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U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-QSB (Mark One)þ
    
    Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934For the quarterly period ended December 31, 2004o
    
    Transition report under section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from  to .
 Commission file number 0-18808 Great Western Land and
Recreation,
Inc.   Nevada
(State or other jurisdiction
of incorporation or organization)
    
    13-3530765
(IRS Employer Identification No.)
 7373 N. Scottsdale Road, Suite C-140
Scottsdale, AZ 85253
(480) 949-6007
(Address and telephone number of principal executive offices) Indicate by check mark whether the registrant: (1) has 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 þ      No o The number of shares of the registrants Common Stock outstanding at February 8, 2005 was
21,165,973.   1




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GREAT WESTERN LAND AND RECREATION, INC. CONTENTS PAGEPart IFinancial InformationItem 1. Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis
    
    
    15Item 3. Controls and Procedures
    
    
    19Part IIOther InformationItem 1. Legal Proceedings
    
    
    20Item 2. Changes in Securities and Use of Proceeds
    
    
    20Item 3. Defaults Upon Senior Securities
    
    
    20Item 4. Submission of Matters to a Vote of Security Holders
    
    
    20Item 5. Other Information
    
    
    20Item 6. Exhibits and Reports on Form 8-K
    
    
    20Signatures
    
    
    22Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  2




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BUSINESS RISKS AND FORWARD-LOOKING INFORMATION This Quarterly Report on Form 10-QSB includes forward-looking statements. Forward-looking
statements are often characterized by the use of words such as may, believes, plans, will,
anticipates, estimates, expects, or intends or by discussions of strategy, plans or
intentions. All forward-looking statements in this Form 10-QSB are made based on our current
expectations and estimates, which involve risks, uncertainties and other factors that could cause
results to differ materially from those expressed in forward-looking statements. You are cautioned
not to place undue reliance on any such forward-looking statements. We have no obligation to
publicly release the result of any revisions that may be made to any forward-looking statements to
reflect anticipated or unanticipated events or circumstances occurring after the date of such
statements. Forward-looking statements involve a number of risks and uncertainties including, but
not limited to, general economic conditions, the cyclical nature of the real estate market,
competitive factors, our ability locate new projects and to finance the acquisition and development
of these projects on acceptable terms, possible delays in bringing our projects to market, the
availability of qualified third-party contractors, our exposure to changes in interest rates,
demand for new housing starts, the availability of finished lots within a particular area and the
cost of compliance with government regulations. 3




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PART I FINANCIAL INFORMATION 
 Item 1.Financial Statements GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED BALANCE SHEET December 31,2004(unaudited)ASSETSCash and cash equivalents
    
    $
    680,244Notes receivable
    
    
    409,803Land held for development and sale
    
    
    11,087,814Receivable from related entities
    
    
    26,532Assets held
for sale
    
    
    11,263,809Property and equipment, net of accumulated
depreciation of $76,025
    
    
    132,536Other
    
    
    701,337$
    24,302,075LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesNotes payable
    
    $
    5,892,537Subordinated debt
    
    
    3,295,906Payable to related entities
    
    
    937,809Liabilities
associated with assets held for sale
    
    
    11,921,317Accounts payable and other accrued liabilities
    
    
    575,745Total liabilities
    
    
    22,623,314Minority interest
    
    
    (809,967
    )Stockholders equityPreferred stock, $0.001 par value; 10,000,000 shares authorized;
22,580 shares issued and outstanding;
20,000 additional shares issued, held by a subsidiary and
reported as treasury shares; liquidation value - $1,539,000
    
    
    1,406,413Common stock, $0.001 par value; 30,000,000 shares
authorized; 21,165,973 shares issued and outstanding
    
    
    21,165Additional paid-in capital
    
    
    2,584,738Accumulated other comprehensive loss
    
    
    (733
    )Accumulated deficit
    
    
    (1,522,855
    )Total stockholders equity
    
    
    2,488,728$
    24,302,075
 The accompanying notes are an
integral part of this consolidated financial statement. 4




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GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) Three months ended December 31,2004
    
    
    2003Land and lot sales
    
    $
    907,375
    
    
    $
    288,876Cost of land and lot sales
    
    
    419,213
    
    
    
    143,304Gross profit on sales
    
    
    488,162
    
    
    
    145,572Operating, selling, general and administrative expense
    
    
    466,655
    
    
    
    416,162Income (loss) from operations
    
    
    21,507
    
    
    
    (270,590
    )Other income (expense)Interest expense
    
    
    (80,262
    )
    
    
    (97,432
    )Interest income
    
    
    8,324
    
    
    
    2,099Other income
    
    
    39,001
    
    
    
    10,474(32,937
    )
    
    
    (84,859
    )Loss
from continuing operations
    
    
    (11,430
    )
    
    
    (355,449
    )Loss
from discontinued operations
    
    
    (68,770
    )
    
    
    (16,706
    )Net Loss
    
    
    (80,200
    )
    
    
    (372,155
    )Less: preferred stock dividends applicable to the period
    
    
    (16,430
    )
    
    
    (11,815
    )Net loss
available for common stock
    
    $
    (96,630
    )
    
    $
    (383,970
    )Basic
and diluted loss per common and common equivalent shareLoss from
continuing operations
    
    $
    
    
    
    $
    (0.02
    )Loss
from discontinued operations
    
    
    
    
    
    
    Net loss per common and common equivalent share
    
    $
    
    
    
    $
    (0.02
    )Weighted average common and common
equivalent shares outstandingBasic and diluted
    
    
    21,050,888
    
    
    
    20,852,790
 The accompanying notes are an integral part of these consolidated financial statements. 5




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GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE LOSS
(unaudited) AccumulatedOtherAdditional
    
    
    compre-
    
    
    
    
    
    
    Compre-Preferred Stock
    
    

    Common Stock
    
    
    paid-in
    
    
    hensive
    
    
    Accumulated
    
    
    hensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    loss
    
    
    deficit
    
    
    income (loss)Balance, September 30, 2004
    
    
    22,580
    
    
    $
    1,390,617
    
    
    
    21,008,399
    
    
    $
    21,008
    
    
    $
    2,576,898
    
    
    $
    (733
    )
    
    $
    (1,442,655
    )
    
    $
    Amortization of discount on
preferred stock
    
    
    
    
    
    
    15,796
    
    
    
    
    
    
    
    
    
    
    
    (15,796
    )
    
    
    
    
    
    
    
    
    
    
    Stock option excercises
    
    
    
    
    
    
    
    
    
    
    157,574
    
    
    
    157
    
    
    
    23,636
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80,200
    )
    
