SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under ss.240.14a-12
Far East Energy Corporation
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1),14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
FAR EAST ENERGY CORPORATION
400 N. Sam Houston Parkway East, Suite 205
Houston, Texas 77060
-----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on June 14, 2002
-------------------------
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of the Shareholders of
Far East Energy Corporation (hereinafter referred to as the "Company"), to be
held on Friday, June 14, 2002 at 2:00 p.m. (CDT) at the Sofitel Hotel, 425 North
Sam Houston Parkway, East, Houston, Texas 77060, for the following purposes:
1. PROPOSAL NO. 1: To elect the Board of Directors, each to serve until
the next Annual Meeting of the shareholders or until
their respective successors are elected and qualify;
2. PROPOSAL NO. 2: To ratify and approve the selection by the Board of
Directors of the Payne, Falkner, Smith & Jones, P.C.
as the Company's independent accountants for the
current year;
3. PROPOSAL NO. 3: To consider and vote upon such other business as may
properly come before the meeting or any adjournment
thereof.
The complete text of these proposals and the reasons your directors have
proposed their adoption are contained in the Proxy Statement, and you are urged
to carefully study them. If you do not plan to attend the Annual Meeting, you
are respectfully requested to sign, date and return the accompanying Proxy
promptly.
FOR THE REASONS STATED HEREIN, YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE "FOR" THE NOMINEES AND "FOR" THESE PROPOSALS. YOUR VOTE IS IMPORTANT NO
MATTER HOW MANY SHARES YOU OWN. TO BE SURE THAT YOUR SHARES WILL BE VOTED AT THE
MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY. THIS WILL NOT PREVENT YOU FROM
ATTENDING AND VOTING YOUR SHARES IN PERSON. PROMPT RETURN OF YOUR PROXY WILL
REDUCE THE COMPANY'S EXPENSES IN THIS MATTER.
Only shareholders of record as shown on the books of the Company at the close
of business on May 17, 2002 will be entitled to vote at the Annual Meeting or
any adjournment thereof. A list of the Company's shareholders entitled to notice
of, and to vote at, the Annual Meeting will be made available during regular
business hours at the Company's principal executive offices at 400 N. Sam
Houston Parkway East, Suite 205
Houston, Texas 77060 from the date of this notice for inspection by any
shareholder for any purpose germane to the Annual Meeting.
The Annual Meeting may adjourn from time to time without notice other than by
announcement at the Annual Meeting, or at any adjournments thereof, and any and
all business for which the Annual Meeting is hereby noticed may be transacted at
any such adjournments.
By order of the Board of Directors,
Bill Jackson, President
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FAR EAST ENERGY CORPORATION
400 N. Sam Houston Parkway East, Suite 205
Houston, Texas 77060
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON JUNE 14, 2002
INFORMATION CONCERNING SOLICITATION AND VOTING
This Proxy Statement is being furnished to shareholders of Far East Energy
Corporation (the "Company") in connection with the Board of Director's
solicitation of proxies for use at the annual meeting of shareholders to be held
on June 14, 2002, and at any adjournment of that meeting (the "Annual Meeting").
The first date on which this Proxy Statement and the form of Proxy are first
being mailed to shareholders of the Company is on or about May 24, 2002.
The Board of Directors has fixed May 17, 2002 as the record date for
determining stockholders who are entitled to vote at the Annual Meeting. At the
close of business on May 17, 2002, the Company had issued and outstanding
45,750,500 shares of common stock (the "Common Stock"), held of record by
approximately 74 stockholders. Each share of Common Stock is entitled to one
vote on each matter properly coming before the Annual Meeting.
The Company will not solicit proxies personally, by telephone or
facsimile. The Company, however, may make a request by telephone, facsimile, or
mail strictly limited to confirming the shareholder's receipt of the proxy and
requesting that the shareholder sign and return the proxy solicited by this
statement. The Company does not expect to pay compensation to any party other
than employees (and then only their regular salaries plus expenses) for the
solicitation of proxies, but may reimburse brokers, custodians, nominees and
fiduciaries for the expense of forwarding solicitation material and proxies to
beneficial owners of their outstanding stock. The cost of soliciting proxies,
not expected to exceed $15,000, will be borne by the Company.
All proxies will be voted in accordance with the instructions contained
therein, if properly executed and not revoked. Proxies that are signed by
shareholders but that lack any such specification will be voted in favor of the
proposals set forth in the Notice of the Annual Meeting. The management of the
Company does not know of any other matters which will be presented for action at
the Annual Meeting, but the person named in the Proxy intends to vote or act
with respect to any other proposal which may be presented for action in
accordance with his best judgment. Any proxy may be revoked by a stockholder at
any time before it is exercised by giving written notice to that effect to the
Corporate Secretary of the Company or by voting in person at the Annual Meeting.
The presence in person or by executed proxy of the holders of a majority
of the aggregate voting power represented by the shares of Common Stock, issued
and outstanding and entitled to vote at the meeting, together as a single class,
shall constitute a quorum for transacting business at the meeting. Any shares
which are withheld or abstain from voting will be counted for the purpose of
obtaining a quorum. Shares held in "street name" by brokers or nominees who
indicate that they do not have discretionary authority to vote such shares as to
a particular matter ("broker non-votes") will not be counted as votes "for" or
"against" the proposals, and will not be counted as shares voted on such matter.
The total number of votes cast "for" will be counted for purposes of
determining whether sufficient affirmative votes have been cast to approve each
proposal. Abstentions from voting on a
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proposal, as well as broker non-votes, will be considered for purposes of
determining the number of total votes present at the Annual Meeting. Abstentions
will have the same effect as votes against the proposals, but will not affect
the election of directors.
The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented at the meeting is required to elect the Board of
Directors and to ratify and approve the selection by the Board of Payne,
Falkner, Smith & Jones, P.C. as the Company's independent accountant for the
current year.
Management of the Company has been informed by the executive officers,
directors, and control persons of the Company that such parties intend to vote
all shares they beneficially hold with voting rights FOR the nominees and FOR
all of the proposals set forth in the notice. Together, such parties and proxies
represent approximately 20.7% of the votes eligible to be cast at the Annual
Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
ownership of the Company's Common Stock as of May 17, 2002, with respect to:
(i) each person known to the Company to be the beneficial owner of more than
five percent of the Company's Common Stock; (ii) all directors; and (iii)
directors and executive officers of the Company as a group. The number of shares
listed as beneficially owned in the following table reflect the forward stock
split of eighteen-for-one (18-for-1) of the Company's issued and outstanding
common stock which became effective on January 1, 2002. As of May 17, 2002,
there were 45,750,500 shares of Common Stock issued and outstanding.
Title of Class Name and Address of Amount and Nature Percent of
Beneficial Owner of Beneficial Class (1)
Ownership(1)
- --------------------------------------------------------------------------------
Executive Officers and Directors
- --------------------------------------------------------------------------------
Common Stock Bill Jackson 1,000,000 2.2%
($0.001 par value) 400 N. Sam Houston Pkwy E.
Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
Common Stock Jawaharlal Gondi 7,000,000 (2) 15.3%
($0.001 par value) 400 N. Sam Houston Pkwy E.
Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
Common Stock Tun Aye Sai 1,000,000 2.2%
($0.001 par value) 400 N. Sam Houston Pkwy E.
Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
Common Stock Ramesh Kalluri 150,000 Less than 1%
($0.001 par value) 400 N. Sam Houston Pkwy E.
Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
Common Stock John Springsteen 200,000 Less than 1%
($0.001 par value) 400 N. Sam Houston Pkwy E.
Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
Common Stock Chris Jackson 100,000 Less than 1%
($0.001 par value) 400 N. Sam Houston Pkwy E.
Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
Common Stock Joe Cooper 0 n/a
($0.001 par value) 400 N. Sam Houston Pkwy E.
Suite 205
Houston, Texas
- --------------------------------------------------------------------------------
Common Stock Directors and Executive Officers
($0.001 par value) as a Group 9,450,000 20.7%
(6 individuals)
- --------------------------------------------------------------------------------
(1) The number of shares and the percentage of the class beneficially
owned by the entities above is determined under rules promulgated by the
SEC and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which the individual has sole or shared voting
power or investment power and also any shares which the individual has the
right to acquire within 60 days through the exercise of any stock option
or other right. The inclusion herein of such shares, however, does not
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of such shares. Unless otherwise indicated, each person
or entity named in the table has sole voting power and investment power
(or shares such power with his or her spouse) with respect to all shares
of capital stock listed as owned by such person or entity.
(2) Jawaharlal Gondi is the principal beneficial owner of 100% of the
voting stock of the Arthi Trust. The Arthi Trust owns 4,000,000 shares of
the Company's Common Stock. These shares are reflected in the total
7,000,000 shares owned by Jawaharlal Gondi.
Change in Control
On April 17, 2002, John Green, our former president, and Ann Frazer, our
former secretary, transferred Twenty Two Million Five Hundred Thousand
(22,500,000) shares ("Shares") of our Common Stock (post forward stock split) to
thirty-one (31) persons ("Recipients"). John Green held Eighteen Million
(18,000,000) shares, and Ann Frazer held Four Million Five Hundred Thousand
(4,500,000) shares. There were 40,500,000 shares of Common Stock issued and
outstanding as of that date giving Green and Frazer a combined control of 55.6%.
Consideration for the Shares consist of services rendered, or to be rendered, by
the Recipients to us.
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Only one person received shares equal to more than five percent (5%) of
the Company's outstanding Common Stock, Jawaharlal Gondi. Mr. Gondi is the
Company's Chairman and he owns 7,000,000 shares or 15.3%:
Shareholder Number of Shares Percentage of Voting Securities
----------- ---------------- -------------------------------
Jawaharlal Gondi* 7,000,000 15.3%
*Includes 4,000,000 shares owned by the Arthi Trust which Jawaharlal Gondi 100%
beneficially owns.
DESCRIPTION OF BUSINESS
General
The Company was incorporated as Egoonline.com ("Egoonline"), on February
4, 2000 to engage in the business of providing Internet-based takeout service
for restaurants. Egoonline changed its name to EZfoodstop.com ("EZfoodstop") on
April 26, 2000. Although the Company originally engaged in providing
Internet-based takeout services, it abandoned those operations in 2001 becoming
a dormant shell without assets or liabilities. EZfoodstop changed its name to
Far East Energy Corporation on January 10, 2002.
On January 25, 2002, the Company entered into two Production Sharing
Contracts with the China United Coal Bed Methane Corporation ("CUCBM"), which
has exclusive legal authority over all coal bed methane gas in the People's
Republic of China ("PRC").
The Product Sharing Contracts are subject to formal ratification by PRC's
Ministry of Foreign Trade and Economic Co-operation (MOFTEC). Although the
Company is extremely confident the agreements will be ratified, and the Company
knows of no similar agreement which has not been ratified by MOFTEC, no
assurances can be given that ratification will be granted, or when it may be
granted.
Pursuant to the two Product Sharing Contracts, the Company received the
authority from CUCBM to jointly explore, develop, produce and sell coal bed
methane gas in and from a total area of 1330 square kilometers, in Enhong,
Laochang and Zhaotong areas of Yunnan Province, PRC. Coal bed methane is a form
of natural gas that exists naturally in coal seams. The Yunnan Provincial Coal
Geological Bureau has estimated that the above joint venture area contains a
potential resource in excess of 6 trillion cubic feet of methane gas. The
Company is currently in the process of obtaining a reserve valuation report from
a US independent coal bed methane gas consulting firm on this resource.
The Company has the right to earn a minimum of 60% interest in the joint
venture, with CUCBM retaining the remaining 40%. In the event that CUCBM elects
to participate at a level less than 40%, their interest will be reduced
proportionately, increasing the Company's participating interest. In exchange
for the Company's product sharing interest, it has agreed to provide, over the
next three years, signing, training and assistance fees totaling approximately
$890,000 to CUCBM. Additionally, drilling seven (7) exploration wells and twelve
(12) pilot development wells is the sole responsibility and liability of the
Company. The estimated cost of drilling such nineteen (19) wells is
approximately Seven Million Dollars (US$7,000,000). Accordingly, the total cost
of acquiring the product sharing rights in these reserves is approximately
$7,890,000, of which $7,390,000 will be reimbursable from future revenues, if
any.
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After completion of these exploration and pilot development wells, CUCBM
has agreed to contribute forty percent (40%) of further expenditures towards
their joint venture interest. The exploration program will not be commenced by
the Company until the Agreement is formally ratified by MOFTEC.
On April 24, 2002, the Company executed a memorandum of understanding
("Memorandum") with Panjiang Coal-Electricity Co. Ltd. ("Panjiang") of Panxian
County, Guizhou Province, in the People's Republic of China. Under the
Memorandum, the Company will extract and use coal mine methane gas from six (6)
operating Panjiang coal mines which cover an area of 120 square kilometers. The
Company awaits a certified petroleum engineer's report concerning the size of
this natural resource.
In consideration for our right to capture this coal mine methane gas, the
Company has agreed to pay a total of $3,300,000 to Panjiang over the next three
(3) years with $300,000 being paid at the beginning of the thirteenth (13th)
month, $600,000 being paid at the beginning of the nineteenth (19th) month,
$1,100,000 being paid at the beginning of the twenty-seventh (27th) month, and
$1,300,000 being paid at the beginning of the thirty third (33rd) month.
Additionally, the Company has agreed to provide Panjiang with 16,000,000 cubic
meters per year of untreated, minimum 30% concentration, coal mine methane gas
(equivalent to 5,500,000 cubic meters of pure methane) for use in Panjiang
employee households. The term of the agreement is for twenty (20) years from the
first sale of methane gas produced by us, and may be extended by mutually agreed
terms. The Company may withdraw from the project at any time by providing ninety
(90) days written notice to Panjiang. After the expiration of the first seven
(7) year period, the Company will pay Panjiang the following percentage of net
profits derived from its sale of coal mine methane gas and its products:
Year Eight 10%
Year Nine through Sixteen 20%
Year Seventeen through Twenty 50%
Other than general corporate activities, including but not limited to the
negotiation and consummation of the Agreement to explore, develop, produce and
sell coal bed methane in China, the Company has not engaged in any substantive
business operations.
Upon commencement of the Company's exploration and production operations,
it intends to identify applicable environmental laws and regulations governing
such operations in China and use its best efforts to maintain its compliance.
