UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

 (Mark One)

  X               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 2002
                                            OR
 ----             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934

                         Commission File Number 1-11871

                      COMMODORE APPLIED TECHNOLOGIES, INC.
                      ------------------------------------
             (Exact name of Registrant as specified in its charter)


         Delaware                                              11-3312952
         --------                                              ----------
   (State or other jurisdiction of                           (I.R.S. Employer
  incorporation or organization)                            Identification No.)


  2121 Jamieson Avenue, Suite 1406
      Alexandria, Virginia                                         22314
  --------------------------------                                 -----
(Address of principal executive office)                           (Zip Code)


Registrant's telephone number, including area code:   (703) 567-1284
                                                      --------------

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X     No ___ .

         The number of shares of common  stock  outstanding  at May 20, 2002 was
57,645,290.

                                       i
<PAGE>

                      COMMODORE APPLIED TECHNOLOGIES, INC.

                                    FORM 10-Q

                                      INDEX


                                                                       Page No.

PART I   FINANCIAL INFORMATION............................................1

Item 1.       Financial Statements (unaudited)

              Condensed Consolidated Balance Sheet -
                      March 31, 2002 and December 31, 2001................1

              Condensed Consolidated Statement of Operations -
                      Three months ended March 31, 2002 and
                      March 31, 2001......................................3

              Condensed Consolidated Statement of Cash Flows -
                      Three months ended March 31, 2002 and
                      March 31, 2001......................................4

              Notes to Condensed Consolidated Financial Statements........5

Item 2.       Management's Discussion and Analysis of Financial
                      Condition and Results of Operations.................9

PART II  OTHER INFORMATION...............................................14

SIGNATURES...............................................................15

<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1:  Financial Statements
         --------------------

              COMMODORE APPLIED TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEET
                  (Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>


                                                                                 March 31,         December 31,
                               ASSETS                                              2002                2001
                                                                                ----------        -------------
                                                                                (unaudited)
Current Assets:
<S>                                                                             <C>                  <C>
         Cash and cash equivalents                                              $      730           $    1,271
         Accounts receivable, net                                                    1,051                  817
         Prepaid assets and other current receivables                                  350                  373
                                                                                ----------           ----------
                  Total Current Assets                                               2,131                2,461

Property and Equipment, net                                                            654                  724
Intangible Assets
         Patents and completed technology, net of
              accumulated amortization of $1,385 and
              $1,375, respectively.                                                     90                  100
         Covenants not to compete, net of
              accumulated amortization of $831
              and $700.                                                              1,794                1,925
         Goodwill, net of accumulated amortization
              of  $1,686.                                                           23,409               23,409
                                                                                ----------           ----------
                      Total Intangible Assets                                       25,293               25,434


         Other Assets                                                                   36                   36
                                                                                ----------           ----------

                    Total Assets                                                $   28,114           $   28,655
                                                                                ==========           ==========
</TABLE>



            See notes to condensed consolidated financial statements.


                                       1
<PAGE>


              COMMODORE APPLIED TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEET
                  (Dollars in Thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                 March 31,        December 31,
                          LIABILITIES AND                                          2002               2001
                        STOCKHOLDERS' EQUITY                                    ----------        -------------
                                                                                (unaudited)

Current Liabilities:
<S>                                                                             <C>                  <C>
         Accounts payable                                                       $    1,477           $    1,422
         Related party payable                                                         141                  160
         Current portion of long term debt                                           2,650                2,650
         Line of credit                                                                360                  108
         Notes payable                                                              15,672               15,655
         Other accrued liabilities                                                   1,957                2,037
                                                                                ----------           ----------
                  Total Current Liabilities                                         22,257               22,032

Long Term Debt                                                                       4,619                4,430
                                                                                ----------           ----------
                   Total Liabilities                                                26,876               26,462

Minority Interest                                                                      572                  622
Commitments and Contingencies                                                           --                   --


Stockholders' Equity
         Convertible Preferred Stock, Series E & F
           par value $0.001 per share,
           5% to 12% cumulative dividends, 601,700
           shares authorized,
           390,200 and 410,200 shares authorized,
           issued and outstanding as of March 31,
           2002 and December 31, 2001, respectively.
           The shares had an aggregate liquidation
           value of $5,140 and $5,403 at
           March 31, 2002 and December 31, 2001,
           respectively.                                                                --                   --
         Common Stock, par value $0.001 per share,
           125,000,000 shares authorized, 57,645,290
           and 55,417,354 issued and outstanding,
           at March 31, 2002 and December 31, 2001,
           respectively.                                                                58                   55
         Additional Paid-in Capital                                                 66,825               66,759
         Accumulated Deficit                                                       (66,217)             (65,243)
                                                                                ----------           ----------
                  Total Stockholders' Equity                                           666                1,571
                                                                                ----------           ----------

         Total Liabilities and Stockholders' Equity                             $   28,114           $   28,655
                                                                                ==========           ==========
</TABLE>

            See notes to condensed consolidated financial statements.

