<PAGE>

                                  FORM 10-QSB


                   U. S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

               For the Quarterly period ended September 30, 1999


                ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                              OF THE EXCHANGE ACT


                         Commission File No. 0-25548


                           ORBIT TECHNOLOGIES, INC.


        Delaware                                      841 00 1269
 ------------------------                 ------------------------------------
(State of Jurisdiction of                 (I.R.S. Employer Identification No.)
Incorporation or Organization)



          5950 La Place Court, Suite 140, Carlsbad, California 92008
          ----------------------------------------------------------
                   (Address of Principal Executive Offices)



                                (760) 918-9168
                 ----------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.
Yes ____  No X
            ---

The number of outstanding shares of the registrant's only class of common stock
as of September 30, 1999: 32,526,579.


      Transitional Small Business Disclosure Format: Yes ____ No  X
                                                                 ---
<PAGE>

                        PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.  (See accompanying Financial Report for the
period ended September 30, 1999.)

Item 2.  Management's Discussion and Analysis or Plan of Operation

Forward Looking Statements
--------------------------

This Form 10-QSB contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under "Risk Factors" in Exhibit 99 and elsewhere in
this Form 10-QSB.

Plan of Operation
-----------------

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

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

As a next step in product acceptance, Lockheed Martin Idaho Technologies Company
and Orbit, together with input from the Microscale Physiochemical Laboratory at
the University of Akron and Ecology and Environmental, Inc. (Orbit's Teaming
Partner) have recently completed the Scope of Work that will lead to a follow-on
calcine evaluation contract utilizing Orbit's PET as a potential transportation
medium in addition to a stabilization and encapsulation material. The
elastomeric properties and material characteristics provided by PET are of
particular benefit in eliminating the potential risk that would occur in the
transportation of the waste from one site to another for long term storage or
disposal. It is estimated that this evaluation phase will be completed in late
1999.

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

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

Until completion of the final development and evaluation of the technology and
the commencement of sales, the Company will have no operating revenues but will
continue to incur substantial expenses. No assurances can be given that the
Company can complete development of any technology or that, if any technology is
fully developed, that it can be manufactured on a large-scale basis or at a
feasible cost. Further, no assurance can be given that any technology will
receive market acceptance. Being a start-up stage entity, the Company is subject
to all the risks inherent in the establishment of a new enterprise and the
marketing and manufacturing of a new product, many of which risks are beyond the
control of the Company.

Background

In May 1996, the Company was awarded a sole source contract, within its
category, to participate in the U. S. Department of Energy's Landfill
Stabilization Project. This Project evaluates materials for treating existing
hazardous

                                       2
<PAGE>

waste at the Idaho National Engineering Laboratory's Subsurface Disposal Areas.
Several materials in other categories have also been selected for testing. The
contract provides for initial bench testing with an option that can be exercised
for more extensive field-testing.

The results of preliminary testing and analysis in Idaho was the development of
a "White Paper" which recommended a much more extensive evaluation of Orbit's
CSF be conducted to evaluate its use for Calcine Waste Stabilization at the
Idaho facility. Calcine waste is specific to the Idaho facility and there are
about 13,000,000 pounds of material to be processed. Part of this study actually
produced three non-radioactive samples that produced acceptable results. A
conceptual process design was also performed as well as initial cost estimates
generated. This study has had wide distribution within the Department of Energy
(DOE).

In November 1996, the Company entered into a Teaming Agreement with Ecology &
Environmental, Inc. (International Specialists in the Environment), for the sole
purpose of identifying and pursuing mutually agreeable business opportunities
within the U. S. Departments of Energy and Defense, and other federal and state
government agencies and private sectors where the environmental application of
Orbit's technology is possible. Identification and pursuit of business
opportunities includes technology development (i. e. both system design and
application identification and construction), sales and client development
efforts, the bid/proposal process, and the contract negotiation process
regarding awarded projects.

