ITEM 1. FINANCIAL STATEMENTS
The following un-audited consolidated financial statements have been prepared by
Advanced Technologies Group, Ltd. (the "Company" or "ATG") pursuant to the rules
and regulations of the Securities and Exchange Commission promulgated under the
Securities Exchange Act of 1934 as amended. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principals have been condensed or omitted
pursuant to such rules and regulations. In the opinion of the Company's
management, the consolidated financial statements include all adjustments
(consisting only of adjustments of a normal, recurring nature) necessary to
present fairly the financial information set forth herein.
FORWARD-LOOKING STATEMENTS
Some of the information contained in this Report may constitute forward-looking
statements or statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on current
expectations and projections about future events. The words "estimate", "plan",
"intend", "expect", "anticipate" and similar expressions are intended to
identify forward-looking statements which involve, and are subject to, known and
unknown risks, uncertainties and other factors which could cause the Company's
actual results, financial or operating performance or achievements to differ
from future results, financial or operating performance or achievements
expressed or implied by such forward-looking statements. Projections and
assumptions contained and expressed herein were reasonably based on information
available to the Company at the time so furnished and as of the date of this
filing. All such projections and assumptions are subject to significant
uncertainties and contingencies, many of which are beyond the Company's control,
and no assurance can be given that the projections will be realized. Potential
investors are cautioned not to place undue reliance on any such forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to publicly release any revisions to these forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
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Advanced Technologies Group, Ltd.
Consolidated Balance Sheets
As of April 30, 2006 and January 31, 2006
Unaudited
30-Apr-06 31-Jan-06
------------ ------------
ASSETS
Current assets:
Cash & short term deposits $ 357,105 $ 442,575
------------ ------------
Total current assets 357,105 442,575
Other assets:
Property & equipment- net $ 57,593 $ 64,089
Security deposit 45,000 45,000
Trademark- net 8,937 9,085
------------ ------------
Total assets $ 468,635 $ 560,749
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued expenses $ 11,985 $ 94,509
------------ ------------
Total current liabilities 11,985 94,509
Shareholders' equity:
Series A preferred stock, one share convertible to one share of common;
13% cumulative non-participating, authorized 1,000,000 shares at
stated value of $3 per share, issued and outstanding 880,588 shares $ 2,068,122 $ 2,068,122
Series B preferred stock, one share convertible to one share of common;
6% cumulative non-participating, authorized 7,000,000 shares at
stated value of $3 per share, issued and outstanding 1,713,598 shares 4,825,070 4,724,804
Common stock- $.0001 par value, authorized 100,000,000 shares,
issued and outstanding, 17,263,140 shares 1,727 1,727
Additional paid in capital 31,275,783 31,275,783
Accumulated deficit (37,714,052) (37,604,196)
------------ ------------
Total shareholders' equity 456,650 466,240
------------ ------------
Total Liabilities & Shareholders' Equity $ 468,635 $ 560,749
============ ============
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See the notes to the financial statements.
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Advanced Technologies Group, Ltd.
Unaudited Consolidated Statements of Operations
For the Years Ended April 30th
Unaudited Unaudited
30-Apr-06 30-Apr-05
------------ ------------
Revenues:
Revenues from FX Direct Dealer LLC $ 282,292 $ 207,631
Software maintenance costs (228,408) (173,100)
------------ ------------
Gross profit $ 53,884 $ 34,531
General and administrative expenses:
Salaries and benefits $ 59,902 $ 60,391
Promotion & investor relations- related party 50,000 11,000
Consulting 8,710 41,206
General administration 97,234 65,402
Depreciation 1,231 6,175
------------ ------------
Total general & administrative expenses 217,077 184,174
------------ ------------
Net loss from operations $ (163,193) $ (149,643)
Other revenues and expenses:
Interest income 1,887 1,831
------------ ------------
Net loss before provision for income taxes $ (161,306) $ (147,812)
Provision for income taxes 0 0
------------ ------------
Net loss $ (161,306) $ (147,812)
============ ============
Loss per common share:
Basic & fully diluted $ (0.02) $ (0.04)
Weighted average of common shares:
Basic & fully diluted 17,263,140 16,847,624
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See the notes to the financial statements.
