SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
[Amendment No. ]
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
PYR Energy Corporation
----------------------------------------------
(Name of Registrant as Specified in its Charter)
Not Applicable
-----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
Not applicable
2. Aggregate number of securities to which transaction applies:
Not applicable
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): Not applicable
4. Proposed maximum aggregate value of transaction: Not applicable
5. Total fee paid: Not applicable
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid: Not applicable
2. Form, Schedule or Registration Statement No.: Not applicable
3. Filing Party: Not applicable
4. Date Filed: Not applicable
<PAGE>
PYR ENERGY CORPORATION
1675 Broadway, Suite 1150
Denver, Colorado 80202
(303) 825-3748
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held April 16, 1999
The Annual Meeting of the stockholders of PYR Energy Corporation (the
"Company") will be held on April 16, 1999 at 10:00 a.m. (local time) at Wells
Fargo Bank, Third Floor Conference Room, 633 17th Street, Denver, Colorado
80202, for the following purposes:
1. To elect a Board of Directors consisting of five Directors.
2. To consider a proposal to amend the Company's Certificate of
Incorporation to provide for authorized preferred stock consisting of 1,000,000
shares of $.001 par value preferred stock. The rights and preferences of 25,000
of these shares have been determined, and these shares are to be issued,
pursuant to a Convertible Note Purchase Agreement dated October 26, 1998. The
rights and preferences of the remaining 975,000 shares of preferred stock to be
authorized are to be determined by the Board of Directors.
3. To consider a proposal to amend the Company's Certificate of
Incorporation to limit the personal liability of directors in certain
circumstances.
4. To consider and vote upon a proposal recommended by the Board of
Directors to ratify the selection of Wheeler Wasoff, P.C. to serve as the
independent certified accountants for the Company.
5. To transact any other business that properly may come before the
meeting.
Only the stockholders of record as shown on the transfer books of the
Company at the close of business on March 26, 1999 are entitled to notice of,
and to vote at, the Stockholders Meeting.
All stockholders, regardless of whether they expect to attend the meeting
in person, are requested to complete, date, sign and return promptly the
enclosed form of proxy in the accompanying envelope (which requires no postage
if mailed in the United States). The person executing the proxy may revoke it by
filing with the Secretary of the Company an instrument of revocation or a duly
executed proxy bearing a later date, or by electing to vote in person at the
stockholder meeting.
ALL STOCKHOLDERS ARE EXTENDED A CORDIAL INVITATION TO ATTEND THE
STOCKHOLDER MEETING.
By the Board of Directors
D. Scott Singdahlsen
Chief Executive Officer
Denver, Colorado
March 31, 1999
<PAGE>
PROXY STATEMENT
PYR ENERGY CORPORATION
1675 Broadway, Suite 1150
Denver, Colorado 80202
(303) 825-3748
ANNUAL MEETING OF STOCKHOLDERS
to be held April 16, 1999
This Proxy Statement is provided in connection with the solicitation of
proxies by the Board of Directors of PYR Energy Corporation, a Delaware
corporation (the "Company"), to be voted at the Annual Meeting Of Stockholders
of the Company to be held at 10:00 a.m. (local time) on April 16, 1999 at Wells
Fargo Bank, Third Floor Conference Room, 633 17th Street, Denver, Colorado
80202, or at any adjournment or postponement of the meeting. The Company
anticipates that this Proxy Statement and the accompanying form of proxy will be
first mailed or given to stockholders of the Company on or about March 31, 1999.
The shares represented by all proxies that are properly executed and
submitted will be voted at the meeting in accordance with the instructions
indicated on the proxies. Unless otherwise directed, the shares represented by
proxies will be voted (1) for each of the five nominees for director whose names
are set forth on the proxy card, (2) in favor of the amendment of the Company's
Certificate of Incorporation to provide for authorized preferred stock,
including 25,000 shares for which the rights and preferences have been
determined and that are to be issued pursuant to a Convertible Note Purchase
Agreement dated October 26, 1998; (3) in favor of the amendment of the Company's
Certificate of Incorporation to limit the personal liability of directors in
certain circumstances, and (4) in favor of ratification of Wheeler Wasoff, P.C.
as the Company's independent certified accountants.
A stockholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of revocation to the Company, by
substituting a new proxy executed at a later date, or by requesting, in person
at the Annual Meeting, that the proxy be returned.
The solicitation of proxies is to be made principally by mail; however,
following the initial solicitation, further solicitations may be made by
telephone or oral communication with stockholders. Officers, directors and
employees of the Company may solicit proxies, but these persons will not receive
compensation for that solicitation other than their regular compensation as
employees of the Company. Arrangements also will be made with brokerage houses
and other custodians, nominees and fiduciaries to forward solicitation materials
to beneficial owners of the shares held of record by those persons. The Company
may reimburse those persons for reasonable out-of-pocket expenses incurred by
them in so doing. All expenses involved in preparing, assembling and mailing
this Proxy Statement and the enclosed material will be paid by the Company. A
majority of the issued and outstanding shares of the Company's Common Stock
entitled to vote, represented either in person or by proxy, constitutes a quorum
at any meeting of the stockholders. If sufficient votes for approval of the
matters to be considered at the meeting have not been received prior to the
meeting date, the Company intends to postpone or adjourn the meeting in order to
solicit additional votes. The form of proxy solicited by the Company requests
authority for the proxies, in their discretion, to vote the stockholders' shares
with respect to a postponement or adjurnment of the meeting. At any postponed or
adjourned meeting, the Company will vote any proxies received in the same manner
described in this proxy statement with respect to the original meeting.
RECENT DEVELOPMENTS CONCERNING THE COMPANY
As previously reported, the Company's exploration well at its East Lost
Hills prospect near Bakersfield, California blew out and ignited on November 23,
1998. The well flow is currently being diverted into surface containment
<PAGE>
facilities consisting of separators, storage tanks and burn pits. Natural gas is
being flared while liquid hydrocarbons and water are being collected in the burn
pits and in above ground storage tanks for trucking to processing and disposal
facilities. A relief well began drilling on December 18, 1998 with the intent of
intersecting the original well bore for plugging. The Company owns a 10.575%
working interest in this well and in approximately 23,000 acres in the vicinity
of this well.
At Southeast Maricopa, the Company continues to interpret approximately 52
square miles of proprietary 3D seismic data. The Company controls a 100% working
interest in approximately 23,000 gross acres here and expects to drill an
exploration well in the second quarter of calendar year 1999.
The Company also is interpreting 39 miles of 3D seismic data over its San
Emidio acreage. As part of its recent private placement, the Company acquired
rights to this data along with a 70% working interest in oil and gas leases
covering approximately 5,400 gross acres. The company expects to drill an
exploration/exploitation well here in the second quarter of calendar 1999.
For additional information concerning the Company and its operations,
please read the section below entitled, "1. ELECTION OF DIRECTORS - Financial
Information".
1. ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect five members of the
Board of Directors to serve as directors on the Board of Directors of the
Company. Each director will be elected to hold office until the next annual
meeting of stockholders and thereafter until his successor is elected and
qualified. The affirmative vote of a majority of the shares represented at the
meeting is required to elect each director. Cumulative voting is not permitted
in the election of directors. Consequently, each stockholder is entitled to one
vote for each share of Common Stock held in his or her name. In the absence of
instructions to the contrary, the person named in the accompanying proxy shall
vote the shares represented by that proxy for the persons named below as
management's nominees for directors of the Company. Each of the nominees other
than S.L. Hutchison and Bryce W. Rhodes currently is a director of the Company.
