FORM 10 QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 {X} Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 2003 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 report 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 December 31, 2003, approximately 22,833,717 shares of the Registrant's Common Stock, $0.001 par value were outstanding. As of December 31, 2003, approximately 38,681,657 shares of the Registrant's Class A Preferred Stock par value $0.001 were outstanding. ________________________________________________________________________________ Page 1 TABLE OF CONTENTS Page Cover Page 1 Part I 2 Financial Statement Item 2 Financial Statements 3 Balance Sheet 4 Income Statement 5 Cashflow Statement 6 Financial Footnotes 7 Management Discussion 7 Announcements 8 Business Overview 8 Actions, Board of Directors 10 Signatures 10 Exhibits Exhibits 11 Additional Exhibits 12 ________________________________________________________________________________ Page 2 ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 12/31/03 ________________________________________________________________________________ ITEM 1. FINANCIAL STATEMENTS ADVANCE TECHNOLOGIES, INC. (A Development Stage Company) Consolidated Financial Statements December 31, 2003 Chisholm & Associates, CPA PO Box 540216 North Salt Lake, UT 84054 Tel: (801) 292-8756 ________________________________________________________________________________ Page 3 ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 12/31/03 ________________________________________________________________________________ ADVANCE TECHNOLOGIES, INC. (a Development Stage Company) Consolidated Balance Sheets December 31, September 30, 2003 2003 ____________ _____________ (Unaudited) ASSETS Current Assets Cash $ 51,581 $ (2,029) _________ _________ Total Current Assets 51,581 (2,029) _________ _________ Property & Equipment, Net 12,476 14,440 _________ _________ Total Assets $ 64,057 $ 12,411 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable $ - $ 9,637 Accrued Interest - - Note Payable - Officer 46,800 46,800 Advance Royalties 25,000 25,000 _________ _________ Total Current Liabilities 71,800 81,437 _________ _________ Long Term Liabilities Line of Credit - - _________ _________ Total Long Term Liabilities - - _________ _________ Total Liabilities 71,800 81,437 _________ _________ Stockholders' Equity Common Stock, Authorized 100,000,000 Shares of $.001 Par Value, Issued and Outstanding 17,218,967 shares 22,766 22,766 Preferred Stock, Series A Authorized 100,000,000 Shares of $.001 Par Value, Issued and Outstanding 38,858,057 Shares 38,748 38,749 Additional Paid in Capital 549,780 549,780 Deficit Accumulated During the Development Stage (619,037) (680,321) _________ _________ Total Stockholders' Equity (7,743) (69,026) _________ _________ Total Liabilities and Stockholders' Equity $ 64,057 $ 12,411 ========= ========= ________________________________________________________________________________ Page 4 ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 12/31/03 ________________________________________________________________________________ Advance Technologies, Inc. (a Development Stage Company) Consolidated Statements of Operations (Unaudited) From the beginning For the three For the three of Development stage months ended months ended October 1, 1985 December 31, December 31, thru December 31, 2003 2002 2003 _____________ _____________ ____________________ Revenues $ 122,205 $ 1,648 $ 182,229 Operating Expenses Depreciation & Amortization 1,964 1,964 39,410 Oranization Costs - - 11,331 Research & Development - - 72,750 General & Administrative 58,957 4,605 691,809 ___________ ___________ _________ Total Operating Expenses 60,921 6,569 815,300 ___________ ___________ _________ Operating Income (Loss) 61,284 (4,921) (633,071) ___________ ___________ _________ Other Income (Expense) Miscellaneous Income - - 98,000 Interest Expense - (2,565) (23,267) ___________ ___________ _________ Total Other Income (Expense) - (2,565) 74,733 ___________ ___________ _________ Net Income (Loss) $ 61,284 $ (7,486) $(558,338) =========== =========== ========= Net Income (Loss) Per Share $ 0.00 $ (0.00) $ (0.23) =========== =========== ========= Weighted Average Shares Outstanding 22,766,317 17,218,967 2,424,076 =========== =========== ========= ________________________________________________________________________________ Page 5 ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 12/31/03 ________________________________________________________________________________ Advance Technologies, Inc. (a Development Stage Company) Consolidated Statements of Cash Flows (Unaudited) From the beginning For the three months ended of development stage December 31, October 1, 1985 ___________________________ thru December 31, 2003 2002 2003 _______ _______ ____________________ Cash Flows from Operating Activities Net Income (Loss) $61,284 $(7,486) $(558,338) Adjustments to Reconcile Net Loss to Net Cash Provided by Operations: Depreciation & Amortization 1,963 1,964 39,409 Stock Issued for Services - - 403,025 Organization Costs - - 11,331 Decrease in Prepaids - - 14,680 Change in Assets and Liabilities - - - Increase in Deferred Income - - - Increase (Decrease) in Accounts Payable and Accrued Expenses (9,637) 2,565 23,274 _______ _______ _________ Net Cash Provided(Used) by Operating Activities 53,610 (2,957) (66,619) _______ _______ _________ Cash Flows from Investing Activities Investment in Subsidiary - - 286 Purchase of Equipment - - (39,386) _______ _______ _________ Net Cash Provided (Used) by Investing Activities - - (39,100) _______ _______ _________ Cash Flows from Financing Activities Payments for Officer Loan - - (41,200) Proceeds from Officer Loan - - 88,000 Proceeds from Line of Credit - 4,500 85,500 Proceeds from Issuance of Stock - - 25,000 _______ _______ _________ Net Cash Provided(Used) by Financing Activities - 4,500 157,300 _______ _______ _________ Increase (Decrease) in Cash 53,610 1,543 51,581 _______ _______ _________ Cash and Cash Equivalents at Beginning of Period (2,029) 1,719 - _______ _______ _________ Cash and Cash Equivalents at End of Period 51,581 3,262 $ 51,581 ======= ======= ========= Cash Paid For: Interest $ - $15,695 $ 31,097 ======= ======= ========= Income Taxes $ $ - $ - ======= ======= ========= ________________________________________________________________________________ Page 6 ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 12/31/03 ________________________________________________________________________________ ADVANCE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 GENERAL Advance Technologies, Inc. (the Company) has elected to omit substantially all footnotes to the financial statements for the three and nine months ended December 31, 2003 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 31, 2003. 