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 June 30, 2004
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 June 30, 2004, approximately 28,306,416 shares of the Registrant's
Common Stock, $0.001 par value were outstanding. As of June 30, 2004,
approximately 37,208,951 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
Financial Statements 2
Balance Sheet 3
Income Statement 4
Cashflow Statement 5
Financial Footnotes 6
Part II
Management Discussion 6
Business Overview 7
Actions, Board of Directors 8
Signatures 10
ITEM 1. FINANCIAL STATEMENTS
ADVANCE TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Financial Statements
June 30, 2004
2
Advance Technologies, Inc.
(a Development Stage Company)
Consolidated Balance Sheets
ASSETS
-------
June 30, September 30,
2004 2003
------------- -------------
(Unaudited)
Current Assets
Cash $ 1,192 $ (2,029)
------------- -------------
Total Current Assets 1,192 (2,029)
------------- -------------
Property & Equipment, Net 8,532 14,440
------------- -------------
Total Assets $ 9,724 $ 12,411
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts Payable $ 9,637 $ 9,637
Accrued Interest - -
Note Payable - Officer 64,700 46,800
Advance Royalties - 25,000
------------- -------------
Total Current Liabilities 74,337 81,437
------------- -------------
Total Liabilities 74,337 81,437
------------- -------------
Stockholders' Equity
Common Stock, Authorized 100,000,000
Shares of $.001 Par Value, Issued and
Outstanding 28,306,416 shares, and
22,766,517 28,306 22,766
Preferred Stock, Series A Authorized
100,000,000 Shares of $.001 Par Value,
Issued and Outstanding 37,208,958 Shares,
and 38,748,857 37,209 38,749
Additional Paid in Capital 549,780 549,780
Deficit Accumulated During the Development
Stage (679,908) (680,321)
------------- -------------
Total Stockholders' Equity (64,613) (69,026)
------------- -------------
Total Liabilities and
Stockholders' Equity $ 9,724 $ 12,411
============= =============
3
Advance Technologies, Inc.
(a Development Stage Company)
Consolidated Statements of Operations(Unaudited)
From the
beginning of
For For For For Development
the Three the Three the nine the nine stage
months months months months October 1,
ended ended ended ended 1985 thru
June 30, June 30, June 30, June 30, June 30,
2004 2003 2004 2003 2004
----------- ----------- ----------- ----------- -----------
Revenues $ - $ 466 $ 149,439 $ 2,115 $ 209,463
Operating Expenses
Depreciation &
Amortization 1,969 1,964 5,908 5,892 43,354
Organization Costs - - - - 11,331
Research & Development - - - - 72,750
General &
Administrative 12,012 9,744 143,117 18,601 778,239
----------- ----------- ----------- ----------- -----------
Total Operating
Expenses 13,981 11,708 149,025 24,493 905,674
----------- ----------- ----------- ----------- -----------
Operating Income (Loss) (13,981) (11,242) 414 (22,378) (696,211)
----------- ----------- ----------- ----------- -----------
Other Income (Expense)
Miscellaneous Income - - - - 98,000
Interest Expense - (2,700) - (7,830) (81,696)
----------- ----------- ----------- ----------- -----------
Total Other Income
(Expense) - (2,700) - (7,830) 16,304
----------- ----------- ----------- ----------- -----------
Net Income (Loss) $ (13,981) $ (13,942) $ 414 $ (30,208) $ (679,907)
=========== =========== =========== =========== ===========
Net Income (Loss)
Per Share $ (0.00) $ (0.00) $ 0.00 $ (0.00) $ (0.22)
=========== =========== =========== =========== ===========
Weighted Average
Shares Outstanding 27,491,303 17,218,967 25,162,510 17,218,967 3,035,963
=========== =========== =========== =========== ===========
4
Advance Technologies, Inc.