In May 1997, the Company was awarded a contract by Lockheed Martin Idaho
Technologies Company (LMITCO) to test and evaluate Orbit's material as a
stabilizing media for sodium and nitrate salts, which included chromium, from
the Idaho National Engineering and Environmental Laboratory`s (INEEL)
Radioactive Waste Management Complex (RWMC). Subcontractors under the contract
to Orbit are the University of Akron's Microscale Physiochemical Engineering
Center, Department of Civil Engineering and Pierpoint Environmental Management
Services.

In August 1997, Lockheed Martin expanded the initial contract to include two
additional nitrate-type surrogate waste materials containing cadmium and an
organic solvent. Conclusions from a report published in November 1997 by
Lockheed Martin indicated that Orbit's material appears to be suitable for he
stabilization of DOE complex salt wastes. The final waste form passed the TCLP
protocol and DOT oxidizer tests.

In September 1997, Orbit Technologies, Inc., Ecology and Environmental, Inc.,
and The University of Akron submitted a proposal entitled "Low-activity Waste
Stabilization using Ceramic Silicon Foam (CSF)" to the Department of Energy -
Idaho Operations Office. The proposal received wide dissemination within the
U.S. Department of Energy.

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

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

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

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

                                       3
<PAGE>

In the last six months the Company has included new surfactant additives, or
binding agents, that enable the system to encapsulate and stabilize waste
material which may include soluble chromium compounds, sodium nitrate, potassium
nitrate, plutonium 238 and 239, uranium 238, and other harmful contaminants.
Orbit's encapsulation system is designed to form a cohesive material suitable
for transportation and final disposal, featuring a low leaching index as well as
the ability to perform at increased waste loading factors. The system has been
developed for the treatment of waste material to prevent environmental damage,
because certain wastes that cannot be easily or economically rendered
environmentally harmless still pose significant disposal problems.

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

In May 1999, Orbit was awarded a contract by Lockheed Martin Idaho Technologies
Company to evaluate the encapsulation of actual pilot scale calcine waste
processed at the Idaho Nuclear Technology and Engineering Center (INTEC) with
its Polymer Encapsulation Technology (PET). All specific engineering, technical
tasks, and testing will be accomplished in accordance with ASTM, Department of
Transportation (DOT), and Toxicity Characteristic Leach Procedure (TCLP), and
standards.

In September 1999, Orbit received a contract modification to evaluate it Polymer
Encapsulation Technology (PET) as a transportation medium for the transportation
of the calcine waste.

In September 1999, Orbit initiated marketing efforts in Asia with the hiring of
Kel Tack Chu, a distinguished engineer with extensive chemical and polymer
experience, who will serve as Managing Director of Asian operations.

Other Matters.
--------------

     None.

                          PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

Item 2.  Changes in Securities. No change.

Item 6.  Exhibits and Reports on Form 8-K.

     (a)       List of Documents filed as part of this report:

               (1)  Financial Statements.

               (2)  Exhibits - See (c) below.

     (b)       Reports on Form 8-K.  None.

     (c) Exhibits

     Exhibit
     Number    Exhibit

     (11)      Computation of per share earnings./(1)/

     (15)      Letter on unaudited interim financial information./(1)/

                                       4
<PAGE>

     (18)      Letter on change in accounting principles./(1)/

     (27)      Financial Data Schedule./(1)/

     (99-1)    Press Releases

     (99-2)    Risk Factors./(2)/

(1) See Orbit Technologies Inc. and Subsidiaries Financial Report for the period
    ended September 30, 1999.

(2) Previously filed as part of the Form 10-KSB for 1998 and which is hereby
    incorporated by reference.


