<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                   FORM 10-KSB-A

(X)      Annual report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the annual period ended DECEMBER 31, 2001

( )      Transition report pursuant of Section 13 or 15(d) of the Securities
         Exchange Act of 1934 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)

           1100 West Katella Avenue, Suite J, Orange, California 92867
                            Telephone (714) 997-0397
         ---------------------------------------------------------------
         (Address of Principal Executive Offices, including Registrant's
                         zip code and telephone number)

                                      NONE
         --------------------------------------------------------------
         Former name, former address and former fiscal year, if changed

         Check 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 (__)

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10 KSB
or any amendment to this Form 10-KSB. ( X )

         The registrant's revenues for its most recent fiscal year were:
$74,078.

         The aggregate market value of the voting stock held by non-affiliates
of the registrant as of December 31, 2001 was $481,049 based upon the book value
of the Registrant's Common Stock of $0.53 as of December 31, 2001.

         The number of shares outstanding of the Registrant's Common Stock, no
par value per share, was 2,890,840 shares as of December 31, 2001.

         Documents Incorporated by Reference:
         None

         Transitional Small Business Disclosure Format (check one):
                                                               Yes (__) No ( X )



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                    ADVANCED REFRIGERATION TECHNOLOGIES, INC.

                                   FORM 10-KSB
                          YEAR ENDED DECEMBER 31, 2001
                                TABLE OF CONTENTS

                                     PART I
                                                                            PAGE
                                                                            ----

Item 1.  DESCRIPTION OF BUSINESS..............................................3

Item 2.  DESCRIPTION OF PROPERTY.............................................12

Item 3.  LEGAL PROCEEDINGS...................................................12

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................12

                                     PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS.................................................12

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS................................13

Item 7.  FINANCIAL STATEMENTS................................................15

Item 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.................................24

                                    PART III

Item 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS and CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT...................24

Item 10. EXECUTIVE COMPENSATION..............................................25

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......26

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................27

                                     PART IV

Item 13. EXHIBITS AND REPORTS ON FORM 8-K....................................27

SIGNATURES...................................................................28

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                           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. SHAREHOLDERS AND 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.

                                     PART I

Item 1. Description of Business

Overview

         Advanced Refrigeration Technologies, Inc. (the "Company") was
incorporated in the State of California on February 5, 1998. It is engaged in
the business of designing, manufacturing and marketing energy efficiency
products. The Company is currently in production with its second and third
products, which are patented evaporator fan motor controllers for walk-in
refrigerators and freezers that can save the customer 25-50% in refrigeration
energy costs.

Business Development

         The Company gained the rights to its basic product by acquiring the
Nevada Energy Control Systems, Inc., ("NECSI") patents for an evaporator fan
motor controller for the evaporators in walk-in coolers. The original product
was evaluated by the National Institute of Standards and Technology's (NIST)
Office of Technology Innovation in accordance with the United States Department
of Energy (DOE) Energy Related Inventions Program (ERIP). This resulted in a
recommendation of the product by the ERIP, and the award of a DOE grant to the
Company to fund validation testing of its claims of the product's energy saving
ability. This testing was performed by the company under the auspices of the
U.S. Department of Energy, and further testing was conducted for the federal
government through Lawrence Berkeley National Laboratory. These test results
will be provided to any interested investor or potential customer. Tests
monitored by the Pacific Gas and Electric Company (PG&E) confirmed refrigeration
energy savings potential at the national level equal to 305,000 barrels of oil
per year, assuming only a 10% market penetration. The Company estimates the
refrigeration energy cost savings to the consumer to be between 25-50%.
Additionally, the product has been evaluated by the Federal Energy Management
Program (FEMP), receiving a positive recommendation, and has been approved for
installation in federal facilities.

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         The Company produced this original unit, its first product, until the
year 2000, when it introduced an enhanced, microprocessor-controlled version.
This model is ART's second product, which can also be used in walk-in freezers.
The third product is the enhanced unit with an accompanying Data Head, to
download information from the controller about the energy usage and energy
savings gained by use of the controller, and operational problems of the cooler
or freezer.

         The Company is currently marketing these products, the ART Evaporator
Fan Controllers Models 4000 and 5000, throughout the United States, and is
planning to bring to market other products and models currently in research and
development.

         Advanced Refrigeration Technologies, Inc., common stock trades under
the symbol ARGT on the NASD Over The Counter Bulletin Board (OTCBB). The
Company's office is located at 1100 W. Katella Avenue, Suite J, Orange,
California 92867; telephone 714-997-0397, fax 714-997-3550, e-mail
info@artcontrollers.com.

The Products

         The Company's products, the ART Evaporator Fan Controllers, are energy
saving devices that can be easily integrated into existing or new walk-in
refrigerator or freezer systems. They regulate the speed of the evaporator fan
motors in a cooler or freezer to meet the need of each phase of the
refrigeration cycle. Just as you save energy by turning off the lights in an
unoccupied room, the ART controller saves energy by running the fans only as
fast as the box requires at the time.

         There are two basic types of walk-in refrigeration systems in use
today. Both of these basic systems consist of an insulated chamber or "box", an
electrically driven compressor, a condenser, and an evaporator. The first ("Type
1"), and most common, turns the compressor on and off according to the
temperature inside the box in response to either a thermostat or a pressure
control valve. These systems may be either "stand alone" with one compressor
operating one evaporator, or "rack" systems wherein several compressors operate
evaporators in multiple boxes. The second basic type of walk-in system ("Type
2") is referred to as an "EPR" or Evaporator Pressure Regulator system, in which
the temperature of the box is maintained by an EPR valve which provides a
constant refrigerant flow from the compressor to the evaporator. The EPR valve
can be either mechanical or electronic. This type is generally found only in
rack systems. In both systems the evaporator fans normally run at full speed 24
hours per day.

         The current ART Controllers require the system to have an on/off cycle
for the refrigerant flow. The Company's products act as a controller for the
evaporator fans in "Type 1" systems, which utilize a thermostat or pressure
control to control the on/off cycle of the compressor. The ART controllers
regulate the speed of the fan motors to a lower level when the refrigerant is
not flowing through the system, and thus save electrical energy. It also reduces
the actual refrigeration load because of the reduced amount of heat introduced
into the refrigerated box by the evaporator fan motors when they run at a lower
speed. The product is designed to easily retrofit into an existing system.
Original Equipment Manufacturer (OEM) customers will provide the product in new
construction.

         There are two models of the ART Evaporator Fan Controllers currently
being produced and marketed:

         The ART 4000 is the basic controller, which consists of a
microprocessor-controlled logic board, four sensors, and a status light. The ART
4000 can be upgraded to the ART 5000 by adding a second hardware module, or
"Data Head". The status light has been added during 2001, and provides the
following information:

         Green             =        System Normal
         Blink Green       =        Icing Condition / Low Voltage
         Blink Red         =        Sensor Failure
         Red               =        System Fault

         The ART 5000 includes the base controller (ART 4000) plus a "Data Head"
which connects to the base controller via a custom 20-foot cable. The Data Head
is a plastic box that includes three status lights, and a 9-pin serial
connector. The serial interface is an RS-232 serial port, which can be connected
to a PC for downloading energy savings statistics or alarm information. The

                                       4


<PAGE>

three status lights provide three warnings: Icing, Box Over Temperature, and
System Fault (the controller is not working). The ART 5000 stores the following
information in its non-volatile memory:

         a)       Amount of time on High Speed
         b)       Amount of time on Low Speed
         c)       Kilowatt Hours used on High Speed
         d)       Kilowatt Hours used on Low Speed
         e)       Kilowatt Hours saved

         By storing this information, the ART controller enables energy
managers, storeowners, utilities engineers, etc., to connect a PC to the Data
Head and retrieve the information. Several utilities require customers to prove
their energy savings in order to receive rebates or other incentives. This Data
Logging also provides the Company the verification required to receive orders
from clients who wish to validate their projected savings prior to purchase.

