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OMB APPROVAL |
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3235-0059 |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant þ |
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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þ Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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o Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
PYR ENERGY CORPORATION
(Name
of Registrant as Specified In Its Charter)
Not Applicable
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (02-02) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
TABLE OF CONTENTS
PYR ENERGY CORPORATION
1675 Broadway, Suite 2450
Denver, Colorado 80202
(303) 825-3748
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 3, 2006
The Annual Meeting of Stockholders of PYR Energy Corporation (the Company) will be held on
May 3, 2006 at 10:00 a.m. (Denver, Colorado time) at The World Trade Center, 1625 Broadway, Ste
800, for the following purposes:
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To elect a Board of Directors consisting of four Directors; |
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To consider and vote upon a proposal recommended by the Board of Directors to
ratify the selection of Hein & Associates LLP to serve as our certified independent
accountants for the fiscal year ending August 31, 2006; and |
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To consider and vote upon a proposal recommended by the Board of Directors to
ratify the sale as part of the October 2005 private placement of 20,000 shares of
common stock to a trust controlled by Kenneth R. Berry, Jr. our Vice President of Land
and currently Corporate Secretary and 50,000 shares of common stock to an entity
controlled by Mr. Berry; |
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To transact any other business that properly may come before the Annual
Meeting. |
Only the stockholders of record as shown on our transfer books at the close of business on
March 13, 2006 are entitled to notice of, and to vote at, the Annual Meeting. Our Annual Report
for the fiscal year ended August 31, 2005 is being mailed to stockholders with this proxy
statement. The Annual Report is not part of the proxy soliciting material.
All stockholders, regardless of whether they expect to attend the meeting in person, are
requested to complete, date, sign and return promptly the enclosed form of proxy in the
accompanying envelope (which requires no postage if mailed in the United States). The person
executing the proxy may revoke it by filing with our Secretary an instrument of revocation or a
duly executed proxy bearing a later date, or by electing to vote in person at the Annual Meeting.
All stockholders are extended a cordial invitation to attend the Annual Meeting.
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By the Board of Directors |
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/s/ D. Scott Singdahlsen |
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Denver, Colorado
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D. Scott Singdahlsen |
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March ___, 2006
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Chief Executive Officer |
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PROXY STATEMENT
PYR ENERGY CORPORATION
1675 Broadway, Suite 2450
Denver, Colorado 80202
(303) 825-3748
ANNUAL MEETING OF STOCKHOLDERS
To be held May 3, 2006
SOLICITATION AND REVOCATION OF PROXIES
This proxy statement is provided in connection with the solicitation of proxies by and on
behalf of the Board of Directors of PYR Energy Corporation, a Maryland corporation (referred to as
the Company or PYR Energy or we or us), to be voted at the Annual Meeting of Stockholders
to be held at 10:00 a.m. (Denver, Colorado time) on May 3, 2006 at The World Trade Center, 1625
Broadway, Ste 800 or at any adjournment or postponement of the Annual Meeting. We anticipate that
this proxy statement and the accompanying form of proxy will be first mailed or given to
stockholders on or about March 28, 2006.
The shares represented by all proxies that are properly executed and submitted will be voted
at the Annual Meeting in accordance with the instructions indicated on the proxies. Unless
otherwise directed, the shares represented by proxies will be voted (1) for each of the four
nominees for director whose names are set forth on the proxy card, (2) in favor of ratification of
Hein & Associates LLP as our certified independent accountants and (3) in favor of the ratification
of the sale of 70,000 shares of our common stock to a trust and entity controlled by Kenneth R.
Berry, Jr., our Vice President of Land and currently Corporate Secretary.
A stockholder giving a proxy may revoke it at any time before it is exercised by delivering
written notice of revocation to our Secretary, by substituting a new proxy executed at a later
date, or by requesting, in person at the Annual Meeting, that the proxy be returned.
The solicitation of proxies is to be made principally by mail; however, following the initial
solicitation, further solicitations may be made by telephone or oral communication with
stockholders. Our officers, directors and employees may solicit proxies, but these persons will
not receive compensation for that solicitation other than their regular compensation as employees.
Arrangements also will be made with brokerage houses and other custodians, nominees and fiduciaries
to forward solicitation materials to beneficial owners of the shares held of record by those
persons. We may reimburse those persons for reasonable out-of-pocket expenses incurred by them in
so doing. We will pay all expenses involved in preparing, assembling and mailing this proxy
statement and the enclosed material. A majority of the issued and outstanding shares of common
stock entitled to vote, represented either in person or by proxy, constitutes a quorum at any
meeting of the stockholders. If sufficient votes for approval of the matters to be considered at
the Annual Meeting have not been received prior to the meeting date, we intend to postpone or
adjourn the Annual Meeting in order to solicit additional votes. The form of proxy we are
soliciting requests authority for the proxies, in their discretion, to vote the stockholders
shares with respect to a postponement or adjournment of the Annual Meeting. At any
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postponed or adjourned meeting, we will vote any proxies received in the same manner described
in this proxy statement with respect to the original meeting.
AVAILABLE INFORMATION
Copies of the Annual Report are being sent to each stockholder with this proxy statement.
Upon written request, we will provide, without charge, a copy of our quarterly reports on Forms
10-QSB for the quarters ended November 30, 2005 and February 28, 2006 to any stockholders of
record, or to any stockholder who owns common stock listed in the name of a bank or broker as
nominee, at the close of business on March 13, 2006. Any request for a copy of these reports
should be mailed to the Secretary, PYR Energy Corporation, 1675 Broadway, Suite 2450, Denver,
Colorado 80202, (303) 825-3748. Stockholders may also receive copies of these reports by accessing
our website at www.pyrenergy.com or the SECs website at www.sec.gov.
1. ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect four directors to serve as our Board of
Directors. Each director will be elected to hold office until the next annual meeting of
stockholders and thereafter until his successor is elected and qualified. The affirmative vote of
a majority of the shares represented at the Annual Meeting in person or by proxy is required to
elect each director. Cumulative voting is not permitted in the election of directors.
Consequently, each stockholder is entitled to one vote for each share of common stock held in his
or her name. In the absence of instructions to the contrary, the person named in the accompanying
proxy shall vote the shares represented by that proxy for the persons named below as managements
nominees for directors. Each of the nominees currently is a director of the Company.
It is not anticipated that any of the nominees will become unable or unwilling to accept
nomination or election, but, if that should occur, the persons named in the proxy intend to vote
for the election of such other person as the Board of Directors may recommend.
Required Vote; Board Recommendation
An affirmative vote of the majority of shares represented at the Annual Meeting in person
or by proxy is necessary to elect each director.
The Board of Directors unanimously recommends a vote for each of the nominees for election as
directors.
The following table sets forth, with respect to each nominee for director, the nominees age,
his positions and offices with the Company, the expiration of his term as a director and the year
in which he first became a director. Individual background information concerning each of the
nominees follows the table. For additional information concerning the nominees, including stock
ownership and compensation, see Executive Compensation, Stock Ownership Of Directors And
Principal Stockholders, and Certain Transactions With Management And Principal Stockholders.
