Edgar Filing: ADVANCE TECHNOLOGIES INC

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended September 30, 2005

[ ] TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-27175

ADVANCE TECHNOLOGIES, INC.
(Name of small business issuer in its charter)

Nevada 95-4755369
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

15 N. Longspur Drive, The Woodlands, TX, 77380
Issuer's telephone number: (310) 213-2143

Securities registered under Section 12(b) of the Exchange Act: None.

Securities registered under Section 12(g) of the Exchange Act: Common
Stock, no par value.

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

State issuer's revenues for its most recent fiscal year. $ 28,953

The aggregate market value of registrant's Common and Preferred Stock held
by non-affiliates, based upon the average bid and asked sales price for
September 2005 was $ 2,948,000.

As of September 30, 2005, there were 39,498,217 shares of the registrant's
Common Stock outstanding. On September 30, 2005, there were 26,017,157
shares of Preferred Stock outstanding.

Transitional Small Business Disclosure Format Yes [X] No [ ]

INFORMATION REQUIRED IN ANNUAL REPORTS OF TRANSITIONAL SMALL BUSINESS
ISSUERS

PART I
DESCRIPTION OF BUSINESS

CORPORATION BUSINESS MODEL

The Advanced Technologies Inc.'s corporation business model is to
develop Infrared imaging systems for commercial market applications. These
markets fall into the areas of medical, security, and the largest,
transportation. The commercial transportation market consists of air, land,
and sea applications. These systems are designed to provide two basic
benefits, operational safety and improved security. These goals are
achieved by utilizing the inherent night vision capability, our core
technology adapted to the specific needs of the market. Infrared technology
is at the heart of these systems. Infrared technology is based upon
advanced research developed for the US military. Infrared technology has
been designated and approved for dual use (military and commercial) by the
United States government.

All Military technology has inherent US Government restrictions.
ATI's highest priority is to ensure we are compliant with restrictions
imposed by the US government. The restrictions and methods of compliance
are detailed in the United States International Traffic on Arms Regulation.
The US Department of Commerce (DOC) is the US over-sight authority for our
activities. When Department of Defense and/or Department of State (co-
administrators of the technology) become involved, their activity is
coordinated through our DOC administrative authoritative.

Advance Technologies marketing strategy is based upon principles that
recognize both our strengths and our weaknesses. This strategy is embodied
in a well-defined business model. Most of our projects require a strategic
partner. The strategic partner needs to be a leader in the market field of
our intended application. The strategic partner as a general rule provides
the marketing, sales, and after sales support for the system. Our strategy
minimizes start-up and infrastructure cost, our market investment, and the
overall risk to ATI. Our primary role for each project is: (1) to ensure
the technology is used properly in each application, (2) the system
engineering necessary to achieve the desired functional capability is
performed, and (3) the end product is compliant with ITAR. Production for
each project is addressed on a case by case basis. The strategic partner
has a key role in establishing the component suppliers, often preferring to
use their own captive sources.

Our business model licenses intellectual property for a specific field
and product to our strategic partner. It is essential that ATI retain core
ownership over the basic technology and intellectual property. Our license
agreements are for applications restricted to the licensed field. By
utilizing our intellectual property in this way, the same technology is
licensed to different fields of application on an exclusive or non-
exclusive basis without creating a conflict between over-lapping markets
and license rights.

MAJOR ACTIVITY,

Enhanced Vision System (EVS)

Advance Technologies entered into a licensing agreement with Kollsman
Inc. in 1995, which allowed the incorporation of the company's technology
and intellectual property into an Enhanced Vision System for use on the
Gulfstream series of Aircraft. The EVS system entered production in early
2002. Kollsman has announced a new enhanced vision product in late 2002 for
use at the low-end private aviation market. This product is expected to
enjoy the same success as the Gulfstream product but with a far larger
market. A redacted copy without competition sensitive data has been
included under Exhibit 99.1.