                                  SIGNATURES

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


ORBIT TECHNOLOGIES INC.
-----------------------
       Registrant


Date: November 18, 1999           By: /s/ James B. Lahey
      -----------------              ---------------------------------------
                                     James B. Lahey, Chief Executive Officer
                                     Chairman of the Board of Directors


Date: November 18, 1999           By:  /s/ James A. Giansiracusa
      -----------------               -------------------------------------
                                      James A. Giansiracusa, Secretary/Chief
                                      Financial Officer

                                       5
<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                    ----------------------------------------


                                FINANCIAL REPORT
                                ----------------


                               SEPTEMBER 30, 1999
                               ------------------


<PAGE>

                    ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                              INDEX TO FORM 10-QSB
                               SEPTEMBER 30, 1999



PART I  -  FINANCIAL INFORMATION

  ITEM 1  -  FINANCIAL STATEMENTS


    CONSOLIDATED BALANCE SHEETS                                      F-1
       At September 30, 1999 and December 31, 1998


    CONSOLIDATED STATEMENTS OF OPERATIONS                            F-2
       For the Three Months Ended September 30, 1998 and 1999


    CONSOLIDATED STATEMENTS OF OPERATIONS                            F-3
       For the Nine Months Ended September 30, 1998 and 1999


    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY              F-4
       For the Nine Months Ended September 30, 1999


    CONSOLIDATED STATEMENTS OF CASH FLOWS                            F-5
       For the Nine Months Ended September 30, 1998 and 1999


    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     F-6-F-11


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


PART II - OTHER INFORMATION


<PAGE>


                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                         ASSETS
                                         ------
-------------------------------------------------------------------------------------------------
                                                                   At                 At
                                                            December 31, 1998   September 30,1999
                                                            -----------------   -----------------
                                                                                    (Unaudited)
-------------------------------------------------------------------------------------------------
<S>                                                         <C>                 <C>
Current Assets:
  Cash                                                          $     20,367       $     19,854
                                                                ------------       ------------
    Total Current Assets                                              20,367             19,854

Property and Equipment - At cost, net of
 accumulated depreciation and allowance against
 equipment expenditures                                               39,735             24,834

Intangible Assets, Net of accumulated
 amortization                                                         67,809             63,960

Other Assets                                                           4,800              5,300
                                                                ------------       ------------
    Total Assets
                                                                $    132,711       $    113,948
                                                                ============       ============
-------------------------------------------------------------------------------------------------


                               LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                               ----------------------------------------
-------------------------------------------------------------------------------------------------
Current Liabilities:
  Accounts payable and accrued liabilities                      $  1,977,161       $  2,113,581
  Notes payable                                                    1,632,591          1,692,091
                                                                ------------       ------------
    Total Current Liabilities
                                                                   3,609,752          3,805,672
Commitments, Contingencies and Other Matters                    ------------       ------------
  (Notes 1, 2 and 3)

Stockholders' Deficiency:
 Preferred stock - par value $.01 per share;
   shares authorized - 1,000,000; shares issued and
   outstanding - none                                                      -                  -
  Common stock - par value $.01 per share;
   shares authorized - 50,000,000; shares issued and
   outstanding - 32,484,716 and 35,982,010 as of December 31,
   1998 and September 30, 1999, respectively                         324,848            359,820
 Additional paid-in capital                                       11,093,727         11,704,740
 Accumulated deficit                                             (14,895,616)       (15,756,284)
                                                                ------------       ------------

    Total Stockholders' Deficiency                                (3,477,041)        (3,691,724)
                                                                ------------       ------------
    Total Liabilities and Stockholders'
     Deficiency                                                 $    132,711       $    113,948
                                                                ============       ============
-------------------------------------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements.

