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