<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
-----------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended February 28, 1999
Commission file number 33-20966
Condor West Corporation
Incorporated in the State of Nevada
Employer Identification Number 76-0251547
909 Frostwood, Suite 261
Houston, Texas 77024
(713) 461-5910
Condor West Corporation (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 and (2) HAS BEEN subject to such filing requirements for the past 90
days.
As of July 8, 1999, there were outstanding 14,939,468 shares of Condor West
Corporation Common Stock, par value $.001.
<PAGE>
CONDOR WEST CORPORATION
Index to Form 10-Q
Part I
FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of February 28, 1999 and
May 31, 1998
Statements of Loss for the Three Months and Nine
Months Ended February 28, 1999 and 1998
Statements of Cash Flows for the Three Months and
Nine Months Ended February 28, 1999 and 1998
Notes to Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Part II
OTHER INFORMATION
Item 6
SIGNATURES
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial statements
CONDOR WEST CORPORATION
(A development stage enterprise)
Balance sheets
<TABLE>
<CAPTION>
February 28, May 31,
1999 1998
(Unaudited)
----------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ - $ -
--------- ---------
Total current assets - -
--------- ---------
Office and computer equipment, net of
accumulated depreciation of $140 - -
--------- ---------
Other assets - -
--------- ---------
Total assets $ - $ -
========= =========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 1,272 $ -
--------- ---------
Total current liabilities 1,272 -
--------- ---------
Total liabilities 1,272 -
--------- ---------
Commitments and contingencies - -
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.001 per share,
35,000,000 shares authorized,
14,939,468 shares issued and outstanding 14,940 14,940
Capital in excess of par value 366,344 364,744
Deficit accumulated during the
development stage (382,556) (379,684)
--------- ---------
Total stockholders' equity (deficit) (1,272) -
--------- ---------
Total liabilities and stockholders' equity $ - $ -
========= =========
</TABLE>
The accompanying notes are an integral part of this financial information.
<PAGE>
CONDOR WEST CORPORATION
(A development stage enterprise)
Statements of Loss
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 28, February 28,
------------------------------------- ----------------------------------
1999 1998 1999 1998
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
----------- ----------- ----------- -----------
Expenses:
Depreciation and amortization - - - -
Salaries and fees for services - - - -
Other general and administrative 1,272 1,275 2,872 1,275
----------- ----------- ----------- -----------
Total expenses 1,272 1,275 2,872 1,275
----------- ----------- ----------- -----------
Income (loss) from operations (1,272) (1,275) (2,872) (1,275)
Other income (expenses):
Interest - - - -
----------- ----------- ----------- -----------
Net (loss) ($1,272) ($1,275) ($2,872) ($1,275)
=========== =========== =========== ===========
Basic earnings per share ($0.00) ($0.00) ($0.00) ($0.00)
=========== =========== =========== ===========
Weighted average number
of shares outstanding 14,841,107 14,841,107 14,841,107 14,841,107
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this financial information.
<PAGE>
CONDOR WEST CORPORATION
(A development stage enterprise)
Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
February 28, February 28,
----------------------------- ------------------------------
1999 1998 1999 1998
Unaudited Unaudited Unaudited Unaudited
--------- --------- ------------------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) ($1,272) $1,275 ($2,872) ($1,275)
Adjustments to reconcile net loss to net cash
used in operating activities
Increase in accounts payable and accrued expenses 1,272 - 1,272 -
Operating expenses paid by shareholders 1,275 1,600 1,275
-------- ------ -------- --------
Net cash flows from operating activities - - - -
-------- ------ -------- --------
Cash flows from investing activities - - - -
-------- ------ -------- --------
Cash flows from financing activities - - - -
-------- ------ -------- --------
Net increase in cash and cash equivalents - - - -
Cash and cash equivalents, beginning of period - - - -
-------- ------ -------- --------
Cash and cash equivalents, end of period $ - $ - $ - $ -
======== ====== ======== ========
Supplementary cash flow information:
Non-cash investing and financing activities:
Operating expenses paid by shareholders $ - $1,275 $ 1,600 $ 1,275
</TABLE>
The accompanying notes are an integral part of this financial information
<PAGE>
CONDOR WEST CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1 - Basis of presentation:
The financial statements include the accounts of Condor West Corporation, which
has no subsidiaries. The balance sheet as of February 28, 1999, the statements
of loss for the three months and nine months ended February 28, 1999 and 1998,
and the statements of cash flows for the three months and nine months ended
February 28, 1999 and 1998 have been prepared by the Company without audit. In
the opinion of management, these financial statements include all adjustments
necessary to present fairly the financial position, results of operations and
cash flows as of February 28, 1999 and for all periods presented. All
adjustments made have been of a normal recurring nature. Certain information
and footnote disclosures normal included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The Company believes that the disclosures included are adequate and
provide a fair presentation of interim period results. Interim financial
statements are not necessarily indicative of financial position or operating
results for an entire year. It is suggested that these interim financial
statements be read in conjunction with the audited financial statements and the
notes thereto included in the Company's Form 10-K for the year ended May 31,
1998 filed with the United States Securities and Exchange Commission (SEC) on
January 20, 1999.