OTHER DEVELOPMENT ACTIVITIES

Recreational Vehicles Systems (RVS)

Advanced Technologies signed a licensing agreement with Recreational
Vehicle Systems (RVS), a Nevada Corporation. Under terms of the agreement
Adv-Tech will provide technical know-how and development support to RVS to
develop an Infrared Imaging System for the license field of Recreational
Vehicles. In consideration for our technical support and certain licensed
technical property rights ATI will receive a royalty on each unit sold. No
sales are projected before late 2006 or early 2007. The terms of the
agreement specify $300.00 per system sold for a period of ten years
initiated by the first sale. This agreement is non-exclusive with RVS.

Medical Systems

The sale of 50 NVS cameras to United Integrated Services (UIS, a
Taiwan Corporation) under an export license granted by the United States
Commerce Department is still pending. UIS as indicated their desire to
complete this sale before the export license expires in June 2006. We
believe there is less than a 50% chance that UIS will be able to comply
with the license requirements prior to the expiration date. Revenue impact
is negligible.

Infrared Security System (ISS)

A provisional patent pending has been obtained for our Infrared
Security System. This protection for our intellectual property rights will
allow us to aggressively engage in discussion with potential partners and
customers. Preliminary discussions have been initiated.

OPERATIONS

In 2006 Advance Technologies will be establishing our headquarters in
Woodland Texas. The Board of Directors has instructed the CEO to initiate
a review of our operations to ascertain our future needs. Our primary
source of future income will be through our licensing agreements. Our
development activities are being conducted in concert with strategic
partners, relying upon their capital resources. Recommendations on how to
best optimize shareholder value will be formulated and presented to the
Board in the near future.

The development activity at Adv-Tech has shifted from internal
hardware based R&D activity to external technical marketing with potential
partners. This shift has been created by Infrared Imaging Cameras and
Systems moving from high technology to more of a commodity or production
component. The system application and embedded application software
represents most of the future opportunities for Advance Technologies.

EMPLOYEES

Advance Technologies Inc. consists of one full time employee. All
additional services required are contracted for on an as needed basis.

ENVIRONMENTAL IMPACT

Advance Technologies operations do not effect the environment and is
fully compliant to Federal, State, and local laws.

POTENTIAL IMPACT ON FINANCIAL PERFORMANCE

Advance Technologies Inc. under the terms of our exclusive license
with Kollsman Inc. is in a position to receive royalties of $22,640,000
over the initial 10,000 units sold under terms of this contract. The
realization of these revenues is dependent upon Kollsman securing a major
share of the Enhanced Vision Market. Advance Technologies Inc. may or may
not achieve all or part of this royalty income based upon market
performance by Kollsman. The performance of Kollsman is subject to
external and internal factors at Kollsman which are outside of Advance
Technologies Inc. ability to either control, affect, or to predict. As
Kollsman progresses in the EVS market through the meeting of key
performance and sales milestones, Advance Technologies will report those
achievements as disclosed by Kollsman or reported in the public media.

DESCRIPTION OF PROPERTY.

Advanced Technologies Inc has rented property at 716 Yarmouth Road,
Palos Verde Estates, and Ca. for the last four years. The office consisted
of approximately 1,800 sq. ft., with separate areas for entry, office,
conference area, and a small laboratory. Advance Technologies has re-
located to Texas. Suitable offices will be located in The Woodlands area
of North Houston in early 2006. Until new facilities are obtained,
business will be conducted from a separate office area at 15 N. Longspur
Drive, The Woodlands, TX, 77380. This place of business is part of the
residence of the President of Advance Technologies. The rent is $ 0.00 per
month.

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.

(a) Directors and Executive Officers

------------------------ ------- -------------------------------
Name Age Position
------------------------ ------- -------------------------------

Gary E. Ball 68 CEO, President, and Director
------------------------ ------- -------------------------------
Gary L. Bane 67 Director (1)
------------------------ ------- -------------------------------
James Watson 57 Director (2)
------------------------ ------- -------------------------------
Wendy S. Ball n.a. Note (3)
------------------------ ------- -------------------------------

(1) Became a director on October 1, 2004.
(2) Became a director on January 1, 2005.
(3) Resigned as a director effective January 1, 2005. Wendy S. Ball is
the spouse of Gary E. Ball.

(b) Qualifications

Mr. James Watson has joined Advance Technologies Board of Directors.
Mr. Watson's extensive experience as Director of Marketing for Western
Airlines will provide valuable sight into marketing issues affecting the
entry of EVS into the passenger segment of commercial aviation. Mr.
Watson's term with the Board will begin January 1, 2005.

