Apex Resources (APXRE) 10QSB 2005 Q3 Quarterly report (small business)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-QSB

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:March 31, 2005

(   ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________to____________________

Commission File number                                     0-11695                                        

APEX RESOURCES GROUP, INC.

(Exact name of registrant as specified in charter)

UTAH	87-0403828
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
136 East South Temple, Suite 1600, Salt Lake City, Utah	84111
(Address of principal executive offices)	(Zip Code)

(801) 363-2599

Registrant’s telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), Yes [x ] No [ ] and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]

State the number of shares outstanding of each of the registrant’s classes of common equity, as of the latest practicable date.

Common stock, par value $.001; 91,585,212 shares outstanding as of March 31, 2005.

INDEX

		PageNumber
PART I.
ITEM 1.	Financial Statements (unaudited)	3
	Balance Sheets
	March 31, 2005 and June 30, 2004	4
	Statements of Operations
	Three months and nine months ended March 31, 2005 and 2004 and the period January 27, 1984 to March 31, 2005	5
	Statement of Changes in Stockholders’ Equity
	Period from January 27, 1984 to March 31, 2005	6
	Statements of Cash Flows
	Nine months ended March 31, 2005 and 2004 and the period January 27, 1984 to March 31, 2005	8
	Notes to Financial Statements	10
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
ITEM 3.	Controls and Procedures	20
PART II
ITEM 2.	Changes in Securities	21
ITEM 6.	Exhibits	22
	Signatures	22

2

PART I - FINANCIAL INFORMATION

This filing contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainty, and actual results may differ materially depending on a variety of factors, many of which are not within the Company’s control. These factors include but are not limited to economic conditions generally and in the industries in which the Company and its customers participate; competition within the Company’s industry, including competition from much larger competitors; technological advances which could render the Company’s products less competitive or obsolete; failure by the Company to successfully develop new products or to anticipate current or prospective customers’ product needs; price increase or supply limitations for components purchased by the Company for use in its products; and delays, reductions, or cancellations of orders previously placed with the Company.

ITEM 1. FINANCIAL STATEMENTS

The accompanying balance sheets of Apex Resources Group, Inc., (development stage company) at December 31, 2004 and March 31, 2005, the statements of operations for the three and nine months ended March 31, 2005 and 2004 and the period January 27, 1984 (date of inception) to March 31, 2005 and cash flows for the nine months ended March 31, 2005 and 2004 and the period January 27, 1984 (date of inception) to March 31, 2005 and the statement of stockholders’ equity for the period from January 27, 1984 to March 31, 2005, have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

Operating results for the quarter ended March 31, 2005, are not necessarily indicative of the results that can be expected for the year ending June 30, 2005.

3

APEX RESOURCES GROUP, INC.

(Development Stage Company)

BALANCE SHEETS

March 31, 2005 and June 30, 2004

				(unaudited)
ASSETS
	Mar 31,2005			Jun 30,2004
CURRENT ASSETS
Cash	$	21,961		$	14,741
Total Current Assets		21,961			14,741
PROPERTY AND EQUIPMENT -net of accumulated
depreciation		183,255			197,538
OTHER ASSETS
Accounts receivable - affiliates		146,072			148,932
Oil leases		67,913			67,913
Land		305,834			83,600
Available-for-sale securities		2,428			2,628
		522,247			303,073
	$	727,463		$	515,352
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - land	$	208,463		$	71,183
Accounts payable		37,786			42,526
Accounts payable - related parties		349,122			84,000
Total Current Liabilities		595,371			197,709
STOCKHOLDERS' EQUITY
Common stock
400,000,000 shares authorized, at $.001 par value;
91,585,212 issued and outstanding		91,585			58,264
Capital in excess of par value		10,880,275			8,002,023
Less stock subscriptions receivable		(2,427,000	)		-
Deficit accumulated during the development stage		(8,412,768	)		(7,742,644	)
Total Stockholders' Equity		132,092			317,643
	$	727,463		$	515,352

The accompanying notes are an integral part of these financial statements.

4

APEX RESOURCES GROUP, INC.

