UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 033-01289-D
Chapeau, Inc.
(Exact name of small business issuer as specified in charter)
Utah 87-0431831
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 West Broadway, Suite 501
Salt Lake City, Utah 84101
(Address of principal executive offices) (Zip Code)
(801) 323-0329
(Issuer's Telephone number, including area code)
6074 Oak Canyon Drive, Salt Lake City, Utah 84117
(Former name, former address, and former fiscal
year, if changed since last report)
Check whether the issuer (1) has 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
As of February 11, 2000, the Issuer had 4,500,000 shares of its common
stock, par value $0.001 per share, issued and outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Chapeau, Inc. (the "Company"), has included the balance sheets of the
Company as of December 31, 1999 (unaudited), and June 30, 1999 (the end of the
Company's most recently completed fiscal year), and unaudited statements of
operations for the three and six months ended December 31, 1999 and 1998, and
unaudited statements of cash flows for the six months ended December 31, 1999
and 1998, together with unaudited condensed notes thereto. In the opinion of
management of the Company, the financial statements reflect all adjustments, all
of which are normal recurring adjustments, necessary to fairly present the
financial condition, results of operations, and cash flows of the Company for
the interim periods presented. The financial statements included in this report
on Form 10-QSB should be read in conjunction with the audited financial
statements of the Company and the notes thereto included in the annual report of
the Company on Form 10-KSB for the year ended June 30, 1999.
CHAPEAU, INC.
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
December 31,1999 June 30, 1999
ASSETS (unaudited)
<S> <C> <C>
Current Assets
Cash $ 549 $ 160
Total Current Assets 549 160
Total Assets $ 549 $ 160
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ - $ 517
Notes payable - related party (Note B) 12,500 10,000
Accrued interest - related party (Note B) 959 534
Reserve for discontinued operations 11,754 11,754
Total Current Liabilities $ 25,213 $ 22,805
Stockholders' 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 (267,435) (265,416)
Total Stockholders' Deficit (24,664) (22,645)
Total Liabilities and Stockholders' Deficit $ 549 $ 160
</TABLE>
The accompanying notes are an integral part of these financial statements.
CHAPEAU, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From Inception
on September 19,
Three Months Ended Six Months Ended 1985, through
December 31, December 31, December 31,
1999 1998 1999 1998 1999
<S> <C> <C> <C> <C> <C>
Revenues $ - $ - $ - $ - $ -
Expenses 495 - 2,019 - 2,019
Loss from operations (495) - (2,019) - (2,019)
Loss from discontinued operations - (2,895) - (3,240) (265,416)
Net loss $ (495) $ (2,895) $ (2,019) $ (3,240) $ (267,435)
Basic loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Basic weighted average
outstanding shares 12,320,049 1,320,049 12,320,049 1,320,049
</TABLE>
The accompanying notes are an integral part of these financial statements.
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 at $0.15 per share - - 100,000 100 14,900 -
Common stock issued for cash on
March 7, 1986, at $0.61 per share - - 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 -
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 -
Shares issued in conjunction with a
15-for-1 reserve stock split - - 49 - - -
Conversion of preferred shares
to common stock (1,000,000) 1,000 11,000,000 11,000 (10,000) -
Net loss from inception through
June 30, 1999 - - - - - (265,416)
Balance, June 30, 1999 - - 12,320,049 12,320 230,451 (265,416)
Net loss for the six months
ended December 31, 1999
(unaudited) - - - - - (2,019)
Balance, December 31, 1999
(unaudited) - $ - 12,320,049 $12,320 $230,451 $ (267,435)
</TABLE>
The accompanying notes are an integral part of these financial statements.
CHAPEAU, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From Inception on
Six Months Ended September 19, 1985,
December 31, Through December 31,
1999 1998 1999
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (2,019) $ (3,240) $ (267,435)
Adjustments to reconcile net loss to
net cash used in 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:
Decrease in accounts payable
and accrued expenses (92) (8,922) 36,476
Net Cash Used in Operating Activities (2,111) (12,162) (230,891)
Cash Flows from Investing Activities - - -
Cash Flows from Financing Activities:
Proceeds from notes payable (related
party) 2,500 5,000 12,500
Issuance of common stock for cash - 7,500 256,155
Stock offering costs - - (37,215)
Net Cash Provided by Financing Activities: 2,500 12,500 231,440
Increase in Cash 389 338 549
Cash at Beginning of Period 160 246 -
Cash at End of Period $ 549 $ 584 $ 549
</TABLE>
The accompanying notes are an integral part of these financial statements.
CHAPEAU, INC.
