Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended: March 31, 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:
May 1, 2000: 1,386,237
Page 1 of 11
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
March 31, 2000
and June 30, 1999 (unaudited) Page 3
Statements of Operations
Three months and nine months ended
March 31, 2000 and 1999 (unaudited) Page 5
Statements of Cash Flows
Nine months ended March 31,
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 11
EXHIBITS: Exhibit 27 - Financial Data Schedule
Page 2 of 11
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
ASSETS
(unaudited)
March 31, June 30,
2000 1999
______________________________________
<S> <C> <C>
CURRENT ASSETS
Cash 6,924 1,200
Receivables, net of allowance for
doubtful accounts 150 160,402
Inventory
Work-in-process 286 42,987
Computer parts 70,957 43,477
Prepaid expenses 3,935 3,201
_______ _______
Total current assets 82,252 251,267
FURNITURE AND EQUIPMENT, net of
$88,236 and $81,978 of
accumulated depreciation 34,853 22,571
PROTOTYPE EQUIPMENT, net of
$166,901 and $150,903 of
accumulated depreciation -- 15,998
Deposits 3,774 3,774
_______ _______
120,879 293,610
Page 3 of 11
<PAGE>
<CAPTION>
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
(unaudited)
March 31, June 30,
2000 1999
________________________________
CURRENT LIABILITIES
Notes payable 58,040 209,514
Accounts Payable 129,746 134,793
Accrued Liabilities 145,349 187,489
Payables - officers/directors 53,947 34,354
Current portion of capitalized
lease obligations 6,823 1,977
_______ _______
Total current liabilities 393,905 568,127
Capitalized lease obligations 16,179 4,411
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,
1,386,237 shares (1,321,237
shares in 1999) issued and
outstanding 1,745,016 1,745,016
Additional paid-in capital 324,842 324,842
Accumulated deficit (2,359,071) (2,348,794)
_________ _________
Total stockholders' equity (289,205) (278,928)
_________ _________
120,879 293,610
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
Page 4 of 11
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
March 31 March 31
2000 1999 2000 1999
___________________________________________
<C> <C> <C> <C>
Revenues
Sales 67,273 65,478 437,857 707,315
Costs and expenses
Cost of sales 61,807 69,306 234,647 420,423
Marketing 15,432 17,232 66,456 114,997
Research and
development 158 6,013 6,238 41,250
General and
administrative 33,559 94,015 140,793 239,547
_______ _______ _______ _______
110,956 186,566 448,134 816,217
Net income (loss) (43,683) (121,088) (10,277) (108,902)
Net income (loss)
per common share (.03) (.09) (.01) (.08)
Weighted average
common shares 1,386,237 1,321,237 1,386,237 1,321,237
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
Page 5 of 11
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended March 31
2000 1999
____________________________
<S> <C> <C>
Cash flows from operating activities:
Net income <loss> (10,277) (108,902)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 22,256 22,581
(Increase) decrease in receivables 160,252 (106,593)
(Increase) decrease in costs and
estimated earnings on long-term
contracts -- 359,580
(Increase) decrease in inventories 15,221 (17,688)
(Increase) decrease in prepaid
expenses/deposits (734) --
Increase (decrease) in accounts
payable (5,047) 4,439
Increase (decrease) in accrued
liabilities and customer deposits (42,140) 114,435
Increase (decrease) in payables--
officers/directors 19,593 (24,249)
Increase (decrease) in deferred
revenue -- (29,642)
________ ________
Net cash provided by (used in)
operating activities 159,124 213,961
________ ________
Cash flows from investing activities
Acquisition of furniture & equipment -- (2,960)
Acquisition of prototype equipment -- 1,581
________ ________
Net cash used in investing
activities -- (1,379)
________ ________
Cash flows from financing activities
Payments on notes payable (151,474) (243,247)
Payments on capital lease (1,926) (3,089)
Common Stock Buyback/Issued -- 10,000
_________ _________
Net cash used in financing
activities: (153,400) (236,336)
_________ _________
Page 6 of 11
<PAGE>
Net increase (decrease) in cash and
cash equivalents 5,724 (23,754)
Cash and cash equivalents at beginning
of period 1,200 23,952
_______ _______
Cash and cash equivalents at end of
period 6,924 198
_______ _______
Supplemental disclosures of cash flow
information
Cash paid during the period for
interest 12,497 66,397
_______ _______
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
Page 7 of 11
<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, 2000 and the results of its operations
and its cash flows for all periods presented. Management has
elected to omit certain footnote disclosures. The Company's Form
10-KSB for fiscal year ended June 30, 1999 includes audited
financial statements as of June 30, 1999 and 1998, complete with
the auditors' report and footnotes to the financial statements,
and should be read in conjunction with this Form 10-QSB.
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 $311,653 and a
stockholders' deficit of $289,205 at March 31, 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
Subsequent to June 1999, the Company physically issued 65,000
shares to a director of the Company pursuant to an option that
was exercised prior to June 30, 1999.
In November 1999 the Board of Directors approved issuance of an
aggregate of 30,500 options to an officer and two employees of
the Company, exercisable at $0.165 per share over a five year
period.
The Company's 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 11
<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 $(43,683) on net
revenue of $67,273 for the quarter ended March 31, 2000 as
compared to a net (loss) of $(121,088) on net revenue of $65,478
for the comparable quarter of the previous year. For the nine
months ended March 31, 2000, the Company reported a cumulative
net (loss) of $(10,277) on net revenue of $437,857 as compared to
a net (loss) of $(108,902) on net revenue of $707,315 for the
nine months ended March 31, 1999.
A very active proposal quarter did not materialize into
contracts. Delays, not losses of projects quoted, have produced
extremely weak revenues. The restructured organization has been,
in some instances, working on a part-time basis, in order to keep
costs under control during this lean period. Sustaining
engineering has been maintained, although very little work has
been carried out on new projects.
The Company is currently engaged in merger discussions with Wels
Research Corporation, Inc. dba Alden Electronics.
The preceding may contain forward-looking statements within the
meaning of section 27A of the Securities Act of 1933 and section
21E of the Securities Exchange Act of 1934, and are subject to
the safe harbor created by these sections. Such forward looking
statements, particularly as related to the business plans of the
Company, expectations of strategic relationships, business
opportunities, acquisitions of capital equipment, availability of
investment capital and future financing, and the Company's
ability to gain market share, are based on current expectations
that involve a number of risks and uncertainties. Actual results
may differ materially from the Company's expectations and
estimates.
FINANCIAL CONDITION
At March 31, 2000 the Company had a net working capital deficit
of $(311,653) as compared to a working capital deficit of
$(316,860) at June 30, 1999.
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 11
<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.
Page 10 of 11
<PAGE>
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)
5/10/00 Kenneth W. Ruggles
(Date) (Signature)
5/10/00 Douglas S. Timms
(Date) (Signature)
Page 11 of 11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,924
<SECURITIES> 0
<RECEIVABLES> 2,050
<ALLOWANCES> 1,900
<INVENTORY> 71,243
<CURRENT-ASSETS> 82,252
<PP&E> 289,990
<DEPRECIATION> 255,137
<TOTAL-ASSETS> 120,879
<CURRENT-LIABILITIES> 393,905
<BONDS> 0
<COMMON> 1,745,016
0
8
<OTHER-SE> 324,842
<TOTAL-LIABILITY-AND-EQUITY> 120,879
<SALES> 437,857
<TOTAL-REVENUES> 437,857
<CGS> 234,647
<TOTAL-COSTS> 448,134
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,277)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,277)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,277)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
