UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10 QSB
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended SEPTEMBER 30, 1999
( ) 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
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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)
3197 Boeing Road, Cameron Park, Ca. 95682 Telephone 530 677 3233
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices, including Registrant's zip code
and telephone number)
NONE
- --------------------------------------------------------------
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, 1999:
2,034,350 shares.
Transitional Small Business Disclosure Format (check one): Yes No X
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<PAGE>
TABLE OF CONTENTS PAGE
----------------- ----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(a) Balance Sheet 3
(b) Statement of Operations 4
(c) Statement of Changes in Financial Position 5
(d) Statement of Shareholders' Equity 6
(e) Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8
Item 3. Risks
PART II. OTHER INFORMATION 9
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults On Senior Securities
Item 4. Submission of Items to a Vote
Item 5. Other Information
Item 6
(a) Exhibits
(b) Reports on Form 8K
SIGNATURES 10
FINANCIAL DATA SCHEDULE 11
2
<PAGE>
<TABLE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(a development stage company)
BALANCE SHEET
AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(unaudited)
<CAPTION>
September 30, December 31,
1999 1998
---------------- ----------------
ASSETS
<S> <C> <C>
Current assets
Cash $ 329 $ 360
Inventory 2,177 3,584
Accounts receivable 833 -
---------------- ----------------
Total current assets $ 3,339 $ 3,944
Equipment & furniture 25,542 25,542
---------------- ----------------
Total assets $ 28,881 $ 29,486
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 12,951 $ 17,166
Accruals 2,543 772
Loans from shareholders 17,620 2,560
---------------- ----------------
Total current liabilities $ 33,114 $ 20,498
Note payable-non current - 55,000
Shareholders' equity
Common stock (no par value) 20,000,000 shares authorized;
September 30, 1999-2,034,350 issued; December 31, 1998-
1,497,200 issued $ 155,423 $ 61,623
Deficit accumulated during development stage (159,656) (107,635)
---------------- ----------------
Total shareholders' equity $ (4,233) $ (46,012)
Total liabilities and shareholders' equity $ 28,881 $ 29,486
================ ================
</TABLE>
3
<PAGE>
<TABLE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999
AND THE THREE MONTHS ENDED SEPTEMBER 30, 1998
AND FOR THE PERIOD FROM INCEPTION MARCH 5 TO SEPTEMBER 30, 1998
(unaudited)
<CAPTION>
From inception
Three months ended Three months ended Nine months ended March 5 to
September 30, 1999 September 30, 1998 September 30, 1999 September 30, 1998
-------------------- -------------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Sales $ 7,529 $ 1,151 $ 8,304 $ 1,151
Cost of Sales 2,293 411 2,388 411
-------------------- -------------------- ------------------- --------------------
Gross profit $ 5,236 $ 740 $ 5,916 $ 740
Expenses
Payroll $ 7,097 $ 8,358 $ 27,424 $ 18,469
Patent - 890 470 890
Research 335 (1,346) 873 17
Marketing 970 1,732 1,338 3,309
Travel 970 5,519 3,670 8,140
Office 947 2,346 3,474 2,998
Postage 11 (541) 243 726
Utilities 242 164 404 1,038
Telephone 521 1,039 2,320 1,962
Rent 2,488 1,140 7,572 3,500
Professional fees 2,100 2,365 3,661 8,555
Taxes 718 22 1,528 22
Grant - - - (5,279)
Public offering expense 887 549 3,310 2,243
-------------------- -------------------- ------------------- --------------------
Total expenses $ 17,286 $ 22,237 $ 56,287 $ 46,590
Loss from operations (12,050) (21,497) (50,371) (45,850)
Interest expense 771 1,229 1,650 1,232
-------------------- -------------------- ------------------- --------------------
Net loss $ (12,821) $ (22,726) $ (52,021) $ (47,082)
==================== ==================== =================== ====================
</TABLE>
4
<PAGE>
<TABLE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(a development stage company)
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
AND THE PERIOD FROM INCEPTION MARCH 5 TO SEPTEMBER 30, 1998
(unaudited)
<CAPTION>
From inception
Nine months ended March 5 to
September 30, 1999 September 30, 1998
--------------------- --------------------
<S> <C> <C>
Funds provided from (used for) operations
Net (loss) during development stage $ (52,021) $ (47,082)
Funds provided by (used for) working capital
Inventory 1,407 (1,684)
Accounts receivable (833) (1,190)
Accounts payable (4,215) 6,930
Accruals 1,771 (34)
Loans 15,060 2,100
Funds provided by (used for) equipment purchase - (2,653)
Funds provided from (used for) financing activities
Decrease in long term debt (55,000) (16,173)
Proceeds from sale of stock 93,800 55,123
--------------------- --------------------
Net funds provided from (used for) all activities $ (31) $ (4,663)
Cash balance at beginning of year 360 4,851
--------------------- --------------------
Cash balance at end of period $ 329 $ 187
===================== ====================
</TABLE>
5
<PAGE>
<TABLE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(a development stage company)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(unaudited)
<CAPTION>
Common stock
-------------------------------------------
Number
of shares Amount Deficiency
-------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1998 1,497,200 $ 61,623 $ (107,635)
Common stock issued 537,150 93,800
Net (loss) during development stage (52,021)
-------------- -------------- -------------
Balance September 30, 1999 2,034,350 $ 155,423 $ (159,656)
============== ============== =============
</TABLE>
6
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(unaudited)
1. GENERAL
The financial statements have been prepared by management without audit and
should be read in conjunction with the financial statements and notes
thereto for the year 1998. The Company is still in the development stage
and the results of interim periods are not indicative of the results for
the year. The accompanying financial statements reflect, in the opinion of
management, all adjustments necessary for the fair presentation of the
interim financial statements. In the opinion of management, all such
adjustments are of a normal and recurring nature.
