<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                                Washington, DC


                                  FORM 10-QSB

                      Pursuant to Section 13 or 15(d) of
                          the Securities Act of 1934


For the Quarter Ended                                          Commission File
   February 28, 2001                                           Number 0-19796


                       AIRTECH INTERNATIONAL GROUP, INC.
              (Exact name of registrant as specified in charter)

    Wyoming                                                     98-0120805
---------------                                             ------------------
(State or other                                               (IRS Employer
Jurisdiction of                                             Identification No.)
Incorporation)

                          15400 Knoll Trail, Ste. 200
                              Dallas, Texas 75248
                   (Address of Principal Executive Offices)


                                 972-960-9400
              (Registrant's telephone number including area code)


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

               Yes  X    No
                   ---      ---

The Registrant has 27,958,641 shares of common stock, par value of $0.05 per
share issued and outstanding as of February 28, 2001

                 Traditional Small Business Disclosure Format

               Yes  X    No
                   ---      ---

                                       1
<PAGE>

                       Airtech International Group, Inc.

                               Table of Contents


<TABLE>
<S>                                                                                             <C>
                                                                                                Page No.
                                                                                                --------
Independent Accountant's Report                                                                     3

  PART I--FINANCIAL INFORMATION

     Item 1.  Airtech International Group, Inc. Financial Statements (Unaudited):
        Balance Sheet as of February 28, 2001and 2000                                               4
        Statement of Operations for the nine months ended February 28, 2001and 2000                 6
        Statement of Operations for the three months ended February 28, 2001 and 2200               7
        Statement of Cash Flows for the nine months ended February 28, 2001 and 2000                8
        Notes to Financial Statements                                                               9

     Item 2.   Management's Discussion and Analysis                                                14


PART II--OTHER INFORMATION

     Item 1.   Legal Proceedings                                                                   18

     Item 2.   Changes in Securities                                                               18

     Item 3.   Defaults upon Senior Securities                                                     19

     Item 4.   Submission of Matters to a Vote of Security Holders                                 19

     Item 5.   Other Information                                                                   19

     Item 6.   Exhibits and Reports on Form 8-K                                                    19


SIGNATURE PAGE                                                                                     20


</TABLE>

                                       2
<PAGE>

                        INDEPENDENT ACCOUNTANT'S REPORT



Board of Directors and Stockholders
Airtech International Group, Inc. and subsidiaries
Dallas, Texas


     We have reviewed the accompanying consolidated balance sheet of Airtech
International Group, Inc. and subsidiaries as of February 28, 2001 and the
related statement of operations, stockholders' equity and cash flows for the
three months and nine months then ended.  These consolidated financial
statements are the responsibility of the Company's management.

     We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants.  A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters.  It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statement taken as a
whole.  Accordingly, we do not express such an opinion.

     Based on our review, we are not aware of any material modifications
that should be made to the accompanying February 28, 2001 consolidated financial
statements for them to be in conformity with generally accepted accounting
principles.



/s/ Turner, Stone & Company, LLP

Certified Public Accountants
April 13, 2001

                                       3
<PAGE>

PART 1--Financial Information

  Item I Financial Statements



              Airtech International Group, Inc. and Subsidiaries
                          Consolidated Balance Sheets
                          February 28, 2001 and 2000

                                     ASSETS
<TABLE>
<S>                                                                             <C>         <C>

CURRENT ASSETS                                                                     2001        2000
------- ------                                                                  ----------  ----------

     Cash                                                                       $   53,368  $  559,385
     Marketable Securities                                                               0   2,000,000
     Trade accounts receivables, net of allowance for doubtful accounts of
        $60,000 and $20,000 respectively                                           731,315     225,352
     Notes receivable, current portion                                             437,250      75,000
     Inventory                                                                   1,305,559     317,665
     Prepaid expenses and other assets                                             113,257     204,524
                                                                                ----------  ----------
          Total current assets                                                   2,640,749   3,381,926
                                                                                ----------  ----------
PROPERTY AND EQUIPMENT--net of accumulated depreciation of
        $198,159 and $149,123 respectively                                         112,740     116,875
NOTES RECEIVABLE--net of current portion, net of allowance for
        Doubtful accounts of $0 and $0, respectively                             1,078,312     575,000
OTHER ASSETS
        Goodwill, net of $45,810 and $84,763 of accumulated amortization,
        respectively                                                                92,432      94,291
        Intellectual properties, net of $167,300 and $58,060 of accumulated
        amortization, respectively                                                 919,597     968,112
        Other, Prepaid Royalties                                                   294,988     519,688
                                                                                ----------  ----------
          Total other assets                                                     1,307,017   1,582,091
                                                                                ----------  ----------
                                                                                $5,138,818  $5,655,892
                                                                                ==========  ==========



</TABLE>





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

                                       4
<PAGE>

              Airtech International Group, Inc. and Subsidiaries
                          Consolidated Balance Sheets
                           February 28,2001 and 2000


                     LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<S>                                                         <C>               <C>
CURRENT LIABILITIES                                            2001              2000
                                                            -----------       -----------

