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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2004 Commission File Number 000-49971 OCEAN WEST HOLDING CORPORATION  Delaware
    
    71-0876952
(IRS Employer(State of Incorporation)
    
    Identification Number)
   15991 Redhill Avenue, Suite 110
Tustin, California 92780
(Address of Principal Executive Offices) (714) 247-4200
(Issuers Telephone Number, Including Area Code) State the number of shares outstanding of each of the issuers classes of common stock as of
the latest practicable date. 5,586,104 shares of Common Stock, 210,096 shares of Class B Common Stock and 0 shares of Class
D Common Stock outstanding as of February 10, 2005 Transitional Small Business Disclosure Format: Yes  o     No  x




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##### Table of Contents



OCEAN WEST HOLDING CORPORATION
AND SUBSIDIARY PART 1  FINANCIAL INFORMATION PageItem 1. Consolidated Financial Statements.Consolidated Balance Sheet  As of December 31, 2004 (unaudited)
    
    
    3Consolidated Statements of Operations  For the Three Months Ended December 31, 2004 and 2003 (unaudited)
    
    
    4Consolidated Statements of Cash Flows  For the Three Months Ended December 31, 2004 and 2003 (unaudited)
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item. 2. Management Discussion and Analysis or Plan of Operations
    
    
    7Item 3. Controls and Procedures
    
    
    11PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    11Item 4. Submission of Matters to a Vote of Security Holders
    
    
    12Item 6. Exhibits and Reports on Form 8-K
    
    
    12Signatures
    
    
    12Index of Exhibits
    
    
    13EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
 2




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(unaudited) December 31,2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    10,170Receivable from loans sold
    
    
    10,905,778Mortgage loans held for sale
    
    
    198,453Stock subscription receivable
    
    
    537,425Prepaid and other current assets
    
    
    716,541Total current assets
    
    
    12,368,367Property and equipment, net
    
    
    229,878Other assets:Originated mortgage servicing rights
    
    
    35,979Loans held for investment
    
    
    327,700Deposits
    
    
    70,370Total other assets
    
    
    434,049Total assets
    
    $
    13,032,294Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    1,031,075Due to stockholder
    
    
    25,247Current maturities of long-term debt
    
    
    857,126Current maturity of capital lease obligation
    
    
    42,624Warehouse lines of credit
    
    
    11,165,824Total current liabilities
    
    
    13,121,896Long-term liabilities:Long-term debt, less current maturities
    
    
    531,891Capital lease obligations, less current maturities
    
    
    2,555Amount due to related party
    
    
    15,000Notes payable  stockholders
    
    
    Total long- term liabilities
    
    
    549,446Total liabilities
    
    
    13,671,342Stockholders equity:Preferred stock, $.01 par value, 10,000,000 shares authorized:Series C, 1,000 shares issued and outstanding
    
    
    100,000Series E, 680 shares issued and outstanding
    
    
    170,000Series F, 1,050 issued and outstanding
    
    
    105,000Series G, 2,000 shares issued and outstanding
    
    
    200,000Series I, 125 shares issued and outstanding
    
    
    12,500Series L, 1,000 shares issued and outstanding
    
    
    1,000,000Series M, 5,000 shares authorized, 0 shares issued and
outstanding
    
    
    Series N 10,000 shares authorized, 2,250 issued and
outstanding
    
    
    2,250,000Class B common stock, $.01 par value, 5,000,000 shares
authorized, 210,096 shares issued and outstanding
    
    
    2,101Class D common stock, $.01 par value, 600,000 shares
authorized, none issued and outstanding
    
    
    Common stock, $.01 par value 30,000,000 shares authorized,
5,586,104 issued and outstanding
    
    
    55,861Additional paid-in capital
    
    
    1,543,194Accumulated deficit
    
    
    (6,077,704
    )Total stockholders equity
    
    
    (639,048
    )Total liabilities and stockholders equity
    
    $
    13,032,294
 The accompanying notes are an integral part of these financial statements. 3




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) Three Months
    
    
    Three MonthsDecember 31,
    
    
    December 31,2004
    
    
    2003Revenues:Revenues from origination and sale
of mortgage loans and commissions, net
    