(Development Stage Company)

STATEMENT OF OPERATIONS - unaudited

For the Three and Nine Months Ended March 31, 2005 and 2004 and the

Period January 27, 1984 (date of inception) to March 31, 2005

	Three Months						Nine Months
	Mar2005			Mar2004			Mar2005			Mar 2004			Jan 27, 1984 to Mar 31, 2005
REVENUES
Rents and interest	$	1,234		$	1,128		$	12,301		$	3,917		$	362,998
EXPENSES
Exploration, development and promotion		172,773			81,003			664,425			294,009			9,987,135
Depreciation		6,000			7,000			18,000			21,000			113,386
		178,773			88,003			682,425			315,009			10,100,521
NET LOSS - before other income		(177,539	)		(86,875	)		(670,124	)		(311,092	)		(9,737,523	)
Gain on sale of assets		-			-			-			-			1,324,755
NET LOSS	$	(177,539	)	$	(86,875	)	$	(670,124	)	$	(311,092	)	$	(8,412,768	)
LOSS PER COMMON SHARE
Basic	$	-		$	-		$	(.01	)	$	-
AVERAGE OUTSTANDINGSHARES - (stated in 1,000's)
Basic		91,585			72,727			84,468			69,721

The accompanying notes are an integral part of these financial statements.

5

APEX RESOURCES GROUP, INC.

(Development Stage Company)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

Period January 27, 1984 (Date of Inception) to March 31, 2005

	Common Stock				Capital in Excess		Accumulated
	Shares		Amount		ofPar Value		Deficit
Balance January 27, 1984
(Date of Inception)		-	$	-	$	-	$	-
Issuance of common stock from inception to June 30, 1998		1,610,838		1,611		2,120,660
Net losses from operations for the six years ended June 30, 1989		-		-		-		(38,910	)
Capital contribution - expenses		-		-		752		-
Net losses from operations for the six years ended June 30, 1998		-		-		-		(1,641,468	)
Issuance of common stock for the year ended June 30, 1999		1,943,798		1,944		1,344,079		-
Net loss from operations for the year ended June 30, 1999		-		-		-		(1,607,517	)
Issuance of common stock for the year ended June 30, 2000		3,318,058		3,318		2,948,196		-
Net loss from operations for the year ended June 30, 2000		-		-		-		(1,029,239	)
Issuance of common stock for the year ended June 30, 2001		1,034,500		1,034		778,467		-
Net loss from operations for the year ended June 30, 2001		-		-		-		(807,576	)
Issuance of common stock for services & expenses - August 31, 2001		105,000		105		62,894		-
Net loss from operations for the year ended June 30, 2002		-		-		-		(1,216,953	)
Issuance of common stock for services at $.001 - April 14, 2003		6,380,000		6,380		-		-
Issuance of common stock for cash at $.001 - April & June 2003		15,650,000		15,650		-		-
Issuance of common stock for services at $.01 - June 3, 2003		2,500,000		2,500		22,500		-
Issuance of common stock for services at $.05 - June 30, 2003		1,680,000		1,680		82,320		-
Net loss from operations for the year ended June 30, 2003		-		-		-		(652,701	)
Balance June 30, 2003		34,222,194	$	34,222	$	7,359,868	$	( 6,994,364	)

The accompanying notes are an integral part of these financial statements. 

6

APEX RESOURCES GROUP, INC.

(Development Stage Company)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Continued)

