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 December 31, 2003
----------------------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File number 0-11695
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APEX RESOURCES GROUP, INC.
formerly Ambra Resources Group, Inc.
------------------------------------
(Exact name of registrant as specified in charter)
UTAH 87-0403828
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
136 East South Temple, Suite 1600, Salt Lake City, Utah 84111
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(Address of principal executive offices) (Zip Code)
(801) 363-2599
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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 registrants
classes of common equity, as of the latest practicable date.
Common stock, par value $.001; 46,917,860 shares outstanding as of
December 31, 2003.
INDEX
Page
Number
PART I.
ITEM 1. Financial Statements (unaudited)..................................3
Balance Sheet
December 31, 2003 and June 30, 2003.............................4
Statements of Operations
Three months ended December 31, 2003 and 2002
and the period January 27, 1984 to December 31, 2003...........5
Statements of Cash Flows
Three months ended December 31, 2003 and 2002
and the period January 27, 1984 to December 31, 2003 .........6
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 ..........................................17
PART II
ITEM 6. Exhibits and Reports on Form 8-K .................................18
Signatures........................................................19
2
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PART I - FINANCIAL INFORMATION
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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.
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ITEM 1. FINANCIAL STATEMENTS
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The accompanying balance sheet of Apex Resources Group, Inc.,
(development stage company) at December 31, 2003 and June 30, 2003, and the
statements of operations and cash flows for the three months ended December 31,
2003 and 2002 and the period January 27, 1984 (date of inception) to December
31, 2003, 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 December 31, 2003, are not
necessarily indicative of the results that can be expected for the year ending
June 30, 2004.
3
APEX RESOURCES GROUP, INC.
( Development Stage Company)
BALANCE SHEETS
December 31, 2003 and June 30, 2003
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ASSETS
Dec 31, 2003 Jun 30, 2003
CURRENT ASSETS
Cash $ 18,102 $ 14,259
----------- -----------
Total Current Assets 18,102 14,259
----------- -----------
PROPERTY AND EQUIPMENT - net of accumulated
depreciation 240,997 221,597
----------- -----------
OTHER ASSETS
Accounts receivable - affiliates 142,561 92,562
Oil leases - note 3 67,913 67,913
Joint venture interest - note 4 125,012 125,012
Other investments 7,005 7,005
----------- -----------
342,491 292,492
----------- -----------
$ 601,590 $ 528,348
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable - current portion 3,067 --
Accounts payable $ 29,787 $ 26,059
Accounts payable - related parties 18,464 102,563
----------- -----------
Total Current Liabilities 51,318 128,622
----------- -----------
NOTE PAYABLE - net of current portion 18,893 --
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STOCKHOLDERS' EQUITY
Common stock
400,000,000 shares authorized, at $.001 par value;
46,917,860 issued and outstanding on Dec 31, 2003 46,918 34,222
Capital in excess of par value 7,703,042 7,359,868
Deficit accumulated during the development stage (7,218,581) (6,994,364)
----------- -----------
Total Stockholders' Equity 531,379 399,726
----------- -----------
$ 601,590 $ 528,348
=========== ===========
The accompanying notes are an integral part of these
financial statements.
4
APEX RESOURCES GROUP, INC.
(Development Stage Company)
STATEMENTS OF OPERATIONS
Forthe Three and Six Months Ended December 31, 2003 and
2002 and the Period January 27, 1984 (date of inception) to December 31, 2003
Three Months Six Months
Dec Dec Dec Dec Jan 27, 1984 to
2003 2002 2003 2002 Dec 31, 2003
----------- ----------- ----------- ----------- -----------
REVENUES
Rents and interest $ 1,317 $ 4,553 $ 2,789 $ 8,813 $ 326,822
----------- ----------- ----------- ----------- -----------
EXPENSES
Exploration, development
and promotion 148,794 168,560 213,006 353,455 8,786,115
Depreciation 7,000 9,500 14,000 19,000 114,043
----------- ----------- ----------- ----------- -----------
155,794 178,060 227,006 372,455 8,900,158
----------- ----------- ----------- ----------- -----------
NET LOSS - before other
income (154,477) (173,507) (224,217) (363,642) (8,573,336)
Gain on sale of assets -- -- -- -- 1,354,755
----------- ----------- ----------- ----------- -----------
NET LOSS $ (154,477) $ (173,507) $ (224,217) $ (363,642) $(7,218,581)
=========== =========== =========== =========== ===========
LOSS PER COMMON SHARE
Basic $ -- $ (.01) $ (.01) $ (.01)
----------- ----------- ----------- -----------
AVERAGE OUTSTANDING
SHARES - (stated in 1,000's)
Basic 42,685 34,222 36,338 34,222
----------- ----------- ----------- -----------
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 December 31, 2003
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Capital in
Common Stock Excess of Accumulated
Shares Amount Par 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 income from operations
