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

Amendment No. 1 to the Form 1O-QSB

(check one)

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

For the Three Months Ended March 31, 2002

[ ] 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.)

880 Apollo Street, Suite 200 El Segundo CA 90245
------------------------------------------------
(Address of principal executive offices)

(310) 416-1270
(Registrant'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 3 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 [ ]

As of March 31, 2002, there were 106,731,332 shares of the registrant's no par
value common stock issued and outstanding
Transmittal Small Business Disclosure
Format (check one):
YES [ ] NO [X]

PART I-FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Consolidated Balance Sheets as of March 31, 2002 and June 30, 2001
(Audited)

Consolidated Statement of Operations for the three and nine months
ended March 31, 2002 and March 31, 2001

Consolidated Statement of Changes in Stockholders' Deficiency for the
three and nine months ended March 31, 2002

Consolidated Statement of Cash Flows for the nine months ended March
31, 2002 and March 31, 2001

Notes to Unaudited Consolidated Financial Statements

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

PART II-OTHER INFORMATION

ITEM 1. LEGAL MATTERS

ITEM 2. CHANGES IN SECURITIES

ITEM 3. DEFAULTS IN SENIOR SECURITIES

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

ITEM 6. SUBSEQUENT EVENTS, EXHIBITS AND REPORTS ON FORM 8-K

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

March 31, 2002 June 30, 2001
(Unaudited) (Audited)
----------- ---------

ASSETS:

Cash $164,359 $ 6,816
Prepaid expenses 3,000 10,000
---------- ----------

TOTAL CURRENT ASSETS 167,359 16,816
---------- ----------

PROPERTY & EQUIPMENT - NET 18,274 19,599
---------- ----------

OTHER ASSETS
Goodwill, less accumulated amortization
of $300,000 1,700,000 2,000,000
Deposits 13,225 5,525
Other receivables 9,927 --
Deferred bond financing costs, less
accumulated amortization of $6,667 73,333 --
---------- -----------

TOTAL OTHER ASSETS 1,796,485 2,005,525
---------- ------------

TOTAL ASSETS $ 1,982,118 $ 2,041,940
============ ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY:

LIABILITIES

CURRENT LIABILITIES
Accounts payable and accrued expenses $683,002 $ 844,205
Accrued compensation 172,183 479,050
Note Payable-Grassland -- 118,530
Loan Payable to shareholder 1,055,736 796,000
Convertible debentures 1,200,750 200,750
Interest payable 10,417 --
---------- ------------

TOTAL CURRENT LIABILITIES 3,122,088 2,438,535

LONG-TERM LIABILITIES
Notes Payable-Unconsolidated affiliate 1,791,166 2,173,167
--------- ------------

TOTAL LIABILITIES $4,913,254 $ 4,611,702
---------- -----------

STOCKHOLDERS' DEFICIENCY
Common stock, no par value, 200,000,000
and 100,000,000 shares authorized,
respectively, 106,731,332 and
94,489,916 shares issued and
outstanding, respectively 25,214,690 22,696,193
Common stock to be issued, 0 and
833,333 shares, respectively -- 250,000
Less: Deferred commitment fees, net
of accumulated amortization
of $93,750 (656,250) --
Accumulated deficit (27,489,576) (25,515,955)
------------ ------------

TOTAL STOCKHOLDERS' DEFICIENCY $(2,931,136) $(2,569,762)
------------ ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 1,982,118 $ 2,041,940
============ ============

The accompanying notes are an integral part of these financial statements

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED ENDED
------------------------ ---------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2002 2001 2002 2001
---------- ------------ --------------------------

TELEPHONE NETWORK REVENUE $ - $ - $ - $ 50,000

COST OF REVENUES - - - (57,310)
------------ ----------- ----------- -------------
GROSS PROFIT (LOSS)
- - - (7,310)
------------ ----------- ---------- -------------

OPERATING EXPENSES

Depreciation and amortization 201,417 262,542 403,417 787,626
Professional and consulting fees 42,189 753,389 607,451 1,235,495
Other selling, general and

administrative expenses 340,370 104,451 616,120 409,917

Stock-based compensation 21,010 30,000 81,010 176,120
------------ ----------- ----------- --------------
TOTAL OPERATING EXPENSES 604,986 1,150,382 1,707,998 2,609,158
------------ ----------- ----------- --------------

LOSS FROM OPERATIONS (604,986) (1,150,382) (1,707,998) (2,616,468)
------------ ----------- ----------- ---------------

OTHER INCOME/(EXPENSE)

Interest expense (260,417) - (265,623) -
Income ( Loss) from investment
in affiliate - 229,803 - (7,487)
Investment Write-down - (425,000) - (425,000)
------------ ------------- ----------- -------------

TOTAL OTHER INCOME/(EXPENSE) (260,417) (195,197) (265,623) (432,487)
------------ ------------- ------------- --------------

$ (865,403) $(1,345,579) $(1,973,621) $(3,048,955)
LOSS BEFORE EXTRAORDINARY GAINS

EXTRAORDINARY GAINS

Gains on extinguishment of debt - - - 23,000
------------ ----------- ------------ --------------

$ (865,403) $(1,345,579) $(1,973,621) $ (3,025,955)
NET (LOSS)

OTHER COMPREHENSIVE (LOSS), NET
OF TAX
Unrealized (loss) on marketable
securities - 195 - (4,680)
------------ ------------- ------------- -------------

$ (865,403) $(1,345,384) $(1,973,621) $ (3,030,635)
COMPREHENSIVE (LOSS) ============ ============= ============= =============

Net (loss) per share-basic and $ (0.01) $ (0.01) $ (0.02) $ (0.03)
diluted =========== ============= ============= =============

Weighted average number of shares
outstanding
during the period-basic and
diluted 101,794,353 90,354,548 98,506,328 86,593,311
============ ============= ============ ==============

The accompanying notes are an integral part of these financial statements

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD JULY 1, 2000 TO DECEMBER 31, 2001

COMMON STOCK
COMMON STOCK ACCUMULATED TO BE ISSUED COMMON
--------------------- STOCK
SHARES AMOUNT DEFICIT SHARES AMOUNT ADVANCES TOTAL
----------- ---------------------------------------------------------------------

BALANCE AT JUNE 30, 2000 82,227,280 $16,865,441 $ (5,783,389) $ $ 375,000 $ 10,707,052

Stock issued for cash 3,060,600 642,726 642,726
Stock warrants issued for cash 275,454 275,454
Stock to be issued 833,333 250,000 250,000
Stock issued for offering costs 250,000 --
Stock issued for services 1,051,491 328,870 328,870
Stock issued for extinguishment
of debt 6,597,000 4,545,902 4,545,902
Stock issued for conversion of
convertible debt 1,803,545 412,800 412,800
Common stock retired (500,000) (375,000) (375,000) --
Net (loss) for period (19,732,566) (19,732,566)
--------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 2001 94,489,916 $22,696,193 $(25,515,955) 833,333 $250,000 $ (2,569,762)
---------------------------------------------------------------------------------------------

Stock issued for services 780,240 244,224 244,224
Stock issued for extinguishments
of debt 1,190,000 357,001 357,001
Stock issued for cash 1,233,333 260,000 (800,000) (240,000) 20,000
Stock warrants issued for cash 110,000 110,000
Net (loss) for the period (456,258) (456,258)
--------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 2001 97,693,489 $23,667,418 $(25,972,213) 33,333 $ 10,000 $ (2,294,795)
--------------------------------------------------------------------------------------------

Stock issued for services 419,681 126,335 (33,333) (10,000) 116,335
Stock issued for offering costs 137,727 0
Net (loss) for the period (651,960) (651,960)
--------------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 2001 98,250,897 $23,793,753 (26,624,173) $ $ (2,830,420)
============================================================================================

Stock issued for services 2,013,468 151,010 151,010
Stock issued for cash and
warrants 2,146,967
Stock issued to Directors for
services 1,000,000 180,000 180,000
Stock issued for commitment fees 3,000,000 750,000 750,000
Deferred commitment fees (656,250) (656,250)
Net (loss) for the period (865,403) (865,403)
Capital contribution 9,927 9,927
Stock issued in settlement of
lawsuit 320,000 80,000 80,000
Interest on beneficial
conversion debentures 250,000 250,000
----------- -------------------------------------------------------------------------------
BALANCE AT MARCH 31, 2002 106,731,332 $24,558,440 $(27,489,576) $ (2,931,136)
============================================================================================

The accompanying notes are an integral part of these financial statements

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED
----------------------------
MARCH 31, MARCH 31,
2002 2001
----------------------------

Cash flows from operating activities
Net (loss) $ (1,973,621) $(3,025,955)
Adjustments to reconcile net loss to net cash used:

Depreciation and amortization 403,417 787,626

Expenses incurred in exchange for common stock 781,569 257,070

Gain on extinguishment of debt - (23,000)

(Loss) on minority interest in affiliate - 7,487
Interest expense on beneficial conversion feature 250,000 -
Changes in operating assets and liabilities:
(Increase) decrease in assets:

Prepaid expense 7,000 46,118

Deposits and other (24,700) 40,000
Increase (decrease) in liabilities:

Accounts payable (161,203) 477,900

Interest payable 10,417 -

Accrued compensation (306,867) 195,000

Other advances (63,000) -

Deferred revenue and other - (50,000)
----------------------------
Net cash used in operating activities
(1,076,988) (1,287,754)
----------------------------

Cash flows from investing activities

Loan to affiliated company - (10,108)

Purchase of fixed assets (1,675) (8,580)

Repayment of loan to unconsolidated affiliate (25,000) -

Repayment of short-term loan (325,000) -
----------------------------
Net cash used in investing activities
(351,675) (18,688)
----------------------------

Cash flows from financing activities
Repayment of note payable (118,530) (41,802)

Loan proceeds from shareholder 259,736 534,500

Proceeds from sale of stock - 41,802
Proceeds from issuance of common stock

and warrants, net of offering costs 120,000 768,180

Proceeds from issuance of convertible debentures 1,000,000 -

Proceeds from issuance of short-term note 325,000 -
----------------------------
Net cash provided by financing activities 1,302,680
1,586,206
----------------------------

Net increase (decrease) in cash 157,543 (3,762)

Cash and cash equivalents at beginning of period 6,816 30,154
------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 164,359 $ 26,392
============= ============

============================================================================================

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

During the nine months ended March 31, 2002, the Company issued 1,190,000 shares
of common stock valued at $357,001 in partial repayment of Notes Payable held by
a related Australian Corporation in which we hold a 20% investment.

The accompanying notes are an integral part of these financial statements

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 PRINCIPLES OF CONSOLIDATION AND SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------

The accompanying unaudited consolidated financial statements include the results
of Advanced Communications Technologies, Inc. ("ACT" or the "Company") and its
wholly-owned subsidiaries. The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial statements. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to the quarterly reporting
rules of the Securities and Exchange Commission. The financial statements
reflect all adjustments of a recurring nature that are, in the opinion of
management, necessary for the fair presentation of the financial statements.

Operating results for the three and nine months ended March 31, 2002 are not
necessarily indicative of the results that may be expected for the fiscal year
ending June 30, 2002. The interim financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
for the fiscal year ended June 30, 2001 included in the Company's Form 10-KSB as
filed with the Securities and Exchange Commission.

(A) ORGANIZATION
- ----------------

The Company was formed on April 30, 1998 and was inactive from its date of
formation until April 1999 when it acquired all of the issued and outstanding
stock of Media Forum International, Inc. ("MFI") in a reverse merger. The merger
was treated as an acquisition of all of the assets of MFI and as a
recapitalization of the Company. In July 1999, the Company formed Advanced
Global Communications, Inc. ("AGC") as a wholly owned subsidiary to conduct its
international telephone network distribution business. On January 31, 2000, the
Company acquired all of the then issued and outstanding shares of
SmartInvestment.com, Inc. ("Smart") an inactive reporting company, for 200,000
shares of restricted common stock. The Company elected successor issuer status
to become a fully reporting company. The Company treated the purchase as a
recapitalization, and has not recorded any goodwill associated with the
acquisition. On April 5, 2000, the Company acquired a 20% equity ownership
interest in Advanced Communications Technology (Australia) Pty Ltd ("ACT-AU"),
an unconsolidated affiliated entity. The Company accounts for its investment in
ACT-AU under the equity method of accounting. On July 5, 2000, the Company
entered into a License and Distribution Agreement with Advanced Communications
Technologies (Australia) Pty Ltd. pursuant to which the Company has the
exclusive rights to market and distribute the SpectruCell technology in North,
South and Central America. The License and Distribution Agreement is effective
for an indefinite period. The parties to this License and Distribution Agreement
are currently involved in litigation in connection with this agreement. In July
2000, the Company formed Australon USA, Inc. ("Australon"), a Delaware
corporation owned 50% by the Company and 50% by Australon Enterprises Pty.,
Ltd., a publicly traded company listed on the Australian Stock Exchange and a
66% owned subsidiary of ACT-AU. In November 2000, the Company formed Advanced
Network Technologies (USA), Inc. ("ANT"), a Delaware corporation owned 70% by
the Company and 30% by ACT-AU. Both Australon and ANT are inactive. The Company
will account for the future results of operations of Australon on an equity
basis and ANT on a consolidated basis.

