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 Fiscal Year Ended September 30, 2003

                           Commission File No. 0-27175


                           ADVANCE TECHNOLOGIES, INC.
             ______________________________________________________
             (Exact name of registrant as specified in its charter)


            Nevada                                       95-4755369
_______________________________             ____________________________________
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or organization)


                             716 Yarmouth Road # 215
                         Palos Verdes Estates, CA 90275
                    ________________________________________
                    (Address of principal executive offices)


       Registrant's telephone number, including area code: (310) 265-7776


           Securities Registered Pursuant to Section 12(b) of the Act:


                               Title of each class
                Common Name of Each exchange on which registered
                   National Association of Securities Dealers Securities
           registered pursuant to Section 12(g) of the Act:

                        _________________________________

                       Indicate by check mark whether the
               Registrant (1) has filed all reports required to be
                 filed by Section 13 or 15(d) of the Securities
                  Exchange Act of 1934 during the preceding 12
                   months (or for such shorter period that the
             Registrant was required to file such reports), and (2)
              has been subject to such filing requirements for the
                                  past 90 days.

                                 Yes {X} No { }

                     Indicate by check mark if disclosure of
              delinquent filers pursuant to item 405 of Regulation
                  S-K is not contained herein, and will not be
              contained, to the best of registrants's knowledge, in
                   definitive proxy or information statements
               incorporated by reference in part III of this Form
                10-KSB or any amendment to this Form 10-KSB. {X}


         Issuer's revenues for its most recent fiscal year were $0.00


                   The aggregate market value of voting stock 38,748,857 held by
          non-affiliates of the Registrant as of September 30,
                        2003 was approximately $ 1,549,954.20


                  On October 1, 2003, approximately 22,766,517
               Shares of the Registrant's Common Stock, $0.001 par
                            value, were outstanding, 910,660.68.


                       Documents Incorporated by Reference
                              Exhibit A & Exhibit B


<PAGE>


                           ADVANCE TECHNOLOGIES, INC.
                                TABLE OF CONTENTS


                                                                            Page
                                     PART I

Item 1.    BUSINESS.........................................................   3

Item 2.    PROPERTIES.......................................................   4

Item 3.    LEGAL PROCEEDINGS................................................   5

Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............   5

                                     PART II

Item 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS............................................   5

Item 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS............................   5

Item 7.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA......................   6

Item 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE............................   6


                                    PART III

Item 9.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................  6

Item 10.   EXECUTIVE COMPENSATION...........................................   7

Item 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
             AND MANAGEMENT.................................................   7

Item 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................   7

                                     PART IV

Item 13.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORT..............   8

Item 14.   EXHIBITS, MANAGEMENT DISCUSSIONS AND OPERATIONS..................   8

           SIGNATURES.......................................................   9



<PAGE>


PART I

ITEM 1. BUSINESS

     Overview

     Advance Technologies Inc. is a developer of Infrared Enhanced Vision
Technology and commercial solutions. The company has a worldwide license from
Hughes Aircraft company, Los Angeles, California for a patented advanced
infrared imaging system. Advance Technologies licenses and develops applied
infrared enhanced vision solutions for use in diverse industries including
aviation, recreational vehicles, commercial trucking, marine, security, and fire
fighting applications. The Company is currently engaged in the development of
night vision systems with applications in the commercial sector.

     Advance Technologies has entered into a licensing agreement with Kollsman
Inc., which has incorporated the company's technology and intellectual property
into an Enhanced Vision System for use on the Gulfstream series of Aircraft. The
system entered production in early 2002. Kollsman has announced a new enhanced
vision product in late 2002 for use at the low-end private aviation market. This
product is expected to enjoy the same success as the Gulfstream product but with
a far larger market.

     Background

     Advance Technologies, Inc. ("the Company") The Company was organized under
the laws of the State of Delaware under the name PWB Industries, Inc.; the
articles of incorporation were issued June 16, 1969. The name was changed to Sun
Energy, Inc. ("The Company"), which merged with Sto Med, Inc. on February 22,
1996 changing its name to Sto Med, Inc. ("The Company") and domicile to the
State of Nevada. On February 23, 1996, Sto Med, Inc.,a privately held California
corporation, was acquired by Sto Med, Inc. ("The Company") the California
Corporation acquisition was rescinded on August 23rd 1997. Sto Med Inc. ("The
Company") the Nevada Corporation changed its name to Advance Technologies, Inc.,
("The Company") on August 23rd 1997. On September 27, 1999 the "Company"
acquired Seacrest Industries of Nevada, also known as Infrared Systems
International.


     The Company

     The Registrant through its wholly owned subsidiary SEACREST INDUSTRIES,
INC., and through its president and director Mr. Gary Ball was granted an
exclusive world-wide license agreement for the use of US patent number 5,534,694
by Hughes Aircraft Company, for a key optical element of the Infrared Aircraft
Landing System. Gary Ball founder and CEO of Infrared Systems International
(ISI) a/k/a Seacrest Industries International, Inc. in 1992 formed the company
for the singular purpose of providing manufacturing and sales support for the
unique Infrared System called Enhanced Vision System (EVS). While employed by
Electro-Optical Systems, a segment of Hughes Aircraft Company, as senior Program
Manager and engineer, he led the research and development team responsible for
the development of the Enhanced Vision System (EVS).

     This technology was designed to allow aircraft pilots to actually "see" the
airport environment through cloud ceiling or surface fog. The factor of enhanced
safety, alone, is generating an enormous demand for this type of system.

     Significant Corporate Milestones

     The aerospace industry honored its own "best of the best" on June 16, 2003
at a glittering ceremony in Paris's Pavilion D'Armenonville. Advance
Technologies Inc. was a finalist in the AVIONICS & ELECTRONICS category for our
achievement: Infrared Commercial Landing Aid System.


                                       3


<PAGE>


     Advance Technologies Inc. entry was an Advanced Optical controller, a
device that greatly expands the optical dynamic range of EVS, a capability that
will be required for EVS to fulfill its full potential for the aviation market.