Mr. JAMES R. WATSON
Sales, Marketing and General Management Executive with over twenty-
five years experience in managing a wide range of marketing, sales and
operations functions designed to create or expand domestic and
international sales opportunities.

CALIFORNIA MANUFACTURING TECHNOLOGY CONSULTING, Gardena, California,
1999-Present, Vice President Operations 2001-Present
Responsible for marketing, sales, consulting services and the
development of delivery tools and services. Redirected the organization
from a service to industry "Go to Market" strategy. Established Aerospace
& Defense and Distribution industry teams.

ANCHOR AUDIO, INC., Los Angeles, California, 1994 to 1999
Vice President Sales & General Manager Europe 1994-1999
Responsible for domestic sales planning, field sales, government and
OEM sales. Established and managed the day to day operation of a European
distribution center and dealership. Developed and implemented the
distribution strategy and the sales/marketing programs for offices in
Europe, Mexico, and the South Pacific and for distributors worldwide.

WESTERN AIRLINES, Los Angeles, California, 1971 to 1985
Vice President Passenger & Cargo Sales, 1983 to 1985
Responsible for managing over 1100 people in sales programs, field
sales, reservations and advertising with a budget in excess of $150
million.

GARY E. BALL
Age 68, residing in The Woodlands, Texas is married. He attended
California State University at Long Beach graduated with a BSEE and MSEE,
went on to perform Graduate Studies at University of Southern California.
He has specialized in product design, development, and management for North
American Aviation. Was Technical Manager for the Pave Tack program for Ford
Aerospace. Program Manager for Northrop Electro-Mechanical in charge of
business development on several classified DOD programs. Was Program
Manager for Hughes Aircraft where he developed the Infrared Enhanced Vision
System reporting to the President of EDSG. Was a member of NATO NIAG study
group on Aircraft Integration. He has authored several articles for trade
publications, the last 9 years he has provided consulting services to 10
U.S. and foreign corporations in the field of IR technology.

On June 15, 2004 the Board of Directors extended an invitation to Gary
L. Bane to re-join the Board of Directors of Advance Technologies Inc. Mr.
Bane had been on ATI's BOD since our founding in 1992. Mr. Bane withdrew
from the BOD in 2002 due to pressing demands from his many business
commitments. We are pleased that Mr. Bane's schedule has abated, which
permits him to re-join the BOD. Mr. Bane term on ATI's BOD will become
effective on October 1, 2004. Mr. Bane has been employed as an independent
consultant for the last five years.

Wendy S. Ball has resigned from the Board of Directors, effective
January 1, 2005.

Involvement in certain legal proceedings.
-----------------------------------------

There has been no legal proceeding involving Advance Technologies Inc.

REMUNERATION OF DIRECTORS AND OFFICERS.

No cash or other remuneration was paid to any director or officer of
the Company during the fiscal year ended September 30, 2005.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS.

Title of Name and address
class of owner Amount owned Percent of class
--------- ---------------- ------------ ----------------

Common Gary Ball 7,800,000 12%
--------- ---------------- ------------ ----------------
Common Wendy Ball 7,800,000 12%
--------- ---------------- ------------ ----------------
Common Gary L. Bane 1,200,000 2%
--------- ---------------- ------------ ----------------
Preferred Jim Watson 20,000 ~
--------- ---------------- ------------ ----------------

PERSONS HOLDING 10% OR MORE OF AVTX STOCK

None that have been reported.

PERSONS HOLDING WARRANTS, OPTIONS OR OTHER RIGHTS

None

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS.

None.

PART II

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS.

Advance Technologies Inc. is traded under the symbol of AVTX on the
NASDAQ BB. The high and low share prices for the last two years by
quarters are:

Quarter Year High Low Dividends
---------- ------ ------ ------ ----------

July-Sept 2005 .08 .04 0
Apr-June 2005 .09 .03 0
Jan-Mar 2005 .04 .02 0
Oct-Dec 2004 .03 .02 0
July-Sept 2004 .05 .03 0
Apr-June 2004 .08 .04 0
Jan-Mar 2004 .09 .02 0
Oct-Dec 2003 .04 .03 0

SHAREHOLDERS OF AVTX

Common Stock, there was 1,029 shareholders listed by Pacific Stock
Transfer Company, our agent of record on September 30, 2005.

