As Filed with the Securities and Exchange Commission on May 8, 1999
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
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FAN ENERGY INC.
----------------
(Name of small business issuer in its charter)
Nevada 1311
----------------------------- ---------------------------
(State or jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
77-0140428
-----------------
(I.R.S. Employer
Identification No.
George H. Fancher Jr.
1801 Broadway, Suite 720 1801 Broadway, Suite 720
Denver, Colorado 80202 Denver, Colorado 80202
(303) 296-6600 (303) 296-6600
--------------------------------------- ----------------------------
(Address and telephone number of (Name, address and telephone
principal executive offices and address number of agent for service)
of principal place of business)
With Copies to:
Alan W. Peryam, LLC
1120 Lincoln Street, Suite 1000
Denver, Colorado 80203
(303) 866-0900
Approximate date of proposed sale to the public: As soon as practicable
following the date on which the Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [X] 333-47699
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum Amount of
Title of Each Class of Amount to be Offering Price Aggregate Registration
Securities To Be Registered Registered Per Share Offering Price Fee
- --------------------------- ------------ ----------- ---------------- ----
<S> <C> <C> <C> <C>
Common Stock Purchase Warrants .......... 3,000,000 shares(1) $0.10 $ 30,000 $ 8.10
Common Stock, $0.001 par value........... 3,000,000 shares(2) $0.10 $ 300,000 $ 80.40
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Total XXXXX XXX $ 330,000 $ 88.50
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(1) To be included in units, each consisting of one share of registrant's
common stock and one warrant. The common stock is registered in
Registration No. 333-47699 being filed on or about May 5, 2000. For
purposes of calculating the registration fee, an offering price of
$0.01 is assumed.
(2) To be issued upon exercise of warrants. The terms of issuance are
described in Registration No. 333-47699.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
(ii)
<PAGE>
Fan Energy Inc.
PART I
INFORMATION REQUIRED IN THE PROSPECTUS
Registrant incorporates all information from Part I of Post-Effective
Amendment No. 2 of Registration No. 333-47699 as the information required in the
prospectus.
(iii)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Article TWELFTH of the Registrant's Restated Articles of Incorporation
provides that no director or officer of the Registrant shall be personally
liable to the Registrant or any of its stockholders for damages for breach of
fiduciary duty as a director or officer, except that such provision will not
eliminate or limit the liability of a director or officer for any act or
omission which involves intentional misconduct, fraud or a knowing violation of
law or for the payment of any dividend in violation of Section 78.300 of the
Nevada Revised Statutes.
Section 78.751 of the Nevada Revised Statutes permits the Registrant to
indemnify its directors, officers, employees and agents if such person acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, has no reasonable cause to believe his conduct was
unlawful.
To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, the
corporation must provide indemnification against expenses, including attorneys'
fees, actually and reasonably incurred by him in connection with the defense.
Article TWELFTH of the Registrant's Restated Articles of Incorporation
provides as follows:
TWELFTH: The corporation shall, to the fullest extent permitted
by Nevada law as in effect from time to time, indemnify any person
against all liability and expense (including attorneys' fees) incurred
by reason of the fact that he is or was a director or officer of the
corporation or, while serving as a director or officer of the
corporation, he is or was serving at the request of the corporation as
a director, officer, partner or trustee of, or in any similar
managerial or fiduciary position of, or as an employee or agent of,
another corporation, partnership, joint venture, trust, association,
or other entity. Expenses (including attorneys' fees) incurred in
defending an action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding
to the fullest extent and under the circumstances permitted by Nevada
law. The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, fiduciary or
agent of the corporation against any liability asserted against and
incurred by such person in any such capacity or arising out of such
person;'s position, whether or not the corporation would have the
power to indemnify against such liability under the provisions of this
Section TWELFTH. The indemnification provided by this Section TWELFTH
shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under these Articles of Incorporation, any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise, and shall inure to the benefit of their heirs, executors
and administrators. The provisions of this Section TWELFTH shall not
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be deemed to preclude the corporation from indemnifying other persons
from similar or other expenses and liabilities as the Board of
Directors or the stockholders may determine in a specific instance or
by resolution of general application.
