UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                   FORM 10-QSB

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

                For the quarterly period ended September 30, 2003

                   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

                       KRONOS ADVANCED TECHNOLOGIES, 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.
/X/ Yes // No

As of October 31, 2003, there were 56,493,930 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 ended September 30, 2003.



<PAGE>


                       Kronos Advanced Technologies, Inc.
                           CONSOLIDATED BALANCE SHEETS

                                       September 30,
                                            2003                   June 30,
                                        (Unaudited)                  2003
                                      -----------------         ----------------
Assets

Current Assets
 Cash                                $        538,455          $        641,178
 Accounts receivable, net                     117,894                    48,766
 Prepaids                                      63,059                    34,135
                                      -----------------         ----------------
  Total Current Assets                        719,408                   724,078
                                      -----------------         ----------------
Net Property and Equipment                     25,304                    28,042

Other Assets
 Intangibles                                2,461,370                 2,487,473
                                      -----------------         ----------------
  Total Other Assets                        2,461,370                 2,487,473
                                      -----------------         ----------------
Total Assets                         $      3,206,082          $      3,239,594
                                      =================         ================

Liabilities and Shareholders' Deficit

Current Liabilities
 Accrued expenses and payables
  to directors and officers          $      1,231,683          $      1,172,015
 Accounts payable                             263,150                   218,338
 Accrued expenses                             138,946                   174,677
 Deferred revenue                             121,629                   133,751
 Notes payable, current portion               405,899                   185,670
                                      -----------------         ----------------
  Total Current Liabilities                 2,161,307                 1,884,451
                                      -----------------         ----------------

 Long Term Liabilities
  Notes payable                             2,311,546                 2,676,479
  Discounts on notes payable                 (812,982)                 (893,046)
                                      -----------------        -----------------
  Total Long Term Liabilities               1,498,564                 1,783,433
                                      -----------------        -----------------

     Total Liabilities                      3,659,871                 3,667,884
                                      -----------------        -----------------
Redeemable Warrants
                                                 -                      805,300
                                      -----------------        -----------------
Shareholders' Deficit
 Common stock, authorized
 500,000,000 shares of $0.001
 par value, 56,293,290 and 53,836,524
 shares outstanding at September 30
 and June 30, 2003, respectively               56,294                    53,837
Capital in excess of par value             17,568,221                16,240,378
Accumulated deficit                       (18,078,304)              (17,527,805)
                                      ------------------        ----------------
  Total Shareholders' Deficit                (453,789)               (1,233,590)
                                      ------------------        ----------------
  Total Liabilities and
   Shareholders' Deficit          $         3,206,082                 3,239,594
                                      ==================        ================

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


<PAGE>


                       Kronos Advanced Technologies, Inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                          Three months ended September 30,
                                                        -------------------------------------
                                                            2003                  2002
                                                        (Unaudited)            (Unaudited)
                                                        --------------      -----------------

<S>                                                   <C>                  <C>
 Sales                                                $    130,017         $       108,617
 Cost of sales                                              82,753                  92,125
                                                        --------------      ------------------
 Gross Profit                                               47,264                  16,492
                                                        --------------      ------------------
 Selling, General and Administrative expenses:
  Compensation and benefits                                202,823                 134,790
  Professional services                                     43,638                 284,076
  Research and development                                  19,828                  30,274
  Depreciation and amortization                             70,579                  72,636
  Facilities                                                18,873                  19,205
  Other selling general and
   administrative expenses                                  73,752                  32,869
                                                        --------------      ------------------
 Selling, General and Administrative expenses              429,493                 573,850
                                                        --------------      ------------------
 Net Operating Loss                                       (382,229)               (557,358)
 Interest Expense                                         (168,270)                (33,773)
                                                        --------------      ------------------
 Net Loss Before Taxes                                    (550,499)               (591,130)
                                                        --------------      ------------------
 Net Loss                                             $   (550,499)               (591,130)
                                                        ==============      ==================
Basic Loss Per Share                                  $     (0.01)                  (0.01)
                                                        ==============      ==================
Diluted Loss Per Share                                $     (0.01)                  (0.01)
                                                        ==============      ==================

Weighted average shares outstanding                     53,973,647              44,526,735

</TABLE>

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



<PAGE>


                       Kronos Advanced Technologies, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                        For the three months ended September 30,
                                                    ------------------------------------------------
                                                          2003                      2002
                                                        (Unaudited)               (Unaudited)
                                                    ----------------------    ----------------------

CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                               <C>                         <C>
 Net loss from continuing operations              $        (550,499)          $      (591,130)
  Adjustments to reconcile net loss to net cash
  used in operating activities

   Depreciation and amortization                             70,579                    72,636
   Common stock issued for compensation/services               -                        5,674
 Change In
  Accounts receivable                                       (69,128)                     -
  Prepaid expenses and other assets                         (28,924)                  (25,950)
  Deferred revenue                                          (12,122)                   34,380
  Accounts Payable                                           60,562                   268,703
  Accrued Expenses and other liabilities                      8,188                   119,201
                                                    ----------------------    ----------------------
   Net cash used in Operating Activities                   (521,345)                 (116,486)

CASH FLOWS FROM INVESTING ACTIVITIES
 Investment in patent protection                            (41,738)                    -
                                                    ----------------------    ----------------------
  Net cash used in Investing Activities                     (41,738)                    -
                                                    ----------------------    ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Issuance of common stock                                   525,000                   183,000
 Repayments of short-term borrowings                       (144,704)                  (88,000)
 Accretion of note discount                                  80,064                      -
                                                    ----------------------    ----------------------
  Net cash provided by Financing Activities                 460,360                    95,000
                                                    ----------------------    ----------------------
NET DECREASE IN CASH                                       (102,723)                  (21,486)

CASH
  Beginning of period                                       641,178                    21,510
                                                    ----------------------    ----------------------

  End of period                                   $         538,455          $             24
                                                    ======================    ======================

Supplemental schedule of non-cash investing
 and financing activities:
  Interest paid in cash                           $           5,337          $            866

</TABLE>

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




<PAGE>



               KRONOS ADVANCED TECHNOLOGIES, 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 periods ended September 30, 2003 and 2002 and are not necessarily
indicative of the results that may be experienced for the fiscal year ending
June 30, 2004.

These financial statements are those of the Company and its wholly-owned
subsidiary. All significant inter-company accounts and transactions have been
eliminated in the preparation of the consolidated financial statements.

The accompanying financial statements should be read in conjunction with the
Kronos Advanced Technologies, Inc. Form 10-KSB for the fiscal year ended June
30, 2003 filed on September 28, 2003.

RECENT ACCOUNTING PRONOUNCEMENTS. In April 2003, the Financial Accounting
Standards Board issued SFAS No. 149, "Amendment of FASB Statement No. 133 on
Derivative Instruments and Hedging Activities." This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under FASB
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities." The Company believes the adoption of SFAS 149 will have no
significant impact on its financial statements. The statement is effective for
contracts entered into or modified after June 30, 2003.

In May 2003, the Financial Accounting Standards Board issued SFAS No. 150,
"Accounting for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity." This Statement establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances). SFAS 150 is effective for financial instruments entered into or
modified after May 31, 2003 and, otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The effect of adopting SFAS
No. 150 has been to reclassify $805,300 in Redeemable Warrants from a
quasi-liability to the equity section of the balance sheet.