The costs and effects of such compliance have not yet been determined by the
Company.
As of May 15, 2002, the Company had a total of seven (7) employees, all of
which were employed full-time.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock received the symbol "EZFS" on the OTC Bulletin
Board on February 15, 2001. On January 16, 2002, the Company's symbol was
changed to "FEEC" to reflect the Company's name change to Far East Energy
Corporation. Because no meaningful trading market for the Company's Common Stock
occurred until 2002, the table below sets forth the high and low sales prices
for the Company's Common Stock for only the first quarter of 2002. The
quotations below reflect inter-dealer prices, without retail markup, markdown or
commission and
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may not represent actual transactions. All figures reflect an eighteen-for-one
(18-for-1) forward stock split which became effective on January 1, 2002.
Year Quarter High Low
2002 First $3.95 $2.50
As of May 22, 2002, the closing trading price for the Company's Common
Stock was $3.965.
Shareholders
As of December 31, 2001, there was a total of 2,250,000 shares of Common
Stock outstanding. As of March 26, 2002, and taking into consideration the
eighteen-for-one (18-for-1) forward stock split, there were 45,750,500 shares of
Common Stock held of record by approximately seventy four (74) shareholders. The
par value of the Company's common stock remains at $0.001 per share.
Dividends on the Common Stock
The Company has not declared a cash dividend on its Common Stock in the
last two fiscal years and the Company does not anticipate the payment of future
dividends. There are no other restrictions that currently limit the Company's
ability to pay dividends on its Common Stock other than those generally imposed
by applicable state law.
Recent Sales of Unregistered Securities
The Company engaged in an accredited investors offering ("Offering") of
shares of its Common Stock, $0.001 par value ("Common Stock"), at sixty five
cents (US$0.65) per share. The Offering was made pursuant to exemptions from
registration under Section 4(2) of the Securities Act of 1933.
Beginning on January 24, 2002 and concluding on March 19, 2002, pursuant
to Rule 506 of the Securities Act of 1933, Five Million Two Hundred Fifty
Thousand Five Hundred (5,250,500) shares of Common Stock ("Shares") were sold to
a group of twenty-two (22) accredited foreign individuals or entities ("Foreign
Investors") and two (2) accredited United States individuals ("U.S. Investors")
for a total offering price of $3,412,825. A commission of eleven percent (11%)
was paid to the European broker and the escrow agent utilized to effect these
European sales. The proceeds from the U.S. Investors were not subject to a
commission.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-looking Information
This information statement contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward- looking statements. These statements relate to
future events or to our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of such terms or other
comparable terminology. These statements are only predictions. Actual events or
results may differ materially. There are a number of factors that
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could cause our actual results to differ materially from those indicated by such
forward-looking statements.
Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, it cannot guarantee future results,
levels of activity, performance, or achievements. Moreover, the Company does not
assume responsibility for the accuracy and completeness of such forward-looking
statements. The Company is under no duty to update any of the forward-looking
statements after the date of this information statement to conform such
statements to actual results. The foregoing management's discussion and analysis
should be read in conjunction with the Company's financial statements and the
notes herein.
General
The Company's operations for the first quarter of 2002 and throughout 2001
consisted of searching for a viable merger or acquisition candidate. This search
successfully concluded when the Company executed the two (2) Production Sharing
Contracts with CUCBM, and the Memorandum with Panjiang.
Other than general corporate activities, including but not limited to the
negotiation and consummation of the two Production Sharing Contracts and the
memorandum of understanding, the Company has not engaged in any substantive
business operations.
Results Of Operations
The following discussion should be read in conjunction with the audited
financial statements and notes thereto included in our annual report on Form
10-KSB for the fiscal year ended December 31, 2001; and should further be read
in conjunction with the financial statements included in this report.
Comparisons made between reporting periods herein are for the year ended
December 31, 2001 as compared to the year ended December 31, 2000, and the three
month period ended March 31, 2002 as compared to that same period in 2001. A
meaningful comparison of the two three month periods cannot be achieved as there
were no operations during the first quarter of 2001 versus our current focus in
the first quarter of 2002 in the exploration, production, extraction and sale of
coal bed methane gas.
Year Ended December 31, 2001 Compared To Year Ended December 31, 2000
There were no revenues for the fiscal year ended December 31, 2001. The
Company had a net loss of $14,716 for the fiscal year ended December 31, 2001 as
compared to a net loss of $10,970 for the fiscal year ended December 31, 2000,
resulting in a net loss per share of $0.01 each fiscal year.
The net loss is attributable to the fact that there were no revenues and
that there were legal and accounting expenses of $4,625 and trust and filing
expenses of $16,304 for the fiscal year ended December 31, 2001. The majority of
such expenses were paid in connection with the preparation and filing of the
Company's 2001 initial public offering conducted in the State of Nevada,
pursuant to an exemption provided by Rule 504 of Regulation D, promulgated under
the Securities Act of 1933, as amended.
9
Three Month Period Ended March 31, 2001 Compared to Same Period in 2002
The Company had no revenue or income for the quarter ended March 31, 2002
and no revenue for the first quarter in 2001. The Company's operating loss
increased to $49,458 as of March 31, 2002 as compared to $5,508 at the end of
the first quarter in 2001. The increase in the Company's operating loss is
attributable to legal and accounting expenses which increased from $1,125 at the
end of the first quarter in 2001 to $37,764 as of March 31, 2002, and
professional services which increased from $4,119 as of March 31, 2001 to $9,663
at the end of the first quarter of 2002.
The Company's current assets as of March 31, 2002 were $3,056,891
consisting entirely of cash received as a result of its Offering of Five Million
Two Hundred Fifty Thousand Five Hundred (5,250,500) shares of Common Stock.
Capital Resources And Liquidity
Year Ended December 31, 2001 Compared To Year Ended December 31, 2000
As of December 31, 2001, the Company's primary source of liquidity
included cash and cash equivalents of $27,539, as compared to $43,159 as of
December 31, 2000.
The Company's accounts payable decreased to $600 as of the fiscal year
ended December 31, 2001, as compared to $1,629 for the same period in 2000.
Current liabilities due to a related party increased to $125 as of December 31,
2001, whereas no such balance existed as of December 31, 2000. These liabilities
relate to reimbursement by the Company of expenses incurred by one of its
directors on the Company's behalf.
Shareholder's equity as of December 31, 2001, was $27,539, as compared to
$41,159 as of December 31, 2000. This decrease is largely due to an increase in
deficit accumulated during the development stage of $25,686 in the fiscal year
ended December 31, 2001 as compared to $10,970 for the same period in 2000.
Three Month Period Ended March 31, 2001 Compared to Same Period in 2002
During the three month period ended March 31, 2002, the Company engaged in
an accredited investors offering ("Offering") of shares of our Common Stock. The
Offering was made pursuant to exemptions from registration under Section 4(2) of
the Securities Act of 1933. The Company sold Five Million Two Hundred Fifty
Thousand Five Hundred (5,250,500) shares of Common Stock ("Shares") at sixty
five cents (US$0.65) per share to a group of twenty-two (22) accredited foreign
individuals or entities and two (2) accredited United States individuals for a
total offering price of $3,412,825. The Offering was made pursuant to exemptions
from registration under Section 4(2) of the Securities Act of 1933.
