SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 11, 2003
------------------------------------------------
Date of Report (date of earliest event reported)
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
----------------------------------------------------
Exact name of Registrant as Specified in its Charter
California 000-25973 68-0406331
--------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
5 Whatney, Irvine, California 92618
----------------------------------------------------------
Address of Principal Executive Offices, Including Zip Code
949/837-8101
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
9309 Narnia Drive, Riverside, California 92503
-------------------------------------------------------------
Former Name or Former Address, if Changed Since Last Report
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The Registrant has previously filed its Current Report on Form
8-K, dated June 11, 2003, without certain financial information required by
Item 7 of such Form 8-K. The Registrant hereby amends the Current Report on Form
8-K to file such financial information. Item 7, subparagraph (a) of the Report
dated June 11, 2003, is hereby amended to read as follows:
Independent Auditors' Report of Berger Mendoza & Company, LLP.
Balance Sheets as of December 31, 2001 and December 31, 2002
Statements of Operations for the Fiscal Year Ended December 31, 2002,
for the period from inception (May 23, 2001) through December 31, 2001
and for the period from inception (May 23, 2001) through December 31, 2002
Statement of Changes in Stockholders' Equity (Deficit)
Statements of Cash Flows for the Fiscal Year Ended December 31, 2002,
for the period from inception (May 23, 2001) through December 31, 2001
and for the period from inception (May 23, 2001) through December 31, 2002
Notes to Financial Statements
Balance Sheets as of December 31, 2002 and June 30, 2003 (unaudited)
Statements of Operations for the Six Moths Ended June 30, 2003 (unaudited), for
the Six Months Ended June 30, 2002 and and for the period from inception (May
23, 2001) through June 30, 2003 (unaudited)
Statement of Changes in Stockholders' Equity (Deficit)from inception (May 23,
2001) through June 20, 2003
Statements of Cash Flows for the Six Months Ended June 30, 2003 (unaudited), for
the Six Months Ended June 30, 2002 and for the period from inception (May 23,
2001) through June 30, 2003 (unaudited)
Notes to Financial Statements
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FROM INCEPTION (MAY 23, 2001)
THROUGH DECEMBER 31, 2002
TABLE OF CONTENTS
Independent Auditors' Report................................................. 1
Balance Sheets................. ............................................. 2
Statements of Operations..................................................... 4
Statement of Changes in Stockholders' Equity (Deficit)....................... 5
Statements of Cash Flows..................................................... 6
Notes to Financial Statements................................................ 7
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Joystar, Inc.
We have audited the accompanying balance sheets of Joystar, Inc. (formerly known
as Solutions Resource, Inc. and a development stage company) as of December 31,
2002 and 2001 and the related statements of operations, changes in stockholders'
equity (deficit) and cash flows for the year ended December 31, 2002, for the
period from inception (May 23, 2001) through December 31, 2001 and for the
period from inception (May 23, 2001) through December 31, 2002. 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the 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 audits provide 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 Joystar, Inc. as of December
31, 2002 and 2001, and the results of its operations and cash flows for the year
ended December 31, 2002, for the period from inception (May 23, 2001) through
December 31, 2001 and for the period from inception (May 23, 2001) through
December 31, 2002, in conformity with accounting principles generally accepted
in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed further in Note 3, the Company
has been in the development stage since its inception ( May 23, 2001) and
continues to incur significant losses. The Company's viability is dependent upon
its ability to obtain future financing and the success of its future operations.