NOTE 2 -- INCOME TAXES

The composition of deferred tax assets and the related tax effects at September
30, 2003 and June 30, 2003 are as follows:

                                           September 30, 2003
                                             (Unaudited)          June 30, 2003
                                           ------------------   ----------------
   Benefit from carryforward of capital
    and net operating losses               $  4,221,374         $  4,034,973
   Other temporary differences                  156,740              188,206
   Less:
    Valuation allowance                      (4,378,114)          (4,223,179)
                                            -----------------   ----------------
   Net deferred tax asset                  $       -            $       -
                                            =================   ================


<PAGE>

The other temporary differences shown above relate primarily to 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>

                                                                 September 30, 2003                June 30, 2003
                                                        ------------------------------   ------------------------------
                                                                               %                                 %
                                                          (Unaudited)         of                                of
                                                            Amount        Pre-Tax Loss       Amount        Pre-Tax Loss
                                                        -------------   --------------    -----------    --------------

<S>                                                    <C>                   <C>         <C>                   <C>
Benefit for income tax at federal statutory rate       $   187,170           34.0%       $   941,746           34.0%
Benefit for income tax at state statutory rate              10,973            2.0%            55,208            2.0%
Non-deductible expenses                                    (43,208)          (7.9)%          319,977           11.7%
Increase in valuation allowance                           (154,935)         (28.1)%       (1,316,931)         (47.7)%
                                                        -------------   --------------    -----------   ---------------
                                                       $      -               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.

At September 30, 2003, for federal income tax and alternative minimum tax
reporting purposes, the Company has approximately $9.2 million of unused Federal
net operating losses, $2.3 million of capital losses and $8.3 million of unused
State net operating losses available for carryforward to future years. The
benefit from carryforward of such losses will expire in various years between
2006 and 2023 and could be subject to limitations if significant ownership
changes occur in the Company.

NOTE 3 - SEGMENTS OF BUSINESS

The Company operates principally in one segment of business: The Company
licenses, manufactures and distributes air movement and purification devices
utilizing the KronosTM technology. All other segments have been disposed of or
discontinued. For the three months ended September 30, 2003, the Company
operated only in the U. S.

NOTE 4 - EARNINGS PER SHARE

Weighted average shares outstanding used in the earnings per share calculation
were 53,973,647 and 44,526,735 for the three months ended September 30, 2003 and
2002, respectively.

As of September 30, 2003, there were outstanding options to purchase 10,601,675
shares of the Company's common stock and outstanding warrants to purchase
15,792,342 shares of the Company's common stock. These options and warrants have
been excluded from the earnings per share calculation as their effect is
anti-dilutive. As of September 30, 2002, there were outstanding options and
warrants to purchase 7,641,975 and 1,900,000 shares, respectively, of the
Company's common stock. These options have been excluded from the earnings per
share calculation as their effect is anti-dilutive.



<PAGE>

NOTE 5 - NOTES PAYABLE

The Company had the following notes payable obligations at September 30 and June
30, 2003:

                                     September 30, 2003          June 30, 2003
                                     ------------------        -----------------
 Obligation to former director  (1)    $     84,725              $       84,275
 Obligation to HoMedics (2)               2,400,000                   2,400,000
 Obligations under capital leases (3)        67,720                      72,424
 Obligations for purchase of
  intellectual property (4)                 145,000                     270,000
 Obligations to others (5)                   20,000                      35,000
                                     ------------------        -----------------
 Total Notes Payable                      2,717,445                   2,862,149

Current portions:
 Obligation to former director               40,000                      40,000
 Obligation to HoMedics                     203,924                        --
 Obligations under capital leases            21,975                      20,670
 Obligations for purchase of
  intellectual property                     120,000                      90,000
 Obligations to others                       20,000                      35,000
                                     ------------------        -----------------
 Total current portion                      405,899                     185,670
                                     ------------------        -----------------
 Total long term obligations net of
  current portion                      $  2,311,546              $    2,676,479
                                     ===================       =================


(1)      This note is to a former officer and director and bears interest at
         12%. The note calls for quarterly payments of at least $10,000 until
         the principal and interest are paid in full.

(2)      This is a 5 year note  bearing  interest  at 6%. No  payments  due
         until the first  anniversary  date.  Quarterly  payments of
         principal and interest due thereafter.

(3)      See Note 6 - Capital Leases

(4)      This is a non-interest bearing obligation with quarterly payments of
         $30,000 until paid in full.

(5)      This is a non-interest bearing obligation with monthly payments of
         $5,000 until paid in full.

NOTE 6 - CAPITAL LEASES

The Company entered into a capital lease for the purpose of purchasing equipment
used in the research center. Certain Officers of the Company personally
guaranteed the capital lease if the Company does not full fill its terms of the
lease obligations. The leases are for 36 months and contain bargain purchase
provisions so that the Company can purchase the equipment at the end of each
lease. The following sets forth the minimum future lease payments and present
values of the net minimum lease payments under these capital leases:

 Year ended                    Minimum Future Lease Payments and
 September 30,            Present Values of the Net Minimum Lease Payments
---------------           ------------------------------------------------
    2004                             $        36,337
    2005                                      36,337
    2006                                      19,027
                                      ----------------
        Total minimum lease payments          91,701
 Less:  Executory costs                         --
                                      ----------------
        Net minimum lease payments            91,701
 Less:  Imputed interest                      23,981
                                      ----------------
Present value of net
 minimum lease payments               $       67,720
                                      ================

Of the equipment that was purchased using capital leases, $10,650 was
capitalized and the remaining $65,782 was expensed through research and
development and cost of sales. In the three months ended September 30, 2003, the
Company paid $4,703 in principal and $4,381 in interest on capital leases.


<PAGE>

NOTE 7 - CONSULTING AGREEMENTS

In October 2001, the Company entered into a 15-month consulting agreement with
Joshua B. Scheinfeld and Steven G. Martin, principals of Fusion Capital, for
consulting services with respect to operations, executive employment issues,
employee staffing, strategy, capital structure and other matters as specified
from time to time. As consideration for their services, the Company issued
360,000 shares of its common stock. In accordance with EITF 96-18, the
measurement date was established as the contract date of October 1, 2001 as the
share grant was non-forfeitable and fully vested on that date. The stock was
valued on that date at $0.28 a share (the closing price for the Company's common
stock on the measurement date). The stock issuance has been recorded as a
prepaid consulting fee and was amortized to Professional Fee Expense ratably
over the 15-month term of the contract. During the three month periods ending
September 30, 2003 and 2002, the Company recognized professional services
expenses of $0 and $20,000, respectively under this agreement.

Effective March 11, 2002, the Company entered into an agreement with the Eagle
Rock Group for a nearly one year period ending March 1, 2003. Pursuant to the
agreement, the Company issued a note for the outstanding balance of $120,000 due
to The Eagle Rock Group, which has been paid in full. The Company granted Eagle
Rock a ten-year warrant granting them the right to purchase 900,000 shares of
our common stock. Two hundred and fifty thousand (250,000) warrant shares at an
exercise price of $0.42 and two hundred and fifty thousand (250,000) warrant
shares at an exercise price of $0.205 (the closing price of the Company's
common stock on March 1, 2002) were earned over a 12-month period and four
hundred thousand (400,000) warrant shares at an exercise price of $0.145 were
earned upon securing of our Licensing Agreement with HoMedics. These warrants
are irrevocable and are fully vested. For the 400,000 warrants earned upon
securing the HoMedics License Agreement, the measurement date is October 22,
2003 as the warrants became fully vested and non-forfeitable on the date. The
value assigned to these 400,000 warrants is $56,800 and was determined using the
Black-Scholes option valuation model. The $56,800 was expensed in the period of
the measurement date. For the other 500,000 warrants, the measurement date is
March 1, 2002 as the warrants are fully vested and non-forfeitable on that date.
The value assigned to these warrants is $62,500 and was determined using the
Black-Scholes option valuation model. The 500,000 warrants are for general
consulting services for a 12 month period. The $62,500 was expensed ratably over
the term of the consulting contract. Under this contract, expenses of $0 and
$15,625 were recorded for the three months ended September 30, 2003 and 2002,
respectively.