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Expiration of Term |
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Director |
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Position with the Company |
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as Director |
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Since |
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David Kilpatrick |
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Chairman of the Board |
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2007 Annual Meeting |
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2002 |
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D. Scott Singdahlsen |
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Chief Executive Officer, Chief Financial Officer, President, and Director |
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2007 Annual Meeting |
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1997 |
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Bryce W. Rhodes |
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Director |
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2007 Annual Meeting |
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1999 |
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Dennis M. Swenson |
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70 |
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Director |
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2007 Annual Meeting |
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2004 |
David B. Kilpatrick has been a Director of the Company since June 2002. Mr. Kilpatrick was
appointed as Chairman of the Board of Directors in November 2005. Mr. Kilpatrick also serves on
the Companys Audit Committee and the Companys Compensation Committee. He is currently President
of Kilpatrick Energy Group, which provides strategic management consulting services to the oil and
gas industry. He currently serves as a Director of the publicly traded Cheniere Energy and
Whittier Energy. Prior to the 1998 merger with Texaco, he was President and Chief Operating
Officer of Monterey Resources, Inc., the largest independent oil and gas producer in California.
Mr. Kilpatrick has served as President of the California Independent Petroleum Association and is a
member of its Board of Directors and also serves as a Director of the Independent Oil Producers
Agency. He earned a Bachelor of Science degree in Petroleum Engineering from the University of
Southern California and a Bachelors Degree in Geology and Physics from Whittier College.
D. Scott Singdahlsen has served as President, Chief Executive Officer, and a Director of the
Company since August 1997. Mr. Singdahlsen co-founded PYR Energy, LLC in 1996, and served as
General Manager and Exploration Coordinator. In 1992, Mr. Singdahlsen co-founded Interactive Earth
Sciences Corporation, a 3-D seismic management and interpretation consulting firm in Denver, for
which he served as vice president and president and lead seismic interpretation specialist from
1992 to 1996. Prior to forming Interactive Earth Sciences Corporation, Mr. Singdahlsen was
employed as a Development Geologist for Chevron USA in the Rocky Mountain region. At Chevron, Mr.
Singdahlsen was involved in 3-D seismic reservoir characterization projects and geostatistical
analysis. Mr. Singdahlsen started his career at UNOCAL as an Exploration Geologist in Midland,
Texas. Mr. Singdahlsen earned a B.A. in Geology from Hamilton College and a M.S. in Structural
Geology from Montana State University.
Bryce W. Rhodes has been a Director of the Company since April 1999, when he was nominated and
elected to the Board in connection with the sale by the Company of convertible promissory notes
issued in a private placement transaction in October and November 1998. Mr. Rhodes is a member of
the Companys Audit Committee and Chairman of the Compensation Committee. Since 1991, Mr. Rhodes
served as Vice President, and then from September 2003 as President and CEO of Whittier Energy
Corporation (WEC), an oil and gas exploration company. Mr. Rhodes served as Investment Manager of
WEC from 1985 until 1991. Mr. Rhodes received B.A. degrees in Geology and Biology from the
University of California, Santa Cruz, in 1976 and an MBA degree from Stanford University in 1979.
3
Dennis M. Swenson joined as a Director in October 2004, and serves as the Audit Committee
Chairman and as a member of the Compensation Committee. From 1992 through 1995, Mr. Swenson was an
independent consultant. Mr. Swenson was Executive Vice President, Chief Financial Officer,
Secretary and Treasurer, of StarTek, Inc., a NYSE traded company with headquarters in Denver,
Colorado from 1996 through retirement in 2001. Mr. Swenson was employed at Ernst & Young in Denver
from 1960 to 1973, and was a partner at Ernst & Young from 1973 to 1991. He has a Bachelors
Degree in Accounting from Brigham Young University and an MBA Degree from the University of Denver.
Executive Officers
Tucker L. Franciscus, 37, Vice President of Strategic Development and Corporate Secretary
until November 2005, joined PYR in September 2004. Mr. Franciscus joined the firm from Stifel
Nicolaus & Company, where he oversaw their Investment Banking Energy Group practice between 2001
and 2004. Mr. Franciscus was responsible for mergers and acquisitions, equity and debt offerings,
and private placements for all of Stifels energy clients. Prior to working at Stifel, Mr.
Franciscus was the senior associate and manager for the Global Energy Group at J.P. Morgan in New
York and an associate in the Deutsche Banc BT Wolfensohn Mergers & Acquisitions Group. Mr.
Franciscus has executed equity, debt, mergers and acquisitions and other financing transactions in
various industries including defense, energy, media and telecom. For five years preceding his
banking experience, Mr. Franciscus worked in various marketing and finance positions in the Oil and
Gas sector, including Snyder Oil and KN Energy (Interenergy). Additionally, he was a commissioned
Infantry Officer in the U.S. Army and served in the reserves recently. Mr. Franciscus has an MBA
from the Daniels college of Business at the University of Denver and a Bachelor of Arts from Ohio
Wesleyan University.
Kenneth R. Berry, Jr., 53, has served as Vice President of Land since August 1999, as land
manager for the Company since October 1997, and as Corporate Secretary since November 2005. Mr.
Berry is responsible for the management of all land issues including leasing and permitting. Prior
to joining the Company, Mr. Berry served as the managing land consultant for Swift Energy Company
in the Rocky Mountain region. Mr. Berry began his career in the land department with Tenneco Oil
Company after earning a B.A. degree in Petroleum Land Management at the University of Texas
Austin.
Each of our officers serves at the pleasure of the Board of Directors. There are no family
relationships among our officers and directors.
Board of Directors and Committees
The Board of Directors met four times during the fiscal year ended August 31, 2005 and
each director participated in all of the meetings of the Board and of all committees on which that
director served during the year. We encourage all incumbent directors, as well as all nominees for
election as directors, to attend the annual meeting of stockholders. Our 2005 Annual Meeting of
Stockholders held on August 8, 2005 was attended by all four of the incumbent Directors who were
directors as of that date.
The standing committees of the Board include the Audit Committee and the Compensation
Committee. The Audit Committee and the Compensation Committee each consists entirely of
non-employee directors. The Board has not appointed a nominating committee.
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The Audit Committee met five times during the fiscal year ended August 31, 2005. The Audit
Committee oversees for the effectiveness of the Companys accounting policies and practices,
financial reporting and internal controls. The Audit Committee charter was adopted by the Board of
Directors in June 2000 and was amended by the Board in April 2001 and April 2004. A copy of the
Audit Committee charter was attached as Exhibit A to our definitive Proxy Statement regarding the
Annual Meeting of our stockholders held on June 18, 2001 and can be found on the SECs website at
www.sec.gov and on the companys website at www.pyrenergy.com. The functions of
the Audit Committee and its activities during the fiscal year ended August 31, 2005 are described
below under the heading Audit Committee Report. The Audit Committee currently consists of
Messrs. Swenson (Chairman), Kilpatrick, and Rhodes, each an independent director within the
meaning of the AMEX rules. The Board of Directors has determined that Mr. Swenson is the Companys
audit committee financial expert.
The Compensation Committee met two times during the fiscal year ended August 31, 2005. The
Compensation Committee has the authority to establish policies and make determinations concerning
compensation and employee benefits. The Compensation Committee reviews and makes recommendations
concerning the compensation policies and the implementation of those policies and determines
compensation and benefits for executive officers. The Compensation Committee currently consists of
Messrs. Kilpatrick, Swenson and Rhodes (Chairman). None of the members of the Compensation
Committee is an employee of the Company.
