U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly period ended March 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission File No. 0-3802
WESTERN STANDARD CORPORATION
----------------------------
(Exact Name of Registrant as Specified in its Charter)
WYOMING 83-0184378
- ------- ----------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
205 SOUTH BROADWAY, RIVERTON, WY 82501
- -------------------------------- -----
(address of principal executive offices)
307-856-9288
------------
(Issuer's telephone number)
UNCHANGED
---------
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
_____.
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date: 9,963,015 common $.05 par at March 31, 2003.
PART 1, ITEM 1, 2, 3 (1)(i)
CLIFFORD H. MOORE AND COMPANY, CPAs
205 South Broadway
Riverton, Wyoming 82501
INDEPENDENT ACCOUNTANT'S REPORT
We have reviewed the accompanying interim financial
statements required by the Securities and Exchange Commission
(SEC) form 10QSB of Western Standard Corporation and consolidated
subsidiaries as of March 31, 2003, and for the three month period
then ended. These financial statements are the responsibility of
the company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements for them to be in conformity with generally accepted
accounting principles.
/s/ Clifford H. Moore and
Company, CPAs
Riverton, Wyoming
May 6, 2003
FORM 10QSB
WESTERN STANDARD CORPORATION
Consolidated Balance Sheet
Unaudited
March 31, 2003
Current Assets:
Cash $ 275,131
Accounts Receivable 327,198
Allowance for Doubtful Accounts ( 14,256)
Inventory - at cost 47,436
-----------
Total Current Assets $ 635,509
---------
Property & Equipment, Net of
Accumulated Depreciation,
Amortization and Depletion $ 8,839,644
------------
Other Assets:
* Accounts Receivable - Snow King Resort
Center, Inc. $ 1,579,403
Allowance for collectibility ( 1,500,000)
** Investment in JH Spring Water 5,510
Prepaid expenses 226,447
Prepaid loan fees and leases 24,121
Leasehold Interest 39,417
Patronage capital 279,725
Other 1,165
Restricted cash 21,368
-----------
Total Other Assets $ 677,156
----------
TOTAL ASSETS $10,152,309
===========
The Registrant also owns 12,000 shares of Class B Common stock in
Snow King Resort, Inc. at Zero Basis.
* This company is approximately 49% owned by Western Standard
Corporation. It is operated by Western Standard's subsidiary,
Snow King Resort, Inc. This is not a short term receivable.
** This company is owned totally by Snow King Resort, Inc. This
is not a short term receivable.
PART 1, ITEM 1, 2, 3 (1)(i)
FORM 10QSB
WESTERN STANDARD CORPORATION
Consolidated Balance Sheet
Unaudited
March 31, 2003
Liabilities:
Accounts Payable $ 682,095
Portion of Long Term Debt
payable within one year 272,499
Advance Deposit 290,460
Accrued Expenses 645,339
First Interstate Bank line of credit 630,000
Vehicle loan 57,818
A-1 Credit 122,542
-----------
Subtotal $ 2,700,753
Long Term Debt 7,118,411
Fee Payable - Officer 90,000
-----------
TOTAL LIABILITIES $ 9,909,164
-----------
Minority Interest in Subsidiary
2,150 shares of Class A stock
in SKRI $ 2,046,242
-----------
STOCKHOLDERS INVESTMENT:
Common Stock, $0.05 par
value, 10,000,000 shares
authorized, 9,963,015
issued and outstanding
at March 31m 2003 $ 401,201
Capital in Excess of Par
Value 3,334,701
Accumulated Deficit ( 5,538,999)
------------
Net Stockholders
Investment ($ 1,803,097)
------------
TOTAL LIABILITIES AND CAPITAL $10,152,309
============
PART 1, ITEM 1, 2, 3 (1)(ii)
FORM 10QSB
WESTERN STANDARD CORPORATION
Consolidated Statement of Operations
Unaudited
Profit and Loss Information
For the (3) Three Months
Ended March 31,
2003 2002
1. Gross sales less discounts,
