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:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6
(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material underss.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 SPECIAL MEETING OF SHAREHOLDERS
To be held on March 3, 2003
------------------------
To Our Shareholders:
You are cordially invited to attend the Special Meeting of the Shareholders
of Far East Energy Corporation (hereinafter referred to as the "Company"), to be
held on Monday, March 3, 2003 at 2:00 p.m. (CST) at the Sofitel Hotel, 425 North
Sam Houston Parkway, East, Houston, Texas 77060, for the following purposes:
1. PROPOSAL NO. 1: To approve an amendment to the Company's articles of
incorporation to increase the number of shares of
common stock authorized for issuance from 100,000,000
to 500,000,000;
2. PROPOSAL NO. 2: To approve an amendment to the Company's articles of
incorporation to authorize a class of 500,000,000
shares of preferred stock, par value $0.001;
3. PROPOSAL NO. 3: To ratify an amendment to the Company's bylaws to
allow the board of directors to fix, in advance, a
record date not more than 60 or less than 10 days
before the date of any shareholder meeting as the
date as of which shareholders entitled to notice of
and to vote at such meetings must be determined; and
4. PROPOSAL NO. 4: 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 Special 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" 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 January 31, 2003 will be entitled to vote at the Special Meeting
or any adjournment thereof. A list of the Company's shareholders entitled to
notice of, and to vote at, the Special 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 Special
Meeting. The Special Meeting may adjourn from time to time without notice other
than by announcement at the Special Meeting, or at any adjournments thereof, and
any and all business for which the Special 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 SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
ON MARCH 3, 2003
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 special meeting of shareholders to be
held on March 3, 2003, and at any adjournment of that meeting (the "Special
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 February
19, 2003.
The Board of Directors has fixed January 31, 2003 as the record date for
determining stockholders who are entitled to vote at the Special Meeting. At the
close of business on January 31, 2003, the Company had issued and outstanding
47,350,500 shares of common stock, par value $0.001 (the "Common Stock"), held
of record by approximately 75 stockholders. Each share of Common Stock is
entitled to one vote on each matter properly coming before the Special 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 $5,000, 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 Special Meeting. The management of the
Company does not know of any other matters which will be presented for action at
the Special 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 Special
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.
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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 proposal, as well as broker non-votes,
will be considered for purposes of determining the number of total votes present
at the Special Meeting. Abstentions will have the same effect as votes against
the proposals.
The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented at the meeting is required to approve an amendment
to the Company's articles of incorporation and to ratify and approve an
amendment to the Company's bylaws.
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 all of the proposals
set forth in the notice. Together, such parties and proxies represent
approximately 25% of the votes eligible to be cast at the Special 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 January 31, 2003, with respect to: (i) each
person known to the Company to be the beneficial owner of more than five percent
(5%) 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 January 31, 2003, there
were 47,350,500 shares of Common Stock issued and outstanding.
Title of Class Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership (1) Class(2)
- --------------------------------------------------------------------------------
Executive Officers and Directors
- --------------------------------------------------------------------------------
Common Stock Bill Jackson 1,400,000 (3) 2.9%
($0.001 par 400 N. Sam Houston
value) Pkwy E. Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
Common Stock Jawaharlal Gondi 7,400,000 (4) 13.5%
($0.001 par 400 N. Sam Houston
value) Pkwy E. Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
Common Stock Tun Aye Sai 1,120,000 (5) 2.3%
($0.001 par 400 N. Sam Houston
value) Pkwy E. Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
Common Stock Ramesh Kalluri 210,000 (6) Less than 1%
($0.001 par 400 N. Sam Houston
value) Pkwy E. Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
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Common Stock John Springsteen 280,000 (7) Less than 1%
($0.001 par 400 N. Sam Houston
value) Pkwy E. Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
Common Stock Chris Jackson 220,000 (8) Less than 1%
($0.001 par 400 N. Sam Houston
value) Pkwy E. Suite 205
Houston, Texas 77060
- --------------------------------------------------------------------------------
Common Stock Directors and Executive 10,630,000 18.7%
($0.001 par Officers Group
value) (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 beneficially
owned by such person or entity.
(2) Percentages are based upon the total 47,350,500 outstanding shares of
Common Stock combined with the number of shares of Common Stock beneficially
owned by each person or entity. (3) Includes 400,000 shares which underlie
vested options.