The Company does not have a nominating committee because it believes that currently, the
nominating functions should be relegated to the full Board. Nominees for director will be selected
or recommended by a majority of the Companys directors who meet the AMEX independence standards,
Messrs. Swenson, Kilpatrick and Rhodes. In selecting nominees for the Board, the Company is
seeking a board with a variety of experiences and expertise, and in selecting nominees will
consider business experience in the industry in which the Company operates, financial expertise,
independence from transactions with the Company, experience with publicly traded companies,
experience with relevant regulatory matters in which the Company is involved and reputation for
integrity and professionalism. The independent directors will consider in good faith director
candidates who meet the minimum qualifications and who are recommended by stockholders.
Stockholders may nominate persons to serve on the Board of Directors. To be considered for
nomination by the Board at the next annual meeting of stockholders, the nominations must be made by
stockholders of record entitled to vote. Stockholder nominations must be made by notice in
writing, delivered or mailed by first class U.S. mail, postage prepaid, to the Secretary of the
Company at the Companys principal business address, not less than 53 days nor more than 90 days
prior to any meeting of the stockholders at which directors are to be elected. Each notice of
nomination of directors by a stockholder shall set forth the nominees name, age, business address,
if known, residence address of each nominee proposed in that notice, the principal occupation or
employment of each nominee for the five years preceding the date of the notice, the number of
shares of the Companys common stock beneficially owned by each nominee and any arrangement,
affiliation, association, agreement or other relationship of the nominee with any Company
stockholder.
Stockholders wishing to send communications to the Board may contact D. Scott Singdahlsen, our
Chief Executive Officer, President and Director, at the Companys principal executive office
address. All such communications shall be shared with the members of the Board, or if applicable,
a specified committee or director.
5
Employee Code of Conduct and Code of Ethics and Reporting of Accounting Concerns
We have adopted an Employee Code of Conduct (the Code of Conduct). We require all
employees to adhere to the Code of Conduct in addressing legal and ethical issues encountered in
conducting their work. The Code of Conduct requires that our employees avoid conflicts of interest,
comply with all laws and other legal requirements, conduct business in an honest and ethical manner
and otherwise act with integrity and in our best interest.
We also adopted a Code of Ethics for our Chief Executive Officer, our Chief Financial Officer,
our Controller and all other financial officers and executives. This Code of Ethics supplements our
Code of Conduct and is intended to promote honest and ethical conduct, full and accurate reporting,
and compliance with laws as well as other matters. The Code of Conduct and Code of Ethics were
filed with the SEC as exhibits to our Annual Report on Form 10-KSB for the year ended August 31,
2003 and can be found on our website at www.pyrenergy.com.
Further, we have established whistle-blower procedures which provides a process for the
confidential and anonymous submission, receipt, retention and treatment of complaints regarding
accounting, internal accounting controls or auditing matters. These procedures provide substantial
protections to employees who report company misconduct.
Audit Committee Financial Expert
Our Board of Directors has determined that Mr. Dennis Swenson, an independent Director,
is the Companys audit committee financial expert.
Audit Committee Report
The report of the Audit Committee shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any filing under the
Securities Act or the Exchange Act, except to the extent that we specifically incorporate this
information by reference, and shall not otherwise be deemed filed under such Acts.
The Audit Committee oversees the Companys financial reporting process on behalf of the Board
of Directors. Management has the primary responsibility for the financial statements and the
reporting process, including the systems of internal controls. In fulfilling its oversight
responsibilities, the Committee reviewed and discussed with management the audited financial
statements in the Companys Annual Report on Form 10-KSB for the year ended August 31, 2005 and the
unaudited financial statements included in the Quarterly Reports on Form 10-QSB for the first three
quarters of the fiscal year ended August 31, 2005.
The Committee discussed with the independent auditors, who are responsible for expressing an
opinion on the conformity of audited financial statements with generally accepted accounting
principles, the auditors judgments as to the quality, not just the acceptability, of the Companys
accounting principles and such other matters as are required to be discussed by the auditors with
the Committee under Statement on Auditing Standard No. 61, as amended. In addition, the Committee
discussed with the independent auditors the auditors independence from management and the Company,
including the matters in the written disclosures and the letter required by the Independence
Standards Board Standard No. 1. The Committee considered whether the auditors providing services
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on behalf of the Company other than audit services is compatible with maintaining the
auditors independence.
The Committee discussed with the Companys independent auditors the overall scope and plans
for their respective audits. The Committee meets with the independent auditors, with and without
management present, to discuss the results of the auditors examinations, their evaluations of the
Companys internal controls, and the overall quality of the Companys financial reporting. The
Committee met five times during the fiscal year ended August 31, 2005, and during the fiscal year
ending August 31, 2006, has met four times to date.
In reliance on the reviews and discussions referred to above, the Committee recommended to the
Board of Directors, and the Board approved, that the audited financial statements be included in
the Annual Report on Form 10-KSB for the year ended August 31, 2005 for filing with the SEC. The
Committee also has recommended to the Board the selection of the Companys independent auditors.
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The Audit Committee |
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Dennis Swenson (Chairman) |
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David B. Kilpatrick |
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Bryce W. Rhodes |
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***** |
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Compensation Committee Interlocks and Insider Participation
Messrs. Kilpatrick, Swenson and Rhodes serve on the Companys Compensation Committee. None of
these individuals served as a member of the compensation committee of another entity that has an
executive officer serving on the Compensation Committee of the Company. No executive officer of
the Company served as a director of another entity that had an executive officer serving on the
Compensation Committee of the Company. Finally, no executive officer of the Company served as a
member of the compensation committee of another entity, which had an executive officer serving as a
director of the Company.
Compensation Committee Report on Executive Compensation
None of the members of the Compensation Committee of the Board of Directors is an employee of
the Company. The Compensation Committee sets and administers the policies that govern the annual
and long-term compensation of executive officers of the Company. The Compensation Committee makes
determinations concerning compensation of executive officers and awards of stock options under the
Companys stock option plans.
Compensation Policies Toward Executive Officers. The Compensation Committees
executive compensation policies are designed to provide competitive levels of compensation that
relate compensation to the Companys annual and long-term performance, reward above-average
corporate performance compared to other companies in the oil and gas industry, recognize individual
initiative and achievements, and assist the Company in retaining and attracting qualified executive
officers. The Compensation Committee attempts to achieve these objectives through a combination of
base salary, stock options, and cash bonus awards. In determining compensation, the Compensation
Committee considers the matters discussed in this report as well as the recommendations of the
Chief Executive Officer concerning other executive officers and employees. The Compensation
Committee met during
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the year ended August 31, 2005 to consider stock option grants for performance during the
years ended August 31, 2004 and August 31, 2005.
Executive Salaries. Executive salaries are reviewed by the Compensation Committee and
are set for individual executive officers based on subjective evaluations of each individual
officers performance and contributions to the Company, the Companys past performance, the
Companys future prospects and long-term growth potential and a comparison of the salary ranges for
executives of other companies in the oil and gas industry. Through consideration of these
criteria, the Compensation Committee believes that salaries may be set in a manner that is both
competitive and reasonable within the Companys industry.
Stock Options. Stock options are granted to executive officers and other employees of
the Company by the Compensation Committee as a means of providing long-term incentive to the
Companys employees. The Compensation Committee believes that stock options encourage increased
performance by the Companys employees and align the interests of the Companys employees with the
interests of the Companys stockholders. Decisions concerning recommendations for the granting of
stock options to a particular executive officer are made after reviewing the number of options
previously granted to that officer, the number of options granted to other executive officers (with
higher ranking officers generally receiving more options in the aggregate), and a subjective
evaluation of that officers performance and contributions to the Company as described above under
Executive Salaries and anticipated involvement in the Companys future prospects. While stock
options are viewed by the Committee on a more forward-looking basis than cash bonus awards based on
prior performance, an executive officers prior performance will impact the number of options that
may be granted. After considering the foregoing factors, during the fiscal year ended August 31,
2005, the Committee recommended that the Company grant options to three officers as follows:
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Number of Options |
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Share |
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D. Scott Singdahlsen,
President and Chief Executive Officer
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200,000 |
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$ |
0.96 |
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Tucker L. Franciscus
Vice PresidentStrategic Development
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150,000 |
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0.94 |
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Kenneth R. Berry, Jr.