         A third model, the ART 6000, has been in development for over a year;
during that time the feature set has been modified to address several new target
markets for the Company. The ART 6000 is being developed to address the needs of
large customers with large facilities that have standardized on EPR systems. The
ART 6000 product is planned to work with the Evaporator Pressure Regulator (EPR)
type system. The ART 6000 will also include interfaces for external Energy
Management Systems (EMS) or box controllers. Additionally, the ART 6000 will
have an optional RS485 interface so it can be networked within a typical
"Building Control" system. The alarm interface will be able to connect to an
external alarm system so that, when the box is over temperature, an alarm
condition will be initiated and the proper alarm sequence can be followed
depending on the customer requirements. The ART 6000 is targeted for release in
the fourth quarter of 2002, or Q1 of 2003.

         Installation Services are sometimes offered by the Company either
directly or on a sub-contractor basis. An installation typically requires one to
two hours of labor depending on the complexity of the system. Installation
Services may become a significant revenue stream for the Company depending on
market conditions. The Company already has an installation agreement with
Comfort Systems USA (NYSE: FIX) as a sub-contractor. Comfort Systems USA is a
very large HVACR services company that has over 125 locations throughout the
United States for full national coverage.

Value Proposition

         The products offered have the following benefits for ART customers:
         -        Reduce energy consumption, saving the customer 25% - 50% of
                  their refrigeration costs
         -        Provide warning indicators for maintenance personnel
         -        Enable longer life for the evaporator fan motors
         -        Reduce the heat introduced into the box by the motors

Marketing Operations

         The Company employs one marketing Vice President in charge of all
marketing functions. The Company presently has no other marketing employees.
Marketing functions include Product Management, Public Relations, Trade Shows,
Collateral Development, Direct Mail, Email Marketing, Government Programs, and
Public Utility Programs. The Company plans to use public relations and
advertising consultants for various marketing projects.

         The Company has separated the market into seven distinct segments. Each
of these segments requires special marketing programs and activities to increase
sales and awareness of our products. These segments include: National Accounts,
Energy Services Companies (ESCO), Refrigeration Equipment Distributors, National
Maintenance and Installation Companies, Public Utilities, Government, and Local
Contractors.

         The Company has begun active marketing of its current products through
industry trade shows, and with direct presentations and installations in
convenience stores, grocery retailers, hotels, and retail facilities. The
Company believes it can sell directly to nation-wide chains of convenience
stores, supermarkets, hotels, and retailers with its small sales organization,

                                       5


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since large chains have only a single point of contact with whom to deal. The
Company plans to continue its marketing efforts for the retrofit application of
the product directly to these facilities, offering demonstration installations
to them, in anticipation of a national installation in these organizations.

         Some public utilities have taken an active role in promoting
energy-efficient technologies to their commercial customers by offering direct
rebates to those who install energy-efficient equipment. The Company presently
has rebate agreements with San Diego Gas & Electric (SDG&E), Pacific Gas &
Electric (PG&E), and Southern California Edison (SCE) that pay for the first
$100 of each unit installed in a facility in their territory. While the recent
deregulation of the electric power industry in the state of California has
affected these programs, the California Public Utilities Commission (CPUC) is
presently funding them. The Company is also working with several major
city-owned utilities, whose programs are not affected by this deregulation, to
qualify for their incentive programs as well. These utilities include Los
Angeles Department of Water & Power (LADWP), and Sacramento Municipal Utility
District (SMUD).

Sales Operations

         The Company employs one Director of Sales in charge of all Sales
functions, and one Sales Manager. The Company presently employs no other sales
employees. Sales operations will utilize the programs and materials generated by
Marketing to achieve sustained growth and stability in the sales area. Currently
the Company is targeting National Accounts in the Grocery Store, Convenience
Store, Hospitality, and Retail markets directly.

         Various utilities are offering rebates, incentives, and general
promotion of these products. The Company is actively working with utilities on
promotions, incentives, and purchases of the ART 4000 and ART 5000 controllers.

         Another significant challenge for the Company is installation of the
products into customers' facilities. The Company has signed a contract with
Comfort Systems USA (NYSE:FIX) to install ART products nation wide. Comfort
Systems USA is a very large HVAC services company with 125 locations nationwide.
The Company plans to also utilize Comfort Systems USA as a reseller for market
penetration and to add credibility to ART products.

Business Strategy

         Target clients and industries

                  The Company plans to continue to focus on obtaining large
         clients from its target markets whereby a large number of units can be
         sold to a few customers. It will also attempt to gain acceptance for
         ART products with other large HVACR contractors throughout the United
         States.

         Technology enhancement.

                  The Company intends to continue to develop and introduce new
         products and enhancements to the ART product line. Additional product
         offerings are being considered with various customers for tracking of
         energy savings remotely. These additions can be added to the product
         portfolio once the ART 6000 has been completed and is being offered to
         customers. The Company also plans to adapt ART products to the
         requirements of international customers in countries with different
         power requirements.

         Strategic acquisitions.

                  In September 2001 the Company acquired a small reseller in
         Orange, California, 21st Century Energy, Inc., which had two employees
         focused entirely on selling ART products. The Company plans to continue
         to research companies that may be ideal acquisition targets in the
         refrigeration business. These targets could be refrigeration
         contractors, or manufacturers of energy savings devices who have
         similar customers.

                                       6


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         Global expansion.

                  Because the Company believes that significant opportunities
         exist outside of the United States, it intends to expand its business
         to promising global markets, particularly in areas where energy is
         expensive. The Company is working with a few distributors in Asia and
         Europe to offer ART products in those regions.

         Rebate programs.

                  The Company currently has rebates for its products available
         through all the public utilities in California. We will be attempting
         to obtain similar rebates with utilities that offer these programs in
         other states.

                                       7


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The Market

         The overall market for the products exceeds 2 million units assuming
all market segments are addressed. The Company has targeted four primary
end-markets for the products: Grocery Stores, Convenience Stores,
Hospitality/Lodging, and Retail. These target markets offer the best fit for the
products based on the Return On Investment (ROI) for our customers. The general
market for the product is any facility that uses a walk-in type refrigerator or
freezer system of the correct type and sufficient size (minimum: 800 cubic feet)
to have a satisfactory payback period. ROI is calculated as the total cost of
ownership including installation versus the cost of the amount of energy saved.
Customers are requiring a maximum of two years ROI; the ART Evaporator Fan
Controllers typically have a payback of 12 to 24 months.

         The following table gives a breakdown on market segments:

TABLE 1
-------

-------------------------------------- ----------------------------------------

      TYPE OF FACILITY                       SALES POTENTIAL IN UNITS
-------------------------------------- ----------------------------------------

Grocery Stores (3 per store)                         1,058,735
-------------------------------------- ----------------------------------------

Convenience Stores                                     195,700
-------------------------------------- ----------------------------------------

Florists                                                52,271
-------------------------------------- ----------------------------------------

Liquor Stores                                           40,197
-------------------------------------- ----------------------------------------

Food Contractors                                        19,117
-------------------------------------- ----------------------------------------

Bars and Taverns                                        36,435
-------------------------------------- ----------------------------------------

Fast Food Restaurants                                  735,062
-------------------------------------- ----------------------------------------

Health Care Related                                     13,045
-------------------------------------- ----------------------------------------

Retail Hosts                                           123,937
-------------------------------------- ----------------------------------------

Other Hosts                                              6,439
-------------------------------------- ----------------------------------------

Lodging Establishments                                 127,251
-------------------------------------- ----------------------------------------

Recreation & Sporting Establishments                    14,627
-------------------------------------- ----------------------------------------

Misc. Nursing Homes, Clubs, etc.                        31,568
-------------------------------------- ----------------------------------------

Employer Operated                                        7,370
-------------------------------------- ----------------------------------------

Educationally Related                                   97,106
-------------------------------------- ----------------------------------------

Penal System                                             4,153
-------------------------------------- ----------------------------------------

Other                                                  236,177
-------------------------------------- ----------------------------------------

TOTAL                                                2,799,190
-------------------------------------- ----------------------------------------
(Source of data: U.S. Dept. Of Commerce, Bureau of the Census, Census of Retail
Trade and Wholesale Trade, National Restaurant Association Report, "The Food
Service Industry")

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Competition

         The Company has virtually no direct competition for its product.
However, a group of former marketing consultants to the inventors has formed a
company called Energy Control Equipment, Inc. This company has produced a
product which is similar to the ART 4000, but that has none of the new features
that have been developed; their product may be in violation of the Company's
patent rights, as well as of a covenant not to compete. The Company has taken
steps to protect its patent rights to the product.

