FORM 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, 2002
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 703, San Antonio, Texas 78232
(Address of principal executive offices)(Zip Code)
(210) 408-1995
(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, 2002
ADVANCED TOBACCO PRODUCTS, INC. PART I - FINANCIAL
INFORMATION
dba ADVANCED THERAPEUTIC PRODUCTS, INC. ITEM 1: Financial Statements
CONDENSED BALANCE SHEET
(Unaudited) (Audited)
June 30 September 30
2002 2001
| ASSETS: |
|
|
|
|
|
| CURRENT ASSETS: |
|
|
| Cash & cash equivalents |
$ 90,804 |
$ 193,498 |
| Product Payments Receivable |
276,898 |
142,095 |
| Interest Receivable |
3,356 |
2,436 |
| Investments |
559,736 |
559,456 |
| TOTAL CURRENT ASSETS: |
930,794 |
897,485 |
|
|
|
|
|
|
| LICENSE AGREEMENTS, Net: |
149,224 |
162,352 |
|
|
|
| LONG TERM INVESTMENTS: |
1,142,567 |
1,105,044 |
|
|
|
| TOTAL ASSETS: |
$2,222,585 |
$2,164,881 |
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY: |
|
|
|
|
|
| LIABILITIES: |
|
|
| Accrued Liabilities |
$ 520 |
$ 40,150 |
| |
|
|
| TOTAL LIABILITIES: |
520 |
40,150 |
|
|
|
| STOCKHOLDERS' EQUITY: |
|
|
| Common stock, $.01 par value; |
|
|
| 30,000,000 shares authorized; |
|
| 8,222,136 shares issued and
outstanding as of June 30, |
| 2002, and September 30, 2001,
respectively |
82,222 |
82,222 |
| Additional paid-in-capital |
12,595,767 |
12,595,767 |
| Accumulated deficit |
(10,455,924) |
(10,553,258) |
|
|
|
| TOTAL STOCKHOLDERS' EQUITY: |
2,222,065 |
2,124,731 |
|
|
|
| TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY: |
$2,222,585 |
$2,164,881 |
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
CONDENSED STATEMENT OF INCOME
(Unaudited)
Three Months Ended June 30,
2002 2001
| REVENUES: |
|
|
| Product Payments |
$ 276,898 |
$ 144,522 |
| Total operating revenues: |
276,898 |
144,522 |
|
|
|
| EXPENSES: |
|
|
| General and administrative |
65,250 |
68,684 |
| Total operating expenses: |
65,250 |
68,684 |
|
|
|
| INCOME FROM OPERATIONS: |
211,648 |
75,844 |
|
|
|
| OTHER INCOME: |
|
|
| Interest Income |
22,315 |
20,456 |
| Total other income: |
22,315 |
20,456 |
|
|
|
| NET INCOME: |
$ 233,963 |
$ 96,294 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING: |
8,222,136 |
8,222,136 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING - |
|
|
| ASSUMING DILUTION: |
8,222,136 |
8,222,136 |
|
|
|
| INCOME PER COMMON SHARE - BASIC AND |
|
|
| ASSUMING DILUTION |
$ .03 |
$ .012 |
|
|
|
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
CONDENSED STATEMENT OF INCOME
(Unaudited)
Nine Months Ended June 30
2002 2001
| REVENUES: |
|
|
| Product Payments |
$ 639,386 |
$ 501,304 |
| Total operating revenues: |
639,386 |
501,304 |
|
|
|
| EXPENSES: |
|
|
| General and administrative |
195,603 |
154,878 |
| Total operating expenses: |
195,603 |
154,878 |
|
|
|
| INCOME FROM OPERATIONS: |
443,783 |
346,426 |
|
|
|
| OTHER INCOME: |
|
|
| Interest Income |
64,657 |
65,108 |
| Total other income: |
64,657 |
65,108 |
|
|
|
| NET INCOME: |
$ 508,440 |
$ 411,534 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING: |
8,222,136 |
8,215,433 |
|
|
|
| WEIGHTED AVERAGED NUMBER OF SHARES |
|
|
| OF COMMON STOCK OUTSTANDING - |
|
|
| ASSUMING DILUTION: |
8,222,136 |
8,215,801 |
|
|
|
| INCOME PER COMMON SHARE - BASIC AND |
|
|
| ASSUMING DILUTION |
$ .06 |
$ .05 |
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended June 30
2002 2001
| CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
| Net income: |
$ 508,440 |
$ 411,534 |
| Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
| Amortization of license agreements |
13,128 |
21,895 |
| Amortization of discount on investments |
8,807 |
(57,111) |
| Increase (decrease) in cash flows from
changes in operating assets |
|
|
| and liabilities: |
|
|
| Payments receivable |
(134,803) |
(36,730) |
| Interest receivable |
(920) |
-0- |
| Accounts payable |
(39,630) |
8,787 |
| Net cash provided by operating activities: |
355,022 |
348,375 |
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
| Purchase of license agreements and patent
costs |
-0- |
(2,612) |
| Purchase of investments |
(161,609) |
(565,046) |
| Sale or maturity of investments |
115,000 |
575,000 |
| Net cash provided (used) by investing
activities: |
(46,609) |
7,342 |
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
| Exercise of Stock Options |
-0- |
8,439 |
| Dividends Paid |
(411,107) |
(411,108) |
| Net cash used in financing activities: |
(411,107) |
(402,669) |
| |
|
|
| NET DECREASE IN CASH AND CASH EQUIVALENTS: |
(102,694) |
(46,952) |
|
|
|
| CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD: |
193,498 |
123,746 |
|
|
|
| CASH & CASH EQUIVALENTS AT END OF PERIOD: |
$ 90,804 |
$ 76,794 |
|
|
|
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, 2001.
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.
The Inhaler was launched nationwide in the U.S. as a
prescription product in 1998. PHA has introduced the Inhaler,
primarily as an over-the-counter product, in Australia,
Austria, Belgium, Czech Republic, Denmark, Estonia, Finland,
France, Hong Kong, Iceland, Ireland, Italy, Malaysia, Malta,
Mexico, Netherlands, New Zealand, Norway, Portugal, Russia,
Singapore, South Africa, Sweden, Switzerland, Taiwan, and the
United Kingdom.
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.
ATP also 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.
In addition, ATP has 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.
LIQUIDITY AND CAPITAL RESOURCES
Cash resources, including investments, available on June 30,
2002, were $1,793,107 as compared to $1,724,902 as of June 30,
2001. On January 9, 2002, and January 10, 2001, ATP paid
dividends aggregating $411,108 (5 cents per share) and
$411,108 (5 cents per share) respectively.
COMPARISON OF SELECTED FINANCIAL DATA
Operating revenues for the nine month period ending June 30,
2002, increased to $639,386, as compared to $501,304 for the
nine month period ending June 30, 2001. This increase is due
to an increase in Inhaler product payments from PHA.
Interest income for the nine month period ending June 30,
2002, decreased to $64,657 as compared to $65,108 for the nine
month period ending June 30, 2001. This decrease is due to
minor variations in earnings on investments.
Net income for the nine month period ending June 30, 2002,
increased to $508,440 as compared to $411,534 for the nine
month period ending June 30, 2001. 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, 2002, decreased to $195,603 as compared to
$204,878 for the nine month period ending June 30, 2001, after
adjusting general and administrative expenses for the nine
month period ending June 30, 2001, for a non-recurring payment
of $50,000 which was credited against general and
administrative expenses. The non-recurring payment was a
"stand still" fee paid by a third party for a review of ATP
and its assets.
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 12, 2002
By: /s/ J.W. Linehan
J. W. Linehan,
Executive Officer and
Chief Accounting Officer