     Notes payable --current portion                        $   277,185       $   277,185
     Accounts payable, trade                                    750,526           608,850
     Note payable-officers                                      210,338           216,488
     Accrued payroll and payroll taxes                          507,753           323,692
     Other accrued expenses                                     608,843           417,511
                                                            -----------       -----------
          Total current liabilities                           2,354,645         1,843,726
                                                            -----------       -----------

LONG-TERM LIABILITIES
     Deferred revenue                                           340,000           400,000
     Product Marketing Obligation                               430,000           405,000
     Convertible Debentures                                   2,350,000         2,800,000
                                                            -----------       -----------
          Total long-term liabilities                         3,120,000         3,605,000
                                                            -----------       -----------
               Total liabilities                              5,474,645         5,448,726
COMMITMENTS AND CONTINGENCIES                                       --                --

STOCKHOLDERS' EQUITY
     Series M cumulative, convertible preferred, 990,625
        and 1,143,750 outstanding respectively; liquidation
        preference of $1.00 per share                               991             1,143
     Common stock--$.05 par value, 50,000,000 shares
        authorized; 27,958,641 and 20,364,417 shares
        issued and outstanding, respectively                  1,397,932         1,018,220
     Additional paid-in capital                               8,251,966         6,682,210
                                                            -----------
     Retained deficit                                        (9,986,716)       (7,494,407)
                                                            -----------       -----------
          Total stockholders' equity                           (335,827)          207,166
                                                            -----------       -----------
                                                            $ 5,138,818       $ 5,655,892
                                                            ===========       ===========


</TABLE>





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

                                       5
<PAGE>

              Airtech International Group, Inc. and Subsidiaries
                     Consolidated Statements of Operations
             For the Nine Months Ended February 28, 2001 and 2000




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

REVENUES                                                    2001            2000
                                                        -----------     -----------

     Product sales                                      $ 1,412,607     $   604,474
     Franchisee fees and other revenues                      25,000         175,000
                                                        -----------     -----------
          Total revenues                                  1,437,607         779,474
                                                        -----------     -----------
COSTS AND EXPENSES
     Salaries and wages                                     787,490         901,729
     Research and Development                               283,927         100,000
     Cost of sales                                          780,235         515,127
     Advertising                                            241,358         101,197
     Depreciation and amortization                          233,188         127,421
     Other general & administrative expense                 639,544         645,073
                                                        -----------     -----------
          Total costs and expenses                        2,965,742       2,390,547
                                                        -----------     -----------
LOSS FROM OPERATIONS                                     (1,528,135)     (1,611,073)
Interest expense                                         (  175,114)        (41,462)
                                                        -----------     -----------
NET LOSS BEFORE INCOME TAXES                             (1,703,249)     (1,652,535)
Income taxes                                                    --              --
                                                        -----------     -----------
NET LOSS                                                $(1,703,249)    $(1,652,535)
                                                        ===========     ===========

LOSS PER COMMON SHARE--BASIC                            $(     0.07)    $(     0.08)
                                                        ===========     ===========

LOSS PER COMMON SHARE--DILUTED                          $(     0.07)    $(     0.08)
                                                        ===========     ===========


</TABLE>



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

                                       6
<PAGE>

              Airtech International Group, Inc. and Subsidiaries
                     Consolidated Statements of Operations
             For the Three Months Ended February 28, 2001 and 2000




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

REVENUES                                                 2001        2000
                                                      ---------   ----------

     Product sales                                    $ 418,034   $  186,136
     Franchisee fees and other revenues                  15,000       60,000
                                                      ---------   ----------
          Total revenues                                433,034      246,136
                                                      ---------   ----------
COSTS AND EXPENSES
     Salaries and wages                                 285,375      516,591
     Research and Development                            52,677       50,000
     Costs of sales                                     220,845       99,478
     Advertising                                         55,963       51,002
     Depreciation and amortization                       72,716       54,665
     Other general and administrative expense           208,006      318,560
                                                      ---------   ----------
          Total costs and expenses                      895,582    1,090,296
                                                      ---------   ----------
LOSS FROM OPERATIONS                                   (462,548)    (844,160)
Interest expense                                       ( 52,404)     ( 4,185)
                                                      ---------   ----------
NET LOSS BEFORE INCOME TAXES                           (514,952)    (848,345)
Income taxes                                                --           --
                                                      ---------   ----------
NET LOSS                                              $(514,952)  $ (848,345)
                                                      =========   ==========

LOSS PER COMMON SHARE--BASIC                          $   (0.02)  $    (0.04)
                                                      =========   ==========

LOSS PER COMMON SHARE--DILUTED                        $   (0.02)  $    (0.04)
                                                      =========   ==========


</TABLE>



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

                                       7
<PAGE>

              Airtech International Group, Inc. and Subsidiaries
                     Consolidated Statements of Cash Flows
             For the Nine Months Ended February 28, 2001 and 2000



<TABLE>
<CAPTION>


<S>                                                               <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                2001          2000
                                                                  -----------   -----------