    $
    1,494,303
    
    
    $
    3,119,013Operating expenses:Salaries and wages
    
    
    763,031
    
    
    
    1,408,302Payroll taxes
    
    
    97,710
    
    
    
    195,689Other general and administrative expenses
    
    
    488,141
    
    
    
    1,996,506Depreciation & amortization
    
    
    35,032
    
    
    
    48,082Total operating expenses
    
    
    1,383,914
    
    
    
    3,648,579Income (loss) from operations
    
    
    110,389
    
    
    
    (529,566
    )Provision for income taxes
    
    
    
    
    
    
    Net income (loss)
    
    
    110,389
    
    
    
    (529,566
    )Dividends on preferred shares
    
    
    (38,240
    )
    
    
    (45,369
    )Net income (loss) applicable to common
shareholders
    
    $
    72,149
    
    
    $
    (574,935
    )Net income (loss) applicable to common
shareholders per common share
basic and diluted
    
    $
    0.01
    
    
    $
    (0.10
    )Weighted average number of common shares
outstanding basic and diluted
    
    
    5,796,200
    
    
    
    5,796,200
 The accompanying notes are an integral part of these financial statements. 4




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) Three Months Ended
    
    
    Three Months EndedDecember 31, 2004
    
    
    December 31, 2003Cash flows (used for) provided by operating activities:Net income (loss)
    
    $
    110,389
    
    
    $
    (529,566
    )Adjustments to reconcile net income
to net cash provided by operating activities:Depreciation and amortization
    
    
    35,032
    
    
    
    48,046Changes in operating assets and liabilities:(Increase) decrease in assets:Restricted cash
    
    
    
    
    
    
    3,010Receivable from loans sold
    
    
    (4,768,758
    )
    
    
    2,003,832Mortgage loans held for sale
    
    
    158,553
    
    
    
    417,675Prepaid and other current assets
    
    
    (451,733
    )
    
    
    403,173Decrease in liabilities:Accounts payable and accrued expenses
    
    
    (208,660
    )
    
    
    (414,124
    )Net cash (used for) provided by operating activities
    
    
    (5,125,178
    )
    
    
    1,932,046Cash flows provided by (used for) investing activities:Purchases of property and equipment
    
    
    (11,604
    )
    
    
    (10,697
    )Net change in stock subscription receivable
    
    
    485,000
    
    
    
    Net cash provided by (used for) investing activities
    
    
    473,396
    
    
    
    (10,697
    )Cash flows provided by (used for) financing activities:Net borrowings (payments) under warehouse lines of credit
    
    
    4,639,279
    
    
    
    (2,306,679
    )Principal (repayments) borrowings on long-term debt
    
    
    (45,233
    )
    
    
    262,830Payments on capital lease obligations
    
    
    (17,933
    )
    
    
    (27,394
    )Borrowings on notes payable, stockholders
    
    
    
    
    
    
    65,000Advances from stockholder
    
    
    
    
    
    
    (13,400
    )Preferred stock dividends
    
    
    (38,240
    )
    
    
    (45,369
    )Net cash provided by (used for) financing activities
    
    
    4,537,872
    
    
    
    (2,065,012
    )Net decrease in cash and cash equivalents
    
    
    (113,910
    )
    
    
    (143,663
    )Cash and cash equivalents, beginning of period
    
    
    124,080
    
    
    
    457,969Cash and cash equivalents, end of period
    
    $
    10,170
    
    
    $
    314,306Supplemental disclosure of cash flow information -Interest paid
    
    $
    
    
    
    $
    14,182Income taxes paid
    
    $
    
    
    
