UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT TO THE 1934
ACT REPORTING REQUIREMENTS
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30,
2000.
[ ] 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: 000-27623
SUNWEST ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State of (I.R.S. Employer
organization) Identification No.)
2505 Rancho Bel Air, Las Vegas, NV 89107
(Address of principal executive offices)
Registrant's telephone number, including area code 702-240-0124
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 and (2) has been subject to such filing requirements
for the past 90 days. Yes X
There are 2,650,000 shares of common stock issued and outstanding
as of June 30, 2000.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Unaudited financial statements for the quarter ended
June 30, 2000.
Sunwest Enterprises, Inc.
(A Development Stage Company)
Index to the Financial Statements
As of June 30, 2000 and
For the Three Month Periods Ended June 30, 2000 and 1999 and
For the Period from March 5, 1999 (Inception) to June 30, 2000
(Unaudited)
Financial Statements of Sunwest
Enterprises, Inc.:
<TABLE>
<S> <C>
Balance Sheet, as of June 30, 2000 (Unaudited) 2
Statements of Operations for the Three Month 4
Periods Ended June 30, 2000 and 1999 and for the
Period from March 5, 1999 (Inception) to June 30,
2000 (Unaudited)
Statement of Shareholders' Equity for the Three 5
Month Period Ended June 30, 2000 and for the
Period from March 5, 1999 (Inception) to June 30,
2000 (Unaudited)
Statement of Cash Flows for the Three Month 6
Periods Ended June 30, 2000 and 1999 and for the
Period from March 5, 1999 (Inception) to June 30,
2000 (Unaudited)
Notes to Financial Statements (Unaudited) 7
</TABLE>
Sunwest Enterprises, Inc.
(A Development Stage Company)
Balance Sheet
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Cash 925
Accrued interest $ 750
Due from shareholder 9,000
--------
Total assets $ 10,675
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 513
--------
Total liabilities 513
--------
Shareholders' equity:
Common stock, $.001 par value;
10,000,000 shares authorized;
2,650,000 shares issued and 2,650
outstanding.
Additional paid-in capital, 9,000
Deficit accumulated during development (1,488)
stage
--------
Total shareholders' equity 10,162
--------
Total liabilities and shareholders' $ 10,675
equity
========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
See accountants' review report.
2
Sunwest Enterprises, Inc.
(A Development Stage Company)
Statement of Operations
For the Three Month Periods Ended June 30, 2000 and 1999 and
For the Period from March 5, 1999 (Inception) to June 30, 2000
(Unaudited)
<TABLE>
<S> <C> <C> <C>
For the
Period From
Three Month Three Month March 5, 1999
Period Ended Period Ended (Inception) to
June 30,2000 June 30, 1999 June 30, 2000
Revenue - - -
Cost of sales - - -
------- -------- ----------
Gross profit - - -
Other expenses $(15) - $ (2,238)
Other income $ 225 - 750
------- -------- ----------
Net income (loss) $ 210 $ - $ (1,488)
======= ======== ==========
Net income (loss) per share - - -
======= ======== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
See accountants' review report.
4
Sunwest Enterprises, Inc.
(A Development Stage Company)
Statement of Shareholders' Equity
For the Three Month Period Ended June 30, 2000 and
For the Period from March 5, 1999 (Inception) to June 30, 2000
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Price Common Additional During the
Common Per Common Stock Paid-in Development
Shares Share Stock Subscribed Capital Stage Total
Formation of
corporation,
March 5, 1999 - - - - - -
Common stock 1,650,000 $ 0.001 $ 1,650 - - - $ 1,650
Common stock
Subscribed - 0.010 - $ 1,000 $ 9,000 - 10,000
Net loss - - - - $- (1,650) (1,650)
--------- -------- -------- -------- -------- --------
Balance,
March 31, 1999 1,650,000 1,650 1,000 9,000 (1,650) 10,000
Issuance of common
stock on collection
of stock
subscription
receivable 1,000,000 1,000 (1,000) - -
Net loss - - - - -
--------- -------- -------- -------- -------- -------- -------
Balance,
June 30, 1999 2,650,000 2,650 - 9,000 (1,650) 10,000
Issuance of common
Stock on collection
of stock
subscription
receivable
Net Loss - - - (48) (48)
March 31, 2000 2,650,000 2,650 - 9,000 (1,698) 9,952
Issuance of common
Stock on collection
Of stock
subscription
receivable
Net Income - - - - 210 210
--------- -------- -------- -------- -------- -------- -------
Balance,
June 30, 2000 2,650,000 2,650 $ - $9,000 $ (1,488) 10,162
========= ======== ======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
Sunwest Enterprises, Inc.
