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


                                   FORM 10-KSB


     [ X ] ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934

     For the year ended  September  30, 2000

     [ ]  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934

                         Commission File Number 0-21279


                          THERMACELL TECHNOLOGIES, INC.
                          ----------------------------
             (Exact name of registrant as specified in its charter)

            FLORIDA                                  59-3223708
            -------                                  ----------
(State or other jurisdiction of                   (I.R.S. Employer
 incorporation or organization)                  Identification No.)

   440 Fentress Blvd., Daytona Beach                          32115
   ----------------------------------                         -----
(Address of principal executive offices)                   (Zip Code)

     Registrant's telephone number, including area code: (904) 253-6262

     Securities registered pursuant to Section 12(b) of the Act: NONE

Check  Whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

[  ] Yes  [  X  ] No

Check  if no  disclosure  of  delinquent  filers  in  response  to  Item  405 of
Regulation S-B is contained in this form,  and no disclosure  will be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  of  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB [ X ]

State  issuer's   revenues  for  its  most  recent   reporting   period  (Fiscal
year)........$1,872,017.

Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant at May 15, 2001 was $1,184,000.  The bid price of the common stock at
that date was $0.08.

DOCUMENTS INCORPORATED BY REFERENCE
Parts of the Company's  definitive proxy statement for the Annual Meeting of the
Company's  stockholders  to be held on September  15, 2001 are  incorporated  by
reference into part III of this Form.


<PAGE>



                          THERMACELL TECHNOLOGIES, INC.

                               FORM 10-KSB - Index
                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2000

        PART I                                                             Page
                                                                           ----
        Item 1.     Business                                                1.

        Item 2.     Properties                                              7.

        Item 3.     Legal Proceedings                                       7.

        Item 4.     Submission of Matters to a Vote of Security Holders     8.

        PART II

        Item 5.     Market of the Registrant's Securities and
                     Related Stockholder Matters                            8.

        Item 6      Management's Discussion and Analysis of
                     Financial Condition
                     and Results of Operations                             11.

        Item 8.     Consolidated Financial Statements
                     and Supplementary Data                                15.

        Item 9.     Changes in and Disagreements with
                     Accountants on Accounting
                     and Financial Disclosures                             14.

        PART III

        Item 10.     Directors and Executive Officers of the Registrant    15.

        Item 11.     Executive Compensation                                15.

        Item 12.     Security Ownership of Certain Beneficial Owners
                      and Management                                       15.

        Item 13.     Certain Relationships and Related Transactions        15.

        Item 14.     Exhibits, Consolidated Financial Statements,
                      Schedules and Reports on Form 8-K                    15.

        Signatures                                                         18.


<PAGE>


This Form 10-KSB  contains  forward  looking  statements,  within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934,  regarding future events and the future performance of the
Company  involve risks and  uncertainties  which may cause the Company's  actual
results in future periods to be materially different from any future performance
suggested  herein.  The  words   "anticipated,"   "believe,"  "expect,"  "plan,"
"intend,"  "seek,"  "estimate,"  "project,"  "will,"  "could," "may" and similar
expressions  are  intended  to  identify   forward-looking   statements.   These
statements  include,  among others,  information  regarding  future  operations,
future capital  expenditures  and future net cash flow. Such statements  reflect
our current views with respect to future events and  financial  performance  and
involve risks and uncertainties, including, without limitation, general economic
and  business  conditions,  changes in foreign,  political,  social and economic
conditions, regulatory initiatives and compliance with governmental regulations,
the ability to achieve further market penetration and additional customers,  and
various other matters, many of which are beyond our control.  Should one or more
of these risks or uncertainties occur, or should underlying assumptions prove to
be  incorrect,  actual  results may vary  materially  and  adversely  from those
anticipated,  believed, estimated, or otherwise indicated,  consequently, all of
the  forward-looking  statements made in this Form 10-KSB are qualified by these
cautionary  statements  and there can be no assurance  of the actual  results or
developments.

                                     PART I

ITEM 1. BUSINESS.

GENERAL

We were  incorporated  in Florida in August 1993, for the purpose of developing,
manufacturing,  and marketing  insulating materials and coatings using partially
evacuated glass microspheres (sometimes referred to as "shells"). The process of
evacuation  removes air and other  gases from the sphere and  thereby  creates a
vacuum.  A shell is a very small glass sphere  (generally the size of a grain of
salt) made by crushing  glass  particles.  The  insertion of shells into various
materials  and  products  ("shell  technology")  can  substantially  improve the
thermal resistive  characteristics  of such materials and products  resulting in
improved insulation ("R") values. The more a shell is evacuated,  the higher the
thermal resistive characteristics of the product or material to which the shells
are added.

Our  management  believes  that  there  is a broad  range  of  applications  for
introduction in products of evacuated or partially  evacuated shells, the effect
of which is improved energy  efficiency of such products because of the inherent
insulating  characteristics  provided by the glass  spheres.  Our strategy is to
commercially  exploit the use of its shell  technology to improve the "R" values
of a number of products.  In fiscal year 1995, we completed the  development  of
our first product line that consisted of paints and coatings  containing  shells
in order to reduce heat  transmission  and improve the insulation  values of the
products.  The products are marketed under the  ThermaCool(TM)  label. There has
been little sales  activities to promote this product since its introduction due
to financial limitation.

                                       1
<PAGE>


On November 30, 1995, we acquired the assets of C.F.  Darling Paint & Chemicals,
Inc.,  a paint  manufacturing  company,  located  in New  Port  Richey,  Florida
("Darling Paint") for approximately  $250,000. in cash. We also assumed the real
estate lease for the Darling Paint  facility and acquired those assets to have a
facility to produce  and  develop  paints and  coatings  for its  ThermaCool(TM)
product line which incorporates its shell technology. Prior to this acquisition,
we  purchased   paints  and  coatings   from   independent   paint  and  coating
manufacturers.

On March 19, 1997,  we  successfully  completed a public  offering for 1,375,000
Units, with each Unit consisting of one share of Common Stock, $.0001 par value,
and one Series A Redeemable Common Stock Purchase  Warrant,  at a price of $4.00
per Unit. In addition,  the underwriter  exercised its  over-allotment  purchase
option and  purchased  206,250  additional  Units at the initial per Unit public
offering price, less the underwriting discounts and commissions.

On July 28, 1997, we acquired all the  outstanding  common  stock,  representing
100%  ownership of Atlas  Chemical Co., a paint  manufacturer  and  distributor,
located in Miami,  Florida. The Company acquired this firm so that it would have
a larger manufacturing facility to both expand production of paints and coatings
and to obtain an established  marketing and distribution  channel which included
major accounts such as Ace Hardware, Lowes, and others. This facility was closed
on November 24, 2000 because of the lack of funds to maintain the operation. All
personnel were terminated on that date.

We acquired T-Coast Pavers/Sealco  Systems, Inc. on December 1, 1998 for 300,000
shares of its common stock, then valued at $300,000 and an employment  agreement
with its founder and key  executive  for the  payment of an  additional  300,000
shares  over the three year  employment  period.  This  company  provides  paver
installation and driveway sealant and coating services  primarily to contractors
in Southeast Florida.

On December 1, 1998, we acquired American Paints, Inc., a Pompano Beach, Florida
paint  manufacturer and distributor for 572,000 common shares.  American Paints'
operations were consolidated into the Company's Atlas manufacturing  facility to
reduce duplicate costs in April 2000.

We have sustained significant operating losses since its inception. Management's
strategy of expanding the ThermaCool(TM) product line, developing a commercially
viable manufacturing  process for shells, and expansion into new markets for its
shell technology may result in the Company  incurring  additional  losses due to
the costs  associated  with these  strategies.  Our management  expects to incur
losses  until it is able to  increase  its sales,  expand its  product  line and
increase its distribution  capabilities to a sufficient  revenue level to offset
ongoing  operating  and  expansion  costs.  The  closing  of the Atlas  Chemical
operations may further delay any plan to to achieve profitability.

Our management's  long-term business strategy is to (i) expand the marketing and
distribution of ThermaCool(TM)  paints and coatings (ii) develop and manufacture
the  Company's  own  shells  and  (iii)  expand  the shell  technology  to other
products,  such as drywall,  gypsum board,  home siding materials and space foam
insulation.  Other  markets in which the  Company  may  utilize  its  technology
include  refrigeration  and  cooling  systems,   automotive  and  transportation
applications and cups and thermoses. There is no assurance that the Company will
continue to be  successful  in  penetrating  the market with its  ThermaCool(TM)
product  line,  developing  commercially  viable  manufacturing  techniques,  or
addressing other markets.


                                       2
<PAGE>


BUSINESS STRATEGY

Our business  strategy is to become  profitable by  commercially  exploiting its
shell  technologies  along with the manufacture and distribution of conventional
paint and coating products.  An important element in the Company's past strategy
incorporated  acquisitions  within the paint industry of paint manufacturers and
distributors. That strategy has been abandoned because of financial constraints.
One of our current  objective  will  continue to be to establish a  distribution
channel to market ThermaCool(TM)  coatings. We will not have other products that
may be  complementary  established  paint and coating  products.  The  Company's
business  strategy  is  dependent  upon  the  successful  implementation  of the
following:


(i)  Re-start  the  marketing  and  distribution  of  ThermaCool(TM)paints   and
     coatings.

The use of shells in paints and  coatings is the first  attempt to  commercially
apply its shell technology.  Although the ultimate  objective is to commercially
exploit fully  evacuated  shells in a variety of products,  management  believes
that the use of partially  evacuated  shells  properly  combined with paints and
coatings can improve the  insulating  properties of these  products.  Management
believes that the closing of Atlas Chemical Co. will further delay the marketing
of ThermaCool(TM) paint and coating products.

The first  ThermaCool(TM)  product is a roof coating material that  incorporates
the partially evacuated shells into a roof coating mixture.  This product can be
used to coat new roofs as well as existing  tiles,  shingles  and flat roofs and
can be applied by  manufacturers  of concrete  and ceramic  tiles.  We will also
market a  ThermaCool(TM)  exterior wall coating that can reduce  emissivity  and
thermal conductivity.

Coatings are characterized as protective barriers that can be applied to various
surfaces for protection from the elements.  Paint is  characterized as a product
to change the color of a particular surface. By this definition, some paints may
be classified as coatings,  such as a semi-gloss  enamel,  while flat wall paint
would  not.  The  basic  difference  between  a roof and a wall  coating  is the
viscosity or thickness of the product.  A roof, being less vertical than a wall,
can accept a thicker coating  without the product running or sagging.  A thicker
coat for a roof is  preferable  because of its  exposure  to the  elements.  The
application of shell technology to our products is limited to the ThermaCool(TM)
roof and exterior  wall  coatings  where the  insulative  and energy  efficiency
characteristics of the product are most beneficial.


We have filed for patent  protection for microshell  technology  based products.
There is no assurance  that the Company will be able to develop  products  other
than roof and exterior wall coatings utilizing its ThermaCool(TM) process.

