Encompass Group Affiliates 10QSB 2007 Q1 Quarterly report (small business)

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

(check one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2007

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE EXCHANGE ACT OF 1934

Commission File Number 000-30486

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.

(Exact name of small business issuer as specified in its charter)

Florida

(State or other jurisdiction

of incorporation or organization)

65-0738251

(IRS Employer Identification No.)

420 Lexington Avenue, New York, NY 10170

(Address of principal executive offices)

(646)-227-1600

(Issuer’s telephone number)

Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months

(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No x

As of May 1, 2007, there were 4,997,711,570 shares of the registrant’s no par value

common stock issued and outstanding.

Transmittal Small Business Disclosure Format (check one):

Yes o No x

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.

INDEX TO FORM 10-QSB

Part I-Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets As Of March 31, 2007 (Unaudited) and June 30, 2006	1

	Condensed Consolidated Statements Of Operations For The Three And Nine Months Ended March 31, 2007 and 2006 (Unaudited)	2

	Condensed Consolidated Statement Of Stockholders’ Deficiency For The Nine Months Ended March 31, 2007 (Unaudited)	3

	Condensed Consolidated Statements Of Cash Flows For The Nine Months Ended March 31, 2007 and 2006 (Unaudited)	4

	Notes To Condensed Consolidated Financial Statements As Of March 31, 2007 (Unaudited)	5

Item 2.	Management’s Discussion And Analysis Or Plan Of Operation	11

Item 3.	Controls And Procedures	20

Part II-Other Information

Item 1.	Legal Proceedings	21

Item 2.	Unregistered Sales of Equity Securities And Use Of Proceeds	21

Item 3.	Defaults Upon Senior Securities	21

Item 4.	Submission Of Matters To A Vote Of Security Holders	21

Item 5.	Other Information	21

Item 6.	Exhibits	21

As used herein, the terms the “Company,” “Advanced Communications Technologies,” ”ACT,” “we,” “us” or “our” refer to Advanced Communications Technologies, Inc., a Florida corporation.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in the "Management’s Discussion and Analysis or Plan of Operation" and elsewhere in this quarterly report constitute "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act")) relating to us and our business, which represent our current expectations or beliefs including, but not limited to, statements concerning our operations, performance, financial condition and growth. All statements, other than statements of historical facts, included in this quarterly report that address activities, events or developments that we expect or anticipate will or may occur in the future, including such matters as our projections, future capital expenditures, business strategy, competitive strengths, goals, expansion, market and industry developments and the growth of our businesses and operations are forward-looking statements. Without limiting the generality of the foregoing, words such as "may,” “believes,” ”expects,” "anticipates,” "could,” "estimates,” “grow,” “plan,” "continue," “will,” “seek,” “scheduled,” “goal” or “future” or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel, variability of quarterly results, our ability to continue our growth strategy and competition, certain of which are beyond our control. Any or all of our forward-looking statements may turn out to be wrong. They may be affected by inaccurate assumptions that we might make or by known or unknown risks or uncertainties. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the forward-looking statements.

Because of the risks and uncertainties associated with forward-looking statements, you should not place undo reliance on them. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2007			June 30, 2006
	(Unaudited)			(Note 1)
ASSETS
Current Assets
Cash and cash equivalents	$	544,749		$	756,093
Accounts receivable, net of allowance for doubtful
accounts of $9,419 and $4,634, respectively		590,590			372,273
Replacement parts and equipment		423,975			414,425
Prepaid expenses and other current assets		102,875			119,961
Total Current Assets		1,662,189			1,662,752

Property and equipment, net		215,898			228,361
Other Assets
Other assets		7,025			7,601
Deferred acquisition costs		782,975			301,921
Licensed Intangibles and rights		400,000			400,000
Goodwill		2,624,388			2,624,388
Total Other Assets		3,814,388			3,333,910

TOTAL ASSETS	$	5,692,475		$	5,225,023

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

LIABILITIES
Current Liabilities
Notes payable and capitalized lease obligation	$	638,649		$	965,909
Accounts payable and accrued expenses		3,233,558			1,993,193
Total Current Liabilities		3,872,207			2,959,102
Capitalized lease obligation, less current portion		—			15,340
Series A convertible preferred stock, $.01 par value		3,006,200			3,565,200
Series B convertible preferred stock, $.01 par value		40,000			60,000
Series A-1 convertible preferred stock, $.01 par value		340,000			—
TOTAL LIABILITIES		7,258,407			6,599,642

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
Common stock, no par value, 5,000,000,000 shares authorized,
4,997,711,570 and 4,167,927,006 shares issued and outstanding as of March
31, 2007 and June 30, 2006, respectively		31,072,040			30,475,040
Additional paid-in capital		1,047,421			1,195,374
Accumulated deficit		(33,685,393	)		(33,045,033	)
Total Stockholders' Deficiency		(1,565,932	)		(1,374,619	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY	$	5,692,475		$	5,225,023

See accompany notes to condensed consolidated financial statements

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For The Three Months Ended						For The Nine Months Ended
	March 31,						March 31,
	2007			2006			2007			2006

NET SALES	$	2,617,443		$	2,552,055		$	6,776,813		$	7,043,179
COST OF SALES		1,802,159			1,656,386			4,521,989			4,598,034
GROSS PROFIT		815,284			895,669			2,254,824			2,445,145

OPERATING EXPENSES
Depreciation		16,990			19,010			53,773			54,168
Professional and consulting fees		115,406			290,678			332,585			548,447
Selling, general and administrative expenses		957,506			849,720			2,419,776			2,714,948
TOTAL OPERATING EXPENSES		1,089,902			1,159,408			2,806,134			3,317,563

Loss From Operations		(274,618	)		(263,739	)		(551,310	)		(872,418	)

OTHER EXPENSE
Other expense		(50,000	)		—			(50,000	)		—
Interest expense, net		(19,401	)		(20,882	)		(39,050	)		(61,857	)
TOTAL OTHER EXPENSE		(69,401	)		(20,882	)		(89,050	)		(61,857	)

NET LOSS	$	(344,019	)	$	(284,621	)	$	(640,360	)	$	(934,275	)

Net loss per share - basic and dilutive	$	—		$	—		$	—		$	—

Weighted average number of shares
outstanding during the period - basic and dilutive		4,976,626,376			3,605,694,811			4,763,625,689			3,341,098,360

See accompany notes to condensed consolidated financial statements

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED MARCH 31, 2007

(UNAUDITED)

	COMMON STOCK					ADDITIONAL PAID IN			ACCUMULATED
	SHARES			AMOUNT		CAPITAL			DEFICIT			TOTAL
BALANCE AT JUNE 30, 2006		4,167,927,006		$	30,475,040	$	1,195,374		$	(33,045,033	)	$	(1,374,619	)

Common stock issued on conversion of Series A preferred stock		789,784,564			559,000		—			—			559,000
Common stock issued on conversion of Series B preferred stock		20,000,000			20,000		—			—			20,000
Issuance of common stock to officers		20,000,000			18,000		13,500			—			31,500
Issuance of common stock to escrow pursuant to litigation settlement		87,500,000			—		—			—			—
Cancellation of common stock issued to escrow		(87,500,000	)		—		—			—
Accrued distribution of common shares of Herborium Group, Inc. to shareholders		—			—		(161,453	)		—			(161,453	)
Net loss for the period		—			—		—			(640,360	)		(640,360	)

BALANCE AT MARCH 31, 2007		4,997,711,570		$	31,072,040	$	1,047,421		$	(33,685,393	)	$	(1,565,932	)

See accompany notes to condensed consolidated financial statements

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Nine Months Ended
	March 31,
	2007			2006
CASH FLOWS USED IN OPERATIONS:
Net loss	$	(640,360	)	$	(934,275	)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation		53,773			54,168
Deferred compensation amortization		13,500			187,500
Allowance for doubtful accounts		4,785			22,861
Loss on sale of marketable securities		4,859			—
Stock distribution from Herborium		(1,464	)		—
Common stock issued for services		18,000			35,000
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable		(223,102	)		(330,429	)
Replacement parts and equipment		(9,550	)		(71,480	)
Prepaid expense and other current assets		1,626			(4,152	)
Increase in liabilities:
Accounts payable and accrued expenses		651,094			695,486
Interest payable		46,737			62,703
Net cash used in operating activities		(80,102	)		(282,618	)

CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of fixed assets		(41,310	)		(40,565	)
Increase in deferred acquisition costs		(126,473	)
Reimbursement of costs from PMIC bankruptcy proceeding		26,500
Proceeds from sale of marketable securities		12,641			7,500
Net cash used in investing activities		(128,642	)		(33,065	)

CASH FLOWS USED IN FINANCING ACTIVITIES:
Principal payments on notes payable and capitalized lease		(342,600	)		(15,555	)
Proceeds from sale of Series A-1 preferred stock		340,000			—
Net cash used in financing activities		(2,600	)		(15,555	)

Net decrease in cash		(211,344	)		(331,238	)

Cash and cash equivalents at beginning of period		756,093			836,876

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	544,749		$	505,638

See accompanying notes to condensed consolidated financial statements

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2007

(UNAUDITED)

NOTE 1. BASIS OF CONSOLIDATION AND SIGNIFICANT ACCOUNTING POLICIES

(A) Organization

Unless the context requires otherwise, “we”, “us”, “our” “ACT” or the “Company” refers to Advanced Communications Technologies, Inc. and its wholly and majority-owned subsidiaries on a consolidated basis.

