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 May 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ________________ to _________________
Commission File No. 0-20879
PYR ENERGY CORPORATION
----------------------
(Exact name of small business issuer as specified in its charter)
Delaware 95-4580642
-------- ----------
(State or jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1675 Broadway, Suite 1150, Denver, CO 80202
------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (303) 825-3748
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___
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of each of the issuer's classes of common
equity as of July 15, 1999 is as follows:
$.001 Par Value Common Stock 14,068,670
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PYR ENERGY CORPORATION
FORM 10-QSB
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheet - May 31, 1999 and August 31, 1998 3
Statement of Operations - Quarter and Nine Months Ended
May 31, 1999 and May 31, 1998 4
Statement of Cash Flows - Nine Months Ended May 31, 1999
and May 31, 1998 5
Notes to Financial Statements 6
Summary of Significant Accounting Policies 6
Item 2. Management's Discussion and Analysis or Plan of Operation 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
2
PART I
ITEM 1. FINANCIAL STATEMENTS
PYR ENERGY CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
5/31/99 8/31/98
------- -------
(UNAUDITED)
CURRENT ASSETS
Cash $ 6,517,262 $ 373,100
Deposits and prepaid expenses 121,810 16,897
------------ ------------
Total Current Assets 6,639,072 389,997
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Furniture and equipment, net 39,749 54,821
Undeveloped oil and gas prospects 4,497,414 2,491,238
------------ ------------
4,537,163 2,546,059
------------ ------------
OTHER ASSETS, net 3,546 3,546
------------ ------------
$ 11,179,781 $ 2,939,602
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 70,305 $ 44,389
Accrued and other liabilities 36,000 --
Dividends payable 30,137 --
Current portion of capital lease obligation 1,559 1,441
Accrued seismic and exploration costs -- 1,282,500
------------ ------------
Total Current Liabilities 138,001 1,328,330
------------ ------------
Capital lease obligation 1,478 2,661
------------ ------------
Total Liabilities 139,479 1,330,991
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value
Authorized 1,000,000 shares
Issued and outstanding - 25,000 shares "Series A
Preferred Stock" $100 face value, 10% coupon 25 --
Common stock, $.001 par value
Authorized 30,000,000 shares
Issued and outstanding - 14,068,670 shares
at 5/31/99 and 9,154,804 shares at 8/31/98 14,069 9,155
Capital in excess of par value 11,884,169 1,768,088
Retained earnings/(accumulated deficit) (857,961) (168,632)
------------ ------------
11,040,302 1,608,611
------------ ------------
$ 11,179,781 $ 2,939,602
============ ============
3
PYR ENERGY CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Three Nine Nine
Months Months Months Months Inception
Ended Ended Ended Ended Through
5/31/99 5/31/98 5/31/99 5/31/98 5/31/99
------- ------- ------- ------- -------
REVENUES
Consulting Fees $ -- $ -- $ -- $ 10,000 $ 127,528
Interest 31,211 5,174 46,813 31,719 88,553
Gain on asset sale -- -- -- 556,197 556,197
------------ ------------ ------------ ------------ ------------
31,211 5,174 46,813 597,916 772,278
OPERATING EXPENSES
General and administrative 216,359 163,343 528,433 524,633 1,347,357
Dry hole impairment -- -- -- -- 15,000
Interest 46,115 -- 158,151 217 158,990
Depreciation and amortization 6,628 6,223 19,421 15,983 42,887
------------ ------------ ------------ ------------ ------------
269,102 169,566 706,005 540,833 1,564,234
NET INCOME BEFORE INCOME TAXES (237,891) (164,392) (659,192) 57,083 (791,956)
Income Taxes -- -- -- 6,240 --
------------ ------------ ------------ ------------ ------------
(237,891) (164,392) (659,192) 50,843 (791,956)
INCOME APPLICABLE TO
PREDECESSOR LLC -- -- -- -- (35,868)
------------ ------------ ------------ ------------ ------------
NET (LOSS) INCOME $ (237,891) $ (164,392) $ (659,192) $ 50,843 $ (827,824)
============ ============ ============ ============ ============
NET INCOME (LOSS) PER COMMON
SHARE -BASIC AND DILUTED $ (.023) $ (.018) $ (.068) $ .006 $ (.116)
============ ============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 10,255,910 9,154,804 9,640,407 9,154,804 7,146,722
4
PYR ENERGY CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative
Nine Months Nine Months from Inception
Ended 5/31/99 Ended 5/31/98 to 5/31/99
------------- ------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (659,192) $ 50,843 $ (791,956)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Gain on sale of assets -- (556,197) (556,197)
Depreciation and amortization 19,421 15,983 42,888
Amortization of deferred financing costs 41,034 -- 41,034
Contributed services -- -- 36,000
Dry hole impairment -- -- 15,000
Changes in assets and liabilities
