UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
( ) 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 O-11695
-------
AMBRA 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.)
610-800 West Pender Street, Vancouver., Canada, V6C 2V6
- ----------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
1- 604- 669-2723
--------------------------------------------------
Registrant's telephone number, including area code
AMBRA ROYALTY - same address
- --------------------------------------------------- ----------------------------
Former name, former address, and former fiscal year, if changed since last
report.)
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date.
Class Outstanding as of September 30, 1999
-------------------------------- ------------------------------------
Common Stock, $0.001 76,518,072
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<PAGE>
INDEX
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Page
Number
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PART I.
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ITEM 1. Financial Statements (unaudited).................................................3
Balance Sheets...................................................................4
September 30, 1999 and June 30, 1999
Statements of Operations
Three months ended September 30, 1999 and 1998...................................5
and the period from January 27, 1984 to September 30, 1999
Statements of Cash Flows
Three months ended September 30, 1999 and 1998...................................6
and the period from January 27, 1984 to September 30, 1999
Notes to Financial Statements....................................................7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...................................12
PART II. Other Information...............................................................14
Signatures......................................................................15
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PART I - FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The accompanying balance sheets of Ambra Resources Group, Inc. (a development
stage company) at September 30, 1999 and June 30, 1999, and the statements of
operations and cash flows for the three months ended September 30, 1999 and 1998
and the period from January 27, 1984 (inception of development stage) to
September 30, 1999, have been prepared by the Company's management and they do
not include all information and notes to the financial statements necessary for
a complete presentation of the financial position, results of operations, cash
flows, and stockholders' equity in conformity with generally accepted accounting
principles. 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 September 30, 1999, are not necessarily
indicative of the results that can be expected for the year ending June 30,
2000.
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<TABLE>
<CAPTION>
AMBRA RESOURCES GROUP, INC.
( Development Stage Company)
BALANCE SHEETS
September 30, 1999 and June 30, 1999
- --------------------------------------------------------------------------------
ASSETS
September 30, June 30,
1999 1999
----------- -----------
CURRENT ASSETS
<S> <C> <C>
Cash $ 21,998 $ 140,482
----------- -----------
Total Current Assets 21,998 140,482
----------- -----------
PROPERTY AND EQUIPMENT - net of
accumulated depreciation - Note 2 111,539 110,820
----------- -----------
OTHER ASSETS
Mining claims - Note 3 -- --
Oil leases - Note 4 315,540 315,540
Equitable securities - Note 5 50,000 50,000
Deposits 3,333 3,333
----------- -----------
368,873 368,873
----------- -----------
$ 502,410 $ 620,175
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related parties $ 76,449 $ 271,663
Accounts payable - other 79,363 167,361
----------- -----------
Total Current Liabilities 155,812 439,024
----------- -----------
STOCKHOLDERS' EQUITY
Common stock
50,000,000 shares authorized, at $.001 par value;
76,518,072 shares issued
and outstanding at Sept 30;
71,092,712 at June 30 76,518 71,093
Capital in excess of par value 3,686,796 3,397,953
Deficit accumulated during the development stage (3,416,716) (3,287,895)
----------- -----------
Total Stockholders' Equity 346,598 181,151
----------- -----------
$ 502,410 $ 620,175
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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AMBRA RESOURCES GROUP, INC.
(Development Stage Company)
STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 1999 and 1998
and the Period January 27, 1984 (date of inception) to
September 30, 1999
- --------------------------------------------------------------------------------
January 27, 1984
Sept Sept (Date of Inception)
1999 1998 to Sept 30, 1999
------------ ------------ -------------------
REVENUES $ 1,367 $ 1,350 $ 240,045
EXPENSES 130,188 134,008 3,656,761
NET LOSS $ (128,821) $ (132,658) $ (3,416,716)
============ ============ ============
LOSS PER COMMON SHARE
Basic $ -- $ --
------------ ------------
Diluted $ -- $ --
------------ ------------
AVERAGE OUTSTANDING
SHARES
Basic 72,892,000 32,966,756
------------ ------------
Diluted 75,392,000 35,466,756
------------ ------------
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
AMBRA RESOURCES GROUP, INC.
(Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Three Months Ended September 30, 1999
and 1998 and the Period January 27, 1984 (Date
of Inception) to September 30, 1999
- --------------------------------------------------------------------------------
January 27, 1984
Sept Sept (Date of Inception)
1999 1998 to Sept 30, 1999
----------- ----------- -------------------
CASH FLOWS FROM OPERATING
ACTIVITIES
<S> <C> <C> <C>
Net loss $ (128,821) $ (132,658) $(3,416,716)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depletion, depreciation
and amortization 850 775 33,600
Common capital stock issued
for services & expenses 23,000 66,100 2,350,671
Loss of oil leases -- -- 140,510
(Increase) decrease in accounts receivable -- (4,929) (20,071)
(Increase) decrease in security deposits -- (3,333) --
Increase (decrease) in liabilities (11,944) (31,918) 299,359
----------- ----------- -----------
Net Cash Used By Operations (116,915) (105,963) (612,647)
----------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property & equipment (1,569) (1,601) (125,378)
Purchase of oil & gas leases and
mining claims -- -- (97,948)
----------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Net proceeds from sale of capital stock -- 49,423 857,971
----------- ----------- -----------
Net increase (decrease) in cash (118,484) (58,141) 21,998
Cash at beginning of year 140,482 60,034 --
----------- ----------- -----------
Cash at end of year $ 21,998 $ 1,893 $ 21,998
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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AMBRA RESOURCES GROUP, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Company was incorporated under the laws of 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 October 14, 1996 the Company completed a reverse stock split of ten shares of
outstanding shares for one share in connection with a name change to "Ambra
Resources Group, Inc." from "Ambra Royalty, Inc." This report has been prepared
showing after stock split shares with a par value of $0.001 from inception.
The company has been in the development stage since inception and has been
primarily engaged in the business of the acquisition and development of mining
and oil properties.
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 at September 30,
1999.
Office equipment 13,001
Residential rentals 107,877
Less accumulated depreciation (9,339)
--------
111,539
--------
Office equipment is depreciated on the straight line method over seven years and
the residential rentals are depreciated on the straight line method over forty
years.
Earnings Per Share
- ------------------
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding after the stock splits, using the treasury
stock method in accordance with FASB No 128.
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AMBRA RESOURCES GROUP, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 Lease 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 proven 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 claims
acquired are unknown and therefore an estimate of any future cost cannot be
made.
Income Taxes
- ------------
At June 30, 1999, the Company had a net operating loss carry forward of
$3,287,895. The tax benefit from the loss carry forward has been fully offset by
a valuation reserve because the use of the future tax benefit is doubtful. 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 2000
through 2019.
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.
Financial Instruments
- ---------------------
The carrying amounts of financial instruments, including cash, investments in
mining claims and oil leases, and accounts payable, are considered by management
to be their estimated fair values. These values are not necessarily indicative
of the amounts that the Company could realize in a current market exchange.
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<PAGE>
AMBRA RESOURCES GROUP, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
Estimates and Assumptions
- -------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. 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.
3. MINING CLAIMS
On June 20, 1994 the Company purchased three unproven mineral claims, from a
related party, and are identified as Marathon, Marathon 1 and Marathon 2,
containing a total of 32 units, with expiration dates during 2006, which 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.
The claims have not been proven to have a commercially minable ore reserve and
therefore all costs for acquisition exploration and retaining the properties
have been expensed.
A final payment of $10,000cn is due on the claims six months after July 14,
1999.
4. OIL LEASES
<TABLE>
BEAUFORT SEA PROJECT
----------------------
<CAPTION>
<S> <C>
COST
----
On June 9, 1997 the Company purchased a 3.745% working interest 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 other partners in the project are controlled by Exxon Oil Corporation,
however there is no immediate plans to develop the area.
$ 67,913
ALKALI CREEK PROSPECT, PETROLEUM COUNTY, MONTANA
--------------------------------------------------
On May 27, 1997 the Company purchased a 50% working interest in the Alkali Creek
Prospect area, Petroleum County Montana, from Starrock Resources Ltd. ,
consisting 4,987 unproven acres. The terms of the leases begin to expire in 1999
through 2004 and provide for royalties of 12.5% to 25% of production.
The leases have not been proven to have commercially recoverable reserves and
therefore the acquisition and exploration costs have been expensed. 0
</TABLE>
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<TABLE>
<CAPTION>
AMBRA RESOURCES GROUP, INC.
(Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
BOONESVILLE - WISE COUNTY, TEXAS
- --------------------------------
<S> <C>
On July 11, 1997 the Company purchased a 10% working interest and a 8% net
revenue interest in an oil lease known as Boonesvile #1 Wise County, Texas. A
recent accident has rendered the well inoperative and the operator has made a
claim of damages from the insurance company. The amount of the claim that may be
paid is undeterminable at the report date. All prior costs have been expensed.
0
CESSFORD - ALBERTA, CANADA
- --------------------------
On July 17, 1997 the Company purchased a 20% interest in a proven oil lease in
the Cessford Area, Alberta, Canada by payment of $ 36,627 and 1,230,000 shares
of the Company. The Company has participated in the initial test well costs
which were expensed. On June 3, 1998 the parties mutually agreed to reduced the
20% interest to 5% resulting in a credit of $96,995cn, to the Company, to be
used in the future drilling programs .
247,627
---------
$ 315,540
=========
5. EQUITABLE SECURITIES
On April 20, 1999 the Company purchased 50% of the outstanding stock of Venture
Oil and Gas Inc. by the issuance of 1,250,000 common shares of the Company.
Venture Oil and Gas Inc. has interests in various proven and unproven oil
properties, some of which have the well equipment installed. Some of the wells
are near the production stage, however additional costs will be required to
bring them into production.
6. STOCK OPTIONS
The Company has granted a 2,500,000 share stock option to officers of the
Company at $.10 per share which will expire
January 1, 2000.
7. RELATED PARTY TRANSACTIONS
Officers and directors have received 9,983,460 common shares of the Company for
services and expenses. See note 5 regarding stock options granted to officers.
The Company rents office space from a related party.
8. RETURN OF CAPITAL STOCK ISSUED
Pursuant to a resolution of the board of director's dated November 2, 1995, the
board authorized the issuance of 1,173,908 shares of common stock to Gary Worley
(former officer and director) and/or his assigns as full consideration for
services, and the use of an office, furniture, and other expenses. Subsequent to
the issuance of the stock and because of a dispute over the transaction Mr.
Worley has agreed to return the stock which has not been done. The Company will
continue to show the stock as outstanding until it is returned for cancellation.
159,627
</TABLE>
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AMBRA RESOURCES GROUP, INC.
( Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
9. GOING CONCERN
The Company intends to continue to acquire other interests in various business
opportunities which, in the opinion of management, will provide a profit to the
Company.
Continuation of the Company as a going concern is dependent upon obtaining the
additional working capital necesssary to fund the projects management has
undertaken and they have developed a strategy, which they believes will
accomplish this through additional equity funding .
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
- --------------------------------------------------------------------------------
Overview
Ambra Royalty, Inc. (the "Registrant" or "Company") was incorporated under the
laws of the State of Utah on January 27, 1984. The registrant was initially
organized primarily to hold overriding royalties of both producing and
non-producing oil and gas properties. However, the Company's articles of
incorporation authorize it to engage in all aspects of the oil and gas business
and for any other lawful purpose.
In connection with its corporate purpose, the Registrant was formed as a
wholly-owned subsidiary of Ambra Oil and Gas Company ("Ambra Oil") for the
specific purpose of holding the overriding royalty interests which were
previously owned by Ambra Oil.
In 1989, the Company transferred its remaining assets in exchange for
cancellation of the Company's debt and ceased operations. After 1989 the
Registrant has been engaged in the business of acquiring , exploring, and
developing mineral properties and the Registrant intends to take advantage of
any reasonable business proposal presented which management believes will
provide the Company and its stockholders with a viable business opportunity. The
board of directors will make the final approval in determining whether to
complete any acquisition, and unless required by applicable law, the articles of
incorporation or bylaws or by contract, stockholders' approval will not be
sought.
The investigation of specific business opportunities and the negotiation,
drafting, and execution of relevant agreements, disclosure documents, and other
instruments will require substantial management time and attention and will
require the Company to incur substantial costs for payment of accountants,
attorneys, and others. If a decision is made not to participate in or complete
the acquisition of a specific business opportunity, the costs incurred in a
related investigation will not be recoverable. Further, even if an agreement is
reached for the participation in a specific business opportunity by way of
investment or otherwise, the failure to consummate the particular transaction
may result in the loss to the Company of all related costs incurred. In the past
the board of directors has approved a resolution authorizing the Registrant to
issue shares of its common stock as consideration for monies advanced or
services rendered on behalf of the Company.