     Net Loss                                                     $(1,703,249)  $(1,652,534)
     Adjustments to reconcile net income to cash
          Depreciation and amortization                               233,188       127,421
          Stock payments to employees and consultants                     --        486,189
     Changes in operating assets and liabilities
          Accounts receivable                                        (461,344)     ( 51,401)
          Inventory                                                  (766,607)      (75,000)
          Accounts payable                                            490,424        98,657
          Accrued expenses                                            294,436        88,823
          Other Receivables                                           (75,045)     (347,955)
                                                                  -----------   -----------
               Net cash used in operating activities               (1,988,197)   (1,325,800)
CASH FLOWS FROM INVESTING ACTIVITIES
  Expenditures for other assets                                        60,085       (57,212)
  (Expenditure for) Redemption Marketable Securities                1,000,000    (2,000,000)
  Repayment of Notes Payable                                         (500,000)
                                                                  -----------   -----------
               Net cash used in investing activities                  560,685    (2,057,212)
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of convertible debentures                                2,800,000
  Proceeds from issuance of common stock                              993,834     1,080,589
                                                                  -----------   -----------
               Net cash provided by financing activities              993,834     3,880,589
                                                                  -----------   -----------
    INCREASE (DECREASE) IN CASH                                    (1,434,278)      497,577
   CASH, BEGINNING OF PERIOD                                        1,487,646        61,808
                                                                  -----------   -----------
   CASH, END OF PERIOD                                            $    53,368   $   559,385
                                                                  ===========   ===========



</TABLE>



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


                                       8
<PAGE>

              Airtech International Group, Inc. and Subsidiaries
                         Notes to Financial Statements



Summary of Significant Accounting Policies

  Organization

  Airtech International Group, Inc. (the Company), formerly Interactive
Technologies Corporation (ITC), was incorporated in the state of Wyoming on
August 8, 1991.  As of May 31, 1998, in connection with the acquisition
discussed below, the Company manufactures and sells a full line of air
purification products.

  On May 31, 1998, the Company acquired all of the outstanding common stock
shares of Airtech International Corporation (AIC), which through its
subsidiaries, manufactures and sells various air filtration and purification
products.  The total purchase price of $22,937,760 was funded through the
issuance of 10,500,000 shares of common stock valued at $.625 per share, the
issuance of 11,858,016 shares of Series A convertible preferred stock shares
valued at $.625 per share and the issuance of $9,000,000 of convertible
debentures.

  However, because these convertible securities were converted into common stock
within two months following acquisition, the shareholders of AIC obtained
control of the company.  As a result, AIC became the acquiror for financial
reporting purposes.

  The transaction was accounted for using the purchase method of accounting with
AIC for accounting and reporting purposes the acquiror.  Accordingly, the
purchase price of the net assets acquired has been allocated among the net
assets based on their relative fair value of zero.

  Principles of consolidation

  The accompanying consolidated financial statements include the general
accounts of the Company and its subsidiaries, AIC, Airsopure, Inc., Airsopure
International Group, Inc. and McCleskey Sales and Service, Inc. (dormant) each
of which has a fiscal year ended May 31, and AIC's investment in Airsopure
999LP, a Texas Limited partnership with a December 31 year end.  All material
intercompany accounts and balances have been eliminated in the consolidation.
Turner, Stone & Company, the Company's independent accountants, has performed
limited reviews of the interim financial information included herein.  Their
report on such reviews accompanies this filing.

  Amortization

  Intellectual property is allocated to the Company's air filtration products
based on expected sales as a percent of total sales by product.  The Company
records amortization beginning when the product is initially inventoried for
sale.  Amortization is recorded ratably over a ten-year term.

                                       9
<PAGE>

              Airtech International Group, Inc. and Subsidiaries
                   Notes to Financial Statements (Continued)


  Goodwill acquired and recorded in the financial acquisition of ITC, is being
amortized under the straight line method over 5 years.

  A prepaid royalty fee, paid pursuant to a December 1995 agreement and related
to the Company's portable medical unit, is being amortized using the straight-
line method over 24 months beginning January 2000.

  Inventories

  Inventories are carried at the lower of cost or net realizable value (market)
and include component parts used in the assembly of the Company's line of air
purification units, filters and finished goods comprised of completed products.
The costs of inventories are based upon specific identification of direct costs
and allocable costs of direct labor, packaging and other indirect costs.

  Property and equipment

  Property and equipment are stated at cost less accumulated depreciation.
Depreciation of property and equipment is currently being provided by straight
line and accelerated methods for financial and tax reporting purposes,
respectively, over estimated useful lives of five years.

  Product marketing obligation

  Property marketing obligations pursuant to Statement of Financial Accounting
Standards, "SFAS" No. 68, the Company has recorded funds raised in an
arrangement to develop, produce and market the Model S-999 as a product
marketing obligation.

  Revenue recognition

  Revenues from the Company's operations are recognized at the time products are
shipped or services are provided.  Revenue from franchise sales are recognized
at the time all material services relating to the sale of a franchise have been
performed by the Company.