We are a New York-based public holding company specializing in the consumer electronic aftermarket service and supply chain, known as reverse logistics. Our wholly-owned subsidiary and principal operating unit, Encompass Group Affiliates, Inc. a Delaware corporation ("Encompass"), acquires and operates businesses that provide office and consumer electronics repair services. Encompass owns Cyber-Test, Inc. ("Cyber-Test"), a consumer electronic equipment repair company based in Florida and our principal operating business. We are currently seeking to acquire various profitable businesses within our industry and to become a leader in the integrated technology aftermarket service and part supply industry through the acquisition of assets and companies in that industry.

Cyber-Test, a Delaware corporation and wholly-owned subsidiary of Encompass, operates as an independent service organization. Cyber-Test provides board-level repair of consumer electronic products to third-party warranty companies, OEMs, national retailers and national office equipment dealers. Service options include advance exchange, depot repair, call center support, parts and warranty management. Cyber-Test's technical competency extends from office equipment and fax machines to printers, scanners, laptop computers, monitors, multi-function units and high-end consumer electronics, such as PDAs, Blackberries and digital cameras. Programs are delivered nationwide through proprietary systems that feature real-time EDI, flexible analysis tools and repair tracking.

(B) Basis of Accounting

The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company incurred a net loss of $640,360 for the nine months ended March 31, 2007 and $573,841 for the year ended June 30, 2006. The Company had a working capital deficiency of $2,210,018 and $1,296,350 as of March 31, 2007 and June 30, 2006, respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon it achieving profitability and generating sufficient cash flows to meet its obligations as they come due. Management is pursuing additional capital and debt financing and the acquisitions of profitable businesses. However, there is no assurance that these efforts will be successful. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

(C) Financial Statement Presentation And Principles Of Consolidation

The consolidated financial statements include the Company and all of its wholly-owned subsidiaries. The Company consolidates all majority-owned and controlled subsidiaries, uses the equity method of accounting for investments in which the Company is able to exercise significant influence, and uses the cost method for all other investments. All significant intercompany transactions have been eliminated in consolidation.

(D) Interim Financial Statements

The financial statements as of March 31, 2007 and for the three and nine months ended March 31, 2007 and 2006 are unaudited but in the opinion of management the consolidated financial statements include all adjustments consisting of normal accruals necessary for a fair presentation of financial position and the comparative results of operation and cash flows. Results of operations for interim periods are not necessarily indicative of those to be achieved or expected for the entire year. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-KSB for the fiscal year ended June 30, 2006. The June 30, 2006 balance sheet has been derived from the audited financial statements as of that date.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2007

(UNAUDITED)

(E) Use of Estimates

The preparation of the consolidated financial statements of the Company in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. In particular, significant estimates are required to value replacement parts and equipment and estimate the future cost associated with the Company’s warranties. If the actual value of the Company’s replacement parts and equipment differs from these estimates, the Company’s operating results could be adversely impacted. The actual results with regard to warranty expenditures could also have an adverse impact on the Company if the actual rate of repair failure or the cost to re-repair a unit is greater than what the Company has used in estimating the warranty expense accrual.

(F) Allowance For Doubtful Accounts

We make judgments as to our ability to collect outstanding trade receivables and provide allowances for the portion of receivables when collection becomes doubtful. Provisions are made based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided at differing rates, based upon the age of the receivable. In determining these percentages, we analyze our historical collection experience and current economic trends. If the historical data we use to calculate the allowance provided for doubtful accounts does not reflect our future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed and the future results of operations could be materially affected.

(G) Replacement Parts and Equipment

Replacement parts and equipment consist primarily of repair parts, consumable supplies for resale and used machines that are held for resale, and are stated at the lower of weighted average cost or market. The weighted average cost of replacement parts and equipment approximates the first-in, first-out (“FIFO”) method. Management performs periodic assessments to determine the existence of obsolete, slow-moving and non-usable replacement parts and equipment and records necessary provisions to reduce such replacement parts and equipment to net realizable value.

(H) Property and Equipment

Property and equipment are stated at cost. Assets are depreciated using the straight-line method based on the following estimated useful lives:

Machinery and equipment	3 to 7 years
Furniture and fixtures	5 to 7 years
Leasehold improvements	Estimated useful life or length of the lease, whichever is shorter

Maintenance and repairs are charged to expense when incurred.

(I) Goodwill

In accordance with SFAS No. 141, the Company allocates the purchase price of its acquisitions to the tangible assets, liabilities and intangible assets acquired based on their estimated fair values. The excess purchase price over those fair values is recorded as “Goodwill.” The fair value assigned to intangible assets acquired is either based on valuations prepared by management using certain estimates and assumptions or the values negotiated at arms-length between the Company and the seller of the acquired assets. In accordance with SFAS No. 142, goodwill and purchased intangibles with indefinite lives acquired after June 30, 2001 are not amortized, but are reviewed periodically for impairment. Purchased intangibles with finite lives will be amortized on a straight-line basis over their respective useful lives.

(J) Revenue Recognition

The Company recognizes revenue from the sale of refurbished computer equipment and related products upon delivery of goods to a common carrier for delivery to the customer. Revenue for the repair of customer-owned equipment is recognized upon completion of the repair. The Company assumes the risk of loss due to damage or loss of products during shipment. The Company is reimbursed by the common carriers for shipping damage and lost products. The Company includes shipping costs in cost of sales. Total shipping costs included in cost of sales for the three months ended March 31, 2007 and 2006 were $495,862 and $418,584, respectively. Total shipping costs included in cost of sales for the nine months ended March 31, 2007 and 2006 were $1,188,525 and $1,115,223, respectively. The Company also sells extended warranty and product maintenance contracts. Revenue from these contracts is deferred and recognized as income on a straight-line basis over the life of the contract, which is typically for a period of one year. Service warranty and product maintenance revenue represented less than 5% of the Company’s total revenue for the three and nine months ended March 31, 2007.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2007

(UNAUDITED)

(K) Loss Per Share

Basic loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution of securities that could share in the earnings of an entity. During the three and nine months ended March 31, 2007 and 2006, shares of common stock that could have been issued upon conversion of convertible preferred stock were excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive. At March 31, 2007 and 2006, our preferred stock would have been converted into 5,677,000,000 and 1,300,000,000 additional common shares, respectively, at our then current stock prices.

(L) Concentration of Credit Risk

The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

(M) Recent Accounting Pronouncements

In December 2004 the Financial Accounting Standards Board ("FASB") issued SFAS 123, "Share-Based Payment" ("SFAS No. 123R"), which addresses the accounting for share-based payment transactions in which a company receives employee services in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company's equity instruments or that may be settled by the issuance of equity instruments. SFAS 123R supercedes APB opinion No. 25 and amends SFAS No. 95, "Statement of Cash Flows". Under SFAS 123R, companies are required to record compensation expense for all share-based award transactions measured at fair value as determined by an option valuation model. This statement is effective for fiscal years beginning after December 15, 2005. The Company adopted SFAS No. 123R on July 1, 2006 using the modified prospective method, which requires the recognition of compensation expense over the remaining vesting period for all awards that remain unvested as of June 30, 2006. The Company does not have any stock options outstanding and all stock issued in prior years vested at date of grant.

