UNITED STATES
                     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       December 31, 2000
                                         --------------------

[  ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          For the transition period from               to
                                         --------------  --------------

                       Commission File Number 0-23812

                     ADVANCED RECYCLING SCIENCES, INC.
                --------------------------------------------
                 Formerly known as The Quantum Group, Inc.
               (Name of small business issuer in its chapter)

     Nevada                                              95-4255962
-------------------------------                  --------------------------
(State or other jurisdiction of                  (I.R.S. Employer I.D. No.)
 incorporation or organization)

Park Irvine Business Center
14771 Myford Road, Suite B Tustin, California                      92780
---------------------------------------------                     --------
(Address of principal executive offices)                         (Zip Code)

     Issuer's telephone number, including area code     (714) 508-1470
                                                       ----------------

Securities registered pursuant to section 12(b) of the Exchange Act: None

          Securities registered under Section 12(g) of the Exchange Act:

                   $.001 par value, common voting shares
                   --------------------------------------
                              (Title of class)

Check whether the Issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such
report(s), and (2) has been subject to such filing requirements for the
past 90 days.  (1) Yes [X]  No [   ]

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

The issuer's revenue for its most recent fiscal year was: $196,827.

The aggregate market value of the issuer's voting stock held as of March
28, 2001, by non-affiliates of the issuer was $10,617,225.75.

As of March 28, 2001, issuer had 14,197,281  shares of its $.001 par value
common stock outstanding.

Transitional Small Busines     Disclosure Format. Yes [  ]  No [X]

Documents incorporated by reference: none
                          The Quantum Group, Inc.
     Annual Report on Form 10-KSB for the Year ended December 31, 2000

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                             TABLE OF CONTENTS

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                                   PART I
ITEM 1    DESCRIPTION OF BUSINESS. . . . . . . . . . . . . . . . . . . . .3

ITEM 2    DESCRIPTION OF PROPERTY. . . . . . . . . . . . . . . . . . . . 14

ITEM 3    LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 14

ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS. . . . . 15

                                  PART II

ITEM 5    MARKET FOR COMMON EQUITY AND
          RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . 15

ITEM 6    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
          OF OPERATION . . . . . . . . . . . . . . . . . . . . . . . . . 18

ITEM 7    FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 23

ITEM 8    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . . . 45

                                  PART III

ITEM 9    DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS,
          AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
          OF THE EXCHANGE ACT  . . . . . . . . . . . . . . . . . . . . . 46

ITEM 10   EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . 49

ITEM 11   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
          OWNERS AND MANAGEMENT. . . . . . . . . . . . . . . . . . . . . 51

ITEM 12   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . 52

                                  PART IV

ITEM 13   EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . 52

          SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 54




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                                   PART I

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                                  FORWARD

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     This Form 10-KSB contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.  For
this purpose any statements contained in this Form 10-KSB that are not
statements of historical fact may be deemed to be forward-looking
statements.  Without limiting the foregoing, words such as "may," "will,"
"expect," "believe," anticipate," "estimate" or "continue" or comparable
terminology are intended to identify forward-looking statements.  These
statements by their nature involve substantial risks and uncertainty, and
actual results may differ materially depending on a variety of factors,
many of which are not within the Company's control.  These factors include
but are not limited to economic conditions generally and in the industries
in which the Company and its customers participate; competition within the
Company's industry, including competition from much larger competitors;
technological advances which could render the Company's products less
competitive or obsolete; failure by the Company to successfully develop new
products or to anticipate current or prospective customers' product needs;
price increase or supply limitations for components purchased by the
Company for use in its products; and delays, reductions, or cancellations
of orders previously placed with the Company.

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                      ITEM 1.  DESCRIPTION OF BUSINESS

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

     Advanced Recycling Sciences, Inc., ("ARS " or the "Company") f.k.a.
The Quantum Group, Inc., is in the business of developing innovative
products and technologies in the environmental and recycling industries,
with specific emphasis on scrap tire rubber recycling.  The principal
offices of the Company are located at the Park Irvine Business Center,
14771 Myford Road, Suite B, Tustin, California 92780.  The Company was
organized as a corporation in 1968, under the laws of the State of
California.  In 1988 the Company changed its domicile from California to
the State of Nevada and has operated as a Nevada corporation since that
time.  In March 2001, the Company amended its articles of incorporation to
change its name from The Quantum Group, Inc., to Advanced Recycling
Sciences, Inc.  The Company is registered and qualified to do business in
the State of California.

     The Company conducts most of its operations through several wholly
owned subsidiary companies.  The corporate organization is as follows:


                                     3

<TABLE>
<CAPTION>


                                         ARS
                          Advanced Recycling Sciences, Inc.
                          Innovative technology development


                               -----------------------
                                  Board of Directors
                               -----------------------
                                          |
                                          |
                                          |
                                          |
                                          |
<S>                          <C>                           <C>
-------------------------    ---------------------------   --------------------------
    Technology Sales                  Engineering                 Product Sales
        Division                      Department                    Division

    Full Circle Tire           Technology Development              Crumb Rubber
     Recycling Systems           Project Management              & Product Sales
       and Solutions             System Engineering
-------------------------    ---------------------------   --------------------------
                                          |
                                          |
                                          |
                                          |
 <S>                  <C>                    <C>                 <C>
  ------------------- ------------------    ------------------  ------------------
       Advanced             Poseidon             Bay Area         Tires2Oil, Inc.
       Surfacing           Products            Recycling,
  Technologies, Inc.         GmbH                   Inc.
                       Penkun, Germany

     Crumb Rubber            Tire &            Tire Recycling        Producing
   Modified Asphalt        Industrial           Crumb Rubber        High Grade
       Paving &              Rubber              Production          Petroleum
      Technology            Recycling                              and Activated
       Transfer             Product                                 Carbon Iron
       De-Icing          Manufacturing                              Scrap Tires
      Technology
   ------------------ -------------------    ------------------  ------------------


</TABLE>


                                     4

Company Subsidiaries

     Advanced Surfacing Technologies, Inc.  ("AST") was incorporated in
Nevada in May 1997 as Quantum Modified Asphalt Xcetera, Inc., a wholly
owned subsidiary of the Company.  The name was changed to Advanced
Surfacing Technologies, Inc., in March 2001.

     The Company believes there are opportunities in the asphalt paving
industry.  Among those opportunities, is a potentially large market for
crumb rubber to be used in producing crumb rubber modified ("CRM") asphalt
paving.  This will include the use of specialized mobile equipment for the
mixing of crumb rubber and asphalt at hot mix plants, overseeing technology
transfer programs to international clients, on-site project management and
seminars to educate both public and private sector engineers about the
Company's products and services.  Through AST, the Company will seek to
exploit these opportunities.  AST will also research, develop and market
other technologies in the asphalt paving industry, including the worldwide
exclusive licence to certain ground surface applications of a novel ice
adhesion modification or "de-icing" technology the Company received when it
acquired Technology Development, Inc., from UTEK Corporation,
http://www.utekcorp.com.

     Technology Development, Inc.  ("TDI")  was acquired by the Company in
February 2001.  TDI will be absorbed into AST, which will oversee the
development and, if appropriate,  commercialization of the ground surface
de-icing technology.

     Poseidon Products GmbH. ("Poseidon") was established by the Company
jointly with SteG, a German Government sponsored company.  Through
Poseidon, the Company will finish construction of and operate a tire
recycling facility in Penkun, in the state of Mecklenburg-Vorpommern.  This
facility will produce crumb rubber and manufacture a wide range of value-
added aftermarket products using technologies licensed or developed by the
Company.

     Ground breaking on the Poseidon facility occurred on September 17,
1998.  Site improvements were begun and foundations for the plant were
commenced.  Due to difficulties in securing an accompanying bank to sponsor
the project, construction of the facility has been delayed.  The Company
continues to negotiate funding for the facility with several German banks,
and hopes to have funding in place late in the year 2001 or early 2002.
The Company has obtained extensions on both the EU grants and the low
interest funding commitment from the government of the state of
Mecklenburg-Vorpommern.

     Poseidon currently has an office in Penkun and is developing a
marketing plan to introduce and sell its manufactured products in Germany
and Europe.  Assuming sufficient funding is obtained, the Company believes
the Poseidon facility will be completed and operational by early next year.
The Company expects to have a clearer understanding as to when the Poseidon
facility will be finished and operational by the end of the second quarter
of 2001.

     As the Poseidon facility will incorporate much of the tire recycling
equipment and technology the Company has to offer, the Company intends to
use the Poseidon facility as a showcase for future full scale tire
recycling plants.

                                     5

     Bay Area Recycling, Inc. During March 2001, the Company signed a
Memorandum of Understanding with Shen Gang Development Limited a quasi
government organization associated with the city of Shen Yang in the
province of Liaoning PRC.  The Memorandum calls for a 50/50 joint venture
between the Company and Shen Gang Development, Limited. The parties expect
to sign a definitive  agreement by April 16, 2001 to jointly develop a
crumb rubber manufacturing facility called Bay Area Recycling, to be
located in Northern California.  The Company has reserved the name Bay Area
Recycling, Inc., with the Secretary of State of California and will
incorporate it immediately upon the execution of the definitive agreement.
Bay Area Recycling will initially produce crumb rubber for the fast growing
California crumb rubber modified asphalt paving market and will look at
other product application in the future.

     Tires2Oil, Inc. is a wholly owned subsidiary of the Company.
Tires2Oil(TM) was formed as a Nevada corporation on January 17, 2001.  The
primary responsibility of Tires2Oil(TM) will be the continued research,
development and exploitation of certain super critical fluid ("SCF") tire
recycling technology recently acquired by the Company.  The SCF technology
is used to break down tires into a clean form of synthetic crude oil which
can be easily upgraded in existing oil refineries.  This technology has
been proven on a table top scale.  Tires2Oil(TM) will focus its initial
efforts into determining whether this technology can be feasible on a
commercial scale.

     The Company recently hired Sudheer Helekar to serve as a project
director.  He will oversee the development and construction of the
Tires2Oil(TM) pilot plant.  The Company has also contracted with Dr.
William Farone of Applied Power Concepts, Inc., of Anaheim, California to
develop the commercial processes and equipment for the Tires2Oil(TM) pilot
plant.

     Advanced Environmental Technologies, Limited ("AET") is a wholly owned
subsidiary of the Company.  AET was incorporated pursuant to the laws of
the province of Alberta, Canada on April 21, 1997 as QEST Industries, Inc.
The Company changed the name in March 2001.  AET will provide engineering
support services to tire recycling facilities in both North and South
America.  These services will be provided via the Company's strategic
alliance with Sultech Engineering, a Calgary based engineering concern.
The Company  pays Sultech on an as needed, job by job basis.

     Other Subsidiaries
     ------------------

     QCAL, Inc.  ("QCAL") is a wholly owned subsidiary of The Quantum
Group, Inc.  QCAL rescinded its joint venture agreement with the State of
California Department of Corrections ("CDC") and has closed down its tire
crumbing facility at the Richard J. Donovan Correctional Facility at Rock
Mountain in San Diego County, California ("Donovan Correctional Facility").
QCAL made the decision to close down the San Diego plant due to
insufficient funds to purchase all of the equipment necessary to
manufacture crumb rubber products and the fact that the installation of the
appropriately sized granulator for shredding and granulating tires proved
to be impractical at the prison facility.  In July 2000, Thomas Driscoll
resigned as an officer of the Company.  QCAL has completed its exit from
the Donovan Correctional Facility, and all obligations of the Company
relative thereto have been satisfied in full.

     The Company plans to ship the Press and the C3000 granulator installed
at the Donovan Correctional Facility to Germany to be installed at the
Poseidon Facility.

                                     6
     With the completion of its exit from the Donovan Correctional
Facility, the Company anticipates it will discontinue all operations in its
QCAL subsidiary.

     Modified Asphalt Technologies, Inc. ("MAT") In January 2001, the
Company and MAT mutually agreed to rescind the MAT Purchase Agreement
entered into by the parties in January 2000.  The Company no longer owns
any interest in MAT.

     Eurectec, Inc.  ("Eurectec") is a wholly owned subsidiary of The
Quantum Group, Inc.  Through Eurectec, the Company entered into a certain
license agreement with CISAP SpA of Italy.  Unfortunately, CISAP could not
provide equipment that operated to its represented specifications.  As a
result, the Company no longer markets or sells CISAP equipment, nor does it
intend to do so in the future.  The Company is currently involved in
litigation with CISAP.  Beyond dealing with the CISAP litigation, the
Company anticipates little, if any business will be transacted through
Eurectec in the future.

     The Company has developed a new group website which can be viewed at
http://www.arsciences.com.  The website allows visitors to access an
overview of the Company's activities, obtain market information for the
Company's trading stock and view the Company's EDGAR filings.  The Company
has a portal website, http://www.tirerecycling.com. The Company is
developing a Tires2Oil website,  which can be viewed at
http://www.tires2oil.com.   The Company may develop additional websites in
the future.

Market For The Company's Products

     In 2000 there were almost 300,000,000 tires discarded in the United
States.  There are currently between two and three billion tires stockpiled
in the United States and an estimated 1,000,000,000 tires discarded
annually worldwide.  Although millions of tires are discarded every year,
there has been no consensus on the best way to dispose of the tires.  Waste
tires continue to accumulate in huge tire dumps throughout the world.  One
of the early governmental responses to this problem was to require the
tires be shred into small pieces.  This measure was taken to help reduce
the size of the tire dumps, the potential for fires, and the health hazards
which existed because of mosquitoes and rodents which inhabit these tire
dumps.  The European Union has issued a directive banning landfilling of
all tires, whether whole or shredded, by the year 2007.

     In an effort to induce recycling of tires in the United States, many
states have enacted laws charging recycling fees on all new tire sales.
The fees are deposited into state operated funds which are used for grants
to fund tire recycling technology research projects and to compensate tire
recyclers for recycling tires.  In addition, the federal and state
governments have created a market for recycled rubber by enacting statutes
which require that new road construction include a certain percentage of
recycled rubber in the roads.  A typical street one mile long and 30 feet
wide using a 1.5 inch topping will use approximately 39,000 pounds of crumb
rubber.  An interstate highway one mile long and 72 feet wide using a 3
inch topping will require 186,000 pounds of crumb rubber in the topping
mix.


