SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the fiscal year ended April 30, 1998
[ ] Transition Report Under Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the transition period from _____________ to _____________.
Commission File No. 0-09800
LYRIC INTERNATIONAL, INC.
(Name of small business issuer in its charter)
COLORADO 75-1711324
(State or other jurisdiction of Incorporation (I.R.S. Employer
or organization) Identification No.)
16901 Dallas Parkway, #111, Dallas, Texas 75248
(Address of principal executive offices) (Zip Code)
Issuers's telephone number: (972) 713-7163
Securities registered pursuant to Section 12 (b) of the Act: N/A
Securities registered pursuant to Section 12 (g) of the Act:
$0.01 Par Value Common Stock
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the 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 X No ____
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State Issuer's Revenues for the most recent fiscal year: $0
State the aggregate market value of Issuer's voting $.01 par value common
stock held by non-affiliates computed by reference to the price at which stock
was sold, or the average bid and asked prices of such stock, as of a specified
date within the past 60 days. (See definition of affiliate in Rule 12b-2 of
the Exchange Act). As of July 27, 1998: $220,000,000 [That calculation is
based upon the average of an asked price of $1.76 and no bid price. The last
reported closing sales price for the Issuer's common stock was $.01 on
September 19, 1997.]
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares of the Issuer's $.01 par value common stock outstanding
as of July 26, 1998 was approximately 1,039,082. (A reverse stock split of the
Issuer's par value common stock was approved on July 1, 1998. The total
number of shares outstanding may be increased as fractional shares of post-
split common stock will be rounded up to the next whole share.)
PART 1
ITEM 1. BUSINESS
Lyric International, Inc. ("Lyric" or the "Company") approved a one share-for-
240.597 share reverse split of the Company's $.01 par value common stock
("Common Stock") on July 1, 1998. All share and per share data
and information contained in this report assumes the effect of a 1-for-240.597
reverse stock split unless otherwise indicated.
Lyric was incorporated in Colorado on April 25, 1980 under the name Lyric
Energy, Inc. On February 3, 1981, the Company completed a registered public
offering of 20,000,000 pre-split shares of its $.01 par value common stock
("Common Stock"), and received gross proceeds of $2,000,000 therefrom. The
Company was an active oil and gas producing company from its inception until
July 31, 1991.
For the fiscal year ending April 30, 1991 the Company's net loss was $360,791
and for 1990 and 1989 was $290,561 and $266,799, respectively. The principal
cause of the losses was the interest being accrued but not paid on the
Company's bank note with the Amarillo National Bank (the "Bank"). The original
principal of the Bank note was $1,815,869. By April 30, 1991 principal and
unpaid interest had grown to $3,209,761. The Company was unable to pay the
interest.
Effective July 31, 1991 the Company entered into an agreement with the Bank
(i) whereby the Company assigned to the Bank interest in certain oil and gas
producing properties having a present worth discounted at 10% of $297,600, and
(ii) 3,800,000 pre-split shares of the Company's Common Stock. In exchange,
the Bank cancelled all past due notes including accrued interest through July
31, 1991. In addition the Company agreed to assign to the Bank small
overriding royalty interests in any wells the Company subsequently drilled on
one proved undeveloped oil property in Moore County, Texas, and on any oil and
gas subsequently drilled by the Company in the Thalia area of Foard County,
Texas. The Company did not drill any such wells.
The Company agreed to continue to operate the Okmulgee oil and casinghead gas
producing properties consisting of the properties in the Creek Indian
designated unit as designated by the Oklahoma Corporation Commission for a six
month period. At the end of that six month period the Company agreed with the
Bank that the Company would, if the production warranted, effectuate a
production payment with the Bank providing that the Bank would receive 75% of
the Company's revenue after expenses from the Creek Indian Unit until the Bank
received $100,000, or alternately the Company would sell the properties in the
unit and give to the Bank the proceeds of such sale. The Company subsequently
sold the Okmulgee oil and casinghead gas producing properties to an unrelated
third party and paid the proceeds to the Bank in accordance with this
agreement.
After assigning to the Bank the oil and gas producing properties described
above, the Company still had interests in some oil and gas properties. All of
those oil and gas properties subsequently were either plugged and abandoned or
ceased producing and expired by their own terms for failure to develop or
failure to produce. One property in Moore County, Texas, was sold to an
unrelated third party in exchange for an obligation by that party to plug and
abandon the wells at the appropriate time and to relieve the Company of that
obligation and a modest amount of cash which was not
sufficient to completely pay the outstanding obligations of that property at
the time of sale. The amount of such unpaid invoices were owed to Stahl
Petroleum Company, a company owned and controlled by the President of the
Company, which waived the payment of the balance due.
As a consequence of the foregoing transactions, the Company had no source of
cash flow or income and no properties of any value.
The Company entered into a letter of intent dated January 2, 1997 and modified
March 17, 1997 (the "Letter of Intent") with Natural Gas Technologies ("NGT"),
a Texas Corporation, for a share exchange transaction ("Share Exchange"). The
reason for the Share Exchange was to carry out the Company's prior plan of
operation to acquire an operating company. Prior to entering into the Letter
of Intent, the Company and NGT were unrelated and NGT held no shares of the
Company.
