SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 10-QSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________to____________
Commission File Number: 0-21457
-----------------------------------
MORGAN COOPER, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2254391
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
214 West 39th Street, Suite 1006, New York, New York 10018
(Address of principal executive offices)
(212) 719-3039
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered under section 12(b)
of the Exchange Act: None
Securities registered under section 12(g)
of the Exchange Act: Common Stock, no par
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or 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 [ ]
Revenues for the three month period ending March 31, 2000
were $53,477.
The aggregate market value of the voting stock held by
non-affiliates of the Company, based upon the closing price of
the common stock on March 31, 2000 was approximately $66,140,430.
As of March 31, 2000, the Company had 13,924,301 shares of common
stock issued and outstanding.
MORGAN COOPER, INC.
FORM 10-QSB
for the quarter ended March 31, 2000
TABLE OF CONTENTS
Part I. Financial Information
- -------
Item 1. Financial Statements (unaudited)
Item 2. Managements Discussion and Analysis or Plan of
Operation
Part II. Other Information
- --------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security holders
Item 5. Other Information
Item 6. Exhibits and reports on form 8-K
SIGNATURES
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
MORGAN COOPER, INC.
(f/k/a Goung Hei Investment Co., Ltd.)
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<PAGE>
MORGAN COOPER, INC.
(f/k/a Goung Hei Investment Co., Ltd.)
MARCH 31, 2000 AND 1999
CONTENTS
Page
Consolidated Financial Statements (Unaudited):
Balance Sheet 1
Statements of Operations and
Stockholders' Deficiency 2
Statements of Cash Flows 3
Notes to Financial Statements 4-6
<PAGE>
<TABLE>
MORGAN COOPER, INC.
(f/k/a Goung Hei Investment Co., Ltd.)
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 24
Accounts receivable 500
Prepaid expense 15,000
Merchandise inventory 15,067
----------
Total Current Assets 30,591
----------
OTHER ASSETS:
Security deposit 16,500
Deferred tax asset -
----------
Total Other Assets 16,500
----------
$ 47,091
==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable $ 518,810
Bridge loans payable 267,500
Stockholders' loans 50,000
Deferred tax liability -
----------
Total Current Liabilities 836,310
STOCKHOLDERS' DEFICIENCY:
Capital stock, par value $.00001;
50,000,000 shares authorized,
13,924,301 shares outstanding 139
Additional paid-in capital 565,020
Accumulated deficit (1,354,378)
----------
Total Stockholders' Deficiency (789,219)
----------
$ 47,091
==========
See accountants' review report and notes to financial statements.
</TABLE>
<PAGE> -1-
<TABLE>
MORGAN COOPER, INC.
(f/k/a Goung Hei Investment Co., Ltd.)
CONSOLIDATED STATEMENTS OF OPERATIONS
AND STOCKHOLDERS' DEFICIENCY (UNAUDITED)
<S> <C> <C>
Three Months Ended March 31,
2000 1999
NET SALES $ 53,477 $ -
COST OF GOODS SOLD
Inventory - Beginning of period 48,330 -
Purchases 35,624 -
Duty and freight 2,824 -
---------- ----------
Goods Available for Sale 86,778 -
Less: Inventory - end of period 15,067 -
---------- ----------
Cost of Goods Sold 71,711 -
---------- ----------
GROSS LOSS (18,234) -
========== ==========
OPERATING EXPENSES:
Officer's salaries 102,500 -
Product development 131,522 -
Consulting fee 140,345 -
Reorganization and settlement costs 22,750 -
Rent and escalation charges 32,095 -
Hong Kong office expenses 98,936 -
Advertising and promotion 33,243 -
Professional fees 116,207 -
Telephone 4,106 -
Payroll Taxes 9,462 -
Travel and entertainment 7,530 -
Freight-in 6,676 -
Office expenses 6,389 -
Interest and bank charges 451 -
---------- ----------
Total Operating Expenses 712,212 -
---------- ----------
NET LOSS BEFORE PROVISION FOR INCOME TAXES (730,446) -
PROVISION FOR INCOME TAXES - -
---------- ----------
NET LOSS (730,446) -
STOCKHOLDERS' DEFICIENCY:
Beginning of Period (58,773) -
---------- ----------
End of Period $ (789,219) $ -
NET LOSS PER COMMON SHARE $ (0.06) $ (0.00)
========== ==========
WEIGHTED AVERAGE NUMBER
COMMON SHARES OUTSTANDING 13,924,301 1,682,345
========== ==========
See accountants' review report and notes to financial statements.
