<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 14, 1996
Cheniere Energy, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
2-63115 95-4352386
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(Commission File Number) (IRS Employer Identification No.)
Two Allen Center
1200 Smith Street
Houston, Texas 77002
- ------------------------- -----
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (713) 659-1361
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None
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
------------
As previously reported on Forms 8-K dated December 18, 1996 and
January 2, 1997, the Company has recently issued 1,317,721 shares of Common
Stock to subscribers pursuant to Regulation D and Regulation S resulting in net
proceeds to the Company of $2,969,123.
In order to better reflect the financial condition of the Company as a
result of these sales, the Company has prepared interim financial statements for
the four month period ended December 31, 1996. These financial statements are
attached.
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 2,419,264
Prepaid Expenses And Other Current Assets 6,632
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TOTAL CURRENT ASSETS 2,425,896
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PROPERTY AND EQUIPMENT, NET 50,315
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OTHER ASSETS
Investment 6,000,000
Security Deposit 500
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TOTAL OTHER ASSETS 6,000,500
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TOTAL ASSETS $ 8,476,711
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 261,838
Advance from Officers 961
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TOTAL LIABILITIES 262,799
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STOCKHOLDERS' EQUITY
Common Stock - $.003 Par Value
Authorized 20,000,000 shares;
11,942,515 Issued and Outstanding 35,828
Preferred Stock - Authorized
1,000,000 shares; None Issued
and Outstanding -
Additional Paid-in-Capital 9,601,817
Retained Deficit (1,423,733)
-----------
TOTAL STOCKHOLDERS' EQUITY 8,213,912
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,476,711
===========
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE FOUR MONTHS ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Revenue $ -
-----------
General and Administrative Expenses 192,330
Interest Expense 8,552
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200,882
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Loss from Operations Before Other Income ( 200,882)
Interest Income 7,329
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Loss From Operations Before Income Taxes ( 193,553)
Provision for Income Taxes -
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Net Loss $( 193,553)
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Loss Per Share $( .02)
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Weighted Average Number of Shares Outstanding 10,588,060
===========
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE FOUR MONTHS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Retained Stockholders'
------------------------
Shares Par Value Capital Deficit Equity
---------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance - September 1, 1996 9,931,767 $ 29,795 $ 5,626,840 $(1,230,180) $ 4,426,455
Sales of Shares 1,905,748 5,718 4,454,657 - 4,460,375
Conversion of Debt 105,000 315 209,685 - 210,000
Expenses Related to Offering - - ( 689,365) - ( 689,365)
Net Loss - - - ( 193,553) ( 193,553)
---------- --------- ----------- ----------- -----------
Balance - December 31, 1996 11,942,515 $ 35,828 $ 9,601,817 $(1,423,733) $ 8,213,912
========== ========= =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE FOUR MONTHS ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $( 193,553)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating Activities:
Depreciation 2,695
(Increase) in Prepaid Expenses and Other Current Assets 1,832)
Decrease in Accounts Payable and Accrued Expenses ( 31,056)
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NET CASH USED BY OPERATING ACTIVITIES ( 223,746)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Furniture, Fixtures and Equipment ( 6,180)
Investment (2,000,000)
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NET CASH USED BY INVESTING ACTIVITIES (2,006,180)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Loan ( 215,000)
Sale of Common Stock 4,460,375
Offering Costs ( 689,365)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 3,556,010
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NET DECREASE IN CASH 1,326,084
CASH - BEGINNING OF YEAR 1,093,180
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CASH - NOVEMBER 30, 1996 $ 2,419,264
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Interest $ 8,552
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Cash Paid for Income Taxes $ -
===========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITIES:
Common stock totalling 105,000 shares was issued upon the conversion of
$210,000 of debt.
See Accompanying Notes to Financial Statements.
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING
---------------------------------
a) Basis of Presentation
---------------------
The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information. 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 period's presentation.
For further information refer to the financial statements and
footnotes included in the Registrant's Annual Report on form 10-K
for the year ended August 31, 1996.
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, 1997.