Article VI, Section 1 of the Registrant's Bylaws provides that the
Registrant shall provide indemnification to Registrant's officers, directors and
employees to the fullest extent permitted under the Nevada General Corporation
Law.
Item 25. Other Expenses of Issuance and Distribution.
Expenses (none of which will be paid or reimbursed by the Selling
Stockholders to the Registrant) payable in connection with the issuance and
distribution of the securities being registered hereby are as follows:
Securities and Exchange Commission Registration Fee .............. $ 88.50
NASD Fees ........................................................ none*
Accounting Fees and Expenses ..................................... none*
Legal Fees and Expenses .......................................... none*
Printing, Freight and Engraving .................................. none*
Escrow Fees ...................................................... none*
Miscellaneous .................................................... none*
------
Total ................................................... $ 88.50*
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*Estimated.
Item 26. Recent Sales of Unregistered Securities.
The following is information with respect to all unregistered securities
sold by the Registrant within the past three years.:
(a) On December 15, 1996 the Registrant issued 636,700 shares of common
stock, valued at $6,367 to an officer and director of the Registrant in
satisfaction of an obligation owed by the Registrant to the officer for expenses
of $6,367 advanced on behalf of the Registrant by such person. The issuance of
the shares was exempt from registration under Section 4(2) of the Securities
Act, as the person to whom the shares were issued, the President and a director
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of the Registrant, had full knowledge of the business and affairs of the
Registrant, certificates representing the shares were marked with a restrictive
legend and the shares were taken for investment.
(b) On June 2, 1997 the Registrant issued 2,500,000 shares of its common
stock and 2,500,000 stock purchase warrants to eight non-U.S. citizens for
$500,000 in a private transaction. Each of the warrants entitles the holder to
purchase one additional share of common stock of the Registrant at an exercise
price of $0.20 per share on or before June 2, 1998. No underwriter was involved
in the transaction and there were no underwriting discounts or commissions. The
issuance of the securities was exempt from registration under Rule 504 adopted
under Regulation D of the Securities Act. Form D was filed by the Registrant.
(c) On August 29, 1997 the Registrant issued 2,250,000 shares of its common
stock to George H. Fancher Jr. in connection with the acquisition by the
Registrant of oil and gas properties. Upon issuance of the shares, certificates
representing the shares were delivered to an escrow agent pending completion of
the acquisition transaction. The acquisition transaction was completed on or
about November 11, 1997 at which time the shares were delivered to Mr. Fancher.
In the transaction, the Registrant received an assignment of Mr. Fancher's
undivided interest in two natural gas exploration and development prospects
located in the southern part of the Sacramento Basin in California. The
Registrant paid $907,951 in cash and issued the 2,250,000 shares of common
stock, valued at $300,000, for the properties. The total of the cash and the
stock is intended to be equal to Mr. Fancher' s cost in acquiring and developing
the property prior to transfer to the Registrant. No underwriter was involved in
the transaction. The issuance of the securities to Mr. Fancher was exempt under
Section 4(2) of the Securities Act. Mr. Fancher acquired the securities for
investment, certificates representing the securities were marked with a
restrictive legend and stop transfer instructions were placed with the
Registrant's stock transfer agent.
