As filed with the Securities and Exchange Commission on January 17, 2003
Registration No. 333-83710
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO THE FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FLORIDA ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. 65-0738251
State or Other Jurisdiction of (Name of Registrant in Our Charter) (I.R.S. Employer Identification No.)
Incorporation
or Organization)

420 LEXINGTON AVENUE, SUITE 2739 7389 WAYNE I. DANSON
NEW YORK, NY 10170 (Primary Standard Industrial c/o Danson Partners, LLC
(646) 227-1600 Classification Code Number) 420 Lexington Ave., Suite 2739
(Address and telephone number of New York, NY 10170
Principal Executive Offices and (646) 227-1600
Principal Place of Business) (Name, address and telephone number
of agent for service)

Copies to:

Clayton E. Parker, Esq. Troy J. Rillo, Esq.
Kirkpatrick & Lockhart LLP Kirkpatrick & Lockhart LLP
201 S. Biscayne Boulevard, Suite 2000 201 S. Biscayne Boulevard, Suite 2000
Miami, Florida 33131 Miami, Florida 33131
(305) 539-3300 (305) 539-3300
Telecopier No.: (305) 358-7095 Telecopier No.: (305) 358-7095

Approximate date of commencement of proposed sale to the public: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

Subject to completion, dated January 17, 2003

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.
79,828,683 Shares of Common Stock

This prospectus relates to the sale of up to 79,828,683 shares of Advanced
Communications' common stock by certain persons who are, or will become,
stockholders of Advanced Communications. Please refer to "Selling Stockholders"
beginning on page 14. Advanced Communications is not selling any shares of
common stock in this offering and therefore will not receive any proceeds from
this offering. We will, however, receive proceeds from the sale of common stock
under the Equity Line of Credit. All costs associated with this registration
will be borne by us.

The shares of common stock are being offered for sale on a "best efforts"
basis by the selling stockholders at prices established on the Over-the-Counter
Bulletin Board during the term of this offering. There are no minimum purchase
requirements. These prices will fluctuate based on the demand for the shares of
common stock.

The selling stockholders consist of:

o Cornell Capital Partners and holders of convertible debentures that
intend to sell up to 72,960,000 shares of common stock.

o Other selling stockholders, who intend to sell up to 6,868,683 shares
of common stock purchased in private offerings.

Cornell Capital Partners, L.P. is an "underwriter" within the meaning of
the Securities Act of 1933 in connection with the sale of common stock under the
Equity Line of Credit Agreement. Cornell Capital Partners, L.P. will pay
Advanced Communications 91% of the market price of our common stock. Advanced
Communications has paid Cornell Capital Partners a one-time commitment fee of
$740,000, payable in 2,960,000 shares of common stock. In addition, Cornell
Capital Partners is entitled to be paid 3% of each advance under the Equity Line
of Credit. The 9% discount, the one-time commitment fee and the 3% retention are
underwriting discounts.

Advanced Communications 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 Advanced
Communications' common stock, which is equal to $10,000 at a closing bid of
$0.25 on January 10, 2002. Westrock Advisors, Inc. is not participating in this
offering.

Our common stock is quoted on the Over-the-Counter Bulletin Board
maintained by the NASD under the symbol "ADVC." On January 13, 2003 the last
reported sale price of our common stock was $0.008 per share.

THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.

PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 7.

With the exception of Cornell Capital Partners, L.P., which is an
"underwriter" within the meaning of the Securities Act of 1933, no other
underwriter or person has been engaged to facilitate the sale of shares of
common stock in this offering. This offering will terminate 24 months after the
accompanying registration statement is declared effective by the Securities and
Exchange Commission. None of the proceeds from the sale of stock by the selling
stockholders will be placed in escrow, trust or any similar account.

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this prospectus is January ___, 2003.

TABLE OF CONTENTS

PROSPECTUS SUMMARY.............................................................1
THE OFFERING...................................................................4
SUMMARY CONSOLIDATED FINANCIAL INFORMATION.....................................5
RISK FACTORS...................................................................8
FORWARD-LOOKING STATEMENTS....................................................12
SELLING STOCKHOLDERS..........................................................13
USE OF PROCEEDS...............................................................16
DILUTION......................................................................17
EQUITY LINE OF CREDIT.........................................................18
PLAN OF DISTRIBUTION..........................................................20
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.....................22
DESCRIPTION OF BUSINESS.......................................................31
MANAGEMENT....................................................................43
DESCRIPTION OF PROPERTY.......................................................46
LEGAL PROCEEDINGS.............................................................46
PRINCIPAL STOCKHOLDERS........................................................52
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER STOCKHOLDER MATTERS............................................56
DESCRIPTION OF SECURITIES.....................................................57
EXPERTS.......................................................................59
LEGAL MATTERS.................................................................59
HOW TO GET MORE INFORMATION...................................................59
FINANCIAL STATEMENTS.........................................................F-1

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We intend to distribute to our stockholders annual reports containing
audited financial statements. Our audited financial statements for the fiscal
year June 30, 2002, were contained in our Annual Report on Form 10-KSB.

PROSPECTUS SUMMARY

We own the North and South American rights to market and distribute
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 is expected to provide flexibility for future spectrum upgrades to
3G. The SpectruCell product is being developed by Advanced Communications
Technologies (Australia), Pty. Ltd. ("Advanced Communications (Australia)") an
insolvent development stage company, in which we formerly owned a 20% interest.

During most of 2002, we were in litigation with Roger May and Advanced
Communications (Australia) over our stock ownership interests in Advanced
Communications (Australia) and our rights to market and distribute SpectruCell.
Based on a substantial record created in that proceeding, the Australia Court
granted us broad injunctions protecting our rights pending trial on the matters
at issue. In early October, 2002, Advanced Communications (Australia) terminated
an interim License Agreement we entered into with Advanced Communications
(Australia) in July 2000 to facilitate implementation of our rights to
SpectruCell on the grounds that we were insolvent and our insolvency constituted
an irreparable breach of the interim License Agreement. Our initial response to
the purported termination of the interim License Agreement was to oppose it and
seek leave of the Australian Court to apply for an injunction to prohibit
Advanced Communications (Australia) from acting on the purported termination
pending trial. The Australian Court granted us leave to do so. However, after
considering the situation further and receiving advice of counsel, we made the
strategic decision to alter our approach and withdraw from the Australian
litigation.

This decision was based on various factors, including the following: (i)
the actions of Mr. May against the Company over the past 11 months, which in the
Company's view demonstrated a consistent lack of good faith on his part that was
unlikely to change, (ii) a recent statement made by Mr. May under oath to the
Australian Court that "IT IS IMPORTANT FROM THE OUTSET TO UNDERSTAND THAT THERE
WAS NO SPECTRUCELL PRODUCT IN 1999 AND TODAY THERE STILL IS NO SPECTRUCELL
PRODUCT AS IT IS CLEARLY STILL IN THE DEVELOPMENT STAGE AND AT LEAST 12 TO 18
MONTHS FROM THE FINAL PRODUCT STAGE.", which was contrary to previous
information consistently provided by Mr. May and Advanced Communications
(Australia) to the Company and the public on that subject, (iii) the completion
of the research and development of SpectruCell is currently projected to require
an additional US$12 to 15 million; (iv) the Company's opinion that development
of SpectruCell is unlikely to be completed and a product brought to successful
commercialization under Mr. May's leadership (v) the Company's limited resources
at the present time are insufficient to enable it take all of the legal actions
that would be necessary to defend and enforce its rights in Australia; and
(v)the need for the Company to use available funds to continue current
operations so that its rights and viability will be meaningfully preserved for
the future.

On October 25, 2002, we withdrew from the Australian litigation against Mr.
May and Advanced Communications (Australia). The effect of the Company's
decision to withdraw from the Australia litigation was that the existing
injunctions issued by the Australia Court have been lifted and the purported
termination of the interim License Agreement is not being challenged in the
Australia Court.

Notwithstanding our withdrawal from the Australia litigation, we retain our
rights to damages and other available legal and equitable relief against Mr.
May, Advanced Communications (Australia) and other parties who have acted in
concert with them in violation of our rights. In addition, we still retain
ownership of the rights to SpectruCell and related technology that we acquired
in the 1999 merger with Advanced Communications Technologies, Inc., a Nevada
corporation ("Advanced Communications (Nevada)"), which rights were neither
created by nor subject to cancellation under the interim License Agreement. The
Company intends to protect these rights to the fullest extent it is able to do
so, and anticipates that Mr. May and Advanced Communications (Australia) will
refuse to acknowledge these rights. Based on recent press releases, we believe
that Roger May has transferred the SpectruCell technology to an Australian
company called SpectruCell SDR Pty Ltd. Moreover, NetSalon, a U.S. company,
recently announced that SpectruCell SDR would acquire a majority interest in
NetSalon and NetSalon would become the new marketing arm for SpectruCell in the
United States. Advanced Communications believes that it possesses the marketing
rights to SpectruCell in the United States and that any such agreement with
NetSalon would violate our rights. We do not believe that Roger May or NetSalon
intends to honor our marketing rights without legal action. Due to cash
shortages, we do not have the financial ability to pursue legal action at this
time.

As a minority shareholder in Advanced Communications (Australia), we had no
management rights in its daily operations or any control over the development of
the SpectruCell product. Our interest in Advanced Communications (Australia) was
evidenced by a Stock Purchase Agreement and was reflected by stock ownership
records on file with the Australian Securities Investment Commission, an
Australian government agency. The Company owes Advanced Communications
(Australia) $1,791,166 under the terms of the Stock Purchase Agreement, subject
to claims or offsets the Company has as a result of the damages caused by Mr.
May and Advanced Communications (Australia) to the Company during the past 12
months. Mr. May, a former officer and director and significant shareholder owns
70% of Advanced Communications (Australia) through Global Communications
Technology Pty Ltd., his wholly owned company. On November 11, 2002, Advanced
Communications (Australia) issued a Notice of Termination to the Company stating
that the April 2000 Stock Purchase Agreement was terminated immediately due to

the Company's insolvency. The effect of the purported Notice of Termination vis
a vis the Stock Purchase Agreement was to cancel the Company's stock ownership
interest in Advanced Communications (Australia). Consistent with our decision to
withdraw from the Australia litigation, we have not challenged the purported
termination of the Stock Purchase Agreement in the Australia Court. Given that
Advanced Communications (Australia) is in an insolvency proceeding in Australia,
that it is unlikely to emerge as an operating entity, and that the Company has
written off its entire investment in Advanced Communications (Australia), the
financial impact of this on the Company is not believed to be significant.

On or about July 18, 2002, Advanced Communications (Australia) filed for
administration under Australia's insolvency laws and appointed an independent
administrator to operate and manage its business. Shortly thereafter, a receiver
was appointed over the assets of Advanced Communications (Australia). In late
September 2002, a plan of arrangement was proposed and approved in the
administrative insolvency proceeding of Advanced Communications (Australia), as
a result of which its significant assets will be sold to third parties to
provide a source of payment of its debts. At this time, it appears that
SpectruCell will be sold to a third party controlled by Mr. May and that
Advanced Communications (Australia) will cease operations as a going concern.

We currently have no products for licensing and/or distribution and, as a
result of the above-described events, our ability to market SpectruCell in North
and South America and exercise the rights we acquired in the 1999 merger with
Advanced Communications (Nevada) is unclear. Apart from this, SpectruCell is
still under development. Moreover, given the litigation and current situation
between the Company, Mr. May and Advanced Communications (Australia), we do not
have (and do not expect to obtain) any reliable information on the status of the
SpectruCell product, when it will be available, if at all, to commercial or
military users, the timetable for completing its development, or if the required
financing can be obtained by Advanced Communications (Australia) or a successor
in interest, to do so.

OVERVIEW OF FINANCIAL CONDITION

We had net losses of $4,332,693 and $19,732,566 during the years ended June
30, 2002 and 2001, respectively. As of September 30, 2002, we had a net loss of
$684,112, cash of $415 and current liabilities of $2,552,994. We do not have
sufficient cash or other assets to meet our current liabilities. In order to
meet those obligations, we will need to raise cash from the sale of securities
or from borrowings. Our independent auditors have added an explanatory paragraph
to their audit opinions issued in connection with the years 2002 and 2001
financial statements, which states that our ability to continue as a going
concern depends upon our ability to resolve liquidity problems, principally by
obtaining capital, commencing sales and generating sufficient revenues to become
profitable. Our ability to obtain additional funding will determine our ability
to continue as a going concern. Our financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

On November 22, 2002, we entered into a Securities Purchase Agreement with
Cornell Capital Partners, LP, whereby we agreed to issue and sell $250,000 of
10% Secured Convertible Debentures. These Secured Convertible Debentures have a
term of two years and are convertible into shares of common stock at a price
equal to $.001 per share commencing on December 31, 2002. $125,000 of the 10%
Secured Convertible Debentures was issued in exchange for accrued and unpaid
interest (including default interest) on the Company's January 2002 5%
$1,000,000 Convertible Debentures with $125,000 issued in exchange for cash of
which the Company will net $100,000 after fees and expenses. The Company will
use the funds from the 10% Secured Convertible Debentures to pay a portion of
its legal and accounting professionals outstanding fees thereby enabling the
Company to continue to prepare and file with the SEC the necessary documents to
have its Equity Line of Credit facility declared effective.

If we are unable to obtain additional funding through our Equity Line of
Credit facility (as described in the Management Discussion and Analysis of
Financial Condition and Results of Operations included elsewhere in this filing)
until such time as the SpectruCell product is ready to be sold within our
exclusive markets, then the failure to obtain this funding will have a material
adverse effect on our business and our ability to continue as a going concern.
As a consequence, we may be forced to seek protection under the bankruptcy laws.
In that event, it is unclear whether we could successfully reorganize our
capital structure and operations, or whether we could realize sufficient value
for our assets to satisfy our creditors in full. Accordingly, should we be
forced to file for bankruptcy protection, there is no assurance that our
stockholders would receive any value. A detailed discussion of our financial
condition is contained in the Management's Discussion and Analysis of Financial
Condition and Results of Operations section of this filing.

ABOUT US

Our principal office is located at 420 Lexington Avenue, Suite 2739, New
York, NY 10170. Our telephone number is (646) 227-1600.

THE OFFERING

This offering relates to the sale of common stock by certain persons who
are, or will become, stockholders of us. The selling stockholders consist of:

o Cornell Capital Partners and other holders of convertible debentures
that intend to sell up to 72,960,000 shares of common stock.

o Other selling stockholders, who intend to sell up to 6,868,683 shares
of common stock purchased in private offerings.

Pursuant to the Equity Line of Credit, we may, at our 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 monthly 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 prevailing market price of our common
stock. In addition, Cornell Capital Partners will be paid 3% of each advance
under the Equity Line of Credit, together with a one-time commitment fee of
$740,000, payable in 2,960,000 shares of common stock. Cornell Capital Partners
intends to sell any shares purchased under the Equity Line of Credit at the then
prevailing market price. Among other things, this prospectus relates to the
shares of common stock to be issued under the Equity Line of Credit.

We have engaged Westrock Advisors, Inc., a registered broker-dealer, to
advise us in connection with the Equity Line of Credit. 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. Westrock
Advisors, Inc. is not participating in this offering.

COMMON STOCK OFFERED 79,828,683 shares by selling stockholders

OFFERING PRICE Market price

COMMON STOCK OUTSTANDING
BEFORE THE OFFERING(1) 118,852,622 shares

USE OF PROCEEDS

We will not receive any proceeds of the
shares offered by the selling
stockholders. Any proceeds we receive from
the sale of common stock under the Equity
Line of Credit will be used for (i) the
repayment of our convertible debt
obligations, (ii) the repayment of our
accounts payable and accrued expenses,
(iii) potential acquisitions, and (iv)
general working capital purposes. See "Use
of Proceeds."

RISK FACTORS The securities offered hereby involve a
high degree of risk and immediate
substantial dilution. See "Risk Factors"
and "Dilution."

OVER-THE-COUNTER BULLETIN
BOARD SYMBOL ADVC

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(1) Excludes warrants to purchase 6,440,990 shares of common stock, debentures
convertible into 100,000,000 shares of common stock (at an assumed
conversion price of $0.01 per share) and up to 60,000,000 shares of common
stock to be issued under the Equity Line of Credit, which amount may be
higher or lower if more or less shares are required upon the conversion of
the debentures.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The summary consolidated financial information set forth below should be
read in conjunction with "Management's Discussion and Analysis or Plan of
Operation," the consolidated financial statements and the notes thereto of
Advanced Communications Technologies, Inc. included elsewhere in this
Prospectus. The selected summary consolidated financial information of Advanced
Communications Technologies, Inc. as of June 30, 2002 and for the years ended
June 30, 2002 and 2001 are derived from audited financial statements included
elsewhere in this document. The balance sheet information as of June 30, 2002 is
derived from the Company's annual Form 10-KSB not included in this document. The
consolidated financial information as of September 30, 2002 and 2001, and for
the three months ended September 30, 2002 and 2001, are unaudited. In the
opinion of management, such financial statements include all adjustments
(consisting only of normal recurring accruals) necessary for the fair
presentation of the financial position and the results of operations. The
results of operations for the three months ended September 30, 2002 and 2001,
are not necessarily indicative of the results to be expected for the full year.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS

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FOR THE THREE THE THE
THREE MONTHS YEAR YEAR
MONTHS ENDED ENDED ENDED ENDED
------------- ------------- ------------- -------------
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, JUNE 30,
2002 2001 2002 2001
(UNAUDITED) (UNAUDITED) (AUDITED) (AUDITED)
------------- ------------- ------------- -------------
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TELEPHONE NETWORK REVENUE $ -- $ -- $ -- $ 50,000
COST OF REVENUES -- -- -- (57,310)
------------
GROSS PROFIT (LOSS) -- -- -- $ (7,310)
------------ ----------- ------------ ------------
OPERATING EXPENSES
Depreciation and amortization 104,750 101,000 508,167 1,051,169

Professional and consulting fees 309,181 230,748 1,218,631 1,782,364
Other selling, general and administrative expenses 24,187 90,304 407,772 501,048
Stock-based compensation -- 30,000 180,000 --
------------ ----------- ------------
TOTAL OPERATING EXPENSES 438,118 452,052 2,314,570 3,334,581
------------ ----------- ------------ ------------

LOSS FROM OPERATIONS (438,118) (452,052) (2,314,570) (3,341,891)
------------ ----------- ------------ ------------

OTHER INCOME/(EXPENSE)
Interest expense (72,500) (4,206) (318,123) (10,332)
Lawsuit settlement (173,494) -- -- --
Income ( Loss) from investment in affiliate -- -- -- (3,571,654)
Loss from impairment of goodwill -- -- (1,700,000) (12,399,864)
Loss on investment acquisition deposit -- -- -- (425,000)
Realized loss on decline in marketable securities -- -- -- (6,825)
------------ ----------- ------------ ------------
OTHER INCOME -- -- -- --
TOTAL OTHER INCOME/(EXPENSE) (245,994) (4,206) (2,018,123) (16,413,675)
------------ ----------- ------------ ------------

LOSS BEFORE EXTRAORDINARY GAINS $ (684,112) $ (456,258) $ (4,332,693) $(19,755,566)

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

NET (LOSS) $ (684,112) $ (456,258) $ (4,332,693) $ 19,732,566)

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

COMPREHENSIVE (LOSS) $ (684,112) $ (456,258) $ (4,332,693) $(19,732,566)
============ =========== ============ ============

Net (loss) per share-basic and diluted $ (0.006) $ (0.005) $ (0.04) $ (0.22)
============ =========== ============ ============

Weighted average number of shares outstanding
during the period-basic and diluted 115,095,829 95,639,024 100,576,484 87,976,428
============ =========== ============ ============

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

- ------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, JUNE 30, JUNE 30,
2002 2002 2001
(UNAUDITED) (AUDITED) (AUDITED)
------------ ----------- ------------
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ASSETS:
Cash and cash equivalents $ 415 $ 11,093 $ 6,816
Prepaid expenses -- -- 10,000
------------ ----------- ------------
TOTAL CURRENT ASSETS 415 11,093 16,816
------------ ----------- ------------

PROPERTY & EQUIPMENT - NET 16,274 17,274 19,599
------------ ----------- ------------
OTHER ASSETS
Goodwill, less accumulated amortization of
$300,000 and 200,000 respectively -- -- 2,000,000
-- -- --
-- -- --
Deposits 7,700 13,225 5,525
Other receivables 9,927 9,927 --
Deferred bond financing costs, less accumulated
amortization 53,333 63,333 --
------------ ----------- ------------
TOTAL OTHER ASSETS 70,960 86,485 2,005,525
------------ ----------- ------------

TOTAL ASSETS $ 87,649 $ 114,852 $ 2,041,940
============ =========== ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:

LIABILITIES

CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,189,658 $ 872,493 $ 844,205
Accrued compensation 172,183 172,183 479,050

Note Payable-Grassland -- -- 118,530
Loan Payable to shareholder 1,055,736 1,055,736 796,000
Convertible debentures -- 1,100,407 200,750
Interest payable 135,417 62,917 --
-
------------ ----------- ------------
TOTAL CURRENT LIABILITIES 2,552,994 3,263,736 2,438,535
------------ ----------- ------------

LONG-TERM LIABILITIES
5 % Convertible Debentures 1,000,000 -- --
------------ ----------- ------------
8% Note Payable 173,494 - -
------------ ----------- ------------
Notes Payable-Unconsolidated affiliate 1,791,166 1,791,166 2,173,167
------------ ----------- ------------
TOTAL LIABILITIES 5,517,654 5,054,902 4,611,702
------------ ----------- ------------

STOCKHOLDERS' DEFICIENCY
Preferred Stock, $.01 par Value, 25,000,000
shares authorized , none issued and
outstanding
Common stock, no par value, 200,000,000 and
100,000,000 shares authorized, respectively,
118,352,622, 114,102,622, and 94,489,916
shares issued and outstanding, respectively 25,571,505 25,471,098 22,696,193
Common stock to be issued, 833,334 shares 250,000
-- -- --
Less: Deferred commitment fees, net of
accumulated amortization (468,750) (562,500) --
-- -- --
------------ ----------- ------------
Accumulated deficit (30,532,760) (29,848,648) (25,515,955)
------------ ----------- ------------
TOTAL STOCKHOLDERS' (DEFICIENCY) EQUITY (5,430,005) (4,940,050) (2,569,762)
------------ ----------- ------------

TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIENCY) EQUITY $ 87,649 $ 114,852 $ 2,041,940
============ =========== ============

RISK FACTORS

We are subject to various risks that may materially harm our business,
financial condition and results of operations. YOU SHOULD CAREFULLY CONSIDER THE
RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS FILING
BEFORE DECIDING TO PURCHASE OUR COMMON STOCK. IF ANY OF THESE RISKS OR
UNCERTAINTIES ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR OPERATING
RESULTS COULD BE MATERIALLY HARMED. IN THAT CASE, THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.

RISKS RELATED TO OUR BUSINESS

THE CONVERSION OF OUR OUTSTANDING DEBENTURES WILL CAUSE DILUTION TO OUR EXISTING
SHAREHOLDERS

The issuance of shares upon the conversion of the outstanding debentures
will have a dilutive impact on our stockholders. We currently have $1,250,000 of
outstanding convertible debentures. Of that total, $250,000 of convertible
debentures are convertible at a fixed price of $0.001 per share, which would
upon conversion result in the issuance of 250,000,000 shares of common stock.
The balance of $1,000,000 of convertible 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 $0.0072 (i.e., 80% of the recent price of $0.009), then the
holders of the convertible debentures would have received 138,888,889 shares of
common stock. As a result, our net income per share could decrease, in future
periods, and the market price of our common stock could decline.

THE CONVERSION OF OUR OUTSTANDING DEBENTURES COULD CAUSE A CHANGE OF CONTROL

The issuance of shares upon the conversion of the outstanding debentures
could result in a change of control. Cornell Capital Partners holds convertible
debentures, which if converted would result in the issuance of 388,888,889
shares of our common stock. Currently, we are authorized to issue a maximum of
200,000,000 shares of common stock. Accordingly, we do not have a sufficient
number of shares of common stock to honor all such conversions. If we issued the
maximum number of shares that we are authorized to issue to Cornell Capital,
then Cornell would receive 81,147,347 shares of common stock, which would
represent 40.6% of our outstanding shares. In such event, Cornell Capital would
be our largest shareholder and would likely be able to exercise control of our
company by electing directors, increasing the number of authorized shares of
common stock that our company could issue or otherwise.

TERMINATION OF THE INTERIM LICENSE AGREEMENT

In early October, 2002, Advanced Communications (Australia) terminated an
interim License Agreement we entered into with Advanced Communications
(Australia) in July 2000 to facilitate implementation of our rights to
SpectruCell on the grounds that we were insolvent and our insolvency constituted
an irreparable breach of the interim License Agreement. Our initial response to
the purported termination of the interim License Agreement was to oppose it and
seek leave of the Australian Court to apply for an injunction to prohibit
Advanced Communications (Australia) from acting on the purported termination
pending trial. The Australian Court granted us leave to do so. However, after
considering the situation further and receiving advice of counsel, we made the
strategic decision to alter our approach and withdraw from the Australian
litigation.

On October 25, 2002, we withdrew from the Australian litigation against Mr.
May and Advanced Communications (Australia). The effect of the Company's
decision to withdraw from the Australia litigation was that the existing
injunctions issued by the Australia Court have been lifted and the purported
termination of the interim License Agreement is not being challenged in the
Australia Court.

Notwithstanding our withdrawal from the Australia litigation, we still
retain ownership of the rights to SpectruCell and related technology acquired in
the 1999 merger with Advanced Communications Technologies (Nevada), which were
neither created by nor subject to cancellation under the interim License
Agreement. It is anticipated that Mr. May and Advanced Communications
(Australia) will refuse to acknowledge these rights.

OUR RELATIONSHIP WITH MR. MAY AND ADVANCED COMMUNICATIONS (AUSTRALIA) IS
SIGNIFICANTLY IMPAIRED

Given all of the litigation by the Company against Mr. May and Advanced
Communications (Australia) over rights to SpectruCell and the Company's 20%
stock interest in Advanced Communications (Australia), it is likely that the
Company will continue to be involved in substantive litigation against Mr. May
and other parties to protect its rights to, and interest in, the SpectruCell
technology for the North and South American markets.

Even if we are able to prevail against Mr. May and Advanced Communications
(Australia) or its successor in interest as to SpectruCell, or settle our
disputes with those parties which is unlikely under current conditions, the
success of the SpectruCell project and our financial viability on this basis is
subject to many other risks and contingencies, including, but not limited to,
the ones mentioned below.

WE HAVE HISTORICALLY LOST MONEY AND LOSSES MAY CONTINUE IN THE FUTURE

We have historically lost money. In the year ended June 30, 2002 and for
the three months ended September 30, 2002, we had a net loss of ($4,332,693) and
($684,112) or ($0.04) and ($0.006) per share, respectively. Future losses are
likely to occur. Accordingly, we may experience significant liquidity and cash
flow problems because our operations are not profitable. No assurances can be
given that we will be successful in reaching or maintaining profitable
operations.

WE WILL NEED TO RAISE ADDITIONAL CAPITAL TO FINANCE OPERATIONS

We have relied on significant external financing to fund our operations.
Such financing has historically come from a combination of borrowings and sale
of common stock to third parties and funds provided by certain officers and
directors. We cannot assure you that financing whether from external sources or
related parties will be available if needed or on favorable terms. Our inability
to obtain adequate financing has resulted in the need to curtail our business
operations. Any of these events would be materially harmful to our business and
may result in a lower stock price. We will need to raise additional capital to
fund our anticipated operating expenses and future expansion. Among other
things, external financing may be required to cover our operating costs.

OUR INDEPENDENT AUDITORS HAVE ADDED A GOING CONCERN OPINION TO OUR FINANCIAL
STATEMENTS, WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS WE
OBTAIN ADDITIONAL FUNDING

Our independent auditors have added an explanatory paragraph to their audit
opinions issued in connection with the years 2000 and 2001 financial statements,
which states that our ability to continue as a going concern depends upon our
ability to resolve liquidity problems, principally by obtaining capital,
commencing sales and generating sufficient revenues to become profitable. Our
ability to obtain additional funding will determine our ability to continue as a
going concern. Our financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

WE HAVE A WORKING CAPITAL DEFICIT, WHICH MEANS THAT OUR CURRENT ASSETS ON
SEPTEMBER 30, 2002 WERE NOT SUFFICIENT TO SATISFY OUR CURRENT LIABILITIES ON
THAT DATE

We had a working capital deficit of $2,552,579 as of September 30, 2002,
which means that our current liabilities exceeded our current assets by
$2,552,579. Current assets are assets that are expected to be converted into
cash within one year and, therefore, may be used to pay current liabilities as
they become due. Our working capital deficit means that our current assets on
September 30, 2002 were not sufficient to satisfy all of our current liabilities
on that date.

