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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _________________
Commission file number _______________________________________
ADVANCED PRODUCTS GROUP, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 75-2035917
- -------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
7820 S. HOLIDAY DR., SUITE 205, SARASOTA, FL 34231
--------------------------------------------------
(Address of principal executive offices)
(941)924-0007
---------------------------
(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: 3,307,535 Common Shares
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ ]
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET FOR SEPTEMBER 30, 1999
STATEMENTS ARE UNAUDITED
9/30/99
---------
ASSETS
CURRENT ASSETS
- --------------
CASH IN BANK $ 456
ACCOUNTS RECEIVABLE $ 1,639
INTEREST RECEIVABLE $ 4,430
INVENTORY $ --
ADVANCES $ --
---------
TOTAL CURRENT ASSETS $ 6,525
---------
TOTAL ASSETS $ 6,525
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITILES
- --------------------
ACCOUNTS PAYABLE $ 168,156
ACCRUED EXPENSES $ 5,980
LOANS PAYABLE $ 14,855
---------
TOTAL CURRENT LIABILITIES $ 188,991
STOCKHOLDERS' EQUITY
- --------------------
COMMON STOCK $ 3,307
PAID IN CAPITAL $ 549,165
ACCUMULATED IN DEVELOPMENT STAGE $(331,528)
OUSTANDING NOTES RECEIVABLE FOR SALE
OF SHARES ISSUED $(403,410)
---------
TOTAL STOCKHOLDERS' EQUITY $(182,466)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,525
=========
2
<PAGE>
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD JULY 1, 1999 TO SEPTEMBER 30, 1999
STATEMENTS ARE UNAUDITED
9/30/99
--------
REVENUES
- --------
SALES $ 3,030
OTHER INCOME $ 2,215
--------
TOTAL REVENUE $ 5,245
COST OF SALES
- -------------
COST OF GOODS SOLD $ 615
COST OF SALES $ 15
--------
TOTAL COST OF SALES $ 630
--------
GROSS PROFIT $ 4,615
--------
EXPENSES
- --------
BANK CHARGES $ 175
DUES AND SUBSCRIPTIONS $ 590
FREIGHT $ 928
FRANCHISE FEES $ 60,045
PRODUCT DEVELOPMENT $ 3,190
MISCELLANEOUS $ 48
OFFICE EXPENSES $ 2,594
POSTAGE $ 331
RENT $ 2,250
TELEPHONE $ 3,901
TRAVEL $ 769
MEALS AND ENTERTAINMENT $ 138
--------
TOTAL EXPENSES $ 74,959
--------
NET INCOME/(LOSS) $(70,344)
========
3
<PAGE>
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD JULY 1, 1999 TO SEPTEMBER 30, 1999
STATEMENTS ARE UNAUDITED
9/30/99
--------
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
NET INCOME OR LOSS $(70,344)
ADJUSTMENTS TO RECONCILE NET
LOSS TO CASH PROVIDED BY OPERATING $ (110)
ACTIVITIES
ACCOUNTS RECEIVABLE $ (1,512)
INTEREST RECEIVABLE $ (2,215)
INVENTORY $ --
NOTES RECEIVABLE $ 100
PREPAID EXPENSES $ --
ADVANCES $ --
ACCOUNTS PAYABLE $ 61,085
ACCRUED EXPENSES $ --
NOTES PAYABLE $ 14,855
--------
TOTAL ADJUSTMENTS $ 72,203
--------
NET CASH PROVIDED BY OPERATIONS $ 1,859
--------
CASH FLOWS FROM INVESTING ACTIVITIES $ --
- ------------------------------------ --------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
PROCEEDS FROM SALE OF COMMON STOCK $ 246
PAID-IN CAPITAL $ (2,359)
USED FOR PAID-IN CAPITAL $ --
OUTSTANDING N/R FOR SHARES $ --
--------
NET CASH USED IN FINANCING $ (2,113)
--------
NET INCREASE/DECREASE IN CASH $ (254)
========
SUMMARY
CASH BALANCE AT END OF PERIOD $ 456
CASH BALANCE AT BEGINNING OF PERIOD $ 710
--------
NET INCREASE/(DECREASE) IN CASH $ (254)
========
4
<PAGE>
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE #1 - CORPORATE HISTORY
Advanced Products Group, Inc., (the Company), is a market based company selling
soaps, hand cleaners and other related products. Originally formed as a Nevada
Corporation on August 27, 1998, using the name Cra-Z Soap Corp. the Company
filed Articles of Amendment on March 12, 1999, and changed its name to Advanced
Products Group, Inc.