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments.” SFAS No. 155 amends FASB Statement No. 133 and FASB Statement No. 140, and improves the financial reporting of certain hybrid financial instruments by requiring more consistent accounting that eliminates exemptions and provides a means to simplify the accounting for these instruments. Specifically, SFAS No. 155 allows financial instruments that have embedded derivatives to be accounted for as a whole if the holder elects to account for the whole instrument on a fair value basis. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006. Management does not believe the adoption of SFAS No. 155 will have a material impact on the Company's financial position or results of operations.

In June 2006, the FASB issued Interpretation No. ("FIN") 48, “Accounting for Uncertainty in Income Taxes.” This interpretation of FASB Statement No. 109, “Accounting for Income Taxes,” prescribes a recognition threshold or measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In order to minimize the diversity in practice existing in the accounting for income taxes, FIN 48 also provides guidance on measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 will be effective for fiscal years beginning after December 15, 2006. Management does not believe the adoption of FIN 48 will have a material impact on the Company's financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. Management does not believe the adoption of SFAS No. 157 will have a material impact on the Company's financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115.” This Standard allows entities to voluntarily choose, at specified election dates, to measure many financial assets and financial liabilities (as well as certain non-financial instruments that are similar to financial instruments) at fair value. The election is made on an instrument-by-instrument basis and is irrevocable. If the fair value option is elected for an instrument, the Statement specifies that all subsequent changes in fair value for that instrument shall be reported in earnings. SFAS No. 159 is effective beginning on January 1, 2008. We are currently evaluating the impact this new Standard could have on our financial position and results of operations.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2007

(UNAUDITED)

NOTE 2. PREFERRED AND COMMON STOCK

On September 13, 2006, the Company amended its articles of incorporation to authorize the issuance of up to 1,000 shares of $0.01 par value Series A-1 Convertible Preferred Stock. The Series A-1 Preferred generally ranks junior to the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock (collectively “the Senior Stock”) and is senior to the Company’s common stock and all series of preferred stock other than the Senior Stock. Subject to certain adjustments, the Series A-1 Preferred is, after December 31, 2006, convertible into shares of Common Stock at a conversion price of (a) $0.01 per share, or (b) eighty percent (80%) of the average of the three (3) lowest closing bid prices of the Common Stock for the ten (10) trading days immediately preceding the date of conversion, whichever is lower. The Company may redeem the shares of Series A-1 Preferred at any time, upon notice to the holders, for a price equal to 120% of the amount paid per share (the “Liquidation Amount”), and is mandatorily redeemable upon the Company’s receipt of an aggregate of $35,000,000 through any combination of debt and equity investments and financing facilities. Upon such event, the holders may exercise the right to convert their shares of Series A-1 Preferred into shares of the Company’s common stock. The Series A-1 Preferred does not have any voting rights.

On September 13, 2006, the Company sold 340 shares of Series A-1 Preferred Stock at a price of $1,000 per share. In connection with the sale of Series A-1 Preferred Stock, the Company received aggregate gross proceeds of $340,000 as follows: (a) $290,000 from officers and a former employee of the Company; and (b) $50,000 from an outside investor. In addition to the rights applicable to all holders of Series A-1 Preferred Stock, the holders of Series A-1 Preferred Stock were granted certain piggyback registration rights in the event that the shares of Series A-1 Preferred Stock are converted into shares of common stock.

In conjunction with the Company’s license of certain intangible assets, the Company issued 300 shares of nonvoting Series B Convertible Preferred Stock (the “Series B Preferred Shares”), having a liquidation value of $1,000 per share. The Series B Preferred Shares have the same terms and privileges as the Series A Preferred Shares, but are junior to the Series A Preferred Shares in the event of a liquidation of the Company, and are convertible, in whole or in part into shares of common stock on the same terms as the Series A Preferred Shares. During the nine months ended March 31, 2007, holders of Series B Preferred Shares elected to convert 20 shares of their Series B preferred stock into 20,000,000 shares of the Company’s common stock. At March 31, 2007, 40 Series B Preferred shares remained issued and outstanding.

Since conversion of the above issuance of preferred stock could result in an indeterminable number of shares of common stock, the Company has classified the preferred stock as a liability under the guidance of Emerging Issues Task Force 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF 00-19”).

On September 25, 2006, the Company entered into two separate, two-year employment agreements with a Chief Operating Officer and Chief Financial Officer. Under the terms of the agreements, an aggregate of 100,000,000 restricted shares of the Company’s common stock with an aggregate value of $90,000 were awarded at the closing price of $.009 per share at the dates of grant, of which 20% vested immediately, with 30% and 50% to vest on September 26, 2007 and September 26, 2008, respectively, subject to continued employment. As of March 31, 2007, 20,000,000 shares of the Company’s stock valued at $18,000 have been issued to these two officers; the balance of unamortized compensation expense amounted to $58,500 as of that date.

NOTE 3. MAJOR CUSTOMERS

For the three months ended March 31, 2007 and 2006, sales to two customers accounted for approximately 82.6% and 90.9%, respectively, of our sales. For the nine months ended March 31, 2007 and 2006, sales to the two customers accounted for approximately 86.3% and 90.5%, respectively, of our sales. As of March 31, 2007, accounts receivable from these two customers aggregated approximately $326,000 or 57.1% of accounts receivable.

NOTE 4. SEGMENT INFORMATION

The Company applies Statement of Financial Accounting Standards No. 131 “Disclosures about Segments of an Enterprise and Related Information”. For the three and nine months ended March 31, 2007 and 2006, the Company primarily operated in one segment, the repair and depot exchange of office and consumer electronics. During the nine months ended March 31, 2006 and prior to discontinuing operations effective June 30, 2006, the Company also operated Encompass Electronics Recovery, an electronic asset recovery and distribution center, which represented less than 1% of the total revenue in that period.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2007

(UNAUDITED)

NOTE 5. COMMITMENTS AND CONTINGENCIES

On March 14, 2007, the Company entered into an employment agreement with Mr. Danson to continue to serve as President and Chief Executive Officer of the Company and continue as a member of the Board of Directors. The employment agreement is for a two-year term beginning January 1, 2007. Under terms of the employment agreement, Mr. Danson is entitled to receive a base salary of $350,000 in the first year and $400,000 in the second year and a $50,000 signing bonus payable on May 15, 2007 or earlier. In the event the acquisitions of several target companies and the related financing do not close on or before April 30, 2007, then Mr. Danson’s base salary shall be reduced to $275,000 until such time as the targets are acquired. Mr. Danson is also entitled to a bonus of between $250,000 and $500,000, as determined by the Compensation Committee of the Board, upon consummation of certain acquisition transactions. In the employment agreement, the Company acknowledges accrued compensation owed pursuant to Mr. Danson’s recently expired Services Agreement in the amount of $342,575, which is payable on May 15, 2007, or earlier if certain financing is received by the Company.

On September 25, 2006, the Company entered into two separate, two-year employment agreements with a Chief Operating Officer and Chief Financial Officer, with each agreement having a one-year renewal option at the Company’s election. Under the terms of the agreements, the Company is obligated to pay base salaries in the aggregate amount of $425,000 in the first year, $450,000 in the second year and $500,000 in the option year. Under certain circumstances in the event of a change in control, as defined, the Chief Operating Officer and Chief Financial Officer shall be entitled to severance payments equal to 299% of their then current respective annual base salaries. Further, an aggregate of 100,000,000 restricted shares of the Company’s common stock was awarded at the closing price per share at the dates of grant, of which 20% vested immediately, with 30% and 50% to vest on September 26, 2007 and September 26, 2008, respectively, subject to continued employment.