(Increase)/decrease in receivables -- (181,600) --
(Increase)/decrease in deposits and prepaids (104,913) (72,253) (120,204)
Increase/(decrease) in accounts payable 25,916 (48,699) 55,871
Increase/(decrease) in accrued and other liabilities 36,000 (2,654) 36,000
Other -- -- (3,751)
------------ ------------ ------------
Net cash provided/(used) by operating activities (641,734) (794,577) (1,245,315)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of oil and gas interests -- 1,050,078 1,050,078
Cash paid for furniture and equipment (1,875) (45,321) (74,763)
Cash paid for undeveloped oil and gas properties (2,651,031) (1,338,632) (4,355,822)
------------ ------------ ------------
Net cash provided/(used) in investing activities (2,652,906) (333,875) (3,380,507)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Members capital contributions -- -- 28,000
Distributions to members -- -- (66,000)
Cash from short-term borrowings -- -- 285,000
Repayments of short-term borrowings -- -- (285,000)
Common stock issued for payment of interest expense 116,822 -- 116,822
Proceeds from sale of common stock 7,000,000 -- 9,023,750
Cash paid for offering costs (67,019) -- (347,730)
Proceeds from convertible debentures 2,500,000 -- 2,500,000
Cash paid for deferred financing costs (109,936) -- (109,936)
Payments on capital lease (1,065) -- (2,158)
Cash received upon recapitalization and merger -- -- 336
------------ ------------ ------------
Net cash (used) provided by financing activities 9,438,802 -- 11,143,084
------------ ------------ ------------
NET INCREASE/(DECREASE) IN CASH 6,144,162 (1,128,452) 6,517,262
CASH, BEGINNING OF PERIODS 373,100 1,432,281 --
------------ ------------ ------------
CASH, END OF PERIODS $ 6,517,262 $ 303,829 $ 6,517,262
============ ============ ============
5
PYR ENERGY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
May 31, 1999
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/A1 as of August 31, 1998.
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 oil and gas exploration company, had been engaged
in the acquisition of undeveloped oil and gas interests 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 May 31, 1999, 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
OIL AND GAS PROPERTIES - The Company follows the full cost method to
account for its oil and gas exploration and development activities. Under
the full cost method, all costs incurred which are directly related to oil
and gas exploration and development are capitalized and subjected to
depreciation and depletion. Depletable costs also include estimates of
future development costs of proved reserves. Costs related to undeveloped
oil and gas properties may be excluded from depletable costs until such
properties are evaluated as either proved or unproved. The net capitalized
costs are subject to a ceiling limitation. Gains or losses upon disposition
of oil and gas properties are treated as adjustments to capitalized costs,
unless the disposition represents a significant portion of the Company's
proved reserves. A separate cost center is maintained for expenditures
applicable to each country in which the Company conducts exploration and/or
production activities.
Undeveloped oil and gas properties consists primarily of leases and
acreage acquired by the Company for its exploration and development
activities. The cost of these non-producing 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 May 31, 1999 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.
7
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 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 seismic technology, the Company seeks to improve the expected return on
investment in its oil and gas exploration projects.
During the quarter ended November 30, 1998, the Company completed the sale
of convertible promissory notes (the "Notes") in the total amount of $2,500,000
in a private placement transaction pursuant to exemptions from federal and state
registration requirements. On April 16, 1999, the Shareholders of the Company
approved a proposal to create a Preferred Class of stock and, pursuant to the
terms of the Notes, the Notes then automatically converted into shares of Series
A Preferred Stock (the "Serie A Preferred") at the rate of one share for each
$100 principal amount of Notes. The Series A Preferred is convertible into
Common Stock at the rate of one share of Common Stock for each $.60 of the $100
per share purchase amount of the Series A Preferred. The Series A Preferred
accrues an annual dividend of 10 percent that is payable semi-annually on July 1
and January 1 of each year. The Company has the right to require conversion of
the preferred shares in the following circumstances:
o The Company has the right to require conversion of one-third of the
outstanding Series A Preferred at any time after October 26, 1999, provided
that the market value of the Company's Common Stock is at least $2.40 per
share, based on a 45 day weighted average trading price.
