UNITED STATES SECURITIES AND EXCHANGE
COMMISSION Washington, D.C.  20549  FORM
10-KSB (Mark One) [X]   ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year
ended December 31, 2007 OR [  ]    TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the transition period
from
      to  Commodore Applied Technologies, Inc. (Exact
Name of Registrant as specified in its charter)  Delaware
001-11871
11-3312952(State or other jurisdiction of incorporation)
(Commission File  Number)
(IRS Employer Identification No.)  517 Knight Street, Suite B, Richland,
Washington
99352(Address of principal executive offices)
(Zip Code)  Registrant's telephone number, including
area code:
                                           (509)
943-2565  Securities
Registered pursuant to Section 12 (g) of the Act: Common stock, Par
Value $0.001 (Title of Class)  Check whether the issuer (1) filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act during the past 12 months (or for such shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety (90) days.
           Yes [X]
          No  [
 ]  Check if disclosure of delinquent filers in
response to Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of Companys knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB.  [  ]  Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [  ]
          No
 [X]  State issuers revenues for its most recent
fiscal year:  $3,196,000  State the aggregate market value of the
voting and non-voting common equity held by non-affiliates computed by reference
to the price at which the common equity was sold, or the average bid and asked
price of such common equity, as of a specified date within the past 60 days.
 Based upon the price at close of market on March 27, 2008 of $0.07, the
aggregate market value of the Registrants common stock held by non-affiliates
was $523,138.  State the number of shares outstanding of
each of the issuers classes of common equity: as of March 27, 2008,
8,288,217 shares of common stock were outstanding.  DOCUMENTS INCORPORATED BY REFERENCE:
 Not applicable.  Transitional Small Business Disclosure
Format (check one): Yes[  ]
          No [X]  1   COMMODORE APPLIED TECHNOLOGIES, INC.  ANNUAL REPORT ON FORM 10-KSB FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2007  TABLE
OF CONTENTS  PART
I 3  ITEM
1.  DESCRIPTION OF BUSINESS 3 ITEM
2.  PROPERTIES 14 ITEM
3.  LEGAL PROCEEDINGS 14 ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 15  PART
II 15  ITEM
5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 15 ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 17 ITEM
7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 20 ITEM
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE 39 ITEM
8A. CONTROLS AND PROCEDURES 39 ITEM
8B. OTHER INFORMATION 39  PART
III 40  ITEM
9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT 40 ITEM
10. EXECUTIVE COMPENSATION 43 ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 45 ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE 48 ITEM
13. EXHIBITS 48 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 53  SIGNATURES 54               2


PART
I  This Annual Report on
Form 10-KSB contains forward-looking statements." These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as the Company "believes," "anticipates,"
"expects" or words of similar import.  Similarly, statements that describe
the Company's projected future results, future plans, objectives, goals, future
conditions or events are also forward-looking statements.  Actual results
are inherently difficult to predict.  Any such forward-looking statements
are subject to the risks and uncertainties that could cause actual results of
operations, financial condition, acquisitions, financing transactions,
expenditures, expansion and other events to differ materially from those
expressed or implied in such forward-looking statements. Any such
forward-looking statements would be subject to a number of assumptions
regarding, among other things, future economic, competitive and market
conditions. Such assumptions would be based on facts and conditions as they
exist at the time such statements are made as well as predictions as to future
facts and conditions, the accurate prediction of which may be difficult and
involve the assessment of events beyond the Company's control.  Further, the Company's
business is subject to a number of risks and uncertainties that would affect any
such forward-looking statements. These risks and uncertainties include, but are
not limited to:  · the Companys critical
need for additional cash to sustain existing operations and meet existing
obligations and capital requirements (the Companys auditors opinions on our
fiscal 2002 through 2007 financial statements contain a going concern
qualification in which they express doubt about the Companys ability to
continue in business); · the ability to contract
for and generate profitable operations from large scale remediation projects; · the ability of the
Company to implement its waste processing operations, including obtaining
commercial waste processing contracts and processing waste under such contracts
in a timely and cost effective manner; · the timing and award of
contracts by the U.S. Department of Energy for the cleanup of waste sites
administered by it; · the acceptance and
implementation of the Companys waste treatment technologies in the government
and commercial sectors; · the Companys ability
to obtain and perform under other large technical support services projects; · developments in
environmental legislation and regulation; · the ability of the
Company to obtain future financing on favorable terms; · other circumstances
affecting anticipated revenues and costs; · the expiration of the
Companys nationwide EPA permit in September 2001 (The Company believes that the
permit may be renewed subject to providing additional information.  The
Company has not resubmitted information for a new permit); and · the ability of the
Company to replicate on a large scale, economically viable basis,  the
results of its technology test results.  These risks and
uncertainties could cause actual results of the Company to differ materially
from those projected or implied by such forward-looking statements.  ITEM
1. BUSINESS  GENERAL  Commodore Applied
Technologies, Inc. (the "Company") is an environmental solutions company
offering a range of environmental and technical services to the public and
private sectors related to (i) providing services related to environmental
management for on-site and off-site identification, investigation remediation
and management of hazardous, mixed and radioactive waste, (ii) remediating
contamination in soils, liquids and other materials and disposing of or reusing
certain waste by-products by utilizing our Solvated Electron Technology (SET)
and (iii) sale of safety and protective equipment used in the treatment,
handling and disposal of hazardous materials.  The Companys corporate
mission is to serve the environmental remediation market from its primary
operating center to profitably provide government and industry with
environmental and remediation solutions to legacy waste environmental problems.
 Our strategy focuses the Company on the unique and high profit niches of
hazardous materials conversion and waste remediation.  The Company was
incorporated in Delaware in March 1996.  As used in this Annual Report, and
except as the context otherwise requires, the "Company" means Commodore Applied
Technologies, Inc. and its subsidiaries, including Commodore Solutions, Inc.,
Government Environmental Technologies, Inc., and Commodore Advanced Sciences,
Inc.  The Company's


3


principal
executive offices are located at 507 Knight Street, Suite B, Richland,
Washington  99352, and its telephone number at that address is (509)
943-2565.  SEGMENT INFORMATION  The Company currently
has identified two operating segments.  These two segments are as
follows: · Commodore Advanced
Sciences, Inc., which primarily provides various environmental and regulatory
services to Government agencies on a fixed rate and lump sum basis and provides
safety and protective equipment used to treat, handle or dispose of hazardous
materials; and · Commodore Solutions,
Inc., which is commercializing technologies to treat mixed and hazardous wastes,
principally the Companys SET technology.  Additional information
regarding the business of each segment is set forth below, and the information
in Note 17 to the Companys Consolidated Financial Statements included in this
Annual Report on Form 10-KSB is incorporated into this Part I by reference.  COMMODORE ADVANCED SCIENCES, INC. -
ENVIRONMENTAL MANAGEMENT  The Company, through
Commodore Advanced Sciences, Inc. (Advanced Sciences), provides specialized
technical and project management products and services primarily to
government-sector customers, including the Department of Energy (DOE) and the
Department of Defense (DOD), and also to private-sector domestic industrial
customers.  Advanced Sciences engages in all aspects of environmental
regulation and compliance, as well as access to leading technologies and
innovative skills related to the identification, investigation, remediation and
management of hazardous, mixed and radiological waste sites. Advanced Sciences
also sells safety, protective and technical equipment used by its customers and
hazardous material handlers.  Advanced Sciences currently operates from an
office located in Oak Ridge, Tennessee, with its principal executive officers
and administrative activities being performed at the offices of its parent
company, Commodore Applied Technologies, located in Richland, Washington.  Services  Environmental
Services: Advanced Sciences is a nationwide firm specializing in
environmental characterization, regulatory compliance technical support and
waste management. Advanced Sciences qualifies as a small business under seven
NAICS codes.  This subsidiary employs approximately 30 professionals who
are expert in providing environmental sample collection, transportation, and
analyses, meeting rigorous quality assurance requirements while performing in
accord with equally rigorous personnel health and safety requirements.  Advanced Sciences
history of program management and technical services include:  - Environmental Site
Restoration Planning -
D & D Planning & Implementation Support - Preliminary Assessments/Site
Investigations -
Waste Minimization - Environmental Audits &
Assessments -
Health & Safety Oversight & Planning - Underground-Storage-Tank Site
Investigation -
Biological Sampling and Characterization -
Environmental Impact Assessments & Statements & Remediation - Structural Engineering
Analysis -
Remedial Investigations/Feasibility Studies - Deconstruction Planning -
Environmental Pollution Control - Regulatory Compliance -
Hazardous, Radioactive, Toxic & Mixed-Waste - Federal
& State Agency Coordination Management Including Treatment - Public Involvement
Support -
Hazardous Waste Site Remediation The two most significant
clients Advanced Sciences has had over the past 10 years have been the DOD and
the DOE, while also providing services to private industry. Advanced Sciences
largest office provides environmental characterization and management, building
decontamination and decommissioning (D&D), environmental protection,
remediation, restoration, safety & health, and environmental regulatory
compliance for the Department of Energys Oak Ridge Complex.


4


In addition to the Oak Ridge Complex in Tennessee, the Company has
performed environmental monitoring and remediation services at Rocky Flats in
Colorado, Los Alamos in New Mexico, Chatfield Basin in Colorado and other
significant sites, predominantly nuclear energy sites run by the DOD or DOE.  Remediation
Services:  Having already established a market position in the
consulting and front-end analysis phase, Advanced Sciences plans to follow
market demand into remediation services.  After an environmental problem is
identified, Advanced Sciences offers alternative remediation approaches that may
involve providing on-site waste containment or management of on-site/off-site
remediation and waste removal.  Advanced Sciences can also redesign its
customers' ongoing production processes and develop technical specifications to
minimize or eliminate the generation of hazardous waste.  The Company
believes that Advanced Sciences' integration of environmental skills, plus its
access to innovative technologies, provide Advanced Sciences with a competitive
advantage in redesigning production processes.  Technical
Services:New technologies play a critical role in both the
remediation of existing waste sites and in the reduction of waste generated by
ongoing production processes.  Advanced Sciences has access to the SET
technology and all its derivatives.  Advanced Sciences has at its disposal,
on a per project basis, what it believes are some among the most qualified
professionals in the environmental consulting business.  Advanced Sciences'
scientists have participated on national boards for risk assessment and quality
assurance, were instrumental in the development of environmental regulations for
the DOE and the DOD, and have served as expert witnesses before the U.S.
Congress and the Nuclear Regulatory Commission.  To maintain its
competitive position, Advanced Sciences intends to continue to develop viable
remediation technologies and attract and retain qualified personnel.  Contracts  EDAM
Advanced Sciences was awarded an Environmental Data Acquisition and Management contract
(EDAM) by Bechtel Jacobs Company LLC of Oak Ridge, TN (BJC) in September
2004.  Prior to August 2006, Advanced Sciences was the lead small business
member of the Commodore Advanced Sciences Team (CAST), which also included
team members Science Applications International, Inc. (SAIC), and RCS
Corporation (RCS).  CAST performed and
managed the EDAM contract through its renewal in August 2006, when Advanced
Sciences alone was awarded the full contract of reduced services, with BJC
self-performing most tasks previously subcontracted to SAIC as part of the
original contract. RCS continues as a teaming partner and subcontractor.
 BJC also assumed management and invoicing for 13 analytical laboratories
that were subcontracted through Advanced Sciences.  Analytical laboratory
costs, although included as revenue of Advances Sciences, were a zero-margin
pass-through activity as a condition to the EDAM contract in place for 2005 and
most of 2006. As a result, gross contract revenues decreased in 2007, as well as
for the balance of the contract period; however, Advanced Sciences expects
better profit margin percentages because the pass-through subcontract to SAIC
was a very low margin activity for Advanced Sciences.  This program is
continuously monitored and audited for safety, quality, productivity,
efficiency, and value to BJC and Department of Energy-Oak Ridge.  Sampling activities
under the EDAM contract include collection of multiple sample types from
hundreds of monitoring locations and packaging and shipping of samples to
appropriate analytical laboratories for analysis. Locations and environments
include abandoned burial grounds and hazardous waste sites, fields and forests,
streams, lakes, and ponds. Sampling tasks support a variety of ongoing
monitoring programs, including the Water Resource Restoration Program (WRRP)
to determine the effectiveness of remedial actions conducted under Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the
ETTP Environmental Monitoring Program. Regulatory compliance data acquisition
and management projects include Resource Conservation and Recovery Act (RCRA)
and National Pollution Discharge Elimination System (NPDES) permit compliance,
the Biological Monitoring and Abatement Program, and Stormwater Pollution
Prevention Program (SWPPP) activities. All of these compliance sampling
programs are closely monitored by regulators, stakeholders, BJC, and DOE-OR.  The Company believes the
EDAM contract may attract more DOE client groups than are contemplated in the
base scope of the contract.  The Company is seeking to extend its
environmental monitoring service capabilities to other DOE sites, such as
Portsmouth, OH and Paducah, KY.   The EDAM contract, in which Advanced
Sciences participates as a subcontractor, is for a total of approximately $29
million through September of 2008, of which Advanced Sciences portion is
approximately $2.0 million and is reflected in the Companys backlog.  Energy SolutionsAdvanced Sciences was awarded a one-year contract from Duratek Federal
Services, Inc. (now Energy Solutions) beginning in January 2005, which was
renewed in January 2006 and 2007 for additional one-year periods, to perform
environmental monitoring services at two engineered landfills on the Oak Ridge
Reservation.  Environmental monitoring services include sample collection,
packaging and shipping to offsite analytical laboratories.   Samples
are collected


5


from surface
water, groundwater, and landfill leachate collection locations on storm event,
weekly, monthly, and quarterly bases.  American
Aquatics Advanced Sciences is contracted by American Aquatics under the
terms of an asset purchase and sale agreement executed in January 2007 to
provide fish and aquatic insect sampling collection, taxonomy, and enumeration.
As a result of the asset purchase agreement, Advanced Sciences acquired an
outstanding staff of aquatic biologists who have extensive experience in
evaluation of aquatic ecosystems and collection and identification of benthic
macro-invertebrates. Advanced Sciences has the only benthic laboratory in the
eastern United States that is licensed and capable of handling aquatic samples
that are potentially contaminated with radioactivity, while simultaneously
processing uncontaminated samples. The contract with American Aquatics runs
through 2008.  Chatfield
Watershed AuthorityAdvanced Sciences is contracted annually to
implement the Chatfield Water Quality Monitoring Program that involves sample
and data collection, laboratory subcontract management, and data management for
the entire Chatfield Basin watershed located southwest of Denver.  The
contract was ongoing through 2007 and has been renewed annually with Advanced
Sciences since 1986.  Legacy Management In
2007, a team lead by the Stoller Corporation was awarded the DOEs Legacy
Management Program contract, an approximately $200 Million effort over the next
four years.  Commodore is on that team, and while specific scope
assignments are being pursued with Stoller, we expect that Commodores presence
on the team will further enhance the Companys position as an industry leader in
environmental services.  The Legacy Management Program embraces the DOE
sites that have been decommissioned and decontaminated (over 94 sites so
far). Tetra Tech Contract Advanced Sciences provides
engineering support under Tetra Tech's general engineering support contract with
BJC.  BJC is responsible for environmental oversight of the U.S. DOE's Oak
Ridge, TN site.  Advanced Sciences provided 1 to 3 engineering personnel on
a time and material basis to Tetra Tech on a contract basis.  This contract
expired March 31, 2007.  WESKEM
Advanced Sciences was awarded a one-year contract in March 2005 from WESKEM
LLC., of Oak Ridge to support their sampling efforts with the Waste Disposition
Services Project. The Sample Management Office (SMO) services required to meet
the needs of this project are: (i) Assistance with the preparation of analytical
statement of works (SOW), (ii) Maintenance of laboratory performance metrics,
(iii) Procurement of best value laboratories, (iv) Performance of contract
verification of data, and (v) Tracking of samples and sample residue. This
contract expired in October 2006.  Sales  Commodore Sales Solutions  A division of Applied
Sciences, doing business as Commodore Sales Solution (CSS), sells finished goods
used in environmental remediation services and the handling of hazardous
materials.  CSS delivers protective coverings and clothing, breathing
systems, filtration systems as well as other safety and construction equipment
to customers in and around the Companys Oak Ridge, TN office.  CSS sells products
predominantly used in the environmental remediation and hazardous materials
handling. The presence of the Oak Ride National Laboratory and significant
number of government sector business working with the DOE and DOD creates a
strong market for the products distributed by the Company. CSS also provides
Applied Sciences with reliable access to the materials and equipment required in
the daily performance of the Companys environmental services at a reduced cost.
 CSS was started in the second quarter of 2007 when the Company acquired
the inventory on hand of one of Advanced Sciences main suppliers. Management
believes that revenues at CSS will exceed $1 million in 2008.  COMMODORE SOLUTION TECHNOLOGIES, INC.
 - DECONTAMINATION  The Company, through
Commodore Solutions, Inc. (Solutions), has developed and has commercialized
its patented process known as SET.  Based on the results of its extensive
testing and commercial processing activities, the Company believes that SET is
capable of effectively treating and decontaminating soils and other materials,
including sludges, sediments, oils and other hydrocarbon liquids, metals,
clothing and porous and non-porous structures and surfaces by destroying PCBs,
pesticides, dioxins, chlorinated substances and other toxic contaminants to an
extent sufficient to satisfy current federal environmental guidelines.  The
Company also believes that, based on the results of additional tests, SET is
capable of neutralizing substantially all known chemical weapons materials and
warfare agents, explosives and concentrating certain radioactive wastes for more
effective disposal.


