FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended May 31,1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the transition period from to
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Commission file number 33-27625
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CONDOR WEST CORPORATION
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(Exact name of registrant as specified in its charter)
Nevada No. 76-0251547
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(State or other jurisdiction (I.R.S. Employer Identification No.)
Of incorporation or organization)
8547 Arapaho Road, Suite 416J
Greenwood Village, Colorado 80112
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (303) 770-2313
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909 Frostwood, Suite 261, Houston, Texas 77024
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(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (Par Value $.001 Per Share)
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 No X
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21,541,148 Common Shares were outstanding as of May 31, 1995
with a market value of $0.00.<PAGE>
CONDOR WEST CORPORATION
TABLE OF CONTENTS
PART I
PAGE
----
Item 1. Organization and Business 3
Item 2. Properties (not applicable) 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security-Holders 3
PART II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters 4
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 4
Item 8. Financial Statements and Supplementary Data
(Included in Item 14) -
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 5
PART III
Item 10. Directors and Executive Officers of the Registrant 5
Item 11. Management Remuneration 9
Item 12. Security Ownership of Certain Beneficial Owners and
Management 10
Item 13. Certain Relationships and Related Transactions 10
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports
on Form 8-K 10
2<PAGE>
PART I
Item 1. Organization and Business
Condor West Corporation ("The Company"), a Nevada corporation organized in
October 1987 for the purpose of implementing an initial distribution of its
stock and thereafter to seek operating businesses as potential candidates for
acquisition or other forms of combination. The Company has no operating
history. No representation is made, nor is any intended, that the Company will
be able to acquire one or more operating businesses or, if any acquisitions are
made, that any operations will be profitable.
On May 7, 1990, 650,000 shares, constituting 52% of the Company's 1,250,000
outstanding shares of Common Stock, were acquired by Dr. Everett Renger and
Carl D. Nation. Concurrent therewith, the Company's existing officers and
directors resigned and were replaced by:
Dr. Everett Renger, Chairman of the Board
Carl D. Nation, President and Director
Steven R. Paige, Director
Terrance Rasmussen, Vice President, Treasurer and Director
Patrick D. West, Executive Vice President
David A. Christman, Secretary
(See Item 10, Directors and Executive Officers of the Registrant.)
The newly-elected Board of Directors, in 1994, authorized the issuance of
541,766 shares of the Company's previously unissued Common Stock in exchange
for all of the outstanding shares of Super Brakes, Inc., a corporation owned
50/50 by Messrs. Renger and Nation. Super Brakes, Inc. is a company in the
organizational stage and its activities to date have consisted solely of the
development of a business plan for the financing and establishment of a chain
of Company owned retail brake and installation outlets. As Super Brakes, Inc.
had no significant assets or operations at that time, the shares issued to
Messrs. Renger and Nation were recorded at a nominal amount representing their
aggregate par value of $542, of which $10 was capitalized as the cost of the
investment, and the remaining $532 was deemed to be for services rendered and
was expensed.
Item 2. Properties
None
Item 3. Legal Proceedings
There are no material legal proceedings pending in which Registrant is named a
party.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of the Registrant's security holders
during the fourth quarter of the fiscal period covered by this report.
3<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
There is no active market for the Company's shares.
Item 6. Selected Financial Data
Fiscal Years Ended May 31,
1995 1994 1993 1992 1991
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Total assets $202,915 $ -0- $ -0- $8,903 $17,807
Long term debt 200,000 -0- -0- -0- -0-
Preferred stock -0- -0- -0- -0- -0-
Net revenue -0- -0- -0- -0- -0-
Net loss (26,266) -0- (8,903) (8,904) (9,553)
Loss per share (.01) (.00) (.01) (.01) (.01)
During the five year period ended May 31, 1995 there were no changes in
accounting methods.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company has had limited funds for the last several years, however, in
April, May and June, 1995, the Company received $300,000 in loans from a
Director/Stockholder (see item 13) to provide the working capital to commence
active operations beginning in June, 1995. During the fiscal year ended May
31, 1996, the Company issued 540,000 shares of stock to the Director in full
payment of the notes, plus accrued interest of $4,068
The Company will continue to seek long-term capital through future offerings of
equity and/or long-term financing from investors or financial institutions.
Management does not anticipate that the Company's continuing capital
requirements in the near term will exceed its ability to obtain resources and
believes that the timing of such requirements as are foreseeable will be such
that the funds will be available on a basis sufficient to satisfy them in a
timely manner. Management may increase or reduce working capital at such times
as it, in its sole discretion, deems appropriate. The Company may also
establish, increase or decrease its reserves in addition to its working
capital, at the discretion of Management. The Company's reserves will
generally be available to satisfy working capital or operating expense needs of
the Company and will also be available to pay any excess third party costs or
expenses incurred by the Company in connection with its administration.