S. L. Hutchison and Bryce W. Rhodes were nominated for election as directors at
the Annual Meeting pursuant to the terms of the sale of Convertible Promissory
Notes by the Company in October and November 1998. See below, " ---Certain
Transactions With Management And Principal Stockholders".
2
<PAGE>
Each of the nominees has consented to be named herein and to serve on the
Board if elected. It is not anticipated that any of the nominees will become
unable or unwilling to accept nomination or election, but, if that should occur,
the persons named in the proxy intend to vote for the election of such other
person as the Board of Directors may recommend.
The following table sets forth, with respect to each nominee for director,
the nominee's age, his positions and offices with the Company, the expiration of
his term as a director, and the year in which he first became a director of the
Company. Individual background information concerning each of the nominees
follows the table. For additional information concerning the nominees, including
stock ownership and compensation, see "---Executive Compensation", "---Stock
Ownership Of Directors And Princiapl Stockholders", and "---Certain Transactions
With Management And Principal Stockholders".
<TABLE>
<CAPTION>
Position With The Expiration Of Term Initial Date
Name Age Company As Director As Director
---- --- ----------------- ------------------- -------------
<S> <C> <C> <C> <C>
D. Scott Singdahlsen 40 Chief Executive Officer; 1998 Annual Meeting August 1997
President; and Chairman of
the Board
Robert B. Suydam 60 Vice-President - Geology; 1998 Annual Meeting October 1998
and Director
Keith F. Carney 42 Director 1998 Annual Meeting August 1997
S. L. Hutchison 66 Nominee for Director ----- ------
Bryce W. Rhodes 45 Nominee for Director ----- ------
</TABLE>
D. Scott Singdahlsen has served as President, Chief Executive Officer, and
Chairman of the Board of the Company since August 1997. Mr. Singdahlsen
co-founded PYR Energy, LLC in 1996, and served as its General Manager and
Exploration Coordinator. In 1992, Mr. Singdahlsen co-founded Interactive Earth
Sciences Corporation, a 3-D seismic management and interpretation consulting
firm in Denver, where he served as vice president and president and lead seismic
interpretation specialist from 1992 to 1996. Prior to forming Interactive Earth
Sciences Corporation, Mr. Singdahlsen was employed as a Development Geologist
for Chevron USA in the Rocky Mountain region. At Chevron, Mr. Singdahlsen was
involved in 3-D seismic reservoir characterization projects and geostatistical
analysis. Mr. Singdahlsen started his career at UNOCAL as an Exploration
Geologist in Midland, Texas. Mr. Singdahlsen earned a B.A. in Geology from
Hamilton College and a M.S. in Structural Geology from Montana State University.
3
<PAGE>
Robert B. Suydam has served as a Director of the Company since October
1998. Mr. Suydam has served as Vice-President - Geology of the Company since
August 1997 and was Secretary of the Company from August 1997 until May 1998.
Mr. Suydam co-founded PYR Energy, LLC in 1996 and served as Chief Geologist.
From 1985 until 1996, Mr. Suydam served as exploration coordinator for Snyder
Oil, Gerrity Oil, and Energy Minerals in Denver. Prior to this employment, Mr.
Suydam served as Vice President of Exploration for National Oil Company, and as
Exploration Manager for Hamilton Brothers Oil Company in Denver and Calgary. Mr.
Suydam started his career as an exploration geologist at Texaco in Denver,
Calgary, and New Orleans. Mr. Suydam earned a B.S. and M.S. in Geology from the
University of Wyoming.
Keith F. Carney has served as a Director of the Company since August 1997.
Since October 1997, Mr. Carney has been Executive Vice-President of Cheniere
Energy, Inc., a Houston based public oil and gas exploration company. From July
1997 until October 1997, Mr. Carney served as Chief Financial Officer of
Cheniere Energy. After earning his M.B.A. degree from the University of Denver
in 1992, Mr. Carney was employed as a Securities Analyst in the oil and gas
exploration/production sector with Smith Barney, Inc. until 1996. Mr. Carney
began his career as an exploration Geologist at Shell Oil after earning B.S. and
M.S. degrees in Geology from Lehigh University.
S. L. Hutchison has been nominated to serve as a Director of the Company in
connection with the sale by the Company of convertible promissory notes issued
in a private placement transaction in October and November 1998. See below,
"---Certain Transactions With Management And Principal Stockholders". Since
1979, Mr. Hutchison has served as Vice President and Chief Financial Officer of
Victory Oil Company, an oil and gas production company based in California, and
other companies in the Victory Group of Companies. Also during that period, Mr.
Hutchison has served as Vice-President and Chief Financial Officer and a
Director of Crail Capital, a real estate investment company that is owned by
Victory Oil Company, and Victex, Inc., a real estate and oil and gas company.
Mr. Hutchinson also serves as Chief Financial Officer and a director of each of
the Crail Johnson Foundation and the Independent Oil Producers Agency, and the
Treasurer and a director of the Los Angeles Maritime Institute. Mr. Hutchison
received a Bachelor's degree in accounting from the University of Washington in
1954.
Bryce W. Rhodes has been nominated to serve as a Director of the Company in
connection with the sale by the Company of convertible promissory notes issued
in a private placement transaction in October and November 1998. See below,
"---Certain Transactions With Management And Principal Stockholders". Since
1996, Mr. Rhodes has served as Vice President of Whittier Energy Company
("WEC"), an oil and gas investment company. Mr. Rhodes served as Investment
Manager of WEC from 1990 until 1996. Mr. Rhodes received B.A. degrees in Geology
and Biology from the University of California, Santa Cruz, in 1976 and an MBA
degree from Stanford University in 1979.
Other Executive Officer
Andrew P. Calerich, 34, has served as Chief Financial Officer of the
Company since August 1997 and as Secretary of the Company since May 1998. From
1993 to 1997, Mr. Calerich was a business consultant specializing in accounting
for private oil and gas producers in Denver. From 1990 to 1993, Mr. Calerich was
employed as corporate Controller at Tipperary Corporation, a public oil and gas
company in Denver. Mr. Calerich began his professional career in public
accounting in the tax department at Arthur Andersen & Company. Mr. Calerich is a
Certified Public Accountant and earned B.S. degrees in both Accounting and
Business Administration at Regis College.
Each of the Company's officers serves at the pleasure of the Company's
Board of Directors. There are no family relationships among the Company's
officers and directors.
Board And Committee Meetings
The Board of Directors met seven times during the fiscal year ended August
31, 1998 and all directors were present at each of those meetings.
