SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

               [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended: December 31, 1999

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
            For transition period from __________ to _______________


                         Commission File Number: 0-25548

                             ORBIT TECHNOLOGIES INC.
                             ----------------------
                 (Name of small business issuer in its charter)

                            Delaware                              84-100269
(State or other jurisdiction                                  (I.R.S. Employer
of incorporation or organization)                            Identification No.)



                         5950 La Place Court, Suite 140
                           Carlsbad, California 92008
                    (Address of principal executive offices)


        Registrant's telephone number, including area code: 760/918-9168
        Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section 12 (g) of the Act:
                           Common Stock, no par value
                                (Title of class)

     Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to the filing requirements for at least
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 of the 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.  X
                                      ---

     Issuer's revenues for the year ended December 31, 1999 were $ -0-.

     On December 31, 1999, the aggregate market value of the voting stock held
by non-affiliated totaled approximately $4,910,179 based on the closing stock
price as reported by The OTC-BB of the NASDAQ Stock Market.

     At December 31,1999; 32,526,579 shares of Common Stock were outstanding.
Transitional Small Business Disclosure Format: Yes      No X
                                                  ---     ---

<PAGE>

                                     PART I

Forward-Looking Statements

This Form 10-KSB contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under "Risk Factors" in Exhibit 99 and elsewhere in
this Form 10-KSB. The following summary is qualified in its entirety by the more
detailed information and the consolidated financial statements, including the
notes thereto, appearing elsewhere in this Form 10-KSB.

Item 1.  DESCRIPTION OF BUSINESS

Orbit Technologies, Inc. (the "Company" or "Orbit") is a technology incubator
and ultimately a technology portal for new and innovative technologies,
engineering ideas, methods, and processes. The Company's philosophy is to
develop or acquire new or innovative technologies that the Company believes hold
the potential to become commercially viable products or processes. Once a
product or process receives commercial validation through an outside or third
party, it will be either spun off as a separate business entity, or will be
licensed or sold to an affiliated or unaffiliated entity that at that time
becomes responsible for the production, marketing, and sales of such products or
services. The technologies described herein are undergoing certain feasibility
studies and/or actual test and evaluation.

The Company is the owner of various patents pending and other proprietary
engineering and intellectual property and information related to a number of
technologies.

Orbit was incorporated under the laws of the state of Delaware in 1985.

General

The Company retains independent engineers, research consultants, institutes,
independent business entities, and other technical and business consultants as
needed to develop and analyze technologies.

The Company evaluates the commercial viability for each technology. When a
commercial application is developed, the Company will license the technology to
a licensee for a license fee and royalty payments. The licensee undertakes the
process of bringing applications of the technology to market independently or
through manufacturing and marketing utilizing joint ventures, selected partners,
or sublicensing. Specific applications of a particular technology may be
licensed to separate entities, each of whom is responsible for that particular
application. Additional funding may be required during these various phases of
technology development and commercialization.

Integrated Product Development Teams

The Company has instituted the latest in developmental concepts and methods in
order to streamline the Company's internal procedures for product discovery,
development, evaluation, acquisition, and commercialization. Integrated Product
Development Teams are made up of in-house personnel, outside independent
engineers, research consultants, academic institutions, and business consultants
needed to investigate and analyze technologies.


<PAGE>

Polymer Encapsulation Technology (PET)

The Company is focusing on its Polymer Encapsulation Technology (PET) that it
believes has potential to yield a significant and commercially viable
environmental product. PET provides certain benefits to generators of
radioactive and toxic wastes with a method to stabilize and encapsulate such
materials for environmentally safe disposal.

The Company utilizes specially identified polymers as a base material to which
it adds certain proprietary materials and formulation methods. This formulation
creates a unique compound that is specially designed to be application specific
based on the required performance criteria. PET is non-flammable, non-toxic, and
processes waste materials at ambient temperatures. Processing with PET materials
produces no secondary waste streams.

PET includes enhanced material properties and formulations and improved
application processes. PET remains intact above 10000C and exceeds the melting
point of many metals. These properties make PET a potentially viable solution to
permanently contain many hazardous wastes

PET, through rigorous and extensive testing, has proven effective in a
laboratory setting for containing surrogate nuclear waste materials and actual
radioactive particulates. Formulations of Orbit's polymer have been subjected to
significant doses (7.5 Grad) of radiation with no absorption or migration of the
radiation through the sample. PET also has the potential to be effective in
providing chemical or thermal barriers.

PET is designed for difficult to treat hazardous or toxic waste materials. The
Company believes that applications may exist in other vertical and horizontal
markets. The Company has filed a new patent covering specific applications of
its Polymer Encapsulation Technology (PET).

Additional testing will be required to determine engineering parameters for both
disposal and transportation of actual radioactive waste materials.

The Company may license the technology, seek strategic alliances or establish
joint venture relationships with specific industry leaders.

Metafusion Process

Metafusion describes a material coating process (the "Metafusion Process"). The
Metafusion Process encompasses the fusion, by chemical or physical means, of
materials at the atomic level. The reaction takes place at room temperature and
at ambient pressure. The process uses very little power, no toxic materials, and
no contaminated waste is produced. The Metafusion Process permits the surface of
a metal or alloy to be coated with another metal or alloy so that the applied
material is actually fused onto and into the atomic structure of the surface of
the substrate material. The Metafusion Process does not generate excessive heat
that can alter the properties of the substrate material. The Metafusion Process
can be accomplished without expensive or sophisticated equipment.

The Metafusion Process has been scientifically corroborated by a number of
independent entities, including Ontario Research Foundation of Mississauga,
Ontario, which validated the solid Metafusion Process by analyzing the coating
of steel and copper with titanium carbide. The results of the analysis showed
the presence of the coating material to a depth of five (5) microns into the
substrate. Hardness tests conducted at the Materials Sciences Laboratory of the
University of California at Los Angeles and the Surface Science Laboratory of
Mountain View, California revealed significant penetration of the applied
materials into the substrate.


<PAGE>

The Company believes that the Metafusion Process has myriad commercial
applications. Plans include a continuation of the commercialization evaluation
phase when additional funding becomes available.

Other Technologies, Inc.

Since 1997, the Company has been reevaluating and prioritizing other
technologies which it possesses. While the Company has devoted its efforts to
the development of its Polymer Encapsulation Technology (PET) system, efforts to
determine the viability of its other technologies will be pursued when
additional funding becomes available. There is, however, no assurance that such
funding will be obtained to facilitate these efforts.

The Company is continually searching for and evaluating other technologies that
may yield commercially viable products and would fit vertically or horizontally
into the Company's area of expertise.

Government Regulation

The production and marketing of the Company's products and technologies and its
ongoing research and development activities are subject to regulation for
safety, efficacy and quality by numerous governmental authorities in the United
States and other countries. Failures or delays by the Company or its affiliates
or licensees in obtaining the required regulatory approvals would adversely
affect the marketing of products being developed by the Company and the
Company's ability to receive product revenues or royalties. See Risk Factors,
Exhibit 99.

Human Resources

As of December 31, 1999, the Company employs three full time individuals, and
engages one technical consultant, and one industry consultant. The Company also
retains independent engineers, research consultants, academic institutions,
independent business entities, and other technical and business consultants as
needed to develop and analyze technologies and create business strategies.

Research and Development

Research and development expenses for the years ended December 31, 1999 and 1998
were $-0- and $7,416, respectively.

Item 2.  DESCRIPTION OF PROPERTY

The Company maintains its principal executive offices in Carlsbad, California
where it occupies a 1,500 square foot office at 5950 La Place Court, Suite 140,
Carlsbad, California 92008 pursuant to a lease expiring in July 2001.

Item 3.  LEGAL PROCEEDINGS

Introduction

The Company is involved in legal proceedings incidental to its normal business
activities. As of the date hereof, the Company is not party to any material
litigation except as described below. Most of the litigation is related to or
actions by past Directors and Officers, and their affiliates.

The Company is a party to the following proceedings. These proceedings are
related and deal with questions related to the actions of past Directors and
Officers and the validity of stock transactions conducted during their tenure.

1. BENVENISTE, ET. AL. V. ORBIT AND ITS OFFICERS. The action was filed on March

<PAGE>

6, 1997 in the Los Angeles Superior Court as Case No. BC167043. The action is to
collect principal, interest and other fees and damages relating to various
promissory notes executed between the plaintiffs and Orbit during 1995
aggregating $600,000 and loans made during 1992 aggregating $197,000.

In December 1998, the parties entered into a settlement agreement, which
resolves all of the claims and the cross-claims. As part of the settlement,
approximately 5 million shares will be surrendered for cancellation by a variety
of parties including the Benvenistes. The Benvenistes have agreed to convert
debt to equity and will be issued approximately 5.7 million shares of stock.
(Also see Item 3., Introduction.)

2. ORBIT TECHNOLOGIES INC., ET AL. V. LAHEY, ET AL. The action filed by Richard
Benveniste and Edgar R. Benveniste on June 2, 1997 in the Delaware Court of
Chancery, Case No. 15720-NC, on behalf of themselves and purportedly on behalf
of the Company against James B. Lahey, James A. Giansiracusa, Ian C. Gent,
Stephen V. Prewett, and William N. Whelen. The Complaint sought a determination
by the Court of Chancery (i) as to who constituted the valid Directors of the
Company in connection with a written consent action initiated by the plaintiffs
{and signed by Richard A. Wall & Associates GmbH (Authorized representative Kurt
Seifman), Kurt Seifman, JTR Associates (Authorized representative William P.
Ruffa, Jr.), William P. Ruffa, Jr., Pacific Equities, Inc. (Authorized
representative Richard A. Wall), Richard A. Wall, Cynthia L. Wall, Eleanor
Moscatel (By her attorney-in-fact, Richard Benveniste), Julie Benveniste (By her
attorney-in-fact, Richard Benveniste), Chad Nellis (Son of Cynthia Wall and step
son of Richard A. Wall), Mikimak Limited, and Frank A. Visco}, and ( ii ) in the
alternative, that the Company be required to hold an annual meeting of
shareholders. In response to the Complaint, on June 20, 1997 the defendants
filed their motion to dismiss or, in the alternative, to stay the Delaware
litigation in favor of litigation relating to the validity of claimed holdings
in the Company that was pending in the state court of California (Adrian Joseph
v. Orbit Technologies Inc.). The Joseph et al. v. Orbit Technologies, Inc. was
decided in favor of the Company and against Joseph, Singletary, and Mikimak. As
a result, the Court cancelled all the shares previously claimed by Joseph et al.
thereby rendering the consent action void.

