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 June 30, 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.)
7609 Ralston Road, Arvada, Colorado 80002
- -------------------------------- --------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 303 422 8127
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 June 30, 2005, was 1,000,018 shares.
MOUNTAINS WEST EXPLORATION, INC.
FINANCIAL STATEMENTS FOR THE
SIX-MONTHS ENDED JUNE 30, 2005
(UNAUDITED)
JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
9175 E. Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Mountains West Exploration, Inc.
Denver, CO
We have reviewed the accompanying balance sheet of Mountains West Exploration,
Inc. as of June 30, 2005 and the related statements of operations for the three
and six months ended June 30, 2005, stockholders' equity, and statements of cash
flows for the six-months ended June 30, 2005. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards of the Public Company
Accounting Oversight Board (United States). The review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquires of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with 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 of America.
The financial statements for the year ended December 31, 2004 were audited by
other accountants, whose report dated March 31, 2005, expressed an unqualified
opinion. They have performed no auditing duties since that date. In our opinion,
the information set forth in the accompanying balance sheet as of June 30, 2005
is fairly stated in all material respects in relation to the balance sheet from
which it has been derived.
Jaspers + Hall, PC
Denver, Colorado
August 15, 2005
/s/Jaspers + Hall, PC
MOUNTAINS WEST EXPLORATION, INC.
Balance Sheets
(Unaudited)
Six Months Ending Year Ending
June 30, 2005 December 31, 2004
ASSETS:
Current Assets:
Cash $ 3,466 $ 30,637
-------------------- --------------------
Total current assets 3,466 30,637
Fixed Assets:
Office Equipment - 15,819
Lease & Well Equipment - 1,236
-------------------- --------------------
- 17,055
Less: Accumulated Depreciation - (14,685)
-------------------- --------------------
Total fixed assets - 2,370
-------------------- --------------------
Other Assets:
Undeveloped Property - 1,540
Well Leases - 17,768
Mineral Interest - 12,740
-------------------- --------------------
Total other assets - 32,048
TOTAL ASSETS $ 3,466 $ 65,055
==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable $ - $ 34,861
Current Portion - Long-Term Debt - 18,744
-------------------- --------------------
Total Current Liabilities - 53,605
-------------------- --------------------
Long-Term Debt
Long-Term Debt - 24,484
-------------------- --------------------
Total long-term debt - 24,484
-------------------- --------------------
Stockholders' Equity (Deficit)
Common stock: authorized 50,000,000 shares, no par value
1,000,018 issued and outstanding at December and March 1,579,786 1,579,786
Accumulated deficit (1,576,320) (1,592,820)
-------------------- --------------------
Total Stockholder's Equity (Deficit) 3,466 (13,034)
-------------------- --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 3,466 $ 65,055
==================== ====================
See accountants review report
MOUNTAINS WEST EXPLORATION, INC.
Statements of Operations
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30
2005 2004 2005 2004
--------------------- --------------------- --------------------- --------------
Revenues:
Oil and Gas Income $ 49,010 $ 32,712 $ 111,520 $ 62,699
Cost of Goods Sold - 1,000
--------------------- --------------------- --------------------- --------------
Net Income 49,010 32,712 111,520 61,699
Costs and Expenses:
Operating Expenses 5,782 11,548 33,431 24,183
Administration Expenses 8,375 4,645 27,171 17,093
--------------------- --------------------- --------------------- --------------
Total Operating Expenses 14,157 16,193 60,602 41,276
Net Income (Loss) from operations 34,853 16,519 50,918 20,423
Other Expense
Mineral Interest Transferred 12,740 12,740
Mineral Leases Expired 19,308 19,308
Write off of assets 2,370 2,370
Interest Expense (1,383) - (1,383)
--------------------- --------------------- --------------------- --------------
Total Other Expense 34,418 (1,383) 34,418 (1,383)
--------------------- --------------------- --------------------- --------------
Net Income (Loss) $ 435 $ 17,902 $ 16,500 $ 21,806
===================== ===================== ===================== ==============
Per Share Information
Weighted average number 1,000,018 37,019,721 1,000,018 37,019,721
of common share outstanding --------------------- --------------------- --------------------- --------------
Net loss per common share * * * *
* Less than $0.01
See accountants review report.
MOUNTAINS WEST EXPLORATION, INC.
Statements of Cash Flows
(Unaudited)
Indirect Method
Six Months Ended June 30,
2005 2004
---- ----
Cash Flows from Operating Activities
Net Income (Loss) $ 16,500 $ 19,040
Adjustments to reconcile net loss to cash used
by operating activities
Depreciation 216
Changes in operating assets and liabilities
(Decrease) Increase in accounts payable & accruals (78,089) 2,500
(Increase) Decrease in Other Assets 34,418 (17,767)
------------------ ------------------
Net Cash Used in Operating Activities (27,171) 3,989
Cash Flows from Financing Activities
Payments on Notes Payable (5,129)
------------------ ------------------
Net Cash Used for Financing Activities (5,129)
Net Decrease in Cash & Cash Equivalents (27,171) (1,140)
Beginning Cash & Cash Equivalents 30,637 11,711
------------------ ------------------
Ending Cash & Cash Equivalents $ 3,466 $ 10,571
================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ - $ 1,383
================== ==================
Cash paid for Income Taxes $ - $ -
================== ==================
See Accountants Review Report
MOUNTAINS WEST EXPLORATION, INC.