(A Development Stage Company)
Statement of Cash Flows
As of June 30, 2000 and
For the Three Month Periods Ended June 30, 2000 and 1999 and
For the Period from March 5, 1999 (Inception) to June 30, 2000
(Unaudited)
<TABLE>
<S> <C> <C> <C>
For the
Period From
Three Month Three Month March 5, 1999
Period Ended Period Ended (Inception) to
June 30, June 30, June 30, 2000
2000 1999
Cash flows from operating
activities:
Net loss $ 210 $ - $ (1,488)
Adjustments to reconcile net
income
(loss) to net cash
Increase in assets:
Accrued Interest (225) - (750)
Due from shareholder - - (9,000)
Increase in liabilities:
Accounts payable - 886 (513)
------ --------- --------
Cash used in operating activities (15) - (10,725)
------ --------- --------
Cash flows used in investing
activities:
Cash used in investing activities - - -
------ --------- --------
Cash flows provided by financing
activities:
Issuance of common stock - 10,000 11,650
------ --------- --------
Cash provided by financing - 10,000 11,650
activities
------ --------- --------
Net increase (decrease) in cash (15) 10,000 925
Cash at beginning of period 940 - -
------ --------- --------
Cash at end of period $ 925 $ 10,000 $ 925
====== ========= ========
</TABLE>
<TABLE>
<S> <C> <C> <C>
Supplemental Disclosure of Cash Flow Information
Interest paid - - -
Income taxes paid - - -
</TABLE>
Supplemental Schedule of Non-Cash Investing and Financing Activities
<TABLE>
<S> <C> <C> <C>
Common stock subscriptions:
Stock subscriptions receivable - - $10,000
Common stock subscribed - - $(1,000)
Additional paid-in capital - - (9,000)
</TABLE>
The accompanying notes are an integral part of the financial
statements.
6
Sunwest Enterprises, Inc.
(A Development Stage Company)
Notes to Financial Statements
As of June 30, 2000 and
For the Three Month Periods Ended June 30, 2000 and 1999 and
For the Period from March 5, 1999 (Inception) to June 30, 2000
(Unaudited)
1. Basis of Presentation
In the opinion of the Company, the accompanying unaudited
condensed financial statements contain all adjustments,
consisting of only normal recurring adjustments, except as
noted elsewhere in the notes to the financial statements,
necessary to present fairly its financial position as of June
30, 2000 and the results of its operations and cash flows for
the three month periods ended June 30, 2000 and 1999 and for
the period from March 5, 1999 (inception) to June 30, 2000.
2. Development Stage Operations
Sun West Enterprises, Inc. (a development stage company) (the
"Company") was incorporated in the state of Nevada on March 5,
1999 and has no operating history with no revenues and no
products or technology ready for the market. The Company's
initial business plan anticipates engaging in the manufacture
and/or sale of vitamins and nutritional supplements, and to
that end, has obtained an exclusive license to manufacture and
market a photon light activated food supplement. The
implementation of these plans requires, among other things,
significant resources and may involve the use of leased
facilities and equipment, subcontract manufacturing,
consultants, outside sales representatives, and/or merger with
an operating entity. While management believes the Company has
adequate cash resources to meet its immediate liquidity needs,
the Company's ability to be a going concern is predicated on
its ability to raise additional necessary capital to implement
its plans, achievement of successful operations, and or the
completion of a merger with an operating entity. There is no
assurance that any of these will occur or be successful.
7
Sunwest Enterprises, Inc.
(A Development Stage Company)
Notes to Financial Statements
As of June 30, 2000 and
For the Three Month Periods Ended June 30, 2000 and 1999 and
For the Period from March 5, 1999 (Inception) to June 30, 2000
(Unaudited)
3. Loss Per Common Share
The loss per common share has been computed by dividing the
loss available to common shareholders by the weighted-average
number of common shares for the period.
The computations of the loss per common share for the three
periods ended June 30, 2000 and 1999 and for the period from
March 5, 1999 (inception) to June 30, 2000 follow.
The Company does not have any potentially dilutive securities.