                                       10
<PAGE>

              Airtech International Group, Inc. and Subsidiaries
                   Notes to Financial Statements (Continued)


  Management estimates

  The preparation of financial statements in conformity with generally accepted
accounting principles 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 financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

  Cash flow

  For purposes of the statement of cash flows, cash includes demand deposits,
short term cash equivalent investments and time deposits with maturities of less
than three months. None of the Company's cash is restricted.

  Loss per share

  The basic and diluted loss per share are based upon 25,269,142 and 24,479,321
respectively, weighted average shares of common stock outstanding over the three
and nine month period ending February 28, 2001.  No effect has been given to the
assumed conversion of convertible preferred stock, convertible debentures,
product market obligation guarantees and the assumed exercise of stock options
and warrants, as the effect would be antidilutive.

  Convertible debentures (6%)

  On February 22, 2000, the Company entered into a securities purchase agreement
with PK Investors LLC (`PKI') to raise up to $5,000,000 through the sale to PKI
of up to $5,000,000 in principal amount of the Company's 6% Convertible
Debentures (`Debentures') and Warrants to purchase up to 500,000 shares of the
Company's Common Stock (`Warrants').  Upon execution of the securities purchase
agreement, PKI purchased $2,500,000 in principal amount of the Debentures and
Warrants to purchase 250,000 shares of Common Stock for a purchase price of
$2,500,000.  The Company was responsible and paid legal, investment banker
commissions, accounting and SEC filing fees totaling $427,000.  Under the terms
of the securities purchase agreement, the Company  also issued to PKI a
Conditional Warrant to purchase the remaining $2,500,000 in principal amount of
Debentures and the remaining Warrants to purchase 250,000 shares of the
Company's Common Stock.  The Conditional Warrants expired on December 22, 2000.
The Debentures, Warrants, and Conditional Warrant were sold and issued to PKI in
a private transaction exempt from registration under Section 4 (2) of the
Securities Act of 1933.

                                       11
<PAGE>

              Airtech International Group, Inc. and Subsidiaries
                   Notes to Financial Statements (Continued)



  Convertible Debentures (12%)

  During the year ended May 31, 2000, the Company issued $350,000 of convertible
debentures maturing on September 1, 2004.  Interest is payable at 12% semi-
annually.  Interest has been deferred until May 2001.  The debentures are
convertible at the holder's option at any time beginning one year after issuance
at a conversion price of $1.00 per share.  The debentures include warrants to
purchase 350,000 common shares at a price of $2.00 per share.  The warrants
expire two years from the date of issuance.

  Convertible Preferred Stock

  During the year ended May 31, 1998, the Company, from the 5,000,000 shares,
authorized, issued 1,143,750 of convertible preferred stock for $1 per share.
The shares have a par value of $.001, do not pay dividends, are convertible at
the holder's option for one share of the Company's common stock, and receive up
to 20%, if totally subscribed, of the gross proceeds from the Company's sales of
its portable individual air purifier for a two-year period.  As of February 28,
2001 and 2000, there were 990,625 and 1,143,750 shares of preferred stock
outstanding, respectively.

Commitments and Contingencies

  Operating Leases

  The company is currently obligated under noncancellable operating leases for
its Dallas office and warehouse facilities, which expire in December 2001 and
January 2004, respectively.

  Minimum future rental payments required under the above operating lease is as
follows:

  Year ending May 31
  ------------------

  2001 .......................................           $100,275
  2002 .......................................             73,566
  2003 .......................................             16,080
  2004 .......................................              9,380
                                                         --------
                                                         $199,301
                                                         ========

                                       12
<PAGE>


  Financial instruments

  The Company's financial instruments consist of its cash, marketable securities
accounts and notes receivable, and trade payables.

              Airtech International Group, Inc. and Subsidiaries
                   Notes to Financial Statements (Continued)

  Cash and Marketable Securities

  The Company maintains its cash in bank deposit and other accounts, which, at
times, may exceed federally insured limits.  The Company invests excess cash not
required for operations in US Treasury repurchase agreements in connection with
its cash management account with its primary bank.  The Company has not
experienced any losses in such accounts, and does not believe it is subject to
any credit risks involving its cash.

  Accounts and notes receivable, trade

  The Company accounts and notes receivables are unsecured and represent sales
not collected to date.  Management believes these accounts and notes receivables
are fairly stated at estimated net realizable amounts.

  Stock options and warrants

  Through the quarter ended February 28, 2001 and 2000, the Company has issued
various stock options and warrants to employees and others and uses the
intrinsic value method of accounting for these stock options.  Compensation cost
for options granted has not been recognized in the accompanying financial
statements because the amounts are not material and its exercise price exceeded
the common stock fair market value at the date of option.  The options and
warrants expire between September 2000 and February 2006 and are exercisable at
prices from $0.10 to $10.00 per option or warrant.  Exercise prices were set at
or above the underlying common stock's fair market value on the date of grant.

