Edgar Filing: KRONOS ADVANCED TECHNOLOGIES INC

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant To Section 14(a) of the
Securities Exchange Act of 1934

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Rule 14a-6(e)(2)

Kronos Advanced Technologies, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

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KRONOS ADVANCED TECHNOLOGIES, INC.
464 Common Street, Suite 301
Belmont, Massachusetts 02478

Dear Stockholder:

On behalf of the Board of Directors, it is my pleasure to invite you to
Kronos' Annual Meeting of Stockholders. The meeting will be held on Wednesday,
December 20, 2005, at 9:00 a.m., local time, at the offices of Kirkpatrick &
Lockhart Nicholson Graham, 75 State Street, Boston, Massachusetts.

You will find information regarding the matters to be voted on in the
attached Notice of Annual Meeting of Stockholders and Proxy Statement. A copy of
our Annual Report on Form 10-KSB and Quarterly Report on Form 10-QSB are
enclosed with these materials.

This meeting is for Kronos stockholders. If you attend the meeting in
person, you will need to present proper photo identification and an account
statement showing your ownership of Kronos stock. If you have any questions
regarding your ownership, you may contact our transfer agent, American Stock
Transfer & Trust Company, at 1.212.936.5100 or www.amstock.com.

Your vote is important and I urge you to vote your shares by proxy,
whether or not you plan to attend the meeting. After you read this proxy
statement, please indicate on the proxy card the manner in which you want to
have your shares voted. Then date, sign and mail the proxy card in the
postage-paid envelope that is provided. If you sign and return your proxy card
without indicating your choices, it will be understood that you wish to have
your shares voted in accordance with the recommendations of the Company's Board
of Directors.

We hope to see you at the meeting.

Sincerely,

/s/ Daniel R. Dwight
-------------------------------------
Daniel R. Dwight
President and Chief Executive Officer

November 21, 2005

KRONOS ADVANCED TECHNOLOGIES, INC.
464 Common Street, Suite 301
Belmont, Massachusetts 02478

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 20, 2005

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Kronos Advanced Technologies, Inc. (the "Company"), will be
held on Wednesday, December 20, 2005, at 9:00 a.m., local time, at the offices
of Kirkpatrick & Lockhart Nicholson Graham, 75 State Street, Boston,
Massachusetts, for the following purposes, as more fully described in the
attached Proxy Statement:

1. To elect four directors, each until the next annual meeting of
the Company's stockholders or until their successors are duly
elected and qualified;

2. To consider any other matters that may properly come before
the Annual Meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on November 17,
2005, as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting or at any adjournment thereof. A complete list
of the stockholders entitled to vote at the Annual Meeting will be open for
examination by any stockholder during ordinary business hours for a period of
ten days prior to the Annual Meeting at the offices of the Company's transfer
agent and registrar, American Stock Transfer & Trust Company, 59 Maiden Lane,
New York, NY 10038.

IMPORTANT

You are cordially invited to attend the Annual Meeting in person. In
order to ensure your representation at the meeting, however, please promptly
complete, date, sign and return the enclosed proxy in the accompanying envelope.
If you should decide to attend the Annual Meeting and vote your shares in
person, you may revoke your proxy at that time.

By Order of the Board of Directors,

/s/ Daniel R. Dwight
-------------------------------------
Daniel R. Dwight
President and Chief Executive Officer

November 21, 2005

TABLE OF CONTENTS

Page No.

ABOUT THE MEETING.............................................................1
What is the purpose of the annual meeting?...........................1
Who is entitled to vote?.............................................1
Who can attend the meeting?..........................................1
What constitutes a quorum?...........................................1
How do I vote?.......................................................1
What if I do not specify how my shares are to be voted?..............2
Can I change my vote after I return my proxy card?...................2
What are the Board's recommendations?................................2
What vote is required to approve each item?..........................2
STOCK OWNERSHIP...............................................................3
Beneficial Owners....................................................3
PROPOSAL 1 - ELECTION OF DIRECTORS............................................4
Directors Standing for Election......................................4
Recommendation Of The Board Of Directors.............................4
Directors - Present Term Expires at the Annual Meeting...............4
Meetings.............................................................6
Committees of the Board of Directors.................................7
Compensation of Directors............................................7
Executive Compensation...............................................8
Stock Option Plan....................................................9
Employment Agreements................................................9
Executive Severance Agreements......................................10
Certain Relationships and Related Transactions......................10
DESCRIPTION OF CAPITAL STOCK.................................................11
Common Stock........................................................11
Preferred Stock.....................................................11
Options ...........................................................11
Warrants ...........................................................13
Anti-Takeover Effects of Provisions of the Articles of
Incorporation, Bylaws and Florida Law...............................14
Transfer Agent And Registrar........................................14
Other Matters.......................................................14
Independent Accountants.............................................14
Additional Information..............................................14

KRONOS ADVANCED TECHNOLOGIES, INC.
464 Common Street, Suite 301
Belmont, Massachusetts 02478

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

PROXY STATEMENT
December 20, 2005

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

This proxy statement contains information related to the Annual Meeting
of Stockholders of Kronos Advanced Technologies, Inc. (the "Company"), to be
held on Wednesday, December 20, 2005, at 9:00 a.m., local time, at the offices
of Kirkpatrick & Lockhart Nicholson Graham, 75 State Street, Boston,
Massachusetts, and any postponements or adjournments thereof. The Company is
making this proxy solicitation.

ABOUT THE MEETING

What is the purpose of the annual meeting?

At the Company's annual meeting, stockholders will act upon the matters
outlined in the notice of meeting on the cover page of this proxy statement,
including the election of directors. In addition, the Company's management will
report on the performance of the Company during fiscal 2005 and respond to
questions from stockholders.