RESULTS OF OPERATIONS
The Company has had no operations in the past three years, however, the Company
began seeking in May, 1995 an established business that could be acquired in a
leveraged buy-out to provide an operating entity to begin the Super Brakes
operations. See the discussion regarding changes in amounts previously
reported for the year ended May 31, 1995, below under Item 9.
4<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Effective January 1, 1995, the Company's prior auditors, O'Neal and White,
P.C., merged their audit practice into the firm of C. Williams & Associates,
P.C. of Houston, Texas. During the preceding two fiscal years ending May 31,
1994 and through January 1, 1995, the Company had no disagreements with O'Neal
and White, P.C. on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure. In February, 1996, the
Texas State Board of Public Accountancy revoked the license of Charles R.
Williams, the principal of C. Williams & Associates, and the SEC required the
Company to have its May 31, 1995 financial statements re-audited. As a result,
it retained the firm of Bateman, Blomstrom & Co. as auditors, who conducted the
re-audit as of May 31, 1995. As a result of the re-audit, the Company restated
certain accounting items, including the following: (1) the investment in
Super Brakes, Inc. was restated at a value of $10, from the previous $542; (2)
shares issued to officers and directors for services in creating a business
plan for Super Brakes were originally capitalized as organization expenses of
$18,192, but were charged to expense as a result of the re-audit; (3) 7,541,680
shares of the Company's stock, originally issued to two of its officers in
connection with the Super Brakes business plan development, were re-contributed
back to the Company in October, 1995, and the return was retroactively recorded
at May 31, 1995. As a result of the adjustments from the re-audit, the
Company's stockholders' equity was decreased from $20,242 to ($13,516), and net
loss was restated from ($3,935) to ($26,266).
PART III
Item 10. Directors and Executive Officers of the Registrant
The following person are the directors and (where indicated) executive officers
of the Company and have served in their respective positions since the
indicated dates:
Dr. Everett Renger (1) 53 Co-Chairman
Carl D. Nation (1) 61 Co-Chairman
Wade D. Althen (2) 53 President, CEO
David A. Christman (2) 53 Vice President of Finance, Treasurer, CFO
Steven R. Paige (1) 34 Vice President of Operations, COO
Terrance L. Rasmussen (1) 34 Vice President, Secretary
Dennis L. Swenson (3) 44 Vice President, Human Resources
John A. Murdock III (3) 51
Dr. Felix F. Banchs (3) 56
(1) Joined Company on May 7, 1990
(2) Joined Company on August 4, 1993
(3) Joined Company on May 12, 1995
Dr. Everett Renger has been a practicing orthodontist in Houston, Texas since
1973. He received both a Bachelor of Science and a Doctor of Dental Science
degrees from Baylor University and a Master of Science (orthodontics) from the
University of Texas Dental School. Dr. Renger is a member of the American
Association of Orthodontists, Southwest Society of Orthodontists,
5<PAGE>
American Dental Association, Texas Dental Association, Houston District Dental
Society, Baylor Dental Alumni Association and the University of Texas
orthodontic Alumni Association. He is currently serving on the Peer Review
Committee of the Houston District Dental Society and is President of Wilson
Radiographic Centers of Houston.
Mr. Carl D. Nation founded Super Brakes, Inc. in 1981. He, along with Dr.
Renger, acquired controlling interest in the Company in 1990 in order to
provide a public vehicle to facilitate growth in the automotive after-market
field. Mr. Nation has been a self-employed financial consultant in the Fort
Worth, Texas area for the past fifteen years representing several major
industries, including precious metals, banks municipalities and various
government and private businesses. Effective June 1, 1995, Mr. Nation became a
full time employee of the company. Mr. Nation has held a prior position as
Vice President and General Manager of Insurers of America, representing Lloyds
of America. Mr. Nation completed an executive management program that
consisted of six months manufacturing, shipping and receiving, inventory
control and sales management. Upon completion he served as marketing director
for the Northeastern United States for Kelsey-Hayes Company, a major
manufacturer of disc brakes. He managed sales personnel, opened new
distribution channels, organized sales and product clinics through automotive,
manufacturing, warehousing, national accounts, mass merchants, municipalities
and state governments. He then became the district manager of the New England
district for Monroe Auto Equipment Company, a manufacturer of shock absorbers.
While with Monroe, he directed the sales force, marketing products through
national accounts, mass merchants, automotive distribution centers, jobbers and
dealers. He also organized and instructed approximately fifty product and
sales clinics annually. His responsibilities included administration, sales
training and new distribution and arranging credit through financial
institutions for new customers. Before that, he was the marketing director of
nine northeastern states for Belden Corporation, a manufacturer of electrical
wire and cable. He held a prior position as the operations department manager
for Hartford National Bank. Mr. Nation was honorably discharged from the
United States Marine Corps.
