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 June 30, 2001
                                       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 the common  stock  outstanding  at August 10, 2001
was 55,086,153.



<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 -
            June 30, 2001 and December 31, 2000............................2

         Condensed Consolidated Statement of Operations -
            Three and Six months ended June 30, 2001 and
            June 30, 2000..................................................4

         Condensed Consolidated Statement of Cash Flows -
            Six months ended June 30, 2001 and
            June 30, 2000..................................................5

         Notes to Condensed Consolidated Financial Statements..............6

Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations...........................11

PART II  OTHER INFORMATION................................................16

SIGNATURES................................................................17


                                        1
<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>


                                                               June 30,            December 31,
                               ASSETS                            2001                 2000
                                                               ---------           -----------
                                                              (unaudited)
<S>                                                            <C>                 <C>

Current Assets:
         Cash and cash equivalents                             $   3,274           $     1,980
         Accounts receivable, net                                  1,977                 4,536
         Prepaid assets and other current receivables                412                   625
                                                               ---------           -----------
                  Total Current Assets                             5,663                 7,141

Property and equipment, net                                        1,743                 1,983
Other assets
         Patents and completed technology, net of
              accumulated amortization of $683 and
              $613, respectively.                                    792                   862
         Covenants not to compete, net of
             accumulated amortization of $434 and
             $175, respectively.                                   2,191                 2,450
         Goodwill, net of accumulated amortization
              of $1,050 and $419, respectively.                   23,275                24,676
                                                               ---------           -----------

                   Total Intangibles                              26,258                27,988

         Other Assets                                                361                   361
                                                               ---------           -----------

                    Total Assets                               $  34,025           $    37,473
                                                               =========           ===========
</TABLE>


            See notes to condensed consolidated financial statements.

                                       2
<PAGE>


              COMMODORE APPLIED TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                  (Dollars in Thousands, except per share data)

<TABLE>
<CAPTION>

                                                               June 30,            December 31,
                           LIABILITIES AND                       2001                 2000
                         STOCKHOLDERS' EQUITY                  ---------           -----------
                                                              (unaudited)
<S>                                                            <C>                 <C>
Current Liabilities:
         Accounts payable                                      $   1,820           $     2,490
         Related party payable                                       247                   247
         Current portion of long term debt                         2,650                 2,650
         Line of credit                                              445                 1,459
         Notes payable                                            15,857                14,682
         Other accrued liabilities                                 2,199                 2,489
                                                               ---------           -----------

                  Total Current Liabilities                       23,218                24,017
Long term debt                                                     4,104                 5,182
                                                               ---------           -----------
                   Total Liabilities                              27,322                29,199

Minority interest                                                     78                   419
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, 445,200 and 556,700
         shares issued and outstanding
         as of June 30, 2001 and December 31, 2000
         respectively.
         The shares had an aggregate liquidation
         value of $5,863 and $7,332 at
         June 30, 2001 and December 31, 2000
         respectively.                                                --                     1
         Common Stock, par value $0.001 per share,
         125,000,000 shares authorized, 55,036,153
         and 48,330,385 issued and outstanding,
         At June 30, 2001 and December 31, 2000,
         respectively.                                                55                    48
         Additional paid-in capital                               66,720                66,495
         Accumulated deficit                                     (60,150)              (58,689)
                                                               ---------           -----------

                  Total Stockholders' Equity                       6,625                 7,855
                                                               ---------           -----------

       Total Liabilities and Stockholders' Equity              $  34,025           $    37,473
                                                               =========           ===========
</TABLE>



            See notes to condensed consolidated financial statements.

                                       3
<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            Six months ended
                                                                     June 30,        June 30,      June 30,       June 30,
                                                                      2001            2000           2001           2000
                                                                     --------        --------      --------       --------

<S>                                                                  <C>            <C>            <C>            <C>
Contract revenues                                                    $   3,130      $   4,538      $  7,151       $   8,870
Costs and expenses:
         Cost of sales                                                   1,122          3,927         1,934           7,858
         Research and development                                           76            354           196             600
         General and administrative                                      1,350          1,065         3,427           1,845
         Depreciation and amortization                                     629            217         1,257             379
         Minority interest                                                 177              -           429               -
                                                                     ---------      ---------      --------       ---------
                  Total costs and expenses                               3,354          5,563         7,243          10,682
                                                                     ---------      ---------      --------       ---------