Note 2 - The Company:
Condor West Corporation (the Company) is a Nevada corporation, incorporated on
October 8, 1987, engaged in organizational activities, raising capital, and
investigating business opportunities. 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.
Note 3 - Summary of significant accounting policies:
Following is a summary of the Company's significant accounting policies:
Basis of presentation - The accounting and reporting policies of the
Company conform to generally accepted accounting principles applicable to
development stage enterprises.
Use 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.
<PAGE>
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.
Fair value of financial instruments and derivative financial instruments -
The Company has adopted Statement of Financial Accounting Standards number
119, Disclosure About Derivative Financial Instruments and Fair Value of
Financial Instruments. The carrying amounts of cash, accounts payable, and
accrued expenses approximate fair value because of the short maturity of
these items. The carrying amount of long term debt approximates fair value
because the interest rate on this instrument approximates a market interest
rate. These fair value estimates are subjective in nature and involve
uncertainties and matters of significant judgment, and, therefore, cannot
be determined with precision. Changes in assumptions could significantly
affect these estimates. At the end of the current quarter, the Company had
no derivative financial instruments.
Office and computer equipment - Office and computer equipment is stated at
cost less accumulated depreciation, computed principally on the straight-
line method over the estimated useful lives of the assets. Depreciation is
taken on the straight-line method for tax purposes also, using lives
prescribed by the Internal Revenue Code, which are similar to book basis
lives.
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
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 - The Company has adopted FASB
Statement Number 128, Earnings per Share, which became effective for
periods ending after December 15, 1997, and simplified the standards for
computing earnings per share; it also makes them comparable to
international EPS standards. It replaces the presentation of primary EPS
with a presentation of basic EPS. It also requires dual presentation of
basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. In the accompanying financial
statements, basic earnings per share of common stock is computed by
dividing net income by the weighted average number of shares of common
stock outstanding during the period. The Company
<PAGE>
did not have a complex capital structure requiring the computation of
diluted earnings per share.
Note 4 - Uncertainty, going concern:
At the end of the current quarter, the Company had exhausted all of its cash and
had no operations, employees, or assets. Although management is currently
seeking additional business opportunities and sources of equity or debt
financing, there is no assurance these activities will be successful.
Accordingly, the Company must rely on its officers and directors to perform
essential functions and to provide funds to pay for essential expenses until a
business operation can be commenced. These factors raise substantial doubt
about the ability of the Company to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Note 5 - Comprehensive income:
FASB Statement Number 130, Reporting Comprehensive Income, became effective for
fiscal years beginning after December 15, 1997, and establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements. This Statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. The Company had no comprehensive income other than
net income during the periods included in the accompanying financial statements.
<PAGE>
CONDOR WEST CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company had no operations during the quarters ending February 28, 1999 or
1998. The Company is dormant and management continues to pursue business
opportunities. However, it did incur operating expenses of $1,272 during the
quarter ended February 28, 1999, compared to $1,275 during the comparable
quarter of the preceding year. The difference is the result of timing in the
incurring of expenses necessary to maintain the corporate entity and to file
required reports.
LIQUIDITY AND CAPITAL RESOURCES
At the end of the current quarter, the Company had no bank account, no assets,
and no operations. It is dependent upon its shareholders, who advance funds
from time to time to pay the expenses incurred to maintain the corporation's
existence and to file required documents. There is no assurance the
shareholders will continue to be willing to advance funds when required.
Consequently, there is no assurance the Company can continue as a going concern.
Although management is currently seeking additional business opportunities and
sources of equity or debt financing, there is no assurance these activities will
be successful.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board has issued several new accounting
pronouncements which may affect the Company in future years.
