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 September 30, 2000
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 c
harter)
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)
N/A
(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 X No
APPLICABLE ONLY TO CORPORATE ISSUERS
As of November 10, 2000, the Issuer had 8,500,000 shares of
its common stock, par value $0.001 per share, issued and
outstanding.
Transitional Small Business Disclosure Format (check one):
Yes X No
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Chapeau, Inc. (the "Company"), has included the unaudited
balance sheets of the Company as of September 30, 2000, and June
30, 2000 (the end of the Company's most recently completed fiscal
year), and unaudited statements of operations, stockholders'
equity (deficit), and cash flows for the three months ended
September 30, 2000, and the period from February 3, 2000 (date of
inception of the development stage), to September 30, 2000,
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 for the
period from February 3, 2000 (date of inception of the
development stage) to June 30, 2000, included in the annual
report of the Company on Form 10-KSB.
2
CHAPEAU, INC.
(A Development Stage Company)
Condensed Balance Sheets
(Unaudited)
September 30, June 30,
2000 2000
---------- ----------
ASSETS
Current Assets
Cash and cash equivalents $ 972,540 $ 989,555
Accrued interest receivable 4,953 4,926
---------- ----------
Total Current Assets 977,493 994,481
---------- ----------
Total Assets $ 977,493 $ 994,481
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued
liabilities $ 3,222 $ 4,446
---------- ----------
Total Current Liabilities 3,222 4,446
---------- ----------
Stockholders' Equity
Preferred Stock, $0.001 par value;
5,000,000 shares authorized; none
issued and outstanding - -
Common stock, $0.001 par value;
325,000,000 shares authorized;
8,500,000 shares issued and
outstanding 8,500 8,500
Additional paid-in capital 1,238,158 1,238,158
Deficit accumulated prior to date
of inception of the development
stage (February 3, 2000) (259,373) (259,373)
Retained earnings (deficit) accumulated
from date of inception of the
development stage (February 3, 2000) (13,014) 2,750
---------- ----------
Total Stockholders' Equity 974,271 990,035
---------- ----------
Total Liabilities and Stockholders'
Equity $ 977,493 $ 994,481
========== ==========
The accompanying notes are an integral part of these condensed
financial statements.
3
CHAPEAU, INC.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
For the period
from February 3,
2000 (date of
inception of the
Three months development
ended stage) to
September 30, September 30,
2000 2000
----------- -----------
Interest Income $ 15,267 $ 35,468
General and Administrative Expense 31,031 48,482
----------- -----------
Net Loss $ (15,764) $ (13,014)
=========== ===========
Basic Loss Per Common Share $ - $ -
=========== ===========
Weighted-Average Common
Shares Outstanding 8,500,000 8,060,158
=========== ===========
The accompanying notes are an integral part of these condensed
financial statements.
4
CHAPEAU, INC.
(A Development Stage Company)
Condensed Statements of Stockholders' Equity (Deficit)
For the Period From February 3, 2000
(Date of Inception of the Development Stage) through June 30, 2000,
and for the Three Months Ended September 30, 2000
(Unaudited)
Retained
earnings
Deficit (deficit)
accumulated accumulated
prior to prior to
inception inception
of the of the
development development Total
Common Stock Additional stage stage stockholders'
---------------------- paid-in (February 3, (February 3, equity
Shares Amount capital 2000) 2000) (deficit)
---------- ---------- ---------- ---------- ---------- ----------
Balance- February 3, 2000
(Date of Inception of the 12,320,049 $ 12,320 $ 230,451 $ (259,373) $ - $ (16,602)
Conversion of related party
note payable and accrued
interest into additional
paid-in capital - - 16,602 - - 16,602
Cancellation of stock (7,820,049 (7,820) 7,820 - - -
Common stock issued from
February 28, to March 13,
2000, at $0.25 per share,
less offering costs 4,000,000 4,000 983,285 - - 987,285
Net income - - - - 2,750 2,750
---------- ---------- ---------- ---------- ---------- ----------
Balance-June 30, 2000 8,500,000 8,500 1,238,158 (259,373) 2,750 990,035
Net loss - - - - (15,764) (15,764)
---------- ---------- ---------- ---------- ---------- ----------
Balance-September 30,
2000 8,500,000 $ 8,500 $1,238,158 $ (259,373) $ (13,014) $ 974,271
========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these condensed financial
statements.
