SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended September 30, 1996 Commission File No. 0-25022
CHELSEA ATWATER, INC.
(Exact name of Registrant as specified in its charter)
NEVADA 72-1148906
(State or other jurisdiction of (I.R.S. Empl. Ident. No.)
incorporation or organization)
90 Madison Street, Suite 707
Denver, Colorado 80206
(Address of Principal Executive Offices) (Zip Code)
(303) 355-3000
(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 such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing to such filing
requirements for at least the past 90 days.
Yes __X__ No _____
The number of shares outstanding of each of the Registrant's classes of common
equity, as of September 30, 1996 are as follows:
Class of Securities Shares Outstanding
Common Stock, $.001 par value 4,308,280
<PAGE>
INDEX
Page of
Report
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets:
As of September 30, 1996 (Unaudited) and
December 31, 1995 .............................................. 3
Statement of Operations (Unaudited):
For the nine months ended September 30, 1996
and 1995 and Cumulative from inception
(April 4, 1989) through September 30, 1996...................... 4
Statements of Cash Flows (Unaudited):
For the nine months ended September 30, 1996
and 1995 and Cumulative from inception
(April 4, 1989) through September 30, 1996...................... 5
Notes to Financial Statements (Unaudited) ...................... 6
Item 2. Management's Discussion and Analysis or Plan
of Operation ................................................... 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................... 8
Signatures ..................................................... 8
2
<PAGE>
<TABLE>
<CAPTION>
CHELSEA ATWATER, INC.
(A Development Stage Company)
Balance Sheets
(Unaudited)
Sept. 30, Dec. 31,
1996 1995
ASSETS ---- ----
<S> <C> <C>
CURRENT ASSETS
Cash ...................................... 0 0
--------- ---------
Total Current Assets .................... 0 0
TOTAL ASSETS ................................... 0 0
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Due to officer / director ................. 20,507 13,080
--------- ---------
Total Liabilities ..................... 20,507 13,080
--------- ---------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; 5,000,000 0 0
shares authorized; none issued
Common stock, $.001 par value; 250,000,000 4,308 597
shares authized, 4,3,8,280 shares issued
and outstanding
Additional paid-in capital ................ 18,677 19,923
Deficit accumulated during the ............ (43,492) (33,600)
development
Total Stockholders' Equity ................. (20,507) (13,080)
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ......................... 0 0
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
CHELSEA ATWATER, INC.
(A Development Stage Company)
Statement of Operations
(Unaudited)
Cumulative from
inception
(Apr. 4, 1989)
For The Nine Months Ended, through
Sept.30, Sept. 30, Sept. 30,
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
Revenues ........................... 0 0 0
Costs and Expenses:
Offering costs ................ 0 0 18,034
General and administrative .... 9,892 9,040 25,458
--------- ------- ---------
Total Expenses ................... 9,892 9,040 43,492
--------- ------- ---------
Net Loss Incurred during Development (9,892) (9,040) (43,492)
Stage
--------- ------- ---------
Net Loss per common share ..........1 (Nil)- (Nil)- (0.02)
--------- ------- ---------
Weighted average shares outstanding 1,851,315 597,997 1,851,315
--------- ------- ---------
<FN>
1 Net loss per share is less than $.01 in each period presented.
</FN>
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
CHELSEA ATWATER, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
Cumulative from
For the Nine months ended, inception (Apr. 4,
Sept. 30, 1989) through
1996 1995 Sept. 30, 1996
---- ---- --------------
<S> <C> <C> <C>
Cash flow operating activities
Net loss ............................... (9,892) (9,040) (43,492)
Adjustments to reconcile net loss to net 0 0 0
cash used by operating activities
Common stock issued for ........... 2,465 0 3,945
out-of-pocket expenses
Due to officer / director ......... 7,427 9,040 20,507
----- ----- ------
Net cash provided by (used In)
operating activities ................. 0 0 (19,040)
----- ----- ------
Cash flow from investing activities
Net cash provided by investing act 0 0 0
----- ----- ------
Cash flows from financing activities
Issuance of common stock ............... 0 0 19,040
----- ----- ------
Net increase (decrease) in cash ............ 0 0 0
----- ----- ------
Cash and cash equivalents at beg. period .... 0 0 0
----- ----- ------
Cash and cash equivalents at end of period .. 0 0 0
----- ----- ------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
CHELSEA ATWATER, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
Note 1. Chelsea Atwater, Inc. ("Company") was incorporated in the State of
Nevada on April 4, 1989. The Company was to obtain funding from a public
offering in order to provide a vehicle to acquire or engage in one or more
business opportunities believed by management to have a potential for
profitability. The accompanying unaudited financial statements of the
Company have been prepared on the accrual basis and in accordance with the
instructions to Form 10-QSB and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. These financial statements should be read
in conjunction with the financial statements and notes thereto included in
the Company's annual report on Form 10-KSB for the fiscal year ended
December 31, 1995.
Note 2. During the fiscal year ended December 31, 1995, the Company incurred a
net loss of $12,773 and had, as of that date, accumulated a deficit of
$33,600. The Company had no operations during the third quarter covered by
these statements and realized no revenues, although it incurred a loss for
the quarter of $5,729.
Note 3. Future working capital requirements are dependent on the Company's
ability to attain profitable operations, to restructure its financing
arrangements or capital structure, and to obtain financing or new capital
as required. It is not possible at this time to predict the outcome of
future operations, restructuring efforts, or whether the necessary
alternative financing can be arranged.
