SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KSB/A
Amendment No. 2
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 11,
2001
Commission File Number: 033 1289 D
CHAPEAU, INC.
(exact name of registrant as specified in charter)
UTAH
(state or other jurisdiction of incorporation or
organization)
87-0431831
(IRS employer identification number)
9661 Comanche Moon Drive 50 West Broadway, Suite 501
Reno, Nevada 89511 Salt Lake City, Utah 84101
(address of principal (former address of
executive offices; ZIP principal executive
code) offices; ZIP code)
Registrant's telephone Registrant's former
number, including area telephone number, including
code: area code:
(916) 780-6764 (801) 323-0329
1
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements and Exhibits.
The Registrant provides the required financial
statements and pro forma financial information related to
the transaction set forth in the Reorganization Plan. These
statements are attached hereto.
(b) Pro Forma Financial Information.
The pro forma financial information related to the
Reorganization Plan is being filed with the above-referenced
financial statements and exhibits. See Item (7)(a) above.
(c) Exhibit(s). "Unaudited Pro Forma Combined Condensed
Financial Statements", "Unaudited Pro Forma Combined
Condensed Balance Sheet", "Unaudited Pro Forma Combined
Condensed Statement of Operations", "Notes to the Unaudited
Pro Forma Combined Condensed Financial Information",
"Independent Auditor's Report", "Specialized Energy
Products, Inc., Balance Sheet", "Specialized Energy
Products, Inc., Statements of Operations", "Specialized
Energy Products, Inc., Statements of Cashflows",
"Specialized Energy Products, Inc., Statements of
Stockholders Equity", and "Specialized Energy Products,
Inc., Notes to the Financial Statements."
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 hereunto duly
authorized.
DATED: June 25, 2001.
/s/ Thomas J. Manz
---------------------
Thomas J. Manz
Chair, Board of Directors
2
CHAPEAU, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed
financial statements give effect to the acquisition by
Chapeau, Inc. (Chapeau) of Specialized Energy Products, Inc.
(Specialized) on April 11, 2001. The acquisition of
Specialized was recorded using the purchase method of
accounting for business combinations. The following pro
forma statements reflect this acquisition using the purchase
method of accounting and include the pro forma adjustments
described in the accompanying notes.
The pro forma combined condensed balance sheet as of
March 31, 2001 has been prepared as if the acquisition had
been consummated on March 31, 2001. The pro forma combined
condensed statements of operations of Chapeau for the nine
months ended March 31, 2001 and for the year ended June 30,
2000 assume that the acquisition of Specialized took place
on July 1, 1999.
Chapeau's and Specialized's results of operations
included in the pro forma combined condensed statements of
operations are derived from their respective historical
financial statements. These pro forma financial statements
should be read in connection with the historical financial
statements of Chapeau and Specialized, including notes to
the financial statements.
The unaudited pro forma combined condensed financial
information of Chapeau and Specialized has been prepared in
accordance with generally accepted accounting principles
applicable to interim financial information and, in the
opinion of management, includes all adjustments necessary
for a fair presentation of the financial information for
such interim periods.
The unaudited pro forma combined condensed information
is presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial
position that would have actually occurred if the
acquisition had been consummated as of the dates indicated,
nor is it necessarily indicative of future operating results
or financial position. The pro forma adjustments are based
on the information available at the date of this document
and are subject to change based upon final purchase price
allocations.
3
CHAPEAU, INC.