    
    (80,200
    )Comprehensive loss for the
three months ended
December 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (80,200
    )Balance, December 31, 2004
    
    
    22,580
    
    
    $
    1,406,413
    
    
    
    21,165,973
    
    
    $
    21,165
    
    
    $
    2,584,738
    
    
    $
    (733
    )
    
    $
    (1,522,855
    )
 The accompanying notes are an integral part of this consolidated financial statement. 6




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GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) Three months ended December 31,2004
    
    
    2003Net cash used in operating activities
    
    $
    (1,170,485
    )
    
    $
    (529,288
    )Cash flows used in investing activitiesCollection of receivable from related entities
    
    
    7,335
    
    
    
    22,151Purchases of property and equipment
    
    
    (45,784
    )
    
    
    (37,021
    )Net cash used in investing activities
    
    
    (38,449
    )
    
    
    (14,870
    )Cash flows from financing activitiesIssuance of notes payable
    
    
    734,745
    
    
    
    103,863Principal
payment on discontinued operations
    
    
    (9,262
    )
    
    
    Payments on notes payable
    
    
    (428,594

    )
    
    
    (148,667
    )Increase (decrease) in payable to related entities
    
    
    (83,401
    )
    
    
    116,757Decrease in subordinated debt
    
    
    
    
    
    
    (378,587
    )Net cash provided by (used in) financing activities
    
    
    213,488
    
    
    
    (306,634
    )Net decrease in cash and cash equivalents
    
    
    (995,446
    )
    
    
    (850,792
    )Cash and cash equivalents at beginning of period
    
    
    1,675,690
    
    
    
    1,100,844Cash and cash equivalents at end of period
    
    $
    680,244
    
    
    $
    250,052Supplemental disclosure of cash flow information:Cash paid during the period for interest, net of amount capitalized
    
    $
    47,481
    
    
    $
    10,599Noncash investing and financing activitiesAccrued interest capitalized included in debt
    
    
    38,222
    
    
    
    57,528Common stock issued in exchange for 47.5% minority interest in Firebird
Financial, LLC and an option to purchase land
    
    
    
    
    
    
    15,000Stock
options delivered to the company in payment of exercised stock options
    
    
    23,636
    
    
    
    
 The accompanying notes are an integral part of these consolidated financial statements. 7




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GREAT WESTERN LAND AND RECREATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) NOTE A  BACKGROUND AND BASIS OF PRESENTATION The accompanying consolidated financial statements as
of December 31, 2004 and for the three month periods ended December 31,
2004 and 2003 include the accounts of Great Western Land and
Recreation, Inc. and
its wholly-and majority-owned subsidiaries. In addition, the Company has consolidated,
since November 8, 2004, #22 Stafford Springs, a limited partnership in which the  Company
holds a 1% general partnership interest and a 33% limited partnership interest. The Company
was deemed to control the limited partnership when it received approval to become the general
partner, which was effective November 8, 2004. Prior to November 8, 2004, the Company
accounted  for its investment in #22 Stafford Springs using the equity method. Great
Western Land and Recreation and its consolidated subsidiaries are collectively referred
to as the Company.  Investments in companies that represent 20% to 50% of the ownership
interest are accounted for on the equity method unless the Company is deemed to control
the investee. Investments in companies that represent less than a 20% ownership interest
are accounted for on the cost basis. All material intercompany  accounts and transactions
have been eliminated. The Company is engaged principally in the acquisition,
development and sale of land located in
Houston and College Station Texas, Phoenix and Glendale, Arizona and certain country areas of New
Mexico and Arizona. Transactions include both retail and non-retail land sales, depending upon the
progress of the development and sub-division process. Great Western Land & Recreation, Inc. is incorporated in the state of Nevada. The accompanying unaudited financial information reflects all adjustments, consisting only of
normal recurring adjustments, that are, in the opinion of management, necessary for a fair
statement of the results for the interim periods presented. Such financial information should be
read in conjunction with the consolidated financial statements and related notes as of September
30, 2004 included in Form 10-KSB filed with the SEC on January 19, 2005. The Company maintains its records and prepares its financial statements in accordance with
accounting principles generally accepted in the United States of America for real estate
operations. In preparing financial statements in conformity with accounting principles generally
accepted in the United States of America, management is responsible for making estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and reported amounts of
revenues and expenses during the reported period. Actual results could differ from those estimates. NOTE B  STOCK BASED COMPENSATION The Company accounts for its stock option plan under the recognition and measurement principles of
APB Opinion No. 25, Accounting for Stock Issued to Employeesand related Interpretations using the
intrinsic value based method. No stock-based employee compensation cost is reflected in net
earnings, as all options granted under this plan had an exercise price equal to the market value of
the underlying common stock on the date of grant. The following table illustrates the effect on
net earnings and earnings per share if the Company had applied the fair value recognition
provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based
employee compensation for the three month periods ended December 31, 2004 and 2003. Three months
    
    
    Three monthsended
    
    
    endedDecember 31,
    
    
    December 31,2004
    
    
    2003Net loss as reported
    
    $
    (80,200
    )
    
    $
    (372,155
    )Deduct: Total stock-based employee compensation expense
determined under fair value based method (1)
    
    
    (2,295
    )
    
    
    (2,679
    )Pro forma net loss
    
    $
    (82,495
    )
    
    $
    (374,834
    )Loss per share:Basic and diluted - as reported
    
    $
    
    
    
    $
    (0.02
    )Basic and diluted - pro forma
    
    $
    
    
    
    $
    (0.02
    )
   (1)
    The fair value method amortizes the estimated fair value of the options at date of grant
over the vesting period. The fair value of these options was estimated at the date of grant
assuming a risk-free interest rate of 4.88%, an expected option life of 10 years with no
 dividends. The expected option life is based on all options being exercised
just prior to expiration. 8