(ii) Develop and manufacture the Company's own shells.

We have applied for a patent involving the production of insulating  shells in a
manner to enable the  evacuation of gases or the addition of low  conductive gas
into the shells.  Such evacuation  results in lower gas pressure or gases within
the  shells  that can  reduce  thermal  conductivity,  thus  providing  improved
insulating qualities.  The manufacturing process involves the formation of water
vapor in the shells and then the subsequent  evacuation of the shells by heating
the shells. This process causes out-permeation of the water vapor. Other patents
have been granted us relating to various processes to evacuate glass shells.


                                       3
<PAGE>


To the  best of  management's  knowledge,  no one has  been  able to  develop  a
commercially  viable process for the production of fully evacuated glass shells,
due to, among other factors, manufacturing and technical restraints.  Currently,
there are three large  multinational  companies  that  manufacture  shells.  The
essential  difference between the manufacturing  process for partially evacuated
shells, as compared to substantially or fully evacuated shells, is the technique
employed  to  evacuate   gases  from  the  shells  which   improve  its  thermal
conductivity or insulating value. Our plans to market  non-evacuated  shells for
several uses will compete  directly with others in this market.  We plan to have
non-evacuated  shells  available to also sell in the general  market because not
all  shells  during  the   manufacturing   process  will  be  evacuated.   These
non-evacuated  shells will be separated and sold for general use as fillers, but
will be produced at a substantially reduced cost.

Our  present  Daytona  facilities  and  equipment  can be  used  to  manufacture
partially evacuated shells.  To-date we have manufactured pilot plant quantities
of microshells but have not made commercial quantities.

(iii) Expand the shell technology to other products.

We believe the potential  exists to commercially  exploit other markets suitable
for the Company's shell technologies.  These include aroma therapy  applications
and construction components such as drywall, gypsum board, home siding materials
and space foam insulation as potential markets.  Other potential markets include
refrigeration and cooling systems,  automotive and transportation  applications,
and cups and  thermoses.  There is no assurance  that we will be able to attract
capital to manufacture  our products or successfully  penetrate any markets.  We
will only be able to  implement  this  strategy  if we are able to  economically
manufacture highly or partially evacuated shells.

SHELL TECHNOLOGY

We have  also  acquired  rights  to  certain  patent  applications  relating  to
evacuated shells.  The first involves a technique for  manufacturing  insulating
shells in a manner that  enables the  evacuation  of retained  gases  within the
shells.  This  evacuation  results in low gas pressure within the shell that can
reduce the thermal conductivity,  thus improving insulation qualities. Evacuated
shells are capable of forming vacuums that limit heat transfer.

The  use of  evacuated  glass  shells  as an  important  component  of  improved
insulation and the use of a reflective layer within or outside of the shells has
also been  referred  to in prior  patents.  Our patent  application  describes a
procedure  which uses water vapor and heat,  combined with the  introduction  of
certain gases,  to cause the  evacuation or substantial  evacuation of the gases
contained in the interior of the shells.

Other patent  application uses evacuated shells introduced into a coating.  Such
coatings may be used for roofs, exterior paints, interior paints and other uses.
The addition of  evacuated or  substantially  evacuated  shells,  into a coating
provides the following characteristics: (i) a reduction in radiant heat transfer


                                       4
<PAGE>

by use of  reflective  coatings,  (ii) the  reduction of heat  transfer  between
shells by restricting  the transfer to point  contact,  and (iii) a reduction in
the heat transfer across a shell by the use of a partial or full vacuum.

Although  management  believes  that patent  protection  is available  for these
inventions,  there is no assurance that such patents will be granted. Management
believes that the processes  described in the patent applications are based upon
sound  scientific  principles,  and the machinery and equipment are available to
implement the production techniques necessary to manufacture evacuated shells on
a commercial  basis,  there is no assurance we will be able to economically  and
profitably  manufacture  evacuated shells or otherwise exploit these inventions.
The  ThermaCool(TM)  product  line does not rely upon these  inventions  because
ThermaCool(TM)   paint  and  coatings  use  partially,   rather  than  fully  or
substantially, evacuated shells.

MANUFACTURING FACILITIES AND TECHNIQUES

Management has acquired machinery, tooling, a high temperature furnace and other
items  necessary  to  manufacture  evacuated  shells  at  its  Daytona,  Florida
location.  Production  of  quantities  of shells  sufficient  for the  Company's
immediate needs is now anticipated  during fiscal year 2001. A more  substantial
facility  will need to be built to provide  shells in  quantities  greater  than
1,500,000  pounds  annually.  Internal cost  estimates,  prepared by management,
indicate that the Company will require at least $150,000 to complete the initial
Daytona shell manufacturing facility that would provide commercial quantities of
shells to outside parties as a separate business endeavor.

The basic process for manufacturing glass shells involves heating glass and then
partially drying and crushing the glass  composition.  The glass  composition is
then size separated for different applications. Glass shells are then formed and
blown at high  temperatures  with  the use of heat in a  vertical  furnace.  The
completed glass shells are then separated from the shell residue. Other types of
glass microspheres have also been developed by the Company.

Management is aware of three other  companies that currently  manufacture  glass
shells.  These glass shells are primarily  used as filler  material for plastics
and ceramics.  The  non-evacuated  glass shells are used because they provide an
improved  "ball  bearing"  effect  for  better  flow,  and as a low cost  filler
material in compounding.  The manufacturing  techniques  proposed by us would be
similar to those currently utilized to manufacture shells,  except that we would
also employ  procedures which evacuate or  substantially  evacuate the shells in
the final stages of the production process.

The Company had produced its  ThermaCool(TM)  product line at its Atlas Chemical
Miami  facility  until is was closed.  The Company no longer  produces and sells
paint and coating products.



COMPETITION

ThermaCool(TM)  products  compete in the special purpose coatings market that is
an extremely  competitive  market  principally  composed of large  multinational
companies that have significantly greater assets, working capital, and marketing
personnel   than  the  Company.   Special   purpose   coatings  are  similar  to
architectural  coatings such as normal house paints, but differ in that they are
formulated for special applications or environmental conditions, such as extreme
temperatures, chemicals, or corrosive conditions.

                                       5
<PAGE>


Major producers of special  purpose  coatings  include PPG  Industries,  DuPont,
Sherwin-Williams,  RPM, Inc., Inmont,  Courtaulds,  PLC, Glidden,  Azkon.V., and
Valspar  Corp.  The U.S.  Bureau of Census valued the special  purpose  coatings
market at approximately $3 billion in 1995. The roofing,  coating and industrial
construction  coating market segment  represents  approximately 15% of the total
"special purpose coatings" market, or 28 million gallons valued at approximately
$450,000,000.

We believe that the primary  competitive factors in the special coatings product
segment are quality, ease of use, service,  warranty,  availability,  and price.
The cost per gallon of  ThermaCool(TM)  is at the high end of the price spectrum
for paints and  coatings  ($17.00 to $25.00  per  gallon).  Although  management
believes that the improved  insulating  characteristics  of  ThermaCool(TM)  add
significant  value and justify the higher cost,  there is no assurance  that the
Company's products will be accepted because of the higher cost.

The Company's  current  supply sources of shells could become  competitors.  The
Company expects that if its products become successful, competitors will be more
likely to develop and introduce  into the market place  comparable  products and
technologies.  There is no assurance that the Company will be able to compete in
the special purpose coatings or other similar markets.



MARKETING AND DISTRIBUTION

The Company intends to market its ThermaCool(TM) products to roofers,  painters,
distributors  and  manufacturers  of special  purpose  coatings.  The  Company's
initial  target  markets  include   industrial  and  residential   construction,
maintenance,  storage  tanks,  and roof coatings.  The Company  intends to place
advertisements  in trade  journals  for the  plastics,  glass  and  construction
industries.  In addition,  the Company intends to participate in trade shows and
intends  to  aggressively  promote  the  energy  saving  characteristics  of its
ThermaCool(TM) product lines.

Management  believes that contractors,  who purchase from distributors,  will be
the primary  customers for the Company's  products.  The Company also intends to
solicit established contractor distribution centers as a source of marketing its
ThermaCool(TM)  products.  Management's  strategy is to attract individuals that
have significant contacts in the special purpose coatings industry.  There is no
assurance  that the Company will be able to attract  these  individuals  or that
such individuals will be successful in their marketing efforts.  Currently,  the
Company  has a limited  sales  staff that is  concentrating  on direct  sales of
conventional  paint  products  until  such  time  as the  Company  has  adequate
production availability for its ThermaCool(TM) products.

The Company plans to market directly to several specialty industries such as the
RV motor home  industry  and  manufactured  housing  industry.  The  Company has
targeted chains such as Home Depot as a point of sale distribution  outlet.  The
Company  believes  that  viable  business   opportunities  for  franchising  and
distribution  relationships  with existing painting and coating  contractors are
additional marketing and distribution strategies that can expand the sale of the
Company's  products.  The  Company  also  believes  that  its  products  may  be
distributed through private label arrangements with other distributors. There is
no assurance  that any of these  marketing or  distribution  strategies  will be
successful.

                                       6
<PAGE>



PRODUCT LIABILITY INSURANCE AND WARRANTIES

The Company does not currently have product liability  insurance in force. These
policies lapsed for non-payment of premiums.

Our  business  provided  warranties  for  its  products  as  follows:   (1)  All
ThermaCool(TM)  products have eight year  warranties;  (2) #44000  Acrylic House
Paint has a nine year  warranty;  (3) #4000 Acrylic House Paint has a seven year
warranty;  (4) #2400  Acrylic  Latex House Paint has a five year  warranty;  (5)
#2200 100% Vinyl Acrylic House Paint has a five year  warranty.  All remedies as
to warranty  failures require only  replacement for these products.  Other Atlas
Chemical  products had warranties  for varying  periods of five to twenty years.
Such warranties provide for replacement of defective product with new product of
equivalent  price.  With the closing of Atlas Chemicals the costs of liabilities
for warranties are uncertain.


EMPLOYEES

As of  September  30,  2000,  the Company had nine  employees,  of whom four are
salaried and the balance are paid hourly. Of these employees, six are located at
the Daytona,  Florida  facility,  three are located at T-Coast Pavers in Stuart,
Florida.  We consider our relations with its employees to be good. The Company's
Sealco/Tcoast   business  utilizes  the  services  of  a  Professional  Employee
Organization ("PEO") to provide services in its operation.


ITEM 2.  PROPERTIES.

The  Company  currently  leases  and  occupies  12,320  sq.  ft. of space at 440
Fentress Blvd.,  Daytona Beach, Florida where it maintains its corporate offices
and where it is  developing  initial  production  facilities  for its  evacuated
shells.  This lease  expires  October 31, 2004.  Lease  payments  are  $5,713.40
monthly.  The  facility  consists of  approximately  2,500 square feet of office
space with the balance being used for warehousing and manufacturing.


ITEM 3.  LEGAL PROCEEDINGS.

