SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 OR THE TRANSITION PERIOD FROM __________ TO
__________
Commission file number 0-8874
Amber Resources Company of Colorado
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(Exact name of registrant as specified in its charter)
Delaware 84-0750506
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
370 17th Street, Suite 4300
Denver, Colorado 80202
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(Address of principal executive offices, including Zip Code)
(303) 293-9133
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(Registrant's telephone number, including area code)
Amber Resources Company
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Former Address: 475 17th Street, Suite 1400
Denver, CO 80202
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), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
4,666,185 shares of common stock $.0625 par value were outstanding as of
February 11, 2005.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
ITEM 1. Financial Statements
Balance Sheets
December 31, 2004 (unaudited) and June 30, 2004 ....... 3
Statements of Operations and
Accumulated Deficit for the Three Months
Ended December 31, 2004 and 2003 (unaudited) .......... 4
Statements of Operations and
Accumulated Deficit for the Six Months
Ended December 31, 2004 and 2003 (unaudited)........... 5
Statements of Cash Flows for the Six Months
Ended December 31, 2004 and 2003 (unaudited) .......... 6
Notes to Financial Statements (unaudited) ............. 7
ITEM 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operation ..................... 9
ITEM 3. Quantitative and Qualitative Disclosures About
Market Risk ............................................. 10
ITEM 4. Controls and Procedures ................................. 10
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings ....................................... 11
ITEM 2. Unregistered Sales of Equity Securities and Use
of Proceeds ............................................. 11
ITEM 3. Defaults upon Senior Securities ......................... 11
ITEM 4. Submission of Matters to a Vote of Security Holders ..... 11
ITEM 5. Other Information ....................................... 11
ITEM 6. Exhibits ................................................ 11
Signatures .............................................. 13
The terms "Amber," "Company," "we," "our," and "us" refer to Amber Resources
Company of Colorado unless the context suggests otherwise.
2
AMBER RESOURCES COMPANY OF COLORADO
BALANCE SHEETS
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December 31, June 30,
2004 2004
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ASSETS
Current Assets:
Cash $ 410 $ 579
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Total current assets 410 579
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Undeveloped offshore California properties 5,006,560 5,006,560
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$ 5,006,970 $ 5,007,139
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ - $ -
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Total current liabilities - -
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Stockholders' Equity:
Preferred stock, $.10 par value; authorized
5,000,000 shares of Class A convertible
preferred stock, none issued - -
Common stock, $.0625 par value; authorized
25,000,000 shares, issued 4,666,185 shares
at December 31, 2004 and 4,666,185 at
June 30, 2004 291,637 291,637
Additional paid-in capital 5,755,232 5,755,232
Accumulated deficit (934,366) (882,571)
Advance to parent (105,533) (157,159)
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Total stockholders' equity 5,006,970 5,007,139
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Commitments $ 5,006,970 $ 5,007,139
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See accompanying notes to consolidated financial statements.
3
AMBER RESOURCES COMPANY OF COLORADO
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
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Three Months Ended
December 31,
2004 2003
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Revenue: $ - $ -
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Total revenue - -
Operating expenses:
Exploration expenses - 8
General and administrative, including
$25,000 in 2004 and 2003 to parent 28,140 25,059
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Total operating expenses 28,140 25,067
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Net loss (28,140) (25,067)
Accumuulated deficit at beginning of
the period $ (906,226) (800,114)
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Accumulated deficit at end of the period (934,366) (825,181)
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Basic loss per common share $ (0.01) $ (0.01)
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Weighted average number of common
shares outstanding 4,666,185 4,666,185
=========== ===========
See accompanying notes to consolidated financial statements.
