----

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-QSB

 

(Mark One)

   [**X**] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June30, 2005.

    [  ]	Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from  to .

 

Commission file number:000-09419
 
**MATRIX ENERGY SERVICES CORPORATION

(FORMERLY POWER EXPLORATION, INC.)**	(Exact name of small business issuer as specified in its charter)

 

 

 

 

        NEVADA        

(State or other jurisdiction of

incorporation or organization)
    84-0811647   

(I.R.S. Employer Identification No.)
 

 

5416 Birchman Ave., Fort Worth, Texas 76107
  	   (Address of principal executive office) (Zip Code)

 

		    (801) 273-9300	
(Issuers telephone number)

 

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file suchreports), and (2) has been subject to such filing requirements for the past 90 days.

  				Yes **X		No 	
The number of outstanding shares of the issuers common stock, $0.002 par value (the only class of votingstock), as of June 30, 2005 was 92,667,217.

 

 
**TABLE OF CONTENTS

 
**PART I**
 

ITEM 1.  FINANCIAL STATEMENTS	3

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION9

ITEM 3.  CONTROLS AND PROCEDURES11
**PART II**
 

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K	11

SIGNATURES	12

INDEX TO EXHIBITS	13

CERTIFICATIONS	14

 

 

 

 

 

 

 

 

 
**MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY****CONSOLIDATED BALANCE SHEETS

ASSETS

June 30, September 30,

		2005			2004	
	 (Unaudited)
**CURRENT ASSETS

Cash $	248$1,673
 

TOTAL CURRENT ASSETS 	2481,673**OTHER ASSETS**
Investments Available  For  Sale

TOTAL OTHER ASSETS 

TOTAL ASSETS $	248$ 1,673
 
**LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES**
Accounts Payable and Accrued Liabilities $ 170,068 $ 151,106

Accounts Payable  Related Party 10,750   
TOTAL CURRENT LIABILITIES 180,818151,106**STOCKHOLDERS DEFICIT 

Common Stock, $.002 Par Value, 500,000,000

Shares Authorized, 92,667,217 Shares

Issued and Outstanding 185,334 185,334

Additional Paid-In-Capital 46,740,082 46,740,082

Retained Deficit (42,085,986) (42,054,849)

	Unrealized Loss on Securities Available-

For-Sale (5,020,000) (5,020,000)

TOTAL STOCKHOLDERS DEFICIT (180,570) (149,433)

	TOTAL LIABILITIES AND 

STOCKHOLDERS DEFICIT $	248$ 1,673
 

 

 

The accompanying note is an

integral part of these consolidated financial statements.

F-1

 
**MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)**
 
** 
 
			Three Months Ended
			Nine Months Ended 
June 30,
June 30, 
		2005	
		2004	
		2005	
		2004	     **REVENUE  Oil and Gas Sales
$
$ 44,077
$ 
$ 131,144     **COST OF REVENUE    
	Lease Operating

62,872

202,014
	Production Taxes

2,036

6,067
Depreciation, Depletion and 

		Amortization

4,828

14,483     
		TOTAL COST OF REVENUES

69,736

222,564     
			GROSS**LOSS

(25,659)

(91,420)     **EXPENSES    
	General and Administrative
8,100
16,569
31,137
156,578
	Interest Expense

7,517

24,163     
	TOTAL EXPENSES
8,100
24,086
31,137
180,741     
		(LOSS) BEFORE INCOME 

		TAXES 
(8,100)
(49,745)
(31,137)
(272,161)     **INCOME TAXES

**NET LOSS
$ (8,100)
$ (49,745)
$ (31,137)
$ (272,161)     **WEIGHTED AVERAGE NUMBER OF     
	**SHARES OUTSTANDING**
92,667,287
45,071,402
92,667,287
45,071,402     **NET (LOSS) PER SHARE
	$	(0.00)
	$	(0.00)
	$	(0.00)
	$	(0.01)
 

The accompanying notes are an integral part of 

these consolidated financial statements.