Preferred Stock, there were 128 shareholders listed by Pacific Stock
Transfer Company, our agent of record on September 30, 2005.

DIVIDENDS

There have been no dividends paid to shareholders in the last two
years.

EQUITY COMPENSATION PLANS

There was no Equity Compensation paid to key employees, directors
and/or Executive Officers in the last two years.

DESCRIPTION OF EXHIBITS.

See Item 2 of Part III, below.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

Not applicable.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The Board of Directors, all Officers, and major shareholders of 10% or
more of Advance Technologies Inc. are in compliance with all reporting
requirements of the exchange act.

PART III
FINANCIAL STATEMENTS

/Letterhead/

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
of Advance Technologies, Inc.
(A Development Stage Company)

We have audited the accompanying balance sheet of Advance Technologies,
Inc. (a development stage company) as of September 30, 2005 and 2004 and
the related statements of operations and cash flows for the years then
ended and from the period October 1, 1985 (date of inception) through
September 30, 2005. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with standards of the PCAOB (United
States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. The Company has determined that it is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Advance Technologies,
Inc. (a development stage company) as of September 30, 2005 and 2004 and
the results of its operations and cash flows for the years then ended and
from the period October 1, 1985 (date of inception) through September 30,
2005 in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is dependent on financing to continue
operations. This raises substantial doubt about its ability to continue as
a going concern. Managements plans to resolve this uncertainty is also
discussed in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/S/ Chisholm, Bierwolf & Nilson, LLC

Chisholm, Bierwolf & Nilson, LLC
Bountiful, Utah
December 30, 2005

Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Balance Sheets

ASSETS
-------

September 30,
2005 2004
----------- -----------

CURRENT ASSETS

Cash $ 2,934 $ 1,773
----------- -----------
Total Current Assets 2,934 1,733
----------- -----------
PROPERTY & EQUIPMENT, net 851 6,562
----------- -----------
TOTAL ASSETS $ 3,785 $ 8,335
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------

CURRENT LIABILITIES

Accounts payable $ 16,921 $ 4,883
Accrued Interest - -
Notes payable-officer 71,000 59,300
----------- -----------
Total Current Liabilities 87,921 64,183

LONG-TERM DEBT

Line of Credit - -
----------- -----------
TOTAL LIABILITIES 87,921 64,183

STOCKHOLDERS' EQUITY

Common stock, authorized 100,000,000 shares of
$0.001 par value, issued and outstanding
39,498,217 and 28,319,416 shares, respectively 39,498 28,319
Preferred Stock, Series A authorized 100,000,000
shares of $0.001 par value, issued and outstanding
26,017,157 and 37,195,958 shares, respectively 26,017 37,196
Additional paid-in capital 558,389 550,889
Retained earnings (deficit) (708,040) (672,252)
----------- -----------
Total Stockholders' Equity (84,136) (55,848)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,785 $ 8,335
=========== ===========

The accompanying notes are an integral part of these financial statements.
8

Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Operations

For the Period
of entering
Development
Stage on
October 1,
For the Year Ended 1985 Through
September 30, September 30,
2005 2004 2005
------------ ------------ ------------

REVENUES

Royalty Income $ 26,500 $ 25,000 $ 51,500
Consulting Fees 2,453 5,366 67,843
Product Sales - 119,073 119,073
------------ ------------ ------------
Total Sales 28,953 149,439 238,416

COST OF GOODS SOLD

Product Purchases - 114,020 114,020
------------ ------------ ------------
Gross Profit 28,953 35,419 124,396

EXPENSES

Depreciation & Amortization 5,711 7,877 51,034
Organization Costs - - 11,301
Research & Development - - 72,750
General and administrative 59,030 19,473 772,084
------------ ------------ ------------
Total Expenses 64,741 27,350 907,169
------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS (35,788) 8,069 (782,773)
------------ ------------ ------------
OTHER INCOME (EXPENSE)

