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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
 FORM 10-KSB þ
    
    Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the fiscal year
ended September 30, 2004
 o
    
    Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 For the transition period from_______ to_______
 Commission file number 000-49971 Ocean West Holding Corporation  Delaware
    
    71-0876952(State or other jurisdiction of
    
    (IRS Employer Identification No.)incorporation or organization)
 15991 Redhill Avenue, Suite 110
Tustin, California 92780
(Address of principal executive offices) Issuers telephone number: (714) 247-4200 Securities registered pursuant to Section 12(b) of the Act: Name of each exchangeTitle of each class
    
    on which registeredNone
    
    None
 Securities registered pursuant to Section 12(g) of this Act: Common Shares, $0.01 par value per share
Common Stock Purchase Warrants 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 requirement for the
past 90 days.
                                                                                                
Yes  þ   No  o Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB. The issuers revenues for its most recent fiscal year ended September 30, 2004 were
$7,187,688. The aggregate market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the average bid and asked price of such common equity, as of December 27,
2004 was $446,880. The number of shares outstanding of each of the issuers classes of common equity as of
December 30, 2004 was: 5,586,104 common shares, 210,096 Class B common shares and 0 Class
D common shares. Transitional Small Business Disclosure Format                                                            
              
                
       Yes o    No þ




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TABLE OF CONTENTS PAGEPART I
    
    
    3Item 1. Description of Business
    
    
    13Item 2. Description of Property
    
    
    14Item 3. Legal Proceedings
    
    
    15Item 4. Submission of Matters to a Vote of Security Holders
    
    
    15PART II
    
    
    15Item 5. Market for Common Equity and Related Stockholder Matters
    
    
    15Item 6. Managements Discussion and Analysis or Plan of Operation
    
    
    16Item 7. Financial Statements
    
    
    34Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
    
    
    62Item 8A. Controls and Procedures
    
    
    62Item 8B.
Other Information
    
    
    63PART III
    
    
    63Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance
with Section 16(a) of the Exchange Act
    
    
    63Item 10. Executive Compensation
    
    
    66Item 11. Security Ownership of Certain Beneficial Owners and Management
    
    
    66Item 12. Certain Relationships and Related Transactions
    
    
    67Item 13. Exhibits and Reports on Form 8-K
    
    
    67Item 14. Principal Accountant Fees and Services
    
    
    68SIGNATURES
    
    
    71Exhibit 31.1Exhibit 31.2Exhibit 32.1
  2




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PART I 
 Item 1. Description of Business. Ocean West Holding Corporation (Ocean West) was formed in Delaware on August 15, 2000 as the
holding company of Ocean West Enterprises, Inc., a California corporation. The holding company
received all of the shares of Ocean West Enterprises in exchange for shares of its stock effective
March 11, 2002. On July 15, 2004, Marshall L. Stewart, Daryl S. Meddings, Enfo Loan Corporation, Kingsley and
Nancy Cannon and Dale and Suzanne Delmege agreed to sell 4,921,930 of their shares of common stock
of the Company to Consumer Direct of America, a Nevada corporation (CDA) in exchange for 622,388
shares of CDA (the Transfer). The Transfer constitutes a change in control of the Company.
Marshall L. Stewart and Daryl S. Meddings will remain as directors and officers of the Company.
On September 28, 2004 Daryl S. Meddings resigned as Chief Financial Officer, concurrently Mr.
Meddings has been appointed to the position of Executive Vice President. On September 28, 2004
the board appointed Wayne Bailey (Chief Financial officer of CDA) to the Board of Directors of the Company to
fill the one vacancy on the Board until the next annual shareholders meeting as well as to the
position of CFO. Ocean West Enterprises was incorporated in November 1988 in the state of California and is
engaged in the business of mortgage banking/brokering. We principally operate under the name of
Ocean West Funding. All references herein to Ocean West, the Company, us, our, and we,
include Ocean West and its consolidated subsidiary, unless the context otherwise requires. Overview We are a retail and wholesale mortgage banking company primarily engaged in the business of
originating and selling loans secured by real property with one-to-four units. The company offers
a wide range of products aimed primarily at high quality, low risk borrowers. Under our current
business strategy, we will make most of our loans to:  
    purchase existing residences
    refinance existing mortgages
    consolidate other debt
    finance home improvements, education or similar needs Ocean West primarily originates conventional mortgage loans, which meet Federal National
Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) standards. The
Company also originates, to a lesser degree, Federal Housing Authority FHA loans. Ocean West
continues to expand into the higher risk Alternative A/Sub-prime market to assist in efforts to
diversify its lending practices. 3