4
AMBER RESOURCES COMPANY OF COLORADO
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
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Six Months Ended
December 31,
2004 2003
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Revenue: $ - $ -
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Total revenue - -
Operating expenses:
Exploration expenses (1,504) 1,449
General and administrative, including
$50,000 in 2004 and 2003 to parent 53,299 50,469
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Total operating expenses 51,795 51,918
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Net loss (51,795) (51,918)
Accumulated deficit at beginning of
the year (882,571) (773,263)
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Accumulated deficit at end of the period $ (934,366) $ (825,181)
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Basic loss per common share $ (0.01) $ (0.01)
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Weighted average number of common
shares outstanding 4,666,185 4,666,185
=========== ===========
See accompanying notes to consolidated financial statements.
5
AMBER RESOURCES COMPANY OF COLORADO
STATEMENTS OF CASH FLOWS
(Unaudited)
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Six Months Ended
December 31,
2004 2003
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Cash flows from operating activities:
Net loss $ (51,795) $ (51,918)
Net changes in operating assets and
operating liabilities - -
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Net cash used in operating activities (51,795) (51,918)
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Net cash used in investing activities - -
Cash flows from financing activities:
Changes in accounts receivable from and
accounts payable to parent 51,626 (51,799)
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Net decrease in cash (169) (119)
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Cash at beginning of period 579 867
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Cash at end of period $ 410 $ 748
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See accompanying notes to consolidated financial statements.
6
AMBER RESOURCES COMPANY OF COLORADO
(A Subsidiary of Delta Petroleum Corporation)
Notes to Financial Statements for the Six Months Ended
December 31, 2004 and 2003 (Unaudited)
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(1) Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and, in accordance with those
rules, do not include all the information and notes required by generally
accepted accounting principles for complete financial statements. As a
result, these unaudited financial statements should be read in conjunction
with Amber Resources Company of Colorado's ("the Company") audited financial
statements and notes thereto filed with the Company's most recent annual
report on Form 10-K. In the opinion of management, all adjustments,
consisting only of normal recurring accruals, considered necessary for a fair
presentation of the financial position of the Company and the results of its
operations have been included. Operating results for interim periods are not
necessarily indicative of the results that may be expected for the complete
fiscal year. For a more complete understanding of the Company's operations
and financial position, reference is made to the financial statements of the
Company, and related notes thereto, filed with the Company's annual report on
Form 10-K for the year ended June 30, 2004, previously filed with the
Securities and Exchange Commission.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates include oil and gas reserves, oil and
gas properties, income taxes, derivatives, contingencies and litigation.
Actual results could differ from these estimates.
Liquidity and Ownership
The Company has incurred losses from operations over the past several
years coupled with significant deficiencies in cash flow from operations for
the same period. As of December 31, 2004, the Company had working capital of
$410. This factor, among others, may indicate that without increased cash
flow from sale of oil and gas properties or additional financing, the Company
may not be able to meet its obligations in a timely manner. Currently, the
Company is 91.68% owned by Delta Petroleum Corporation (Delta) and depends on
Delta to fund its operations. The Company believes that proceeds from the
sale of undeveloped properties, advances from Delta and other sources of funds
will be adequate to fund our operating expenses and satisfy our other current
liabilities over the next year or longer.
7
AMBER RESOURCES COMPANY OF COLORADO
(A Subsidiary of Delta Petroleum Corporation)
Notes to Financial Statements for the Six Months Ended
December 31, 2004 and 2003 (Unaudited)
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(2) Unproved Undeveloped Offshore California Properties
The Company has ownership interests ranging from .87% to 6.97% in three
unproved undeveloped offshore California oil and gas properties with aggregate
carrying values of $5,006,560 on December 31, 2004 and June 30, 2004. These
property interests are located in proximity to existing producing federal
offshore units near Santa Barbara, California and represent the right to
explore for, develop and produce oil and gas from offshore federal lease
units. Preliminary exploration efforts on these properties have occurred and
the existence of substantial quantities of hydrocarbons has been indicated.
The recovery of the Company's investment in these properties will require
extensive exploration and development activities (and costs) that cannot
proceed without certain regulatory approvals that have been delayed and is
subject to other substantial risks and uncertainties.