Although there was a net loss from our operating activities, as a result
of the Offering there was a dramatic increase in the Company's liquidity. Net
cash provided from financing activities increased dramatically to $3,052,072 for
the quarter ended March 31, 2002 from $0 for the same period in 2001.
Net loss from operating activities increased to $22,720 for the first
quarter of 2002 as compared to $6,691 for the three month period ended March 31,
2001.
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As of March 31, 2002, the Company had a total stockholder's equity of
$3,029,428. The Company hopes to continue to improve its stockholder equity once
it commences business operations in China and begins to realize revenues from
the exploration, production, extraction and sale of coal bed methane gas.
The Company anticipates that the commencement of its business operations
in China will drastically increase expenses and if such operations are
successful, revenues. Although the Company is confident that the Production
Sharing Agreements will be ratified by MOFTEC and a final agreement
memorializing the terms of the memorandum of understanding will be executed, no
assurances can be given. In the event the Production Sharing Agreements are not
ratified and a final agreement is not executed, the Company would have no
business operations and would begin searching for a suitable merger or
acquisition candidate.
As a result of the Offering, the Company believes that its current cash
position of approximately $3,000,000 will be sufficient to satisfy its operating
needs for the next eighteen (18) months. The Company intends to utilize the
proceeds raised to support its current business operations in China. If the
proceeds are not enough to satisfy its operating needs and the Company is unable
to generate revenues and/or obtain bank loans on favorable terms and/or sell
additional shares of its equity securities to secure the cash required to
conduct its business operations for the next eighteen (18) months, it could
fail. Because the Company has just acquired a raw undeveloped potential natural
resource which will require substantial exploration and development, it does not
expect to generate meaningful revenues until at least October 2004. Expenses
associated with the exploration and development are expected to exhaust the
Company's cash reserves in approximately eighteen (18) months. Expenses beyond
this time will have to be financed through cash flow, which may not yet be
available if production and sales of coal bed methane gas are not significant,
or through future financings of equity and/or debt.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Bill Jackson, the president of the Company, is executive vice president
and chief financial officer for Quality Technologies, which subleases the office
space to the Company in Houston. Bill Jackson is the father of Chris Jackson,
the Company's vice president of corporate development.
FINANCIAL STATEMENTS
The Company's financial statements for the fiscal year ended December 31,
2001, and the quarter ended March 31, 2002, are attached hereto beginning on
page F-1.
INDEPENDENT PUBLIC ACCOUNTANTS
On May 10, 2002, Payne, Falkner, Smith & Jones, P.C. was selected by the
Board as the Company's independent auditor for the current year. De Visser &
Gray served as the Company's independent auditor for the most recent fiscal
year. There was no disagreement with De Visser & Gray on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure. De Visser & Gray's financial statements did not contain an
adverse opinion or disclaimer of opinion. The change was prompted by the move of
the Company's principal executive office from Vancouver, B.C., Canada to
Houston, Texas. The decision to change accountants was approved by the Company's
Board.
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Audit Fees
De Visser & Gray billed the Company an aggregate of $500 in fees for
professional services rendered in connection with the audit of the Company's
financial statements for the most recent fiscal year ended December 31, 2001.
Payne, Falkner, Smith & Jones, P.C. billed the Company an aggregate of
$1,200 in fees for professional services rendered in connection with the review
of the Company's financial statements included in its Form 10-QSB for the
quarterly period ended March 31, 2002.
Financial Information Systems Design and Implementation Fees
De Visser & Gray did not bill the Company for any professional services
rendered to the Company and its affiliates for the fiscal year ended December
31, 2001 in connection with financial information systems design or
implementation, the operation of the Company's information system or the
management of its local area network.
All Other Fees
De Visser & Gray has not billed the Company any other fees for
professional or other related services.
The Company's Board of Directors has determined that the provision of
services by De Visser & Gray and Payne, Falkner, Smith & Jones, P.C., as set
forth above, is compatible with maintaining the principal accountant's
independence.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors has determined that there will be four (4)
directors of the Company elected at the Annual Meeting. The Board of Directors
has nominated Jawaharlal Gondi, Bill Jackson, Ramesh Kalluri, and Tun Aye Sai.
In the absence of other instructions, the proxies will be voted for each of the
individuals named, each of whom the Board proposes for election as a director of
the Company. If elected, such individuals will serve until the next Annual
Meeting of shareholders or until their successors are duly elected and
qualified. All of the nominees are members of the present Board of Directors.
The Board recommends a vote FOR the election of each of the nominees
listed below.
Nomination of Directors
All of the nominees for director are current directors of the Company. The
Board has no reason to believe that any nominee would be unable or unwilling to
serve if elected. If a nominee becomes unable or unwilling to accept nomination
or election, the Board will either select a substitute nominee or will reduce
the size of the Board. If you have submitted a proxy and a substitute nominee is
selected, your shares will be voted for the election of the substitute nominee.
12
About the Directors
Set forth below is biographical and other information about the persons
who will make up the Board following the annual meeting, presuming election of
the nominees named above. All Directors of the Company will hold office until
the next annual meeting of shareholders of the Company or until successors are
duly elected and qualified.
Name Age Position(s) and Office(s)
- ---- --- -------------------------
Jawaharlal (Lal) Gondi 60 Chief Executive Officer, Chairman and a Director
Bill Jackson 57 President, Chief Operating Officer and a Director
Ramesh Kalluri 44 Secretary, Treasurer and a Director
Tun Aye Sai 55 Director of China Operations and a Director
Jawaharlal (Lal) Gondi was appointed the Chief Executive Officer, Chairman
and a director of the Company on December 31, 2001. Mr. Gondi is a geologist
with an extensive financial background. He has eleven years of diverse mineral
exploration experience and twenty- three years of corporate finance and
investment knowledge of capital markets. He has served as director, senior
officer or principal of a number of brokerage firms both in Canada & Europe. Mr.
Gondi served as senior executive director of Union Capital, UK, a brokerage
firm, from March 1993 to May 1997. He was self-employed from May 1997 to January
2001 trading public securities. Mr. Gondi has served on the board of directors
and as the president of BPI Industries since January 2001, became its chairman
in August 2001, and continued to serve in these positions until November 2001.
He holds a Masters of Science degree in applied geology from Andhra University,
Waltair, India and completed several advanced courses in geology & finance in
North America.
Bill Jackson was appointed the President, Chief Operating Officer and a
director of the Company on December 31, 2001. Mr. Jackson has over thirty years
of experience in the Engineering and Construction industry. He served as a vice
president and the chief operating officer of the Shaw Group, an engineering and
construction company, from November 1998 to June 1999. From February 2000 to
present, Mr. Jackson has served as executive vice president and chief financial
officer for Quality Technologies, an inspection services company. Prior to that,
he also served as Vice President of Bechtel Corporation, Senior Vice President
of Bechtel Services Corporation, and managed the Bechtel/Chevron Capital
Projects Alliance, Worldwide Procurement and Contracts (including over 1,400
technical personnel), and a Joint Venture Company with EDS focused on Utility
Plant Operations outsourcing. He was instrumental in the development and
formation of the Bechtel worldwide contracts management organization. Mr.