The Company is a holding company, whose primary activity is the investment in
companies involved in the wireless telecom industry. The Company expects to
generate revenue from marketing and distribution of their wireless communication
network products through licensing agreements with network providers.

(B) PRINCIPLES OF CONSOLIDATION
- -------------------------------

The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries AGC, Australon and ANT (all presently inactive).
All significant intercompany transactions and balances have been eliminated in
consolidation.

In preparing consolidated financial statements in conformity with generally
accepted accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and revenues and expenses during the reported period.
Actual results could differ from those estimates.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(D) FAIR VALUE OF FINANCIAL INSTRUMENTS
- ---------------------------------------

The carrying amounts of the Company's accounts payable, accrued liabilities, and
loans payable approximates fair value due to the relatively short period to
maturity for these instruments.

(E) MARKETABLE SECURITIES
- -------------------------

Management determines the appropriate classification of its investments at the
time of acquisition and reevaluates such determination at each balance sheet
date. Available-for-sale securities are carried at fair value, with unrealized
losses, reported as a separate component of stockholders' equity.

Declines in the fair value of individual available for sale securities below
their cost that are other than temporary would result in write-downs of the
individual securities to their fair value. The related write-downs are included
in earnings as realized losses.

(F) PROPERTY AND EQUIPMENT
- --------------------------

Property and equipment are stated at cost and depreciated, using accelerated
methods, over the estimated useful lives of 5 years.

(G) LONG-LIVED ASSETS
- ---------------------

The Company reviews long-lived assets and certain identifiable assets related to
those assets for impairment whenever circumstances and situations change such
that there is an indication that the carrying amounts may not be recoverable.

(H) INCOME TAXES
- ----------------

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

There was no current income tax expense for the three and nine months ended
March 31, 2002 and 2001 due to net operating losses in both periods. Any
deferred tax asset arising from the future benefit of the Company's net
operating loss carryforward has been fully reserved.

(I) COMPREHENSIVE INCOME
- ------------------------

The Company accounts for Comprehensive Income (Loss) under the Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (Statement No. 130"). Statement No. 130
establishes standards for reporting and display of comprehensive income and its
components.

(J) REVENUE RECOGNITION
- -----------------------

Revenue was generally recognized at the time telephone service minutes were used
and based on the volume of call service provided to customers and processed by
the Company's contractual service providers.

(K) 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.

(L) LOSS PER SHARE
- ------------------

Net loss per common share is computed based upon the weighted average common
shares outstanding.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(M) NEW ACCOUNTING PRONOUNCEMENTS
- ---------------------------------

The Financial Accounting Standards Board has recently issued several new
Statements of Financial Accounting Standards. Statement No. 141, "Business
Combinations" supersedes APB Opinion 16 and various related pronouncements.
Pursuant to the new guidance in Statement No. 141, all business combinations
must be accounted for under the purchase method of accounting; the
pooling-of-interests method is no longer permitted. SFAS 141 also establishes
new rules concerning the recognition of goodwill and other intangible assets
arising in a purchase business combination and requires disclosure of more
information concerning a business combination in the period in which it is
completed. This statement is generally effective for business combinations
initiated on or after July 1, 2001.

Statement No. 142, "Goodwill and Other Intangible Assets" supercedes APB Opinion
17 and related interpretations. Statement No. 142 establishes new rules on
accounting for the acquisition of intangible assets not acquired in a business
combination and the manner in which goodwill and all other intangibles should be
accounted for subsequent to their initial recognition in a business combination
accounted for under SFAS No. 141. Under SFAS No. 142, intangible assets should
be recorded at fair value. Intangible assets with finite useful lives should be
amortized over such period and those with indefinite lives should not be
amortized. All intangible assets being amortized as well as those that are not,
are both subject to review for potential impairment under SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of". SFAS No. 142 also requires that goodwill arising in a business
combination should not be amortized but is subject to impairment testing at the
reporting unit level to which the goodwill was assigned to at the date of the
business combination.

SFAS No. 142 is effective for years beginning after December 15, 2001 and must
be applied as of the beginning of such year to all goodwill and other intangible
assets that have already been recorded in the balance sheet as of the first day
in which SFAS No. 142 is initially applied, regardless of when such assets were
acquired. Goodwill acquired in a business combination whose acquisition date is
on or after July 1, 2001, should not be amortized, but should be reviewed for
impairment pursuant to SFAS No. 121, even though SFAS No. 142 has not yet been
adopted. However, previously acquired goodwill should continue to be amortized
until SFAS No. 142 is first adopted.

Statement No. 143 "Accounting for Asset Retirement Obligations" establishes
standards for the initial measurement and subsequent accounting for obligations
associated with the sale, abandonment, or other type of disposal of long-lived
tangible assets arising from the acquisition, construction, or development
and/or normal operation of such assets. SFAS No. 143 is effective for years
beginning after June 15, 2002, with earlier application encouraged.

The future adoption of these pronouncements is not expected to have a material
effect on the Company's financial position or results of operations.

NOTE 2. INVESTMENT IN UNCONSOLIDATED AFFILIATE
- --------------------------------------------------

In April 2000, the Company acquired 20% of the common stock of ACT-AU, an
unconsolidated affiliate. The purchase price of the investment amounted to
$19,350,000, and was comprised of a note payable for $7,500,000 (See Note 1(D)
and Note 6(B)) and the issuance of 5,000,000 shares of restricted common stock
valued at $11,850,000. The shares issued were valued at the average quoted
trading price during the acquisition period. The fair value of the investment at
the acquisition date was determined to be $3,657,472. The excess of the purchase
price over the fair value of the investment in the amount of $15,692,528 was
accounted for as goodwill.

The Company's 20% interest in ACT-AU was accounted for using the equity method
of accounting and was stated at the amortized cost of goodwill and the equity in
undistributed earnings since acquisition. The equity in earnings of ACT-AU was
adjusted for the amortization of the goodwill, as discussed above. During the
year ended June 30, 2001, the Company reduced the carrying value of its
unconsolidated equity investment in ACT-AU to $2,000,000 based on management's
evaluation of ACT-AU's fair market value. This adjustment was required by FASB
121 ("Accounting for Impairment of Long-Lived Assets") and APB 18 ("The Equity
Method of Accounting for Investments in Common Stock"). Such pronouncements
require the annual evaluation of long-lived assets for impairment.

ACT-AU had a current period operating loss combined with a history of operating
losses due to the fact that ACT-AU has been in development stage activities
since inception and has not generated any sales revenue for its products.
ACT-AU's projections of estimated future cash flows could not be objectively
verified because ACT-AU had not completed scheduled field trials of the
SpectruCell product, a requisite before sales can be recognized. Based on these
factors, management completely wrote-off its investment in ACT-AU and wrote-down

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

its investment in ACT-AU's goodwill to $2,000,000 based on the fair market value
of ACT-AU's 66% majority ownership interest in Australon Enterprises, Ltd, a
publicly traded Australian company.

Amortization was computed on a straight-line basis over fifteen years until June
30, 2001 when the Company re-assessed the life of the goodwill to be 5 years.
This change coupled with the writedown of goodwill resulted in a reduction of
Goodwill amortization on a quarterly basis from $261,542 to $100,000. The
amortization of goodwill charged to income for the nine months ended March 31,
2002 and March 31, 2001 was $300,000 and $784,626, respectively.

The components of the investment in ACT-AU at March 31, 2002 are as follows:

INVESTMENT GOODWILL TOTAL

At acquisition $ 3,657,472 $ 15,692,528 $ 19,350,000

Cumulative Investment loss (3,657,472) -- (3,657,472)
Amortization of goodwill -- (1,292,664) (1,292,664)
Impairment of goodwill -- (12,399,864) (12,399,864)
------------ ------------ -------------

Balance at June 30, 2001 $ -- $ 2,000,000 $ 2,000,000
Cumulative amortization of
goodwill through 3/31/02 (300,000) (300,000)
------------ ------------ -------------
Balance at March 31, 2002 $ $ 1,700,000 $ 1,700,000
============ ============ =============

NOTE 3. REALIZED LOSS ON DECLINE IN MARKETABLE SECURITIES
- -------------------------------------------------------------

The Company's marketable securities were comprised of equity securities, all
classified as available-for-sale, which were carried at their fair value based
upon the quoted market prices of those investments at June 30, 2001 and 2000.
Declines in the fair value that are other than temporary result in write-downs
of the securities and included in earnings as realized losses. The Company
determined there was a permanent decline in the fair value of these securities
and at June 30, 2001 the Company wrote down these securities to their fair value
of $0. This resulted in $6,825 being recognized in the statements of operations
as a realized loss on decline in marketable securities for the year ended June
30, 2001.

NOTE 4. PROPERTY AND EQUIPMENT
- ----------------------------------

Computer and office equipment $ 32,909
Less: Accumulated depreciation (14,635)
--------------
Property and equipment - net $ 18,274
==============

Depreciation expense for the nine months ended March 31, 2002 was $3,000.

NOTE 5. ACCRUED COMPENSATION
- --------------------------------

The Company had an oral agreement with Mr. Roger May to serve as the Chief
Executive Officer of the Company. Mr. May agreed to defer payment of the amounts
owed him pursuant to the oral agreement due to the Company's lack of funds. The
Company owed Mr. May $479,050 at June 30, 2001. On November 30, 2001, Mr. May
was removed as the Company's Chief Executive Officer. Subsequent to that date,
Mr. May was not entitled to receive any additional compensation from the
Company.

At the request of the Company's Board of Directors, the Compensation Committee
conducted a review of the nature of the past services provided by Mr. May to the
Company to determine whether a portion of such services are more properly
allocable to the Company's unconsolidated Australian affiliate. At the Company's
March 26, 2002 Board of Director's meeting, the Board of Directors unanimously
approved the recommendation of the Compensation Committee to reduce Mr. May's
prior accrued compensation by $394,361 representing services Mr. May performed
for ACT-Australia, leaving a balance of $172,183 at March 31, 2002.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. NOTES AND LOAN PAYABLE
- ---------------------------------

(A) NOTE PAYABLE-GRASSLAND
- --------------------------

MFI was obligated to pay $150,000 to a company (the "Payee") pursuant to a
convertible promissory note. During December 1997, MFI issued 75,000 of its
common shares to settle the amounts due to the Payee. However, a dispute arose
as to whether the Payee authorized the issuance of the shares. The Payee filed a
suit during December 1997 to enforce the convertible promissory note. Total
interest payable was $84,507 as of June 30, 2000 resulting in the total
principal and accrued interest payable at June 30, 2000 of $234,507. In June
2000, the parties agreed to settle the matter for a payment of $200,000. This
resulted in a gain on extinguishment of debt in the amount of $34,507. The
Company made a payment of $50,000 by June 30, 2000. The $150,000 remainder was
to be paid with proceeds from the 75,000 shares of stock and any remaining
balance to be paid by the Company. The revised obligation was to be paid by
August 14, 2000. The Company defaulted on this revised payment obligation and a
judgment against the Company was entered. In October 2000, the Company sold the
75,000 shares of stock realizing $41,802 which it remitted in partial repayment
of its outstanding debt. As of June 30, 2001, the Company's remaining balance
and accrued interest on this obligation was $118,530. An additional $4,206 of
interest was accrued on this note and on October 19, 2001 the Company paid the
obligation in full. On October 24, 2001 the Company received notice from the
court that its judgment has been satisfied.

(B) NOTE PAYABLE TO ACT-AUSTRALIA
- ---------------------------------

The Company had a non-interest bearing and unsecured note payable to ACT-AU of
$7,500,000 as of April 5, 2000 (See Note 2). The note was payable in three equal
monthly installments commencing on May 31, 2000. Under the terms of the Stock
Purchase Agreement with ACT-AU, the monthly installment payments were extended
without interest to allow for the Company to, on a best efforts basis, raise the
cash portion of the purchase price through a private or public offering of
securities. There are no default or penalty provisions. Upon raising funds
pursuant to a private or public offering, the Company shall only be obligated to
repay ACT-AU's note with those funds remaining after deduction for reserves
needed for current operations, working capital and the development and expansion
of its operations and the operations of its subsidiaries, as determined by the
Company's Board of Directors.

The following schedule represents payments on such debt by issuance of
restricted common stock to either ACT-AU or creditors or employees of ACT-AU.
Such transactions were recorded at the market price of the stock at date of
issuance.

DATE SHARES OF COMMON VALUE
STOCK ISSUED

September 2000 5,000,000 3,500,000
October 2000(1) 460,000 460,000
June 2001 1,137,000 567,100
September 2001 1,190,000 357,001
----------------------- ----------------

7,787,000 4,884,101
----------------------- ----------------
(1) This transaction resulted in a gain on extinguishment of debt of $23,000.

During the year ended June 30, 2001 the Company repaid an aggregate of $247,608
of the obligation in cash. During the three month period ended September 2001,
the Company repaid $25,000 of the obligation in cash. No payments on the note
were made during the three months ended December 31, 2001 and March 31, 2002.