                                      F-1
<PAGE>

                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)



<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                                             For the Three Months Ended
                                                                                    September 30,
                                                                             ---------------------------
                                                                                 1998            1999
                                                                             -----------     -----------
--------------------------------------------------------------------------------------------------------
<S>                                                                          <C>             <C>
Revenue                                                                      $         -     $         -
                                                                             -----------     -----------
Costs and Expenses
  Research and development                                                         2,212               -
  General and administrative                                                      97,695          69,561
  Amortization of financing costs                                                 21,867               -
  Debt conversion expense                                                              -             750
  Compensatory element of common stock and options                                     -         405,000
  Interest expense                                                                48,882          40,748
                                                                             -----------     -----------

      Total Costs and Expenses                                                   170,656         516,059
                                                                             -----------     -----------

Net Loss                                                                     $  (170,656)    $  (516,059)
                                                                             ===========     ===========
PER SHARE DATA:

Basic and Diluted Loss Per Share                                             $      (.01)    $      (.01)
                                                                             ===========     ===========

Weighted Average Common Shares Used in Basic and Diluted Loss Per Share       30,398,865      34,907,430
                                                                             ===========     ===========
--------------------------------------------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements.

                                      F-2
<PAGE>

                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)



<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                                              For the Nine Months Ended
                                                                                     September 30,
                                                                             ---------------------------
                                                                                1998             1999
                                                                             -----------     -----------
--------------------------------------------------------------------------------------------------------
<S>                                                                          <C>             <C>
Revenue                                                                      $         -     $         -
                                                                             -----------     -----------

Costs and Expenses
  Research and development                                                         5,562               -
  General and administrative                                                     363,533         286,138
  Amortization of financing costs                                                 27,211               -
  Debt conversion expense                                                              -          96,343
  Compensatory element of common stock and options                                     -         405,000
  Interest expense                                                               149,072         120,884
  Other (income) expense, net                                                          -         (47,696)
                                                                             -----------     -----------

      Total Costs and Expenses                                                   545,378         860,669
                                                                             -----------     -----------

Net Loss                                                                     $  (545,378)    $  (860,669)
                                                                             ===========     ===========
PER SHARE DATA:

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

Weighted Average Common Shares Used in Basic and Diluted Loss Per Share       30,398,865      33,518,177
                                                                             ===========     ===========
--------------------------------------------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements.

                                      F-3
<PAGE>

                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                                  (UNAUDITED)
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999



<TABLE>
<CAPTION>
                                                                   Common Stock         Additional       Accumulated
                                                            -------------------------
                                                             Shares          Amount     Paid-in Capital     Deficit     Total
                                                             ------------------------   ---------------  -----------    -----
<S>                                                         <C>           <C>           <C>          <C>            <C>
Balances at December 31, 1998                                 32,484,716      $324,848  $11,093,727  $(14,895,616)  $(3,477,041)

Issuance of stock                                                256,573         2,566       42,434             -        45,000
Issuance of stock for conversion of notes payable and            393,903         3,938       89,705             -        93,643
 accrued interest                                                  2,500            25          475             -           500
Issuance of stock for accrued interest                                 -             -       96,343             -        96,343
Debt conversion expense                                           19,318           193        3,307             -         3,500
Issuance of stock for accrued expenses                           300,000         3,000            -             -         3,000
Exercised stock options                                        2,400,000        24,000      360,000             -       384,000
Stock awarded to directors and officers                          125,000         1,250       18,750             -        20,000
Stock awarded to employee                                              -             -            -      (860,669)     (860,669)
Net loss                                                      ----------      --------  -----------  ------------   -----------

Balances at September 30, 1999                                35,982,010      $359,820  $11,704,741  $(15,756,285)  $(3,691,724)
                                                              ==========      ========  ===========  ============   ===========

</TABLE>

See notes to consolidated financial statements.