4
<PAGE>
The Board of Directors currently has a Compensation Committee which met one
time during the fiscal year ended August 31, 1998 and both members of the
Compensation Committee participated in that meeting. The Compensation Committee
has the authority to establish policies concerning compensation and employee
benefits for employees of the Company. The Compensation Committee reviews and
makes recommendations concerning the Company's compensation policies and the
implementation of those policies and determines compensation and benefits for
executive officers. The Compensation Committee currently consists of the entire
Board. It is anticipated that after the election of additional outside directors
to the Board the Compensation Committee will be reelected to consist of at least
two outside directors and not the entire Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
The Company believes that during the year ended August 31, 1998, its officers,
directors and holders of more than 10% of the Company's Common Stock complied
with all Section 16(a) filing requirements. In making these statements, the
Company has relied upon the written representations of its directors and
officers and the Company's review of the monthly statements of changes filed
with the Company by its officers and directors.
Executive Compensation
Summary Compensation Table
The following table sets forth in summary form the compensation received
during each of the Company's three successive completed fiscal years ended
August 31, 1998 by D. Scott Singdahlsen, the Chief Executive Officer, President
and Chairman Of The Board of the Company. No executive officer of the Company,
including the Chief Executive Officer and the Chairman Of The Board, received
total salary and bonus exceeding $100,000 during any of the three successive
fiscal years ending August 31, 1998.
5
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long Term Compensation
--------------------------
Annual Compensation Awards Payouts
----------------------------------------- --------------------------
Restricted
Other Annual Stock LTIP All other
Name and Fiscal Salary Bonus Compensation Awards Options Payouts Compensation
Principal Position Year ($)(1) ($)(2) ($)(3) ($) (#) ($)(4) ($)(5)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D. Scott Singdahlsen 1998 $75,000 $-0- -0- -0- -0- -0- -0-
Chief Executive Officer,
President and Chairman 1997 $10,250 -0- -0- -0- -0- -0- -0-
Of the Board
1996 -- -- -- -- -- -- --
</TABLE>
- ----------
(1) The dollar value of base salary (cash and non-cash) received during the
year indicated. Includes $4,000 paid as consulting fees to Mr. Singdahlsen
by PYR Energy, LLC during the period from January 1, 1997 through August 6,
1997.
(2) The dollar value of bonus (cash and non-cash) received during the year
indicated.
(3) During the period covered by the Summary Compensation Table, the Company
did not pay any other annual compensation not properly categorized as
salary or bonus, including perquisites and other personal benefits,
securities or property.
(4) The Company does not have in effect any plan that is intended to serve as
incentive for performance to occur over a period longer than one fiscal
year except for the Company's 1997 Stock Option Plan.
(5) All other compensation received that the Company could not properly report
in any other column of the Summary Compensation Table including annual
Company contributions or other allocations to vested and unvested defined
contribution plans, and the dollar value of any insurance premiums paid by,
or on behalf of, the Company with respect to term life insurance for the
benefit of the named executive officer, and, the full dollar value of the
remainder of the premiums paid by, or on behalf of, the Company.
1997 Stock Option Plan
In August 1997, the Company's 1997 Stock Option Plan (the "1997 Plan") was
adopted by the Board of Directors of the Company and subsequently approved by
the Company's stockholders. Pursuant to the 1997 Plan, the Company may grant
options to purchase an aggregate of 1,000,000 shares of the Company's Common
Stock to key employees, directors, and other persons who have contributed or are
contributing to the success of the Company. The options granted pursuant to the
1997 Plan may be either incentive options qualifying for beneficial tax
treatment for the recipient or nonqualified options. The 1997 Plan may be
administered by the Board of Directors or by an option committee. Administration
of the 1997 Plan includes determination of the terms of options granted under
the 1997 Plan. At August 31, 1998, options to purchase 246,000 shares were
outstanding under the 1997 Plan. Options to purchase 435,000 additional shares
subsequently were granted and options to purchase 7,500 shares subsequently
terminated so that, as of December 2, 1998, options to purchase 326,500 shares
may be granted pursuant to the 1997 Plan.
6
<PAGE>
Compensation Of Outside Directors
On May 26, 1998, each Director of the Company who was not also an employee
of the Company ("Outside Director") was granted options to purchase 10,000
shares of Common Stock. The Options are exercisable for $1.28 per share, which
was the average of the closing bid and ask prices of the Common Stock on the
date of grant. Options to purchase 2,500 shares became exercisable on each of
September 1, 1998 and December 1, 1998, and options to purchase 2,500 shares
become exercisable on each of March 1, 1999 and June 1, 1999 if the person
continues to be an Outside Director through each of those dates. All the options
expire on May 26, 2001. Directors also are reimbursed for expenses incurred in
attending meetings and for other expenses incurred on behalf of the Company.
Employment Contracts And Termination of Employment And In-Control
Arrangements
The Company does not have any written employment contracts with any of its
officers or other employees. The Company has no compensatory plan or arrangement
that results or will result from the resignation, retirement, or any other
termination of an executive officer's employment with the Company or from a
change-in-control of the Company or a change in an executive officer's
responsibilities following a change-in-control, except that the 1997 Plan
provides for vesting of all outstanding options in the event of the occurrence
of a change-in-control.
Stock Ownership Of Directors And Principal Stockholders
As of December 2, 1998, there were 9,421,470 shares of the Company's Common
Stock outstanding. The following table sets forth certain information as of
December 2, 1998, with respect to the beneficial ownership of the Company's
Common Stock by each director and nominee for director, by all executive
officers and directors as a group, and by each other person known by the Company
to be the beneficial owner of more than five percent of the Company's Common
Stock:
7
<PAGE>
Name and Address of Number of Shares Percentage of
Beneficial Owner Beneficially Owned (1) Shares Outstanding
- ---------------- ---------------------- ------------------
D. Scott Singdahlsen 2,000,000 21.2%
1675 Broadway, Suite 1150
Denver, Colorado 80202
Robert B. Suydam 1,300,000 (2) 13.8%
1675 Broadway, Suite 1150
Denver, Colorado 80202
Keith F. Carney 110,000 (3) 1.2%
915 Bay Oaks Road
Houston, Texas 77008
All Executive Officers and Directors
as a group (four persons) 3,447,500 (2)(3)(4) 36.5%
S.L. Hutchison 1,974,333 (5) 17.6%
c/o Victory Oil Company
222 West Sixth Street, Suite 1010
San Pedro, California 90731
Bryce W. Rhodes 79,667 (6) 0.8%
c/o Whittier Energy Company
1600 Huntington Drive
South Pasadena, California 91030
PinOak Inc. 1,300,000 (2) 13.8%
5037 South Oak Court
Littleton, Colorado 80127
Victory Oil Company 1,873,333 (7) 16.9%
222 West Sixth Street, Suite 1010
San Pedro, California 90731
Whittier Trust Company 556,734 (8) 5.6%
1600 Huntington Drive
South Pasadena, California 91030
- ----------
(1) "Beneficial ownership" is defined in the regulations promulgated by the
U.S. Securities and Exchange Commission as having or sharing, directly or
indirectly (i) voting power, which includes the power to vote or to direct
the voting, or (ii) investment power, which includes the power to dispose
8
<PAGE>
or to direct the disposition of shares of the common stock of an issuer.
Unless otherwise indicated, the beneficial owner has sole voting and
investment power.
(2) The shares shown for Mr. Suydam are owned of record by PinOak Inc.
("PinOak"). These shares are included twice in the table. They are listed
as being held beneficially by both PinOak and by Mr. Suydam. PinOak is
owned by Mr. Suydam's wife and Mr. Suydam is the President of PinOak.
