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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2005
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 033-55254-27
ADVANCED LUMITECH, INC.
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(Name of small business issuer in its charter)
Nevada 87-0438637
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8C Pleasant Street, First Floor, South Natick, MA 01760
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(Address of principal executive offices, Zip code)
(508) 647-9710
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
-----------------------------
(Title of class)
Check whether the Company (1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 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.
[X] Yes [ ] No
Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the
Exchange Act). [ ] Yes [X] No
The Company had 100,000,000 shares of Common Stock, $.001 par value, issued and outstanding as of
November 14, 2005.
Transitional Small Business Disclosure Format: [ ] Yes [X] No
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INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30, 2005 and
December 31, 2004 4
Condensed Consolidated Statements of Operations for the Three
Months Ended September 30, 2005 and 2004 and the
Nine Months Ended September 30, 2005 and 2004 5
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2005 and 2004 6
Notes to Condensed Consolidated Financial Statements 7-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-18
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Item 4. Controls and Procedures 20
Part II. Other Information
Item 1. Legal Proceedings 21
Item 2. Unregistered Sales of Equity and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 23
-2-
Exhibit Index 24
Exhibit 31 Certification of Chief Executive and Financial Officer Pursuant
to 18 U.S.C Section 1850, As Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. (filed herewith) E1
Exhibit 32 Certification of Chief Executive and Financial Officer Pursuant to Rule
13a-14(b) of the Exchange Act and 18 U.S.C Section 1850, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) E2
NOTE REGARDING FORWARD LOOKING STATEMENTS:
ANY STATEMENTS CONTAINED IN THIS FORM 10-QSB THAT DO NOT DESCRIBE HISTORICAL FACTS, INCLUDING
WITHOUT LIMITATION STATEMENTS CONCERNING EXPECTED REVENUES, EARNINGS, PRODUCT INTRODUCTIONS AND
GENERAL MARKET CONDITIONS, MAY CONSTITUTE FORWARD-LOOKING STATEMENTS AS THAT TERM IS DEFINED IN THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. ANY SUCH FORWARD-LOOKING STATEMENTS CONTAINED
HEREIN ARE BASED ON CURRENT EXPECTATIONS, BUT ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES
THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM EXPECTATIONS. THE FACTORS THAT COULD CAUSE
ACTUAL FUTURE RESULTS TO DIFFER MATERIALLY FROM CURRENT EXPECTATIONS INCLUDE THE FOLLOWING: THE
COMPANY'S ABILITY TO RAISE THE FINANCING REQUIRED TO SUPPORT THE COMPANY'S OPERATIONS; THE COMPANY'S
ABILITY TO ESTABLISH ITS INTENDED OPERATIONS; FLUCTUATIONS IN DEMAND FOR THE COMPANY'S PRODUCTS AND
SERVICES; THE COMPANY'S ABILITY TO MANAGE ITS GROWTH; THE COMPANY'S ABILITY TO DEVELOP, MARKET AND
INTRODUCE NEW AND ENHANCED PRODUCTS ON A TIMELY BASIS; THE COMPANY'S LACK OF CUSTOMERS; AND THE
ABILITY OF THE COMPANY TO COMPETE SUCCESSFULLY IN THE FUTURE. FURTHER INFORMATION ON FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THOSE ANTICIPATED IS DETAILED HEREIN IN ITEM 2, RISK
FACTORS, AND IN VARIOUS FILINGS MADE BY THE COMPANY FROM TIME TO TIME WITH THE SECURITIES AND
EXCHANGE COMMISSION. ANY FORWARD-LOOKING STATEMENTS SHOULD BE CONSIDERED IN LIGHT OF THOSE FACTORS.
-3-
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Advanced Lumitech, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(Unaudited) (Audited)
September 30, 2005 December 31, 2004
------------------ -----------------
ASSETS
Current assets
Cash and cash equivalents $ 13,504 $ 4,310
Accounts receivable 30,767 -
Interest receivable 47,482 38,750
Inventory 57,141 31,348
Deposits and prepaid expenses 987 -
-------------------- --------------------
TOTAL CURRENT ASSETS 149,881 74,408
-------------------- --------------------
Office and photographic equipment 23,511 23,511
Less accumulated depreciation (23,511) (23,511)
-------------------- --------------------
- -
-------------------- --------------------
Note receivable from related party 250,000 250,000
-------------------- --------------------
TOTAL ASSETS $ 399,881 $ 324,408
==================== ====================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Current maturities of long-term debt $ 3,230 $ 3,505
Accounts payable 181,098 367,329
Accrued expenses 164,249 243,219
Advance from related party 54,224 64,196
Notes payable to related party - 100,000
-------------------- --------------------
TOTAL CURRENT LIABILITIES 402,801 778,249
-------------------- --------------------
Long-term liabilities
Long-term debt, net of current maturities 85,595 162,986
Liability for shares to be issued 403,000 467,000
-------------------- --------------------
488,595 629,986
-------------------- --------------------
891,396 1,408,235
-------------------- --------------------
Stockholders' deficit
Common stock 100,000 100,000
Additional paid-in capital 9,252,403 7,731,403
Stock subscribed 435,000 850,000
Accumulated deficit (10,429,291) (9,908,695)
Accumulated other comprehensive income 150,373 143,465
-------------------- --------------------
(491,515) (1,083,827)
-------------------- --------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 399,881 $ 324,408
==================== ====================
The accompanying notes are an integral part of these financial statements.