On October 4, 2000, a judgment was rendered by the United States  District Court
Middle  District  of Florida in a trial  regarding  claims  made by Mr.  Russell
Haraburda and Eden Group,  Inc.  against John  Pidorenko,  the Company's  former
president,  and the Company for monies  purportedly due for arranging  financing
for the Company prior to its IPO in March of 1997.  The judgment  concluded that
no  monies or other  consideration  was due Mr.  Haraburda  or Eden  Group.  The
Company's  claims  regarding two promissory  notes of the Eden Group,  Inc., Mr.
Haraburda's  firm, that are unpaid were also denied.  Subsequently,  Mr. Russell
Haraburda and Eden Group,  Inc.  appealed the decision to the United State Court
of Appeals for the  Eleventh  Circuit.  The company  also  appealed the decision
regarding the  obligations of Eden Group,  Inc. under the promissory  notes.  No
decision has been rendered as of the date of this filing.

                                       7
<PAGE>


The company is involved in several  lawsuits  for  obligation  outstanding  with
vendors, leasing company, and certain professionals for services provided. There
are default judgments that have been granted because the company has not had the
financial  resources  to  appropriately  defend  itself  as  representation  was
declined or withdrawn. It is uncertain whether the company will in the future be
able to pay these obligations.  If unable to do so, then the company will likely
seek to protect  its  remaining  assets and seek to  liquidate  its  business in
utilizing the provisions of the Federal  Bankruptcy Courts. The ability to raise
additional  capital is highly uncertain at this time. Should such funding not be
available,   than  the   company   will  have  no  choice  but  to  seek  either
reorganization or liquidation utilizing the Bankruptcy statutes.

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

None

                                     PART II


ITEM 5. COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

Before the Company's public offering,  which closed on March 19, 1997, there was
no market for the Company's Common Stock, Units, or Warrants.  Consequently, the
offering  prices  of the  Units  and  Warrant  Exercise  Price  were  determined
arbitrarily by negotiation  between the Company and the  Underwriter.  Among the
factors considered in such negotiations were estimates of the business potential
of the  Company,  the present  state of its  development  of new  products,  its
financial  condition,  an assessment of its management and the general condition
of the securities markets at the time of this offering.

On March 19,  1997,  1,581,250  Units of the  Company's  securities  (each  Unit
consisting of one share of Common Stock and one Redeemable  Warrant) were issued
to investors at $4.00 per Unit. Trading of such Units commenced  thereafter.  On
March 19,  1997,  the  Underwriter  commenced  trading of the  Common  Stock and
Warrants separately.

Our common stock and warrants were listed and traded on NASDAQ under the symbols
VCLL and VCLLW,  respectively,  until  February 23, 2000 at which time they were
de-listed for  non-compliance.  Subsequently,  our securities were listed on the
NASD  BB:OTC  until  February  23,  2001 at which  time  they were  removed  and
thereafter  listed in the Pink Sheets.  The following table sets forth,  for the
periods indicated,  the range of high bid and low bid closing quotations for the
securities  during the last two years.  The tables  reflect  the 1 for 4 reverse
split that occurred in March 2000. These quotations are between dealers,  do not
include retail mark-ups,  mark-downs, or other fees or commissions,  and may not
represent actual trades.

                                       8
<PAGE>



                              Common                  Redeemable
                              Stock                   Warrants
-------------------------------------------------------------------------------
                           Bid                        Bid
2000 Fiscal Year       High   Low   Closing       High   Low   Closing
-------------------------------------------------------------------------------

First quarter         2 3/8  1 7/8  3 3/16       11/16   3/32   5/16
Second quarter        5 3/4  1 5/8  1 5/8         9/16   1/8    5/16
Third quarter         3       9/16  1 3/4         1/2    7/32   9/32
Fourth quarter        1 3/4   5/8     5/8         1/4    1/32   5/32

 -------------------------------------------------------------------------------
                           Bid                        Bid
1999 Fiscal Year       High   Low   Closing       High   Low   Closing
-------------------------------------------------------------------------------

First quarter         9 1/2  5      5 1/2         11/16   3/32   5/16
Second quarter        6 1/2  2 1/2  5 1/4          9/16   1/8    5/16
Third quarter         4 5/8  3 3/4  3 1/4          1/2    7/32   9/32
Fourth quarter        7 3/8  2      2 3/4          1/4    1/32   5/32

As of September  30, 2000,  there were  approximately  135 holders of record for
common  stock and 5 holders of record of the  warrants.  However,  the  Company'
management  believes  that 300 of its customers  beneficially  own the Company's
Common Stock as of April 30, 2001.


EXPIRATION OF WARRANTS AND UNDERWRITTER'S OPTIONS

In  connection  with the public  offering,  the Company sold to the  Underwriter
Options to purchase 137,500 Units of the Company's securities,  identical to the
Units publicly sold, at an exercise price of 165% of the public  offering price.
The Underwriters' Units were exercisable at a price per Unit of $6.00 subject to
certain  adjustments.  They  expired on March 12,  2001 along with  warrants  to
purchase  392,192  shares of common stock.  The exercise price of these warrants
after a reverse stock split was $24.00 per share.


DIVIDEND POLICY

The Company has not paid any  dividends  on its common stock and does not intend
to pay cash dividends on its common stock in the forseeable  future. The Company
intends  to  follow a policy of  retaining  earnings,  if any,  to  finance  the
development and expansion of its business.

                                       9
<PAGE>

TRANSFER AGENT AND WARRANT AGENT

Continental  Stock  Transfer & Trust  Company of New York,  New York acts as the
Company's Transfer Agent and Warrant Agent.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Form 10-KSB  contains  forward  looking  statements,  within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934,  regarding future events and the future performance of the
Company  involve risks and  uncertainties  which may cause the Company's  actual
results in future periods to be materially different from any future performance
suggested  herein.  The  words   "anticipated,"   "believe,"  "expect,"  "plan,"
"intend,"  "seek,"  "estimate,"  "project,"  "will,"  "could," "may" and similar
expressions  are  intended  to  identify   forward-looking   statements.   These
statements  include,  among others,  information  regarding  future  operations,
future capital  expenditures  and future net cash flow. Such statements  reflect
our current views with respect to future events and  financial  performance  and
involve risks and uncertainties, including, without limitation, general economic
and  business  conditions,  changes in foreign,  political,  social and economic
conditions, regulatory initiatives and compliance with governmental regulations,
the ability to achieve further market penetration and additional customers,  and
various other matters, many of which are beyond our control.  Should one or more
of these risks or uncertainties occur, or should underlying assumptions prove to
be  incorrect,  actual  results may vary  materially  and  adversely  from those
anticipated,  believed, estimated, or otherwise indicated.  Consequently, all of
the  forward-looking  statements  made in this Form 10-K are  qualified by these
cautionary  statements  and there can be no assurance  of the actual  results or
developments.

GENERAL

The Company was a developmental  stage enterprise during its initial three years
of  operation  for the fiscal years  through  September  30,  1997.  During this
development  stage  period,  management  devoted the  majority of its efforts to
research  and  development,  financing,  marketing  and  activities  related  to
starting up production of its  proprietary  technology.  These  activities  were
funded by investments  from  stockholders  and borrowings  from unrelated  third
parties.  Since  fiscal  year 1998,  the  Company  has been an  operating  stage
enterprise  based  upon the  several  acquisitions  that  were  completed.  With
acquisitions, particularly Atlas Chemical, we evolved from the development stage
to an  operating  enterprise  whose  principal  line of business was the sale of
paints  and  coatings  within  the paint  industry.  With the  closing  of Atlas
Chemical  during November 2000, the Company is not presently  manufacturing  any
paint or coating products.  Furthermore, the Company's ThermaCool(TM) coating is
not presently being manufactured.

We have not been able to  generate  sufficient  revenues  during  our  operating
history  to fund  our  ongoing  operating  expenses  or our  continuing  product
development  activities.  The successful IPO completed in March 1997 allowed the
Company to repay its then outstanding indebtedness and provided working capital.
In fiscal year 1994, the Company  completed the development of its first product
line. The Company has sustained significant operating losses since its inception
resulting in an accumulated  deficit of  approximately  $13,379,113 at September
30, 2000.

                                       10
<PAGE>


We have sustained significant operating losses since its inception. Management's
restructuring strategy of developing a commercially viable manufacturing process
for microshells  and expansion into markets for its shell  technology may result
in the Company  incurring  additional  losses due to the costs  associated  with
these  strategies.  The  Company  expects  to incur  losses  until it is able to
increase its sales,  expand its product  lines,  and  increase its  distribution
capabilities  to a sufficient  revenue  level to offset  ongoing  operating  and
expansion costs.

Management's  previous strategies of expanding the ThermaCool(TM)  product line,
developing a commercially viable manufacturing process for shells, and expansion
into new markets for its shell  technology  would have  resulted in  substantial
additional losses due to the costs associated with these strategies.

We will continue to incur losses until it is able to increase sales,  expand its
product lines, and increase its distribution capabilities sufficiently to offset
ongoing operating and expansion costs.


RESULTS OF OPERATIONS
FISCAL YEAR 2000 COMPARED TO FISCAL PERIOD 1999

Revenues

Total revenues for the year ended September 30, 2000,  were $1,872,017  compared
to $1,519,447  for the same fiscal period ending of 1999,  which  represented an
increase  of  $352,570,  or 23%.  The  increase  was a  result  of the  sales of
Sealco/T-Coast  Pavers that was acquired during December of 1998 and contributed
to the operating results for only 10 months in the fiscal year ended 1999.

Cost of Sales

Cost of sales for the fiscal year ended  September  30, 2000,  increased  41% to
$1,609,878  from $1,141,547 in the fiscal 1999. Cost of sales as a percentage of
sales  increased to 86% from 75% for 2000 over 1999. This increase is attributed
to higher cost of sales of its sealing and paving operation  experienced  during
more recent fiscal year. Consequently,  the gross profit margin decreased to 14%
for fiscal year 2000 from 24.9% for the prior fiscal year.

Selling, General and Administrative Expenses

For  the  year  ended   September  30,  2000,   total  selling,   general,   and
administrative  expenses  were  $3,234,327  as  compared to  $2,086,073  for the
previous fiscal, an increase of $1,148,254, or 55%. The increase was largely due
to additional  expenses for  professional  and  consulting  fees paid during the
recent fiscal year which payments  included the issuance of common stock instead
of cash compensation.

In October of 1999, the Company  relocated its corporate offices to 440 Fentress
Blvd., Daytona Beach, Florida from its former location in Sarasota, Florida.

Interest Expense

Interest expense increased 24%, or $63,091 to $330,222 for the fiscal year ended
September 30, 2000 from $267,131 in the previous fiscal year ended September 30,
1999. The increase in interest charges are attributed to higher  indebtedness as
the company expanded operations at the new Daytona facility.

                                       11
<PAGE>


Loss on Discontinued Operations

During  fiscal year ended  September  30,  2000,  the  company  closed its Atlas
Chemicals  operation in Miami,  Florida because of the lack of working  capital.
This closing  resulted in a charge of $2,848,852.  There was a charge of $86,944
in the prior  fiscal  year for the  closing of a specific  operation  within the
paint division.