Who is entitled to vote?

Only stockholders of record on the close of business on the record
date, November 17, 2005, are entitled to receive notice of the annual meeting
and to vote the shares of common stock that they held on that date at the
meeting, or any postponements or adjournments of the meeting. Each outstanding
share of common stock will be entitled to one vote on each matter to be voted
upon at the meeting.

Who can attend the meeting?

All stockholders as of the record date, or their duly appointed
proxies, may attend the meeting. Seating, however, is limited. Admission to the
meeting will be on a first-come, first-serve basis. Registration will begin at
9:00 a.m., and seating will begin at 9:30 a.m. Each stockholder may be asked to
present valid picture identification, such as a driver's license or passport.
Cameras, recording devices and other electronic devices will not be permitted at
the meeting.

Please note that if you hold your shares in "street name" (that is,
through a broker or other nominee), you will need to bring a copy of a brokerage
statement reflecting your stock ownership as of the record date and check in at
the registration desk at the meeting.

What constitutes a quorum?

The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. As of the
record date, 81,758,067 shares of common stock of the Company were outstanding.
Proxies received but marked as abstentions and broker non-votes will be included
in the calculation of the number of shares considered to be present at the
meeting.

How do I vote?

If you complete and properly sign the accompanying proxy card and
return it to the Company, it will be voted as you direct. If you are a
registered stockholder and attend the meeting, you may deliver your completed
proxy card in person or vote by ballot at the meeting. "Street name"
stockholders who wish to vote at the meeting will need to obtain a proxy form
from the institution that holds their shares.

What if I do not specify how my shares are to be voted?

If you submit a proxy but do not indicate any voting instructions, then
your shares will be voted in accordance with the Board's recommendations.

Can I change my vote after I return my proxy card?

Yes. Even after you have submitted your proxy card, you may change your
vote at any time before the proxy is exercised by filing with the Secretary of
the Company either a notice of revocation or a duly executed proxy bearing a
later date. The powers of the proxy holders will be suspended if you attend the
meeting in person and so request, although attendance at the meeting will not by
itself revoke a previously granted proxy.

What are the Board's recommendations?

Unless you give other instructions on your proxy card, the persons
named as proxy holders on the proxy card will vote in accordance with the
recommendation of the Board of Directors. The Board's recommendation is set
forth together with the description of each item in this proxy statement. In
summary, the Board recommends a vote:

o For the election of the nominated slate of directors (see page
4);

With respect to any other matter that properly comes before the
meeting, the proxy holders will vote as recommended by the Board of Directors
or, if no recommendation is given, in their own discretion.

What vote is required to approve each item?

Election of Directors. The affirmative vote of a plurality of the votes
cast at the meeting is required for the election of directors. This means that
the four nominees will be elected if they receive more affirmative votes than
any other person. A properly executed proxy marked "Withheld" with respect to
the election of any director will not be voted with respect to such director
indicated, although it will be counted for purposes of determining whether there
is a quorum.

If you hold your shares in "street name" through a broker or other
nominee, your broker or nominee may not be permitted to exercise voting
discretion with respect to some of the matters to be acted upon. Thus, if you do
not give your broker or nominee specific instructions, your shares may not be
voted on those matters and will not be counted in determining the number of
shares necessary for approval. Shares represented by such "broker non-votes,"
however, will be counted in determining whether there is a quorum.

STOCK OWNERSHIP

Beneficial Owners

The following table presents certain information regarding the
beneficial ownership of all shares of common stock at November 17, 2005 for each
executive officer and director of our Company and for each person known to us
who owns beneficially more than 5% of the outstanding shares of our common
stock. The percentage ownership shown in such table is based upon the 81,758,067
common shares issued and outstanding at November 17, 2005 and ownership by these
persons of options or warrants exercisable within 60 days of such date. Unless
otherwise indicated, each person has sole voting and investment power over such
shares.

Common Stock
Beneficially Owned
-------------------------------
Name and Address Number Percent
------------------------------------------------ -------------------------------
HoMedics, Inc. 40,000,000(1) 32.9%
3000 Pontiac Trail
Commerce Township, MI 48390

Cornell Capital Partners, LP 6,750,000 7.6%
101 Hudson Street - Suite 3700
Jersey City, NJ 07302

Daniel R. Dwight 5,988,132(2) 6.8%
464 Common Street
Suite 301
Belmont, MA 02478

Richard F. Tusing 3,401,208(3) 4.0%
464 Common Street
Suite 301
Belmont, MA 02478

James P. McDermott 797,077(4) 1.0%
464 Common Street
Suite 301
Belmont, MA 02478

Milton M. Segal 388,000(5) 0.5%
464 Common Street
Suite 301
Belmont, MA 02478

57,324,417(6) 44.1%

-----------------------
(1) Includes warrants to purchase 40,000,000 shares of common stock that can be
acquired within sixty days of November 17, 2005

(2) Includes options to purchase 4,786,206 shares of common stock that can be
acquired within sixty days of November 17, 2005.

(3) Includes options to purchase 2,548,456 shares of common stock that can be
acquired within sixty days of November 17, 2005.

(4) Includes options to purchase 502,959 shares of common stock that can be
acquired within sixty days of November 17, 2005.

(5) Includes options to purchase 388,000 shares of common stock that can be
acquired within sixty days of November 17, 2005.

(6) Includes warrants and options to purchase 48,225,621 shares of common stock
that can be acquired within sixty days of November 17, 2005.

PROPOSAL 1 - ELECTION OF DIRECTORS

Directors Standing for Election

The Board of Directors of the Company consists of eight seats. Each
director holds office until the first annual meeting of stockholders following
their election or appointment and until their successors have been duly elected
and qualified.