Period January 27, 1984 (Date of Inception) to March 31, 2005

	Common Stock				Capital inExcess		Accumulated
	Shares		Amount		of Par Value		Deficit
Issuance of common stock for purchase of land at $.03 - Nov 17, 2003		300,000		300		8,700		-
Issuance of common stock for payment of debt at $.03 - Nov 25, 2003		7,095,666		7,095		205,774		-
Issuance of common stock for cash at $.02 - Nov 6, 2003		2,500,000		2,500		47,500		-
Issuance of common stock for cash at $.015 to $.04 - Jan & Feb 2004		2,501,820		2,502		49,657		-
Issuance of common stock for services at $.05 - Mar 2004		367,655		368		18,014		-
Issuance of common stock for services at $.001 - Apr 2004		500,000		500		-		-
Issuance of common stock for payment of debt at $.03 - Jun 2004		2,376,234		2,377		68,910		-
Issuance of common stock for services and expenses at $.03 - Nov & Jun 2004		8,400,000		8,400		243,600		-
Net loss from operations for the year ended June 30, 2004		-		-		-		(748,280	)
Balance June 30, 2004 -audited		58,263,569		58,264		8,002,023		(7,742,644	)
Issuance of common stock for expenses at $.02 - Sept 2, 2004		1,717,785		1,718		30,137		-
Issuance of common stock for payment of debt at $.02 - Sept 2, 2004		311,500		311		7,789		-
Issuance of common stock for expenses and services at $.02 - Sept 24, 2004		2,800,000		2,800		81,200		-
Issuance of common stock for cash and note receivable at $.02 - Sept 27, 2004		5,000,000		5,000		95,000		-
Issuance of common stock for land at $.016 to .02 - Sept 29, 2004		1,100,000		1,100		16,900		-
Issuance of common stock for stock subscriptions receivable at $.05 to $.20 November & December 2004		18,000,000		18,000		2,432,000		-
Issuance of common stock for expenses at $.05 - December 21, 2004		4,392,358		4,392		215,226		-
Net loss form operations for the nine months ended March 31, 2005		-		-		-		(670,124	)
Balance March 31, 2005 -unaudited		91,585,212	$	91,585	$	10,880,275	$	(8,412,768	)

The accompanying notes are an integral part of these financial statements.

7

APEX RESOURCES GROUP, INC.

(Development Stage Company)

STATEMENT OF CASH FLOWS - unaudited

For the Nine Months Ended March 31, 2005 and 2004 and the

Period January 27, 1984 (Date of Inception) to March 31, 2005

	Mar312005,			Mar 312004,			January 27, 1984 to Mar 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(670,124	)	$	(311,092	)	$	(8,412,768	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation		18,000			21,000			118,386
Common capital stock issued for services & expenses		335,473			102,382			5,312,093
(Increase) decrease in accounts receivable		2,860			(54,638	)		(146,072	)
Increase (decrease) in liabilities		405,762			175,684			884,011
Net Change in Cash from Operations		91,971			(66,664	)		(2,244,350	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments		200			-			(2,428	)
Purchase of property & equipment		(207,951	)		(35,020	)		(602,475	)
Purchase of oil & gas leases and mining claims		-			-			(67,913	)
		(207,751	)		(35,020	)		(672,816	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of capital stock		123,000			102,158			2,939,127
Net Change in cash		7,220			474			21,961
Cash at beginning of year		14,741			14,259			-
Cash at end of year	$	21,961		$	14,733		$	21,961

The accompanying notes are an integral part of these financial statements.

8

APEX RESOURCES GROUP, INC.

(Development Stage Company)

STATEMENT OF CASH FLOWS (Continued)

For the Period January 27, 1984 (Date of Inception) to March 31, 2005

SCHEDULE OF NONCASH OPERATING, INVESTING, AND FINANCING ACTIVITIES

Issuance of 1,154,073 common shares for assets, services and expenses - from inception to June 30, 1998	$	1,500,765
Issuance of 1,549,875 common shares for assets, services and expenses - for the year ended June 30, 1999		1,157,000
Issuance of 1,242,781 common shares for assets, services and expenses - for the year ended June 30, 2000		1,240,093
Issuance of 784,500 common shares for services and expenses - for the year ended June 30, 2001		629,500
Issuance of 105,000 common shares for services and expenses - for the year ended June 30, 2002		62,999
Issuance of 10,560,000 common shares for services and expenses - for the year ended June 30, 2003		115,380
Issuance of 9,267,655 common shares for services and expenses - for the year ended June 30, 2004		270,882
Issuance of 4,517,785 common shares for services and expenses for the three months ended September 30, 2004		115,855
Issuance of 4,392,358 common shares for services and expenses for the three months ended December 31, 2004		219,619

9

APEX RESOURCES GROUP, INC.

(Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

March 31, 2005

1. ORGANIZATION

The Company was incorporated in the State of Utah on January 27, 1984 with authorized capital stock of 50,000,000 shares at a par value of $0.001. On May 17, 1999 the authorized was increased to 100,000,000 shares and on March 3, 2000 the authorized was increased to 400,000,000 shares with the same par value. On March 26, 2003 the name of the Company was changed from “Ambra Resources Group, Inc. to “Apex Resources Group, Inc.”

The Company has been in the development stage since inception and has been engaged in the business of the acquisition of mining and oil property interests and other business activities.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods

The Company recognizes income and expenses based on the accrual method of accounting.

Dividend Policy

The Company has not yet adopted any policy regarding payment of dividends.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity, at the time of purchase, of less than three months, to be cash equivalents.

Property and Equipment

The Company’s property and equipment consists of the following:

Office equipment	132,130
Residential rentals	164,511
Less accumulated depreciation	(113,386	)
	183,255

Office equipment is depreciated on the straight line method over five and seven years and the residential rentals are depreciated on the straight line method over forty years.

Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.

10

APEX RESOURCES GROUP, INC.

(Development Stage Company)

NOTES TO FINANCIAL STATEMENTS (Continued)

March 31, 2005

Capitalization of Oil Leases Costs

The Company uses the successful efforts cost method for recording its oil lease interests, which provides for capitalizing the purchase price of the project and the additional costs directly related to proving the properties and amortizing these amounts over the life of the reserve when operations begin or a shorter period if the property is shown to have an impairment in value or expensing the remaining balance if it is proven to be of no value. Expenditures for oil well equipment are capitalized and depreciated over their useful lives.

Environmental Requirements

At the report date environmental requirements related to the mineral claim interests acquired are unknown and therefore an estimate of any future cost cannot be made.

Foreign Currency Translation

Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and therefore, no gain or loss from the translations is recognized. US dollars are considered to be the functional currency.

Financial Instruments

The carrying amounts of financial instruments are considered by management to be their estimated fair values due their short term maturities.

Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

At March 31, 2005, the Company had a net operating loss available for carry forward of $8,412,768. The tax benefit of approximately $2,524,000 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful because the Company is unable to establish a predictable projection of operating profits for future years.

The net operating loss carryovers will expire beginning in the years 2004 through 2025.

11

APEX RESOURCES GROUP, INC.

(Development Stage Company)

NOTES TO FINANCIAL STATEMENTS (Continued)

March 31, 2005

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue Recognition

Revenue is recognized on the sale and transfer of properties or services and the receipt other sources of income.

Advertising and Market Development

The Company expenses advertising and market development costs as incurred.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consists primarily of cash and account receivables. Cash balances are maintained in accounts that are not federally insured for amounts over $100,000 but are other wise in financial institutions of high credit quality. Accounts receivable are unsecured, however management considers them to be currently collectable.

Other Recent Accounting Pronouncements

The Company does not expect that the adoption of other recent accounting pronouncements to have any material impact on its financial statements.

3. OIL LEASES -BEAUFORT SEA PROJECT

On June 9, 1997 the Company purchased a 3.745% working interest, for $67,913, in the Beaufort Sea well Esso Pex Home et al Itiyok I-27 consisting of 640 acres and is located at Latitude 70-00', Longitude 134-00', Sections 7, 8, 17, 18, 27, 28, and 37, License No. 55, dated April 22, 1987. During 1982 and 1983 a consortium of companies participated in the drilling, casing, and testing the area to a depth of 12,980 feet. A review of the well data and geological prognosis indicates that the areawould contain proven recoverable gas reserves of 108 Bscf and proven recoverable oil reserves of 8,976 MSTB.

12

APEX RESOURCES GROUP, INC.

(Development Stage Company)

NOTES TO FINANCIAL STATEMENTS (Continued)

March 31, 2005

3. OIL LEASES (continued)

The lease is shown at cost, which is considered by management to be its estimated fair value.

The other partners in the project are controlled by Exxon Oil Corporation, however, there are noimmediate plans to develop the area until a gas pipe line becomes available.

