<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: March 31, 1999
[ ] 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)
Utah 87-0431831
- ------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
6074 Oak Canyon Drive, Salt Lake City, Utah 84121
-----------------------------------------------------
(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 May 17, 1999
<PAGE>
<PAGE> 2
PART 1.- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHAPEAU, INC.
FINANCIAL STATEMENTS
(UNAUDITED)
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
However, in the opinion of management, all adjustments (which include only
normal recurring accruals) necessary to present fairly the financial position
and results of operations for the periods presented have been made. These
financial statements should be read in conjunction with the accompanying
notes, and with the historical financial information of the Company. <PAGE>
<PAGE> 3
CHAPEAU, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
------
March 31,
1999 June 30,
(Unaudited) 1998
----------- -----------
CURRENT ASSETS
Cash $ 1,791 $ 246
----------- -----------
Total Current Assets $ 1,791 $ 246
----------- -----------
TOTAL ASSETS $ 1,791 $ 246
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
LIABILITIES
Accounts payable $ 453 $ 5,710
Notes payable - related party (Note 7) 10,000 -
Reserve for discontinued operations 21,191 25,828
----------- -----------
Total Current Liabilities 31,644 31,538
----------- -----------
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;
1,320,049 shares issued and outstanding 1,320 1,320
Additional paid-in capital 240,451 240,451
Stock subscription receivable (Note 6) - (7,500)
Deficit accumulated during the
development stage (272,624) (266,563)
----------- -----------
Total Stockholders' Equity (Deficit) (29,853) (31,292)
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 1,791 $ 246
=========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
Chapeau, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three For the Nine on September 19,
Months Ended Months Ended 1985 Through
March 31, March 31, March 31,
------------------ -------------------- -------------------
1999 1998 1999 1998 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
EXPENSES 2,821 250 6,061 250 49,931
LOSS FROM DISCONTINUED
OPERATIONS (NOTE 4) - - - - 222,693
--------- --------- --------- --------- ---------
NET LOSS $ (2,821) $ (250) $ (6,061) $ (250) $(272,624)
========= ========= ========= ========= =========
BASIC LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 5
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 - - 100,000 100 14,900 -
Common stock issued for cash on
March 7, 1986 - - 268,153 268 163,632 -
Issuance of warrants to purchase
402,203 shares of common stock - - - - 40 -
Common stock issued for services
at approximately $0.04 per share - - 31,847 32 14,299 -
Common stock issued in acquisition
of Robert K. McIntosh & Associates,
Inc. in July 1987 - - 40,000 40 9,460 -
Net loss from inception
through June 30, 1994 - - - - - (222,693)
--------- -------- --------- -------- ---------- ----------
Balance, June 30, 1994 - - 440,000 440 202,331 (222,693)
Net loss for the year ended
June 30, 1995 - - - - - (1,779)
--------- -------- --------- -------- ---------- ----------
Balance, June 30, 1995 - - 440,000 440 202,331 (224,472)
Net loss for the year ended
June 30, 1996 - - - - - (1,961)
--------- -------- --------- -------- ---------- ----------
Balance, June 30, 1996 - - 440,000 440 202,331 (226,433)
Issuance of preferred stock for
cash at $0.015 per share 1,000,000 1,000 - - 14,000 -
Issuance of common stock for
cash at $0.019 per share - - 880,000 880 24,120 -
Net loss for the year ended
June 30, 1997 - - - - - (27,166)
--------- -------- --------- -------- ---------- ----------
Balance, June 30, 1997 1,000,000 $ 1,000 1,320,000 $ 1,320 $ 240,451 $ (253,599)
--------- -------- --------- -------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
<PAGE> 6
CHAPEAU, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)(Continued)
<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>
Balance, June 30, 1997 1,000,000 $ 1,000 1,320,000 $ 1,320 $ 240,451 $ (253,599)
Shares issued in conjunction with
a 15-for-1 reverse stock split - - 49 - - -
Net loss for the year ended
June 30, 1998 - - - - - (12,964)
--------- -------- --------- -------- ---------- ----------
Balance, June 30, 1998 1,000,000 1,000 1,320,049 1,320 240,451 (266,563)
Net loss for the nine months
March 31, 1999 (unaudited) - - - - - (6,061)
--------- -------- --------- -------- ---------- ----------
Balance, March 31, 1999
(unaudited) 1,000,000 $ 1,000 1,320,049 $ 1,320 $ 240,451 $ (272,624)
========= ======== ========= ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
<PAGE> 7
CHAPEAU, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three For the Nine on September 19,
Months Ended Months Ended 1985 Through
March 31, March 31, March 31,
------------------ -------------------- ------------------
1999 1998 1999 1998 1999
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
(Loss) from operations $ (2,821) $ (250) $ (6,061) $ (250) $ (272,624)