The Board of Directors has nominated Daniel R. Dwight, Richard F.
Tusing, James P. McDermott and Milton J. Segal for election as directors. The
accompanying proxy will be voted for the election of these nominees, unless
authority to vote for one or more nominees is withheld. In the event that any of
the nominees is unable or unwilling to serve as a director for any reason (which
is not anticipated), the proxy will be voted for the election of any substitute
nominee designated by the Board of Directors. The nominees for directors have
previously served as members of the Board of Directors of the Company and have
consented to serve such term.

Recommendation Of The Board Of Directors

The Board of Directors unanimously recommends a vote "FOR" the election
of each of the nominees

Directors - Present Term Expires at the Annual Meeting

Daniel R. Dwight Daniel R Dwight has served as a Director
President and Chief Executive of Kronos since December 2000, and as
Officer a Director and Chief Executive Officer of
Age 45 Kronos Air Technologies since January
2001. Effective October 16, 2001, Mr.
Dwight was appointed President and Chief
Executive Officer of Kronos. Effective
January 1, 2004, Mr. Dwight was appointed
Acting Chief Financial Officer of Kronos.
He has extensive experience in private
equity and operations in a wide variety of
high growth and core industrial
businesses. Mr. Dwight spent 17 years with
General Electric including 10 years of
operations, manufacturing, and business
development experience with GE's
industrial businesses, and seven years of
international investment and private
equity experience with GE Capital. He has
had responsibility for over a $1 billion
in merger and acquisition and private
equity transactions at GE. Mr. Dwight
initiated GE Capital's entry in the Asia
private equity market. Between 1995 and
1999, the Asian equity portfolio grew to
include consolidations, leveraged buyouts,
growth capital and minority investments in
diverse industries, including information
technology, telecommunications services,
consumer products, services and
distribution, and contract manufacturing.
Since 1982, Mr. Dwight has held other
leadership positions domestically and
internationally with GE Capital, as well
as senior positions with GE Corporate
Business Development (1989-1992) and GE
Corporate Audit Staff (1984-1987). Mr.
Dwight holds an MBA in Finance and
Marketing with Honors from The University
of Chicago Graduate School of Business and
a B.S. in Accounting with Honors from the
University of Vermont and is a member of
the Association of Heating, Ventilation,
Air conditioning and Refrigeration
Engineers, Inc. (ASHRAE).

Richard F. Tusing Richard F. Tusing has served as a Director
Chief Operating Officer of Kronos since October 2000 and as a
Age 47 Director of Kronos Air Technologies since
January 2001 and was appointed Chief
Operating Officer on January 1, 2002. Mr.
Tusing has had extensive experience in
developing new enterprises, negotiating
the licensing of intellectual property
rights, and managing technical and
financial organizations, and has more than
20 years of business development,
operations, and consulting experience in
the technology and telecommunications
industries. Prior to his services to
Kronos, Mr. Tusing spent four years in
executive management with several emerging
technology companies, 14 years in various
managerial and executive positions with
MCI Communications Corporation, and three
additional years in managerial consulting.
From 1982-1996, Mr. Tusing held multiple
managerial and executive positions with
MCI Communications Corporation. From
1994-1996, he served as MCI's Director of
Strategy and Technology, managing MCI's
emerging technologies division (having
primary responsibility for evaluating,
licensing, investing in, and acquiring
third-party technologies deemed of
strategic importance to MCI), and also
oversaw the development of several
early-stage and venture-backed software
and hardware companies; in this capacity,
Mr. Tusing managed more than 100
scientists and engineers developing
state-of-the-art technologies. From
1992-1994, Mr. Tusing founded MCI Metro,
MCI's entree into the local telephone
services business and, as MCI Metro's
Managing Director, managed
telecommunications operations, developed
financial and ordering systems, and led
efforts in designing its marketing
campaigns. From 1990-1992, he served as
Director of Finance and Business
Development for MCI's western region. From
1982-1990, Mr. Tusing held other
management and leadership positions within
MCI, including service as MCI's Pacific
Division's Regional Financial Controller,
Manager of MCI's Western Region's
Information Technology Division, and led
MCI's National Corporate Financial Systems
Development Organization. Mr. Tusing
received B.S. degrees in business
management and psychology from the
University of Maryland in 1979.

James P. McDermott James P. McDermott became a Director of
Age 43 Kronos in July 2001. Mr. McDermott has
over 22 years of financial and operational
problem-solving experience. Mr. McDermott
is currently President and CEO AF&L, Inc.
and its wholly-owned subsidiaries. Through
its wholly-owned subsidiaries, AF&L
provides speciality insurance products to
the seniors market place. Mr. McDermott is
a co-founder and is also currently a
Managing Director of Eagle Rock Advisors,
LLC, the Manager for The Eagle Rock Group,
LLC. From 1992 through 2000, Mr. McDermott
held various managerial and executive
positions with PennCorp Financial Group,
Inc. and its affiliates. From 1998 through
2000, Mr. McDermott was Executive
Vice-President and Chief Financial Officer
of PennCorp Financial Group. While serving
in this position, Mr. McDermott was
one-third of the executive management team
that was responsible for developing and

implementing operational stabilization,
debt reduction and recapitalization plans
for the company. From 1995 through 1998,
Mr. McDermott served as Senior
Vice-President of PennCorp Financial
Group. Mr. McDermott worked closely with
the Audit Committee of the Board of
Directors on evaluating the PennCorp's
accounting and actuarial practices. In
addition, Mr. McDermott was responsible
for developing a corporate-wide technology
management program resulting in technology
convergence and cost savings to the
company's technology budget. From 1994
through 1998, Mr. McDermott was a
principal in Knightsbridge Capital Fund I,
LP, a $92 million investment fund
specializing in leverage-equity
acquisitions of insurance and
insurance-related businesses. Mr.
McDermott was also the founding Chairman
of the e-business Internet service
provider, Kivex.com, and a senior manager
of one of the world's leading public
accounting firms, KPMG. Mr. McDermott
received a B.S. Degree in Business
Administration from the University of
Wisconsin, Madison.