Pursuant to the terms of the April 5, 2000 Stock Purchase Agreement between the
Company and ACT-AU, the Company has elected to reduce its outstanding loan
balance by $552,125 for funds previously advanced to ACT-AU.

As of March 31, 2002, the balance of the Company's obligation to ACT-AU was
$1,791,166. The Company is currently in litigation with ACT-AU regarding the
attempt by Mr. May and ACT-AU to lien or transfer the Company's shares in ACT-AU
for alleged nonpayment of the Company's obligation (See Note 10).

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2002, the Company owed Global Communications Technology Pty, an
Australian company wholly-owned by Mr. May, a former officer and director of the
Company, $1,055,736 for funds advanced to the Company to provide working
capital. This loan is non-interest bearing and unsecured, and has no fixed date
for repayment.

(D) SHORT TERM LOAN PAYABLE
- ---------------------------

On December 13, 2001 the Company entered into a 90 day $325,000 Promissory Note
(the "Note") with Cornell Capital Partners, LP. The Note bears interest at 12%
and is secured by a Guaranty and Pledge Agreement executed by Messrs. Danson,
Lichtman and Prouty. The Company realized $269,000 of net proceeds after
financing costs and legal fees. The Note was repaid on January 14, 2002 with
proceeds from the Company's $1 million Convertible Debenture (See Note 7(B)).

NOTE 7. CONVERTIBLE DEBENTURES
- ----------------------------------

(A) AJW PARTNERS, LLC AND NEW MILLENNIUM CAPITAL PARTNERS II, LLC
- ------------------------------------------------------------------

On September 30, 1999, the Company entered into secured convertible debentures
purchase agreements with two investors, who were also stockholders of the
Company, whereby the Company sold $500,000 of 12% Secured Convertible Debentures
due April 1, 2000, which were convertible into shares of the Company's Common
Stock. In addition, on September 30, 1999, the Company issued another
convertible debenture to Bank Insinger de Beaufort N.V. in the amount of
$150,000. The debentures were convertible, at the holder's option, into shares
of common stock in whole or in part at any time after the original issue date.
The number of shares of common stock issuable upon a conversion was to be
determined by dividing the outstanding principal amount of the debenture to be
converted, plus all accrued interest, by the conversion price. The conversion
price in effect on any conversion date is 50% of the average of the bid price
during the twenty trading days immediately preceding the applicable conversion
date.

The convertible debentures contained a beneficial conversion feature computed at
its intrinsic value which is the difference between the conversion price and the
fair value on the debenture issuance date of the common stock into which the
debt is convertible, multiplied by the number of shares into which the debt is
convertible at the commitment date. Since the beneficial conversion feature is
to be settled by issuing equity, the amount attributed to the beneficial
conversion feature, of $650,000, was recorded as an interest expense and a
component of equity on the issuance date during the fiscal year ended June 30,
2000.

The Company further reduced these bonds payable by offsetting a related bond
receivable in the amount of $36,450.

Between October and December 2000, AJW Partners, LLC and New Millennium Capital
Partners II, LLC elected to convert $262,800 of convertible debentures into
860,378 shares of the Company's restricted common stock.

In December 2000, Bank Insinger de Beaufort N.V. converted its $150,000 note,
inclusive of accrued and unpaid interest into 943,167 shares of the Company's
restricted common stock.

As of March 31, 2002 and June 30, 2001, $200,750 of Secured Convertible
Debentures were still outstanding. The Company is in default of its remaining
obligations to AJW Partners, LLC and New Millennium Capital Partners II, LLC.

On April 24, 2002 the Company entered into a Settlement Agreement with the two
note holders, AJW Partners, LLC and New Millennium Capital Partners II, LLC.
Under the terms of the Settlement Agreement, the note holders agreed to dismiss
their lawsuit and convert their remaining unpaid obligation, inclusive of
accrued and unpaid interest, into 8,500,000 shares of the Company's common
stock, payable over a 180-day period. The Company has the option, until July 23,
2002, to cash out the note holders by remitting to them $475,000 by June 8, 2002
or $325,000 by July 23, 2002 in lieu of the balance of shares to be delivered.
On April 24, 2002, the Company issued 1,460,725 and 664,275 shares of common
stock to AJW Partners, LLC and New Millennium Capital Partners II, LLC,
respectively (See Note 10(B)).

(B) CORNELL CAPITAL PARTNERS, LP
- --------------------------------

In January 2002, the Company issued, in the aggregate $1 million of 5%
Convertible Debentures to Cornell Capital Partners, LP and other investors.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

These debentures are convertible into shares of common stock at a price equal to
either (a) an amount equal to 120% of the closing bid price of the common stock
as of the closing date or $.40, whichever is higher, or (b) an amount equal to
80% of the lowest closing bid price of the common stock for the five trading
days immediately preceding the conversion date. These convertible debentures
accrue interest at a rate of 5% per year and are convertible at the holder's
option. These convertible debentures have a term of two years. At the Company's
option, these debentures may be paid in cash or redeemed at a 20% premium prior
to January 2004.

The convertible debentures contain a beneficial conversion feature computed at
its intrinsic value that is the difference between the conversion price and the
fair value on the debenture issuance date of the common stock into which the
debt is convertible, multiplied by the number of shares into which the debt is
convertible at the commitment date. Since the beneficial conversion feature is
to be settled by issuing equity, the amount attributed to the beneficial
conversion feature, of $250,000, was recorded as an interest expense and a
component of equity on the issuance date.

The Company realized $564,000 of net proceeds after financing fees, closing
costs and the repayment of the $325,000 ninety-day short-term note (See Note
6(D)).

NOTE 8. STOCKHOLDERS' EQUITY (DEFICIENCY)
- ---------------------------------------------

(A) PRIVATE PLACEMENT
- ---------------------

During the period of December 2000 to August 2001, pursuant to a private
placement, the Company issued 3,060,600 shares of common stock and 3,060,000
warrants at $.30 per share. The Company received $1,168,180 from investors,
which included $250,000 for stock not yet issued as of June 30, 2001 and
$275,454 for warrants.

The Company issued 250,000 shares of common stock, valued at $75,000, in payment
of offering costs incurred. The value assigned to this stock was based on the
private placement memorandum of $.30 per share. The value of the common stock
has been charged to equity as direct costs to the offering.

The fair market value of the warrants, aggregating $275,454 and $110,000 at June
30, 2001 and September 30, 2001, respectively, was estimated on the grant date
using the Black-Scholes option pricing model as required under FASB 123 with the
following weighted average assumptions: expected dividend yield 0%, volatility
49.84%, risk-free interest rate 4.22%, expected option life 2 years. At December
31, 2001, no warrants have been exercised.

During the three months ended September 30, 2001, the Company received the
balance of the offering proceeds and issued an additional 1,233,333 shares of
its restricted common stock and associated warrants.

During the three months ended December 31, 2001, the Company issued 137,727
shares of common stock, valued at $41,318 in payment of offering costs incurred.
The value assigned to this stock was based on the private placement memorandum
of $.30 per share. The value of the common stock has been charged to equity as
direct costs to the offering and has been netted against proceeds received from
the issuance of shares in the previous quarter.

On February 27, 2002, the Company's Board of Directors approved a resolution to
reprice the private placement offering from $.30 per share to $.20 per share.
The repricing resulted in the additional issuance of 2,146,967 of its restricted
common stock and warrants to the 23 investors that previously subscribed to the
Company's private placement. The exercise price of the underlying warrants will
remain at $.30 per share.

(B) EQUITY LINE OF CREDIT FACILITY
- ----------------------------------

On January 10, 2002, the Company entered into a $30 million Equity Line of
Credit facility with Cornell Capital Partners, LP. Pursuant to the Equity Line
of Credit, the Company may, at its discretion, periodically issue and sell to
Cornell Capital Partners, LP shares of common stock for a total purchase of $30
million. The amount of each advance is subject to an aggregate monthly maximum
advance amount of $2 million in any 30 day period. Cornell Capital Partners, LP
will purchase the shares of common stock for a 9% discount to the lowest closing
bid price of the Company's common stock during the 5 trading days after a notice
date. In addition, Cornell Capital Partners, LP will retain 3% of each advance
under the Equity Line of Credit, together with a one-time commitment fee of
$740,000, paid in 2,960,000 shares of common stock. Cornell Capital Partners, LP
intends to sell any shares under the Equity Line of Credit at the then
prevailing market price.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has engaged Westrock Advisors, Inc., a registered broker-dealer, to
advise it in connection with the Equity Line of Credit. Westrock Advisors, Inc.
was paid a fee of 40,000 shares of the Company's common stock, which was equal
to $10,000 at a closing bid of $.25 on January 10, 2002.

During the year ended June 30, 2001, the Company issued 1,051,491 shares of
common stock for services. The stock was valued based on the quoted trading
price on the grant dates, which aggregated $328,870.

During the three months ended September 30, 2001, the Company issued 780,240
shares of restricted common stock for services. The stock was valued based on
the quoted trading price on the grant dates, which aggregated $244,224.

During the three months ended December 31, 2001, the Company issued 419,681
shares of restricted common stock for prior professional services rendered. The
stock was valued based on the quoted trading price on the grant dates, which
aggregated $116,335.

During the three months ended March 31, 2002, the Company issued 2,013,468
shares of restricted common stock having a value of $151,010 for prior
professional services rendered. The stock was valued based on the quoted trading
price on the date the stock was granted.

(D) STOCK ISSUED FOR EXTINGUISHMENT OF DEBT
- -------------------------------------------

During the nine months ended March 31, 2002, the Company issued 1,190,000 shares
of restricted common stock to ACT-AU, its vendors and employees for the partial
extinguishment of debt. The stock was valued based on the quoted trading price
on the grant dates, which aggregated $370,001 (See Note 6(B)).

STOCK ISSUED TO DIRECTORS
- -------------------------

During the three months ended March 31, 2002, the Company issued 200,000 shares
of its restricted common stock having a value of $36,000 to each of its five
current Directors for services rendered to the Company as directors. The Company
issued a total of 1,000,000 shares in the aggregate having a value of $180,000.
The stock was valued based on the quoted trading price of the Company's stock on
the date that the shares were granted to the individual directors.

STOCK ISSUED IN SETTLEMENT OF LAWSUIT
- -------------------------------------

During the three months ended March 31, 2002, the Company issued 320,000 shares
of its restricted common stock having a value of $80,000 to the principals of
WORLD IP in full settlement of the WORLD IP rescission lawsuit. The stock was
valued based on the quoted trading price of the Company's stock on the date that
the shares were granted (See Note 10).

STOCK ISSUED FOR PLACEMENT FEES
- -------------------------------

During the three months ended March 31, 2002, the Company issued 2,960,000
shares of its restricted common stock having a value of $740,000 to Cornell
Capital Partners, LP as a one-time commitment fee in connection with the $30
million Equity Line of Credit Agreement. The stock was priced at the closing bid
price of $.25 per share on January 10, 2002. In addition, the Company issued
40,000 shares of its restricted common stock having a value of $10,000 to
Westrock Advisors, Inc to advise it in connection with the Equity Line of
Credit. The 40,000 shares were also priced at the closing bid price of $.25 on
January 10, 2002.

NOTE 9. RELATED PARTIES
- ---------------------------

(A) GLOBAL COMMUNICATIONS TECHNOLOGY PTY LTD
- --------------------------------------------

Global Communications Technologies Pty Ltd., a related party, is wholly owned by
Mr. May a principal stockholder of the Company.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(B) ADVANCED COMMUNICATIONS TECHNOLOGY (AUSTRALIA) PTY. LTD.
- ------------------------------------------------------------

Advanced Communications Technology (Australia) Pty. Ltd., an Australian company,
is 70% owned by Mr. May's wholly-owned company, Global Communications Technology
Pty Ltd.

Certain of the Company's legal counsel are stockholders and directors of the
Company.

NOTE 10. COMMITMENTS AND CONTINGENCIES
- -----------------------------------------

(A) LEASE AGREEMENT
- ---------------------

The Company is a party to a three-year office lease commencing January 1, 2002
and ending December 31, 2004. The monthly rent is $7,634 inclusive of the cost
of monthly parking. The minimum lease payments for the remaining life of the
lease is $251,922.

(B) LEGAL MATTERS
- --------------------

(I) NANCY J. NEEDHAM AND EDMUND R. DUPONT LAWSUIT

In Nancy J. Needham; Edmund R. DuPont et al v. Advanced Communications
Technologies, Inc., et al, an action filed July 2000 in the Fifteenth
Judicial Circuit in the State of Florida, two former officers and
directors of the Company are seeking damages and injunctive relief arising
out of the Company's refusal to provide legal opinion letters and to take
other actions necessary to allow the former officers to convert restricted
stock into unrestricted stock under an exemption under Rule 144. The
plaintiffs have not specified the amount of damages they are seeking. The
Company has filed a counterclaim to rescind all of the Plaintiffs' stock
for lack and/or failure of consideration and other damages. The Company
believes that it has meritorious defenses to the suit and is vigorously
defending the litigation. In October 2001, the Court denied summary
judgment for the Plaintiffs.

