-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HKioc0yuijsvSACqKs+RgHtbef4ukpErc7qIKkjL0PbhUjJkRLTuQ96PNJhrdkcn 0LBg0dcEF3/0gO69Z7LI7g== 0001072588-05-000089.txt : 20050418 0001072588-05-000089.hdr.sgml : 20050418 20050415180527 ACCESSION NUMBER: 0001072588-05-000089 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050418 DATE AS OF CHANGE: 20050415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOUNTAINS WEST EXPLORATION INC CENTRAL INDEX KEY: 0000319040 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 850280415 STATE OF INCORPORATION: NM FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09500 FILM NUMBER: 05755119 BUSINESS ADDRESS: STREET 1: 616 CENTRAL AVE SE STE 230 CITY: ALBUQUERQUE STATE: NM ZIP: 87102 BUSINESS PHONE: 5052434949 MAIL ADDRESS: STREET 1: P O BOX 754 CITY: TRINIDAD STATE: CO ZIP: 81082 10KSB 1 mwei10k2004.txt FORM 10-KSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004 Commission File Number: 0-9500 ------ MOUNTAINS WEST EXPLORATION, INC. (Exact of small business issuer in its charter) New Mexico 0 85-0280415 - ---------- ------------ (State or other jurisdiction of I.R.S. Employer incorporation or organization) identification no.) 7609 Ralston Road 80002 (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: 303-422-8127 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: $0.001 Par Value Common Stock - ----------------------------- (Title of Class) 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 [_] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year. $86,854 State the aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of December 31, 2004. (See definition of affiliate in Rule 12b-2 of the Exchange Act). $1,120,770 (based on a market value of $.04 per share on December 31, 2004) State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: common stock, its only class of equity securities, as of December 31, 2004 was: 49,990,700. PART I PAGE Item 1. Description of Business 1 Item 2. Description of Property 4 Item 3. Legal Proceedings 6 Item 4. Submission of Matters to a Vote of Security Holders 6 PART II Item 5. Market for Common Equity and Related Stockholder Matters 6 Item 6. Management's Discussion and Analysis or Plan of Operation 8 Item 7. Financial Statements 9 Item 8. Changes in and Disagreements With Accountants on Accounting 9 and Financial Disclosure Item 8a. Controls and Procedures 9 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act 10 Item 10. Executive Compensation 11 Item 11. Security Ownership of Certain Beneficial Owners and Management 13 Item 12. Certain Relationships and Related Transactions 14 Item 13. Exhibits and Reports on Form 8-K 14 Item 14. Principal Accountant Fees and Services 15 SIGNATURES 16 PART I Item 1. Description of Business. The Company Mountains West Exploration, Inc. (the "Company") was incorporated under the laws of the State of New Mexico on September 17, 1979. The Company, is an independent company engaged in the acquisition, exploration and development of coal bed methane leases located in Colorado. For the past several years, as resources have permitted, the Company has been increasing its activities and gas production is rising, but it has yet to obtain significant gas income. Management's time and the limited Company resources have been used to maintain the properties held, to acquire additional properties and to participate to the extent possible in the development of its properties. (See Properties). Domestic Exploration and Production The Company owns small interests in methane gas wells in the Raton Basin in Colorado. These wells are producing from coal bed. The Company has approximately 4,740 gross acres of oil and gas leases rights in South Central Colorado, located in the southwestern part of the Raton Basin. Several Companies have now drilled and completed approximately 58 gas wells around these leases. 1 The Company does not presently have the resources to develop any properties, therefore, a decision will be made whether the properties will be held until such time that the Company has the necessary resources for the development or whether the properties will be leased or farmed out to others for development. Access to all domestic properties in which the Company owns any interest is readily available from state and county highways and roads on a year round basis. MOUNTAINS WEST EXPLORATION, INC. PARTICIPATES AS A MINORITY INTEREST HOLDER (NON OPERATOR) IN METHANE GAS WELLS LOCATED IN LAS ANIMAS COUNTY, COLORADO AS FOLLOWS: OPERATOR-EVERGREEN OPERATING COMPANY (PIONEER) WELL NAME %INTEREST NET WELLS GROSS ACRES NET ACRES - --------- --------- --------- ----------- --------- Ozzello (one) 12.5% 12.5% 160 20 Jacks (one) 6.25% 6.25% 80 5 Nicol (four units) (see * below) 3.5% 14% 640 22.4 TOTAL 32.75% 880 47.4 * Nicol Lease 640 acres 4 drill units because of irregular shape 7 wells were drilled. Bumble Bee 