In July 2006, the Company, its subsidiary, Pacific Magtron International Corp. (“PMIC”), Theodore S. Li and Hui Cynthia Lee (the “Former Executives”), and others entered into a Mutual Settlement Agreement and Release (the “Settlement Agreement”) with respect to the settlement of the litigation and other potential claims, involving the Company, PMIC, Encompass, Mr. Li, Ms. Lee, Martin Nielson, the Company’s then Executive Vice President, and Wayne Danson, the Company’s Chief Executive Officer. PMIC’s entry into the Settlement Agreement was conditioned on bankruptcy court approval, which was obtained on August 11, 2006 in connection with confirmation of PMIC’s Plan of Reorganization. Under PMIC’s Plan of Reorganization, ACT contributed $50,000 as of June 30, 2006, and an additional $137,000 in accrued legal fees during the nine months ended March 31, 2007 on behalf of PMIC’s stockholders to effectuate the plan of reorganization and the merger of a subsidiary of PMIC with an unrelated entity, Herborium, Inc. In connection with the merger, PMIC changed its name to Herborium Group, Inc. Upon closing of the merger on September 18, 2006, the Company paid an aggregate $325,000 in cash to Mr. Li and Ms. Lee. In addition, Mr. Li and Ms. Lee are entitled to receive certain shares of common stock of Herborium Group. Under the terms of the Settlement Agreement, if these shares failed to have a value of $.10 or greater at the end of a 150-day lock-up period, the difference would be made up, at the Company’s option, by cash payments from the Company and/or delivery of an additional 1,750,000 shares of Herborium/PMIC common stock which would otherwise be issued to the Company’s stockholders under PMIC’s Plan of Reorganization and which have been escrowed. The common stock of Herborium Group did not have a value of $.10 per share at the end of the lock-up period which expired on April 20, 2007; accordingly, a reserve in the amount of $50,000 was recorded in the period ending March 31, 2007 to reserve for a possible claim arising from this matter. The Company intends to distribute approximately 2,800,000 escrowed and other shares of common stock of Herborium Group to fulfill its obligation.

A special stock distribution of approximately 7,400,000 shares of Herborium Group has been made to the holders of our common stock as of the record date of August 11, 2006 on the basis of a 0.001652911 share of Herborium common stock for each share of our common stock. On August 16, 2006, 87,500,000 shares of the Company’s common stock were issued to Mr. Li and Ms. Lee and held in escrow in accordance with the Settlement Agreement. These escrowed shares were subsequently cancelled following the aforementioned issuance of 7,400,000 shares of Herborium Group common stock in January 2007.

Under the court approved PMIC Plan of Reorganization, the Company has been acting as the disbursing agent and administrator for the remaining assets of PMIC since September 19, 2006. By court order dated March 20, 2007, all PMIC bankruptcy claims have been finalized and closed effective February 28, 2007. As of March 31, 2007, all creditors have been paid in full and the Company held approximately $500 in trust for payment of final administrative expenses.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2007

(UNAUDITED)

NOTE 6. RELATED PARTIES

Certain of the Company’s legal counsels are stockholders and directors of the Company. The Company incurred $0 and $397 for these attorneys’ services during the three and nine months ended March 31, 2007, respectively. At March 31, 2007, the Company owed $1,497 to these attorneys.

Pursuant to the terms of a Service Agreement with Danson Partners, LLC (“DPL”), which agreement expired on December 31, 2006, the Company accrued $125,000 for Mr. Danson’s services as President and Chief Executive Officer for the six months ended December 31, 2006. At March 31, 2007, the Company owed a total of $343,000 to DPL for compensatory services and reimbursable expenses under the Service Agreement, which amount bears interest from January 1, 2007 at the current prime interest rate. On March 14, 2007, the Company entered into the employment agreement with Mr. Danson described in Note 5 above.

NOTE 7. SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION

The following are the payments made during the nine months ended March 31, 2007 and 2006 for income taxes and interest:

	2007		2006
Income taxes	$	3,913	$	0

Interest	$	0	$	0

During the nine months ended March 31, 2007 and 2006, the Company issued certain common shares for consideration other than cash.

Nine Months Ended March 31, 2007:

(1)

559 shares of Series A Preferred Shares and 20 shares of Series B Preferred Shares were converted into 789,784,564 shares and 20,000,000 shares, respectively, of the Company’s common stock.

(2)

20,000,000 shares of the Company’s common stock were issued to certain officers of the Company pursuant to their employment contracts.

(3)

Acquisition-related costs of $481,000, $126,000 of which were paid, have been deferred and are included in other assets.

Nine Months Ended March 31, 2006:

(1)

385 shares of Series A Preferred Shares and 40 shares of Series B Preferred Shares were converted into 719,327,877 shares and 63,492,065 shares, respectfully, of the Company’s common stock.

(2)

50,000,000 shares of the Company’s restricted common stock were issued to officers of Cyber-Test as additional compensation in the amount of $35,000.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion should be read in conjunction with our financial statements and the related notes and the other financial information appearing elsewhere in this report. In addition to historical information, the following discussion and other parts of this quarterly report contain words such as “may,” "estimates," "expects," "anticipates," "believes," “plan,” "grow," "will," “could,” "seek," “continue,” “future,” “goal,” “scheduled” and other similar expressions that are intended to identify forward-looking information that involves risks and uncertainties. In addition, any statements that refer to expectations or other characterizations of future events or circumstances are forward-looking statements. Actual results and outcomes could differ materially as a result of important factors including, among other things, general economic conditions, the Company's ability to renew or replace key supply and credit agreements, fluctuations in operating results, committed backlog, public market and trading issues, risks associated with dependence on key personnel, competitive market conditions in the Company's existing lines of business and technological obsolescence, as well as other risks and uncertainties. See “Risk Related To Our Business” and “Risks Related To Our Stock” below.

General

We are a New York-based public holding company specializing in the consumer electronic aftermarket service and supply chain, known as reverse logistics. Our wholly-owned subsidiary and principal operating unit, Encompass Group Affiliates, Inc. ("Encompass"), acquires and operates businesses that provide office and consumer electronics repair services. Encompass owns Cyber-Test, Inc. ("Cyber-Test"), an office and consumer electronic equipment repair company based in Florida and our principal operating business. Encompass ceased the operations of PMIC in California effective June 30, 2006. The Company currently operates in one business segment, the repair and refurbishment component of the reverse logistics industry.

Financial Condition

We incurred a consolidated net loss of $640,000 for the nine months ended March 31, 2007 and $574,000 for the year ended June 30, 2006, and we had a working capital deficiency of $2,210,000 as of March 31, 2007. For the nine months ended March 31, 2007, we partially funded our ongoing operations from positive cash flow generated by Cyber-Test and the issuance of preferred stock. However, as these amounts have not been sufficient to fund all of our corporate overhead, we accordingly incurred an increase in accounts payable and accrued expenses at the holding company level. Our ability to continue as a going concern is dependent upon achieving profitability and generating sufficient cash flows to meet our obligations as they come due.

Our independent auditors have added an explanatory paragraph to their audit opinions issued in connection with our fiscal 2006 and 2005 financial statements, which states that our ability to continue as a going concern depends upon our ability to resolve liquidity problems by generating sufficient operating profits to provide additional working capital. Our ability to obtain additional funding and pay off our obligations will determine our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

RESULTS OF OPERATIONS-COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2007 TO THE THREE MONTHS ENDED MARCH 31, 2006

Summary of Results of Operations

The following table sets forth certain selected financial data as a percentage of sales for the three months ended March 31, 2007 and 2006:

	2007			2006

Net sales		100.0	%		100.0	%
Cost of sales		68.9			64.9
Gross profit/margin		31.1			35.1
Operating expenses		41.6			45.4
Loss from operations before other expense		(10.5	)		(10.3	)
Other expenses		(2.6	)		(0.8	)
Net loss		(13.1	)%		(11.1	)%

Net Sales

Net sales for the three months ended March 31, 2007 were $2,617,000 as compared to net sales of $2,552,000 for the three months ended March 31, 2006, an increase of $65,000, or 2.5%. Cyber-Test, our core operating business unit, experienced a $91,000, or 3.6%, increase in net sales for the three months ended March 31, 2007 compared to the three months ended March 31, 2006. Encompass, which ceased operations in California effective June 30, 2006, recorded no sales in the three months ended March 31, 2007 compared to $26,000 in the same period in 2006. The increase in Cyber-Tests net sales was primarily due to an increase in repair orders from one of Cyber-Test’s two major customers, as well as an increase in repair orders from several recently-added customers, during the period ended March 31, 2007 compared to the same period in 2006, partially offset by a decrease in repair orders from its other major customer. Sales to Cyber-Test’s two major customers as a percent of total sales decreased to approximately 82.6% during the three months ended March 31, 2007 compared to 90.9% during the three months ended March 31, 2006.

Cost of Sales and Gross Profit

Our cost of sales totaled $1,802,000 for the three months ended March 31, 2007, as compared to $1,656,000 for the three months ended March 31, 2006, an increase of $146,000, or 8.8%. Our gross profit decreased to $815,000 for the three months ended March 31, 2007 as compared to $896,000 for the three months ended March 31, 2006, with gross margins declining to 31.1% from 35.1% for the comparable periods.

