U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-9800
LYRIC ENERGY, INC.
(Exact name of small business issuer as specified in its Charter)
Colorado 75-1711324
(State of Incorporation) (I.R.S. Employer Identification
Number)
1013 West 8th Ave., Amarillo, Texas 79101
(Address of principal executive offices)
(806) 376-5088
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Securities Exchange Act during the past 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....... No...X....
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: 250,000,000 shares of common
stock as of June 30, 1997.
Transitional Small Business Disclosure Format (check one);
Yes....... No...X....
THIS AMENDMENT ON FORM 10-QSB/A TO THE REGISTRANT'S FORM 10-QSB FOR THE
QUARTER ENDED JANUARY 31, 1997 IS BEING FILED TO CORRECTLY STATE THE
FORGIVENESS OF JUDGMENT PAYABLE TO RELATED PARTY AND FORGIVENESS OF ADVANCE
PAYABLE TO RELATED PARTY AS CAPITAL CONTRIBUTIONS FOR THE THREE-MONTH AND
NINE-MONTH PERIODS ENDED JANUARY 31, 1997. ALL OTHER INFORMATION CONTAINED IN
PARTS I AND II OF THE ORIGINAL FORM 10-QSB FILED ON APRIL 9, 1997 IS
UNCHANGED.
Index to Quarterly Report on Form 10Q-SB
PART I - FINANCIAL INFORMATION
Page
Item 1.Financial Statements:
Balance Sheet as of January 31, 1997. . . . . . . . . . . .3
Statements of Operations for the Three-Month and Nine-Month
Periods ended January 31, 1997 and 1996 . . . . . . . . . .4
Statements of Cash Flows for the Nine-Month Periods
endedJanuary 31, 1997 and 1996 . . . . . . . . . . . . . .5
Notes to Financial Statements . . . . . . . . . . . . . . .6
Item 2.Plan of Operation. . . . . . . . . . . . . . . . . . . .8
PART II - OTHER INFORMATION
Item 1.Legal Proceedings. . . . . . . . . . . . . . . . . . . 11
Item 2.Changes in Securities. . . . . . . . . . . . . . . . . 11
Item 3.Defaults Upon Senior Securities. . . . . . . . . . . . 11
Item 4.Submission Of Matters To A Vote Of Security Holders. . 11
Item 5.Other Information. . . . . . . . . . . . . . . . . . . 11
Item 6.Exhibits And Reports on Form 8-K . . . . . . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Lyric Energy, Inc.
(A Development Stage Enterprise)
Balance Sheet
(Unaudited)
January 31, 1997
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities - accounts payable, trade
(including $48,811 due to related parties) $ 64,521
Shareholders' deficiency:
Common stock, $.01 par value, shares authorized,
250,000,000; issued and outstanding, 46,958,483 469,584
Additional paid-in capital 2,154,638
Accumulated deficit (including $1,539 of net losses
during the development stage) (2,688,743)
Total shareholders' deficiency (64,521)
Total liabilities and shareholders' deficiency $ -
See accompanying notes to financial statements.
Lyric Energy, Inc.
(A Development Stage Enterprise)
Statements of Operations
(Unaudited)
Three-Month Nine-Month
Periods Ended Periods Ended
January 31, January 31,
1997 1996 1997 1996
November 1, 1996
(Inception)
Through
January 31, 1997
Revenues $ - $ - $ - $ -
General and administrative
expenses (57) - (158) -
Other income - - 44 -
Interest expense to related
party (1,482) (2,223) (5,928) (6,669)
Net loss before income taxes (1,539) (2,223) (6,042) (6,669)
Income taxes - - - -
Net loss $(1,539) $(2,223) $(6,042) $(6,669)
Weighted average shares
outstanding 46,958,483 46,958,483 46,958,483 46,958,483
Net loss per common share $ (.00003) $ (.00005) $ (.0001) $ (.0001)
See accompanying notes to financial statements.
Lyric Energy, Inc.
