10QSB 1 form10-qsb_214441.txt FORM 10-QSB 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 September 30, 2006 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From __________ to __________ Commission File Number: 0-9500 MOUNTAINS WEST EXPLORATION, INC. (Exact name of small business issuer as specified in its charter) New Mexico 85-0280415 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 3111 N. Seminary, Suite 1N, Chicago, Illinois 60657 --------------------------------------------------- (Address of principal executive offices) Issuer's telephone number, including area code: (312) 952-7100 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] The number of shares of the issuer's common stock, par value $.001 per share, outstanding at November 15, 2006, was 1,300,018 shares. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] 1 TABLE OF CONTENTS PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements 3 Balance Sheets September 30, 2006 (unaudited) and December 31, 2005 3 Statements of Operations for the Three-Months and Nine-Months ended September 30, 2006 (unaudited) 4 Statements of Stockholders Equity (Deficit) September 30, 2006 (unaudited) 5 Statements of Cash Flows for the Three-Months and Nine-Months ended September 30, 2006 (unaudited) 6 Notes to Consolidated Financial Statements (unaudited) 7 Item 2. Management's Discussion and Analysis on Plan of Operation 9 Item 3. Controls and Procedures 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13 Item 3. Defaults Upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6. Exhibits 13 Signatures 15 2 PART I. FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS MOUNTAINS WEST EXPLORATION, INC. FINANCIAL STATEMENTS FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED) Unaudited Audited September 30, December 31, 2006 2005 -------------- ------------- ASSETS Current Assets: Cash $ 2,300 $ - -------------- ------------- Total Current Assets 2,300 - -------------- ------------- Other Assets: Deposit for Acquisition 250,000 - -------------- ------------- Total Other Assets 250,000 - -------------- ------------- TOTAL ASSETS $ 252,300 - ============== ============= LIABILITIES ANDSTOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities: Accounts Payable 116,930 25,450 Accrued Interest 19,958 4,433 Notes Payable - Convertible Debentures 347,500 - Notes Payable - Related Party 103,000 197,000 -------------- ------------- Total Current Liabilities 587,388 226,883 -------------- ------------- Stockholders Equity (Deficit) Common stock, no par value, 50,000,000 1,582,786 1,582,786 shares authorized, 1,300,018 shares issued and outstanding September 30, 2006 and December 31, 2005 respectively Retained Earnings (Deficit) (1,917,874) (1,809,669) -------------- ------------- Total Stockholders' Equity (Deficit) (335,088) (226,883) -------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 252,300 $ - ============== ============= 3 MOUNTAINS WEST EXPLORATION, INC Statement of Operations For the Three-Months and Nine- Months ended September 30, 2006 (Unaudited)
Three-Months Ended Nine-Months Ended -------------------------- -------------------------- September 30, September 30, 2006 2005 2006 2005 ---------- ----------- ---------- ---------- CONTINUED OPERATIONS REVENUE: Revenue $ - $ - $ - $ - Total Income - - - - EXPENSES: Operating Expenses - - 615 - Administation Expenses 18,148 - 92,065 - TOTAL EXPENSES 18,148 - 92,680 - OTHER EXPENSES: Interest Expense 5,175 - 15,525 - TOTAL OTHER EXPENSES 5,175 - 15,525 - NET (LOSS) FROM CONTINUED $ (23,323) $ - $(108,205) $ - OPERATIONS ============ =========== ============ ========== DISCONTINUED OPERATIONS REVENUE: Revenue - - - 111,520 Total Income - - - 111,520 EXPENSES: Operating Expenses - - - 33,431 Administration Expenses - 3,466 - 30,637 Mineral Interest Transferred - - - 12,740 Mineral Leases Expired - - - 19,308 Write off of assets - - - 2,370 TOTAL EXPENSES - 3,466 - 98,486 NET INCOME FROM DISCONTINUED $ - $ (3,466) $ - $ 13,034 OPERATIONS ============ =========== ============ ========== PER SHARE INFORMATION Weighted average number of common shares outstanding 1,300,018 999,994 1,300,018 999,994 Net Loss per common share $ (0.02) $ - $ (0.08) $ 0.01 ============ =========== ============ ==========
4 MOUNTAINS WEST EXPLORATION, INC. Stockholders' Equity (Deficit) September 30, 2006 (Unaudited)
Deficit COMMON STOCKS Accum. ------------------------ During Total Development Stockholders' # OF SHARES AMOUNT STAGE EQUITY ----------- ----------- ------------ ------------- Balance - December 31, 2001 740,409 1,554,786 (1,573,676) (18,890) ----------- ----------- ------------ ------------- Net Loss for Year - - (4,094) (4,094) ----------- ----------- ------------ ------------- Balance - December 31, 2002 740,409 1,554,786 (1,577,770) (22,984) ----------- ----------- ------------ ------------- Net Loss for Year - - (16,483) (16,483) ----------- ----------- ------------ ------------- Balance - December 31, 2003 740,409 1,554,786 (1,594,253) (39,467) ----------- ----------- ------------ ------------- Issuance of stock for cash 259,609 25,000 - 25,000 Net Profit for the Year - - 1,433 1,433 ----------- ----------- ------------ ------------- Balance - December 31, 2004 1,000,018 1,579,786 (1,592,820) (13,034) ----------- ----------- ------------ ------------- Issuance of stock for cash 300,000 3,000 - 3,000 Net Loss for Year - - (216,849) (216,849) ----------- ----------- ------------ ------------- Balance - December 31, 2005 1,300,018 1,582,786 (1,809,669) (226,883) ----------- ----------- ------------ ------------- Net Loss for Period - - (108,205) (108,205) ----------- ----------- ------------ ------------- Balance - September 30, 2006 1,300,018 $1,582,786 $(1,917,874) $(335,088) =========== =========== ============ ============= All shares of stock reflects a 1 for 50 reverse split in April 2005