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NOTE C  NET LOSS PER SHARE Basic net loss per share is computed by dividing net loss less preferred stock dividends applicable
to the period by the weighted average common shares outstanding during the period. Diluted net
loss per share is the same as basic loss per share because the convertible preferred stock
and the stock options are either anti-dilutive or have no impact and therefore are excluded from
the computation. NOTE D  INVESTMENT IN UNCONSOLIDATED COMPANY On September 19, 1997, Laguna Investments L.L.C. (Laguna Investments), a subsidiary of the
Company, acquired a 25.52% ownership in Laguna at Arrowhead Apartments L.L.C. (Laguna), which
owns an apartment complex in Phoenix, Arizona. On December 30, 2002, the Company sold a 7.1%
interest in Laguna Investments to Lafayette Financial Services, L.L.C. (Lafayette) for $35,500 in
partial payment of the note payable to Lafayette. Lafayette is 50% owned by the Chairman of the
Companys Board of Directors with the remaining ownership balance belonging to one outside
investor. On September 29, 2003, the Company sold an additional 6.37% interest in Laguna
Investments to Lafayette for $31,855, also in partial payment of the note payable to Lafayette. On
September 29, 2003, the Company also sold a 3.0% interest in Laguna Investments to Torok Partners,
LLC for $15,000 in exchange for Torok Partners minority interest in one of the Companys projects.
Torok Partners is controlled by the Chairman of the Companys Board of Directors. As a result of
these transactions, at December 31, 2004, the Company owns 83.53% of Laguna Investments, which
represents a 21.32% interest in Laguna. This investment in Laguna is accounted for using the equity method. Under the equity method, the
Companys investment balance approximates the Companys original cost adjusted for its equity
interest in the earnings and losses of Laguna since the date of acquisition. At December 31, 2004
the Companys investment balance in Laguna was $-0-. Under the terms of the Laguna at Arrowhead
Apartments L.L.C. operating agreement, Laguna Investments L.L.C. is subject to additional capital
calls in connection with its ownership interest in Laguna. Laguna Investments L.L.C. paid in
additional capital of $53,530, which was paid in fiscal 2003. Unrecognized losses from Laguna as of
December 31, 2004 total $323,600. On February 14, 2005 the
pending sale of Laguna at Arrowhead Ranch Apartments
closed. The Company has received cash proceeds of approximately $878.000, net
of the amounts due to Lafayette and Torok Partners, as a result of this closing.
According to the management company  for Laguna at Arrowhead Ranch Apartments,
this sum represents approximately 98% of the expected total distribution from the
sale. The remainder will be distributed as the affairs of Laguna at Arrowhead Ranch
are wound up. This sale will be accounted for in the Companys financial statements
for the quarter ending March 31, 2005. The gain is expected to approximate the
amount of  the distribution. Summarized unaudited financial information
for Laguna is as follows: December 31,2004Current assets
    
    $
    1,129,426Noncurrent assets
    
    
    8,162,311Total assets
    
    $
    9,291,737Current liabilities
    
    $
    1,311,650Noncurrent liabilities
    
    
    9,186,845Members capital
    
    
    (1,206,758
    )$
    9,291,737
 Three months
    
    
    Three monthsended
    
    
    endedDecember 31,
    
    
    December 31,2004
    
    
    2003Revenues
    
    $
    396,884
    
    
    $
    362,997Net loss
    
    
    (116,338
    )
    
    
    (121,208
    )
 9




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NOTE E  RELATED ENTITIES Related entity receivables/payables are as follows at December 31, 2004: Receivable from related entities:Minority investor in Houston Warren Ranch Partners, LLC (2)
    
    $
    18,500Other
    
    
    8,032$
    26,532Payable to related entities:Minority investors in Glendale Condominiums, LLC (1)
    
    $
    772,184Minority investors in Villa Maria, LLC (3)
    
    
    165,625$
    937,809
 The subordinated debt is also due to a related entity. See Note F for further discussion. 10




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(1)
    The Company has a 70% interest in Glendale Condominiums, LLC. The land for the project was
purchased from an individual and a trust who own the other 30% of the project. The payable
represents the balance due, including interest at 8% per annum, for this purchase. Principal
and interest are due quarterly from September 2008 through September 2018. The land cost and
preliminary development costs for this project total $3,805,934 at December 31,
2004  and are included in land held for development and
sale.  (2)
    The Company has a total interest of 70% in Houston Warren Ranch Partners, LLC (Warren
Ranch) which is derived from its 55% direct ownership in Warren Ranch as well as a 15%
indirect interest from its one third ownership in Jessica Star Partners, LLC. Jessica Star
Partners, LLC owns 45% of Warren Ranch and consists of the following members owning a one
third interest in the company: Great Western Land & Recreation, Inc., the Chairman of Great
Westerns Board of Directors and Brad Dill of BD Realty. The note receivable from Jessica Star
Partners, LLC bears interest at 10%, with principal and interest due
on September 24, 2004. The Company is currently seeking either
repayment or an extension of this loan. During the three months ended
December 31, 2004 the Company paid BD Realty $53,250 in fees related to the development
of Mallard Crossing and Westchester Lakes, as well as rent on the Houston Office which is
leased from them.  (3)
    The Company has an 82.5% interest in Villa Maria, LLC, which is constructing a condominium
project in College Station, Texas called Woodland Court. The remaining 17.5% is owned by
minority investors, consisting of three members of the Companys Board of Directors. The
payable represents the balance due to these investors. Interest on this balance accrues at 10%
per annum, with principal and interest due at the end of the project. NOTE F  SUBORDINATED DEBT The Companys operations have been partially financed with periodic advances in prior years from
Amortibanc Investments, LLC. The advances are subordinate to the Companys bank financing and bear
interest at 4% to 10%. The interest accrued on these advances has typically been added to the
subordinated debt. Payments on the debt are made only when cash flow from a land sale, after
payment of bank debt, exceeds the Companys operating cash requirements. This determination of
operating cash requirements is made by the Companys management, however under the terms of the
bank loan the Company obtained to finance the Woodland Court condominium project, the outstanding
balance of the subordinated debt may not be less than $3,000,000. On October 31, 2003, the Company
made a payment of $378,587. Also included in subordinated debt is a note payable related to the
purchase of land in College Station, Texas for the Woodland Court condominium project. The note
bears interest at 5.0% and is subordinate to other loans on this property. Principal on the note
is due on April 1, 2009, with interest payments due quarterly. The balance due on this note,
including accrued interest, is $70,875  at December 31, 2004. NOTE G  COMMITMENTS AND CONTINGENCIES The Company has sold notes receivable with repayment terms of up to 20 years, with recourse upon
nonpayment by the debtor, of $215,167 and $81,741 during the three months ended December 31, 2004
and December 31, 2003, respectively. The remaining balances due, with recourse, of all notes sold
are $1,782,325 as of December 31, 2004. Fifteen percent of the note sales proceeds are retained by the purchaser of the notes as a
nonpayment reserve and returned to the Company when the original land purchasers pay off the note
balances.

