<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1943
For the transition period from _______ to ________
COMMISSION FILE NO. 2-63115
CHENIERE ENERGY, INC.
(Exact name as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
95-4352386
(I. R. S. Identification No.)
1200 SMITH STREET, SUITE 1710
HOUSTON, TEXAS
(Address or principal place of business)
77002-4312
(Zip Code)
(713) 659-1361
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for 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 [ ].
As of March 14, 1997, there were 12,648,409 shares of Cheniere Energy, Inc.
Common Stock, $.003 par value, issued and outstanding.
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<PAGE>
CHENIERE ENERGY, INC
INDEX TO FORM 10-Q
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.............................. 3
Consolidated Balance Sheet................................... 3
Consolidated Statement of Operations......................... 4
Consolidated Statement of Stockholders' Equity............... 5
Consolidated Statement of Cash Flows......................... 6
Notes to Consolidated Financial Statements........................ 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................ 12
PART II. OTHER INFORMATION
Item 5. Other Information.............................................. 15
Item 6. Exhibits and Reports on Form 8-K............................... 15
SIGNATURES.................................................................. 16
2
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
February 28, August 31,
1997 1996
------------ ----------
ASSETS
CURRENT ASSETS
Cash $ 3,843,088 $ 1,093,180
Prepaid Expenses And Other Current Assets 153,321 4,800
------------ ------------
TOTAL CURRENT ASSETS 3,996,409 1,097,980
------------ ------------
PROPERTY AND EQUIPMENT, NET 48,967 46,830
------------ ------------
OTHER ASSETS
Investment 7,141,745 4,000,000
Security Deposit 500 500
------------ ------------
TOTAL OTHER ASSETS 7,142,245 4,000,500
------------ ------------
TOTAL ASSETS $ 11,187,621 $ 5,145,310
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 196,776 $ 292,894
Loans Payable - 425,000
Advance from Officers - 961
Advances for Issuance of Common Stock 1,500,025 -
------------ ------------
TOTAL LIABILITIES 1,696,801 718,855
------------ ------------
STOCKHOLDERS' EQUITY
Common Stock - $.003 Par Value
Authorized 20,000,000 shares;
12,295,462 and 9,931,767 Issued and
Outstanding at February 28, 1997 and
August 31, 1996, respectively 36,886 29,795
Preferred Stock - Authorized
1,000,000 shares; None Issued
and Outstanding
Additional Paid-in-Capital 10,982,363 5,626,840
Retained Deficit (1,528,429) (1,230,180)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 9,490,820 4,426,455
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,187,621 $ 5,145,310
============ ===========
See Accompanying Notes to Financial Statements.
3
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, FEBRUARY 29,
1997 1996 1997 1996
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Revenue $ - $ 39,736 $ - $ 42,258
----------- ---------- ----------- ----------
General and Administrative Expenses 165,765 110,003 311,693 192,617
Interest Expense 1,313 - 8,552 -
----------- ---------- ----------- ----------
167,078 110,003 320,245 192,617
----------- ---------- ----------- ----------
Loss from Operations Before Other Income (167,078) (70,267) (320,245) (150,359)
Interest Income 20,495 673 21,996 1,279
----------- ---------- ----------- ----------
Loss From Operations Before Income Taxes (146,583) (69,594) (298,249) (149,080)
Provision for Income Taxes - - - -
----------- ---------- ----------- ----------
Net Loss $ (146,583) $ (69,594) $ (298,249) $ (149,080)
=========== ========== =========== ==========
Loss Per Share (.01) (.04) (.03) (.09)
=========== ========== =========== ==========
Weighted Average Number of Shares
Outstanding 11,757,696 1,781,500 11,036,471 1,681,203
=========== ========== =========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
4
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
Common Stock Additional Total
---------------------- Paid-in Retained Stockholders'
Shares Amount 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 2,258,695 6,776 5,953,624 - 5,960,400
Conversion of Debt 105,000 315 209,685 - 210,000
Expenses Related to Offering - - (807,786) - (807,786)
Net Loss - - - (298,249) (298,249)
---------- ------- ----------- ------------- ----------
Balance - February 28, 1997 12,295,462 $36,886 $10,982,363 $(1,528,429) $9,490,820
========== ======= =========== ============= ==========
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (298,249)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating Activities:
Depreciation 4,043
(Increase) in Prepaid Expenses and Other Current Assets (148,521)
Decrease in Accounts Payable and Accrued Expenses (96,118)
(Decrease) in Advance from Officers (961)
-----------
NET CASH USED BY OPERATING ACTIVITIES (539,806)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Furniture, Fixtures and Equipment (6,180)
Investment (3,141,745)
-----------
NET CASH USED BY INVESTING ACTIVITIES (3,147,925)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Loan (215,000)
Sale of Common Stock 5,960,400
Offering Costs (807,786)
Advances for Issuance of Common Stock 1,500,025
-----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,437,639
-----------
NET INCREASE IN CASH 2,749,908
CASH - BEGINNING OF YEAR 1,093,180
-----------
CASH - FEBRUARY 28, 1997 $ 3,843,088
===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Interest $ 15,635
===========
Cash Paid for Income Taxes $ -
===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITIES:
Common stock totaling 105,000 shares was issued upon the conversion of
$210,000 of debt.
