FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
Commission file number 0-12984
ADVANCED TOBACCO PRODUCTS, INC.
(Exact name of registrant as specified in
its charter)
TEXAS 74-2285214
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
16607 Blanco Road, Suite 1504, San Antonio,
Texas 78232
(Address of principal executive offices)
(Zip Code)
(210) 408-7077
(Registrant's telephone number, including
area code)
N/A
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes No N/A
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
8,092,136 as of March 31, 1997
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
BALANCE SHEETS
(Unaudited) (Audited)
March 31 June 30
1997 1996
ASSETS:
CURRENT ASSETS:
Cash & cash equivalents $ 72,018 $ 84,918
Investments 348,933 237,434
Accrued Royalty 57,000 -0-
Accounts receivable 539 -0-
Total current assets: 478,490 322,352
LICENSE AGREEMENTS, Net: 157,675 154,809
INVESTMENTS: 952,332 1,007,837
TOTAL ASSETS: $1,588,497 $1,484,998
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Accounts payable $ 10,557 $ 3,528
TOTAL LIABILITIES: 10,557 3,528
SHAREHOLDER'S EQUITY:
Common stock, $.01 par value;
30,000,000 shares authorized;
8,092,136 and 7,952,136 shares
outstanding as of March 1997,
and June 1996, respectively 80,922 79,522
Additional paid-in-capital 12,544,878 12,528,778
Accumulated deficit (11,047,860)(11,126,830)
TOTAL STOCKHOLDERS' EQUITY: 1,577,940 1,481,470
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY: $1,588,497 $1,484,998
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
STATEMENT OF INCOME
(Unaudited)
Three Months Ended March 31
1997 1996
REVENUES:
Royalty Income $ 57,000 $ -0-
Total operating revenue: 57,000 -0-
EXPENSES:
General and Administrative 27,018 18,176
Total operating expenses: 27,018 18,176
INCOME (LOSS) FROM OPERATIONS: 29,982 (18,176)
OTHER INCOME :
Interest Income 17,791 19,011
Total other income 17,791 19,011
NET INCOME: $ 47,773 $ 835
WEIGHTED AVERAGED NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING: 8,092,136 7,792,136
EARNINGS PER COMMON SHARE: $ .005 NIL
(Unaudited)
Nine Months Ended March 31
1997 1996
REVENUES:
Royalty Income $ 135,200 $ -0-
Total operating revenue: 135,200 -0-
Expenses:
General and Administrative 114,537 76,097
Total Expenses: 114,537 76,097
INCOME (LOSS) FROM OPERATIONS: 20,663 (76,097)
OTHER INCOME:
Interest Income 58,308 58,143
Total other income 58,308 58,143
NET INCOME (LOSS): $ 78,971 $ (17,954)
WEIGHTED AVERAGED NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING: 8,092,136 7,792,136
EARNINGS (LOSS) PER COMMON SHARE: $ .01 $ (.002)
ADVANCED TOBACCO PRODUCTS, INC.
dba ADVANCED THERAPEUTIC PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended March 31
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss): $ 78,971 $ (17,954)
Adjustments to reconcile net income
(loss) to net cash:
Amortization 5,010 5,010
Accounts receivable (539) -0-
Accrued royalty (57,000)
Accounts payable and accrued
liabilities 7,029 3,946
Net cash provided by operations: 33,471 (8,998)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenses of license agreements (7,875) (28,633)
Net cash provided by investments: (7,875) (28,633)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of Stock Option 17,500 -0-
Net cash provided by financing: 17,500 -0-
NET INCREASE (DECREASE) IN CASH: 43,096 (37,631)
CASH & INVESTMENTS AT BEGINNING
OF PERIOD: 1,330,189 1,363,058
CASH & INVESTMENTS AT END OF PERIOD: $1,373,285 $1,325,427
NOTES TO FINANCIAL STATEMENTS
The condensed financial statements included herein were prepared by the
Company without audit. Certain information and footnote disclosures
normally included in financial statements have been omitted. The condensed
financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual Report on
Form 10-K as of June 30, 1996.