4. PURCHASE OF LAND

The Company is obligated under installment sales contracts for the purchase of land. The contracts have balances of $208,463 at March 31, 2005, including accrued interest, on which $126,105 was due December 31, 2004 (unpaid) and the balance of $82,358 due over 25 years in monthly payments, including interest of 11%. The payments due are in arrears.

5. AVAILABLE-FOR-SALE SECURITIES

During 2001 the Company purchased 6,000,000 shares of Omega Ventures Group, Inc. for $3,000. During the year ended June 30, 2004 745,635 shares were sold for $21,184, and during August 2004 399,735 shares were sold for $8,761, leaving 4,854,630 shares. On the date of this report the shares have been trading, in a small quantities, for $.035 per share.

Management intents to hold the securities for investment.

6. PURCHASE OF OIL LEASES

During the quarter ended September 2004 the Company purchased a 1% interest, and 2.5 participation units in two oil leases by the payment of the initial drilling costs. The payments for the drilling costs have been expensed.

7. ISSUANCE OF COMMON CAPITAL STOCK

During the year ended June 30, 2004 the Company issued 5,001,820 common shares in a private placement sale for cash of $102,159.

During the year ended June 30, 2004 the Company issued 9,471,900 restricted common shares for payment of debt of $284,156, 9,267,655 restricted common shares for services at $.03 per share, and 300,000 restricted common shares for Arizona land for $9,000, all to related parties.

During the quarter ended September 2004 the Company issued 4,517,785 restricted common shares for services and expenses, 311,500 for payment of a debt, 1,100,000 for purchase of land, and 5,000,000 shares for cash and a note receivable.

13

APEX RESOURCES GROUP, INC.

(Development Stage Company)

NOTES TO FINANCIAL STATEMENTS (Continued)

March 31, 2005

7. ISSUANCE OF COMMON CAPITAL STOCK(continued)

During the quarter ended December 2004 the Company issued 18,000,000 restricted common shares for stock subscriptions receivable of $2,450,000 and 4,392,358 for expenses of $219,618.

On March 26, 2003 the Company completed a reverse stock split of one share for 20 shares of outstanding stock. This report has been prepared showing post split shares from inception.

8. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

Officers-directors and their controlled entities and a consultant have acquired 14% of the outstanding common stock of the Company.

The Company has made no interest, demand loans to affiliates of $146,072. The affiliations resulted through common officers between the company and its affiliates, and the Company owns 7% of the outstanding stock of one of the affiliates.

Officers-directors have made no interest, demand, loans to the Company of $349,122.

9. GOING CONCERN

The Company will need additional working capital for its future planned activity and to service its debt, which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining sufficient working capital to be successful in that effort. The management of the Company has developed a strategy, which it believes will accomplish this objective, through additional short term loans, and equity funding, which will enable the Company to operate for the coming year.

14

APEX RESOURCES GROUP, INC.

(Development Stage Company)

NOTES TO FINANCIAL STATEMENTS (Continued)

March 31, 2005

10. SCHEDULE OF EXPENSES

Following is a summary schedule of the expenses for the nine months ended March 31, 2005 and 2004 shown in the statement of operations under exploration, development, and administrative.

	Mar 31, 2005		Mar 31,2004
Travel	$	61,310	$	27,691
Office expenses		102,394		69,547
Professional		22,915		15,387
Consultants		320,886		104,909
Promotional		18,678		9,801
Rent		56,373		23,041
Exploration and development - oil and gas		55,414		35,028
Other		26,455		8,605
	$	664,425	$	294,009

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

For a complete understanding, this Management Discussion and Analysis should be read in conjunction with Part I- Item 1. Financial Statements to this Form 10-QSB and the Annual Report of the Company on Form 10-KSB for the year ended June 30, 2004.

General

The Company is in the development stage and engaged in the acquisition of interests in gas and oil properties and the acquisition of interests in real estate. The Company has not been engaged in the production of any gas and oil. For a detailed description of the oil and gas and real estate holding of the Company, please see the Annual Report of the Company filed on Form 10-KSB for the year ended June 30, 2004, and the subsequent Quarterly Reports filed by the Company on Form 10-QSB. Following is a brief description of relevant events that occurred during the quarter ended March 31, 2005.