On September 2, 1997, a hearing on the defendant's motion to dismiss was held at
which time the Court of Chancery decided to defer a decision on the defendant's
motion to dismiss until such time as an annual meeting of the Company's
shareholders was held. The Company intends to hold a shareholder meeting to
bring the aforementioned settlement before the shareholders for approval.(Also
see Item 3., Introduction.)

While the outcome of any such proceedings cannot be accurately predicted, the
Company does not believe the ultimate resolution of any such existing matters
has had or will have a material adverse effect on its financial position or
results of operation.

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

No matters were submitted during the year ended December 31, 1999 to a vote of
the Company's securities holders.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The table below shows the high and low bid prices as reported by the OTC-BB. The
bid prices represent inter-dealer quotations, without adjustments for retail

<PAGE>

mark-ups, markdowns or commissions and may not necessarily represent actual
transactions.

Calendar Year ended December 31:

1998                                 High        Low

First Quarter                       $0.62       $0.34
Second Quarter                       0.52        0.30
Third Quarter                        0.42        0.20
Fourth Quarter                       0.30        0.16

1999

First Quarter                       $0.33       $0.18
Second Quarter                       0.26        0.18
Third Quarter                        0.22        0.16
Fourth Quarter                       0.32        0.18

2000

First Quarter                       $0.95       $0.36

There were approximately 1,500 shareholders of record of Common Stock as of
December 31, 1999. The Company has not paid cash dividends on its Common Stock
and does not intend to do so in the foreseeable future.

During 1999, 1998, and 1997, the Company converted $125,000 of principal and
related accrued interest of $19,398 into 675,875 shares of common stock pursuant
to exemptions under Section 4(2) and or Regulation D., under the Securities Act
of 1933, as amended.

ITEM 6.  MANAGEMENT'S PLAN OF OPERATION

Since 1996, the Company has focused on the development and use of its
polydimethylsiloxane-based Polymer Encapsulation Technology (PET) as a method
for stabilizing and encapsulating various radioactive and toxic waste materials
leading to a final waste form for disposal.

Significant progress has been attained as evidenced by the success achieved on
test and evaluation contracts completed for Lockheed Martin Idaho Technologies
Company (LMITCO) and Bechtel BWXT, in conjunction with the U. S. Department of
Energy, Idaho Operations Office, Idaho Falls, ID. The Company's business plan
and near term strategy will focus the Company's human resources and funding on
developing the Polymer Encapsulation Technology (PET) as an advanced
technological solution to various radioactive and toxic waste materials
identified for disposal by the Department of Energy (DOE).

As a next step in product acceptance, Bechtel BWXT and Orbit, together with
input from the Microscale Physiochemical Laboratory at the University of Akron
and the U. S. Department of Energy are involved in discussions for utilizing
Orbit's PET as a potential transportation medium in addition to a stabilization
and encapsulation material for final disposal. The elastomeric properties and
material characteristics of PET are of particular benefit in eliminating the
potential risk that would occur in the transportation of the waste from one site
to another for long term storage or disposal.

After product performance evaluations are successfully completed for stabilizing
and encapsulating the waste, a pilot plant evaluation is normally conducted. The
pilot plant demonstrates actual processing methods and applications
incorporating

<PAGE>

both PET and selected waste materials.

Building on the successes achieved under the Lockheed Martin contracts, the
marketing strategy is to build a substantial government and private sector
business in which Orbit's system will be used in the containment of various
radioactive and heavy metal wastes. Work has begun with initial contacts being
made with industry leaders in the waste management and waste remediation sectors
and potential end-users of the technology. Ultimately, the Company plans to
develop strategic relationships with prime contractors throughout the waste
management industry.

Background

In March 1998, the Company was awarded a contract by Lockheed Martin Idaho
Technologies Company to evaluate encapsulation of both surrogate and actual WERF
(Waste Experimental Reduction Facility) low-level waste with its Polymer
Encapsulation Technology (PET).

In July 1998, the Statement of Work was modified and redirected the Company to
focus on a low-level calcine material. These new tests included mixing studies
and enhanced treatment methodologies. Test reports by Lockheed Martin indicated
that encapsulation of the low-level mixed waste fraction from INTEC calcined
waste has potential as an encapsulating media for final disposal and the report
recommended exploration of further treatment formulations.

In August 1998, a paper detailing the Company's mixed waste encapsulation
technology, entitled "Encapsulation of Nitrate Salt Waste Using Polysiloxane,"
was selected for presentation at the 216th Annual American Chemical Society
National Meeting. The paper examined the use of a new waste management solution
to encapsulate the U.S. Department of Energy's approximately 250 million-kg of
dry nitrate salt waste which is laden with heavy metals and radioactive
isotopes.

In October 1998, the Company filed a new patent application for its Polymer
Encapsulation Technology (PET). The new patent was the result of rigorous test
and evaluation over the last year and included the results of enhanced
formulations and improved process applications. The Company's system involves a
method for stabilizing granular salts generated by solidifying neutralized
acidic solutions used to recover and reformulate weapons material.

Also in October 1998, Orbit's Polymer Encapsulation Technology (PET) was
selected for presentation at the 19th U. S. Department of Energy Low-Level
Radioactive Waste Management Conference. The goal of the conference was to
provide an opportunity for information exchange between representatives of the
commercial and defense related low-level radioactive waste management
communities.

In May 1999, Orbit was awarded a contract by Bechtel BWXT, Idaho Falls, to
evaluate Orbit's PET for disposal of actual pilot scale calcine waste. In
September 1999, the contract was expanded and directed that PET be examined at
maximum waste loading scenarios as a means for transporting certain high-level
wastes out of Idaho to an off-site melter. Orbit's material was loaded at 40%
waste for final disposal evaluation and at 80% waste loading for the
transportation evaluation. The actual pilot scale calcine waste (minus
radionuclides) is processed at the Idaho Nuclear Technology and Engineering
Center (INTEC) and contained heavy metals - chromium, cadmium, lead, barium, and
arsenic.

In November 1999, Orbit reported significant results for the transportation,
storage, and disposal of radioactive waste.


<PAGE>

In addition to the initial reductions in heavy metals provided by Orbit's
polymer formulation, the introduction of proprietary additives further reduced
the concentrations of cadmium and chromium by 77% and 71%, respectively. The PET
sample, at 40% waste loading passed all Resource Conservation and Recovery Act
(RCRA) criteria and the Universal Treatment Standards (UTS) for heavy metals.
The Universal Treatment Standards for cadmium is 0.11 and for chromium is 0.60.
See Additional Reduction in Cadmium and Chromium with Proprietary Additives.

Bechtel BWXT recommended to the DOE that a pilot plant demonstration be
conducted to test and evaluate engineering parameters and product throughput.
Other recommendations included encapsulation and mixing studies utilizing actual
radioactive materials.

As part of the transportation option of the contract, PET was mixed at a loading
factor of 85% waste to 15% polymer. The final formulation passed the Department
of Transportation Oxidizer (DOT) Test and a Drop Test from a height of 10
meters. Of particular significance was a 20% reduction in the final product's
total volume after treatment.

[GRAPH]

[CHART]

In February 2000, an Orbit funded study was highlighted in the American Chemical
Society's publication ENVIRONMENTAL SCIENCE & TECHNOLOGY. The article, entitled
"CHROMIUM LEACHING FROM SILICONE FOAM-ENCAPSULATED MIXED WASTE SURROGATE" by
Christopher M. Miller, Ph.D., Stephen E. Duirk, and Kevin H. Gardner, Ph.D.,
discusses polymer encapsulation of waste and chromium leaching kinetics under


<PAGE>

Toxicity Characteristic Leach Procedure and Accelerated Leach Test conditions at
variable waste loadings.

In March 2000, Orbit's Polymer Encapsulation Technology was selected for the
second consecutive year for presentation at the international waste symposium in
Tucson, Arizona. The international conference, Waste Management 2000, hosted and
sponsored by the University of Arizona is held at the Tucson Convention Center.
Sponsors include the American Nuclear Society, the American Society of
Mechanical Engineers, New Mexico State University, and the Waste Management
Education and Research Consortium. The paper, which was submitted for
consideration by Bechtel BWXT Idaho, was judged by the conference's Technical
Review Board and chosen for presentation based on the results of the most recent
test and evaluation project completed for the Bechtel Group. In that evaluation,
Orbit's Polymer Encapsulation Technology (PET) showed a positive
proof-of-confidence to encapsulate calcine waste for both disposal at a
permanent high-level waste repository and for transportation to an offsite
melter. Orbit's presentation, entitled "POLYSILOXANE ENCAPSULATION OF CALCINE
WASTE," was presented in the Nuclear Materials Stabilization and Disposition
technical session.

In the most recent evaluation, the Company demonstrated that with the addition
of certain surfactant additives and binding agents, the PET system will
encapsulate and stabilize waste material which may include soluble chromium
compounds, sodium nitrate, potassium nitrate, plutonium 238 and 239, uranium
238, and other harmful contaminants.

Orbit's encapsulation system is designed to form a cohesive material suitable
for transportation and final disposal, featuring a low leaching index as well as
the ability to perform at increased waste loading factors. The system has been
developed for the treatment of waste material to prevent environmental damage
because certain wastes that cannot be easily or economically rendered harmless
still pose significant environmental problems.

Until completion of the final development of a technology and the commencement
of sales, the Company will have no operating revenues but will continue to incur
substantial expenses. No assurances can be given that the Company can complete
development of any technology or that, if any technology is fully developed,
that it can be manufactured on a large-scale basis or at a feasible cost.
Further, no assurance can be given that any technology will receive market
acceptance. 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.

Financial Condition

For the fiscal years ended December 31, 1999 and 1998, the Company had no
revenues. General and administrative expenses decreased from $490,711 in 1998 to
$373,483 in 1999. For the years ending December 31, 1999 and December 31, 1998,
the Company incurred an operating loss of $635,209 and $877,054, respectively.
It is anticipated that net-operating losses will continue through the next two
years.

Liquidity and Capital Resources

On December 31, 1999, the Company had an accumulated deficit and a working
capital deficit of $15,530,825 and $3,407,853, respectively. The Company had a
significant reduction in the ratio of liabilities to tangible assets from 56 to
1 as of December 31, 1998 to approximately 33 to 1 as of December 31, 1999. The
Company continues to be in default on a significant number of notes that total
approximately $1,522,000 in principal as of December 31, 1999. The report of the

<PAGE>

Company's independent certified public accountants includes an uncertainty
paragraph with regard to the ability of the Company to continue as a going
concern.