0.875% interest Colorow 1.762375% Donohue 0.59314% Ellen 3.5% Jerry 1.75% News Radio 2.6% Roseanne 3.5% All of the above wells were drilled by others. Foreign Exploration. None Competitive Factors The petroleum industry is volatile and highly competitive. Earnings from oil and gas production are primarily dependent upon 2 prices of crude oil and natural gas. The costs and prices of crude oil, natural gas and refined products have fluctuated substantially in recent years, often in a divergent fashion. Competition exists in every aspect of oil and gas operations, including the acquisition, exploration, discovery and development of new oil and gas reserves, as well as purchasing, gathering, transporting, refining and marketing of crude oil, natural gas and petroleum products. Many companies and individuals are engaged in the oil and gas business in both the U.S. and foreign markets. Many such companies are very large and well established with substantial capabilities and long earnings records. The Company has, and will continue, to encounter strong competition in acquiring oil and gas leases, licenses and concessions from these and other companies. In most instances the Company is not able to compete with these other more adequately capitalized companies in meeting price, exploration and bonding requirements established by the land owners or foreign governments. The Company has, joined with better capitalized operators to participate in the discovery of commercial quantities of methane gas. The acquisition, exploration, development, production and sale of oil and gas interests are subject to many factors which are outside the Company's control. These factors include worldwide and United States economic conditions, oil import and export quotas, availability of drilling rigs and pipelines, weather conditions, supply and price of other fuels, and the regulation of production, transportation and marketing by both domestic and foreign governmental agencies. Foreign Governmental preferences for major international oil companies over small independent companies may also have an adverse effect on the Company's ability to compete with such major companies, even if it otherwise has the capital to do so. Environmental Regulations On a worldwide basis, environmental laws and regulations vary greatly. In the United States compliance with State and Federal laws may require significant capital expenditure and will effect decisions regarding acquisition of certain properties, methods of production and distribution of the oil and gas and the Company's earning potential from any property. The managing partner of the PPL 56 Joint Venture has not informed the Partners in the Joint Venture of any environmental laws, rules or regulations established by Papua New Guinea that might be expected to have any unusual or adverse impact upon the operations of the Joint Venture or the production of oil and gas from its license interests. 3 Governmental Regulations In the United States, the production of oil and gas is subject to regulation by the various state regulatory authorities. In general, these regulatory authorities are empowered to make and enforce regulations to prevent waste of oil and gas, and to fix allowable production rates for oil and gas within the limits of maximum rates of production and reasonable market demands for oil and gas. In addition, the Company will be required to comply with spacing and other conservation rules of the various states within which the Company owns oil and gas leases upon which exploration activities are conducted. Also, leases, the Company will be required to comply with requirements established for exploration and development by the United States Geological Survey and the Bureau of Land Management. Natural gas production and prices are regulated by the Federal Energy Regulatory Commission and are subject to the Natural Gas Policy Act. New natural gas, some onshore gas production and interstate gas were deregulated effective January 1, 1985. The Company will also be subjected to varying taxes that are or may be established on producers of oil and gas relating to prices received in excess of certain established norms. Personnel. At year end, the Company has no employees, but hires consultants for services. The Company has retained the services of outside parties for legal, lease/revenue management, accounting, drafting, geological, and lease acquisition services to the extent that it has been able to afford such expenses. Item 2. Description of Properties. Offices. The Company rented its offices at 134 West Main St., Ste 35, Trinidad, CO 81082, under a month-to-month lease at a monthly rental of $500 up to year end. The suite consists of approximately 700 sq. feet, Approximately one half of the space is sublet to another party for a monthly rent of $245. After year end the Company sought a new office sharing arrangement to cut costs. 