lyric energy inc (form: 10ksb, filing date:...

Business Address1013 W 8TH AVEAMARILLO TX 791018063765088

Mailing AddressPO BOX 2231AMARILLO TX 79105

SECURITIES AND EXCHANGE COMMISSION

FORM 10KSBAnnual and transition reports of small business issuers [Section 13 or 15(d), not S-B Item 405]

Filing Date: 1997-04-08 | Period of Report: 1996-04-30SEC Accession No. 0001001348-97-000054

(HTML Version on secdatabase.com)

FILERLYRIC ENERGY INCCIK:319420| IRS No.: 751711324 | State of Incorp.:CO | Fiscal Year End: 0430Type: 10KSB | Act: 34 | File No.: 000-09800 | Film No.: 97576707SIC: 1311 Crude petroleum & natural gas

Copyright © 2012 www.secdatabase.com. All Rights Reserved.Please Consider the Environment Before Printing This Document

http://www.sec.gov/Archives/edgar/data/0000319420/000100134897000054/0001001348-97-000054-index.htmhttp://edgar.secdatabase.com/1863/100134897000054/filing-main.htmhttp://www.secdatabase.com/CIK/319420http://www.secdatabase.com/CIK/319420http://www.secdatabase.com/FileNumber/9800http://www.secdatabase.com/SIC/1311http://www.secdatabase.com

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

Annual Report Pursuant to Section 13 or 15(d) of the Securitiesand Exchange Act of 1934

For the fiscal year ended April 30, 1996Commission File No. 0-9800

LYRIC ENERGY INC.(Exact Name of Registrant as specified in its charter)

COLORADO 75-1711324(State or other jurisdiction of (I.R.S. Employer I.D. No.)Incorporation or organization)

1013 West 8th Ave., Amarillo, Texas 79101(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:(806) 376-5088

Securities registered pursuant to Section 12 (b) of the Act: N/ASecurities registered pursuant to Section 12 (g) of the Act:

$0.01 Par Value Common Stock(Title of Class)

Indicate by check mark whether the Registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months(Or for such shorter period that the Registrant was required tofile such reports), and (2) Has been subject to such filingrequirements for the past 90 days: Yes ____ No X

Check if there is no disclosure of delinquent filers in responseto Item 405 of Regulation S-B is not contained in this form, andno disclosure will be contained, to the best of registrant'sknowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-KSB or anyamendment to this Form 10-KSB: Yes X No _____

State Issuer's Revenues for the most recent fiscal year: $-0-


http://www.secdatabase.com

State the aggregate market value of Registrant's voting $0.01 parvalue common stock held by non-affiliates computed by referenceto the price at which the stock was sold, or the average bid andasked prices of such stock, as of a specified date within thepast 60 days. (See definition of affiliate in Rule 12b-2 of theExchange Act). There is no bid or asked price quoted.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVEYEARS)

Check whether the issuer has filed all documents and reportsrequired to be filed by Section 12, 13 or 15(d) of the ExchangeAct after the distribution of securities under a plan confirmedby a court. Yes _____ No ______

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer'sclasses of common equity, as of the latest practicable date. Asof December 31, 1996, there were 46,958,483 shares of theRegistrant's $.01 par value common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

No documents are incorporated herein by reference.

Transitional Small Business Format (check one): Yes ___ No X

PART 1

ITEM 1. BUSINESS

(a) General Development of Business.

Lyric Energy, Inc. ("Registrant") was incorporated in theState of Colorado on April 25, 1980, and was organized on May 1,1980.

On February 3, 1981, Registrant completed a registeredpublic offering of 20,000,000 shares of its $0.01 par valuecommon stock, and received gross proceeds of $2,000,000therefrom.

Registrant was an active oil and gas producing company fromits inception until July 31, 1991. All requisite 10-K's werefiled with the Securities and Exchange Commission through April30, 1991. 10-Q's were filed through the Quarter ending January31, 1992.



For the fiscal year ending April 30, 1991 the net loss was$360,791 and for 1990 and 1989 was $290,561 and $266,799. Theprincipal cause of the losses was the interest being accrued butnot paid on the bank note with the Amarillo National Bank. Theoriginal principal of the Bank note was $1,815,869. By the end offiscal year 1991 (April 30) principal and unpaid interest hadgrown to $3,209,761. Registrant was unable to pay the interest.

Effective July 31, 1991 Registrant entered into an agreementwith the Amarillo National Bank wherein Registrant assignedRegistrant's interest in certain oil and gas producing propertieshaving a present worth discounted at 10% of $297,600 to theAmarillo National Bank and the issuance by Registrant to theAmarillo National Bank of 3,800,000 shares of Registrant'sauthorized but unissued Common Stock which Common Stock bore aRestrictive 144 Legend at the time the stock was issued all inconsideration of cancellation of Registrant's past due notesincluding accrued interest thru July 31, 1991. In additionRegistrant agreed to assign the Amarillo National Bank smalloverriding royalty interests in any wells Registrant subsequentlydrilled on one proved undeveloped oil property in Moore County,Texas and on any oil and gas subsequently drilled by Registrantin the Thalia area of Foard County, Texas. Such overridingroyalty interests applied only to wells which Registrant drilledsubsequent to July 31, 1991 in these specifically designatedareas. Registrant did not drill any of such wells on either theundeveloped oil property in Moore County, Texas, or on any oiland gas wells subsequently drilled in the Thalia area in FoardCounty, Texas. Other Oil and Gas Leases owned by Registrant onJuly 31, 1991, were assigned to other operators or expired bytheir own terms for failure to develop or failure to produce.Registrant agreed to continue to operate the Okmulgee oil andcasinghead gas producing properties consisting of the propertiesin the Creek Indian designated unit as designated by the OklahomaCorporation Commission for a six month period. At the end of thatsix month period Registrant agreed with the bank that Registrantwould, if the production warranted, effectuate a productionpayment with the bank providing that the bank would receive 75%of Registrant's revenue after expenses from the Creek Indian Unituntil the bank receives $100,000 or alternately Registrant wouldsell the properties in the unit and give to the bank the proceedsof such sale. Registrant subsequently sold the Okmulgee oil andcasinghead gas producing properties to an unrelated third partyand paid the proceeds to the Amarillo National Bank in accordancewith this agreement.

After assigning to the Amarillo National Bank the oil andgas producing properties described above, Registrant still had aninterest in some oil and gas properties. All of those oil and gasproperties subsequently were either plugged and abandoned or



ceased producing and expired by their own terms for failure todevelop or failure to produce. With the exception of one propertyin Moore County, Texas, which was sold to an unrelated thirdparty in exchange for an obligation by that unrelated third partyto plug and abandon the wells at the appropriate time and relieveRegistrant of that obligation, and a modest amount of cash whichwas not sufficient to completely pay the outstanding obligationsof that property at the time of sale. The amount of such unpaidinvoices were owed to Stahl Petroleum Company which waived thepayment of the balance due.

As a consequence, the Registrant had no source of cash flowor income and no properties with any appreciable value. TheRegistrant ceased filing 10-K's and 10-Q's after the quarterended January 31, 1992.

The oil and gas properties remaining which were basicallyworthless were written off. Most were no longer valid forfailure to produce and were lost as a result of the terms of theOil and Gas Leases which provide if there is no production inpaying quantities for a period of time the Oil and Gas Leaseterminates by its own terms.

Registrant filed a 10-Q for the quarter ended January 31,1992 which summarized the effect of the financial transactionsfrom April 30, 1991 (date of last 10-K) and January 31, 1992. Thesignificant transaction was the elimination and cancellation bythe Bank of the note and accrued interest in exchange forRegistrant's issuance of stock to the Bank and the transfer ofRegistrants viable oil and gas property interests. The effect wasto reduce the net property and equipment amount from $829,171 to$563,419. Registrant used full cost accounting in calculatingthe net property and equipment amount. The estimated value of theproperty transferred was the difference of $265,752.

Registrant assigned to the Bank all of Registrants viableoil and gas property interest, but retained those properties withno value. Registrant has eliminated those items from Registrantsbooks of account to the end that Registrant has no oil and gasproperties as either assets or liabilities.