         Indirect competition exists in that manufacturers of motors have been
producing more energy efficient designs, which would slow the payback period of
the ART product in new applications. For example, GE Motors has introduced a
refrigeration motor, which uses 50% less energy than conventional units;
however, the ART controller is compatible with these energy efficient motors and
reduces their power usage just as it does with standard motors. Additionally,
other companies are developing higher efficiency compressors, parallel
compressors, higher efficiency door seals, improved wall panel constructions,
plastic air shields, new refrigerants and total facility energy management
systems. However, since the Company's products are complementary to these new
technologies, the potential market is unaffected.

Intellectual Property

         The Company holds United States Patent Nos. 5,488,835, issued February
6, 1996, and 5,797,276, issued August 25, 1998 for its products. Several
additional patent applications will be filed over the next 12 months to improve
its intellectual property portfolio.

         The Company's success and ability to compete are substantially
dependent on its internally developed technologies. The Company generally enters
into confidentiality or license agreements with its employees, consultants and
corporate partners, and in general, controls access to and distribution of its
technologies, documentation and other proprietary information. Despite the
Company's efforts to protect its proprietary rights from unauthorized use or
disclosure, parties may attempt to disclose, obtain or use the Company's
solutions or technologies. The Company cannot be certain that the steps it has
taken will prevent misappropriation of its solutions or technologies,
particularly in foreign countries where the laws or law enforcement may not
protect its proprietary rights as fully as in the United States. There can be no
assurance that any of the Company's patent, copyright or trademark applications,
now pending or to be filed in the future, will be approved. Even if they are
approved, such patents, trademarks or copyrights may be successfully challenged
by others or invalidated. If the Company's trademark registrations are not
approved because third parties own such trademarks, its use of the trademarks
will be restricted unless it enters into arrangements with such third parties.
These arrangements may not be available on commercially reasonable terms.

Research and Development

         The Company employs one full time Vice President of Engineering and
Manufacturing, who is in charge of all research and development of new products.
The Company also utilizes an outside contractor for software development,
working with the guidance of the President and Vice President of Engineering.
The products have been developed over the past three years with minimal expense:
the Company has spent a total of $43,902 over the last three years in research
and development. We expect these expenses to continue to be small; however, we
expect to add a full-time software engineer once the ART 6000 hardware has been
fully designed.

Manufacturing

         The Vice President of Engineering and Manufacturing carries out or
oversees all manufacturing engineering, component specification, and assembly
and testing of the products.

         There are no raw materials used in the composition of the product. All
parts used, including the custom case and transformer, are readily available
from multiple sources. The Company has determined that subcontract product
assembly is the most viable and economical production method for the product. It
does not make economic sense to create an in-house production facility due to
the readily available subcontract facilities.

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Employees

         The Company presently employs six employees, four of whom are working
management employees. The Company also utilizes the services of an outside
software consultant for the software and firmware development.

Risk Factors

         The risk factors in this section are some of the factors that could
cause the Company's actual results to differ markedly from those contained in
any forward-looking statements.

         Limited Operating History

                  Advanced Refrigeration Technologies, Inc., a California
         corporation, was incorporated in February 1998. Thus, the Company has
         only a limited operating history on which to base an evaluation of its
         business and prospects. The Company's prospects must be considered in
         light of the risks, uncertainties, expenses and difficulties frequently
         encountered by companies in their early stages of development,
         particularly companies in new and rapidly evolving markets such as
         energy saving technologies. The Company cannot assure the investor that
         it will be successful in meeting the challenges and addressing the
         risks that it faces in its market.

         No Assurance of Profitability

                  The Company believes that the planned growth and profitability
         will depend in large part on its ability to increase sales of its
         products and promote its brand name. Accordingly, the Company intends
         to invest heavily in marketing and promotion and development of its
         customer base.

         Need for Additional Capital

                  The Company could be in need of additional capital to fund
         future operations or expansions. There is no guarantee that additional
         capital will be available.

         Significant Reduction in the Cost of Energy

                  The Company's product sales strategy relies on a Return On
         Investment (ROI) model. The higher the cost of energy the sooner ART's
         customers receive a return on their investment to purchase ART
         products. If energy cost is suddenly reduced significantly below $.05
         cents per kilowatt-hour, the ability to sell using the ROI model will
         be difficult to maintain. Such problems could have an adverse impact on
         the Company's business, operation results and financial condition.

         Availability of Certain Key Electronic Components

                  The ART Models 4000, 5000 and future products rely on
         components, which can from time to time become unavailable from the
         manufacturers due to manufacturing problems, or other problems relating
         to the suppliers. The Company has designed its products using
         components that have alternate sources; however, supply can still pose
         problems in the Company's ability to meet customer demand. Such
         problems could have an adverse impact on the Company's business,
         operation results and financial condition.

         Our efforts to protect our intellectual property rights may not
         sufficiently protect us and we may incur costly litigation to protect
         our rights

                  The Company holds two patents and it plans to file additional
         patent applications in the future with respect to various additional
         aspects of its technologies. The Company marks its software with
         copyright notices, and intends to file copyright registration
         applications where appropriate. There can, however, be no assurance
         that any patents, copyright registrations, or trademark registrations
         applied for by the Company will be issued, or if issued, will
         sufficiently protect its proprietary rights.

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                  Despite the Company's efforts to protect its intellectual
         property, a third party or a former employee could copy,
         reverse-engineer or otherwise obtain and use the Company's intellectual
         property or trade secrets without authorization or could develop
         technology competitive to that of the Company.

                  The Company's intellectual property may be misappropriated or
         infringed upon. Consequently, litigation may be necessary in the future
         to enforce the Company's intellectual property rights, to protect its
         confidential information or trade secrets, or to determine the validity
         or scope of the rights of others. Litigation could result in
         substantial costs and diversion of management and other resources and
         may not successfully protect its intellectual property. Additionally,
         the Company may deem it advisable to enter into royalty or licensing
         agreements to resolve such claims. Such agreements, if required, may
         not be available on commercially reasonable or desirable terms or at
         all.

         Our technology may infringe on the rights of others

                  Even if the patents, copyrights and trademarks applied for are
         granted, they do not confer on the Company the right to manufacture or
         market products or services if such products or services infringe on
         intellectual property rights held by others. If any third parties hold
         conflicting rights, ART may be required to stop making, using, or
         marketing one or more of its products or to obtain licenses from and
         pay royalties to others, which could have a significant and material
         adverse effect on it. There can be no assurance that the Company will
         be able to obtain or maintain any such license on acceptable terms at
         all.