6


The Company believes
that SET is the only patented, non-thermal, portable and scalable process that
is currently available for treating and decontaminating soils, liquids and other
materials containing PCBs, pesticides, dioxins, chemical weapons and warfare
agents and other toxic contaminants.  SET Contracts  The Company was awarded
an Advanced Remediation Demonstration contract by the Department of Energy's
Office of Environmental Management (DOE-EM) for the Company's technology for the
separation of radioactive (surrogate) and RCRA heavy metals from sludges and
other waste matrices.  The DOE-EM awarded 12
contracts totaling $3.3 million, of which the Companys demonstration was a
part, to support the development of technologies that have the potential to
reduce cleanup costs and increase the safety and efficiency of treating and
disposing of various waste streams, including radioactive waste at such sites as
Hanford, Idaho, Savannah River, and others.  The Companys Phase I
contract was performed over a six month period, concluding in January 2007.
Phase I activities included: laboratory/pilot-scale test results, developing a
technical approach for demonstration, scale-up and implementation schedule,
detailed system design, and a detailed cost estimate for implementation in Phase
II. We reported successful results upon which a $300,000 Phase II of the
contract has been proposed, and is awaiting approval and funding..  We do
not know when or if this Phase will be awarded.  The SET Technology  The Company, its
subsidiaries and predecessors have researched, developed, acquired, tested and
proven the SET technology, including its processes and equipment, over several
years.  The process is based
upon a chemical phenomenon discovered by Sir Humphrey Davy in 1865, shown below
for the liquid phase of a sodium and potassium solution:  Na0 + K0    [commodore10ksbapr1508s002.gif] Na+ + K+ + 2e -(the solvated
solution)  The solution has been
called solvated electrons since the dissolved metal releases electrons to the
solution in huge numbers.  These electrons, also know as free radicals, are
the most powerful reducing agents known, quickly reacting with many compounds.
 Most of the alkali metals readily dissolve in anhydrous ammonia releasing
their valance electrons into the ammonia in a relatively rare but stable state
unassociated with any atom.  In this state, both the electrons and the
metal atoms are available to react with other elements and compounds.  The SET technology,
which is based upon solvated electron chemistry, mixes anhydrous liquid ammonia
and/or other similar solvents with reactive metals and contaminated elements to
effect the selective destruction or neutralization of organic compounds (such as
PCBs, pesticides and dioxins).  The Company has demonstrated that SET can
achieve consistently high levels of contaminant destruction when working with
PCBs, dioxins and pesticides.  SET has treated soils containing up to
10,000 parts per million (ppm) of contaminants, and oils containing up to
250,000 ppm, leaving residual soils and oils with contamination levels of less
than one ppm. In addition, SET has been successfully applied to other
PCB-contaminated surfaces such as concrete.  The SET process can be used in
conjunction with selected post-treatment processes such that no hazardous or
toxic residues will result from the use of SET, nor will there be any toxic
emissions into the air, water, soils or other surfaces.  For example, most
contaminated soils treated with SET can (subject, in some instances, to
re-blending the soil with organic matter) be used subsequently for planting or
for any other use for which non-contaminated soils are appropriate.  Equipment utilized in
the SET process consists of tanks, pumps and piping to handle anhydrous ammonia
and other solvents in liquid and vapor forms, and treatment vessels for holding
contaminated materials and for the introduction of solvating solutions.
 The system can be transported to field sites and configured in numerous
sizes.  The SET process requires
placing the contaminated materials into a treatment vessel where they are mixed
with a solvent and charged with a base metal (e.g. sodium).  The chemical
reaction produces metal salts such as calcium chloride, calcium hydroxide and
non-halogenated inert organics.  The ammonia within the treatment vessel is
then removed to a discharge tank for later reuse.  The materials are
removed, sampled for residual traces of PCB or other halogenated organic
compounds, and placed in storage for disposal.  In many cases, the
decontaminated soil and metals can be replaced in their original location,


7


recycled or
reused.  The solvents do not enter the chemical reaction, but merely serve
as dissolving liquids for the solvated electron solution.  Operational
Characteristics:Substantially all existing systems in use for
the destruction of PCBs and other halogenated compounds involve incineration or
other thermal processes, and either the permanent installation of highly complex
and expensive incinerators and waste disposal equipment at the affected site, or
the removal of contaminated materials to off-site facilities.  The Company
believes that SET represents an approach to resolving serious environmental
remediation issues that does not create or entail the safety risks of air
pollution and transportation of hazardous materials.  The Company believes
that SET is more effective than incineration and other destruction processes for
toxic substances in that:  · SET does not emit toxic
fumes into the atmosphere, as is sometimes the case with thermal or incineration
methods; · SET is portable and can
be moved directly to the contaminated site, thereby reducing the risk of
off-site contamination; · SET equipment can be
customized and configured for various treatment applications; · SET's reaction time is
substantially less than that of alternative processes, such as thermal
destruction and other forms of chemical treatment; · SET equipment can be
installed and operated inside industrial plant facilities to treat hazardous
wastes on-line as a continuation of the manufacturing process; · SET, when used to treat
soils, yields nitrogen-enriched soils that can be reused on-site, avoiding
replacement and the post-treatment costs of off-site disposal; and · SET has been shown to
neutralize or destroy all chemical weapons material and warfare agents in the
United States stockpile, and Lewisite (the primary chemical weapons material and
warfare agent of the former Soviet Union), in tests conducted by an independent,
federally certified surety laboratory.  The Company believes
that SET is the only technology currently available that possesses all of these
features and is capable of treating a wide variety of contaminants.  The
above characteristics (non-thermal, no air emissions, mobile) are particularly
applicable when dealing with mixed waste.  Wastes that contain radioactive
material and hazardous waste regulated by RCRA and TSCA are particularly
difficult to treat and have extremely limited disposal options.  By
applying the SET process to remove the RCRA and TSCA components, leaving only
radioactive waste material, disposal options expand.  SET not only removes
the hazardous components but also does so by an efficient, non-thermal process
that can control and contain the radioactive material so that it remains in the
treated material and does not enter the environment in an uncontrolled fashion.  EPA Nationwide
Permit:The Company has previously qualified for a permit from
the EPA to enable it to treat PCBs within the United States on all non-Superfund
sites.  Most EPA permits granted to date for PCB destruction are solely for
single-site incineration treatment centers. Commodores initial EPA Nationwide
Permit was the first (and only) to be issued for nationwide use as a totally
enclosed, non-thermal, chemical destruction process for PCB contaminated organic
material.  The permit authorized treatment of soils at contamination levels
greater than 1,000 ppm PCBs, and also authorized treatment of miscellaneous
metallic materials.  The test results, confirmed by EPAs contract program
laboratory, indicated organics contaminated with PCBs exceeding 5,000 ppm, were
treated to non-detect levels of PCBs. In addition to soil treatment, the
Nationwide Permit allows the Company to treat PCB contaminated metallic surfaces
and waste oils, as well as wastewater (the wastewater is treated by a non-SET
process).  The Company has also successfully demonstrated SET as a
treatment process for organic materials contaminated with PCBs and radionuclides
and has received a draft revised EPA permit for these matrices.  This
permit revision covers the destruction of PCBs in soils, waste oils, organic
materials, water, and on metallic surfaces.  Prior to securing a
significant contract which utilizes the SET technology, the Company will be
required to renew this permit, which expired in 2001.  The renewal process
may require the Company to provide additional information to the EPA at the time
of renewal.  Based on currently
published lists of EPA national operating permits, the Company believes that it
possesses the only mobile non-thermal PCB treatment technology for multiple
applications permitted under the EPA's Alternate Destruction Technology Program.
 The EPA's Alternative Destruction Technology Program is designed to
encourage remediation technologies as an alternative to incineration. EPA
regulations governing permitting have been in effect for more than 15 years, and
according to the latest EPA published list of non-thermal destructive processes,
only seven companies have met EPA's stringent requirements for commercial
operation.  Of these, only the Company has been permitted for the chemical
destruction of such a wide range of PCB contaminated materials.


8


Test Results:The Company has performed
treatability studies and actual commercial applications of the SET process that
have resulted in successful treatment of over 120 regulated compounds.  In
more than 1,500 tests using SET, various high levels of contaminants, including
PCBs, were reduced to levels approaching non-detectable with the destruction
process occurring in a matter of minutes.  The Company has
performed various treatability studies and processed commercial quantities of
waste utilizing the SET process.  Additionally, the Company has conducted
several hundred tests of the SET technology on limited quantities of
contaminated material, and there can be no assurance that SET will be able to
replicate any of these test results on a large-scale commercial basis or on any
specific project.  Discussions and selected test results are
available at the Companys website at www.commodore.com.  MARKETS AND CUSTOMERS  General  The Company markets its
services and technologies to governmental and industrial customers throughout
the United States.  Additionally, the Companys technologies also have
application to similar customers in markets abroad, particularly in Eastern
Europe and the Middle East.  While the Company currently does not actively
market outside the United States, it does receive inquiries from time to time
from these markets concerning its technologies. A majority of the Company's
sales are technical in nature and involve senior technical and management
professionals, supported by the Company's corporate management. During the year
ended December 31, 2007, a significant portion of the Companys environmental
management services revenue was derived from contracts with federal, state and
municipal government agencies.  Contracts with governmental customers
generally may be terminated at any time at the option of the customer. In 2007,
two contracts with a single customer, BJC, accounted for approximately 70.9% of
Advanced Sciences' service revenues.  In 2006, BJC accounted for
approximately 90.2% of Advanced Sciences service revenues. The loss of Bechtel
Jacobs as a customer would have a material adverse effect upon the Company.  Demand for our
environmental technologies is anticipated to arise principally from the
following sources:  · Stricter legislation
and regulations mandating new or increased levels of air and water pollution
control and solid waste management; and · the need for
alternative environmental treatment and disposal methods for toxic substances
(such as the SET technology), which involve limited safety risks with respect to
air pollution and transportation of hazardous materials and do not result in
large volumes of residual waste that require further treatment prior to
disposal.  Our business strategy is
to expand our environmental technologies businesses by:  · establishing additional
collaborative joint working and marketing arrangements with established
engineering and environmental service organizations to pursue commercial
opportunities in the public and private sector; · diversifying the types
of service and products offered to clients and potential new customers; and · implementing the SET
technology in selected niche markets within certain strategic environmental
market segments, such as government mixed waste remediation and chemical weapons
demilitarization.  Decontamination  The Company anticipates
that the initial market for commercial applications of SET will be the hazardous
and mixed waste and industrial by-products treatment and disposal market.
 Mixed waste is material that contains both a hazardous and radioactive
component.  The most common methods of treatment and disposal of hazardous
wastes and industrial by-products include landfilling, chemical and biological
treatment and incineration.  Most of the current treatment and disposal
methods entail air pollution and transportation risks.  In a mixed waste,
both hazardous and nuclear regulations apply, making disposal difficult, if not
impossible.  Currently, there exists very limited disposal options and
these may not provide a permanent solution.  Certain of these treatment and
disposal methods result in large volumes of residual waste, which may require
further treatment prior to disposal.  As a result, a number of these
methods are encountering increased public resistance and added regulatory
oversight.  The Company has been
working very closely with the DOE site in Portsmouth, OH to demonstrate SETs
effectiveness in removing PCBs from samples of mixed waste at that facility.
 Currently, that facility is relying on the TSCAI incinerator at Oak Ridge,
TN to destroy this waste material.  However, that incinerator is currently
being evaluated for potential shutdown


9


and
decommissioning within the next two years.  Should that occur, the Company
believes its SET technology will represent an economical and effective method of
neutralizing the millions of pounds of mixed waste at the Portsmouth facility.
 The Company has completed bench tests which demonstrate the success of the
SET process in removing PCBs from Pyrenol samples provided by the Portsmouth
facility.  Phase II of this testing, the timing and accomplishment of which
is contingent upon DOE funding of approximately $300,000, will be to move a
small SET machine to Portsmouth for larger scale on site testing.  With the
anticipated successful completion of Phase II, the Company would be prepared to
move its large SET machine, and possibly build additional units, to the facility
for full-scale operation to neutralize the entire volume of waste over a
multi-year contract.  As with any new
technology or process, there has been initial resistance to the use of SET on a
large scale, especially in connection with a strong vested interest on the part
of the U.S. Military (based on substantial expenditures and commitments
previously made) to use incineration for the destruction of chemical weapons.
 In addition, other prospective projects for the Company have already been
committed to other forms of destruction technology, including incineration,
plasma arc, vitrification, molten metal, molten salt, chemical neutralization,
biological treatment, catalytic electrochemical oxidation and supercritical wet
oxidation.  The Company, and its collaborative partners, have been
attempting to overcome such competition by introducing SET in smaller clean-up
projects and through feasibility studies demonstrating its applicability to
larger projects, such as the Initial Harrisburg Contract during 2000 and 2001,
and the WCS Fixed Facility Processing Contract during  2001.  The SET
process provides a significant advantage by allowing the processed material to
be disposed of as a non-mixed waste by destroying the hazardous component.  It may also be
anticipated that, over an extended period, the market for decontamination of
hazardous materials will continue to decline as past environmental degradation
is corrected, and as the private and public sectors limit further pollution
through prohibitions on production and use of a broad range of hazardous
materials and through the modification and improved efficiency of various
manufacturing processes.   The mixed waste market is one of the few
areas that shows growth and has limited competition when compared to the general
hazardous waste market.  The Company believes the SET process brings a
unique solution to the problem of remediating mixed waste.  Environmental Management  Based on market data
compiled by Advanced Sciences, the largest market for environmental services
today within the United States is the U.S. Government.  Government-wide
spending levels for environmental services exceed $10 billion per year.
 The DOD and DOE are expected to account for approximately 66% of such
expenditures and together expect to spend in excess of $200 billion for
environmental work over the next twenty years.  Advanced Sciences has a
long-term record for providing environmental services to the U.S. Government
with the DOD and DOE being its primary customers.  RAW MATERIALS  With the exception of the SET technology, most of the Companys
revenue streams do not require raw materials. The Company has historically experienced no difficulty in
obtaining components used in the SET process for which it relies on a broad
range of suppliers.  Nevertheless, business disruptions or financial
difficulties of such suppliers, shortages or other causes beyond the Company's
control, could adversely affect the Company by increasing the cost of goods sold
or reducing the availability of such components.  If the Company was unable
to obtain a sufficient supply of required components, it could experience
significant delays in the furnishing of components used in the SET process,
which could result in the loss of orders and customers and could have a material
adverse affect on the Company's business, financial condition and results of
operations.  In addition, if the cost of finished components were to
increase, there can be no assurance that the Company would be able to pass such
increase on to its customers.  The use of outside suppliers also entails
risks of quality control and disclosure of proprietary information. BACKLOG  At December 31, 2007, total potential backlog for the Company was
approximately $1.7 million as compared with approximately $2.1 million as of
December 31, 2006. The total backlog represents work for which the Company has
entered into a signed agreement or purchase order with respect thereto or has
received an order to proceed with work up to a specified dollar amount.
 The Company estimates that all of the total backlog represents work that
will be completed in the next 12 months. Backlog amounts have historically
resulted in revenues; however, no assurance can be given that all amounts
included in backlog will ultimately be realized, even if covered by written
contracts or work orders.


10


RESEARCH AND
DEVELOPMENT  The Company is not
currently under taking any research and development projects. Management is
continually looking for new technologies or new applications for current Company
technology. Research and development expenditures for the Company and its
subsidiaries were $0 for the years ended December 31, 2007 and 2006.  INTELLECTUAL PROPERTY  The Company currently has sixteen (8) issued U.S. and foreign
patents.  The average life expectancy for the currently issued patents is
9.7 years.  As patents are issued, the U.S. Patent and Trademark Office
assigns the Company a twenty (20) year patent-life for each patent issued.  The Company believes
that its patent portfolio provides the Company with the proprietary intellectual
property to market, distribute, and license the full range of the SET technology
and all of its derivatives.  Additionally, the Companys strength of its
patent portfolio may operate as an effective barrier to entry in several of
the markets in which the Company is presently conducting business.  To protect its trade
secrets and the un-patented proprietary information in its development
activities, the Company requires its employees, consultants and contractors to
enter into agreements providing for the confidentiality and the Company's
ownership of such trade secrets and other un-patented proprietary information
originated by such persons while in the employ of the Company. The Company also
requires potential collaborative partners to enter into confidentiality and
non-disclosure agreements.  There can be no
assurance that any patents that may hereafter be obtained, or any of the
Company's confidentiality and non-disclosure agreements, will provide meaningful
protection of the Company's confidential or proprietary information in the case
of unauthorized use or disclosure. In addition, there can be no assurance that
the Company will not incur significant costs and expenses, including the costs
of any future litigation, to defend its rights in respect of any such
intellectual property.   COMPETITION  Decontamination   The Company anticipates
that the market for commercial private sector applications of SET will be
hazardous and non-hazardous waste and industrial by-products treatment and
disposal, in particular the more recalcitrant mixed wastes (wastes containing
a radioactive element).  Several large domestic and international companies
and numerous small companies, many of whom have substantially greater financial
and other resources than the Company, compete with the Company in this market.
 The Company primarily competes in the hazardous waste treatment market in
the U.S.  The top ten competitors in this market account for over 70
percent of the revenues for this market sector.  The dominant companies in
this sector include companies with permitted waste treatment and disposal sites,
including Energy Solutions, Pacific EcoSolution, and American Ecology, as well
as other treatment companies such as PermaFix.  The Companys revenues for
2007 account for less than 1 percent of the dollar volume of the hazardous waste
market.  Any one or more of the Company's competitors or other enterprises
not presently known may develop technologies which are superior to the
technologies utilized by the Company.  To the extent that the Company's
competitors are able to offer comparable services at lower prices or of higher
quality, or more cost-effective remediation alternatives, the Company's ability
to compete effectively could be adversely affected.  The domestic and
international governmental public sector of the market is dominated by many
large multinational corporations who are presently engaged in providing
incineration and other conventional technologies in decontaminating chemical
weapons and warfare agents, concentration of nuclear wastes and the
decontamination of military vessels and other hardware.  These competitors
include Raytheon Corporation (the current general contractor for the Johnston
Atoll incinerator), EG&G, Inc. (the general contractor for the Tooele Army
Depot), Mason and Hanger (the general contractor for the Newport News Naval
Facility), Waste Management Corporation (a bidder for domestic "large burial"
stockpile weapons decontamination), and others, including Browning-Ferris
Industries, Inc., Jacobs Engineering, Inc., Fluor Daniel Corporation and
Lockheed Martin Marietta Corporation.  All of these corporations have
substantially greater financial, personnel and other resources than the Company.
 In addition, many prospective users of SET have already committed
substantial resources to other forms of environmental remediation technology,
including incineration, plasma arc, vitrification, bio-remediation, molten salt,
chemical neutralization, catalytic electrochemical oxidation and supercritical
wet oxidation.


