U.S. Securities And Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended November 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
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Commission File No. 0-20879
PYR ENERGY CORPORATION
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(Exact name of small business issuer as specified in its charter)
Delaware 95-4580642
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(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1675 Broadway, Suite 1150, Denver, CO 80202
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (303) 825-3748
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Check whether the issuer (1) 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
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(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of each of the issuer's classes of common
equity as of January 20, 1998 is as follows:
$.001 Par Value Common Stock 9,154,804
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PYR ENERGY CORPORATION
FORM 10-QSB
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements............................................ 3
Balance Sheet - November 30, 1997 and August 31, 1997........... 3
Statement of Operations - Quarter Ended November 30, 1997
and November 30, 1996........................................... 4
Statement of Cash Flows - Quarter Ended November 30, 1997
and November 30, 1996........................................... 5
Notes to Financial Statements................................... 6
Summary of Significant Accounting Policies...................... 6
Item 2. Management's Discussion and Analysis or Plan of Operation....... 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................... 10
Item 2. Changes in Securities........................................... 10
Item 3. Defaults Upon Senior Securities................................. 10
Item 4. Submission of Matters to a Vote of Security Holders............. 10
Item 5. Other Information............................................... 10
Item 6. Exhibits and Reports on Form 8-K................................ 10
Signatures .............................................................. 10
2
PART I
ITEM 1. FINANCIAL STATEMENTS
PYR ENERGY CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
11/30/97 8/31/97
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(UNAUDITED)
CURRENT ASSETS
Cash $ 1,102,796 $ 1,432,281
Accounts receivable -- 10,000
Deposits and prepaid expenses 16,627 4,196
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Total Current Assets 1,119,423 1,446,477
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PROPERTY AND EQUIPMENT, at cost
Furniture and equipment, net 37,143 28,540
Undeveloped oil and gas prospects 450,031 311,007
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487,174 339,547
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OTHER ASSETS, net 3,642 3,642
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$ 1,610,239 $ 1,789,666
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 51,832 $ 60,064
Accrued liabilities 4,500 10,184
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Total Current Liabilities 56,332 70,248
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.001 par value
Authorized 30,000,000 shares
Issued and outstanding -
9,154,804 shares 9,155 9,155
Capital in excess of par value 1,768,088 1,768,088
Deficit accumulated during the
development stage (223,336) (57,825)
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1,553,907 1,719,418
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$ 1,610,239 $ 1,789,666
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3
PYR ENERGY CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Cumulative from
Three Months Three Months Inception to
Ended 11/30/97 Ended 11/30/96 11/30/97
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REVENUES
Consulting fees $ 10,000 $ 15,000 $ 127,528
Interest 15,739 -- 21,335
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25,739 15,000 148,863
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OPERATING EXPENSES
General and administrative 187,917 1,369 295,596
Interest -- -- 351
Depreciation and amortization 3,333 -- 4,384
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191,250 1,369 300,331
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(165,511) 13,631 (151,468)
INCOME APPLICABLE TO PREDECESSOR LLC -- (13,631) (71,868)
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NET (LOSS) $ (165,511) $ -- $ (223,336)
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NET INCOME (LOSS) PER
COMMON SHARE $ (.018) $ .003 $ (.029)
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WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 9,154,804 4,000,000 5,145,512
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4
PYR ENERGY CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative from
Three Months Three Months Inception to
Ended 11/30/97 Ended 11/30/96 11/30/97
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (165,511) $ 13,631 $ (151,468)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation and amortization 3,333 -- 4,384
Changes in assets and liabilities
(Increase)/decrease in accounts receivable 10,000 -- --
(Increase)/decrease in deposits and prepaids (12,432) -- (16,628)
Increase/(decrease) in accounts payable (8,232) -- 51,832
Increase/(decrease) in accrued liabilities (5,684) -- 4,500
Other -- (474) (3,750)
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Net cash provided/(used) by operating activities (178,526) 13,157 (111,130)
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CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for furniture and equipment (11,935) -- (41,418)
Cash paid for undeveloped oil and gas properties (139,024) -- (450,031)
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Net cash (used) in investing activities (150,959) -- (491,449)
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CASH FLOWS FROM FINANCING ACTIVITIES
Members capital contributions -- 5,000 28,000
Distributions to members -- (8,000) (66,000)
Cash from short-term borrowings -- -- 285,000
Repayments of short-term borrowings -- -- (285,000)
Proceeds from sale of common stock -- -- 2,023,750
Cash paid for offering costs -- -- (280,711)
Cash received upon recapitalization and merger -- -- 336
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Net cash (used) provided by financing activities -- (3,000) 1,705,375
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NET INCREASE/(DECREASE) IN CASH (329,485) 10,157 1,102,796
CASH, BEGINNING OF PERIODS 1,432,281 -- --
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CASH, END OF PERIODS $ 1,102,796 $ 10,157 $ 1,102,796
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5
PYR ENERGY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
November 30, 1997
The accompanying interim financial statements of PYR Energy Corporation (the
"Company") are unaudited. In the opinion of management, the interim data
includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results for the interim period.
