SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 2004
Commission File No. 0-27175
ADVANCE TECHNOLOGIES, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Nevada 95-4755369
_____________________________ ____________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
716 Yarmouth Road # 215
Palos Verdes Estates, CA 90275
________________________________________
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 265-7776
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Common Name of Each exchange on which registered
National Association of Securities Dealers Securities
registered pursuant to Section 12(g) of the Act:
_________________________________
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 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 if disclosure of
delinquent filers pursuant to item 405 of Regulation
S-K is not contained herein, and will not be
contained, to the best of registrants's knowledge, in
definitive proxy or information statements
incorporated by reference in part III of this Form
10-KSB or any amendment to this Form 10-KSB. {X}
Issuer's revenues for its most recent fiscal year were $0.00
The aggregate market value of voting stock 28,319,416 held by non-
affiliates of the Registrant as of September 30, 2004 was approximately $
649,482.
On October 1, 2004, approximately 37,195,958 preferred Shares of the
Registrant's Common Stock, $0.001 par value, were outstanding.
Documents Incorporated by Reference
Exhibit A & Exhibit B
ADVANCE TECHNOLOGIES, INC.
TABLE OF CONTENTS
Page
PART I
Item 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . 5
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . 5
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . . . 5
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . 6
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . . 9
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . .24
PART III
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . .24
Item 10. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . .25
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . .25
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . .25
PART IV
Item 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORT. . . . .25
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . .26
PART I
ITEM 1. BUSINESS
Overview
Advance Technologies Inc. is a developer of Infrared Enhanced Vision
Technology and commercial solutions. The company has a worldwide license
from Hughes Aircraft company, Los Angeles, California for a patented
advanced infrared imaging system. Advance Technologies licenses and
develops applied infrared enhanced vision solutions for use in diverse
industries including aviation, recreational vehicles, commercial trucking,
marine, security, and fire fighting applications. The Company is currently
engaged in the development of night vision systems with applications in the
commercial sector.
Advance Technologies has entered into a licensing agreement with
Kollsman Inc., which has incorporated the company's technology and
intellectual property into an Enhanced Vision System for use on the
Gulfstream series of Aircraft. The system entered production in early 2002.
Kollsman has announced a new enhanced vision product in late 2002 for use
at the low-end private aviation market. This product is expected to enjoy
the same success as the Gulfstream product but with a far larger market.
Background
Advance Technologies, Inc. ("the Company") The Company was organized
under the laws of the State of Delaware under the name PWB Industries,
Inc.; the articles of incorporation were issued June 16, 1969. The name was
changed to Sun Energy, Inc. ("The Company"), which merged with Sto Med,
Inc. on February 22, 1996 changing its name to Sto Med, Inc. ("The
Company") and domicile to the State of Nevada. On February 23, 1996, Sto
Med, Inc.,a privately held California corporation, was acquired by Sto Med,
Inc. ("The Company") the California Corporation acquisition was rescinded
on August 23rd 1997. Sto Med Inc. ("The Company") the Nevada Corporation
changed its name to Advance Technologies, Inc., ("The Company") on August
23rd 1997. On September 27, 1999 the "Company" acquired Seacrest Industries
of Nevada, also known as Infrared Systems International.
The Company
The Registrant through its wholly owned subsidiary SEACREST
INDUSTRIES, INC., and through its president and director Mr. Gary Ball was
granted an exclusive world-wide license agreement for the use of US patent
number 5,534,694 by Hughes Aircraft Company, for a key optical element of
the Infrared Aircraft Landing System. Gary Ball founder and CEO of Infrared
Systems International (ISI) a/k/a Seacrest Industries International, Inc.
in 1992 formed the company for the singular purpose of providing
manufacturing and sales support for the unique Infrared System called
Enhanced Vision System (EVS). While employed by Electro-Optical Systems, a
segment of Hughes Aircraft Company, as senior Program Manager and engineer,
he led the research and development team responsible for the development of
the Enhanced Vision System (EVS).
This technology was designed to allow aircraft pilots to actually
"see" the airport environment through cloud ceiling or surface fog. The
factor of enhanced safety, alone, is generating an enormous demand for this
type of system.