11


The Company believes that its ability to compete in both the
commercial private and governmental public sectors is dependent upon SET being
accepted in these sectors as a superior, more cost-effective method to achieve
decontamination of a variety of materials.  Environmental Management  In the hazardous waste
management market, Advanced Sciences' competitors include such firms as Energy
Solutions, Jacobs Engineering, Science Applications International Corp., CH2M
Hill and CDM, all of whom have greater financial and other resources than the
Company.  In providing environmental impact assessment services, Commodore
Advanced Sciences' principal competitors in this market sector include RSI,
North Wind, Stoller, Weston Solutions, The Earth Technology Corp., Battelle, URS
and Woodward-Clyde.  Commodore Advanced
Sciences currently occupies a position in the waste management and environmental
services arena by virtue of its long-term record for providing environmental
services to the United States government. Primary factors affecting Advanced
Sciences' competitiveness in this market are its ability to continue to attract
and retain qualified technical and professional staff with quality project
performance records and to control its costs of doing business.  In an effort to maintain
its competitive position, Advanced Sciences believes that it has developed a
solid infrastructure, acquired a qualified professional staff, and developed
aggressive marketing objectives to provide hazardous waste management and
environmental sciences to the United States government and private sector
industrial customers.  The Company believes its competitive position with
the United States government is enhanced by the physical proximity of Advanced
Sciences' plants to DOE and DOD sites, its skilled professional staff, prior
project experience with the United States government, numerous existing
multi-year contracts with the United States government, integrated services and
high quality performance.  ENVIRONMENTAL REGULATION  The environmental
legislation and policies which the Company believes are applicable to SET in the
United States primarily include TSCA, RCRA, and the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), as amended by the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), and may include,
on a case by case basis, the Clean Air Act of 1970, as amended (the "Clean Air
Act").  These laws regulate the management and disposal of toxic and
hazardous substances, provide for the protection of land and groundwater
resources, and control the discharge of pollutants into the air.  Many of
these laws have international counterparts, particularly in Europe and elsewhere
in North America.  TSCA regulates the
manufacture, distribution, and sale of chemical substances, and requires testing
of new chemicals and new uses of known chemicals that may present an
unreasonable risk of injury to health or the environment.  The EPA, through
TSCA, has adopted comprehensive regulations for PCB's and other halogenated
substances, as part of a vast regulatory program covering thousands of
chemicals.  RCRA was enacted in 1976
with the primary objective to protect human health and the environment and to
conserve valuable material and energy resources.  The most important aspect
of RCRA is its establishment of cradle-to-grave management and tracking of
hazardous waste, from generator to transporter, to treatment, storage, and
disposal.  CERCLA and subsequent
amendments under SARA (often referred to collectively as Superfund) impose
strict, retroactive liability upon persons who generated, transported, or
arranged for the transportation of hazardous substances or owned or operated the
vessels or facilities at which such substances were disposed.  CERCLA
provides for the investigation and remediation of hazardous substance sites and
mandates that any hazardous substances remaining on-site must meet certain
regulatory requirements, with a preference for innovative technology.
 These program regulations may create an incentive to utilize
environmental-friendly technologies such as SET, which destroy targeted wastes
without creating additional residual waste product.  Moreover, to the
extent hazardous substances are effectively destroyed, potential liability can
be eliminated or significantly reduced.  The Clean Air Act
empowered the EPA to establish and enforce ambient air quality standards and
limitations on emissions of air pollutants from specific facilities.  In
1987, the EPA began to enforce stricter standards for incineration emissions.
 With more stringent regulations on waste reduction technologies, the
Company believes that SET could obtain a desired market share since, in most
cases, it produces little or no air emissions.


12


CERCLA imposes strict
joint and several liability upon owners or operators of facilities when a
release or threatened release of a hazardous substance has occurred, upon
parties who generated hazardous substances that were released at such facilities
and upon parties who arranged for the transportation of hazardous substances to
and from such facilities.  The Company's plans to own and operate SET at
on-site installations expose the Company to potential liability under CERCLA for
releases of hazardous substances at those sites.  In the event that
off-site treatment, storage or disposal facilities utilized by the Company for
final disposition of residues from SET are targeted for investigation and
clean-up under CERCLA, the Company could incur liability as a generator of such
materials or by virtue of having arranged for their transportation and
disposal.  In light of such
potential liability, the Company has designed the SET technology to minimize the
potential for release of hazardous substances into the environment.  In
addition, the Company has developed plans to manage the risk of CERCLA
liability, including training of operators, use of operational controls and
structuring of its relationships with the entities responsible for the handling
of waste materials and by-products.  The Company also maintains insurance
with respect to environmental claims, although there can be no assurance that
such insurance will be adequate.  The Clean Air Act
Amendments of 1990 impose strict requirements upon owners and operators of
facilities that discharge pollutants into the environment.  These
amendments may require that certain air emission control technology be installed
on the SET systems in the event that there is any discharge of non-recovered
gases into the environment.  Such additional air emission controls can be
costly and require an air permit to construct and operate.  The Company obtained a
Nationwide Permit issued by the EPA under the Alternative Destruction Technology
Program that allowed it to use SET on-site to treat PCB-contaminated soils and
metallic surfaces, although the permit is currently expired.  The
Nationwide Permit contains numerous conditions for maintaining the Nationwide
Permit and there can be no assurance that the Company will be able to comply
with such conditions to maintain and/or secure renewal of the Nationwide Permit.
 In addition, if environmental legislation or regulations are amended, or
are interpreted or enforced differently, the Company may be required to meet
stricter standards of operation and/or obtain additional operating permits or
approvals.  Failure to obtain such permits or otherwise comply with such
regulatory requirements could have a material adverse effect on the Company and
its operations.   Various revisions to the equipment and process
parameters are being made to the existing permit.  The Company believes
that the revised permit will be issued pending the final site selection for the
full or part-time operation of any SET system for the treatment of PCB wastes.
 The revised permit will require the Company to fund closure costs
associated with the implementation of any SET system for the treatment of PCB
wastes.  The closure costs are calculated on a site-by-site basis and are
funded accordingly by the Company.  EMPLOYEES  As
of December 31, 2007, the Company (including its direct subsidiaries) had a
total of 31 full-time and 3 part-time employees, of which approximately 18 are
engineers, scientists, environmental technicians and other professionals.
 None of such employees are covered by collective bargaining agreements and
the Company's relations with its employees are believed to be good.  All 30 persons on the
technical staff are extensively trained in proper procedures for handling waste
materials and environmental media.  Advanced Sciences technical staff has
more than 500 years of combined experience performing environmental and waste
sampling tasks.  Ten of our personnel hold DOE security clearances.  All Advanced Sciences
sampling personnel maintain currency in the following minimum training
requirements:  · OSHA 40-hour Hazardous Waste
Operations and Emergency Response (HAZWOPER) · OSHA  8-hr Annual HAZWOPER
Refresher · OSHA HAZWOPER Supervisor · Hazard Communication
(HAZCOM)/Hazardous Materials Information System (HMIS) training · Radiation Worker II · First Aid/CPR · Annual Medical Monitoring · Respirator Fit Testing · General Safety · Hazardous Energy Control
(Lockout/Tagout) · Work Control Process · Excavation/Penetration Permit · Construction Equipment Inspection
& Maintenance Program


13


· Hotwork (welding safety) · Confined Space Program · Asbestos and Other Fibrous
Materials · Chronic Berylium Disease
Prevention · IATA Dangerous Good Awareness
 Certificate · Workplace Substance Abuse Prevention
Program participation     OTHER INFORMATION  See Item 7, Financial
Statements and Supplementary Data, of this Annual Report on Form 10-KSB for
information regarding revenue from customers, a measure of profit or loss and
total assets for each of the Companys segments for the last two fiscal
years.  The Company currently
requires additional cash to sustain existing operations and to meet current
obligations and ongoing capital requirements.  The reports of our
independent registered public accounting firms on our fiscal 2007 and 2006
consolidated financial statements contain a going concern qualification in
which they express substantial doubt about our ability to continue in
business.  ITEM
2. PROPERTIES.  The Companys principal
executive offices are located in Richland, Washington. Advanced Science leases
approximately 3,750 square feet of space for rental payments in the amount of
$3,500 per month under a yearly lease.  In addition to the
Richland, Washington facilities, Advanced Sciences has leased approximately
20,000 square feet of space on five acres in Oak Ridge, TN for its
administrative functions, on a three year lease, for a rental payment in the
amount of $6,667 per month.  Advanced Sciences also
leases approximately 475 square feet of office and storage space in Broomfield,
Colorado with an average rental payment of $495 per month over the term of the
lease.  The Company leases
approximately 1000 square feet of exterior uncovered storage space for the
Companys industrial and waste processing equipment in Hobbs, New Mexico for
rental payments in the amount of $527 per month, pursuant to a month-to-month
lease arrangement.  The Company believes
that the foregoing properties will satisfy the business and operational needs of
the Company and its subsidiaries in the present and in the foreseeable
future.   ITEM
3. LEGAL
PROCEEDINGS  Indemnification Matters  The Company, along with
several other entities, in a prior year guaranteed a performance bond of
Separation relating to a contract with the Port of Baltimore.  The Company
was notified on June 28, 2000 that the performance bond was being called. It is
not known, at this time, the amount, if any, the Companys share of any
potential liability would be. There has been no communication with the bond
issuer or the Port of Baltimore since 2000, and the matter may no longer be an
open issue.  As of March 15, 2008, no
litigation or claim has been filed against the Company, or any of the Companys
subsidiaries with respect to this indemnification issue.  No amount has
been recorded in the financial statements as the Company is unable to determine
a loss amount, if any, on the issue of indemnification.  Incidental Matters  The Company and its
subsidiaries are involved in ordinary, routine litigation incidental to the
conduct of their business.  Management believes that none of this
litigation, individually or in the aggregate, is material to the Company's
financial condition or results of operations.


14


ITEM
4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS.  None    PART II  ITEM 5. MARKET FOR
REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES.  MARKET INFORMATION  Shares of the Companys
common stock are quoted on the Over The Counter Bulletin Board of the National
Association of Securities Dealers, Inc. (the OTC Bulletin Board or OTCBB)
under the symbol CXIA. The following table sets forth, for the fiscal periods
shown, the high and low sale prices (rounded to the nearest cent) for the
Companys common stock as reported on the OTCBB.     Stock price by quarter

High

LowFiscal year ended December 31,
2007First
Quarter

$    0.22

$   0.12Second
Quarter

0.25

0.13Third
Quarter

0.23

0.15Fourth
Quarter

0.15

0.07Fiscal year ended December 31,
2006First
Quarter

$    0.30

$   0.15Second
Quarter

0.26

0.13Third
Quarter

0.17

0.09Fourth
Quarter

0.26

0.13  Holders of Record  As of December 31, 2007
there were 204 shareholders of record of our common stock and approximately
3,100 additional shareholders whose shares are held through brokerage firms or
other institutions.  Dividends  The issuance of
convertible preferred securities limits the Companys ability to pay dividends
to common share holders.  Series H Preferred Stock  The holders of the
Companys Series H Convertible Preferred Stock, par value ($0.001) per share
(the Series H Preferred), are entitled to a dividend rate of 3%.  Through
December 31, 2007, the Company had not paid cash dividends and the Company has
accrued approximately $131 thousand in unpaid dividends.  The Company has
the option to pay the dividends accrued in all periods in additional shares of
Series H Preferred. Series H Preferred is convertible into shares of the
Companys common equity.  Series I Preferred Stock  The holders of the
Companys Series I Convertible Preferred Stock, par value ($0.001) per share
(the Series I Preferred), are entitled to a dividend of 10%.  Through
December 31, 2007, the Company has accrued approximately $184 thousand in unpaid
dividends. The Company has the option to pay the dividends accrued in all
periods after March 31, 2006 in the Companys common stock rather than cash.
During 2007 the Company has not paid any of the accrued dividends on all of the
converted Series I Preferred shares to date. The payment of dividends in the
form of common stock is subject to limitation, such that no payment in the form
of stock can be made that would result in the holder owning 5% or more
beneficial ownership of the Companys common stock. There are zero shares of
Series I preferred stock and $184 thousand in accrued dividends outstanding at
December 31, 2007. The Company has reserved 3,750,000 shares of common stock for
the potential conversion of accrued dividends on Series I Preferred into common
stock.


15


Series J Preferred Stock  The holders of the
Companys Series J Convertible Preferred Stock, par value ($0.001) per share
(the Series J Preferred), are entitled to a dividend of 10%.  Through
December 31, 2007, the Company has accrued approximately $877 thousand in unpaid
dividends. The Company has the option to pay the dividends accrued in all
periods after March 31, 2006 in the Companys common stock rather than cash.
During 2007, no shares of the Companys Series J Preferred Stock were converted.
The conversion of the Series J
Preferred shares into common stock and the payment of dividends in the form of
common stock are subject to limitation, such that no conversion or payment in
the form of stock can be made that would result in the holder owning 5% or more
beneficial ownership of the Companys common stock. The Company has reserved
60,000,000 shares of common stock for the potential conversion of the Series J
Convertible Preferred Stock and accrued dividends there on. The preferred
stockholder has 388,302 shares of Series J Preferred at December 31, 2007.  Common Stock  The Company has never
paid cash dividends on its common stock.  Any future determination by the
Board of Directors of the Company with respect to the payment of cash dividends
on the common stock of the Company will depend on the ability of the Company to
service its outstanding indebtedness, the Companys future earnings, capital
requirements, the financial condition of the Company and such other factors as
the Company's Board of Directors may consider.  The Company currently
intends to retain its earnings, if any, to finance the growth and development of
its business, to repay outstanding indebtedness and does not anticipate paying
cash dividends on its common stock in the foreseeable future.    Securities Authorized for Issuance under
Equity Compensation Plans  The Company did not
issue any shares or options to purchase shares of the Companys common stock
under the 1998 Stock Option Plan during 2007 or 2006. At December 31, 2007,
after removing forfeited options and expired warrants, the Company had the
following options outstanding and available for issuance:  Plan Category
Number of securities to be issued upon exercise of
outstanding options, warrants and rights
(a)
Weighted average exercise price of outstanding options,
warrants and rights
(b)
Number of securities remaining available for future
issuance
(c)Equity compensation plans approved by security
holders
453,904
$1.40
265,384Equity compensation plans not approved by security
holders
5,436,858
$0.56
-Total
5,890,762
$0.63
265,384  Repurchase of Securities  During 2007, neither the
Company nor any of its affiliates repurchased common shares of the Company
registered under Section R of the Exchange Act.  Recent Sales of Unregistered
Securities  On September 5, 2006,
the Company issued 220,000 shares of common stock to Aurelius Consulting Group,
Inc. / RedChip Companies (Aurelius) in partial consideration for the first six
months of an agreement for Aurelius to provide investor relations services.
 The Company recorded investor relations expense of approximately $28
thousand in the quarter ended December 31, 2006, the value of the shares issued
at the average market price of $0.13 on the date of issue.  On March 5, 2007, the
Company issued 120,000 shares of common stock to Aurelius in additional
consideration for the second six months of investor relations services to be
provided under the agreement. The Company recorded investor relations expense of
approximately $23 thousand in the quarter ended March 31, 2007, the value of the
shares issued at the average market price of $0.19 on the date of issue.  The offering of units
was conducted by the Company in a private placement solely to accredited
investors pursuant to an exemption from registration available under Rule 506 of
Regulation D of the Securities Act.


16


ITEM 6. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.  OVERVIEW  The
Company generates all of its revenues through Advanced Sciences. Revenues are
derived from the sale environmental services under contracts with various
government agencies and private companies in the U.S and the sale of finished
good inventory used in environmental services and hazardous materials handling.  As
some government contracts are funded in one-year increments, there is a
possibility for cutbacks as these contracts constitute a major portion of
Advanced Sciences revenues, and such a reduction would materially affect
operations.  However, management believes Advanced Sciences existing
client relationships will allow the Company to obtain new contracts in the
future.  The Company has access to technologies related to the separation
and destruction of mixed waste, polychlorinated biphenyls (PCBs) and
chlorofluorocarbons (CFCs).  The Company is currently working on the
commercialization of these technologies through development efforts, licensing
arrangements and joint ventures.  In
the second quarter of 2007 Applied Sciences acquired approximately $40 thousand
in finished good inventory from a supplier and began selling goods used in the
performance of environmental services and hazardous materials handling under the
assumed business name Commodore Sales Solution (CSS). CSS gives the Company
another revenue source that is complimentary to the sale of environmental
services. As the Companys sales representative continues to build the sales
pipeline management expects revenue from CSS to continue to grow.  The
Company has identified two reportable segments in which it operates, based on
the guidelines set forth in the Financial Accounting Standards Boards Statement
of Financial Accounting Standards No. 131.  These two segments are as
follows:  Commodore Advanced Sciences, Inc., which primarily provides
various environmental sampling, analysis and data management services to
Government agencies on a lump sum and fixed cost basis; and Commodore Solutions,
Inc., which is commercializing technologies to treat mixed and hazardous waste.  The Company currently
requires additional cash to sustain existing operations and to meet current
obligations and ongoing capital requirements.  The Companys current
monthly operating expenses exceed cash revenues by approximately $80 thousand.
Currently, the Company is addressing this cash shortfall through loans from The
Shaar Fund, Ltd., but The Shaar Fund, Ltd. is under no obligation to continue to
make such advances to the Company. If this lender decided to discontinue
advances, the Company would not be able to meet its current obligations.
 In addition, the Company owes approximately $564 thousand in loans that
are currently due or are payable on demand.  Although the lenders on these
loans have not yet called the loans, the Company does not currently have the
ability to pay these loans absent additional financing.  The reports of our
independent registered public accounting firms on our fiscal 2006 and 2007
consolidated financial statements contain a going concern qualification in
which they express substantial doubt about our ability to continue in business.
  The Company currently requires additional cash to sustain existing
operations and to meet current obligations and ongoing capital requirements.   RESULTS OF OPERATIONS  Year ended December 31, 2007 compared
to Year ended December 31, 2006  Environmental Services  Environmental service
revenues were approximately $2.6 million for the year ended December 31, 2007,
compared to approximately $7.3 million for the year ended December 31, 2006.
 The decreases in service revenues is attributable to Advanced Sciences as
certain contracts were closed out in 2006 and there was a reduction in the value
of the EDAM renewal contract awarded to the Company late in 2006. Service
revenues in 2007 were primarily derived from engineering and scientific services
performed for the United States government under two contracts similar to those
in place in 2006.  Advanced Sciences had one major customer in 2007, which
represents more than 10% of annual revenue.  Revenue from this customer was
approximately $1.8 million or 71.2% of the Companys total 2007 service revenue.
 The decrease in service revenues at Advanced Sciences is primarily the
result of the revision of the EDAM contract at a lower total amount, due to BJC
performing more self-assessment tasks and the removal of management of
laboratory activities from the contract. This modification to the contract upon
renewal results in less pass-through revenues to the Company subcontractors
which have very little, if any, margin.


