U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
[ ] TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to __________________
Commission file number 0-28879
COOL ENTERTAINMENT INC.
(Exact name of small business issuer as specified in its charter)
COLORADO APPLIED FOR
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
10900 N.E. 8TH STREET, SUITE 900, BELLEVUE, WASHINGTON 98004
(Address of principal executive offices)
(888) 603-8833
(Issuer's telephone number)
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 Exchange Act during the past 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
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the last practicable date:
37,619,401 SHARES OF COMMON STOCK, NO PAR VALUE, AS OF
MARCH 31, 2000
Transitional Small Business Disclosure Format (check one); Yes No X
<PAGE>
Interim Consolidated Financial Statements of
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
(Expressed in U.S. Dollars)
March 31, 2000
2
<PAGE>
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
Interim Consolidated Balance Sheet
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
(unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 102,267 $ 89,058
---------------- ----------------
Total current assets 102,267 89,058
Property and equipment, net 24,066 -
Receivable from related party 78,045 45,297
---------------- ----------------
$ 204,378 $ 134,355
================ ================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 31,724 $ 15,107
Loan payable - 15,000
---------------- ----------------
Total current liabilities 31,724 30,107
Stockholders' equity:
Common stock, no par value, authorized 100,000,000 shares; issued
37,619,401 (unaudited) shares at March 31, 2000
and 35,928,688 shares at June 30, 1999 13,320,355 217,158
Less: subscriptions receivable (1,000) -
Other paid-in capital 12,166 4,387
Deficit accumulated during the development stage (13,158,867) (117,297)
---------------- ----------------
Total stockholders' equity 172,654 104,248
---------------- ----------------
$ 204,378 $ 134,355
================ ================
</TABLE>
See accompanying notes to interim consolidated financial statements.
3
<PAGE>
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
Interim Consolidated Statements of Operations
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
Period from
Nine November 3, Period from
months 1998 Three Three November 3,
ended (inception) to months ended months ended 1998 (inception)
March 31, March 31, March 31, March 31, to March 31,
2000 1999 2000 1999 2000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Operating income:
Sales $ 2,496 $ - $ 2,496 $ - $ 2,496
Cost of goods sold 2,167 - 2,167 - 2,167
------------- ------------ ------------ ------------ --------------
Gross profit 329 - 329 - 329
Operating expenses:
Site development and
maintenance (note 5) 12,584,909 - 12,394,121 - 12,614,787
Management fees 182,044 5,340 67,175 5,340 208,733
Professional fees 162,121 23,367 119,618 23,367 201,568
Travel, advertising and
promotion 77,701 - 47,800 - 92,481
Office and administrative 28,381 61 5,384 61 33,666
Depreciation 6,743 - 3,467 - 6,743
Organization costs - - - - 1,218
------------- ------------ ------------ ------------ --------------
13,041,899 28,768 12,637,565 28,768 13,159,196
------------- ------------ ------------ ------------ --------------
Loss for the period $(13,041,570) (28,768) $(12,637,236) $ (28,768) $ (13,158,867)
============= ------------ ============= ============ ==============
Net loss per common share,
basic and diluted $ (0.61) $ (0.00) $ (0.47) $ (0.00) $ (0.71)
============= ============ ============ ============ ==============
Weighted average common
shares outstanding,
basic and diluted 21,383,777 13,705,821 26,899,759 14,479,937 18,592,830
============= ============ ============ ============ ==============
</TABLE>
See accompanying notes to interim consolidated financial statements.
4
<PAGE>
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
Interim Consolidated Statement of Stockholders' Equity
(Expressed in U.S. Dollars)
(Unaudited)
Period from November 3, 1998 (inception) to March 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Other During Total
COMMON STOCK Paid-In Development Stockholders'
SHARES AMOUNT CAPITAL STAGE EQUITY
<S> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 3, 1998
(Minas Novas Gold Corp.