The accompanying consolidated financial statements include the
accounts of Cheniere Energy, Inc. ("The Company") and its 100%
owned subsidiaries, Cheniere Energy Operating Co., Inc. ("Cheniere
Operating") and Cheniere Energy California, Inc. ("Cheniere
California"). Accordingly, all references herein to Cheniere
Energy, Inc. or the "Company" include the consolidated results of
its subsidiary. All significant intercompany accounts and
transactions have been eliminated in consolidation.
b) Line of Business
----------------
Cheniere Operating is a Houston-based company formed for the
purpose of oil and gas exploration and exploitation. The Company is
currently involved in a joint exploration program which is engaged
in the exploration for oil and natural gas along the Gulf Coast of
Louisiana, onshore and in the shallow waters of the Gulf of Mexico.
The Company commenced its oil and gas activities through such joint
program in April 1996.
c) Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
d) Concentration of Credit Risk
----------------------------
The Company places its cash in what it believes to be credit-worthy
financial institutions. However, cash balances exceeded FDIC
insured levels at various times during the year.
e) Property and Equipment
----------------------
Property and equipment are recorded at cost. Repairs and
maintenance costs are charged to operations as incurred.
Depreciation is computed using the straight-line method calculated
to amortize the cost of assets over their estimated useful lives,
generally five to seven years. Upon retirement or other disposition
of property and equipment the cost and related depreciation will be
removed from the accounts and the resulting gains or losses
recorded.
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING (CONTINUED)
---------------------------------
f) Income Taxes
------------
Income taxes are provided for based on the liability method of
accounting pursuant to Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes". Deferred income
taxes are recorded to reflect the tax consequences on future years
of differences between the tax bases of assets and liabilities and
their financial reporting amounts at each year-end.
g) Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
h) Loss Per Share
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Loss per share is based on the weighted average number of shares of
common stock outstanding during the period.
NOTE 2- PROPERTY AND EQUIPMENT
----------------------
Property and equipment at December 31, 1996 consist of the
following:
Furniture and Fixtures $29,914
Office Equipment 26,700
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56,614
Less: Accumulated Depreciation 6,299
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Property and Equipment - Net $50,315
=======
Depreciation expense for the three months ended December 31, 1996
was $2,695.
NOTE 3- REORGANIZATION
--------------
On July 3, 1996 Cheniere Operating consummated the transactions (the
"Reorganization") contemplated in the Agreement and Plan or Reorganization
(the "Reorganization Agreement") dated April 16, 1996 between Cheniere
Operating and Bexy Communications, Inc., a publicly held Delaware
corporation ("Bexy"). Under the terms of the Reorganization Agreement, Bexy
transferred its existing aassets and liabilities to Mar Ventures, Inc., its
wholly-owned subsidiary ("Mar Ventures"), Bexy received 100% of the
outstanding shares of Cheniere Operating and the former shareholders of
Cheniere Operating received approximately 8.3 million newly issued shares
of Bexy common stock, representing 93% of the then issued and outstanding
Bexy shares.
Immediately following the Reorganization, the Original Bexy Stockholders
held the remaining 7% of the outstanding Bexy stock. In accordance with the
terms of the Reorganization Agreement, Bexy changed its name to Cheniere
Energy, Inc. Subsequently, the Company distributed the outstanding capital
stock of Mar Ventures to the original holders of Bexy common stock.
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 4- INVESTMENT IN JOINT VENTURE
---------------------------
The Company has entered into a joint exploration program pursuant to an
Exploration Agreement between the Company and Zydeco Exploration, Inc.
("Zydeco"), an operating subsidiary of Zydeco Energy, Inc. (the
"Exploration Agreement"), with regard to a new proprietary 3-D seismic
exploration project in southern Louisiana (the "3-D Joint Venture"). The
Company has the right to earn up to a 50% participation in the 3-D Joint
Venture. The Company believes that the 3-D seismic survey (the "Survey") is
the first of its size within the Transition Zone of Louisiana, an area
extending a few miles on either side of the Louisiana State coastline.
The Survey is to be conducted over certain areas located within a total
area of approximately 255 square miles running 5 miles south and generally
3 to 5 miles north of the coastline in the most westerly 28 miles of West
Cameron Parish, Louisiana (the "Survey AMI"). The 3-D Joint Venture does
not currently have rights to survey the entire Survey AMI and the extent of
the Survey AMI which the 3-D Joint Venture will be entitled to survey is
dependent upon its ability to obtain survey permits and similar rights.