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 for commercial solutions and applications. The Company engages in advance development activities and through strategic business arrangements AVTX utilizes OEM suppliers and major system corporations to form strategic business associations. This unique business model combines the strength of our organization with the prior capital investment of the OEMs and the in place established marketing and sales organization of the System Integrator. Our ability to bridge IR technology into application-specific markets shortens the development-to-market cycle and the investment risk. Advance Technologies has entered into a licensing agreement with Kollsman, Inc in 1997. which has incorporated the Company's technology into an Enhanced Vision System ("EVS") for use with Gulfstream Aerospace aircraft and other aircraft. The Kollsman EVS License has board applicability to commercial aviation. ________________________________________________________________________________ Page 7 ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 12/31/03 ________________________________________________________________________________ BUSINESS OVERVIEW The tragic events of September 11, 2001 have produced economic and bureaucratic shock waves that have had a direct effected on AVTX and our strategic plans. The effect has been most notable in the decline of the price of our common stock in the past two years reflecting the general slow down of our markets. The acquisition of Telesis Technologies Inc., a privately held Taiwanese corporation was officially completed this fall by United Integrated Services (UIS), a publicly traded Taiwan Corporation. Our agent agreement and joint projects are expected to continue without substantial change. In December 2003 ATI delivered 15 Nightview camera to UIS for their Spectrum 9000 medical system sold in the far east. These units were exported under the terms of our agent agreement and in compliance with the terms and conditions of Department of Commerce License No. D293324 issued October 26, 2002. A second shipment of 15 units is scheduled for export in January 2004 under the terms of the same export provisions. This export will complete the number of authorized units under the Department of Commerce license D293324. UIS has asked ATI to apply for another export license for 50 additional IR Cameras. This will be the third license ATI has obtained for UIS (Telesis). ATI was contacted by a medical service facility in the USA. The medical company is interested in conducting clinical trials on the Spectrum 9000 produced by UIS to investigate potential benefits in the treatment of diabetes, varicose veins, and other circulatory diseases. UIS has asked ATI to submit a peer review study proposal. ENHANCED VISION ACTIVITIES Enhance Vision System, our first project; has entered production. Advance Technologies benefits through a license agreement with Kollsman Inc. Kollsman has issued a year end 2002 total program to date deliveries and sales. ANNUAL UNITS DELIVERED & SOLD ============================= INITIAL DELIVERY UNITS SOLD TOTAL ________________ __________ _____ Year 2002 47 29 29 Year 2003 108 107 107 ________________________________________________________________ TOTAL 155 136 136 ________________________________________________________________________________ Page 8 ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 12/31/03 ________________________________________________________________________________ NITEAGLE Telesis Technologies provided two pre-production units for market evaluation. Tests are completed. The baseline configuration is up to date with the latest advancements. The rapid pace of the technology as it enters production has been an impediment to finalizing the system. Price reductions of 30% per year have been typical. We believe that 2003 will bring price and source stability to the market. We are currently waiting on price and delivery information from our USA supplier. This information has been delayed; we now expect information in the first quarter of 2004. SPECTRUM 9000, MEDICAL EQUIPMENT Advanced Technologies is working with a US medical service company to provide a clinical study, peer group review proposal to study and evaluate potential benefits to the treatment of circulatory diseases such as varicose veins, diabetes, and other potential applications. This study will be conducted under the direction of well recognized Surgeon. DEVELOPMENT PROJECTS 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 a formal announcement is appropriate without compromising the development plan and/or the application market. 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. 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. ________________________________________________________________________________ Page 9 ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 12/31/03 ________________________________________________________________________________ ADVANCE TECHNOLOGIES INC. BOARD OF DIRECTOR ACTIONS The maturity of the Enhanced Vision Project has provided the need to make adjustments to prepare for our transition from a "development company" to a mature self-sustaining company. We anticipate a full transition by mid-2004. Accordingly, the following actions have been authorized by the AVTX Board of Directors to smooth the transition of AVTX. December 14, 2003 the Board of Directors directed the Corporate attorney to file for authorization to issue 4,000,000 shares of AVTX common stock for the purpose of generating operating capitol for 2004. The proceeds of sales will be used to cover operating expense as AVTX completes their transition from a development company, dependent upon investments to an on-going profitable enterprise. 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. ADVANCE TECHNOLOGIES, INC. (Registrant) Date: January 23, 2004 By: /s/ GARY E. BALL ___________________________ Gary E. Ball President and Director ________________________________________________________________________________ Page 10