(4) Includes 4,000,000 shares of Common Stock owned by the Arthi Trust of
which he is the principal beneficial owner of 100% of the voting stock, and
400,000 shares which underlie vested options. (5) Includes 120,000 shares
which underlie vested options.
(6) Includes 60,000 shares which underlie vested options.
(7) Includes 80,000 shares which underlie vested options.
(8) Includes 120,000 shares which underlie vested options.
DESCRIPTION OF SECURITIES
The Company is authorized to issue 100,000,000 shares of Common Stock, $0.001
par value. The holders of Common Stock are entitled to equal dividends and
distributions, with respect to the Common Stock when, as, and if declared by the
board of directors from funds legally available for such dividends. No holder of
Common Stock has any preemptive right to subscribe for any of the Company's
stock nor are any shares subject to redemption. Upon liquidation, dissolution or
winding up of the Company, and after payment of creditors, the assets will be
divided pro rata on a share-for-share basis among the holders of the shares of
Common Stock.
The Company has never paid any dividends to shareholders of its Common Stock.
The declaration in the future of any cash or stock dividends will depend upon
the Company's capital requirements and financial position, general economic
conditions, and other pertinent factors. Presently, the Company does not intend
to pay any cash or stock dividends in the foreseeable future. Management intends
to reinvest earnings, if any, in the development and expansion of the Company's
business.
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The Common Stock is listed for trading on the OTC-BB under the symbol "FEEC."
On the Record Date, the reported closing price of the Common Stock was $4.15 per
share.
The articles of incorporation of the Company currently do not provide
authority for a separate class of preferred stock, but Proposal No. 2 herein
recommends an amendment to the Company's articles of incorporation allowing the
creation of a new class of 500,000,000 authorized shares of preferred stock, par
value $0.001.
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 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.
Overview
The Company's operations for the nine months ended September 30, 2002 and
throughout 2001 consisted of searching for a viable merger or acquisition
candidate and developing drilling and production plans. The Company executed two
(2) Production Sharing Contracts with China United CoalBed Methane Corporation
("CUCBM") on January 25, 2002. Pursuant to the two Production Sharing Contracts,
which are subject to formal ratification by the Ministry of Foreign Trade and
Economic Cooperation ("MOFTEC'), the Company received the authority from CUCBM
to jointly explore, develop, produce and sell coalbed methane gas in and from a
total area of 1,330 square kilometers in the Enhong, Laochang and Zhaotong areas
of the Yunnan Province of the People's Republic of China. On December 30, 2002,
MOFTEC ratified the Production Sharing Contract with CUCBM to jointly explore,
develop, produce and sell coal bed methane gas in and from a total area of 1,072
square kilometers in the Enhong and Laochang areas of Yunnan Province, PRC. The
Production Sharing Contract with CUCBM in the Zhaotong area of Yunnan Province
has not yet been ratified.
On June 5, 2002, the Company executed a Sino-Foreign Joint Venture Contract
(the "Contract") with Panjiang Coal-Electricity (Group) Co. Ltd. ("Panjiang") to
establish a joint venture limited liability company ("Joint Venture") in the
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People's Republic of China to extract and use coalmine methane gas from six (6)
operating Panjiang coalmines, which cover an area of 120 square kilometers. This
Contract was entered into on the Company's behalf by its wholly owned subsidiary
Far East Energy (BVI), Inc., an international business company incorporated in
the British Virgin Islands. The Company is developing drilling plans to prove
and exploit the resources in its contract areas in the Guizhou Province.
On December 31, 2002, the Company acquired a significant amount of assets
when its wholly owned subsidiary, Far East Montana, Inc., executed a Plan of
Merger ("Agreement") with Newark Valley Oil & Gas, Inc., a Nevada corporation
("Newark") wholly owned by North American Oil and Gas, Inc. ("North American").
Newark survived the merger and became a wholly owned subsidiary of the Company.
Pursuant to the Agreement, in exchange for one hundred percent (100%) of the
outstanding equity of Newark, the Company issued 1,600,000 restricted shares of
its Common Stock and agreed to pay $600,000 to North American in the following
installments:
(1) One Hundred Thousand dollars ($100,000) at closing, which occurred on
January 21, 2003 ("Closing");
(2) Two Hundred Thousand dollars ($200,000) payable five (5) months after
Closing; and
(3) Three Hundred Thousand dollars ($300,000) payable twelve (12) months
after Closing.