                                       2
<PAGE>


              COMMODORE APPLIED TECHNOLOGIES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
            (Unaudited - Dollars in thousands, except per share data)
<TABLE>
<CAPTION>



                                                                                      Three months ended
                                                                                March 31,             March 31,
                                                                                   2002                 2001
                                                                                ----------           ----------

<S>                                                                             <C>                  <C>
Contract revenues                                                               $    1,647           $    4,021
Costs and expenses:
         Cost of sales                                                                 814                  912
         Research and development                                                       77                  120
         General and administrative                                                  1,338                1,977
         Depreciation and amortization                                                 214                  628
         Minority interest                                                             (50)                 252
                                                                                ----------           ----------
                  Total costs and expenses                                           2,393                3,889
                                                                                ----------           ----------
Income (loss) from operations                                                         (746)                 132
                                                                                ----------           ----------
Other income (expense):
         Interest income                                                                 3                   13
         Interest expense                                                             (231)                (794)
                                                                                ----------           ----------
                  Net other income (expense)                                          (228)                (781)
                                                                                ----------           ----------
Loss before income taxes                                                              (974)                (649)
         Income taxes                                                                   --                   --
                                                                                ----------           ----------
         Net loss                                                               $     (974)          $     (649)
                                                                                ==========           ==========
         Loss per share                                                         $     (.02)          $     (.01)
                                                                                ==========           ==========
Number of weighted average shares outstanding (in thousands)                        57,356               49,847
                                                                                ==========           ==========

</TABLE>


            See notes to condensed consolidated financial statements.

                                       3
<PAGE>


              COMMODORE APPLIED TECHNOLOGIES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
            (Unaudited - Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                          Three months ended
                                                                                 March 31,            March 31,
                                                                                    2002                2001
                                                                                ----------           ----------

Cash flows from operating activities:
<S>                                                                             <C>                  <C>
     Net loss                                                                   $     (974)          $     (649)
     Adjustments to reconcile net loss to net cash used in
     operating activities:
         Depreciation and amortization                                                 214                  628
         Amortization of debt discount                                                 216                  532
         Minority interest                                                             (50)                 252
         Changes in assets and liabilities:
                Accounts receivable                                                   (234)                (106)
                Prepaid assets                                                          23                  176
                Other assets                                                             -                   76
                Accounts payable                                                        55                 (466)
                Other liabilities                                                      (11)                (416)
                                                                                ----------           ----------
                  Net cash provided/ (used) in operating activities                   (761)                  27

Cash flows from investing activities:
      Purchase of equipment                                                             (3)                 (38)
      Advances to related parties                                                      (19)                   -
                                                                                ----------           ----------
                  Net cash used in investing activities                                (22)                 (38)

Cash flows from financing activities:
      Increase in (repayment of) line of credit                                        252                 (987)
      Increase (decrease) in notes and loans payable                                   (10)                   -
                                                                                ----------           ----------
                  Net cash provided/(used) in financing activities                     242                 (987)

Increase (decrease) in cash                                                           (541)                (998)

Cash, beginning of period                                                            1,271                1,980
                                                                                ----------           ----------
Cash, end of period                                                             $      730           $      982
                                                                                ==========           ==========
</TABLE>


            See notes to condensed consolidated financial statements.

                                       4
<PAGE>

              COMMODORE APPLIED TECHNOLOGIES, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                 March 31, 2002

Note A - Basis of Presentation

         The accompanying  unaudited condensed consolidated financial statements
for Commodore  Applied  Technologies,  Inc. and  subsidiaries  (the "Company" or
"Applied")  have  been  prepared  in  accordance  with U.S.  generally  accepted
accounting   principles  for  interim   financial   information   and  with  the
instructions  to Form 10-Q and  Article  10 of  Regulation  S-X.  The  financial
statement  information was derived from unaudited  financial  statements  unless
indicated otherwise. Accordingly, they do not include all of the information and
footnotes required by U.S. generally accepted accounting principles for complete
financial statements.