</TABLE>
<PAGE> -2-
<TABLE>
MORGAN COOPER, INC.
(f/k/a Goung Hei Investment Co., Ltd.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<S> <C> <C>
Three Months Ended March 31,
2000 1999
CASH FLOWS PROVIDED BY (USED FOR):
OPERATING ACTIVITIES:
Net loss $ (730,446) $ -
Adjustments to reconcile net loss to
cash provided by operating activities:
Changes in certain assets
and liabilities:
(Increase) decrease in:
Accounts receivable (500) -
Inventory 33,263 -
Security deposit (5,000) -
Prepaid expense (15,000) -
Increase (decrease) in:
Accounts payable 320,403 -
Accrued expenses and taxes (380) -
---------- ----------
Net Cash Used for
Operating Activities (397,660) -
---------- ----------
INVESTING ACTIVITIES:
Notes receivable 125,000 -
---------- ----------
FINANCING ACTIVITIES:
Stockholders' loans 50,000 -
Proceeds from bridge loans payable 197,500 -
---------- ----------
Net Cash Provided by
Financing Activities 247,500 -
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (25,160) -
---------- ----------
CASH AND CASH EQUIVALENTS:
Beginning of period 25,184 -
---------- ----------
End of period $ 24 $ -
========== ==========
See accountants' review report and notes to financial statements.
</TABLE>
<PAGE> -3-
MORGAN COOPER, INC.
(f/k/a Goung Hei Investment Co., Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 1 - ORGANIZATION:
Goung Hei Investment Co., Ltd. ("GHIC") was incorporated on
October 12, 1988, under the laws of the State of Delaware. The
purpose of Goung Hei Investment Co., Ltd. was to seek out and
acquire potential business opportunities. Morgan Cooper, Inc.
("MCII") was incorporated on August 2, 1999, under the laws of
the State of New York. Pursuant to a reorganization, (see Note
3), MCII became a wholly owned subsidiary of GHIC. On November
24, 1999, GHIC acquired the assets of Tinjian Garment USA, Inc.
at which time Tinjian became a wholly-owned subsidiary of GHIC.
The consolidated Company designs and imports men's and women's
private and name brand apparel, which will be sold to retailers
throughout the country.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation:
The consolidated financial statements include the accounts of
Morgan Cooper, Inc. (DE) f/k/a Goung Hei Investment Co., Ltd.,
and its wholly-owned subsidiaries Morgan Cooper, Inc. (NY) and
Tinjian Garment USA, Inc.. All significant intercompany
transactions and balances have been eliminated in consolidation.
Use of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Accounts Receivable:
The company considers accounts receivable to be fully
collectible; accordingly no allowance for doubtful accounts is
required. The company will utilize a direct write-off method
should accounts receivable be considered uncollectible.
Advertising:
Advertising costs are expensed as incurred.
Cash and Cash Equivalents:
Cash and cash equivalents consist primarily of cash at banks and
highly liquid investments with maturities of three months or
less.
Inventories:
Inventories are valued at lower of cost or market.
Federal Income Taxes:
The Financial Accounting Standards Board issued Statement No.
109, "Accounting for Income Taxes" (SFAS 109), which provides for
the recognition of deferred tax assets, net of an applicable
valuation allowance, related to net operating loss carryforwards
and certain temporary differences.
Stock Options:
The Company accounts for stock options in accordance with
Accounting Principles Board Opinion No. 25 (APB 25), "Accounting
for Stock Issued to Employees." Under APB 25, the Company
recognizes no compensation expense related to employee stock
options, as no options are granted at a price below the market
price on the date of grant.
Loss Per Share:
Basic net loss per share was computed based on the weighted
average number of shares of common stock outstanding during the
period.
NOTE 3 - BUSINESS COMBINATION:
Pursuant to a Reorganization and Stock Purchase Agreement dated
November 18, 1999, GHIC issued 9,637,652 shares of common stock
to the stockholders of MCII in exchange for all of the
outstanding shares of MCII. The transaction made MCII a wholly-
owned subsidiary of GHIC. In January 2000, GHIC changed its name
to "Morgan Cooper, Inc."