Net Loss

The net loss and the net loss per share were $6,459,744 and $1.68  respectively,
for the year ended  September  30, 2000,  as compared to a net loss and net loss
per share of  $3,677,068  and $1.85,  respectively,  for the fiscal  year ending
September  30,  1999.  The  increase  in loss  is,  in part,  attributed  to the
Company's  higher level of selling,  general and  administrative  costs over the
prior year and the charge for discontinued operations in the current year while,
in the previous year, the company  benefited from deferred income tax expense of
$795,309.  On a weighted average basis,  there were 3,830,448 shares outstanding
for fiscal year ending  September  30,  2000 as  compared  to  1,981,228  shares
outstanding for fiscal year ended September 30, 1999, a 93% increase.


FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998

Revenues

Total  revenues  for  fiscal  year  ended  1999 were  $1,519,447.  There were no
revenues for the company's prior fiscal year.  These revenues were realized from
the Sealco/Tcoast operation that was acquired in December 1999 which contributed
to the operating results for 10 months in this fiscal year.

Cost of Sales

Cost of sales for the fiscal year ended September 30, 1999 was $1,141,547.  Cost
of sales as a  percentage  of sales was 75%.  There was no  comparables  for the
previous  fiscal  year ended 1998.  Cost as a  percentage  of sales  reflect the
margins obtained from the Sealco/Tcoast business providing services that include
sealants  and paver to  customers  on the east coast of  Florida.  Gross  profit
margin was 24.9% for this fiscal year.

Selling, General and Administrative Expenses

For the fiscal  year ended  September  30,  1999,  total  selling,  general  and
administrative  expenses  were  $2,086,073 as compared to $566,689 for the prior
fiscal year, a 268%  increase.  This increase is  attributed  to the  additional
selling,  general  and  administrative  expenses  of  the  company's  operations
including T-Coast Pavers, that was acquired during this fiscal year ended.

In an effort to streamline  operations and further cut costs,  management closed
its Arizona operation in September 1999 just prior to the end of its fiscal year
and closed down its retail paint store in Holiday, Florida in November 1999.

Interest Expense

Interest  expense  increased  965%,  or $242,063 to $267,131 for the fiscal year
ended  September  30, 1999 from $25,068 in the previous  fiscal year ended 1998.
This  increase  is  attributed  to  the  interest   accrued  on  the  discounted
convertible  debentures  the company  issued  during the fiscal year 1999 in the
total amount of $1,333,333.

                                       12
<PAGE>


Tax Benefit

A determination  was made by management to establish a 100% valuation  allowance
for the deferred tax asset  generated  during  fiscal year ended  September  30,
1999. A determination was made by management that the tax benefit established in
prior years was sufficient.

Net Loss

The net loss and the net loss per  share  were  $3,677,068  and  $1.85 per share
respectively, for the period ended September 30, 1999, as compared to a net loss
and net loss per share of $607,904 and $.66 per share, respectively,  for fiscal
year  1998.  The loss  was a 505%  increase  amounting  to  $3,069,164  over the
previous fiscal year, but the loss per share was a 180% increase  because of the
greater number of shares  outstanding.  On a weighted average basis,  there were
shares  1,981,228  outstanding  for fiscal  year  ended  September  30,  1999 as
compared to 919,295  shares  outstanding  for the  previous  fiscal year, a 115%
increase.


LIQUIDITY AND CAPITAL RESOURCES

To date,  the  Company  has funded its  capital  requirements  and its  business
operations,  including product development activities with funds provided by the
sale of its securities and from  borrowings.  During fiscal year ended September
30, 2000, the Company received $500,000 from an unaffiliated investor, PAMG LLC.
During the fiscal year,  only limited other  capital,  as discussed  below,  was
received  by the company to conduct its  operations.  Consequently,  without the
availability  of  adequate  funding  the company was forced to close some of its
operations  that included  consolidating  the American  Paints business into the
Miami location of Atlas Chemical, and thereafter the Atlas operation itself.

Early in fiscal  year  ended  September  30,  2000,  the  Company  arranged  the
placement  of an  additional  $315,000  from  the  holder  of the 9%  Redeemable
Convertible  Promissory  notes  that  provided  financing  in fiscal  year ended
September  30,  1999.  In that  financing,  the Company  issued two  warrants to
purchase  50,000 shares each of the  Company's  common stock at $2.00 per share.
This  placement  was  discounted  from face  value  with the  Company  receiving
approximately $900,000 after placement costs and expenses. Those funds were used
for the relocation of its corporate offices to Daytona,  Florida,  establishment
of its microshells  manufacturing  facility at that location,  and to supplement
its working capital.

During March 2001,  conversion  of  $566,000,  a portion of the debt held by the
Augustine  Fund,  who holds all remaining  convertible  debt was completed  into
6,888,000  shares of common stock which  represents more than 50% voting control
of the  outstanding  common  stock of the  company.  With this  conversion,  the
principals of Augustine  Capital are in a position to control the affairs of the
company.  Augustine  Capital  has  agreed,  subject  to certain  additional  due
diligence,  to provide additional capital to the company. No significant funding
has occurred prior to this filing.

The Company continues to experience  operating losses. The Company's net working
capital  and   stockholders'   equity  deficit  are  $1,624,642  and  $1,741,457
respectively,  at September 30, 2000. The Company has not historically generated
sufficient  revenues  from  operations  to self-fund  its capital  requirements.
Management  is  focusing  on  raising  additional  capital  to fund  it  present
development.  Management  expects that it will be able to arrange for additional

                                       13
<PAGE>


financial   resources  to  properly  execute  its  strategic  plan  although  no
assurances can be given that it will be successful in such  endeavors.  If it is
not  successful  in this  endeavor,  then it will choices  will be limited.  The
Company does not have sufficient working capital to meet its immediate needs. If
capital is not immediately made available then the Company may be forced to seek
protection within the Federal bankruptcy courts.

On January 5, 1998, NASD Regulation,  Inc. announced that a complaint was issued
on December 23, 1997 charging Monroe Parker Securities,  Inc. and certain of its
officers with price  manipulation and excessive markups in the trading of Steven
Madden,  Ltd. and fraud in the sales of  securities of United  Leisure.  Neither
firm is affiliated  with the Company.  The complaint  asked for  restitution  to
defrauded investors and potential sanctions that may include a fine, suspension,
individual  bar, or firm  expulsion  from the NASD. To date,  there have been no
adverse effect upon the Company  relating to  allegations  against Monroe Parker
Securities, Inc.

Monroe  Parker  Securities,   Inc.  was  the  Company's  investment  banker  and
underwriter  for the public  offering that was concluded on March 19, 1997.  The
underwriter  was granted an  appointee  to the board of directors as a condition
for this  undertaking.  During December 1997,  Monroe Parker ceased  substantive
market making  activities in the Company's  common stock.  On December 19, 1997,
Stephen  Drescher,  who was the Monroe Parker designee to the Company's board of
directors,  resigned  effective  that date.  Since  then,  the  Company  has not
suffered any further consequence of Monroe Parker ceasing operations.


SEASONALITY AND FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company  believes it will  experience  seasonal  demand for its products and
services in the coating and paver business.


INFLATION

Inflation  has not  proven to be a factor in the  Company's  business  since its
inception  and is not  expected  to  have a  material  impact  on the  Company's
business in the foreseeable future.


ITEM 7.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The information required by Item 8 appears at page F-1, which appears after
this page.



ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

     The Company  appointed Pender Newkirk and Company,  CPA's as their auditors
on May 2, 2000.

                                       14
<PAGE>

                                    PART III


ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.


     The  information  required by this item is incorporated by reference to the
     definitive  proxy  statement  to be filed  by the  Company  for the  Annual
     Meeting of Stockholders to be held on September 15, 2001


ITEM 10: EXECUTIVE COMPENSATION

     The  information  required by this item is incorporated by reference to the
     definitive  proxy  statement  to be filed  by the  Company  for the  Annual
     Meeting of Stockholders to be held on September 15, 2001.


ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The  information  required by this item is incorporated by reference to the
     definitive  proxy  statement  to be filed  by the  Company  for the  Annual
     Meeting of Stockholders to be held on September 15, 2001.


ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  information  required by this item is incorporated by reference to the
     definitive  proxy  statement  to be filed  by the  Company  for the  Annual
     Meeting of Stockholders to be held on September 15, 2001.


ITEM 13. EXHIBITS,  CONSOLIDATED FINANCIAL STATEMENTS,  SCHEDULES AND REPORTS ON
FORM 8-K.

(a)  The following documents are filed as part of this report:

     (1)(2) CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.

     A list  of the  Consolidated  Financial  Statements  filed  as part of this
     Report is set forth in Item 8 and appears at Page F-1 of this Report; which
     list is incorporated herein by reference. The Financial Statement Schedules
     and the Report of Independent Auditors as to Schedules follow the Exhibits.

(a)(3) EXHIBITS.

                                       15
<PAGE>

<TABLE>
<CAPTION>



<S>      <C>
     1.1 Revised Form of Underwriting Agreement*
     1.2 Revised Form of Underwriter's Warrants*
     1.3 Revised Form of Selected Dealers Agreement*
     1.4 [Reserved]
     1.5 [Reserved]
     1.6 Executed Escrow Agreement and Amendment thereto entered into by First of America, Bank of
         Michigan, N.A., the
         Company and the Underwriters*

     3.1 Certificate of Incorporation and Amendment to Certificate of Incorporation of the Company*

     3.1 (a)   Certificate of Amendment to Certificate of Incorporation to
               reflect 1 for 10 reverse stock split*

     3.1 (b)   Form of Certificate of Amendment to Certificate of Rights,
               Designation and Preferences of Series A Preferred Stock*
     3.1 (c)   Certificate of Amendment to Certificate of Incorporation to
               reflect 1 for 4reverse stock split .

     3.2 Bylaws of the Company*
     3.3 Amendment to Bylaws*
     4.1 Specimen of Common Stock Certificate*
     4.2 Specimen of Warrant Certificate*

     4.3 Revised Form of Warrant Agreement*

     4.4 Conversion Notice and Election Form for Convertible Note Holder*

     5.1 Opinion of Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A. as to legality of issuance of Units*

    10.0 Employment Agreement (4/4/96) John Pidorenko*

    10.0 (a) Employment Agreement (4/4/96) John Trusty*

    10.0 (b) Form of Convertible Note*

    10.0 (c) Trademark Registration for ThermaCool(TM)*

    10.0 (d) Published International Patent Application*

    10.0 (e) Stock Option Plan*

    10.0 (f) Asset Purchase Agreement for Darling Paint and Coatings
               effective November, 1995*

</TABLE>


                                       16
<PAGE>


    10.0 (g) Lease for Executive Offices*

    10.0 (h) Lease for Darling Paint*

    10.0 (i) Lease for Sarasota Store*

    10.0 (j) Form of Promissory Note (3/6/96)*

    10.0 (k) Stock Purchase Agreement between the stockholders of
              Atlas Chemical Co. and the Issuer effective August 1, 1997**

    10.0 (l) Lease for Daytona Offices

    10.0 (m) Consulting agreement of J. Pidorenko.