Mr. Wade D. Althen began functioning as the President/CEO of the Company on a
full time basis effective June 1, 1995. During April and May of 1995 he served
as Licensed Manager of Employment World, Inc. in North Little Rock, Arkansas.
From May 1992 to March 1995 he was employed by National Education Centers, Inc.
a subsidiary of National Education Corporation (a NYSE company). His positions
with National Education Corporation included Business Instructor in Economics,
Accounting and Computer Science and Co-Chair of the Business Department from
May 1992 to June 1993. From July 1993 to June 1994 he was Education Director
in charge of: curriculum; hiring, scheduling and training instructional staff;
budgeting; attrition of student body; and filing Accreditation reports. These
positions were all at the Little Rock, Arkansas campus. In June 1994 Mr.
Althen was appointed Director and President of the Fort Worth, Texas campus
until his resignation in March 1995. From February 1987 to May 1992 he was a
self-employed Certified Public Accountant and financial consultant in North
Little Rock, Arkansas. He has provided executive level management for eighteen
of the last twenty-one years including four years as Chief Executive of a
commercial bank, one year as Chief Executive Officer of a publicly traded
petroleum company and two years as managing partner of a CPA firm. Mr. Althen
has prepared and provided oversight of preparation of budgets in many
industries. In the banking industry, he planned for significant growth by
utilizing financial and human resources to enable a seventy year old bank to
double in size within four years. In the petroleum industry,
6<PAGE>
he established and executed a plan that made a publicly traded company that was
in reorganization viable as an acquisition candidate. He is experienced with
preparation of initial registrations of public corporations and Securities and
Exchange Commission reports. He has conducted audits for many types of
industries and submitted financial statements to clients and regulatory
agencies. He also has experience with statements required by the Federal
Deposit Insurance Corporation and other banking agencies. In 1970, Mr. Althen
obtained his Bachelor of Science Degree in Accounting from Arkansas State
University and received one year of post graduate training from the Stonier
Graduate School of Banking at Rutgers University. He has been a Certified
Public Accountant since 1972.
Mr. David A. Christman has been a Senior Financial Analyst with Intellicap
Limited since November 1994 working with the Ministry of Finance of the State
of Kuwait to develop and administer the government's Counter-Trade Offset
Program. His duties include working with supply contractors. He contributed
to the design of the program's guidelines and designed and implemented the
Financial Performance Model of evaluating the feasibility and acceptability of
business plans submitted by the contractors. He also developed a training
program and teaches finance to the Kuwaiti staff. From January 1991 to
November 1994 he was the principal in David A. Christman & Associates, an
independent financial and management consulting firm in Dallas, Texas. He work
consisted of installing management accounting systems, job cost reporting
systems, standard cost accounting systems and other phases of financial
management procedures and policies. He also helped with restructuring
organizations, wrote job descriptions, designed and installed incentive plans
and employee evaluation procedures. He provided management training, wrote
employee handbooks and installed management by objectives (MBO) programs. From
February 1988 to January 1991 he served as a management consultant with George
S. May International Company where his duties included all aspects of financial
and organizational management consulting as well as computer installation. Mr.
Christman holds a Bachelor of Science in Business Administration Degree with a
Major in Accounting from Rochester Institute of Technology in New York and has
completed a post-graduate program in finance and statistics.
Mr. Steven R. Paige graduated from the University of New York at Albany in 1984
with a Bachelor of Science degree in Business Administration which he achieved
while enlisted in the U.S. Air Force. Upon completion of his enlistment and
degree requirements, Mr. Paige worked for a major television station in Denver,
Colorado as an account executive. In 1986 he joined one of Denver's most
prominent advertising agencies. Within two years, Mr. Paige was personally
responsible for doubling the firm's gross revenues by acquiring three national
accounts, and was promoted to Executive Vice President. His new
responsibilities included personnel development, full creative and buying
authority, and future business development. In 1988 he left the agency and
formed his own marketing company, The Paige Group, which pursued new areas of
marketing, advertising and finance for clients. From March 1989 to June 1990,
Mr. Paige was Sales Manager for Mike Naughton Ford Company with full
responsibility for hiring and training of sales personnel as well as total
responsibility for movement of inventory including advertising, marketing and
promotional activities. Through his implementation of creative marketing and
sales techniques, he was instrumental in bringing the dealership from a seventh
place rating to a number one rating in a little over a year. From June 1990 to
December 1991, Mr. Paige was General Manager of Metro Toyota with overall
responsibility of the dealership including inventory control, budgeting, sales
performance, service and maintenance operations and total income performance.