(A Development Stage Enterprise)
Statements of Cash Flows
(Unaudited)
November 1, 1996
Nine-Month (Inception)
Periods Ended Through
January 31, January 31, 1997
1997 1996
Net cash used in
operating activities
and net decrease
in cash $(1,453) $(336) $(23)
Cash at beginning
of period 1,453 412 23
Cash at end of
period $ - $ 72 $ -
Schedule of Noncash Financing Activities
Release of obligation
payable to related
party $ 88,907 $ - $ 88,907
Release of judgment payable
to related party $250,000 $ - $250,000
See accompanying notes to financial statements.
Lyric Energy, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(Unaudited)
Note 1. Basis of Presentation
The unaudited financial statements and related notes to
financial statements presented herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The accompanying
financial statements were prepared in accordance with the
accounting policies used in the preparation of the Company's
audited financial statements included in its Annual Report on Form
10-KSB for the fiscal year ended April 30, 1996 and should be read
in conjunction with such financial statements and the notes
thereto.
Effective November 1, 1996, the Company returned to the
development stage in accordance with Statement of Financial
Accounting Standards No. 7, Accounting and Reporting by Development
Stage Enterprises, with its planned principal activities consisting
of the evaluation, structure and completion of a merger with or
acquisition of a privately owned corporation.
In the opinion of management, all adjustments (consisting only
of normal recurring adjustments) which are necessary for a fair
presentation of operating results for the interim periods presented
have been made.
Note 2. Going Concern
The Company has been relatively inactive during the past two
years due to a lack of operating assets and working capital and a
significant deficiency in assets. These factors raise substantial
doubt about the Company's ability to continue as a going concern.
The Company is currently searching for the acquisition of or merger
with an operating company in order to carry on the business of the
acquired company. The Company has signed a Letter of Intent to
make such an acquisition (see Note 4). The ability of the Company
to continue as a going concern is dependent on the completion of
such an acquisition. The financial statements do not include any
adjustments that might be necessary if the Company is unable to
continue as a going concern.
Note 3. Related Party Transactions
As of December 31, 1996, the Company was obligated to repay an
advance from a related party (ML&C Trust) consisting of an
unsecured 10% demand note payable of $88,907. ML&C Trust is
controlled by a significant shareholder of the Company. Interest
expense of $1,482, $2,223, $5,928 and $6,669 was incurred on this
advance during the three-month periods ended January 31, 1997 and
1996 and nine-month periods ended January 31, 1997 and 1996,
respectively. In January 1997, the Company received a capital
contribution through the release of its obligation to repay this
advance including all interest which was accrued under the terms of
the note.
The Company had a $250,000 judgment payable to a related party
(Dynamic Investing, Inc.) at November 30, 1996. The underlying
judgment occurred in 1993. Dynamic Investing, Inc. is owned by the
president of the Company, who also is a shareholder of the Company.
In December 1996, the Company received a capital contribution
through the release of the judgment from the related party at no
cost to the Company.
Note 4. Letter of Intent and Promissory Note
On January 2, 1997, the Company entered into a Letter of
Intent ("LOI"), which was amended by subsequent negotiations and a
supplemental letter dated March 17, 1997, with Natural Gas
Technologies, Inc., a Texas corporation ("NGT"). Pursuant to the
LOI, NGT loaned the Company $100,000 pursuant to a
noninterest-bearing convertible note dated February 4, 1997
("Note"), and the loaned funds were placed in escrow. The loan
will be converted into 203,041,517 common shares, which are all of
the remaining authorized but unissued common shares of the Company,
after the Company has filed all of the required reports pursuant to
the Securities Exchange Act of 1934, as amended, and after the
Company obtains a waiver from the bank of the Company's commitment
in connection with a compromise and settlement agreement related to
a bank debt forgiveness in July 1991 to issue additional common
stock in the future as may be required to maintain the bank at an
8.9976% ownership interest. Upon such conversion, the loaned funds
will be released from escrow and paid to the Company for use in
satisfying all existing debts and encumbrances and to settle all
claims against it. If the Note is not converted by December 31,
1997, the funds in escrow will be returned to NGT. The LOI further
provides for a share exchange transaction whereby the shareholders
of NGT would be issued additional shares in the Company such that
these shareholders would own a total of 95 percent of the total
issued and outstanding common shares of the Company and NGT would
become a wholly-owned subsidiary of the Company. The share
exchange will occur after the Company holds a shareholder meeting
for the purpose of (i) approving a reverse split of the Company's
common stock which will result in additional common shares being
made available for issuance in the shares exchange; (ii)
authorizing 10,000,000 shares of no par value preferred stock
approximately 25,000 of which will be designed for exchange with
NGT preferred shareholders in the share exchange and the remaining
9,975,000 of which will be reserved for future issuance at the
discretion of the Board of Directors; and (iii) approving certain
other amendments to the Company's Articles of Incorporation. The
share exchange remains conditional upon the completion of due
diligence and final documentation.