Common Stock) 12,483,533 $ 180,958 $ - $ - $ 180,958
Adjustment to comply with
recapitalization accounting:
o elimination of Minas
Novas common stock - (180,958) - - (180,958)
o Cool Washington
common stock - 400 - - 400
Common stock issued to
purchase all issued and
outstanding shares of
Cool Washington, March 1,
1999 (note 2(a)) 23,184,044 11,192 - - 11,192
Common stock issued for cash,
April 12, 1999 at $0.75 per
share, net of issuance costs
of $2,849 40,000 27,151 - - 27,151
Common stock issued for cash,
April 23, 1999 at $0.90 per
share, net of issuance costs
of $2,736 121,111 106,264 - - 106,264
Fully paid stock subscriptions,
April 23, 1999, at $0.90 per
share, net of issuance costs
of $113 - - 4,387 - 4,387
Common stock issued for cash,
May 28, 1999 at $0.75 per
share, net of issuance costs
of $2,849 100,000 72,151 - - 72,151
Net loss - - - (117,297) (117,297)
------------ ----------- -------------- -------------- -------------
BALANCE, JUNE 30, 1999 35,928,688 217,158 4,387 (117,297) 104,248
Fully paid stock subscriptions,
July 20, 1999 at $0.65 per
share, net of issuance costs
of nil - - 75,000 - 75,000
</TABLE>
5
<PAGE>
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
Interim Consolidated Statement of Stockholders' Equity
(Expressed in U.S. Dollars)
(Unaudited)
Period from November 3, 1998 (inception) to March 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Other During Total
COMMON STOCK Paid-In Development Stockholders'
SHARES AMOUNT CAPITAL STAGE EQUITY
(continued)
<S> <C> <C> <C> <C> <C>
Fully paid stock subscriptions
August 6, 1999, at $0.53 per
share, net of issuance costs
of nil - $ - $ 55,985 $ - $ 55,985
Unpaid stock subscriptions
August 6, 1999, at $0.53 per
share, net of issuance costs
of nil - - 19,015 - 19,015
Fully paid stock subscriptions
September 10, 1999, at $0.53 per
share, net of issuance costs
of nil - - 69,921 - 69,921
Unpaid stock subscriptions
September 10, 1999, at $0.53 per
share, net of issuance costs
of nil - - 5,079 - 5,079
Net loss - - - (141,873) (141,873)
------------ ----------- -------------- -------------- ------------
BALANCE, SEPTEMBER 30, 1999 35,928,688 217,158 229,387 (259,170) 187,375
Common stock issued October 1,
1999 for fully paid stock
subscriptions at
$0.53 per share, net of
issuance costs of nil 105,625 55,985 (55,985) - -
Common stock issued October 1,
1999 for fully paid stock
subscriptions at $0.53 per
share, net of
issuance costs of nil 35,875 19,015 (19,015) - -
Common stock issued October 1,
1999 to satisfy loan at
$0.53 per share 28,300 15,000 - - 15,000
Common stock issued October 1,
1999 fully paid stock
subscriptions at $0.65 net
of issuance costs of nil 115,375 75,000 (75,000) - -
Common stock issued October 1,
1999 for fully paid stock
subscriptions at $0.90,
net of issuance costs of nil 5,000 4,387 (4,387) - -
Fully paid stock subscriptions
September 10, 1999, at $0.53
per share, net of issuance
costs of nil - - 166 - 166
Fully paid stock subscriptions
December 15, 1999, at $0.25
per share, net of issuance
costs of nil - - 123,000 - 123,000
6
</TABLE>
<PAGE>
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
Interim Consolidated Statement of Stockholders' Equity
(Expressed in U.S. Dollars)
(Unaudited)
Period from November 3, 1998 (inception) to March 31, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Other During Total
COMMON STOCK Paid-In Subscriptions Development Stockholders'
SHARES AMOUNT CAPITAL RECEIVABLE STAGE EQUITY
(continued)
<S> <C> <C> <C> <C> <C> <C>
Unpaid stock subscriptions
December 15, 1999, at
$0.25 per share, net of
issuance costs
of nil - $ - $ 8,000 (8,000) $ - $ -
Net loss - - - - (262,461) (262,461)
---------- ----------- --------- --------- ------------- ------------
BALANCE, DECEMBER 31, 1999 36,218,863 386,545 206,166 (8,000) (521,631) 63,080
Common stock issued January
3, 2000 for fully paid
stock subscriptions at
$0.53 per share, net of
issuance costs of nil 141,500 75,000 (75,000) -
Common stock issued for cash,
January 13, 2000, at $0.61
per share, net of issuance
costs of nil 46,722 28,500 - - 28,500
Common stock issued January 3,
2000 for fully paid stock
subscriptions at $0.25, net
of issuance costs of nil 524,000 131,000 (131,000) 7,000 - 7,000
Common stock issued for cash,
January 27, 2000 at $0.80
per share, net of issuance
costs of nil 72,500 58,000 - - 58,000
Common stock issued for cash,
February 1, 2000, at $0.80
per share, net of issuance
costs of $14,440 477,816 209,560 - - 209,560
Warrants issued for financial - - 12,000 - - 12,000
services (note 4)
Site development (note 5) - 12,345,500 - - - 12,345,500
Common stock issued for
services March 3, 2000 138,000 86,250 - - 86,250
Net loss - - - - (12,637,236) (12,637,236)
---------- ----------- --------- --------- ------------- ------------
BALANCE, MARCH 31, 2000 37,619,401 $13,320,355 $ 12,166 (1,000) $(13,158,867) $ 172,654
========== =========== ========= ========= ============= ============
</TABLE>
See accompanying notes to interim consolidated financial statements.
