U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended May 31, 1996
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required] for the transition period from _____to______
Commission File Number: 2-63115
CHENIERE ENERGY, INC.
(f/k/a BEXY Communications, Inc.)
(Name of small business issuer as specified in its charter)
Delaware 95-4352386
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Allen Center
1200 Smith Street, Suite 1710
Houston, Texas 77002
Issuer's Telephone Number: (713) 659-1361
(Address and phone number of principal executive offices)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months
(or such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
The Registrant has 1,803,459 shares of common stock, par value $.01 per
share, issued and outstanding as of May 31, 1996
<PAGE>
INDEX TO QUARTERLY REPORT
ON FORM 10-QSB
PART I FINANCIAL INFORMATION
Page
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis
or Plan of Operation 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Change in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote
of Securities-Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
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<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
(Financial Statements Commence on Following Page)
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<PAGE>
BEXY COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MAY 31,
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Assets
Cash $ 63,541 $ 78,397
Accounts Receivable 68,800 63,620
Program Inventory, Net 52,756 511,244
Furniture and Fixtures, (Net of
Accumulated Depreciation of $3,464 and $2,262) 622 1,258
Other Assets 4,600 12,121
----------- -----------
Total Assets $ 190,319 $ 666,640
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts Payable and Accrued Expenses $ 39,849 $ 64,502
Accrued Interest Expense to Related Party 37,209 38,924
Note Payable -- 180,000
Note Payable to Related Party -- 76,219
Deposits 2,000 2,000
Deferred Income 16,000 --
----------- -----------
Total Liabilities 95,058 361,648
----------- -----------
STOCKHOLDERS' EQUITY
Common Stock, Par Value $.01, 25,000,000
Shares Authorized, 1,803,459 and 1,490,951 Shares
Issued and Outstanding 147,404 130,289
Contributed Capital 1,116,581 915,828
Accumulated Deficit (1,138,489) (659,910)
Notes Receivable from Stockholders (30,235) (81,212)
----------- -----------
Total Stockholders' Equity 95,261 304,995
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 190,319 $ 666,640
=========== ===========
</TABLE>
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<PAGE>
BEXY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
May 31, 1996 May 31, 1995 May 31, 1996 May 31, 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE $ 7,500 $ 45,689 $ 49,758 $ 101,867
Cost of Programs and
Distribution Fees 3,826 40,852 29,071 125,514
----------- ----------- ----------- -----------
3,674 4,837 20,687 (23,647)
----------- ---------- ----------- ----------
EXPENSES:
Advertising 2,042 - 10,101 225
Salaries - 2,739 - 8,216
Consulting Fees to Majority
Shareholder 21,000 - 59,500 -
General and Administrative 10,116 11,510 100,545 43,574
Depreciation 300 302 900 906
Interest - 1,718 - 6,328
Professional Fees 13,158 1,811 35,144 6,066
Rent 3,645 10,406 11,443 26,381
----------- ------------- ------------- ------------
Total Expenses 50,261 28,486 217,633 91,696
----------- ------------- ------------ -----------
Other Income 540 - 1,819 4,162
----------- ------------- ------------- ------------
Net Loss (46,047) (23,649) (195,127) (111,181)
============ ============= =========== ===========
Net Loss per Share (.02) (.02) (.10) (.08)
============ ============= =========== ===========
Weighted Average Number of
Shares Outstanding 1,803,459 1,455,950 1,681,203 1,450,450
</TABLE>
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<PAGE>
BEXY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTH PERIODS ENDED MAY 31,
<TABLE>
<CAPTION>
1996 1995
------------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (195,127) $ (111,181)
Adjustments to Reconcile Net Loss to
Net Cash (Used By) Operating Activities:
Amortization of Film Costs 2,700 58,255
Depreciation 900 906
Changes in Operating Assets and Liabilities:
Accounts Receivable (5,600) (28,420)
Other Assets 2,122 -
Accounts Payable and Accrued Expenses 3,539 19,962
Accrued Interest Expense (4,981) 6,328
------------ ------------
Net Cash (Used By) Operating Activities (196,447) (54,150)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Furniture and Fixtures (566) -
Net Change in Notes Receivable 16,439 51,788
------------ ------------
Net Cash Provided By Investing Activities 15,873 51,788
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of Common Stock 137,500 130,967
Repayment of Note Payable - (5,000)
Net Repayment to Related Party (7,519) (51,781)
------------ ------------
Net Cash Provided by Financing Activities 129,981 74,186
------------ ------------
Net (Decrease) Increase in Cash (50,593) 71,824
CASH - BEGINNING OF YEAR 114,134 6,573
------------ ------------
CASH - END OF YEAR $ 63,541 $ 78,397
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Interest $ 4,983 $ -
============ ===========
Cash Paid for Income Taxes $ - $ 1,221
============ ===========
</TABLE>
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<PAGE>
BEXY COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1996
NOTE 1 - GENERAL
The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and
Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been
included. Certain reclassifications have been made to the prior
period to conform to the current periods presentation.