These factor raise substantial doubt about the Company's ability to continue as
a going concern. Management's plan in regard to these matters is also described
in Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
MENDOZA BERGER & COMPANY, LLP
August 12, 2003
Irvine, California
1
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
------------------------------------------------------------------------------------------------------------------------
ASSETS
DECEMBER 31, 2002 DECEMBER 31, 2001
----------------- -----------------
Current assets:
Cash $ 5,025 $ --
---------------- ----------------
Total current assets 5,025 --
---------------- ----------------
Property and equipment, net (Note 4) 2,406 --
---------------- ----------------
Total assets $ 7,431 $ --
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 9,718 $ --
Accrued salaries 81,811 --
Accrued rent 54,000 --
Advances from shareholder 62,577 --
---------------- ----------------
Total current liabilities 208,106 --
---------------- ----------------
Commitments (Note 9) -- --
Stockholders' equity:
Common Stock, par value $0.001per share, 50,000,000 shares
authorized; 16,785,667 and 16,715,000 shares issued and
outstanding at December 31, 2002 and December 31, 2001,
respectively 16,786 16,715
Additional paid in capital 105,927 --
Deficit accumulated during development stage (323,388) (16,715)
---------------- ----------------
Total stockholders' equity (deficit) (200,675) --
---------------- ----------------
Total liabilities and stockholders' equity $ 7,431 $ --
================ ================
The accompanying notes are an integral part of these financial statements
2
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
-----------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE AMOUNTS
FROM INCEPTION
FOR THE YEAR FROM INCEPTION (MAY (MAY 23, 2001)
ENDED 23, 2001) THROUGH THROUGH
DECEMBER 31, 2002 DECEMBER 31, 2001 DECEMBER 31, 2002
----------------- ----------------- -----------------
Income:
Travel agent program $ 6,263 $ -- $ 6,263
---------------- ---------------- ----------------
Operating expenses:
General and administrative 190,518 16,715 207,233
Marketing and sales 122,418 -- 122,418
---------------- ---------------- ----------------
Total operating expenses 312,936 16,715 329,651
---------------- ---------------- ----------------
Loss from operations (306,673) (16,715) (323,388)
---------------- ---------------- ----------------
Provision for taxes (Note 8) -- -- --
---------------- ---------------- ----------------
Net loss $ (306,673) $ (16,715) $ (323,388)
================ ================ ================
Loss per share $ (0.02) $ (0.004)
================ ================
Weighted average number of common shares outstanding 16,822,686 4,462,376
================ ================
The accompanying notes are an integral part of these financial statements
3
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
-------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK TOTAL
--------------------------------- RETAINED STOCKHOLDERS'
NUMBER OF PAR VALUE ADDITIONAL EARNINGS EQUITY
SHARES $0.001 PAID-IN CAPITAL (DEFICIT) (DEFICIT)
--------------- --------------- --------------- --------------- ---------------
Balance, inception (May 23, 2001) -- $ -- $ -- $ -- $ --
Stock issued for services (Note 7) 16,715,000 16,715 -- -- 16,715
Net loss -- -- -- (16,715) (16,715)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 2001 16,715,000 16,715 -- (16,715) --
Stock issued various dates for
cash at $1.50 per share (Note 7) 70,667 71 105,927 -- 105,998
Net loss -- -- -- (306,673) (306,673)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 2002 16,785,667 $ 16,786 $ 105,927 $ (323,388) $ (200,675)
=============== =============== =============== =============== ===============
The accompanying notes are an integral part of these financial statements
4
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
---------------------------------------------------------------------------------------------------------------------------
CUMULATIVE AMOUNTS
FROM INCEPTION FROM INCEPTION
FOR THE YEAR (MAY 23, 2001) (MAY 23, 2001)
ENDED THROUGH THROUGH
DECEMBER 31, 2002 DECEMBER 31, 2001 DECEMBER 31, 2002
----------------- ----------------- -----------------
Cash flows from operating activities:
Net loss $ (306,673) $ (16,715) $ (323,388)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock issued for services -- 16,715 16,715
Changes in assets and liabilities:
Increase in accounts payable 9,718 -- 9,718
Increase in accrued salaries 81,811 -- 81,811
Increase in accrued rent expense 54,000 -- 54,000
-------------- -------------- --------------
Net cash used by operations (161,144) -- (161,144)
-------------- -------------- --------------
Cash flows used by investing activities:
Acquisition of fixed assets (2,406) -- (2,406)
-------------- -------------- --------------
Net cash used by investing activities (2,406) -- (2,406)
-------------- -------------- --------------
Cash flows from financing activities:
Advances from shareholder 62,577 -- 62,577
Issuance of common stock 105,998 -- 105,998
-------------- -------------- --------------
Net cash provided by financing activities 168,575 -- 168,575
-------------- -------------- --------------
Net increase in cash 5,025 -- 5,025
Cash, beginning of period -- -- --
-------------- -------------- --------------
Cash, end of period $ 5,025 $ -- $ 5,025
============== ============== ==============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for services $ -- $ 16,715 $ 16,715
============== ============== ==============
The accompanying notes are an integral part of these financial statements
5
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2001,
FOR THE YEAR ENDED DECEMBER 31, 2002 AND
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2002
--------------------------------------------------------------------------------
1. ORGANIZATION AND HISTORY
------------------------
Joystar, Inc. (the Company), a Nevada Corporation, was incorporated on
May 23, 2001. The Company is a provider of online and offline travel
services for the leisure and small business traveler.