     On June 3, 2003, Mr. Gary E. Ball, President of Advance Technologies Inc.
was presented the prestigious National Leadership Award. Mr. Ball will serve as
an Honorary Chairman on the Business Advisory Council (BAC) for the National
Republican Congressional Committee.

     In February of 2003 the Federal Aviation Administration submitted a
proposed change for operating rules that if adopted would greatly expand the EVS
market opportunities. These changes deal with the operating rules for flight
operations under low or reduced visibility conditions. Advance Technologies Inc.
is looking forward to the finalization and the introduction of these needed
changes.

     Gulfstream Aerospace announced at the NBAA show that EVS is available as
optional equipment on the G500, G-V, G-400, G-IVSP, and G300 business jets. The
optional equipment is available on new aircraft or retrofit to in service
aircraft. In addition, EVS will be standard equipment on the new G550 and the
newly announced G450.

     At the NBAA show in Orlando, it was announced that Kollsman and FedEx have
reached an agreement whereby Kollsman will provide EVS systems for FedEx's fleet
of wide body aircraft. This market is estimated at 200 aircraft. The aircraft
types involved are Boeing MD-10 & MD-11, and the Airbus A300 & A310. These
additional aircraft types represent a major accomplishment for EVS.

     Employees

     The Company employs a total of three (3) employees, One of, which is full
time, the other two are used on a reduced hour work week on an as required
basis. This staff reduction is the result of economic conditions discussed in
the Management Discussion Section in depth.

ITEM 2. PROPERTIES

     The Company's executive offices are located in Palos Verdes Estates,
California.



ITEM 3. LEGAL PROCEEDINGS

     There are no legal proceedings known or pending against the Registrant or
its subsidiary

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

     No matters were submitted to a vote of the Company's Security holders
through the solicitation of proxies or Otherwise, during the fiscal year ended
September 30, 2003.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company is currently trading, OTC, on the Nationals Association of
Securities Dealers "Pink Sheets" with the high bid at $0.20 per share and the
low bid of $0.04 per share during the last year. Additional information required
by this item may be found in the Company's 2002 Financial Statements.


                                       4


<PAGE>


     On September 30, 2002 there was 22,766,517 shares outstanding of
registrant's common stock, at $0.001 par value. There was an additional
38,748,857 shares of Class B restricted stock.

     The increase of common stock from 17,218,967 to 22,766,517 Resulted from
conversion of 144 restricted stock to free trading stock. The conversion was
authorized by the board of directors of Advance Technologies on January 1, 2002.

     The increase in preferred shares was the result of the issuing of 5,438,350
shares to retire the outstanding short term loan of $108,767.00 and the further
conversion of preferred shares into common stock.

     Effective January 1, 2004 the board of directors has authorized the
conversion of an additional 35% of preferred shares into common provided the
holding period has been satisfied. This will increase the converted percentage
to 65% once minimum holding periods have been satisfied.



<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND REPORTS
        OF OPERATION

From time to time, we may publish forward-looking statements relating to
matters, including anticipated financial performance business projects, the
progress and goals for our research and development programs, marketing
strategies, and other similar matters. The Private Securities Litigation Reform
Act of 1995 provides a safe harbor; a variety of factors could cause Our actual
results and experience to differ materially from the Anticipated results or
other expectations expressed in our Forward-looking statements. In addition, we
disclaim any Intent or obligation to update those forwarding-looking statements.

When used in this discussion, the words "believes," "anticipates" "expected",
"assumes", "and similar expressions are intended to identify forward looking
statements. Such statements are subject to risks and uncertainties that could
cause actual results to differ materially from those projected. Readers are
cautioned not to place undue reliance on these forward-looking statements that
speak only as of the date of this report. We undertake no obligation to publicly
release the results of any Revisions to these forward-looking statements that
may be made To reflect events or circumstances after the date of this report or
to Reflect the occurrence of unanticipated events.

For a more detailed description of our operations for 2003 see Item 14
Management Discussion for 2003.

ITEM 7. FINANCIAL STATEMENTS.


The financial statements required by this item are included in the Company's
2003 Financial Statements and are presented in Part IV, Item 13.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTS ON ACCOUNTING FINANCIAL

DISCLOSURE:

None

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     GARY E. BALL Age 65, residing in Manhattan Beach, California is married. He
attended California State University at Long Beach graduating in 1968 with a
BSEE and MSEE, went on to perform Graduate Studies at University of Southern
California. He has specialized in product design, development, and management
for North American Aviation, Autonetics Division. Technical Manager in charge of
the Pave Track program for Ford Aerospace. Program Manager for Northrop
Electro-Mechanical in charge of business development on several classified DOD
programs, including the AMRAAM effort. Program Manager for Hughes Aircraft where
he developed the Infrared Enhanced Vision System, reporting to the President of
EDSG as directed by General Motors and directed all non-core business. He is a
member of NATO NIAG study group on Aircraft Integration. He has authored several
articles for trade publications, the last 4 years he has provided consulting
services to 10 U.S. and foreign corporations in the field of IR technology.

     GARY L. BANE has resigned from the board of directors effective August 1,
2003. Advance Technologies is currently evaluating candidates to fill this
position.


                                       6


<PAGE>


     WENDY BALL Age 56, residing in Manhattan Beach, California is married. She
graduated from University of Southern California, BS cum Laude. Her career has
been focused on retail merchandising, where she has demonstrated exceptional
skills in management, team building and communications. She is National Sales
Director for Christian Lacroix New York, a wholly owned subsidiary of Louis
Vitton Moet Hennessey (LVNH). She was an account executive for Carolee Jewelry
for Southern California, Arizona and Utah. She was co-owner Brava Specialty
Clothing Store in Redondo Beach, California.


ITEM 10. EXECUTIVE COMPENSATION

Other than information provided in the Company's 2003 Financial Statements
incorporated herein, executive officers and directors have received no other
compensation.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

<TABLE>
<CAPTION>

                   (1) Name and Address of           (2) Amount and Nature of         Percent of
Title of Class         Beneficial Owner                  Beneficial Ownership         Class
______________         ___________________               ____________________         ___________
<S>                    <C>                               <C>                          <C>


Preferred              Gary E. Ball                      9,240,000 Issued Shares      15.0
                       28 Santa Cruz Court
                       Manhattan Beach, CA 90266

Preferred              Wendy Ball                        9,240,000 Issued Shares      15.0
                       28 Santa Cruz Court
                       Manhattan Beach, CA 90266

</TABLE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Gary E. Ball and Wendy Ball are married.