OUR FUTURE DEPENDS UPON THE MARKET ACCEPTANCE OF A SINGLE PRODUCT

We intend to market and distribute a single product called SpectruCell. To
date, we have not had any revenue from the sale of this product. Our success is
completely dependent on the telecommunication industry's acceptance of this
product, in such quantities that we can generate sufficient revenues and cash
flow to finance our operations. We may need to overcome substantial hurdles to
obtain such market acceptance, including convincing the telecommunication
industry of the necessity of such product and encouraging companies and other
entities to offer incentives to use our product. No assurances can be given that
the market will accept our product.

The inability of Advanced Communications (Australia) to complete the
development of our proposed product and prove its features and functionality
will jeopardize our ability to continue operations.

Our proposed product is under development and is not commercially
available. The features and functionality of our proposed product is
commercially unproven. The success of Advanced Communications is dependent upon
the ability of Advanced Communications (Australia) to successfully complete the
development, and to prove the features and functionality of our product. The
inability to timely complete such development or to prove to potential customers
our product's features and functionality, such that we can generate sales, will
jeopardize our ability to continue operations. Such testing and functionality is
outside our control and we are dependent on Advanced Communications
(Australia)'s efforts to complete these tasks.

THE PRICE OF OUR COMMON STOCK MAY BE AFFECTED BY A LIMITED TRADING VOLUME AND
MAY FLUCTUATE SIGNIFICANTLY

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

OUR COMMON STOCK IS DEEMED TO BE "PENNY STOCK," WHICH MAY MAKE IT MORE DIFFICULT
FOR INVESTORS TO SELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS

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

o With a price of less than $5.00 per share;

o That are not traded on a "recognized" national exchange;

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

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

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

WE COULD FAIL TO ATTRACT OR RETAIN KEY PERSONNEL

Our success largely depends on the efforts and abilities of key executives
and consultants, including Wayne Danson, our President and Chief Financial
Officer. The loss of the services of Mr. Danson could materially harm our
business because of the cost and time necessary to replace and train a
replacement. Such a loss would also divert management attention away from
operational issues. We do not presently maintain a key-man life insurance policy
on Mr. Danson.

RISKS RELATING TO THIS OFFERING

FUTURE SALES BY OUR STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE AND OUR
ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS

Sales of our common stock in the public market following this offering
could lower the market price of our common stock. Sales may also make it more
difficult for us to sell equity securities or equity-related securities in the
future at a time and price that our management deems acceptable or at all. Of
the 118,852,622 shares of common stock outstanding as of January 13, 2003,
52,886,765 shares are, or will be, freely tradable without restriction, unless
held by our "affiliates." The remaining 65,965,857 shares of common stock held
by existing stockholders are "restricted securities" and may be resold in the

public market only if registered or pursuant to an exemption from registration.
Some of these shares may be resold under Rule 144.

In addition, we have issued, or will issue, warrants to purchase up to
6,440,900 shares of common stock and debentures convertible into 100,000,000
shares of common stock (assuming a conversion price of $0..01 per share).

EXISTING STOCKHOLDERS WILL EXPERIENCE SIGNIFICANT DILUTION FROM THE SALE OF
SHARES UNDER THE EQUITY LINE OF CREDIT

The sale of shares pursuant to the Equity Line of Credit will have a
dilutive impact on our 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, for a given advance, we will need to issue a greater
number of shares of common stock under the Equity Line of Credit as our stock
price declines. If our stock price is lower, then our existing stockholders
would experience greater dilution.

THE INVESTOR UNDER THE EQUITY LINE OF CREDIT WILL PAY LESS THAN THE
THEN-PREVAILING MARKET PRICE OF OUR COMMON STOCK

The common stock to be issued under the Equity Line of Credit will be
issued at a 9% discount to the lowest closing bid price for the 5 days
immediately following the notice date of an advance. These discounted sales
could cause the price of our common stock to decline.

THE SELLING STOCKHOLDERS INTEND TO SELL THEIR SHARES OF COMMON STOCK IN THE
PUBLIC MARKET, WHICH SALES MAY CAUSE OUR STOCK PRICE TO DECLINE

The selling stockholders intend to sell the shares of common stock being
registered in this offering in the public market. Such sales may cause our stock
price to decline.

THE SALE OF OUR STOCK UNDER OUR EQUITY LINE OF CREDIT COULD ENCOURAGE SHORT
SALES BY THIRD PARTIES, WHICH COULD CONTRIBUTE TO THE FURTHER DECLINE OF OUR
STOCK PRICE

The significant downward pressure on the price of our common stock caused
by the sale of significant amounts of common stock under the Equity Line of
Credit could encourage short sales by third parties. Such an event could place
further downward pressure on the price of our common stock.

OUR COMMON STOCK HAS BEEN RELATIVELY THINLY TRADED AND WE CANNOT PREDICT THE
EXTENT TO WHICH A TRADING MARKET WILL DEVELOP

Before this offering our common stock has traded on the Over-the-Counter
Bulletin Board. Our common stock is thinly traded compared to larger more widely
known companies in our industry. Thinly traded common stock can be more volatile
than common stock trading in an active public market. We cannot predict the
extent to which an active public market for the common stock will develop or be
sustained after this offering.

THE PRICE YOU PAY IN THIS OFFERING WILL FLUCTUATE AND MAY BE HIGHER OR LOWER
THAN THE PRICES PAID BY OTHER PEOPLE PARTICIPATING IN THIS OFFERING

The price in this offering will fluctuate based on the prevailing market
price of the common stock on the Over-the-Counter Bulletin Board. Accordingly,
the price you pay in this offering may be higher or lower than the prices paid
by other people participating in this offering.

THE ISSUANCE OF SHARES OF COMMON STOCK UNDER THIS OFFERING COULD RESULT IN A
CHANGE OF CONTROL

We are registering 79,828,683 shares of common stock in this offering.
These shares represent approximately 43% of our outstanding common stock, and we
anticipate all such shares will be sold in this offering. 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.

FORWARD-LOOKING STATEMENTS

Information included or incorporated by reference in this prospectus may
contain forward-looking statements. This information may involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be materially different from the future
results, performance or achievements expressed or implied by any forward-looking
statements. Forward-looking statements, which involve assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend" or "project" or the negative of these words or other
variations on these words or comparable terminology.

This prospectus contains forward-looking statements, including statements
regarding, among other things, (a) our projected sales and profitability, (b)
our growth strategies, (c) anticipated trends in our industry, (d) our future
financing plans and (e) our anticipated needs for working capital. These
statements may be found under "Management's Discussion and Analysis or Plan of
Operations" and "Business," as well as in this prospectus generally. Actual
events or results may differ materially from those discussed in forward-looking
statements as a result of various factors, including, without limitation, the
risks outlined under "Risk Factors" and matters described in this prospectus
generally. In light of these risks and uncertainties, there can be no assurance
that the forward-looking statements contained in this prospectus will in fact
occur.

SELLING STOCKHOLDERS

The following table presents information regarding the selling
stockholders. The table identifies the selling stockholders and the type of
security or securities to be sold in this offering. None of the selling
stockholders have held a position or office, or had any other material
relationship, with Advanced Communications, except as follows:

o Cornell Capital Partners, L.P. is the investor under the Equity Line
of Credit and a holder of convertible debentures. All investment
decisions of Cornell Capital Partners are made by its general partner,
Yorkville Advisors, LLC. Mark Angelo, the managing member of Yorkville
Advisors, makes the investment decisions on behalf of Yorkville
Advisors.

o Westrock Advisors, Inc. is a registered broker/dealer that has been
retained by us. It has provided advice to us in connection with the
Equity Line of Credit. For its services, Westrock Advisors, Inc.
received 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. These shares were transferred to D. Christian Southwick,
Julia Oliver, Mark Sklar and Mitchel Sklar, each of whom are employees
of Westrock Advisors. These shares are being registered in this
offering.

o Robert Bends makes the investment decisions on behalf of Central
Florida Sales and Leasing.

o Bennie Williams makes the investment decisions on behalf of Morgan
Group.

The table follows:

- ------------------------------------------------------------------------------------------------------------------------------
PERCENTAGE
OF SHARES TO PERCENTAGE OF
OUTSTANDING BE OUTSTANDING
SHARES SHARES ACQUIRED SHARES TO BE PERCENTAGE
BENEFICIALLY BENEFICIALLY UNDER THE ACQUIRED SHARES TO OF SHARES
OWNED OWNED EQUITY UNDER THE BE SOLD BENEFICIALLY
BEFORE BEFORE LINE OF EQUITY LINE IN THE OWNED AFTER
SELLING STOCKHOLDER OFFERING OFFERING(1) CREDIT(2) OF CREDIT OFFERING OFFERING(1)
- ------------------------ ------------- -------------- ----------- -------------- ---------- ------------
- ------------------------------------------------------------------------------------------------------------------------------

WARRANTS:
Anthony Castaldi 125,000 * -- -- 125,000 0.00%
Central Florida Sales 125,000 * -- -- 125,000 0.00%
and Leasing
David R. Osborne 200,000 * -- -- 200,000 0.00%
Frank Tremmel 125,000 * -- -- 125,000 0.00%
Fred S. Mann 125,000 * -- -- 125,000 0.00%
Gary Levy 125,000 * -- -- 125,000 0.00%
Jerome and Joanne 125,000 * -- -- 125,000 0.00%
Martin
John C. Roberson 125,000 * -- -- 125,000 0.00%
Johnny & Janice Greene 250,000 * -- -- 250,000 0.00%
Leslie Rosenberg 375,000 * -- -- 375,000 0.00%
Melissa Graybeal 125,000 * -- -- 125,000 0.00%
Michael Jones 62,500 * -- -- 62,500 0.00%
Michael Jones & 125,000 * -- -- 125,000 0.00%
Thomas Smith
Morgan Group 2,000,000 1.75% -- -- 2,000,000 0.00%
Paul & Debra Hale 187,500 * -- -- 187,500 0.00%
Paul M. Troop 325,000 * -- -- 325,000 0.00%
R. William Timberman 560,000 * -- -- 560,000 0.00%

Raj Selvaraju 375,000 * -- -- 375,000 0.00%
Ronald Coletta 280,900 * -- -- 280,900 0.00%
Sean R. Repko 125,000 * -- -- 125,000 0.00%
Theodore & Claudia 125,000 * -- -- 125,000 0.00%
Jones
Victoria Lichtman 125,000 * -- -- 125,000 0.00%
Wayne Madden 325,000 * -- -- 325,000 0.00%
---------- ------ ---------- ------ ---------- -----

Total Shares 6,440,900 5.43% -- -- 6,440,900 0.00%
---------- ------ ---------- ------ ---------- -----
Underlying Warrants
- ------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK:
- ------------------------------------------------------------------------------------------------------------------------------
Alberto Monteiro 160,000 * -- -- 160,000 0.00%
Eduardo Acosta 160,000 * -- -- 160,000 0.00%
James Rennie 34,449 * -- -- 34,449 0.00%
Robert H. Groman 11,111 * -- -- 11,111 0.00%
Richard R. Ross 11,111 * -- -- 11,111 0.00%
Russell G. Tisman 11,112 * -- -- 11,112 0.00%
D. Christian Southwick 16,000 * -- -- 16,000 0.00%
Julia Oliver 16,000 * -- -- 16,000 0.00%
Mark Sklar 4,000 * -- -- 4,000 0.00%
Mitchel Sklar 4,000 * -- -- 4,000 0.00%
---------- ------ ---------- ------ ---------- -----
Total Shares 427,783 * -- -- 427,783 0.00%
of Common Stock ---------- ------ ---------- ------ ---------- -----
- ------------------------------------------------------------------------------------------------------------------------------
DEBENTURES:
- ------------------------------------------------------------------------------------------------------------------------------
Eric Brager 100,000 * -- -- 100,000 0.00%
Mary Ellen Misiak 1,500,000 1.32% -- -- 1,500,000 0.00%
Connie Benesch 500,000 * -- -- 500,000 0.00%
Adam Denish 150,000 * -- -- 150,000 0.00%
Paul Denish 300,000 * -- -- 300,000 0.00%
Dr. Gerald Holland 1,100,000 1.06% -- -- 1,100,000 0.00%
Doree Kesselbrenner
(For Sarah 110,000 * -- -- 110,000 0.00%
Kesselbrenner)
Doree Kesselbrenner
(For David 110,000 * -- -- 110,000 0.00%
Kesselbrenner)
Doree Kesselbrenner
(For Joseph 110,000 * -- -- 110,000 0.00%
Kesselbrenner)
Doree Kesselbrenner
(For Louis 110,000 * -- -- 110,000 0.00%
Kesselbrenner)
Roger Mischel 200,000 * -- -- 200,000 0.00%
Robert Benson 50,000 * -- -- 50,000 0.00%

Kent Chou 150,000 * -- -- 150,000 0.00%
Steve Severance 150,000 * -- -- 150,000 0.00%
Craig Moss 35,000 * -- -- 35,000 0.00%
Meir Levin 325,000 * -- -- 325,000 0.00%
---------- ------ ---------- ------ ---------- -----
Total Shares
Underlying Debentures 10,000,000 8.20% -- -- 10,000,000 0.00%
---------- ------ ---------- ------ ---------- -----
- ------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
FROM EQUITY LINE:
- ------------------------------------------------------------------------------------------------------------------------------
Cornell Capital 2,960,000 2.58% 60,000,000 34.89% 62,960,000 0.00%
Partners, L.P. ---------- ------ ---------- ------ ---------- -----

Total Shares
of Common Stock
from Equity Line: 2,960,000 2.58% 60,000,000 34.89% 62,960,000 0.00%
---------- ------ ---------- ------ ---------- -----
- ------------------------------------------------------------------------------------------------------------------------------

GRAND TOTAL 19,828,683 15.04% 60,000,000 34.89% 79,828,683 0.00%
========== ====== ========== ====== ========== =====
- ------------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------
* Less than 1%.

(1) Applicable percentage of ownership is based on 118,852,622 shares of common
stock outstanding as of January 13, 2003, together with securities
exercisable or convertible into shares of common stock within 60 days of
January 10, 2003, for each stockholder. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities.
Shares of common stock subject to securities exercisable or convertible
into shares of common stock that are currently exercisable or exercisable
within 60 days of January 13, 2003 are deemed to be beneficially owned by
the person holding such securities for the purpose of computing the
percentage of ownership of such person, but are not treated as outstanding
for the purpose of computing the percentage ownership of any other person.
The common stock is the only outstanding class of equity securities of
Advanced Communications.

(2) The number of shares of common stock available under the Equity Line of
Credit may be increased to a maximum of 70,000,000 shares of common stock
if none of the outstanding debentures are converted into shares of common
stock.

USE OF PROCEEDS

This prospectus relates to shares of our common stock that may be offered
and sold from time to time by certain selling stockholders. There will be no
proceeds to us from the sale of shares of common stock in this offering.
However, we will receive the proceeds from the sale of shares of common stock to
Cornell Capital Partners, L.P. under the Equity Line of Credit. The purchase
price of the shares purchased under the Equity Line of Credit will be equal to
91% of the lowest closing bid price of our common stock on the Over-the-Counter
Bulletin Board for the 5 days immediately following the notice date.

For illustrative purposes, we have set forth below our intended use of
proceeds for the range of net proceeds indicated below to be received under the
Equity Line of Credit. The table assumes estimated offering expenses of $85,000
and 3% retention of the gross proceeds raised under the Equity Line of Credit.

GROSS PROCEEDS $10,000,000 $20,000,000 $30,000,000

NET PROCEEDS $9,615,000 $19,315,000 $29,015,000

USE OF PROCEEDS: AMOUNT AMOUNT AMOUNT
- -----------------------------------------------------------------------------------------------------------------

Repayment of Convertible Debt $1,400,000 $1,400,000 $1,400,000
Administrative Expenses, Including Salaries 600,000 600,000 600,000
Accounts Payable & Note Payable 1,600,000 2,000,000 2,500,000
Future Acquisitions 4,500,000 14,000,000 22,550,000
General Working Capital 1,515,000 1,315,000 1,965,000
----------- ----------- -----------

TOTAL $9,615,000 $19,315,000 $29,015,000
=========== =========== ===========

Any proceeds received upon issuance of outstanding options or warrants will
be used for general working capital purposes.

DILUTION

The net tangible book value of our company as of September 30, 2002, was
($5,430,005) or ($0.0458) per share of common stock. Net tangible book value per
share is determined by dividing the tangible book value of our company (total
tangible assets less total liabilities) by the number of outstanding shares of
our common stock. Since this offering is being made solely by the selling
stockholders and none of the proceeds will be paid to our company, our net
tangible book value will be unaffected by this offering. Our net tangible book
value, however, will be impacted by the common stock to be issued under the
Equity Line of Credit. The amount of dilution will depend on the offering price
and number of shares to be issued under the Equity Line of Credit. The following
example shows the dilution to new investors at an offering price of $0.005 per
share.

If we assume that our company had issued 70,000,000 shares of common stock
under the Equity Line of Credit at an assumed offering price of $0.005 per share
(i.e., the maximum number of shares registered in this offering under the Equity
Line of Credit, which number of shares assumes none of the debentures will be
converted into shares of common stock), less retention fees of $63,000 and
offering expenses of $85,000, our net tangible book value as of September 30,
2002, would have been ($5,175,505) or ($0.0274) per share. Note that at an
offering price of $0.005 per share, Advanced Communications would receive gross
proceeds of $656,250 or $29,343,750 less than is available under the Equity Line
of Credit. Such an offering would represent an immediate increase in net
tangible book value to existing stockholders of $0.0184 per share and an
immediate dilution to new stockholders of $0.0324 per share. The following table
illustrates the per share dilution:

- --------------------------------------------------------------------------------
Assumed public offering price per share $0.005
- --------------------------------------------------------------------------------
Net tangible book value per share before this offering $0.0458
- --------------------------------------------------------------------------------
Increase attributable to new investors $0.0184
-------
- --------------------------------------------------------------------------------
Net tangible book value per share after this offering ($0.0274)
---------
- --------------------------------------------------------------------------------
Dilution per share to new stockholders $0.0324
=========
- --------------------------------------------------------------------------------

The offering price of our common stock is based on the then-existing market
price. In order to give prospective investors an idea of the dilution per share
they may experience, we have prepared the following table showing the dilution
per share at various assumed offering prices:

- --------------------------------------------------------------------------------
ASSUMED NO. OF SHARES TO BE DILUTION PER SHARE TO
OFFERING PRICE ISSUED(1) NEW INVESTORS
-------------- ------------------- ---------------------
- --------------------------------------------------------------------------------
$0.0094 70,000,000 $0.0352
- --------------------------------------------------------------------------------
$0.0063 70,000,000 $0.0332
- --------------------------------------------------------------------------------
$0.0050 70,000,000 $0.0324
- --------------------------------------------------------------------------------
$0.0038 70,000,000 $0.0316
- --------------------------------------------------------------------------------
$0.0025 70,000,000 $0.0308
- --------------------------------------------------------------------------------
$0.0013 70,000,000 $0.3000
- --------------------------------------------------------------------------------

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

(1) This represents the maximum number of shares of common stock that will be
registered under the Equity Line of Credit.

EQUITY LINE OF CREDIT

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. The costs associated with this registration
will be borne by us.

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 in the accompanying registration statement at a
recent price of $0.005 per share, we would issue 70,000,000 shares of common
stock to Cornell Capital Partners, L.P. for gross proceeds of $656,250 or
$29,343,750 less than is available under the Equity Line of Credit. These shares
would represent 37.1% 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 $0.005
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 $0.005 per share and
25%, 50% and 75% discounts to the recent price.

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

Purchase Price: $0.0013 $0.0025 $0.0038 $0.0050
- --------------------------------------------------------------------------------------------------------------------------
Gross Proceeds: $87,500 $175,000 $262,500 $350,000
- --------------------------------------------------------------------------------------------------------------------------
No. of Shares(1): 70,000,000 70,000,000 70,000,000 70,000,000
- --------------------------------------------------------------------------------------------------------------------------
Total Outstanding(2): 188,852,622 188,852,622 188,852,622 188,852,622
- --------------------------------------------------------------------------------------------------------------------------
Percent Outstanding(3): 37.1% 37.1% 37.1% 37.1%
- --------------------------------------------------------------------------------------------------------------------------

(1) Represents the maximum number of shares of common stock to be issued to
Cornell Capital Partners, L.P.

(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.

Proceeds used under the Equity Line of Credit will be used in the manner
set forth in the "Use of Proceeds" section of this prospectus. We cannot predict
the total amount of proceeds to be raised in this transaction because we have
not determined the total amount of the advances we intend to draw.

We expect to incur expenses of approximately $85,000 in connection with
this registration, 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.

PLAN OF DISTRIBUTION

The selling stockholders have advised us that the sale or distribution of
our common stock owned by the selling stockholders may be effected directly to
purchasers by the selling stockholders or by pledgees, donees, transferees or
other successors in interest, as principals or through one or more underwriters,
brokers, dealers or agents from time to time in one or more transactions (which
may involve crosses or block transactions) (i) on the over-the-counter market or
in any other market on which the price of our shares of common stock are quoted
or (ii) in transactions otherwise than on the over-the-counter market or in any
other market on which the price of our shares of common stock are quoted. Any of
such transactions may be effected at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at varying prices
determined at the time of sale or at negotiated or fixed prices, in each case as
determined by the selling stockholders or by agreement between the selling
stockholders and underwriters, brokers, dealers or agents, or purchasers. If the
selling stockholders effect such transactions by selling their shares of common
stock to or through underwriters, brokers, dealers or agents, such underwriters,
brokers, dealers or agents may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of common stock for whom they may act as agent (which discounts,
concessions or commissions as to particular underwriters, brokers, dealers or
agents may be in excess of those customary in the types of transactions
involved). The selling stockholders and any brokers, dealers or agents that
participate in the distribution of the common stock may be deemed to be
underwriters, and any profit on the sale of common stock by them and any
discounts, concessions or commissions received by any such underwriters,
brokers, dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act.

Cornell Capital Partners, L.P. is an "underwriter" within the meaning of
the Securities Act of 1933 in connection with the sale of common stock under the
Equity Line of Credit. Cornell Capital Partners, L.P. will pay us 91% of the
lowest closing bid price of our common stock on the Over-the-Counter Bulletin
Board or other principal trading market on which our common stock is traded for
the 5 days immediately following the advance date. In addition, Cornell Capital
Partners will retain 3% of the proceeds received by us under the Equity Line of
Credit, plus a one-time commitment fee of $740,000, which was paid by the
issuance of 2,960,000 shares of common stock. The 9% discount, the 3% retention,
and the one-time commitment fee are underwriting discounts. 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.

Cornell Capital Partners, L.P. was formed in February 2000 as a Delaware
limited partnership. Cornell Capital Partners is a domestic hedge fund in the
business of investing in and financing public companies. Cornell Capital
Partners does not intend to make a market in our stock or to otherwise engage in
stabilizing or other transactions intended to help support the stock price.
Prospective investors should take these factors into consideration before
purchasing our common stock.

Under the securities laws of certain states, the shares of common stock may
be sold in such states only through registered or licensed brokers or dealers.
The selling stockholders are advised to ensure that any underwriters, brokers,
dealers or agents effecting transactions on behalf of the selling stockholders
are registered to sell securities in all fifty states. In addition, in certain
states the shares of common stock may not be sold unless the shares have been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and is complied with.

We will pay all the expenses incident to the registration, offering and
sale of the shares of common stock to the public hereunder other than
commissions, fees and discounts of underwriters, brokers, dealers and agents. We
have agreed to indemnify Cornell Capital Partners and its controlling persons
against certain liabilities, including liabilities under the Securities Act. We
estimate that the expenses of the offering to be borne by us will be
approximately $85,000, and a one-time fee of $740,000 payable in common stock.
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 offering
expenses consist of: a SEC registration fee of $955 printing expenses of $2,500,
accounting fees of $15,000, legal fees of $50,000 and miscellaneous expenses of
$16,545. We will not receive any proceeds from the sale of any of the shares of
common stock by the selling stockholders. We will, however, receive proceeds
from the sale of common stock under the Equity Line of Credit.

The selling stockholders should be aware that the anti-manipulation
provisions of Regulation M under the Exchange Act will apply to purchases and
sales of shares of common stock by the selling stockholders, and that there are
restrictions on market-making activities by persons engaged in the distribution
of the shares. Under Registration M, the selling stockholders or their agents
may not bid for, purchase, or attempt to induce any person to bid for or
purchase, shares of our common stock while such selling stockholders are
distributing shares covered by this prospectus. Accordingly, except as noted
below, the selling stockholders are not permitted to cover short sales by
purchasing shares while the distribution is taking place. Cornell Capital
Partners can cover any short positions only with shares received from us under
the Equity Line of Credit. The selling stockholders are advised that if a
particular offer of common stock is to be made on terms constituting a material
change from the information set forth above with respect to the Plan of
Distribution, then, to the extent required, a post-effective amendment to the
accompanying registration statement must be filed with the Securities and
Exchange Commission.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS OF ADVANCED COMMUNICATIONS AND THE NOTES
THERETO APPEARING ELSEWHERE IN THIS FILING. STATEMENTS IN THIS MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION AND ELSEWHERE IN THIS PROSPECTUS
THAT ARE NOT STATEMENTS OF HISTORICAL OR CURRENT FACT CONSTITUTE
"FORWARD-LOOKING STATEMENTS."

OVERVIEW OF FINANCIAL CONDITION

If we are unable to obtain additional funding through our Equity Line of
Credit facility (as described in the Management Discussion and Analysis of
Financial Condition and Results of Operations included elsewhere in this
filingl) until such time as the SpectruCell product is ready to be sold within
our exclusive markets, then the failure to obtain this funding will have a
material adverse effect on our business and our ability to continue as a going
concern. As a consequence, we may be forced to seek protection under the
bankruptcy laws. In that event, it is unclear whether we could successfully
reorganize our capital structure and operations, or whether we could realize
sufficient value for our assets to satisfy our creditors in full. Accordingly,
should we be forced to file for bankruptcy protection, there is no assurance
that our stockholders would receive any value. A detailed discussion of our
financial condition is contained in the Management's Discussion and Analysis of
Financial Condition and Results of Operations section of this filing.

THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2001

OVERALL RESULTS OF OPERATIONS

For the three months ended September 30, 2002 we incurred an overall loss
of ($684,112) or ($.006) per share, which was an increase of $227,854 over the
loss of ($456,258) or ($0.005) per share for the comparable period in the prior
year.

REVENUE

No revenues were generated during the three months ended September 30, 2002
or September 30, 2001.

OPERATING EXPENSES

Operating expenses for the three months ended September 30, 2002, were
$438,118 and represent a modest decrease in operating expenses of $452,052 for
the comparative period ended September 30, 2001. Included in operating expenses
for both periods is $104,750 and $101,000 respectively, of depreciation and
amortization attributable to the quarterly depreciation of our office property
and equipment ($1,000) and $103,750 of amortization attributable to deferred
financing and commitment fees for the three months ended September 30, 2002 and

$100,000 of amortization of goodwill for the three months ended September 30,
2001. Consulting fees for the three months ended September 30, 2002 decreased by
$83,228 from the comparative period due to the curtailment of our operations
during the quarter. Professional fees for the three months ended September 30,
2002 increased $161,661 over the comparable three-month period ended September
30, 2001 due to the increase in legal fees associated with the Company's
Australian litigation with Roger May and Advanced Communications (Australia).

OTHER EXPENSE

Interest expense incurred for the three months ended September 30, 2002 was
$72,500 and was attributable to accrued and default interest on the $1 million
5% Convertible Debentures we issued in January 2002. Interest of $4,206 for the
comparative three-month period ended September 30, 2001 was attributable to the
Grassland Capital note payable of $118,530 which was paid in October 2001.
During the three month period ended September 30, 2002, the Company recorded, in
accordance with paragraphs 8(a) and 35 of FASB 5, $173,494 of expense relating
to the settlement of the Needham/DuPont lawsuit. No such expense was incurred
during the comparative three month period ended September 30, 2001.

YEAR ENDED JUNE 30, 2002 COMPARED TO YEAR ENDED JUNE 30, 2001

REVENUE

We did not generate any revenue during the year. Revenue for the year ended
June 30, 2001 was $50,000 and was realized entirely from our subsidiary's
U.S.-Pakistan international telephone distribution network. We ceased operating
our international telephone services network on June 30, 2001 because of
regulatory difficulties we encountered in our target market. We realized no
revenue from the sale and/or license of the SpectruCell product as such product
was not ready to be commercially sold in our territory.