  Subsequent event

  On November 2, 2000, the Company and its subsidiary entered into a Stock
Purchase Agreement with Southern Therapy, Inc. and its principal shareholders
("STI") to purchase the majority of shares of STI.  At this time the Parties
have agreed not to consummate this merger.  Under the terms of the Stock
Purchase Agreement, the Company would swap stock for the purchase price.  Due to
the decreasing market price of the underlying shares of Company Common Stock
since the Agreement was reached, the Company has decided that the cost of the
transaction has exceeded the number of shares of stock that prudently should be
issued based upon the stock price of the Company Common Stock.

  However, recognizing the strengths of STI, the Company has entered into a
Distribution Agreement with STI.  STI will exclusively represent the Company in
marketing and selling the portable air-purification unit to the US medical
industry.

                                       13
<PAGE>

              Airtech International Group, Inc. and Subsidiaries
                   Notes to Financial Statements (Continued)
                                    PART  I

Item 2. MANAGEMENT DISCUSSION AND ANALYSIS

  The Company restated and refilled its Financial Statements for the year ended
May 31, 1999 and the comparable period ending May 31, 1998 in conformance with
the reverse merger with ITC.  The Company originally filed the May 31,2000 10-
K/SB and February 28, 2000 financial statements incorporating this reverse
merger.

1.  Results of Operations
    Revenues

       The Company's Revenues for the three months ended February 28, 2001
    increased $186,898 or 76% more than the comparable $246,136 revenue in 2000.
    This increase is due to sales of Company products exceeding the prior period
    sales by $231,898. This increase was partially offset by a decrease of
    $45,000 in Franchise Fee and Other Income revenues for 2000 compared to
    $15,000 for 2001. The Company is currently waiving franchise fees for
    prospective franchisees that possess direct marketing skills and indoor air
    quality experience. The waiver is in lieu of extensive training and start up
    time lags that net save the Company money. During the nine month period
    ending February 28, 2001 two new franchisees were brought on stream. This
    compares to one larger franchise signed up in the period ending February 28,
    2000.

       For the nine months ended February 28, 2001, the Revenues increased
    $658,133 or 84% over the comparable nine months ended February 28, 2000. The
    increase in Revenues were likewise partially offset by the decrease in
    Franchise Fees and Other Income of $150,000 with $25,000 in comparable
    income for the current nine months ended February 28, 2001.

    Costs and Expenses

       The Company's Total Costs and Expenses decreased $194,714 or a 18%
    decrease over the $895,582 in expenses for the three months ended February
    28, 2001. The costs for the nine months ended February 28, 2001 increased
    $575,195 or a 24% increase to total $2,965,742 for the nine months ended
    February 28, 2001 compared to $2,390,547 for the nine months ended February
    28, 2000. The costs and expenses are as follows:

       The Company's Salaries and Wages decreased 44% or $231,216 for the
    current three-month period totaling $285,375 compared to the three months
    ended February 28, 2000, that totals $516,591. The decrease is due to
    additional sales personnel in the direct sales commercial division and the
    salaries for the Company Franchise store. There were no comparable Company
    Franchise Stores open in 2000 and fewer Commercial sales persons. The
    Directors and Officers of the Company elected to receive wages in common
    stock of the Company during the period ended February 28, 2001.

                                       14
<PAGE>

       For the nine-month periods, Salaries and Wages decreased $114,239 or 13%
    to total $787,490 at February 28, 2001 The Company owned four franchise
    stores during the nine months ended February 28, 2001 compared to one (just
    opened ) for the nine months ended February 28, 2000. As in the three-month
    period there were no comparable sales persons nor Company stores in 2000.
    The Company has discontinued the Company stores during 2001.

       The Research and Development expense increased 5% or $2,677 and $183,927
    or 183% for the three and nine month periods ended February 28, 2001
    compared to the three and nine months in the prior year, 2000. The increase
    was primarily due to increased testing and development of the Company's new
    in-line unit, the Model S-30, and testing of the portable unit Model S-950,
    along with the upgrading of the commercial model S-12.

       The Cost of Sales increased $265,108 for the nine months ended February
    28, 2001, resulting in $780,235 in costs. This increase, however, is the
    result of additional product sales such that, as a percentage of sales, the
    costs decreased from over 85% of product sales to 55% for the current nine
    month period. The prior periods reflected inventory write-offs and other
    adjustments.

       For the three month period, the cost of sales as a percentage of product
    sales decreased from over 53% to 52% for the three months. The overall costs
    increased $121,367 between the periods.

       Similarly, the Advertising and marketing expenses, including, design and
    development of brochures increased 10% or $4,961 to total $55,963 for the
    three months and 51% or $265,108 to total $241,358 for the nine months ended
    February 28, 2001 compared to the costs for the three and nine months ended
    February 28, 2000. The increases are the result of increased marketing
    expenses for the Model S-30 and Model S-950 along with the Company franchise
    store advertising and marketing expenses.

       Depreciation and Amortization increased $18,051 and $105,767 to total
    $72,716 and $233,188, respectively, for the three and nine months ended
    February 28, 2001 compared to $54,665 and $127,421 for the 2000 three and
    nine month periods ending February 28. The 33% and 83% increase,
    respectively, is due to the commencement in January (at the end of the third
    quarter) 2000 of the amortization of Prepaid Royalties that was not required
    in the prior quarters of fiscal year 2000.