As a result of the Agreement, the Company acquired certain undeveloped oil
and gas rights and interests in approximately 147,535.10 net acres
located in the eastern portion of the state of Montana. Of the total net acres,
approximately 134,530.16 acres constitute federal leases, approximately 5,141.80
acres constitute state of Montana leases, and approximately 7,863.14 acres
constitute freehold leases.
Business operations in China will continue to increase the Company's expenses
and, if such operations are successful, its revenues. The Company is moving
forward in the natural gas industry in China and Montana by virtue of its
acquisition of rights to methane gas in the Guizhou Province, the ratification
of the Production Sharing Contract explore, develop, produce and sell coalbed
methane gas in the Enhong and Laochang areas, and the acquisition of undeveloped
oil and gas rights and interests in the state of Montana.
Results Of Operations
The following discussion should be read in conjunction with the audited
financial statements and notes thereto included in the Company's 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 nine month period
ended September 30, 2002 as compared to that period in 2001 and for the year
ended December 31, 2001 as compared to the year ended December 31, 2000. A
comparison of the periods in 2002 relative to the same periods in 2001 may not
be meaningful, as the Company did not have exploration, development, extraction
and sale of coalbed methane gas activities in China during the first nine months
of 2001 versus its current focus.
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.
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Nine Months Ended September 30, 2002 Compared To Nine Months Ended September 30,
2001
The Company had no revenue for the nine months ended September 30, 2002 and
no revenue for the same period in 2001. The Company's operating loss increased
by $1,312,227 for the nine months ended September 30, 2002 as compared to
$13,027 for the same period in 2001, attributable to increases in general and
administrative expenses related to its exploration, development, extraction and
sale of coalbed methane and coal mine methane gas in China.
The Company's assets as of September 30, 2002 were $1,750,517 as compared to
$27,539 as of December 31, 2001. The increase in assets was due entirely to cash
received as a result of the Company's March 2002 private placement of 5,250,500
shares of Common Stock at $0.65 per share.
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.
Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30,
2001
During the nine month period ended September 30, 2002, the Company sold
5,250,500 shares of Common Stock at US$0.65 per share to a group of accredited
entities 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.
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Although there was a net loss from our operating activities, due to financing
there was an increase in the Company's liquidity. Net cash provided from
financing activities increased to $3,052,072 for the nine months ended September
30, 2002 from $0 for the same period in 2001.
As a result of the Company's sale of equity in March 2002, it believed that
its cash position of approximately $1,750,000 would be sufficient to satisfy its
operating needs for the next eight (8) months. The Company intends to utilize
the proceeds raised to support its current and proposed business operations in
China. If the proceeds are not enough to satisfy the Company's operating needs
and it 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 eight (8) months, the
Company could fail. Because the Company has acquired an undeveloped natural
resource that will require substantial exploration and development, it does not
expect to generate meaningful revenues until at least October 2004. Expenses
associated with exploration and development are expected to exhaust the
Company's cash reserves in approximately eight (8) months. Expenses beyond this
time will have to be financed through cash flow, which may not yet be available
if production and sales of coalbed methane gas are not significant, or through
future financings of equity and/or debt. In the event the Company does not raise
funds sufficient to finance its current development plans for projects in Yunnan
and Guizhou, it may not generate revenues until after October 2004.
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, no assurances can be given that
ratification will be granted, or when it may be granted. In the event the
Production Sharing Agreements are not ratified, the Company would have no
business operations and would begin searching for a suitable merger or
acquisition candidate.
FINANCIAL STATEMENTS
The Company's financial statements for the fiscal year ended December 31,
2001, and the quarter ended September 30, 2002, are attached hereto beginning on
page F-1.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
During the two most recent fiscal years, there were no disagreements with,
resignations by, or dismissals of the Company's independent accountant.
Representatives of the Company's current independent accountant, Payne, Falkner,
Smith & Jones, P.C., are not expected to be present at the Special Meeting.