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We give our borrowers a credit grade through two basic methods. One is through an underwriter
that knows and understands the end investors credit requirements and grades the borrowers
accordingly. The other is through automated underwriting systems used by many investors including
Fannie Mae and Freddie Mac. In the automated system, the borrowers credit information is entered
into a computer-driven underwriting system that analyzes the data and runs a credit report. The
majority of the Companys production is secured by first priority mortgages. Based on dollar
volume, for fiscal year ended September 30, 2004 approximately 85% of the total funded loans were
in the first position of loans originated by us and are secured by a first priority mortgage. The
remaining mortgages are typically in a second position. Products Ocean West offers a broad range of mortgage loan products to provide flexibility to mortgage
loan brokers and our retail division. These products vary in loan-to-value ratio and income
requirements as well as other factors. The following is a list of our primary standard products:  
    Conforming Mortgage Products  Adjustable and fixed rate loan programs that
meet the guidelines for purchase by government-sponsored entities, such as FNMA and
FHLMC which guarantee mortgage backed securities, and by permanent investors in
mortgage backed securities secured by, or representing ownership in, such mortgage
loans.
    FHA/VA  Thirty-year fully amortizing adjustable or fixed rate program 
adjustable rate program indexed to the one-year treasury featuring a cap of annual
interest rate increases of 1% and a life cap on increases of 5%.
    Alt A/Sub Prime Mortgage Products  Alternative-A/Sub-Prime loans are
adjustable and fixed rate loans that usually do not meet FNMA and FHLMC guidelines due
to various reasons. These loans usually do not meet this guideline because they
require a reduced amount of income verification and may exceed these agencies maximum
loan-to-value (LTV) guidelines. These loans are sold to institutional investors such
as Credit Suisse First Boston, Banco Popular and Saxon Mortgage.
    Second Mortgage Program  Fixed rate amortizing and fixed rate with a
balloon payment programs that are limited to borrowers we identify as A+ through B
credit, risks, with a maximum combined loan-to-value ratio equal to 100%.
    JUMBO Loans  Adjustable and fixed rate loan program for loans that exceed
the loan limits set by the FNMA (Fannie Mae) and the FHLMC (Freddie Mac). These loans
are sold to investors in the secondary market that specialize in these types of loans
and are structured to meet the guidelines provided by specific investors. 4