Also see Note 10 - Subsequent Events

NOTE 8 - 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 quarter ended September 30, 2003. 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 its working capital needs.

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:


<PAGE>

HoMedics Licensing Agreement. In October 2002, Kronos Air Technologies, Inc.,
and HoMedics USA, Inc. executed a multiyear, multi-million-dollar Licensing
Agreement to bring Kronos(TM) proprietary technology to the consumer. The
agreement provides for exclusive North American, Australian and New Zealand
retail distribution rights for next generation consumer air movement and
purification products based on the patented Kronos(TM) technology. In November
2002, Kronos and HoMedics executed a Development Agreement to provide Kronos
with the financial resources necessary to complete commercialization of the
initial Kronos(TM)-based consumer product line. Kronos is working with HoMedics'
engineers, designers, manufacturers, and marketing and sales personnel to
complete the initial product line for sales and distribution. HoMedics is
focused on product design and features, completion of manufacturing tooling and
assembly line processes, and product packaging, including prominent display of
the "Kronos" brand. Kronos is focused on completion of the technical hardware
and related power supplies for each of the products in the air purification
product line, as well as on developing product features and benefits unique to
this initial consumer product line.

The initial term of the agreement is three and one half years with the option to
extend the agreement for six additional years. Kronos will be compensated
through an initial royalty payment and ongoing quarterly royalty payments based
on a percentage of sales. HoMedics will pay minimum royalty payments of at least
$2 million during the initial term and on-going royalty payments to extend the
agreement. Kronos will retain full rights to all of its intellectual property.

US Navy SBIR. In November 2002, Kronos was awarded by the U. S. Navy a Small
Business Innovation Research ("SBIR") Phase II contract. The Phase II contract
(commercialization phase) is an extension of the Phase I and the Phase I Option
work that began in 2001. It is intended that the Kronos(TM) devices being
developed under this contract will be embedded in existing HVAC systems in order
to move air more efficiently than traditional, fan-based technology. During
Phase II, Kronos shall develop, produce and install a set of fully controlled
devices that represent a "cell" of an advanced distributive air management
system with medium capacity airflow in a U. S. Navy unique environment. The
"cell" will be designed to be easily adjustable to a variety of parameters such
as duct size, airflow requirements, and air quality. As of September 30, 2003,
U. S. Navy had provided Kronos with $150,000 in funding for this effort under
the Phase II contract.

HoMedics Debt Financing. In May 2003, Kronos entered into an agreement with
HoMedics, Inc. for $3.5 million in financing, including $3.4 million in secured
debt financing and $100,000 for the purchase of warrants. $2.5 million was paid
to Kronos upon execution of the agreement and $1.0 million will be paid upon the
start of production as defined in the Licensing Agreement for the
Kronos(TM)-based air purification product line to be marketed and distributed by
HoMedics. In conjunction with securing this financing, Kronos and HoMedics
agreed to negotiate the expansion of our relationship into additional
Kronos(TM)-based stand-alone consumer products, including fans, heaters,
humidifiers and dehumidifiers, as well as geographic expansion into Europe and
Asia.

US Army SBIR.  See Note 10 - Subsequent Events.


<PAGE>

NOTE 9 - COMMITMENTS AND CONTINGENCIES

In May 2003, Kronos entered into an agreement with a strategic customer,
HoMedics, Inc., for $3.5 million in financing, including $3.4 million in secured
debt financing and $100,000 for the purchase of warrants. $2.5 million was paid
to Kronos upon execution of the agreement and $1.0 million will be paid upon the
start of production as defined in the Licensing Agreement for the Kronos-based
air purification product line to be marketed and distributed by HoMedics.
HoMedics has a security interest in the Company's assets including its
technology. There is a risk that we will not be successful in achieving
production as defined in the Licensing Agreement. In exchange for providing $3.4
million in debt financing and $100,000, Kronos provided HoMedics with two
warrants: (i) 6.7 million warrants (which equated to 10% of the then fully
diluted shares) fully vested at the time of funding and (ii) 6.7 million
warrants (which equated to 10% of the then fully diluted shares) which will vest
only if (1) Kronos does not prepay the entire amount of principal and interest
due under the Notes by November 8, 2005; (2) Kronos is in default under any of
the Investment Documents, or (3) Kronos does not earn, at any time after the
date of this Agreement but prior to November 8, 2005, revenues in an aggregate
amount equal to or greater than $3.5 million. The exercise price was set at the
market price at the time of closing ($0.10). HoMedics may not be diluted below
7.5% for the first warrant (15% for both warrants) for any funds raised at less
than $0.20 per share, excluding options or shares issued to management,
directors, and consultants in the normal course of business. There are no
anti-dilution measures in place for funds raised at greater than $0.20 per
share.

EMPLOYMENT AGREEMENTS

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 the Employment Agreement is for 2 years and will automatically
renew for successive 1 year terms unless written notice within 3 months of the
end of the initial term or any subsequent renewal term is received by either
party. The Board of Directors renewed the Employment Agreement on August 13,
2003. The Employment Agreement provides for base cash compensation of $180,000
per year and eligibility for annual incentive bonus compensation in an amount
equal to annual salary based on the achievement of certain bonus objectives. In
addition, the Company granted 1,000,000 immediately vested and exercisable,
ten-year stock options at various exercise prices.

The Company  entered into an Employment  agreement  with Richard F. Tusing,  our
Chief  Operating  Officer,  effective as of January 1, 2003. The initial term of
the  Employment  Agreement  is for 2 years  and  will  automatically  renew  for
successive 1 year terms unless  written notice within 3 months of the end of the
initial term or any  subsequent  renewal term is received by either  party.  The
Employment Agreement provides for base cash compensation of $160,000 per year.

NOTE 10 - SUBSEQUENT EVENTS

On October 6, 2003, Erik W. Black resigned as a member of the board of
directors.

On October 31, 2003, the Company entered into a 10-month consulting agreement
with Joshua B. Scheinfeld and Steven G. Martin, principals of Fusion Capital,
for consulting services with respect to operations, strategy, capital structure
and other matters as specified from time to time. As consideration for their
services, the Company issued 360,000 unregistered shares of its common stock. In
accordance with EITF 96-18, the measurement date was established as the contract
date of October 31, 2003 as the share grant was non-forfeitable and fully vested
on that date. The stock was valued on that date at $0.22 a share (the closing
price for the Company's common stock on the measurement date). The stock
issuance has been recorded as a prepaid consulting fee and is being amortized to
Professional Fee Expense ratably over the term of the contract.

On November 7, 2003, the U. S. Army awarded Kronos a Small Business Innovation
Research Phase II contract. The first year of the contract is worth $369,000
with an Army option on the second year worth $360,000. The contract is to
develop Kronos' proprietary Electrostatic Dehumidification Technology ("EDT").
The objective of this Phase II effort is to implement and optimize
dehumidification via Kronos electrostatic field technology. The objective is to
be accomplished by: (1) prototype design and manufacturing, (2) prototype
testing in the laboratory environment and field demonstration, (3) analytical
and numerical modeling of Kronos' EDT process, and (4) project documentation and
reporting including interim and final reports.

<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 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

Kronos Advanced Technologies, Inc. is a high technology industrial company
focused on developing, marketing and selling products using the Company's
proprietary air movement and purification technology. Kronos is pursuing
commercialization of its patented technology in a limited number of markets; and
if we are successful we intend to enter additional markets in the future. To
date, our ability to execute our strategy has been restricted by our limited
amount of capital.