OPERATING EXPENSES

Total operating expenses for the fiscal years ended June 30, 2002 and June
30, 2001 were $2,314,570 and $3,334,581 respectively and represents a 31%
decrease from the prior fiscal year. Of these amounts, $1,228,780 and $1,214,739
or 53% and 36% respectively, were for professional services rendered of which
$677,634 and $328,870 during the fiscal years ended June 30, 2002 and June 30,
2001, respectively, was paid via the issuance of restricted common stock and
represent a non-cash expense. During the fiscal years ended June 30, 2002 and
June 30, 2001, we paid $246,782 and $307,002 respectively, in cash fees for
professional services rendered.

Depreciation and amortization expense decreased by $543,002 due to the
write-off of the unamortized balance of Goodwill as of June 30, 2002.

Consulting fees, which includes employee payments, decreased $577,774 from
the fiscal year ended June 30, 2001 due to the curtailment of our employees and
outside consultants during the fiscal year ended June 30, 2002 as well as the
reversal of $394,361 of accrued compensation due Mr. May, our former Chief
Executive Officer and Chairman. During the fiscal year ended June 30, 2002 and
June 30, 2001, $0 and $3,200, respectively, was paid via the issuance of
restricted common stock and represents a non-cash expense.

Other general and administrative expenses (exclusive of professional fees,
consulting expenses and other non-cash charges) amounted to $407,772 for the
fiscal year ended June 30, 2002, a decrease of $93,276 from the prior fiscal
year.

Interest expense increased $307,791 from the fiscal year ended June 30,
2001 due principally to the issuance, in January 2002, of our 5% Convertible
Debentures. $250,000 of the increase in interest expense is attributable to the
intrinsic value of the beneficial conversion feature included in the convertible
debentures.

Other expense for the fiscal year ended June 30, 2002 includes a $1,700,000
loss from impairment of Goodwill associated with our investment in Advanced
Communications (Australia). The impairment loss of $1,700,000 was based on
management's evaluation, in accordance with FASB 121 and SFAS 142 of the
carrying value of our investment in Advanced Communications (Australia). The
decision to write-down our remaining Goodwill was based principally on the
ongoing financial difficulties of Advanced Communications (Australia) and its
filing for voluntary administration (bankruptcy) in Australia on or about July
18, 2002.

Other expense for the fiscal year ended June 30, 2001 includes a one-time
write-off of $425,000 attributable to the abandonment of our investment deposit
for the proposed acquisition of the ORBCOMM assets. It also includes a
$12,399,864 loss on the write-down of Goodwill associated with our investment in
Advanced Communications (Australia), as well as the write-off of $3,571,654
representing our remaining equity investment in Advanced Communications
(Australia). The write-down in Advanced Communications (Australia) was based on
management's evaluation of the business prospects, which were necessitated 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. Advanced Communications (Australia) has been in the development
stage since inception, and has not made any sales. Based on these factors,
management believed that the carrying value of the good will in the investment
should be reduced to $2,000,000, resulting in a $12,399,864 write-down of
goodwill.

EXTRAORDINARY GAIN

YEAR ENDED JUNE 30, 2001 COMPARED TO YEAR ENDED JUNE 30, 2000

REVENUE

We realized nominal revenue during the year from sales of international
telephone services into Pakistan through our international network providers.
Such revenue represented a 100% increase from the prior year. We ceased
operating our international telephone services network during the year because
of regulatory difficulties we encountered in our target market. We realized no
revenue from the sale and/or license of the SpectruCell product as such product
was not ready to be commercially sold in our territory.

OPERATING EXPENSES

Total operating expenses for the fiscal years ended June 30, 2001 and June
30, 2000 were $3,334,581 and $4,635,186 respectively and represents a 28%
decrease from the prior fiscal year. Of these amounts, $1,214,739 and $3,409,038
or 36% and 74% respectively, were for professional services rendered of which
$328,870 (27%) and $3,009,388 (88%) during the fiscal years ended June 30, 2001
and June 30, 2000, respectively, was paid via the issuance of restricted common
stock and represent a non-cash expense. During the fiscal years ended June 30,
2001 and June 30, 2000, we paid $307,002 and $215,756 respectively, in cash fees
for professional services rendered. Professional fees decreased substantially
from the prior year due principally to the fact that shares issued in the
current fiscal year in exchange for professional services rendered were issued
at a lower price per share than the prior fiscal year.

Depreciation and amortization expense increased by $800,674 due to the full
year amortization of goodwill associated with our investment in Advanced
Communications (Australia).

Consulting fees, which includes employee payments, increased nominally from
the prior year. During the fiscal year ended June 30, 2001 and June 30, 2000,
$32,000 and $259,970 respectively, was paid via the issuance of restricted
common stock and represents a non-cash expense.

Other general and administrative expenses (exclusive of professional fees,
consulting expenses and other non-cash charges) amounted to $501,048 for the
fiscal year ended June 30, 2001, an increase of $88,938 from the prior fiscal
year.

Interest expense decreased $736,778 from the fiscal year ended June 30,
2000 due principally to the issuance, in September 1999, of our Secured
Convertible Debentures. Approximately $715,000 of the decrease in interest
expense is attributable to the intrinsic value of the convertible debentures as
well as bond issuance costs charged to interest expense in fiscal 2000.

Other income (expense) includes a one-time write-off of $425,000
attributable to the abandonment of our investment deposit for the proposed
acquisition of the ORBCOMM assets and $192,474 of other income recognized in
fiscal 2000 on the abandonment of certain accounts payable and accrued expenses
of MFI. It also includes a $12,399,864 loss in fiscal 2001 on the write-down of
Goodwill associated with our investment in Advanced Communications (Australia),

as well as an increase of $3,485,836 in our share of a full year's loss from our
equity ownership in Advanced Communications (Australia). The write-down in
Advanced Communications (Australia) was based on management's evaluation of the
business prospects, which were necessitated 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. Advanced Communications
(Australia) has been in the development stage since inception, and has not made
sales. Based on these factors, management believed that the carrying value of
the good will in the investment should be reduced to $2,000,000, resulting in a
$12,399,864 write-down of goodwill.

EXTRAORDINARY GAIN

Extraordinary gain for the fiscal year ended June 30, 2001 included a
$23,000 gain on the issuance of our restricted common stock to unrelated vendors
of Advanced Communications (Australia) in excess of the then current market
value. In fiscal 2000, we realized extraordinary gains of $242,561 on the
extinguishments of prior shareholder loans in exchange for 600,000 of our
restricted common stock, and $34,507 on the settlement of the Grassland loan
payable. The prior shareholders were not shareholders of Advanced Communications
at the time these loans were forgiven.

LIQUIDITY AND CAPITAL RESOURCES

SIGNIFICANT ACCOUNTING POLICIES

Financial Reporting Release No. 60, which was recently released by the
Securities and Exchange Commission, requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Note 1 of the Notes to the Financial Statements includes a
summary of the significant accounting policies and methods used in the
preparation of our Financial Statements. The following is a brief discussion of
the more significant accounting policies and methods used by us. In addition,
Financial Reporting Release No. 61 was recently released by the Securities and
Exchange Commission to require all companies to include a discussion to address,
among other things, liquidity, off-balance sheet arrangement, contractual
obligations and commercial commitments.

NEW ACCOUNTING PRONOUNCEMENTS

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS 145 rescinds the provisions of SFAS No. 4 that requires companies to
classify certain gains and losses from debt extinguishments as extraordinary
items, eliminates the provisions of SFAS No. 44 regarding transition to the
Motor Carrier Act of 1980 and amends the provisions of SFAS No. 13 to require
that certain lease modifications be treated as sale leaseback transactions. The
provisions of SFAS 145 related to classification of debt extinguishments are
effective for fiscal years beginning after May 15, 2002. Earlier application is
encouraged. The Company does not believe the adoption of this standard will have
a material impact the financial statements.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Restructuring
Costs." SFAS 146 applies to costs associated with an exit activity (including
restructuring) or with a disposal of long-lived assets. Those activities can
include eliminating or reducing product lines, terminating employees and
contracts and relocating plant facilities or personnel. Under SFAS 146, the
Company will record a liability for a cost associated with an exit or disposal
activity when that liability is incurred and can be measured at fair value. SFAS
146 will require the Company to disclose information about its exit and disposal
activities, the related costs, and changes in those costs in the notes to the
interim and annual financial statements that include the period in which an exit
activity is initiated and in any subsequent period until the activity is
completed. SFAS 146 is effective prospectively for exit or disposal activities
initiated after December 31, 2002, with earlier adoption encouraged. Under SFAS
146, a company cannot restate its previously issued financial statements and the
new statement grandfathers the accounting for liabilities that a company had
previously recorded under Emerging Issues Task Force Issue 94-3.

OVERVIEW

Since our inception, we have financed our operations through the private
sales of common stock and convertible debentures and from unsecured loans from
an entity controlled by Mr. Roger May, a former officer and director of our
company and a significant shareholder. We have raised approximately $4,000,000
before offering costs through the sale of these securities and have borrowed
$1,055,736 from an entity wholly owned by Mr. May. These loans are non-interest
bearing, are unsecured, and have no fixed date for repayment. Advanced
Communications does not believe that the loans are due upon demand. However, the
actual repayment terms are not known with any specificity since the terms are
not contained in a written document. At September 30, 2002, our principal source
of liquidity was $415 of cash and cash equivalents. We have no credit facilities
in place. On January 10, 2002, we entered into an Equity Line of Credit
Agreement 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 as a fee. 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. Our Equity Line of Credit is
not yet effective and the Company has not drawn down any funds from this
facility. Except for the Equity Line of Credit, we have no commitments for
capital.

We anticipate that our cash needs over the next 12 months consist of
general working capital needs of $600,000, plus the repayment of outstanding
indebtedness of $2,552,994. These obligations include accounts payable and
accrued expenses in the amount of $1,189,658, 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 (Australia) in the
amount of $1,791,166 at September 30, 2002 that was the subject of a lawsuit by
us against Roger May and Advanced Communications (Australia). As of September
30, 2002, we had a working capital deficiency of $2,552,579. We will attempt to
satisfy our cash needs over the next 12 months from the sale of securities or
loans, including the Equity Line of Credit.

Our financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business; and as a consequence, the financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might be necessary should we be unable to continue as a going concern. We have
experienced net operating losses and negative cash flows since inception and, as
of September 30, 2002, we had an accumulated deficit of $30,532,760. Cash used
in operations for the fiscal years ended June 30, 2002 and 2001 was $1,103,254
and $1,479,999, respectively. At September 30, 2002, our only source of
liquidity was $415 of cash. Such conditions raise substantial doubt that we will
be able to continue as a going concern for a reasonable period of time.
Subsequent to the end of the fiscal year, we have substantially curtailed our
overhead and have closed our office in California. Unless we are able to raise
additional capital through the issuance of stock or convertible debentures or
commence drawing down on our Equity Line of Credit once it is declared effective
by the SEC, we will be unable to continue our operations. Unless we are able to
raise additional capital through our Equity Line of Credit or from other
sources, we will be unable to continue as a going concern. Considering the
depressed state of the private and public capital markets, we believe that our
only reasonable chance of raising additional capital is through our Equity Line
of Credit with Cornell Capital Partners, L.P., if it is declared effective by
the SEC.

On November 22, 2002, we entered into a Securities Purchase Agreement with
Cornell Capital Partners, LP, whereby we agreed to issue and sell $250,000 of
10% Secured Convertible Debentures. These Secured Convertible Debentures have a
term of two years and are convertible into shares of common stock at a price
equal to $.001 per share commencing on December 31, 2002. $125,000 of the 10%
Secured Convertible Debentures was issued in exchange for accrued unpaid
interest (including default interest) on the Company's January 2002 5%
$1,000,000 Convertible Debentures with $125,000 issued in exchange for cash of
which the Company will net $100,000 after fees and expenses. The Company will
use the funds from the 10% Secured Convertible Debentures to pay a portion of
its legal and accounting professionals outstanding fees thereby enabling the
Company to continue its pursuit of seeking its Equity Line of Credit facility to
be declared effective by the SEC.

If we are unable to obtain additional funding through our Equity Line of
Credit facility or alternate sources of funding, this will have a material
adverse effect on our business and our ability to continue as a going concern.
As a consequence, we may be forced to seek protection under the bankruptcy laws.
In that event, it is unclear whether we could successfully reorganize our
capital structure and operations, or whether we could realize sufficient value
for our assets to satisfy our creditors in full. Accordingly, should we be
forced to file for bankruptcy protection, there is no assurance that our
stockholders would receive any value.

CAPITAL RESOURCES

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 are attempting to register 70,000,000 shares of common stock in
connection with the Equity Line of Credit and upon conversion of the debentures.
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,
if we issued all 70,000,000 shares of common stock at a recent price of $0.005
per share (which assumes that no shares would need to be issued upon conversion
of debentures), then we would receive $339,500 under the Equity Line of Credit
(after deducting a 3% retention payable to Cornell). This is $9,650,000 less
than is available under the Equity Line of Credit. Our stock price would have to
rise substantially for us to have access to the full amount available under the
Equity Line of Credit. These shares would represent 37% of our outstanding
common stock upon issuance. 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 $0.005 per share. In
addition, we would be required to obtain the approval of our shareholders to
increase the number of authorized shares of common stock. Pursuant to our
Articles of Incorporation, we are authorized to issue up to 200,000,000 shares
of common stock. At a recent price of $0.005 per share, we would be required to
issue 6,000,000,000 shares of common stock in order to fully utilize the $30.0
million available. We would be required to obtain a vote of at least a majority
of the outstanding shares in order to increase our authorized shares of common
stock for this purpose. Our inability to obtain such approval would prohibit us
from increasing our authorized shares of common stock and from issuing any
additional shares under the Equity Line of Credit or to otherwise raise capital
from the sale of capital stock.

In November 2002, Advanced Communications entered into a Securities
Purchase Agreement with Cornell Capital Partners, L.P., whereby it agreed to
issue and sell Two Hundred Fifty Thousand Dollars ($250,000) of secured
convertible debentures. These secured convertible debentures have a term of two
years and are convertible into shares of common stock at a price equal to $.001
per share commencing on December 31, 2002. These secured convertible debentures
accrue interest at a rate 10% per year and are convertible at the holder's
option. At Advanced Communications' option, these debentures may be paid in cash
or redeemed at a 20% premium on or before December 15 2002 and at a 50% premium
after December 15, 2002 and prior to November 2004. In connection with the
Securities Purchase Agreement, Advanced Communications entered into a Security
Agreement in favor of Cornell Capital Partners, L.P. whereby it granted a
security interest in all of its assets as security for its obligations under the
secured convertible debentures, as well as all other obligations of Advanced
Communications to Cornell Capital Partners, L.P. whether arising before, on or
after the date of the Security Agreement, including, without limitation, those
obligations of Advanced Communications to Cornell Capital Partners, L.P. under
the convertible debentures dated January 2002. The security agreement provides,
however, that upon the payment in full by Advanced Communications of its
obligations to Cornell Capital Partners, L.P. arising from the Securities
Purchase Agreement dated November 2002, and the related documents of even date
therewith, Cornell Capital Partners, L.P. agrees to release any and all security
interests it may then maintain on SpectruCell and the related License and
Distribution Agreement dated July 5, 2000, between the Advanced Communications
and Advanced Communications Technologies (Australia) Pty., Ltd. The issuance of
the secured convertible debentures is expected to 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. 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.

On January 10, 2002, we executed various financing agreements with Cornell
Capital Partners, LP 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. The 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 $0.008 (i.e., 80% of the recent price of $0.01), then the holders
of the convertible debentures would have received 125,000,000 shares of common

stock leaving no stock available to be issued under the Equity Line of Credit.
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 of
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 were lower, then our existing
stockholders would experience greater dilution. 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 for the fiscal year ended June 30, 2002 and
a component of equity on the issuance date.

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.

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 terminated this
equity line of credit facility.

During the period of December 2000 to August 2001, pursuant to a private
placement under Regulation D, Rule 506, Advanced Communications issued 4,293,933
shares of common stock and 4,293,933 warrants at $.30 per share. Advanced
Communications received $1,288,180 from investors, which included $250,000 for
stock not yet issued as of June 30, 2001 and $275,454 for warrants. Advanced
Communications issued 137,729 and 250,000 shares of common stock, valued at
$41,318 and $75,000, in payment of offering costs incurred respectively. 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. 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.
The Board of Directors repriced these shares due to the delay in registering the
shares sold to investors in the private placement. The Company did not receive
any consideration for the repricing of the shares. This repricing resulted 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 remains at $0.30 per share.

Between October and December 2000, AJW Partners, LLC and New Millennium
Capital Partners II, LLC elected to convert $262,800 of their September 30, 1999
12% Convertible Debentures into 860,378 shares of Advanced Communications'
restricted common stock. The Company is in default of its remaining obligations
to AJW Partners, LLC and New Millennium Capital Partners II, LLC and on April
24, 2002 entered into a Settlement Agreement. 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 had 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. On June 4, 2002 the Company issued an
additional 1,460,725 and 664,275 shares of common stock to AJW Partners LLC and
New Millennium Capital Partners, II, LLC. On both August 22, 2002 and September
24, 2002 we issued 1,460,725 and 664,275 shares of common stock each to AJW
Partners, LLC and New Millennium Capital Partners II, LLC respectively, in full
satisfaction of the September 30, 1999 12% Convertible Debentures.

During December 2000, Bank Insinger de Beauford, N.V. converted its
$150,000 September 30, 1999 12% convertible debenture, inclusive of accrued and
unpaid interest into 943,167 shares of restricted common stock.

On September 30, 1999, Advanced Communications entered into a 12% secured
convertible debentures purchase agreement with AJW Partners, LLC and New
Millennium Capital Partners II, LLC, which were stockholders of Advanced
Communications, whereby Advanced Communications sold $500,000 of 12% Secured
Convertible Debentures due April 1, 2000, convertible into shares of Advanced
Communications' Common Stock. In addition, on September 30, 1999, Advanced
Communications issued another convertible debenture to Bank Insinger de
Beauford, 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's predecessor, MFI (as previously defined) was obligated to pay
$150,000 to Grassland Capital Group (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 in the open market on behalf of
the Payee 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.

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

Net cash used in operating activities was $10,678 and $102,422 for the
three months ended September 30, 2002 and 2001, respectively. The use of cash by
operating activities was principally the result of net losses during both
reporting periods together with a corresponding increase/(decrease) in accounts
payable and accrued interest for the three months ended September 30, 2002 and
2001, respectively.

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

No net cash was provided by or used in investing activities for the three
months ended September 30, 2002 or 2001.

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

No net cash was provided by financing activities for the three months ended
September 30, 2002. Net cash provided by financing activities for the three
months ended September 30, 2001 was $150,200 and was attributable to $125,000 of
proceeds received from the sale of equity securities pursuant to a private
placement that commenced December 2000 and ended August 2001 and $25,000 of loan
proceeds received from Global Communications Technology Pty Ltd, an entity
wholly owned by Roger May, a former officer and director of the company.

ACQUISITIONS

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 (Australia). In addition, during this period we filed two
lawsuits against Mr. May and Advanced Communications (Australia) for breach of
our April 5, 2000 Stock Purchase Agreement and July 5, 2000 Interim 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. On September 7, 2002, the September
7, 2001 Letter of Intent that the Company entered into with Advanced
Communications (Australia) to acquire all of the intellectual property,
including the worldwide rights (other than the rights to territories that the
Company currently possess) for the licensing and distribution of the SpectruCell
product, expired.

Due to the litigation with Mr. May and Advanced Communications (Australia),
the restrictions on foreign ownership and Advanced Communications (Australia)
voluntary administration described above, the Company will no longer pursue the
acquisition of Advanced Communications (Australia)'s intellectual property.

DESCRIPTION OF BUSINESS

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

On October 25, 2002, we withdrew from the Australian litigation against Mr.
May and Advanced Communications (Australia). The effect of the Company's
decision to withdraw from the Australia litigation was that the existing
injunctions issued by the Australia Court have been lifted and the purported
termination of the interim License Agreement is not being challenged in the
Australia Court.

months. Mr. May, a former officer and director and significant shareholder owns
70% of Advanced Communications (Australia) through Global Communications
Technology Pty Ltd., his wholly owned company. On November 11, 2002, Advanced
Communications (Australia) issued a Notice of Termination to the Company stating
that the April 2000 Stock Purchase Agreement was terminated immediately due to
the Company's insolvency. The effect of the purported Notice of Termination vis
a vis the Stock Purchase Agreement was to cancel the Company's stock ownership
interest in Advanced Communications (Australia). Consistent with our decision to
withdraw from the Australia litigation, we have not challenged the purported
termination of the Stock Purchase Agreement in the Australia Court. Given that
Advanced Communications (Australia) is in an insolvency proceeding in Australia,
that it is unlikely to emerge as an operating entity, and that the Company has
written off its entire investment in Advanced Communications (Australia), the
financial impact of this on the Company is not believed to be significant.

We expected to generate revenue from the marketing and distribution of the
SpectruCell product, if and when it became available to us. Although we still
own the North America and South America rights to market and distribute
SpectruCell, acquired pursuant to the 1999 merger with Advanced Communications
(Nevada), it is unclear at this point whether we will be able to actualize those
rights if SpectruCell is ever brought to the market and is a commercially viable
product. We have not had any meaningful revenues to date. For the year ended
June 30, 2002, we had a net loss of $4,332,693 or $.0.04 per share. At June 30,
2002, we had negative working capital of $3,252,643 and an accumulated deficit
of $29,848,648.

INTERIM LICENSE AGREEMENT

In April 1999, Advanced Communications (Nevada) merged with and into the
Company. Pursuant to this merger, the shareholders of Advanced Communications
(Nevada) (of which Mr. May was the principal shareholder) received 90% of the
Company's outstanding common stock and the Company received all of Advanced
Communications (Nevada)'s assets which included all of the North and South
American rights to SpectruCell.

On July 5, 2000, we entered into an interim License and Distribution
Agreement (the "Interim License Agreement") with Advanced Communications
Technologies (Australia) Pty Ltd. to help facilitate implementation of the
rights we acquired in the 1999 merger with Advanced Communications (Nevada). At
that time, we owned a 20% interest and Mr. May indirectly owns a 70% interest in
Advanced Communications (Australia). Mr. May is a former officer and director
and a significant shareholder of our company. Consistent with the rights to
SpectruCell that we acquired in the 1999 merger with Advanced Communications
(Nevada), the interim License Agreement confirmed our indefinite, exclusive
license to market and distribute in North and South America the SpectruCell
technology and certain other technologies to be developed. It was the intention
of the parties that upon the SpectruCell technology becoming commercially
available, our company and Advanced Communications (Australia) would negotiate
royalty payments, in accordance with industry standards on an arms-length basis
after the final pricing of the SpectruCell technology was established. The
Company's rights to SpectruCell acquired in the April 1999 merger was neither
created by nor subject to cancellation under the interim License Agreement.

During most of 2002 we were involved in litigation in Australia with
Advanced Communications (Australia) regarding SpectruCell. On April 26, 2002,
the Supreme Court of Victoria at Melbourne, Australia issued an interim
injunction against Advanced Communications (Australia) and Mr. May in connection
with the ongoing litigation between Advanced Communications and Advanced
Communications (Australia). The interim injunction prohibited Advanced
Communications (Australia) and Mr. May from violating the terms of the interim
License Agreement. Based on a press release issued by Advanced Communications

(Australia), it appeared that Advanced Communications (Australia) intended to
license the SpectruCell technology to another entity in our territory. On May 7,
2002, we received a notice from Advanced Communications (Australia) alleging a
breach of the license, accompanied by a notice of termination of the interim
License Agreement. We believed the purported termination was without merit and
took steps to temporarily enjoin Advanced Communications (Australia) from
terminating our rights under the interim 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.

A dispute also arose between Advanced Communications (Australia) and the
Company as to whether the Company's SpectruCell license included military
applications as well as commercial applications. Contrary to previous statements
and understandings, Advanced Communications (Australia) claimed for the first
time on or about March 2002 that military applications were not included under
the Company's SpectruCell license, and that these rights were exclusively
reserved to Advanced Communications (Australia). A dispute also arose between
the parties as to whether the Company's SpectruCell license included marketing
rights, in addition to distribution rights. Contrary to previous statements and
understandings, Advanced Communications (Australia) claimed for the first time
on or about March 2002 that the Company's SpectruCell license did not include
marketing rights, and that these rights were exclusively reserved to Advanced
Communications (Australia).

The Company disputed these claims and requested the court to expand the
existing injunctions against Advanced Communications (Australia) to include
marketing rights and military applications of SpectruCell technology in the
Exclusive Territory and to continue the existing injunctions in effect until the
trial on the case.

The marketing and military applications rights were relevant because the
Company had been contacted by a U.S. defense contractor that was bidding on a
U.S. Army project that involved a SpectruCell-type component that the contractor
wanted the Company to provide for the project. The Company was also contacted at
this time by another U.S. defense-related company regarding similar products. It
was also relevant because it had become apparent that the best way to generate
short term revenues for SpectruCell-related products was through military
applications which were easier and less expensive to produce than the
technically much more sophisticated commercial products being designed for
public telephone system use.

The above-mentioned matters were argued before the court at a two day
hearing on May 27 and 28, 2002. The court took the matters under submission. On
August 23, 2002, the court issued its ruling in which the judge concluded:

"IT IS PREFERABLE, IN MY OPINION, THAT ALL ACTIVITY
[RELATED TO SPECTRUCELL] ON BEHALF OF ACT [AUSTRALIA] IN
THE EXCLUSIVE TERRITORY PENDING THE TRIAL BE CARRIED OUT BY
ACT INC [ADVANCED COMMUNICATIONS]."

Based on this conclusion, the court issued a comprehensive preliminary
injunction granting all the relief sought by the Company. Among other things,
the injunction prohibits Advanced Communications (Australia), directly or
indirectly, from taking any action in the exclusive territory with respect to
marketing, distributing, selling or otherwise dealing with the SpectruCell
technology (including the military applications thereof), except through and
with the prior written consent of the Company. Quoted below is the text of one
of the sections of the court's order:

"...THE FIRSTNAMED DEFENDANT [I.E., ADVANCED COMMUNICATIONS
(AUSTRALIA)], WHETHER BY ITSELF OR BY ITS OFFICERS,
EMPLOYEES AGENTS, ATTORNEYS, OR ANY OF THEM OR HOWSOEVER
OTHERWISE, BE RESTRAINED FROM ITSELF MARKETING,
DISTRIBUTING, SELLING, SUPPLYING, OFFERING TO SELL OR
SUPPLY OR OTHERWISE DEALING IN OR WITH THE PRODUCT
INCLUDING ANY MILITARY APPLICATIONS OR USES OF THE
SPECTRUCELL TECHNOLOGY, IN THE EXCLUSIVE TERRITORY WITHOUT
THE PRIOR WRITTEN CONSENT OF [ADVANCED COMMUNICATIONS]."

The court's order also prohibited Advanced Communications (Australia) from
licensing, marketing, distributing, selling or otherwise dealing with the
SpectruCell technology, including military applications of the product, and from
offering to do any of the foregoing, in the exclusive territory through any
third party without the Company's prior written consent. The court's order also
prohibited Advanced Communications (Australia) from entering into a license or
sub-license agreement to market, distribute, sell, provide promotional material
or otherwise deal with the SpectruCell technology, including military
applications thereof, in the exclusive territory except to the company or at its
request. The court's order also prohibited Advanced Communications (Australia)
from granting any license to any third party to use, sub-license or reproduce
the product in the exclusive territory, except at the request of the Company.

REPUDIATION OF INTERIM LICENSE AGREEMENT IN OCTOBER 2002. In early October
2002, Mr. May and Advanced Communications (Australia) applied to the Australian
Court to modify the above-referenced injunctions issued on August 23, 2002, on
the grounds that they were meaningless and, therefore, should be disregarded.
The primary basis for the application was the assertion of Mr. May, set forth in
an Affidavit sworn under oath, dated October 8, 2002, that SpectruCell had
evolved from a base station hardware technology (its original form) to a
software defined radio based operating system (its current form). Based on this,
Mr. May stated that in it's current form SpectruCell was not covered under the
interim License Agreement and had not been covered under the interim License
Agreement for approximately two years. Mr. May contended that the Company had no
rights to the SpectruCell technology under the interim License Agreement and
that the injunctions issued by the Australia Court on August 23, 2002 had no
application to what ACT-Australia is presently doing vis a vis SpectruCell. The
Company rejected Mr. May's sworn statements as self serving to his current
purposes of nullifying the Company's rights under the interim License Agreement
and as being inconsistent with numerous prior public statements he had made and
the intentions of the parties, as reflected in the agreements between them and
their prior actions.

TERMINATION OF INTERIM LICENSE AGREEMENT IN OCTOBER 2002. In mid-October
2002, Mr. May and Advanced Communications (Australia)'s purportedly terminated
the interim License Agreement based on the assertion that the Company is
insolvent and that its insolvency constitutes an irreparable event of default
thereunder. As stated above, the Company made a strategic decision not to
challenge the termination. Further, despite the termination of the interim
License Agreement, the Company still owns the North and South American rights to
SpectruCell that it received pursuant to the April 1999 merger with Advanced
Communications (Nevada).

