<PAGE>

                      U .S. SECURITIES 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, 2002
                           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

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 May 16, 2003 there were 38,649,933 outstanding shares of registrant's common
stock held by non-affiliates, with a market value of approximately $15,846,473
based on a closing bid quotation on the NASD OTC Bulletin Board on that date of
$0.41 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. Not applicable

At May 12, 2003, a total of 50,111,270 shares of registrant's common stock were
outstanding.

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

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.



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PART I

ITEM 1. Description of Business

FORWARD LOOKING STATEMENTS. The following discussion and analysis should be read
in conjunction with the financial statements and notes thereto included
elsewhere in this report on Form 10-KSB of Advanced Technology Industries, Inc.
(the "Company"). 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 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, forward looking 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. 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. These influences
include, but are not limited to the following: whether or not we can
successfully commercialize the products of our subsidiaries; whether or not we
are able to acquire new, marketable technologies; whether or not others develop
products or services that are more readily accepted than, or compete with, the
products or services we currently offer or intend to offer; political turmoil or
changes in government policies in the countries in which we do business; changes
in regulations or laws that adversely impact the ability of our subsidiary, ATI
Nuklear AG, to undertake the management of nuclear waste clean-up projects in
Russia; whether or not we are able to raise sufficient capital to fund our
operations, including funding the development of the technologies owned by our
subsidiaries, and other factors or influences that may be out of our control.
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."

COMPANY OPERATIONS.

GENERAL. The Company is a development stage company and its efforts have been
primarily devoted to technology identification and acquisition, research and
development and raising capital. This discussion provides an analysis of the
Company's anticipated plan of operation for the next 12 months.

The Company was formed in 1995 to acquire and commercialize new or previously
existing but non-commercialized technologies, particularly those developed by
scientists and engineers in Israel, Russia, and Germany. Directly or through a
subsidiary, the Company may acquire a direct interest in these technologies, a
right to use these technologies, and/or an ownership interest in the entity
owning these technologies. The acquisition of technologies by the Company may be
made by the issuance of common stock or other securities, cash or other
consideration, or a combination thereof. Our principal activities include
identifying, reviewing and assessing technologies for their commercial
applicability and potential.

During the next 12 months the Company intends to concentrate on (i) continued
negotiation of a transaction with LTDnetwork Inc., a Delaware corporation
("LTDN"), as contemplated by the Letter of Intent dated October 16, 2002 and
further amended between the Company and LTDN (the "LOI"), (ii) the
commercialization of products developed for RESEAL, Ltd, our 96% owned
subsidiary ("RESEAL"), (iii) the commercialization of products developed by
Cetoni GmbH ("Cetoni"), our 100% owned subsidiary and (iv) new products
developed by the founder of Cetoni.

The Company intends to substantially restructuring its Russian business. It is
contemplated that all Russian activities will be transferred to a newly formed
subsidiary of which the Company will be 51% shareholder. The Company's partners
will hold 49% equity and will be responsible for all funding and day-to-day
management of the Russian business.

The Company believes the prospects for revenues from RESEAL products and Cetoni
products and the Russian activities will require further capital and the Company
has decided to devote its financial and management resources to
commercialization of its consumer products.

We anticipate that we will incur additional costs for and devote the focus of
our management to the continued development of technologies for RESEAL, Cetoni
and new products developed by the founder of Cetoni.

We will require additional financing to continue our planned operations during
the next 12-month period. Management believes that it will be able to raise the
necessary financing to continue planned operations. However, there is no
guarantee that we will be able to successfully raise the required funds for
operations, or that such funds will be available on terms satisfactory to us.
Any inability to raise additional funds would require that we significantly
scale back our planned operations.

As referenced above, on October 16, 2002 the Company and LTDN entered into the
LOI, as amended. Under the terms of the LOI LTDN will acquire at least 58% of
the Company, including its technologies, for the business of LTDN and $5 million
less the aggregate amount of funds invested by LTDN in the Company prior to the
closing of the proposed transaction. It is anticipated that the form of such
acquisition will be a reverse merger resulting in a minimum of 58% of the common
stock of the Company being issued to the shareholders of LTDN. We anticipate the
transaction will close during the third quarter of 2003. However, there can be
no assurance that the transaction will close by that date or at all or on the
original terms detailed in the LOI. The closing is subject to numerous
conditions, including the satisfactory completion of due diligence by LTDN, the
determination of the number of shares of common stock to be issued in any such
transaction and the negotiation and execution of a definitive merger agreement,
the failure by either party to meet any of the conditions could cause the
transaction to be terminated.

Pursuant to the LOI, LTDN has invested over $500,000, as of April 30, 2003 in
the Company under asecured promissory note. The obligations under the promissory
note are secured by the Star Can patents of the Company and Cetoni. In the event
that LTDN provides loans to the Company in excess of $500,000, additional
security may be required in the form of other patents of the Company and its
subsidiaries and/or shares of common stock of the Company. Subject to the
Company not being in breach under the LOI or such promissory note, in the event
that LTDN fails to

On November 27, 2002, the Company and LTDN amended the terms of the LOI pursuant
to which ATI has agreed to pay LTDN a break-up fee, consisting of the Star Can
patents, in the event ATI chooses not to proceed with a transaction or the
Company is unable to issue a majority of its shares to LTDN in connection with
any such transaction. The Star Can Patents are covered by a Pledge and Security
Agreement dated November 27, 2002 between ATI, LTDN, Reseal and Cetoni. On April
14, 2003 the Company and LTDN further amended the terms of the LOI. As part of
the extension of the term of the LOI, the parties to the LOI have revised the
conditions under which such break-up fee is payable. Such break-up fee is only
payable if LTDN is willing and able to proceed with the transaction at the time
ATI is in breach under the LOI, LTDN has loaned to ATI at least $500,000 by
April 30, 2003 and LTDN has loaned to ATI at least an additional $500,000 by
June 30, 2003. LTDN only needs to provide the additional $500,000 by June 30 if
at least the greater of 50% of the outstanding indebtedness of ATI and its
subsidiaries (other than indebtedness to LTDN) as of March 31, 2003 or
$3,400,000 of such indebtedness, (i) has been converted, or is subject to an
agreement to be converted on or prior to the closing of the merger with LTDN, to
shares of ATI common stock or (ii) has been cancelled, or is subject to an
agreement to be cancelled on or prior to the closing of the Acquisition, in
connection with a settlement but only to the extent such indebtedness is
forgiven and is not required to be repaid.

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 addition, 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 and the declaration of said dividends are solely within the
discretion of the Board of Directors of the portfolio company.

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

ISRAELI INVESTMENTS AND TECHNOLOGIES

During April, 1999, we acquired a 20% equity 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.

We purchased our interest from 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, which holds the remaining 80% interest. The agreements required us
to pay $60,000 for our equity stake in each company, payable in four $15,000
tranches, all of which has been paid. Additionally, we have been granted an
option to purchase an additional 25% of the common equity of each company from
the Foundation for a sum to be mutually determined when and if we decide to
exercise the option. These 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, and generally a period of
two years commencing as of the date of registration of the project as an Israeli
corporation). Further, we have entered into an oral 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.

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. 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.

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 payment
increases to 4% for the next three years, and finally to 5% for the three years
thereafter until all funds invested by the Foundation in each of Flexitech and
Pirocat have been repaid.

We have the right to appoint one director on each of Flexitech's and Pirocat's
Board of Directors, which is comprised initially of four persons: Two directors
appointed by the Foundation, a third director appointed by the scientist, and
our director. All decisions of the Board must be carried by a majority of the
directors.

We do not anticipate expending any further funds on the Israeli investments.

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.

EKOR COMPOUND TECHNOLOGY

On November 30, 1999, we acquired an interest which entitles us to receive 2% of
the gross revenues generated by Eurotech (the "EKOR Compound") from Eurotech,
Ltd., a former affiliate.. 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.

We are entitled to receive an override of 2% of revenues generated by EKOR.

RESEALABLE BEVERAGE PACKAGING TECHNOLOGY

RESEAL, Ltd. ("RESEAL") was formed to hold the Company's ownership of two
proprietary resealable beverage packaging products, specifically a resealable
metal beverage can and a resealable cardboard tetra-pak package. These products
were originally developed by Cetoni. The main emphasis of RESEAL over the next
twelve months will be on the successful commercialization of its metal beverage
packaging products. We have previously entered into a marketing agreement during
2000 with the Falcon Group, Ltd. ("Falcon") to provide for the introduction of
the resealable products into the European brewery market. Falcon is entitled to
a royalty payment plan based on certain unit sales of the resealable beverage
can, additionally a royalty of 1% of total revenues is payable to an affiliate
of the inventor of RESEAL's products. To date, Falcon and RESEAL have not
entered into any distribution or sales agreements for the RESEAL products and
technology. However, we anticipate that RESEAL will successfully enter into
distribution and sales agreements within the next twelve month period for the
full commercialization of its products and technology.

RESEAL is preparing for the production of 10,000 machine-fabricated samples for
distribution to beverage producers who have previously expressed a high degree
of interest in the resealable beverage cans. It is anticipated that production
of those samples, marketing and general operational expenses will require less
than $450,000. RESEAL anticipates that in the event it is required to purchase
capital equipment for the full scale production of our resealable beverage cans,
an additional $2,000,000 would be required. The completion of the initial 10,000
sample production run has been delayed due to our failure to complete an
expected financing during the quarter ended September 30, 2002. Additionally,
RESEAL has terminated the employment of Dr. Markus Witschi from the position of
Chief Executive Officer.

To date, RESEAL has not entered into any distribution or sales agreements. We
anticipate, based upon response received from major beverage producers and
beverage packaging manufacturers, that RESEAL will enter into distribution or
sales agreements within the next twelve month period. There can be no assurance
that RESEAL will enter into distribution or sales agreements, or if entered into
that the agreements will result in significant sales or revenue to the Company.
The ability to successfully commercialize the RESEAL products and technology is
heavily dependent upon our ability to raise additional funds.

We believe that RESEAL can obtain financing on favorable terms for a substantial
portion of that amount from the beverage producers and/or packagers, suppliers
and/or other sources. However, if financing is not available, management
believes that RESEAL will be able to obtain the necessary funds to pay for the
production, marketing and operational expenses from other sources. An inability
to raise funds to continue the commercialization of the RESEAL products and
technology would further delay their introduction to market.

In December 2001, we entered into an agreement whereby we sold a 2.75% equity
stake in RESEAL to an accredited investor for $275,000. Furthermore, in January
2002, we entered into an agreement with the same party and sold an additional
1.25% equity stake in RESEAL for $125,000. We currently own 96% of RESEAL.

We intend to devote and focus a higher proportion of our time and energy towards
the commercialization of the RESEAL products. We have commenced the process of
identifying appropriate distribution channel partners for the RESEAL products.
We anticipate that any commercial arrangement involving the RESEAL products
would involve alliances with industry leaders in the packaging industry..

If potential partners are interested in the RESEAL products, then we plan to
enter long-term license agreements with those partners whereby we grant them the
right to manufacture and use the RESEAL products in selected markets and grant
the right to sublicense the RESEAL products to manufacturers in other selected
markets. In consideration of such license agreements we plan to negotiate and
secure appropriate license fees and/or royalties from the licensees and
sub-licensees.

Prior to, or in conjunction with entering into a license agreement, we
anticipate that we will need to expend approximately $500,000 on the manufacture
of an industrial tool for the purpose of testing the production capacity of the
RESEAL product and satisfy licensees of same.

ATI Nuklear AG
--------------

On June 11, 2001, ATI entered into a new agreement to modify its license
agreement with Nurescell Inc. ("Nurescell"). Under the terms of this new
agreement, ATI had an exclusive and transferable right to Nurescell Inc.
proprietary technology in certain countries in Europe and Asia. ATI Nuklear was
required to pay Nurescell Inc. a royalty for the utilization of the technology
and products in the amount of 8% of the net sales of the Nurescell Inc.
technology. Net sales are defined as gross sales, less discounts, rebates,
credits and freight.

In addition, under the terms of this modified agreement, Nurescell Inc. agreed
to assign to ATI all ownership in Nurescell AG, which has been renamed to ATI
Nuklear AG. Nurescell Inc. had agreed to repay to ATI all monies that ATI had
previously paid to, or on behalf of, Nurescell Inc. for its acquisition of a 49%
interest in Nurescell AG. As part of the agreement, ATI agreed to continue to
finance Nurescell Inc's continued monthly operations on a non-interest bearing
basis through December 31, 2001. Nurescell Inc. has also executed a convertible
promissory note for the monies due to ATI up to and including the date of this
agreement. Principal and interest on this note shall be all due and payable on
demand. The principal and interest may be converted by ATI into shares of the
$.001 par value common stock of Nurescell Inc. Interest is payable at the rate
of 10% per annum.

As of September 30, 2001, ATI, Nurescell Inc. and ATI Nuklear AG entered into
another agreement pursuant to which, among other things, (i) Nurescell
was released from any and all past, present, and future obligations, whether
past due or otherwise, with respect to the funding of ATI Nuklear AG, (ii)
Nurescell Inc agreed that all payments required of ATI Nuklear AG pursuant to
the License Agreement (other than 8% royalty payments) were deemed paid in full,
(iii) Nurescell Inc. amended its June 11, 2001 promissory note to the following
terms: $1 million convertible promissory note payable to ATI Nuklear AG. The
note is secured by (i) 15,000,000 shares of Nurescell Inc's common stock, (ii) a
first priority security interest in Nurescell Inc.'s technology and (iii) all
royalties from ATI Nuklear AG.

Pursuant to a Restructure Agreement (the "Restructure Agreement") entered into
on March 21, 2003 between the Company, Triton Private Equities Fund ("Triton"),
ATI Nuklear AG and Nurescell Inc., we acquired 100% of the technology ownership
rights of Nurescell's radiation shielding technology (the "Technology") in
return for the cancellation by ATI and ATI Nuklear of all debts and other
obligations owed to either of them by Nurescell , consisting primarily of a $1
million promissory note, plus interest, secured by the Technology (among other
things) and approximately $200,000 in short-term cash advances and payments made
by ATI to or for Nurescell. The Technology consists of proprietary intellectual
property, including patents and patent applications.

As of December 31, 2002, we owned 4,590,000 shares of Nurescell Inc. common
stock, representing 28.56% of their outstanding and issued shares. ATI Nuklear
AG has developed a business plan for the manufacture and marketing of its core
technologies and products in Russia and continental Europe. ATI Nuklear AG is
presently continuing its test program for the technologies and products in
Russia and Germany to verify the suitability of its technology rights for these
applications in shielding, encapsulating and immobilization for transporting and
storing nuclear waste.

ATI Nuklear AG intends to be active in the development and marketing of its
technology rights and products in Germany and Russia during the next 12 months.
ATI Nuklear AG intends to raise up to $12,000,000 of project financing to
support its required investments to fully implement its business plan. If
necessary financing is not available, management of ATI Nuklear AG would be
required to significantly scale back its plan of operations.

ATI Nuklear AG owns a radiation shielding product developed by Nurescell and is
developing its own shielding materials. ATI Nuklear AG intends to manufacture
and market its technologies in Russia and continental Europe. The shielding
technologies have not actually been utilized, as of the current date, in any
commercial application. ATI Nuklear AG has conducted tests and will continue a
testing program for the technology in Russia and Germany to verify its
suitability for these applications in nuclear power plants, radioactive waste
storage facilities, radioactive waste storage and transport containers and other
commercial uses.

ATI Nuklear AG also intends to become active in the area of project management
for various nuclear waste clean-up projects within Russia. Acting as project
manager, ATI Nuklear AG would receive a fee for organizing all parts of the
clean-up effort, including construction, engineering for transportation and
intermediate and final storage of the nuclear waste.