Based on indications of levels of hydrocarbons present from drilling
operations conducted in the past, the Company believes the fair values of its
property interests are in excess of their carrying values at December 31, 2004
and that no impairment in the carrying values has occurred. Pursuant to a
ruling in California v. Norton, later affirmed by the 9th Circuit Court of
Appeals, the U.S. Government is required to make a consistency determination
relating to our 1999 lease suspension requests under a 1990 amendment to the
Coastal Zone Management Act. In the event that there is some future adverse
ruling under the Coastal Zone Management Act that we decide not to appeal or
that we appeal without success, it is likely that some or all of our interests
in these leases would become impaired and written off at that time. It is
also possible that other events could occur during the Coastal Zone Management
Act review or appellate process that would cause our interests in the leases
to become impaired, and we will continuously evaluate those factors as they
occur. On January 9, 2002, the Company and several other plaintiffs filed a
lawsuit in the United States Court of Federal Claims in Washington, D.C.
alleging that the U.S. Government has materially breached the terms of forty
undeveloped federal leases, some of which are part of our Offshore California
properties. See disclosure in Item 1 of Part II.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
The statements contained in this report which are not historical fact are
"forward looking statements" that involve various important risks,
uncertainties and other factors which could cause the Company's actual results
to differ materially from those expressed in such forward looking statements.
These factors include, without limitation, the risks and factors set forth
below as well as other risks previously disclosed in the Company's annual
report on Form 10-K.
Critical Accounting Policies and Estimates
The discussion and analysis of the Company's financial condition and
results of operations were based upon the financial statements, which have
been prepared in accordance with accounting principles generally accepted in
the United States. The preparation of these financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses. Our significant accounting policies are
described in Note 1 to our financial statements filed in Form 10-K for our
fiscal year ended June 30, 2004. In response to SEC Release No. 33-8040,
"Cautionary Advise Regarding Disclosure About Critical Accounting Policies,"
we have identified certain of these policies as being of particular importance
to the portrayal of our financial position and results of operations and which
require the application of significant judgment by management. We analyze our
estimates, including those related to oil and gas reserves, oil and gas
properties, income taxes, derivatives, contingencies and litigation, and base
our estimates on historical experience and various other assumptions that we
believe reasonable under the circumstances. Actual results may differ from
these estimates under different assumptions or conditions. We believe that
our critical accounting policies affect our more significant judgments and
estimates used in the preparation of the Company's financial statements.
Background
Amber Resources Company of Colorado ("Amber," "the Company," "we," "us"
and "our") was incorporated in January, 1978, and is principally engaged in
acquiring, exploring and developing oil and gas properties. We own interests
in undeveloped oil and gas properties offshore California, near Santa Barbara.
Liquidity and Capital Resources.
At December 31, 2004, we had working capital of $410 compared to working
capital of $579 at June 30, 2004.
We do not currently have a credit facility with any bank and we have not
determined the amount, if any, that we could borrow against our existing
properties.
We believe that proceeds from the sale of properties, the repayment of
advances from Delta and other sources of funds will be adequate to fund our
operating expenses and satisfy our other current liabilities over the next
year or longer.
9
Unproved Undeveloped Offshore California Properties
We have ownership interests ranging from .87% to 6.97% in three unproved
undeveloped offshore California oil and gas properties with an aggregate
carrying value of $5,006,560 on both December 31, 2004 and June 30, 2004.
These property interests are located in proximity to existing producing
federal offshore units near Santa Barbara, California and represent the right
to explore for, develop and produce oil and gas from offshore federal lease
units. Preliminary exploration efforts on these properties have occurred and
the existence of substantial quantities of hydrocarbons has been indicated.
The recovery of our investment in these properties will require extensive
exploration and development activities (and costs) that cannot proceed without
certain regulatory approvals that have been delayed and is subject to other
substantial risks and uncertainties.
Results of Operations
Net losses were $28,140 and $25,068 for the three months ended December
31, 2004 and 2003. We reported net losses of $51,795 and $51,918 for the six
months ended December 31, 2004 and 2003.
