UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
{X} QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2006
OR
{ } TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
For transition period from _______________ to _______________
Commission File Number: 0-17953
Advance Technologies Inc.
(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 95-4755369
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15 N. Longspur Drive
The Woodlands, TX 77380
(Address of Principal Executive Offices)
(310) 213-2143
(Issuer's telephone number)
-------------------------
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES { X } NO { }
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
YES { } NO { X }
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of March 31, 2006:
39,498,217 of Common & 26,497,157 of Preferred.
Transitional Small Business Disclosure Format (check one):
YES { x } NO { }
INFORMATION REQUIRED IN ANNUAL REPORTS OF TRANSITIONAL SMALL
BUSINESS ISSUERS
PART I
Financial Information
ITEM 1. FINANCIAL STATEMENTS
-------------------
ADVANCE TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
------
ADVANCE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
MARCH 31, 2006 CONSOLIDATED
FINANCIAL STATEMENTS
ADVANCE TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
Pages
Unaudited Condensed Consolidated Balance Sheets, March 31, 2006
and September 30, 2005 4
Unaudited Condensed Consolidated Statements of Operations, For
the Three and Six Months Ended March 31, 2006 and 2005 and For
the Period From Entering Development Stage on October 1, 1985
Through March 31, 2006 5
Unaudited Condensed Consolidated Statements of Cash Flows, For
the Six Months Ended March 31, 2006 and 2005 and For the Period
From Entering Development Stage on October 1, 1985 Through
March 31, 2006 6
Notes to the Unaudited Condensed Consolidated Financial
Statements 7 - 8
ADVANCE TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
------
March 31, September 30,
2006 2005
------------- -------------
(Restated)
CURRENT ASSETS:
Cash $ 1,473 $ 2,934
Accounts receivable 4,800 6,600
Prepaid expenses 191 -
------------- -------------
Total Current Assets 6,464 9,534
PROPERTY AND EQUIPMENT, net 396 851
------------- -------------
TOTAL ASSETS $ 6,860 $ 10,385
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 19,308 $ 16,921
Related party loans 76,950 71,000
Liability to be settled by
issuance of stock - 8,000
------------- -------------
Total Current Liabilities 96,258 95,921
STOCKHOLDERS' EQUITY:
Series A convertible preferred
stock, $.001 par value,
100,000,000 shares authorized,
26,497,157 and 26,017,157 shares
issued and Outstanding,
respectively 26,497 26,017
Common stock, $.001 par value,
100,000,000 shares authorized,
39,498,217 and 39,498,217
shares issued and outstanding,
respectively 39,498 39,498
Capital in excess of par value 609,124 582,685
Deficit accumulated during the
Development stage (764,517) (733,736)
------------- -------------
Total Stockholders' Equity (89,398) (85,536)
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 6,860 $ 10,385
============= =============
See accompanying notes and accountant's report.
Page 4
ADVANCE TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Period
From Entering
Development
Stage
October
For the Three Months For the Six Months 1, 1985
Ended March 31, Ended March 31, through
----------------------- ----------------------- March 31,
2006 2005 2006 2005 2006
----------- ----------- ----------- ----------- -----------
(Restated) (Restated) (Restated) (Restated)
REVENUES:
Royalty $ 4,800 $ 3,300 $ 11,100 $ 4,200 $ 53,200
Consulting - 2,453 - 2,453 67,843
Product - - - - 119,073
----------- ----------- ----------- ----------- -----------
Total Revenues 4,800 5,753 11,100 6,653 240,116
----------- ----------- ----------- ----------- -----------
COST OF
GOODS SOLD - - - - 114,020
----------- ----------- ----------- ----------- -----------
GROSS PROFIT 4,800 5,753 11,100 6,653 126,096
----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES:
Depreciation
and amortization 169 1,668 455 3,282 51,489
Research and
development - - - - 72,750
Other general and
administrative 23,202 8,243 38,507 23,552 813,892
----------- ----------- ----------- ----------- -----------
Total Operating
Expenses 23,371 9,911 38,962 26,834 938,131
----------- ----------- ----------- ----------- -----------
LOSS BEFORE
OTHER INCOME
(EXPENSE) (18,571) (4,158) (27,862) (20,181) (812,035)
----------- ----------- ----------- ----------- -----------
OTHER INCOME
(EXPENSE):
Miscellaneous
income - - - - 98,000
Interest expense - - - - (23,267)
Interest expense
related party (1,487) (1,435) (2,919) (2,696) (27,215)
----------- ----------- ----------- ----------- -----------
Total Other
Income (Expense) (1,487) (1,435) (2,919) (2,696) 47,518
----------- ----------- ----------- ----------- -----------
NET LOSS $ (20,058) $ (5,593) $ (30,781) $ (22,877) $ (764,517)
=========== =========== =========== =========== ===========
LOSS PER COMMON SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.13)
=========== =========== =========== =========== ===========
WEIGHTED-AVERAGE SHARES
OUTSTANDING 39,498,217 34,598,553 39,498,217 31,406,947 5,769,343
=========== =========== =========== =========== ===========
See accompanying notes and accountant's report.