The financial statements include the Company's wholly-owned
subsidiary, Mar Ventures, Inc., a Delaware Corporation, which
acquired substantially all of the assets and assumed substantially
all of the liabilities of the Company on April 16, 1996.
For further information refer to the financial statements and
footnotes included in the Registrant's Annual Report on Form 10-KSB
for the year ended August 31, 1995, which indicated a going concern
report as to the Company's ability to continue in existence.
The Results of Operations for any interim period are not necessarily
indicative of the results to be expected for the full fiscal year
ended August 31, 1996.
Unclassified Balance Sheet - In accordance with the provisions of
SFAS No. 53, the Company has elected to present an unclassified
balance sheet.
Per Share Information - Net loss per share for the periods presented
is computed on the basis of the weighted average common shares
outstanding.
NOTE 2 - REORGANIZATION AGREEMENT
The Company entered into an Agreement and Plan of Reorganization
dated as of April 16, 1996 with Cheniere Energy Operating Co., Inc.
("Operating"), the stockholders of Operating and Buddy Young.
Pursuant to the Reorganization Agreement, subject to approval of the
Reorganization by the stockholders of the Company, the Company will,
among other things, issue shares of its common Stock equal to
approximately 93% of its then issued and outstanding Common Stock and
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<PAGE>
distribute the shares of common stock of Mar Ventures to the
Company's stockholders of record as of May 15, 1996.
NOTE 3 - GENERAL AND ADMINISTRATIVE EXPENSES
The Company has expended approximately $46,000 through May 31, 1996
to fund certain start-up costs of a company owned by the Company's
majority shareholder. In exchange for funding the start-up costs, the
majority shareholder granted the Company an option to purchase the
Company for $50,000, which was terminated by the Company on April 16,
1996.
NOTE 4 - SUBSEQUENT EVENTS
On July 3, 1996, a date subsequent to the balance sheet date , the
stockholders approved a plan of reorganization to change the
Company's business from the television production and health
information business to the business of oil and gas exploration and
exploitation, as well as related changes in the capitalization and
management of the Company. A one-for-three reverse split of the
Common Stock previously declared by the Board of Directors of the
Company became effective immediately after the approval of the
Reorganization by the Company's stockholders.
As part of the Reorganization, the Company issued new shares of its
stock in exchange for all of the stock of Operating resulting in a
change in control of the Company and distributed the shares of Mar
Ventures to the Company's stockholders of record as of May 15, 1996.
