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 June 30, 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:
8,212,136 as of June 30, 2001
ADVANCED TOBACCO PRODUCTS, INC. PART I - FINANCIAL INFORMATION
dba ADVANCED THERAPEUTIC PRODUCTS, INC. ITEM 1: Financial Statements
BALANCE SHEETS
(Unaudited) (Audited)
June 30 September 30
2001 2000
| ASSETS: |
|
|
|
|
|
| CURRENT ASSETS: |
|
|
| Cash & cash equivalents |
$ 76,794 |
$ 123,746 |
| Investments |
733,440 |
565,153 |
| Payments Receivable |
144,522 |
107,792 |
|
|
|
| Total current assets: |
$ 954,756 |
$ 796,691 |
|
|
|
| LICENSE AGREEMENTS, Net: |
170,573 |
189,856 |
|
|
|
| INVESTMENTS: |
914,668 |
1,035,798 |
|
|
|
| TOTAL ASSETS: |
$2,039,997 |
$2,022,345 |
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY: |
|
|
|
|
|
| LIABILITIES: |
|
|
| Accrued Liabilities |
$ 32,824 |
$ 24,037 |
|
|
|
| TOTAL LIABILITIES: |
32,824 |
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 |
(10,670,816) |
(10,671,242) |
|
|
|
| TOTAL STOCKHOLDERS' EQUITY: |
2,007,173 |
1,998,308 |
|
|
|
| TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY: |
$2,039,997 |
$2,022,345 |
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended June 30
2001 2000
| REVENUES: |
|
|
| Product Payments |
$ 144,522 |
$ 114,708 |
| Total operating revenues: |
144,522 |
114,708 |
|
|
|
| EXPENSES: |
|
|
| General and administrative |
68,684 |
28,445 |
| Total operating expenses: |
68,684 |
28,445 |
|
|
|
| INCOME FROM OPERATIONS: |
75,844 |
86,263 |
|
|
|
| OTHER INCOME: |
|
|
| Interest Income |
20,456 |
24,080 |
| Total other income: |
20,456 |
24,080 |
|
|
|
| NET INCOME: |
$ 96,294 |
$110,343 |
|
|
|
| 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 |
8,192,136 |
|
|
|
| INCOME PER COMMON SHARE - BASIC AND |
|
|
| ASSUMING DILUTION |
$ .012 |
$ .015 |
|
|
|
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended June 30
2001 2000
| REVENUES: |
|
|
| Product Payments |
$ 501,304 |
$ 388,724 |
| Total operating revenues: |
501,304 |
388,724 |
|
|
|
| EXPENSES: |
|
|
| General and administrative |
154,878 |
103,154 |
| Total operating expenses: |
154,878 |
103,154 |
|
|
|
| INCOME FROM OPERATIONS: |
346,426 |
285,570 |
|
|
|
| OTHER INCOME: |
|
|
| Interest Income |
65,108 |
73,692 |
| Total other income: |
65,108 |
73,692 |
|
|
|
| NET INCOME: |
$ 411,534 |
$359,262 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING: |
8,215,433 |
8,166,954 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING - |
|
|
| ASSUMING DILUTION: |
8,215,801 |
8,182,132 |
|
|
|
| INCOME PER COMMON SHARE - BASIC AND |
|
|
| ASSUMING DILUTION |
$ .05 |
$ .045 |
|
|
|
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended June 30
2001 2000
| CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
| Net income: |
$411,534 |
$359,262 |
| Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
| Amortization of license agreements |
21,895 |
11,895 |
| Amortization of discount on investments |
(57,111) |
(56,832) |
| Increase (decrease) in cash flows from |
|
|
| changes in operating assets and liabilities |
|
|
| Payments receivable |
(36,730) |
(26,957) |
| Accounts payable |
8,787 |
(7,117) |
| Net cash provided by operating activities: |
348,375 |
334,165 |
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
| Purchase of license agreements and patent
expenses |
(2,612) |
(20,864) |
| Purchase of investments |
(565,046) |
(485,691) |
| Maturity of investments |
575,000 |
800,000 |
| Net cash provided by investing activities: |
7,342 |
293,445 |
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
| Exercise of stock Options |
8,439 |
43,750 |
| Dividends Paid |
(411,108) |
(1,228,820) |
| Net cash provided by financing activities: |
(402,669) |
(1,185,070) |
| |
|
|
| NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS: |
(46,952) |
(557,460) |
|
|
|
| CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD: |
123,746 |
689,801 |
|
|
|
| CASH & CASH EQUIVALENTS AT END OF PERIOD: |
$76,794 |
$132,341 |
|
|
|
|
|
|
|
|
|
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/Nicortol Inhaler (Inhaler), to what is now Pharmacia Corporation (PHA) in
exchange for product payment of 3 percent 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 percent 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/NicotrolPatch.
LIQUIDITY AND CAPITAL RESOURCES
Cash resources, including investments, available on June 30, 2001, were $1,724,902
as compared to $1,619,079 as of June 30, 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 nine month period ending June 30, 2001, increased
to $501,304, as compared to $388,724 for the nine month period ending June 30, 2000.
This increase is due to an increase in Inhaler product payments from PHA.
General and administrative expenses for the nine month period ending June 30, 2001,
increased to $154,878 as compared to $103,154 for the nine month period ending
June 30, 2000. This increase is due to minor variations in administrative costs.
Interest income for the nine month period ending June 30, 2001, decreased to $65,108
as compared to $73,692 for the nine month period ending June 30, 2000. This decrease
is due to minor variations in interest earned on investments.
Net income for the nine month period ending June 30, 2001, increased to $411,534
as compared to $359,262 for the nine month period ending June 30, 2000. This increase
is due to an increase in Inhaler product payments from PHA.
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: August 14, 2001
By: /s/ J.W. Linehan
J.W. Linehan
Executive Officer and
Chief Accounting Officer