17


Cost of sales for service revenues decreased from approximately
$7.2 million for 2006 to approximately $2.6 million for 2007. A decrease in cost
of sales at Advanced Sciences was the result of decreased revenues due to the
completion of the original EDAM contract and a decrease in pass through revenue
related to self-assessment tasks and laboratory activities. The Companys
backlog at December 31, 2007 totals approximately $1.7 million, all of which
represents work to be completed during calendar year 2008. This compares to a
backlog of approximately $2.1 million at December 31, 2006, all of which was
performed during calendar year 2007. Revenues and associated expenses in
relation to the EDAM contract are expected to be lower for calendar 2008 when
compared to 2007 as a result of the reduced backlog at the end of 2007.  Contracts of the Company may be subjected
to audit by the DCAA. Anticipated losses on contracts are provided for by a
charge to income during the period such losses are first identified. During
2007, the Company completed a DCAA audit of a single contract for the period
January 1995 through December 1999. The DCAA had asserted that the Company
incorrectly overbilled the Government for services rendered under contracts
performed during the period under audit. The Company had previously recorded a
liability totaling $376 thousand as a reserve to settle any claims or expense
that may be incurred as a result of the audit process. The amount recorded was
estimated based on an assessment of potential liability using an analysis of
available information with respect to pending claims, historical experience and,
where available, recent and current trends. During the fourth quarter of 2007,
the DCAA completed their audit and a settlement was reached. Contrary to earlier
expectations and accruals, the Company recognized additional contract revenues
of $86 and subcontractor cost of revenues of $147 were recognized, resulting in
a decrease in loss from operations of $315 after eliminating the previous
accrual.  Year Ended December 31,
2007  Commodore Sales Solutions  In the second quarter of
2007 the Company acquired substantially all of the finished good inventory from
one of Advanced Sciences main suppliers. The supplier provided materials
regularly used by the Companys environmental service personnel in the
performance of their duties under environmental service contracts. The creation
of Commodore Sales Solution (CSS) provided the Company with an additional
source of revenue complementary to the Companys current service offering,
provided for a reliable supply of resources used by Applied Sciences on a
regular basis, and reduced material costs on service contracts.  CSS gross margin for the
period ended December 31, 2007 was approximately $33 thousand on sales of $607
thousand, a gross margin percentage of approximately 5.4%. Product sales and the
related of cost of goods sold have been presented separately on the Statement of
Operation.  Management believes
there is potential for continued revenue growth for CSS given the large number
of government contracts, governmental contractors and  subcontractors
located in the Oak Ridge area that use products sold by Sales Solution on a
regular basis. There is a cyclical nature to CSS revenues with sales more
heavily weighted to the second and third quarters.  As the Companys sales
representative continues to build the sales pipeline management expects 2008
product revenues to exceed 2007 as a result of increased market penetration and
a full-years operation results.   Total revenues for 2008 are expected
to surpass $1 million.  Commodore Solutions, Inc.  In the case of Solution,
there were no revenues for the years ended December 31, 2007 and 2006. Should
the Company be successful in securing contract revenues for its SET technology,
Solution would reflect revenues once again.  Research and Development  For the years ended
December 31, 2007 and 2006, the Company did not incur any research and
development related costs.   General and Administrative
Expense  Consolidated general and
administrative expense remained consistent from the prior year, expenses for the
years ended December 31, 2007 and 2006 were approximately $1.5 million.  In the case of Advanced
Sciences, general and administrative costs increased to approximately $517
thousand for the year ended December 31, 2007 from approximately $394 thousand
for the year ended December 31, 2006.  This increase reflects additional
depreciation expense recognized during the year as a result of the American
Aquatics asset purchase in January


18


2007. Advanced
Sciences also experienced an increase corporate overhead related to bid and
proposal work as well as increased expense related to CSS. Advanced Sciences had
focused its sales and marketing efforts on the bid and proposal activities to
achieve a higher contract base and to seek new contracting opportunities.
 Solution did not incur any general and administrative costs related to bid
and proposal activities for the years ended December 31, 2007 and 2006,
respectively.   Depreciation and amortization expense at Advanced
Sciences increased by $56 thousand. Depreciation and amortization expense for
the year ended December 31, 2007 was $81 thousand compared with $25 thousand for
the year ended December 31, 2006.  General and administrative expense
related to CSS of approximately $22 thousand included advertising, postage and
other expenses associated with initial start-up.  Interest expense  Interest expense
increased to approximately $808 thousand in 2007 from approximately $659
thousand in 2006, an increase of 23%, due to increased borrowings by the Company
under the Amended and Restated Shaar Note.  OFF-BALANCE SHEET ARRANGEMENTS  There are no off-balance
sheet arrangements, such as financing or variable interest entities, that either
have, or are reasonably likely to have, a current or future material effect on
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources.  LIQUIDITY AND CAPITAL RESOURCES  The Company currently
requires additional cash to sustain existing operations and to meet current
obligations and ongoing capital requirements.  The Company's current
monthly operating expenses exceed cash revenues by approximately $80 thousand at
December 31, 2007.  Currently, the Company is addressing this cash
shortfall through loans from The Shaar Fund, Ltd., but The Shaar Fund, Ltd. is
under no obligation to continue to make such advances to the Company.  If
this lender decided to discontinue advances, the Company would not be able to
meet its current obligations.  In addition, the Company owes approximately
$564 thousand in loans that are currently due or are payable on demand as of
December 31, 2007.  Although the lenders on these loans have not yet called
the loans, the Company does not currently have the ability to pay these loans
absent additional financing.  The Company has
experienced a decrease in total assets for the year ended December 31, 2007. The
majority of the decrease was attributable to a reduction in accounts receivable,
net. Accounts receivable, net, for the period ended December 31, 2007 was
approximately $391 thousand as compared to approximately $802 thousand for the
year ended December 31, 2006.  The decrease in accounts receivable, net, is
due to the decreases in revenue contribution by Advanced Sciences from the EDAM
contract in Oak Ridge, TN.  The reports of our
independent registered public accounting firms on our fiscal 2006 and 2007
consolidated financial statements contain a going concern qualification in
which they express substantial doubt about our ability to continue in business.
  The Company currently requires additional cash to sustain existing
operations and to meet current obligations and ongoing capital requirements.  For the year ended
December 31, 2007, the Company incurred a net loss of approximately $2.0 million
compared to a net loss of approximately $1.8 million for the year ended December
31, 2006.  The increase in the net loss was attributable to an increase in
interest and general and administrative expenses. The Company has also
experienced net cash outflows from operating activities of approximately $1.3
million and $596 thousand for the years ended December 31, 2007, and 2006,
respectively.  As of December 31, 2007
and 2006, the Company had a stockholders deficit of approximately $14.5 million
and $12.1 million, respectively.  The Companys net increase in
stockholders deficit from December 31, 2006 to December 31, 2007 is primarily
due to the loss for the year ended December 31, 2007.  At December 31, 2007
and 2006 the Company had working capital deficit of approximately $6.7 million
and $5.8 million, respectively.  The increase in the working capital
deficit from December 31, 2006 to December 31, 2007 also includes $418 thousand
in accrued dividends to preferred stockholders.  Certain prior-year
amounts have been reclassified to conform to the current year presentation.
 These reclassifications have no effect on net loss or total Stockholders
equity as previously reported.


19


ITEM
7. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.    TABLE OF CONTENTSPageReport of Independent
Registered Public Accounting Firm
21Consolidated
Balance Sheets, December 31, 2007 and 2006
22Consolidated
Statements of Operations for the years ended December 31, 2007 and
2006
23Consolidated
Statements of Changes in Stockholders Deficit for the years ended
December 31, 2007 and 2006
24Consolidated
Statements of Cash Flows for the years ended December 31, 2007 and
2006
25Notes to Consolidated
Financial Statements
26


20


[commodore10ksbapr1508s004.gif]


21


Commodore Applied Technologies,
Inc. and SubsidiariesConsolidated Balance Sheets(Amounts in thousands except shares)December 31,ASSETS
2007

2006Current assets:Cash
$
                 200

$
                 127Accounts receivable, net
391

802Prepaid assets
124

138Inventory
73

-Total current assets
788

1,067Property and equipment,
net
172

119Purchased intangible asset,
net
53

-Other assets
1

57Total assets
$
             1,014

$
              1,243LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilitiesAccounts payable
$
                 915

$
              1,012Accrued interest
2,041

1,249Deferred wages
2,039

1,883Preferred dividends
payable
1,189

773Loss contingency accrual
-

376Other accrued liabilities
549

884Long-term debt, current
735

654Total  current
liabilities
7,468

6,831Long-term debt, net of current
portion
8,016

6,509Total liabilities
15,484

13,340Stockholders' deficit:Preferred Stock, par value
$0.001 per share, 10,000,000 shares authorizedConvertible Preferred Stock,
Series H & J, par value $.001 per shareaggregate
liquidation value of $6,908 and $6,712 at December 31, 2007and 2006,
respectively, 3% non-cumulative dividends for Series H, 10%cumulative
dividends for Series J, 1,550,000 shares authorized 1,188,302shares issued
and outstanding as of December 31, 2007 and 2006
1

1Common Stock, par value $.001
per share, 300,000,000 sharesauthorized,
8,288,217 shares and 7,948,217 shares issued andoutstanding
at December 31, 2007 and 2006, respectively
8

8Additional paid-in
capital
68,901

69,296Accumulated deficit
(83,117)

(81,139)Treasury stock, 171,875 shares,
at cost
(263)

(263)Total stockholders'
deficit
(14,470)

(12,097)Total liabilities and
stockholders' deficit
$
              1,014

$
              1,243 The accompanying
notes are an integral part of these consolidated financial statements.


22


Commodore Applied Technologies,
Inc. and SubsidiariesConsolidated Statements of
OperationsFor the years ended December 31 2007
and 2006(Amounts in thousands except per share data)2007

2006Revenue:Service
$
         2,589

$
         7,254Product
607

-Total sales
3,196

7,254Costs and expenses:Cost of  revenueService
2,608

7,153Product
574

-DCAA settlement, net
(315)

-General and
administrative
1,499

1,456Total costs and expenses
4,366

8,609Loss from operations
(1,170)

(1,355)Other income (expense):Interest expense
(808)

(659)Other income
-

165Net loss
(1,978)

(1,849)Dividends accrued to preferred stockholders
(418)

(412)Net loss applicable to common stockholders
$
       (2,396)

$
       (2,261)Net loss per share - basic and diluted
$
         (0.29)

$
         (0.29)Weighted average shares outstanding - basic and
diluted
8,276

7,847               The accompanying notes are an integral
part of these consolidated financial statements.


23


Commodore
Applied Technologies, Inc. and SubsidariesConsolidated
Statements of Stockholders' DeficitFor the
years ended December 31, 2007 and 2006(Amounts in thousands, except
shares)AdditionalPreferred stock

Common Stock

Paid-In

Accumulated

TreasuryShares

Amount

Shares

Amount

Capital

Deficit

Stock

TotalBalance, January 1, 2006
1,188,302

$
          1

7,948,217

$
          8

$
      69,680

$
         (79,290)

$
      (263)

$
     (9,864)Preferred stock dividends
-

-

-

-

(412)

-

-

(412)Stock issued for services
-

-

220,000

-

28

-

-

28Net loss
-

-

-

-

-

(1,849)

-

(1,849)Balance, December 31, 2006
1,188,302

1

8,168,217

8

69,296

(81,139)

(263)

(12,097)Preferred stock dividends
-

-

-

-

(418)

-

-

(418)Stock issued for services
-

-

120,000

-

23

-

-

23Net loss
-

-

-

-

-

(1,978)

-

(1,978)Balance, December 31, 2007
1,188,302

$
          1

8,288,217

$
          8

$
      68,901

$
         (83,117)

$
      (263)

$
   (14,470)        The accompanying notes are an integral
part of these consolidated financial statements.    24


Commodore Applied Technologies,
Inc. and Subsidiaries
Consolidated Statements of Cash
Flows
For the years ended December 31, 2007
and 2006
(Amounts in thousands)2007

2006Cash flows from operating activities:Net loss
($1,978)

($1,849)Adjustments to reconcile net loss
to net cashused in operating activities:Depreciation and amortization
80

25Other asset writedown
56

-Gain on settlement of DCAA audit
(376)

-Medical insurance reserve accrual reversal
(56)

-Gain on disposal of equipment
-

(3)Issuance of common stock for services
23

28Changes in assets and
liabilities:Accounts receivable, net
411

1,263Prepaid assets
14

1Inventory
(73)

-Accounts payable
(97)

(364)Accrued interest
792

555Deferred wages
156

194Other accrued liabilities
(279)

(446)Net
cash used - operating activities
(1,327)

(596)Cash flows from investing activities:Equipment purchased
(17)

-Purchased intangible asset
(10)

-Proceeds form sale of property
and equipment
-

7Net
cash provided (used) - investing activities
(27)

7Cash flows from financing activities:Borrowings on debt
1,615

1,102Payments on long-term debt
(188)

-Payments to related
parties
-

(310)Repayment of line of
credit
-

(141)Net
cash provided - financing activities
1,427

651Net change in cash
73

62Cash at beginning of year
127

65Cash at end of year
$
      200

$
      127Supplemental disclosure of cash flow
information:Cash paid during the year for interest
$
        24

$
      104Non-cash investing and financing activities:Purchase of equipment by issuing debt
$
        91