Registrant also issued a total of 4,000,000 shares to theofficers of the Registrant as well as employees of StahlPetroleum who had assisted in operating Registrant withoutcompensation.

Registrant's management did not believe it was prudent torecommend dissolution of the Corporation to the shareholders.Consequently Registrant has been dormant. Registrant now desiresto again become a full reporting company to the Securities andExchange Commission by filing this 10-KSB.



(b) Financial Information About Industry Segments.

N/A

(c) Narrative Description of Business.

Registrant is currently engaged in the business of searchingfor an acquisition of an operating company in order to carry onthe business of the acquired company. The Registrant has onlyengaged in preliminary efforts intended to identify possiblemerger or acquisition "targets."

Plan of Operation

The Registrant has insufficient capital with which toprovide merger or acquisition candidates with substantial cash orother assets. However, Management believes the Registrant willoffer owners of potential merger or acquisition candidates theopportunity to acquire a controlling ownership interest in apublic company at substantially less cost than is required toconduct an initial public offering. The target company will,however, incur significant post-merger or acquisitionregistration costs in the event target company shareholders wishto offer a portion of their shares for subsequent sale. Further,while target company shareholders will receive "restrictedsecurities" in any merger or acquisition transaction, thoserestricted securities will represent, if a trading marketdevelops for the Registrant's common stock, ownership in a"publicly-traded" as opposed to a "privately-held" company.Management also believes target company shareholders may benefitin obtaining a greater ownership percentage in the Registrantremaining after a merger or acquisition that may be the case inthe event a target company offered its shares directly for saleto the public. Nevertheless, the Officers and Directors of theRegistrant have not conducted market research and are not awareof statistical data which would support the perceived benefits ofa merger or acquisition transaction for target companyshareholders.

The Registrant expects to concentrate primarily on theidentification and evaluation of prospective merger oracquisition "target" entities including private companies,partnerships or sole proprietorships. The Registrant does notintend to act as a general or limited partner in connection withpartnerships it may merge with or acquire. Management has notidentified any particular area of interest within which theRegistrant will concentrate its efforts.

Management contemplates that the Registrant will seek tomerge with or acquire a target company with either assets or



earnings, or both, and that preliminary evaluations undertaken bythe Registrant will assist in identifying possible targetcompanies. The Registrant has not established a specific levelof earnings or assets below which the Registrant would notconsider a merger or acquisition with a target company.Moreover, management may identify a target company which isgenerating losses which it will seek to acquire or merge with theRegistrant. The merger with or acquisition of a target companywhich is generating losses or which has negative shareholders'equity may have a material adverse effect on the price of theRegistrant's Common Shares.

Plan of Acquisition

The Registrant intends to follow a systematic approach toidentify its most suitable acquisition candidates.

First, management intends to concentrate on identifying anynumber of preliminary prospects which may be brought to theattention of management through present associations or by virtueof the very limited advertising campaign the Registrant willconduct. Management will then apply certain of its broadcriteria to the preliminary prospects. Essentially, this willentail a determination by management as to whether or not theprospects are in an industry which appears promising and whetheror not the prospects themselves have potential within their ownindustries. During this initial screening process, managementwill ask and receive answers to questions framed to provideappropriate threshold information, depending upon the nature ofthe prospect's business. Such evaluation is not expected to bean in-depth analysis of the target company's operations althoughit will encompass a look at most, if not all, of the same areasto be examined once one or more target companies are selected foran in-depth review. For instance, at this stage, management maylook at a prospect's unaudited balance sheet. Once a prospect isselected for an in-depth review, management will review theprospect's audited financial statements. Management anticipatesthis evaluation will provide a broad overview of the business ofthe target company and should allow a large percentage ofpreliminary prospects to be eliminated from furtherconsideration.

Management considers it unlikely that it will evaluate morethan two or three firms on this basis in view of capital andmanagerial time constraints. Following the identification of atmost one or two target companies which appear to be suitablemerger or acquisition candidates, the Registrant expects tocommission appraisals, professional studies of reserves and assetreports to be conducted by outside consultants. The Registranthas limited funds with which to engage consultants and,accordingly, management intends to conserve such funds pending



management's evaluation.

Management expects to enter into further negotiations withtarget company management following successful conclusion offinancial and evaluation studies. Negotiations with targetcompany management will be expected to focus on the percentage ofthe Registrant which target company shareholders would acquire inexchange for their shareholdings in the target company.Depending upon, among other things, the target company's assetsand liabilities, the Registrant's shareholders will in alllikelihood hold a lesser percentage ownership interest in theRegistrant following any merger or acquisition. The percentageownership may be subject to significant reduction in the eventthe Registrant acquires a target company with substantial assets.Any merger or acquisition effected by the Registrant can beexpected to have a significant dilutive effect on the percentageof shares held by the Registrant's then-shareholders includingpurchasers in this offering.

Letter of Intent and Promissory Note

On January 2, 1997, the Registrant entered into a Letter ofIntent with Natural Gas Technologies, Inc. ("NGT"), a Texascorporation engaged in the exploration, development andproduction of oil and gas properties. The Letter of Intent wasamended March 17, 1997. Pursuant to the Letter of Intent, NGTloaned the Registrant $100,000 pursuant to a non-interest bearingConvertible Promissory Note (the "Note"). The Note automaticallyconverts into 203,041,517 shares of the Registrant upon the laterto occur of (i) the Registrant becoming current on all reportsrequired under Section 13 or 15(d) of the Securities Exchange Actof 1934, as amended (the "Exchange Act"), and (ii) the Registrantobtaining a waiver from Amarillo National Bank of the Bank'snon-dilution rights contained in the July 31, 1991 agreement withthe Bank. If the Note does not convert prior to December 31,1997, the funds in escrow will be repaid to NGT. Upon conversionof the Note, the Registrant has agreed to fill two vacancies onthe Board of Directors with two directors nominated by NGT.

The Letter of Intent further provides for a special meetingof the shareholders of the Registrant to approve the followingmatters: (i) a 268.3342 shares for one share reverse split of theRegistrant's common stock; (ii) a name change of the Registrantto Natural Gas Technologies, Inc.; (iii) amendments to theRegistrant's articles of incorporation to eliminate the liabilityof officers and directors in certain circumstances and to reducethe shareholder voting requirements for certain significantcorporate actions; and (iv) the authorization of 10,000,000shares of no par value preferred stock which will be reserved forfuture issuance in the discretion of the Board of Directors.Assuming approval of the foregoing matters, the current



shareholders of the Registrant will upon conversion of the Notehold 175,000 shares and NGT will hold 756,674 shares on apost-reverse split basis. The special meeting will be held assoon as practicable after the conversion of the Note, and allcosts associated with the meeting, including the preparation andmailing of the information statements and notices will be borneby NGT.

The Letter of Intent further contemplates a share exchangebetween NGT and Lyric. The share exchange is intended to takeplace in two stages. The first stage will occur immediatelyafter shareholder approval of the matters specified above andwill consist of the exchange of approximately 2,055,000 shares ofthe authorized but unissued post-reverse split shares of theRegistrant for approximately eighty percent of the equityinterests in NGT, which interests are held by certain officers,directors and their family members and affiliates. TheRegistrant will therefore control NGT upon completion of thefirst stage. The second stage will occur upon the effective dateof a registration statement on Form S-4 which registers theexchange of all of the remaining equity interests in NGT intoapproximately 513,000 shares of the authorized but unissuedpost-reverse split shares of the Registrant and further providingfor the distribution of the 756,674 post-reverse split shares ofthe Registrant issued to NGT upon conversion of the Note to theshareholders of NGT immediately prior to the share exchange. Theforegoing terms are subject to adjustment based upon theanticipated conversion of certain preferred stock of NGT intocommon stock and based upon certain anticipated oil and gasproperty acquisitions by NGT prior to the share exchange. It isanticipated that upon completion of the share exchange, thecurrent shareholders of the Registrant will hold five percent ofthe total outstanding shares of Lyric and the shareholders of NGTwill hold the remaining 95 percent.

The share exchange remains conditional upon the completionof due diligence and final documentation therefor.