Significant Corporate Milestones
In February of 2004 the Federal Aviation Administration adopted their
proposed change for operating rules which has greatly expand the EVS
market opportunities. These changes deal with the operating rules for
flight operations under low or reduced visibility conditions. Advance
Technologies Inc. is pleased with the finalization and the introduction of
these needed changes.
4
Gulfstream Aerospace announced at the NBAA show that EVS is available
as optional equipment on the G500, G-V, G-400, G-IVSP, and G300 business
jets. The optional equipment is available on new aircraft or retrofit to in
service aircraft. In addition, EVS will be standard equipment on the new
G550 and the newly announced G450.
At the NBAA show in Orlando, it was announced that Kollsman and FedEx
have reached an agreement whereby Kollsman will provide EVS systems for
FedEx's fleet of wide body aircraft. This market is estimated at 200
aircraft. The aircraft types involved are Boeing MD-10 & MD-11, and the
Airbus A300 & A310. These additional aircraft types represent a major
accomplishment for EVS.
Employees
The Company employs a total of three (3) employees, One of, which is
full time, the other two are used on a reduced hour work week on an as
required basis. This staff reduction is the result of economic conditions
discussed in the Management Discussion Section in depth.
ITEM 2. PROPERTIES
The Company's executive offices are located in Palos Verdes Estates,
California.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings known or pending against the Registrant
or its subsidiary.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's Security holders
through the solicitation of proxies or Otherwise, during the fiscal year
ended September 30, 2004.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company is currently trading, OTC, on the Nationals Association of
Securities Dealers "Pink Sheets" with the high bid at $0.13 per share and
the low bid of $0.02 per share during the last year. Additional information
required by this item may be found in the Company's 2003 Financial
Statements.
On September 30, 2004 there was 28,319,416 shares outstanding of
registrant's common stock, at $0.001 par value.
The increase of common stock from 22,766,517 to 28,319,416 resulted
from conversion of 144 restricted stock to free trading stock. The
conversion was authorized by the board of directors of Advance Technologies
on January 1, 2003.
On September 30, 2004 there was 37,195,958 shares outstanding of
registrant's preferred class B stock. The reduction from 42,748,857 to
37,195,958 was the result of the conversion of Class B shares to common
shares by shareholders during the fiscal year.
Effective January 1, 2004 the board of directors has authorized the
conversion of an additional 35% of preferred shares into common provided
the holding period has been satisfied. This will increase the converted
percentage to 100% once minimum holding periods have been satisfied.
5
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
REPORTS OF OPERATION
From time to time, we may publish forward-looking statements relating
to matters, including anticipated financial performance business projects,
the progress and goals for our research and development programs, marketing
strategies, and other similar matters. The Private Securities Litigation
Reform Act of 1995 provides a safe harbor; a variety of factors could cause
Our actual results and experience to differ materially from the Anticipated
results or other expectations expressed in our Forward-looking statements.
In addition, we disclaim any Intent or obligation to update those
forwarding-looking statements.
When used in this discussion, the words "believes," "anticipates"
"expected", "assumes", "and similar expressions are intended to identify
forward looking statements. Such statements are subject to risks and
uncertainties that could cause actual results to differ materially from
those projected. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of the date of this report.
We undertake no obligation to publicly release the results of any Revisions
to these forward-looking statements that may be made To reflect events or
circumstances after the date of this report or to Reflect the occurrence of
unanticipated events.
MANAGEMENT DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS 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 advance IR
technology into application specific markets shortens the development-to-
market cycle and associated high investment risks of this enterprise.
Highlights of the Year
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.
ATI application for an export license for 50 additional IR Cameras for
United Integrated Services has been approved. This will be the third
license ATI has obtained for UIS. The export license application is with
United States Department of Commerce. The explore value for the 50 units is
$250,000.00 as specified in the export license.
ENHANCED VISION ACTIVITIES
Enhance Vision System, our first project; has entered production.
Advance Technologies benefits through a license agreement with Kollsman
Inc.
