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, 2004
( ) 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
JOYSTAR, 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)
Advanced Refrigeration Technologies, Inc.
--------------------------------------------------------------------------------
Former name
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 June 30, 2004:
21,597,744 shares.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(a) Balance Sheets 3
(b) Statements of Operations 4
(c) Statement of Shareholders' Equity (deficit) 5
(d) 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 9
Item 3. Controls and Procedures 10
PART II. OTHER INFORMATION 11
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 AND CERTIFICATES 12
2
JOYSTAR, INC.
(FORMERLY ADVANCED REFRIGERATION TECHNOLOGIES, INC.)
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 2003 AND JUNE 30, 2004
----------------------------------------------------------------------------------------------
ASSETS
JUNE 30,
DECEMBER 31, 2004
2003 (UNAUDITED)
------------ ------------
Current assets:
Cash $ 136,319 $ 132,074
Other receivables 2,000 1,000
Prepaid expenses 8,042 7,852
------------ ------------
Total current assets 146,361 140,926
------------ ------------
Property and equipment, net 22,690 34,646
------------ ------------
Total assets $ 169,051 $ 175,572
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 132,198 115,007
Accrued salaries and payroll taxes 198,474 278,111
Accrued rent 35,000 35,466
Loans from shareholder 83,795 --
------------ ------------
Total current liabilities 449,467 428,584
------------ ------------
Stockholders' equity (deficit):
Preferred stock (no par value) 10,000,000 shares authorized;
none issued -- --
Common Stock, no par value, 50,000,000 shares authorized;
21,051,277 and 21,597,744 shares issued and outstanding at
December 31, 2003 and June 30, 2004, respectively 1,895,241 2,692,493
Stock issued for deferred compensation (894,250) (757,750)
Stock subscribed not issued, 118,667 and 664,000 shares
at December 31, 2003 and June 30, 2004,
respectively 176,800 854,800
Deficit accumulated during development stage (1,458,207) (3,042,555)
------------ ------------
Total stockholders' (deficit) (280,416) (253,012)
------------ ------------
Total liabilities and stockholders' equity $ 169,051 $ 175,572
============ ============
The accompanying notes are an integral part of these financial statements
3
JOYSTAR, INC.
(FORMERLY ADVANCED REFRIGERATION TECHNOLOGIES, INC.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2004 AND 2003
AND FOR THE PERIOD FROM INCEPTION (MAY 23, 2001) TO JUNE 30, 2004
(UN-AUDITED)
--------------------------------------------------------------------------------------------------------------------------
Cumulative
amounts from
For the six For the six For the three For the three inception
months ended months ended months ended months ended (May 23, 2001)
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003 June 30, 2004
------------- ------------- ------------- ------------- -------------
Income:
Travel commissions $ 41,059 $ 20,933 $ 9,815 $ (346) $ 90,492
------------- ------------- ------------- ------------- -------------
Operating expenses:
General and administrative 613,283 212,454 250,148 114,351 1,476,051
Marketing and sales 1,009,564 39,060 668,614 12,456 1,532,850
------------- ------------- ------------- ------------- -------------
Total operating expenses 1,622,847 251,514 918,762 126,807 3,008,901
------------- ------------- ------------- ------------- -------------
Loss from operations before
interest and taxes (1,581,788) (230,581) (908,947) (127,153) (2,918,409)
Interest expense -- -- -- -- 5,644
Provision for taxes - State 2,560 -- 2,560 -- 2,560
------------- ------------- ------------- ------------- -------------
Net loss $ (1,584,348) $ (230,581) $ (911,507) $ (127,153) $ (2,926,613)
============= ============= ============= ============= =============
Loss per share $ (0.07) $ (0.02) $ (0.04) $ (0.01)
============= ============= ============= =============
Weighted average number of common
shares outstanding 21,239,656 14,170,584 21,395,965 13,846,347
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements
4
JOYSTAR, INC.
(FORMERLY ADVANCED REFRIGERATION TECHNOLOGIES, INC.)
