UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB/A-2
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 2003
( ) Transition report pursuant of Section 13 or 15(d) of the Securities
Exchange Act of 1939 for the transition period ____ to______
COMMISSION FILE NUMBER 000-25973
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
California 68-0406331
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5 Whatney, Irvine, Ca. 92618, Telephone (949) 837-8101
-------------------------------------------------------------------------------
(Address of Principal Executive Offices, including Registrant's zip code
and telephone number)
9309 Narnia Drive, Riverside, California 92503
----------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed
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 [ ]
The number of shares of the registrant's common stock as of September 30, 2003:
18,228,439 shares.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(a) Consolidated Balance Sheets 3
(b) Consolidated Statements of Operations 4
(c) Consolidated Statement of Shareholders' Equity (deficit) 5
(d) Consolidated Statements of Cash Flows 6
(e) Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 11
Item 3. Controls and Procedures 12
PART II. OTHER INFORMATION 12
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults On Senior Securities 13
Item 4. Submission of Items to a Vote 13
Item 5. Other Information 13
Item 6. 13
(a) Exhibits
(b) Reports on Form 8K
SIGNATURES AND CERTIFICATES 14
2
ADVANCED REFRIGERATION TECHNOLOGIES, INC. & SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
-----------------------------------------------------------------------------------------
ASSETS
SEPTEMBER 30, 2003 DECEMBER 31,
UN-AUDITED 2002
------------ ------------
Current assets:
Cash $ 127,358 $ 5,025
Other receivables 2,382 --
Prepaid expenses 3,000 --
------------ ------------
Total current assets 132,740 5,025
Property and equipment (net) 21,317 2,406
------------ ------------
Total assets $ 154,057 $ 7,431
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 79,660 $ 9,718
Accrued salaries and payroll taxes 197,528 81,811
Accrued rent 35,000 54,000
Loans from shareholders 89,597 62,577
------------ ------------
Total current liabilities 401,785 208,106
Shareholders' equity:
Preferred stock (no par value) 10,000,000 shares
authorized; none issued -- --
Common stock (no par value) 50,000,000 shares
authorized; at September 30, 2003 and December 31,
2002, 18,228,439 and 16,785,667 issued and
outstanding, respectively 304,313 122,713
Common stock subscribed, 2,694,600 shares 460,906 --
Accumulated deficit during development stage (1,012,947) (323,388)
------------ ------------
Total shareholders' equity (deficit) (247,728) (200,675)
------------ ------------
Total liabilities and shareholders' equity (deficit) $ 154,057 $ 7,431
============ ============
The accompanying notes are an integral part of these financial statements
3
ADVANCED REFRIGERATION TECHNOLOGIES, INC. & SUSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
AND FOR THE PERIOD FROM INCEPTION MAY 23, 2001 TO SEPTEMBER 30, 2003
(UN-AUDITED)
----------------------------------------------------------------------------------------------------------------
CUMULATIVE
AMOUNTS FROM
FOR THE NINE FOR THE NINE FOR THE THREE FOR THE THREE INCEPTION MAY 23
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED 2001 TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002 2003
------------- ------------- ------------- ------------- -------------
Income
Travel agent program $ 31,137 $ -- $ 10,204 $ -- $ 37,400
Operating expenses:
General and
Administrative 444,576 125,915 232,122 56,508 651,809
Marketing and sales 155,473 76,154 116,413 29,566 277,891
------------- ------------- ------------- ------------- -------------
Total expenses 600,049 202,069 348,535 86,074 929,700
------------- ------------- ------------- ------------- -------------
Loss from operations (568,912) (202,069) (338,331) (86,074) (892,300)
------------- ------------- ------------- ------------- -------------
Interest expense 4,705 -- 4,705 -- 4,705
Provision for income taxes -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Net loss $ (573,617) $ (202,069) $ (343,036) $ (86,074) $ (897,005)
============= ============= ============= ============= =============
Net loss per share $ (0.04) $ (0.01) $ (0.02) $ (0.01)
============= ============= ============= =============
