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 February 28, 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 April 14, 1999 is as follows:
$.001 Par Value Common Stock 9,421,470
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PYR ENERGY CORPORATION
FORM 10-QSB
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheet - February 28, 1999 and August 31, 1998 3
Statement of Operations - Quarter Ended and Six Months Ended
February 28, 1999 and February 28, 1998 4
Statement of Cash Flows - Six Months Ended February 28, 1999
and February 28, 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 14
2
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PART I
ITEM 1. FINANCIAL STATEMENTS
PYR ENERGY CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
2/28/99 8/31/98
(UNAUDITED)
CURRENT ASSETS
<S> <C> <C>
Cash $ 711,367 $ 373,100
Deposits and prepaid expenses 128,128 16,897
----------- -----------
Total Current Assets 839,495 389,997
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Furniture and equipment, net 44,503 54,821
Undeveloped oil and gas prospects 3,060,053 2,491,238
----------- -----------
3,104,556 2,546,059
----------- -----------
OTHER ASSETS, net 58,120 3,546
----------- -----------
$ 4,002,171 $ 2,939,602
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 15,856 $ 44,389
Accrued and other liabilities 11,000 --
Interest payable 84,603 --
Current portion of capital lease obligation 1,543 1,441
Convertible Debentures 2,500,000 --
Accrued seismic and exploration costs -- 1,282,500
----------- -----------
Total Current Liabilities 2,613,002 1,328,330
----------- -----------
Capital lease obligation 1,860 2,661
----------- -----------
Total Liabilities 2,614,862 1,330,991
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.001 par value
Authorized 30,000,000 shares
Issued and outstanding - 9,421,470 shares
at 2/28/99 and 9,154,804 shares at 8/31/98 9,421 9,155
Capital in excess of par value 1,967,821 1,768,088
Retained earnings/(accumulated deficit) (589,933) (168,632)
----------- -----------
1,387,309 1,608,611
----------- -----------
$ 4,002,171 $ 2,939,602
=========== ===========
3
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<CAPTION>
PYR ENERGY CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Three Six Six
Months Months Months Months Inception
Ended Ended Ended Ended Through
2/28/99 2/28/98 2/28/99 2/28/98 2/28/99
------- ------- ------- ------- -------
REVENUES
<S> <C> <C> <C> <C> <C>
Consulting Fees $ -- $ -- $ -- $ 10,000 $ 127,528
Interest 11,076 10,806 15,601 26,545 57,342
Gain on asset sale 556,197 556,197 556,197
----------- ----------- ----------- ----------- -----------
11,076 567,003 15,601 592,742 741,067
OPERATING EXPENSES
General and administrative 174,299 173,373 312,074 361,290 1,130,998
Dry hole impairment -- -- -- -- 15,000
Interest 82,204 217 112,036 217 112,875
Depreciation and amortization 6,407 6,427 12,793 9,760 36,260
----------- ----------- ----------- ----------- -----------
262,910 180,017 436,903 371,267 1,295,133
NET INCOME BEFORE INCOME TAXES (251,834) 386,986 (421,302) 221,475 (554,066)
Income Taxes -- 6,240 -- 6,240 --
(251,834) 380,746 (421,302) 215,235 (554,066)
INCOME APPLICABLE TO
PREDECESSOR LLC -- -- -- -- (35,868)
----------- ----------- ----------- ----------- -----------
NET (LOSS) INCOME $ (251,834) $ 380,746 $ (421,302) $ 215,235 $ (589,934)
=========== =========== =========== =========== ===========
NET INCOME (LOSS) PER COMMON
SHARE -BASIC AND DILUTED $ (.027) $ .042 $ (.045) $ .024 $ (.089)
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 9,421,470 9,154,804 9,288,139 9,154,804 6,658,899
4
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<CAPTION>
PYR ENERGY CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative
Six Months Six Months from Inception
Ended 2/28/99 Ended 2/28/98 to 2/28/99
------------- ------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ (421,302) $ 215,235 $ (554,066)
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 12,793 9,760 36,260
Amortization of deferred financing costs 27,224 -- 27,224
Contributed services -- -- 36,000
Dry hole impairment -- -- 15,000
Changes in assets and liabilities