    $
    
 The accompanying notes are an integral part of these financial statements. 5




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2004
(unaudited) (1) Basis of Presentation: The accompanying unaudited interim consolidated financial statements of Ocean West Holding
Corporation, and its subsidiary Ocean West Enterprises, Inc. dba Ocean West Funding (collectively
the Company), reflect all adjustments which, in the opinion of management, are necessary for a
fair presentation of the results of the interim periods presented. All such adjustments are of a
normal recurring nature. Since inception through December 31, 2004, the Company has suffered recurring losses from
operations; we have incurred aggregate net losses of $ 6,077,704. This circumstance raise
substantial doubt about our ability to continue as a going concern, as described in the explanatory
paragraph on our independent auditors report on the September 30, 2004 consolidated financial
statements, included in the Companys Annual Report on Form 10-KSB. Management believes that cash flows from operations will be sufficient to meet the Companys
current liquidity and capital needs at least for the next fiscal quarter ended March 31, 2005.
Future offerings are possible, although the Company does not currently have any specific offering
plans. (2) Nature of Business: Ocean West Holding Corporation (Ocean West) was organized in the State of Delaware on August 15,
2000 as a holding company with negligible assets and liabilities. During March 2002, Ocean West
acquired all of the issued and outstanding shares of preferred and common stock of Ocean West
Enterprises, Inc. dba Ocean West Funding (Ocean West Enterprises) in an exchange of shares.
Since the shareholders of Ocean West Enterprises are the controlling shareholders of Ocean West
after the exchange, Ocean West Enterprises treated the transaction as recapitalization, and the
historical financial statements reflect the operations of Ocean West Enterprises. Ocean West Enterprises, a California corporation, was incorporated in November 1988 for the purpose
of engaging in mortgage banking activities. It is involved in the process of originating,
packaging and funding of HUD and other government-insured loans and non-government-insured loans in
the United States. (3) Principles of Consolidation: The consolidated financial statements include the accounts of Ocean West and its wholly owned
subsidiary, Ocean West Enterprises. All significant inter-company accounts and transactions have
been eliminated. (4) Interim Period: These financial statements have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been omitted. Operating results
for the three months ended December 31, 2004 are not necessarily indicative of the results that may
be expected for the full year ending September 30, 2005. The unaudited interim consolidated financial statements should be read in conjunction with the
Companys audited financial statements and notes thereto for the past fiscal year ended September
30, 2004, included in the Companys Annual Report on Form 10-KSB. Earnings per share have been calculated based upon the weighted average number of common shares
outstanding during both reporting periods. 6




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Item 2. Managements Discussion and Analysis or Plan of Operation. General Ocean West is a holding company, which holds all of the issued and outstanding stock of Ocean
West Enterprises. Ocean West Enterprises is a wholesale and retail mortgage banking company
primarily engaged in the business of originating and selling loans secured by real property with
one to four units. We offer a wide range of products and historically, we primarily have targeted
high quality, low risk borrowers. However, we recently expanded into the higher risk sub-prime
market to assist in efforts to diversify our lending practices. Our income is generated from loan
origination fees and from gains from sales of mortgage loans on the secondary mortgage market and
to private investors. We also generate revenues through fees, such as brokerage fees, underwriting
fees, processing fees and document drawing fees, in connection with the funding or brokering of a
loan. During fiscal 2004, we have funded approximately 18% of our loans through our warehouse
credit facilities. Typically, the amount drawn from our warehouse lines of credit for a particular
loan is repaid when the loan is sold in the secondary mortgage market or to an investor. We face strong competition in originating, purchasing and selling mortgage loans and related
mortgage servicing rights. Our competition is principally from savings and loans associations,
other mortgage companies, commercial banks and, to a lesser degree, credit unions and insurance
companies, depending upon the type of mortgage loan product offered. In addition to offering a
wide range of competitive products, we believe we compete with these entities through our efforts
to provide helpful and timely service to mortgage brokers and borrowers alike. Many of these
institutions have greater financial resources than we do and maintain a significant number of
branch offices in the areas in which we conduct operations. Increased competition for mortgage
loans from other lenders may result in a decrease in the volume of mortgage loans that we are able
to originate and purchase. If we are unable to compete effectively, our operations and financial
condition could be materially and adversely affected. Ocean West changed its fiscal year-end subsequent to March 31, 2002 from March 31 to September
30 effective in 2002. The reasons for the change were a reduction in auditing costs as fewer
companies use a September 30 year-end and to aid in HUD reporting. Critical Accounting Policies As set forth in greater detail in Footnote (1) to Ocean Wests September 30, 2004 financial
statements Summary of Significant Accounting Policies, the Company recognizes revenue upon sale
of a loan when the documents are shipped to the independent investors, and all rights have passed
and the Company has become obligated to convey the loan, thereby isolating the transferred assets
from the Company and fulfilling all criteria of SFAS No. 140. If these criteria were not met, then
revenue recognition would be delayed until the proceeds were subsequently received from the
investors, typically within the following month. Pursuant to SFAS No. 91, the Company capitalizes its loan origination costs, including an amount of
its payroll and related costs which are directly attributable to the credit origination process.
The measurement of such capitalizable costs requires the use of some judgments by management, as to
the portion of such costs associated with credit origination and with other activities. Disclosure, pursuant to SFAS No. 107, is required of the fair value of financial instruments.
However, since most of the Companys financial instruments turn over within a very short time
period, management discloses that the net book value approximates fair value at the balance sheet
date. Results of Operations We believe that interest rate trends potentially have the single largest effect on our results of
operations. Trends in interest rates are not only important to our refinance business, but are
also very important in the purchase market. As interest rates rise, more individuals are
eliminated as potential borrowers. The reason for this is simple, as
interest rates 7