(II) WORLD IP INCORPORATED SETTLEMENT

In Advanced Communications Technologies, Inc., et al v. World IP
Incorporated, et al, an action filed in the Fifteenth Judicial Circuit in
the State of Florida, the Company sued World IP Incorporated, its
subsidiaries and shareholders (collectively, "World") for breach of the
terms of a Stock Subscription and Purchase Agreement between the parties
dated November 10, 1999. The parties entered into Settlement and
Rescission Agreements, pursuant to which all transactions between the
parties including the Stock Subscription and Purchase Agreement, the
issuance of World stock to the Company and the issuance of 500,000 shares
of the Company's stock to World's shareholders were rescinded effective
November 10, 1999. Further, World's shareholders were issued 320,000
shares of the Company's stock which will be registered pursuant to the
Registration Statement currently on file with the Securities Exchange
Commission. The lawsuit was dismissed by a Court order dated January 29,
2002.

(III) AJW PARTNERS, LLC AND NEW MILLENNIUM CAPITAL PARTNERS II, LLC

On April 24, 2002, the Company entered into a Settlement Agreement with
the two remaining September 1999 Convertible Debenture holders, AJW
Partners, LLC and New Millennium Capital Partners II, LLC. Under the terms
of the Settlement Agreement, the Company is obligated to issue, over a 180
day period, 8,500,000 shares of its common stock in exchange for the
dismissal of the lawsuit and in satisfaction of the remaining outstanding
principal and accrued interest. The Company has the option, until July 23,
2002, to substitute cash in lieu of shares. On closing, the Company issued
1,460,725 and 664,275 shares of its common stock to AJW Partners, LLC and
New Millennium Capital Partners II, LLC, respectively. A Stipulation and
Order of Discontinuance was filed with and Ordered by the court on April
25, 2002 (See Note 7A ).

(IV) ACT-AUSTRALIA LITIGATION

On December 6, 2001, Mr. Roger May, as Chairman and Chief Executive
Officer of ACT-Australia, sent a letter to Advanced Communications

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

demanding full payment of all amounts due under the Stock Purchase
Agreement between Advanced Communications and ACT-Australia (the "Stock
Purchase Agreement). This letter was dated six days after Mr. May was
removed by the Board of Directors from all executive capacities including
as President and Chief Executive Officer. Mr. May sent additional demand
letters on December 11, 2001, and December 21, 2001. These demand letters
threatened to exercise the rights granted to ACT-Australia under its
constitutional documents, which include exercising ACT-Australia's lien
over the shares registered in the name of Advanced Communications or
declaring that those shares be forfeited. Advanced Communications believes
that it has fully met its obligation under the Stock Purchase Agreement,
which states that payments are only required to be paid to ACT-Australia
from those funds remaining after deduction of reserves needed for current
operations, working capital and the development and expansion of its
operations and the operations of its subsidiaries as determined by its
Board of Directors. At this time, Advanced Communications does not have
sufficient funds available to pay to ACT-Australia. On January 23, 2002,
Advanced Communications filed suit against ACT-Australia and Roger May in
the Supreme Court of Victoria at Melbourne, Australia to protect its
investment.

On January 23, 2002, the Court issued an interim order effectively
enjoining and prohibiting ACT-Australia from "transferring, dealing with,
charging, diminishing, mortgaging, assigning or disposing of" Advanced
Communications' stock in ACT-Australia. Although the court order had
already been extended twice, it was again extended by the court on
February 20, 2002, until a final determination is made at trial.
ACT-Australia declined to contest the court orders sought by Advanced
Communications. ACT-Australia filed its Answer to the suit and the parties
are currently conducting discovery of material documents.

On March 15, 2002, ACT-Australia issued a press release stating that
EntrePort Corporation ("EntrePort"), an AMEX listed company, executed
"definitive documents" whereby EntrePort would acquire a minority interest
in ACT-Australia and ACT-Australia would purchase a majority interest in
EntrePort. Further, on March 14, 2002, ACT-Australia entered into an
Acquisition Agreement with EntrePort (the "Acquisition Agreement") which
stated that ACT-Australia "now plans to locate and establish a base of
operations in the United States for the continued development, marketing
and distribution of the SpectruCell product in the USA and Canada. Such
base of operations will involve the establishment of engineering
facilities, research and development, sales, marketing and distribution."
The Acquisition Agreement also stated that EntrePort's name would be
changed to "Advanced Communications USA, Inc." Mr. May resigned from
Advanced Communications' Board of Directors one day before entering into
the Acquisition Agreement.

Advanced Communications believes that the transaction with EntrePort as
described in the Acquisition Agreement is inconsistent with the rights
granted to it by ACT-Australia in the License and Distribution Agreement
dated July 5, 2000 pursuant to which Advanced Communications received the
exclusive rights to market and distribute the SpectruCell technology in
North, South and Central America. Advanced Communications therefore
instructed its Australian lawyers to write to ACT-Australia requesting an
undertaking that it would not appoint EntrePort or any other person to
market and distribute the SpectruCell technology in the exclusive
territory in breach of the license agreement. ACT-Australia refused to
provide the undertaking sought by Advanced Communications and,
accordingly, Advanced Communications applied to the Court for an order
restraining ACT-Australia from breaching the terms of the license
agreement. On April 26, 2002, the Court issued an interim order on the
following terms:

"Until the determination of the plaintiff's [i.e., Advanced
Communications'] summons filed on 23 April 2002 or further
order, the first defendant [i.e., ACT-Australia], whether
by itself or by its officers, employees, agents, attorneys,
or any of them or otherwise, be restrained from appointing
or agreeing to appoint in any way whatsoever EntrePort
Corporation or any other person to distribute, sell, offer
to sell or supply or otherwise deal in or with the wireless
or terrestrial multi-protocols communication network
technology known as SpectruCell (`Product') (incorporating
the software which enables the Product to perform to its
specifications, consisting of a set of instructions or
statements in machine readable medium, and any enhancement
or modification of that software (`Software') and related
hardware performing part of the base station controller
which processes and transmits mobile communications
protocols such as AMPS, CDMA, TDMA GSM, W-CDMA, UMTS, 3G &
Voice IP) in the United States of America, the North
American and South American Continents (`Exclusive
Territory') without the prior written consent of the
plaintiff."

EntrePort was added as a defendant to the proceedings.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On May 7, 2002, Advanced Communications received a notice alleging a
breach from ACT-Australia stating that Advanced Communications had
breached its obligation under the License Agreement. In addition, on May
7, 2002, ACT-Australia sent a termination notice formally terminating the
License Agreement. Advanced Communications believes that the notice of
breach and the termination notice are without merit and it is taking the
necessary legal actions to prevent ACT-Australia from terminating its
rights under the License Agreement.

On May 8, 2002, the Court extended its April 26, 2002 order further
restraining ACT-Australia from "acting upon or taking any further steps in
reliance upon" the notice of breach and termination notice. On May 27,
2002, the Court held a full hearing on the injunction application, took
the matter under advisement and indicated that it would rule on the matter
in the near future. The parties are currently awaiting the judge's
decision in this matter.

V) STAR MULTICARE SERVICES, INC.

In Star Multi Care Services, Inc. v. Advanced Communications Technologies,
Inc., an action filed September 18, 2000 in the Fifteenth Judicial Circuit
in the State of Florida, Star Multi Care Services, Inc. ("Star") sued the
Company for alleged breach of contract and the recovery of a break-up or
termination fee in excess of $50,000 in conjunction with the Company's
alleged failure to consummate a proposed merger with Star in January 2000.
The Company believes that the suit is without basis and is vigorously
defending the alleged claim.

NOTE 11. GOING CONCERN
- -------------------------

The Company's consolidated financial statements for the nine months ended March
31, 2002, have been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business. The Company's net loss of $(1,973,621) for the nine
months ended March 31, 2002, working capital deficiency of $2,954,729 and
stockholders' deficiency of $2,931,136, raise substantial doubt about its
ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on the
Company's ability to raise additional capital and implement its business plan.
Management anticipates that the issuance of securities will generate sufficient
resources for the continuation of the Company's operations (See Note 8B).

The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

NOTE 12. SUBSEQUENT EVENTS
- -----------------------------

Effective April 30, 2002, Mr. Gary Ivaska resigned as the Company's Chief
Executive Officer. The Company and Mr. Ivaska have settled all outstanding
amounts otherwise due him for his prior services. Under the terms of the Ivaska
Agreement, the Company is obligated to pay Mr. Ivaska $40,000 at the rate of
$10,000 per month for four months commencing on May 31, 2002.

On May 2, 2002, the Company's Board of Directors voted to appoint Mr. Wayne
Danson, currently the Company's Vice President and Chief Financial Officer to
assume the role of the Company's President.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

ITEM 1. BUSINESS

Unless the context requires otherwise, "we", "us" or "our" refers to Advanced
Communications Technologies, Inc. and subsidiaries on a consolidated basis.

OVERVIEW

We are a party to a license and distribution agreement for SpectruCell, a
wireless software based communications platform that is being developed to offer
mobile communications network providers the flexibility of processing and
transmitting multiple wireless communication signals through one base station.
The SpectruCell product, which is based on the Software Defined Radio ("SDR")
platform, is being developed to allow wireless communication network providers
with the ability to not only direct multiple wireless frequencies (AMPS, CDMA,
GSM, Mobile IP, Voice IP, etc.) through one base station but will also provide
flexibility for future spectrum upgrades to 3G. The SpectruCell product is being
developed by our affiliated entity, Advanced Communications Technologies, Pty
(Australia) which we own a 20% interest in. Mr. May, a former officer and
director and significant shareholder owns 70% of Advanced Communications
Technologies (Australia) Pty Ltd. through Global Communications Technology Pty
Ltd., his wholly-owned company. Our license and distribution agreement
encompasses a territory comprising North, Central, and South America and is for
an indefinite period. It grants us the exclusive right to license, market and
distribute SpectruCell and other products being developed by our affiliated
entity throughout the North, Central and South American territories. On May 7,
2002, Advanced Communications (Australia) alleged that we are in default of the
license and distribution agreement. We believe this allegation is without merit
and intend to defend our rights.

We currently have no other products for licensing and/or distribution other than
SpectruCell and other products being developed for sale and/or license by
Advanced Communications (Australia). SpectruCell has not yet been commercially
tested and is expected to be field tested in the U.S. in 2002. We believe that
SpectruCell is expected to be available for commercial license and distribution
in the fourth quarter 2002.

We expect to generate revenue from the licensing, marketing and distribution of
the SpectruCell product under our license agreement. The license agreement gives
us the exclusive right to market and distribute SpectruCell in North, Central
and South America. The manufacturing of SpectruCell will be arranged by Advanced
Communications (Australia). We have not had any meaningful revenues to date. For
the six months ended December 31, 2001, we had a net loss of $1,108,218 or $0.01
per share. At December 31, 2001, we had negative working capital of $2,870,078
and an accumulated deficit of $26,624,173. For the nine months ended March 31,
2002, we had a net loss of $1,973,621 or $0.02 per share. At March 31, 2002, we
had negative working capital of $2,954,729 and an accumulated deficit or
$27,489,576.

SpectruCell is being developed as a technology that, we believe, will reduce the
network providers' cost for on-going upgrades to wireless formats 2.5 and 3G and
beyond, as each upgrade will be software-based rather than hardware-based. We
also believe that network providers implementing a SpectruCell network
architecture will be able to protect their existing client base through
continued support and expansion of their existing services while being able to
support future 2.5 and 3G-based protocols. This flexible migration path for
network operators means that they can protect their existing financial asset
while giving the operator both a technical and financial migration to 2.5 and
3G.

LICENSE AGREEMENT

On July 5, 2000, we entered into a license and distribution agreement with
Advanced Communications Technologies (Australia) Pty Ltd, a company in which we
own a 20% interest and Mr. May indirectly owns a 70% interest. Mr. May is a
former officer and director and a significant shareholder of our company.
Pursuant to the agreement, we received an exclusive license to market and
distribute in North, South and Central America the SpectruCell technology and
certain other technologies to be developed. This license is for an indefinite
period of time. Upon the SpectruCell technology becoming commercially available,
our company and Advanced Communications (Australia) will need to negotiate
minimum guaranty payments, as well as the amount of the commission payable to
our company. These amounts will be negotiated in accordance with industry
standards after the final pricing of the SpectruCell technology is established.

We are involved in litigation in Australia with Advanced Communications
(Australia) regarding the license. On April 26, 2002, the Supreme Court of

Victoria at Melbourne, Australia issued an interim order against Advanced
Communications (Australia) and Mr. May in connection with the ongoing litigation
between Advanced Communications and Advanced Communications (Australia). The
interim order prohibits Advanced Communications (Australia) and Mr. May from
violating the terms of the license and distribution agreement. Based on a press
release issued by Advanced Communications (Australia), Advanced Communications
(Australia) appears to be seeking to license the SpectruCell technology to
another entity in our territory. On April 26, 2002, the Australian court entered
the interim order. On May 7, 2002, Advanced Communications received a notice
alleging a breach from ACT-Australia stating that Advanced Communications had
breached its obligation under the License Agreement. In addition, on May 7,
2002, ACT-Australia sent a termination notice formally terminating the License
Agreement. Advanced Communications believes the notice of breach and the
termination notice are without merit and is taking the necessary legal actions
to prevent ACT-Australia from terminating its rights under the License
Agreement. On May 8, 2002, the Australian court extended its April 26, 2002
order further restraining Advanced Communications (Australia) from "acting upon
or taking any further steps in reliance upon" the notice of breach and
termination notice. On May 27, 2002, the Court held a full hearing on the
injunction application, took the matter under advisement and indicated that it
would rule on the matter in the near future. The parties are currently awaiting
the judge's decision on this matter.