Milton J. Segal Milton J. Segal became a Director of
Age 60 Kronos in September 2003. Mr. Segal has
over 35 years of corporate governance,
entrepreneurial and investment banking
expertise. Mr. Segal founded the
investment banking firm of M.J. Segal
Associates in 1987. Since 1992, the firm
has specialized in researching private
equity opportunities in both private and
emerging growth public companies. The
Segal group caters primarily to
institutional clients, private investment
partnerships and professional money
managers. After starting his career as a
stockbroker and financial planner in 1966
with Philadelphia based New York Stock
Exchange firm, Robinson & Company, Mr.
Segal joined Josephthal & Co. Inc., a
leading full-service investment banking
and brokerage firm in New York. Mr. Segal
has served as senior vice president of the
congressionally charted National
Corporation for Housing Partnerships in
Washington, D. C. and president of its
investment banking subsidiary and has
qualified as a NASD broker/dealer
financial principal. Originally from
Philadelphia, Mr. Segal attended the
Wharton School of the University of
Pennsylvania and is a graduate of The New
York Institute of Finance.

Meetings

During the Company's fiscal year ending June 30, 2005 ("Fiscal 2005")
the Board of Directors met on ten occasions. Each director attended more than
75% of the total number of meetings of the Board and Committees on which he
served.

Committees of the Board of Directors

Audit Committee. On September 10, 2003, the Board of Directors
established an Audit Committee consisting of at least two independent members of
the Board of Directors. The Audit Committee is charged with providing
independent and objective oversight of the accounting functions and internal
controls of the Company and its subsidiaries to ensure the objectivity of the
Company's financial statements. Messrs. McDermott and Segal are the current
members of the Audit Committee. During the year the Audit Committee held three
meetings. Each member attended at least 75% of the meetings.

Compensation. On September 11, 2001, the Board of Directors established
a Compensation Committee consisting of at least two independent members of the
Board of Directors. The Compensation Committee is charged with reviewing and
making recommendations concerning Kronos' general compensation strategy,
reviewing salaries for officers, reviewing employee benefit plans, and
administering Kronos' stock incentive plan, once adopted and implemented.
Messrs. McDermott and Segal are the current members of the Compensation
Committee. During the year the Compensation Committee held two meetings. Each
member attended at least 75% of the meetings.

Executive Committee. On September 4, 2003, the Board of Directors
established an Executive Committee. The purpose of the Executive Committee is to
exercise all the powers and authority of the Board of Directors in the
management of the property, affairs and business of the Company. The Committee
shall consist of no fewer than three members, including the Chief Executive
Officer of the Company. Messrs. Dwight, McDermott, Segal and Tusing are the
current members of the Executive Committee.

Compensation of Directors

Cash Compensation. Our Bylaws provide that, by resolution of the Board
of Directors, each director may be reimbursed his expenses of attendance at
meetings of the Board of Directors; likewise, each director may be paid a fixed
sum or receive a stated salary as a director. As of the date of this filing, no
director receives any salary or other form of cash compensation for such
service.

Share Based Compensation. Each non-executive director is entitled to
receive annually 70,000 fully-vested stock option grants, 7,000 stock option
grants per meeting attended via conference call, 14,000 option grants per
meeting attended in person, 3,500 option grants per meeting for participation on
a committee or 5,000 stock option grants per meeting for chairing a committee,
as compensation for their services as members of our Board of Directors.
Effective August 6, 2003, executive directors, including Messrs. Dwight and
Tusing are not being compensated separately for their services as members of our
Board of Directors.

For the twelve month period ending June 30, 2005, Messrs. McDermott and
Segal have earned 189,000, each stock options as compensation for their services
as members of our Board of Directors.

Executive Compensation

The following table sets forth compensation for the fiscal year ended
June 30, 2005 for our executive officers:

SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
--------------------------------------- --------------------------------------------------------
Restricted Securities
Name and Other Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Awards Options/SARS Payouts Compensation
Fiscal Position Year $ $ $ $ # $ $
---------------- ----- --------- ---------- -------------- ----------- --------------- -------- --------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
---------------- ----- --------- ---------- -------------- ----------- --------------- -------- --------------

Daniel R. 2005 180,000 67,500(4) 14,689 -- 750,000 -- --
Dwight, 2004 180,000 -- 14,292 -- 726,206 -- --
President and 2003 180,000 118,800(5) 12,288 -- 660,000 -- --
Chief
Executive
Officer(1)

Richard F. 2005 160,000 37,530(4) -- -- 450,000 -- --
Tusing, Chief 2004 160,000 -- -- -- 971,756 -- --
Operating 2003 80,000 -- -- -- -- -- --
Officer(2)

Richard A. 2005 -- -- -- -- -- -- --
Papworth Chief 2004 120,000 -- -- -- -- -- --
Financial 2003 120,000 21,000(5) -- -- 300,000 -- --
Officer(3)

(1) Mr. Dwight became President and Chief Executive Officer of Kronos effective
October 16, 2001. He executed a two year employment contract on December 15,
2001. His contract was renewed on August 13, 2003 and again on August 15,
2004 and August 15, 2005 by the Board of Directors. His annual salary is
$180,000.

