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 equally by Messrs. Renger and Nation. Super Brakes, Inc. was in the organizational stage and its activities had 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.
On May 18, 1996, the Super Brakes investment was sold back to Mr. Nation for $10, resulting in no gain nor loss. Thereafter, the Company abandoned its plans to enter the retail automobile services field.
The Company is not currently engaged in any business. It is investigating various business opportunities, and does not expect to have substantial revenues until it either acquires or starts a business activity.
In its current development stage, management anticipates incurring additional losses as it investigates business opportunities. 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 to maintain the corporate entity, 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.
Item 2.
Item 2. Properties
None
Item 3.
Item 3. Legal Proceedings
There are no material legal proceedings pending in which Registrant is named a party.
Item 4.
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.
PART II
Item 5.
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.
Item 6. Selected Financial Data
During the five year period ended May 31, 1999 there were no changes in accounting methods.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
At May 31, 1999, the Company remains a development stage enterprise without any business operations. The Company's officers and directors will continue to seek investment capital and possible merger or acquisition candidates. As the Company has no source of funds and no working capital, it plans to finance expenses incident to maintenance of its corporate status, including legal, accounting, filing fees, and other similar costs, primarily through advances from its officers and directors, or from the sale of additional shares.
RESULTS OF OPERATIONS
Development stage loss increased to $4,932 for fiscal 1999 from $1,275 for fiscal 1998. The decreases were attributable to the timing of audit and other fees included other general and administrative expenses.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no changes in accountants during the current fiscal year, and there was no disagreements with the Company's independent certified public
accountants regarding accounting and financial disclosure matters.
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:
Name Age Position Dr. Everett Renger (1) 55 Chairman Carl D. Nation (1) 63 President, CEO (elected 9/10/97) Steven R. Paige (1) 36 Executive Vice-President Terrance L. Rasmussen (1) 36 Vice President, Secretary & Treasurer
(1) Joined Company on May 7, 1990
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, 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; his full time employment terminated prior to May 31, 1996. 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. 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. 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, a Director, for more than five years. Effective June 1, 1995 he became a full-time employee of the Company; his full time employment terminated prior to May 31, 1996.
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.
Item 11. Management remuneration
Through May 31, 1995, the Company's officers received no compensation. Compensation paid to officers during the year ended May 31, 1996 aggregated $191,807, paid to three officers; no single officer received compensation in excess of $100,000. All officers terminated employment prior to May 31, 1996, and no compensation was paid during the year ended May 31, 1998 or 1999. The Company has not adopted any stock option plans, long term compensation payouts, deferred compensation plans, incentive plans, pension plans, change-in-control arrangements, or other compensation plans. The Company's officers are reimbursed for reasonable business expenses incurred in connection with their activities on its behalf.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Officers and Directors, and persons beneficially owning more than 5% of the 14,939,468 shares of common stock outstanding at May 31, 1999 were as follows:
Name Officer Director Shares Percent Dr. Everett Renger Yes Yes 5,325,000 (1) 35.6% Carl D. Nation Yes Yes 5,325,000 (1) 35.6 Steven R. Paige Yes Yes 1,000,000 6.7 Terrance L. Rasmussen Yes Yes 300,000 2.0 All officers and directors as a group 11,950,000 79.9
(1) On October 10, 1995, Messrs Renger and Nation each returned 3,770,840 shares to the Company as an anti-dilutionary measure. Shares shown above are net of the returned shares.
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.
During the year ended May 31, 1999, certain officers and directors paid expenses of the Company without seeking reimbursement and without receiving stock therefor. The amounts paid were as follows:
Paid by Amount Dr. Everett Renger $3,660 Carl Nation -0- ------------- Total $3,660 =============
All of the amounts paid are included in Other operating expenses in the accompanying financial statements.
PART IV
Item 14. Exhibits, Financial Statements, Schedules, and Reports of Form 8-K
Exhibit 27 -- Financial Data Schedule
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES REQUIRED BY ITEMS 8 AND ITEM 13
INDEX
A. Financial statements --------------------
Reports of independent certified public accountants
Balance sheets, May 31, 1999 and 1998
Statements of loss for the periods ended May 31, 1999, 1998, and 1997
Statements of stockholders' equity for the years ended May 31, 1999, 1998, and 1997
Statements of cash flows for the periods ended May 31, 1999, 1998 and 1997
Notes to consolidated financial statements
B. Financial statement schedules -----------------------------
Schedules are omitted because of the absence of the conditions under which they are required, or because the information required by such omitted schedule is contained in the financial statements or the notes thereto.
[LETTERHEAD OF BATEMAN & CO., INC., P.C.]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To The Board of Directors and Stockholders Condor West Corporation Houston, Texas
We have audited the accompanying balance sheets of Condor West Corporation, (a development stage enterprise) as of May 31, 1999 and 1998 and the related statements of loss, stockholders' equity, and cash flows for the periods ended May 31, 1999, 1998, and 1997. 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 audits 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 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, 1999 and 1998 and the results of its operations and cash flows for the periods ended May 31, 1999, 1998, and 1997, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company has exhausted all its cash and has no operations, employees, or assets. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
BATEMAN & CO., INC., P.C..
