Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended: September 30, 2000
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: (831) 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:
November 10, 2000: 13,862,370
Page 1 of 10
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
September 30, 2000 (unaudited)
and June 30, 2000 Page 3
Statements of Operations
Three months ended September 30,
2000 and 1999 (unaudited) Page 5
Statements of Cash Flows
Three months ended September 30,
2000 and 1999 (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 9
SIGNATURES Page 10
Page 2 of 10
<PAGE>
SYSTEMS WEST, INC.
BALANCE SHEETS
ASSETS
(unaudited)
September 30, June 30,
2000 2000
______________________________________
[S] [C] [C]
CURRENT ASSETS
Cash $ 539 $ 1,934
Receivables, net of allowance for
doubtful accounts 150 150
Inventory
Costs & estimated earnings on
long-term contracts -- --
Work-in-process 27,654 27,654
Computer parts 41,686 41,953
Prepaid expenses 1,499 2,623
------- -------
Total current assets 71,528 74,314
FURNITURE AND EQUIPMENT, net of
$96,532 (September) and $94,446
(June) of accumulated depreciation 29,049 31,134
PROTOTYPE EQUIPMENT, net of
$166,901 (September) and $166,901
(June) of accumulated depreciation 1,365 --
Other Assets 4,363 4,363
------- -------
$106,305 $109,811
======= =======
Page 3 of 10
<PAGE>
SYSTEMS WEST, INC.
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
(unaudited)
September 30, June 30,
2000 2000
________________________________
CURRENT LIABILITIES
Note payable $ 50,000 $ 50,000
Accounts Payable 128,535 134,308
Deferred Income 2,400 4,800
Accrued Liabilities 212,848 175,077
Payables - officers/directors 98,730 96,515
Current portion of capitalized
lease obligation 7,295 6,979
------- -------
Total current liabilities 499,808 467,679
Capitalized lease obligation 13,159 15,389
------- -------
Total liabilities 512,967 483,068
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;
200,000,000 shares authorized,
13,862,370 shares issued and
outstanding 1,745,016 1,745,016
Additional paid-in capital 324,842 324,842
Accumulated deficit (2,476,528) (2,443,123)
--------- ---------
Total stockholders' equity
(deficit) (406,662) (373,257)
--------- ---------
$ 106,305 $ 109,811
========= =========
[FN]
See accompanying notes to financial statements.
</FN>
Page 4 of 10
<PAGE>
SYSTEMS WEST, INC.
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
September 30
2000 1999
_____________________________
[S] [C] [C]
Revenues
Sales $ 18,205 $190,301
Costs and expenses
Cost of sales 4,008 94,002
Marketing 450 22,938
Research and development -- 6,080
General and administrative 47,152 52,563
------- -------
50,610 175,583
------- -------
Net income (loss) $(33,405) $ 14,718
======= =======
Net income (loss) per common share (*) *
Weighted average common shares 13,862,370 13,862,370
* less than $.01 per share
[FN]
See accompanying notes to financial statements.
</FN>
Page 5 of 10
<PAGE>
SYSTEMS WEST, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended September 30
2000 1999
_______________________________
[S] [C] [C]
Cash flows from operating activities:
Net income <loss> $(33,405) $14,718
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 2,086 7,527
Decrease in receivables -- 146,284
Increase in costs and estimated
earnings on long-term contracts -- (70,000)
Decrease in inventories 267 15,221
(Increase) decrease in prepaid
expenses/deposits 1,124 (2,463)
Decrease in accounts payable -- (2,240)
Increase (decrease) in accrued
liabilities and customer deposits 31,998 (56,538)
Increase in payables--officers/
directors 2 215 --
Decrease in deferred revenue (2,400) --
------- -------
Net cash provided by
operating activities 1,885 52,509
Cash flows from investing activities
Acquisition of prototype equipment (1,366) --
Decrease in other assets -- --
------- -------
Net cash used in investing
activities (1,366) --
------- -------
Cash flows from financing activities
Increase on line of credit -- (27,108)
Payments on capital lease (1,914) 115
Investment in Common Stock -- --
------- -------
Net cash used in financing
activities: (1,914) (26,993)
------- -------
Page 6 of 10
<PAGE>
SYSTEMS WEST, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
Net increase (decrease) in cash and
cash equivalents (1,395) 25,516
Cash and cash equivalents at beginning
of period 1,934 1,200
------- -------
Cash and cash equivalents at end of
period $ 539 $26,716
======= =======
Supplemental disclosures of cash flow
information
Cash paid during the period for
interest -- 5,848
See accompanying notes to financial statements.