(A Development Stage Company)
Unaudited Pro Forma Combined Condensed Balance Sheet
March 31, 2001
ASSETS
Chapeau Specialized Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
---------- ---------- ---------- ----------
Current Assets
Cash and cash equivalents $ 369,729 $ 145,713 $ $ 515,442
Notes receivable 517,464 - (a) (317,464) 200,000
Accrued interest receivable 9,744 - (a) (4,304) 5,440
Inventory - 67,464 - 67,464
Prepaid expenses 37,500 37,500
---------- ---------- ---------- ----------
Total Current Assets 934,437 213,177 (321,768) 825,846
Deferred acquisition costs 23,152 - (a) (23,152) -
Goodwill - - (a) 670,371 670,371
---------- ---------- ---------- ----------
Total Assets $ 957,589 $ 213,177 $ 325,451 $1,496,217
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and
accrued liabilities $ 30,047 $ 17,932 (a)$ (4,304) $ 43,675
Note payable - 317,464 (a) (317,464) -
---------- ---------- ---------- ----------
Total Current Liabilities 30,047 335,396 (321,768) 43,675
---------- ---------- ---------- ----------
Stockholders' Equity
Preferred stock - - - -
Common stock 8,500 25,000 (a) (21,500) 12,000
Additional paid-in capital 1,238,158 (24,650)(a) 668,719 -
(b) (122,569) 1,759,658
Deficit accumulated prior to
date of inception of the
development stage (259,373) (259,373)
Deficit accumulated from date
of inception of the
development stage (59,743) (122,569)(b) 122,569 (59,743)
---------- ---------- ---------- ----------
Total Stockholders' Equity 927,542 (122,219) 647,219 1,452,542
---------- ---------- ---------- ----------
Total Liabilities and Stockholder's
Equity $ 957,589 $ 213,177 $ 325,451 $1,496,217
========== ========== ========== ==========
The accompanying notes are an integral part of these pro forma
financial statements.
4
CHAPEAU, INC.
(A Development Stage Company)
Unaudited Pro Forma Combined Condensed Statement of Operations
Nine Months Ended March 31, 2001
Chapeau Specialized Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
---------- ---------- ---------- ----------
Net Sales $ - $ - $ - $ -
General and administrative
expense (106,879) (39,040) - (145,919)
Research and development
expense - (79,065) - (79,065)
Amortization of goodwill - - (c) (50,324) (50,324)
---------- ---------- ---------- ----------
Loss from operations (106,879) (118,105) (50,324) (275,308)
Interest income, net 44,386 (4,304) - 40,082
---------- ---------- ---------- ----------
Net Income (Loss) $ (62,493) $ (122,409) $ (50,324) $ (235,226)
========== ========== ========== ==========
Basic Income (Loss) per
Common Share $ (0.01) $ (0.02)
========== ==========
Weighted-Average Common
Shares Outstanding 8,500,000 12,000,000
========== ==========
The accompanying notes are an integral part of these pro forma
financial statements.
5
CHAPEAU, INC.
(A Development Stage Company)
Unaudited Pro Forma Combined Condensed Statement of Operations
Year Ended June 30, 2000
Chapeau Specialized Pro Forma Pro Forma
(Historical) (Historical) Adjustments Combined
---------- ---------- ---------- ----------
Net Sales $ - $ - $ - $ -
General and administrative
expense (17,451) - (17,451)
Amortization of goodwill - - (c) (67,037) (67,037)
---------- ---------- ---------- ----------
Loss from operations (17,451) - (67,037) (84,488)
Interest income, net 20,201 - - 20,201
---------- ---------- ---------- ----------
Net Income (Loss) $ 2,750 $ - $ (67,037) $ (64,287)
========== ========== ========== ==========
Basic Income (Loss) per
Common Share $ 0.00 $ (0.01)
========== ========== ========== ==========
Weighted-Average Common
Shares Outstanding 7,786,743 11,286,743
========== ========== ========== ==========
The accompanying notes are an integral part of these pro forma
financial statements.
6
NOTES TO THE
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
Acquisition of Specialized Energy Products, Inc.
Specialized is a company that is engaged in the sale of
customized engines and control panels for use in the development,
assembly and marketing of packaged co-generation and power
generation systems to the electrical power market. On April 11,
2001, Chapeau, Inc. (Chapeau) acquired all of the outstanding
stock of Specialized Energy Products, Inc. (Specialized) and
Specialized was merged with Chapeau Nevada, Inc., a wholly owned
subsidiary of Chapeau, to effectively make Specialized a wholly-
owned subsidiary of Chapeau. Specialized was acquired in
exchange for the cancellation of a $317,464 note receivable from
Specialized, the initial issuance of 3.5 million shares of common
stock and the potential issuance of an additional 3.0 million
shares of common stock on the achievement of certain benchmarks
in the development of Specialized's business, as follows:
a. One million shares upon initial receipt of revenues
from the sale of its engine and control panel products;
b. One million shares upon the realization of gross revenues
of not less than $2,000,000 in any fiscal quarter; and
c. One million shares upon the realization of gross
revenues of not less than $4,000,000 in any fiscal quarter.
