FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
Commission file number 0-12984
ADVANCED TOBACCO PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-2285214
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
16607 Blanco Road, Suite 1504, San Antonio, Texas 78232
(Address of principal executive offices) (Zip Code)
(210) 408-7077
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports 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 N/A
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:
8,222,136 as of December 31, 2000
ADVANCED TOBACCO PRODUCTS, INC. PART I - FINANCIAL INFORMATION
dba ADVANCED THERAPEUTIC PRODUCTS, INC. ITEM 1: Financial Statements
BALANCE SHEETS
(Unaudited) (Audited)
December 31 September 30
2000 2000
| ASSETS: |
|
|
|
|
|
| CURRENT ASSETS: |
|
|
| Cash & cash equivalents |
$ 541,803 |
$ 123,746 |
| Investments |
703,569 |
565,153 |
| Payments Receivable |
193,719 |
107,792 |
|
|
|
| Total current assets: |
$1,439,091 |
$ 796,691 |
|
|
|
| LICENSE AGREEMENTS, Net: |
177,641 |
189,856 |
|
|
|
| INVESTMENTS: |
616,206 |
1,035,798 |
|
|
|
| TOTAL ASSETS: |
$2,232,938 |
$2,022,345 |
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY: |
|
|
|
|
|
| LIABILITIES: |
|
|
| Accrued Liabilities |
$ 43,192 |
$ 24,037 |
|
|
|
| TOTAL LIABILITIES: |
43,192 |
24,037 |
|
|
|
| STOCKHOLDERS' EQUITY: |
|
|
| Common stock, $.01 par value; |
|
|
| 30,000,000 shares authorized; |
|
|
| 8,222,136 shares and 8,192,136 |
|
|
| shares issued and outstanding as of |
|
|
| December 31, 2000, and September 30,
2000, respectively |
82,222 |
81,922 |
| Additional paid-in-capital |
12,595,767 |
12,587,628 |
| Accumulated deficit |
(10,488,243) |
(10,671,242) |
|
|
|
| TOTAL STOCKHOLDERS' EQUITY: |
2,189,746 |
1,998,308 |
|
|
|
| TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY: |
$2,232,938 |
$2,022,345 |
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended December 31
2000 1999
| REVENUES: |
|
|
| Product Payments |
$ 193,719 |
$ 91,863 |
| Total operating revenues: |
193,719 |
91,863 |
|
|
|
| EXPENSES: |
|
|
| General and administrative |
35,100 |
43,148 |
| Total operating expenses: |
35,100 |
43,148 |
|
|
|
| INCOME FROM OPERATIONS: |
158,619 |
48,715 |
|
|
|
| OTHER INCOME: |
|
|
| Interest Income |
24,380 |
31,461 |
| Total other income: |
24,380 |
31,461 |
|
|
|
| NET INCOME: |
$ 182,999 |
$ 80,176 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING: |
8,202,245 |
8,115,946 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING - |
|
|
| ASSUMING DILUTION: |
8,202,245 |
8,183,627 |
|
|
|
| INCOME PER COMMON SHARE - BASIC AND |
|
|
| ASSUMING DILUTION |
$ .02 |
$ .01 |
|
|
|
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended December 31
2000 1999
| CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
| Net income: |
182,999 |
$80,176 |
| Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
| Amortization of license agreements |
13,965 |
3,965 |
| Amortization of discount on investments |
(18,824) |
(15,856) |
| Increase in cash flows from changes |
|
|
| in operating assets and liabilities |
|
|
| Payments receivable |
(85,927) |
(91,863) |
| Accounts payable |
19,155 |
(6,006) |
| Net cash provided by operating activities: |
111,368 |
(29,584) |
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
| Purchase of license agreements and patent
costs |
(1,750) |
-0- |
| Purchase of investments |
-0- |
-0- |
| Sale or maturity of investments |
300,000 |
500,000 |
| Net cash provided by investing activities: |
298,250 |
500,000 |
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
| Exercise of stock Options |
8,439 |
43,750 |
| Dividends Paid |
-0- |
-0- |
| Net cash provided by financing activities: |
8,439 |
43,750 |
| |
|
|
| NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS: |
418,057 |
514,166 |
|
|
|
| CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD: |
123,746 |
689,801 |
|
|
|
| CASH & CASH EQUIVALENTS AT END OF PERIOD: |
$541,803 |
$1,203,967 |
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED FINANCIAL STATEMENTS
The condensed financial statements included herein have been
prepared by Advanced Tobacco Products, Inc., dba Advanced
Therapeutic Products, Inc. ("ATP") without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.