On May 27, 1997, the Company entered into an installment loan agreement with an
individual shareholder for $300,000 payable in $100,000 installments on May 27,
1997, and September 5, 1997, and December 6, 1997. The installment loan bears
interest at 12% per annum. The loan agreement provides for a minimum semi-annual
interest payment of $6,000 commencing December 6, 1997. The Company's rights,
titles and patents, to its polymer technology collateralize the installment
note. The interest payments are currently in default. The Company will record
the additional consideration as interest expense amounting to $42,750, which is
based on the fifty percent (50%) of the fair market value at the common stock at
May 27, 1997, the date of the installment loan agreement. Furthermore, the
Company granted the shareholder the right to purchase 150,000 shares of
restricted common stock at seventy-five percent (75%) of the fair market value
for a period of 180 days commencing May 27, 1997, the date of the installment
agreement.

The Company will require additional financing to finance it proposed business
plan. No assurance can be given that additional financing can be obtained, or if
obtainable, that the terms will be satisfactory to the Company. To date, the
Company has funded its operations from the private sales of Common Stock or
convertible notes (many of which have been converted into Common Stock). Such
sales have been able to fund only minimal operations and technological
developments. Development and exploitation of technologies have been delayed by
lack of adequate funding.

ITEM 7.  FINANCIAL STATEMENTS

See the Financial Statements and Notes thereto.

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

None.

                                    PART III

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

The following table sets forth information concerning the directors and
executive officers of the Company:

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

James B. Lahey           65   President, Chief Executive Officer, and Director
James A. Giansiracusa    51   Vice President - Operations, Secretary, Chief
                              Financial Officer and Director
Ian C. Gent              57   Director
Stephen V. Prewett       54   Director
William N. Whelen, Jr.   62   Director

JAMES B. LAHEY became President and a director of the Company in March 1995.
From 1993 through 1994 he was President and Executive Vice President of
Sensotron, Inc., which develops technologically advanced transducer products.
From 1989 to 1992 he was Corporate Executive Vice President of W. S. Shamban &
Co., a manufacturer of engineered sealing systems. He has previously held senior

<PAGE>

management positions with W. R Grace & Co. and Ausimont U.S.A. Mr. Lahey holds a
Bachelors degree in Civil Engineering from Manhattan College and is a registered
professional engineer in New York.


JAMES A. GIANSIRACUSA has been the Secretary of the Company since October 1993
and became Vice President-Operations in January 1994. Before joining the
Company, Mr. Giansiracusa was a Lieutenant Colonel in the United States Marine
Corps where his duties included command billets in both aviation and infantry.
He was also a consultant for Wackenhut Services International, an international
security firm, from 1991 to 1992. During Mr. Giansiracusa's military service he,
at times, was responsible for over 1,300 persons. Mr. Giansiracusa participated
in strategic planning relative to many global scenarios. Mr. Giansiracusa was
awarded a Master of Science degree in Systems Management from the University of
Southern California in 1983.

IAN C. GENT has been a consultant to the Company since September 1994. Mr. Gent
became Chief Financial Officer and a director of the Company in April 1995. He
has provided advice in the areas of investment banking, corporate structuring,
and organizational strategies. Mr. Gent has also assisted with securities
compliance and investor relations. Between 1989 and 1994 he was Vice President
and Director of the Canadian Commerce Group of Fleet Bank of New York, a member
of the Fleet Financial Group. In January 1994 he became President and Chief
Executive Officer of West Niagara Capital Corporation, a private Canadian
merchant banking company specializing in technology and real estate consulting.
During his 27 years in the securities and banking industries, he has held
positions as Vice President, Merrill Lynch Royal Securities in Canada, Managing
Director of a regional broker dealer, President and Chief Operating Officer of
Southern Tier Gas Producers, and President and Chief Executive Officer of GDM
Securities, a wholly owned subsidiary of Goldome Savings Bank. Mr. Gent has a
Bachelor of Science in Business Administration from Ashland College, Ohio and
has completed several advanced management and industry programs.

DR. STEPHEN V. PREWETT has been a consultant to the Company since July 1994 and
has provided technological assessment support, technology transfer guidance, and
license agreement negotiations. He became Vice President - Technology
Development in July 1994 and a director of the Company in April 1995. Dr.
Prewett has extensive nuclear industry experience and has served in a variety of
positions with the Department of Energy, including Senior Nuclear Engineer from
1976 to 1982. Dr. Prewett was also Director of Environmental Safety and Health
and Manager of Environmental Affairs with Gen Corp, a multi-national
manufacturing company from 1982 to 1984. Dr. Prewett's background includes
market assessment, identifying teaming partners for new technology
implementations, and strategy assessment to identify market trends and industry
growth areas. Dr. Prewett received a Bachelor of Science in Applied Physics
degree from East Carolina University, and Masters and Doctorate degrees from
Virginia Polytechnic Institute in Nuclear Science and Engineering.

WILLIAM N. WHELEN, JR. was appointed a director of the Company in September
1996, filling the vacancy following the resignation of Mr. Joseph. Mr. Whelen
has spent the last thirty years in the investment banking business. He has
served with two Philadelphia firms, Suplee Mosley, Close and Kerner, and Jenney
Montgomery Scott. Today Mr. Whelen is a Director with S. A. Power Corporation
USA. He is a registered representative of Simon Securities, New Jersey. Mr.
Whelen has an electrical engineering degree from Widener University of Chester,
Pennsylvania.

There are no family relationships between any of the Company's directors and

<PAGE>

officers. There are no arrangements or understandings between any director or
executive officer and any other person pursuant to which any person has been
elected or nominated as a director or executive officer.

SECTION 16(a) - Beneficial Ownership Reporting compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than 10%
of the Company's stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than 10% beneficial owners are required by
applicable regulations to furnish the Company with copies of all Section 16(a)
forms they file.

Based solely upon a review of the copies of such forms furnished to the Company
and information involving securities transactions of which the Company is aware,
the Company believes that during the fiscal year ending December 31, 1999, there
was compliance with all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than 10% beneficial stockholders.

ITEM 10. EXECUTIVE COMPENSATION

Cash Compensation

The following table presents, for each of the last three fiscal years, the
annual compensation earned by the chief executive officer and the most highly
compensated executive officers of the Company for the three fiscal years ended
December 31, 1999:

                           Summary Compensation Table
<TABLE>
<CAPTION>
                                                                               LONG TERM COMPENSATION AWARDS

                                                                                                  All Other Annual
Name and Principal                      ANNUAL COMPENSATION              Securities Underlying      COMPENSATION
POSITION                       YEAR           SALARY           BONUS           OPTIONS/SAR

<S>                            <C>         <C>                   <C>               <C>                   <C>
James B. Lahey, President      1999        $120,000(1)           0                 0                     0
                               1998         120,000(1)           0                 0                     0
                               1997         120,000(1)           0                 0                     0

James A. Giansiracusa,         1999        $132,000(1)           0                 0                     0
Vice President, Operations     1998        $132,000(1)           0                 0                     0
                               1997        $132,000(1)           0                 0                     0

Stephen V. Prewett, Vice       1999        $   0                 0                 0                     0
President, Technology          1998        $   0                 0                 0                     0
Development                    1997        $108,000(1)           0                 0                     0
</TABLE>

(1)  The amounts stated above have not been fully paid and Messrs. Lahey,
     Giansiracusa, and Prewett have agreed to deferred compensation in the
     amount totaling $1,005,600 from deferrals in the three fiscal years
     reflected in the above table. (Also see Notes 6 and 11 to Consolidated
     Financial Statements.)


<PAGE>

The Company entered into Employment Agreements effective April 1, 1995, with its
key employees, Messrs. Lahey, Giansiracusa, and Prewett, to serve in the
positions set forth above for a period of two years, and unless otherwise
terminated, to continue year by year thereafter. The basic annual salaries under
the Employment Agreements are $120,000, $132,000, and $108,000, respectively,
subject to a 40% deferral that will be paid when the Company's financial
condition permits such payment. Such individuals also received stock options
under the 1995 Stock Option Plan for 300,000 shares, 500,000 shares, and 500,000
shares, respectively. During portions of 1995, 1996, 1997, 1998 and 1999, key
officers have deferred salaries in amounts significantly greater than 40% so
that cash could be applied to the Company's operations.

Compensation of Directors

Directors received no payment for their services as directors during 1998,
although the Company's By-Laws provide that directors shall receive $500 for
each meeting. The compensation of officers and directors is subject to review
and adjustment from time to time by the Board of Directors.

Stock Options

The following table presents information for the named officer in the Summary
Compensation Table with respect to options exercised during fiscal year ended
December 31, 1999 and unexercised options held as of the end of the fiscal year.

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


<TABLE>
<CAPTION>
                                                                 Number of Securities          Value of Unexercised
                                                                Underlying Unexercised      In-the-Money Options/SARs
                                                              Options/SARs at FY-End (#)           at FY-End ($)
                            Shares Acquired       Value              Exercisable/                  Exercisable/
Name                        on Exercise (#)   Realized ($)          Unexercisable                 Unexercisable
----                        ---------------   ------------    --------------------------    -------------------------

<S>                                <C>              <C>                 <C>                         <C>
James B. Lahey                     0                0                   500,000/0                   $160,000/$0
James A. Giansiracusa              0                0                 1,556,593/0                   $498,109/$0
Stephen V. Prewett              100,000             0                   694,783/0                   $254,330/$0
Ian C. Gent
William N. Whelen                  0                0                   200,000/0                    $64,000
                                   0                0                   200,000/0                    $64,000
</TABLE>

Values reflected above are based on the closing price of $ .32 per share of the
Company's Common Stock for the last business day of the fiscal year.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of December 31, 1999, certain information as
to shares of the Common Stock owned by (i) each person known by management to
beneficially own more than 5% of the outstanding Common Stock, (ii) each of the
Company's directors, and (iii) all executive officers and directors of the
Company as a group:

<PAGE>

<TABLE>
<CAPTION>
Name and Address of                          Amount and Nature of         Percent of Outstanding
Beneficial Owner                           Beneficial Shares Owned              Ownership
-------------------                        -----------------------        ----------------------

<S>            <C>                               <C>                                 <C>
James B. Lahey (1,3,5)                           1,600,000                           5%
James A. Giansiracusa (2,3,5)                    2,421,593                           7%
Ian C. Gent (3,4,5)                                700,000                           2%
Stephen V. Prewett (3,4,5)                       1,194,783                           4%
William N. Whelen, Jr. (4,5)                       600,000                           2%
All Officers and Directors as a group
  (5 persons) (6)                                5,616,376                          19%
Ruth P. Brittingham (7)                          4,022,292                          11%
S. A. Power Corporation (7)                      2,000,000                           6%
O. G. Sansone & Colleen Sansone (7).             5,543,603                          16%
</TABLE>

---------------------------------
* Amount held represents less than 1%.