4 Productive Wells and Acreage. The following table reflects the approximate total gross and net productive oil and gas wells and approximate total gross and net developed acreage at December 31, 2004: Productive Wells OPERATOR-EVERGREEN OPERATING COMPANY WELL NAME %INTEREST NET WELLS GROSS ACRES NET ACRES - --------- --------- --------- ----------- --------- Ozzello (one) 12.5% 12.5% 160 20 Jacks (one) 6.25% 6.25% 80 5 Nicol (four units) (see * below) 3.5% 14% 640 22.4 TOTAL 32.75% 880 47.4 * Nicol Lease 640 acres - 4 drill units because of irregular shape 7 wells were drilled. Bumble Bee 0.875% interest Colorow 1.762375% Donohue 0.59314% Ellen 3.5% Jerry 1.75% News Radio 2.6% Roseanne 3.5% 1. Gross well or acres is a well or acre in which a working interest is owned. 2. A net well or acre is deemed to exist when the sum or the fractional ownership working interests in gross wells or acres equal one. As a working interest holder, the Company, along with other working interest holders, pay a pro rata share of 100% of production costs. Undeveloped Properties At December 31, 2004 the Company held approximately the following gross and net undeveloped oil and gas acreage: Leases Gross Acres Net Acres (1) New Mexico 4,740 3,792 Totals (1) Computed using the Company's net revenue interest. Net Acres include working interests and overriding royalty interests. 5 Reserves The Company has not filed any reports containing oil or gas reserves estimates with any Federal or foreign government or authority or agency within the past 12 months. The Company has not prepared or had prepared for them any reserve reports related to the properties discussed herein because the royalties and working interests are so small as to not warrant the cost of such studies or reports. Item 3. Legal Proceedings. There are no legal proceedings now pending to which the company is a party. Item 4. Submission of Matters to a Vote of Securities Holders. No matters were submitted to a vote of shareholders during the fourth quarter of the Company's fiscal year. PART II Item 5. Market for Common Equity and Related Stockholder Matters. The Company's common stock is traded over-the-counter, symbol MWEX.PK The Company's common stock is listed by the National Daily Quotation Bureau, Inc. in its Pink Sheets. The high and low bid prices available during each quarter of 2003 and 2004 appear as follows, however, much of the "pink sheet" quotes are unreliable as to accuracy of individual trades and may not represent actual prices after mark up, mark down, or dealer discounts or commissions. 2003 2004 ---- ---- Bid Prices Bid Prices ---------- ---------- High Low High Low ---- --- ---- --- 1st Quarter .009 .001 1st Quarter .012 .001 2nd Quarter .009 .001 2nd Quarter .01 .001 3rd Quarter .009 .001 3rd Quarter .005 .001 4th Quarter .002 .001 4th Quarter .06 .01 There were approximately 1,896 record holders of the Company's common stock on March 31, 2005. 6 There currently is a limited public market for the Company's common stock in the pink sheets, and no assurance can be given that a market will develop or that a shareholder ever will be able to liquidate his investment without considerable delay, if at all. If a market should develop, the price may be highly volatile. Unless and until the Company's common shares are quoted on the NASDAQ system or listed on a national securities exchange, it is likely that the common shares will be defined as "penny stocks" under the Exchange Act and SEC rules thereunder. The Exchange Act and penny stock rules generally impose additional sales practice and disclosure requirements upon broker-dealers who sell penny stocks to persons other than certain "accredited investors" (generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with spouse) or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, the broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the SEC. So long as the Company's common shares are considered "penny stocks", many brokers will be reluctant or will refuse to effect transactions in the Company shares, and many lending institutions will not permit the use of penny stocks as collateral for any loans. Effective August 11, 1993, the Securities and Exchange Commission (the "Commission") adopted Rule 15g-9, which established the definition of a "penny stock," for purposes relevant to the Company, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) that the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) states that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. 7 The Company has never paid dividends on its common stock. Item 6. Management's Discussion and Analysis or Plan of Operation Results of Operations The company had revenues from gas production of $163,801 in 2004 and $86,854 in 2003. The company incurred operating expenses of $1158,123 in 2004 and $99,465 in 2003. The substantial increase in expenses in 2004 was due to higher consulting fees over 2003. The largest components of expense were as follows. 