                                      F-4

<PAGE>

                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                                              FOR THE NINE MONTHS ENDED
                                                                                    SEPTEMBER 30,
                                                                            ------------------------------
                                                                                1998             1999
                                                                            ------------------------------
-----------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                                      $(545,378)      $(860,669)
  Adjustments to reconcile net loss to net cash used in operating
     activities:
          Depreciation and amortization                                            15,440          18,750
          Amortization of unearned and deferred finance costs                      22,711               -
          Compensatory element of common stock and options                              -         405,000
          Debt conversion expense                                                       -          96,343
          Issuance of stock for services                                              586           3,500

      Cash provided by (used for) the change in assets and liabilities:
           Increase in other assets                                                     -            (500)
           Increase in accounts payable and  accrued liabilities                  264,344         155,563
                                                                                ---------       ---------
            NET CASH USED IN OPERATING ACTIVITIES                                (242,297)       (182,013)
                                                                                ---------       ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from sale of stock                                                     236,100          45,000
  Proceeds from exercise of stock options                                               -           2,000
  Proceeds from loans                                                              15,000         134,500
                                                                                ---------       ---------
          NET CASH PROVIDED BY FINANCING ACTIVITIES                               251,100         181,500
                                                                                ---------       ---------
INCREASE (DECREASE) IN CASH                                                         8,803            (513)

CASH - BEGINNING                                                                    3,631          20,361

CASH - ENDING                                                                   $  12,434       $  19,854
                                                                                =========       =========

SCHEDULE OF NON-CASH INVESTING AND FINANCING
   ACTIVITIES:
       Issuance of 393,903 shares of common stock for conversion
          of $93,643 of notes payable and accrued  interest of $18,643          $       -       $ 93,643
                                                                                =========       ========
       Issuance of 2,500 shares of common stock for payment of
          accrued interest                                                      $       -       $    500
                                                                                =========       ========
       Issuance of 108,412 shares of common stock  for conversion
          of $25,000 notes payable and legal fees                               $  25,586       $      -
                                                                                =========       ========
       Issuance of 2,400,000 shares of common stock to directors and
          officers                                                              $       -       $384,000
                                                                                =========       ========
       Issuance of 125,000 shares of common stock to employee as
          additional compensation for services                                  $       -       $ 20,000
                                                                                =========       ========
       Non-qualified stock options exercised by a company director at $.01
          per share for 100,000 shares of common stock                          $       -       $  1,000
                                                                                =========       ========
       Issuance of 19,318 shares of common stock for payment of accrued
          expenses                                                              $       -       $    750
                                                                                =========       ========
----------------------------------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.

                                      F-5
<PAGE>

                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



NOTE  1 -  BUSINESS AND CONTINUED OPERATIONS

           Orbit Technologies Inc. (the "Company") was incorporated in the State
           of Delaware on April 29, 1985. The Company is a commercial technology
           research and development company holding rights to certain patents
           and their technologies.

           The Company's business plan is to develop certain technologies until
           commercially viable products are possible and to license or sell
           these technologies to third parties which would be responsible for
           the production and marketing of any products resulting therefrom.
           Since its incorporation in 1985, the Company has pursued the
           research, development, acquisition and licensing of certain
           technologies. The Company concentrated its efforts in the areas of
           coatings technologies and new materials technologies. While the
           technologies are undergoing certain feasibility studies and testing,
           none has proved commercially feasible, except for the TiTRODE type
           electrodes. To date, the Company has not financially benefitted from
           the commercialization of the TiTRODE electrode.

           The accompanying financial statements have been prepared in
           conformity with generally accepted accounting principles, which
           contemplate continuation of the Company as a going concern. However,
           for the year ended December 31, 1998 and the nine months ended
           September 30, 1999, the Company incurred net losses of approximately
           $877,000 and $861,000, respectively, and as of September 30, 1999,
           had a stockholders' deficiency and a working capital deficiency of
           approximately $3,857,000 and $3,786,000, respectively. The Company is
           also in default on a significant number of loan agreements which
           total approximately $2,292,877 in principal and interest as of
           September 30, 1999, and is in arrears with substantially all of its
           other payables and accrued liabilities. The Company requires
           additional funds to continue research and development efforts and
           complete the necessary work to commercialize its technologies. Until
           completion of the development of a technology and the commencement of
           sales, the Company will have no operating revenues, but will continue
           to incur substantial expenses and operating losses. No assurances can
           be given that the Company can complete development of any technology
           or that, if any technology is fully developed, it can be manufactured
           on a large scale basis or at a feasible cost. Further, no assurance
           can be given that any technology will receive market acceptance.
           These factors raise substantial doubt about the Company's ability to
           continue as a going concern.