As we sold all of our producing properties to Delta on July 1, 2001,
there was no revenue during the two six month periods. Also, because of the
sale of the properties, there were no lease operating expenses or depletion.
For the three month periods ended December 31, 2004 and 2003, exploration
expenses were zero and $8 respectively. During the six months ended December
31, 2004, exploration expenses were $(1,504) and $1,449 in the 2003 period.
For the three month periods ended December 31, 2004 and 2003, general and
administrative expenses were $28,140 and $25,060 and for the six month periods
ended December 31, 2004 and 2003 general and administrative expenses were
$53,299 and $50,469. The majority of the expense in all periods is a
management fee paid to our parent of $25,000 per quarter.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the potential loss arising from adverse changes in market
rates and prices, such as foreign currency exchange and interest rates and
commodity prices. We do not use financial instruments to any degree to manage
foreign currency exchange and interest rate risks and do not hold or issue
financial instruments to any degree for trading purposes. All of our revenue
and related receivables are payable in U.S. dollars.
ITEM 4. CONTROLS AND PROCEDURES
As of December 31, 2004, under the supervision and with the participation
of the Company's Chief Executive Officer and the Chief Financial Officer,
management has evaluated the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on that evaluation, the
Chief Executive Officer and the Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective as of December 31,
2004. There were no changes in internal control over financial reporting that
occurred during the fiscal quarter covered by this report that have materially
affected, or are reasonably likely to affect, the Company's internal control
over financial reporting.
10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On January 9, 2002, we and several other plaintiffs filed a lawsuit in
the United States Court of Federal Claims in Washington, D.C. alleging that
the U.S. Government has materially breached the terms of forty undeveloped
federal leases, some of which are part of our Offshore California properties.
The Complaint is based on allegations by the collective plaintiffs that the
United States has materially breached the terms of certain of their Offshore
California leases by attempting to deviate significantly from the procedures
and standards that were in effect when the leases were entered into, and by
failing to carry out its own obligations relating to those leases in a timely
and fair manner. More specifically, the plaintiffs have alleged that the
judicial determination in the California v. Norton case that a 1990 amendment
to the Coastal Zone Management Act required the Government to make a
consistency determination prior to granting lease suspension requests in 1999
constitutes a material change in the procedures and standards that were in
effect when the leases were issued. The plaintiffs have also alleged that the
United States has failed to afford them the timely and fair review of their
lease suspension requests which has resulted in significant, continuing and
material delays to their exploratory and development operations.
The suit seeks compensation for the lease bonuses and rentals paid to the
Federal Government, exploration costs and related expenses. The total amount
claimed by all lessees for bonuses and rentals exceeds $1.2 billion, with
additional amounts for exploration costs and related expenses. In addition,
our claim for exploration costs and related expenses will also be substantial.
In the event, however, that we receive any proceeds as the result of such
litigation, we will be obligated to pay a portion of any amount received by us
to landowners and other owners of royalties and similar interests, and to pay
expenses of litigation and to fulfill certain pre-existing contractual
commitments to third parties. Although the computation of the various amounts
that we would be required to pay to landowners and other owners of royalties
and similar interests is dependent upon facts and circumstances that are not
yet known, it is possible that they may be as much as twenty percent of any
proceeds that we might ultimately obtain.
The Federal Government has not yet filed an answer in this proceeding
pending its motion to dismiss the lawsuit, which motion has not yet been heard
by the court.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None.
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.
Exhibits are as follows:
31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. Filed
herewith electronically.
11
31.2 Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. Filed
herewith electronically.
32.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350. Filed herewith electronically.
32.2 Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350. Filed herewith electronically.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AMBER RESOURCES COMPANY OF COLORADO
(Registrant)
Date: February 14, 2005 By: /s/ Roger A. Parker
Roger A. Parker
President and Chief Executive Officer
By: /s/ Kevin K. Nanke
Kevin K. Nanke, Chief Financial
Officer and Treasurer
13