(d) On September 15, 1997 the Registrant issued 250,000 shares of its
common stock to six persons for services valued by the Registrant at $50,000. Of
the six persons, one is a Canadian attorney who received 25,000 shares for
service as a director of the Registrant and for preparation of documentation for
the Registrant in connection with the acquisition of oil and gas properties and
advise to the officers concerning certain aspects of the acquisition. A second
person, also a director at the time of issuance of the shares, was also the
Secretary and Treasurer of the Registrant and received 50,000 shares. He
provided financial and accounting services to the Registrant and maintained its
books and records. Two of the persons, each of whom received 50,000 shares, have
substantial experience in the oil and natural gas business and served as
consultants to the Registrant in connection with the acquisition of the natural
gas exploration properties. They reviewed in detail the geologic and related
data available concerning the properties and advised the officers concerning the
advisability of the acquisition. A third consultant also received 50,000 shares,
and agreed in August 1997 to become a director of the Registrant at the time
that the acquisition of the oil and gas properties was completed, he assisted
the Registrant to prepare and document its financing and exploration plan and to
evaluate and budget the plan of development of the natural gas exploration
properties. Of the three consultants, two became directors in November 1997 and
the third agreed to provide ongoing consulting services to the Registrant. The
sixth person, who received 25,000 shares, is an employee of a business owned by
the President of the Registrant and an administrative assistant to the
President. This person provided office, administrative and stenographic services
to the Registrant. Each of the persons to whom the shares were issued had full
knowledge of the business and affairs of the Registrant, each signed a written
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investment letter which acknowledged thc receipt of information concerning the
Registrant and each agreed to hold the shares issued for investment purposes,
the certificates representing the shares each bear a restrictive legend and stop
transfer instructions were entered with the Registrant's stock transfer agent.
No underwriter was involved in the transactions. Based on the foregoing facts,
the issuance of the securities was exempt from registration pursuant to Section
4(2) of the Securities Act and/or Rule 506 adopted thereunder.
(e) On October 31, 1997 the Registrant issued 2,000,000 shares of its
common stock and warrants to purchase 1,000,000 shares of common stock to 10
non-U.S. citizens for $1,000,000. Each of the warrants entitles the holder to
purchase one additional share of common stock at an exercise price of $0.60 per
share on or before October 31, 1998. The Registrant issued cash finder's fees
totaling $45,000 and issued warrants entitling the holders to purchase up to
180,000 shares of common stock at $0.50 per share to three nonaffiliated,
non-U.S. citizen finders in connection with the transaction. The Registrant's
President, William E. Grafham, participated in the private placement and
purchased 200,000 shares and 100,000 warrants for $100,000. The issuance of the
securities was exempt from registration pursuant to Regulation S adopted under
the Securities Act. Each of the purchasers agreed that no sale of any of the
securities would be made to any U.S. Person, as defined in Regulation S. except
in compliance with the Securities Act.
(f) In September 1998, the Registrant issued 2,065,000 shares of its common
stock to eight persons upon exercise of outstanding warrants originally issued
June 2, 1997 (see Item 26(b) above). The warrants were exercised at $0.20 per
share for total proceeds of $413,000. 435,000 unexercised warrants expired at
the end of August 1998. No underwriter was involved in the transaction and there
were no underwriting discounts or commissions. The issuance of the securities
was exempt from registration under Section 4(2) of the Securities Act. Each of
the persons exercising warrants acquired the securities for investment,
certificates representing the securities were marked with a restrictive legend
and stop transfer instructions were placed with the Registrant's stock transfer
agent.
(g) Effective July 1,1998, the Registrant issued 215,000 shares of its
common stock to four officers and directors of the Registrant in consideration
for services, valued at $43,000, provided to the Registrant through June 30,
1998. No underwriter was involved in the transaction. The issuance of securities
to the individuals were exempt under Section 4(2) of the Securities Act. Mr.
Fancher acquired the securities for investment, certificates representing the
securities were marked with a restrictive legend and stop transfer instructions
were placed with the Registrant's stock transfer agent.
(h) Effective December 31, 1999, the Registrant issued 99,788 shares of its
common stock to William E. Grafham, President, as payment for $22,452 of rent
and administrative services provided to Registrant in 1999. Registrant also
issued 100,000 shares to Albert A. Golusin, Secretary, for $22,500 in consulting
services provided to Registrant in 1999. No underwriter was involved in the two
transactions. Both persons had full information about the business and affairs
of the Registrant as a result of their positions as officers. The issuance of
the securities was exempt from registration under Section 4(2) of the Securities
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Act. Each of the persons exercising warrants acquired the securities for
investment, certificates representing the securities were marked with a
restrictive legend and stop transfer instructions were placed with the
Registrant's stock transfer agent.