(3) Includes options to purchase 5,000 shares at $1.28 per share until May 26,
2001 that currently are excercisable or that will become exercisable within
the next 60 days.
(4) Includes 2,500 shares of Common Stock and options to purchase 25,000 shares
of Common Stock that currently are excercisable or that will become
exercisable within the next 60 days that are held by Andrew P. Calerich,
the Chief Financial Officer and Secretary of the Company, and 10,000 shares
held by Mr. Calerich's wife's individual retirement account.
(5) Includes 100,000 shares of Common Stock that may be issued upon the
conversion of convertible promissory notes ("Notes") held by Mr. Hutchison.
Also includes the shares shown as beneficially owned by Victory Oil Company
as described in note (7) below. Mr. Hutchison is the Vice President and
Chief Financial Officer of Victory Oil Company. Mr. Hutchinson disclaims
beneficial ownership of the shares beneficially owned by Victory Oil
Company.
(6) Includes 66,667 shares of Common Stock that may be issued upon the
conversion of Notes held by a company owned by Mr. Rhodes' wife.
(7) Includes 1,666,667 shares of Common Stock that may be issued upon the
conversion of Notes held by Victory Oil Company. Also includes 100,000
shares owned by Crail Capital, a wholly-owned subsidiary of Victory Oil
Company. See "---Certain Transactions With Management And Principal
Stockholders".
(8) This beneficial ownership was reported in the Schedule 13D filed by Victory
Oil Company, Whittier Trust Company and other filing parties on November 5,
1998. The Company believes that these shares consist of shares Common Stock
that may be issued upon the conversion of convertible promissory notes held
by various holders for whom Whittier Trust Company serves as trustee and/or
agent. See "---Certain transactions With Management And Principal
Stockholders".
Certain Transactions With Management And Principal Stockholders
Acquisition Of PYR Energy, LLC
The Company acquired all the ownership interest in PYR Energy, LLC on
August 6, 1997 in exchange for 4,000,000 shares of the Company's Common Stock.
Mr. Singdahlsen received 2,000,000 shares of the Company's Common Stock in that
transaction in exchange for the 50 percent of PYR Energy, LLC that he owned
immediately prior to the transaction. PinOak, a company of which Mr. Suydam is
the President and whose sole shareholder is Mr. Suydam's wife, received
1,300,000 shares of the Company's Common Stock in that transaction in exchange
for PinOak's ownership of 32.5 percent of the ownership interests in PYR Energy,
LLC immediately prior to the transaction. In connection with that transaction,
the Company agreed to appoint each of Messrs. Singdahlsen, Carney and Gregory B.
Barnett to constitute all the members of the Company's Board Of Directors.
9
<PAGE>
Loan To PYR Energy, LLC
In June 1997, PYR Energy, LLC borrowed $275,000 from the Company in order
to fund certain of PYR Energy, LLC's obligations pursuant to PYR Energy, LLC's
lease and seismic option in the San Joaquin basin. PYR Energy, LLC secured that
loan with a pledge of PYR Energy, LLC's interest in the lease and seismic
option. The loan accrued interest at a rate of eight percent per annum, with
interest payable at the end of each calendar quarter. The loan was effectively
eliminated upon consummation of the Company's acquisition of PYR Energy, LLC.
Sale Of Assets To Former Director And Officer
Effective as of August 6, 1997, the Company sold all the assets not related
to the Company's business of oil and gas exploration, development and
consulting, and not related to the Company's principal office in Denver,
Colorado, to Buddy Young, a stockholder and a former director and officer of the
Company. The purchase price for the assets was $32,000, which was paid in the
form of a release from Mr. Young to the Company of the Company's obligation to
repay the $32,000 it owed to Mr. Young. The Company's approximate $32,000
obligation to Mr. Young had been incurred through advances from Mr. Young to the
Company for working capital purposes. At August 6, 1997, there were outstanding
$17,852 of accounts receivable related to the assets that Mr. Young obtained the
right to receive. Mr. Young also assumed all liabilities related to the assets.
The Company also assigned to Mr. Young the lease for the Company's office in
Encino, California, and Mr. Young assumed the Company's obligations under the
lease. The Company obtained a release from the landlord for additional
obligations under the lease.
In addition to the accounts receivable described above, the assets sold to
Mr. Young consisted primarily of the Company's interests in three television
programs, "Heartstoppers . . . At The Movies", a two-hour television program
hosted by George Hamilton, "Christmas At The Movies", a one-hour television
program hosted by Gene Kelly, and "It's A Wonderful Life - A Personal
Remembrance", an approximately 15-minute television program hosted by Frank
Capra, Jr., and the office furniture and supplies in the Company's former office
in Encino, California. The television programs previously had been held by the
Company for licensing to various television and cable television operators.
During the year ended August 31, 1997, the Company received licensing fees of
$15,216 for the television programming assets sold to Mr. Young. The low revenue
amount was mainly due to the programs' previously having been licensed in most
major territories. Because, as a result of the Company's acquisition of PYR
Energy, LLC, the Company determined to focus its activities on oil and gas
exploration, development and consulting and to locate its principal office in
Denver, Colorado, the Company determined that it was in its best interests to
sell the assets of the Company that were not related to this business and to
assign its office lease in Encino, California.
Private Placement Of Notes
In November 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. Victory Oil Company ("Victory") purchased $1.0 million of Notes,
and parties related to Whittier Energy Company ("WEC") purchased $500,000 of
Notes. The remaining $1.0 million of Notes were sold to other investors.
10
<PAGE>
In connection with the sale of Notes, the Company agreed to add S.L.
Hutchison and Bryce W. Rhodes to the Board of Directors. Messrs. Hutchison and
Rhodes have been nominated for election as directors at the Annual Meeting of
Stockholders pursuant to this agreement. Mr. Hutchison is the Chief Financial
Officer of Victory and Mr. Rhodes is the Vice President of WEC.
The Notes will automatically convert into shares of Series A Preferred
Stock (the "Series A Preferred") at the rate of one share for each $100
principal amount of Notes if the Series A Preferred is approved by stockholders
prior to April 26, 1999. The Series A Preferred is convertible into Common Stock
at the rate of one share of Common Stock for each $.60 of the face amount of the
Series A Preferred. If approval of the Series A Preferred is not obtained by
April 23, 1999, the Note holders have the right to require that Notes and
accrued interest be paid on demand or to convert the Notes into Common Stock at
the rate of one share of Common Stock for each $.30 of principal amount of Notes
rather than the conversion rate of one share of Common Stock for each $.60 of
face amount of the Series A Preferred. The full principal amount of the Notes
and accrued interest at the rate of 10 percent per year is due on October 26,
1999 if the Notes have not been converted into Series A Preferred or Common
Stock prior to that time. The Company has the right in its discretion to pay the
interest portion of the Notes with Common Stock at a rate based on the weighted
average trading price of the Common Stock for 45 days prior to the interest
payment date.
The holders of the Series A Preferred, as a separate class, have the right
to elect two members of the Board of Directors of the Company when at least
10,000 shares of Series A Preferred are outstanding. When more than 5,000 shares
but fewer than 10,000 shares of Series A Preferred are outstanding, the holders
of Series A Preferred have the right to elect one member of the Board of
Directors. The Board of Directors currently consists of three members and will
be increased to five members at the Annual Meeting of Stockholders. The size of
the Board may not be increased beyond six members without the approval of the
investors.
