UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period endedDecember 31, 2002
¨ Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period __________ to __________
Commission File Number000-27147
COOL CAN TECHNOLOGIES, INC.
(Exact name of small Business Issuer as specified in its charter)
| Minnesota | 95-4705831 |
| (State or other jurisdiction of | (IRS Employer Identification No.) |
| incorporation or organization) | |
| 698 Seymour Street, Suite 311 | |
| Vancouver, British Columbia | V6B-3K6 |
| (Address of principal executive offices) | (Zip Code) |
| Issuer’s telephone number, including area code: | (604) 688- 8619 |
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)
Check whether the issuer (1) 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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: ¨ Yes x No
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:As of December 30, 2003 the issuer had outstanding19,352,966 shares of Common Stock.
Transitional Small Business Disclosure Format (Check one): Yes ¨ Nox
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and Item 310 (b) of Regulation S-B, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the six months ended December 31, 2002 are not necessarily indicative of the results that can be expected for the year ending June 30, 2003.
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COOL CAN TECHNOLOGIES, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
| December 31, | June 30, | |||||
| 2002 | 2002 | |||||
| ASSETS | (unaudited) | (audited) | ||||
| CURRENT ASSETS: | ||||||
| Cash | $ | 476 | $ | - | ||
| AVAILABLE-FOR-SALE SECURITIES | 15,000 | - | ||||
| INTANGIBLES, NET | 35,600 | 36,800 | ||||
| Total assets | $ | 51,076 | $ | 36,800 | ||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||
| CURRENT LIABILITIES: | ||||||
| Accounts payable | $ | 148,554 | $ | 78,604 | ||
| Accounts payable, stockholders | 227,640 | 202,140 | ||||
| Due to stockholders | 145,030 | 143,928 | ||||
| Total current liabilities | 521,224 | 424,672 | ||||
| STOCKHOLDERS' DEFICIT: | ||||||
| Preferred stock | - | - | ||||
| Common stock | 664,769 | 664,769 | ||||
| Additional paid in capital | 504,000 | 504,000 | ||||
| Accumulated other comprehensive loss | (48,000 | ) | - | |||
| Deficit accumulated during the developmental stage | (1,590,917 | ) | (1,556,641 | ) | ||
| Total stockholders' deficit | (470,148 | ) | (387,872 | ) | ||
| Total liabilities and stockholders' deficit | $ | 51,076 | $ | 36,800 | ||
See accompanying notes to financial statements
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COOL CAN TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
| Period from Inception | |||||||||||||||
| Three Months Ended | Six Months Ended | (April 1,1998) | |||||||||||||
| December 31, | December 31, | Through | |||||||||||||
| 2002 | 2001 | 2002 | 2001 | December 31, 2002 | |||||||||||
| Revenues | $ | - | $ | - | $ | 63,000 | $ | - | $ | 63,000 | |||||
| Administrative pre-opening and | |||||||||||||||
| development expenses | (58,339 | ) | (210,744 | ) | (97,276 | ) | (269,842 | ) | (1,653,917 | ) | |||||
| Net Loss | (58,339 | ) | (210,744 | ) | (34,276 | ) | (269,842 | ) | (1,590,917 | ) | |||||
| Other comprehensive loss - unrealized loss on available- | |||||||||||||||
| for-sale securities | (12,000 | ) | - | (48,000 | ) | - | (48,000 | ) | |||||||
| Comprehensive Loss | $ | (70,339 | ) | $ | (210,744 | ) | $ | (82,276 | ) | $ | (269,842 | ) | $ | (1,638,917 | ) |
| Loss per common share - basic | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.10 | ) |
| . | |||||||||||||||
| Loss per common share - diluted | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.10 | ) |
| Weighted average outstanding shares | 19,352,966 | 19,152,966 | 19,352,966 | 18,640,466 | 16,426,843 | ||||||||||
See accompanying notes to financial statements