                                     7

     Several different methods for disposing of or recycling tires have
been attempted.  At one point, a market developed for shredded tires as
fuel in cement kilns and electric power plants, however, most states have
prohibited or strictly limited tire burning because of its adverse
environmental impact.  In addition, it has been recognized that tire
burning is an inadequate use of the valuable rubber resource contained in
the tires.

     In an effort to reclaim valuable resources from tires, attempts have
been made to recover  oil from tires through pyrolysis.  Pyrolysis is a
process of heating tires to very high temperatures and extracting the
petroleum content from the rubber.  To date pyrolysis systems have not
reached commercial viability because of the substantial capital investment
required to construct such systems, the high operating cost and low
efficiency of such systems when compared to the price of crude oil.

     Another system being offered by some of the Company's competitors is a
cryogenic process which freezes the tires to very cold temperatures using
liquid nitrogen, at which point the brittle rubber can be broken free of
the steel and fabric content of the tire.  Cryogenic systems are expensive,
costing  from 4 to 20 million dollars.  To date, the Company is not aware
of any facility using a cryogenic system that is not subsidized by
government grants or private grants from producers of liquid nitrogen.
Although this process uses much more sophisticated technology, the process
tends to be cumbersome and expensive to operate.  Moreover, if the
equipment is shut down for maintenance or repairs the entire system must be
taken off line for a period of days.  Another disadvantage of such systems
is that the crumb rubber made by the cryogenic process has reduced
elasticity, which limits the usefulness of the crumb rubber for after
market products.

     Other systems uses efficient shredding equipment, but rely on
hammermill technology for granulating the shredded rubber.  These systems
tend to be very large, noisy and inefficient, largely because hammermill
technology was designed for other industrial applications and has not been
readily adaptable for use in tire recycling.

     In addition to the fact that there is no agreed upon best method for
recycling scrap tires, another of the challenges facing the tire recycling
industry has been the lack of reasonably priced equipment for the
production of crumb rubber, particularly given the production capacity of
such equipment and the prevailing market prices of crumb rubber.  Prices of
crumb rubber vary according to the mesh (size) of the rubber.  The 2001
issue of Scrap Tire and Rubber Users Directory, published by Recycling
Research Institute, provided information regarding historical market prices
of tire-derived materials, including crumb rubber.  In 2000-2001, the
average price of crumb rubber with a mesh of  minus 10 was $.055 - .20 per
pound.  This is the size most commonly used in asphalt paving.  Aftermarket
products manufactured from press equipment use rubber of approximately
minus 30 mesh, which  for 2000-2001 was priced at $.09 - .32 per pound.
Very finely ground crumb rubber which is suitable for devulcanization is
usually minus 80-100 mesh.  In 2000-2001 crumb this size ranged in price
from $.18 - .80 per pound.

     Another obstacle to market development has been the limited and
uncertain demand for crumb rubber.  Without an established market for crumb
rubber and reasonably predictable prices for crumb rubber there is no way
to assure a recycler that he could recover his capital investment or make a
profit on a recycling operation.  In turn manufacturers have been reluctant
to specify the use of crumb rubber in products because of the lack of a
broad and consistent supply of high quality crumb rubber at predictable
prices.

                                     8

     Moreover, the tire recycling industry is highly competitive, no single
competitor holds a dominant market position.  Some of the Company's
competitors have longer operating histories and are financially stronger
than the Company. There are several companies which offer different pieces
of equipment to recyclers such as shredders, slitters and granulating
equipment.  Few companies, however, offer complete recycling systems which
include all the equipment required to process whole tires to crumb rubber
and in turn use crumb rubber to produce aftermarket products and CRM
asphalt paving.

Products

     Crumbing Equipment

     Eco Granulating System ("EGS")
     ------------------------------

     The Company believes the system it offers has several advantages over
the systems offered by competitors, including (i) lower initial cost of a
system; (ii) higher operating efficiencies and lower operating expense;
(iii) less maintenance down time; and (iv) recycling at ambient
temperatures resulting in high quality crumb rubber output.

     The Company has designed a complete tire recycling and granulating
production system which integrates individual pieces of tire recycling
equipment made by other manufacturers.  The EGS System reduces scrap
automobile and truck tires to useful and valuable crumb rubber, reusable
steel scrap and nylon fluff.  The system as designed follows common
processing steps accepted in the industry.  The process begins by sending
truck tires through a de-beader, slitter and shredder.  Automobile tires go
directly to a shredder.  In the next step, the shredded material is fed to
a grizzly which extracts approximately 90% of the steel from the shredded
tires and further reduces the size of the material to minus one inch.  Then
the material is processed through a magnetic separator which removes the
steel shred and a pneumatic aspiration system which removes the nylon
fibers.  The product is processed through a granulator which further
reduces the shred to approximately 5 mesh and removes any remaining steel
and fabric. Finally, the crumb rubber is processed through a granulator
which reduces the product to particle sizes ranging from 0 to .5 mm, .5 mm
to 2 mm, 2 mm to 4 mm. The EGS System will also offer as an option, a
grinder which will reduce the crumb rubber to minus 60 mesh.

     The EGS System the Company markets does not require the Company to
manufacture any equipment.  Most of the  equipment used in the system e.g.,
de-beaders, slitters, grizzlies, grinders and granulators are currently
manufactured by other companies.  If necessary, third party contractors can
manufacture all of the equipment and parts required to integrate the
individual pieces of equipment into a unified recycling system.

     SuperCollider - Impact 500 Technology
     -------------------------------------

     During 1997, the Company  worked on the in-house development of a
compact SuperCollider machine designed to take large mesh size crumb rubber
produced by the EGS System and buffings from tire retreading and pulverize
it into fine powder in order to open up several new markets.  These markets
include extrusion products, press products and products combining super-fine
crumb and plastic.  The Company finalized the engineering for the
SuperCollider and concluded the development, prototype work and initial
performance testing during 1998 and early 1999.  After  testing the initial
prototype, the Company decided not to sell the SuperCollider into the
market until a number of improvements could be made.  During 1999, the

                                     9


Company made those improvements and began additional testing.  The first
SuperCollider was  installed and operational at the Donovan Correctional
Facility.  It has now been removed and the Company anticipates it will be
shipped and installed at the Poseidon Facility.

     REVULCON(R) - Revulc 300 Technology
     ---------------------------------

     The Company is currently renegotiating its exclusive worldwide license
agreement with Faru GmbH., Dresden, Germany ("Faru").  Faru is the patent
holder of the REVULCON(R) technology.  This technology enables the
production of high density, smooth finish rubber moldings and extrusions,
including new tires, by adding REVULCON(R) compound.  This is done by a
process of devulcanizing the rubber, returning it to a state where it can
be utilized in new products and re-vulcanized.  The reactivated rubber
waste can be processed without further additives to rubber products like
mats, plates, solid rubber tires, components for fall protection, elements
for sound and vibration deadening, blocking and insulating layers against
heat and moisture.  Profiles and other goods can be made by extrusion or
injection molding when the revulcanized rubber is mixed with fresh rubber
or plastics.  While there are other companies developing and marketing
competing technology, the REVULCON(R) technology is the only one that does
not introduce or use of chemicals in its process.

Aftermarket Product Equipment

     Eco-Press
     ---------

     The Company also sells press equipment which can be used to process
crumb rubber into value added aftermarket products including door mats,
anti-fatigue mats, cattle and heated floor mats, roofing products, trailer
liners, carpet underlay.  Also other products such as speed bumps, sports
surfaces such as tennis and other ball game courts, gymnastic and running
track surfaces, and playground safety surfaces are other end products which
can be manufactured using crumb rubber.  The Company also has a slicer
machine capable of peeling pre-cast cylinders of solid crumb rubber for use
in making continuous roll sheeting material.

     Rothbury Technology
     -------------------

     The Company, has the exclusive worldwide manufacturing and marketing
rights to a process for giving a mixture of crumb rubber granulates, resins
and other additives heat conductive characteristics for use in products
such as heatable floor coverings, livestock and pet mats and underlayments
developed by Rothbury Engineering Limited, Great Britain.

     The Rothbury technology relies on a heating filament, which operates
on either AC or DC electricity, imbedded in a rubber underlayment.  These
products can be operated more cost effectively than interior forced air and
radiant heating systems.  In exterior applications, the heated rubber
products provide superior heat conducting properties to other available
technology such as heating coils in concrete.  These heated products give
manufacturers new products and a new market for crumb rubber.



                                     10

     The Company has patent applications pending in the United States and
Europe on the Roxbury echnology subject to the license agreement.  If the
patent is granted, it will be held by Advanced Recycling Sciences, Inc.


     Crumb Rubber Modified ("CRM") Asphalt Paving

          Crumb Rubber Modified/Asphalt Mixing Equipment
          ----------------------------------------------

     The crumb rubber modified ("CRM") asphalt paving industry is still in
the early stage of development.  Currently, the Company knows of five
states which have done sufficient testing of CRM asphalt to no longer
consider it experimental.  The testing performed by Arizona, California,
Florida, New Mexico and Texas has shown that the application of asphalt
rubber systems significantly increases the life of the roadway surface
while reducing the maintenance costs and life-cycle costs.  These states
are all increasing their overall use of various CRM asphalt systems.  The
Company believes that within the next five years, the number of states
specifying and using CRM asphalt paving will increase to as many as thirty
four.

     The Company has spent significant time and effort researching and
seeking to establish itself in the CRM asphalt paving industry.  The
Company will seek to establish itself as a premier provider of crumb
rubber/asphalt mixing equipment to contractors in the asphalt paving
industry.

     In addition to providing crumb rubber/asphalt mixing equipment, the
Company, through  Bay Area Recycling, will have the ability to provide a
ready source of crumb rubber to its own operations and to outside clients.

          Roadway Surface De-Icing Technology
          -----------------------------------

     In February 2001, the Company acquired TDI.  TDI had two primary
assets:  a worldwide exclusive license for the ground surface applications
of a patented novel ice adhesion modification technology developed at
Dartmouth College's Thayer School of Engineering; and a $200,000 pre-paid
credit for additional research and development of the technology by the
Dartmouth College engineering professor who developed the technology.
While this technology is still in its early stages of development, the
Company believes that this technology can be commercially developed to
provide rapid non-thermal de-icing of CRM asphalt surface.  De-icing is
accomplished through a novel electrochemical decomposition technology which
the Company believes can be applied to roadways, bridges, airport runways,
tarmacs and other surfaces exposed to cold environments.  The Company
anticipates that this technology will be capable of being retro-fitted to
existing surfaces, as well as being used in new construction.

     The Company's rights are limited to ground surface applications.
Dartmouth College sold BFGoodrich the license rights to use this technology
in aerospace and marine applications.  Torvec, Inc., purchased the license
rights for land-based vehicle applications.

                                     11



     Tires2Oil(TM) Super Critical Fluid Process

     In June 2000, the Company acquired the exclusive worldwide licensing
rights to certain Super Critical Fluid ("SCF-Oil(TM)") tire recycling
technology developed and patented by the University of South Alabama.
Through a simple one-step process, this technology can be used to produce
synthetic crude oil which can easily be upgraded in existing oil
refineries.  In addition to synthetic crude oil, the process also produces
carbon black, which has a number of manufacturing uses or with further
processing can be converted to activated carbon used in water and air
purification system technologies.  The Company believes this technology
will provide another environmentally conscious means of recycling scrap
tires.

     Based on preliminary laboratory results achieved at the University of
South Alabama, this SCF-Oil(TM) process appears to be capable of producing
significantly more oil per ton of processed tires than currently existing
processes such as pyrolsis.  The Company believes this technology, unlike
currently existing technologies, represents the first commercially feasible
tires to oil recycling process.  To date, this technology has been
demonstrated only in the laboratory.

     The Company intends to continue development of this technology.  The
Company has begun ordering equipment for the establishment of a pilot plant
to be used to develop firm criteria and product data for enabling the
construction of full scale production plants.  The estimated cost of
establishing this pilot plant is $1,000,000  This will be accomplished
through the Company's Tires2Oil(TM) subsidiary.  Once the Company has a
firm understanding of the criteria, data, and production specifications,
Tires2Oil(TM) will market and license this technology worldwide.  The
Company may also seek to set up its own full scale production plants.  The
current estimated cost of building a full scale production plant is between
$11,000,000 and $13,000,000.

Research and Development

     During the past year the Company's primary efforts were employed in
the evaluation and due diligence associated with the acquisition of the
Tires2Oil(TM) and de-icing technologies via our strategic alliance with
UTEK Corporation.  Therefore, the Company did not expend significant
resources in research and development during fiscal year 2000.  With the
acquisition of these new technologies, the Company anticipates incurring
significantly greater expenses for research and development during fiscal
year 2001.

Marketing and Sales

     The Company has been most successful marketing and selling outside of
the United States where attractive incentives are offered to investors by
way of government grants, low interest loans and tax advantaged investment
programs.

     The Company continues to rely principally on the efforts of its
officers and directors to generate sales.  Historically, the Company's
principal method of marketing has been through direct sales by officers of
the Company and independent commissioned sales representatives worldwide.
The Company believes its active participation in trade shows and trade
organizations is providing strong industry connections and  marketing
opportunities.  The Company is also advertising in technical and trade
journals and articles and on the Company's new website.  Finally, the
Company believes its Poseidon facility will provide an excellent marketing
platform for the sale of the Company's products and technologies.

                                     12

     The Company is a member of a number of associations related to the
tire, rubber and recycling industries including the Rubber Pavements
Association located in Mesa, Arizona, the International Tire and Retreading
Association, headquartered in Louisville, Kentucky (ITRA), ETRA (the
"European Tire Recycling Association") headquartered in Paris, France and
is a founding member of the International Recycling Federation located in
Bonn, Germany.  In addition, the Company is listed in the Scrap Tire Users
Directory, an Recycling Research Institute annual publication which is a
business reference guide to the tire recycling industry.

