UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q/A


                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                  For the quarterly period ended March 31, 2002

                  Transition Report under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


             For the transition period from __________ to __________

                          Commission File No. 000-30191

                                   TSET, INC.
                                   ----------
             (Exact name of registrant as specified in its charter)

           NEVADA                                   87-0440410
           ------                                   ----------
(State of other jurisdiction of        (I.R.S. Employer Identification Number)
incorporation or organization)


 464 Common Street, Suite 301, Belmont, MA                      02478
 -----------------------------------------                      -----
  (Address of principal executive offices)                    (Zip Code)


Registrant's telephone number, including area code:            (617) 993-9965
---------------------------------------------------            --------------

      (1) Registrant has filed all reports required to be filed by Section 13 or
15(d) of the Securities  Exchange Act of 1934 during the preceding 12 months (or
for such shorter  period that the registrant was required to file such reports),
and

      (2)   has been subject to such filing requirements for the past 90 days.

                              / /  Yes                          /X/  No

      As of June 7,  2002,  there  were  43,937,907  shares  outstanding  of the
issuer's common stock.



<PAGE>

                                     PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The  following  comprise  our  condensed  (unaudited)   consolidated   financial
statements for the three months and nine months ended March 31, 2002.


















                                       2
<PAGE>

                                    TSET, INC
                           CONSOLIDATED BALANCE SHEETS

                                                   March 31,
                                                     2002             June 30,
                                                 (Unaudited)           2001
                                                 -----------        -----------

 ASSETS

 Current Assets
       Cash                                     $     9,721       $    32,619
       Accounts receivable, net                           -
       Prepaids and other current assets            178,829            37,679
                                                -----------       -----------
            Total Current Assets                    188,550            70,298
                                                -----------       -----------
 Property and Equipment                              62,723            62,723
       Less: Accumulated Depreciation               (29,514)          (18,016)
                                                -----------       -----------
            Net Property and Equipment               33,209            44,707
                                                -----------       -----------
 Other Assets
       Intangibles                                2,280,047         2,431,524
       Deferred financing fees                      556,152           520,800
                                                -----------       -----------
            Total Other Assets                    2,836,199         2,952,324
                                                -----------       -----------
 Total Assets                                   $ 3,057,958       $ 3,067,329
                                                ===========       ===========

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Current Liabilities
       Accounts payable                         $ 1,275,817         $ 323,045
       Accrued expenses                             877,642         1,284,268
       Notes payable, current portion               343,900           313,900
                                                -----------       -----------
            Total Current Liabilities             2,497,359         1,921,213
                                                -----------       -----------
 Long Term Liabilities
       Notes payable                                250,000
                                                -----------       -----------
            Total Long Term Liabilities             250,000
                                                -----------       -----------
 Net liabilities of discontinued operations         747,550           667,550
                                                -----------       -----------
            Total Liabilities                     3,494,909         2,588,763
                                                -----------       -----------
 Redeemable Warrants                                686,000                 -

 Shareholders' Equity
       Common stock, authorized 500,000,000          39,386            34,001
            shares of $.001 par value
       Capital in excess of par value            13,749,933        12,418,350
       Deferred equity compensation                       -
       Retained earnings (Accumulated deficit)  (14,912,271)      (11,973,785)
                                                -----------       -----------
            Total Shareholders' Equity           (1,122,951)          478,566
                                                -----------       -----------
 Total Liabilities and Shareholders' Equity     $ 3,057,958       $ 3,067,329
                                                ===========       ===========

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


                                       3
<PAGE>

<TABLE>
 TSET INC and Subsidiaries
 Income Statement

<CAPTION>
                                                              For the three months            For the nine months
                                                                 ended March 31,                 ended March 31,
                                                                 ---------------                 ---------------
                                                               2002             2001          2002           2001
                                                           (Unaudited)       (Unaudited)   (Unaudited)    (Unaudited)
                                                           -----------       -----------   -----------    -----------
<S>                                                        <C>             <C>           <C>             <C>
 Sales                                                     $        -       $    5,000   $     65,070    $      5,000

 Cost of sales                                                      -                -         50,070               -
                                                           ----------      -----------   ------------    ------------
 Gross Margin                                                       -            5,000         15,000           5,000
                                                           ----------      -----------   ------------    ------------
 Selling, General and Administrative expenses:
       Compensation and benefits                              141,261          230,771        401,115         898,717
       Research and development                                58,682           16,038        197,516         127,905
       Professional services                                  225,078          187,088      1,750,454         474,170
       Depreciation and amortization                           71,674           80,544        215,021         220,738
       Other selling general & administrative expenses        126,256          165,576        321,401         435,456
                                                           ----------      -----------   ------------    ------------
 Total Selling, General and Administrative expenses           622,952          680,017      2,885,508       2,156,986
                                                           ----------      -----------   ------------    ------------
 Net Operating Income (Loss)                                 (622,952)        (675,017)    (2,870,508)     (2,151,986)
 Other Income / (expense)                                          50            1,050          1,537           5,591

 Interest Expense                                             (34,349)               -        (69,513)              -
                                                           ----------      -----------   ------------    ------------
 Net Income (Loss) Before Taxes                            $ (657,251)      $ (673,967)  $ (2,938,484)   $ (2,146,395)

 Provision for Taxes                                                -                -              -               -
                                                           ----------      -----------   ------------    ------------
 Net Income (Loss) from continuing operations                (657,251)        (673,967)    (2,938,484)     (2,146,395)
 Income (Loss) from discontinued operations,
    net of income tax of $0                                                   (380,609)                    (1,171,104)
 Loss on disposal of discontinued operations,
    net of income tax of $0                                                 (2,510,000)                    (2,510,000)

 Net Income (Loss)                                         $ (657,251)     $(3,564,576)  $ (2,938,484)   $ (5,827,499)
                                                           ==========      ===========   ============    ============
 Basic Earnings (Loss) Per Share

       Income (loss) from continuing operations                 (0.02)           (0.02)         (0.08)          (0.07)
       Loss from discontinued operations                            -            (0.09)             -           (0.12)
                                                           ----------      -----------   ------------    ------------
       Net Income (loss)                                   $    (0.02)         $ (0.11)       $ (0.08)        $ (0.19)
                                                           ==========      ===========   ============    ============
 Diluted Earnings (Loss) Per Share

       Income (loss) from continuing operations                 (0.02)           (0.02)         (0.08)          (0.07)
       Loss from discontinued operations                            -            (0.09)             -           (0.12)
                                                           ----------      -----------   ------------    ------------
       Net Income (loss)                                      $ (0.02)         $ (0.11)       $ (0.08)        $ (0.19)
                                                           ==========      ===========   ============    ============

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


</TABLE>


                                       4
<PAGE>
<TABLE>
                                                     TSET, INC
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>
                                                                               For the nine months ended March 31,
                                                                               -----------------------------------
                                                                                    2002                  2001
                                                                                 (Unaudited)            (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES                                             -----------            -----------
<S>                                                                            <C>                    <C>
     Net loss from continuing operations                                       $ (2,938,484)          $ (2,146,395)
     Adjustments to reconcile net loss to net cash
         (used in) provided by operations
         Depreciation and amortization                                              215,021                220,738
         Common stock issued for compensation/services                              814,532                 83,954
     Change In
         Inventory Assets                                                                 -                      -
         Accounts receivable                                                              -                  6,000
         Prepaid expenses and other assets                                         (176,502)                  (489)
         Accounts Payable                                                           952,772                193,782
         Accrued Expenses and other liabilities                                     (56,626)               189,322
                                                                               ------------           ------------
             Net cash (used in) provided by Continuing Operations                (1,189,286)            (1,453,088)
CASH FLOWS FROM INVESTING ACTIVITIES
         Purchases of property and equipment                                              -                (77,614)
         Investment in patent protection                                             15,795                      -
         Investment in discontinued operations                                      (84,014)              (177,594)
                                                                               ------------           ------------
             Net cash (used in) provided by Investing Activities                    (68,219)              (255,208)
                                                                               ------------           ------------
CASH FLOWS FROM FINANCING ACTIVITIES
         Issuance of common stock                                                 1,234,607              1,719,740
         Proceeds from short-term borrowings                                              -                      -
         Repayments of short-term borrowings                                              -
         Issuance of notes payable
                                                                               ------------           ------------
             Net cash (used in) provided by Financing Activities                  1,234,607              1,719,740
                                                                               ------------           ------------
NET (DECREASE) INCREASE IN CASH                                                     (22,898)                11,444
CASH
     Beginning of period                                                             32,619                102,949
                                                                               ------------           ------------
     End of period                                                                  $ 9,721              $ 114,393
                                                                               ============           ============

Supplemental schedule of non-cash investing and financing activities:

     Debt satisfied with common stock                                             $ 100,000              $ 419,143
     Note payable issued in satisfaction of accrued liability                     $ 350,000


                     The accompanying notes are an integral part of this financial statement.

