<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarter Ended: September 30, 1997
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Transition Period from _____________ to ____________
Commission File Number: 33-1289-D
---------------------
Chapeau, Inc.
----------------------------------------------
(Name of Small Business Issuer in its charter)
Nevada 87-0429154
- ------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
6074 Oak Canyon Drive, Salt Lake City, Utah 84117
-----------------------------------------------------
(Address of principal executive offices and Zip Code)
(801) 272-7131
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has 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
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
(1) Yes [ ] No [X] (2) Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, Par Value $0.001 1,320,000
- ------------------------------ ----------------------------
Title of Class Number of Shares Outstanding
as of July 9, 1998
<PAGE>
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
CHAPEAU, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
September 30, June 30,
1997 1997
(Unaudited)
------------ ------------
CURRENT ASSETS
Cash $ - $ -
------------ ------------
Total Current Assets - -
------------ ------------
TOTAL ASSETS $ - $ -
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Note payable - related $ 25,000 $ 25,000
Interest payable 1,812 279
Reserve for discontinued operations 25,828 25,828
------------ ------------
Total Current Liabilities 52,640 51,107
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock $0.001 par value;
5,000,000 shares authorized; 1,000,000
shares issued and outstanding 1,000 1,000
Common stock $0.001 par value;
325,000,000 shares authorized; 19,800,000
issued and outstanding 19,800 19,800
Additional paid-in capital 221,971 221,971
Stock subscription receivable (Note 6) (41,812) (40,279)
Deficit accumulated during the
development stage (253,599) (253,599)
------------ ------------
Total Stockholders' Equity (Deficit) (52,640) (51,107)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ - $ -
============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE> 3
CHAPEAU, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
From
Inception on
September 19,
For the Three Months Ended 1985 Through
September 30, September 30,
1997 1996 1997
---------- ---------- ------------
REVENUES $ - $ - $ -
LOSS FROM DISCONTINUED
OPERATIONS (Note 4) - 6,791 253,599
---------- ---------- ------------
NET LOSS $ - $ (6,791) $ (253,599)
========== ========== ============
LOSS PER SHARE $ (0.00) $ (0.00)
========== ==========
WEIGHTED AVERAGE
OUTSTANDING SHARES 19,800,000 6,600,000
========== =========
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
CHAPEAU, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Preferred Stock Common Stock Paid-in Development
Shares Amount Shares Amount Capital Stage
--------- -------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
At inception on September 19, 1985 - $ - - $ - $ - $ -
Common stock issued for cash to
stockholders - - 1,500,000 1,500 13,500 -
Common stock issued for cash on
March 7, 1986 - - 4,022,300 4,022 159,878 -
Issuance of warrants to purchase
402,203 shares of common stock - - - - 40 -
Common stock issued for services
at approximately $0.03 per share - - 477,700 478 13,853 -
Common stock issued in acquisition
of Robert K. McIntosh & Associates,
Inc. in July, 1987 - - 600,000 600 8,900 -
Net loss from inception
through June 30, 1994 - - - - - (222,693)
--------- -------- --------- -------- ---------- ----------
Balance, June 30, 1994 - - 6,600,000 6,600 196,171 (222,693)
Net loss for the year ended
June 30, 1995 - - - - - (1,779)
--------- -------- --------- -------- ---------- ----------
Balance, June 30, 1995 - - 6,600,000 6,600 196,171 (224,472)
Net loss for the year ended
June 30, 1996 - - - - - (1,961)
--------- -------- --------- -------- ---------- ----------
Balance, June 30, 1996 - - 6,600,000 6,600 196,171 (226,433)
Issuance of preferred stock for
subscription receivable at $0.015
per share 1,000,000 1,000 - - 14,000 -
Issuance of common stock for
subscription receivable at $0.019
per share - - 13,200,000 13,200 11,800 -
Net loss for the year ended
June 30, 1997 - - - - - (27,166)
--------- -------- --------- -------- ---------- ----------
Balance, June 30, 1997 1,000,000 $ 1,000 19,800,000 $19,800 $ 221,971 $ (253,599)
Net loss for the three months
ended September 30, 1998
(Unaudited) - - - - - -
--------- -------- --------- -------- ---------- ----------
Balance, September 30, 1998