The following is management's discussion and analysis of certain significant
factors, which have affected our financial position and operating results.
Certain statements under this section may constitute "forward-looking
statements" (See Part II- Other Information). The following discussion should be
read in conjunction with the unaudited financial statements and Notes thereto.

Resignations

Effective March 14, 2002, Roger May and Allen Roberts resigned from our
company's Board of Directors.

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2002 TO THE THREE
MONTHS ENDED MARCH 31, 2001

OVERALL RESULTS OF OPERATIONS

For the three months ended March 31, 2002 we incurred an overall loss of
($615,403) or ($.01) per share, which was 54% less than the overall loss of
($1,345,384) or ($0.01) per share in the comparable period in the prior year.

REVENUE AND COST OF SALES

No revenues were generated during the three months ended March 31, 2002 or March
31, 2001.

OPERATING EXPENSES

Operating expenses, net of stock-based compensation charges of $21,010 for the
three months ended March 31, 2002, were $583,976 and represent a $536,406 or 48%
decrease in operating expenses of $1,120,382, net of stock-based compensation
charges, for the comparative period ended March 31, 2001. Included in operating
expense for both periods is $100,000 and $262,542 respectively, of depreciation
and amortization attributable to the quarterly depreciation of our office
property and equipment and amortization of goodwill for the three months ended
March 31, 2002 and 2001. Additional amortization of deferred financing costs and
commitment fee of $100,417 is included for the three months ended March 31,
2002.

OTHER INCOME (EXPENSE)

Interest expense incurred for the three months ended March 31, 2002 was $260,417
and was attributable to accrued interest on the $1 million Convertible
Debentures we issued in January 2002. Included in total interest expense is
$250,000 interest attributable to the intrinsic value of the beneficial
conversion feature included in the convertible debentures we issued to Cornell
Capital Partners, L.P. and other investors. We incurred no interest for the
comparative three-month period ended March 31, 2001.

For the quarter ended March 31, 2002, we did not record our share of our
unconsolidated investment in Advanced Communications Technologies (Australia)
Pty Ltd. consolidated quarterly loss because our equity investment in its
underlying net assets was written down to zero as of June 30, 2001. In
accordance with the equity method of accounting, we are not required to record
our share of future losses from our investment in Advanced Communications
Technologies, Pty (Australia) until our investment becomes positive. For the
comparative three months ended March 31, 2001, our share, expressed in US
dollars, of our unconsolidated investment in Advanced Communications ___
Technologies, Pty (Australia) consolidated net income for the quarter was
$229,803. During the three months ended March 31, 2001, we recognized a $425,000
loss on the unsuccessful acquisition of ORBCOMM's assets.

COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 2002 TO THE NINE MONTHS
ENDED MARCH 31, 2001

OVERALL RESULTS OF OPERATIONS

For the nine months ended March 31, 2002, the Company incurred an overall net
loss of ($1,973,621) or ($.02) per share, as compared to an overall net loss of
($3,030,635) or ($.03) per share, for the comparative period in the prior year.
The overall net loss for the nine months ended March 31, 2002 was 35% less than
the net loss for the nine months ended March 31, 2001.

REVENUE. We did not generate any revenue for the nine months ended March 31,
2002. Revenue for the nine months ended March 31, 2001 was $50,000 and was
realized entirely from our subsidiary's then operational U.S.-Pakistan
international telephone distribution network. Cost of sales attributable to
telephone network revenue was $57,310 for the nine months ended March 31, 2001.

OPERATING EXPENSES. Operating expenses, net of stock-based compensation charges
of $81,010 for the nine months ended March 31, 2002, were $1,626,988 and
represent a $806,050 decrease, or 33%, in operating costs net of stock-based
compensation charges of $176,120 for the comparable nine month period ended
March 31, 2001.

Interest expense incurred for the nine months ended March 31, 2002 was $265,623.
Included in total interest expense is $250,000 interest attributable to the
intrinsic value of the beneficial conversion feature included in the convertible
debentures we issued to Cornell Capital Partners, L.P. and other investors. We
incurred no interest expense for the comparative nine months ended March 31,
2001.

Other income (loss) for the nine months ended March 31, 2001 includes our share,
determined under the equity method of accounting, of Advanced Communications
Technologies, Pty (Australia) operating loss. No loss was reported for the
comparative period ended March 31, 2002, as our investment in Advanced
Communications Technologies, Pty (Australia) was written down to zero as of June
30, 2001 and we are no longer required to record our share of Advanced
Communications Technologies, Pty (Australia) loss until our investment becomes
positive. We realized no extraordinary gain or loss during the nine months ended
March 31, 2002.

(B) LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations through the sale of common
stock and convertible debentures and from unsecured loans from our major
shareholder. We have raised approximately $3,900,000 before offering costs
through the sale of these securities and have borrowed $1,055,736 from an entity
wholly-owned by Roger May, a former officer and director of our company and a
significant shareholder.

At March 31, 2002, our cash and cash equivalents balance was $164,359 an
increase of $157,543 from the balance of $6,816 at June 30, 2001. During the
nine-months ended March 31, 2002, cash provided by (used in) operations amounted
to ($1,076,988). Cash provided by (used in) investing activities was ($351,675).
Cash provided by financing activities during the nine-months ended March 31,
2002 amounted to $1,586,206 and consisted of $259,736 of unsecured loans from an
entity wholly-owned by Roger May, a former officer and director of our company
and a significant shareholder, $120,000 from the sale of common stock and
warrants pursuant to our private offering and $1,000,000 of proceeds from the
sale of convertible debentures to Cornell Capital Partners, LP and other
investors. For the comparative nine-month period ended March 31, 2001, no cash
was provided by operations as all of our operations during this period were
financed via unsecured loans from an entity wholly-owned by Roger May, a former
officer and director of our company and a significant shareholder and proceeds
from the sale of securities in private offerings. We had a working capital
deficiency in the amount of ($2,954,729) and ($2,950,011) respectively, for the
nine month periods ended March 31, 2002 and March 31, 2001.

On August 14, 2001, we filed a S-1 Registration Statement to register 37,500,000
of our shares in connection with our proposed $12,000,000 equity line credit
facility with Ladenburg Thalmann & Co., Inc. and Wanquay Limited. Based on
comments received by the SEC relating to the terms and conditions of the
proposed equity line and on advice of counsel, on November 30, 2001, we withdrew
the Registration Statement with the SEC. Advanced Communications intends to
terminate this equity line of credit facility.

On December 13, 2001, we entered into a 90-day $325,000 Promissory Note (the
"Note") with Cornell Capital Partners, LP. The Note had an interest rate of 12%
and was secured by a Guaranty and Pledge Agreement executed by Messrs. Danson,
Lichtman and Prouty. We realized $269,000 of net proceeds after financing costs
and legal fees. The Note was repaid on January 14, 2002 with proceeds from
Advanced Communications' $1 million Convertible Debentures.

On January 10, 2002, we executed various financing agreements with Cornell
Capital Partners, LP ("Cornell"), a New Jersey-based hedge fund whereby Cornell
and certain other investors purchased from us $1 million of two-year Convertible
Debentures and Cornell entered into a $30 million Equity Line of Credit.
Pursuant to the Convertible Debenture financing, we received $564,000 net of
financing and closing costs and the repayment of the $325,000 ninety-day note.
Under the terms of the $30 million structured equity facility, we have the right
to require Cornell to make monthly purchases of up to $2 million of our stock on
a discounted basis. These debentures are convertible into shares of common stock
at a price equal to equal to either (a) an amount equal to one hundred twenty
percent (120%) of the closing bid price of the common stock as of the closing
date or $0.40, whichever is higher, or (b) an amount equal to eighty percent
(80%) of the lowest closing bid price of the common stock for the five trading
days immediately preceding the conversion date. If such conversion had taken
place at $0.024 (i.e., 80% of the recent price of $0.03), then the holders of
the convertible debentures would have received 41,666,667 shares of common
stock. These convertible debentures accrue interest at a rate 5% per year and
are convertible at the holder's option. These convertible debentures have a term
two years. At our option, these debentures may be paid in cash or redeemed at a
20% premium prior to January 2004. The issuance of shares upon conversion of the
Debentures or pursuant to the Equity Line of Credit will have a dilutive impact
on our existing stockholders. As a result, our net income per share could
decrease in future periods, and the market price of our common stock could
decline. In addition, the lower our stock price is the more shares of common
stock we will have to issue upon conversion of the debentures or under the
Equity Line of Credit. If our stock price is lower, then our existing
stockholders would experience greater dilution.

We anticipate that our cash needs over the next 12 months will come primarily
from the sale of securities or loans, including the Equity Line of Credit.
Pursuant to the Equity Line of Credit, we may periodically issue and sell to
Cornell Capital Partners, L.P. shares of common stock for a total purchase price
of $30 million. The amount of each advance is subject to an aggregate maximum
advance amount of $2 million in any thirty-day period. Cornell Capital Partners,
L.P. will purchase the shares of common stock for a 9% discount to the lowest
closing bid price of our common stock during the five trading days after an
advance notice. In addition, Cornell Capital Partners may retain 3% of each
advance under the Equity Line of Credit. Cornell Capital Partners intends to
sell any shares purchased under the Equity Line of Credit at the then prevailing
market price. Except for the Equity Line of Credit, we have no commitments for
capital.

Our ability to draw upon the Equity Line of Credit is conditioned upon our
company registering with the SEC the shares of common stock to be issued under
the Equity Line of Credit.

Our anticipated cash needs over the next 12 months consist of general working
capital needs of $1,200,000 plus the repayment of outstanding indebtedness of
$2,921,338. These obligations include outstanding convertible debentures in the
amount of $1 million, as well as accounts payable and accrued expenses in the
amount of $683,002, accrued compensation of $172,183 and an unsecured,
non-interest-bearing loan payable to an entity wholly-owned by Roger May, a
former officer and director and a significant shareholder. In addition, we have
a note payable to Advanced Communications Technologies, Pty (Australia) in the
amount of $1,791,166 at March 31, 2002 that is the subject of a pending lawsuit
by us against Roger May and Advanced Communications Technologies, Pty
(Australia).

convertible at the commitment date. Since the beneficial conversion feature is
to be settled by issuing equity, the amount attributed to the beneficial
conversion feature, of $650,000, was recorded as an interest expense and a
component of equity on the issuance date during the fiscal year ended June 30,
2000.

During December 2000, holders of $412,800 of convertible debentures elected to
convert their notes into 1,803,545 of Advanced Communications' restricted common
stock. Advanced Communications further reduced these convertible debentures by
offsetting a related convertible debentures in the amount of $36,450.

As of December 31, 2001 and June 30, 2001, $200,750 of Secured Convertible
Debentures was outstanding. Advanced Communications is in default based on the
April 1, 2000 due date. The holders of these debentures are AJW Partners, LLC,
New Millennium Capital Partners II, LLC and Bank Insinger de Beaufort, N.V.
These debentures were convertible, at the holder's option, into shares of common
stock at a conversion price equal to 50% of the average of the bid price during
the twenty trading days immediately preceding the applicable conversion date.
These debentures had been the subject of litigation pending in the Federal Court
for the Eastern District of New York. On April 24, 2002, this matter was
settled. Pursuant to the terms of the settlement, we will issue a total of
8,500,000 shares of common stock to the two debenture holders over a 180 day
period.

During December 1997, MFI, Advanced Communications' former name, issued 75,000
of its common shares to settle the amounts due, which was $150,000 to a company
(the "Payee") pursuant to a convertible promissory note (the "Grassland Note").
However, a dispute arose as to whether the Payee authorized the issuance of the
shares. The Payee filed a suit during December 1997 to enforce the convertible
promissory note. Total interest payable was $84,507 as of June 30, 2000
resulting in the total principal and accrued interest payable at June 30, 2000
of $234,507. In June 2000, the parties agreed to settle the matter for a payment
of $200,000. This resulted in a gain on extinguishment of debt in the amount of
$34,507. Advanced Communications made a payment of $50,000 by June 30, 2000. The
$150,000 remainder was to be paid with proceeds from the 75,000 shares of stock
and any remaining balance to be paid by Advanced Communications. The revised
obligation was to be paid by August 14, 2000. Advanced Communications defaulted
on this revised payment obligation and a judgment against Advanced
Communications was entered. In October 2000, Advanced Communications sold the
75,000 shares of stock realizing $41,802 which it remitted in partial repayment
of its outstanding debt. As of June 30, 2001, Advanced Communications' remaining
balance and accrued interest on this obligation was $118,530. An additional
$4,206 of interest was accrued on this note and on October 19, 2001 Advanced
Communications paid the obligation in full. On October 24, 2001, the court
issued its notice of satisfaction and release.