Interest Expense - - (23,267)
Miscellaneous Income - - 98,000
------------ ------------ ------------
Total Other Income (Expense) - - 74,733
------------ ------------ ------------
NET INCOME (LOSS) $ (35,788) $ 8,069 $ (708,040)
============ ============ ============
NET LOSS PER SHARE
Loss Per Share $ (0.00) $ 0.00 $ (0.14)
============ ============ ============
Weighted average shares
outstanding 35,255,995 25,219,406 4,928,892
============ ============ ============

The accompanying notes are an integral part of these financial statements.
9

Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
(For the period of entering development stage on October 1, 1985
through September 30, 2005)

Deficit
Accumulated
Additional During the
Common Stock Paid-In Preferred Stock Development
Shares Amount Capital Shares Amount Stage
------------------- ---------- ----------- -------- -----------

Balance,
October 1, 1985
(beginning of the
development stage) 6,487 $ 7 $ 58,161 - $ - $ (60,701)

Shares issued for
coal royalties at
$0.01 4,369 4 1,525 - - -

Shares issued for
services at $0.25 554 1 4,849 - - -

Shares issued for
services at $0.03 1,601 2 1,680 - - -

Shares issued for
services at $0.25 1,274 1 11,145 - - -

Shares issued for
services at $0.01 2,290 2 798 - - -

Shares issued for
services at $0.25 37,203 37 325,487 - - -

Preferred shares
issued for services - - - 10,048 1,004 -

Preferred shares
expire - - 1,004 (10,048) (1,004) -

Net loss since the
beginning of the
development stage
at October 1, 1985 - - - - - (344,001)
------------------- ---------- ----------- -------- -----------
Balance,
September 30, 1995 53,778 54 404,649 - - (404,702)

Shares issued for
services at $0.25 5,714 6 49,994 - - -

Share round up (6) (1) - - - -

Net loss for
the year ended
September 30, 1996 - - - - - (50,000)

Balance,
September 30, 1996 59,486 59 454,643 - - (454,702)

The accompanying notes are an integral part of these financial statements.
10

Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
(For the period of entering development stage on October 1, 1985
through September 30, 2004)

Deficit
Accumulated
Additional During the
Common Stock Paid-In Preferred Stock Development
Shares Amount Capital Shares Amount Stage
------------------- ---------- ----------- -------- -----------

Balance Forward 59,486 59 454,643 - - (454,702)

Shares issued for
services at
$0.25 608 1 5,324 - - -

Net loss for
the year ended
September 30,
1997 - - - - - (5,325)
------------------- ---------- ----------- -------- -----------
Balance,
September 30,
1997 60,094 60 459,967 - - (460,027)

Shares issued for
services at
$0.001 12,828 13 436 - - -

Net loss for
the year ended
September 30,
1998 - - - - - (447)
------------------- ---------- ----------- -------- -----------
Balance,
September 30,
1998 72,922 73 460,403 - - (460,474)

Shares issued for
cash at $0.01 2,500,000 2,500 22,500 - - -

Shares issued for
common stock of
SeaCrest
Industries Corp.
at $0.001 - - (36,457) 50,254,102 50,254 -

Net loss for
the year ended
September 30,
1999 - - - - - (90,126)
------------------- ---------- ----------- -------- -----------
Balance,
September 30,
1999 2,572,922 2,573 446,446 50,254,102 50,254 (550,600)

Net loss for
the year ended
September 30,
2000 - - - - - (101,799)
------------------- ---------- ----------- -------- -----------
Balance,
September 30,
2000 2,572,922 2,573 446,496 50,254,102 50,254 (652,399)

The accompanying notes are an integral part of these financial statements.
11

Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
(For the period of entering development stage on October 1, 1985
through September 30, 2004)

Deficit
Accumulated
Additional During the
Common Stock Paid-In Preferred Stock Development
Shares Amount Capital Shares Amount Stage
------------------- ---------- ----------- -------- -----------

Balance Forward 2,572,922 2,573 446,446 50,254,102 50,254 (652,399)

Net income (loss)
for the year
ended September
30, 2001 - - - - - 31,669
------------------- ---------- ----------- -------- -----------
Balance,
September 30,
2001 2,572,922 2,573 446,446 50,254,102 50,254 (620,730)

