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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 JUNE 30, 2000
( ) 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.
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(Exact name of registrant as specified in its charter)
California 68-0406331
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3197 Boeing Road, Cameron Park, Ca. 95682 Telephone 530 677 3233
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(Address of Principal Executive Offices, including Registrant's zip code and
telephone number)
NONE
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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
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The number of shares of the registrant's common stock as of June 30, 2000:
2,034,350 shares.
Transitional Small Business Disclosure Format (check one): Yes No X
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TABLE OF CONTENTS PAGE
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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 9
Item 3. Risks
PART II. OTHER INFORMATION 10
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 11
FINANCIAL DATA SCHEDULE 12
2
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ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF JUNE 30, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
June 30, December 31,
2000 1999
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ASSETS
Current assets
Cash and cash equivalents $ 28,089 $ 3,737
Accounts receivable 3,282 2,455
Inventory 16,807 5,589
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Total current assets $ 48,178 $ 11,781
Equipment & furniture 28,326 24,812
Depreciation 4,268 3,468
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24,058 21,344
Total assets $ 72,236 $ 33,125
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 4,525 $ 15,777
Accruals 1,822 3,926
Loans from shareholders 89,970 31,176
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Total current liabilities $ 96,317 $ 50,879
Shareholders' equity
Common stock (no par value) 20,000,000 shares
authorized; June 30, 2000-2,034,350 issued;
December 31, 1999-2,034,350 issued $ 231,324 $ 155,424
Deficit accumulated during development stage (255,405) (173,178)
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Total shareholders' equity $ (24,081) $ (17,754)
Total liabilities and shareholders' equity $ 72,236 $ 33,125
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The accompanying notes are an integral part of these financial statements.
3
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<TABLE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2000
AND JUNE 30, 1999
(UNAUDITED)
<CAPTION>
Three months Three months Six months Six months
ended June ended June ended June ended June
30, 2000 30, 1999 30, 2000 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales $ 6,634 - $ 17,124 $ 775
Cost of sales 4,095 - 13,898 500
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Gross profit $ 2,539 - $ 3,226 $ 275
Expenses
Payroll 8,506 $ 8,396 17204 $ 20,327
Patent - 470 - 470
Research 34,528 280 34,578 538
Marketing 1,211 267 1,662 368
Travel 4,801 1225 6,207 2,699
Depreciation 400 - 800 -
Office 833 681 2,434 2,168
Postage 1,008 204 1,286 232
Insurance 860 - 860 -
Utilities 82 258 143 313
Telephone 1,297 844 2,113 1,584
Rent 2,175 2,903 4,350 5,388
Professional fees 3,395 - 10,595 1,560
Taxes - 10 10 10
Public offering expense 1,078 795 1,466 2,468
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Total expenses $ 60,174 $ 16,333 $ 83,708 $ 38,125
Loss from operations before interest and income (57,635) (16,333) (80,482) (37,850)
taxes
Interest expense 381 468 945 879
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Net loss before income taxes $ (58,016) $ (16.801) $ (81,427) $ (38,729)
State income tax 800 800 800 800
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Net (loss) $ (58,816) $ (17,601) $ (82,227) $ (39,529)
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements.
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ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Six months Six months
ended June ended June
30, 2000 30, 1999
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<S> <C> <C>
Funds provided from (used for) operations
Net (loss) during development stage $ (82,227) $ (39,529)
Depreciation 800 -
Funds provided by (used for) working capital
Inventory (11,218) (94)
Accounts receivable (827) (402)
Accounts payable (11,252) (3,182)
Accruals (2,103) 1,463
Loans 58,794 10,110
Funds provided by (used for) equipment purchases (3,515) -
Funds provided from (used for) financing activities
Decrease in long term debt - (55,000)
Stock issued for services 34,500 -
Proceeds from sale of stock 41,400 91,925
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Net funds provided from (used for) all activities $ 24,352 $ 5,291
Cash balance at year end 3,737 360
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Cash balance at June 30, 2000 $ 28,089 $ 5,651
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The accompanying notes are an integral part of these financial statements.
5
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ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Common stock
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Number of Amount Deficiency
shares
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<S> <C> <C> <C>
Balance at December 31, 1998 1,497,200 $ 61,623 $ (107,635)
Common stock issued after acquisition 149,900
Common stock issued under 504 offering 385,750 91,925
(Loss) for the six months (39,529)
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Balance at June 30, 1999 2,032,850 $ 153,548 $ (147,164)
============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Common stock
-----------------------------------------------
Number of Amount Deficiency
shares
------------- ------------- -------------
<S> <C> <C> <C>
Balance at December 31, 1999 2,034,350 $ 155,424 $ (173,178)
Common stock received in treasury (55,000)
Common stock issued from treasury 55,000 75,900
(Loss) for the six months (82,227)
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Balance at June 30, 2000 2,034,350 $ 231,324 $ (255,405)
============= ============= =============
The accompanying notes are an integral part of these financial statements.