Following the purported termination of the interim License Agreement, Mr.
May contacted the Company on several occasions in response to previous attempts
by the Company to settle the existing disputes. He indicated that he was
interested in reaching a settlement and on October 14, 2002, he stated that he
would submit a settlement proposal to the Company. He has not yet done so and
has refused to respond to follow-up overtures from the Company in that regard.

The Company believes that Mr. May's purported termination of the interim
License Agreement and his failure to negotiate in good faith to settle the
existing disputes, in spite of his promise to do so, were part of a preconceived
plan on his part to nullify the Company's rights as a stockholder of Advanced
Communications (Australia) and as the owner of the North and South America
rights to the SpectruCell technology and to transfer the technology to a
controlled third party substantially free of the claims of third parties,
including the Company.

FINANCIAL CONDITION

We had net losses of $4,332,693 and $19,732,566 during the years ended June
30, 2002 and 2001, respectively. As of June 30, 2002, we had cash of $11,093 and
current liabilities of $3,263,736. We do not have sufficient cash or other
assets to meet our current liabilities. In order to meet those obligations, we
will need to raise cash from the sale of securities or from borrowings. Our
independent auditors have added an explanatory paragraph to their audit opinions
issued in connection with the years 2002 and 2001 financial statements, which
states that our ability to continue as a going concern depends upon our ability
to resolve liquidity problems, principally by obtaining capital, commencing
sales and generating sufficient revenues to become profitable. Our ability to
obtain additional funding will determine our ability to continue as a going
concern. Our financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

If we are unable to obtain additional funding through our Equity Line of
Credit facility (as described in the Management Discussion and Analysis of
Financial Condition and Results of Operations included elsewhere in this Annual
Report) until such time as the SpectruCell product is ready to be sold within
our exclusive markets, then the failure to obtain this funding will have a
material adverse effect on our business and our ability to continue as a going
concern. As a consequence, we may be forced to seek protection under the
bankruptcy laws. In that event, it is unclear whether we could successfully
reorganize our capital structure and operations, or whether we could realize
sufficient value for our assets to satisfy our creditors in full. Accordingly,
should we be forced to file for bankruptcy protection, there is no assurance
that our stockholders would receive any value. A detailed discussion of our
financial condition is contained in the Management's Discussion and Analysis of
Financial Condition and Results of Operations section of this filing.

ADVANCED COMMUNICATIONS (AUSTRALIA) VOLUNTARY ADMINISTRATION

On or about July 15, 2002, the Australia Tax Office ("ATO") filed an action
against Advanced Communications (Australia) to appoint a liquidator of the
company for failure to pay back taxes. SpectruCell SDR Pty Ltd. ("SDR"), a
company controlled by Roger May to which Advanced Communications (Australia)
intends to transfer its rights to the SpectruCell technology, was also named as
a defendant in this action.

At the request of ATO, on or about July 15, 2002, the court issued
injunctions against Advanced Communications (Australia) and SpectruCell SDR
prohibiting them from selling, transferring, charging, mortgaging, disposing,
leasing, diminishing or dealing in any way with any of Advanced Communications
(Australia)'s assets or undertakings. On or about July 18, 2002, in response to
the ATO's action, Advanced Communications (Australia) appointed an
administrator, who took control of the company. On or about July 22, 2002, the
court made the above-mentioned injunctions applicable to the administrator.

On or about July 29, 2002, Global Communications Technology Pty Ltd
("Global"), a company controlled by Roger May, appointed a receiver/manager
("Receiver") to take control of the assets of Advanced Communications
(Australia) under the terms of a security agreement. On or about August 1, 2002,
the ATO filed another action in which it joined Global and the Receiver to the
first action and sought to have declared invalid Global's security interest in
the assets of Advanced Communications (Australia). On or about August 2, 2002,
the court made the above-mentioned injunctions applicable to Global and the
Receiver.

On or about August 30, 2002, at the request of the Receiver, the court
approved a sale of Advanced Communications (Australia)'s shares in Australon
Enterprises Pty Ltd ("Australon"), now known as Intermoco Ltd., for
AUS$6,000,000.

On or about September 10, 2002, the ATO, Advanced Communications
(Australia), SDR, Global, and the Receiver entered into a settlement agreement
pursuant to which it was agreed, among other things, that the majority of the
amounts owed by Advanced Communications (Australia) to ATO would be paid from
the proceeds of the sale of the Australon shares, that a portion of the balance
of the sale proceeds would be used to pay the expenses of administration,
employee wages and the unsecured creditors, and the balance would go to Global.
Subject to completion of the sale of the Australon shares, which is to take
place in February 2003, the ATO agreed to drop its actions against Advanced
Communications (Australia), Global and the Receiver.

On or about September 18, 2002, a plan of reorganization was submitted to
the administrator, which is supported by management of Advanced Communications
(Australia). Under the plan, the expenses of administration and the claims of
employees and unsecured creditors will be partially or fully paid over a 3-year
period from (i) a portion of the sale proceeds from the Australon shares, (ii) a
portion of the sale proceeds or license royalties, if any, from the SpectruCell
technology, which will be licensed or sold to SDR, and (iii) a portion of the
net recovery, if any, from various lawsuits in which Advanced Communications
(Australia) is the plaintiff.

At a meeting of the creditors held on September 26, 2002, a plan of
reorganization was approved and the administration was continued to allow the
administration to oversee the implementation of the plan of reorganization.

The Company submitted a claim to the administrator in regard to the damages
that were caused to the Company by the hostile actions of Advanced
Communications (Australia) following the removal of Roger May as an officer and
director of the Company in December 2001. The administrator allowed the
Company's claim to the extent of $1. As a result, the Company will not be
receiving any meaningful amounts from the plan of reorganization.

Based on the hostile actions of Roger May toward the Company over the past
11 months, if Roger May controls the entity that ultimately ends up owing or
licensing the SpectruCell technology, the Company anticipates that its rights
vis a vis SpectruCell will continue to be disregarded and violated. Although the
Company intends to use all resources available to it to protect the Company's
rights in that regard, as it has during the past 11 months, it is not known if
the Company will be successful in doing so.

COMPANY HISTORY

We were incorporated on April 30, 1998 and were inactive from April 1998 to
June 1998 except for the issuance of founders' shares. On April 7, 1999,
Advanced Communications (Nevada) merged with and into the Company. Pursuant to
this merger, the shareholders of Advanced Communications (Nevada) (of which Mr.
May was the principal shareholder) received 90% of the Company's outstanding
common stock and the Company received all of Advanced Communications (Nevada)'s
assets which included all of the North and South American rights to SpectruCell.

Mr. May and his related entities including Global Communications Technology
Pty Ltd, his wholly owned entity, as majority owner of Advanced Communications
(Nevada), received approximately 42,000,000 shares in the Company under the
share exchange.

Media Forum, the surviving entity, subsequently changed its name to
Advanced Communications Technologies, Inc. Upon completion of the merger, we
changed our trading symbol to "ADVC."

On January 31, 2000, we acquired Smart Investments.com, Inc. through a
stock exchange with Smart Investments' sole shareholder. Immediately upon
completion of that acquisition, we elected successor issuer status in accordance
with Rule 12g-3 promulgated under the Securities Exchange Act of 1934, as
amended, and consequently became a "reporting company" in compliance with the
NASD's requirements.

On July 20, 1999, we formed Advanced Global Communications, Inc. ("AGC"), a
Florida corporation. AGC was established to develop and operate our
international telecommunications network as well as to acquire other switching
and telecommunications companies. During the fiscal year ended June 30, 2001, we
ceased operating AGC's international telecommunications network and wrote-off
our entire investment in various telephone equipment and network costs. Such
write-off amounted to $69,506.

On November 10, 1999, AGC entered into an agreement with the shareholders
of World IP Incorporated and its wholly-owned foreign subsidiaries, Sur
Comunicaciones, S.A., a Chilean corporation, and Acinel, S.A., an Argentinean
corporation, to acquire a 51% controlling interest in the World IP. Under the
terms of the agreement, 500,000 shares of our restricted common stock, plus
$95,000 in cash was exchanged for 1,020 shares of stock representing 51% of the
then issued and outstanding shares of World. The 500,000 shares of restricted
common stock were valued at the trading price on the closing date and together
with the cash consideration resulted in a purchase price of $470,000. World IP
provides wholesale international telephone services from the U.S. to Chile and
Argentina. On October 4, 2000, we notified World's management and its
shareholders that we intended to rescind the agreement because we were unable,
after repeated requests, to obtain from World's management financial records and
audited financial statements. Consequently, our management deemed that it was in
our best interest to unilaterally rescind the agreement. On October 6, 2000, we
filed suit in the Circuit Court in and for Palm Beach County, Florida against
the World IP and its shareholders for rescission of the agreement and for
monetary damages resulting from such breach. On January 23, 2002, the parties
entered into Settlement and Rescission Agreements and a Stipulation for
Dismissal with Prejudice (the "Stipulation") to settle this matter. The
Stipulation states that the November 10, 1999, Agreement and all related
transactions, including the issuance of 1,020 shares of World IP to AGC and the
500,000 shares of restricted common stock to World IP shareholders, are
rescinded, ab initio, effective November 10, 1999, as though such transactions
never occurred. Further, as part of the settlement, Advanced Communications
issued a total of 320,000 shares of restricted common stock to certain
shareholders of World IP, which shares are being registered. The Circuit Court
in and for Palm Beach County issued an Order Approving Stipulation approving the
Settlement and Rescission Agreements and the Stipulation. The lawsuit was
dismissed by a court order dated January 29, 2002.

For financial statement purposes, we have treated the World IP rescission
transaction as if we had never acquired the World IP stock and wrote-off our
$125,000 investment in World IP in our June 30, 2000 financial statements.

On April 5, 2000, we entered into a Stock Purchase Agreement with Advanced
Communications (Australia) to acquire a 20% interest for $19,350,000. The
majority owner of Advanced Communications (Australia) is Roger May, who was the
Chief Executive Officer, Chairman of the Board of Directors of our company until
November 30, 2001. In consideration for our purchase of the stock, we issued
5,000,000 shares of our common stock having a value of $11,850,000 and a
$7,500,000 unsecured non-interest bearing note payable in installments. The note
payable was payable in three equal monthly installments commencing May 31, 2000.
Under the terms of the April 2000 Stock Purchase Agreement, the monthly
installment deadline was extended, without interest, to allow for our company
to, on a best efforts basis, raise the cash portion of the purchase price
through the sale of securities. Upon raising such funds, our company is
obligated to repay Advanced Communications (Australia)'s note payable after
deducting 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 its Board of Directors. 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.

Our 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 until June 30, 2001 at which time we
reassessed the life of the goodwill to be five years. The amortization of
goodwill charged to income for each of the fiscal years ended June 30, 2002 and
June 30, 2001 was $300,000 and $1,046,169, respectively.

During the year ended June 30, 2001, we reduced the carrying value of our
investment in Advanced Communications (Australia) to $2,000,000 based on
management evaluation of Advanced Communications (Australia). This adjustment
was necessitated 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.

Due to litigation by the Australian Tax Office against Advanced
Communications (Australia) and Advanced Communications (Australia)'s subsequent
filing on or about July 18, 2002 for protection under Australia's insolvency
laws by appointing an Independent Administrator to take over its business and
affairs, management has determined that its remaining goodwill investment is
impaired pursuant to the provisions of SFAS 142. Accordingly, the Company has
written off the balance of its unamortized goodwill of $1,700,000 during the
fiscal year ended June 30, 2002.

Based on recent press releases, we believe that Roger May has transferred
the SpectruCell technology to an Australian company called SpectruCell SDR Pty
Ltd. Moreover, NetSalon, a U.S. company, recently announced that SpectruCell SDR
would acquire a majority interest in NetSalon and NetSalon would become the new
marketing arm for SpectruCell in the United States. Advanced Communications
believes that it possesses the marketing rights to SpectruCell in the United
States and that any such agreement with NetSalon would violate our rights. We do
not believe that Roger May or NetSalon intends to honor our marketing rights
without legal action. Due to cash shortages, we do not have the financial
ability to pursue legal action at this time.

The components of the investment in Advanced Communications (Australia) at
June 30, 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 March 31, 2002 (300,000) (300,000)
Impairment of Goodwill (1,700,000) (1,700,000)
Balance at June 30, 2002 $ -- $ -- $ --

On November 11, 2002, Advanced Communications (Australia) issued a Notice
of Termination to the Company stating that the April 2000 Stock Purchase
Agreement is terminated immediately due to the Company's insolvency. The effect
of the purported Notice of Termination is to cancel the Company's stock interest
in Advanced Communications (Australia). Consistent with our decision to withdraw
from the Australia litigation, we have not challenged the purported termination
of the Stock Purchase Agreement in the Australia Court. Given that Advanced
Communications (Australia) is in an insolvency proceeding in Australia, is
unlikely to emerge as an operating entity, and that the Company has written off
its entire investment in Advanced Communications (Australia), the future
financial impact of this on the Company is not believed to be significant.

On July 5, 2000, we entered into an interim License and Distribution
Agreement with Advanced Communications Technologies (Australia) (the "interim
License Agreement") to facilitate implementation of our rights to SpectruCell
acquired in the 1999 merger with Advanced Communications (Nevada).

During most of 2002, we were in litigation with Roger May and Advanced
Communications (Australia) over our rights to market and distribute SpectruCell.
Based on a substantial record created in that proceeding, the Australia Court
granted us broad injunctions protecting our rights pending trial on the matters
at issue. In early October, 2002, Advanced Communications (Australia) terminated
the interim License Agreement on the grounds that we were insolvent and our
insolvency constituted an irreparable breach of the interim License Agreement.
Our initial response to the purported termination of the interim License
Agreement was to oppose it and seek leave of the Australian Court to apply for
an expansion of our existing injunctions that would prohibit Advanced
Communications (Australia) from acting on the purported termination pending
trial. The Australian Court granted us leave to do so. However, after
considering the situation further and receiving advice of counsel, we made the
strategic decision to alter our approach and withdraw from the Australian
litigation.

This decision was based on various factors, including the following: (i)
the actions of Mr. May against the Company over the past 11 months, which in the
Company's view demonstrated a consistent lack of good faith on his part that was
unlikely to change, (ii) a recent statement made by Mr. May under oath to the
Australian Court that "IT IS IMPORTANT FROM THE OUTSET TO UNDERSTAND THAT THERE
WAS NO SPECTRUCELL PRODUCT IN 1999 AND TODAY THERE STILL IS NO SPECTRUCELL
PRODUCT AS IT IS CLEARLY STILL IN THE DEVELOPMENT STAGE AND AT LEAST 12 TO 18
MONTHS FROM THE FINAL PRODUCT STAGE.", which was contrary to previous
information consistently provided by Mr. May to the Company and the public on
that subject, (iii) the completion of the research and development of
SpectruCell is currently projected to require an additional US$12 to 15 million;
(iv) the Company's opinion that development of SpectruCell is unlikely to be
completed and a product brought to successful commercialization under Mr. May's
leadership (v) the Company's limited resources at the present time are

insufficient to enable it take all of the legal actions that would be necessary
to defend and enforce its rights in Australia; and (v)the need for the Company
to use available funds to continue current operations so that its rights and
viability will be meaningfully preserved for the future.

On October 25, 2002, we withdrew from the Australian litigation against Mr.
May and Advanced Communications (Australia). The effect of our decision to
withdraw from the Australia litigation was that the existing injunctions issued
by the Australia Court have been lifted and the purported termination of the
License is not being challenged in the Australia Court.

On July 24, 2000, our company formed Australon USA, Inc., a Delaware
corporation, owned 50% by our company and 50% by Australon Enterprises Pty.,
Ltd. a publicly traded company listed on the Australian Stock Exchange and a 66%
owned subsidiary of Advanced Communications (Australia). Australon Enterprises
Pty Ltd is an Australian public company that manufactures and distributes remote
monitoring devices for homes and businesses such as remote meter reading and
residential automated gateway devices. While Mr. May, our former CEO and
Chairman of the Board has a significant ownership interest in Australon
Enterprise Pty, through his ownership interest in Advanced Communications
(Australia), he is not involved in Australon `s daily management or business
operations and is not represented on its Board of Directors. The joint venture
relationship was established while Mr. May controlled both companies. We formed
Australon USA, Inc. to market and sell the Australon suite of products in the
U.S., Canada and South America. Presently, the company is not in negotiations
with Australon Enterprises Pty and will not enter into any discussions with
Australon's management until the Company's lawsuit with Advanced Communications
(Australia) and Mr. May is resolved. Australon USA, Inc is inactive and will
remain inactive for the foreseeable future. Australon USA, Inc. had no revenues
or expenses for the fiscal years ended June 30, 2002 or 2001.

In November 2000, we formed Advanced Network Technologies (USA), Inc., a
Delaware corporation, owned 70% by us and 30% by Advanced Network Technologies
Pty. Ltd. Advanced Network intended to acquire wireless network infrastructure
in North and South America. This infrastructure was intended to help showcase
SpectruCell within a working network environment. To date, no acquisitions have
been made. Advanced Network Technologies (USA), Inc. is presently inactive and
had no revenues or expenses for the fiscal years ended June 30, 2001 or 2001.

ACQUISITIONS

On September 7, 2001 we entered into a Letter of Intent with Advanced
Communications Technologies (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 (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 (Australia). In addition, during this period we have filed two
lawsuits against Mr. May and Advanced Communications (Australia) 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. On September 7, 2002, the September
7, 2001 Letter of Intent that the Company entered into with Advanced
Communications (Australia) to acquire all of the intellectual property,
including the worldwide rights (other than the rights to territories that the
Company currently possess) for the licensing and distribution of the SpectruCell
product, expired.

INDUSTRY OVERVIEW

GROWTH OF THE WIRELESS TELECOM INDUSTRY

The wireless telecom industry is a rapidly growing business, driven by the
dramatic increase in wireless telephone usage, as well as strong demand for
wireless Internet and other data services. U.S. mobile subscribers are projected
to grow to 226.8 million by 2010 and generate revenues of $72.8 billion,
according to Analysts Bakerville (Feb. 2002). The demand for wireless Internet
access and other data services is accelerating the adoption of new technologies
such as those embodied in the emerging third-generation (3G) standard.
High-speed fiber optic networks are being coupled with broadband wireless
technologies to deliver enhanced telecom capabilities and features to new
customers and markets.

Wireless carriers must continuously upgrade their networks with new
technologies and expand into new geographic regions in order to remain
competitive and satisfy the demand for wireless service. Additionally, new
carriers are entering the market as a result of deregulation, the issuance of
new licenses and the demand for new services, fueling the development of new
networks. Consequently, carriers are deploying new network equipment both in the
U.S. and abroad. New technologies, such as broadband wireless, are helping to
fuel demand for more advanced wireless equipment. Global revenues from the
broadband market are expected to exceed $88 billion by 2007, according to the
ARC Group (Feb. 2002). However, during the past six months, the
telecommunications industry has experienced the adverse effect of the downturn
in the global economy, and as a result, has significantly curtailed its
infrastructure capital spending.

CHANGES IN THE WIRELESS TELECOM INDUSTRY

As carriers deploy their networks, they face significant competition.
Through privatization in the 1980s and deregulation in the 1990s, both
domestically and internationally, the competitive landscape has changed for
wireless carriers. For carriers to differentiate themselves and remain
competitive in this new environment, they are deploying networks to:

o provide seamless nationwide coverage and avoid expensive roaming costs
on competitors' networks in markets where carriers do not currently
own infrastructure;

o offer enhanced services, such as one rate plans, calling party pays,
caller ID, text messaging and emergency 911 locator services;

o implement the new third-generation (3G) network standard to deliver
wireless broadband data services, including Internet access and
two-way e-mail;

o introduce other emerging data networking and broadband technologies,
such as LMDS, MMDS and other point-to-multipoint architectures, for
the provision of high speed data wireless Internet access and other
broadband services; and

o offer wireless local loop systems domestically to bypass incumbent
wire line competitors and in developing countries lacking modern wire
line telephone infrastructure.

The convergence of traditional wireless, wire line and cable services is
also adding complexity to the telecom environment as carriers deploy networks
spanning traditional wireless/wire line boundaries to offer these enhanced
services and new technologies.

NEW CHALLENGES FOR WIRELESS CARRIERS AND EQUIPMENT VENDORS

Due to this increasingly competitive environment, carriers need to focus on
satisfying customer demand for enhanced services, seamless and comprehensive
coverage, better quality, more bandwidth and lower prices. The proliferation of
carriers and new technologies has created an environment where speed to market
is an essential element of a wireless carrier's success. Carriers are also
experiencing challenges managing increasingly complex networks and technologies.
For example, the introduction of wireless Internet technologies and the growth
in broadband wireless services requiring the transmission of large amounts of
data creates additional new technological hurdles for carriers establishing or
upgrading their networks. In this dynamic environment, customer acquisition and
retention are the most important determinants of success. This has led carriers
to increasingly prioritize their resources, focusing on mission critical revenue
generating activities such as marketing, billing and customer care and
outsourcing whenever they can do so effectively.

The changing environment is also placing significant operational challenges
on carriers. Carriers must make critical decisions about which geographic
markets to serve and which services and technologies to offer. They are striving
to avoid the cost uncertainties and considerable operational challenges
associated with the staffing and process implementation software for the
deployment and management of their networks. Furthermore, the rapidly changing
and increasingly complex nature of wireless technologies has made it difficult
for carriers to optimize employee training and utilization for what are often
one-time upgrades for each generation of new technology. Additionally, networks
are being implemented with equipment from unrelated vendors, posing system
integration challenges. This situation is exacerbated by consolidation in the
industry, which often entails the integration of disparate networks.

Equipment vendors are facing numerous challenges in the current
environment, as carriers are requiring them to develop new generations of
equipment that are capable of handling increased features and functionality. In
addition, vendors must provide equipment that can be deployed within a carrier's
existing network and integrate with equipment offered by other vendors. Carriers
are more likely to select a vendor who provides a full suite of products and
deployment services. Given the rapid pace of technological change, equipment
vendors are finding it increasingly difficult to justify using resources for the
deployment, integration and optimization of their current generation of
products. This has increasingly led equipment vendors to focus on their core
competencies to offer competitive solutions in this rapidly changing
technological environment and to outsource network design, deployment and
management services. On top of the technological challenges, facing the
telecommunications industry, the recent downturn in the U.S. and global
economies as well as the bankruptcy filings of Worldcom and Quest Communications
have caused a dramatic decrease in not only the capital budgets of the telecom
giants but in the industry's overall financial stability.

THE SPECTRUCELL TECHNOLOGY

As previously discussed, due to litigation between us and Advanced
Communications (Australia) and Roger May, we have not been provided with
meaningful and reliable information about the status of the SpectruCell
technology and when it will be available, if at all, to military users and field
tested for commercial applications. Further, as stated above, Advanced
Communications (Australia) has undergone a voluntary insolvency and its assets
are being sold to pay off creditors. The SpectruCell technology has been
transferred to SDR Communications Technologies Pty Ltd., a company owned and
controlled by Mr. May, and Advanced Communications (Australia) has terminated
the Company's interim License Agreement for SpectruCell. The following
discussion about SpectruCell is a general description of the technology based on
information we have been provided with and should be read in this context.

The SpectruCell concept was originally conceived in the United States in an
entirely different format and configuration to the current product design. The
request to develop the SpectruCell Wireless Base Station concept was presented
to the Royal Melbourne Institute of Technology University in the first quarter
of 1998 for evaluation and development. The current technology for the
SpectruCell Wireless Base Station unit has been developed entirely in Melbourne,
Australia by Advanced Communications (Australia) in collaboration with the
Department of Computer Systems Engineering at the Royal Melbourne Institute of
Technology University.

Advanced Communications (Australia) is, based on information we have been
provided with, developing a wireless communication network technology that will
be trademarked and marketed as "SpectruCell". At this time, SpectruCell is not
commercially available and is still in the concept and prototype stages of
development. SpectruCell is expected to use commercial off the shelf components
to the extent that they are available. The SpectruCell conceptual design
incorporates new design concepts and approaches to the development of a software
defined radio operating system. Unlike existing communications networks,
SpectruCell is being designed to support a wireless network architecture
designed to process and transmit numerous communications protocols (AMPS, CDMA,
TDMA, GSM, W-CDMA, UMTS, 3G, Voice IP, etc.), as well as wireless Internet
applications, all within one network. Advanced Communications (Australia) is, we
believe, in the process of developing these software applications. Accordingly,
applications capable of supporting all of these protocols or wireless
frequencies do not currently exist. By utilizing the SpectruCell software-based
operating system, network providers are expected to be able to support
substantially all current and future wireless frequencies with the same
equipment on the same network through software upgrades.

We have been informed that a prototype version of the software suitable to
support the laboratory operation of a prototype with restricted functionality
has been developed. We have been informed that Advanced Communications
(Australia) plans to have a beta test version of the commercial version of the
software available in 2004. While some presales activity may take place during
2003, sales of a commercial product are unlikely before that date. However,
custom designed, specialist, non-commercial applications such as military
applications may be available by the end of 2003. The current prototype
SpectruCell product can only support the CDMA-1 and GSM protocols. Any planned
development of future product applications will focus on the development of a
product supporting the CDMA 2000 protocol.

The SpectruCell architecture is being developed and designed to provide a
method of transmitting the entire base bank spectrum from the receiving
Antenna/Cell to a centralized Mobile Telephone Switching Office (MTSO) for call
processing and redistribution, rather than processing calls at the cell site.
Until approximately three years ago almost all cellular transmissions were
Analog. In the current cellular network environment, additional call processing
hardware has to be added to each cell site (usually around 200+ cells per
average network), for network operators to transmit evolving new digital
protocols (CDMA, TDMA, GSM, W-CDMA, etc.) over their existing cellular networks.
SpectruCell is being developed and designed as a publishable API (open
architecture) so that network operators can write their own interfaces, and it
is also software upgradeable so that additional protocols can be added to an
existing base station by uploading another software module to the base station.

We have been informed that SpectruCell is being developed to have the
capacity to dynamically assign channels and spectrum (i.e., call carrying
capacity) to the cells requiring it most. In a sense, the cellular operator
would possess a so-called "elastic capacity" at cells in the system. Since all
voice channels would be centrally located at the switch instead of at the
cell/antenna sites, individual voice channels and RF trunks can be distributed
as needed to busy cell/antenna sites. Channels would be essentially "borrowed"
from surrounding cells and used to support call traffic at the busier sites
during call volume peaks. This is a distinct departure from present "honeycomb
style" systems where each cellular network is dedicated to a single protocol and
each cell has fixed call carrying capacity or bandwidth, that is limited by the
number of voice channels installed at each cell site. In essence, the
SpectruCell architecture provides a basis for a paradigm shift from the
conventional telecommunications central office switching structure for evolving
wireless networks. For carriers to support multiple protocols such as GSM and
CDMA digital mobile phones, current wireless communications technology requires
separate cell sites with separate equipment for each protocol carried. We have
been informed that upon implementation, SpectruCell will allow carriers to
maintain and utilize their existing networks within a modern network platform
that will enable them to support evolving protocols. We also have been informed
that by utilizing the SpectruCell multiple protocol wireless base station,
network providers will be able to support current and in all probability future
protocols with the same equipment on the same existing networks. Future
protocols would be added to the network through software.

Other applications that have been identified for potential deployment
include:

o A hardware platform for 3G cellular test equipment where SpectruCell's
SDR based flexibility can be employed to allow for testing of varying
3G standards;

o A hardware platform for high end military based signal processing. SDR
originated in the military and SpectruCell's ability to handle
multiple communications standards is expected to make it desirable for
test and development of advanced military communications' system, such
as:

[ ] Radar;

[ ] Sonar; and

[ ] Military communications.

o Aerial communications and mobile communications platforms. SpectruCell
is being designed such that it can be deployed aerially or in mobile
situations in order to provide rapid and flexible coverage for a
particular area;

PATENTS

We have been told that Advanced Communications (Australia) has filed five
patent applications with the Australian patent office under the Patent
Cooperation Treaty in connection with certain aspects of the SpectruCell
technology. Under this treaty, any patents issued provide patent protection in
111 member countries, including the United States. No patents have been issued
to date and we have no assurance that any such patents will be issued in the
future. Information regarding patents filed by Advanced Communications
(Australia) is included in this filing because our company's success is highly
dependent on the technology being developed by Advanced Communications
(Australia) and its ability to protect the technology from potential competitors
through patents.

COMPETITION

We have been informed that the SpectruCell system will compete with
traditional cellular telephone and other wireless communications technologies.
However, the technology will have to be differentiated through cost savings in
implementation and upgrades and through improved service. Like most new
technologies the introduction of SpectruCell will require demonstrations and
education through field trials and similar demonstrations to introduce the
product to the potential market. No assurances can be given that the market will
accept the SpectruCell technology, or that other competing products will be
developed or achieve better market acceptance than the SpectruCell technology.