6
Kollsman has issued a detailed report of all sales and deliveries
through September 30, 2004. The EVS market continues to develop on
schedule. As stated in our June 30, 2004 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 to prevent tracking of EVS sales by
potential competitors. This action is in response to increase activity in
the EVS market. 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.
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.
7
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 September 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 has been approved. This will be the third
license ATI has obtained for UIS. The export license application is with
United States Department of Commerce. The explore value for the 50 units is
$250,000.00 as specified in the export license.
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 been placed on
hold. As a result, ATI will continue to investigate other options as they
present themselves.
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.
8
ITEM 7. FINANCIAL STATEMENTS.
ADVANCE TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Financial Statements
September 30, 2004 and 2003
C O N T E N T S
Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . .11
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . .13
Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . .14
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . 17
Notes to the Financial Statements. . . . . . . . . . . . . . . . . . . 19
/Letterhead/
INDEPENDENT AUDITOR'S REPORT
------------------------------
To the Board of Directors and Stockholders of
Advance Technologies, Inc.
(A Development Stage Company)
We have audited the accompanying consolidated balance sheets of Advance
Technologies, Inc. (a development stage company) as of September 30, 2004
and 2003 and the related statements of operations, stockholders' equity and
cash flows for the years ended September 30, 2004 and 2003 and from
inception on October 1, 1985 through September 30, 2004. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Advance
Technologies, Inc. (a development stage company) as of September 30, 2004
and 2003 and the results of its operations and cash flows for the years
ended September 30, 2004 and 2003 and from inception on October 1, 1985
through September 30, 2004 in conformity with the standards of the Public
Company Accounting Oversight Board (United States).
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has minimal assets and is dependent upon
financing to continue operations. These factors raise substantial doubt
about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in the Note 2. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Chisholm, Bierwolf & Nilson, LLC
Chisholm, Bierwolf, & Nilson, LLC
Bountiful, Utah
December 27, 2003
11
Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
-------
September 30,
2004 2003
----------- -----------
CURRENT ASSETS
Cash $ 1,773 $ -
----------- -----------
Total Current Assets 1,773 -
----------- -----------
PROPERTY & EQUIPMENT, net 6,562 14,440
----------- -----------
TOTAL ASSETS $ 8,335 $ 14,440
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
CURRENT LIABILITIES
Bank Overdraft $ - $ 2,029
Accounts payable 4,883 9,637
Accrued Interest - -
Advance Royalties - 25,000
Notes payable-officer 59,300 46,800
----------- -----------
Total Current Liabilities 64,183 83,466
LONG-TERM DEBT
Line of Credit - -
----------- -----------
TOTAL LIABILITIES 64,183 83,466
STOCKHOLDERS' EQUITY
Common stock, authorized 100,000,000 shares of
$0.001 par value, issued and outstanding
28,319,416 and 22,766,517 shares, respectively 28,319 22,766
Preferred Stock, Series A authorized 100,000,000
shares of $0.001 par value, issued and outstanding
37,195,958 and 38,748,857 shares, respectively 37,196 38,749
Additional paid-in capital 550,889 549,780
Retained earnings (deficit) (672,252) (680,321)
----------- -----------
Total Stockholders' Equity (55,848) (69,026)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,335 $ 14,440
=========== ===========
The accompanying notes are an integral part of these financial statements.