Advanced Communications had a non-interest bearing note payable to Advanced
Communications Technologies (Australia) Pty Ltd of $7,500,000 as of April 5,
2000. The following schedule represents payments on such debt by issuance of
restricted common stock to either Advanced Communications Technologies
(Australia) Pty Ltd or creditors of Advanced Communications Technologies
(Australia) Pty Ltd . Such transactions were recorded at the market price of the
stock at date of issuance.

DATE SHARES OF COMMON STOCK
STOCK ISSUED VALUE

September 2000 5,000,000 $ 3,500,000
October 2000(1) 460,000 460,000
June 2001 1,137,000 567,100
September 2001 1,190,000 357,001
--------- ------------------
7,787,000 $ 4,884,101
========= ==================

(1) This transaction resulted in a gain on extinguishment of debt of $23,000.

During the year ended June 30, 2001 Advanced Communications repaid an aggregate
of $247,608 of the obligation in cash. During the three-month period ended
September 2001, Advanced Communications repaid $25,000 of the obligation in
cash. No payments on the note were made during the three months ended December
31, 2001.

Pursuant to the terms of the April 5, 2000 Stock Purchase Agreement between
Advanced Communications and Advanced Communications (Australia), Advanced
Communications has elected to reduce its outstanding loan balance by $552,125
for funds previously advanced to Advanced Communications (Australia).

As of March 31, 2002, the balance of Advanced Communications' obligation to
Advanced Communications (Australia) was $1,791,166. Advanced Communications is
currently in litigation with Advanced Communications (Australia) regarding the
timing for the repayment of Advanced Communications' obligation.

As of March 31, 2002, Advanced Communications owed Global Communications
Technologies Pty Ltd, a wholly-owned entity of Roger May, a former officer and
director of our company and a significant shareholder, $1,055,736 for funds
advanced to Advanced Communications to provide working capital and for the
repayment of certain of Advanced Communications' obligations. This loan is
non-interest bearing and unsecured. This loan does not have a scheduled date of
repayment.

On December 13, 2001 Advanced Communications entered into a 90-day $325,000
Promissory Note (the "Note") with Cornell Capital Partners, LP. The Note had an
interest rate of 12% and was secured by a Guaranty and Pledge Agreement executed
by Messrs. Danson, Lichtman and Prouty. Advanced Communications realized
$269,000 of net proceeds after financing costs and legal fees. The Note was
repaid on January 14, 2002 with proceeds from Advanced Communications' $1
million Convertible Debenture.

Advanced Communications issued 250,000 shares of common stock, valued at
$75,000, in payment of offering costs incurred. The value assigned to this stock
was based on the private placement memorandum of $.30 per share. The value of
the common stock has been charged to equity as direct costs of the offering.

During the three months ended September 30, 2001, Advanced Communications
received the balance of the offering proceeds and issued an additional 1,233,333
shares of its restricted common stock and associated warrants.

On February 27, 2002, our Board of Directors approved a resolution to reprice
the private placement offering from $0.30 per share to $0.20 per share. This
repricing will result in the issuance of an additional 2,146,967 shares of
common stock and warrants to the private placement investors. These additional
shares are included in the number of shares that we are registering for these
selling shareholders. The exercise price of the underlying warrants will remain
at $0.30 per share.

During the three months ended December 31, 2001, Advanced Communications issued
137,727 shares of common stock, valued at $41,318 in payment of offering costs
incurred. The value assigned to this stock was based on the private placement
memorandum of $.30 per share. The value of the common stock has been charged to
equity as direct costs to the offering. Such amounts have been netted against
proceeds received from the issuance of shares in the previous quarter.

SUMMARY. In January 2002, we entered into an Equity Line of Credit with Cornell
Capital Partners, L.P. Pursuant to the Equity Line of Credit, we may, at our
discretion, periodically sell to Cornell Capital Partners shares of common stock
for a total purchase price of up to $30.0 million. For each share of common
stock purchased under the Equity Line of Credit, Cornell Capital Partners will
pay 91% of the lowest closing bid price of our common stock on the
Over-the-Counter Bulletin Board or other principal market on which our common
stock is traded for the 5 days immediately following the notice date. Cornell
Capital Partners is a private limited partnership whose business operations are
conducted through its general partner, Yorkville Advisors, LLC. Further, Cornell
Capital Partners will retain a fee of 3% of each advance under the Equity Line
of Credit. In addition, we engaged Westrock Advisors, Inc., a registered
broker-dealer, to advise us in connection with the Equity Line of Credit. For
its services, Westrock Advisors, Inc. received 40,000 shares of our common
stock. The effectiveness of the sale of the shares under the Equity Line of
Credit is conditioned upon us registering the shares of common stock with the
Securities and Exchange Commission.

EQUITY LINE OF CREDIT EXPLAINED. Pursuant to the Equity Line of Credit, we may
periodically sell shares of common stock to Cornell Capital Partners, L.P. to

raise capital to fund our working capital needs. The periodic sale of shares is
known as an advance. We may request an advance every 5 trading days. A closing
will be held 7 trading days after such written notice at which time we will
deliver shares of common stock and Cornell Capital Partners, L.P. will pay the
advance amount, less the 3% retention.

We may request advances under the Equity Line of Credit once the underlying
shares are registered with the Securities and Exchange Commission. Thereafter,
we may continue to request advances until Cornell Capital Partners has advanced
$30.0 million or two years after the effective date of the accompanying
registration statement, whichever occurs first.

The amount of each advance is subject to an aggregate maximum advance amount of
$2 million in any thirty-day period. The amount available under the Equity Line
of Credit is not dependent on the price or volume of our common stock.

We cannot predict the actual number of shares of common stock that will be
issued pursuant to the Equity Line of Credit, in part, because the purchase
price of the shares will fluctuate based on prevailing market conditions and we
have not determined the total amount of advances we intend to draw. Nonetheless,
we can estimate the number of shares of our common stock that will be issued
using certain assumptions. Assuming we issued the maximum number of shares of
common stock being registered at a recent price of $0.03 per share, we would
issue 70,000,000 shares of common stock to Cornell Capital Partners, L.P. for
gross proceeds of $2,100,000, or $27,900,000 less than is available under the
Equity Line of Credit. These shares would represent 41% of our outstanding
common stock upon issuance. We are registering 70,000,000 shares of common stock
for the sale under the Equity Line of Credit and the conversion of debentures.
Accordingly, we would need to register additional shares of common stock in
order to fully utilize the $30.0 million available under the Equity Line of
Credit at the current price of $0.03 per share.

There is an inverse relationship between our stock price and the number of
shares to be issued under the Equity Line of Credit. That is, as our stock price
declines, we would be required to issue a greater number of shares under the
Equity Line of Credit for a given advance. This inverse relationship is
demonstrated by the following table, which shows the number of shares to be
issued under the Equity Line of Credit at a recent price of $0.03 per share and
25%, 50% and 75% discounts to the recent price.

Purchase Price: $0.0075 $0.0150 $0.0225 $0.0300

No. of Shares(1): 4,000,000,000 2,000,000,000 1,333,333,333 1,000,000,000

Total
Outstanding(2): 4,102,530,897 2,102,530,897 1,435,864,230 1,102,530,897

Percent
Outstanding(3): 97.5% 95.1% 92.9% 90.7%

(1) Represents the number of shares of common stock to be issued to Cornell
Capital Partners, L.P. at the prices set forth in the table. Note that the
number of shares of common stock reflected in the table are in excess of
our authorized common stock. A shareholders' meeting would be required in
order to issue shares in excess of that authorized.

(2) Represents the total number of shares of common stock outstanding after
the issuance of the shares to Cornell Capital Partners, L.P.

(3) Represents the shares of common stock to be issued as a percentage of the
total number shares outstanding.

The issuance of shares under the Equity Line of Credit may result in a change of
control. That is, up to 4,000,000,000 shares of common stock could be issued
under the Equity Line of Credit, although initially we intend to register
70,000,000 shares of common stock under the Equity Line of Credit. If all or a
significant block of these shares are held by one or more stockholders working
together, then such stockholder or stockholders would have enough shares to
assume control of Advanced Communications by electing its or their own
directors.

We expect to incur expenses of approximately $85,000 in connection with
registering the Equity Line of Credit with Securities and Exchange Commission,
consisting primarily of professional fees. In addition, Cornell Capital Partners
will retain 3% of each advance. In connection with the Equity Line of Credit, we
paid Cornell Capital Partners a commitment fee of $740,000, which was paid by
the issuance of 2,960,000 shares of common stock. The number of shares issued
for the commitment fee was equal to $0.25 per share. In addition, we issued

40,000 shares of common stock, valued at $10,000, to Westrock Advisors, Inc., a
registered broker-dealer, as a placement agent fee.

(D) ACQUISITIONS

On September 7, 2001 we entered into a Letter of Intent with Advanced
Communications Technologies, Pty (Australia) to acquire all of the intellectual
property, including the worldwide rights (other than rights to territories that
we currently possess) for the licensing and distribution of the SpectruCell
product (the "IP Rights"). The Letter of Intent which was executed by Messrs
Roberts and May on behalf of Advanced Communications Technologies, Pty
(Australia) and us, respectively, includes various conditions precedent to the
transfer of the IP Rights including, but not limited to, the raising by us of
$80 million in the US capital markets, appropriate regulatory approvals,
approval by both our Board of Directors and shareholders, appropriate due
diligence and definitive agreements. During the period from January 2002 to
present, we, along with our Australian financial and legal advisors, have
attempted to negotiate with Mr. May in good faith to enter into a Non-Disclosure
Agreement to allow us to commence our due diligence on the financial, legal and
technological affairs of Advanced Communications Technologies (Australia) Pty
Ltd. In addition, during this period we have filed two lawsuits against Mr. May
and Advanced Communications Technologies (Australia) Pty Ltd. for breach of our
April 5, 2000 Stock Purchase Agreement and July 5, 2000 License and Distribution
Agreement. Consequently, we have been unable to execute any Non-Disclosure
Agreement nor commence any active or meaningful negotiations with Mr. May for
the acquisition of the SpectruCell technology pursuant to the terms of the
September 7, 2001 Letter of Intent. Because of the matters described above,
there can be no assurance that the proposed acquisition of all of the tangible
and intangible (including the IP Rights) assets will be completed under the
terms and conditions as expressed in the Letter of Intent or at all.

(E) ACT'S QUARTERLY STOCK PRICE

FOR THE QUARTER ENDED HIGH LOW
--------------------- ---- ---

March 31, 2002 $.30 $.05
December 31, 2001 .38 .17
September 30, 2001 .41 .25
June 30, 2001 .68 .27
March 31, 2001 1.03 .45

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

PART II- OTHER INFORMATION

The statements in this quarterly report, Form 10-QSB, that are not historical
constitute "forward-looking statements"._Such forward-looking statements involve
risks and uncertainties that may cause the actual results, performance or
achievements of the Company and its subsidiary to be materially different from
any future results, performances or achievements, express or implied by such
forward-looking statements. These forward-looking statements are identified by
their use of such terms and phrases as "expects", "intends", "goals",
"estimates", "projects", "plans", "anticipates", "should", "future", "believes",
and "scheduled".

The variables which may cause differences include, but are not limited to, the
following: i) general economic and business conditions; ii) competition; iii)
success of operating initiatives including the successful field testing and
commercialization of the SpectruCell product; iv) financing efforts; v)
advertising and promotional efforts; vi) the existence or absence of adverse
publicity; vii) changes in business strategy or development plans; viii) the
ability to retain and attract new management; ix) availability, terms and
deployment of capital; x) business abilities and judgment of personnel; xi)
labor and employment benefit costs; xii) availability and costs of raw materials
and supplies; and xiii) changes in, or failure to comply with various government
regulations. Although we believe that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this filing will prove to be
accurate.

ITEM 1. LEGAL PROCEEDINGS

In NANCY J. NEEDHAM; EDMUND R. DUPONT ET AL V. ADVANCED COMMUNICATIONS
TECHNOLOGIES, INC., et al, an action filed July 2000 in the Fifteenth Judicial
Circuit in the State of Florida, two former officers and directors of the
Company are seeking damages and injunctive relief arising out of the Company's
refusal to provide legal opinion letters and to take other actions necessary to
allow the former officers to convert restricted stock into unrestricted stock
under an exemption under Rule 144. The plaintiffs have not specified the amount
of damages they are seeking. The Company has filed a counterclaim to rescind all
of the Plaintiffs' stock for lack and/or failure of consideration and other
damages. The Company believes that it has meritorious defenses to the suit and
is vigorously defending the litigation. In October 2001, the Court denied
summary judgment for the Plaintiffs.

In ADVANCED COMMUNICATIONS TECHNOLOGIES, INC., ET AL v. World IP Incorporated,
et al, an action filed in the Fifteenth Judicial Circuit in the State of
Florida, the Company sued World IP Incorporated, its subsidiaries and
shareholders (collectively, "World") for breach of the terms of a Stock
Subscription and Purchase Agreement between the parties dated November 10, 1999.
The parties entered into Settlement and Rescission Agreements, pursuant to which
all transactions between the parties including the Stock Subscription and
Purchase Agreement, the issuance of World stock to the Company and the issuance
of 500,000 shares of the Company's stock to World's shareholders were rescinded
effective November 10, 1999. Further, World's shareholders were issued 320,000
shares of the Company's stock which have been included in the Registration
Statement currently on file with the Securities Exchange Commission. The lawsuit
was dismissed by a Court order dated January 29, 2002.