The Company 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
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. No property and equipment has been depreciated.
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.
6
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2001,
FOR THE YEAR ENDED DECEMBER 31, 2002 AND
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2002
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
------------------------------------------
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.
3. 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.
7
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2001,
FOR THE YEAR ENDED DECEMBER 31, 2002 AND
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2002
--------------------------------------------------------------------------------
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
DECEMBER 31, 2002 DECEMBER 31, 2001
----------------- -----------------
Office furniture $ 1,864 $ --
Computers 542 --
--------------- ---------------
2,406 --
Less: accumulated depreciation -- --
--------------- ---------------
$ 2,406 $ --
=============== ===============
The property and equipment was acquired at the end of 2002.
Depreciation will start in 2003.
6. RELATED PARTY TRANSACTIONS
--------------------------
Advances from shareholder of $62,577 at December 31, 2002 are
non-interest bearing, currently payable and not evidenced by any notes.
7. 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.
8
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2001,
FOR THE YEAR ENDED DECEMBER 31, 2002 AND
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2002
--------------------------------------------------------------------------------
7. CAPITAL STOCK (Continued)
-------------
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.
STOCK CANCELED AND ISSUED SUBSEQUENT TO DECEMBER 31, 2002
---------------------------------------------------------
A majority shareholder canceled 3,000,000 shares of stock in
anticipation of the acquisition of Advanced Refrigeration Technologies,
Inc. (see "subsequent event" footnote 10).
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.
8. INCOME TAXES
------------
The components of the deferred tax asset is as follows:
DECEMBER 31, 2002 DECEMBER 31, 2001
----------------- -----------------
Deferred tax assets:
Net operating loss carryforward $ 128,000 $ 6,500
Less: valuation allowance (128,000) (6,500)
-------------- --------------
Net deferred tax assets $ -- $ --
============== ==============
The Company's operations are headquartered in the State of California
and are subject to California state income taxes. The Company had
available approximately $323,000 of unused Federal and State net
operating loss carryforwards at December 31, 2002 that may be applied
against future taxable income. These net operating loss carryforwards
expire
9
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2001,
FOR THE YEAR ENDED DECEMBER 31, 2002 AND
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2002
--------------------------------------------------------------------------------
8. INCOME TAXES (Continued)
------------
through 2022 for Federal purposes. There is no assurance that the
Company will realize the benefit of the net operating loss
carryforwards.
SFAS No. 109 requires a valuation allowance to be recorded when it is
more likely than not that some or all of the deferred tax assets will
not be realized. At December 31, 2002 and 2001, valuations for the full
amount of the net deferred tax asset were established due to the
uncertainties as to the amount of the taxable income that would be
generated in future years.
Reconciliation of the differences between the statutory tax rate and
the effective income tax rate is as follows:
DECEMBER 31, 2002 DECEMBER 31, 2001
----------------- -----------------
Statutory federal tax (benefit) rate (34.00)% (34.00)%
Statutory state tax (benefit) rate (5.83)% (5.83)%
----------------- -----------------
Effective tax rate (39.83)% (39.83)%
Valuation allowance 39.83% 39.83%
----------------- -----------------
Effective income tax rate 0.00% 0.00%
================= =================
9. COMMITMENTS
-----------
OPERATING LEASE
---------------
The Company leases office space under an operating lease which expires
in April of 2004. As of December 31, 2002, future minimum lease
payments are as follows:
2003 $ 90,000
2004 18,000
---------------
$ 108,000
===============
10
JOYSTAR, INC.