Loss from operations                                                      (224)        (1,025)          (92)         (1,812)
                                                                     ---------      ---------      --------       ---------

Other income (expense):
         Interest income                                                     8             23            21              39
         Interest expense                                                 (583)           (55)       (1,377)           (103)
                                                                     ---------      ---------      --------       ---------

                  Net other income (expense)                              (575)           (32)       (1,356)            (64)
                                                                     ---------      ---------      --------       ---------

Loss before income taxes                                                  (799)        (1,057)       (1,448)         (1,876)
         Income taxes                                                      (13)             -           (13)              -
                                                                     ---------      ---------      --------       ---------

         Net loss                                                    $    (812)     $  (1,057)     $ (1,461)      $  (1,876)
                                                                     =========      =========      ========       =========

         Loss per share - basic and diluted                          $   (0.02)     $   (0.03)     $  (0.03)      $   (0.06)
                                                                     =========      =========      ========       =========

Number of weighted average shares outstanding (000's)                   52,807         31,911        51,371          31,525
                                                                     =========      =========      ========       =========
</TABLE>




            See notes to condensed consolidated financial statements.


                                       4
<PAGE>




              COMMODORE APPLIED TECHNOLOGIES, INC. AND SUBSIDIARIES

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

<TABLE>
<CAPTION>



                                                                              Six months ended
                                                                        June 30,         June 30,
                                                                          2001             2000
                                                                        --------         --------
<S>                                                                    <C>              <C>
Cash flows from operating activities:
     Net loss                                                          $    (1,461)     $    (1,876)
     Adjustments to reconcile net loss to net cash used in
     operating activities:
         Depreciation and amortization                                       1,257              380
         Amortization of debt discount                                       1,064                -
           Other non-cash charges                                              196                -
         Minority interest                                                     429                -
         Changes in assets and liabilities, net of
         acquisitions:
                Accounts receivable                                          2,609              437
                Prepaid assets                                                  46             (134)
                Other assets                                                     -               (1)
                Accounts payable                                              (670)            (503)
                Other liabilities                                             (632)            (594)
                                                                       -----------      -----------

                  Net cash provided/(used) in operating activities           2,838           (2,291)

Cash flows from investing activities:
      Purchase of equipment                                                    (57)             (82)
      Acquisition of patents                                                     -              (37)
      Advances to related parties                                                -              (45)
      Other investments                                                          -             (325)
                                                                       -----------      -----------

                  Net cash provided/(used) in investing activities             (57)            (489)

Cash flows from financing activities:
      Increase in (repayment of) line of credit                             (1,014)            (125)
      Increase in notes and loans payable                                    1,000              199
      Payments on notes payable                                             (1,673)               -
      Preferred stock dividends                                                  -             (295)
      Proceeds from sale of preferred stock and warrants                         -            1,770
      Proceeds from sale of common stock                                       200              567
                                                                       -----------      -----------

                 Net cash provided/(used) in financing activities           (1,487)           2,116

Increase (decrease) in cash                                                  1,294             (664)
Cash, beginning of period                                                    1,980            1,797
                                                                       -----------      -----------

Cash, end of period                                                    $     3,274      $     1,133
                                                                       ===========      ===========

</TABLE>

            See notes to condensed consolidated financial statements.

                                       5
<PAGE>


              COMMODORE APPLIED TECHNOLOGIES, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                  June 30, 2001

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 accounting principles generally
accepted in the United States of America 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 accounting  principles  generally accepted
in the United States of America 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 and six month periods ended June 30,
2001 are not necessarily  indicative of the results that may be expected for the
year ending December 31, 2001.

         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/A  for the year  ended
December 31, 2000.

         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 June 30, 2001, and the years
ended December 31, 2000, 1999 and 1998,  Applied  incurred losses of $1,461,000,
$11,441,000, $3,985,000 and $13,353,000, respectively. Applied's continuation as
a company is dependent upon its ability to generate sufficient cash flow to meet
its  obligations  on a timely basis,  to obtain  additional  financing as may be
required,  and  ultimately to attain  profitability.  Potential  sources of cash
include  new  contracts,  external  debt,  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 $76,000 at December 31,
2000 and June 30, 2001.