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operation
RESULTS OF OPERATIONS
In 1987, the Company sold nicotine technology to an entity which is now
owned or controlled by Pharmacia & Upjohn, Inc. ("Pharmacia & Upjohn"), a
worldwide pharmaceutical company that manufactures the Nicorette Chewing
Gum, the Nicotrol/Nicorette Patch and the Nicotrol/Nicorette Nasal Spray and
the Nicotrol/Nicorette Inhaler.
Based upon nicotine technology acquired from the Company, Pharmacia &
Upjohn developed their Nicotrol/Nicorette Inhaler for use in the nicotine
replacement therapy ("NRT") market. ATP will receive product payments of 3%
of sales of the Inhaler to wholesale distributors. Pharmacia & Upjohn
launched its Inhaler commercially in Denmark in September 1996, in Sweden
in December 1996, and in Italy in February 1997, under the trade name of
the Nicorette Inhaler and for the nine-month period ended March 31, 1997, the
Company recognized $83,974 in revenue as a result of these initial European
sales. Additional worldwide launches are planned by Pharmacia & Upjohn to
occur as regulatory approvals are granted.
The Inhaler was recently approved for sale as a prescription product by
the United States Food and Drug Administration, and the Company anticipates
that the Inhaler will be launched in the U.S. later this year as the
Nicotrol Inhaler by McNeil Consumer Products, a Johnson & Johnson company.
The U.S. represents approximately 50% of the world NRT market.
Outside the U.S., the Inhaler is marketed by Pharmacia & Upjohn as the
Nicorette Inhaler. The Inhaler has been approved as a prescription product
in the Netherlands and applications are pending in ten other countries,
including the United Kingdom.
The Inhaler is the only NRT to help smokers quit by addressing the
hand-to-mouth motions of smokers, as well as providing a sensation in the
back of the throat similar to the feeling of inhaling smoke.
Effective as of October 1993, the Company has an agreement with
Pharmacia & Upjohn under which, among other matters, the Company has the
right to receive a royalty equal to .1% of net revenues received by
Pharmacia & Upjohn from the sale of any product using a nicotine
impermeable copolymer technology covered by, and subsequent to, the
issuance of a patent in March 1996. Under the terms of the agreement,
for the nine-month period ended March 31, 1997, the Company recognized
$51,226 in revenue as the result of sales of the Nicotrol/Nicorette Patch.
In order to create future growth opportunities and take advantage of
emerging technologies, the Company licensed a dry powder nicotine inhaler
technology from Duke University in 1992 and has had several U.S. patent
filings subsequently approved. The Company is continuing to seek a
strategic partner to further develop this technology.
LIQUIDITY AND CAPITAL RESOURCES
Cash resources, including investments, available on March 31, 1997,
were approximately $1,375,000, as compared to approximately $1,325,000,
for March 31, 1996.
COMPARISON OF SELECTED FINANCIAL DATA
Operating Revenues for the nine-month period ended March 31, 1997,
increased to $135,200, as compared to $-O- for the nine-month period
ended March 31, 1996. This increase is due to the recognition of income
from the Inhaler and the nicotine impermeable copolymer technology.
Interest income for the nine-month period ended March 31, 1997,
increased to $58,308, as compared to $58,143 for the nine-month period
ended March 31, 1996. This increase is primarily due to minor interest
rate fluctuations.
Net income for the nine-month period ended March 31, 1997, increased to
$78,971, as compared to a net loss of $17,954 for the nine-month period
ended March 31, 1996. This increase is due to the recognition of income
from the Inhaler and the nicotine impermeable copolymer technology.
General and administrative expenses for the nine-month period ended
March 31, 1997, increased to $114,537, as compared to $76,097 for the
nine-month period ended March 31, 1996. This increase is primarily due to
the award of a one-time bonus in the amount of $17,500 to a consultant and
a Director of the Company and to the costs associated with press releases
and mailings to shareholders as a result of the Inhaler marketing
introduction.
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
None
Item 2: Changes in Securities
None
Item 3: Defaults Upon Senior Securities
None
Item 4: Submission of Matters to a Vote of Security Holders
None
Item 5: Other Information
None
Item 6: Exhibits and Reports on Form 8-K
None
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ADVANCED TOBACCO PRODUCTS, INC.
(Registrant)
Dated: May 12, 1997
By:/s/ J. W. Linehan
J. W. Linehan, President
Chief Executive Officer and
Chief Accounting Officer
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