The reserve balance was $252,903 at December 31, 2004
 and is included in other assets, net of an allowance established for recourse
chargeback of $31,286. If the Company incurs a chargeback, ownership of the original
land sold will revert to the Company and can be resold to help recover any losses incurred by the
Company as a result of the chargeback. During the three months ended December 31, 2004 and 2003,
the Company received no chargebacks. From time-to-time the Company is involved in litigation arising in the normal course of business.
Based on information currently available, management does not believe that the ultimate resolution
of any such matters will have a material adverse effect on the Companys financial condition,
results of operations or cash flow. The Company entered into a five-year employment agreement with its CEO during 2001. In the event
the Company consummates an acquisition (as defined in the agreement) during the terms of the
agreement, the contract provides for salary increases and issuance of
options to acquire a total of 600,000 common shares of the surviving corporation at a price not to
exceed the fair market value of such shares on the closing date of the acquisition. The agreement
also provides for severance payments upon termination in the amount of the total compensation for
the remainder of the contract terms and a consulting arrangement upon retirement of the CEO. 11




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NOTE H  PREFERRED STOCK The Company has authorized three series of preferred stock: Series A Cumulative Convertible
Preferred Stock (Series A Preferred), Series B Cumulative Convertible Preferred Stock (Series B
Preferred) and Series C Cumulative Convertible Preferred Stock (Series C Preferred).

As of
December 31, 2004, there were 14,380 shares of Series A Preferred issued and
outstanding. As of December 31, 2004, there were 8,200  shares of
Series C Preferred issued and outstanding. As of December 31, 2004, 20,000 shares of
Series B Preferred have been issued and are held by a subsidiary of the Company. Series A Preferred Stock Effective June 28, 2002, the Company issued 14,380 shares of Series A Preferred with a liquidation
value of $719,000. The Series A Preferred is senior to the Series B Preferred and to the Series C
Preferred, and is not redeemable at a fixed or determinable price or on a fixed or determinable
date or upon the occurrence of any event that is not solely within the Companys control. It is
convertible by the holder at any time into shares of the Companys common stock at a price equal to
the average market price of the Companys common stock for the thirty business days immediately
preceding the conversion, and is redeemable by the Company at any time after one year from the date
of issuance. The Series A Preferred has a cumulative dividend, payable semi-annually at the
following rates: First year from the date of issuance
    
    0% per annumSecond year from the date of issuance
    
    2% per annumThird year from the date of issuance
    
    4% per annumFourth year from the date of issuance
    
    5% per annumFifth year from the date of issuance
    
    6% per annumThereafter
    
    7% per annum
 As the Series A Preferred has an increasing dividend rate, it was initially recorded at its fair
value at the date of its issuance by discounting the preferred stock using managements estimate of
the current market rate for dividend yields and comparing it to the actual dividend rate of the
stock. This resulted in a discount of $114,071, which is being amortized to additional paid in
capital over the period of increasing dividend rates of the stock. The balance of the Series A
Preferred (net of unamortized discount) was $694,319 at December 31, 2004. At December 31, 2004, dividends in arrears totaled $28,760, or $2 per
share. Series B Preferred Stock Effective June 1, 2004, the Company issued 20,000 shares of Series B Preferred with a liquidation
value of $1,000,000 to Houston Warren Ranch Partners, LLC, a majority-owned subsidiary of the
Company. The Series B Preferred was then pledged by Houston Warren Ranch Partners, LLC as
collateral on a loan. The Series B Preferred ranks junior to the Series A Preferred, but is senior
to the Series C Preferred, and is not redeemable at a fixed or determinable price or on a fixed or
determinable date or upon the occurrence of any event that is not solely within the Companys
control. It is convertible by the holder at any time into shares of the Companys common stock at a
price equal to the average market price of the Companys common stock for the thirty business days
immediately preceding the conversion, and is redeemable by the Company at any time after one year
from the date of issuance. The Series B Preferred has a cumulative dividend, payable semi-annually
at the following rates: First year from the date of issuance
    
    2.0% per annumSecond year from the date of issuance
    
    3.0% per annumThird year from the date of issuance
    
    3.5% per annumThereafter
    
    4.0% per annum
 As a majority-owned subsidiary of the Company, the accounts of Houston Warren Ranch Partners, LLC
are included in the accompanying consolidated financial statements. Accordingly, the shares and
dividends of Series B Preferred owned by Houston Warren Ranch Partners, LLC are not reported in the
accompanying consolidated balance sheet. Series C Preferred Stock Effective March 31, 2004, the Company issued 8,200 shares of Series C Preferred with a liquidation
value of $820,000. The shares were issued in exchange for land with a fair market value of
$678,581. The Series C Preferred ranks junior to the Series A Preferred and to the Series B
Preferred, and is not redeemable at a fixed or determinable price on a fixed or determinable date
or upon the 12




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occurrence of any event that is not solely within the Companys control. It is convertible by the
holder at any time into shares of the Companys common stock at the following prices: First year from the date of issuance
    
    $1.00 per share of common stockSecond through fourth years from
the date of issuance
    
    $2.00 per share of common stockThereafter
    
    $3.50 per share of common stock
 The Series C Preferred is redeemable by the Company at any time after five years from the date of
issuance. It has a cumulative dividend, payable semi-annually at the following rates: First year from the date of issuance
    
    1% per annumSecond year from the date of issuance
    
    2% per annumThird year from the date of issuance
    
    3% per annumFourth year from the date of issuance
    
    4% per annumFifth year from the date of issuance
    
    5% per annumThereafter
    
    7% per annum
 As the Series C Preferred has an increasing dividend rate, it was initially recorded at its fair
value at the date of its issuance by discounting the preferred stock using managements estimate of
the current market rate for dividend yields and comparing it to the actual dividend rate of the
stock. This resulted in a discount of $141,419, which is being amortized to additional paid-in
capital over the period of increasing dividend rate of the stock.

The balance of the Series C
Preferred was $712,094  on December 31, 2004. At
December 31, 2004 dividends in arrears totaled $4,100 or $0.50 per share. NOTE I - STOCK OPTION PLAN The Company has established a 2001 stock option plan and has reserved 3,500,000 shares to be issued
under the plan. All employees are eligible to participate in this plan and participants shall be
selected by an Administrative Committee consisting of not less than three members of the Companys
Board of Directors. The options generally vest over a period of 3 years, however certain options
granted to employees vest sooner. The options expire no more than 10 years from the date of grant.
Upon termination of an option holders employment, all unvested options will immediately terminate
and vested options will generally remain exercisable for a period of three months after date of
termination (one year in case of disability or death). The options issued in 2003 and 2004 were at
exercise prices which approximated the fair market value of the Companys common stock at the date
of grant. Prior to the time a public market existed for the Companys common stock, fair market
value was determined by the Board of Directors. Thereafter, fair value was determined by the most
recent closing price for the Companys common shares on the over-the-counter bulletin board on the
date of grant. At December 31, 2004 options for 1,210,500 shares of common stock were available for
issuance under the plan, respectively. Additional information with respect to stock option plan
activity is as follows: Outstanding OptionsWeightedNumber
    