Weighted average number of
common shares outstanding
15,561,366 13,741,169 18,228,439 13,763,794
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements
4
ADVANCED REFRIGERATION TECHNOLOGIES, INC. & SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION MAY 23, 2001 TO SEPTEMBER 30, 2003
------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
-----------------------------------
Deficit
Accumulated
Additional Common During the Total
Number of Paid-in Stock Development Stockholders'
Shares Amount Capital Subscribed Stage Equity
------------ ------------ ------------ ------------ ------------ --------------
Balance at inception - May 23, 2001 -- $ -- $ -- $ -- $ -- $ --
Stock issued for services 16,715,000 16,715 -- -- -- 16,715
Net loss -- -- -- -- (16,715) (16,715)
------------ ------------ ------------ ------------ ------------ --------------
Balance at December 31, 2001 16,715,000 16,715 -- -- (16,715) --
------------ ------------ ------------ ------------ ------------ --------------
Stock issued various dates for cash
at $1.50 per share 70,667 71 105,927 -- -- 105,998
Net loss -- -- -- -- (306,673) (306,673)
------------ ------------ ------------ ------------ ------------ --------------
Balance at December 31, 2002 16,785,667 16,786 105,927 -- (323,388) (200,675)
------------ ------------ ------------ ------------ ------------ --------------
Shares canceled by majority
Shareholder (3,000,000) -- -- -- -- --
Common stock subscribed (3,000 shares) -- -- -- 4,500 -- 4,500
Stock issued various dates
for cash at $1.50 per share 94,932 95 142,205 -- -- 142,300
------------ ------------ ------------ ------------ ------------ --------------
Balance June 11, 2003 date of
acquisition of Joystar, Inc. shares
in a reverse merger 13,880,599 16,881 248,132 4,500 (323,388) (53,875)
Cancel Joystar shares (13,880,599) -- -- -- --
Advanced Refrigeration shares
outstanding at June 11, 2003 3,322,840 -- -- -- -- --
Issue Advanced Refrigeration
Technologies, Inc. shares 13,880,599 248,132 (248,132) -- (115,942) (115,942)
Stock issued pursuant to the
stock option plan June 11, 2003
at market value of stock $0.03 per
share 810,000 24,300 -- -- -- 24,300
Stock issued for services 215,000 15,000 -- -- -- 15,000
Common stock subscribed (2,691,600 shares) -- -- -- 1,420,073 -- 1,420,073
Common stock subscribed not expensed -- -- -- (158,667) -- (158,667)
Common stock subscribed-deferred compensation -- -- -- (805,000) (805,000)
Net loss -- -- -- -- (573,617) (573,617)
------------ ------------ ------------ ------------ ------------ --------------
Balance at September 30, 2003
(un-audited) 18,228,439 $ 304,313 $ -- $ 460,906 $ (1,012,947) $ (247,728)
============ ============ ============ ============ ============ ==============
The accompanying notes are an integral part of these financial statements
5
ADVANCED REFRIGERATION TECHNOLOGIES, INC. & SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
AND CUMULATIVE FROM INCEPTION MAY 23, 2001 TO SEPTEMBER 30, 2003
(UN-AUDITED)
-----------------------------------------------------------------------------------------------------
CUMULATIVE
AMOUNTS FROM
INCEPTION
FOR THE NINE FOR THE NINE (MAY 23, 2001)
MONTHS ENDED MONTHS ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003
------------- ------------- -------------
Cash flows from operating activities:
Net loss $(573,617) $(202,069) $(897,005)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization and depreciation 1,068 -- 1,068
Stock issued\subscribed for services 116,806 -- 133,521
Changes in assets and liabilities:
Increase in prepaid expenses (3,000) -- (3,000)
Increase in other receivables (2,382) -- (2,382)
Increase in accounts payable 24,000 20 33,718
Increase in accrued salaries and payroll taxes 115,717 20,668 197,528
Increase (decrease) in rent accrual (19,000) 30,000 35,000
---------- ---------- ----------
Net cash used in operations (340,408) (151,381) (501,552)
---------- ---------- ----------
Cash flows used by investing activities:
Acquisition of fixed assets (19,979) -- (22,385)
---------- ---------- ----------
Net cash used by investing activities (19,979) -- (22,385)
---------- ---------- ----------
Cash flows from financing activities:
Issuance of common stock 142,300 89,998 248,298
Advances from shareholders 27,020 63,532 89,597
Subscribed stock not issued (294,600 shares) 383,400 -- 383,400
Payment of debt assumed in reverse acquisition (70,000) -- (70,000)