       General and Administrative expenses of $208,006 decreased $110,554 or 34%
    for the three months ended February 28, 2001 compared to $318,560 for the
    three months in 2000. General and Administrative expenses reflected one time
    charges in 2000 for legal expenses with no comparable expense in 2001.
    Conversely the comparable nine-month periods show a decrease in General and
    Administrative expenses of $5,529 or 1% resulting in a $639,544 expense for
    the nine months ended February 28, 2001. The General expense increased due
    to the operating overhead expenses for the Company owned franchise stores as
    well as general corporate legal and accounting increased expenses.

    Interest Expense

       Interest expenses increased over the prior year due to the provision for
    interest on the Convertible Debentures that were sold in early 2000 and
    outstanding for a short period in the

                                       15
<PAGE>

    comparable periods ended February 28, 2000. The over 369% increase resulted
    in a $48,219 and $133,652 increase over the prior three and nine month
    periods ending February 28, 2001 and 2000, resulting in $52,404 and $175,114
    in interest expense for the current three and six month periods ending
    February 28, 2001.

       In total, the Net Loss for the three months ended February 28, 2001
    decreased 39% or $333,393 to a $514,952 loss, which is a $0.02 loss per
    share for that period. This compares to a $1,703,249 or $0.07 loss per share
    for the nine months ended February 28, 2001, or a $50,715 increase in losses
    over the nine months ended February 28, 2000. The February 28, 2000 loss was
    $848,345 or $0.04 per share for the three months and $1,652,534 or $0.08 per
    share for the nine-month periods.

2.  Liquidity and Capital Resources

       During the calendar year 2000 and 2001 to date, the overall financial
    markets eroded as exemplified by the NASDAQ Composite Index free falling
    over 68% during that period. In this environment, the Company was in
    discussion with several investment companies for additional capital. The
    Company entered into an agreement to raise up to $1,000,000 through the sale
    of the Corporation's 12% Secured Convertible Debenture. The 12% Debentures
    are convertible at the option of the holder into shares of the Company's
    common stock. The conversion price and number of shares of common stock to
    be issued on conversion are determined from a formula which relates to the
    average trading price of the Company's common stock on the over the counter
    bulletin board during the 20 trading days prior to the date of conversion.

       The Company is selling Consumer Franchises and expects to sell up to 25
    Franchises by the end of the calendar year. Although the fees have been
    waived for the first number of franchisees that have Indoor Air Quality or
    direct sale experience, the franchise fees to be generated could result in
    up to $300,000 in fees to the Company.

       The current distributorship contractual agreement with Southern Therapy
    Inc. should result in additional sales to the Medical Market. In addition,
    the application for approval in the HCPCS coding system for the Model S-950
    has been processed. The granting of a HCPCS code, if it is granted which the
    Company can not guarantee, does not by itself increase sales. However the
    Company and its distributor will be in a better position to market the unit
    to the larger medical insurance companies in the US. The medical market,
    even without a HCPCS code, could result in substantial sales. The agreement
    with Southern Therapy calls for purchases of $1,000,000 in the first year
    and substantial increases thereafter, however they are under no obligation
    to purchase that amount.

       The Company has also entered into a distributorship agreement with W & B
    Service, Inc. to be the commercial distributor for the Company's commercial
    products. The Company can not assure you that there will be additional sales
    for these markets, however the Company currently has contracted for W & B to
    purchase at a minimum $4,000,000 in Company product for the coming year,
    with increases in years two and three.

       The Company feels that these completed financing resources along with
    increased sales of Company products through industry distributors, by the
    increased foreign sales through in country distributors and the new Model S-
    30 that is gaining market acceptance that combined , will enable the Company
    to aggressively pursue the indoor air purification market with adequate
    funding.

       As a culmination of the two distributorship agreements, the Company has
    decreased as of April 2001 corporate overhead by over $75,000 per month.
    This represents a 40% decrease in those

                                       16
<PAGE>

    overhead expenses compared to August 2000. The sales personnel and marketing
    expenses will be absorbed by the new distributors. The lower profit margins
    on the sales through the distributors are expected to be mitigated by the
    increase in sales. As stated earlier the Company franchise stores have been
    reallocated.

       The Company does not have any plans for major capital outlays outside of
    the regular course of business over the next twelve months. Any increased
    expenditure will be based on consumer demand or made to order products,
    thereby resulting in predictable payoff periods.

