U.S. Securities And Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended May 31, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission File No. 0-20879
PYR ENERGY CORPORATION
(Exact name of small business issuer as specified in its charter)
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Delaware 95-4580642
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(State or jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1675 Broadway, Suite 2450, Denver, CO 80202
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (303) 825-3748
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No___
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of each of the issuer's classes of common
equity as of July 16, 2001 is as follows:
$.001 Par Value Common Stock 23,661,357
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PYR ENERGY CORPORATION
FORM 10-QSB
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements ........................................ 3
Balance Sheets - August 31, 2000 and May 31, 2001 (Unaudited) 3
Statements of Operations - Three Months and Nine Months Ended
May 31, 2000 and May 31, 2001 (Unaudited) ................... 4
Statements of Cash Flows - Nine Months Ended May 31, 2000
and May 31, 2001 (Unaudited) ................................ 5
Notes to Financial Statements ............................... 6
Summary of Significant Accounting Policies .................. 6
Item 2. Management's Discussion and Analysis or Plan of Operation ... 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ........................................... 11
Item 2. Changes in Securities and Use of Proceeds ................... 11
Item 3. Defaults Upon Senior Securities ............................. 11
Item 4. Submission of Matters to a Vote of Security Holders ......... 11
Item 5. Other Information ........................................... 12
Item 6. Exhibits and Reports on Form 8-K ............................ 12
Signatures ........................................................... 13
2
PART I
ITEM 1. FINANCIAL STATEMENTS
PYR ENERGY CORPORATION
BALANCE SHEETS
ASSETS
8/31/00 5/31/01
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(UNAUDITED)
CURRENT ASSETS
Cash $ 8,598,016 $ 12,560,144
Oil and gas receivables -- 1,056,259
Other receivables -- 5,329
Deposits and prepaid expenses 20,835 80,298
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Total Current Assets 8,618,851 13,702,030
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PROPERTY AND EQUIPMENT, at cost
Furniture and equipment, net 29,650 44,285
Oil and gas properties, net 11,293,589 20,949,919
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11,323,239 20,994,204
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OTHER ASSETS -- 3,277
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$ 19,942,090 $ 34,699,511
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 165,289 $ 1,507,209
Current portion of capital lease obligation 920 --
------------ ------------
Total Current Liabilities 166,209 1,507,209
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; Authorized 1,000,000 shares
Series A - Issued and outstanding - 14,263
Shares at 8/31/00 - $100 face value, 10% coupon 14 --
Common stock, $.001 par value
Authorized 75,000,000 shares
Issued and outstanding - 19,069,019 shares
at 8/31/00 and 23,661,357 shares at 5/31/01 19,069 23,661
Capital in excess of par value 22,048,384 35,193,407
Retained earnings/(accumulated deficit) (2,291,586) (2,024,766)
------------ ------------
19,775,881 33,192,302
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$ 19,942,090 $ 34,699,511
============ ============
3
PYR ENERGY CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
5/31/00 5/31/01 5/31/00 5/31/01
------------ ------------ ------------ ------------
REVENUES
Oil and gas revenues $ -- $ 822,993 $ -- $ 1,075,353
Interest 21,226 142,162 105,516 310,496
------------ ------------ ------------ ------------
21,226 965,155 105,516 1,385,849
OPERATING EXPENSES
Oil and gas operating expenses, taxes -- 78,005 -- 81,057
General and administrative 202,917 370,021 684,755 955,068
Interest 59 -- 180 --
Depreciation, depletion and amortization 4,581 57,928 13,838 82,904
------------ ------------ ------------ ------------
207,557 505,954 698,773 1,119,029
NET (LOSS) INCOME (186,331) 459,201 (593,257) 266,820
------------ ------------ ------------ ------------
Less dividends on preferred stock -- -- (107,228) (62,899)
------------ ------------ ------------ ------------
NET (LOSS) INCOME COMMON STOCKHOLDERS $ (186,331) $ 459,201 $ (700,485) $ 203,921
============ ============ ============ ============
NET (LOSS) INCOME PER COMMON
SHARE -BASIC $ (0.012) $ 0.020 $ (0.045) $ 0.009
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 16,163,083 23,512,581 15,571,912 21,704,133
============ ============ ============ ============
NET (LOSS) INCOME PER COMMON
SHARE -FULLY DILUTED $ (0.012) $ 0.019 $ (0.045) $ 0.009
============ ============ ============ ============
