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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended SEPTEMBER 30, 2001
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period to
Commission File Number 0-27147
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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)
SUITE 206, 4505 LAS VIRGENES ROAD
CALABASAS, CA 91302
- --------------------------------------- -----
(Address of principal executive (Zip Code)
offices)
Issuer's telephone number,
including area code: (818) 871-9999
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NOT APPLICABLE
_____________________________________________________________________
(Former name, former address and former fiscal six months, 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 [X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 18,752,966 SHARES COMMON STOCK
OUTSTANDING AS OF NOVEMBER 5, 2001.
1
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 three months ended September 30, 2001 are not
necessarily indicative of the results that can be expected for the year ending
June 30, 2002.
2
COOL CAN TECHNOLOGIES, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
September 30, June 30,
ASSETS 2001 2001
----------- ----------
(Unaudited) (Audited)
Cash $ 265 $ 1,515
Prepaid expenses - -
----------- ----------
Total current assets 265 1,515
Intangibles 38,600 39,200
----------- ----------
$ 38,865 $ 40,715
=========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable $ 53,633 $ 71,885
Accounts payable, stockholders 134,140 108,640
Due to stockholders 346,732 296,732
----------- ----------
Total current liabilities 534,505 477,257
STOCKHOLDERS' DEFICIT:
Preferred stock - -
Common stock 279,769 279,769
Accumulated deficit (775,409) (716,311)
----------- ----------
(495,640) (436,542)
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$ 38,865 $ 40,715
=========== ==========
Note: The balance sheet at June 30, 2001 has been taken from the audited
financial statements at that date, and condensed.
See Notes to Condensed Financial Statements.
3
COOL CAN TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30
--------------------------
2001 2000
------------ ------------
Revenues $ - $ -
Administrative pre-opening and development expenses 59,098 47,758
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Net loss $ (59,098) $ (47,758)
============ ============
Loss per common share $ (0.01) $ (0.01)
============ ============
Loss per common share assuming dilution $ (0.01) $ (0.01)
============ ============
Weighted average outstanding shares 18,127,966 18,127,966
============ ============
See Notes to Condensed Financial Statements.
4
COOL CAN TECHNOLOGIES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30
--------------------
2001 2000
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(59,098) $(47,758)
Amortization 600 600
Decrease in accounts payable (18,252) (5,060)
Increase in accounts payable, stockholders 25,500 -
--------- ---------
Net cash used in operating activities (51,250) (52,218)
CASH FLOWS FROM FINANCING ACTIVITIES:
Due from stockholders 50,000 72,500
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50,000 72,500
Decrease in cash (1,250) 20,282
Cash and savings:
Beginning of period 1,515 579
--------- ---------
End of period $ 265 $ 20,861
========= =========
See Notes to Condensed Financial Statements.
5
COOL CAN TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Condensed Financial Statements:
The condensed balance sheet as of September 30, 2001, the
statement of operations for the three-month periods ended
September 30, 2001 and 2000, and the condensed statement of
cash flows for the three-month periods then ended 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 September 30,
2001 and for all periods presented have been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles 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, 2001 audited financial
statements. The results of operations for the period ended
September 30, 2001 are not necessarily indicative of the
operating results for the full year.
Note 2. Stockholders' Equity:
During the three months ended September 30, 2001, stockholders'
deficit changed for a net loss of $59,098.
Note 3. Subsequent Events:
Subsequent to September 30, 2001, the company re-priced
1,050,000 stock options to $.31 per share for directors and
employees of the Company. In October, 2001, 500,000 options were
exercised at $.31 per share by an employee of the Company.
Note 4. Subsequent Events:
Subsequent to September 30, 2001, the Company repriced 1,050,000
stock options to $.31 per share for directors and employees.
Compensation expense of $105,000 was recognized as a result of this
repricing. In October, 2001, 500,000 options were exercised at
$.31 per share.
In addition, the Company has entered into a funding agreement
with a stockholder of the Company whereby the stockholder has
agreed to provide $1,000,000 of funding over a 12-month period by
purchasing restricted Company shares at 75% of the average closing
price of the Company's common shares for the 10 day period
immediately preceding receipt by the Company of notice of
intention to fund.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
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, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve risks and uncertainties, including statements
regarding the Company's 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 the Risk Factors section below, and, from time to time, in other
reports the Company files with 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 product.
Our proposed product is referred to by us as the "Cool Can" product and consists
of a module for insertion in an aluminum 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 aluminum
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.