Currently, the 3-D Joint Venture has permits and similar rights to survey
approximately 84% of the Survey AMI and is attempting to acquire rights to
Survey additional portions of the Survey AMI. There is no assurance that
the 3-D Joint Venture will successfully obtain rights to survey additional
portions of the Survey AMI, nor that it will be successful in acquiring
farmouts, lease options (other than those already obtained), leases, or
other rights to explore or recover oil and gas.
As of December 31, 1996, the Company has an investment of $6,000,000 in the
joint venture. Under the terms of the Exploration Agreement, the Company is
still required to make monthly payments to the 3-D Joint Venture
aggregating, at least, $7.5 million. The Company's potential participation
in the 3-D Joint Venture could be significantly reduced in the event of a
failure by the Company to make such required monthly payments when due.
NOTE 5- NOTES PAYABLE
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During June 1996, Cheniere Operating borrowed $425,000 through a private
placement of short term promissory notes with an initial interest rate of
8% (the "Notes"). The Notes were due on September 14, 1996 (the "Maturity
Date"). In connection with the placement of the Notes, Cheniere Operating
issued warrants, which, following the Reorganization, were exchanged for an
aggregate of 141,666 and 2/3 warrants to purchase shares of the Common
Stock, to the holders of the Notes (the "Noteholders"), each of which
warrants entitles the holder to purchase one share of the Common Stock at
an exercise price of $3.00 per share at any time on or before June 14,
1999.
Failure by the Company to pay all amounts due and payable under the Notes
by the Maturity date constitutes an event of default thereunder. In such an
event of default, the interest rate applicable to any outstanding Notes
would increase to 13%. In addition, the holders of such outstanding Notes
would be entitled to receive up to an aggregate of 42,500 additional
warrants (on similar terms) for each month, or partial month, any amounts
remain due and payable following the Maturity date, up to a maximum
aggregate number of 170,000 such additional warrants. The proceeds from the
placement of the Notes were applied toward professional expenses and used
for working capital.
Effective as of September 14, 1996, certain of the note holders converted
their notes into common stock at a price of $2 per share. As a result,
105,000 shares were issued to retire $210,000 of notes.
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 5- NOTES PAYABLE (CONTINUED)
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In addition, an individual note holder purchased the promissory notes of
the remaining note holders. The holder thus held notes totalling $215,000.
As per the terms of the notes (as described above), the interest rate on
these outstanding notes increased to 13% per annum, effective September 14,
1996. The holder of the notes was also entitled to receive up to an
aggregate of 21,500 additional warrants for each month, or partial month,
any amounts remain due and payable after September 14, 1996, up to a
maximum aggregate number of 86,000 such additional warrants. On December
13, 1996, the Company repaid the $215,000 notes and related accrued
interest. Upon repaying the notes, the Company issued 64,500 warrants in
accordance with the loan agreement.
NOTE 6- INCOME TAXES
------------
At December 31, 1996, the Company had net carryforward losses of
approximately $1,423,733. A valuation allowance equal to the tax benefit
for deferred taxes has been established due to the uncertainty of realizing
the benefit of the tax carryforward.
Deferred tax assets and liabilities reflect the net tax effect of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities
at December 31, 1996 are as follows:
Deferred Tax Assets
Loss Carryforwards $ 484,000
Less: Valuation Allowance ( 484,000)
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Net Deferred Tax Assets $ -
==========
Net operating loss carryforwards expire starting in 2006 through 2011. Per
year availability is subject to change of ownership limitations under
Internal Revenue Code Section 382.
NOTE 7- WARRANTS
--------
The Company has issued and outstanding certain warrants described herein.
The Company has issued and outstanding 141,666 and 2/3 warrants
(collectively, the "June Warrants"), each of which entitles the registered
holder thereof to purchase one share of Common Stock. The June Warrants are
exercisable at any time on or before June 14, 1999, at an exercise price of
$3.00 per share (subject to customary anti-dilution adjustments). The June
Warrants were originally issued by Cheniere Operating and were converted to
warrants of Cheniere following the Reorganization. The June Warrants were
issued to a group of 11 investors in connection with a private placement of
unsecured promissory notes.