Technology Description and Benefits

The Kronos(TM) technology combines high voltage electronics and electrodes. By
combining these technologies, a Kronos(TM)-based device can both move and clean
air without any moving parts. Kronos(TM) devices are versatile, energy- and
cost-efficient and capable of multiple design forms. As a result, Kronos(TM)
devices have the immediate potential to be used as a standalone product or to
replace a range of heating, ventilation and air conditioning ("HVAC") products
for residential usage to high efficiency particulate air ("HEPA") filtration
systems for operating and manufacturing clean rooms.

The proprietary Kronos(TM) technology involves the application of high voltage
management across paired electrical grids to create an ion exchange that moves
and purifies air. Kronos(TM) technology has numerous valuable characteristics.
It moves air and gases at high velocities while removing odors, smoke and
particulates and killing pathogens, including bacteria and mold. The technology
is cost-effective and is more energy efficient than current alternative fan and
filter (including HEPA filter and ultraviolet light based) technologies. To
date, no commercial products using the Kronos(TM) technology have been sold.

A number of the scientific claims of the Kronos(TM) technology have been tested
by the U. S. government and a few multi-national companies, including the U. S.
Department of Energy, the U. S. Department of Defense, General Dynamics,
Underwriters Laboratory, and Intel. Independent laboratory testing has verified
the purification capability of the Kronos(TM) technology. Tests conducted at
MicroTest Laboratories and at the New Hampshire Materials Laboratory
demonstrated HEPA Clean Room Class 1000 quality particulate reduction and up to
95% reduction of hazardous gases (in one air pass through the Kronos(TM)
system), including numerous contaminants found in cigarette smoke.

Market Segmentation

Kronos' business development strategy is to sell and license the Kronos(TM)
technology to six distinct market segments: (1) air movement and purification
(health care, hospitality, residential and commercial facilities); (2) air
purification for unique spaces (cleanrooms, automotive, cruise ships and
airplanes); (3) specialized military (naval vessels, closed vehicles and mobile
facilities); (4) embedded cooling and cleaning (electronic devices and medical
equipment); (5) industrial scrubbing (produce storage and diesel and other
emissions); and (6) hazardous gas destruction (incineration and chemical
facilities).


<PAGE>

Kronos' initial focus is on the first three of these market segments which are
described in more detail below. Kronos is currently developing products for the
air movement and purification, air purification for unique spaces, and
specialized military through customer contracts which were executed over the
past twelve months. These contracts are described in more detail in the
Technology Application and Product Development section of this filing.

o        Air Movement and Purification. Indoor air pollution, including "sick
         building syndrome" and "building related illness," is primarily caused
         by inadequate ventilation, chemical contaminants from indoor and
         outdoor sources and biological contaminants. The addressable air
         movement and purification segment is made up of four principal
         applications: (1) health care, (2) hospitality, (3) commercial and (4)
         residential. Kronos is seeking to leverage the product development and
         funding resources of HoMedics, Inc., Kronos' strategic partner for
         consumer-based residential applications, to develop standalone products
         for other air movement and purification applications.

o        Air Purification for Unique Spaces. Electronics, semiconductor,
         pharmaceutical, aerospace, medical and many other producers depend on
         cleanroom technology. As products such as electronic devices become
         smaller, the chance of contamination in manufacturing becomes higher.
         For pharmaceutical companies, clean, safe and contaminant-free products
         are imperative to manufacturing and distributing a viable product.
         Other potential applications for the Kronos(TM) technology include
         closed environments such as aircraft, cruise ships and other
         transportation modes that require people to breathe contaminated,
         re-circulated air for extended periods. Kronos is building on its
         product development effort with its strategic partner in the business
         jet market to serve other closed environment applications.

o        Specialized Military. Military personnel face the worst of all possible
         worlds: indoor air pollution, often in very confined spaces for
         extended periods, combined with the threat of biological warfare,
         nuclear fallout, and other foreign elements. The military market
         segment offers Kronos a unique opportunity to leverage the technical
         and funding resources of the U. S. military to expand Kronos ability to
         develop and produce Kronos(TM)-based air movers and purifiers for
         applications that require these products to be embedded into
         ventilation systems to address the needs of military personnel.

Technology Application and Product Development

To best serve Kronos' targeted market segments, our Company is developing
specific product applications across two distinct product application platforms.
A Kronos(TM) device can be either used as a standalone product or can be
embedded. Standalone products are self-contained and only require the user to
plug the Kronos(TM) device into a wall outlet to obtain air filtration for their
home, office or hotel room. Embedded applications of the Kronos(TM) technology
require the technology be added into another system such as a building
ventilation system for more efficient air movement and filtration or into an
electrical device such as computer or medical equipment to replace the cooling
fan.

                               Standalone Platform

o        HoMedics Contract. In October 2002, Kronos Air Technologies, Inc., and
         HoMedics USA, Inc.  executed a Licensing  Agreement  granting HoMedics
         certain  rights with  respect to the  distribution  of the  Kronos(TM)
         proprietary  technology  to the consumer.  The agreement  provides for
         exclusive   North   American,   Australian   and  New  Zealand  retail
         distribution  rights for next  generation  consumer  air  movement and
         purification products based on the patented Kronos(TM) technology.  In
         November 2002, Kronos and HoMedics executed a Development Agreement to
         provide  Kronos with the  financial  resources  believed  necessary to
         complete  commercialization of the initial  Kronos(TM)-based  consumer
         product line. Kronos is working with HoMedics'  engineers,  designers,
         manufacturers,  and  marketing  and sales  personnel  to complete  the
         initial product line for sales and  distribution.  HoMedics is focused
         on product design and features,  completion of  manufacturing  tooling
         and  assembly  line  processes,   and  product  packaging,   including
         prominent  display  of  the  "Kronos"  brand.  Kronos  is  focused  on
         completion  of the technical  hardware and related power  supplies for
         each of the products in the air purification  product line, as well as
         on  developing  product  features and benefits  unique to this initial
         consumer product line.

         The initial term of the agreement is three and one half years with the
         option to extend the Licensing Agreement for six additional years.
         Kronos was compensated through an initial royalty payment and will
         receive ongoing quarterly royalty payments based on a percentage of
         sales. HoMedics will pay minimum royalty payments of at least $2
         million during the initial three and a half year term and on-going
         royalty payments to extend the agreement. Kronos will retain the rights
         to all of its intellectual property.


<PAGE>

         HoMedics commitment includes funding a marketing and advertising
         campaign to promote the Kronos(TM)-based product line. The products
         will be manufactured and distributed by HoMedics. HoMedics currently
         distributes their products through major domestic retailers, including
         Wal-Mart, Home Depot, Sears, Bed Bath & Beyond, and Linens 'N Things.
         Kronos will manufacture and provide HoMedics with Kronos' proprietary
         electronics.

         In May 2003, Kronos entered into an agreement with HoMedics, Inc. for
         $3.5 million in financing, including $3.4 million in secured debt
         financing and $100,000 for the purchase of warrants. $2.5 million was
         paid to Kronos upon execution of the agreement and $1.0 million will be
         paid upon the start of production as defined in the Licensing Agreement
         for the Kronos(TM)-based air purification product line to be marketed
         and distributed by HoMedics. A provision of the agreement gives
         HoMedics a security interest in the assets of Kronos, including its
         technology. In conjunction with securing this financing, Kronos and
         HoMedics agreed to negotiate the expansion of our relationship into
         additional Kronos(TM)-based stand-alone consumer products, including
         fans, heaters, humidifiers and dehumidifiers, as well as geographic
         expansion into Europe and Asia.

