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, 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 September 30, 2004: 22,403,300 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 8 Item 3. Controls and Procedures 9 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 AND CERTIFICATES 11 2 JOYSTAR, INC. (A Development Stage Company) BALANCE SHEETS DECEMBER 31, 2003 AND SEPTEMBER 30, 2004 ---------------------------------------------------------------------------------------------- ASSETS September 30, December 31, 2004 2003 (UNAUDITED) ------------ ------------ Current assets: Cash $ 136,319 $ 107,370 Other receivables 2,000 100 Prepaid expenses 8,042 3,265 ------------ ------------ Total current assets 146,361 110,735 ------------ ------------ Property and equipment, net 22,690 39,785 ------------ ------------ Total assets $ 169,051 $ 150,520 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 132,198 126,110 Accrued salaries and payroll taxes 198,474 293,695 Accrued rent 35,000 35,000 Loans from shareholder 83,795 -- ------------ ------------ Total current liabilities 449,467 454,805 ------------ ------------ 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 22,403,300 shares issued and outstanding at December 31, 2003 and September 30, 2004, respectively 1,895,241 3,458,993 Stock issued for deferred compensation (894,250) (712,000) Stock subscribed not issued, 118,667 and 416,999 shares at December 31, 2003 and September 30, 2004, respectively 176,800 623,800 Deficit accumulated during development stage (1,458,207) (3,675,078) ------------ ------------ Total stockholders' (deficit) (280,416) (304,285) ------------ ------------ Total liabilities and stockholders' equity $ 169,051 $ 150,520 ============ ============ The accompanying notes are an integral part of these financial statements 3 JOYSTAR, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 AND FOR THE PERIOD FROM INCEPTION (MAY 23, 2001) TO SEPTEMBER 30, 2004 (UN-AUDITED) ------------------------------------------------------------------------------------------------------------------------ Cumulative amounts from For the For the inception For the nine For the nine three months three months (May 23, months ended months ended ended ended 2001) to September 30, September 30, September September September 2004 2003 30, 2004 30, 2003 30, 2004 ------------- ------------- ------------- ------------- ------------- Income: Travel agent programs and commissions $ 53,610 $ 31,137 $ 43,795 $ 10,204 $ 103,043 ------------- ------------- ------------- ------------- ------------- Operating expenses: General and administrative 1,046,394 444,576 796,246 232,122 1,909,162 Marketing and sales 1,221,502 155,473 552,888 116,413 1,744,788 ------------- ------------- ------------- ------------- ------------- Total operating expenses 2,267,896 600,049 1,349,134 348,535 3,653,950 ------------- ------------- ------------- ------------- ------------- Loss from operations before interest and taxes (2,214,286) (568,912) (1,305,339) (338,331) (3,550,907) Interest expense -- 4,705 -- 4,705 5,644 Provision for taxes - State 2,585 -- 25 -- 2,585 ------------- ------------- ------------- ------------- ------------- Net loss $ (2,216,871) $ (573,617) $ (1,305,364) $ (343,036) $ (3,559,136) ============= ============= ============= ============= ============= Loss per share $ (0.10) $ (0.04) $ (0.06) $ (0.02) ============= ============= ============= ============= Weighted average number of common shares outstanding 21,531,413 15,561,366 22,108,238 18,228,439 ============= ============= ============= ============= The accompanying notes are an integral part of these financial statements 4 JOYSTAR, INC. (A Development Stage Company) STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) FROM INCEPTION (MAY 23, 2001) TO SEPTEMBER 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 649,800 788,272 -- -- -- 616,772 Stock issued for cash 702,223 775,480 -- -- -- 946,980 Deferred compensation earned -- -- 204,750 -- -- 204,750 Deferred compensation -- -- (22,500) -- -- (22,500) Stock subscribed not issued 416,999 shares -- -- -- 447,000 -- 447,000 Net loss -- -- -- -- (2,216,871) (2,216,871) ------------ ------------ ------------ ------------ ------------ ------------ Balance September 30, 2004 (Unaudited) 22,403,300 $ 3,458,993 $ (712,000) $ 623,800 $(3,675,078) $ (304,285) ============ ============ ============ ============ ============ ============ The accompanying notes are an integral part of these financial statements 5 JOYSTAR, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 AND CUMULATIVE FROM INCEPTION (MAY 23, 2001) TO SEPTEMBER 30, 2004 (UN-AUDITED) ----------------------------------------------------------------------------------------------------- Cumulative amounts from inception For the nine For the nine (May 23, 2001) Months ended months ended through September 30, September 30, September 30, 2004 2003 2004 ------------ ------------ ------------ Cash flows from operating activities: Net loss $(2,216,871) $ (573,617) $(3,559,136) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 5,876 1,068 8,484 Stock issued or subscribed for services 1,089,522 116,806 1,310,715 Changes in assets and liabilities: (Increase) decrease in prepaid expenses 4,777 (3,000) (3,265) (Increase) decrease in other receivables 1,900 (2,382) (100) (Decrease) increase in accounts payable (6,088) 24,000 126,110 Increase in accrued salaries and payroll taxes 95,221 115,717 293,695 Increase in rent accrual -- (19,000) 35,000 ------------ ------------ ------------ Net cash used in operations (1,025,663) (340,408) (1,788,497) ------------ ------------ ------------ Cash flows used by investing activities: Acquisition of fixed assets (22,971) (19,979) (48,269) ------------ ------------ ------------ Net cash used by investing activities (22,971) (19,979) (48,269) ------------ ------------ ------------ Cash flows from financing activities: Issuance of common stock 775,480 142,300 1,555,278 Reduction of shareholders loan, issued 60,000 shares of common stock (83,295) -- (83,295) Net issuance of common stock for cash 692,185 -- 82,295 (Decrease) Increase in shareholder loans (500) 27,020 -- Subscribed stock not issued 328,000 383,400 504,800 Payment of debt assumed in reverse acquisition -- (70,000) (115,942) ------------ ------------ ------------ Net cash from financing activities 1,019,685 482,720 1,944,136 ------------ ------------ ------------ Net (decrease) increase in cash (28,949) 122,333 107,370 Cash, beginning of period 136,319 5,025 -- ------------ ------------ ------------ Cash, end of period $ 107,370 $ 127,358 $ 107,370 ============ ============ ============ SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Issuance or subscription of common stock for services $ 1,089,522 $ 29,300 $ 1,310,715 Issuance of common stock for future services $ 22,500 -- $ 712,000 Issuance of common stock for loan payable $ 83,295 -- -- Interest expense paid -- -- 5,644 Income taxes paid $ 2,585 -- $ 2,585 ============ ============ ============ The accompanying notes are an integral part of these financial statements 6 JOYSTAR, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER, 2004 AND 2003 AND CUMULATIVE FROM INCEPTION (MAY 23, 2001) TO SEPTEMBER 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. INTERIM FINANCIAL INFORMATION ----------------------------- The financial statements of the Company as of September 30, 2004 and for the nine months ended September 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 nine months ended September 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 nine months ended September 30, 2004, the Company issued 702,223 shares of common stock in a private placement for a total sales price of $775,480 an average sales price of $1.10 per share. The Company has received subscriptions to purchase 535,666 shares of common stock at an average purchase price of $1.16. During the nine months ended September 30, 2004 the Company issued 649,800 shares of common stock for services valued at the fair market value price of the Company's stock on the dates issued $788,272 and average of $1.21 a share. Loans payable to shareholder at December 31, 2003, $83,295 were converted to 60,000 shares of common stock during the nine months ended September 30, 2004. On August 27, 2004 the Company granted options to purchase 150,000 share of common stock under the Company's 2003 Equity Compensation Plan at $0.66 per share, 110% of the market price on that date. 7 LEGAL PROCEEDINGS ---------------- In March, 2004 a former employee of the Company who was terminated prior to the acquistion 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 ------------------ As of November 8, 2004, the Company commenced its private placement offering of up to $1,000,000 of units consisting of two shares of common stock and one warrant to purchase a share of common stock at an exercise price of $1.25 per share. Each unit is being sold at $2.00 purchase price. The units are offered by the Company to accredited investors only in reliance on Section 505 of the Regulation D of the Securities Act of 1933. 100,000 units have been subscribed as of November 12, 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 incorporated 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 sales of $53,610 for the nine months ended September 30, 2004 as compared to $31,137 for the nine months ended September 30, 2003. To date income has been generated only by travel agent programs and commissions on travel sales. Sales from inception total $103,043 and the Company is accounted for as a development stage company. The Company is allocating substantial monies and effort to enlist travel agents into its travel network in order to increase income levels to a profitable level. During the quarter ended September 30, 2004 the Company has had more success in signing up agents, generating about $39,000 in revenue from this activity. (See infomercial in marketing and sales expense) General and administrative expenses for the nine months ended September 30, 2004 were $1,046,394 as compared to $444,576 for the nine months ended September 30, 2003, an increase of $601,818 due primarily to the increases in salaries of $399,000, professional fees of $123,000, rent $27,000, travel and entertainment of $41,000 and a general increase in other expenses due to increased activity. Marketing and sales expenses for the nine months ended September 30, 2004 were $1,221,502 as compared to $155,473 for the nine months ended September 30, 2003, an increase of $1,066,029. This was due to increases in independent contractor marketing expenses $418,000 and sales and marketing expense $650,000 including production of an infomercial. The Company is expecting the infomercial to generate substantial interest by agents to join the Company. However, there can be no assurance of the realization of such expectations by the Company. LIQUIDITY AND SOURCES OF CAPITAL --------------------------------- At September 30, 2004 the Company had a cash balance of $107,370 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 nine months ended September 30, 2004. The Company had negative working capital at September 30, 2004. To date the Company has financed operations by issuance of shares of common stock in private placements $1,555,278, stock subscribed for cash of $504,800 and the issuance of shares for services $1,310,715. During the nine months ended September 30, 2004, the Company issued 702,223 shares of common stock in a private placement for a total purchase price of $775,480 an average purchase price of $1.10 per share. The Company has received subscriptions to purchase 535,666 shares of common stock at an average purchase price of $1.16. During the nine months ended September 30, 2004 the Company issued 649,800 shares of common stock for services valued at the fair market value price of the Company's stock on the dates issued $788,272 and average of $1.21 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 September 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 in Orange County Superior Court for breach of contract and specific performance relating to the exercise of options, among other causes of action. The amount of damages is not specified in the complaint. Damages may vary depending on number of options allegedly exercises, the value of shares over the period of time they might have been exercised and other factors. 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 nine months ended September 30, 2004, the Company issued 702,223 shares of common stock in a private placement for a total purchase price of $775,480 an average purchase price of $1.10 per share. The Company has received subscriptions to purchase 535,666 shares of common stock at an average purchase price of $1.16. 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 nine months ended September 30, 2004 the Company issued 649,800 shares of common stock for services valued at the fair market value price of the Company's stock on the dates issued $788,272 an average of $1.21 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: none 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: November 15, 2004 By /s/ William Alverson --------------------------- President 12