<TABLE>
<S> <C> <C> <C>
For the
Period From
Three Month Three Month March 5, 1999
Period Ended Period Ended (Inception) to
June 30, June 30, 1999 June 30, 2000
2000
Net income (loss)
available
to common shareholders $ 210 $ - $ (1,488)
Weighted-average shares 2,650,000 2,650,000 2,587,500
--------- --------- ----------
Income (loss) per common - - $ -
share
========= ========= ==========
</TABLE>
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF
OPERATIONS
THIS REPORT SPECIFIES FORWARD-LOOKING STATEMENTS OF MANAGEMENT OF
THE COMPANY ("FORWARD-LOOKING STATEMENTS") INCLUDING, WITHOUT
LIMITATION, FORWARD-LOOKING STATEMENTS REGARDING THE COMPANY'S
EXPECTATIONS, BELIEFS, INTENTIONS AND FUTURE STRATEGIES. FORWARD-
LOOKING STATEMENTS ARE STATEMENTS THAT ESTIMATE THE HAPPENING OF
FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACTS. FORWARD-
LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-
LOOKING TERMINOLOGY, SUCH AS "COULD", "MAY", "WILL", "EXPECT",
"SHALL", "ESTIMATE", "ANTICIPATE", "PROBABLE", "POSSIBLE",
"SHOULD", "CONTINUE", "INTEND" OR SIMILAR TERMS, VARIATIONS OF
THOSE TERMS OR THE NEGATIVE OF THOSE TERMS. THE FORWARD- LOOKING
STATEMENTS SPECIFIED IN THIS REPORT HAVE BEEN COMPILED BY
MANAGEMENT OF THE COMPANY ON THE BASIS OF ASSUMPTIONS MADE BY
MANAGEMENT AND CONSIDERED BY MANAGEMENT TO BE REASONABLE. FUTURE
OPERATING RESULTS OF THE COMPANY, HOWEVER, ARE IMPOSSIBLE TO
PREDICT AND NO REPRESENTATION, GUARANTY, OR WARRANTY IS TO BE
INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.
THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING
STATEMENTS SPECIFIED IN THIS REPORT REPRESENT ESTIMATES OF FUTURE
EVENTS AND ARE SUBJECT TO UNCERTAINTY AS TO POSSIBLE CHANGES IN
ECONOMIC, LEGISLATIVE, INDUSTRY, AND OTHER CIRCUMSTANCES. AS A
RESULT, THE IDENTIFICATION AND INTERPRETATION OF DATA AND OTHER
INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING ASSUMPTIONS
FROM AND AMONG REASONABLE ALTERNATIVES REQUIRE THE EXERCISE OF
JUDGMENT. TO THE EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE
OUTCOME MAY VARY SUBSTANTIALLY FROM ANTICIPATED OR PROJECTED
RESULTS, AND, ACCORDINGLY, NO OPINION IS EXPRESSED ON THE
ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS. IN ADDITION,
THOSE FORWARD-LOOKING STATEMENTS HAVE BEEN COMPILED AS OF THE
DATE OF THIS REPORT AND SHOULD BE EVALUATED WITH CONSIDERATION OF
ANY CHANGES OCCURRING AFTER THE DATE OF THIS REPORT. NO ASSURANCE
CAN BE GIVEN THAT ANY OF THE ASSUMPTIONS RELATING TO THE FORWARD-
LOOKING STATEMENTS SPECIFIED IN THIS REPORT ARE ACCURATE, AND THE
COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING
STATEMENTS.
Overview of the Vitamin and Health Supplement Industry. The
retail market for vitamins and nutritional supplements in the
United States presently exceeds $7 billion annually.
Approximately 45% of adults in the United States take some form
of vitamin or nutritional supplement. We believe this market will
continue to expand due to increasing consumer awareness of the
health benefits of vitamins and nutritional supplements. We also
believe that the market for vitamins and other nutritional
supplements will continue to grow as the nation's demographics
continue to shift towards a more senior-aged population, who have
a greater tendency to use vitamins on a regular basis. Industry
sources report that approximately 55% of Americans aged 50 and
over are regular vitamin users. It is anticipated that the 50 and
over age group will be the fastest growing segment of the United
States population as the baby boom generation continues to
mature.
Overview of Our Business. We were incorporated on March 5, 1999,
pursuant to the provisions of General Corporation Law of Nevada.