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Item 2. Managements Discussion and Analysis or Plan of Operation (continued). get higher, so do the mortgage payments. Higher payments mean fewer people have the ability to
qualify for loans. Historically, mortgage bankers like us are more negatively affected by a rising
interest rate market than banks. Banks tend to have an advantage in an adjustable rate market,
because banks have the ability to hold loans and, therefore, can be more creative in designing
adjustable rate loans to fit the borrowers needs. Mortgage bankers like us are limited to loan
products that can be sold in the secondary market or securitized. These programs have become more
competitive in recent years, but we believe banks still retain a competitive advantage. Historically inflation has an impact on us because inflation typically impacts interest rates.
As the threat of inflation becomes more of a concern, interest rates tend to rise. This result is
based upon the perception that the Federal Reserve will revise short-term interest rates to keep
inflation in check. This concern ultimately affects mortgage rates. Our revenues are currently derived approximately two-thirds from sale of loans and one-third
from fees generated in connection with such sales. Revenues generated from the sale of a loan vary
based on loan type and size. Premiums paid can range from 1/8% to 5% of the loan amount.
Conventional conforming loans have lowest profit margins while alternative A and sub-prime loans
have higher premiums. Sub-prime loans typically have the largest margins. Fees received also vary
depending on loan type and origination source and generally range from $495 to $995 per loan. Three Months Ended December 31, 2004 Compared to Three Months Ended December 31, 2003 During the quarter ended December 31, 2004, we funded 421 loans with an aggregate dollar value
of approximately $75 million compared to 1,177 loans with an aggregate dollar value of
approximately $211 million in the quarter ended December 31, 2003. This decrease was due to the
downsizing of 29 branches and an overall market reduction in loan volume. The average loan size
for the quarter ended December 31, 2004 was approximately $178,000, which was a decrease from an
average loan size of $179,000 for the quarter ended December 31, 2003. As the Company continues to
increase its originations in markets outside California, the average loan size decreases due to
lower home prices in much of the rest of the nation. Net revenues from origination and/or sale of loans decreased to $1.5 million for the quarter
ended December 31, 2004 from $3.1 million for the quarter ended December 31, 2003. The decrease in
revenues can be attributed the reduction of the number of branches as well as the reduction of loan
production in the overall market. Total operating expenses decreased by $2.2 million to $1.4 million for the quarter ended
December 31, 2004 from $3.6 million for the quarter ended December 31, 2003. Salaries, wages and
payroll taxes were $830,000 for the quarter ended December 31, 2004 compared to $1.4 million for
the December 31, 2003. The decrease in salaries, wages and payroll taxes was primarily due to a
decrease in personnel at the branch offices. Other general and administrative expenses consist
primarily of rent, advertising services, and fees for professional services, insurance and office
expenses. These expenses decreased $1.5 million to $488,000 for the quarter ended December 31,
2004 from $2.0 million for the same period in 2003. Rent, insurance and related office expenses
decreased as branch officers were reduced to meet loan demand. We had a net income of $110,389 for the quarter ended December 31, 2004 compared to net loss
of $529,566 for the same quarter of 2003. The significant increase in income for the December 31,
2004 quarter was due to an overall decrease in general and administrative expenses resulting from
the Companys downsizing efforts. Liquidity and Capital Resources Liquidity is the ability of a company to generate funds to support asset growth, satisfy
disbursement needs, maintain reserve requirements and otherwise operate on an ongoing basis. If
our loan volume were to increase too rapidly, we believe the increase could have a severe impact on
our liquidity. Our warehouse credit facilities limit the amount that may be advanced on each loan
funded. Therefore, cash must be used to fund the additional dollars needed to close escrow. Thus,
it is crucial that we closely monitor our loan volume. Historically we have funded loans primarily through our warehouse credit facilities or using
cash on hand. During fiscal 2004, we have funded approximately 18% of our loans through our
warehouse credit facilities. Loans that 8