-4-
Advanced Lumitech, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(Unaudited)
For the Three Months For the Nine Months
Ending September 30, Ending September 30,
----------------- ----------------- ----------------- -----------------
2005 2004 2005 2004
----------------- ----------------- ----------------- -----------------
Sales $ 38,951 $ 1,560 $ 123,309 $ 219,741
Cost of sales 25,193 4,527 96,608 201,010
----------------- ----------------- ----------------- -----------------
Gross profit 13,758 (2,967) 26,701 18,731
----------------- ----------------- ----------------- -----------------
Operating expenses
Research and development 67,681 11,762 147,936 106,378
Selling and marketing 7,334 76,969 44,857 372,603
General and administrative 55,275 120,294 356,723 444,083
----------------- ----------------- ----------------- -----------------
130,290 209,025 549,516 923,064
----------------- ----------------- ----------------- -----------------
Operating loss (116,532) (211,992) (522,815) (904,333)
Other Income (Expense) 1,909 (514) 2,219 (4,083)
----------------- ----------------- ----------------- -----------------
Net loss (114,623) (212,506) (520,596) (908,416)
Accumulated deficit - beginning (10,314,668) (9,051,300) (9,908,695) (8,355,390)
----------------- ----------------- ----------------- -----------------
Accumulated deficit - ending $(10,429,291) $(9,263,806) $(10,429,291) $(9,263,806)
================= ================= ================= =================
Basic and diluted net loss per
share $ (0.00) $ (0.00) $ (0.01) $ (0.01)
================= ================= ================= =================
Weighted average number of
shares used in computation of
basic and diluted net loss per
share 100,000,000 98,283,620 100,000,000 98,283,620
================= ================= ================= =================
COMPREHENSIVE LOSS
Net loss ($114,623) ($212,506) ($520,596) ($908,416)
Other comprehensive income
(loss) 8,274 (977) 6,908 9,755
----------------- ----------------- ----------------- -----------------
Comprehensive loss ($106,349) ($213,483) ($513,688) ($898,661)
================= ================= ================= =================
The accompanying notes are an integral part of these financial statements.
-5-
Advanced Lumitech, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended September 30,
2005 2004
---------------------------------------
Cash flows from operating activities
Net loss $ (520,596) $ (908,416)
Adjustments to reconcile net loss to net cash used for
operating activities:
Accrued interest on note receivable-related party (8,732) (8,981)
Depreciation - 2,034
Foreign exchange (gain) loss (7,721) (575)
General and administrative expense associated
with stock based transactions 65,000 189,000
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (30,767) (7,329)
Inventory (25,793) 71,570
Deposits and prepaid expenses (987) -
Increase (decrease) in:
Accounts payable (108,705) 75,262
Accrued expenses (79,228) (29,208)
-------------------- --------------------
Net cash used for operating activities (717,529) (616,643)
-------------------- --------------------
Cash flows from financing activities
Principal payments on long-term debt (3,430) (4,915)
Principal payments on note payable - related party (100,000) 6,000
Repayment of advances from related party (93,755) (80,000)
Cash received for sale of common stock, exercise of
warrants and stock subscribed 917,000 350,000
-------------------- --------------------
Net cash provided by financing activities 719,815 271,085
-------------------- --------------------
Effects of changes in foreign exchange rates 6,908 9,755
Net increase (decrease) in cash and cash equivalents 9,194 (335,803)
Cash and cash equivalents - beginning 4,310 335,803
-------------------- --------------------
Cash and cash equivalents - ending $ 13,504 $ -
==================== ====================
Supplemental disclosures of cash flows information
Cash paid during the period for interest $ 13,611 $ 3,921
==================== ====================
Issuance of stock to settle accounts payable $ 60,000 $ 67,000
==================== ====================
The accompanying notes are an integral part of these financial statements.
-6-
Advanced Lumitech, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. OPERATIONS
Advanced Lumitech, Inc. d/b/a Brightec ("ADLU" or "Company") develops and markets luminescent films
incorporating luminescent or phosphorescent pigments (the "Luminescent Product"). These pigments
absorb and reemit visible light producing a "glow" which accounts for the common terminology "glow
in the dark." The Company's Luminescent Product will be sold primarily as a printable luminescent
film designed to add luminescence to existing or new products. The Company uses third parties for
manufacturing, and markets and sells graphic quality printable luminescent films (the "Luminescent
Product"). These films are based on the Company's proprietary and patented technology, which enables
prints to be of photographic quality by day and luminescent under low light or night conditions. The
Company expects that its Luminescent Product will be available for sale in a number of versions
appropriate for commonly used commercial and personal printing technology, including offset
printing, laser or inkjet printing, plus a variety of "print on demand" digital technologies. The
Company offers its products in sheets and rolls.
2. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements at September 30, 2005 and for
the three-month and nine-month periods ended September 30, 2005 and 2004 include the accounts of the
Company and its wholly-owned subsidiary (Brightec S.A.). All inter-company transactions and balances
have been eliminated in consolidation. In our opinion, these unaudited condensed consolidated
financial statements have been prepared on the same basis as the audited consolidated financial
statements included in our Annual Report on Form 10-KSB for the year ended December 31, 2004, and
include all adjustments, necessary to make the financial statements not misleading. Certain footnote
disclosures normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or omitted in accordance with
rules of the Securities and Exchange Commission for interim reporting. These condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial
statements included in our Annual Report on Form 10-KSB for the year ended December 31, 2004.
3. LIQUIDITY, MANAGEMENT PLANS AND GOING CONCERN
The Company has a working capital deficit of $252,920 and an accumulated deficit of $10,429,291 at
September 30, 2005, and recurring net losses since inception. The ability of the Company to continue
to operate as a going concern is primarily dependent upon the ability of the Company to raise the
necessary financing, to effectively produce and market Brightec products at competitive prices, to
establish profitable operations and to generate positive operating cash flows. If the Company fails
to raise funds, or the Company is unable to generate operating profits and positive cash flows,
there are no assurances that the Company will be able to continue as a going concern and it may be
unable to recover the carrying value of its assets.
Management believes that it will continue to be successful in raising the necessary financing to
fund the Company's operations through the 2005 calendar year; however, there can be no assurances
that such financing can be obtained.