FULLY DILUTED WEIGHTED AVERAGE
NUMBER OF COMMON SHARES
OUTSTANDING 16,163,083 24,167,017 15,571,912 21,922,278
============ ============ ============ ============
4
PYR ENERGY CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Nine Months
Ended 5/31/00 Ended 5/31/01
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CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $ (593,257) $ 266,820
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation, depletion and amortization 13,838 82,904
Changes in assets and liabilities
(Increase) in accounts and other receivables (7,218) (1,061,022)
(Increase) in yard inventory (373,170) --
(Increase) in prepaids (18,708) (63,307)
(Decrease) increase in accounts payable (52,196) 1,341,922
Other -- 1,888
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Net cash (used) provided by operating activities (1,030,711) 569,205
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CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for furniture and equipment (4,200) (30,972)
Cash paid for undeveloped oil and gas properties (3,724,700) (9,724,786)
Proceeds received from marketable securities 5,111,062 --
Cash paid for reimbursable property costs (20,500) --
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Net cash provided (used) by investing activities 1,361,662 (9,755,758)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock 715,000 11,600,000
Proceeds from exercise of warrants 364,062 1,557,165
Proceeds from exercise of options -- 152,906
Cash paid for offering costs -- (160,470)
Payments on capital lease (1,322) (920)
------------ ------------
Net cash provided by financing activities 1,077,740 13,148,681
------------ ------------
NET INCREASE IN CASH 1,408,691 3,962,128
CASH, BEGINNING OF PERIODS 117,905 8,598,016
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CASH, END OF PERIODS $ 1,526,596 $ 12,560,144
============ ============
5
PYR ENERGY CORPORATION
Notes to Financial Statements
May 31, 2001
The accompanying interim financial statements of PYR Energy Corporation 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 results of
operations for the periods ended May 31, 2001 are not necessarily indicative of
the operating results for the entire year.
We have prepared the financial statements included herein 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. We believe the
disclosures made are adequate to make the information not misleading and
recommend that these condensed financial statements be read in conjunction with
the financial statements and notes included in our Form 10-KSB for the year
ended August 31, 2000.
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 was
a public company with 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, was 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 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
surviving legal 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 us 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, we consider as
cash equivalents all highly liquid investments with a maturity of three months
or less at the time of purchase. At May 31, 2001, there were no cash
equivalents.
PROPERTY AND EQUIPMENT - Furniture and equipment is recorded at cost.
Depreciation is provided by use of the straight-line method over the estimated
useful lives of the related assets of three to five years. Expenditures for
replacements, renewals, and betterments are capitalized. Maintenance and repairs
are charged to operations as incurred.
OIL AND GAS PROPERTIES - We follow the full cost method to account for our
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.
6
Undeveloped oil and gas properties consists of ongoing exploratory drilling
costs, for which no results have been obtained, and of leases and acreage that
we acquire for our exploration and development activities. The cost of these
non-producing leases is recorded at the lower of cost or fair market value.
At August 31, 2000 and May 31, 2001, our oil and gas properties consisted
of the following:
August 31,2000 May 31, 2001
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Proved properties $ -- $ 7,022,812
Undeveloped properties 11,293,589 13,995,563
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Total 11,293,589 21,018,375
Depreciation, depletion, and amortization -- (68,456)
------------ ------------
Net oil and gas properties $ 11,293,589 $ 20,949,919
============ ============
Depreciation, depletion and amortization expense in the three and nine
months ended May 31, 2001 is computed using reserve estimates we believe are
reasonable and are based on the best information available. The DD&A expense as
of May 31, 2001 has been estimated without benefit of a formal engineers reserve
report. We will prepare our first reserve report in conjunction with our fiscal
year end of August 31, 2001 and, accordingly, the amounts reflected at year end
could differ from the estimates reflected in these financial statements.
