UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

X . QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009.

. TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________ to ___________________________

Commission File Number: 0-32123

DESERT MINING, INC.

(Exact name of registrant as specified in its charter)


Nevada	87-0664962
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4328 Highway 66, Longmont, CO	80504
(Address of principal executive offices)	(Zip Code)

(970) 535-6213

(Registrant’s telephone number, including area code)

_______________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X . Yes . No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). . Yes X . No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	.	Accelerated filer	.

Non-accelerated filer	. (Do not check if a smaller reporting company)	Smaller reporting company	X .

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). . Yes X . No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. . Yes . No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of March 31, 2009: 20,649,260

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2009 and 2008 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2008 audited financial statements. The results of operations for the periods ended March 31, 2009 and 2008 are not necessarily indicative of the operating results for the full year.

DESERT MINING, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET - unaudited

March 31, 2009 and December 31, 2008


		March 31,		December 31,
		2009		2008
ASSETS
CURRENT ASSETS

Cash	$	11,781	$	120,608
Accounts receivable		10,032		-
Total Current Assets		21,813		120,608

FURNITURE & EQUIPMENT – net of depreciation		26,394		31,489

OTHER ASSETS

Undeveloped oil & gas leases		576,028		576,028
Less valuation allowance		(388,707)		(374,934)
Proved producing properties		1,419,051		1,419,051
Less accumulated depletion		(86,753)		(81,224)
Unevaluated Drilling Costs		27,406		37,406
Deposits		112,531		102,531
		1,659,556		1,678,858

	$	1,707,763	$	1,830,955

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES

Accounts payable	$	346,441	$	376,825
Accounts payable-related parties		1,500		1,500
Note payable		150,000		150,000
Accrued interest payable		4,500		-
Total Current Liabilities		502,441		528,325


STOCKHOLDERS’ EQUITY

Common stock
100,000,000 shares authorized at $0.001 per value
20,649,260 shares issued and outstanding		20,649		20,649
Capital in excess of par value		5,353,430		5,353,430
Accumulated deficit		(4,168,757)		(4,071,449)
Total Stockholders’ Equity		1,205,322		1,302,630

	$	1,707,763	$	1,830,955

The accompanying notes are an integral part of these financial statements.

DESERT MINING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF OPERATIONS - unaudited

For the Three Months Ended March 31, 2009 and 2008


		March 31,		March 31,
		2009		2008
REVENUE
Natural Gas Sales	$	15,987	$	67,444
Compression & Operating Cost		(9,404)		(13,466)
Severance & Production Taxes		(1,918)		(8,145)
Gross Profit		4,665		45,833

EXPENSES

Annual lease payments				640
Depreciation, Depletion & Value Allowance		24,397		56,166
Administrative		73,076		116,469
		97,473		173,275

NET LOSS FROM OPERATIONS		(92,808)		(127,442)

OTHER EXPENSES

Gain from sale of oil & gas lease		-		58,917
Interest expense		(4,500)		(33,657)

NET INCOME/(LOSS)	$	(97,308)	$	(102,182)


NET INCOME/(LOSS) PER COMMON SHARE

Basic and diluted	$	(0.00)	$	(0.01)

AVERAGE OUTSTANDING SHARES – (stated in 1,000’s)

Basic		20,649		14,163
Diluted		20,649		14,163

The accompanying notes are an integral part of these financial statements.

DESERT MINING, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2009 and 2008


		March 31,		March 31,
		2009		2008

CASH FLOWS FROM
OPERATING ACTIVITIES

Net income/(loss)	$	(97,308)	$	(102,182)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Depreciation, depletion & amortization		24,397		56,166
Changes in accounts receivable		(10,032)		(5,620)
Changes in deposits		-		10,000
Changes in notes and accounts payable		(25,884)		72,169
Net Decrease in Cash From Operations		(108,827)		30,533

CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sale of oil & gas leases		-		160,985
Cost of oil & gas leases sold		-		(102,068)
Purchase/development of oil & gas leases		-		(15,711)
		-		43,206

CASH FLOWS FROM FINANCING
ACTIVITIES
		-		-
		-		-

Net Increase/(Decrease) in Cash		(108,827)		73,739
Cash at Beginning of Period		120,608		148,306
Cash at End of Period	$	11,781	$	222,045

The accompanying notes are an integral part of these financial statements.

