Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended: March 31, 1996
Commission file number: 33-15682-LA
Exact name of small business issuer as specified in its charter:
Systems West, Inc.
State or other jurisdiction of incorporation or organization:
Colorado
IRS Employer Identification No.: 94-3026545
Address of principal executive offices:
3239 Imjin Road, Marina, CA 93933
Issuer's telephone number: (408) 582-1050
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 such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
February 1, 1996: 1,066,749
This Form 10-QSB is not covered by an accountant's report
Page 1 of 10
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
March 31, 1996 (unaudited)
and June 30, 1995 Page 3
Statements of Operations
Three months and nine months ended
March 31, 1996 and 1995 (unaudited) Page 5
Statements of Cash Flows
Nine months ended March 31,
1996 and 1995 (unaudited) Page 6
Notes to Financial Statements
(unaudited) Page 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations Page 9
PART II. OTHER INFORMATION Page 10
SIGNATURES Page 10
EXHIBITS: Exhibit 27 - Financial Data Schedule
Page 2 of 10
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
ASSETS
March 31, June 30,
1996 1995
(unaudited)
______________________________________
<S> <C> <C>
CURRENT ASSETS
Cash 92,583 3,215
Receivables, net of allowance for
doubtful accounts 94,597 299,493
Inventory
Costs & estimated earnings on
long-term contracts 117,428 6,109
Work-in-process 26,536 29,204
Computer parts 85,930 49,285
Prepaid expenses -- 8,023
_______ _______
Total current assets 417,074 395,329
FURNITURE AND EQUIPMENT, net of
$53,569 and $48,878 of
accumulated depreciation 16,639 22,769
PROTOTYPE EQUIPMENT, net of
$73,827 and $64,305 of
accumulated depreciation 52,008 40,009
Deposits 4,474 1,474
_______ _______
490,195 459,581
Page 3 of 10
<PAGE>
<CAPTION>
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, June 30,
1996 1995
(unaudited)
________________________________
CURRENT LIABILITIES
Deposits 80 --
Note payable -- 130,000
Accounts Payable 137,658 98,685
Accrued Liabilities 89,480 147,248
Payables - officers/directors 140,509 140,626
Current portion of capitalized
lease obligation 6,530 1,738
Deferred Revenue/LT Contracts 9,590 20,300
_______ _______
Total current liabilities 383,847 538,597
Capitalized lease obligation 11,125 7,107
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value;
1,000,000 shares authorized,
Series A, 812.5 shares issued
and outstanding (liquidation
preference of $32,500) 8 8
Common stock, no par value;
5,000,000 shares authorized,
1,066,749 shares issued and
outstanding 1,703,746 1,703,746
Additional paid-in capital 160,435 160,435
Accumulated deficit (1,768,966) (1,950,312)
_________ _________
Total stockholders' equity 95,223 (86,123)
_________ _________
490,195 459,581
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
Page 4 of 10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
March 31 March 31
1996 1995 1996 1995
___________________________________________
<C> <C> <C> <C>
Revenues
Sales 279,702 322,398 1,043,575 579,956
Costs and expenses
Cost of sales 137,286 257,198 473,882 470,332
Marketing 53,428 20,665 159,999 47,268
Research and
development 9,914 5,996 21,347 6,761
General and
administrative 65,108 56,069 207,001 167,517
_______ _______ _______ _______
265,736 339,928 862,229 691,878
Net income (loss) 13,966 (17,530) 181,346 (111,922)
Net income (loss)
per common share .013 (.016) (.017) (.102)
Weighted average
common shares 1,066,749 1,095,320 1,066,749 1,095,320
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
Page 5 of 10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended March 31
1996 1995
____________________________
<S> <C> <C>
Cash flows from operating activities:
Net income <loss> 181,346 (111,922)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 14,213 14,910
(Increase) decrease in receivables 204,896 (178,459)
(Increase) decrease in costs and
estimated earnings on long-term
contracts (111,319) 320,732
(Increase) decrease in inventories (33,977) (34,230)
(Increase) decrease in prepaid
expenses/deposits 5,023 12,108
Increase (decrease) in accounts
payable 38,973 63,179
Increase (decrease) in accrued
liabilities and customer deposits (57,688) 92,309
Increase (decrease) in payables--
officers/directors (117) 7,066
Increase (decrease) in deferred
revenue (10,710) -0-
________ ________
Net cash provided by (used in)
operating activities 230,640 185,693
________ ________
Cash flows from investing activities
Acquisition of furniture & equipment 1,439 -0-
Acquisition of prototype equipment (21,521) (1,076)
________ ________
Net cash used in investing
activities (20,082) (1,076)
________ ________
Cash flows from financing activities
Proceeds from line of credit -0- (270,178)
Payments on line of credit (130,000) --
Payments on capital lease 8,810 (1,099)
_________ _________
Net cash used in financing
activities: (121,190) (271,277)
_________ _________
Page 6 of 10
<PAGE>
Net increase (decrease) in cash and
cash equivalents 89,368 (86,660)
Cash and cash equivalents at beginning
of period 3,215 87,442
_______ _______
Cash and cash equivalents at end of
period 92,583 782
_______ _______
Supplemental disclosures of cash flow
information
Cash paid during the period for
interest 7,340 7,732
_______ _______
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
Page 7 of 10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared by
the Company without audit. In the opinion of management, the
accompanying unaudited financial statements contain all
adjustments (consisting of only normal recurring accruals)
necessary for a fair presentation of the Company's financial
position as at March 31, 1996 and 1995 and the results of its
operations, changes in its stockholders' equity and cash flows
for the respective periods then ended. Management has elected to
omit certain disclosure required by generally accepted accounting
principles. The Company's Form 10-KSB for fiscal year ended June
30, 1995 includes audited financial statements as of June 30,
1995 and 1994, complete with the auditors' report and footnotes
to the financial statements, and should be read in conjunction
with this Form 10-QSB.