Item 27. Exhibits.
The following is a list of exhibits filed as part of this Registration
Statement.
Exhibit No. Description and Method of Filing
- ----------- --------------------------------
(3.1) Restated Articles of Incorporation of Eastern Star Mining, Inc.,
as filed with the Nevada Secretary of State February 7, 1997.*
(3.2) Certificate of Amendment of Articles of Incorporation of Eastern
Star Mining, Inc., as filed with the Nevada Secretary of State
May 19, 1997.*
(3.3) Certificate of Amendment of Articles of Incorporation of Eastern
Star Mining, Inc., as filed with the Nevada Secretary of State
May 28, 1997.*
(3.4) Certificate of Amendment of Articles of Incorporation of Eastern
Star Holdings, Inc., as filed with the Nevada Secretary of State
December 10, 1997.*
(3.5) Bylaws of Registrant adopted December 31, 1997.*
(4.1) Form of Amended Fund Escrow Agreement.*
(4.2) Form of Subscription Agreement.*
(5.0) Legality opinion of Alan W. Peryam dated May 4, 2000.*
(10.1) Letter Agreement dated August 27, 1997 between Registrant and
George H. Fancher Jr. d/b/a Fancher Oil Company.*
(10.2) Agreement With Arizona Corporate Management, Inc. dated November
1, 1998.*
(10.3) 1997 Incentive and Nonstatutory Stock Option Plan. *
(10.4) Letter regarding conflicts of interest dated March 6, 1998
between Registrant and George H. Fancher Jr.*
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(10.5) Form of Subscription Agreement for certain officers and
consultants.*
(10.6) Agreement with Albert Golusin.*
(10.7) Form of Lockup Agreement for Selling Securityholders.*
(10.8) Participation Agreement dated October 1, 1998 with Fancher Oil
LLC.(1)
(10.9) Agreement dated May 6, 1999 with George H. Fancher Jr.*
(10.10) Indemnification Agreement with George H. Fancher Jr.(2)
(10.11) Warrant Agency Agreement.*
(23) Consent of Wheeler Wasoff, P.C., Independent Certified Public
Accountants.
(23.1) Consent of Alan W. Peryam, LLC.
- ------------------
*Incorporated by reference to Registration No. 333-47699.
(1) Incorporated by reference to Exhibit 10.7 to Registrant's
Annual Report on Frm 10- KSB for the fiscal year ended
December 31, 1998.
(2) Incorporated by reference to Exhibit 10.8 to Registrant's
Annual Report on Frm 10- KSB for the fiscal year ended
December 31, 1999.
Item 28. Undertakings.
The undersigned Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in
the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
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(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its legal counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City and County
of Denver, State of Colorado on May 8, 2000.
FAN ENERGY INC.
By /s/ William E. Grafham
-------------------------------------------
William E. Grafham, Chief Executive Officer
By /s/ George H. Fancher Jr.
-------------------------------------------
George H. Fancher Jr., Principal
Financial Officer
By /s/ Albert A. Golusin
-------------------------------------------
Albert A. Golusin, Principal
Accounting Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated:
Signature Title Date
- --------- ----- ----
/s/ William E. Grafham
- ---------------------------------- Director May 8, 2000
William E. Grafham
/s/ George H. Fancher Jr.
- ---------------------------------- Director May 8, 2000
George H. Fancher Jr.
/s/ Jeffrey J. Scott
- ---------------------------------- Director May 8, 2000
Jeffrey J. Scott
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As Filed with the Securities and Exchange Commission on May 8, 2000
Registration No._________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SB-2
Registration Statement
Under
The Securities Act of 1933
FAN ENERGY INC.