(Increase)/decrease in receivables -- (383,047) --
(Increase)/decrease in deposits and prepaids (111,231) (17,482) (126,522)
Increase/(decrease) in accounts payable (28,533) (24,855) 1,422
Increase/(decrease) in accrued and other liabilities 95,603 (2,564) 95,603
Other -- -- (3,751)
----------- ----------- -----------
Net cash provided/(used) by operating activities (425,446) (759,150) (1,029,027)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of oil and gas interests -- 850,078 1,050,078
Cash paid for furniture and equipment (2,563) (48,602) (75,451)
Cash paid for undeveloped oil and gas properties (1,651,227) 396,925) (3,356,018)
----------- ----------- -----------
Net cash provided/(used) in investing activities (1,653,790) 404,551 (2,381,391)
----------- ----------- -----------
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)
Proceeds from sale of common stock -- -- 2,023,750
Cash paid for offering costs -- -- (280,711)
Proceeds from convertible debentures 2,500,000 -- 2,500,000
Cash paid for deferred financing costs (81,798) -- (81,798)
Payments on capital lease (699) -- (1,792)
Cash received upon recapitalization and merger -- -- 336
----------- ----------- -----------
Net cash (used) provided by financing activities 2,417,503 3,281 4,121,785
----------- ----------- -----------
NET INCREASE/(DECREASE) IN CASH 338,267 (351,318) 711,367
CASH, BEGINNING OF PERIODS 373,100 1,432,281 --
----------- ----------- -----------
CASH, END OF PERIODS $ 711,367 $ 1,080,963 $ 711,367
=========== =========== ===========
5
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PYR ENERGY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
February 28, 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 February 28, 1999,
there were no cash equivalents.
6
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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.
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 February 28, 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
<PAGE>
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, 1999, 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.
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 purchase amount of
the Series A Preferred. If the Series A Preferred is not issued by April 26,
1999 (which requires stockholder approval to authorize a class of preferred
stock), the Note holders have the right to require that the 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 is required to make semi-annual interest
payments on the Notes commencing on the date that is six months from the date of
the Notes until the Notes are repaid. 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.
During the six months ended February 28, 1999 ("1999") and February 28,
1998 ("1998"), the Company incurred approximately $369,000 and $397,000
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.
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. However, there can be no assurance that any such wells
will be drilled and if drilled that any of these wells will be successful.
8
<PAGE>
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").
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.
This basin as a whole has suffered from a lack of applied exploration
technology and deep drilling. Only about one percent of the total basin wells
have been drilled to a depth greater than 12,000 feet and none of the 2,000
wells drilled during 1996 was drilled to a depth greater than 12,000 feet.
Additional 1996 statistics indicate that the average well depth drilled during
the year was just slightly more than 1,800 feet. Three-dimensional seismic has
been employed only in limited quantity and in certain areas of the basin.
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 with modern seismic technology and the drill bit. In
addition, continued retrenchment of major oil companies has opened up fee
acreage positions to outside exploration by aggressive independent companies.
Although the Company has identified a number of exploration plays in the San
Joaquin basin, the project that has advanced most rapidly has been the company's
East Lost Hills Prospect.