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (MAY 23, 2001) TO JUNE 30, 2004
Deficit
COMMON STOCK Stock issued Stock Accumulated Total
--------------------------- for Subscribed During the Stockholders'
Number of Deferred not Development Equity
Shares Amount Compensation Issued Stage (Deficit)
------------ ------------ ------------ ------------ ------------ ------------
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 70,667 105,998 -- -- -- 105,998
Net loss -- -- -- -- (306,673) (306,673)
------------ ------------ ------------ ------------ ------------ ------------
Balance at December 31, 2002 16,785,667 122,713 -- -- (323,388) (200,675)
Shares canceled by majority
shareholder (3,000,000) -- -- -- -- --
Stock issued various dates
for cash at $1.50 per share 94,932 142,300 -- -- -- 142,300
------------ ------------ ------------ ------------ ------------ ------------
Balance June 11, 2003 date of
acquisition of Joystar, Inc. shares
in a reverse merger 13,880,599 265,013 -- -- (323,388) (58,375)
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 -- -- -- (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
Stock issued for past and future
compensation 2,400,000 1,008,000 -- -- -- 1,008,000
Future compensation deferred until earned -- -- (894,250) -- -- (894,250)
Stock issued various dates for cash
at between $0.50 and $1.50 per share 394,267 531,500 -- -- -- 531,500
Stock issued for services 28,571 51,428 -- -- -- 51,428
Stock subscribed not issued 118,667 shares -- -- -- 176,800 -- 176,800
Net loss -- -- -- -- (1,018,877) (1,018,877)
------------ ------------ ------------ ------------ ------------ ------------
Balance at December 31, 2003 21,051,277 1,895,241 (894,250) 176,800 (1,458,207) (280,416)
Stock issued for services 349,800 521,772 -- -- -- 521,772
Stock issued for cash 196,667 275,480 -- -- -- 275,480
Deferred compensation earned -- -- 136,500 -- -- 136,500
Stock subscribed not issued 545,333 shares -- -- -- 678,000 -- 678,000
Net loss -- -- -- -- (1,584,348) (1,584,348)
------------ ------------ ------------ ------------ ------------ -----------
Balance June 30, 2004 (Unaudited) 21,597,744 $ 2,692,493 $ (757,750) $ 854,800 $(3,042,555) $ (253,012)
============ ============ ============ ============ ============ ===========
The accompanying notes are an integral part of these financial statements
5
JOYSTAR, INC.
(FORMERLY ADVANCED REFRIGERATION TECHNOLOGIES, INC.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
AND CUMULATIVE FROM INCEPTION (MAY 23, 2001) TO JUNE 30, 2004
(UN-AUDITED)
-----------------------------------------------------------------------------------------------------
CUMULATIVE
AMOUNTS FROM
INCEPTION
FOR THE SIX FOR THE SIX (MAY 23, 2001)
MONTHS ENDED MONTHS ENDED THROUGH
JUNE 30, JUNE 30, JUNE 30,
2004 2003 2004
------------ ------------ ------------
Cash flows from operating activities:
Net loss $(1,584,348) $ (230,581) $(2,926,613)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 3,638 332 6,246
Stock issued\subscribed for services 893,272 24,300 1,114,465
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses 190 (3,000) (7,852)
(Increase) decrease in other receivables 1,000 -- (1,000)
(Decrease) increase in accounts payable (17,191) 76,493 115,007
Increase in accrued salaries and payroll taxes 79,637 99,614 278,111
Increase in rent accrual 466 6,000 35,466
------------ ------------ ------------
Net cash used in operations (623,336) (26,842) (1,386,170)
------------ ------------ ------------
Cash flows used by investing activities:
Acquisition of fixed assets (15,594) (5,966) (40,892)
------------ ------------ ------------
Net cash used by investing activities (15,594) (5,966) (40,892)
------------ ------------ ------------
Cash flows from financing activities:
Issuance of common stock 275,480 142,300 1,055,278
Reduction of shareholders loan, subscribed
60,000 shares of common stock (83,295) -- --
(Decrease) Increase in shareholder loans (500) 34,562 --
Subscribed stock not issued 443,000 4,500 619,800
Payment of debt assumed in reverse acquisition -- (115,942) (115,942)
------------ ------------ ------------
Net cash from financing activities 634,685 65,420 1,559,136
------------ ------------ ------------
Net (decrease) increase in cash (4,245) 32,612 132,074
Cash, beginning of period 136,319 5,025 --
------------ ------------ ------------
Cash, end of period $ 132,074 $ 37,637 $ 132,074
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock for services $ 893,272 $ 24,300 $ 1,114,465
Issuance of common stock for future services -- -- 757,750
Issuance of common stock for accounts payable -- 15,000 --
Issuance of common stock for loan payable $ 83,295 $ -- $ --
============ ============ ============
The accompanying notes are an integral part of these financial statements
6
JOYSTAR, INC.