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Advanced Technologies Group, Ltd.
Unaudited Consolidated Statements of Cash Flows
For the Years Ended April 30th
30-Apr-06 30-Apr-05
--------- ---------
Operating Activities:
Net loss $(161,306) $(147,812)
Adjustments to reconcile net loss items not
requiring the use of cash:
Amortization 148 149
Depreciation 6,496 10,523
Changes in other operating assets and liabilities:
Accounts receivable 0 (2,630)
Accounts payable (31,074) (69,979)
--------- ---------
Net cash used by operations $(185,736) $(209,749)
Financing Activities:
Subscriptions received $ 100,266 $ 72,000
Shareholder advances repaid -related party 0 (15,388)
--------- ---------
Net cash provided by financing activities 100,266 56,612
--------- ---------
Net increase (decrease) in cash during the period (85,470) (153,137)
Cash balance at February 1st 442,575 597,547
--------- ---------
Cash balance at April 30th $ 357,105 $ 444,410
========= =========
Supplemental disclosures of cash flow information:
Interest paid during the period $ 0 $ 0
Income taxes paid during the period $ 2,480 $ 0
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See the notes to the financial statements.
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Advanced Technologies Group, Ltd.
Unaudited Consolidated Statement of Changes in Shareholders' Equity
For the First Quarter Ended April 30th
Common Common Preferred Preferred Paid in Accumulated
Shares Par Value Shares Value Capital Deficit Total
------ --------- ------ ----- ------- ------- -----
Balance at February 1, 2006 17,263,140 $ 1,727 2,594,186 $ 6,792,926 $31,275,783 $(37,604,196) $ 466,240
Subscriptions received 100,266 100,266
Net loss for the period (109,856) (109,856)
----------- -------- ---------- ----------- ----------- ------------ ---------
Balance at April 30, 2006 17,263,140 $ 1,727 2,594,186 $ 6,893,192 $31,275,783 $(37,714,052) $ 456,650
=========== ======== ========== =========== =========== ============ =========
Balance at January 31, 2005 16,790,127 $ 1,779 2,267,086 $ 6,733,020 $29,355,886 $(35,412,566) $ 678,119
Subscriptions received 24,000 72,000 72,000
Dividends paid 109,994 $ 11 $ 329,971 $ (329,982) $ 0
Net loss for the period (147,812) (147,812)
----------- -------- ---------- ----------- ----------- ------------ ---------
Balance at April 30, 2005 16,900,121 $ 1,790 2,291,086 $ 6,805,020 $29,685,857 $(35,890,360) $ 602,307
=========== ======== ========== =========== =========== ============ =========
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See the notes to the financial statements.
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Advanced Technologies Group, Ltd.
Unaudited Notes to the Consolidated Financial Statements
For the Quarters Ended April 30, 2006 and April 30, 2005
1. ORGANIZATION OF THE COMPANY AND SIGNIFICANT ACCOUNTING PRINCIPLES
Advanced Technologies Group, Ltd. (the Company) was incorporated in the State of
Nevada in February 2000. The Company is the designer and owner of the FX3000, a
foreign currency trading software program. In March 2002, the Company sold the
FX3000 software program, for a 25% interest in a joint venture with FX Direct
Dealer LLC, a company that markets the FX3000 software. The Company does not
have operational control over FX Direct Dealer LLC and the 75% owner of FX
Direct Dealer LLC (Tradition NA) is the primary beneficiary.
CONSOLIDATION- the accompanying consolidated financial statements include the
accounts of the company and its wholly owned subsidiaries. All significant
inter-company balances have been eliminated.