Vice PresidentLand
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-0- |
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Cash Bonus Awards. The Compensation Committee considers on an annual basis whether to
pay cash bonuses to some or all of the Companys employees, including the Companys executive
officers. The Compensation Committee considers the granting of bonuses with the objective that the
Company will remain competitive in its compensation practices and be able to retain highly
qualified executive officers. In determining the amounts of bonuses, the Compensation Committee
considers the performance both of the Company and of each executive officer in the past year as
described above under Executive Salaries. The Committees review of the Companys performance
concentrates on exploration success, prospect generation, investment community recognition of the
Company and
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financial stability. The Committee did not pay cash bonuses to any of its employees during
the fiscal year ended August 31, 2005.
Chief Executive Officer Compensation. Generally, the compensation of the Companys
Chief Executive Officer is determined in the same manner as the compensation for other executive
officers of the Company as described above. The Committee did not adjust Mr. Singdahlsens
compensation during the fiscal year ended August 31, 2005.
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The Compensation Committee
David B. Kilpatrick (Chairman until November 2005)
Dennis Swenson
Bryce W. Rhodes (New Chairman)
* * * *
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act),
requires the Companys directors, executive officers and holders of more than 10% of the Companys
common stock to file with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of the Company. The
Company believes that during the year ended August 31, 2005, its officers, directors and holders of
more than 10% of the Companys common stock complied with all Section 16(a) filing requirements,
except that Tucker Franciscus, a Vice President, was late filing a Form 3 with respect to his
receipt of stock options on September 1, 2004 and David Kilpatrick, a director, was late filing a
Form 4 with respect to his receipt of stock options on October 13, 2004. In making these
statements, the Company has relied upon representations and its review of copies of the Section
16(a) reports filed for the fiscal year ended August 31, 2005 on behalf of the Companys directors,
officers and holders of more than 10% of the Companys common stock.
9
Executive Compensation
Summary Compensation Table
The following table sets forth in summary form the compensation received during each of the
last three completed fiscal years ended August 31, 2005 by D. Scott Singdahlsen, our Chief
Executive Officer, President, Chief Financial Officer and Director
and our other two most highly
compensated officers (the Named Executive Officers).
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Summary Compensation Table |
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Annual Compensation |
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Long-Term Compensation |
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Awards |
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Payouts |
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Other |
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Restricted |
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Annual |
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Stock |
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Securities |
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LTIP |
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All Other |
Name and Principal |
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Fiscal |
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Bonus |
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Compensation |
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Awards |
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Underlying |
|
Payouts |
|
Compensation |
Position |
|
Year |
|
Salary ($)(1) |
|
($)(2) |
|
($)(3) |
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($) |
|
Options(#) |
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($)(4) |
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($)(5) |
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D. Scott Singdahlsen |
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2005 |
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$ |
175,000 |
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200,000 |
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Chief Executive |
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2004 |
|
|
$ |
175,000 |
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Officer, Chief |
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2003 |
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|
$ |
175,000 |
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281,750 |
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Financial Officer, and
President |
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Tucker L. Franciscus |
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2005 |
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$ |
120,000 |
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150,000 |
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Vice President |
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2004 |
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2003 |
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Kenneth R. Berry Jr. |
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2005 |
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$ |
108,000 |
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Vice President |
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2004 |
|
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$ |
93,150 |
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135,000 |
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2003 |
|
|
$ |
93,150 |
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|
157,500 |
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(1) |
|
The dollar value of base salary (cash and non-cash) received during the year indicated. |
|
(2) |
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The dollar value of bonus (cash and non-cash) received during the year indicated. |
|
(3) |
|
During the period covered by the Summary Compensation Table, we did not pay any other annual
compensation not properly categorized as salary or bonus, including perquisites and other
personal benefits, securities or property. |
10
Option Grants in Last Fiscal Year
The following table provides certain summary information concerning individual grants of stock
options made to Named Executive Officers during the fiscal year ended August 31, 2005 under our
stock option plans.
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Option Grants in Last Fiscal Year |
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Shares of |
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Common |
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Stock |
|
% of Total |
|
|
|
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Underlying |
|
Options Granted |
|
|
|
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|
|
Options |
|
to Employees in |
|
Exercise Price |
|
|
Name |
|
Granted |
|
Fiscal
Year (3) |
|
($/Share) |
|
Expiration Date |
|
|
|
|
|
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|
D. Scott Singdahlsen |
|
|
200,000 |
(1) |
|
|
40 |
% |
|
$ |
0.96 |
|
|
November 17, 2014 |
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Tucker Franciscus |
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150,000 |
(2) |
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30 |
% |
|
$ |
0.94 |
|
|
September 1, 2009 |
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Kenneth Berry |
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(1) |
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One-fifth of these options are exercisable on each anniversary date of the
grant for five years following the grant date. |
|
(2) |
|
One-third of these options are exercisable on each anniversary date of the
grant for three years following the grant date. |
|
(3) |
|
During fiscal year 2005, we granted stock options to purchase a total of
500,000 shares of our common stock under our stock option plans to
all employees, including the Named Executive Officers. |
Subsequent to the fiscal year ended August 31, 2005, we granted Options to (1) David
Kilpatrick, Dennis Swenson and Bryce Rhodes, each a member of our Board of Directors, each to
purchase 15,000 shares at a exercise price of $1.34 per share immediately exercisable on or before
the fifth anniversary of the grant dated; (2) Scott Singdahlsen, our Chief Executive Officer, on
November 23, 2005 to purchase 25,000 shares at a exercise price of $1.34 per share immediately
exercisable on or before the fifth anniversary of the grant dated; (3) Tucker Franciscus, our Vice
President of Strategic Planning, on November 2, 2005 to purchase 25,000 shares at a exercise price
of $1.34 per share immediately exercisable on or before the fifth anniversary of the grant dated;
and (4) Kenneth Berry, our Vice President of Land and currently Corporate Secretary, on November
23, 2005 to purchase 25,000 shares at a exercise price of $1.34 per share immediately exercisable
on or before the fifth anniversary of the grant dated.
Aggregated Option Exercises And Fiscal Year-End Option Value Table
The following table provides certain summary information concerning stock option exercises
during the fiscal year ended August 31, 2005 by the Named
Executive Officers and the value of
unexercised stock options held by the Named Executive Officers as of August 31, 2005.