9
PROPOSAL NO. 1
AMENDMENT TO ARTICLES OF INCORPORATION INCREASING NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
On February 7, 2003, the board of directors adopted resolutions, subject to
shareholder approval, to amend the Company's articles of incorporation to
increase the number of shares of Common Stock authorized for issuance from
100,000,000 to 500,000,000.
The board believes it to be in the best interests of the Company to increase
the number of authorized Common Stock. Reasons for this revolve around the
Company's operations, which involve exploring, developing, extracting and
marketing coalbed methane. The Company does not yet have any cash flow to
finance such activities and therefore is dependent on external financing
sources.
The increase in the number of authorized shares of Common Stock will provide
the Company with increased flexibility in obtaining additional financing for the
Company's operations. An increase in the number of authorized shares of Common
Stock will not alter proportionate voting rights and other rights of
shareholders.
The board of directors recommends a vote FOR the approval of the amendment to
the Company's articles of incorporation increasing the number of authorized
shares of Common Stock from 100,000,000 to 500,000,000.
PROPOSAL NO. 2
AMENDMENT TO ARTICLES OF INCORPORATION AUTHORIZING
A CLASS OF PREFERRED STOCK
On February 7, 2003, the board of directors adopted resolutions, subject to
shareholder approval, to amend the Company's articles of incorporation to
authorize a new class of 500,000,000 shares of preferred stock, par value
$0.001.
The principal purpose for the creation of a class of preferred stock is to
increase the Company's flexibility in obtaining additional financing for the
Company's operations. The board of directors
10
would be granted the authority to issue shares of the preferred stock in one or
more series, and to designate the number, voting powers, preferences, relative
rights, qualifications, limitations, restrictions, and other distinguishing
characteristics of each series to be issued.
The Company presently has several financing opportunities which require the
issuance of a class of securities with rights superior to that of its Common
Stock.
The board of directors recommends a vote FOR the approval of the amendment to
the Company's articles of incorporation authorizing a class of 500,000,000
shares of preferred stock.
PROPOSAL NO. 3
AMENDMENT TO BYLAWS
On February 7, 2003, the board of directors adopted resolutions, subject to
ratification by the shareholders of the Company, allowing the board of directors
to prescribe a period not exceeding 60 days before any meeting of the
shareholders during which no transfer of stock on the books of the corporation
may be made, or to fix, in advance, a record date not more than 60 or less than
10 days before the date of any shareholder meeting as the date as of which
shareholders entitled to notice of and to vote at such meetings must be
determined. Section 2.5 "Fixing of Record Date" of the Company's bylaws
currently states the following:
"For the purpose of determining shareholders of any voting group entitled to
notice of or to vote at any meeting of shareholders, or shareholders entitled
to receive payment of any distribution or dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date. Such record date
shall not be more than 70 days prior to the date on which the particular
action requiring such determination of shareholders entitled to dividend or
distribution. The record date for determination of such shareholders shall be
at the close of business on:
(a) With respect to an annual shareholder meeting or any special shareholder
meeting called by the Board of Directors or any person specifically
authorized by the Board of Directors or these bylaws to call a meeting, the
day before the first notice is given to shareholders;
(b) With respect to a special shareholder meeting demanded by the
shareholders, the date the first shareholder signs the demand;
(c) With respect to the payment of a share dividend, the date Board of
Directors authorizes the share dividend;
(d) With respect to actions taken in writing without a meeting (pursuant to
Article 2, Section 2.12, the first date any shareholder signs a consent; and
(e) With respect to a distribution to shareholders, (other than one involving
a repurchase or reacquisition of shares), the date the Board of Directors
authorizes the distribution.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made, as provided in this section, such determination
shall apply to any adjournment thereof
11
unless the Board of Directors fixes a new record date, which it must do if
the meeting is adjourned to a date more than 120 days after the date fixed
for the original meeting.
If no record date has been fixed, the record date shall be the date the
written notice of the meeting is given to shareholders."
The board of directors of the Company have amended section 2.5 of the bylaws
to state the following:
"In lieu of closing the stock transfer books, the Board may fix in advance a
date as the record date for any such determination of shareholders. Such
record date shall not, in any case, be more than sixty (60) days and, in the
case of a meeting of shareholders, not less than ten (10) days, prior to the
date on which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer books are not closed and
no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders, or shareholders entitled
to receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record
date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof."