Pursuant to an Agreement of Merger dated August 28, 1998, the Company merged
into Advanced Technologies Group, Inc., a Delaware Corporation organized under
the laws of the state of Delaware on March 25, 1987.
The Company is considered to be a development stage company.
NOTE #2 - SIGNIFICANT ACCOUNTING POLICIES
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the period when
the goods are shipped to the customer.
C. The Company considers all short term, highly liquid investments that are
readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
D. Basic Earnings Per Shares are computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding during the period. Diluted Earnings Per Share shall be computed
by including contingently issuable shares with the weighted average shares
outstanding during the period. When inclusion of the contingently issuable
shares would have an antidilutive effect upon earnings per share no diluted
earnings per share shall be presented.
E. Consolidation Policies: The accompanying consolidated financial statements
include the accounts of the company and its majority - owned subsidiary.
Intercompany transactions and balances have been eliminated in
consolidation.
F. Depreciation: The cost of property and equipment is depreciated over the
estimated useful lives of the related assets. The cost of leasehold
improvements is amortized over the lesser of the length of the lease of the
related assets of the estimated lives of the assets. Depreciation and
amortization is computed on the straight line method.
NOTE #3 - REVERSE TAKEOVER AND RECAPITALIZATION
Pursuant to an Agreement of Merger dated August 27, 1998, Cra-Z-Soap Corp., a
Nevada Corporation, (the legal acquiree) and Advanced Technologies Group, Inc.,
a Delaware Corporation, (the legal acquirer) exchanged common stock to give
the shareholders of the legal acquiree control of the legal acquirer.
5
<PAGE>
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -CONTINUED-
NOTE #3 - REVERSE TAKEOVER AND RECAPITALIZATION -CONTINUED-
Shareholders of the legal acquiree surrendered 100% of the outstanding shares in
exchange for 1,100,000 Shares of Common Stock and 310,550 Series A Super
Preferred Voting Shares of the legal acquirer.
On April 30, 1999, Advanced Technologies Group, Inc., the legal acquirer, filed
a Certificate of Amendment with the Secretary of State of the state of Delaware
changing its name to Advanced Products Group, Inc.
The share exchange of a private operating Company, (Cra-Z-Soap Corp.) into a
non-operating public shell corporation (Advanced Technologies Group, Inc.), with
no assets or liabilities resulted in the shareholders of the private company
having actual operating control of the combined company after the transaction,
and the shareholders of the former public shell continuing only as passive
investors.
This transaction is considered to be a capital transaction in substance, rather
than a business combination. That is, the transaction is equivalent to the
issuance of stock by the private company for the net monetary assets of the
shell corporation, accompanied by a recapitalization. The accounting is
identical to that resulting from a reverse acquisition, except no goodwill or
other intangible is recorded.
APB No. 16, paragraph 70 states that, "Presumptive evidence of the acquiring
corporation in combinations effected by an exchange of stock is obtained by
identifying the former common stockholder interest of a combined company which
either retains or receives the larger portion of the voting rights of the
combined corporation. That corporation should be treated as the acquirer unless
other evidence clearly indicates that another corporation is the acquirer."
Staff accounting Bulletin Topic 2A affirms the above principle and gives
guidelines that the post reverse-acquisition comparative historical financial
statements furnished for the legal acquirer should be those of the legal
acquiree.
In accordance with this guideline the outstanding shares of Cra-Z Soap Products
Corp., have been retroactively restated on the Balance Sheet, and the Statement
of Stockholders' Equity to give effect to the three shares for one share
exchange. The retroactively restated shares have been used in the Computations
for Earnings (Losses) Per Share to preserve comparability of those figures.