(1)  Includes 500,000 shares of Common Stock as part of an employment contract.
(2)  Includes 1,556,593 shares of Common Stock subject to currently exercisable
     options.
(3)  Includes 500,000 shares of Common Stock awarded as Part of Incentive
     Compensation Plan.
(4)  Includes 400,000 shares of Common Stock awarded as Part of Incentive
     Compensation Plan.
(5)  The address for these individuals is the address of the Company.
(6)  Includes 3,251,376 shares of Common Stock subject to currently exercisable
     options.
(7)  Not Directors or Officers.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit
Number   Exhibit

(3)      (i)      Articles of Incorporation.(1)
         (ii)     Amended and Restated By-laws.(1)
(10)     (i)      Lockheed Martin Idaho Technologies Company (LMITCO) Purchase
                  Order No. K99-181662, Encapsulation Study - Polysiloxane
                  Encapsulation of Calcined Waste.
         (ii)     1995 Stock Option Plan and Form S-8 Registration Statement.(1)
         (iii)    Employment Agreements dated April 1, 1995 of Messrs. Lahey,
                  Giansiracusa, and Prewett. (1)
(11)     Form 10-KSB for the Period Ending December 31, 1997. (2)
(11.2)   Form 10-KSB for the Period Ending December 31, 1998. (2)
(27)     Financial Data Schedule.
(99)     Risk Factors.


<PAGE>

Note: Certain previously filed exhibits are no longer being incorporated by
reference (and therefore not numerically listed) as the underlying documents
have either expired or are no longer material or relevant.

(1)  Previously filed as part of the Form 10 filed in May 1995 and which are
     hereby incorporated by reference.
(2)  Previously filed as part of the Form 10-KSB for the Period Ending December
     31, 1997 and 1998.
(b)  Reports on Form 8-K

None.

<PAGE>

                                   SIGNATURES

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

Orbit Technologies Inc.




By: /s/
   --------------------------------
   James B. Lahey
   Chief Executive Officer and Chairman of the Board of Directors

Date:    April 14, 1999

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

NAME                        TITLE                               DATE


/s/ JAMES B. LAHEY          Chief Executive Officer and         April 14, 2000
------------------------
James B. Lahey              Chairman of the Board (Chief
                            Executive Officer)

/s/JAMES A. GIANSIRACUSA    Vice President- Operations, Chief   April 14, 2000
------------------------
James A. Giansiracusa       Financial Officer (Chief
                            Financial and Accounting
                            Officer), Secretary, and Director

/s/ IAN C. GENT             Director                            April 14, 2000
------------------------
Ian C. Gent

/s/STEPHEN V.  PREWETT
------------------------
Stephen V. Prewett          Director                            April 14, 2000

/S/WILLIAM N. WHELEN        Director                            April 14, 2000
------------------------
William N. Whelen, Jr.

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES

                              INDEX TO FORM 10-KSB

                                DECEMBER 31, 1999


INDEPENDENT AUDITORS REPORT                                     F-2


CONSOLIDATED BALANCE SHEET                                      F-3
    At December 31, 1999


CONSOLIDATED STATEMENTS OF OPERATIONS                           F-4
    For the Years Ended December 31, 1998 and 1999


CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY              F-5
    For the Year Ended December 31, 1998 and 1999


CONSOLIDATED STATEMENTS OF CASH FLOWS                           F-6
    For the Years Ended December 31, 1998 and 1999


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                   F-7 - F-27



                                      F-1

<PAGE>




To the Stockholders of
Orbit Technologies Inc. and Subsidiaries

                          INDEPENDENT AUDITORS' REPORT

We have audited the accompanying consolidated balance sheet of Orbit
Technologies Inc. and Subsidiaries as of December 31, 1999, and the related
consolidated statements of operations, stockholders' deficiency and cash flows
for the years ended December 31, 1998 and 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Orbit Technologies
Inc. and Subsidiaries as of December 31, 1999, and the results of its operations
and its cash flows for the years ended December 31, 1998 and 1999, in conformity
with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the consolidated
financial statements, the Company has not generated any revenue, to-date, from
any of its products or technologies, and incurred a net loss of approximately
$635,000 during the year ended December 31, 1999. Further, as of December 31,
1999, the Company had a working capital deficiency of approximately $3,408,000
and stockholders' deficiency of approximately $3,321,000. As described more
fully in Notes 1, 7 and 11 to the consolidated financial statements, the Company
is in default on its loan agreements with various individuals, certain of whom
have filed a lawsuit, and is in arrears on accounts with certain vendor
creditors which, among other things, causes the balances to become due on
demand. The Company is not aware of any alternate sources of capital to meet
such demands, if made. Those conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

                                       TABB, CONIGLIARO & McGANN, P.C.

New York, NY
March 27, 2000

                                       F-2

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                              AT DECEMBER 31, 1999

                                     ASSETS
                                     ------

<TABLE>
<CAPTION>
<S>                                                                             <C>
Current Assets:
  Cash                                                                          $  81,587
                                                                                ---------

    Total Current Assets                                                           81,587

Property and Equipment - At cost, net of accumulated depreciation and
    allowance against equipment expenditures                                       19,867

Intangible Assets, Net of accumulated amortization                                 62,677

Other Assets                                                                        4,800
                                                                                ---------

    Total Assets                                                                $ 168,931
                                                                                =========
</TABLE>

                     LIABILITIES AND STOCKHOLDERS DEFICIENCY

<TABLE>
<CAPTION>
<S>                                                                              <C>
Current Liabilities:
  Accounts payable and accrued liabilities                                      $ 1,967,349
  Notes payable                                                                   1,522,091
                                                                                -----------

    Total Current Liabilities                                                     3,489,440
                                                                                -----------

Commitments, Contingencies and Other Matters
  (Notes 1, 2, 3, 6, 7, 8 and 11)

Stockholders' Deficiency:
  Preferred stock - par value $.01 per share; shares authorized
    - 1,000,000; shares issued and outstanding - none                                     -
  Common stock - par value $.01 per share; shares authorized -
    50,000,000;  shares issued and outstanding - 36,822,805                         368,228
  Additional paid-in capital                                                     11,842,088
  Accumulated deficit                                                           (15,530,825)
                                                                                -----------

    Total Stockholders' Deficiency                                               (3,320,509)
                                                                                -----------

    Total Liabilities and Stockholders' Deficiency                              $   168,931
                                                                                ===========
</TABLE>






See notes to consolidated financial statements.

                                       F-3


<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
<S>                                                                                 <C>                 <C>

                                                                                        For the Years Ended
                                                                                             December 31,
                                                                                ----------------------------------
                                                                                     1998                 1999
                                                                                --------------       -------------
Revenue                                                                         $     -              $     -
                                                                                --------------       -------------
Costs and Expenses:
  Research and development                                                            7,416                      -
  General and administrative                                                        490,711                373,483
  Compensatory element of common stock and options                                   83,334                405,000
  Amortization of financing costs                                                    30,281                      -
  Debt conversion expense                                                            59,000                 96,343
  Interest expense                                                                  198,762                160,638
  Other expense (income) , net                                                        7,550               (400,255)
                                                                                -----------              ---------

      Total Costs and Expenses                                                      877,054                635,209
                                                                                -----------              ---------

Net Loss                                                                        $  (877,054)             $(635,209)
                                                                                ===========              =========
PER SHARE DATA:

Basic and Diluted Loss Per Share                                                     $(.03)                  $(.02)
                                                                                     =====                   =====

Weighted Average Common Shares Used in Basic and Diluted Loss
   Per Share                                                                     30,997,491             34,359,349
                                                                                ===========             ==========
</TABLE>

See notes to consolidated financial statements.

                                       F-4


<PAGE>
<TABLE>
<CAPTION>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIENCY

                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999


                                                              Common Stock
                                                          ----------------------     Additional      Acumulated
                                                           Shares       Amount     Paid-in Capital     Deficit
                                                          ----------   ---------   ---------------  -------------
<S>                                                          <C>          <C>            <C>             <C>
Balances at December 31, 1997                             27,115,768   $ 271,158     $10,193,132    $(14,018,562)

Issuance of stock for conversion of notes payable          4,340,059      43,401         490,834             -
Issuance of stock in settlement of litigation                 40,000         400           7,150             -
Stock issued in connection with compensatory obligations     250,000       2,500          52,500             -
Stock option issued in connection with consulting agreement      -           -            20,000             -
Cancellation of stock for non-payment of note receivable    (260,000)     (2,600)            -               -
Satisfaction of notes receivable in exchange for services       -           -                -               -
Issuance of stock for cash                                   998,889       9,989         271,111             -
Amortization of unearned financing fees                          -           -               -               -
Debt conversion expense                                          -           -            59,000             -
Net loss                                                         -           -               -          (877,054)
                                                          ----------   ---------     -----------    ------------
Balances at December 31, 1998                             32,484,716     324,848      11,093,727     (14,895,616)

Issuance of stock for cash                                   815,396       8,154         131,846             -
Issuance of stock for conversion of notes payable and
related accrued interest                                     675,875       6,758         137,640
Issuance of stock for accrued interest                         2,500          25             475             -
Debt conversion expense                                          -           -            96,343             -
Issuance of stock for accrued expenses                        19,318         193           3,307             -
Exercised stock options                                      300,000       3,000               -             -
Stock awarded to directors and officers                    2,400,000      24,000         360,000             -
Stock awarded to employee                                    125,000       1,250          18,750             -
Net loss                                                         -           -               -          (635,209)
                                                          ----------   ---------     -----------    ------------
Balances at December 31, 1999                             36,822,805   $ 368,228     $11,842,088    $(15,530,825)
                                                          ==========   =========     ===========    ============
</TABLE>
<TABLE>
<CAPTION>
                                                             Unearned       Notes
                                                           Compensation   Receivable
                                                            and Finance     from
                                                              Charges    Stockholders        Total
                                                            -----------  -------------    -----------
<S>                                                             <C>           <C>             <C>
Balances at December 31, 1997                               $ (30,281)     $ (10,934)     $(3,595,487)

Issuance of stock for conversion of notes payable                 -              -            534,235
Issuance of stock in settlement of litigation                     -              -              7,550
Stock issued in connection with compensatory obligations          -              -             55,000
Stock option issued in connection with consulting agreement       -              -             20,000
Cancellation of stock for non-payment of note receivable          -            2,600              -
Satisfaction of notes receivable in exchange for services         -            8,334            8,334
Issuance of stock for cash                                        -              -            281,100
Amortization of unearned financing fees                        30,281            -             30,281
Debt conversion expense                                           -              -             59,000
Net loss                                                          -              -           (877,054)
                                                           ----------      ---------      -----------
Balances at December 31, 1998                                     -              -         (3,477,041)

Issuance of stock for cash                                        -              -            140,000
Issuance of stock for conversion of notes payable and
related accrued interest                                          -              -            144,398
Issuance of stock for accrued interest                            -              -                500
Debt conversion expense                                           -              -             96,343
Issuance of stock for accrued expenses                            -              -              3,500
Exercised stock options                                           -              -              3,000
Stock awarded to directors and officers                           -              -            384,000
Stock awarded to employee                                         -                            20,000
Net loss                                                          -              -           (635,209)
                                                           ----------      ---------      -----------
Balances at December 31, 1999                               $     -              -        $(3,320,509)
                                                           ==========      =========      ===========
</TABLE>

See notes to consolidated financial statements.