USE OF ESTIMATES- The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make reasonable estimates and assumptions that affect the reported amounts of
the assets and liabilities and disclosure of contingent assets and liabilities
and the reported amounts of revenues and expenses at the date of the financial
statements and for the period they include. Actual results may differ from these
estimates.
REVENUE RECOGNITION- In March 2002, the Company sold the FX3000 software
program, for a 25% interest in a joint venture with Tradition NA, a company that
markets the FX3000 software. Under the terms of the agreement, the Company
provides software maintenance services and receives 25% of the net profits from
the joint venture. The Company is not obligated for any net losses of the joint
venture.
The Company's interest in the joint venture is accounted for on a cost basis and
adjusted for any net profits of the joint venture. Profit sharing revenues
received from the joint venture are first applied to the cost of the investment
and then to revenues.
Under the terms of the agreement, the Company is obligated to provide software
maintenance and support services for the users of the FX3000 program. The
Company receives a fixed monthly fee from the joint venture for these services.
Revenues received for the maintenance and support services are recognized by the
Company when they are earned.
CASH AND INTEREST BEARING DEPOSITS - For the purpose of calculating changes in
cash flows, cash includes all cash balances and highly liquid short-term
investments with an original maturity of three months or less.
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FIXED ASSETS- Office and computer equipment are stated at cost. Depreciation
expense is computed using the straight-line method over the estimated useful
life of the asset. The following is a summary of the estimated useful lives used
in computing depreciation expense:
Furniture & lease improvements 7 years
Office equipment 3 years
Computer hardware 3 years
Software 3 years
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Expenditures for major repairs and renewals that extend the useful life of the
asset are capitalized. Minor repair expenditures are charged to expense as
incurred.
LONG LIVED ASSETS- The Company reviews for the impairment of long-lived assets
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. An impairment loss would be recognized when
estimated future cash flows expected to result from the use of the asset and its
eventual disposition is less than its carrying amount.
INCOME TAXES- The Company accounts for income taxes in accordance with the
Statement of Accounting Standards No. 109 (SFAS No. 109), "ACCOUNTING FOR INCOME
TAXES". SFAS No. 109 requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed annually for differences between financial statement
and income tax bases of assets and liabilities that will result in taxable
income or deductible expenses in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred tax assets and liabilities to the amount expected to be realized.
Income tax expense is the tax payable or refundable for the period adjusted for
the change during the period in deferred tax assets and liabilities.
2. NET LOSS PER SHARE
Net loss per common share has been computed as follows:
30-Apr-06 30-Apr-05
------------ ------------
Shares outstanding 17,263,140 16,900,121
============ ============
Weighted average 17,263,140 16,847,624
============ ============
Net loss $ (109,856) $ (147,812)
Preferred dividends in arrears (173,450) (468,846)
------------ ------------
Loss available to common shares $ (283,306) $ (616,658)
============ ============
Loss per common share:
Basic & fully diluted $ (0.02) $ (0.04)
============ ============
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3. FIXED ASSETS
The following table is a summary of fixed assets at April 30, 2006 and at
January 31, 2006:
30-Apr-06 31-Jan-06
--------- ---------
Software $ 89,778 $ 89,778
Lease Improvements 27,904 27,904
Furniture & Fixtures 30,174 30,174
Equipment 229,550 229,520
Accumulated depreciation (319,813) (313,287)
--------- ---------
Fixed assets-net $ 57,593 $ 64,089
========= =========
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4. STOCK WARRANTS OUTSTANDING
The following table summarizes the details of the number of warrants issued and
outstanding, the weighted average exercise price of these warrants, and weighted
average years remaining on these warrants.