5 MOUNTAINS WEST EXPLORATION, INC. Statements of Cash Flow For Nine-Months ended September 30, 2006 (Unaudited) Nine-Months Ended September 30, 2006 --------------------------- 2006 2005 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Profit/Loss $(108,205) 13,034 Adjustments to reconcile net loss to net cash usedby operating activities Changes in operating assets and liabilities (Increase) in Other Assets - 34,418 Increase (Decrease) in Accounts ------------ ------------ Payable and Accruals 107,005 (78,089) NET CASH USED IN OPERATING ACTIVITIES (1,200) (30,637) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Payment for Deposit on Acquisition (250,000) - ------------ ------------ NET CASH USED FOR INVESTING ACTIVITIES (250,000) - ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Notes Payable - Convertible 347,500 - Payment made on Note Payable - Related Party (197,000) - Proceeds from Notes Payable - Related Party 103,000 - NET CASH USED FOR FINANCING ACTIVITIES 253,500 - ------------ ------------ NET INCREASE IN CASH & CASH EQUIVALENTS 2,300 (30,637) BEGINNING CASH & CASH EQUIVALENTS - 30,637 ------------ ------------ ENDING CASH & CASH EQUIVALENTS $ 2,300 - ============ ============ SUPPLEMENTAL DISCLOSUE OF CASH FLOW INFORMATION Cash paid for interest $ - $ 297 ============ ============ Cash paid for Income Taxes $ - - ============ ============ 6 MOUNTAINS WEST EXPLORATION, INC. Notes to Financial Statements September 30, 2006 (Unaudited) Note 1 - PRESENTATION OF INTERIM INFORMATION: In the opinion of the management of Mountains West Exploration, Inc. the accompanying unaudited financial statements include all normal adjustments considered necessary to present fairly the financial position as of September 30, 2006 and the results of operations for the three-months and nine-months ended September 30, 2006 and 2005, and the related cash flows for the three-months and nine-months ended September 30, 2006 and 2005. Interim results are not necessarily indicative of results for a full year. The financial statements and notes are presented as permitted by Form 10-QSB, and do not contain certain information included in the Company's audited financial statements and notes for the fiscal year ended December 31, 2005. Note 2 - GOING CONCERN: The Company's financial statements have been presented on the basis that it is a going concern, which contemplated the realization of assets and the satisfaction of liabilities in the normal course of business. The current liabilities exceed the current assets by $585,088 and have an accumulated deficit of $1,917,874. The Company's ability to continue as a going concern is dependent upon its ability to develop additional sources of capital or locate a merger candidate and ultimately, achieve profitable operations. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. Management is seeking new capital to revitalize the Company. Note 3 - NOTES PAYABLE - RELATED PARTY: Following is the summary of Notes Payable at September 30, 2006: LD Acquisition, LLC - A one year loan at 18% interest per annum. $103,000 ======= 7 MOUNTAINS WEST EXPLORATION, INC. Notes to Financial Statements September 30, 2006 (Unaudited) Note 4 - NOTES PAYABLE - CONVERTIBLE DEBENTURE: On September 30, 2006 the Company had the following Convertible Debentures: Note payable to William Kargle, bearing 7% interest per annum, due March 1, 2007 unless sooner converted. $ 35,000 Note payable to Thomas Case, bearing 7% interest per annum, due March 1, 2007, unless sooner converted. 25,000 Note payable to Northwest Cedar Products, bearing 7% interest per annum, due March 1, 2007, unless sooner converted. 62,500 Note payable to Anthony Gagliardi, bearing 7% interest per annum, due March 1, 2007, unless sooner converted. 25,000 Note payable to Albert Pick III, bearing 7% interest per annum, due March 1, 2007, unless sooner converted. 100,000 Note payable to Kenneth White, bearing 7% interest per annum, due March 1, 2007, unless sooner converted. 15,000 Note payable to William Martinez, bearing 7% interest per annum, due March 1, 2007, unless sooner converted. 45,000 Note payable to Jack Clark, bearing 7% interest per annum, due March 1, 2007, unless sooner converted. 25,000 Note payable to Randy Holzhauler, bearing 7% interest per annum, due March 1, 2007, unless sooner converted. 15,000 -------- Total Convertible Debentures $347,500 These notes are all convertible at a 25% discount to the Private Placement offering price of approximately $1.25 per share. As of November 10, 2006, the Private Placement has not been completed. 