We have 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. During the fiscal year ended August 31, 2000, we recorded an
impairment loss of approximately $200,000. No impairment losses have been
recorded during the three months or nine months ended May 31, 2001.
INCOME TAXES - We have 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We are an independent oil and gas exploration company with a strategic
focus on exploring for and developing significant oil and gas reserves in deep,
structurally complex formations. To date, the primary focus of our activity has
been in the San Joaquin Basin of California. We are involved in a number of high
potential exploration projects in this area, the most notable being our East
Lost Hills project. We initiated this project in 1997 and brought in industry
partners in 1998. We also are active in the Rocky Mountain region, where we
continue to acquire acreage positions in exploration areas we have identified as
having significant oil and gas production and reserve potential.
Our activities have been focused on prospect generation, the acquisition of
acreage, geological and geophysical work, securing partners, and drilling
exploration wells. On February 6, 2001, we commenced our first production at
East Lost Hills and we will prepare our first reserve report with respect to our
August 31, 2001 fiscal year.
7
Our future financial results continue to depend primarily on (1) our
ability to discover commercial quantities of oil and gas; (2) the market price
for oil and gas; (3) our ability to continue to generate potential projects; and
(4) our ability to fully implement our exploration and development program.
There can be no assurance that we will be successful in any of these respects or
that the prices of oil and gas prevailing at the time of production will be at a
level allowing for profitable production.
We paid approximately $3,725,000 and $9,725,000 during the nine months
ended May 31, 2000 and May 31, 2001, respectively, for drilling costs, delay
rentals, acquisition of acreage, direct geological and geophysical costs, and
other related direct costs with respect to our identified exploration and
exploitation projects.
We currently anticipate that we will participate in the drilling of between
three to six exploration/development wells during the next 12 months, although
the number of wells may increase as additional projects are added to our
portfolio. However, there can be no assurance that any wells will be drilled and
if drilled that any of these wells will be successful.
It is anticipated that the future development of our business will require
additional, and possibly substantial, capital expenditures. Depending upon the
extent of success of our ability to sell additional prospects for cash, the
level of industry participation in our exploration projects, and the continuing
results at East Lost Hills and the deep Temblor exploration program, we
anticipate spending a minimum of approximately $8 million for capital
expenditures relating to exploration and development of our projects during
calendar 2001. To limit additional capital expenditures, we intend to form
industry alliances to exchange a portion of our interest for cash and/or a
carried interest in our exploration projects. We may need to raise additional
funds to cover capital expenditures. These funds may come from cash flow, equity
or debt financing, or from sales of interests in our properties although there
is no assurance continued funding will be available.
On March 9, 2001, we received net proceeds of approximately $11.45 million
from a public offering of 1,450,000 shares of our common stock. We intend to use
these funds primarily to fund exploitation and development of our East Lost
Hills discovery.
At May 31, 2001, we had a working capital amount of approximately
$12,195,000. We had no outstanding long-term debt at May 31, 2001 and had not
entered into any commodity swap arrangements or hedging transactions. Although
we have no current plans to do so, we may enter into commodity swap and/or
hedging transactions in the future in conjunction with oil and gas production.
The following provides a summary update of our East Lost Hills project in
the San Joaquin Basin of California.
On March 19, 2001, the previous operator, Berkley Petroleum Corporation,
was acquired by Anadarko Petroleum Corporation and, effective on that date,
Anadarko became the operator of the East Lost Hills project.
During the nine months ended May 31, 2001, we purchased an additional
1.5433% working interest at East Lost Hills to bring our total working interest
in the East Lost Hills project to 12.1193%.