Currently, management is not able to determine the time or resources that will
be necessary to complete the participation in or acquisition of any future
business prospect.
Acquisition of Property - Land - Novia Scotia, Canada
On December 8, 1994, the Registrant entered into an option purchase agreement by
the issuance of 50,000 shares of it's common stock (non refundable), to purchase
property containing 1000 acres of improved and unimproved land, lots, two homes,
and a recreation building located at Clam Bay, Halifax County, Providence of
Nova Scotia, Canada at a purchase price of $2,300,000. In late 1995 the option
expired due to non-performance by the Registrant, however, prior to the
expiration the Registrant purchased two of the lots, and their improvements.
Acquisition of Property - Mining Claims - Province of British Columbia, Canada
On June 20, 1994, the Registrant purchased three mineral claims, from a related
party, by the issuance of 200,000 common shares of its stock, and are identified
as Marathon, Marathon 1 and Marathon 2, containing a total of 32 units, with an
expiration date of February 24, 2006, which are located near Cowichan Lake in
-12-
<PAGE>
the Province of British Columbia, Canada. The claims are located within the
Sicker Volcanic Belt on Vancouver Island in an active gold mining area.
The claims have not been proven to have a commercially minable ore reserve and
therefore all costs for acquisition exploration and retaining the properties
have been expensed.
A final payment of $10,000cn is due on the claims six months after July 14,
1999.
Acquisition of property - Oil Leases - Beaufort Sea Project
On June 9, 1997 the Company purchased a 3.745% working interest 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 other partners in the project are controlled by Exxon Oil Corporation,
however there is no immediate plans to develop the area.
The terms of the purchase provides for a payment of $15,000 and the issuance of
1,050,000 shares of the Company.
Acquisition of Property - Oil Leases - Alkali Creek Prospect, Petroleum County,
Montana
On May 27, 1997 the Company purchased a 50% working interest in the Alkali Creek
Prospect area, Petroleum County Montana, from Starrock Resources Ltd. ,
consisting 4,987 unproven acres. The terms of the leases begin to expire in 1999
through 2004 and provide for royalties of 12.5% to 25% of production.
The leases have not been proven to have commercially recoverable reserves and
therefore the acquisition and exploration costs have been expensed.
Acquisition of Property - Boonesville - Wise County, Texas
On July 11, 1997 the Company purchased a 10% working interest and a 8% net
revenue interest in an oil lease known as Boonesvile #1 Wise County, Texas for
$2,700. A recent accident has rendered the well inoperative and the operator has
made a claim for damages from the insurance company. The amount of the claim
that may be paid is undeterminable at the report date. All prior costs have been
expensed.
Acquisition of Property - Cessford - Alberta, Canada
On July 17, 1997 the Company purchased a 20% interest in an oil lease in the
Cessford Area, Alberta, Canada by payment of $ 36,627 and 1,230,000 shares of
the Company. The Company has participated in the initial test well costs which
were expensed. On June 3, 1998 the parties mutually agreed to reduced the 20%
interest to 5% resulting in a credit of $96,995cn, to the Company, to be used in
the future drilling programs .
Liquidity and Capital Resources
The Registrant has plans to further develop its properties and to seek others
which will provide a profit to the Company however there is insufficient working
capital to be successful in this effort.
-13-
<PAGE>
Results of Operations
Since the Company ceased operations in 1989, its only activity, to date has
involved the investigation and purchase of potential business opportunities.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
During July through September 1999, the Registrant issued 5,425,360 common
shares for services and payment of debt.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
-14-
<PAGE>
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
AMBRA RESOURCES GROUP, INC.
(Registrant)
Dated: November 9,1999 By /s/John M. Hickey
-------------- ------------------
John M. Hickey, President
-15-
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 21988
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21998
<PP&E> 120878
<DEPRECIATION> 9339
<TOTAL-ASSETS> 502410
<CURRENT-LIABILITIES> 155812
<BONDS> 0
0
0
<COMMON> 76518
<OTHER-SE> 270080
<TOTAL-LIABILITY-AND-EQUITY> 502410
<SALES> 1387
<TOTAL-REVENUES> 1387
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 130188
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 128821
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</TABLE>