12
Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
For the Period
of entering
Development
Stage on
October 1,
For the Year Ended 1985 Through
September 30, September 30,
2004 2003 2004
----------- ----------- -----------
REVENUES
Royalty Income $ 25,000 $ - $ 25,000
Consulting Fees 5,366 - 65,390
Product Sales 119,073 - 119,073
----------- ----------- -----------
Total Sales 149,439 - 209,463
COST OF GOODS SOLD
Product Purchases 114,020 - 114,020
----------- ----------- -----------
Gross Profit 35,419 - 95,443
EXPENSES
Depreciation & Amortization 7,877 7,927 45,323
Organization Costs - - 11,301
Research & Development - - 72,750
General and administrative 19,473 23,890 713,054
----------- ----------- -----------
Total Expenses 27,350 31,817 842,428
----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS 8,069 (31,817) (746,985)
----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest Expense - - (23,267)
Miscellaneous Income - - 98,000
----------- ----------- -----------
Total Other Income (Expense) - - 74,733
----------- ----------- -----------
NET INCOME (LOSS) $ 8,069 $ (31,817) $ (672,252)
=========== =========== ===========
NET LOSS PER SHARE
Loss Per Share $ (0.00) $ (0.00) $ (0.20)
=========== =========== ===========
Weighted average shares
outstanding 25,219,406 20,249,214 3,338,729
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
13
Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
(For the period of entering development stage on October 1, 1985
through September 30, 2004)
Deficit
Accumulated
Additional During the
Common Stock Paid-In Preferred Stock Development
Shares Amount Capital Shares Amount Stage
----------- -------- ---------- ----------- --------- ----------
Balance,
October 1, 1985
(beginning of the
development stage) 6,487 $ 7 $58,161 - $ - $ (60,701)
Shares issued for
coal royalties at
$0.01 4,369 4 1,525 - - -
Shares issued for
services at $0.25 554 1 4,849 - - -
Shares issued for
services at $0.03 1,601 2 1,680 - - -
Shares issued for
services at $0.25 1,274 1 11,145 - - -
Shares issued for
services at $0.01 2,290 2 798 - - -
Shares issued for
services at $0.25 37,203 37 325,487 - - -
Preferred shares
issued for services - - - 10,048 1,004 -
Preferred shares
expire - - 1,004 (10,048) (1,004) -
Net loss since the
beginning of the
development stage
at October 1, 1985 - - - - - (344,001)
----------- -------- ---------- ----------- --------- ----------
Balance,
September 30, 1995 53,778 54 404,649 - - (404,702)
Shares issued for
services at $0.25 5,714 6 49,994 - - -
Share round up (6) (1) - - - -
Net loss for
the year ended
September 30, 1996 - - - - - (50,000)
Balance,
September 30, 1996 59,486 59 454,643 - - (454,702)
The accompanying notes are an integral part of these financial statements.
14
Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
(For the period of entering development stage on October 1, 1985
through September 30, 2004)
Deficit
Accumulated
Additional During the
Common Stock Paid-In Preferred Stock Development
Shares Amount Capital Shares Amount Stage
----------- -------- ---------- ----------- --------- ----------
Balance Forward 59,486 59 454,643 - - (454,702)
Shares issued for
services at $0.25 608 1 5,324 - - -
Net loss for
the year ended
September 30, 1997 - - - - - (5,325)
----------- -------- ---------- ----------- --------- ----------
Balance,
September 30, 1997 60,094 60 459,967 - - (460,027)
Shares issued for
services at $0.001 12,828 13 436 - - -
Net loss for
the year ended
September 30, 1998 - - - - - (447)
----------- -------- ---------- ----------- --------- ----------
Balance,
September 30, 1998 72,922 73 460,403 - - (460,474)
Shares issued for
cash at $0.01 2,500,000 2,500 22,500 - - -
Shares issued for
common stock of
SeaCrest Industries
Corp. at $0.001 - - (36,457) 50,254,102 50,254 -
Net loss for
the year ended
September 30, 1999 - - - - - (90,126)
----------- -------- ---------- ----------- --------- ----------
Balance,
September 30, 1999 2,572,922 2,573 446,446 50,254,102 50,254 (550,600)
Net loss for
the year ended
September 30, 2000 - - - - - (101,799)
----------- -------- ---------- ----------- --------- ----------
Balance, September
30, 2000 2,572,922 2,573 446,496 50,254,102 50,254 (652,399)
The accompanying notes are an integral part of these financial statements.