     Despite significant effort, to date the Company has been unable to
establish consistent sales volume.  The Company credits this to a number of
factors.  First, although the problem of waste tires has existed for
decades, the tire recycling industry is still in its early stages of
development worldwide.  No single response to the problem of waste tires
has become generally accepted.  While momentum in the industry seems to
favor tire recycling, which reclaims the rubber resource, no single
technology or method has achieved market dominance.  Under these
conditions, potential purchasers are slow to buy.  Second, because of
limited sales, manufacturers of recycling equipment do not carry large
inventories of equipment, which significantly lengthens the sales cycle.
Third, due to inconsistent sales volume, the Company has had limited
capital and has maintained only a  limited marketing and sales staff.
While these factors have made it difficult for the Company to create
consistent cash flow and compete successfully in the industry, they also
form significant barriers to entry by competitors who will face many of the
same challenges.

     As part of its strategic reorganization during the third quarter 2000,
the focus of the Company's business will be technology acquisition and
development driven.  The Company will seek to vertically integrate these
technologies into its own planned operations in Germany and the United
States, thus providing multiple potential revenue streams in the future.

Employees

     Currently the Company has five employees other than its officers and
directors, its independent outside sales persons and an outside consultant.
The Company relies heavily on the efforts of its President and Chief
Operating Officer, Keith J. Fryer.  It also relies upon the services of
John F. Pope, the Company's Treasurer, a Vice President and Director, and
Ehrenfried Liebich, the Company's Chief Executive Officer and Chairman of
the Board.

Scientific Advisory Board

     Consistent with the Company's goal to become a leader in the
development and commercialization of technologies for the scrap tire
recycling and crumb rubber modified asphalt paving, the Company has
established a Scientific Advisory Board to assist it in the evaluation and
development of new technologies.  The following individuals currently serve
on the Company's Scientific Advisory Board: Victor F. Petrenko, Ph.D.,
Jagdish Dhawan, Ph.D., Pawan Agarwal, Ph.D. and Nicholas D. Sylvester,
Ph.D.  The members of the Scientific Advisory Board are not employees of
the Company, and each maintains full-time employment with other
organizations.


                                     13

     Initially, Dr. Petrenko will be compensated for his services to the
Company by Dartmouth College pursuant to the $200,000 pre-paid research and
development credit with Dartmouth College acquired by the Company when it
purchased TDI.  The other Scientific Advisory Board members each received
Company common stock for services to be rendered to the Company.

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

ITEM 2.  DESCRIPTION OF PROPERTY

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

     On March 1, 2000, the Company renewed its lease agreement to lease an
industrial condominium in a multi-tenant building for use as its principal
executive office.  The Company pays $3,821.00 per month for 4,495 square
foot facility.  The lease expires on February 28, 2002 and has a renewal
option for an additional year.  The building is located at Park Irvine
Business Center, 14771 Myford Road, Building B, Tustin, California 92780.
The space the Company is leasing is sufficiently large to accommodate all
of its administrative and storage needs.

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

ITEM 3.  LEGAL PROCEEDINGS

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

     Tyre's Ecology S.r.l.

     The litigation between Eurectec and Tyre's Ecology S.r.l., in the
Court in Pistoia, Italy, is ongoing.  The next hearing scheduled in this
matter has been set for January 10, 2002.  The parties are currently
attempting to negotiate a settlement in this matter.

     Veplas Manufacturing, Ltd.

     The Company has initiated a lawsuit against Veplas Manufacturing,
Ltd., and is seeking the return of the purchase price of equipment.  The
Company claims misrepresentation on the acidity and performance of the
equipment purchased from Veplas. At the time Veplas Manufacturing, Ltd.,
answered the Company's Complaint, Veplas made various counterclaims against
the Company.  These claims include a claim for $27,081.46, which Veplas
claims is the balance due pursuant to the Agreement signed between the
parties, a claim for $2,387.69 for shipping costs paid by Veplas on the
Company's behalf; and unspecified claims for costs for special damages.
The Company refutes Veplas' counterclaims and will continue to  pursue this
matter.


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

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

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

     No matters were submitted to a vote of the Company's shareholders
during the fourth quarter of the fiscal year ending December 31, 2000.


                                     14

     In January 2001, in accordance with the Company's Articles of
Incorporation, its Bylaws and Section 78.325 of the Nevada Revised
Statutes, the shareholders, by written shareholder consent, without a
meeting approved the following actions: 1) that the Company amend its
Articles of Incorporation to effect a name change to Advanced Recycling
Sciences, Inc.; 2) in connection with the name change, the Company obtain a
new CUSIP number and a new trading symbol, "ARYC."  The Company received
7,619,603 votes in favor of the above actions.  No votes were cast against
the actions.

     The shareholders were not asked to vote on directors.

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

                                  PART II

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


     ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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

     The Company's common stock is listed on the NASD OTC Bulletin Board
under the symbol "ARYC."  The Company's common stock is also listed on the
Third Segment of the Frankfurt Stock Exchange under German Securities Code
Number 882879.  As of March 28, 2001, the Company had 463 shareholders
holding 14,197,281 common shares.  Of the issued and outstanding common
stock, 3,987,406 are free trading, the balance are "restricted securities"
shares as that term is defined in Rule 144 promulgated by the Securities
and Exchange Commission .  The Company has never declared a dividend on its
common shares.

     The published bid and ask quotations for the previous two fiscal years
are included in the chart below.  These quotations represent prices between
dealers and do not include retail markup, markdown or commissions.  In
addition, these quotations do not represent actual transactions.

<TABLE>
<CAPTION>
                                   BID PRICES          ASK PRICES
                                   HIGH      LOW       HIGH      LOW
<S>                                <C>       <C>       <C>       <C>
1999
First Quarter ended March 31       4.25      3.0625    4.50      3.375
Second Quarter ended June 30       3.125     2.50      3.50      2.875
Third Quarter ended Sept. 30       3.25      2.65625   3.375     3.00
Fourth Quarter ended Dec. 31       3.00      1.4375    3.15625   1.5625

2000
First Quarter ended March 31       2.50      1.25      2.75      1.4375
Second Quarter ended June 30       2.50      1.25      2.6875    1.375
Third Quarter ended Sept. 30       2.125      .78125   2.25       .96875
Fourth Quarter ended Dec. 31       1.6875     .4375    1.78125    .59375

</TABLE>

     The foregoing figures were furnished to the Company by the National
Quotation Bureau, 11 Penn Plaza, 15th Floor, New York, New York 10001.

                                     15

     Recent Sales of Unregistered Securities

     No instruments defining the rights of the holders of any class of
registered securities have been materially modified, limited or qualified.

     The following securities, which are not registered under the
Securities Act of 1933, were issued since the Company's last quarterly
report for the quarter ended September 30, 2000.

     During the quarter ended September 30, 2000, the Company sold
1,357,108 shares of its common stock to non United States citizens in
Germany.  The shares were valued at $1.00 per share.  The Company paid
commissions of $298,564.  These shares were sold pursuant to Regulation S
promulgated by the Securities and Exchange Commission under the Securities
Act of 1933.  The Company did not offer the securities to any person in the
United States, any identifiable groups of U.S. citizens abroad, or to any
U.S. Person as that term is defined in Regulation S.  At the time the buy
orders were originated, the Company reasonably believed the Buyers were
outside of the United States and were not U.S. Persons.  The Company
reasonably believed that the transaction had not been pre-arranged with a
buyer in the United States.  The Company has not nor will engage in any
"Directed Selling Efforts" and reasonably believes the Buyers have not nor
will engage in any "Directed Selling Efforts."  The Company reasonably
believed the Buyers purchased the securities for their own accounts and for
investment purposes and not with the view towards distribution or for the
account of a U.S. Person.

     On October 13, 2000, the Company issued 11,428 restricted shares each
to Dr. Pawan Agarwal and Dr. Nicholas Sylvester for their participation on
the Company's Scientific Advisory Board.  The Company received no cash for
these shares.  The shares were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933.

     On November 14, 2000, the Company issued 40,000 restricted common
shares to Doris Schmidt for services rendered by her in overseeing the
business and development matters of the Poseidon Facility.  The Company
received no cash for these shares.  The shares were issued pursuant to an
exemption from registration under Section 4(2) of the Securities Act of
1933.

     On November 20, 2000, the Company issued 50,000 restricted common
shares to Richard Collette for investment marketing and analysis services
Mr. Collette provides to the Company.  The Company received no cash for
these shares.  The shares were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933.

     On November 28, 2000, the Company issued 11,428 restricted common
shares to Dr. Jagdish Dhawan for his participation on the Company's
Scientific Advisory Board.  The Company received no cash for these shares.
The shares were issued pursuant to an exemption from registration under
Section 4(2) of the Securities Act of 1933.

     During 2000 the Company established FaRReach Internet Advisors, Inc.,
a wholly owned subsidiary, with the intent of entering into the web
development and internet support business.  As part of is corporate
restructuring, the Company decided not to pursue the FaRReach concept.   On
December 15, 2000, 15,000 restricted shares of Company common stock were
issued to Chris Meehan, an employee of the Company, in lieu of an equity
interest he had been promised in FaRReach.  The Company received no cash
for these shares.  The shares were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933.

                                     16

     On January 9, 2001, the Company issued options to purchase 442,969
shares of restricted common stock to certain officers, directors, employees
and consultants of the Company.  Some of the options were issued in
exchange for said officers, directors, employees and consultants
surrendering options previously issued to them by the Company.  The Company
received no cash for issuing these options.  These options were issued
pursuant to exemptions from registration under Section 3 and Section 4(2)
of the Securities Act of 1933.

     On February 19, 2001, the Company issued 1,446,153 restricted common
shares to UTEK Corporation to acquire Technology Development, Inc., a
wholly owned subsidiary of UTEK.  The Company received no cash for these
shares.    The shares were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933.

     During February and March 2001, the Company sold 473,233 shares of its
common stock to non United States citizens in Germany.  The shares were
valued at $.25 per share.  The Company paid commissions of $47,323.   These
shares were sold pursuant to Regulation S promulgated by the Securities and
Exchange Commission under the Securities Act of 1933.  The Company did not
offer the securities to any person in the United States, any identifiable
groups of U.S. citizens abroad, or to any U.S. Person as that term is
defined in Regulation S.  At the time the buy orders were originated, the
Company reasonably believed the Buyers were outside of the United States
and were not U.S. Persons.  The Company reasonably believed that the
transaction had not been pre-arranged with a buyer in the United States.
The Company has not nor will engage in any "Directed Selling Efforts" and
reasonably believes the Buyers have not nor will engage in any "Directed
Selling Efforts."  The Company reasonably believed the Buyers purchased the
securities for their own accounts and for investment purposes and not with
the view towards distribution or for the account of a U.S. Person.

     The Company hereby incorporates by reference the Form 10-QSBs it filed
on May 22, 2000, August 14, 2000, and November 14, 2000, for information
regarding sales of unregistered securities made during the first three
quarters of 2000.

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

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

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

Liquidity and Capital Resources

     As of December 31, 2000, the Company had cash on hand of $15,321.  The
Company raised $1,177,046 during 2000 in a Regulation S offering. The
Company anticipates an additional $500,000 to $600,000 will be received at
the end of March, 2001, as the initial receipt of  funds for a 2001
Regulation S offering. The 2001 Regulation S offering is anticipated to
raise  a total of between $1,500,000 and $2,500,000 depending on market
conditions. The Company also has a commitment, from the overseas investment
banking firm with which the Company has had a long term relationship, for a
private placement of shares in its subsidiary, Tires2Oil, Inc., for
$800,000. The majority of the funds from this offering will be used for the
building of  the pilot plant referred to in the Company Subsidiary section
and the Products section of this form 10K-SB. The proceeds from this
private placement are anticipated during the second quarter of 2001.  The
Company is in discussion with several domestic investment banking firms
regarding raising additional funds. This funding, should it materialize,
would be utilized to implement the Company's business development strategy.

                                     17

Results of Operations

     Comparison of the year ended December 31, 2000, and the year ended
December 31, 1999

     The Company generated a loss of $2,007,696 in the year ended December
31, 2000, compared to a loss of $2,642,390 for the year ended December 31,
1999. This $634,694  (24%) reduction in loss is a result of general
reductions in General and Administrative expenses and the closing of the
Company's subsidiary operation in San Diego, California. Company had no
significant sales in either year. The Company had $31,709 in equipment
sales and $82,003 in crumb rubber and crumb rubber product sales for the
twelve months ended December 31, 2000. $12,500 in consulting fees was
generated in the U.S. operations and $70,615 was earned in Poseidon
(Germany) during the year ended December 31, 2000, compared to $17,821 in
domestic consulting fees in 1999.  The Company had no revenue from sales of
equipment in 1999. No revenue from license fees was generated in either the
year ended December 31, 2000 or 1999. Due to the emphasis on technology
transfer, no license fee income is anticipated until a full scale
Tires2Oil  plant is operational. Such plant will not be begun until and in
less the pilot plant proves successful.

     Historically, the majority of the Company's equipment sales were
recorded when equipment was shipped and title passed to the buyer. Typical
sales were by letter of credit, with the funds released by the bank when
the equipment was placed for shipment with the carrier. Historically,
payment for the Company's equipment sales have been made on the basis of
10% due at the time of sale, 80% due on shipment of the equipment and 10%
due on the completion of installation. This has resulted in the Company
receiving its revenue in large lump sums at irregular intervals rather than
smaller amounts at frequent intervals. Equipment purchased for the use of a
subsidiary or joint venture is recorded as a purchase of assets with no
revenue or inter-company profit generated upon the transfer to the
operating entity. The Company revised its equipment sales approach during
2000.  In the future, the Company will receive fees for the design,
configuration and specification of certain pieces of equipment. The sale
will be made directly from the specified supplier to the client. The
manufacturer will warrant its equipment directly to the buyer. In addition
to the acquisition of the Tires2Oil  technology and the de-icing technology
direct the Company's future revenue generation activities to a technology
transfer emphasis rather than equipment sales.