FASB Statement Number 129, Disclosure of Information about Capital Structure, is
effective for periods ending after December 15, 1997, and establishes standards
for disclosing information about an entity's capital structure. This
pronouncement did not have a significant effect on the Company's financial
statement disclosures.
FASB Statement Number 130, Reporting Comprehensive Income, became effective for
fiscal years beginning after December 15, 1997, and establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements. This Statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. The Company had no comprehensive income other than
net income during the last two fiscal years.
FASB Statement Number 131, Disclosures about Segments of an Enterprise and
Related Information, became effective for fiscal years beginning after December
15, 1997, and establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. As the Company has only one business
segment, the pronouncement had no material effect during the current year.
FASB Statement Number 132, Employers' Disclosures about Pensions and Other
Postretirement Benefits, became effective for fiscal years beginning after
December 15, 1997, and revises employers' disclosures about pension and other
postretirement benefit plans. It does not
<PAGE>
change the measurement or recognition of those plans. It standardizes the
disclosure requirements for pensions and other postretirement benefits to the
extent practicable, requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis, and eliminates certain disclosures. Since the Company has no pension
or postretirement benefit plans, the pronouncement had no effect in the current
year.
FASB Statement Number 133, Accounting for Derivative Instruments and Hedging
Activities, becomes effective for fiscal years beginning after June 15, 1999,
and establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. The
Company does not believe this pronouncement will have a material effect on its
financial statements in the near future.
FASB Statement Number 134, Accounting for Mortgage-Backed Securities Retained
after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise, becomes effective for fiscal years beginning after December 15,
1998. It is not expected to apply to the Company.
OTHER MATTERS
The Year 2000 issue is a general term used to address a class of problems which
are caused by the inability of computer programs to recognize various date
values around January 1, 2000. This class of problems could result in a system
failure or miscalculations causing disruptions of operations such as, among
other, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities. Inasmuch as the Company is dormant and
does not own or utilize computers, management believes that the year 2000 issue
relating to computers will not have a material effect on the Company's financial
position.
This Form 10-Q includes or may include certain forward-looking statements that
involve risks and uncertainties. This Form 10-Q contains certain forward-looking
statements concerning the Company's financial position, business strategy,
budgets, projected costs and plans and objectives of management for future
operations as well as other statements including words such as "anticipate,"
"believe," "plan," "estimate," "expect," "intend," and other similar
expressions. Although the Company believes its expectations reflected in such
forward-looking statements are based on reasonable assumptions, readers are
cautioned that no assurance can be given that such expectations will prove
correct and that actual results and developments may differ materially from
those conveyed in such forward-looking statements. Important factors that could
cause actual results to differ materially from the expectations reflected in the
forward-looking statements in this Form 10-Q include, among others, the pace of
technological change, the Company's ability to manage growth and attract and
retain employees, general business and economic conditions in the Company's
operating regions, and competitive and other factors, all as more fully
described in the Company's Report on Form 10-K for the period ended May 31, 1998
under Management's Discussion and Analysis of Financial Condition and Results of
Operations "Assumptions Underlying Certain Forward-Looking Statements and
Factors that May Affect Future Results" and elsewhere from time to time in the
Company's other SEC reports. Such forward-looking statements speak only as of
the date on which they are made and the Company does not undertake any
obligation to update any forward-looking statement to reflect events or
circumstances after the date of
<PAGE>
this Form 10-Q. If the Company does update or correct one or more forward-
looking statements, investors and others should not conclude that the Company
will make additional updates or corrections with respect thereto or with respect
to other forward-looking statements. Actual results may vary materially.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 -- Financial Data Schedule
All other items in Part II are either not applicable to the
Company during the current quarter, the answer is negative, or a
response has been previously reported and an additional report of
the information is not required, pursuant to the instructions to
Part II.
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 on the 9th day of July,
1999.
CONDOR WEST CORPORATION
By: /s/ Dr. Everett Renger
----------------------------
Dr. Everett Renger
Co-Chairman
Date: July 9, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF CONDOR WEST CORPORATION AS OF FEBRUARY 28, 1999 AND FOR THE THREE
MONTHS AND NINE MONTHS THEN ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> DEC-01-1999
<PERIOD-END> FEB-28-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 1,272
<BONDS> 0
0
0
<COMMON> 14,940
<OTHER-SE> (16,212)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 2,872
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,872)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,872)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,872)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