---------- ---------- ----------
Net cash from financing activities 482,720 153,530 651,295
---------- ---------- ----------
Net increase (decrease) in cash 122,333 2,149 127,358
Cash, beginning of period 5,025 -- --
---------- ---------- ----------
Cash, end of period $ 127,358 $ 2,149 $ 127,358
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for services $ 81,906 $ -- $ 100,348
Issuance of stock for future services 158,667 -- 158,667
========== ========== ==========
The accompanying notes are an integral part of these financial statements
6
ADVANCED REFRIGERATION TECHNOLOGIES, INC. & SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
AND CUMULATIVE FROM INCEPTION MAY 23, 2001 TO SEPTEMBER 30, 2003
(UN-AUDITED)
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
---------------------
On June 11, 2003, Advanced Refrigeration Technologies, Inc. a California
corporation (" the Company") acquired all of the issued and outstanding common
stock of Joystar, Inc., a Nevada corporation ("Joystar") in exchange for the
issuance by the Company of a total of 13,880,599 newly issued restricted shares
of common voting stock to the Joystar shareholders pursuant the Agreement an
Plan of Reorganization dated as if June 10, 2003. Prior to the issuance of the
shares, the Company had 3,322,840 shares of common stock issued and outstanding.
Subsequent to the exchange there were 17,203,439 shares issued and outstanding.
The shareholders of Joystar own 81% of the common stock outstanding of the
Company after the issuance of the 13,880,599 shares.
The acquisition of Joystar by the Company on June 11, 2003 has been accounted
for as a purchase and treated as a reverse acquisition since the former owners
of Joystar controlled 81% of the total shares of Common Stock of the Company
outstanding immediately following the acquisition.
On this basis, the historical financial statements prior to June 11, 2003 have
been restated to be those of the accounting acquirer Joystar. The historical
stockholders' equity prior to the reverse acquisition has been retroactively
restated (a recapitalization) for the equivalent number of shares received in
the acquisition after giving effect to any difference in par value of the
issuer's and acquirer's stock. The original 3,322,840 shares of common stock
outstanding prior to the exchange reorganization have been reflected as an
addition in the stockholders' equity account of the Company on June 11, 2003.
The Company has been in the development stage since its inception May 23, 2001.
2. INTERIM FINANCIAL INFORMATION
-----------------------------
The financial statements of Advanced Refrigeration Technologies, Inc. (the
Company) as of September 30, 2003 and for the nine months ended September 30,
2003 and 2002 and related footnote information are un-audited. All adjustments
(consisting only of normal recurring adjustments) have been made which, in the
opinion of management, are necessary for a fair presentation. Results of
operations for the nine months and three months ended September 30, 2003 and
2002 are not necessarily indicative of the results that may be expected for any
future period. The balance sheet at December 31, 2002 was derived from audited
financial statements.
Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America, have been omitted. These financial statements
should be read in conjunction with the financial statements and notes for the
year ended December 31, 2002 included in an 8-K filed with the Securities and
Exchange Commission on August 26, 2003.
7
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
REVENUE RECOGNITION
--------------------
The Company records revenues from travel related sales transactions
where the Company both purchases from the supplier and sells to the
customer the requested travel service. This is reflected in the
Consolidated Statement of Operations at the net amount, which reflects
the gross amount charged to the customer less the cost paid to the
supplier. The Company also receives commissions from travel suppliers
for processing reservations.
PROPERTY AND EQUIPMENT
----------------------
Property and equipment is stated at cost and depreciated using the
straight-line method over the estimated useful life of the assets,
which is seven years for furniture and equipment and three years for
computer equipment. Depreciation for the nine months ended September
30, 2003 was $1,068 and none for the nine months ended September 30,
2002.