Competition

The Registrant will remain an insignificant participantamong the firms which engage in mergers with and acquisitions ofprivately-financed entities. There are many established venturecapital and financial concerns which have significantly greaterfinancial and personnel resources and technical expertise thanthe Registrant. In view of the Registrant's combined limitedfinancial resources and limited management availability, theRegistrant will continue to be at a significant competitivedisadvantage compared to the Registrant's competitors.



Regulation and Taxation

The Registrant could be subject to regulation under theInvestment Company Act of 1940 in the event the Registrantobtains and continues to hold a minority interest in a number ofentities. However, management intends to seek at most one or twomergers or acquisitions and management's plan of operation isbased upon the Registrant obtaining a controlling interest in anymerger or acquisition target company and, accordingly, theRegistrant does not believe that it will become subject toregulation under the Investment Company Act of 1940. In order toavoid such regulation, the Registrant may be required todiscontinue any prospective merger or acquisition of any companyin which a controlling interest will not be obtained.

Any securities which the Registrant acquires in exchange forits Common Stock will be "restricted securities" within themeaning of the Securities Act of 1933 (the "1933 Act"). If theRegistrant elected to resell such securities, such sale could notproceed unless a registration statement had been declaredeffective by the Securities and Exchange Commission or anexemption from registration was available. Section 4(1) of the1933 Act, which exempts sales of securities not involving adistribution, would in all likelihood be available to permit aprivate sale if various restrictions pertaining to such a saleare complied with. Although management's plan of operation doesnot contemplate resale of securities acquired, in the event sucha sale were necessary, the Registrant would be required to complywith the provisions of the 1933 Act.

As a condition to any merger or acquisition, it is possibletarget company management may request registration of theRegistrant's shares to be received by target companyshareholders. In such event, the Registrant could incurregistration costs, and management intends to require the targetcompany to bear most, if not all, of the cost of any suchregistration. If the Registrant does contribute toward the costof such registration, its maximum contribution will be limited tothe extent that proceeds from this offering are available forsuch contribution. Alternatively, the Registrant may issue"restricted securities" to any prospective target company, whichsecurities may be subsequently registered for sale or sold inaccordance with Rule 144 of the Securities Act of 1933.

The Registrant intends to structure a merger or acquisitionin such a manner as to minimize federal and state taxconsequences to the Registrant and any target company.

(d) Employees.

Registrant has one part-time, non-compensated employee, its



President. Registrant's President devotes a modest amount of timeto the Registrant's business. The Registrant utilizes thesecretaries and bookkeepers employed by Stahl Petroleum Company.Stahl Petroleum Company is wholly-owned and controlled by G. E.Stahl, Registrant's President.

ITEM 2. PROPERTIES

(a) Office Facilities.

Registrant's offices are located at 1013 West 8th Avenue,Amarillo, Texas 79101, in space which Registrant shares withStahl Petroleum Company. Stahl Petroleum Company is wholly-ownedand controlled by G.E. Stahl. Registrant does not pay StahlPetroleum Company for secretarial and accounting services, officerent, miscellaneous expenses or any other services or material.

ITEM 3. LEGAL PROCEEDINGS

(a) Registrant knows of no pending or threatened legalproceedings to which the Registrant is a party and no suchproceedings are known to the Registrant to be contemplated bygovernmental authorities except the following:

(i) On August 25, 1989, the Registrant was suedin United States District Court in Amarillo, Texas by aninterstate pipeline company covering one oil and casinghead gaslease in Moore County, Texas in which Registrant had an interest,and upon which Registrant had drilled, completed and produced oiland casinghead gas from two oil wells. These two wells wereoperated by Registrant and were owned by certain participantstogether with Registrant. The interstate pipeline companyclaimed that Registrant produced gas belonging to the interstatepipeline company.

At that time Registrant together with the otherparticipants owned the oil and casinghead gas rights under thelease in question, and the interstate pipeline company owned thegas rights. Pursuant to the terms of the agreement concerningthe rights and obligations of the parties, the matter wasreferred to binding arbitration. On June 16, 1993, thearbitrators found against the Registrant and the otherowners who were participants in the project. Judgment wasentered in the United States District Court in Amarillo, Texasand set forth the amount of damages for each of the participantsin the project, but also provided that the Registrant, G. E.Stahl, President of Registrant, and L. K. Hayhurst,Vice-President, of Registrant were jointly and severally liablefor the full amount of the judgment. The judgment was paid infull, but some of the participants, including the Registrant, did



not pay their proportionate share, and as a consequence G. E.Stahl, President of Registrant, paid those amounts. On December31, 1996, Mr. Stahl released the Registrant of all liability forcontribution which Registrant might have had arising out of thejudgment.

(ii) On April 8, 1993, legal action was instituted inDistrict Court of Potter County, Texas, by Crouch PetroleumCompany against G. E. Stahl as an individual, Stahl PetroleumCompany and the Registrant in an attempt to obtain reimbursementof legal expenditures incurred by Crouch Petroleum Company in anunrelated case that was filed by a third party in the DistrictCourt of Foard County, Texas. The Foard County litigation wassettled between Registrant and plaintiff in that case.Registrant feels this current litigation is without merit andplans to vigorously defend against the claim.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS,

During the period of time from the last filing made byRegistrant and including the period of time covered by thisannual report, the following matters were submitted to a vote ofRegistrant's shareholders:

(a) None.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATEDSTOCKHOLDER MATTERS,

(a) Market Information.

On rare occasions the Registrant's common stock is traded onthe over-the-counter market and quotes for such common stock arereported in the National Quotation Bureau's "Pink Sheets." Thereis no established market for the Registrant's common stock.

The following table sets forth the range of high and low bidquotations, as reported by National Quotation Bureau:

Quarter Ended High Low

July 31, 1994 None NoneOctober 30, 1994 None NoneJanuary 31, 1995 None NoneApril 30, 1995 None None

July 31, 1995 None NoneOctober 30, 1995 None None



January 31, 1996 None NoneApril 30, 1996 None None

July 31, 1996 None NoneOctober 30, 1996 None NoneJanuary 31, 1997 $.035 $ 0

The foregoing bid quotations reflect inter-dealer prices,without mark-up, mark-down or commissions, and may notnecessarily represent actual transactions.

(b) Holders.

The following table sets forth the approximate number ofsecurity holders of record of Registrant's $0.01 par value commonstock as of December 31, 1996.

Number ofTitle of Class Record Holders

$0.01 Par Value 4,155Common stock

(c) Dividends.

No cash dividends have been declared with respect toRegistrant's $0.01 par value common stock since its inception,and it has no present intention to pay such dividends in theforeseeable future.

PART III

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OFOPERATION

(a) Liquidity and Capital Resources.

On April 30, 1996, the Registrant had cash on hand of$1,453. After the date of this report, the Registrant hasentered into a Convertible Promissory Note pursuant to which$100,000 has been loaned to Registrant but is currently beingheld in escrow. Such funds will be taken out of escrow and paidto the Registrant upon the later to occur of (i) the Registrantbecoming current on all reports required under Section 13 or15(d) of the Exchange Act and (ii) the Registrant obtaining awaiver from Amarillo National Bank of the Bank's non-dilutionrights contained in a settlement agreement with the Bank. See"Letter of Intent and Promissory Note" in Item 1(c). Pursuant toa letter of intent between the Registrant and the lender, the



Registrant must use such funds for the payment of outstandingobligations in preparation for a share exchange with the lender.In the event the foregoing escrow release conditions do not occurbefore December 31, 1997, the funds in escrow will be repaid tothe lender. Should this occur, the Registrant will haveinadequate liquidity on its own to carry out its business planand will have to rely on future advances from its President.

(b) Plan of Operation

See "Plan of Operation" in Item 1(c).

ITEM 7. FINANCIAL STATEMENTS AND SCHEDULES

See Financial Statements beginning at Page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL DISCLOSURES

N/A

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

(a) Identification of Directors and Executive Officers.

The following table sets forth the names and ages of allDirectors and Executive Officers of the Registrant and allpersons nominated or chosen to become a Director, indicatingall positions and offices with the Registrant held by each suchperson, and the periods during which he has served as such:

Position Held With DirectorName Age Registrant Since

G. E. Stahl 70 President, Chief May 1, 1980Executive Officerand Director

Mr. L.K. Hayhurst resigned as an officer and director December15, 1996, and Mr. James Clements resigned as a director December31, 1996. There was no disagreement with the Registrant overoperations or policies by either director who resigned.