    
    Averageof
    
    
    ExerciseShares
    
    
    PriceSeptember 30, 2004
    
    
    2,289,500
    
    
    $
    0.24Grants
    
    
    350,000
    
    
    $
    0.39Exercises
    
    
    (157,574
    )
    
    $
    0.15Cancellations
    
    
    (192,426
    )
    
    $
    0.15December 31, 2004
    
    
    2,289,500
    
    
    $
    0.28
 NOTE J INCOME TAXES Income taxes are accounted for using the asset and liability method. Under this method, deferred
income tax assets and liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which these temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is provided for deferred tax assets for which realization is
dependent on future taxable income. 13




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During the three month period ended December 31, 2004, the valuation allowance was increased to
account for the net operating loss during the periods.As a result, there is no income tax expense
for the three month period ended December 31, 2004. NOTE K  RELATED PARTY TRANSACTIONS Effective July 8, 2003, in exchange for a $650,000 note payable, the Company acquired land in
Stafford, Texas for $125,000 and also agreed to become a general partner and acquire a 34% interest
in #22 Stafford Springs LTD (Stafford Springs) for $525,000. Stafford Springs owns the Summer
Park Duplexes, a 168-unit, HUD-financed, manufactured housing duplex rental community in Stafford,
Texas. This note was paid off on September 29, 2003 at a discount of $260,000. The Chairman of the
Companys board of directors also beneficially owns or controls as fiduciary 33% of Stafford
Springs. On February 10, 2005 the Company sold the limited liability companies (the Stafford LLCs) through
which it held its general and limited partnership interests in
Stafford Springs. Please refer to Notes L and M for additional
information. On September 19, 1997, Laguna Investments L.L.C. (Laguna Investments), a subsidiary of the
Company, acquired a 25.52% ownership in Laguna at Arrowhead Apartments L.L.C. (Laguna), which
owns an apartment complex in Phoenix, Arizona. On December 30, 2002, the Company sold a 7.1%
interest in Laguna Investments to Lafayette for $35,500 in partial payment of the note payable to
Lafayette. Lafayette is 50% owned by the Chairman of the Companys Board of Directors. On September
29, 2003, the Company sold an additional 6.37% interest in Laguna Investments to Lafayette for
$31,855, also in partial payment of the note payable to Lafayette. On September 29, 2003, the
Company also sold a 3.0% interest in Laguna Investments to Torok Partners, LLC for $15,000 in
exchange for Torok Partners minority interest in one of the Companys projects. Torok Partners is
controlled by the Chairman of the Companys Board of Directors. As a result of these transactions,
at December 31, 2004, the Company owns 83.53% of Laguna Investments, which
represents a 21.32% interest in Laguna (see Note D). In December 2003, three members of the Companys Board of Directors invested a total of $150,000 in
exchange for a subordinated note payable from Villa Maria, LLC and a 17.5% minority interest in
Villa Maria, LLC. The Company currently owns the remaining 82.5% of Villa Maria, LLC together with
a subordinated payable. Villa Maria, LLC is constructing Woodland Court, a planned 43-unit
condominium project located in College Station, Texas. Interest on the $150,000 balance accrues at
10% per annum, with principal and interest due at the end of the project (see Note E). The Company
believes that the terms of the subordinated note payable are at least as good as it could have
obtained through arms-length negotiations. NOTE L  DISCONTINUED
OPERATIONS Effective July 8, 2003, the
Company agreed to become a general partner and acquire a 34%interest
in #22 Stafford Springs LTD (Stafford Springs) for $525,000.
Stafford Springs owns the Summer Park Duplexes, a 168-unit, HUD-financed, manufactured
housing duplex rental community in Stafford, Texas. The Company recorded this
investment in Stafford Springs as a deposit pending approval by HUD of the general
partnership ownership transfer. The Company has recorded its 34% of Stafford Springs
losses since July 8, 2003. The Company was notified by HUD , effective November 8,
2004, that the Company had been approved as the general partner of Stafford Springs.
As general partner, the Company was deemed to control Stafford Springs and has
therefore consolidated Stafford Springs in the accompanying financial statements since
November 8, 2004. The Company, as of December 31, 2004 has adopted a
plan to sell its interest in Stafford Springs. The assets and liabilities of Stafford
Springs are therefore reflected as held for sale in the accompanying
balance sheet. Also,
due to the plan to dispose of Stafford Springs, the operations of Stafford Springs are
classified as discontinued operations in the accompanying statements of operations. On February 10, 2005, the Company sold the
limited liability companies (the Stafford LLCs) through
which it held its general and
limited partnership interest in Stafford Springs. The Stafford LLCs were sold to Lafayette Financial
Services, LLC (Lafayette). Lafayette is owned by the
Chairman of the Companys board of
directors and an unrelated party. The consideration for the sale was $17,000 in cash and an
earn-out agreement through which the Company will receive 33% of the proceeds of a future
sale of the Summer Park Duplexes.  The Company therefore no longer has any ownership
interest in Stafford Springs. This sale will be accounted for in the
Companys
financial statements for the quarter ending March 31, 2005. The Companys net
investment at December 31, 2004 was $186,963. Summarized unaudited financial information
for Stafford Springs is as follows: December 31,2004Current assets
    
    $
    163,682Land and
buildings
    
    
    10,345,604Other noncurrent assets
    
    
    754,523Total assets
    
    $
    11,263,809Current liabilities
    
    $
    504,964Note Payable
    
    
    11,416,353Total liabilities
    
    $
    11,921,317
 A summary of loss from
discontinued operations is as follows: Three months
    
    
    Three monthsended
    
    
    endedDecember 31,
    
    
    December 31,2004
    
    
    2003Operations of Stafford Springs from November 8, 2004
through December 31, 2004Sales
    
    $
    174,684
    
    
    $
    Operating expenses
    
    
    (294,234
    )
    
    
    Minority
interest
    
    
    79,383
    
    
    
    (40,167
    )
    
    
    Equity in operating losses of Stafford Springs prior to
consolidation
    
    
    (28,603
    )
    
    
    (16,706
    )Loss from discontinued operations
    
    $
    (68,770
    )
    