NOTE 4 - GOING CONCERN:
As shown in the accompanying financial statements, the Company
has negative working capital and has incurred a material net loss
for the three months then ended. In addition, the Company has
not generated material revenues in the first quarter of 2000 and
is currently unable to meet its obligations as they come due.
These factors raise substantial doubt about the Company's ability
to continue as a going concern.
As discussed in Note 11, on March 15, 2000, management issued a
Private Placement Memorandum with a stock offering of up to
1,600,000 shares generating a maximum of $6,000,000. The
proceeds from this private placement are to be used as working
capital, to repay current outstanding indebtedness and general
corporate purposes. As of May 12, 2000, no proceeds have been
received from this Private Placement Memorandum. The financial
statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
NOTE 5 - INCOME TAXES:
The Company's total deferred tax liabilities, deferred tax assets
and valuation allowance consists of the following at March 31,
2000:
Total deferred tax liabilities $ -
Total deferred tax assets 364,150
Total valuation allowance 364,150
---------
$ -
=========
NOTE 6 - NOTES PAYABLE:
During 1999 and 2000, the Company issued $767,500 of 12%
convertible promissory notes to prospective investors via a
subscription agreement. The notes provide that the promissory
notes are convertible into common stock at a price equal to 50%
of the price at which such securities are issued in the offering.
As of March 31, 2000, $500,000 of the total offering received of
$767,500, was converted into common stock of the Company.
NOTE 7 - LOANS PAYABLE:
During March 2000, the Company received $50,000 from two key
stockholders. No terms of the loan have been set except that the
amount will be offset by any proceeds received from the Private
Placement Memorandum discussed in Note 11.
NOTE 8 - COMMITMENTS AND CONTINGENCIES:
On November 23, 1999, employment contracts were entered into with
the Chairman/President and the Executive Vice President/Lead
Designer. Both agreements expire in August 2002 and provide a
salary of $250,000 and $160,000 per annum, respectively. The
agreements provide increases in salary plus bonuses and stock
options when the Company achieves certain financial milestones.
In addition, payments in the amount of $60,000 will be made on
behalf of the Chairman/President in connection with payment of
interest on indebtedness of the Company's predecessor, which were
personally guaranteed.
Also, during 1999, the Company entered into employment agreements
with four key individuals. These agreements became effective
January 3, 2000. The employment agreements are for a term of
thirty-nine months and provide for aggregate annual salaries of
$1,110,000. The agreements also provide for bonuses and stock
option incentives based upon specified performance criteria.
NOTE 9 - LEASE COMMITMENTS:
During 1999, the Company entered a four year, three month sub-
lease agreement for showroom space with monthly rent of $3,733
per month. On February 15, 2000, a two-year lease was entered
into for space for a design studio with monthly rent of $2,000
per month. On April 1, 2000, a one-year, seven-month sub-lease
agreement was entered into for office space with monthly rent of
$6,000 per month. Rent expense including escalation charges for
the three months ended March 31, 1999 was $32,095.
At March 31, 2000, future minimum payments on the leases are as
follows:
Year
-----
2000 $132,600
2001 164,800
2002 54,800
2003 44,800
--------
$397,000
========
NOTE 10 - STOCK OPTION PLANS:
Under terms of the Company's incentive stock option plans,
officers and certain other employees may be granted options to
purchase the Company's common stock at no less than 100% of the
market price on the date the option is granted. As of March 31,
2000, the Company's stock options available are based on the
performance goals of the Company as noted in key personnel
employee agreements. At March 31, 2000, there were no options
outstanding.
NOTE 11 - PRIVATE PLACEMENT MEMORANDUM:
On March 15, 2000, the Company issued a Private Placement
Memorandum offering up to 1,600,000 shares of common stock with
an attached warrant open for three years to purchase a share of
common stock for an offering price of $3.75 per share.
As discussed in Note 4, as of May 12, 2000, no proceeds have been
received.
NOTE 12 - SUBSEQUENT EVENTS:
As discussed in Note 8, the Company entered into a lease
agreement on April 1, 2000.