5
CHAPEAU, INC.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
For the period
from February 3,
2000 (date of
inception of the
Three months development
ended stage) to
September 30, September 30,
2000 2000
----------- -----------
Increase (decrease) in cash and cash
equivalents:
Cash flows from operating activities
Net loss $ (15,764) $ (13,014)
Adjustments to reconcile net
loss to net cash used in operating
activities:
Changes in assets and liabilities:
Accrued interest receivable (27) (4,953)
Accounts payable and accrued liabilities (1,224) 3,222
------------ -----------
Net cash and cash equivalents used in
operating activities (17,015) (14,745)
------------ -----------
Cash flows from investing activities - -
------------ ------------
Cash flows from financing activities
Proceeds from issuance of common stock - 1,000,000
Stock offering costs - (12,715)
------------ ------------
Net cash and cash equivalents
provided by financing activities - 987,285
------------ ------------
Net increase (decrease) in cash and
cash equivalents (17,015) 972,540
Cash and cash equivalents at
beginning of period 989,555 -
------------ ------------
Cash and cash equivalents at end of period $ 972,540 $ 972,540
============ ============
The accompanying notes are an integral part of these condensed
financial statements.
6
CHAPEAU, INC.
(A Development State Company)
Notes to Condensed Financial Statements
(A) Basis of Presentation
The accompanying unaudited condensed 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 disclosures required by generally accepted
accounting principles for complete financial statements. These
financial statements should be read in conjunction with the
audited financial statements and the notes thereto for the period
from February 3, 2000 (date of inception of the development
stage) to June 30, 2000, included in the Company's annual report
on Form 10-KSB. In the opinion of management, the accompanying
unaudited condensed financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to
fairly present the Company's financial position as of September
30, 2000, and its results of operations and its cash flows for
the three months ended September 30, 2000, and for the period
from February 3, 2000 (date of inception of the development
stage), through September 30, 2000. The results of operations
for the three months ended September 30, 2000, may not be
indicative of the results that may be expected for the year
ending June 30, 2001.
(B) History and Recent Events
History and Nature of business -- The Company was organized under
the laws of the State of Utah on September 19, 1985. The Company
was engaged in the operation of sports clothing stores but was
unsuccessful and closed its final store in May 1989. The Company
was dormant from May 1989 until February 3, 2000.
Recapitalization -- On February 3, 2000, two principal
shareholders of the Company (the "Selling Shareholders") and the
Company entered into a Stock Purchase Agreement with a group of
investors (the "Purchasers"). Under the terms of the Stock
Purchase Agreement, the Selling Shareholders contributed notes
and accrued interest payable to the Selling Shareholders totaling
$16,602 as capital of the Company with no additional shares being
issued, the Purchasers acquired 5,000,000 shares of common stock
from the Selling Shareholders by a cash payment of $300,000, or
$0.06 per share, and the Selling Shareholders and one of the
Purchasers returned 7,820,049 shares of common stock to the
Company for cancellation for no consideration. No stated or
unstated rights were given in exchange for the cancellation of
the common stock. No gain or loss was recognized in connection
with the contribution of the notes payable and accrued interest
to capital.