7
<PAGE>
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
Interim Consolidated Statement of Cash Flows
(Expressed in U.S. dollars)
<TABLE>
<CAPTION>
Period from
November 3, Period from
Nine months 1998 November 3,
ended (inception) to 1998 (inception)
March 31, March 31, to March 31,
2000 1999 2000
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Operations:
Loss for the period $ (13,041,570) $ (28,768) $ (13,158,867)
Items not involving cash:
Depreciation 6,743 - 6,743
Amortization of organization costs - - 1,218
Common stock issued for services 86,250 - 86,250
Warrants issued for financial services 12,000 - 12,000
Site development and maintenance 12,345,500 - 12,345,500
Changes in operating assets and liabilities:
Receivable from related party (32,748) - (54,678)
Accounts payable and accrued
liabilities 16,617 28,368 30,371
--------------- --------------- ---------------
Net cash used in operating activities (607,208) (400) (731,463)
--------------- -------------- ---------------
Cash flows from investing activities:
Purchase of property and equipment (30,809) - (30,809)
Cash acquired on acquisition - 2,960 2,960
--------------- -------------- ---------------
Net cash used in investing activities (30,809) 2,960 (27,849)
---------------- -------------- ---------------
Cash flows from financing activities:
Net proceeds from issuances of and
subscriptions for common stock 652,226 400 862,579
Subscriptions receivable (1,000) - (1,000)
--------------- -------------- ---------------
Net cash provided by financing activities 651,226 400 861,579
--------------- --------------- ---------------
Net increase in cash and cash equivalents
during the period 13,209 2,960 102,267
Cash and cash equivalents at beginning of
period 89,058 - -
--------------- -------------- ---------------
Cash and cash equivalents at end of period $ 102,267 $ 2,960 $ 102,267
=============== ============== ===============
Supplementary disclosure:
Non-cash transactions:
Stock issued to acquire Cool
Entertainment Inc. (note 2(a)) $ - $ 8,232 $ 8,232
Stock issued to satisfy loan payable 15,000 - 15,000
Interest paid - - -
Taxes paid - - -
</TABLE>
See accompanying notes to interim consolidated financial statements.
8
<PAGE>
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
Nine months ended March 31, 2000
Period from November 3, 1998 (inception) to March 31, 2000
- --------------------------------------------------------------------------------
1. GENERAL AND FUTURE OPERATIONS
Cool Entertainment Inc. (the "Company") was incorporated under the laws of
the State of Colorado on June 17, 1996, under the name of Minas Novas Gold
Corp. On February 15, 1999, the Company changed its name to Cool
Entertainment Inc. Prior to its acquisition of Cool Washington (note 2(a)),
the Company was a holding company with no substantive operations.
The Company is currently in the business of retailing entertainment related
products such as CDs, DVDs and videos through the website it is developing.