The acquisition has been accounted for as a purchase business
combination. Because there was no market for Chapeau's stock at
the date of the acquisition, the value of the 3.5 million shares
have been accounted for at a price of $0.15 per share based on
recent sales of common stock between shareholders to equal a
total value of $525,000. The 3.0 million shares that are
contingently issuable based on the future events outlined above
will be recorded as additional goodwill at the current market
value of the common stock on the date the shares become issuable.
The contingently issuable shares have not been considered in the
pro forma adjustments to the accompanying pro forma combined
condensed financial information.
The acquisition consideration totals $865,616 and consists of
the value of the common stock issued, cash loaned to Specialized
prior to the acquisition of $317,464, and acquisition costs of
$23,152. The consideration in excess of net identifiable assets
acquired allocated to goodwill amounted to $670,371, and is
being amortized over an estimated useful life of ten years on a
straight-line basis.
The adjustments to the unaudited pro forma combined condensed
balance sheet as of March 31, 2001 and to the unaudited pro forma
combined condensed statements of operations for the nine months
ended March 31, 2001 and the year ended June 30, 2000 are as
follows:
(a) To record the conversion of a $317,464 note receivable
and $4,304 of related accrued interest from Specialized and the
issuance of 3.5 million shares of common stock to acquire
Specialized.
(b) To record the elimination of Specialized's accumulated
deficit.
(c) To record amortization of goodwill acquired over a
period of 10 years on a straight-line basis..
Pro forma basic income (loss) per share is based on the weighted-
average number of shares of Chapeau outstanding during the period
and the number of shares of Chapeau common stock issued in
connection with the acquisition of Specialized.
7
Daniel J. Forbush
Certified Public Accountant
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
And Shareholders of
Specialized Energy Products, Inc.
I have audited the balance sheet of Specialized Energy Products,
Inc. (A Development Stage Company) as of December 31, 2000 and
December 31, 1999 and the related statements of operations,
stockholders' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on the
financial statements based on my audit.
I have conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides
a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Specialized Energy Products, Inc. (A Development Stage Company) as
of December 31, 2000 2000 and December 31, 1999 and the related
statements of operations, stockholders' equity, and cash flows for
the years then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been presented assuming
that the Company will continue as a going concern. As discussed in
Note 6 to the financial statements, the Company has suffered
losses from operations and has yet to make a sale which raises
doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Daniel J. Forbush
Reno, Nevada
March 19, 2001
8
SPECIALIZED ENERGY PRODUCTS, INC.
(A DEVELOPMENT STAGE CORP.)
BALANCE SHEET
March 31, December December
2001 31, 2000 31, 1999
(Unaudited) (Audited) (Audited)
---------- ---------- ----------
Current Assets:
Cash and cash equivalents $ 145,713 $ 90 $ 90
Inventory 67,464 - -
---------- ---------- ----------
Total Current Assets 213,177 90 90
---------- ---------- ----------
TOTAL ASSETS $ 213,177 $ 90 $ 90
========== ========== ==========
Current Liabilities:
Accounts payable $ 13,628 $ - $ -
Accrued expenses (Note 3) 4,304 - -
Note payable (Note 4) 317,464 - -
---------- ---------- ----------
Total Current Liabilities 335,396 - -
---------- ---------- ----------
Stockholder's Equity:
Common stock, $0.25 par value 100,000
shares authorized; 100,000, 400 and
400 shares issued and outstanding at
March 31, 2001 December 31, 2000 and
December 31, 1999, respectively 25,000 100 100
Paid in capital (24,650) 150 150
Deficit accumulated during the
development stage (122,569) (160) (160)
---------- ---------- ----------
Total Stockholder's Equity (122,219) 90 90
---------- ---------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY $ 213,177 $ 90 $ 90
========== ========== ==========
The accompanying Notes are an integral part of these financial statements
9
SPECIALIZED ENERGY PRODUCTS, INC.