The financial statements included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations.
Management believes the disclosures made are adequate to make the information
not misleading and recommends that these condensed financial statements be read
in conjunction with the financial statements and notes included in the Company's
Form 10-KSB as of August 31, 1997.
PYR Energy Corporation (formerly known as Mar Ventures Inc. ("Mar")) was
incorporated under the laws of the State of Delaware on March 27, 1996. Mar had
been a public company which had no significant operations as of July 31, 1997.
On August 6, 1997 Mar acquired all the interests in PYR Energy LLC ("PYR LLC")
(a Colorado Limited Liability Company organized on May 31, 1996), a development
stage company as defined by Statement of Financial Accounting Standards (SFAS)
No. 7. PYR LLC, an independent exploration company, had been engaged in the
acquisition of oil and gas properties for exploration and exploitation in the
Rocky Mountain region and California. As of August 6, 1997 PYR LLC had acquired
only non-producing leases and acreage and no exploration had been commenced on
the properties. Upon completion of the acquisition of PYR LLC by Mar, PYR LLC
ceased to exist as a separate entity. Mar remained as the legal surviving entity
and, effective November 12, 1997, Mar changed its name to PYR Energy
Corporation.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
CASH EQUIVALENTS - For purposes of reporting cash flows, the Company
considers as cash equivalents all highly liquid investments with a maturity
of three months or less at the time of purchase. At November 30, 1997,
there were no cash equivalents.
PROPERTY AND EQUIPMENT - Furniture and equipment is recorded at cost.
Depreciation is provided by use of the straight-line method over the
estimated useful lives of the related assets of three to five years.
Expenditures for replacements, renewals, and betterments are
capitalized. Maintenance and repairs are charged to operations as incurred.
6
Undeveloped oil and gas properties consists of leases and acreage
acquired by the Company for its exploration and development activities. The
cost of these nonproducing leases is recorded at the lower of cost or fair
market value.
The Company has adopted SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed of" which
requires that long-lived assets to be held and used be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The adoption of SFAS
121 has not had an impact on the Company's financial statements, as the
Company has determined that no impairment loss through November 30, 1997
need to be recognized for applicable assets of continuing operations.
ORGANIZATION COSTS - Costs related to the organization of the Company have
been capitalized and are being amortized over a period of five years.
INCOME TAXES - The Company has adopted the provisions of SFAS No. 109,
"Accounting for Income Taxes". SFAS 109 requires recognition of deferred
tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined based
on the difference between the financial statement and tax basis of assets
and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
At August 31, 1997, the Company had a net operating loss carryforward
of approximately $33,000 that may be offset against future taxable income
through 2012. The Company has fully reserved the tax benefits of these
operating losses because the likelihood of realization of the tax benefits
cannot be determined. The approximate $6,300 tax benefit of the loss
carryforward has been offset by a valuation allowance of the same amount.
Temporary differences between the time of reporting certain items for
financial and tax reporting purposes are not considered significant by
management of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company is an independent oil and gas exploration company whose
strategic focus is the application of advanced seismic imaging and
computer-aided exploration technologies in the systematic search for commercial
hydrocarbon reserves, primarily in the onshore western United States. The
Company attempts to leverage its technical experience and expertise with 3-D
seismic to identify exploration and exploitation projects with significant
potential economic return. The Company intends to participate in selected
exploration projects as a non-operating, working interest owner, sharing both
risk and rewards with its partners. The Company has and will continue to pursue
exploration opportunities in regions where the Company believes significant
opportunity for discovery of oil and gas exists. By reducing drilling risk
through 3-D seismic technology, the Company seeks to improve the expected return
on investment in its oil and gas exploration projects.
During the 3 months ended November 30, 1997, the Company incurred
approximately $139,000 for various direct costs and expenses relating to its
identified exploration and exploitation projects. The Company undertook no
drilling and had no revenues from oil and gas production during this period.
The Company currently anticipates that it will participate in the drilling
of one to four gross exploratory wells during the next twelve months, although
the number of wells may increase as additional projects are added to the
Company's portfolio. However, there can be no assurance that any such wells will
be drilled and if drilled that any of these wells will be successful.
7
The Company currently has three active projects in the Southern San Joaquin
Basin of California:
School Road - The Company expects to commence drilling its first
exploratory well on its School Road project in the second quarter of
calendar 1998. The total 100% dry hole cost of this well is projected to be
about $850,000. Completion costs are projected at an additional $500,000.
It is anticipated that this well will take approximately 45 to 60 days to
drill. The Company currently holds a 100% working interest and will present
this project to potential industry partners in order to sell a significant
portion of its working interest and thereby limit or eliminate its
financial expenditures for the cost of the well. The Company may drill a
second exploratory well on this project late in calendar 1998. The costs
for this well should be similar to the first exploratory well.