In April 2000, the Company, its wholly-owned subsidiary, Tianjian
Garments USA, Inc. and certain of its key employees have been
named as defendants in a lawsuit seeking compensatory and
punitive damages. The suit alleges tortious interference of
contract from the Company's hiring of two former employees of the
plaintiff who were subject to employment agreements. The
plaintiff initially obtained a temporary restraining order
against the Company from doing business with any of the
plaintiff's customers, but the Company was successful in having
this TRO vacated. The Company intends to vigorously contest the
lawsuit, however management is unable to evaluate the ultimate
outcome or whether the resulting liability, if any, would have a
material adverse effect on the financial condition and results of
operations of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
The following discussion should be read in conjunction with
the Company's financial statements and notes thereto included in
Item 1 of this Form 10-QSB report.
During the next twelve months, the Company plans to design,
manufacturer and distribute "better" women's sportswear under the
Morgan Cooper brand to be distributed through specialty and
"better" department stores, and also to produce private label
goods for retailers such as J.C. Penny, Walmart, K-Mart, Sears
and Target.
In March of 2000, the Company commenced the solicitation of
funds through a Regulation D, Rule 506 private placement
memorandum ("PPM"). The Company intends to raise $6,000,000
through the sale of 1,600,000 shares of the Company's common
stock with an attached three-year warrant to purchase an
additional share of common stock at a price of $3.75. The net
proceeds from the offering will be used as working capital, to
repay current outstanding indebtedness and for general corporate
purposes, and should cover the Company's expenses for the next
twelve months.
Operating Subsidiary
The Company has established a wholly-owned subsidiary called
Tianjin Garment USA, Inc. ("Tianjin"). Tianjin commenced
operations in January 2000. Tianjin will specialize in private
label sales to five major accounts: Walmart, K-Mart, J.C. Penney,
Target and Sears. Tianjin has hired a very strong management
team of George Powell, Michael Russo, and James Toth. In 1999,
this management team designed and sold over $69,000,000 to the
five accounts listed above. These individuals have consistently
achieved similar sales figures for the past eleven years while
working for other companies.
George Powell is the chief executive officer and will assume
responsibility for strategic planning of all domestic and
international operations and all sales to J.C. Penney. Michael
Russo is the vice president of sales and will assume
responsibility for sales plans and specific direction of all
Walmart programs. Jimmy Toth is the chief operating officer and
will assume responsibility for all domestic and international
operations and merchandising operations.
Advertising, Sales and Marketing
The Company plans to capitalize on the existing Morgan
Cooper trademark and to develop, promote and maintain a
consistent image through coordination of advertising,
merchandising and promotion, both in retail stores and on the
Internet. The Company plans to advertise in magazines such as
Elle, Vogue and Harper's Bazaar, as well as on television, to
promote its high quality, contemporary, sophisticated image to
women aged 19-40, a slightly younger demographic group than that
targeted by the Company's most prominent competitors.
Growth Strategies
The Company's strategy will employ six major elements which
it believes will result in successful market penetration:
1. Rapid expansion of the private label division through
expanded product sales within existing private label and brand
label customers.
2. Support for Tinanjin USA Inc.
3. Creation of five unique annual collections to be exhibited
at trade shows and to existing buyers and clientele.
4. Exploitation of its strategic alliance with Tsinlien
Garments Co., Ltd.
5. Creation of a successful awareness campaign, including
print, television and electronic media, for the designer and
private label lines of Morgan Cooper.
6. Implementation of a full e-commerce Internet site to market
the Morgan Cooper trademark labels over the Internet.
Sourcing
The Company's sourcing strategy will be to contract for the
manufacture of its product lines and collections. Outsourcing
will allow the Company to maximize production flexibility while
avoiding significant capital expenditures, work-in-process
inventory buildups and the costs of managing a large production
work force. The Company will inspect products manufactured by
contractors to insure that they meet the Company's quality
standards.
The Company will import most of its finished goods because
it believes it can import higher quality at lower costs than can
be achieved domestically in the United States. Senior management
has extensive long-term relationships with the manufacturers of
the Morgan Cooper trademark products and has established a
relationship with Tsinlien Garments Co., Ltd. group in China for
the manufacture of the private label products. The Company's
production and sourcing staff will oversee all aspects of apparel
manufacturing and production, the negotiation for raw materials
and the research and development of new products and sources.
The Company's agreement with Tsinlien Garments Co., Ltd., and its
agreements with several other manufacturers in China that are
being assigned by the Company's predecessor, will allow the
Company effectively to compete and maintain high profit margins
by allowing the Company to purchase raw goods at cost and the
contract manufacturer to manufacture and distribute the products
to the retail clients and clientele of the Company. Although the
Company's relationship with Tsienlien is relatively new,
management believes that Tsienlien has the capacity and quality
control systems to enable it to satisfy the Company's needs.