2. STOCKHOLDERS' EQUITY
On May 25, 1993, the Company's shareholders approved a 1 for 400
reverse split of the Company's common stock and preferred stock,
and increased the authorized capital stock of the Company to
5,000,000 shares of no par value common stock and 1,000,000
shares of $.01 par value preferred stock. Retroactive effect has
been given to all share and per share data in the accompanying
financial statements.
The Series A preferred stock has a $40.00 per share liquidation
preference and is convertible to common stock on an eighteen for
one basis at the option of the holders. The preferred stock may
be redeemed at any time at $40.00 per share, at the election of
the Board of Directors of the Company.
The Company has authorized but unissued shares of preferred stock
which may be issued in such series and preferences as determined
by the Board of Directors.
Page 8 of 10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Systems West, Inc. posted net income of $13,966 on gross sales
of $279,702 in the third quarter of fiscal year 1996. This
successful quarter resulted from repeat project business with
strong margins. The Company has a firm backlog in excess of
$621,000 as of 3/31/96, most of which is deliverable by quarter
one-end of 1997. Management remains optimistic about the fiscal
year sales projections and overall performance. For fiscal year
1996, management anticipates revenues of approximately $1,400,000
and pretax profitability of $200,000.
The Company continues to be constrained by insufficient working
capital to support effective levels of production and sales
activity. Current working capital is supplemented by export
loans guaranteed by the California Export Finance Office on
international business.
Additional investors and/or partners are currently actively being
sought, to enable the Company to capitalize on the significant
worldwide opportunities available with the current products.
FINANCIAL CONDITION
At March 31, 1996, the Company had a working capital surplus
of $33,227 as compared to a working capital (deficiency) of
$(51,204) at March 31, 1995.
Currently, Systems West, Inc. does not require an extended line
of credit guaranteed by the California Export Finance Office.
This directed line of credit, along with the Company's
limited working capital, supports Systems West's short-term
working capital requirements.
Page 9 of 10
<PAGE>
PART II. OTHER INFORMATION
No information is included in answer to Items 1, 2, 3, 4, 5, or 6
under Part II as the Items are either not applicable or, if
applicable, the answer is negative.
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.
SYSTEMS WEST, INC.
(Registrant)
3/13/96 Kenneth W. Ruggles
(Date) (Signature)
3/13/96 Douglas S. Timms
(Date) (Signature)
Page 10 of 10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 92,583
<SECURITIES> 0
<RECEIVABLES> 109,471
<ALLOWANCES> 14,874
<INVENTORY> 112,466
<CURRENT-ASSETS> 417,074
<PP&E> 196,043
<DEPRECIATION> 127,396
<TOTAL-ASSETS> 490,195
<CURRENT-LIABILITIES> 383,847
<BONDS> 0
<COMMON> 1,703,746
0
8
<OTHER-SE> 160,435
<TOTAL-LIABILITY-AND-EQUITY> 490,195
<SALES> 279,702
<TOTAL-REVENUES> 279,702
<CGS> 137,286
<TOTAL-COSTS> 265,736
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,340
<INCOME-PRETAX> 13,966
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,966
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,966
<EPS-PRIMARY> .013
<EPS-DILUTED> .013
</TABLE>
