Advance Nanotech, Inc. 10-Q Quarterly Report May 2010

MONTEBELLO, NY - Advance Nanotech, Inc. (OTCBB: AVNA) today reported its financial results for the year ended December 31, 2009. The reported financial results represent a significant change in presentation and disclosure as a result of certain transactions undertaken, which is detailed in the Company’s Form 10-K filed with the Securities and Exchange Commission on April 15, 2010.

Financial Presentation

As a result of the transactions undertaken by Owlstone Nanotech, Inc. (“Owlstone”) in November and December 2009, Advance Nanotech now holds a non-controlling equity interest in Owlstone and thus can no longer present consolidated financial information of Owlstone. In November and December 2009, Owlstone sold shares of its common stock in private placements and converted its indebtedness into its common shares which reduced the Company’s ownership interest in Owlstone to 37.81% (and further to 34.99% in January 2010). As such, the Company deconsolidated Owlstone as of October 2009, the date a controlling financial interest was lost. Operations and cash flow of Owlstone have been eliminated from the accounts of the Company’s ongoing operations and major classes of assets and liabilities related thereto have been segregated as discontinued operations.

Advance Nanotech’s financial statements now reflect its current business, which has no revenues or operations other than those attributed to its non-controlling ownership interest in Owlstone and expenditures associated with being a public company.

Results of Operations

It is important to note that the results as presented, especially the net income and net income from continuing operations, reflect significant gains resulting from the deconsolidation and fair value re-measurement of Owlstone and other derivative revaluations, and should not be construed as representative of Advance Nanotech’s ongoing business.

For the twelve months of 2009, the Company had net income from continuing operations of $0.10 cents per share, compared with net income of $0.01 cents per share for the same twelve month period in 2008. The Company had a loss from operations of $1,068,972 for the year ended December 31, 2009, compared to $3,119,900 for the comparable period in 2008, representing a decrease of $2,050,928, or approximately 66%. The Company had net income from continuing operations of $6,072,908 for the year ended December 31, 2009, compared to net income from continuing operations of $407,587 for the comparable period in 2008, representing an increase of $5,665,321. Advance Nanotech had net income of $4,676,833 for the year ended December 31, 2009 compared to a net loss of $4,055,374 for the comparable period in 2008, representing an increase of $8,732,207. The increase in net income for 2009 is a result of the non-cash gain of $6,746,230 for the fair value re-measurement of Advance Nanotech’s holdings of Owlstone and the non-cash gain of the warrant liability revaluation of $1,695,464 which is off-set by the losses from discontinued operations of $1,396,076.

In 2009, a significant effort was made to reduce the level of operating expenses of the Company. The decrease of $2,050,928 in operating costs referenced above included:

•	a decrease in salaries and benefits of approximately $810,000;

•	a decrease in legal, accounting and consulting fees of approximately $528,000;

•	a decrease in Board of Director fees & shareholder filing fees of approximately $222,000;

•	a decrease in marketing costs of approximately $158,000;

•	a decrease in facilities cost of approximately $145,000;

•	a decrease in insurance, travel & bank fees of approximately $137,000;

The Company recognized a non-cash gain for the year ended December 31, 2009 and for the year ended December 31, 2008 of $1,695,464 and $2,897,452, respectively, for the change in fair value of the warrant liability driven by the decline in the price of the Company’s common stock.

For 2009, other income included recognized non-cash gains from the dissolution of the U.K. subsidiaries of approximately $381,988. Interest income decreased by $18,578 for the same period in 2009 compared to 2008.

The following information was filed by Advance Nanotech, Inc. on Thursday, April 15, 2010 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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CIK: 354699
Form Type: 10-Q Quarterly Report
Accession Number: 0001437749-10-001568
Submitted to the SEC: Mon May 17 2010 3:29:33 PM EST
Accepted by the SEC: Mon May 17 2010
Period: Wednesday, March 31, 2010
Industry: Measuring And Controlling Devices

External Resources:
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Advance Nanotech, Inc. (354699) SEC Filing 10-Q Quarterly report for the period ending Wednesday, March 31, 2010

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