Equity

6 Months Ended

Jun. 30, 2011

Equity and Comprehensive Loss [Abstract]

EQUITY

NOTE 5 — EQUITY

Choice

     As part of the purchase price of Choice we issued 8,281,920 shares of our common stock to the previous shareholders of Choice. See Note 3.

Private placements

     As discussed in Note 3, on March 1, 2011, in connection with the closing of the Choice acquisition, the 12,262,500 Subscription Receipts were exchanged for 12,262,500 shares of our common stock. As part of this transaction, we received cash of $56,253,791, net of issuance costs.

     In addition, on March 22, 2011, we entered into a series of arm’s length securities purchase agreements to sell 12,000,000 shares of our common stock at a price of $5.00 per share, for aggregate proceeds of $60,000,000 to certain funds of a global financial institution (the “Private Placement”). We intend to use the proceeds from the Private Placement to further our organic and acquisition growth strategy, as well as for working capital purposes. On March 23, 2011, we closed the Private Placement and issued 12,000,000 shares of our common stock. Pursuant to the securities purchase agreements, the shares of common stock issued in the Private Placement may not be transferred on or before June 24, 2011 without our consent. We agreed to use commercially reasonable efforts to file a resale registration statement with the SEC relating to the shares of common stock sold in the Private Placement. If the registration statement was not filed or declared effective within specified time periods, the investors would be entitled to receive liquidated damages in cash equal to one percent of the original offering price for each share that at such time remains subject to resale restrictions. The Company filed a resale registration statement with the SEC relating to the 12,000,000 shares issued in the Private Placement. The registration statement was effective as of the date of this filing.

     On April 15, 2011, we entered into a series of arm’s length securities purchase agreements to sell 9,857,143 shares of our common stock at a price of $7.70 per share, for aggregate proceeds of $75,900,000 to certain funds of a global financial institution. We completed this transaction on April 19, 2011 and intend to use the proceeds from this transaction to further our organic and acquisition growth strategy, as well as for working capital purposes. Pursuant to the securities purchase agreements, following July 24, 2011 the Company agreed to use commercially reasonable efforts to file a resale registration statement with the SEC relating to the shares of common stock sold in the private placement. If the registration statement was not filed or declared effective within the specified time periods, the investors would be entitled to receive liquidated damages in cash equal to one percent of the original offering price for each share that at such time remains subject to resale restrictions. The Company filed a resale registration statement with the SEC relating to the 9,857,143 shares. The registration statement was effective as of the date of this filing.

Acquisitions and asset purchases

     We issued a total of 6,310,789 shares of our common stock in connection with certain acquisitions of franchisees and businesses during the six months ended June 30, 2011. In addition during the six months ended June 30, 2011, we issued 394,991 shares for purchases of property and equipment of $194,683and to settle $987,879 of liabilities.

Stock based compensation and warrants

     Stock based compensation is the result of the recognition of the fair value of share based compensation on the date of grant over the service period for which the awards are expected to vest. Options to purchase 705,000 shares were exercised at a weighted average exercise price of $0.88 during 2011.

     In May 2011, warrants to purchase 5,500,000 shares with an exercise price of $0.50 in Canadian dollars per warrant issued to a director of CoolBrands and the Company, and certain parties related to the director, were exercised and as a result, we received cash of $2,750,000 in Canadian dollars.

Convertible promissory note

     During 2011, convertible promissory notes with an aggregate principal amount of $13,621,480 were converted into 3,207,459 shares of the Company’s common stock.