    $
    (16,706
    )
 NOTE M  SUBSEQUENT EVENT On February 10, 2005 the Company sold the limited liability companies (the Stafford LLCs) through
which it held its general and limited partnership interests in Stafford Springs. The Stafford LLCs
were sold to Lafayette Financial Services, LLC (Lafayette). Lafayette is owned by the Chairman
of the Companys board of directors and an unrelated party. The consideration for the sale was
$17,000 in cash and an earn-out agreement through which the Company will receive 33% of the
proceeds of a future sale of the Summer Park Duplexes. The Company therefore no longer has any
ownership interest in Stafford Springs. This sale will be accounted for in the Companys financial
statements for the quarter ending March 31, 2005. On February 14, 2005 the pending sale of Laguna at Arrowhead Ranch Apartments closed. The Company has received cash proceeds of
approximately $878,000, net of the amounts due to Lafayette and Torok Partners, as a result of this closing. According to the
management company for Laguna at Arrowhead Ranch Apartments, this sum represents approximately 98% of the expected total
distribution from the sale. The remainder will be distributed as the affairs of Laguna at Arrowhead Ranch are wound up. This sale
will be accounted for in the Companys financial statements for the quarter ending March 31, 2005. The gain is expected to
approximate the amount of the distribution. 14




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Item 2.Managements Discussion and Analysis The following discussion includes forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from the results contemplated by these forward-looking
statements due to certain factors, including those discussed below, elsewhere in this Form 10-QSB
and in the Companys other filings with the SEC. Overview Great Western Land and Recreation, Inc. (we or the Company) is incorporated in the state of
Nevada. We acquire, develop, market, sell and finance residential and recreational property in the
southwestern United States, with over 10,000 acres in various stages of development. Our properties
are located in Arizona, Texas and New Mexico and consist of a variety of lifestyle choices
including townhomes and condominiums for first-time homebuyers, vacant lots for commercial
homebuilders and ranch lots for those seeking recreational and investment properties. Over the
years, we have developed a number of subdivision projects in the Houston area, with additional
subdivision projects currently in various stages of development. Subdivided residential lots are
marketed principally to builders seeking to build homes in quality residential settings in the low-
to mid-price range. Our ranch properties are marketed to purchasers seeking a long-term investment
in up-scale vacant ranch land. In addition, we engage in ranching and agricultural activities on
some of our properties until the properties are either developed or sold. These activities include
the planting of tree farms, and the leasing of ranch property for cattle grazing. As an additional
marketing incentive to customers for our recreational land, we offer financing on individual
purchases of ranch lots. The majority of these loans are then sold to third parties. Results of Operations Three months ended December 31, 2004 (first quarter of fiscal 2005) compared to the three months
ended December 31, 2003 (first quarter of fiscal 2004) Land and lot sales.Land and lot sales increased $618,499 or 214% to $907,375 in the first quarter
of fiscal 2005 from $288,876 in the first quarter of fiscal 2004. This increase was principally the
result of increases in ranch land sales of $520,859 partially offset by decreases in residential
lot sales of $16,728. The decline in residential lot sales reflects the fact that our current
project in Houston is nearing completion. We expect the Coventry subdivision to be sold out in mid
fiscal 2005. However, we expect Woodland Court, a planned 43-unit condominium project located in
College Station, Texas, to begin generating revenue in the spring of 2005. In addition, Mallard
Crossing and Westchester Lakes, two new large residential developments in the Houston metro area,
are expected to begin generating revenue in late calendar 2005. Due to the sale of substantially all of the Willow Springs Ranch in September 2004, the majority of
ranch land sales in the first quarter of fiscal 2005, was generated at the Wagon Bow Ranch. Gross
margins are significantly higher at the Wagon Bow Ranch due to higher average per-acre selling
prices. We believe that with an increased emphasis on marketing, along with an improvement in the
economy, this will lead to a continued increase in ranch land sales at the Wagon Bow Ranch. Our land and lot sales are affected by numerous factors including mortgage interest rates, demand
for new housing starts and the availability of finished lots within a particular area. Generally,
the pace of sales and the price per lot increase over the life of a project as developments gain
popularity and as contract price escalators become effective. Cost of land and lot sales.Cost of land and lot sales increased $275,909, or 193%, to $419,213 in
the first quarter of fiscal 2005 from $143,304 in the first quarter of fiscal 2004. As a percentage
of land and lot sales, the cost of land and lot sales decreased to 46% in the first quarter of
fiscal 2005 from 50% in the first quarter of fiscal 2004. This was primarily due to a change in
the mix of sales, with a higher percentage of our sales coming from ranch land sales during the
first quarter of fiscal 2005 compared to the first quarter of fiscal 2004. Ranch land sales
historically have had significantly higher gross margins than residential lot sales. Operating, selling, general and administrative expenses.Operating, selling, general and
administrative expenses increased $50,493, or 12%, to $466,655 in the first quarter of fiscal 2005
from $416,162 in the first quarter of fiscal 2004. The increase was primarily due to increases in
salaries of $15,727, payroll taxes of $10,868 and travel of $14,586, partially offset by decreases
in professional fees of $11,782 and taxes of $5,793. Salaries and payroll taxes increased due to
higher staffing levels this quarter as well as compensation of $23,793 related to a cashless option
exercise for shares of our common stock. Interest expense.Interest expense decreased $17,170 to $80,262 in the first quarter of fiscal 2005
from $97,432 in the first quarter of fiscal 2004. The decrease was primarily due to the sale of
substantially all of the Willow Springs Ranch and the payoff of the related indebtedness. 15




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Interest income.Interest income increased $6,225 to $8,324 in the first quarter of fiscal 2005
from $2,099 in the first quarter of fiscal 2004 due to higher outstanding balances on notes
receivable. Loss from discontinued
operations. We were notified by HUD,
effective November 8, 2004, that we had been approved as the general partner of Stafford Springs. We were therefore deemed to control Stafford Springs and have therefore consolidated Stafford Springs in our financial statements since November 8, 2004. As of December 31, 2004,
we adopted a plan to sell our interest in Stafford Springs. The
assets and liabilities of Stafford Springs are therefore reflected as
held for sale in our balance sheet, and the operations of Stafford
Springs are classified as discontinued operations in our statements of operations. The loss from discontinued operations was $68,770 and $16,706 for the three-months periods ended December 31, 2004 and 2003 respectively. On February 10, 2005, we
sold the limited liability companies (the Stafford LLCs)
through which we held our general and limited partnership interests
in Stafford Springs. The Stafford LLCs were sold to Lafayette Financial Services LLC (Lafayette). Lafayette is owned by the Chairman of our board of directors and an unrelated party. The consideration for the sale was $17,000
in cash and an earn-out agreement through which we will receive 33% of the proceeds of a future sale of the Summer Park Duplexes. We therefore no longer have any ownership interest in Stafford Springs. Other income.
Other income was $39,001 in the first quarter of fiscal 2005 compared
to an income of $10,474 in the first quarter of fiscal 2004. Net loss.Net loss was $80,200 in the first quarter of fiscal 2005 compared to a net loss of
$372,155 in the first quarter of fiscal 2004. This decrease is primarily due to a $342,590 increase
in gross profit primarily due to increased land sales at the Wagon Bow Ranch. Liquidity and Capital Resources In this section of the management discussion and analysis segment, we discuss:  
    sources and uses of cash, and significant factors that influence both;
    our analysis of our cash flows for the first three months of fiscal 2005; and
    our commitments and contractual obligations. All of these factors are important to obtain an understanding of our ability to meet our current
obligations, to fund working capital, to finance the acquisition and development of new projects
and to pay down existing debt. Sources and uses of cash. We require cash to fund our operating expenses, to finance the
acquisition and development of new projects and to pay debt service. Our principal sources of
liquidity are cash on hand, cash generated from land and lot sales, cash generated from bulk land
sales, collections on notes receivable, refinancings and funds from external borrowings. We may
also raise additional funding through future equity offerings, subject to market conditions. We believe that the key factors that could affect sources of cash include:  
    factors that affect our results of operations and cash flows, including reduced demand
for land resulting from the economic slowdown, competitive pricing pressures; and
    factors that affect our access to bank financing that could impair our ability to obtain
needed financing on acceptable terms to finance the acquisition and development of new
projects. 16