                  The Company may also be subject to litigation to defend
         against claims of infringement of the rights of others or to determine
         the scope and validity of the intellectual property rights of others.
         If third parties hold trademark, copyright or patent rights that
         conflict with its business, then the Company may be forced to litigate
         infringement claims that could result in substantial costs. In
         addition, if we were unsuccessful in defending such a claim, it could
         have a negative financial impact. If third parties prepare and file
         applications in the United States that claim trademarks used or
         registered by ART, we may oppose those applications and be required to
         participate in proceedings before the United States Patent and
         Trademark Office to determine priority of rights to the trademark,
         which could result in substantial costs. An adverse outcome in
         litigation or privity proceedings could require ART to license disputed
         rights from third parties or to cease using such rights. Any litigation
         regarding the Company's proprietary rights could be costly, divert
         management's attention, result in the loss of certain of its
         proprietary rights, require the seeking of licenses from third parties
         or prevent ART from selling its services, any one of which could have a
         negative financial impact.

        Dependence on Key Personnel

                  The Company's continued growth and development is dependent
         upon its ability to retain and motivate its key employees. Competition
         for top people is intense and there can be no assurance that the
         Company will be able to retain key management and technical employees
         or be able to attract and retain additional qualified technical
         personnel and management in the future. The Company does not currently
         maintain key person life insurance on any member of the management team
         though it is considering doing so in the near future. If ART is
         unsuccessful in hiring and keeping key people, its business will
         suffer.

        Control by Principal Shareholders

                  The officers and directors of the Company have beneficial
         ownership of a substantial majority of the voting common shares, which
         allows them to control who is elected to the Board of Directors. See
         Item 11, Securities Ownership of Certain Beneficial Owners and
         Management.

                                       11


<PAGE>

        Indemnification of Officers and Directors

                  Pursuant to the Corporation Law of the State of California,
         under most circumstances, the Company's officers and directors may not
         be held liable to the Company or its shareholders for errors in
         judgment or other acts or omissions in the conduct of the Company's
         business unless such errors in judgment, acts or omissions constitute
         fraud, gross negligence or malfeasance.

         Our stock price could be volatile

                  The Company's stock price has been and is likely to continue
         to be highly volatile and could be subject to wide fluctuations in
         response to factors such as:

                  -        actual or anticipated variations in quarterly
                           operating results;
                  -        announcements;
                  -        new sales formats or new services offered by ART or
                           ART's competitors;
                  -        changes in financial estimates by securities
                           analysts, conditions or trends in Energy Efficiency
                           markets; and
                  -        changes in the market valuations of other Energy
                           Efficiency companies.

Item 2.  Description of Property

         On October 9, 2000 the Company entered into an operating lease for
office space in Indio, California. The lease was for one year ending October 8,
2001 at $1,300 per month with an option for an additional year. The Company did
not renew the lease because of its move to Orange, California where it has taken
over the office / warehouse space of 21st Century Energy, Inc., at 1100 West
Katella Avenue, Suite J, Orange, California, 92867. This space is rented on a
month-to-month basis for $835 per month for the first year from a non-affiliate
of the Company with a 30-day notice of vacating required by either party to the
other.

Item 3.  Legal Proceedings

         There are no pending legal proceedings to which the Company is a party
or to which the property interests of the Company are subject.

Item 4.  Submission of Matters to a Vote of Security Holders

         The Company held an annual meeting of its shareholders on June 22, 2001
to vote on three proposals: By the vote of a majority of shareholders (a total
of 2,051,624 votes), Charles E. McEwan, Allan E. Schrum and David J. Kimber were
elected to be the directors of the Company. The same number of shareholders
voted to ratify the appointment of William Lindberg, CPA, as Company Auditor. A
majority of shareholders (a total of 1,562,550 votes) approved the third
proposal, adoption of the Company's 2000 Stock Option Plan.

                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder
         Matters

         Advanced Refrigeration Technologies, Inc., common stock trades under
the symbol ARGT on the NASD Over The Counter Bulletin Board (OTCBB). There were
64 shareholders of record as of December 31, 2001. The price of the Company's
common stock as of December 31, 2001 was $0.53 (open) and $0.53 (close).

         The Company's high and low closing bid and close information for the
fiscal year ended December 31, 2001 is listed below as provided by the NASD OTC
Bulletin Board. Quotations reflect inter-dealer prices, without retail mark-up,
markdown, or commission and may not represent actual transactions.

                                       12


<PAGE>

         -------------- ------------ ------------ ------------ ------------
         Date           Open         High         Low          Close
         -------------- ------------ ------------ ------------ ------------
         Jan-01         0.22         1.06         0.22         0.88
         -------------- ------------ ------------ ------------ ------------
         Feb-01         0.94         1.00         0.63         0.94
         -------------- ------------ ------------ ------------ ------------
         Mar-01         0.72         0.81         0.63         0.81
         -------------- ------------ ------------ ------------ ------------
         Apr-01         0.81         0.81         0.51         0.51
         -------------- ------------ ------------ ------------ ------------
         May-01         0.51         0.94         0.46         0.46
         -------------- ------------ ------------ ------------ ------------
         Jun-01         0.46         0.46         0.35         0.36
         -------------- ------------ ------------ ------------ ------------
         Jul-01         0.36         0.40         0.20         0.34
         -------------- ------------ ------------ ------------ ------------
         Aug-01         0.34         0.38         0.22         0.22
         -------------- ------------ ------------ ------------ ------------
         Sep-01         0.22         0.89         0.22         0.45
         -------------- ------------ ------------ ------------ ------------
         Oct-01         0.45         0.55         0.30         0.40
         -------------- ------------ ------------ ------------ ------------
         Nov-01         0.40         0.42         0.28         0.42
         -------------- ------------ ------------ ------------ ------------
         Dec-01         0.42         0.53         0.27         0.53
         -------------- ------------ ------------ ------------ ------------

         From its inception through July 1, 1999, the Company sold its common
stock in a private placement pursuant to the exemption provided in Section 4(2)
and Regulation D, Rule 504, which was commenced on June 5, 1998, and extended on
March 15, 1999. The offering closed on April 6, 1999, and resulted in the sale
of 403,100 shares, resulting in gross offering proceeds of $111,200. Another
private placement pursuant to the exemption provided in Section 4(2) and
Regulation D, Rule 506, was commenced on April 7, 1999 and closed on July 1,
1999. This offering resulted in the sale of 21,250 shares, resulting in gross
offering proceeds of $22,800. The Company became a reporting company with the
Securities and Exchange Commission as of July 6, 1999.

         A private placement pursuant to the exemption provided in Section 4(2)
and Regulation D, Rule 506, was commenced on January 1, 2001 and closed on June
30, 2001. This offering resulted in the sale of 215,850 shares, resulting in
gross offering proceeds of $108,060.

         A private placement pursuant to the exemption provided in Section 4(2)
and Regulation D, Rule 506, was commenced on July 1, 2001 and closed on November
30, 2001. This offering resulted in the sale of 260,000 shares, resulting in
gross offering proceeds of $130,000. Included with this offering was a warrant
to purchase common stock. For each share of common stock purchased, the
purchaser had the right to purchase one additional share of stock at $1 per
share resulting in 260,000 warrants. The warrants expire two years after the
initial investment.

         In September of 2001, the Company acquired the net assets of 21st
Century Energy, Inc., in Orange, California. The Company issued 200,000 shares
of "restricted" common stock for the assets of 21st Century Energy, Inc. The
Company also issued 200,000 warrants to purchase stock at $.50 per share; these
warrants expire September 29, 2003. The Company also received a $100,000
investment from the owners of 21st Century Energy for the securities offered in
the private placement described above which commenced July 1, 2001.

         The Company has not paid any cash dividends since its inception and
does not contemplate paying any in the foreseeable future. It is anticipated
that earnings, if any, will be retained for the operation of the Company's
business.

Item 6.  Management's Discussion and Analysis

General

         The following discussion should be read in conjunction with selected
financial data and the financial statements and notes to financial statements.