         Kronos is seeking to leverage its consumer product development work
         with HoMedics to develop and produce our own commercial line of
         standalone air purifiers. This commercial line of Kronos(TM)-based air
         purifiers would attempt to address the specific air quality issues,
         including odors, bacteria and viruses, found in most nursing home and
         assisted living, healthcare and other commercial facilities.

                                Embedded Platform

o        U. S.  Navy  SBIR  Contracts.  The U. S.  Department  of  Defense  and
         Department  of Energy have  provided  Kronos with  various  grants and
         contracts to develop,  test and evaluate the Kronos(TM) technology for
         embedded  applications.  Kronos has developed  several  commercial and
         industrial  applications,  including  the  retrofit  of  berthing  fan
         systems and embedded  air movement  systems for U. S. Navy Aegis Class
         destroyers.

         In November 2002, the U. S. Navy awarded Kronos a Small Business
         Innovation Research Phase II contract worth $580,000, plus an option of
         $145,000. The Phase II contract (commercialization phase) is an
         extension of the Phase I and the Phase I Option work that began in
         2001. It is intended that the Kronos(TM) devices being developed under
         this contract will be embedded in existing HVAC systems in order to
         move air more efficiently than traditional, fan-based technology.

         During Phase II, Kronos will attempt to develop, produce and install a
         set of fully controlled devices that represent a "cell" of an advanced
         distributive air management system with medium capacity airflow in a U.
         S. Navy unique environment. The "cell" will be designed to be easily
         adjustable to a variety of parameters such as duct size, airflow
         requirements, and air quality. The goal of this development work is to
         significantly reduce or replace altogether the current HVAC air
         handling systems on naval ships. During the initial six months of the
         contract, Kronos has designed a new generation power supply, improved
         the efficiency of the core technology to allow for increased air
         movement and filtration, and initiated selection with the U. S. Navy of
         the specifications for the commercial products to be built under the
         Phase II contract. As of September 30, 2003, the U. S. Navy had
         provided Kronos with $150,000 in funding for this effort under the
         Phase II contract.

         As part of its air management system, Kronos intends to develop and
         test an air filtration mechanism capable of performing to HEPA quality
         standards. We believe that Kronos(TM) devices could replace current
         HEPA filters with a permanent, easily cleaned, low-cost solution. The
         U. S. Navy unique environment includes shock exposure, vibration,
         Electromagnetic Interference/Compatibility (EMI/EMC), and salt spray.
         Kronos(TM) devices will be built and tested to meet specific Navy
         standards. Testing shall include assessments for system performance,
         including control techniques, noise levels, and acquisition and
         lifecycle costs.

         We believe that during the option portion of the contract, Kronos(TM)
         technology's ability to kill bacteria and other pathogens will be
         confirmed and expanded to a wide range of pathogens for space
         disinfection and bio-terrorist attacks. We believe the Kronos(TM)
         technology can kill all or most airborne pathogens regardless of their
         nature, genetic structure, robustness, or method of delivery.
<PAGE>

         Kronos has begun the process for obtaining Phase III (production phase)
         support for the Kronos(TM)-based advanced distributive air management
         system being developed under Phase II. Phase III contracts may be
         awarded prior to completion of Phase II contract work. Kronos is
         working directly with Dawnbreaker, a U. S. Government entity
         established for the purpose of supporting companies seeking Phase III
         contracts.

o        U. S. Army SBIR Contracts. In August 2003, Kronos was awarded the
         option on its U. S. Army Small Business Innovation Research Phase I
         contract bringing the value of the Phase I contract award to $120,000.
         In July 2003, Kronos obtained a Pre-Award notice from the U. S. Army
         for a Small Business Innovation Research Phase II contract. On November
         7, 2003, the U. S. Army awarded Kronos the Small Business Innovation
         Research Phase II contract. The first year of the contract is worth
         $369,000 with an Army option on the second year worth $360,000. The
         contract is to develop Kronos' proprietary Electrostatic
         Dehumidification Technology ("EDT").

         The objective of the Phase II effort is to implement and optimize
         dehumidification via Kronos electrostatic field technology. The
         objective is to be accomplished by: (1) prototype design and
         manufacturing, (2) prototype testing in the laboratory environment and
         field demonstration, (3) analytical and numerical modeling of Kronos'
         EDT process, and (4) project documentation and reporting including
         interim and final reports. We anticipate the Kronos(TM) devices
         manufactured under this contract will further demonstrate the
         versatility of the Kronos(TM) technology to meet airflow, system
         pressure and reduced humidity requirements for HVAC systems. In
         December 2001, Kronos was awarded the Phase I contract. Phase I of the
         contract was worth $70,000 in funding to investigate and analyze the
         feasibility of the Kronos(TM) technology to reduce humidity in HVAC
         systems. Dehumidification is essential to making HVAC systems more
         energy efficient.

         Kronos is seeking to leverage its military application development work
         with the U. S. Navy and U. S. Army to develop and produce air handlers
         and purifiers for commercial and industrial facilities. A future
         potential commercial line of Kronos(TM)-based air handlers and
         purifiers would attempt to address the specific air quality issues,
         including bacteria and other germs, found in large enclosed spaces such
         as office buildings and multi-dwelling residential complexes, while
         providing more efficient air movement.

o        Business Jet Manufacturer. In January 2003, Kronos extended its work
         into the transportation industry by signing a Development and
         Acquisition Agreement with a premier business jet manufacturer. The
         Agreement was the direct result of initial prototype development work
         performed by the Kronos Research Team with input from the customer in
         2002. The Kronos(TM) devices being designed and manufactured under this
         contract will need to meet all FAA safety standards, including
         environmental, flammability and electromagnetic interference (EMI). The
         Company has initiated the next phase of design and development based on
         the customer's specific product application requirements.

         Kronos is seeking to leverage its business jet application development
         work to develop and produce air handlers and purifiers for the
         commercial aviation and automotive markets. A future potential
         commercial line of Kronos(TM)-based air handlers and purifiers would
         attempt to address the specific air quality issues, including exhaust
         and viruses, found in enclosed spaces occupied by multiple people for
         extended periods of time, while providing more efficient air movement
         within unique space constraints.

Patents and Intellectual Property

In August 2003, Kronos received a Notice of Allowance from the United States
Patent and Trademark Office indicating that its patent application entitled
Method of and Apparatus for "Electrostatic Fluid Acceleration Control of a Fluid
Flow" has been examined and allowed for issuance as a U. S. patent. It is
expected that the U. S. Patent will be issued in due course. This latest patent
when formally issued will provide intellectual property protection for key
aspects of Kronos' technology until late in 2020.

In January 2003, Kronos received formal notification from the United States
Patent and Trademark Office indicating that its application entitled
"Electrostatic Fluid Accelerator" has been examined and allowed for issuance as
a U. S. patent (#6,504,308). The patent provides protection for key aspects of
Kronos' technology until late in 2019.

In addition to the "Electrostatic Fluid Accelerator" and "Method of and
Apparatus for Electrostatic Fluid Acceleration Control of a Fluid Flow" patents,
a number of additional patent applications have been filed for, among other
things, the control and management of electrostatic fluid acceleration. These
additional patent applications are either being examined or are awaiting
examination by the Patent Office. There are a number of corresponding patent
applications, which have been filed and are pending outside of the United
States.

<PAGE>

CRITICAL ACCOUNTING POLICIES

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

Allowance for Doubtful Accounts. We provide a reserve against our receivables
for estimated losses that may result from our customers' inability to pay. These
reserves are based on potential uncollectible accounts, aged receivables,
historical losses and our customers' credit-worthiness. Should a customer's
account become past due, we generally will place a hold on the account and
discontinue further shipments and/or services provided to that customer,
minimizing further risk of loss.