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
    Non-Conforming Loans  Fixed- rate first mortgage loans that are amortized
over a fifteen or thirty-year period as well as loans with a balloon payment in fifteen
years and payable during the fifteen-year period under a thirty-year amortization
schedule. Loan Origination We originate both purchase and refinance mortgage loans. The percentage of refinance loans as
compared to total volume for the year ended September 30, 2004 was 56.4% and 69.7% for the year
ending September 30, 2003 We originate loans primarily through three different channels. The first is directly through
our corporate retail division. This division deals directly with the client. Most of the retail
loans are referred to us through real estate agents or past clients. The remaining clients are
generated through various marketing techniques such as direct mail, telemarketing, or various lead
providers. The Company has closed this division in the early part of its fiscal year and has
decided to focus its attention on the two remaining channels,as discussed below. The corporate
retail loans comprised .04% of our loan volume for the year ended September 30, 2004 as compared to
20.3% of our loan volume for the year ended September 30, 2003. The second method of origination is through our net branch network of retail branches. A
net branch is a retail branch where all related branch expenses must be paid for through branch
revenues and the manager of the branch is compensated only through the branch profits. We have
concentrated on developing this area of our business in recent months because we believe this is
one of the most cost effective and efficient ways to increase loan originations. The net branches
comprised 92% of the loan volume in the fiscal year ended September 30, 2004 as compared to 84% of
the loan volume in the fiscal year ended September 30, 2003. As of September 30, 2004 we had 57 retail net branches in 42 states. These branches are
located in areas close to potential borrowers and referral sources. Being located near these
referral sources better enables the Company in developing referral business. Our goal is to
continue to develop and maintain recurring referral sources. To supplement branch business, we
continue to develop lead programs through various providers. The third method of origination is the wholesale channel which represents loans solicited
through mortgage brokers. A loan broker generally receives commissions on the individual loan
transactions submitted by the broker. Commissions vary based upon loan type, loan amount, interest
rate and fees charged by the broker. Average commissions are approximately $3,880 per loan
transaction. The loan officer will be compensated from the commissions earned. The typical
compensation to the loan officer ranges from 55% to 75% of the total commissions earned. This
division comprised 8.0% of our total loan volume for the fiscal year ended September 30, 2004 as
compared to 9.5% of our total loan volume for the fiscal year ended September 30, 2003. 5




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We incur certain costs in originating loans, including general and administrative expenses,
salary and commission expenses, out-of-pocket expenses, and interest due on borrowings on the
warehouse line of credit. Underwriting Process Loans originated through the corporate retail division or net branches require processing.
Processing procedures very depending on specific loan program and investor requirements. Loan
applications are reviewed and verified for accuracy. The verification process includes, but is not
limited to: (i) evaluation of the borrowers credit worthiness by obtaining a formal credit report
through an approved credit agency, (ii) third party verification of the applicants income and
deposit information, and (iii) obtaining a preliminary title and appraisal report. Once processing
is complete, the file is sent on to underwriting. Regardless of how a loan is generated, all loans must be underwritten in accordance with
guidelines set forth by management and the secondary market investors. Some underwriting criteria
include borrower income and credit worthiness, loan-to-value ratios, property condition and type,
insurance requirements and investor requirements. Our underwriting guidelines also comply with
those guidelines set forth by the FNMA, FHLMC, FHA, Veterans Administration (VA) and private
institutional investors. The underwriting guidelines are intended to aid in evaluating the credit
history of the potential borrower, the capacity of the borrower to repay the mortgage loan, the
value of the real property, which will secure the loan, and the adequacy of such property as
collateral for the proposed loan. The loan terms, including interest rate and maximum
loan-to-value ratio, are determined based upon the underwriters review of the loan application and
related data and the application of the underwriting guidelines. We employ only experienced underwriters. Our Underwriting Manager must approve the hiring of
all underwriters, including those who will be located in a regional or branch office. Our
underwriters must have had either substantial underwriting experience or substantial experience
with us in other aspects of the mortgage finance industry before becoming part of the underwriting
department. All underwriters are required to participate in ongoing training, including regular
supervisory critiques of each underwriters work. We believe that our underwriting personnel have
the ability to analyze the specific characteristics of each loan application and make appropriate
credit judgments. The level of income verification varies with program type. The underwriting guidelines
include four levels of documentation requirements for applicants, which are referred to as the
Full Documentation, Lite Documentation, Stated Income Documentation, and No Documentation
programs. The purchasers in the secondary market dictate the level of income documentation
required for a specific loan. Except for the No Documentation programs, where verification of
income is not required, we review:  
    the applicants source of income;
    calculate the amount of income from sources listed on the loan application or other
documentation;
    review the credit history of the applicant; 6