Houston, Texas July 6, 1999
The accompanying notes are an integral part of these statements.
The accompanying notes are an integral part of these statements.
The accompanying notes are an integral part of these statements.
CONDOR WEST CORPORATION (A development stage enterprise) Statements of Cash Flows For The Periods Ended May 31, 1999, 1998, and 1997 ================================================================================
The accompanying notes are an integral part of these statements.
CONDOR WEST CORPORATION (A development stage enterprise) Statements of Cash Flows For The Periods Ended May 31, 1999, 1998, and 1997 ===============================================================================
The accompanying notes are an integral part of these statements.
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
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. 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.
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.
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
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
these estimates. At May 31, 1999 and 1998, 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 did not have a complex capital structure requiring the computation of diluted earnings per share.
Note 2 - Issuance of stock: Since its inception, the Company has issued shares of its common stock as follows:
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ===============================================================================
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 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 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 shares (or $532) were deemed to have been issued for services and were charged to expense. On May 18, 1996, the Super Brakes investment was sold back to the Co-chairman for $10.
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
At May 31, 1999 and 1998, the Company had abandoned its plans to enter the retail automobile services field, and was engaged in seeking other business opportunities.
Note 3 - Federal income tax: The Company follows Statement of Financial Accounting Standards number 109 (SFAS 109), Accounting for Income Taxes. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carryforwards. 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.
The current provision for refundable Federal income tax consists of the following:
The cumulative tax effect at the expected rate of 34% of significant items comprising the Company's net deferred tax amounts as of May 31, 1999 and 1998 are as follows:
At May 31, 1999, 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
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
2006 9,553 2007 8,904 2008 8,903 2009 - 2010 26,266 2011 290,063 2012 7,630 2013 1,275 2014 4,932 ---------- Total net operating loss carryover $ 384,616 ==========
Note 4 - Commitments: The Company was previously obligated on two operating leases for automobiles requiring monthly payments of $1,342, and expiring in May 1998 and October 1998. In December 1995, the auto lease obligations were assumed by two officers of the Company and the related vehicles were retained by them. Because the obligations under these leases were assumed and paid by the officers, the Company incurred no rental expense during the years ended May 31, 1999, 1998, or 1997.
Note 5 - Year 2000 issues: 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.
Note 6 - Uncertainty, going concern: At May 31, 1999, 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 7 - New accounting pronouncements: 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
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
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 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.
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
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
July 9, 1999 /s/ DR. EVERETT RENGER Dated __________________ By ___________________________________ Dr. Everett Renger Chairman of the Board
July 9, 1999 /s/ CARL D. NATION Dated __________________ By ___________________________________ Carl D. Nation, President, CEO, and Director
July 9, 1999 /s/ STEVEN R. PAIGE Dated __________________ By ___________________________________ Steven R. Paige, Executive Vice President and Director
July 9, 1999 /s/ TERRANCE RASMUSSEN Dated __________________ By ___________________________________ Terrance Rasmussen, Secretary, Treasurer, 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:
July 9, 1999 Dated __________________
/s/ DR. EVERETT RENGER _________________________________ Dr. Everett Renger Chairman of the Board
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no changes in accountants during the current fiscal year, and there was no disagreements with the Company's independent certified public
accountants regarding accounting and financial disclosure matters.
PART III
Item 10.
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:
Name Age Position Dr. Everett Renger (1) 55 Chairman Carl D. Nation (1) 63 President, CEO (elected 9/10/97) Steven R. Paige (1) 36 Executive Vice-President Terrance L. Rasmussen (1) 36 Vice President, Secretary & Treasurer
(1) Joined Company on May 7, 1990
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, 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; his full time employment terminated prior to May 31, 1996. 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. 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. 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, a Director, for more than five years. Effective June 1, 1995 he became a full-time employee of the Company; his full time employment terminated prior to May 31, 1996.
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.
Item 11.
Item 11. Management remuneration
Through May 31, 1995, the Company's officers received no compensation. Compensation paid to officers during the year ended May 31, 1996 aggregated $191,807, paid to three officers; no single officer received compensation in excess of $100,000. All officers terminated employment prior to May 31, 1996, and no compensation was paid during the year ended May 31, 1998 or 1999. The Company has not adopted any stock option plans, long term compensation payouts, deferred compensation plans, incentive plans, pension plans, change-in-control arrangements, or other compensation plans. The Company's officers are reimbursed for reasonable business expenses incurred in connection with their activities on its behalf.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Officers and Directors, and persons beneficially owning more than 5% of the 14,939,468 shares of common stock outstanding at May 31, 1999 were as follows:
Name Officer Director Shares Percent Dr. Everett Renger Yes Yes 5,325,000 (1) 35.6% Carl D. Nation Yes Yes 5,325,000 (1) 35.6 Steven R. Paige Yes Yes 1,000,000 6.7 Terrance L. Rasmussen Yes Yes 300,000 2.0 All officers and directors as a group 11,950,000 79.9
(1) On October 10, 1995, Messrs Renger and Nation each returned 3,770,840 shares to the Company as an anti-dilutionary measure. Shares shown above are net of the returned shares.
