U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
(X) Quarterly report pursuant to section 13 or 15(d) of the SECURITIES AND
EXCHANGE ACT OF 1934 For the Quarterly period ended March 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 for the transition
period from to
Commission File No. 000-24885
FAR EAST VENTURES, INC.
-----------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada 88-0378451
------ ----------
(State or other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
3960 Howard Hughes Parkway, 5th Floor, Las Vegas, NV 89109
(Address of Principal Executive Offices)
(702) 990-3600
(Issuer's Telephone Number)
Check whether the issuer (1) 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
PROCEEDING 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
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date: 10,900,000 shares as of March
31, 2000.
TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
Part I. Financial Information
- -------
Item 1. Financial Statements (unaudited):
Balance Sheet as of March 31, 2000 3
Statement of Operations for the three months ended
March 31, 2000 4
Statements of Cash Flows for the three months ended
March 31, 2000 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 8
Part II. Other Information
- --------
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security holders 9
Item 5. Other Information 9
Item 6. Exhibits and reports on form 8-K 9
SIGNATURES 11
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FAR EAST VENTURES, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
ASSETS
CURRENT ASSETS
Prepaid consulting fees $ 6,836,951
-----------
Total current assets 6,836,951
OTHER ASSETS 151,353
-----------
TOTAL ASSETS $ 6,988,304
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 2,092,423
Line of Credit - Stockholder 561,977
-----------
Total current liabilities 2,654,400
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock, $0.001 par value, 50,000,000
shares authorized, 10,900,000 shares issued
and outstanding 10,900
Additional paid-in capital 5,402,192
Accumulated deficit (1,079,188)
-----------
Total stockholders' equity 4,333,904
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 6,988,304
===========
See the accompanying notes to the consolidated financial statements
3
FAR EAST VENTURES, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
2000 1999
------------ ----------
REVENUE $ - $ -
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,068,188 -
------------- ---------
LOSS BEFORE INCOME TAXES (1,068,188) -
INCOME TAXES - -
------------ ---------
NET LOSS $ (1,068,188) $ -
============ =========
BASIC AND DILUTED LOSS PER SHARE $ (0.17) $ (0.00)
============ ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC AND DILUTED 6,446,154 4,500,000
============ ==========
See the accompanying notes to the consolidated financial statements
4
FAR EAST VENTURES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
2000 1999
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,068,188) $ -
Adjustments to reconcile net loss to net
cash used in operating activities
(Increase) decrease in:
Prepaid expenses 775,429 -
Other assets (151,353) -
Increase (decrease) in:
Accounts payable and accrued expenses (26,565) -
----------- -----------
Net cash used in operating activities (470,677) -
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from line of credit - stockholder 470,677 -
----------- -----------
Net cash provided by financing activities 470,677 -
----------- -----------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS - -
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD - -
----------- -----------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ - $ -
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
During the three months ended March 31, 2000 and 1999, the Company paid no
income taxes and no interest.
See the accompanying notes to the consolidated financial statements
5
FAR EAST VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The unaudited Consolidated Financial Statements have been prepared by Far East
Ventures, Inc. (the "Company"), pursuant to the rules and regulations of the
Securities and Exchange Commission. The information furnished herein reflects
all adjustments (consisting of normal recurring accruals and adjustments) which
are, in the opinion of management, necessary to fairly present the operating
results for the respective periods. Certain information and footnote disclosures
normally present in annual consolidated financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. The results of the three months ended
March 31, 2000 are not necessarily indicative of the results to be expected for
the full year ending December 31, 2000.
NOTE 2 - LOSS PER SHARE
In 1997, the Financial Accounting Standard Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 replaced the previously reported primary and fully diluted loss per share
with basic and diluted loss per share. Unlike primary loss per share, basic loss
per share excludes any dilutive effects of options, warrants, and convertible
securities. Diluted loss per share is very similar to the previously reported
fully diluted loss per share. Basic loss per share is computed using the
weighted-average number of common shares outstanding during the period. Common
equivalent shares are excluded from the computation if their effect is
anti-dilutive. There are no common stock equivalents.
NOTE 3 - CONSULTING AGREEMENTS
In January 2000, the Company issued to R.R.P., L.L.C., an unrelated third party,
300,000 shares of the Company's common stock in accordance with a consulting
agreement. The shares have been valued in accordance with FASB No. 123
"Accounting for Stock-Based Compensation" at $1,274,880 based on the fair market
value of the Company's common stock on the date of issuance of the shares.
In January 2000, the Company has committed to enter into a consulting agreement
with the owner ("Consultant") of a company, which is a stockholder of the
Company. The agreement is for an investor and public relations services to be
rendered by the Consultant over a twelve-month period. For the services
rendered, the Consultant will receive 500,000 shares of the Company's common
stock. The shares have been valued in accordance with FASB No. 123 "Accounting
for Stock-Based Compensation" at $2,062,500 based on the fair market value of
the Company's common stock on the date of issuance of the shares.
In January 2000, the Company engaged Chanin Capital Partners, LLC ("CCP") and
its affiliates to act as exclusive financial advisor and/or agent to the Company
in connection with acquisitions. CCP has agreed to initiate a private placement
of up to $100,000,000, on best efforts, of senior secured debt, senior
subordinated notes or equity. For these services CCP will be paid a one-time
advisory fee of $25,000 and a commission, based on percentage of funding, for
any private placement financing.