-7-
ADVANCED LUMITECH, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
4. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market value and consist of the
following:
September 30, 2005 December 31, 2004
-------------------------- -------------------------
Raw materials $ 20,475 $ 19,867
Work in process 31,699 7,181
Finished goods 4,967 4,300
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$ 57,141 $ 31,348
========================== =========================
5. INCOME TAXES
The Company has not calculated the tax benefits of its net operating losses as of September 30, 2005
and December 31, 2004 since it does not have the required information. The Company has not filed its
federal and state corporate tax returns for years ended December 31, 2004, 2003, 2002 and 2000. The
tax return filed for 2001 will need to be amended. Due to the uncertainty over the Company's ability
to utilize these operating losses, any deferred tax assets, when determined, would be fully offset
by a valuation allowance.
6. RELATED PARTY TRANSACTIONS
As of September 30, 2005 and December 31, 2004, a ten year note of $250,000 was receivable from the
Company's president, who is also a director and stockholder. This note, due no later than December
31, 2011, bears interest at a fixed rate of 5.05% and is full-recourse. Interest is on the note is
accrued quarterly and due annually. No interest payments on such note have been made to date. During
the three-month and nine-month periods ended September 30, 2005 and the year ended December 31,
2004, the Company recognized interest income of $3,182, $9,443 and $13,627, respectively, on the
above note receivable and advances. As of September 30, 2005 and December 31, 2004, net accrued
interest was receivable from the president of $47,482 and $38,750, respectively. At September 30,
2005 and December 31, 2004, the Company owed the president $54,224 and $55,196, respectively, in
connection with advances made by him to the Company in prior years. During the three-month and
nine-month periods ended September 30, 2005, he made advances to the Company of $5,500 and $43,000,
respectively and the Company repaid $14,755 and $127,755, respectively, of the outstanding advances
due. During the nine-month period ended September 30, 2005, the Company's president also personally
assumed a portion of the long-term debt owed to a related party ($66,257) and an operating liability
($17,526). The assumptions of the long-term debt and operating liability have been credited to the
president as if he had advanced the Company the money. All such advances bear interest at the
Internal Revenue Service short term "Applicable Federal Rate," calculated and accrued monthly and
amounted to $1,443 for the nine months ended September 30, 2005. In December 2004, the principal
stockholder advanced the Company $9,000 on a non-interest bearing basis. The advance was repaid in
January 2005.
Additional related party debt is described in Notes 7 and 9.
7. NOTES PAYABLE TO RELATED PARTY
In December 2002, the Company borrowed $50,000 from its largest stockholder under a convertible
demand promissory note, which bears interest at 8.00% and is payable in full on demand within one
year. The principal, if not paid within thirty days of the due date, bears interest at the rate of
10.00%. The note is convertible into that number of shares of the Company's common stock determined
by dividing the unpaid principal amount, together with all accrued but unpaid interest on the note,
at the conversion date by $0.10, subject to certain adjustments. At September 30, 2005 and December
31, 2004, $0 and $50,000, respectively, was outstanding under this note and accrued interest of $0
and $3,575, respectively, was due.
-8-
ADVANCED LUMITECH, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
7. NOTES PAYABLE TO RELATED PARTY - continued
In early 2003, the Company issued a second convertible demand promissory note to this stockholder to
borrow up to an additional $55,000 with the same terms as the $50,000 note, except that the interest
rate on the note is a fixed 8.00%. At September 30, 2005 and December 31, 2004, $0 and $50,000,
respectively, was outstanding under this note and accrued interest of $0 and $2,997, respectively,
was due.
8. COMMON STOCK NUMBER OF SHARES OF COMMON STOCK AUTHORIZED
Under the Company's charter, 100,000,000 shares of common stock are authorized. As of September 30,
2005 and December 31, 2004, 100,000,000 shares of common stock were issued and outstanding. On April
6, 2005, the Company entered into an agreement with one of the Company's major shareholders allowing
the Company to redeem 15,767,145 shares of common stock he held, in order to permit the Company to
issue a like number of shares of common stock to other investors who held subscriptions for shares
of common stock. On August 23, 2005, the Company entered into an agreement with another of the
Company's shareholders allowing the Company to redeem 583,334 shares of common stock he held, in
order to permit the Company to issue a like number of shares of common stock to an investor who
partially exercised a warrant to purchase shares of common stock. Under the agreement, the
shareholders are to receive no compensation for the redemption of their respective securities. Upon
the amendment of the Company's Articles of Incorporation, the Company will reissue the exact number
of shares redeemed from these shareholders for no consideration.
As of September 30, 2005, the Company has committed to issue an additional 23,153,099 shares. It is
anticipated that a vote of the Company's stockholders to increase the number of shares of common
stock authorized will occur early in 2006.
ISSUANCES OF COMMON STOCK
On August 23, 2005, the Company issued 583,334 shares of common stock to an investor who partially
exercised a warrant to purchase shares of common stock with an aggregate purchase price of $ 70,000.
STOCK SUBSCRIBED
Stock subscribed represents amounts received for equity investments for which shares of common stock
remain unissued at September 30, 2005.
As of June 30, 2005 and December 31, 2004, 3,335,000 and 10,107,145 shares, respectively, with an
aggregate purchase price of $375,000 and $ 850,000, respectively, were subscribed but un-issued.
On August 30, 2005, the Company received a stock subscription for 500,000 shares with an aggregate
purchase price of $60,000. These shares remain un-issued at September 30, 2005.
As a result of the above transactions, 3,835,000 shares with an aggregate purchase price of $435,000
are subscribed but unissued as of September 30, 2005.
LIABILITY FOR SHARES TO BE ISSUED
Liability for shares to be issued represents commitments to issue shares of common stock in exchange
for services provided or the settlement of debt. Such shares remain unissued at September 30, 2005.