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Item 2. Managements Discussion and Analysis or Plan of Operation (continued). are closed using our credit facilities are funded through short term borrowing on our
warehouse lines of credit. We pay interest on funds advanced under the warehouse lines of credit
at a pre-negotiated rate. The interest rate at which we borrow is variable in nature and typically
averages between 4.5% and 6.9% per annum. The average time between funding a mortgage and the
receipt of the proceeds from the sale of the mortgage was approximately fifteen days during fiscal
2004 and continued as such during the three months ended December 31, 2004. Our ability to finance and purchase mortgage loans depends on our ability to secure warehouse
lines of credit with acceptable terms. Previously, we have funded the majority of our loans
through First Collateral Services. First Collateral ceased providing us funds under the line
effective April 30, 2003. The outstanding balance on the First Collateral Services line of credit
is being paid off as the loans securing the lines are sold. As of December 31, 2004 the
outstanding balance with First Collateral Services was $455,759. Until January 2003, we had
frequently drawn amounts in excess of the limit on the line. It bears interest at 8% and the rate
on September 30, 2004 was 4.311%. Currently we fund loans through our warehouse lines of credit with Provident Consumer
Financial Services Warehouse One Acceptance Company IV, LLC and Consumer Direct of America (CDA),
which owns 84.9% of the outstanding shares of the Company. As of December 31, 2004 the
outstanding balance with Provident Consumer Financial Services Warehouse One and CDA was $8,214,512
        , $424,634 and $2,070,919, respectively. The lending limit on the line of credit through
Provident Consumer Financial Services is currently $8,000,000 ,, Warehouse One lending limit is
$5,000,000 and the CDA lending limit is $5,000,000. We are currently in excess of the $8,000,000
limit imposed by Provident by $214,512. The Warehouse One and Provident lines are also $50 to
$100 more per transaction than those charged by First Collateral. In addition, the lending limits
on the First Collateral line of credit had been larger than those granted by the current providers.
The loan agreement governing the terms of the Warehouse One line of credit contains a
restrictive covenant relating to tangible net worth. The Company received an amendment to its
agreement with Warehouse One changing its financial net worth covenant from $750,000 to $450,000 on
December 30, 2003. Currently, the Company is in compliance with its lender under the new amended
agreement. Should the Company not comply with the restrictive covenants, there is the possibility
that we may lose the credit facility at any time, which would cause a negative impact on the way we
do business and a material adverse effect on our results of operations and financial condition. At December 31, 2004, the interest rate charged on our warehousing lines of credit with
Provident Consumer Financial Services , Warehouse One and CDA were approximately 6.93% , 5.5% and
5.25%, respectively. The fees associated with Provident Consumer Financial Services and Warehouse
One is also $50 to $100 more per transaction than those charged by First Collateral. In addition
the lending limits on the First Collateral line of credit has been larger than those granted by the
current providers. The loss of First Collateral as our primary warehouse lender has increased our
cost of funds and has limited our ability to fund a higher volume of loans and may have a material
adverse effect on our results of operations and financial condition. To the extent we are not
successful in securing alternate warehousing sources; we may have to curtail our mortgage loan
origination activities, which would also have a material adverse effect on our results of
operations and financial condition. At the present time, our liquidity resources are minimal. We have not consistently met the
HUD net worth requirements. We were unable to maintain a minimum net worth of $1,000,000 to
retain our mortgagee status. Due to the facts that the Company was unable to maintain its required
net worth and the amount of FHA business has decreased significantly over the past few years, we
elected to change our status to Correspondent with HUD in July of 2003. The percentage of FHA
loans funded for the quarter ended December 31, 2004 was 5.7% based on dollar volume, compared to
9.2% for the three month period ended December 31, 2003. Historically we have funded operations through a combination of borrowings and issuance of
stock. We currently intend to retain our earnings for the foreseeable future to help increase our
liquidity. In August and September of 2004, CDA purchased in aggregate 2,250,000 of senior
preferred stock of Ocean West Enterprises., a for an aggregate purchase price of $2,250,000 in
cash. In relation to the purchase as of December 31, 2004, there was a stock subscription
receivable of $537,425 of which has subsequently been paid in full. Management continues to
explore investment alternatives to aid in its liquidity, but there can be no reliance made on such. Management believes that cash flows from operations will be sufficient to meet the Companys
current liquidity and capital needs at least for the next fiscal quarter ended March 31, 2005.
Future offerings are possible, although the Company does not currently have any specific offering
plans. 9