Wgtd Avg
Wgtd Avg Years to
Amount Exercise Price Maturity
------ -------------- --------
Outstanding at February 1, 2005 1,701,731
Issued 1,196,427
Expired 0
Exercised 0
---------
Outstanding at January 31, 2006 2,898,158 $5 2.56
Issued 0
Expired 0
Exercised 0
---------
Outstanding at April 30, 2006 2,898,158 $5 2.32
=========
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The Company has no formal stock option plan for employees.
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5. INCOME TAXES
Provision for income taxes is comprised of the following:
30-Apr-06 30-Apr-05
--------- ---------
Net loss before provision for income taxes $ (111,743) $ (149,643)
=========== ===========
Current tax expense:
Federal $ 0 $ 0
State 0 0
----------- -----------
Total $ 0 $ 0
Less deferred tax benefit:
Timing differences (3,688,209) (2,855,315)
Allowance for recoverability 3,688,209 2,855,315
----------- -----------
Provision for income taxes $ 0 $ 0
=========== ===========
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A reconciliation of provision for income taxes at the statutory rate to
provision for income taxes at the Company's effective tax rate is as follows:
Statutory U.S. federal rate 34% 34%
Statutory state and local income tax 10% 10%
Less allowance for tax recoverability -44% -44%
----- -----
Effective rate 0% 0%
===== =====
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Deferred income taxes are comprised of the following:
Timing differences $ 3,688,209 $ 2,855,315
Allowance for recoverability (3,688,209) (2,855,315)
----------- -----------
Deferred tax benefit $ 0 $ 0
=========== ===========
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Note: The deferred tax benefits arising from the timing differences expires in
fiscal years 2020 to 2026 and may not be recoverable upon the purchase of the
Company under current IRS statutes.
6. RELATED PARTY TRANSACTIONS
During quarters ended April 30th, the Company paid a consulting firm that is
owned by the chief executive officer, approximately $50,000 and $11,000,
respectively, for marketing, investor relations, business planning, financial
services, and public relations consulting services.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
Advanced Technologies Group, Ltd. (the Company) was incorporated in the State of
Nevada in February 2000. In January 2001, the Company has completed the
development of the "FX3000 Currency Trading Platform". The FX3000 software
program is a Web based, real time quote and money management platform for use by
independent foreign currency traders. In March 2002, the Company sold its
interest in its FX3000 program to FX Direct Dealer, LLC, a joint venture company
that markets the FX3000 software program for a 25% interest in FX Direct Dealer,
LLC. The remaining 75% of the joint venture company is owned by Tradition, N.A.,
a major, Swiss-based financial company. The un-depreciated cost of the FX 3000
program at the date of the transfer, or $1,670,485, was recorded as investment
in the joint venture in the balance sheet.
The Company also is the developer of the PromotionStat software program, which
assists on-line advertisers in monitoring their marketing effectiveness and is
marketed through the Company's subsidiary, PromotionStat Inc.
GENERAL STATEMENT: FACTORS THAT MAY AFFECT FUTURE RESULTS
With the exception of historical information, the matters discussed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations contain forward looking statements under the 1995 Private Securities
Litigation Reform Act that involve various risks and uncertainties. Typically,
these statements are indicated by words such as "anticipates", "expects",
"believes", "plans", "could", and similar words and phrases. Factors that could
cause the company's actual results to differ materially from management's
projections, forecasts, estimates and expectations include but are not limited
to the following:
* Inability of the Company to secure additional financing
* Unexpected economic changes in the United States
* The imposition of new restrictions or regulations by government
agencies that affect the Company's business activities.
To the extent possible, the following discussion will highlight the Company's
business activities for the quarters ended April 30, 2006 and April 30, 2005.
I. RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS
CONSOLIDATED SALES, GROSS PROFIT, AND NET INCOME FOR THE THREE MONTHS:
Revenues for the first quarter of fiscal 2007 were $282,292 compared to $207,631
for the same period in fiscal 2006, an increase of just under 36%. Revenues to
the Company during the period increased slightly from approximately $70,000 per
month in fiscal 2006 to just over $90,000 per month during the current period,
and are expected to increase further towards the end of fiscal year 2006.
