UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT FOR
THE TRANSITION PERIOD FROM _________ TO _____________.
COMMISSION FILE NUMBER: 000-31171
ADVANCED PRECISION TECHNOLOGY, INC.
____________________________________________________
(Exact name of small business issuer as specified in its charter)
NEVADA 87-0455378
_______________________________ ________________________________
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2271-D South Vasco Road, Livermore, CA 94550
_________________________________________________
(Address of principal executive offices)
(925) 447-6900
____________________________________
(Issuer's telephone number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of January 29, 2000, the issuer had outstanding 54,051,077 shares of Common
Stock, par value $0.001 per share.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited financial statements of Advanced Precision Technology, Inc., a
Nevada corporation (the "Company"), as of September 30, 2000, were prepared
by Management and commence on the following page. In the opinion of
Management, the financial statements fairly present the financial condition of
the Company.
ADVANCED PRECISION TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED BALANCE SHEET
SEPTEMBER 30, 2000
ASSETS
--------
CURRENT ASSETS:
Cash $ 1,681,101
Inventory (lower of cost or market) 28,627
Prepaid expenses 6,125
-------------
Total Current Assets 1,715,853
-------------
FIXED ASSETS, AT COST:
Equipment 240,668
Furniture and fixtures 70,134
Leasehold improvements 36,635
-------------
347,437
Accumulated depreciation and amortization 125,367
-------------
222,070
-------------
OTHER ASSETS:
Patents, at cost - net of accumulated amortization
of $284,836 1,074,177
Deposits 3,685
-------------
1,077,862
-------------
$ 3,015,785
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 63,645
Notes payable 10,000
Loans payable - stockholder 10,762
-------------
Total Current Liabilities 84,407
-------------
STOCKHOLDERS' EQUITY:
Preferred stock, $100 par value;
authorized 25,000,000 shares;
1,250 shares issued and outstanding 125,000
Common stock, $.001 par value;
authorized 100,000,000 shares,
54,051,077 issued and outstanding: 54,051
Additional paid-in capital 6,301,459
Deficit accumulated during development stage (3,549,132)
-------------
2,931,378
-------------
$ 3,015,785
=============
ADVANCED PRECISION TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF OPERATIONS
Cumulative
During
Development
Stage
9 Months Ended September 30, (Inception
2000 1999 June 1, 1993)
------------- -------------- -------------
REVENUES $ 82,478
-------------
EXPENSES:
Cost of goods sold 28,049
Research and development $ 193,700 $ 8,420 1,350,999
Marketing 98,375 41,586 572,219
Administrative 222,444 82,490 909,718
Officer salaries 114,500 90,000 354,500
Depreciation and amortization 67,855 76,886 398,130
------------- -------------- -------------
Total Expenses 696,874 299,382 3,613,615
------------- -------------- -------------
NET LOSS $ (696,874) $ (299,382) $ (3,531,137)
============= ============== =============
BASIC AND DILUTED LOSS PER SHARE $ (.01) $ (.01)
============= ==============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 53,910,660 35,974,000
============= ==============
ADVANCED PRECISION TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Deficit
Accumulated
Additional During
Preferred Common Paid-In Development
Stock Stock Capital Stage
----------- --------- ------------ ------------
Balance December 31, 1999 $ 125,000 $ 41,502 $ 3,348,542 $(2,852,258)
Proceeds from sale of
7,192,666 shares of
common stock 7,193 2,364,473
1,504,000 shares issued in
payment of loan fees, cost
of patents and consulting
services 1,504 213,296
3,852,500 shares issued in
payment of notes payable 3,852 375,148
Net Loss (696,874)
----------- --------- ------------ ------------
Balance, September 30, 2000 $ 125,000 $ 54,051 $ 6,301,459 $(3,549,132)
=========== ========= ============ ============
ADVANCED PRECISION TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF CASH FLOWS
Cumulative
During
Development
Stage
(Inception
9 Months Ended September 30, June 1,
2000 1999 1993)
------------- ------------- -------------
CASH USED IN OPERATIONS:
Net Loss $ (696,874) $ (299,382) $ (3,531,137)
Accumulated deficit of
acquired company (258,205)
Depreciation and amortization 85,525 76,886
Increase in inventory (16,289) (4,000) (28,627)
Increase in prepaid expenses (3,525) (6,125)
Increase (decrease) in accounts
payable (105,030) (77,253) 63,645
Increase (decrease) in accrued
expenses (11,932) 7,406
Increase (decrease)in due
stockholder (87,993) 67,705 10,762
------------- ------------- -------------
Net cash used in operations (836,118) (228,638) (3,339,484)
CASH USED IN INVESTING ACTIVITIES:
Investment in patents (111,611) (37,000) (1,359,013)
Investment in fixed assets (218,322) (208) (347,437)
Deposit (3,605) (3,685)
------------- ------------- -------------
Net cash used in investing
activities (333,618) (37,208) (1,710,135)
CASH PROVIDED BY FINANCING ACTIVITIES:
Sale of preferred and common stock 2,965,466 205,002 6,720,720
Contributed capital
Notes payable (185,000) 76,000 10,000
------------- ------------- -------------
Net cash provided by financial
activities 2,780,466 281,002 6,720,720
------------- ------------- -------------
INCREASE IN CASH AND EQUIVALENTS 1,610,730 15,156 1,681,101
CASH AND EQUIVALENTS BEGINNING
OF PERIOD 70,371 3,254
------------- ------------- -------------
CASH AND EQUIVALENTS END OF PERIOD $ 1,681,101 $ 18,410 $ 1,681,101
============= ============= =============
ADVANCED PRECISION TECHNOLOGY, INC.