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COOL CAN TECHNOLOGIES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| Period from Inception | |||||||||
| Six Months Ended | (April 1,1998) | ||||||||
| December 31, | Through | ||||||||
| 2002 | 2001 | December 31, 2002 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Net loss | $ | (34,276 | ) | $ | (269,842 | ) | $ | (1,590,917 | ) |
| Adjustments to reconcile net loss to net cash flows | |||||||||
| from operating activities: | |||||||||
| Depreciation and amortization | 1,200 | 1,200 | 8,400 | ||||||
| Receipt of available-for-sale securities for | |||||||||
| agreement extension | (63,000 | ) | - | (63,000 | ) | ||||
| Compensation expense, options to nonemployees | - | 120,000 | 504,000 | ||||||
| Excess of fair value of common stock issued over | |||||||||
| carrying amount of debt | - | - | 120,000 | ||||||
| Changes in assets and liabilities: | |||||||||
| Accounts payable | 69,950 | 4,522 | 158,554 | ||||||
| Accounts payable - stockholders | 25,500 | 42,500 | 227,640 | ||||||
| Due to stockholders | 1,102 | - | 1,102 | ||||||
| Net cash flows from operating activities | 476 | (101,620 | ) | (634,221 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Purchase of intangibles | - | - | (44,000 | ) | |||||
| Net cash flows from investing activities | - | - | (44,000 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Proceeds from issuing common stock | - | 50,000 | 329,769 | ||||||
| Due from stockholders | - | 50,500 | 348,928 | ||||||
| Net cash flows from financing activities | - | 100,500 | 678,697 | ||||||
| Net change in cash | 476 | (1,120 | ) | 476 | |||||
| Cash - beginning of year | - | 1,515 | - | ||||||
| Cash - end of period | $ | 476 | $ | 395 | $ | 476 | |||
| Noncash financing and investing activities: | |||||||||
| Conversion of debt to common stock | $ | - | $ | 205,000 | $ | 205,000 | |||
| Conversion of payable to common stock | $ | - | $ | 10,000 | $ | 10,000 | |||
See accompanying notes to financial statements
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COOL CAN TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Financial Statements
Note 1. Nature of Business and Summary of Significant Accounting Policies:
Condensed Financial Statements
The condensed balance sheet of Cool Can Technologies, Inc. (the Company) as of December 31, 2002, the statements of operations and cash flows for the periods ended December 31, 2002 and 2001 have been prepared by the Company, without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows at December 31, 2002 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 2002 audited financial statements. The results of operations for the period ended December 31, 2002 are not necessarily indicative of the operating results for the full year.
Organization and activities
The Company was incorporated on April 1, 1998 in the state of Minnesota. The Company was formed to act as a holding company for manufacturing companies and since inception, has devoted its efforts to raising capital and pre-opening activities. The Company owns a patent for a self-chilling beverage container and parts therefore. The Company is considered to be in the development stage and the accompanying financial statements represent those of a development stage enterprise, and therefore, are subject to the usual business risks of development stage companies. The Company has had no operations. Research and development costs are expensed as incurred.
Stock based compensation
The Company applies Accounting Principles Board (APB) Opinion 25 “Accounting for Stock Issued to Employees” and related Interpretations in accounting for its stock options. Accordingly, no compensation cost has been recognized for stock options issued to employees for the periods ended December 31, 2002 and 2001 or the period from inception through December 31, 2002. Stock options and warrants issued to nonemployees are recorded at fair value, as required by SFAS No. 123, using the Black Scholes pricing model.