2004 2003 ---- ---- Depreciation 432 2,237 Moving Expense - 15,732 Consulting 86,377 64,834 Legal and Accounting 55,760 7,771 Mineral rights - - Rent 6,000 1,600 Transfer Agent 2,750 4,000 Travel 2,949 3,797 The net profit was $1,433 for 2004 compared to a loss of ($16,483) for 2003 even though revenues increased, expenses also increased. The net loss per share was nominal in each year. The Company believes that the trend toward profiability is only temporary basd on its past experiance in the energy business. Liquidity and Capital Resources During the year, the company had increased revenue, and a marginally increased cash position, which was insufficient for any significant operations expansion The company had cash of $30,637 and illiquid assets of $17,055 approximately, at year end. The company's only capital resources are its cash assets which may be illiquid, and its common stock which might be sold to raise capital. Changes in Financial Condition Year to date the Company experienced an increase in cash position due to increased revenue of the Company and a capital infusion of $25,000. The Company's total debt increased to approximately $78,000 during the year as a result of expense accruals. The Company's total liabilities are approximately $78,089 at year end. NEED FOR ADDITIONAL FINANCING The Company may 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 may 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. 8 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 $78,089, $53,605 of which is current, $30,637 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 in the next year of approximately $250,000. Item 7. Financial Statements. Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. No principal independent accountant resigned (or declined to stand for re-election) or was dismissed during the Company's two most recent fiscal years or any later interim period. Item 8a. Controls and Procedures Evaluation of Internal and Disclosure Controls - ---------------------------------------------- The management of the company has evaluated the effectiveness of the issuer's disclosure controls and procedures as of the end of the period for this report (evaluation date) and have concluded that the disclosure controls and procedures are adequate and effective based upon their evaluation as of the evaluation date. There were no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the evaluation date, including any corrective actions with regard to significant deficiencies and material weaknesses. 9 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act. The following individuals are the Company's directors and executive officers as of date of filing of this report. Name Age Positions held with Company Denis Iler 65 Director, President and Treasurer Redgie Green 51 Secretary and Director Background information about each director and executive officer is as follows: DENIS R. ILER, age 65, President, CFO and Director, received a BA in Math from San Jose State University in California, and an MBA from Regis University in 1982. He was a comptroller with Berge Exploration from 1978 to 1984. Since 1984, he has been President and principal accountant for Business Financial Systems, Inc., an independent accounting firm, providing tax and accounting services for the small business community, including oil and gas, construction, and real estate brokerage accounting. He was a director of NELX, Inc. from 1999-2001. He was elected Director and appointed President of Jagged Edge Mountain Gear, Inc. in 2004. He was President and Director of Cheyenne Resources, Inc. from January to August, 2004. REDGIE GREEN, age 51, Secretary, Treasurer and Director, (elected in March of 2005) has been Secretary and Director of Dynadapt Systems, Inc. since 1998. Mr. Green has been co-owner and operator of Green's B&R Enterprises, a wholesale donut baker since 1983. He has been an active investor in small capital and high-tech adventures since 1987. Mr. Green was a director of Colorado Gold & Silver, Inc. in 2000. He was a director for Houston Operating Company in late 2004 until December 2004. He was elected a director of Mind2Market, Inc. in late 2004. No director, officer or beneficial owner of more than 10% of the Company's common stock, its only equity securities, or any other person subject to Section 16 of the Exchange Act failed to file reports required by Section I 6(a) of the Exchange Act during the most recent fiscal year or prior fiscal years. There are no family relationships among the members of the Board of Directors and Management. 10 Item 10. Executive Compensation. The following table sets forth certain information concerning the remuneration paid by the Company for the fiscal year ended December 31, 2004, for each officer and director.