(a Development Stage Company)
Consolidated Statements of Cash Flows(Unaudited)
From the
beginning of
development
stage October
For the nine months ended 1, 1985
June 30, thru
---------------------------- June 30,
2004 2003 2004
------------- ------------- -------------
Cash Flows from Operating Activities
Net Income (Loss) $ 414 $ (16,266) $ (679,908)
Adjustments to Reconcile Net Loss to
Net Cash Provided by Operations:
Depreciation & Amortization 5,906 3,928 30,854
Stock Issued for Services 4,000 - 407,025
Organization Costs - - 11,331
Decrease in Prepaids - - 14,680
Change in Assets and Liabilities
Increase (Decrease) in Accounts
Payable and Accrued Expenses (25,000) 5,130 81,109
------------- ------------- -------------
Net Cash Provided(Used) by
Operating Activities (14,680) (7,208) (134,909)
------------- ------------- -------------
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 17,900 1,000 105,900
Proceeds from Line of Credit - 4,500 85,500
Proceeds from Issuance of Stock - - 25,000
------------- ------------- -------------
Net Cash Provided(Used) by
Financing Activities 17,900 5,500 175,200
------------- ------------- -------------
Increase (Decrease) in Cash 3,220 (1,708) 1,191
------------- ------------- -------------
Cash and Cash Equivalents at
Beginning of Period (2,029) 1,719 -
------------- ------------- -------------
Cash and Cash Equivalents
at End of Period 1,191 11 1,191
============= ============= =============
Cash Paid For:
Interest $ - $ - $ -
============= ============= =============
Income Taxes $ - $ - $ -
============= ============= =============
5
ADVANCE TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2004
GENERAL
Advance Technologies, Inc. (the Company) has elected to omit
substantially all footnotes to the financial statements for the three and
six months ended June 30, 2004 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, 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.
Part II - Management's Discussion
BUSINESS OVERVIEW
The tragic events of September 11, 2001 and the resulting high level of
security activity continues to effect ATI and our strategic plans. As time
passes the impact is lessen and the over-all business recovery will
improve. The cost of venture capital remains high for the technology
sector. US Government restrictions on the application of Infrared
Technology to commercial application continue to be tight as we learn to
work with new restrictions and reporting requirements.
Advance Technologies had reached an agreement via a letter of intent in
principle with a marketing and sales group to launch the NITEAGLE program.
Terms of this agreement were projected to be completed in April 2004. As
of June 30, 2004 a final agreement has not been reached. As of now, ATI
believes that it is unlikely that a satisfactory agreement can be reach.
Therefore, ATI has re-open our discussions with other potential business
partners.
ATI application for an export license for 50 additional IR Cameras for
United Integrated Services is proceeding. This will be the third license
ATI has obtained for UIS. The export license application is with United
States Department of Commerce.
ATI was contacted by a medical service facility in the USA. The medical
service company is interested in conducting clinical trials on the Spectrum
9000 produced by UIS to investigate potential benefits in the treatment of
circulatory diseases. The medical company is fully engaged in bring their
core business (varicose vein treatment) up to speed utilizing a new
approach based upon LASER technology. This project has slipped into 2005
at the earliest. As a result, ATI will remain in contact, but will
continue to investigate other options as they present themselves.
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 detailed report of all sales and deliveries through
June 30, 2004. A summary of those sales are as shown.
6
ANNUAL UNITS DELIVERED & SOLD
=============================
INITIAL DELIVERY UNITS SOLD TOTAL
________________ __________ _____
Year 2002 47 29 29
Year 2003 108 107 107
Year 2004 (Q2) 29 46 48
_______________________________________________________________
TOTAL 184 182 184
The EVS market continues to develop on schedule. Beginning with our next
filing we will no longer report on units delivered and sold. In lieu of
this we will report on royalties received. This change has been done at
Kollsman's request to prevent tracking of EVS sales by potential
competitors. In the future Advance Technologies will report only those unit
sales publicly reported by Kollsman.
On March 30, 2004 Gulfstream Aerospace announced that they have received an
amendment to the EVS Supplemental Type Certification (STC) for their G-IV
Aircraft. The addition of the G-IV increases the EVS market by more than
500 systems. As a result of this action, Gulfstream now offers EVS as a
retrofit on six models (GIV, GIV-SP, G300, G400, and GV). The retrofit
modification is combined with scheduled maintenance and can be performed at
five Service Centers in the USA. EVS remains standard equipment on G450 &
G550 currently in production. See Gulfstream.com for more details.