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 had
a maturity date of December 31, 1997 and automatically converted into
203,041,517 pre-split shares of the Company's Common Stock upon (i) the
Company coming into current compliance with the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and (ii) the Company obtaining a waiver
from the Bank of certain non-dilution rights in favor of the Bank. The Note
converted by its terms on April 10, 1997, which resulted in NGT obtaining a
controlling interest in the Company. Previously, no single person or voting
group controlled the Company. G.E. Stahl was the sole Director and approved
the transaction in that capacity. The source of the $100,000 was loans to NGT
from Brent Wagman and Warren Donohue, both officers and directors of NGT.
In January, 1998, that NGT terminated its merger plans with the Company and
transferred the 203,041,517 pre-split shares of the Company's Common Stock to
Brent Wagman, the Chairman of the Board of the Company.
The Company approved at a special meeting of the Company shareholders held on
July 1, 1998 to change the Company's name from Lyric Energy, Inc. to Lyric
International, Inc., which became effective July 21, 1998, a 1-for-240.597
share reverse split of the Company's Common Stock and Articles of Amendment to
the Company's Articles of Incorporation. The Articles of Amendment contain
provisions that change the Company's name, authorize 10,000,000 shares of no-
par value preferred stock to be reserved for future issuance in the discretion
of the Company's Board of Directors, eliminate the liability of the Company's
officers and directors in certain circumstances, reduce the voting
requirements for certain fundamental corporate actions, and reduce the quorum
requirement for shareholder meetings from shares representing a majority of
outstanding voting rights to shares representing one-third of the outstanding
voting rights on the matters presented.
Plan of Operation
Lyric currently is focusing on three plans of operations: (i) resources, (ii)
technology, and (iii) real estate.
Resources
The Company primarily plans to build shareholder value through consistent
growth in per share reserves, production and the resulting cash flow in
earnings of the Company. To accomplish this, the Company plans to acquire
working interests in properties which are expected to produce secondary
recoveries of oil and gas through the use of new technologies, water floods or
additional drilling. These types of properties can usually be acquired on
more favorable terms and properties in primary production, although lease
operating costs for these properties are higher upon acquisition and
properties in primary production. The Company however has not identified any
properties in which to acquire a working interest or determined the manner in
which such acquisitions may be financed.
Technology
The Company currently is negotiating with an affiliated party to acquire
advance 4-D seismic equipment and technology to systematically explore for and
exploit natural gas and oil accumulations. No determination has been made by
the parties as to whether the Company will purchase all of, part of or lease
the 4-D siesmic equipment and technology from the affiliated party. If that
transaction is consummated, it will be on a non-arm's-length basis.
Real Estate
The Company currently is negotiating with certain parties to acquire a beach
front hotel in Key Largo, Florida. The parties however have not entered into
any definitive agreement or a letter of intent. The Company has not
determined the manner in which the possible purchase of the hotel may be
financed.
Competition
The Company will be engaging in the oil and gas business to the extent that
the Company acquires working interest in oil and gas properties. Competition
in the oil and gas business is intense, particularly with respect to the
acquisition of producing properties, proved undeveloped acreage and leases.
Major and independent oil and gas companies actively bid for desirable oil and
gas properties and for the equipment and labor required for their operation
and development. Many of the Company's competitors will have financial
resources and exploration and development budgets that are substantially
greater than those of the Company, and these may adversely affect the
Company's ability to compete.
Regulation and Taxation
The Company's oil and gas business will be subject to various federal, state
and local laws and governmental regulations which may be changed from time to
time in response to economic or political conditions. Matters subject to
regulation include discharge permits for drilling operations, drilling bonds,
reports concerning operations, the spacing of wells, unitization and pooling
of properties, taxation and environmental protection. From time to time,
regulatory agencies have imposed price controls and limitations on production
by restricting the rate of flow of oil and gas wells below actual production
capacity in order to conserve supplies of oil and gas.
The Company's operations could result in liability for personal injuries,
property damage, oil spills, discharge of hazardous materials, remediation and
clean-up costs and other environmental damages. The Company could be liable
for environmental damages caused by previous property owners. As a result,
substantial liabilities to third parties or governmental entities may be
incurred, the payment of which could have a material adverse effect on the
Company's financial condition and results of operations. The Company intends
to maintain insurance coverage for its operations, including limited coverage
for sudden environmental damages, but does not believe that insurance coverage
for environmental damages that occur over time will be available at a
reasonable cost. Moreover, the Company does not believe that insurance
coverage for the full potential liability that could be caused by sudden
environmental damages will be available at a reasonable cost. Accordingly,
the Company may be subject to liability or may lose substantial portions of
its properties in the event of certain environmental damages. The Company
could incur substantial costs to comply with environmental laws and
regulations.
The Oil Pollution Act of 1990 imposes a variety of regulations on "responsible
parties" related to the prevention of oil spills. The implementation of new,
or the modification of existing, environmental laws or regulations, including
regulations promulgated pursuant to the Oil Pollution
Act of 1990, could have a material adverse impact on the Company.
The recent trend toward stricter standards in environmental legislation and
regulation is likely to continue. For instance, legislation has been
introduced in Congress that would reclassify certain exploration and
production wastes as "hazardous wastes" which would make the reclassified
wastes subject to much more stringent handling, disposal and clean-up
requirements. If such legislation were enacted, it could have a significant
impact on the operating costs of the Company, as well as the oil and gas
industry in general. Initiatives to further regulate the disposal of oil and
gas wastes are also pending in certain states, and these various initiatives
could have a similar impact on the Company.