    10.0 (n) Stock Purchase  Agreement between PAMG, LLC and the Issuer,  dated
              May 30, 2000.

    10.0 (o) Consulting agreement of CFM Management, Inc.

    10.0 (p) Consulting agreement of Couture & Company, Inc.

    10.0 (q) Employment agreement of P. Thomas.

    10.0 (r) Employment Agreement of J. Hagarman.

    10.0 (s) Form of Augustine Fund, LP convertible note and related
              documentation.

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

     *    Previously filed under cover of Form SB-2 (SEC File No. 333-22001).
     * *  See Form 8-K filed August 7, 1997 via EDGAR

(b)  Reports on Form 8-K

     May 2, 2000 relating to change of auditors.



                                       17
<PAGE>


SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



     Date:   May 21, 2001                   By:      /s/ James Hagarman
                                                     -----------------------
                                                     James Hagarman

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.


SIGNATURE                           TITLE                              DATE
---------                           -----                              ----

/s/ James Hagarman                President                        May 21, 2001
----------------------------
James Hagarman

/s/ Gerald Couture                Vice President and Chief
----------------------------      Financial Officer (Principal     May 21, 2001
Gerald Couture                    Financial Officer) and
                                  Chairman of the Board

/s/ Maurice Malacarne             Vice President, Chief Operating
---------------------------       Officer, Director                May 21, 2001
Maurice Malacarne


                                       18
<PAGE>


                        Consolidated Financial Statements

                 ThermaCell Technologies, Inc. and Subsidiaries

                     Years Ended September 30, 2000 and 1999
                          Independent Auditors' Report



<PAGE>


                 ThermaCell Technologies, Inc. and Subsidiaries

                        Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



                                    Contents


Independent Auditors' Report on Consolidated Financial Statements...........F-1

Consolidated Financial Statements:

    Consolidated Balance Sheet..............................................F-2
    Consolidated Statements of Operations...................................F-3
    Consolidated Statements of Changes in Stockholders' Deficit.......F-4 - F-5
    Consolidated Statements of Cash Flows.............................F-6 - F-7
    Notes to Consolidated Financial Statements........................F-8 - F-22




<PAGE>


                          Independent Auditors' Report



Board of Directors
ThermaCell Technologies, Inc. and Subsidiaries
Daytona Beach, Florida


We have  audited  the  accompanying  consolidated  balance  sheet of  ThermaCell
Technologies,  Inc. and  Subsidiaries  as of September  30, 2000 and the related
consolidated  statements of operations,  changes in stockholders'  deficit,  and
cash flows for the year then ended. These consolidated  financial statements are
the  responsibility  of the  management  of  ThermaCell  Technologies,  Inc. and
Subsidiaries.  Our responsibility is to express an opinion on these consolidated
financial  statements based on our audit. The consolidated  financial statements
of ThermaCell Technologies, Inc. and Subsidiaries as of September 30, 1999, were
audited by other  auditors  whose  opinion,  dated  December  2, 1999,  on those
statements  included an  explanatory  paragraph that described the going concern
uncertainty discussed in Note 2 to the consolidated financial statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  These  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall  consolidated  financial  statement  presentation.  We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material  respects,   the  financial  position  of  ThermaCell
Technologies,   Inc.  and   Subsidiaries  as  of  September  30,  2000  and  the
consolidated  results  of its  operations  and its cash  flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that ThermaCell  Technologies,  Inc. and  Subsidiaries  will continue as a going
concern.  As  discussed  in  Note 2 to the  consolidated  financial  statements,
ThermaCell  Technologies,  Inc. and Subsidiaries  has suffered  recurring losses
from  operations,  negative  working  capital,  and  negative  cash  flows  from
operations. In addition, the Company has certain default judgments against them,
as further  discussed in Note 16. These conditions raise substantial doubt about
its ability to continue as a going concern.  Management's  plans regarding those
matters are also described in Note 2. The consolidated  financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.


Pender Newkirk & Company
Certified Public Accountants
Tampa, Florida
April 23, 2001

                                      F-1
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                           Consolidated Balance Sheet

                               September 30, 2000


<TABLE>
<S>                                                                             <C>
Assets
Current assets:
    Cash                                                                        $       12,879
    Cash held in trust account                                                          27,500
    Accounts receivable, trade, net of allowance for uncollectible
        accounts of $10,000                                                            125,676
    Officer advance                                                                      6,900
    Prepaid expenses and other                                                          70,437
                                                                                --------------
Total current assets                                                                   243,392
                                                                                --------------

Property and equipment, net of accumulated depreciation                                709,513
                                                                                --------------

Other assets:
    Deposits                                                                            30,555
    Prepaid expenses                                                                    47,488
    Other intangibles, net of accumulated amortization of $226,922                     612,672
                                                                                --------------
Total other assets                                                                     690,715
                                                                                --------------

                                                                                $    1,643,620
                                                                                ==============
Liabilities and Stockholders' Deficit
Current liabilities:
    Accounts payable                                                            $      814,155
    Accrued expenses                                                                   688,070
    Accrued payroll                                                                     22,249
    Current maturities of long-term debt:
        Notes payable                                                                   55,959
        Capital leases                                                                 287,601
                                                                                --------------
Total current liabilities                                                            1,868,034
                                                                                --------------

Long-term liabilities:
    Accrued expenses                                                                   176,950
    Notes payable, net of current maturities                                         1,340,093
                                                                                --------------
Total long-term liabilities                                                          1,517,043
                                                                                --------------

Stockholders' deficit:
    Preferred stock, Series A; $.0001 par value; 5,000,000 shares authorized;
        0 shares issued and outstanding
    Preferred stock,  Series B convertible;  $1,000 stated value; 8.0% dividend;
        1,500 shares authorized; 0 shares issued and outstanding
    Common stock; $.0001 par value; 20,000,000 shares authorized; 6,147,109
        shares issued; 6,107,109 shares outstanding                                        615
    Additional paid-in capital                                                      11,659,041
    Common stock payable                                                               105,500
    Common stock receivable                                                            (72,500)
    Accumulated deficit                                                            (13,379,113)
    Treasury stock; 40,000 common shares                                               (55,000)
                                                                                --------------
Total stockholders' deficit                                                         (1,741,457)
                                                                                --------------

                                                                                $    1,643,620
                                                                                ==============
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                      F-2
<PAGE>




                 ThermaCell Technologies, Inc. and Subsidiaries

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>



                                                                                     Year Ended September 30,
                                                                                 ----------------------------------
                                                                                       2000               1999
                                                                                 ----------------------------------

<S>                                                                              <C>                 <C>
Sales                                                                            $   1,872,017       $    1,519,447

Cost of sales                                                                        1,609,878            1,141,547
                                                                                 ----------------------------------

Gross profit                                                                           262,139              377,900

Selling, general and administrative expenses                                         3,234,327            2,086,073
                                                                                 ----------------------------------

Loss from operations                                                                (2,972,188)          (1,708,173)
                                                                                 ----------------------------------

Other income (expense):
    Interest income                                                                                           4,431
    Interest expense                                                                  (330,222)            (267,131)
    Gain on sale of assets                                                                                    6,771
                                                                                 ----------------------------------
                                                                                      (330,222)            (255,929)
                                                                                 ----------------------------------

Loss from continuing operations before income taxes                                 (3,302,410)          (1,964,102)

Income taxes                                                                                               (795,309)
                                                                                 ----------------------------------

Loss from continuing operations after income taxes                                  (3,302,410)          (2,759,411)
                                                                                 ----------------------------------

Discontinued operations:
    Loss from operations of discontinued division                                     (308,512)            (830,713)
    Loss on disposal of division                                                    (2,848,852)             (86,944)
                                                                                 ----------------------------------
                                                                                    (3,157,364)            (917,657)
                                                                                 ----------------------------------

Net loss                                                                         $  (6,459,774)      $   (3,677,068)
                                                                                 ==================================

Earnings per share:
    Basic loss per common share from continuing operations                       $        (.86)      $        (1.39)
    Basic loss per share from discontinued operations                                     (.82)                (.46)
                                                                                 ----------------------------------

Net loss per share                                                               $       (1.68)      $        (1.85)
                                                                                 ==================================

Weighted average number of common shares outstanding                                 3,830,448            1,981,228
                                                                                 ==================================


</TABLE>


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                      F-3
<PAGE>


                 ThermaCell Technologies, Inc. and Subsidiaries

           Consolidated Statements of Changes in Stockholders' Deficit

                     Years Ended September 30, 2000 and 1999



<TABLE>
<CAPTION>

                                                      Series A                    Series B
                                                 Preferred Stock             Preferred Stock             Common Stock
                                           ------------------------      ----------------------    ------------------------
                                              Shares       Amount        Shares       Amount          Shares        Amount
                                           --------------------------------------------------------------------------------

<S>                                      <C>            <C>            <C>       <C>             <C>            <C>
Balance, September 30, 1998                  5,000,000      $ 500          250       $  250,000      1,282,331      $ 128

Issuance of stock for payment
    of services                                                                                         68,725          7

Issuance of stock for acquisitions                                                                     218,000         22

Issuance of stock in connection
    with conversion  of preferred
    stock                                                                                              351,250         35

Issuance of stock to employees                                                                         115,000         12

Issuance of stock for patent rights                                                                    117,636         12

Payments associated with
    stockholder loan, net

Cancellation of Series B
    preferred stock                                                       (250)        (250,000)      (107,029)       (11)

Exchange of preferred stock for
    common stock                            (5,000,000)      (500)                                     312,500         31

Cancellation of dividends of
    Series B preferred stock

Return of common stock

Net loss for the year
                                           --------------------------------------------------------------------------------

Balance, September 30, 1999                          0          0            0                0      2,358,413        236

Issuance of stock for payment
    of services                                                                                        560,288         57

Issuance of stock for acquisition                                                                       75,000          7

</TABLE>


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>

<TABLE>
<CAPTION>



                                          Note
                                       Receivable
                                       Associated
  Additional         Common                with          Common
   Paid-In            Stock            Stockholder       Stock           Accumulated         Treasury
   Capital         Receivable            Payable         Payable            Deficit           Stock             Total
------------------------------------------------------------------------------------------------------------------------

<S>               <C>            <C>                <C>               <C>                 <C>           <C>
$   6,612,866                       $  (453,695)                         $  (3,242,271)                     $  3,167,528


      154,948                                                                                                    154,955

    1,399,978                                                                                                  1,400,000



      249,966                                                                                                    250,001

      379,988                                                                                                    380,000

      499,988                                                                                                    500,000


                                        251,660                                                                  251,660


      250,011


          469


      (28,339)                                                                                                   (28,339)

                                         55,000                                              $  (55,000)

                                                                            (3,677,068)                       (3,677,068)
------------------------------------------------------------------------------------------------------------------------