returns and allowances $2,273,187 $2,408,044
2. Non-operating revenues-
Gain on sale 1,505,328
3. Total of Captions 1 and 2 2,273,187 3,913,372
4. Costs and Expenses
(a) Operating Expenses 2,517,778 2,562,060
(b) Interest Expense 113,848 211,723
(c) Depreciation 142,683 142,683
Total Costs and Expenses 2,774,309 2,916,466
5. Income (Loss) before taxes
on income & extraordinary
items ( 501,122) 996,906
6. Discontinued Operations -0- -0-
7. Provisions for taxes on
income -0- 338,948
8. Income or (Loss) ( 501,122) 657,958
9. Minority interest in
profit (loss) of
subsidiary ( 116,538) 236,538
10. Income (Loss) before
extraordinary items ( 384,584) 421,420
11. Income tax, benefit of
net operating loss
carryover and minority
share of tax -0- 338,948
12. Net Income (Loss) ( 384,584) 760,368
13. Earnings (Loss) per share:
($384,584): 9,963,015
issued and outstanding
at 3/31/03 (.0386)
($451,383) 9,963,015
issued and outstanding
at 3/31/02 .076
14. Dividends per share -0- -0-
The results for interim periods are not necessarily indicative of results to
be expected for the year.
The information furnished for Western Standard Corporation reflects
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for this interim period.
PART 1, ITEM 1, 2, 3 (1)(iii)
FORM 10QSB
WESTERN STANDARD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
For the (3) Three Months
Ended March 31,
2003 2002
INCREASE (DECREASE) IN CASH:
Cash flows from operating
activities:
Cash received from
customers $2,127,847 $3,921,258
Cash paid to suppliers
and employees ( 2,071,085) ( 2,353,019)
Interest paid ( 113,848) ( 211,723)
Interest received 231 -0-
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Net cash provided
by operations ($ 56,855) $1,356,516
---------- ----------
Cash flows from investing
activities:
Acquisition of Resort Ass'n Shares( 10,810) $ -0-
Reduction in accounts
receivable-officer -0- 3,000
Capital expenditures ( 67,040) ( 10,165)
(Increase) decrease in
restricted cash 13,246 20,446
(Increase) reduction in
Snow King Center loan 4,379 61,996
Repayment (loan)
Loveridge Receivable 1,344 ( 78,000)
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Net cash provided
(used) by investing
activities ($ 58,881) ($ 2,723)
---------- ---------
Cash flows from financing
activities:
New loans $ 307,818 $ 285,000
Principal payments to
banks ( 224,222) ( 1,147,590)
---------- ---------
Net cash provided
(used) by financing
activities $ 83,596 ($ 862,590)
--------- ----------
Net increase (decrease) in
cash ( 32,140) $ 491,203
Cash at beginning of period 307,271 262,655
---------- ----------
Cash at end of quarter $ 275,131 $ 753,858
-======== =========
RECONCILIATION OF NET INCOME
TO NET CASH USED BY OPERATING
ACTIVITIES: FOR THE THREE MONTHS ENDED MARCH 31,
2003 AND 2002
Net income (loss) ($ 384,584) $ 760,367
Adjustments:
Depreciation and amortization 142,683 142,683
Decrease (increase) in
advance deposits ( 129,668) ( 5,323)
Increase (decrease) in
accrued expenses 117,809 150,222
Decrease (increase) in
accounts receivable ( 15,441) ( 133,329)
Decrease in prepaid
expenses 81,312 55,905
Decrease (increase)in
inventories 7,994 4,138
(Decrease) increase in
accounts payable 239,578 -0-
Cost of land sold 145,315
Allocation of minority
interest in profit
(loss) of subsidiary ( 116,538) 236,538
----------- -----------
Net cash provided (used)
by operations ($ 56,855) $ 1,356,516
=========== ===========
PART I, ITEM 1, 2, 3 (2)
FORM 10QSB
WESTERN STANDARD CORPORATION
(ii) Material Subsequent Events and Contingencies
None
(iii) Significant Equity Investors
Six investors own approximately 23.57% of Snow King
Resort, Inc., a Western Standard Corporation sub-
sidiary.