$
        -Purchase of equipment by capital lease
$
        12

$
        -Purchase of intangible asset by issuing debt
$
        70

$
        -Accrued dividends on preferred stock
$
      416

$
      412 The accompanying
notes are an integral part of these consolidated financial statements.  25     Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  1. Summary of Significant Accounting
Policies  Nature of
Operations  Commodore Applied
Technologies, Inc. and subsidiaries ("Applied" or the Company) is engaged in
the destruction and neutralization of hazardous waste from other materials.
 Through its subsidiary, Commodore Solutions, Inc. (Solution), Applied
owns technologies related to the separation and destruction of polychlorinated
biphenyls (PCBs) and chlorofluorocarbons (CFCs).  Applied is currently
working on the commercialization of these technologies through development
efforts, licensing arrangements and permitting activities.  Through Commodore
Advanced Sciences, Inc. ("Advanced Sciences"), Applied has contracts with
various government agencies and private companies in the United States and
abroad performing environmental monitoring and engineering services. Advanced
Sciences also distributes safety products and other materials used in connection
with monitoring and engineering services through its operating division
Commodore Sales Solution.  Principles of
Consolidation  The consolidated
financial statements include the accounts of Applied and its majority-owned
subsidiaries.  All significant intercompany balances and transactions have
been eliminated.  Cash and Cash
Equivalents  Applied considers cash
and highly liquid debt instruments with original maturities of three months or
less at the date of purchase to be cash equivalents.  Concentration of
Credit Risk and Significant Customers  Applied maintains its
cash in bank deposit accounts which, at times, may exceed federally insured
limits.  Applied has not experienced any losses in such accounts.  With respect to trade
receivables, Applied generally does not require collateral as the majority of
Applied's services are performed for the U.S. Government and prime contractors
that serve the U.S. Government.  Applied believes it is not exposed to any
significant credit risk on cash, cash equivalents and trade receivables.
 Sales to major customers which exceeded 10 percent of revenues are limited
to one customer as follows, in thousands:  2007 2006 Customer A $ 1,835 $ 6,542  Customer A
accounts for approximately 67.6% of the accounts receivable balance as of
December 31, 2007. Accounts receivable  Trade receivables are
carried at original invoice amount less an estimate made for doubtful
receivables based on a review of all outstanding amounts on a monthly basis.
Management determines the allowance for doubtful accounts by identifying
troubled accounts and by using historical experience applied to an aging of
accounts. Trade receivables are written off when deemed uncollectible.
Recoveries of trade receivables previously written off are recorded when
received.  A trade receivable is
considered to be past due if any portion of the receivable balance is
outstanding for more than 90 days, not counting retainage billed, which is due
at the end of the particular phase of the master government contract.  At
December 31, 2007 and 2006, retainage of approximately $12 thousand and $568
thousand were included in trade accounts receivable, respectively, all expected
to be collected within one year. Interest is not charged on trade receivables.  26      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  1. Summary of Significant Accounting
Policies, Continued:  Inventory  Inventories, consisting
of finished goods purchased for resale, are valued at the lower of cost or
market and are removed from inventory using the average-cost method.  Property and
Equipment  Property and equipment
are recorded at cost, less accumulated depreciation.  Improvements which
substantially increase the useful lives of assets are capitalized. Maintenance
and repairs are expensed as incurred.  Upon retirement or disposal, the
related cost and accumulated depreciation are removed from the respective
accounts and any gain or loss is recorded in the Statement of Operations.
 Depreciation is computed on the straight-line method based on the
estimated useful lives of the assets; machinery & equipment over 3 to 7
years, furniture and fixtures over 3 to 7 years and computer equipment and
software over 3 to 5 years.  Purchased
Intangibles  Applied amortizes
purchased intangibles on a straight-line basis over their contractual or
economic lives.  Impairment of
Long-Lived Assets  Applied reviews its
long-lived assets, including property, equipment and intangibles with useful
lives, for impairment annually or whenever circumstances indicate that the
carrying amount of the assets may not be recoverable.  The Company
evaluates, at each balance sheet date, whether events and circumstances have
occurred which indicate possible impairment.  The carrying value of a
long-lived asset is considered impaired when the estimated cumulative
undiscounted cash flows of the related asset or asset group is less than the
carrying value.  In that event, a loss is recognized based on the amount by
which the carrying value exceeds the estimated fair market value of the
long-lived asset. Applied did not record any impairment charges for the years
ended December 31, 2007 and 2006.  Revenue
Recognition  Substantially all of
Applied's revenues are generated by its subsidiary, Advanced Sciences.
 Advanced Sciences revenues consist of engineering and scientific services
and sales of scientific and safety products. Engineering and scientific services
are  performed for the U.S. Government and prime contractors that serve the
U.S. Government under a variety of contracts, most of which provide for unit
prices.Revenue under unit price contracts is recorded when a
contract or arrangement exists, the fees to be charged are fixed or
determinable, the services have been provided, and collection of the billed
amounts is reasonably assured.  Revenue on product
sales is generally recognized when evidence of a customer arrangement exists,
prices are fixed and determinable and product title, ownership and risk of loss
transfers to the customer. Revenue for product sales also includes freight and
handling charges. The Companys standard shipping terms are FOB shipping point.     Income
Taxes  Income taxes are
recognized in accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," (SFAS No. 109) whereby deferred income tax
liabilities or assets at the end of each period are determined using the tax
rate expected to be in effect when the taxes are actually paid or recovered. A
valuation allowance is recognized on deferred tax assets when it is more likely
than not that some or all of these deferred tax assets will not be realized.   27      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  1. Summary of Significant Accounting
Policies, Continued:  Income Taxes,
Continued:  On January 1, 2007, the
Company adopted Financial Accounting Standards Board Interpretation No. 48 (FIN
No. 48) Accounting for Uncertainty in Income Taxes. FIN No. 48 clarifies the
accounting for uncertainty in income taxes recognized in accordance with SFAS
No. 109, prescribing a recognition threshold and measurement attribute for the
recognition and measurement of a tax position taken or expected to be taken in a
tax return. In the course of our assessment, we have determined that we are
subject to examination of our income tax filings in the United States and state
jurisdictions for the 2003 through 2006 tax years. In the event that the Company
is assessed penalties and or interest, penalties will be charged to other
operating expense and interest will be charged to interest expense.  The Company adopted FIN
No. 48 using the modified prospective transition method, which requires the
application of the accounting standard as of January 1, 2007. There was no
impact on the financial statements as of and for the year ended December 31,
2007 as a result of the adoption of FIN No. 48. In accordance with the modified
prospective transition method, the financial statements for prior periods have
not been restated to reflect, and do not include, the impact of FIN No. 48.  Fair Value of Financial
Instruments  The fair value of
financial instruments is determined by reference to market data and other
valuation techniques as appropriate. Accounts receivable, accounts payable,
other accrued liabilities and long term debt are financial instruments that are
subject to material market variations from the recorded book value.  The
fair value of these financial instruments approximates the recorded book value
as of December 31, 2007 and 2006.  Use of
Estimates  The preparation of
consolidated financial statements in conformity with U.S. Generally Accepted
Accounting Principles (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.  Recent Accounting
Pronouncements  In September 2006, the
Financial Accounting Standards Board issued SFAS No. 157, Fair Value
Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework
for measuring fair value, and expands disclosures about fair-value measurements
required under other accounting pronouncements, but does not change existing
guidance as to whether or not an instrument is carried at fair value. SFAS 157
is effective for the Companys fiscal year 2008. The Company is currently
evaluating the impact of adopting SFAS 157.  On January 1, 2007, the
Company adopted SFAS No. 154, Accounting Changes and Error Corrections  a
replacement of APB Opinion No. 20 and FASB Statement No. 3.  The Statement
establishes, unless impracticable, retrospective application as the required
method for reporting a change in accounting principle in the absence of explicit
transition requirements specific to the newly adopted accounting principle. The
adoption of this Statement had no material impact on the Companys financial
position or result of operations.         28      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  1. Summary of Significant Accounting
Policies, Continued:  Recent Accounting
Pronouncements, Continued  On January 1, 2007, the
Company adopted SFAS No. 155 Accounting for Certain Hybrid Financial
Instruments, which amends SFAS No. 133 Accounting for Derivative Instruments
and Hedging Activities and SFAS No. 140 Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities. SFAS No. 155 resolves
issues addressed in Statement 133 Implementation Issue No. D1 Application of
Statement 133 to Beneficial Interests in Securitized Financial Assets, and: · Permits fair value
re-measurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation; · Clarifies which
interest-only strips are not subject to the requirements of SFAS No. 133; · Establishes a
requirement to evaluate interests in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation; · Clarifies that
concentrations of credit risk in the form of subordination are not embedded
derivatives; and · Amends SFAS No.
140 to eliminate the prohibition on a qualifying special-purpose entity from
holding a derivative financial instrument that pertains to a beneficial interest
other than another derivative financial instrument.  The Company adopted
SFAS No. 155 using the modified prospective transition method, which requires
application of the standard as of January 1, 2007. There was no impact on the
financial statements as of and for the year ended December 31, 2007 as a result
of adoption of SFAS No. 155. In accordance with the modified prospective
transition method, the financial statements for prior periods have not been
restated to reflect, and do not include, the impact of SFAS No. 155.  On January 1, 2007, the
Company adopted SFAS No. 156, Accounting for Servicing of Financial Assets  an
Amendment of FASB Statement No. 140.  This Statement amended SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities, with respect to the accounting for separately recognized
servicing assets and servicing liabilities. The adoption of this Statement had
no material impact on the Companys financial position or results of
operations.  In February 2007, the
FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities. SFAS No. 159 permits companies to choose to
measure many financial instruments and certain other items at fair value. SFAS
No. 159 is effective for financial statements issued for fiscal years
beginning after November 15, 2007. The Company does not expect the adoption
of SFAS No. 159 to have a material impact on our consolidated financial
statements.  In December 2007, the
FASB issued SFAS No. 141 (R), Business Combinations, and SFAS
No. 160, Noncontrolling Interests in Consolidated Financial Statements.
SFAS No. 141 (R) requires an acquirer to measure the identifiable
assets acquired, the liabilities assumed and any noncontrolling interest in the
acquiree at their fair values on the acquisition date, with goodwill being the
excess value over the net identifiable assets acquired. SFAS No. 160
clarifies that a noncontrolling interest in a subsidiary should be reported as
equity in the consolidated financial statements. The calculation of earnings per
share will continue to be based on income amounts attributable to the parent.
SFAS No. 141 (R) and SFAS No. 160 are effective for financial
statements issued for fiscal years beginning after December 15, 2008. Early
adoption is prohibited. The Company not yet determined the effect on our
consolidated financial statements, if any, upon adoption of SFAS No. 141
(R) or SFAS No. 160.       29      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  1. Summary of Significant Accounting
Policies, Continued:  Stock-Based
Compensation  Effective January 1,
2006, the Company adopted the fair value recognition provisions of SFAS No. 123
(Revised), Share-Based Payment, using the modified-prospective transition
method.  Under this transition method, the Company recognizes stock-based
compensation expense for stock-based awards granted subsequent to the year ended
December 31, 2005 in accordance with the provisions of SFAS No. 123R, and the
estimated expense for the portion vesting in the period for options granted
prior to, but not vested as of December 31, 2005, based on the grant date fair
value estimated in accordance with the original provisions of SFAS No. 123.  At December 31, 2007
and 2006, the Company had a stock plan for key employees, non-employee directors
and management consultants, described more fully in Note 11 Share-Based
Compensation. Managements adoption of SFAS 123R resulted in recognition of $0
of stock-based compensation expense in 2007 and 2006.  Reclassifications  Certain amounts in
prior years have been reclassified to conform to the current year presentation.
These reclassifications have no effect on net loss, total assets or
stockholders equity as previously reported.  The reclassifications have no
effect on net loss or total stockholders deficit as previously reported.  2. Going Concern  The accompanying
consolidated financial statements have been prepared under the assumption that
Applied will continue as a going concern.  Such assumption contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business.  As shown in the consolidated financial statements, Applied
incurred losses and negative cash flows from operating activities for the years
ended December 31, 2007 and 2006.  Applied also has a working capital
deficit of approximately $6.8 million and an accumulated deficit of
approximately $83.1 million at December 31, 2007 and several of the Companys
notes payable are in default.  These factors raise substantial doubt about
the Companys ability to continue as a going concern.  The consolidated
financial statements do not include any adjustments that might be necessary
should Applied be unable to continue as a going concern.  Applied's continuation
as a going concern is dependent upon its ability to generate sufficient cash
flow to meet its obligations on a timely basis, to obtain additional financing
as may be required, and ultimately to attain profitability.  Potential
sources of cash include new contracts, external debt, the sale of shares of
Company stock or alternative methods such as mergers or sale transactions.
 No assurances can be given, however, that Applied will be able to obtain
any of these potential sources of cash.  Applied currently requires
additional cash funding from outside sources to sustain existing operations and
to meet current obligations and ongoing capital requirements.  3. Accounts
Receivable  The components of
Applieds receivables as of December 31, 2007 and 2006 are as follows, in
thousands:  2007 2006 Accounts receivables $ 394 $ 803 Related party receivables 3 3 Allowance for doubtful accounts (6) (4) Accounts receivable, net $ 391 $ 802  Substantially all of
Advanced Sciences accounts receivables are pledged to Wells Fargo Bank as
collateral under a factoring agreement guaranteed by Applied. See Note 4.    30      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  4. Sale of Accounts
Receivable  Advanced Sciences sells
its accounts receivable under the Environmental Data Acquisition and Management
(EDAM) contract to Wells Fargo Bank pursuant to the terms of a factoring
agreement. The agreement allows Advanced Sciences to receive 90% of eligible
receivables up to $2 million. According to the terms of the agreement
receivables are sold with full recourse and the Company assumes all risk of
collectability. Financing fees are paid monthly at prime plus 2.0 percent of
receivables sold, aggregate of 9.25% at December 31, 2007. Financing fees paid
for the year ended December 31, 2007 and 2006 were $11 and $18 thousand,
respectively under the agreement.  5. Property and Equipment  Property and equipment
consist of the following as of December 31, 2007 and 2006, in thousands:  2007 2006 Machinery and equipment $ 659 $ 571 Furniture and fixtures 60 47 Computer equipment 96 99 815 717 Accumulated depreciation (643) (598) Property and equipment, net $ 172 $ 119  During the year ended
December 31, 2007, $2 thousand of fully depreciated machinery and equipment was
sold, resulting in a recognized gain of $400.  The Company also abandoned
$10 thousand of fully depreciated machinery and equipment. Cost and related
accumulated depreciation have been removed from the respective accounts.  6. Contract Acquisition  In January 2007,
Advance Sciences acquired net assets in the form of equipment and monitoring
services contracts from American Aquatics Inc. in exchange $170 thousand in cash
and short-term notes payable. The acquisition increased environmental monitoring
revenues by $156 thousand, which are included in Services revenue in the
consolidated statement of operations and segment information reported in Note
17. The purchase price resulted in additions to property and equipment of
approximately $90 thousand and an intangible asset of approximately $79 thousand
for the monitoring service contracts. The acquired intangible will be amortized
on a straight-line basis over the life of the monitoring service contracts,
which extend through December 2009. For the year ended December 31, 2007 Applied
recorded $26 thousand in amortization expense on the purchased intangible.
Amortization expense and accumulated amortization will be $26 thousand and $52
thousand, respectively for 2008, and $27 thousand and $79 thousand, respectively
for 2009.  7. Other Accrued Liabilities  Other accrued
liabilities consist of the following, in thousands: 2007 2006 Compensation and employee benefits (1) $ 186 $ 213 Subcontractors (2) - 355 Related party payable (3) 269 185 Other (4) 94 131 Total $ 549 $ 884  (1) Liability accrued for
payroll, payroll taxes and employee benefits earned by company employees but
paid subsequent to the close of the year of accrual. (2) Liability accrued for
services performed by subcontractors for the Company under its contracts with
the Department of Energy or Department of Defense. (3) Amounts payable to
parties related to the Company by past ownership of an acquired company. (4) Accruals for other
general liabilities of the Company.  31      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  8. Long-Term Debt  Long-term debt consists of the
following as of December 31, 2007 and 2006, in thousands:  2007 2006 Convertible note payable, 10% interest (1) $ 8,009 $ 6,509 Note payable, 12% interest (2) 252 252 Note payable, 9% interest (3) 312 312 Note payable, 8.75% interest (4) 58 - Note payable, 6.5% interest (5) 80 - Note payable, 6.0.% interest (6) 24 90 Other (7) 16 - 8,751 7,163 Less current portion (735) (654) $ 8,016 $ 6,509  (1) Notes payable to The
Shaar Fund, Ltd. with interest at 10%, interest only due in monthly installments
beginning on June 30, 2008, maturing in April 2009, no prepayment option, and
collateralized by property and equipment and patents.  The note is
convertible into common stock at any time, and the interest can be paid in cash
or stock, at the option of either the Company or the holder. Both the conversion
and the payment of interest in the form of common stock are subject to a
limitation, such that no conversion or payment in the form of stock can be
exercised or made that would result in the holder owning 5% or more beneficial
ownership of the Companys common stock. The conversion price is the lower of
the average closing price of the ten days preceding the conversion date, or
$0.57.  See Note 10.  Also, these notes payable restrict the Companys
ability to declare or pay dividends on and repurchase common stock, materially
change the Companys business, enter a business combination, or transfer or sell
assets.  (2) Notes payable to
individuals bearing 12.0% interest, in default as of January 15, 2005,
collateralized by accounts receivable.  (3) Note payable to
individual with interest at 9.0%, unsecured and in default as of December 31,
2006.  (4) Note payable to
American Aquatics, Inc. with interest at 8.75%, payable monthly through May
2008.  (5) Note payable to
Sterling Lending financing the Companys general liability insurance, with
interest at 6.5% payable monthly through December 2008.  (6) Note payable to
Sterling Lending financing the Companys directors and officers insurance, with
interest at 6.0% payable monthly through April 2008.  (7) Other long-term debt
consists of short-term notes and capital leases for equipment. Interest rates
vary and dates of maturity are through April 2010.  Future maturities of
long-term debt is as follows, in thousands:  2008 $ 735 2009 8,012 2010 3 2011 1 Thereafter - $ 8,751    32      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  9. Income Taxes  Applied provides for
deferred income taxes on temporary differences which represent tax effects of
transactions reported for tax purposes in periods different than for book
purposes.  The provision for
income taxes for the years ended December 31, 2007 and 2006 results in an
effective tax rate which differs from federal income tax rates as follows, in
thousands:  2007 2006 Expected tax benefit at federal statutory rate $ (666) $ (629) State income tax benefit at federal statutory rate (69) (65) Other 13 131 Change in valuation allowance 722 563 Income tax benefit $ - $ -  The components of the
net deferred tax assets as of December 31, 2007 and 2006 are as follows, in
thousands:  2007 2006 Reserves and accruals $ 27 $ 158 Net operating loss carryforward 16,537 15,427 Depreciation, amortization and impairment charges 891 1,148 17,455 16,733 Valuation allowance (17,455) (16,733) Net deferred tax assets $ - $ -  Management estimates
that our combined federal and state tax rates will be 36.3%. Applied conducts a
periodic examination of its valuation allowance, factors considered in the
evaluation include recent and expected future earnings and Applied's liquidity
and equity positions.  As of December 31, 2007 and 2006, Applied has
established a valuation allowance for the entire amount of net deferred tax
assets, due to the Companys belief that it is more likely than not that the
deferred tax asset will not be realized.  Applied has net
operating loss ("NOL") carryforwards at December 31, 2007 of approximately
$43.4 million which expire in years 2010 through 2027.  The NOL
carryforwards are limited to use against future taxable income due to changes in
ownership and control.  10. Stockholders Deficit  Series H Convertible
Preferred Stock  Applied issued 800,000
shares of Series H Preferred Stock (the Series H Preferred), par value $0.001
per share, having a stated value of $1 per share.  The Series H Preferred
shall have the following rights, privileges, and limitations:  a) The
conversion feature was exercisable on or after June 30, 2003.  b) The
conversion price is determined by the average closing price of Companys common
stock in the previous 30 trading days, but in no event shall the conversion
price be less than $4.00 per share.  c) The
Series H Preferred has a non-cumulative annual dividend of 3%, payable in cash
or Series H Preferred stock within 30 days of the
end of Applieds fiscal year, at Applieds election.  Dividends of $24
thousand were accrued during 2007 and 2006 respectively, and total accumulated
dividends of $131 thousand had been accrued at December 31, 2007.  d)
 The Series H Preferred is not transferable.  33      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  10. Stockholders Deficit , Continued:  There have been no
shares of Series H Preferred stock converted into common shares as of December
31, 2007.  In the event of liquidation, dissolution or winding up of
Applied, holders of Series H Convertible Preferred Stock are entitled to receive
liquidation distributions equivalent to $1.00 per share, and no more, before any
distribution to holders of the common stock.  Series J Convertible
Preferred Stock  Effective October 1,
2005, the Company authorized the issuance of 550,000 shares of Series J
Convertible Preferred Stock (Series J Preferred), par value $0.001 per share,
each such share having a stated value of $10.00 per share.  The Series J Preferred
have the following rights, privileges, and limitations:  a) The
conversion feature was exercisable immediately upon issuance of the shares.  b) The
conversion price is determined by the average closing price of the Companys
common stock in the previous 10 trading days, but in no event shall the
conversion price be more than $0.50 per share or less than $0.05 per share.  c) If
the Companys common stock is not listed on an exchange at the time of the
conversion, then the conversion price will be 50% of the market price at that
time.  d) The
Series J Preferred have a cumulative annual dividend of 10%, payable in cash or
shares of the Companys common stock at the Companys election.  e) Dividends were to be paid quarterly commencing March 31, 2006, to
the holder of the shares of the Series J Preferred Stock. As of
December 31, 2007, no dividends had yet been paid under these terms, and the
holder has agreed to a deferral of payment until June 30, 2008 without
consequence to the Company.  f) The
Company has reserved 60,000,000 shares of its common stock for the conversion of
the Series J Preferred and the Amended New Shaar Convertible Note.  g) Both
the conversion and the payment of dividends in the form of common stock are
subject to limitation, such that no conversion or payment in the form of stock
can be exercised or made that would result in the holder owning 5% or more
beneficial ownership of the Companys common stock.  h) The
Company accrued approximately $392 thousand and $388 thousand of dividends in
2007 and 2006 on the Series J Preferred. Accumulated dividends totaled
approximately $877 thousand through December 31, 2007.  Upon liquidation,
dissolution or winding up of Applied, holders of Series J Convertible Preferred
Stock are entitled to receive liquidation distributions equivalent to a stated
value of $10.00 per share, plus 30% of the stated value, plus the aggregate of
all accrued and unpaid dividends, the total of such distributions to be made
before any distribution to holders of the common stock.  Rights and
Dividends  The holders of all
series of convertible preferred stock have the right, voting as a class, to
approve or disapprove of the issuance of any class or series of stock ranking
senior to or on a parity with the convertible preferred stock with respect to
declaration and payment of dividends or the distribution of assets on
liquidation, dissolution or winding up.  Cumulative unpaid
dividends on all series of preferred stock are approximately $1.2 million and
$773 thousand at December 31, 2007 and 2006, respectively.   34      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  10. Stockholders Deficit,
Continued:  Warrants  Each outstanding warrant is
exercisable into one share of the Companys common stock. A summary of the
warrants outstanding as of December 31, 2007 and 2006 and changes during the
periods then ended is presented below:  Weighted Avg. # of Warrants Exercise Price Beginning Balance 2006 1,724,456 $ 0.55 Granted - Expired (91,665) 1.23 Beginning Balance 2007 1,632,791 $ 0.52 Granted - Expired (50,001) 0.57 Ending Balance 2007 1,582,790 $ 0.52   Year of Current Expiration Grant Warrants Exercise Price Date 2003 1,367,790 $ 0.57 Nov-08 2003 2,500 $ 0.57 Nov-08 2004 12,500 $ 0.60 Feb-09 2005 200,000 $ 0.20 Apr-08 Total outstanding 1,582,790  As of December 31, 2007 there was no
unrecognized expense related to non-vested warrants granted under the Companys
plans.  As of December 31, 2007
all remaining outstanding warrants are exercisable.  11. Share-Based Compensation  During the year ended
December 31, 2007, the Company issued 120,000 shares of common stock to an
investor relations services consulting firm, for which an expense of
approximately $23 thousand was recognized, measured by the fair value of the
shares at the date of issue.  In December 1998,
Applied adopted its 1998 Stock Option Plan pursuant to which officers,
directors, key employees and/or consultants of Applied can receive non-qualified
stock options to purchase up to an aggregate 250,000 shares of Applied's common
stock.  During 1999 and 2000 Applied increased the number of shares
authorized by 250,000 shares each year resulting in 750,000 shares currently
available under the 1998 stock option plan.  Exercise prices applicable to
stock options issued under this Plan represent no less than 100% of the fair
value of the underlying common stock as of the date of grant.  Stock
options granted under the plan may vest immediately or for any period up to five
years.  The Company did not
recognize any compensation expense related to share-based payments under SFAS
123R for the years ended December 31, 2007 or 2006.  As of December 31,
2007, there was no unrecognized compensation expense related to non-vested
share-based compensation arrangements granted under the Companys plans. No
stock options were granted in the years ended December 31, 2007 and 2006.       35      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  11.  Share-Based Compensation, Continued:  Stock
Options  A summary of stock
options outstanding as of December 31, 2007 and 2006 and changes during the
periods then ended is presented below: Weighted Avg. # of Options Exercise Price Beginning Balance 2006 4,325,841 1.08 Forfeited (15,369) 106.47 Beginning Balance 2007 4,310,472 0.66 Forfeited (2,500) 1.06 Ending Balance 2007 4,307,972 $ 0.66   Range of Exercise # of Options Weighted Avg. Weighted Avg. # of Shares Prices Outstanding Remaining Life Exercise Price Exercisable $0.00-$0.57 3,854,068 0.96 $ 0.57 3,854,068 $0.58-$1.40 453,904 0.96 $ 1.40 453,904 4,307,972 0.96 $ 0.65 4,307,972  As of December 31, 2007, the aggregate
intrinsic value of options outstanding and exercisable was $0.  12. Basic and Diluted Loss Per
Share  Basic loss per share is
computed by dividing net loss available to common shareholders by the weighted
average number of shares outstanding during the period.  Diluted loss per
share is computed using the weighted average number of shares determined for the
basic computations plus the number of shares that would be issued assuming all
contingently issuable shares having a dilutive effect on earnings per share were
outstanding for the period.  Options and warrants to purchase 5,890,762 and
5,943,263 shares of common stock were outstanding as of December 31, 2007 and
2006, respectively.  Additionally, exercise of a convertible note,
interest, Series H and Series J Preferred and dividends would result in issuance
of 172,596,534 shares of common stock, subject to provisions that limit the
total of these conversions to less than 5% beneficial ownership by the holder.
 Shares issuable upon exercise of options, warrants and convertible debt
and instruments were excluded from the calculation of diluted loss per share as
the effect would have been anti-dilutive as the Company has experienced net
losses.  13. Related Party Transactions  Applied had the following related
party transactions not fully disclosed elsewhere:  a) Applied has a
receivable from a related party of approximately $57 thousand for the year ended
December 31, 2006, and is included in other assets. b) Applied has payables to
related parties of approximately $269 and $185 thousand for the years ended
December 31, 2007 and 2006, and are included in other accrued liabilities. c) Applied has a note
payable to Bentley Blum, a member of the board of directors that is due on
demand and carries interest at 9%.  The balance as of December 31, 2007 and
2006 was approximately $312 thousand. Accrued interest as of December 31, 2007
and 2006 was $127 thousand and $99 thousand, respectively. The note is in
default at December 31, 2007.       36      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  13. Related Party Transactions,
Continued:  d) Applied has a long-term
convertible note payable to The Shaar Fund, Ltd., a shareholder of Applied, that
matures in April 2009. The note bears interest at 10% annually with interest
only due in monthly installments beginning June 30, 2008. The balance as of
December 31, 2007 and 2006 was approximately $8.0 million and $6.5 million,
respectively. Accrued interest on the note was approximately $1,718 thousand and
$984 thousand for the years ended December 31, 2007 and 2006 respectively, and
is included in other accrued liabilities. e) During 2007, the
Company engaged a consulting firm owned by its Chief Financial Officer to assist
the Company in its compliance with Section 404 of the Sarbanes-Oxley Act of
2002, incurring a total expense of $41,173 to this related party.  14. Operating Leases  Applied and its
subsidiaries are committed under non-cancellable operating leases for office
space and other equipment. Future obligations under the leases are as follows,
in thousands:  2008 $ 128 2009 128 2010 128 2011 77 Thereafter - Total $ 461  Rent expense, including
cancelable month to month leases, was approximately $213 thousand and $198
thousand in 2007 and 2006, respectively.  15. Commitments and Contingencies  DCAA Audit  Contracts of the
Company may be subjected to audit by the Defense Contract Audit Agency (DCAA).
Anticipated losses on contracts are provided for by a charge to income during
the period such losses are first identified. During 2007, the Company completed
a DCAA audit of a single contract of the Company for the period January 1995
through December 1999. The DCAA had asserted that the Company incorrectly
overbilled the Government for services rendered under contracts performed during
said period. The Company had previously recorded a liability totaling $376
thousand as a reserve to settle any claims or expense that may be incurred as a
result of the audit process. The amount recorded was estimated based on an
assessment of potential liability using an analysis of available information
with respect to pending claims, historical experience and, where available,
recent and current trends. During the fourth quarter the DCAA completed their
audit and a settlement was reached. The Company recognized additional contract
revenues of $86 and subcontractor cost of revenue of $147 were recognized,
resulting in a decrease in the loss from operations of $315.  Guarantee  Applied, along with
several other entities in a prior year, guaranteed a performance bond of
Commodore Separation Technologies, Inc. relating to a contract with the Port of
Baltimore.  Applied was notified on June 28, 2000, that the performance
bond was being called.  It is not known at this time the amount, if any,
Applieds share will be.  No liability has been reflected in the financial
statements as of December 31, 2007 or 2006 related to this bond, as the Company
feels an adverse determination is not probable, and the amount of loss is not
determinable.     37      Commodore Applied
Technologies, Inc. and Subsidiaries Notes to
Consolidated Financial Statements  16. 401(K) Savings
Plan  Applied has adopted a
401(K) savings plan for all employees who qualify as to age and service.
 Contributions by Applied are discretionary.  Applied made
discretionary contributions of approximately $0 and $14 thousand to the plan
during the years ended December 31, 2007 and 2006, respectively.  17. Segment
Information  Using the guidelines
set forth in SFAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information," Applied has identified two reportable segments as
follows:  1. Advanced Sciences, which primarily provides various engineering,
legal, sampling and public relations services to government agencies on a cost
plus basis.  2. Solution which has equipment to treat mixed and hazardous waste
through a patented process using sodium and anhydrous ammonia.  Common overhead costs
are allocated between segments based on a record of time spent by executives.
 Applied evaluates segment performance based on the segment's net income
(loss).  The accounting policies of the segments are the same as those
described in the summary of significant accounting policies.  Summarized
financial information concerning Applied's reportable segments is shown in the
following tables.  Commodore Applied Technologies, Inc. and
SubsidariesSegment DisclosureFor the years ended December 31, 2007 and
2006(Amounts in Thousands)2007