SUMMARY COMPENSATION TABLE OF EXECUTIVES AND DIRECTORS Fiscal Annual Compensation Awards Name & Principal Year Salary Bonus Other Annual Restricted Securities Position ($) ($) Compensation Stock Underlying ($) Award(s) Options/ ($) SARS (#) - - --------------------------------------------------------------------------------------------------------------------- Robert Doak, 2004 $86,337 0 0 0 0 President/ CEO 2003 $64,834 (2) 0 0 0 0 & Director 2002 $12,000 0 0 0 0 (Resigned in 2004) David Shier, 2004 $0 0 0 0 0 Secretary & Director 2003 $0 0 0 0 0 (Resigned in 2004 2002 $0 0 0 0 0 Denis Iler, 2004 $0 0 0 0 0 President/CFO 2003 $0 0 0 0 0 Director 2002 $0 0 0 0 0 Redgie Green 2004 $0 0 0 0 0 Secretary & Treasure Director as of 1/1/05 All Officers & 2004 $86,337 0 0 0 0 Directors as a group (2) 2003 $86,337 0 0 0 0 2002 $12,000 0 0 0 0
(1) Directors are to be paid $300 per meeting attended by such director. Other than the remuneration discussed above, the Company has no retirement, pension, profit sharing, stock option or similar program for the benefit of its officers, Directors or employees, nor does it have a Long Term Incentive Programs. (2) Consulting fees. 11 Audit Committee - --------------- The company does not have an Audit Committee. The members of the Board sit as the Audit Committee. No qualified financial expert has bee hired because the company is to small to afford such expense. Code of Ethics - -------------- The company has adopted a Code of Ethics for the Board and employees. Committees and Procedures - -------------------------- (1) The registrant has no standing audit, nominating and compensation committees of the Board of Directors, or committees performing similar functions. The Board acts itself in lieu of committees due to its small size. (2) The view of the board of directors is that it is appropriate for the registrant not to have such a committee because all directors participate in the consideration of director nominees and the board is so small. (3) Each of the members of the Board which acts as nominating committee is not independent, pursuant to the definition of independence of a national securities exchange registered pursuant to section 6(a) of the Act (15 U.S.C. 78f(a). (4) The nominating committee has no policy with regard to the consideration of any director candidates recommended by security holders, but the committee will consider director candidates recommended by security holders; 12 (5) The basis for the view of the board of directors that it is appropriate for the registrant not to have such a policy is that there is no need to adopt a policy for a small company. (6) The nominating committee will consider candidates recommended by security holders, and by security holders in submitting such recommendations; should provide a completed Directors Questionnaire to the company (7) There are no specific, minimum qualifications that the nominating committee believes must be met by a nominee recommended by security holders except to find anyone willing to serve with clean background. There are no differences in the manner in which the nominating committee evaluates nominees for director based on whether the nominee is recommended by a security holder, or found by the board. (8) The nominating committee's process for identifying and evaluation nominees for director, including nominees recommended by security holders, is to find anyone willing to serve with clean background. There are no differences in the manner in which the nominating committee evaluates nominees for director based on whether the nominee is recommended by a security holder, or found by the board. Item 11. Security Ownership of Certain Beneficial Owners and Management The following table sets forth, as of December 31, 2004, the beneficial ownership of Common Stock by each person who is known by the Company to own beneficially more than 5% of the issued and outstanding Common Stock and the shares of Common Stock owned by each officer and Director. Each person has sole voting and investment power as to all shares unless otherwise indicated. 13 Directors. (2) (3) (1) Name and address Amount and nature (4) Title of of of Percent Class Beneficial owner Beneficial ownership of class - ----- ---------------- -------------------- -------- $.001 par value Denis Iler 21,980,429(1) 43.96% common stock 2000 Wadsworth Blvd direct PMB 179 Lakewood, CO 80214 $0.001 par value Redgie Green 0 (2) 0% common stock 259 N. Commercial St. direct Trinidad, Colorado 81082 All Directors and officers as a group (1) (2) (3) (4) 21,980,429 43.96% Item 12. Certain Relationships and Related Transactions. The company paid Robert Doak $86,337 in consulting fees for his services in 2004. Further Mr. Doak retains a 5% royalty on 4,740 acres of coal bed methane leases owned by the company. Mr. Doak was President and a Director until November 3, 2004. Skye Blue Ventures LLC, in November 2004, purchased 9,000,000 shares from Robert Doak and also purchased 12,980,429 shares from the Company for $25,000. Item 13. Exhibits and Reports on Form 8-K. (a) Documents filed as a part of this report: ----------------------------------------- (1) Financial Statements. Independent Auditors' report Balance Sheets at December 31, 2004 and 2003. Statements of Operations for the years ended December 31, 2004 and 2003. Statements of Stockholders' Equity for the years ended December 31, 2004 and 2003. 