10QSB 1 mweiq903.txt FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2003 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 (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 754, Trinidad, Colorado 81802 -------------------------------- -------- (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: 719-846-2623 Indicate by check mark whether the issuer (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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [X] The number of shares outstanding of the issuer's common stock, par value $.001 per share, at September 30, 2003, was 37,019,271 shares. PART I MOUNTAINS WEST EXPLORATION, INC. FINANCIAL STATEMENTS FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED) MICHAEL JOHNSON & CO., LLC Certified Public Accountants 9175 East Kenyon Ave., Suite 100 Denver, Colorado 80237 Michael B. Johnson C.P.A. Telephone: (303) 796-0099 Member: A.I.C.P.A. Fax: (303) 796-0137 Colorado Society of C.P.A.s ACCOUNTANTS REVIEW REPORT Board of Directors Mountains West Exploration, Inc. Trinidad, CO We have reviewed the accompanying balance sheet for Mountains West Exploration, Inc. for September 30, 2003 and the related statements of operations for the three and nine-months ended September 30, 2003 and 2002, and cash flows for the nine-months ended September 30, 2003 and 2002, included in the accompanying Securities and Exchange Commission 10-QSB for the period ended September 30, 2003. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. The review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with accounting principles generally accepted in the United States. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, conditions exist which raise substantial doubt about the Company's ability to continue as a going concern unless it is able to generate sufficient cash flows to meet its obligations and sustain its operations. Management's plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We have previously audited, in accordance with auditing standards generally accepted in the United States, the balance sheet as of December 31, 2002, and the related statements of operations, stockholders' equity (deficit) and cash flows for the year then ended (not presented herein). In our report dated February 23, 2004, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of September 30, 2003, is fairly stated in all material respects in relation to the balance sheet from which it has been derived. Michael Johnson & Co, LLC February 27, 2004
MOUNTAINS WEST EXPLORATION, INC. Balance Sheets (Unaudited) September 30, December 31, 2003 2002 --------------- --------------- ASSETS Current Assets: Cash $ 10,028 $ 1,613 --------------- --------------- Total Current Assets 10,028 1,613 --------------- --------------- Fixed Assets: Office Equipment 15,850 14,470 Leases & Well Equipment 1,236 1,236 --------------- --------------- 17,086 15,706 Less: Accumulated Depreciation (13,983) (13,983) --------------- --------------- Total Fixed Assets 3,103 1,723 --------------- --------------- Other Assets: Undeveloped Property 1,540 1,540 Mineral Interest 12,140 12,140 --------------- --------------- Total Other Assets 13,680 13,680 --------------- --------------- TOTAL ASSETS $ 26,811 $ 17,016 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable 5,000 5,000 Notes Payable - Wells Fargo 35,170 - Current Portion - Long-Term Debt 7,029 9,372 --------------- --------------- Total Current Liabilities 47,199 14,372 --------------- --------------- Long-Term Debt: Long-Term Debt 27,471 25,628 --------------- --------------- Total Long-Term Debt 27,471 25,628 --------------- --------------- Stockholders' Equity: Common stock, no par value, 50,000,000 shares 1,554,786 1,554,786 authorized, 37,019,271 shares issued and outstanding Retained Earnings (Deficit) (1,602,645) (1,577,770) --------------- --------------- Total Stockholders' Equity (Deficit) (47,859) (22,984) --------------- --------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 26,811 $ 17,016 =============== ===============
See Accountants Review Report