(FORMERLY KNOWN AS SOLUTIONS RESOURCE, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2001,
FOR THE YEAR ENDED DECEMBER 31, 2002 AND
FROM INCEPTION (MAY 23, 2001) THROUGH DECEMBER 31, 2002
--------------------------------------------------------------------------------
9. COMMITMENTS (continued)
-----------
Subsequent to December 31, 2002, the Company entered into a month to
month lease for office space at $3,000 per month.
Rent expense totaled $54,000, $54,000 and $0, from inception (May 23,
2001) through December 31, 2002, for the year ended December 31, 2002
and the period ended December 31, 2001, respectively.
10. SUBSEQUENT EVENT
----------------
On June 11, 2003, the Company, entered into an agreement and plan of
reorganization with Advanced Refrigeration Technologies (Advanced), a
publicly held company. The stockholders of the Company exchanged 100%
of their common shares for 13,880,599 newly issued restricted shares of
Advanced common voting stock.
Since the former shareholders of Joystar, Inc. acquired control of
Advanced upon the merger closing, the merger will be accounted for as a
reverse acquisition. Accordingly, for financial statement purposes,
Joystar, Inc. will be considered the accounting aquiror and the related
business combination will be considered a recapitalization of Joystar,
Inc., rather than an acquisition by Advanced. The historical financial
statements presented prior to June 11, 2003, in all future public
filings, will be those of Joystar, Inc.
11
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2003 AND DECEMBER 31, 2002
--------------------------------------------------------------------------------------
ASSETS
JUNE 30, 2003 DECEMBER 31,
UN-AUDITED 2002
------------ ------------
Current assets:
Cash $ 37,637 $ 5,025
Prepaid rent 3,000 --
------------ ------------
Total current assets 40,637 5,025
Property and equipment (net) 8,040 2,406
------------ ------------
Total assets $ 48,677 $ 7,431
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 86,211 $ 9,718
Accrued salaries 181,425 81,811
Accrued rent 60,000 54,000
Stock subscribed to be issued 4,500 --
Note payable 79,450 --
Loans from shareholders 17,689 62,577
------------ ------------
Total current liabilities 429,275 208,106
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 June 30, 2003 and December 31,
2002, 17,203,439 and 16,785,667 issued and
outstanding, respectively 265,013 122,713
Accumulated deficit (645,611) (323,388)
------------ ------------
Total shareholders' equity (deficit) (380,598) (200,675)
------------ ------------
Total liabilities and shareholders' equity (deficit) $ 48,677 $ 7,431
============ ============
The accompanying notes are an integral part of these financial statements
12
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2003 AND 2002
AND FOR THE PERIOD FROM INCEPTION MAY 24, 2001 TO JUNE 30, 2003
(UN-AUDITED)
----------------------------------------------------------------------------------------------------------------
CUMULATIVE
AMOUNTS FROM
FOR THE SIX FOR THE SIX FOR THE THREE FOR THE THREE INCEPTION MAY
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED 24, 2001 TO
JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003
------------- ------------- ------------- ------------- -------------
Income
Travel agent program $ 20,933 $ -- $ (346) $ -- $ 27,196
Operating expenses:
General and
Administrative 188,154 69,407 90,051 59,329 395,387
Marketing and sales 39,060 46,588 12,456 31,560 161,478
------------- ------------- ------------- ------------- -------------
Total expenses 227,214 115,995 102,507 90,889 556,865
------------- ------------- ------------- ------------- -------------
Loss from operations (206,281) (115,995) (102,853) (90,889) (529,669)
------------- ------------- ------------- ------------- -------------
Provision for income taxes -- -- -- -- --
Loss on acquisition June 11,
2003-net liabilities acquired in
reverse meager (115,942) -- (115,942) -- (99,156)
------------- ------------- ------------- ------------- -------------
Net loss (322,223) $ (115,995) $ (218,795) $ (90,889) $ (628,825)
============= ============= ============= ============= =============
Net loss per share $ (0.02) $ (0.01) $ (0.02) $ (0.01)
============= ============= ============= =============
Weighted average number of
common shares outstanding
14,170,584 16,730,778 13,846,347 16,730,778
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements
13
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION MAY 24, 2001 TO JUNE 30, 2003
--------------------------------------------------------------------------------------------------------------
COMMON STOCK
-----------------------------------
Deficit
Additional Accumulated Total
Number of Par Value Paid-in During the Stockholders'
Shares $0.001 Capital Development Stage Equity
------------ ------------ ------------ ------------ ------------
Balance at inception - May 24, 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)
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 (323,388) (58,375)
Cancel Joystar shares (13,880,599)
Issue Advanced Refrigeration
Technologies, Inc. shares 13,880,599 (16,881) 16,881
Advanced Refrigeration shares
outstanding at June 11, 2003 3,322,840
Net loss (322,223) (322,223)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2003
(un-audited) 17,203,439 $ -- $ 265,013 $ (645,611) $ (380,598)
============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements
14
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
AND CUMULATIVE FROM INCEPTION MAY 24, 2001 TO JUNE 30, 2003