The wireless telecommunications infrastructure market is highly
competitive. The market for a SpectruCell type product is characterized by
rapidly changing technology, evolving industry wireless standards and frequent
new product introductions and enhancements. Failure to keep pace with these
changes could seriously harm our ability to compete once it becomes commercially
available. Our ability to compete depends on many factors including the timing
of delivery to market the SpectruCell product, its flexibility, price, and
reliability.

Current and potential competitors consist primarily of major domestic and
international companies, most of which have longer operating histories;
installed customer bases; higher volumes; substantially greater name
recognition; and greater financial, technical, manufacturing, marketing, sales
and distribution resources. We have identified at least one competitor to the
SpectruCell technology. This competitor is Airnet Communications Corporation
(www.airnet.com). We expect to face increasing competition as other
telecommunications companies realize the advantages of SDR and begin devoting
more resources to developing SDR base technologies. Many of these companies have
substantially greater resources than we do. These companies also have more
experience than we do in obtaining governmental approval from the Federal
Communications Commission and other agencies.

We cannot be sure that we will be able to effectively compete with existing
wireless network companies or that we will gain acceptance for the SpectruCell
system.

SALES AND DISTRIBUTION

We planned to have independent distribution and sales offices located in
California, New York and Florida once SpectruCell became commercially available.
Given the litigation between us and Advanced Communications (Australia) and the
current state of the SpectruCell development, it is unclear when or whether we
will carry out such plans.

GOVERNMENT REGULATION

The proposed sale of wireless communications services through the
SpectruCell product may be subject to government regulation. Federal law
regulates interstate and international telecommunications, while states have
jurisdiction over telecommunications that originate and terminate within the
same state. These regulations may require Advanced Communications (Australia),
its successor, or our company to obtain regulatory approval from the Federal
Communications Commission prior to the use of the SpectruCell product. At this
time, we cannot estimate how long this process will take to complete or whether
these efforts will be successful or how and when Advanced Communications
(Australia) will satisfy the FCC, if at all. Moreover, because SpectruCell is
not yet developed for the commercial market, it is uncertain what form the
product will ultimately take and whether Advanced Communications (Australia),
the company or the commercial user will be required to comply with the specific
FCC regulations in effect at the time SpectruCell is available for sale to
commercial customers. The inability to obtain FCC approval, if required, would
prevent us from deploying any wireless applications, which would be detrimental
to our proposed business operations. Changes in existing policies or regulations
in any state or by the Federal Communications Commission ("FCC") could have a
material adverse effect on our financial condition or results of operations.
There can be no assurance that the regulatory authorities in one or more states
or the FCC will not take action having an adverse effect on our business or
financial condition or results of operations.

EMPLOYEES AND CONSULTANTS

As of January 15, 2003, we have no full time employees and four part time
consultants. None of our consultants are covered by any collective bargaining
agreement.

MANAGEMENT

The following table sets forth the names and ages of our current directors
and executive officers, their principal offices and positions and the date each
such person became a director or executive officer. Our executive officers are
elected annually by the Board of Directors. Our directors serve one-year terms
until their successors are elected. The executive officers serve terms of one
year or until their death, resignation or removal by the Board of Directors.
There are no family relationships between any of the directors and executive
officers. In addition, there was no arrangement or understanding between any
executive officer and any other person pursuant to which any person was selected
as an executive officer.

Our directors and officers are as follows:

- --------------------------------------------------------------------------------
NAME AND ADDRESS AGE POSITION
- ----------------------------- ----- ----------------------------------
- --------------------------------------------------------------------------------
Wayne I. Danson 49 President, Chief Financial Officer
420 Lexington Ave. and Director
New York, NY 10170

Dr. Michael Finch 54 Director
37 Walnut Street
Wellesley, MA 02481

Jonathan J. Lichtman 50 Director
120 East Palmetto Park Road,
Suite 100
Boca Raton, FL 33432

Randall Prouty 50 Director
420 Lexington Avenue
New York, NY 10170

Wilbank J. Roche 56 Director
2530 Wilshire Blvd.
Santa Monica, CA 90403

The directors named above will serve until the next annual meeting of our
shareholders or until their successors shall be elected and accept their
positions. Mr. Danson is party to a written consulting agreement that entitles
him to $20,000 per month in cash and stock for the period September 1, 2000
through August 31, 2001 and, as extended orally, to December 31, 2001. Effective
January 1, 2002, Mr. Danson agreed to orally extend his consulting agreement
with Advanced Communications through December 31, 2003 at a monthly rate of
$12,500. Mr. Danson is reimbursed for reasonable out-of-pocket expenses relating
to their activities for Advanced Communications.

Our directors do not receive any cash compensation for their services as a
director, but are reimbursed for all of their out-of-pocket expenses incurred in
connection with the rendering of services as a director. The directors are
compensated through the grant and issuance of 100,000 shares of restricted
common shares for each of the fiscal years ended 2002 and 2001 in which they
have served as directors. The value of the stock issued to each director on
January 22, 2002 was $36,000.

WAYNE I. DANSON, PRESIDENT, CHIEF FINANCIAL OFFICER AND DIRECTOR. Mr.
Danson has served as our company's Chief Financial Officer since December 1,
1999, was appointed a Director on January 3, 2000, and appointed President on
April 30, 2002. Mr. Danson is the Managing Director and Founder of Danson
Partners, LLC, a financial advisory firm specializing in middle market companies
in the real estate and technology industries. Prior to forming Danson Partners,
LLC in May 1999, Mr. Danson was co-head of and Managing Director of
PricewaterhouseCoopers LLP's Real Estate Capital Markets Group. Prior to
rejoining PricewaterhouseCoopers in 1996, Mr. Danson was a Managing Tax Partner
with Kenneth Leventhal & Company in New York and Washington D.C., where he was
also Kenneth Leventhal's National Director of its International and Debt
Restructure Tax Practices. Prior to his involvement with Kenneth Leventhal in
1988, Mr. Danson was a Managing Director with Wolper Ross & Co., Ltd. in New
York, a closely held financial services company specializing in financial tax,
pension consulting, designing financial instruments and providing venture
capital and investment banking services. Mr. Danson graduated with honors from
Bernard M. Baruch College with a BBA in Accounting and an MBA in Taxation. He is
a certified public accountant and a member of the AICPA and the New York State
Society of CPAs.

JONATHAN J. LICHTMAN, SECRETARY AND DIRECTOR. Mr. Lichtman was appointed a
Director on November 9, 1999 and is currently a partner with the Boca Raton law
firm of Levinson & Lichtman, LLP, where he specializes in structuring corporate
and partnership transactions, including real estate syndications. Mr. Lichtman
is also currently a general partner of several real estate partnerships in New
York, North Carolina and Florida. Prior to forming Levinson and Lichtman LLP,
Mr. Lichtman was an attorney with English, McCaughan and O'Bryan, PA, where he
performed legal work for domestic and international clients, as well as real
estate partnerships and development. Mr. Lichtman obtained his J.D. degree, cum
laude, from Syracuse University College of Law and his LLM degree in taxation
from the University of Miami School of Law. He is also a certified public
accountant and is licensed to practice law in Florida and New York.

DR. MICHAEL FINCH, DIRECTOR. Dr. Finch was appointed a Director on March
10, 1997 and since 1998, has been Chief Technology Officer of New Media
Solutions, responsible for the conception, planning, creation, execution and
deployment of all software products and projects. For the four years before
that, he was employed by Media Forum (first in the UK, and then in the U.S.) as
Director of Product Development. He was responsible for developing and
implementing Media Forum's software capabilities and strategy, managing
technical and complex software projects for high-end clients, and pre-sales
demonstrations to clients of Media Forum's software stance and expertise. From
1983 to 1993, Dr. Finch was a Financial Software Engineer, who designed, wrote
and implemented sophisticated real-time computer programs for trading Financial
Instruments and Commodities on the Chicago and New York Futures exchanges. Prior
to 1983, Dr. Finch was a research scientist and mathematician, with an academic
career at four UK universities. He obtained a Doctorate of Mathematics at Sussex
University for original research into Einstein's Theory of General Relativity
and its application to Neutron Stars. He lectured at Queen Mary's College London
on advanced mathematics.

RANDALL PROUTY, DIRECTOR. Mr. Prouty, a co-founder and Director since March
10, 1997, is currently the President and CEO of World Associates, Inc., a
publicly traded development stage company. He is also the sole owner of Bristol
Capital, Inc., a firm active in consulting and business development work for
companies seeking access to capital markets, and through which he is incubating
other e-business ventures. Mr. Prouty is a licensed real estate and mortgage
broker in the State of Florida. His technical background includes being a
qualified Webmaster and developing e-businesses on the web.

WILBANK J. ROCHE, DIRECTOR. Mr. Roche was appointed a Director on March 25,
1999 and is currently a principal with the law firm of Roche & Holt in Santa
Monica, California. Mr. Roche was an honors graduate from the University of
California in 1976, as well as from Loyola University School of Law, Los
Angeles, in 1979. He was admitted to the California State Bar in 1979 and has
been practicing law actively since that time. Mr. Roche worked for law firms in
the Los Angeles area from 1976 to 1983, when he opened his own office. In 1985,
he formed Roche & Holt. Mr. Roche's law practice has revolved largely around
representing small businesses and their owners. In that regard, he has provided
legal services in connection with the formation, purchase, sale, and dissolution
of numerous entities, as well as in connection with their on-going operations.
In the past several years, he has devoted substantial time to clients in the
telecommunications business.

RESIGNATIONS

Effective November 30, 2001, Mr. May was removed as Chief Executive
Officer, President and Chairman of the Board. The Board of Directors removed Mr.
May because it had become dissatisfied with Advanced Communications' direction
under Mr. May's leadership. Mr. Prouty assumed the role of Chairman of the Board
effective November 30, 2001 and Mr. Gary Ivaska was appointed President of the
Company. Effective March 14, 2002, Roger May and Allen Roberts resigned from the
Board of Directors. Neither Mr. May nor Mr. Roberts were replaced on Advanced
Communications' Board of Directors. Effective April 30, 2002, Mr. Ivaska
resigned as our President. Effective December 12, 2002, Mr. Prouty resigned his
position as Chairman of the Board. Mr. Prouty remains a director of the Company
and is a member of the Company's audit, compensation and acquisition committees.

COMMITTEES OF THE BOARD OF DIRECTORS

In a board meeting held on May 15 2001, both an audit and compensation
committee was established. The audit committee will report to the board
regarding the appointment of our independent public accountants, the scope and
results of our annual audits, compliance with our accounting and financial
policies and management's procedures and policies relative to the adequacy of
our internal accounting controls. The audit committee is comprised of Messrs.
Prouty and Finch. The compensation committee of the board of directors will
review and make recommendations to the board regarding our compensation policies
and all forms of compensation to be provided to our executive officers. In
addition, the compensation committee will review bonus and stock compensation
arrangements for all of our other employees. The compensation committee is
comprised of Messrs. Roche and Prouty.

The Board of Directors also established an Acquisitions Committee and an
Advanced Communications (Australia) Committee. Messrs. Prouty, Danson, Lichtman
and Roche currently serve on the Acquisitions Committee and Messrs. Prouty,
Danson, Lichtman, Roche and Finch serve on the Australian Affiliate Committee,
which will address and make all decisions relating to the activities of our
Australian Affiliate and SpectruCell.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table shows all cash compensation accrued and/or paid by
Advanced Communications, as well as certain other compensation paid or accrued,
for the fiscal years ended June 30, 2002, 2001 and 2000. Other than as set forth
herein, no executive officer's cash salary and bonus exceeded $50,000 in any of
the applicable years. The following information includes the dollar value of
base salaries, bonus awards, the value of restricted shares issued in lieu of
cash compensation and certain other compensation, if any, whether paid or
deferred.

ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------------- ---------------------------------
AWARDS PAYOUTS
------------ -------------------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
NAME AND ----------- ------- ------------ ------------ -------- ------- ------------
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- ----------- ------- ------------ ------------ -------- ------- ------------

Wayne I. Danson, 2002 $149,933(1) -- -- $110,000 (1) -- -- --
President and CFO 2001 $235,931(2) -- -- $167,500 (2) -- -- --
2000 $50,000(3) -- -- $223,400 (4) -- -- --

Roger May, CEO 2002 $87,500(5) -- -- -- -- -- --
$50,000
2001 $197,500(5) (5) -- -- -- -- --
2000 $120,000(5) -- -- -- -- -- --

- -----------------------------------------------------------------------------------------------------------------------------------
(1) Represents accrued fees and out-of-pocket expenses. Mr. Danson received $65,000 in cash for fiscal 2002 services and
$32,775 for reimbursement of prior and current out-of-pocket expenses. Mr. Danson was appointed President on April 30, 2002.

(2) Represents the value of accrued fees and stock-based compensation earned by Mr. Danson during the fiscal year ended June 30,
2001. Stock-based compensation amounted to $167,500. Of accrued consulting fees earned in the amount of $235,931, only
$23,105 was paid in cash to Mr. Danson. The balance of Mr. Danson's accrued compensation remains unpaid as of June 30,
2001. In August 2001, Mr. Danson agreed to receive 500,000 shares of our restricted common stock in lieu of $150,000 of
unpaid consulting fees.

(3) Mr. Danson became Chief Financial Officer of Advanced Communications on December 1, 1999 and such amount reflects the cash
compensation (exclusive of reimbursement of expenses) paid to him during the period December 1, 1999 to June 30, 2000.

(4) Mr. Danson also received 100,000 shares of our stock as a signing bonus in December 1999 and June 2000. During this time,
the shares were trading between $1.50 - $3.50 per share.

(5) Accrued and unpaid compensation. No cash was received by Mr. May during the fiscal years ended June 30, 2000, June 30, 2001
and 2002. Mr. May's compensation for fiscal 2001 includes a $50,000 cash bonus which remains unpaid as of June 30, 2001.
Mr. May left Advanced Communications on November 30, 2001. On March 26, 2002, the Board of Directors unanimously approved
the recommendation of the Compensation Committee to reduce Mr. May's current and prior accrued compensation by $394,361
representing services Mr. May performed for Advanced Communications (Australia).

Advanced Communications has no deferred compensation, stock options, SAR
or other bonus arrangements for its employees and/or directors. During the
fiscal year ended June 30, 2001, all decisions concerning executive compensation
were made by the Board of Directors and effective May 15, 2001 by our
compensation committee.

EMPLOYMENT AGREEMENTS

On November 29, 1999, we entered into an employment agreement with Danson
Partners, LLC to provide the functions customarily provided by a Chief Financial
Officer. As compensation for these services, we paid $5,000 monthly in advance,
plus 100,000 restricted shares of common stock. Starting April 1, 2000,
compensation for these services increased to $10,000 per month. On September 1,
2000, we entered into another one-year consulting agreement with Wayne I.
Danson, the Chief Financial Officer. A signing bonus of 75,000 shares of stock
was issued, valued at $67,500. This contract expired August 31, 2001, but was
orally extended to December 31, 2001. As compensation, Mr. Danson receives

$10,000 per month in cash and $10,000 per month in stock. Effective January 1,
2002, Mr. Danson agreed to orally extend his contract with Advanced
Communications through December 31, 2003, at a monthly rate of $12,500.

Effective July 1, 2000, Advanced Communications and Mr. May, our former
Chief Executive Officer, entered into an oral employment agreement that entitled
Mr. May to receive $15,000 per month and a bonus of $50,000. Effective December
1, 2000, Mr. May's compensation increased to $17,500 per month. On November 30,
2001, Mr. May was terminated as Advanced Communications' Chief Executive
Officer. The Compensation Committee of the Board of Directors reviewed the
nature and extent of Mr. May's past services to Advanced Communications to
determine how much of Mr. May's prior services are more properly allocable to
Advanced Communications (Australia). At Advanced Communications' 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 Advanced
Communications (Australia), leaving a balance of $172,183 at June 30, 2002.

On November 30, 2001, we entered into an oral employment agreement with
Mr. Gary Ivaska to serve as our President at a rate of $120,000 per annum.
Effective April 30, 2002, Mr. Gary Ivaska resigned as Advanced Communications'
President.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of the
small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the small business issuer will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

DESCRIPTION OF PROPERTY

As of August 1, 2002, the Company relocated its principal executive office
from California to 420 Lexington Avenue, New York, NY 10170 within the office
facility of Danson Partners, LLC, a privately owned company that employs our
President and Chief Financial Officer. No rent or facility use fee is charged to
the Company by Danson Partners, LLC. The Company is a party to a three-year
office lease that commenced January 1, 2002 and ends December 31, 2004 for its
former California office located at 880 Apollo Street, Suite 200, El Segundo,
CA. 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 $229,020. The
Company has engaged Grubb & Ellis to find a suitable subtenant to assume all or
a portion of the Company's remaining lease obligation.

The Company is a guarantor to Jason Webster's one-year residential lease
that expires January 25, 2003. The Guaranty which was executed in January 2002
requires the Company to reimburse the landlord in the event of a default by
Jason Webster, the former Director of Corporate Communications of the Company.
The rent under the residential lease is $1,690 per month. The Company has not
been required to perform under the Guaranty.

LEGAL PROCEEDINGS

We are defendant in a number of lawsuits as described below. We do not
believe these lawsuits have a material adverse impact on our business.

(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. In October 2001, the court denied summary judgment for the Plaintiffs.
On November 14, 2002, the Company settled the litigation with the Needham/DuPont
plaintiffs by agreeing to release the plaintiffs' stock from restriction and
issuing a three year promissory note for $173,494 to reimburse the plaintiffs
for its legal costs. The plaintiffs agreed to release the Company, its officers,

and directors, except Mr. May and Mr. Halperin, the Company's former SEC counsel
from any claims for damages. On November 18, 2002 a Notice of Voluntary
Dismissal was filed with the court.

On or about July 2000, the Company entered into an indemnification
agreement with Jack Halperin, Esq., our then SEC counsel, whereby the Company
agreed to indemnify Mr. Halperin for all costs and damages incurred as a result
of Mr. Halperin being named a defendant in the Needham/DuPont lawsuit filed
against the Company, Mr. May and Mr. Halperin in July 2000. Mr. May executed
this agreement on behalf of the Company. The agreement includes a provision that
prohibits the Company from entering into any settlement agreement in the
Needham/DuPont lawsuit unless such settlement agreement provides for the
unconditional release of Mr. Halperin from any claim. On November 14, 2002, the
Company settled the Needham/DuPont lawsuit without obtaining a full release for
Mr. Halperin. The Company's Board of Directors is consulting with its current
legal counsel to determine the validity of the indemnification agreement.

(ii) 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 had 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. On June 4, 2002 the Company issued an
additional 1,460,725 and 664,275 shares of common stock to AJW Partners LLC and
New Millennium Capital Partners, II, LLC.

On both August 26, 2002 and September 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, in full satisfaction of the
Company's outstanding obligation on the remaining September 30, 1999 12%
Convertible Debenture.

(iii) ADVANCED COMMUNICATIONS (AUSTRALIA) LITIGATION

On December 6, 2001, Mr. Roger May, as Chairman and Chief Executive
Officer of Advanced Communications (Australia), sent a letter to the Company
demanding full payment of all amounts due under the Stock Purchase Agreement
between the Company and Advanced Communications (Australia) (the "Stock Purchase
Agreement). This letter was dated six days after Mr. May was removed by the
Board of Directors of the Company 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 Advanced Communications (Australia) under its
constitutional documents, which include exercising Advanced Communications
(Australia)'s lien over the shares registered in the name of the Company or
declaring that those shares be forfeited. The Company believes that it has fully
met its obligation under the Stock Purchase Agreement, which states that
payments are only required to be paid to Advanced Communications (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, the Company does not have sufficient funds available to pay to
Advanced Communications (Australia). On January 23, 2002, the Company filed suit
against Advanced Communications (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 injunction effectively
enjoining and prohibiting Advanced Communications (Australia) from
"transferring, dealing with, charging, diminishing, mortgaging, assigning or
disposing of" the Company's stock in Advanced Communications (Australia). The
interim injunction was recently extended by the court until a final
determination is made at trial.

On March 15, 2002, Advanced Communications (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 Advanced Communications (Australia) and Advanced
Communications (Australia) would purchase a majority interest in EntrePort.
Further, on March 14, 2002, Advanced Communications (Australia) entered into an
Acquisition Agreement with EntrePort (the "Acquisition Agreement") which stated
that Advanced Communications (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 the Company's Board of Directors one day before
entering into the Acquisition Agreement.

The Company believes that the transaction with EntrePort as described in
the Acquisition Agreement was inconsistent with our ownership rights to
SpectruCell in North and South America acquired in the 1999 merger with Advanced
Communications (Nevada) and under the interim License and Distribution Agreement
dated July 5, 2000 which we entered into with Advanced Communications
(Australia) to facilitate implementation of our rights in SpectruCell acquired
in the 1999 merger. The Company therefore instructed its Australian lawyers to
write to Advanced Communications (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 interim
License Agreement. Advanced Communications (Australia) refused to provide the
undertaking sought by the Company and, accordingly, the Company applied to the
court for an order restraining Advanced Communications (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., Advanced Communications
(Australia)Advanced Communications (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.

On May 7, 2002, the Company received a notice alleging a breach from
Advanced Communications (Australia) stating that Advanced Communications had
breached its obligation under the interim License Agreement. In addition, on May
7, 2002, Advanced Communications (Australia) sent a termination notice formally
terminating the interim License Agreement. We believed that the notice of breach
and the termination notice were without merit and immediately took the necessary
legal action to protect our interests acting on either notice. On May 8, 2002,
the court extended its April 26, 2002 order and further restrained Advanced
Communications (Australia) from "acting upon or taking any further steps in
reliance upon" the notice of breach and termination notice.

A dispute also arose between Advanced Communications (Australia) and the
Company as to whether our rights in SpectruCell included military applications
as well as commercial applications. Contrary to previous statements and
understandings, Mr. May and Advanced Communications (Australia) claimed for the
first time in or about March 2002 that military applications were not included
under the Company's SpectruCell license, and that these rights were exclusively
reserved to Advanced Communications (Australia). A dispute also arose between
Advanced Communications (Australia) and the Company as to whether our rights in
SpectruCell included marketing rights, in addition to distribution rights.
Contrary to previous statement and understandings, Mr. May and Advanced
Communications (Australia) claimed for the first time in or about March 2002
that the Company's rights in SpectruCell did not include marketing rights, and
that these rights were exclusively reserved to Advanced Communications
(Australia).

The marketing and military applications rights were relevant because the
Company had been contacted by a major U.S. defense contractor that was bidding
on a large U.S. Army project that involved a SpectruCell-type component that the
contractor wanted the Company to provide for the project. The Company was also
contacted at this time by another U.S. defense-related company regarding similar
products. It was also relevant because it had become apparent that the best way
to generate short term revenues for SpectruCell-related products was through
military applications which were easier and less expensive to produce than the

technically much more sophisticated commercial products being designed for
public telephone system use.

The above-mentioned matters were argued before the Australia court at a
two day hearing on May 27 and 28, 2002. The court took the matters under
submission. On August 23, 2002, the Australia court issued its ruling in which
the judge concluded:

"It is preferable, in my opinion, that all activity [related
to SpectruCell] on behalf of ACT (Australia) in the
Exclusive Territory pending the trial be carried out by ACT
Inc. [Advanced Communications]."

Based on this conclusion, the court issued a comprehensive preliminary
injunction granting all the relief sought by the Company. Among other things,
the injunction prohibits Advanced Communications (Australia), directly or
indirectly, from taking any action in the Exclusive Territory with respect to
marketing, distributing, selling or otherwise dealing with the SpectruCell
technology (including the military applications thereof), except through and
with the prior written consent of the Company. Quoted below is the text of one
of one of the sections of the court's order:

"...the Firstnamed Defendant [i.e., ACT Australia], whether
by itself or by its officers, employees agents, attorneys,
or any of them or howsoever otherwise, be restrained from
itself marketing, distributing, selling, supplying, offering
to sell or supply or otherwise dealing in or with the
Product including any military applications or uses of the
SpectruCell technology, in the Exclusive Territory without
the prior written consent of [Advanced Communications]."

The court's order also prohibited Advanced Communications (Australia) from
licensing, marketing, distributing, selling or otherwise dealing with the
SpectruCell technology, including military applications of the product, and from
offering to do any of the foregoing, in the Exclusive Territory through any
third party without the Company's prior written consent. The court's order also
prohibited Advanced Communications (Australia) from entering into a license or
sub-license agreement to market, distribute, sell, provide promotional material
or otherwise deal with the SpectruCell technology, including military
applications thereof, in the Exclusive Territory except to the company or at its
request. The court's order also prohibited Advanced Communications (Australia)
from granting any license to any third party to use, sub-license or reproduce
the product in the Exclusive Territory, except at the request of the Company.

In mid-July 2002, Mr. May placed Advanced Communications (Australia) into
an administrative insolvency proceeding in Australia, as a result of which the
Company's stock interest in Advanced Communications (Australia) became
worthless. Shortly thereafter, Mr. May appointed a receiver over the assets of
Advanced Communications (Australia), including SpectruCell, based on a blanket
security interest he had created in December 2001, in favor of Global
Communications Technology Pty Ltd ("Global"), an entity owned and controlled by
Mr. May and his son, Jason May. In mid-September 2002, Mr. May proposed a plan
of company arrangement in the insolvency proceeding pursuant to which Advanced
Communications (Australia)'s two main assets (its shares in Australon
Enterprises Pty Ltd ("Australon") and the SpectruCell technology) will be
disposed of with no benefit to the minority shareholders of Advanced
Communications (Australia), which includes the Company. Advanced Communications
(Australia)'s shares in Australon will be sold and a portion of the sale
proceeds will go to third party creditors and to pay the expenses of
administration. The balance of the sale proceeds will go to Global, the majority
shareholder of Advanced Communications (Australia). Further, the SpectruCell
technology will be transferred by the receiver to an entity owned and controlled
by Mr. May. The plan of company arrangement was approved at a meeting of
creditors held on September 26, 2002. The Company voted against the plan.

Shortly after the plan of company arrangement was adopted, Mr. May and
Advanced Communications (Australia) filed a motion with the Australian Court to
terminate the Court's injunctions in favor of the Company regarding the interim
License Agreement. The motion to terminate the injunctions was based on
statements made by Mr. May under oath to the effect that the SpectruCell
technology in its current form had evolved from the original licensed technology
and was no longer subject to the interim License Agreement and had not been
subject to the interim License Agreement for the last two years. Neither Mr. May
nor Advanced Communications (Australia) addressed the Company' ownership rights
to SpectruCell in North and South America acquired in the 1999 merger with
Advanced Communications (Nevada). This contention was directly contrary to
numerous statements made by Mr. May, Advanced Communications (Australia) and
others in various forums, including Internet posts, press releases, SEC filings
and documents exchanged between the parties. Several days later, Advanced
Communications (Australia) acting on Mr. May's instructions, sent a letter to
the Company purportedly terminating the interim License Agreement on the basis
that the Company is insolvent, as determined under Australian law, and that the
Company's insolvency constitutes an irreparable event of default under the
interim License Agreement.

The company's initial response to the receiver's motion to terminate the
injunctions and the receiver's purported termination of the interim License
Agreement was to oppose them and seek leave of the Australian Court to apply for
an injunction to prohibit Advanced Communications (Australia) from acting on the
purported termination pending trial. The Australian Court granted the Company
leave to do so. However, after considering the situation further and receiving
advice of counsel, the Company made the strategic decision to alter its approach
and withdraw from the Australian litigation. This decision was based on various
factors, including the following: (i) the actions of Mr. May against the Company
over the past 10 months, which in the Company's view demonstrated a consistent
lack of good faith on his part that was unlikely to change; (ii) Mr. May's
recent statement made under oath to the Australian Court that "IT IS IMPORTANT
FROM THE OUTSET TO UNDERSTAND THAT THERE WAS NO SPECTRUCELL PRODUCT IN 1999 AND
TODAY THERE STILL IS NO SPECTRUCELL PRODUCT AS IT IS CLEARLY STILL IN THE
DEVELOPMENT STAGE AND AT LEAST 12 TO 18 MONTHS FROM THE FINAL PRODUCT STAGE.",
which was contrary to previous information consistently provided by Mr. May to
the Company and the public on that subject; (iii) the completion of the research
and development of SpectruCell that is currently projected to require an
additional U.S.$12 to $15 million; (iv) the Company's opinion that development
of SpectruCell is unlikely to be completed and a product brought to successful
commercialization under Mr. May's leadership; (v) the Company's limited
resources at the present time are insufficient to enable it take all of the
legal actions that would be necessary to defend and enforce its rights in
Australia; and (vi) the need for the Company to use available funds to continue
current operations so that its rights and viability will be meaningfully
preserved for the future.