(A DEVELOPMENT STAGE CORP.)
STATEMENTS OF OPERATIONS
March 31, December December
2001 31, 2000 31, 1999
(Unaudited) (Audited) (Audited)
---------- ---------- ----------
Net Sales $ - $ - $ -
Cost of Sales - - -
---------- ---------- ----------
Gross Profit - - -
---------- ---------- ----------
Operating Expenses:
General and administrative expenses 39,040 - -
Research and development expenses 79,065 - -
Depreciation and amortization - - -
---------- ---------- ----------
Total Operating Expenses 118,105 - -
---------- ---------- ----------
Interest Income (Expenses): (4,304) - -
---------- ---------- ----------
Net Loss $ (122,409) $ - $ -
========== ========== ==========
Loss Per Common Share $ (3.64) $ - $ -
========== ========== ==========
Weighted Average Shares Outstanding 100,000 400 400
========== ========== ==========
The accompanying Notes are an integral part of these financial statements
10
SPECIALIZED ENERGY PRODUCTS, INC.
(A DEVELOPMENT STAGE CORP.)
STATEMENTS OF CASHFLOWS
March 31, December December
2001 31, 2000 31, 1999
(Unaudited) (Audited) (Audited)
---------- ---------- ----------
Reconciliation of Net Loss to Net Cash
Used in Operating Activities:
Net Loss $ (122,409) $ - $ -
---------- ---------- ----------
Adjustments to Reconcile Net Loss to
Net Cash Provided by (Used in)
Operating Activities:
(Increase) decrease in assets:
Inventory (67,464) - -
Other Assets - - -
Increase (decrease) in liabilities:
Accounts payable 13,628 - -
Accrued expenses 4,304 - -
Due to/from related parties - - -
---------- ---------- ---------
Total Adjustments (49,532) - -
---------- ---------- ---------
Net Cash Provided (Used) by Operating
Activities $ (171,941) $ - $ -
---------- ---------- ---------
Cash Flows from Investing Activities:
Cash from sale (purchase) of equipment - - -
---------- ---------- ---------
Net Cash Used in Investing Activities - - -
---------- ---------- ---------
Cash Flows from Financing Activities:
Proceeds from issuance of capital stock,
net of offering costs 100 - -
Proceeds from debt 317,464 - -
Principal payments on debt - - -
---------- ---------- ---------
Net Cash Provided by Financing
Activities 317,564 - -
---------- ---------- ---------
Net Increase (Decrease) in Cash 145,623 - -
Cash at beginning of period 90 90 90
---------- ---------- ---------
Cash at end of period $ 145,713 $ 90 $ 90
========== ========== =========
The accompanying Notes are an integral part of these financial statements
11
SPECIALIZED ENERGY PRODUCTS, INC.
(A DEVELOPMENT STAGE CORP.)
STATEMENTS OF STOCKHOLDERS EQUITY
Common Stock Additional From
--------------- Paid-in Inception
Shares Amount Capital To Date Total
---------- ---------- ---------- ---------- ----------
Issuance of shares for cash on
March 24, 1998 (inception) 400 $ 100 $ 150 $ - $ 250
Cumulative loss from inception
to December 31, 1994 - - - (160) (160)
---------- ---------- ---------- ---------- ----------
Balance December 31, 1998 400 100 150 (160) 90
Income (loss) for the year ended
December 31, 1999 - - - - -
---------- ---------- ---------- ---------- ----------
Balance December 31, 1999 400 100 150 (160) 90
Income (loss) for the year ended
December 31, 2000 - - - - -
---------- ---------- ---------- ---------- ----------
Balance December 31, 2000 400 100 150 (160) 90
Issuance of shares for cash on
January 1, 2001 99,600 24,900 (24,800) - 100
Loss for the period ended
March 31, 2001 - - - (122,409) (122,409)
---------- ---------- ---------- ---------- ----------
Balance March 31, 2001 100,000 $ 25,000 $ (24,650) $ (122,569) $ (122,219)
========== ========== ========== ========== ==========
The accompanying Notes are an integral part of these financial statements
12
SPECIALIZED ENERGY PRODUCTS, INC.
