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, 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 December 31, 2004, approximately 30,369,020 shares of the
Registrant's Common Stock, $0.001 par value were outstanding. As of
December 31, 2004, approximately 35,146,354 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 3
Consolidated Balance Sheet 3
Statement of Income 4
Statement of Cash Flow 5
Notes to Consolidated Financial Statements 6
Part II
Management Discussion 6
Business Overview 6
Actions, Board of Directors 9
Signatures 11
Page 2
PART I. FINANCIAL STATEMENT ITEM
ITEM 1. FINANCIAL STATEMENTS
Advance Technologies, Inc.
(a Development Stage Company)
Consolidated Balance Sheets
ASSETS
-------
December 31, September 30,
2004 2004
------------- -------------
(Unaudited)
Current Assets
Cash $ 2,664 $ 1,773
------------- -------------
Total Current Assets 2,664 1,773
Property & Equipment, Net 4,921 6,562
------------- -------------
Total Assets $ 7,585 $ 8,335
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts Payable $ 4,883 $ 4,883
Accrued Interest - -
Note Payable - Officer 68,000 59,300
Advance Royalties - -
------------- -------------
Total Current Liabilities 72,883 64,183
Long Term Liabilities
Line of Credit - -
------------- -------------
Total Long Term Liabilities - -
------------- -------------
Total Liabilities 72,883 64,183
Stockholders' Equity
Common Stock, Authorized 100,000,000
Shares of $.001 Par Value, Issued and
Outstanding 17,218,967 shares 28,319 28,319
Preferred Stock, Series A Authorized
100,000,000 Shares of $.001 Par Value,
Issued and Outstanding 38,858,057 Shares 37,196 37,196
Additional Paid in Capital 558,389 550,889
Deficit Accumulated During the Development
Stage (689,202) (672,252)
------------- -------------
Total Stockholders' Equity (65,298) (55,848)
------------- -------------
Total Liabilities and Stockholders' Equity $ 7,585 $ 8,335
============= =============
See accompanying notes to financial statements.
Page 3
Advance Technologies, Inc.
(a Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From the
beginning of
Development
For the three For the three Stage October
months ended months ended 1, 1985 thru
December 31, December 31, December 31,
2004 2003 2003
------------- ------------- -------------
Revenues
Royalty Income $ - $ - $ 25,000
Consulting Fees - 3,132 65,390
Product Sales - 119,073 119,073
------------- ------------- -------------
Total Sales - 122,205 209,463
Cost of Goods Sold
Product Purchases - - 114,020
------------- ------------- -------------
Gross Profit - 122,205 95,443
Operating Expenses
Depreciation & Amortization 1,614 1,964 46,937
Organization Costs - - 11,301
Research & Development - - 72,750
General & Administrative 15,309 58,957 728,390
------------- ------------- -------------
Total Operating Expenses 16,923 60,921 859,378
Operating Income (Loss) (16,923) 61,284 (763,935)
------------- ------------- -------------
Other Income (Expense)
Miscellaneous Income - - 98,000
Interest Expense - - (23,267)
------------- ------------- -------------
Total Other Income (Expense) - - 74,733
------------- ------------- -------------
Net Income (Loss) $ (16,923) $ 61,284 $ (689,202)
============= ============= =============
Net Income (Loss) Per Share $ (0.00) $ 0.00 $ (0.19)
============= ============= =============
Weighted Average Shares
Outstanding 28,319,416 22,766,317 3,665,599
See accompanying notes to financial statements.
Page 4
Advance Technologies, Inc.
(a Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From the
beginning of
Development
For the three For the three Stage October
months ended months ended 1, 1985 thru
December 31, December 31, December 31,
2004 2003 2003
------------- ------------- -------------
Cash Flows from Operating Activities
Net Income (Loss) $ (16,950) $ 61,284 $ (689,202)
Adjustments to Reconcile Net Loss to
Net Cash Provided by Operations:
Depreciation & Amortization 1,641 1,963 46,964
Stock Issued for Services - - 403,025
Organization Costs - - 11,331
Decrease in Prepaids - - 14,680
Change in Assets and Liabilities
Increase (Decrease) in Accrued
Liabilities 8,700 (9,637) 72,557
------------- ------------- -------------
Net Cash Provided(Used) by
Operating Activities (6,609) 53,610 (140,645)
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 - - (48,200)
Proceeds from Officer Loan - - 107,500
Proceeds from Line of Credit - - 85,500
Proceeds from Issuance of Stock 7,500 - 37,609
------------- ------------- -------------
Net Cash Provided(Used) by
Financing Activities 7,500 - 182,409
------------- ------------- -------------
Increase (Decrease) in Cash 891 53,610 2,664
Cash and Cash Equivalents at
Beginning of Period 1,773 (2,029) -
------------- ------------- -------------
Cash and Cash Equivalents at
End of Period 2,664 51,581 2,664
============= ============= =============
Cash Paid For:
Interest $ - $ 15,695 $ 31,097
============= ============= =============
Income Taxes $ - $ - $ -
============= ============= =============
See accompanying notes to financial statements.
Page 5
Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2004
GENERAL
Advance Technologies, Inc. (the Company) has elected to omit substantially
all footnotes to the financial statements for the three months ended
December 31, 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, 2004.
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.
Advanced Technologies Inc. (AVTX) received notification from the United
States Department of Commerce, Bureau of Industry and Security that an
export license (D326061, effective September 21, 2004) has been granted for
fifty (50) NV-2000 cameras.
The IR cameras are to be delivered to United Integrated Services Inc.