6
FAR EAST VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
NOTE 3 - CONSULTING AGREEMENTS, continued
In March 2000, the Company issued to Alan Burkun, an unrelated third party,
900,000 shares of the Company's common stock in accordance with a consulting
agreement. The shares have been valued in accordance with FASB No. 123
"Accounting for Stock-Based Compensation" at $3,037,500 based on the fair market
value of the Company's common stock on the date of issuance of the shares.
In March 2000, the Company issued to J.B. Marc & Associates, an unrelated third
party, 900,000 shares of the Company's common stock in accordance with a
consulting agreement. The shares have been valued in accordance with FASB No.
123 "Accounting for Stock-Based Compensation" at $1,237,500 based on the fair
market value of the Company's common stock on the date of issuance of the
shares.
In December 1999, Churchill Resources, Inc. ("CRI") engaged Crary Onthank and
O'Neil LLC ("COO"), who have agreed to initiate a private placement of up to
$6,000,000, on best efforts, of senior secured debt, senior subordinated notes
or equity. The funds will be used for CRI's acquisition of the operating assets
of Orangeville Raceway, Ltd. For these services, COO will be paid a one-time
advisory fee of 25,000 shares of the Company's common stock and a commission,
based on percentage of funding, for any private placement financing.
NOTE 4 - ACQUISTION
In January 2000, the Company completed an acquisition of CRI. The Company issued
4,500,000 shares of its common stock for all of the issued and outstanding
common stock of CRI. After the acquisition, CRI will have a majority ownership
of the Company. Since CRI will be the controlling stockholder, CRI will be the
successor by merger to the Company. Therefore, the acquisition will be accounted
for as a recapitalization of CRI and the historical and continuing financial
statement presentation will be that of the legal subsidiary, CRI, not the legal
parent, the Company. Due to the Company's lack of business activity prior to the
merger, no excess cost over fair value of net assets acquired will be recorded.
In January 2000, the Company, formerly CRI, executed an asset purchase agreement
and paid an initial deposit of $100,000 to purchase the operating assets of
Orangeville Raceway, Ltd. The asset purchase agreement closing is contingent
upon regulatory approval from the British Columbia Racing Authority.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
(a) Plan of Operation.
Initially during the first quarter of 2000 the Company focused on
developing a management team and a corporate identity. Business offices were
leased in Las Vegas, Nevada and management was secured, including a Chief
Executive Officer and Chief Financial Officer who were knowledgeable in the
gaming and horse racing industries. Further members of management are
knowledgeable in the various regulatory issues presented by the Registrant being
involved in gaming and horse racing in the United States and Canada. The
Registrant retained the services of an Accounting firm with substantial SEC
experience.
The Registrant also focused on the development of what is to be its core
business, horse racing and gaming. To that end the Registrant entered into an
agreement to purchase the Fraser Downs Raceway assets in Surrey, British
Columbia, Canada. The Registrant has submitted all documentation required to the
British Columbia Racing Commission to secure the necessary licenses to own and
operate the Fraser Downs Raceway assets. The Registrant has also signed a letter
of intent to purchase the Sandown Raceway assets on Vancouver Island, British
Columbia on March 2, 2000. In April 2000, the Registrant executed a letter of
intent to purchase a majority in Retama Park in Selma, Texas. The Registrant is
presently seeking to acquire additional horse racing and gaming venues.
The Registrant has entered into various agreements to provide the necessary
capital to complete its acquisition program.
8
PART II
ITEM 1. LEGAL PROCEEDINGS
To the best knowledge of the officers and directors of the Company, neither
the Company nor any of its officers or directors is a party to any material
legal proceeding or litigation and such persons know of no other material legal
proceeding or litigation contemplated or threatened.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
9
(b) Reports on Form 8-K.
On February 2, 2000 the Registrant corrected information regarding the
resignation of its officers and directors by filing a Form 8-K/A on February 14,
2000.
On February 8, 2000, the Registrant reported a change in control to
Churchill Resources, Inc. and to acquire its assets. The February 8, 2000
Current Report noted a change in the Certifying Accountant and a change in
Officers and Directors. The February 8, 2000 Form 8-K was amended by filing a
Form 8-K/A dated February 23, 2000 on February 24, 2000 to report that the
Registrant had conditionally agreed to acquire the Fraser Downs Raceway assets.
The February 8, 2000 Form 8-K was amended by filing a Form 8-K/A dated March 3,
2000 on March 15, 2000 to provide the audited financial statements of Churchill
Resources, Inc.
On February 11, 2000 the Registrant reported on Form 8-K that it entered
into a financial advisory agreement with Chanin Capital LLC to provide financing
up to $100,000,000.
On March 2, 2000 the Registrant reported that it had agreed to acquire the
Sandown Raceway assets situated on Vancouver Island, British Columbia, Canada.
On March 13, 2000 the Registrant reported that it had hired a Chief
Executive Officer.
10
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
FAR EAST VENTURES, INC.
Date: May 22, 2000 By: /s/ Fred Bilawey
--------------------
Fred Bilawey
Chief Financial Officer
11