7<PAGE>
From January 1992 to May 1995, he was Sales Manager and General Manager of Don
Massey Cadillac (a member of the largest Cadillac group in the world) with
total responsibility as dealer-operator including procurement of all major
inventory. Again, with his implementation of marketing and sales techniques,
he brought the dealership from a number six rating to a number one rating in
less than six months. Mr. Paige has been associated with Condor West
Corporation and with Mr. Carl D. Nation, Co-Chairman for more than five years.
Effective June 1, 1995 he became a full-time employee of the Company.
Mr. Terrance L. Rasmussen has been employed in a management position with Hilti
Corporation since 1990. His responsibilities include inventory control and
internal auditing. Prior to that he was employed by A & A Plate Service, Inc.
and Sears, Roebuck and Company in computerized accounting systems. Additional
areas of experience accounts payable, accounts receivable, payroll and tax
consulting. Mr. Rasmussen has also analyzed company operations for purposes of
recommending changes for improvement, and potential companies for take-over
based on profitability potential. Major projects included areas of real
estate, manufacturing and agriculture. Mr. Rasmussen is licensed by NASD and
was an account executive for a national brokerage firm where he developed
corporate and individual accounts. He provided guidance to clients, determined
investment objectives and developed solid portfolios according to the
objectives using stocks, bonds, and mutual funds. He received a Bachelors
degree in business, management and finance from Iowa State university in Ames,
Iowa, and attended the Metropolitan State University in Minneapolis, Minnesota
where he obtained a degree in accounting. Mr. Rasmussen is also a CPA.
John A. Murdock III is the founder of JAM Consulting Service, Inc. and
principal stockholder, chief executive officer and founder of Power By Nature,
Inc. Mr. Murdock served more than 20 years in the United States Air Force
where he obtained extensive training in management and operations. As Weapons
Superintendent, he was responsible for more than 250 airmen and worked world
wide in areas of Europe, Asia and the Middle East. Mr. Murdock's decorations
include the Distinguished Flying Cross (with four oak leaf clusters), the
Airman's Medal of Valor, the Air Medal (with 18 oak leaf clusters), the
Vietnamese Cross of Gallantry (with Bronze Star, Palm Leaf and 3 oak leaf
clusters), and the Good Conduct Medal (with 7 oak leaf clusters). After
retiring from the United State Air Force, Mr. Murdock used his experience to be
an advisor for the Armament and Mobility Officers for the Royal Saudi Air
Force. He worked directly with foreign country representatives as a Logistics
Engineer for Foreign Military Sales. This included the sale of aircraft and
other defense systems. Currently, he is an agent for the leasing of Deeds of
Assignments of United States Treasuries. These are used to aid in the funding
of projects, and require highest contacts in banking and business. Mr. Murdock
Obtained a B.S. Degree from Troy State Unviersity, a Masters in Business
Administration in Personnel Administration from Chapman College, and a Doctor
of Laws degree from Louisiana Baptist University.
Dennis L. Swenson possesses more than 25 years of human resource and
administrative management experience with Fortune 500 and smaller corporations.
From January 1991 to present he has been Vice President Human Resources and
Administration for PharmAssist, Inc. as well as owner of DLS Associates, a
Human Resources consulting firm. From January 1987 to January 1991 he was
Director of Compensation and Benefits for FoxMeyer Corporation and from May
1969 to December 1986 he was Manager of Employee Benefits for Burlington
Northern Railroad Company. While at FoxMeyer Corporation he established the
Human Resource
8<PAGE>
Department serving more than 4,500 employees as well as developing and staffing
the Customer Service Department for a $45 billion wholly owned subsidiary.
While employed with Burlington Norther, Inc., Mr. Swenson managed and
administered all labor relations functions, including negotiation of the
benefits program covering 48,000 employees. Through design and administrative
modifications, he was responsible for cost reductions of nearly $5 million
annually. !n 1990, he served as acquisition consultant to Computer Land
Corporation when they acquired the $750 million Nynex Business Information
Systems. He has extensive experience in conducting audits to assure sound and
feasible business practices based upon corporate liability and profit margin.
Dr. Felix F. Banchs has served as Mexico Project Manager/Nationally Certified
Financial Counselor for the National Foundation for Consumer Credit, Fort
Worth, Texas from 1992 to present where his responsibilities include the
development, implementation and supervision of debt management and financial
programs for the USA, Puerto Rico and Mexico. From 1990 to 1992 he was
Director of Training for Centro de Amistad, Dallas, Texas where he developed
and supervised vocational training programs. From 1977 to 1990, Dr. Banchs was
Vice President for Administration and Dean of Business Administration for
Boricua College in New York. His responsilbilities included the development of
the business administration curriculum and management of three campuses.