The ELH #1 well began production on February 6, 2001, from an interval
between approximately 19,400 and 19,700 feet in the lower Temblor, and is
currently the deepest producing well in the State of California. For the quarter
ended May 31, 2001, the well produced approximately 632,000 mcf of gas and
approximately 34,300 bbls of liquid hydrocarbons. Using a 6:1 equivalent basis
to convert hydrocarbon liquids to gas, the ELH #1 produced approximately 838,000
mcfe, which equates to an average of 9.1 mmcfe per day. PYR's total net
production was approximately 76,400 mcfe for the quarter. We have recorded
revenues and expenses associated with this production for the quarter and nine
months ended May 31, 2001. Production from the ELH #1 well has been constrained
during the quarter due to downsteam factors including processing, marketing,
water disposal, and periodic power outages related to California's ongoing
energy shortages. We expect this periodic production curtailment to continue
into the near future. The operator is exploring alternatives for processing,
marketing and water disposal in an effort to avoid some of these curtailment
issues.
8
The ELH #2 well, located approximately 1.5 miles northwest of the ELH #1
well, was drilled and cased to a total measured depth of 18,011 feet. Initial
production testing, in early March, of the upper Temblor interval in the well
resulted in limited wellbore influx of hydrocarbons (approximate flow rate of
3mmcf/d), higher than expected fluid content, and poorer than expected pressure
response. Many of the initial production test results on the well have been
influenced by mechanical difficulties associated with drillpipe that was
inadvertently cemented across the testing interval. The partners have
subsequently attempted a number of remedial completion operations to enhance the
productivity and response of the well. The remedial efforts included acidizing
the existing perforations, re-perforation, and perforation of additional zones.
Results of these efforts are inconclusive at this time. The partners also
undertook production logging of the productive interval to gain additional
information and data related to reservoir performance and response. Analysis of
these tests are under review. The partners are also currently evaluating the
economics of production facilities and pipeline connection to produce the well.
The partners will make a decision regarding hookup of the production or a
possible sidetrack of the well after appropriate analysis.
The ELH #3R West Flank exploration well was drilled to a total measured
depth of 21,769 feet to test the Temblor interval in a separate, seismically
defined structure from the productive East Lost Hills structure. Due to steep
dips encountered in the lower portion of the well, it was determined that the
underlying secondary objective, the Point of Rocks formation, could not be
reached in the existing wellbore. The well was plugged back to 19,370 feet
measured depth for testing of the lower Temblor. Multiple zones in the lower
Temblor section were perforated and tested in the well. Communication was
established with the formation during testing and no hydrocarbons were
recovered. The well has been suspended pending analysis of new seismic data and
additional offset well information.
The ELH #4 well commenced drilling on November 26, 2000 at a location
approximately 4 miles southeast of the ELH #1 well. This well is projected to
drill to approximately 20,000 feet and test the lower Temblor interval.
Intermediate casing was set at 17,009 feet and the well is currently drilling in
the Temblor at approximately 19,800 feet.
The participants at East Lost Hills are preparing to commence drilling the
ELH #9 well located in Section 2, T27S-R21E, approximately 2 miles southeast of
the ELH #4 well. This well is designed to test the continuation of the East Lost
Hills structure in the south easterly direction. The ELH #9 well is expected to
commence drilling on or about July 17, 2001 and is targeted to a total depth of
21,000 feet.
The Aera Energy LLC NWLH 1-22 exploration well located in Section 22,
T25S-R20E is expected to commence drilling during August 2001. The participants
in the East Lost Hills area of mutual interest can elect to participate in this
well through a pooling arrangement. This well is designed to test the Temblor
formation to a projected total depth of 20,000 feet. Aera Energy LLC will
operate this well, which is approximately 3.5 miles northwest of the currently
producing ELH #1 well. We have elected to participate in this well at an
approximate 4.3% working interest.