for the period ended June 30, 1984 - - - 3,048
Net loss from operations
for the year ended June 30, 1985 - - - (44,556)
Net income from operations
for the year ended June 30, 1986 - - - 18,018
Net loss from operations
for the year ended June 30, 1987 - - - (9,248)
Net income from operations
for the year ended June 30, 1988 - - - 15,828
Net loss from operations
for the year ended June 30, 1989 - - - (22,000)
Capital contribution - expenses - - 752 -
Net loss from operations
for the year ended June 30, 1993 - - - (9,752)
Net loss from operations
for the year ended June 30, 1994 - - - (82,277)
Net loss from operations
for the year ended June 30, 1995 - - - (115,762)
Net loss from operations for
the year ended June 30, 1996 - - - (269,717)
Net loss from operations for the
year ended June 31, 1997 - - - (515,238)
Net loss from operations for the year
ended June 30, 1998 - - - (648,722)
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)
Balance June 30, 2000 6,872,694 6,873 6,413,687 (4,317,134)
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 December 31, 2003
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Capital in
Common Stock Excess of Accumulated
Shares Amount Par Value Deficit
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)
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 7,096 205,774 -
Issuance of common stock for services
and expenses at $.03 - Nov 25, 2003 2,800,000 2,800 81,200 -
Issuance of common stock for cash
at $.02 - Dec 10, 2003 2,500,000 2,500 47,500 -
Net loss from operations for the six
months ended December 31, 2003 - - - (224,217)
Balance December 31, 2003 46,917,860 $ 46,918 $ 7,703,042 $ ( 7,218,581)
========== ====== ========= ==========
The accompanying notes are an integral
part of these financial statements.
7
APEX RESOURCES GROUP, INC.
( Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Six Months Ended December 31, 2003 and 2002 and the
Period January 27, 1984 (Date of Inception) to December 31, 2003
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January 27, 1984
Dec Dec (Date of Inception)
2003 2002 to Dec 31, 2003
----------- ----------- --------------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net profit (loss) $ (224,217) $ (363,642) $ (7,218,581)
Adjustments to reconcile net loss
to net cash provided by operating
activities
Valuation of investments -- -- 2,640
Depreciation 14,000 19,000 114,043
Common capital stock issued
for services & expenses 84,000 -- 4,789,737
Gain from sale of assets -- -- (1,354,755)
(Increase) decrease in accounts receivable (49,999) 205,312 (142,561)
(Increase) decrease in advance deposits -- 38,664 --
Increase (decrease) in liabilities 132,499 (14,535) 282,037
----------- ----------- --------------
Net Cash Used By Operations (43,717) (115,201) (3,527,440)
----------- ----------- --------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of other assets -- -- (9,645)
Purchase of property & equipment (24,400) -- (346,040)
Purchase of oil & gas leases -- -- (523,019)
Net sales of assets -- -- 1,638,159
----------- ----------- --------------
(24,400) -- 759,455
----------- ----------- --------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Increase in note payable 21,960 -- 21,960
Net proceeds from sale of capital stock 50,000 10,000 2,764,127
----------- ----------- --------------
Net increase (decrease) in cash 3,843 (105,201) 18,102
Cash at beginning of year 14,259 251,998 --
----------- ----------- --------------
Cash at end of year $ 18,102 $ 146,797 $ 18,102
=========== =========== ==============
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 December 31, 2003
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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 300,000 for purchase of land November 17, 2003 9,000
---------
Issuance of 7,095,666 for payment of debt November 25, 2003 212,870
---------
Issuance of 2,800,000 for services and expenses November 25, 2003 84,000
---------
9
APEX RESOURCES GROUP, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
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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. The Company has not engaged in any mineral claims
explorations.
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:
Land 33,400
Office equipment 128,413
Residential rentals 164,511
Less accumulated depreciation (85,327)
---------
240,997
=========
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.
10
APEX RESOURCES GROUP, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2003
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Capitalization of Mining Claim Costs
- -------------------------------------
Costs of acquisition, exploration, carrying, and retaining unproven properties
are expensed as incurred. Costs incurred in proving and developing a property
ready for production are capitalized and amortized over the life of the mineral
deposit or over a shorter period if the property is shown to have an impairment
in value. Expenditures for mine equipment are capitalized and depreciated over
their useful lives.
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.
11
APEX RESOURCES GROUP, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2003
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments
- ---------------------
The carrying amounts of financial instruments, including cash, accounts
receivable due from affiliates, and accounts payable, are considered by
management to be their estimated fair values.