         In the opinion of  management,  all  adjustments  (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included.  Operating results for the three-month period ended March 31, 2002 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending December 31, 2002.

         The accompanying  unaudited condensed consolidated financial statements
should be read in conjunction with the Company's  audited  financial  statements
included in the Company's annual report on Form 10-K for the year ended December
31, 2001.

         Certain  prior-year  amounts have been  reclassified  to conform to the
current year presentation.

         The  accompanying  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.  For the period ended March 31, 2002, and for the
years ended  December 31,  2001,  2000,  and 1999,  Applied  incurred  losses of
$974,000, $6,554,000, $11,441,000, and $3,985,000,  respectively. For the period
ended March 31, 2002, and for the years ended December 31, 2001, 2000, and 1999,
Applied  has  also  experienced  net  cash  inflows  (outflows)  from  operating
activities  of  ($761,000),  $1,907,000,  ($2,002,000),  and  ($2,905,000).  The
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.  The Company has a
working  capital  deficit  $20,126,000.  Potential  sources of cash  include new
contracts,  external  debt  and the  sale of new  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.

         Anticipated  losses on contracts are provided for by a charge to income
during the period such losses are identified.  Changes in job  performance,  job
conditions,  estimated  profitability  (including  those  arising from  contract
penalty  provisions)  and final contract  settlements may result in revisions to
cost and income and are  recognized  in the  period in which the  revisions  are
determined. Allowances for anticipated losses totaled $200,000 at March 31, 2002
and December 31, 2001.  In  addition,  on May 16, 2002,  the Company  received a
notice of default  on the debt  related to the  purchase  of Dispute  Resolution
Management, Inc. (See Subsequent Events section)

         The  consolidated  financial  statements  include  the  accounts of the
Company  and  its  majority-owned  subsidiaries.  All  significant  intercompany

                                       5
<PAGE>

balances and transactions have been eliminated.  The preparation of consolidated
financial  statements  in conformity  with U.S.  generally  accepted  accounting
principles 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.

Note B - Segment Information

         The  Company  has  identified  three  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
three segments are as follows:  (i) Commodore  Advanced  Sciences,  Inc.,  which
primarily provides various engineering,  legal,  sampling,  and public relations
services  to U.S.  government  agencies  on a cost plus  basis;  (ii)  Commodore
Solutions,  Inc.,  which is  commercializing  technologies  to treat  mixed  and
hazardous  waste;  and (iii)  Dispute  Resolution  Management,  Inc.,  which was
acquired  (81%) on August  30,  2000,  provides a package  of  services  to help
companies recover financial  settlements from insurance policies to defray costs
associated with environmental liabilities.

         Applied evaluates segment performance based on the segment's net income
(loss).  Applied's  foreign and export sales and assets  located  outside of the
United States are not significant.  Summarized financial information  concerning
Applied's reportable segments is shown in the following table.

Three Months Ended March 31, 2002
<TABLE>
<CAPTION>

                                                                                                                  Corporate
                                                                                                                   Overhead
                                                 Total              CASI         Solution            DRM           and Other

<S>                                             <C>               <C>           <C>               <C>          <C>
Contract Revenues                               $ 1,647           $ 1,087       $       --        $    560     $         --

Costs and expenses
     Cost of Sales                                  814               814               --              --               --
     Research and Development                        77               --                77              --               --
     General and Administrative                   1,338               210               40             816              272
     Depreciation and Amortization                  214                11               50              10              143
     Minority Interest                              (50)               --               --              --              (50)
                                                -------           -------       ----------        --------     ------------
              Total costs and expenses            2,393             1,035              167             826              365
                                                -------           -------       ----------        --------     ------------
 Income (Loss) from Operations                     (746)               52             (167)           (266)            (365)

     Interest Income                                  3                --               --               3               --
     Interest Expense                              (231)               --               --              --             (231)
                                                -------           -------       ----------        --------     ------------
Net Income (Loss)                               $  (974)          $    52       $     (167)       $   (263)    $       (596)
                                                =======           =======       ==========        ========     ============

Total Assets                                    $28,114           $ 1,986       $      500        $  3,748     $     21,880

Expenditures for long-lived assets              $     3           $    --       $       --        $      3     $         --
</TABLE>

                                       6
<PAGE>


Three Months Ended March 31, 2001
<TABLE>
<CAPTION>
                                                                                                                 Corporate
                                                                                                                 Overhead
                                                 Total              CASI         Solution            DRM         and Other

<S>                                             <C>               <C>           <C>               <C>          <C>
Contract Revenues                               $ 4,021           $ 1,223       $      102        $  2,696     $         --