14 Statements of Cash Flows for the years ended December 31, 2004 and 2003. Notes to Financial Statements at December 31, 2004 and 2003. (b) Reports on Form 8-K: -------------------- The Registrant filed reports on Form 8-K during the last quarter of the period covered by this Report as follows: 8-K November 8, 2004 (1) The Registrant's Articles of Incorporation and Bylaws are incorporated herein by reference to SEC file No. 2-69024, filed September 2, 1980. There are no other exhibits specified in Item 601 of Regulation S-B to be included with this filing. Item 14. Principal Accountant Fees and Services General. Michael Johnson & Co., LLC, CPAs ("MJC") is the Company's principal auditing accountant firm. The Company's Board of Directors has considered whether the provisions of audit services is compatible with maintaining MJC's independence. Audit Fees. MJC billed the Company $6,000 for the following professional services: audit of the annual financial statement of the Company for the fiscal year ended December 31, 2004, and review of the interim financial statements included in quarterly reports on Form 10-QSB for the periods ended March 31, 2004, June 30, 2004 and September 30, 2004. MJC billed the Company $5,000 for the 2003 audit and $4,000 for the 2004 Audit. There were no audit related fees in 2004 or 2003. There were no tax fees or other fees in 2004 or 2003 paid to Auditors or Auditors affiliates. The Company's Board acts as the audit committee and had no "pre-approval policies and procedures" in effect for the auditors' engagement for the audit year 2004 and 2003. All audit work was performed by the auditors' full time employees. 15 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. MOUNTAINS WEST EXPLORATION, INC. Date: April 13, 2005 /s/Denis Iler - ---------------------- Denis Iler, President and Chief Executive Officer and Chief Financial Officer In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: April 13, 2005 /s/Denis Iler - ----------------------- Denis Iler, Director Date: April 13, 2005 /s/Redgie Green - ----------------------- Redgie Green, Director 16 MOUNTAINS WEST EXPLORATION, INC. INDEX OF FINANCIAL STATEMENTS Pages Auditors Report F-1 Balance Sheets F-2 Statements of Operations F-3 Statements of Changes in Stockholders Deficit F-4 Statements of Cash Flows F-5 Notes to Financial Statements F-6 - F-10 MOUNTAINS WEST EXPLORATION, INC. FINANCIAL STATEMENTS For the Years Ended December 31, 2004 and 2003 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 INDEPENDENT AUDITOR'S REPORT Board of Directors Mountains West Exploration, Inc. Trinidad, CO 81082 We have audited the accompanying balance sheets of Mountains West Exploration, Inc. as of December 31, 2004 and 2003 and the related statements of operations, stockholders' equity, and cash flows for the year ended December 31, 2003 and 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit "in accordance with standards of the Public Company Accounting Oversight Board (United States)" as outlined in PCAOB Auditing Standard No. 1. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mountains West Exploration, Inc. as of December 31, 2004 and 2003, and the results of their operations and their cash flows for the years ended December 31, 2004 and 2003, in conformity with accounting principles generally accepted in the United States. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 4, conditions exist which raised 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 also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Michael Johnson & Co., LLC Denver, Colorado February 16, 2005 /s/Michael Johnson & Co., LLC F-1
MOUNTAINS WEST EXPLORATION, INC. Balance Sheets December 31, 2004 2003 ---- ---- ASSETS: Current assets: Cash $ 30,637 $ 11,711 ----------------- ----------------- Total current assets 30,637 11,711 ----------------- ----------------- Fixed assets: Office Equipment 15,819 15,819 Lease & Well Equipment 1,236 1,236 ----------------- ----------------- 17,055 17,055 Less: Accumulated Depreciation (14,685) (14,253) ----------------- ----------------- Total fixed assets 2,370 2,802 ----------------- ----------------- Other Assets: Undeveloped Property 1,540 1,540 Well Leases 17,768 - Mineral Interest 12,740 12,740 ----------------- ----------------- Total other assets 32,048 14,280 ----------------- ----------------- TOTAL ASSETS $ 65,055 $ 28,793 ================= ================= LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts Payable $ 34,861 $ - Current Portion - Long-Term Debt 18,744 18,744 ----------------- ----------------- Total current liabilities 53,605 18,744 ----------------- ----------------- Long-Term Debt: Long-Term Debt 24,484 49,516 ----------------- ----------------- Total long-term debt 24,484 49,516 ----------------- ----------------- Stockholders' equity: Common Stock, no par value; 50,000,000 shares authorized; 49,999,700 shares issued and outstanding in 2004 1,579,786 1,554,786 37,019,271 shares issued and outstanding in 2003. Retained Earnings (Deficit) (1,592,820) (1,594,253) ----------------- ----------------- Total stockholders' equity (deficit) (13,034) (39,467) ----------------- ----------------- TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 65,055 $ 28,793 ================= =================