MOUNTAINS WEST EXPLORATION, INC. Statements of Operations (Unaudited) Three-Months Ended Nine-Months Ended September 30, September 30, 2003 2002 2003 2002 ---- ---- ---- ---- Revenue: Oil & Gas Income $ 38,926 $ 6,395 $ 63,675 $ 18,967 Cost of Goods Sold - - (271) (1,030) ---------- ---------- ---------- ---------- Total Income 38,926 6,395 63,404 17,937 ---------- ---------- ---------- ---------- Costs and Expenses: Operating Expense 21,742 3,245 77,099 9,675 Administrative Expense 5,627 3,499 11,195 10,509 ---------- ---------- ---------- ---------- Total Operating Expenses 27,369 6,744 88,294 20,184 ---------- ---------- ---------- ---------- Other Income and Expenses: Interest Income 3 - 15 - ---------- ---------- ---------- ---------- Net Profit (Loss) $ 11,560 $ (349) $ (24,875) $ (2,247) ========== ========== ========== ========== Per Share Information: Weighted average number of common shares outstanding 37,019,271 37,019,271 37,019,271 37,019,271 ---------- ---------- ---------- ---------- Net Loss per common share * * * * ========== ========== ========== ========== * Less than $.01
See Accountants Review Report
MOUNTAINS WEST EXPLORATION, INC. Stockholders' Equity (Deficit) September 30, 2003 (Unaudited) Deficit COMMON STOCKS Accum. During Total Development Stockholders' # of Shares Amount Stage Equity ----------- ------ ----- ------ Balance - December 31, 2000 38,010,000 $1,555,777 $(1,546,201) $ 9,576 Cancellation of Stock (990,279) (991) - (991) Net Loss for Year - - (27,475) (27,475) ---------- ---------- ----------- ---------- Balance - December 31, 2001 37,019,721 1,554,786 (1,573,676) (18,890) ---------- ---------- ----------- ---------- Net Loss for Year - - (4,094) (4,094) ---------- ---------- ----------- ---------- Balance - December 31, 2002 37,019,721 1,554,786 (1,577,770) (22,984) ---------- ---------- ----------- --------- Net Loss for Period - - (24,875) (24,875) ---------- ---------- ----------- --------- Balance - September 30, 2003 37,019,721 $1,554,786 $(1,602,645) $ (47,859) ========== ========== =========== =========
See Accountants Review Report
MOUNTAINS WEST EXPLORATION, INC. Statements of Cash Flow (Unaudited) Indirect Method Nine-Months Ended September 30, 2003 2002 ---- ---- Cash Flows from Operating Activities: Net Loss $(24,875) $ (2,996) -------- -------- Net Cash Used in Operating Activities (24,875) (2,996) -------- -------- Cash Flows from Investing Activities: Purchase of Equipment (1,380) - -------- -------- Net Cash Used for Investing Activities (1,380) - -------- -------- Cash Flows from Financing Activities: Payment on Notes Payable (3,196) Proceeds from Notes Payable 37,866 - -------- -------- Net Cash Provided by Financing Activities 34,670 - -------- -------- Net Increase in Cash & Cash Equivalents 8,415 (2,996) Beginning Cash & Cash Equivalents 1,613 4,574 -------- -------- Ending Cash & Cash Equivalents $ 10,028 $ 1,578 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest $ 3,714 $ 2,117 ======== ======== Cash paid for Income Taxes $ - $ - ======== ========
See Accountants Review Report MOUNTAINS WEST EXPLORATION, INC. Notes to Financial Statements September 30, 2003 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, 2003 and the results of operations for the three and six-months ended September 30, 2003 and 2002, and cash flows for the six-months ended September 30, 2003 and 2002. 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, 2002. Note 2 - Going Concern: The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. 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. 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., ("The Art Boutique," 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. 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 busi- ness, inability to raise additional capital or financ -ing to implement its business plans; (e) failure to commercialize its technology or to make sales; (f) rapid and significant changes in markets; (g) litigation with or legal claims and allegations by outside parties; (h) insufficient revenues to cover operating costs. There is no assurance that the Company will be profitable, the Company may not be able to successfully develop, manage or market its products and services, the Company may not be able to attract or retain qualified executives and technology personnel, the Company's products and services may become obsolete, government regulation may hinder the Company's business, 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 the Company's businesses. 