Page 5
ADVANCE TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period
From Entering
Development
Stage on
For the Six Months October 1,
Ended March 31, 1985 through
-------------------------- March 31,
2006 2005 2006
------------ ------------ ------------
(Restated) (Restated) (Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (30,781) $ (22,877) $ (764,517)
Adjustments to reconcile net loss to
net cash used by operating activities
Depreciation & amortization 455 3,282 51,489
Imputed interest 2,919 2,696 27,215
Organization Costs - - 11,331
Stock issued for services 16,000 - 427,025
(Increase) decrease in accounts receivable 1,800 (3,300) (4,800)
(Increase) decrease in prepaid expenses (191) - 14,489
Increase (decrease) in accrued liabilities 2,387 6,200 78,282
------------ ------------ ------------
NET CASH USED BY OPERATING ACTIVITIES (7,411) (3,999) (159,486)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - - (39,386)
Investment in subsidiary - - 286
------------ ------------ ------------
NET CASH USED BY INVESTING ACTIVITIES - - (39,100)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash paid on related party loans - - (48,200)
Proceeds from related party loans 5,950 - 125,150
Proceeds from line of credit - - 85,500
Proceeds from stock issuances - - 30,109
Capital contribution - 7,500 7,500
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,950 7,500 200,059
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH (1,461) 3,501 1,473
CASH AT BEGINNING OF PERIOD 2,934 1,773 -
------------ ------------ ------------
CASH AT END OF PERIOD $ 1,473 $ 5,274 $ 1,473
============ ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
See accompanying notes and accountant's report.
Page 6
ADVANCE TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SUMMARY OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
For the period ended March 31, 2006:
The Company recorded imputed interest expense on related party loans of
$2,919 with an offsetting capital contribution.
In March 2006, the Company issued 160,000 shares of Series A convertible
preferred stock to pay $2,000 in director fees and $6,000 in salary.
In December 2005, the Company issued 160,000 shares of Series A
Convertible preferred stock to pay $2,000 in director fees and $6,000 in
salary.
In October 2005, the Company issued 160,000 shares of Series A
Convertible preferred stock to settle a prior year liability consisting of
$2,000 in director fees and $6,000 in salary.
For the period ended March 31, 2005:
The Company recorded imputed interest expense on related party loans
Of $2,696 with an offsetting capital contribution.
7
ADVANCE TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Condensed - Advance Technologies, Inc. and Subsidiary ("the Company")
Has elected to omit substantially all footnotes to the financial statements
for the six months ended March 31, 2006 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, 2005.
Unaudited Information - The information furnished herein was taken from the
books and records of the Company without audit. However, such
Information reflects all adjustments (normal recurring) which are, in the
opinion of management, necessary to properly reflect the results of the
interim periods presented. The information presented is not necessarily
indicative of the results from operations expected for the full fiscal
year.
Reclassification Certain amounts in prior-year financial statements have
been reclassified for comparative purposes to conform with presentation in
the current-year financial statements.
Recent Accounting Standards - Statement of Financial Accounting Standards
No. 154, "Accounting Changes and Error Corrections a replacement of APB
Opinion No. 20 and FASB Statement No. 3," was recently issued and is
effective for fiscal years beginning after December 15, 2005. Had the
Company applied the provisions of SFAS No. 154, their effects on the
financial statements would not have been significant.