         The  consolidated  financial  statements  include  the  accounts of the
Company  and its  majority-owned  subsidiaries.  All  significant  inter-company
balances and transactions have been eliminated.  The preparation of consolidated
financial statements in conformity with accounting principles generally accepted
in the United  States of  America  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.


                                       6
<PAGE>

Note B - Segment Information

         Using the  guidelines  set forth in SFAS No.  131,  "Disclosures  About
Segments of an Enterprise and Related  Information",  the Company has identified
three  reportable  segments  in which it  operates,  based  on the  services  it
provides.  The  reportable  segments  are as  follows:  (i)  Commodore  Advanced
Sciences,  Inc., which primarily provides various engineering,  legal, sampling,
and public relations services to 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 June 30, 2001
(Dollars in Thousands)
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
                                                                                                       Corporate
                                                                                                        Overhead
                                                      Total         ASI       Solution       DRM       and Other
                                                      -----         ---       ---------      ---       ---------

<S>                                                <C>           <C>            <C>       <C>            <C>
Contract revenues                                  $    3,130    $   1,076      $    83   $   1,971      $     --

Costs and expenses
     Cost of sales                                      1,122        1,026           96          --            --
     Research and development                              76           --           76          --            --
     General and administrative                         1,350           59           71       1,026           194
     Depreciation and amortization                        629           19          114          11           485
     Minority interest                                    177           --           --          --           177
                                                   ----------    ---------      -------   ---------      --------
              Total costs and expenses                  3,354        1,104          357       1,037           856
                                                   ----------    ---------      -------   ---------      --------
Income (loss) from operations                            (224)         (28)        (274)        934          (856)

     Interest income                                        8           --           --           8            --
     Interest expense                                    (583)         (10)          --          --          (573)
     Income taxes                                         (13)          --           --         (13)           --
                                                   ----------    ---------      -------   ---------      --------
Net income (loss)                                  $     (812)   $     (38)     $  (274)  $     929      $ (1,429)
                                                   ==========    =========      =======   =========      ========

Total assets                                       $   34,025    $   2,478      $ 1,604   $   3,477      $ 26,466

Expenditures for long-lived assets                 $       19    $      --      $    --   $      19      $     --
</TABLE>



                                       7
<PAGE>



Six Months Ended June 30, 2001
(Dollars in Thousands)
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
                                                                                                       Corporate
                                                                                                        Overhead
                                                      Total         ASI       Solution       DRM       and Other
                                                      -----         ---       ---------      ---       ---------

<S>                                                <C>           <C>            <C>       <C>            <C>

Contract revenues                                  $    7,151    $   2,299      $   185   $   4,667      $     --

Costs and expenses
     Cost of sales                                      1,934        1,735          199          --            --
     Research and development                             196           --          196          --            --
     General and administrative                         3,427          439          240       2,394           354
     Depreciation and amortization                      1,257           39          231          20           967
     Minority interest                                    429           --           --          --           429
                                                   ----------    ---------      -------   ---------      --------
              Total costs and expenses                  7,243        2,213          866       2,414         1,750
                                                   ----------    ---------      -------   ---------      --------
Income (loss) from operations                             (92)          86         (681)      2,253        (1,750)

     Interest income                                       21           --           --          18             3
     Interest expense                                  (1,377)         (36)          --          --        (1,341)
     Income taxes                                         (13)          --           --         (13)           --
                                                   ----------    ---------      -------   ---------      --------

Net Income (loss)                                  $   (1,461)   $      50      $  (681)  $   2,258      ($3,088)
                                                   ==========    =========      =======   =========      ========

Total assets                                       $   34,025    $   2,478      $ 1,604   $   3,477      $ 26,466

Expenditures for long-lived assets                 $       57    $      --      $    --   $      57      $     --

</TABLE>


                                       8
<PAGE>


Three Months Ended June 30, 2000
(Dollars in Thousands)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                               Corporate
                                                                                               Overhead
                                                      Total         ASI       Solution         and Other
                                                      -----         ---       ---------        ---------

<S>                                                <C>           <C>            <C>          <C>
Contract revenues                                  $    4,538    $   4,488      $    50      $         --