These interim consolidated financial statements have been prepared on a
going concern basis in accordance with United States generally accepted
accounting principles. The going concern basis of presentation assumes the
Company will continue in operation for the foreseeable future and will be
able to realize its assets and discharge its liabilities and commitments in
the normal course of business. Certain conditions, discussed below,
currently exist which raise substantial doubt upon the validity of this
assumption. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
The Company's future operations are dependent upon the market's acceptance
of its services and the Company's ability to secure strategic partnerships
There can be no assurance that the Company will be able to secure market
acceptance or strategic partnerships. As of March 31, 2000, the Company is
considered to be in the development stage as the Company has not generated
any significant revenues and is continuing to develop its business. The
Company has experienced negative cash flows and operations have primarily
been financed through the issuance of common stock. The Company does not
have sufficient working capital to sustain operations until the end of the
year ended June 30, 2000. Additional debt or equity financing will be
required and may not be available or may not be available on reasonable
terms.
2. SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of presentation:
On March 1, 1999, the Company issued 23,184,044 common shares for all
of the issued and outstanding shares of Cool Entertainment Inc. ("Cool
Washington"), a company incorporated in the State of Washington on
November 3, 1998. The acquisition was accounted for as a
recapitalization of Cool Washington. The transaction has been accounted
for as a capital transaction effectively representing an issue of
shares by Cool Washington for the net assets of the Company.
9
<PAGE>
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
Nine months ended March 31, 2000
Period from November 3, 1998 (inception) to March 31, 2000
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(a) Basis of presentation (continued):
Acquisition related costs of $23,367 were incurred on this
recapitalization and have been recorded as professional fees.
The historical financial statements reflect the financial position of
Cool Washington from the date of its incorporation on November 3, 1998,
consolidated with those of the Company from March 1, 1999.
(b) Basis of consolidation:
These interim consolidated financial statements have been prepared
using generally accepted accounting principles in the United States.
The financial statements include the accounts of the Company's
wholly-owned subsidiary, Cool Washington and all adjustments,
consisting solely of normal recurring adjustments, which in
management's opinion are necessary for a fair presentation of the
financial results for the interim periods. The financial statements
have been prepared consistent with the accounting policies described in
the Company's Registration Statement on Form 10-SB filed with the
Securities and Exchange Commission, and should be read in conjunction
therewith. Certain comparative figures have been reclassified to
conform to the presentation adopted in the current period.
(c) Use of estimates:
The preparation of interim consolidated financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the recorded
amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the interim consolidated
financial statements and reported revenues and expenses for the
reporting period. Actual results could differ from those estimates.
(d) Property and equipment
Property and equipment are stated at cost and are depreciated using the
straight line method over their estimated useful life determined to be
2 years.
10
<PAGE>
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
Nine months ended March 31, 2000
Period from November 3, 1998 (inception) to March 31, 2000
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(e) Net loss per share:
Basic loss per share is computed using the weighted average number of
common shares outstanding during the period. Diluted loss per share is
computed using the weighted average number of common stock and
potentially dilutive common stock outstanding during the period. As the
Company has a net loss in the period presented, basic and diluted net
loss per share are the same.
3. RELATED PARTY BALANCES AND TRANSACTIONS:
In March, 1999, the Company entered into a contract with a company, Cool
Management Inc., controlled by its stockholders to provide management
services, site development and other professional services at cost plus
10%. The expiry date of the contract is contingent upon the Company's
achievement of certain financing milestones and will conclude on the date
the final milestone is reached or upon the termination of the financing
agent. The receivable from related party is non-interest bearing, unsecured
and due on demand. The funds were advanced to Cool Management Inc. to fund
future development costs of the Company's website.
4. WARRANTS:
On February 4, 2000 the Company granted warrants to four directors of the
Company to purchase 1,200,000 common shares at $0.625 per share, being the
market price per share at the date of the grant. These warrants expire in
three years from their grant date. The Company also elected to grant on
February 4, 2000, warrants to certain shareholders to purchase 1,200,000
common shares at $0.625 per share, being the market price per share at the
date of the grant. These warrants were valued at $12,000 and were recorded
as a direct financing cost related to prior equity financings in which
these shareholders participated. These warrants expire in three years from
their grant date. All of the warrants are exercisable immediately but are
subject to a one year hold period.
In conjunction with the issue of 477,816 common shares in February 2000,
the Company issued 477,816 warrants to purchase 477,816 common shares at
$1.25 per share. These warrants are exercisable immediately and expire five
years from the issue date.
