Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended: March 31, 1997
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:
May 1, 1997: 1,066,237
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, 1997 (unaudited)
and June 30, 1996 Page 3
Statements of Operations
Three months and nine months ended
March 31, 1997 and 1996 (unaudited) Page 5
Statements of Cash Flows
Nine months ended March 31,
1997 and 1996 (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,
1997 1996
(unaudited)
______________________________________
<S> <C> <C>
CURRENT ASSETS
Cash 83,715 128,199
Receivables, net of allowance for
doubtful accounts 33,072 134,621
Inventory
Costs & estimated earnings on
long-term contracts 23,000 54,301
Work-in-process 9,502 14,178
Computer parts 93,425 63,958
Prepaid expenses 6,169 4,398
_______ _______
Total current assets 248,883 399,655
FURNITURE AND EQUIPMENT, net of
$62,448 and $56,707 of
accumulated depreciation 22,724 20,662
PROTOTYPE EQUIPMENT, net of
$99,318 and $83,946 of
accumulated depreciation 45,156 45,708
Deposits 4,474 4,474
_______ _______
321,327 470,499
Page 3 of 10
<PAGE>
<CAPTION>
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, June 30,
1997 1996
(unaudited)
________________________________
CURRENT LIABILITIES
Deposits 80 --
Note payable 35,709 --
Accounts Payable 46,667 69,252
Accrued Liabilities 67,865 90,530
Payables - officers/directors 140,441 140,663
Current portion of capitalized
lease obligation 9,045 8,701
Deferred Revenue/LT Contracts -- 6,020
_______ _______
Total current liabilities 299,807 315,166
Capitalized lease obligation 4,644 7,567
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,
1,066,237 shares issued and
outstanding 1,703,416 1,703,746
Additional paid-in capital 160,435 160,435
Accumulated deficit (1,847,073) (1,716,423)
_________ _________
Total stockholders' equity 16,786 147,766
_________ _________
321,237 470,499
<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
1997 1996 1997 1996
___________________________________________
<C> <C> <C> <C>
Revenues
Sales 139,065 279,702 577,320 1,043,575
Costs and expenses
Cost of sales 120,023 137,286 275,919 473,882
Marketing 68,964 53,428 195,009 159,999
Research and
development 11,025 9,914 33,234 21,347
General and
administrative 69,351 65,108 203,808 207,001
_______ _______ _______ _______
269,363 265,736 707,970 862,229
Net income (loss) (130,298) 13,966 (130,650) 181,346
Net income (loss)
per common share (.12) .013 (.12) .017
Weighted average
common shares 1,066,237 1,066,749 1,066,237 1,066,749
<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
1997 1996
____________________________
<S> <C> <C>
Cash flows from operating activities:
Net income <loss> (130,650) 181,346
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 21,113 14,213
(Increase) decrease in receivables 101,549 204,896
(Increase) decrease in costs and
estimated earnings on long-term
contracts (23,000) (111,319)
(Increase) decrease in inventories 29,510 (33,977)
(Increase) decrease in prepaid
expenses/deposits (1,771) 5,023
Increase (decrease) in accounts
payable (22,585) 38,973
Increase (decrease) in accrued
liabilities and customer deposits (22,585) (57,688)
Increase (decrease) in payables--
officers/directors (222) (117)
Increase (decrease) in deferred
revenue (6,020) (10,710)
________ ________
Net cash provided by (used in)
operating activities (54,661) 230,640
________ ________
Cash flows from investing activities
Acquisition of furniture & equipment -- 1,439
Acquisition of prototype equipment (22,623) (21,521)
________ ________
Net cash used in investing
activities (22,623) (20,082)
________ ________
Cash flows from financing activities
Proceeds from line of credit 35,709 --
Payments on line of credit -- (130,000)
Payments on capital lease (2,579) 8,810
Common Stock Buyback (330) --
_________ _________
Net cash used in financing
activities: 32,800 (121,190)
_________ _________
Page 6 of 10
<PAGE>
Net increase (decrease) in cash and
cash equivalents (44,484) 89,368
Cash and cash equivalents at beginning
of period 128,199 3,215
_______ _______
Cash and cash equivalents at end of
period 83,715 92,583
_______ _______
Supplemental disclosures of cash flow
information
Cash paid during the period for
interest 1,959 7,340
_______ _______
<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, 1997 and 1996 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, 1996 includes audited financial statements as of June 30,
1996 and 1995, 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.
The Company completed a limited common stock buyback program
during fiscal quarter three 1997, repurchasing 512 shares from
shareholders.
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 a net (loss) of $(130,298) on gross
sales of $139,065, placing the Company in a net loss position for
the year. The loss position resulted from the unanticipated
cancellation of a government contract extension due to lack of
budget, and our continued strong investment into marketing and
new product development.
As of March 31, 1997, the Company had a backlog of $283,000, most
of which is deliverable in the fourth quarter. Based on present
expectations, management expects revenues approximating $800,000
for the year and a pretax loss approaching $150,000.
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 being solicited actively
to enable the Company to capitalize on the significant worldwide
opportunities available with the current products.
FINANCIAL CONDITION
At March 31, 1997, the Company had a working capital (deficit) of
$(50,924) as compared to a working capital surplus at March 31,
1996 of $33,227.
Currently, Systems West, Inc. has made limited use of its
extended line of credit guaranteed by the California Export
Finance Office and will continue to do so in quarter four 1997.
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)
3/13/97 Kenneth W. Ruggles
(Date) (Signature)
3/13/97 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-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 83,715
<SECURITIES> 0
<RECEIVABLES> 47,807
<ALLOWANCES> 14,735
<INVENTORY> 102,927
<CURRENT-ASSETS> 248,883
<PP&E> 229,646
<DEPRECIATION> 161,766
<TOTAL-ASSETS> 321,237
<CURRENT-LIABILITIES> 298,807
<BONDS> 0
<COMMON> 1,703,746
0
8
<OTHER-SE> 160,435
<TOTAL-LIABILITY-AND-EQUITY> 321,237
<SALES> 139,065
<TOTAL-REVENUES> 139,065
<CGS> 120,023
<TOTAL-COSTS> 269,363
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,959
<INCOME-PRETAX> (130,298)
<INCOME-TAX> 0
<INCOME-CONTINUING> (130,298)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (130,298)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