Note 4. In September of 1994, the Company's shareholders approved at a special
meeting an amendment to the Company's certificate of incorporation which
effected a 1-for-10 reverse split of the Company's Common Stock. This
action, which combined every ten Common Shares of the Company into one
share, reduced the number of outstanding shares from 5,980,000 to 597,997
shares (some fractional shares were lost) and reduced the number of
authorized shares from 50,000,000 to 5,000,000. The shareholders also
approved at that meeting a proposal to, immediately following the reverse
split, increase the number of authorized shares to 50,000,000 and increase
the par value to the original $.001 per share.
Subsequent to quarter ended June 30, 1996, the Company effected a 5-for-1
forward split of the Company's common stock, $.001 par value per share,
which had the effect of changing each share of common stock existing
immediately prior to the split into five (5) shares of the Company's common
stock following the split. The forward split increased the number of the
Company's authorized common shares from 50,000,000 to 250,000,000 and
increased the number of issued and outstanding common shares (as of July
12, 1996) from 847,656 to 4,308,280. The authorized preferred shares of the
Company, the terms and preferences of which have not been designated by the
board of directors, were not affected by the forward split. Shareholder
approval for the split was not required under Nevada law and was not
sought.
Note 5. On July 12, 1996, the Company entered into and consummated an Asset
Purchase Agreement ("Purchase Agreement") with Casino Casino PLC, a company
organized in the Island of Nevis (British West Indies) under Section 4(6)
of the Nevis Business Corporation Ordinance 1984, as amended ("Casino
PLC"). Pursuant to the Purchase Agreement, Casino PLC assigned to the
Company certain rights which Casino PLC held under an Option to Purchase
and a Management Agreement, both dated June 26, 1996, between Casino PLC
and E.V.A. LIMITED, a limited liability company organized in St. Vincent
and the Grenadines (British West Indies) under the provisions of the
Companies Act, Chapter 219. The Company issued an aggregate of 1,195,035
shares (post- split) of its common stock in reliance upon Regulation S
under the Act in order to make the acquisition.
6
<PAGE>
The Company's board of directors determined in September of 1996 to cancel
and rescind the Asset Purchase Agreement with Casino PLC due to breaches of
the agreement by Casino PLC or others and because of the failure or
inaccuracy of certain representations and warranties in that agreement.
Subsequent to the end of the calendar quarter, the Company cancelled that
agreement and cancelled the 1,195,035 shares issued to Casino PLC and its
shareholders. Those shares are therefore no longer reflected as being
issued or outstanding on the Company's stock transfer ledger.
Note 6. Counsel to the Company (Mr. Brasher, who is also the Chairman, Chief
Executive and Financial Officer and President of the Company) has not yet
submitted a bill to the Company for legal services rendered or expenses
incurred or advanced on the Company's behalf through September 30, 1996.
The foregoing interim financial statements thus do not give effect to such
bills, which Mr. Brasher has estimated will be not less than US$30,000.
Note 7. Loss per common share is based on the weighted average number of common
shares outstanding during the period.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Business. Chelsea Atwater, Inc., a Nevada corporation ("Company"),
is in the development stage in accordance with Financial Accounting Standards
Board Standard No. 7. Effective November 8, 1996, the Company entered into an
Exchange Agreement with E.V.A. Limited, a limited liability company organized in
St. Vincent and the Grenadines under the provisions of the Companies Act,
Chapter 219 ("EVA"), and the shareholders of EVA, whereby the Company will
acquire all of the issued and outstanding capital stock of EVA and is obligated
to issue to the EVA shareholders (i) the Company's promissory notes for an
aggregate of US$200,000, less certain deductions for expense items such as
unpaid bills and taxes, which the Company believes will amount to at least
US$65,000, (ii) 500,000 shares of the Company's common stock, and (iii) warrants
to purchase an additional 500,000 common shares of the Company's common stock at
US$2.75 per share, subject to certain adjustments. This agreement will be
reported in more detail in a subsequent report on Form 8-K. Such notes, stock
and warrants have not yet been issued.
Financial Condition. During the quarter ended September 30, 1996
(third quarter of this year), the Company had no revenues and did not have
operations other than its attempts to acquire the outstanding shares of E.V.A.
Limited, a St. Vincent limited liability company, and the execution of the Asset
Purchase Agreement with Casino PLC. Expenses for this period resulted in a loss
of $5,729. The Company has, since inception, accumulated a deficit (net loss)
through the end of this quarter of $43,492.
Liquidity and Capital Resources. The Company had no cash on hand at
the end of the quarter. The Company had no other cash or other assets, nor any
current plans to raise capital. Offices are provided without charge to the
Company by its Chairman. However, the Company will in any event incur routine
fees and expenses incident to filing of periodic reports with the Securities and
Exchange Commission, and it will incur fees and expenses in the event it makes
or attempts to make an acquisition. As a practical matter, the Company expects
no significant operating costs other than professional fees payable to attorneys
and accountants. The operations of EVA will required substantial cash amounting
to at least US$100,000, which the Company will have to raise in the form of an
equity financing. The source of this funding is not assured, though management
believes it will not be difficult to raise, nor is the timing of such funding
certain.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
Report on Form 8-K dated July 12, 1996 (acquisition, stock split)
7
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report on Form 10-QSB to be signed on its behalf by the undersigned,
thereunto duly authorized.
DATED: November 20, 1996
CHELSEA ATWATER, INC.
By /s/ John D. Brasher Jr.
--------------------------
John D. Brasher Jr., Chief Executive Officer
and Chief Financial Officer
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 20,507
<BONDS> 0
0
0
<COMMON> 4,308
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,729
<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>