On April 24, 2002, the Company entered into a Settlement Agreement with the two
remaining September 1999 Convertible Debenture holders, AJW Partners, LLC and
New Millennium Capital Partners II, LLC. Under the terms of the Settlement
Agreement, the Company is obligated to issue, over a 180 day period, 8,500,000
shares of its common stock in exchange for the dismissal of the lawsuit and in
satisfaction of the remaining outstanding principal and accrued interest. The
Company has the option, until July 23, 2002, to substitute cash in lieu of
shares. On closing, the Company issued 1,460,725 and 664,275 shares of its
common stock to AJW Partners, LLC and New Millennium Capital Partners II, LLC,
respectively. A Stipulation and Order of Discontinuance was filed with and
Ordered by the court on April 25, 2002 (See Note 7A ).

On December 6, 2001, Mr. Roger May, as Chairman and Chief Executive Officer of
ACT-Australia, sent a letter to Advanced Communications demanding full payment
of all amounts due under the Stock Purchase Agreement between Advanced
Communications and ACT-Australia (the "STOCK PURCHASE AGREEMENT). This letter
was dated six days after Mr. May was removed by the Board of Directors from all
executive capacities including as President and Chief Executive Officer. Mr. May
sent additional demand letters on December 11, 2001, and December 21, 2001.
These demand letters threatened to exercise the rights granted to ACT-Australia
under its constitutional documents, which include exercising ACT-Australia's
lien over the shares registered in the name of Advanced Communications or
declaring that those shares be forfeited. Advanced Communications believes that
it has fully met its obligation under the Stock Purchase Agreement, which states
that payments are only required to be paid to ACT-Australia from those funds
remaining after deduction of reserves needed for current operations, working
capital and the development and expansion of its operations and the operations
of its subsidiaries as determined by its Board of Directors. At this time,

Advanced Communications does not have sufficient funds available to pay to
ACT-Australia. On January 23, 2002, Advanced Communications filed suit against
ACT-Australia and Roger May in the Supreme Court of Victoria at Melbourne,
Australia to protect its investment.

On January 23, 2002, the Court issued an interim order effectively enjoining and
prohibiting ACT-Australia from "transferring, dealing with, charging,
diminishing, mortgaging, assigning or disposing of" Advanced Communications'
stock in ACT-Australia. Although the court order had already been extended
twice, it was again extended by the court on February 20, 2002, until a final
determination is made at trial. ACT-Australia declined to contest the court
orders sought by Advanced Communications. ACT-Australia filed its Answer to the
suit and the parties are currently conducting discovery of material documents.

On March 15, 2002, ACT-Australia issued a press release stating that EntrePort
Corporation ("EntrePort"), an AMEX listed company, executed "definitive
documents" whereby EntrePort would acquire a minority interest in ACT-Australia
and ACT-Australia would purchase a majority interest in EntrePort. Further, on
March 14, 2002, ACT-Australia entered into an Acquisition Agreement with
EntrePort (the "Acquisition Agreement") which stated that ACT-Australia "now
plans to locate and establish a base of operations in the United States for the
continued development, marketing and distribution of the SpectruCell product in
the USA and Canada. Such base of operations will involve the establishment of
engineering facilities, research and development, sales, marketing and
distribution." The Acquisition Agreement also stated that EntrePort's name would
be changed to "Advanced Communications USA, Inc." Mr. May resigned from Advanced
Communications' Board of Directors one day before entering into the Acquisition
Agreement.

Advanced Communications believes that the transaction with EntrePort as
described in the Acquisition Agreement is inconsistent with the rights granted
to it by ACT-Australia in the License and Distribution Agreement dated July 5,
2000 pursuant to which Advanced Communications received the exclusive rights to
market and distribute the SpectruCell technology in North, South and Central
America. _ Advanced Communications therefore instructed its Australian lawyers
to write to ACT-Australia requesting an undertaking that it would not appoint
EntrePort or any other person to market and distribute the SpectruCell
technology in the exclusive territory in breach of the license agreement.
ACT-Australia refused to provide the undertaking sought by Advanced
Communications and, accordingly, Advanced Communications applied to the Court
for an order restraining ACT-Australia from breaching the terms of the license
agreement. On April 26, 2002, the Court issued an interim order on the following
terms:

"Until the determination of the plaintiff's [i.e., Advanced
Communications'] summons filed on 23 April 2002 or further
order, the first defendant [i.e., ACT-Australia], whether by
itself or by its officers, employees, agents, attorneys, or
any of them or otherwise, be restrained from appointing or
agreeing to appoint in any way whatsoever EntrePort
Corporation or any other person to distribute, sell, offer
to sell or supply or otherwise deal in or with the wireless
or terrestrial multi-protocols communication network
technology known as SpectruCell (`Product') (incorporating
the software which enables the Product to perform to its
specifications, consisting of a set of instructions or
statements in machine readable medium, and any enhancement
or modification of that software (`Software') and related
hardware performing part of the base station controller
which processes and transmits mobile communications
protocols such as AMPS, CDMA, TDMA GSM, W-CDMA, UMTS, 3G &
Voice IP) in the United States of America, the North
American and South American Continents (`Exclusive
Territory') without the prior written consent of the
plaintiff."

On May 7, 2002, Advanced Communications received a notice alleging a breach from
ACT-Australia stating that Advanced Communications had breached its obligation
under the License Agreement. Advanced Communications believes that the notice of
breach is without merit and it is taking the necessary legal actions to prevent
ACT-Australia from terminating its rights under the License Agreement.

On May 8, 2002, the Court extended its April 26, 2002 order through May 14,
2002, further restraining ACT-Australia from "acting upon or taking any further
steps in reliance upon" the notice of breach. On May 14, 2002, the Court further
extended the Order.

In STAR MULTI CARE SERVICES, INC. V. ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.,
an action filed September 18, 2000 in the Fifteenth Judicial Circuit in the
State of Florida, Star Multi Care Services, Inc. ("Star") sued the Company for
alleged breach of contract and the recovery of a break-up or termination fee in
excess of $50,000 in conjunction with the Company's alleged failure to
consummate a proposed merger with Star in January 2000. The Company believes
that the suit is without basis and is vigorously defending the alleged claim.

ITEM 2. CHANGES IN SECURITIES

During the quarter, we issued 8,480,435 shares of our restricted common
stock having a value of $1,161,010 to the following parties:

(i) 200,000 shares each having a value of $36,000 were issued to
Messrs. Danson, Prouty, Lichtman, Roche and Finch for director's fees;

(ii) 2,960,000 shares having a value of $740,000 were issued to Cornell
Capital Partners, LP as a one-time commitment fee for the $30 million
Equity Line of Credit facility;

(iii) 40,000 shares having a value of $10,000 were issued to Westrock
Advisors, Inc. for financial advisory services in connection with the
Equity Line of Credit facility;

(iv) 160,000 shares each having a value of $40,000 were each issued to
Eduardo Acosta and Alberto Monteiro in settlement of the World IP
recession lawsuit;

(v) 667,667 shares having a value of $50,000 were issued to Danson
Partners, LLC for prior professional services;

(vi) 666,667 shares having a value of $50,000 were issued to Levinson &
Lichtman, LLP for prior legal services;

(vii) 400,000 shares having a value of $30,000 were issued to Jack
Halperin, Esq. for prior legal services;

(viii) 133,334 shares having a value of $10,000 were issued to Dr. Michael
Finch for prior professional services;

(ix) 27,800 shares having a value of $2,085 were issued to The Law
Offices of Alan Foxman for prior legal services;

(x) 119,000 shares having a value of $8,925 were issued to
DDInvestor.com, Inc. for prior investor relations services; and

(xi) 2,146,967 shares and associated warrants were issued to all of the
private placement investors.

In January 2002, Advanced Communications entered into the Equity Line of Credit
Agreement where Advanced Communications may, at its discretion, periodically
issue and sell to Cornell Capital Partners, L.P. shares of common stock for a
total purchase price of $30 million. The amount of each advance is subject to an
aggregate maximum advance amount of $2 million in any thirty-day period. Cornell
Capital Partners, L.P. will purchase the shares of common stock for a 9%
discount to the lowest closing bid price of our common stock during the five
trading days after an advance notice. In addition, Cornell Capital Partners is
entitled to retain 3% of each advance under the Equity Line of Credit, together
with a one-time commitment fee of $740,000, payable in shares of its common
stock. On January 28, 2002, we issued 2,960,000 shares of our restricted common
stock to Cornell Capital Partners, LP with a market value of $740,000 as a
commitment fee for the $30 million structured equity line facility. Cornell
Capital Partners intends to sell any shares purchased under the Equity Line of
Credit at the then prevailing market price. Additionally, Westrock Advisors,
Inc. was paid a fee of 40,000 shares of Advanced Communications' common stock,
which is equal to $10,000 at a closing bid of $0.25 on January 10, 2002 for
acting as the placement agent.

In January 2002, Advanced Communications entered into a Securities Purchase
Agreement with the Buyers (as listed in Schedule 1 of the Securities Purchase
Agreement), pursuant to which we issued and sold to the Buyers One Million
Dollars of convertible debentures. These debentures are convertible into shares
of common stock at a price equal to equal to either (a) an amount equal to one
hundred twenty percent (120%) of the closing bid price of the common stock as of
the closing date or $0.40, whichever is higher, or (b) an amount equal to eighty
percent (80%) of the lowest closing bid price of the common stock for the five
trading days immediately preceding the conversion date. If such conversion had
taken place at $0.16 (i.e., 80% of the recent price of $0.20), then the holders
of the convertible debentures would have received 7,812,500 shares of common
stock. These convertible debentures accrue interest at a rate 5% per year and
are convertible at the holder's option. These convertible debentures have a term

two years. At Advanced Communications' option, these debentures may be paid in
cash or redeemed at a 20% premium prior to January 2004.

On January 22, 2002, our directors, excluding Mr. May and Roberts, pursuant to a
January 4, 2002 Board of Directors Meeting, were each issued 200,000 shares for
a total of 1,000,000 shares of our restricted common stock for services rendered
to us as directors for the 2001 and 2002 fiscal years.

During the quarter ended December 31, 2001, we issued 557,408 shares of our
restricted common stock, of which 419,681 shares valued at $116,335 were issued
in exchange for professional services and 137,727 shares were issued to our
placement agent for placement fees in connection with the 504(d) private
placement.

During the quarter ended September 30, 2001, Advanced Communications issued
3,203,573 shares of its restricted common stock, of which 780,240 shares valued
at $244,224 were issued in exchange for services and 1,190,000 shares valued at
$357,001 were issued to various employees and vendors of Advanced Communications
(Australia) in partial repayment of our note payable.

As of March 31, 2002 and June 30, 2001, $200,750 of Secured Convertible
Debentures were outstanding. Advanced Communications is in default based on the
April 1, 2000 due date. On April 24, 2002, Advanced Communications agreed to
settle this matter by issuing a total of 8,500,000 shares of common stock over a
180-day period.

During the year ended June 30, 2001, Advanced Communications issued 1,051,491
shares of common stock for services. The stock was valued based on the quoted
trading price on the grant dates, which aggregated $328,870.

During the quarter ending June 30, 2001, Advanced Communications issued 780,240
shares of restricted common stock for services. The stock was valued based on
the quoted trading price on the grant dates, which aggregated $244,224.

During the period of December 2000 to August 2001, pursuant to a private
placement under Regulation D, Rule 506, Advanced Communications issued 3,060,600
shares of common stock and 3,060,000 warrants at $.30 per share. Advanced
Communications received $1,168,180 from investors, which included $250,000 for
stock not yet issued as of June 30, 2001 and $275,454 for warrants. Advanced
Communications issued 250,000 shares of common stock, valued at $75,000, in
payment of offering costs incurred. The value assigned to this stock was based
on the private placement memorandum of $.30 per share. The value of the common
stock has been charged to equity as direct costs to the offering. The fair
market value of the warrants, aggregating $275,454, was estimated on the grant
date using the Black-Scholes option pricing model as required under FASB 123
with the following weighted average assumptions: expected dividend yield 0%,
volatility 49.84%, risk-free interest rate 4.22%, expected option life 2 years.
To date, no warrants have been exercised.

During the quarter ended September 30, 2001, we issued an additional 1,233,333
shares of restricted common stock for cash and warrants at $0.30 per share that
were subscribed for prior to August 2001. On February 27, 2002, our Board of
Directors approved a resolution to reprice the private placement offering from
$0.30 per share to $0.20 per share. This repricing will result in the issuance
of an additional 2,146,967 shares of common stock and warrants to the private
placement investors. These additional shares are included in the Registration
Statement currently on file with the SEC. The exercise price of the underlying
warrants will remain at $0.30 per share.