The overall decrease in gross profit and gross margin is primarily attributable to a change in product mix as a greater percentage of repair work in the current period was performed on equipment that yields lower margins and also, to a lesser extent, the inclusion of high margin sales by Encompass in the earlier period. Encompass’ sales represented the disposal of remaining consignment inventory that had low direct product costs associated with it.

Operating Expenses

Total operating expenses for the three months ended March 31, 2007 and 2006 were $1,090,000 and $1,159,000, respectively, representing a decrease of $69,000, or 6.0%. The overall decrease was primarily attributable to a decrease in professional and consulting expenses of $175,000, offset by an increase of $109,000 in selling, general and administrative expenses for the three months ended March 31, 2007 as compared to the three months ended March 31, 2006.

Depreciation expense for the three months ended March 31, 2007 amounted to $17,000 compared to $19,000 for the three months ended March 31, 2006.

Professional and consulting fees decreased to $115,000 for the three months ended March 31, 2007 from $291,000 for the three months ended March 31, 2006, primarily due to lower legal fees associated with the PMIC bankruptcy proceeding and litigation settlement.

Selling, general and administrative expenses increased to $958,000 for the three months ended March 31, 2007 from $850,000 for the three months ended March 31, 2006, principally due to an increase in compensation expense at the corporate level in the three months ended March 31, 2007 compared to the three months ended March 31, 2006, offset by a decrease in amortization expense in the current period attributable to a higher deferred compensation balance in the earlier comparable period associated with an unvested stock grant and a decrease in Encompass’ operating expenses. A $204,000 increase in compensation expense in the three-month period ended March 31, 2007 was primarily due to the expense associated with the addition of two executives. Encompass, which ceased operations in California effective June 30, 2006, incurred no expenses in the three months ended March 31, 2007, whereas it incurred expenses of approximately $48,000 in the three months ended March 31, 2006.

Other Expense

Other expense amounted to $50,000 for the three months ended March 31, 2007, compared to $0 for the three months ended March 31, 2006, and represents a reserve for possible additional payments in connection with PMIC bankruptcy proceeding and litigation settlement. Interest expense for the three months ended March 31, 2007 was $19,000 compared to $21,000 for the three months ended March 31, 2006.

RESULTS OF OPERATIONS-COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 2007 TO THE NINE MONTHS ENDED MARCH 31, 2006

Summary of Results of Operations

The following table sets forth certain selected financial data as a percentage of sales for the nine months ended March 31, 2007 and 2006:

	2007			2006

Net sales		100.0	%		100.0	%
Cost of sales		66.7			65.3
Gross profit/margin		33.3			34.7
Operating expenses		41.4			47.1
Loss from operations before other expense		(8.1	)		(12.4	)
Other expenses		(1.3	)		(0.9	)
Net loss		(9.4	)%		(13.3	)%

Net Sales

Net sales for the nine months ended March 31, 2007 amounted to $6,777,000 as compared to net sales of $7,043,000 for the nine months ended March 31, 2006, a decrease of $266,000, or 3.8%. Cyber-Test, our core operating business unit, experienced a 2.9% decrease in net sales for the nine months ended March 31, 2007, compared to the comparable period in 2006, and sales for Encompass, which ceased operations in California effective June 30, 2006, were $1,000 in the current period compared to $68,000 in the comparable period in 2006. The decrease in net sales was primarily due to reduced repair orders from one of Cyber-Test’s major customers during the nine months ended March 31, 2007, compared to the same period in 2006, partially offset by an increase in repair orders from another major customer, as well as an increase in equipment salvage revenue. Sales to Cyber-Test’s two major customers as a percent of total sales decreased to approximately 86.4% during the nine months ended March 31, 2007 compared to 90.5% during the nine months ended March 31, 2006.

Cost of Sales and Gross Profit

Our cost of sales totaled $4,522,000 for the nine months ended March 31, 2007 as compared to $4,598,000 for the nine months ended March 31, 2006, a decrease of $76,000, or 1.7%. Our gross profit decreased to $2,255,000 for the nine months ended March 31, 2007 as compared to $2,445,000 for the nine months ended March 31, 2006. Gross margins for the current period declined to 33.3% from 34.7% in the prior period.

The overall decrease in gross profit and gross margin is principally due to the decrease in Cyber-Test’s net sales and gross margin in the current period compared to the earlier period, and to a lesser extent due to the inclusion of high margin sales by Encompass in the earlier period. Encompass’ sales represented the disposal of remaining consignment inventory that had low direct product costs associated with it. The decrease in the Company’s gross margin to 33.3% from 34.7% was also due to a change in Cyber-Test’s product mix in the latter months of the current period as a greater percentage of repair work was performed on equipment that yields lower margins.

Operating Expenses

Total operating expenses for the nine months ended March 31, 2007 and 2006 were $2,806,000 and $3,318,000, respectively, representing a decrease of $512,000, or 15.4%, primarily attributable to decreases in professional and consulting fees and selling, general and administrative expenses of $216,000 and $295,000, respectively.

Depreciation expense for the nine months ended March 31, 2007 and 2006 amounted to $54,000.

Professional and consulting fees decreased to $333,000 for the nine months ended March 31, 2007 from $548,000 for the nine months ended March 31, 2006, primarily due to lower legal fees associated with the PMIC bankruptcy proceeding and litigation settlement.

Selling, general and administrative expenses decreased to $2,420,000 for the nine months ended March 31, 2007 from $2,715,000 for the nine months ended March 31, 2006, principally due to a decrease in Encompass’ operating expenses of $203,000. Corporate level expenses decreased by a minor amount of $8,000, which was the net result of an increase of $116,000 in compensation expense from the addition of two executives (see Note 5 to the Condensed Consolidated

Financial Statements above), relocation expense of $28,000 in the current period, and a credit of $35,000 in the earlier period for over withholding of state taxes in connection with a sale of securities, offset by a $173,000 decrease in amortization expense in the current period attributable to a higher deferred compensation balance in the earlier period associated with an unvested stock grant and by a $28,000 decrease in promotion expenses. Encompass, which ceased operations in California effective June 30, 2006, incurred expenses of $4,000 in the nine months ended March 31, 2007, compared to expenses of $255,000 in the nine months ended March 31, 2006.

Other Expense

Other expense amounted to $50,000 for the nine months ended March 31, 2007 compared to $0 for the nine months ended March 31, 2006, which charge represents a charge for possible additional payments in connection with PMIC bankruptcy proceeding and litigation settlement. Interest expense for the nine months ended March 31, 2007 was $39,000, compared to $62,000 for the nine months ended March 31, 2006. The decrease is primarily due to a decrease in the amount of notes payables and capital leases outstanding in the nine months ended March 31, 2007, compared to the comparable period in 2006.

LIQUIDITY AND CAPITAL RESOURCES

The Company incurred a net loss of $640,000 for the nine months ended March 31, 2007 and $574,000 for the year ended June 30, 2006. The Company had a working capital deficiency of $2,210,000 as of March 31, 2007. For the year ended June 30, 2006 and for the nine months ended March 31, 2007, we have funded our ongoing operations principally from working capital generated by Cyber-Test and the issuance of our Series A-1 Preferred Stock. However, these amounts have not been sufficient to fund all of our corporate overhead; accordingly, we have experienced an increase in accounts payable and accrued expenses at the holding company level. The Company incurred substantial legal expenses during the nine months ended March 31, 2007 and for the year ended June 30, 2006. We also incurred $481,000 and $302,000 of legal, accounting and consulting costs relating to the potential acquisition of certain targeted businesses for the nine months ended March 31, 2007 and the year ended June 30, 2006, respectively. Additionally, during fiscal 2006, the Company settled litigation with former PMIC executives for $325,000, which was paid, in full, on September 18, 2006.

On September 13, 2006, we sold 340 shares of our Series A-1 Preferred Stock for proceeds of $340,000. A portion of these proceeds was used to pay the $325,000 owed to former PMIC executives. Our existing sources of liquidity, including cash resources and cash provided by operating activities, will not provide us with sufficient resources to meet our present obligations and the working capital and cash requirements for the next 12 months. Consequently, we are actively pursuing but have not yet secured a working capital facility to provide us with the necessary working capital over the next 12 months. The Company’s ability to continue as a going concern is dependent upon achieving profitability and generating sufficient cash flows to meet its obligations as they come due, and obtaining additional equity or debt financing.