           The Company is exploring additional sources of working capital
           including private borrowings, sales of its securities, joint ventures
           and licensing of technologies. While no assurance can be given,
           management believes the Company can raise adequate capital to keep
           the Company functioning at a minimum level of operation in 1999. From
           January 1, 1999 through September 30, 1999, the Company's proceeds
           from all financing activities amounted to approximately $181,500.

           The Company is exploring ways to reduce its existing liabilities
           including exchanging certain of its liabilities for shares of its
           common stock. For the nine months ended September 30, 1999, the
           Company exchanged $75,000 of principal on various promissory notes
           outstanding at December 31, 1998 for shares of common stock (see Note
           2).

                                      F-6
<PAGE>

                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



NOTE  1 -  BUSINESS AND CONTINUED OPERATIONS (Continued)

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

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

           The accompanying unaudited financial statements have been prepared in
           accordance with generally accepted accounting principles for interim
           financial information and with instructions to Form 10-QSB.
           Accordingly, they do not include all of the information and footnotes
           required by generally accepted accounting principles for complete
           financial statements. In the opinion of management, the interim
           financial statements include all adjustments necessary in order to
           make the financial statements not misleading. The results of
           operations for the three-month and six-month periods then ended are
           not necessarily indicative of the results to be expected for the full
           year. For further information, refer to the Company's audited
           financial statements and footnotes thereto at December 31, 1998,
           included in the Company's Form 10-KSB, filed with the Securities and
           Exchange Commission.

NOTE  2 -  CAPITALIZATION

           Conversion of Debt to Equity
           ----------------------------

           During the first quarter of 1999, the Company converted $25,000 of
           principal and $362 of accrued interest, relating to a note payable
           outstanding at December 31, 1998, into 120,771 shares of the
           Company's common stock.

           As part of a settlement agreement with a noteholder, during the first
           quarter of 1999, the Company agreed to convert principal of $50,000
           and accrued interest of $18,281, relating to a note payable
           outstanding at December 31, 1998, into 273,132 shares of the
           Company's common stock. Under the original loan agreement, the debt
           was convertible, at the option of the noteholder, at $0.60 per share.
           The difference between the original conversion rate of $0.60 and the
           actual conversion rate of $0.25 was reflected in the accompanying
           financial statement as a debt conversion expense of $95,593.

                                      F-7
<PAGE>

                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



NOTE  2 -  CAPITALIZATION (Continued)

           During the third quarter of 1999, the Company converted $3,500 of
           outstanding debt to an individual for 19,318 shares of the Company's
           common stock. The common stock was valued at $0.22 per share, for a
           total value of $4,250. The difference between the market value of the
           common stock and the converted debt was reflected in the accompanying
           financial statements as a debt conversion expense of $750.

           Notes Payable
           -------------

           During the first quarter of 1999, the Company received the proceeds
           of a $50,000 from loans from two unrelated individuals. The loans are
           due in one year, bear interest at 8% per annum, and are convertible
           into common stock at a 20% discount to the average 5-day market price
           at the conversion date.

           During the second quarter of 1999, the Company received the proceeds
           of a $25,000 loan from an individual. The loan is due in one year,
           bears interest at 8% per annum, and is convertible into common stock
           at a 20% discount to the average five-day market price at the
           conversion date.

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

           During the second quarter of 1999, the Company received the proceeds
           of a $15,000 loan from one of the Company's principal officers. The
           proceeds were used to pay Jeffer, Mangels, Butler & Marmaro, LLP
           under a court judgement for past due services. The loan is due in one
           year and bears interest at 10% per annum.