(2) Mr. Tusing became Chief Operating Officer of Kronos effective January 1,
2002. Mr. Tusing executed an employment contract effective January 1, 2003.
The Board of Directors renewed Mr. Tusing's Employment Agreement on October
1, 2004 and again on October 1, 2005. Prior to this date, Mr. Tusing was
compensated as a consultant to the Company. His annual salary is $160,000.

(3) Mr. Papworth was the Company's Chief Financial Officer from May 19, 2000
until January 1, 2004. His annual salary was $120,000. On July 1, 2004 Mr.
Papworth ended his employment with Kronos.

(4) Cash Bonuses earned in 2005 were paid through the issuance of common stock
at the market closing price on June 30, 2005.

(5) Cash Bonuses earned in 2003 have been included in Notes Payable.

AGGREGATED OPTIONS/SAR EXERCISES
IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTIONS/SAR VALUES(1)

VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED OPTIONS/SARS AT FISCAL OPTIONS/SARS AT
NAME ON EXERCISE VALUE REALIZED YEAR END(1) FISCAL YEAR END(2)
------------------- ----------------- ----------------- -------------------------- ---------------------

Daniel R. Dwight, -0- -0- Exercisable: 4,786,206 -0-
President and Unexercisable: -0- -0-
Chief Executive
Officer(3)

Richard F. -0- -0- Exercisable: 2,548,456 -0-
Tusing, Chief Unexercisable: -0- -0-
Operating
Officer(4)

(1) These grants represent options to purchase common stock. No SAR's have been
granted.

(2) The value of the unexercised in-the-money options were calculated by
determining the difference between the fair market value of the common
stock underlying the options and the exercise price of the options as of
June 30, 2005.

(3) Mr. Dwight became President and Chief Executive Officer of Kronos effective
October 16, 2001.

(4) Mr. Tusing became Chief Operating Officer of Kronos effective January 1,
2002.

Option/SAR Grants Table
% Total
No. of Securities Options/SAR's
Underlying Granted to
Options/SAR's Employees in Exercise or Base Price
Name Granted (#) Fiscal Year (%) ($ per Share) Expiration Date
-------------------------- ----------------- ---------------- ---------------------- --------------------

Daniel R. Dwight 50,000 1.5% $0.890 April 9, 2006
President and 1,000,000 16.4% $0.680 February 12, 2012
Chief Executive Officer(1) 600,000 9.9% $0.250 February 12, 2012
500,000 8.2% $0.420 December 15, 2011
250,000 4.1% $0.660 December 15, 2011
250,000 4.1% $0.560 December 15, 2011
660,000 26.0% $0.190 March 21, 2013
726,206 22.4% $0.180 March 22, 2014
750,000 43.5% $0.125 June 30, 2015

Richard F. Tusing 50,000 1.5% $0.890 April 9, 2006
Chief Operating Officer(2) 600,000 9.9% $0.680 February 12, 2012
350,000 5.8% $0.250 February 12, 2012
126,700 5.0% $0.960 June 30, 2006
971,756 30.0% $0.180 March 22, 2014
450,000 26.1% $0.125 June 30, 2015

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

(1) Mr. Dwight became President and Chief Executive Officer of Kronos Advanced
Technologies effective October 16, 2001.

(2) Mr. Tusing became Chief Operating Officer of Kronos Advanced Technologies
effective January 1, 2002.

Stock Option Plan

On February 12, 2002, the Board of Directors approved the TSET, Inc.
Stock Option Plan under which Kronos' key employees, consultants, independent
contractors, officers and directors are eligible to receive grants of stock
options. Kronos has reserved and issued a total of 6,250,000 shares of common
stock under the Stock Option Plan. It is presently administered by Kronos' Board
of Directors. Subject to the provisions of the Stock Option Plan, the Board of
Directors has full and final authority to select the individuals to whom options
will be granted, to grant the options and to determine the terms and conditions
and the number of shares issued pursuant thereto.

Employment Agreements

Daniel R. Dwight, our President and Chief Executive Officer, and our
Company entered into an Employment agreement effective as of December 15, 2001.
The initial term of Mr. Dwight's Employment Agreement was for 2 years and will
automatically renew for successive 1 year terms unless Kronos or Mr. Dwight
provide the other party with written notice within 3 months of the end of the
initial term or any subsequent renewal term. The Board of Directors renewed Mr.
Dwight's Employment Agreement on August 13, 2003 and again on August 15, 2004
and August 15, 2005. Mr. Dwight's Employment Agreement provides for base cash
compensation of $180,000 per year. Mr. Dwight is eligible for annual incentive
bonus compensation in an amount equal to Mr. Dwight's annual salary based on the
achievement of certain bonus objectives. In addition, Kronos granted Mr. Dwight
1,000,000 immediately vested and exercisable, ten-year stock options at various
exercise prices. Mr. Dwight will be entitled to fully participate in any and all
401(k), stock option, stock bonus, savings, profit-sharing, insurance, and other
similar plans and benefits of employment.

Richard F. Tusing, our Chief Operating Officer, and our Company entered
into an Employment agreement effective as of January 1, 2003. The initial term
of Mr. Tusing's Employment Agreement is for 2 years and will automatically renew
for successive 1 year terms unless Kronos or Mr. Tusing provide the other party
with written notice within 3 months of the end of the initial term or any
subsequent renewal term. The Board of Directors renewed Mr. Tusing's Employment
Agreement on October 1, 2004 and again on October 1, 2005. Mr. Tusing's
Employment Agreement provides for base cash compensation of $160,000 per year.
Mr. Tusing will be entitled to fully participate in any and all 401(k), stock
option, stock bonus, savings, profit-sharing, insurance, and other similar plans
and benefits of employment.