ATI Nuklear AG has been invited by the Russian Ministry of Atomic Energy
("Minatom") to identify and provide solutions for a range of nuclear waste
issues in the Russian Federation. The primary focus will be on the
decommissioning of nuclear submarines from both the Northern and Far Eastern
Fleets. The Russian Navy's nuclear powered fleet includes marine reactors either
in service or in storage, generating significant quantities of spent nuclear
fuel, high and low-level solid and liquid radioactive wastes that have not been
processed or safely stored. The defueling schedule of the retired submarines has
been increasing over the past years in conjunction with the increased waste
management funding from Minatom.

On September 12, 2002, ATI Nuklear AG signed an agreement with an Institute of
Minatom for cooperation and testing of ATI Nuklear AG's patent pending
geopolymeric material "Geoposil D." The purpose of this cooperation agreement is
to certify "Geoposil D" for use in the Russian market as a precondition for
commercial sales in the Russian Federation. ATI Nuklear AG anticipates these
certification tests should be completed during the third quarter of 2003 and
commercial sales are expected to commence in 2003 to facilities in Russia.

ATI Nuklear AG presented its nuclear technology "Geoposil D" to the conference
on "Ecological Problems in Nuclear Submarines Decommissioning and Development of
Nuclear Power in the Region" in Vladivostok (September 16-20, 2002) co-sponsored
by ATI and jointly organized and convened by Minatom and other Russian Agencies.

Minatom announced at this conference that the Russian atomic submarine repair
plant "Zvezda," (located in Far Eastern Russia) would begin construction of a
solid radioactive waste and single-compartment nuclear reactor depository in
early 2003. According to Minatom, there are currently a minimum of (several)
nuclear ships with radioactive materials on board that require decommissioning.

"Zvezda" has indicated their intention to use "Geposil D" after successful
testing in Russia for the various uses contemplated in the decommissioning
process, including the coating of drums containing low level radioactive wastes
and other proprietary uses, specifically developed by ATI Nuklear, appropriate
for the nuclear remediation facilities in this region. These applications are
proprietary to ATI Nuklear and the Company intends to use its cooperation
agreement with Forschungszentrum Juelich GmbH, an agency of the German
government, for modifications for specific applications in the Russian market.
ATI Nuklear AG anticipates these certification tests should be completed during
third quarter of 2003 and commercial sales are expected to commence in 2003 in
Russia.

Minatom announced at this conference that the Russian atomic submarine repair
plant "Zvezda",located in Far Eastern Russia, will go forward in construction
of a solid radioactive waste and single-compartment nuclear reactor depository
in early 2003. According to Minatom, there are currently a minimum of several
nuclear ships with radioactive materials on board that require decommissioning.

On March 24, 2003, ATI terminated the employment of Dr. Juergen P. Lempert,
President of ATI Nuklear AG and all members of the board of directors of ATI
Nuklear AG. Dr. Lempert has been replaced by Hans-Joachim Skrobanek, our
president. The board has been replaced by Allan Klepfisz, Chai Ong and Christa
Sieber.

As part of the Company's restructure of its nuclear interests it is contemplated
that ATI Nuklear will be reorganized so that the Company will hold a majority,
yet passive, interest in the assets currently in ATI Nuklear.

Other than any potential costs associated with the proposed restructure, we do
not anticipate expending any further significant funds on these activities.

CETONI GmbH

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'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 automotive accessory (Tool
Star, Ring Memory), healthcare (Pharmaceutical packaging), household goods
(butter dish, sugar dispenser, candy dispenser, fruit peeler and
fruit peeler with tray), sports (Power Ball and Walk and Roll), office and
general consumer markets (Light Boy, Cleaning Center). It is anticipated
that Cetoni will devote the majority of its focus during 2003 on the successful
commercialization of RESEAL's products, which it developed, and to prepare the
commercialization of the above products.

The Company plans to review the commercialization prospects of all products and
investigate the most efficient and effective paths to market for all products,
focusing our energy and attention towards the most favorable prospects.

INTERNATIONAL CENTER OF ADVANCED TECHNOLOGIES.

The Company has entered into a cooperation agreement with a Krasnoyarsk
scientific company, The Research Institute of Physics and Engineering,to form a
Russian joint stock company called The International Center of Advanced
Technologies, Ltd., ("ICAT"). ICAT was formed to explore the conversion of
existing nuclear and defense Technologies into non-nuclear technologies and
nuclear waste remediation Technologies.

ICAT currently owns a foam glass technology developed by Russian scientists. The
foam glass technology is an innovative insulation product made from waste
created in the mining of alumina. Foam glass' developers maintain the belief
that the product maintains numerous advantages over traditional fiber glass
insulation. It is the target of ICAT to commercialize the foam glass technology
with a Russian aluminium producer. ATI is currently evaluating the business plan
of ICAT to determine whether ICAT warrants further investment. Should ATI
determine to move forward with the Foam Glass project we anticipate we will be
required to contribute $20,000 for its operations .

The Company proposes to substantially restructure its interest in ICAT. It is
contemplated that it will be reorganized so that the Company's interest in ICAT
will be a passive one.

Other than any potential costs associated with the proposed restructure, we do
not anticipate expending any further significant funds on these activities.

SIBCONVERS

The Company has entered into an agreement with a group of Russian investors to
form a Russian company called Sibconvers in which the Company will have a 50%
interest. Sibconvers intends to pursue programs offered by various governmental
agencies of Russia, the United States, and European Union countries for the
conversion of Russian nuclear defense industries into high-tech non-defense and
nuclear remediation enterprises and to retrain nuclear and military researchers,
technicians and engineers employed in those industries. Those industries are
primarily located in the closed "nuclear cities" situated in Siberia. This
project is not a current priority of ATI and is not expected to generate any
business during the next 12 months. ATI anticipates that it will not be required
to make a financial commitment to Sibconvers during the next 12 month period.
ATI is currently evaluating the business plan of Sibconvers to determine whether
Sibconvers warrants further investment.

The Company proposes to substantially restructure its interest in Sibconvers. It
is contemplated that it will be reorganized so that the Company's interest in
Sibconvers will be a passive one.

Other than any potential costs associated with the proposed restructure, we do
not anticipate expending any further significant funds on these activities.

INTERNATIONAL LABORATORY FOR NUCLEAR WASTE MANAGEMENT.

The Company has entered into an agreement with the Federal Republic of
Germany-nuclear research facility-Forschungszentrum Juelich Institute fur
Sicherheitsforschung and Reaktortechnik and the Institute of Physics and
Engineering of Krasnoyarsk State University for the formation of a laboratory to

be known as the International Laboratory for Nuclear Waste Management. This
venture intends to pursue contracts and programs concerning the research,
development, testing, and certification for nuclear waste remediation
applications in the closed "nuclear cities" of the Russian Federation. ATI
anticipates that it will not be required to make a financial commitment to the
International Laboratory during the next 12 month period.

The Company intends to substantially restructure its interest in International
Laboratory. It is contemplated that it will be reorganized so that the Company's
interest in International Laboratory will be a passive one.

Other than any potential costs associated with the proposed restructure, we do
not anticipate expending any further significant funds on these activities.

CURRENT OPERATIONS

The competition in the technology 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, patentability and
commercialization 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 our 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 AND DISTRIBUTION
--------------------------

Our primary business focus is the acquisition and commercialization of advanced
technologies and the commercial products that result from these efforts. We
anticipate that beverage packaging will be the primary markets for our products
and technologies during 2003. 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, specifically our beverage packaging products.
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.

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. To date,
we have not generated any revenues from our products or technologies and are
competing against companies that may have significantly greater financial and
human resources.

RESEARCH AND DEVELOPMENT
------------------------

In the fiscal year ended December 31, 2002, we spent $1,137,990 on research and
development.

By comparison, in the fiscal year ended December 31, 2001, we spent $868,878 on
research and development.

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 regulations
pertaining to the containment and remediation of radioactive contamination and
the toxicity of materials used in connection therewith (in the case of the EKOR
Compound 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 their 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 Eurotech 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 Compound 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, 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.

EMPLOYEES
---------
We currently employ one part-time and 15 full-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 five full-time and three part-time
employees. Cetoni's employees engage in product research, development and
marketing.

Since the commencement of merger discussions with LTDN, we have been aided
and assisted by LTDN's senior management, including Allan Klepfisz and
Chai Ong in relation to our product marketing endeavors, corporate structure
issues, debt and cost reduction strategies and capital raising requirements.

ATI Nuklear AG currently has a supervisory board consisting of Allan Klepfisz,
Chai Ong and Christa Sieber.  ATI Nuklear AG maintains one full-time employee,
President Hans-Joachim Skrobanek and three consultants.

We believe that we have good relations with our current employees.

ITEM 2. DESCRIPTION OF PROPERTY

Our principal executive offices are at Berlin, Germany. The 800 square foot
office 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. RESEAL's executive offices are
also located in the offices of the Company.

Cetoni's principal executive offices are located in a 220 square meter space at
Patriching 26, D-94034, Passau, Germany. 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.

ATI Nuklear AG maintains its executive office space adjacent to our executive
offices in Berlin, German. The 100 square meter executive space is leased for a
period of four years at a monthly rent of approximately $3,400.

In light of the impending merger with LTDN and our intentions in relation
to ATI Nuklear, we intend to rationalize our office requirements so that related
expenses are reduced.

ITEM 3. LEGAL PROCEEDINGS

There is no current outstanding litigation in which we are involved.

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

PART II

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

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.

PREFERRED STOCK

Currently, 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.

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
Over The Counter -Bulletin Board. The bid prices represent inter-dealer
quotations, without adjustments for retail mark-ups, markdowns or commissions
and may not necessarily represent actual transactions.

2001                                High             Low
-------                            -------          -------
First Quarter                         .50              .22
Second Quarter                       1.91              .19
Third Quarter                         .85              .22
Fourth Quarter                        .40              .22

2002                                High             Low
-------                            -------          -------
First Quarter                       $1.10            $0.26
Second Quarter                      $2.23            $0.51
Third Quarter                       $0.69            $0.16
Fourth Quarter                      $0.26            $0.09

There were approximately 322 shareholders of record of common stock as of May
15, 2003.

There are currently fifteen 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., Sierra Brokerage Services, Paragon Capital
Corporation, Meyerson (M.H.) & Co. Inc., Schwab Capital Markets LP, Phillip
Louis Trading, Inc., Ladenburg Capital Management Inc., North American
Institutional Brokers and V Finance Investments Inc..

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.

SALE OF UNREGISTERED SHARES

During the last four years, we have sold securities which were not registered
under the Securities Act of 1933 (the "Act"). The transactions not reported in
our previously filed quarterly reports are as follows:

During October 2002, the Company issued 40,000 shares of common stock as
consideration for finder's fee. Shares issued were valued at $7,600, which was
charged to operations during 2002.

During October 2002, the Company issued 700,000 shares of common stock as
consideration for legal services performed by its attorneys. Shares issued under
these arrangements were valued at $77,350, which were charged to operations
during 2002.

During October 2002, the Company issued 145,328 shares of common stock due to
the exercise of options for $21,000.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

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.

PLAN OF OPERATION
-----------------

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.

We will require additional financing to continue our planned operations during
2003. Management believes that it will be able to raise the necessary financing
to continue planned operations. However, there is no guarantee that we will be
able to successfully raise the required funds for operations, or that such funds
will be available on terms satisfactory to us. Any inability to raise additional
funds would require that we significantly scale back our planned operations.

Ideally, upon the commercialization of our products, and implementation of
operational cost controls, we would hope that sustainable revenues will be able
to be generated so as to avoid the necessity to raise significant funds in the
longer term.

RESEAL, Ltd., the Company's 96% owned subsidiary, was formed to hold the
Company's ownership of two proprietary resealable beverage packaging products,
specifically a resealable metal beverage can and a resealable cardboard
tetra-pak package. These products were originally developed by Cetoni GmbH, an
ATI subsidiary. The main emphasis of RESEAL over the next twelve months will be
on the successful commercialization of its beverage packaging products. We have
previously entered into a marketing agreement during 2000 with Falcon to provide
for the introduction of the resealable products into the European brewery
market. Falcon is entitled to a royalty payment plan based on unit sales of the
resealable beverage can.

We have begun in partnership with Styner+Bienz, plans for the first 10,000
machine-fabricated production samples for distribution to beverage producers who
have previously expressed a high degree of interest in the resealable beverage
cans. It is anticipated that production of those samples, marketing and general
operational expenses will require less than $450,000. We anticipate that in the
event we are required to purchase capital equipment for the full scale
production of our resealable beverage cans, an additional $2,000,000 would be
required. However, as previously indicated we plan to enter strategic alliances
with industry leaders within this field in order to license the right to
manufacture the RESEAL products thus minimizing the requirement for the Company
to purchase the necessary capital equipment.

Despite our intentions, if necessary, RESEAL believes that it can obtain
financing on favorable terms for a substantial portion of that amount from the
beverage producers, suppliers and/or other sources. However, if financing is not
available, management believes that RESEAL will be able to obtain the necessary
funds to pay for the production, marketing and operational expenses from other
sources.

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

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

We may incur substantial expenses associated with performing due diligence
incident to the investigation of technologies or companies 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 a
prior period, 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 RESEAL will be able to do so. Neither
our products and technologies or those of RESEAL or ATI Nuklear 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 our subsidiaries, if ever. No
assurance can be given that 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.

RISK FACTORS

ATI's competitors may introduce products with which its current and new products
may not compete successfully.

The markets for ATI's products experience and will continue to experience
rapidly changing technologies, evolving industry standards and new product
introductions by its competitors. These market characteristics and the
activities of ATI's competitors, including their introduction of new products
and product upgrades, could render ATI's technology obsolete. ATI may not
successfully develop, introduce or manage the transition of new products or do
so on a timely basis in response to changing technologies and standards and new
products and product upgrades introduced by its competitors. Failed market
acceptance of existing or new products or problems associated with new product
transitions could harm ATI's business, results of operations and financial
condition.

ATI has experienced quarterly fluctuations in operating results that have
affected and may adversely affect its share price and cause it to be volatile.

ATI has experienced, and expects to continue to experience, significant
fluctuations in its quarterly operating results due to costs associated with new
product introduction and demand for its products. This has in the past adversely
affected and in the future could adversely affect ATI's revenues as reported on
a quarterly basis, as well as its share price, and increase the volatility of
the market price of its common stock.

Holders of ATI's common stock will have their percentage ownership diluted by
approximately 58% upon completion of the merger with LTDN and as a result
the price of its common stock may decline.

A significant number of shares of ATI's common stock will be available for
trading in the public market which will result in substantial dilution to
existing shareholders upon completion of the merger with LTDN. The
additional shares in the market will dilute the percentage interest of ATI's
other shareholders and may have a material adverse effect on the market price of
ATI's common stock. Any such decline in the market price of its common stock
could impede ATI's efforts to obtain additional financing through the sale of
additional equity or equity-related securities or could make such financing more
costly.

Any inability of ATI to protect its intellectual property may limit its ability
to compete and result in a loss of a competitive advantage and decreased
revenue.

ATI relies principally on copyright, trademark, patent, trade secret and
contract laws to protect its proprietary technology. ATI cannot be certain that
it has taken adequate steps to prevent misappropriation of its technology or
that its competitors will not independently develop technologies that are
substantially equivalent or superior to ATI's technology.

ATI may be subject to intellectual property infringement claims that are costly
to defend and could limit its ability to use some technologies in the future.

Although ATI believes that none of the technologies or products it has developed
or the trademarks it uses or any of the other elements of its business infringe
on the proprietary rights of any third parties, third parties may assert claims
against ATI for infringement of their proprietary rights and these claims may be
successful. ATI could incur substantial costs and diversion of management
resources in the defense of any claims relating to proprietary rights, which
could materially adversely affect its business, results of operations or
financial condition. Parties making these claims could secure a judgment
awarding substantial damages as well as injunctive or other equitable relief
that could effectively block ATI's ability to market or license its products in
the United States, Australia or elsewhere. Such a judgment could have a material
adverse effect on ATI's ability to sell its products or on its costs of doing
business. If a third party asserts a claim relating to proprietary technology or
information against ATI, it may seek licenses to the intellectual property from
the third party. However, ATI cannot be certain that third parties will extend
licenses to it on commercially reasonable terms, or at all. ATI's failure to
obtain the necessary licenses or other rights or to obtain those rights at a
reasonable cost could materially adversely affect its ability to sell its
products or its costs of doing business.