                                       13


<PAGE>

         Until December 21, 2000, the Company was reporting as "a development
stage company". As of January 1, 2001, the Company is reporting as an operating
company. The Company will need to raise additional capital in order to continue
its development and marketing. The Company is being financed by private
investments from accredited investors, loans from major stockholders, and the
sale of its products into the market. These sales are primarily orders from
customers whom the Company hopes will become major customers, and in most cases
are test units to prove the technology works as presented.

Overview

         The Company was incorporated February 5, 1998, and purchased for stock
the assets and liabilities of Nevada Energy Control Systems, Inc., (NECSI),
which had developed what became the Company's first product, the ART Model 4000
Evaporator Fan Controller.

         As of September 29, 2001, the Company acquired 21st Century Energy,
Inc., a distributor of Advanced Refrigeration Technologies products. They have
an established customer and installation base for ART products, along with an
in-place sales staff. Under the terms of the transaction, the Company acquired
the net assets from the owners of 21st Century Energy, Inc., in consideration
for 200,000 "restricted" shares of the Company's common stock and 200,000
warrants to purchase additional shares of "restricted" common stock for $0.50
each. The owners of 21st Century Energy also participated in the July 2001
private placement and invested $100,000 into the Company and received 200,000
shares of "restricted" common stock and 200,000 warrants to purchase additional
shares of "restricted" common stock for $1.00 each. The warrants will expire
September 29, 2003.

         21st Century Energy has been occupying leased office/warehouse space in
Orange, California, which has now become the headquarters for the Company. The
offices in Indio and Cameron Park have been vacated in order to have all
personnel and all company functions in one location. The acquisition has
increased payroll costs substantially, and accomplishing the consolidation of
the offices increased other costs especially in the last quarter of the year;
however, it is expected that the consolidation will proportionally cut other
operating costs, such as rent, telephone and general office expenses, in the
coming year.

         A major effort was undertaken by the Company in 2001 to pursue major
companies that have the need for large numbers of units. Marketing staff
attended a number of industry trade shows and made sales calls on large users of
refrigeration walk-in coolers, managing to get test efforts underway with a high
percentage of these potential customers. Sales should reflect this effort in the
coming years.

         The Company banks with Wells Fargo Bank, checking account only, and has
no other accounts or lines of credit with this bank or any other bank. The
Company has short-term credit lines with most of its vendors and pays its bills
in 30 to 60 days.

         During the second quarter, the Board of Directors accepted the
resignation of Charles E. McEwan from the office of President, due to declining
health and for personal reasons. He was reelected to the post of Chairman of the
Board of Directors. Richard R. McEwan, 37, his son, was elected as President.
During the coming quarter, the Company expects to make further changes to the
Board because of the acquisition of 21st Century Energy, Inc.

Results of operations

         In the fiscal year ended December 31, 2001, the Company sold $74,078
worth of its products with a direct cost of sales of $34,277 and a gross profit
of $39,801. Expenses other than direct cost of sales totaled $363,324, with the
increase from 2000 primarily due to increases in payroll after the acquisition
of 21st Century Energy. This compared with gross sales of $30,795, gross (loss)
of ($4,193) and other expenses of $195,655 for the fiscal year 2000, and gross
sales of $29,065, gross profit of $14,568 and other expenses of $79,718 for the
fiscal year 1999.

                                       14


<PAGE>

         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.

Liquidity and sources of capital

         At December 31, 2001 our cash position required that we actively seek
additional sources of capital. At December 31, 2001 we had available cash of
$30,154, and $20,000 in escrow from our July private placement. We estimate that
our monthly cash operating expenses have increased to $30,000 due to adding
employees associated with the acquisition of 21st Century Energy. Over the last
year our monthly sales have averaged $6,500. We estimate our monthly revenue
will increase; however, there can be no assurances that this will happen. If
revenues do not increase over historical levels, we anticipate that based on our
current operating plan and available cash, we will need additional financing in
the first quarter of FY2002.

         As of December 31, 1999, 2000, and 2001, we had current assets of
$33,125, $97,455, and $164,977 respectively, and current liabilities of $50,879,
$113,817, and $207,287 respectively. For the periods ending December 31, 1999,
2000 and 2001, we used $64,769, $161,636, and $177,511, respectively, of cash
for operating activities. For the periods ending December 31, 1999, 2000, and
2001, $67,416, $164,656, and $207,665 were provided by financing activities,
primarily from issuance of common stock, and loans from shareholders.

Item 7. Financial Statements

The consolidated financial statements of the Company required to be included in
Item 7 are listed in this index, and follow this page:

         Report of Independent Certified Public Accountant
         Financial Statements
         Balance Sheet
         Statements of Operations
         Statements of Cash Flows
         Statements of Shareholders' Equity
         Notes to Financial Statements

                                       15


<PAGE>

                               WILLIAM D. LINDBERG
                           CERTIFIED PUBLIC ACCOUNTANT
                             1725 MONROVIA AVE. C-1
                              COSTA MESA, CA. 92627
                             TELEPHONE 949 642 7801
                                 FAX 949 5741891
                           E.MAIL CATALINA61@JUNO.COM

To the Board of Directors and Stockholders
of Advanced Refrigeration Technologies, Inc.

I have audited the accompanying balance sheet of Advanced Refrigeration
Technologies, Inc. (a California corporation), as of December 31, 2001 and the
related statements of operations, cash flows and shareholders' equity, for the
years ended December 31, 2001 and 2000. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audits.

I conducted the audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Advanced Refrigeration
Technologies, Inc., as of December 31, 2001 and the results of its operations
and its cash flows for the two years ended December 31, 2001 and 2000 in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in notes to financial
statements, the Company's recurring losses, negative working capital and
shareholders' capital deficiency raise substantial doubt as to its ability to
continue as a going concern. Management plans concerning these matters are also
described in the notes to financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

William D. Lindberg
March  8, 2002
Costa Mesa, Ca.

                                       16


<PAGE>

                    ADVANCED REFRIGERATION TECHNOLOGIES, INC.
                                  BALANCE SHEET
                             AS OF DECEMBER 31, 2001

                                                                   December 31,
                                                                       2001
                                                                  --------------

ASSETS
     Current assets
Cash                                                              $      30,154
Receivable from attorney trust account                                   20,000
Inventory (First-in, first-out at the lower of cost or market)           49,464
Prepaid rent                                                              1,235
                                                                  --------------
     Total current assets                                               100,853

      Equipment and furniture
Testing equipment                                                        14,919
Office furniture                                                         28,150
                                                                  --------------
                                                                         43,069
Accumulated depreciation                                                 12,903
                                                                  --------------
       Total equipment and furniture                                     30,166

      Intangible asset
Patents (less amortization of $8,800)                                    33,958
                                                                  --------------

     Total assets                                                 $     164,977
                                                                  ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
     Current liabilities
Accounts payable                                                  $      22,528
Accrual payroll                                                         103,232
Other accruals                                                              945
Compensation payable in stock                                            68,750
Loans from shareholders                                                  80,582
                                                                  --------------
     Total current liabilities                                          276,037

     Shareholders' equity
Common stock (no par value) 20,000,000 shares authorized;
December 31, 2001, 2,890,840 issued and outstanding                     601,355
Retained (deficit) of which $386,185 was accumulated during
development stage and $319,213 after                                   (712,415)
                                                                  --------------

     Total shareholders' equity                                        (111,060)
                                                                  --------------

Total liabilities and shareholders' equity                        $     164,977
                                                                  ==============

   The accompanying notes are an integral part of these financial statements.