</TABLE>


                                       5
<PAGE>

<TABLE>
                                                             TSET, INC
                                           STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

<CAPTION>
                                                            Common Stock
                                                       ------------------------
                                                                                    Capital In       Retained           Total
                                                                                      Excess          Earnings       Shareholders'
                                                                                      of Par        (Accumulated        Equity
                                                       Shares           Amount        Value            Deficit)         Deficit
                                                       ------           ------        -----            --------         -------
<S>                                                  <C>              <C>          <C>             <C>              <C>
 BALANCE at June 30, 2001                            34,000,978       $ 34,001     $ 12,418,350    $ (11,973,785)   $    478,566

       Shares issued on July 6, 2001 for cash           238,806            239           79,761                           80,000

       Shares issued on July 20, 2001 as
           compensation                                     250                             113                              113

       Shares issued on October 1, 2001 for
           consulting services                          360,000            360          100,440                          100,800

       Shares issued on October 1, 2001 as
           compensation                                   2,250              2            1,446                            1,448

       Shares issued on October 1, 2001 for
           cash                                       1,000,000          1,000          446,982                          447,982

       Shares issued on November 30, 2001
           for cash                                     100,000            100           23,400                           23,500

       Shares issued on December 10, 2001
           for cash                                      50,000             50           10,950                           11,000

       Shares issued on December 12, 2001
           for cash                                     100,000            100           20,900                           21,000

       Shares issued on December 13, 2001
           for cash                                      75,000             75           16,050                           16,125

       Shares issued on December 14, 2001
           for cash                                     500,000            500          107,000                          107,500

       Shares issued in January 2002
           for cash                                     925,000          $ 925        $ 194,700                          195,625

       Shares issued in February 2002
           for cash                                     350,000          $ 350         $ 69,150                           69,500

       Shares issued in March 2002
            for cash                                  1,683,333        $ 1,684        $ 260,691                          262,375

       Net loss for the period ended
           March 31, 2002                                                                             (2,938,484)     (2,938,484)
                                                 ---------------------------------------------------------------------------------
 BALANCE at March 31, 2002                           39,385,617       $ 39,386     $ 13,749,933    $ (14,912,269)   $ (1,122,950)
                                                 =================================================================================

                             The accompanying notes are an integral part of this financial statement.
</TABLE>






                                       6
<PAGE>

                           TSET, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - ACCOUNTING MATTERS

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly,  they do not  include  all the  information  and notes  required by
generally accepted accounting principles for complete financial  statements.  In
the opinion of  management,  all  adjustments  necessary  to present  fairly the
information  set forth  therein have been  included.  Operating  results for the
three-month  and  nine-month  periods  ended March 31, 2002 are not  necessarily
indicative  of the results  that may be  experienced  for the fiscal year ending
June 30, 2002.

These  financial  statements  are  those of the  Company  and its  wholly  owned
subsidiaries.  All significant inter-company accounts and transactions have been
eliminated in the preparation of the consolidated financial statements.  Aperion
Audio,  Inc.  is  disclosed  as  discontinued   operations  in  these  financial
statements.  The accompanying financial statements should be read in conjunction
with the TSET,  Inc.  Form 10-K for the fiscal year ended June 30, 2001 filed on
October 15, 2001.

RECENT ACCOUNTING PRONOUNCEMENTS. On July 20, 2001, the FASB issued Statement of
Financial Accounting Standard (SFAS) No. 141, "Business  Combinations," and SFAS
No.  142,  "Goodwill  and  Other  Intangible   Assets."  These  statements  make
significant changes to the accounting for business  combinations,  goodwill, and
intangible assets.

SFAS No. 141 establishes new standards for accounting and reporting requirements
for business combinations and requires that the purchase method of accounting be
used for all business  combinations  initiated  after June 30, 2001.  Use of the
pooling-of-interests  method is  prohibited.  This  statement is  effective  for
business combinations initiated after June 30, 2001.

SFAS No. 142  establishes  new  standards  for  goodwill  acquired in a business
combination,  eliminates amortization of goodwill and instead sets forth methods
to  periodically  evaluate  goodwill for  impairment.  Intangible  assets with a
determinable  useful life will  continue to be amortized  over that period.  The
Company  adopted this statement  during the quarter  ending  September 30, 2002.
Goodwill  and  intangible  assets  acquired  after June 30, 2001 will be subject
immediately  to  the  non-amortization   and  amortization   provisions  of  the
statement.  The Company does not  currently  have any  goodwill  recorded on its
financial  statements and it is expected that there will be no immediate  impact
on the  Company's  financial  statements  as a result  of the  adoption  of this
statement.

In June 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 143,
"Accounting  for Asset  Retirement  Obligations."  This statement  addresses the
financial  accounting  and reporting for the  retirement of tangible  long-lived
assets and the  associated  asset  retirement  costs.  The Company  believes the
adoption  of  SFAS  143  will  have  no  significant  impact  on  its  financial
statements.

In August 2001, the Financial  Accounting  Standards  Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." This statement
addresses the financial  accounting and reporting for the impairment or disposal
of long-lived assets. The Company believes the adoption of SFAS 144 will have no
significant impact on its financial statements.



                                       7
<PAGE>

NOTE 2 -- INCOME TAXES

The  composition of deferred tax assets and the related tax effects at March 31,
2002 and June 30, 2001 are as follows:



                                             March 31, 2002     June 30, 2001
                                              (Unaudited)
                                           -----------------    -------------
Benefit from carryforward of net
  operating losses                         $      2,202,150     $   1,538,645
Other temporary differences                         245,121           228,121
Less:
  Valuation allowance                            (2,447,271)       (1,766,766)
                                             ---------------    --------------
  Net deferred tax asset                   $              -     $           -
                                           =================    ==============



The  other  temporary  differences  shown  above  relate  primarily  to  loss on
discontinued operations,  impairment reserves for intangible assets, and accrued
and deferred compensation.  The difference between the income tax benefit in the
accompanying  statements of  operations  and the amount that would result if the
U.S. Federal statutory rate of 34% were applied to pre-tax loss is as follows:


<TABLE>
<CAPTION>
                                         March 31, 2002            June 30, 2001
                                          (Unaudited)
                                  ------------------------------------------------------
                                                % of pre-tax              % of pre-tax
                                     Amount         Loss       Amount        Loss
                                  ------------------------------------------------------
<S>                                 <C>              <C>      <C>              <C>
Benefit for income tax at
  federal statutory rate            $  999,085         34.0%  $ 3,354,468       34.0%
Non-deductible expenses               (318,580)       (10.8)%  (1,803,355)     (18.3)%
Disposed subsidiary NOL                      -            -      (578,370)      (5.9)%
Increase in valuation allowance       (680,506)       (23.2)%    (972,743)      (9.8)%
                                  ------------------------------------------------------
                                    $       -           0.0%  $        -         0.0%
                                  ======================================================
</TABLE>

The non-deductible expenses shown above related primarily to the amortization of
intangible  assets and to the accrual of stock  options for  compensation  using
different valuation methods for financial and tax reporting purposes.

The Company  filed all of its federal and state income tax returns for all years
through  June 30,  2001.  The Company is current on all income tax  filings.  At
March 31, 2002,  for federal  income tax and  alternative  minimum tax reporting
purposes,  the Company has  approximately  $6.5 million of unused net  operating
losses available for carryforward to future years. The benefit from carryforward
of such net operating  losses will expire in various years between 2011 and 2023
and could be subject to limitations if  significant  ownership  changes occur in
the  Company.  Of the $6.5 million of unused net  operating  losses noted above,
approximately  $178,000 relates to losses incurred by the Company's  subsidiary,
Aperion  Audio.  In fiscal years prior to June 30, 2000,  Aperion  Audio did not
file its tax returns on a consolidated basis with the Company.  Accordingly, the
$178,000  loss  incurred  by  Aperion  Audio  is  further  subject  to  separate
limitations that restrict the ability of the Company to use such losses.

NOTE 3 - SEGMENTS OF BUSINESS

The Company operates principally in one segment of business:  The Kronos segment
licenses,  manufactures  and distributes air movement and  purification  devices
utilizing the Kronos(TM) technology. All other segments have been disposed of or
discontinued. In the nine months ended March 31, 2002, the Company operated only
in the U.S.

NOTE 4 - EARNINGS PER SHARE

On February 12, 2002,  the Board  approved the TSET,  Inc. Stock Option Plan and
the  issuance of stock  options to  employees  totaling  4,580,000  shares.  The
exercise  prices of these  options  range from  $0.25 to $0.68,  with a weighted
average of $0.50.  The options vest on December 31, 2002.  As of March 31, 2002,
there were  outstanding  options to purchase  6,563,575  shares of the Company's
common  stock.  These  options  have been  excluded  from the earnings per share
calculation as their effect is anti-dilutive.

NOTE 5 - DISCONTINUED OPERATIONS

In early January 2001,  management  committed to a formal plan of action to sell
or otherwise dispose of Atomic Soccer. Agreement was reached with a buyer group,
that  included  current and former Atomic  Soccer  management,  to sell them the
outstanding  shares of common stock of Atomic Soccer for $1,000. The transaction
was effective on April 11, 2001. On September 14, 2001 the board



                                       8
<PAGE>

approved a formal plan of action to sell or otherwise  dispose of Aperion  Audio
(formerly EdgeAudio). The Company has accrued $150,000 for anticipated operating
loses during the phase-out period.  As a result,  both Atomic Soccer and Aperion
are included in the financial statements as discontinued operations.

