UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act, 1934
For the quarterly period ended March 31, 2000
Commission File No.
ADVANCED PRODUCTS GROUP, INC.
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(Exact name of registrant as specified in its charter.)
Delaware 75-2035917
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(State of jurisdiction of (IRS Employer Identification
incorporation or organization No.)
5221 Ocean Blvd No 257 Sarasota, Florida 34242
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number including area code) (941) 346-8347
Indicate by check mark whether the registrant (1) has filed all reports
required to filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter time that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $0.001 Par Value - 3,340,868 as of March 31, 2000
<PAGE>
PART I - FINANCIAL INFORMATION
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATMENTS OF LOSS AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS AND NINE MONTHS
ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION> CASH FLOWS FROM OPERATING ACTIVITIES
March 31, 2000 June 30, 1999
CASH FLOW OPER. ACTIVITY
<S> <C> <C>
NET INCOME (LOSS) (39, 224) (112,879)
ADJUSTMENTS TO RECONCILE NET
LOSS TO CASH
AMORTIZATION LICENSE AGREEMENT 16,650 33,300
NON CASH EXPENSES 0 2,875
CHANGES IN OPERATING ASSETS& LIABILITIES
ACCOUNTS RECEIVABLES 0 8,230
INTEREST RECEIVABLES 0 (2, 215)
INVENTORY (381) 1,343
NOTES RECEIVABLE 0 0
PREPAID EXPENSES 0 1,400
ADVANCES ( 1,097) 0
ACCOUNTS PAYABLE 106,135 2,900
ACCRUED EXPENSES 0 5,759
TOTAL ADJUSTMENTS 121,307 53,592
NET CASH PROVIDED BY OPERATION 82,083 (59,284)
CASH FLOWS FROM INVESTING ACTIVITIES
LICENSE AGREEMENT PAYABLE CURR (82,709) (22,496)
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS FROM SALE OF COMMON STOCK 0 111,690
NOTES PAYABLE 575 (60,970)
USED FOR PAID IN CAPITAL 0 0
OUTSTANDING N/R FOR SHARES 0 0
NET CASH USED IN FINANCING 575 50,720
NET INCREASE (DECREASE IN CASH) (51) (31,060)
SUMMARY
CASH BALANCE AT END OF PERIOD 50 710
CASH BALANCE AT BEGINNING OF PERIOD 101 31,770
NET INCREASE (DECREASE) IN CASH (51) (31,060)
</TABLE>
<PAGE>
ADVANCED PRODUCTS GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS PERIOD
ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION> REVENUES
REVENUES MARCH 31, 2000 JUNE 30, 1999
<S> <C> <C>
SALES 1,549 5,830
OTHER INCOME 0 0
TOTAL REVENUE 1,549 5,830
COST OF SALES
COST OF GOODS SOLD 289 1,343
COST OF SALES -OTHER 60 0
TOTAL COST OF SALES 349 1,343
GROSS PROFIT 1,200 4,487
EXPENSES
GENERAL AND ADMINISTRATIVE 3,734 46,656
AMORTIZATION 16,650 33,300
INTEREST 20,040 40,080
TOTAL EXPENSES 40,424 120,036
OTHER INCOME
INTEREST INCOME 0 2,673
NET INCOME (LOSS) (39,224) ( 112,876)
LOSS PER SHARE DILUTED ( .01) ( .03)
</TABLE>
<PAGE>
ADVANCED PRODUCTS GROUP, INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
FOR THE THREE MONTHS AND NINE MONTHS PERIOD
ENDING MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION> ASSETS
MARCH 31, 2000 JUNE 30,1999
ASSETS
<S> <C> <C>
CURRENT ASSETS
CASH IN BANK 50 710
ACCOUNTS RECEIVABLE 0 127
INTEREST RECEIVABLE 4,430 2,215
INVENTORY 0 0
ADVANCES 4,444 0
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TOTAL CURRENT ASSETS 8.924 3,052
OTHER ASSETS
LICENSE 1,332,000 1,332,000
LESS AMORTIZATION ( 105,450) ( 55,500)
TOTAL OTHER ASSETS 1,226,550 1,276,500
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TOTAL ASSETS 1,235,474 1,279,552
</TABLE>
<PAGE>
ADVANCED PRODUCTS GROUP, INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
FOR THE THREE MONTHS AND NINE MONTHS PERIOD
ENDING MARCH 31, 2000
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION> LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, 2000 JUNE 31, 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
ACCOUNTS PAYABLE 53,492 10,912
ACCRUED EXPENSE 5,980 5,980
LOANS PAYABLE 31,213 0
LICENSE FEE - CURRENT PORTION 159,840 159,840
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TOTAL CURRENT LIABILITIES 250,525 176,732
LONG TERM LIABILITIES
LICENSE FEE PAYABLE 1,175,543 1,135,672
STOCKHOLDERS' EQUITY
COMMON STOCK 3,297 3,061
PAIN IN CAPITAL 547,052 551,273
OUTSTANDING NOTES RECEIVABLES FOR SALE
OF SHARES ISSUED (403,410) (403,410)
ACCUMULATED IN THE DEVELOPMENT STAGE (337,533) (183,776)
TOTAL STOCKHOLDERS' EQUITY (190,594) ( 32,852)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 1,235,474 1,279,552
</TABLE>
<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 state 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 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 will be presented.