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Item 2. Managements Discussion and Analysis or Plan of Operation (continued). Cash Flows During the first three months of fiscal 2005 and 2004 we had net cash (used for) provided by
operating activities of $(5.1) million and $(1.9) million, respectively. The primary sources of
net cash used for was increase in the amount of mortgage loans held for sale and receivables from
loans sold over the three month period ending December 31, 2004, a decrease in accounts payable, an
increase in other current assets and an increase by the net income for the period. The primary
sources of net cash provided by was a decrease in the amount of mortgage loans held for sale and
receivables from loans sold over the three month period ending December 31, 2003 offset by the net
loss for the period. As investors purchase loans, the amounts advanced for such loans through the
warehouse lines of credit are paid. At that time, the receivables are cleared and the cash
deposited in our operating account. These accounts vary significantly depending upon where the
bulk of the loans are in the process of funding and selling. Net cash provided by (used for) investing activities during the first three months of fiscal
2005and 2004 was $473,000 and $11,000 which was attributable to the collection of notes receivable
and the purchase of property and equipment. Net cash provided by financing activities for the three months ended December 31, 2004 was
$4.5 million. This consisted primarily of net borrowings under the warehouse lines of credit of
$4.6 million, payments of $18,000 on capital lease obligations and payments of $45,000 on notes
payable, as well as dividends paid of $38,240. Net cash used for financing activities for the three
months ended December 31, 2003 was $(2.1) million. This consisted primarily of payments
under the warehouse lines of credit of $2.3 million, payments of $27,000 on capital lease
obligations and payments on advances from stockholder of $13,400, as well as dividends paid of
$45,000 offset by borrowings of $263,000 on long-term debt and $65,000 on notes payable from
stockholder. At 2004, the Company has net operating loss carryforwards (NOLs) of approximately
$3,983,443, for Federal income tax reporting purposes and approximately $2,787,507 for state
reporting purposes, expiring in various years through 2025. On September 11, 2002, the Governor of California signed into law new tax legislation that
suspends the use of NOL carryforwards into tax years beginning on or after January 1, 2002 and
2003. Should the Company have taxable income it may not look to California net operating losses
generated in prior years to offset taxable income. This suspension will not apply to tax years
beginning in 2004 and beyond. Regulatory Trends The regulatory environments in which we operate have an impact on the activities in which we
may engage, how the activities may be carried out and the profitability of those activities.
Therefore, changes to laws, regulations or regulatory policies can affect whether and to what
extent we are able to operate profitably. For example, proposed state and federal legislation
targeted at predatory lending could have the unintended consequence of raising the cost or
otherwise reducing the availability of mortgage credit for those potential borrowers with less than
prime-quality credit histories, thereby resulting in a reduction of otherwise legitimate sub-prime
lending opportunities. Forward-Looking Statements Statements contained in this Form 10-QSB that are not historical facts are forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. In addition, words such as believes, anticipates, expects and similar
expressions are intended to identify forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements or events, or timing of events, to differ materially from any
future results, performance or achievements or events, or timing of events, expressed or implied by
such forward-looking statements. We cannot assure that we will be able to anticipate or respond
timely to the changes that could adversely affect our operating results in one or more fiscal
quarters. Results of operations in any past period should not be considered indicative of results
to be expected in future periods. Fluctuations in operating results may result in fluctuations in
the price of our securities. 10