During the first half of calendar 2001, the participants at East Lost Hills
participated in the acquisition of approximately 165 square miles of 3D seismic
data over the East Lost Hills structure and surrounding acreage. The data
acquisition has been completed and the seismic data is currently being
processed. Upon final interpretation of the data, the participants expect to be
able to more accurately map the East Lost Hills structure and will use the data
for selection of potential delineation and development well locations.
9
Results of Operations
The quarter ended May 31, 2001 compared with the quarter ended May 31, 2000.
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Operations during the quarter ended May 31, 2001 resulted in net income of
$459,201 compared to a net loss of $186,331 for the quarter ended May 31, 2000.
The increase in operating net income is due to oil and gas operating revenues
from production commencing at the ELH #1 well on February 6, 2001. In the prior
year, none of our oil and gas properties was producing, and accordingly, no oil
or gas revenues were recognized.
Oil and Gas Revenues and Expenses. Production commenced at the East Lost
Hills #1 well on February 6, 2001. We recorded $738,004 from the sale of 57,376
mcf of natural gas for an average price of $12.86 per mcf and $84,989 from the
sale of 3,166 bbls of hydrocarbon liquids for an average price of $26.84 per
barrel during the quarter ended May 31, 2001. Operating expenses during this
period were $16,042. We recorded no revenues or expenses from oil and gas
operations for the quarter ended May 31, 2000. None of our oil or gas properties
were producing before February 6, 2001.
Interest Income. We recorded $142,162 and $21,226 in interest income for
the quarters ended May 31, 2001 and May 31, 2000, respectively. The increase in
the quarter ended May 31, 2001 is attributable to interest earned on cash
balances remaining from the common stock offering in March 2001.
Depreciation, Depletion and Amortization. We recorded $52,391 and $0
depreciation, depletion and amortization expense from oil and gas properties for
the quarters ended May 31, 2001 and May 31, 2000, respectively. The increase is
due to the commencement of production of the East Lost Hills #1 well on February
6, 2001. In the prior year, none of our oil and gas properties were producing
and, therefore no DD&A expense was recognized. The DD&A expense in the quarter
ended May 31, 2001 was estimated without benefit of a formal engineers reserve
report. We will prepare our first reserve report in conjunction with our fiscal
year end of August 31, 2001 and, accordingly, the amounts reflected at year end
could differ from the estimates reflected in these financial statements. We
recorded $5,537 and $4,581 in depreciation expense associated with capitalized
office furniture and equipment during the quarters ended May 31, 2001 and May
31, 2000, respectively.
General and Administrative Expense. We incurred $370,021 and $202,917 in
general and administrative expenses during the quarters ended May 31, 2001 and
May 31, 2000, respectively. The increase is primarily attributable to
unrecoverable financing costs and an increase in personnel and related salary
expenses.
Interest Expense. We recorded no interest expense for the quarter ended May
31, 2001 and nominal interest expense for the quarter ended May 31, 2000.
The nine months ended May 31, 2001 compared with the nine months ended May 31,
2000.
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Operations during the nine months ended May 31, 2001 resulted in net income
of $266,820 compared to a net loss of $593,257 for the nine months ended May 31,
2000. The increase in operating net income is due to oil and gas operating
revenues from production commencing at the ELH #1 well on February 6, 2001.
Prior to February 6, 2001, none of our oil and gas properties was producing, and
accordingly, no oil or gas operating revenues were recognized.
Oil and Gas Revenues and Expenses. We recorded $962,838 from the sale of
75,177 mcf of natural gas and $112,515 from the sale of 4,236 bbls of
hydrocarbon liquids during the nine months ended May 31, 2001. Operating
expenses during this period were $19,094. Production commenced at the ELH #1
well on February 6, 2001. We recorded no revenues or expenses from oil and gas
operations for the nine months ended May 31, 2000. None of our oil and gas
properties was producing prior to February 6, 2001.
10
Interest Income. We recorded $310,496 and $105,516 in interest income for
the nine months ended May 31, 2001 and May 31, 2000, respectively. The increase
is attributable to cash on hand during the nine months ended May 31, 2001 from
the common stock private placement completed in August of 2000, as well as
proceeds received from the public offering of common stock in March 2001.