During his tenure, both faculty and student population increased by 500%. In
addition, Dr. Banchs has held executive positions with Shell Oil Co., Baxter-
Travenol Laboratories and Colgate-Palmolive. Dr. Banchs graduated Magna Cum
Laude with a BBA in Management from Catholic University of Puerto Rico, Cum
Laude with a Masters in Business Administration in Marketing Management from
St. John's University, New York and earned a PhD in Business Administration and
Economics from Columbia University, New York. Dr. Banchs is listed in AWho's
Who in Finance and Industry in America and is a veteran of the United States
Air Force.
Item 11. Management remuneration
Through May 31, 1995, the Company's officers have not received any compensation
in connection with their activities on behalf of the Company. However, the
Company's officers will be reimbursed for any reasonable business expenses
incurred in connection with their activities on its behalf. In the event of a
change of control in the Company, the present shareholders may derive a benefit
through the sale of their shares. Effective June 1, 1995, Messrs. Nations,
Althen and Paige became full-time employees of the Company as it commenced
attempts to implement its business plan to activate Super Brakes. Their level
of compensation in the future will be determined based on the Company's level
of operations.
9<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
Officers and Directors, and persons beneficially owning more than 5% of the
21,541,148 shares of common stock outstanding at May 31, 1995 were as follows:
Name Officer Director Shares Percent
Dr. Everett Renger Yes Yes 9,095,840 (1) 42.2%
Carl D. Nation Yes Yes 9,095.840 (1) 42.2
Wade D. Althen Yes Yes 1,000,000 4.6
Steven R. Paige Yes Yes 1,000,000 4.6
Terrance L. Yes Yes 300,000 1.4
Rasmussen
David A. Christman Yes Yes 200,000 0.9
All officers and
directors as 20,691,680 96.1
a group
(1) Subsequent to May 31, 1995, on October 10, 1995, Messrs Renger and Nation
each returned 3,770,840 shares to the Company as an anti-dilutionary measure.
The return of these shares has been retroactively recorded as of May 31, 1995.
Item 13. Certain Relationships and Related Transactions
See Item 1, _Organization and Business_, for discussion of the acquisition of
all the outstanding stock of Super Brakes, Inc. from Dr. Renger and Mr. Nation.
On April 28, 1995, May 30, 1995, and June 22, 1995, John A. Murdock, III, a
Director, loaned the Company $100,000 on each occasion, or a total of $300,000.
The notes bore interest at 15% and were due and payable two years after date.
Under the terms of the notes, Mr. Murdock had the option to convert each note
into 130,000 shares of common stock of the Company. However, on June 30, 1995,
the notes and accrued interest of $4,068 were converted into 540,000 shares of
stock at the rate of $0.563 per share.
PART IV
Item 14. Exhibits, Financial Statements, Schedules, and Reports of Form 8-K
10<PAGE>
CONDOR WEST CORPORATION
(A development stage enterprise)
Index To Financial Statements
May 31, 1995
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Description Page
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Reports of Independent Certified Public Accountants F-2
Balance sheets as of May 31, 1995 and 1994 F-4
Statements of loss for the periods ended
May 31, 1995, 1994 and 1993 F-5
Statements of stockholders' equity for the years ended
May 31, 1995, 1994 and 1993 F-6
Statements of cash flows for the periods ended
May 31, 1995, 1994 and 1993 F-7
Notes to financial statements F-8
F-1
<PAGE>
Bateman, Blomstrom & Co.
Certified Public Accountants
9301 Southwest Freeway, Suite 100
Houston, Texas 7074-1593
(713) 552-9800
(713) 771-4385
FAX (713) 771-5553
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To The Board of Directors and Stockholders
Condor West Corporation
Greenwood Village, Colorado
We have audited the accompanying balance sheet of Condor West Corporation (a
development stage enterprise) as of May 31, 1995, and the related statements of
loss, stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and the significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Condor West Corporation (a
development stage enterprise) as of May 31, 1995, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/Bateman, Blomstrom & Co.
BATEMAN, BLOMSTROM & CO.
Houston, Texas
December 5, 1996
Member
INTERNATIONAL ASSOCIATION OF PRACTISING ACCOUNTANTS
Offices in Principal Cities Around The World
F-2<PAGE>
O'NEAL AND WHITE, P.C.
Certified Public Accountants
17350 Tomball Parkway, Suite 300
Houston, Texas 77064
(713) 890-2554
INDEPENDENT AUDITOR'S REPORT
The firm of O'Neal and
June 5, 1994 White, P.C. has
discontinued the practice
of public accounting and no
Board of Directors and Shareholders longer provides audit and
Condor West Corporation accounting services. This
Houston, Texas document is a copy of the
latest signed and dated
audit report issued by
O'Neal and White.
We have audited the accompanying balance sheet of Condor West Corporation as of
May 31, 1994 and 1993, and the related statements of operations, shareholders'
equity, and cash flows for the three years ended May 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and the significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Condor West Corporation (a
development stage enterprise) as of May 31, 1994 and 1993, and the results of
its operations and its cash flows for the three years ended May 31, 1994 in
conformity with generally accepted accounting principles.