USE OF ESTIMATES
----------------
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
INCOME TAXES
------------
Deferred income taxes are reported using the liability method. Deferred
tax assets are recognized for deductible temporary differences and
deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
8
NET LOSS PER SHARE
------------------
In February 1997, the Financial Accounting Standards Board (FASB)
issued SFAS No. 128 "Earnings Per Share" which requires the Company to
present basic and diluted earnings per share, for all periods
presented. The computation of loss per common share (basic and diluted)
is based on the weighted average number of shares actually outstanding
during the period. The Company has no common stock equivalents, which
would dilute earnings per share.
FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
Financial instruments consist principally of cash and various current
liabilities. The estimated fair value of these instruments approximates
their carrying value.
4. GOING CONCERN
-------------
The accompanying financial statements, which have been prepared in
conformity with accounting principles generally accepted in the United
States of America, contemplates the continuation of the Company as a
going concern. However, the Company has been in the development stage
since its inception (May 23, 2001), sustained significant losses and
has used capital raised through the issuance of stock and debt to fund
activities. Continuation of the Company as a going concern is
contingent upon establishing and achieving profitable operations. Such
operations will require management to secure additional financing for
the Company in the form of debt or equity.
Management believes that actions currently being taken to revise the
Company's funding requirements will allow the Company to continue its
development stage operations. However, there is no assurance that the
necessary funds will be realized by securing debt or through stock
offerings.
5. CAPITAL STOCK
-------------
COMMON STOCK
------------
On November 2, 2001, the Company issued 16,715,000 restricted shares of
common stock at $0.001 per share totaling $16,715 for services rendered
in connection with the start up of the Company.
At various dates in 2002, the Company issued for cash of $105,998,
70,667 shares of common stock at $1.50 per share through a private
placement, pursuant to provisions of Section 4(2) of the Securities Act
of 1933 and Rule 506 of Regulation D.
COMMON STOCK SPLIT
------------------
On November 1, 2001, the Board of Directors of the Company approved a
stock split of the Company's common stock at a ratio of 1,000 for 1.
All references in the accompanying financial statements to the number
of common stock and per share amounts reflect the stock split.
9
STOCK CANCELED
--------------
A majority shareholder canceled 3,000,000 shares of stock in
anticipation of the acquisition of Advanced Refrigeration Technologies,
Inc.
At various dates in 2003, the Company issued for cash of $142,300,
94,932 shares of common stock at $1.50 per share through a private
placement, pursuant to provisions of Section 4(2) of the Securities Act
of 1933 and Rule 506 of Regulation D.
STOCK ISSUED IN REVERSE MERGER JUNE 11, 2003
---------------------------------------------
The Company acquired all of the issued and outstanding common stock of
Joystar, Inc., a Nevada corporation ("Joystar") in exchange for the
issuance by the Company of a total of 13,880,599 newly issued
restricted shares of common dated as if June 10, 2003.
RECONCILIATION OF COMMON STOCK AT DECEMBER 31, 2002
---------------------------------------------------
Common stock at par value $0.001 $ 16,786
Additional paid in capital 105,927
------------
$ 122,713
============
STOCK ISSUED UNDER STOCK OPTION PLAN AND FOR PAYMENT OF SERVICES
----------------------------------------------------------------
The Company issued 810,000 shares of common stock pursuant to the Company's
Stock Option Plans on June 11, 2003 valued at the market price of the stock on
that date $0.03.
The Company issued 215,000 shares of common stock in payment of invoices for
professional services in June, 2003.
On July 30, 2003 the Company approved an issuance of 400,000 shares of common
stock to two consultants for services to be provided over a two and three year
period. The services are valued daily based on the daily stock prices and the
amount of shares earned each day. The Company recorded $42,506 of expense for
the period ended September 30, 2003, $158,667 to common stock subscribed not
earned and $201,173 to common stock subscribed. The unearned shares are to be
retired in the event of non-performance.