6
<PAGE>
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -CONTINUED-
NOTE #4 - INCOME TAXES
The Company has adopted FASB 109 to account for income taxes. The Company
currently has no issues that create timing differences that would mandate
deferred tax expense. Net operating losses would create possible tax assets in
future years. Due to the uncertainty as to the utilization of net operating loss
carryforwards an evaluation allowance has been made to the extent of any tax
benefit that net operating losses may generate.
The Company has incurred losses that can be carried forward to offset future
earnings if conditions of the Internal revenue Codes are met. These losses are
as follows:
Year of Loss Amount Expiration Date
-------------------------------------------
1998 $ 101,226 2018
1999
----------
Current Tax Asset Value of Net Operating Loss Carryforwards
at Current Prevailing Federal Tax Rate $ 34,416
Evaluation Allowance (34,416)
---------
Net Tax Asset $ -0-
=========
Current Income Tax Expense -0-
Deferred Income Tax Benefit -0-
NOTE #5 - GOING CONCERN
The Company has no assets and no operations from which it can obtain working
capital. The Company recognizes that it must find a source of working capital or
the Company may not be able to continue its existence.
NOTE #6 - LICENSE AGREEMENT
On August 27, 1998, Cra-Z Soap Corp., (the Licensor) entered into an Agreement
with Masters Marketing and Development, Inc., a Tennessee Corporation (the
Licensor). Pursuant to the Agreement the Licensor granted to the Licensee
property that is identified as all formulas, patents, applications for patents,
trade secrets, improvements, technology or technological products, intellectual
properties, know-how, ideas, methods, processes and concepts, and devices
("formulas"), whether now existing or hereafter conceived, developed or acquired
by Licensor relating to the product known as Cra-Z Soap or any similar product
or any application of the formulas to any product or commercialization thereof.
7
<PAGE>
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -CONTINUED-
NOTE #6 - LICENSE AGREEMENT -CONTINUED-
A royalty often percent (10%) of the Adjusted Gross Sales price of any Products
sold by Licensee or its Affiliates for which Licensee receives payment or Twenty
Thousand Dollars and U. S. ($20,000) (the "monthly minimum"), whichever is
greater ("Royalties"). "Adjusted Gross Sales Price" shall mean the gross sales
price of any Products sold less returns and reasonable actual discounts or
rebates. At such time as the total amount of Royalties paid reaches a sum equal
to or exceeding two million dollars U.S. ($2,000,000), the percentage of
Adjusted Gross Sales paid as royalty as defined above shall change from ten
percent (10%) to three percent (3%) with no monthly minimum.
Licensee shall pay Licensor the Royalties on the first day of each month during
the Term.
NOTE #7 - STOCKHOLDERS' EQUITY
The Company is authorized to issue 40,000,000 shares of common stock with a par
value of $0.00 per share.
The Company is authorized to issued 1,000,000 Shares of Series "A" Super
Preferred Voting Shares. Pursuant to the Agreement of Merger 103,517 Series "A"
Super Preferred Voting Shares, retroactively restated have the following
characteristics;
A. Voting Rights: The holder of each share of the Shares shall have the
right to cast twenty (20) votes per Share held on any and all matters
presented for shareholder consideration. Each holder of common shares
may cash one (1) vote per common share held on any and all matters
presented for shareholder consideration.
B. Preference: Holders of the Shares shall be preferred over holders of
common shares for payment of dividends or in any distribution to
shareholders resulting from liquidation of the issuer.
C. Face Value and Redemption Value: The Shares have a face value of $1.00
each. The Shares may be redeemed by the issuer prior to any conversion
thereof any time after two (2) years from date of issuance for $1.00
each at the option of the issuer.
D. Dividends: The Shares earn a non-cumulative dividend of three percent
(3%) annually based upon the Shares face value and redemption value.
Dividends shall be paid from earnings of the issuer, if any.