The principal purpose of the amendment to the bylaws is to avoid
misinterpretation of the language of section 2.5 as currently drafted, and to
simplify the guidelines which the board of directors must follow when setting a
record date in connection with a shareholders' meeting. As currently drafted,
section 2.5 of the Company's bylaws requires that the board of directors utilize
specific days in order to make a determination of shareholders for certain
purposes, rather than prescribing a general time period within which the board
of directors may set the record date. It is the board's opinion that this
approach drastically restricts the board of directors flexibility in planning
and preparing for shareholders meetings, and substantially increases the risk
that the Company will violate specific SEC proxy rules.
Although shareholder approval of the board of directors' amendment of the
bylaws is not required by the bylaws or state law, the board of directors
believes that it is advisable to give shareholders an opportunity to ratify this
amendment. If the stockholders do not approve this proposal at the Special
Meeting, the board of directors may reconsider the amendment to the Company's
bylaws.
The board of directors recommends a vote FOR the ratification of the
amendment to the Company's bylaws.
12
PROPOSAL NO. 4
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 have been 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.
If a stockholder who wished to present a proposal failed 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.
ANNUAL REPORT
The Company will provide without charge to each shareholder of record as of
January 31, 2003, 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 John Springsteen,
Chief Financial Officer, 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
February 7, 2003
13
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 & COMPAY
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 & Co.
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 - $Nil).
6. SUBSEQUENT EVENTS
On January 10, 2002, the Company changed its name to Far East Energy
Corporation.
F-8
Far East Energy Corporation
(Formerly EZFoodstop.com)
FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
September 30, 2002
F-9
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
Balance Sheet
As at December 31, 2001 and September 30, 2002
(U.S.$) (U.S.$)
(audited) (unaudited)
December 31, September 30,
2001 2002
ASSETS
Current Assets
Cash and Cash Equivalents $ 27,539 $ 1,750,517
----------- -------------
Property and Equipment
Equipment 0 69,217
- ------
Other Assets
Investment in Contract Rights 0 3,300,000
- ---------
TOTAL ASSETS 27,539 5,119,734
====== =========
LIABILITIES
Current Liabilities
Accounts Payable 725 53,074
Current Portion of Long-Term Liabilities 0 300,000
- -------
Total Current Liabilities 725 353,074
--- -------
Long-Term Liabilities
Other Long-Term Liabilities 0 3,000,000
- ---------
TOTAL LIABILITIES 725 3,353,074
--- ---------
STOCKHOLDERS' EQUITY
Stockholders' Equity (note 4)
Authorized:100,000,000 common shares,
par value $0.001 per share
Issued: 2,250,000 common shares as of December 31, 2001 2,250
Issued: 45,750,500 common shares as of September 30, 2002 45,751
Additional paid in capital 50,250 3,058,822
Deficit accumulated during the Development Stage (25,686) (1,337,913)
-------- -----------
26,814 1,766,660
Continuance of Operations (note 3) 27,539 5,119,734
====== =========
F-10
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
Statements of Operations and Accumulated Deficit
For the Nine Month Periods Ended September 30, 2002 and September 30, 2001
Cumulative
Amounts
Date of
Incorporation
(February 4, 2000)
to September For the Nine Month Periods Ended
2002 September 30,
(U.S.$) (U.S.$)
(unaudited) (unaudited)
----------- -----------
2002 2001
Revenues 0 0 0
Expenses
General and Administrative 1,337,913 1,312,227 13,027
--------- --------- ------
Net loss for the period (1,337,913) (1,312,227) (13,027)
Deficit - beginning of period 0 (25,686) (10,970)
- -------- --------
Accumulated deficit - end of period (1,337,913) (1,337,913) (23,997)
----------- ----------- --------
Weighted average number of shares outstanding (note 4) 45,750,500 40,500,000
========== ==========
Loss per share $ (0.03) $ 0.00
========== ==========
F-11
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
Statements of Operations and Accumulated Deficit
For the Three Month Periods Ended September 30, 2002 and September 30, 2001
Cumulative
Amounts
Date of
Incorporation
