Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended: December 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:
February 2, 1998: 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
December 31, 1997 (unaudited)
and June 30, 1997 Page 3
Statements of Operations
Three months and six months ended
December 31, 1997 and 1996 (unaudited) Page 5
Statements of Cash Flows
Six months ended December 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
December 31, June 30,
1997 1997
(unaudited)
______________________________________
<S> <C> <C>
CURRENT ASSETS
Cash 43,540 85,092
Receivables, net of allowance for
doubtful accounts 23,831 2,755
Inventory
Costs & estimated earnings on
long-term contracts -- 141,103
Work-in-process 17,586 36,084
Computer parts 80,540 61,524
Prepaid expenses 4,827 4,827
_______ _______
Total current assets 170,324 331,385
FURNITURE AND EQUIPMENT, net of
$69,462 and $65,290 of
accumulated depreciation 17,044 20,683
PROTOTYPE EQUIPMENT, net of
$118,257 and $107,375 of
accumulated depreciation 29,055 39,600
Deposits 4,474 8,474
_______ _______
220,897 400,142
Page 3 of 10
<PAGE>
<CAPTION>
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, June 30,
1997 1997
(unaudited)
________________________________
CURRENT LIABILITIES
Deposits 80 --
Note payable 50,000 143,400
Accounts Payable 61,148 61,177
Accrued Liabilities 46,157 48,046
Payables - officers/directors 181,006 143,883
Current portion of capitalized
lease obligation 4,918 8,284
Deferred Revenue/LT Contracts 22,521 --
_______ _______
Total current liabilities 365,830 404,790
Capitalized lease obligation 2,557 4,463
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 1,703,416
Additional paid-in capital 160,435 160,435
Accumulated deficit (2,011,349) (1,872,970)
_________ _________
Total stockholders' equity (147,490) (9,111)
_________ _________
220,897 400,142
<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
1997 1996 1997 1996
___________________________________________
<C> <C> <C> <C>
Revenues
Sales 164,233 124,569 254,224 438,256
Costs and expenses
Cost of sales 71,260 31,078 112,571 156,481
Marketing 29,953 64,426 73,722 126,045
Research and
development 23,394 17,092 72,723 22,209
General and
administrative 73,538 64,891 133,587 133,873
_______ _______ _______ _______
198,145 177,487 392,603 438,608
Net income (loss) (33,912) (52,918) (138,379) (352)
Net income (loss)
per common share (.03) (.05) (.13) --
Weighted average
common shares 1,066,237 1,081,000 1,066,237 1,081,000
<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
1997 1996
____________________________
<S> <C> <C>
Cash flows from operating activities:
Net income <loss> (138,379) (352)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 15,054 12,804
(Increase) decrease in receivables (21,076) 98,734
(Increase) decrease in costs and
estimated earnings on long-term
contracts 141,103 54,301
(Increase) decrease in inventories (518) (70,824)
(Increase) decrease in prepaid
expenses/deposits 4,000 4,398
Increase (decrease) in accounts
payable (29) (10,875)
Increase (decrease) in accrued
liabilities and customer deposits (1,809) (32,607)
Increase (decrease) in payables--
officers/directors 37,123 --
Increase (decrease) in deferred
revenue 22,521 (6,020)
________ ________
Net cash provided by (used in)
operating activities 57,990 49,559
Cash flows from investing activities
Acquisition of furniture & equipment (533) 785
Acquisition of prototype equipment (337) (8,128)
________ ________
Net cash used in investing
activities (870) (7,343)
________ ________
Cash flows from financing activities
Proceeds from line of credit 50,000 --
Payments on line of credit (143,400) --
Payments on capital lease (5,272) (4,181)
_________ _________
Net cash used in financing
activities: (98,672) (4,181)
Page 6 of 10
<PAGE>
Net increase (decrease) in cash and
cash equivalents (41,552) 38,035
Cash and cash equivalents at beginning
of period 85,092 128,199
_______ _______
Cash and cash equivalents at end of
period 43,540 166,234
Supplemental disclosures of cash flow
information
Cash paid during the period for
interest 10,280 1,185
<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, 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,
1997 and 1996, 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 a net (loss) of $(33,912) on net
sales of $164,233 for the second quarter of fiscal year 1998, and
a cumulative net (loss) of $(138,379) on net sales of $254,224
for the six months ended December 31, 1997. The first six months
of fiscal year 1998 continued to be impacted adversely by
significant cash constraints and unanticipated delays in
finalizing contract negotiations on a major South American
project. This $1,132,000 contract was signed early in fiscal
quarter three 1998.
The Company has a backlog in excess of $1,320,000 as of January
31, 1998, most of which is deliverable during the next twelve
months. The sales prospect activity continues at healthy levels
and management remains encouraged that the fiscal year 1998
profit performance will approach breakeven with the second half
of the year returning to profitability on strong revenue results.
FINANCIAL CONDITION
At December 31, 1997, the Company had a working capital deficit
of $(195,506) as compared to a working capital surplus of
$85,073 at December 31, 1996.
Systems West, Inc. currently has an outstanding line of credit
financing of $50,000. This line of credit and the Company's
existing working capital is supporting its short term operating
requirements. Ongoing working capital is supplemented
periodically by export loans guaranteed by the California Export
Finance Office on international business.
Page 9 of 10
<PAGE>
PART II. OTHER INFORMATION
No information is included in answer to Items 1, 2, 3, 4, or 5
under Part II as the Items are either not applicable or, if
applicable, the answer is negative.
Item 6. Resignations of Registrant's Directors
Effective October 20, 1997, E. R. Reins resigned his position on
the Board of Directors and as an officer of Systems West, Inc.
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)
2/13/98 Kenneth W. Ruggles
(Date) (Signature)
2/13/98 Douglas S. Timms
(Date) (Signature)
Page 10 of 10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 43,540
<SECURITIES> 0
<RECEIVABLES> 31,793
<ALLOWANCES> 7,962
<INVENTORY> 98,126
<CURRENT-ASSETS> 170,324
<PP&E> 233,818
<DEPRECIATION> 187,719
<TOTAL-ASSETS> 220,897
<CURRENT-LIABILITIES> 365,830
<BONDS> 0
<COMMON> 1,703,416
0
8
<OTHER-SE> 160,435
<TOTAL-LIABILITY-AND-EQUITY> 220,897
<SALES> 164,233
<TOTAL-REVENUES> 164,233
<CGS> 71,260
<TOTAL-COSTS> 198,145
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (33,912)
<INCOME-TAX> 0
<INCOME-CONTINUING> (33,912)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33,912)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