E. Consolidation Policies: The accompanying consolidated financial statements
include the accounts of the company and its majority - owned subsidiary.
Inter-company 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 (the legal acquirer) exchanged common stock
to give the shareholders of the legal acquiree control of the legal acquirer.
<PAGE>
Advanced Products Group, Inc
(A Development Stage Company)
Notes to Financial Statements
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 310,000 Series A
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.
The 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 that 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, 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
Computation for Earnings (Losses) Per Share to preserve comparability of
those figures.
<PAGE>
Advanced Products Group, Inc
(A Development Stage Company)
Notes to Financial Statements
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 carry forwards 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
earnings, if conditions of the Internal Revenue Codes are met. These losses
are as follows:
Year of Loss Amount Expiration Date
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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.
Management has found a source of funding, and has a plan of operation.
Funding is contingent on completing its SEC form 10Sb registration.
NOTE #6 - License Agreement
On August 27, 1998, Cra Z Soap, Corp., (the Licensee) 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 or developed 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.
<PAGE>
Advanced Products Group, Inc
(A Development Stage Company)
Notes to Financial Statements
NOTE #6 - License Agreement - Continued -
A royalty of ten percent (10%) of the Adjusted Gross Sales price for any
Products sold by the 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 the 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 ($2,000,000)
the percentage of Adjusted Gross Sales paid as Royalty as defined above shall
change from ten (10%) percent to three (3%) percent with no monthly minimum.
Licensee shall pay 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 issue 1,000,000 Shares of Series A Super
Preferred Voting Shares. Pursuant to the Agreement of Merger 103,517 Shares
"A" Super Preferred Voting Shares retroactively restated have the following
characteristics:
A. Voting Rights: The holder of each share of the Series 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 cast 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.
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 the date of issuance for $1.00 each
at the option of the issuer.
D. Dividends: the Shares earn non-cumulative dividend of three (3%) percent
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 the 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 the purposes of Rule 144, or any subsection
thereof, as promulgated by the Securities and Exchange Commission shall
commence upon the date of issuance of any such Series converted.
<PAGE>
Advanced Products Group, Inc
(A Development Stage Company)
Notes to Financial Statements
NOTE #7 - Stockholder's Equity- Continued-
On March 12, 1999 at a Special Meeting, the 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 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 option 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 receivable as follows:
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 166,667
Total $ 403,310
The Company issued 666,667 shares of common stock for the notes receivable.
Generally accepted accounting principal require that note receivable for
stock issued be offset against the equity increased from the original sale.
<PAGE>
ADVANCED PRODUCTS GROUP, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE #9 - Deficit Accumulated in the Development Stage
Subsequent to the Agreement of Merger the surviving entity is considered to
be a development state company. Deficits accumulated are as follows:
Period Amount
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From August 27, 1998, (Inception)
to December 31, 1998 $ 101,226
From January 1, 1999 to
June 30, 1999 160,493
Total $ 261,719
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 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.
PART II - OTHER INFORMATION
ITEM # 6 EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 27, Financial Data Schedule
B. Reports on Form 8-K
No reports have been filed on Form 8-K during this quarter
<PAGE>
ADVANCED PRODUCTS GROUP, INC
(A DEVELOPMENT STAGE COMPANY)
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADVANCED PRODUCTS GROUP, INC.
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Registrant
June 14, 2000 /s/ Edward J. da Parma, Jr.
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Edward J. da Parma, Jr. President
