<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, 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 [X] No [ ] (2) Yes [X] No [ ]
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 12,320,049
- ------------------------------ ----------------------------
Title of Class Number of Shares Outstanding
as of November 12, 1999
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<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 Sheet
ASSETS
September 30, June 30,
1999 1999
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash $ 43 $ 160
------------ ------------
Total Current Assets $ 43 160
------------ ------------
TOTAL ASSETS 43 $ 160
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 1,824 $ 517
Notes payable - related party 10,000 10,000
Accrued interest - related party 634 534
Reserve for discontinued operations 11,754 11,754
------------ ------------
Total Current Liabilities 24,212 22,805
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock $0.001 par value;
325,000,000 shares authorized;
12,320,049 shares issued and
outstanding 12,320 12,320
Additional paid-in capital 230,451 230,451
Deficit accumulated during the
development stage (266,940) (265,416)
------------ ------------
Total Stockholders' Equity (Deficit) (24,169) (22,645)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 43 $ 160
============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
CHAPEAU, INC.
(A Development Stage Company)
Statements of Operations
From
Inception on
For the September 19,
Three Months Ended 1985 Through
September 30, September 30,
-----------------------------------------
1999 1998 1999
------------ ------------ ------------
REVENUES $ - $ - $ -
EXPENSES 1,524 - 1,524
------------ ------------ ------------
LOSS FROM OPERATIONS $ (1,524) $ - $ (1,524)
LOSS FROM DISCONTINUED
OPERATIONS $ - (345) (265,416)
------------ ------------ ------------
NET LOSS $ (1,524) $ (345) $ (266,940)
============ ============ ============
BASIC LOSS PER SHARE $ (0.00) $ (0.00)
============ ============
BASIC WEIGHTED AVERAGE
OUTSTANDING SHARES 12,320,049 1,320,049
============ ============
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<PAGE> 5
CHAPEAU, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
[CAPTION]
<TABLE>
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
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 - - 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)
[CAPTION]
<TABLE> 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)
Conversion of preferred
shares to common shares (1,000,000) 1,000 11,000,000 11,000 (10,000) -
Net income for the year ended
June 30, 1999 - - - - - 1,147
----------- ----------- ----------- ----------- ----------- -----------
Balance, June 30, 1999 - - 12,320,049 12,320 $ 230,451 $ (265,416)
Net loss for the three months
ended September 30, 1999
(unaudited) - - - - - (1,524)
----------- ----------- ----------- ----------- ----------- -----------
Balance, September 30, 1999
(Unaudited) - $ - 12,320,049 $ 12,320 $ 230,451 $ (266,940)
=========== =========== =========== =========== =========== ===========
</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
<TABLE>
<CAPTION>
From
Inception on
For the September 19,
Years Ended 1985 Through
September 30, September 30,
---------------------------
1999 1998 1999
------------ ------------ -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Loss from operations $ (1,524) $ (345) $ (266,940)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Common stock issued for services - - 14,331
Common stock issued for exchange
of assets - - 9,500
Gain on settlement of debt - - (23,763)
Changes in assets and liabilities:
Increase (decrease)in accounts
payable and accrued expenses 1,407 (10,347) 27,753
Increase (decrease) in accrued
interest - - 14,858
Increase(decrease) in reserve for
discontinued operations - - (4,636)
------------ ------------ ------------
Net Cash Provided (Used) by
Operating Activities (117) (10,692) (228,897)
------------ ------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES: - - -
------------ ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from notes payable
(related party) - 5,000 10,000
Issuance of common stock for cash - 7,500 256,155
Stock offering - - (37,215)
------------ ------------ ------------
Net Cash Provided (Used) by
Financing Activities $ - $ 12,500 $ 228,940
------------ ------------ ------------
</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 (Continued)
<TABLE>
<CAPTION> From
Inception on
For the September 19,
Years Ended 1985 Through
September 30, September 30,
1999 1998 1999
<S> ------------ ------------ ------------
<C> <C> <C>
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ (117) $ 1,808 $ 43
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 160 246 -
------------ ------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 43 $ 2,054 $ 43
============ ============ ============
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
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 9
CHAPEAU, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 1999
NOTE 1 -CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at September 30, 1999 and 1998
and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company' s September 30, 1999
audited financial statements. The results of operations for periods ended
September 30, 1999 and 1998 are not necessarily indicative of the operating
results for the full years.
<PAGE>
<PAGE> 10
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 was convertible into shares of the Company's
common stock on an eleven to one basis, after giving effect to the Company's
reverse stock split. The shares of 1997 Series A Convertible Preferred Stock
was converted in 1999 into 11,000,000 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> 11
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, 1999, the Company had limited assets of $43 in cash
and liabilities of $24,212 resulting in a negative working capital position of
$24,169. The liabilities of $24,212 included $11,754 which is reserved for
discontinued operations and $10,634 owed to principal shareholders of the
Company.
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, 1999, the Company
had no revenue but expenses of $1,524.
The Company had a loss of $1,524 related to ongoing expenses for the
three months ended September 30, 1999. 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> 12
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> 13
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: November 12, 1999 By:/s/ Donald McKean, President and
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 43
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 43
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 43
<CURRENT-LIABILITIES> 24,212
<BONDS> 0
0
0
<COMMON> 242,771
<OTHER-SE> (266,940)
<TOTAL-LIABILITY-AND-EQUITY> 43
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,524
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,524)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,524)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