Valuation of Goodwill, Intangible and Other Long Lived Assets. We use
assumptions in establishing the carrying value, fair value and estimated lives
of our long-lived assets and goodwill. The criteria used for these evaluations
include management's estimate of the asset's ability to generate positive income
from operations and positive cash flow in future periods compared to the
carrying value of the asset, the strategic significance of any identifiable
intangible asset in our business objectives, as well as the market
capitalization of Kronos. We have used certain key assumptions in building the
cash flow projections required for evaluating the recoverablility of our
intangible assets. We have assumed revenues from the following applications of
Kronos' technology: consumer stand-alone devices, assisted care/skilled nursing
stand-alone devices, embedded devices in the hospitality industry and in
specialized military applications. Expenses/cash out flows in our projections
include sales and marketing, production, distribution, general and
administrative expenses, research and development expenses and capital
expenditures. These expenses are based on management estimates and have been
compared with industry norms (relative to sales) to determine their
reasonableness. We use the same key assumptions for our cash flow evaluation as
we do for internal budgeting, lenders and other third parties; therefore, they
are internally and externally consistent with financial statement and other
public and private disclosures. We are not aware of any negative implications
resulting from the projections used for purposes of evaluating the
appropriateness of the carrying value of these assets. If assets are considered
to be impaired, the impairment recognized is the amount by which the carrying
value of the assets exceeds the fair value of the assets. Useful lives and
related amortization or depreciation expense are based on our estimate of the
period that the assets will generate revenues or otherwise be used by Kronos.
Factors that would influence the likelihood of a material change in our reported
results include significant changes in the asset's ability to generate positive
cash flow, loss of legal ownership or title to the asset, a significant decline
in the economic and competitive environment on which the asset depends,
significant changes in our strategic business objectives, and utilization of the
asset.

Valuation of Deferred Income Taxes. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized.
The likelihood of a material change in our expected realization of these assets
is dependent on our ability to generate future taxable income, our ability to
deduct tax loss carryforwards against future taxable income, the effectiveness
of our tax planning and strategies among the various tax jurisdictions that we
operate in, and any significant changes in the tax treatment received on our
business combinations.

Revenue Recognition. We recognize revenue in accordance with Securities and
Exchange Commission Staff Bulletin 101 ("SAB 101"). Further, Kronos Air
Technologies recognizes revenue on the sale of custom-designed contract sales
under the percentage-of-completion method of accounting in the ratio that costs
incurred to date bear to estimated total costs. For uncompleted contracts where
costs and estimated profits exceed billings, the net amount is included as an
asset in the balance sheet. For uncompleted contracts where billings exceed
costs and estimated profits, the net amount is included as a liability in the
balance sheet. Sales are reported net of applicable cash discounts and
allowances for returns.

<PAGE>

RESULTS OF OPERATIONS

The Company's net loss from continuing operations for the three months ended
September 30, 2003 decreased by 7% to $550,000, compared with a net loss of
$591,000 for the corresponding period of the prior year. The decrease in the net
loss was primarily the result of an increase in gross profit ($31,000) and a
decrease in selling, general and administrative expenses ($145,000) offset by an
increase in interest expense ($135,000).

REVENUE. Revenues are generated through sales of Kronos(TM) devices at Kronos
Air Technologies, Inc. Revenue for the three months ended September 30, 2003 was
$130,000. Revenue of $109,000 was recorded during the corresponding period of
the prior year. These revenues were primarily from our HoMedics contract and U.
S. Navy SBIR Phase II contract. Revenues in the corresponding period of the
prior year were primarily from our U. S. Army and U. S. Navy SBIR Phase I
contracts and Alticorp contract.

COST OF SALES. Cost of sales for the three months ended September 30, 2003 was
$83,000 compared to $92,000 for the corresponding period of the prior year. Cost
of sales in the current year is primarily development costs associated with our
HoMedics and U. S. Navy SBIR contracts. Prior year cost of sales related to
revenue from U. S. Army and U. S. Navy SBIR Phase I contracts and Alticorp
contract.

GROSS PROFIT: Gross profit for the three months ended September 30, 2003
increased 185% to $47,000 compared to $16,000 for the corresponding period of
the prior year. This increase was primarily the result of the higher gross
margin from our HoMedics contract in the current quarter compared with the gross
margin from our Alticor contract in the corresponding period of the prior year.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended September 30, 2003 decreased
25% to $429,000 compared to $574,000 for the corresponding period of the prior
year. This decrease is primarily the result of a decrease in professional
services ($240,000) offset by an increase in compensation and benefits
($68,000). The decrease in professional services was the result of a reduction
in business consulting ($153,000), and legal and auditing ($87,000) expenses.
The reduction in business consulting included the benefit to the Company from
converting our Chief Operating Officer from a consulting agreement to a full
time employment contract.

CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2003

Our total assets at September 30, 2003 and June 30, 2003 were $3.2 million.
Total assets at September 30, 2003 were comprised primarily of $2.5 million of
patents/intellectual property and $0.5 million of cash. Total assets at June 30,
2003 were comprised primarily of $2.5 million of patents/intellectual property
and $0.6 million of cash. Total current assets at September 30, 2003 and June
30, 2003 were $0.7 million, while total current liabilities for those same
periods were $2.2 million and $1.9 million, respectively, creating a working
capital deficit of $1.4 million and $1.2 million at each respective period end.
This working capital deficit is primarily due to accrued expenses for
compensation, management consulting and other professional services and the
current portion of notes payable. Shareholders' deficit as of September 30, 2003
and June 30, 2003 were $(0.5) million and $(1.2) million, respectively,
representing a decrease of $0.7 million. The decrease in shareholders' deficit
is primarily the result of a reclassification of $0.8 million in redeemable
warrants to equity based on FAS 150 and the sale and issuance of $0.5 million of
common stock, partially offset through incurring a $0.6 million loss from
continuing operations for the three months ended September 30, 2003.


<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow used on operating activities was $521,000 for the current three
month period. We were able to satisfy our cash requirements for this period
through funding under the terms of our secured financing from HoMedics and from
revenue on our HoMedics and U. S. Navy contracts.

On May 9, 2003, we closed on a $3.5 million secured financing from a strategic
customer, HoMedics, Inc. $2.5 million was advanced to Kronos upon execution of
the agreement and $1.0 million will be advanced upon the start of production for
the Kronos-based air purification product line to be marketed and distributed by
HoMedics.

Kronos SBIR contracts with the U. S. Military, including the U. S. Army Phase I
Option and Phase II and the U. S. Navy Phase II contracts, are potentially
worth, if all options are exercised, up to $1.5 million in product development
and testing support for Kronos Air Technologies. In November 2002, Kronos Air
Technologies was awarded by the U. S. Navy for a Small Business Innovation
Research Phase II contract worth $580,000, plus an option of $150,000. As of
September 30, 2003, Kronos has received $150,000 in funding under the U. S. Navy
SBIR Phase II contract. On November 7, 2003, the U. S. Army awarded Kronos a
Small Business Innovation Research Phase II contract. The first year of the
contract is worth $369,000 with an Army option on the second year worth
$360,000. In August 2003, Kronos Air Technologies obtained notice from the U. S.
Army for the option of the SBIR Phase I contract worth $50,000. To earn these
future amounts, we will have to complete the required work.

On June 19, 2001, we entered into a common stock purchase agreement with Fusion
Capital. Pursuant to this agreement, we have sold approximately 6 million shares
of our common stock and have received $1.3 million.