2006CASI

Solution

Corporate
& Other

Total

CASI

Solution

Corporate
& Other

TotalRevenuesServices
$
    2,589

$
          -

$
            -

$
    2,589

$
    7,254

$
          -

$
          -

$
   7,254Product
607

-

-

607

-

-

-

-Total
Revenue
3,196

-

-

3,196

7,254

-

-

7,254Cost of
revenuesServices
2,608

-

-

2,608

7,153

-

-

7,153Products
574

-

-

574DCAA settlement,
net
(315)

-

-

(315)

-

-

-

-General and
administrative
517

-

982

1,499

394

-

1,062

1,456Total costs and
expenses
3,384

-

982

4,366

7,547

0

1,062

8,609Income (loss)
from operations
(188)

-

(982)

(1,170)

(293)

0

(1,062)

(1,355)Interest
expense
(1)

-

(807)

(808)

(4)



(655)

(659)Other
Income
-

-

-

-

68

-

97

165Net (loss)
income
$
    (189)

$
          -

$
    (1,789)

$
 (1,978)

$
    (229)

$
          -

$
  (1,620)

$
(1,849)Total
assets
$
    628

-

$
       386

$
  1,014

$
  1,024

-

$
       219

$
   1,243Expenditures for
long-lived assets
$
     200

-

-

$
       200

-

-

-

-   38      ITEM 8. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.  There have been no disagreements between
the Company and its accountants regarding any matter or accounting principles or
practice or financial statement disclosures.    ITEM 8A. CONTROLS AND PROCEDURES  Evaluation of Disclosure Controls and
Procedures  At the end of the period covered by this
report, an evaluation was carried out under the supervision of, and with the
participation of, the Companys management, including the Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Companys disclosure controls and procedures (as defined in
Rule 13a  15(e) and Rule 15d  15(e) of the Securities and Exchange Act of
1934, as amended).  Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer have concluded that as of the end of the period
covered by this report, the Companys disclosure controls and procedures were
adequately designed and effective in ensuring that information required to be
disclosed by the Company in its reports that it files or submits to the SEC
under the Exchange Act, is recorded, processed, summarized and reported within
the time period specified in applicable rules and forms.  Our Chief Executive Officer and Chief
Financial Officer have also determined that the disclosure controls and
procedures are effective to ensure that material information required to be
disclosed in our reports filed under the Exchange Act is accumulated and
communicated to our management, including the Companys Chief Executive Officer
and Chief Financial Officer, to allow for accurate required disclosure to be
made on a timely basis.  Managements Report on Internal Control
over Financial Reporting  The Companys management is responsible for
establishing and maintaining adequate internal control over financial
reporting.  The Companys internal control over financial reporting is
a process designed under the supervision of its Chief Executive Officer and
Chief Financial Officer to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of the Companys
financial statements for external reporting in accordance with accounting
principles generally accepted in the United States of
America.  Management evaluates the effectiveness of the Companys
internal control over financial reporting using the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control  Integrated Framework.  Management, under the
supervision and with the participation of the Companys Chief Executive Officer
and Chief Financial Officer, assessed the effectiveness of the Companys
internal control over financial reporting as of December 31, 2007 and concluded
that it is effective.  This annual report does not include an
attestation report of the Companys registered public accounting firm regarding
internal control over financial reporting. Managements report was not subject
to attestation by the Companys registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
Company to provide only managements report in this annual report.  Changes in internal controls over
financial reporting  During the period covered by this report,
there have been no changes in the Companys internal control over financial
reporting that have materially affected, or are reasonably likely to materially
affect, the Companys internal control over financial reporting.  ITEM
8B. OTHER
INFORMATION  None  39     PART III  ITEM
9. DIRECTORS AND
EXECUTIVE OFFICERS OF THE REGISTRANT.  EXECUTIVE OFFICERS AND DIRECTORS  The names and ages of
the executive officers and directors of the Company, and their positions with
the Company as of March 31, 2008 are as follows:  Name
Age
PositionDr. Shelby T. Brewer
71
Director, Chairman of the Board and
Chief Executive OfficerO. Mack Jones
67
Director, President and Chief
Operating OfficerTed R. Sharp
51
Director, Chief Financial Officer,
Treasurer and SecretaryBentley J. Blum
66
DirectorPaul E. Hannesson
67
DirectorVADM Michael P. Kalleres
68
DirectorAmbassador William A. Wilson
93
DirectorJan C. Huly
60
DirectorThomas J. Colatosti
60
Director  Dr. Shelby T. Brewer  Chairman of the
Board and Chief Executive Officer  Dr. Brewer has served as
Chairman of the Board and Chief Executive Officer of the Company since April
2003. Prior to that Dr. Brewer served as President of the Company from January
2001 to April 2003. Since April 2000, Mr. Brewer served as Chairman and CEO of
Solutions, a wholly owned subsidiary of the Company. From 1996 to March 2000,
Dr. Brewer was President of S. Brewer Enterprises, a privately held consulting
firm he founded that is engaged in supporting mergers and acquisitions,
arranging private and public financing, and forming joint ventures abroad. He
served as President and CEO of the nuclear power businesses of ABB Combustion
Engineering, a public company, from 1985 to 1995. From 1981 to 1984, he served
as Assistant Secretary of Energy in the Reagan administration, holding the top
nuclear post in the US government. Dr. Brewer holds Ph.D. and M.S. degrees in
nuclear engineering from Massachusetts Institute of Technology; he holds a B.S.
degree in mechanical engineering and a B.A. in humanities from Columbia
University.  O. Mack Jones  Director, President and
Chief Operating Officer  Mr. Jones has served as
President and C.O.O. of the Company since April 2003. Since February 2001, Mr.
Jones has served as Acting President of Advanced Sciences, a wholly owned
subsidiary of the Company from April 1998 to February 2001. He has also has
served as Vice President of Field Operations of the Company since April 1998,
managing its field treatability studies and commercial projects.  From June
1996 to April 1998, Mr. Jones served as a consultant to the Company assisting in
the commercialization of the solvated electron technology. From 1991 to February
1998, Mr. Jones served as the founder and principal executive officer of a
privately held environmental consulting company, Florida Vector Services, which
provided both consulting and hands-on remediation services primarily in
TSCA-related areas. From 1986 to 1991, Mr. Jones was Vice President-Operations
with Quadrex Environmental Company, a public company, managing the companys
field remediation businesses. Mr. Jones held several managerial and operating
positions in power generation and distribution arenas during his twenty-six
years of service to General Electric Company, a public company. Mr. Jones holds
a degree in mechanical engineering from Mississippi State University and is
registered as a professional mechanical engineer.  Ted R. Sharp  Director, Chief Financial
Officer, Treasurer and Secretary  Mr. Sharp began his
employment with the Company in November 2006 and has served as Chief Financial
Officer and Treasurer of the Company since January 2007. In November 2007 Mr.
Sharp was elected to the Board of Directors. Mr. Sharp is the principal owner of
Sharp Executive Associates, a private executive management consulting firm
located in Nampa, Idaho. Mr. Sharp also served as executive management for Key
Technology, Inc., a public company, including Chief Financial Officer, Managing
Director of European Operations (Netherlands) and Corporate Controller from
January 1989 to March 2003. Mr. Sharp received a BBA degree in Accounting from
Boise State University and currently holds active CPA licenses in both Idaho and
Washington.  Mr. Sharp is a member of the American Institute of Certified
Public Accountants, the Idaho Society of CPAs and Financial Executives
International.   40      Bentley J. Blum  Director  Mr. Blum has served as
director of the Company since March 1996.  Prior to that Mr. Blum served as
Chairman of the Board of Environmental, a public company, from 1984 to November
1996 and is its principal stockholder. Currently he serves as a director of
Separation, a wholly owned subsidiary of Environmental. Currently he also serves
as a director of Solution, a wholly owned subsidiary of the Company. Mr. Blum is
the sole stockholder and director of a number of corporations that hold real
estate interests, oil drilling and other corporate interests that are privately
held companies. Mr. Blum is the brother-in-law of Paul E. Hannesson, a director
of the Company.  Paul E Hannesson  Director  Mr. Hannesson has served
as a director of the Company since March 1996. Mr. Hannesson served as Chairman,
CEO and President of the Company from 1996 to January 2001. He also served as a
Director and Officer of Environmental, a public company, from 1996 to July 1998.
He served as Chairman of the Board and CEO of Separation, a wholly owned
subsidiary of the Company from May 1997 to December 2004. Mr. Hannesson is the
brother-in-law of Bentley Blum, a director of the Company.  Vice Admiral Michael P. Kalleres 
Director  Vice Admiral (VADM)
Kalleres has served as a director of the Company since June 2002. VADM Kalleres
currently serves as President of Dare to Excel Inc., a privately held financial
management and consulting firm (1998 to present). He also served as President
and Chief Executive Officer of Global Associates, Ltd., Technology Services
Group, a privately held financial and corporate consulting firm, from 1994 to
1998.  VADM Kalleres retired from active duty in September 1994 after 32
years as a naval officer. VADM Kalleres was awarded 18 personal/unit
military/combat decorations including the Defense Distinguished Service Medal (2
awards) and the U.S. Navy Distinguished Service Medal. He is also a recipient of
the Congressional, Ellis Island Medal of Honor. VADM Kalleres is a former member
(1994-1998) of the Defense Science Board, the Naval Studies Board of the
National Academy of Science.  He is also a board member of the Dean's
Advisory Council at the Krannert School of Management-Purdue University, and the
National Board of the Salvation Army. VADM Admiral Kalleres was awarded a BS
degree in Industrial Management and Engineering from the Krannert School of
Management-Purdue University, and a MS degree in Political and International
Affairs from George Washington University.  Ambassador William A. Wilson 
Director  Mr. Wilson has been a
director of the Company since June 2002. Mr. Wilson has been active in ranching
and farming in California and Mexico from 1980 to 1997. Mr. Wilson was active in
real estate development in California from 1961 through 1985. Mr. Wilson served
as Chief Engineer of Wilson Oil Tools, a privately held company, from 1938
through 1955 and as Chairman from 1955 to 1961. Mr. Wilson served as the
Presidential Envoy to the Holy See from 1980 to 1984 and as Ambassador to the
Holy See from 1984 to 1986. Mr. Wilson served on the Board of Directors of
Jorgensen Steel Co., a public company, from 1973 to 1984 and again from 1986 to
1991.  Mr. Wilson also served on the Board of Directors of Pennzoil
Company, a public company, from 1983 to 1987.  Mr. Wilson holds a BA in
Mechanical Engineering from Stanford University and a Doctor of Laws, Honoris
Causa from Assumption College, Barry University, and Pepperdine University.  Jan C. Huly  Director  Mr. Huly was elected to
the Board of Director in November 2007. In 2006, Jan C. Huly retired as
Lieutenant General in the U.S. Marine Corps with over thirty years of experience
as a leader and administrator, holding such positions as: Deputy Commandant,
Plans, Policies and Operations, Washington DC from 2003 to 2006; Commanding
General, Marine Corps Recruit Depot, San Diego, CA from 2000 to 2003; Director
of Operations, U.S. Marine Corps, Washington DC from 1998 to 2000, and Deputy
Commander, U.S. Marine Reserves, New Orleans, LA from 1996 to 1998.  Prior
to 1996, Mr. Huly held several positions with the Marine Corps, variously
responsible for operations and planning, security and force protection,
recruiting and training, public relations, budgeting and programming, and human
resources. He received a BS degree from the University of California, Berkeley
and an MA degree from Central Michigan University.  Thomas J. Colatosti  Director  Mr. Colatosti was
elected to the Board of Directors in November 2007. Mr. Colatosti has been the
President and Chief Executive Officer of American Security Ventures (ASV) since
2002. ASV provides strategic management services and capital resources to
emerging and developing companies in the biometric and homeland security
industries. Since August 2005, Mr.  41      Colatosti has been President , Treasurer
and a Director of Good Harbor Partners Acquisition Corp. Mr. Colatosti is
also the Chairman of the Board of Directors and Co-CEO of BIO-Key International,
Inc., an OTC Bulletin Board listed company that develops advanced biometric
finger identification and wireless mobile technologies. Prior to founding
American Security Ventures, from 1997 to May 2002, Mr. Colatosti was
President and Chief Executive Officer of Viisage Technology, Inc., a Nasdaq
listed company that provides biometric face-recognition technology and highly
secure identification documents and systems. Before joining Viisage, from 1995
to 1997, Mr. Colatosti was President and Chief Executive Officer of CIS
Corporation, a provider of software solutions for higher education. From 1973
until 1995, Mr. Colatosti worked at Digital Equipment Corporation (DEC), a
large multinational computer company. As Vice President of the Government
Systems Group, a billion dollar revenue division of DEC, he was responsible for
all products and services to the federal government, aerospace, electronics and
manufacturing industries. Mr. Colatosti also currently serves on the board
of several privately held companies and non-profit organizations. He also served
on the Board of Advisors of Saflink Corporation, a Nasdaq listed provider of
software security solutions. Mr. Colatosti is a decorated Vietnam veteran.
He received a B.S. and an M.B.A. from Suffolk University.  Each director is elected
to serve for a term of one year or until his or her successor is duly elected
and qualified. The Companys officers are elected by, and serve at the pleasure
of, the Board of Directors, subject to the terms of any employment agreements.
Messrs. Hannesson and Blum are brothers-in-law. No family relationship exists
among any other directors or executive officers of the Company.  KEY EMPLOYEES  The names and ages of
the key employees of the Company not listed above, and their positions with the
Company as of March 31, 2008, are as follows:  Name
Age
PositionWalter L.
Foutz
53
Vice
President of Operations, Advanced Sciences  Mr. Foutz was appointed
Vice President of Operations of Advanced Sciences in April 2005.
 Previously, Mr. Foutz served as Advanced Sciences Western Regional
Manager from January of 2002.  Previously, Mr. Foutz has been a Sr. Project
Manager with corporate and management responsibilities for Advanced Sciences
from December 2000 to January 2002.  From 1991 to 2000 Mr. Foutz was the
Environmental Program Manager for MDM Services Corporation, managing
environmental task-order contracts with numerous government clients.  From
1986-1991 Mr. Foutz was the lead Senior Environmental Geologist on RFI/CMS and
RI/FS projects at Dyess Air Force Base, Texas; Fallon Naval Air Station, Nevada;
Kansas City DOE Plant, Arizona Air National Guard Base, Tucson; US Army
Kwajelein Atoll, Marshall Islands.  Mr. Foutz received his
B.S. in Geology in 1981.  He has 24 years of progressive professional
experience in geological, hydro-geological, and environmental consulting and
contrayct management as a Department of Energy contractor.  BOARD COMMITTEES  The Company's Board of
Directors has (i) an Audit Committee and (ii) a Compensation, Stock
Option and Benefits Committee.  On August 30, 2000, the Board of Directors
unanimously voted to abolish the Finance Committee and determined that the
entire Board of Directors would perform its function.  As of December 31, 2007,
the Compensation, Stock Option and Benefits Committee, was composed of Michael
P. Kalleres, Ambassador William A. Wilson, Jan Huly and Dr. Shelby T. Brewer.
The position of Chairman of the Compensation, Stock Option and Benefits
Committee was vacant as of December 31, 2007 as a result of the resignation of
Dr. Frank E. Coffman from the Board in November 2007. The Compensation, Stock
Option, and Benefits Committee has responsibility for establishing and reviewing
employee and consultant/advisor compensation, bonuses and incentive compensation
awards, administering and interpreting the Company's 1998 Stock Option Plan, as
amended (the 1998 Plan), and determining the recipients, amounts and other
terms (subject to the requirements of the 1998 Plan) of options which may be
granted under the 1998 Plan and outside the 1998 Plan, from time to time and
providing guidance to management in connection with establishing additional
benefit plans.  As of December 31, 2007,
the Audit Committee was composed of Michael P. Kalleres as Chairman, Tom
Colatosti and Ambassador William A. Wilson. The responsibilities of the Audit
Committee include selecting, engaging and determining the compensation of the
firm of independent accountants to be retained by the Company, reviewing with
the Company's  42      independent accountants the scope and
results of their audits, reviewing with the independent accountants and
management the Company's accounting and reporting principles, policies and
practices, as well as the Company's accounting, financial and operating controls
and staff, supervising the Company's policies relating to business conduct and
dealing with conflicts of interest relating to officers and directors of the
Company.  AUDIT COMMITTEE AND FINANCIAL EXPERT  Michael P. Kalleres
currently serves as the Chairman of the Audit Committee and the Board of
Directors has determined him to be an audit committee financial expert and an
independent Director of the Company.  COMPENSATION OF DIRECTORS  The Company pays
non-management directors a director's fee in the amount of $375 per meeting for
attendance at the meetings of the Board of Directors, and the Company reimburses
the directors for actual expenses incurred in respect of such attendance. The
Company does not separately compensate employees for serving as directors.  COMPLIANCE WITH SECTION 16(a)OF
THE EXCHANGE ACT  Section 16(a) of the
Exchange Act requires the Company's directors and executive officers, and
persons who own more than 10% of the outstanding shares of the Company's common
stock, to file initial reports of beneficial ownership and reports of changes in
beneficial ownership of shares of common stock with the Commission.  Such
persons are required by regulations promulgated under the Exchange Act to
furnish the Company with copies of all Section 16(a) forms filed with the
Commission.  Based on representations
from the officers and directors, the Company believes that no director,
executive officer or holder of more than 10% of the outstanding shares of common
stock failed to file on a timely basis the reports required by Section 16(a) of
the Exchange Act during, or with respect to, the year ended December 31,
2007.  CODE OF ETHICS The Companys Board of
Directors has established and adopted a code of ethics in 2004 applicable to its
senior executives, financial officers and directors.  See Exhibit 14.01 
Code of Ethics of Commodore Applied Technologies, Inc.  ITEM
10. EXECUTIVE
COMPENSATION.  SUMMARY  The following table sets
forth the amount of all compensation paid by the Company and/or its affiliates
and allocated to the Company's operations for services rendered during each of
2007 and 2006 to all persons serving as the Company's Chief Executive Officer
during 2007 and 2006 and to each of the Company's four most highly compensated
executive officers other than the Chief Executive Officer whose total salary and
bonus compensation exceeded $100 thousand during any such year.   43        Summary Compensation Table  Annual Compensation