       Certain statements in this form 10-Q/SB constitute "forward looking
    statements" as that term is defined under the Private Securities Litigation
    Reform Act of 1995 (the "Act"). The words "believe," "expect," "anticipate,"
    "intend," "estimate," and other expressions which are predictions of or
    indicate future events and trends and which do not relate to historical
    matters identify forward-looking statements. The safe harbor provisions
    provided in the Act do not apply to forward looking statements the Company
    makes in this form 10-Q/SB. Readers are cautioned not to place undue
    reliance on these forward-looking statements and to note that they speak
    only as of the date hereof. Although forward-looking statements reflect
    management's good faith beliefs, reliance should not be placed on
    uncertainties and other factors, which may cause the actual results,
    performance, or achievements of the Company to differ materially from
    anticipated future results, performance, or achievements expressed or
    implied by such forward-looking statements. The Company undertakes no
    obligation to publicly update or revise any forward-looking statement,
    whether as a result of new information, future events or otherwise.

                                       17
<PAGE>

                          PART II--OTHER INFORMATION

                                    ITEM 1
  Legal Proceedings

  The company has been named as a defendant in a number of lawsuits arising in
the ordinary course of business.  In some of these cases a judgment was rendered
against the Company.  The Company has answered these routine causes of action
where appropriate and agreed to a payment schedule with respect to others.  The
Company has fully reserved for these claims and causes of action in our
consolidated financial statements in the aggregate amount of $85,000.

  In 1978, the Company was also named as a defendant in a cause of action styled
LLB Realty, L.L.C. v Interactive Technologies, Corp., Cause No. MER-L-1534-97,
in the Superior Court of New Jersey, Mercer County.  The complaint alleges
damages relating to a lease agreement entered into by the Company for office
facilities in New Jersey.  The Company never occupied the space based upon the
plaintiff (lessor) failing to finish out the space pursuant to the Company's
specifications.  The complaint alleges damages of approximately $607,000 for
remaining lease payments, finish-out costs and lost revenues.  Although the
Company is currently in negotiations for a favorable settlement relating to the
complaint, the outcome of these negotiations is uncertain.  The Company
established a reserve in our consolidated financial statements in the amount of
$200,000 in anticipation of a settlement.

  The Company is also a defendant in a lawsuit filed March 2, 2000 called H.A.A.
Inc. v Airtech International Group, Inc., Cause No. oo CV-1603 (KMW) in the
United States District Court for the Southern District of New York.  The
plaintiff is seeking specific performance of an alleged contract providing for
our sale to the plaintiff of 1,854,386 shares of our common stock for a cash
purchase price of $419,000.  The case is in the later stages of discovery and we
intend to vigorously defend against the plaintiff's claims.  We have not
established any reserves for this action.

  In July 2000 the Company settled a law suit controversy with Carlo Gavazzi
Mupac, the Company has not made all payments required under the Settlement
Agreement, the remaining balance due under the Agreement is $380,000.  The
Company has reflected the outcome of the settlement on its books and records.
The Company is in discussions to re-negotiate the Settlement Agreement.

ITEM  2

  Changes in Securities:

  During the three month period ending February 28, 2001, The Company issued
555,128 shares of common stock to management, employees and consultants for
services rendered, for prices from $0.10 to $0.25 per share under a S-8
Registration Statement and 800,000 under Section 4 (2) of the Securities Act.
The Company issued 2,104,534 shares to PK Investors in conversion of $450,000 of
6% Convertible Debentures, issued under a SB-2 Registration Statement. On
January 5, 2001, the Company issued 1,500,000 shares under Section 4 (2) of the
Securities Act to accredited investors for prices from $0.13 to $0.20 per share.
During the three months ended February 28, 2001, the Company issued under
Section 4 (2) of the Securities Act, 419,335 shares of common stock to
accredited investors for prices ranging from $0.15 to $0.25 per share.

                                       18
<PAGE>

ITEM  3

  Defaults upon Senior Securities, None

ITEM 4

  Submission of Matters to Vote of Security Holders:  None


                          PART II--OTHER INFORMATION
                                  (Continued)
ITEM 5

  Other Information, None

ITEM 6

  Exhibits and Reports on Form 8-K

  (a)   Exhibits

        3.1   Restated Articles of Incorporation filed December 27, 1991 of the
              Company's predecessor in name, Interactive Technologies
              Corporation, Inc.(incorporated by reference to the Company's
              Registration Statement on Form SB-2 filed on May 8, 2000,
              Registration No. 333-36554)

        3.2   Articles of Amendment filed May 14, 1997 of the Company's
              predecessor in name Interactive Technologies Corporation, Inc.
              (incorporated by reference to the Company's Registration Statement
              on Form SB-2 filed on May 8, 2000, Registration No. 333-36554)

        3.3   Articles of Amendment of the Company filed October 16, 1998
              (incorporated by reference to the Company's Registration Statement
              on Form SB-2 filed on May 8, 2000, Registration No. 333-36554)

        3.4   Bylaws of the Company's predecessor in name, Interactive
              Technologies Corporation, Inc. (incorporated by reference to the
              Company's Form 10 filed on January 14, 1992)

        4.1   Specimen Series "M" Preferred Stock Certificate (incorporated by
              reference to the Company's Registration Statement on Form SB-2
              filed on May 8, 2000, Registration No. 333-36554)

        4.2   Specimen Common Stock Certificate (incorporated by reference to
              the Company's Registration Statement on Form SB-2 filed on May 8,
              2000, Registration No. 333-36554)