6
</TABLE>
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ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND JUNE 30, 1999
(UNAUDITED)
GENERAL
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 and State Securities laws provided by Regulation D, Rule 504 and Rule
506 of the Securities and Exchange Commission. 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 10SB12G on May 2, 1999 with the
Securities and Exchange Commission in order to qualify for listing and is now
listed on NASDAQ OTC Bulletin Board.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. EQUIPMENT AND FURNITURE
Equipment and furniture are stated at cost less accumulated
depreciation. Depreciation is computed using the straight-line method over the
estimated useful lives of seven years.
The Company recognizes an impairment loss on a fixed asset when the
asset is no longer useful and the carrying amount of the asset cannot be
realized through sale.
B. INVENTORIES
The Company has adopted the first-in, first-out (FIFO) method of
inventory valuation or market, if that is lower.
C. RESEARCH AND DEVELOPMENT
As a development stage company the Company expenses all research and
development costs.
INVENTORIES
Inventory consists of finished evaporator fan control units and parts.
June 30, 2000 December 31,
1999
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Finished goods $ 5,411 $ 1,470
Parts 11,396 4,119
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Total $ 16,807 $ 5,589
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EQUIPMENT AND FURNITURE
Equipment and furniture consist of testing equipment and office equipment and
furniture.
June 30, 2000 December 31,
1999
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Testing equipment $ 14,547 $ 14,116
Office furnishings 13,779 10,696
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Total $ 28,326 $ 24,812
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INCOME TAXES
The Company has a tax loss carry-forward resulting from the acquisition of
Nevada Energy Control Systems, Inc., of approximately $42,000. It has an
additional tax loss carry-forward resulting from losses in 1998 and 1999 of
$130,419.
RELATED PARTY TRANSACTIONS
Three of the founding stockholders have been active in the running of the
day-to-day business of the Company on a full or part-time basis. They have
received no compensation for such work and the Company has reflected no expense
in the statement of operations.
COMMON STOCK
Shares of common stock issued to acquire Nevada Energy Control Systems Research,
to founders and key people and sold under Rule 506 are restricted.
The Company issued 150,000 shares of stock in payment of a debt with an
agreement by the debtor to return half of the shares if the value on the NASDAQ
OTC Bulletin Board reached a certain level. In accordance with the agreement the
debtor returned 55,000 shares to treasury and such shares have been reissued for
services and cash.
8
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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 second and third
products, the ART4000N and the ART5000, are currently in production. They are
patented evaporator fan controllers for walk-in refrigerators and freezers,
which can save the consumer from 30-40% in refrigeration energy costs. In
addition, the ART 5000 unit keeps track of energy consumption and savings, and
gives warnings of possible maintenance problems.
During these six months, the Company's products have qualified for rebate
programs offered to both small and large commercial users of refrigeration by
three of the largest investor-owned utilities in California. These rebate and
incentive programs enable small business owners, in particular, to take
advantage of energy saving equipment, such as the ART Evaporator Fan
Controllers. The Company has begun working with several Manufacturers Sales
Representatives to sell the Company's products on a commission basis, especially
in the geographic areas covered by these utilities.
Also during these six months, the Company was selected to supply over 20 ART
4000N units to two convenience store chains for testing, through a division of
PG&E Energy Services. Training in installation was included in this sale. It is
expected that this preliminary sale will develop into potential sales of up to
25,000 units in the next three years.
The San Diego City School District also purchased several ART5000 units to
accompany their earlier installations of 25 ART4000 units in their school
cafeterias.
The Company is completing the design effort on the ART 6000, which offers the
ability to remotely access its cost savings and alarm information. It is planned
to begin shipments of this model in the fourth quarter of the year 2000.
The comparison of the second quarter and first six months of 2000 with the
second quarter and first six months of 1999 indicates that the Company is
spending at about the same level. Marketing efforts will be stepped up as
finances allow.
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.
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.
9
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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
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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: August 11, 2000 By: /s/Charles E. McEwan
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Charles E. McEwan, President
Dated: August 11, 2000 By: /s/Clare C. Schrum
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Clare C. Schrum, Chief Financial Officer
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