Registrant's Directors hold office until the next annualmeting of Registrant's shareholders. There is no arrangement orunderstanding between any Director or nominee for Director of theRegistrant and any other person or persons pursuant to which suchDirector was or is to be selected as Director or nominee forDirector. Registrant's Executive Officers hold office until thenext annual meeting of Directors of the Registrant.



(b) Family Relationships.

There are no family relationships between any Director orExecutive Officer or person nominated or chosen by the Registrantto become a Director or Executive Officer.

(c) Business Experience.

Following is a brief account of the business experienceduring the past five years of the Executive Officer of theRegistrant:

G. E. "Skip" Stahl. Mr. Stahl has been the President, ChiefExecutive Officer and a Director of the Registrant since itsorganization. Mr. Stahl has been actively engaged as anindependent oil and gas operator since 1960. He has been thePresident, a Director and controlling shareholder of StahlPetroleum Company, Amarillo, Texas, an independent oil andgas operator, since 1960. Mr. Stahl previously was Chairman ofthe Board of Directors, Chief Executive Officer and Secretary ofAdvanced Monitoring Systems, Inc., a publicly held companyengaged in pipeline monitoring. Mr. Stahl resigned as an officerand director of Advanced Monitoring Systems from September 10,1992 to April 1, 1993, and then again on August 30, 1993. SinceAugust 30, 1993, Mr. Stahl has not been associated with AdvancedMonitoring Systems, Inc.

(d) Involvement in Certain Legal Proceedings.

N/A.

ITEM 10. MANAGEMENT'S COMPENSATION

(a) Current Remuneration.

The following table sets forth all remuneration to theRegistrant's Chief Executive Officer for services in allcapacities to the Registrant during the fiscal year ended April30, 1996:

Long Term CompensationNameand SecuritiesPrin- Annual Compensation Rest- Under- Allcipal ricted lying OtherPosi- Bonus/ Compen- Stock Options Compen-tion Year Salary Other sation Awards /SARs LTIP sation(a) (b) (c) (d) (e) (f) (g) (h) (i)



G.E. 1996 $ 0 $ 0 $ 0 0 0 $ 0 $ 0Stahl 1995 $ 0 $ 0 $ 0 0 0 $ 0 $ 0

1994 $ 0 $ 0 $ 0 0 0 $ 0 $ 0

(1) No Directors of the Registrant receive fees for theirattendance at meetings of the Registrant's Board ofDirectors. There are no other arrangements pursuant towhich Registrant's Directors receive remuneration fromRegistrant for services as a Director or arrangements forremuneration upon termination of employment of Directors orExecutive Officers Registrant has no options, warrants orany rights outstanding as of the date of this report.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSAND MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners.

The following table sets forth the number of shares of theRegistrant's $0.01 par value common stock owned by each personwho, as of July 1, 1996, was known by the Registrant to ownbeneficially more than 5% of its common stock:

Amount and(1)Nature of

Name and Address of Beneficial Percent of(2)Beneficial Owner Ownership Class

G. E. Stahl 3,577,402(3) 7.62%Box 2231Amarillo, TX 79105

Wesley W. Masters 4,179,562(4) 8.90%Box 800Amarillo, TX 79105

Amarillo National Bank 4,225,150 9.00%Amarillo, TX

All officers and 3,577,402 7.62%directors as a group(4 persons)

(1) Named beneficial owners have sole voting and investmentpower over shares indicated in table.

(2) Based on 46,958,483 shares outstanding as of February 11,



1997.

(3) Does not include 40,000 shares owned by Stahl PetroleumCompany employees.

(4) Includes 112,500 shares formerly owned by Centergas, Inc.,Mr. Masters was sole owner.

(b) Changes in Control.

As of April 30, 1996, there were no arrangements known tothe Registrant, including any pledge by any person of securitiesof the Registrant or any of its parents, the operation of whichmay at a subsequent date result in a change in control of theRegistrant. As of March 10, 1997, the Registrant has enteredinto a Convertible Promissory Note, which upon conversion wouldresult in a change of control. See "Letter of Intent andPromissory Note" in Item 1(c).

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a) Transactions with Management and Others.

No Director, Executive Officer or principal security holderof the Registrant, or any member of the immediate family of anyof the foregoing persons, had any transaction, or series ofsimilar transactions, since the beginning of the Registrant'slast fiscal year, or any currently proposed transaction, orseries of similar transactions, to which the Registrant or any ofits subsidiaries was, or is to be a party, in which the amountinvolved exceeds $60,000 and in which any of such persons had, orwill have, a direct or indirect material interest except asfollows:

On December 1, 1982 the Registrant loaned Mr. Masters, aformer director, $7,551 pursuant to a note and bearing interestat 10% per annum. As of April 30, 1996, $17,681 was due to theRegistrant under such note. Such amount was applied against anobligation of the Registrant to a trust controlled by Mr.Masters, which obligation was ultimately forgiven in January1997.

In 1983, the Registrant loaned Mr. Hayhurst a total of$8,874 pursuant to two notes bearing interest at 10% per annum.As of April 30, 1996, $12,752 was due on such notes. TheRegistrant forgave the obligations under those notes as of April30, 1996 in consideration for Mr. Hayhurst's past services to theRegistrant.

As of April 30, 1996, Stahl Petroleum Company, over a periodof time had loaned to Registrant $43,692.34, for Registrant's



working capital and for Registrant to pay certain expendituresincurred in the Natural Gas Pipeline Company of Americalitigation described at Item 3(a)(i). That amount remains unpaidas of January 31, 1997.

Registrant believes that the foregoing transactions were onterms as favorable as those which it could have obtained fromunaffiliated parties.

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTSON FORM 8-K

(a) Documents Filed as Part of This Report.

(1) Financial Statements: (The following FinancialStatements and Schedules are included in Part 111, Item8.)

Independent Auditor's Report

Balance Sheet - April 30, 1996

Statements of Operations - Years ended April 30,1996 and 1995.

Statements of Changes in Deficiency in Assets - Yearsended April 30, 1996 and 1995.

Statements of Cash Flows - Years ended April 30, 1996and 1995.

Notes to Financial Statements

(2) Financial Statement Schedules:

None

(3) Exhibits

3. Articles of Incorporation as amended and Bylaws.

10.1 Compromise and Settlement Agreement datedJuly 31, 1991 between the Registrant and AmarilloNational Bank.

10.2 Letter of Intent dated January 2, 1997 withNatural Gas Technologies, Inc., as amended byletter dated March 17, 1997.



10.3 Restated Convertible Promissory Note datedFebruary 4, 1997.

10.4 Release of Judgment dated December 31, 1996.

10.5 Termination of Agreement and Cancellation of Loandated January 2, 1997.

(b) Reports on Form 8-K

None

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of theSecurities Exchange Act of 1934, the Registrant has duly causedthis Report to be signed on its behalf by the undersigned,thereunto duly authorized.

LYRIC ENERGY, INC.

Dated: April 8, 1997 By: /s/ G.E. StahlG. E. Stahl, President

Pursuant to the requirements of the Securities Exchange Actof 1934, this report has been signed below by the followingpersons on behalf of the Registrant and in the capacities and onthe dates indicated:

Dated: April 8, 1997 By: /s/ G.E. StahlG. E. Stahl, President, ChiefExecutive Officer and Director

LYRIC ENERGY, INC.

Financial Statements

April 30, 1996 and 1995

(with independent auditor's report thereon)

WILSON, HAAG & CO., P.C.CERTIFIED PUBLIC ACCOUNTANTS



418 S. POLK, P.O. BOX 590, AMARILLO, TEXAS 79105(806) 372-3331 FAX (806) 372-3355

Independent Auditor's Report

The Board of Directors and StockholdersLyric Energy, Inc.:

We have audited the accompanying balance sheet of Lyric Energy,Inc. as of April 30, 1996, and the related statements ofoperations, changes in deficiency in assets and cash flows forthe years ended April 30, 1996 and 1995. These financialstatements are the responsibility of the Company's management.Our responsibility is to express an opinion on these financialstatements based on our audits.