Jackson holds a Bachelor of Science degree from Texas A&M University, Commerce,
Texas.
Tun Aye Sai was appointed the Director of China Operations and a director
of the Company on December 31, 2001. Mr. Sai has over 30 years of international
mining and exploration experience. He has extensive experience in developing and
managing mining projects in China and Southeast Asia. Mr. Sai has served as a
director and consultant for Golden Pacific Resources since May 1994. He holds a
Bachelor of Engineering degree in mining from Rangoon Institute of Technology,
Rangoon, Burma and a post graduate diploma in management and administration from
Institute of Economics, Rangoon, Burma.
Ramesh Kalluri was appointed secretary, treasurer and a director of the
Company on December 31, 2001. Mr. Kalluri has over eighteen years experience in
environmental regulations, engineering/design management, construction, and
start-ups. He was an engineer with Bechtel
13
Corporation from September 1991 to February 1998. He served as a vice president
for GSG, an engineering company, from March 1998 to December 1998. Mr. Kalluri
has been president of the Kalluri Group, an engineering company, since January
1999. He has also held senior engineering positions with Bechtel Corporation,
Turner, Collie & Braden, Inc. and Jay Engineering. Mr. Kalluri holds a Bachelor
of Science degree in civil engineering from Andhra University, Waltair, India
and a Masters of Science in environmental engineering from McGill University.
Meetings and Committees of the Board of Directors
The Board held one (1) meeting and took action by written consent one (1)
time during fiscal 2001. All of the directors attended the meeting of the Board
of Directors during fiscal 2001.
The Company has no standing audit, compensation, or nominating committees,
and no committees performing similar functions.
Directors' Compensation
The Company's directors are not compensated for any meeting of the board
of directors which they attend.
EXECUTIVE OFFICERS
Name Age Position(s) and Office(s)
- ---- --- -------------------------
John Springsteen 32 Vice President and Chief Financial Officer
Chris Jackson 32 Vice President of Corporate Development
Joe Cooper 48 Vice President of Coal Bed Methane Operations
John Springsteen was appointed the Vice President and Chief Financial
Officer of the Company on December 31, 2001. Mr. Springsteen has over a decade
of experience in international business, management consulting, and
environmental engineering. He was a senior consultant for Ernst & Young from
September 1996 to September 1998, a manager at the Chicago Group from September
1998 to September 2000, and a managing consultant at the Bridge Strategy Group
from September 2000 to June 2001. From October 2001 to present he has served as
a vice president of Value Partners Group. Mr. Springsteen holds a Bachelor of
Science degree in civil and environmental engineering from the Massachusetts
Institute of Technology and a Masters of Business Administration from the
Kellogg Graduate School of Management at Northwestern University.
Chris Jackson was appointed Vice President of Corporate Development of the
Company on December 31, 2001. Chris Jackson is the son of Bill Jackson, the
Company's president. Mr. Jackson has experience in the areas of business
development, marketing, project management, and alliances and partnerships. He
served as president of iCon Logistics, a transportation services company, from
July 1999 to January 2000. From February 2000 to May 2001, Mr. Jackson was an
executive vice president in sales for Quality Technologies. He served as a vice
president for Infrastructure World, Inc., an Internet company from June 2001 to
January 2002. Prior to 1999, he worked for Bechtel Corporation, Electronic Data
Systems (EDS), and consulted to companies like Phelps Dodge, British Borneo, and
Kaiser Aluminum. Mr. Jackson holds a Bachelor of Science degree in business
administration and finance from Texas A&M University, Commerce, Texas.
14
Joe Cooper was appointed Vice President of Coal Bed Methane ("CBM")
Operations of the Company in April 2002. His responsibilities are centered
around the exploration and development of the Company's CBM projects in the
Yunnan and Guizhou provinces of the People's Republic of China. Mr. Cooper was
the Exploration Manager for Anshutz Exploration Co. Gulf Coast from 2000 until
he joined the Company in 2002. Between 1999 and 2000, he undertook several
independent consulting assignments, which included evaluating CBM projects in
Illinois, Indiana, and Kentucky in the Illinois Basin, and Arkoma and the
Cherokee Basins in Oklahoma. Prior to that, he spent 20 years with Amoco
Petroleum ("Amoco") and gained significant experience in CBM in the development
of the Oak Grove Field in the Black Warrior Basin, Alabama. Throughout the
1990s, Mr. Cooper was involved with Amoco's entry into CBM exploration in China,
India, South Africa, and Australia. Mr. Cooper held the position of Exploration
Manager in both India and South Africa. During his tenure with Amoco, he was a
member of the Amoco CBM Network of Excellence. Mr. Cooper currently serves on
BPI Industries' advisory board. He holds a Master of Science degree in geology
with honors from Memphis State University and a Bachelor of Arts in geology,
magna cum laude, from the University of Tennessee, Chattanooga.
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of forms 3, 4 and 5 furnished to the Company,
the Company is not aware of any person, who at any time during the fiscal year
ended December 31, 2001, was a director, officer, or beneficial owner of more
than ten percent (10%) of the Common Stock of the Company, and who failed to
file, on a timely basis, reports required by Section 16(a) of the Securities
Exchange Act of 1934 during such fiscal year.
COMPENSATION AND OTHER BENEFITS
Executive Compensation
No compensation in excess of $100,000 was awarded to, earned by, or paid
to any executive officer of the Company during the fiscal years 2001 and 2000.
The following table provides summary information for the years 2001 and 2000
concerning cash and noncash compensation paid or accrued by the Company to or on
behalf of the Company's chief executive officer.
SUMMARY COMPENSATION TABLES
Annual Compensation
- -----------------------------------------------------
Name and Other Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
- -------------------------------------------------------------------------------
John Green, 2001 - 0 - - 0 - - 0 -
President
- -------------------------------------------------------------------------------
John Green, 2000 - 0 - - 0 - - 0 -
President
- -------------------------------------------------------------------------------
15
Long Term Compensation
- -----------------------------------------
Awards Payouts
- -----------------------------------------
Restricted Securities Underlying LTIP All Other
Name and Principal Stock Options/ Payouts Compensation
Position Year Award(s)($) SARs(#) ($) ($)
- -------------------------------------------------------------------------------
John Green, 2001 - 0 - - 0 - - 0 - - 0 -
President
- -------------------------------------------------------------------------------
John Green, 2000 - 0 - - 0 - - 0 - - 0 -
President
- -------------------------------------------------------------------------------
Option/SAR Grants in Last Fiscal Year
(Individual Grants)
- ---------------------------------------------
Percent of Total
Name Number of Options/SARs Exercise of
Securities Granted to Base Price Expiration Date
Underlying Employees In Fiscal ($/Sh)
Options/SARs(1) Year
- --------------------------------------------------------------------------------
Bill Jackson 1,000,000 25.1% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
John Springsteen 200,000 5.0% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
Chris Jackson 300,000 7.5% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
Jawaharlal Gondi 1,000,000 25.1% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
Tun Aye Sai 300,000 7.5% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
Mike McElwrath 100,000 2.5% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
Larry Izzo 30,000 0.8% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
Ben Malek 30,000 0.8% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
Ramesh Kalluri 150,000 3.8% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
Joe Cooper 600,000 15.0% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
Don Gunther 280,000 7.0% $0.65/Share January 29, 2009
- --------------------------------------------------------------------------------
(1)These options to purchase shares of the Company's Common Stock were
granted to these individuals on January 29, 2002 to reward them as
incentive based stock options and to motivate these persons. These
options to purchase shares vest in five (5) equal allotments with
twenty percent (20%) vesting and being exercisable on July 29, 2002,
and the remaining eighty percent (80%) vesting and being exercisable in
four (4) equal annual increments beginning on January 29, 2003 and
continuing until January 29, 2006. All of these options are exercisable
until and expire on January 29, 2009. Because these options and the
shares underlying these options are being provided as motivation to the
individuals only, both the option and the underlying shares may not be
sold, transferred, assigned, pledged for a loan, margined, hypothecated
or exchanged, except pursuant to the laws of descent, for a period of
two (2) years from the date of grant.