Tsinlien Garments Co., which has 40 garment factories within
mainland China, has been successfully manufacturing garments for
European and Asian designers for 35 years. It is a subsidiary of
Tianjin Development Corp., a major Chinese conglomerate, and one
of only eight mainland Chinese companies currently trading on the
Hong Kong Stock Exchange (Hang Seng Index).
The Company expects to have its products manufactured
according to plans prepared each year, which reflect prior year's
experience, current fashion trends, economic conditions and
management estimates of the performance of its various fashion
lines. In certain cases, the Company expects to negotiate
separately with suppliers for sale of raw materials, which will
then be purchased by its contractors in accordance with the
Company's specifications. The Company intends to limit its
exposure to holding excess inventory by committing to purchase a
portion of total projected demand. The Company believes it will
be able to satisfy the excess demand through reorders. The
Company believes that its policy of limiting its commitments for
purchases early in the season will reduce its exposure to excess
inventory and obsolescence.
The Company's reliance on third party manufacturing could
result in the Company being unable to deliver on a timely basis,
which could result in the cancellation of orders, refusal to
accept orders or a reduction in purchase price, any of which
could have a material adverse effect on the Company's financial
condition and results of operations. Although the Company
believes that in the event and if needed, the Company can replace
such suppliers in a timely manner, there can be no assurance that
such suppliers could be replaced in a timely manner, and the loss
of such suppliers could have a significant effect on the
Company's short-term operation results.
Seasonality of Business
The Company's business varies with general seasonal trends
that are characteristic of the apparel industry, and it generally
experiences lower net revenues and net income (or higher net
losses) in the first half of each fiscal year, as compared to the
second half of its fiscal year. On a quarterly basis, the
Company's operations may vary with production and shipping
schedules, the introduction of new products, and variation in the
timing of certain holidays from year to year.
FORWARD-LOOKING STATEMENTS AND BUSINESS CONSIDERATIONS
Certain statements contained herein are forward-looking
statements that have been made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. The words and phrases "will likely result," "are expected
to," "will continue," "is anticipated," "estimates," "projects,"
"believes," "plans" or similar expressions, are intended to
identify "forward-looking statements include, without limitation,
the Company's expectations regarding sales, earnings, or other
future financial performance and liquidity, and general
statements about future operations and operating results.
Although the Company believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual
results will not differ materially from its expectations. Factors
that could cause actual results to differ from expectations
include, without limitation: (i) the failure of certain key
members of the Company's design teams or management, including
Morgan and Zarina Cooper, to continue to be active in the
business of the Company; (ii) the timing and expense associated
with, and effects of, the strategic initiatives being implemented
by the Company; (iii) risks associated with the receipt, pricing,
and timing of customer orders; (iv) general competitive factors
and the overall financial condition of the apparel industry, the
retail industry, and the general economy; (v) a change in
retailer or consumer acceptance of the Company's products; (vi)
the variability of the Company's results in any period due to the
seasonal nature of the business, the timing and level of the
Company's sales, the timing of launch of new products and
collections and opening of new doors, fashion trends, and the
timing, terms, consummation, or success of any joint ventures,
licenses, or other dispositions of product lines; (vii) social,
political and economic risks to the Company's foreign operations
and customers, including changes in foreign investment and trade
policies and regulations of the host countries and of the United
States; (viii) changes in laws, regulations, and policies,
including changes in accounting standards, that affect, or will
affect, the Company in the United States and abroad; (ix) foreign
currency fluctuations affecting the Company's results of
operations and value of its foreign assets, the relative price at
which the Company and foreign competitors sell their products in
the same markets, and the Company's operating and manufacturing
costs outside of the United States; (x) shipment delays,
depletion of inventory, and increased production costs resulting
from disruption at any of the Company's facilities or other
causes; (xi) changes in product mix to ones which are less
profitable; (xii) infringements of the Company's trademarks and
other proprietary rights, imitations or diversions of the
Company's products, or inability to obtain trademark protection
outside the United States for one or more of the Company's marks;
(xiii) political or economic instability resulting in the
disruption of trade from the countries in which the Company's
contractors, suppliers, licensees, or customers are located, the
imposition of additional regulations relating to imports, the
imposition of additional duties, taxes, and other charges on
imports, significant fluctuations of the value of the dollar
against foreign currencies, or restriction on transfer of funds;
(xiv) the inability of a contractor to deliver the Company's
products in a timely manner thereby causing the Company to miss
the delivery date requirements of its customers, which in turn
could result in the cancellation of orders, refusal to accept
deliveries, or a reduction in the selling price; or (xv) the
violation of labor or other laws by any independent manufacturer
or any licensee. The Company undertakes no obligation to publicly
update or revise any forward-looking statements made herein or
elsewhere whether as a result of new information, future events
or otherwise.