(A Development State Company)
Condensed Notes to the Financial Statements
(A) Basis of Presentation
The accompanying unaudited financial statements of Chapeau, Inc. (the
"Company"), have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB. Accordingly, these financial statements do not include all of the
information and footnote disclosures required by generally accepted accounting
principles for complete financial statements. These financial statements and
footnote disclosures should be read in conjunction with the audited financial
statements and the notes thereto included in the Company's annual report on Form
10-KSB for the year ended June 30, 1999. In the opinion of management, the
accompanying unaudited financial statements contain all adjustments (consisting
of only normal recurring adjustments) necessary to fairly present the Company's
financial position as of December 31, 1999, its results of operations for the
three and six months ended December 31, 1999 and 1998, and its results of
operations and cash flows for the six months ended December 31, 1999 and 1998.
The results of operations for the three months and six months ended December 31,
1999, may not be indicative of the results that may be expected for the year
ending June 30, 2000.
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. However, the Company has not had significant operations to date, nor
has it established a source of revenues sufficient to allow it to continue as a
going concern. As described in the current report on Form 8-K dated February 3,
2000, control and management of the Company has recently changed. New
management has committed to meeting the Company's basic operating expenses to
the extent necessary.
(B) Subsequent Event
On February 3, 2000, the three directors of the Company resigned and Howard S.
Landa, Terrell W. Smith, and Mickey Hale were appointed as their successors.
Howard S. Landa was also appointed as the new Chief Executive Officer of the
Company and Andrew C. Bebbington was appointed as Chief Financial Officer.
Mr. Landa and other members of management purchased a controlling interest in
the Company from its two former principal shareholders. As part of the
transaction, the number of shares issued and outstanding was reduced from
12,320,049 to 4,500,000 shares. Additionally, the two former principal
shareholders agreed to pay all accounts payable outstanding as of February 2,
2000, except those included in Reserve for Discontinued Operations, and
converted the notes payable and accrued interest due to them into contributed
capital. New management, together with a principal shareholder, now holds
3,480,000 of the outstanding shares, or approximately 77%, of the Company. The
new management now has voting control of the Company and is managing the
Company's day-to-day affairs.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Recent Events
Control and management of the Company changed on February 3, 2000, as
reported on the Company's current report on Form 8-K as of that date. Readers
are referred to that report for additional information.
General
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 $163,900, after deducting underwriters' compensation and other costs
of the offering totaling $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. However, the Company's efforts to become a
franchisee of Pro Image stores ultimately proved unsuccessful and the Company
ceased all activity related to the Pro Image stores.
Subsequently, the Company investigated several other business
opportunities, but did not consummate any transaction. The Company presently
has no operations other than minimal operations necessary to maintain its
corporate status.
In 1997, the Company changed management and sold shares of its Common and
Preferred Stock to two individuals in order to raise capital to cover past
obligations and to provide for basic ongoing corporate obligations. Until
recently, these two individuals were the controlling shareholders of the
Company.
Results of Operations
The Company has no current operations or revenue. The Company has only
incidental ongoing expenses primarily associated with maintaining its corporate
status. For the three and six month periods ended December 31, 1999, the
Company's expenses were $495 and $2,019, respectively, compared to $2,895 and
$3,240 for the three and six month periods ended December 31, 1998,
respectively.
Liquidity and Capital Resources
As of December 31, 1999, the Company has limited assets of $549 in cash and
liabilities of $25,213 resulting in negative working capital of $24,664. The
liabilities include a reserve of $11,754 for discontinued operations and $13,459
owed to the former principal shareholders of the Company. On February 3, 2000,
as part of the change in control of the Company, the former principal
shareholders agreed to cancel the indebtedness of the Company to them, and
convert it to contributed capital. The reserve for discontinued operations is
associated with two judgment liens against the Company in the approximate
amount of the reserve.
New management of the Company intends to seek an additional capital
infusion into the Company to provide it with working capital. There can be no
assurance that management will be successful in its efforts.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K.
The Company filed a current report on Form 8-K dated February 3, 2000,
reporting the change in control and management of the Company.
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.
Dated: February 14, 2000 By /s/ Andrew C. Bebbington
Andrew C. Bebbington, Chief
Financial Officer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET AS OF DECEMBER 31, 1999, AND STATEMENT OF OPERATIONS FOR THE
SIX MONTHS ENDED DECMEBER 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 549
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 549
<CURRENT-LIABILITIES> 25,213
<BONDS> 0
<COMMON> 12,320
0
0
<OTHER-SE> (36,984)
<TOTAL-LIABILITY-AND-EQUITY> 549
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 495
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (495)
<INCOME-TAX> 0
<INCOME-CONTINUING> (495)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (495)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