                                       F-5

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                   For the Years Ended
                                                                                       December 31,
                                                                                ----------------------------
                                                                                  1998              1999
                                                                                ----------       -----------
<S>                                                                                <C>               <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                     $ (877,054)      $  (635,209)
   Adjustments to reconcile net loss to net cash used in operating
      activities:
           Depreciation and amortization                                            25,567            25,000
           Amortization of unearned and deferred finance costs                      30,281                 -
           Compensatory element of common stock and options                         83,334           405,000
           Gain from write-off of old obligations                                        -         (352,558)
           Debt conversion expense                                                  59,000            96,343
           Loss on litigation settlements                                            7,550                 -
           Issuance of stock for accrued expenses                                        -             3,500

       Cash provided by (used for) the change in assets and liabilities:
            Decrease in other assets                                                 9,215                 -
            Increase in accounts payable and accrued liabilities                   327,202           242,644
                                                                                ----------       -----------

             NET CASH USED IN OPERATING ACTIVITIES                                (334,905)         (215,280)
                                                                                ----------       ----------

 CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from sale of stock                                                     281,100           140,000
   Proceeds from exercise of stock options                                               -             2,000
   Proceeds from loans                                                              94,500           134,500
   Repayment of officer loan payable                                               (23,959)          -
                                                                                ----------       -----------

           NET CASH PROVIDED BY FINANCING ACTIVITIES                               351,641           276,500
                                                                                ----------       -----------

 INCREASE IN CASH                                                                   16,736            61,220

 CASH - BEGINNING                                                                    3,631            20,367
                                                                                ----------       -----------

 CASH - ENDING                                                                  $   20,367       $    81,587
                                                                                ==========       ===========
</TABLE>


See notes to consolidated financial statements.

                                       F-6


<PAGE>

                                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1 -      BUSINESS AND CONTINUED OPERATIONS

               Orbit Technologies Inc. (the "Company") was incorporated in the
               State of Delaware on April 29, 1985. The Company is a technology
               portal for new and innovative technologies, engineering ideas,
               methods and processes. The Company's business plan is to develop
               or acquire new or innovative technologies that the Company
               believes hold the potential to become commercially viable
               products or processes. Once a product or process receives
               commercial validation through an outside or third party, it is
               the Company's intention to either spin it off as a separate
               business entity, or license or sell to an affiliated or
               unaffiliated entity that, at that time, becomes responsible for
               the production, marketing and sales of such products or services.
               The Company's technologies are undergoing certain feasibility
               studies and/or actual tests and evaluations. To date, the Company
               has not financially benefited from the commercialization of any
               of its technologies.

               The accompanying financial statements have been prepared in
               conformity with generally accepted accounting principles, which
               contemplate continuation of the Company as a going concern.
               However, for the years ended December 31, 1998 and 1999, the
               Company incurred net losses of approximately $877,000 and
               $635,000, respectively, and as of December 31, 1999, had a
               stockholders' deficiency and a working capital deficiency of
               approximately $3,321,000 and $3,408,000, respectively. The
               Company is also in default on a significant number of loan
               agreements which total approximately $2,036,000 in principal and
               interest as of December 31, 1999, and is in arrears with
               substantially all of its other payables and accrued liabilities.
               The Company requires additional funds to continue research and
               development efforts and complete the necessary work to
               commercialize its technologies. Until completion of the
               development of a technology and the commencement of sales, the
               Company will have no operating revenues, but will continue to
               incur substantial expenses and operating losses. No assurances
               can be given that the Company can complete development of any
               technology or that, if any technology is fully developed, it can
               be manufactured on a large-scale basis or at a feasible cost.
               Further, no assurance can be given that any technology will
               receive market acceptance. These factors raise substantial doubt
               about the Company's ability to continue as a going concern.

               The Company is exploring additional sources of working capital
               including private borrowings, sales of its securities, joint
               ventures and licensing of technologies. While no assurance can be
               given, management believes the Company can raise adequate capital
               to keep the Company functioning at a minimum level of operation
               in 1999. For the year ended December 31, 1999, the Company's
               proceeds from all financing activities amounted to approximately
               $276,500 (see Note 13).

                                       F-7


<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE  1 -      BUSINESS AND CONTINUED OPERATIONS (Continued)

               The Company is exploring ways to reduce its existing liabilities,
               including exchanging certain of its liabilities for shares of its
               common stock. For the year ended December 31, 1999, the Company
               exchanged $125,000 of principal on various promissory notes for
               shares of common stock (see Note 13).

               To date, the Company has not completed its restructuring of the
               remaining debt and the Company continues to be in default under
               such agreements. On March 6, 1997, one group of note holders,
               representing $600,000 of the promissory notes outstanding as of
               December 31, 1997, has filed a lawsuit against the Company to
               recover loans and other monies provided to the Company. During
               June 1998, the Company and the note holders reached a tentative
               settlement, which is subject to the approval of the majority of
               the shareholders and approval of the residing court (see Note
               3b).

               The Company's ability to continue as a going concern is dependent
               upon obtaining the additional financing, restructuring and/or
               curing the defaults on its debt, completion of research and
               development and the successful marketing of its technologies.
               These financial statements do not include any adjustments
               relating to the recoverability of recorded asset amounts that
               might be necessary as a result of the above uncertainty.

NOTE  2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

               PRINCIPLES OF CONSOLIDATION

               The consolidated financial statements include the accounts of the
               Company and its wholly owned subsidiaries.

               All material intercompany balances and transactions have been
               eliminated in consolidation.

               USE OF ESTIMATES

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

                                       F-8

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

               FAIR VALUE OF FINANCIAL INSTRUMENTS

               Cash and cash equivalents, note receivable, accounts payable,
               accrued expenses, due to stockholders and notes payable are
               reflected in the accompanying consolidated balance sheets at
               amounts considered by management to reasonably approximate fair
               value.

               CASH AND CASH EQUIVALENTS

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

               CONCENTRATION OF CREDIT RISK

               Financial instruments, which potentially subject the Company to
               concentrations of credit risk, are primarily trade accounts
               receivable. Ongoing credit evaluations of customers' financial
               condition will be performed and generally no collateral will be
               required.

               EQUIPMENT AND FIXTURES

               Equipment and fixtures are recorded at cost. Depreciation is
               provided using the accelerated and straight-line methods over the
               estimated useful lives of the related assets as follows:

                       DESCRIPTION                                      YEARS

                Furniture and fixtures                                    7
                Computer hardware and software                            5

                INTANGIBLE ASSETS

               Patent costs, which include legal costs and filing fees, are
               being amortized on the straight-line method over the shorter of
               the estimated economic life of the patents or seventeen years.

               INCOME TAXES

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

                                       F-9

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

               DEFERRED AND UNEARNED FINANCE COSTS

               Deferred and unearned finance costs represent expenses incurred
               and common shares issued to obtain financing for the Company and
               are amortized over the life of the related debt obligation.

               REVENUE RECOGNITION

               Revenue from license fees will be recognized in the year
               received. Revenue from the sale of technology will be recognized
               in the period in which it is earned.

               RESEARCH AND DEVELOPMENT COSTS

               Research and development costs are charged to expense as
               incurred, unless they are reimbursed under specific contracts.
               The costs of materials and equipment that are acquired or
               constructed for research and development activities, and have
               alternative future uses (either in research and development,
               marketing or production), are classified as property and
               equipment and depreciated over their estimated useful lives.
               Certain software development costs are capitalized.

               STOCK-BASED COMPENSATION

               As permitted by SFAS No. 123, Accounting for Stock-Based
               Compensation, the Company accounts for its stock-based
               compensation arrangements pursuant to APB Opinion No. 25,
               "Accounting for Stock Issued to Employees. In accordance with the
               provisions of SFAS No. 123, the Company discloses the proforma
               effects of accounting for these arrangements using the minimum
               value method to determine fair value.

               LOSS PER SHARE

               Basic earnings per share (Basic EPS) are computed by dividing net
               loss available to common stockholders by the weighted average
               number of common shares outstanding during the period. Diluted
               earnings per share (Diluted EPS) gives effect to all dilutive
               potential common shares outstanding during a period. In computing
               Diluted EPS, the treasury stock method is used in determining the
               number of shares assumed to be purchased from the conversion of
               common stock equivalents. Securities that could potentially
               dilute Basic 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 options,
               warrants, convertible notes and convertible accrued salaries
               discussed in Notes 7, 8 and 11 to the accompanying financial
               statements.

                                      F-10

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

               IMPAIRMENT OF LONG-LIVED ASSETS

               During 1996, the Company adopted the Statement of Financial
               Accounting Standards (SFAS) No. 121, Accounting for the
               Impairment of Long-Lived Assets and for Long-Lived Assets to be
               Disposed of. Under the provisions of this statement, the Company
               has evaluated its long-lived assets for financial impairment, and
               will continue to evaluate them as events or changes in
               circumstances indicate that the carrying amount of such assets
               may not be fully recoverable.

               The Company evaluates the recoverability of long-lived assets by
               measuring the carrying amount of the assets against the estimated
               undiscounted future cash flows associated with them. At the time
               such evaluations indicate that the future undiscounted cash flows
               of certain long-lived assets are not sufficient to recover the
               carrying value of such assets, the assets are adjusted to their
               fair values. Based on these evaluations, there were no
               adjustments to the carrying value of long-lived assets in 1996.
               In December 1997, the Company recorded a charge of $223,064
               related to special use assets under construction (Note 4).

               IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

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

NOTE  3-       COLLABORATION AGREEMENTS

               In March 1998, the Company signed a contract with Lockheed Martin
               Idaho Technologies Company (LMITCO) for evaluating Orbit's
               proprietary polymer system, as an encapsulating agent for
               radioactive ash. In July 1998, this contract was modified to test
               Orbit's polymer system with a low-level calcine waste surrogate
               material. The results recommended that pre-treatment options be
               explored in more detail for chromium and cadmium and, therefore,
               be recommended as a treatment option leading to the disposal of
               the low level waste stream.