11
<PAGE>
COOL ENTERTAINMENT INC.
(FORMERLY MINAS NOVAS GOLD CORP.)
(A Development Stage Enterprise)
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
Nine months ended March 31, 2000
Period from November 3, 1998 (inception) to March 31, 2000
- --------------------------------------------------------------------------------
5. SITE DEVELOPMENT AND MAINTENANCE:
Effective February 25, 2000, the Company reached certain performance
milestones relating to the development of the Company's website. As a
result, 17,388,033 common shares previously held in escrow were released.
Site development and maintenance expense of $12,345,500 has been
recognized, representing the difference between the market value of the
common shares on the date of their release and the original cost of these
common shares.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The acquisition of Cool Entertainment Inc., a Washington corporation
("Cool Washington") on March 1, 1999 has been accounted for as a
recapitalization of Cool Washington. The transaction has been accounted for as a
capital transaction effectively representing the issuance of shares by Cool
Washington for the net assets of the Company.
RESULTS OF OPERATIONS
The Company is considered to be in the development stage since it has
not generated any significant revenues and is continuing to develop its
business. Revenues of only $2,496 were generated during the quarter ended March
31, 2000.
The Company experienced losses of $12,637,236 and $13,041,570 for the
three months and nine months ended March 31, 2000, respectively. For the
three-month period, operating expenses consisted primarily of the following:
site development and maintenance of $12,394,121, management fees of $67,175, and
travel, advertising, and promotion expenses of $47,800 related to the launch,
development, and maintenance of the Company's website. Professional fees of
$119,618 reflect the Company's efforts to achieve reporting company status under
the Securities Exchange Act of 1934. Such status become effective in February
2000.
Operating expenses for the nine-month period were primarily site
development and maintenance expenses of $12,584,909, management fees of
$182,044, professional fees of $162,121, and travel, advertising, and promotion
expenses of $77,701. These expenditures reflect the Company's launch,
development, and maintenance of its website, coolentertainment.com, on January
26, 2000.
Site development and maintenance expense of $12,345,500 was recognized
during the quarter ended March 31, 2000 as a result of the release of 17,388,033
common shares from escrow. Such shares had been held in escrow to insure the
achievement of certain performance milestones relating to the development of the
Company's website. The milestones were achieved in February, 2000, and the
Company had to recognize the difference between the market value of the
17,388,033 common shares on the date of their release and their original cost.
Since inception (November 3, 1998), the Company has incurred a net loss
of $13,158,867.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999 and March 31, 2000, the Company had working capital of
$58,951 and $70,543, respectively. Virtually all of the Company's liquidity has
been provided through the sale of its Common Stock. For the period from November
3, 1998 to June 30, 1999, the Company has received $210,353 in net proceeds from
the issuance of its Common Stock. During the nine months ended March 31, 2000,
the Company received an additional $652,226 from the sale of stock.
13
<PAGE>
PLAN OF OPERATION
At March 31, 2000, the Company had cash of approximately $102,000.
Additional funds will be needed to continue operations through the end of June
2000. In addition, the Company is required to raise more funds for a marketing
campaign. The Company is dependent upon external sources of funds and there is
no assurance that any such funding will be available to the Company. The Company
does not anticipate making any expenditures for plant or equipment, but expects
to increase the number of employees after its website is launched and fully
operational.
Due to the losses generated to date and the fact that operations have
been financed through the issuance of Common Stock, there is substantial doubt
about the Company's ability to continue as a going concern. As stated above, the
Company does not have sufficient working capital to sustain operations until the
end of its current fiscal year, which ends June 30, 2000. Additional debt or
equity financing will be required and may not be available or may not be
available on reasonable terms.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
In January 2000, Worgan Corporation purchased 46,722 shares of Common
Stock for cash of $28,500 and 72,500 shares for cash of $58,000. The
Company relied upon the exemption from registration contained in
Section 4(2) of the Securities Act of 1933. No underwriters were used
and no underwriting commissions were paid.
In February 2000, Orienstar Finance Limited purchased 477,816 shares
of Common Stock and warrants to purchase 477,816 shares for cash of
$224,000. The warrants are exercisable at $1.25 per share and expire
five years from the date of issuance. The Company relied upon the
exemption from registration contained in Rule 504 of Regulation D
under the Securities Act of 1933. The Company paid a finder's fee of
$13,440 and an escrow fee of $1,000.