(Unaudited) 1,000,000 $ 1,000 19,800,000 $19,800 $ 221,971 $ (253,849)
========= ======== ========== ======= ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 5
CHAPEAU, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception on
September 19,
For the Three Months Ended 1985 Through
September 30, September 30,
1997 1996 1997
---------- ---------- ------------
CASH FLOWS FROM OPERATING
ACTIVITIES
(Loss) from operations $ - $ (6,791) $ (253,599)
Adjustments to reconcile net
(loss)to net cash used by
operating activities:
Common stock issued for
services - - 14,331
Common stock issued for
exchange of assets - - 9,500
Change in operating assets
and liabilities:
(Increase) decrease in
interest receivable - (69) -
Increase (decrease) in
accounts payable and
accrued expenses - 541 25,828
Increase (decrease) in
accrued interest - 6,319 -
---------- ---------- ------------
Net Cash (Used) by Operating
Activities - - (203,940)
---------- ---------- ------------
CASH FLOWS FROM INVESTING
ACTIVITIES - - -
---------- ---------- ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from notes
payable - - 25,000
Issuance of common stock
for cash - - 216,155
Stock offering costs - - (37,215)
---------- ---------- ------------
Net Cash Provided (Used) by
Financing Activities $ - $ - $ 203,940
---------- ---------- ------------
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
CHAPEAU, INC.
(A Development Stage Company)
Statements of Cash Flows (Continued)
(Unaudited)
From
Inception on
September 19,
For the Three Months Ended 1985 Through
September 30, September 30,
1997 1996 1997
---------- ---------- ------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ - $ - $ -
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD - - -
---------- ---------- ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ - $ - $ -
========== ========== ============
Cash Paid For:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued
for services $ - $ - $ 14,331
Common stock issued for
exchange of assets $ - $ - $ 9,500
Common stock issued for
notes receivable $ - $ - $ 25,000
Preferred stock issued
for notes receivable $ - $ - $ 15,000
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
CHAPEAU, INC.
(A Development State Company)
Notes to the Financial Statements
September 30, 1997 and June 30, 1997
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Chapeau, Inc. (the "Company") was organized under the laws of the State of
Utah on September 19, 1985. On July 27, 1987, the Company completed a plan of
reorganization with Robert K. McIntosh and Associates, Inc. (McIntosh). The
Company issued 600,000 shares of its restricted common stock to McIntosh in
exchange for all of the issued and outstanding shares of McIntosh. McIntosh
held one Pro Image franchise. At the time of acquisition, McIntosh became a
wholly-owned subsidiary. Subsequent to this event, McIntosh was dissolved in
1989 and as a result is no longer a subsidiary of the Company.
In 1988, the Company was engaged in the operation of franchised sports
clothing stores (Pro-Image). The Company sold their final store in May, 1989
and has been inactive since that time. Presently, the Company has no active
operations and is seeking other business opportunities. The Company has
elected a June 30 year end.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a June 30 fiscal year end.
b. Provision for Taxes
The Company has a net operating loss carryover of approximately $250,000 as of
September 30, 1997 which expires from 2000 to 2012. The potential tax benefit
has been offset by a valuation allowance for the same amount.
c. Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
d. 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 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.
e. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the adjustments
which, in the opinion of management, are necessary for a fair presentation.
Such adjustments are of a normal, recurring nature.
<PAGE> 8
CHAPEAU, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 1997 and June 30, 1997
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has not established revenues sufficient to cover its
operating costs and allow it to continue as a going concern. Management
intends to seek a merger with an existing, operating company, in the interim
it has committed to meeting the Company's minimal operating expenses.
NOTE 4 - DISCONTINUED OPERATIONS
In 1989, the Company discontinued operations and was reclassified as a
development stage company. All revenues generated by the Company have been
netted against the expenses and are grouped into the discontinued operations
line on the statements of operations.