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 in 2004 and any Current Reports on Form 8-K filed by the Company. The Company owns over small ownership interests in coal bed methane wells in Las Animas county, Colorado and has leases on 4,000 acres for coal bed methane in northern New Mexico, none of which are explored or developed. The Company is currently considering developing these minerals itself as funds become available. Results of Operations for the Quarter Ended September 30, 2003 Compared to the Same Period in 2002. During the quarter ended September 30, 2003, oil and gas sales were $38,926 compared to $6,395 for the same period in the prior year. The Company had no other operating income during the quarter. The company had operating expenses of $21,742 and $3,245 in the quarter in 2003 and 2002 respectively. The company incurred administrative expenses of $5,627 and $3,499 in 2003 and 2002 respectively in the quarter. Total operating expenses were $27,396 in the quarter in 2003 compared to $6,744 in the quarter in 2002. The net profit was $11,560 in the quarter in 2003 compared to a ($349) net loss in the quarter in 2002. The profit/loss per share was nominal in the quarter in 2003 and 2002. The large expense increase is as a direct result of increased expenses of production. Even though the company had a profitable quarter, the year to date totals still reveal a loss on operations, and investors should view the results in light of longer term averages. Results of Operations for the Nine Months Ended September 30, 2003 Compared to Same Period in 2002. The company had revenues of $63,675 in the period in 2003 compared to $18,967 in the period in 2002. The dramatic increase was due to increased production and higher gas prices from production sales. The cost of goods sold was $271 and $1,030 in the nine month period in 2003 and 2002 respectively. The company experienced $77,099 in operating expense in the nine month period in 2003 compared to $9,675 in such expense in the same period in 2002. There was administrative expense incurred in the period of $11,195 in 2003 and $10,509 in 2002. The total operating expenses in the period were $88,294 in 2003 and $20,184 in 2002. The net loss for the period was ($24,875) in 2003 compared to ($2,247) in 2002. The increased loss is due primarily to substantially increased operating expenses due to expanded revenue generation. The loss per share was nominal in the period in 2003 and 2002. Changes in Financial Condition Year to date the Company experienced an increase in cash position to $10,028 at quarter end due to increased revenue of the Company. The Company's total debt increased by $33,000 during the quarter as a result of expense accruals. The Company's total liabilities are approximately $74,670. The company expects the trend of losses (year to date) to continue at about the same rate as year to date. Liquidity and Capital Resources Year to date, the company had increased revenue, and a marginally increased cash position, which is insufficient for any significant operations. The company had cash of $10,028 and illiquid assets of $13,680 approximately at quarter end. The company's only capital resources are its assets which may be illiquid and 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, 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 its existing capital may be a sufficient impediment to prevent it from accomplishing the goal of expanding its operations. There is no assurance, however, that without funds it will ultimately allow company to carry out its business The Company will need to raise additional funds to 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 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. 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, debt in excess of $74,000, $47,199 of which is current, $10,028 in cash, minimal other liquid assets, and no capital commitments. The effects of such conditions could easily be to cause the Company's bankruptcy. Management hopes to seek and obtain funding, via loans or private placements of stock for operations, debt and to provide working capital. Management has plans to seek capital in the form of loans or stock private placements of approximately $250,000. ITEM 3. CONTROLS AND PROCEDURES a. Evaluation of Disclosure Controls and Procedures: Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required. 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. CHANGES IN SECURITIES NONE ITEM 3. DEFAULTS UPON SENIOR SECURITIES NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER NONE ITEM 5. OTHER INFORMATION NONE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) 32 906 Sarbanes-Oxley Certification 31 302 Sarbanes-Oxley Certification (b) Reports on Form 8-K. NONE SIGNATURES In accordance with section 13 to 15 (d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Robert A. Doak, Jr. April 22, 2004 - -------------------------------------------------------- Robert A. Doak, Jr. President, Chief Executive Officer and Chief Financial Officer