Executive Severance Agreements

The Employment Agreement of Daniel R. Dwight, our Chief Executive
Officer, provides that, upon the occurrence of any transaction as defined as a
"change of control" of Kronos, Mr. Dwight shall receive his salary and benefits
for a period of time that is the greater of (i) one year or (ii) the remainder
of Mr. Dwight's employment term.

The Employment Agreement of Richard F. Tusing, our Chief Operating
Officer, provides that, upon the occurrence of any transaction as defined as a
"change of control" of Kronos that is not approved by the Board of Directors,
Mr. Tusing shall receive his salary and benefits for a period of time that is
the greater of (i) one year or (ii) the remainder of Mr. Tusing's employment
term.

Certain Relationships and Related Transactions

We believe that all prior related party transactions have been entered
into upon terms no less favorable to us than those that could be obtained from
unaffiliated third parties. Our reasonable belief of fair value is based upon
proximate similar transactions with third parties or attempts to obtain the
consideration from third parties. All ongoing and future transactions with such
persons, including any loans or compensation to such persons, will be approved
by a majority of disinterested members of the Board of Directors.

On March 31, 2004, we entered into promissory notes (the "Notes") with
Daniel R. Dwight and Richard F. Tusing in exchange for past due compensation,
expenses and interest due and payable for $363,139 and $485,883, respectively.
The Notes bear a simple interest rate 1% per month and call for aggregate
monthly principal and interest payments $6,718 and $8,989, respectively, for
each month in which the Company's beginning cash balance equals or exceeds
$200,000. Subject to certain conditions, including default, these Notes become
payable in full. In the event of a debt or equity financing, 20% of the proceeds
derived from the financing will be used to pay down the outstanding interest and
principal obligations. As a result of a Cornell Capital financing, with the
Company on March 7, 2005, the Notes are due and payable in full. As of June 30,
2005, $348,513 was still outstanding under the terms of the Notes.

DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 500,000,000 shares of common
stock, par value $0.001 per share, and 50,000,000 shares of preferred stock, no
par value. As of November 17, 2005 81,758,067 shares of common stock were issued
and outstanding; no shares of our preferred stock are issued and outstanding.
The rights and preferences of the preferred stock will be determined upon
issuance by our Board of Directors. The following description is a summary of
our capital stock and contains the material terms thereof. Additional
information can be found in our Articles of Incorporation and Bylaws, which were
filed as exhibits to our Registration Statement on Form S-1 filed on August 7,
2001 with the Securities and Exchange Commission.

Common Stock

Holders of our common stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders, including the election
of directors. Accordingly, holders of a majority of our common stock entitled to
vote in any election of directors may elect all of the directors standing for
election should they choose to do so. Neither our Articles of Incorporation nor
our Bylaws provide for cumulative voting for the election of directors. Holders
of our common stock are entitled to receive their pro rata share of any
dividends declared from time to time by the Board of Directors out of funds
legally available therefor. Holders of our common stock have no preemptive,
subscription, conversion, sinking fund, or redemption rights. All outstanding
shares of our common stock are fully paid and non-assessable. In the event of
liquidation, dissolution, or winding up of the Company, the holders of common
stock 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

Our Articles of Incorporation authorizes 50,000,000 shares of preferred
stock, no par value. No shares of preferred stock are issued and outstanding as
of the date of this prospectus. The Board of Directors is authorized, subject to
any limitations prescribed by the Nevada Revised Statutes, or the rules of any
quotation system or national securities exchange on which our stock 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 further vote or action by the
stockholders. 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 the Company or could have voting or conversion rights that could
adversely affect the holders of the outstanding common stock. There are no
present plans by the Board of Directors to issue preferred shares or address the
rights to be assigned thereto.

Options

As of November 17, 2005, the following options had been granted in the
amounts and to the individuals shown below; as of the date hereof, none of such
options has been exercised:

------------------------------------- ------------------- ------------------ -------------------------- -------------------------
Number
Name of Options Strike Price Date of Grant Expiration
------------------------------------- ------------------- ------------------ -------------------------- -------------------------

Daniel R. Dwight 50,000 $0.885 April 9, 2001 April 9, 2006
1,000,000 $0.680 February 12, 2002 February 12, 2012
600,000 $0.250 February 12, 2002 February 12, 2012
500,000 $0.420 December 15, 2001 December 15, 2011
250,000 $0.660 December 15, 2001 December 15, 2011
250,000 $0.560 December 15, 2001 December 15, 2011
660,000 $0.185 March 21, 2003 March 21, 2013
726,206 $0.180 March 22, 2004 March 22, 2014
750,000 $0.125 June 30, 2005 June 30, 2015

Richard F. Tusing 50,000 $0.885 April 9, 2001 April 9, 2006
600,000 $0.680 February 12, 2002 February 12, 2012
350,000 $0.250 February 12, 2002 February 12, 2012
126,700 $0.960 June 30, 2006 June 30, 2006
971,756 $0.180 March 22, 2004 March 22, 2014
450,000 $0.125 June 30, 2005 June 30, 2015

Igor Krichtafovitch 50,000 $0.885 April 9, 2001 April 9, 20/06
600,000 $0.680 February 12, 2002 February 12, 2012
400,000 $0.250 February 12, 2003 February 12, 2012
600,000 $0.185 March 21, 2003 March 21, 2013
500,000 $0.150 May 7, 2003 May 7, 2013
180,726 $0.180 March 22, 2004 March 22, 2014
525,000 $0.125 June 30, 2005 June 30, 2015