Taipei Taiwan. The NV-2000 IR Cameras are for installation in the Spectrum
9000, an Infrared medical system. The Spectrum 9000 will then be re-sold to
medical treatment facilities in Taiwan & South Korea in 2005.
The NV-2000 Infrared Camera has been granted a commodity jurisdiction
designation of ECCN 6A003 for this application. The value of the export
equipment authorized under and specified in the export license is $250,000.
This is the third license granted to Adv-Tech from the DOC for the Spectrum
9000 medical equipment The initial licenses were for 25 systems in 2001 and
for 35 systems in 2003. The work performed by Advance Technologies Inc. is
authorized under an agreement between United Integrated Services and
Advance Technologies Inc. that cover this and other areas of mutual
interest.
Page 6
Advanced Technologies was asked to provide assistance to Kollsman Inc. to
plan their 2005 R & D activities. This activity is in response to an
initiative by Kollsman to expand their commercial avionics business.
Information and project definitions were prepared and presented to Kollsman
senior management to assist them in their planning activity. The
proprietary material provided to Kollsman is consistent with and compliant
with the Advance Technologies Kollsman Technology Transfer Agreement,
1995.
Kollsman Instrument has provided the quarterly sales for period from
October 1, 2004 to December 31, 2004, as well as accumulative sales to
date. With the latest sales, the initial quantity of units for level 1
have been satisfied. Level 1, under terms of the agreement were designated
as royalty free. With the satisfying of the initial sales, all future
sales will provide royalties to Advance Technologies Inc. on a quarterly
basis. Advance Technologies will report the royalty income. Information
on number of units sold and/or the royalty fee per unit are competition
sensitive and will not be report beyond any unit sales that Kollsman may
elects to make public.
ENHANCED VISION ACTIVITIES
Enhance Vision System, our first project; has entered production. Advance
Technologies benefits through a license agreement with Kollsman Inc. The
EVS market continues to develop on schedule.
Gulfstream Aerospace announced 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 the latest information.
Page 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. 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 continous to provide support to United Integrated
Services Ltd. Taiwan. With the receipt of our third export license for UIS,
Adv-Tech will be exporting 50 NV-2000, IR Cameras to UIS in 2005. The
value of the export equipment is $250,000.00 as specified in the US
Department of Commerce License No. D326061. There has been no activity
with regard to the potential importing of the Spectrum 9000 during this
reporting period.
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.
This release contains forward-looking statements within the meaning of the
federal securities laws that relate to future events or Advance
Technologies' future performance. All statements in this release that are
not historical facts, including any statements about the markets,
potential markets, market growth, and Advance Technologies' ability to
compete in the Infrared Imaging markets are hereby identified as "forward-
looking statements." In this release, Advance Technologies has based these
forward-looking statements on management's current expectations. Such
forward-looking statements should, therefore, be considered in light of
various important factors as stated and unstated in Advance Technologies
past filing. Actual results may differ from these statements due to risks
and uncertainties, including those associated with the introduction of
competing products, and market acceptance of existing and new products.
Investors are cautioned not to place undue reliance on these forward-
looking statements. Investors also should understand that is not possible
to predict or identify all risk factors. Advance Technologies has no
obligation to publicly update or release any revisions to these forward-
looking statements to reflect events or circumstances after the date of
this release.
CAPITAL RESOURCES
No commitment for capital resources has been made during this reporting
period.
Page 8
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
Advance Technologies has completed the transition from a "development
company" to a self-sustaining company. A summary of the Board of Director
actions that were taken in 2004 are as summarized:
On June 15, 2004 the Board of Directors has authorize that all Class B
preferred shares are 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 5, 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 term on
ATI's BOD was effective on September 1, 2004.
On June 15, 2004 the Board of Directors has authorized the contacting of
two additional individuals to join ATI's Board of Directors. As a result
of this action Mr. James Watson has joined the Board. See attached resume
for details.
Wendy S. Ball, has resigned from the Board of Directors. Effective January
1, 2005. The management and Board of Directors of Advance Technologies
wishes to thank Ms. Ball for her involvement with Adv-Tech over these many
years and her contribution to our success to date.
As a result of prior Board of Director actions Class B, preferred Shares
and Class A, Common share enjoy the same privileges of dividend
participation and voting rights. The only different that remains between
the two class of stocks, is the Class A common shares are listed and traded
as AVTX on the NASDAQ small cap market.
Page 9
Mr. JAMES R. WATSON
Sales, Marketing and General Management Executive with over twenty-five
years experience in managing a wide range of marketing, sales and
operations functions designed to create or expand domestic and
international sales opportunities. Prior Experience:
CALIFORNIA MANUFACTURING TECHNOLOGY CONSULTING, Gardena, California,
Vice President Operations 2001-Present
Vice President Business Development 1999-2001
ANCHOR AUDIO, INC., Los Angeles, California, 1994 to 1999
Vice President Sales & General Manager Europe 1994-1999
National Sales Manager, 1992 to 1994
SUPERSHUTTLE INTERNATIONAL, INC., Los Angeles, California, 1987 to 1992
Vice President Sales & Marketing, 1990 to 1992
General Manager/Vice President Special Projects, 1987 to 1990
TOTAL AIR/AIR AMERICA., Los Angeles, California, 1986 to 1987
Vice President Marketing
NEEDHAM HARPER, WORLDWIDE., Los Angeles, California, 1985 to 1986
Vice President, Management Representative
WESTERN AIRLINES., Los Angeles, California, 1971 to 1985
Vice President Passenger & Cargo Sales, 1983 to 1985
Page 10
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 22, 2005 By: /s/ GARY E. BALL
______________________________
Gary E. Ball
President and Director
Page 11