Costs and expenses
     Cost of Sales                                  912               809              103              --               --
     Research and Development                       120                --              120              --               --
     General and Administrative                   1,977               280              169           1,368              160
     Depreciation and Amortization                  628                20              482               9              117
     Minority Interest                              252                --               --              --              252
                                                -------           -------       ----------        --------     ------------
              Total costs and expenses            3,889             1,109              874           1,377              529
                                                -------           -------       ----------        --------     ------------

 Income (Loss) from Operations                      132               114             (772)          1,319             (529)

     Interest Income                                 13                --                2              10                1
     Interest Expense                              (794)              (26)              --             (10)            (758)
                                                -------           -------       ----------        --------     ------------
Net Income (Loss)                               $  (649)          $    88       $     (770)       $  1,319     $     (1,286)
                                                =======           =======       ==========        ========     ============

Total Assets                                    $35,739           $ 2,361       $    1,721        $  4,127     $     27,530

Expenditures for long-lived assets              $    38           $    --       $       --        $     38     $         --
</TABLE>

                                       7
<PAGE>



Note C - Contingencies

         Applied has matters of  litigation  arising in the  ordinary  course of
business  which in the opinion of  management  will not have a material  adverse
effect on its financial condition or results of operations.

Note D - Subsequent Events

         On May 16, 2002, a Notice of Default and Right to Pursue  Remedies (the
"Notice")  was issued to the Company by William J. Russell and Tamie B. Speciale
(the  "Pledgees")  claiming  that the  Company  is in  default  under  the Stock
Purchase Agreement (the "Agreement"), between the Company and Dispute Resolution
Management,  Inc.  ("DRM") and the related  Stock Pledge  Agreement  (the "Stock
Pledge").

         Pursuant to the Agreement,  the Company  agreed to repurchase  from the
Pledgees, originally by September 29, 2001, and subsequently extended to January
16,  2002  and May 16,  2002,  that  number  of the 9.5  million  shares  of the
Company's common stock issued in connection with the acquisition as necessary to
provide the Pledgees with cash of $14.5 million. As partial security for payment
of this repurchase obligation, the Company pledged to the Pledgees all shares of
DRM stock owned by the Company.

         The Notice  asserts  that the  Company is in default for its failure to
pay a repurchase of stock  obligation,  failure to perform certain covenants and
its insolvency.  The Pledgees, as CEO and President of DRM, have transferred the
DRM Stock  owned by the Company to and into the name of the  Pledgees  and is in
the process of tendering  4,750,000 shares of the Company's pledged common stock
back to the Company.  If such actions are not  invalidated,  as of May 16, 2002,
the Company no longer owns an 81% interest in DRM.

         In addition,  the Notice made a demand for the immediate payment of (1)
$1,073,570, for advances to the Company for operating expenses during 2000-2001,
(2) $1,417,833,  for advances to the Company for installment payments due to the
Pledgees under the Agreement, and (3) $1,500,000,  for the Company's obligations
under the  Agreement.  The  Pledgees  intend to make  demands for the  immediate
payment of (4) all deficiency amounts,  plus interest and expenses,  due for the
Company's repurchase  obligation under the Agreement,  and (5) $8,582,167,  plus
interest and expenses, for the accelerated make whole payment due by the Company
upon a sale of control.  The  Pledgees  also  reserved the right to vote the DRM
Stock in all DRM  matters and to apply any funds or other  property  received on
the Company's pledged common stock to the Company's obligations.

         The  Company  believes  that it is not in default  and has  meritorious
defenses  under the  Agreement  and Stock  Pledge to the claims  asserted by the
Pledgees.  The Company plans and desires to reach an amicable resolution of this
matter.  However,  the  Company's  inability  to resolve this matter and pay its
repurchase  obligation  would have a significant  material adverse effect on the
financial condition of the Company,  and the Company may not be able to continue
to operate as a going concern.

         Unless the Company  reaches a  satisfactory  resolution of this matter,
the Company's loss of the DRM subsidiary will have a material  adverse effect on
the financial  condition of the Company and its cash flow problems.  The Company
currently  requires  additional cash to sustain existing  operations and to meet
current  obligations  and  ongoing  capital  requirements.  Excluding  DRM,  the
Company's   current   monthly   operating   expenses  exceed  cash  revenues  by
approximately $200,000.

