-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EOrClufU8k7WBo0G9P31Jd4hG1+T2vrZpg80xSheg123tJ0AvtBZ7uUWzEdq8ghG HldYTuTLbVDtV/QUWNxaRA== 0001096906-05-000056.txt : 20050218 0001096906-05-000056.hdr.sgml : 20050218 20050218165541 ACCESSION NUMBER: 0001096906-05-000056 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050218 DATE AS OF CHANGE: 20050218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APEX RESOURCES GROUP INC CENTRAL INDEX KEY: 0000742248 STANDARD INDUSTRIAL CLASSIFICATION: [6221] IRS NUMBER: 870403828 STATE OF INCORPORATION: UT FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 002-91973 FILM NUMBER: 05628197 BUSINESS ADDRESS: STREET 1: 610-800 WEST PENDER ST STREET 2: STE 510 CITY: VANCOUVER, B C CANAD STATE: UT ZIP: 84124 BUSINESS PHONE: 6046692723 MAIL ADDRESS: STREET 1: 610-800 WEST PENDER ST STREET 2: VANCOUVER BRITISH COLUMBIA V6C2V CITY: CANADA FORMER COMPANY: FORMER CONFORMED NAME: AMBRA RESOURCES GROUP INC DATE OF NAME CHANGE: 19981026 FORMER COMPANY: FORMER CONFORMED NAME: AMBRA ROYALTY INC DATE OF NAME CHANGE: 19930727 10QSB 1 apex10qsb123104.txt 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, 2004 ---------------------------- (x) 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 (I.R.S. Employer incorporation or organization) 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 December 31, 2004. INDEX Page Number ------ PART I. ITEM 1. Financial Statements (unaudited)...................................3 Balance Sheets December 31, 2004 and June 30, 2004..............................4 Statements of Operations Three months and six months ended December 31, 2004 and 2003 and the period January 27, 1984 to December 31, 2004................................................5 Statement of Changes in Stockholders' Equity Period from January 27, 1984 to December 31, 2004................6 Statements of Cash Flows Six months ended December 31, 2004 and 2003 and the period January 27, 1984 to December 31, 2004............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 ..........................................18 PART II ITEM 2. Changes in Securities ............................................19 ITEM 6. Exhibits .........................................................19 Signatures........................................................20 -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 June 30, 2004, the statements of operations for the three and six months ended December 31, 2004 and 2003 and the period January 27, 1984 (date of inception) to December 31, 2004 and cash flows for the six months ended December 31, 2004 and 2003 and the period January 27, 1984 (date of inception) to December 31, 2004 and the statement of stockholders' equity for the period from January 27, 1984 to December 31, 2004, 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, 2004, 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 December 31, 2004 and June 30, 2004 ================================================================================ (unaudited) ASSETS Dec 31, Jun 30, 2004 2004 ------------ ------------ CURRENT ASSETS Cash $ 52,599 $ 14,741 ------------ ------------ Total Current Assets 52,599 14,741 ------------ ------------ PROPERTY AND EQUIPMENT - net of accumulated depreciation 189,255 197,538 ------------ ------------ OTHER ASSETS Accounts receivable - affiliates 150,726 148,932 Oil leases 67,913 67,913 Land 273,045 83,600 Deposit 4,000 -- Available-for-sale securities 2,428 2,628 ------------ ------------ 498,112 303,073 ------------ ------------ $ 739,966 $ 515,352 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable - current - land $ 207,835 $ 71,183 Accounts payable 30,954 42,526 Accounts payable - related parties 154,574 84,000 ------------ ------------ Total Current Liabilities 393,363 197,709 ------------ ------------ LONG TERM DEBT - net of current - land 36,972 -- ------------ ------------ 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 (8,235,229) (7,742,644) ------------ ------------ Total Stockholders' Equity 309,631 317,643 ------------ ------------ $ 739,966 $ 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 Six Months Ended December 31, 2004 and 2003 and the Period January 27, 1984 (date of inception) to December 31, 2004 ========================================================================================================= Three Months Six Months Dec Dec Dec Dec Jan 27, 1984 to 2004 2003 2004 2003 Dec 31, 2004 ----------- ----------- ----------- ----------- --------------- REVENUES Rents and interest $ 1,120 $ 1,317 $ 11,067 $ 2,789 $ 361,764 ----------- ----------- ----------- ----------- ----------- EXPENSES Exploration, development and promotion 321,142 148,794 491,652 213,006 9,814,362 Depreciation 6,000 7,000 12,000 14,000 107,386 ----------- ----------- ----------- ----------- ----------- 327,142 155,794 503,652 227,006 9,921,748 ----------- ----------- ----------- ----------- ----------- NET LOSS - before other income (326,022) (154,477) (492,585) (224,217) (9,559,984) Gain on sale of assets -- -- -- -- 1,324,755 ----------- ----------- ----------- ----------- ----------- NET LOSS $ (326,022) $ (154,477) $ (492,585) $ (224,217) $(8,235,229) =========== =========== =========== =========== =========== LOSS PER COMMON SHARE Basic $ -- $ -- $ (.01) $ (.01) ----------- ----------- ----------- ----------- AVERAGE OUTSTANDING SHARES - (stated in 1,000's) Basic 72,727 37,517 69,721 35,871 ----------- ----------- ----------- ----------- 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, 2004 =================================================================================================== Common Stock Capital in ------------ 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 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 December 31, 2004 =================================================================================================== Common Stock Capital in ------------ Excess of Accumulated Shares Amount 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 six months ended December 31, 2004 -- -- -- (492,585) ----------- ----------- ----------- -------------- Balance December 31, 2004 - unaudited 91,585,212 $ 91,585 $10,880,275 $(8,235,229) =========== =========== =========== ============== 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 Six Months Ended December 31, 2004 and 2003 and the Period January 27, 1984 (Date of Inception) to December 31, 2004 ====================================================================================== Dec 31, Dec 31, Jan 27, 1984 2004 2003 to Dec 31, 2004 ----------- ----------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (492,585) $ (224,217) $(8,235,229) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation 12,000 14,000 112,386 Common capital stock issued for services & expenses 335,473 84,000 5,312,093 (Increase) decrease in accounts receivable (1,794) (48,999) (150,726) Increase (decrease) in liabilities 240,726 131,499 718,975 ----------- ----------- ----------- Net Change in Cash from Operations 93,820 (43,717) (2,242,501) ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Deposit (4,000) -- (4,000) Purchase of investments 200 -- (2,428) Purchase of property & equipment (175,162) (24,400) (569,686) Purchase of oil & gas leases and mining claims -- -- (67,913) ----------- ----------- ----------- (178,962) (24,400) (644,027) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from note payable -- 21,960 -- Net proceeds from issuance of capital stock 123,000 50,000 2,939,127 ----------- ----------- ----------- Net Change in cash 37,858 3,843 52,599 Cash at beginning of year 14,741 14,259 -- ----------- ----------- ----------- Cash at end of year $ 52,599 $ 18,102 $ 52,599 =========== =========== =========== 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, 2004 ================================================================================ 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 ---------- The accompanying notes are an integral part of these financial statements. -9- APEX RESOURCES GROUP, INC. (Development Stage Company) NOTES TO FINANCIAL STATEMENTS December 31, 2004 ================================================================================ 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 (107,386) ---------- 189,255 ---------- 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) December 31, 2004 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 December 31, 2004, the Company had a net operating loss available for carry forward of $8,235,229. The tax benefit of approximately $2,470,000 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) December 31, 2004 ================================================================================ 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue Recognition - ------------------- Revenue is recognized on the sale and transfer of properties or services and the receipt of 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. -12- APEX RESOURCES GROUP, INC. (Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) December 31, 2004 ================================================================================ 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 coordinated through Imperial Oil Resources. There are no plans to develop the area until a gas pipe line becomes available. 4. PURCHASE OF LAND The Company is obligated under three installment sales contracts for the purchase of land. One contract has a balance of $176,160, including accrued interest, after the down payment, of which $126,105 is due over 25 years in monthly payments including 4% interest of $697, and two contracts provide for 180 monthly payments of $776 starting in January and March of 2004, 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 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. -13- APEX RESOURCES GROUP, INC. (Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) December 31, 2004 ================================================================================ 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. 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 The 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 $150,726. 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 $154,574. 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) December 31, 2004 ================================================================================ 10. SCHEDULE OF EXPENSES Following is a summary schedule of the expenses for the six months ended December 31, 2004 and 2003 shown in the statement of operations under exploration, development, and administrative. Dec 31, Dec 31, 2004 2003 -------- -------- Travel $ 54,154 $ 23,686 Office expenses 73,572 58,775 Professional 9,860 15,236 Consultants 236,475 73,975 Promotional 10,678 8,747 Rent 41,171 15,307 Exploration and development - oil and gas 55,414 16,122 Other 10,328 1,158 -------- -------- $491,652 $213,006 -------- -------- 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 December 31, 2004. -15- Oil and Gas Interests --------------------- Plaquemines Parish, Louisiana ----------------------------- To date, this well has not been put into production. The Company has learned that the operator needs additional funding to complete work on the well before if can be re-entered. At this time it is unclear when or if this well will be re-entered. The Company owns a 6.25% working interest in this well. Manahuilla Creek Field , Texas ------------------------------ During the quarter ended September 30, 2004, P.B. Energy Partners notified the Company that the BB Gayle #1 gas well had been drilled and perforated and did not prove to be of commercial value. Plans to perforate another zone within this well are currently being discussed by the partners in the project. The Company owns a 1.875% of 75% participating working interest in this gas well. Henry Dome Prospect, Texas -------------------------- This well site was prepared for drilling during the quarter. However, the operator was unable to secure a drilling rig during the quarter. It is expected that a drilling rig should be delivered and drilling should start before the end of February 2005. 