(A DEVELOPMENT STAGE CORP.)
NOTES TO THE FINANCIAL STATEMENTS
Based on Audited Financial Statements at December 31, 1999
and December 31, 2000 and Unaudited Financial Statements at March
31, 2001
NOTE 1 -NATURE OF BUSINESS AND ORGANIZATION
Nature of Business:
Specialized Energy Products, Inc. (the "Company") is an energy
products development company specializing in natural gas fired
electrical generation and co-generation products. The Company's
corporate objective is to have the product line available for
marketing July 1, 2001. The Company intends to conduct all
testing necessary to prove the economic viability of and the
regulatory approval for such products in order to initiate
marketing and establish distribution channels for its products.
Organization:
The Company was incorporated under the laws of the State of
Nevada on March 10, 1998. Effective March 24, 1998, the Company
issued 400 shares of stock to the founder, Mr. Gerald H. Dorn.
On January 1, 2001 the remaining 99,600 shares authorized by its
incorporation were issued.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organizational Costs:
Organization costs were expensed in the year incurred, as they
were not material.
Inventory:
Inventory is valued at the lower of cost or market.
Equipment:
Equipment is stated at cost. Depreciation is incorporated on a
straight-line and units of production basis over the life of the
asset. Expenditures for maintenance and repairs are charged to
expense as incurred. Upon retirement or disposal of assets, the
cost and accumulated depreciation are eliminated from the
accounts and any resulting gain or loss is included in expense.
Use of Estimates:
In order to prepare the financial statements in conformity with
generally accepted accounting principles, management must make
estimates and assumptions that affect certain reported accounts
and disclosures. Actual results could differ from these
estimates.
Earnings per share:
The earnings per share calculations were based on the weighted
average number of shares outstanding during the period.
Income Tax:
Because of losses sustained since inception, no provision has
been made for income tax.
Research and Development Costs:
These expenditures are expensed as incurred.
NOTE 3 - ACCRUED EXPENSES
Accrued expenses consist of interest on a note payable in the
amount of $4,304 (see discussion of note payable in Note 4).
13
NOTE 4 - NOTES PAYABLE
In February of 2001 pursuant to a promissory note dated February
12, 2001 between the Company and Chapeau, Inc. a Utah
corporation, secured by inventory and equipment, the Company
received $250,000 in cash at the signing of the note and a
provision for the note holder to provide payments for additional
inventory and equipment. The Note carries an interest rate of 12%
and is due in 120 days from the date of the Note or June 21, 2001.
Chapeau, Inc. has subsequent to the dates of these statements
entered in to a Plan of Reorganization and Agreement with the
Company. See Note 5 for further explanation.
NOTE 5 - SUBSEQUENT EVENTS
On March 15, 2001 the Company entered into a Plan of
Reorganization and Agreement with Chapeau, Inc., a Utah
corporation, wherein the Company will be acquired by a subsidiary
of Chapeau (a public company) for the consideration of 3,500,000
shares of the common stock of Chapeau and contingent
consideration of an additional 3,000,000 shares of the common
stock of Chapeau subject to the Company's line of business
meeting certain sales targets. Also as the result of this
transaction the Company's management will be in control of
Chapeau and hence will become a publicly traded company following
the finalization of all additional listing requirements. In
addition the principals of Chapeau have represented to the
Company that they can raise an additional $5.0 million through
the issuance of common stock of Chapeau to be used by the Company
for the manufacture, sales, distribution and installation of the
Company's products in the market place.
NOTE 6 - UNCERTAINTY - GOING CONCERN
The financial statements of the Company have been prepared
assuming that the Company will continue as a going concern. The
Company's continued existence is dependent upon its ability to
resolve its liquidity problems, principally by obtaining
additional equity capital from other sources. If additional
capital is not secured, there is considerable doubt about the
Company's ability to continue as a going concern.
14