We conducted our audits in accordance with generally acceptedauditing standards. Those standards require that we plan andperform the audits to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe thatour audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to abovepresent fairly, in all material respects, the financial positionof Lyric Energy, Inc. as of April 30, 1996, and results of itsoperations and its cash flows for the years ended April 30, 1996and 1995, in conformity with generally accepted accountingprinciples.

The accompanying financial statements have been prepared assumingthat the Company will continue as a going concern. As discussedin note 6 to the financial statements, the Company has beenrelatively inactive during the past two years due to a lack ofoperating assets and working capital and a significant deficiencyin assets. These factors raise substantial doubt about theCompany's ability to continue as a going concern. The financialstatements do not include any adjustments that might result fromthe outcome of this uncertainty.

/S/ Wilson, Haag & Co., P.C.WILSON, HAAG & CO., P.C.



January 10, 1997 (except for certaininformation in note 5 as to whichthe date is March 17, 1997)

Amarillo, Texas

LYRIC ENERGY, INC.

Balance Sheet

April 30, 1996

Assets

Current asset - cash in bank $ 1,453

Liabilities and Deficiency in Assets

Current liabilities:Accounts payable, trade (including

$48,811 due to related parties) 65,860Judgement payable to a related party

(note 2) 250,000Accrued interest payable to a related

party (note 2) 119,258Advance from a related party (note 2) 88,907

Total current liabilities 524,025

Deficiency in assets:Common stock - par value $.01 per share;

authorized 250,000,000 shares; issuedand outstanding 46,958,483 shares (note 5) 469,584

Additional paid-in capital 1,690,545Deficit (2,682,701)

(522,572)

Commitment and contingency (notes 4 and 6)$ 1,453



See accompanying notes to financial statements.

LYRIC ENERGY, INC.

Statements of Operations

Years ended April 30, 1996 and 1995

1996 1995

General and administrative expenses $ (906) (2,684)

Interest expense to related party (8,891) (8,891)

Net loss before income taxes (9,797) (11,575)

Income taxes (note 3) - -

Net loss $ (9,797) (11,575)

Net loss per common share (note 1) $ (.0002) (.0002)


LYRIC ENERGY, INC.



Statements of Changes in Deficiency in Assets


Common Stock

Number Additionalof Paid-In

Shares Amount Capital Deficit Total

BalancesApril30,1994 46,958,483 $469,584 1,690,545 (2,661,329) (501,200)

Netloss - - - (11,575) (11,575)

BalancesApril30, 1995 46,958,483 $469,584 1,690,545 (2,672,904) (512,775)

Net loss - - - (9,797) (9,797)

BalancesApril30, 1996 46,958,483 $469,584 1,690,545 (2,682,701) (522,775)


LYRIC ENERGY, INC.

Statements of Cash Flows


Increases (Decreases) in Cash

1996 1995

Cash flows from operating activities:Cash paid to suppliers $ (67) (3,134)Other 1,108 1,770

Net cash provided by (used in)operating activities and net



increase (decrease) in cash 1,041 (1,364)

Cash at beginning of year 412 1,776

Cash at end of year $ 1,453 412

Reconciliation of Net Loss toNet Cash Provided by (Used in) Operating Activities

1996 1995

Net loss $ (9,797) (11,575)Adjustments to reconcile net loss to

net cash provided by (used in)operating activities:

Net changes in the following:Accounts payable, trade 1,947 1,320Accrued interest 8,891 8,891

Net cash provided by (used in)operating activities $ 1,041 (1,364)


LYRIC ENERGY, INC.

Notes to Financial Statements

April 30, 1996 and 1995

(1) General and Summary of Significant Accounting Policies

General

Lyric Energy, Inc. is a publicly registered company formerlyinvolved in the exploration and development of oil and gasreserves. The Company currently has no interests in any oiland gas properties and has been inactive during 1996 and1995.



Pervasiveness of Estimates

The preparation of financial statements in conformity withgenerally accepted accounting principles requires managementto make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosures ofcontingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenuesand expenses during the reporting period. Actual resultscould differ from those estimates.

Net Loss Per Common Share

Net loss per common share was calculated by applying thetreasury stock method using weighted average outstandingshares of 46,958,483.

(2) Related Party Transactions

Advance from a related party (ML&C Trust) consists of anunsecured 10% demand note payable of $88,907. ML&C Trust iscontrolled by a significant shareholder of the Company.Interest expense of $8,891 was incurred on this advanceduring 1996 and 1995. In January 1997, the Company receiveda release of its obligation to repay this advance includingany interest which was accrued under the terms of the note.

The Company had a $250,000 judgement payable to a relatedparty (Dynamic Investing, Inc.) at April 30, 1996. DynamicInvesting, Inc is owned by the president of the Company. InDecember 1996, the Company received a release of thejudgement from the related party at no cost to the Company.

(3) Income Taxes

Income tax credits differ from the amounts computed bymultiplying losses before income taxes by the applicableFederal income tax rates. The reasons for these differencesand the tax effect of each are as follows:

1996 1995

"Expected" income tax credit $ (3,300) (3,900)Limitation on recognition of

income tax benefits of currentoperating loss and tax credits 3,300 3,900

$ - -



At April 30, 1996, the Company had investment tax creditcarryforwards of approximately $26,000 available to offsetcurrent Federal income taxes in future years which, ifunused, expire as follows: $15,000 in 1997; $6,000 in 1998;$4,000 in 1999; and $1,000 in 2001. The Company has astatutory depletion carryforward of approximately $219,000which can be carried forward indefinitely. The Company hastax net operating loss carryforwards of approximately$2,714,000 which expire as follows: $140,000 in 2001;$201,000 in 2002; $239,000 in 2003; $257,000 in 2004;$354,000 in 2005; $305,000 in 2006; $840,000 in 2007;$220,000 in 2008; $79,000 in 2009 and $79,000 in 2010.These depletion and net operating loss carryforwards areavailable to offset future Federal taxable income. Thedeferred tax asset related to the above carryforwards hasbeen reduced to zero by a valuation allowance of equalamount so that no tax benefits of any of thesecarry-forwards are reflected in the financial statements.

(4) Commitment

In connection with a compromise and settlement agreementrelated to a bank debt forgiveness in July 1991, the Companyagreed to issue additional common stock in the future as maybe required to maintain the bank at an 8.9976% ownershipinterest.

(5) Subsequent Event

On January 2, 1997, the Company entered into a Letter ofIntent("LOI"), which was amended by subsequent negotiationsand a supplemental letter dated March 17, 1997, with NaturalGas Technologies, Inc., a Texas corporation "NGT").Pursuant to the LOI, NGT loaned the Company $100,000pursuant to a noninterest-bearing convertible note datedFebruary 4, 1997, ("Note") and the loaned funds were placedin escrow. The loan will be converted into 203,041,517common shares, which are all of the remaining authorized butunissued common shares of the Company, after the Company hasfiled all of the required reports pursuant to the SecuritiesExchange Act of 1934, as amended, and after the Companyobtains a waiver from the bank of the non-dilution rightsdescribed in note 4. Upon such conversion, the loaned fundswill be released from escrow and paid to the Company for usein satisfying all existing debts and encumbrances and tosettle all claims against it. If the Note is not converted



by December 31, 1997, the funds in escrow will be returnedto NGT. The LOI further provides for a share exchangetransaction whereby the shareholders of NGT would be issuedadditional shares in the Company such that theseshareholders would own a total of 95 percent of the totalissued and outstanding common shares of the Company and NGTwould become a wholly-owned subsidiary of the Company. Theshare exchange will occur after the Company holds ashareholder meeting for the purpose of (i) approving areverse split of the Company's common stock which willresult in additional common shares being made available forissuance in the shares exchange; (ii) authorizing 10,000,000shares of no par value preferred stock approximately 25,000of which will designated for exchange with NGT preferredshareholders in the share exchange and the remaining9,975,000 of which will be reserved for future issuance atthe discretion of the Board of Directors; and (iii)approving certain other amendments to the Company's Articlesof Incorporation. The share exchange remains conditionalupon the completion of due diligence and finaldocumentation.