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 the re-entry and completion of the first well prospect in McMullen County, Texas. Under its purchase agreement, the Company had the right to rescind the agreement and request a refund of price it paid for its participation units, less reasonable costs, if the well was not spudded by December 31, 2004. While the well was not spudded by that date, the Company did not and does not intend to seek to rescind its agreement. Northstar Wallis Prospect, Texas -------------------------------- During the quarter, Northstar Energy, Inc., the operator and Managing Venturer of the Northstar Wallis Well #1 Joint Venture in Victoria County, Texas notified the Company that the well had been drilled and perforated. The well did not prove to be of commercial value Real Estate Interests - --------------------- Cowichan Lake, Victoria, B.C. ----------------------------- Subsequent to quarter end 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. Of the $39,000, $30,000 paid the balance of the down payment for that lot. The remaining $9,000 was used to pay various fees and taxes. During the upcoming quarter, the Company anticipates making a payment of approximately $40,000 toward the purchase price of Lot 2. -16- Part of said payment will be used to satisfy the balance of the down payment on Lot 2. Following this payment, 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 "OMGV." 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 six months ended December 31, 2004, the Company financed its operations primarily through the issuance of Company securities. During the quarter, 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 December 31, 2004, the Company has received $23,000. The Company's balance sheet reflects the remaining balance as stock subscriptions receivable. During the quarter, 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, the Company also issued out 4,392,358 common shares in satisfaction of services and expenses totaling $219,619. On December 31, 2004, the Company had cash on hand of $52,599, 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. Results of Operations Comparison of the quarter ended December 31, 2004 and 2003 The Company sustained a net loss of $326,022 in the quarter ended December 31, 2004, compared to a loss of $154,477 for the quarter ended December 31, 2003. This increase in loss was primarily the result of the Company being much more active in its business operations in the three months ended December 31, 2004, compared to the same period of 2003, as shown in the following comparison of expenses: December 31, 2004 December 31, 2003 ----------------- ----------------- Travel $ 50,687 $ 6,021 Office Expenses 47,145 41,012 Professional 9,100 2,649 Consultants 159,328 60,094 Promotional 6,668 8,747 Rent 28,071 15,307 Exploration and Development- Oil and Gas 17,314 16,122 Other 2,829 -- -17- The significant increases in travel, professional and consultant fees are primarily the result of the Company undertaking more active oil and gas and real estate purchasing activities in the three months ended December 31, 2004 compared to the same period 2003. The Company has no employees, rather management retains consultants to provide the services the Company needs. We anticipate consultant expenses to continue at about the same level in the upcoming quarter as the Company continues active oil and gas exploration activities. Depending on the results of exploration currently being conducted, exploration and development expenses could also continue at about the same level during the upcoming quarter. Non operating revenue was $1,120 in the three months ended December 31, 2004, compared to $1,317 in the three months ended December 31, 2003. Comparison of the six months ended December 31, 2004 and 2003 The Company sustained a net loss of $492,585 during the six months ended December 31, 2004, compared to a loss of $224,217 for the six months ended December 31, 2003. This increase in loss was primarily the result of the Company being much more active in its business operations in the six months ended December 31, 2004, compared to the same period of 2003, as shown in the following comparison of expenses: December 31, 2004 December 31, 2003 ----------------- ----------------- Travel $ 54,154 $ 23,686 Office Expenses 73,572 58,775 Professional 9,860 15,236 Consultants 236,475 73,975 Promotional 10,678 8,747 Rent 41,171 15,307 Exploration and Development - Oil and Gas 55,414 16,122 Other 10,328 1,158 The significant increases in travel, office expense, consultant fees and exploration and development costs are primarily the result of the Company undertaking more active oil and gas and real estate purchasing activities during the six months ended December 31, 2004 compared to the same period 2003. The Company has no employees, rather management retains consultants to provide the services the Company needs. We anticipate consultant expenses to continue at about the same level in the upcoming quarter as the Company continues active oil and gas exploration activities. Depending on the results of exploration currently being conducted, exploration and development expenses could also continue at about the same level during the upcoming quarter. Non operating revenue for the six months ended December 31, 2004 was $11,067 compared to $2,789 during 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 defined in Rule 13A-15(e) under the Securities Exchange Act of 1934 ("Exchange Act") as of the end of the period covered by this quarterly report (the "Evaluation Date"). Based on their evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its Exchange Act reports is recorded, processed, summarized and reported within the applicable periods specified by the SEC's rules and forms. (b) Changes in Internal Controls and Procedures. During the period covered by this quarterly report, there were no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15) or 15d-15 under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting. -18- 