On February 4, 2000, the Company granted warrants to four officers and
directors of the Company to purchase 1,200,000 common shares at $0.625
per share, being the market price at the date of grant. These warrants
expire three years from the date of grant. Also on that date, the
Company granted warrants to purchase 1,200,000 common shares at $0.625
per share to five shareholders who had assisted the Company with
financing. These warrants also expire three years from the date of
grant and were valued at $12,000. This amount was recorded as a direct
financing cost related to prior equity financings in which these
shareholders participated.
In March 2000, the Company issued 133,000 shares to Charterbridge
Financial Group, Inc. as compensation for financial public relations
and investment banking services, and 5,000 shares to Bulletin Board
Times, Inc. as compensation for public relations services. The shares
were valued at $0.625 per share, the market value of the Common Stock
at the time of issuance. The Company relied upon the exemption from
registration contained in Section 4(2) of the Securities Act of 1933.
No underwriters were used and no underwriting commissions were paid.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
15
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
<TABLE>
<CAPTION>
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
2.1 Chelsea Pacific Financial Corp. Agreement dated February 25, 1999 (1)<F1> N/A
3.1 Articles of Incorporation, as amended (1)<F1> N/A
3.2 Bylaws (1)<F1> N/A
10.1 Management Agreement between Cool Entertainment, Inc., and Cool N/A
Management Inc. dated March 1, 1999 (1)<F1>
10.2 Employment Agreement between Cool Management Inc. and Marc G. Belcourt N/A
dated March 1, 1999 (1)<F1>
10.3 Consulting Agreement between Cool Management Inc. and Leonard Wayne N/A
Voth dated March 1, 1999 (1)<F1>
10.4 Employment Agreement between Cool Management Inc. and William J. N/A
Hadcock dated March 1, 1999 (1)<F1>
10.5 Employment Agreement between Cool Management Inc. and Clement K.M. N/A
Lau dated March 1, 1999 (1)<F1>
10.6 Escrow Agreement between Pacific Corporate Trust Company, Cool N/A
Entertainment, Inc. (Washington), Chelsea Pacific Financial Corp., Cool
Entertainment, Inc. (Colorado), Clement Kar Man Lau, William James
Hadcock, Leonard Wayne Voth, and Marc Gregory Belcourt dated March 1,
1999, as amended (1)<F1>
10.7 Form of Registration Rights Agreement between Cool Entertainment, Inc. N/A
and each of Clement Kar Man Lau, William James Hadcock, Leonard Wayne
Voth, and Marc Gregory Belcourt dated March 1, 1999 (1)<F1>
10.8 Order Fulfillment Agreement with Valley Media, Inc. dated May 4, 1999 (1)<F1> N/A
10.9 License Agreement with Muze, Inc. dated May 1999 (1)<F1> N/A
16
<PAGE>
<CAPTION>
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
27 Financial Data Schedule 19
- ----------------------------
<FN>
(1)<F1> Incorporated by reference to the exhibits filed with the Registration Statement on Form 10-SB, File
No. 0-28879
</FN>
</TABLE>
B) REPORTS ON FORM 8-K:
None.
17
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
COOL ENTERTAINMENT INC.
(Registrant)
Date: May 18, 2000 By: /s/ Clement Lau
------------------------------------
Clement Lau, President (Principal
financial officer)
18
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDING MARCH 31, 2000, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 102,267
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 102,267
<PP&E> 30,809
<DEPRECIATION> 6,743
<TOTAL-ASSETS> 204,378
<CURRENT-LIABILITIES> 31,724
<BONDS> 0
0
0
<COMMON> 13,320,355
<OTHER-SE> (13,147,701)
<TOTAL-LIABILITY-AND-EQUITY> 204,378
<SALES> 2,496
<TOTAL-REVENUES> 2,496
<CGS> 2,167
<TOTAL-COSTS> 2,167
<OTHER-EXPENSES> 13,041,899
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (13,041,570)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,041,570)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,041,570)
<EPS-BASIC> (0.61)
<EPS-DILUTED> (0.61)
</TABLE>