F - 2

 
**MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

STATEMENTS OF CASH FLOWS

(UNAUDITED)

FOR THE NINE MONTHS ENDED 

JUNE 30, 2005 AND 2004**
 
 
		2005	
		2004	**CASH FLOW FROM OPERATING ACTIVITIES  
	Net (Loss)
$ (31,137)
$ (272,161)
	Adjustments to Reconcile Net (Loss) to Net Cash  
		From Operating Activities

Depreciation, Depletion and Amortization

16,242
	Changes in Operating Assets and Liabilities  
		Related Party Receivable/Payable
10,750
127,893
		Prepaid and Other Assets

93,750
		Accounts Payable and Accrued Expenses
18,962
25,706   
					NET CASH (USED) IN 

					OPERATING ACTIVITIES
(1,425)
(8,570)   **CASH FLOW FROM FINANCING ACTIVITIES  
	Increase in Related Party Note Payable

1,253 
		 
					NET CASH PROVIDED BY 

					FINANCING ACTIVITIES

1,253   **NET (DECREASE) IN CASH
(1,425)
(7,317)  
		**CASH AT BEGINNING OF PERIOD
1,673
15,396  
		**CASH AT END OF YEAR
	$	248
$ 8,079  
		**SUPPLEMENTAL SCHEDULE OF CASH FLOW  **	INFORMATION  
			Cash Paid During the Period For:  
				Interest
$ 
$ 4,500
				Income Taxes
$ 
$    
 

 

 

 

 

 

The accompanying notes are an integral part of 

these consolidated financial statements.

F3

 
**MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY 

 
**NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1:	BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principals for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulations S-X.  They do not include all information and notes required by generally accepted accounting principals for complete financial statements.However, except as disclosed, there has been no material change in the information disclosed in the notes to consolidated financial statements included in the Annual Report on Form 10-K of Matrix Energy Services Corporation for the year ended September30, 2004.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the nine month period ended June30, 2005, are not necessarily indicative of the results that may be expected for the year ending September30, 2005.
** **
 

F-4
** 

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business**
As used herein, the term "Company" refers to Matrix Energy Services Corporation (formerly PowerExploration, Inc.), a Nevada corporation, and its subsidiary and predecessors, unless the context indicates otherwise.  Originally incorporated on October31, 1979 in Colorado as Imperial Energy Corp., the Company adopted its present name in May of 2002.  Current management obtained controlling ownership of the Company in July 2005.  

The Company has had no operations since September 9, 2004.  The Company is currently looking for a business opportunity.  The Company intends to take advantage of any reasonable business proposal presented which management believes will provide the Company and its stockholders with a viable business opportunity.  The board of directors will make the final approval in determining whether to complete anyacquisition, and unless required by applicable law, the articles ofincorporation, bylaws or by contract, stockholders' approval may not be sought.

The investigation of specific business opportunities and thenegotiation, drafting, and execution of relevant agreements, disclosuredocuments, and other instruments will require management time and attention and will require the Company to incur costs for payment ofaccountants, attorneys, and others.  If a decision is made not to participate in or complete the acquisition of a specific businessopportunity, the costs incurred in a related investigation will not be recoverable.Further, even if agreement is reached for the participation in a specific business opportunity by way of investment orotherwise, the failure to consummate the particular transaction may result in the loss to the Company of all related costs incurred.

Currently, management is not able to determine the time or resources that will be necessary to complete the participation in or acquisition of any future business prospect.  There is no assurance that the Company will be able to acquire an interest in any suchprospects, products or opportunities that may exist or that any activity of theCompany, regardless of the completion of any participation in or the acquisition of any businessprospect, will be profitable.
**Forward Looking Statements**
The information herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of1933, as amended and Section 21E of the Securities Exchange Act of 1934, asamended, which are intended to be covered by the safe harbors created thereby.  Investors are cautioned that all forward-looking statements involve risks anduncertainty, including, without limitation, the ability of Matrix Energy Services Corporation ("Matrix") to continue its expansionstrategy, changes in the real estate markets, labor and employee benefits, as well as general marketconditions, competition, and pricing.  Although Matrix believes that the assumptions underlying the forward-looking statements contained herein arereasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in the Form 10QSB will prove to be accurate.  In view of the significant uncertainties inherent in the forward-looking statements includedherein, the inclusion of such information should not be regarded as a representation by Matrix or any other person that the objectives and plans of Matrix will be achieved.
** 