On October 25, 2002, we withdrew from the Australian litigation against
Mr. May and Advanced Communications (Australia). The effect of the Company's
decision to withdraw from the Australia litigation is that the interim License
Agreement has been terminated and the existing injunctions issued by the
Australia Court have been lifted and the purported termination of the interim
License Agreement is not being challenged in the Australia Court..
Notwithstanding this, the Company retains its rights to bring an action or
actions for damages and other available legal and equitable relief against Mr.
May, Advanced Communications (Australia) and other related and unrelated parties
who have damaged it. In addition, we still retain ownership of the rights to
SpectruCell and related technology acquired in the 1999 merger with Advanced
Communications (Nevada), which were neither created by nor subject to
cancellation under the interim License Agreement. The Company intends to protect
these rights to the fullest extent it is able to do so, and anticipates that Mr.
May and Advanced Communications (Australia) will not acknowledge these rights.

(iv) 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. On January 13, 2003, the
Company settled the action by agreeing to remit $15,000 to Star Multicare
Services, Inc on or before March 15, 2003. In the event that the Company does
not remit the $15,000 to Star Multicare Services, Inc on or before March 15,
2003, an additional $5,000 is due together with the $15,000 settlement on or
before May 15, 2003.

CONTINGENCIES

INDEMNIFICATION OF DIRECTORS AND EMPLOYEES IN RE: ADVANCED COMMUNICATIONS
(AUSTRALIA) V. COMPANY DIRECTORS AND EMPLOYEES

On or about May 10, 2002, Advanced Communications (Australia) filed suit
in the Superior court of Orange County, California against the Company, all of
its directors, its former president, and some of its former and present
employees, including the Company's receptionist. On or about May 17, 2002,
Advanced Communications (Australia) voluntarily dismissed the suit as to the
Company but not as to the individual defendants.

The complaint sets forth multiple causes of action against the defendants,
including various business torts. The basis of the complaint is that the
defendants improperly interfered with and conspired to ruin plaintiff's business
and conspired to force plaintiff into bankruptcy.

In the opinion of the Company, based on input from legal counsel, the
complaint is deficient and subject to attack on numerous procedural grounds. In
the opinion of the Company, based on its knowledge of the facts and
circumstances underlying the action, the complaint is also substantively
deficient and meritless.

be under an obligation to indemnify and defend the other former and present
employees named as defendants who have not been served in the action, if and
when they are served. This determination will be made on a case-by-case basis.

INDEMNIFICATION AGREEMENT BETWEEN THE COMPANY AND JACK HALPERIN RE: NEEDHAM/
DUPONT LAWSUIT

PENDING CLAIM BY ADVANCED COMMUNICATIONS (AUSTRALIA) FOR COSTS OF AUSTRALIA
LITIGATION AND FOR DAMAGES

Following our withdrawal from the Australia litigation against Mr. May and
Advanced Communications (Australia), Advanced Communications (Australia) applied
to the court for an order awarding its costs of the litigation against the
Company. Advanced Communications (Australia) has indicated that its costs of
litigation were approximately Aus $400,000. The Company believes a cost award
will be made by the Australia Court in favor of Advanced Communications
(Australia) but it does not know in what amount. Advanced Communications
(Australia) has also applied for an order awarding damages against the Company
in the amount of Aus $6,000,000 or approximately US$3,200,000 as a result of the
Company notifying third parties in the U.S. with which Advanced Communications
(Australia) was dealing in regard to SpectruCell, of the Australia Court's
August 23, 2002 injunctive orders. Management believes that based on information
made available to it, Advanced Communications (Australia) proposed AU$6,000,000
or approximately US $3,200,000 claim for damages is without merit. As far as the
Company knows, the Australia Court has not awarded any costs and has not awarded
any damages against the Company. It is not known if such awards will be made
and, if they are made, what their amounts will be.

PRINCIPAL STOCKHOLDERS

The following table contains information about the beneficial ownership of
our common stock as of January 13, 2003 for:

o each person who beneficially owns more than five percent of the common
stock;

o each of our directors;

o the named executive officers; and

o all directors and executive officers as a group.

Unless otherwise indicated, the address for each person or entity named
below is c/o Advanced Communications Technologies, Inc., 420 Lexington Avenue,
New York, NY 10170.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Except as indicated by footnote, and subject
to community property laws where applicable, the persons named in the table
below have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them. The percentage of beneficial
ownership is based on 118,852,622 shares of common stock outstanding as of
January 13, 2003.

COMMON STOCK
BENEFICIALLY OWNED
---------------------------------------
NAME/ADDRESS NUMBER PERCENT(1)
- ------------------------------------- --------------------- --------------
Roger May 18,228,000(1)(2) 15.34%
Nancy Needham 7,168,454(3) 6.03%
E.R. DuPont 2,751,335(4) 2.31%
Wayne Danson 2,811,214(5) 2.37%
Jonathan J. Lichtman 2,710,334(6) 2.28%
Dr. Michael Finch 591,334 *
Randall Prouty 2,218,056 1.87%
Wilbank J. Roche 650,000 *
----------------------------------------
All Officers and Directors as a Group 8,980,938 7.56%

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

(1) No shares are owned directly by Mr. May. All shares beneficially owned by
Mr. May are owned through affiliated entities and/or by family members.

(2) Includes 10,000,000 shares beneficially owned through Advanced
Communications Technologies (Australia) Pty Ltd.

(3) Excludes 4,790,347 shares held by Dr. Needham's adult children. Dr. Needham
has no beneficial ownership in these shares.

(4) Excludes 3,449,048 shares held by Mr. DuPont's adult children and in
trust for Rhett DuPont, a minor. Mr. DuPont has no beneficial ownership
in these shares.

(5) Includes 2,461,214 shares owned beneficially by Mr. Danson's affiliated
entity and children.

(6) Excludes 396,666 shares beneficially owned through various family trusts.
Mr. Lichtman has no beneficial ownership in these shares.

* Less than 1%.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Effective April 30, 2002, Mr. Gary Ivaska resigned as Advanced
Communications' Chief Executive Officer. Advanced Communications and Mr. Ivaska
have settled all outstanding amounts otherwise due him for his prior services.
Under the terms of the Ivaska Agreement, Advanced Communications is obligated to
pay Mr. Ivaska $40,000 at the rate of $10,000 per month for four months
commencing on May 31, 2002. No payments have been made to Mr. Ivaska.

During the fiscal year ended June 30, 2002, Advanced Communications 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 Advanced Communications
as directors. Advanced Communications 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 Advanced Communications' stock on the date that the shares were
granted to the individual directors.

At the request of Advanced Communications' Board of Directors, the
Compensation Committee conducted a review of the nature of the past services
provided by Mr. May to Advanced Communications to determine whether a portion of
such services are more properly allocable to Advanced Communications
(Australia). At Advanced Communications' 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 Advanced Communications
(Australia), leaving a balance of $172,183 at June 30, 2002.

On January 10, 2002, the Company executed various financing agreements
with Cornell Capital Partners, LP, a New Jersey-based hedge fund, whereby
Cornell and certain other investors purchased from Advanced Communications $1
million of two-year Convertible Debentures and Cornell provided a $30 million
structured equity facility. Pursuant to the Convertible Debenture financing,
Advanced Communications 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, Advanced Communications has the right to
require Cornell to make monthly purchases of up to $2 million of Advanced
Communications' stock on a discounted basis. Advanced Communications issued
2,960,000 shares of common stock with a market value of $740,000 as a commitment
fee as part of this transaction.

On January 15, 2002, Advanced Communications moved its corporate
headquarters from Irvine to El Segundo, California. The lease has a three-year
term commencing on January 1, 2002. As of August 1, 2002, the Company relocated
its principal executive office from California to 420 Lexington Avenue, New
York, NY 10170 within the office facility of Danson Partners, LLC, a privately
owned company that employs our President and Chief Financial Officer. No rent or
facility use fee is charged to the Company by Danson Partners, LLC.

On January 23, 2002, Advanced Communications filed suit against Advanced
Communications (Australia) and Roger May in the Supreme Court at Melbourne,
Victoria, Australia, and on that date the court issued an interim injunction
effectively enjoining and prohibiting Advanced Communications (Australia) from
"transferring, dealing with, charging, diminishing, mortgaging, assigning or
disposing of" the Company's stock in Advanced Communications (Australia). The
interim injunction was extended on April 26, 2002 by the court until a final
determination is made at trial. On May 7, 2002, the Company received a notice
alleging a breach from Advanced Communications (Australia) stating that Advanced
Communications had breached its obligation under the interim License Agreement.
In addition, on May 7, 2002, Advanced Communications (Australia) sent a
termination notice formally terminating the interim License Agreement. The
Company believed that the notice of breach and the termination notice were
without merit and it took the necessary legal actions to prevent Advanced
Communications (Australia) from terminating its rights under the interim License
Agreement. On May 8, 2002, the 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 and May 28, 2002 the court held full hearings on the injunction
application, took the matter under advisement and indicated that it would rule
on the matter in the near future. On August 23, 2002, the court issued a
comprehensive preliminary injunction granting all the relief sought by the
Company. Among other things, the injunction prohibits Advanced Communications
(Australia), directly or indirectly, from taking any action in the Exclusive
Territory with respect to marketing, distributing, selling or otherwise dealing
with the SpectruCell technology (including the military applications thereof),
except through and with the prior written consent of the Company. In addition,
the ruling granted the Company a preliminary injunction until trial prohibiting
Advanced Communications (Australia) from "transferring, dealing with, charging,
diminishing, mortgaging, assigning or disposing of" the Company's stock in
Advanced Communications (Australia). In mid-October 2002, Mr. May and Advanced
Communications (Australia) purportedly terminated the interim License Agreement
based on the assertion that the Company is insolvent and that its insolvency
constitutes an irreparable event of default thereunder. As stated above, the
Company made a strategic decision not to challenge the termination. On October
25, 2002, the Company withdrew from the litigation against Advanced
Communications (Australia) and Mr. May. Despite the termination of the interim
License Agreement, the Company still owns the North and South American rights to
SpectruCell that it acquired pursuant to the April 1999 merger with Advanced
Communications (Nevada).

Through a family trust established in Australia, Mr. May, an officer and
director of the company until November 30, 2001 and March 14, 2002 respectively
and a principal shareholder of our company, indirectly owns a 70% majority
interest in Advanced Communications (Australia). Up until November 11, 2002, we
owned 20% of the common stock of Advanced Communications (Australia). On
November 11, 2002, Advanced Communications (Australia)'s issued a Notice of

Termination to the Company stating that the April 2000 Stock Purchase Agreement
was terminated immediately due to the Company's insolvency. Advanced
Communications (Australia) filed for protection under Australia's insolvency law
on July 18, 2002 and appointment an independent administrator and receiver to
manage and operate its business.

As of June 30, 2002, Advanced Communications owed Global Communications
Technology Pty Ltd, a wholly-owned entity of Roger May, a former officer and
director of the 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. Advanced Communications does not believe that the loans are due upon
demand. However, the actual repayment terms are not known with any specificity
since the terms are not contained in a written document.

In April 2000, our company 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. Our interest in Advanced Communications (Australia) is evidenced by a
Stock Purchase agreement and is reflected by stock ownership records on file
with the Australian Securities Investment Commission, an Australian government
agency. We owe Advanced Communications (Australia) $1,791,166 under the terms of
the Stock Purchase Agreement. 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. Mr. May is a principal shareholder of our company and
Advanced Communications (Australia). Through June 30, 2002, we repaid $5,708,834
of our obligation to Advanced Communications (Australia), in part by the
issuance of 7,787,000 shares of restricted common stock having a value of
$4,884,101. The balance of our repayments was in the form of cash and the offset
of $552,125 of funds previously advanced to Advanced Communications (Australia).
During the years ended June 30, 2001 and 2002 Advanced Communications repaid an
aggregate of $247,608 and $25,000 of the obligation in cash. As of June 30,
2002, the balance of our obligation to Advanced Communications (Australia) was
$1,791,166. Advanced Communications was in litigation with Advanced
Communications (Australia) regarding the attempt by Mr. May to lien and transfer
the company's shares in the affiliate for alleged nonpayment of the company's
obligations as well as to terminate our License and Distribution Agreement. On
November 11, 2002, Advance Communications (Australia) issued a Notice of
Termination to the Company that the April 2000 Stock Purchase Agreement is
terminated immediately due to the Company's insolvency.

On September 1, 2000, Mr. Danson entered into a one-year consulting
agreement with our company for the period September 1, 2000 through August 31,
2001. Under the terms of the consulting agreement, Mr. Danson received $10,000
per month in cash and $10,000 per month in stock for his services. Mr. Danson's
agreement expired on August 31, 2001. Mr. Danson has agreed to orally extend his
consulting agreement with Advanced Communications through December 31, 2003 at a
monthly rate of $12,500.

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 Mr. Danson, Mr. Lichtman and Mr. 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.

Jonathan J. Lichtman, Assistant Secretary and a director of the Company,
is a partner at Levinson & Lichtman, LLP, a law firm in Boca Raton, FL that the
Company retained to provide legal services during the fiscal years 2002 and
2001. The Company has paid Levinson & Lichtman, LLP $43,913 and $90,000 in the
form of cash and stock respectively, for legal services rendered during fiscal
2002. No cash was paid to Levinson & Lichtman, LLP during fiscal 2001. During
fiscal 2001, the Company issued $186,000 of restricted common stock for legal
services rendered.

Wilbank Roche, a director of the Company, is a partner at Roche & Holt, a
law firm in Los Angeles, CA that the Company retained to provide legal services
during the fiscal year 2002. The Company has paid Roche & Holt $13,515 and
$15,000 in the form of cash and stock, respectively, for legal services
rendered.

Effective July 1, 2002, the Company entered into a consulting agreement
with Randall Prouty, Chairman of the Board and a director of the Company,
pursuant to which Mr. Prouty has agreed to provide certain business services to
the Company. Pursuant to the terms of the consulting agreement, Mr. Prouty will
accrue $10,000 in monthly compensation for services provided to the Company.
During the fiscal year ended June 30, 2002, the Company issued 1,100,000 shares
of restricted common stock having a value of $55,000 to Mr. Prouty and $10,986
in cash compensation for business services rendered to the Company.

Dr. Michael Finch, a director of the Company, has been issued 133,334
shares of restricted common stock having a value of $10,000 for engineering and
software design consulting services rendered to the Company during fiscal 2002.

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS

Our common stock is currently traded on the National Association of
Securities Dealers Automated Quotation System Over-the-Counter Bulletin Board
under the symbol "ADVC". As of January 13, 2003, there were 118,852,622 common
shares outstanding and approximately 427 holders of record.

The following table sets forth, for the fiscal periods indicated, the bid
price range of our common stock:

HIGH BID LOW BID
---------------- --------------
FISCAL 2000
Quarter Ended March 31, 2000 $6.0300 $2.2100
Quarter Ended June 30, 2000 2.4600 1.0600

FISCAL 2001
Quarter Ended September 29, 2000 $1.2100 $0.5600
Quarter Ended December 29, 2000 0.9800 0.4000
Quarter Ended March 30, 2001 1.0200 0.4800
Quarter Ended June 29, 2001 0.6200 0.3100

FISCAL 2002
Quarter Ended September 28, 2001 $0.3800 $0.2500
Quarter Ended December 31, 2001 0.3500 0.1700
Quarter Ended March 28, 2002 0.2550 0.0550
Quarter Ended June 30, 2002 0.0800 0.0200

FISCAL 2003
Quarter Ended September 30, 2002 $0.008 $0.0050
Quarter Ended December 31, 2002 0.015 0.0040

Such market quotations reflect the high bid and low prices as reflected by
the OTCBB or by prices, without retail mark-up, markdown or commissions and may
not necessarily represent actual transactions.

We did not pay any dividends during fiscal 2002 and have never paid any
dividends on our capital stock. We currently expect that we will retain future
earnings for use in the operation and expansion of our business and do not
anticipate paying any cash dividends in the foreseeable future. Any decision on
the future payment of dividends will depend on our earnings and financial
position at that time and such other factors as the Board of Directors deems
relevant.

DESCRIPTION OF SECURITIES

CAPITAL STOCK

The authorized capital stock of Advanced Communications consists of
200,000,000 shares of common stock, no par value per share, and 25,000,000
shares of preferred stock. As of January 13, 2003, we had 118,852,622 shares of
our common stock outstanding. In addition, there are outstanding debentures
convertible into 10,000,000 shares of common stock (at an assumed conversion
price of $0.10 per share) and warrants to purchase up to 6,440,900 shares of
common stock. The following description is a summary of the capital stock of
Advanced Communications and contains the material terms of the capital stock.
Additional information can be found in Advanced Communications' Articles of
Incorporation and Bylaws.

COMMON STOCK. Each share of common stock entitles the holder to one vote
on each matter submitted to a vote of our stockholders, including the election
of directors. There is no cumulative voting. Subject to preferences that may be
applicable to any outstanding preferred stock, stockholders are entitled to
receive ratably such dividends, if any, as may be declared from time to time by
the Board of Directors. Stockholders have no preemptive, conversion or other
subscription rights. There are no redemption or sinking fund provisions related
to the common stock. In the event of liquidation, dissolution or winding up of
Advanced Communications Technologies, Inc., stockholders are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
distribution rights of preferred stock, if any, then outstanding.

PREFERRED STOCK. The Board of Directors is authorized, subject to any
limitations prescribed by the Florida Statutes, or the rules of any quotation
system or national securities exchange on which stock of our company may be
quoted or listed, to provide for the issuance of shares of preferred stock in
one or more series; to establish from time to time the number of shares to be
included in each such series; to fix the rights, powers, preferences, and
privileges of the shares of such series, without any further vote or action by
the shareholders. Depending upon the terms of the preferred stock established by
the Board of Directors, any or all series of preferred stock could have
preference over the common stock with respect to dividends and other
distributions and upon liquidation of our company or could have voting or
conversion rights that could adversely affect the holders of the outstanding
common stock. Advanced Communications has no present plans to issue any shares
of preferred stock.

CONVERTIBLE DEBENTURES. We have outstanding convertible debentures with an
original principal balance of $1,000,000. These debentures are convertible into
shares of common stock at a price 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 $0.11 (i.e., 80% of the recent price of $0.14), then the holders
of the convertible debentures would have received 9,090,909 shares of common
stock. 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 our option, these debentures may be paid in cash or redeemed at
a 20% premium prior to January 2004.

OPTIONS. Advanced Communications has no outstanding options.

WARRANTS. Advanced Communications has outstanding warrants to purchase up
to 6,440,900 shares of common stock. All of the warrants have a $0.30 exercise
price.

TRANSFER AGENT

Advanced Communications' transfer agent is American Stock Transfer & Trust
Company. Its address is 6201 15th Avenue, 3rd Floor, Brooklyn, New York 11219.
Its telephone number is (718) 921-8200.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE ARTICLES OF INCORPORATION

AUTHORIZED AND UNISSUED STOCK. The authorized but unissued shares of our
common are available for future issuance without our stockholders' approval.
These additional shares may be utilized for a variety of corporate purposes
including but not limited to future public or direct offerings to raise
additional capital, corporate acquisitions and employee incentive plans. The
issuance of such shares may also be used to deter a potential takeover of
Advanced Communications that may otherwise be beneficial to stockholders by
diluting the shares held by a potential suitor or issuing shares to a
stockholder that will vote in accordance with Advanced Communications' Board of
Directors' desires. A takeover may be beneficial to stockholders because, among

other reasons, a potential suitor may offer stockholders a premium for their
shares of stock compared to the then-existing market price.

The existence of authorized but unissued and unreserved shares of
preferred stock may enable the Board of Directors to issue shares to persons
friendly to current management which would render more difficult or discourage
an attempt to obtain control of our company by means of a proxy contest, tender
offer, merger or otherwise, and thereby protect the continuity of our company's
management.

EXPERTS

The financial statements for the September 30, 2002 and the year ended
June 30, 2002, respectively included in the Prospectus have been reviewed and
audited by Weinberg & Company, independent certified public accountants, to the
extent and for the periods set forth in their report (which contains an
explanatory paragraph regarding Advanced Communications' ability to continue as
a going concern) appearing elsewhere herein and are included in reliance upon
such report given upon the authority of said firm as experts in auditing and
accounting.

LEGAL MATTERS

Kirkpatrick & Lockhart LLP, Miami, Florida, will pass upon the validity of
the shares of common stock offered hereby for us.

HOW TO GET MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act with respect to the securities
offered by this prospectus. This prospectus, which forms a part of the
registration statement, does not contain all the information set forth in the
registration statement, as permitted by the rules and regulations of the
Commission. For further information with respect to us and the securities
offered by this prospectus, reference is made to the registration statement.
Statements contained in this prospectus as to the contents of any contract or
other document that we have filed as an exhibit to the registration statement
are qualified in their entirety by reference to the to the exhibits for a
complete statement of their terms and conditions. The registration statement and
other information may be read and copied at the Commission's Public Reference
Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the
Commission.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2002 JUNE 30, 2002
(UNAUDITED) (AUDITED)
--------------------------------------------

ASSETS

CURRENT ASSETS:

Cash $ 415 $ 11,093
-
-------------------- --------------------
TOTAL CURRENT ASSETS 415 11,093
-------------------- --------------------

PROPERTY AND EQUIPMENT (NET) 16,274 17,274
-------------------- --------------------
OTHER ASSETS:
-
Security Deposits 7,700 13,225
Other Receivables 9,927 9,927
Deferred Bond Financing Costs, net of accumulated amortization 53,333 63,333
-------------------- --------------------
TOTAL OTHER ASSETS 70,960 86,485
-------------------- --------------------

TOTAL ASSETS $ 87,649 $ 114,852
- ------------ ==================== ====================

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------

LIABILITIES

Current Liabilities
Accounts Payable $ 1,189,658 $ 872,493
Accrued Compensation 172,183 172,183
Loan Payable to Shareholder 1,055,736 1,055,736
12% Convertible Debentures - 100,407
Interest Payable 135,417 62,917
-------------------- --------------------
TOTAL CURRENT LIABILITIES 2,552,994 2,263,736

LONG-TERM LIABILITIES
5% Convertible Debentures 1,000,000 1,000,000
8% Note Payable 173,494 -
Note Payable-ACT-Australia 1,791,166 1,791,166
-------------------- --------------------
TOTAL OTHER LIABILITIES 2,964,660 2,791,166
-------------------- --------------------

TOTAL LIABILITIES 5,517,654 5,054,902
-------------------- --------------------
STOCKHOLDERS' DEFICIENCY
Preferred Stock, $.01 Par Value, 25,000,000 Shares Authorized,
none issued and outstanding - -
Common Stock, No Par Value, 200,000,000 and 100,000,000
Shares Authorized, 118,352,622 and 114,102,622
shares issued and outstanding, respectively 25,571,505 25,471,098
Deferred Commitment fees, net of accumulated amortization (468,750) (562,500)
Accumulated Deficit (30,532,760) (29,848,648)
-------------------- --------------------
TOTAL STOCKHOLDERS' DEFICIENCY (5,430,005) (4,940,050)
-------------------- --------------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 87,649 $ 114,852
- ---------------------------------------------- ==================== ====================

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

F-1

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

FOR THE THREE MONTHS ENDED
------------------------------------------------------
SEPTEMBER 30, 2002 SEPTEMBER 30, 2001
------------------------- ------------------------

OPERATING EXPENSES

Consulting Fees 16,772 100,000
Amortization and Depreciation 104,750 101,000
Professional Fees 292,409 130,748
Other Selling, General and Administrative Expenses 24,187 90,304
Stock-Based Compensation - 30,000
------------------------- ------------------------

TOTAL OPERATING EXPENSES 438,118 452,052
------------------------- ------------------------

(Loss) From Operations (438,118) (452,052)
------------------------- ------------------------

OTHER EXPENSES

Lawsuit settlement (173,494) -
Interest expense (72,500) (4,206)
------------------------- ------------------------

TOTAL OTHER (EXPENSES) (245,994) (4,206)
------------------------- ------------------------

NET (LOSS) $ (684,112) $ (456,258)
- ---------- ========================= ========================

Net (Loss) Per Share- Basic and Dilutive $ (0.006) $ (0.005)
========================= ========================

Weighted Average Number of Shares
Outstanding During the Period- Basic and Dilutive 115,095,829 95,639,024
========================= ========================

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

F-2

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

FOR THE THREE MONTHS ENDED
-------------------------------------------------
SEPTEMBER 30, 2002 SEPTEMBER 30, 2001
---------------------- -----------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (684,112) $ (456,258)
Adjustments to reconcile net loss to net cash used:
Depreciation and amortization 104,750 101,000
Stock issued for services - 244,224
Accrued compensation - 52,500
Settlement of Lawsuit 173,494 -
Changes in operating assets and liabilities:
(Increase) decrease in assets
Prepaid expense 5,525 (10,000)
Increase (decrease) in liabilities:
Accounts payable 317,165 (101,094)
Interest payable 72,500 4,206
Other Advances 63,000
---------------------- -----------------------
Net cash used in operating activities (10,678) (102,422)
---------------------- -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Loan to unconsolidated affiliated company
Purchase of fixed assets
Repayment of loan to unconsolidated affiliate
---------------------- -----------------------
Net cash used in investing activities - -
---------------------- -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Loan proceeds from shareholder 25,200
Proceeds from issuance of common stock
and warrants net of offering costs 125,000
---------------------- -----------------------
Net cash provided by financing activities - 150,200
---------------------- -----------------------

Net increase (decrease) in cash (10,678) 47,778

Cash and cash equivalents at beginning of year 11,093 6,816
---------------------- -----------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 415 $ 54,594
- ------------------------------------------ ====================== =======================

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

During the three months ended September 30, 2002, the Company issued 4,250,000 shares of common stock valued at $100,407 in full
settlement of the September 1999 12% Senior Secured Convertible Debentures.

During the three months ended September 30, 2001, the Company issued 1,190,000 shares of common stock, valued at $357,001, in
partial payment of notes payable held by a related Australian corporation, in which we hold a 20% interest.

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

F-3

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

NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------------------------------

NOTE 1. BASIS OF PRESENTATION 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 months ended September 30, 2002 are not
necessarily indicative of the results that may be expected for the fiscal year
ending June 30, 2003. 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, 2002 included in the Company's Form 10-KSB as
filed with the Securities and Exchange Commission.

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

Advanced Communications Technologies, Inc., a Nevada corporation, was
incorporated on April 30, 1998 and was inactive from its date of formation until
April 1999 when it merged with and into the Company in a reverse merger. In
consideration for 90% of the stock of the Company, Advanced Communications
Technologies, Inc (Nevada) (of which Roger May, our former Chairman and CEO was
the principal shareholder) transferred all of its assets which included all of
the rights and interest in the SpectruCell technology for the North and South
American territories. For accounting purposes, the merger was treated as an
acquisition of all of the assets of the Company 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 Technologies
(Australia) Pty Ltd ("ACT-AU"), an unconsolidated affiliated entity, which on
November 11, 2002 was unilaterally terminated by ACT-AU. See Note 8(E)(iv). On
July 5, 2000, the Company entered into a interim License and Distribution
Agreement with ACT-AU pursuant to which the Company had the exclusive rights to
market and distribute the SpectruCell technology in North, South and Central
America. On October 25, 2002, the interim License and Distribution Agreement was
unilaterally terminated by ACT-AU. (See Note 8(E)(iv). 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 and have never been operational.
Australon Enterprises Pty Ltd is an Australian public company that manufactures
and distributes remote monitoring devices for homes and businesses such as
remote meter reading and residential automated gateway devices. While Mr. May,
our former CEO and Chairman of the Board has a significant ownership interest in
Australon Enterprise Pty, through his ownership interest in ACT-AU, he is not
involved in Australon `s daily management or business operations and is not
represented on its Board of Directors. The joint venture relationship was
established while Mr. May controlled both companies. Presently, the company is
not in negotiations with Australon Enterprises Pty and does not intend to enter
into any discussions with Australon's management. Australon USA, Inc is inactive
and will remain inactive for the foreseeable future.

The Company will account for the future results of operations, if any, of
Australon on an equity basis and ANT on a consolidated basis.

The Company is a marketing company whose primary asset is the ownership of the
rights to market and distribute the SpectruCell technology in the North and
South American territories. The Company expects to generate revenue from the
marketing and distribution of the SpectruCell technology when and if it becomes
available to the marketplace. The Company has not generated any meaningful
revenue to date.

F-4

(B) PRINCIPLES OF 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.

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

The carrying amounts of the Company's accounts payable, accrued liabilities,
debentures, 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 fiscal years ended June 30, 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, of approximately $14,500,000 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.

F-5

(J) 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.

(K) LOSS PER SHARE
- ------------------

Basic and dilutive net loss per common share is computed based upon the weighted
average common shares outstanding.