As a condition to the sale of the Notes, D. Scott Singdahlsen and Robert B.
Suydam, who are directors and officers of the Company, entered into a voting
agreement ("Voting Agreement") with the purchasers of the Notes. Pursuant to the
Voting Agreement, Mr. Singdahlsen and Mr. Suydam each agreed, respectively, that
he will vote all the shares of Common Stock of the Company owned by him in favor
of the election of two nominees of the investors to serve on the Board of
Directors of the Company and for the re-election of those nominees or other
nominees at any time that the aggregate percentage ownership of common equity of
the Company underlying the Notes or Series A Preferred owned by the investors is
20 percent or more of the outstanding Common Stock. Mr. Singdahlsen and Mr.
Suydam are required to vote for only one nominee at any time after the aggregate
percentage ownership of common equity of the Company owned by the investors is
less than 20 percent and greater than or equal to 10 percent of the outstanding
Common Stock. The obligation of Mr. Singdahlsen and Mr. Suydam to vote for any
nominees of the investors terminates at any time after the percentage ownership
of common equity of the Company owned by the investors is less than 10 percent
of the outstanding Common Stock. Mr. Singdahlsen and Mr. Suydam are not required
to vote for the designated board members at any time that the holders of the
Series A Preferred have the right voting separately as a class to elect those
designated board members.
11
<PAGE>
Also as a condition to the investors' purchase of the Notes, the Company
entered into an agreement with Victory, WEC, and Catalina Properties Corporation
("Catalina") pursuant to which Victory, WEC and Catalina sold to the Company
their working interests, totaling 100%, in their San Emidio exploration project,
which consist of approximately 5,400 gross acres of undeveloped leasehold as
well as access to 39 square miles of existing 3-D seismic data adjoining the
Company's Southeast Maricopa "Stevens" Exploration Project in California. There
currently are no operating oil or natural gas wells, proved reserves or other
income producing properties included in this transaction. The Company agrees to
assign to Victory 30% of any interest in the San Emidio area of mutual interest
("AMI") that the Company receives or reserves for itself as consideration in
connection with the future assignment by the Company of any existing lease or
any other lease within the San Emidio AMI. As consideration for these interests,
the Company issued 106,666 shares of Common Stock to Victory, 80,000 shares to
WEC, and 80,000 shares to Catalina, for an aggregate of 266,666 shares. The
total value of this transaction is $200,000 based on the quoted market price of
the Company's common stock at the time of negotiating the transaction.
Except as described above, during the fiscal year ended August 31, 1998,
there were no transactions between the Company and its directors, executive
officers or known holders of greater than five percent of the Company's Common
Stock in which the amount involved exceeded $60,000 and in which any of the
foregoing persons had or will have a material interest.
2. PROPOSAL TO APPROVE AUTHORIZED PREFERRED STOCK
The Board of Directors has unanimously approved and proposes for
stockholder approval an amendment to the Company's Certificate of Incorporation
to authorize a new class of capital stock consisting of 1,000,000 shares of
preferred stock, $.001 par value (the "Preferred Stock"), with such relative
rights, preferences and designations as may be determined by the Board in its
sole discretion upon the issuance of any shares of the Preferred Stock. The
proposal to authorize a new class of Preferred Stock is intended to provide
shares of Preferred Stock for issuance from time to time as may be required for
various purposes, including the issuance of 25,000 shares of Series A Preferred
Stock (the "Series A Preferred") in connection with the financing transaction
among the Company, Victory Oil Company and Whittier Energy Company described
above under "1. ELECTION OF DIRECTORS - Certain Transactions With Management And
Principal Stockholders." The shares of Preferred Stock other than the Series A
Preferred could be issued from time to time by the Board in its sole discretion
without further approval or authorization by the stockholders, in one or more
series, each of which series could have any particular distinctive designations
as well as relative rights and preferences as determined by the Board. The
relative rights and preferences that may be determined by the Board in its
discretion from time to time, include but are not limited to the following:
o the rate of dividend and whether the dividends are to be
cumulative and the priority, if any, of dividend payments
relative to other series in the class;
o whether the shares of any such series may be redeemed, and if so,
the redemption price and the terms and conditions of redemption;
o the amount payable with respect to such series in the event of
voluntary or involuntary liquidation and the priority, if any, of
each series relative to other series in the class with respect to
amounts payable upon liquidation and sinking fund provision, if
any, for the redemption or purchase of the shares of that series;
12
<PAGE>
o the terms and conditions, if any, on which the shares of a series
may be converted into or exchanged for shares of any class,
whether common or preferred, or into shares of any series of the
same class, and if provision is made for conversion or exchange,
the times, prices, rates, adjustments and other terms.
The existence of authorized but unissued shares of Preferred Stock could
have anti-takeover effects because the Company could issue Preferred Stock with
special dividend or voting rights that could discourage potential bidders.
Series A Preferred. If the Preferred Stock is approved by the stockholders,
the Company will issue 25,000 shares of Preferred Stock designated as the
"Series A Preferred Stock" (the "Series A Preferred") to holders of the
Company's Convertible Notes due October 26, 1999 (the "Notes"). The terms of the
Notes are described above in "1. ELECTION OF DIRECTORS - Certain Transactions
With Management and Principal Stockholders - Private Placement Of Notes". The
Company will provide each stockholder who requests a copy of the Certificate of
Designation setting forth the rights and preferences of the Series A Preferred.
The following is a summary of the rights of the Series A Preferred:
o Each share of Series A Preferred will have a face value of $100
per share.
o An annual dividend of 10 percent will be payable on the Series A
Preferred semi-annually, which payment shall be made either in
cash or in Common Stock, at the option of the Company, with the
Common Stock issuable at a rate based on the weighted average
trading price of the Common Stock.
o The Series A Preferred shall be convertible, in whole or in part,
into Common Stock at the rate of one share of Common Stock for
each $.60 of face value of Series A Preferred (or 166.67 shares
of Common Stock for each $100 face amount share of Series A
Preferred), on a fully diluted basis, which conversion right may
be exercised at any time and from time to time.
o The Company has the right to require holders to convert their
Series A Preferred into Common Stock in the following
circumstances:
o The Company has the right to require that one-third of the
outstanding Series A Preferred be converted at any time
after one year from issuance provided that the market value
of the Company's Common Stock is $2.40 per share, based on a
45 day weighted average trading price.
o The Company has the right to require that two-thirds of the
outstanding Series A Preferred be converted two years from
issuance provided that the market value of the Common Stock
is $3.60 per share.
o The Company has the right to require all of the outstanding
Series A Preferred be converted beginning at any time after
two years from issuance provided that the market value of
the Common Stock is $4.80 per share.
o The Company shall have the right, beginning two years from
the issuance, to require that all the outstanding Series A
Preferred be converted if the Corporation has accumulated
retained earnings equal to or greater than $3,750,000.