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In the event we need to raise additional financing, there can be no assurance that any such
financing will be available on acceptable terms. If such financing is not available on
satisfactory terms, we may be unable to expand or continue our business as desired and operating
results may be adversely affected. Debt financing will increase expenses and must be repaid
regardless of operating results. Equity financing could result in dilution to existing
stockholders. Some of the more prominent known risks and uncertainties of our business are set forth below.
However, this section does not discuss all possible risks and uncertainties to which we are
subject, nor can it be assumed that there are not other risks and uncertainties which may be more
significant.  
    Our losses from period to period;
    Our failure to continuously meet HUD minimum net worth requirements;
    Our failure to continue to be an approved FHA mortgagee;
    Our dependence on the warehouse lines of credit which has been reduced and as of
December 31, 2004, the Company exceeded the limit on one of its facilities by
$200,000, and should the Company fail to comply with the restrictive covenant
relating to the line of credit it may loose its credit line;
    Our need for additional funding sources so that our ability to originate and fund
loans is not impaired and
    Changes in interest rates can affect the volume, net interest income and sale of
mortgage loans originated and purchased by us.
    Our ability to compete with banks and other mortgage lenders that are significantly larger. 
 Item 3. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our principal executive officer and principal financial officer have carried out an evaluation
of the effectiveness of the Companys disclosure controls and procedures as of December 31, 2004
(as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15(d)-15(e)). Based on that
evaluation, these officers have concluded that as of December 31, 2004, the Companys disclosure
controls and procedures were adequate. Changes in Internal Controls During the period covered by this report, there have been no changes in the Companys internal
control over financial reporting that have materially affected or are reasonably likely to
materially affect the Companys internal control over financial reporting. 
 PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings. We are party to claims from time to time, not required to be disclosed in accordance with Item
103 of Regulation S-B. While management currently believes that the ultimate outcome of these
proceedings, individually and in the aggregate, will not have a material adverse effect on our
financial position or results of operations, litigation is subject to inherent uncertainties. Were
an unfavorable ruling to occur, there exists the possibility of a material adverse impact on our
results of operations of the period in which the ruling occurs. The estimate of the potential
impact on our financial position or overall results of operations for the above legal proceedings
could change in the future. 11




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Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. 
 Item 6. Exhibits and Reports on Form 8-K.  (a)
    ExhibitsSee Index of Exhibits on page 13.(b)
    Reports on Form 8-KOn February 4, 2005 the Company filed a Form 8-K reporting a change in accountants. 
 SIGNATURES 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. OCEAN WEST HOLDING CORPORATIONDate: February 18, 2005By:
    /s/ Marshall L. StewartMarshall L. StewartPresident and Chief Executive OfficerDate: February 18, 2005By:
    /s/ Wayne K. BaileyWayne K. BaileyChief Financial Officer
     (Principal Accounting Officer) 12




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OCEAN WEST HOLDING CORPORATION
Quarterly Report on Form 10-QSB
For the Quarter Ended December 31, 2004 INDEX OF EXHIBITS ExhibitDescription of Exhibit
    
    Table Number*
    
    Number302 Certifications
    
    
    31(i)
    
    Certificate of Chief Executive
Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    
    
    
    
    
    31.1(ii)
    
    Certificate of Chief Financial
Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    
    
    
    
    
    31.2906 Certifications
    
    
    32(i)
    
    Certificate of Chief Executive
Officer and Chief Financial Officer
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.**
    
    
    
    
    
    
    32.1
 13