Wall Street Group 476,190 $0.070 July 15, 2005 July 15, 2015

J. Alexander Chriss 50,000 $0.885 April 9, 2001 April 9, 2006
350,000 $0.680 February 12, 2002 February 12, 2012
300,000 $0.250 February 12, 2002 February 12, 2012
405,000 $0.185 March 21, 2003 March 21, 2013
247,834 $0.180 March 22, 2004 March 22, 2014

Richard A. Papworth 50,000 $0.885 April 9, 2001 April 9, 2006
398,475 $0.885 April 9, 2001 April 9, 2011
100,000 $0.680 February 12, 2002 February 12, 2012
200,000 $0.250 February 12, 2002 February 12, 2012
300,000 $0.185 March 21, 2003 March 21, 2013

Jeffrey D. Wilson 50,000 $0.885 April 9, 2001 April 9, 2006
200,000 $0.710 May 3, 2001 May 3, 2011
23,014 $0.590 October 15, 2001 Ocotber 15, 2006
10,000 $0.210 March 31, 2002 March 31, 2007
50,000 $0.410 April 30, 2002 April 30, 2007
10,000 $0.190 June 30, 2002 June 30, 2007
10,000 $0.140 Septemner 30, 2002 September 30, 2007
42,000 $0.220 October 15, 2002 Ocotber 15, 2007
33,425 $0.180 December 30, 2002 December 30, 2007
50,000 $0.185 June 30, 2003 June 30, 2008

James P. McDermott 50,000 $0.280 July 30, 2001 July 30, 2006
20,959 $0.150 December 30, 2002 December 30, 2007
30,000 $0.150 August 6, 2003 August 6, 2008
213,000 $0.200 July 1, 2004 July 1, 2009
189,000 $0.125 July 1, 2005 July 1, 2010

Spencer Browne 213,000 $0.200 July 1, 2004 July 1, 2009
154,000 $0.125 July 1, 2005 July 1, 2010

Milton J. Segal 199,000 $0.200 July 1, 2004 July 1, 2009
189,000 $0.125 July 1, 2005 July 1, 2010

Charles D. Strang 50,000 $0.885 April 9, 2001 April 9, 2006
50,000 $0.710 May 3, 2001 May 3, 2011
50,000 $0.280 August 14, 2002 August 14, 2007
18,904 $0.150 December 30, 2002 December 30, 2007
21,000 $0.150 August 6, 2003 August 6, 2008
50,000 $0.200 July 1, 2004 July 1, 2009
50,000 $0.125 July 1, 2005 July 1, 2010

Erik W. Black 50,000 $0.885 April 9, 2001 April 9, 2006
29,041 $0.160 June 1, 2001 June 1, 2006
50,000 $0.380 December 30, 2002 December 30, 2007
30,000 $0.150 August 6, 2003 August 6, 2008
39,667 $0.200 October 6, 2003 October 6, 2008

William Poster 35,000 $0.280 July 30, 2002 July 30, 2007
35,575 $0.150 July 30, 2003 July 30, 2008
50,000 $0.200 July 1, 2004 July 1, 2009
50,000 $0.125 July 1, 2005 July 1, 2010

Vladimir Gorobets 30,000 $0.250 February 12, 2002 February 12, 2012
100,000 $0.185 March 21, 2003 March 21, 2013

Jacob Oharah 30,000 $0.250 February 12, 2002 February 12, 2012
50,000 $0.185 March 21, 2003 March 31, 2013

Sergey Karpov 30,000 $0.200 April 7, 2004 April 7, 2014

Vladimir Bibikov 25,000 $0.220 June 30, 2004 June 30, 2014

Terence Tam 25,000 $0.200 April 21, 2004 April 21, 2014

Maciej Ziomkowski 25,000 $0.130 Novermber 1, 2004 December 1, 2014

Christopher Martin 25,000 $0.130 Novermber 1, 2004 December 1, 2014

Charles H. Wellington, Jr. 50,000 $0.885 April 9, 2001 April 9, 2006

Capitol Partners 30,000 $0.360 December 27, 2001 December 27, 2011

Daniel Gladkowski 18,000 $0.100 April 1, 2003 April 1, 2008

Warrants

In August 2001, we entered into a Warrant Agreement with The Eagle Rock
Group, LLC, pursuant to which The Eagle Rock Group was granted a ten-year
warrant to acquire 1,400,000 shares of our common stock at an exercise price of
$0.68 per share (the fair market value on the date of grant). The shares
underlying the warrant have piggyback and demand registration rights, as well as
subscription rights in the event that we issue any rights to all of our
stockholders to subscribe for shares of our common stock. In addition, the
warrant contains redemption rights in the event that we enter into a transaction
that results in a change of control of our company. We registered all of the
shares underlying The Eagle Rock Group's warrant in a Form S-1 Registration
Statement filed with the U.S. Securities & Exchange Commission on August 16,
2002.

In March 2002, we entered into an agreement with The Eagle Rock Group
extending our relationship with The Eagle Rock Group until March 1, 2003.
Pursuant to the agreement, we agreed to grant to The Eagle Rock Group a ten-year
warrant for the right to purchase 500,000 shares of our common stock.

In May 2003, Kronos entered into a Master Loan and Investment Agreement
with a strategic customer, HoMedics, Inc., for $2.5 million in financing,
including $2.4 million in secured debt financing and $100,000 for the purchase
of warrants. In connection with this Agreement, we agreed to grant HoMedics a
ten-year warrant for the right to purchase 13.4 million shares of our common
stock. The exercise price was set at the market price at the time of closing
($0.10).