Shares issued for
services at
$0.001 3,250,000 3,250 - - - -

Shares converted
to common stock 11,396,045 11,396 - (11,396,045) (11,396) -

Net income (loss)
for the year
ended September
30, 2002 - - - - - (27,774)
------------------- ---------- ----------- -------- -----------
Balance,
September 30,
2002 17,218,967 17,219 446,446 38,858,057 38,858 (648,504)

Shares issued for
conversion of
debt 5,438,350 5,438 103,334 - - -

Shares issued for
conversion of
Preferred stock 109,200 109 - (109,200) (109) -

Net income (loss)
for the year
ended September
30, 2003 - - - - - (31,817)
----------- -------- ---------- ----------- --------- ----------
Balance,
September 30,
2003 22,766,517 22,766 549,780 38,748,857 38,749 (680,321)

Shares issued for
private
placement 4,000,000 4,000 1,109 - - -

Shares issued for
conversion of
Preferred stock 1,552,899 1,553 - (1,552,899) (1,553) -

Net income (loss)
for the year
ended September
30, 2004 - - - - - 8,069
----------- -------- ---------- ----------- --------- ----------
Balance,
September 30,
2004 28,319,416 28,319 550,889 37,195,958 37,196 (672,252)

The accompanying notes are an integral part of these financial statements.
12

Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
(For the period of entering development stage on October 1, 1985
through September 30, 2004)

Deficit
Accumulated
Additional During the
Common Stock Paid-In Preferred Stock Development
Shares Amount Capital Shares Amount Stage
------------------- ---------- ----------- -------- -----------

Shares issued for
conversion of
Preferred stock 11,178,801 11,179 - (11,178,801) (11,179) -

Capital
contribution - - 7,500 - - -

Net income (loss)
for the year
ended September
30, 2005 - - - - - (35,788)
----------- -------- ---------- ----------- --------- ----------
Balance,
September
30, 2005 39,498,217 $39,498 $558,389 26,017,157 $ 26,017 $(708,040)

The accompanying notes are an integral part of these financial statements.
16

Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows

For the Period
of entering
Development
Stage on
October 1,
For the Year Ended 1985 Through
September 30, September 30,
2005 2004 2005
------------ ------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss $ (35,788) $ 8,069 $ (708,040)
Adjustments to reconcile net loss to net
cash, provided by operations:
Stock issued for services - - 403,025
Depreciation & Amortization 5,711 7,877 51,034
Organization Costs - - 11,331
Decrease in prepaids - - 14,680
Increase (Decrease) in accrued liabilities 12,038 (31,782) 75,895
------------ ------------ ------------
Net Cash Flows Used Operating Activities (18,039) (15,836) (152,075)
------------ ------------ ------------
CASH FLOWS USED IN INVESTMENT ACTIVITIES

Purchase of Equipment - - (39,386)
Investment in Subsidiary - - 286
------------ ------------ ------------
Net Cash Used in Investment Activities - - (39,100)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES

Cash paid on Loan from Officer - (7,000) (48,200)
Proceeds from Loan from Officer 11,700 19,500 119,200
Proceeds from Line of Credit - - 85,500
Proceeds from Issuance of Stock - 5,109 30,109
Capital contribution 7,500 - 7,500
------------ ------------ ------------
Net Cash Flows from Financing Activities 19,200 17,609 194,109
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH 1,161 1,773 2,934

CASH, BEGINNING OF YEAR 1,773 - -
------------ ------------ ------------
CASH, END OF YEAR $ 2,934 $ 1,773 $ 2,934
============ ============ ============

The accompanying notes are an integral part of these financial statements.
14

Advance Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
-Continued-

For the Period
of entering
Development
Stage on
October 1,
For the Year Ended 1985 Through
September 30, September 30,
2005 2004 2005
------------ ------------ ------------

SUPPLEMENTAL CASH FLOW INFORMATION

Cash Paid for:
Interest $ - $ - $ -
Taxes $ - $ - $ -

SUPPLEMENTAL NON-CASH INFORMATION

In March 2003, the Company issued 5,438,350 shares for the satisfaction of a
line of credit and accrued interest in the amount of $108,772.

During the year ending September 30, 2003, a total of 109,200 shares of
preferred stock were converted to common stock.