The accompanying notes are an integral part of these financial statements. F-2
MOUNTAINS WEST EXPLORATION, INC. Statements of Operations Year Ended December 31, 2004 2003 --------------- --------------- Revenue Oil & Gas Income $ 163,801 $ 86,854 --------------- --------------- Net Income 163,801 86,854 --------------- --------------- Expenses: Bank Charges 38 4 Consulting 86,337 64,834 Depreciation 432 2,337 Dues & Subscriptions 367 240 Legal and Accounting 55,760 3,753 Maintenance - - Meals & Entertainment 185 122 Moving Expense - 15,732 Office Expenses 563 1,492 Penalties - - Postage 444 347 Rent 6,000 1,600 Taxes 571 117 Telephone 1,482 840 Transfer Agent Expense 2,750 4,000 Travel 2,949 3,797 Vehicle Expense 245 250 --------------- --------------- Total Expenses 158,123 99,465 --------------- --------------- Other Income and Expense Interest Expense 4,245 3,872 Interest Income - - --------------- --------------- Total Other Income & Expense 4,245 3,872 --------------- --------------- Net Profit (Loss) $ 1,433 $ (16,483) =============== =============== Per Share Information: Weighted average number of common shares outstanding 38,100,998 37,019,271 --------------- --------------- Net Loss per Common Share * * =============== =============== * Less than $.01
The accompanying notes are an integral part of these financial statements. F-3
MOUNTAINS WEST EXPLORATION, INC. Stockholders' Equity (Deficit) December 31, 2004 Retained Common Stock (Deficit) # of Shares Amount Earnings Totals ----------- ------ -------- ------ Balance - December 31, 2000 38,010,000 $1,555,777 $(1,546,201) $ 9,576 Cancelation of stocks (990,729) (991) - (991) Net Loss for year - - (27,475) (27,475) ----------------- --------------- ----------------- ----------- Balance - December 31, 2001 37,019,271 1,554,786 (1,573,676) (18,890) ----------------- --------------- ----------------- ----------- Net Loss for year - - (4,094) (4,094) ----------------- --------------- ----------------- ----------- Balance - December 31, 2002 37,019,271 1,554,786 (1,577,770) (22,984) ----------------- --------------- ----------------- ----------- Net Loss for year - - (16,483) (16,483) ----------------- --------------- ----------------- ----------- Balance - December 31, 2003 37,019,271 1,554,786 (1,594,253) (39,467) ----------------- --------------- ----------------- ----------- Issuance of stock for cash 12,980,429 25,000 - 25,000 Net Profit for the Year - - 1,433 1,433 ----------------- --------------- ----------------- ----------- Balance - December 31, 2004 49,999,700 $1,579,786 $(1,592,820) $ (13,034) ================= =============== ================= ===========
The accompanying notes are an integral part of these financial statements. F-4
MOUNTAINS EXPLORATION, INC. Statements of Cash Flows (Indirect Method) Year Ended December 31, 2004 2003 ---- ---- Cash Flows from Operating Activities: Net Profit (Loss) $ 1,433 $ (16,483) Depreciation 432 270 Increase (Decrease) in Accounts Payable 34,861 (5,000) ----------------- ---------------- Net Cash Flows Used by Operations 36,726 (21,213) ----------------- ---------------- Cash Flows from Investing Activities: Purchase of Equipment & Leases (17,768) (1,949) ----------------- ---------------- Cash Flows Used by Investing Activities (17,768) (1,949) ----------------- ---------------- Cash Flows from Financing Activities: Payment to Notes Payable (25,032) - Issuance of Common Stock 25,000 Proceeds from Notes Payable - 33,260 ----------------- ---------------- Net Cash Flows Provided by Financing Activities (32) 33,260 ----------------- ---------------- Net Increase (Decrease) in Cash 18,926 10,098 ----------------- ---------------- Cash at Beginning of Period 11,711 1,613 ----------------- ---------------- Cash at End of Period $ 30,637 $ 11,711 ================= ================ Supplemental Disclosure of Cash Flow Information Cash paid for Interest $ 4,245 $ 3,872 ================= ================ Cash paid for income taxes $ - $ - ================= ================
The accompanying notes are an integral part of these financial statements. n F-5 MOUNTAINS WEST EXPLORATION, INC. Notes to Financial Statements December 31, 2004 Note 1 - Organization and Summary of Significant Accounting Policies: ------------------------------------------------------------ Organization: Mountain West Exploration, Inc. (MWEX) was incorporated in the state of New Mexico. It is primarily organized for the purpose of acquiring interests in undeveloped oil and gas and mineral leases, reselling all or part of its interest in these leases to other companies in the oil and gas industry and engaging in other oil and gas activities. The Company's fiscal year end is December 31. Basis of Accounting: The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. Cash and Cash Equivalents: The Company considers all highly liquid debt instruments, purchased with an original maturity of three