The Company has been in the development stage since it acquired the deficit
accumulated by Nevada Energy Control Systems, Inc., in developing an
evaporator fan control system. The Company's activities have consisted of
obtaining financing and capital and initiating marketing of the product.
The company filed a public offering as of June 5, 1998. Since that date the
Company has sold stock in compliance with an exemption from registration
under the Federal securities laws. Due to changes in requirements to be
listed on the over the counter Bulletin Board by the National Association
of Security Dealers, the Company filed Form 10-SB with the Securities and
Exchange Commission May 5, 1999 and became a reporting company under
Section 12(g) of the Securities and Exchange Act of 1934 as of July 6,
1999, in order to qualify for listing.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORY
Inventory consists of finished evaporator fan controllers and parts for
assembling additional units at historical cost. The Company has yet to
determine the method of valuation of its inventories. Whatever method is
elected would have no effect on the financial statements.
INCOME TAXES
The Company has a loss tax carry-forward resulting from the acquisition of
Nevada Energy Control Systems, Inc. of approximately $42,000 and $64,800
from the year ended December 31, 1998. The Company has not recognized any
tax benefit of such carry-forwards in the financial statements.
GRANT
The U. S. Department of Energy made a grant of $98,279 to the Company, of
which the final $5,279 was included as a reduction of expenses in the
statement of operations in 1998. The $98,279 expended for research and
development is in addition to the funds expended by the Company, none of
which has been deferred.
3. OTHER MATTERS
NOTE PAYABLE - LONG TERM
During the period a note payable in the amount of $55,000 was converted to
stock.
7
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
THIS ANALYSIS CONTAINS FORWARD-LOOKING COMMENTS WHICH ARE BASED ON CURRENT
INFORMATION. ACTUAL RESULTS IN THE FUTURE MAY DIFFER MATERIALLY.
The Company is engaged in the business of designing, manufacturing and marketing
energy efficiency and conservation products. The Company's first product, which
is currently in production, is a patented evaporator fan controller for walk-in
refrigerators and freezers, which can save the consumer from 30-40% in
refrigeration energy costs.
The Company filled the first major order for its ART 4000 product during this
quarter. During the second week of August 1999, the Company shipped 25 units to
San Diego City Schools; the units have been accepted and are being installed by
the school district's maintenance staff. The school district estimates that
these units will save the district, over the twenty year life of the product, at
least $120,000. This savings will be generated by installing only 25 ART 4000
controllers.
The Company was also selected to supply ART 4000 units to Jack-In-The-Box fast
food restaurants via a sub-contract from Sempra Energy Services. This order also
includes some ART 5000 units. The ART 5000 unit keeps track of energy
consumption and savings, and gives warnings of possible maintenance problems.
This order only pertains to the Northern California restaurants. These shipments
will be made in November and December.
The Company is also completing the design effort on the ART 6000, and plans to
begin shipments of it in the first quarter of the year 2000.
The comparison of the third quarter of 1999 with the third quarter of 1998
indicates that the Company is spending at about the same level. The comparison
of the first nine months of 1999 with the period from inception to September 30,
1998 is not very meaningful. The Company continues to develop the ART Evaporator
Fan Controllers.
Year 2000 Compliance: With respect to Year 2000 compliance, the Company
manufactures a product which contains microprocessors. The source code for the
microprocessors has been written so that it is not dependent on dates, but,
instead, functions on a 24-hour internal timing routine. To this extent, all
products currently being manufactured by the Company are Year 2000 compliant.
The Company has performed an audit of all of its computer hardware, internal
accounting and software applications and found all to be Year 2000 compliant or
capable. As of this date, the Company has been given assurances from its banking
institution and transfer agent that they are working toward compliance or are in
compliance. Although no assurances can be offered with respect to third party
compliance, the Company believes there should be no significant effect on the
Company's business, financial condition or results of operation from the Year
2000 situation.
Item 3. Risks
The Company will continue in its efforts to raise capital so that the ART
Evaporator Fan Controllers can be sold and delivered. There can be no assurance
that the Company will be able to obtain capital.
8
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings NONE
Item 2. Changes in securities and use of proceeds NONE
Item 3. Defaults on senior securities NONE
Item 4. Submission of items to a vote NONE
Item 5. Other information NONE
Item 6.
a) Exhibits NONE
b) Reports on 8K NONE
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Advanced Refrigeration Technologies, Inc.
Dated: November 8, 1999 By: /s/Charles E. McEwan
---------------------------
Charles E. McEwan, President
Dated: November 8, 1999 By: /s/Clare C. Schrum
---------------------------
Clare C. Schrum, Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 329
<SECURITIES> 0
<RECEIVABLES> 833
<ALLOWANCES> 0
<INVENTORY> 2177
<CURRENT-ASSETS> 3339
<PP&E> 25542
<DEPRECIATION> 0
<TOTAL-ASSETS> 28881
<CURRENT-LIABILITIES> 33114
<BONDS> 0
0
0
<COMMON> 155423
<OTHER-SE> (159,656)
<TOTAL-LIABILITY-AND-EQUITY> 28881
<SALES> 8304
<TOTAL-REVENUES> 8304
<CGS> 2388
<TOTAL-COSTS> 58675
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1650
<INCOME-PRETAX> (52021)
<INCOME-TAX> 0
<INCOME-CONTINUING> (52021)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52021)
<EPS-BASIC> (.025)
<EPS-DILUTED> (.025)
</TABLE>