NOTE 2 - RESTATEMENT
Subsequent to filing its Form 10-KSB for the year ended September 30,
2005, the Company discovered that (1) its revenues had been recorded on a
cash basis rather than accrual, (2) its revenues had not been recorded net
of discounts, (3) officer and director compensation had not been accrued,
and (4) interest had not been imputed on non-interest-bearing related party
loans. The restatement had the following effects on the amounts presented
herein:
September 30, 2005
Balance Sheet
------------------------------------------
Before After
Restatement Restatement Difference
------------- ------------- ------------
Accounts receivable $ - $ 6,600 $ 6,600
Current assets 2,934 9,534 6,600
Total assets 3,785 10,385 6,600
Liability to be settled by
issuance of stock - 8,000 8,000
Current assets 87,921 95,921 8,000
Capital in excess of
par value 558,389 582,685 24,296
Retained earnings (708,040) (733,736) (25,696)
Stockholders' equity
(deficit) (84,136) (85,536) (1,400)
8
ADVANCE TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Statement of Operations for the Three
Months Ended March 31, 2005
-----------------------------------------
Before After
Restatement Restatement Difference
------------- ------------- -------------
Royalty revenues $ 900 $ 3,300 $ 2,400
Interest expense
related party - (1,435) (1,435)
Net income (loss) (6,558) (5,593) 965
Net income (loss)
per share (0.00) (0.00) -
Statement of Operations for the Six
Months Ended March 31, 2005
-----------------------------------------
Before After
Restatement Restatement Difference
------------- ------------- -------------
Royalty revenues $ 900 $ 4,200 $ 3,300
Interest expense
related party - (2,696) (2,696)
Net income (loss) (23,481) (22,877) 604
Net income (loss)
per share
(0.00) (0.00) -
Statement of Operations for the Period from
Entering Development Stage on
October 1, 1985 through March 31, 2006
-----------------------------------------
Before After
Restatement Restatement Difference
------------- ------------- -------------
Royalty revenues $ 62,600 $ 53,200 $ (9,400)
Other general and
administrative expense (821,892) (813,892) 8,000
Interest expense
related party - (27,215) (27,215)
Net income (loss) (735,902) (764,517) (28,615)
Net income (loss)
per share (0.13) (0.13) -
NOTE 3 SUBSEQUENT EVENT
In April 2006, the Company formed a wholly-owned Nevada subsidiary
named Infrared Systems International.
9
ADVANCE TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The management discussions contain certain forward-looking statements and
information that are based on the beliefs of management as well as
assumptions made by and information currently available to management. When
used in this document, the words "anticipate," "believe," "estimate,"
"expect," "intend," "will," "plan," "should," "seek," and similar
expressions, are intended to identify forward-looking statements. Such
statements reflect the current view of management regarding future events
and are subject to certain risks, uncertainties and assumptions. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual actions or results may vary materially
from those described herein as anticipated, believed, estimated, expected
or intended.
The following discussion and analysis should be read in conjunction with
the company's consolidated financial statements and related footnotes for
the quarter ended March 31, 2006. The discussion of results, causes and
trends should not be construed to imply any conclusion that such results or
trends will necessarily continue in the future.
Results of Operations
EXECUTIVE SUMMARY
(A) Advanced Technologies Inc. has been receiving royalty income from
Kollsman Inc. Since August 12, 2002. This income is computed and paid on a
quarterly basis. Income fluctuates within quarterly intervals, variations
of +/- 30% are typical.
(B) Advance Technologies operations are based upon the present on going
sales revenue (royalties from Kollsman) and new business operations
focused on creating additional revenue in the future.
The Kollsman revenues have resulted from sales of Enhanced Vision
Systems to Gulfstream. The contract with Gulfstream continues, and
the sales provide a stay source of income to Advance Technologies.
Gulfstream has indicated they are pleased with the EVS and have
contracted for an improved EVS (EVS II) for both their new aircraft
sales and a retrofit market for sales of earlier models in previous
years. No projects have been provided by either Gulfstream Aerospace
Corporation or Kollsman for this market.
Kollsman has signed a contract with FedEx for future sales of EVS II
to FedEx. These sales are contingent upon FedEx receiving EVS
certification for each aircraft type and model. The total FedEx sales
have been estimated at 300 systems. It is anticipated that the sales
will be between 5 10 units per month.
The revenue to the company from Gulfstream & FedEx royalties is
expected to double by the end of 2006 and double again by the end of
2007.
10
Advance Technologies Inc. will be providing consultation and export
sales to United Integrated Services Inc., a Taiwan Corporation in
2006. The income from the sales will be approximately $200,000, and
the expense incurred is approximately $190,000. Since the contract is
a time & material, there is no incurred risk beyond potential loss of
profit.
Advance Technologies Inc. is pursuing a new product (Infrared Security
System). The funds for this new venture will be obtained from
investment sources without liability to Advance Technologies Inc.
Therefore, no incurred expense or set aside provisions for future
expense has been made.
(c) There are no off-balance sheet arrangements.
--------------------------------------------
MAJOR ACTIVITY
Highlights of Second Quarter
The Enhanced Vision System project continues with on going sales by
Kollsman to Gulfstream. These sales generally track the new aircraft
deliveries by Gulfstream. The retrofit market for Gulfstream continues at
a slow rate.
The introduction of EVS II for FedEx remains on schedule, with
certification anticipated before the end of 2006. When EVS II is placed in
production for FedEx it is expected that the Gulfstream retro-fit program
for older models of their G series aircraft, which will use the new EVS II
will increase.