11
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|
|
Aggregated Option Exercises in last Fiscal Year And Year-End Option Values(1) |
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|
|
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Number of Securities |
|
|
|
|
|
|
|
|
|
|
|
|
Underlying Unexercised |
|
Value of Unexercised In-the- |
|
|
|
|
|
|
|
|
|
|
Options at Fiscal |
|
Money Options at Fiscal Year- |
|
|
|
|
|
|
|
|
|
|
Year-End (#)(4) |
|
End ($)(5) |
|
|
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
Acquired on |
|
Value |
|
|
|
|
|
|
|
|
Name |
|
Exercise(2) |
|
Realized ($)(3) |
|
Exercisable |
|
Unexercisable |
|
Exercisable |
|
Unexercisable |
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Scott Singdahlsen |
|
|
|
|
|
|
|
|
|
|
302,834 |
|
|
|
293,916 |
|
|
|
145,937 |
|
|
|
152,968 |
|
|
|
|
|
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|
|
|
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|
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|
|
|
|
|
|
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|
|
|
|
|
Tucker Franciscus |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
|
|
|
|
|
|
63,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth Berry |
|
|
|
|
|
|
|
|
|
|
300,000 |
|
|
|
82,500 |
|
|
|
185,400 |
|
|
|
41,600 |
|
|
|
|
(1) |
|
No stock appreciation rights are held by any of the named executive officers. |
|
(2) |
|
The number of shares received upon exercise of options during the year ended August 31, 2005. |
|
(3) |
|
With respect to options exercised during the year ended August 31, 2005, the dollar value of
the difference between the option exercise price and the market value of the option shares
purchased on the date of the exercise of the options. |
|
(4) |
|
The total number of unexercised options held as of August 31, 2005, separated between those
options that were exercisable and those options that were not exercisable on that date. |
|
(5) |
|
For all unexercised options held as of August 31, 2005, the aggregate dollar value of the
excess of the market value of the stock underlying those options over the exercise price of
those unexercised options. These values are shown separately for those options that were
exercisable and those options that were not yet exercisable on August 31, 2005 based on the
closing sale price of our common stock on that date, which was $1.36 per share. |
Employee Retirement Plans, Long-Term Incentive Plans and Pension Plans
Excluding the Companys stock option plans, we do not have any long-term incentive plan to
serve as incentive for performance to occur over a period longer than one fiscal year.
12
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
|
|
|
|
|
|
|
|
Remaining Available for |
|
|
|
Number of Securities |
|
|
|
|
|
|
Future Issuance Under |
|
|
|
to be Issued Upon |
|
|
Weighted-Average |
|
|
Equity Compensation |
|
|
|
Exercise of |
|
|
Exercise Price of |
|
|
Plans (Excluding |
|
|
|
Outstanding Options, |
|
|
Outstanding Options, |
|
|
Securities Reflected in |
|
Plan Category |
|
Warrants and Rights |
|
|
Warrants and Rights |
|
|
Column (a))* |
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity
compensation plans
approved by
security holders |
|
|
2,269,750 |
|
|
$ |
1.41 |
|
|
|
569,250 |
|
Equity compensation
plans not approved
by security holders |
|
|
-0- |
|
|
|
|
|
|
|
-0- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,269,750 |
|
|
|
|
|
|
|
569,250 |
|
|
|
|
* |
|
As of February 28, 2006. |
1997 Stock Option Plan
In August 1997, our 1997 Stock Option Plan (the 1997 Plan) was adopted by the Board of
Directors and subsequently approved by the stockholders. Pursuant to the 1997 Plan, we may grant
options to purchase an aggregate of 1,000,000 shares of common stock to key employees, directors,
and other persons who have contributed or are contributing to our success. The options granted
pursuant to the 1997 Plan may be either incentive options qualifying for beneficial tax treatment
for the recipient or they may be nonqualified options. The 1997 Plan may be administered by the
Board of Directors or by an option committee. Administration of the 1997 Plan includes
determination of the terms of options granted under the 1997 Plan. At February 28, 2006, options
to purchase 550,000 shares were outstanding under the Plan and 166,500 options were available to be
granted under the 1997 Plan.
2000 Stock Option Plan
In March 1999, our 2000 Stock Option Plan (the 2000 Plan) was adopted by the Board of
Directors and subsequently approved by the stockholders. Pursuant to the 2000 Plan, we may grant
options to purchase shares of our common stock to key employees, directors, and other persons who
have contributed or are contributing to our success. We initially could grant options to purchase
up to 500,000 shares pursuant to the 2000 Plan. In June 2001, our stockholders approved an
amendment which allows us to grant options to purchase up to 1,500,000 shares pursuant to the 2000
Plan. In June 2004, our stockholders approved an amendment to increase from 1,500,000 to 2,250,000
the number of shares of common stock issuable pursuant to options granted under the 2000 Plan. The
options granted pursuant to the 2000 Plan may be either incentive options qualifying for beneficial
tax treatment for the recipient or non-qualified options. The 2000 Plan may be administered by the
Board of Directors or by an option committee. Administration of the 2000 Plan includes
determination of the terms of options
13
granted under the 2000 Plan. As of February 28, 2006, options to purchase 1,719,750 shares
were outstanding under the 2000 Plan and 402,750 options were available to be granted pursuant to
the 2000 Plan.
Compensation Of Outside Directors
On April 12, 2002, we granted options to purchase 20,000 shares of common stock to Mr.
S.L. Hutchison and Mr. Rhodes who, at that time, were the only outside directors of the Company.
The exercise price of the options is $1.65 per share, with 5,000 of the options immediately vesting
and the remaining 15,000 of the options vesting 2,500 options for each fiscal quarter served as
Director beginning June 1, 2002. Effective with Mr. Kilpatrick becoming a non-employee member of
the Board of Directors on June 4, 2002, we granted him options to purchase 20,000 shares of common
stock at an exercise price of $1.72 per share. The options vest 2,500 options for each fiscal
quarter served as Director beginning with our fiscal quarter ended August 31, 2002. Other than
options to purchase an aggregate of 281,750 shares granted to Scott Singdahlsen in February 2003,
there were no options granted to any of our directors during the fiscal years ended August 31, 2003
or 2004. Mr. Kilpatrick and Mr. Rhodes both received options to purchase 50,000 shares at an
exercise price of $1.15 per share on September 17, 2004. One-half of these options vest
immediately and one-half vest after one year. Mr. Swenson was granted options to purchase 50,000
shares on October 1, 2004 at an exercise price of $1.24 per share. One-half of these options vest
immediately and one-half vest after one year. Mr. Hutchison, the former Audit Committee Chairman,
was awarded options to purchase 25,000 shares on January 12, 2005 at an exercise price of $1.15 per
share. On November 23, 2005, we granted to Messrs. Kilpatrick, Swenson and Rhodes options each to
purchase 15,000 shares at a exercise price of $1.34 per share immediately exercisable on or before
the fifth anniversary of the grant dated.
The Company pays each member of the Board of Directors a fee for attending Board meetings,
plus a cash retainer to the Audit Committee Chairman. The fees are as follows:
Meeting Fees:
|
|
|
$1000 per meeting for in-person quarterly Board meetings and $250 per meeting for
teleconference meetings |
|
|
|
|
$500 per meeting for in-person or telephonic committee meetings (audit and
compensation) when not held in conjunction with a regularly scheduled Board meeting.
$250 if held in conjunction with a regularly scheduled Board meeting. |
|
|
|
|
$1000 fee for attendance of Annual Meeting of Stockholders (in addition to fee
related to Board meeting in conjunction with the Annual Meeting of Stockholders). |
Cash Retainer:
|
|
|
$5,000 per year for Audit Committee Chairperson. |
Employment Contracts And Termination of Employment And Change-In-Control Arrangements
We do not have any written employment contracts with any of our officers or other
employees. We have no compensatory plan or arrangement that results or will result from the
resignation, retirement or any other termination of an executive officers employment or from a
change-in-control or a change in an executive officers responsibilities following a
change-in-control, except that both the 1997 Plan and the 2000 Plan provide for vesting of all
outstanding options in the event of the occurrence of a change-in-control.