Employees
The Company currently does not have any full time employees. The Company's
Chairman of the Board and Secretary devote only part of their time to the
Company's business.
ITEM 2. PROPERTIES
The Company's offices are located at 16901 Dallas Parkway, #111, Dallas, Texas
75248, in space which the Company shares with the offices of the Company's
Chairman of the Board, Brent Wagman. The Company does not pay Brent Wagman
for secretarial and accounting services, office rent, miscellaneous expenses
or any other services or material.
The Company currently does not own interests in any oil and gas properties or
other property.
ITEM 3. LEGAL PROCEEDINGS
Except as set forth below, Lyric knows of no pending or threatened legal
proceedings to which it is a party other than routine litigation for which it
has no material financial exposure and no such proceedings are known to Lyric
to be contemplated by governmental authorities.
On August 1, 1997, the 47th District Court for Potter County, Texas rendered a
judgment against Lyric and G.E. Stahl for approximately $60,000 in the case of
Crouch Enterprises, Inc. dba Crouch Petroleum Company v. G.E. Stahl, Stahl
Petroleum Company and Lyric Energy, Inc. Liability for the judgment is joint
and several. Mr. Stahl and Lyric intend to appeal the judgment. Stahl
Petroleum Company, a Company owned and controlled by G.E. Stahl, has agreed to
indemnify Lyric against all losses and expenses arising from this lawsuit.
Accordingly, Lyric does not believe it will suffer any adverse effect as a
result of the judgment.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter during the fourth quarter of the fiscal
year ended April 30, 1998 to a vote of the Company's security holders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information
On rare occasions the Company's Common Stock is traded on the over-the-counter
market and quotes for Common Stock are reported in the National Quotation
Bureau's "Pink Sheets." There is no established market for the Company's
Common Stock.
The following table sets forth the range of high and low bid quotations, as
reported by National Quotation Bureau:
<TABLE>
<CAPTION>
<S> <C> <C>
Quarter Ended High Low
July 31, 1996 None None
October 30, 1996 None None
January 31, 1997 $.035 $0
April 30, 1997 $.035 $.001
July 31, 1997 None None
October 30, 1997 None None
January 31, 1998 None None
April 30, 1998 None None
</TABLE>
The foregoing bid quotations reflect inter-dealer prices, without mark-up,
mark-down or commissions, and may not necessarily represent actual
transactions.
(b) Holders
The following table sets forth the approximate number of security holders of
record of the Company's $0.01 par value common stock as of July 26, 1998.
Number of
Title of Class Record Holders
$0.01 Par Value 4,155
Common Stock
(c) Dividends
No cash dividends have been declared with respect to the Company's Common
Stock since its inception, and the Company has no present intention to pay
such dividends in the foreseeable future.
(d) Recent Sale of Unregistered Securities
Not applicable.
PART III
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
See "Plan of Operation" in Item 1.
Cautionary Statement with Regard to Forward Looking Information
The matters discussed in this report, when not historical matters, are forward
looking statements which involve a number of risks and uncertainties which
could cause actual events and results to differ materially from projected or
anticipated events or results. Such factors include, among other
things, the speculative nature of oil and gas exploration, the volatile
markets for oil and gas, uncertainties in production and reserve estimates,
environmental and governmental regulations, the availability of financing,
particularly equity financing, the ability of Lyric to establish a trading
market for its stock, force majeure events and other risk factors as described
from time to time in Lyric's filings with the Securities and Exchange
Commission.
ITEM 7. FINANCIAL STATEMENTS AND SCHEDULES
See Financial Statements beginning at Page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
Not applicable.
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names and ages of all Directors and
Executive Officers of Lyric and the periods during which each has served as
such:
<TABLE>
<CAPTION>
Position Held With Director
Name Age Lyric Since
<S> <C> <C> <C>
Brent A. Wagman 40 Chairman of the Board April 1997
G. E. Stahl 71 Director May 1980
Warren Donohue 57 Director, Secretary April 1997
</TABLE>
The Company's Directors hold office until the next annual meeting of the
Company's shareholders. Except as set forth below, there is no arrangement or
understanding between any Director or nominee for Director of the Company and
any other person or persons pursuant to which such Director was or is to be
selected as Director or nominee for Director.
There are no family relationships between any Director or Executive Officer of
Lyric.
Following is a brief account of the business experience during the past five
years of the Directors and Executive Officers of Lyric.
Brent A. Wagman. Mr. Wagman has been Chairman of the Board of Lyric since
April, 1997. Mr. Wagman has been President, Chief Executive Officer and a
Director of NGT since its organization in April 1993. He has also been
president, chief executive officer and director of Wagman Petroleum, Inc., an
oil and gas operator, since May 1988. Mr. Wagman graduated from Valencia
College with an Associate in Arts Degree in 1976 and attended the University
of Florida, majoring in Chemistry and Physics, but left prior to obtaining a
degree from that institution. Mr. Wagman devotes approximately 85 percent of
his time to NGT and 15 percent to Wagman Petroleum, Inc.