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 September 30, 2003, the Company had a net operating loss available for carry
forward of $7,218,581. The tax benefit of approximately $2,165,000 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 2023.
Revenue Recognition
- -------------------
Revenue is recognized on the sale and transfer of properties or services and the
receipt other sources of income.
Statement of Cash Flows
- -----------------------
For the purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less to be cash
equivalents.
Advertising and Market Development
- ----------------------------------
The company expenses advertising and market development costs as incurred.
12
APEX RESOURCES GROUP, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2003
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 area would contain proven recoverable gas reserves
of 108 Bscf and proven recoverable oil reserves of 8,976 MSTB.
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 no plans to develop the area until a pipeline is built to
transport the gas.
13
APEX RESOURCES GROUP, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2003
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4. JOINT VENTURE INTEREST
During July 2001 the Company purchased a one half participation interest in a
joint venture covering the "Hughes Prospect Lease Bank Agreement" for $175,290,
which consists of 4,219 acres of oil and gas leases located in Robertson County,
Texas in which the joint venture participants are marketing the leases. The
Company has received $50,278 as its share of the on-going sale of the leases,
which has been recorded as a reduction of the cost of the joint venture. A gain
or loss cannot be determined until the balance of the leases have been sold.
5. MINING CLAIMS
On June 20, 1994 the Company purchased six unproven mineral claims, from a
related party, and are identified as Marathon, Marathon 1 and Marathon 2,
Krystal Ann 1, Krystal Ann 2 and Krystal Ann 3. The Marathon claims contain 32
units and expire in February 2006 and the Krystal claims contain 28 units and
expire in May 2006. The Claims are located near Cowichan Lake in the Province of
British Columbia, Canada. The claims are located within the Sicker Volcanic Belt
on Vancouver Island in an active gold mining area and are current though 2005.
The claims have not been proven to have a commercially minable ore reserve and
therefore all costs for acquisition and retaining the properties have been
expensed.
6. ISSUANCE OF COMMON CAPITAL STOCK
During the quarter ended December 31, 2003 the Company issued 10,195,666
restricted common shares of its capital stock for services, expenses, and the
purchase of land, and 2,500,000 restricted common shares for cash, as outlined
in the statement of changes in stockholders' equity.
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.
7. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officers-directors and their controlled entities have acquired 36% of the
outstanding common stock of the Company and have made demand, no interest loans
to the Company of $18,464. The Company has made no interest, demand loans to
affiliates of $142,561. The affiliations resulted through common officers
between the Company and its affiliates, and the Company owns 15% of the
outstanding stock of one of the affiliates.
14
APEX RESOURCES GROUP, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2003
- --------------------------------------------------------------------------------
8. 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.
9. CONTINUING LIABILITIES
The Company is obligated under a three year lease for office space, starting in
March 2001 through February 2004 at $2,545Cn per month.
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
- --------------------------------------------------------------------------------
General
The Company is in the development stage and engaged in the acquisition
of interests in gas and oil properties in Texas, and Louisiana, and other
business interests, the Company has not been engaged in the production of any
gas and oil. Near the end of the quarter, the Company learned that well #1 of
the Bastian Bay State Lease 16152 at Plaquemines Parish, Louisiana was expected
to begin production during the upcoming quarter. Apex has a 6.25% working
interest in this well and hopes that production will lead to a steady income
stream for the Company in the upcoming quarters. On September 30, 2003, the
Company also entered into a Participation Agreement with PB Energy USA, Inc.,
acquiring 1.875% participating working interest in an oil and gas prospect on
certain prospect lands located in Goliad County, Texas, for $7,500. At this time
it is anticipated that drilling on this prospect will commence in March 2004.
During the quarter ended December 31, 2003, the Company purchased
approximately 37 acres of real property at the Woodland Valley Ranch. The
Woodland Valley Ranch is located approximately 15 miles northeast of St. Johns,
Arizona. The purchase price of the property was $24,400. The Company financed
the purchase of the property.
The Company also owns approximately 5,600,000 or 14.5% 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 "OMGV."
15
Liquidity and Capital Resources
During the quarter ended December 31, 2003, the Company funded its
operations primarily from the sale of Company securities. During the quarter,
the Company reduced its accounts payable to related parties by issuing 7,095,666
shares of its common stock in satisfaction of debts owing of approximately
$212,870. On December 31, 2003, the Company had cash on hand of $18,102. The
Company will need additional working capital for its future planned activities
and to service its debt. 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.