We are pursuing equity and debt financing for the acquisition of profitable businesses within our industry. In April 2006, we engaged Janney Montgomery Scott, LLC, a Philadelphia-based investment banking firm, to assist us in securing long-term strategic equity investors and/or an acquisition debt facility for the purpose of providing us with acquisition funds and funds for ongoing working capital needs and a planned recapitalization of our common and preferred stock. There can be no assurance that we will be able to obtain financing to meet working capital needs at suitable valuations or rates of interest, if at all. In addition, there is no guarantee that we will be able to secure financing to permit us to pursue strategic acquisitions and investments.

On September 25, 2006, the Company entered into two separate, two-year employment agreements with its Chief Operating Officer and Chief Financial Officer, with each agreement having a one-year renewal option at the Company’s election. Under the terms of the agreements, the Company is obligated to pay base salaries in the aggregate amount of $425,000 in the first year, $450,000 in the second year and $500,000 in the option year. Further, an aggregate of 100,000,000 restricted shares of the Company’s common stock was awarded to the Chief Operating Officer and Chief Financial Officer at the closing price per share at the dates of grant, of which 20% vested immediately, with 30% and 50% to vest on September 26, 2007 and September 26, 2008, respectively, subject to continued employment.

On March 14, 2007, the Company entered into an employment agreement with Mr. Danson pursuant to which he will continue to serve as President and Chief Executive Officer of the Company and continue as a member of the Board of Directors. The employment agreement is for a two-year term beginning January 1, 2007. Under terms of the employment agreement, Mr. Danson is entitled to receive a base salary of $350,000 in the first year and $400,000 in the second year and a $50,000 signing bonus payable on May 15, 2007 or earlier. In the event the acquisitions of several target companies and the related financing do not close on or before April 30, 2007, then Mr. Danson’s base salary shall be reduced to $275,000 until such time as the targets are acquired. Mr. Danson is also entitled to a bonus of between $250,000 and $500,000, as determined by the Compensation Committee of the Board, upon consummation of certain acquisition transactions. In the employment agreement, the Company acknowledges accrued compensation owed pursuant to Mr. Danson’s recently expired Services Agreement in the amount of $342,575, which is payable on May 15, 2007, or earlier if certain financing is received by the Company.

We have total contractual obligations of $639,000 as of March 31, 2007. These contractual obligations, along with the dates on which such payments are due, are described below:

	Contractual Obligations

	Total		1 Year or Less		More Than 1 Year

Notes payable	$	617,000	$	617,000	$	—
Capitalized lease obligations		22,000		22,000		—

Total Contractual Obligations	$	639,000	$	639,000	$	—

Net Cash Used In Operating Activities

Net cash used in operating activities was $80,000 for the nine months ended March 31, 2007, compared to net cash used in operating activities of $283,000 for the nine months ended March 31, 2006. Net cash used in operating activities for the nine months ended March 31, 2007 was principally due to the loss from operations of $640,000 and an increase in accounts receivable of $223,000, offset by an increase in accounts payable and accrued expenses of $651,000, an increase in accrued interest of $47,000 and depreciation, amortization and other non-cash charges of $93,000.

Net cash used in operating activities for the nine months ended March 31, 2006 was principally due to the net loss from operations of $934,000, an increase in accounts receivable of $330,000 and an increase in replacement parts and equipment of $72,000, offset by an increase in accounts payable and accrued expenses of $695,000, an increase in accrued interest of $63,000 and depreciation, amortization and other non-cash charges of $300,000.

Net Cash Used In Investing Activities

Net cash used in investing activities of $129,000 for the nine months ended March 31, 2007 was attributable to an increase in deferred acquisition costs of $126,000 incurred in connection with planned acquisitions in process and purchases of fixed assets of $41,000.

Net cash used in investing activities of $33,000 for the nine months ended March 31, 2006 was principally attributable to purchases of fixed assets of $41,000, offset by the receipt of $8,000 of funds from the sale of marketable securities.

Net Cash Used In Financing Activities

Net cash used in financing activities of $3,000 for the nine months ended March 31, 2007 was attributable to proceeds of $340,000 from the sale of our Series A-1 Preferred Stock, offset by principal payments of $343,000 on notes payable and capital leases.

Net cash used in financing activities of $16,000 for the nine months ended March 31, 2006 was attributable to principal payments on notes payable and capital leases.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements between the Company and any other entity that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. The Company does not have any non-consolidated special purpose entities.

RISKS RELATED TO OUR BUSINESS

In addition to historical facts or statements of current condition, this quarterly report on Form 10-QSB contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events.

The following discussion outlines certain factors that we think could cause our actual outcomes and results to differ materially from our forward-looking statements as well as impact our future overall performance. These factors are in addition to those set forth elsewhere in this quarterly report on Form 10-QSB.

We Have A History Of Losses, And May Incur Additional Losses

We are a holding company with a limited history of operations. For the nine months ended March 31, 2007 and the year ended June 30, 2006, we incurred an overall net loss of $640,000 and $574,000, respectively. We cannot be sure that we will be profitable in future years.

Our Independent Auditors Have Added A Going Concern Opinion To Our Financial Statements, Which Means That We May Not Be Able To Continue Operations Unless We Obtain Additional Funding

We Will Need Additional Capital to Achieve Our Business Plans

We are seeking capital to fund the transactions with our current acquisition candidates. Delay in obtaining this funding will delay or inhibit our progress in achieving our goals. We will likely require additional investment funds:

to seek out and find investment opportunities in high growth-potential companies; and,

to acquire the assets or stock of related companies in the reverse logistics arena.

It is possible that we will be unable to obtain additional funding as and when we need it or on terms that are acceptable to us. If we are unable to obtain additional funding as and when needed, we could be forced to delay the progress of our business expansion plans.

We Need Additional Capital to Fund our Present Liabilities

At March 31, 2007, we had a working capital deficit of $2,210,000. It is unlikely that Cyber-Test’s operations will be able to produce sufficient excess working capital to fund this deficit in the next 12 months. Therefore, we will be required to raise additional debt or equity funds to pay our present liabilities. In the event we are not able to raise sufficient funds in connection with proposed acquisitions, we may not have any sources of capital available to pay these liabilities.

To Service Our Indebtedness, We Will Require A Significant Amount Of Cash; Our Ability To Generate Cash Depends On Many Factors Beyond Our Control

Our ability to make payments on the indebtedness we intend to incur to fund acquisitions will depend on our ability to generate cash from our operations in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on our projected level of operations after the acquisitions, we believe our cash flow from operations will be adequate to meet our debt service requirements. We cannot provide any assurances, however, that we will have sufficient cash flow to fund our debt service and other liquidity needs. We may need to refinance or restructure all or a portion of our indebtedness on or before maturity. We cannot make any assurances that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances. We cannot make any assurances that any such actions, if necessary, could be effected on commercially reasonable terms, or at all.

New Equity Financing Could Dilute Current Stockholders

If we raise funds through equity financing to meet the needs discussed above, it will have a dilutive effect on existing holders of our shares by reducing their percentage ownership. The shares may be sold at a time when the market price is low because we need the funds. This will dilute existing holders more than if our stock price was higher. In addition, equity financings often involve shares sold at a discount to the current market price.

The Loss Of Any One Of Cyber-Test's Key Customers Could Have A Material Adverse Effect On Our Business

Cyber-Test relies heavily on the business of a few key customers. While all these key customers are contractually committed to purchase parts or service from Cyber-Test, these contracts are terminable within 60 to 90 days. If any one (or all) of these key customers terminates its relationship with Cyber-Test, it could have a material adverse effect on our business.

We And Our Subsidiaries Operate In Competitive Industries

Cyber-Test's business is highly competitive. Cyber-Test competes with companies that provide repair services for office equipment and computer peripheral products, with companies that supply parts and consumables to end-users and repair companies of such equipment and products, and with resellers of such equipment and products.

Competition within the office equipment and computer peripheral products service and repair industry is based on quality of service, depth of technical know-how, price, availability of parts, speed and accuracy of delivery, and the ability to tailor specific solutions to customer needs. Many of Cyber-Test's competitors are larger in size and have greater financial and other resources than Cyber-Test, such as Decision One, Depot America and DEX. Cyber-Test also competes with manufacturers, including original equipment manufacturers (OEMs), that do their own repair work, as well as large distribution and logistics companies such as United Parcel Service and Airborne Logistics.