14
Stock Ownership Of Directors And Principal Stockholders
As of March 13, 2006 there were 37,915,259 shares of common stock outstanding. The
following table sets forth certain information as of that date with respect to the beneficial
ownership of common stock by each director and nominee for director, by all executive officers and
directors as a group, and by each other person known by us to be the beneficial owner of more than
five percent of our outstanding shares of common stock:
|
|
|
|
|
|
|
Number of Shares |
|
Percentage of |
Name and Address of Beneficial Owner |
|
Beneficially Owned(1) |
|
Shares Outstanding |
D. Scott Singdahlsen |
|
2,111,750(2) |
|
5.5% |
1675 Broadway, Suite 2450 |
|
|
|
|
Denver, Colorado 80202 |
|
|
|
|
Bryce W. Rhodes |
|
162,414(3) |
|
* |
c/o Whittier Energy Company |
|
|
|
|
7770 El Camino Real |
|
|
|
|
Carlsbad, CA 92009 |
|
|
|
|
David B. Kilpatrick |
|
85,000(4) |
|
* |
9105 St. Cloud Lane |
|
|
|
|
Bakersfield, CA 93311 |
|
|
|
|
Dennis M. Swenson |
|
65,000(5) |
|
* |
5360 Lakeshore Drive |
|
|
|
|
Littleton, CO 80123 |
|
|
|
|
Tucker L. Franciscus |
|
75,000(6) |
|
* |
1675 Broadway, Suite 2450 |
|
|
|
|
Denver, Colorado 80202 |
|
|
|
|
Kenneth R. Berry, Jr. |
|
505,365(7) |
|
1.3% |
1675 Broadway, Suite 2450 |
|
|
|
|
Denver, Colorado 80202 |
|
|
|
|
All Executive Officers and Directors as a group (six persons) |
|
3,004,529(1)(2)(3)(4)(5)(6)(7) |
|
7.7% |
Victory Oil Company |
|
3,183,976(8) |
|
8.4% |
222 West Sixth Street, Suite 1010 |
|
|
|
|
San Pedro, California 90731 |
|
|
|
|
Eastbourne Capital Management, L.L.C. |
|
3,766,753(9) |
|
9.9% |
1101 Fifth Avenue, Suite 160 |
|
|
|
|
San Rafael, CA 94901 |
|
|
|
|
15
|
|
|
|
|
|
|
|
|
Number of Shares |
|
Percentage of |
Name and Address of Beneficial Owner |
|
Beneficially Owned(1) |
|
Shares Outstanding |
Wellington Management Company, LLP |
|
|
|
|
|
|
75 State Street |
|
|
|
|
|
|
Boston, MA 02109
|
|
5,056,100(10)
|
|
|
13.3 |
% |
|
|
|
(*) |
|
Less than one percent. |
(1) |
|
Beneficial ownership is defined in the regulations promulgated by the U.S. Securities and
Exchange Commission as having or sharing, directly or indirectly (1) voting power, which
includes the power to vote or to direct the voting, or (2) investment power, which includes
the power to dispose or to direct the disposition of shares of the common stock of an issuer.
The definition of beneficial ownership includes shares underlying options or warrants to
purchase common stock, or other securities convertible into common stock, that currently are
exercisable or convertible or that will become exercisable or convertible within 60 days.
Unless otherwise indicated, the beneficial owner has sole voting and investment power. |
(2) |
|
The shares shown for Mr. Singdahlsen include 200,000 shares owned by Mr. Singdahlsens two
minor children. Also includes options to purchase 15,000 shares at $1.82 per share until
April 12, 2007, options to purchase 200,000 shares at $0.29 per share until February 4, 2010,
options to purchase 81,750 shares at $1.30 per share until February 4, 2010, options to
purchase 25,000 shares at $1.34 until November 23, 2010, and options to purchase 40,000 shares
at $0.96 per share until November 17, 2014. |
(3) |
|
Includes 13,000 shares of common stock owned by Mr. Rhodes and 64,414 shares of common stock
owned by Adventure Seekers Travel, Inc. Adventure Seekers is owned by Mr. Rhodes wife and
Mr. Rhodes is the President of Adventure Seekers. Also includes options to purchase 20,000
shares at $1.65 per share until April 11, 2007, options to purchase 50,000 shares at $1.17 per
share until October 14, 2009 and options to purchase 15,000 shares at $1.34 until November 23,
2010 that currently are exercisable. Excludes 171,625 shares that are held by Whittier
Energy Company. Mr. Rhodes is a President and CEO of Whittier Energy Company. Mr. Rhodes
disclaims beneficial ownership of the shares beneficially owned by
Whittier Energy Company. |
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Includes options to purchase 20,000 shares at $1.72 per share until June 4, 2007, options to
purchase 50,000 shares at $1.17 per share until October 14, 2009 and options to purchase
15,000 shares at $1.34 until November 23, 2010 that currently are exercisable that are owned
by Mr. Kilpatrick. |
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Includes options to purchase 50,000 shares at $1.24 per share until October 1, 2009 and
options to purchase 15,000 shares at $1.34 until November 23, 2010 that are exercisable. The
options expire five years from the date that they become exercisable by Mr. Swenson. |
(6) |
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Includes options to purchase 50,000 shares at $.94 share until September 1, 2009 and options
to purchase 25,000 shares at $1.34 until November 2, 2010. Does not include options to
purchase an additional 100,000 shares at $0.94 share until September 1, 2009, 50,000 of which
become exercisable on September 1, 2006, and 50,000 of which become exercisable on September
1, 2007. |
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Includes the following securities held directly or indirectly by Kenneth R. Berry, Jr., who
is Vice President of Land: an aggregate of 172,865 shares owned by various entities, IRAs, and
trusts with which Mr. Berry, or his spouse or minor daughter, is associated; and options to
purchase 332,500 shares of common stock at exercise prices ranging from $.29 to $5.44 per
share that currently are exercisable or that will become exercisable within the next 60 days. |
(8) |
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Based on the information provided by the Victory Oil Company. |
(9) |
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The shares reflected include the shares beneficially owned by Eastbourne Capital Management,
L.L.C., a registered investment adviser, Richard Jon Barry, Manager of Eastbourne and Black
Bear Offshore Master Fund L.P., a Cayman Island exempted company to which Eastbourne is
investment adviser. |
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Includes 1,897,300 shares owned by J. Caird Partners, L.P., and 1,976,000 shares owned by J.
Caird Investors (Bermuda) L.P., each of which is an entity controlled by Wellington, and each
of which is a 5% or greater beneficial owner of the Companys common stock. |
Certain Transactions With Management And Principal Stockholders
On May 24, 2002, certain investment entities managed by Eastbourne Capital Management,
LLC purchased $6 million of convertible notes from the Company. The notes provide for semi-annual
interest payments at an annual rate of 4.99% and are convertible into common stock at the rate of
$1.30 per share. At the time of the transaction, these entities had aggregate ownership in PYR
Energy Corporation of approximately 15%. Concurrent with the sale, we agreed to add Messrs. Eric
Sippel and Borden Putnam, of Eastbourne, to our Board of Directors. Messrs. Sippel and Putnam
resigned from the board in August 2003, although Eastbourne still has the right to designate two
individuals to serve on the Board.