ATI's common stock price has been and may in the future be affected by recently
experienced extreme price and volume fluctuation in the market for developmental
stage companies.

The Over the Counter Bulletin Board, where many developmental stage companies
are traded, experiences extreme price and volume fluctuations. These
fluctuations often have been unrelated or disproportionate to the operating
performance of these companies. These broad market and industry factors may
materially adversely affect the market price of ATI's common stock, regardless
of its actual operating performance. In the past, following periods of
volatility in the market price of an individual company's securities, securities
class action litigation often has been instituted against that company. ATI has
not been the subject to any lawsuits alleging that it has violated various
provisions of federal securities laws. The filing of litigation against ATI, or
any other claims, if made, could result in substantial costs and a diversion of
the attention and resources of ATI's management.

If ATI is unable to hire and retain key personnel, it may be unable to develop
products or achieve sales of products.

ATI's success depends to a significant extent on the performance of its
executive officers and key technical and marketing personnel. The loss of one or
more of ATI's key employees could have a material adverse effect on its ability
to develop products or to sell products. ATI believes that its future success
will depend in large part on its ability to attract and retain highly skilled
technical, managerial and sales and marketing personnel. There can be no
assurance that ATI will be successful in attracting and retaining these
personnel.

ATI's marketplace is intensely competitive and rapidly changing and it may not
be able to compete successfully in the future.

ATI's industry is highly competitive and subject to rapid technological change.
Many of its current and potential competitors have larger technical staffs, more
established and larger marketing and sales organizations and significantly
greater financial resources. The rapid pace of technological change constantly
creates new opportunities for existing and new competitors and can quickly
render existing technologies less valuable. As the market for ATI's products
continues to develop, additional competitors may enter the market and
competition may intensify. Inability to compete in the following factors could
have a material adverse effect on ATI's business product performance, product
features, ease of use, reliability, hardware and competitor compatibility, brand
name recognition, product reputation, pricing, levels of advertising,
availability and quality of customer support and timeliness of product upgrades.

ATI faces regulatory risks in doing business in foreign countries that could
adversely affect its revenues and profitability.

Because ATI's revenues and expenses are recorded in different currencies, its
revenues are subject to exchange rate fluctuations.

ATI's research and development program and costs may not result in increased
sales or revenue.

Developing new products and technologies is expensive. ATI plans to continue
significant investments in product research in the near future. ATI cannot
assure that significant sales or revenue from the products it is developing will
be achieved.

The report of ATI independent public accountants and the notes to our financial
statements included elsewhere in this document state that the continuation of
ATI 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

ATI can provide no assurance that we will be able to achieve any of the
foregoing.

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

ATI was incorporated in 1995 and has 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    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.

ATI anticipates that it will continue to incur significant operating losses
through 2003. ATI may incur additional losses thereafter, depending upon our
ability to generate revenues from the license or sale of its technologies and
products or to enter into any or a sufficient number of joint ventures or
collaborations working. ATI has generated no meaningful revenues to date.
Although ATI's management believes that it may recognize revenues during 2003,
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. ATI products and technologies have never been
utilized on a large-scale commercial basis.

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

         o    the timing of licensing of technologies and sales of products;

         o    market acceptance of ATI's technologies and products;

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

         o    the ongoing development and testing of technologies and products;
              and

         o    the availability of financing.

ATI's 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 any failure to enter into joint ventures or
consummate any such agreements could have a material adverse effect on ATI's
results of operations.

In addition, ATI will require substantial additional capital to expand its
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, ATI has not identified any sources of and cannot provide any
assurances that it ever will obtain the additional capital necessary to fully
effectuate our business goals. Moreover, ATI cannot provide assurances that
additional capital requirements will not arise, or that for periods following
fiscal year 2003 it will generate sufficient revenues to cover expenses or
generate profits. If adequate financing is not available, ATI 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 ATI would otherwise
seek to develop. To the extent ATI raises additional capital by issuing equity
securities, holders of our equity securities will be diluted.

No assurance can be given that ATI 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 ATI technologies.

As part of ATI's long-term growth strategy, it 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, ATI may enter
into discussions and negotiations with companies regarding our acquiring,
investing in, or partnering with their businesses, products, services or
technologies. ATI may not identify suitable acquisition, investment or strategic
partnership candidates, or if it does identify suitable candidates, may not
complete those transactions on commercially acceptable terms or at all.
Acquisitions often involve a number of special risks, including the following:

         o    difficulty integrating acquired operations, products, services and
              personnel;

         o    the acquisition may disrupt our ongoing business;

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

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

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

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

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

         o    diluting shareholder ownership interest;

         o    causing ATI to incur additional debt; and

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

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

ATI's intends 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 ATI is 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, ATI can give no assurances that any such relationships
will result in the sale or licensing of our technologies or products.

The majority of the technologies or products ATI offer have been available on a
commercial basis in the past and ATI cannot assure you that any of these
technologies or products will gain acceptance among the potential users thereof.

If ATI is successful in promoting our technology products in the future, our
ability to generate revenues and our results of operations will be materially
adversely effected.

ATI and its subsidiaries have prepared and filed patent applications covering
several of consumer products in industrial countries. ATI success depends, in
part, on its ability to obtain and protect patents covering, and maintain trade
secrecy protection of, 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 ATI's pending or future.
patent applications will be approved, that ATI will develop additional
proprietary technology that is patentable, that any patents issued will provide
ATI 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 ATI's ability to
conduct business.

Furthermore, there can be no assurance that others will not independently
develop similar or superior technologies or design around any technology that is
patented by ATI or its subsidiaries. It is possible that ATI 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 ATI on acceptable terms,
if at all, or that ATI would prevail in any such contest. In addition, ATI 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, ATI relies on trade secrets, proprietary
know-how and technology which it seeks 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 ATI 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.

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

ATI conducts a significant portion of its business outside the United States.
Certain risks attach to operations in foreign countries, some of which are
described below: Legal systems in some of the nations in which ATI conducts
operations, including the licensing of technologies and selling products, may
not be as developed as the United States legal system. Consequently, contract
rights which ATI takes 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 ATI's business and results of operations.

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

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

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

The price of ATI's 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 ATI and its technologies and products; and

         o    general economic and market conditions.

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

ATI's financial results may fluctuate significantly because of several factors,
many of which are beyond its control. These factors include:

         o    any inability to effectively market our technologies and products;

         o    any failure to keep pace with changing technology;

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

         o    downward pressure on prices due to increased competition;

         o    changes in operating expenses; and

         o    the effect of potential acquisitions.

Fluctuations caused by these and other factors could cause ATI's business to
suffer.

ATI has never paid any cash dividends on its common stock. ATI currently intends
to retain all future earnings, if any, for use in its business and does not
expect to pay any dividends in the foreseeable future.

ATI may have to sell and issue Common Stock or securities convertible into
Common Stock in order to obtain the funding necessary to support operations
which will dilute your shareholdings and may negatively impact the price of
ATI's Common Stock. In addition, the market price of ATI's common stock could
fall if ATI's stockholders sell substantial amounts of common stock, including
shares issued upon the exercise of outstanding options, in the public market.

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.

RESULTS OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 2002 AS COMPARED TO THE
PERIOD ENDED DECEMBER 31, 2001.

As of December 31, 2002 we had working capital deficiency of $7,995,000,
shareholders' deficiency of $7,665,749 and an accumulated deficit of
$21,453,320. 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 ATI Nuklear AG and RESEAL Ltd to
generate revenues from the license or sale of technologies or products.

LIQUIDITY AND CAPITAL RESOURCES
--------------------------------

We will require additional financing to continue to fund our 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.

ITEM 7. FINANCIAL STATEMENTS

Our financial statements for the year ended December 31, 2002 are attached
hereto as pages F-1 through F-48.

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

Our previous accountants were Grassi & Co, P.C. located in New York, New York.
Effective September 9, 2002 several partners of Grassi & Co., P.C. merged with
Marcum & Kliegman LLP. located in New York and that firm remains as our
independent auditor.

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, 2002, our officers and Directors were:

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

Hans-Joachim Skrobanek        52        President and Director

Peter Goerke                  42        Vice President

James Samuelson               33        Vice President, Chief Financial Officer,
                                        Secretary

Hans-Joachim Schuerholz       76        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.

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. In 1997, Mr. Samuelson was
employed as a Vice President from Grammont, Ltd., a boutique investment banking
firm in Paris, France. 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.

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

Kurt Seifman and ERBC Holdings, LTD., owner of 22% of our Common Stock
delinquently filed a Form 5 relating to several transactions occurring in 2001
and 2002. This was corrected via a Form 5 filed February, 19 2003.

To the best of our knowledge Cetoni Holdings Ltd. has not filed a Form 3 or Form
4 reflecting its acquisition or disposition of common stock acquired as a result
of our acquisition of Cetoni Unwelttechnologies-Entwicklhungs, GmbH.

ITEM 10. EXECUTIVE COMPENSATION

The following table presents, for each of the last three fiscal years ending
December 31, 2002 the annual compensation earned by our chief executive officer
and our most highly compensated executive officers.
<TABLE>
<CAPTION>

=========================================================================================================
                                                               LONG TERM COMPENSATION
---------------------------------------------------------------------------------------------------------
                                ANNUAL COMPENSATION                  Awards          Payouts
                            --------------------------------  ---------------------  ---------

                                                   Other                  Securities              All
                                                   Annual     Restricted  Underlying    LTIP     Other
                                          Bonus    Compen-    Stock       Options/    Payouts   Compen-
                     Year    Salary ($)    ($)     sation($)  Awards($)   SARs(#)       ($)     sation($)
-------------------  -----  -----------  --------  ---------  ----------  ----------  --------  ---------
<S>                  <C>    <C>          <C>       <C>        <C>         <C>         <C>       <C>
Hans-Joachim Skrobanek,
President            2002   $110,000
-------------------  -----  -----------  --------  ---------  ----------  ----------  --------  ---------
                     2001    110,000
-------------------  -----  -----------  --------  ---------  ----------  ----------  --------  ---------
                     2000    110,000
-------------------  -----  -----------  --------  ---------  ----------  ----------  --------  ---------
James Samuelson,
Vice President,
Chief Financial
Officer, Secretary   2002   $120,000(1)    $0.00
-------------------  -----  -----------  --------  ---------  ----------  ----------  --------  ---------
                     2001   $120,000(2)    $0.00
-------------------  -----  -----------  --------  ---------  ----------  ----------  --------  ---------
                     2000   $120,000     $10,000
-------------------  -----  -----------  --------  ---------  ----------  ----------  --------  ---------

=========================================================================================================

===============================================================================================
                           OPTIONS/SAR GRANTS IN THE FISCAL YEAR 2002
-----------------------------------------------------------------------------------------------
                                      INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------------------
                                     Number of     % of Total
                                     Securities    Options/SARs
                                     Underlying    Granted to
                                     Option/SARs   Employees in   Exercise or Base   Expiration
Name                         Year    Granted (#)   Fiscal Year    Price ($/Share)    Date
---------------------------  -----   -----------   ------------   ----------------   ----------

Hans-Joachim Skrobanek,
President                    2002             0
                             2001             0
---------------------------  -----   -----------   ------------   ----------------   ----------
                             2000       150,000          31.91%            $0.343     10/25/10
---------------------------  -----   -----------   ------------   ----------------   ----------

---------------------------  -----   -----------   ------------   ----------------   ----------
James Samuelson, Vice
President, Chief Financial
Officer, Secretary           2002             0

                             2001             0
---------------------------  -----   -----------   ------------   ----------------   ----------
                             2000       100,000          21.28%            $0.343     10/25/10
---------------------------  -----   -----------   ------------   ----------------   ----------

===============================================================================================
</TABLE>

INCENTIVE STOCK OPTION 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 approved the Plan on May 18, 2001.

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.

COMPENSATION OF DIRECTORS

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

EMPLOYMENT CONTRACTS

We currently have employement contracts with Mr. Srkobanek and Mr. Goerke. Under
the terms of the contracts Mr. Skrobanek is entitled to a salary of $110,000 per
annum and Mr. Goerke is entitled to a salary of $95,000 per annum.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of December 31, 2002 as to each
person who is known to ATI to be the beneficial owner of more than 5% of ATI's
outstanding common stock (giving effect to all warrants and options exerciseable
within 60 days) and as to the security and percentage ownership of each
executive officer and director of ATI and all officers and directors of ATI as a
group. Except where specifically noted, each person listed in the table has sole
voting and investment power with respect to the shares listed.
<TABLE>
<CAPTION>

------------------- ------------------------------------ -------------------------- -------------------------
                             Name and Address               Security Ownership             Percentage
     Title of                       Of                       Amount and Nature                 Of
      Class                  Beneficial Owners            Of Beneficial Ownership            Class
------------------- ------------------------------------ -------------------------- -------------------------
      <S>           <C>                                       <C>                            <C>
      Common        Kurt Seifman
                    5 West 86th Street                         10,973,922(1)                 22.0%
                    New York, NY  10024
------------------- ------------------------------------ -------------------------- -------------------------
      Common        Glenn A. Cramer
                    3134 Bel Air Drive                          3,436,577(2)                  6.89%
                    Los Vegas, NV
------------------- ------------------------------------ -------------------------- -------------------------
      Common        Hans Joachim Skrobanek
                    Taubenstrasse 20                            1,073,359                     2.15%
                    Berlin, Germany D-10117
------------------- ------------------------------------ -------------------------- -------------------------
      Common        Hans Joachim Schuerholz                       15,000
                    Taubenstrasse 20                                                             0%
                    Berlin, Germany D-10117
------------------- ------------------------------------ -------------------------- -------------------------
      Common        James Samuelson                               179,056
                    Taubenstrasse 20                                                             0%
                    Berlin, Germany D-10117
------------------- ------------------------------------ -------------------------- -------------------------
      Common        Peter Goerke                                  50,000
                    Taubenstrasse 20                                                             0%
                    Berlin, Germany D-10117
------------------- ------------------------------------ -------------------------- -------------------------
                    Officers and Directors as a group
                    (5 persons)                                 1,323,415                     2.65%
------------------- ------------------------------------ -------------------------- -------------------------
</TABLE>

(1)      2,154,440 of these shares are held directly by Mr. Seifman. 5,194,482
         of these shares are held indirectly through ERBC Holdings, Ltd., for
         which Mr. Seifman is the sole beneficial holder. 3,500,000 of these
         shares represent Mr. Seifman's sole voting power as Proxy Holder
         pursuant to an Irrevocable Proxy for the Adrian Joseph Separate
         Property Trust and the Dianna Joseph Separate Property Trust, as well
         as presently exercisable options to purchase 125,000 shares at $0.343
         per share.

(2)      These shares are held indirectly by Mr. Cramer as Trustee of the Glenn
         A. Cramer Separate Property Trust dated September 1, 1987.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

By letter agreement dated June 1, 1996 we engaged ERBC Holdings LTD ("ERBC") to
provide consulting services for one year. That agreement has been renewed
annually. During 2001, we incurred consulting fees of $240,000 for services
provided under the contract. At December 31, 2002, we owed ERBC $895,176 under
the agreement.

Amounts due to related parties represent various demand notes, plus interest at
10% per annum, payable to certain stockholders, relatives of shareholders and
companies affiliated with stockholders. Interest expense accrued on these demand
notes totaled $300,824 in 2002 and $266,045 in 2001. An officer of the Company
advanced the Company $21,915 to pay certain expenses of the Company as of
December 31, 2002.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

RESULTS OF OPERATIONS AND CAPITAL RESOURCES.