Each of Mr. Gondi, Mr. Bill Jackson, Mr. Springsteen, Mr. Chris Jackson
and Mr. Joe Cooper have signed offer letters with the Company. Pursuant to these
letters, Mr. Gondi, Mr. Bill Jackson, Mr. Springsteen, Mr. Chris Jackson and Mr.
Cooper have agreed to devote both business and professional time and efforts to
the Company's business as its Chief Executive Officer, President/Chief Operating
Officer, Chief Financial Officer, Vice President of Corporate Development, and
Vice President of Coal Bed Methane Operations, respectively. Each may be
entitled to receive, at the
16
sole discretion of the Company's Board of Directors or a committee thereof,
bonuses based on the achievement (in whole or in part) by the Company of its
business plan and achievement by the employee of fixed personal performance
objectives.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the stockholders, the Board has selected Payne,
Falkner, Smith & Jones, P.C., independent auditors, to audit the financial
statements of the Company for the fiscal year ending December 31, 2002. Although
stockholder approval of the Board of Directors' selection of Payne, Falkner,
Smith & Jones, P.C. is not required by law, the Board of Directors believes that
it is advisable to give stockholders an opportunity to ratify this selection. If
the stockholders do not approve this proposal at the Annual Meeting, the Board
of Directors may reconsider the selection of Payne, Falkner, Smith & Jones, P.C.
Representatives of Payne, Falkner, Smith & Jones, P.C. are expected to be
present at the Meeting and will have an opportunity to make a statement if they
desire to do so. Such representatives, if present, will be available to respond
to appropriate questions from stockholders.
Representatives of De Visser & Gray are not expected to be present at the
Meeting.
The Board recommends a vote FOR the ratification of the appointment of
Payne, Falkner, Smith & Jones, P.C. as the Company's independent auditors.
PROPOSAL NO. 3
OTHER BUSINESS
The Board of Directors is not aware of any business to come before the
meeting other than those matters described above in this proxy statement. If,
however, any other matters should properly come before the meeting, it is
intended that holders of proxies will act in accordance with their judgment on
such matters.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the
Company's next Annual Meeting must be received by the Company not later than
February 4, 2003 in order to be included in the proxy statement and proxy
relating to the meeting.
Stockholders who wish to make a proposal at the next Annual Meeting of
shareholders other than one that will be included in the Company's proxy
materials should notify the Company not later than January 24, 2003 and no
earlier than December 24, 2002. If a stockholder who wished to present a
proposal fails to notify the Company by this date, the proxies that management
solicits for that meeting will have discretionary authority to vote on the
stockholder's proposal if it is properly brought before that meeting. If a
stockholder makes timely notification, the proxies may still exercise
discretionary authority under circumstances consistent with the Securities and
Exchange Commission's proxy rules.
17
ANNUAL REPORT
The Company will provide without charge to each shareholder of record as
of May 17, 2002, upon the written request of such person, a copy of the
Company's Form 10-KSB, including the financial statements, for the year ending
December 31, 2001. A copy of any exhibit to the Company's Form 10-KSB may also
be obtained from the Company at no charge upon written request for each such
exhibit requested. Such written requests should be sent to Bill Jackson,
President, Far East Energy Corporation, 400 N. Sam Houston Parkway East, Suite
205, Houston, Texas 77060.
BY THE ORDER OF THE BOARD OF DIRECTORS:
/s/ Bill Jackson
Bill Jackson, President
Houston, Texas
May 23, 2002
18
EZFOODSTOP.COM
(A Development Stage Company)
FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
December 31, 2001
and
For the Period From Incorporation on February 4, 2000
to
December 31, 2000
F-1
DE VISSER & GRAY
CHARTERED ACCOUNTANTS
401-905 West Pender Street
Vancouver, B.C., Canada
V6C 1L6
Tel: (604) 687-5447
Fax: (604) 687-6737
AUDITOR'S REPORT
To the Stockholders of EZfoodstop.com
We have audited the balance sheets and statement of stockholders' equity of
EZfoodstop.com as at December 31, 2001 and 2000 and the statements of operations
and deficit and cash flows for the year ended December 31, 2001 and for the
period from the date of incorporation on February 4, 2000 to December 31, 2000.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2001 and 2000
and the results of its operations and its cash flows for the year ended December
31, 2001 and for the period from the date of incorporation on February 4, 2000
to December 31, 2000 in accordance with generally accepted accounting principles
in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has no established source of revenue and is dependent on
its ability to raise substantial amounts of equity funds. This raises
substantial 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.