Continuation of the Company as a going concern is dependent upon obtaining
sufficient working capital to be successful in that effort. Management of the
Company has developed a strategy, that it believes will accomplish this
objective, through additional short term loans, and equity funding, which may
enable the Company to operate for the coming year. The Company, however, has no
firm commitments from any party to provide it additional funding. Without some
source of additional funds, it is unlikely the Company will have sufficient
funds to continue operations for the next twelve months. There is no guarantee
the Company will be successful in implementing its strategy to obtain sufficient
working capital to continue operations for the next twelve months.
The Company has plans to further develop its properties which will
require all of its current working capital.
Results of Operations
Comparison of the quarter ended December 31, 2003 and the quarter ended
December 31, 2002
The Company sustained a net operating loss of $154,477 in the quarter
ended December 31, 2003, compared to a loss of $173,507 for the quarter ended
December 31, 2002. This decrease in the loss was largely the result of decreases
in expenses as shown in the following comparison of expenses:
December 31, 2003 December 31, 2002
Exploration, development $148,794 $168,560
and promotion
Depreciation 7,000 9,500
The decrease in operating expenses in the quarter ended December 31,
2003, compared to the same period of 2002 was primarily the result of decreased
exploration, development and promotional activity by the Company in the quarter
ended December 31, 2003, because of a lack of funds to pursue these activities.
Revenue from rents and interest decreased from $4,553 in the three
months ended December 31, 2002 to $1,317 in the three months ended December 31,
2003.
16
Comparison of the six months ended December 31, 2003 and six months ended
December 31, 2002.
The Company sustained a net operating loss of $224,217 for the six
months ended December 31, 2003, compared to a loss of $363,642 for six months
ended December 31, 2002. This decrease in the loss was largely the result of
decreases in expenses as shown in the following comparison of expenses:
December 31, 2003 December 31, 2002
Exploration, development $213,006 $353,455
and promotion
Depreciation 14,000 19,000
The decrease in operating expenses during the six months ended December
31, 2003, compared to the same period of 2002 was primarily the result of
decreased exploration, development and promotional activity by the Company in
the six months ended December 31, 2003, due to a lack of funds to pursue these
activities.
Revenue from rents and interest decreased from $8,813 in the six months
ended December 31, 2002 to $2,789 in the six months ended December 31, 2003.
- --------------------------------------------------------------------------------
ITEM 3. CONTROLS AND PROCEDURES
- --------------------------------------------------------------------------------
(a) Evaluation of Disclosure Controls and Procedures. The Company's
Chief Executive Officer and Chief Financial Officer have conducted an evaluation
of the Company's disclosure controls and procedures as of a date (the
"Evaluation Date") within 90 days before the filing of this quarterly report.
Based on their evaluation, the Company's Chief Executive Officer and Chief
Financial Officer have concluded that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the applicable Securities and Exchange Commission rules and
forms.
(b) Changes in Internal Controls and Procedures. Subsequent to the
Evaluation Date, there were no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls, nor
were any corrective actions required with regard to significant deficiencies and
material weaknesses.
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PART II - OTHER INFORMATION
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ITEM 2. CHANGES IN SECURITIES
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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 September 30, 2003.
On November 17, 2003, the Company issued 300,000 restricted common
shares to purchase certain real property in the State of Arizona. The shares
were valued at $.03 per share. The shares were issued without registration under
the Securities Act of 1933 in reliance upon an exemption from registration
provided by Section 4(2) of the Securities Act.
On November 25, 2003, the Company issued 7,095,666 restricted common
shares to Manhattan Communications and Computer Wizards Consulting, affiliates
of the Company through common officers and/or directors, in satisfaction of debt
owed in the amount of approximately $212,870. The shares were issued without
registration under the Securities Act of 1933 in reliance upon an exemption from
registration provided by Section 4(2) of the Securities Act.
Also on November 25, 2003, the Company issued 2,800,000 restricted
common shares to four individuals, including Mr. John Hickey, the Company's
Secretary and a Director, for services rendered to the Company and expenses
incurred on the Company's behalf. These shares were valued at $.03 per share.
These shares were issued pursuant to Regulation S promulgated by the Securities
and Exchange Commission under the Securities Act of 1933.
On December 10, 2003, the Company issued 2,500,000 restricted common
shares to three individuals for $50,000. The shares were issued without
registration under the Securities Act of 1933 in reliance upon an exemption from
registration provided by Section 4(2) of the Securities Act.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Reports on Form 8-K.
None.
(b) Exhibits.
31.1 Certification of Principal Executive Officer
31.2 Certification of Principal Financial Officer
32.1 Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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SIGNATURES
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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: February 16, 2004 By:/s/ John R. Rask
---------------------------------
John R. Rask, President
Date: February 16, 2004 By:/s/ John M. Hickey
---------------------------------
John M. Hickey, Secretary
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