PART IV


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

     The following documents are filed as part of this Form 10-KSB Annual
Report:

     See Attached Financial Statements: Exhibit A (15 pages)


ITEM 14. EXHIBITS, MANAGEMENT DISCUSSIONS AND OPERATIONS

     The following document is filed as part of this Form 10-KSB Annual Report:

     See Attached Exhibit A - Financial Statements (15 pages)

     See Attached Exhibit B - Management Discussion and Analysis (6 pages)

     Exhibit 31 - Section 302 Certification

     Exhibit 32 - Section 906 Certification


                                       7


<PAGE>


                                   SIGNATURES


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




Date: January 14, 2004                          Advance Technologies, Inc.
                                                (Registrant)



                                                By:/s/ GARY E. BALL
                                                   __________________________
                                                       Gary E. Ball
                                                       President and Director


                                       8


<PAGE>


                                    EXHIBIT A


                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)

                        Consolidated Financial Statements

                           September 30, 2003 and 2002





<PAGE>






                                 C O N T E N T S


Independent Auditor's Report................................................F-3

Balance Sheets..............................................................F-4

Statements of Operations....................................................F-5

Statements of Stockholders' Equity..........................................F-6

Statements of Cash Flows....................................................F-9

Notes to the Financial Statements...........................................F-10


<PAGE>








                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders of
Advance Technologies, Inc.
(A Development Stage Company)

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Advance
Technologies,  Inc. (a  development  stage company) as of September 30, 2003 and
2002 and the related  statements of  operations,  stockholders'  equity and cash
flows for the years  ended  September  30, 2003 and 2002 and from  inception  on
October 1, 1985 through  September 30, 2003. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  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  Advance
Technologies,  Inc. (a  development  stage company) as of September 30, 2003 and
2002 and the  results  of its  operations  and cash  flows for the  years  ended
September  30,  2003 and 2002 and from  inception  on  October  1, 1985  through
September 30, 2003 in conformity with accounting  principles  generally accepted
in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial  statements,  the  Company has minimal  assets and is  dependent  upon
financing to continue  operations.  These factors raise  substantial doubt about
its  ability to  continue as a going  concern.  Management's  plans in regard to
these matters are also described in the Note 2. The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.



Chisholm & Associates
North Salt Lake, Utah
December 24, 2003

                                      F-3
<PAGE>
<TABLE>
<CAPTION>

                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                           Consolidated Balance Sheets



                                     ASSETS
                                                                                        September 30,
                                                                                   2003                2002
                                                                            ------------------ -------------------

<S>                                                                         <C>                <C>
CURRENT ASSETS

   Cash                                                                     $                - $             1,719
                                                                            ------------------ -------------------
       Total Current Assets                                                                  -               1,719
                                                                            ------------------ -------------------

PROPERTY & EQUIPMENT, net                                                               14,440              22,367
                                                                            ------------------ -------------------

   TOTAL ASSETS                                                             $           14,440 $            24,086
                                                                            ================== ===================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

   Bank Overdraft                                                           $            2,029 $                 -
   Accounts payable                                                                      9,637                   -
   Accrued Interest                                                                          -              23,267
   Advance Royalties                                                                    25,000              25,000
   Notes payable-officer                                                                46,800              36,300
                                                                            ------------------ -------------------

       Total Current Liabilities                                                        83,466              84,567
                                                                            ------------------ -------------------

LONG-TERM DEBT

   Line of Credit                                                                            -              85,500
                                                                            ------------------ -------------------

   TOTAL LIABILITIES                                                                    83,466             170,067
                                                                            ------------------ -------------------

STOCKHOLDERS' EQUITY

   Common stock, authorized 100,000,000 shares of
     $0.001 par value, issued and outstanding 22,766,517
      and 17,218,967 shares, respectively                                               22,766              17,219
   Preferred Stock, Series A authorized 100,000,000
     shares of $0.001 par value, issued and outstanding
     38,748,857 and 38,858,057 shares, respectively                                     38,749              38,858
   Additional paid-in capital                                                          549,780             446,446
   Retained earnings (deficit)                                                        (680,321)           (648,504)
                                                                            ------------------ -------------------

       Total Stockholders' Equity                                                     ( 69,026)           (145,981)
                                                                            ------------------ -------------------

       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $           14,440 $            24,086
                                                                            ================== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.


                                       F-4

<PAGE>
<TABLE>
<CAPTION>


                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                      Consolidated Statements of Operations

                                                                                For the period
                                                                                   of entering
                                                                                   Development
                                                                                      Stage on
                                                                                    October 1,
                                                                     For the Year Ended             1985 Through
                                                                        September 30,               September 30,
                                                        --------------------------------------
                                                                2003                 2002                2003
                                                           ------------          ------------       -------------

<S>                                                     <C>                     <C>             <C>
REVENUES                                                $                -      $       29,039  $           60,024
                                                        ------------------      --------------  ------------------

EXPENSES:

   Depreciation & Amortization                                       7,927               7,854              37,446
   Organization Costs                                                  -                     -              11,331
   Research & Development                                              -                     -              72,750
   General and administrative                                       23,890              38,699             632,852
                                                        ------------------  ------------------  ------------------

       Total Expenses                                               31,817              46,553             754,379
                                                        ------------------  ------------------  ------------------

INCOME (LOSS) FROM OPERATIONS:                                     (31,817)            (17,514)           (694,355)
                                                        ------------------  ------------------  ------------------

OTHER INCOME (EXPENSE):

   Interest Expense                                              (       -)            (10,260)            (23,267)
   Miscellaneous Income                                                  -                   -              98,000
                                                        ------------------  ------------------  ------------------

       Total Other Income (Expense):                                    -              (10,260)             74,733
                                                        ------------------  ------------------  ------------------