                                        8
<PAGE>


ITEM 2.  Management's Discussion and Analysis of Financial Condition
         -----------------------------------------------------------

         and Results of Operations
         -------------------------

Overview

         Commodore Applied Technologies, Inc. and subsidiaries (the "Company" or
"Applied"),  is engaged in  providing  a range of  engineering,  technical,  and
financial  services to the public and private sectors related to (i) remediating
contamination in soils,  liquids and other materials and disposing of or reusing
certain waste  by-products  by utilizing  SET,  (ii) the  settlement of complex,
long-tail and latent  insurance  claims by utilizing a series of tools including
an  internally  developed  risk modeling  program,  FOCUS,  and (iii)  providing
services  related  to,   environmental   management  for  on-site  and  off-site
identification, investigation remediation and management of hazardous, mixed and
radioactive waste.

         The  Company is  currently  working on the  commercialization  of these
technologies  through  development  efforts,  licensing  arrangements  and joint
ventures.  Through Commodore Advanced  Sciences,  Inc. ("ASI") formerly Advanced
Sciences,  Inc.,  a  subsidiary  acquired  on October 1, 1996,  the  Company has
contracts with various government  agencies and private companies in the U.S. As
some  government  contracts  are  funded  in  one-year  increments,  there  is a
possibility for cutbacks as these contracts  constitute a major portion of ASI's
revenues, and such a reduction would materially affect the operations.  However,
management believes its existing client  relationships will allow the Company to
obtain new contracts in the future. Through Dispute Resolution Management,  inc.
("DRM"),  an 81% owned  subsidiary  acquired  August 30,  2000,  the Company has
several engagements with various industrial,  manufacturing and mining companies
in the U.S. and in Europe for the recovery of insurance claims.


RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

         Revenues  were  $1,647,000  for the three  months ended March 31, 2002,
compared to $4,021,000 for the three months ended March 31, 2001.  Such revenues
were primarily from the Company's two subsidiaries, ASI and DRM.

         In the case of DRM,  revenues were $560,000 for the three-month  period
ended March 31, 2002 compared to  $2,696,000  for the  three-month  period ended
March 31, 2001. The Company purchased its 81% interest in DRM on August 30, 2000
and was  able to  consolidate  DRM's  revenues  and  earnings  as of that  date.
Revenues in DRM were  primarily  from completed  settlement  agreements  between
their clients and major insurers.  DRM has several client engagements,  of which
three  represented  more than 10% of DRM's annual revenue.  The combined revenue
for these three  customers was $343,000 or 61.25% of the DRM's total revenue for
the period ending March 31, 2002.  Settlements are the result of 18 to 24 months
of effort by various employees of DRM, of which the expenses are captured in the
general and administrative costs section.  Anticipated losses on engagements, if
any,  will be provided  for by a charge to income  during the period such losses
are first  identified.  The decrease in sales is due to the  reduction in number
and dollar  amount of client  retainers  and the  absence of  material  lump-sum
settlements.

         In the case of ASI, revenues were $1,087,000 for the three-month period
ended March 31, 2002 as compared  with  $1,223,000  for the  three-month  period
ended March 31,  2001.  The  revenues  from ASI  consisted  of  engineering  and
scientific  services  performed for the United States government under a variety
of contracts,  most of which provide for  reimbursement of cost plus fixed fees.
Revenue under  cost-reimbursement  contracts is recorded under the percentage of
completion  method as costs  are  incurred  and  include  estimated  fees in the
proportion that costs to date bear to total estimated  costs.  ASI has two major
customers,  each of which represent more than 10% of total revenue. The combined

                                        9
<PAGE>

revenue for these two customers was $1,087,000 or 100% of total revenues for the
period ending March 31, 2002.  Cost of sales were $814,000 for the period ending
March 31, 2002 compared to $809,000 for the period ending March 31, 2001.

         In the case of Commodore Solution, Inc. ("Solution"),  revenues were $0
for the period  ended March 31, 2002 as compared  with  $102,000  for the period
ended March 31, 2001.  The decrease is primarily due to the lack of  feasibility
studies and  commercial  processing.  Cost of sales was $0 for the period  ended
March 31, 2002  compared to $103,000 for the period  ended March 31,  2001.  The
cost of sales  is  attributable  to sales  and  marketing  expenses  for the SET
technology,  which the Company  anticipates will result in greater revenues from
Solution in the remainder of 2002.  Anticipated  losses on engagements,  if any,
will be  provided  for by a charge to income  during the period  such losses are
first identified.