Mar Ventures remains responsible for the liabilities of the Company
prior to the date of the Reorganization, including the Company's
obligations under the Reorganization Agreement.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
GENERAL
On July 3, 1996 the stockholders of the Company approved a plan of
reorganization (the "Reorganization") as contemplated by that certain
Agreement and Plan of Reorganization dated as of April 16, 1996 (the
"Reorganization Agreement") among the Company, Cheniere Energy Operating Co.,
Inc. ("Operating"), the stockholders of Operating and Buddy Young, the
President and majority stockholder of the Company, pursuant to which the
Company changed its business from the television production and health
information business to the business of exploring for and exploiting oil and
gas reserves. As a result, the following discussion of the results of
operations of the Company should not be used as the basis for assessing the
future performance of the Company. For a more detailed discussion of the
Reorganization and a description of Company's current plan of operation, see
the Form 8-K dated July 3, 1996 (the "Form 8-K") to be filed by the Company on
or before July 18, 1996 and the Company's definitive proxy statement dated
June 13, 1996 (the "Proxy Statement") distributed to the stockholders of the
Company in connection with the special meeting held on July 3, 1996 to approve
the Reorganization and related actions.
The description of the Reorganization contained in this Report is qualified in
its entirety by reference to the Form 8-K and Proxy Statement.
RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED MAY 31, 1996 COMPARED
TO THE THREE-MONTH PERIOD ENDED MAY 31, 1995
Revenues from the licensing of the Company's program library for
the three-month period ended May 31, 1996 were $7,500 compared to $45,689
during the comparable period in 1995. This substantial decrease resulted from
the expiration of licensing agreements for the Company's program library and
management's focus on the negotiation and consummation of the Reorganization.
The cost of programs and distribution fees during the three-month
period ended May 31, 1996 decreased $37,026 or 91% from the comparable period
in 1995 primarily because of the significant amortization costs incurred in
such period in 1995.
Expenses during the three-month period ended May 31, 1996 increased
$21,775 or 43% from the comparable period in 1995 primarily as a result of the
$21,000 consulting fee paid to the Company's majority stockholder during such
period in 1996 which was not incurred during such period in 1995, the increase
in advertising expense to $2,042 in the three-month period ended May 31, 1996
from none during the comparable period in 1995 and the increase in
professional fees paid to $13,158 from $1,811 during the comparable period in
1995. These increased expenses were partly offset by a reduction in rent
expense incurred to $3,645 compared to $10,406 incurred in the comparable
period in 1995 and the elimination of expense attributable to interest and
salaries incurred during the comparable period in 1996 of $1,718 and $2,739,
respectively.
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<PAGE>
The Company's net loss for the three-month period ending May 31,
1996 increased by $22,398 or 49% from the comparable period in 1995. The
increase in net loss was primarily the result of the substantial decrease in
revenues and increase expenses described above, offset in part by lower cost
of programs and distribution fees.
RESULTS OF OPERATIONS FOR THE NINE-MONTH PERIOD ENDED MAY 31, 1996 COMPARED
TO THE NINE-MONTH PERIOD ENDED MAY 31, 1995
Revenues from the licensing of the Company's program library for
the nine-month period ended May 31, 1996 were $49,758 compared to $101,867
during the comparable period in 1995. This substantial decrease resulted from
the expiration of licensing agreements for the Company's program library and
management's focus on the negotiation and consummation of the Reorganization.
The cost of programs and distribution fees during the nine-month
period ended May 31, 1996 decreased $96,446 or 77% from the comparable period
in 1995 primarily because of the significant amortization costs incurred in
such period in 1995.
Expenses during the nine-month period ended May 31, 1996 increased
$125,937 or 137% from the comparable period in 1995 primarily as a result of
an increase of $56,971 in General and Administrative expense, additional
expense of consulting fees incurred of $59,500 paid to the Company's majority
stockholder during such period which was not incurred during such period in
1995, the increase in advertising expense to $10,101 during the nine-month
period ended May 31, 1996 from $225 during the comparable period in 1995 and
the increase in professional fees incurred to $35,144 from $6,066 during the
comparable period in 1995. These increased expenses were partly offset by a
reduction in rent incurred to $11,443 in the nine-month period ended May 31,
1996 compared to $26,381 incurred in the comparable period in 1995 and the
elimination of expense attributable to interest and salaries of $6,328 and
$8,216, respectively.