(A DEVELOPMENT COMPANY)
NOTE TO FINANCIAL STATEMENTS
Note 1. In the opinion of the management of Advanced Precision Technology,
Inc., the unaudited financial statements of Advanced Precision Technology,
Inc., for the interim periods shown include all adjustments, consisting only
of normal recurring accruals, necessary for a fair presentation of the
financial position at September 30, 2000, and the results of operations and
cash flows for the periods ended September 30, 2000 and 1999. The results of
operations for the interim periods shown may not be indicative of the results
that may be expected for the fiscal year. These unaudited financial statements
should be read in conjunction with the audited financial statements and notes
thereto included in this Form 10-SB.
Note 2. During the year 2000, the Company issued 12,549,160 shares of its
common stock for $2,371,666 of cash, to pay off loans of $379,000 and loan
fees of $50,400, the cost of patents of $109,500 and consulting services of
$54,900.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation.
Over the next 12 months, the Company plans to enter the identity
verification market through manufacturing and directly distributing the
Company's high quality fingerprint capture product to established vendors
selling fingerprint capture to major government agencies and other large-scale
identification programs. In support of this strategic plan, the Company has
developed ongoing relationships by demonstrating in person and providing
product to test, with leading industry experts, integrators, end users and
consultants. Over the past 24 months, the Company has expended approximately
$500,000 on research and development.
The Company has established new corporate offices and is in the process
of establishing production capabilities in a 9,686 square foot facility it has
leased in Livermore, California. The Company believes that its location,
access to trained scientific and manufacturing personnel, and proximity to
affordable housing will assist in achieving the Company's business plan.
The Company has and will continue to invest significant capital expenditures
in equipment, internal systems, and personnel to meet these anticipated
demands. The Company is setting up clean room facilities with extensive
optical equipment including lasers, optical tables, and film processing
workstations for the manufacture of the HOE's. The Company is installing
computer networks, desks, phone systems, and workstations for the internal
operations. The Company is setting up manufacturing cells with fixtures,
tools and related equipment and ordering parts for an initial 2000 unit build.
The Company has hired a Chief Financial Officer (who is not currently an
officer of the Company), Office Manager, Production Manager, Holographers,
Quality Control Specialists and Assemblers to build the team to assist in
achieving the Company's business plan.
Major Markets of Interest
The Company is currently seeking or intends to seek sales contracts to
the following general categories of potential customers and applications: (1)
Law Enforcement Agencies, including the FBI, state, county and municipal
jurisdictions; (2) Civil Markets, including United States Immigration,
passport, military, state driver licenses, welfare fraud deterrence and
benefit entitlement; (3) Commercial Markets, including access control of
physical sites, access control of computers and databases, and security in
support of card based financial systems; and (4) International Markets,
including countries with national ID programs, border control, voter
registration, social benefits, and national health.
Market Entry Strategy
---------------------
Over the next 12 months, the Company's plan includes establishing
strategic partnerships with established vendors including Value Added
Resellers/Distributors (VARs), Original Equipment Manufacturers (OEMs), and
System Integrators (SIs). Relationships with VARs would include nonexclusive
arrangements for target markets of interest wherein selected channel partners
have established relationships with large potential segments or higher margin
"niche" markets. Relationships with OEMs would involve ATMs, point of sale,
time clocks, transit turnstiles, access control, and healthcare information
system vendors. SIs would include large scale system providers such as IBM,
EDS, NEC, Unisys and similar companies.