     Net cash used in operations was $1,458,733 during the year ended
December 31, 2000 compares to $836,692 in the year ended December 31, 1999.
During 2000, Accounts receivable increased by  $33,748, Equipment increased
by $248,245. Inventory decreased $101,941. Customer deposits decreased
$295.183 and deposits decreased by $687,487. Cash used in operations in
1999 was from an increase in Accounts Receivable of $2,747,576. Deposits
decreased by $755,717, offset by an decrease in Customer Deposits of
$1,897,779. Accrued Expensed decreased by $366,041 while Accounts Payable
decreased by $71,684.



                                     18


     Equipment increased due to the purchase of equipment for the QCAL
facility . This equipment is now in storage, awaiting shipment to Germany
for use in the Poseidon Project.

     During the year ended December 31, 2000 the Company acquired two major
pieces of tire recycling and after market product manufacturing equipment
from Fonds Concepts, in Atzendorf, Germany for shares and credit against
the deposits account. This equipment is being held in Germany pending
shipment to the Poseidon project in Penkun, Germany. The equipment is
valued at $1,835,211. No comparable transaction occurred in 1999.

     Inventory consists of purchased crumb rubber originally intended for
the Company's QCAL San Diego facility. This crumb rubber was purchased from
the Company's licensee in Mexico. With the closing of the San Diego
facility, the crumb rubber inventory was written down to current market
wholesale values. The inventory was sold in the first quarter of 2001.

     Franchise Taxes payable balance at December 31, 1999 was $103,548. The
Company had delayed payment of this balance pending clarification of
certain collections and timing differences. The Company resolved the timing
difference and collection questions during the year ended December 31, 2000
and eliminated the reserve.

     Accrued expenses decreased in the year ended December 31, 2000 by
$74,806 compared to a decrease of $366,041 in the year ended December 31,
1999. Accounts payable declined $201,429 in the year ended December 31,
2000 compared to a decrease of $71,684. These reductions are primarily due
to the availability of funds as a result of the 2000 Regulation S offering.

     The carrying value of the land owned by the Poseidon joint venture was
reduced to $149,119 at December 31, 2000 from $157,753 at December 31,
1999. This reduction is as a result of the decline in valuation of the
German Mark against the US Dollar. As this re-valuation is of an existing
asset, no loss is reported  for operating statement purposes

     Depreciation Expense of $275,886 for the year ended December 31, 2000,
exceeds the 1999 expense of $144,222 by $131,664. This is due to the
equipment purchased and manufactured for the QCAL operation.

     Travel expenses of $91,161 for the year ended December 31, 2000,
decreased by 45% or $76,113 compared to $167,274  for the year ended
December 31, 1999. This decrease is due to eliminating marketing activities
in support of the QCAL operation.

     Professional fees increased from $210,483 for the twelve months ended
December 31, 1999, to $239,823 for 2000. This increase is due, primarily,
to the legal activities regarding patents and related matters for both the
Tires2Oil  license and the preparatory work for the purchase of the de-icing
technology license in the first quarter of 2001. Additionally, legal
support for the Company's current and in-formation overseas joint venture
were increased as these projects move closer to maturity.

     Office expenses of $115,293 for the twelve months ended December 31,
2000, are a $17,937 increase from the 1999 expenses of $97,356. This
increase is primarily due to expenses at the QCAL operation in the first
half of 2000.


                                     19

     Administrative expenses of $293,282 for the year ended December 31,
2000 are significantly lower than the $814,361 for the comparable 1999
period. This reduction is due to closing the San Diego operation in mid
year 2000, and cessation of QCAL marketing activities.

     Consulting expenses of $793,890 for the year ended December 31, 2000
increased from the year ended December 31, 1999 expense of $715,663 by
$78,227. This increase is primarily due to the hiring of a consultant for
the Tires2Oil  project, offset by the reduction of  consultants associated
with the QCAL marketing activities and fee increases from the Company's
Vice President-Finance.

     Options expense of $39,067 was recognized in 1999 as a result of the
Board of Directors approval of the 1999 employee incentive stock option
program. Options expense of $19,146 was recognized in the year ended
December 31, 2000, for the 2000 employee incentive stock option program.
The year 2000 expense is less than the 1999 expense due to the reduced
price of the Company's stock and slightly fewer options issued.

     Comparison of the year ended December 31, 1999, and the year ended
December 31, 1998

     The Company generated a loss of $2,642,390 in the year ended December
31, 1999, compared to a loss of $100,691 for the year ended December 31,
1998. The primary reason for the differences is that the Company had no
revenue from sales of equipment in 1999 to unrelated third parties. The
1998 revenue from equipment sales was $2,882,007 with a gross profit of
$1,191,125. During 1999 the Company concentrated on the purchase and
manufacture of equipment for its QCAL subsidiary operation and delayed
sales efforts to other customers until equipment package specification were
modified and updated and until the QCAL facility was operational. The 1999
loss includes an Accounts Receivable write off of $347,220, the 1998 loss
included an accounts receivable write off of $100,000. No revenue from
license fees was generated in either the year ended December 31, 1999 or
1998.

     Net cash used in operations was $836,692 during the year ended
December 31, 1999, compares to $1,334,685 in the year ended December 31,
1998. During 1999, Accounts receivable decreased by  $2,747,576. Furniture
and fixtures increased by $35,443 Equipment increased by $1,414,664.
Inventory increased $120,044, Customer deposits decreased $1,897,779 and
Deposits decreased by $775,717. Cash used in operations in 1998 was from an
increase in Accounts Receivable of $2,354,061. Deposits increased by
$1,804,508, offset by an increase in Customer Deposits of $2,190,462.
$179,309 was used for the purchase of land. Accrued Expensed decreased by
$102,315 while Accounts Payable increased by $585,185.

     Accounts Receivable decreased in the year ended December 31, 1999, by
$2,747,576. This decrease was from the payments received from customers of
$1,724,810, the return, cancellation, and crediting of a sale of $675,546
and the write off of $347,220. The write off is of all remaining balances
on the Mexico project. The Company believes that as a result of
difficulties with the Cisap equipment, combined with other factors, the
financial viability of the Mexico project is so low that collection of the
outstanding balances is unlikely. The return involved a piece of equipment
sold to, but not yet installed, in Germany. The customer returned the
equipment to the Company who in turn installed it in the QCAL San Diego
plant.


                                     20

     Furniture and fixtures increased by $35,443 due to furniture purchased
for the QCAL facility and for the Quantum Group corporate offices.

     Equipment increased due to the purchase of Equipment for the QCAL
facility and from the manufacturing costs of completing the Impact 500, and
transferring the 1998 balance of $63,203 for the prototype to equipment
upon its installation in San Diego.

     Customer deposits decreased upon applying the deposits to invoices
upon the completion of installation and testing at customer sights.
Deposits with vendors decreased as the deposits were applied to the
Company's liability upon installation and upon receipt of equipment for the
QCAL San Diego facility

     Inventory consists of purchased crumb rubber on site at the Company's
QCAL San Diego facility. This crumb was purchased from Mexico to provide
safety stock raw materials and to facilitate crumb rubber re-sales prior
the San Diego facility reaching full capacity production.

     Franchise Taxes payable balance at December 31, 1999 and 1998 of
$103,548 consists of $70,691 Federal taxes and $32,857 in California state
taxes. Although the Company has a Net Operating Loss Carry Forward for
Federal Income Tax purposes, the law provides that the utilization of the
NOL is a preference item triggering the Alternative Minimum Tax. The State
of California does not have a NOL Carry Forward. The Company has delayed
payment of this balance pending clarification of certain collections and
timing differences. This issue was resolved in the year ended December 31,
2000.

     Accrued expenses decreased in the year ended December 31, 1999 by
$383,578 compared to a decrease of $102,315 in the year ended December 31,
1998. Accounts payable declined $71,684 in the year ended December 31, 1999
compared to an increase of $585,185. The 1998 increase relates to the open
invoices for a two large sales shipped just prior to yearend. Aside from
those two open items, the general reduction of accrued expenses and
accounts payable is a result of more timely disbursements.

     Minority interest was $9,463 at the end of December, 1998. That
interest represents the remaining balance of the German investment in the
Poseidon joint venture project after giving effect to their 20% portion of
the 1998 operating loss. The loss for the year ended December 31, 1999
exceeds the minority interest equity, which was accordingly reduced to
zero.

     The carrying value of the land owned by the Poseidon joint venture was
reduced to $157,753 at December 31, 1999 from $179,309 at December 31,
1998. This reduction is as a result of the decline in valuation of the
German Mark against the US Dollar. As this re-valuation is of an existing
asset, no loss is reported  for operating statement purposes

     Depreciation Expense of $144,222 for the year ended December 31, 1999
exceeds the 1998 expense of $96,531 by $65,069. This is due to the
equipment purchased and manufactured for the QCAL operation.

     Travel expenses of $167,274 for the year ended December 31, 1999
increased by 8% or $11,832 compared to the  year ended December 31, 1998.
This increase is due to increased marketing activities in support of the
QCAL operation.


                                     21

     Professional fees increased from $56,978 for the twelve months ended
December 31, 1998 to $210,483 for 1999. This increase is due to the legal
activities involving the CISAP litigation and in resolving the concerns of
the various projects utilizing the cisap equipment.

     Office expenses of $97,356 for the twelve months ended December 31,
1999 are a slight reduction from the 1998 expenses of $98,139.

     Administrative expenses of $814,361 for the year ended December 31,
1999 are significantly higher than the $249,909 for the comparable 1998
period. This included the start up cost of the QCAL operation and increased
personnel in marketing and office support of the QCAL product sales effort.

     Consulting expenses of $715,663 for the year ended December 31, 1999
increased from the year ended December 31, 1998 by $266,155. This increase
is primarily due to added use of consultants on the reconfiguration of the
Company's equipment packages and fee increases from the Company's president
and executive vice president.

     Options expense of $39,067 was recognized in 1999 as a result of the
Board of Directors approval of the 1999 employee incentive stock option
program. No comparable expense was incurred in 1998.

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

                       ITEM 7.  FINANCIAL STATEMENTS

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

     The following financial statements of the Company are filed as a part
of this report:

Report of Crouch, Bierwolf & Associates, Certified Public Accountants;
     Consolidated Balance Sheets as of December 31, 2000 and December 31, 1999;
     Consolidated Statements of Operations for the years ended December 31, 2000
       and 1999;
     Consolidated Statements of Stockholders' Equity from January 1, 1999 to
        December 31, 2000;
     Consolidated Statements of Cash Flows for the years ended December 31,
        2000 and 1999;
     Notes to Consolidated Financial Statements.

     There are no financial statement schedules included as part of this
report. The consolidated financial statements of the Company are set forth
immediately following the signature page to this Form 10-KSB.

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

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

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

     During 2000, the Company's Certified Public Accountant, Darrell
Schvaneveldt of Schvaneveldt and Company died.  His practice was acquired
by Crouch, Bierwolf & Associates, the Company's current Certified Public
Accountants.


                                     22


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

                                  PART III

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

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

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

     The following table sets forth as of December 31, 1999 the name, age,
and position of each executive officer and director and the term of office
of each director of the Corporation.

<TABLE>
<CAPTION>

Name                Age    Position                  Director or Officer Since
-------------------------------------------------------------------------------
<S>                 <C>    <C>                       <C>
Ehrenfried Liebich  58     Chief Executive Officer   March 1989
                           Director                  March 1989

Keith J. Fryer      51     President                 October 2000
                           Chief Operating Officer   October 2000
                           Secretary                 July 1997
                           Director                  March 1995

John F. Pope        58     Vice President            January 1991
                           Treasurer                 January 1991
                           Director                  March 1989

-------------------------------------------------------------------------------
</TABLE>

     All officers hold their positions at the will of the Board of
Directors.  All directors hold their positions for one year or until their
successors are elected and qualified.

     Set forth below is certain biographical information regarding each of
the Company's executive officers and directors:

     Ehrenfried Liebich.  Mr. Liebich is the Chief Executive Officer and
Chairman of the Board of Directors of the Company.  Mr. Liebich first
became involved with the Company in March 1989.  Mr. Liebich was born and
educated in Germany.  After his formal secondary education in Germany he
joined the Merchant Marine, which he left as a Ship's Officer with the
Court Line, London, U.K.  Mr. Liebich immigrated to Canada in 1965 where he
started various businesses in the areas of real estate, investment,
chemical distribution and electronics.  In March of 1989 he became the
President, a Director and controlling shareholder of the Company.
Following a management reorganization in October 2000, Mr. Liebich became
the Chief Executive Office and Chairman of the Board of Directors.



                                     23

     Keith J. Fryer.   Mr. Fryer is the President, Chief Operating Officer,
Secretary and a Director of the Company.  Mr. Fryer first became involved
with the Company in August 1992.  Mr. Fryer was educated in England and
graduated from the Cheshire College of Further Education with a City and
Guild of London Institute Diploma in Construction and Site Surveying.  He
also studied at Cranfield and Dunchurch UK Management Colleges and became a
Member of the Institute of Marketing London in 1974.  Mr. Fryer became a
Chartered Member of the Institute in 1989.  He is a life member of the Wig
& Pen Club, The Strand, London.  Mr. Fryer successfully operated Keith
Fryer Associates England, a business he formed in 1986, that provided
marketing consulting services in various business areas.  In 1992, Mr.
Fryer established Keith Fryer Associates California, Inc., a marketing
consulting firm.  Following a management reorganization in October 2000,
Mr. Fryer became the President and Chief Operating Officer of the Company.
He became the Secretary in July 1997, and a Director of the Company in
March 1995.

     John F. Pope. Mr. Pope is the Treasurer, a Vice President and a
Director of the Company.  Mr. Pope began his professional career in 1963 as
an auditor in public accounting and subsequently on the corporate staff of
Olivetti Underwood in New York.  He joined Burger King Corporation in
Miami, Florida, in 1968 and progressed to the position of Controller,
Company Stores Division.  He joined Orange Julius International, Inc.,
Santa Monica, California, in 1974 as Vice President, Finance and a Director
for the parent company and its national and international subsidiaries.