13
<PAGE>
o In a vote of stockholders, other than for the election of
directors of the Company, the holders of the Series A
Preferred are entitled to vote the number of votes equal to
the number of shares into which the Series A Preferred may
be converted, or 167 votes for each share of Series A
Preferred.
o The holders of the Series A Preferred, as a separate class,
have the right to elect two members of the Board of
Directors of the Company when 10,000 or more shares of
Series A Preferred are outstanding. If the Board of
Directors is increased to a number greater than six, the
holders of the Series A Preferred may elect one-third of the
total number of directors when 10,000 or more shares are
outstanding. When more than 5,000 shares but less than
10,000 shares of Series A Preferred are outstanding, the
holders of Series A Preferred have the right to elect one
member of the Board of Directors. If the Board of Directors
is increased to a number of greater than six, the holders of
the Series A Preferred may elect one-sixth of the total
number of directors when more than 5,000 shares but less an
10,000 shares are outstanding.
A total of $2,500,000 was received by the Company upon the completion of
the sale of the Notes in a private placement financing pursuant to exemptions
from federal and state securities registration requirements. Approximately
$1,400,000 of the proceeds from the sale of the Notes have been used to pay
indebtedness of the Company for 3-D seismic data and oil and gas lease payments.
Of this amount, approximately $1,282,000, payable to two unrelated entities for
costs incurred in acquiring 3-D seismic data, was accrued during the fiscal year
ended August 31, 1998. In addition, approximately $118,000 was paid for lease
payments incurred subsequent to the fiscal year ended August 31, 1998, including
approximately $48,000 that was paid to Victory Oil Company, which purchased
Notes in the private placement, for reimbursement of lease acquisition costs
paid for on behalf of the Company. See above, "1. ELECTION OF DIRECTORS -
Certain Transactions With Management And Principal Stockholders - Private
Placement of Notes." Of the balance of $1,100,000 from the private placement
approximately $65,000 has been used to pay expenses of the private placement and
the balance is expected to be used for working capital and the Company's share
of drilling and development costs on the Company's leases.
Background Of Sale Of Notes
The Company had attempted to raise additional funds since shortly after its
acquisition of PYR Energy LLC in August 1997. The Company believes that, due to
the general downturn in the oil and gas industry and to a certain extent the
Company's start-up nature and lack of existing production, the Company had been
unable to raise additional capital. The Company had incurred approximately
$1,282,000 for seismic acquisition and seismic data reprocessing charges that
occurred from February 1998 through August 1998. At the time of the private
placement of the Notes, the Company had only approximately $250,000 in cash.
After meeting with a variety of potential funding sources over the course of a
year and having received no other acceptable proposals, the Company, through its
Board of Directors, determined to pursue, and was successful in reaching an
agreement concerning, the private placement of Notes discussed above. The
benefit of the private placement of Notes has been to provide capital needed to
allow the exploration activities of the Company to continue.
Reasons For Requesting Stockholder Approval
The authorization of the Preferred Stock requires amending the Company's
certificate of incorporation. The Company is a Delaware corporation. Under the
laws of the State of Delaware, the Company is required to obtain the approval of
its stockholders to any amendment to the Company's certificate of incorporation.
14
<PAGE>
The Company is seeking stockholder approval of the authorization of the
Preferred Stock pursuant to this proxy statement in order to satisfy this
requirement.
Impact On Existing Stockholders
The authorization of the Preferred Stock will enable the Company to issue
the Series A Preferred to the holders of the Notes and give the Company's Board
of Directors the ability, without stockholder approval, to issue additional
shares of Preferred Stock with rights and preferences determined by the Board of
Directors in the future. As a result, the Company may issue additional shares of
Preferred Stock that have dividend, voting and other rights superior to those of
the Common Stock, or that convert into shares of Common Stock, without the
approval of the holders of Common Stock. This could result in the dilution of
the voting rights, ownership and liquidation value of current stockholders.
As described above, the Series A Preferred is convertible into shares of
Common Stock at the rate of one share of Common Stock for each $.60 of face
value of Series A Preferred (or 166.67 shares of Common Stock for one share of
$100 face amount Series A Preferred). If the Series A Preferred is issued and
all 25,000 shares are converted, 4,166,750 shares of Common Stock would be
issued by the Company. This would be equal to approximately 30.7% of the
Company's Common Stock after the conversion. If the Preferred Stock is not
approved, the holders of the Notes will have the right to convert the Notes into
shares of Common Stock at the rate of one share of Common Stock for each $.30 of
fact amount of Notes. If all $2,500,000 face amount of Notes outstanding are
converted at the $.30 rate, 8,333,333 shares of Common Stock would be issued.
This would be equal to approximately 47.0% of the Company's Common Stock after
the conversion. If the Preferred Stock is approved by the stockholders, and the
Series A Preferred is issued to the holders of the Notes and converted into
Common Stock, the resulting dilution to the Company's existing stockholders,
including the exercise of warrants to purchase 175,000 shares of Common Stock
that were issued in conjunction with the sale of the Notes, would be
approximately 30.3%. If the Preferred Stock is not approved by the stockholders
on or before April 26, 1999, then the Notes can be converted into Common Stock
at the rate of $.30 per share, and the resulting dilution to the Company's
existing stockholders, including the exercise of the same 175,000 warrants,
would be approximately 46.9%.
Financial Information
Financial Statements And Management's Discussion And Analysis Of Financial
Condition And Results Of Operations. The Company's financial statements for the
year ended August 31, 1998 are included in the Company's Annual Report on Form
10-KSB/A for the year ended August 31, 1998 and are incorporated into this proxy
statement by reference. The Company's unaudited financial statements for he
three months ended November 30, 1998 are included in the Company's Form 10-QSB
for the quarter ended November 30, 1998 and are incorporated into this proxy
statement by reference. Each of these reports also includes a Management's
Discussion And Analysis Of Financial Condition And Results Of Operations for the
respective periods covered by the Reports. Copies of these reports are being
sent to each stockholder with this proxy statement.
Changes In And Disagreements With Accountants On Accounting And Financial
Disclosure. On August 13, 1997, the Company engaged Wheeler Wasoff, P.C. of
Denver, Colorado as the Company's independent accountant to replace Farber &
Hass, which was dismissed on that date. This decision was approved by the Board
of Directors of the Company. At that time, the Board of Directors believed it
was in the best interests of the Company for its accountant to be located in the
same city as the Company's principal executive offices.
15
<PAGE>
The independent auditor's report of Farber & Hass with respect to the
Company's (i) balance sheet as of August 31, 1996, and (ii) statements of
operations, shareholders' equity and cash flows for the period from July 2, 1996
(the date of the Company's inception) to August 31, 1996, was modified as to the
uncertainty about the Company's ability to continue as a going concern. Farber &
Hass's prior report did not otherwise contain an adverse opinion or disclaimer
of opinion, and it was not qualified or modified as to audit scope or accounting
principles. There have not been any disagreements with Farber & Hass on any
matter of accounting principles or practices, financial statements disclosure or
auditing scope or procedure.
Required Vote; Board Recommendation
The affirmative vote of a majority of the outstanding shares of Common
Stock is required to approve the authorization of the Preferred Stock. The Board
of Directors unanimously recommends that the stockholders vote in favor of the
proposal to approve the authorization of the Preferred Stock.
3. PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO LIMIT DIRECTORS' PERSONAL LIABILITY
The Board of Directors has unanimously approved and proposes for
stockholder approval an amendment to the Company's Certificate of Incorporation
to limit certain monetary liabilities of the directors of the Company to the
Company or its stockholders. The proposed amendment would implement provisions
of the Delaware general corporation law permitting a Delaware corporation such
as the Company to include in its Certificate of Incorporation a provision
limiting the personal liability of a director to the corporation or its
stockholders for monetary damages.
The Delaware law concerning limitation of liability for directors also may
be viewed as a response to the perceived difficulty of attracting and retaining
well-qualified directors and officers of Delaware corporations in view of the
increased risks of personal liability resulting from judicial decisions. During
the past several years, courts have increasingly scrutinized business decisions
made by the directors of corporations and have held directors personally liable
to a corporation or its stockholders for damages arising from breach of their
fiduciary duty as directors, including the duty of care. Liability for the
breach of the duty of care may arise when directors have unintentionally failed
to exercise sufficient care in reaching decisions or otherwise attending to
their responsibilities as directors.
The proposed amendment to the Certificate of Incorporation is designed to
avoid or reduce the undesirable consequences described above that may result
from increased risk for personal financial liability to the Company's directors
by limiting the liability of directors to the extent permitted by Delaware law
as currently in effect or as the law may be changed in the future. The primary
effect of the proposed amendment would be to eliminate the liability of the
director, but not that of a director while acting in another capacity, to the
Company or its stockholders for monetary damages for violations of that
director's fiduciary duty of care or loyalty that arise after the amendment is
adopted. There are a number of limitations on the protection afforded directors
by the proposed amendment. The amendment would limit the liability of a director
only to the Company and its stockholders. Directors would still remain
potentially liable for damages and suits brought by third parties, including
governmental and regulatory agencies, or for violations of laws, such as the
federal securities laws. In addition, the amendment would not eliminate or limit
liability of a director for breaching his duty of loyalty, failing to act in
good faith, engaging in intentional misconduct or knowingly violating a law,
paying a dividend or approving a stock repurchase that is illegal under Delaware
law, or obtaining improper personal benefits. The availability of equitable
remedies, such as injunctions or rescission, for breach of fiduciary duty would
remain.
16
<PAGE>
The proposed amendment provides that no amendment, modification or repeal
of the proposed amendment will adversely affect any right or protection of a
director that exists at the time of the amendment, modification or repeal. This
is intended to assure directors that the protection of the amendment will not be
retroactively withdrawn. In addition, if the law applicable to the proposed
amendment to the Certificate of Incorporation is modified, then the scope of the
amendment will be correspondingly modified without further action by the
Company's stockholders. The Company is not aware of any proposed changes to
applicable law on the limitation of directors' liability.
The Board of Directors believes that the amendment is in the best interests
of the Company and its stockholders because it will allow the Company's
directors to make business decisions on the basis of the best interests of the
Company and its stockholders without undue concern about personal liability and
will enhance the Company's ability in the future to attract and retain highly
qualified directors. Directors' and officers' liability insurance coverage may
become more costly and less comprehensive. The Board believes that the proposed
amendment should lessen the impact of changes in the cost and scope of directors
liability insurance.
Although the limitation of monetary damages could conceivably have a
negative effect on the level of diligence and care used by directors, the Board
of Directors believes that the diligence and care used by the Company's
directors extends primarily from their desire to act in the best interests of
the Company and not from a fear of monetary damage awards. Therefore, the Board
of Directors believes that the level of diligence and care exercised by
directors and officers will not be lessened by adoption of the amendment.
However, it should be recognized that the directors and officers could benefit
from the amendment, and thus have a personal interest in having the amendment
approved because it would limit certain liabilities of directors.
The text of the proposed amendment to the Company's Certificate of
Incorporation is as follows:
Proposed Article SEVENTH:
"SEVENTH. The personal liability of each director of the
Corporation shall be eliminated and limited to the full extent
permitted by the laws of the State of Delaware, including without
limitation as permitted by the provisions of Section 102(b)(7) of the
General Corporation Law of Delaware and any successor provision, as
amended from time to time. No amendment of this Certificate of
Incorporation or repeal of any of its provisions shall limit or
eliminate the benefits provided to directors under this provision with
respect to any act or omission that occurred prior to that amendment or
repeal."
Under the Company's current Bylaws, the Company is required to indemnify
its directors to the full extent permitted by Delaware law. Delaware law permits
indemnification of a director except in connection with a proceeding by or on
behalf of the corporation or a proceeding in which the director was found to
have derived a personal benefit from the transaction. A director may be
indemnified against liability in a civil (as contrasted with a criminal) action
if he conducted himself in good faith and he reasonably believed that, with
respect to conduct in his official capacity, his conduct was in the
corporation's best interests or, in other cases, his conduct was not opposed to
the corporation's best interests. Therefore, under the Company's current
indemnification provisions, the Company could not indemnify a director for
liability for breach of his duty of care in connection with an action brought by
the Company or its shareholders. Although the Company currently maintains
director's liability insurance, any indemnification of a director not covered by
that insurance would be paid by the Company and would reduce the Company's
assets and its stockholders' equity. There is no assurance that the Company will
be able maintain directors' and officers' insurance at an acceptable cost.
17
<PAGE>
Required Vote; Board Recommendation
The affirmative vote of a majority of the outstanding shares is required to
adopt this amendment. If this amendment is not approved by the stockholders, the
Board will consider other appropriate action.
The Board of Directors unanimously recommends that the stockholders vote in
favor of the proposal to amend the Certificate of Incorporation to limit
directors' liability in certain circumstances.
4. PROPOSAL TO RATIFY THE SELECTION OF WHEELER WASOFF, P.C. AS CERTIFIED
INDEPENDENT ACCOUNTANTS
The Board of Directors recommends that the stockholders of the Company vote
in favor of ratifying the selection of the certified public accounting firm of
Wheeler Wasoff, P.C. of Denver, Colorado as the auditors who will audit
financial statements, prepare tax returns, and perform other accounting and
consulting services for the Company for the fiscal year ended August 31, 1999 or
until the Board of Directors, in its discretion, replaces them. Wheeler Wasoff,
P.C. also audited the Company's financial statements for the fiscal years ended
August 31, 1998 and 1997.
An affirmative vote of the majority of shares represented at the meeting is
necessary to ratify the selection of auditors. There is no legal requirement for
submitting this proposal to the stockholders; however, the Board of Directors
believes that it is of sufficient importance to seek ratification. Whether the
proposal is approved or defeated, the Board may reconsider its selection of
Wheeler Wasoff, P.C. It is expected that one or more representatives of Wheeler
Wasoff, P.C. will be present at the Annual Meeting and will be given an
opportunity to make a statement if they desire to do so and to respond to
appropriate questions from stockholders.
The Board of Directors unanimously recommends that the stockholders vote
for approval of Wheeler Wasoff, P.C. as the Company's certified independent
accountants.
OTHER BUSINESS
The Board of Directors of the Company is not aware of any other matters
that are to be presented at the Annual Meeting, and it has not been advised that
any other person will present any other matters for consideration at the
meeting. Nevertheless, if other matters should properly come before the Annual
Meeting, the stockholders present, or the persons, if any, authorized by a valid
proxy to vote on their behalf, shall vote on such matters in accordance with
their judgment.
