Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended: December 31, 1995
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:
27880 Dorris Drive, Carmel, CA 93923
Issuer's telephone number: (408) 625-6911
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
December 31, 1995 (unaudited)
and June 30, 1995 Page 3
Statements of Operations
Three months and six months ended
December 31, 1995 and 1994 (unaudited) Page 5
Statements of Cash Flows
Six months ended December 31,
1995 and 1994 (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
December 31, June 30,
1995 1995
(unaudited)
______________________________________
<S> <C> <C>
CURRENT ASSETS
Cash 136,040 3,215
Receivables, net of allowance for
doubtful accounts 70,029 299,493
Inventory
Costs & estimated earnings on
long-term contracts 132,397 6,109
Work-in-process 13,912 29,204
Computer parts 85,661 49,285
Prepaid expenses -- 8,023
_______ _______
Total current assets 438,039 395,329
FURNITURE AND EQUIPMENT, net of
$52,514 and $48,878 of
accumulated depreciation 14,954 22,769
PROTOTYPE EQUIPMENT, net of
$70,653 and $64,305 of
accumulated depreciation 49,302 40,009
Deposits 1,474 1,474
_______ _______
503,769 459,581
Page 3 of 10
<PAGE>
<CAPTION>
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, June 30,
1995 1995
(unaudited)
________________________________
CURRENT LIABILITIES
Deposits 80 --
Note payable -- 130,000
Accounts Payable 58,033 98,685
Accrued Liabilities 190,377 147,248
Payables - officers/directors 140,882 140,626
Current portion of capitalized
lease obligation 8,268 1,738
Deferred Revenue/LT Contracts 13,160 20,300
Total current liabilities 410,800 538,597
Capitalized lease obligation 11,712 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 (1,782,932) (1,950,312)
Total stockholders' equity 81,257 (86,123)
503,769 459,581
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
Page 4 of 10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
December 31 December 31
1995 1994 1995 1994
___________________________________________
<C> <C> <C> <C>
Revenues
Sales 373,642 142,336 763,873 257,593
Costs and expenses
Cost of sales 145,177 104,836 336,596 212,368
Marketing 90,492 10,610 106,571 26,603
Research and
development 8,325 464 11,432 765
General and
administrative 67,839 46,028 141,893 111,448
_______ _______ _______ _______
311,833 161,938 596,492 351,984
Net income (loss) 61,809 (19,602) 167,381 (94,391)
Net income (loss)
per common share .06 (.018) .16 (.087)
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)
Six Months Ended December 31
1995 1994
____________________________
<S> <C> <C>
Cash flows from operating activities:
Net income <loss> 167,381 (94,391)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 9,984 9,918
(Increase) decrease in receivables 229,464 (37,690)
(Increase) decrease in costs and
estimated earnings on long-term
contracts (126,288) 306,487
(Increase) decrease in inventories (21,084) (22,751)
(Increase) decrease in prepaid
expenses/deposits 8,023 13,265
Increase (decrease) in accounts
payable (40,652) 19,264
Increase (decrease) in accrued
liabilities and customer deposits 58,628 26,885
Increase (decrease) in payables--
officers/directors 256 3,489
Increase (decrease) in deferred
revenue <22,560> -0-
________ ________
Net cash provided by (used in)
operating activities 263,152 224,476
Cash flows from investing activities
Acquisition of furniture & equipment 4,179 -0-
Acquisition of prototype equipment (15,641) (1,076)
________ ________
Net cash used in investing
activities (11,462) (1,076)
________ ________
Cash flows from financing activities
Proceeds from line of credit -0- 28,321
Payments on line of credit (130,000) (334,688)
Payments on capital lease 11,135 (719)
_________ _________
Net cash used in financing
activities: (118,865) (307,086)
Page 6 of 10
<PAGE>
Net increase (decrease) in cash and
cash equivalents 132,825 (83,686)
Cash and cash equivalents at beginning
of period 3,215 87,442
_______ _______
Cash and cash equivalents at end of
period 136,040 3,756
Supplemental disclosures of cash flow
information
Cash paid during the period for
interest 5,482 5,302
<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 December 31, 1995 and 1994 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 $61,809 on gross sales
of $373,642 in the second quarter of fiscal year 1996. This
successful quarter resulted from healthy revenue increases and
repeat project business with strong margins. The Company has a
firm backlog in excess of $121,000 as of 12/31/95, most of which
is deliverable in quarter three of 1996. Management remains
optimistic about the fiscal year sales projections and overall
performance. In February 1996, the Company booked a defense
subcontract order for $725,000. 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 December 31, 1995, the Company had a working capital surplus
of $27,239 as compared to a working capital (deficiency) of
$(38,285) at December 31, 1994.
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)
2/14/96 Kenneth W. Ruggles
(Date) (Signature)
2/14/96 Douglas S. Timms
(Date) (Signature)
Page 10 of 10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 136,040
<SECURITIES> 0
<RECEIVABLES> 84,766
<ALLOWANCES> 14,874
<INVENTORY> 99,573
<CURRENT-ASSETS> 438,039
<PP&E> 187,423
<DEPRECIATION> 123,167
<TOTAL-ASSETS> 503,769
<CURRENT-LIABILITIES> 410,800
<BONDS> 0
<COMMON> 1,703,746
0
8
<OTHER-SE> 160,435
<TOTAL-LIABILITY-AND-EQUITY> 503,769
<SALES> 373,642
<TOTAL-REVENUES> 373,642
<CGS> 145,177
<TOTAL-COSTS> 311,833
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,590
<INTEREST-EXPENSE> 5,482
<INCOME-PRETAX> 61,809
<INCOME-TAX> 0
<INCOME-CONTINUING> 61,809
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,809
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