    9,519,875                          (147,035)                            (6,919,339)         (55,000)       2,398,737


    1,128,497                                                                                                  1,128,554

      299,993                                                                                                    300,000

</TABLE>

                                      F-4
<PAGE>



                 ThermaCell Technologies, Inc. and Subsidiaries

           Consolidated Statements of Changes in Stockholders' Deficit

                     Years Ended September 30, 2000 and 1999

<TABLE>
<CAPTION>



                                                      Series A                    Series B
                                                 Preferred Stock             Preferred Stock             Common Stock
                                           ------------------------      ----------------------    ------------------------
                                              Shares       Amount        Shares      Amount           Shares       Amount
                                           --------------------------------------------------------------------------------

<S>                                        <C>          <C>            <C>         <C>           <C>             <C>
Issuance of stock in connection
    with conversion of promissory
    notes payable                                                                                      153,408         15

Common stock paid for, not issued

Prepaid stock incentives                                                                               500,000         50

Issuance of stock for cash, net of
    offering costs of $62,417                                                                        2,500,000        250

Payments associated with
    stockholder loan, net

Net loss for the year
                                           --------------------------------------------------------------------------------

Balance, September 30, 2000                          0     $    0              0         $    0      6,147,109      $ 615
                                           ================================================================================

</TABLE>


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>

<TABLE>
<CAPTION>


                                           Note
                                        Receivable
                                        Associated
Additional         Common                  with            Common
  Paid-In           Stock              Stockholder          Stock           Accumulated       Treasury
  Capital        Receivable              Payable           Payable            Deficit           Stock              Total
--------------------------------------------------------------------------------------------------------------------------

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



       153,393                                                                                                    153,408

                                                      $     105,500                                               105,500

       119,950     $  (72,500)                                                                                     47,500


       437,333                                                                                                    437,583


                                         147,035                                                                  147,035

                                                                             (6,459,774)                       (6,459,774)
-------------------------------------------------------------------------------------------------------------------------

$   11,659,041     $  (72,500)       $         0      $     105,500      $  (13,379,113)     $  (55,000)    $  (1,741,457)
=========================================================================================================================

</TABLE>


                                      F-5
<PAGE>




                 ThermaCell Technologies, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                     Year Ended September 30,
                                                                              -------------------------------------
                                                                                    2000                  1999
                                                                              -------------------------------------
<S>                                                                       <C>                   <C>
Operating activities
    Net loss                                                                  $    (6,459,774)    $      (3,677,068)
                                                                              -------------------------------------
    Adjustments to reconcile net loss to net cash used
        by operating activities:
           Depreciation and amortization                                              330,159               342,447
           Loss on discontinued operations                                          2,848,852                86,944
           Bad debt                                                                    17,240
           Deferred income tax benefit                                                                      795,309
           Loss on conversion of note payable to
               common stock                                                            43,274
           Common stock issued to employees                                            47,500               380,000
           Common stock issued for services                                         1,128,554               154,955
           (Increase) decrease in:
               Accounts receivable and notes receivable                               111,933               223,276
               Inventory                                                              316,471               141,253
               Officer advance                                                        149,334              (156,234)
               Prepaid and other assets                                               105,630              (306,213)
           Increase (decrease) in:
               Accounts payable                                                      (184,806)              150,192
               Accrued expenses                                                       766,250                78,351
                                                                              -------------------------------------
    Total adjustments                                                               5,680,391             1,890,280
                                                                              -------------------------------------
    Net cash used by operating activities                                            (779,383)           (1,786,788)
                                                                              -------------------------------------

Investing activities
    Purchase of property and equipment                                               (197,842)             (139,405)
    Increase in trust account                                                         (27,500)
    Acquisitions                                                                                             93,899
    Proceeds from sale of equipment                                                                          73,000
    Proceeds from sale of division                                                                            8,000
    Expenditures for patent, net                                                                            (77,380)
                                                                              -------------------------------------
    Net cash used by investing activities                                            (225,342)              (41,886)
                                                                              -------------------------------------

Financing activities
    Proceeds from issuance of notes payable and capital leases                        304,275             1,462,363
    Proceeds from sale of common stock                                                605,500               250,000
    Offering costs paid                                                               (62,417)
    Principal payments on notes payable and capital leases                            (36,962)             (114,242)
    Principal advances on stockholder loan                                                                 (326,069)
    Proceeds from payments on stockholder loan                                        147,035               632,729
    Cancellation of preferred dividends                                                                     (28,339)
    Purchase of treasury stock                                                                              (55,000)
                                                                              -------------------------------------
    Net cash provided by financing activities                                         957,431             1,821,442
                                                                              -------------------------------------
</TABLE>


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                      F-6
<PAGE>




                 ThermaCell Technologies, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>


                                                                                      Year Ended September 30,
                                                                              -------------------------------------
                                                                                    2000                  1999
                                                                              -------------------------------------

<S>                                                                          <C>                  <C>
Net decrease in cash                                                                  (47,294)               (7,232)

Cash at beginning of year                                                              60,173                67,405
                                                                              -------------------------------------

Cash at of end of year                                                        $        12,879       $        60,173
                                                                              =====================================

Supplemental disclosures of cash flow information:
    Cash paid for interest                                                    $       198,272       $        60,876
                                                                              =====================================
</TABLE>


During the year ended  September  30,  2000,  the  Company  acquired  $12,575 of
equipment under a capital lease.

During the year ended  September  30, 2000,  the Company  converted  $110,134 of
notes payable, plus accrued interest, into 153,408 shares of common stock.

Common  stock was issued in payment of certain  services  and Series B preferred
stock dividend obligations during the year ended September 30, 1999.


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                      F-7
<PAGE>



                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



1.      Background Information

ThermaCell Technologies,  Inc. (the "Company") is a Florida corporation that was
incorporated  on August 12, 1993.  The Company is an operating  company that has
two wholly owned  subsidiaries,  Sealco  Corporation,  doing business as T-Coast
Pavers  ("T-Coast"),  which was incorporated in December 1998 and Atlas Chemical
Co. ("Atlas"),  which was incorporated in July 1997. The Company is preparing to
manufacture  and sell  microscopic  evacuated  glass spheres.  T-Coast  installs
paving  materials;  Atlas  manufactures  and  distributes  paints and  coatings.
Presently,  substantially all of the Company's sales and accounts receivable are
generated in Florida.  All of the  Company's  sales and assets are  domestically
located.  No customer  represents  more than 10 percent of the Company's  annual
sales.

The paving business is  concentrated  in southeast  Florida and is influenced by
the general economic conditions of the surrounding area.

During  the year  ended  September  30,  2000,  the  Company  adopted  a plan to
discontinue and abandon the paint division. This division consists of the wholly
owned subsidiary, Atlas Chemical Co. (see Note 14).


2.      Going Concern

The accompanying consolidated financial statements have been prepared on a going
concern basis that  contemplates the realization of assets and  liabilities.  In
the ordinary course of business,  operating  losses have been incurred each year
since   inception,   resulting  in  an  accumulated   deficit  of  approximately
$13,379,000  and negative  working  capital of  approximately  $1,625,000  as of
September  30,  2000,   and  total   liabilities   exceeding   total  assets  by
approximately  $1,741,000 as of September 30, 2000. In addition, the Company has
certain  default  judgments  against  them,  as  further  discussed  in Note 16.
Currently,  management is soliciting  additional  equity investors to fund these
losses.  However,  these conditions raise  substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements of
the Company do not include any adjustments  relating to the  recoverability  and
classification  of recorded asset amounts or the amounts and  classification  of
liabilities  that might be necessary should the Company be unable to continue as
a going concern.

                                      F-8
<PAGE>


                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



3.      Significant Accounting Policies

The significant accounting policies followed are:

        The accompanying  consolidated financial statements include the accounts
        of  the  Company  and  its  subsidiaries,   Atlas  and  T-Coast,   after
        elimination of material, inter-company accounts, and transactions.

        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 disclosure of contingent
        assets  and  liabilities  at  the  date  of the  consolidated  financial
        statements and the reported  amounts of revenues and expenses during the
        reporting period. Actual results could differ from those estimates.

        The estimated  fair value of the  Company's  cash,  accounts,  and notes
        receivable and payable approximated their carrying value at year-end.

        Basic loss per common share (EPS) is computed by dividing loss available
        to  common  stockholders  by the  weighted  average  number of shares of
        common stock outstanding for the year. Diluted EPS reflect the potential
        dilution  from the  exercise or  conversion  of  securities  into common
        stock. Diluted EPS is not presented because it is anti-dilutive.

        Offering costs  associated  with the sale of stock are  capitalized  and
        offset  against the proceeds of the offering or expensed if the offering
        is unsuccessful.

        The Company issues stock in lieu of cash for certain  transactions.  The
        fair value of the stock,  which is based on comparable cash purchases or
        the value of services,  whichever is more readily determinable,  is used
        to value the transaction.

        The Company issued common stock prior to receiving services. This amount
        is recorded as a common stock receivable in the  consolidated  financial
        statements.

        The Company records the receipt of payment for common stock that has not
        been  issued  to  the  stockholder  as a  common  stock  payable  in the
        consolidated financial statements.

                                      F-9
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



3.      Significant Accounting Policies (continued)

        Advertising  costs  (except for costs  associated  with direct  response
        advertising) are charged to operations when the advertising takes place.
        The cost of direct  response  advertising is  capitalized  and amortized
        over  the  period  during  which  future  benefits  are  expected  to be
        received.  At  September  30,  2000 and 1999,  the Company had no direct
        response advertising costs.  Advertising expense amounted to $34,332 and
        $10,463 for the years ended September 30, 2000 and 1999, respectively.

        Financial   Accounting   Standards  Board  (FASB)   Statement  No.  133,
        "Accounting for Derivative Instruments and Hedging Activities," requires
        that derivative  instruments  such as options,  forward  contracts,  and
        swaps be recorded as assets and liabilities at fair value,  and provides
        guidance  for  recognition  of changes in fair  value  depending  on the
        reason for holding the  derivative.  The Company does not presently have
        transactions  involving  derivative  instruments,  but  may do so in the
        future.  The  Company is  required  to adopt  Statement  No. 133 for all
        fiscal quarters of all fiscal years beginning after June 15, 2000.

        Property  and   equipment  are  recorded  at  cost,   less   accumulated
        depreciation.  Depreciation  is  computed  using the  straight-line  and
        accelerated  methods  over the  estimated  useful  lives of the  assets,
        ranging 5 to 10 years. Maintenance and repairs are charged to operations
        when incurred.  Betterments and renewals are capitalized.  When property
        and equipment  are sold or otherwise  disposed of, the asset account and
        related accumulated  depreciation account are realized,  and any gain or
        loss is included in operations.

        Intangible  assets  subject  to  amortization   include  trademarks  and
        patents. Trademarks are being amortized on a straight-line basis over 10
        years.  Amounts  attributable  to patents are being  amortized  over the
        useful life of the  patent,  but not more than 20 years,  beginning  the
        month the patent becomes effective.