As of December 31, 2002, the Company had working capital of $(7,995,000), a
stockholders' deficit of $7,665,749 and an accumulated deficit of $21,453,320.
The Company anticipates that it will continue to incur significant operating
losses for the next twelve months. The Company may incur additional losses
thereafter, depending upon its ability to generate revenues from the license or
sale of its technologies and/or products.

The Company has not generated any revenue from operations since its inception
and it has not been profitable since inception. Although the Company believes
that it will generate revenues during the next twelve months based on
expressions of interest from third parties to purchase its products, there can
be no assurances as to when and whether the Company will be able to
commercialize its products and technologies and realize any revenues therefrom.
To date, the Company's products and technologies have not been utilized on a
large-scale commercial basis. The Company expects that it will continue to
generate losses until at least such time as it can commercialize its products
and technologies, if ever. No assurance can be given that the Company can
complete the development of any technology or that, if any technology is fully
developed, that products incorporating the applicable technology 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, the Company is subject to all risks inherent in the
establishment of a developing or new business.

During the next twelve months, the Company does not anticipate any significant
changes in the numbers of employees employed by it, Cetoni, RESEAL or ATI
Nuklear AG The Company and its subsidiaries utilize the services of numerous
consultants in their ordinary course of business. During the next 12 months, the
Company anticipates significant changes in the numbers of consultants employed
by it, Cetoni and RESEAL. The Company may incur substantial expenses associated
with performing due diligence incident to the investigation of technologies
suitable for acquisition and for the completion of a transaction with LTDN as
contemplated by the LOI. The amount and type of expenses incurred will vary
depending on the technology being investigated and it is not possible to project
what those expenses might be during the next twelve months.

The Company will require additional financing to continue to fund research and
development efforts, to fund operating costs, to complete additional technology
acquisitions and to complete its business plan. The Company anticipates that it
will be able to raise the needed funds for continuing operations from related
parties, or through the public or private placement of its securities, debt or
equity financing, joint ventures, or the licensing or sale of its technologies
and products. However, if the Company is not able to raise the needed capital,
it will be required to curtail and possibly discontinue operations. There is no
assurance that the Company will be able to continue to operate if additional
capital is not obtained. Furthermore, if the Company is required to curtail its
operations, that could have a serious negative impact on its ability to proceed
with its business plan and to commercialize and/or develop existing technologies
and products or to identify and acquire new technologies.

Item 3.  Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. The Company's Chief
Executive Officer and Chief Financial Officer have conducted an evaluation of
the Company's disclosure controls and procedures as of a date (the "Evaluation
Date") within 90 days before the filing of this quarterly report. Based on their
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
have concluded that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the applicable Securities and Exchange Commission rules and forms.

(b) Changes in Internal Controls and Procedures. Subsequent to the Evaluation
Date, there were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls, nor were any
corrective actions required with regard to significant deficiencies and material
weaknesses.

                          PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is currently not a party to any legal proceedings.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

During October 2002, the Company issued 40,000 shares of common stock as
consideration for finder's fee. Shares issued were valued at $7,600, which was
charged to operations during 2002.

During October 2002, the Company issued 700,000 shares of common stock as
consideration for legal services performed by its attorneys. Shares issued under
these arrangements were valued at $77,350, which were charged to operations
during 2002.

During October 2002, the Company issued 145,328 shares of common stock due to
the exercise of options for $21,000.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

         (A) Reports on 8-K:

        (B) Exhibits. The following exhibits are included as part of this
report:

                  Exhibit 99.1      Certification Pursuant to Section 906
                                    of the Sarbanes-Oxley Act of 2002



<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                      ADVANCED TECHNOLOGY INDUSTRIES, INC.

Dated: May 20, 2003             By: /s/ Hans-Joachim Skrobanek
                                       --------------------------------
                                       Hans-Joachim Skrobanek, President

Dated: May 20, 2003             By: /s/ James Samuelson

                                       --------------------------------
                                       James Samuelson
                                       Chief Financial Officer



<PAGE>

                     CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Hans-Joachim Skrobanek, certify that:

(1) I have reviewed this annual report on Form 10-KSB of Advanced Technology
Industries, Inc., (the "Company");

(2) Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
annual report;

(3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this annual report;

(4) The Company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and have:

         (a)      designed such disclosure controls and procedures to ensure
                  that material information relating to the Company, including
                  its consolidated subsidiaries, is made known to us by others
                  within those entities, particularly during the period in which
                  this quarterly report is being prepared;

         (b)      evaluated the effectiveness of the Company's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

         (c)      presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

(5) The Company's other certifying officer and I have disclosed, based on our
most recent evaluation, to the Company's auditors and the audit committee of the
Company's board of directors (or persons fulfilling the equivalent function):

         (a)      all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the Company's
                  ability to record, process, summarize and report financial
                  data and have identified for the Company's auditors any
                  material weaknesses in internal controls; and

         (b)      any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  Company's internal controls; and

(6) The Company's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: May 20, 2003         By: /s/ Hans-Joachim Skrobanek
                                --------------------------------------
                                Hans-Joachim Skrobanek, Chief Executive Officer



<PAGE>

                  CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James Samuelson, certify that:

(1) I have reviewed this annual report on Form 10-KSBof Advanced Technology
Industries, Inc., (the "Company");

(2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this annual report;

(4) The Company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and have:

         (a)      designed such disclosure controls and procedures to ensure
                  that material information relating to the Company, including
                  its consolidated subsidiaries, is made known to us by others
                  within those entities, particularly during the period in which
                  this annual report is being prepared;

         (b)      evaluated the effectiveness of the Company's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

         (c)      presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

(5) The Company's other certifying officer and I have disclosed, based on our
most recent evaluation, to the Company's auditors and the audit committee of the
Company's board of directors (or persons fulfilling the equivalent function):

         (a)      all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the Company's
                  ability to record, process, summarize and report financial
                  data and have identified for the Company's auditors any
                  material weaknesses in internal controls; and

         (b)      any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  Company's internal controls; and

(6) The Company's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 20, 2003            By: /s/ James Samuelson
                                      ---------------------------------------
                                      James Samuelson, Chief Financial Officer



<PAGE>

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

                          CONSOLIDATED FINANCIAL REPORT

                               FOR THE YEARS ENDED
                           DECEMBER 31, 2002 AND 2001



<PAGE>

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

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                   Page Nos.
                                                                   --------

INDEPENDENT AUDITORS' REPORT                                            1

CONSOLIDATED BALANCE SHEET                                              2
  December 31, 2002

CONSOLIDATED STATEMENTS OF OPERATIONS                                   3
  For the Years Ended December 31, 2002 and 2001
  For the Period from Inception (October 25, 1995) to
    December 31, 2002

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY                   4 - 12
  For the Period from Inception (October 25, 1995) to
    December 31, 2002

CONSOLIDATED STATEMENTS OF CASH FLOWS                                13 - 14
  For the Years Ended December 31, 2002 and 2001
  For the Period from Inception (October 25, 1995) to
    December 31, 2002

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                           15 - 48

SELECTED FINANCIAL DATA
  For the Five Years Ended December 31, 2001

(*) Included in Part II, Item 6 of the Form.



<PAGE>

To the Board of Directors and Stockholders
Advanced Technology Industries, Inc. and Subsidiaries

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

We have audited the accompanying consolidated balance sheet of Advanced
Technology Industries, Inc. and Subsidiaries, (the "Company") (a development
stage company) as of December 31, 2002 and the related consolidated statements
of operations, stockholders' deficiency, and cash flows for the years ended
December 31, 2002 and 2001 and for the period from inception (October 25, 1995)
to December 31, 2002. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Advanced Technology Industries, Inc. and Subsidiaries (a development stage
company) as of December 31, 2002 and the results of their operations and their
cash flows for the year then ended and for the period from inception (October
25, 1995) to December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company incurred a net
loss for the year ended December 31, 2002 of approximately $6,758,000, and as of
December 31, 2002 had a working capital deficit of approximately $7,955,000 and
a stockholders' deficiency of approximately $7,666,000. 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 regarding those 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.

New York, New York
April 14, 2003

                                      F-1



<PAGE>
<TABLE>

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

                                          CONSOLIDATED BALANCE SHEET

                                             DECEMBER 31, 2002

                                                  ASSETS
                                                  ------

<CAPTION>
<S>                                                                                              <C>
Current Assets:
  Cash and cash equivalents                                                                      $     6,896
  Prepaid expenses and other current assets                                                          186,766
                                                                                                 -----------
        Total Current Assets                                                                         193,662

Property and equipment, net                                                                          240,380
Due from related parties                                                                              59,946
                                                                                                 -----------
        Total Assets                                                                             $   493,988
                                                                                                 ===========

                                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                                    ----------------------------------------

Current Liabilities:
  Loans and notes payable                                                                        $ 1,947,000
  Accrued liabilities, including $1,176,926 due to related
    parties                                                                                        5,387,752
  Obligations under capital leases                                                                     5,862
  Due to related parties                                                                             808,363

                                                                                                 -----------
      Total Current Liabilities                                                                    8,148,977

Long-term portion of obligations under capital leases                                                 10,760
                                                                                                 -----------
      Total Liabilities                                                                            8,159,737
                                                                                                 -----------
Commitments and Other Matters

Stockholders' Deficiency:
  Preferred stock - $0.001 par value; 1,000,000 shares
    authorized; -0- shares issued and outstanding                                                         --
  Common stock - $0.0001 par value; 100,000,000 shares
    authorized; 49,650,593 shares issued and outstanding                                                  --
  Additional paid-in capital                                                                           4,966
  Accumulated other comprehensive income                                                          13,706,192
  Deficit accumulated during the development stage                                                   121,413
  Receivable on sale of stock                                                                    (21,453,320)
                                                                                                     (45,000)
      Total Stockholders' Deficiency                                                             -----------
                                                                                                  (7,665,749)
      Total Liabilities and Stockholders' Deficiency                                             -----------
                                                                                                 $   493,988
                                                                                                 ===========

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

                                                     F-2
</TABLE>



<PAGE>
<TABLE>

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

                                        CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>

                                                               For the Years Ended                For the Period
                                                                   December 31,                  from Inception
                                                         -------------------------------       (October 25, 1995)
                                                            2002                2001           to December 31, 2002
                                                         -----------         -----------       --------------------
<S>                                                      <C>                 <C>                   <C>

Revenues                                                 $    -              $    -                $    -
                                                         -----------         -----------           ------------
Costs and Expenses:
  Research and development                                 1,137,990             868,878              5,024,317
  Compensatory element of stock
    issuances pursuant to consulting
    professional and other agreements                      1,506,996             654,523              5,112,138
  Consulting fees                                            541,877             853,934              2,847,235
  Other general and administrative
    Expenses                                               2,010,554           1,667,868              6,130,121
  Depreciation and amortization                              176,875             291,685                702,594
    expense
  Loss on impairment of license fee                          566,667              -                     566,667
  Interest and amortization of debt                          917,579           1,590,891              3,958,507
    issuance costs
  Loss (gain) on sale of marketable                         (100,818)             41,287               (875,156)
    securities
  Equity loss and amortization of
    goodwill of unconsolidated                                -                1,660,550              1,660,550
    affiliate - Nurescell Inc.
  Minority interest in loss of                                -                   -                    (323,965)
    consolidated subsidiary                              -----------         -----------           ------------
                                                           6,757,720           7,629,616             24,803,008
    Total Costs and Expenses                             -----------         -----------           ------------
                                                          (6,757,720)         (7,629,616)           (24,803,008)
Loss before extraordinary item

Extraordinary item - gain on sale of
  technology interest to former
  affiliate, net of income taxes of                           -                    -                  3,349,688
  $-0-                                                   -----------         -----------           ------------
                                                         $(6,757,720)        $(7,629,616)          $(21,453,320)
Net Loss                                                 ===========         ===========           ============

Basic and diluted loss per common share                        $(.14)              $(.20)
                                                               =====               =====
Weighted average shares used in
  basic and diluted loss per common share                 47,647,310          38,805,309
                                                          ==========          ==========

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

                                                         F-3
</TABLE>



<PAGE>
<TABLE>

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

                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                         FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) TO DECEMBER 31, 2002

<CAPTION>

                                                                              Common Stock                  Additional
                                                                        -------------------------            Paid-in
                                                                          Shares         Amount              Capital
                                                                        ----------     ----------           ----------
<S>                                                                     <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)                                     12,300,000       $    1,230         $    -
Issuance of stock for legal fees
  ($0.04 per share)                                                        500,000               50             19,950
Issuance of stock under consulting
  agreement ($0.04 per share)                                            1,605,000              161            284,839
Net loss - 1996                                                              -                -                  -
Issuance of stock under consulting
  agreements ($1.00 per share)                                             750,000               75            749,925
Issuance of stock for cash pursuant to
  offering ($2.00 per share)                                               306,500               30            612,970
Offering costs                                                               -                -                (50,000)
Comprehensive income:
  Net loss - 1997                                                            -                -                  -
                                                                        ----------       ----------         ----------
Balance - December 31, 1997                                             15,461,500       $    1,546         $1,617,684
                                                                        ==========       ==========         ==========

                                                                          Deficit
                                                      Accumulated       Accumulated         Total
                                                        Other            During the      Stockholders'
                                                     Comprehensive      Development         Equity          Comprehensive
                                                     Income (Loss)         Stage         (Deficiency)       Income (Loss)
                                                     -------------      -----------      ------------       -------------

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)                              -                 -               285,000
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



<PAGE>

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

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

       FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) TO DECEMBER 31, 2002

                                                                               Common Stock                 Additional
                                                                        -------------------------            Paid-in
                                                                          Shares         Amount              Capital
                                                                        ----------     ----------           ----------

Year Ended December 31, 1998:
----------------------------

Balance - January 1, 1998, as previously
  reported                                                              15,461,500       $    1,546         $1,617,684
Effect of Cetoni pooling-of-interests                                    5,000,000              500             27,245
                                                                        ----------       ----------         ----------
Balance - January 1, 1998, 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
                                                                        ==========       ==========         ==========

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

Balance - January 1, 1998, as previously
  reported                                            $    -            $(1,640,067)     $   (20,837)
Effect of Cetoni pooling-of-interests                     36,122           (512,769)        (448,902)
                                                      ----------        -----------      -----------
Balance - January 1, 1998, 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.

                                                          F-5



<PAGE>

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

                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                         FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) TO DECEMBER 31, 2002

                                                                              Common Stock                  Additional
                                                                        -------------------------            Paid-in
                                                                          Shares         Amount              Capital
                                                                        ----------     ----------           ----------

Year Ended December 31, 1999:
----------------------------

Balance - January 1, 1999                                               20,461,500       $    2,046         $1,644,929

Cancellation of shares issued to founders                               (6,795,000)            (679)               679
Stock issued pursuant to employment and
  consulting agreements                                                  1,009,411              101          1,009,310
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 loss                                                                  -                -                  -
   Other comprehensive income, net of
     tax:
       Foreign currency translation
         adjustments                                                         -                -                  -
       Unrealized gains                                                      -                -                  -
                                                                        ----------       ----------         ----------
Balance - December 31, 1999                                             14,675,911       $    1,468         $3,246,918
                                                                        ==========       ==========         ==========

                                                                          Deficit
                                                      Accumulated       Accumulated         Total
                                                         Other          During the       Stockholders'
                                                     Comprehensive      Development         Equity          Comprehensive
                                                     Income (Loss)         Stage         (Deficiency)       Income (Loss)
                                                     -------------      -----------      ------------       -------------

Year Ended December 31, 1999:
----------------------------

Balance - January 1, 1999                             $  (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:
     Foreign currency translation
       adjustments                                        92,899             -                92,899            92,899
     Unrealized gains on securities                    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.