General**
During the quarter ending June 30, 2005, Matrix Energy Services Corporation and its subsidiary (hereinafter "Matrix" unless the context indicates otherwise) continued to pursue potential business opportunities and possible acquisition targets in order to generate greater revenue and increase shareholder value. 

The following discussion of the consolidated financial condition and results of operations of Matrix should be read in conjunction with the consolidated financial statements of Matrix and the notes thereto included in Item 1 of Part I of this Report.
**Results of Operations

Revenues**
The Company had no revenues for the three months ended June30, 2005, compared to gross revenue of $44,077 for the same period in 2004.  There were no revenues in the current period because the Company has had no operations since September9, 2004.
**Costs and Expenses**
General and administrative expenses were $8,100 for the three months ended June30, 2005 compared to $24,086 for the same period in 2004, which reflect the termination of operations prior to the June 2005 quarter.  Management anticipates expenses to remain similar in future quarters with the terminations of business operations.
**Gross Loss**
Losses for the three months ended June 30, 2005, were $8,100 compared to$49,745 for the same period in 2004.  The reduction in loss is the result of the termination of operations.  Management anticipates continued losses until new business is developed.
**Liquidity and Capital Resources**
At June 30, 2005, the Companys only asset was cash in the amount of $248 as compared to$1,673 at September 30, 2004.  The Companys working capital deficit of $180,570 at June30, 2005 compared to a working capital deficit of $149,433 at September 30, 2004 shows an increase in working capital deficit of$31,137 for the year to date from the figure for the year ended September 30, 2004.  The working capital deficit was increased by borrowing from related parties to pay general and administrative expenses and by current amounts payable to non-related parties for filing related expenses.

Stockholders deficit in the Company was $180,570 as of June30, 2005, compared to $149,433 at year-end on September 30, 2004.  This decrease is due to general and administrative expenses and a lack of revenue.

Management anticipates that the Company will incur more costs including legal and accounting fees to locate and complete a merger or acquisition.  At the present time the Company does not have the assets to meet these financial requirements.Additionally, the Company does not have substantial assets to entice potential business opportunities to enter into transactions with the Company.

It is unlikely that any revenue will be generated until the Company locates a business opportunity with which to acquire or merge.  Management of the Company will be investigating various business opportunities.  These efforts may cost the Company not only out of pocket expenses for its management but also expenses associated with legal and accounting costs.  There can be no guarantee that the Company will receive any benefits from the efforts of management to locate business opportunities.

If and when the Company locates a business opportunity, management of the Company will give consideration to the dollar amount of that entity's profitable operations and the adequacy of its working capital in determining the terms and conditions under which the Company would consummate such an acquisition.  Potential businessopportunities, no matter which form they may take, will most likely result in substantial dilution for the Company's shareholders as it has only limited capital and no operations.

The Company does not intend to employ anyone in the future, unless its present business operations were to change.  The president of the Company is providing the Company with a location for its offices on a "rent free basis." The Company does intend to reimburse its officers and directors for out of pocket costs.
**ITEM 3.  CONTROLS AND PROCEDURES**
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Companys Securities Exchange Act reports isrecorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules andforms, and that such information is accumulated and communicated to the Companysmanagement, including its Chief Executive Officer and Chief Financial Officer, asappropriate, to allow timely decisions regarding required disclosure.