Long-Term CompensationSecuritiesRestricted

Under-Other

Stock

Lying

LTIPName and Principal






Annual

Awards

Options

Pay-outs

All OtherPosition
Year

Salary ($)

Bonus ($)

Comp ($)

($)

(#)

($)

Comp ($)(a)
(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)Dr. Shelby T.
Brewer(1)
2007

199,609
(2)
-

-

-

-

-

-Chief
Executive Officer
2006

208,012
(2)
-

-

-

-

-

-O. Mack
Jones(3)
2007

176,905
(4)
-

-

-

-

-

-President
and
2006

185,634
(4)
-

-

-

-

-

-Chief
Operating OfficerJames M.
DeAngelis(5)
2007

86,152
(6)
-

-

-

-

-

-Senior Vice
President
2006

165,497
(6)
-

-

-

-

-

-Walter L.
Foutz(7)
2007

135,221
(8)
-

-

-

-

-

-VP of
Operations
2006

126,518
(8)
-

-

-

-

-

-Ted R. Sharp(9)
2007

120,000
(10)
-

-

-

-

-

41,173
(11)Chief
Financial Officer
2006

16,154
(10)
-

-

-

-

-

-  (1) Mr. Brewer served as Chief Executive Officer and President of
Solutions and a director of the Company since April 2000. Mr. Brewer assumed the
positions of Chairman, Chief Executive Officer and President of the Company from
January 2001 through October 2003 and continues to serve as Chief Executive
Officer and a director since October 2003 to present.  (2) Represents the amount of Mr. Brewers base salary paid by the
Company less amounts deferred. Brewer. Mr. Brewers base salary for 2007 was
$280,000, of which $83,391 was originally deferred until December 31, 2007, and
remains unpaid as of March 31, 2008. Mr. Brewers base salary for 2006 was
$285,000, of which $76,988 was originally deferred until December 31, 2006, and
remains unpaid as of March 31, 2008  (3) Mr. Jones served as President of Advanced Sciences from February
2001 to present, and President and Chief Operating Officer of the Company from
April 2003 to present. Mr. Jones has served as a director of the Company since
October 2003.  (4) Represents the amount of Mr. Jones base salary paid by the
Company less amounts deferred.  Mr. Jones total base salary for 2007 was
$250,000 of which $73,095 was originally deferred until December 31, 2007, and
remains unpaid as of March 31, 2008. Mr. Jones total base salary for 2006 was
$250,000, of which $66,346 was originally deferred until December 31, 2006, and
remains unpaid as of March 31, 2008.  (5) Mr. DeAngelis served as Sr. Vice President, Chief Financial and
Administrative Officer, Treasurer and Secretary from December 1999 to December
2006. Mr. DeAngelis served as Senior Vice President of the Company form December
2006 to August 2007. Mr. DeAngelis served as a director of the Company from June
2002 to August 2007. Mr. DeAngelis resigned from his position as Senior Vice
President and Director effective September 1, 2007.  (6) Represents the amount of Mr. DeAngelis base salary paid by the
Company through September 2007 less any amounts deferred.  Mr. DeAngelis
base salary for 2007 was $120,000 of which $2,596 was originally deferred until
December 31, 2007, and remains unpaid as of March 31, 2008. Mr. DeAngelis total
base salary for 2006 was $225,000 of which $59,712 was originally deferred until
December 31, 2006, and remains unpaid as of March 31, 2008.  (7) Mr. Foutz served as the Western Regional Manager of Advanced
Sciences from January 2002 to March 2005.  Mr. Foutz served as Vice
President of Operations of Advanced Sciences, Inc. since April 2005 to present.   44      (8) Represents the amount of Mr. Foutzs base salary paid by the
Company.  Mr. Foutzs total base salary for 2007 was $130,000. Mr. Foutzs
total base salary for 2006 was $125,000.  (9) Represents the amount paid to Mr. Sharp to provide services as the
Companys Chief Financial Officer. The Company entered into an employment
agreement with Mr. Sharp to serve as the Company as Chief Financial Officer
effective January 1, 2007. Mr. Sharp for 2006 began his employment November 1,
2006 and assumed full responsibility for the position on January 1, 2007.  (10) Represents the pro rated base salary paid to Mr. Sharp by the
Company. Mr. Sharps annual base salary for 2007 and 2006 was $120,000.  (11) Represents amounts paid to a consulting firm owned by Mr. Sharp,
which was engaged to assist the Company in its compliance with Section 404 of
the Sarbanes-Oxley Act of 2002.  STOCK OPTIONS  No options were granted
during the year ended December 31, 2007 to any individuals listed in the Summary
Compensation Table pursuant to the Company's 1998 Stock Option Plan, as amended,
(the "1998 Plan") and no options were granted to any individuals outside of the
1998 Plan. The Company has no outstanding stock appreciation rights and granted
no stock appreciation rights during the years ended December 31, 2007 and
2006.  The following table sets
forth certain information concerning the exercise of options and the value of
unexercised options held under the 1998 Plan and outside of the 1998 Plan at
December 31, 2007 by the individuals listed in the Summary Compensation
Table.  Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year-End Option Values  Number of Securities
Underlying Unexercised
Options at FY-End (#)

Value of Unexercised
In-the-
Money Options
at FY-End ($)(1)Shares
Acquired on Exercise
ValuesName
(#)
Realized

Exercisable
Unexercisable

Exercisable
UnexercisableDr. Shelby T.
Brewer
-
-

2,115,802
-

-
-James M.
DeAngelis
-
-

1,124,175
-

-
-O. Mack
Jones
-
-

600,000
-

-
-Walter L.
Foutz
-
-

14,813
-

-
-  (1) There were no outstanding in-the-money options at year end. The
last reported sale price of the common stock on March 27, 2008 was $0.07 and the
exercise prices of the options range from $0.57 to $1.40.  EMPLOYMENT AGREEMENTS  The Company has no
employment contracts.     ITEM 11. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT  The following table sets
forth certain information regarding the beneficial ownership of shares of the
Companys common stock as of March 31, 2008 by each person who is known by the
Company to beneficially own more than 5% of its issued and outstanding shares of
common stock, its named executive officers, its directors and all of its
executive officers and directors as a group. As used herein, the term beneficial
ownership with respect to a security is defined by Rule 13d-3 under the Exchange
Act as consisting of sole or shared voting power (including the power to vote or
direct the disposition of) with respect to the security through any contract,
arrangement, understanding, relationship or otherwise, including a right to
acquire such power(s) during the next 60 days. Unless otherwise noted,
beneficial ownership consists of sole ownership, voting and investment rights.  45       Title of Class
Name of Shareholder
Address
Amount and Nature of Beneficial Ownership

Percent of Class(1)Directors and Named Executive OfficersCommon Stock
Shelby T. Brewer
2151 Jamieson Street
Carlyle Towers, Suite 308
Alexandria, VA  22314
2,791,079
(2)
26.9%Common Stock
Bentley J. Blum
150 East 58th Street, Suite 3238
New York, NY  10155
1,605,311
(3)
16.6%Common Stock
James M. DeAngelis
359 Thames Street, Unit A/B #3
Newport, RI  02840
1,140,714
(4)
12.1%Common Stock
O.
Mack Jones
507 Knight Street, Suite B
Richland, WA  99352
604,444
(5)
6.8%Common Stock
Paul E. Hannesson
150 East 58th Street, Suite 3238
New York, NY  10155
321,757
(6)
3.7%Common Stock
Michael P. Kalleres
507 Knight Street, Suite B
Richland, WA  99352
22,500
(7)
*Common Stock
William A. Wilson
507 Knight Street, Suite B
Richland, WA  99352
22,500
(7)
*Common Stock
Ted R. Sharp
507 Knight Street, Suite B
Richland, WA  99352
-

*Common Stock
Jan C. Huly
507 Knight Street, Suite B
Richland, WA  99352
-

*Common Stock
Thomas J. Colatosti
507 Knight Street, Suite B
Richland, WA  99352
-