The  Company's  consolidated  financial  statements  for all  periods  have been
reclassified to report separately results of operations and operating cash flows
from continuing operations and the discontinued operations. The net revenues are
included in the financial  statements under Net Income (Loss) from  Discontinued
Operations. The assets and liabilities of Aperion at March 31, 2002 are included
in the balance sheet Net Liabilities of Discontinued  Operations.  Net assets of
discontinued  operations at March 31, 2002 and operating results of discontinued
operations for the nine-months ended March 31, are as follows:

                   NET LIABILITIES OF DISCONTINUED OPERATIONS

                               Aperion Audio
                               -------------
Current Assets                  $  335,466
Net Property and Equipment          44,654
Current Liabilities               (601,859)
Minority Interest                 (525,811)
                                -----------
Net Assets (Liabilities)        $ (747,550)
                                ===========

<TABLE>
                              OPERATING RESULTING OF DISCONTINUED OPERATIONS:

                               Operating Results of Discontinued Operations:

<CAPTION>
                                                        For the nine months ended March 31,
                                               2002                               2001
                                          ----------------   ------------------------------------------------
                                           Aperion Audio        Atomic      Aperion Audio       Total
                                          ----------------   -------------  --------------   ----------------
<S>                                         <C>             <C>            <C>                <C>
Sales                                       $    733,183    $  714,464     $    587,570       $  1,302,034

Cost of sales                                  (273,282)      (512,282)        (304,488)          (816,770)

Depreciation and amort                           (9,927)      (215,398)        (198,111)          (413,509)

General and Administrative                     (545,964)      (369,058)        (927,871)        (1,296,929)
                                          ----------------   -------------  ----------------  ---------------

Operating income (loss)                         (95,990)      (382,274)        (842,900)        (1,225,174)

Other Income                                     22,217            735             (537)               198

Interest expense                                (25,584)       (69,232)          (8,279)           (77,511)

Provision for future operating losses            79,485              -                -                  -
Provision for asset impairment

Minority interest                                19,871              -          131,383            131,383
                                          ----------------   -------------  ----------------  ---------------

Income (Loss) pre-tax                                 0       (450,771)        (720,333)        (1,171,104)

Income taxes (benefits)                               -                                                  -
                                          ----------------   -------------  ----------------  ---------------
Loss from disc'd ops                      $           0      $(450,771)     $  (720,333)      $ (1,171,104)
                                          ================   =============  ================  ===============
</TABLE>

NOTE 6 - NOTES PAYABLE

On October 15,  2001,  the Company  entered  into an  agreement  with Jeffrey D.
Wilson pursuant to which the Company issued a promissory  note for  compensation
which was accrued but not paid to him during the time he served as an  executive
officer of the  Company.  The amount of the note is for  $350,000  and calls for
quarterly  payments of principal  and interest of $20,000 until the note is paid
in full.  The interest is being accrued at the rate of 4.59% and is disclosed in
the financial statements as follows:

Notes payable,  current  portion  $100,000;  Notes payable,  long term $250,000;
Total note payable $350,000



                                        9
<PAGE>

NOTE 7 - ISSUANCE OF WARRANTS

On July 9, 2001,  the  Company  signed an  agreement  to utilize  the  strategic
planning and business plan execution  services of The Eagle Rock Group, LLC. The
Eagle  Rock  Group  will work with the  Kronos  Air  Technologies  team to fully
develop and capitalize the KronosTM technology.

Pursuant to the  agreement  that we entered  into with The Eagle Rock Group,  we
issued to The Eagle  Rock Group a ten-year  warrant  granting  them the right to
purchase  1,400,000 shares of our common stock at an exercise price of $0.68 per
share.  The  warrant  was  valued at  $686,000  using the  Black-Scholes  option
valuation mode and was initially  recorded as deferred  equity  compensation  to
amortized  into  current  period  professional  services  expense  at a rate  of
$137,200  per  month  over 5  months.  Amortization  for  the  three-months  and
nine-months ended March 31, 2002 was $0 and $686,000,  respectively.  The shares
underlying the warrant have piggy-back and demand  registration  rights, as well
as  subscription  rights  in the event  that we issue  any  rights to all of our
stockholders  to subscribe  for shares of our common  stock.  In  addition,  the
warrant contains redemption rights in the event that we enter into a transaction
that results in a change of control of our company.

On March 11, 2002, the company entered into a 12 month consulting agreement with
The Eagle Rock Group.  Pursuant  to the  agreement,  the company  will grant The
Eagle Rock Group a 10 year  warrant for up to  2,000,000  shares.  Five  hundred
thousand (500,000) shares will fully vest on March 1, 2003. The remainder of the
shares may be earned  contingent upon the occurrence of various events including
a  successful  capital  raise equal to or greater  than $1.5  million,  securing
contracts with the U.S.  military,  securing  contracts with consumer  -oriented
distribution  organizations,  and the adoption of a branding/marketing  campaign
which has been principally developed by The Eagle Rock Group.

NOTE 8 - DISPUTE WITH APERION AUDIO, INC.

On January 11, 2002, Aperion Audio, Inc. (f/k/a EdgeAudio.com,  Inc.), a company
to which TSET owns common  shares,  initiated  arbitration in a dispute over the
Agreement and Plan of  Reorganization  between the parties.  Aperion Audio, Inc.
requests damages of $213,900 plus conseqential damages. Discovery is ongoing.

NOTE 9 - SUBSEQUENT EVENTS

On April 1, 2002, the company  entered into an Employment  agreement with Daniel
R. Dwight, our President and Chief Executive  Officer,  effective as of November
15, 2001. The initial term of Mr. Dwight's  Employment  Agreement is for 2 years
and will  automatically  renew for  successive  1 year terms  unless TSET or Mr.
Dwight provide the other party with written notice within 3 months of the end of
the  initial  term or any  subsequent  renewal  term.  Mr.  Dwight's  Employment
Agreement  provides for base cash  compensation of $180,000 per year. Mr. Dwight
is eligible for annual  incentive  bonus  compensation in an amount equal to Mr.
Dwight's annual salary based on the achievement of certain bonus objectives.  In
addition,  TSET granted Mr. Dwight 1,000,000 immediately vested and exercisable,
ten-year stock options at various exercise  prices.  Mr. Dwight will be entitled
to fully participate in any and all 401(k), stock option, stock bonus,  savings,
profit-sharing,  insurance,  and other similar plans and benefits of employment.
Mr. Dwight is entitled to be indemnified, defended, and held harmless by us from
and against any and all costs, losses,  damages,  penalties,  fines, or expenses
(including,  without  limitation,  reasonable  attorneys' fees, court costs, and
associated expenses) suffered, imposed upon, or incurred by him in any manner in
connection with his service as our Chief Executive Officer.

In May 2002,  the company  completed  a private  placement  of its common  stock
pursuant to which the company sold 2,559,412 shares of its common stock at $0.17
per share to eight  accredited  investors for  consideration of $435,100 in cash
and 841,459 shares of its common stock at $0.17 per share to five members of its
management  team for  consideration  of commitments to convert  $143,048 of debt
into equity with certain members of the management team.


NOTE 10 - REALIZATION OF ASSETS

The  accompanying  financial  statements  have been prepared in conformity  with
accounting principles generally accepted in the United States of America,  which
contemplate  continuation  of the  Company as a going  concern.  The Company has
sustained losses from operations in recent years, and such losses have continued
through the current  year nine months ended March 31,  2002.  In  addition,  the
Company has used,  rather than provided cash in its  operations.  The Company is
currently  using its resources to raise capital  necessary to complete  research
and development work, and to provide for the working capital needs of itself and
its subsidiaries.

In view of the matters described in the preceding paragraph, recoverability of a
major portion of the asset amounts  shown in the  accompanying  balance sheet is
dependent upon continued  operations of the Company,  which in turn is dependent
upon the Company's  ability to meet its financing  requirements  on a continuing
basis, to maintain  present  financing and to succeed in its future  operations.
The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and  classification  of  recorded  asset  amounts or amounts and
classification  of  liabilities  that might be  necessary  should the Company be
unable to continue in existence.

Management  has taken the  following  steps with  respect to its  operating  and
financial requirements,  which it believes are sufficient to provide the Company
with the ability to continue in existence:

         1.       In May  2001,  Kronos  Air  Technologies  was  awarded a Small
                  Business  Innovation  Research  contract.   This  contract  is
                  sponsored by the United States Navy and is  potentially  worth
                  up to $837,000 in product  development and testing support for
                  Kronos Air  Technologies.  The first phase of the  contract is
                  worth up to $87,000 in funding for manufacturing and testing a
                  prototype  device for air  movement  and  ventilation  onboard
                  naval  vessels.  In  April  2002,  the U.S.  Navy  and  Kronos
                  mutually  agreed to exercise  the option on the first phase of
                  the  U.S.  Navy  SBIR  contract.  The  option  is  to  provide
                  incremental  funding  to Kronos to further  test and  evaluate
                  Kronos(TM)devices  built  during  the  initial  SBIR  funding.
                  Testing will include  demonstrating  the ability of these U.S.
                  Navy  Kronos(TM)  devices to capture  and  destroy  biological
                  hazards  and  to  effectively   manage   electrical   magnetic
                  interference.  If  awarded  to Kronos  Air  Technologies,  the
                  second phase of the contract  would be worth up to $750,000 in
                  additional funding. The  Kronos(TM)devices  manufactured under
                  this  contract will be embedded in an existing HVAC systems to
                  move  air  more   efficiently   than  the  current  fan  based
                  technology.   This   contract   is   an   extension   of   the
                  commercialization  effort by Kronos  Air  Technologies  in the
                  specialized military marketplace. We are currently waiting for
                  the announcement of the award of the phase II contracts by the
                  Navy.