O'NEAL AND WHITE, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
F-3
<PAGE>
CONDOR WEST CORPORATION
(A development stage enterprise)
Balance Sheets
May 31, 1995 and 1994
- -------------------------------------------------------------------------------
1995 1994
----------- ----------
ASSETS
Current assets:
Cash $202,905 $ -
----------- ----------
Total current assets 202,905 -
----------- ----------
Other assets 10 -
----------- ----------
Total assets $202,915 $ -
=========== ==========
LIABILITIES
Current liabilities:
Accrued interest $ 1,397 $ -
Accounts payable, related party 15,034 -
----------- ----------
Total current liabilities 16,431 -
----------- ----------
Noncurrent liabilities:
Notes payable, related party 200,000 -
----------- ----------
Total liabilities 216,431 -
----------- ----------
Commitments and contingencies - -
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.001 per share,
35,000,000 shares authorized, 13,999,468 and
1,249,468 shares issued and outstanding 14,000 1,250
Capital in excess of par value 53,200 53,200
Deficit accumulated during the development stage (80,716) (54,450)
----------- ----------
Total stockholders' equity (deficit) (13,516) -
----------- ----------
Total liabilities and stockholders' equity $202,915 $ -
=========== ==========
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
CONDOR WEST CORPORATION
(A development stage enterprise)
Statements of Loss For The Periods Ended
May 31, 1995, 1994 and 1993
- -------------------------------------------------------------------------------
Cumulative
October 8,
1987
Through
May 31, Years ended May 31,
1995 1995 1994 1993
----------- --------- ---------- ---------
Revenues $191 $ - $ - $ -
----------- --------- ---------- ---------
Expenses:
Depreciation and amortization 40,186 - - 8,903
Salaries and fees for services 19,589 19,589 - -
Other general and administrative 19,735 5,280 - -
----------- ---------- ---------- ---------
Total expenses 79,510 24,869 - 8,903
----------- ---------- ---------- ---------
Income (loss) from (79,319) (24,869) - (8,903)
operations
Other income (expenses):
Interest (1,397) (1,397) - -
----------- --------- ---------- ---------
Net (loss) $(80,716) $(26,266) $ - $(8,903)
=========== ========= ========== =========
Net loss per common share $(0.004) $ - $(0.007)
========= =========== =========
Weighted average number of shares
outstanding 7,572,071 1,249,468 1,249,468
========== =========== =========
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
CONDOR WEST CORPORATION
(A development stage enterprise)
Statements of Stockholders' Equity For The Years Ended
May 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------------------------------
Deficit
Accumulated Total
Additional During the Stockholders'
Common Stock Paid In Development Equity
Shares Amount Capital Stage (Deficit)
------------ ----------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Balance May 31, 1992 1,249,468 $1,250 $53,200 $(45,547) $8,903
Net loss (8,903) (8,903)
------------ ----------- ----------- ------------- --------------
Balance May 31, 1993 1,249,468 1,250 53,200 (54,450) -
Net loss -
------------ ----------- ----------- ------------- --------------
Balance May 31, 1994 1,249,468 1,250 53,200 (54,450) -
Stock issued for services,
net of shares subse-
quently returned 12,740,000 12,740 - - 12,740
Stock issued for other
assets 10,000 10 - - 10
Net loss (26,266) (26,266)
------------ ----------- ----------- ------------- --------------
Balances, May 31, 1995 13,999,468 $14,000 $53,200 $(80,716) $(13,516)
============ =========== =========== ============= ==============
</TABLE>
The accompanying notes are an integral part of these statements.
F-6<PAGE>
<TABLE>
<CAPTION>
CONDOR WEST CORPORATION
(A development stage enterprise)
Statements of Cash Flows For The Periods Ended
May 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------------------------------
Cumulative
October 8,
1987
Through
May 31, Years ended May 31,
1995 1995 1994 1993
----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $(80,716) $(26,266) $ - $(8,903)
Adjustments to reconcile net loss to
net cash used in operating activities:
Operating expenses incurred by issuance of
stock 12,740 12,740 - -
Increase (decrease) in accounts payable,
related party (4,411) 12,129 - -
Increase (decrease) in accrued interest 1,397 1,397 - -
Depreciation and amortization 40,186 - - 8,903
----------- ---------- ----------- ------------
Net cash flows from operating activities (30,804) - - -
----------- ---------- ----------- ------------
Cash flows from investing activities:
Increase in deferred organization costs (23,646) - - -
----------- ---------- ----------- ------------
Net cash flows from investing activities (23,646) - - -
----------- ---------- ----------- ------------
Cash flows from financing activities:
Proceeds from sale of common stock 20,625 - - -
Proceeds from notes payable, related party 200,000 200,000 - -
Increase in account payable, related party 2,905 2,905 - -
Liability assumed by parent 33,825 - - -
----------- ---------- ----------- ------------
Net cash flows from financing activities 257,355 202,905 - -
----------- ---------- ----------- ------------
Net increase in cash and cash equivalents 202,905 202,905 - -
Cash and cash equivalents, beginning of period - - - -
----------- ---------- ----------- ------------
Cash and cash equivalents, end of period $202,905 $202,905 $ - $ -
=========== ========== =========== ============
Supplementary cash flow information:
Non-cash investing and financing activities:
Common stock issued for services $12,740 $12,740 $ - $ -
Common stock issued for other assets 10 10 - -
Cash paid for interest - - - -
Cash paid for income taxes - - - -
</TABLE>
The accompanying notes are an integral part of these statements.