(February 4, 2000)
to September For the Three Month Periods Ended
2002 September
(U.S.$) (U.S.$)
(unaudited) (unaudited)
----------- -----------
2002 2001
Revenues 0 0 0
Expenses
General and Administrative 1,337,913 652,951 1,658
--------- ------- -----
Net loss for the period (1,337,913) (652,951) (1,658)
Deficit - beginning of period 0 (684,962) (22,339)
- --------- --------
Accumulated deficit - end of period (1,337,913) (1,337,913) (23,997)
----------- ----------- --------
Weighted average number of shares outstanding (note 4) 45,750,500 40,500,000
---------- ----------
Loss per share $ (0.03) $ 0.00
========== ===========
F-12
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
Statement of Changes in Stockholders' Equity
For the Period from the Date of Incorporation
(February 4, 2000)to September 30, 2002
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 0 52,500
Net loss 0 0 (10,970) (10,970)
- - -------- --------
Balance, December 31, 2000 2,250 50,250 (10,970) 41,530
Net loss 0 0 (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) 0
Shares issued 5,251 3,046,822 3,052,073
Net loss 0 0 (1,312,227) (1,312,227)
- - ----------- -----------
Balance, September 30, 2002 45,751 3,058,822 (1,337,913) 1,766,660
====== ========= =========== =========
F-13
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
Statements of Cash Flows
For the Nine Month Periods Ended September 30, 2002 and September 30, 2001
Cumulative
Amounts
Date of
Incorporation
(February 4, 2000)
to September For the Nine Month Periods Ended
2002 September 30,
(U.S.$) (U.S.$)
(unaudited) (unaudited)
----------- -----------
2002 2001
Cash Provided By (Used For):
Operating Activities
Net loss for the period 0 (1,312,227) (13,027)
Adjustment to reconcile net loss to cash:
- increase in accounts payable 53,075 52,350 (274)
------ ------ -----
53,075 (1,259,877) (13,301)
------ ----------- --------
Investing Activity
Investments in property and equipment (69,217) (69,217) 0
-------- -------- -
Financing Activity
Proceeds from the sale of common stock 3,104,572 3,052,072 0
--------- ---------- -
Increase (decrease) in cash and cash equivalents 3,088,430 1,722,978 (13,301)
Cash and cash equivalents - beginning of period 0 27,539 43,159
- ------ ------
Cash and cash equivalents - end of period 3,088,430 1,750,517 29,858
========= ========= ======
Non-Cash Transactions
Acquisition of contract rights 3,300,000 3,300,000 0
========= ========= =
F-14
FAR EAST ENERGY CORP.
(formerly EZFoodstop.com)
(A Development Stage Company)
Notes to the Financial Statements
For the Nine Month Period Ended September 30, 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's United States office is located in Houston, Texas, and the
Company has offices in the Yunnan and Guizhou Provinces of the People's Republic
of China, specifically in the cities of Guiyang and Panjiang, Guizhou Province
and the city of Kunming, Yunnan Province. The Company is in its development
stage and to date its activities have been limited to initial organization,
capital formation, CBM well drill planning, and CMM production planning.
2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
These financial statements have been prepared in US Dollars using US
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.
F-15
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.
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. COMMON STOCK
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.
F-16
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.
5. ACQUISITION OF ASSETS
On June 5, 2002, we executed a Sino-Foreign Joint Venture Contract (the
"Contract") with Panjiang Coal-Electricity (Group) Co. Ltd. ("Panjiang") to
establish a joint venture limited liability company ("Joint Venture") in the
People's Republic of China to extract and use coal mine methane gas from six (6)
operating Panjiang coal mines which cover an area of 120 square kilometers. This
Contract was entered into on our behalf by our wholly owned subsidiary Far East
Energy (BVI), Inc., an international business company incorporated in the
British Virgin Islands. We are developing drilling plans to prove and exploit
the resources in our contract areas in the Guizhou Province.
In consideration for this right to capture Panjiang's coal mine methane
gas, the Company will 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 Company has also committed to provide all of the
necessary funds for the extraction and use of the coal mine methane gas
operations over the twenty (20) year term of the Contract.