NET INCOME (LOSS)                                       $          (31,817) $          (27,774) $         (619,622)
                                                        ==================  ==================  ==================


NET LOSS PER SHARE:
   Loss Per Share                                       $            (0.00) $            (0.00) $            (0.29)
                                                        ------------------  ------------------  ------------------

   Weighted average shares outstanding                          20,249,214          10,796,656           2,120,735
                                                        ==================  ==================  ==================
</TABLE>

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

                                       F-5
<PAGE>
<TABLE>
<CAPTION>

                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                 Consolidated Statements of Stockholders' Equity
        (For the period of entering development stage on October 1, 1985
                           through September 30, 2002)


                                                                                                    Deficit
                                                                                                    Accumulated
                                  Common Stock          Additional     Preferred Stock              During the
                            ------------------------     Paid-In     -----------------------------  Development
                            Shares          Amount       Capital      Shares          Amount        Stage
                            ---------  -------------  -------------  --------------  -------------  --------------
<S>                         <C>        <C>            <C>            <C>             <C>            <C>
Balance, October 1,
 1985 (beginning of
 the development
 stage)                         6,487  $           7  $      58,161               -  $           -  $      (60,701)
Shares issued for coal
 royalties at $0.01             4,369              4          1,525               -              -               -

Shares issued for
 services at $0.25                554              1          4,849               -              -               -

Shares issued for
 services at $0.03              1,601              2          1,680               -              -               -

Shares issued for
  services at $0.25             1,274              1         11,145               -              -               -

Shares issued for
 services at $0.01              2,290              2            798               -              -               -

Shares issued for
 services at $0.25             37,203             37        325,487               -              -               -

Preferred shares
 issued for services                -              -              -          10,048          1,004               -

Preferred shares expire -           -          1,004        (10,048)         (1,004)             -

Net loss since the
 beginning of the
 development stage
 at October 1, 1985                 -              -              -               -              -        (344,001)
                            ---------  -------------  -------------  --------------  -------------  --------------

Balance, September
 30, 1995                      53,778             54        404,649               -              -        (404,702)

Shares issued for
 services at $0.25              5,714              6         49,994               -              -               -

Share round up                     (6)            (1)             -               -              -               -

Net loss for
 the year ended
 September 30, 1996                 -              -              -               -              -         (50,000)
                            ---------  -------------  -------------  --------------  -------------  --------------

Balance, September
 30, 1996                      59,486             59        454,643               -              -        (454,702)

</TABLE>

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

                                      F-6
<PAGE>
<TABLE>
<CAPTION>



                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                 Consolidated Statements of Stockholders' Equity
        (For the period of entering development stage on October 1, 1985
                           through September 30, 2002)
                                   (Continued)

                                                                                                    Deficit
                                                                                                    Accumulated
                                  Common Stock          Additional     Preferred Stock              During the
                            ------------------------     Paid-In     -----------------------------  Development
                            Shares          Amount       Capital      Shares          Amount        Stage
                            ---------  -------------  -------------  --------------  -------------  --------------
<S>                         <C>        <C>            <C>            <C>             <C>            <C>

Balance Forward                59,486             59        454,643                -              -      (454,702)

Shares issued for
 services at $0.25                608              1          5,324                -              -               -

Net loss for
 the year ended
 September 30, 1997                 -              -              -               -              -         (5,325)
                            ---------  -------------  -------------  --------------  -------------  --------------

Balance, September
 30, 1997                      60,094             60        459,967               -              -       (460,027)

Shares issued for
 services at $0.001            12,828             13            436               -              -               -

Net loss for
 the year ended
 September 30, 1998                 -              -              -               -              -           (447)
                            ---------  -------------  -------------  --------------  -------------  --------------

Balance September
 30, 1998                      72,922             73        460,403               -              -       (460,474)

Shares issued for
 cash at $0.01              2,500,000          2,500         22,500               -              -               -

Shares issued for
 common stock of
 SeaCrest Industries
 Corp. at $0.001                    -              -        (36,457)     50,254,102         50,254               -

Net loss for
 the year ended
 September 30, 1999                 -              -              -               -              -        (90,126)
                            ---------  -------------  -------------  --------------  -------------  --------------

Balance, September
 30, 1999                   2,572,922          2,573        446,446      50,254,102         50,254       (550,600)

Net loss for
 the year ended
 September 30, 2000                 -              -              -               -              -       (101,799)
                            ---------  -------------  -------------  --------------  -------------  --------------

Balance, September
 30, 2000                   2,572,922          2,573        446,496      50,254,102         50,254       (652,399)

</TABLE>

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

                                      F-7
<PAGE>
<TABLE>
<CAPTION>
                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                 Consolidated Statements of Stockholders' Equity
        (For the period of entering development stage on October 1, 1985
                           through September 30, 2002)
                                   (Continued)

                                                                                                    Deficit
                                                                                                    Accumulated
                                  Common Stock          Additional     Preferred Stock              During the
                            ------------------------     Paid-In     -----------------------------  Development
                            Shares          Amount       Capital      Shares          Amount        Stage
                            ---------  -------------  -------------  --------------  -------------  --------------
<S>                         <C>        <C>            <C>            <C>             <C>            <C>

Balance Forward             2,572,922          2,573        446,446      50,254,102         50,254       (652,399)

Net income (loss)
 for the year ended
 September 30, 2001                  -              -              -               -              -         31,669
                            ---------  -------------  -------------  --------------  -------------  --------------

Balance, September
 30, 2001                   2,572,922          2,573        446,446      50,254,102         50,254        (620,730)

Shares issued for
 services at $0.001         3,250,000          3,250              -               -              -               -

Shares converted to
 common stock              11,396,045         11,396              -     (11,396,045)       (11,396)              -

Net income (loss)
 for the year ended
 September 30, 2002                 -              -              -               -              -         (27,774)
                            ---------  -------------  -------------  --------------  -------------  --------------

Balance, September
 30, 2002                  17,218,967         17,219        446,446      38,858,057         38,858        (648,504)

Shares issued for
 conversion of debt         5,438,350          5,438        103,334             -              -    -

Shares issued for
 conversion of
  Preferred stock             109,200            109            -     (109,200)      (109)          -