                                       17


<PAGE>

<TABLE>
                     ADVANCED REFRIGERATION TECHNOLOGIES, INC.
                              STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
<CAPTION>

                                                         Year ended     Year ended
                                                        December 31,   December 31,
                                                            2001           2000
                                                        ------------   ------------
<S>                                                     <C>            <C>
Sales                                                   $    74,078    $    30,795
Cost of sales                                                34,277         34,988
                                                        ------------   ------------
Gross profit                                                 39,801         (4,193)

Expenses
Payroll                                                     226,803         78,718
Research                                                      2,889         39,789
Marketing                                                    18,941          9,031
Travel                                                       21,798         18,916
Depreciation                                                  5,486          3,949
Amortization                                                  2,512          2,515
Office                                                       17,084          6,734
Postage                                                         743          1,901
Insurance                                                     4,582          2,591
Utilities                                                     1,804            953
Telephone                                                     8,933          5,214
Rent                                                         16,633          9,319
Professional fees                                            30,997         13,675
Taxes                                                            83             10
Public offering expense                                       4,036          2,340
                                                        ------------   ------------
       Total expenses                                       363,324        195,655

Loss from operations before interest and income taxes      (323,523)      (199,848)
Interest expense                                              1,907          1,345
                                                        ------------   ------------
Loss from operations before income taxes                   (325,430)      (201,193)
State income tax                                                800            800
                                                        ------------   ------------

Net loss                                                $  (326,230)   $  (201,993)
                                                        ============   ============
Loss per share                                          $    (0.132)   $     (0.10)
                                                        ============   ============
Diluted loss per share                                  $    (0.125)   $     (0.10)
                                                        ============   ============
Weighted average number of shares outstanding             2,465,106      2,073,725
                                                        ============   ============
Diluted weighted average number of shares outstanding     2,615,106      2,073,725
                                                        ============   ============

     The accompanying notes are an integral part of these financial statements.

                                        18
</TABLE>


<PAGE>

<TABLE>
                          ADVANCED REFRIGERATION TECHNOLOGIES, INC.
                                   STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
<CAPTION>

                                                               For the year      For the year
                                                                  ended             ended
                                                               December 31,      December 31,
                                                                   2001             2000
                                                              --------------   --------------
<S>                                                           <C>              <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net loss                                                      $    (326,230)   $    (201,993)
Adjustments to reconcile net income to net cash
      Depreciation of equipment and furniture                         5,486            3,949
      Amortization of intangible                                      2,512            2,515
      Shares issued for research services                                --           34,500
      Shares issued for legal services                                7,017               --
      Compensation that will be issued in shares                     68,750               --
(Increase) decrease in operating assets
     Inventory                                                      (19,848)         (24,027)
     Accounts receivable                                              5,917           (3,462)
     Prepayments                                                         65           (1,300)
Increase (decrease) in operating liabilities
     Accounts payable                                                 4,170            2,581
     Accruals                                                        74,650           25,601
                                                              --------------   --------------
Net cash provided by operating activities                          (177,511)        (161,636)

CASH FLOWS FROM INVESTING ACTIVITIES
     (Acquisition) disposition of equipment and furniture                --           (6,757)
                                                              --------------   --------------
Net cash provided by (used in) investing activities                      --           (6,757)

CASH FLOWS FROM FINANCING ACTIVITIES
      Increase in bank overdraft                                     (1,252)           1,252
      Increase in loans from employees                               (4,840)           4,840
      Increase in loans from shareholders                            20,742           44,164
      Proceeds from issuance of common stock                        193,015          114,400
                                                              --------------   --------------
Net cash (used in) provided by financing activities                 207,665          164,656

Net increase (decrease) in cash in bank                              30,154           (3,737)
Cash in bank as of the beginning of the year                             --            3,737
                                                              --------------   --------------

Cash in bank as of the end of the year                        $      30,154    $          --
                                                              ==============   ==============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
   Stock issued for furniture and equipment                   $      11,500    $          --
   Interest paid                                                      1,907            1,345
   State income tax paid                                                800              800

          The accompanying notes are an integral part of these financial statements.

                                             19
</TABLE>


<PAGE>

<TABLE>
                           ADVANCED REFRIGERATION TECHNOLOGIES, INC.
                               STATEMENT OF SHAREHOLDERS' EQUITY
                        FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
<CAPTION>

                                                           Common Stock
                                                   ---------------------------
                                                   Number of
                                                     shares
                                                    (no par                         Retained
                                                     value)           Amount        (Deficit)
                                                   -----------     -----------     -----------
<S>                                                 <C>            <C>             <C>

Balance at December 31, 1999                        2,034,350         220,923        (184,192)

Restricted common shares issued by the
Company to acquire 150,000 unrestricted
shares (fair market value of 10,000 shares
difference at $1.50 per share)                        160,000          15,000              --

Unrestricted common shares acquired by the
Company                                              (150,000)        (15,000)             --

Donation of common shares acquired by the
Company from shareholder                              (55,000)             --              --

Donated common shares issued for research
services at $1.38                                      25,000          34,500              --

Donated common shares issued for cash $1.38            30,000          41,400              --

Unrestricted common shares sold by the Company        150,000          73,000              --

Loss during development stage                              --              --        (201,993)
                                                   -----------     -----------     -----------

Balance at December 31, 2000                        2,194,350      $  369,823      ($ 386,185)

Common shares sold for cash                           275,850         138,060              --

Common shares issued for billed legal services         20,640           7,017              --

Common shares issued in connection with 21st
Century acquisition of assets                         400,000          86,455              --

Net Loss                                                   --              --        (326,230)
                                                   -----------     -----------     -----------

Balance at December 31, 2001                        2,890,840      $  601,355      $ (712,415)
                                                   ===========     ===========     ===========

          The accompanying notes are an integral part of these financial statements.

                                              20
</TABLE>


<PAGE>

                    ADVANCED REFRIGERATION TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

GENERAL

         Advanced Refrigeration Technologies, Inc. ("the Company") was
incorporated in California in February 1998. On March 5, 1998, the Company
acquired the assets and liabilities of Nevada Energy Control Systems, Inc.,
(NECSI) in exchange for stock. NECSI had developed an evaporator fan control
system device on which it held a patent. Since acquiring such net assets the
Company's activities have consisted of continuing the research and development
of the evaporator fan control system, obtaining financing and capital, and
initiating marketing of the product. Since June 5, 1998 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,
promulgated under the Securities Act of 1933, as amended.

BASIS OF PRESENTATION

         From inception until December 31, 2000 the Company had reported as "a
development stage Company". The Company is no longer in the development stage as
of January 1, 2001.

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

         Certain reclassifications have been made in the financial statements of
prior periods in order to make them comparable with the current financial
statement presentation.

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.

B. INVENTORIES
         The Company has adopted the first-in, first-out (FIFO) method of
         inventory valuation or market, if that is lower.

Inventories consist of the following:

                                        December         December
                                        31, 2001         31, 2000
                                     -------------    -------------
                  Finished goods     $     28,432     $      8,973
                  Parts                    21,032           20,643
                                     -------------    -------------
                  Total              $     49,464     $     29,616
                                     =============    =============

C. RESEARCH AND DEVELOPMENT
         The Company expenses all research and development costs.

                                       21


<PAGE>

D. EARNINGS PER SHARE
         Earnings per share are computed using the weighted average number of
         common shares outstanding. The shares used in the computation of the
         Company's basic and diluted earnings per common share are reconciled as
         follows:

<TABLE>
<CAPTION>
                                                             December 31,     December 31,
                                                                 2001             2000
                                                            -------------    -------------
<S>                                                            <C>              <C>
         Weighted average common shares outstanding            2,465,106        2,050,350

         Dilutive effect of stock options to be issued
         for compensation                                        150,000                -
                                                            -------------    -------------
         Weighted average common shares outstanding,
         assuming dilution                                     2,615,106        2,050,350
                                                            =============    =============
</TABLE>

         Weighted average common shares outstanding, assuming dilution, includes
         the incremental shares that would be issued upon the assumed exercise
         of stock options issued for compensation.