DeVisser & Gray
CHARTERED ACCOUNTANTS
/s/ DeVisser & Gray
Vancouver, British Columbia
January 11, 2002
F-2
EZFOODSTOP.COM
BALANCE SHEET
As of
December 31, 2001
2001 2000
(US$) (US$)
----------- -----------
ASSETS
Current Assets
Cash $ 27,539 $ 43,159
LIABILITIES
Current Liabilities
Accounts payable 600 1,629
Due to related party (note 5) 125 -
----------- -----------
725 1,629
STOCKHOLDERS' EQUITY
Share Capital (note 4)
Authorized: 100,000,000 common shares
par value $0.001 per share
Issued: 2,250,000 common shares 2,250 2,250
Additional paid-in capital 50,250 50,250
Deficit accumulated during the
Development Stage (25,686) (10,970)
----------- -----------
26,814 41,530
Continuance of Operations (note 3) $ 27,539 $ 41,159
=========== ===========
Approved by the Director:
/s/ John Green
See notes to the financial statements
F-3
EZFOODSTOP.COM
STATEMENT OF OPERATIONS AND DEFICIT
Cumulative Amounts
Date of For the For the
Incorporation Year Ended Period From
(2/4/2000) December 31 Inc.(2/4/00)
to 12/31/01 2001 to 12/31/00
(U.S.$) (U.S.$) (U.S.$)
------------- ------------- --------------
Expenses
Administrative and office $ 643 $ 25 $ 618
Advertising and promotion 650 650 -
Bank charges and interest 343 224 119
Legal and accounting 4,625 2,825 1,800
Office equipment 476 35 441
Office rent 2,645 1,500 1,145
Trust and filing 16,304 9,457 6,847
Net loss for the year/period (25,686) (14,716) (10,970)
Deficit-beginning of year/period - (10,970) -
------------- ------------- --------------
Deficit-end of year/period (25,686) (25,686) (10,970)
============= ============= ==============
Basic and diluted weighted average
number of shares outstanding 2,250,000 1,375,378
============= =============
Basic and diluted loss per share $ (0.01) $ (0.01)
============= =============
See notes to the financial statements
F-4
EZFOODSTOP.COM
STATEMENT OF CASH FLOWS
Cumulative Amounts
Date of For the For the
Incorporation Year Ended Period From
(2/4/2000) December 31 Inc.(2/4/00)
to 12/31/01 2001 to 12/31/00
(U.S.$) (U.S.$) (U.S.$)
------------- ------------- --------------
Cash Provided By (Used For):
Operating Activities
Net loss for the year/period $ (25,686) $ (14,716) $ (10,970)
Adjustment to reconcile net loss to cash:
(decrease) increase in
accounts payable 600 (1,029) 1,629
increase in due to
related party 125 125 -
------------- ------------- --------------
(24,961) (15,620) (9,341)
Financing Activity
Proceeds from the issue
of share capital 52,500 - 52,500
------------- ------------- --------------
Net Cash (used) provided
during the year/period 27,539 (15,620) 43,159
Cash-beginning of
year/period - 43,159 -
------------- ------------- --------------
Cash-end of year/period $ 27,539 $ 27,539 $ 43,159
============= ============= ==============
See Notes to the Financial Statements
F-5
EZFOODSTOP.COM
STATEMENT OF STOCKHOLDERS' EQUITY For the Period from the
Date of Incorporation (February 4, 2000)
to December 31, 2001
Additional Total
Common Paid-in Accumulated Stockholders'
Stock Capital Deficit Equity
---------- ---------- ----------- -------------
U.S.$ U.S.$ U.S.$ U.S.$
Shares issued 2,250 50,250 - 52,500
Net loss - - (10,970) (10,970)
---------- ---------- ----------- -------------
Balance, Dec. 31, 2000 2,250 50,250 (10,970) 41,530
Net loss - - (14,716) (14,716)
---------- ---------- ----------- -------------
Balance, Dec. 31, 2001 2,250 50,250 (25,686) 26,814
========== ========== =========== =============
See Notes to the Financial Statements
F-6
EZFOODSTOP.COM
(A Development Stage Company)
Notes to the Financial Statements
For the Year December 31, 2001 and For the Period from
Incorporation on February 4, 2000 to December 31, 2000
1. THE CORPORATION AND ITS BUSINESS
The Company was incorporated as Egoonline.com in the State of Nevada, United
States of America on February 4, 2000 under the Nevada Revised Statutes, Chapter
78, Private Companies, and changed its name to EZfoodstop.com on April 26, 2000.
The Company has offices in Reno, Nevada, U.S.A. and Vancouver, B.C. The Company
is in its development stage and to date its activities have been limited to
initial organization and capital formation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
These financial statements have been prepared in United States of America
dollars using United States of America Generally Accepted Accounting Principles.
Accounting Method
The Company records income and expenses on the accrual method.
Fiscal Year
The fiscal year end of the Company is December 31.
Net Loss Per Share
Basic loss per share includes no dilution and is computed by dividing net loss
available to common stockholders by the weighted average number of common shares
outstanding in the period. Diluted earnings per share reflects the potential
dilution of securities that could occur if securities or other contracts (such
as stock options and warrants) to issue common stock were exercised or converted
into common stock. The Company has no outstanding stock options or warrants.
Financial Instruments
Unless otherwise indicated, the fair value of all reported assets and
liabilities which represent financial instruments (none of which are held for
trading purposes) approximate the carrying values of such amounts.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents.
F-7
Use of Estimates
The preparation of the Company's financial statements in conformity with United
States Generally Accepted Accounting Principles requires the Company's
management to make estimates and assumptions that effect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.
3. GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and the liquidation of liabilities in the normal course of
business. The Company currently has no source of revenue. The ability of the
Company to continue as a going concern is dependent upon its ability to raise
substantial amounts of equity funds for use in administrative and investment
activities.
4. SHARE CAPITAL
Authorized
The authorized share capital consists of 100,000,000 shares of common stock with
a par value of $0.001.
Issued
1,250,000 common shares were issued at $0.002 per share for a consideration of
$2,500.
1,000,000 common shares were issued at $0.05 per share for a consideration of
$50,000.
5. RELATED PARTY TRANSACTION
All transactions with related party have occurred in the normal course of
operations and are measured at the exchange amount, which is the amount of
consideration established and agreed to by the related party. The year end
balances referred to below are non-interest bearing, payable on demand and have
arisen from the provision of services, loan advances, and expense reimbursements
described.
The Company was charged an aggregate of $2,418 during the year ended December
31, 2001 (year ended December 31, 2000 - $1,017) by a director for rent and
reimbursement of expenses incurred on its behalf. At December 31, 2001, the
Company owed this director $125 (2000 - $Nil).
6. SUBSEQUENT EVENTS
On January 10, 2002, the Company changed its name to Far East Energy
Corporation.
F-8
FAR EAST ENERGY CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
March 31, 2002
F-9
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
(A Development Stage Company)
Balance Sheet
At March 31, 2002
(U.S.$)
(unaudited)
ASSETS
Current Assets
Cash 3,056,891
===========
LIABILITIES
Current Liabilities
Accounts Payable 27,463
-----------
STOCKHOLDERS' EQUITY
Share Capital (note 4)
Authorized: 100,000,000 common shares, par value $0.001 per share
Issued: 45,750,500 common shares 45,751
Additional paid in capital 3,058,822
Deficit accumulated during the Development Stage (75,144)
-----------
3,029,428
-----------
Continuance of Operations (note 3) 3,056,891
===========
F-10
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
(A Development Stage Company)
Statements of Operations and Accumulated Deficit
For the Three Months Ended March 31, 2002 and March 31, 2001
Cumulative
Amounts
Date of
Incorporation
(February 4, 2000)
to March 31, For the Three Months Ended
2002 March 31,
(U.S.$) (U.S.$)
(unaudited) (unaudited)
-------------------------------------------
2002 2001
---------- ----------
Expenses
Administrative and office 643 - -
Advertising and promotion 650 - -
Bank charges 456 113 46
Legal and accounting 42,389 37,764 1,125
Miscellaneous 434 434 10
Postage and Delivery 19 19 -
Office equipment 476 - -
Office rent 2,895 250 -
Professional services 9,663 9,663 4,119
Trust and filing 17,519 1,215 208
---------- ---------- ----------
Net income (loss) for the period (75,144) (49,458) (5,508)
Deficit - beginning of period - (25,686) (10,970)
---------- ---------- ----------
Deficit - end of period (75,144) (75,144) (16,478)
========== ========== ==========
Weighted average number of shares outstanding (note 4) 45,750,500 40,500,000
========== ==========
Loss per share $ (0.00) $ (0.00)
========== ==========
F-11
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
(A Development Stage Company)
Statement of Stockholders' Equity
For the Period from the Date of Incorporation
(February 4, 2000) to March 31, 2002 (unaudited)
Total
Common Additional Accumulated Stockholders'
Stock Paid-in-Capital Deficit Equity
U.S.$ U.S.$ U.S.$ U.S.$
---------- ---------------- ------------ -------------
Shares issued 2,250 50,250 - 52,500
Net income (loss) - - (10,970) (10,970)
---------- ---------------- ------------ -------------
Balance, December 31, 2000 2,250 50,250 (10,970) 41,530
Net income (loss) - - (14,716) (14,716)
---------- ---------------- ------------ -------------
Balance, December 31, 2001 2,250 50,250 (25,686) 26,814
18 for 1 Stock Split 38,250 (38,250) -
Shares issued 5,251 3,046,822 3,052,072
Net income (loss) - - (49,458) (49,458)
---------- ---------------- ------------ -------------
Balance, March 31, 2002 45,751 3,058,822 (75,144) 3,029,428
========== ================ ============ =============
F-12
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
(A Development Stage Company)
Statements of Cash Flows
For the Three Months Ended March 31, 2002 and March 31, 2001
Cumulative
Amounts
Date of
Incorporation
(February 4, 2000) For the Three Months Ended
to March 31, 2002 March 31,
(U.S.$) (U.S.$)
(unaudited) (unaudited)
------------------- --------------------------
2002 2001
------------- -----------
Cash Provided By (Used For):
Operating Activities
Net loss for the period (75,144) (49,458) (5,508)
Adjustment to reconcile net loss to cash:
- increase in accounts payable 27,463 26,738 (1,183)
------------ ------------- -----------
(47,681) (22,720) (6,691)
Financing Activity
Proceeds from the issue of share capital 3,104,572 3,052,072
------------ ------------- -----------
Net cash provided (used) during the period 3,056,891 3,029,352 (6,691)
Cash - beginning of period 27,539 43,159
------------ ------------- -----------
Cash - end of period 3,056,891 3,056,891 36,468
============ ============= ===========
F-13
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
(A Development Stage Company)
Notes to the Financial Statements
For the Three Months Ended March 31, 2002 (unaudited)
1. THE CORPORATION AND ITS BUSINESS
The Company was incorporated as Egoonline.com in the State of Nevada,
United States of America on February 4, 2000 under the Nevada Revised
Statutes, Chapter 78, Private Companies, and changed its name to
EZfoodstop.com on April 26, 2000. EZFoodstop.com changed its name to Far
East Energy Corporation on January 10, 2002.