*Common Stock
All current executive officers and directors as a
group
6,508,726

47.54%5% or greater shareholdersNone * Less
than 1%. (1) Calculated
based on 8,288,217 shares of common stock issued and outstanding as of March 31,
2008. (2) Consists of 675,277 shares of common stock and 2,115,802 shares of
common stock acquirable upon exercise of options exercisable before December 15,
2008. (3) Consists of:  (i) 125,000 shares of common stock; (ii) 7,210
shares of common stock acquirable upon exercise of options exercisable before
December 15, 2008; (iii) 1,367,790 shares of common stock acquirable upon
exercise of warrants before November 19, 2008; and (iv) Mr. Blum's indirect
beneficial ownership of common stock based upon his  ownership of
28,479,737 shares and his spouse's ownership of 2,000,000 shares of Commodore
Environmental Services, Inc. (Environmental) common stock, representing
together 37.74% of the outstanding shares of Environmental common stock at March
31, 2008, and 4,500,000 shares of Environmental common stock underlying
currently exercisable stock options, representing together 41.02% of the
outstanding shares of Environmental.  Does not include 785,400 shares of
Environmental common stock owned by Simone Blum, the mother of Mr. Blum. Mr.
Blum disclaims any beneficial interest in the shares of Environmental common
stock owned by his spouse and mother. (4) Consists of 14,535 shares of common stock, 1,124,175 shares of
common stock acquirable upon exercise of options exercisable before December 15,
2008; and Mr. DeAngelis indirect beneficial ownership of common stock based
upon his ownership of 580,000 shares of Environmental. (5) Consists of 604,444 shares of common stock acquirable upon
exercise of option exercisable before December 15, 2008, of which 4,444 of the
options are held by Mr. Jones spouse. (6) Consists of 300,000 shares of common stock acquirable upon
exercise of options exercisable before December 15, 2008 and Mr. Hannesson's
indirect beneficial ownership of common stock based upon his ownership of an
aggregate of (a) 2,650,000 shares of Environmental common stock owned by Suzanne
Hannesson, the spouse of Mr. Hannesson, (b) 2,650,000 shares of Environmental
common stock owned by the Hannesson Family Trust (Suzanne Hannesson and John D.
Hannesson, trustees) for the benefit of Mr. Hannesson's spouse and (c) 500,000
shares of Environmental common stock in exchange for options to purchase 950,000
shares of Environmental common stock, issued to Hannesson Family Trust,
representing together 7.18% of the outstanding shares of Environmental common
stock as of March 31, 2007, and (d) currently exercisable options to purchase
525,705 shares of Environmental common stock, representing together 7.78% of the
outstanding shares of Environmental common stock.  Does not include (i)
2,000 shares of the Companys common stock owned by each of Jon Paul and Krista
Hannesson, the adult children of Mr. Hannesson; and (ii) 1,000,000 shares of
Environmental common stock owned by each of Jon Paul and Krista Hannesson.
 Mr. Hannesson disclaims any beneficial interest in the shares of
Environmental common stock owned by or for the benefit of his spouse and
children. All amounts adjusted for the 1 for 20 reverse split of the Companys
common stock on August 29, 2005. (7) Consists of 22,500 shares of common stock acquirable upon exercise
of option exercisable before December 15, 2008.  Messrs. Blum and
Hannesson are brothers-in-law.   46      Other than as described below, the Company has no knowledge of any
other arrangements, including any pledge by any person of its securities, the
operation of which may at a subsequent date result in a change in control of the
Company. · The Shaar Fund holds a convertible note, together with accrued
interest thereon, and convertible Series J Preferred stock, together with
accrued dividends on the Series I and J Preferred stock.  The payment of
accrued interest and dividends may be made in cash or common stock.  The
conversion of the note and the Series J Preferred stock, and the payment of
interest and dividends in the form of common stock are subject to limitation,
such that no conversion or payment in the form of stock can be exercised or made
that would result in the holder owning 5% or more beneficial ownership of the
Companys common stock.  Should this limitation be removed, as much as an
additional 186 million shares of the Companys common stock could be issued,
which would result in a change in control of the Company.  We are not, to the best of our knowledge, directly or indirectly
owned or controlled by another corporation or foreign government. EQUITY COMPENSATION PLAN
INFORMATION  The following table reflects the number of
shares of our common stock that, as of December 31, 2007, were outstanding and
available for issuance under compensation plans that have previously been
approved by our stockholders as well as compensation plans that have not
previously been approved by our stockholders.  Plan Category
Number of securities to be issued upon exercise of
outstanding options, warrants and rights
(a)
Weighted average exercise price of outstanding options,
warrants and rights
(b)
Number of securities remaining available for future
issuance under equity compensation plans
(c)Equity compensation plans approved by security
holders
1998
Stock Option Plan (1)(2)
453,904
$1.40
265,384Equity compensation plans not approved by security
holders (3)(4)
5,436,858
$0.56
-Total
5,890,762
$0.63
265,384  (1) Consists of options issuable under the 1998 Stock Option Plan, as
amended, as approved by the stockholders on September 12, 2003.  (2) Consists of options issuable outside of the 1998 Stock Option
Plan, as amended as approved by the stockholders on September 12, 2003.  (3) Includes options to purchase a total of 3,854,068 shares issued in
November 2003 outside of the 1998 Stock Option Plan, as amended.  (4) Includes warrants issued in November 2003 to purchase a total of
1,582,790.  The following is a brief
description of the material features of the equity compensation plans not
approved by our stockholders that are reflected in the chart above.  On November 19, 2003,
our Board of Directors approved the issuance of stock options outside of the
Companys 1998 Stock Option Plan, as amended, and warrants for the Companys
common stock to executive officers and directors of the Company.  A total
of 3,854,068 fully vested, non-qualified stock options were issued with an
exercise price of $0.57 and an expiration date of December 14, 2008 (as
described in footnote 3 above).  A warrant for a total of 1,367,790 shares
of the Companys common stock was issued to a director with an exercise price of
$0.57 and an expiration date of November 18, 2008 (as described in footnote 4
above).  The purpose of these options and warrant is to advance the
interests of our stockholders by enhancing our ability to attract, retain and
motivate persons who make important contributions to the Company by providing
them with equity ownership opportunities that better align their interests with
those of our stockholders.   47      ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.  Related Transactions              During 2007, we engaged Sharp Executive Associates, Inc., a
consulting firm owned by our Chief Financial Officer to assist the Company in
its compliance with Rule 404 of the Sarbanes-Oxley Act of 2002, incurring a
total expense of $41,173 to this related party. There were no related party
transactions during the year ended December 31, 2006.  ITEM 13. EXHIBITS  Other than  contracts made in the ordinary course of
business, the following are the material contracts that we have entered into
within the two years preceding the date of this Form 10-KSB: Exhibit
No.
Description3.1
Certificate
of Incorporation of the Company. (1)3.2
By-Laws of
the Company. (1)4.1
Specimen
common stock Certificate. (3)4.11
Common Stock
Purchase Agreements, dated as of September 26, 1997, by and between the
Company and each of certain private investors listed therein.
(9)4.19
Warrant to
purchase shares of common stock of Commodore Applied Technologies, Inc.
issued to The Shaar Fund Ltd. (16)4.20
Certificate
of Designation of Series E Preferred Stock. (16)4.21
Warrant to
purchase shares of common stock of Commodore Applied Technologies, Inc.
issued to Avalon Research Group, Inc. (16)4.22
Warrant to
purchase shares of common stock of Commodore Applied Technologies, Inc.
issued to The Shaar Fund Ltd. (20)4.22
Certificate
of Designation of Series F Preferred Stock. (20)4.23
Warrant to
purchase shares of common stock of Commodore Applied Technologies, Inc.
issued to Avalon Research Group, Inc. (20)4.24
Certificate
of Designation of Series H Preferred Stock. (24)4.25
Certificate
of Designation of Series I Preferred Stock. (26)4.26
Certificate
of Designation of Series J Preferred Stock.(27)10.15
Non-Competition, Non-Disclosure and Intellectual Property
Agreement, dated March 29, 1996, between the Company and Gerry D. Getman.
(1)10.7
1996 Stock
Option Plan of the Company. (1)10.9
Nationwide
Permit for PCB Disposal issued by the EPA to Commodore Remediation
Technologies, Inc. (1)10.17
License
Agreement, dated as of March 29, 1996, by and between the Company and
Environmental, relating to the use of SET in the CFC Business.
(2)10.32
Services
Agreement, dated as of September 1, 1997, by and among the Company,
Environmental, Separation, Advanced Sciences and other affiliated
companies named therein. (14)10.33
Amended and
Restated 1996 Stock Option Plan. (13)10.34
Securities
Purchase Agreement, dated November 4, 1999, between Commodore Applied
Technologies, Inc. and The Shaar Fund Ltd.
(16)  48       10.35
Registration
Rights Agreement, dated November 4, 1999, between Commodore Applied
Technologies, Inc. and the Shaar Fund Ltd. (16)10.37
Securities
Purchase Agreement, dated March 15, 2000, between Commodore Applied
Technologies, Inc. and The Shaar Fund Ltd. (16)10.38
Registration
Rights Agreement, dated March 15, 2000, between Commodore Applied
Technologies, Inc. and the Shaar Fund Ltd. (16)10.43
Specimen Form
of Common Stock Certificate. (1)10.50
Secured
Promissory Note, dated November 13, 2000, issued to Klass Partners Ltd. in
the principal amount of $250,000. (20)10.51
Secured
Promissory Note, dated November 13, 2000, issued to Mathers Associates in
the principal amount of $150,000. (20)10.52
Secured
Promissory Note, dated November 13, 2000, issued to Jon Paul Hannesson in
the principal amount of $75,000. (20)10.53
Secured
Promissory Note, dated November 13, 2000, issued to Stephen A. Weiss in
the principal amount of $25,000. (20)10.55
Securities
Purchase Agreement, dated November 13, 2000, by and among Commodore
Applied Technologies, Inc., Commodore Environmental Services, Inc.,
Mathers Associates, Klass Partners, Ltd., Jon Paul Hannesson and Stephen
A. Weiss. (20)10.56
Security
Agreement, dated November 13, 2000 by and among Mathers Associates, Klass
Partners, Ltd., Jon Paul Hannesson, Stephen A. Weiss and Commodore Applied
Technologies, Inc. (20)10.57
Registration
Rights Agreement, dated November 13, 2000, among Mathers Associates, Klass
Partners, Ltd., Jon Paul Hannesson, Stephen A. Weiss and Commodore Applied
Technologies, Inc. (20)10.58
Dispute
Resolution Management, Inc. Undertaking Letter, dated November 13, 2000.
(20)10.59
Nationwide
Permit Extension for PCB Disposal issued by the EPA to Commodore
Remediation Technologies, Inc. (20)10.71
Memorandum of
Understanding for Amendment of $500,000 CXI Bridge Loan Documents, dated
April 16, 2001, by and among the Company, Commodore Environmental
Services, Inc., Mathers Associates, Jon Paul Hannesson and Stephen A.
Weiss. (20)10.72
Klass
Partners Ltd. Agreement for Amendment of CXI Bridge Loan Documents, dated
April 16, 2001, by the Company and Klass Partners, Ltd. (20)10.73
Warrant to
purchase 300,000 shares of common stock of the Company issued to Mathers
Associates. (20)10.74
Warrant to
purchase 75,000 shares of common stock of the Company issued to Jon Paul
Hannesson. (20)10.75
Warrant to
purchase 75,000 shares of common stock of the Company issued to Krista S.
Hannesson. (20)10.76
Warrant to
purchase 50,000 shares of common stock of the Company issued to Stephen A.
Weiss. (20)10.77
Memorandum of
Understanding for Amendment of $500,000 CXI Bridge Loan Documents, dated
April 16, 2001, by and among the Company, Commodore Environmental
Services, Inc., Mathers Associates, Klass Partners, Jon Paul Hannesson and
Stephen A. Weiss. (23)10.78
Warrant to
purchase 222,222 shares of common stock of the Company issued to Klass
Partners. (23)  49       10.79
Warrant to
purchase 166,667 shares of common stock of the Company issued to Mathers
Associates. (23)10.80
Warrant to
purchase 41,666 shares of common stock of the Company issued to Jon Paul
Hannesson. (23)10.81
Warrant to
purchase 41,666 shares of common stock of the Company issued to Krista S.
Hannesson. (23)10.82
Warrant to
purchase 27,778 shares of common stock of the Company issued to Stephen A.
Weiss. (23)10.84
Registration
Rights Agreement dated May 22, 2001, between Commodore Applied
Technologies, Inc., and Dr. Marion Danna. (23)10.85
Warrant to
purchase 500,000 shares of common stock of the Company issued to Dr.
Marion Danna. (23)10.89
Registration
Rights Agreement dated June 13, 2001, between Commodore Applied
Technologies, Inc., and the Shaar Fund, Ltd. (23)10.91
Warrant to
purchase 166,667 shares of common stock of the Company issued to the Shaar
Fund, Ltd. (23)10.102
Forbearance
Agreement dated April 1, 2002, between Commodore Applied Technologies,
Inc., and Milford Capital & Management. (24)10.103
Memorandum of
Understanding for Amendment of $500,000 CXI Bridge Loan Documents, dated
April 29, 2002, by and among the Company, Commodore Environmental
Services, Inc., Mathers Associates, Klass Partners, Jon Paul Hannesson and
Stephen A. Weiss. (24)10.108
Settlement
Agreement dated August 19, 2002 by and among Commodore Applied
Technologies, Inc., Dispute Resolution Management, Inc., William J.
Russell and Tamie P. Speciale. (24)10.109
Liability
Release Agreement dated August 19, 2002 by Dispute Resolution Management,
Inc., William J. Russell and Tamie P. Speciale to Commodore Applied
Technologies, Inc. (24)10.110
Liability
Release Agreement dated August 19, 2002 by Commodore Applied Technologies,
Inc. to Dispute Resolution Management, Inc., William J. Russell and Tamie
P. Speciale. (24)10.114
Memorandum of
Understanding for Amendment of $500,000 CXI Bridge Loan Documents, dated
November 18, 2002, by and among the Company, Commodore Environmental
Services, Inc., Mathers Associates, Klass Partners, Jon Paul Hannesson and
Stephen A. Weiss. (24)10.127
Warrant to
purchase 27,355,800 shares of common stock issued to Blum Asset Trust.
(25)10.130
Memorandum of
Understanding for Amendment of $500,000 CXI Bridge Loan Documents, dated
February 15, 2004, by and among the Company, Mathers Associates, Klass
Partners, Jon Paul Hannesson and Stephen A. Weiss. (25)10.131
Warrant to
purchase 222,222 shares of common stock of the Company issued to Klass
Partners. (25)10.132
Warrant to
purchase 166,667 shares of common stock of the Company issued to Mathers
Associates. (25)10.133
Warrant to purchase 41,667 shares of
common stock of the Company issued to Jon Paul Hannesson. (25)10.134
Warrant to
purchase 41,667 shares of common stock of the Company issued to Krista S.
Hannesson. (25)10.135
Warrant to
purchase 27,778 shares of common stock of the Company issued to Stephen A.
Weiss. (25)10.136
Warrant to
purchase 500,000 shares of common stock of the Company issued to Klass
Partners. (25)  50       10.137
Warrant to purchase 300,000 shares of
common stock of the Company issued to Mathers Associates. (25)10.138
Warrant to
purchase 75,000 shares of common stock of the Company issued to Jon Paul
Hannesson. (25)10.139
Warrant to
purchase 75,000 shares of common stock of the Company issued to Krista S.
Hannesson. (25)10.140
Warrant to
purchase 50,000 shares of common stock of the Company issued to Stephen A.
Weiss. (25)10.141
Warrant to
purchase 444,444 shares of common stock of the Company issued to Klass
Partners. (25)10.142
Warrant to purchase 333,334 shares of
common stock of the Company issued to Mathers Associates. (25)10.143
Warrant to
purchase 83,332 shares of common stock of the Company issued to Jon Paul
Hannesson. (25)10.144
Warrant to
purchase 83,332 shares of common stock of the Company issued to Krista S.
Hannesson. (25)10.145
Warrant to
purchase 55,556 shares of common stock of the Company issued to Stephen A.
Weiss. (25)10.146
Series E
Convertible Preferred automatic conversion date extension dated March 10,
2004, between the Company and The Shaar Fund, Ltd. (25)10.147
Series F
Convertible Preferred automatic conversion date extension dated April 9,
2004,  between the Company and The Shaar Fund, Ltd. (25)10.148
Dividend
Forgiveness letter dated April 9, 2004, between the Company and The Shaar
Fund, Ltd. (25)10.149
Promissory
Note dated April 12, 2005, between the Company and The Shaar Fund, Ltd.
(26)10.150
Amended and
Restated Security Agreement dated April 12, 2005, between the Company and
The Shaar Fund, Ltd. (26)10.151
Patent
Collateral Assignment dated April 12, 2005, between the Company and The
Shaar Fund, Ltd. (26)10.152
Amended and
Restated Guaranty and Suretyship Agreement dated April 12, 2005, between
the Company and The Shaar Fund, Ltd. (26)10.153
Exchange
Agreement dated April 12, 2005, between the Company and The Shaar Fund,
Ltd. (26)10.154
Warrant to
purchase 4,000,000 shares of common stock of the Company issued to Dr.
Marion Danna. (27)10.155
Securities
Purchase Agreement dated April 27, 2005, between Commodore Applied
Technologies, Inc., and Dr. Marion Danna. (27)10.156
Registration
Rights Agreement dated April 27, 2005, between Commodore Applied
Technologies, Inc., and Dr. Marion Danna. (27)10.157
Amended
Promissory Note effective October 1, 2005, between the Company and The
Shaar Fund, Ltd. (27)10.158
Amended
Exchange Agreement effective October 1, 2005, between the Company and The
Shaar Fund, Ltd. (27)10.159
Purchase
Agreement with American Aquatics, dated xx, 200714.01
Code of
Ethics of Commodore Applied Technologies, Inc.
(26)  51       16.1
Letter
regarding change in certifying accountant. (12)16.2
Letter
regarding change in certifying accountant. (17)*22.1
Subsidiaries
of the Company.*31.1
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.*32.2
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.99.1
Debt
Repayment Agreement, dated September 28, 1998, between the Company and
Environmental. (15)99.2
Registration
Rights Agreement, dated September 28, 1998, between the Company and
Environmental. (15) * Filed herewith.  (1) Incorporated by reference and filed as Exhibit to Registrant's
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on May 2, 1996 (File No. 333-4396).  (2) Incorporated by reference and filed as Exhibit to Registrant's
Amendment No. 1 to Registration Statement on Form S-1 filed with the Securities
and Exchange Commission on June 11, 1996 (File No. 333-4396).  (3) Incorporated by reference and filed as Exhibit to Registrant's
Amendment No. 2 to Registration Amendment No.2 to Registration Statement on Form
S-1 filed with the Securities and Exchange Commission on June 25, 1996 (File No.
333-4396).  (4) Incorporated by reference and filed as Exhibit to Registrant's
Post-Effective Amendment No. 1 to Registration Statement on Form S-1 filed with
the Securities and Exchange Commission on July 1, 1996 (File No. 333-4396).  (5) Incorporated by reference and filed as Exhibit to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
October 15, 1996 (File No. 1-11871).  (6) Incorporated by reference and filed as Exhibit to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
January 27, 1997 (File No. 1-11871).  (7) Incorporated by reference and filed as Exhibit to Amendment No. 3
to Registration Statement on Form S-1 of Separation filed with the Securities
and Exchange Commission on January 23, 1997 (File No. 333-11813).  (8) Incorporated by reference and filed as Exhibit to Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 of Environmental filed
with the Securities and Exchange Commission on April 15, 1997 (File No.
0-10054).  (9) Incorporated by reference and filed as an Exhibit to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
October 3, 1997 (File No. 1-11871).  (10) Incorporated by reference and filed as an Exhibit to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
February 23, 1998 (File No. 1-11871).  (11) Incorporated by reference and filed as an Exhibit to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 filed
with the Securities and Exchange Commission on April 15, 1997 (File No.
1-11871).  (12) Incorporated by reference and filed as an Exhibit to Registrants
Current Report on Form 8-K filed with the Securities and Exchange Commission on
December 24, 1996 (File No. 1-11871).  (13) Incorporated by reference and filed as an Exhibit to the
Registrants Registration Statement on Form S-8 filed with the Securities and
Exchange Commission on December 5, 1997 (File No. 333-41643).  (14) Incorporated by reference and filed as an Exhibit to Registrants
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 filed
with the Securities and Exchange Commission on March 31, 1998 (File No.
1-11871).  (15) Incorporated by reference and filed as an Exhibit to Registrants
Current Report on Form 8-K filed with the Securities and Exchange Commission on
January 5, 1999 (File No. 1-11871).   52      (16) Incorporated by reference and filed as an Exhibit to Registrants
Current Report on Form 8-K filed with the Securities and Exchange Commission on
January 5, 1999 (File No. 1-11871).  (17) Incorporated by reference and filed as Exhibit to Amendment No. 5
to Registrants Registration Statement on Form S-3 filed with the Securities and
Exchange Commission on September 12, 1999 (File No. 333-95445).  (18) Incorporated by reference and filed as an Exhibit to Registrants
Current Report on Form 8-K filed with the Securities and Exchange Commission on
August 23, 1999 (File No. 1-11871).  (19) Incorporated by reference and filed as an Exhibit to Registrants
Current Report on Form 8-K filed with the Securities and Exchange Commission on
September 13, 2000 (File No. 1-11871).  (20) Incorporated by reference and filed as an Exhibit to Registrants
Annual Report on Form 10-K/A for the fiscal year ended December 31, 2000 filed
with the Securities and Exchange Commission on May 04, 2001 (File No.
1-11871).  (21) Incorporated by reference and filed as an Exhibit to Registrants
Current Report on Form 8-K filed with the Securities and Exchange Commission on
September 26, 2001 (File No. 1-11871).  (22) Incorporated by reference and filed as an Exhibit to Registrants
Current Report on Form 8-K filed with the Securities and Exchange Commission on
October 31, 2001 (File No. 1-11871).  (23) Incorporated by reference and filed as an Exhibit to Registrants
Annual Report on Form 10-K for the fiscal year ended December 31, 2001 filed
with the Securities and Exchange Commission on April 15, 2002 (File No.
1-11871).  (24) Incorporated by reference and filed as an Exhibit to Registrants
Annual Report on Form 10-K for the fiscal year ended December 31, 2002 filed
with the Securities and Exchange Commission on April 15, 2003 (File No.
1-11871).  (25) Incorporated by reference and filed as an Exhibit to Registrants
Annual Report on Form 10-K for the fiscal year ended December 31, 2003 filed
with the Securities and Exchange Commission on April 15, 2004 (File No.
1-11871).  (26) Incorporated by reference and filed as an Exhibit to Registrants
Annual Report on Form 10-K for the fiscal year ended December 31, 2004 filed
with the Securities and Exchange Commission on April 15, 2005 (File No.
1-11871).  (27) Incorporated by reference and filed as an Exhibit to Registrants
Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed
with the Securities and Exchange Commission on April 17, 2006 (File No.
1-11871).  ITEM 14. PRINCIPAL ACCOUNTANT
FEES AND SERVICES  The
following is a summary of the fees billed to the Company by its principal
accountants during the years ended December 31, 2007 and December 31, 2006:  2007

2006Audit fees
$     69,604

$
    87,560Audit related fees
5,000

2,195Tax fees
-

12,109All other fees
-

-Total
$74,604

$
    101,864  Fees
for audit services include fees associated with the annual audit, the reviews of
our quarterly reports on Form 10-QSB, assistance with and review of documents
filed with the SEC.  Audit-related fees consist of fees related to the
edgarization and filing of SEC forms.  Tax
fees include tax compliance and tax consultations.  The
board of directors has adopted a policy that requires advance approval of all
audit, audit-related, tax services, and other services performed by our
independent registered public accountants. The policy provides for pre-approval
by the board of directors of specifically defined audit and non-audit services.
Unless the specific service has been previously pre-approved with respect to
that year, the board of directors must approve the permitted service before the
independent registered public accountants are engaged to perform it.  Principal Accountant
Independence  The
Audit Committee has determined that the provision of all non-audit services
performed by the principal accountants were compatible with maintaining their
independence.  53      SIGNATURES  Pursuant to the
requirements to Section 13 or 15(d) 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.  Date:  April 15, 2008 COMMODORE APPLIED TECHNOLOGIES, INC.  By:/s/ Ted R. Sharp Ted R. Sharp Chief Financial Officer  Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.  /s/ Shelby
T. Brewer
Dr. Shelby T. Brewer
Chairman of the Board and
Chief Executive Officer (principal executive officer)
April 15,
2008/s/ Ted R.
Sharp
Ted R.
Sharp
Chief Financial Officer
(principal financial officer)
April 15,
2008/s/
Bentley J. Blum
Bentley J.
Blum
Director
April 15,
2008Paul E.
Hannesson
Director
April 15,
2008/s/ O.
Mack Jones
O. Mack
Jones
Director
April 15,
2008/s/
Michael P. Kalleres
VADM Michael
P. Kalleres
Director
April 15,
2008Ambassador
William A. Wilson
Director
April 15,
2008/s/ Jan
C. Huly

Jan C.
Huly
Director
April 15,
2008/s/ Thomas
J. Colatosti
Thomas J.
Colatosti
Director
April 15,
2008      54