     In 1980, Mr. Pope became President of Inflation Management, Inc., Los
Angeles, California.  From February 1982 until February 1984 he was Vice
President, Finance of Aerobic Dancing, Inc.  In 1984 he became Senior Vice
President of Animated Playhouses Incorporated and Subsidiaries, before
moving to become Executive Vice President Finac International, Inc., an
investment and venture capital firm in Torrance, California.

     From 1986 through November 1987, Mr. Pope acted as Vice President
Finance and Administration for ASI Sign Systems of Marina Del Rey, Inc.
After leaving ASI Sign Systems in late 1987, Mr. Pope became an independent
financial consultant assisting a number of domestic and international
public and private companies in franchising, financial structure, and
internal and SEC reporting.  He continues to serve on the Board of
Directors of several companies he helped to become public companies,
including currently serving as the interim President and a Director of the
New Anaconda Company.

     In 1989, Mr. Pope became a founding member of the Board of Directors
of the Quantum Group, Inc.  Mr. Pope is a Certified Management Accountant
(CMA) and serves on the National Board of Directors of The Institute of
Management Accountants, where he serves on the National Strategic Planning
Committee.  He has also been Certified in Financial Management (CFM) by the
same institute.  He is a Certified Public Accountant (CPA) and a member of
the American Institute of Certified Public Accountants (AICPA).  He has
been a member of a number of other professional and civic organizations,
including the Curriculum Steering Committee, School of Accountancy,
University of Southern California.


                                     24

     Key Employees

     Sudheer Helekar.  Mr. Helekar received a Masters Degree in Mechanical
Engineering from Worchester Polytechnic Institute, Massachusetts, in 1968.
Mr. Helekar has 37 years experience in developing new technologies to
commercial hardware.  He developed the Solar Stirling Engine from concept
to commercial hardware within eighteen months.  He has also helped develop
various solar and ethanol plant concepts, as well as, several turbines and
energy systems.  He also has experience with cryogenic systems,
conventional pyrolysis, carbon activation and power generation.  Prior to
joining the Company, Mr. Helekar spent eight years as an environmental
consultant for Alton Geoscience, where he was primarily responsible for
environmental audits, environmental energy and conversion of bio-waste to
energy and chemicals.

     Scientific Advisory Board

     Victor F. Petrenko, Ph.D.  Dr. Petrenko received a Masters Degree in
Engineering Physics and Electronics from the Moscow Institute of Physics
and Technology, Moscow, U.S.S.R. in 1970.  He earned a Ph.D. in
Experimental Physics from the Institute of Physical Problems, Academy of
Science, Moscow, U.S.S.R. in 1974.  Since 1991, D. Petrenko has worked as a
Research Professor of Engineering at the Thayer School of Engineering,
Dartmouth College.  Dr. Petrenko has been closely involved with the
research, development and patenting of the novel ice adhesion modification
or "de-icing" technology recently acquired by the Company.  Dr. Petrenko
holds six U.S. and two International patents.

     Jagdish Dhawan, Ph.D.  Dr.  Dhawan received a Masters Degree in
Chemical Engineering from the University of Kanpur, India in 1969.  He
earned a Ph.D. in Chemical Engineering from the University of Mississippi
in 1974.  Dr. Dhawan is a Professor at the University of South Alabama,
where he has taught since 1983.  From 1995 to 1998, he also served as a
consultant to the Center for Legislative Energy & Environmental Research,
Irving Texas.  Dr. Dhawan is the primarily responsible for developing the
Tires2Oil  recycling process.

     Pawan Agarwal, Ph.D.  Dr. Agarwal received his Ph.D. from the
Department of Metallurgical and Materials Science and Engineering,
University of Pittsburgh in 1975.  He has been employed with Exxon-Mobil
Chemical Company for the past 20 years, where he has held a variety of
positions.  Currently, he is oversees the research work of 12 scientists at
the Baytown Polymers Center of Exxon-Mobil.  Dr. Agarwal is known for his
work in the field of rubber chemicals and polymers.  He currently holds 33
U.S. patents.

     Nicholas D. Sylvester, Ph.D.  Dr. Sylvester received his Ph.D. in
Chemical Engineering from Carnegie-Mellon University in 1968. Since 1996,
Dr. Sylvester has been employed as a professor of chemical engineering at
the University of South Alabama, where he teaches at both  graduate and
undergraduate levels.  He is also a special member of the College of
Engineering Strategic Planning Committee.  Prior to joining the University
of South Alabama, Dr. Sylvester held numerous positions at the University
of Akron and the University of Tulsa.

     There are no family relationships between any of the Company's
officers and directors.  In addition, none of the officers and directors
have been involved in legal proceeding which require disclosure in this
annual report of the Company.

                                     25

     Compliance with Section 16(a) of the Exchange Act

     Directors and executive officers are required to comply with Section
16(a) of the Securities Exchange Act of 1934, which requires generally that
such persons file reports regarding ownership of and transactions in
securities of the Company on Forms 3, 4, and 5.  A Form 3 is an initial
statement of ownership of securities, which is to be filed by the officers
and directors owning shares in the Company within 10 days after the
effective date of the Company's filing on Form 10-SB.    Form 4 is to
report changes in beneficial ownership and is due on or before the tenth
day of the month following any month in which they engage in any
transaction in the Company's common stock.  Form  5 covers annual statement
of changes in beneficial ownership which is due 90 days after the fiscal
year end of the Company.

     Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5
and amendments thereto furnished to the Company with respect to the most
recent fiscal year, it appears all Forms 3, 4 and 5 were timely filed.

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

                      ITEM 10.  EXECUTIVE COMPENSATION

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

    The following table sets forth certain summary information concerning the
compensation paid or accrued over each of the Registrant's last three
completed fiscal years to the Company's, or its principal subsidiaries,
chief executive officers during such period (as determined at December 31,
2000 the end of the Registrant's last completed fiscal year).
<TABLE>
<CAPTION>
                              Summary Compensation Table
                             ----------------------------

                                                  Long Term Compensation
                                                  ----------------------
               Annual Compensation                Awards           Payouts
               -------------------                ------           --------
                                         Other    Restri
Name and                                 Annual   -cted                     All
Principal                                Compen   Stock   Options  LTIP     Other
Position       Year    Salary   Bonus    -sation  Awards$ /SARS#            Payout
------------------------------------------------------------------------------------
<S>            <C>     <C>      <C>      <C>      <C>     <C>      <C>      <C>
Ehrenfried
 Liebich       2000    $ -0-    $ -0-    $129,956 $ -0-    52,666   -0-      -0-
CEO/Director   1999      -0-      -0-     169,573   -0-    52,696   -0-      -0-
               1998      -0-      -0-      72,806   -0-      -0-    -0-      -0-

Keith Fryer(1) 2000      -0-      -0-     132,750   -0-    36,259   -0-      -0-
President/COO/ 1999      -0-      -0-      95,000   -0-    36,198   -0-      -0-
Secretary/
Director       1998      -0-      -0-     105,000   -0-      -0-    -0-      -0-

John F.Pope(2) 2000      -0-      -0-      50,000   -0-    15,108   -0-      -0-
Vice President 1999      -0-      -0-      27,500   -0-    14,999   -0-      -0-
Treasurer/
Director       1998      -0-      -0-      30,000   -0-      -0-    -0-      -0-

------------------------------------------------------------------------------------
</TABLE>
                                     26
     (1) In 2000, 1999 and 1998, Keith Fryer provided consulting services
to the Company through Keith Fryer Associates California, Inc., his private
consulting business.  The salary figures represent amounts paid by the
Company to Keith Fryer Associates California, Inc.  These services were
provided on terms at least as favorable as could have been negotiated with
an independent third party.

     (2)  John Pope provided consulting services to the Company through his
private consulting business, John F. Pope, Inc.  The salary figures
represent amounts paid by the Company to John F. Pope, Inc., for Mr. Pope's
services to the Company as an officer and director overseeing the financial
affairs of the Company.  These services were provided on terms at least as
favorable as could have been negotiated with an independent third party.

Bonuses and Deferred Compensation

     The Company does not have any bonus, deferred compensation or
retirement plan.  Such plans may be adopted by the Company at such time as
deemed reasonable by the board of directors.  The Company does not have a
compensation committee, all decisions regarding compensation are determined
by the board of directors.

Stock Option and Stock Appreciation Rights Plans

     On January 9, 2001, all persons holding stock options granted under
The Quantum Group, Inc., 1999 Stock Option Plan, and The Quantum Group,
Inc., 2000 Stock Option Plan surrendered those options and the Company
canceled those stock option plans.  On that same date, the Company
implemented the Advanced Recycling Sciences Stock Option Plan and allocated
1,000,000 shares of common stock of the Company to be available for grants
under the plan.

     In consideration of the option holders surrendering their outstanding
options, the Company issued options under the Advanced Recycling Sciences,
Inc. Stock Option Plan ("Replacement Options").  The Company agreed to
waive the vesting schedule on all Replacement Options.  The Company had
granted options to purchase 146,321 and 153,168 restricted common shares
respectively under the 1999 and 2000.  This included options to purchase
52,696 shares and 52,666 shares granted to Ehrenfried Liebich, options to
purchase 36,198 and 36,259 shares granted to Keith J. Fryer, and options to
purchase 14,999 and 15,108 shares granted to John F. Pope in 1999 and 2000
respectively.  These options were replaced with Replacement Options.  The
Replacement Options are exercisable at $0.79 per share.  The Replacement
Options expire on January 9, 2006.  To date, none of the Replacement
Options has been exercised.

     In addition to the Replacement Options, the Company granted additional
options ("New Options") to purchase 143,480 restricted shares to its
officers, directors, employees and consultants.  The New Options are
exercisable at $0.79 per share. The New Options vest and become exercisable
six months from the grant date and expire five years from the date of
grant.  To date, none of the New Options have vested or been exercised.
The officers and directors received options as follows:  Ehrenfried Liebich
received an option to purchase 36,996 shares; Keith Fryer received an
option to purchase 36,996 shares; John Pope received an option to purchase
30,389 shares.

                                     27

Option / SAR Grants

<TABLE>
<CAPTION>

     Individual Grants

Name               Number of      % of Total     Exercise   Expiration   Grant
                   Securities     Options/SARs   or Base    Date         Date
                   Options/SARs   Granted to     Price                   Present
                   Granted        Employees      ($/share)               Value ($)
------------------------------------------------------------------------------------
<S>                <C>            <C>            <C>        <C>          <C>
Ehrenfried Liebich  142,358       32.14%         $0.79      2006         $112,463

Keith J. Fryer      109,453       24.71           0.79      2006           86,468

John Pope            60,496       13.66           0.79      2006           47,792

------------------------------------------------------------------------------------
</TABLE>

Termination of Employment and Change of Control Arrangement

     There are no compensatory plans or arrangements, including payments to
be received from the Company, with respect to any person named in cash
compensation set out above which would in any way result in payments to any
such person because of his resignation, retirement, or other termination of
such person's employment with the company or its subsidiaries, or any
change in control of the Company, or a change in the person's
responsibilities following a changing in control of the Company.

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

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

     The following table sets forth as of March 28, 2001 the name and the
number of shares of the Registrant's Common Stock, par value $0.001 per
share, held of record or beneficially by each person who held of record, or
was known by the Registrant to own beneficially, more than 5% of the
14,197,281 issued and outstanding shares of the Registrant's Common Stock,
and the name and shareholdings of each director and of all officers and
directors as a group.

<TABLE>
<CAPTION>

Title of                                   Amount and Nature of    Percentage
Class        Name of Beneficial Owner      Beneficial Ownership    of Class
---------    ---------------------------   --------------------    ------------
<S>          <C>                           <C>                     <C>
Common       Ehrenfried Liebich            2,126,290(1)            16.69%
             14771 Myford Road
             Building B
             Tustin, California 90744

Common       Keith J. Fryer                614,621(2)               4.76%
             14771 Myford Road
             Building B
             Tustin, California 90744

                                          28
Common       John F. Pope (2)              49,607(3)                0.04%
             14771 Myford Road
             Building B
             Tustin, California 90744

Common       UTEK Corporation              2,377,153               16.68%
             202 South Wheeler Street
             Plant City, Florida 33566

------------------------------------------------------------------------------------
Common       All Officers and Directors
              as a Group:(4 persons)       2,790,518               19.58%
------------------------------------------------------------------------------------
</TABLE>

(1) This includes options to purchase up to an additional 105,362 common
shares within 60 days of the date of this Form 10-KSB.

(2) This includes 15,000 shares held of record by his three children and
37,666 held of record by Keith Fryer Associates, California, Inc., all of
which he may be deemed to be a beneficial owner of.  This figure also
includes options to purchase up to an additional 272,455 common shares
within 60 days of the date of this Form 10-KSB.

(3) This includes 19,500 shares which are held of record by John F. Pope,
Inc.  Mr. Pope may be deemed to be a beneficial owner of the shares because
he has shared investment power of the shares.  This figure also includes
options to purchase up to an additional 30,107 common shares within 60 days
of the date of this Form 10-KSB.

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

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

     In August 1998 and January 1999, the Company loaned $30,000 and
$10,000 respectively, to John Pope, a director and officer of the Company.
Both notes are at an interest rate of 9% per annum.  Both notes have been
extended and are now due and payable on December 31, 2001.  As of March 28,
2001, Mr. Pope had repaid $32,500.  Mr. Pope may be deemed to have control
over John F. Pope, Inc., in as much as he may be considered to have
qualified investment power over the shares held by John F. Pope, Inc.
Compensation paid to John F. Pope, Inc. is identified under the
compensation table.

     In August 1999, the Company loaned $25,000 to Keith Fryer, a director
and officer of the Company.  The note is at an interest rate of 9% per
annum.  The due date of this note was  extended to December 31, 2001.
During March 2001, Mr. Fryer paid off the outstanding balance of the note.
Keith Fryer, an officer and director of the Company, is the owner of Keith
Fryer Associates California, Inc., ("KFA") a consultant to the Company.
Compensation paid to KFA is identified under the compensation table.