E. Conversion: The Shares may be converted into restricted common shares
at any time commencing two (2) years after date of issuance. Each
Series "A" Preferred Voting Share may be converted into twenty (20)
restricted common shares. The holding periods of any restricted
common shares issued as a result of conversion for purposes of Rule
144, or any subsection thereof, as promulgated by the Securities &
Exchange Commission, shall commence upon the date of issuance of any
such Series converted.
8
<PAGE>
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -CONTINUED-
NOTE #7 - STOCKHOLDERS' EQUITY -CONTINUED-
On March 12, 1999, at a Special Meeting, Shareholders authorized a one for three
split of the issued and outstanding shares of common and preferred stock.
Retroactive restatement has been made to the financial statements. The remaining
preferred shares outstanding were returned to the Company at no cost and were
canceled.
The Company issued 24,916 shares of common stock for services valued at $2,838
in 1998 and 317,639 shares for services valued at $7,585 in 1999.
The Company issued shareholders of Advanced Technologies Group, Inc., options to
acquire up to 666,667 post split shares of common stock at $0.75 per share. In
1999, the Shareholders exercised the options and the Company issued 666,667
shares of common stock for Notes Receivable of $500,000. At June 30, 1999, the
Company had received $96,690 from one of the note holders.
NOTE #8 - NOTES RECEIVABLE
The Company has three short term notes receivables as follows;
<TABLE>
<S> <C>
Note #1 - From a Business Entity, Note of $166,667 is dated April 1, 1999,
Due March 31, 2000, Interest at .025% Per Annum $ 166,667
Note #2 - From a Business Entity, Note of $166,667 is dated April 1, 1999,
Due March 31, 2000, Interest at .025% Per Annum 166,667
Note #3 - From a Business Entity, Note of $166,667 is dated April 1, 1999,
Due March 31, 2000, Interest at .025% Per Annum 69,976
---------
Total $ 403,310
=========
</TABLE>
The Company issued 666,667 shares of common stock for the notes receivable.
Generally accepted accounting principle require that note receivable for stock
issued be offset against the equity increased from the original sale.
NOTE #9 - DEFICIT ACCUMULATED IN THE DEVELOPMENT STAGE
Subsequent to the Agreement of Merger the surviving entity is considered to be a
development stage company. Deficits accumulated are as follows;
PERIOD AMOUNT
---------------------------------------------------------------------------
Fiscal Year End June 30,1998 $ 261,719
From July 1, 1999 to September 30, 1999 70,344
----------
Total $ 331,063
==========
9
<PAGE>
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -CONTINUED-
NOTE #10 - NEW TECHNICAL PRONOUNCEMENTS
In February 1997, SFAS No. 129, "Disclosure of Information about Capital
Structure" was issued effective for periods ending after December 31, 1997. The
Company has adopted the disclosure provisions of SFAS No. 129 effective with the
fiscal year ended December 31, 1998.
In June 1997, SFAS No. 130, "Reporting Comprehensive Income" was issued
effective for fiscal years beginning after December 31, 1997, with earlier
application permitted. The Company has elected to adopt SFAS No. 130 effective
with the fiscal year ended December 31, 1998. Adoption of SFAS No. 130 is not
expected to have a material impact on the Company's financial statements.
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" was issued for fiscal year beginning after December 31,
1997, with earlier application permitted. The Company has elected to adopt SFAS
No. 131, effective with the fiscal years ended December 31, 1998. Adoption of
SFAS No. 131 is not expected to have a material impact on the Company's
financial statements.
NOTE #11 -
The balance in Accounts Payable ($168,156) includes $151,821 in unpaid license
fees which are currently disputed and being negotiated with the Licensor.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATION:
The Company is a developmental stage company with a comprehensive
marketing plan to launch its Internet web site called Go Autoparts Direct. The
Company entered into an agreement with Telebrands, Inc to provide media exposure
of its web site. Further, management is in the process of completing agreements
with several manufacturers' representatives to provide direct access to various
auto aftermarket manufacturers.