The proposed rule change (February 2003, Federal Registrar) by the FAA was
adopted after nearly a year of study and review. The flight rule
specifically approvals EVS for precision approaches in FAA defined low
visibility operations. This rule takes away the last restriction, and EVS
can now be expanded beyond the Business Jet (Part -91 operations) to the
Regional Carriers (Part -135), Major Carriers (Part -121), and the Package
Carrier operators (Part -127/-121).
Gulfstream Aerospace received the prestigious Collier Award for their G550
aircraft. This award was in recognition for Gulfstream's contribution to
aviation. Industry observers have given Enhance Vision System credit as a
key element in GAC winning the award.
The agreement between Kollsman and FedEx is proceeding with the EVS being
slated for operation on all of FedEx's widebody aircraft. See Kollsman.com
for additional details.
In June Elbit Systems Ltd., the parent company of Kollsman announced that
they have concluded an agreement with Honeywell to supply the electro-
optical projection units for the FedEx program. This is an important step
forward to develop a full EVS capability (i.e. HUD & EVS) For additional
information see Elbitsystems.com.
7
NITEAGLE
The advancements in price, performance, and delivery of the microbolometer
IR technology have matured to the point where NITEAGLE is commercially
viable. This long awaited event is key to several commercial applications
besides NITEAGLE. As a result of the termination of negotiations with the
major principles, other options will be explored for NITEAGLE. ATI has
been working with key suppliers for NITEAGLE. ATI remains confident over
the viability of the NITEAGLE opportunity, but the direction and timing of
the business opportunity is unclear at this time.
SPECTRUM 9000, MEDICAL EQUIPMENT
Advanced Technologies was 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.
The US medical service company has experienced start up problems with their
LASER equipment. The nature and extent of the problem is unknown. The
impact of the problem has cause a delay in the program. ATI has informed
UIS of the current status, and the situation is under review.
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 present 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.
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 had anticipated a full transition by
mid-2004, it now appears achievement of this milestone will be in the
fourth quarter of 2004 or January 2005. Accordingly, the following actions
have been authorized by the AVTX Board of Directors to smooth the
transition of AVTX.
On June 15, 2004 the Board of Directors has authorize that all Class B
preferred shares to be eligible for conversion to Class A common shares
provided the two year holding period has been satisfied. The effective
date for 100% conversion is January 1, 2005.
On June 15, 2004 the Board of Directors extended an invitation to Gary L.
Bane to re-join the Board of Directors of Advance Technologies Inc. Mr.
Bane had been on ATI's BOD since our founding in 1992. Mr. Bane withdrew
from the BOD in 2002 due to pressing demands from his many business
ventures. We are pleased that Mr. Bane's schedule abated, which has
permitted him to re-join the BOD. Mr. Bane term on ATI's BOD will be
effective on September 1, 2004.
8
On June 15, 2004 the Board of Directors has authorized the contacting of
two additional individuals to join ATI's Board of Directors.
ATI's BOD members have served on the Board without compensation. Because
the Board Members were major shareholders, the need for supplement
compensation was deemed as unnecessary. As ATI moves to expand our Board
of Directors to include individuals that are not necessary share holders in
ATI, it is appropriate that the subject of BOD compensation be revisited.
Therefore, the Board of Directors has authorized the investigation of Board
of Directors compensation to determine suitable and common practices in
this regard.
The President & CEO, Gary E. Ball, continues to serve without salary
compensation or stock incentives. Once a full and independent Board of
Directors has been established, this subject will be reviewed in 2005.
Wendy S. Ball, has asked to be removed from the Board of Directors. Ms.
Ball will continue to serve until January 1, 2005. Ms. Ball, was recently
promoted to National Sales Manager for Christian Lacroix. The executive
level position requires extensive travel and work demands that necessitates
the request.
In February 2004, the Board of Directors directed our corporate attorney to
file for the issuance of 4,000,000 shares and instructed the corporate
attorney to prepare a Private Placement Memorandum for the private
placement of 4,000,000 common shares subject to Rule 144 restrictions to
provide for operating capital and new business development for 2004. As of
June 30, 2004, 500,000 shares of ATI preferred shares has been placed, and
the activity is continuing.
9
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: August 10, 2004 By: /s/ GARY E. BALL
______________________________
Gary E. Ball
President and Director
10