On August 12, 2002, we terminated our common stock purchase agreement dated June
19, 2001 and entered into a new common stock purchase agreement with Fusion
Capital. Pursuant to the 2002 common stock purchase agreement, Fusion Capital
has agreed to purchase on each trading day during the term of the agreement,
$10,000 of our common stock or an aggregate of $6.0 million. The $6.0 million of
our common stock can be purchased over a 30-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. Fusion Capital is obligated to
purchase shares under the agreement as long as the share price exceeds a floor
of $0.10. However, there can be no assurance of how much cash we will receive,
if any, under the common stock purchase agreement with Fusion Capital. Pursuant
to this agreement, we have sold approximately 8 million shares of our common
stock and have received $1.1 million.

We estimate that achievement of our business plan will require substantial
additional funding. We anticipate that the source of funding will be obtained
pursuant to the senior debt funding from HoMedics, Fusion Capital transaction
and/or the sale of additional equity in our Company, cash flow generated from
government grants and contracts, which includes funding from the Small Business
Innovation Research contracts sponsored by the U. S. Navy and Army awarded to
Kronos Air Technologies, and cash flow generated from customer revenue. Pursuant
to discussions with the companies that we will be licensing our technology, we
anticipate generating cash flow in our 2004 fiscal year from advance funding
from these companies for production development work. There are no assurances
that these sources of funding will be adequate to meet our cash flow needs.

GOING CONCERN OPINION

Our independent auditors have included an explanatory paragraph to their audit
opinions issued in connection with our 2003 and 2002 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 develop,
manufacturer and sell 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.

<PAGE>

FACTORS AFFECTING KRONOS' BUSINESS AND PROSPECTS

We are subject to various risks which may have a material adverse effect on our
business, financial condition and results of operations, and may result in a
decline in our stock price. Certain risks are discussed below:

We have a limited operating history with significant losses and expect losses to
continue fro 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 $0.6 million for the three
months ended September 30, 2002. We have incurred net losses from continuing
operations of $2.8 million for the fiscal years ended June 30, 2003. As a
result, at September 30, 2003 and June 30, 2003, we had an accumulated deficit
of $18.1 million and $17.5 million, respectively. Our revenues and cash flows
from operations have not been sufficient to sustain our operations. We have
sustained our operations through the issuance of our common stock and the
incurrence of secured debt. We expect that our revenues and cash flows from
operations may not be sufficient to sustain our operations for the foreseeable
future. Our profitability will require the successful commercialization of our
Kronos(TM) technologies. No assurances can be given that we will be able to
successfully commercialize our Kronos(TM) technologies or that we will ever be
profitable.

We will require significant additional financing to sustain our operations and
with it we will not be able to continue operations.

At September 30, 2003 and June 30, 2003, we had a working capital deficit of
$1.4 million and $1.2 million, respectively. The independent auditor's report
for the year ended June 30, 2003, 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. For the three months ended September 30, 2003 and for the fiscal
year ended June 30, 2003, we had an operating cash flow deficit of $0.5 million
and $2.0 million, respectively. We currently do not have sufficient financial
resources to fund our operations or pay certain existing obligations or those of
our subsidiary. Therefore, we need substantial additional funds to continue
these operations and pay certain existing obligations.

If obtaining sufficient financing from the U. S. Navy, U. S. Army, HoMedics and
/or Fusion Capital were to be unavailable and if we are unable to commercialize
and sell the products or technologies, 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, U. S. Navy and U.S Army SBIR contracts,
HoMedics senior debt agreement and / or the Fusion common stock purchase
agreement, we may still need additional capital to fully implement our business,
operating and development plans. At September 30 and June 30, 2003, we had a
cash balance of $538,000 and $641,000, respectively. Should the financing we
require to sustain our working capital needs be unavailable, or prohibitively
expensive when we require it, we would be forced to curtail our business
operations.

Existing shareholders will experience significant dilution from our sale of
shares under the common stock purchase agreement with Fusion Capital and any
other equity financing.

The sale of shares pursuant to our agreement with Fusion Capital, the exercise
of HoMedics stock warrants or any other future equity financing transaction will
have a dilutive impact on our stockholders. As a result, our net income per
share could decrease in future periods, and the market price of our common stock
could decline. In addition, the lower our stock price is, the more shares of
common stock we will have to issue under the common stock purchase agreement
with Fusion Capital in order to draw down the full amount. If our stock price is
lower, then our existing stockholders would experience greater dilution. We
cannot predict the actual number of shares of common stock that will be issued
pursuant to the agreement with Fusion Capital or any other future equity
financing transaction, in part, because the purchase price of the shares will
fluctuate based on prevailing market conditions and we do not know the exact
amount of funds we will need.

Failure to develop manufacturing capabilities would have material adverse effect
on our business.

The manufacture of consumer products by HoMedics based on our technology is in
the initial stage. We have no experience manufacturing and distributing
commercial quantities of our Kronos' products. Kronos currently does not have
any commercial-scale manufacturing facilities. Kronos does not have any
contractual relationships with third parties to contract manufacture. If Kronos
is unable to acquire adequate manufacturing capabilities or if it cannot enter
into satisfactory arrangements with third parties to manufacture the Kronos(TM)
products on commercially reasonable terms, we would be forced to curtail our
business operations. There can be no assurance that we will be able to acquire
adequate manufacturing capabilities or be able to enter into satisfactory
arrangements with third parties to manufacture the Kronos(TM) products.


<PAGE>

Competition in the market for air movement and purification devices may result
in the failure of the Kronos(TM) products to achieve market acceptance.

Kronos 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' competitors already have brand recognition and
established positions in the markets that we have targeted for penetration. In
the event that the Kronos(TM) products do not favorably compete with the
products sold by our competitors, we would be forced to curtail our business
operations.

Our failure to enforce protection of our intellectual property would have a
material adverse effect on our business.

A significant part of our success depends in part on our ability to obtain and
defend our intellectual property, including patent protection for our products
and processes, preserve our trade secrets, defend and enforce our rights against
infringement and operate without infringing the proprietary rights of third
parties, both in the United States and in other countries. Our limited amount of
capital impedes our current ability to protect and defend our intellectual
property.

In January 2003, Kronos received formal notification from the United States
Patent and Trademark Office indicating that its application entitled
"Electrostatic Fluid Accelerator" had been examined and allowed for issuance as
a U. S. patent (#6,504,308). The patent will provide protection for key aspects
of Kronos' technology until late in 2019. In August 2003, Kronos received a
Notice of Allowance from the United States Patent and Trademark Office
indicating that its patent application entitled "Method of and Apparatus for
Electrostatic Fluid Acceleration Control of a Fluid Flow" has been examined and
allowed for issuance as a U. S. patent. It is expected that the U. S. Patent
will issue in due course. We have additional U. S. and foreign patent
applications pending. The validity and breadth of our intellectual property
claims in ion wind generation and electrostatic fluid acceleration and control
technology involve complex legal and factual questions and, therefore, may be
highly uncertain. Despite our efforts to protect our intellectual proprietary
rights, existing copyright, trademark and trade secret laws afford only limited
protection.

Our industry is characterized by frequent intellectual property litigation based
on allegations of infringement of intellectual property rights. Although we are
not aware of any intellectual property claims against us, we may be a party to
litigation in the future.

Possible future impairment of intangible assets would have a material adverse
effect on our financial condition.