Due to the importance of broadcast and print media for a successful
e-commerce business, management forged a strategic alliance with one of the
largest producers and purchasers of TV advertising time. They are committed to
help launch the Company's program with TV and radio and an infomercial as well.
With the added help of the Company's marketing and advertising agency, Daugherty
Tegarden Hanley, management is confident that will make our site successful.
The Company's Internet site will allow users to purchase replacement
autoparts and accessories directly from various manufacturers OEM and
Aftermarket products. Additionally, potential buyers will be linked to an
auction site that will specialize in antique automobiles and trucks. Also,
management plans to link directly with suppliers of used and hard to find parts
and accessories.
Finally, the site will provide an outlet to market its cleaning
products. This is a highly competitive arena and a captive distribution channel
through the Internet will facilitate the launch of this product to the market
place.
The Company can satisfy its cash requirements for a period of 90 days
from September 1, 1999. It is currently engaged in raising sufficient capital to
launch its Internet site and expects to be successful in this endeavor.
The Company researched the number and type of auto parts sites found on
the Web. While there are some 20,000 websites dealing with auto parts, only a
few sell auto parts and very few provide for sales without a requirement for an
e-mail transaction. None of the sites provide direct access to the manufacturer,
each being a distributor site. Additionally, the Company plans to continue its
research into the technical requirements, most especially software, to provide
the direct type of service it envisions. It does expect that these technical
requirements will require significant purchases of both hardware and software in
the near term. Management expects these expenditures to be approximately
$250,000. Management also anticipates that the Company will not require any
significant new employment to accomplish its launch.
The Company's began operations in October, 1998, therefore the
financials contained herein will not show a comparable time period.
11
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
(a) There are no legal proceedings, judicial or administrative, pending
against the Company.
ITEM 2. CHANGES IN SECURITIES.
(a) There are no changes affecting the rights of the holders of any class
of registered securities.
(b) There are no changes affecting or materially limiting the rights by the
issuance or modification of any other class of securities
(c) The registrant sold no securities during the period covered.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) The Company is not in default in the payment of principal, interest, a
sinking or purchase fund installment, or any other material default not
cured within 30 days, with respect to any indebtedness of the small
business issuer exceeding 5 percent of the total assets.
(b) The Company is not in arrears in the payment of dividends or any other
material delinquency, with respect to any class of preferred stock of the
registrant which is registered or which ranks prior to any class of
registered securities, or with respect to any class of preferred stock.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) No matters have been submitted to a vote of security holders during the
period covered by this report, through the solicitation of proxies or
otherwise.
ITEM 5. OTHER INFORMATION.
(a) The registrant has no other information to report at this time.
ITEM 6. EXHIBITS AND REPORTS
(a) Exhibits furnished include #11 and 27.
(b) No reports were filed during the quarter on Form 8-K.
12
<PAGE>
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.
ADVANCED PRODUCTS GROUP, INC.
(Registrant)
Date: NOVEMBER 15, 1999 /s/ EDWARD DAPARMA
------------------------------------
Edward Daparma
President
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
11 Computation of Earnings Per Share
27 Financial Data Schedule
EXHIBIT 11
ADVANCED PRODUCTS PRODUCTS, INC.
COMPUTATION OF EARNINGS PER SHARE
PRIMARY AND FULLY DILUTED
Three Months Ended
September 30, 1999
Net income (72,522)
Shares used in computation:
Weighted average number of common
shares outstanding 3,184,062
Common stock equivalents from assumed
issuances using the treasury stock method
Stock options and warrants N/A
Primary and fully diluted shares 3,184,062
Primary and fully diluted earnings per share $ (0.02)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 456
<SECURITIES> 0
<RECEIVABLES> 6,069
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,525
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,525
<CURRENT-LIABILITIES> 188,991
<BONDS> 0
0
0
<COMMON> 3,307
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,525
<SALES> 3,030
<TOTAL-REVENUES> 5,245
<CGS> 615
<TOTAL-COSTS> 630
<OTHER-EXPENSES> 74,959
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (70,344)
<INCOME-TAX> 0
<INCOME-CONTINUING> (70,344)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (70,344)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