(6) Going Concern

The Company has been relatively inactive during the past twoyears due to a lack of operating assets and working capitaland a significant deficiency in assets. These factors raisesubstantial doubt about the Company's ability to continue asa going concern. The Company is currently searching for theacquisition of or merger with an operating company in orderto carry on the business of the acquired company. TheCompany has signed a Letter of Intent to make such anacquisition (see note 5). The ability of the Company tocontinue as a going concern is dependent on the completionof such an acquisition. The financial statements do notinclude any adjustments that might be necessary if theCompany is unable to continue as a going concern.



ARTICLES OF INCORPORATION

OF

LYRIC ENERGY, INC.

KNOW ALL MEN BY THESE PRESENTS: That the undersignedincorporator being a natural person of the age of eighteen yearsor more and desiring to form a body corporate under the laws ofthe State of Colorado does hereby adopt and deliver in duplicateto the Secretary of State of the State of Colorado, theseArticles of Incorporation:

ARTICLE IName

The name of the corporation shall be: Lyric Energy, Inc.

ARTICLE IIPeriod of Duration

The corporation shall exist in perpetuity, from and afterthe date of filing these Articles of Incorporation with theSecretary of State of the State of Colorado unless dissolvedaccording to law.

ARTICLE IIIPurposes and Powers

1. Purposes. Except as restricted by the Articles ofIncorporation, the corporation is organized for the purpose oftransacting all lawful business for which corporations may beincorporated pursuant to the Colorado Corporation Code.

2. General Powers. Except as restricted by the Articlesof Incorporation, the corporation may exercise all powers which acorporation may exercise legally pursuant to the ColoradoCorporation Code.

3. Partial Liquidations. The board of directors of thecorporation may distribute, from time to time, to itsshareholders in partial liquidation, out of stated capital orcapital surplus of the corporation, a portion of its assets incash or property.

4. Issuance of Shares. The board of directors of thecorporation may divide and issue any class of stock of thecorporation in series pursuant to a resolution properly filed



with the Secretary of State of the State of Colorado.

ARTICLE IVCapital Stock

The aggregate number of shares which this corporation shallhave authority to issue is fifty million (50,000,000) shares of apar value of one cent ($0.01) each, which shares shall bedesignated Common Stock .

1. Dividends. Dividends in cash, property or shares ofthe corporation may be paid upon the Common Stock, as and whendeclared by the board of directors, out of funds of thecorporation to the extent and in the manner permitted by law.

2. Distribution in Liquidation. Upon any liquidation,dissolution or winding up of the corporation, and after paying oradequately providing for the payment of all its obligations, theremainder of the assets of the corporation shall be distributed,either in cash or in kind, pro rata to the holders of the CommonStock.

3. Voting Rights; Cumulative Voting. Each outstandingshare of Common Stock shall be entitled to one vote and eachfractional share of Common Stock shall be entitled to acorresponding fractional vote on each matter submitted to a voteof shareholders. Cumulative voting shall not be allowed in theelection of directors of the corporation.

4. Denial of Preemptive Rights. No holder of any sharesof the corporation, whether now or hereafter authorized, shallhave any preemptive or preferential right to acquire any sharesor securities of the corporation, including shares or securitiesheld in the treasury of the corporation.

ARTICLE VRight of Directors to Contract with Corporation

No contract or other transaction between the corporation andone or more of its directors or any other corporation, firm,association, or entity in which one or more of its directors aredirectors or officers or are financially interested shall beeither void or voidable solely because of such relationship orinterest or solely because such directors are present at themeeting of the board of directors or a committee thereof whichauthorizes, approves, or ratifies such contract or transaction orsolely because their votes are counted for such purpose if:

(a) The fact of such relationship or interest isdisclosed or known to the board of directors or committee which



authorizes, approves, or ratifies the contract or transaction bya vote or consent sufficient for the purpose without counting thevotes or consents of such interested directors; or

(b) The fact of such relationship or interest isdisclosed or known to the shareholders entitled to vote and theyauthorize, approve, or ratify such contract or transaction byvote or written consent; or

(c) The contract or transaction is fair andreasonable to the corporation. Common or interested directorsmay be counted in determining the presence of a quorum at ameeting of the board of directors or a committee thereof whichauthorizes, approves, or ratifies such contract or transaction.

ARTICLE VICorporate Opportunity

The officers, directors and other members of management ofthis corporation shall be subject to the doctrine of corporateopportunities only insofar as it applies to businessopportunities in which this corporation has expressed an interestas determine from time to time by this corporation's board ofdirectors as evidenced by resolutions appearing in thecorporation s minutes. Once such areas of interest aredelineated, all such business opportunities within such areas ofinterest which come to the attention of the officers, directors,and other members of management of this corporation shall bedisclosed promptly to this corporation and made available to it.The board of directors may reject any business opportunitypresented to it and thereafter any officer, director or othermember of management may avail himself of such opportunity.Until such time as this corporation, through its board ofdirectors, has designated an area of interest, the officers,directors and other members of management of this corporationshall be free to engage in such areas of interest on their ownand this doctrine shall not limit the rights of any officer,director or other member of management of this corporation tocontinue a business existing prior to the time that such area ofinterest is designated by the corporation. This provision shallnot be construed to release any employee of this corporation(other than an officer, director or member of management) fromany duties which he may have to this corporation.

ARTICLE VIIIndemnification

Directors and Others

1. The corporation shall indemnify any person who was oris a party or is threatened to be made a party to any threatened,pending, or completed action, suit, or proceeding, whether civil,



criminal, administrative, or investigative (other than an actionby or in the right of the corporation), by reason of the factthat he is or was a director, officer, employee, or agent of thecorporation or is or was serving at the request of thecorporation as a director, officer, employee, or agent of anothercorporation, partnership, joint venture trust, or otherenterprise, against expenses (including attorneys fees),judgments, fines, and amounts paid in settlement actually andreasonably incurred by him in connection with such action, suit,or proceeding if he acted in good faith and in a manner which hereasonably believed to be in the best interests of thecorporation and, with respect to any criminal action orproceeding, had reasonable cause to believe that his conduct wasunlawful.

2. The corporation shall indemnify any person who was or isa party or is threatened to be made a party to any threatened,pending, or completed action or suit by or in the right of thecorporation to procure a judgment in its favor by reason of thefact that he is or was a director, officer, employee, or agent ofthe corporation or is or was serving at the request of thecorporation as a director, officer, employee, or agent of anothercorporation, partnership, joint venture, trust, or otherenterprise against expenses (including attorneys fees) actuallyand reasonably incurred by him in connection with the defense orsettlement of such action or suit if he acted in good faith andin a manner he reasonably believed to be in the best interests ofthe corporation; but no indemnification shall be made in respectof any claim, issue, or matter as to which such person has beenadjudged to be liable for negligence or misconduct in theperformance of his duty to the corporation unless and only to theextent that the court in which such action or suit was broughtdetermines upon application that, despite the adjudication ofliability, but in view of all circumstances of the case, suchperson is fairly and reasonably entitled to indemnification forsuch expenses which such court deems proper.

3. To the extent that a director, officer, employee, oragent of the corporation has been successful on the merits indefense of any action, suit, or proceeding referred to in thisarticle or in defense of any claim, issue, or matter therein, heshall be indemnified against expenses (including attorneys fees)actually and reasonably incurred by him in connection therewith.

4. Any indemnification under paragraph 1 or 2 of thisarticle (unless ordered by a court) shall be made by thecorporation only as authorized in the specific case upon adetermination that indemnification of the director, officer,employee, or agent is proper in the circumstances because he hasmet the applicable standard of conduct set forth in saidparagraphs 1 or 2. Such determination shall be made by the board



of directors by a majority vote of a quorum consisting ofdirectors who were not parties to such action, suit, orproceeding, or, if such a quorum is not obtainable or even ifobtainable a quorum of disinterested directors so directs, byindependent legal counsel in a written opinion, or by theshareholders.

5. Expenses (including attorneys fees) incurred indefending a civil or criminal action, suit, or proceeding may bepaid by the corporation in advance of the final disposition ofsuch action, suit, or proceeding as authorized in paragraph 4 ofthis article upon receipt of an undertaking by or on behalf ofthe director, officer, employee or agent to repay such amountunless it is ultimately determined that he is entitled to beindemnified by the corporation as authorized in this article.