         2.       In December 2001,  Kronos Air Technologies was awarded an SBIR
                  contract   sponsored  by  the  U.S.  Army.  This  contract  is
                  potentially  worth up to $850,000 in product  development  and
                  testing support for Kronos Air Technologies.  Phase One of the
                  contract is worth up to $120,000 in funding to investigate and
                  analyze the feasibility of the  Kronos(TM)technology to reduce
                  humidity in heating,  ventilation and air conditioning  (HVAC)
                  systems.  Dehumidification is essential to making HVAC systems
                  more energy  efficient.  Phase Two of the contract is worth up
                  to $730,000 in additional funding for product  development and
                  testing.  In May 2002,  the U.S. Army requested the company to
                  submit a  detailed  Phase Two  proposal  by June 10,  2002 for
                  review in the current  year. We submitted the proposal on June
                  7, 2002.

         3.       On June 19,  2001,  we entered  into a common  stock  purchase
                  agreement with Fusion Capital pursuant to which Fusion Capital
                  agreed to purchase on each  trading day during the term of the
                  agreement,  $12,500 of our common stock or an aggregate, under
                  certain  conditions,  of $10.0  million.  The $10.0 million of
                  common  stock  is to be  purchased  over  a 40  month  period,
                  subject to a six-month extension or earlier termination at our
                  discretion.  The purchase  price of the shares of common stock
                  will be equal to the then  current  market price of the common
                  stock  without  any fixed  discount to the market  price.  The
                  agreement  is  dependent  on  the  Company   registering   the
                  associated shares and on the ability to Fusion Capital to fund
                  the purchase of those  shares.  Assuming the  Company's  share
                  price remains at current levels, the 5 million shares that the
                  Company is  currently  registering  would allow the Company to
                  raise  approximately $1.5 to $2.0 million without  registering
                  additional   shares.   We  have  already  sold   approximately
                  4,060,000 shares to Fusion Capital and raised $750,000.

         4.       On July 2,  2001,  we  signed  an  agreement  to  utilize  the
                  strategic planning and business plan execution services of The
                  Eagle Rock Group, LLC. The Eagle Rock Group will work with the
                  Kronos Air  Technologies  team to fully develop and capitalize
                  on the Kronos(TM)  technology.  We believe that The Eagle Rock
                  Group can assist us in unlocking  the  potential  value of the
                  Kronos(TM)technology. The Eagle Rock Group's multi-disciplined
                  approach,   which  uses  seasoned   business   executives  and
                  leverages  relationships  and  networks,  can  accelerate  the
                  Kronos(TM)opportunity  versus the timing and development if we
                  were to  continue on a  go-it-alone  strategy or if we were to
                  work and  coordinate  with the myriad of groups  necessary  to
                  duplicate  The  Eagle  Rock  Group  team.   Specifically,   we
                  initially envision The Eagle Rock Group working to augment and
                  enhance our efforts in the following areas (i) capital raising
                  and  allocation,   (ii)  strategic  partner  introduction  and
                  evaluation,  (iii)  distribution  channel  development,   (iv)
                  product  focus  and  brand  development,  (v)  human  resource
                  placement, and (vi) capital market introduction and awareness.
                  Pursuant to the agreement  that we entered into with The Eagle
                  Rock  Group,  we  issued to The Eagle  Rock  Group a  ten-year
                  warrant  granting them the right to purchase  1,400,000 shares
                  of our common  stock at an exercise  price of $0.68 per share.
                  The shares  underlying the warrant have  piggy-back and demand
                  registration  rights,  as well as  subscription  rights in the
                  event that we issue any rights to all of our  stockholders  to
                  subscribe  for shares of our common  stock.  In addition,  the
                  warrant contains  redemption rights in the event that we enter
                  into a transaction  that results in a change of control of our
                  company.


NOTE 11 - COMMITMENTS AND CONTINGENCIES

LITIGATION.  On  February  2,  2001,  we  initiated,  together  with  Kronos Air
Technologies,  legal  proceedings  in Clackamas  County,  Oregon against W. Alan
Thompson,  Ingrid T.  Fuhriman,  and Robert L.  Fuhriman  II,  each of whom were
formerly  executive officers and members of the Board of Directors of Kronos Air
Technologies.  This suit alleges, among other things, breach of fiduciary duties
and breach of contract by these  individuals,  and seeks, among other things, an
order form the court referring the dispute to arbitration in accordance with the
terms  of  these  individuals'  respective  employment  agreements,  which  were
terminated by us on January 30, 2001, and other  appropriate  equitable  relief.
Arbitration  has been  ordered  and the  arbitrators  selected.  The Company ahs
agreed to arbitration proceedings in the state of Washington. The parties are in
the process of exchanging and complying with requests for discovery.

APERION  AUDIO  "EARN-OUT"  PROVISION.  Part of the  consideration  given by the
Company  for  Aperion  Audio is related to an  earn-out  provision  in which the
Company would award $3.75  million of additional  common stock of the Company as
Aperion Audio achieves  stipulated  revenue  milestones  over a five year period
commencing on May 4, 2000. The earn out provides five  cumulative  gross revenue
milestones that range between  $1,764,271 and  $22,187,203.  Upon achieving each
milestone, an additional $750,000 of TSET common stock will be issued. The share
conversion  is to be based on an average of the closing  price of the shares for
the five trading days immediately  preceding the date that the revenue milestone
is achieved.  Through June 7, 2002,  Aperion Audio has not achieved any of these
milestones.  As part of the settlement  and sale of Aperion  Audio,  all parties
have agreed to  relinquish  all rights to this  earn-out  provision.  Therefore,
there is no longer a contingency for it.

INCOME  TAXES.  The Company  has filed all of its  federal and state  income tax
returns through June 30, 2001 and is therefore, current in all of its income tax
filings.  As with the tax returns of any other corporation,  these returns could
be  subject  to  review  and  potential  examination  by the  respective  taxing
authorities.  Should any of these returns come under  examination  by federal or
state authorities, the Company's positions on certain income tax issues could be
challenged.  The impact, if any, of the potential future  examination  cannot be
determined at this time. If the Company's positions are successfully challenged,
the results may have a material impact on the Company's  financial  position and
results of operations.


                                       10
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

                             INTRODUCTORY STATEMENTS

                 FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

This filing contains forward-looking statements, including statements regarding,
among other  things:  (a) the growth  strategies  of TSET,  Inc.,  d/b/a  Kronos
Advanced Technologies (the "Company" or "Kronos"); (b) anticipated trends in our
Company's  industry;  (c) our  Company's  future  financing  plans;  and (d) our
Company's ability to obtain financing and continue operations. In addition, when
used in  this  filing,  the  words  "believes,"  "anticipates,"  "intends,"  "in
anticipation   of,"  and  similar   words  are  intended  to  identify   certain
forward-looking  statements.  These forward-looking statements are based largely
on our  Company's  expectations  and  are  subject  to a  number  of  risks  and
uncertainties,  many of which are beyond our Company's  control.  Actual results
could differ  materially  from these  forward-looking  statements as a result of
changes in trends in the economy and our Company's  industry,  reductions in the
availability  of  financing  and  other  factors.  In light of these  risks  and
uncertainties,  there can be no assurance  that the  forward-looking  statements
contained in this filing will in fact occur.  Our Company does not undertake any
obligation   to  publicly   release  the  results  of  any   revision  to  these
forward-looking  statements  that may be made to reflect  any  future  events or
circumstances.

                                     GENERAL

Historically, we had been seeking select business opportunities globally among a
wide range of prospects.  Over the past two years, we made several  investments,
including Kronos Air  Technologies,  Inc. and Aperion Audio,  Inc. After further
evaluation  of these  investments,  we believe  our  investment  in and the full
development of Kronos Air Technologies and the Kronos(TM)  technology represents
the  single  best  opportunity  for us. As a  result,  we have  prioritized  our
management  and  financial  resources  to fully  capitalize  on this  investment
opportunity.  Effective October 10, 2001, Jeffrey D. Wilson resigned as Chairman
of the Board and Chief Executive Officer of the Company,  as well as Chairman of
the Board of Kronos Air Technologies and Aperion Audio, respectively.  Effective
December 31, 2001,  Erik W. Black  resigned as Executive  Vice-President  of the
Company. Messrs. Wilson and Black remain as directors of the Company.  Effective
November 15, 2001, Daniel R. Dwight was appointed  President and Chief Executive
Officer of Kronos.  Effective  January 1, 2002,  Richard F. Tusing was appointed
Chief  Operating  Officer of Kronos.  A more detailed  explanation of Kronos Air
Technologies  and the current status of Aperion Audio and the other  investments
made by us are discussed below.

We have reorganized our Company to prioritize and focus management and financial
resources  on  Kronos  Air  Technologies  and the  Kronos(TM)  technology.  This
reorganization has resulted in the decision to sell or to no longer pursue other
investment opportunities previously identified. We sold our investment in Atomic
Soccer in April 2001;  decided  not to pursue  investments  in Cancer  Detection
International,  Electric  Management Units, and Cancer Treatment Centers in July
2001;  established a formal plan to dispose of Aperion Audio in September  2001;
and  terminated  by mutual  consent  of both  parties a contract  to  distribute
Computerized Thermal Imaging equipment in August 2000.