See Accompanying Notes to Financial Statements.
6
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1997
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 and with the instructions to Form 10-Q.
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.
For further information refer to the financial statements and
footnotes included in the Registrant's Annual Report on form 10-K
for the year ending 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 subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Loss Per Share
Loss per share is based on the weighted average number of shares
of common stock outstanding during the period.
NOTE 2 - ACQUISITIONS
On December 19, 1996, Cheniere California was incorporated.
Cheniere California is a 100% owned subsidiary of the Company.
NOTE 3 - 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
7
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1997
NOTE 3 - WARRANTS (Cont'd)
group of 11 investors in connection with a private placement of
unsecured promissory notes.
Effective September 14, 1996, the Company had not paid 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. An individual note holder purchased the promissory notes of
the remaining note holders. As per the terms of the notes, the
holder was entitled to receive up to an aggregate of 21,500
additional warrants for each month, or partial month, any amounts
that remained due and payable after September 14, 1996, up to a
maximum aggregate number of 86,000 such additional warrants. These
notes were repaid on December 14, 1996 and, upon repayment, the
Company issued 64,500 warrants in accordance with the loan
agreement. The terms of the warrants were similar to the June
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.
8
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1997
NOTE 4 - STOCK OPTIONS
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 qualified options vest and become exercisable on June 1,
1997 and expire June 1, 2001.
2) 75,000 qualified options vest and become exercisable on June 1,
1998 and expire June 1, 2001.
3) 150,000 qualified 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 qualified 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.
Also, the Company has granted 12,000 non-qualified options to an
employee at an exercise price of $3.00 per share. These options
vest and become exercisable in equal annual installments of 25% each
on the first through fourth anniversary of January 23, 1997 and
expire January 23, 2002.
NOTE 5 - COMMON STOCK RESERVED
The Company has reserved 386,666 and 2/3 share of Common Stock for
insurance upon the exercise of outstanding warrants.
The Company has reserved 331,444 and 2/3 shares of Common Shares
for insurance upon the exercise of outstanding options.
NOTE 6 - 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
9
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1997
NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONT'D)
Pacific Outer Continental Shelf (OCS) off Santa Barbara County,
California. 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. Minimum prepayments from the annual production payment
shall be made at the rate of $540,000 per year, payable in advance.
Poseidon will receive the first minimum prepayment of $540,000 at
closing. 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 revenue report. Subject to the satisfaction of
certain conditions by Poseidon and Cheniere California, it is
anticipated that closing of the purchase will occur during the
second calendar quarter of 1997.
3) As of February 28, 1997, the Company has an investment of $7,141,745
in a 3-D seismic exploration program in southern Louisiana, (the
"Joint Venture"). Under the terms of the Exploration Agreement
relating to the program, the Company is required to make additional
monthly payments aggregating, at least, approximately $6.358 million
(See Note 7). The Company's potential participation in the Joint
Venture could be significantly reduced in the event of a failure by
the Company to make such required monthly payments when due.
4) On February 28, 1997, The Company issued 352,947 shares of Common
Stock at a price of $4.25 per share. If during the 270 day period
following the date of purchase of these shares the Company offers
and sells any shares of its Common Stock for a per share gross sales
price lower than the price paid for these shares, the Company will
issue additional shares of Common Stock to reflect the lowest per
share gross sales price at which shares of Common Stock were offered
and sold during the period.
NOTE 7 - SUBSEQUENT EVENTS
On March 4, 1997, $1,500,025 of Advances for Issuance of Common
Stock were transferred to capital, as the Company issued 352,947
shares of common stock for gross proceeds of $1,500,025. Proceeds
received are intended to fund future commitments to the 3-D Joint
Venture. If during the 270 day period following the date of purchase
of these shares the Company offers and sells any shares of its
Common Stock for a per share gross sales price lower than the price
paid for these shares, the Company will issue additional shares of
Common Stock to reflect the
10
<PAGE>
CHENIERE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1997
NOTE 7 - SUBSEQUENT EVENTS (CONT'D)
lowest per share gross sales price at which shares were offered and
sold during the period.
On March 4, 1997, the Company funded an additional $858,255
investment in the 3-D Joint Venture, bringing its total investment
to date to $8,000,000. The Company has a remaining commitment of at
least $5.5 million, which is due in three payments of $2 million
each on April 22, 1997 and May 22, 1997 and $1.5 million due on June
21, 1997. A thirty day grace period applies to each of the payments.