months or less, to be cash equivalents. Use of Estimates: The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Net Earnings (Loss) Per Share: Net loss per share is based on the weighted average number of common shares and common shares equivalents outstanding during the period. Furniture and Equipment: Furniture and equipment are capitalized at acquisition cost and depreciated utilizing the straight-line method over its estimated life of five years. Maintenance, repairs and minor renewals are charged to operations as incurred. Major renewals and betterments which substantially extend the useful life of the property and equipment are capitalized. F-6 MOUNTAINS WEST EXPLORATION, INC. Notes to Financial Statements December 31, 2004 Oil and Gas Properties: MWEX uses the successful efforts method of accounting for oil and gas producing activities. Costs to acquire interests in oil and gas properties, to drill and equip exploratory wells that find proved reserves, and to drill and equip development wells are capitalized. Costs to drill exploratory wells that do not find proved reserves, geological and geophysical costs, and costs of carrying and retaining unproved properties are expensed. Unproved oil and gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at the time of impairment by providing an impairment allowance. Other unproved properties are amortized based on MWEX's experience of successful drilling and average holding period. Capitalized costs of producing oil and gas properties, after considering estimated dismantlement and abandonment costs and estimated salvage values, are depreciated and depleted by the unit-of-production method. Other Comprehensive Income: The Company has no material components of other comprehensive income (loss), and accordingly, net loss is equal to comprehensive loss in all periods. Revenue Recognition on Sale of Oil and Gas Leases: Sale of interests in undeveloped oil and gas leases are accounted for utilizing the cost recovery method. Accordingly, the financial reporting, purposes, gain on sales of interests in such leases is recognized only to the extent that total proceeds of the sale exceed MWEX's original cost in the leases. Gain is not recognized on sales in which a substantial obligation for future performance exists. Note 2 - Federal Income Taxes: The Financial Accounting Standards Board (FASB) has issued Statement of Financial Accounting Standards Number 109 ("SFAS 109"). "Accounting for Income Taxes", which requires a change from the deferred method to the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. F-7 MOUNTAINS WEST EXPLORATION, INC. Notes to Financial Statements December 31, 2004 Note 2 - Federal Income Taxes (Cont): December 31, 2004 December 31, 2003 Deferred tax assets Net operating loss carryforwards $ 1,578,135 $ 1,608,506 Accumulated Depreciation 14,685 14,253 Valuation allowance (1,592,820) (1,594,253) -------------- ------------ Net deferred tax assets $ 0 $ 0 =============== ============ At December 31, 2004, the Company had net operating loss carryforwards of approximately $1,557,959 for federal income tax purposes. These carryforwards if not utilized to offset taxable income will begin to expire in 2011. Note 3 - Notes Payable: Following is the summary of Notes Payable at December 31, 2004: Bank of America - A ten-year loan at 5% interest per annum secured by miscellaneous holdings. $17,071 Wells Fargo - A four-year loan at 8% interest per annum secured by miscellaneous holdings 26,157 -------- Total Notes Payable $43,228 Less: Current Portion (18,744) --------- Long-Term Portion $24,484 ======== Note 4 - Going Concern: The Company's financial statements have been presented on the basis that it is a going concern. The Company's ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and achieve profitable operations. There is insufficient cash on hand to support current or anticipated 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 5 - Capital Stock Transactions: The authorized capital stock of the Company was established at 50,000,000 with no par value. There were 12,980,429 shares of common stock issued in December 2004. Note 6 - Segment Information Mountains West Exploration operates primarily in a single operating segment, acquiring interests in unproved oil, gas and mineral leases and engaging in other oil and gas activities F-8 EX-31 2 ex31.txt CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT I, Denis Iler, certify that: 1. I have reviewed this annual report on Form 10-KSB of Mountains West Exploration, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of December 31, 2004; and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 30, 2005 /s/Denis Iler - ----------------------- Denis Iler, President EX-32 3 ex32.txt CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Mountains West Exploration Inc. (the "Company") on Form 10-KSB for the period ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"). I, Denis Iler, CEO of the company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief. (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Denis Iler -------------------------------- Denis Iler, CEO Dated: March 30, 2005 -----END PRIVACY-ENHANCED MESSAGE-----