           During the third quarter of 1999, the Company received the proceeds
           of a $12,000 loan from one of the Company's principal officers. The
           proceeds were used for the Company's normal operating activities. The
           loan is due in one year and bears interest at 10% per annum.

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

           During the second quarter of 1999, the Company sold 256,573 shares of
           common stock for $45,000 in cash and paid related interest expense of
           $500 by the issuance of 2,500 common shares.

                                      F-8
<PAGE>

                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



NOTE  2 -  CAPITALIZATION (Continued)

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

           During the third quarter of 1999, the Company awarded its directors
           and officers 2,400,000 shares of the Company's common stock. The
           shares were issued based on years of service provided to the Company.
           The common stock was valued at $0.16 per share, for a total value of
           $384,000, which was reflected in the accompanying financial
           statements as a compensatory element of common stock and options. In
           addition, four directors and one officer were each granted stock
           options for 100,000 shares, of which 300,000 options are exercisable
           over two years, at a price of $0.50 per share, and 100,000 options
           are exercisable over three years, at a price of $1.00 per share,
           respectively. Had compensation cost for the Company's stock option
           plans been determined based upon the fair value at the grant date for
           awards under the plans consistent with the methodology prescribed
           under SFAS No. 123, the Company's net loss for the nine months ended
           September 30, 1999 would have been approximately $882,000, or $.03
           per share, on a diluted basis. The fair value of the options granted
           during 1999 are estimated at $21,000 on the date of grant using the
           Black-Scholes option-pricing model with the following assumptions: no
           dividend yield, volatility of 65%, a risk-free interest rate of 5%
           and an expected life of two years from date of vesting.

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

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

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

           Earnings Per Share
           ------------------

           Securities that could potentially dilute basic earnings per share
           ("EPS") in the future that were not included in the computation of
           diluted EPS because to do so would have been anti-dilutive for the
           periods presented consist of the following:

             -------------------------------------------------------------
             Options to purchase common stock                    4,800,000
             Warrants to purchase common stock                     800,000
             Accrued salaries                                   10,000,000
             Convertible debt, net of shares to be cancelled     1,546,000
                                                                ----------

                                                                17,146,000
                                                                ==========
             -------------------------------------------------------------

                                      F-9
<PAGE>

                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



NOTE  3 -  COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

           Litigation/Disputes
           -------------------

           a)  Jeffer, Mangels, Butler & Marmaro, LLP v. Orbit Technologies,
               -------------------------------------------------------------
               Inc.
               ----
               Action by former attorneys of Orbit to compel arbitration to
               recover attorney fees. Orbit stipulated to arbitration of fee
               dispute and stipulated to entry of interim arbitration award in
               the amount of approximately $160,000, subject to any defenses,
               offsets or claims, which Orbit is asserting by way of a separate
               legal malpractice action.

               The Company's legal malpractice action was directed to
               arbitration by a retainer agreement signed by Mr. Joseph, in his
               capacity when he was with the Company. Prior to Orbit becoming a
               client, Mr. Joseph was a personal client of Jeffer, Mangels,
               Butler & Marmaro. The retainer agreement signed by Joseph has
               barred Orbit from filing a legal malpractice action.

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

           b)  Benveniste, et. al. vs. Orbit and Its Officers. The action was
               ----------------------------------------------
               filed on March 6, 1997 in the Los Angeles Superior Court. The
               action is to collect principal, interest and other fees and
               damages relating to various promissory notes executed between the
               plaintiffs and Orbit during 1992 totalling $197,000 and
               additional loans made during 1995 totalling $600,000.

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

                                      F-10
<PAGE>

                   ORBIT TECHNOLOGIES INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



NOTE  3 -  COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

           Litigation/Disputes (Continued)
           -------------------

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

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

                                      F-11