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, 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 June 30, 2003, approximately 22,766,517 shares of the Registrant's Common
Stock, $0.001 par value were outstanding. As of June 30, 2003, approximately
38,748,857 shares of the Registrant's Class A Preferred Non-voting 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 3
Income Statement 4
Cashflow Statement 5
Financial Footnotes 6
Management Discussion 7
Announcements 7
Business Overview 8
Actions, Board of Directors 10
Signatures 11
Exhibits
Exhibits 12
Additional Exhibits 13
ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 06/30/03
________________________________________________________________________________
ITEM 1. FINANCIAL STATEMENTS
ADVANCE TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Financial Statements
June 30, 2003
Chisholm & Associates, CPA
PO Box 540216
North Salt Lake, UT 84054
Tel: (801) 292-8756
________________________________________________________________________________
Page 2
ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 06/30/03
________________________________________________________________________________
ADVANCE TECHNOLOGIES, INC.
(a Development Stage Company)
Consolidated Balance Sheets
ASSETS
June 30, September 30,
2003 2002
_________ _____________
(Unaudited)
Current Assets
Cash $ 233 $ 1,719
_________ _________
Total Current Assets
233 1,719
_________ _________
Property & Equipment, Net 16,475 22,367
_________ _________
Total Assets $ 16,708 $ 24,086
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accrued Interest $ 31,097 $ 23,267
Note Payable - Officer 25,000 25,000
Advance Royalties 46,800 36,300
_________ _________
Total Current Liabilities 102,897 84,567
_________ _________
Long Term Liabilities
Line of Credit 90,000 85,500
_________ _________
Total Long Term Liabilities 90,000 85,500
_________ _________
Total Liabilities 192,897 170,067
_________ _________
Stockholders' Equity
Common Stock, Authorized 100,000,000 Shares of $.001 Par Value,
Issued and Outstanding 17,218,967 shares 17,219 17,219
Preferred Stock, Series A Authorized 100,000,000 Shares of $.001
Par Value, Issued and Outstanding 38,858,057 Shares 38,858 38,858
Additional Paid in Capital 446,446 446,446
Accumulated Deficit (60,699) (60,699)
Deficit Accumulated During the Development Stage (618,013) (587,805)
_________ _________
Total Stockholders' Equity (176,189) (145,981)
_________ _________
Total Liabilities and Stockholders' Equity $ 16,708 $ 24,086
========= =========
________________________________________________________________________________
Page 3
Advance Technologies, Inc.
(a Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From the beginning
For the nine For the nine For the three For the three of Development stage
months ended months ended months ended months ended October 1, 1985
June 30, June 30, June 30, June 30, thru June 30,
2003 2002 2003 2002 2003
___________________________________________________________________________________________
Revenues $ 2,115 $ 23,010 $ 466 $ 5,563 $ 62,138
Operating Expenses
Depreciation & Amortization 5,892 - 1,964 - 35,411
Oranization Costs - - - - 11,331
Research & Development - - - - 72,750
General & Administrative 18,601 35,855 9,744 8,533 627,562
___________ __________ ___________ ___________ __________
Total Operating Expenses 24,493 35,855 11,708 8,533 747,054
___________ __________ ___________ ___________ __________
Operating Income (Loss) (22,378) (12,845) (11,242) (2,970) (684,916)
___________ __________ ___________ ___________ __________
Other Income (Expense)
Miscellaneous Income - - - - 98,000
Interest Expense (7,830) (15,695) (2,700) (5,535) (31,097)
___________ __________ ___________ ___________ __________
Total Other Income (Expense) (7,830) (15,695) (2,700) (5,535) 66,903
___________ __________ ___________ ___________ __________
Net Income (Loss) $ (30,208) $ (28,540) $ (13,942) $ (8,505) $ (618,013)
=========== ========== =========== =========== ==========
Net Income (Loss) Per Share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.41)
=========== ========== =========== =========== ==========
Weighted Average Shares Outstanding 17,218,967 8,649,842 17,218,967 12,396,535 1,518,424
=========== ========== =========== =========== ==========
________________________________________________________________________________
Page 4
Advance Technologies, Inc.