DESERT MINING, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENT

March 31, 2009

ORGANIZATION

The Company was incorporated under the laws of the state of Nevada on June 6, 1979 with the name Holidays of America, Inc. with authorized common stock of 2,500 shares at no par value. On November 28, 2000 the name was changed to Desert Mining, Inc. and the authorized common stock was increased to 100,000,000 shares with a par value of $0.001 in connection with a forward stock split of two hundred shares for each outstanding share.

This report has been prepared showing after stock split shares from inception with a par value of $0.001.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods

The Company recognizes income and expenses based on the accrual method of accounting.

Dividend Policy

The Company has not yet adopted a policy regarding payment of dividends.

Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

On March 31, 2009, the Company had a net operating loss available for carry forward of $3,320,757. The tax benefit of approximately $996,000 from the loss carry forward has been fully offset by a valuation reserve because the company has been unable to project a reliable estimated future net income. The net operating loss will expire starting in 2008 through 2030.

Financial and Concentrations Risk

The Company does not have any concentration or related financial credit risks except the Company maintains bank accounts over the insured amount of $250,000. However, they are maintained in banks with high quality.

Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.

DESERT MINING, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (Continued)

March 31, 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Statement of Cash Flows

For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Revenue Recognition

The Company is in the business of exploring for, developing, producing and selling crude oil and natural gas. Crude oil revenue is recognized when the product is taken from the storage tanks on the lease and delivered to the purchaser. Natural gas revenues are recognized when the product is delivered into a third party pipeline downstream of the lease. Occasionally the Company may sell specific leases and the gain or loss associated with those transactions will be shown separately from the profit or loss from normal ongoing operations.

Advertising and Market Development

The company expenses advertising and market development costs as incurred.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.

Financial Instruments

The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short term maturities.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiary from its inception. All significant intercompany accounts and balances have been eliminated in consolidation.

Recent Accounting Pronouncements

The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

DESERT MINING, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (Continued)

March 31, 2009

3. OIL & GAS LEASES

During 2003, 2004, and 2005 the Company purchased 32,734 net acres of oil and gas leases consisting of 19,799 acres from the State of Wyoming, 11,451 acres from the BLM and 1,484 net acres from private individuals. The terms of the BLM leases are for ten years and require yearly payments of $17,177 starting one year after the issuance of the leases. The terms of the State of Wyoming leases are for five years with yearly payments of $19,799 starting one year after the date of issuance of the leases. The private leases vary from 19 months to 52 months and do not require any annual payments. The required yearly payments are expensed as paid. The company acquired 2,856 BLM acres in the second quarter of 2007. Due to the short term remaining on the leases, no consideration was paid to the vendor but the vendor retained an overriding royalty on the leases. This transaction added $5,712 to our annual BLM rental obligations. An additional 2,953 BLM acres were acquired in the second quarter of 2008 adding $4,430 to our annual BLM payments.

During 2004 the Company sold 240 net acres of State leases retaining an overriding royalty of 4.34% and reducing annual payments by $240. In June 2005, the Company sold 2,103 net BLM acres retaining a 2.5% overriding royalty and reducing annual payments by $3,155. In March 2006 the Company sold 640 State acres reducing the annual payments by $640 and in December 2006 the Company sold 640 State acres reducing annual payments by $640. In the first half of 2007, 1,278 acres of private leases were allowed to expire. In September 2007 the Company sold 6,045 BLM acres and retained a 5% overriding royalty interest. This reduced our annual BLM obligation by $9,068. In January 2008 we sold a total of 10,625 acres (4,826 BLM acres and 6,799 State acres) reducing our annual BLM payments by $7,239 and our annual State payments by $5,799. We retained an overriding royalty of 3.333% on the State leases and an overriding royalty of 7.5% on some of the BLM leases. An additional 4,760 acres of State leases was allowed to expire in September reducing annual payments by $4,760.