Item 13.
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.
During the year ended May 31, 1999, certain officers and directors paid expenses of the Company without seeking reimbursement and without receiving stock therefor. The amounts paid were as follows:
Paid by Amount Dr. Everett Renger $3,660 Carl Nation -0- ------------- Total $3,660 =============
All of the amounts paid are included in Other operating expenses in the accompanying financial statements.
PART IV
Item 14.
Item 14. Exhibits, Financial Statements, Schedules, and Reports of Form 8-K
Exhibit 27 -- Financial Data Schedule
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES REQUIRED BY ITEMS 8 AND ITEM 13
INDEX
A. Financial statements --------------------
Reports of independent certified public accountants
Balance sheets, May 31, 1999 and 1998
Statements of loss for the periods ended May 31, 1999, 1998, and 1997
Statements of stockholders' equity for the years ended May 31, 1999, 1998, and 1997
Statements of cash flows for the periods ended May 31, 1999, 1998 and 1997
Notes to consolidated financial statements
B. Financial statement schedules -----------------------------
Schedules are omitted because of the absence of the conditions under which they are required, or because the information required by such omitted schedule is contained in the financial statements or the notes thereto.
[LETTERHEAD OF BATEMAN & CO., INC., P.C.]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To The Board of Directors and Stockholders Condor West Corporation Houston, Texas
We have audited the accompanying balance sheets of Condor West Corporation, (a development stage enterprise) as of May 31, 1999 and 1998 and the related statements of loss, stockholders' equity, and cash flows for the periods ended May 31, 1999, 1998, and 1997. 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 audits 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 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, 1999 and 1998 and the results of its operations and cash flows for the periods ended May 31, 1999, 1998, and 1997, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company has exhausted all its cash and has no operations, employees, or assets. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
BATEMAN & CO., INC., P.C..
Houston, Texas July 6, 1999
The accompanying notes are an integral part of these statements.
The accompanying notes are an integral part of these statements.
The accompanying notes are an integral part of these statements.
CONDOR WEST CORPORATION (A development stage enterprise) Statements of Cash Flows For The Periods Ended May 31, 1999, 1998, and 1997 ================================================================================
The accompanying notes are an integral part of these statements.
CONDOR WEST CORPORATION (A development stage enterprise) Statements of Cash Flows For The Periods Ended May 31, 1999, 1998, and 1997 ===============================================================================
The accompanying notes are an integral part of these statements.
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
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. 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.
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.
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
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
these estimates. At May 31, 1999 and 1998, 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 did not have a complex capital structure requiring the computation of diluted earnings per share.
Note 2 - Issuance of stock: Since its inception, the Company has issued shares of its common stock as follows:
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ===============================================================================
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 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 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 shares (or $532) were deemed to have been issued for services and were charged to expense. On May 18, 1996, the Super Brakes investment was sold back to the Co-chairman for $10.
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
At May 31, 1999 and 1998, the Company had abandoned its plans to enter the retail automobile services field, and was engaged in seeking other business opportunities.
Note 3 - Federal income tax: The Company follows Statement of Financial Accounting Standards number 109 (SFAS 109), Accounting for Income Taxes. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carryforwards. 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.
The current provision for refundable Federal income tax consists of the following:
The cumulative tax effect at the expected rate of 34% of significant items comprising the Company's net deferred tax amounts as of May 31, 1999 and 1998 are as follows:
At May 31, 1999, 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
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
2006 9,553 2007 8,904 2008 8,903 2009 - 2010 26,266 2011 290,063 2012 7,630 2013 1,275 2014 4,932 ---------- Total net operating loss carryover $ 384,616 ==========
Note 4 - Commitments: The Company was previously obligated on two operating leases for automobiles requiring monthly payments of $1,342, and expiring in May 1998 and October 1998. In December 1995, the auto lease obligations were assumed by two officers of the Company and the related vehicles were retained by them. Because the obligations under these leases were assumed and paid by the officers, the Company incurred no rental expense during the years ended May 31, 1999, 1998, or 1997.
Note 5 - Year 2000 issues: 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.
Note 6 - Uncertainty, going concern: At May 31, 1999, 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 7 - New accounting pronouncements: 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
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
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 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.
CONDOR WEST CORPORATION (A development stage enterprise) Notes to Financial Statements May 31, 1999, 1998, and 1997 ================================================================================
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
July 9, 1999 /s/ DR. EVERETT RENGER Dated __________________ By ___________________________________ Dr. Everett Renger Chairman of the Board
July 9, 1999 /s/ CARL D. NATION Dated __________________ By ___________________________________ Carl D. Nation, President, CEO, and Director
July 9, 1999 /s/ STEVEN R. PAIGE Dated __________________ By ___________________________________ Steven R. Paige, Executive Vice President and Director
July 9, 1999 /s/ TERRANCE RASMUSSEN Dated __________________ By ___________________________________ Terrance Rasmussen, Secretary, Treasurer, 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:
July 9, 1999 Dated __________________
/s/ DR. EVERETT RENGER _________________________________ Dr. Everett Renger Chairman of the Board