Costs and expenses
     Cost of sales                                      3,927        3,808          119                --
     Research and development                             354            -          354                --
     General and administrative                         1,065          416           20               629
     Depreciation and amortization                        217           21           96               100
                                                   ----------    ---------      -------      ------------
              Total costs and expenses                  5,563        4,245          589               729
                                                   ----------    ---------      -------      ------------
Income (loss) from operations                          (1,025)         243         (539)             (729)

     Interest income                                       23           --           --                23
     Interest expense                                     (55)         (23)         (32)               --
                                                   ----------    ---------      -------      ------------
Net income (loss)                                  $   (1,057)   $     220      $  (571)     $       (706)
                                                   ==========    =========      =======      ============

Total assets                                       $   15,190    $   2,941      $ 2,624      $      9,625

Expenditures for long-lived assets                 $       50    $      12      $     -      $         38

</TABLE>


                                       9
<PAGE>



Six Months Ended June 30, 2000
(Dollars in Thousands)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                               Corporate
                                                                                               Overhead
                                                      Total         ASI       Solution         and Other
                                                      -----         ---       ---------        ---------

<S>                                                <C>           <C>            <C>            <C>
Contract revenues                                  $    8,870       $8,775      $    70      $         25

Costs and expenses
     Cost of sales                                      7,858        7,703          155                --
     Research and development                             600           --          743              (143)
     General and administrative                         1,845          696           19             1,130
     Depreciation and amortization                        379           41          138               200
                                                   ----------    ---------      -------      ------------
              Total costs and expenses                 10,682        8,440       1,055              1,187
                                                   ----------    ---------      -------      ------------
Income (loss) from operations                          (1,812)         335         (985)           (1,162)

     Interest income                                       39           --           --                39
     Interest expense                                    (103)         (56)         (47)               --
                                                   ----------    ---------      -------      ------------
Net income (loss)                                  $   (1,876)   $     279      $(1,032)     $     (1,123)
                                                   ==========    =========      =======      ============

Total assets                                       $   15,190    $   2,941      $ 2,624      $      9,625

Expenditures for long-lived assets                 $      119    $      14      $    67      $         38
</TABLE>


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.



                                       10
<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 and Six Months Ended June 30, 2001  Compared to Three and Six Months Ended
June 30, 2000

         Revenues were  $3,130,000  and  $7,151,000 for the three and six months
ended June 30, 2001, compared to $4,538,000 and $8,870,000 for the three and six
months ended June 30, 2000.  Such revenues were primarily from the Company's two
subsidiaries, ASI and DRM.

         In  the  case  of  DRM,   revenues  were   $1,971,000   and  $4,667,000
respectively  for the three and six months  ended  June 30,  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.
Settlements are the result of 18 to 24 months of effort by various  employees of
DRM, of which the expenses are captured in general and  administrative  costs as
incurred.  Anticipated losses on engagements,  if any, will be provided for by a
charge to income during the period such losses are first identified.

         In  the  case  of  ASI,   revenues  were   $1,076,000   and  $2,299,000
respectively  for the three and six months ended June 30, 2001 as compared  with
$4,488,000  and $8,775,000 for the three and six months ended June 30, 2000. The
decrease in revenues is primarily due to the completion of a five-year  contract
to provide technical management support services to the Department of Energy for
the opening and operation of the Waste Isolation Pilot Plant near Carlsbad,  New
Mexico,  which  ended on  December  31,  2000.  ASI has been  unsuccessful  with
replacing  this  contract  volume to date.  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

                                       11
<PAGE>

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.
Currently, ASI has two major customers, each of which represent more than 10% of
total revenue.  The combined  revenue for these two customers was $1,076,000 and
$2,299,000  respectively  (100% of total  revenues) for the three and six months
ended June 30, 2001.  Cost of sales was $1,026,000  and $1,735,000  respectively
for the three and six months  ended June 30,  2001  compared to  $3,808,000  and
$7,703,000  respectively  for the three and six months ended June 30, 2000.  The
decrease in cost of sales is due to a decrease in sales  volume in the three and
six months ended June 30, 2001.