Based on our decision to focus our resources on Kronos Air Technologies, several
actions were taken,  most of which impacted the results of operations.  On April
11, 2001,  we sold Atomic  Soccer.  The sale  resulted in a loss of  $2,297,000.
During our  fourth  quarter of 2001,  we  determined  that the assets of Aperion
Audio were  impaired and we  recognized an  impairment  loss of  $2,294,000.  On
September 14, 2001, the board authorized  management to pursue a formal plan for
disposal of Aperion  Audio.  The  anticipated  loss from  operations  during the
phase-out period is $150,000. We do not anticipate a loss on the sale of Aperion
Audio.  Based upon our decision to discontinue  development of Cancer  Detection
International,  we have recognized an impairment loss of the remaining  goodwill
of $273,000 associated with that investment.

On January 18,  2002,  we began  trading  shares of our common stock under a new
ticker symbol  (KNOS).  At the same time, we announced  that our Company will be
doing business  under the name of Kronos  Advanced  Technologies.  We anticipate
asking our shareholders to vote for the approval of an amendment to our Articles
of  Incorporation   for  a  name  change  of  our  Company  to  Kronos  Advanced
Technologies, Inc. at our annual meeting in 2002.

Kronos Air Technologies is focused on the development and  commercialization  of
an air movement and  purification  technology  known as Kronos(TM)  that is more
fully  described   below.  The  Kronos(TM)   technology   operates  through  the
application  of  high-voltage  management  across paired  electrical  grids that
creates  an ion  exchange  which  moves air and gases at high  velocities  while
removing odors, smoke, and particulates, as well as killing pathogens, including
bacteria. We believe the technology is cost-effective and is more



                                       11
<PAGE>

energy-efficient   than  current   alternative  fan  and  filter   technologies.
Kronos(TM) has U.S. and international patents pending.

The Kronos(TM) device is comprised of state-of-the-art  high-voltage electronics
and  electrodes  attached  to one or more sets of corona and  target  electrodes
housed in a self-contained casing. The device can be flexible in size, shape and
capacity  and  can be used  in  embedded  electronic  devices,  standalone  room
devices, and integrated HVAC and industrial applications.  The Kronos(TM) device
has no moving  parts or degrading  elements  and is composed of  cost-effective,
commercially available components.

The  Kronos(TM)  technology  combines the benefits of silent air  movement,  air
cleaning,  and odor removal.  Because the  Kronos(TM)  air movement  system is a
silent, non-turbulent, and energy-efficient air movement and cleaning system, we
believe that it is ideal for air  circulation,  cleaning and odor removal in all
types of buildings as well as compact,  sealed  environments  such as airplanes,
submarines and cleanrooms. Additionally, because it has no moving parts or fans,
a  Kronos(TM)  device can  instantly  block or reverse  the flow of air  between
adjacent areas for safety in hazardous or extreme circumstances.

The U.S. Department of Defense and Department of Energy have provided Kronos Air
Technologies with various grants and contracts to develop, test and evaluate the
Kronos(TM)  technology.  Since May  2001,  the  total  potential  value of Small
Business Innovation Research (SBIR) contracts awarded to Kronos Air Technologies
has been $1.7 million.  In December 2001, Kronos Air Technologies was awarded an
SBIR contract  sponsored by the U.S. Army. This contract is potentially worth up
to  $850,000  in  product   development  and  testing  support  for  Kronos  Air
Technologies.  Phase One of the  contract  is worth up to $120,000 in funding to
investigate and analyze the  feasibility of the Kronos(TM)  technology to reduce
humidity  in  heating,   ventilation  and  air   conditioning   (HVAC)  systems.
Dehumidification  is essential  to making HVAC  systems  more energy  efficient.
Phase Two of the  contract  is worth up to $730,000  in  additional  funding for
product  development  and testing.  In May 2002,  the U.S.  Army  requested  the
company to submit a detailed  Phase Two  proposal by June 10, 2002 for review in
the current year.

In May 2001,  Kronos  Air  Technologies  was  awarded  its first  SBIR  contract
sponsored by the U.S.  Navy.  That  contract is  potentially  worth  $837,000 in
product  development  and testing  support.  The first phase of the  contract is
worth up to $87,000 in funding for  manufacturing  and testing prototype devices
for air movement and ventilation onboard naval vessels.  The second phase of the
contract is worth up to $750,000 in additional  funding. In January 2002, Kronos
Air  Technologies  received a Phase II  invitation  letter for this grant with a
potential $750,000  commitment.  The Kronos(TM) devices  manufactured under this
contract  will  be  embedded  in an  existing  HVAC  systems  to move  air  more
efficiently than the traditional, fan based technology.

In April 2002, the U.S. Navy and Kronos  mutually  agreed to exercise the option
on the first  phase of the U.S.  Navy SBIR  contract.  The  option is to provide
incremental  funding  to Kronos to  further  test and  evaluate  the  Kronos(TM)
devices   built   during  the  initial  SBIR   funding.   Testing  will  include
demonstrating  the ability of these U.S. Navy Kronos(TM)  devices to capture and
destroy  biological  hazards  and  to  effectively  manage  electrical  magnetic
interference ("EMI").

                              RESULTS OF OPERATIONS

The Company's  net loss from  continuing  operations  for the current year third
quarter  and nine  months  was $0.7  million  and  $2.9  million,  respectively,
compared with a net loss of $0.7 million and $2.1 million for the  corresponding
periods  of the  prior  year.  The  increase  in the net loss was the  result of
increased  professional  fees and  consulting  services  offset by a decrease in
salaries and other general and administrative expenses.

REVENUE. Revenues are generated through sales of Kronos(TM)devices at Kronos Air
Technologies, Inc. Revenue for the current year third quarter was $0 and for the
current year nine months was $65,000.  Revenue of $5,000 was recorded during the
corresponding  periods of the prior year. These revenues were primarily from our
U.S. Navy Small Business Innovative Research contract.

COST OF SALES.  Cost of sales for the  current  year  third  quarter  was $0 and
$50,000  for the  current  year  nine  months,  respectively.  Cost of  sales is
primarily  research and  development  costs  associated with our U.S. Navy Small
Business Innovative Research contract.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   General   and
Administrative  expenses in the current year third quarter decreased $57,000 and
in the current  year nine months  increased  $729,000,  to $0.6 million and $2.9
million,  respectively.  The  decrease  in the  current  year third  quarter was
primarily due a reduction in payroll and related costs of $89,000.  The increase
for the current year nine months was primarily due to non-cash stock warrants to
the Eagle Rock Group of $686,000,  non-cash stock  options/grants of $57,000 and
cash-based  fees  paid/accrued to management  consultants,  legal and accounting
professionals engaged by the company of $500,000. This was partially offset by a
reduction  in payroll and related  costs of $500,000  and a reduction  in travel
related costs of $63,000.



                                       12
<PAGE>

                 CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2002

Our total assets at March 31, 2002 were $3.1 million  compared with $3.1 million
at June 30,  2001.  Total assets at March 31, 2002 were  comprised  primarily of
$2.3 million of patents/intellectual property and $556,000 of deferred financing
fees. Total assets at June 30, 2001 were comprised  primarily of $2.4 million of
patents/intellectual  property and $520,800 of deferred  financing  fees.  Total
current  assets at March 31, 2002 and June 30, 2001 were  $189,000  and $70,000,
respectively,  while total current  liabilities for those same periods were $2.5
million and $1.9 million,  respectively,  creating a working  capital deficit of
$2.3  million  and $1.9  million at each  respective  period end.  This  working
capital  deficit  is  primarily  due  to  accrued  expenses  for   compensation,
management consulting and other professional  services.  Shareholders' equity as
of  March  31,  2002  and  June  30,  2001  was  $(1.1  million)  and  $479,000,
respectively,   representing  a  decrease  of  $1.6  million.  The  decrease  in
shareholders'  equity is  primarily  the result of incurring a $2.9 million loss
from continuing  operations for the nine months ended March 31, 2002,  partially
offset through the sale and issuance of $1.3 million of common stock.

                         LIQUIDITY AND CAPITAL RESOURCES

Historically  we have relied  principally on the sale of common stock to finance
our operations. We have recently completed a successful private placement of our
common stock  through  which we were able to obtain  commitments  for  2,738,824
shares of our common  stock,  valued at $0.17 per  share,  in  consideration  of
$465,600 in cash and  841,459  shares of our common  stock,  valued at $0.17 per
share, in  consideration  of commitments to convert $143,048 of debt into equity
with  respect to certain  members of the  management  team.  Going  forward,  in
addition to  continued  sales of common  stock,  we plan to rely on the proceeds
from Small Business  Innovation Research (SBIR) contracts with the U.S. Navy and
Army as well as other government  contracts and grants,  and cash flow generated
from the sale of  Kronos(TM)  devices.  We have also entered into a common stock
purchase agreement with Fusion Capital under which we have the right, subject to
certain conditions,  to draw down approximately $12,500 per day from the sale of
common stock to Fusion Capital.  The SBIR contracts are potentially  worth up to
$1.7  million  in  product  development  and  testing  support  for  Kronos  Air
Technologies.  The  first  phase of the  contracts  is worth up to  $207,000  in
funding.  If  awarded  to  Kronos  Air  Technologies,  the  second  phase of the
contracts  would be worth up to $1.5 million in additional  funding.  In January
2002 and May 2002 Kronos Air Technologies  received Phase II invitation  letters
for U.S. Navy and U.S.  Army  contracts,  respectively,  with  potentially  $1.5
million in commitments.

Net cash flow used on operating activities was $1.2 million for the current year
nine  months.  We were able to satisfy  some of our cash  requirements  for this
period through the issuance and sale of our common stock.