As more fully described in the Form 8-K filed with the SEC on October 26, 2005, in mid-October
2005, the Company completed a Private Equity Placement consisting of the sale of 6.328 million
shares of common stock, priced at $1.30 per share, to a group of institutional and accredited
individual investors. Pursuant to the terms of the Private Placement, the Company has filed a
registration statement covering the resale of these shares. On October 3, 2005, Estancia
Corporation, an entity solely owned by Kenneth Berry Jr., purchased 50,000 shares of common stock
pursuant to the Private Placement, and a trust of which Mr. Berry is Trustee and a beneficiary
purchased an additional 20,000 shares of common stock pursuant to the Private Placement. This
transaction was approved by the Board of Directors of the Company.
During the fiscal year ended August 31, 2005, there were no other transactions between the
Company and its directors, executive officers or known holders of greater than five percent of the
Companys common stock in which the amount involved exceeded $60,000 and in which any of the
foregoing persons had or will have a material interest.
Description of Securities
Below is a description of our common stock and our preferred stock.
Common stock
Holders of our common stock are entitled to one vote for each share held of record in all
matters to be voted on by the stockholders. Holders of common stock are entitled to receive
dividends as may be legally declared from time to time by the board of directors, and in the event
of our liquidation, dissolution or winding up, to share ratably in all assets remaining after
payment of liabilities. Declaration of dividends on common stock is subject to the discretion of
the board of directors and will depend upon a number of factors, including our future earnings,
capital requirements and financial condition. We have not declared dividends on our common stock
in the past and we currently anticipate that retained earnings, if any, in the future will be
applied to the expansion and development of our business rather than the payment of dividends.
The holders of common stock have no preemptive or conversion rights and are not subject to
further calls or assessments. There are no redemption or sinking fund provisions applicable to the
common stock. Our articles of incorporation require the approval of the holders of a majority of
our
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outstanding common stock for certain fundamental corporate actions, such as mergers and sales
of substantial assets, or for an amendment to our articles of incorporation. There exists no
provision in our articles of incorporation or our bylaws that would delay, defer or prevent a
change in control of the Company.
U.S. Corporate Stock Transfer acts as our transfer agent and registrar.
Preferred stock
The Company has authorized 1,000,000 shares of $0.001 par value preferred stock, of which
no shares are issued and outstanding.
2. PROPOSAL TO RATIFY THE SELECTION OF HEIN & ASSOCIATES LLP
AS CERTIFIED INDEPENDENT ACCOUNTANTS
The Board of Directors recommends that the stockholders vote in favor of ratifying the
selection of the certified public accounting firm of Hein & Associates LLP of Denver, Colorado as
the auditors who will audit financial statements, prepare tax returns and perform other accounting
and consulting services we request for the fiscal year ended August 31, 2006 or until the Board of
Directors, in its discretion, replaces them.
It is expected that one or more representatives of Hein & Associates LLP will be present at
the Annual Meeting and will be given the opportunity to make a statement and to respond to
appropriate questions from stockholders.
Principal Accountant Fees and Services
Audit Fees
Hein & Associates, LLP, the Companys principal accountants, billed the Company $81,907 for
the year ended August 31, 2004 and $79,000 for the year ended August 31, 2005. Hein & Associates,
LLP was hired in January 2004 as our certified independent accountant. Heins professional
services have included audits of financial statements included in the Companys Forms 10-KSB, for
the years ended August 31, 2004 and August 31,2005 and review of financial statements included on
the company Forms 10-QSB in such periods, and reviews of the Companys Forms 10-QSB for the
quarters ending November 30, 2005 and February 28, 2006, and services provided in connection with
regulatory filings.
Audit-Related Fees
For the years ended August 31, 2004 and August 31, 2005, Hein & Associates, LLP did not
provide the Company with any services for assurance and related services that are reasonably
related to the performance of the audit or review of the Companys financial statements and are not
reported above under Audit Fees.
Tax Fees
For the years ended August 31, 2004 and August 31, 2005, Hein & Associates, LLP did not
provide the Company with professional services for tax compliance, tax advice, and tax planning.
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All Other Fees
For the years ended August 31, 2004 and August 31, 2005, Hein & Associates, LLP did not bill
the Company for products and services other than those described above.
Audit Committee Pre-Approval Policies
The Audit Committee policy is that any services performed by the principal independent
auditors that are not included in the audit engagement letter shall be pre-approved by the Audit
Committee. All the services described above that were performed by the Companys independent
auditors and that were not included in the audit engagement letter were pre-approved by the Audit
Committee.
Required Vote; Board Recommendation
An affirmative vote of the majority of shares represented at the Annual Meeting in person
or by proxy is necessary to ratify the selection of auditors. There is no legal requirement for
submitting this proposal to the stockholders; however, the Board of Directors believes that it is
of sufficient importance to seek ratification. Whether the proposal is approved or defeated, the
Board may reconsider its selection of Hein & Associates LLP.
The Board of Directors unanimously recommends that the stockholders vote for approval of Hein
& Associates LLP as the Companys certified independent accountants.
3. PROPOSAL TO RATIFY THE SALE AS PART OF THE OCTOBER 2005 PRIVATE
PLACEMENT OF 20,000 SHARES OF COMMON STOCK TO A TRUST CONTROLLED BY
KENNETH R. BERRY, JR. OUR VICE PRESIDENT OF LAND AND 50,000 SHARES OF
COMMON STOCK TO AN ENTITY CONTROLLED BY MR. BERRY;
The Board of Directors recommends that the stockholders vote in favor of ratifying the
issuance of 20,000 shares of shares of common stock to a trust controlled by Kenneth R. Berry, Jr.
our Vice President of Land and 50,000 shares of common stock to an entity controlled by Mr. Berry;
Background
In October 2005, we sold 6,275,000 shares of our common stock (and issued 52,500 warrants) at
$1.30 per share in a private placement for an aggregate offering amount of $8,157,000 (the Private
Placement). We negotiated the terms of the Private Placement with Wellington Management Company
as the lead investor including the $1.30 offering price per share. The closing price of our stock
on September 23, 2005 was $1.38 per share. On September 27, 2005, the Board approved the Private
Placement on which day our stock closed at $1.27 per share. On September 28, 2005, the Private
Placement Memorandum was finalized and the closing price of our stock on that day was $1.47 per
share. The Private Placement closed in three separate closings, occurring on October 3, October 6
and October 20, respectively. The closing price of our stock on the date of these closings was,
respectively, $2.07, $1.46 and $1.36 per share.
Kenneth R. Berry, Jr., our Vice President of Land, purchased shares of our common stock in
connection with the first closing of the Private Placement, which occurred on October 3, 2005, as
follows. The Kenneth R. Berry, Jr. and Leslie A. Berry Trust (the Trust) purchased 20,000 shares
of
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common stock in the Private Placement. Mr. Berry is a trustee and beneficiary of the trust.
Estancia Petroleum Corporation (Estancia) purchased 50,000 shares of common stock in the Private
Placement. Mr. Berry owns all the outstanding equity interests in Estancia Corporation. The
foregoing purchasers account for $91,000 of the total $8,157,000 offering amount approximately 1.1%
of the total private placement at the same purchase price as all the other purchasers in the
Private Placement. The shares were subscribed for pursuant to two separate Subscription Agreements
each executed on October 3, 2005 by the Trust and Estancia respectively. As of March 13, 2006, Mr.
Berry beneficially owns, 1.3% of our issued and outstanding stock.
Our Audit Committee approved Mr. Berrys participation in the Private Placement in a meeting
held on November 2, 2005.