6. The indemnification provided by this article shall notbe deemed exclusive of any other rights to which thoseindemnified may be entitled under the Articles of Incorporation,any bylaw, agreement, vote of shareholders or disinteresteddirectors, or otherwise, and any procedure provided for by any ofthe foregoing, both as to action in his official capacity and asto action in another capacity while holding such office, andshall continue as to a person who has ceased to be a director,officer, employee, or agent and shall inure to the benefit ofheirs, executors, and administrators of such a person.

7. The corporation may purchase and maintain insurance onbehalf of any person who is or was a director, officer, employee,or agent of the corporation or who is or was serving at therequest of the corporation as a director, officer, employee, oragent of another corporation, partnership, joint venture, trust,or other enterprise against any liability asserted against himand incurred by him in any such capacity or arising out of hisstatus as such, whether or not the corporation would have thepower to indemnify him against such liability under theprovisions of this article.

ARTICLE VIIIShareholder Voting

A majority of the shares entitled to vote, represented inperson or by proxy, shall constitute a quorum at a meeting ofshareholders.

ARTICLE IXAdoption and Amendment of Bylaws

The initial Bylaws of the corporation shall be adopted byits board of directors. The power to alter or amend or repealthe Bylaws of adopt new Bylaws shall be vested in the board of



directors, but the holders of common stock may also alter, amendor repeal the Bylaws of adopt new Bylaws. The Bylaws may containany provisions for the regulation and management of the affairsof the corporation not inconsistent with law or these Articles ofIncorporation.

ARTICLE XRegistered Office and Registered Agent

The address of the initial registered office of thecorporation is 717 Seventeenth Street, Suite 2600, Denver,Colorado 80202, and the name of the initial registered agent atsuch address is Douglas J. Reich. Either the registered officeor the registered agent may be changed in the manner permitted bylaw.

ARTICLE XIInitial Board of Directors

The number of directors of the corporation shall be fixed bythe Bylaws of the corporation, except the initial board ofdirectors of the corporation shall consist of three directors.The names and addresses of the persons who shall serve asdirectors until the first annual meeting of shareholders anduntil their successor are elected and shall qualify are asfollows:

NAME ADDRESS

Wesley W. Masters P. O. Box 7988Amarillo, Texas 79109

G. E. Stahl P. O. Box 2231Amarillo, Texas 79105

L. K. Hayhurst P. O. Box 2231Amarillo, Texas 79105

ARTICLE XIIIncorporator

The name and address of the incorporator is as follows:

NAME ADDRESS

Daniel B. Matter 2600 Energy Center717 Seventeenth Street



Denver, Colorado 80202

IN WITNESS WHEREOF, the above-named incorporator has signedthese Articles of Incorporation this 24th day of April, 1980.

/s/Daniel B. MatterDaniel B. Matter

STATE OF COLORADO )) ss.

CITY AND COUNTY OF DENVER )

I, the undersigned, a Notary Public, hereby certify that onthe 24th day of April, 1980, personally appeared before me,Daniel B. Matter who being by me first duly swore, declared thathe is the person who signed the foregoing document asincorporator, that it was his free and voluntary act and deed,and that the statements therein contained are true.

WITNESS my hand and official seal.

My Commission expires: ______________________________

_________________________________Notary Public

(N O T A R I A L S E A L)

ARTICLES OF AMENDMENT

TO THE

ARTICLES OF INCORPORATION

Pursuant to the provisions of the Colorado Corporation Act,the undersigned corporation adopts the following Articles ofAmendment to its Articles of Incorporation:

FIRST: The name of the corporation is Lyric Energy, Inc.

SECOND: The following amendment was adopted by theshareholders of the corporation on the Ninth day of February,



1987, in the manner prescribed by the Colorado CorporationAct:

The aggregate number of shares which the Corporationshall have power to issue shall be two hundred fifty million(250,000,000) shares of no par value common stock. Each shareshall have the same rights and privileges as every other shareand no distinction between them shall exist.

THIRD: The number of shares of the corporation outstandingat time of such adoption was 38,433,000; and the number of sharesentitled to vote thereon was 38,433,000.

FOURTH: The designation and number of outstanding shares ofeach class entitled to vote thereon as a class were as follows:

CLASS NUMBER OF SHARES

Common Stock, No Par Value 38,433,000

FIFTH: The number of shares voted for such amendment was25,776,783; and the number of shares voted against suchamendment was 445,362.

SIXTH: The number of shares of each class entitled tovote thereon as a class voted for and against such amendment,respectively, was:

CLASS NUMBER OF SHARES VOTED

Common Stock For Against25,776,783 445,362

SEVENTH: The manner, if not set forth in such amendment, inwhich any exchange, reclassification, or cancellation of issuedshares provided for in the amendment shall be effected, is asfollows:

No Change

EIGHTH: The manner in which such amendment effects achange in the amount of stated capital, and the amount of statedcapital as changed by such amendment, are as follows:

No Change

LYRIC ENERGY, INC.



By: /s/ G. E. StahlG.E. Stahl, President

And: /s/ John DodsonJohn Dodson, Secretary

STATE OF TEXAS )County of Potter )

Before me, Alberta M. Reinbold a Notary Public in andfor the said County and State personally appeared G. E. Stahl whoacknowledged before me that he is the President of Lyric Energy,Inc., a Colorado corporation and that he signed the foregoingArticles of Amendment as his free and voluntary act and deed forthe uses and purposes therein set forth, and that the factscontained therein are true.

In witness whereof I have hereunto set my hand and sealthis 26th day of June, A.D. 1987.

My commission expires: 2-21-89

/s/ Alberta M. Reinbold(Notary Public)

BYLAWS

OF

LYRIC ENERGY, INC.

ARTICLE IPrincipal Office and Corporate Seal

Section 1. The principal office and place of business ofthe corporation in the State of Texas shall be at 1013 West 8thAvenue, Amarillo, Texas 79105. Other offices and places ofbusiness may be established from time to time by resolution ofthe board of directors or as the business of the corporation mayrequire.

Section 2. The seal of the corporation shall haveinscribed thereon the name of the corporation and shall be insuch form as may be approved by the board of directors, which



shall have power to alter the same at pleasure. The corporationmay use the seal by causing it, or a facsimile thereof, to beimpressed or affixed or in any other manner reproduced.

ARTICLE IIShares and Transfer Thereof

Section 1 - Certificates. The shares of this corporationshall be represented by certificates signed by the president or avice president and the secretary or an assistant secretary of thecorporation, and may be sealed with the seal of the corporationor a facsimile thereof. The signatures of the president or vicepresident and the secretary or assistant secretary upon acertificate may be facsimiles if the certificate is countersignedby a transfer agent, or registered by a registrar, other than thecorporation itself or an employee of the corporation. In caseany officer who has signed a certificate shall have ceased to besuch officer before such certificate is issued, it may be issuedby the corporation with the same effect as if he were suchofficer at the date of its issue.

Section 2 - New Certificates. No new certificatesevidencing shares shall be issued unless and until the oldcertificate or certificates, in lieu of which the new certificateis issued, shall be surrendered for cancellation, except asprovided in Section 3 of this Article II.

Section 3 - Loss or Destruction. In case of loss ordestruction of any certificate of shares, another certificate maybe issued in its place upon satisfactory proof of such loss ordestruction and, at the discretion of the corporation, upongiving to the corporation a satisfactory bond of indemnity issuedby a corporate surety in an amount and for a period satisfactoryto the board of directors.

Section 4 - Transfer Agent. Unless otherwise specifiedby the board of directors by resolution, the secretary of thecorporation shall act as transfer agent of the certificatesrepresenting the shares of stock of the corporation. He shallmaintain a stock transfer book, the stubs in which shall setforth among other things, the names and addresses of the holdersof all issued shares of the corporation, the number of sharesheld by each, the certificate numbers representing such shares,the date of issue of the certificates representing such shares,and whether or not such shares originate from original issue orfrom transfer. Subject to Section 5, the names and addresses ofthe shareholders as they appear on the stubs of the stocktransfer book shall be conclusive evidence as to who are theshareholders of record and as such entitled to receive notice ofthe meetings of shareholders; to vote at such meetings; toexamine the list of the shareholders entitled to vote at



meetings; to receive dividends; and to own, enjoy and exerciseany other property or rights deriving from such shares againstthe corporation. Each shareholder shall be responsible fornotifying the secretary in writing of any change in his name oraddress and failure so to do will relieve the corporation, itsdirectors, officers and agents, from liability for failure todirect notices or other documents, or pay over or transferdividends or other property or rights, to a name or address otherthan the name and address appearing on the stub of the stocktransfer book.