     There were no other related party transactions during 2000.


                                     29

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

                                  PART IV

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

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

--------------------------------------------------------------------------
(a)  Reports on Form 8-K.

     None.

(b)  Exhibits.  The following exhibits are included as part of this report:

     SEC Exhibit

<TABLE>
<CAPTION>

Exhibit        Reference
Number         Number     Title of Document                      Location
-------        ---------  -----------------                      ---------
<S>            <C>        <C>                                    <C>
3.01           3          Articles of Amendment to the            Incorporated by
                          Articles of Incorporation               reference*

3.02           3          Articles of Incorporation               Incorporated by
                                                                  reference*

3.03           3          Bylaws                                  Incorporated by
                                                                  reference*

10.01          10         The Quantum Group, Inc., 2000           Attached
                          Stock Option Plan

10.02          10         Advanced Recycling Sciences,            Attached
                          Inc., 2001 Stock Option Plan

23.01          23         Consent of Accountant                   Attached
</TABLE>

* Incorporated by reference from the Registrant's registration statement on
Form 10-SB, as amended, filed with the Commission, SEC File No. 0-23812.



                                     30

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

                                 SIGNATURES

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

     In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.


Dated: March 29, 2001                  Advanced Recycling Sciences, Inc.
                                       a Nevada corporation

                                       By: /s/ Keith J. Fryer
                                           ------------------
                                       Keith J. Fryer, President



DATE               NAME AND TITLE      SIGNATURE

March 29, 2001     Keith J. Fryer      By: /s/ Keith J. Fryer
                                           ------------------
                   President/COO/      Keith J. Fryer
                   Director/Secretary



March 29, 2001     John F. Pope        By: /s/ John F. Pope
                                           -----------------
                   Vice President/     John F. Pope
                   Treasurer/Director



31















             ADVANCED RECYCLING SCIENCES, INC. AND SUBSIDIARIES
            (Formerly The Quantum Group, Inc., and Subsidiaries)


                       CONSOLIDATED FINANCIAL STATEMENTS

                             DECEMBER 31, 2000
                                     &
                             DECEMBER 31, 1999

/Letterhead/





                        Independent Auditors' Report
                       -----------------------------

Board of Directors
Advanced Recycling Sciences, Inc., and Subsidiaries
(Formerly The Quantum Group, Inc., and Subsidiaries)


We have audited the accompanying consolidated balance sheets of Advanced
Recycling Sciences, Inc., and Subsidiaries (a California Corporation), as
of December 31, 2000, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year ended December 31, 2000.
These consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.  The consolidated
financial statements of Advanced Recycling Sciences, Inc., and Subsidiaries,
as of December 31, 1999, were  audited by other auditors whose report dated
April 12, 2000, expressed an  unqualified opinion on that statement.

We conducted our audit in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the  financial statements are
free of material misstatements.  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 the significant estimates made by management, as well as
evaluating the overall financial statements presentation.  We believe that
our audit provides a reasonable basis for our opinion.

In our opinion, the aforementioned consolidated financial statements present
fairly, in all material respects, the financial position of Advanced Recycling
Sciences, Inc., and Subsidiaries, as of  December 31, 2000, and the results
of its operations and its cash flows for the years ended December 31, 2000,
in conformity with generally accepted accounting principles.


/S/ Crouch, Bierwolf & Associates

Salt Lake City, Utah
March 27, 2001
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                        Consolidated Balance Sheets
                                December 31
<TABLE>
<CAPTION>

                                                       2000         1999
                                                   -----------   ----------
<S>                                               <C>         <C>
      Assets

Current Assets
--------------
  Cash                                             $   15,321  $   242,934
  Accounts Receivable                                  59,949      317,464
  Interest Receivable                                     722            -
  Inventory                                            37,528      139,469
  Equipment Inventory                               1,835,211            -
  Deposit                                              31,409      317,003
  Note & Interest Receivable - Officer                 34,000       69,253
  Prepaid Expenses                                    139,444       26,944
                                                   -----------  -----------
      Total Current Assets                          2,153,584    1,113,067

Property & Equipment
--------------------
  Furniture & Fixtures                                 33,339       66,780
  Equipment                                         1,732,639    1,414,664
  Vehicles                                             81,485       81,485
  Land                                                149,119      157,753
  Websites                                              9,650        9,650
                                                   -----------  -----------
      Total Property & Equipment                    2,006,232    1,730,332

      Less Accumulated Depreciation                  (416,809)    (144,221)
                                                   -----------  -----------
      Net Property & Equipment                      1,589,423    1,586,111

Other Assets
  License Rights                                      377,859      442,611
  Patent Rights                                     1,715,000            -
  Deposit                                                   -      687,487
                                                   -----------  -----------
      Other Assets                                  2,092,859    1,130,098
                                                   -----------  -----------
      Total Assets                                 $5,835,866  $ 3,829,276
                                                   ===========  ===========


                                 Continued
                                    F-3
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                         Consolidated Balance Sheets
                                December 31

</TABLE>
<TABLE>
<CAPTION>
                                                      2000         1999
                                                  -----------  -----------
<S>                                              <C>          <C>
      Liabilities & Stockholders' Equity

Current Liabilities
-------------------
  Accrued Expenses                                 $    9,237  $    84,043
  Accounts Payable                                    452,088      653,517
  Notes Payable (Current Portion)                      98,953      272,240
  Interest on Note Payable                              3,637            -
  Customer Deposits                                         -      295,183
  Franchise Taxes Payable                                   -      103,548
                                                   -----------  -----------
      Total Current Liabilities                       563,915    1,408,531

Long Term Liabilities
---------------------
  Capital Lease                                        31,475       67,631
  Note Payable                                        605,937       10,198
                                                   -----------  -----------
      Total Long Term Liabilities                    637,412        77,829

Stockholders' Equity
--------------------
  Common Stock 50,000,000 Shares Authorized;
   Par Value of $0.001 Per Share; 12,752,128 &
   9,033,123 Shares Issued and Outstanding             12,751        9,033
  Paid In Capital                                  11,128,925    6,692,776
  Accumulated Deficit                              (6,507,137)  (4,358,893)
                                                   -----------  -----------
      Total Stockholders' Equity                    4,634,539    2,342,916
                                                   -----------  -----------
      Total Liabilities & Stockholders' Equity     $5,835,866   $3,829,276
                                                   ===========  ===========

</TABLE>

 The accompanying notes are an integral part of these financial statements
                                    F-4

            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                   Consolidated Statements of Operations
                      For the Years Ended December 31
<TABLE>
<CAPTION>
                                                       2000         1999
                                                   -----------  -----------
<S>                                               <C>          <C>
Revenues
--------

  Equipment Sales                                  $   31,709  $         -
  Other Sales                                          82,003            -
  Other Income                                         83,115       17,821
                                                   -----------  -----------
      Total Revenues                                  196,827       17,821

      Cost of Sales                                   141,160          348
                                                   -----------  -----------
      Gross Profit                                     55,667       17,473

Expenses
--------
  Commission                                            4,249            -
  Depreciation                                        275,886      144,222
  Amortization                                         64,756       64,756
  Travel                                               91,161      167,274
  Professional Fees                                   239,823      210,483
  Office                                              115,293       97,356
  Rent & Utilities                                    152,539       71,242
  Administrative Expenses                             303,282      814,361
  Consultant Fees                                     793,890      715,663
  Interest                                             13,298       19,504
  Accounts Receivable Written Off                           -      347,220
  Options Issued Expense                               19,146       39,067
                                                   -----------  -----------
      Total Expenses                                2,073,323    2,691,148
                                                   -----------  -----------
      Net Income (Loss) From Operations            (2,017,656)  (2,673,675)




                                 Continued
                                    F-5

            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                    Consolidated Statements of Operations
                      For the Years Ended December 31

</TABLE>
<TABLE>
<CAPTION>
                                                       2000         1999
                                                   -----------  -----------
<S>                                               <C>          <C>

Other Income (Expenses)
-----------------------
  Interest Income                                  $      991  $    21,822
  Leasehold Abandonment                               (51,218)           -
                                                   -----------  -----------
      Total Other Income (Expense)                    (50,227)      21,822
                                                   -----------  -----------
      Net Income (Loss)
      Before Minority Interest                     (2,067,883)  (2,651,853)

Taxes & Minority Interest
  Provision for Taxes - Current                             -            -
  Minority Interest                                         -       (9,463)
                                                   -----------  -----------
      Total Taxes & Minority Interest                       -       (9,463)
                                                   -----------  -----------
      Net Income (Loss)                           $(2,067,883) $(2,642,390)
                                                   ===========  ===========
      Net (Loss) Per Share Before
      Extraordinary Items                          $    (0.21)  $    (0.30)

      Net (Loss) Per Share After
      Extraordinary Items                          $    (0.21)  $    (0.30)

  Weighted Average Shares Outstanding               9,940,519    8,670,366


</TABLE>

 The accompanying notes are an integral part of these financial statements

                                    F-6




            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
              Consolidated Statements of Stockholders' Equity
                 From January 1, 1999 to December 31, 2000
<TABLE>
<CAPTION>
                         Common Stock       Paid-In Comprehensive   Accumulated
                        Stock    Amount     Capital        Income       Deficit
                   -------------------------------------------------------------
<S>               <C>          <C>       <C>         <C>           <C>
Balance,
January 1, 1999     8,400,075  $  8,400  $6,018,287  $          -  $ (1,716,503)

Shares Issued
for Services
at $1.75 Per Share    363,178       363     635,480

Shares Issued
for Cash at
$1.75 Per Share       269,870       270     472,004

Cost of Shares
Issued                                     (472,062)

Options Issued                               39,067

Net Loss for
the Year Ended
December 31, 1999                                                    (2,642,390)
                   -------------------------------------------------------------
Balance,
December 31, 1999   9,033,123     9,033   6,692,776                  (4,358,893)

Shares issued
for Services at
$1.75 Per Share         1,515         2       2,649

Shares issued for
Patent Rights at
$1.75 Per Share       980,000       980   1,714,020

Shares issued for
Services at $0.78
Per Share              26,618        26      20,736

Shares issued for
Assets at $2.125
Per Share             577,386       577   1,226,368

Shares issued for
Services at $1.625
Per Share              10,000        10      16,240

Shares issued for
Cash at $1.00 Per
Share               1,510,970     1,511   1,509,459

Cost of Shares
Issued                                     (332,413)

</TABLE>
                                 Continued
                                    F-7
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
              Consolidated Statements of Stockholders' Equity
                 From January 1, 1999 to December 31, 2000
<TABLE>
<CAPTION>
                         Common Stock       Paid-In Comprehensive   Accumulated
                        Stock    Amount     Capital        Income       Deficit
                   -------------------------------------------------------------
<S>               <C>          <C>       <C>         <C>           <C>
Shares issued for
Services at
$1.75 Per Share        22,856        23      39,975

Shares issued for
Services at
$1.010 Per Share       40,000        40      40,360

Shares issued for
Services at
$0.687 Per Share       50,000        50      34,300

Shares issued for
Services at
$1.75 Per Share        11,428       473     117,835

Shares issued for
Conversion of Debt
at $0.250 Per Share   473,232       473     117,835

Shares issued for
Services at
$0.500 Per Share       15,000        15       7,485

Options Issued                               19,146

Foreign Currency
Translation                                               (80,361)

Net Loss for the
Year Ended
December 31, 2000                                                    (2,067,883)
                   -------------------------------------------------------------
Balance,
December 31, 2000  12,752,128  $ 12,751  $11,128,925  $  (80,361)  $ (6,507,137)
                   =============================================================


</TABLE>

 The accompanying notes are an integral part of these financial statements
                                    F-8



            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                   Consolidated Statements of Cash Flows
                      For the Years Ended December 31
<TABLE>
<CAPTION>

                                                           2000         1999
                                                     ------------- -------------
<S>                                                 <C>           <C>
Cash Flows from Operating Activities
------------------------------------
 Net Profit or (Loss)                                $ (2,067,883) $ (2,642,390)
 Adjustments to Reconcile Net Profit
  or (Loss) to Net Cash:
   Write Off Accounts Receivable                                -       347,220
   Options Issued                                          19,146        39,067
   Amortization & Depreciation                            340,642       208,978
   Non Cash Expense                                       280,219       163,500
   Minority Interest                                            -         9,463
 Changes in Operating Assets & Liabilities:
  (Increase) Decrease in Accounts Receivable              (33,748)    2,747,576
  (Increase) Decrease in Interest Receivable                  722             -
  (Increase) Decrease in Inventory                        101,941      (120,044)
  (Increase) Decrease in Deposit on Inventory             (31,409)      (13,982)
  (Increase) Decrease in Notes Receivable - Officer        35,253       (38,321)
  (Increase) Decrease in Prepaid Expense                 (112,500)      (26,504)
  (Increase) Decrease in Deposits                         687,487       755,717
  Increase (Decrease) in Accrued Expenses                 (74,806)     (366,041)
  Increase (Decrease) in Accounts Payable                (201,429)      (71,684)
  Increase (Decrease) in Interest on Notes Payable         (3,637)            -
  Increase (Decrease) in Customer Deposits               (295,183)   (1,897,779)
  Increase (Decrease) in Taxes Payable                   (103,548)            -
  (Increase) Decrease in Cash Pledged                           -         5,329
                                                     ------------- -------------
     Net Cash (Used) by Operating
     Activities                                        (1,458,733)     (836,692)

Cash Flows from Investing Activities
------------------------------------
 Purchase of Fixed Assets & Intangibles                  (248,245)   (1,499,158)
                                                     ------------- -------------
     Net Cash Provided (Used) by
     Investing Activities                                (248,245)   (1,499,158)



</TABLE>

                                 Continued
                                    F-9
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                     Consolidated Statements of Cash Flows
                         For the Years Ended December 31
<TABLE>
<CAPTION>

                                                           2000         1999
                                                     ------------- -------------
<S>                                                 <C>           <C>
Cash Flows from Financing Activities
------------------------------------
 Sale of Common Stock (Net)                          $  1,177,046  $    472,274
 Payment on Long Term Debt                                (31,250)            -
 Increase (Decrease) in Notes Payable                     333,569       324,566
                                                     ------------- -------------
  Net Cash Provided by Financing Activities             1,479,365       796,840
                                                     ------------- -------------
     Increase (Decrease) in Cash                         (227,613)   (1,539,010)

     Cash at Beginning of Period                          242,934     1,781,944
                                                     ------------- -------------
     Cash at End of Period                           $     15,321  $    242,934
                                                     ============= =============
Disclosures from Operating Activities
-------------------------------------
 Interest                                            $     13,298  $     19,504
 Taxes                                                          -             -

Significant Non Cash Transactions
---------------------------------

During 2000, the Company issued 177,417 shares of common stock in exchange for
consulting services rendered.  The cost of the services has been charged to
operations, and additional paid-in capital has been increased by $181,734,
representing the excess of the cost of the services over the par value of the
common stock issued.