(L) NEW ACCOUNTING PRONOUNCEMENTS
- ---------------------------------

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS
145 rescinds the provisions of SFAS No. 4 that requires companies to classify
certain gains and losses from debt extinguishments as extraordinary items,
eliminates the provisions of SFAS No. 44 regarding transition to the Motor
Carrier Act of 1980 and amends the provisions of SFAS No. 13 to require that
certain lease modifications be treated as sale leaseback transactions. The
provisions of SFAS 145 related to classification of debt extinguishments are
effective for fiscal years beginning after May 15, 2002. Earlier application is
encouraged. The Company does not believe the adoption of this standard will have
a material impact the financial statements.

NOTE 2. PROPERTY AND EQUIPMENT
- -------------------------------

September 30, June 30,
2002 2002
----------------- -----------------

Computer and office equipment $ 32,909 $ 32,909
Less: Accumulated depreciation (16,635) (15,635)
----------------- -----------------
Property and equipment - net $ 16,274 $ 17,274
================= =================

Depreciation expense for each of the three months ended September 30, 2002 and
2001 was $1,000.

NOTE 3. 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-AU, leaving a balance of $172,183 at September 30, 2002 and June 30,
2002.

F-6

NOTE 4. NOTES AND LOAN PAYABLE
- -------------------------------

(A) 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, on a best efforts basis, to raise the
cash portion of the purchase price through a private or public offering of
securities. There are no default or penalty provisions under the terms of the
Stock Purchase Agreement. 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.

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
------------------ ------------------
7,787,000 $ 4,884,101
------------------ ------------------

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

During the fiscal years ended June 30, 2002 and 2001 the Company repaid $25,000
and $247,608 of the obligation in cash, respectively.

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 September 30, 2002, the balance of the Company's obligation to ACT-AU was
$1,791,166.

On November 11, 2002, ACT-AU issued a Notice of Termination to the Company
stating that the April 2000 Stock Purchase Agreement was terminated immediately
due to the Company's insolvency. The effect of the purported Notice of
Termination vis a vis the Stock Purchase Agreement was to cancel the Company's
stock ownership interest in ACT-AU. Consistent with our decision to withdraw
from the Australia litigation, we have not challenged the purported termination
of the Stock Purchase Agreement in the Australia Court. The Company is reviewing
its rights with Australian counsel to determine if its remaining obligation to
ACT-AU is similarly cancelled.

(B) LOAN PAYABLE TO SHAREHOLDER
- -------------------------------

As of September 30, 2002 and June 30, 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 scheduled date for repayment. The Company believes that
the loan is not due upon demand. However, since the actual repayment terms are
not known with any specificity because the terms are not confirmed in a written
document, the loan has been classified as a current liability.

On November 14, 2002, the Company settled its litigation with the Needham/DuPont
plaintiffs by agreeing to release the plaintiffs' stock from restriction and
issuing a three year 8% promissory note for $173,494 to reimburse the plaintiffs
for their legal costs. The note is payable in three equal annual installments of
principal and interest commencing December 1, 2003 with additional installments
due on December 1, 2004 and December 1, 2005. In accordance with paragraphs 8(a)
and 35 of FASB 5, the Company has recorded in its September 30, 2002 financial

F-7

statements, an expense of $173,494 and the associated liability in connection
with the lawsuit settlement.

NOTE 5. 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.

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.

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. On April 24, 2002 and June 4, 2002, the
Company issued a total of 2,921,450 and 1,328,550 shares of common stock to AJW
Partners, LLC and New Millennium Capital Partners II, LLC, respectively (See
Note 10(B)), for a total debt reduction of $100,343. As of June 30, 2002
$100,407 of 12% Secured Convertible Debentures remained outstanding. On August
26, 2002 and September 24, 2002 the Company issued a total of 2,921,450 and
1,328,550 shares of common stock to AJW Partners, LLC and New Millennium Capital
Partners, LLC, respectively, in full satisfaction of the remaining amount due
under the September 1999 12 % Secured Convertible Debentures.

(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.

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 at maturity 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 in the June 30, 2002 financial
statements as interest expense and a component of equity on the issuance date.

F-8

The Company incurred $80,000 of financing costs associated with the 5%
Convertible Debentures that is being amortized over the life of the debentures.
Amortization of $10,000 was expensed for the three months ended September 30,
2002.

As of September 30, 2002 and June 30, 2002, interest of $135,417 and $62,917,
respectively, is accrued on these debentures.

Future maturities of long-term debt as of September 30, 2002 are as follows:

YEAR AMOUNT
----------- ----------------
2004 $ 1,057,831
2005 57,831
2006 57,831
---------------
Total $ 1,173,494

NOTE 6. STOCKHOLDERS' DEFICIENCY
- ---------------------------------

(A) STOCK ISSUED FOR CONVERTIBLE DEBENTURES
- -------------------------------------------

During the three months ended September 30, 2002 the Company issued 4,250,000
shares of stock to the 12% Convertible Debenture holders in full settlement of
the Company's outstanding obligation of $100,407.

NOTE 7. 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.

(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. Advanced Communications Technologies (Australia) Pty Ltd placed itself
into voluntary administration on or about July 18, 2002.

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

NOTE 8. 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 payment for the remaining life of the
lease is $229,020. On August 1, 2002, the Company notified the landlord that it
was relocating its office from California to New York. The Company has engaged
Grubb & Ellis to find a suitable subtenant to assume all or a portion of the
Company's remaining lease obligation.

The Company is a guarantor of Jason Webster's one-year residential lease which
expires January 25, 2003. The Guaranty which was executed in January 2002
requires the Company to reimburse the landlord in the event of a default by
Jason Webster, the former Director of Corporate Communications of the Company.
The rent under the residential lease is $1,600 per month. The Company has not
been required to perform under the Guaranty.

F-9

(B) INDEMNIFICATION OF DIRECTORS AND EMPLOYEES IN RE: ADVANCED COMMUNICATIONS
(AUSTRALIA) V. COMPANY DIRECTORS AND EMPLOYEES
- --------------------------------------------------------------------------------

On or about May 10, 2002, ACT-AU filed suit in the Superior court of Orange
County, California against the Company, all of its directors, its former
president, and some of its former and present employees, including the Company's
receptionist. On or about May 17, 2002, ACT-AU voluntarily dismissed the suit as
to the Company but not as to the individual defendants.

In the opinion of the Company, based on input from legal counsel, the complaint
is deficient and subject to attack on numerous procedural grounds. In the
opinion of the Company, based on its knowledge of the facts and circumstances
underlying the action, the complaint is also substantively deficient and
meritless.

Under the Company's articles of incorporation and applicable Florida law, the
Company is obligated to indemnify and defend its directors and the officer named
as defendants who have been served in the action. The Company might also be
under an obligation to indemnify and defend the other former and present
employees named as defendants who have not been served in the action, if and
when they are served. This determination will be made on a case-by-case basis.

(C) INDEMNIFICATION AGREEMENT BETWEEN THE COMPANY AND JACK HALPERIN RE:
NEEDHAM/DUPONT LAWSUIT
- --------------------------------------------------------------------------------

On or about July 2000, the Company entered into an indemnification agreement
with Jack Halperin, Esq., our then SEC counsel, whereby the Company agreed to
indemnify Mr. Halperin for all costs and damages incurred as a result of Mr.
Halperin being named a defendant in the Needham/DuPont lawsuit filed against the
Company, Mr. May and Mr. Halperin in July 2000. Mr. May executed this agreement
on behalf of the Company. The agreement includes a provision that prohibits the
Company from entering into any settlement agreement in the Needham/DuPont
lawsuit unless such settlement agreement provides for the unconditional release
of Mr. Halperin from any claim. On November 14, 2002, the Company settled the
Needham/DuPont lawsuit without obtaining a full release for Mr. Halperin. The
Company's Board of Directors is consulting with its current legal counsel to
determine the validity of the indemnification agreement (see Note 8(E)(i).

(D) PENDING CLAIM BY ADVANCED COMMUNICATIONS (AUSTRALIA) FOR COSTS OF AUSTRALIA
LITIGATION AND FOR DAMAGES
- --------------------------------------------------------------------------------

Following our withdrawal from the Australia litigation against Mr. May and
ACT-AU, ACT-AU applied to the court for an order awarding its costs of the
litigation against the Company. ACT-AU has indicated that its costs of
litigation were approximately Aus $400,000. The Company believes a cost award
will be made by the Australia Court in favor of ACT-AU but it does not know in
what amount. ACT-AU has also applied for an order awarding damages against the
Company in the amount of Aus $6,000,000 or approximately US$3,200,000 as a
result of the Company notifying third parties in the U.S. with which ACT-AU was
dealing in regard to SpectruCell, of the Australia Court's August 23, 2002
injunctive orders referred to in Note 8(E)(iv). Management believes that based
on information made available to it, ACT-AU proposed AU$6,000,000 or
approximately US $3,200,000 claim for damages is without merit. As far as the
Company knows, the Australia Court has not awarded any costs and has not awarded
any damages against the Company. It is not known if such awards will be made
and, if they are made, what their amounts will be.

(E) 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 by
an exemption under Rule 144 of the Securities and Exchange regulations. 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. In October 2001, the
court denied summary judgment for the Plaintiffs. On November 14, 2002, the
Company settled the litigation with the Needham/DuPont plaintiffs by agreeing to
release the plaintiffs' stock from restriction and issuing a three year
promissory note for $173,494 to reimburse the plaintiffs for its legal costs.
The plaintiffs agreed to release the Company, its officers, and directors,
except Mr. May and Mr. Halperin, the Company's former SEC counsel from any
claims for damages. On November 18, 2002 a Notice of Voluntary Dismissal was
filed with the court. In accordance with the provisions of FASB 5 paragraph 35,

F-10

the Company has recorded the expense of settlement and the associated liability
in its September 30, 2002 financial statements.

On or about July 2000, the Company entered into an indemnification agreement
with Jack Halperin, Esq., our then SEC counsel, whereby the Company agreed to
indemnify Mr. Halperin for all costs and damages incurred as a result of Mr.
Halperin being named a defendant in the Needham/DuPont lawsuit filed against the
Company, Mr. May and Mr. Halperin in July 2000. Mr. May executed this agreement
on behalf of the Company. The agreement includes a provision that prohibits the
Company from entering into any settlement agreement in the Needham/DuPont
lawsuit unless such settlement agreement provides for the unconditional release
of Mr. Halperin from any claim. On November 14, 2002, the Company settled the
Needham/DuPont lawsuit without obtaining a full release for Mr. Halperin. The
Company's Board of Directors is consulting with its current legal counsel to
determine the validity of the indemnification agreement (see Note 8(C).

(ii) ACT-AUSTRALIA LITIGATION

On December 6, 2001, Mr. Roger May, as Chairman and Chief Executive Officer of
ACT-AU, sent a letter to the Company demanding full payment of all amounts due
under the Stock Purchase Agreement between the Company and ACT-AU (the "Stock
Purchase Agreement). This letter was dated six days after Mr. May was removed by
the Board of Directors of the Company 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-AU under its constitutional documents, which
include exercising ACT-AU's lien over the shares registered in the name of the
Company or declaring that those shares be forfeited. The Company 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-AU 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, the Company
does not have sufficient funds available to pay to ACT-AU. On January 23, 2002,
the Company filed suit against ACT-AU and Roger May in the Supreme Court of
Victoria at Melbourne, Australia to protect its investment.

On March 15, 2002, Advanced Communications (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 Advanced Communications (Australia) and Advanced Communications
(Australia) would purchase a majority interest in EntrePort. Further, on March
14, 2002, Advanced Communications (Australia) entered into an Acquisition
Agreement with EntrePort (the "Acquisition Agreement") which stated that
Advanced Communications (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 the Company's Board of Directors one day before
entering into the Acquisition Agreement.

The Company believes that the transaction with EntrePort as described in the
Acquisition Agreement was inconsistent with our ownership rights to SpectruCell
in North and South America acquired in the 1999 merger with Advanced
Communications (Nevada) and under the interim License and Distribution Agreement
dated July 5, 2000 which we entered into with Advanced Communications
(Australia) to facilitate implementation of our rights in SpectruCell acquired
in the 1999 merger. The Company therefore instructed its Australian lawyers to
write to Advanced Communications (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 interim
License Agreement. Advanced Communications (Australia) refused to provide the
undertaking sought by the Company and, accordingly, the Company applied to the
court for an order restraining Advanced Communications (Australia) from
breaching the terms of the license agreement. On April 26, 2002, the court
issued an interim order on the following terms:

F-11

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."

In mid-July 2002, Mr. May placed Advanced Communications (Australia) into an
administrative insolvency proceeding in Australia, as a result of which the
Company's stock interest in Advanced Communications (Australia) became
worthless. Shortly thereafter, Mr. May appointed a receiver over the assets of
Advanced Communications (Australia), including SpectruCell, based on a blanket
security interest he had created in December 2001, in favor of Global
Communications Technology Pty Ltd ("Global"), an entity owned and controlled by
Mr. May and his son, Jason May. In mid-September 2002, Mr. May proposed a plan
of company arrangement in the insolvency proceeding pursuant to which Advanced
Communications (Australia)'s two main assets (its shares in Australon
Enterprises Pty Ltd ("Australon") and the SpectruCell technology) will be
disposed of with no benefit to the minority shareholders of Advanced
Communications (Australia), which includes the Company. Advanced Communications
(Australia)'s shares in Australon will be sold and a portion of the sale
proceeds will go to third party creditors and to pay the expenses of
administration. The balance of the sale proceeds will go to Global, the majority
shareholder of Advanced Communications (Australia). Further, the SpectruCell
technology will be transferred by the receiver to an entity owned and controlled
by Mr. May. The plan of company arrangement was approved at a meeting of
creditors held on September 26, 2002. The Company voted against the plan.

Shortly after the plan of company arrangement was adopted, Mr. May and Advanced
Communications (Australia) filed a motion with the Australian Court to terminate
the Court's injunctions in favor of the Company regarding the interim License
Agreement. The motion to terminate the injunctions was based on statements made
by Mr. May under oath to the effect that the SpectruCell technology in its
current form had evolved from the original licensed technology and was no longer
subject to the interim License Agreement and had not been subject to the interim
License Agreement for the last two years. Neither Mr. May nor Advanced
Communications (Australia) addressed the Company' ownership rights to
SpectruCell in North and South America acquired in the 1999 merger with Advanced
Communications (Nevada). This contention was directly contrary to numerous
statements made by Mr. May, Advanced Communications (Australia) and others in
various forums, including Internet posts, press releases, SEC filings and
documents exchanged between the parties. Several days later, Advanced
Communications (Australia) acting on Mr. May's instructions, sent a letter to
the Company purportedly terminating the interim License Agreement on the basis
that the Company is insolvent, as determined under Australian law, and that the
Company's insolvency constitutes an irreparable event of default under the
interim License Agreement.

The Company's initial response to the receiver's motion to terminate the
injunctions and the receiver's purported termination of the interim License
Agreement was to oppose them and seek leave of the Australian Court to apply for
an injunction to prohibit Advanced Communications (Australia) from acting on the
purported termination pending trial. The Australian Court granted the Company
leave to do so. However, after considering the situation further and receiving
advice of counsel, the Company made the strategic decision to alter its approach
and withdraw from the Australian litigation. This decision was based on various
factors, including the following: (i) the actions of Mr. May against the Company
over the past 10 months, which in the Company's view demonstrated a consistent
lack of good faith on his part that was unlikely to change; (ii) Mr. May's
recent statement made under oath to the Australian Court that "It is important
from the outset to understand that there was no SpectruCell product in 1999 and
today there still is no SpectruCell product as it is clearly still in the
development stage and at least 12 to 18 months from the final product stage.",
which was contrary to previous information consistently provided by Mr. May to
the Company and the public on that subject; (iii) the completion of the research
and development of SpectruCell that is currently projected to require an
additional U.S.$12 to $15 million; (iv) the Company's opinion that development
of SpectruCell is unlikely to be completed and a product brought to successful
commercialization under Mr. May's leadership; (v) the Company's limited
resources at the present time are insufficient to enable it take all of the
legal actions that would be necessary to defend and enforce its rights in
Australia; and (vi) the need for the Company to use available funds to continue
current operations so that its rights and viability will be meaningfully
preserved for the future.

F-12

and other related and unrelated parties who have damaged it. In addition, we
still retain ownership of the rights to SpectruCell and related technology
acquired in the 1999 merger with Advanced Communications (Nevada), which were
neither created by nor subject to cancellation under the interim License
Agreement. The Company intends to protect these rights to the fullest extent it
is able to do so, and anticipates that Mr. May and Advanced Communications
(Australia) will not acknowledge these rights.

On November 11, 2002, Advanced Communications (Australia) issued a Notice of
Termination to the Company stating that the April 2000 Stock Purchase Agreement
is terminated immediately due to the Company's insolvency. The effect of the
purported Notice of Termination is to cancel the Company's stock interest in
Advanced Communications (Australia). Consistent with our decision to withdraw
from the Australia litigation, we have not challenged the purported termination
of the Stock Purchase Agreement in the Australia Court. Given that Advanced
Communications (Australia) is in an insolvency proceeding in Australia, is
unlikely to emerge as an operating entity, and that the Company has written off
its entire investment in Advanced Communications (Australia), the future
financial impact of this on the Company is not believed to be significant.

(iii) STAR MULTICARE SERVICES, INC.

NOTE 9. GOING CONCERN
- ----------------------

The Company's consolidated financial statements for the three months ended
September 30, 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 $684,112
for the three months ended September 30, 2002, working capital deficiency of
$2,552,579 and stockholders' deficiency of $5,430,005, 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.

Based on the Company's loss from operations, working capital deficiency and
stockholders' deficiency, there is doubt regarding its ability to continue as a
going concern. Of the $4,332,693 loss incurred during the fiscal year ended June
30, 2002, $3,229,439 was non-cash, a major portion of which was a non-recurring
charge for the impairment of a long-lived asset. Cash required by operations
amounted to $1,103,254. The Company raised $1,459,206 by issuing stock and debt.
Management is of the opinion that funds for the next fiscal year can be obtained
by issuing additional stock and debt. Management anticipates that future
operations will generate sufficient cash to offset operating expense.

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

NOTE 10. SUBSEQUENT EVENTS
- ----------------------------

On October 10, 2002, the Company's Board of Directors approved the issuance of
100,000 shares each to Messrs. Danson, Prouty, Lichtman, Roche and Finch, having
a value of $1,000 each in partial satisfaction of unpaid prior legal and
consulting fees. These shares were issued on December 5, 2002.

F-13

after the date of the Security Agreement, including, without limitation, those
obligations of Advanced Communications to Cornell Capital Partners, L.P. under
the convertible debentures dated January 2002.

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.

F-14

ADVANCED COMMUNICATIONS
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2002

F-15

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of:
Advanced Communications Technologies, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Advanced
Communications Technologies, Inc., and Subsidiaries as of June 30, 2002 and 2001
and the related consolidated statements of operations, changes in stockholders'
deficiency and cash flows for the years ended June 30, 2002 and 2001. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly in all material respects, the financial position of Advanced
Communications Technologies, Inc. and Subsidiaries as of June 30, 2002 and 2001,
and the results of their operations and their cash flows for the years ended
June 30, 2002 and 2001 in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 11 to
the consolidated financial statements, the Company's significant net loss of
$4,332,693 for the year ended June 30, 2002, a working capital deficiency of
$3,252,643, and a stockholders' deficiency of $4,940,050, raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regards to these matters are also described in Note 11. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

WEINBERG & COMPANY, P.A.

Boca Raton, Florida
September 7, 2002 (except for Note 12 (A) and (B) as to which date is
December 4, 2002)

F-16

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2002 AND JUNE 30, 2001

June 30,
2002 2001
-------------------------------
ASSETS
------

CURRENT ASSETS
Cash $ 11,093 $ 6,816
Prepaid Expenses - 10,000
-------------- ---------------
TOTAL CURRENT ASSETS 11,093 16,816
-------------- ---------------

PROPERTY AND EQUIPMENT (NET) 17,274 19,599
-------------- ---------------
OTHER ASSETS
Purchase Goodwill-ACT-AU - 2,000,000
Security Deposits 13,225 5,525
Other Receivables 9,927 -
Deferred Bond Financing Costs, net of accumulated
amortization 63,333 -
-------------- ---------------
TOTAL OTHER ASSETS 86,485 2,005,525
-------------- ---------------

TOTAL ASSETS $ 114,852 $ 2,041,940
- ------------ ============== ===============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
LIABILITIES

CURRENT LIABILITIES
Accounts Payable $ 872,493 $ 844,205
Accrued Compensation 172,183 479,050
Note Payable-Grassland - 118,530
Loan Payable to Shareholder 1,055,736 796,000
12% Convertible Debentures 100,407 200,750
5% Convertible Debentures 1,000,000 -
Interest Payable 62,917 -
-------------- ---------------
TOTAL CURRENT LIABILITIES 3,263,736 2,438,535

LONG-TERM LIABILITIES
Note Payable-ACT-Australia 1,791,166 2,173,167
-------------- ---------------
TOTAL OTHER LIABILITIES 1,791,166 2,173,167
-------------- ---------------

TOTAL LIABILITIES 5,054,902 4,611,702
-------------- ---------------

STOCKHOLDERS' DEFICIENCY
Preferred Stock, $.01 Par Value, 25,000,000 Shares
Authorized, none issued and outstanding - -
Common Stock, No Par Value, 200,000,000 and
100,000,000 Shares Authorized, 114,102,622 and
94,489,916 shares issued and outstanding, respectively 25,471,098 22,696,193
Common Stock to be issued, 833,334 shares - 250,000
Deferred Commitment fees, net of accumulated amortization (562,500) -
Accumulated Deficit (29,848,648) (25,515,955)
-------------- ---------------
TOTAL STOCKHOLDERS' DEFICIENCY (4,940,050) (2,569,762)
-------------- ---------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 114,852 $ 2,041,940
- ---------------------------------------------- ============== ===============

See accompanying notes to consolidated financial statements.

F-17

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2002 AND JUNE 30, 2001

2002 2001
------------- --------------

SALES $ - $ 50,000
COST OF SALES - (57,310)
-------------- --------------
GROSS PROFIT (LOSS) - (7,310)
-------------- --------------
OPERATING EXPENSES
Amortization and Depreciation 508,167 1,051,169
Professional and Consulting Fees 1,218,631 1,782,364
Other Selling, General and Administrative Expenses 407,772 501,048
Stock-Based Compensation 180,000 -
-------------- --------------

TOTAL OPERATING EXPENSES 2,314,570 3,334,581
-------------- --------------

(LOSS) FROM OPERATIONS (2,314,570) (3,341,891)
-------------- --------------

OTHER EXPENSES
Interest expense (318,123) (10,332)
Loss from investment - (3,571,654)
Loss from impairment of goodwill (1,700,000) (12,399,864)
Loss on investment acquisition deposit - (425,000)
Realized loss on decline in marketable securities - (6,825)
-------------- --------------

TOTAL OTHER (EXPENSES) (2,018,123) (16,413,675)
-------------- --------------

(LOSS) BEFORE EXTRAORDINARY GAIN (4,332,693) (19,755,566)

EXTRAORDINARY GAIN
Gain on extinguishment of debt - 23,000
-------------- --------------

NET (LOSS) (4,332,693) $ (19,732,566)
- ---------- ============== ==============

Net (Loss) Per Share - Basic and Dilutive $ (0.04) $ (0.22)
============== ==============

Weighted Average Number of Shares
Outstanding During the Period - Basic and Dilutive $ 100,576,484 87,976,428
============== ==============

See accompanying notes to consolidated financial statements.

F-18

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE YEARS ENDED JUNE 30, 2002 AND JUNE 30, 2001

COMMON STOCK TO
COMMON STOCK BE ISSUED COMMON DEFERRED
------------------------ ACCUMULATED -------------------- STOCK COMMITMENT
SHARES AMOUNT DEFICIT SHARES AMOUNT ADVANCES FEES
------------ ----------- ------------ --------- ---------- ---------- -----------

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

Stock issued for cash 3,060,600 642,726
Stock warrants issued for cash 275,454
Stock to be issued 833,334 $ 250,000
Stock issued for offering costs 250,000
Stock issued for services 1,051,491 328,870
Stock issued for extinguishment of debt 6,597,000 4,545,902
Stock issued for conversion of convertible debt 1,803,545 412,800
Common stock retired (500,000) (375,000) 375,000
Net (loss) for the year (19,732,566)
---------------------------------------------------------------------------------
BALANCE AT JUNE 30, 2001 94,489,916 $22,696,193 $(25,515,955) 833,334 $ 250,000 - -
---------------------------------------------------------------------------------

Stock issued for services 6,334,679 677,634 (33,334) (10,000)
Stock issued for extinguishments of debt 1,190,000 357,001
Stock issued for conversion of convertible debt 4,250,000 100,343
Stock issued for cash 1,233,333 260,000 (800,000) (240,000)
Stock warrants issued for cash - 110,000
Stock issued for offering costs 137,727 -
Stock and warrants issued from repricing
of previously issued shares 2,146,967 -

Stock issued to Directors for services 1,000,000 180,000

Stock issued for commitment fees 3,000,000 750,000 $ (562,500)
Capital contribution - 9,927
Stock issued in settlement of lawsuit 320,000 80,000

Interest on beneficial conversion -
Convertible Debentures - 250,000

Net (loss) for the year (4,332,693)
---------------------------------------------------------------------------------

BALANCE AT JUNE 30, 2002 114,102,622 $25,471,098 $(29,848,648) - $ - $ $ (562,500)
=================================================================================

See accompanying notes to consolidated financial statements.

F-19

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2002 AND JUNE 30, 2001

2002 2001
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------

Net (Loss) $ (4,332,693) $ (19,732,566)
Adjustments to reconcile net loss to net cash used:
Depreciation and amortization 508,167 1,051,169
Realized loss on decline in marketable securities - 6,825
Stock issued for services 847,634 328,870
Stock issued in settlement of lawsuit 80,000
Gain on extinguishment of debt - (23,000)
Loss from investment - 3,571,654
Loss from impairment of goodwill 1,700,000 12,399,864
Accrued compensation (306,867) 247,500
Interest Expense on Beneficial Conversion Feature 250,000 -
Changes in operating assets and liabilities:
(Increase) decrease in assets
Prepaid expense 10,000 36,118
Deposits and other 7,700 40,000
Increase (decrease) in liabilities:
Accounts payable 28,288 633,235
Interest payable 62,917 10,332
Deferred revenue and other 41,600 (50,000)
--------------- --------------
Net cash used in operating activities (1,103,254) (1,479,999)
--------------- --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Loan to unconsolidated affiliated company - (247,608)
Purchase of fixed assets (1,675) (8,411)
Repayment of loan to unconsolidated affiliate (25,000) -
--------------- --------------
Net cash used in investing activities (26,675) (256,019)
--------------- --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Repayment of note payable (118,530) -
Loan proceeds from shareholder 259,736 544,500
Proceeds from stock to be issued - 250,000
Proceeds from issuance of common stock
and warrants net of offering costs 130,000 918,180
Proceeds from issuance of convertible debentures, net 889,000
Proceeds from short-term loan, net of financing fees 299,000 -
Repayment of short-term loan (325,000) -
--------------- --------------
Net cash provided by financing activities 1,134,206 1,712,680
--------------- --------------

Net increase (decrease) in cash 4,277 (23,338)

Cash and cash equivalents at beginning of year 6,816 30,154
--------------- --------------

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 11,093 $ 6,816
- ---------------------------------------- =============== ==============

See accompanying notes to consolidated financial statements.

F-20

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the year ended June 30, 2002, the Company issued 1,190,000 shares of
common stock, valued at $357,001, in partial payment of notes payable held by a
related Australian corporation, in whom we hold a 20% investment, and a
non-related company (See Notes 6(B) and 8(D)).

During the year ended June 30, 2002 the Company issued 4,250,000 shares of
common stock, valued at $100,343, for the conversion of convertible debentures.

During the year ended June 30, 2001, the Company issued 6,597,000 shares of
common stock, valued at $4,545,902, in partial payment of notes payable held by
a related Australian corporation, in whom we hold a 20% investment, and a
non-related company (See Notes 6(B) and 8(D)).

During the year ended June 30, 2001, the Company issued 1,803,545 shares of
common stock, valued at $412,800, for the conversion of convertible debentures.

F-21

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

(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 ("Advanced
Communications (Australia)"), an unconsolidated affiliated entity. The Company
is currently in litigation over its ownership rights. See Note 10(B)(iv). 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. (See Note 10(B)(iv). 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 Advanced Communications
(Australia). In November 2000, the Company formed Advanced Network Technologies
(USA), Inc. ("ANT"), a Delaware corporation owned 70% by the Company and 30% by
Advanced Communications (Australia). Both Australon and ANT are inactive and
have never been operational. Australon Enterprises Pty Ltd is an Australian
public company that manufactures and distributes remote monitoring devices for
homes and businesses such as remote meter reading and residential automated
gateway devices. While Mr. May, our former CEO and Chairman of the Board has a
significant ownership interest in Australon Enterprise Pty, through his
ownership interest in ACT AU, he is not involved in Australon `s daily
management or business operations and is not represented on its Board of
Directors. The joint venture relationship was established while Mr. May
controlled both companies. Presently, the company is not in negotiations with
Australon Enterprises Pty and will not enter into any discussions with
Australon's management until the Company's lawsuit with Advanced Communications
(Australia)Advanced Communications (Australia) and Mr. May is resolved.
Australon USA, Inc is inactive and will remain inactive for the foreseeable
future.