NOTE 5 - RESERVE FOR DISCONTINUED OPERATIONS
There are several tax and judgment liens claimed by the State of Utah and two
companies against the Company. The tax and judgment liens along with
interest, total approximately $25,828.
NOTE 6 - STOCK SUBSCRIPTION RECEIVABLE
The Company has notes receivable from related parties for $7,500 and $40,000
as of September 30, 1997 and June 30, 1997, respectively. These notes bear
interest at 8%. The notes are due within one year and include accrued
interest of $1,812.
<PAGE>
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
- -------
Chapeau, Inc., a Utah corporation, (the "Company") was organized under
the laws of the State of Utah on September 19, 1985, to provide a capital
resource fund to be used to participate in business opportunities. The
Company completed a public offering of its common stock in March of 1986. The
Company received net proceeds from the public offering of approximately
$163,900, after deducting underwriters' compensation and other costs of the
offering totaling approximately $37,215.
On May 13, 1987, the Company entered into an agreement with Pro Image,
Inc. for the purchase of licenses to open up to eighteen (18) Pro Image
stores. In 1987, the Company acquired Robert K. McIntosh, Inc., a closely
held corporation which owned a Pro Image franchise. In exchange for all of
the stock of Robert K. McIntosh, Inc., the Company issued 600,000 shares of
its common stock and the shareholders of Robert K. McIntosh, Inc., Robert K.
McIntosh and Robert McDonald, became members of the Company's board of
directors. In December 1987, the Company also entered an agreement with Dave
Carver to purchase a Pro Image store in Long Beach, California.
The Company used the proceeds of its public offering and all additional
funds it borrowed or raised to fund the Company's efforts in starting and
purchasing Pro Image stores. The Company's efforts to become a franchisee of
Pro Image stores; however, proved unsuccessful and the Company ceased all
activity related to the Pro Image stores.
After the Company ceased its Pro Image franchises, the Company
investigated several other business opportunities none of which proved
successful. The Company presently has no operations other then minimal
operations necessary to maintain its corporate status.
In 1997, the Company changed management and sold shares of its Common and
Preferred Stock in an effort to raise enough capital to cover past obligations
and provide capital for corporate cleanup. Through the sale of 13,200,000
shares of its Common Stock the Company raised $25,000. The Company raised an
additional $15,000 by the sale of 1,000,000 shares of its preferred stock (the
"1997 Series A Convertible Preferred Stock".) All shares were sold to two
individuals. The preferred stock is convertible into shares of the Company's
common stock on an eleven to one basis, after giving effect to the Company's
fifteen to one reverse stock split. Accordingly, the holders of preferred
stock will be able to convert their 1,000,000 shares of preferred stock into
eleven million shares of the Company's common stock.
The Company is currently seeking potential business acquisition or
opportunities to enter in an effort to commence business operations. The
Company does not propose to restrict its search for a business opportunity to
any particular industry or geographical area and may, therefore, engage in
essentially any business in any industry. The Company has unrestricted
discretion in seeking and participating in a business opportunity, subject to
availability of such opportunities, economic conditions, and other factors.
The Company intends to take advantage of any reasonable business proposal
presented which management believes will provide the Company and its
stockholders with a viable business opportunity. The board of directors will
<PAGE>
<PAGE> 10
make the final approval in determining whether to complete any acquisition,
and unless required by applicable law, the articles of incorporation, bylaws
or by contract, stockholders' approval may not be sought.
The investigation of specific business opportunities and the negotiation,
drafting, and execution of relevant agreements, disclosure documents, and
other instruments will require management time and attention and will require
the Company to incur costs for payment of accountants, attorneys, and others.
If a decision is made not to participate in or complete the acquisition of a
specific business opportunity, the costs incurred in a related investigation
will not be recoverable. Further, even if agreement is reached for the
participation in a specific business opportunity by way of investment or
otherwise, the failure to consummate the particular transaction may result in
the loss to the Company of all related costs incurred.
