FORM 10 QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2002 Or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period____________to_______________ Commission file number 0-27175 ADVANCE TECHNOLOGIES, INC. (Exact name or registrant as specified in its charter) Nevada 95-4755369 (State or other jurisdiction (I.R.S. Employer Incorporation or organization) Identification No.) 716 Yarmouth Rd Suite 215 Palos Verdes Estates, CA 90274 (Address of principal executive offices) Registrant's telephone number, including area code: (310) 265-7776 Indicate by check mark whether the registrant (1) has filed all reports Required to be filed by Section 13 or 15(d) of the Securities Exchange Act Of 1934 during the preceding 12 months (or for such that the registrant was Required to file such reports), and (2) has shorter period been subject to Such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO ISSUES INVOLVED IN BANKRUPTCY. Indicate by check whether the registrant has filed all documents And reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities Under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of June 30, 2002, approximately 12,446,467 shares of the Registrant's Common Stock, $0.001 par value were outstanding. As of June 30, 2002, approximately 43,630,557 shares of the Registrant's Class A Preferred Non-voting Stock par value $0.001 were outstanding. ITEM 1. FINANCIAL STATEMENTS ADVANCE TECHNOLOGIES, INC. (A Development Stage Company) Consolidated Financial Statements June 30, 2002 Chisholm & Associates, CPA PO Box 540216 North Salt Lake, UT 84054 Tel: (801) 292-8756 ADVANCE TECHNOLOGIES, INC. (a Development Stage Company) Consolidated Balance Sheets ASSETS June 30, September 30, 2002 2001 ----------------------------- (Unaudited) Current Assets Cash $ 103 $ 3,515 ----------------------------- Total Current Assets 103 3,515 ----------------------------- Property & Equipment, Net 21,402 26,835 ----------------------------- Total Assets $ 21,505 $ 30,350 ============================= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accrued Interest $ 20,702 $ 13,007 Note Payable - Officer 40,300 28,300 Advance Royalties 25,000 25,000 ----------------------------- Total Current Liabilities 86,002 66,307 ----------------------------- Long Term Liabilities Line of Credit 85,500 85,500 ----------------------------- Total Long Term Liabilities 85,500 85,500 ----------------------------- Total Liabilities 171,502 151,807 ----------------------------- Stockholders' Equity Preferred Stock, Series A Authorized 100,000,000 Shares of $.001 Par Value, Issued and Outstanding 43,630,557 and 50,204,102 shares, respectively 43,631 50,204 Common Stock, Authorized 100,000,000 Shares of $.001 Par Value, Issued and Outstanding 12,446,467 and 2,572,923 shares, respectively 12,446 2,573 Additional Paid in Capital 449,796 446,496 Deficit Accumulated During the Development Stage (655,870) (620,730) ----------------------------- Total Stockholders' Equity (149,997) (121,457) ----------------------------- Total Liabilities and Stockholders' Equity $ 21,505 $ 30,350 ============================= ADVANCE TECHNOLOGIES, INC. (a Development Stage Company) Consolidated Statements of Operations (Unaudited) For the three For the nine From inception on months ended months ended October 1, 1985 June 30, June 30, thru June 30, ------------------------ ---------------------- 2002 2002 2001 2002 2001 ----------- ---------- ---------- ---------- --------------- Revenues $ 5,563 $ - $ 23,010 $ 3,000 $ 53,995 Operating Expenses Research & Development - - - - 72,750 General & Administrative 8,533 4,420 35,855 63,750 639,114 ----------- ---------- ---------- ---------- --------------- Total Operating Expenses 8,533 4,420 35,855 63,750 711,864 ----------- ---------- ---------- ---------- --------------- Operating Income (Loss) (2,970) (4,420) (12,845) (60,750) (657,869) ----------- ---------- ---------- ---------- --------------- Other Income (Expense) Miscellaneous Income - - - - 98,000 Interest Expense (5,535) - (15,695) - (28,702) ----------- ---------- ---------- ---------- --------------- Total Other Income (Expense) (5,535) - (15,695) - 69,298 ----------- ---------- ---------- ---------- --------------- Net Income (Loss) $ (8,505) $ (4,420) $ (28,540) $ (60,750) $ (588,571) =========== ========== ========== ========== =============== Net Income (Loss) Per Share $ (0.00) $ (0.00) $ (0.00) $ (0.02) $ (0.72) =========== ========== ========== ========== =============== Weighted Average Shares Outstanding 12,396,535 2,572,923 8,649,842 2,572,923 815,812 ----------- ---------- ---------- ---------- --------------- Advance Technologies, Inc. (a Development Stage Company) Consolidated Statements of Cash Flows (Unaudited) From inception inception on For the nine months ended October 1, 1985 June 30, thru ----------------------------------------- June 30, 2002 2002 2001 ---------------------------------------------------------- Cash Flows from Operating Activities Net Income (Loss) $ (28,540) $ (60,750) $ (588,571) Adjustments to Reconcile Net Loss to Net Cash Provided by Operations: Depreciation & Amortization 5,433 7,000 27,098 Stock Issued for Services - - 399,775 Organization Costs - - 11,331 Decrease in Prepaids - - 14,680 Change in Assets and Liabilities Increase in Deferred Income - - - Increase (Decrease) in Accounts Payable & Accrued Expenses 7,695 (37,107) 20,704 ---------------------------------------------------------- Net Cash Provided(Used) by Operating Activities (15,412) (90,857) (114,983) ---------------------------------------------------------- Cash Flows from Investing Activities Investment in Subsidiary - - 286 Purchase of Equipment - (10,000) (36,000) ---------------------------------------------------------- Net Cash Provided (Used) by Investing Activities - (10,000) (35,714) ---------------------------------------------------------- Cash Flows from Financing Activities Proceeds from Joint Venture - 98,000 - Payments for Officer Loan - (10,000) (33,200) Proceeds from Officer Loan 12,000 - 73,500 Proceeds from Line of Credit - 11,265 85,500 Proceeds from Issuance of Stock - - 25,000 ---------------------------------------------------------- Net Cash Provided(Used) by Financing Activities 12,000 99,265 150,800 ---------------------------------------------------------- Increase (Decrease) in Cash (3,412) (1,592) 103 ---------------------------------------------------------- Cash and Cash Equivalents at Beginning of Period 3,515 1,646 - ---------------------------------------------------------- Cash and Cash Equivalents at End of Period $ 103 $ 54 $ 103 ========================================================== Cash Paid For: Interest $ 8,000 $ - $ 8,000 ========================================================== Income Taxes $ - $ - $ - ========================================================== ADVANCE TECHNOLOGIES, INC. (A Development Stage Company) Notes to the Consolidated Financial Statements June 30, 2002 GENERAL Advance Technologies, Inc.