However, all adjustments have been made to the accompanying
financial statements which are, in the opinion of ATP's management,
necessary for the fair presentation of ATP's results of operations
for the period covered. Certain information and footnote
disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations,
although ATP believes that the disclosures are adequate to make the
information presented herein not misleading. These condensed
financial statements should be read in conjunction with the
financial statements and notes thereto included in ATP's Annual
Report on Form 10-K as of September 30, 2000.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operation
DISCUSSION OF OPERATIONS
In 1987, ATP sold patented nicotine technology, which forms the
basis of the Nicorette/Nicotrol Inhaler ("Inhaler"), to what is
now Pharmacia Corporation ("PHA"), in exchange for product
payments of 3% of Pharmacia's net sales of the Inhaler.
Product payments are payable on a country by country basis for the
greater of 10 years following the date of the first commercial sale
or the expiration of all issued patents enforceable in such
countries. There are payment limitations in the event of the sale
of a nicotine vapor product competitive with the Inhaler. There
are payment limitations when payment calculations exceed certain
ceilings, as more completely described in ATP's Annual Report on
Form 10-K as of September 30, 2000.
In September 1998, Pharmacia launched the Inhaler nationwide in the
U.S. as a prescription product. PHA has introduced the Inhaler,
primarily as an over-the-counter product, in 16 European countries,
Russia, Mexico, Australia, New Zealand, Hong Kong, Singapore and
Taiwan. ATP understands that additional country launches are
planned by PHA to occur as regulatory approvals are granted.
The Inhaler is the only nicotine replacement product designed to
help control a smoker's cravings for cigarettes while providing a
key behavioral component of smoking--the hand-to-mouth ritual. The
Inhaler consists of a mouthpiece and a cartridge containing
nicotine. The user puffs on the mouthpiece, inhaling the nicotine,
which is then absorbed through the lining of the mouth.
In September 1992, ATP obtained an exclusive worldwide license to
certain dry powder nicotine inhaler technology from Duke
University. ATP has obtained several patents covering this
technology. ATP believes that a dry powder nicotine inhaler has
the potential to be a future generation nicotine replacement
product.
Effective as of October 1993, ATP has an agreement with PHA under
which, among other matters, ATP has the right to receive a royalty
equal to .1% of net revenues received by PHA from the sale of any
product using a nicotine impermeable copolymer technology. Under
the terms of the agreement, ATP receives royalties from the sales
of PHA's Nicorette/Nicotrol Patch.
LIQUIDITY AND CAPITAL RESOURCES
Cash resources, including investments, available on December 31,
2000, were $1,861,578 as compared to $2,465,625 as of December 31,
1999. On January 10, 2001, and January 10, 2000, ATP paid dividends
aggregating $411,107 (5 cents per share) and $1,228,820 (15 cents
per share), respectively.
COMPARISON OF SELECTED FINANCIAL DATA
Operating revenues for the three month period ending December 31,
2000, increased to $193,719, as compared to $91,863 for the three
month period ending December 31, 1999. This increase is due to an
increase in product payments from PHA.
Interest income for the three month period ending December 31,
2000, decreased to $24,380, as compared to $31,461 for the three
month period ending December 31, 1999. This decrease is due to a
decrease in cash resources and investments.
Net income for the three month period ending December 31, 2000,
increased to $182,999, as compared to $80,176 for the three month
period ending December 31, 1999. This increase is due to an
increase in product payments from PHA.
General and administrative expenses for the three month period
ending December 31, 2000, decreased to $35,100, as compared to
$43,148 for the three month period ending December 31, 1999. This
decrease is due to minor variations in administrative costs.
PART II - OTHER INFORMATION
Item 1: Legal Proceedings. None
Item 2: Changes in Securities and Use of Proceeds. None
Item 3: Defaults Upon Senior Securities. None
Item 4: Submission of Matters to a Vote of Security Holders. None
Item 5: Other Information. None
Item 6: Exhibits and Reports on Form 8-K. None
Pursuant to the requirements 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.
ADVANCED TOBACCO PRODUCTS. INC.
(Registrant)
Dated: fEBRUARY 14, 2001
By: /S/ J.W. Linehan
J. W. Linehan,
Executive Officer and
Chief Accounting Officer