15

Recent Developments

Oil and Gas Interests

Plaquemines Parish, Louisiana

During the quarter, the Company learned that Royal “T” Oil, the operator of the Plaquemines Parish, Bastian Bay Well #16152, turned over its interest in the well to Imperial Petroleum, Inc. Imperial is preparing to do a work over of the well at an estimated cost of $906,800 and has made a cash call to all participants. The participants in the well were given the choice to pay the cash call or continue on a non-consent basis under which the non paying participants relinquish half of their working interest after Imperial has recouped its expenditures. The Company determined to continue on a non-consent basis and will not meet the cash call. This means the Company’s net revenue interest will be reduced from 6.25% to 3.125%.

Henry Dome Prospect, Texas

During the quarter, PB Energy Partners, the operator of the Henry Dome Prospect in McMullen County, Texas, informed the Company that the JB Henry Dome #1 was successfully re-entered and gas was found. The Company owns 2.5 participation units in the Henry Dome Prospect in McMullen County, Texas, for $12,500. These units give the Company a 1.875% working interest in JB Henry Dome #1 well. Initial flow testing of the well demonstrated flow of 1.2 to 1.4 million cubic feet of gas per day. Following initial testing, acid washing of the well was performed to attempt to increase flow rates. Additional flow testing following the acid washing will be performed before results will be announced. The estimated life expectancy of this well is at least six years.

Real Estate Interests

Cowichan Lake, Victoria, B.C.

In January 2005, the Company paid approximately $39,000 toward the purchase price for Lot 4 on Upper Point Ideal Road in the Cowichan Lake District in Victoria B.C. In March 2005, the Company paid approximately $42,000 toward the purchase price of Lot 2. Part of the payment covered various fees and taxes, the remainder was applied to reduce the balance of the purchase price. The Company will pay off the balance of the purchase price of the two lots by making monthly payments for 25 years. The Company acquired these properties for investment purposes and has no present intent to develop or improve these parcels.

The Company also owns approximately 4,854,630 or 7% of the outstanding common shares of Omega Ventures Group, Inc., a corporation whose common stock is traded on the Over-the-Counter Bulletin Board, stock symbol “APXR.”

16

Liquidity and Capital Resources

The Company currently does not have sufficient cash reserves or cash flow from operations to meet its cash requirements. This raises substantial doubt about the Company’s ability to continue as a going concern. During the nine months ended March 31, 2005, the Company financed its operations primarily through the issuance of Company securities and loans from related parties. During the quarter ended December 31, 2004, the Company received subscriptions to purchase 18,000,000 shares of its common stock in private placement transactions for cash totaling $2,450,000. As of March 31, 2005, the Company has received $23,000. The Company’s balance sheet reflects the remaining balance as stock subscriptions receivable. During the quarter ended December 31, 2004, the Company caused its transfer agent to issue the 18,000,000 shares. These shares, however, are being held in escrow and will only be delivered out as funds are received by the Company. During the quarter ended March 31, 2005, the Company did not issue any shares for services or in satisfaction of expenses, as a result, accounts payable to related parties increased to $349,122 compared to $154,574 at December 31, 2004.

On March 31, 2005, the Company had cash on hand of $21,961, as cash flows from operating activities and financing activities were only partially offset by cash flows used in investing activities.

The Company has plans to further develop its oil and gas properties, which will require substantial additional working capital which the Company does not currently have. Moreover, the Company does not anticipate significant revenue from its operating activities in the upcoming quarter.