        The Company follows Financial Accounting Standards Board Statement No.
        121 (FASB No.  121),  "Accounting  for the  Impairment  of  Long-Lived
        Assets  and for  Long-Lived  Assets to be  Disposed  Of." FASB No. 121
        requires that long-lived assets and certain  identifiable  intangibles
        to be held and used by an entity be reviewed for  impairment  whenever
        events or changes in  circumstances  indicate that the carrying amount
        of these assets may not be recoverable. In performing the review of


                                      F-10
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



3.      Significant Accounting Policies (continued)

        recoverability,  the  Company  estimates  the future cash flows that are
        expected  to  result  from  the use of the  assets  and  their  eventual
        disposition. Because events and circumstances frequently do not occur as
        expected,  there will usually be  differences  between the estimated and
        actual future cash flows, and these differences may be material.

        Deferred tax assets and  liabilities  are  recognized  for the estimated
        future  tax  consequences   attributable  to  differences   between  the
        financial statements carrying amounts of existing assets and liabilities
        and  their  respective  income  tax  bases.   Deferred  tax  assets  and
        liabilities  are measured  using enacted tax rates  expected to apply to
        taxable  income in the years in which those  temporary  differences  are
        expected to be recovered  or settled.  The effect on deferred tax assets
        and  liabilities of a change in tax rates is recognized as income in the
        period that included the enactment date.

        Certain minor  reclassifications have been made to the 1999 consolidated
        financial statements to conform to the classifications used in 2000.


4.      Accounts Receivable, Factored

The Company entered into an agreement to sell the accounts  receivable of Atlas,
with recourse, to Millennium Funding ("Millennium"). The agreement calls for the
immediate  payment of 75 percent of the face value of the  accounts  receivable,
with the  remaining 25 percent  payable upon  collection  of the  receivable  by
Millennium.  The  Company  is  charged  various  factoring  and  financing  fees
amounting  to one  percent  for  each  10-day  period  the  receivables  are not
collected by Millennium.

In the event of a  default,  or 90 days from  invoice  date,  the  Company  must
repurchase the accounts  receivable from  Millennium.  Losses from defaults have
not been significant.  At September 30, 2000, the Company is contingently liable
in the amount of $33,231 relating to such receivables sold with recourse.


                                      F-11
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



5.      Property and Equipment

Property and equipment as of September 30, 2000 consist of:

        Furniture and fixtures                             $     125,110
        Property and equipment                                   640,745
        Transportation equipment                                 100,092
        Computer hardware and software                           152,578
        Lab equipment                                              2,435
        Leasehold improvements                                    81,195
                                                            -------------
                                                               1,102,155
        Less accumulated depreciation                            392,642
                                                            -------------
                                                           $     709,513
                                                            =============

Depreciation expense was $171,280 and $196,477 for the years ended September 30,
2000 and 1999, respectively.

During  the year  ended  September  30,  2000,  the  Company  adopted  a plan to
discontinue the operations of the paint division and to abandon the property and
equipment associated with this segment. In connection with the plan, the Company
recorded a loss of $238,443 for the net book value of those assets.  The loss is
included in the loss on disposal of division.


6.      Related Party Transactions

The Company  incurred  expenses of $28,683 and $80,637 for legal services during
2000 and 1999,  respectively,  from a law firm,  which is a  stockholder  of the
Company.  Accounts  payable to the law firm were $0 and $28,683 at September 30,
2000 and 1999, respectively.

Officer  advances  totaling  $6,900 at September 30, 2000 are from an officer of
the Company. These advances are unsecured, non-interest bearing, demand notes.

During  February  2000,  the Company  issued  143,750  shares of common stock in
exchange for services rendered by management.  The cost of the services has been
charged to  operations  and  additional  paid-in  capital has been  increased by
$205,548, representing the excess of the cost of the services over the par value
of the common  stock.  In  accordance  with FASB No. 123,  the fair value of the
equity instrument was used. The value assigned of $1.43 per share was determined
from the Form S-8 proposed offering price.


                                      F-12
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



6.      Related Party Transactions (continued)

The Company's  vice  president owns the real estate in which the Company has its
offices.  Rental  expense for the years ended  September  30, 2000 and 1999 were
$16,692 and $0, respectively.

The Company has a consulting  agreement with a stockholder that expires on March
1, 2002.  Monthly  payments under the agreement are $10,000.  For the year ended
September 30, 2000, the Company owed $70,000 in consulting fees.

The Company has a consulting  agreement  with a company owned by its Chairman of
the Board of Directors.  This agreement  expires on March 1, 2002 and requires a
monthly  payment of $10,000.  For the year ended September 30, 2000, the Company
paid $15,000 and issued  225,000  shares of common stock as payment for services
rendered.  As of September  30, 2000 and 1999,  the Company  owes  approximately
$101,000  and  $20,000  in  unpaid  fees  in  connection  with  this  agreement,
respectively.

The above  transactions are not necessarily  indicative of the transactions that
would have been entered into had comparable  transactions been entered into with
independent parties.


7.      Capital Leases

The Company leases vehicles, computers, and plant equipment under the provisions
of long-term leases. For financial  reporting  purposes,  minimum lease payments
relating to this  equipment  have been  capitalized.  The leased  property under
capital leases as of September 30, 2000 has a cost of approximately $447,500 and
accumulated  amortization of approximately $175,000.  Amortization of the leased
property is included in depreciation  expense.  The Company has defaulted on the
monthly  payments  associated  with  these  leases  and,  therefore,  the entire
liability is recorded as current in the consolidated financial statements.

The future  minimum lease  payments under the capital leases and the net present
value of the future minimum lease payments at September 30, 2000 are as follows:

        Total minimum lease payments                           $    347,997
        Less amount representing interest                            60,396
                                                                ------------
        Present value of net minimum lease payments                 287,601
        Less current maturities                                     287,601
                                                                ------------
                                                               $          0
                                                                ============


                                      F-13
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



8.      Long-Term Debt

Long-term debt at September 30, 2000 consists of:

<TABLE>
<CAPTION>

<S>                                                                                   <C>
        Redeemable  convertible  promissory note due July 2002; interest payable
           quarterly  at stated rate of 9.0% ; face amount of  $666,667;  net of
           unamortized discount of $94,908; unsecured                                  $     571,759
        Various notes payable on vehicles with interest ranging
           from 7.3% to 10.35%; payments from $236 to $794
           per month; due on demand                                                           55,959
        Redeemable convertible promissory notes; due
           March 2002;  interest payable  quarterly at stated rate of 9.0%; face
           amount of $566,667; net of unamortized
           discount of $83,333; unsecured                                                    483,334
        Redeemable convertible promissory note; due
           October 2002; interest payable quarterly at stated rate of 9.0%; face
           amount of $315,000; net of unamortized
           discount of $30,000; unsecured                                                    285,000
                                                                                        -------------
                                                                                           1,396,052
        Less current maturities                                                               55,959
                                                                                        -------------
                                                                                       $   1,340,093
                                                                                        =============
</TABLE>

The redeemable  convertible  promissory  notes are  convertible at a rate of 105
percent of the average  bid price for the three days  preceding  the  conversion
date at the option of the  lender.  The  Company  is in  default on the  various
monthly  notes  payable on vehicles  and,  therefore,  the entire  liability  is
recorded as current in the accompanying consolidated financial statements.

During the year ended  September 30, 2000,  $100,000 of  redeemable  convertible
promissory notes were converted into 153,408 shares of common stock.

The  following is a schedule of the principal  payments  required on these notes
payable as of September 30, 2000:

        2001                                              $55,959
                                                          =======
        2002                                           $1,055,093
                                                       ==========
        2003                                             $285,000
                                                         ========

Subsequent  to  year-end,  the Company  converted  $566,667 of notes  payable to
6,883,595 shares of common stock.


                                      F-14
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



9.      Operating Leases

The Company leases a building and office space under  operating  leases expiring
in various years through  2004.  Rental  expense under these leases was $126,354
and $128,761 for 2000 and 1999, respectively. The following is a schedule of the
approximate  minimum  rental  payments  under the above lease  agreements  as of
September 30, 2000:

        2001                                            $70,000
                                                        =======
        2002                                            $70,000
                                                        =======
        2003                                            $70,000
                                                        =======
        2004                                             $6,000
                                                         ======


10.     Income Taxes

The Company has net operating loss carryforwards of $13,478,000 at September 30,
2000 that expire in 2009 through 2020.

A valuation  allowance  is required by FASB  Statement  No. 109 if, based on the
weight of  available  evidence,  it is more likely than not that some portion or
all of the deferred tax assets will not be realized.  The need for the valuation
allowance is evaluated periodically by management.  Based on available evidence,
management  concluded that valuation allowances of 100 percent for September 30,
2000 and 1999  were  necessary.  Significant  components  of the  Company's  net
deferred tax assets are as follows:

                                                    2000               1999
                                              ---------------------------------
        Tax benefit of net operating loss     $   5,403,157      $    2,800,999
        Less valuation allowance                  5,403,157           2,800,999
                                              ---------------------------------
                                              $           0      $            0
                                              =================================

The Company's deferred income tax provisions include the following components:

                                                    2000               1999
                                              ---------------------------------
        Future net operating loss deductions  $   2,603,000      $    1,210,381
        Change in allowance valuation for tax
           benefit of net operating loss         (2,603,000)         (2,005,690)
                                              ---------------------------------
                                              $           0      $     (795,309)
                                              =================================


                                      F-15
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



10.     Income Taxes (continued)

A  reconciliation  of the income tax benefit  computed at the federal  statutory
rate and the Company's effective rate are as follows:

<TABLE>
<CAPTION>

                                                                       2000                     1999
                                                            -----------------------   -----------------------
<S>                                                         <C>               <C>     <C>               <C>
        Federal statutory rate                              $   2,240,000     34%     $     979,840     34%
        Adjustments, primarily state
           income taxes                                           363,000      8            230,541      8
        Change in allowance valuation for
           tax benefit of net operating loss                   (2,603,000)   (42)        (2,005,690)   (70)
                                                            -----------------------   -----------------------
                                                            $           0      0%     $    (795,309)   (28)%
                                                            =======================   ======================
</TABLE>

The Company's  effective income tax rate is lower than what would be expected if
the federal  statutory  rate were applied to income from  continuing  operations
primarily because of expenses deducted for financial reporting purposes that are
not deductible for tax purposes and the effects of using the surtax exemption.


11.     Segment Information

The Company operates in two primary business  segments that are identified based
on products and services.

The Company, through its wholly owned subsidiary, T-Coast, installs brick pavers
in driveways and sidewalks.

The  Company,  through its wholly  owned  subsidiary,  Atlas,  manufactures  and
distributes paints and coatings.  The paint division was discontinued during the
year ended September 30, 2000.

The Company is preparing to manufacture  and sell  microscopic  evacuated  glass
spheres  (microcells)  in the next fiscal  year.  During the current  year,  the
Company incurred  expenses in perfecting the  manufacturing  process.  Corporate
general and administrative  expenses are included in this division. This segment
is identified as ThermaCell Technologies.