Depreciation, Depletion and Amortization. We recorded $68,456 and $0 in
depreciation, depletion and amortization expense from oil and gas properties for
the nine months ended May 31, 2001 and May 31, 2000, respectively. The increase
is due to production starting at the ELH #1 well on February 6, 2001. The DD&A
expense in the nine months ended May 31, 2001 has been estimated without benefit
of a formal engineers reserve report. We will prepare our first reserve report
in conjunction with our fiscal year end of August 31, 2001 and, accordingly, the
amounts reflected at year end could differ from the estimates reflected in these
financial statements. In the prior year, none of our oil and gas properties were
producing, therefore no oil and gas expenses were recorded. We recorded $14,448
and $13,838 in depreciation expense associated with capitalized office furniture
and equipment during the nine months ended March 31, 2001 and March 31, 2000,
respectively.
General and Administrative Expense. We incurred $955,068 and $684,755 in
general and administrative expenses during the nine months ended May 31, 2001
and May 31, 2000, respectively. The difference is due to unrecoverable financing
costs, increases in investor relations, and additional personnel and related
salary expenses.
Interest Expense. We recorded no interest expense for the nine months ended
May 31, 2001 and nominal interest expense for the nine months ended May 31,
2000.
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities and Use of Proceeds; Recent Sales Of Unregistered
Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were submitted to a vote of security holders at the
annual meeting of stockholders which was held on June 18, 2001 and recessed
until, and completed on July 2, 2001:
The stockholders voted to re-elect D. Scott Singdahlsen, Keith F.
Carney, S.L. Hutchison and Bryce W. Rhodes to continue as directors of the
Company. A total of 17,461,706 votes were represented with respect to this
matter. At least 17,424,256 (99.8%) of the shares voted for each nominee,
no shares voted against any nominee and the remaining shares abstained from
voting.
11
A proposal to amend our Certificate of Incorporation to increase our
authorized common stock to 75,000,000 shares was approved by the
stockholders. A total of 17,462,213 votes were represented with a total of
17,401,422 (99.7%) shares voting for the proposal, 33,663 shares voting
against the proposal and 27,128 shares abstaining from voting.
A proposal to reincorporate the Company under the laws of the State of
Maryland was approved by the stockholders. A total of 13,293,964 votes were
represented with a total of 13,179,693 (99.1%) shares voting for the
proposal, 113,891 shares voting against the proposal and 380 shares
abstaining from voting.
A proposal to amend our 2000 Stock Option Plan to increase from
500,000 to 1,500,000 the number of shares of common stock issuable pursuant
to options granted under our 2000 Stock Option Plan was approved by the
stockholders. A total of 17,462,213 votes were represented with a total of
17,244,386 (98.8%) shares voting for the proposal, 188,445 shares voting
against the proposal and 29,382 shares abstaining from voting.
A proposal to ratify the selection of Wheeler Wasoff, P.C. as
Certified Public Accountants was approved by the stockholders. A total of
17,462,213 votes were represented with a total of 17,459,365 (99.9%) shares
voting for the proposal, 1,404 shares voting against the proposal and 1,444
shares abstaining from voting.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) During the Quarter ended May 31, 2001, we filed three reports on Form
8-K:
A Form 8-K was filed on March 12, 2001 reporting a news release dated
March 12, 2001.
A Form 8-K was filed on March 20, 2001 reporting a news release dated
March 20, 2001.
A Form 8-K was filed on April 17, 2001 reporting a news release dated
April 17, 2001.
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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.
Signatures Title Date
---------- ----- ----
/s/ D. Scott Singdahlsen President, Chief Executive Officer July 16, 2001
------------------------- and Chairman Of The Board
D. Scott Singdahlsen
/s/ Andrew P. Calerich Vice-President and Chief Financial July 16, 2001
----------------------- Officer
Andrew P. Calerich
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