                                                          F-6



<PAGE>

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

                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                         FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) TO DECEMBER 31, 2002

                                                                                                              Accumulated
                                                                    Common Stock             Additional          Other
                                                               -----------------------        Paid-in        Comprehensive
                                                                 Shares       Amount          Capital        Income (Loss)
                                                               ----------   ----------       ----------      -------------

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

Balance - January 1, 2000                                      14,675,911     $    1,468     $3,246,918      $ 1,192,384

Stock options exercised                                           120,000             12         59,988           -
Shares issued for acquisition of
  Aberdeen                                                        400,000             40        499,960           -
Compensatory issuance of stock                                    218,000             22        287,486           -
Value assigned to stock options
  issued in connection with
  consulting agreements                                             -              -            472,500           -
Value assigned to stock as
  additional consideration for
  financing activities                                            713,571             71        222,788           -
Issuance of stock to retire debt
  from related party                                           13,054,393          1,305      1,558,695           -
Issuance of stock to officers for
  bonus                                                           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



<PAGE>

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

                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                         FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) TO DECEMBER 31, 2002

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

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

Balance - January 1, 2000                     $(3,697,340)      $   -          $   -          $   743,430

Stock options exercised                            -                -            (45,000)          15,000
Shares issued for acquisition of
  Aberdeen                                         -                -              -              500,000
Compensatory issuance of stock                     -                -              -              287,508
Value assigned to stock options
  issued in connection with
  consulting agreements                            -                -              -              472,500
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



<PAGE>

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

                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                         FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) TO DECEMBER 31, 2002

                                                                                                                      Accumulated
                                                                         Common Stock               Additional           Other
                                                                    ------------------------         Paid-in          Comprehensive
                                                                      Shares       Amount            Capital          Income (Loss)
                                                                    -----------   ----------        -----------       -------------
Year Ended December 31, 2001:
----------------------------

Balance - January 1, 2001                                            29,281,875      $    2,928     $ 6,368,525        $   294,762

Value assigned to stock as additional
  consideration for financing
  activities                                                          3,015,000             301       1,529,048              -
Issuance of stock for 4,590,000
  shares of Nurescell Inc.                                            4,590,000             459       1,660,091              -
Issuance of stock to retire debt from
  related party                                                       3,336,745             334         527,539              -
Compensatory issuance of stock                                          500,000              50         168,700              -
Issuance of stock on conversion of loan
  from officer                                                          344,788              34          54,511              -
Issuance of stock for accrued expenses                                  316,056              32          49,968              -
Value assigned to stock options issued
  in connection with consulting
  agreement                                                              -                -              37,500              -
Cashless exercise of warrants                                            67,857               7              (7)             -
Issuance of stock on conversion of loan
  and accrued interest                                                1,695,374             170         577,030              -
Issuance of stock for accrued interest
  on promissory notes                                                    61,844               6          22,178              -
Compensatory issuance of stock                                        1,381,826             139         356,885              -
Issuance of stock to employees as a
  sign-on bonus                                                          75,000               8          18,743              -
Issuance of stock for legal fees                                        477,429              47         112,714              -
Proceeds from sale of minority interest
  in Reseal, Ltd.                                                        -                -             275,000              -
Value assigned to stock options issued
  in connection with consulting
  agreement                                                              -                -              10,000              -
Amortization of unearned financing
  costs                                                                  -                -              -                   -
Comprehensive income:
  Net loss                                                               -                -              -                   -
  Other comprehensive income (loss),
    Net of tax:
      Foreign currency transaction
        adjustment                                                       -                -              -                 (5,824)
      Unrealized holding losses
        arising during the year, net
        of taxes of $-0-                                                 -                -              -               (178,663)
                                                                    ----------       ----------     -----------       -----------
Balance - December 31, 2001                                         45,143,794       $    4,515     $11,768,425       $   110,275
                                                                    ==========       ==========     ===========       ===========

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

                                                          F-9



<PAGE>

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

                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                         FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) TO DECEMBER 31, 2002

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

Year Ended December 31, 2001:
----------------------------

Balance - January 1, 2001                          $(7,065,984)  $ (168,256)  $  (45,000)     $  (613,025)

Value assigned to stock as additional
  consideration for financing
  activities                                             -       (1,529,350)        -               -
Issuance of stock for 4,590,000
  shares of Nurescell Inc.                               -             -            -           1,660,550
Issuance of stock to retire debt
  from related party                                     -             -            -             527,873
Compensatory issuance of stock                           -             -            -             168,750
Issuance of stock on conversion of
  loan from officer                                      -             -            -              54,545
Issuance of stock for accrued expenses                   -             -            -              50,000
Value assigned to stock options issued
  in connection with consulting
  agreement                                              -             -            -              37,500
Cashless exercise of warrants                            -             -            -               -
Issuance of stock on conversion of
  loan and accrued interest                              -             -            -             577,200
Issuance of stock for accrued interest
  on promissory notes                                    -             -            -              22,184
Compensatory issuance of stock                           -             -            -             357,023
Issuance of stock to employees as a
  sign-on bonus                                          -             -            -              18,750
Issuance of stock for legal fees                         -             -            -             112,762
Proceeds from sale of minority
  interest in Reseal, Ltd.                               -             -            -             275,000
Value assigned to stock options issued
  in connection with consulting
  agreement                                              -             -            -              10,000
Amortization of unearned financing
  costs                                                  -        1,405,402         -           1,405,402
Comprehensive income:
  Net loss                                          (7,629,616)        -            -          (7,629,616)       $(7,629,616)
  Other comprehensive income (loss),
    net of tax:
      Foreign currency transaction
        adjustment                                       -             -            -              (5,824)            (5,824)
      Unrealized holding losses
        arising during the year, net
        of taxes of $-0-                                 -             -            -            (178,663)          (178,663)
                                                   ------------  ----------   ----------      -----------        -----------
Balance - December 31, 2001                        $(14,695,600) $ (292,204)  $  (45,000)     $(3,149,589)       $(7,814,103)
                                                   ============  ==========   ==========      ===========        ===========

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

                                                         F-10



<PAGE>

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

                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                         FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) TO DECEMBER 31, 2002

                                                                                                                      Accumulated
                                                                         Common Stock               Additional           Other
                                                                    ------------------------         Paid-in          Comprehensive
                                                                      Shares       Amount            Capital          Income (Loss)
                                                                    -----------   ----------        -----------       -------------

For the Year Ended December 31, 2002:
------------------------------------

Balance - December 31, 2001                                         45,143,794       $    4,515     $11,768,425        $  110,275

Value assigned to stock as additional
  consideration for financing
  activities                                                           833,306               83         285,139            -

Issuance of stock for legal fees                                     2,711,791              272         854,845            -

Proceeds from sale of minority interest
  in Reseal, Ltd.                                                        -                -             125,000            -

Cashless exercise of warrants                                           16,374                1              (1)           -

Compensatory issuance of stock                                         250,000               25         344,975            -

Issuance of stock for consulting fees                                  400,000               40         227,960            -

Value assigned to options issued for
  consultant                                                             -                -              50,679            -

Issuance of stock for finder's fee                                      50,000                5          10,195            -

Issuance of stock for loan incentive                                   100,000               10          17,990            -

Amortization of unearned financing costs                                 -                -              -                 -

Exercise of stock options                                              145,328               15          20,985            -

Comprehensive Income:
Net loss                                                                 -                -              -                 -
  Other comprehensive income (loss), net of tax:
      Foreign currency transaction adjustment                            -                -              -                (17,225)
      Reclassification adjustment for gains
        included in net loss                                             -                -              -                 28,363
                                                                    ----------       ----------     -----------        ----------
Balance - December 31, 2002                                         49,650,593       $    4,966     $13,706,192        $  121,413
                                                                    ==========       ==========     ===========        ==========

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

                                                         F-11



<PAGE>

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

                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                         FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) TO DECEMBER 31, 2002

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

For the Year Ended December 31, 2002:
------------------------------------

Balance - December 31, 2001                        $(14,695,600)  $ (292,204)      $  (45,000)     $(3,149,589)             -

Value assigned to stock as additional
  consideration for financing
  activities                                             -          (285,222)           -                -                  -

Issuance of stock for legal fees                         -             -                -              855,117              -

Proceeds from sale of minority
  interest in Reseal, Ltd.                               -             -                -              125,000              -

Cashless exercise of warrants                            -             -                -                -                  -

Compensatory issuance of stock                           -             -                -              345,000              -

Issuance of stock for consulting fees                    -             -                -              228,000              -

Value assigned to options issued for
  consultant                                             -             -                -               50,679              -

Issuance of stock for finder's fee                       -             -                -               10,200              -

Issuance of stock for loan incentive                     -             -                -               18,000              -

Amortization of unearned financing costs                 -           577,426            -              577,426              -

Exercise of stock options                                -             -                -               21,000              -

Comprehensive Income:
  Net loss                                           (6,757,720)       -                -           (6,757,720)        (6,757,720)
    Other comprehensive income (loss),
      net of tax:
        Foreign currency transaction
          adjustment                                     -             -                -              (17,225)           (17,225)
        Reclassification adjustment for
          gains included in net loss                     -             -                -               28,363             28,363
                                                   ------------   ----------       ----------      -----------        -----------
Balance - December 31, 2002                        $(21,453,320)  $    -           $  (45,000)     $(7,665,749)       $(6,746,582)
                                                   ============   ==========       ==========      ===========        ===========

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

                                                         F-12



<PAGE>

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

                                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                          For the Period
                                                                       For the Years Ended                from Inception
                                                                           December 31,                 (October 25, 1995)
                                                                   ---------------------------            to December 31,
                                                                       2002            2001                   2002
                                                                   ------------    -----------          -------------------

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                         $(6,757,720)      $(7,629,616)           $(21,453,320)
  Adjustments to reconcile net loss to net cash used
    in operating activities:
      Equity loss and amortization of goodwill of
        unconsolidated affiliate - Nurescell Inc.                       -                850,431                 850,431
      Writedown of equity investment in Nurescell
        Inc.                                                            -                810,119                 810,119
      Expenses incurred on behalf of consolidated
        affiliate applied to the purchase of license                    -                (79,493)               (405,432)
      Acquisition of Aberdeen                                           -                 -                      650,000
      Loss (gain) on sale of marketable securities                    (100,818)           41,287                (875,156)
      Extraordinary gain                                                -                 -                   (3,349,688)
      Stock-based compensation                                       1,506,996           654,523               5,112,138
      Interest and amortization of debt issuance
        costs                                                          577,426         1,405,402               3,105,622
      Research and development costs                                    -                 -                      437,368
      Depreciation and amortization                                    176,875           291,685                 702,595
      Loss on impairment of license fee                                566,667            -                      566,667
      Cumulative translation adjustment                                (17,225)           (5,824)                121,413
  Changes in assets (increase) decrease:
      Prepaid expenses and other assets                                (21,973)         (111,020)               (186,766)
  Changes in liabilities increase (decrease):
      Accrued liabilities                                            2,441,178         1,475,299               5,504,645
                                                                   -----------       -----------            ------------
    Net Cash Used in Operating Activities                           (1,628,594)       (2,297,207)             (8,409,364)
                                                                   -----------       -----------            ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Capital expenditures                                                (119,689)          (85,126)               (472,337)
  Proceeds from sale of marketable securities                          332,095         1,330,561               3,012,656
                                                                   -----------       -----------            ------------
    Net Cash Provided by Investing Activities                          212,406         1,245,435               2,540,319
                                                                   -----------       -----------            ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from exercise of options                                     21,000            -                       36,000
  Proceeds from issuance of common stock                                -                 -                      641,975
  Offering costs                                                        -                 -                      (50,000)
  Proceeds from loans and notes                                        512,000         1,918,986               3,144,557
  Repayment of loans and notes                                        (293,012)         (220,000)               (513,012)
  Proceeds from convertible debentures                                  -                 -                      750,000
  Financing costs                                                       -                 -                      (75,000)
  Due from/to related parties, net                                   1,015,094          (800,703)              2,156,672
  Payments under capital lease obligations                             (10,538)          (11,782)                (20,683)
  Repayment of license fee payable                                      -               (155,956)               (594,568)
  Proceeds from sale of minority interest in
    Reseal, Ltd.                                                       125,000           275,000                 400,000
                                                                   -----------       -----------            ------------
    Net Cash Provided by Financing Activities                        1,369,544         1,005,545               5,875,941
                                                                   -----------       -----------            ------------
(Decrease) Increase in Cash                                            (46,644)          (46,227)                  6,896

Cash - Beginning of Year                                                53,540            99,767                  -
                                                                   -----------       -----------            ------------
Cash - End of Year                                                 $     6,896       $    53,540            $      6,896
                                                                   ===========       ===========            ============

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

                                                         F-13



<PAGE>

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

                                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                          For the Period
                                                                       For the Years Ended                from Inception
                                                                           December 31,                 (October 25, 1995)
                                                                   ---------------------------            to December 31,
                                                                       2002            2001                   2002
                                                                   ------------    -----------          -------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
-------------------------------------------------
  Cash paid during the year for:
    Interest                                                       $    10,021       $    40,404            $    152,098
                                                                   ===========       ===========            ============
    Income taxes                                                   $    -            $    -                 $     -
                                                                   ===========       ===========            ============

SUPPLEMENTAL SCHEDULE OF NON-CASH AND FINANCING
-----------------------------------------------
  ACTIVITIES:
  ----------

  Equipment purchased under capital lease
    obligations                                                    $    21,001       $    -                 $     58,306
                                                                   ===========       ===========            ============
  Convertible debentures and interest assumed by
    Eurotech                                                       $    -            $    -                 $  1,212,188
                                                                   ===========       ===========            ============
  Debt converted to equity                                         $    -            $   684,545            $  2,244,545
                                                                   ===========       ===========            ============
  Accrued expenses converted to equity                             $    -            $   129,646            $    129,646
                                                                   ===========       ===========            ============
  Loans from related parties converted to equity                   $    -            $   467,873            $    467,873
                                                                   ===========       ===========            ============

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

</TABLE>
                                                         F-14



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1 - BUSINESS AND CONTINUED OPERATIONS

Organization and Description of Business
----------------------------------------

Advanced Technology Industries, Inc. ("ATI" or the "Company") was incorporated
under the laws of the State of Delaware on October 25, 1995. 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 Russia, Germany and Israel. ATI is a
development-stage company and as such has no revenue or earnings from
operations.

The accompanying consolidated financial statements include the accounts of ATI
and its Subsidiaries, Cetoni Umwelttechnologie Entwicklungs GmbH ("Cetoni"), ATI
Nuklear AG ("ATI Nuklear") (previously Nurescell AG) and Reseal, Ltd.
("Reseal"), collectively referred to as "the Company."

Cetoni and ATI Nuklear are 100% owned subsidiaries and Reseal is a 96% owned
subsidiary.

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.

During December of 1999, ATI acquired all of the outstanding capital stock of
Cetoni, a German-based design and engineering firm focused on developing and
patenting technologies and products for the consumer market. Cetoni is a
development-stage company and as such has no revenue or earnings from
operations.

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. At the
time of this agreement, ATI Nuklear AG was owned 51% by Nurescell US and 49% by
ATI. During June 2001, ATI acquired the remaining 51% interest in Nurescell AG
and during July 2001, Nurescell AG changed its name to ATI Nuklear AG. ATI
Nuklear is a development-stage company focused on developing nuclear waste
remediation technologies. Since inception, ATI Nuklear had no revenues or
earnings from operations.

On June 8, 2001, ATI formed a new entity, Reseal, Ltd., which was incorporated
under the laws of the State of Delaware. Reseal is a development-stage company
organized to commercialize its proprietary "reseal-able" packaging systems
technology. This patented system for re-sealing "pop-top" cans for both soft
drinks and beer has been developed and Reseal believes it is ready for
commercial introduction. Since inception Reseal had no revenue or earnings from
operations.