<PAGE>
Item 2. Plan of Operation.
The Company is currently searching for an operating company to
acquire in order to carry on the business of the acquired company.
The Company has only engaged in preliminary efforts in attempting
to identify possible merger or acquisition candidates; however,
effective January 2, 1997, as amended March 17, 1997, the Company
has entered into a letter of intent with Natural Gas Technologies,
Inc. See "Letter of Intent and Promissory Note." The Company has
insufficient capital with which to provide merger or acquisition
candidates with substantial cash or other assets, regardless,
management believes that the Company offers potential merger or
acquisition candidates the opportunity to acquire a controlling
ownership interest in a public company at substantially less cost
than is required to conduct an initial public offering.
Management contemplates that the Company will seek to merge
with or acquire a company with assets or earnings, or both. The
Company has not established a specific level of earnings or assets
below which the Company would not consider a merger acquisition of
the target company. Moreover, management may identify and acquire
a target company which is generating losses if it believes that the
prospects of the target company merit the risks involved.
The Company has very limited liquidity and in fact in the
absence of being able to borrow money from its Chairman of the
Board of Directors or some other source, it will not be able to
continue operations. In recent history, the Company's sole source
of liquidity was in fact from loans of cash or services provided to
it by its Chairman. The Company does not plan on hiring third
party consultants to perform due diligence or market research
relative to availability of target companies but instead plans on
relying on its own judgment in determining the viability of the
merger and acquisition market and any target candidates which may
be made available to it. The Company's sole employee is its
Chairman and Chief Executive Officer and it is expected this shall
remain true until such time as the Company completes an acquisition
of a target operating company or a business of another company by
way of a merger transaction. As a result of the Company's lack of
cash, its only available form of acquisition "capital" is its
stock.
Letter of Intent and Promissory Note
On January 2, 1997, the Company entered into a Letter of
Intent with Natural Gas Technologies, Inc. ("NGT"), a Texas
corporation engaged in the exploration, development and production
of oil and gas properties. The Letter of Intent was amended
March 17, 1997. Pursuant to the Letter of Intent, NGT loaned the
Company $100,000 pursuant to a non-interest bearing Convertible
Promissory Note (the "Note"). The Note automatically converts into
203,041,517 shares of the Company upon the later to occur of (i)
the Company becoming current on all reports required under Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (ii) the Company obtaining a waiver from
Amarillo National Bank of the Bank's non-dilution rights contained
in the July 31, 1991 agreement with the Bank. If the Note does not
convert prior to December 31, 1997, the funds in escrow will be
repaid to NGT. Upon conversion of the Note, the Company has agreed
to fill two vacancies on the Board of Directors with two directors
nominated by NGT.
The Letter of Intent further provides for a special meeting of
the shareholders of the Company to approve the following matters:
(i) a 268.3342 shares for one share reverse split of the Company's
common stock; (ii) a name change of the Company to Natural Gas
Technologies, Inc.; (iii) amendments to the Company's articles of
incorporation to eliminate the liability of officers and directors
in certain circumstances and to reduce the shareholder voting
requirements for certain significant corporate actions; and (iv)
the authorization of 10,000,000 shares of no par value preferred
stock which will be reserved for future issuance in the discretion
of the Board of Directors. Assuming approval of the foregoing
matters, the current shareholders of the Company will upon
conversion of the Note hold 175,000 shares and NGT will hold
756,674 shares on a post-reverse split basis. The special meeting
will be held as soon as practicable after the conversion of the
Note, and all costs associated with the meeting, including the
preparation and mailing of the information statements and notices
will be borne by NGT.