Southeast Maricopa - The Company expects to undertake acquisition of
3-D seismic data in its Southeast Maricopa project starting in the first
quarter of calendar 1998. Cash commitments of as much as $2,000,000 will be
required to fund the 3-D seismic permitting, data acquisition and location
damages. The Company also currently holds a 100% working interest in this
project and will present this project to potential industry partners in
order to sell a significant portion of the working interest and thereby
limit or eliminate its financial expenditures for the cost of the 3-D
seismic project. The Company projects drilling an initial exploratory test
well in late calendar 1998.
East Lost Hills - The Company holds a 30% working interest in the East
Lost Hills project and jointly with Armstrong Oil and Gas, Inc. (a private
Denver based independent exploration company) is actively marketing this
prospect to industry partners. The Company anticipates that industry
partners will fund 100% of the drilling and completion costs of the initial
test well and also will pay a cash consideration for the right to
participate in this project. The initial test well is projected to spud in
the second or third quarter of calendar 1998. The Company expects to retain
a working interest of between 7.5% and 10%
The Company has other projects identified in the Denver Basin of Colorado
and Nebraska and in the Big Horn Basin of Wyoming and Montana. There is
currently no plan for drilling activity in these projects for the next 12
months. In addition, the Company continues to identify and evaluate acquisition
opportunities for exploration and exploitation opportunities.
In connection with the implementation of its exploration, exploitation and
potential development program, the Company may use a portion of its existing
cash resources to expand its technical and support staff. As a result, the
Company anticipates that its general and administrative expenses may increase
during the next 12 months. Further, the Company anticipates incurring additional
legal, administrative and accounting costs in future periods as a result of
being a public company.
The Company's cash balance at November 30, 1997 was $1,102,800. The Company
had outstanding warrants to issue 2,047,500 shares of its common stock at $1.25
per share (the "A Warrants") and has outstanding warrants to issue 2,047,500
shares of its common stock at $1.75 per share (the "B Warrants"). The A Warrants
expired on January 15, 1998 with none of the warrants being exercised. On
8
January 16, 1998, the Company signed a letter of intent to issue up to 2,100,000
shares of its common shares in a private placement at a price of $1.25 per
share. The Company expects to receive up to $2,625,000 from this private
placement by the end of January 1998, although there is no assurance that this
will occur. The Company's B Warrants expire on April 15, 1998. If all the
outstanding B Warrants are exercised, of which there is no assurance, the
Company would receive approximately $3,261,000, net of commissions. To the
extent that these warrants expire without being exercised, the Company may be
limited in its ability to continue to fund its exploration and exploitation
activities until additional financing is available. To the extent sufficient
funding is available and depending on the level of industry partner
participation in the Company's exploration projects, capital expenditures for
the next 12 months could be as much as $5,000,000.
The Company has no outstanding long-term debt and although it has no
current plan to do so, it may incur long-term debt in the future in order to
fund development of oil and gas producing properties.
Results of Operations
The quarter ended November 30, 1997 compared with the quarter ended
November 30, 1996
Oil and Gas Revenues and Expenses. The Company has not owned any producing
or proved oil and gas properties. Accordingly, no oil and gas revenues or
expenses have been recorded by the Company.
Depreciation, Depletion and Amortization. The Company recorded no depletion
expense from oil and gas properties for the quarters ended November 30, 1997 or
1996. The Company has not owned any proved reserves and had no oil or gas
production. The Company recorded nominal depreciation expense associated with
capitalized office furniture and equipment during the quarter ended November 30,
1997.
General and Administrative Expense. The Company incurred $188,000 and
$1,000 in general and administrative expenses during the quarters ended November
30, 1997 and 1996, respectively. The increase results from incurring costs
associated with the hiring of technical personnel, leasing of office space, and
legal and accounting and other costs associated with administering and pursuing
the development of the Company's exploration and exploitation plan.
Consulting Fee Revenue. The Company generated $10,000 and $15,000 from
consulting fees during the quarters ended November 30, 1997 and 1996,
respectively. These revenues are considered to be ancillary to the Company's
focus of generating revenues from oil and gas production. These revenues are
expected to decrease or cease completely in the future.
9
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes 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
None
Item 6. Exhibits and Reports on Form 8-K
During the quarter ended November 30, 1997, the Registrant filed two reports on
Form 8-K reporting events occurring on October 27, 1997, and November 12, 1997.
SIGNATURES
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In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PYR ENERGY CORPORATION
Signatures Title Date
/s/ D. Scott Singdahlsen Chief Executive Officer; January 20, 1998
- ----------------------------- President and Chairman
D. Scott Singdahlsen Of The Board
/s/ Andrew P. Calerich Chief Financial Officer January 20, 1998
- -----------------------------
Andrew P. Calerich
10