Our executive offices are located at 2505 Rancho Bel Air, Las
Vegas, Nevada 89107. Our telephone number is (702)240-0124. We
were organized to engage in the manufacturing, packaging and sale
and distribution of vitamins and nutritional supplements. We plan
to distribute vitamin brands of other vitamin producers, as well
as developing our own vitamin brands. We plan to develop, or
acquire a license to distribute, many different vitamin products.
For example, vitamin products can be sold in single vitamin and
in multivitamin combinations with varying potency levels in
various forms, including tablets (both chewable and time released
tablets), powders, two-piece hard shell capsules, and soft
gelatin encapsulated capsules, which are known in the industry as
"soft gels". We may produce our own products or subcontract out
production and packaging to others.
Some of our shareholders are friends and business associates of
Dr. Robert Milne. Dr. Milne is a board-certified family practice
physician with extensive experience in alternative health care,
allergy testing and preventative medicine. He is also the
inventor of a patented allergy-testing device. Before starting
his own practice at the Milne Medical Center in Las Vegas,
Nevada, Dr. Milne was Medical Director at the Omni Medical Center
and also practiced medicine at the Nevada Clinic after previous
assignments in emergency medicine and a family practice. Dr.
Milne is the author of numerous papers in the medical field and
has authored several books, including The Definitive Guide to
Headaches and The Photon Connection - Energy for the New
Millennium. Dr. Milne has been developing various vitamin and
health-supplement products for many years.
In December, 1999, we entered into a licensing agreement with Dr.
Milne to acquire the rights to produce and market a photon-
activated food supplement that will provide consumers with the
benefits of eating green vine- ripened fruit and vegetables in a
small package.
Private Label Industry. We will attempt to participate in the
growing market for private label, also called "store brand",
vitamins. Sales of store brand vitamins have grown significantly
in chain drug stores. From the consumer's standpoint, store brand
products offer lower-priced and equal if not better quality
alternatives to nationally advertised brand name products. From
the retailer's standpoint, such products allow for lower retail
pricing than national brands and yet provide retailers with
higher profit margins. Industry analysts predict that private
label's share of the overall market should grow significantly
over the next 10 years. We will try to market some of our
products directly to retail chain stores or to sublicense the
rights to those products to those retail chain stores.
Our Competition Has More Money Than We Do And Will Continue To
Introduce New Products. The vitamin and nutrient supplement
industry is rapidly changing through the continuous development
and introduction of new products. Many of our established
competitors currently sell their vitamin products directly to the
public over the Internet. We therefore are competing not only
with existing store brand vitamins and giant vitamin
manufacturers, but with a host of smaller manufacturers which
compete with us more directly because they, too, claim to have
products on the leading edge of natural supplements. Our
competition includes such manufacturers as Apothecary, Boiron,
Country Life, Enzymatic Therapy, Earths Lands & Seas, EAS, Flora,
Forest Herbs , Futurebiotics, Grifron, Healthcomm International,
HFS, Lane Lab, MAX, Menuco, Natrol, Nature's Bounty, Nature's
Herbs, Nature's Secret, Nature's Way, NOW, Nutramax, Osmo,
Pathway, ProBiologic, Rezei Bar Ltd., Source Naturals, Twin Lab,
and Zand.
Our strategy for growth depends on our ability to continually
improve and enhance our existing products and introduce new
products. In some cases, we will be able to license the rights to
use a product someone else has paid to develop. However, we may
be required to spend our own funds to enhance or improve our
product line to keep pace with evolving industry standards. This
could require the expenditure of significant funds and resources,
and we do not presently have a source or commitment for any such
funds and resources.
Our Plan of Operation for Next 12 Months. Over the next 12 months
we plan to establish relationships with health food stores,
retail vitamin chains and even Internet vitamin wholesalers and
suppliers. We may also try some direct selling efforts, either by
establishing a website on the Internet or marketing our products
by distributing brochures and price lists through the mails. We
may place advertisements in magazines that promote various sports
and activities. These sources, as well as magazines promoting
health products and targeted to the alternative medicine
practitioner, will be the main focus of our magazine advertising.
We may also enter into joint venture agreements or distribution
agreements with existing vitamin retailers or wholesalers if the
opportunity arises.