8 MOUNTAINS WEST EXPLORATION, INC. Notes to Financial Statements September 30, 2006 (Unaudited) Note 5 - DISCONTINUED OPERATIONS: Due to the unitization of the Company's fractional interests in wells into the Spanish Peaks Federal unit by the operator, which resulted in a revenue back charge estimated at $40,000 for overpayment of revenue, and the anticipation of future charges to revenues for development and workover, the Company has assigned its interest in the Spanish Peaks unit to a non-affiliate in consideration for the assumption of all of the revenue back charges and future assessments. These discontinued operations have been presented in the accounting financial statements. Note 6 - DEPOSIT ON BUSINESS ACQUISITION: On March 22, 2006, Mountains West Exploration, Inc. signed a letter of intent to purchase an online dating and online education business from Think Partnership, Inc. This letter of intent has expired. However, the Company entered into a replacement letter of intent with Think Partnership, Inc. Mountains West Exploration, Inc. has paid Think Partnership, Inc. a deposit of $250,000 to be credited against the purchase price if the transaction was completed. The $250,000 deposit will only be returned to Mountains West Exploration, Inc., if Think Partnership sells the Selected Subsidiaries to a third party. Think Partnership, Inc. also agreed to pay Mountains West Exploration, Inc. a breakup fee of $250,000. Mountains West Exploration, Inc. borrowed the funds for this transaction from a related party, LD Acquisitions ("LD"). This acquisition has not been completed as of November 10, 2006 as the Company has not completed the Private Placement to raise additional capital for the completion of the payment to Think Partnership, Inc. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Cautionary and Forward Looking Statements In addition to statements of historical fact, this Form 10-QSB contains forward-looking statements. The presentation of future aspects of Mountains West Exploration, Inc., ("Mountains West Exploration, Inc." the "Company" or "issuer") found in these statements is subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," or "could" or the negative variations thereof or comparable terminology are intended to identify forward-looking statements. 9 These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause Mountains West Exploration, Inc. actual results to be materially different from any future results expressed or implied by Mountains West Exploration, Inc. in those statements. Important facts that could prevent Mountains West Exploration, Inc. from achieving any stated goals include, but are not limited to, the following: Some of these risks might include, but are not limited to, the following: (a) volatility or decline of the Company's stock price; (b) potential fluctuation in quarterly results; (c) failure of the Company to earn revenues or profits; (d) inadequate capital to continue or expand its business, inability to raise additional capital or financing to implement its business plans; (e) failure to make sales; (f) rapid and significant changes in markets; (g) litigation with or legal claims and allegations by outside parties; or (h) insufficient revenues to cover operating costs. There is no assurance that the Company will be profitable, and the Company may not be able to successfully develop, or manage any business, the Company may not be able to attract or retain qualified executives and personnel, and competition and government regulation may hinder the Company's business attempts. Further, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of warrants and stock options, and other risks inherent in business. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the factors described in other documents the Company files from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-QSB and Annual Report on Form 10-KSB filed by the Company for the period ending December 31, 2005. Results of Operations for the Quarter Ended September 30, 2006 compared to Same Period in 2005. During the quarter ended September 30, 2006 and 2005 respectively, the Company had no revenues. 10 The Company had operating expenses of $0 in the quarters in 2006 and 2005 respectively. The Company incurred administrative expenses of $18,148 in 2006 compared to $3,466 in 2005 for the period. The total expenses in the period were $18,148 in 2006 compared to $3,466 for the same period in 2005. The net loss for the period was $23,323 in 2006 compared to $3,466 in 2005 for the same period. The net loss per share was ($0.02) for the period in 2006 as compared to a nominal loss for the same period in 2005. Results of Operations for the nine-months Ended September 30, 2006 compared to Same Period in 2005. The Company had revenues of $0 in the nine-month period in 2006 compared to $111,520 in the nine-month period in 2005. The Company experienced $615 in operating expenses in the nine-month period in 2006 compared to $33,431 in such expense in the same period in 2005. The Company incurred administrative expenses of $92,065 in 2006 and $30,637 for the same period in 2005. The total expenses were $92,680 in 2006 compared to $64,068 for the same period in 2005. The net loss for the period was $108,205 in 2006 compared to a