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##### Table of Contents



Analysis of cash flows.Cash flow information for the three months ended December 31, 2004 and 2003 follows: Three months ended December 31,2004
    
    
    2003Unaudited
    
    
    UnauditedNet cash used in operating activities
    
    $
    (1,170,485
    )
    
    
    (529,288
    )Cash flows provided by (used in) investing activitiesCollection of receivable from related entities
    
    
    7,335
    
    
    
    22,151Purchases of property and equipment
    
    
    (45,784
    )
    
    
    (37,021
    )Net cash used in investing activities
    
    
    (38,449
    )
    
    
    (14,870
    )Cash flows from financing activitiesIssuance of notes payable
    
    
    734,745
    
    
    
    103,863Principal
payment on discontinued operations
    
    
    (9,262
    )
    
    
    Payments on notes payable
    
    
    (428,594
    )
    
    
    (148,667
    )Increase (decrease) in payable to related entity
    
    
    (83,401
    )
    
    
    116,757Decrease in subordinated debt
    
    
    
    
    
    
    (378,587
    )Net cash provided by (used in) financing activities
    
    
    213,488
    
    
    
    (306,634
    )Net decrease in cash and cash equivalents
    
    
    (995,446
    )
    
    
    (850,792
    )Cash and cash equivalents at beginning of period
    
    
    1,675,690
    
    
    
    1,100,844Cash and cash equivalents at end of period
    
    $
    680,244
    
    
    $
    250,052
 Cash flow activity for the three months ended December 31, 2004 (first three months of fiscal
2005).As of December 31, 2004, we had cash and cash
equivalents of $680,244 which is a decrease in cash and cash
equivalents of $995,446 in the first three months of fiscal 2005. Cash flow used in operating
activities was $1,170,485 for the first three months of fiscal 2005
compared to $529,288 of cash used in the first three months of fiscal 2004, an increase of
$641,197. Factors causing decreased cash flows from operating activities in the first three months
of fiscal 2005 as compared to the first three months of fiscal 2004 include:  
    Uncollected notes receivables from current years sales totaled $146,739 in the first
three months of fiscal 2005 compared to $53,074 in the first three months of fiscal 2004.
The increase in fiscal 2005 was primarily due to the increase of notes issued
as a result of the increased sales activity of land sales at the Wagon Bow Ranch;
    Land held for development and sale increased $1,520,771 in the first three months of
fiscal 2005 compared to an increase of $120,528 in the first three months of fiscal 2004.
The increase in fiscal 2005 is primarily due to the capitalization of development costs
related to our condominium project in Glendale, Arizona, our condominium project in College
Station, Texas, and our Mallard Crossing and Westchester Lakes projects in the Houston area
for a residential lot development. Construction costs for the Glendale and College Station
projects are being funded primarily through bank loans. These were partially offset by the following factor:  
    An increase in land and lot sales to $907,375 in the first three months of fiscal 2005
from $288,876 in the first three months of fiscal 2004; 17




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##### Table of Contents



Looking forward, we expect cash flow from operations to increase over the next twelve months,
because of several new projects that will come on-line during the next twelve months. Net cash used in investing activities was $38,449 in the first three months of fiscal 2005 compared
to cash used of $14,870 in the first three months of fiscal 2004. Collections of receivables from
related entities totaled $7,335 in the first three months of fiscal 2005 compared to $22,151 in the
first three months of fiscal 2004. We purchased $45,784 of property and equipment in the first
three months of fiscal 2005 compared to $37,021 in the first three months of fiscal 2004. We are
not planning any significant purchases of property and equipment for the remainder of the fiscal
year. Net cash provided by
financing activities was $213,488 in the first three months of fiscal 2005
compared to cash used of $306,634 in the first three months of fiscal 2004. During the first three
months of fiscal 2005, additional borrowings totaled $734,745 compared to $103,863 in the first
three months of fiscal 2004. The borrowings in fiscal 2005 consisted primarily of $531,303 related
to construction on Phase I of the Glendale project and on the College Station project, both
expected to continue through 2005. We also borrowed $140,076 to fund
our development of 480 acres
in the Houston area for a residential lot development called Mallard
Crossing. Development
activity at Mallard Crossing is expected to begin late this year. Payments on notes payable
totaled $428,594 in the first three months of fiscal 2005 compared to
$148,667 in the first three
months of fiscal 2004. Principal payments on our notes are made primarily through the payment of
release prices as lots are sold and included $144,000 which was not
related to the sale of lots. Subordinated debt did not
change in the first three months of fiscal 2005, compared to a decrease
of $378,587 in the first three months of fiscal 2004. Contractual
obligations. Our long-term debt includes notes payable of $5,892,537 and subordinated
debt of $3,295,906. Other than two vehicle loans, all of the notes payable were incurred to finance
the development of our real estate projects. Principal payments on those notes payable are
primarily made as lots are sold, although minimum principal payments are also required on certain
loans. Included in notes payable is $2,327,039 of acquisition and development loans used to
purchase and develop two large parcels of land (480 acres and 200 acres) in the Houston metro area
for two new subdivisions. Also included is the note payable of $955,305 to finance our Wagon Bow
Ranch in northern Arizona. In addition, our construction loan for a condominium project in
Glendale, Arizona requires periodic advances by the Company into a borrowers funds account
maintained by the bank. The borrowers funds account is used for the payment of construction costs.
As of December 31, 2004, construction on one 8-unit building is near completion. The remaining five
buildings in this phase of the project are expected to begin construction at various dates through
2005. Payments on the subordinated debt are made only when cash flow from a land sale, after payment of
bank debt, exceeds our operating cash requirements. This determination of operating cash
requirements is made by our management. On June 28, 2002, Amortibanc, our majority stockholder,
contributed $719,000 of capital to the Company through the conversion of subordinated debt to
preferred stock. The preferred stock is convertible into shares of our common stock, and has a
cumulative dividend, payable semi-annually. The dividend rate is 0% for the first year from the
date of issuance, and escalates each year until it reaches 7% in the sixth year from the date of
issuance. On September 29, 2003, Amortibanc contributed an additional $293,106 of capital to the
company through the conversion of subordinated debt to equity. In the normal course of our business, we have also entered into various operating leases for
equipment and vehicles. Our primary future cash needs, both in the short term and in the long-term will focus on funding
operating expenses, financing the acquisition and development of new projects and paying debt
service. To meet our cash flow needs during fiscal 2005 it will be necessary to supplement the land
and lot sales with bulk sales of ranch property, or additional borrowings. Although there can be no
assurances, management believes that cash flow from operations coupled with existing cash and cash
equivalent balances, proceeds from bulk sales of property or the sale of one or more notes
receivable, along with borrowings from banks and other financial institutions will generate
sufficient cash to fund our operating and cash flow needs for the next twelve months. To the extent
that actual results or events differ from our financial projections, our liquidity may be adversely
affected. We project that our capital expenditures for property and development, net of amounts funded by
development loans, will be approximately $2.3 million during fiscal 2005. The remainder will be
borrowed from banks and other financial institutions. As part of our business strategy, we
continuously review acquisition opportunities and proposals. We expect to finance any future
acquisitions with additional equity and debt financing, to the extent available on attractive
terms. We hold $409,803 of third party notes receivable from the sale of property. These notes are secured
by the property sold and bear interest at 9.5% per year. We evaluate the collectibility of these
notes based on the payment history and the value of the collateral, and charge off any
uncollectible balances. 18