Following the submission of our Additional Listing Application filed with the American Stock
Exchange (AMEX), AMEX advised us that, because Mr. Berry purchased common stock in the Private
Placement at a price that was less than the market value of our common stock on the date of
purchases, stockholder approval would be required in order for any of the Trusts or Estancias
shares to be listed on AMEX. We have made a number of request for AMEX to change its position
based on the facts and circumstances of the above but AMEX stated that it had taken this same
position in other instances and it would not be willing to change its position in this case.
We are requesting that our stockholders ratify the above issuances, in connection with the
Private Placement, of 70,000 shares at $1.30 per share.
Effect on Existing Stockholders
All the existing holders of our common stock have been diluted proportionately in connection
with the issuance of the shares of our common stock as part of the Private Placement.
We filed a registration statement on Form S-3 to register the resale and transfer of the
shares sold in the Private Placement. This Form S-3 registration statement became effective on
January 6, 2006.
Our common stock has no preemptive or similar rights.
Principal Effects of Nonapproval
If stockholder ratification is not obtained, we would then cancel the sales and return the
purchase price to the Trust and Estancia.
In the event stockholder ratification is not obtained and for some reason we are unable to
accomplish the above options, we would not be in compliance with AMEX listing requirements. If we
fail to comply with AMEX listing or other agreements with AMEX in any material respect, our
securities are subject to suspension from dealings and, unless prompt corrective action is taken,
removal from AMEX listing. While we could reapply for AMEX listing if our securities were
delisted, removal from AMEX could negatively affect the price of our stock, our reputation, and our
ability to raise capital and could otherwise negatively affect our business.
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Required Vote; Board Recommendation
An affirmative vote of the majority of shares represented at the Annual Meeting in person or
by proxy is necessary to approve this matter.
Our Board of Directors unanimously recommends that the stockholders vote in favor of ratifying
the issuance of the shares purchased as part of the Private Placement by the Trust and Estancia of
the shares of our common stock as described above.
OTHER BUSINESS
The Board of Directors is not aware of any other matters that are to be presented at the
Annual Meeting, and it has not been advised that any other person will present any other matters
for consideration at the meeting. Nevertheless, if other matters should properly come before the
Annual Meeting, the stockholders present, or the persons, if any, authorized by a valid proxy to
vote on their behalf, shall vote on such matters in accordance with their judgment.
FINANCIAL AND OTHER INFORMATION INCORPORATION BY REFERENCE
Financial and other information required to be disclosed in this proxy statement is set forth
in our Annual Report on Form 10-KSB for the fiscal year ended August 31, 2005 under the captions
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, and MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, is hereby incorporated herein by reference. A copy
of our Annual Report Form 10-KSB accompanies this proxy statement.
VOTING PROCEDURES
Votes at the Annual Meeting are counted by an inspector of election appointed by the Chairman
of the meeting. If a quorum is present, an affirmative vote of a majority of the votes entitled to
be cast by those present in person or by proxy is required for the approval of items submitted to
stockholders for their consideration, unless a different number of votes is required by Maryland
law or our certificate of incorporation. Abstentions by those present at the Annual Meeting are
tabulated separately from affirmative and negative votes and do not constitute affirmative votes.
If a stockholder returns his proxy card and withholds authority to vote for any or all of the
nominees, the votes represented by the proxy card will be deemed to be present at the meeting for
purposes of determining the presence of a quorum but will not be counted as affirmative votes.
Shares in the names of brokers that are not voted are treated as not present.
RESOLUTIONS PROPOSED BY INDIVIDUAL STOCKHOLDERS,
DISCRETIONARY AUTHORITY TO VOTE PROXIES
Under Rule 14a-8(e) of the Securities Exchange Act of 1934, in order to be considered for
inclusion in the proxy statement and form of proxy relating to our next annual meeting of
stockholders following the end of our 2006 fiscal year, proposals by individual stockholders must
be received by us no later than November 28, 2006.
In addition, under Rule 14a-4(c)(1) of the Securities Exchange Act, the proxy solicited by the
Board of Directors for the next annual meeting of stockholders following the end of our 2006 fiscal
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year will confer discretionary authority on any stockholder proposal presented at that meeting
unless we are provided with notice of that proposal no later than February 11, 2007.
FORWARD-LOOKING STATEMENTS
This proxy statement includes forward-looking statements within the meaning of Section 21E
of the Exchange Act. All statements other than statements of historical facts included in this
proxy statement, including without limitation statements under Recent Developments Concerning The
Company regarding our financial position, business strategy and plans and objectives of management
for future operations and capital expenditures are forward-looking statements. Although we believe
that the expectations reflected in the forward-looking statements and the assumptions upon which
the forward-looking statements are based are reasonable, we can give no assurance that such
expectations and assumptions will prove to have been correct. Additional statements concerning
important factors that could cause actual results to differ materially from our expectations
(Cautionary Statements) are disclosed in the Disclosure Regarding Forward-Looking Statements And
Cautionary Statements section of our Annual Report on Form 10-KSB for the fiscal year ended August
31, 2005. All written and oral forward-looking statements attributable to us or persons acting on
our behalf subsequent to the date of this proxy statement are expressly qualified in their entirety
by the Cautionary Statements.
* * * * *
This Notice and Proxy Statement are sent by order of the Board of Directors.
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Dated: March ___, 2006
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/s/ D. Scott Singdahlsen
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D. Scott Singdahlsen
Chief Executive Officer |
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* * * * *
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PYR ENERGY CORPORATION
For the Annual Meeting of Stockholders on May 3, 2006
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints D. Scott Singdahlsen and Tucker Franciscus, or either of
them, as proxies with full power of substitution to vote all the shares of the undersigned with all
of the powers which the undersigned would possess if personally present at the Annual Meeting of
Stockholders of PYR Energy Corporation (the Corporation) to be held at 10:00a.m. (Denver,
Colorado time) on May 3, 2006, at The World Trade Center, 1625 Broadway, Ste 800 or any
adjournments thereof, on the following matters:
þ Please mark votes as in this example.
1. |
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To elect the following four directors: |
Nominees: Dennis Swenson, David B. Kilpatrick, Bryce W. Rhodes, D. Scott Singdahlsen.
FOR ALL NOMINEES o
WITHHELD AUTHORITY FOR ALL NOMINEES o
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE o
2. |
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To ratify the selection of Hein & Associates LLP as the Corporations certified independent
accountants. |
o FOR o AGAINST o ABSTAIN
3. |
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To ratify the sale as part of the October 2005 private placement of 20,000 shares of
common stock to a trust controlled by Kenneth R. Berry, Jr. our Vice President of Land and
50,000 shares of common stock to an entity controlled by Mr. Berry. |
o YES o NO
o ABSTAIN
4. |
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In their discretion, the proxies are authorized to vote upon an adjournment or postponement
of the meeting. |
o YES o NO
o ABSTAIN
5. |
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In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting. |
o YES o NO
o ABSTAIN
(Continued and to be signed on the reverse side)
Unless contrary instructions are given, the shares represented by this proxy will be voted in favor of Items 1,
2, 3, 4 and 5. This proxy is solicited on behalf of the Board of Directors of PYR Energy Corporation.
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW o
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Dated:
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Signature: |
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Signature: |
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Signature if held jointly |
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(Please sign exactly as shown on your stock certificate and on the envelope in which
this proxy was mailed. When signing as partner, corporate officer, attorney, executor,
administrator, trustee, guardian, etc., give full title as such and sign your own name
as well. If stock is held jointly, each join owner should sign.) |