(the Company) has elected to omit substantially all footnotes to the financial statements for the three and nine months ended June 30, 2002 since there have been no material changes (other than indicated in other footnotes) to the information previously reported by the Company in their Annual Report filed on Form 10-KSB for the fiscal year ended September 30, 2001. UNAUDITED INFORMATION The information furnished herein was taken from the books and records of the Company without audit. However, such information reflects all adjustments which are, in the opinion of management, necessary to properly reflect the results of the interim period presented. The information presented is not necessarily indicative of the results from operations expected for the full fiscal year. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS Advance Technologies Inc. ("AVTX") is a developer of infrared (IR) Enhanced Vision technology and commercial solutions. The Company has a worldwide license from Hughes Aircraft Company, Los Angeles, California, which includes a patent for an infrared Enhanced Vision System. Advance Technologies licenses and develops applied infrared enhanced vision solutions for use in diverse industries including aviation, recreational vehicles, commercial trucking, marine, security and fire fighting applications. ENHANCED VISION SYSTEM ACTIVITIES AVTX's Enhance Vision System, our first project; has entered production following its certification last year from the Federal Aviation Administration. Advance Technologies benefits through our license agreement with Kollsman Inc. whereby AVTX achieves royalties that increase in time. Initial EVS systems have been delivered to Gulfstream Aerospace Company, and Gulfstream, in turn, has completed initial deliveries to its customers. As of this filing, Kollsman has not yet provided AVTX an official schedule of its planned EVS production. AVTX will provide guidance based upon production commitments and delivery schedules between Gulfstream Aerospace Company and Kollsman Inc. as this information becomes available. Last quarter, AVTX and Kollsman had discussed collaboration on an Advanced EVS incorporating AVTX's proprietary technology, which is not included as or a part of the current production EVS. A process was initiated in which Kollsman would provide AVTX with certain hardware items to support AVTX's development activities for the Advanced EVS. As of June 30, this program has not progressed further. AVTX and Telesis Technologies signed an EVS agreement, which designates Telesis Technologies as our EVS representative for Far East opportunities. This agreement gives Telesis the right to present limited information on EVS and on the benefits that EVS can provide to civil aviation. Advance Technologies, Inc. also continues its development phase with several projects moving forward at a pace dictated by market conditions, technical innovations and market factors. NITEAGLETM Telesis Technologies has provided to AVTX a second preproduction NITEAGLETM System, Advance Technologies' proprietary infrared system for recreational vehicles, for our market evaluation and market development activities. Demonstrations and marketing presentations have been conducted in accordance with our plan. The evaluation effort has continued with many discussions with potential partners. SPECTRUM 9000, MEDICAL EQUIPMENT AVTX continues to provide export license support under a time & service reimbursement agreement with Telesis Technologies. Telesis has announced no plans for introduction of the Spectrum 9000 into the US market. HONEYWELL TECHNOLOGY LICENSE Honeywell International has provided AVTX initial terms for a "field application" and/or "market use" of their Micro-bolometer technology. The terms and conditions are under evaluation by AVTX and our business partner Telesis Technologies. OTHER IR ACTIVITIES Advance Technologies Inc. continues development activities on new Infrared systems for commercial markets. These projects cannot be forecast with any degree of certainty, and all strategic partnerships or business arrangements remain confidential until such time as formal announcements are appropriate without compromising the development plan and/or the application marketplace. CAPITAL RESOURCES No commitment for capital resources has been made during this reporting period. FINANCIAL ANALYSIS The results on the operation represent projects of likely future events that cannot be guaranteed. Therefore, the financial analysis does not include projects, and no quantitative assessment has been provided based upon the future discussion of potential events in Section 3. The Company has received revenue pursuant to an agent agreement with, that allows the Company to receive fixed monthly service fees, and to bill for additional services provided. The Company records revenues when the services are performed. The Company is entitled to reimbursement for various expenses associated with the development of its night vision technology pursuant to the joint venture agreement with Telesis Technologies. These reimbursements are recorded as miscellaneous income when received. No material changes have been provided; therefore impact of unforeseeable events cannot be assessed. Present financial plans are adequate to meet our cash flow needs with our current project schedule. ITEM 6. EXHIBITS 99.1 Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 13, 2002 Advance Technologies, Inc. (Registrant) By: /s/ Gary E. Ball Gary E. Ball President and Director