(FORMERLY ADVANCED REFRIGERATION TECHNOLOGIES, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE, 2004 AND 2003
AND CUMULATIVE FROM INCEPTION (MAY 23, 2001) TO JUNE 30, 2004
(UN-AUDITED)
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
---------------------
On June 11, 2003, Joystar, Inc. (formerly 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 to
the Agreement and Plan of Reorganization dated as of 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.
As of June 4, 2004 Joystar, Inc., a Nevada corporation and wholly owned
subsidiary of the Company), was officially merged with and into Joystar, Inc., a
California corporation (formerly Advanced Refrigeration Technologies, Inc.). In
connection with the merger the Company provided for the name change from
Advanced Refrigeration Technologies, Inc. to Joystar, Inc. The merger and the
name change was approved by the Company's Board of Directors. The Company no
longer files consolidated financial statements. This merger had on effect on
income for this or any prior period reported.
The Company has been in the development stage since its inception May 23, 2001.
2. ADDITIONAL FOOTNOTES INCLUDED BY REFERENCE
------------------------------------------
Except as indicated in the following notes, there have been no other material
changes in the information disclosed in the notes to the financial statements
included in the Company's Form 10-KSB for the year ended December 31, 2003.
Therefore, those footnotes are included herein by reference.
3. INTERIM FINANCIAL INFORMATION
-----------------------------
The financial statements of the Company as of June 30, 2004 and for the six
months ended June 30, 2004 and 2003 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 ended June 30, 2004 and
2003 are not necessarily indicative of the results that may be expected for any
future period. The balance sheet at December 31, 2003 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, 2003
COMMON STOCK TRANSACTIONS
-------------------------
During the six months ended June 30, 2004, the Company issued 196,667 shares of
common stock in a private placement for a total sales price of $275,480 an
average sales price of $1.40 per share. The Company has received subscriptions
to purchase 545,333 shares of common stock at an average purchase price of
$1.24.
During the six months ended June 30, 2004 the Company issued 349,800 shares of
common stock for services valued at the fair market value price of the Company's
stock on the dates issued $521,772 and average of $1.49 a share.
Loans payable to shareholder at December 31, 2003, $83,295 were converted to
60,000 shares of common stock during the six months ended June 30, 2004.
7
JOYSTAR, INC.
(FORMERLY ADVANCED REFRIGERATION TECHNOLOGIES, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE, 2004 AND 2003
AND CUMULATIVE FROM INCEPTION (MAY 23, 2001) TO JUNE 30, 2004
(UN-AUDITED)
--------------------------------------------------------------------------------
LEGAL PROCEEDINGS
-----------------
In March, 2004 a former employee of the Company who was terminated prior to the
acquisition of Joystar, filed a lawsuit for breach of contract and specific
performance relating to the exercise of options, among other causes of action.
The Company considers the basis of the lawsuit without merit and intends to
vigorously defend itself.
SUBSEQUENT EVENT
----------------
In July 2004 the Company issued 500,000 shares of stock at $1.00.
In June 2004 the Company entered into an agreement with a marketing and
advertising agency for the issuance of 1,000,000 shares of common stock for
services as provided. The Company issued 250,000 shares, valued at $235,000, in
July 2004 for services provided under the contract from April 2004 through June
2004.
8
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
Joystar, Inc., a California corporation, formerly Advanced
Refrigeration Technologies, Inc. (the "Company") was incorporated in the State
of California on February 5, 1998. On 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 voting stock to the Joystar
shareholders pursuant the Agreement an Plan of Reorganization dated as of June
10, 2003. Joystar was incorporporated on May 23, 2001. 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 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 developing technology and infrastructure
licensing and product development and acquisitions.
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 June 30, 2003.
As of June 4, 2004 Joystar, Inc., a Nevada corporation was officially
merged with and into Joystar, Inc., a California corporation, (formerly Advanced
Refrigeration Technologies, Inc.).
The following discussion should be read in conjunction with selected
financial data and the financial statements and notes to financial statements.