The Letter of Intent further contemplates a share exchange
between NGT and Lyric. The share exchange is intended to take
place in two stages. The first stage will occur immediately after
shareholder approval of the matters specified above and will
consist of the exchange of approximately 2,055,000 shares of the
authorized but unissued post-reverse split shares of the Company
for approximately eighty percent of the equity interests in NGT,
which interests are held by certain officers, directors and their
family members and affiliates. The Company will therefore control
NGT upon completion of the first stage. The second stage will
occur upon the effective date of a registration statement on Form
S-4 which registers the exchange of all of the remaining equity
interests in NGT into approximately 513,000 shares of the
authorized but unissued post-reverse split shares of the Company
and further providing for the distribution of the 756,674
post-reverse split shares of the Company issued to NGT upon
conversion of the Note to the shareholders of NGT immediately prior
to the share exchange. The foregoing terms are subject to
adjustment based upon the anticipated conversion of certain
preferred stock of NGT into common stock and based upon certain
anticipated oil and gas property acquisitions by NGT prior to the
share exchange. It is anticipated that upon completion of the
share exchange, the current shareholders of the Company will hold
five percent of the total outstanding shares of Lyric and the
shareholders of NGT will hold the remaining 95 percent.
The share exchange remains conditional upon the completion of
due diligence and final documentation therefor.
Liquidity and Capital Resources
On January 31, 1997, the Company had no cash on hand. At the
date of this report, the Company has entered into a Convertible
Promissory Note pursuant to which $100,000 has been loaned to
Company but is currently being held in escrow. Such funds will be
taken out of escrow and paid to the Company upon the later to occur
of (i) the Company becoming current on all reports required under
Section 13 or 15(d) of the Exchange Act and (ii) the Company
obtaining a waiver from Amarillo National Bank of the Bank's
non-dilution rights contained in a settlement agreement with the
Bank. See Note 4 of the Notes to Financial Statements presented
herein. Pursuant to a letter of intent between the Company and the
lender, the Company must use such funds for the payment of
outstanding obligations in preparation for a share exchange with
the lender. In the event the foregoing escrow release conditions
do not occur before December 31, 1997, the funds in escrow will be
repaid to the lender. Should this occur, the Company will have
inadequate liquidity on its own to carry out its business plan and
will have to rely on future advances from its President and Sole
Director.
Except for historical information contained herein, statements
in this discussion are forward looking statements. Forward looking
statements involve known and unknown risks and uncertainties which
may cause the Company's actual results in future periods to differ
materially from forecast results.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See the Company's Annual Report on Form 10-KSB for the
fiscal year ended April 30, 1996.
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
(a)Exhibits
Exhibit No.Description
3. Articles of Incorporation as amended and
Bylaws (see Note)
10.1 Compromise and Settlement Agreement
dated July 31, 1991 between the
Registrant and Amarillo National Bank
(see Note)
10.2 Letter of Intent dated January 2, 1997
with Natural Gas Technologies, Inc., as
amended by letter dated March 17, 1997
(see Note)
10.3 Restated Convertible Promissory Note
dated February 4, 1997 (see Note)
10.4 Release of Judgment dated December 31,
1997 (see Note)
10.5 Termination of Agreement and
Cancellation of Loan dated January 2,
1997 (see Note)
27.1 Financial Data Schedule
Note to Exhibits
Incorporated by reference to exhibits included in the
Company's Annual Report on Form 10-KSB for the fiscal
year ended April 30, 1996.
(b)Reports On Form 8-K
There were no reports on Form 8-K filed during the
quarter for which this report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LYRIC ENERGY, INC.
Date: July 2, 1997 By: /s/ Brent Wagman
Brent Wagman, Chairman of the Board
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE LYRIC
ENERGY, INC. FINANCIAL STATEMENTS FOR THE INTERIM YEAR TO DATE PERIOD ENDED
JANUARY 31, 1997, AS AMENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> LYRIC ENERGY, INC.
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