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##### Table of Contents



Item 3. Controls and Procedures We carried out an evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness
of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end
of the period covered in this report, our disclosure controls and procedures were effective to
ensure that information required to be disclosed in reports filed under the Securities Exchange Act
of 1934, as amended, is recorded, processed, summarized and reported within the required time
periods and is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure. Our auditors have advised us
of the existence of certain material weaknesses in our internal
controls primarily due to a lack of segregation of duties because of the small
size of our staff. Our management is evaluating possible corrective
actions. 19




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##### Table of Contents



PART II: OTHER INFORMATION 
 Item 1.Legal Proceedings We are not a party to any pending legal proceedings other than routine litigation incidental
to our business, and to the best of our knowledge, no other litigation against us has been
threatened. 
 Item 2.Changes in Securities and Use of Proceeds We have not materially modified the instruments defining the rights of our security holders
during the reporting period. 
 Item 3.Defaults Upon Senior Securities Not Applicable. 
 Item 4.Submission of Matters to a Vote of Security Holders The Companys Annual Meeting of Stockholders was held on October 8, 2004. Three matters were
submitted to a vote of the stockholders at this meeting, (1) the election of four directors to
serve until the 2005 Annual Meeting of Stockholder; (2) the ratification of the selection of Grant
Thornton LLP as the Companys auditors for the fiscal year ending September 30, 2004; and (3) the
amendment of the Companys Articles of Incorporation to increase the authorized common stock from
30,000,000 shares to 45,000,000 shares. The voting results are as follows:  (1)
    The first matter submitted to a vote was the election of four directors for the ensuing year.Jay N. Torok, David J. Weber, Roger B. Clark and Daniel Tracy were elected by the holders
of the Companys Common Stock by the following votes: (a) Mr. Torok: 19,161,873 votes for, 0
votes withheld, 2,833 abstentions and 0 broker non-votes; (b) Mr. Weber: 19,161,882 votes for,
0 votes withheld, 2,824 abstentions and 0 broker non-votes; (c) Mr. Clark: 19,161,874 votes
for, 0 votes withheld, 2,832 abstentions and 0 broker non-votes; (d) Mr. Tracy:19,161,995
votes for, 0 votes withheld, 2,711 abstentions and 0 broker non-votes.(2)
    The second matter submitted to a vote was the proposal to ratify
the selection of Grant Thornton LLP as the Companys auditors for
the fiscal year ending September 30, 2004. The holders of the
Company Common Stock approved the matter by votes of 19,161,098
for, 1,055 against, 2,500 abstentions and 0 broker non-votes.(3)
    The third matter submitted to a vote was the proposal to amend
the Companys Articles of Incorporation to increase the
authorized common stock from 30,000,000 shares to 45,000,000
shares . The holders of the Company Common Stock approved the
matter by votes of 19,150,860 for, 11,042 against, 2,804
abstentions and 0 broker non-votes. 
 Item 5.Other Information Not Applicable 
 Item 6.Exhibits and Reports on Form 8-K (a) Exhibits ExhibitNo.31.1
    
    Certification by Jay N. Torok pursuant to Rule 13a-14(a) or
15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification by Jay N. Torok pursuant to Rule 13a-14(a) or
15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification by Jay N. Torok pursuant to 18 U.S.C. Section
1350, as adopted pursuant to
 20




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ExhibitNo.Section 906 of The Sarbanes-Oxley
Act of 200232.2
    
    Certification by Jay N. Torok pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley
Act of 2002
 (b) Reports on Form 8-K On May 24, 2004, a Form 8-K was filed to report the news release of the Companys results for the quarter ended March 31, 2004.
On October 14, 2004, a Form 8-K was filed to announce that the Companys share authorization increased 50%
On December 7, 2004, a Form 8-K was filed to report the resignation of Ron OConnor as the Companys Chief Financial Officer.
On December 20, 2004, a Form 8-K was filed to announce that Jerome L. Joseph was named as the Companys Chief Financial Officer. 21




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SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized. GREAT WESTERN LAND AND RECREATION, INC.
(Registrant)Date: February 17, 2005
    By /s/ Jay N. TorokJay N. TorokChief Executive Officer and Principal Financial Officer (see explanatory note) Explanatory note: Ron OConnor resigned as Chief Financial Officer effective November 19, 2004.
Jerome L. Joseph was appointed Chief Financial Officer effective December 15, 2004. However,
because Mr. Joseph was not the Companys Chief Financial Officer for the entire period covered by
this report, Jay N. Torok has been appointed by the Companys Board of Directors to act as the
Principal Financial Officer for purposes of filing this report. 22