On June 19, 2001, we entered into a common stock purchase  agreement with Fusion
Capital.  Pursuant to the common stock  purchase  agreement,  Fusion Capital has
agreed to purchase on each trading day during the term of the agreement, $12,500
of our common stock or an aggregate of $10.0  million.  The $10.0 million of our
common stock is to be purchased over a 40-month  period,  subject to a six-month
extension or earlier  termination at our sole  discretion and subject to certain
events.  The  purchase  price of the  shares of common  stock will be equal to a
price based upon the future  market price of our common stock  without any fixed
discount to the  then-current  market  price.  On November 13, 2001,  the common
stock purchase agreement was amended to establish a floor price.  Fusion Capital
is obligated to purchase  shares under the  agreement as long as the share price
exceeds a floor of $0.25. However, even during recent periods in which our share
price was below  that  $0.25  threshold,  we have been able to work with  Fusion
Capital to provide  for some of the  financing  needs of the  Company.  However,
there can be no assurance of how much cash we will  receive,  if any,  under the
common stock purchase agreement with Fusion Capital.

In May 2002,  we completed a private  placement of our common stock  pursuant to
which we sold  2,559,412  shares of our common stock at $0.17 per share to eight
accredited investors for consideration of $435,100 in cash and 841,459 shares of
our common stock at $0.17 per share to five members of our  management  team for
consideration of commitments to convert $143,048 of debt.

                              GOING CONCERN OPINION

Our  independent  auditors  have added an  explanatory  paragraph to their audit
opinion issued in connection  with the 2001 and 2000 financial  statements  that
states that we do not have  significant  cash or other material  assets to cover
our  operating  costs.  Our ability to obtain  additional  funding  will largely
determine our ability to continue in business. Accordingly, there is substantial
doubt about our ability to continue as a going concern. Our financial statements
do not  include  any  adjustments  that might  result  from the  outcome of this
uncertainty.

We can make no assurance that we will be able to  successfully  transition  from
research and development to manufacturing and selling  commercial  products on a
broad basis. While attempting to make this transition, we will be subject to all
the risks inherent in a growing venture, including, but not limited to, the need
to develop and manufacture  reliable and effective  products,  develop marketing
expertise and expand our sales force.

CERTAIN RISK FACTORS

Our Company is subject to various risks which may materially  harm our business,
financial  condition  and results of  operations.  Certain  risks are  discussed
below.



                                       13
<PAGE>

WE HAVE A LIMITED OPERATING HISTORY WITH SIGNIFICANT LOSSES AND EXPECT LOSSES TO
CONTINUE FOR THE FORESEEABLE FUTURE

We have only recently begun  implementing our plan to prioritize and concentrate
our management and financial  resources to fully capitalize on our investment in
Kronos Air  Technologies  and have yet to  establish  any history of  profitable
operations.  We incurred a net  operating  loss of $2.9  million for the current
year nine months. We have incurred net losses from continuing operations of $3.6
million and $1.4 million for the fiscal  years ended June 30, 2001 and 2000.  We
have  incurred  net losses from  continuing  operations  of $0.7 million for the
three months ended March 31, 2002. We have incurred annual  operating  losses of
$9.9  million,  $2.0  million  and $52,000  respectively,  during the past three
fiscal years of operation.  As a result,  at March 31, 2002 and June 30, 2001 we
had an accumulated deficit of $14.9 million and $12.0 million, respectively. Our
revenues have not been sufficient to sustain our operations.  We expect that our
revenues will not be sufficient to sustain our  operations  for the  foreseeable
future. Our profitability will require the successful  commercialization  of our
Kronos(TM)  technology.  No assurances can be given when this will occur or that
we will ever be profitable.

WE HAVE BEEN SUBJECT TO A GOING CONCERN OPINION FROM OUR INDEPENDENT AUDITORS

Our  independent  auditors  have added an  explanatory  paragraph to their audit
opinion issued in connection  with the financial  statements for the years ended
June 30, 2001 and June 30,  2000  relative to our ability to continue as a going
concern.  Our ability to obtain additional funding will determine our ability to
continue  as a going  concern.  Our  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

WE WILL REQUIRE ADDITIONAL FINANCING TO SUSTAIN OUR OPERATIONS AND WITHOUT IT WE
WILL NOT BE ABLE TO CONTINUE OPERATIONS

At March 31, 2002 we had a working capital deficit of $2.3 million.  At June 30,
2001 we had a working capital deficit of $1.9 million. The independent auditor's
report  for the  years  ended  June 30,  2001 and June  30,  2000,  includes  an
explanatory  paragraph to their audit opinion stating that our recurring  losses
from operations and working capital deficiency raise substantial doubt about our
ability to continue as a going concern. We had an operating cash flow deficit of
$11,000 in 1999,  an  operating  cash flow  deficit of  $288,000  in 2000 and an
operating  cash flow deficit of $1.6 million in 2001. We do not  currently  have
sufficient   financial  resources  to  fund  our  operations  or  those  of  our
subsidiaries. Therefore, we need additional funds to continue these operations.

We have the right, subject to certain conditions, to receive $12,500 per trading
day under the common stock purchase  agreement  unless our stock price equals or
exceeds  $3.00,  in which case the daily  amount may be increased at our option.
Since we  initially  registered  5,000,000  shares  for sale by  Fusion  Capital
pursuant to the common stock purchase agreement, the selling price of our common
stock to Fusion  Capital will have to average at least $2.00 per share for us to
receive  the maximum  proceeds of  $10,000,000  without  registering  additional
shares of common stock or filing a post-effective  amendment with respect to the
number of shares registered.  On November 13, 2001, Fusion Capital established a
floor price of $0.25 under the common stock purchase agreement.  Fusion Capital,
therefore,  has no obligation to purchase shares under the common stock purchase
agreement if the price would be less than the floor  price.  Assuming a purchase
price of $0.25 per share (the floor price) and the purchase by Fusion Capital of
the full 5,000,000 shares under the common stock purchase agreement, proceeds to
us would only be  $1,250,000  unless we choose to register  more than  5,000,000
shares,  which we have the right,  but not the obligation,  to do. The extent we
rely on Fusion Capital as a source of funding will depend on a number of factors
including,  the  prevailing  market  price of our common stock and the extent to
which we are able to secure working capital from other sources,  such as through
the sale of our Kronos(TM) air movement and purification  systems.  If obtaining
sufficient  financing from Fusion Capital were to prove prohibitively  expensive
and if we are unable to  commercialize  and sell the products or technologies of
our  subsidiaries,  we will need to secure another source of funding in order to
satisfy  our  working  capital  needs.  Even if we are able to access  the funds
available  under  the  common  stock  purchase  agreement,  we  may  still  need
additional  capital to fully  implement our business,  operating and development
plans.  Should the financing we require to sustain our working  capital needs be
unavailable  or  prohibitively  expensive  when we require it, the  consequences
would be a material adverse effect on our business, operating results, financial
condition and prospects.



                                       14
<PAGE>

WE HAVE VERY LIMITED SALES AND MARKETING  CAPABILITIES FOR OUR KRONOSTM PRODUCTS
AND OUR  FAILURE  TO  DEVELOP  ANY OF THESE  CAPABILITIES  WOULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS

We have no experience  marketing or  distributing  commercial  quantities of our
Kronos Air  Technologies'  products.  Kronos Air Technologies  does not have any
relationships  with  third  parties  to  market  or  distribute  the  Kronos(TM)
products.  If Kronos  Air  Technologies  is unable to hire  sales and  marketing
personnel  or if it cannot  enter  into  satisfactory  arrangements  with  third
parties  to market  and  distribute  the  Kronos(TM)  products  on  commercially
reasonable  terms,  the  consequences  would be a material adverse effect on our
business,  operating results, financial condition and prospects. There can be no
assurance that we will be able to hire sales and marketing  personnel or be able
to enter  into  satisfactory  arrangements  with  third  parties  to market  and
distribute the Kronos(TM) products.

COMPETITION IN THE MARKET FOR AIR MOVEMENT AND  PURIFICATION  DEVICES MAY RESULT
IN THE FAILURE OF THE KRONOSTM PRODUCTS TO ACHIEVE MARKET ACCEPTANCE

Kronos Air  Technologies  presently faces  competition from other companies that
are  developing or that currently  sell air movement and  purification  devices.
Many of these competitors have  substantially  greater  financial,  research and
development,  manufacturing,  and sales and marketing resources than we do. Many
of the products sold by Kronos Air Technologies'  competitors already have brand
recognition and  established  positions in the markets that we have targeted for
penetration. There can be no assurance that the Kronos(TM) products will compete
favorably with the products sold by our competitors.

WE RELY ON MANAGEMENT AND KRONOS AIR TECHNOLOGIES  RESEARCH PERSONNEL,  THE LOSS
OF WHOSE SERVICES COULD HAVE A MATERIAL ADVERSE EFFECT UPON OUR BUSINESS

We rely  principally  upon  the  services  of our  Board  of  Directors,  senior
executive  management,  and  certain  key  employees,  including  the Kronos Air
Technologies  research  team,  the loss of whose  services could have a material
adverse effect upon our business and prospects.  Competition  for  appropriately
qualified  personnel  is  intense.  Our  ability  to attract  and retain  highly
qualified senior management and technical research and development personnel are
believed  to be an  important  element of our  future  success.  Our  failure to
attract and retain such  personnel  may,  among other things,  limit the rate at
which we can  expand  operations  and  achieve  profitability.  There  can be no
assurance  that we will be able to attract and retain senior  management and key
employees having  competency in those  substantive areas deemed important to the
successful  implementation of our plans to fully capitalize on our investment in
Kronos Air Technologies and the Kronos(TM)  technology,  and the inability to do
so or any  difficulties  encountered  by  management in  establishing  effective
working   relationships  among  them  may  adversely  affect  our  business  and
prospects.  Currently,  we do not carry key person life insurance for any of our
directors, executive management, or key employees.