o The Company has the right to require conversion of an additional one-third
of the initially issued Series A Preferred at any time after October 26,
2000, provided that the market value of the Company's Common Stock is at
least $3.60 per share, based on a 45 day weighted average trading price.
o The Company has the right to require conversion of the final one-third of
the initially issued Series A Preferred at any time after October 26, 2000,
provided that the market value of the Company's Common Stock is at least
$4.80 per share, based on a 45 day weighted average trading price.
o The Company has the right to require conversion of all of the outstanding
Series A Preferred at any time after October 26, 2000 if the Company has
accumulated retained earnings equal to or greater than $3,750,000.
During the Quarter ended May 31, 1999, the Company received $7,000,000
(less commissions, fees and related expenses of approximately $92,000) of
private placement funding through the sale of 4,375,000 shares of the Company's
Common Stock and 437,500 5-year warrants to purchase an additional share of the
Company's Common Stock at a price of $2.50. The warrants are immediately
exercisable, and all warrants expire on May 14, 2004. The Company may, upon
30-days notice, repurchase the warrants for $.01 per warrant at any time after
the weighted average trading price of the Company's Common Stock has been at
least $6.00 for a 45 day period.
During the nine months ended May 31, 1999 ("1999") and May 31, 1998
("1998"), the Company incurred approximately $2,651,000 and $2,054,000
respectively, for acquisition of acreage, direct geological and geophysical
costs, drilling costs and other related direct costs with respect to its
identified exploration and exploitation projects. The Company has had no
revenues from oil and gas production.
8
The Company currently anticipates that it will participate in the drilling
of two to four additional exploratory wells during the next twelve months,
although the number of wells may increase as additional projects are added to
the Company's portfolio. There can be no assurance that any such wells will be
drilled and if drilled that any of these wells will be successful.
The following provides a summary and status of the Company's exploration
areas and significant projects. While actively pursuing specific exploration
activities in each of the following areas, the Company is continually reviewing
additional opportunities in these core areas and in other areas that meet
certain exploration and exploitation criteria. There is no assurance that
drilling opportunities will continue to be identified in the current project
portfolio or will be successful if drilled. The Company's primary focus area is
the San Joaquin Basin of California.
The San Joaquin Basin of California has proven to be one of the most
productive hydrocarbon producing basins in the continental United States. To
date, the approximately 14,000 square mile basin has produced in excess of 12.7
billion barrels of oil equivalent, and contains 25 fields classified as giant,
with cumulative production of more than 100 million barrels of oil equivalent
("MMBoe"). In calculating barrels of oil equivalent, the Company uses the ratio
of six thousand cubic feet ("Mcf") of gas for one barrel of oil.
The San Joaquin Basin contains six of the 25 largest oil fields in the U.S.
All six of these fields were discovered between 1890 and 1911, a full decade
prior to the discovery of the first giant Texas oil field. The basin accounts
for 34 percent of California's actively producing fields, yet produces more than
75 percent of the state's total oil and gas production. Most of the production
within the basin is located along the western and southern end of Kern County.
San Joaquin Basin production totals for 1997 reported by the California
Department of Oil and Gas for all producers in the aggregate indicate total
production of 246.9 MMBoe. Of this figure, Kern County accounts for over 90
percent of the oil production from the San Joaquin Basin.
Exploration Opportunity. For the 100 plus years of its productive life, the
San Joaquin Basin has been dominated by major oil companies and large fee
acreage holdings. As a result of these conditions, the basin has generally been
under-explored by independent exploration and production companies, groups that
usually bring advanced technologies to their exploration efforts. The large
fields in the basin were all discovered on surface anticlines and produce mostly
heavy oil from depths of less than 5,000 feet. As a consequence, basin operators
have employed only those advanced engineering technologies related to enhanced
production practices including steam floods and, most recently, horizontal
drilling.
With limited exploration in the San Joaquin Basin since the "boom" days of
the early 1980s, the Company believes that multiple exploration opportunities
are available. Deep basin targets, both structural and stratigraphic in nature,
remain largely untested. In addition, retrenchment of the majors in the basin
has caused many of them to rethink their policies regarding their large fee
acreage positions. For the first time in history, many of these companies are
opening up these fee acreage positions to outside exploration by aggressive
independent companies.