G. E. "Skip" Stahl. Mr. Stahl was the President and Chief Executive Officer
of Lyric since its organization until July, 1998. Mr. Stahl has been a
Director of Lyric since its organization. Mr. Stahl has been actively engaged
as an independent oil and gas operator since 1960. He has been the president,
a director and controlling shareholder of Stahl Petroleum Company, Amarillo,
Texas, an independent oil and gas operator, since 1960. Mr. Stahl previously
was chairman of the board of directors, chief executive officer and secretary
of Advanced Monitoring Systems, Inc., a publicly held company engaged in
pipeline monitoring. Mr. Stahl resigned as an officer and director of
Advanced Monitoring Systems on September 10, 1992, was reappointed on April 1,
1993, and resigned again on August 30, 1993. Since August 30, 1993, Mr. Stahl
has not been associated with Advanced Monitoring Systems, Inc.
Warren Donohue. Mr. Donohue became a Director of Lyric in April, 1997 and the
Secretary of Lyric in July, 1998. He has been a Director of NGT since October,
1993 and was appointed Secretary of NGT in August, 1996. Mr. Donohue held
various positions with Volvo Cars of North America, Inc. from November, 1958
until December, 1996, at which time he was Sales Development Manager. Mr.
Donohue is also President of Donohue Enterprises Inc., a marketer of women's
bridal apparel. He serves as a director of Haber, Inc., a public company
which manufactures high speed separation devices. Mr. Donohue devotes
approximately thirty percent of his time to the business of NGT and Lyric.
ITEM 10. MANAGEMENT'S COMPENSATION
The following table sets forth all remuneration to Lyric's Chief Executive
Officer for services in all capacities to Lyric during the fiscal years ended
April 30, 1998, 1997 and 1996. No Officer of Lyric earned $100,000 or more
during the fiscal year ended April 30, 1998.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Securities All
and Other Restricted Under- Other
Principal Annual Stock Lying LTIP Compen-
Posi- Compen- Award(s) Options/ Payouts sation
tion Year Salary($) Bonus($) sation($) ($) SARs(#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G.E.
Stahl,
President
1998 $0 $0 $0 $0 0 $0 $0
1997 $0 $0 $0 $0 0 $0 $0
1996 $0 $0 $0 $0 0 $0 $0
</TABLE>
No Directors of Lyric receive fees for their attendance at meetings of Lyric's
Board of Directors. There are no other arrangements pursuant to which Lyric's
Directors receive remuneration from Lyric for services as a Director or
arrangements for remuneration upon termination of employment of Directors or
Executive Officers. Lyric has no options, warrants or other rights
outstanding as of the date of this report.
Compliance with Section 16(a) under the Exchange Act
Based solely on a review of reports filed with the Company, all Directors,
Executive Officers and Beneficial Owners of ten percent of the outstanding
Common Stock timely filed all reports regarding transactions in the Company's
securities required to be filed during the fiscal year ended April 30, 1998 by
Section 16(a) of the Exchange Act except as follows: Brent Wagman did not
timely file a Form 3 Initial Statement of Beneficial Ownership of Securities.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 26, 1998, the Common Stock
ownership of each person known by the Company to be the beneficial owner of
five percent or more of the Company's Common Stock ("Principal Shareholders"),
all Directors and Officers individually and all Directors and Officers of the
Company as a group. Except as noted, each person has sole voting and
investment power with respect to the shares shown. There are no contractual
arrangements or pledges of the Company's securities, known to the Company,
which may at a subsequent date result in a change of control of the Company.
<TABLE>
<CAPTION>
Amount of Beneficial Ownership
Name and Address Common Percent of
of Beneficial Owner Stock(1) Class(2)
<S> <C> <C>
Brent A. Wagman 843,908(6) 81%
Chairman of the Board
16775 Addison Road
Suite 300
Dallas, TX 75248
Warren Donohue ___ ___
Director
16775 Addison Road
Suite 300
Dallas, TX 75248
G. E. Stahl 14,869 1.4%
President, Director
1013 West 8th Avenue
Amarillo, TX 79101
All Officers and 858,777 83%
Directors as a
Group (three persons)
</TABLE>
__________________________
(1) Rule 13d-3 under the Exchange Act, involving the determination of
beneficial owners of securities, includes as beneficial owners of securities,
among others, any person who directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has, or shares, voting
power and/or investment power with respect to such securities; and, any person
who has the right to acquire beneficial ownership of such security within
sixty days through means, including but not limited to, the exercise of any
option, warrant or conversion of a security. The Company has no options or
warrants outstanding.
(2) Based upon 1,039,082 shares issued and outstanding after the reverse
split described in Item 1.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 1, 1982, the Company loaned Mr. Wesley Masters, a former Director,
$7,551 pursuant to a note bearing interest at 10% per annum. As of April 30,
1996, $17,681 was due on such obligation. Such amount was applied against an
obligation of the Company to a trust controlled by Mr. Masters and the
remainder of that obligation of the Company was forgiven in January 1997.
In 1983, the Company loaned Mr. L. K. Hayhurst, a former Director, a total of
$8,874 pursuant to two notes bearing interest at 10% per annum. As of April
30, 1996, $12,752 was due on such notes. In January 1997, the Company forgave
the obligations under those notes in consideration of Mr. Hayhurst's past
uncompensated services to the Company as Director.
As of April 30, 1996, Stahl Petroleum Company, over a period of time had
loaned to Lyric $43,692.34, for Lyric's working capital and for Lyric to pay
certain other expenditures. That amount was repaid out of the proceeds from
conversion of the $100,000 loan to the Company from NGT.
In April 1997, Stahl Petroleum Corporation was paid $35,000 for past services
out of the proceeds from the $100,000 loan to the Company from NGT.
