FORM 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 June 30, 2002 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 703, San Antonio, Texas 78232 (Address of principal executive offices)(Zip Code) (210) 408-1995 (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:

8,212,136 as of June 30, 2002

ADVANCED TOBACCO PRODUCTS, INC. PART I - FINANCIAL INFORMATION dba ADVANCED THERAPEUTIC PRODUCTS, INC. ITEM 1: Financial Statements CONDENSED BALANCE SHEET

(Unaudited) (Audited) June 30 September 30 2002 2001

ASSETS:

CURRENT ASSETS:
Cash & cash equivalents	$ 90,804	$ 193,498
Product Payments Receivable	276,898	142,095
Interest Receivable	3,356	2,436
Investments	559,736	559,456
TOTAL CURRENT ASSETS:	930,794	897,485


LICENSE AGREEMENTS, Net:	149,224	162,352

LONG TERM INVESTMENTS:	1,142,567	1,105,044

TOTAL ASSETS:	$2,222,585	$2,164,881

LIABILITIES AND STOCKHOLDERS' EQUITY:

LIABILITIES:
Accrued Liabilities	$ 520	$ 40,150

TOTAL LIABILITIES:	520	40,150

STOCKHOLDERS' EQUITY:
Common stock, $.01 par value;
30,000,000 shares authorized;
8,222,136 shares issued and outstanding as of June 30,
2002, and September 30, 2001, respectively	82,222	82,222
Additional paid-in-capital	12,595,767	12,595,767
Accumulated deficit	(10,455,924)	(10,553,258)

TOTAL STOCKHOLDERS' EQUITY:	2,222,065	2,124,731

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY:	$2,222,585	$2,164,881

ADVANCED TOBACCO PRODUCTS, INC. dba ADVANCED THERAPEUTIC PRODUCTS, INC. CONDENSED STATEMENT OF INCOME

(Unaudited) Three Months Ended June 30, 2002 2001

REVENUES:
Product Payments	$ 276,898	$ 144,522
Total operating revenues:	276,898	144,522

EXPENSES:
General and administrative	65,250	68,684
Total operating expenses:	65,250	68,684

INCOME FROM OPERATIONS:	211,648	75,844

OTHER INCOME:
Interest Income	22,315	20,456
Total other income:	22,315	20,456

NET INCOME:	$ 233,963	$ 96,294

WEIGHTED AVERAGED NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING:	8,222,136	8,222,136

WEIGHTED AVERAGED NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING -
ASSUMING DILUTION:	8,222,136	8,222,136

INCOME PER COMMON SHARE - BASIC AND
ASSUMING DILUTION	$ .03	$ .012

ADVANCED TOBACCO PRODUCTS, INC. dba ADVANCED THERAPEUTIC PRODUCTS, INC. CONDENSED STATEMENT OF INCOME

(Unaudited) Nine Months Ended June 30 2002 2001

REVENUES:
Product Payments	$ 639,386	$ 501,304
Total operating revenues:	639,386	501,304

EXPENSES:
General and administrative	195,603	154,878
Total operating expenses:	195,603	154,878

INCOME FROM OPERATIONS:	443,783	346,426

OTHER INCOME:
Interest Income	64,657	65,108
Total other income:	64,657	65,108

NET INCOME:	$ 508,440	$ 411,534

WEIGHTED AVERAGED NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING:	8,222,136	8,215,433

WEIGHTED AVERAGED NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING -
ASSUMING DILUTION:	8,222,136	8,215,801

INCOME PER COMMON SHARE - BASIC AND
ASSUMING DILUTION	$ .06	$ .05

ADVANCED TOBACCO PRODUCTS, INC. dba ADVANCED THERAPEUTIC PRODUCTS, INC. CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited) Nine Months Ended June 30

2002 2001

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income:	$ 508,440	$ 411,534
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of license agreements	13,128	21,895
Amortization of discount on investments	8,807	(57,111)
Increase (decrease) in cash flows from changes in operating assets
and liabilities:
Payments receivable	(134,803)	(36,730)
Interest receivable	(920)	-0-
Accounts payable	(39,630)	8,787
Net cash provided by operating activities:	355,022	348,375

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of license agreements and patent costs	-0-	(2,612)
Purchase of investments	(161,609)	(565,046)
Sale or maturity of investments	115,000	575,000
Net cash provided (used) by investing activities:	(46,609)	7,342

CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of Stock Options	-0-	8,439
Dividends Paid	(411,107)	(411,108)
Net cash used in financing activities:	(411,107)	(402,669)

NET DECREASE IN CASH AND CASH EQUIVALENTS:	(102,694)	(46,952)

CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD:	193,498	123,746

CASH & CASH EQUIVALENTS AT END OF PERIOD:	$ 90,804	$ 76,794

NOTES TO CONDENSED FINANCIAL STATEMENTS

The condensed financial statements included herein have been prepared by Advanced Tobacco Products, Inc., dba Advanced Therapeutic Products, Inc. ("ATP") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. However, all adjustments have been made to the accompanying financial statements which are, in the opinion of ATP's management, necessary for the fair presentation of ATP's results of operations for the period covered. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although ATP believes that the disclosures are adequate to make the information presented herein not misleading. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in ATP's Annual Report on Form 10-K as of September 30, 2001.

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operation

DISCUSSION OF OPERATIONS

In 1987, ATP sold patented nicotine technology, which forms the basis of the Nicorette®/Nicotrol® Inhaler ("Inhaler"), to what is now Pharmacia Corporation ("PHA"), in exchange for product payments of 3% of PHA's net sales of the Inhaler.

Product payments are payable on a country by country basis for the greater of 10 years following the date of the first commercial sale or the expiration of all issued patents enforceable in such countries. There are payment limitations in the event of the sale of a nicotine vapor product competitive with the Inhaler.

The Inhaler was launched nationwide in the U.S. as a prescription product in 1998. PHA has introduced the Inhaler, primarily as an over-the-counter product, in Australia, Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Hong Kong, Iceland, Ireland, Italy, Malaysia, Malta, Mexico, Netherlands, New Zealand, Norway, Portugal, Russia, Singapore, South Africa, Sweden, Switzerland, Taiwan, and the United Kingdom.

The Inhaler is the only nicotine replacement product designed to help control a smoker's cravings for cigarettes while providing a key behavioral component of smoking--the hand-to-mouth ritual. The Inhaler consists of a mouthpiece and a cartridge containing nicotine. The user puffs on the mouthpiece, inhaling the nicotine, which is then absorbed through the lining of the mouth.

ATP also has an agreement with PHA under which, among other matters, ATP has the right to receive a royalty equal to .1% of net revenues received by PHA from the sale of any product using a nicotine impermeable copolymer technology. Under the terms of the agreement, ATP receives royalties from the sales of PHA's Nicorette®/Nicotrol® Patch.

In addition, ATP has an exclusive worldwide license to certain dry powder nicotine inhaler technology from Duke University. ATP has obtained several patents covering this technology. ATP believes that a dry powder nicotine inhaler has the potential to be a future generation nicotine replacement product.

LIQUIDITY AND CAPITAL RESOURCES

Cash resources, including investments, available on June 30, 2002, were $1,793,107 as compared to $1,724,902 as of June 30, 2001. On January 9, 2002, and January 10, 2001, ATP paid dividends aggregating $411,108 (5 cents per share) and $411,108 (5 cents per share) respectively.

COMPARISON OF SELECTED FINANCIAL DATA

Operating revenues for the nine month period ending June 30, 2002, increased to $639,386, as compared to $501,304 for the nine month period ending June 30, 2001. This increase is due to an increase in Inhaler product payments from PHA.

Interest income for the nine month period ending June 30, 2002, decreased to $64,657 as compared to $65,108 for the nine month period ending June 30, 2001. This decrease is due to minor variations in earnings on investments.

Net income for the nine month period ending June 30, 2002, increased to $508,440 as compared to $411,534 for the nine month period ending June 30, 2001. This increase is due to an increase in Inhaler product payments from PHA

General and administrative expenses for the nine month period ending June 30, 2002, decreased to $195,603 as compared to $204,878 for the nine month period ending June 30, 2001, after adjusting general and administrative expenses for the nine month period ending June 30, 2001, for a non-recurring payment of $50,000 which was credited against general and administrative expenses. The non-recurring payment was a "stand still" fee paid by a third party for a review of ATP and its assets.

PART II - OTHER INFORMATION

Item 1: Legal Proceedings. None

Item 2: Changes in Securities and Use of Proceeds. 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: August 12, 2002

By: /s/ J.W. Linehan J. W. Linehan, Executive Officer and Chief Accounting Officer

ADVANCED TOBACCO PRODUCTS INC 10-Q