During December 2001, the Company issued 3,250,000 shares of common stock for
services valued at $3,250 (or $.001 per share).

During the year ending September 30, 2002, a total of 11,396,045 shares of
preferred stock were converted to common stock.

During the year ending September 30, 2004, a total of 1,552,869 shares of
preferred stock were converted to common stock.

During the year ending September 30, 2005, a total of 11,178,801 shares of
preferred stock were converted to common stock.

The accompanying notes are an integral part of these financial statements.
15

Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2005 and 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Organization

The Company was organized under the laws of the state of Delaware
on June 16, 1969 as PWB Industries, Inc. On November 10,
1975,the Company changed its name to Sun Energy, Inc. At that
time, the Company began operations in the oil and gas lease
industry. By 1985, the Company discontinued its operations and
became dormant. On March 6, 1996, the Company attempted a merger
which failed. On August 23, 1997, the Company changed its name
to Advance Technologies, Inc. and changed its place of domicile
to from Delaware to Nevada.

On September 27, 1999, pursuant to a plan of acquisition, the
Company exchanged 50,254,102 shares of its Seris "A" preferred
stock for 50,254,102 shares of SeaCrest Industries Corporation's
common stock. This acquisition has been accounted for using the
purchase method of a business combination.

The Company is currently engaged in the development of a night
vision system with applications in the military as well as civil.
The Company has an agreement with a Taiwan company wherein they
are jointly developing the night vision system for use in Class A
coaches. The Company is also involved in the development of
other Electro-optical mechanical devices.

b. Accounting Method

The Company recognizes income and expenses on the accrual basis
of accounting.

c. Consolidation

The consolidated financial statement include the accounts of
Advanced Technologies, Inc. and SeaCrest Industries Corporation,
a wholly owned subsidiary. Intercompany transactions have been
eliminated.

d. Cash and Cash Equivalents

The Company considers all highly liquid investments with
maturities of three months or less to be cash equivalents.

Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2005 and 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

e. Earnings (Loss) Per Share

The computation of earnings per share of common stock is based on
the weighted average number of shares outstanding at the date of
the financial statements.

From
Inception on
October 1,
For the Years Ended 1985 Through
September 30, September 30,
2005 2004 2005
------------- ------------- -------------

Numerator - net loss $ (35,788) $ 8,069 $ (708,040)

Denominator - weighted
average number of shares
outstanding 35,255,995 25,219,406 4,928,892
============= ============= =============
Loss per share $ (0.00) $ 0.00 $ (0.14)
============= ============= =============

f. Provision for Income Taxes

No provision for income taxes has been recorded due to net
operating loss carryforwards totaling approximately $708,040 that
will be offset against future taxable income. These NOL
carryforwards begin to expire in the year 2006. No tax benefit
has been reported in the financial statements because the Company
believes there is a 50% or greater chance the carryforward will
expire unused.

Accordingly, per FASB 109, the potential tax benefits of the loss
carryforwards are offset by the valuation of the same amount.

Deferred tax assets and the valuation account are as follows at
September 30, 2005 and 2004.

September 30,
2005 2004
------------ ------------

Deferred tax asset:
NOL carryforward $ 240,734 $ 196,946
Valuation allowance (240,734) (196,946)
------------ ------------
Total $ - $ -
============ ============

Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2005 and 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

g. Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and revenues
and expenses during the reporting period. In these financial
statements assets and liabilities involve extensive reliance on
management's estimates. Actual results could differ from those
estimates.

h. Revenue Recognition

The Company receives revenues for consulting services performed
and product sales. Consulting services are recorded as sales
when services are complete. Product sales are recorded as
revenue when the products are shipped to the buyer.

NOTE 2 - GOING CONCERN

The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company
is dependent upon raising capital to continue operations. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty. It is management's
plan to raise capital in order to define expand their business
operations, thus creating necessary operating revenue.

NOTE 3 - DEVELOPMENT STAGE COMPANY

The Company is a development stage company as defined in
Financial Accounting Standards Board Statement No. 7. It is
concentrating substantially all of its efforts in raising capital
and developing its business operations in order to generate
significant revenues.

Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2005 and 2004

NOTE 4 - PROPERTY & EQUIPMENT

Property & Equipment consists of the following at September 30,
2005 and 2004:

September 30,
2005 2004
------------ ------------

Equipment $ 39,386 $ 39,386
Less: Accumulated Depreciation (38,535) (32,824)
------------ ------------
Net Property & Equipment $ 851 $ 6,562
============ ============

Expenditures for property and equipment and for renewals and
betterments, which extend the originally estimated economic life
of assets or convert the assets to a new use, are capitalized at
cost. Expenditures for maintenance, repairs and other renewals
of items are charged to expense. When items are disposed of the
cost and accumulated depreciation are eliminated from the
accounts, and a gain or loss is included in the results of
operations.

The provision for depreciation is calculated using the straight-
line method over the estimated useful lives of the assets. The
useful lives of equipment are 5 years. Depreciation expense for
the years ended September 30, 2005 and 2004 are $5,711 and
$7,877, respectively.

NOTE 5 - ADVANCED ROYALTIES

SeaCrest Industries Corporation, formerly Infrared Systems
International, Inc., entered into a licensing agreement for
marketing and distributing of infrared aircraft landing systems.
Seacrest received $25,000 in advances. These royalty revenues
were deferred until revenue streams occur. During the fiscal
2004 year, the Company generated sales of the systems and claimed
the royalty as income.

NOTE 6 - RELATED PARTY TRANSACTIONS

As of September 30, 2005 and 2004, the Company owes an officer
the Company $71,000 and $66,300 for loans made. This note
payable-officer is considered a current liability with no
provision for interest.

Advance Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2005 and 2004

NOTE 7 - COMMON STOCK

During December 2001, the Company issued 3,250,000 shares of
previously authorized but unissued common stock for consulting
services for $3,250 (or $.001 per share).

During the year ended September 30, 2002, 11,396,045 shares of
preferred stock were converted to common stock.

In December 2002, the Company issued 5,438,350 shares of common
stock in satisfaction of $85,500 in debt and $23,267 of accrued
interest.

During the year ended September 30, 2003, preferred shareholders
converted 109,200 shares of preferred stock for 109,200 shares of
common stock.

During the year ended September 30, 2004, preferred shareholders
converted 1,552,899 shares of preferred stock for 1,552,899
shares of common stock. There was also a private placement of
common stock in the amount of 4,000,000 shares for cash of
$5,109.

During the year ended September 30, 2005, preferred shareholders
converted 11,178,801 shares of preferred stock for 11,178,801
shares of common stock.

Part III

Index to Exhibits.

Exhibit
Number Description

2.1 Articles of Incorporation (1)
2.2 Amendment to Articles of Incorporation (1)
2.3 Amendment to Articles of Incorporation (1)
2.4 Amended Bylaws (1)
3.1 See Articles of Incorporation, as Amended (1)
31.1 Certification of President and Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of President and Chief Executive Officer
Pursuant to Rule 13-14 or Rule 15-14 of the Securities
and Exchange Act of 1934 as adopted pursuant to Section
906 of The Sarbanes-Oxley act of 2002.
99.1 License Agreement with Infrared Enhanced Vision Sensor
System

(1) Incorporated by reference to the exhibits to Registrant's Registration
Statement on Form 10-SB filed on August 30, 1999, File Number 000-27175.

DESCRIPTION OF EXHIBITS.

EXHIBIT 99.1: LICENSE AGREEMENT, INFRARED ENHANCED VISION SENSOR SYSTEM,
JULY 15, 1997.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

ADVANCE TECHNOLOGIES, INC.

By /S/ Gary E. Ball
___________________________________________________
Gary E. Ball, President and Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.

/S/ Gary E. Ball
__________________________________________
Gary E. Ball, Principal Executive Officer

/S/ Gary E. Ball
__________________________________________
Gary E. Ball, Principal Financial Officer

/S/ Gary E. Ball
__________________________________________
Gary E. Ball, Controller or Principal Accounting Officer

/S/ Gary L. Bane
__________________________________________
Gary L. Bane, Director

/S/ James Watson
__________________________________________
James Watson, Director

[ATTACH EXHIBITS TO EXTENT NOT INCORPORATED BY REFERENCE]