(a Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From the beginning
For the nine months ended of development stage
June 30, October 1, 1985
_________________________ thru
June 30,
2003 2002 2003
________ ________ ____________________
Cash Flows from Operating Activities
Net Income (Loss) $(30,208) $(28,540) $(618,013)
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operations:
Depreciation & Amortization 5,892 5,433 35,411
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 7,830 7,695 31,099
________ ________ _________
Net Cash Provided(Used) by Operating Activities (16,486) (15,412) (122,467)
________ ________ _________
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 10,500 12,000 88,000
Proceeds from Line of Credit 4,500 - 90,000
Proceeds from Issuance of Stock - - 25,000
________ ________ _________
Net Cash Provided(Used) by Financing Activities 15,000 12,000 161,800
________ ________ _________
Increase (Decrease) in Cash (1,486) (3,412) 233
________ ________ _________
Cash and Cash Equivalents at Beginning of Period 1,719 3,515 -
________ ________ _________
Cash and Cash Equivalents at End of Period 233 103 $ 233
======== ======== =========
Cash Paid For:
Interest $ 7,830 $ 15,695 $ 31,097
======== ======== =========
Income Taxes $ $ - $ -
======== ======== =========
________________________________________________________________________________
Page 5
ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 06/30/03
________________________________________________________________________________
ADVANCE TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 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 June
30, 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 30, 2002.
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.
________________________________________________________________________________
Page 6
ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 06/30/03
________________________________________________________________________________
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. The Kollsman EVS
License has board applicability to commercial aviation.
ANNOUNCEMENTS (AVTX)
Advance Technologies Inc. has received two recent honors. First, at an aerospace
awards banquet at the Paris Air show, and secondly, for the appointment of their
president to a national Business Advisory Board.
The aerospace industry honored its own "best of the best" on June 16, 2003 at a
glittering ceremony in Paris's Pavilion D'Armenonville when 11 winners of the
coveted Flight International Aerospace Industry Awards 2003 were announced. More
than 500 top executives from all parts of the industry applauded the
achievements of their peers.
Advance Technologies Inc. (AVTX) was a finalist in the AVIONICS & ELECTRONICS
category for their achievement: Infrared Commercial Landing Aid System. Advance
Technologies was represented by their President, Mr. Gary E. Ball. Mr. Ball was
delighted with the recognition of "our fine work that continues to be on the
cutting edge of technology for Enhanced Vision Systems."
Advance Technologies Inc. entry was an Advance Optical Controller, a device that
greatly expands the optical dynamic range of EVS, a capability that will be
required for EVS to fulfill its full potential for the aviation market.
(Enhanced Vision is a unique system that provides the pilot clear vision under
night and adverse weather conditions, which serves to enhance safety and flight
operations.)
In a related announcement, on June 3, 2003 Mr. Gary Ball, President of Advance
Technologies Inc., has been presented the prestigious National Leadership Award.
Mr. Ball will serve as an HONORARY CHAIRMAN on the Business Advisory Council
(BAC) for the National Republican Congressional Committee.
Mr. Ball will represent the State of California on this advisory committee. In
this capacity he will advise and assist on critical issues that affect business
and promote a pro-business agenda.
Mr. Ball is honored to participate in this illustrious group, and believes the
small cap, high technology sector is the basis for economic growth and stimulus
to growing the economy. We believe that government assistance in the economic
sector should be focused at stimulating innovation and simplification of
regulatory and oversight functions. By becoming actively involved in this
Advisory Council, Mr. Ball believes he can provide a voice and guidance to
effect these needed changes.
________________________________________________________________________________
Page 7
ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 06/30/03
________________________________________________________________________________
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 aftermath of 9-11 additionally effected Advance Technologies Inc. because of
our involvement in Infrared Technology, a technology regulated by the US
Government. Since AVTX is exclusively involved in commercial applications, and
all of the technologies we employ are considered "dual use technology" (military
and commercial), our government's restrictions have had little effect on the
scope and direction of our strategic plans. Thus, our plans for future products
have not materially changed. But, our government's new requirements to ensure
our applications meet the commodity jurisdiction regulations and are compliant
to the International Traffic in Arms Regulation (ITAR) have slowed our growth.