The Company follows the successful efforts method of accounting and will capitalize successful wells and related leasehold costs. These costs will be amortized using the unit of production method. Dry hole and related leasehold costs will be expensed. On March 31, 2008 the Company had three producing gas wells.

4. NOTE PAYABLE

The Company received $150,000 under a note payable dated December 29, 2008 which was due March 31, 2009 (subsequently extended) including interest at 12%. Additionally, the company agreed to assign the Lender one percent (1%) overriding royalty in its Spotted Horse project in Campbell County, Wyoming . The Company is currently negotiating with the note holder and believes the final interest rate will be lower than this but we have accrued at the full rate.

5. CONTINUING LIABILITIES

The Company was obligated under an office lease for $2,375 per month which expired September 30, 2008. The Company is negotiating with the Landlord and is currently renting on a month to month basis.

DESERT MINING, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (Continued)

March 31, 2009

6. DEPOSITS

The Company has placed deposits with the US Department of the Interior – Bureau of Land Management ($25,000) and State of Wyoming Oil and Gas Conservation Commission ($75,000). State and Federal regulations require all oil and gas well operators to have on deposit with the appropriate regulatory agency, an amount sufficient to reclaim any wells the Operator is responsible for.

7. RELATED PARTY TRANSACTIONS

Officers-directors have acquired 1% of the common capital stock issued. In addition, they are owed $1,500 for expenses.

8. GOING CONCERN

On the balance sheet date the Company did not have sufficient working capital to service its debt and for its planned activity for the coming year. Continuation of the Company in its planned activity is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through seeking and obtaining additional equity funding, and long term financing, which will enable the Company to be successful in its efforts.

ITEM 2. PLAN OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENT NOTICE

This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.

Description of Business.

Desert Mining is engaged in the activity of seeking developmental mineral properties. In particular Desert is focusing on the oil and gas industry and is actively pursuing oil and gas leases along with joint ventures or acquisitions to complement the intended business operation.

We have approximately 2,720 Federal acres, 7,720 State acres and 187 private acres of oil and gas leases. In addition to our leases, we have minimal office equipment, vehicles and no other assets. In September 2008, we allowed 4,760 acres of State leases to expire.

The Spotted Horse project located in Campbell County, Wyoming has been on production since the third quarter of 2006. It continues to produce 62 mcfd from the three existing wells. We are evaluating development options for our undrilled acreage in the Prospect. Our Dripping Rock Prospect has two approved drilling permits and we are preparing for a drilling program on the lease in the third quarter of 2009.

At March 31, 2009, we had three producing gas wells.

As a part of our planned operations, Desert is actively seeking to develop joint ventures or acquire businesses with current operations in the oil and gas production areas.

Plan of Operation

We intend to drill for oil and natural gas on our leases. Drilling costs will be treated as work in progress until such time as the well has been finished and its commercial potential evaluated.

Results of Operations – Three Months Ended March 31, 2009 Compared to the Three Months Ended March 31, 2008

For the three months ended March 31, 2009 we had revenue from natural gas sales of $15,987 with compression and operating costs of $9,404 and severance and production taxes of $1,918 resulting in a gross profit of $4,665, compared to $67,444 in revenue from natural gas sales with compression and operating costs of $13,466 and severance and production taxes of $8,145 resulting in a gross profit of $45,833 for the three months ended March 31, 2008.

For the three months ended March 31, 2009 our expenses consisted of $-0- in annual lease payments, $24,397 in depreciation, depletion and amortization and $73,076 in administrative expenses and interest expense of $4,500 which resulted in a net loss of $(97,308) or $(0.004) per share, compared to expenses of $640 in annual lease payments, $56,166 in depreciation, depletion and amortization and $116,469 in administrative expenses, $58,917 gain from sale of oil and gas lease and $33,657 in interest expense for a net loss for the corresponding period of 2008 of $(102,182) or $(0.01) per share.