In January 1998, NGT terminated its merger plans with the Company and
transferred 203,041,517 pre-split shares of the Company's Common Stock to
Brent Wagman.
The Company believes that the foregoing transactions were on terms at least as
favorable as those which it could have obtained from unaffiliated parties.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents Filed as Part of This Report.
(1) Financial Statements: (The following Financial Statements and Schedules
are included in Part III, Item 8.)
Lyric Financial Statements
Report of Robert Early & Company, P.C.
Balance Sheets as of April 30, 1998 and 1997.
Statements of Operations for the years ended April 30, 1998 and 1997.
Statements of Changes in Stockholders' Equity/(Deficiency) for the years ended
April 30, 1998 and 1997.
Statements of Cash Flows for the years ended April 30, 1998 and 1997.
(2) Exhibits
3.1 Articles of Incorporation of Lyric Energy, Inc. (Incorporated by
reference from Exhibit 3 of Registrant's Form 10-KSB for April 30, 1996).
3.2 Articles of Amendment of Lyric Energy, Inc. (Incorporated by reference to
Exhibit 3 from Registrant's Form 10-KSB for April 30, 1996).
3.3 Articles of Correction to the Articles of Incorporation of Lyric Energy,
Inc. (Incorporated by reference from Exhibit 3.3 of Registrant's Form 10-KSB
for April 30, 1997).
3.4 Articles of Amendment to the Articles of Incorporation of Lyric Energy,
Inc. (Included herewith).
3.5 Bylaws of Lyric Energy, Inc. (Incorporated by reference from Exhibit 3 of
Registrant's Form 10-KSB for April 30, 1996).
10.1 Letter of Intent dated January 2, 1997 with Natural Gas Technologies,
Inc., as amended by letter dated March 17, 1997 (Incorporated by reference to
Exhibit 10.2 of Registrant's Form 10-KSB for April 30, 1996).
10.2 Restated Convertible Promissory Note dated February 4, 1997
(Incorporated by reference to Exhibit 10.3 of Registrant's Form 10-KSB for
April 30, 1996).
10.3 Release of Judgment dated December 31, 1996 (Incorporated by reference
to Exhibit 10.4 of Registrant's Form 10-KSB for April 30, 1996).
10.4 Termination of Agreement and Cancellation of Loan dated January 2, 1997
(Incorporated by reference to Exhibit 10.5 of Registrant's Form 10-KSB for
April 30, 1996).
10.5 Agreement between the Registrant and Amarillo National Bank dated March
3, 1997 (Incorporated by reference to Exhibit 10.6 of Registrant's Form 10-KSB
for April 30, 1997).
10.6 Indemnification Agreement between the Registrant and Stahl Petroleum
Company dated March 17, 1997 (Incorporated by reference to Exhibit 10.7 of
Registrant's Form 10-KSB for April 30, 1997).
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the last quarter of
the fiscal year ended April 30, 1998.
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
LYRIC INTERNATIONAL, INC.
Dated: July 26, 1998 /s/ Brent A. Wagman
__________________________________
Brent A. Wagman, Chairman of the Board
and Chief Accounting Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:
Dated: July 26, 1998 /s/ Brent Wagman
____________________________________
Brent Wagman, Chairman of the Board
Dated: July 26, 1998 /s/ G.E. Stahl
____________________________________
G. E. Stahl, Director
Dated: July 26, 1998 /s/ Warren Donohue
____________________________________
Warren Donohue, Director
LYRIC ENERGY, INC.
(A Development Stage Enterprise)
AUDITED FINANCIAL STATEMENTS
For the Years Ended
April 30, 1998 and 1997
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
LYRIC ENERGY INC.
Dallas, Texas
We have audited the accompanying balance sheets of Lyric Energy, Inc. (a
development stage enterprise) as of April 30, 1998 and 1997, and the related
statements of operations, changes in shareholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lyric Energy, Inc. as of
April 30, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Lyric Energy, Inc. will continue as a going concern. As discussed in Note 6
to the financial statements, Lyric has been essentially inactive during the
past three years due to a lack of operating assets and working capital and a
significant deficiency in assets and equity. These factors raise substantial
doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 6.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Robert Early & Company, P.C.
Abilene, Texas
June 19, 1998
F-1
LYRIC ENERGY, INC.
(A Development Stage Enterprise)
Balance Sheets
April 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
______ ________
<S> <C> <C>
Assets
Cash $ - $ -
======= ========
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
Accounts payable trade including
$14,993 due to related parties $15,117 $ -
Stockholders' Equity
Common stock, $.01 stated value
(250,000,000 shares authorized,
250,000,000 and 250,000,000
outstanding) 2,500,000 2,500,000
Additional paid-in capital 224,222 224,222
Retained (deficit) (2,687,204) (2,687,204)
(Deficit) accumulated during
the Development Stage (52,135) (37,018)
_______________ ____________
Total Stockholders' Equity (15,117) -
_______________ ____________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ - $ -
=============== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
LYRIC ENERGY, INC.