PART II
ITEM 1. LEGAL PROCEEDINGS
As of the date of this filing, the Company, its wholly-owned
subsidiary, Tianjian Garments USA, Inc. and certain of its key
employees have been named as defendants in a lawsuit seeking
compensatory and punitive damages. The suit alleges tortious
interference of contractual relations resulting from the
Company's hiring of two former employees of the plaintiff who
were subject to employment agreements. The Company intends to
vigorously contest the lawsuit, however management is unable at
this time to evaluate the ultimate outcome or whether the
resulting liability, if any, would have a material adverse effect
on the financial condition and results of operations of the
Company. The Company's litigation counsel believes that there is
a likelihood that the case will be dismissed upon the Company's
upcoming motion therefor.
Notwithstanding the foregoing, to the best knowledge of the
officers and directors of the Registrant, neither the Registrant
nor any of its officers or directors are parties to any material
legal proceeding or litigation and such persons know of no other
material legal proceeding or litigation contemplated or
threatened. There are no judgments against the Registrant or its
officers or directors. None of the officers or directors have
been convicted of a felony or misdemeanor relating to securities
or performance in corporate office.
ITEM 2. CHANGES IN SECURITIES
In March of 2000, the Company commenced the solicitation of
funds through a Regulation D, Rule 506 private placement
memorandum ("PPM"). The Company intends to raise $6,000,000
through the sale of 1,600,000 shares of the Company's common
stock with an attached three-year warrant to purchase an
additional share of common stock at a price of $3.75. The net
proceeds from the offering will be used as working capital, to
repay current outstanding indebtedness and for general corporate
purposes, and should cover the Company's expenses for the next
twelve months.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
For the first quarter of the fiscal year ending December 31,
2000, there were no matters submitted to a vote of security
holders through the solicitation of proxies or otherwise.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
EXHIBIT
NUMBER DESCRIPTION
------- ----------------------------------------------
16 Letter of resignation from the Company's former
auditors (incorporated by reference to the Form
8-K filed on March 6, 2000)
27 Financial Data Schedule
Reports on Form 8-K
On April 13, 2000, the Company filed an 8-K indicating an
Item 4 Change in Registrant's Certifying Accountants. As of
March 23, 2000, Morgan Cooper, Inc. (the "Company") retained and
appointed the accounting firm of Sobel & Co., LLC as the
Company's new independent accountants to audit the Company's
financial statements for the fiscal year ending December 31,
1999. The decision to retain and appoint the accounting firm of
Sobel & Co., LLC has been approved by the Company's Board of
Directors.
A copy of any of the exhibits listed or referred to above
will be furnished at a reasonable cost to any person who was a
shareholder of the Company on March 31, 2000 upon receipt from
any such person of written request for any such exhibit. Such
request should be sent to the Company with the attention directed
to the Corporate Secretary.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Exchange Act, the Company has caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MORGAN COOPER, INC.
Date: May 15, 2000 /s/ Morgan Cooper
Morgan Cooper,
President, CEO and Director
Date: May 15, 2000 /s/ Zarina Cooper,
Zarina Cooper,
Executive Vice President and
Director
Date: May 15, 2000 /s/ George Powell
George Powell,
Director
Date: May 15, 2000 /s/ Gary Kotler
Gary Kotler,
Chief Financial Officer
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the Company
and in the capacities end on the dates indicated.
Date: May 15, 2000 /s/ Morgan Cooper
Morgan Cooper,
President, CEO and Director
Date: May 15, 2000 /s/ Zarina Cooper,
Zarina Cooper,
Executive Vice President and
Director
Date: May 15, 2000 /s/ George Powell
George Powell,
Director
Date: May 15, 2000 /s/ Gary Kotler
Gary Kotler,
Chief Financial Officer
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