The Company will account for the future results of operations, if any, of
Australon on an equity basis and ANT on a consolidated basis.

The Company is a marketing company whose primary activity is the ownership of
the rights to the SpectruCell technology including a License and Distribution
Agreement and its investment in Advanced Communications (Australia). The Company
expects to generate revenue from the marketing and distribution of Advanced
Communications (Australia)'s software defined radio based wireless communication
product "SpectruCell". The Company has not generated any meaningful revenue to
date.

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

The accompanying consolidated financial statements include the accounts of the
Company and its inactive subsidiaries AGC, Australon and ANT. All significant
intercompany transactions and balances have been eliminated in consolidation.
The Company accounts for its investment in Advanced Communications (Australia),
a non-consolidated affiliate (a 20-50% owned company over which the Company does
not exercise control) under the equity method of accounting.

F-22

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

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

(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
- ---------------------

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

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

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

For the fiscal year ended June 30, 2001, 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. The Company recognized no revenue for the fiscal year ended June 30,
2002.

(K) CONCENTRATION OF CREDIT RISK
- --------------------------------

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

Basic and dilutive net loss per common share is computed based upon the weighted
average common shares outstanding.

F-23

(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. The Company intends to adopt the provisions
of SFAS 142 in its financial statements for the fiscal year ended June 30, 2002.

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.

In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and supercedes
FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of." The provisions of the statement are
effective for financial statements issued for fiscal years beginning after
December 15, 2001.

With the exception of the adoption of SFAS No. 142 (See Note 2), the 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 Advanced
Communications (Australia), 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(A) 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 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. During the year ended June 30,
2001, the Company reduced the carrying value of its unconsolidated equity
investment in Advanced Communications to $2,000,000 based on management's
evaluation of Advanced Communications (Australia)'s fair market value. This
adjustment was required by FASB 121 ("Accounting for Impairment of Long-Lived

F-24

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.

Advanced Communications (Australia) had a current period operating loss combined
with a history of operating losses due to the fact that Advanced Communications
(Australia) has been in development stage activities since inception and has not
generated any sales revenue for its products. Advanced Communications
(Australia)'s projections of estimated future cash flows could not be
objectively verified because Advanced Communications (Australia) 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 Advanced Communications (Australia) and wrote-down its
investment in Advanced Communications (Australia)'s goodwill to $2,000,000 based
on the fair market value of Advanced Communications (Australia)'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 write down 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 fiscal years ended June 30,
2002 and June 30, 2001 was $300,000 and $1,046,169, respectively.

Due to litigation by the Australian Tax Office against Advanced Communications
(Australia) and Advanced Communications (Australia)'s subsequent filing on or
about July 18, 2002 for protection under Australia's insolvency laws by
appointing an Independent Administrator to take over its business and affairs
(see Note 10(B)(iv)), management has determined that its remaining goodwill
investment is impaired pursuant to the provisions of SFAS 142. Accordingly, the
Company has written off the balance of its unamortized goodwill of $1,700,000
during the fiscal year ended June 30, 2002.

The components of the Company's investment in its unconsolidated affiliate
Advanced Communications (Australia) at June 30, 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 March 31, 2002 (300,000) (300,000)
Impairment of goodwill -- (1,700,000) (1,700,000)
-------------- ------------- ---------------
Balance at June 30, 2002 $ -- $ -- $ --
============== ============ ===============

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 are 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
- -------------------------------
2002 2001
----------- -----------
Computer and office equipment $ 32,909 $ 31,234
Less: Accumulated depreciation (15,635) (11,635)
----------- -----------
Property and equipment - net 17,274 19,599
=========== ===========

Depreciation expense for the years ended June 30, 2002 and 2001 was $4,000 and
$5,000, respectively.

F-25

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

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 Advanced Communications (Australia)Advanced Communications (Australia),
leaving a balance of $172,183 at June 30, 2002.

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 the judgment has been satisfied.

(B) NOTE PAYABLE TO ADVANCED COMMUNICATIONS (AUSTRALIA)
- -------------------------------------------------------

The Company had a non-interest bearing and unsecured note payable to Advanced
Communications (Australia) 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 Advanced Communications
(Australia), the monthly installment payments were extended without interest to
allow for the Company , on a best efforts basis, to raise the cash portion of
the purchase price through a private or public offering of securities. There are
no default or penalty provisions under the terms of the Stock Purchase
Agreement. Upon raising funds pursuant to a private or public offering, the
Company shall only be obligated to repay Advanced Communications (Australia)'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.

F-26

The following schedule represents payments on such debt by issuance of
restricted common stock to either Advanced Communications (Australia) or
creditors or employees of Advanced Communications (Australia). Such transactions
were recorded at the market price of the stock at date of issuance.

SHARES
DATE OF COMMON 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 fiscal years ended June 30, 2002 and 2001 the Company repaid $25,000
and $247,608 of the obligation in cash, respectively.

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

As of June 30, 2002, the balance of the Company's obligation to Advanced
Communications (Australia) was $1,791,166. The Company is currently in
litigation with Advanced Communications (Australia) regarding the attempt by Mr.
May and Advanced Communications (Australia) to lien or transfer the Company's
shares in Advanced Communications (Australia) for alleged nonpayment of the
Company's obligation (See Note 10 (B)(iv.)).

As of June 30, 2002 and 2001, the Company owed Global Communications Technology
Pty Ltd., an Australian company wholly-owned by Mr. May, a former officer and
director of the Company, $1,055,736 and $796,000 respectfully, for funds
advanced to the Company to provide working capital. This loan is non-interest
bearing and unsecured, and has no scheduled date for repayment. The Company
believes that the loan is not due upon demand. However, since the actual
repayment terms are not known with any specificity because the terms are not
confirmed in a written document, the loan has been classified as a current
liability.

(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 bore interest at 12%
and was secured by a Guaranty and Pledge Agreement executed by three
stockholders. 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
- -----------------------------------------------------------------

F-27

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

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 June 30, 2002 and June 30, 2001, $100,407 and $200,750 of 12% Secured
Convertible Debentures, respectively remain outstanding.

On August 26, 2002, the Company issued its third set of shares to AJW Partners,
LLC (1,460,725 shares) and New Millennium Capital Partners II, LLC (664,275
shares). The final delivery of shares is due on or about October 21, 2002.

(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.

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 accrued $22,917 of interest as of June 30, 2002 on these debentures.

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)).

The Company incurred $80,000 of financing costs associated with the 5%
Convertible Debentures that is being amortized over the life of the debentures.
Amortization of $16,667 was expensed for the fiscal year ended June 30, 2002.

NOTE 8. STOCKHOLDERS' DEFICIENCY
- ---------------------------------

On September 11, 2001, the Company's stockholders authorized a change in the
Company's Articles of Incorporation increasing the authorized no par value
common shares from 100,000,000 to 200,000,000 and providing for a class of

F-28

25,000,000 $.01 par value shares of preferred stock which will have such terms
as the Board of Directors shall determine from time to time. A Certificate of
Amendment to the Company's Articles of Incorporation incorporating the above
changes was filed on September 27, 2001.

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

During the period of December 2000 to August 2001, pursuant to a private
placement, the Company issued 4,293,933 shares of common stock and 4,293,933
warrants at $.30 per share. The Company received $1,288,180 from investors,
which included $250,000 for stock not yet issued as of June 30, 2001 (which was
subsequently issued during the year ended June 30, 2002) and $275,454 for
warrants.

For the fiscal years ended June 30, 2002 and June 30, 2001, the Company issued
137,727 and 250,000 shares of common stock, valued at $75,000 and $41,318
respectively, 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 $110,000 and $275,454 at June
30, 2002 and June 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 June 30,
2002, no warrants have been exercised.

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 Board of Directors repriced these shares due the delay in registering the
shares sold to investors in such private placement. The Company did not receive
any consideration for the repricing of the shares. 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. As of June 30, 2002, the Company has not drawn down any
funds on this line.

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.

For the fiscal year ended June 30, 2002, the Company recorded amortization
expense of $187,500 in connection with the $750,000 two year commitment fees and
the balance of $562,500 has been recorded as deferred commitment fees and
classified as part of stockholders' deficiency (See Note 8(G)).

During the fiscal 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 fiscal year ended June 30, 2002, the Company issued 6,334,679 shares
of restricted common stock for services valued at $667,634. The stock was valued
based on the quoted trading price on the grant dates.

F-29

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

During the fiscal years ended June 30, 2002 and June 30, 2001, the Company
issued 6,597,000 and 1,190,000 shares of restricted common stock respectively,
to Advanced Communications (Australia), 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 $4,545,902 and $357,001 respectively
(See Note 6(B)).

(E) STOCK ISSUED TO DIRECTORS
- -----------------------------

During the fiscal year ended June 30, 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 during the
two-year period ending September 30, 2002. 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.

(F) STOCK ISSUED IN SETTLEMENT OF LAWSUIT
- -----------------------------------------

During the year ended June 30, 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 10B).

(G) STOCK ISSUED FOR PLACEMENT FEES
- -----------------------------------

During the fiscal year ended June 30, 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.

(H) STOCK ISSUED FOR CONVERTIBLE DEBENTURES
- -------------------------------------------

During the fiscal years ended June 30, 2002 and June 30, 2001, the Company
issued 1,803,545 and 4,250,000 shares of stock to the 12% Convertible Debenture
holders in extinguishments of $412,800 and $100,343 of Convertible Debentures
respectively (See Note 10B).

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

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

Global Communications Technology Pty Ltd., a related party, is wholly owned by
Mr. May a principal stockholder of the Company (See Note 6(C)).

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

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

F-30

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

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

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

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

(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 (See Note 8F) 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 had 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 June 4, 2002 the
Company issued an additional 1,460,725 and 664,275 shares of common stock to AJW
Partners LLC and New Millennium Capital Partners, II, LLC (See Notes 7(A) and 8
(H)).

(IV) ADVANCED COMMUNICATIONS (AUSTRALIA)) LITIGATION

F-31

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 Advanced Communications (Australia) under its constitutional
documents, which include exercising Advanced Communications (Australia)'s lien
over the shares registered in the name of the Company or declaring that those
shares be forfeited. The Company believes that it has fully met its obligation
under the Stock Purchase Agreement, which states that payments are only required
to be paid to Advanced Communications (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, the Company
does not have sufficient funds available to pay to Advanced Communications
(Australia). On January 23, 2002, the Company filed suit against Advanced
Communications (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 injunction effectively
enjoining and prohibiting Advanced Communications (Australia) from
"transferring, dealing with, charging, diminishing, mortgaging, assigning or
disposing of" the Company's stock in Advanced Communications (Australia). The
interim injunction was recently extended by the court until a final
determination is made at trial.

On March 15, 2002, Advanced Communications (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 Advanced Communications (Australia) and Advanced Communications
(Australia) would purchase a majority interest in EntrePort. Further, on March
14, 2002, Advanced Communications (Australia) entered into an Acquisition
Agreement with EntrePort (the "Acquisition Agreement") which stated that
Advanced Communications (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 the Company's Board of Directors one day before
entering into the Acquisition Agreement.

The Company believes that the transaction with EntrePort as described in the
Acquisition Agreement is inconsistent with the rights granted to it by Advanced
Communications (Australia) in the License and Distribution Agreement dated July
5, 2000 pursuant to which the Company received the exclusive rights to market
and distribute the SpectruCell technology in North, South and Central America.
The Company therefore instructed its Australian lawyers to write to Advanced
Communications (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.
Advanced Communications (Australia) refused to provide the undertaking sought by
the Company and, accordingly, the Company applied to the Court for an order
restraining Advanced Communications (Australia) from breaching the terms of the
license agreement. On April 26, 2002, the Court issued an interim order that
held that Advanced Communications (Australia), whether by itself or by its
officers, employees, agents, attorneys or any of them is restrained from
appointing or agreeing to appoint EntrePort Corporation or any other person to
distribute, sell, offer to sell or supply the SpectruCell product and its
related hardware in the U.S., and North and South Americas without the prior
written consent of the Company.

EntrePort was added as a defendant to the proceedings.

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

On May 8, 2002, the 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.

A dispute also arose between Advanced Communication (Australia) and the Company
as to whether the Company's SpectruCell license included military applications
as well as commercial applications. Contrary to previous statements and
understandings, Advanced Communications (Australia) claimed for the first time
in or about March 2002 that military applications were not included under the
Company's SpectruCell license, and that these rights were exclusively reserved
to Advanced Communications (Australia). A dispute also arose between the parties
as to whether the Company's SpectruCell license included marketing rights, in
addition to distribution rights. Contrary to previous statement and

F-32

understandings, Advanced Communications (Australia) claimed for the first time
in or about March 2002 that the Company's SpectruCell license did not include
marketing rights, and that these rights were exclusively reserved to Advanced
Communications (Australia).

The Company disputed these claims and requested the court to expand the existing
injunctions against Advanced Communications (Australia) to include marketing
rights and military applications of SpectruCell technology in the Exclusive
Territory and to continue the existing injunctions in effect until the trial on
the case.

The marketing and military applications rights were relevant because the Company
had been contacted by a major U.S. defense contractor that was bidding on a
large U.S. Army project that involved a SpectruCell-type component that the
contractor wanted the Company to provide for the project. The Company was also
contacted at this time by another U.S. defense-related company regarding similar
products. It was also relevant because it had become apparent that the best way
to generate short term revenues for SpectruCell-related products was through
military applications which were easier and less expensive to produce than the
technically much more sophisticated commercial products being designed for
public telephone system use.

The above-mentioned matters were argued before the court at a two-day hearing on
May 27 and 28, 2002. The court took the matters under submission. On August 23,
2002, the court issued its ruling in which the judge held that all activity
related to SpectruCell in the Exclusive Territory pending the trial, will be
carried out by the Company and not Advanced Communications (Australia).

Based on this conclusion, the court issued a comprehensive preliminary
injunction granting all the relief sought by the Company. Among other things,
the injunction prohibits Advanced Communications (Australia), directly or
indirectly, from taking any action in the Exclusive Territory with respect to
marketing, distributing, selling or otherwise dealing with the SpectruCell
technology (including the military applications thereof), except through and
with the prior written consent of the Company.

The court's order also prohibited Advanced Communications (Australia) from
licensing, marketing, distributing, selling or otherwise dealing with the
SpectruCell technology, including military applications of the product, and from
offering to do any of the foregoing, in the Exclusive Territory through any
third party without the Company's prior written consent. The court's order also
prohibited Advanced Communications (Australia) from entering into a license or
sub-license agreement to market, distribute, sell, provide promotional material
or otherwise deal with the SpectruCell technology, including military
applications thereof, in the Exclusive Territory except to the company or at its
request. The court's order also prohibited Advanced Communications (Australia)
from granting any license to any third party to use, sub-license or reproduce
the product in the Exclusive Territory, except at the request of the Company.

The court's order will remain in effect until the trial on the merits in the
case. Simultaneously with making the above-described order, because Advanced
Communications (Australia)'s administrator indicated that he had no intention of
proceeding with the litigation at this time, the court ordered the proceeding to
be taken off the fast-track "Commercial List" and returned to the regular track.
According to the Company's Australian counsel, this means that the case will not
proceed to trial for well over one year. At the present time the action is
stayed because of the administration proceeding in which Advanced Communications
(Australia) is involved and the above-mentioned injunctions remain in effect.

(V) STAR MULTICARE SERVICES, INC.

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

The Company's consolidated financial statements for the fiscal year ended June
30, 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 $4,332,693 for the fiscal
year ended June 30, 2002, working capital deficiency of $3,252,693 and
stockholders' deficiency of $4,940,050, raise substantial doubt about its
ability to continue as a going concern.

F-33

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

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

(A) ACT - AUSTRALIA LITIGATION (SEE NOTE 10(B)(IV))
- ----------------------------------------------------

In July 2002, Advanced Communications (Australia) entered into an administrative
insolvency proceeding in Australia. As a result of this insolvency proceeding,
the Company's stock interest in Advanced Communications (Australia) became
worthless. Further, the SpectruCell technology will be transferred by the
receiver to an entity owned and controlled by Mr. Roger May. The plan of company
arrangement was approved at a meeting held on September 26, 2002. The Company
voted against the plan. Shortly after the plan of company arrangement was
adopted, Advanced Communications (Australia) filed a motion with the Australian
Court to terminate the Court's injunctions against it regarding the interim
License Agreement. Advanced Communications (Australia) sent a letter to the
Company purportedly terminating the interim License Agreement on the basis that
Advanced Communications (Australia) is insolvent, as determined under Australian
law, and this insolvency constitutes an irreparable event of default under the
interim License Agreement.

On September 7, 2002, a September 7, 2001 Letter of Intent that the Company
entered into with ACT-Australia to acquire all of the intellectual property,
including the worldwide rights (other than the rights to territories that the
Company currently possess) for the licensing and distribution of the SpectruCell
product expired.

In October 2002, the Company withdrew from the Australia litigation against Mr.
May and Advanced Communications (Australia). The effect of the Company's
decision to withdraw from the Australia litigation is that the interim License
Agreement has been terminated and the existing injunctions issued by the
Australia Court have been lifted.

In November 2002, Advanced Communications (Australia) issued a Notice of
Termination to the Company stating that the April 2000 Stock Purchase Agreement
is terminated immediately due to Advanced Communications (Australia)'s
insolvency. The effect of the Notice of Termination is to cancel the Company's
stock interest in Advanced Communications (Australia).

Consistent with the Company's decision to withdraw from the Australia
litigation, it has not challenged the termination of the Stock Purchase
Agreement. The Company has written off its entire investment in Advanced
Communications (Australia).

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

In November 2002, the Company entered into a Securities Purchase Agreement to
Cornell Capital Partners, LP whereby it agreed to issue and sell $250,000 of
secured convertible debentures. These secured convertible debentures have a term
of two years and are convertible into shares of common stock at a price equal to
$.001 per share commencing on December 31, 2002. These secured convertible
debentures accrue interest at a rate of 10% per year and are convertible at the
holder's option. At the Company's option, these debentures may be paid in cash
or redeemed at a 20% premium on or before December 15, 2002 and at a 50% premium
after December 15, 2002 and prior to November 2004. In connection with the
Securities Purchase Agreement, the Company entered into a Security Agreement in
favor of Cornell Capital Partners, L.P. whereby it granted a security interest
in all of its assets as security for its obligations under the secured
convertible debenture.

F-34

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.

F-35

WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO PROVIDE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS ABOUT ADVANCED COMMUNICATIONS
TECHNOLOGIES, INC. EXCEPT THE INFORMATION OR REPRESENTATIONS CONTAINED IN THIS
PROSPECTUS. YOU SHOULD NOT RELY ON ANY ADDITIONAL INFORMATION OR REPRESENTATIONS
IF MADE.

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

This prospectus does not constitute an offer to sell, or a ----------------------
solicitation of an offer to buy any securities:
PROSPECTUS
/_/ except the common stock offered by this prospectus;
---------------------
/_/ in any jurisdiction in which the offer or
solicitation is not authorized;

/_/ in any jurisdiction where the dealer or other
salesperson is not qualified to make the offer or 79,828,683 Shares of Common Stock
solicitation;

/_/ to any person to whom it is unlawful to make the
offer or solicitation; or ADVANCED COMMUNICATIONS
TECHNOLOGIES, INC.
/_/ to any person who is not a United States resident or
who is outside the jurisdiction of the United States.

The delivery of this prospectus or any accompanying sale does not imply that:

/_/ there have been no changes in the affairs of ___________ __, 2003
Advanced Communications Technologies, Inc. after the
date of this prospectus; or

/_/ the information contained in this prospectus is
correct after the date of this prospectus.

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

Until __________, 2003, all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Advanced Communications Technologies, Inc.'s bylaws provide that it has
the power to indemnify any officer or director against damages if such person
acted in good faith and in a manner the person reasonably believed to be in the
best interests of Advanced Communications Technologies, Inc. No indemnification
may be made (i) if a person is adjudged liable unless a Court determines that
such person is entitled to such indemnification, (ii) with respect to amounts
paid in settlement without court approval or (iii) expenses incurred in
defending any action without court approval.

OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth estimated expenses expected to be incurred
in connection with the issuance and distribution of the securities being
registered. Advanced Communications will pay all expenses in connection with
this offering.

Securities and Exchange Commission Registration Fee $ 955
Printing and Engraving Expenses $ 2,500
Accounting Fees and Expenses $ 15,000
Legal Fees and Expenses $ 50,000
Blue Sky Qualification Fees and Expenses $ 2,500
Miscellaneous $ 16,545

TOTAL $ 85,000

RECENT SALES OF UNREGISTERED SECURITIES

On October 10, 2002, the Company's Board of Directors approved the
issuance of 100,000 shares each to Messrs. Danson, Prouty, Lichtman, Roche and
Finch, having a value of $1,000 each in partial satisfaction of unpaid prior
legal and consulting fees. These shares were issued on December 5, 2002.

On both August 26, 2002 and September 24, 2002, we issued a total of
2,921,450 and 1,328,550 shares of common stock to AJW Partners LLC and New
Millennium Capital Partners II, LLC, respectively, in full satisfaction of the
Company's outstanding obligation on the remaining September 30, 1999 12%
Convertible Debenture.

On April 24, 2002 Advanced Communications 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
Advanced Communications' common stock, payable over a 180-day period. Advanced
Communications 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 both April 24, 2002 and June
10, 2002, Advanced Communications issued 1,460,725 and 664,275 shares of common
stock to AJW Partners, LLC and New Millennium Capital Partners II, LLC,
respectively.

During the first quarter of 2002, 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;

II-1

(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 share 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; and

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

All of the above share issuance were valued based on the price of
Advanced Communications' common stock on the date that Advanced Communications'
Board of Directors approved the issuance of the stock.

On February 27, 2002, Advanced Communications' 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 Advanced Communications' private placement. The
exercise price of the underlying warrants will remain at $.30 per share.

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 prevailing market price of our common stock. 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 Buyers (as listed in Schedule 1 of the Securities
Purchase Agreement), where they shall issue and sell to Buyers up to One Million
Dollars of convertible debentures Advanced Communications has outstanding
convertible debentures with an original principal balance of $1,000,000. 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 $016), 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 valued at
$41,318 were issued to our placement agent for placement fees in connection with
the 504(d) private placement.

II-2

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 September 30, 2001 and June 30, 2001, $200,750 of Secured
Convertible Debentures are still outstanding. Advanced Communications is in
default based on the April 1, 2000 due date and Advanced Communications is
currently in litigation with these debenture holders.

During the year ended June 30, 2001, Advanced Communications retired
500,000 shares of restricted common stock, valued at $375,000. The stock was
originally issued to the owners of World IP in connection with that company's
acquisition in November 1999 and was then retired pursuant to a rescission of
this transaction in October 2000.

During the year ended June 30, 2001, Advanced Communications issued
6,597,000 shares of common stock for the extinguishment of debt. The stock was
valued based on the quoted trading price on the grant dates, which aggregated
$4,545,902.

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
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.

In July and August 2001, Advanced Communications authorized the
issuance of 1,190,000 Regulation 144 shares on behalf of Advanced Communications
(Australia) in consideration for a $357,000 credit ($.30 a share) against the
outstanding debt incurred for the 20% equity purchase of Advanced Communications
(Australia). These shares were issued on August 29, 2001.

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 bonds
payable by offsetting a related bond receivable in the amount of $36,450.

During the year ended June 30, 2001, Advanced Communications issued
1,803,545 shares of common stock, valued at $412,800, for the conversion of
convertible debentures.

During the year ended June 30, 2000, Advanced Communications issued
500,000 shares of common stock, valued at $375,000, related to a rescinded
acquisition. As of June 30, 2000, Advanced Communications had not received the
funds for these shares; therefore, a common stock advance had been recorded in
the equity section, in the amount of $375,000, to offset the value of the shares
that were issued at year-end.

On January 31, 2000 Advanced Communications issued 200,000 shares of
common stock to acquire 100% of Smart Investment.com Inc.

II-3

As of April 5, 2000, Advanced Communications had a non-interest bearing
note payable to an affiliate of $7,500,000. The following schedule represents
payments on such debt by issuance of restricted common stock to either the
affiliate or creditors of the affiliate. 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.

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 Advanced Communications' 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 Advanced
Communications' restricted common stock.

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

II-4

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.

II-5

EXHIBITS

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

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

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

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

2.3 Third Amendment to Articles of Incorporation of Media Incorporated by reference to Exhibit 2.3 to
Forum International, Inc. the Company's 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 currently in effect for Incorporated by reference to Exhibit 3.1 to
the Company 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 Incorporation Incorporated by reference to Exhibit 2.7 to
the Form SB-2 filed with the SEC on March 5,
2002

5.1 Opinion re: Legality Previously filed.

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

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

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

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

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

II-6

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

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

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

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

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

10.10 Investor Registration Rights Agreement dated January Incorporated by reference to Exhibit 10.10 to
10, 2002, by and among Advanced Communications the Company's 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, 2002, by and among Incorporated by reference to Exhibit 10.12 to
Advanced Communications Technologies, Inc., Buyers the Company's Form 10-QSB filed on February
and First Union National Bank 12, 2002

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

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

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

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

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

10.18 Letter of Intent dated September 7, 2001 re: Purchase Incorporated by reference to Exhibit 10.18 to
of Advanced Communications (Australia) Amendment No. 1 to the Company's Form 10-QSB
for the quarter ended December 31, 2001.

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

10.19 Securities Purchase Agreement, dated November 2002, Incorporated by reference to Exhibit 10.19 to
by and among Advanced Communications and Buyers the Company's Form 10-KSB for the year ended
June 30, 2002 filed on December 6, 2002.

10.20 Investor Registration Rights Agreement, dated Incorporated by reference to Exhibit 10.20 to
November 2002, by and among Advanced Communications the Company's Form 10-KSB for the year ended
and Investors June 30, 2002 filed on December 6, 2002.

10.21 Secured Convertible Debenture Incorporated by reference to Exhibit 10.21 to
the Company's Form 10-KSB for the year ended
June 30, 2002 filed on December 6, 2002.

10.22 Escrow Agreement, dated November 2002, by and among Incorporated by reference to Exhibit 10.22 to
Advanced Communications, Buyers, and Wachovia Bank, the Company's Form 10-KSB for the year ended
N.A. June 30, 2002 filed on December 6, 2002.

10.23 Irrevocable Transfer Agent Instructions, dated Incorporated by reference to Exhibit 10.23 to
November 2002 the Company's Form 10-KSB for the year ended
June 30, 2002 filed on December 6, 2002.

10.24 Security Agreement, dated November 2002, by and among Incorporated by reference to Exhibit 10.24 to
Advanced Communications and Buyers the Company's Form 10-KSB for the year ended
June 30, 2002 filed on December 6, 2002.

10.25 Middletons Lawyers Letter, dated November 11, 2002, Incorporated by reference to Exhibit 10.25 to
terminating the April 2000 Stock Purchase Agreement the Company's Form 10-KSB for the year ended
between Advanced Communications Technologies, Inc. June 30, 2002 filed on December 6, 2002.
and Advanced Communications (Australia)

23.1 Consent of Weinberg and Company, P.A. Provided herewith

23.2 Consent of Kirkpatrick & Lockhart, LLP Incorporated by reference to Exhibit 5.1 to
this Registration Statement

UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:

(i) Include any prospectus required by Sections 10(a)(3)
of the Securities Act of 1933 (the "Act"); ---

(ii) Reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the

II-8

maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;

(iii) Include any additional or changed material
information on the plan of distribution;

(2) That, for the purpose of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities that remain unsold at the end of the offering.

II-9

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on our behalf by the undersigned, on January 17, 2003.

ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.

By: /s/ Wayne I. Danson
-----------------------------------------
Name: Wayne I. Danson
Title: President, Chief Financial Officer
and Director (Principal Accounting
Officer)

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.

SIGNATURE TITLE DATE
- --------- ----- ----

/S/ WAYNE I. DANSON President (Chief Executive January 17, 2003
- --------------------------- Officer), Chief Financial
Wayne I. Danson Officer (Principal Accounting
Officer and Controller) and
Director

/S/ JONATHAN LICHTMAN Secretary and Director January 17, 2003
- ---------------------------
Jonathan Lichtman

/S/ RANDALL PROUTY Director January 17, 2003
- ---------------------------
Randall Prouty

/S/ MICHAEL FINCH Director January 17, 2003
- ---------------------------
Michael Finch

/S/ WILBANK ROCHE Director January 17, 2003
- ---------------------------
Wilbank Roche

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