net income of $13,034 in 2005 for the same period. The net loss per share was $0.08 in 2006 as compared to net profit of $0.01 for the same period in 2005. Changes in Financial Condition Year to date the Company experienced a decrease in cash position to $2,300 at quarter end. The Company has total current liabilities in the amount of $587,388. The Company expects the trend will be increased losses due to no revenues. The Company has no long term debt. Liquidity and Capital Resources Year to date, the Company had a increased cash position, which remains insufficient for any significant operations. The Company had $2,300 in cash at quarter end. The Company's total assets are $252,300. The Company's only capital resources are its common stock which might be sold to raise capital. NEED FOR ADDITIONAL FINANCING The Company does not have capital sufficient to meet the Company's cash needs, to operate, and pay debt, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934. The Company will have to seek loans or equity placements to cover such cash needs. Lack of capital may be a sufficient impediment to prevent it from accomplishing the goal of expanding its operations. There is no assurance, that without funds it will ultimately allow the Company to carry out its business. The Company will 11 need to raise additional funds to continue and expand its business activities in the next twelve months. No commitments to provide additional funds have been made by management or other stockholders. Accordingly, there can be no assurance that any additional funds will be other than available to the Company to allow it to cover its expenses as they may be incurred. Irrespective of whether the Company's cash assets prove to be inadequate to meet the Company's operational needs, the Company might seek to compensate providers of services by issuances of stock in lieu of cash. On March 22, 2006, the Company signed a letter of intent to purchase an online dating and online education business from Think Partnership, Inc. This letter of intent has expired. However, the Company entered into a replacement letter of intent with Think Partnership, Inc. The Company paid Think Partnership, Inc. a deposit of $250,000 to be credited against the purchase price if the transaction is completed. The $250,000 deposit will only be returned to the Company if Think Partnership, Inc. sells the Selected Subsidiaries to a third party. Think Partnership, Inc. also agreed to pay the Company a breakup fee of $250,000. The Company borrowed the funds for this deposit from a related party, LD. There can be no assurance that this transaction will be consummated. The consummation of this transaction would require the raise of significant additional funds and the satisfaction of several additional conditions. There can be no assurances that these funds can or will be raised. GOING CONCERN The Company's auditor has issued a "going concern" qualification as part of his opinion in the Audit Report. There is substantial doubt about the ability of the Company to continue as a "going concern." The Company has no business, limited capital, no debt minimal cash, no other liquid assets, and no capital commitments. Management hopes to seek and obtain funding, via loans or private placements of stock for operations, debt and to provide working capital. SUBSEQUENT EVENTS On February 6, 2006 the Company entered into a Letter of Extension with LD, an entity indirectly owned by Lee Wiskowski and Doug Stukel. The Letter of Extension extended the due date of the Promissory Note, made by the Company to LD on November 15, 2005 for the principal amount of One Hundred Ninety-Seven Thousand and NO/100 Dollars ($197,000) ogether with simple interest computed at a rate of (18%) per annum, to May 6, 2006 (the "Note"). This note was further extended on May 11, 2006 to extend such due date to November 15, 2006. OFF-BALANCE SHEET ARRANGEMENTS We are not a party to any off-balance sheet arrangements. ITEM 3. CONTROLS AND PROCEDURES 12 a. Evaluation of Disclosure Controls and Procedures: As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 (the "Exchange Act"). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. b. Changes in Internal Control over Financial Reporting: There were no changes in the Company's internal control over financial reporting identified in connection with the Company evaluation of these controls as of the end of the period covered by this report that could have significantly affected those controls subsequent to the date of the evaluation referred to in the previous paragraph, including any correction action with regard to significant deficiencies and material weakness. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. NONE ITEM 2. UNREGISTERED SALE 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 (a) 31.1 302 Sarbanes-Oxley Certification 31.2 302 Sarbanes-Oxley Certification 13 32.1 906 Sarbanes-Oxley Certification 32.2 906 Sarbanes-Oxley Certification 14 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. November 20, 2006 /S/ Lee Wiskowski ---------------------------- Lee Wiskowski, President (principal executive officer) /S/ Douglas Stukel ---------------------------- Douglas Stukel, Treasurer (principal financial officer) 15