Liquidity and Available Cash for Operations. We believe our
current cash resources are sufficient to fund our marketing and
promotion activities relating to our vitamin products for the
next 9 months. Specifically, at March 31, 2000, we had cash and
equivalents of $9,417.00, with no outstanding liabilities except
for the annual fees for maintaining the corporation's status
required by the State of Nevada. We are not currently generating
any revenues from the sale or licensing of our vitamin products.
Our only external source of liquidity is the sale of our capital
stock. Fortunately, because Dr. Milne developed the vitamin
products we are licensing, he, and not the company, paid the
research costs and other costs of development.
We Have No Employees. We do not currently have any employees. We
anticipate using consultants for business, accounting, marketing
and legal services on an as-needed basis. Because we plan to
enter into licensing and manufacturing agreements with third
parties, we anticipate that we will require very few employees,
if any, during the next fiscal year.
Producing Our Vitamin Products. We do not own production
equipment and we do not intend to purchase any production
equipment or lease a production facility until we have completed
our initial marketing efforts. We do not believe we will have any
problems purchasing the ingredients necessary to produce our
vitamin products in commercial quantities or that availability of
those ingredients will be significantly effected by seasonal
factors. The principal raw materials used in the manufacturing
process are natural and synthetic vitamins, purchased from
manufacturers primarily in the United States, with certain
materials imported from Japan and Europe. We intend to purchase
our raw materials from numerous sources, both foreign and
domestic, so that we do not become dependent on any one supplier.
We Have Potential Product Liability Risks. Any time you sell a
product which is consumed by the public, you are exposed to
potential product liability risks that are inherent in the
testing, manufacturing and marketing of nutritional supplement
products. We do not currently have product liability insurance,
and there can be no assurance that we will be able to obtain or
maintain such insurance on acceptable terms or, if obtained, that
such insurance will provide adequate coverage against potential
liabilities. We face an inherent business risk of exposure to
product liability and other claims in the event that the
development or use of our technology or products is alleged to
have resulted in adverse effects.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal actions pending against the Company nor are
any such legal actions contemplated.
ITEM 2. CHANGES IN SECURITIES
Shares Issued as Compensation for Services. In March 1999, we
issued at total of 550,000 shares of our common stock as
compensation for legal services provided to the company by Thomas
E. Stepp, Jr. and his paralegal, Richard Reincke. Those shares
were valued at what we believe was the fair market value at the
time of issuance, which was $0.001 per share. Also in March 1999,
we issued 1,100,000 shares of our common stock to Thomas Krucker
because he had expended the funds to incorporate the company and
provided services in connection with the incorporation of the
company. Those shares were valued at what we believe was the fair
market value at the time he expended those funds, which was par
value.
Sale of Our Common Stock. In March, 1999, we sold unregistered
shares of our common stock in reliance on an exemption from
registration provided by Rule 504 of Regulation D of the
Securities Act of 1933. We sold a total of 1,000,000 shares of
our common stock and received gross proceeds totaling $10,000 in
cash from approximately 24 non-accredited investors.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
1 Underwriting Agreement (not applicable)
2 Plan of Merger (not applicable)
3.1 Articles of Incorporation (Charter Document) (1)
3.2 Certificate of Amendment to Articles of Incorporation
(Charter Document) (1)
3.3 Bylaws (1)
10.1 Material Contracts - License Agreement dated
December 21, 1999 with Dr. Robert Milne (2)
11 Statement Re: Computation of Per Share Earnings
(included in Footnote 2 of the Financial Statements in
Item 1 of this Quarterly Report on Form 10-QSB)
15 Letter on Unaudited Interim Financial Information
(included in Financial Statements in Item 1 of this
Quarterly Report on Form 10-QSB)
18 Letter on Change in Accounting Principles (not
applicable)
19 Reports Furnished to Security Holders (not applicable)
22 Published Report Regarding Matters Submitted to Vote
(not applicable)
24 Power of Attorney (1)
27 Financial Data Schedule
99 Other (not applicable)
(1) Previously filed as exhibits to Registration Statement on
Form 10-SB filed with the Securities and Exchange Commission
on October 13, 1999.
(2) Previously filed as exhibits to Form 10-QSB for the quarter
ended December 31, 1999 filed with the Securities and
Exchange Commission on July 20, 2000.
(b) Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized in the City of Las
Vegas, Nevada, on December __________, 2000.
Sunwest Enterprises, Inc., a Nevada
corporation
___________________________________
_
By: Ronald Almadova, President