As of June 30, 2005 and December 31, 2004, 1,890,000 and 3,210,000 shares, respectively, with an
aggregate value of $328,000 and $467,000, respectively, were committed but unissued.
On August 22, 2005, the Company entered into an agreement with a former consultant, to issue
1,000,000 shares of common stock, valued at $0.075 per share, in satisfaction of indebtedness owed
by the Company to the former
-9-
ADVANCED LUMITECH, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
8. COMMON STOCK NUMBER OF SHARES OF COMMON STOCK AUTHORIZED - continued
LIABILITY FOR SHARES TO BE ISSUED - continued
consultant for prior services rendered, in the amount of $40,000 and to pay a "sign-on" bonus of
$35,000 upon hiring the former consultant as an employee on August 22, 2005.
As a result of the above transactions, 2,890,000 shares with an aggregate value of $403,000 are
committed but un-issued as of September 30, 2005.
REDEMPTION OF SHARES
As of June 30, 2005 and December 31, 2004, the Company's president and a major stockholder agreed to
allow the Company to redeem 15,844,765 and 77,620 shares, respectively, of their common stock for no
consideration in order to allow the Company to fulfill its commitments to issue shares to various
investors, consultants and vendors.
On August 23, 2005, another shareholder, and relative of the Company's president, agreed to allow
the Company to redeem 583,334 shares of his common stock for no consideration in order to fulfill
the Company's obligation under the partial exercise of a stock warrant by another shareholder, for
the same amount of shares.
The Company will use its best efforts to increase the number of authorized shares of its common
stock as soon as reasonably practicable and, upon such event, it will issue 16,428,099 replacement
shares (adjusted for any recapitalization transactions) for no additional consideration.
9. LONG-TERM DEBT
As of September 30, 2005 and December 31, 2004, $88,825 and $166,491, respectively, was outstanding
in connection with an agreement entered into in 2002 with the mother-in-law of the Company's
president. This agreement provides for the repayment of 2,000 Swiss francs of principal each January
1 and July 1, together with accrued interest on the unpaid balance payable quarterly at the rate of
4.25% per annum. The Company recorded interest expense with respect to this obligation for the
three-month and nine-month periods ended September 30, 2005 and the year ended December 31, 2004 of
$1,955, $4,611 and $7,562, respectively. At each balance sheet date the outstanding debt is
translated to U.S. dollars and any required adjustment is recorded in the cumulative translation
adjustment account within the equity section of the balance sheet.
The maturities of long-term debt for the next five years and in the aggregate are as follows:
Twelve Months Ended Amount
-------------------------------------------- ---------------------
September 30, 2006 $ 3,230
September 30, 2007 3,230
September 30, 2008 3,230
September 30, 2009 3,230
September 30, 2010 3,230
Thereafter 72,675
---------------------
$ 88,825
=====================
During the nine-month period ended September 30, 2005, the Company's president assumed $66,257 of
the outstanding long-term debt. This amount was reclassified in the "Advances to related party"
account on the balance sheet.
-10-
ADVANCED LUMITECH, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
10. STOCK OPTIONS
There were no stock options granted to employees of the Company during the fiscal quarter ended
September 30, 2005.
The following table illustrates the pro forma effect on net loss and net loss per share for the
three-month and nine-month period (the only interim period in which employee stock options were
granted) ended September 30, 2005 if the Company had applied the fair value recognition provisions
of SFAS No.123, "Accounting for Stock-based Compensation" and SFAS No. 148, "Accounting for
Stock-based Compensation - Transition and Disclosure":
Three Months Ended Nine Months Ended
September 30, 2005 September 30, 2005
-------------------------- -------------------------
Net loss for the period $ 114,623 520,596
Less: Stock based compensation expense
determined under fair value based method for awards - 336,000
-------------------------- -------------------------
Proforma net loss $ 114,623 $ 856,596
========================== =========================
Basic and diluted net loss per share:
As reported $ (0.00) $ (0.01)
========================== =========================
Proforma $ (0.00) $ (0.01)
========================== =========================
-11-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of operations of the Company should
be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto
included elsewhere in this Quarterly Report on Form 10-QSB and our Annual Report on Form 10-KSB for
the year ended December 31, 2004. This Quarterly Report on Form 10-QSB contains forward-looking
statements based on our current expectations, assumptions, estimates and projections about the
Company and our industry. These forward-looking statements are usually accompanied by words such as
"believes", "anticipates", "plans", "expects" and similar expressions. Forward-looking statements
involve risks and uncertainties and our actual results may differ materially from the results
anticipated in these forward-looking statements as a result of certain factors, as more fully
described in this section under the caption "Risk Factors".
CRITICAL ACCOUNTING POLICIES
Certain of the Company's accounting policies are particularly important to the portrayal and
understanding of its financial position and results of operations and require the application of
significant judgment by management. As a result, these policies are subject to an inherent degree of
uncertainty. In applying these policies, the Company uses its judgment in making certain assumption
and estimates. The Company's critical accounting policies, which consist of revenue recognition,
account receivable reserves and inventories, are described in the Annual Report on Form 10-KSB for
the year ended December 31, 2004. There have been no material changes to the Company's critical
accounting policies as of September 30, 2005.
RESULTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED WITH THREE MONTHS AND NINE MONTH
ENDED SEPTEMBER 30, 2004
REVENUES:
The Company's revenue, net of returns, allowances and discounts, for the three-month period ended
September 2005, was $ 38,951 compared to $ 1,560 for the comparable three-months of 2004. This
increase in revenue resulted from additional commercial sales of the Company's luminescent product,
which was sold to a major poster board and inkjet paper marketer that introduced a "Glow-in-the-Dark
Sign Kit" that includes two sheets of Brightec's glow-in-the dark paper in an 11"x14" poster board
format and two "Inkjet Glow in the Dark Photo Quality Paper Packs" one including five sheets of
Brightec glow-in-dark paper in an 4"x6" format and the second including three sheets of Brightec
glow-in-dark paper in an 8.5"x11" format. The Company's revenue, net of returns, allowances and
discounts, for the nine-months ended September 30, 2005 was $123,309 compared to $219,741 for the
comparable nine-months of 2004. The decrease in revenues for the nine-months ended September 30,
2005 is primarily due to the fact that in the comparable period of 2004 the Company had a major test
market program for its inkjet paper with an office superstore products retailer and no such test
market in the nine months ended September 30, 2005.