ATI entered into an agreement with an offshore OEM strategic partner Telesis
Electronics September of 2000; a Taiwanese privately held corporation. Under the
terms of this agreement ATI is developing IR systems in conjunction with Telesis
for sale in the USA as well as other foreign markets. Export licenses are
required to provide critical components for this work. Approvals for these
licenses are taking more than a year to obtain. In October 2002, We were
notified our second export license for 30 additional systems was approved, which
is valid for two (2) years. Telesis has notified ATI that they wish to proceed
forward with the export of the Infrared Detectors 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.
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 their latest quarterly report required under the License
Agreement to ATI stating THIRTY (30) EVS have been delivered to their customer
during this quarter (Qt 2, 2003).
UNITS DELIVERED & SOLD PER QUARTER
==================================
INITIAL DELIVERY UNITS SOLD TOTAL
________________ __________ _____
1ST QT. 2002 2 0 0
2ND QT 2002 7 5 5
3RD QT. 2002 14 6 11
4TH QT. 2002 23 17 28
1ST QT. 2003 27 18 46
2ND QT. 2003
_________________________________________________________________
TOTAL 103 71 90
The delivery rates are increasing as Kollsman ramps up production. Kollsman has
released no information on future production plans. Their Gulfstream customer
continues to expand the application to additional aircraft through certification
activity with the FAA. This will serve to increase and extend the EVS market.
________________________________________________________________________________
Page 8
ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 06/30/03
________________________________________________________________________________
HONEYWELL TECHNOLOGY LICENSE
Honeywell provided ATI initial terms for a "field application" and/or "market
use" of their Micro-bolometer technology. The terms and conditions have been
evaluation by ATI. The terms are reasonable based upon assumptions on the price
and availability of a low cost imports from Taiwan. This import product has just
recently become available. No price-performance information has been provided to
date. Once this information becomes available, the need to negotiate and
finalize an agreement with Honeywell will be addressed.
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
last quarter of 2003. The plan to launch Niteagle has been prepared and
submitted to Telesis. Once our USA supplier provides the necessary information,
ATI and Telesis will seek final approval.
SPECTRUM 9000, MEDICAL EQUIPMENT
Telesis Technologies has not announced a date for introduction of the Spectrum
9000 into the US market. Telesis has announced the receipt of FDA approval from
the US Government. ATI believes that Telesis will become activity in the US
market in 2003, and what role ATI will play in that activity has not been
determined.
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: 06/30/03
________________________________________________________________________________
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. The following descriptions are
provided as a summary of the resolutions adopted by our Board of Directors.
1. 5,438,350 shares of AVTX preferred Class B stock were authorized and
transferred to Equi-share Financial in consideration for the
cancellation and debt nullification of AVTX's short-term loan. The loan
balance was $108,767.00 on January 1, 2003.
This action was necessary to satisfy the term and conditions of the
line of credit AVTX had with Equi-share Financial. This action resolves
this due-on-demand note without the need to raise additional short-term
capital.
2. The Board of Directors has authorized that all shares of AVTX be
eligible to receive dividends from AVTX earnings. Prior to this action
only preferred shares were eligible to receive dividends.
This action will serve to give all of the equity owners of AVTX equal
participation in future benefits. This resolution is effective 9/1/03.
3. The Board of Directors has authorized that all shares of AVTX, common
and preferred be granted voting rights. In the past on Common AVTX
shareholders had voting privileges. This resolution is effective
9/01/03.
This action will serve to give all equity owners of AVTX equal rights
in determining AVTX's future course of action and situations that
warrant share holder participation.
4. The Board of Directors has authorized the conversion of additional
shares of preferred stock to common stock for those shareholders that
have met holding period requirements. The authorization for conversion
increases the past conversion percentage (effective January 2002) from
30% to 65%. This resolution will be effective on January 1, 2004.
This authorization represents an additional step towards full
conversion, and the elimination of Class B preferred stock from the
public domain.
________________________________________________________________________________
Page 10
ADVANCE TECHNOLOGIES INC - 10-Q FILING DATE: 06/30/03
________________________________________________________________________________
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 4, 2003
ADVANCE TECHNOLOGIES, INC.
(Registrant)
By: /s/ GARY E. BALL
__________________________
Gary E. Ball
President and Director
________________________________________________________________________________
Page 11