                                       15
<PAGE>

THE SALE OF OUR COMMON STOCK TO FUSION  CAPITAL MAY CAUSE  DILUTION AND THE SALE
OF THE SHARES OF COMMON STOCK  ACQUIRED BY FUSION  CAPITAL COULD CAUSE THE PRICE
OF OUR COMMON STOCK TO DECLINE

The purchase price for the common stock to be issued to Fusion Capital  pursuant
to the common stock purchase  agreement will fluctuate based on the price of our
common  stock.  All shares  issued to Fusion  Capital will be freely  tradeable.
Fusion  Capital  may  sell  none,  some or all of the  shares  of  common  stock
purchased  from us at any time. We expect that the shares sold to Fusion Capital
will be sold over a period of up to 40 months from the date of the common  stock
purchase  agreement.  Depending  upon market  liquidity  at the time,  a sale of
shares by Fusion  Capital at any given time could cause the trading price of our
common  stock to  decline.  The sale of a  substantial  number  of shares of our
common stock by Fusion Capital,  or  anticipation  of such sales,  could make it
more difficult for us to sell equity or equity-related  securities in the future
at a time and at a price that we might otherwise wish to effect sales.

OUR FAILURE TO TIMELY FILE  FEDERAL  AND STATE  INCOME TAX RETURNS FOR  CALENDAR
YEARS 1997 THROUGH 2001 MAY RESULT IN THE IMPOSITION OF INTEREST AND PENALTIES

We failed to timely file  federal and state  income tax returns for fiscal years
1997  through  2001,  respectively.  We are now current in all of our income tax
filings.  We had  operating  losses for each year during the period 1997 through
2001,  and there  were no income  taxes  due and  owing for those  years.  These
returns could be subject to review and potential  examination  by the respective
taxing  authorities.  Should  any of these  returns  come under  examination  by
federal or state  authorities,  our positions on certain income tax issues could
be challenged. The impact, if any, of the potential future examination cannot be
determined  at this time.  If our positions  are  successfully  challenged,  the
results  may have a material  impact on our  financial  position  and results of
operations.



                                       16
<PAGE>

                                     PART II

ITEM 1. LEGAL PROCEEDINGS

On February 2, 2001, we initiated legal proceedings in Clackamas County,  Oregon
against W. Alan Thomson,  Ingrid T. Fuhriman, and Robert L. Fuhriman II, each of
whom were formerly  executive  officers and members of the Board of Directors of
Kronos Air Technologies. This suit alleges breach of fiduciary duties and breach
of contract by these  individuals,  and seeks,  among  other  things,  relief of
claims.  Thomson,  Fuhriman and  Fuhriman  have filed for  enforcement  of their
respective  employment  agreements  and  related  damages.   Pursuant  to  those
agreements,  the  proceedings  have been moved into  arbitration in King County,
Washington,  and arbitrators have been selected.  Discovery and  Interrogatories
are underway.

On January 11, 2002, Aperion Audio, Inc. (f/k/a EdgeAudio.com,  Inc.), a company
to which Kronos Advanced Technologies owns common shares,  initiated arbitration
in a dispute over the Agreement and Plan of Reorganization  between the parties.
Aperion Audio, Inc. requests damages of $213,900 plus consequential damages. The
arbitration hearing is projected in the next three months.

On June 6, 2002, Dutchess Advisors Ltd. initiated legal proceedings in Middlesex
County, Massachusetts,  against TSET. The complaint alleges, among other things,
breach of contract,  QUANTUM  MERUIT,  unjust  enrichment  and  conversion  with
respect to a letter  agreement,  dated June 19, 2001,  between TSET and Dutchess
Advisors  LTD.,  and seeks,  among  other  things,  a judgment  in the amount of
$75,000,  exclusive of pre-judgment  interest,  costs and attorneys'  costs. The
company believes it has meritorious defenses and intends to vigorously defend.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

From January 3, 2002 through March 26, 2002, we issued  2,958,333 common shares,
at an average value of $0.17831 per share, at an aggregate value of $527,500, to
Fusion Capital,  LLC pursuant to the common stock purchase agreement between our
Company and Fusion Capital, in exchange for $527,500 in cash.

On February 12, 2002,  the Board  approved the TSET,  Inc. Stock Option Plan and
the issuance to the Company's  employees of options to purchase 4,580,000 shares
of common stock. The exercise prices of these options range from $0.25 to $0.68,
with a weighted average of $0.50. These options vest on December 31, 2002.

In May 2002,  we completed a private  placement of our common stock  pursuant to
which we sold  2,559,412  shares of our common stock at $0.17 per share to eight
accredited investors for consideration of $435,100 in cash and 841,459 shares of
our common stock at $0.17 per share to five members of our  management  team for
consideration  of  commitments  to convert  $143,048  of debt into  equity  with
certain members of the management team.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

None.

ITEM 5. EXHIBITS

<TABLE>
EXHIBIT
NO.         DESCRIPTION                              LOCATION
---------   ----------------------------------       ---------------------------------
<S>         <C>                                      <C>
   2.1      Articles of Merger for Technology        Incorporated by reference to
            Selection, Inc. with the Nevada          Exhibit 2.1 to the Registrant's
            Secretary of State                       Registration Statement on Form
                                                     S-1 filed on August 7, 2001 (the
                                                     "REGISTRATION STATEMENT")

   3.1      Articles of Incorporation                Incorporated by reference to
                                                     Exhibit 3.1 to the Registration
                                                     Statement on Form S-1 filed on
                                                     August 7, 2001

                                       17
<PAGE>

EXHIBIT
NO.         DESCRIPTION                              LOCATION
---------   ----------------------------------       ---------------------------------

   3.2      Bylaws                                   Incorporated by reference to
                                                     Exhibit 3.2 to the Registration
                                                     Statement on Form S-1 filed on
                                                     August 7, 2001

   4.1      2001 Stock Option Plan                   Incorporated by reference to
                                                     Exhibit 4.1 to Registrant's
                                                     Form 10-Q for the quarterly period
                                                     ended March 31, 2002 filed on
                                                     May 15, 2002

   5.1      Opinion re: Legality                     Incorporated by reference to
                                                     Exhibit 5.1 to Amendment No. 1
                                                     to Form S-1 filed on October 19,
                                                     2001

   10.1     Employment Agreement, dated April 16,    Incorporated by reference to
            1999, by and between TSET, Inc. and      Exhibit 10.1 to the Registration
            Jeffrey D. Wilson                        Statement on Form S-1 filed on
                                                     August 7, 2001

   10.2     Deal Outline, dated December 9, 1999,    Incorporated by reference to
            by and between TSET, Inc. and Atomic     Exhibit 10.2 to the Registration
            Soccer, USA, Ltd.                        Statement on Form S-1 filed on
                                                     August 7, 2001

   10.3     Letter of Intent, dated December 27,     Incorporated by reference to
            1999, by and between TSET, Inc. and      Exhibit 10.3 to the Registration
            Electron Wind Technologies, Inc.         Statement on Form S-1 filed on
                                                     August 7, 2001

   10.4     Agreement, dated February 5, 2000, by    Incorporated by reference to
            and between DiAural,  LLC and            Exhibit 10.4 to the Registration
            EdgeAudio, LLC                           Statement on Form S-1 filed on
                                                     August 7, 2001

   10.5     Stock Purchase Agreement, dated March    Incorporated by reference to
            6, 2000, by and among TSET, Inc.,        Exhibit 10.5 to the Registration
            Atomic Soccer USA, Ltd., Todd P.         Statement on Form S-1 filed on
            Ragsdale, James Eric Anderson, Jewel     August 7, 2001
            Anderson, Timothy Beglinger and Atomic
            Millennium Partners, LLC

   10.6     Acquisition Agreement, dated March 13,   Incorporated by reference to
            2000, by and among TSET, Inc., High      Exhibit 10.6 to the Registration
            Voltage Integrated, LLC, Ingrid          Statement on Form S-1 filed on
            Fuhriman, Igor Krichtafovitch, Robert    August 7, 2001
            L. Fuhriman and Alan Thompson

   10.7     Letter of Intent, dated April 18, 2000,  Incorporated by reference to
            by and between TSET, Inc. and            Exhibit 10.7 to the Registration
            EdgeAudio.com, Inc.                      Statement on Form S-1 filed on
                                                     August 7, 2001

   10.8     Lease Agreement, dated May 3, 2000, by   Incorporated by reference to
            and between Kronos Air Technologies,     Exhibit 10.8 to the Registration
            Inc. and TIAA Realty, Inc.               Statement on Form S-1 filed on
                                                     August 7, 2001

   10.9     Agreement and Plan of Reorganization,    Incorporated by reference to
            dated May 4, 2000, by and among TSET,    Exhibit 10.9 to the Registration
            Inc., EdgeAudio.com, Inc., LYNK          Statement on Form S-1 filed on
            Enterprises, Inc., Robert Lightman, J.   August 7, 2001
            David Hogan, Eric Alexander and Eterna
            Internacional, S.A. de C.V.