Management believes Cyber-Test has a competitive advantage over many of its competitors, but Cyber-Test's ability to maintain such competitive advantage is dependent upon many variables, including its ability to successfully attract and retain technicians that are capable of performing repair on all brands and models of office equipment and computer peripherals at prices which remain competitive. We can provide no assurances that Cyber-Test will continue to have the resources to successfully compete in the technology repair service industry.

Our Business Could Suffer If There Is A Prolonged Economic Downturn

We derive a substantial amount of our net revenue from the repair and service by Cyber-Test of office equipment and computer peripheral products. Revenue from the repair and service of such equipment does not generally fluctuate widely with economic cycles. However, a prolonged national or regional economic recession could have a material adverse effect on our business.

Fluctuations In The Price Or Availability Of Office Equipment Parts And Computer Peripheral Products Could Materially Adversely Affect Us

The price of office equipment parts and computer peripheral products may fluctuate significantly in the future. Changes in the supply of or demand for such parts and products could affect delivery times and prices. We cannot provide any assurances that Cyber-Test will continue to have access to such parts and products in the necessary amounts or at reasonable prices or that any increases in the cost of such parts and products will not have a material adverse effect on our business.

We Could Be Materially Affected By Turnover Among Our Service Representatives

Cyber-Test depends on its ability to identify, hire, train, and retain qualified service and repair personnel as well as a management team to oversee the services that Cyber-Test provides. A loss of a significant number of these experienced personnel would likely result in reduced revenues for Cyber-Test and could materially affect our business. Cyber-Test's ability to attract and retain qualified service representatives depends on numerous factors, including factors that Cyber-Test cannot control, such as conditions in the local employment markets in which it operates. We cannot provide any assurances that Cyber-Test will be able to hire or retain a sufficient number of service representatives to achieve its financial objectives.

We Have A Working Capital Deficit, Which Means That Our Current Assets On March 31, 2007 Were Not Sufficient To Satisfy Our Current Liabilities On That Date

We had a working capital deficit of $2,210,000 as of March 31, 2007, which means that our current liabilities exceeded our current assets by $2,210,000. Current assets are assets that are expected to be converted into cash within one year and, therefore, may be used to pay current liabilities as they become due. Our working capital deficit means that our current assets on March 31, 2007 were not sufficient to satisfy all of our current liabilities on that date.

We Could Fail To Attract Or Retain Key Personnel

Our success largely depends on the efforts and abilities of key executives, including Mr. Wayne Danson, our President and Chief Executive Officer, Mr. Steven Miller, our Chief Operating Officer, Mr. John Donahue, our Chief Financial Officer, and Ms. Lisa Welton, President and Chief Executive Officer of Cyber-Test. The loss of the services of these key executives could materially adversely affect our business because of the cost and time necessary to replace and train a replacement. Such a loss would also divert management’s attention away from operational issues. We maintain a $2,000,000 key-man life insurance policy for each of Mr. Danson and Ms. Welton, and expect to do so for Mr. Miller and Mr. Donahue.

RISKS RELATED TO OUR STOCK

The Future Conversion Of Our Outstanding Series A, A-1 And B Convertible Preferred Stock Will Cause Dilution To Our Existing Shareholders, Which Means That Our Per Share Income And Stock Price Could Decline

The issuance of shares upon any future conversion of the outstanding Series A, Series A-1 and Series B Convertible Preferred Stock will have a dilutive impact on our stockholders. As of March 31, 2007, we had $3,386,000 of outstanding shares at liquidation value of Series A, Series A-1 and Series B Convertible Preferred Stock that is convertible into shares of our common stock. Our Series A and B Convertible Preferred Stock are convertible at a price of $0.01 per share or 100% of the average of the three lowest closing bid prices for the ten trading days immediately preceding the date of conversion, whichever is lower. Our Series A-1 Convertible Preferred Stock is convertible at a price of $0.01 per share or 80% of the average of the three lowest closing bid prices for the ten trading days immediately preceding the date of conversion, whichever is lower. If our share price were equal to or greater than $0.01 per share at the time of conversion, the Series A, A-1 and B Convertible Preferred Stock would be convertible into an aggregate of 339,000,000 shares of our common stock. In the event the price of our common stock is less than $0.01 per share at the time of conversion, the number of shares of our common stock issuable would be greater than 339,000,000. If such conversions had taken place at $0.0006, our recent stock price, then holders of our Convertible Preferred Stock would have received 5,643,000,000 shares of our common stock. As a result, the market price of our common stock could decline due to the dilutive effect of such additional shares of common stock.

We Have Not Authorized A Sufficient Number Of Shares Of Our Common Stock To Cover The Future Conversion Of Our Outstanding Series A, A-1 and B Convertible Preferred Stock.

Our Articles of Incorporation require that we reserve and keep available out of our authorized common stock the full number of shares of our common stock issuable upon conversion of each of our Series A, A-1 and B Convertible Preferred Stock. Under our Articles of Incorporation, 5,000,000,000 shares of our common stock are currently authorized. As of May 1, 2007, 4,997,711,570 shares of our common stock were issued and outstanding. At a minimum, the conversion of all of our issued and outstanding shares of Series A, A-1 and B Convertible Preferred Stock would require us to issue an aggregate of 5,677,000,000 shares of our common stock to such investors, 5,675,000,000 shares of which are not currently authorized. In order to comply with our obligations under the Articles of Incorporation, our stockholders would need to authorize additional shares of common stock. Although our Board of Directors is contractually obligated to recommend that our shareholders approve such a measure and to vote any shares under the directors’ control in favor of such measure, we cannot make any assurances that additional shares of our common stock will be authorized. If such shares are not authorized, the investors holding shares of our Series A, A-1 and B Convertible Preferred Stock could declare a default under the terms of their respective agreements with us.

The Conversion Of Our Series A Convertible Preferred Stock Could Cause A Change Of Control

The issuance of shares upon the conversion of our Series A Convertible Preferred Stock could result in a change of control. Cornell Capital Partners, L.P. currently holds $2,040,000 of our Series A Convertible Preferred Stock, which if converted at $0.0006 per share would result in the issuance of up to 3,400,000,000 shares of our common stock. After such conversions, Cornell Capital Partners, L.P. would own approximately 40% of our then outstanding shares of Common Stock. In such event, Cornell Capital Partners, L.P. would be a major shareholder and might be able to exercise control of us by electing directors and increasing the number of authorized shares of common stock that we could issue or otherwise.

The Price of Our Common Stock May Be Affected By A Limited Trading Volume And May Fluctuate Significantly

There is a limited public market for our common stock, and there can be no assurance that an active trading market will continue. An absence of an active trading market could adversely affect our stockholders’ ability to sell our common stock in short time periods, or at all. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors, such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets, could cause the price of our common stock to fluctuate substantially.

Our Common Stock Is Deemed To Be "Penny Stock," Which May Make It More Difficult For Investors To Sell Their Shares Due To Suitability Requirements

Our common stock is deemed to be "penny stock" as that term is defined in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, as amended. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline. Penny stocks:

have a price of less than $5.00 per share;

are not traded on a "recognized" national exchange;

are not quoted on the NASDAQ automated quotation system (NASDAQ listed stock must still have a price of not less than $5.00 per share); or

include stock in issuers with net tangible assets of less than $2.0 million (if the issuer has been in continuous operation for at least three years) or $5.0 million (if in continuous operation for less than three years), or with average revenues of less than $6.0 million for the last three years.

Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor.