The Company developed its APrinT HoloPass fingerprint capture devices,
which utilize high image quality by design and multi-channel distribution
system based upon the marketing experience and insights gained from over five
years of industry participation and internal market research. The Company's
products have been engineered to provide high quality, consistent images, and
to achieve compliance with the strictest government and industry standards at
relatively low cost. Government standards include "FBI IQS EFTS" and
"ANSI/NIST", each of which is described below.
American National Standards Institute/National Institute of Standards
and Technology (ANSI/NIST) and Federal Bureau of Investigation Image Quality
Standards for the Electronic Fingerprint Transmission Standards, are standards
set forth by the respective agencies and include Geometric accuracy,
resolution, modulation transfer functions and grayscale as some of their
requirements. Some government bids require them, and the Company plans to
meet those standards. Currently there is no government agency providing
certification for single-digit devices claiming to meet those standards.
By licensing and/or marketing under non-exclusive strategic agreements
with major corporations that are serving diverse target market segments, the
Company expects to reduce the higher business risks associated with
over-dependence on a single industry, or a single large customer, or a
specific geographic region. In addition, the Company plans to work with
established security vendors in the access control/physical security
application markets in an effort to better access major corporations,
colleges, airports, hospitals, laboratories, government facilities, and
computer networks.
These strategic relationships will not only provide the Company with
distribution outlets and generate demand for the Company's product, but will
also allow the Company to integrate software, hardware, and services provided
by the Company into its offerings to others, possibly creating additional
opportunities for revenues and profits.
The Company is continuing to ship no charge units (which cost the
Company approximately $500) to major fingerprint software algorithm vendors,
integrators, and vendors with existing government contracts. The Company is
doing extensive travel to meet with major federal agencies, participate in
major trade events and standards committees, and discuss potential
distribution arrangements for the soon to be built units. The Company is
seeking purchase orders for delivery starting in the first quarter of 2001.
The Company believes this strategy will complement the Company's
product marketing efforts with end users and system integrators for large
scale fingerprint capture/verification applications such as law enforcement,
military ID, driver licenses, passports, voter registration programs, computer
security/commerce and proposed electronic benefits transfer programs by state
and federal agencies.
The Company has integrated its proprietary fingerprint capture devices
with complementary software for enrollment and verification. Separately, it
also developed proprietary technology for transfer of captured fingerprints
into "smart" cards, for subsequent verification of the user's fingerprint at
the time the "smart" card is used. By meeting high government standards and by
initially focusing on market segments that are currently purchasing
fingerprint identity verification products, the Company expects to
conclusively establish its technology as one of the standards for the
industry.
The Company's primary focus is existing government, industrial, and
commercial market segments requiring rapid, high-quality fingerprint
enrollment and identity verification in one-to-one and one-to-many
applications. One-to-one applications include security access systems that
use an individual's unique fingerprint pattern to enter restricted access
locations, to access a specific computer or data, or "smart cards".
One-to-many applications include fingerprint identity verification database
comparisons for corporate employees, military personnel, suspected criminals,
prospective handgun purchasers, recipients of government welfare or
entitlement benefits, state licensed drivers, and foreign countries'
fingerprint identification programs.
The Company's marketing strategy consists of market penetration through
price performance leadership. The Company anticipates that it will be selling
direct or through current market suppliers, system integrators, value-added
resellers, and international agents. The Company intends to support its
marketing strategy with quality collateral material, targeted advertising, and
publicity campaigns.
The Company is establishing its corporate office and production
facility to meet the anticipated demands of these marketing efforts. The
Company is investing over $250,000 in capital equipment and facilities to
enable this effort. The Company intends to significantly increase the number
of its employees by adding quality personnel in the areas of operations,
assembly, testing, engineering, and administration.
The Company plans to do additional research and development into
improving and reducing the cost of all key components in the HoloPass device.
Additional projects are planned to add digital output, internal logic, and
wireless operations to the HoloPass product.
The Company anticipates that its current funding will last for 12
months, and hopes to be operating profitably by the end of such 12 month
period. The Company has placed funds into relative term certificates of
deposit and secured lines of credit.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Change in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Securities Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
On or about January 5, 2001, The Company filed a report on Form 8-K to report
that effective December 19, 2000, the Company engaged Feldman Sherb & Co.,
P.C. The Company's previous auditor, Arthur Korn, CPA (Korn) resigned at an
earlier date when he agreed to become CFO for the Company.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: February 2, 2001 ADVANCED PRECISION TECHNOLOGY, INC.
/S/ BRUCE A. PASTORIUS
By:__________________________________
BRUCE A. PASTORIUS
Chairman, Chief Executive Officer
and President
/S/ JAMES D. HOMER
By:__________________________________
JAMES D. HOMER
Secretary and Director