GROSS PROFIT:
The Company's gross profit percentage was 35.32% and 21.65% for the three- and nine-month periods
ended September 30, 2005, compared to a loss for the three-month period in fiscal 2004 and 8.52% for
the comparable nine-month period in fiscal 2004. The increase in the level of the gross profit
margin was primarily due to continued improvement in the manufacturing cost of the Company's
products and no additional price reductions in the three- month period ended September 30, 2005. In
order to continue to increase its gross profit percentage and compete favorably in the marketplace,
the Company will need to continue lower its manufacturing costs.
RESEARCH AND DEVELOPMENT EXPENSES:
Research and development expenses increased by $55,919 for the three-months ended September 30, 2005
to $67,681 from $11,762 for the comparable three-months of 2004 and increased by $41,558 for the
nine-months ended September 30, 2005 to $147,936 from $106,378 for the comparable nine-months of
2004. The increase in research and development expenses for the three-months ended September 30,
2005 was primarily due to non-cash charges of $35,000 relating to commitment to issue shares of the
Company's common stock related to a signing bonus for the hiring in the second quarter of 2005 of a
former consultant as a full time employee to oversee the Company's research and development. The
-12-
RESEARCH AND DEVELOPMENT EXPENSES - continued
increase in research and development expenses in the third quarter of 2005 was also due to an
increase in the number of manufacturing trial runs.
SELLING AND MARKETING EXPENSES:
Selling and marketing expenses decreased by $69,635 for the three-months ended September 30, 2005 to
$7,334 from $76,969 for the comparable three-months of 2004 and decreased by $327,746 for the
nine-months ended September 30, 2005 to $44,857 from $372,603 for the comparable nine-months of
2004. The decrease in selling and marketing expenses was primarily due to a decrease in professional
fees and consulting services, which consisted primarily of terminating the services of a marketing
consultant, a marketing and corporate branding consultant and a public relation firm. Selling and
marketing expenses included no non-cash charges relating to commitments to issue shares of the
Company's common stock in exchange for consulting services for the three-months ended September 30,
2005, compared to $45,000 of such charges for the comparable three-months of 2004 and included
non-cash charges relating to commitments to issue shares of the Company's common stock in exchange
for consulting services of $30,000 for the nine-months ended September 30, 2005, compared to
$189,000 of such charges for the comparable nine-months of 2004.
GENERAL AND ADMINISTRATIVE:
General and administrative expenses consisted primarily of the compensation of the executive
officer, and payments for rent and consultants, as well as legal and accounting fees. General and
administrative expenses decreased by $65,019 for the three-months ended September 30, 2005 to
$55,275 from $120,294 for the comparable three-months of 2004 and decreased by $87,360 for the
nine-months ended September 30, 2005 to $356,723 from $444,083 for the comparable nine-months of
2004. The decrease in the third quarter of 2005 from the comparable period in 2004 was primarily due
to a decrease in professional fees and the overall decrease for the nine-months ended September 30,
2005 from the comparable period in 2004 was primarily due to a decrease in consulting fees and
accounting fees.
OTHER INCOME (EXPENSE):
For the three-months ended September 30, 2005 and 2004, interest expense, net of interest income was
($2,167) and $514, respectively. For the nine-months ended September 30, 2005 and 2004, interest
expense, net of interest income was ($2,348) and $3,179, respectively. Interest expense and interest
income are dependent on the level of loans due to and from affiliates parties. For the nine-months
ended September 30, 2005, Other Income (Expense) also includes $129 from foreign currency
translation losses relating to the amount of U.S. dollars required to purchase Swiss francs in order
to pay its interest obligation on long-term debt versus the amount accrued, in U.S. dollars, when
the interest was due.
INCOME TAXES:
The Company has not calculated the tax benefits of its net operating losses, since it does not have
the required information. Due to the uncertainty over the Company's ability to utilize these
operating losses, any deferred tax assets, when determined, would be fully offset by a valuation
allowance.
-13-
LIQUIDITY AND CAPITAL RESOURCES AS OF SEPTEMBER 30, 2005:
Since inception, the Company's operations have not generated sufficient cash flow to satisfy the
Company's capital needs. The Company has financed its operations primarily through the private sale
of shares of its common stock, warrants to purchase shares of the Company's common stock and debt
securities. The Company has generated, from inception through September 30, 2005, cumulative net
cash proceeds from the sale of its equity of approximately $4.8 million. The Company's net working
capital deficit at September 30, 2005 was $252,920 compared to a deficit of $703,841 at December 31,
2004. The Company's authorized capital stock consists of 100,000,000 shares of common stock, of
which 100,000,000 were issued and outstanding at September 30, 2005. As of September 30, 2005, the
Company had also made commitments to issue an additional 23,153,099 shares of common stock, none of
which the Company can issue. The 23,153,099 additional shares of common stock can be issued at such
time as the Company is able to increase the number of authorized shares of its common stock. The
number of shares committed excludes shares of common stock to be issued upon the exercise of
outstanding options and warrants. Amounts received for these additional committed shares, which were
purchased for cash are reflected in the Company's financial statements as stock subscribed. Amounts
received for these additional committed shares that are to be issued in exchange for consulting
services or in exchange for settlement of obligations owed by the Company, are reflected in the
Company's financial statements as liability for shares to be issued. In December 2004, the Company's
president agreed to allow the Company to redeem 77,620 shares of his common stock for no
consideration in order to allow the Company to fulfill its commitments to issue shares to certain
consultants and investors in the Company. In April 2005, the Company's principal stockholder agreed
to allow the Company to redeem 15,767,145 shares of his common stock for no consideration in order
to allow the Company to fulfill its commitments to issue shares to certain consultants and investors
in the Company. In August 2005, another shareholder agreed to allow the Company to redeem 583,334
shares of his common stock for no consideration in order to allow the Company to fulfill its
obligation under the partial exercise of an outstanding stock warrant by another shareholder. Upon
the increase in the number of authorized shares of its common stock, the Company will issue
16,428,099 replacement shares (adjusted for any re-capitalization transactions) for no additional
consideration.