                                      F-15



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1 - BUSINESS AND CONTINUED OPERATIONS (Continued)

Going-Concern and Management's Plan
-----------------------------------

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, 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 2003. 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 to enter into any or a sufficient number of joint ventures. The Company has
no 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, 2002, the Company had an accumulated deficit since inception of
$21,453,320 and a working capital deficiency and stockholders' deficiency of
approximately $7,955,000 and $7,967,000, respectively.

Management's business plan will require additional financing. To support its
operations during 2002, the Company borrowed monies from investors and certain
stockholders in the amount of $1,234,082, sold a minority interest in its
subsidiary Reseal for $125,000 (see Note 2) and received $21,000 for the
exercise of stock options. The Company is exploring other financing
alternatives, including private placements and selling a portion of the Company
to an outside party (see Note 3).

While no assurance can be given, management believes the Company can raise
adequate capital to keep the Company functioning during 2003. No assurance can
be given that the Company can continue to obtain any working capital, 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.

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.

                                      F-16



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

The consolidated financial statements include the accounts of ATI and all of its
wholly-owned and its majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. Investments in
unconsolidated affiliates are accounted for using the equity method when the
Company owns at least 20%, but no more than 50% of such affiliates. Under the
equity method, the Company records its proportionate shares of profits and
losses based on its percentage interest in earnings of companies 50% or less.

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

The preparation of consolidated financial statements, in conformity with
accounting principles generally accepted in the United States of America,
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 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.

At December 31, 2002, investments in companies accounted for under the equity
method consist of the following foreign development-stage technology companies:

                                                    %            Country of
                                                  Owned          Operations
                                                 -------         ----------

         Flexitech, Ltd. ("Flexitech")            20.00%           Israel
         Pirocat, Ltd. ("Pirocat")                20.00%           Israel
         Nurescell Inc.                           28.58%           USA
         Sibconvers                               50.00%           Russia
         Container Engineering, Ltd.              50.00%           Russia

The Company does not have sufficient control over management, the board of
directors or financial matters and accordingly the Company does not consolidate
such entities. The above companies do not have any revenue nor any significant
assets, liabilities, commitments and contingencies.

                                      F-17



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

The recorded carrying values of accounts receivable, accounts payable and other
long-term obligations approximate the fair values of such financial instruments.

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

For purposes of the statement of cash flows, the Company considers all
short-term investments with a maturity of three months or less when purchased to
be cash equivalents.

Concentration of Credit Risk
----------------------------

The Company places its cash in what it believes to be creditworthy financial
institutions. However, cash balances may exceed FDIC insured levels at various
times during the year.

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

The Company accounts for its investments in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in debt and Equity Securities". 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 or loss. 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. All securities
held by the Company, 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.

                                      F-18



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment
----------------------

Property and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation is provided for on a straight-line basis over the
estimated useful lives of the related assets, generally two to ten years.
Amortization of leasehold improvements is provided for on the straight-line
basis over the lesser of the estimated useful lives of the improvements or the
initial term of the lease. Gain or loss is recognized upon sale or other
disposition of property and equipment.

Major repairs or replacements of property, plant and equipment are capitalized.
Maintenance, repairs and minor replacements are charged to operations as
incurred.

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

Licenses for exclusive marketing rights to various products have been acquired
from a related party.

Licensing fees are being amortized on a straight-line basis over 5 years. The
balance of the capitalized license fee of $566,667 was written-off during 2002
(See note 7).

Impairment of Long-Lived Assets
-------------------------------

In accordance with SFAS No. 144, " Accounting for the Impairment or Disposal on
Long-Lived Assets." The Company reviews the carrying amount of long-lived assets
on a regular basis for the existence of facts or circumstances, both internally
and externally, that suggest impairment. The Company determines if the carrying
amount of a long-lived asset is impaired based on anticipated undiscounted cash
flows before interest from the use of the asset. In the event of impairment, a
loss is recognized based on the amount by which the carrying amount exceeds the
fair value of the asset. Fair value is determined based on appraised value of
the assets or the anticipated cash flows from the use of the asset, discounted
at a rate commensurate with the risk involved.

During the year ended December 31, 2001, the Company recorded an impairment loss
of $810,119 related to the equity investment in Nurescell USA. The Company
recorded the loss because it had determined that the investment in Nurescell
Inc. had become impaired due to the decline in the value of the security.

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

Advertising expenses are charged to operations when incurred. There were no
advertising expenses for the years ended December 31, 2002 and 2001.

                                      F-19



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

Deferred taxes represent the tax effects of differences between the financial
reporting and tax bases of the Company's assets and liabilities at the enacted
tax rates in effect for the years in which the differences are expected to
reverse. The Company evaluates the recoverability of deferred tax assets and
establishes a valuation allowance when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Income tax
expense consists of the tax payable for the period and the change during the
period in deferred tax assets and liabilities.

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
------------------------

In accordance with SFAS No. 2, "Accounting for Research and Development Costs,"
all research and development ("R&D") costs are expensed when they are incurred,
unless they are reimbursed under specific contracts. Assets used in R&D
activity, such as machinery, equipment, facilities and patents that have
alternative future use either in R&D activities or otherwise are capitalized.

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

The Company accounts for stock-based compensation for employees in accordance
with Accounting Principals Board ("APB") No. 25 and Financial Interpretation
No.44. Stock and options granted to other parties in connection with providing
goods and services to the Company are accounted for under the fair value method
as prescribed by SFAS No. 123.

                                      F-20



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock-Based Compensation (Continued)
------------------------

In December 2002, the Financial Accounting Standard Board ("FASB") issued SFAS
No.148, "Accounting for Stock-Based Compensation - Transition and Disclosure -
an Amendment of SFAS Statement No.123". This statement amends SFAS No.123 to
provide alternative methods of transition for a voluntary change to the fair
value-based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No.123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. SFAS No.148 also requires that
those effects be disclosed more prominently by specifying the form, content, and
location of those disclosures. The Company has adopted the increased disclosure
requirements of SFAS No.148 for the fiscal year ended December 31, 2002.

The addition disclosures required by SFAS No. 148 are as follows:
<TABLE>
<CAPTION>

                                                                                    December 31,
                                                                                2002              2001
                                                                             -----------       -----------
<S>                                                                          <C>               <C>
       Net loss applicable to common stockholders, as reported               $(6,757,720)      $(7,629,616)
       Add:  Stock-based employee compensation expense
               included in reported net loss applicable to
               common stockholders                                                -                 -
       Less: Total stock-based employee compensation expense
               determined under the fair value-based method of
               all awards                                                         -                 -
                                                                             -----------       -----------
       Proforma Net Loss Applicable to Common Stockholders                   $(6,757,720)      $(7,629,616)
                                                                             ===========       ===========
       Net loss applicable to common stockholders per basic and dilutive shares:
           As reported                                                             $(.14)            $(.20)
                                                                                   =====             =====
           Proforma                                                                $(.14)            $(.20)
                                                                                   =====             =====
</TABLE>

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

The U.S. dollar is the functional currency for all of the Company's businesses,
except its operations in Germany and Russia. Foreign currency denominated assets
and liabilities for these units are translated into U.S. dollars based on
exchange rates prevailing at the end of each year, and revenues and expenses are
translated at average exchange rates during the year. The effects of foreign
exchange gains and losses arising from these translations of assets and
liabilities are included as a component of equity.

                                      F-21



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings (Loss) Per Share of Common Stock
----------------------------------------

Basic net earnings (losses) per share of common stock are computed by dividing
earnings (losses) available to common stockholders by the weighted average
number of common shares outstanding during the periods presented.

Diluted net earnings (losses) per share reflects per share amounts that result
if dilutive common stock equivalents are converted to common stock.

Common stock equivalents, consisting of options and warrants, discussed in Note
13, were not included in the calculation of diluted loss per share because their
inclusion would have had been anti-dilutive.

Deferred and Unearned Financing Costs
-------------------------------------

Financing costs in connection with the Company's debt offerings are being
amortized over the expected life of the obligations.

Business Segment
----------------

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 reporting of selected information about operating segments in interim
financial statements regarding products and services, geographical areas and
major customers. The Company has determined that under SFAS No. 131, it operates
in two segments (see Note 15).

Gains on Issuance of Stock by Subsidiaries
------------------------------------------

At the time a subsidiary sells its stock to unrelated parties at a price in
excess of its book value, the Company's net investment in that subsidiary
increases. If at that time the subsidiary is not a newly-formed, non-operating
entity, nor a research and development, start-up or development stage company,
nor is there a question as to the subsidiary's ability to continue in existence,
the Company records the increase in its consolidated statements of operations.
Otherwise, the increase is reflected in additional paid-in capital in the
Company's consolidated statements of stockholders' deficiency. During the year
ended December 31, 2002 and 2001, the Company's sales of minority interest in
its Reseal subsidiary for $125,000 and $275,000, respectively, were all credited
to paid-in capital as Reseal was classified as a development stage company.

                                      F-22



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

The Company has adopted SFAS No. 130, "Accounting for Comprehensive Income."
This statement establishes standards for reporting and disclosure of
comprehensive income and its components (including revenues, expenses, gains and
losses) in a full set of general-purpose financial statements. The items of
other comprehensive income that are typically required to be disclosed are
foreign currency items, minimum pension liability adjustments, and unrealized
gains and losses on certain investments in debt and equity securities.

Accumulated other comprehensive income, at December 31, 2002, consists of
foreign currency translation adjustments in the amount of $121,413.

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

Certain prior year amounts have been reclassified to conform with the current
year's presentation.

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

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statement No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS No. 145 requires that gains and losses from extinguishment of debt be
classified as extraordinary items only if they meet the criteria in APB No. 30
("Opinion No. 30"). Applying the provisions of Opinion No. 30 will distinguish
transactions that are part of an entity's recurring operations from those that
are unusual and infrequent that meet the criteria for classification as an
extraordinary item. The Company is required to adopt SFAS No. 145 no later than
the first quarter of fiscal 2003, although early adoption is allowed. The
Company has not yet evaluated the impact from SFAS No. 145 on its financial
position and results of operations, if any.

                                      F-23



<PAGE>

              ADVANCED TECHNOLOGY INDUSTRIES, INC. AND SUBSIDIARIES
                          (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 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullified Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including certain costs incurred in a restructuring." SFAS No. 146 requires
that a liability at fair value for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. However, an entity's
commitment to a plan, by itself, does not create a present obligation to others
that meets the definition of a liability. The provisions of this statement are
effective for exit or disposal activities that are initiated after December 31,
2002, with early application encouraged. The Company has not yet determined the
impact of SFAS No. 146 on its financial position and results of operations, if
any.

In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (" FIN 45"). FIN 45 requires a company, at the time it
issues a guarantee, to recognize an initial liability for the fair value of
obligations assumed under the guarantee and elaborates on existing disclosure
requirements related to guarantees and warranties. The initial recognition
requirements of FIN 45 are effective for guarantees issued or modified after
December 31, 2002 and adoption of the disclosure requirements are effective for
the Company during the first quarter ending January 31, 2003. The Company does
not expect the adoption of FIN 45 will have a significant impact on its
consolidated financial position or results of operations.

In January 2003, the FASB issued FASB Interpretation No. 46 (" FIN 46"),
"Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51."
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first interim
or annual period beginning after June 15, 2003. The Company is currently
evaluating the effect that the adoption of FIN 46 will have on its results of
operations and financial condition.

                                      F-24



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LETTER OF INTENT TO ACQUIRE COMPANY'S STOCK

On October 16, 2002, the Company signed a letter of intent ("LOI") with LTD
Network, Inc.("LTDN"), a Delaware corporation with offices in San Francisco,
California and Melbourne, Australia, which operates specialty e-commerce sites
and has developed a range of proprietary software products that are designed to
facilitate and enhance the purchasing experience of both its own customers and
those of leading internet companies that will utilize the products under joint
venture or licensing arrangements ("LTDN"). Under the terms of the LOI, LTDN
will acquire at least a 58% interest in the Company, including its technologies,
for $5 million, less the aggregate amount of funds invested in the Company by
LTDN, prior to closing.  It is anticipated that this transaction will be treated
as a reverse merger.

The Company anticipates the transaction will close during the third quarter of
2003. However, there can be no assurance that the transaction will close by that
date, or at all, or on the original terms detailed in the LOI. The closing is
subject to numerous conditions, including the satisfactory completion of due
diligence by LTDN, the determination of the number of shares of common stock to
be issued in any such transaction and the negotiation and execution of a
definitive merger agreement. The failure by either party to meet any of the
conditions could cause the transaction to be terminated.

Pursuant to the LOI, LTDN has invested over $332,000 in the Company under a
secured promissory note as of December 31, 2002. The obligations under the
promissory note are secured by the Star Can patents of the Company and Cetoni.
The Star Can patents are for the Company's resealable can technology.In the
event that LTDN provides loans to the Company in excess of $500,000,
additional security may be required in the form of other patents of the Company
and its subsidiaries and/or shares of common stock of the Company. Subject to
the Company's compliance under the LOI or such promissory note, in the event
that LTDN fails to loan $500,000 to the Company by January 30, 2003, then LTDN
has agreed to release the security interest in all the patents, including the
Star Can patents, and in the event that LTDN does not invest $5,000,000, less
the aggregate amount of funds invested under the secured promissory note at the
time of the proposed transaction between ATI and LTDN as contemplated by the
LOI, or LTDN determines not to proceed with such transaction, then LTDN has
agreed to exchange its security interest in the patents, including the Star Can
patents, for shares of the Company's common stock.

On November 28, 2002, the Company and LTDN amended the terms of the LOI,
pursuant to which ATI has agreed to pay LTDN a break-up fee, consisting of the
Star Can patents, in the event ATI chooses not to proceed with a transaction, or
the Company is unable to issue a majority of its shares to LTDN in connection
with any such transaction. The Star Can Patents are covered by a Pledge and
Security Agreement, dated November 27, 2002, between ATI, LTDN, Reseal and
Cetoni. This break-up fee is not payable to LTDN in the event LTDN does not
provide loans to the Company in an aggregate amount of at least $500,000 by
January 31, 2003, LTDN does not provide additional loans to the Company in an
aggregate amount of at least $500,000 by March 30, 2003 or LTDN determines not
to, or is unable to, consummate a transaction.

                                      F-25



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LETTER OF INTENT TO ACQUIRE COMPANY'S STOCK (Continued)

On March 30, 2003, the Company and LTDN further amended the terms of the LOI.
Under this amendment to the LOI, in the event ATI chooses not to proceed with
the Acquisition, or ATI is unable to issue a majority of its shares to LTDN in
connection with the Acquisition, ATI has agreed to pay LTDN a break-up fee,
consisting of the Star Can patents in all jurisdictions. As part of the
extension of the term of the LOI, the parties to the LOI have revised the
conditions under which such break-up fee is payable. Such break-up fee is only
payable if LTDN is willing and able to proceed with the Acquisition at the time
ATI is in breach under the LOI, LTDN has loaned to ATI at least $500,000 by
April 30, 2003 and LTDN has loaned to ATI at least an additional $500,000 by
June 30, 2003. LTDN only needs to provide the additional $500,000 by June 30, if
at least the greater of 50% of the outstanding indebtedness of ATI and its
subsidiaries (other than indebtedness to LTDN) as of March 31, 2003, or
$3,400,000 of such indebtedness, (i) has been converted, or is subject to an
agreement to be converted, on or prior to the closing of the merger with LTDN,
to shares of ATI common stock, or (ii) has been cancelled, or is subject to an
agreement to be cancelled on or prior to the closing of the Acquisition, in
connection with a settlement, but only to the extent such indebtedness is
forgiven and is not required to be repaid. Through April 14, 2003, LTDN has
loaned the Company a total of $500,000.

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 was paid 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.

                                      F-26



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - ACQUISITIONS (Continued)

Investments in Israeli Technology Companies (Continued)
-------------------------------------------

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, 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, 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.

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.

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.