Had compensation costs for the Company's stock options been determined based on the fair value at the grant dates consistent with the method of SFAS No. 123, the Company's net loss and loss per common share would have been changed to the pro forma amounts indicated below:
| Period from | |||||||||||||||
| Inception | |||||||||||||||
| Three Months Ended | Six Months Ended | (April 1, 1998) | |||||||||||||
| December | December | Through | |||||||||||||
| 2002 | 2001 | 2002 | 2001 | December 31, 2002 | |||||||||||
| Net loss | $ | (58,339 | ) | $ | (210,744 | ) | $ | (34,276 | ) | $ | (269,842 | ) | $ | (1,638,917 | ) |
| Pro forma net loss | (58,339 | ) | (258,744 | ) | (34,276 | ) | (317,842 | ) | (2,286,917 | ) | |||||
| Stock based compensation | |||||||||||||||
| As reported | 0 | 120,000 | 0 | 120,000 | 504,000 | ||||||||||
| Pro forma | 0 | 48,000 | 0 | 48,000 | 648,000 | ||||||||||
| Basic and diluted loss per common share | |||||||||||||||
| As reported | $ | .00 | $ | (.01 | ) | $.00 | $ | (.01 | ) | $(.10) | |||||
| Pro forma | $ | .00 | $ | (.01 | ) | $.00 | $ | (.02 | ) | $(.14) | |||||
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COOL CAN TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Financial Statements
The fair value of each option was estimated using the Black-Scholes option-pricing model with the following assumptions for the periods ended December 31, 2002 and 2001:
| Risk-free interest rate | 2.5-3.0% | ||
| Expected lives | 1-2 years | ||
| Volatility | 95% |
Loss per common share
Loss per share is computed based on the weighted average number of common shares outstanding. Potential issuances that would reduce dilutive loss per common share are considered anti-dilutive and are excluded from the computation.
Note 2. License Agreement
On June 5, 2002, the Company entered into a license agreement with Balsam Ventures, Inc. (BVI) whereby the Company granted to BVI an exclusive license to manufacture, use and sell the Company’s proprietary technology. The agreement required BVI to pay the Company $200,000 within ninety days expend $1,800,000 in development expenditures, and pay to the Company 5% of gross profits and 5% of gross revenues on sales of licensed apparatus products. As consideration for granting the second 90 day extension to BVI on September 2, 2002, the Company received 300,000 restricted shares from BVI. The Company reported the value of these restricted shares at $63,000. The license agreement has been extended several times with the last extension being granted on September 30, 2003 until November 30, 2003.
Note 3. Subsequent Events:
Subsequent to December 31, 2002 all 2,500,000 stock options either expired or were cancelled.
During the period from January through June 2003, the Company issued $550,000 of 10% convertible notes pursuant to Regulation S of the Securities Act of 1933. The convertible notes are due on or before December 31, 2005 and the holder of the note has the right to convert the note into the Company’s common stock at any time prior to the maturity date. The note is convertible at the lesser of $.001 or 50% of the average trading price of the Company’s common stock for the 10 trading days preceding the date of conversion. The Company may at its option elect to pay a portion of the interest due by issuing the Company’s common stock as defined in the convertible note agreement.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS
The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements involve risks and uncertainties, including statements regarding Cool Can Technologies, Inc.’s (the “Company”) capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined in other reports the Company files with the Securities and Exchange Commission (the “SEC”). These factors may cause the Company’s actual results to differ materially from any forward-looking statement. The Company disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
OVERVIEW
We are in the business of developing and marketing a patented unique proprietary technology which will allow for the licensing and manufacture of a commercially viable self-chilling beverage container. We are currently in the development stage of our business. We are in the process of taking our planned product from the conceptual stage of development to the production of a prototype of a self-chilling beverage container that we can use for testing purposes. If our testing efforts are successful, we will then proceed to the marketing phase of our plan of operations which involves marketing the self-chilling beverage container to beverage manufacturers. We have not completed the development of a commercially viable self-chilling beverage container to date, nor have we achieved any revenues to date. Our ability to pursue our plan of operations, as discussed below, is contingent upon us achieving substantial financing, of which there is no assurance.
Our proposed product is referred to by us as the “Cool Can” product and consists of a module for insertion in an aluminium beverage container that incorporates a cartridge of liquid carbon dioxide (“CO2”) that is held in place by a cartridge holder. The module consists of proprietary technology for which we have been granted patent protection. The module would be inserted in an aluminium beverage container during an automated canning process. Containers incorporating the Cool Can product would be identified and sold as self-chilling beverage containers. To start the chilling process, a consumer would pull the tab off the container as with a regular non-chilling beverage container. When the tab on the lid of the beverage container is pulled by the consumer, a valve mechanism within the container releases the compressed liquid CO2. The escaping CO2 forms into small particles of frozen snow at extremely cold temperatures and rapidly imparts a chilling action to the beverage. The targeted result is that the consumer may purchase a beverage at room temperature and enjoy it cold without having to purchase it from a cooler or purchase ice to cool the beverage.