F-7
<PAGE>
CONDOR WEST CORPORATION
(A development stage enterprise)
Notes To Financial Statements
May 31, 1995, 1994 and 1993
- -------------------------------------------------------------------------------
Note 1 - Organization and summary of significant accounting policies:
Following is a summary of the Company's organization and significant accounting
policies:
Organization and nature of business - Condor West Corporation (the
Company) is a Nevada corporation, incorporated on October 8, 1987, engaged
in organizational activities, raising capital, and investigating business
opportunities, currently in the retail automotive services field.
Accordingly, the Company has no business operations and does not intend to
engage in an active business until it acquires or combines with an
operating enterprise.
To date, the Company's activities have been limited to its formation, the
initial registration of its securities, and the identification and
screening of potential business acquisitions. In its current development
stage, management anticipates incurring substantial additional losses as
it investigates business opportunities.
Basis of presentation - The accounting and reporting policies of the
Company conform to generally accepted accounting principles applicable to
development stage enterprises.
Uses of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from
those estimates. The Company's periodic filings with the Securities and
Exchange Commission include, where applicable, disclosures of estimates,
assumptions, uncertainties and concentrations in products and markets
which could affect the financial statements and future operations of the
Company.
Cash and cash equivalents - For purposes of the statement of cash flows,
the Company considers all cash in banks, money market funds, and
certificates of deposit with a maturity of less than one year to be cash
equivalents.
Federal income taxes - Deferred income taxes are reported for timing
differences between items of income or expense reported in the financial
statements and those reported for income tax purposes in accordance with
Statement of Financial Accounting Standards number 109 Accounting for
Income Taxes, which requires the use of the asset/liability method of
accounting for income taxes. Deferred income taxes and tax benefits are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, and for tax loss and credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
The
F-8<PAGE>
CONDOR WEST CORPORATION
(A development stage enterprise)
Notes To Financial Statements
May 31, 1995, 1994 and 1993
- -------------------------------------------------------------------------------
Company provides deferred taxes for the estimated future tax effects
attributable to temporary differences and carryforwards when realization
is more likely than not.
Net income per share of common stock - Net income per share of common
stock is computed by dividing net income by the weighed average number of
shares of common stock outstanding during the period, after giving
retroactive effect to stock splits, if any.
Note 2 - Issuance of stock:
Since its inception, the Company has issued shares of its common stock as
follows:
Price
Per
Date Description Shares Share Amount
- --------------------------------------------------------------------------------
Transactions prior to current year:
10/8/87 Shares issued for cash 750,000 $.0275 $20,625
5/31/90 Shares issued in exchange for debt 499,468 .0677 33,825
----------- --------
Subtotal 1,249,468 54,450
----------- --------
Transactions during current year:
12/1/94 Shares issued to officers and
directors for services 20,281,680 .001 20,282
Less, shares subsequently
returned (7,541,680) .001 (7,542)
----------- --------
Net shares issued for services 12,740,000 12,740
12/1/94 Shares issued to acquire all of the
outstanding stock of Super Brakes,
Inc. 10,000 .001 10
----------- --------
Subtotal 12,750,000 12,750
----------- --------
5/31/95 Total outstanding 13,999,468 $67,200
=========== ========
During the year ended May 31, 1995, the Company began the formulation of a
business plan to enter the retail automotive service field. In that
connection, 20,281,680 shares of common stock (including 531,666 shares
described in the following paragraph) were issued to 8 officers and directors
for their services in connection with the proposed business, including the
development of a business plan. Subsequently, on October 10, 1995, two of the
officers returned 7,541,680 of these shares to the Company for cancellation as
an adjustment in the value of the services rendered. The return of shares has
been retroactively recorded as of December 1, 1994. Shares issued were<PAGE>
recorded at par value, which approximates fair value of the services rendered,
and were charged to expense as incurred.