ATI Nuklear AG (Formerly known as 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. At the
time of this agreement, ATI Nuklear AG was 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
occurs later.

                                      F-27



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - ACQUISITIONS (Continued)

ATI Nuklear AG (Formerly known as 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. ATI advanced payments of $594,568 against the license fee directly
to Nurescell US. ATI funded $1,068,163 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 $405,432, representing the Nurescell US
share of the funding.

On June 11, 2001, ATI entered into a new agreement to modify its above license
agreement with Nurescell US. Under the terms of this new agreement, ATI has an
exclusive and transferable right to Nurescell US proprietary technology in
certain countries in Europe and Asia. The Company is required to pay Nurescell
US a royalty for the utilization of the technology and products in the amount of
8% of the net sales of the Nurescell US technology. Net sales are defined as
gross sales, less discounts, rebates, credits and freight.

In addition, under the terms of this modified agreement, Nurescell US has agreed
to assign to ATI all ownership in Nurescell AG, which has been renamed to ATI
Nuklear AG. Nurescell US has agreed to repay to ATI all monies that ATI has
previously paid to, or on behalf of, Nurescell US for its acquisition of a 49%
interest in Nurescell AG. As part of the agreement, the Company agreed to
continue to finance certain amounts of Nurescell US continued monthly operations
on a non-interest bearing basis, advancing a total of $114,946 through December
31, 2002. Nurescell US has executed a convertible promissory note for the above
monies due to ATI. Principal and interest on this note is due and payable on
demand. The principal and interest may be converted by ATI into shares of the
common stock of Nurescell US. Interest is payable at the rate of 10% per annum.

As of December 31, 2002, the Company, Nurescell US and ATI Nuklear AG entered
into another agreement pursuant to which, among other things, (i) Nurescell US
was released from any and all past, present, and future obligations, whether
past due or otherwise, with respect to the funding of ATI Nuklear AG, (ii)
Nurescell US agreed that all payments required of ATI Nuklear AG pursuant to the
License Agreement (other than 8% royalty payments) were deemed paid in full, and
(iii) Nurescell US executed a $1 million convertible promissory note payable to
ATI Nuklear AG. The principal and interest may be converted by ATI into shares
of common stock of Nurescell US. Interest is payable at the rate of 10% per
annum. The note is secured by (i) 15,000,000 shares of Nurescell US' common
stock, (ii) a first priority security interest in Nurescell US' technology and
(iii) all royalties from ATI Nuklear AG.

The $1,000,000 convertible note was recorded net of a valuation allowance of
$1,000,000.In March 2003, pursuant to an agreement, the $1,000,000 note will be
exchanged for the licensed technology. This exchange is expected to close during
the third quarter of 2003 (See note 16).

                                      F-28



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - ACQUISITIONS (Continued)

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 common stock of ATI valued at $1,093,750. 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 was
effective on January 11, 2001.

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, ATI has the right to purchase the shares at 80% of
the average bid price at determined times.

On April 16, 2001, the Company entered into an agreement to purchase 1,090,000
shares of Nurescell US common stock from one of its stockholders in exchange of
1,090,000 shares of the Company's common stock valued at $566,800.

As of December 31, 2002, the Company owns 4,590,000 shares of Nurescell US
constituting approximately 28.58% of the outstanding shares of Nurescell US.

As of December 31, 2001, the Company has recorded equity losses and amortization
of goodwill related to its investment in Nurescell US in the amount of $850,431.
During December 2001, the Company recorded an impairment loss of $810,119 in
connection with Nurescell Inc. common stock which reduced its investment in
Nurescell US to zero.

Sibconvers
----------

The Company entered into an agreement with a Russian group to form a company
called Sibconvers under Russian law, in which each has a 50% interest. The
Company and the Russian group are to initially fund Sibconvers with 50,000
roubles each payable in cash within one year. This company will pursue programs
offered by various governmental agencies of Russia, the United States, and
European Union countries for the conversion of Russian nuclear defense
industries into high tech non-defense and nuclear remediation enterprises and to
re-train nuclear and military researchers, technicians and engineers employed in
these industries. These industries are primarily located in the closed "Nuclear
Cities" situated in Siberia.

                                      F-29



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - ACQUISITIONS (Continued)

Reseal, Ltd.
-----------

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 paid on
September 30, 2000. This product was originally developed by Cetoni. 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. On June 8, 2001, ATI formed a new entity, Reseal, Ltd., to
commercialize its "Reseal-able" packaging systems technology. In December 2001,
the Company entered into an agreement, whereby it sold a 2.75% equity stake in
Reseal to an accredited investor for $275,000. In January 2002, the Company
entered into an agreement with the same accredited investors to sell an
additional 1.25% equity stake in Reseal for $125,000.

Container Engineering, Ltd.
---------------------------

During March 2001, the Company entered into an agreement with a Russian group to
form a joint-stock company called Container Engineering, Ltd., in which the
Company has a 50% interest. Container Engineering, Ltd. was incorporated in
accordance to Russian law. Container Engineering, Ltd. was formed to manufacture
silicon carbide technologies developed by Russian scientists. There has been no
substantial activity to date.

NOTE 5 - SECURITIES AVAILABLE-FOR-SALE

During the year ended December 31, 2002, the Company disposed of all 216,700
shares of its Eurotech restricted common stock resulting in a gain of $100,818.

NOTE 6 - PROPERTY AND EQUIPMENT

Equipment at December 31, 2002 consisted of the following:

        Machinery and equipment                                  $ 222,071
        Transportation equipment                                   153,489
        Office furniture and fixtures                              167,675
        Software                                                    13,615
                                                                 ---------
                                                                   556,850
        Less: Accumulated depreciation                             316,470
                                                                 ---------
                                                                 $ 240,380
                                                                 =========

Depreciation expense for the years ended December 31, 2002 and 2001 amounted to
$26,875 and $91,685, respectively.

                                      F-30



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - WRITE-DOWN OF LICENSE FEE

At the end of the third quarter of 2002, management concluded that certain
conditions and events were such that impairment testing was required to be
performed with respect to the license acquired in the Nurescell US transactions.
Due to the absence of current sales and sales contracts and funding available to
the Company, the Company recorded a loss from impairment related to the license
agreement of $566,667 in the accompanying consolidated statement of operations
for the quarter ended September 30, 2002.

The following table presents the carrying amounts of the license fee at December
31, 2002 and 2001:

                                                 2002               2001
                                              ----------         ----------

       License fee                            $1,000,000         $1,000,000
       Less:  Accumulated amortization           433,333            283,333
       Less:  Loss from impairment               566,667              -
                                              ----------         ----------
             Total                            $    -             $  716,667
                                              ==========         ==========

NOTE 8 - LOANS AND NOTES PAYABLE

During the year ended December 31, 2000, the Company's Board of Directors
approved a private placement of its debt securities in an amount up to
$1,500,000. Interest on such debt securities is cumulative at a rate of 1% per
month. 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. As additional consideration, each lender shall receive one
share of the common stock for each $1.00 loaned to the Company. As of December
31, 2000, the Company received an aggregate amount of $713,571 from four
investors. Accordingly, the Company issued 713,571 shares of its common stock to
such investors valued at $222,859. The Company amortized the $222,859 as
interest expense over the six-month period ending April 2001.

During April 2001, various obligations on the above notes payable, totalling
$343,571 of principal were satisfied by the issuance of 1,365,259 shares of
common stock. On May 1, 2001, the Company repaid $220,000 of principal to an
investor. The maturity date of the remaining promissory notes, totalling
$150,000, was extended to March 1, 2002. During April 2002, the maturity date of
the remaining promissory notes, totalling $150,000, was extended to June 1,
2002. As consideration for entering into these agreements, the investor received
two shares of the Company's common stock for each $1.00 loaned to the Company
(300,000 shares). In addition, the investor may be repaid in cash or in the
Company's common stock. The price per share for purposes of computing the
conversion ratio shall be $0.25 per share. The maturity date of the remaining
promissory notes, totaling $150,000, was extended to June 15, 2003.

                                      F-31



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - LOANS AND NOTES PAYABLE (Continued)

During May 2001, the Company borrowed $100,000 from an individual and issued a
promissory note, which provides that the loan is due in three months and
provides for interest at the rate 1% per month. The Company issued 100,000
shares of its common stock to the lender as an incentive to make that loan. In
addition, the Company granted the lender piggyback registration rights for the
shares for a period of five years from the date of the loan. The loan's maturity
date was extended to March 1, 2002 and as consideration for entering into this
agreement, the individual received an additional 200,000 shares of the Company's
common stock. The Company extended the loan's maturity date to June 15, 2003
with no additional consideration.

During June 2001, the Company borrowed $260,000 from an individual and issued a
promissory note which provides that the loan is due in six months and provides
for interest at the rate of 1% per month. The Company issued 260,000 shares of
its common stock to the lender. The loan's maturity date was extended to
February 6, 2002 and as consideration for entering into these agreements, the
individual received an additional 520,000 shares of the Company's common stock.
During February 2002, the maturity date was extended again to March 6, 2002 and
as consideration, the investor received 280,000 shares of the Company's common
stock. It was also agreed that if the loan was not repaid by March 6, 2002, the
loan would be extended by the Company and the Company will pay a late fee in the
amount of $500 per day, until all principal, interest and late fees are paid in
full. As of December 31, 2002, the Company has accrued $102,500 as late fees.

On July 13, 2001, the Company borrowed $15,000 from an individual and issued a
promissory note which provides that the loan is due in three months and provides
for interest at the rate of 1% per month. The Company issued 15,000 shares of
its common stock to the lender as an incentive to make that loan. The loan's
maturity date was orally extended to June 1, 2002 and as consideration, the
individual received an additional 30,000 shares of the Company's common stock.
Subsequently the notes have been extended to June 15, 2003, with no additional
consideration.

Also on July 13, 2001, an officer of the Company advanced $10,000 pursuant to a
promissory note, which provides that the loan is due in three months and
provides for interest at the rate of 1% per month. The Company issued 10,000
shares of its common stock to the lender as an incentive to make that loan. The
officer has agreed to extend the due date to June 15, 2003, with no additional
consideration.

On July 30, 2001, the Company borrowed $330,000 from an individual and issued a
promissory note, which provides that the loan is due in six months and provides
for interest at the rate of 1% per month. The Company issued 330,000 shares of
its common stock to the lender as an incentive to make that loan. In addition,
the Company granted the lender piggyback registration rights for the shares for
a period of five years from the date of the loan. The noteholder has agreed
orally to extend the maturity date to June 15, 2003, with no additional
consideration.

                                      F-32



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - LOANS AND NOTES PAYABLE (Continued)

Effective September 10, 2001, the Company borrowed $560,000 from an individual
and issued a promissory note which provides that the loan is due January 31,
2002 and provides for interest at the rate of 1% per month. The Company issued
1,270,000 shares of its common stock to the lender as an incentive to make that
loan. The note has been extended to June 15, 2003, without any new
consideration.

On November 27, 2001, the Company borrowed $10,000 from an individual and issued
a promissory note which provides that the loan is due in 90 days and provides
for interest at the rate of 1% per month. The Company issued 10,000 shares of
its common stock to the lender as an incentive to make that loan. The loan's
maturity date was extended to May 27, 2002 and as consideration for entering
into this agreement, the individual received an additional 20,000 shares of the
Company's common stock. The note was subsequently extended to June 15, 2003,
without any new consideration.

Pursuant to the October 16, 2002 Letter of Intent with LTDN, the Company has
received $332,000 under a secured promissory note (see Note 3). The note accrues
interest at a rate of 10% per annum and is secured by the Company's Star Can
patents.

Loan Payable
------------

On September 6, 2002, the Company entered into an agreement to borrow $60,000
from an individual. The loan bears interest at 10% per annum and is payable
immediately upon the Company obtaining additional financing. As an incentive to
make this loan, the individual received 100,000 shares of the Company's common
stock, with piggy-back registration rights, valued at $1,322. The Company has
expensed the entire amount as interest expense during the year ended December
31, 2002. As of December 31, 2002, the principal amount outstanding is $60,000.

In addition, the Company will issue an additional 50,000 shares of its common
stock for each week the loan is not repaid. The Company is currently negotiating
with the individual to avoid any additional shares being issued as a penalty.

During October 2002, the Company received an advance of $120,000 from an
individual payable on demand. The loan accrues interest at 10% per annum.

                                      F-33



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - INCOME TAXES

There is no provision for income taxes for the years ended December 31, 2002 and
2001, as a result of net operating losses incurred during those years.

The components of deferred tax assets and liabilities at December 31, 2002 are
as follows:

      Deferred Tax Assets:
        Net operating loss carryforwards                      $3,680,000
        Compensatory element of stock issuances                1,800,000
                                                              ----------
          Total Gross Deferred Tax Assets                      5,480,000

        Less:  Valuation allowance                             5,480,000
                                                              ----------
          Net Deferred Tax Assets                             $    -
                                                              ==========

The net change in the valuation allowance for deferred tax assets was an
increase of approximately $3,150,000 during the year ended December 31, 2002.

As of December 31, 2002, the Company had available approximately $9,200,000 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, 2000, 2001 and 2002 expire in the years 2019, 2020, 2021 and 2022,
respectively. Pursuant to Section 382 of the Internal Revenue Code, substantial
restrictions are imposed on the utilization of NOL carryforwards in the event of
an ownership change. The Company's foreign subsidiary has a net operating loss
carryforward of approximately $5,654,000. 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,
                                                         --------------------
                                                           2002        2001
                                                         --------    --------

        Federal statutory rate                            (34.0)%     (34.0)%
        Unutilized foreign losses                          18.1        33.0
        Change in valuation allowance                      15.9         1.0
                                                          -----        -----
          Effective rate                                   -0- %        -0- %
                                                          =====        =====

                                      F-34



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - ACCRUED LIABILITIES

Accrued liabilities at December 31, 2002 consist of the following:

     Consulting fees (including related                      $2,239,812
       parties of $895,176)
     Professional fees                                        1,406,034
     Interest (including related parties
       of $281,750)                                             698,298
     Other                                                      625,325
     Payroll and other taxes                                    418,283
                                                             ----------
           Total                                             $5,387,752
                                                             ==========

NOTE 11 - 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, 2002 and 2001.

As of December 31, 2002, property held under capital leases was as follows:

      Transportation equipment                                $110,513
      Less: Accumulated depreciation                            34,141
                                                              --------
                                                              $ 76,372
                                                              ========

Minimum future lease payments under capital leases are as follows:

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

                      2003                                         $  6,993
                      2004                                            6,993
                      2005                                            4,283
                                                                   --------
                Total minimum lease payments                         18,269
                Less: Amount representing interest                    1,647
                                                                   --------
                Obligations Under Capital Leases                   $ 16,622
                                                                   ========

                                      F-35



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - OBLIGATIONS UNDER CAPITAL LEASES (Continued)

Interest rates on capitalized leases vary from 6.868% to 7.502% per annum, 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                                       $  5,862
       Long-term portion of obligations
         under capital leases                                   10,760
                                                              --------
                                                              $ 16,622
                                                              ========

NOTE 12 - RELATED PARTY TRANSACTIONS

Amounts due to related parties represent various demand notes, plus interest at
10% per annum, payable to certain stockholders, relatives of stockholders and
companies affiliated with stockholders. Interest expense accrued on these demand
notes totalled $300,824 in 2002 and $266,045 in 2001. In addition, the Company
has a consulting agreement with ERBC (see Note 14). An officer of the Company
loaned the Company $21,915 to pay certain expenses of the Company during the
year ended December 31, 2002. The loan is payable on demand and interest accrues
at 10% per annum.

NOTE 13 - 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. No preferred stock has been
issued as of December 31, 2002.

Increase of Authorized Common Stock
-----------------------------------

During the quarter ended December 31, 2002, the Company, with the approval of
consenting stockholders, unanimously adopted and approved an amendment to ATI's
Certificate of Incorporation to increase the authorized common stock from
50,000,000 to 100,000,000 shares.