ITEM 3. CONTROLS AND PROCEDURES

(A) Evaluation Of Disclosure Controls And Procedures

As of March 31, 2007, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Section 13a-15(e) or 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the March 31, 2007 quarterly period, our disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to the Company’s management, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

(B) Changes In Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as defined in Section 13a-15(f) or 15d-15(f) of the Exchange Act) during our fiscal quarter ended March 31, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company has been, and may in the future be, involved as a party to various legal proceedings which are incidental to the ordinary course of its business. Management regularly analyzes current information and, as necessary, provides accruals for probable liabilities on the eventual disposition of these matters. In the opinion of management, as of March 31, 2007, there were no threatened or pending legal matters that would have a material impact on the Company's consolidated results of operations, financial position or cash flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

On March 31, 2007, we were in default for failure to pay an unsecured term note issued to Cornell Capital Partners, L.P. when due on June 30, 2005. The note has a principal balance of $275,000 and bears interest at the rate of 10%. The total amount of principal and interest due as of March 31, 2007 amounted to $334,000.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit No.	Description	Location (1)

3(i)(a)	Articles of Incorporation of Media Forum International, Inc.	Incorporated by reference to Exhibit 2.1 to the Company’s Form S-8 filed with the SEC on February 9, 2000

3(i)(b)	Second Amendment to Articles of Incorporation of Telenetworx, Inc.	Incorporated by reference to Exhibit 2.2 to the Company’s Form S-8 filed with the SEC on February 9, 2000

3(i)(c)	Third Amendment to Articles of Incorporation of Media Forum International, Inc.	Incorporated by reference to Exhibit 2.3 to the Company’s Form S-8 filed with the SEC on February 9, 2000

3(i)(d)	Fourth Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 2.7 to the Company’s Form SB-2 filed with the SEC on March 5, 2002

3(i)(e)	Fifth Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 2.8 to the Company’s Form SB-2 filed with the SEC on July 16, 2003

3(i)(f)	Sixth Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 3.1.6 the Company’s Form 10-KSB filed with the SEC on November 3, 2004

3(i)(g)	Seventh Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 3.1.7 the Company’s Form 10-KSB filed with the SEC on November 3, 2004

3(i)(h)	Eighth Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on September 19, 2006

3(ii)	Bylaws of the Company	Incorporated by reference to Exhibit 2.4 to the Company’s Form S-8 filed with the SEC on February 9, 2000

4.7	6% Senior Unsecured Promissory Note, in the original principal amount of $547,000 issued on June 3, 2004 by Cyber-Test, Inc., a Delaware corporation, in favor of Cyber-Test, Inc., a Florida corporation.	Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the SEC on June 18, 2004

4.8	Escrow Agreement, dated June 3, 2004, by and between Cyber-Test, Inc., a Delaware corporation, and Cyber-Test, Inc., a Florida corporation.	Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed with the SEC on June 18, 2004

4.9	Amendment No. 1 to 6% Unsecured Promissory Note dated August 10, 2004.	Incorporated by reference to Exhibit 10.35 to the Company’s Form 10-KSB filed with the SEC on November 3, 2004

4.10	Form of Exchange Agreement, dated June 24, 2004, by and among Advanced Communications Technologies, Inc. and certain debenture holders of Hy-Tech Technology Group, Inc.	Incorporated by reference to Exhibit 10.40 to the Company’s Form 10-KSB filed with the SEC on November 3, 2004

4.11	Escrow Agreement dated May 28, 2004 by and among Advanced Communications Technologies, Inc., Buyers and Butler Gonzalez, LLP, Escrow Agent.	Incorporated by reference to Exhibit 10.42 to the Company’s Form 10-KSB filed with the SEC on November 3, 2004

4.12	Investment Agreement dated May 28, 2004 by and between Advanced Communications Technologies, Inc. and Cornell Capital Partners, LP.	Incorporated by reference to Exhibit 10.43 to the Company’s Form 10-KSB filed with the SEC on November 3, 2004

4.13	Registration Rights Agreement dated May 28, 2004 by and between Advanced Communications Technologies, Inc. and Cornell Capital Partners, LP.	Incorporated by reference to Exhibit 10.44 to the Company’s Form 10-KSB filed with the SEC on November 3, 2004

4.14	Investment Agreement dated September 8, 2006 by and between Advanced Communications Technologies, Inc. and the Series A-1 Preferred Stockholders	Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the SEC on September 19, 2006

10.1*	Employment Agreement dated January 1, 2007 between Advanced Communications Technologies, Inc. and Wayne I. Danson	Provided herewith

31.1	Certification by Chief Executive Officer pursuant to Sarbanes-Oxley Section 302	Provided herewith

31.2	Certification by Chief Financial Officer pursuant to Sarbanes-Oxley Section 302	Provided herewith

32.1	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350	Provided herewith

32.2	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350	Provided herewith

* Management contract or management compensatory plan or arrangement. (1) In the case of incorporation by reference to documents filed by the Company under the Exchange Act, the Company’s file number under the Exchange Act is 000-30486.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.

	By: /s/ Wayne I. Danson
	Name: Wayne I. Danson
	Title: President, Chief Executive Officer (Principal Executive Officer) and Director
	Date: June 15, 2007

	By: /s/ John E. Donahue
	Name: John E. Donahue
	Title: Chief Financial Officer (Principal Accounting Officer)
	Date: June 15, 2007

EXHIBIT INDEX

Exhibit No.	Description	Location (1)

3(i)(a)	Articles of Incorporation of Media Forum International, Inc.	Incorporated by reference to Exhibit 2.1 to the Company’s Form S-8 filed with the SEC on February 9, 2000

3(i)(b)	Second Amendment to Articles of Incorporation of Telenetworx, Inc.	Incorporated by reference to Exhibit 2.2 to the Company’s Form S-8 filed with the SEC on February 9, 2000

3(i)(c)	Third Amendment to Articles of Incorporation of Media Forum International, Inc.	Incorporated by reference to Exhibit 2.3 to the Company’s Form S-8 filed with the SEC on February 9, 2000

3(i)(d)	Fourth Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 2.7 to the Company’s Form SB-2 filed with the SEC on March 5, 2002

3(i)(e)	Fifth Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 2.8 to the Company’s Form SB-2 filed with the SEC on July 16, 2003

3(i)(f)	Sixth Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 3.1.6 the Company’s Form 10-KSB filed with the SEC on November 3, 2004

3(i)(g)	Seventh Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 3.1.7 the Company’s Form 10-KSB filed with the SEC on November 3, 2004

3(i)(h)	Eighth Amendment to Articles of Incorporation	Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on September 19, 2006

3(ii)	Bylaws of the Company	Incorporated by reference to Exhibit 2.4 to the Company’s Form S-8 filed with the SEC on February 9, 2000

4.7	6% Senior Unsecured Promissory Note, in the original principal amount of $547,000 issued on June 3, 2004 by Cyber-Test, Inc., a Delaware corporation, in favor of Cyber-Test, Inc., a Florida corporation.	Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the SEC on June 18, 2004

4.8	Escrow Agreement, dated June 3, 2004, by and between Cyber-Test, Inc., a Delaware corporation, and Cyber-Test, Inc., a Florida corporation.	Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed with the SEC on June 18, 2004

4.9	Amendment No. 1 to 6% Unsecured Promissory Note dated August 10, 2004.	Incorporated by reference to Exhibit 10.35 to the Company’s Form 10-KSB filed with the SEC on November 3, 2004

4.10	Form of Exchange Agreement, dated June 24, 2004, by and among Advanced Communications Technologies, Inc. and certain debenture holders of Hy-Tech Technology Group, Inc.	Incorporated by reference to Exhibit 10.40 to the Company’s Form 10-KSB filed with the SEC on November 3, 2004

4.11	Escrow Agreement dated May 28, 2004 by and among Advanced Communications Technologies, Inc., Buyers and Butler Gonzalez, LLP, Escrow Agent.	Incorporated by reference to Exhibit 10.42 to the Company’s Form 10-KSB filed with the SEC on November 3, 2004

4.12	Investment Agreement dated May 28, 2004 by and between Advanced Communications Technologies, Inc. and Cornell Capital Partners, LP.	Incorporated by reference to Exhibit 10.43 to the Company’s Form 10-KSB filed with the SEC on November 3, 2004

4.13	Registration Rights Agreement dated May 28, 2004 by and between Advanced Communications Technologies, Inc. and Cornell Capital Partners, LP.	Incorporated by reference to Exhibit 10.44 to the Company’s Form 10-KSB filed with the SEC on November 3, 2004

4.14	Investment Agreement dated September 8, 2006 by and between Advanced Communications Technologies, Inc. and the Series A-1 Preferred Stockholders	Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the SEC on September 19, 2006

10.1*	Employment Agreement dated January 1, 2007 between Advanced Communications Technologies, Inc. and Wayne I. Danson	Provided herewith

31.1	Certification by Chief Executive Officer pursuant to Sarbanes-Oxley Section 302	Provided herewith

31.2	Certification by Chief Financial Officer pursuant to Sarbanes-Oxley Section 302	Provided herewith

32.1	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350	Provided herewith

32.2	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350	Provided herewith


* Management contract or management compensatory plan or arrangement. (1) In the case of incorporation by reference to documents filed by the Company under the Exchange Act, the Company’s file number under the Exchange Act is 000-30486.

Encompass Group Affiliates (ECGA) Inactive 10QSB2007 Q1 Quarterly report (small business)