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
    calculate the debt service-to-income ratio to determine the applicants ability to
repay the loan;
    review the type and use of the property being financed; and
    review the property. Under our Full Documentation programs, applicants are generally required to submit two written
forms of verification of stable income for at least twelve months. Under our Lite Documentation
programs, the applicant may submit twenty-four months of bank statements in lieu of traditional
documentation such a tax returns and pay-stubs. Our Stated Income Documentation programs may be
accepted based upon the monthly income stated on the mortgage loan application if other criteria
are met. Our No Documentation programs do not give consideration to income. Instead, more weight
is given to the borrowers credit history and property value. All of the programs require a
telephone verification of the employment of salaried employees. In the case of purchase money
loans, under the Full Documentation program guidelines and, on all purchase loans where the
loan-to-value ratio is greater than 80%, we also verify source of funds to be deposited by the
applicant into escrow. In most cases, our underwriters determine the applicants ability to repay the loan using: (a)
a qualifying rate that is equal to the stated interest rate on fixed-rate loans, (b) the initial
interest rate on loans which provide for three years of fixed interest rate and payments before the
initial interest rate adjustment, or (c) 2% above the initial interest rate on other
adjustable-rate loans. The underwriting guidelines require that mortgage loans be underwritten
following a standard procedure that complies with applicable federal and state laws and
regulations. It also requires our underwriters to be satisfied of the value of the property to be
mortgaged based upon a review of the appraisal. In general, the maximum principal amount of loans
originated under our conventional program is $650,000; however, management may approve and make
larger loans on a case-by-case basis. Larger loans also require approval by the intended purchaser
of the loan. Automated underwriting systems are rapidly becoming the industry standard when underwriting
conventional loans. These systems can be used for underwriting loan programs such as FHA and VA;
and at times specific investors require their use. The two primary systems are the FNMAs Desktop
Underwriter and the FHLMCs Loan Prospector. Over the past few years, the trend has moved toward
the exclusive use of these systems. We currently underwrite over half of the loans originated
using these systems. We are also in the process of developing it own proprietary underwriting
system to aid in the process of underwriting those loan programs that can not be underwritten by
the Desktop Underwriter or Loan Prospector. Management evaluates the underwriting guidelines on an ongoing basis and periodically modifies
them to reflect current assessments of various issues relating to underwriting analysis. In
addition, as new loan products are developed, we adopt underwriting guidelines that we believe are
appropriate for the new products. All loans are underwritten to the standards of the intended
purchasers of the loans. The Company makes certain representations and warranties customary in the
industry relating to, among other things, accurate information, program standards, and compliance
with laws and regulations. If we are found to have breached such a representation or warranty, we
could be required to repurchase the loan. 7




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Quality Control We have implemented a loan quality control process to help enforce sound lending practices and
compliance with our policies and procedures as well the compliance requirements of agencies such as
HUD, Fannie Mae and the requirements of other purchasers of mortgages. Prior to funding a loan, we
perform a pre-funding quality control audit in which our staff re-verifies the borrowers credit
history and employment, using automated services as well as verbal verifications. In addition, an
independent appraiser appraises properties that will potentially secure the mortgage loans. A
qualified licensed independent appraiser must conduct all appraisals and the appraisal must conform
to the Uniform Standards of Professional Appraisal Practice adopted by the Appraisal Standards
Board of the Appraisal Foundation. Our personnel also review every appraisal to confirm the
adequacy of the property as collateral prior to funding. In addition, our quality assurance department audits a percentage of all loans that are
funded. The department reviews the documentation, including appraisals and verifications, for
compliance with established underwriting guidelines and lending procedures. The department also
reexamines the funding documents for accuracy, completeness and adherence to corporate, state and
federal requirements. As part of the audit process, any deficiencies discovered are reported to
senior management to determine trends and any need for additional training of personnel. Loan Funding Loans that are closed using our own credit facilities are funded through short term borrowing
on our warehouse lines of credit. We pay interest on funds advanced under the warehouse line of
credit at a pre-negotiated rate. The rate at which the Company borrows is variable in nature and
typically averages between 4.5% and 5.5%. Ocean West currently has approval for $13,000,000 in
warehouse capability. Ocean West has its primary warehouse line of $8,000,000 with Provident
Consumer Financial Services. A second line of $5,000,000 is with Warehouse One. The line with
Warehouse One continues to renew itself on an annual basis. The facilities are secured by the
mortgage loans financed through the line, related mortgage servicing agreements. and Ocean West
repays the outstanding balance under the warehouse line with the proceeds from the sale of mortgage
loans. The additional proceeds earned from loan sales also replenish working capital. 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. Payment of cash
dividends or redemption of shares is also restricted to net income after the date of the applicable
agreement computed on a cumulative basis. Our ability to finance and purchase mortgage loans depends on our ability to secure
warehousing lines with acceptable terms. Until recently we have funded the majority of our loans
through First Collateral Services. First Collateral ceased providing us funds under the line 8