Adjustment 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
Changes in assets and
liabilities:
(Increase)decrease in
interest receivable - (1,533) - (1,533) -
Increase (decrease) in
accounts payable and
accrued expenses (972) 1,100 (9,894) 1,100 21,644
Increase (decrease) in
accrued interest - (279) - (279) -
---------- ---------- ---------- --------- ---------
Net Cash (Used) by
Operating Activities (3,793) (962) (15,955) (962) (227,149)
---------- ---------- ---------- --------- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES: - - - - -
---------- ---------- ---------- --------- ---------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Payment on note payable - (25,000) - (25,000) -
Proceeds from notes
payable 5,000 - 10,000 - 10,000
Receipt of stock
subscription - 32,500 - 32,500 -
Issuance of common
stock for cash 7,500 - 256,155
Stock offering costs - - - - (37,215)
---------- ---------- ---------- --------- ---------
Net Cash Provided (Used)
by Financing Activities 5,000 7,500 17,500 7,500 228,940
---------- ---------- ---------- --------- ---------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,207 6,538 1,545 6,538 1,791
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 584 - 246 - -
---------- ---------- ---------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 1,791 $ 6,538 $ 1,791 $ 6,538 $ 1,791
========== ========== ========== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 8
CHAPEAU, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three For the Nine on September 19,
Months Ended Months Ended 1985 Through
March 31, March 31, March 31,
------------------ -------------------- ------------------
1999 1998 1999 1998 1999
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
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 for
notes receivable $ - $ - $ - $ - $ 15,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 9
CHAPEAU, INC.
(A Development State Company)
Notes to the Financial Statements
March 31, 1999 and June 30, 1998
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.
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 $270,000 as of
March 31, 1998 which expires from 2001 to 2014. 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>
<PAGE> 10
CHAPEAU, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 1999 and June 30, 1998
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 judgement liens claimed by the State of Utah and two
companies against the Company. The tax and judgement liens along with
interest, total approximately $21,191.
NOTE 6 - STOCK SUBSCRIPTION RECEIVABLE
The Company had notes receivable from related parties for $-0- and $7,500 as
of March 31, 1999 and June 30, 1998, respectively. These notes bear interest
at 8%. The notes are due within one year and include accrued interest of
$1,812.
NOTE 7 - NOTES PAYABLE - RELATED PARTY
During the nine months ended March 31, 1999, a shareholder loaned the Company
$10,000 to pay ongoing operating expenses. The note is non-interest bearing
and due on demand.<PAGE>
<PAGE> 11
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> 12
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.
The Company entered into negotiations and drafted contracts on a
potential acquisition during the last part of April 1999. These negotiations
subsequently were terminated. However, the Company did incur time and expense
in these negotiations.
Liquidity and Capital Resources
- -------------------------------
As of March 31, 1999, the Company had limited assets of $1,791 in cash
and liabilities of $31,644 resulting in a negative working capital position of
($29,853). 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 March 31, 1999,
the Company had no revenue but expenses of $2,821.
The liabilities of $31,644 included $21,191 which is reserved for
discontinued operations and $10,000 owed to principal shareholders of the
Company.
The Company had a loss of $2,821 related to ongoing expenses for the
three months ended March 31, 1999, and $6,061 related to ongoing expenses for
the nine months ended March 31, 1998. 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 will continue to
have ongoing legal and accounting cost to maintain its 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> 13
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
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
<PAGE>
<PAGE> 14
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 exhibits are included as they are either not required or not applicable.
(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: May 20, 1999 By:/s/ Donald McKean, President and
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000783211
<NAME> CHAPEAU, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,791
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,791
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,791
<CURRENT-LIABILITIES> 31,644
<BONDS> 0
0
1,000
<COMMON> 241,771
<OTHER-SE> (272,624)
<TOTAL-LIABILITY-AND-EQUITY> 1,791
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,061
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,061)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,061)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