9
East Lost Hills. The East Lost Hills prospect is a deep, large untested
structure in the footwall of the Lost Hills thrust that lies directly east of
and structurally below the existing Lost Hills field. The Lost Hills thrust has
produced in excess of 350 MMBoe from shallow pay zones in a large thrusted
anticlinal feature.
In early 1998, the Company and Denver based Armstrong Resources, LLC
entered into an exploration agreement with a number of established Canadian
partners concerning approximately 30,000 gross acres over this prospect. PYR
received cash consideration for its share of acreage in this play and a carried
6.475% working interest through the tanks in the initial exploration well. PYR
owns an additional 4.1% working interest for a total working interest of 10.575%
in the nine township area of mutual interest.
On May 15, 1998, the Bellevue Resources et al. #1-17 East Lost Hills well,
located in SE1/4. Sec 17, T26S, R21E, Kern County, California, commenced
drilling. The well was designed to test prospective Miocene sandstone reservoirs
in the Temblor Formation. During September 1998, the well was sidetracked in an
attempt to gain better structural position and delineate potential uphole pay.
On November 23, 1998, the well was drilling at 17,600 feet toward a total depth
of 19,000 feet when it blew out and ignited. No personal injuries resulted, and
an expert well control team was engaged to contain the fire. Surface containment
facilities were installed and all liquid and gas production from that well were
contained and were transported to processing and disposal facilities. A snubbing
unit was deployed to attempt a surface control kill of the Bellevue #1-17, but,
after eight kill attempts, was not successful. A relief well, the Bellevue
#1-17R, began drilling on December 18, 1998. It was initially expected to
intersect the wellbore of the Bellevue #1-17 at a depth of about 13,500 feet.
However, as drilling continued and the characteristics of the blowout were
examined, it was determined to attempt to intersect the wellbore below 16,000
feet. The relief well was drilled to 16,668 feet, where it intersected the
original well bore. On May 29, 1999, the original well bore was killed by
pumping heavy mud and cement into the well bore. The original well bore has been
plugged back and abandoned and the relief well is currently being used to
sidetrack a replacement well into the targeted Temblor Zone. It is anticipated
that the drilling of the replacement well will be completed by the end of August
1999.
Although the Company believes that substantially all the loss from the
blowout of the Bellevue #1-17 well is covered by insurance, the insurance
company has not determined its position on certain claims related to the
blowout, and the operator continues to work with the insurance company in order
to clarify the claims. If the insurance company denies these claims
successfully, the Company's share of these costs could be as much as $400,000.
Deep Temblor Exploration Program. In April 1999, the Company purchased a
working interest in three additional deep exploration projects in the San
Joaquin Basin of California. These three projects are in addition to the
exploration program initiated by the recent deep drilling at East Lost Hills,
and all three lay outside the East Lost Hills joint venture area. Pursuant to
the agreement, the Company paid $656,000 cash and issued 218,866 shares of
common stock in exchange for working interests, ranging from 3.00% to 3.75%, in
each of the three exploration prospect areas. The Company's interest will be
carried "through the tanks" in the initial test well in each of the three
separate exploration prospects.
The first exploration well in the program began drilling on June 15, 1999
and is operated by Berkley Petroleum Corporation ("Berkley") of Calgary. The
three exploration prospects in this program, targeting the Temblor Formation at
depths ranging from 15,000 to 18,000 feet, are expected to be drilled in
sequence with the same rig. Berkley will operate the other exploration projects
in the Deep Temblor Exploration Program as well as assume operations at East
Lost Hills, effective July 1, 1999.
10
Including the above four projects, the Company has a total of nine separate
projects with interests covering approximately 93,500 gross and 42,500 net acres
in the San Joaquin Basin of California. In addition, the Company has an interest
in a number of additional exploration projects in the Rocky Mountains, covering
approximately 58,000 gross and 51,000 net acres, that are currently at various
stages of development.
At May 31, 1999, the Company had a working capital amount of $6,501,000.
The Company had no outstanding long-term debt at May 31, 1999 other than a
capital lease obligation and has not entered into any commodity swap
arrangements or hedging transactions. Although it has no current plans to do so,
it may enter into commodity swap and/or hedging transactions in the future in
conjunction with oil and gas production. Nevertheless, there can be no assurance
that the Company will ever have oil and gas production.