PLAN OF OPERATION
Our plan of operations for the next twelve months, subject to our receiving the necessary additional financing, includes the following components:
| 1. | The first phase will be divided into two parts and involves engaging LNE Engineering Co. to proceed with prototype development and production of samples of our self-chilling beverage container modules. This phase will include the following elements: |
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| Phase 1 Prototype Development | Timeline | |
| Part 1 | • Review of past progress. • Development of coils and suppliers for the associated parts. • Development of trigger/valve mechanism. • Development of charging and canning system. • Fabrication of six engineering prototype samples. • Plan, cost and schedule for production of 2000 industry demonstration samples. | 1 month 2 months 3 months 4 months 5 months 6 months |
| Part 2 | • Production of 2,000 industry demonstration samples. | 7.5 months |
| 2. | The second phase of our plan of operations involves consultation and feedback with all parties involved in the production and handling of our planned self-chilling beverage container. This phase would be undertaken upon completion of phase one, as outlined above. Consultation would include meeting and discussing our progress to date with aluminium can manufacturers, filler manufacturers, beverage canners and recycling entities. The focus of the consultation would be to determine what auxiliary equipment will be required for production of our planned self-chilling beverage containers and to develop blueprints and estimated costs for full-scale production. |
| 3. | The third phase of our plan of operations is to market and pursue licensing of our Cool Can technology. This phase is anticipated to include presentation of product-ready samples to the beverage industry. We would seek out qualified candidates for licensing of the product in various countries and/or territories. We plan to approach beverage manufacturers for joint venture opportunities in order to drive consumer trials and to sample the finished product in the market. |
| We anticipate spending approximately $630,000 over the next twelve months, of which $350,000 is anticipated to be spent over the next six months, subject to our receiving the necessary financing to enable us to pursue our plan of operations. We will not be able to proceed with our plan of operations unless we achieve significant additional financing. If we achieve sufficient additional financing, of which there is no assurance, then the estimated cost and timeframe for completion of each of the above components of our plan of operations will be as follows: | |
| 1. | Product development is estimated to be completed over a timeframe of 7.5 months at an estimated cost of $350,000, and is intended to result in the manufacturing of 2,000 industry demonstration samples. |
| 2. | Consultation feedback is estimated to take place over a timeframe of three months following completion of phase one at an estimated cost of $50,000. |
| 3. | Marketing and licensing will follow phase two and is estimated to take three months at an estimated cost of $50,000. |
| 4. | General expenditures over the next twelve months are estimated to be $15,000 per month, consisting of $12,000 per month in general administrative expenses and $3,000 per month in legal and accounting expenses relating to compliance with our reporting obligations. |
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We currently have a cash position of $55,043 at June 30, 2003. In addition, we have a current working capital deficit of $32,542 at June 30, 2003. Accordingly, we will require additional financing in order to proceed with our plan of operations, see “Liquidity and Capital Resources” below. If we achieve financing that is less than that required to pursue our stated plan of operations, then we will scale back our plan of operations to concentrate solely on the product development phase of our plan of operations. In this event, we will pursue product development to the extent of our financial resources.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
RESULTS OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 2002 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2001
Revenues
We have not earned any revenues from sales of our products to date. We do not anticipate earning revenues until such time as we have completed commercial development of products incorporating our Cool Can technology. We are presently in the development stage of our business and we can provide no assurance that we will be able to complete commercial development or successfully sell or license products incorporating our Cool Can technology once development is complete.