Net income (loss)
 for the year ended
 September 30, 2003                 -              -              -               -              -         (31,817)
                            ---------  -------------  -------------  --------------  -------------  --------------

Balance, September
 30, 2002                  22,766,517  $      22,766  $     549,780      38,748,857  $      38,749  $     (680,321)
                        =============  =============  =============  ==============  =============  ==============

</TABLE>

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

                                      F-8

<PAGE>
<TABLE>
<CAPTION>
                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                                                                                                        (For the period of
                                                                                                         entering Development
                                                                                                         Stage on October 1,
                                                                 For the Year Ended                        1985 Through
                                                                      September 30,                        September 30,
                                                                 -----------------------------------
                                                                         2003                2002               2003
                                                                    ------------        ------------      -------------

<S>                                                              <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net loss                                                      $          (31,817) $          (27,774) $        (619,622)
   Adjustments to reconcile net loss to net cash,
    provided by operations:
     Stock issued for services                                                    -               3,250            403,025
     Depreciation & Amortization                                              7,927               7,854             37,446
     Organization Costs                                                           -                   -             11,331
     Decrease in prepaids                                                         -                   -             14,680
     Increase (Decrease) in accrued liabilities                              11,671              10 260             34,940
                                                                 ------------------  ------------------  -----------------

       Net Cash Flows Used in Operating Activities                          (12,219)             (6,410)          (118,200)
                                                                 ------------------  ------------------  -----------------

CASH FLOWS USED IN INVESTMENT ACTIVITIES(39

   Purchase of Equipment                                                          -              (3,386)           (39,386)
   Investment in Subsidiary                                                       -                   -                286
                                                                 ------------------  ------------------  -----------------

       Net Cash Used in Investment Activities                                     -              (3,386)           (39,100)
                                                                 ------------------  ------------------  -----------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Cash paid on Loan from Officer                                                 -              (8,000)           (41,200)
   Proceeds from Loan from Officer                                           10,500              16,000             88,000
   Proceeds from Line of Credit                                                   -                   -             85,500
   Proceeds from Issuance of Stock                                                -                   -             25,000
                                                                 ------------------  ------------------  -----------------

       Net Cash Flows from Financing Activities                              10,500               8,000            157,300
                                                                 ------------------  ------------------  -----------------

NET INCREASE (DECREASE) IN CASH                                              (1,719)            (1,796)                -

CASH, BEGINNING OF YEAR                                                       1,719               3,515                -
                                                                 ------------------  ------------------  -----------------

CASH, END OF YEAR                                                $                -  $            1,719  $               -
                                                                 ==================  ==================  =================

</TABLE>

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

                                      F-9

<PAGE>
<TABLE>
<CAPTION>

                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                                   (Continued)
                                                                                                        (For the period of
                                                                                                         entering Development
                                                                                                         Stage on October 1,
                                                                 For the Year Ended                        1985 Through
                                                                      September 30,                        September 30,
                                                                 -----------------------------------
                                                                         2003                2002               2003
                                                                    ------------        ------------      -------------

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

SUPPLEMENTAL CASH FLOW INFORMATION

   Cash Paid for:
       Interest                                                  $                -  $                -  $               -
       Taxes                                                     $                -  $                -  $               -

</TABLE>

SUPPLEMENTAL NON-CASH INFORMATION

   In March 2003, the Company issued  5,438,350 shares for the satisfaction of a
   line of credit and accrued interest in the amount of $108,772.

   During the year  ending  September  30,  2003,  a total of 109,200  shares of
   preferred stock were converted to common stock.

   During December 2001, the Company issued 3,250,000 shares of common stock for
   services valued at $3,250 (or $.001 per share).

   During the year ending  September 30, 2002, a total of  11,396,045  shares of
   preferred stock were converted to common stock.



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

                                      F-10
<PAGE>

                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              a.  Organization

              The Company was organized  under the laws of the state of Delaware
              on June 16, 1969 as PWB Industries, Inc. On November 10, 1975, the
              Company  changed  its name to Sun Energy,  Inc. At that time,  the
              Company  began  operations in the oil and gas lease  industry.  By
              1985, the Company  discontinued its operations and became dormant.
              On March 6, 1996, the Company  attempted a merger which failed. On
              August  23,  1997,  the  Company   changed  its  name  to  Advance
              Technologies,  Inc.  and  changed  its place of  domicile  to from
              Delaware to Nevada.

              On September  27,  1999,  pursuant to a plan of  acquisition,  the
              Company  exchanged  50,254,102  shares of its Seris "A"  preferred
              stock for 50,254,102 shares of SeaCrest  Industries  Corporation's
              common stock.  This  acquisition  has been accounted for using the
              purchase method of a business combination.

              The Company is  currently  engaged in the  development  of a night
              vision system with  applications in the military as well as civil.
              The Company has an agreement  with a Taiwan  company  wherein they
              are jointly  developing the night vision system for use in Class A
              coaches.  The Company is also involved in the development of other
              Electro-optical mechanical devices.

              b.  Accounting Method

              The Company recognizes income and expenses on the accrual basis of
              accounting.

              c.  Consolidation

              The  consolidated  financial  statement  include  the  accounts of
              Advanced Technologies, Inc. and SeaCrest Industries Corporation, a
              wholly  owned  subsidiary.  Intercompany  transactions  have  been
              eliminated.

              d.  Cash and Cash Equivalents

              The  Company   considers  all  highly  liquid   investments   with
              maturities of three months or less to be cash equivalents.