E. PATENTS
         Patents held by the Company are being amortized over the life of the
patents, seventeen years.

F. INCOME TAXES
         The components of the deferred tax asset are as follows:

                                                   December 31,    December 31,
                                                       2001            2000
                                                  --------------  --------------
         Deferred tax assets:
             Net operating loss carry-forward     $     263,000   $     162,000
         Valuation allowance                      $    (263,000)  $    (162,000)
                                                  --------------  --------------

         Net deferred tax assets                  $          --   $          --
                                                  ==============  ==============

         The Company had available approximately $658,000 and $405,000 of unused
         Federal and state net operating loss carry-forwards at December 31,
         2001 and 2000, respectively, that may be applied against future taxable
         income. These net operating loss carry-forwards expire for Federal
         purposes in 2021. There is no assurance that the Company will realize
         the benefit of the net operating loss carry-forwards.

         SFAS No. 109 requires a valuation allowance to be recorded when it is
         more likely than not that some or all of the deferred tax assets will
         not be realized. At December 31, 2001 and 2000, valuations for the full
         amount of the net deferred tax asset were established due to the
         uncertainties as to the amount of the taxable income that would be
         generated in future years.

         Reconciliation of the differences between the statutory tax rate and
         the effective income tax rate is as follows:

                                                   December 31,    December 31,
                                                       2001            2000
                                                  -------------   -------------
         Statutory federal tax (benefit) rate          (34.0)%         (34.0)%
         Statutory state tax (benefit) rate            (5.83)%         (5.83)%
                                                  -------------   -------------
         Effective tax rate                           (39.83)%        (39.83)%
         Valuation allowance                           39.83 %         39.83 %
                                                  -------------   -------------
         Effective income tax rate                      0.00 %          0.00 %
                                                  =============   =============

                                       22


<PAGE>

RELATED PARTY TRANSACTIONS

         Two of the founding stockholders had been active in the running of the
day-to-day business of the Company on a full or part-time basis through December
31, 2000 and the Company reflected no expense in the statement of operations
through that date for their services.

         Loans from shareholders $80,582 at December 31, 2001, are non-interest
bearing, currently payable and not evidenced by any notes.

COMMON STOCK

         Total shares restricted as to trading were 1,987,200 at December 31,
2001

         As of September 29, 2001 the Company acquired the net assets and
$100,000 from the owners of 21st Century Energy, Inc., for 400,000 shares of the
Company's stock. In addition the Company granted 200,000 warrants to purchase
additional shares of stock for $0.50, and 200,000 warrants to purchase
additional shares of stock for $1.00. The warrants will expire September 29,
2003.

         The Company granted 60,000 warrants to purchase additional shares of
stock for $1.00 per share to purchasers of 60,000 common shares. The warrants
will expire on September 29, 2003.

STOCK OPTIONS

         On March 3, 2001 the Company granted an employee the right to 150,000
common shares (no par value). The shares will vest on February 1, 2002. The
Company has set the fair market value at $ 0.50 per share, the price for which
the Company sold stock in March 2001, and recognized employee compensation based
on that value.

         The Board of Directors has approved a Company stock option plan that
will provide 330,000 shares to be granted at the discretion of the Board of
Directors at an exercise price of 100% of the fair market value of the stock at
the date of grant. In September 2001 the first shares, 75,000, were granted to
two employees at $0.27 per share.

         The Board of Directors granted a stock option in May 2001 for an
employee to purchase 400,000 shares of common stock at an exercise price of
$0.30 per share vesting one third at May 1, 2002, and the balance investing
quarterly over the two years ending May 1, 2004.

         In October the Company for value received granted an ex-employee an
option to purchase 250,000 shares of the Company's common stock at an exercise
price of $0.27 commencing July 24, 2001 and expiring July 23, 2006. The option
was granted for the cancellation of 133,000 shares issued pursuant to the Stock
Grant Agreement dated as of February 20, 2001 and a mutual release agreement.
The option agreement restricts the sale shares acquired for a period of one
year.

         The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
interpretations in accounting for its employee stock options. The alternative
fair value accounting provided under FASB Statement 123, "Accounting for
Stock-Based Compensation", requires the use of option valuation models that were
not developed for use in valuing employee stock options. The Company has not
valued the options using this method since compensation is currently recognized
or the options are short term.

LEASES

         On October 9, 2000 the Company entered into an operating lease for
office space in Indio, California. The lease was for one year ending October 8,
2001 at $1,300 per month with an option for an additional year. The Company did
not renew the lease but has taken over the office\warehouse of 21st Century
Energy, Inc., in Orange, California on a month-to-month lease.

                                       23


<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 2001, the FASB issued SFSA No. 141, "Business Combinations",
and SFAS No. 142, "Goodwill and Other Intangible Assets". Under these new
standards, all acquisitions subsequent to June 30, 2001 must be accounted for
under the purchase method of accounting, and purchased goodwill is no longer
amortized over its useful life. Rather, goodwill will be subject to a periodic
impairment test based upon its fair value.

         In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" ("SFAS 143"). SFAS 143 establishes accounting standards
for recognition and measurement of a liability for the costs of asset retirement
obligations. Under SFAS 143, the costs of retiring an asset will be recorded as
a liability when the retirement obligation arises, and will be amortized to
expense over the life of the assets.

         In October 2001, the FASB issued SFAS No, 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 addresses
financial accounting reporting for the impairment or disposal of long-lived
assets and discontinued operations.

         These pronouncements have no impact on the financial position and
results of operations of the Company. The Company has adopted these standards as
of this year.

Item 8.  Changes In and Disagreements With Accountants on Accounting and
         Financial Disclosure

None.

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act

The Executive Officers of the Company, and their ages, are as follows:

Name                        Age             Position
----                        ---             --------

Rick R. McEwan              37              President, CEO
David J. Kimber             43              Vice President/Marketing, Director
Allan E. Schrum             60              Vice President/Engineering, Director
Clare C. Schrum             59              Secretary, Chief Financial Officer

         Rick R. McEwan. Mr. McEwan has been the President and CEO of the
Company since May 2001. Mr. McEwan has over twenty years of experience in
technology companies. Most recently Mr. McEwan was co-founder and Chief
Technology Officer of MindArrow Systems, a publicly traded company on the
NASDAQ-SC market. At MindArrow Systems, Mr. McEwan was responsible for filing 18
technology patents, and leading a team of over twenty engineers. Prior to
joining MindArrow Mr. McEwan served as President and CEO of Zap International, a
software company located in Silicon Valley, which was purchased by MindArrow
Systems in April 1999. Prior to Zap International, Mr. McEwan spent four years
at Fourth Communications Network in San Jose, Ca., as senior database engineer.
Mr. McEwan has an extensive background in database development and tracking
systems. Several of the patent-pending technologies developed at MindArrow
surround Internet database tracking systems for advertising and data analysis.
Prior to Fourth Communications Network, Mr. McEwan held engineering and
marketing positions with SuperMac Technology, RasterOps, and Ramtek Corp. Mr.
McEwan is the son of Charles McEwan.

         Allan E. Schrum. Mr. Schrum is the Vice President, Engineering, and a
Director of the Company. He is the co-inventor of the Company's product, and was
responsible for obtaining the U.S. patent on the product. Mr. Schrum's
professional experience spans more than 30 years as an innovative manager and
engineer in the electronic and electromechanical industries. He has been
responsible for the direction of research and development, engineering,
manufacturing and new product introduction as well as corporate budget planning

                                       24


<PAGE>

and staffing. He was Vice President, Engineering of NECSI from February 1992
through January 1996, and was President of NECSI from January 1996 through March
1998. Before and during those years, he was also Vice President, engineering at
Varatouch Technology, Director of Engineering at Vicom Systems and at Ramtek
Corp., and has also run his own hardware/software design consulting service,
Gnosis Consulting, since 1982.