On June 5, 2002, we entered into a license agreement with Balsam Ventures, Inc. (“BVI”) whereby we granted to BVI an exclusive license to manufacture, use and sell our proprietary technology. The agreement required BVI to: (i) pay us $200,000 within ninety days, expend $1,800,000 in development expenditures, and (ii) pay us 5% of gross profits and 5% of gross revenues on sales of licensed apparatus products. As consideration for granting the second 90 day extension to BVI on September 2, 2002, we received 300,000 restricted shares from BVI. We reported the value of these restricted shares at $63,000. The License Agreement expired in November, 2003 and was superseded by a second license agreement with BVI.
Operating Expenses
Our operating expenses were $97,276 for the six months ended December 31, 2002, compared to operating expenses of $269,842 for the six months ended December 31, 2001. Our operating expenses for the six months ended December 31, 2002 consisted primarily of product development expenses, consulting fees accrued to Mr. Bruce Leitch, and legal and accounting expenses incurred in connection with our reporting obligations under the Exchange Act and our financing activities.
We anticipate that our operating expenses will increase significantly if we are able to obtain the financing necessary to continue with the development of our Cool Can product and related technology in accordance with our plan of operations.
Net Loss
We recorded a net loss of $34,276 for the six months ended December 31, 2002, compared to a net loss of $269,842 for the six months ended December 31, 2001. Our net loss was comprised entirely of product development and administrative expenses.
THREE MONTHS ENDED DECEMBER 31, 2002 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2001
LIQUIDITY AND CAPITAL RESOURCES
We had cash on hand of $476 at December 31, 2002, compared to cash of $nil at June 30 2002. We had a working capital deficit of $505,748 at December 31, 2002, compared to a working capital deficit of $424,672 at June 30, 2002.
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We were dependent on loans from certain of our shareholders during the six months ended December 31, 2002, and the issuance of 10% convertible notes to finance our business operations. Loans from shareholders increased to $145,030 at December 31, 2002 from $143,928 at June 30, 2002. These loans are outstanding as demand loans with no fixed date for repayment. There is no assurance that we will be able to obtain any additional loans from shareholders. Accrued but unpaid consultant fees payable to our president, Mr. Bruce Leitch, increased to $227,640 at December 31, 2002 from $202,140 at June 30, 2002.
In June 2003, we issued an aggregate of $550,000 of 10% convertible notes (the “Convertible Notes”) pursuant to Regulation S of the Securities Act. We sold $82,500 of the Convertible Notes in exchange for cash and the remaining $467,500 of the Convertible Notes were issued to certain of our creditors as payment of amounts owed to the creditors. The proceeds of these issuances were used to reduce our outstanding debt to shareholders and to pay outstanding accounts liabilities.
Our current monthly operating expenses are approximately $15,000 per month. Our current cash reserves are only sufficient to enable us to operate for an additional one month. In addition, we require approximately $630,000 in order to carry out our plan of operations over the next twelve months. Accordingly, we will immediately require additional financing if we are to continue as a going concern and to finance our business operations. We anticipate that any additional financing would be through the sales of our common stock or other equity-based securities. We are presently in the process of negotiating private placements of securities to raise working capital to finance its operations. However, we do not have any arrangements in place for the sale of any of our securities and there is no assurance that we will be able to raise the additional capital that we require to continue operations. In the event that we are unable to raise additional financing on acceptable terms, we intend to reduce our product development efforts and may implement additional actions to reduce expenditures.
We anticipate that we will continue to incur losses for the foreseeable future, as we expect to incur substantial product development, marketing and operating expenses in implementing our plan of operations. Our future financial results are uncertain due to a number of factors, many of which are outside of our control. These factors include, but are not limited to:
ITEM 3. CONTROLS AND PROCEDURES.
As required by Rule 13a-15 under the Exchange Act, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2002, being the date of our most recently completed fiscal quarter covered by this Quarterly Report. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, Mr. Bruce Leitch. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting management to material information relating to us required to be included in our periodic SEC filings. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out our evaluation.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed our reports filed or submitted under the Exchange Act is recorded,
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processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
During our most recently completed quarter ended December 31, 2002, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.
The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| (1) | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant; |
| (2) | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and |
| (3) | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant's assets that could have a material effect on the financial statements. |
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
We did not issue any of our securities without registration under the Securities Act of 1933 during the six months ended December 31, 2002.