Cash and cash equivalents increased to $13,504 at September 30, 2005 from $4,310 at December 31,
2004. Net cash used for operating activities for the nine-months ended September 30, 2005 was
$717,529. Net cash provided by financing activities for the nine-months ended September 30, 2005 was
$719,815.
The net cash provided was the result of cash received of $917,000 from the sale and subscription of
common stock and the exercise of warrants, net of principal payments on long-term debt ($3,430),
principal payments on a note payable to a related party ($100,000) and re-payment of advances to a
related party ($ 93,755) of $197,185.
-14-
ABILITY TO CONTINUE AS A GOING CONCERN:
At September 30, 2005, the Company has generated minimal revenues from commercial sales of the
Company's products. To date, the Company's operations have generated accumulated losses of
$10,429,291. At September 30, 2005, the Company's current liabilities exceed its current assets by
$252,920. The Company's ability to remedy this condition is uncertain due to the Company's current
financial condition. These conditions raise substantial doubt about the Company's ability to
continue as a going concern. The Company believes it has the ability to obtain additional funds from
its principal stockholders or by raising additional debt or equity securities as described below.
The Company is continuing discussions with investors in its effort to obtain additional financing.
However, there can be no assurances that the Company will be able to raise the funds it requires, or
that if such funds are available, that they will be available on commercially reasonable terms.
The ability of the Company to continue to operate as a going concern is primarily dependent upon the
ability of the Company to generate the necessary financing to effectively market and produce
Brightec products, to establish profitable operations and to generate positive operating cash flows.
If the Company fails to raise funds or the Company is unable to generate operating profits and
positive cash flows, there are no assurances that the Company will be able to continue as a going
concern and it may be unable to recover the carrying value of its assets. Management believes that
it will be successful in generating the necessary financing to fund the Company's operations through
the 2005 calendar year. Accordingly, management believes that no adjustments or reclassifications of
recorded assets and liabilities are necessary at this time.
CREDIT AVAILABILITY:
The Company had no line-of-credit facilities as of September 30, 2005.
COMMITMENTS:
The Company had no material capital expenditure commitments as of September 30, 2005.
EFFECTS OF INFLATION:
Management believes that financial results have not been significantly impacted by inflation and
price changes.
-15-
RISK FACTORS
THE COMPANY HAS A LIMITED OPERATING HISTORY UPON WHICH AN INVESTOR CAN EVALUATE ITS POTENTIAL FOR
FUTURE SUCCESS. The Company has had seven commercial sales of its Luminescent Products aggregating a
total of approximately $388,000. Therefore, there is limited historical financial information about
the Company upon which to base an evaluation of the Company's performance or to make a decision
regarding an investment in shares of the Company's common stock. The Company has generated an
accumulated deficit of approximately $10.43 million through September 30, 2005. To date, the
Company's operations have largely been limited to its effort to develop the manufacturing process
for its Luminescent Product. Sales of the Company's products may fail to achieve significant levels
of market acceptance. The Company's business will be subject to all the problems, expenses, delays
and risks inherent in the establishment of an early stage business enterprise, including limited
capital, delays in product development, manufacturing, costs overruns, price increases in raw
materials and unforeseen difficulties in manufacturing, uncertain market acceptance and the absence
of an operating history. Therefore, the Company may never achieve or maintain profitable operations,
and the Company may encounter unforeseen difficulties that may deplete its limited capital more
rapidly than anticipated.
THE COMPANY WILL REQUIRE ADDITIONAL CAPITAL, AND IF ADDITIONAL CAPITAL IS NOT AVAILABLE, THE COMPANY
MAY HAVE TO CURTAIL OR CEASE OPERATIONS. To become and remain competitive, the Company will be
required to make significant investments in the Company's infrastructure, including hiring employees
to provide sales, marketing, product development and financial reporting services on an ongoing
basis. The Company does not at this time have any committed sources of financing. There can be no
assurance that additional necessary financing will be attainable on terms acceptable to the Company
in the future or at all. If financing is not available on satisfactory terms, the Company may be
unable to operate at its present level, market or sell its products, establish or maintain a system
of financial controls or develop and expand its business, develop new products or develop new
markets, and its operating results may be adversely affected. Debt financing, if available,
increases expenses and must be repaid regardless of operating results. The availability of debt or
equity financing is uncertain, and successful equity financing would result in additional dilution
to existing stockholders. The losses incurred to date, the uncertainty regarding the ability to
raise additional capital and questions concerning the Company's ability to generate net income and
positive cash flows from operations indicate that the Company may be unable to continue as a going
concern for a reasonable period of time. The Company's report of independent registered public
accounting firm, as of and for the year ended December 31, 2004, also indicates that there is
substantial doubt about the Company's ability to continue as a going concern.
THE COMPANY HAS A LIMITED NUMBER OF EMPLOYEES TO CARRY ON ITS OPERATIONS. As of September 30, 2005,
the Company had only three full-time employees and several part-time consultants. The Company has
not had sufficient resources to hire additional employees and the Company's continued inability to
hire additional employees will have a material adverse effect on the Company's ability to carry on
and expand its business operations.