(A Development Stage Enterprise)
Statements of Operations
For the years ended April 30, 1998 and 1997
<TABLE>
<CAPTION>
Cumulative
During the
Development
Stage 1998 1997
______________ ________ _________
<S> <C> <C> <C>
General and
administrative expenses $(50,653) $(15,117) $(35,593)
Interest expense to
related parties (1,482) - (5,928)
______________ __________ ____________
NET (LOSS) $(52,135) $(15,117) $(41,521)
============== ========== ============
Net loss per
weighted
average share $ (0.00) $(0.00) $(0.00)
============== =========== ============
Weighted average
shares outstanding 190,128,783 250,000,000 58,084,045
============== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
LYRIC ENERGY, INC.
(A Development Stage Enterprise)
Statement of Changes in Stockholders' Equity/(Deficiency)
For the years ended April 30, 1998 and 1997
<TABLE>
<CAPTION>
Deficit
Accumulated
Date of Additional During the
Trans- Common Stock Paid-In Accumulated Development
action Shares Amount Capital (Deficit) Stage
<S> <C> <C> <C> <C> <C> <C>
BALANCES,
April 30,
1996 46,958,483 $469,584 $1,690,545 $(2,682,701) $ -
Capital
contributed
by related
parties
through
cancellation 12/15/96 &
of debts 01/15/97 - - 464,093 -
Stock issued for
Cash (conversion
from note) 04/10/97 203,041,517 2,030,416 (1,930,416) -
Net (loss) - - - (4,503) (37,018)
__________ _________ __________ ___________ _________
BALANCES,
April 30, 1997 250,000,000 2,500,000 224,222 (2,687,204) -
Net (loss) - - - - (15,117)
_________ _________ __________ ___________ _________
BALANCES,
April 30, 1998 250,000,000 $2,500,000 $224,222 $(2,687,204) $(52,135)
========== ========= =========== =========== =========
</TABLE>
The accompanying notes are an integral part of these financials statements.
F-4
LYRIC ENERGY, INC.
(A Development Stage Enterprise)
Statements of Cash Flows
For the years ended April 30, 1998 and 1997
<TABLE>
<CAPTION>
Cumulative
During the
Development
Stage 1998 1997
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $(52,135) $(15,117) $(41,521)
Adjustments to reconcile
net income/(loss) to
net cash provided by
operations:
Increase/(decrease) in:
Accounts payable (49,370) 15,117 (65,860)
Accrued expenses 1,482 - 5,928
______________ ________ _________
NET CASH (USED) BY
OPERATING ACTIVITIES (100,023) - (101,453)
______________ ___________ ___________
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from note
payable 100,000 - 100,000
______________ ____________ ____________
Increase/(decrease)
in cash for period (23) - (1,453)
Cash, Beginning of
period 23 - 1,453
_____________ ____________ ___________
Cash, End of period $ - $ - $ -
============= ============ ===========
Supplemental Disclosures:
Cash payments for:
Interest $ - $ - $ -
Income taxes - - -
Cancellation of
related party and
other indebtedness $458,166 $ - $458,166
Stock issued for
conversion of
note payable $100,000 $ - $ -
The accompanying notes are an integral part of these financial statements.
F-5
LYRIC ENERGY, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
April 30, 1998 and 1997
GENERAL:
Lyric Energy, Inc. (the Company) is a publicly held entity formerly involved
in the exploration and development of oil and gas reserves. At April 30, 1996
and since then, the Company has not held any interests in oil and gas
properties. The Company was incorporated on April 25, 1980 and began
operations then. The Company has been essentially dormant since April 1994.
During the year ended April 1996, the Company began seeking a merger partner
and this pursuit has been its primary activity since that time.
Development Stage Enterprise -- The Company returned to the development stage
in November 1996 when it transferred its final operating responsibility to
others and, thereby, reduced its activities to the sole pursuit of
identifying, evaluating, structuring, and completing a merger with or
acquisition of a privately owned entity.
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of the Company conform with generally
accepted accounting principles.
Loss per Share - Loss per share is calculated by applying the treasury stock
method using weighted average shares outstanding. Weighted average shares are
presented on the face of the statement of operations. The 203,041,517 shares
issued to Natural Gas Technologies, Inc.(discussed below) were considered to
be outstanding effective April 10, 1997.
Cash Flows - The Company considers cash to be its only cash equivalent for
purposes of presenting its Statement of Cash Flows.
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,
the disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Income Taxes - The Company accounts for income taxes in accordance with SFAS
109, "Accounting for Income Taxes" which requires the use of the "liability
method." Accordingly, deferred tax liabilities and assets are determined
based on the temporary differences between the financial statement and tax
bases of assets and liabilities, using enacted tax rates in effect for the
year in which the differences are expected to reverse. The Company files a
consolidated Federal income tax return. Currently Texas does not accept
consolidated reporting and the Company has elected to file separate returns in
New Mexico only for the entities required to file there. As such, each entity
may incur state tax liabilities based on its separate income or capital
structure. Investment tax credits are accounted for by the flow-through
method under which benefits are recognized in the year taxes are actually
reduced. Foreign income taxes are deducted as an expense when incurred.
Recent Accounting Pronouncements -- In June 1997, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standard
(SFAS) No. 130, "Reporting Comprehensive Income" which establishes standards
for reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and distributions
to owners. Among other disclosures, SFAS 130 requires that all items that are
required to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements. SFAS 130 is effective
for financial statements for periods beginning after December 15, 1997 and
requires comparative information for earlier years to be restated. Management
has not determined what impact, if any, this statement will have on future
financial statement disclosures. Results of operations and financial position
will be unaffected by implementation of these standards.