In 1997, the Company had identified and, together with Armstrong Resources
LLC ("Armstrong"), had undertaken technical analysis of a deep, large untested
structure in the footwall of the Lost Hills thrust. This prospect lies directly
east of and structurally below the existing Lost Hills field, which has produced
in excess of 350 MMBoe from shallow pay zones in a large thrusted anticlinal
feature. Early in 1998, the Company and Armstrong, entered into an exploration
agreement with a number of established Canadian partners to participate in the
drilling of an initial exploratory well to fully evaluate the feature. Bellevue
Resources, Inc., a subsidiary of Elk Point Resources, Ltd., is operator of the
well. Currently, other participants in the well include: Berkley Petroleum
Corporation, Paramount Resources, Ltd., Richland Petroleum Corporation,
Westminister Resources, Ltd., Kookaburra Resources, Inc. and Hilton Petroleum
Company. 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
before payout working interest of 10.575%, which reduces to 9.253% after payout
in the initial exploration well. The Company owns a total working interest of
10.575% in the six township area of mutual interest, subject to a back-in
interest after payout on approximately 900 acres that would reduce the Company's
working interest on those approximate 900 acres to 9.255%. The Company and its
joint working interest owners control approximately 30,000 gross acres of
leasehold over the prospect.
9
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The Bellevue Resources et al. #1-17 East Lost Hills well, located in SE1/4.
Sec 17, T26S, R21E, Kern County, California, commenced drilling on May 15, 1998.
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. Currently, the well is
fully contained with produced water, natural gas, natural gas liquids and oil
being separated and delivered to disposal and processing facilities. In order to
control the well, the operator commenced drilling a relief well on December 18,
1998, designed to intersect the wellbore of the blowout well at a depth of
approximately 16,500 to 17,000 feet. Upon intersection, the relief well is
intended to perform a bottom hole kill to permanently plug the blowout well.
Additional projects in the San Joaquin Basin include the Company's
neighboring Southeast Maricopa and San Emidio projects. At Southeast Maricopa,
the Company's seismic contractor, Western Geophysical Company, completed
acquisition and processing of approximately 52 square miles of 3-D seismic data
in late 1998. The Company continues to interpret the data in order to further
refine drillable prospects. At San Emidio, the Company's approach is to
incorporate approximately 39 square miles of existing 3- seismic data with the
newly acquired data at its Southeast Maricopa acreage in order to further
understand the complex stratigraphic geometries and trapping mechanisms found
here. The Company may present this project to potential industry partners in
conjunction with its Southeast Maricopa project or may create an independent
project for presentation. The Company's approach may be to obtain industry
participation in order to receive a carried interest in the drilling of one or
more exploration wells. No drilling commitments have been made or received.
On April 5, 1999, the Company reported it has signed an agreement with
Armstrong Resources, LLC to participate in three additional deep exploration
projects in the San Joaquin basin of California. All three projects lay outside
the East Lost Hills joint venture area. The agreement calls for PYR to pay
Armstrong a combination of cash and common stock in exchange for a working
interest, ranging from 3.00% to 3.75%, in each of the three exploration prospect
areas. PYR's interest will be carried in the initial test well in each of the
three separate exploration prospects. The first exploration well in the program
is expected to spud in May and will be operated by Berkley Petroleum
Corporation. The three of exploration prospects, 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. It is expected that this agreement will close on or
before May 1, 1999.
In addition to the above activities in the San Joaquin Basin of California,
the Company has signed an exploration farmout agreement with Chevron Production,
USA on approximately 68,000 gross (37,000 net) acres of leasehold in
northwestern Montana. In exchange for the Company's payment of delay rental
obligations and Chevron retaining overriding royalty interests, ranging from 2
to 5%, the Company has obtained Chevron's interest in this acreage position.
10
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At February 28, 1999, the Company had a negative working capital amount of
($1,774,000). Included in this figure are $2,500,000 of convertible debentures
sold by the Company in a private placement during the quarter ended November 30,
1998. The private placement securities issued are 10% convertible notes that
will automatically convert to 10% convertible preferred stock at the time, if
any, that PYR has obtained stockholder approval for, and issued, the convertible
preferred shares. The preferred stock is ultimately convertible into common
stock at a conversion price of $.60 per common share.