                                      F-11

<PAGE>


                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              e.  Earnings (Loss) Per Share

              The computation of earnings per share of common stock is based on
              the weighted average number of shares outstanding at the date of
              the financial statements. From Inception on October 1,

<TABLE>
<CAPTION>
                                                                   For the Years Ended            1985 Through
                                                                       September 30,              September 30,
                                                        --------------------------------------
                                                                2003                2002                2003
                                                          -------------       -------------       -------------


<S>                                                     <C>                 <C>                 <C>
              Numerator - net loss                      $          (31,817) $          (27,774) $         (619,622)

              Denominator - weighted
               average number of shares
               outstanding                                      20,249,214          10,796,656           2,120,735
                                                        ==================  ==================  ==================


              Loss per share                            $           (0.00)  $            (0.00) $            (0.29)
                                                        ==================  ==================  ==================

</TABLE>

              f.  Provision for Income Taxes

              No  provision  for  income  taxes  has  been  recorded  due to net
              operating loss carryforwards  totaling approximately $680,000 that
              will  be  offset  against  future   taxable   income.   These  NOL
              carryforwards begin to expire in the year 2004. No tax benefit has
              been  reported  in the  financial  statements  because the Company
              believes  there is a 50% or greater chance the  carryforward  will
              expire unused.

              Accordingly,  per FASB 109, the potential tax benefits of the loss
              carryforwards are offset by the valuation of the same amount.

              Deferred  tax  assets and the  valuation  account is as follows at
              September 30, 2003 and 2002.

<TABLE>
<CAPTION>
                                                                          September 30,
                                                                    2003                2002
                                                               -------------       -------------
<S>                                                        <C>                 <C>
              Deferred tax asset:
                 NOL carryforward                          $          231,200  $          214,700
              Valuation allowance                                    (231,200)           (214,700)
                                                           ------------------  ------------------
              Total                                        $                -  $                -
                                                           ==================  ==================
</TABLE>

                                      F-12
<PAGE>

                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              g.  Use of Estimates

              The  preparation  of  financial   statements  in  conformity  with
              generally accepted  accounting  principles  requires management to
              make estimates and  assumptions  that affect  reported  amounts of
              assets  and  liabilities,  disclosure  of  contingent  assets  and
              liabilities  at the date of the financial  statements and revenues
              and  expenses  during the  reporting  period.  In these  financial
              statements assets and liabilities  involve  extensive  reliance on
              management's  estimates.  Actual  results  could differ from those
              estimates.

              h.  Revenue Recognition

              The Company has received  revenue  pursuant to an agent  agreement
              which allows the Company to receive  fixed  monthly  service fees,
              and to bill for additional services provided.  The Company records
              revenues  when  the  services  are  performed.   The  Company  has
              recognized $-0-, and $29,039 in revenues for services performed in
              connection  with this agreement for the years ended  September 30,
              2003 and 2002.

              The Company is also entitled to reimbursement for various expenses
              associated  with the  development  fo its night vision  technology
              pursuant to the joint venture  agreement with the Taiwan  company.
              These  reimbursements  are recorded as  miscellaneous  income when
              received.  The Company  recognized  miscellaneous  income of $ -0-
              during the fiscal years 2003 and 2002 from reimbursement  received
              from the joint venture partner.

NOTE 2 -      GOING CONCERN

              The accompanying  financial statements have been prepared assuming
              that the Company will continue as a going concern.  The Company is
              dependent  upon  raising  capital  to  continue  operations.   The
              financial  statements  do not include any  adjustments  that might
              result from the outcome of this  uncertainty.  It is  management's
              plan to raise  capital in order to define  expand  their  business
              operations, thus creating necessary operating revenue.

NOTE 3 -      DEVELOPMENT STAGE COMPANY

              The Company is a development stage company as defined in Financial
              Accounting  Standards Board  Statement No. 7. It is  concentrating
              substantially all of its efforts in raising capital and developing
              its business operations in order to generate significant revenues.

                                      F-13

<PAGE>

                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002


NOTE 4 -      PROPERTY & EQUIPMENT

              Property & Equipment  consists of the  following at September  30,
              2002 and 2001:
<TABLE>
<CAPTION>

                                                                              September 30,
                                                                         2003                2002
                                                                    -------------       -------------

<S>                                                              <C>                 <C>
              Equipment                                          $           39,386  $           39,386
              Less: Accumulated Depreciation                                (24,946)            (17,019)
                                                                 ------------------  ------------------

              Net Property & Equipment                           $           14,440  $           22,367
                                                                 ==================  ==================
</TABLE>

              Expenditures  for  property  and  equipment  and for  renewals and
              betterments,  which extend the originally  estimated economic life
              of assets or convert the assets to a new use, are  capitalized  at
              cost. Expenditures for maintenance,  repairs and other renewals of
              items are charged to expense.  When items are disposed of the cost
              and accumulated depreciation are eliminated from the accounts, and
              a gain or loss is included in the results of operations.

              The  provision   for   depreciation   is   calculated   using  the
              straight-line  method  over  the  estimated  useful  lives  of the
              assets.  The useful lives of equipment  are 5 years.  Depreciation
              expense for the years ended September 30, 2003 and 2002 are $7,927
              and $7,854, respectively.

NOTE 5 -      ADVANCED ROYALTIES

              SeaCrest   Industries   Corporation,   formerly  Infrared  Systems
              International,  Inc.,  entered  into  a  licensing  agreement  for
              marketing and  distributing of infrared  aircraft landing systems.
              Seacrest received $25,000 in advances. These royalty revenues have
              been deferred until future revenue  streams occur, if any actually
              do occur,  and these  royalty  revenues  have been  recorded  as a
              liability.

NOTE 6 -      RELATED PARTY TRANSACTIONS

              As of September 30, 2003 and 2002, the Company owes an officer the
              Company   $46,800  and   $36,300   for  loans   made.   This  note
              payable-officer   is  considered  a  current   liability  with  no
              provision for interest.

NOTE 7 -      LINE OF CREDIT

              The Company has  negotiated  a Line of Credit with a  corporation,
              wherein  the  Company has a credit  limit of  $125,000.  This line
              accrues 12.0% interest  annually and is due January 1, 2004. As of
              September  30, 2002,  the Company has borrowed a total of $85,500.
              For the year  ended  September  30,  2002,  the  Company  recorded
              $10,260 in interest expense. As of September 30, 2002, the Company
              has accrued interest totaling $23,267.

                                      F-14

<PAGE>

                           ADVANCE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           September 30, 2003 and 2002


NOTE 7 -      LINE OF CREDIT (Continued)

              In December 2002, the Company authorized the issuance of 5,438,350
              shares of common  stock in  satisfaction  of the $85,500  debt and
              accrued  interest  of  $23,267.  As  of  September  30,  2003,  no
              obligation exists.