Effective September 14, 1996, the Company failed to pay all amounts due and
payable under the Notes by the Maturity Date. Certain of the noteholders
converted their notes into 105,000 shares of common stock.
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7- WARRANTS (CONTINUED)
--------
An individual note holder purchased the promissory notes of the remaining
note holders. As per the terms of the notes, the holder was also entitled
to receive up to an aggregate of 21,500 additional warrants for each month,
or partial month, any amounts remain due and payable after September 14,
1996, up to a maximum aggregate number of 86,000 such additional warrants.
On December 14, 1996, upon repaying the notes, the Company issued an
additional 64,500 warrants.
In consideration of certain investment advisory and other services to the
Company, pursuant to warrant agreements each dated as of August 21, 1996,
the Company issued warrants to purchase 13,600 and 54,400 shares of Common
Stock, (collectively the "Adviser Warrants"). The Adviser Warrants are
exercisable at any time on or before May 15, 1999 at an exercise price of
$3.00 per share (subject to customary anti-dilution adjustments).
In connection with the July and August 1996 placement of 508,400 shares of
Common Stock, the Company issued warrants to purchase 12,500 shares of
Common Stock to one of two distributors who placed the shares. Such
warrants are exercisable on or before the second anniversary of the sale of
the shares of Common Stock at an exercise price of $3.125 per share
(subject to customary anti-dilution adjustments).
In late August 1996, the Company sold 100,000 units, each such unit
consisting of 5 shares of Common Stock and a warrant to purchase one share
of Common Stock. Each such warrant is exercisable on or before September 1,
1999 at an exercise price of $3.125 per share (subject to customary anti-
dilution adjustments).
The Warrants do not confer upon the holders thereof any voting or other
rights of a stockholder of the Company.
NOTE 8- STOCK OPTIONS
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The Company has granted certain options to purchase shares of Common Stock
to 2 executives. Such options aggregate 300,000 shares at an exercise price
of $3.00 per share. The options vest and are exercisable as follows:
1) 75,000 options vest and become exercisable on June 1, 1997 and
expire June 1, 2001.
2) 75,000 options vest and become exercisable on June 1, 1998 and
expire June 1, 2001.
3) 150,000 options vest and become exercisable in equal annual
installments of 25% each on the first through fourth anniversary of
July 16, 1996 and expire July 16, 2001.
In addition, the Company has granted options to the former President of the
Company. The holder has the option to acquire 19,444 and 2/3 shares of
Common Stock at an exercise price of $1.80 per share. The options expire
November 11, 2003.
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 9- COMMON STOCK RESERVED
---------------------
The Company has reserved 322,166 and 2/3 share of Common Stock for
insurance upon the exercise of outstanding warrants (See Note 8).
The Company has reserved 319,444 and 2/3 shares of Common Shares for
insurance upon the exercise of outstanding options (See Note 9).
NOTE 10- COMMITMENTS AND CONTINGENCIES
-----------------------------
1) The Company subleases its Houston, Texas headquarters from Zydeco
under a month-to-month sublease.
2) On December 20, 1996, Cheniere California signed a Purchase and
Sale Agreement with Poseidon Petroleum, LLC, ("Poseidon") to
acquire Poseidon's 60% working interest in six undeveloped leases
in the Bonito Unit of the Pacific Outer Continental Shelf (OCS) off
Santa Barbara County California (which is equal to 47% of the
working interest in the Bonito Unit). Poseidon estimates that the
net proved undeveloped reserves attributable to its interest are
approximately 47 million barrels of oil equivalent. As payment for
this interest, Poseidon will receive production payments
aggregating $18,000,000 to be paid as three percent of the
production revenue from the leases being assigned. Poseidon will
have a reserve report prepared with respect to the leases which is
subject to Cheniere California's acceptance. The principal amount
of the production payment and the required minimum yearly payments
are subject to adjustment based on the results of the reserve
report. Minimum prepayments from the annual production payment
shall be made at the rate of $540,000 per year, payable in advance.
Subject to the satisfaction of certain conditions, it is
anticipated that closing of the purchase will occur during the
second quarter of 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHENIERE ENERGY, INC.
By:/s/ KEITH F. CARNEY
-------------------------
Keith F. Carney
Chief Financial Officer
Date: January 15, 1997