               In June 1999, the Company signed a contract with Lockheed Martin
               Idaho Technologies Company (LMITCO) to evaluate Orbit's
               proprietary and patent pending Polymer Encapsulation Technology
               with a surrogate waste processed at the Idaho Nuclear Technology
               and Engineering Center (INTEC). The results recommended the U.S.
               Department of Energy (DOE) fund a pilot plant to demonstrate
               Orbit's technology.

                                      F-11

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 -       PROPERTY AND EQUIPMENT - NET

               Property and equipment, net, consisted of the following at
               December 31, 1999:

<TABLE>
<CAPTION>
<S>                   <C>                                                             <C>

                      Office furniture and fixtures                                $   46,605
                      Research laboratory furniture and fixtures                       65,087
                      In-process machinery                                            223,064
                                                                                   ----------

                              Sub-total                                               334,756

                      Accumulated depreciation                                        (91,825)
                      Valuation allowance for in-process machinery                   (223,064)
                                                                                   ----------

                                                                                   $   19,867
                                                                                   ==========
</TABLE>

               During the year ended December 31, 1997, the Company provided for
               a $223,064 valuation allowance for a probable loss against two
               machines, which have not been placed in service to date. The
               valuation allowance is equal to the aggregate cost of the
               machines.

               Depreciation expense for the years ended December 31, 1998 and
               1999 was $20,437 and $19,868, respectively.

NOTE  5 -      INTANGIBLE ASSETS

               Intangible assets consisted of the following at December 31,
               1999:
<TABLE>
<CAPTION>
<S>                       <C>                                                        <C>
                           Patent costs                                            $   87,212
                           Accumulated amortization                                   (24,535)
                                                                                   ----------

                                                                                   $   62,677
                                                                                   ==========
</TABLE>

               Patent costs are being amortized over seventeen years on the
               straight-line method.

               Amortization expense for the years ended December 31, 1998 and
               1999 was $5,130 and $5,132, respectively.

                                      F-12

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  6 -      ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

               Accounts payable and accrued liabilities consist of the following
               at December 31, 1999:
<TABLE>
<CAPTION>
<S>                        <C>                                                       <C>
                           Salary and related taxes (Note 11)                      $1,017,592
                           Professional fees                                          293,730
                           Interest                                                   513,471
                           Consulting                                                  39,739
                           Miscellaneous                                              102,817
                                                                                   ----------

                                                                                   $1,967,349
                                                                                   ==========
</TABLE>
NOTE  7 -      NOTES PAYABLE
<TABLE>
<CAPTION>
<S>            <C>                                                                                 <C>

               Notes payable consisted of the following at December 31, 1999:

                    a)   Represents four promissory notes aggregating $170,000,
                         all of which are past due, with interest at 15%. During
                         the year ended December 31, 1999, the Company reversed
                         $120,000 of these notes, which date back to 1992 and
                         1993. The gain is reflected in the accompanying
                         financial statements as other income of $246,313, which
                         includes $126,313 of accrued interest related to these
                         notes.                                                                 $   50,000


                    b)   Represents a settlement agreement entered into during
                         1995 to pay past due consulting fees. Under such
                         agreement, the Company is required to repay this debt
                         from proceeds of future equity or debt financings as
                         follows: 6% of the 1st $1,000,000 - $60,000; 7% of the
                         2nd $1,000,000 - $70,000; 8% of the 3rd $1,000,000 -
                         $80,000; 6.425% of the 4th $1,000,000 - $64,250.                          274,250

                    c)   Represents $100,000 in a one-year promissory note
                         bearing interest at 10% per annum, due September 13,
                         1996. The note and related accrued interest is
                         convertible into common stock at $0.60 per share, with
                         automatic conversion upon the effectiveness of a
                         Registration Statement under the Securities Act of
                         1933. As part of a settlement agreement with a note
                         holder, during the first quarter of 1999, the Company
                         agreed to convert principal of $50,000 and accrued
                         interest of $18,281, relating to a note payable
                         outstanding at December 31, 1998, into 273,132 shares
                         of the Company's common stock. Under the original loan
                         agreement, the debt was convertible, at the option of
                         the note holder, at $0.60 per share. The difference
                         between the original conversion rate of $0.60 and the
                         actual conversion rate of $0.25 was reflected in the
                         accompanying financial statement as a debt conversion
                         expense of $95,593 (see Note 13).                                          50,000



</TABLE>

                                                      F-13


<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  7 -       NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>
<S>                  <C>                                                                           <C>

                    d)   During the years ended December 31,1999, 1998, 1997 and
                         1996, the Company borrowed $27,000, $-0-, $76,800 and
                         $51,000, respectively, from its officers and issued
                         convertible notes to reflect these borrowings. Each
                         note bears interest of 10% per annum and is due one
                         year from the issuance date. The notes principal and
                         accrued interests are convertible into common stock at
                         prices ranging from $0.10 and $0.22 per share of debt.
                         During the year ended December 31, 1998, the Company
                         repaid $23,959 in principal and $24,941 in interest to
                         an officer. The remaining notes are in default.                        $  130,841

                    e)   During the years ended December 31, 1999 and 1998, the
                         Company borrowed $25,000 and $85,000, respectively,
                         from three private investors and issued convertible
                         promissory notes that mature during November 1999. The
                         interest rate on these promissory notes range between
                         8% and 10%. The notes principal balance and accrued
                         interest can be converted into the Company's common
                         stock at the market price discounted by 20% of the
                         average bid price for the period five days prior to the
                         date of conversion. In January of 1999, one of the
                         private investors converted their note with principal
                         of $25,000 and related accrued interest of $362 at the
                         above rate into 120,771 shares of common stock.
                                                                                                    85,000


                    f)   Represents one-year promissory notes due at various
                         dates during 1996 at interest rates ranging from 10% to
                         15% per annum. Notes with principal amounting to
                         $350,000 and related accrued interest are convertible
                         into common stock at prices ranging from $.10 - $.22
                         per share.

                         The Company is in default under these obligations. In
                         June of 1998, a tentative settlement was reached, which
                         issubject to shareholder and court approvals (see
                         Note 11 - Benveniste Litigation).                                      $  600,000


</TABLE>

                                                     F-14


<PAGE>

                                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  7 -      NOTES PAYABLE (Continued)

<TABLE>
<CAPTION>
<S>                   <C>                                                                       <C>

                 g)   On May 27, 1997, the Company entered into an installment  loan
                      agreement with an individual  shareholder to borrow  $300,000,
                      payable in $100,000 installments on May 27,1997,  September 5,
                      1997 and  December  3, 1997.  As of  December  31,  1998,  the
                      shareholder  has  advanced  the Company  $299,500  against the
                      $300,000 loan agreement.  The installment  loan bears interest
                      at  12%  per  annum  and is due on  May  27,  1999.  The  loan
                      agreement provides for a minimum semi-annual  interest payment
                      of  $6,000  commencing  December  6,  1997,  which was paid in
                      January  1998.  The Company  has  defaulted  on the  remaining
                      semi-annual  payments.  The installment note is collateralized
                      by the Company's rights,  titles and patents,  to a technology
                      known as Ceramic Silicone Foam.

                 h)   During the second  quarter of 1999,  the Company  received the               299,500
                      proceeds  of a $32,500  loan from two  individuals.  The terms
                      of the loans have not yet been determined.                                    32,500

                                                                                                ----------
                                                    Total Notes Payable                         $1,522,091
                                                                                                ==========
</TABLE>
NOTE  8 -       STOCKHOLDERS' EQUITY

               a)   COMMON STOCK TRANSACTIONS

                    1999:

                    During the year ended December 31, 1999, the Company sold
                    815,396 shares of common stock for $140,000 in cash. The
                    Company paid interest expense of $500 by the issuance of
                    2,500 common shares.

                    During the third quarter of 1999, the Company awarded its
                    directors and officers 2,400,000 shares of the Company's
                    common stock. The shares were issued based on years of
                    service provided to the Company. The common stock was valued
                    at $0.16 per share, for a total value of $384,000, which was
                    reflected in the accompanying financial statements as a
                    compensatory element of common stock and options.

                    In addition, during the year ended December 31, 1999, four
                    directors and one officer were each granted stock options
                    for 200,000 shares, of which 100,000 options are exercisable
                    over two years, at a price of $0.50 per share, and 100,000
                    options are exercisable over three years, at a price of
                    $1.00 per share, respectively.

                                      F-15

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  8 -      STOCKHOLDERS' EQUITY (Continued)

               a)   COMMON STOCK TRANSACTIONS (Continued)

                    1999: (Continued)

                    During the third quarter of 1999, an individual exercised
                    200,000 non-qualified stock options, at an exercise price of
                    $0.01 per share.

                    During the third quarter of 1999, the Company awarded an
                    employee 125,000 share of the Company's common stock as
                    additional compensation for services provided to the
                    Company. The common stock was valued at $0.16 per share, for
                    a total value of $20,000, which was reflected in the
                    accompanying financial statements as a compensatory element
                    of common stock and options.

                    During the third quarter of 1999, an officer of the Company
                    exercised 100,000 non-qualified stock options, at an
                    exercise price of $0.01, previously granted by the Company.
                    The exercise price of $1,000 was reflected in the
                    accompanying financial statements as a compensatory element
                    of common stock and options.

                    During the year ended December 31, 1999, the Company
                    converted $125,000 of principal and $19,398 of accrued
                    interest into 675,875 shares of common stock.

                    During the third quarter of 1999, the Company issued 19,318
                    shares of common stock in settlement of services to an
                    individual for $3,500. The difference between the conversion
                    rate and the value of the services was reflected in the
                    accompanying financial statements as a debt conversion
                    expense of $750.

                    1998:

                    During the year ended December 31, 1998, the Company sold
                    998,889 shares of common stock for $281,100.

                    During the year ended December 31, 1998, the Company and
                    certain of its debt holders agreed to convert $440,332 of
                    principal and $93,903 of accrued interest into 4,340,059
                    shares of common stock.

                    As discussed further in Note 9, the Company entered into a
                    settlement agreement during 1998. Pursuant to the agreement,
                    the Company was required to issue an additional 40,000
                    shares of common stock, valued at $7,550, which was deemed
                    the fair market value at the settlement date.

                                      F-16

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  8 -      STOCKHOLDERS' EQUITY (Continued)

               a)   COMMON STOCK TRANSACTIONS (Continued)

                    1998: (Continued)

                    During the year ended December 31, 1998, the Company awarded
                    250,000 shares of common stock to a former employee, who
                    performed consulting services during 1998. The Company has
                    valued these shares at $55,000.