   10.10    Letter Agreement, dated May 4, 2000, by  Incorporated by reference to
            and between TSET, Inc. and Cancer        Exhibit 10.10 to the
            Detection International, LLC             Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.11    Employment Agreement, dated May 19,      Incorporated by reference to
            2000, by and between TSET, Inc. and      Exhibit 10.11 to the
            Richard A. Papworth                      Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.12    Finders Agreement, dated August 21,      Incorporated by reference to
            2000, by and among TSET, Inc., Richard   Exhibit 10.12 to the
            F. Tusing and Daniel R. Dwight           Registration Statement on Form
                                                     S-1 filed on August 7, 2001

                                       18
<PAGE>

EXHIBIT
NO.         DESCRIPTION                              LOCATION
---------   ----------------------------------       ---------------------------------

   10.13    Contract Services Agreement, dated June  Incorporated by reference to
            27, 2000, by and between Chinook         Exhibit 10.13 to the
            Technologies, Inc. and Kronos Air        Registration Statement on Form
            Technologies, Inc.                       S-1 filed on August 7, 2001

   10.14    Letter of Intent, dated July 17, 2000,   Incorporated by reference to
            by and between Kronos Air Technologies,  Exhibit 10.14 to the
            Inc. and Polus Technologies, Inc.        Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.15    Consulting Agreement, dated August 1,    Incorporated by reference to
            2000, by and among TSET, Inc., Richard   Exhibit 10.15 to the
            F. Tusing and Daniel R. Dwight           Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.16    Preferred Stock Purchase Agreement,      Incorporated by reference to
            dated September 12, 2000, by and         Exhibit 10.16 to the
            between EdgeAudio.com, Inc. and Bryan    Registration Statement on Form
            Holbrook                                 S-1 filed on August 7, 2001

   10.17    Shareholders Agreement, dated September  Incorporated by reference to
            12, 2000, by and among TSET, Inc.,       Exhibit 10.17 to the
            Bryan Holbrook and EdgeAudio.com, Inc.   Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.18    Amendment to Agreement and Plan of       Incorporated by reference to
            Reorganization dated September 12,       Exhibit 10.18 to the
            2000, by and among TSET, Inc.,           Registration Statement on Form
            EdgeAudio.com, Inc., LYNK Enterprises,   S-1 filed on August 7, 2001
            Inc., Robert Lightman, J. David Hogan,
            Eric Alexander and Eterna
            Internacional, S.A. de C.V.

   10.19    Agreement Regarding Sale of Preferred    Incorporated by reference to
            Stock, dated November 1, 2000, by and    Exhibit 10.19 to the
            between EdgeAudio.com, Inc. and Bryan    Registration Statement on Form
            Holbrook                                 S-1 filed on August 7, 2001

   10.20    Amendment to Subcontract,  dated         Incorporated by reference to
            December 14, 2000, by and between Bath   Exhibit 10.20 to the
            Iron Works and High  Voltage             Registration Statement on
            Integrated                               Form S-1 filed on
                                                     August 7, 2001

   10.21    Consulting Agreement, dated January 1,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.21 to the
            Dwight, Tusing & Associates              Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.22    Employment Agreement, dated March 18,    Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.22 to the
            Alex Chriss                              Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.23    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.23 to the
            Jeffrey D. Wilson                        Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.24    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.24 to the
            Jeffrey D. Wilson                        Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.25    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.25 to the
            Daniel R. Dwight                         Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.26    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.26 to the
            Richard F. Tusing                        Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.27    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.27 to the
            Charles D. Strang                        Registration Statement on Form
                                                     S-1 filed on August 7, 2001


                                       19
<PAGE>

EXHIBIT
NO.          DESCRIPTION                              LOCATION
---------    ----------------------------------       ---------------------------------

   10.28    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.28 to the
            Richard A. Papworth                      Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.29    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.29 to the
            Richard A. Papworth                      Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.30    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.30 to the
            Erik W. Black                            Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.31    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and J.   Exhibit 10.31 to the
            Alexander Chriss                         Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.32    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.32 to the
            Charles H. Wellington                    Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.33    Stock Option Agreement, dated April 9,   Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.33 to the
            Igor Krichtafovitch                      Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.34    Letter Agreement, dated April 10, 2001,  Incorporated by reference to
            by and between TSET, Inc. and Richard    Exhibit 10.34 to the
            A. Papworth                              Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.35    Letter Agreement, dated April 12, 2001,  Incorporated by reference to
            by and between TSET, Inc. and Daniel R.  Exhibit 10.35 to the
            Dwight and Richard F. Tusing             Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.36    Finders Agreement, dated April 20,       Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.36 to the
            Bernard Aronson, d/b/a Bolivar           Registration Statement on Form
            International Inc.                       S-1 filed on August 7, 2001

   10.37    Indemnification Agreement, dated May 1,  Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.37 to the
            Jeffrey D. Wilson                        Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.38    Indemnification Agreement, dated May 1,  Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.38 to the
            Daniel R. Dwight                         Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.39    Indemnification Agreement, dated May 1,  Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.39 to the
            Richard F. Tusing                        Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.40    Indemnification Agreement, dated May 1,  Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.40 to the
            Charles D. Strang                        Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.41    Indemnification Agreement, dated May 1,  Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.41 to the
            Richard A. Papworth                      Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.42    Indemnification Agreement, dated May 1,  Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.42 to the
            Erik W. Black                            Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.43    Stock Option Agreement, dated May 3,     Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.43 to the
            Jeffrey D. Wilson                        Registration Statement on Form
                                                     S-1 filed on August 7, 2001


                                       20
<PAGE>

EXHIBIT
NO.          DESCRIPTION                              LOCATION
---------    ----------------------------------       ---------------------------------

   10.44    Common Stock Purchase Agreement, dated   Incorporated by reference to
            June 19, 2001, by and between TSET,      Exhibit 10.44 to the
            Inc. and Fusion Capital Fund II, LLC     Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.45    Registration Rights Agreement, dated     Incorporated by reference to
            June 19, 2001, by and between TSET,      Exhibit 10.45 to the
            Inc. and Fusion Capital Fund II, LLC     Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.46    Mutual Release and Settlement            Incorporated by reference to
            Agreement, dated July 7, 2001, by and    Exhibit 10.46 to the
            between TSET, Inc. and Foster & Price    Registration Statement on Form
            Ltd.                                     S-1 filed on August 7, 2001

   10.47    Letter Agreement, dated July 9, 2001,    Incorporated by reference to
            by and between TSET, Inc. and The Eagle  Exhibit 10.47 to the
            Rock Group, LLC                          Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.48    Finders Agreement, dated July 17, 2001,  Incorporated by reference to
            by and between TSET, Inc. and John S.    Exhibit 10.48 to the
            Bowles                                   Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.49    Warrant Agreement, dated July 16, 2001,  Incorporated by reference to
            by and between TSET, Inc. and The Eagle  Exhibit 10.49 to the
            Rock Group, LLC                          Registration Statement on Form
                                                     S-1 filed on August 7, 2001

   10.50    Agreement and Release, dated October     Incorporated by reference to
            10, 2001, by and between TSET, Inc. and  Exhibit 10.50 to the
            Jeffrey D. Wilson                        Registrant's Form 10-K for the
                                                     year ended June 30, 2001 filed
                                                     on October 15, 2001

   10.51    Promissory Note dated October 10, 2001   Incorporated by reference to
            payable to Mr. Jeffrey D. Wilson         Exhibit 10.51 to the
                                                     Registrant's  Form 10-K for
                                                     the  year  ended  June  30,
                                                     2001 filed on  October  15,
                                                     2001

   10.52    Consulting Agreement, dated October 10,  Incorporated by reference to
            2001, by and between TSET, Inc. and      Exhibit 10.52 to the
            Jeffrey D. Wilson                        Registrant's Form 10-K for the
                                                     year ended June 30, 2001 filed
                                                     on October 15, 2001

   10.53    Consulting Agreement effective           Incorporated by reference to
            October 1, 2001, by and among TSET,      Exhibit 10.53 to the Registrant's
            Inc., Steven G. Martin and Joshua        Form 10-Q for the quarterly
            B. Scheinfeld                            period ended September 30, 2001
                                                     filed on November 19, 2001

   10.54    Letter Agreement dated November 13,      Incorporated by reference to
            2001 by and between TSET, Inc. and       Exhibit 10.54 to the Registrant's
            Fusion Capital Fund II, LLC              Form 10-Q for the quarterly
                                                     period ended September 30, 2001
                                                     filed on November 19, 2001

   10.55    Employment Agreement, effective          Incorporated by reference to
            November 15, 2001 by and between         Exhibit 10.55 to the Registrant's
            TSET, Inc. and Daniel R. Dwight          Form 10-Q for the quarterly period
                                                     ended March 31, 2002 filed on
                                                     May 15, 2002

   11.1     Statement re:  Computation of Earnings   Not applicable

   12.1     Statement re:  Computation of Ratios     Not applicable

   15.1     Letter re:  Unaudited Interim Financial  Not applicable
            Information

   18.1     Letter re: Change in Accounting          Not applicable
            Principals

   24.1     Power of Attorney                        Not applicable

   27.1     Financial Data Schedule                  Not applicable
</TABLE>


                                       21
<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.





Dated:      June __, 2002        TSET, INC.

                                By:   /s/ Daniel R. Dwight
                                      -------------------------------------
                                      Daniel R. Dwight
                                      President and Chief Executive Officer


                                By:   /s/ Richard A. Papworth
                                      -------------------------------------
                                      Richard A. Papworth
                                      Chief Financial Officer










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