15
Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
(For the period of entering development stage on October 1, 1985
through September 30, 2004)
Deficit
Accumulated
Additional During the
Common Stock Paid-In Preferred Stock Development
Shares Amount Capital Shares Amount Stage
----------- -------- ---------- ----------- --------- ----------
Balance Forward 2,572,922 2,573 446,446 50,254,102 50,254 (652,399)
Net income (loss)
for the year ended
September 30, 2001 - - - - - 31,669
----------- -------- ---------- ----------- --------- ----------
Balance,
September 30, 2001 2,572,922 2,573 446,446 50,254,102 50,254 (620,730)
Shares issued for
services at $0.001 3,250,000 3,250 - - - -
Shares converted to
common stock 11,396,045 11,396 - (11,396,045)(11,396) -
Net income (loss)
for the year ended
September 30, 2002 - - - - - (27,774)
----------- -------- ---------- ----------- --------- ----------
Balance,
September 30, 2002 17,218,967 17,219 446,446 38,858,057 38,858 (648,504)
Shares issued for
conversion of debt 5,438,350 5,438 103,334 - - -
Shares issued for
conversion of
Preferred stock 109,200 109 - (109,200) (109) -
Net income (loss)
for the year ended
September 30, 2003 - - - - - (31,817)
----------- -------- ---------- ----------- --------- ----------
Balance,
September 30, 2003 22,766,517 22,766 549,780 38,748,857 38,749 (680,321)
Shares issued for
private placement 4,000,000 4,000 1,109 - - -
Shares issued for
conversion of
Preferred stock 1,552,899 1,553 - (1,552,899) (1,553) -
Net income (loss)
for the year ended
September 30, 2004 - - - - - 8,069
----------- -------- ---------- ----------- --------- ----------
Balance,
September 30, 2004 28,319,416 $28,319 $550,889 37,195,958 $ 37,196 $(672,252)
=========== ======== ========== =========== ========= ==========
The accompanying notes are an integral part of these financial statements.
16
Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Period
of entering
Development
Stage on
October 1,
For the Year Ended 1985 Through
September 30, September 30,
2004 2003 2004
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ 8,069 $ (31,817) $ (672,252)
Adjustments to reconcile net loss to net cash,
provided by operations:
Stock issued for services - - 403,025
Depreciation & Amortization 7,877 7,927 45,323
Organization Costs - - 11,331
Decrease in prepaids - - 14,680
Increase (Decrease) in accrued liabilities (31,782) 11,671 68,857
----------- ----------- -----------
Net Cash Flows Used in Operating Activities (15,836) (12,219) (134,036)
----------- ----------- -----------
CASH FLOWS USED IN INVESTMENT ACTIVITIES
Purchase of Equipment - - (39,386)
Investment in Subsidiary - - 286
----------- ----------- -----------
Net Cash Used in Investment Activities - - (39,100)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash paid on Loan from Officer (7,000) - (48,200)
Proceeds from Loan from Officer 19,500 10,500 107,500
Proceeds from Line of Credit - - 85,500
Proceeds from Issuance of Stock 5,109 - 30,109
----------- ----------- -----------
Net Cash Flows from Financing Activities 17,609 10,500 174,909
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 1,773 (1,719) 1,773
CASH, BEGINNING OF YEAR - 1,719 -
----------- ----------- -----------
CASH, END OF YEAR $ 1,773 $ - $ 1,773
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
17
Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
-Continued-
For the Period
of entering
Development
Stage on
October 1,
For the Year Ended 1985 Through
September 30, September 30,
2004 2003 2004
----------- ----------- -----------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Paid for:
Interest $ - $ - $ -
Taxes $ - $ - $ -
SUPPLEMENTAL NON-CASH INFORMATION
In March 2003, the Company issued 5,438,350 shares for the satisfaction of a
line of credit and accrued interest in the amount of $108,772.
During the year ending September 30, 2003, a total of 109,200 shares of
preferred stock were converted to common stock.
During December 2001, the Company issued 3,250,000 shares of common stock for
services valued at $3,250 (or $.001 per share).
During the year ending September 30, 2002, a total of 11,396,045 shares of
preferred stock were converted to common stock.
During the year ending September 30, 2004, a total of 1,552,869 shares of
preferred stock were converted to common stock.
The accompanying notes are an integral part of these financial statements.
18
Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2004 and 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The Company was organized under the laws of the state of Delaware
on June 16, 1969 as PWB Industries, Inc. On November 10, 1975,
the Company changed its name to Sun Energy, Inc. At that time,
the Company began operations in the oil and gas lease industry.
By 1985, the Company discontinued its operations and became
dormant. On March 6, 1996, the Company attempted a merger which
failed. On August 23, 1997, the Company changed its name to
Advance Technologies, Inc. and changed its place of domicile to
from Delaware to Nevada.