Currently, management is not able to determine the time or resources that
will be necessary to complete the participation in or acquisition of any
future business prospect. There is no assurance that the Company will be able
to acquire an interest in any such prospects, products or opportunities that
may exist or that any activity of the Company, regardless of the completion of
any participation in or the acquisition of any business prospect, will be
profitable.
Liquidity and Capital Resources
- -------------------------------
As of September 30, 1997, the Company had no assets and liabilities of
$52,604 resulting in a negative working capital position of ($52,640). The
Company has only incidental ongoing expenses primarily associated with
maintaining its corporate status and professional fees associated with
accounting costs. For the three months ended September 30, 1997, the Company
had no revenue or expenses.
The liabilities of $52,604 included $25,000 owed to former officers and
directors of the Corporation and to legal counsel all of which was paid in
December 1997 reducing outstanding obligations to $27,640. The funds used to
pay the $25,000 in related party debt was received through the sale of shares
of the Corporation's common stock and was recorded as a subscription
receivable at September 30, 1997, which was subsequently paid in December
1997. The receipt of the $25,000 reduced subscription receivables to $16,182.
The Company had no revenue for the corresponding quarter ended September
30, 1996, but did have a loss of $6,791 related to discontinued activities.
The Company does not anticipate any revenue, other than nominal interest
income, until it is able to establish operation through a merger or
acquisition, which may not occur.
Although the Company has had only limited expenses, it may have to incur
substantial legal and accounting cost to bring it current on its financial and
corporate reporting obligation. Management anticipates that the Company will
incur more cost including legal and accounting fees to locate and complete a
merger or acquisition. At the present time the Company is relying on the
financial support of its principal shareholders Kirk Blosch and Jeff Holmes to
provide further funding to meet ongoing financial requirements. Neither Mr.
Blosch nor Holmes have any obligation to continue to fund the Company and have
not indicated if they will provide any future funding to cover further
expenses.
<PAGE>
<PAGE 11>
Since inception the Company has not generated sufficient revenue to cover
operating cost and since the termination of its business operations in 1989
has not generated any revenues. It is unlikely that any revenue will be
generated until the Company locates a business opportunity with which to
acquire or merge. Management of the Company will be investigating various
business opportunities with which to acquire or merge. These efforts may cost
the Company not only out of pocket expenses for its management but also
expenses associated with legal and accounting cost. There can be no guarantee
that the Company will receive any benefits from the efforts of management to
locate business opportunities. The Company may have trouble attracting
potential acquisitions or mergers as it does not have substantial assets to
entice potential business opportunities to enter into transactions with the
Company.
If and when the Company locates a business opportunity, management of the
Company will give consideration to the dollar amount of that entity's
profitable operations and the adequacy of its working capital in determining
the terms and conditions under which the Company would consummate such an
acquisition. Potential business opportunities, no matter which form they may
take, will most likely result in substantial dilution for the Company's
shareholders as it has only limited capital and no operations.
The Company has no employees and does not intend to employ anyone in the
future, unless its present business operations were to change. The president
of the Company is providing the Company with a location for its offices on a
"rent free basis." No salaries or other form of compensation are being paid by
the Company for the time and effort required by management to run the Company.
The Company does intend to reimburse its officers and directors for out of
pocket cost.
Results of Operations
- ---------------------
The Company's has no operations except preliminary investigation of one
or more potential business opportunities, none of which have come to fruition.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
Pursuant to a vote of shareholders on May 20, 1998, the Company reversed
split or consolidated its common stock on a fifteen (15) to one (1) basis. As
a result of the reverse split or consolidation, the Company reduced its issued
and outstanding common stock from 19,800,000 to 1,320,000 which management
felt made the Company a more attractive merger candidate.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
<PAGE>
<PAGE> 12
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
(a) Exhibits.
---------
No. 27 Financial Data Schedule
(b) Reports on Form 8-K.
--------------------
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Chapeau, Inc.
[Registrant]
Dated: July 9, 1998 By:/s/ Donald McKean, President and
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 52,640
<BONDS> 0
0
1,000
<COMMON> 241,771
<OTHER-SE> (295,411)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