(iv) Significant Disposition and Purchase Business
Combinations.
SALE OF ALPHORN MOTEL AND LOTS:
In March 2002, lots 12, 13, 14 with buildings were
sold by Snow King Resort for $1,080,000.00 and our
unimproved lots 4, 5 and 6 were sold for $610,000.00
for a total of $1,690,000.00. The net proceeds were
applied against debt.
After this payment the interest rate was reduced from
7.98% to 5.875% and the monthly payments were reduced
from $107,846.90 to $79,286.04 with no payments due
for the months of April, May and November. However,
there is a provision for monthly payments of $8,000.00
into a reserve account. This will help the cash flow
considerably.
Western Standard's largest asset is its equity
interest in SKRI. SKRI owns and operates the Snow
King ski resort and hotel in Jackson, Wyoming and
engages in real estate activities in the immediate
area.
(v) Material accounting changes
None
PART I, Item 1, 2, 3 (2)(iii)
Significant Equity Investors
Unaudited
January 1 to
March 3, 2003
Sales $ 2,267,155
Gross Income $ 2,267,155
Net Income (Loss) from continuing operations ($ 494,435)
Less Minority Interest in profit or (loss) -
23.57% ($ 116,538)
Net Income (Loss) ($ 377,897)
The above figures are for Snow King Resort, Inc., a Western
Standard Corporation subsidiary. The Registrant owns
approximately 76.43 percent of the outstanding Snow King Resort,
Inc. voting stock.
PART 1, ITEM 1, 2, 3 (3)
Controls and Procedures
Under the supervision and with the participation of management,
including our Chief Executive Officer/Chief Financial Officer, we
conducted an evaluation of our disclosure controls and procedures,
as such term is defined under Rule 13a-14(c) promulgated under the
Securities Exchange Act of 1934, as amended within 90 days of the
filing date of this report. Based on the evaluation, our Chief
Executive Officer/Chief Financial Officer concluded that our
disclosure controls and procedures are effective.
There have been no significant changes (including corrective
actions with regard to significant deficiencies or material
weaknesses) in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of the
evaluation referenced above.
PART II
FORM 10QSB
WESTERN STANDARD CORPORATION
Other Information
1. Legal Proceedings.
At March 31, 2003, one lawsuit had been filed against
Snow King Resort by a doctor who was hurt while riding the
Alpine slide. Our insurance company is handling the suit by
the doctor. The law suit is in the pretrial stage. It
is expected that our insurance will cover any damages. At
this time it is impossible to estimate any possible loss.
Another lawsuit may be filed by three airline stewardesses
over an incident at the Snow King Resort. No suit is filed
as of March 31, 2003. Each stewardess has requested a
Settlement of $25,000. Our insurance company has offered
each $5,000 and is negotiating. It is impossible to estimate
any final damages. The Teton County Attorney may file
charges against the employee involved with the stewardess
incident.
2. Change in Securities
None
3. Defaults upon senior securities.
None
4. Submission of matters to a vote of security holders.
None
5. Other information.
None
6. Exhibits and reports on Form 8-K.
(a) Exhibit 99.1 & Exhibit 99.2
(b) Reports on Form 8-K
Form 8-K dated 6/12/01 is the last Form 8-K filed.
303(b) 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.
(a) ANALYSIS OF FINANCIAL CONDITION:
The Snow King Center which has been quite a drain on
Westan's resources is doing much better financially.
The airlines contemplate bringing in more flights this
coming summer. Summer business looks good at the Resort
Complex. Previously reported refinancing, increased
revenues and cost cutting make the 2003 summer and the
2003 winter appear quite promising.
(b) Western Standard Corporation, the parent company, will
have sufficient funds to cover its expenses during 2003
from cash reserves, oil and gas royalties, interest, and
accounts receivable.