On July 30, 2003 the Company entered into a four-year employment agreement for a
Vice President of Business Development. The agreement provides for 500,000
shares of restricted Common stock to be issued annually over the four years for
a total of 2,000,000 shares. The value of the compensation was based on the
stock price on the agreement date of $0.42, a total of $840,000. The Company
recorded compensation expense of $35,000 for period ended September 30, 2003 and
2,000,000 shares as stock subscribed $840,000, and deferred compensation of
$805,000.
On July 30, 2003 the Company granted certain employees options to purchase
100,000 shares of common stock at $1.90 per share, with a one year vesting
period. The quoted market share price on the grant date of the options was $.42
6. RELATED PARTY TRANSACTIONS
--------------------------
The Company received loans in the amount of $85,000 and $5,000 from two
shareholders. The $85,000 bears interest at 10% and is evidenced by a note
payable to the shareholder and can be converted to common stock at $1.50 per
share. The $5,000 bears interest at 10%, but is not evidenced by a note.
7. STOCK OPTIONS
-------------
The Board of Directors has approved in April, 2003 a Company stock option
plan, which was amended by the Company in July, 2003. All the shares (480,000
shares) under 2002 Equity and Stock Option Plan were issued in June, 2003. In
July, 2003, the Company approved 2003 Equity Compensation Plan which provides
for the grant to directors, officers, employees and consultants of the Company
of stock based awards and options to purchase up to an aggregate of 2,500,000
shares of Common Stock. No grants have been made yet under 2003 Equity
Compensation Plan.
On June 11, 2003 the Company granted a total of 810,000 shares under the 2000
and 2002 stock compensation plans for services to the Company. The valuation of
the shares issued were at the market price on the Grant date $0.03.
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
ALL FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE DEEMED BY THE COMPANY TO BE
COVERED BY AND TO QUALIFY FOR THE SAFE HARBOR PROTECTION PROVIDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. PROSPECTIVE SHAREHOLDERS SHOULD
UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER ANY FORWARD - LOOKING STATEMENT
CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE OF THOSE FACTORS COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED HEREIN. THESE
FORWARD - LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES OF MANAGEMENT FOR
FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO THE PRODUCTS AND
THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY. ASSUMPTIONS RELATING TO THE
FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND THE
TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS, ALL OF
WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE
BEYOND THE CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UNDERLYING THE FORWARD - LOOKING STATEMENTS CONTAINED HEREIN ARE
REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE,
THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD -
LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED. BASED ON ACTUAL EXPERIENCE
AND BUSINESS DEVELOPMENT, THE COMPANY MAY ALTER ITS MARKETING, CAPITAL
EXPENDITURE PLANS OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S
RESULTS OF OPERATIONS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE
FORWARD - LOOKING STATEMENTS INCLUDED THEREIN, THE INCLUSION OF ANY SUCH
STATEMENT SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER
PERSON THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL BE ACHIEVED.
General
Advanced Refrigeration Technologies, Inc. (the "Company") was
incorporated in the State of California on February 5, 1998. It designed,
manufactured and marketed an energy efficiency evaporator fan motor controller
for walk-in refrigerators and freezers until June 11, 2003 when it acquired all
of the issued and outstanding common stock of Joystar, Inc., a Nevada
corporation ("Joystar") in exchange for the issuance by the Company of a total
of 13,880,599 newly issued restricted shares of common voting stock to the
Joystar shareholders pursuant the Agreement an Plan of Reorganization dated as
if June 10, 2003. Prior to the issuance of the shares, the Company had 3,322,840
shares of common stock issued and outstanding. Subsequent to the exchange there
were 17,203,439 shares issued and outstanding. The shareholders of Joystar own
81% of the common stock outstanding of the Company after the issuance of the
13,880,598 shares. Concurrent with the acquisition of Joystar the Company
disposed of the fan control business extinguishing approximately $125,000 of
debt for $105,000 of fan control assets.
Joystar was incorporated on May 23, 2001. Joystar is a provider of
online and offline travel services for the leisure and small business traveler.
Joystar has been in the development stage since its inception, May 23,
2001. It is primarily engaged in raising capital to increase sales and marketing
activity, licensing and product development, acquisitions and infrastructure
development.
