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 MARCH 31, 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
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 March 31, 2000:
2,034,350 shares.
Transitional Small Business Disclosure Format (check one): Yes ____No __X__
<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 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
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF MARCH 31, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
March 31, December 31,
2000 1999
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 3,608 $ 3,737
Accounts receivable 8,037 2,455
Inventory 8,203 5,589
------------ ------------
Total current assets $ 19,848 $ 11,781
Equipment & furniture 24,812 24,812
Depreciation 3,868 3,468
------------ ------------
20,944 21,344
Total assets $ 40,792 $33,125
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 21,926 $15,777
Accruals 1,638 3,926
Loans from shareholders 58,393 31,176
------------ ------------
Total current liabilities $ 81,957 $ 50,879
Shareholders' equity
Common stock (no par value) 20,000,000
shares authorized; March 31, 2000-2,034,350
issued; December 31, 1999-2,034,350 issued $ 155,424 $ 155,424
Deficit accumulated during development stage (196,589) (173,178)
------------ ------------
Total shareholders' equity $ (41,165) $ (17,754)
Total liabilities and shareholders'
equity
$ 40,792 $ 33,125
============ ============
3
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND MARCH 31, 1999
(UNAUDITED)
Three months Three months
ended March 31, ended March 31,
2000 1999
--------------- --------------
Sales $ 10,490 $ 775
Cost of sales 9,803 500
--------------- --------------
Gross profit $ 687 $ 275
Expenses
Payroll $ 8,698 $ 11,931
Research 50 258
Marketing 450 101
Travel 1,406 1,474
Depreciation 400 -
Office 1,449 1,487
Postage 277 28
Utilities 61 55
Telephone 968 740
Rent 2,175 2,485
Professional fees 7,200 1,560
Taxes 10 -
Public offering expense 390 1,673
--------------- --------------
Total expenses $ 23,534 $ 21,792
Loss from operations before interest
and income taxes (22,847) (21,517)
Interest expense 564 411
--------------- --------------
Net loss before income taxes $ (23,411) $ (21,928)
State income tax - -
--------------- --------------
Net (loss) $ (23,411) $ (21,928)
=============== ==============
4
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND MARCH 31, 1999
(UNAUDITED)
Three months Three months
ended March 31, ended March 31,
2000 1999
--------------- --------------
Funds provided from (used for) operations
Net (loss) during development stage $ (23,411) $ (21,928)
Depreciation 400 -
Funds provided by (used for) working capital
Inventory (2,614) 500
Accounts receivable (5,581) (402)
Accounts payable 6,149 662
Accruals (2,288) 1,577
Loans 27,216 9,600
Funds provided from (used for) financing
activities
Decrease in long term debt - (55,000)
Proceeds from sale of stock - 66,000
--------------- --------------
Net funds provided from (used for) all
activities $ (129) $ 1,009
Cash balance at beginning of period 3,737 360
--------------- --------------
Cash balance at end of period $ 3,608 $ 1,369
=============== ==============
5
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Common stock
-------------------------------------------------
Number of
shares Amount Deficiency
--------------- --------------- ---------------
<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 363,500 66,000
(Loss) for the three months (21,928)
--------------- --------------- ---------------
Balance at March 31, 1999 2,010,600 $ 127,623 $ (129,563)
=============== =============== ===============
Common stock
-------------------------------------------------
Number of
shares Amount Deficiency
--------------- --------------- ---------------
Balance at December 31, 1999 2,034,350 $ 155,424 $ (173,178)
(Loss) for the three months (23,411)
--------------- --------------- ---------------
Balance at March 31, 2000 2,034,350 $ 155,424 $ (196,589)
=============== =============== ===============
</TABLE>
6
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND MARCH 31, 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.
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.
March 31, December 31,
2000 1999
------------ ------------
Finished goods $ 712 $ 1,470
Parts 7,491 4,119
------------ ------------
Total $ 8,203 $ 5,589
============ ============
EQUIPMENT AND FURNITURE
Equipment and furniture consist of testing equipment and office equipment and
furniture.
March 31, December 31,
2000 1999
------------ ------------
Testing equipment $ 14,116 $ 14,846
Office furnishings 10,696 10,696
------------ ------------
Total $ 24,812 $ 25,542
============ ============
7
<PAGE>
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.
8
<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 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 this quarter, 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 this quarter, 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 third quarter of the year 2000.
The comparison of the first quarter of 2000 with the first quarter 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
<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
10
<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: May 11, 2000 By: /s/Charles E. McEwan
----------------------------------------
Charles E. McEwan, President
Dated: May 11, 2000 By: /s/Clare C. Schrum
----------------------------------------
Clare C. Schrum, Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,608
<SECURITIES> 0
<RECEIVABLES> 8,037
<ALLOWANCES> 0
<INVENTORY> 8,203
<CURRENT-ASSETS> 19,848
<PP&E> 24,812
<DEPRECIATION> 3,868
<TOTAL-ASSETS> 40,792
<CURRENT-LIABILITIES> 81,957
<BONDS> 0
0
0
<COMMON> 155,424
<OTHER-SE> (196,589)
<TOTAL-LIABILITY-AND-EQUITY> 40,792
<SALES> 10,490
<TOTAL-REVENUES> 10,490
<CGS> 9,803
<TOTAL-COSTS> 33,337
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 564
<INCOME-PRETAX> (23,411)
<INCOME-TAX> 0
<INCOME-CONTINUING> (23,411)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,411)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