NOTE 8-       COMMON STOCK

              During  December  2001,  the Company  issued  3,250,000  shares of
              previously  authorized  but unissued  common stock for  consulting
              services for $3,250 (or $.001 per share).

              During the year ended  September  30, 2002,  11,396,045  shares of
              preferred stock were converted to common stock.

              In December 2002, the Company  issued  5,438,350  shares of common
              stock in  satisfaction  of $85,500 in debt and  $23,267 of accrued
              interest.

              During the year ended September 30, 2003,  preferred  shareholders
              converted  109,200 shares of preferred stock for 109,200 shares of
              common stock.


                                      F-15



<PAGE>


                                    EXHIBIT B


                            Advance Technologies Inc.
                       Management Discussion and Analysis
                            Year End, September 2003


MANAGEMENT DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS

Advance Technologies Inc. ("AVTX") is a developer of infrared (IR)

Enhanced Vision technology for commercial solutions and applications. The
Company engages in advance development activities and through strategic business
arrangements AVTX utilizes OEM suppliers and major system corporations to form
strategic business associations. This unique business model combines the
strength of our organization with the prior capital investment of the OEMs and
the in place established marketing and sales organization of the System
Integrator. Our ability to bridge advance IR technology into application
specific markets shortens the development-to-market cycle and associated high
investment risks of this enterprise.

Highlights of the Year

     The aerospace industry honored its own "best of the best" on June 16, 2003
at a glittering ceremony in Paris's Pavilion D'Armenonville when 11 winners of
the coveted Flight International Aerospace Industry Awards 2003 were announced.
Their peers applauded more than 500 top executives from all parts of the
industry for their achievements.

     Advance Technologies Inc. was a finalist in the AVIONICS & ELECTRONICS
category for our achievement: Infrared Commercial Landing Aid System. Their
President represented advance Technologies Inc., Mr. GARY BALL. Mr. Ball was
delighted with the recognition of "our fine work that continues to be on the
cutting edge of technology for Enhanced Vision Systems."

     Advance Technologies Inc. entry was an Advanced Optical controller, a
device that greatly expands the optical dynamic range of EVS, a capability that
will be required for EVS to fulfill its full potential for the aviation market.

     On June 3, 2003, Mr. Gary E. Ball, President of Advance Technologies Inc.
was presented the prestigious National Leadership Award. Mr. Ball will serve as
an Honorary Chairman on the Business Advisory Council (BAC) for the National
Republican Congressional Committee. Mr. Ball will represent the State of
California on this advisory committee. In this capacity he will advise and
assist in critical issues that affect business and promote a pro-business
agenda.

     Mr. Ball is honored to participate in this illustrious group, and believes
the small cap, high technology sector is the basis for economic growth and
stimulus to grow the economy. We believe that government assistance in the
economic sector should be focused at stimulating innovation and simplification
of regulatory and oversight functions. By becoming actively involved in the BAC
Mr. Ball believes he can provide a voice and guidance to effect needed changes.


<PAGE>


     In February of 2003 the Federal Aviation Administration submitted a
proposed change for operating rules that if adopted would greatly expand the EVS
market opportunities. These changes deal with the operating rules for flight
operations under low or reduced visibility conditions. Advance Technologies Inc.
has responded to the Federal Registrar notice of proposed changes. These changes
if adopted will make the certification process for EVS easier. Advance
Technologies Inc. is looking forward to the finalization and the introduction of
these needed changes.

Business Overview

     The tragic events of September 11, 2001 continue to effect are operation.
The effect has been most notable in the decline of the price of our common stock
in recent months reflecting the general slow down that has effected our markets.

     The aftermath of 9-11 has effected Corporations such as Advance
Technologies Inc. through our significant involvement in Infrared Technology,
which is a controlled and regulated technology by the US Government. Since AVTX
is exclusively involved in commercial applications, and all of the technologies
we employ are considered "dual use technology" (military and commercial), the
Government's restrictions have had little effect on the scope and direction of
our strategic plans. Thus, our plans for future products have not changed
materially. But, the government has imposed new requirements on Corporation like
AVTX to prove our system applications meet the commodity juristition regulations
(commercial non-military end-use) to the Department of State through compliance
to the International Traffic in Arms Regulation (ITAR), 22 CFR 120-130. This
burden of compliance has both lengthen and complicated the approval process.
This has contributed to a slow down thus effecting our rate of progress.

     ATI entered into an agreement with an offshore OEM strategic partner
Telesis Electronics September of 2000, a Taiwanese privately held corporation.
Under the terms of this agreement ATI is developing IR systems in conjunction
with Telesis for sale in the USA as well as other foreign markets. Export
licenses are required to provide critical components for this work. Approval for
these licenses are taking more than a year to obtain. Furthermore additional
end-user restrictions are being imposed complicating and lengthening them
process. This same activity in the past took less than 6 months prior to 9-11,
with far less paper work and disclosure documents. In spite of these delays ATI
continues to provide support to Telesis through the application and delivery of
an additional 30 detector units.

     Telesis Technologies Inc. a privately held corporation has been acquired by
United Integrated Services, a Taiwanese public corporation in early 2003. The
new ownership has retained the principals in Telesis, and except for a small
start-up interruptions are work with the Taiwan Corporation has continued.

     The second event that has had an impact on AVTX stock has been the
authorization of a 30% of conversion of Advance Technology Preferred stock into
AVTX common stock by the shareholder of record provided the holding period has
been met.

     The resulting action has been to increase the number of shares of common
stock in the market (float), which under normal circumstances produces some
degree of pressure on the stock. This process of moving from a development
Corporation with restricted 144 stock to a fully free trading corporation is a
common but necessary growing pain of the maturation process.


<PAGE>


Enhanced Vision Activities

     Enhance Vision System, our first project; has entered production. Advance
Technologies benefits through a license agreement with Kollsman Inc.

