10-Q 1 ambra10q3312001.txt QUARTERLY REPORT MARCH 31, 2001 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 March 31, 2001 -------------- ( ) 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 April 14, 2001 -------------------------- -------------------------------- Common Stock, $0.001 149,138,322 -1-

PART I - FINANCIAL INFORMATION -------------------------------------------------------------------------------- ITEM 1. FINANCIAL STATEMENTS -------------------------------------------------------------------------------- The accompanying balance sheets of Ambra Resources Group, Inc. ( development stage company) at March 31, 2001 and June 30, 2000, and the statements of operations and cash flows for the three and nine months ended March 31, 2001 and 2000 and the period from January 27, 1984 to March 31, 2001, 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 March 31, 2001, are not necessarily indicative of the results that can be expected for the year ending June 30, 2001. -3-

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 and 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. The company has been in the exploratory and 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: Office equipment $ 136,811 Residential rentals 142,396 Less accumulated depreciation (31,172) --------- 248,035 --------- Office equipment and computers are depreciated on the straight line method over five years and the residential rentals are depreciated on the straight line method over forty years. -8- AMBRA RESOURCES GROUP, INC. ( Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Earnings Per Share ------------------ Earnings (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. 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 proven 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 and the oil leases acquired are unknown and therefore an estimate of any future cost cannot be made. Income Taxes ------------ At March 31, 2001, the Company had a net operating loss carry forward of $4,148,014. The tax benefit of $1,244,404 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful since 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 2022. -9- AMBRA RESOURCES GROUP, INC. ( Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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. 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. 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. 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. Comprehensive Income -------------------- The Company has adopted Statement of Financial Accounting Standards No. 130. The adoption of this standard had no impact on the total stockholder's equity. 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. -10- AMBRA RESOURCES GROUP, INC. ( Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) -------------------------------------------------------------------------------- 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. 4. OIL LEASES BEAUFORT SEA PROJECT 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 Exxon Oil Corporation, Anderson Oil, and Gulf Canada Resources. $ 67,913 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 reduce the 20% interest to 5% resulting in a credit of $96,995cn, to the Company which was used in the drilling programs . Six of the seven wells drilled proved worthy of building a pipeline to a central gathering system. During March 2000 the Company completed an agreement with Bigstone Energy to construct a pipe line to service the wells. The Company issued 4,500,000 shares of its common capital stock as payment for its share which is shown in the balance sheet under gas lines. During September 2000 the completed gas line was sold for $711,000cn and a 5.8% working interest in all projects. During February 2001 the Company sold its interest in the Cessford project for $2,900,000cn. -11- AMBRA RESOURCES GROUP, INC. ( Development Stage Company) NOTES TO FINANCIAL STATEMENTS (Continued) -------------------------------------------------------------------------------- 5. EQUITABLE SECURITIES The Company purchased 75% of the outstanding stock of Venture Oil and Gas Inc. by the issuance of 2,250,000 common shares of the Company and cash of $140,000. 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. On the date of this report financial statements of Venture Oil and Gas were not available for inclusion in this report and therefore consolidated financial statements have not been prepared. 6. DEVELOPMENT AND SALE OF WEB SITES During the prior fiscal year the Company entered a partnership arrangement to develop and sell web sites. On the date of this report the activity was in the development stage and all costs have been expensed. 7. RELATED PARTY TRANSACTIONS Officers and directors have received 18,343,460 common shares of the Company for services and expenses. . The Company rents office space from a related party. Other related party transactions are shown in the balance sheet under accounts payable. -12- -------------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION -------------------------------------------------------------------------------- Overview Ambra Resources Group, 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 - 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 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. -13- 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. Acquisition of Property - 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 reduce the 20% interest to 5% resulting in a credit of $96,995cn, to the Company which was used in the drilling programs . Six of the seven wells drilled proved worthy of building a pipeline to a central gathering system. During March 2000 the Company completed an agreement with Bigstone Energy to construct a pipe line to service the wells. The Company issued 4,500,000 shares of its common capital stock as payment for its share which is shown in the balance sheet under gas lines. During September 2000 the completed gas line was sold for $711,000cn and a 5.8% working interest in all projects. During February 2001 the Company sold its interest in the Cessford project for $2,900,000cn. . Acquisition of Equitable Securities The Company purchased 75% of the outstanding stock of Venture Oil and Gas Inc. by the issuance of 2,250,000 common shares of the Company and cash of $140,000. 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. On the date of this report financial statements of Venture Oil and Gas were not available for inclusion in this report and therefore consolidated financial statements have not been prepared. Acquisition of web sites During the prior fiscal year the Company entered a partnership arrangement to develop and sell web sites. On the date of this report the activity was in the development stage and all costs have been expensed. Liquidity and Capital Resources The Registrant has plans to further develop its properties which will require a substantial part of its current working capital. -14- 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 January through March 2001 , the Registrant issued 3,630,000 regulation S common shares for services and expenses with a value of $181,500. -------------------------------------------------------------------------------- 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. -15- 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: April 20, 2001 By /s/ John M. Hickey -------------------------------- John M. Hickey, President -16-

AMBRA RESOURCES GROUP INC 10-Q