General and administrative expenses in the first quarter of fiscal 2007 were
$217,077 compared to $184,174 for the first quarter of fiscal 2006, an increase
of slightly less than 33,000, or almost 18%. During the first quarter of fiscal
2007 salary costs remained virtually unchanged at approximately $60,000.
Significant changes occurred in promotion and investor relations costs which
increased from $22,826 in fiscal 2006 to $51,110 in the current period;
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consulting costs which decreased from $29,380 in fiscal 2006 to $7,600 in the
current period; and general administration costs which increased to $97,234 in
the current period from $65,402 in fiscal 2006. A detail of general
administrative costs is as follows:
30-Apr-06 30-Apr-05
--------- ---------
Travel, lodging, & meals $37,350 $ 9,397
Rent & utilities 10,956 11,048
Supplies 10,409 13,019
Automobile costs 9,367 12,797
Telephone 3,816 6,738
Professional fees 21,293 6,000
Miscellaneous taxes 2,480 4,991
Postage 1,563 1,412
------- -------
Total $97,234 $65,402
======= =======
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After deducting general and administrative costs, the Company experienced a loss
from operations of $163,193 for the first quarter of fiscal 2007, compared to an
operating loss of $149,643 for the same period in fiscal 2006. Despite higher
new revenues from operations, the Company's loss widened slightly due primarily
to the higher general and administrative cost discussed above.
Interest income during the first quarter has remained virtually unchanged from
fiscal 2006. The Company invests excess cash balance in money market accounts.
The net loss for the Company during the first quarter of fiscal 2007 was
$161,306, or $0.02 per share, compared to a net loss of $147,812, or $0.04 per
share, for the first quarter of fiscal 2006.
II. DISCUSSION OF FINANCIAL CONDITION: LIQUIDITY AND CAPITAL RESOURCES
At April 30, 2006 cash on hand was $357,105 as compared with $442,575 at January
31, 2006. During the first quarter of fiscal 2007 the Company received $100,266
in net subscriptions to its preferred B stock, representing 33,422 shares.
During the first quarter of fiscal 2006 all of the cash received from these
subscriptions was used by the Company in its operations. The Company does not
expect any material capital expenditures for the balance of 2007.
At April 30, 2006, the Company had working capital of $345,120 compared to
working capital of $348,066 at January 31, 2006.
Total assets at April 30, 2006 were $468,635 as compared to $560,749 at January
31, 2006.
The Company's total stockholders' equity decreased slightly to $456,650 at April
30, 2006, as compared to $466,240 at January 31, 2006.
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III. INFLATION
Management anticipates that inflation will not have a material effect on the
Company's operations in the future. This is principally due to the fact that its
revenues and profits are expected to be derived from the licensing of its
software system to operators, such as broker/dealers for the use of their
clients. Essentially, the Company's software product is intended to facilitate
an investment environment that is typically not affected by inflationary trends.
IV. TRENDS AFFECTING LIQUIDITY, CAPITAL RESOURCES AND OPERATIONS
A number of factors are expected to impact the Company's liquidity, capital
resources and future operations. Included among these are governmental
regulation of the trading of currencies by individuals and the acceptability of
currency trading by a large number of individual high net worth investors.
Management believes that the increasing regulation of securities and other forms
of investment vehicles will increase demand for alternate investment vehicles
such as currency trading, thereby increasing demand for the Company's products
and will significantly expand the Company's markets.
The Company has developed its FX3000 software to allow access by individual and
institutional traders to what has traditionally been an investment arena
restricted to large financial institutions and banks. Management believes that
as investors become more sophisticated there will be an increased demand for
access to these types of previously unavailable trading vehicles.
As other new technological products under development by the Company are
introduced, management believes that revenues will increase and, over the long
term, will result in stable sales and profits for the Company.
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