During the 90-day period prior to the date of this report, an evaluation was performed under the supervision and with the participation of the Companysmanagement, including the Chief Executive Officer and the Chief FinancialOfficer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures.  Based upon thatevaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Companys disclosure controls and procedures were effective.  There have been no significant changes in the Companys internal controls or in other factors that could significantly affect thesecontrols, and no corrective actions taken with regard to significant deficiencies or material weaknesses in suchcontrols, subsequent to the date of our most recent evaluation of internal controls.
** 

PART II.  OTHER INFORMATION

ITEM 6.  Exhibits**
(a)  Exhibits    Exhibits required to be attached by Item 601 of Regulation S-B are listed in the

Index to Exhibits on page 5 of this Form 10-QSB, and are incorporated herein by this reference.

(b)  Reports on Form 8-K The Company filed one report on Form 8-K during the quarter ending June30, 2005. 

 
** 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

                                                	  Martix Energy Services Corporation.

                                                             (Registrant)

 

 

 

Date      August 12, 2005 By:__________________________________

     Jim Anderson, Chief Executive Officer

 

 

 Date      August 12, 2005 /S/__________________________________

                                                 Jim Anderson, Chief Financial Officer          

Index to Exhibits****EXHIBIT         	PAGE          

NO.         NO.   DESCRIPTION
2.1  Plan of Reorganization and Change of Situs by which Titan

     Energy Corp., and Power Exploration, Inc. Changes Its Place

	     of Incorporation.              

2.2  Agreement and Plan of Merger Between PowerExploration,

         Inc. (Nevada) and Power Exploration, Inc. (Colorado).

         August 1, 1998. 

2.3  Articles of Merger Between Power Exploration, Inc. (Nevada)

    and Power Exploration, Inc. (Colorado).  August 1, 1998.

3.1	*	Articles of Incorporation of Imperial Energy dated October

31, 1979.

3.2 *  Amendment to Articles of Incorporation dated June 26, 1984.

3.3 * Amendment to Articles of Incorporation dated September25,

	     1996.

3.4 * Amendment to Articles of Incorporation dated June 15,1997,

     changing name to Oil Retrieval Systems, Inc. 

3.5 *  Articles of Incorporation of Power Exploration, Inc. (Nevada)

    dated May 14, 1998.  

3.6 *  By Laws of Power Exploration, Inc.  (Nevada) Dated June1,

	    1998.

31.01     CEO certification Pursuant to 18 USC Section 1350, as

                              adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002

   	This Filing

31.02     CFO certification Pursuant to 18 USC Section 1350, as adopted 

     pursuant to Section 302 of Sarbanes-Oxley Act of 2002   

This Filing

32.01				    CEO Certification pursuant to section 906		This Filing

32.02			 	    CFO Certification pursuant to Section 906   	This Filing

* Previously filed and incorporated herein by reference from the Form 10-KSB filed January14, 2000.    
** 

 CERTIFICATION

I, Jim Anderson, certify that:

1. 	I have reviewed this quarterly report on Form 10-QSB of Matrix Energy Services Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterlyreport, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report; 

4. 	The registrant's other certifying officers and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) designed such disclosure controls and procedures to ensure that material information relating to theregistrant, including its consolidated subsidiary, is made known to us by others within thoseentities, particularly during the period in which this quarterly report is being prepared;

(b) 	evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

(c) 	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I havedisclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability torecord, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recentevaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  August 12, 2005
/s/                                                   	

   Jim Anderson, Chief Executive Officer
**CERTIFICATION

I, Jim Anderson, certify that:

1. 	I have reviewed this quarterly report on Form 10-QSB of Matrix Energy Services Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterlyreport, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report; 

4. 	The registrant's other certifying officers and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) designed such disclosure controls and procedures to ensure that material information relating to theregistrant, including its consolidated subsidiary, is made known to us by others within thoseentities, particularly during the period in which this quarterly report is being prepared;

(b) 	evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

(c) 	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I havedisclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability torecord, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recentevaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  August 12, 2005
/s/                                                        	

         Jim Anderson, Chief Financial Officer
**CERTIFICATION OF CHIEF EXECUTIVE OFFICER**
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to********************************************************