During the year, the company issued 1,557,386 shares of common stock to purchase
fixed assets and intangibles.  Additional paid-in capital has been increased by
$2,940,388, representing the excess of the cost of the assets over the par value
of the common stock.

On December 31, 2000, a stockholder of the company converted a note due to him
of $118,308, for 473,232 shares of common stock.  Accordingly, $117,735,
representing the principal amount plus accrued interest has been transferred to
additional paid-in capital.


</TABLE>

 The accompanying notes are an integral part of these financial statements
                                    F-10
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                 Notes to Consolidated Financial Statements

NOTE 1 - Corporate History
--------------------------

The Company was organized on December 2, 1968, under the laws of the state
of California as Acquatic Systems, Inc.  On June 27, 1989, the Company
merged with Country Maid, Inc., a Nevada Corporation, the Corporate
domicile was changed to the state of Nevada.  On September 18, 1992, the
name of the Company was changed to The Quantum Group, Inc.  On March 26,
2001, the Company filed an Amendment to the Articles of Incorporation
changing it's name to Advanced Recycling Sciences, Inc.  The Company is
registered and qualified to do business in the state of California.

NOTE 2 - Significant Accounting Policies
----------------------------------------

A.   The Company uses the accrual method of accounting.
B.   Revenues and directly related expenses are recognized in the period
     when the goods are shipped to the customer.
C.   The Company considers all short term, highly liquid investments that
     are readily convertible, within three months, to known amounts as cash
     equivalents.  The Company currently has no cash equivalents.
D.   Primary Earnings Per Share amounts are based on the weighted average
     number of shares outstanding at the dates of the financial statements.
     Fully Diluted Earnings Per Shares shall be shown on stock options and
     other convertible issues that may be exercised within ten years of the
     financial statement dates.
E.   The inventory is stated at the lower of cost or market.  The inventory
     is a single recycling system that the Company intends to sell as a
     system.  The Company is currently pursuing several prospects to sell
     the system.
F.   Consolidation Policies:    The accompanying consolidated financial
     statements include the accounts of the company and its majority -
     owned subsidiaries. Intercompany transactions and balances have been
     eliminated in consolidation.
G.   Foreign Currency Translation / Remeasurement Policy:   Assets and
     liabilities that occur in foreign countries are recorded at historical
     cost and translated at exchange rates in effect at the end of the
     year.  Income Statement accounts are translated at the average
     exchange rates for the year. Translation gains and losses shall be
     recorded as a separate line item in the equity section of the
     financial statements.
H.   Depreciation:   The cost of property and equipment is depreciated over
     the estimated useful lives of the related assets. The cost of
     leasehold improvements is depreciated (amortized) over the lesser of
     the length of the related assets or the estimated lives of the assets.
     Depreciation is computed on the straight line method for reporting
     purposes and for tax purposes.
I    Issuance of Subsidiary's Stock: The Company has elected to account for
     shares issued by its subsidiary as an equity transaction.
J.   Use of 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 reported
     amounts of revenues and expenses during the reporting period.  Actual
     results could differ from those estimates.

                                    F-11
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                 Notes to Consolidated Financial Statements

NOTE 2 - Significant Accounting Policies
----------------------------------------

K.   As permitted by SFAS #123 "Accounting for Stock-Based Compensation,"
     the Company has elected to account for the stock option plans as a
     compensation cost when options were issued at equal to or more than
     fair market value.

NOTE 3 - Notes Payable
----------------------
<TABLE><CAPTION>
The Company has the following notes payable obligations             2000
                                                               ------------
<S>                                                           <C>
Note payable to bank due April 29, 2003, plus interest
  payable annually at 12.32%, secured by the equipment.        $    35,649
Note payable to bank due April 29, 2002, plus interest
  payable annually at 12.32%, secured by the equipment.             12,524
Various unsecured short term notes payable, non interest
  bearing, due on demand                                           170,250
Short term note payable to a Venture Capital Group,
  (Germany) 6% interest rate, due on demand                        424,740
                                                               ------------
     Total                                                         643,163
     Less Current Maturities                                        27,548
                                                               ------------
     Total Notes Payables                                      $   615,615
                                                               ============
</TABLE>
Following are maturities of long-term debt for each of the next five years;
<TABLE><CAPTION>
       <S>           <C>
          2001        $ 622,538
          2002           19,065
          2003            1,560
          2004                -
          2005                -
                      ----------
          Total       $ 643,163
                      ==========
</TABLE>
NOTE 4 - Operating Leases
-------------------------

On March 1, 2000, the Company renewed its lease agreement to lease an
industrial condominium in a multi-tenant building for use as its principal
executive office.  The Company pays $3,821 per month for a 4,495 square
foot facility.  The lease expires on February 28, 2002 and has a renewal
option for an additional year.  The building is located at Park Irvine
Business Center, 14771 Myford Road, Building B, Tustin, California 92780.
The space the Company is leasing is sufficiently large enough to
accommodate all of its administrative and storage needs.  Prior to March 1,
2000, the Company rented the same facility on a month to month arrangement.
<TABLE><Capital>

     Total Lease Commitments              Year       Amount
     <S>                                 <C>    <C>
                                          2001    $  45,852
                                          2002        7,642
                                                  ----------
     Total                                        $  53,494
                                                  ==========
</TABLE>                            F-12
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                  Notes to Consolidated Financial Statements

NOTE 5 - Depreciation
---------------------
The Company capitalizes the purchase of equipment and fixtures for major
purchases in excess of $1,000 per item.  Capitalized amounts are
depreciated over the useful life of the assets using the straight-line
method of depreciation.

Scheduled below are the assets, costs and accumulated depreciations at
December 31, 2000 and 1999.
<TABLE>
<CAPTION>
                           December 31,           Depreciation           Accumulated
                         2000        1999            Expenses           Depreciation
Assets                   Cost        Cost        2000      1999        2000       1999
---------------------------------------------------------------------------------------
<S>               <C>        <C>          <C>        <C>        <C>         <C>
Furniture &
 Fixtures          $   33,339 $    66,780  $   4,224  $   8,252  $  10,551   $   9,626
Equipment           1,732,639   1,414,664    252,148    121,900    374,048                    121,900
Vehicle                81,485      81,485     16,297     10,387     27,385      11,088
Website                 9,650       9,650      3,217      1,608      4,825       1,608
                   --------------------------------------------------------------------
  Balance          $1,857,113  $1,572,579  $ 275,886  $ 142,539  $ 416,809   $ 144,222
                   ====================================================================
</TABLE>

NOTE 6 - Related Party Transactions
-----------------------------------

     In August 1998 and January 1999, the Company loaned $30,000 and
$10,000 respectively, to John Pope, a director and officer of the Company.
Both notes are at an interest rate of 9% per annum.  Both notes have been
extended and the balance of $15,000 is due and payable on December 31,
2001.

     In August 1999, the Company loaned $25,000 to Keith Fryer, a director
and officer of the Company.  The note is at an interest rate of 9% per
annum.  The due date of this note was  extended and the balance of $19,000,
is due and payable on December 31, 2001.

     There were no other related party transactions during 2000.

     The Company accrued and paid interest on the two notes during the 2000
year.

     In 2000, Officers of the Company loaned the Company a total of
$64,000.  The note is non interest bearing and is due on demand.



                                    F-13
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                       Notes to Financial Statements

NOTE 7 - Net Operating Loss Carryforward for Income Tax Purposes
----------------------------------------------------------------

The Company has incurred losses that can be carried forward to offset
future earnings if conditions of the Internal Revenue Codes are met.  These
losses are as follows:

<TABLE>
<Caption

                  Year of                             Expiration
                    Loss              Amount                Date
                 --------          ----------         -----------
                <S>               <C>                <C>
                    1992           $ 440,338                2007
                    1993                 -0-                2008
                    1994             198,818                2009
                    1995             782,181                2010
                    1996             241,809                2011
                    1997                 -0-                2017
                    1998              80,058                2018
                    1999           2,642,390                2019
                    2000           2,067,883                2020
</TABLE>

     The Company has adopted FASB 109 to account for income taxes.  The
Company currently has no issues that create timing differences that would
mandate deferred tax expense.  Net operating losses would create possible
tax assets in future years.  Due to the uncertainty as to the utilization
of net operating loss carryforwards an evaluation allowance has been made
to the extent of any tax benefit that net operating losses may generate.
<TABLE>
<CAPTION>
                                                        2000          1999
                                                ------------- -------------
<S>                                            <C>           <C>
Current Tax Asset Value of Net Operating
Loss Carryforwards at Current Prevailing
Federal Tax Rate                                $  1,882,343  $  1,120,505
Evaluation Allowance                            (  1,882,343) (  1,120,505)
                                                ------------- -------------
     Net Tax Asset                              $          -  $          -
                                                ============= =============
     Current Income Tax Expense                 $          -  $          -
     Deferred Income Tax Benefit                           -             -

</TABLE>

                                    F-14
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                 Notes to Consolidated Financial Statements

NOTE 8 - Options / Warrants for Purchase of Common Stock
--------------------------------------------------------
The Company has adopted two stock option incentive plans which provides for
the grant of options to officers, consultants, and employees to acquire
shares of the Company's common stock at a purchase price equal to or
greater than fair market value as of the date of the grant.  Options are
exercisable six months after grant and expire five years from the date of
the grant.  The two plans adopted are for the years 1999 and 2000.  Each
plan calls for a total of 200,000 shares to be held for each plan.  A
summary of activity follows:
<TABLE>
<CAPTION>
1999 Stock Option Plan                  2000                   1999
                              ---------------------- ----------------------
                                           Weighted               Weighted
                                  Number    Average     Number     Average
                                      Of   Exercise         of    Exercise
                                  Shares      Price     Shares       Price
                               ---------- ---------- ----------  ----------
<S>                           <C>        <C>        <C>         <C>

Outstanding at beginning
 of year                         146,594  $    2.89          -   $       -
Granted                                -          -    146,594        2.89
Exercise                               -          -          -           -
Canceled                               -          -          -           -
                               ---------- ---------- ----------  ----------
Outstanding at end of year       146,594  $    2.89    146,594   $    2.89
                               ========== ========== ==========  ==========
Exercisable at end of year       146,594       2.89    146,594        2.89
                               ========== ========== ==========  ==========
2000 Stock Option Plan
                                           Weighted
                                  Number    Average
                                      Of   Exercise
                                  Shares      Price
                               ---------- ----------
Outstanding at beginning
 of year                               -  $       -
Granted                          153,168       2.61
Exercise                               -          -
Canceled                               -          -
                               ---------- ----------
Outstanding at end of year       153,168  $    2.61
                               ========== ==========
Exercisable at end of year       153,168       2.61
                               ========== ==========               </TABLE>
Compensation expense of $19,146 was recognized in the year 2000 and $39,067
in 1999.

The fair value of each option grant was estimated at the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions:
<TABLE><CAPTION>                                       2000         1999
                                                    ----------   ----------
     <S>                                           <C>          <C>
     Risk-free interest rate                             9.0%        8.38%
     Dividend yield                                        0%           0%
     Volatility                                           50%          50%
     Average expected term (years to exercise date)       1/2          1/2
                                                    ----------   ----------
                                    F-15                           </TABLE>

            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                 Notes to Consolidated Financial Statements

NOTE 9 - Options / Warrants for Purchase of Common Stock
--------------------------------------------------------

Employee stock options outstanding and exercisable under these plans as of
December 31, 2000 were:
<TABLE><CAPTION>
                                   Outstanding                Exercisable
                         ---------------------------   --------------------
2000 Stock Option Plan:
                                              Weighted
                                               Average
                                  Weighted   remaining            Weighted
              Range of             Average Contractual             Average
              Exercise            Exercise        Life            Exercise
                 Price   Options     Price      (Years)  Options     Price
              --------- --------- ---------   --------- --------- ---------
             <C>       <C>       <C>         <C>       <C>       <C>
              $   2.89   146,594   $ 2.625        3.91   146,594  $   0.89
<CAPTION>
Employee stock options outstanding and exercisable under these plans as of
December 31, 1999 were:
                                   Outstanding                Exercisable
                         ---------------------------   --------------------
1999 Stock Option Plan:
                                              Weighted
                                               Average
                                  Weighted   remaining            Weighted
              Range of             Average Contractual             Average
              Exercise            Exercise        Life            Exercise
                 Price   Options     Price      (Years)  Options     Price
              --------- --------- ---------   --------- --------- ---------
             <C>       <C>       <C>         <C>       <C>       <C>
              $   2.89   146,594   $ 2.625        3.91   146,594  $   0.89

NOTE 10 - Other Comprehensive Income/Loss
-----------------------------------------
As of January 1, 1999, the Company adopted Statement of Financial
Accounting Standards  (SFAS) No., 130, "Reporting Comprehensive Income".
SFAS No., 130, establishes new rules for the reporting and display of
comprehensive income and its components; however, the adoption of this
statement had no impact on the Company's net income or shareholders'
equity.  SFAS No., 130 requires other comprehensive income to include
foreign currency translation adjustments, minimum pension liability
adjustments, and unrealized gain or loss from available-for-sale
securities.