THE COMPANY HAS LIMITED FINANCIAL AND OPERATIONAL CONTROLS.
The Company has been unable to attract additional directors and has no audit or compensation
committees. In addition, the Company's employees have limited financial experience and the Company
currently lacks an adequate system of internal financial or management controls. The Company does
not have an accounting department but relies on outside bookkeeping services to record financial
activity and consultants to assist in the preparation with financial statements. The Company has
received a letter from its independent registered public accountants indicating that the Company has
material weaknesses with respect to (1) accurately recording day-to-day transactions, (2) the lack
of segregation of duties, (3) the approval of significant transactions in a timely manner by the
Company's board of directors and (4) the preparation of its financial statements in an accurate and
timely fashion. If the Company is unable to raise additional capital, it will not have sufficient
resources to implement an adequate system of internal management and financial controls and will be
unable to hire employees with adequate financial and accounting experience.
-16
THERE EXISTS SIGNIFICANT CONCENTRATION OF OWNERSHIP OF THE COMPANY'S COMMON STOCK.
One of the Company's stockholders, David Geffen, owns a significant percentage of the Company's
outstanding Common Stock. As a result, this stockholder may be able to influence the outcome of
matters requiring stockholder approval, including the election of directors and approval of
significant corporate transactions. This concentration of ownership of the Company's common stock
may have the effect of impacting the probability and timing of a change in control of the Company.
This could deprive the Company's stockholders of an opportunity to receive a premium for their
common stock as part of a sale of the Company and might otherwise affect the market price of the
Company's common stock.
THE COMPANY'S PRODUCTS MAY NOT BE ACCEPTED BY THE MARKET AND THE COMPANY HAS HAD LIMITED PRODUCT
SALES TO DATE.
The Company relies on a single product and has had limited product sales to date. Because the
Company has only commenced limited marketing of its Luminescent Product, it can give no assurance
that this product will be commercially accepted in the marketplace or that the market for its
product will be as large as expected by the Company.
THE COMPANY RELIES ON THIRD-PARTY MANUFACTURERS TO PRODUCE ITS PRODUCTS. The Company currently has
no manufacturing facilities and relies on several third party manufacturers to produce the Company's
Luminescent Product. Loss of these manufacturing facilities would have a significant adverse effect
on the Company's operations. There can be no assurance that the Company's third party manufacturers
will continue to manufacture the Company's products.
THE COMPANY RELIES ON PATENTS, LICENSES AND INTELLECTUAL PROPERTY RIGHTS TO PROTECT ITS PROPRIETARY
INTERESTS. The Company's future success depends in part on its ability to maintain patents and other
intellectual property rights covering its Luminescent Products. There can be no assurance that the
Company's patents and patent applications are sufficiently comprehensive to protect the Company's
products. The process of seeking further patent protection can be long and expensive and there can
be no assurance that the Company will have sufficient capital resources to cover the expense of
patent prosecution or maintenance for its applications or existing patents or that all or even any
patents will issue from currently pending or any future patent applications or if any of the patents
when issued will be of sufficient scope or strength, provide meaningful protection or any commercial
advantage to the Company. The Company's limited financial resources may limit the Company's ability
to bring any action to enforce its current patents.
-17-
THE COMPANY IS DEPENDENT UPON A SOLE SOURCE FOR RAW MATERIALS TO MANUFACTURE IT PRODUCTS.
The principal raw materials used by the Company, in connection with the manufacturing of its
Luminescent Product, are purchased from a sole source supplier. The unavailability of such raw
material or significant price increases of such raw material would have a material adverse effect on
the Company's business. The Company currently has no secondary source for such raw material.
RIGHTS TO ACQUIRE SHARES OF THE COMPANY'S COMMON STOCK WILL RESULT IN SIGNIFICANT DILUTION TO OTHER
HOLDERS OF SHARES OF THE COMPANY'S COMMON STOCK.
As of September 30, 2005, warrants and options to acquire a total of 28,979,577 shares of the
Company's common stock were outstanding. As of such date, the Company had also made commitments to
issue an additional 23,153,099 shares of common stock to investors in the Company at such time as
the Company is able to increase the number of shares of the Company's authorized common stock, which
require the approval of the Company's stockholders. The existence of such stock options, warrants,
and commitments could adversely affect the price at which shares of the Company's common stock may
be sold or the ability of the market to absorb such additional shares of common stock if such
investors decide to sell such shares and the terms on which the Company can obtain additional
financing.
THERE IS A LIMITED MARKET FOR THE COMPANY'S COMMON STOCK.
The Company's common stock is thinly traded and may experience price volatility, which could affect
a stockholders ability to sell the Company's common stock or the price at which it may be sold.
There has been and may continue to be a limited public market for the common stock of the Company.
The shares of the Company's common stock are not traded on any established market and the Company's
common stock was de-listed from the NASDAQ small cap market in 2001 due to non-compliance with
certain continuing listing requirements. The Company's common stock is currently quoted on the "pink
sheets" under the symbol "ADLU.PK".
THE COMPANY'S FAILURE TO COMPETE EFFECTIVELY MAY LIMIT ITS ABILITY TO ACHIEVE PROFITABILITY.
Competition in the area in which the Company expects to market the Luminescent Products is intense,
and the Company's competitors have substantially greater resources than the Company.
THE COMPANY IS DEPENDENT ON ITS FOUNDER AND KEY EMPLOYEE.
The success of the Company is dependent upon the continued availability of its founder, Patrick
Planche. The unavailability of Patrick Planche or the Company's inability to attract and retain
other key employees could severely affect the ability of the Company's current and proposed conduct
of its business.
-18-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discussion of the Company's market risk includes forward-looking statements that
involve risk and uncertainties. Actual results could differ materially from those projected in the
forward-looking statements. Market risk represents the risk of changes in value of a financial
instrument caused by fluctuations in interest rates, foreign exchange rates, and equity prices.