In June 2003, we issued the Convertible Notes pursuant to Regulation S of the Securities Act. We sold $82,500 of the Convertible Notes in exchange for cash and the remaining $467,500 of the Convertible Notes were issued to certain of our creditors as payment of amounts owed to the creditors. The principal amount of the Convertible Notes is due on or before December 31, 2005 and the holder of a Convertible Note has the right to convert the Convertible Note into our common stock at any time prior to the maturity date. The Convertible Notes bear interest at a rate of 10% per annum subject to any adjustments in accordance with the terms of the Convertible Notes. Accrued interest on the Convertible Notes is payable on December 31 of each year. We may, at our option, elect to pay interest on the Convertible Notes by the issuance of shares of our common stock, the number of which will be determined by dividing the amount of the interest payment by the number which is 70% of the average market price of our common shares for the 10 trading days immediately prior to the interest payment date.
Noteholders are entitled to convert the Convertible Notes at any time into shares of our common stock equal to the principal amount of the Convertible Note divided by a conversion price equal to the lesser of $0.001 or 50% of the average trading price of our common stock for the 10 trading days preceding the date of conversion. We completed the Convertible Note offering pursuant to Regulation S of the Securities Act. Each subscriber of the Convertible Notes represented to us that they were a non-US person as defined in Regulation S.
We did not engage in any offering of the Convertible Notes in the United States. Each subscriber of the Convertible Notes represented their intention to acquire the securities for investment only and not with a view toward distribution. Appropriate legends were affixed to the Convertible Notes issued to each subscriber in accordance with Regulation S. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. No registration rights were granted to any of the subscribers.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to our security holders for a vote during the fiscal quarter ending December 31, 2002.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
The following exhibits are either provided with this Quarterly Report or are incorporated herein by reference:| Exhibit Number | Description of Exhibit | |
| 3 | Articles of Incorporation and Bylaws(1) | |
| 10.1 | Sale of Patent Agreement dated as of June 15, 1998 between Cool Can Technologies, Inc. and Edward Halimi(1) | |
| 10.2 | Patent and Technology Transfer Agreement dated April 18, 2001 among Cool Can Technologies, Inc., David St. James, Melanie St. James and Edward Halimi.(2) | |
| 10.3 | Exclusive License Agreement dated June 5, 2002 between Balsam Ventures, Inc. and Cool Can Technologies Inc.(3) | |
| 10.4 | Form of Convertible Note(4) | |
| 10.5 | Form of Subscription Agreement between Cool Can Technologies, Inc. and the Convertible Noteholders(4) | |
| 10.6 | Exclusive License Agreement dated for reference November 30, 2003 between Balsam Ventures, Inc. and Cool Can Technologies, Inc.(4) | |
| 31.1 | Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| (1) | Filed with the SEC as an exhibit to our registration statement on Form 10SB originally filed on August 26, 1999, as amended. |
| (2) | Filed with the SEC as an exhibit to our annual report on Form 10-KSB for the year ended June 30, 2001. |
| (3) | Filed with the SEC on June 20, 2002 as an exhibit to our current report on Form 8-K. |
| (4) | Filed with the SEC on January 9, 2004 as an exhibit to our current report on Form 8-K. |
REPORTS ON FORM 8-K
We did not file any Current Reports on Form 8-K during the fiscal quarter ended December 31, 2002. The following reports on Form 8-K were filed since the fiscal quarter ended December 31, 2002.
| Date of Form 8-K | Date of Filing with the SEC | Description of the Form 8-K |
| January 8, 2004 | January 9, 2004 | Disclosure of Exclusive License Agreement dated for reference November 30, 2003 |
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SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.
COOL CAN TECHNOLOGIES, INC.
| By: | /s/ Bruce Leitch | |
| Bruce Leitch | ||
| Chief Executive Officer, | ||
| Chief Financial Officer and | ||
| Director | ||
| (Principal Executive Officer, | ||
| Principal Financial Officer and Principal Accounting Officer) | ||
| Date: January 5, 2004 |
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