Inception of the Development Stage -- In connection with the
recapitalization of the Company, the former board of directors
resigned and a new board of directors was appointed from the
Purchasers. Howard S. Landa was also appointed as the chief
executive officer and Andrew C. Bebbington was appointed as the
chief financial officer of the Company. As a result of the Stock
Purchase Agreement and the changes in management, the Company was
reactivated on February 3, 2000. The development stage
activities of the Company include raising capital and seeking
investment or merger opportunities.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
Forward Looking Statements
This report and other information made publicly available by
the Company from time to time may contain certain forward looking
statements and other information relating to the Company and its
business that are based on the beliefs of management of the
Company and assumptions made concerning information then
currently available to management. Such statements reflect the
views of management of the Company at the time they are made and
are not intended to be accurate descriptions of the future. The
discussion of future events, including the business prospects of
the Company, is subject to the material risks listed below and
based on assumptions made by management. These risks include the
ability of the Company to identify and negotiate a transaction to
acquire operations or assets that provide the potential for
future shareholder value, the ability of the Company to negotiate
and complete advantageous investments, the success of the
entities in which the Company may invest (over which the Company
may have no control), the ability of the Company to attract the
necessary additional capital to permit it to take advantage of
opportunities with which it is presented, and the ability of the
Company to generate sufficient revenue such that it can support
the costs associated with the Company, including the
investigation of potential transactions. Should one or more of
these or other risks materialize or if the underlying assumptions
of management prove incorrect, actual results of the Company may
vary materially from those described in the forward looking
statements. The Company does not intend to update these forward
looking statements, except as may occur in the regular course of
its periodic reporting obligations.
Historical and Recent Events
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.
Initially, the Company engaged in the operation of sport clothing
stores, but was unsuccessful and closed its final store in May
1989. The Company was dormant from May 1989 until February 3,
2000.
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. On February 3, 2000, two principal shareholders of
the Company entered into a Stock Purchase Agreement with a group
of investors pursuant to which the following occurred:
(1) The investors purchased 5,000,000 shares of common
stock from the two principal shareholders;
(2) The two principal shareholders and one investor
returned 7,820,049 shares of common stock to the Company for
cancellation for no consideration; and
(3) The two principal shareholders contributed notes
payable and accrued interest totaling $16,602 as capital of
the Company for no consideration.
In conjunction with this transaction, the former board of
directors resigned and a new board of directors was appointed
from the new investor group. As a result of the stock purchase
and change in management, the Company was reactivated on February
3, 2000, representing the inception of a new development stage.
The development stage activities of the Company include raising
capital and seeking investment or merger opportunities.
8
Plan of Operations
The Company has no current operations. Through September
30, 2000, the Company had only interest income and incidental
expenses primarily associated with reactivating the Company,
maintaining its corporate status, and investigating potential
investment and merger opportunities. For the three months ended
September 30, 2000, and for the period from February 3, 2000
(date of inception of the development stage), to September 30,
2000, the Company's expenses were $31,031 and $48,482,
respectively, principally consisting of professional fees and
travel expenses.
During March 2000, the Company completed a private placement
of 4,000,000 shares of common stock resulting in net proceeds to
the Company of approximately $987,000. The offering was made to
provide funding to the Company to permit it to identify and
investigate potential business transactions and to provide the
Company with sufficient capital to potentially make it an
attractive merger candidate.
As of September 30, 2000, the Company had current assets of
$977,493 and current liabilities of $3,222, resulting in working
capital of $974,271.
Management of the Company has reviewed a limited number of
investment or merger opportunities and continues to seek such
opportunities. Management believes that the current cash balance
is sufficient to meet its existing operating commitments and to
conduct its investigations of potential investment or merger
opportunities. The Company's need for additional capital beyond
its current cash balances will depend on the financial condition
and capital needs of the potential investment or merger
candidate.
9
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
------ --------- ----------------------- -----------
1 27 Financial Data Schedule This Filing
Reports on Form 8-K
During the quarter ended September 30, 2000, the Company did
not file a report on Form 8-K.
10
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: November 13, 2000 By /s/ Andrew C. Bebbington
------------------------------------
Andrew C. Bebbington,
Chief Financial Officer
(Principal Financial and Accounting
Officer)
11