On September 27, 1999, pursuant to a plan of acquisition, the
Company exchanged 50,254,102 shares of its Seris "A" preferred
stock for 50,254,102 shares of SeaCrest Industries Corporation's
common stock. This acquisition has been accounted for using the
purchase method of a business combination.
The Company is currently engaged in the development of a night
vision system with applications in the military as well as civil.
The Company has an agreement with a Taiwan company wherein they
are jointly developing the night vision system for use in Class A
coaches. The Company is also involved in the development of
other Electro-optical mechanical devices.
b. Accounting Method
The Company recognizes income and expenses on the accrual basis
of accounting.
c. Consolidation
The consolidated financial statement include the accounts of
Advanced Technologies, Inc. and SeaCrest Industries Corporation,
a wholly owned subsidiary. Intercompany transactions have been
eliminated.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with
maturities of three months or less to be cash equivalents.
19
Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2004 and 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on
the weighted average number of shares outstanding at the date of
the financial statements.
From
Inception on
October 1,
For the Years Ended 1985 Through
September 30, September 30,
2004 2003 2004
------------- ------------- -------------
Numerator - net loss $ 8,062 $ (31,817) $ (672,252)
Denominator - weighted
average number of shares
outstanding 20,249,214 20,249,214 3,338,729
============= ============= =============
Loss per share $ (0.00) $ (0.00) $ (0.20)
============= ============= =============
f. Provision for Income Taxes
No provision for income taxes has been recorded due to net
operating loss carryforwards totaling approximately $679,252 that
will be offset against future taxable income. These NOL
carryforwards begin to expire in the year 2004. No tax benefit has
been reported in the financial statements because the Company
believes there is a 50% or greater chance the carryforward will
expire unused.
Accordingly, per FASB 109, the potential tax benefits of the loss
carryforwards are offset by the valuation of the same amount.
Deferred tax assets and the valuation account is as follows at
September 30, 2004 and 2003.
September 30,
2004 2003
------------ ------------
Deferred tax asset:
NOL carryforward $ 196,946 $ 231,200
Valuation allowance (196,946) (231,200)
------------ ------------
Total $ - $ -
============ ============
20
Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2004 and 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and revenues
and expenses during the reporting period. In these financial
statements assets and liabilities involve extensive reliance on
management's estimates. Actual results could differ from those
estimates.
h. Revenue Recognition
The Company receives revenues for consulting services performed
and product sales. Consulting services are recorded as sales
when services are complete. Product sales are recorded as
revenue when the products are shipped to the buyer.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company
is dependent upon raising capital to continue operations. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty. It is management's
plan to raise capital in order to define expand their business
operations, thus creating necessary operating revenue.
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined in
Financial Accounting Standards Board Statement No. 7. It is
concentrating substantially all of its efforts in raising capital
and developing its business operations in order to generate
significant revenues.
21
Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2004 and 2003
NOTE 4 - PROPERTY & EQUIPMENT
Property & Equipment consists of the following at September 30,
2004 and 2003:
September 30,
2004 2003
------------ ------------
Equipment $ 39,386 $ 39,386
Less: Accumulated Depreciation (32,824) (24,946)
------------ ------------
Net Property & Equipment $ 6,562 $ 14,440
============ ============
Expenditures for property and equipment and for renewals and
betterments, which extend the originally estimated economic life
of assets or convert the assets to a new use, are capitalized at
cost. Expenditures for maintenance, repairs and other renewals
of items are charged to expense. When items are disposed of the
cost and accumulated depreciation are eliminated from the
accounts, and a gain or loss is included in the results of
operations.
The provision for depreciation is calculated using the straight-
line method over the estimated useful lives of the assets. The
useful lives of equipment are 5 years. Depreciation expense for
the years ended September 30, 2004 and 2003 are $7,877 and
$7,927, respectively.
NOTE 5 - ADVANCED ROYALTIES
SeaCrest Industries Corporation, formerly Infrared Systems
International, Inc., entered into a licensing agreement for
marketing and distributing of infrared aircraft landing systems.