F-6
NOTE 2: RELATED PARTY TRANSACTIONS
At December 31,1996, the Company had a total of $501,261 owed to related
parties arising from advances, accrued interest, and a judgment. These
amounts were payable to entities owned or controlled by former significant
stockholders or officers of the Company. Essentially all of this indebtedness
was contributed as additional paid in capital during December 1996 and January
1997.
During the year ended April 30, 1998, the Company incurred fees for legal and
auditing services. Essentially all of these fees were paid by Natural Gas
Technologies, Inc. (NGT) on behalf of the Company. NGT is controlled by
members of the Company's board of directors
NOTE 3: MERGER AGREEMENT WITH NATURAL GAS TECHNOLOGIES, INC.
On January 2, 1997, the Company entered into a Letter of Intent (LOI) with
NGT. In accordance with the LOI, NGT loaned the Company $100,000 which was
converted on April 10, 1997 into 203,041,517 common shares (all of the
remaining authorized but unissued common shares of the Company). Conversion
occurred after the Company had achieved certain milestones set out in the LOI
regarding debt and certain covenants regarding its stock. Upon conversion,
loaned funds were released from escrow to the Company for use in satisfying
all existing debts and encumbrances and settling all claims against it.
The LOI set forth terms for a share exchange to effect a merger with NGT. In
January 1998, NGT terminated the merger plans and transferred its shares to
Brent Wagman. Mr. Wagman is the chairman of the Company's board of directors.
The Company plans to either identify another merger candidate or to attempt to
obtain funding to start up new operations. Mr. Wagman is party to certain
activities which may have potential as new operations if details can be worked
out.
NOTE 4: INCOME TAXES
As of April 30, 1998 and 1997, Lyric had operating loss carry-forwards for
income tax purposes. Tax loss carry-forwards vary from amounts reported in
the financial statements due to differences in the treatment of various items
for financial reporting and for tax purposes. These loss carry-forwards,
which may provide future benefits, expire as shown in the following table.
Investment tax credits are accounted for on the flow through method. A merger
or acquisition will, in all likelihood, limit the availability of these net
operating losses as deductions against future taxable income of a combined
entity.
</TABLE>
<TABLE>
<CAPTION>
Amount of Investment
Year of Operating Loss Year of Tax Credit
Expiration Carry-Forwards Expiration Carry-Forwards
____________ _______________ ___________ ________________
<S> <C> <C> <C>
2001 $139,783 2001 $1,000
2002 201,086 ==========
2003 238,676
2004 257,086
2005 354,420
2006 305,119
2007 839,730
2008 220,172
2009 78,986
2010 78,980
2011 37,018
2012 15,117
--------------
$2,766,173
</TABLE>
F-7
The provision for income tax is as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Current
Federal $ - $ -
Deferred
Federal (5,140) (14,117)
Less allowance 5,140 14,117
_____________ ____________
Total $ - $ -
============= =============
</TABLE>
A reconciliation of income tax at the statutory rate to the Company's
effective rate at April 30, 1998 and 1997 indicates that the expected
statutory rate for each of these years is 0%. The effective tax rate is also
0%.
The deferred tax asset and liabilities are comprised of the following at April
30, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
Assets Liabilities Assets Liabilities
<S> <C> <C> <C> <C>
Net operating losses
carried forward $940,499 - 935,359 -
Less valuation
allowance (940,499) - (935,359) -
------------ --------- --------- ----------
Gross deferred
tax assets and
liabilities $ - $ - $ - $ -
========== ========= ========== =========
</TABLE>
Due to the way future utilization of tax benefits is analyzed under SFAS 109,
an allowance for the full amount of the benefits that may arise from operating
loss carry-forwards has been made and no asset has been recorded as a result
at April 30, 1998 or 1997.
NOTE 5: CONTINGENCY
On April 23, 1997, a judgement totaling approximately $59,905, including
interest, was awarded against the defendants in a suit to recover legal fees
and court costs pertaining to a previous action. The Company was one of the
defendants in this case. The liability is joint and several. However, the
judgement was appealed and a decision has not been rendered by the appellate
court. Lyric has obtained an indemnification agreement against loss from
Stahl Petroleum, Inc., another defendant in the suit and previously a related
party. Management anticipates that this action will have no effect on the
Company.
NOTE 6: GOING CONCERN
The Company has been inactive during the past three years due to a shortage of
operating assets and working capital. This factor raises substantial doubt
about the Company's ability to continue as a going concern. The Company
reentered the development stage in November 1996 when it transferred its last
operations to another operator and reinforced its search for a merger or
acquisition target in order to carry on the operations of the target Company.
In a failed merger attempt, NGT acquired an 81% ownership interest in the
Company. This interest was transferred to the Company's board chairman in
January 1998. At the present time, the board is considering the possibility
of raising additional capital to fund new operations or the pursuit of a
merger with another entity, but no decision has been made. The Company is not
a going concern at this time. Its ability to restart is dependent on the
board's ability to start new operations or to complete a merger with an active
entity. Should the Company be unable to restart activities, the Company would
default on its debt to NGT.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 15,117
<BONDS> 0
0
0
<COMMON> 2,724,222
<OTHER-SE> (2,739,339)
<TOTAL-LIABILITY-AND-EQUITY> (15,117)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 15,117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (15,117)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,117)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,117)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
Exhibit 3.4
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF LYRIC ENERGY, INC.
