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 March 31, 2001
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 March 31, 2001
| ADVANCED TOBACCO PRODUCTS, INC. |
PART I - |
FINANCIAL INFORMATION |
| dba ADVANCED THERAPEUTIC PRODUCTS, INC. |
ITEM 1: |
Financial Statements |
| BALANCE SHEETS |
|
|
|
(Unaudited) |
(Audited) |
|
March 31 |
September 30 |
|
2001 |
2000 |
| ASSETS: |
|
|
|
|
|
| CURRENT ASSETS: |
|
|
| Cash & cash equivalents |
$ 29,549 |
$ 123,746 |
| Investments |
800,826 |
565,153 |
| Payments Receivable |
163,063 |
107,792 |
|
|
|
| Total current assets: |
$ 993,438 |
$ 796,691 |
|
|
|
| LICENSE AGREEMENTS, Net: |
173,676 |
189,856 |
|
|
|
| INVESTMENTS: |
752,046 |
1,035,798 |
|
|
|
| TOTAL ASSETS: |
$1,919,160 |
$2,022,345 |
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY: |
|
|
|
|
|
| LIABILITIES: |
|
|
| Accrued Liabilities |
$ 8,281 |
$ 24,037 |
|
|
|
| TOTAL LIABILITIES: |
8,281 |
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 |
|
|
| March 31, 2001, and September 30,
2000, respectfully |
82,222 |
81,922 |
| Additional paid-in-capital |
12,595,767 |
12,587,628 |
| Accumulated deficit |
(10,767,110) |
(10,671,242) |
|
|
|
| TOTAL STOCKHOLDERS' EQUITY: |
1,910,879 |
1,998,308 |
|
|
|
| TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY: |
$1,919,160 |
$2,022,345 |
| ADVANCED TOBACCO PRODUCTS, INC. |
|
|
| dba ADVANCED THERAPEUTIC PRODUCTS, INC. |
|
|
| STATEMENTS OF INCOME |
|
|
|
(Unaudited) |
|
|
Three Months |
Ended March 31 |
|
2001 |
2000 |
| REVENUES: |
|
|
| Product Payments |
$ 163,063 |
$ 182,153 |
| Total operating revenues: |
163,063 |
182,153 |
|
|
|
| EXPENSES: |
|
|
| General and administrative |
51,094 |
31,561 |
| Total operating expenses: |
51,094 |
31,561 |
|
|
|
| INCOME FROM OPERATIONS: |
111,969 |
150,592 |
|
|
|
| OTHER INCOME: |
|
|
| Interest Income |
20,272 |
18,150 |
| Total other income: |
20,272 |
18,150 |
|
|
|
| NET INCOME: |
$ 132,241 |
$ 168,742 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING: |
8,222,136 |
8,192,136 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING - |
|
|
| ASSUMING DILUTION: |
8,222,136 |
8,195,624 |
|
|
|
| INCOME PER COMMON SHARE - BASIC AND |
|
|
| ASSUMING DILUTION |
|
|
|
$ .02 |
$ .02 |
| ADVANCED TOBACCO PRODUCTS, INC. |
|
|
| dba ADVANCED THERAPEUTIC PRODUCTS, INC. |
|
|
| STATEMENTS OF INCOME |
|
|
|
(Unaudited) |
|
|
Six Months |
Ended March 31 |
|
2001 |
2000 |
| REVENUES: |
|
|
| Product Payments |
$ 356,782 |
$ 274,016 |
| Total operating revenues: |
356,782 |
274,016 |
|
|
|
| EXPENSES: |
|
|
| General and administrative |
86,194 |
74,709 |
| Total operating expenses: |
86,194 |
74,709 |
|
|
|
| INCOME FROM OPERATIONS: |
270,588 |
199,307 |
|
|
|
| OTHER INCOME: |
|
|
| Interest Income |
44,652 |
49,612 |
| Total other income: |
44,652 |
49,612 |
|
|
|
| NET INCOME: |
$ 315,240 |
$ 248,919 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING: |
8,212,081 |
8,104,533 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING - |
|
|
| ASSUMING DILUTION: |
8,212,143 |
8,149,953 |
|
|
|
| INCOME PER COMMON SHARE - BASIC AND |
|
|
| ASSUMING DILUTION |
$ .04 |
$ .03 |
| ADVANCED TOBACCO PRODUCTS, INC. |
|
|
| dba ADVANCED THERAPEUTIC PRODUCTS, INC. |
|
|
| STATEMENTS OF CASH FLOWS |
|
|
|
(Unaudited) |
|
|
Six Months |
Ended March 31 |
|
2001 |
2000 |
| CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
| Net income: |
$ 315,240 |
$ 248,919 |
| Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
| Amortization of license agreements |
17,930 |
7,930 |
| Amortization of discount on investments |
(37,430) |
(33,580) |
| Increase in cash flows from changes |
|
|
| in operating assets and liabilities |
|
|
| Payments receivable |
(55,271) |
(30,017) |
| Accounts payable |
(15,756) |
(9,113) |
| Net cash provided by operating activities: |
224,713 |
184,139 |
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
| Purchase of license agreements and patent
costs |
(1,750) |
-0- |
| Purchase of investments |
(214,491) |
(148,593) |
| Sale or maturity of investments |
300,000 |
500,000 |
| Net cash provided by investing activities: |
83,759 |
351,407 |
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
| Exercise of Stock Options |
8,439 |
43,750 |
| Dividends Paid |
(411,108) |
(1,228,820) |
| Net cash used in financing activities: |
(402,669) |
(1,185,070) |
| |
|
|
| NET DECREASE IN CASH AND CASH EQUIVALENTS: |
(94,197) |
(649,524) |
|
|
|
| CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD: |
123,746 |
689,801 |
|
|
|
| CASH & CASH EQUIVALENTS AT END OF PERIOD: |
$ 29,549 |
$ 40,277 |
|
|
|
NOTES TO 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 PHA'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, PHA 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, in addition to 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 now receives royalties from the
sales of PHA's Nicorette®/Nicotrol® Patch.
LIQUIDITY AND CAPITAL RESOURCES
Cash resources, including investments, available on March 31, 2001, were $1,582,421,
as compared to $1,466,665 as of March 31, 2000. On January 10, 2001, and January
10, 2000, ATP paid dividends aggregating $411,108 (5 cents per share) and $1,228,820
(15 cents per share), respectively.
COMPARISON OF SELECTED FINANCIAL DATA
Operating revenues for the six month period ending March 31, 2001, increased to
$356,782, as compared to $274,016 for the six month period ending March 31, 2000.
This increase is due to an increase in Inhaler product payments from PHA.
Interest income for the six month period ending March 31, 2001, decreased to
$44,652, as compared to $49,612 for the six month period ending March 31, 2000.
This decrease is due to minor variations in earnings on investments.
Net income for the six month period ending March 31, 2001, increased to $315,240,
as compared to $248,919 for the six month period ending March 31, 2000. This
increase is due to an increase in product payments from PHA.
General and administrative expenses for the six month period ending March 31, 2001,
increased to $86,194, as compared to $74,709 for the six month period ending March
31, 2000. This increase 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: May 14, 2001
By:
/s/ J.W. Linehan
J. W. Linehan
Chief Executive Officer and
Chief Accounting Officer