<PAGE>

Our net intangible assets of approximately $2.5 million as of September 30, 2003
consist principally of purchased patent technology and marketing intangibles,
which relate to the acquisition of Kronos Air Technologies, Inc. in March 2000
and to the acquisition of license rights to fuel cell, computer and
microprocessor applications of the Kronos(TM) technology not included in the
original acquisition of Kronos Air Technologies, Inc. in May 2003. Intangible
assets comprise 78% of our total assets as of September 30, 2003. Intangible
assets are subject to periodic review and consideration for potential impairment
of value. Among the factors that could give rise to impairment include a
significant adverse change in legal factors or in the business climate, an
adverse action or assessment by a regulator, unanticipated competition, a loss
of key personnel, and projections or forecasts that demonstrate continuing
losses associated with these assets. In the case of our intangible assets,
specific factors that could give rise to impairment would be, but are not
limited to, an inability to obtain patents, the untimely death or other loss of
Dr. Igor Krichtafovitch, the lead inventor of the Kronos(TM) technology and
Kronos Air Technologies Chief Technology Officer, or the ability to create a
customer base for the sale or licensing of the Kronos(TM) technology. Should an
impairment occur, we would be required to recognize it in our financial
statements. A write-down of these intangible assets could have a material
adverse impact on our total assets, net worth and results of operations.

Our common stock is deemed to be "Penny Stock," subject to special requirement
and conditions and may not be a suitable investment.

Our common stock is deemed to be "penny stock" as that term is defined in Rule
3a51-1 promulgated under the Securities Exchange Act of 1934. Penny stocks are
stocks:

o        With a price of less than $5.00 per share;

o        That are not traded on a "recognized" national exchange;

o        Whose prices are not quoted on the Nasdaq automated quotation system
         (Nasdaq listed stock must still have a price of not less than $5.00 per
         share); or

o        In issuers with net tangible assets less than $2.0 million (if the
         issuer has been in continuous operation for at least three years) or
         $5.0 million (if in continuous operation for less than three years), or
         with average revenues of less than $6.0 million for the last three
         years.

Broker/dealers dealing in penny stocks are required to provide potential
investors with a document disclosing the risks of penny stocks. Moreover,
broker/dealers are required to determine whether an investment in a penny stock
is a suitable investment for a prospective investor. These requirements may
reduce the potential market for our common stock by reducing the number of
potential investors. This may make it more difficult for investors in our common
stock to resell shares to third parties or to otherwise dispose of them. This
could cause our stock price to decline.

We rely on management and research personnel, the loss of whose services could
have a material adverse effect upon our business.

We rely principally upon the services of our senior executive management, and
certain key employees, including the Kronos 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 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
executive management, or key employees.


<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Within 90 days prior to the
filing date of this report, our Company carried out an evaluation of the
effectiveness of the design and operation of its disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14. This evaluation was done under
the supervision and with the participation of our Company's President and Chief
Financial Officer. Based upon that evaluation, they concluded that our Company's
disclosure controls and procedures are effective in gathering, analyzing and
disclosing information needed to satisfy our Company's disclosure obligations
under the Exchange Act.

Changes in Internal Controls. There were no significant changes in our Company's
internal controls or in other factors that could significantly affect those
controls since the most recent evaluation of such controls.


<PAGE>

                                     PART II

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

There were no sales of unregistered securities of the Company.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. EXHIBITS
<TABLE>
<CAPTION>


EXHIBIT NO.     DESCRIPTION                                  LOCATION
-------------------------------------------------------------------------------------------------
<C>               <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

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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

<C>                                       <C>
10.4            Agreement, dated February 5, 2000, by        Incorporated by reference to
                and between DiAural, EdgeAudio, LLC          LLC and Exhibit 10.4 to the
                                                             Registration 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

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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


<C>                 <C>                                          <C>
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


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
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

<C>                                                 <C>
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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


<C>                                               <C>
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

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 December 31, 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 December 31, 2001
                                                             filed on November 19, 2001

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

<C>                      <C>                                            <C>
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

10.56           Agreement, dated November 13, 2001           Incorporated by reference to Exhibit
                by and between TSET, Inc. and Fusion         10.56 to the Registrant's Amendment
                Capital Fund II, LLC                         No. 1 to Form S-1 filed on
                                                             August 2, 2002

10.57           Common Stock Purchase Agreement,             Incorporate by reference to Exhibit
                dated August 12, 2002 by and between         10.57 to the Registrant's Form S-1
                between TSET, Inc. and Fusion                filed on August 13, 2002
                Capital Fund II, LLC

10.58           Registration Rights Agreement, dated         Incorporated by reference to Exhibit
                August 12, 2002 by and between TSET,         10.58 to the Registrant's Form S-1
                Inc. and Fusion Capital Fund II, LLC         filed on August 13, 2002

10.59           Termination Agreement, dated                 Incorporated by reference to Exhibit
                August 12, 2002 by and between TSET,         10.59 to the Registrant's Amendment
                Inc. and Fusion Capital Fund II, LLC         No. 1 to Form S-1 filed on
                                                             September 16, 2002

10.60           Master Loan and Investment                   Incorporated by reference to
                Agreement, dated May 9, 2003,                the Registrant's 8-K filed on
                by and among Kronos Advanced                 May 15, 2003
                Technologies, Inc., Kronos Air
                Technologies, Inc. and FKA
                Distributing Co. d/b/a HoMedics,
                Inc., a Michigan corporation
                ("HoMedics")

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

<C>                            <C>                                                      <C>
10.61                Secured Promissory Note, dated                              Incorporated by reference to
                     May 9, 2003, in the principal                               Exhibit 99.2 to the Registrant's
                     amount of $2,400,000 payable to                             8-K filed on May 15, 2003
                     HoMedics

10.62                Secured Promissory Note, dated                              Incorporated by reference to
                     May 9, 2003, in the principal                               Exhibit 99.4 to the Registrant's
                     amount of $1,000,000 payable to                             8-K filed on May 15, 2003
                     HoMedics

10.63                Security Agreement dated May 9,                             Incorporated by reference to
                     2003, by and among Kronos Air                               Exhibit 99.4 to the Registrant's
                     Technologies, Inc. and HoMedics                             8-K filed on May 15, 2003

10.64                Registration Rights Agreement,                              Incorporated by reference to
                     dated May 9, 2003, by and between                           Exhibit 99.5 to the Registrant's
                     Kronos and HoMedics                                         8-K filed on May 15, 2003

10.65                Warrant No. 1 dated May 9, 2003,                            Incorporated by reference to
                     issued to HoMedics                                          Exhibit 99.7 to the Registrant's
                                                                                 8-K filed on May 15, 2003

10.66                Warrant No. 2 dated May 9, 2003,                            Incorporated by reference to
                     issued to HoMedics                                          Exhibit 99.7 to the Registrant's
                                                                                 8-K filed on May 15, 2003
                                                                                 2002

10.67                Consulting Agreement effective                              Provided herewith
                     October 31, 2003, by and among Kronos
                     Advanced Technologies Inc.,
                     Steven G. Martin and Joshua B.
                     Scheinfeld

</TABLE>


<PAGE>

<TABLE>
<CAPTION>


EXHIBIT NO.     DESCRIPTION                                  LOCATION
-------------------------------------------------------------------------------------------------
<C>                         <C>                                    <C>
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

16.1            Letter re:  Change in Certifying              Incorporated by reference to
                            Accountant                        the Company's Form 8-K filed on
                                                              August 22, 2003

21.1            Subsidiaries of the Registrant                Not applicable

24.1            Power of Attorney                             Not applicable

27.1            Financial Data Schedule                       Not applicable

31.1            Certification of Chief Executive              Provided herewith
                Officer pursuant to 15 U.S.C.
                Section 7241, as adopted pursuant
                to Section 302 of the Sarbanes-Oxley
                Act of 2002

31.2            Certification of Principal Financial          Provided herewith
                Officer pursuant to U.S.C. Section
                7241, as adopted pursuant to Section
                302 of the Sarbanes-Oxley Act of 2002

32.1            Certification by Chief Executive Officer      Provided herewith
                and Principal Accounting Officer pursuant
                to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002

</TABLE>

<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:   November 13, 2003                  KRONOS ADVANCED TECHNOLOGIES, 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