10QSB 1 mweiq305.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 March 31, 2005 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 [X] No [__] The number of shares outstanding of the issuer's common stock, par value $.001 per share, at March 31, 2005, was 37,019,271 shares.
Table of Contents PART I - FINANCIAL INFORMATION PAGE Item 1. Condensed Consolidated Financial Statements Independent Auditor's Report............................................................ F-1 Balance Sheets March 31, 2005 (unaudited) and December 31,, 2004........................ F-2 Statements of Operations for the Three Months ended March 31, 2005...................... F-3 Statements of Stockholders Equity (Deficit) March 31, 2005 (unaudited).................. F-4 Statements of Cash Flows for the Three Months ended March 31, 2005 ..................... F-5 Notes to Condensed Consolidated Financial Statements (Unaudited)........................ F-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations... 4 Item 3 Controls and Procedures................................................................. 8 PART II - OTHER INFORMATION Item 1. Legal Proceedings....................................................................... 8 Item 2. Changes in Securities................................................................... 9 Item 3. Defaults upon Senior Securities......................................................... 9 Item 4. Submission of Matters to a Vote of Security Holders..................................... 9 Item 5. Other Information....................................................................... 9 Item 6. Exhibits and Reports on Form 8-K........................................................ 9 Signatures....................................................................................... 10
2 PART I - FINANCIAL INFORMATION MOUNTAINS WEST EXPLORATION, INC. FINANCIAL STATEMENTS FOR THE THREE-MONTHS ENDED MARCH 31, 2005 (UNAUDITED) 3 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 REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT To the Board of Directors Mountains West Exploration, Inc. Denver, CO We have reviewed the accompanying balance sheet of Mountains West Exploration, Inc. as of March 31, 2005 and the related statements of operations and cash flows for the three months ended March 31, 2005 and 2004, included in the accompanying Securities and Exchange Commission Form 10-QSB for the period ended March 31, 2005. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A 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 the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Based on our reviews, 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. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the balance sheet as of December 31, 2004, and the related statements of operations, stockholders' equity and cash flows for the year then ended (not presented herein). In our report dated February 16, 2005, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of March 31, 2005 is fairly stated in all material respects in relation to the balance sheet from which it has been derived. Michael Johnson & Co., LLC. Denver, Colorado May 20, 2005 /s/Michael Johnson & Co., LLC F-1
MOUNTAINS WEST EXPLORATION, INC. Balance Sheets (Unaudited) Three Months Ending Year Ending March 31, 2005 December 31, 2004 ASSETS: Current Assets: Cash $ 11,841 $ 30,637 -------------------- -------------------- Total current assets 11,841 30,637 Fixed Assets: Office Equipment 15,819 15,819 Lease & Well Equipment 1,236 1,236 -------------------- -------------------- 17,055 17,055 Less: Accumulated Depreciation (14,685) (14,685) -------------------- -------------------- Total fixed assets 2,370 2,370 -------------------- -------------------- Other Assets: Undeveloped Property 1,540 1,540 Well Leases 17,767 17,768 Mineral Interest 12,741 12,740 -------------------- -------------------- Total other assets 32,048 32,048 TOTAL ASSETS $ 46,259 $ 65,055 ==================== ==================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable $ - $ 34,861 Current Portion - Long-Term Debt 18,744 18,744 -------------------- -------------------- Total Current Liabilities 18,744 53,605 -------------------- -------------------- Long-Term Debt Long-Term Debt 24,484 24,484 -------------------- -------------------- Total long-term debt 24,484 24,484 -------------------- -------------------- Stockholders' Equity (Deficit) Common stock: authorized 50,000,000 shares, no par value 49,999,700 issued and outstanding at December and March 1,579,786 1,579,786 Accumulated deficit (1,576,755) (1,592,820) -------------------- -------------------- Total Stockholder's Equity 3,031 (13,034) -------------------- -------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 46,259 $ 65,055 ==================== ====================
See accountants review report F-2
MOUNTAINS WEST EXPLORATION, INC. Statements of Operations (Unaudited) Three Months Ending March 31 2005 2004 --------------------------------------- Revenues: Oil and Gas Income $ 62,510 $ 29,987 Cost of Goods Sold - 1,000 --------------------------------------- Net Income 62,510 28,987 Costs and Expenses: Operating Expenses 27,649 12,635 Administration Expenses 18,796 12,448 --------------------------------------- Total Operating Expenses 46,445 25,083 Net Income (Loss) from Operations $ 16,065 $ 3,904 ======================================= Per Share Information Weighted average number 49,999,700 37,019,721 of common share outstanding --------------------------------------- Net loss per common share * * * Less than $0.01