If the two events described above had occurred as of February 28,
1997, along with applicable costs and expenses, the balance sheet as
of February 28, 1997 would reflect the following:
Cash $ 2,759,882
Prepaid Expenses and Other Current Assets 119,571
Property and Equipment, Net 48,967
Investment 8,000,000
Security Deposit 500
Total Assets $10,928,920
===========
Accounts Payable and Accrued Expenses $ 84,300
-----------
Common Stock 37,946
Additional Paid-in Capital 12,335,103
Retained Deficit (1,528,429)
-----------
10,844,620
-----------
Total Liabilities and Stockholders' Equity $10,928,920
===========
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the Company's financial operations for
the three month and six month periods ended February 28, 1997 and February 29,
1996. The Company's accompanying unaudited financial statements and notes
thereto and the consolidated financial statements included in the Company's
Annual Report of Form 10-K for the year ended August 31, 1996 contain detailed
information that should be referred to in conjunction with the following
discussion.
GENERAL. On July 3, 1996, the Company changed its name to Cheniere
Energy, Inc. and its principal business became oil and gas exploration. The
assets and liabilities relating to its former business were distributed to the
previous shareholders as of that same date. The comparative financial results
for the periods ended February 29, 1996 relate to those discontinued operations.
CHENIERE ENERGY CALIFORNIA, INC. PURCHASE AND SALE AGREEMENT On December
20, 1996, Cheniere Energy California, Inc. ("Cheniere California"), a wholly-
owned direct subsidiary of the Company, 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 (OCF) off Santa Barbara County, California. The majority
interest in the unit is owned by Nuevo Energy Company. Torch Operating Co. is
the operator of the Unit, pursuant to an agreement with Nuevo.
Poseidon estimates that the net proved undeveloped reserves attributable
to its interests 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. Minimum prepayments of the annual production payment
shall be made at the rate of $540,000 per year, payable in advance. Poseidon
will receive the first minimum prepayment of $540,000 at closing. 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 revenue report. Subject to the satisfaction of certain conditions
by Poseidon and Cheniere California, it is anticipated that the closing of the
purchase will occur during the second quarter of 1997.
ZYDECO EXPLORATION, INC. 3-D SEISMIC EXPLORATION PROGRAM. Cheniere
made two payments totaling $1.14 million during the quarter, and a third payment
of $0.86 million on March 4, 1997 to Zydeco Exploration, Inc. to raise its
investment in the two companies' 3-D seismic exploration program in southern
Louisiana (the "3-D Joint Venture") to $8 million. On January 22, 1997 the
Company was given notice by Zydeco to resume the schedule of Seismic Fund
payments pursuant to the November 29, 1996 amendment to the Exploration
Agreement relating to the project, in anticipation of the resumption of seismic
acquisition activities during April. Cheniere has a remaining commitment of at
least $5.5 million, which is due in three payments; $2 million each on April 22
and May 22 of 1997, and $1.5 million on June 21, 1997. A thirty-day grace
period applies to each of the payments.
12
<PAGE>
PRIVATE PLACEMENT OF COMMON SHARES. In December 1996, pursuant to
Regulation D promulgated under the Securities Act of 1933 ("Regulation D"), the
Company sold an aggregate of 182,166 shares for gross proceeds of $414,875. The
Common Stock was sold to six "accredited investors" pursuant to Rule 506 of
Regulation D. Net proceeds after placement fees totaled $389,638.
In December 1996 and February 1997, pursuant to Regulation S promulgated
under the Securities Act of 1933, the Company sold an aggregate of 1,448,502
shares of Common Stock to nine offshore investors for gross proceeds of
$4,225,025. Net proceeds after fees and placement commissions totaled
$3,933,284.
The proceeds of the sales of Common Stock during the quarter as set forth
above, together with cash balances, were used to fund payments to the 3-D Joint
Venture and for general corporate purposes.
RESULTS OF OPERATIONS; THREE MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY
29, 1996 The Company's operating results for the three months ended February
28, 1997 reflect a loss of $146,583, or $0.01 per share, as there were no
operating revenues. General and administrative expenses of $165,765 and
interest expenses of $1,313 were partially offset by interest income of $20,495.
Operating results for the prior year's quarter relate to discontinued
operations. For the three months ended February 29, 1996, the Company had an
operating loss of $69,594, or $0.04 per share.
RESULTS OF OPERATIONS; SIX MONTHS ENDED FEBRUARY 28, 1997 AND FEBRUARY 29,
1996 The Company's operating results for the six months ended February 28, 1997
reflect a loss of $298,249, or $0.03 per share, as there were no operating
revenues. General and administrative expenses of $311,693 and interest expenses
of $8,552 were partially offset by interest income of $21,996. Operating
results for the prior year's quarter relate to discontinued operations. For the
six months ended February 29, 1996, the Company had an operating loss of
$149,080, or $0.09 per share.