Our Cool Can product is presently in the development stage. We have not
finalized commercialization of our Cool Can product and we have not yet achieved
any sales of our Cool Can product.
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PLAN OF OPERATION
Our plan of operations for the next twelve months includes the following
components:
1. The first phase will be to proceed with product development and
production of samples of our self-chilling beverage container modules. This
phase will include the following elements:
(a) Product fabrication, including testing and studying design concepts,
making required design modifications, developing and building a fully
functioning prototype self-chilling beverage container.
(b) Follow on prototype development including, analysis, testing and fine
tooling required for production and finalizing all production drawings and
specifications.
(c) Producing high-volume production cost estimates and methods, including
estimation of tooling costs, sourcing production facilities and requesting bids
for tender from potential manufacturers of component parts and analysis and cost
estimates for projected method of assembling of chilling module.
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
consultation with aluminum 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 test the
finished product in the market.
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 six
months, commencing upon us achieving the required financing, at an estimated
cost of $200,000.
2. Consultation feedback is estimated to take place over a timeframe of
three months following completion of phase one at an estimated cost of $100,000.
8
3. Marketing and licensing will follow phase two and is estimated to take
three months at an estimated cost of $100,000.
We currently have a cash position of $265 as at September 30, 2001. In
addition, we have a current working capital deficit of $534,240 as at September
30, 2001. 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.
RESULTS OF OPERATIONS
REVENUES
We did not earn any revenues during the three months ended September 30, 2001 or
the year ended June 30, 2001. 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.
OPERATING EXPENSES
Our operating expenses were $59,908 for the three months ended September 30,
2001, compared to operating expenses of $47,758 for the three months ended
September 30, 2000. Our operating expenses for the three months ended
September 30, 2001 consisted primarily of: (i) product development expenses in
the approximate amount of $11,000; (ii) consulting fees paid to Mr. Bruce
Leitch, our chief executive officer, in the amount of $25,500; and (iii) legal
and accounting expenses incurred in connection with our reporting obligations
under the Securities Exchange Act of 1934.
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 technology in accordance with our plan of operations.
NET LOSS
We recorded a net loss of $59,908 for the three months ended September 30, 2001,
compared to a net loss of $47,758 for the three months ended September 30, 2000.
Our net loss was comprised entirely of operating expenses.
9
LIQUIDITY AND CAPITAL RESOURCES
We had cash on hand of $265 as at September 30, 2001, compared to $1,515 as at
June 30, 2001. We had a working capital deficit of $534,240 as at September 30,
2001, compared to $475,742 as at June 30, 2001.
We were dependent on loans from certain of our shareholders during the three
months ended September 30, 2001 to finance our business operations. Loans from
shareholders increased to $346,732 as at September 30, 2001 from $296,732 as at
June 30, 2001. 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 $134,140 as at September 30,
2001 from $108,640 as at June 30, 2001.
Subsequent to September 30, 2001, we sold 500,000 shares of our common stock at
a price of $0.31 per share pursuant to the exercise of employee stock options,
for gross proceeds of $155,000. The proceeds of this sale of common stock were
applied to fund payment of a portion of our current accounts payable and to
partially repay outstanding shareholder loans.
We sold an additional 125,000 shares of our common stock at a price of $0.40 per
share to Bay Financial S.A., a private investor, pursuant to Regulation S of the
Securities Act of 1933 on October 29, 2001. We intend to use the proceeds of
this sale for our ongoing product development program and for general working
capital purposes.
Our current monthly operating expenses are approximately $12,000 per month. Our
current cash reserves are only sufficient to enable us to operate for an
additional one month, assuming that our revenues remain constant. In addition,
we require approximately $400,000 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:
A. our ability to develop a commercially marketable Cool Can product;
10
B. the success of our planned license agreements for the Cool Can technology
that we develop;
C. our ability to raise additional capital necessary to implement our
business strategy and plan of operation;
D. our ability to compete with other chilled beverage container technology;
and
E. the success of any marketing and promotional campaign which we conduct
for the our Cool Can product once development is complete.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
None.
REPORTS ON FORM 8-K
1. Form 8-K filed November 8, 2001 announcing funding agreement with Bay
Financial, S.A.
11
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
President, Secretary and Treasurer
(Principal Executive Officer,
Principal Financial Officer and Principal Accounting Officer)
Director
Date: November 9, 2001