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 December 31, 2004. The following securities, which are not registered under the Securities Act of 1933, were issued by the Company during the quarter ended December 31, 2004. On December 21, 2004 and December 22, 2004, the Company issued 4,392,358 shares of its common stock to non United States persons, including 945,480 shares to Company Secretary and Director, John Hickey in satisfaction of debts owed by the Company and 700,000 shares as a bonus for services rendered to the Company over the past ten years. All shares issued were valued at $.05 per share. These shares were issued pursuant to Regulation S promulgated by the Securities and Exchange Commission under the Securities Act of 1933. The Company did not offer the securities to any person in the United States, any identifiable groups of U.S. citizens abroad, or to any U.S. Person as that term is defined in Regulation S. At the time the buy orders were originated, the Company reasonably believed the Buyers were outside of the United States and were not U.S. Persons. The Company reasonably believed that the transaction had not been pre-arranged with a buyer in the United States. The Company has not nor will engage in any "Directed Selling Efforts" and reasonably believes the Buyers have not nor will engage in any "Directed Selling Efforts." The Company reasonably believed the Buyers purchased the securities for their own accounts and for investment purposes and not with the view towards distribution or for the account of a U.S. Person. During the quarter ended December 31, 2004, the Company received subscriptions for 18,000,000 shares of its common stock pursuant to private placements of Company stock in accordance with Regulation S. The subscriptions were for various prices ranging from $.05 - $.20 per share, with total proceeds to be received of $2,450,000. As of December 31, 2004, the 18,000,000 shares have been issued and are being held in escrow awaiting receipt of funds. As of December 31, 2004, only $23,000 has been received by the Company. The Company did not offer any of these shares to any person in the United States, any identifiable groups of U.S. citizens abroad, or to any U.S. Person as that term is defined in Regulation S. At the time the buy orders were originated, the Company reasonably believed the Buyers were outside of the United States and were not U.S. Persons. The Company reasonably believed that the transaction had not been pre-arranged with a buyer in the United States. The Company has not nor will engage in any "Directed Selling Efforts" and reasonably believes the Buyers have not nor will engage in any "Directed Selling Efforts." The Company reasonably believed the Buyers purchased the securities for their own accounts and for investment purposes and not with the view towards distribution or for the account of a U.S. Person. ITEM 6. EXHIBITS 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 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 -19- 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: February 18, 2005 By: /s/ John R. Rask --------------------------------- John R. Rask, President and Director Date: February 18, 2005 By: /s/ John M. Hickey --------------------------------- John M. Hickey, Secretary and Director -20- EX-31.1 2 apexre10qsb12312004ex31-1.txt EXHIBIT 31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, John Ray Rask, certify that: (1) I have reviewed this quarterly report on Form 10-QSB of Apex Resources Group, Inc., (the "Company"); (2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; (3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report; (4) The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and have: (a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the Company, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the Company's disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and (c) Disclosed in this quarterly report any change in the Company's internal controls over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting; and (5) The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons fulfilling the equivalent function): (a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls over financial reporting. Date: February 18, 2005 By: /s/ John Ray Rask ---------------------------------------- John Ray Rask, Principal Executive Officer EX-31.2 3 apexre10qsb12312004ex31-2.txt EXHIBIT 31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, John M. Hickey, certify that: (1) I have reviewed this quarterly report on Form 10-QSB of Apex Resources Group, Inc., (the "Company"); (2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; (3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report; (4) The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and have: (a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the Company, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the Company's disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and (c) Disclosed in this quarterly report any change in the Company's internal controls over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting; and (5) The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons fulfilling the equivalent function): (a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls over financial reporting. Date: February 18, 2005 By: /s/ John M. Hickey ----------------------------------------- John M. Hickey, Principal Financial Officer EX-32.1 4 apexre10qsb12312004ex32-1.txt EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Apex Resources Group, Inc.,on Form 10-QSB for the period ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, John R. Rask, Principal Executive Officer and John M. Hickey, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Date: February 18, 2005 By: /s/ John Ray Rask ---------------------------------------- John Ray Rask, Principal Executive Officer Date: February 18, 2005 By: /s/ John M. Hickey ----------------------------------------- John M. Hickey, Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----