                                      F-36



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 -  STOCKHOLDERS' EQUITY (Continued)

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

Common Stock Issuances - 2001
-----------------------------

During January 2001, the Company issued in connection with a private placement
of debt, 100,000 shares of common stock as additional consideration to the
purchaser.

During January 2001, the Company issued 3,500,000 shares of common stock to
purchase 3,500,000 shares of the $.0001 par value common stock of Nurescell US
from Adrian and Dianna Joseph.

During April 2001, the Company issued 1,090,000 shares of common stock to
purchase 1,090,000 shares of the $.0001 par value common stock of Nurescell US
from the Glenn A. Cramer Separate Property Trust.

During April 2001, the Company issued 3,336,745 shares of common stock to a
related party for accrued consulting fees of $467,873 and conversion of a
$54,545 promissory note payable.

During April 2001, the Company issued 501,812 and 418,177 shares of common stock
in settlement of two promissory notes totalling $180,000 and $150,000,
respectively. In addition during November 2001, the Company issued 61,844 shares
of common stock in settlement of interest on one of the note holders valued at
$22,184.

On April 18, 2001, the Company issued 500,000 shares of common stock to its
President for consulting services performed. Shares issued under this agreement
were valued at $168,750, which was all charged to operations during the six
months ended June 30, 2001.

During April 2001, the Company issued 344,788 shares of common stock to its
President for the settlement of a promissory note totalling $60,000.

During April 2001, the Company issued in connection with a private placement of
debt 770,000 shares of common stock as additional consideration to the
purchaser.

                                      F-37



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - STOCKHOLDERS' EQUITY (Continued)

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

During April 2001, the Company issued 316,056 shares of common stock to an
officer for the settlement of accrued wages of $50,000.

During July 2001, the Company issued 775,385 shares of common stock in
settlement of a promissory note with respect to $240,000 of principal and $7,200
of interest.

During July 2001, the Company issued in connection with a private placement of
debt 355,000 shares of common stock as additional consideration to the
purchaser.

During July 2001, the Company issued 67,857 of its common stock due to a
cashless exercise of 112,500 warrants.

During October and November 2001, the Company issued in connection with a
private placement of debt 578,304 shares of common stock as additional
consideration to the purchaser. The shares were valued at $255,000, of which
167,044 was charged to operations during 2001.

During October 2001, the Company issued 17,000 shares of common stock pursuant
to consulting arrangements with two consultants. Shares issued under these
arrangements were valued at $9,890, which was charged to operations during 2001.

During November 2001, the Company issued 36,826 shares of its common stock as
consideration for consulting services performed by two consultants totaling
$15,133.

During November 2001, the Company issued in connection with a private placement
of debt 10,000 shares of common stock as additional consideration to the
purchaser. The shares were valued at $3,200, of which $1,209 was charged to
operations during 2001.

During November and December 2001, the Company issued 75,000 shares of common
stock to two employees of the Company as a sign-on bonus, which was valued at
$18,751, and charged to operations during 2001.

During December 2001, the Company issued in connection with a private placement
of debt 691,696 shares of common stock as additional consideration to the
purchaser.

During December 2001, the Company issued 1,328,000 shares of common stock
pursuant to consulting arrangements with various consultants. Shares issued
under these arrangements were valued at $332,000, which was charged to
operations during 2001.

                                      F-38



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - STOCKHOLDERS' EQUITY (Continued)

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

During December 2001, the Company issued 477,429 shares of common stock as
consideration for legal services performed by its attorneys. Shares issued under
these arrangements were valued at $112,761, which was charged to operations
during 2001.

During December 2001, the Company issued an additional 510,000 shares of its
common stock as additional consideration for extending the due date on
promissory notes related to private placement of debt. The shares were valued at
$140,200, of which $36,927 was charged to operations during 2001, with the
remaining balance being amortized over the new term of the notes.

Common Stock Issuances - 2002
-----------------------------

During the year ended December 31, 2002, the Company issued an additional
833,306 shares of its common stock as additional consideration for extending the
due date on promissory notes related to private placement of debt. The shares
were valued at $285,222, which was charged to operations during the year ended
December 31, 2002.

In January 2002, the Company issued 280,670 shares of common stock as
consideration for legal services performed by its attorneys. Shares issued under
these arrangements were valued at $80,159, which was charged to operations
during 2002.

In February 2002, the Company issued 55,037 shares of common stock as
consideration for legal services performed by its attorneys. Shares issued under
these arrangements were valued at $11,245, which was charged to operations
during 2002.

During April 2002, the Company issued 16,374 shares of its common stock due to a
cashless exercise of 32,500 warrants.

During April 2002, the Company issued 328,104 shares of common stock as
consideration for legal services performed by its attorneys. Shares issued under
these arrangements were valued at $122,458, which was charged to operations
during 2002.

                                      F-39



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - STOCKHOLDERS' EQUITY (Continued)

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

During April 2002, the Company issued 250,000 shares of common stock pursuant to
a consulting arrangement. Shares issued under this arrangement were valued at
$345,000, which was charged to operations during 2002.

During May 2002, the Company issued 95,146 shares of common stock as
consideration for legal services performed by its attorneys. Shares issued under
these arrangements were valued at $65,832, which was charged to operations
during 2002.

During June 2002, the Company issued 578,952 shares of common stock as
consideration for legal services performed by its attorneys. Shares issued under
these arrangements were valued at $329,603, which was charged to operations
during 2002.

During July 2002, the Company issued 400,000 shares of common stock as
consideration for consulting services performed by a consultant. Shares issued
under consulting agreement were valued at $228,000, which was charged to
operations during 2002.

During September 2002, the Company issued 673,882 shares of common stock as
consideration for legal services performed by its attorney. Shares issued under
the arrangements were valued at $168,471, which was charged to operations during
2002.

During September 2002, the Company issued 10,000 shares of common stock as
consideration for a finder's fee. Shares issued were valued at $1,600, which was
charged to operations during 2002.

During September 2002, the Company issued 100,000 shares of common stock as
consideration for loan incentives. Shares issued under the loan agreement were
valued at $18,000, which was charged to operations during 2002.

During October 2002, the Company issued 40,000 shares of common stock as
consideration for finder's fee. Shares issued were valued at $7,600, which was
charged to operations during 2002.

During October 2002, the Company issued 700,000 shares of common stock as
consideration for legal services performed by its attorneys. Shares issued under
these arrangements were valued at $77,350, which was charged to operations
during 2002.

During October 2002, the Company issued 145,328 shares of common stock due to
the exercise of options for $21,000.

                                      F-40



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - STOCKHOLDERS' EQUITY (Continued)

Warrants
--------

At December 31, 2002, there were warrants outstanding to purchase 625,000 shares
of the Company's common stock exercisable at $0.65 per share, which expire on
April 14, 2004. These warrants were granted in 1999.

During April 2001, the Company issued 67,857 shares of common stock for the
cashless exercise of 112,500 warrants.

During January 2002, the Company issued 16,374 shares of common stock for the
cashless exercise of 32,500 warrants.

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

The Company entered into a one year consulting agreement on April 6, 2001 with a
public relations company for various consulting and financial professional
relations services in connection with the Company's interactions with
broker-dealers, financial professionals and analysts. The Company agreed to
issue to the consultant options to purchase 150,000 shares of the Company's
common stock. Of the options granted, there are 5 blocks of 30,000 warrants at
exercise prices of $.50, $.75, $1.00, $1.25 and $1.50. The consultant has the
right to convert the options into the Company's common stock on a cashless
basis. These options were valued at $.25 each on the grant date.

In May 2001, the Company entered into an agreement with a consultant for
managing and updating all aspects of the Company's website and internet. The
Company agreed to grant an option to purchase 24,000 shares of the Company's
restricted common stock at $.70 per share. The options expire on May 1, 2005.
The options were valued at $.61 per share on the grant date.

                                      F-41



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - STOCKHOLDERS' EQUITY (Continued)

Options - Outside the Stock Option Plan (Continued)
---------------------------------------

The above options were valued using the Black-Scholes option pricing model with
the following assumptions:

                  Risk-free interest rate           5.0% - 5.5%
                  Expected life                  90 days - 5 years
                  Expected volatility                 65.0%
                  Dividend yield                         0%

Compensation costs related to options grants charged to operations was $-0- in
2002 and $47,500 in 2001.

Stock Option Plans
------------------

On October 26, 2000, the Board of Directors adopted the Advanced Technology
Industries, Inc. 2000 Stock Option Plan ("the Plan"). On that date, the Board,
which is the Plan Administrator 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-qualified 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.

During 2002, the Board of Directors and the majority shareholders amended the
above stock option plan to increase the number of shares that are subject to
ISO's from 3,000,000 to 5,000,000.

                                      F-42



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - STOCKHOLDERS' EQUITY (Continued)

Stock Option Plans (Continued)
------------------
<TABLE>
<CAPTION>

                                                                                                           Weighted
                                                                    Weighted                               Average
                                                Incentive           Average          Non-Qualified         Exercise
                                              Stock Options      Exercise Price      Stock Options          Price
                                              -------------      --------------      -------------        ----------
<S>                                               <C>                 <C>                <C>                 <C>
Outstanding - 12/31/00                            470,000             $.34               615,000             $.34

Options granted - 01/01-12/31/01:
  In the plan                                       -                  -                    -                 -
Options granted - 01/01-12/31/01:
  Outside the option plan                           -                  -                 174,000             $.96
Options expired/cancelled:
  Outside the plan                                  -                  -                    -                 -
Options exercised:
  Outside the plan                                  -                  -                    -                 -
                                               ----------                              ---------
Outstanding - 12/31/01                            470,000             $.34               789,000             $.48

Options granted - 2002:
  In the plan                                       -                  -                    -                 -
Options granted - 2002:
  Outside the option plan                           -                  -                 300,000             $.14
Options expired/cancelled:
  Outside the plan                                  -                  -                    -                 -
Options exercised
  Outside the plan                                  -                  -                (145,328)            $.14
                                               ----------                              ---------
Outstanding - 12/31/02                            470,000             $.34               943,672             $.42
                                               ==========                              =========
Composition at 12/31/02:
-----------------------
2000 stock option plan                            470,000             $.34               615,000             $.34
Options granted outside the plan                    -                  -                 328,672             $.57
                                               ----------                              ---------
Outstanding - 12/31/02                            470,000             $.34               943,672             $.42
                                               ==========                              =========

Total Value at Option Price                              $  159,800                            $  396,342
                                                         ==========                            ==========
Total Exercisable Value at Option Price                  $  159,800                            $  396,342
                                                         ==========                            ==========

</TABLE>

                                      F-43



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - 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                         1,413,672
      Warrants to purchase common stock                          625,000
                                                               ---------
      Total as of December 31, 2002                            2,038,672
                                                               =========

In addition, the proposed transaction with LTDN will effectively transfer
control of the Company to LTDN at the closing of the transaction (See note 3).

NOTE 14 - COMMITMENTS AND OTHER MATTERS

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

By letter dated June 1, 1996, the Company engaged ERBC Holdings Ltd. ("ERBC"),
an affiliate of the Company by virtue of common stockholders, 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. Commencing in 2001, fees under the consulting
agreement are $240,000 per year. During April 2001, ERBC entered into an
agreement to convert $467,873 of accrued consulting fees into the Company's
common stock. Included in accrued liabilities as of December 31, 2002 is
$895,176 related to this agreement.

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

The Company has strategic alliances, collaboration agreements and 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-44



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - 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 with a five-year option.
Under the lease agreement, annual rent will amount to approximately $47,275, or
$3,939, per month commencing March 1, 2000, subject to certain escalation
adjustments.

During September 2001, ATI Nuklear entered into a lease for office space in
Berlin, Germany for a period of five years. Under the lease agreement, annual
rent will amount to approximately $35,047 for each year, commencing October 1,
2001, subject to certain escalation adjustments.

Future minimum lease payments for each of the next 5 years are as follows:

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

                 2003                                             $ 82,322
                 2004                                               82,322
                 2005                                               42,925
                 2006                                               26,285

Rent expense for operating leases was approximately $122,000 and $109,000 for
the years ended December 31, 2002 and 2001, respectively.

                                      F-45



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - COMMITMENTS AND OTHER MATTERS (Continued)

Commitments
-----------

Russian Contract for Research and Development
---------------------------------------------

In October of 2001, pursuant to contract research and development agreement with
a Moscow-based State Scientific Research Institute Scientific Production Company
"Lutch," Lutch agreed to perform various contract research and development
services related to technology licensed by the Company from Nurescell US for an
total price of $985,000. As a result of nine amendments to this contract the
payments and performance of services were rescheduled to occur commencing with
the quarter ended March 31, 2003 and to be completed by September 30, 2003. As
of December 31, 2002, the Company has paid $100,000 under this agreement which
was charged to research and development expenses during the year ended December
31, 2002.

Technology Purchase
-------------------

In connection with an oral agreement, the Company agreed to acquire the rights
to certain technologies now held by a German Bank, for an estimated purchase
price of $1,000,000. This transaction is expected to close during the next 12
months.

NOTE 15 - 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 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 items.
Segment results for 2002 and 2001 are as follows:

                                      F-46



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - SEGMENT REPORTING (Continued)

<TABLE>
<CAPTION>

                                          U.S.A.            Germany           Eliminations       Consolidated
                                      -------------        -----------        ------------       ------------
<S>                                    <C>                 <C>                <C>                <C>
    2002:
    ----

    Loss before extra-
      ordinary item                    $ 3,152,411         $  3,605,309       $   -              $ 6,757.720
                                       ===========         ============       ==========         ===========
    Depreciation and
      amortization                     $    -              $    176,875       $   -              $   176,875
                                       ===========         ============       ==========         ===========

    Identifiable Assets                $    59,946         $    434,042       $   -              $   493,988
                                       ===========         ============       ==========         ===========

    2001:
    ----

    Loss before extra-
      ordinary item                    $ 2,698,253         $ 4,931,363        $    -             $ 7,629,616
                                       ===========         ===========        ==========         ===========
    Depreciation and
      amortization                     $     -             $   291,685        $    -             $   291,685
                                       ===========         ===========        ==========         ===========

    Identifiable Assets                $   262,860         $ 1,305,946        $    -             $ 1,568,806
                                       ===========         ===========        ==========         ===========

</TABLE>

NOTE 16 - SUBSEQUENT EVENTS

Nurescell US Restructure Agreement
----------------------------------

On March 21, 2003, The Company and Nurescell US entered into a Restructure
Agreement in which the Company agreed to cancel its $1 million principal
promissory note and related interest due from Nurescell US in consideration of
Nurescell US transferring to the Company the licensed technology. (See Note 3).
This transaction is anticipated to close during the quarter ended September 30,
2003

                                      F-47



<PAGE>

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 - QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>

                                                          Quarter Ended
                                --------------------------------------------------------
                                  March 31       June 30      September 30   December 31                Total Year
                                ------------   -----------    ------------   -----------               ------------
<S>                              <C>               <C>              <C>               <C>               <C>
2002:
----

Revenues                        $    -            $    -           $    -            $     -           $    -
Net loss                         (1,154,603)       (1,945,348)      (2,753,048)       904,720)       (6,757,720)
Loss per share - basic
  and diluted                         $(.03)            $(.04)           $(.06)            $(.02)            $(.14)

2001:
----

Revenues                        $     -           $    -           $     -           $     -           $    -
Net loss                           (648,467)      (2,137,167)       (1,082,533)       (3,761,449)       (7,629,616)
Loss per share - basic
  and diluted   (a)                   $(.02)           $(.06)            $(.03)            $(.10)            $(.20)
</TABLE>

(a) Per share common stock amounts for the quarters and full year have been
calculated separately. Accordingly, quarterly amounts do not add to the annual
amount because of differences in the weighted average common shares outstanding
during each period due to the effect of the Company issuing shares of its common
stock during the year.

                                      F-48