A summary of the components of other comprehensive income for the year
ended December 31, 2000 is as follows;

</TABLE>
<TABLE><CAPTION>
                                        Before-Tax      Income    After-Tax
                                            Amount         Tax       Amount
                                        ----------  ----------   ----------
<S>                                    <C>         <C>          <C>
Foreign Currency Translation            $  80,631   $       -    $  80,631
Net change in unrealized gain (loss)
  on available-for-sale securities              -           -            -
                                        ----------  ----------   ----------
Other Comprehensive Income              $  80,631   $       -    $  80,631
                                        ==========  ==========   ==========
</TABLE>
                                    F-16

            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                       Notes to Financial Statements

NOTE 11 - Capital Leases
------------------------

The Company is the lessee of a 1999 Isuzu Truck under a capital lease
expiring September 30, 2004.  The assets and liabilities under this lease
are recorded at the fair market value of the asset.  The asset is
depreciated over the related lease term.  Deprecation of the asset under
capital lease is included in depreciation expense for 2000.

Minimum future lease payments under capital leases as of December 31, 2000,
for each of the next five year and in the aggregate are:
<TABLE><CAPTION>
    <S>                               <C>
     2001                               $   9,499
     2002                                   9,499
     2003                                   9,499
     2004                                   7,124
     2005                                       -
                                        ----------
     Total Lease Payments               $  35,621
     Less Amount Representing Interest     (4,720)
                                        ----------
     Net Lease Payments                 $  30,901
                                        ==========
</TABLE>
NOTE 12 - Net Earnings (Loss) Per Share
---------------------------------------

Basic earnings (loss) per common share (BEPS) is based on the weighted-
average number of common shares outstanding during each period.  Diluted
earnings (loss) per common shares are based on  shares outstanding
(computed as under BEPS) and dilutive potential common shares.  Shares from
the exercise of the outstanding options were not included in the
computation of diluted loss per share, because their inclusion would have
been antidilutive for the year ended December 31, 2000 and 1999.

The following data shows the shares used in the computing loss per common
share including dilutive potential common stock;
<TABLE>
    <S>                                                         <C>
     Common shares outstanding during the entire period          9,940,519
     Weighted-average shares paid for, but not
       issued during the period.                                         -
                                                               ------------
     Weighted-average number of common shares used in
       basic EPS                                                 9,940,519
       dilutive effect of options                                        -
                                                               ------------
     Weighted-average number of common shares and dilutive
       potential common shares used in diluted EPS               9,940,519
</TABLE>                                                       ============

     Shares from the exercise of the outstanding options were not included
in the computation of diluted loss per share because their inclusion would
have been antidilutive for the year ended December 31, 2000.

                                    F-17

<PAGE>
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                 Notes to Consolidated Financial Statements

NOTE 12 - Equipment Inventory
-----------------------------

During 2000, the Company purchased the equipment of Fonds Concepts
(Atzendorf) through the issuance of 577,386 shares of Quantum Group's
common stock, and the application of deposits on inventory.  Equipment
inventory of $1,835,211 shown on the balance sheet as a current asset
represents the inventory acquired that is expected to be placed in service
at the Poseidon Products GmbH tire recycling facility in Penkun,
Mecklenburg-Vorpommerm.  The Company anticipates that the assets will be
placed in  service, and the plant will be fully operational during 2001.

NOTE 13 - Patent Rights
-----------------------

On May 24, 2000, the Company purchased the patent rights to the
Tires2Oil technology.  This technology was acquired from UTEK Corporation
by issuing 980,000 shares of Quantum Group, Inc's common stock.  Patent
rights of $1,715,000 shown on the balance sheet as a non current asset
represents the rights acquired to the technology that will be used in the
future.

NOTE 14 - SuperCollider  Impact 500 Technology
----------------------------------------------

During 1997, the Company  worked on the in-house development of a
compact SuperCollider machine designed to take large mesh size crumb rubber
produced by the EGS System and buffings from tire retreading and pulverize
it into fine powder in order to open up several new markets.  These markets
include extrusion products, press products and products combining super-fine
crumb and plastic.  The Company finalized the engineering for the
SuperCollider and concluded the development, prototype work and initial
performance testing during 1998 and early 1999.  After  testing the initial
prototype, the Company decided not to sell the SuperCollider into the
market until a number of improvements could be made.  During 1999, the
Company made those improvements and began additional testing.  The first
SuperCollider was  installed and operational at the Donovan Correctional
Facility.  It has now been removed and the Company anticipates it will be
shipped and installed at the Poseidon Facility.

NOTE 15 - License Rights
------------------------

The Company is currently renegotiating its exclusive worldwide license
agreement with Faru GmbH., Dresden, Germany ("Faru").  Faru is the patent
holder of the REVULCON(R) technology.  This technology enables the
production of high density, smooth finish rubber moldings and extrusions,
including new tires, by adding REVULCON(R) compound.  This is done by a
process of devulcanizing the rubber, returning it to a state where it can
be utilized in new products and re-vulcanized.  The reactivated rubber
waste can be processed without further additives to rubber products like
mats, plates, solid rubber tires, components for fall protection, elements
for sound and vibration deadening, blocking and insulating layers against
heat and moisture.  Profiles and other goods can be made by extrusion or
injection molding when the revulcanized rubber is mixed with fresh rubber
or plastics.  While there are other companies developing and marketing
competing technology, the REVULCON(R) technology is the only one that does
not introduce or use of chemicals in its process.

                                    F-18


            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                 Notes to Consolidated Financial Statements

NOTE 15 - License Rights
------------------------

The cost and associated amortization of the rights of the license is
as follows;
<TABLE>
<CAPTION>
                                     License   Amortization    Accumulated
Licensor                                Cost   Expense 2000   Amortization
--------------------------------------------------------------------------
<S>                             <C>             <C>           <C>
Rothbury                         $   497,547     $   49,756    $   232,189
Faru GmbH                            150,000         15,000         37,500
                                 ------------------------------------------
     Total                       $   647,547     $   64,756    $   269,689
                                 ==========================================
</TABLE>

NOTE 16 - Joint Venture
-----------------------

Poseidon Products GmbH. ("Poseidon") was established by the Company
jointly with SteG, a German Government sponsored company.  Through
Poseidon, the Company will finish construction of and operate a tire
recycling facility in Penkun, in the state of Mecklenburg-Vorpommern.  This
facility will produce crumb rubber and manufacture a wide range of value-
added aftermarket products using technologies licensed or developed by the
Company.

Ground breaking on the Poseidon facility occurred on September 17,
1998.  Site improvements were begun and foundations for the plant were
commenced.  Due to difficulties in securing an accompanying bank to sponsor
the project, construction of the facility has been delayed.  The Company
continues to negotiate funding for the facility with several German banks,
and hopes to have funding in place during the second quarter of 2001.  The
Company has obtained extensions on both the EU grants and the low interest
funding commitment from the government of the state of Mecklenburg-Vorpommern.

Poseidon currently has an office in Penkun and is developing a
marketing plan to introduce and sell its manufactured products in Germany
and Europe.  Assuming sufficient funding is obtained, the Company believes
the Poseidon facility will be completed and operational by early next year.
The Company expects to have a clearer understanding as to when the Poseidon
facility will be finished and operational by the end of the second quarter
of 2001.

As the Poseidon facility will incorporate much of the tire recycling
equipment and technology the Company has to offer, the Company intends to
use the Poseidon facility as a showcase for future full scale tire
recycling plants.



                                    F-19

            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                 Notes to Consolidated Financial Statements

NOTE 17 - Legal Proceedings
---------------------------

The litigation between Eurectec and Tyre's Ecology S.r.l., in the Court in
Pistoia, Italy, is ongoing.  The next hearing scheduled in this matter has
been set for January 10, 2002.  The parties are currently attempting to
negotiate a settlement in this matter.

The Company has initiated a lawsuit against Veplas Manuracturing, Ltd., and
is seeking the return of the purchase price of equipment.  The Company
claims misrepresentation on the acidity and performance of the equipment
purchased from Veplas.  Veplas has made various counterclaims against the
Company.  These claims include a claim for $27,081, which Veplas claims is
the balance due pursuant to the Agreement signed between the parties, a
claim for $2,387 for shipping costs paid by Veplas on the Company's behalf;
and unspecified claims for costs for special damages.  The Company refutes
Veplas' counterclaims and will continue to  pursue this matter.

NOTE 18 - Principles of Consolidation
-------------------------------------
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" was issued for fiscal year beginning after
December 31, 1997, with earlier application permitted.  The Company has
elected to adopt SFAS No. 131, effective with the fiscal years ended
December 31, 1998.  Adoption of SFAS No. 131 did not have a material impact
on the Company's financial statements.

The Company's subsidiaries are as described as follows;

     Quantum Environmental Solutions & Techonologies, Inc., (QEST)
     -------------------------------------------------------------

     QEST is a wholly owned subsidiary of Advanced Recycling Sciences, Inc.
QEST was established pursuant to the laws of the State of Nevada on April
21, 1997.  QEST was put into active operations during the fourth quarter of
1999.  The primary responsibility of QEST is the marketing and sales of
tire recycling and aftermarket product equipment systems.

     Advanced Surfacing Technologies, Inc.  ("AST")
     ----------------------------------------------

     AST was incorporated in Nevada in May 1997 as Quantum Modified Asphalt
Xcetera, Inc., a wholly owned subsidiary of the Company.  The name was
changed to Advanced Surfacing Technologies, Inc., in March 2001.



                                    F-20

<PAGE>
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                 Notes to Consolidated Financial Statements

NOTE 18 - Principles of Consolidation
-------------------------------------

     The Company believes there are opportunities in the asphalt paving
industry.  Among those opportunities, is a potentially large market for
crumb rubber to be used in producing crumb rubber modified ("CRM") asphalt
paving.  This will include the use of specialized mobile equipment for the
mixing of crumb rubber and asphalt at hot mix plants, overseeing technology
transfer programs to international clients, on-site project management and
seminars to educate both public and private sector engineers about the
Company's products and services.  Through AST, the Company will seek to
exploit these opportunities.  AST will also research, develop and market
other technologies in the asphalt paving industry, including the worldwide
exclusive licence to certain ground surface applications of a novel ice
adhesion modification or "de-icing" technology the Company received when it
acquired Technology Development, Inc., from UTEK Corporation,
http://www.utekcorp.com.

     Technology Development, Inc.  ("TDI")
     -------------------------------------

     TDI was acquired by the Company in February 2001.  TDI will be
absorbed into AST, which will oversee the development and, if appropriate,
commercialization of the ground surface de-icing technology.

     Tires2Oil, Inc.
     ---------------

     Tires2Oil, Inc., is a wholly owned subsidiary of the Company.
Tires2Oil(TM) was formed as a Nevada corporation on January 17, 2001.  The
primary responsibility of Tires2Oil(TM) will be the continued research,
development and exploitation of certain super critical fluid ("SCF") tire
recycling technology recently acquired by the Company.  The SCF technology
is used to break down tires into a clean form of synthetic crude oil which
can be easily upgraded in existing oil refineries.  This technology has
been proven on a table top scale.  Tires2Oil(TM) will focus its initial
efforts into determining whether this technology can be feasible on a
commercial scale.

     Advanced Environmental Technologies, Limited ("AET")
     ----------------------------------------------------

     AET is a wholly owned subsidiary of the Company.  AET was incorporated
pursuant to the laws of the province of Alberta, Canada on April 21, 1997
as QEST Industries, Inc.  The Company changed the name in March 2001.  AET
will provide engineering support services to tire recycling facilities in
both North and South America.  These services will be provided via the
Company's strategic alliance with Sultech Engineering, a Calgary based
engineering concern.  The Company  pays Sultech on an as needed, job by job
basis.



                                    F-21

<PAGE>
            Advanced Recycling Sciences, Inc., and Subsidiaries
            (Formerly The Quantum Group, Inc., and Subsidiaries)
                 Notes to Consolidated Financial Statements

NOTE 18 - Principles of Consolidation
-------------------------------------

     QCAL, Inc.
     ----------

     "QCAL" is a wholly owned subsidiary of The Quantum Group, Inc.  QCAL
rescinded its joint venture agreement with the State of California
Department of Corrections ("CDC") and has closed down its tire crumbing
facility at the Richard J. Donovan Correctional Facility at Rock Mountain
in San Diego County, California ("Donovan Correctional Facility").  QCAL
made the decision to close down the San Diego plant due to insufficient
funds to purchase all of the equipment necessary to manufacture crumb
rubber products and the fact that the installation of the appropriately
sized granulator for shredding and granulating tires proved to be
impractical at the prison facility.  In July 2000, Thomas Driscoll resigned
as an officer of the Company.  QCAL has completed its exit from the Donovan
Correctional Facility, and all obligations of the Company relative thereto
have been satisfied in full.

     The Company plans to ship the Press and the C3000 granulator installed
at the Donovan Correctional Facility to Germany to be installed at the
Posiedon Facility.

     With the completion of its exit from the Donovan Correctional
Facility, the Company anticipates it will discontinue all operations in its
QCAL subsidiary.

     Modified Asphalt Technologies, Inc. ("MAT")
     -------------------------------------------

      In January 2001, the Company and MAT mutually agreed to rescind the
MAT Purchase Agreement entered into by the parties in January 2000.  The
Company no longer owns any interest in MAT.

     Eurectec, Inc.  ("Eurectec")
     ----------------------------

     Eurectec is a wholly owned subsidiary of The Quantum Group, Inc.
Through Eurectec, the Company entered into a certain license agreement with
CISAP SpA of Italy.  Unfortunately, CISAP could not provide equipment that
operated to its represented specifications.  As a result, the Company no
longer markets or sells CISAP equipment, nor does it intend to do so in the
future.  The Company is currently involved in litigation with CISAP.
Beyond dealing with the CISAP litigation, the Company anticipates little,
if any business will be transacted through Eurectec in the future.

                                    F-22