         For the three-month  period ended March 31, 2002, the Company  incurred
research  and  development  costs of $77,000 as  compared  to  $120,000  for the
three-month period ended March 31, 2001.  Research and development costs include
salaries,  wages,  and other related costs of personnel  engaged in research and
development activities, contract services and materials, test equipment and rent
for facilities  involved in research and  development  activities.  Research and
development costs are expensed when incurred,  except those costs related to the
design  or  construction  of  an  asset  having  an  economic  useful  life  are
capitalized,  and then  depreciated over the estimated useful life of the asset.
The  decrease  in  research  and  development  expense  is due to the  continued
commercialization focus of the Company.

         General and  administrative  expenses  for the three months ended March
31, 2002 were  $1,338,000 as compared to  $1,977,000  for the three months ended
March 31, 2001.  This  difference is primarily  due to DRM's  salaries and other
expenses.

         Interest  income was $3,000 for the three  months ended March 31, 2002,
as compared to $13,000 for the three months ended March 31, 2001.

         Interest expense for the three months ended March 31, 2002 was $231,000
as compared to $794,000 for the three months ended March 31, 2001.  The decrease
in interest expense of $563,000 is primarily  related to ceasing of amortization
of non-cash interest costs associated with the Company's  purchase of 81% of DRM
on August 30, 2000  ($333,000),  the  amortization  of non-cash  interest  costs
associated with the Brewer  Promissory Note ($29,000),  and the  amortization of
non-cash interest costs associated with the Bridge Loan ($167,000).


LIQUITY AND CAPITAL RESOURCES

         At March 31, 2002 and December 31, 2001 ASI had a $360,000 and $108,000
outstanding balance, respectively, on its revolving lines of credit.

         For the three months ended March 31, 2002,  the Company  incurred a net
loss of $974,000 as  compared  to a net loss of  $649,000  for the three  months
ended March 31, 2001.  For the period  ended March 31,  2002,  and for the years
ended December 31, 2001,  2000, and 1999,  Applied has also experienced net cash
inflows  (outflows)  from  operating   activities  of  ($761,000),   $1,907,000,
($2,002,000),  and  ($2,905,000).  At March 31,  2002 the  Company  had  working
capital deficit of $20,126,000 and shareholders' equity of $666,000.

         During  the  three-month  period  ended  March 31,  2002,  the  Company
converted  20,000 shares of Series F Convertible  Preferred  Stock for 1,360,544

                                       10
<PAGE>

shares of the Company's common stock.  Additionally,  the Company issued 867,392
shares of the Company's  common stock in satisfaction  of all accrued  dividends
pertaining to the Series E and Series F Convertible  Preferred Stock conversions
to date.

         In March 2000, the Company  completed $2.0 million in financing through
private  placement.  The  Company  issued  226,000  shares  of a  new  Series  F
Convertible Preferred Stock,  convertible into Common Stock at the market price,
after  September  30,  2000 and up  through  April  30,  2003 at  which  time it
automatically converts to Common Stock. The Series F Convertible Preferred Stock
has a variable rate dividend averaging 8.15% over the term of the security.  The
Company  reserved  the right to redeem  all the Series F  Convertible  Preferred
Stock on or before  September  30,  2000 by  payment  of $2.3  million  plus any
accrued dividends.

         In September 2000, the Company  completed  $500,000 in financing in the
form of a loan  (the  "Brewer  Note")  from S.  Brewer  Enterprises,  Inc.  ("SB
Enterprises"),  which is owned by one of its officers and  directors,  Shelby T.
Brewer.  The Brewer Note bears a 9.75% interest rate,  payable  monthly,  with a
balloon  principal  payment at the end of the term. The note was due and payable
on March 15, 2001 and was  extended  under the same terms and  conditions  until
December  31,  2001.  The Brewer Note is  convertible  into Common  Stock at the
market price up through December 31, 2001.

         On March 15,  2001,  SB  Enterprises  executed an Amended and  Restated
Promissory Note (the "Restated  Brewer Note"),  which extended the maturity date
of the note until December 31, 2001. Additionally, the conversion feature of the
Restated  Brewer  Note was  changed to the 5-day  average  closing  price of the
Company's  common  stock  prior to a  conversion  notice.  On April 9, 2001,  SB
Enterprises issued a conversion notice for $250,000 of the outstanding principal
of the Brewer Restated Note. The conversion price was calculated by the previous
5-day  average  of the  closing  price of the  Company's  common  stock  and was
converted into 1,041,667 shares. The remaining  principal balance of $250,000 is
outstanding  as of May 20,  2002.  The  Company  has not  been  notified  of the
holder's intent to declare a default on the Brewer Note.