United Integrated Services Inc. of Taiwan has informed ATI that they
plan on proceeding forward with the purchase and export of the 50 NV-2000
cameras authorized under our Dept. of Commerce Export license D326061,
validated Sep 21, 2004, expires Sep. 30 2006. The NV-2000 Cameras
components are produced in Taiwan and exported to ATI. ATI purchases the
detectors, and install the detectors in the Cameras for export as a
complete IR camera. 25 NV-2000 Cameras will be exported in May, and
another 25 Cameras are scheduled for September.
ATI has formed a subsidiary company to pursue the Infrared Security
System (ISS) opportunity. This wholly owned, Infrared Systems
International (ISIX or I-6) has been licensed by ATI for the intellectual
property pertaining to ISS. The ISS project requires a major effort that
encompasses advance technology in the areas of Infrared, Image Processing,
Wireless conductivity, Advanced Server Design, and Security Response
Providers.
Our initial discussions under binding Non-disclosure agreements have
been positive. As a result of these discussions the Board of Directors of
ATI recognizes the need to form ISIX. ISIX, as an arms length extension of
ATI, allows the structuring of the development team where equality
participation, exclusive or limited rights, preferred vendor relationships
and consultants can be accommodated consisted with the scope of the ISS
project. The ISS license agreement for ISS is attached as Exhibit 33.1 to
this filing.
Recreational Vehicle Systems Inc. is completing their incorporation
filing, and hopes to initiate operations this quarter. The degree of ATI's
participation, if any, will evolve over the next several months.
11
ATI continues to utilize the services of an SEC Attorney on retainer,
and contract for bookkeeping services on a time and material basis. This
has substantially added to our cost of ensuring that we are and remain
fully complaint to all SEC regulations.
SIX MONTHS ENDED MARCH 31, 2006 COMPARED WITH THE SIX MONTHS ENDED MARCH
31, 2005
NET SALES
Net sales for the company were approximately $11,100 for the six month
period ending on March 31, 2006 as compared to approximately $6,653 for the
same period a year earlier. The $6,653 for last year included $2,453
consulting fee. For the three month period ending on March 31, 2006 sales
were $4,800 as compared to $5,753 for the same period last year. The
increase in sales resulted from the total quantity of EVS units exceeded
the "royalty free" threshold in early 2005. The total sales of EVS by our
licensee were essentially the same.
GROSS PROFIT
The gross profit was the same as the NET PROFIT. Since Royalty income or
consulting fees have no cost of goods, the gross and net profits would be
the same.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating expense for the 6 month period ending March 31, 2006 was $38,962
as compared to $26,834 for the same six month period in 2005. The
operating expenses for the three month period ending on March 31, 2006 were
$23,371 versus $9,911 in 2005. The major increase in our operating cost
can be attributed to two factors. First additional controls and procedures
that have been implemented to ensure the company reporting are fully
compliant with Oxley Sarbanes requirements and other SEC reporting. This
represented about $5,000 increase in expense over prior periods. The
second expense is the inclusion of the cost for the President ($6,000 per
quarter), and Board of directors ($2,000 per quarter). This resulted in a
$16,000 loss for the six month period that included the $8,000 loss for the
three month period.
OTHER INCOME AND EXPENSE
For the six month period this year income expense was $2,919 versus $2,696
in 2005. Interest expense for the three month period ending March 31, 2006
was $1,487 compared to $1,435 in the like period of 2005.
NET PROFIT (LOSS) BEFORE PROVISIONS FOR INCOME TAXES
The net loss for the six month period ending March 31, 2006 was $30,781
versus $22,877 in 2005
The company's net loss for the 3 months ending on March 31, 2006 was
$20,058 versus $5,593 for the same three month period in 2005. The major
cost item for the company has been the changes in reporting and the
compensation for the President and the Board of Directors. Part of this
cost was a one time change over associated with a new system. We expect
that these costs will be reduced as our new procedures become a routine.
That, coupled with the likely potential for additional revenues in 2006
should reduce or eliminate our loss in the future.
12
THREE MONTHS ENDED MARCH 31, 2006 COMPARED WITH THE THREE MONTHS ENDED
MARCH 31, 2006:
NET SALES
For the three month period ending on March 31, 2006 sales were $4,800 as
compared to $5,753 for the same period last year. The increase in sales
resulted from the total quantity of EVS units exceeded the "royalty free"
threshold in early 2005.