As of April 5, 2000, Advanced Communications had a non-interest bearing note
payable to ACT-Australia of $7,500,000. The following schedule represents
payments on such debt by issuance of restricted common stock to either
ACT-Australia or creditors of ACT-Australia. Such transactions were recorded at
the market price of the stock at date of issuance.

SHARES OF
COMMON
STOCK
DATE ISSUED VALUE
------------------------------- --------- -------------
September 2000 5,000,000 $ 3,500,000
October 2000(1) 460,000 460,000
June 2001 1,137,000 567,100
September 2001 1,190,000 357,001
December 2001
--------- -------------
7,787,000 $ 4,884,101

==============================

(1) This transaction resulted in a gain on extinguishment of debt of $23,000.

In April 2000, Advanced Communications acquired 20% of the common stock of
Advanced Communications (Australia). The purchase price of the investment
amounted to $19,350,000, and was comprised of a note payable for $7,500,000 and
the issuance of 5,000,000 shares of restricted common stock valued at
$11,850,000. The shares issued were valued at the average quoted trading price
during the acquisition period. The fair value of the investment at the
acquisition date was determined to be $3,657,472. The excess of the purchase
price over the fair value of the investment in the amount of $15,692,528 was
accounted for as goodwill.

In April 2000, Advanced Communications' 20% interest in Advanced Communications
(Australia) was accounted for using the equity method of accounting and was
stated at the amortized cost of goodwill and the equity in undistributed
earnings since acquisition. The equity in earnings of Advanced Communications
(Australia) was adjusted for the amortization of the goodwill, as discussed
above. Amortization was computed on a straight-line basis over fifteen years.
The amortization of goodwill charged to income for each of the three months
ended September 30, 2001 and September 30, 2000 was $261,542.

On September 30, 1999, Advanced Communications entered into secured convertible
debentures purchase agreement with two companies, which were stockholders of
Advanced Communications, whereby Advanced Communications sold $500,000 of 12%
Secured Convertible Debentures due April 1, 2000, which were convertible into
shares of Advanced Communications' Common Stock. In addition, on September 30,
1999, Advanced Communications issued another convertible debenture to an
unrelated party in the amount of $150,000. The debentures were convertible, at
the holder's option, into shares of common stock in whole or in part at any time
after the original issue date. The number of shares of common stock issuable
upon a conversion was to be determined by dividing the outstanding principal
amount of the debenture to be converted, plus all accrued interest, by the
conversion price. The conversion price in effect on any conversion date is 50%
of the average of the bid price during the twenty trading days immediately
preceding the applicable conversion date. The convertible debentures contained a
beneficial conversion feature computed at its intrinsic value which is the
difference between the conversion price and the fair value on the debenture
issuance date of the common stock into which the debt is convertible, multiplied
by the number of shares into which the debt is convertible at the commitment
date. Since the beneficial conversion feature is to be settled by issuing
equity, the amount attributed to the beneficial conversion feature, of $650,000,
was recorded as an interest expense and a component of equity on the issuance
date during the fiscal year ended June 30, 2000. Currently, none of these
debentures are outstanding.

MFI (as previously defined) was obligated to pay $150,000 to a company (the
"Payee") pursuant to a convertible promissory note. During December 1997, MFI
issued 75,000 of its common shares to settle the amounts due to the Payee.
However, a dispute arose as to whether the Payee authorized the issuance of the
shares. The Payee filed a suit during December 1997 to enforce the convertible
promissory note. Total interest payable was $84,507 as of June 30, 2000
resulting in the total principal and accrued interest payable at June 30, 2000
of $234,507. In June 2000, the parties agreed to settle the matter for a payment
of $200,000. This resulted in a gain on extinguishment of debt in the amount of
$34,507. Advanced Communications made a payment of $50,000 by June 30, 2000. The
$150,000 remainder was to be paid with proceeds from the 75,000 shares of stock
and any remaining balance to be paid by Advanced Communications. The revised
obligation was to be paid by August 14, 2000. Advanced Communications defaulted
on this revised payment obligation and a judgment against Advanced
Communications was entered. In October 2000, Advanced Communications sold the
75,000 shares of stock realizing $41,802 which it remitted in partial repayment
of its outstanding debt. As of June 30, 2001, Advanced Communications' remaining
balance and accrued interest on this obligation was $118,530. An additional
$4,206 of interest was accrued on this note and on October 19, 2001 Advanced
Communications paid the obligation in full. On October 24, 2001 Advanced
Communications received notice from the court that its judgment has been
satisfied.

With respect to the sale of unregistered securities referenced above, all
transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933 (the "1933 Act"), and Regulation D promulgated under the
1933 Act. In each instance, the purchaser had access to sufficient information
regarding Advanced Communications so as to make an informed investment decision.
More specifically, Advanced Communications had a reasonable basis to believe
that each purchaser was an "accredited investor" as defined in Regulation D of
the 1933 Act and otherwise had the requisite sophistication to make an
investment in Advanced Communications' securities.

ITEM 3. DEFAULTS ON SENIOR SECURITIES

As of December 31, 2001 and June 30, 2001, $200,750 of Secured Convertible
Debentures were outstanding. Advanced Communications is in default based on the
April 1, 2000 due date. On April 24, 2002, Advanced Communications agreed to
settle this matter by agreeing to issue a total of 8,500,000 shares of common
stock over a 180-day period.

We were obligated to pay $150,000 to a company (the "Payee") pursuant to a
convertible promissory note. During December 1997, we issued 75,000 of its
common shares to settle the amounts due to the Payee. However, a dispute arose
as to whether the Payee authorized the issuance of the shares. The Payee filed a
suit during December 1997 to enforce the convertible promissory note. Total
interest payable was $84,507 as of June 30, 2000 resulting in the total
principal and accrued interest payable at June 30, 2000 of $234,507. In June
2000, the parties agreed to settle the matter for a payment of $200,000. This
resulted in a gain on extinguishment of debt in the amount of $34,507. Advanced
Communications made a payment of $50,000 by June 30, 2000. The $150,000
remainder was to be paid with proceeds from the 75,000 shares of stock and any
remaining balance to be paid by Advanced Communications. The revised obligation
was to be paid by August 14, 2000. Advanced Communications defaulted on this
revised payment obligation and a judgment against Advanced Communications was
entered. In October 2000, Advanced Communications sold the 75,000 shares of
stock realizing $41,802 which it remitted in partial repayment of its
outstanding debt. As of June 30, 2001, Advanced Communications' remaining
balance and accrued interest on this obligation was $118,530. An additional
$4,206 of interest was accrued on this note and on October 19, 2001 Advanced
Communications paid the obligation in full. On October 24, 2001 Advanced
Communications received notice from the court that its judgment has been
satisfied.

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

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

EXHIBIT NO. DESCRIPTION LOCATION
- ------------- ------------------------------------ ------------------------------

1.1 Exchange Agreement between MRC Legal Incorporated by reference to
Services Corporation and Advanced Exhibit 1.1 to Company's Form
Communications Technologies, Inc. 8-K filed on February 4, 2000
dated as of January 31, 2000

2.1 Articles of Incorporation of Media Incorporated by reference to
Forum International, Inc. Exhibit 2.1 to the Company's
Form S-8 filed on February 9,
2000

2.2 Second Amendment to Articles of Incorporated by reference to
Incorporation of Telenetworx, Inc. Exhibit 2.2 to the Company's
Form S-8 filed on February 9,
2000

2.3 Third Amendment to Articles of Incorporated by reference to
Incorporation of Media Forum Exhibit 2.3 to the Company's
International, Inc. Form S-8 filed on February 9,
2000

2.4 Bylaws of the Company Incorporated by reference to
Exhibit 2.4 to the Company's
Form S-8 filed on February 9,
2000

2.5 Articles of Incorporation as Incorporated by reference to
currently in effect for the Company Exhibit 3.1 to Form S-1
Registration Statement filed on
August 14, 2001

2.6 Bylaws, as currently in effect Incorporated by reference to
Exhibit 3.2 to Form S-1
Registration Statement filed on
August 14, 2001

2.7 Fourth Amendment to Articles of Incorporated by reference to
Incorporation Exhibit 2.7 to the Form SB-2
filed with the SEC on March 5,
2002

10.1 Lease Agreement dated as of November Incorporated by reference to
27, 2001 between the Company and Exhibit 10.1 to the Form SB-2
Continental Development, L. P. II filed with the SEC on March 5,
2002

10.2 Stock Purchase Agreement between Incorporated by reference to
Advanced Communications Technologies, Exhibit 10.2 to the Form S-1
Inc. and Advanced Communications Registration Statement filed on
Technologies (Australia) Pty Ltd. August 14, 2001

10.3 Agreement dated June 27, 2000, Incorporated by reference to
between Ladenburg Thalmann & Co. and Exhibit 10.3 to the Company's
the Company Form S-1 Registration Statement
filed on August 14, 2001

10.4 Common Stock Purchase Agreement dated Incorporated by reference to
December 14, 2000, between the Exhibit 10.4 to the Company's
Company and Wanquay Ltd. Form S-1 Registration Statement
filed on August 14, 2001

EXHIBIT NO. DESCRIPTION LOCATION
- ------------- ------------------------------------ ------------------------------

10.5 Registration Rights Agreement dated Incorporated by reference to
December 14, 2000, between the Exhibit 10.5 to the Company's
Company and Wanquay Ltd. Form S-1 Registration Statement
filed on August 14, 2001

10.6 Escrow Agreement dated December 14, Incorporated by reference to
2000, among the Company, Wanquay Ltd. Exhibit 10.6 to the Company's
and Epstein Becker & Green Form S-1 Registration Statement
filed on August 14, 2001

10.7 Consulting Agreement with M. Richard Incorporated by reference to
Cutler dated January 31, 2000 Exhibit 10.1 to the Company's
Form S-8 filed on February 9,
2000

10.8 Stock Purchase Agreement dated April Incorporated by reference to
5, 2000, between Advanced Exhibit 10.5 to the Company's
Communications Technologies, Inc. and Form 10-QSB filed on May 24,
Advanced Communications Technologies 2000
Pty Ltd.

10.9 Securities Purchase Agreement dated Incorporated by referenced to
January 10, 2002, by and among Exhibit 10.9 to the Company's
Advanced Communications Technologies, Form 10-QSB filed on February
Inc. and Buyers 12, 2002

10.10 Investor Registration Rights Incorporated by reference to
Agreement dated January 10, 2002, by Exhibit 10.10 to the Company's
and among Advanced Communications Form 10-QSB filed on February
Technologies, Inc. and Investors 12, 2002

10.11 Transfer Agent Instructions Incorporated by reference to
Exhibit 10.11 to the Company's
Form 10-QSB filed on February
12, 2002

10.12 Escrow Agreement dated January 10, Incorporated by reference to
2002, by and among Advanced Exhibit 10.12 to the Company's
Communications Technologies, Inc., Form 10-QSB filed on February
Buyers and First Union National Bank 12, 2002

10.13 Equity Line of Credit Agreement dated Incorporated by reference to
January 10, 2002, by and between Exhibit 10.13 to the Company's
Cornell Capital Partners, LP and Form 10-QSB filed on February
Advanced Communications Technologies, 12, 2002
Inc.

10.14 Registration Rights Agreement dated Incorporated by reference to
January 10, 2002, by and between Exhibit 10.14 to the Company's
Advanced Communications Technologies, Form 10-QSB filed on February
Inc. 12, 2002

10.15 Placement Agent Agreement dated Incorporated by reference to
January 10, 2002, by and between Exhibit 10.15 to the Company's
Advanced Communications Technologies, Form 10-QSB filed on February
Inc. and Westrock Advisors, Inc. 12, 2002

10.16 Escrow Agreement dated January 10, Incorporated by reference to
2002, by and among Advanced Exhibit 10.16 to the Company's
Communications Technologies, Inc., Form 10-QSB filed on February
Cornell Capital Partners, LP , Butler 12, 2002
Gonzalez LLP and First Union National
Bank

10.17 License and Distribution Agreement Incorporated by reference to
dated as of July 5, 2000, between Exhibit 10.17 to the Company's
Advanced Communications Technologies, Amendment to Form 10-KSB filed
Inc. and Advanced Communications on May 23, 2002.
Technologies (Australia) Pty. Ltd.

EXHIBIT NO. DESCRIPTION LOCATION
- ------------- ------------------------------------ ------------------------------

11.0 Audited Consolidated Financial Incorporated by reference to
Statements for Advanced Exhibit 11.0 to the Company's
Communications Technology (Australia) Form 10-KSB filed on October
PTY Ltd and controlled entities 30, 2001

(b) REPORTS ON FORM 8-K.

On May 9, 2002, Advanced Communications filed a Form 8-K disclosing the
resignation of Gary Ivaska as President and Chief Executive Officer and the
appointment of Wayne Danson as President. The Form 8-K also contained new
developments in Advanced Communications' litigation with Advanced Communications
Technologies (Australia), in which our company owns a 20% interest.

SIGNATURES

In accordance with Section 13 or 15(d) 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. (REGISTRANT)

/s/ Wayne I. Danson June 5, 2002
- ------------------------------------------ -------------------------------------
Wayne I. Danson Date
President, Chief Financial Officer and
Director
(Principal Accounting Officer)