         In November  2000, the Company  completed  $500,000 in financing in the
form of a loan (the "Weiss Group Note") from a group of four investors;  $75,000
of which was borrowed from the son of Paul E.  Hannesson,  our former  President
and Chief Executive  Officer,  and $25,000 of which was borrowed from Stephen A.
Weiss,  a  shareholder  of  Greenberg  Traurig,  LLP, our former  corporate  and
securities  counsel.  The Weiss Group Note bears interest at 12% per annum,  was
due and payable on February  12, 2001,  and is secured by the first  $500,000 of
loans or dividends that the Company may receive from DRM. As  consideration  for
such loan,  Environmental,  one of the Company's  principal  stockholders owning
approximately  15% of the Common Stock,  transferred to the investors a total of
1,000,000  shares of common  stock.  All  holders  of the Weiss  Group Note have
granted payment extensions until May 31, 2002.

         Effective  April 5, 2001,  the  Company  issued  warrants  to  purchase
500,000  shares of its common stock at an exercise price of $0.22 per share (the
closing price of our common stock on the American  Stock  Exchange on such date)
to all  holders  of the  Weiss  Group  Note in  consideration  of  such  persons
extension of the due date of such loans from February 12, 2001 to June 30, 2001.

         Effective  January 24, 2002,  the Company  issued  warrants to purchase
500,000  shares of its common stock at an exercise price of $0.15 per share (the
closing price of our common stock on the American  Stock  Exchange on such date)
to all  holders  of the  Weiss  Group  Note in  consideration  of  such  persons
extension of the due date of such loans from June 30, 2001 to May 31, 2002.

         On May 23, 2001, a private investor purchased $250,000 of the Company's
common  stock at the market  price.  The  Company  issued the  private  investor
1,923,077  shares  of common  stock of the  Company  as a result  of the  equity
purchase.  In connection with the purchase of the shares of the Company's common
stock,  the  Company  issued the private  investor a 2-year  warrant for 500,000
shares of the Company's common stock at an exercise price of $0.22 per share.

                                       11
<PAGE>

         On June 13,  2001,  the  Company  issued  and sold to  Milford  Capital
Management, Inc. and the Shaar Fund, Ltd. (hereinafter known as "Milford/Shaar")
one-year,  15% Senior Secured Promissory Notes (the  "Milford/Shaar  Bridge Loan
Notes") in the aggregate principal amount of $1,000,000.  In connection with the
Milford/Shaar Bridge Loan Notes, the Company issued to Milford/Shaar a five-year
warrant for 333,333 shares of the Company's common stock at an exercise price of
$0.22 per share. The Company pledged its equipment and SET related  intellectual
property as  collateral  for the  Milford/Shaar  Bridge Loan Notes.  The Company
shall pay  Milford/Shaar  principal  and interest on a monthly basis in arrears.
The Milford/Shaar Bridge Loan Notes may be prepaid at any time without penalty.

         The Company  made all payments on the  Milford/Shaar  Bridge Loan Notes
until  November 13, 2001.  The Company asked for and received a  forbearance  of
payments on the  Milford/Shaar  Bridge Loan Notes from  November  13, 2001 until
June 13, 2002.

         The Company had an irrevocable obligation to repurchase from the former
shareholders  of DRM, by May 16, 2002,  that number of 9.5 million shares of the
Company's  common  stock (at a per share  price equal to the greater of $1.50 or
the closing  price of our common  stock 30 days prior to  purchase)  as shall be
necessary  to provide the holders of such shares with a total of $14.5  million.
The original  repurchase  obligation  deadline of August 30, 2001,  subsequently
extended through May 16, 2002 by a series of extensions  (initially  extended to
September 29, 2001,  further  extended to October 29, 2001,  further extended to
January 16, 2002 and was  subsequently  extended until May 16, 2002). As partial
security  for the  payment of such  obligation,  all of the shares of DRM common
stock owned by the Company have been  pledged to Messrs.  William J. Russell and
Tamie P. Speciale, the former sole stockholders of DRM. In the event the Company
is unable to make such  $14.5  million  payment,  when  due,  the  pledgees  may
foreclose  on the DRM stock;  in which event the  Company  would lose its entire
equity ownership in the DRM subsidiary.

         The Company  originally  intended to meet its repurchase  obligation to
the former  shareholders  of DRM by  reacquiring  their shares and selling those
shares to generate  the cash  necessary  to meet the  obligation;  however,  the
Company's ability to effect the repurchase  obligation in this manner is heavily
dependent  on the stock price of the  Company's  common stock at the time of the
repurchase.  The Company was unable to meet its repurchase obligation by May 16,
2002. (See Subsequent  Events section) At May 20, 2002, the closing price of the
Company's common stock on the American Stock Exchange, Inc. was $0.08 per share.