GROSS PROFIT
The gross profit was the same as the NET PROFIT. Since Royalty income or
consulting fees have no cost of goods, the gross and net profits is the
same.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The operating expenses for the three month period ending on March 31, 2006
were $23,371 versus $9,911 in 2005. The major increase in our operating
cost can be attributed to two factors. First additional controls and
procedures that have been implemented to ensure the company reporting are
fully compliant with Oxley Sarbanes requirements and other SEC reporting.
This represented about $5,000 increase in expense over prior periods. The
second expense is the inclusion of the cost for the President ($6,000 per
quarter), and Board of directors ($2,000 per quarter). This resulted in a
loss $8,000 loss for the three month period.
OTHER INCOME AND EXPENSE
Interest expense for the three month period ending March 31, 2006 was
$1,487 compared to $1,435 in the like period of 2005.
NET PROFIT (LOSS) BEFORE PROVISON FOR INCOME TAXES
The company's net loss for the 3 months ending on March 31, 2006 was
$20,058 versus $5,593 for the same three month period in 2005. The major
cost item for the company has been the changes in reporting and the
compensation for the President and the Board of Directors. Part of this
cost was a one time change over associated with a new system. We expect
that these costs will be reduced as our new procedures become a routine.
LIQUIDITY AND CAPITAL RESOURCES
The company's primary source of revenues is from royalties from our EVS
licensee Kollsman. Our Royalties reported as revenues are net royalties
with the gross revenue at 2.27 times the reported royalties. The reduction
to net royalties is caused by the repayment of advance royalties as
specified in the Kollsman License Agreement. Based upon current sales, the
advance royalties will be fully paid by the end of 2006. This will cause
our net income to jump by a factor of 2.67 on the same number of sales.
The other source of income comes from our Agent agreement with United
Integrated Service Co. LTD, Taiwan. The collaboration with UIS has allowed
our company to be coupled into the Far East market. This Agent
relationship in 2006 will add between 4 and 6 thousand dollars to our net
earnings. The gross sale will be in excess of $200,000, but the cost of
goods at approximately 95% of the gross sales. This small margin reflects
the low risk nature of the transaction.
13
The company has formed a wholly owned subsidiary called I-6. The Infrared
Security System has been licensed to I-6. Under terms of the license (see
exhibit 10.1), I-6 has issued a promissory note to the company for
$100,000. This note when collected will defer internal expenses, the most
notable being for a patent attorney to complete the ISS patent filed last
November 6, 2005.
The company income has not been sufficient for meeting our expenses, as a
result our short term debt has increased slightly and the President has
loan additional money to the company, see discussion under OPERATIONS.
I-6 expects to receive investment funds from ISS Associates for
considerations limited to the ISS Venture. The company stands to benefit
through the success of I-6, but is structured to be insolated from any
liability. Investments in I-6 will be separately reported, but as part of
Advance Technologies Inc. for the immediate future.
OPERATIONS
The company operated at a substantial loss over the last six months of
$30,781. $16,000 of this loss was financed by the issuing of preferred
restricted shares at a 100% of face value to the President and Board of
Directors. The company has a short term corporate credit line that was
used to offset several thousands dollars. And lastly, the President loaned
the company an additional $4,000.
The reduction in audit and compliance costs through procedural efficiency
combined with increase in revenue by the end of 2006 are judged to be
adequate to preclude further selling of shares to raise capital.
INVESTING
The company made no investments during this reporting period.
FINANCING
The company believes that no additional financing will be required, and
present interim financing will meet all of our short term needs until
royalties will cover all of our expenses.
Item 3. Controls and Procedures
The President/CEO/CFO maintains direct control over all financial
proceeding of the company.
The President reviews all expenditures and reconciles the all income and
expenses through the Corporate Bank account. The President is the only
person authorized for this account. This procedure has been used since the
original company was established in 1993.
The President maintains budget control, and the Board of Directors
authorizes any new expenses.
14
PART II OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended March 31, 2006, the Company issued or
approved the issuance of an aggregate of 340,000 shares of AVTX Preferred
Stock to four directors or employees of the Company in consideration for
services provided to the Company. The transactions were non-public
offerings of securities exempt from registration under the Securities Act
of 1933, as amended, by virtue of Section 4(2) thereof.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
10.1 License Agreement with Infrared Security System
31.1 Certification of President, Chief Executive Officer and Chief
Financial Officer Pursuant to Rule 13-14 or Rule 15-14 of the
Securities and Exchange Act of 1934 as adopted pursuant to
Section 906 of The Sarbanes-Oxley act of 2002.
32.1 Certification of President, Chief Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 30, 2006 Advance Technologies, Inc.
(Registrant)
By:/s/ GARY E. BALL
---------------------------------------
Gary E. Ball
President and Director
16