Seacrest received $25,000 in advances. These royalty revenues
were deferred until revenue streams occur. During the fiscal
2004 year, the Company generated sales of the systems and claimed
the royalty as income.
NOTE 6 - RELATED PARTY TRANSACTIONS
As of September 30, 2004 and 2003, the Company owes an officer
the Company $66,300 and $46,800 for loans made. This note
payable-officer is considered a current liability with no
provision for interest.
22
Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2004 and 2003
NOTE 7 - COMMON STOCK
During December 2001, the Company issued 3,250,000 shares of
previously authorized but unissued common stock for consulting
services for $3,250 (or $.001 per share).
During the year ended September 30, 2002, 11,396,045 shares of
preferred stock were converted to common stock.
In December 2002, the Company issued 5,438,350 shares of common
stock in satisfaction of $85,500 in debt and $23,267 of accrued
interest.
During the year ended September 30, 2003, preferred shareholders
converted 109,200 shares of preferred stock for 109,200 shares of
common stock.
During the year ended September 30, 2004, preferred shareholders
converted 1,552,899 shares of preferred stock for 1,552,899
shares of common stock.There was also a private placement of
common stock in the amount of 4,000,000 shares for cash of
$5,109.
23
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTS ON ACCOUNTING
FINANCIAL DISCLOSURE:
None
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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 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 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 October 1, 2004.
Wendy S. Ball, has resigned from the Board of Directors, effective
January 1, 2005.
Mr. James Watson has joined Advance Technologies Board of Directors.
Mr. Watson's extensive experience as Director of Marketing for Western
Airlines will provide valuein sight into marketing issues effecting the
entry of EVS into the passenger segment of commercial aviation. Mr.
Watson's term with the Board will begin January 1, 2005.
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 September 30, 2004, 560,000 shares of ATI preferred shares
has been placed, and the activity is continuing.
GARY E. BALL Age 67, residing in Manhattan Beach, California is
married. He attended California State University at Long Beach graduating
in 1968 with a BSEE and MSEE, went on to perform Graduate Studies at
University of Southern California. He has specialized in product design,
development, and management for North American Aviation, Autonetics
Division. Technical Manager in charge of the Pave Track program for Ford
Aerospace. Program Manager for Northrop Electro-Mechanical in charge of
business development on several classified DOD programs, including the
AMRAAM effort. Program Manager for Hughes Aircraft where he developed the
Infrared Enhanced Vision System, reporting to the President of EDSG as
directed by General Motors and directed all non-core business. He is a
member of NATO NIAG study group on Aircraft Integration. He has authored
several articles for trade publications, the last 4 years he has provided
consulting services to 10 U.S. and foreign corporations in the field of IR
technology.
WENDY BALL Age 56, residing in Manhattan Beach, California is married.
She graduated from University of Southern California, BS cum Laude. Her
career has been focused on retail merchandising, where she has demonstrated
exceptional skills in management, team building and communications. She is
National Sales Director for Christian Lacroix New York, a wholly owned
subsidiary of Louis Vitton Moet Hennessey (LVNH). She was an account
executive for Carolee Jewelry for Southern California, Arizona and Utah.
She was co-owner Brava Specialty Clothing Store in Redondo Beach,
California.
24
ITEM 10. EXECUTIVE COMPENSATION
Other than information provided in the Company's 2003 Financial
Statements incorporated herein, executive officers and directors have
received no other compensation.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(1) Name and Address of (2) Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
______________ ___________________ ____________________ _______
Preferred Gary E. Ball 9,240,000 Issued Shares 15.0
28 Santa Cruz Court
Manhattan Beach, CA 90266
Preferred Wendy Ball 9,240,000 Issued Shares 15.0
28 Santa Cruz Court
Manhattan Beach, CA 90266
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Gary E. Ball and Wendy Ball are married.
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are filed as part of this Form 10-KSB Annual
Report:
Exhibit 31 - Section 302 Certification
Exhibit 32 - Section 906 Certification
25
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: January 14, 2005 Advance Technologies, Inc.
(Registrant)
By:/s/ GARY E. BALL
__________________________
Gary E. Ball
President and Director
26