The restructuring and re-capitalization has been treated as a reverse
acquisition with Joystar becoming the accounting acquirer. The accompanying
financial statements represent Joystar's activity since inception May 23, 2001
through September 30, 2003. Advanced Refrigeration Technologies, Inc. now a
shell has had no activity since June 11, 2003.
The following discussion should be read in conjunction with selected
financial data and the financial statements and notes to financial statements.
11
Results of operations
The Company only had sales of $31,137 for the nine months ended
September 30 2003 as compared to none for the nine months ended September 30,
2002 and sales of 10,204 for the quarter ended September 30, 2003 as compared to
none for the quarter ended September 30, 2002. Income was generated by sales of
travel on which the Company earned commissions. There were no sales to related
parties. The reported results of the Company would not have been materially
different, as far as can determined, by using any different assumptions or
considering any different conditions in applying the Company's critical
accounting policies.
General and administrative expenses for the nine months ended September
30, 2003 were $444,576 as compared to $125,915 for the nine months ended
September 30, 2002, an increase of $319,000 due primarily to the increase in
salaries of $198,000, professional fees of $32,000 and dues and subscriptions of
$18,000. Salary were lower in the prior year due to the fall off of travel after
September 11, 2001. The Company has increased its sales activities in 2003.
Marketing and sales expenses for the nine months ended September 30,
2003 were $155,473 as compared to $76,154 for the nine months ended September
30, 2002, an increase of $79,000. This was due to increased marketing expenses
of $54,000 and telephone expenses of 13,000.
Liquidity and sources of capital
At September 30, 2003 our cash position required that we actively seek
additional sources of capital. At September 30, 2003 the Company had available
cash of $127,358 that probably will only last till the end of November.
The loans payable $89,597 are payable on demand and have an interest rate
of 10%. If the loans stay at the present level the Company incurs approximately
$2,275 in interest each quarter.
ITEM 3. Controls and Procedures
The Company has disclosure controls and procedures (as defined in Rules
13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended) to
ensure that material information contained in its filings with the Securities
and Exchange Commission is recorded, processed, summarized and reported on a
timely and accurate basis. Based on such evaluation, the Company's principal
executive officer and principal financial officer have concluded that the
Company's disclosure controls and procedures are effective at ensuring that
material information is recorded, processed, summarized and reported on a timely
and accurate basis in the Company's filings with the Securities and Exchange
Commission. Since such evaluation there have not been any significant changes in
the Company's internal controls, or in other factors that could significantly
affect these controls
PART II. OTHER INFORMATION
Item 1. Legal proceedings - No disclosures are required pursuant to Item
103 of Regulation S-B, taking into account
Instruction 1 to that Item
Item 2. Changes in securities and use of proceeds
During the quarter ended September 30, 2003, the Company sold in its private
placement a total of 316,267 shares of its common stock at a purchase price of
$1.50 per share, for the total purchase price of $474,400. During the quarter
ended June 30, 2003, the Company sold 60,000 shares of its common stock at a
purchase price of $1.50 in its private placement. The shares of the Company's
common stock were issued and sold in reliance upon the exemption provided by
Section 4(2) and Section 506 of Regulation D of the Securities Act of 1933. The
offers and sales in the Company's private placement were made to accredited
investors only.
During the quarter ended September 30, 2003, the Company approved various
employment and consulting agreements and the issuances of common stock and
options to issue the Company's common stock for services to the Company pursuant
to such agreements. See Financial Statements. None of the shares or options
issuable pursuant to the above agreements were issued in the quarter ended
September 30, 2003.
12
Item 3. Defaults on senior securities NONE
Item 4. Submission of items to a vote
In June, 2003, the Company's majority shareholders (12,820,000 shares) voted to
approve the Company's name to "Joystar, Inc.".
Item 5. Other information NONE
Item 6.
(a) Exhibits
--------
Exhibit No. Description
----------- -----------
Exhibit 31 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF
FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT
Exhibit 32 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF
FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT
b) Reports on 8K during the quarter: There were no 8K filings in the quarter
ended September 30, 2003.
13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
Date: February 19, 2004
By /s/ William Alverson
---------------------------
President
14