18
<PAGE>
VOTING PROCEDURES
Votes at the Annual Meeting Of Stockholders are counted by an Inspector of
Election appointed by the Chairman of the meeting. If a quorum is present, an
affirmative vote of a majority of the votes entitled to be cast by those present
in person or by proxy is required for the approval of items submitted to
stockholders for their consideration, unless a different number of votes is
required by Delaware law or the Company's Certificate of Incorporation. Under
Delaware law, the proposal to amend the Company's Certificate of Incorporation
to provide for Preferred Stock and the proposal to amend the Certificate of
Incorporation to limit directors' liability each requires the approval of a
majority of all the outstanding shares. Abstentions by those present at the
meeting are tabulated separately from affirmative and negative votes and do not
constitute affirmative votes. If a stockholder returns his proxy card and
withholds authority to vote for any or all of the nominees, the votes
represented by the proxy card will be deemed to be present at the meeting for
purposes of determining the presence of a quorum but will not be counted as
affirmative votes. Shares in the names of brokers that are not voted are treated
as not present.
RESOLUTIONS PROPOSED BY INDIVIDUAL STOCKHOLDERS;
DISCRETIONARY AUTHORITY TO VOTE PROXIES
In order to be considered for inclusion in the Company's Proxy Statement
and form of proxy relating to the Company's next Annual Meeting Of Stockholders
following the end of the Company's 1999 fiscal year, proposals by individual
stockholders must be received by the Company no later than September 3, 1999.
Pursuant to Rule 14a-4(c) under the Securities Exchange Act of 1934, as
amended, the Company hereby notifies its stockholders that the proxies solicited
by the Company in connection with the Company's annual meeting to be held in
1999 will confer discretionary authority to vote on matters raised by
stockholders for which the Company did not have notice on or before November 17,
1999. In addition, if the Company receives notice on or before November 17, 1999
of a matter that a stockholder intends to raise at the annual meeting of
stockholders to be held in 1999, the proxies solicited by the Company may
exercise discretion to vote on each such matter if the Company includes in its
proxy statement advice on the nature of the matter raised and how the Company
intends to exercise its discretion to vote on each such matter. However, the
Company may not exercise discretionary voting authority on a particular proposal
if the proponent of that proposal provides the Company with a written statement,
on or before November 17, 1999, that the proponent intends to deliver a proxy
statement and form of proxy to holders of at least the percentage of the
Company's voting shares required under applicable law to carry the proposal (the
"Required Percentage"), which would be a majority of the Company's outstanding
Common Stock or a majority of the shares of Common Stock represented at the
meeting, depending on the nature of the proposal, if the proponent includes the
same statement in its proxy materials filed under Rule 14a-6, and if the
proponent, immediately after soliciting the holders of the Required Percentage,
provides the Company with a statement from any solicitor or any other person
with knowledge that the necessary steps have been taken to deliver a proxy
statement and form of proxy to the holders of the Required Percentage.
AVAILABILITY OF REPORTS ON FORM 10-KSB
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF
ITS ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED AUGUST 31, 1998 TO
ANY OF THE COMPANY'S STOCKHOLDERS OF RECORD, OR TO ANY STOCKHOLDER WHO OWNS THE
COMPANY'S COMMON STOCK LISTED IN THE NAME OF A BANK OR BROKER AS NOMINEE, AT THE
CLOSE OF BUSINESS ON MARCH 26, 1999. ANY REQUEST FOR A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB SHOULD BE MAILED TO THE SECRETARY, PYR ENERGY
CORPORATION, 1675 BROADWAY, SUITE 1150, DENVER, COLORADO 80202, (303) 825-3748.
19
<PAGE>
INCORPORATION BY REFERENCE
The Company incorporates by reference into this proxy statement the
following information included in report filed by the Company with the
Securities And Exchange Commission.
1. Items 6 (Management's Discussion and Analysis Of Financial Condition
And Results Of Operations) and 7 (Financial Statements) included in
the Company's Annual Report on Form 10-KSB/A for the year ended August
31, 1998; and
2. Items 1 (Financial Statements) and 2 (Management's Discussion And
Analysis Of Financial Condition And Results Of Operations) included in
the Company's Quarterly Report on Form 10-QSB for the quarter ended
November 30, 1998.
A copy of these reports is being mailed to each stockholder with this proxy
statement.
FORWARD-LOOKING STATEMENTS
This proxy statement includes "forward-looking" statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All statements other than statements of historical facts
included in this proxy statement, including without limitation statements under
"1. ELECTION OF DIRECTORS - Recent Developments" and "- Financial Information",
regarding the Company's financial position, business strategy, and plans and
objectives of management of the Company for future operations and capital
expenditures, are forward-looking statements. Although the Company believes that
the expectations reflected in the forward-looking statements and the assumptions
upon which the forward-looking statements are based are reasonable, it can give
no assurance that such expectations and assumptions will prove to have been
correct. Additional statements concerning important factors that could cause
actual results to differ materially from the Company's expectation ("Cautionary
Statements") are disclosed below in the "Forward-Looking Statement - Cautionary
Statements" section of the Company's Annual Report on Form 10-KSB/A for the year
ended August 31, 1998. All written and oral forward-looking statements
attributable to the Company or persons acting on its behalf subsequent to the
date of this proxy statement are expressly qualified in their entirety by the
Cautionary Statements.
This Notice and Proxy Statement are sent by order of the Board of
Directors.
Dated: March 31, 1999 D. Scott Singdahlsen
Chief Executive Officer
20
<PAGE>
PROXY PROXY
PYR ENERGY CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints D. Scott Singdahlsen and Andrew P.
Calerich, or either of them, as proxies with full power of substitution to vote
all the shares of the undersigned with all of the powers which the undersigned
would possess if personally present at the Annual Meeting of Stockholders of PYR
Energy Corporation (the "Corporation"), to be held at 10:00 a.m. on Friday,
April 16, 1999, in the Third Floor Conference Room of Wells Fargo Bank, located
at 633 17th Street, Denver, Colorado 80202, or any adjournments thereof, on the
following matters:
[ X ] Please mark votes as in this example.
1. ELECTION OF DIRECTORS
Nominees: Keith F. Carney, S. L. Hutchison, Bryce W. Rhodes,
D. Scott Singdahlsen and Robert B. Suydam.
FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES [ ]
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE [ ]
2. Proposal to amend the Certificate of Incorporation to provide for the
authorization of the Preferred Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to amend the Certificate of Incorporation to limit the
personal liability of directors in certain circumstances.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to ratify the selection of Wheeler Wasoff, P.C. as the
Company's certified independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on the reverse side)
<PAGE>
5. In their discretion, the proxies are authorized to vote upon an
adjournment or postponement of the meeting.
[ ] YES [ ] NO [ ] ABSTAIN
6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
This proxy is solicited on behalf of the Board of Directors of PYR Energy
Corporation.
Dated:
------------------------------------
Signature:
-------------------------------
Signature:
-------------------------------
Signature if held jointly
(Please sign exactly as shown on your stock certificate and on the envelope in
which this proxy was mailed. When signing as partner, corporate officer,
attorney, executor, administrator, trustee, guardian, etc., give full title as
such and sign your own name as well. If stock is held jointly, each joint owner
should sign.)
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING ENVELOPE.