The Company's net loss for the nine-month period ending May 31,
1996 increased by $83,946 or 76% from the comparable period in 1995. The
increase in net loss was primarily the result of the substantial decrease in
revenues and increase expenses described above, offset in part by lower cost
of programs and distribution fees.
LIQUIDITY AND CAPITAL RESOURCES
As of May 31, 1996 the Company had working capital of $37,288. The
Company's cash and accounts receivable as at such date were insufficient to
ensure the Company's continued existence as a going concern. During the
nine-month period ended May 31, 1996, the Company had a negative cash flow
from operating activities of $196,447. Management of the Company anticipates
that the current cash flow requirements of the Company would be satisfied by
the consummation of the Reorganization as contemplated by the Reorganization
Agreement.
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<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGE IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
None
ITEM 5. OTHER INFORMATION.
On July 3, 1996, a special meeting of stockholders of the Company
was called (the "Special Meeting") to approve the Reorganization, including
the divestiture of the then existing television production and health
information business of the Issuer, and the exchange of the outstanding
capital stock of Operating for an aggregate of approximately 93% of the issued
and outstanding capital stock of the Company, and, in connection therewith, to
amend the certificate of incorporation of the Company as follows:
1. to change the authorized capital stock of the Issuer to a total of
21,000,000 shares, comprised of 20,000,000 shares of Common Stock,
par value $.003 per share, and 1,000,000 shares of preferred stock,
the rights, powers and preference of which shall be set by
resolution of the Board of Directors of the Company;
2. to change the name of the Company to Cheniere Energy, Inc. from BEXY
Communications, Inc.; and
3. to add a provision limiting the liability of the Company's directors
and to provide for indemnification of officers and directors of the
Company to the fullest extent permitted by Delaware law.
In addition, at the Special Meeting, the stockholders of the
Company elected three new directors nominated by Operating to replace the
existing directors of the Company who resigned effective the date of the
Special Meeting. Immediately following the consummation of the Reorganization,
the Board of Directors of the Company elected an additional director and
elected new executive officers of the Company.
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<PAGE>
In addition, immediately following the amendment of the Company's
certificate of incorporation, but immediately prior to the issuance of shares
of Common Stock to the stockholders of Operating, the Company effected a
one-for-three reverse stock split.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) See Exhibit Index.
(b) None.
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<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
CHENIERE ENERGY, INC.
Dated: July 12, 1996 By: /s/ WILLIAM D. FORSTER
----------------------
William D. Forster,
President and Chief Operating
Officer (principal executive
officer)
By: /s/ CHARIF SOUKI
Charif Souki,
Secretary and Chief Financial
Officer (principal financial
and accounting officer)
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<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
2 Agreement and Plan of *
Reorganization dated as of
April 16, 1996 among the
Company, Operating, the
Stockholders of Operating and
Buddy Young
3 Amended and Restated **
Certificate of Incorporation
21 Subsidiaries 15
27 Financial Data Schedule
- -----------
* Incorporated by reference to Exhibit B to the definitive proxy statement
of the Company dated June 13, 1996.
** Incorporated by reference to Exhibit A to the definitive proxy statement
of the Company dated June 13, 1996.
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EXHIBIT 21
SUBSIDIARIES
Cheniere Energy Operating Co., Inc., a Delaware corporation, the capital stock
of which is 100% owned by the Company.
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> MAY-31-1996
<CASH> 63,541
<SECURITIES> 0
<RECEIVABLES> 68,800
<ALLOWANCES> 0
<INVENTORY> 52,756
<CURRENT-ASSETS> 0
<PP&E> 622
<DEPRECIATION> 0
<TOTAL-ASSETS> 190,319
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 147,404
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 190,319
<SALES> 7,500
<TOTAL-REVENUES> 7,500
<CGS> 3,826
<TOTAL-COSTS> 3,826
<OTHER-EXPENSES> 50,261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (46,047)
<INCOME-TAX> (46,047)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,047)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