As of September 30, 2005, the Company did not participate in any derivative financial instruments or
other financial and commodity instruments for which fair value disclosure would be required under
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments". Our investments are primarily
cash in financial institutions and short-term money market accounts that are carried on the
Company's books at cost.
The functional currency of the Company is the U.S. dollar, with the Swiss franc being the functional
currency of Brightec SA. Foreign currency denominated assets and liabilities are translated into
U.S. dollar equivalents based on exchange rates prevailing at the end of each period. Revenues and
expenses are translated at average exchange rates during the period. Aggregate foreign exchange
gains and losses arising from the translation of foreign currency denominated assets and liabilities
are included as a component of comprehensive loss. Foreign exchanges gains and losses arising from
transactions are included in the current year net loss.
-19-
ITEM 4. CONTROLS AND PROCEDURES
During the last five years, the Company did not have an accounting department, but instead relied on
outside bookkeeping services to record financial activity and consultants to assist in the
preparation of its financial statements. Upon the completion of audit of the December 31, 2004
financial statements, the Company received a letter from its independent registered public
accounting firm indicating that the Company has material weaknesses with respect to (1) accurately
recording day-to-day transactions, (2) the lack of segregation of duties, (3) the approval of
significant transactions in a timely manner by the Company's Board of Directors and (4) the
preparation of its financial statements, in an accurate and timely fashion. The Company's management
agrees with the assessment of the Company's independent registered public accounting firm and is
developing a plan to address these material weaknesses.
No changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f)
under the Exchange Act) occurred during the three-month and nine-month periods ended September 30,
2005 that have materially affected, or are reasonably likely to materially affect, the Company's
internal control over financial reporting.
-20-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Company is a party or to which any of
its properties are subject.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following equity transactions occurred during the period August 22, 2005 to September 30, 2005
and were not registered under the Securities Act of 1933, as amended (the "Securities Act").
On August 22, 2005, the Company agreed to issue 1,000,000 shares of common stock, at an agreed upon
value of $0.075 per share, to Louis Kronfeld, in satisfaction in indebtedness owed by the Company
for consulting services rendered in 2004 in the amount of $40,000 and to pay for his signing bonus
of $35,000 upon his hiring by the Company as an employee in the second quarter of 2005.
On August 22, 2005, Jeffrey Stern Revocable Trust exercised warrants to purchase 583,334 shares of
the Company's common stock for an aggregate exercise price of $70,000.
On August 30, 2005, the Company sold 500,000 shares of common stock to John Dolan at a purchase
price of $0.12 per share for an aggregate of $60,000.
On August 22, 2005, the Company entered into an agreement with Francois Planche, one of the
Company's shareholders, allowing the Company to borrow 583,334 shares of common stock he held, in
order to issue shares of common stock to other an investor that exercised a warrant to purchase
shares of common stock, which could not be issued since the Company had sold the maximum number of
shares of common stock authorized under it Article of Incorporation. Under the agreement, Mr.
Planche is to receive no compensation for the redemption of his securities. Upon the amendment of
the Company's Articles of Incorporation, the Company will reissue the exact number of shares
borrowed from Mr. Planche.
All shares of common stock issued by the Company were issued without registration pursuant to the
exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. All
purchasers of shares of the Company's common stock who purchased such shares of common stock for
cash represented that they were acquiring the securities for investment and for their own account.
All purchasers of the Company's common stock who are United States residents and purchased such
securities for cash also represented to the Company that they were accredited investors as of the
date of such investment. A legend was placed on the stock certificates representing all securities
purchased stating that the securities have not been registered under the Securities Act and cannot
be sold or otherwise transferred without an effective registration or an exemption there from.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
-21
ITEM 6. EXHIBITS
NUMBER DESCRIPTION OF EXHIBIT
31 Certification of Patrick Planche, President and Chief Executive Officer, pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended.
32 Certification of Patrick Planche, President and Chief Executive Officer, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
-22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ADVANCED LUMITECH, INC.
Date: November 14, 2005 By: /s/ Patrick Planche
---------------------------------------
Patrick Planche
President and Chief Executive Officer
-23-
EXHIBIT INDEX
Number Description of Exhibit
31 Certification of Chief Executive and Financial Officer Pursuant to 18 U.S.C Section 1850,
As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) E-1
32 Certification of Chief Executive and Financial Officer Pursuant to Rule 13a-14(b) of the
Exchange Act and 18 U.S.C. Section 1850, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. (filed herewith) E-2
24
E-1
Exhibit 31
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302
I, Patrick Planche, certify that:
1. I have reviewed this Quarterly Report of Advanced Lumitech, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the small business issuer as of, and for, the periods
presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under my supervision, to ensure that
material information relating to the small business issuer, including its
consolidated subsidiaries, is made known to me by others within those entities,
particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the small business issuer's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(c) Disclosed in this report any change in the small business issuer's internal
control over financial reporting that occurred during the small business issuer's
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the small business issuer's internal control over financial
reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial
reporting, to the small business issuer's auditors and the small business issuer's audit
committee of the board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely
affect the small business issuer's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees
who have a significant role in the small business issuer's internal control over
financial reporting.
Date: November 14, 2005 /s/Patrick Planche
-------------------------------------------------------
Patrick Planche, President, Chief Executive
Officer, Treasurer and Chief Financial Officer
E-2
Exhibit 32
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Advanced Lumitech, Inc. (the "Company") on Form 10-QSB
for the quarterly period ended September 30, 2005, as filed with the Securities and Exchange
Commission on the date hereof (the "Report'), I, Patrick Planche, President, Chief Executive
Officer, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of
my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the
financial condition and result of operations of the Company.
/s/ Patrick Planche
- --------------------------------------------
Patrick Planche, President,
Chief Executive Officer, Treasurer and
Chief Financial Officer
November 14, 2005