The Company has offices in Houston, Texas and Reno, Nevada. The Company
is in its development stage and to date its activities have been limited
to initial organization and capital formation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
These financial statements have been prepared in United States of America
dollars using United States of America Generally Accepted Accounting
Principles.
Accounting Method
The Company records income and expenses on the accrual method.
Fiscal Year
The fiscal year end of the Company is December 31.
Net Loss Per Share
Basic loss per share includes no dilution and is computed by dividing net
loss available to common stockholders by the weighted average number of
common shares outstanding in the period. Diluted earnings per share
reflects the potential dilution of securities that could occur if
securities or other contracts (such as stock options and warrants) to
issue common stock were exercised or converted into common stock. The
Company has no outstanding stock options or warrants.
Financial Instruments
Unless otherwise indicated, the fair value of all reported assets and
liabilities which represent financial instruments (none of which are held
for trading purposes) approximate the carrying values of such amounts.
F-14
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of
three months or less to be cash equivalents.
Use of Estimates
The preparation of the Company's financial statements in conformity with
United States Generally Accepted Accounting Principles requires the
Company's management to make estimates and assumptions that effect the
amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
3. GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. The Company currently has no source of revenue. The
ability of the Company to continue as a going concern is dependent upon
its ability to raise substantial funds for use in development activities.
4. SHARE CAPITAL
Authorized
The authorized share capital consists of 100,000,000 shares of common
stock with a par value of $0.001.
Issued
Prior to an 18 for 1 forward stock split:
1,250,000 common shares were issued at $0.002 per share for a
consideration of $2,500. 1,000,000 common shares were issued at
$0.05 per share for a consideration of $50,000.
Subsequent to an 18 for 1 forward stock split:
5,250,500 common shares were issued at $0.65 per share. Net of
expenses associated with the offering, consideration to the Company
was $3,052,072.
F-15
FAR EAST ENERGY CORPORATION
400 N. Sam Houston Parkway East, Suite 205
Houston, Texas 77060
***PROXY***
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John Springsteen as Proxy, with full power
of substitution and revocation, the true and lawful attorney and proxy of the
undersigned at the Annual Meeting of shareholders (the "Meeting") of the Company
to be held Friday, June 14, 2002 at 2:00 p.m. (CDT), at the Sofitel Hotel, 425
North Sam Houston Parkway, East, Houston, Texas 77060, or any adjournments
thereof, to vote the shares of Common Stock of the Company standing in the name
of the undersigned on the books of the Company, or such shares of Common Stock
of the Company as the undersigned may otherwise be entitled to vote on the
record date for Meeting with all powers the undersigned would possess if
personally present at the Meeting, with respect to the matters set forth below
and described in the Notice of the Annual Meeting of shareholders dated May 23,
2002, and the accompanying Proxy Statement of the Company.
1. Election of the Board of Directors until the next Annual Meeting.
[ ] For all nominees listed below (except as marked to the contrary)
For the nominee Against the nominee Abstain
1. Jawaharlal Gondi [ ] [ ] [ ]
2. Bill Jackson [ ] [ ] [ ]
3. Ramesh Kalluri [ ] [ ] [ ]
4. Tun Aye Sai [ ] [ ] [ ]
2. Ratification of the employment of Payne, Falkner, Smith & Jones, P.C. as
the Company's independent auditor for the fiscal year ending December 31,
2002.
For [ ] Against [ ] Abstain [ ]
3. Any other business as may properly come before the meeting or any
adjournment thereof.
For [ ] Against [ ] Abstain [ ]
4. Mark "FOR" to enroll this account to receive certain future shareholder
communications in a single package per household. Mark "AGAINST" if you do
not want to participate. To change your election in the future, call (713)
586-1900.
For [ ] Against [ ] Abstain [ ]
In His Discretion, the Proxy Is Authorized to Vote upon Such Other Business
That May Properly Come Before the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS LISTED. IF NO
DIRECTIONS ARE GIVEN BY THE PERSON(S) EXECUTING THIS PROXY, THE SHARES WILL BE
VOTED IN FAVOR OF ALL LISTED PROPOSALS. THIS PROXY WHEN PROPERLY EXECUTED WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER, AND
UNLESS OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED FOR ALL PROPOSALS.
Please sign exactly as your name appears on your certificate. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such and submit
powers of attorney or other appropriate document. If a corporation, please sign
in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated , 2002
-----------------------
- ------------------------------ ------------------------ ----------------------
Please Print or Type Your Name Signature Number of Shares Voted
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY TO THE ADDRESSEE IN
THE ENCLOSED STAMPED ENVELOPE.
If you have had a change of Address, please print or type your new address(s)
in the space below:
FAR EAST ENERGY CORPORATION
400 N. Sam Houston Parkway East, Suite 205
Houston, Texas 77060
Telephone: (713) 586-1900
Consent to Electronic Delivery of Corporate Information to Shareholders
For your convenience, we are now offering you, as a Far East Energy Corporation
("Far East") shareholder, the option of viewing future Far East corporate
information, including Annual Reports and Proxy Statements, on the Internet. You
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Date:____________________ ________________________________________
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400 N. Sam Houston Parkway East, Suite 205
Houston, Texas 77060