Capital Resources and Liquidity

As of March 31, 2009, we had total assets of $1,707,763 and liabilities of $502,441. Our assets consist of $11,781 in cash, $10,032 in accounts receivable, $26,394 in furniture and equipment, net of depreciation, undeveloped oil and gas leases of $576,028 less accumulated amortization and valuation allowance of $388,707, proved developed properties of $1,419,051 less accumulated depletion of $86,753, unevaluated drilling costs of $27,531 and deposits of $112,531.

Our liabilities consist of $346,441 in accounts payable, $150,000 note payable, $1,500 in accounts payable to related parties and $4,500 in accrued interest payable.

We have placed deposits with the US Department of the Interior – Bureau of Land Management ($35,000) and State of Wyoming Oil and Gas Conservation Commission ($75,000). State and Federal regulations require all oil and gas well operators to have on deposit with the appropriate regulatory agency, an amount sufficient to reclaim any wells the Operator is responsible for.

During the last quarter of 2008, the Company borrowed $150,000 from a shareholder. The note was due March 31, 2009 and subsequently extended indefinitely. The note bears interest at a rate of 12% per annum. As a condition to the note, the Company granted the shareholder a 1% royalty override on the Spotted Horse project.

The Company intends to drill for oil and natural gas on their leases. Drilling costs will be treated as work in progress until such time as the well has been finished and its commercial potential evaluated. The Company follows the successful efforts method of accounting and will capitalize successful wells and related leasehold costs. These costs will be amortized using the unit of production method. Dry hole and related leasehold costs will be expensed. At March 31, 2009, the Company had three wells producing.

Continuation of the Company in its planned activity is dependent upon obtaining additional working capital and Management has developed a strategy which it believes will accomplish this objective through additional equity funding, long term financing and reallocation of certain assets which will enable the Company to be successful in its efforts.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required by smaller reporting companies.

ITEM 4T. CONTROLS AND PROCEDURES.

(a)

Evaluation of Disclosure Controls and Procedures. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management has concluded that the Company’s internal control over financial reporting and procedures was effective as of September 30, 2008.

(b)

Changes in Internal Control over Financial Reporting. There were no changes in the Company's internal controls over financial reporting, known to the chief executive officer or the chief financial officer, that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company was named in a complaint dated July 27, 2007 which was filed in the State of Wyoming, County of Campbell, District Court, Sixth Judicial District with Civil No. 28144. The complaint was brought by Cammeran Petroleum, Inc., an Oklahoma corporation and named Desert Mining, Inc. and its subsidiary, 44 Mag Production, Inc. among other parties. The complaint relates to mining leases and royalties in Wyoming and the plaintiff is requesting the Court to quiet title on the properties in dispute. The Company has attempted to settle the dispute amicably and now intends to fully defend its position. The can be no assurance of a positive outcome and any negative outcome could have an adverse affect on the Company.

The Company has been served with a complaint dated September 15, 2008 which was filed in the State of Nevada, Clark County District Court with Case No. A571579. The complaint was brought by seven of the Company’s shareholders and names the Company, Gabriel K. Holt, an individual (the Company’s officer and director) and Does I-X and Roe Corporations I – X. The complaint alleges breach of fiduciary duty, conversion, fraud and breach of shareholders rights to inspect among other issues. The plaintiffs are requesting injunctive relief, damages in excess of $10,000, appointment of a receiver for the Company and costs. Management believes the lawsuit is frivolous, fails to state a cause of action and is without merit. Management is attempting to negotiate a favorable settlement.

Further, to the knowledge of management, no director or executive officer is party to any action in which any has an interest adverse to the Company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The Company did not sell or issue any securities during the period covered by this report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted during the period covered by this report to a vote of security holders.

ITEM 5. OTHER INFORMATION.

None

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

(a) Exhibits

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.


Exhibit No.	Title of Document	Location

31	Certification of the Principal Executive Officer/ Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Attached

32	Certification of the Principal Executive Officer/ Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*	Attached

(b) Reports on Form 8-K

None

The Exhibit attached to this Form 10-Q shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

DESERT MINING, INC.

Date: May 11, 2009

By: /s/ Gabriel Holt

Gabriel Holt, President and Chief Financial Officer

DESERT MINING INC 10-Q