Section 5 - Close of Transfer Book and Record Date. Forthe purpose of determining shareholders entitled to notice of orto vote at any meeting of shareholders, or any adjournmentthereof, or entitled to receive payment of any dividend, or inorder to make a determination of shareholders for any otherproper purpose, the board of directors may provide that the stocktransfer books shall be closed for a stated period, but not toexceed in any case fifty days. If the stock transfer books shallbe closed for the purpose of determining shareholders entitled tonotice of, or to vote at a meeting of shareholders, such booksshall be closed for at least ten days immediately preceding suchmeeting. In lieu of closing the stock transfer books, the boardof directors may fix in advance a date as the record date for anysuch determination of shareholders, such date in any case to benot more than fifty days and, in case of a meeting ofshareholders, not less than ten days prior to the date on whichthe particular action requiring such determination ofshareholders is to be taken. If the board of directors does notorder the stock transfer books closed, or fix in advance a recorddate, as above provided, then the record date for thedetermination of shareholders entitled to notice of, or to voteat any meeting of shareholders, or any adjournment thereof, orentitled to receive payment of any dividend, or for thedetermination of shareholders for any proper purpose shall be

thirty days prior to the date on which the particular actionrequiring such determination of shareholders is to be taken.

ARTICLE IIIShareholders and Meetings Thereof

Section 1 - Shareholders of Record. Only shareholdersof record on the books of the corporation shall be entitled to betreated by the corporation as holders in fact of the sharesstanding in their respective names, and the corporation shall notbe bound to recognize any equitable or other claim to, orinterest in, any shares on the part of any other person, firm orcorporation, whether or not it shall have express or other noticethereof, except as expressly provided by the laws of Colorado.

Section 2 - Meetings. Meetings of shareholders shall be



held at the principal office of the corporation, or at such otherplace as specified from time to time by the board of directors.If the board of directors shall specify another location suchchange in location shall be recorded on the notice calling suchmeeting.

Section 3 - Annual Meeting. In the absence of aresolution of the board of directors providing otherwise, theannual meting of shareholders of the corporation for the electionof directors, and for the transaction of such other business asmay properly come before the meeting, shall be held on the 1stday of the fifth month in each fiscal year, if the same be not alegal holiday, and if a legal holiday, then on the nextsucceeding business day, at 9:00 o clock a.m.

Section 4 - Special Meetings. Special meetings ofshareholders may be called by the president, the board ofdirectors, the holders of not less than one-tenth of all theshares entitled to vote at the meeting, or legal counsel of thecorporation as last designated by resolution of the board ofdirectors.

Section 5 - Notice. Written notice stating the place,day and hour of the meeting and, in case of a special meeting,the purpose or purposes for which the meeting is called, shall bedelivered not less than ten days nor more than fifty days beforethe date of the meeting, either personally or by mail, by or atthe direction of the president, the secretary, or the officer orperson calling the meeting to each shareholder of record entitledto vote at such meeting; except that, if the authorized sharesare to be increased, at least thirty days notice shall be given.

Notice to shareholders of record, if mailed, shall be deemedgiven as to any shareholder of record, when deposited in theUnited States mail, addressed to the shareholder at his addressas it appears on the stock transfer books of the corporation,with postage thereon prepaid, but if three successive lettersmailed to the last-known address of any shareholder of record arereturned as deliverable, no further notices to such shareholdershall be necessary, until another address for such shareholder ismade known to the corporation.

Section 6 - Shareholder Record. The officer or agenthaving charge of the stock transfer books for shares of thiscorporation shall make, at least ten days before each meeting ofshareholders, a complete record of the shareholders entitled tovote at such meeting or any adjournment thereof, arranged inalphabetical order, with the address of and the number of sharesheld by each, which record, for a period of ten days before suchmeeting, shall be kept on file at the principal office of the



corporation, whether within or outside Colorado, and shall besubject to inspection by any shareholder for any purpose germaneto the meeting at any time during usual business hours. Suchrecord shall also be produced and kept open at the time and placeof the meeting and shall be subject to the inspection of anyshareholder for any purpose germane to the meeting during thewhole time of the meeting. The original stock transfer booksshall be prima facie evidence as to who are the shareholdersentitled to examine such record or transfer books or to vote atany meeting of shareholders.

Section 7 - Quorum and Adjournment. At any meeting of theshareholders the presence, in person or by proxy of the holdersof more than a majority of the shares outstanding and entitled tovote shall constitute a quorum. In the absence of a quorum, themeeting may be adjourned by any officer entitled to preside at,or act as secretary of such meeting, or by a majority in interestof those shareholders present in person or by proxy.

Section 8 - Voting. A shareholder may vote either inperson or by proxy executed in writing by the shareholder or byhis duly authorized attorney in fact. No proxy shall be validafter eleven months from the date of its execution, unlessotherwise provided in the proxy.

At all meetings of the shareholders, a quorum being present,all matters shall be decided by a simple majority vote of thethen eligible share, except as otherwise provided by statute, bythe Articles of Incorporation of the corporation, or by theseBylaws. The vote on any matter need not be by ballot unlessrequired by statute or requested by a shareholder, in person orby proxy, who is entitled to vote at the meeting.

Section 9 - Conduct of Meetings. Each meeting of theshareholders shall be presided over by the president, or if thepresident shall not be present, by the vice president. If boththe president and vice president are absent, a chairman shall bechosen by a majority in voting interest of those shareholderspresent or represented by proxy. The secretary of thecorporation shall act as secretary of each meeting of theshareholders. If he shall not be present the chairman of themeeting shall appoint a secretary.

ARTICLE IVDirectors, Powers and Meetings

Section 1 - Board of Directors. The business and affairsof the corporation shall be managed by a board of three directorswho need not be shareholders of the corporation or residents ofthe State of Colorado and who shall be elected at the annual



meeting of shareholders or some adjournment thereof. Directorsshall hold office until the next succeeding annual meeting ofshareholders and until their successors shall have been electedand shall qualify. The board of directors may increase ofdecrease, to not less than three, the number of directors byresolution.

Section 2 - Regular Meetings. The annual meeting of theboard of directors shall be held at the same place as, andimmediately after, the annual meeting of shareholders, and nonotice shall be required in connection therewith. The annualmeeting of the board of directors shall be for the purpose ofelecting officers and the transaction of such other business asmay come before the meeting. Regular meetings of the board ofdirectors may be held without notice as determined by resolutionadopted by the board.

Section 3 - Special Meetings. Special meetings of theboard of directors or any committee designated by said board maybe called at any time by the president or by any director, andmay be held within or outside the State of Colorado at such timeand place as the notice or waiver thereof may specify. Notice ofsuch meetings shall be mailed or telegraphed to the last knownaddress of each director at least five days, or shall be given toa director in person or by telephone at least forth-eight hours,prior to the date or time fixed for the meeting. Specialmeetings of the board of directors may be held at any time thatall directors are present in person, and presence of any directorat a meeting shall constitute waiver of notice of such meetingexcept as otherwise provided by law. Unless specificallyrequired by law, the Articles of Incorporation or these Bylaws,neither the business to be transacted at, nor the purpose of, anymeeting of the board of directors or any committee designated bysaid board need be specified in the notice or waiver of notice ofsuch meeting.

Section 4 - Special Attendance. Except as may beotherwise provided by the Articles of Incorporation or Bylaws,members of the board of directors or any committee designated bysuch board may participate in a meeting of the board or committeeby means of conference telephone or similar communicationsequipment by which all persons participating in the meeting canhear each other at the same time. Such participation shallconstitute presence in person at the meeting.

Attendance of a director at a meeting shall constitute awaiver of notice of such meeting except where a director attendsa meeting for the express purpose of objecting to the transactionof business because the meeting is not lawfully called orconvened.



Section 5 - Quorum and Voting. A quorum at a