         In the case of Commodore  Solution,  Inc.  ("Solution"),  revenues were
$83,000 and  $185,000  respectively  for the three and six months ended June 30,
2001 as compared with $50,000 and $70,000  respectively for three and six months
ended  June  30,  2000.  The  increase  is  primarily  due  to the  increase  in
feasibility  studies and  commercial  processing.  Revenues were  primarily from
remediation  services performed for engineering and waste treatment companies in
the U.S. under a variety of contracts. Solution has two major customers, each of
whom  represents more than 10% of the revenue for the three and six months ended
June 30, 2001.  The  combined  revenue for these two  customers  was $83,000 and
$185,000  respectively  (100% of the Solution's total revenue) for the three and
six  months  ended  June  30,  2001.  Cost of sales  was  $96,000  and  $199,000
respectively  for the three and six months  ended June 30,  2001 as  compared to
$119,000 and $155,000  respectively  for the three and six months ended June 30,
2000.  The  increase  in cost of sales is  attributable  to  greater  sales  and
marketing  expenses for the SET technology,  which the Company  anticipates will
result in greater  revenues from Solution in the remainder of 2001.  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 and six months ended June 30, 2001, the Company  incurred
research and development costs of $76,000 and $196,000  respectively as compared
to $354,000  and $600,000  respectively  for the three and six months ended June
30, 2000.  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 and six months ended
June 30,  2001 were  $1,350,000  and  $3,427,000  respectively  as  compared  to
$1,065,000 and $1,845,000  respectively  for the three and six months ended June
30, 2000. This difference is due to DRM's salaries and other expenses.

         Interest income was $8,000 and $21,000  respectively  for the three and
six months ended June 30, 2001, as compared to $23,000 and $39,000  respectively
for the three and six months ended June 30, 2000.

         Interest  expense for the three and six months  ended June 30, 2001 was
$583,000  and  $1,377,000  respectively  as  compared  to $55,000  and  $103,000
respectively  for the three and six months ended June 30, 2000.  The increase in
interest expense is primarily related to amortization of non-cash interest costs
associated  with the  Company's  purchase of 81% of DRM on August 30, 2000,  the
amortization of non-cash  interest costs  associated with the Brewer  Promissory
Note, the  amortization  of non-cash  interest costs  associated with the Bridge
Loan Notes, and the amortization of non-cash  interest costs associated with the
Milford/Shaar Bridge Loan Notes.



                                       12
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         At  June  30,  2001  and  December  31,  2000  ASI had a  $445,000  and
$1,459,000 outstanding balance, respectively, on its revolving lines of credit.

         In  October  2000,  ASI  refinanced  their  line  of  credit  with  KBK
Financial, Inc. (the "KBK Credit Line"). The KBK Credit Line is not to exceed 85
percent of eligible  receivables  or  $2,500,000  and is due  October  2002 with
interest  payable  monthly at prime plus 2 percent  (8.75 percent as of June 30,
2001). The KBK Credit Line is  collateralized by the assets of Advanced Sciences
and is guaranteed by the Company. The KBK Credit Line contains certain financial
covenants and restrictions  including minimum ratios that Advanced Sciences must
satisfy. ASI was in compliance with the covenants of the KBK Credit Line at June
30, 2001.

         In addition,  the KBK Credit Line agreement stipulates that no payments
shall be made by ASI to the Company  other than  monthly  scheduled  payments of
principal with respect to the $8,280,000  subordinated  indebtedness owed by ASI
to  the  Company  (which  is  eliminated  in  consolidation)   and  intercompany
indebtedness  not to exceed  $20,000 in any month.  In  addition,  ASI shall not
incur  indebtedness in excess of $25,000,  other than trade payables,  the above
subordinated  indebtedness  and other  contractual  obligations to suppliers and
customers incurred in the ordinary course of business.

         For the three and six months ended June 30, 2001, the Company  incurred
a net loss of $812,000 and $1,461,000  respectively as compared to a net loss of
$1,057,000 and $1,876,000  respectively  for the three and six months ended June
30, 2000.  For the years ended  December 31, 2000,  1999,  and 1998, the Company
incurred   losses  and  also   experienced  net  cash  outflows  from  operating
activities.  At June  30,  2001 the  Company  had  working  capital  deficit  of
$17,555,000 and shareholders' equity of $6,625,000.

         In March 2000, the Company  completed $2.0 million in financing through
a private  placement.  The  Company  issued  226,000  shares  of a new  Series F
Convertible Preferred Stock, convertible into common stock of the Company 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.