LIQUIDITY AND CAPITAL RESOURCES At February 28, 1997, total assets were
$11,187,621 compared to $5,145,310 at August 31, 1996. The increase is due
primarily to equity proceeds net of offering costs in the amount of $5,145,838
and Advances for Issuance of Common Stock in the amount of $1,500,025 received
during the six months. Current assets increased to $3,996,409 from $1,097,980
during the same period. Current liabilities of $1,696,801 included $1,500,025
representing Advances for the Issuance of Common Stock. The Company has no long
term liabilities. Other assets reflect an increase in investment to $7.1 million
from $4.0 million in the 3-D Joint Venture. This increase was funded primarily
from equity proceeds and cash balances.
On March 4, 1997, the Company funded an additional $858,255 investment in
the 3-D Joint Venture, bringing its total investment to $8,000,000, and
$1,500,025 of Advances for Issuance of Common Stock were transferred to capital,
as the Company issued 352,947 shares of Common Stock, at a price of $4.25 per
share, for gross proceeds of $1,500,025. With respect to these shares of Common
Stock, as well as 352,947 shares of Common Stock issued at a price of $4.25 per
share in February 1997, the Company has agreed that if, during the 270 day
period following the date of
13
<PAGE>
purchase of these shares, the Company offers and sells any shares of Common
Stock for a per share gross sales price lower than the per share price paid for
these shares, the Company will issue additional shares of Common Stock for a per
share gross sales price at which shares were offered and sold during the period.
The financial impact of these two events had they occurred as of February 28,
1997 is indicated in Note 7 of the Consolidated Financial Statements.
OTHER This document includes "forward looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Act of 1934, as amended. Although the Company believes
that the expectations reflected in such forward looking statements are based
upon reasonable assumptions, it can give no assurance that its expectations will
be achieved. Certain risks and uncertainties inherent in the Company's business
are set forth in the filings of the Company with the Securities and Exchange
Commission.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
CHAIRMAN OF BOARD OF DIRECTORS SELECTED. On January 23, 1997 the Company's
Board of Directors elected Charif Souki as Chairman of the Board. Mr. Souki
also serves as Corporate Secretary.
PRIVATE PLACEMENT OF COMMON SHARES. On February 28, 1997, pursuant to
Regulation S under the Securities Act of 1933, the Company sold an aggregate of
352,947 shares of Common Stock for a price of $4.25 per share to two offshore
investors for gross proceeds of $1,500,025. Net proceeds after fees/commissions
totaled $1,353,800. On March 4, 1997, the Company sold an additional 352,947
shares of Common Stock Pursuant to Regulation S for a price of $4.25 per share
to two offshore investors for gross proceeds of $1,500,025. Net proceeds after
fees/commissions totaled $1,353,800 If during the 270 day period following the
date of purchase of these shares the Company offers and sells any shares of its
Common Stock for a per share gross sales price lower than the price paid for
these shares, the Company will issue additional shares of Common Stock to
reflect the lowest per share gross sales price at which shares were offered and
sold during the period.
The proceeds of the sales of Common Stock will be used to fund payments to the
3-D Joint Venture.
ITEM 6. REPORTS ON FORM 8-K
27.1 --Financial Data Schedule
(b) A report on Form 8-K was filed on December 18, 1996 relating to the private
placement of Common Stock. A report on Form 8-K was filed on January 2, 1997
relating to the signing of a Purchase and Sale Agreement to acquire an interest
in the Bonito Unit of the Pacific Outer Continental Shelf and to the private
placement of Common Stock.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
CHENIERE ENERGY, INC.
/s/ WILLIAM D. FORSTER
-------------------------------------------
William D. Forster
President and Chief Executive Officer
Date: March 14, 1997
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> AUG-31-1996 AUG-31-1996
<PERIOD-START> SEP-01-1996 DEC-01-1996
<PERIOD-END> FEB-27-1997 FEB-28-1997
<CASH> 3,843,088 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 3,996,409 0
<PP&E> 56,613 0
<DEPRECIATION> 7,646 0
<TOTAL-ASSETS> 11,187,621 0
<CURRENT-LIABILITIES> 1,696,801 0
<BONDS> 0 0
0 0
0 0
<COMMON> 36,886 0
<OTHER-SE> 9,490,820 0
<TOTAL-LIABILITY-AND-EQUITY> 11,187,621 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 8,552 1,313
<INCOME-PRETAX> (298,249) (146,583)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (298,249) (146,583)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (298,249) (298,249)
<EPS-PRIMARY> (0.03) (0.01)
<EPS-DILUTED> (0.03) (0.01)
</TABLE>