     The License Agreement between Advance Technologies and Kollsman Instruments
covers the transfer of proprietary intellectual property owned by Advance
Technology. The data package consisted of technical, industrial, marketing, and
FAA regulatory knowledge to facilitate the development of the IR EVS and
subsequent FAA certification. Included as part of, but specifically partition
within the Agreement is an option for Kollsman to use a Hughes Aircraft patent
that was licensed to Advance Technologies in 1996. Kollsman elected to proceed
forward with an IR EVS system based upon the content of the License Agreement,
but without incorporating the Hughes Aircraft patent. There has been concerns
expressed that the lack of inclusion of the Hughes Patent could in some way
effect ATI our future revenue.


     Kollsman has issued the quarterly report (9/30/03) required under the
License Agreement. The following report by Kollsman has been verified.

                     ANNUAL NUMBER OF UNITS DELIVERED & SOLD

                                     INITIAL DELIVERY     UNITS SOLD

     CALENDER YEAR 2002                    47                 29
     CALENDER YEAR 2003, TO DATE           79                 78
                                          ___                ___
            TOTAL                         126                107


     Kollsman has released no information on their future production plans.
Their end user continues to expand the application to additional aircraft
through certification activity with the FAA. This will serve to increase the EVS
market.

     At the NBAA show in Orlando, it was announced that Kollsman and FedEx have
reached an agreement whereby Kollsman will provide EVS systems for FedEx's fleet
of wide body aircraft. This market is estimated at 200 aircraft. The delivery of
EVS to this market will result in four additional aircraft types receiving
certification for EVS. This is a significant milestone in the EVS program.

     The completion of the FedEx certification will addition several additional
aircraft types to be authorized for EVS equipment. The aircraft types involved
are Boeing MD-10 & MD-11, and the Airbus A300 & A310. These additional aircraft
certification will facilitate the operators of these aircraft types to
incorporate EVS into their fleet operations. The cost and time associated with
certifying each aircraft type for EVS remains the largest hurdle for full
industry acceptance. These additional aircraft types represent a major
accomplishment for EVS.

     The License Agreement (July 1997) between Kollsman and ATI has a royalty
schedule that was specifically tailored to achieve two key elements (1) for
rapid recovery of the development investment and (2) maximize long term profits
to ATI predicated upon a large EVS market. Under the provisions that implement
this strategy the initial production units are royalty free. The royalty per
unit increases in four discrete steps to a maximum value per unit.

     Kollsman Instruments released a PRESS RELEASE in September 2002, titled,
KOLLMAN'S ENHANCED VISION SYSTEM PRODUCTLINE EXPAND. The Press Release announced
the introduction of a "new reduced performance EVS version" called Night Window
TM, a low cost derivative of the high performance Kollsman's "All-weather
Window" system. The expansion of Kollsman into the higher volume, lower cost EVS
market has been anticipated by Advance Technologies. This market is larger and
is more accessible from an FAA certification standpoint.


<PAGE>


     Gulfstream Aerospace announced at the NBAA show that EVS is available as
optional equipment on the G500, G-V, G-400, G-IVSP, and G300 business jets. The
optional equipment is available on new aircraft or retrofit to in service
aircraft. In addition, EVS will be standard equipment on the new G550 and the
newly announced G450. Gulfstream Aerospace has received worldwide acclaim for
the EVS, and as a result GAC is aggressive marketing EVS for sales in both the
new and after market sectors.


     Spectrum 9000, Medical Equipment

     ATI continues to provide export license support under a time & service
reimbursement agreement with Telesis Technologies. Telesis has not announced a
date for introduction of the Spectrum 9000 into the US market. Additional
discussions and meeting with medical equipment experts in the USA. ATI believes
that Telesis will become activity in the US market in 2004, and what role ATI
will play in that activity has not been determined.

     Development Projects

     Advance Technologies Inc. continues development activities on new Infrared
systems for commercial markets. These projects cannot be forecast with any
degree of certainty and all strategic partnerships or business arrangements
remain confidential until such time as a formal announcement is appropriate
without compromising the development plan and/or the application market.

CAPITAL RESOURCES

     No commitment for capital resources has been made during this reporting
period.

FINANCIAL ANALYSIS

     The results on the operation represent projects of likely future events
that cannot be guaranteed. Therefore, the financial analysis does not include
projects, and no quantitative assessment has been provided based upon the future
discussion of potential events in section 3.

     No material changes have been provided; therefore impact of unforeseeable
events cannot be assessed.

     Present financial plans are adequate to meet our cash flow needs with our
current project schedule.


BOARD OF DIRECTOR ACTIONS

     The maturity of the Enhanced Vision Project has provided the need to take
action and make adjustments to prepare for our transition from a "development
company" to a mature self-sustaining corporation. We anticipate a full
transition by mid-2004. Accordingly, the following actions have been authorized
by the Board of Directors. The following descriptions are provided as a summary
of these actions.

     1. 5,438,350 shares of AVTX preferred Class B stock was authorized and
        transferred to Equi-share Financial in consideration for the
        cancellation and debt nullification of AVTX's short-term loan. The loan
        balance, including interest, was $108,767.00 at the time of transfer.

     This action was necessary to satisfy the terms and conditions of the line
of credit AVTX had with Equi-share Financial. This action resolves this
due-on-demand note without the need to raise additional short-term capital.


<PAGE>


     2. The Board of Directors of AVTX has authorized that all shares of AVTX
        shall be eligible to receive dividends from AVTX. Prior to this action
        only preferred shares were eligible to receive dividends.

     This action will serve to give all of the equity owners of AVTX equal
participation in future benefits. This resolution is effective 9/1/03.

     3. The Board of Directors has authorized that all shares of AVTX, common
        and preferred be granted voting rights on a one vote for one share
        basis. Previously, only Common AVTX shareholders had voting privileges.
        This resolution is effective 9/1/03.

     This action will serve to give all equity owners of AVTX equal rights in
determining AVTX's future directions in those matters that warrant shareholder
participation.

     4. The Board of Directors has authorized the conversion of additional
        shares of preferred stock to common stock for those shareholders that
        have or will meet holding period requirements. The authorization for
        conversion increases the past conversion percentage from 30% to 65%.
        This resolution is effective on January 1, 2004.

     This action represents an additional step towards full conversion of all
preferred shares to common shares.