EXHIBITS
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<CAPTION>
EXHIBIT INDEX
Exhibit No. Description and Method of Filing Page
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<S> <C> <C>
(3.1) Restated Articles of Incorporation of Eastern Star Mining, Inc., N/A
as filed with the Nevada Secretary of State February 7, 1997.*
(3.2) Certificate of Amendment of Articles of Incorporation of Eastern N/A
Star Mining, Inc., as filed with the Nevada Secretary of State
May 19, 1997.*
(3.3) Certificate of Amendment of Articles of Incorporation of Eastern N/A
Star Mining, Inc., as filed with the Nevada Secretary of State
May 28, 1997.*
(3.4) Certificate of Amendment of Articles of Incorporation of Eastern N/A
Star Holdings, Inc., as filed with the Nevada Secretary of State
December 10, 1997.*
(3.5) Bylaws of Registrant adopted December 31, 1997.* N/A
(4.1) Form of Amended Fund Escrow Agreement.* N/A
(4.2) Form of Subscription Agreement.* N/A
(5.0) Legality opinion of Alan W. Peryam dated May 4, 2000.* N/A
(10.1) Letter Agreement dated August 27, 1997 between Registrant and N/A
George H. Fancher Jr. d/b/a Fancher Oil Company.*
(10.2) Agreement With Arizona Corporate Management, Inc. dated November N/A
1, 1998.*
(10.3) 1997 Incentive and Nonstatutory Stock Option Plan. * N/A
(10.4) Letter regarding conflicts of interest dated March 6, 1998 N/A
between Registrant and George H. Fancher Jr.*
(10.5) Form of Subscription Agreement for certain officers and N/A
consultants.*
(10.6) Agreement with Albert Golusin.* N/A
(10.7) Form of Lockup Agreement for Selling Securityholders.* N/A
(10.8) Participation Agreement dated October 1, 1998 with Fancher Oil N/A
LLC.(1)
(10.9) Agreement dated May 6, 1999 with George H. Fancher Jr.* N/A
(10.10) Indemnification Agreement with George H. Fancher Jr.(2) N/A
(10.11) Warrant Agency Agreement.* N/A
(23) Consent of Wheeler Wasoff, P.C., Independent Certified Public
Accountants.
(23.1) Consent of Alan W. Peryam, LLC.
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*Incorporated by reference to Registration No. 333-47699.
(1) Incorporated by reference to Exhibit 10.7 to Registrant's
Annual Report on Frm 10- KSB for the fiscal year ended
December 31, 1998.
(2) Incorporated by reference to Exhibit 10.8 to Registrant's
Annual Report on Frm 10- KSB for the fiscal year ended
December 31, 1999.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S CONSENT
We consent to the incorporation by reference in the Registration Statement on
Form SB-2 of Fan Energy Inc. of our report dated March 17, 2000 on our audit of
the financial statements of Fan Energy Inc. as of December 31, 1999.
/s/ Wheeler Wasoff, P.C.
WHEELER WASOFF, P.C.
Denver, Colorado
May 4, 2000
CONSENT OF ATTORNEY
Reference is made to the Registration Statement on Form SB-2 pursuant to
which Registrant proposes to sell a maximum of 3,000,000 units, each consisting
of one share of the $0.001 par value common stock ("Common Stock") of the
Company and one warrant entitling holders to purchase one additional share of
Common Stock. Reference is also made to the opinion dated May 4, 2000 included
as Exhibit (5.0) to the Registration Statement relating to the legality of the
securities proposed to be issued and to be sold.
I hereby consent to the filing of the opinion dated May 4, 2000, as an
exhibit to the Registrant's Registration Statement on Form SB-2 and reference to
the undersigned in the Registration Statement under the caption "Legal Matters."
/s/ Alan W. Peryam
--------------------------------
Alan W. Peryam, LLC
Denver, Colorado
Dated: May 5, 2000