It is anticipated that the future development of the Company's business
will require additional capital expenditures. Depending upon the ultimate
results at East Lost Hills and the results of the Company's other exploration
projects, the Company may require as much as $4,000,000 to $6,000,000 for
capital expenditures during the next 12 months. In conjunction with funding
these capital requirements, the Company has received $7,000,000 from a private
placement funding completed during the quarter ended May 31, 1999. The Company
intends to limit capital expenditures by forming industry alliances and
exchanging an appropriate portion of its interest in the various exploration
projects for cash and/or a carried interest in these projects. The Company
anticipates that it may need to raise additional funds to cover added capital
expenditures.
Results of Operations
The quarter ended May 31, 1999 ("1999") compared with the quarter ended May
31, 1998 ("1998").
Operations during the quarter ended May 31, 1999 resulted in a net loss of
($237,891) compared to a net loss of ($164,392) for the quarter ended May 31,
1998. The difference is attributable to an increase in interest expense in 1999
associated with the Company's convertible debentures and with a slight increase
in general and administrative expenses.
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 May 31, 1999 or 1998.
The Company has not owned any proved reserves and had no oil or gas production.
The Company recorded $6,628 and $6,223 in depreciation expense associated with
capitalized office furniture and equipment during the quarters ended May 31,
1999 and 1998, respectively.
General and Administrative Expense. The Company incurred $216,359 and
$163,343 in general and administrative expenses during the quarters ended May
31, 1999 and 1998, respectively. The difference is attributable to increases in
shareholder relations expenses and Directors and Officers insurance.
Interest Expense. The Company recorded $46,115 in interest expense for the
quarter ended May 31, 1999 primarily associated with the Company's convertible
debentures. The Company had nominal interest expense for the quarter ended May
31, 1998.
11
The nine months ended May 31, 1999 ("1999") compared with the nine months
ended May 31, 1998 ("1998").
Operations during the nine months ended May 31, 1999 resulted in a net loss
of ($659,192) compared to a net income of $50,843 for the nine months ended May
31, 1998. The difference is attributed to a gain from the sale of oil and gas
properties reported during the nine months ended May 31, 1998 of $556,000 and to
an increase in interest expense in 1999 associated with the Company's
convertible debentures.
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 nine months ended May 31, 1999 or
1998. The Company has not owned any proved reserves nor had any oil or gas
production. The Company recorded $19,421 and $15,983 in depreciation expense
associated with capitalized office furniture and equipment during the nine
months ended May 31, 1999 and 1998, respectively.
General and Administrative Expense. The Company incurred $528,433 and
$524,633 in general and administrative expenses during the nine months ended May
31, 1999 and 1998, respectively.
Interest Expense. The Company recorded $158,151 in interest expense for the
nine months ended May 31, 1999 primarily associated with the Company's
convertible debentures. The Company had nominal interest expense for the nine
months ended May 31, 1998.
Consulting Fee Revenue. The Company generated $10,000 from consulting fees
during the nine months ended May 31, 1998. These revenues have ceased and are
not expected to occur in the future.
Year 2000 Compliance
Year 2000 compliance is the ability of computer hardware and software to
respond to the problems posed by the fact that computer programs traditionally
have used two digits rather than four digits to define an applicable year. As a
consequence, any of the Company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
interruption of operations, including temporary inability to perform 3-D seismic
analysis and to perform accounting functions and delays in the receipt of
payments from purchasers of oil and gas production, if any. The Company
continues to review the Company's computers and software as well as other
equipment that utilizes imbedded computer chips, such as facsimile machines and
telephone systems. The Company believes that its review will be completed prior
to its fiscal year ending August 31, 1999. The Company has confirmed with the
maker of its accounting software that it is Year 2000 compliant.
Until the Company's Year 2000 review has been completed, the Company has no
estimate of the cost to correct any potential deficiency in Year 2000 compliance
for its computers and equipment. Upon the completion of the Company's Year 2000
review, the Company intends to develop a contingency plan to address potential
Year 2000 problems
12
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 May 31, 1999, the Registrant filed two reports on
Form 8-K:
A Form 8-K was filed on April 7, 1999 reporting a press release dated April
5, 1999,
A Form 8-K was filed on April 30, 1999 reporting a press release dated
April 30, 1999,
SIGNATURES
----------
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; President July 15,1999
- ------------------------ and Chairman Of The Board
D. Scott Singdahlsen
/s/ Andrew P. Calerich Chief Financial Officer July 15, 1999
- -----------------------
Andrew P. Calerich
13