(c) RESULTS OF OPERATIONS:
Snow King Resort is in the process of installing a
sprinkler system in the rooms and hallways of the Hotel
as well as hard wired smoke alarms at an estimated cost
of $445,000. At March 31, 2003, the sprinklers were
30% complete and 90% complete on May 5, 2003. The smoke
alarms were 50% complete at May 5, 2003. The carpentry
and painting were 50% complete on May 5, 2003.
Net loss for the first three months of 2003 amounted to
$501,122, compared to a net income for the first three
months of 2002 in the amount of $760,367.
Profits and losses for the first three months of 2003 and
2002 came from:
SOURCE 2003 2002
----------- -----------
Western Standard Corporation ($ 6,637) ($ 7,235)
Snow King Resort, Inc. ( 494,435) 767,018
Western Recreation Corporation ( 50) 584
----------- -----------
($ 501,122) $ 760,367
=========== ===========
Snow King Resort's business is very seasonal and can be affected
considerably by temperatures, snow conditions and the airlines.
The third and fourth quarters produce the greatest revenue. Summer
hotel bookings are looking quite favorable.
THREE MONTHS ENDED 3/31/03 COMPARED TO THREE MONTHS ENDED 3/31/02
Revenues for the 3 months ended 3/31/03 were $134,857 less than in
2002 after deducting $1,508,328 from the sale of the Alphorn Motel.
There was an decrease of 789 in the number of rooms occupied and an
increase in the average room rate of $5.73.
Costs and expenses for the first 3 months in 2003 were less than
those in 2002 by $142,157. Interest decreased $97,875 and
operating expenses decreased $44,282.
Room rentals, food and beverages and condominium rentals increased
while mountain operations and "other" departments decreased.
OTHER
Merging the Center into Snow King Resort is on indefinite hold.
Snow King Resort is presently in compliance with bank covenants.
The Loveridge note to Snow King Resort in the amount of $78,000 was
paid in full with interest in the month of October 2002.
A land acquisition of lot 3 Vine Street, Jackson, Wyoming in the
amount of $35,865 was paid for over several years with ski tickets.
Title has been conveyed to Snow King Resort. A survey revealed
that part of a Snow King Resort's maintenance building was on the
neighbors land so Snow King purchased the land and paid for it with
ski tickets.
FORM 10QSB
WESTERN STANDARD CORPORATION
SIGNATURE
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTERN STANDARD CORPORATION
----------------------------
(Registrant)
Dated: May 6, 2003 /s/ Stanford E. Clark
----------------------------
Stanford E. Clark, President
Treasurer
Certification of Chief Executive
of Western Standard Corporation pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
I, S. E. Clark, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Western
Standard Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date"); and
(c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: May 6, 2003 /s/ S. E. Clark
-----------------------
Chief Executive Officer
Certification of Chief Financial Officer
of Western Standard Corporation pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
I, S. E. Clark, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Western
Standard Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date"); and
(c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: May 6, 2003 /s/ S. E. Clark
-----------------------
Chief Financial Officer
EXHIBIT 99.1
Certification of Chief Executive Officer
of Western Standard Corporation
I. S. E. Clark, certify that:
In connection with the Quarterly Report on Form 10-QSB of
Western Standard Corporation (the Company) for the period ended
March 31, 2003 as filed with the Securities and Exchange Commission
on the date hereof (the Report), I, S. E. Clark, Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
1. The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
2. The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Company.
Western Standard Corporation
/s/ S. E. Clark,
-----------------
S. E. Clark,
Chief Executive Officer
May 6, 2003
EXHIBIT 99.2
Certification of Chief Financial Officer
of Western Standard Corporation
I, S. E. Clark, certify that:
In connection with the Quarterly Report on Form 10-QSB of
Western Standard Corporation (the Company) for the period ended
March 31, 2003 as filed with the Securities and Exchange Commission
on the date hereof (the Report), I, S. E. Clark, Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
1. The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
2. The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Company.
Western Standard Corporation
/s/ S. E. Clark
----------------
S. E. Clark,
Chief Financial Officer
May 6, 2003