                                      F-16
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



11.     Segment Information (continued)

The following table presents  information about the results of operations of the
Company's business segments for the year ended September 30, 2000:

<TABLE>
<CAPTION>


                                                            Paint      ThermaCell       Paver
                                                          Division    Technologies     Division   Consolidated
                                                       ------------------------------------------------------------

<S>                                                    <C>          <C>            <C>          <C>
    Sales                                                             $    40,000    $1,832,017   $ 1,872,017

    Less cost of sales                                                     31,384     1,578,494     1,609,878
                                                       ------------------------------------------------------------

    Gross profit                                                            8,616       253,523       262,139

    Selling, general and administrative                                 2,930,988       273,340     3,204,328
                                                       ------------------------------------------------------------

    Loss from operations                                               (2,922,372)      (19,817)   (2,942,189)

    Other expenses:
        Interest expense                                                 (325,805)       (4,417)     (330,222)
                                                       ------------------------------------------------------------

    Loss from continuing operations before
        income taxes                                                   (3,248,177)      (24,234)   (3,272,411)

    Loss from discontinued operations                  $(3,157,364)             0             0    (3,157,364)
                                                       ------------------------------------------------------------

    Net loss                                           $(3,157,364)   $(3,248,177)  $   (24,234)  $(6,429,775)
                                                       ============================================================
</TABLE>


The following table presents  information about the results of operations of the
Company's business segments for the year ended September 30, 1999:

<TABLE>
<CAPTION>

                                                ThermaCell          Paint          Paver
                                               Technologies      Division       Division      Consolidated
                                               -----------------------------------------------------------

<S>                                         <C>             <C>            <C>            <C>
        Sales                                                                 $1,519,447      $  1,519,447

        Less cost of sales                                                     1,141,547         1,141,547
                                               -----------------------------------------------------------

        Gross profit                                                             377,900           377,900

        Selling, general and administrative
           expenses                            $ 1,668,915                       417,158         2,086,073
                                               -----------------------------------------------------------

        Loss from operations                    (1,668,915)                      (39,258)       (1,708,173)
                                               -----------------------------------------------------------

        Other income (expenses):
           Interest income                           4,431                                           4,431
           Interest expense                       (257,566)                       (9,565)         (267,131)
           Loss (gain) on sale of assets             6,771                                           6,771
                                               -----------------------------------------------------------
                                                  (246,364)                       (9,565)         (255,929)
                                               -----------------------------------------------------------

</TABLE>

                                      F-17
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



11.     Segment Information (continued)

<TABLE>
<CAPTION>

                                                ThermaCell          Paint          Paver
                                               Technologies      Division       Division      Consolidated
                                               -----------------------------------------------------------
<S>                                          <C>             <C>             <C>            <C>
        Loss from continuing operations
           before income taxes                  (1,915,279)                      (48,823)       (1,964,102)

        Income taxes                              (795,309)                                       (795,309)
                                               -----------------------------------------------------------

        Loss from continuing operations
           after income taxes                   (2,710,588)                      (48,823)       (2,759,411)

        Loss from discontinued operations                      $ (917,657)                        (917,657)
                                               -----------------------------------------------------------

        Net loss                               $(2,710,588)    $ (917,657)    $  (48,823)     $ (3,677,068)
                                               ===========================================================
</TABLE>


12.     Stockholders' Equity

On April 14, 2000,  the Board of Directors  authorized a 1-for-4  reverse  stock
split of the  Company's  $.0001 par value common  stock.  All  references in the
accompanying  consolidated  financial  statements to the number of common shares
and per share amounts have been restated to reflect the stock split.

During  October 1999 and February  2000,  the Company  issued 112,500 and 68,750
shares of common  stock,  respectively,  in exchange for services  rendered by a
consulting  firm.  The cost of the  services  has been  charged to  expense  and
capital has been  increased by $82,609 and $98,306,  respectively,  representing
the fair market value of the common stock issued.

During June 2000,  the Company issued 235,283 shares of common stock in exchange
for services  rendered.  The cost of the services has been charged to operations
and capital has been increased by $263,489 representing the fair market value of
the common stock issued.

As of September 30, 2000, the Company recorded $105,500 of common stock payables
to investors who had not been issued their respective shares.

During  August  1999,  the  Board  of  Directors   waived  certain   performance
requirements that allowed the conversion of preferred stock by the president and
chairman, John Pidorenko,  and authorized that this preferred stock be converted
into .25  shares of common  stock,  which was  consistent  with its  established
conversion  terms.  The  conversion  permitted the holder to use common stock to
raise  funding for the benefit of the  Company.  A total of $453,695  was funded
through September 30, 2000 as a result of this action.


                                      F-18
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



12.     Stockholders' Equity (continued)

In  connection  with  a  public  offering  in  1997,  the  Company  sold  to the
underwriter  options to  purchase  34,375  post-split  units  (the  "underwriter
warrants") of the Company's securities,  identical to the units publicly sold at
an exercise price of 165 percent of the public offering price. The underwriter's
units  are  exercisable  at a price  per  unit of  $24.00,  subject  to  certain
adjustments, until March 12, 2001, when they expire.

The underwriter's warrants contain certain registration rights and anti-dilution
provisions.  The holders of the underwriter's warrants have no voting, dividend,
or other  rights as  stockholders  of the  Company  with  respect  to the shares
underlying the warrants.

Authorized common shares have been reserved for the warrants.


13.     Acquisition

In January 2000,  the Company  acquired all of the  outstanding  common stock of
Silab Research  Center  ("Silab") in exchange for $50,000,  and 75,000 shares of
common  stock  valued at  $300,000.  This  acquisition  was  recorded  using the
purchase   method  of  accounting.   Effective   March  31,  2000,  the  Company
discontinued  operations,  and all activity for the period January through March
2000 has been included in loss from discontinued operations.


14.     Discontinued Operations

During the year ended  September 30, 2000, the Company adopted a plan to abandon
or dispose of 100 percent of the assets of its paint division.  Accordingly, the
results of operations of the paint  division for the year presented are reported
as a component of discontinued  operations,  with the prior year reclassified in
the consolidated statements of operations. The estimated loss on the disposal of
discontinued  operations of  $2,848,852  represents  the  estimated  loss on the
disposition of the segment  assets and operations  through the disposal date for
the year ended September 30, 2000. During the year ended September 30, 1999, one
of the companies  operating in the paint division was sold,  which resulted in a
loss of $86,944. The loss is shown as loss on disposal of division in 1999.


                                      F-19
<PAGE>


                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



14.     Discontinued Operations (continued)

Summarized results of the paint division are as follows:

                                                   2000                  1999
                                            -----------------------------------
        Net sales                           $    2,283,817       $    2,786,961
                                            ===================================
        Operating loss                      $     (308,512)      $     (830,713)
                                            ===================================
        Loss from discontinued operations   $     (308,512)      $     (830,713)
                                            ===================================

The  remaining  assets  and  liabilities  of the paint  division  consist of the
following in the September 30, 2000 consolidated balance sheet:

        Current assets                                           $     11,538
        Current liabilities                                          (520,819)
                                                                   ------------
        Net liabilities assumed                                  $   (509,281)
                                                                   ============


15.     Stock Options

Prior to September 30, 1999,  the Company made awards of incentive  common stock
options to corporate  officers and  authorized  the allocation of 150,000 common
shares  (post-split)  for a compensatory  Section 422A plan for officers and key
employees.  Awards  outstanding  as of  September  30,  2000 are  summarized  as
follows:

<TABLE>
<CAPTION>

                                                                             Exercise           Year of
                                                                Shares          Price         Expiration
                                                              --------------------------------------------
<S>                                                           <C>            <C>           <C>
        Incentive awards to corporate officers:
           1997                                                  175,000         $2.00             2002
           1998                                                   18,750         $2.00             2003
           1999                                                   18,750         $2.00             2004

        Section 422A plan awards:
           Corporate officer                                      71,250         $2.00             2008
           Key employees                                          42,500         $2.00             2008
                                                              ----------

        Total awards                                             326,250
                                                              ==========
</TABLE>

Authorized  common  shares have been  reserved  for the  specific  1997 and 1998
awards and the plan allocation.

                                      F-20
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999


15.     Stock Options (continued)

The  exercise  prices for the stock  options  exceeded  the market  price of the
common stock on the date of award. Accordingly, no related compensation cost has
been charged to  operations.  Due to the limited  public  market  history of the
Company's  common stock,  management is unable to estimate the fair value of the
options  awarded;   however,   management  believes  such  fair  value  was  not
significant as of date of award.


16.     Contingent Liabilities

On October 4, 2000, a judgment was rendered by the United States District Court,
Middle  District of Florida,  in a trial  regarding  claims made by Mr.  Russell
Haraburda and Eden Group,  Inc.  against John  Pidorenko,  the Company's  former
president,  and the Company for monies  purportedly due for arranging  financing
for the  Company  prior  to its IPO in  March  1997.  The  Plaintiffs,  in their
pre-trial  statement,  claimed  damages  in the  amount  of  approximately  $3.5
million.  The judgment  concluded that no monies or other  consideration was due
Mr.  Haraburda  or the Eden Group,  Inc.  The  Company's  claims  regarding  two
promissory notes of the Eden Group,  Inc., Mr. Haraburda's firm, that are unpaid
were also denied. Subsequently,  Mr. Haraburda and Eden Group, Inc. appealed the
decision to the United  States  Court of Appeals for the Eleventh  Circuit.  The
Company also appealed the decision regarding the obligations of Eden Group, Inc.
under the promissory notes. No decision has been rendered as of the date of this
filing,  and no  liability  has  been  recorded  in the  consolidated  financial
statements.

The Company is involved in several  lawsuits for  obligations  outstanding  with
vendors,  a leasing company,  and certain  professionals for services  provided.
There are default  judgments that have been granted  because the Company has not
had the financial resources to appropriately defend itself as representation was
declined or withdrawn.  It is uncertain whether the Company will, in the future,
be able to pay these  obligations.  If unable to do so,  then the  Company  will
likely seek to protect its  remaining  assets and seek to liquidate its business
in utilizing the  provisions of the Federal  Bankruptcy  Courts.  The ability to
raise additional  capital is highly uncertain at this time.  Should such funding
not be  available,  then the  Company  will  have no choice  but to seek  either
reorganization or liquidation utilizing the bankruptcy statutes.


                                      F-21
<PAGE>

                 ThermaCell Technologies, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2000 and 1999



17.     Commitments

On May 30, 2000,  the Company  entered into a stock  purchase  agreement  for an
aggregate of 5,000,000  shares of common stock at $.20 per share.  The agreement
contains  certain buyer's rights that allow the buyer to obligate the Company to
purchase all or a portion of the shares issued at a per share price equal to the
latest 10-day average price if certain requirements,  conditions,  and approvals
contained  within the  agreement  are not met. As of  September  30,  2000,  the
Company has issued 2,500,000 shares of common stock under this agreement.


                                      F-22