                    During the year ended December 31, 1998, the Company
                    cancelled 260,000 shares of common stock for non-payment of
                    a note receivable originating from a stock option that was
                    exercised during 1995.

               b)   STOCK OPTIONS

                    The Company has granted options to purchase shares of the
                    Company's common stock to officers, key employees,
                    consultants and financing sources as follows:

                    (1)  1995 STOCK OPTION PLAN

                    The Company's 1995 Stock Option Plan (the "Option Plan") was
                    adopted by the Board of Directors and stockholders of the
                    Company in February 1995. Under the Option Plan, 5,000,000
                    shares of the Company's common stock (subject to certain
                    adjustments) are reserved for issuance upon the exercise of
                    options. Options granted under the Option Plan may be either
                    (i) options intended to constitute incentive stock options
                    under Section 422 of the Internal Revenue Code of 1986 (the
                    "Code"), as amended, or (ii) non-qualified stock options.
                    Incentive stock options may be granted under the Option Plan
                    to employees (including officers and directors who are
                    employees) of the Company on the date of grant.
                    Non-qualified options may be granted to (i) officers and
                    directors of the Company on the date of the grant, without
                    regard to whether they are employees, and (ii) consultants
                    or advisors to, agents or independent representatives of the
                    Company.

                    Incentive stock options granted under the Option Plan may
                    not have an exercise price less than the fair market value
                    of the common stock on the date of the grant (or 110% of the
                    fair market value in the case of employees holding ten
                    percent or more of the voting stock of the Company). Options
                    granted under the Option Plan will expire, not more than ten
                    years from the date of the grant (5 years in the case of
                    incentive options of employees holding ten percent or more
                    of the

                                      F-17


<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  8 -      STOCKHOLDERS' EQUITY (Continued)

               b)   STOCK OPTIONS (Continued)

                    (1)  1995 STOCK OPTION PLAN (Continued)

                    voting stock of the Company) subject to earlier termination
                    under the Option Plan. Optionees under the Option Plan may
                    exercise their options by paying cash, by using the cashless
                    exercise procedure allowed under Federal Reserve Regulation
                    T or by tendering shares of Company common stock that they
                    already own. Options generally become exercisable over a
                    three-year period.

                    For options granted under the non-qualified plan,
                    compensation expense is recorded on the date of grant and is
                    measured by the amount per share that the fair market value
                    of the underlying shares on the date of grant exceeds the
                    grant price.

                    (2)  NON-QUALIFIED STOCK OPTIONS OUTSIDE THE OPTION PLAN

                    From time to time, the Company issues non-qualified stock
                    options outside the option plan described in (1) above.
                    These options are generally granted to consultants for past
                    services and are granted to note holders in connection with
                    financing agreements.

                    The Company entered into a consulting agreement with a
                    scientist on February 1, 1998. Pursuant to the terms of the
                    agreement, the Company granted the consultant two options to
                    purchase 100,000 shares each of restricted common stock.
                    Each stock option provides for an exercise price of $.01 per
                    share and expires on March 31, 2000. The February 1, 1998
                    agreement provides for an additional option to purchase
                    100,000 shares at the above price if the consultant
                    completes a phase of the project by a date to be determined
                    by the Company and the consultant. The options for 200,000
                    shares of common stock were valued at $20,000 and were
                    charged to operations during 1998. During 1999, the
                    consultant exercised these options. The option to purchase
                    an additional 100,000 shares of common stock was not earned
                    as of December 31, 1999.

                    In addition, during the year ended December 31, 1999, four
                    directors and one officer were each granted stock options
                    for 200,000 shares, of which 100,000 options are exercisable
                    over two years, at a price of $0.50 per share, and 100,000
                    options are exercisable over three years, at a price of
                    $1.00 per share, respectively.

                                      F-18

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  8 -      STOCKHOLDERS' EQUITY (Continued)

               b)    STOCK OPTIONS (Continued)

                    (3)  Shares Under Option

                    The following is a summary of activity and information
                    relating to shares (rounded to whole shares) subject to
                    option under the above described plans for the years ended
                    December 31, 1998 and 1999:

<TABLE>
<CAPTION>

                                                            Weighted                               Weighted
                                        Incentive           Average           Non-Qualified         Average
                                      Stock Options      Exercise Price       Stock Options     Exercise Price
                                     --------------      --------------       -------------     --------------
<S>                                     <C>                   <C>                <C>                <C>
Outstanding - 12/31/97                      516,400      $       .79              4,830,672       $     .27
                                                         -----------                              ---------

Options granted - 1998:
  Outside the option plan -
     Consultants                                  -              -                 200,000              .01
Options expired:
  Outside the option plan -
     financing agreements
     ($.88)                                       -              -                (890,000)             .88
                                     --------------      -----------          ------------        ---------

Outstanding - 12/31/98                      516,400              .79             4,140,672              .08

Options granted - 1999:
  Outside the option plan -
     directors and officers                       -              -               1,000,000              .75
Options expired/cancelled:
  Outside the plan                                -              -                (160,000)             .87
Options exercised                                 -              -                (300,000)             .01
                                     --------------      -----------          ------------        ---------

Outstanding - 12/31/99                      516,400              .79             4,680,672              .20
                                     ==============      ===========          ============        =========

COMPOSITION AT 12/31/99:
  1995 stock option plan
    ($.50-$.87/share)                       516,400      $       .79
  1995 stock option plan
    ($.01/share)                                  -              -               2,244,976        $     .01
  Outside the option plan -
    Consultants
    ($.01-$1.06/share)                            -              -               1,435,696              .11
  Outside the option plan -
    directors and officers
    ($.50-$1.00/share)                      -                    -               1,000,000              .75
                                     --------------      -----------          ------------        ---------

Outstanding - 12/31/99                      516,400      $       .79             4,680,672        $     .20
                                     ==============      ===========          ============        =========

Total Value at Option Price                      $   406,200                              $   925,307
                                                 ===========                              ===========

Total Exercisable Value at
    Option Price                                 $   406,200                              $   467,307
                                                 ===========                              ===========
</TABLE>

                                      F-19

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  8 -      STOCKHOLDERS' EQUITY (Continued)

               b)    STOCK OPTIONS (Continued)

                    (3)  SHARES UNDER OPTION (Continued)

                    Had compensation cost for the Company's stock option plans
                    been determined based upon the fair value at the grant date
                    for awards under the plans consistent with the methodology
                    prescribed under SFAS No. 123, the Company's net loss for
                    the year ended December 31, 1999 would have been
                    approximately $733,000, or $(.02) per share, on a diluted
                    basis. The fair value of the options granted during 1999 are
                    estimated at $98,000 on the date of grant using the
                    Black-Scholes option-pricing model with the following
                    assumptions: no dividend yield, volatility of 50%, a
                    risk-free interest rate of 5% and an expected life of two
                    years from date of vesting.

NOTE  9 -      OTHER (INCOME) EXPENSE

               Other (income) expense, net, consists of the following for the
               years ended December 31, 1998 and 1999:

<TABLE>
<CAPTION>
<S>                                                                             <C>                   <C>
                                                                                1998                  1999
                                                                            ------------        -------------

                 a) Gain from litigation settlement                         $          -        $     (47,697)
                 b) Gain from write-off of old obligations                             -             (352,558)
                 c) Loss from litigation settlement                                7,550              -
                                                                            ------------        -------------
                          Total                                             $      7,550        $    (400,255)
                                                                            ============        =============
</TABLE>


          a)   On June 21, 1999, the Company reached a settlement agreement and
               general release with Jeffer, Mangels, Butler & Marmaro, LLP,
               whereby the parties agreed that Orbit shall pay the sum of
               $60,000, which represents a comprise sum for the amounts due
               under a court judgment in favor of Jeffer, Mangels, Butler &
               Marmaro, LLP for past due services in the amount of $107,697,
               plus interest, at a rate of ten percent per annum from December
               10, 1996, and costs, including reasonable attorney's fees in the
               amount of $30,671. This settlement resulted in a net gain of
               $47,697, which has been reflected as other income during the year
               ended December 31, 1999.

                                      F-20

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  9 -      OTHER (INCOME) EXPENSE (Continued)

               b)   During the year ended December 31, 1999, the Company
                    recorded a gain of $352,558 from the write-off of old
                    obligations dating back to 1992 and 1993.

               c)   During November 1998, the Company entered into a settlement
                    agreement with a shareholder in connection with prior
                    purchases of the Company's common stock. The settlement
                    agreement provided for the Company to issue additional
                    40,000 shares of the Company's common stock, valued at
                    $7,550, which was deemed the fair market value at the
                    settlement date.

NOTE 10 -      INCOME TAXES

               The Company was not required to provide for a provision for
               income taxes for the years ended December 31, 1998 and 1999 as a
               result of net operating losses incurred during those years.

               The components of deferred tax assets and liabilities at December
               31, 1999 consist of the following:

<TABLE>
<CAPTION>
<S>               <C>                                                               <C>
                  Deferred Tax Assets:

                      Net operating loss carryforwards                            $4,219,000
                      Tax effects of temporary differences (*)                     1,424,000
                      Start-up costs                                                  93,000
                                                                                  ----------

                          Total Gross Deferred Tax Assets                          5,736,000

                      Less: Valuation allowance                                    5,736,000
                                                                                  ----------

                           Net Deferred Tax Assets                                $   -
                                                                                  ==========
</TABLE>
               (*)  Temporary differences that give rise to the deferred tax
                    asset at December 31, 1999 are primarily: compensatory
                    element of grants of stock options, awards of common stock,
                    allowance against equipment expenditures, and deferred
                    officers compensation.

               The net change in the valuation allowance for deferred tax assets
               was an increase of $246,000.

               As of December 31, 1999, the Company had available approximately
               $10,547,000 of net operating losses for income tax purposes that
               may be carried forward to offset future taxable income, if any.
               The Tax Reform Act of 1986 imposed substantial restrictions on
               the utilization of net operating loss carry forwards in the event
               of an ownership change as defined by the Internal Revenue Code.

                                      F-21
<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 -      INCOME TAXES (Continued)

               These carryforwards expire in the following approximate amounts:

<TABLE>
<CAPTION>
<S>                      <C>                                            <C>
                  YEAR OF EXPIRATION:

                          2000                                          $ 557,000
                          2001                                            726,000
                          2002                                             43,000
                          2003                                              2,000
                          2004                                              2,000
                          2005                                              1,000
                          2006                                              1,000
                          2007                                            937,000
                          2008                                          1,937,000
                          2009                                            932,000
                          2010                                          1,814,000
                          2011                                          1,611,000
                          2012                                            561,000
                          2018                                            773,000
                          2019                                            650,000
                                                                        ---------

                                                                      $10,547,000
                                                                      ===========
</TABLE>

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

<TABLE>
<CAPTION>
<S>                                                             <C>               <C>
                                                              Years Ended December 31,
                                                             -------------------------
                                                                 1998            1999
                                                                -----           -----

                Federal statutory rate                          (34.0)%         (34.0)%
                Non-deductible expenses                            .4              .9
                Unutilized net operating loss                    33.6            33.1
                                                                ------          -----

                Effective rate                                    -0-   %         -0- %
                                                                 =====          =====
 </TABLE>

NOTE 11 -      COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

               LEASE OBLIGATION

               The Company has relocated and has signed a new operating lease
               for office space effective July 1, 1998. Monthly payments under
               this lease amount to: $1,450 per month from July 1, 1998 to June
               30, 1999; $1,510 per month from July 1, 1999 to June 30, 2000;
               and $1,570 per month from July 1, 2000 to June 30, 2001.