Stockholders' Equity (Deficit)
30-Jun-05
(Unaudited)
COMMON STOCK Total
Accumulated Stockholders'
# of shares Amount Deficit Equity (Deficit)
----------- ------ ------- ----------------
Balance - December 31, 2001 740,385 $ 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 259,638 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 Income for Period - - 16,500 16,500
---------- ----------- ----------- ----------
*Balance - June 30, 2005 1,000,018 $ 1,579,786 $(1,576,320) $ 3,466
========== =========== =========== ==========
*(Includes rounding shares) Adjusted for (1 for 50 reverse split as of April 12,
2005.)
See Accountants Review Report
MOUNTAINS WEST EXPLORATION, INC.
Notes to Financial Statements
June 30, 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 June 30,
2005 and the results of operations for the six-months ended June 30, 2005 and
2004, and cash flows for the three-months ended June 30, 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.
ITEM 2. MANAGEMENTS'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 the risks might include, but are not limited to, the following:
(a) volatility or decline of the Company's stock price
(b) potential fluctuation in quarterly results;
(c) failure of the Company to earn revenues or profits;
(d) inadequate capital to continue or expand its business, inability to
raise additional capital or financing to implement its business plans;
(e) failure to 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 owned small ownership interests in producing coal bed methane wells
in Las Animas county, Colorado. Due to the unitization of the Company's
fractional interests in wells into the Spanish Peaks Federal unit by the
operator, which resulted in a revenue back charge estimated at $35,000 to
$40,000 for overpayment of revenues, and the anticipation of future charges to
revenues for development and workover, the Company has assigned its interest in
the Nichols Lease and its .0007757% non-operating interest in the Spanish Peaks
unit to a non-affiliate in consideration for the assumption of all of the
revenue back charges and future assessments. The Company had leases on 4,000
acres for coal bed methane exploration in northern New Mexico, none of which
were explored or developed, and which have expired or not been renewed due to
costs. (See RESULTS OF OPERATIONS BELOW.)
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2005, COMPARED TO SAME
PERIOD IN 2004.
The Company had revenues from methane production in the quarter in 2005 of
$49,010 compared to $32,712 in 2004. The cost of goods sold was $0 in 2005 and
$1,000 in 2004. The operating expenses were $5,782 and $11,548 in the quarter in
2005 and 2004 respectively. Administration expense was $8,375 in 2005 and $4,645
in 2004. Total expenses were $40,157 in the quarter in 2005 compared to $16,193
in the same quarter in 2004. The net income on operations was $34,853 in the
quarter in 2005 compared to $16,519 in the same quarter in 2004. The net income
was decreased in the quarter in 2005 due to the writeoffs of certain assets
totalling $34,418. Net income was $435 in the quarter in 2005 compared to
$17,902 in the quarter in 2004. The leases that were held by production were
unitized into a Federal Unit by the owners of majority interests in the area,
thereby substantially reducing companys minority ownership interest and
resulting in an overpayment assessment of $35,000 to $40,000 by the operator.
The fractional interest was transferred to a non-affiliated party in exchange
for their assumption of the overpayment assessment by the operator, and
assumption of all liabilities for future operations and development on the unit
and lease. Since the offices had been previously closed the office equipment and
other equipment were considered to be abandoned as of the end of the current
quarter.
The profit per share was nominal in the period in 2005 and 2004.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO
SAME PERIOD IN 2004.
The company had revenues of $111,520 in the period in 2005 compared to $62,669
in the period in 2004. The increase was due to increased production and higher
gas prices from production sales. The cost of goods sold was none and $1,000 in
the six month period in 2005 and 2004 respectively.
The company experienced $33,431 in operating expense in the six month period in
2005 compared to $24,183 in such expense in the same period in 2004. There was
administrative expense incurred in the period of $27,171 in 2005 and $17,093 in
2004. The total operating expenses in the period were $60,602 in 2005 and
$41,276 in 2004. The net operating income for the period was $50,918 in 2005
compared to $20,423 in 2004. The company had other expenses from write offs of
interests in leases and equipment totalling $34,418 in the period in 2005,
compared to interest income of $1,383 in the period of 2004. The profit per
share was nominal in the period in 2005 and 2004. Net income was $16,500 and
$21,806 in the six month periods in 2005 and 2004 respectively. Since the
Company has no operating revenues as of period end, due to disposal of property
for assumption of debt it anticipates future quarterly losses in the range of
$10,000 to $20,000 per quarter until additional revenues can be achieved of a
which there is no assurance.
Changes in Financial Condition
During the period the Company experienced a decrease in cash position to $3,466
from year end 2004 of $30,637. The Company's total debt decreased by
approximately $78,089 during the period as a result of payments being made. The
Company's total liabilities are $0 at period end. It is Management's belief that
the Company will not be able to meet its operating expenses during the remainder
of the fiscal year without additional capital infusion. The Company divested its
minority interest in a lease and a unit for assumption of assessments and
future financial obligations. The Company wrote off its other carried assets
due to expiration, non renewal, and closing of the office.
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 and 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 the 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 limited business,
limited capital, and no debt, $3,466 in cash, no other 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
quarter 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's evaluation of these controls as of
the end of the period covered by this report that could have significantly
affected these controls subsequent to the date of the evaluation referred to in
the previous paragraph, including any corrective action with regard to
significant deficiencies and material weaknesses.
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 August 15, 2005
- - --------------------------------------------------------
Denis Iler, President, Chief Executive Officer
and Chief Financial Officer