Also on December 1, 1994, the Company issued 541,666 shares to its Chairman and
Co-chairman
F-9<PAGE>
CONDOR WEST CORPORATION
(A development stage enterprise)
Notes To Financial Statements
May 31, 1995, 1994 and 1993
- -------------------------------------------------------------------------------
in exchange for all the outstanding stock of Super Brakes, Inc. Super Brakes
was an inactive corporation with no assets, liabilities or operations that was
formed to engage in the proposed retail automotive services business. Of the
total shares issued, 10,000 shares (or $10) were capitalized as the investment
cost, and the remaining 531,666 (or $532) were deemed to have been issued for
services and were charged to expense. Subsequent to May 31, 1995, on May 18,
1996, the Super Brakes investment was sold back to the Co-chairman for $10.
The investment is included among other assets on the accompanying balance
sheet.
Note 3 - Notes payable, related party:
The Company is indebted on two promissory notes payable to a Director dated
April 28, 1995, and May 30, 1995 in the amount of $100,000 each. The notes are
due two years after date, bear interest at 15%, and are unsecured. On June 22,
1995, the Director loaned an additional $100,000 to the Company on similar
terms.
On June 30, 1995, the three loans, plus accrued interest of $4,068, were
exchanged for 540,000 shares of common stock at the rate of $0.563 per share.
Note 4 - Federal income tax:
No provision for currently refundable Federal income tax has been made in the
accompanying statements of loss as no recoverable taxes were paid previously.
Similarly, no deferred tax asset attributable to the net operating loss
carryforward has been recognized, as it is not likely to be realized. At May
31, 1995, the Company had unused net operating loss carryovers which may be
used to offset future taxable income and which expire as follows:
Expires May 31, Amount
- ------------------------------------------- -----------
2004 $16,233
2005 10,857
2006 9,553
2007 8,904
2008 8,903
2009 -
2010 26,266
-----------
Total net operating loss carryover $80,716
===========
Note 5 - Commitments:
The Company is obligated on two operating leases for automobiles requiring
monthly payments of $1,342, and expiring in May 1998 and October 1998.
Aggregate commitments under these leases at May 31, 1995 were as follows:
F-10<PAGE>
CONDOR WEST CORPORATION
(A development stage enterprise)
Notes To Financial Statements
May 31, 1995, 1994 and 1993
- -------------------------------------------------------------------------------
Year ended May 31, Amount
- ---------------------------------------- -----------
1996 $16,101
1997 15,363
1998 3,625
In May, 1995, the Company also entered into a lease for office space on a
month-to-month lease requiring monthly rentals of $1,250 per month. The total
amount charged to operations under operating leases during the year ended May
31, 1995 was $1,342.
In December 1995, the auto lease obligations were assumed by two officers of
the Company and the related vehicles were retained by them.
Note 6 - Accounts payable, related party:
An officer of the Company has advanced funds to or paid expenses for the
Company aggregating $15,035 at May 31, 1995. These amounts were repaid by the
Company subsequent to May 31, 1995.
F-11<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CONDOR WEST CORPORATION
Dated 2-6-97 By /s/Dr. Everett Renger
----------------- --------------------------
Dr. Everett Renger
Co-Chairman of the Board
Dated 2-14-97 By /s/Carl D. Nation
----------------- --------------------------
Carl D. Nation
Co-Chairman of the Board
Dated 2-7-97 By /s/Wade D. Althen
----------------- --------------------------
Wade D. Althen, President,
CEO and Directorr
Dated 2-10-97 By /s/Steven R. Paige
----------------- --------------------------
Steven R. Paige, Executive
Vice President, COO, and
Director
Dated 2-11-97 By /s/David A. Christman
----------------- --------------------------
David A. Christman,
Treasurer, CFO and
Director
Dated 2-11-97 By /s/Terrance Rasmussen
----------------- --------------------------
Terrance Rasmussen,
Secretary and Director
Dated 2-14-97 By /s/John A. Murdock
----------------- --------------------------
John A. Murdock, III,
Director
Dated 2-14-97 By /s/Felix F. Banchs
----------------- --------------------------
Dr. Felix F. Banchs,
Director
Dated 2-14-97 By /s/Dennis L. Swenson
----------------- --------------------------
Dennis L. Swenson, Vice
President of Human
Relations and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Dated 2-17-97 /s/Dr. Everett Renger
---------------- -----------------------------
Dr. Everett Renger
Co-Chairman of the Board<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> MAY-31-1995
<CASH> 202905
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 202905
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 202915
<CURRENT-LIABILITIES> 16431
<BONDS> 200000
0
0
<COMMON> 14000
<OTHER-SE> (27516)
<TOTAL-LIABILITY-AND-EQUITY> 202915
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 24869
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1397
<INCOME-PRETAX> (26266)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26266)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26266)
<EPS-PRIMARY> (.004)
<EPS-DILUTED> (.004)
</TABLE>