Results of Operations

Comparison of the three months ended March 31, 2005 and 2004

The Company sustained a net loss of $177,539 in the quarter ended March 31, 2005 compared to a loss of $86,875 for the quarter ended March 31, 2004. This increase in loss was primarily the result of the Company being much more active in its business operations in the three months ended March 31, 2005, compared to the same period of 2004, as shown in the following comparison of expenses:

	March 31, 2005		March 31, 2004
Travel	$	7,156	$	4,005
Office Expenses		28,822		9,614
Professional		13,055		151
Consultants		84,411		30,934
Promotional		8,000		1,054
Rent		15,202		7,734
Exploration and Development -
Oil and Gas		-0-		18,906
Other		16,127		8,605
	$	172,773	$	81,003

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Travel expenses increased $3,151 or 79% to $7,156 during the three months ended March 31, 2005 compared to March 31, 2004. This increase is primarily the result of increased travel in connection with increasing operating activities during the three months ended March 31, 2005 compared to the same period of 2004. The Company anticipates travel expenses to continue at rates consistent with those incurred during the three month period ended March 31, 2005.

Office expenses increased $19,208 or 200% to $28,822 during the three months ended March 31, 2005 compared to the same period 2004. This significant increase is partially the result of the Company retaining the services of two individuals to provide administrative and office support services, as well as increasing expenses due to more extensive operations during the third fiscal quarter of 2005 compared to 2004. Office expenses in the future should remain fairly consistent with those experienced during the third fiscal quarter of 2005.

As with travel and office expenses, professional expenses increased $12,904 to $13,055 during the three months ended March 31, 2005 compared to the three months ended March 31, 2004, as accounting and legal expenses continue to increase as a result of more stringent compliance obligations imposed by the Sarbanes-Oxley Act of 2002. The Company expects professionals fees to continue to increase in upcoming fiscal quarters.

Consultants fees increased $53,477 or 173% to $84,411 during the three months ended March 31, 2005 compared to three month period ended March 31, 2004. The Company has no employees, rather management retains consultants to provide the services the Company needs. Again, as a result of increasing operating activities, consulting fees increased in the three months ended March 31, 2005 compared to the same three month period of 2004. While the Company expects consultants fees to continue to be greater than 2004 levels, management does not expect to see such significant increases in the immediate future.

Promotional expenses increased $6,946 to $8,000 during the quarter ended March 31, 2005 compared to $1,054 for the quarter ended March 31, 2004. This increase in promotional expenses is largely the result of the Company’s efforts to keep its shareholders and the market better informed as to the Company’s activities through a coordinated media campaign. The Company expects promotional expenses to continue to increase in upcoming quarters.

Rent expenses nearly doubled from $7,734 during the three months ended March 31, 2004 to $15,202 during the three months ended March 31, 2005. We do not expect rent expenses to continue to increase at such significant rates in the future.

During the three months ended March 31, 2005, the Company incurred no expenses for exploration and development, compared to $18,906 during the three months ended March 31, 2004. The Company believes this decrease is simply a result of timing issues and anticipates exploration and development expenses in the future will return to the higher levels experienced during the three months ended March 31, 2004.

Other expenses increased to $16,127 for the three months ended March 31, 2005 compared to $8,605 for the three months ended March 31, 2004, an 87% increase. This increase is primarily due to the increased operating activities of the Company during the 2005 quarter compared to the 2004 quarter. The Company anticipates other expenses to continue at level consistent with the three month ended March 31, 2005.

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Revenue from interest and rents remained constant, at $1,234 during the three months ended March 31, 2005, compared to $1,128 during the three months ended March 31, 2004.

Comparison of the nine months ended March 31, 2005 and 2004

The Company sustained a net loss of $670,124 during the nine months ended March 31, 2005, compared to a net loss of $311,092 for the nine months ended March 31, 2004. This increase in loss was primarily the result of the Company being much more active in its business operations in the nine months ended March 31, 2005, compared to the same period of 2004, as shown in the following comparison of expenses:

	March 31, 2005		March 31, 2004
Travel	$	61,310	$	27,691
Office Expenses		102,394		69,547
Professional		22,915		15,387
Consultants		320,886		104,909
Promotional		18,678		9,801
Rent		56,373		23,041
Exploration and Development -
Oil and Gas		55,414		35,028
Other		26,455		8,605
	$	664,425	$	294,009

Travel expenses increased $33,619 or 121% to $61,310 during the nine months ended March 31, 2005 compared to March 31, 2004. This increase is primarily the result of increased travel in connection with increasing operating activities during the nine months ended March 31, 2005 compared to the same period of 2004. The Company anticipates travel expenses to continue at rates consistent with those incurred during the first nine months of the 2005 fiscal year.