Pursuant to the provisions of the Colorado Business Corporation
Act, the undersigned corporation adopts the following Articles of Amendment to
its Articles of Incorporation:
Article I shall be changed to read in its entirety as follows:
Name
The name of the corporation shall be: Lyric International, Inc.
Article IV shall be deleted in its entirety and substituted with the
following:
ARTICLE IV
Capital Stock
The aggregate number of shares which this corporation shall have
authority to issue is two hundred fifty million (250,000,000) shares of $.01
par common stock ("Common Stock") and ten million (10,000,000) share of no par
value preferred stock ("Preferred Stock").
1. Preferred Stock.
All shares of Preferred Stock may be issued from time to time in one or
more series and for such consideration as the Board of Directors shall
determine. Subject to the limitations set forth herein and any limitations
then prescribed by law, authority is hereby expressly granted to the Board of
Directors to fix by resolution from time to time the designation of such
series and the powers, preferences and rights of the shares of such series,
and the qualifications, limitations or restrictions thereof, including,
without limitation, the following:
(a) the designation and number of shares comprising such series,
which number may from time to time be decreased by the Board of Directors (but
not below the number of such shares then outstanding) or may be increased
(unless prohibited by action of the Board of Directors in resolutions creating
such series);
(b) the rate, amount and times at which, and the preferences and
conditions under which, dividends shall be payable on shares of such series,
including, without limitation, whether such dividends are cumulative or
noncumulative and whether the shares of such series participate or do not
participate in additional dividends after the payment of preferential
dividends with respect to such shares;
(c) any rights and preferences of the holders of shares of such
series upon the liquidation, dissolution or winding up of the affairs of, or
upon any distribution of the assets of, the corporation, and whether such
amounts vary depending upon whether such liquidation, dissolution or winding
up is voluntary or involuntary;
(d) the full or limited voting rights, if any, of the shares of
any such series, in addition to voting rights provided by law; and whether or
not, under what conditions and with respect to what subject matters, the
shares of such series shall be entitled to vote separately as a class;
(e) any times, terms and conditions upon which the shares of
such series may be subject to redemption and the amount, terms, conditions and
manner of operation of any purchase, retirement or sinking fund to be provided
with respect to the redemption of such shares;
(f) any rights to convert such shares into, or to exchange such
shares for, shares of any other class or classes or of any other series of the
same class, including, without limitation, the prices, rates, conversion or
exchange and any other terms or conditions applicable to such conversion or
exchange;
(g) any limitations upon the payment of dividends or the making
of distributions on or the acquisition or redemption of common stock of any
other class of shares subordinate to the shares of such series with respect to
the payment of dividends;
(h) any conditions or restrictions upon the issue of any
additional shares on a parity with or superior to the shares of such series;
and
(i) any other relative powers, preferences or rights and any
other qualifications, limitations or restrictions with respect to the shares
of such series as the Board of Directors may deem advisable and as shall not
be inconsistent with the provisions hereof.
2. Common Stock
(a) Dividends. Dividends in cash, property or shares of the
corporation may be paid upon the Common Stock, as and when declared by the
Board of Directors, out of funds of the corporation to the extent and in the
manner permitted by law.
(b) Distribution in Liquidation. Upon any liquidation,
dissolution or winding up of the corporation, and after paying or adequately
providing for the payment of all its obligations, and subject to the rights
and preferences of any outstanding Preferred Stock, the remainder of the
assets of the corporation shall be distributed, either in cash or in kind, pro
rata to the holders of the Common Stock.
(c) Voting Rights; Cumulative Voting. Each outstanding share of
Common Stock shall be entitled to one vote and each fractional share of Common
Stock shall be entitled to a corresponding fractional vote on each matter
submitted to a vote of shareholders. Cumulative voting shall not be allowed
in the election of Directors of the corporation.
(d) Denial of Preemptive Rights. No holder of any shares of
Common Stock of the corporation, whether now or hereafter authorized, shall
have any preemptive or preferential right to acquire any shares or securities
of the corporation, including shares or securities held in the treasury of the
corporation.
Article VIII shall be deleted in its entirety and substituted with the
following:
ARTICLE VIII
Quorum
At all meetings of shareholders, one-third of the shares of a voting
group entitled to vote at such meeting, represented in person or by proxy,
shall constitute a quorum of that voting group.
Article XIII shall be added in its entirety as follows:
ARTICLE XIII
Limitation of Liability for Directors and Officers
No Director or Officer of the corporation shall have any personal
liability to the corporation or its shareholders for monetary damages for
breach of fiduciary duty as a Director or Officer; provided that Directors and
Officers shall not be exonerated from liability for monetary damages for (a)
any breach of the Director's or Officer's duty of loyalty to the corporation
or to its shareholders; (b) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (c) the payment
of distributions in violation of section 7-108-403 of the Colorado Business
Corporation Act or (d) any transaction from which the Director or Officer
directly or indirectly derived an improper personal benefit.
Article XIV shall be added in its entirety as follows:
ARTICLE XIV
Certain Voting Requirements
With respect to any action to be taken by shareholders of this
corporation which pursuant to the Business Corporation Act requires the vote
of two-thirds of the outstanding shares of each voting group entitled to vote
thereon as a result of the corporation having been in existence on June 30,
1994, the vote required to approve such action shall be the same as the vote
which would be required under the Colorado Business Corporation Act to approve
such action if the corporation were formed on or after July 1, 1994.