Panjiang will, in addition to allowing full and complete access to the
coal mine methane gas, do the following:
o Apply to the relevant authorities for the establishment of the
Joint Venture and obtain necessary approvals;
o Assist in obtaining a business license for the Joint Venture;
o Assist in getting land use rights, water use rights, electricity
supply and other necessities for field development, well drilling,
installation, upgrading, purification of coal mine methane gas and
production of chemical products;
o Provide all the land use rights for the household use methane gas
pipelines;
o Assist the foreign employees in getting relevant visas;
o Assist in purchasing equipment, materials, vehicles, communication
equipment;
and,
o Assist in the design and construction of the project, and in
recruiting managers, technicians, workers and other required
employees.
F-17
The Company may withdraw from the Panjiang project at any time by
providing ninety (90) days written notice. During the first seven (7) year
period, the Company will receive one hundred percent (100%) of the profits
derived from its sale of coal mine methane gas and its products. 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%
6. LONG-TERM LIABILITIES
Long-term liabilities consist of obligations arising from the acquisition
of certain assets as more fully described in "Note 5. Acquisition of Assets."
Liabilities associated with the acquisition
of certain contract rights $3,300,000
Less current maturities included in
current liabilities 300,000
-------
$3,000,000
Following are maturities of long-term liabilities for each of the next
three years:
Year Amount
2003 $600,000
2004 1,100,000
2005 1,300,000
---------
$3,000,000
F-18
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 Bill Jackson as Proxy, with full power of
substitution and revocation, the true and lawful attorney and proxy of the
undersigned at the Special Meeting of shareholders (the "Meeting") of the
Company to be held Monday, March 3, 2003 at 2:00 p.m. (CST), 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
for Meeting with all powers the undersigned would possess if personally present
on the record date at the Meeting, with respect to the matters set forth below
and described in the Notice of the Special Meeting of shareholders dated
February 7, 2003, and the accompanying Proxy Statement of the Company.
1. To approve an amendment to the Company's articles of incorporation to
increase the number of shares of common stock authorized for issuance from
100,000,000 to 500,000,000.
For [ ] Against [ ] Abstain [ ]
2. To approve an amendment to the Company's articles of incorporation to
authorize a class of 500,000,000 shares of preferred stock, par value
$0.001.
For [ ] Against [ ] Abstain [ ]
3. To ratify an amendment to the Company's bylaws to allow the board of
directors to fix, in advance, a record date not more than 60 or less than
10 days before the date of any shareholder meeting as the date as of which
shareholders entitled to notice of and to vote at such meetings must be
determined.
For [ ] Against [ ] Abstain [ ]
4. Any other business as may properly come before the meeting or any
adjournment thereof.
For [ ] Against [ ] Abstain [ ]
5. 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 [ ]
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 , 2003
-----------------------
- ------------------------------ ------------------- ----------------------
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:
14
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
can access them at your convenience and easily print them if you wish. The best
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Please note that this is a global consent to receive all corporate information
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access providers and telephone companies.
If your Far East stock is held directly with a broker, please contact ADP
Investor Communication Services at http://www.icsdelivery.com/live/, which will
handle your request for electronic delivery of corporate information.
If your Far East stock is held directly with Far East and you are a registered
shareholder, please continue below.
If you would like to receive future corporate information via Far East's web
site, http://www.fareastenergy.com, rather than receiving hard copies in the
mail, please enter your name and Tax Payer ID # or Social Security # below:
Tax Payer ID# or Social Security #:__________________________
Name(s) on Account: _____________________________________
REGISTRATION FOR ELECTRONIC DELIVERY
I (we) consent to use Far East's Internet site to receive all future corporate
information, including but not limited to, Annual Reports and Proxy Statements
as they become available. I understand that this consent will remain in effect
until I notify Far East by mail that I wish to resume mail delivery of corporate
documents.
By signing below and returning this card to Far East at the address listed
herein, I agree with the above.
Date:____________________ ________________________________________
Signature
E-MAIL ALERT SERVICE
We are also offering you the opportunity to enroll to receive messages (alerts)
delivered to your e-mail address directly from the Far East Investor Relations
staff. You may receive notification from us periodically alerting you to some
updated information on our website. Please fill in your name and e-mail address
below:
Your name:___________________________________________
E-mail address:________________________________________
You may revoke this consent to receive electronic delivery of Far East's
corporate information at any time. To resume mail delivery or to unsubscribe
from the e-mail alert service, please write to:
Far East Energy Corporation
400 N. Sam Houston Parkway East, Suite 205
Houston, Texas 77060
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