See accountants review report. F-3
MOUNTAINS WEST EXPLORATION, INC. Stockholders' Equity (Deficit) March 31, 2005 (Unaudited) COMMON STOCK Total Accumulated Stockholders' # of shares Amount Deficit Equity ----------- ------ ------- ------ 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 Year - - 1,433 1,433 - Balance - December 31, 2004 49,999,700 1,579,786 (1,592,820) (13,034) - Net Loss for Period - - 16,065 16,065 Balance - March 31, 2005 49,999,700 $ 1,579,786 $(1,576,755) $ 3,031
See Accountants Review Report F-4
MOUNTAINS WEST EXPLORATION, INC. Statements of Cash Flows (Unaudited) Indirect Method Three Months Ended March 31 2005 2004 ---- ---- Cash Flows from Operating Activities Net Income (Loss) $ 16,065 $ 3,904 Adjustments to reconcile net loss to cash used by operating activities Depreciation 108.00 Changes in operating assets and liabilities (Decrease) Increase in accounts payable & accruals (34,861) 2,500 (Increase) in Other Assets (10,045) ---------------------------------- Net Cash Used in Operating Activities (18,796) (3,533) Cash Flows from Financing Activities Payments on Notes Payable (1,181) ---------------------------------- Net Cash Used for Financing Activities (1,181) Net Decrease in Cash & Cash Equivalents (18,796) (4,714) Beginning Cash & Cash Equivalents 30,637 11,711 ---------------------------------- Ending Cash & Cash Equivalents $ 11,841 $ 6,997 ================================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest $ - $ 297 ================================== Cash paid for Income Taxes $ - $ - ==================================
See Accountants Review Report F-5 MOUNTAINS WEST EXPLORATION, INC. Notes to Financial Statements March 31, 2005 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 March 30, 2005 and the results of operations for the three-months ended March 31, 2005 and 2004, and cash flows for the three-months ended March 31, 2005 and 2004. 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, 2004. 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. F-6 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," 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. 4 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 2005 and any Current Reports on Form 8-K filed by the Company. The Company owns small ownership interests in producing coal bed methane wells in Las Animas county, Colorado. 5 Changes in Financial Condition During the quarter the Company experienced a decrease in cash position to $11,841 from year end 2004 of $30,637. The Company's total debt decreased by $43,861 approximately during the quarter as a result of revenue applied to debt. The Company's total liabilities are approximately $18,744. It is Management's belief that the Company will be able to meet its operating expenses during the remainder of the fiscal year. RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2005, COMPARED TO SAME PERIOD IN 2004. The company had revenue from methane production in the quarter in 2005 of $62,510 compared to $29,987 in 2004. The cost of goods sold was $0 in 2005 and $1,000 in 2004. The operating expenses were $27,649 and $12,635 in the quarter in 2005 and 2004 respectively. Administration expense was $18,796 in 2005 and $12,448 in 2004 in the quarter. Total expenses were $46,445 in the quarter in 2005 compared to $25,083 in the same quarter in 2004. The profit on operations was $16,065 in the quarter in 2005 compared to $3,904 in the same quarter in 2004. The increase in profit was due to increased revenues. The profit per share was nominal in the period in 2005 and 2004. Management expects that the revenue and expense will fluctuate for the balance of 2005 due to price reduction of gas in summer months. 6 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 of $18,744, all of which is current, $11,841 in cash, minimal 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. Management has plans to seek capital in the form of loans or stock private placements in the next quarter of approximately $250,000. 7 ITEM 3. CONTROLS AND PROCEDURES The Company's Chief Executive Officer and Chairman have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report and, based on this evaluation, have concluded that the disclosure controls and procedures are effective. There have been no changes in the Company's internal control over financial reporting that occurred during the Company's first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 8 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Management knows of no legal proceedings or unsatisfied judgments in any court or agency to which the Company or any of its officers or directors are or may be a party. 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 9 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. Denis Iler May 19, 2005 - -------------------------------------------------------- Denis Iler President, Chief Executive Officer and Chief Financial Officer 10