(UN-AUDITED)
-----------------------------------------------------------------------------------------------------
CUMULATIVE
AMOUNTS FROM
INCEPTION
FOR THE SIX FOR THE SIX (MAY 24, 2001)
MONTHS ENDED MONTHS ENDED THROUGH
JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003
------------- ------------- -------------
Cash flows from operating activities:
Net loss $ (322,223) $ (115,995) $ (645,611)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization and depreciation 332 -- 332
Stock issued for services -- -- 16,715
Directors fees Changes in assets and liabilities:
Increase in prepaid expenses (3,000) -- (3,000)
Increase in accounts payable 76,493 -- 86,211
Increase in salaries 99,614 32,000 181,425
Increase in rent accrual 6,000 24,000 60,000
------------- ------------- -------------
Net cash used in operations (142,784) (59,995) (303,928)
------------- ------------- -------------
Cash flows used by investing activities:
Acquisition of fixed assets (5,966) -- (8,372)
------------- ------------- -------------
Net cash used by investing activities (5,966) -- (8,372)
------------- ------------- -------------
Cash flows from financing activities:
Issuance of common stock 142,300 30,000 248,298
Advances from shareholders (44,888) 27,274 17,689
Subscribed stock not issued 4,500 -- 4,500
Notes payable to others 79,450 -- 79,450
Bank overdraft -- 2,721 --
------------- ------------- -------------
Net cash from financing activities 181,362 59,995 349,937
------------- ------------- -------------
Net increase (decrease) in cash 32,612 -- 37,637
Cash, beginning of period 5,025 -- --
------------- ------------- -------------
Cash, end of period $ 37,637 $ -- $ 37,637
============= ============= =============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for services $ -- $ -- $ 16,715
============= ============= =============
The accompanying notes are an integral part of these financial statements
15
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
AND CUMULATIVE FROM INCEPTION MAY 24, 2001 TO JUNE 30, 2003
(UN-AUDITED)
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1. BASIS OF PRESENTATION
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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 13,880,598 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.
2. INTERIM FINANCIAL INFORMATION
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The financial statements of Advanced Refrigeration Technologies, Inc. (the
Company) as of June 30, 2003 and for the six months ended June 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
six months and three months ended June 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 (put in date) .
3. NON REVIEW BY AUDITORS
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The auditors have not had an opportunity to review the six months ended June 30,
2003 financials statements as the Company was not able to prepare them in
sufficient time for their review. The Company will file an amendment to this
report after such auditors' review.
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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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PROPERTY AND EQUIPMENT
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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. No property and equipment has been depreciated.
USE OF ESTIMATES
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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
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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.
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NET LOSS PER SHARE
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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
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Financial instruments consist principally of cash and various current
liabilities. The estimated fair value of these instruments approximates
their carrying value.
5. GOING CONCERN
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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.
6. CAPITAL STOCK
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COMMON STOCK
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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
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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.
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STOCK CANCELED
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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
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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
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Common stock at par value $0.001 $ 16,786
Additional paid in capital 105,927
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$ 122,713
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7. RELATED PARTY TRANSACTIONS
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Advances from shareholder of $17,689 at June 30, 2003 are non-interest
bearing, currently payable and not evidenced by any notes.
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SIGNATURES
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, hereunto duly authorized.
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
Dated: June 25, 2003 By: /s/ William M. Alverson
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William M. Alverson,
President, Chief Financial Officer
And Secretary
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