               Rental expense for the years ended December 31, 1998 and 1999 was
               $27,723 and $20,478, respectively.

                                      F-22


<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 -      COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

               EMPLOYMENT AND CONSULTING AGREEMENTS

               On April 1, 1995, the Company entered into three employment
               agreements with its then current officers. The agreements provide
               for monthly salaries aggregating $30,000 over an initial two-year
               period ending March 31, 1997, and provide for automatic annual
               renewals. The officers have agreed to defer 40% of their
               respective salaries until a financing of at least $3.5 million is
               raised by the Company. Effective January 1, 1997, one of the
               three officers elected to terminate their contract, which was
               mutually agreed to by the Company.

               For each of the years ended December 31, 1998 and 1999, the
               expense recorded under the remaining agreements amounted to
               $252,000. At December 31, 1999, unpaid obligations under these
               agreements amounted to $1,005,600 and are convertible into common
               stock at $.22 per share.

               POTENTIAL SECURITIES ACT LIABILITIES

               The Company has sold securities and notes without registration
               under the Securities Act of 1933, as amended (the "Act"), or
               without qualification under the securities (blue sky) laws of
               certain states. As a result of such sales, and a subsequent
               transfer of the shares by the original purchasers, the Company
               has not determined it can claim valid exemptions for such sales
               since the burden of proving any exemption is on the Company.

               Therefore, no assurances can be given as to the existence or
               extent of any liability, which may result for violating the
               registration or qualification provisions of the federal or state
               securities laws. The Company thus may have a continuing
               contingent liability under the Securities Act of 1933, as
               amended, the Securities Exchange Act of 1934, as amended (the
               "Exchange Act"), and various state securities laws for an
               undetermined amount for an undetermined period.

               POTENTIAL LIABILITY FOR OVER-ISSUANCES

               Between December 16, 1992 and February 17, 1994, the Company
               issued approximately 15 million more shares of its common stock
               than it had authorized by its Certificate of Incorporation. As a
               result of cancellations during 1997 and a tentative settlement
               discussed in Note 11e, the remaining amount has been reduced to
               approximately 2 million shares.

               It is conceivable that some shareholders will try to hold the
               Company responsible for the acts of its former officers and
               directors with respect to the issuance of such stock in excess of
               the Company's authorized shares. The potential liability is
               unknown, but could be significant. It could also interfere with
               the settlement of the Benveniste litigation (Note 11e). Orbit
               anticipates pursuing an action in Delaware to resolve this
               matter.

                                      F-23

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 -      COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

               MANAGEMENT COMPENSATION PLAN

               On January 3, 1997, the Board of Directors instituted an
               incentive compensation plan for two of the Company's key
               personnel. The plan provides that each executive would be issued
               100,000 shares of common stock for the achievement of each of the
               five events described as follows:

               1.   An increase in the common stock price to $1.00 per share.

               2. First revenue producing contract.

               3.   A singular funding of $1,000,000 or more.

               4.   The filing of registration statement or the reduction of
                    debt over $1,000,000 via a stock conversion or other means.

               5.   Cancellation and or the surrender of shares by former
                    officers, directors, consultants, etc. who are subject to
                    various legal action by the Company.

               No compensation was earned under this plan for the years ended
               December 31, 1998 and 1999.

               LITIGATION/DISPUTES

               a)   A technology referred to as the Metafuse technology was
                    utilized to coat copper-alloy resistance welding electrodes
                    (welding tips) through the fusion of titanium carbide or
                    molybdenum tungsten onto and into copper-alloy welding tips
                    ("TiTRODEs"). TiTRODE type electrodes were sold to Chrysler
                    by a Canadian corporation, with which the Company claims to
                    have an written agreement beginning in January 1994, whereby
                    the two parties would share net revenues derived from the
                    sale of TiTRODEs. The Canadian corporation has not
                    acknowledged the validity of such agreement, and to-date, no
                    monies or any financial information have been received by
                    the Company. The Company intends to retain legal counsel to
                    enforce its agreement. No action was taken during 1998 and
                    1999.


                                      F-24

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 -      COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

               b)   BENVENISTE, ET. AL. VS. ORBIT AND ITS OFFICERS. The action
                    was filed on March 6, 1997 in the Los Angeles Superior
                    Court. The action is to collect principal, interest and
                    other fees and damages relating to various promissory notes
                    executed between the plaintiffs and Orbit during 1992
                    totaling $197,000 and additional loans made during 1995
                    totaling $600,000.

                    The plaintiffs allege that the defendants violated the
                    securities laws of the state of California and made
                    negligent misrepresentations related to Company's
                    technologies, thereby inducing them to loan monies to the
                    Company. The plaintiffs also allege that, pursuant to an
                    oral agreement with an officer of the Company, the exercise
                    price for various stock options to acquire Orbit stock was
                    reduced to $0.10 per share and the conversion price under
                    various convertible loan agreements between the plaintiffs
                    and Orbit was also reduced to $0.10.

                    Further, the plaintiffs allege that they have not received
                    500,000 shares of Orbit stock promised as additional
                    compensations under such agreements and that debt related to
                    the 1992 loans of $197,000 is not reflected on the Company's
                    books.

                    Management contends that all of the debt and related fees
                    and shares of common stock are properly reflected on Orbit's
                    books as of December 31, 1997. The Company's records reflect
                    that the debt related to the 1992 loans of $197,000 and
                    related accrued interest was converted into 226,550 common
                    shares of Orbit in 1993. Management also contends that there
                    was no oral agreement to reduce the exercise and conversion
                    prices of certain financial instruments. Further, management
                    contends that there were no violations of securities laws,
                    that no misrepresentations were made to plaintiffs and all
                    other complaints are without merit.

                    Orbit contends that the plaintiffs loaned money to another
                    entity, other than Orbit in 1992, for which Orbit has no
                    liability. Additionally, Orbit contends that the plaintiffs
                    hold substantial shares of Orbit common stock, which are
                    void and/or voidable. By its Cross Complaint, Orbit seeks to
                    cancel invalidly issued stock and recover money damages.

                                      F-25

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 -      COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

               LITIGATION/DISPUTES (Continued)

               b)   BENVENISTE, ET. AL. VS. ORBIT AND ITS OFFICERS. (CONTINUED).
                    In June of 1998, all parties reached a tentative
                    comprehensive settlement. The financial terms of the
                    tentative settlement include the conversion of all the
                    Benvenistes' debt to 5,745,000 shares of common stock.
                    Because the accord requires the surrender and cancellation
                    of approximately 5 million shares of Orbit common stock
                    issued by past officers and directors that Orbit contends
                    are invalid, the net effect will be to essentially maintain
                    the existing equity structure. The agreement also grants to
                    the Benvenistes' the option to purchase up to 1,100,000
                    shares at a price ranging from $0.23 to $0.75 per share,
                    which depend on the period of time from the option grant
                    date that the options are exercised. The settlement has
                    several contingencies, which need to be resolved before the
                    settlement is final.

               c)   BENVENISTE, ET AL. VS. LAHEY, ET Al. On June 2, 1997,
                    Richard Benveniste and Edgar Benveniste filed suit in the
                    Delaware Court of Chancery on behalf of themselves and
                    purportedly on behalf of the Company against James B. Lahey,
                    James A. Giansiracusa, Stephen V. Prewett, Ian C. Gent and
                    William N. Whelen. The complaint sought a determination by
                    the Court of Chancery for: (i) as to who constituted the
                    valid directors of the Company in connection with a written
                    consent action initiated by the plaintiffs or, (ii) in the
                    alternative, that the Company be required to hold a annual
                    meeting of shareholders.

                    On September 2, 1997, the Court of Chancery decided to defer
                    a decision on the defendants motion to dismiss until such
                    time as an annual meeting of the Company's shareholders was
                    held. The Court thereafter ordered that the Company hold its
                    annual meeting. The Company is in the process of complying
                    with the Court's requirements.

NOTE 12 -      SUPPLEMENTAL CASH FLOW INFORMATION

               During the years ended December 31, 1998 and 1999, the Company
               paid $30,941 and $-0- for interest, respectively.

               NON-CASH TRANSACTIONS

                During the Year Ended December 31, 1998:

               a)   The Company issued 250,000 shares of common stock as
                    consideration for current compensatory obligation amounting
                    to $55,000.

               b)   Convertible promissory notes and related accrued interest
                    aggregating $310,833 were converted to 3,470,817 shares of
                    its common stock.

                                                     F-26

<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 -      SUPPLEMENTAL CASH FLOW INFORMATION (Continued)

               NON-CASH TRANSACTIONS (Continued)

               During the Year Ended December 31, 1998: (Continued)

               c)   In connection with a legal settlement agreement, the Company
                    issued 40,000 shares of its common stock valued at $7,450.

               d)   As an inducement for a note holder to convert, a debt
                    conversion expense of $59,000 was incurred. The note holder
                    converted $223,402 of principal and accrued interest into
                    869,242 shares.

               e)   Notes receivable of $8,334 from a shareholder, relating to
                    an exercise of prior stock options, were satisfied through
                    services rendered.

               f)   Pursuant to a consulting agreement, the Company issued
                    200,000 stock options that had an aggregate value of
                    $20,000.

               During the Year Ended December 31, 1999:

               a)   The Company issued 393,903 shares of common stock for
                    conversion of $75,000 of notes payable and $18,643 of
                    accrued interest.

               b)   The Company issued 2,500 shares of common stock for payment
                    of accrued interest of $500.

               c)   The Company issued 2,400,000 shares of common stock to
                    directors and officers. The common stock was valued at
                    $384,000, which as been reflected in the accompanying
                    financial statements as a compensatory element of common
                    stock and options.

               d)   The Company issued 125,000 shares of common stock to an
                    employee. The stock was valued at $20,000, which has been
                    reflected in the accompanying financial statements as a
                    compensatory element of common stock and options.

               e)   The Company issued 19,318 shares of common stock for payment
                    of accrued expenses of $750.

               f)   The Company converted $50,000 of principal and $755 of
                    accrued interest, relating to a note payable, into 281,972
                    shares of common stock.

                                      F-27