The Company had no outstanding long-term debt at February 28, 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. The Company is in the process of
attempting to control an exploration well at East Lost Hills. 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. The Company
intends to limit capital expenditures by forming industry alliances and
exchanging an appropriate portion of its interest for cash and/or a carried
interest in its exploration projects. The Company anticipates that it may need
to raise additional funds to cover capital expenditures.
Results of Operations
The quarter ended February 28, 1999 ("1999") compared with the quarter
ended February 28, 1998 ("1998").
Operations during the quarter ended February 28, 1999 resulted in a net
loss of ($251,834) compared to a net income of $380,746 for the quarter ended
February 28, 1998. The difference is attributed to a gain from the sale of oil
and gas properties reported during the quarter ended February 28, 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 quarters ended February 28, 1999 or
1998. The Company has not owned any proved reserves and had no oil or gas
production. The Company recorded $6,407 and $6,427 in depreciation expense
associated with capitalized office furniture and equipment during the quarters
ended February 28, 1999 and 1998, respectively.
11
<PAGE>
General and Administrative Expense. The Company incurred $174,299 and
$173,373 in general and administrative expenses during the quarters ended
February 28, 1999 and 1998, respectively.
Interest Expense. The Company recorded $82,204 in interest expense for the
quarter ended February 28, 1999 primarily associated with the Company's
convertible debentures. The Company had nominal interest expense for the quarter
ended February 28, 1998.
The six months ended February 28, 1999 ("1999") compared with the six
months ended February 28, 1998 ("1998").
Operations during the six months ended February 28, 1999 resulted in a net
loss of ($421,302) compared to a net income of $215,235 for the six months ended
February 28, 1998. The difference is attributed to a gain from the sale of oil
and gas properties reported during the six months ended February 28, 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 six months ended February 28, 1999
or 1998. The Company has not owned any proved reserves and had no oil or gas
production. The Company recorded $12,793 and $9,760 in depreciation expense
associated with capitalized office furniture and equipment during the six months
ended February 28, 1999 and 1998, respectively.
General and Administrative Expense. The Company incurred $312,074 and
$361,290 in general and administrative expenses during the six months ended
February 28, 1999 and 1998, respectively.
Interest Expense. The Company recorded $112,036 in interest expense for the
six months ended February 28, 1999 primarily associated with the Company's
convertible debentures. The Company had nominal interest expense for the six
months ended February 28, 1998.
Consulting Fee Revenue. The Company generated $10,000 from consulting fees
during the six months February 28, 1998. These revenues have ceased and are not
expected to occur in the future.
12
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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
currently is reviewing 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 June 30, 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
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 February 28, 1999, the Registrant filed a
total of two reports on Form 8-K:
A Form 8K was filed on 12/07/98 reporting a press release dated
12/7/98,
A Form 8K was filed on 1/18/99 reporting a press release dated
1/15/99,
13
<PAGE>
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 April 14, 1999
- ------------------------ and Chairman Of The Board
D. Scott Singdahlsen
/s/ Andrew P. Calerich Chief Financial Officer April 14, 1999
- -----------------------
Andrew P. Calerich
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 2/28/99
FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> AUG-31-1999 AUG-31-1999
<PERIOD-START> DEC-01-1998 SEP-01-1998
<PERIOD-END> FEB-28-1999 FEB-28-1999
<CASH> 711,367 711,367
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 839,495 839,495
<PP&E> 3,104,556 3,104,556
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 4,002,171 4,002,171
<CURRENT-LIABILITIES> 2,613,002 2,613,002
<BONDS> 0 0
0 0
0 0
<COMMON> 9,421 9,421
<OTHER-SE> 1,377,888 1,377,888
<TOTAL-LIABILITY-AND-EQUITY> 0 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 180,706 324,867
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 82,204 112,036
<INCOME-PRETAX> (251,834) (421,302)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (251,834) (421,302)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (251,834) (421,302)
<EPS-PRIMARY> (.027) (.045)
<EPS-DILUTED> (.027) (.045)
</TABLE>