         David J. Kimber. Mr. Kimber is the Vice President Marketing and a
Director of the Company. He has experience in, and in successfully obtaining,
utility incentive participation programs for new technologies. He served as
Director of Marketing for Nevada Energy Control Systems, Inc., (NECSI), the
Company's predecessor, from June 1997 through March 1998. From 1990 through
1997, he was a self-employed marketing consultant. Mr. Kimber has experience in
general business management, strategic planning, project development, budgeting
and advertising. He holds a B.S. degree in Business Administration and Finance
from California State University, Hayward.

         Clare C. Schrum. Ms. Schrum is the Secretary and Chief Financial
Officer of the Company. She has also served as the Office Manager of Gnosis
Consulting since 1982. Ms. Schrum was the Corporate Secretary and Treasurer of
NECSI and Office Manager from April 1997 through March 1998. She is the wife of
the Vice President, Engineering, Allan E. Schrum. She holds a B.A. degree from
San Jose State University.

Compliance with Beneficial ownership Reporting Rules

         Section 16(a) of the Securities Act of 1934, as amended ("Exchange
Act"), requires the Company's executive officers and directors, and persons who
beneficially own more than 10% of a registered class of the Company's common
stock to file initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission ("Commission"). Such officers,
directors and shareholders are required by Commission regulations to furnish the
Company with copies of all such reports that they file.

         Based solely upon a review of copies of such reports furnished to the
Company during its fiscal year ended December 31, 2001 and thereafter, the
Company believes that, during the Company's 2001 fiscal year, all Section 16(a)
filing requirements applicable to the Company's reporting persons were complied
with.

Item 10. Executive Compensation

         The following table sets forth all compensation awarded or paid by the
Company to its Chief Executive Officer and all other executive officers for
services rendered during the fiscal year ended December 31, 2001 and the fiscal
year December 31, 2000. The only salary paid from inception to the fourth
quarter of 2000 has been to the Vice President/Marketing.

<TABLE>
Summary Compensation Table
<CAPTION>
                                                                   Awards
                                                                   ------
                                                Annual                         Other
Name and Position                   Year        Salary        Bonus        Compensation
-----------------------------------------------------------------------------------------
<S>                                 <C>          <C>            <C>             <C>
Rick R. McEwan                      2000           -0-          -0-             -0-
President                           2001          8,000         -0-             -0-

Charles E. McEwan                   2000           -0-          -0-             -0-
President (until 5/01)              2001           -0-          -0-             -0-

Allan E. Schrum                     2000           -0-          -0-             -0-
Vice President/Engineering          2001          2,000         -0-             -0-

David J. Kimber                     2000         36,100         -0-             -0-
Vice President/Marketing            2001         52,000         -0-             -0-

Clare C. Schrum                     2000          5,000         -0-             -0-
Secretary, Chief Financial Officer  2001          6,000         -0-             -0-
</TABLE>

                                       25


<PAGE>

Fiscal 2001 Stock and Stock Option Grants to Executives

         The following table sets forth for each of the named executives certain
information concerning stock and stock options granted during fiscal 2001.

<TABLE>
<CAPTION>
Name and Position          Number of Securities       % of Total Options     Exercise Price   Expiration
                            Underlying Options       Granted  to Employees      per Share        Date
---------------------------------------------------------------------------------------------------------
<S>                                <C>                        <C>                <C>           <C>
                                    Granted                   in 2001
Rick R. McEwan                     400,000 (1)                  64%              $0.30         5/01/2006
David J. Kimber                    150,000 (2)                  24%
</TABLE>

(1) This option was granted in May 2001; one third of it will vest on May 1,
2002, and the balance will vest quarterly over the next two years.

(2) This is a grant of a right to common shares (no par value) made in March
2001, which vests on February 1, 2002. The Company set the fair market value at
$0.50 per share, the price for which the Company sold stock in March 2001, and
recognized employee compensation based on that value.

Item 11. Securities Ownership of Certain Beneficial Owners and Management

         The following table sets forth certain information regarding the
beneficial ownership of the shares of Common Stock of the Company as of December
31, 2001, by (i) each person who is known by the Company to be the beneficial
owner of more than five percent (5%) of the issued and outstanding shares of
common stock, (ii) each of the Company's directors and executive officers, and
(iii) all directors and executive officers as a group.

Name and Address                    Number of Shares         Percentage Owned
----------------                    ----------------         ----------------
i.
Mervin Wade Howenstine (1)                  160,000                 5.5%
Citrus Heights, CA 95610

ii.
Charles E. McEwan                           576,000                19.9%
Chairman, former President
Rancho Mirage, CA 92270

Rick R. McEwan                               40,100                 1.4%
President
Orange, CA 92867

Allan E. Schrum (2)                         400,000                13.8%
Vice President, Director
Orange, CA 92867

David J. Kimber                             146,200                 5.1%
Vice President, Director
Orange, CA 92867

Clare C. Schrum (2)                          60,000                 2.1%
Secretary, Chief Financial Officer
Orange, CA 92867

iii.
Officers and Directors Total              1,222,300                42.3%

--------------------
(1)      Mr. Howenstine is a former officer of NECSI and a co-inventor of the
         product.
(2)      Mr. and Ms. Schrum are husband and wife.

                                       26


<PAGE>

Item 12. Certain Relationships and Related Transactions

         There have been no transactions since the beginning of fiscal year 2001
or any currently proposed transactions, or series of similar transactions, to
which the Company was or is to be a party, in which the amount involved exceeds
$60,000, and in which any of the officers, or directors, or holders of over 5%
of the Company's stock have or will have any direct or indirect material
interest. The Company does not currently have any policy toward entering into
any future transactions with related parties.

                                     PART IV

Item 13. Exhibits and Reports on Form 8-K

A. Financial Statements

         Balance sheet of the Company of December 31, 2001, and related
statements of operations, stockholders' equity, and cash flows for the fiscal
year ended December 31, 2001 and 2000.

B. Reports on Form 8-K

         None.

C. Other exhibits

         Previously filed.

DOCUMENTS INCORPORATED BY REFERENCE

         The Company is currently subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington D. C. 20549; at its New York
Regional Office, Suite 1300, 7 World Trade Center, New York, New York, 10048;
and its Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and copies of such materials can be obtained from the Public
Reference Section of the Commission at its principal office in Washington, D.C.,
at prescribed rates. In addition, such materials may be accessed electronically
at the Commission's site on the World Wide Web, located at
http://www.sec.gov.com. The Company intends to furnish its stockholders with
annual reports containing audited financial statements and such other periodic
reports as the company may determine to be appropriate or as may be required by
law.

                                       27


<PAGE>

SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on May 8, 2002.

                              ADVANCED REFRIGERATION TECHNOLOGIES, INC.

                              By: /s/ Rick R. McEwan
                                  --------------------------------------------
                                  Rick R. McEwan,
                                  President

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>                           <C>                                         <C>
/s/ Rick R. McEwan            President                                   Date: May 8, 2002
-----------------------------
Rick R. McEwan

/s/ Charles E. McEwan         Chairman of Board of Directors              Date: May 8, 2002
-----------------------------
Charles E. McEwan

/s/ Clare C. Schrum           Secretary and Chief Financial Officer       Date: May 8, 2002
-----------------------------
Clare C. Schrum

/s/ Allan E. Schrum           Vice President and Director                 Date: May 8, 2002
-----------------------------
Allan E. Schrum

/s/ David J. Kimber           Vice President and Director                 Date: May 8, 2002
-----------------------------
David J. Kimber
</TABLE>

                                       28