        4.3   Form of Warrant to purchase shares of Common Stock granted to
              holders of Series "M" Convertible Preferred Stock (incorporated by
              reference to the Company's Registration Statement on Form SB-2
              filed on May 8, 2000, Registration No. 333-36554)

        4.4   Form of 6% Convertible Debenture Due 2002 (incorporated by
              reference to the Company's Registration Statement on Form SB-2
              filed on May 8, 2000, Registration No. 333-36554)

        4.5   Form of Warrant to purchase shares of Common Stock granted to
              holders of 6% Convertible Debentures Due 2002 (incorporated by
              reference to the Company's Registration Statement on Form SB-2
              filed on May 8, 2000, Registration No. 333-36554)

        4.6   Form of Conditional Warrant to Purchase 6% Convertible Debentures
              and Warrants to Purchase Common Stock (incorporated by reference
              to the Company's Registration Statement on Form SB-2 filed on May
              8, 2000, Registration No. 333-36554)

        4.7   Form of 12% Convertible Debenture Due 2005 (incorporated by
              reference to the Company's Form 10-KSB filed on September 7, 2000)

        4.8   Form of Warrant to purchase shares of Common Stock granted to
              holders of 12& Debentures Due 2005 (incorporated by reference to
              the Company's Form 10-KSB filed on September 7, 2000)

  (b)   Reports on Form 8-K, None

                                       19
<PAGE>

                          PART II--OTHER INFORMATION
                                  (Continued)



   Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunder duly authorized, and in the capacity as the Registrant's
Chief Executive Officer and Chief Financial and Accounting Officer,
respectively.



                                    Dated:  April 16, 2001

                                    AIRTECH INTERNATIONAL GROUP, INC.




                                    By: /s/ C.J. Comu
                                        -------------------------------------
                                                      CJ Comu
                                        Chairman and Chief Executive Officer

                                    By: /s/ James R. Halter
                                        -------------------------------------
                                                  James R. Halter
                                        Chief Financial and Accounting Officer

                                       20
<PAGE>

                                 EXHIBIT INDEX


Exhibit Number                               Document
--------------                               --------

3.1                           Restated Articles of Incorporation filed
                              December 27, 1991 of the Company's
                              predecessor in name, Interactive Technologies
                              Corporation, Inc.(incorporated by reference to
                              the Company's Registration Statement on Form
                              SB-2 filed on May 8, 2000, Registration No.
                              333-36554)

3.2                           Articles of Amendment filed May 14, 1997 of
                              the Company's predecessor in name Interactive
                              Technologies Corporation, Inc. (incorporated
                              by reference to the Company's Registration
                              Statement on Form SB-2 filed on May 8, 2000,
                              Registration No. 333-36554)

3.3                           Articles of Amendment of the Company filed
                              October 16, 1998 (incorporated by reference to
                              the Company's Registration Statement on Form
                              SB-2 filed on May 8, 2000, Registration No.
                              333-36554)

3.4                           Bylaws of the Company's predecessor in name,
                              Interactive Technologies Corporation, Inc.
                              (incorporated by reference to the Company's
                              Form 10 filed on January 14, 1992)

4.1                           Specimen Series "M" Preferred Stock
                              Certificate (incorporated by reference to the
                              Company's Registration Statement on Form
                              SB-2 filed on May 8, 2000, Registration No.
                              333-36554)

4.2                           Specimen Common Stock Certificate
                              (incorporated by reference to the Company's
                              Registration Statement on Form SB-2 filed on
                              May 8, 2000, Registration No. 333-36554)
<PAGE>

Exhibit Number                               Document
--------------                               --------

4.3                           Form of Warrant to purchase shares of
                              Common Stock granted to holders of Series
                              "M" Convertible Preferred Stock  (incorporated
                              by reference to the Company's Registration
                              Statement on Form SB-2 filed on May 8, 2000,
                              Registration No. 333-36554)

4.4                           Form of 6% Convertible Debenture Due 2002
                              (incorporated by reference to the Company's
                              Registration Statement on Form SB-2 filed on
                              May 8, 2000, Registration No. 333-36554)

4.5                           Form of Warrant to purchase shares of
                              Common Stock granted to holders of 6%
                              Convertible Debentures Due 2002
                              (incorporated by reference to the Company's
                              Registration Statement on Form SB-2 filed on
                              May 8, 2000, Registration No. 333-36554)

4.6                           Form of Conditional Warrant to Purchase 6%
                              Convertible Debentures and Warrants to
                              Purchase Common Stock (incorporated by
                              reference to the Company's Registration
                              Statement on Form SB-2 filed on May 8, 2000,
                              Registration No. 333-36554)

4.7                           Form of 12% Convertible Debenture Due 2005
                              (incorporated by reference to the Company's
                              Form 10-KSB filed on September 7, 2000)

4.8                           Form of Warrant to purchase shares of
                              Common Stock granted to holders of 12&
                              Debentures Due 2005 (incorporated by
                              reference to the Company's Form 10-KSB filed
                              on September 7, 2000)