In October 2004, in connection with the First Amendment to Master Loan
and Investment Agreement with HoMedics, agreed to grant to HoMedics a ten-year
warrant for the right to purchase 26.5 million shares of our common stock. The
exercise price is $0.10 per share. In consideration for the warrant, HoMedics
delivered to Kronos $75,000 by funding the closing fees owed by Kronos and
HoMedics agreed to amend two (2) warrants to purchase 13.4 million shares of
Kronos' common stock previously issued by Kronos by removing the anti-dilution
protection previously granted to HoMedics. Kronos agreed to include new
anti-dilution protection in the new warrant. HoMedics is entitled, under certain
circumstances, to anti-dilution protection in order to maintain beneficial
ownership of Kronos equal to 30%. HoMedics may not be diluted below 30% for any
funds raised at less than $0.20 per share, excluding options or shares issued to
management, directors, and consultants in the normal course of business or
shares issued to Cornell Capital in repayment of the two promissory notes. There
are no anti-dilution measures for funds raised at greater than $0.20 per share.
In addition, Kronos agreed to grant HoMedics piggy-back registration rights and
one (1) demand registration right with respect to any shares of common stock of
Kronos that HoMedics may acquire pursuant to the two (2) previously issued
warrants and the warrant issued in October 2004 in connection with the First
Amendment to Master Loan and Investment Agreement. HoMedics also agreed not to
exercise any warrants until one year after the effective date of the
registration statement to be filed pursuant to the Investor Registration Rights
Agreement with Cornell Capital.

Anti-Takeover Effects of Provisions of the Articles of Incorporation, Bylaws and
Nevada Law

The following provisions of the Articles of Incorporation and Bylaws of
our Company could discourage potential acquisition proposals and could delay or
prevent a change in control of our Company. Such provisions may also have the
effect of preventing changes in the management of our Company, and preventing
stockholders from receiving a premium on their common stock.

Authorized but Unissued Stock. The authorized but unissued shares of
common stock and preferred stock are available for future issuance without
stockholder approval. These additional shares may be utilized for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans.

Transfer Agent And Registrar

The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company, 59 Maiden Lane, New York, NY 10038, Telephone
1.212.936.5100.

Other Matters

As of the date of this proxy statement, our Company knows of no
business that will be presented for consideration at the meeting other than the
items referred to above. If any other matter is properly brought before the
meeting for action by stockholders, proxies in the enclosed form returned to our
Company will be voted in accordance with the recommendation of our Board of
Directors or, in the absence of such a recommendation, in accordance with the
judgment of the proxy holder.

Independent Accountants

The firm of Sherb & Co., LLP served as our Company's independent
accountants for Fiscal 2005. Representatives of the firm will be available by
telephone to respond to questions at the Annual Meeting of the Stockholders.
These representatives will have an opportunity to make a statement if they
desire to do so.

Audit Fees. The aggregate fees billed for professional services
rendered was $62,500 for the audit of the Company's annual financial statements
for the year ended June 30, 2005 and the reviews of the financial statements
included in the Company's Forms 10-QSB for that fiscal year.

Financial Information Systems Design and Implementation Fees. None of
the professional services described in Paragraphs (c)(4)(ii) of Rule 2-01 of
Regulation S-X were rendered by the principal accountant for the year ended June
30, 2005.

All Other Fees. Other than the services described above under the
captions "Audit Fees" and "Financial Information Systems Design and
Implementation Fees," the aggregate fees billed for services rendered by the
principal accountant was $76,665 for the year ended June 30, 2005. These fees
related to the review of the Company's Registration Statements and the
preparation of federal and state income-tax returns.

Additional Information

Advance Notice Procedures. Under our Company's Bylaws, no business may
be brought before an annual meeting unless it is specified in the notice of the
meeting (which includes stockholder proposals that our Company is required to
include in its proxy statement pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934) or is otherwise brought before the meeting by or at the
discretion of the Board or by a stockholder entitled to vote who has delivered
notice to the Company (containing certain information specified in the bylaws)
not less than 120 days nor more than 180 days prior to the first anniversary of
the preceding year's annual meeting. These requirements are separate from and in
addition to the SEC's requirements that a stockholder must meet in order to have
a stockholder proposal included in our Company's proxy statement.

Stockholder Proposals for the 2006 Annual Meeting. Stockholders
interested in submitting a proposal for inclusion in the proxy materials for our
2003 Annual Meeting of the Stockholders may do so by following the procedures
prescribed in SEC Rule 14a-8. To be eligible for inclusion, stockholder
proposals must be received by our Company's Secretary no later than July 22,
2006. Any stockholder proposals should be addressed to our Company's Secretary,
464 Common Street, Suite 301, Belmont, Massachusetts 02478.

Proxy Solicitation Costs. Our Company is soliciting the enclosed
proxies. The cost of soliciting proxies in the enclosed form will be borne by
our Company. Officers and regular employees of our Company may, but without
compensation other than their regular compensation, solicit proxies by further
mailing or personal conversations, or by telephone, telex, facsimile or
electronic means. Our Company will, upon request, reimburse brokerage firms for
their reasonable expenses in forwarding solicitation materials to the beneficial
owners of stock.

Incorporation by Reference. Certain financial and other information
required pursuant to Item 13 of the Proxy Rules is incorporated by reference to
the Company's Annual Report, which is being delivered to the stockholders with
this proxy statement. In order to facilitate compliance with Rule 2-02(a) of
Regulation S-X, one copy of the definitive proxy statement will include a
manually signed copy of the accountant's report.

By Order of the Board of Directors

/s/ Daniel R. Dwight
-------------------------------------
Daniel R. Dwight
President and Chief Executive Officer

Belmont, Massachusetts
November 21, 2005