9
RESULTS OF OPERATIONS
---------------------
The Company had revenues of $41,059 for the six months ended June 30,
2004, as compared to $20,933 for the six months ended June 30, 2003. To date
income has been generated only by commissions on travel sales. Sales from
inception total $90,492 and the Company is accounted for as a Development stage
company.
The Company's primary focus to date has been the development of its
technology, infrastructure, product development, services and travel agent
hosting solutions. The Company had sales of $41,059 for the six months ended
June 30, 2004 as compared to $20,933 for the six months ended June 30, 2003.
General and administrative expenses for the six months ended June 30,
2004 were $613,283 as compared to $212,545 for the six months ended June 30,
2003, an increase of $400,738 due primarily to the increases in salaries of
$200,000, professional fees of $56,000, rent $24,000, travel and entertainment
of $18,000 and a general increase in other expenses due to increased activity
and product development.
Marketing, advertising and product expenses for the six months ended
June 30, 2004 were $1,009,564 as compared to $39,060 for the six months ended
June 30, 2003, an increase of $970,504. $371,000 and $585,000 was due to the
development of a substantial amount of marketing material, including websites,
creatives, online and print advertising, the production of a direct marketing 30
minute television commercial, 30 and 60 second television spots, and 6 and 12
minute video and DVD marketing collateral.
LIQUIDITY AND SOURCES OF CAPITAL
---------------------------------
On July 26, 2004 the Company announced that it entered into an
agreement with an accredited investor to purchase 500,000 shares of restricted
common stock at $1.00 as of the date of this filing, all $500,000 has been
received and shares have been issued.
At June 30, 2004 the Company had a cash balance of $132,074 as compared
to a cash balance of $136,319 at December 31, 2003. Loans payable to shareholder
at December 31, 2003, $83,295 were converted to 60,000 shares of common stock
during the six months ended June 30, 2004. The Company had negative working
capital at June 30, 2004. To date the Company has financed operations by
issuance of shares of common stock in private placements $1,055,278, stock
subscribed for cash of $619,800 and the issuance of shares for services
$1,114,465. During the six months ended June 30, 2004, the Company issued
196,667 shares of common stock in a private placement for a total purchase price
of $275,480 an average purchase price of $1.40 per share. The Company has
received subscriptions to purchase 545,333 shares of common stock at an average
purchase price of $1.24. During the six months ended June 30, 2004 the Company
issued 349,800 shares of common stock for services valued at the fair market
value price of the Company's stock on the dates issued $521,772 and average of
$1.49 a share.
ITEM 3. Controls and Procedures
Our President and Treasurer/Chief Financial Officer (the "Certifying
Officer") is responsible for establishing and maintaining disclosure controls
and procedures and internal controls and procedures for financial reporting for
the Company. The Certifying Officer has designed such disclosure controls and
procedures and internal controls and procedures for financial reporting to
ensure that material information is made known to him, particularly during the
period in which this report was prepared. The Certifying Officer has evaluated
the effectiveness of the Company's disclosure controls and procedures and
internal controls and procedures for financial reporting as of June 30, 2004 and
believes that the Company's disclosure controls and procedures and internal
controls and procedures for financial reporting are effective based on the
required evaluation. There have been no significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
10
PART II. OTHER INFORMATION
Item 1. Legal proceedings
In March, 2004 a former employee of the Company who was terminated
prior to the acquisition of Joystar, filed a lawsuit for breach of contract and
specific performance relating to the exercise of options, among other causes of
action. The Company considers the basis of the lawsuit without merit and intends
to vigorously defend itself.
Item 2. Changes in securities and use of proceeds
During the six months ended June 30, 2004, the Company issued 196,667
shares of common stock in a private placement for a total purchase price of
$275,480 an average purchase price of $1.40 per share. The Company has received
subscriptions to purchase 545,333 shares of common stock at an average purchase
price of $1.24. 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. The proceeds
were used for working capital.
During the six months ended June 30, 2004 the Company issued 349,800
shares of common stock for services valued at the fair market value price of the
Company's stock on the dates issued $521,772 and average of $1.49 a share.
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
--------
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: 8-K filed July, 2004 for (5- Other Events)
taking place June 15, 2004
11
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.
JOYSTAR, INC.
Date: August 17, 2004
By /s/ William Alverson
---------------------------
President
12