         The Company  currently  requires  additional  cash to sustain  existing
operations and meet current  obligations  (including  those described above) and
the  Company's  ongoing  capital  requirements.   Excluding  the  Company's  DRM
subsidiary,  the Company's  current monthly  operating  expenses exceed its cash
revenues by approximately $200,000. The continuation of the Company's operations
is dependent in the short term upon its ability to obtain  additional  financing
and, in the long term, 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.

         The Company's auditor's opinion on our fiscal 2001 financial statements
contains a "going concern"  qualification  in which they express doubt about the
Company's ability to continue in business, absent additional financing.

         The  Company  currently  is  negotiating  with a lender to obtain  debt
financing, to supplement funds generated from operations,  to meet the Company's
cash needs over the next 12 months.  The  Company  intends to meet its long term
capital needs through  obtaining  additional  contracts that will generate funds
from operations and obtaining  additional debt or equity  financing as necessary
or engaging in merger or sale transactions.  There can be no assurance that such
sources of funds  will be  available  to the  Company or that it will be able to
meet its short or long term capital requirements.

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<PAGE>


NET OPERATING LOSS CARRYFORWARDS

         The  Company  has net  operating  loss  carryforwards  (the  "NOLs") of
approximately  $31,000,000,  which  expire in the years 2010 through  2021.  The
applicable  tax laws that are in  effect  at the time such NOLs can be  utilized
will limit the amount of NOLs that can be used in any one year.  The Company has
determined  a maximum of  approximately  $2.4 million of NOLs is available to be
used annually.  Unused NOLs balances may be  accumulated  and used in subsequent
years.  A full  valuation  allowance has been  established to offset any benefit
from the net operating loss  carryforwards.  It cannot be determined  when or if
the Company will be able to utilize the NOLs.


FORWARD-LOOKING STATEMENTS

         Certain matters discussed in this Quarterly Report are "forward-looking
statements" intended to qualify for the safe harbors from liability  established
by Section 27A of the Securities Act and Section 21E of the Securities  Exchange
Act of 1934, as amended (the "Exchange Act"). 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  future
plans, objectives or goals are also forward-looking  statements. Such statements
may address future events and  conditions  concerning,  among other things,  the
Company's  results of operations and financial  condition;  the  consummation of
acquisition and financing  transactions  and the effect thereof on the Company's
business;  capital  expenditures;   litigation;   regulatory  matters;  and  the
Company's  plans and  objectives for future  operations and expansion.  Any such
forward-looking  statements would be subject to the risks and uncertainties that
could cause actual results of  operations,  financial  condition,  acquisitions,
financing transactions,  operations, 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  generally.  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 that
would affect any such forward-looking statements.  These risks and uncertainties
include, but are not limited to, the ability of the Company to commercialize its
technology;  product demand and industry pricing;  the ability of the Company to
obtain patent  protection  for its  technology;  developments  in  environmental
legislation  and  regulation;  the  ability  of the  company  to  obtain  future
financing on favorable  terms;  and other  circumstances  affecting  anticipated
revenues and costs. 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 3.  Quantitative and Qualitative Disclosures About Market Risk
         ----------------------------------------------------------

         Not applicable.

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<PAGE>

                           PART II - OTHER INFORMATION



ITEM 1.  Legal Proceedings

         There have been no material legal proceedings to which the Company is a
party which have not been disclosed in previous  filings with the Securities and
Exchange  Commission.  There are no material  developments to be reported in any
previously reported legal proceedings.

ITEM 2.  Change in Securities

         Not applicable

ITEM 3.  Defaults among Senior Securities

         Not applicable.

ITEM 4.  Submission of Matters to a Vote of Security Holders

         Not applicable.

ITEM 5.  Other Events

         Not applicable.

ITEM 6.  Exhibits and Reports on Form 8 - K

         (a) Exhibits - none.

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



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                                   SIGNATURES


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






Date: May 20, 2002                   COMMODORE APPLIED TECHNOLOGIES, INC.
                                     (Registrant)


                                     By   /s/ James M. DeAngelis
                                     -------------------------------------------
                                     James M. DeAngelis - Senior Vice President
                                     and Chief Financial Officer (as both a duly
                                     authorized officer of the registrant and
                                     the principal financial officer of the
                                     registrant)



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