         On September  15, 2000,  the Company  issued to S. Brewer  Enterprises,
Inc.  (the "SB  Enterprises")  a 9.75%  Secured  Promissory  Note  (the  "Brewer
Promissory Note") in the aggregate  principal amount of $500,000.  In connection
with the Brewer Promissory Note, Commodore Environmental Services, Inc., pledged
to SB  Enterprises  500,000  shares  of our  common  stock  owned  by  Commodore
Environmental  Services,  Inc. as security for the Brewer  Promissory  Note. The
Company shall pay SB Enterprises  the interest on a monthly basis in arrears and
pay the  outstanding  principal  amount on the earliest to occur (the  "Maturity
Date") of (i) the sale of the Company's interest in the Teledyne-Commodore, LLC;
or (iii) on March 15,  2001.  The Brewer  Promissory  Note may be prepaid at any
time without penalty.

         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 Company issued SB Enterprises  1,041,667 shares
of common stock of the Company as a result of the conversion notice.

         On November 13, 2000, the Company issued and sold to certain  investors
(the "Investors") 12% Senior Secured  Promissory Notes (the "Bridge Loan Notes")
in the aggregate  principal  amount of $500,000.  In connection  with the Bridge
Loan  Notes,  Commodore  Environmental  Services,  Inc.  issued  and sold to the
Investors 1,000,000 shares of our common stock owned by Commodore  Environmental
Services, Inc, at a purchase price of $.01 per share. We shall pay each Investor
the outstanding principal amount,  together with all accrued and unpaid interest
on the  earliest to occur (the  "Maturity  Date") of (i) the  prepayment  of the
Bridge  Loan  Notes out of one  hundred  percent  (100%)  of the first  proceeds
received by us as a cash  distribution  (whether in the form of an  intercompany

                                       13
<PAGE>

dividend,  bonus, loan or otherwise) from DRM, or (ii) on February 12, 2001. The
Bridge Loan Notes may be prepaid at any time,  on five (5)  business  days prior
notice, without penalty. The Company did not pay the Bridge Loan Notes as of the
Maturity Date.

         On April 16, 2001, the Investors executed a Memorandum of Understanding
to extend the payment  date of the  $500,000 of Bridge Loan Notes.  Three of the
holders of the Bridge Loan Notes have granted payment  extensions  until June 30
and July 31, 2001, while the fourth holder of the Bridge Loan Notes has extended
only until May 1, 2001.  The Company  made the June 30, 2001 payment to three of
the  holders of the Bridge  Loan Notes and made a partial  payment to the fourth
holder of the Bridge Loan Notes on June 19,  2001.  The Company did not make the
July 31,  2001  payment to three of the  holders of the Bridge Loan Note and has
not paid the balance owed to the fourth  holder of the Bridge Loan Notes.  As of
July 02, 2001,  the  principal  balance on the Bridge Loan Notes  aggregates  to
$225,000.

         If the fourth holder of the Bridge Loan Notes  declared a default on or
after May 1, 2001,  the other  three  holders of the Bridge  Loan Notes also are
permitted  to declare a default.  As of August 14, 2001 the Company has not been
notified of the  holder's  intent to declare a default on the Bridge Loan Notes.
In  connection  with the  bridge  loan  extension,  the  Company  issued  to the
Investors  warrants  for  500,000  shares of the  Company's  common  stock at an
exercise price of $0.22 per share.

         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.

         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 has an irrevocable obligation to repurchase from the former
shareholders  of DRM, by August 30, 2001,  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.
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.  At August 13, 2001, the closing price of the Company's common stock
on the American Stock Exchange, Inc. was $0.12 per share.

                                       14
<PAGE>

         The Company  currently  requires  additional  cash to sustain  existing
operations and meet 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  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.


NET OPERATING LOSS CARRYFORWARDS

         The Company  has net  operating  loss  carryforwards  of  approximately
$39,000,000.  The amount of net operating loss  carryforward that can be used in
any one year will be limited by the  applicable  tax laws which are in effect at
the time such carryforward can be utilized.  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 net
operating losses.


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.


                                       15
<PAGE>


ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk
         ----------------------------------------------------------

         Not applicable.



                           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.


                                       16
<PAGE>





                                   SIGNATURES


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




Date: August 14, 2001            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)



                                       17
<PAGE>