Office expenses increased $32,847 or 47% to $102,394 during the nine months ended March 31, 2005 compared to the same period 2004. This increase is partially the result of the Company retaining the services of two individuals to provide administrative and office support services, as well as increasing expenses due to more extensive operations during the first three fiscal quarters of 2005 compared to 2004. Office expenses in the future should remain fairly consistent with those experienced during the nine months ended March 31, 2005.

Professional expenses went from $15,387 during the nine months ended March 31, 2004 to $22,915 during the nine months ended March 31, 2005. This increase is attributable to increasing accounting and legal expenses incurred by the Company as it seeks to comply with the increasingly more stringent requirements of the Sarbanes-Oxley Act of 2002.

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Consultants fees increased $215,977 or 206% to $320,886 during the nine months ended March 31, 2005 compared to nine month period ended March 31, 2004. The Company has no employees, rather management retains consultants to provide the services the Company needs. The increased in consultants fees is attributable to the Company’s increased operational activities during the nine months ended March 31, 2005 compared to the same period 2004. While the Company expects consultants fees to continue to be greater than 2004 levels, management does not expect to see such significant increases in the immediate future.

Promotional expenses increased $8,877 to $18,678 during the nine month period ended March 31, 2005 compared to $9,801 for the same period of 2004. This increase in promotional expenses is largely the result of the Company’s efforts to keep its shareholders and the market better informed as to the Company’s activities through a coordinated media campaign. The Company expects promotional expenses to continue to increase in upcoming quarters.

Rent expenses increased from $35,028 during the nine months ended March 31, 2004 to $47,082 during the nine months ended March 31, 2005, a 34% increase. We do not expect rent expenses to continue to increase at such significant rates in the future.

Exploration and development expenses increased from $35,028 during the nine months ended March 31, 2004 to $55,414 during the nine months ended March 31, 2005, a 58% increase. This increase is directly related to increase oil and gas prices, and a corresponding increase in exploration activities. The Company expects exploration and development expenses will continue to increase in the future for as long as oil and gas prices remain at current or higher rates.

Other expenses increased to $26,455 for the nine months ended March 31, 2005 compared to $8,605 for the nine months ended March 31, 2004, a 207% increase. This increase is primarily due to the increased operating activities of the Company during the nine months enced March 31, 2005 compared to the nine months ended March 31, 2004. The Company anticipates other expenses to continue at level consistent with those experienced during the nine months ended March 31, 2005.

Revenue from interest and rents for the nine months ended March 31, 2005 was $12,301 compared to $3,917 during the nine months ended March 31, 2004.

ITEM 3. CONTROLS AND PROCEDURES

The Company’s principal executive officers and our principal financial officer (the"Certifying Officers") are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Such officers have concluded (based upon their evaluations of these controls and procedures as of the end of the period covered by this report) that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by it in this report is accumulated and communicated to management, including the Certifying Officers as appropriate, to allow timely decisions regarding required disclosure.

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The Certifying Officers have also indicated that there were no significant changes in the Company’s internal controls over financial reporting or other factors that could significantly affect such controls subsequent to the date of their evaluation, and there were no significant deficiencies and material weaknesses.

Management, including the Certifying Officers, does not expect that the Company’s disclosure controls or its internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any systems of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES

No instruments defining the rights of the holders of any class of registered securities have been materially modified, limited or qualified during the quarter ended March 31, 2005.

During the quarter ended March 31, 2005, the Company issued no securities that were not registered under the Securities Act of 1933.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A)	Reports on Form 8-K
	None.
(B)	Exhibits. The following exhibits are included as part of this report:
	31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized

	APEX RESOURCES GROUP, INC.
Date: May 13, 2005	By:	/s/ John R. Rask
		John R. Rask, President and Director
Date: May 13, 2005	By:	/s/ John M. Hickey
		John M. Hickey, Secretary and Director

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