Page 7 of 10
<PAGE>
SYSTEMS WEST, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
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 September 30, 2000 and 1999 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, 2000 includes audited financial statements as of June 30,
2000 and 1999, complete with the auditors' report and footnotes
to the financial statements, and should be read in conjunction
with this Form 10-QSB.
Continuing operations:
The financial statements have been prepared on a going-concern
basis which contemplates continuity of operations, realization of
assets and liquidation of liabilities in the normal course of
business. Since 1995, the Company has incurred substantial
losses, resulting in negative working capital of $428,280 and a
stockholders' deficit of $406,662 at September 30, 2000. The
Company's continued existence is dependent on its ability to
achieve profitable operations, obtain additional debt or equity
funding, locate a partner, or consummate a business combination
providing additional equity funding. The financial statements do
not include any adjustment relating to the recoverability and
classification of recorded asset amounts or the amount and
classification of liabilities or other adjustments that might be
necessary should the Company be unable to continue as a going-
concern in its present form.
2. STOCKHOLDERS' EQUITY
On September 15, 2000, shareholders of the Company approved an
increase in the authorized number of common shares to 200,000,000
shares and also approved a ten-for-one forward stock split. All
numbers of shares and per share references have been retroactively
adjusted to reflect this change.
Page 8 of 10
<PAGE>
The Series A preferred stock has a $40.00 per share liquidation
preference and is convertible to common stock on a 180 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.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Systems West, Inc. recorded net loss of $(33,405) on net revenue of
$18,205 for the quarter ended September 30, 2000 as compared to net
income of $14,718 on net revenue of $190,301 for the comparable
quarter of the previous year.
The Company still awaits the outcome of several long outstanding
quotations, including several that have been issued in this quarter.
In the meantime, operating expenses other than administrative expenses
associated with the Company's compliance, are being kept to a minimum
by utilizing part-time consultants.
FINANCIAL CONDITION
At September 30, 2000, the Company had a net working capital deficit
of $441,000 as compared to a working capital deficit of $393,000 at
June 30, 2000. The current working capital requirements are supplemented
by $50,000 subordinated two year, 8% interest note convertible at $.05 per
share from a private investor. However, the Company continues to be
severely constrained by shortfalls in working capital needed to support
normal levels of operating activities.
In addition to the borrowings mentioned above, the Company continues to
solicit investors and/or strategic partners to enable it to capitalize
on its core technology opportunities in the significant global market.
To date, definitive investment or other opportunities have yet to
materialize.
The Board and management have serious doubts concerning the Company's
ability to sustain successful operations and return the operation to
annual profitability without a material capital infusion.
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.
Page 9 of 10
<PAGE>
Forward-Looking Statements
The statements contained in this report which are not historical in
nature are forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of
1934 and the Company intends that such forward-looking statements be
subject to the safe harbors for such statements under such sections.
The forward-looking statements herein are based on current expectations
that involve a number of risks and uncertainties. Such forward-looking
statements are based on numerous assumptions, including, but not limited
to, the assumption that the Company can successfully compete with larger,
more established competitors; that the market segments targeted by the
Company will continue to grow; that pricing and other competitive pressures
worldwide on significant projects will not cause margins to erode
significantly; that the Company will complete its major project cost-
effectively to budgetary expectations; and that currency fluctuations
worldwide will not cause adverse pricing pressures.
The foregoing assumptions are based on judgments with respect to, among
other things, future economic, competitive and market conditions, and
future business decisions, all of which are difficult or impossible to
predict accurately and many of which are beyond the Company's control.
Accordingly, although the Company believes that the assumptions underlying
the forward-looking statements are reasonable, any such assumption could
prove to be inaccurate and therefore there can be no assurance that the
results contemplated in forward-looking statements will be realized. The
forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from those set forth in
or implied by the forward-looking statements, including, but not limited
to, the risk that competitive conditions in the industry will change
adversely or otherwise become more intense; that changes in technology
or customer preference could cause the growth rate in the markets the
Company serves to slow or halt; that demand for the Systems West product
line will slow; that worldwide pricing and other competitive pressures
could adversely affect the Company's margins; or that currency fluctuations
could result in international pricing pressures or could reduce the value
in U.S. dollar terms of the Company's international sales.
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)
11/10/00 Douglas S. Timms
(Date) (Signature)
Page 10 of 10