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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 September 30, 2004 the
line balance was $470,758. The line is secured by the mortgage loans financed through the line and
the personal guarantees of two of the Companys officers, Marshall Stewart and Daryl Meddings. The
interest rates charged on our lines of credit with Provident Consumer Financial Services and
Warehouse One are approximately 1% higher than the rate First Collateral charged. The fees
associated with 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 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. To the extent we are not successful in using these
alternate warehousing sources, we may have to curtail our mortgage loan origination activities,
which would also have a material adverse effect on our operations and financial condition. To help address the lower limits on the lines of credit, in March 2003, we began participating
in a fast funding program offered by Union Federal Bank, one of the regular purchasers of our
loans. This program has significantly eased the restraints on funding imposed by the limits on the
lines of credit by allowing us to remove loans that are funded through our warehouse lines of
credit in a shorter period of time, freeing up the line for new loans. Participation in the
program is an additional $150 fee per loan. The program is designed to roll loans on and off the
warehouse lines of credit within 48 to 72 hours of funding. However, we do not receive the profits
from the loan at the time it is taken off the warehouse lines of credit. The profits are paid when
the file has been reviewed and cleared, typically within seven to ten days, which is consistent
with our current revenue recognition policy. Sale of Loans The percentage of originated loans that were funded using the Companys warehouse lines of
credit was 18% of the total dollar volume for the year ended September 30, 2004. We generally sell
substantially all of the loans originated. Once we have funded a loan through a credit facility,
the next objective is to sell the loan as quickly as possible, which typically happens in ten to
fifteen business days. A reconciliation package is prepared for our accounting department. The
file then moves on to the shipping department where it is copied and stacked to specific investor
guidelines. After we receive the final closing statement, usually two to three days after funding,
the file is sent to the appropriate investor and revenue is recognized. We typically make general
representations and warranties to purchasers of the mortgages relating to borrower disclosures,
closing procedures, credit documentation, follow-up documentation and accuracy of representations.
In many cases, purchasers of the mortgages will require language in the documentation mandating
that we return all or a portion of the premium and any premium paid for servicing rights for loans
that are paid off early, typically prior to the end of the first six months. In most cases, we are
only liable for premium recapture if the loan is being prepaid as a result of a refinancing through
us or one of our affiliates. Most of our loans are purchased by the following institutional investors: GreenPoint Mortgage
Funding Inc., Indy Mac Bank F.S.B., Banco Popular, First Horizon Home Loan Corporation,., F.S.B.,
Union Federal Bank, Credit Suisse First Boston, Washington Mutual, F.A., 9




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Purchasers of loans vary from time to time as the purchasers get in and out of the market. For the
year ended September 30, 2004 four buyers purchased in excess of 10% of our production funded on
our warehouse lines of credit: Union Federal purchased 23%, Credit Suisse First Boston purchased
25%, Banco Popular purchased 20%, and The Winter Group purchased 10%. For the year ended September
30, 2003, four buyers purchased in excess of 10% of our production funded on our warehouse lines of
credit: Union Federal purchased 27%, Credit Suisse First Boston purchased 15%, U.S. Bank purchased
11%, and First Nationwide purchased 10%. For the six month period ended September 30, 2002, two
buyers purchased in excess of 10% of our production funded on our warehouse lines of credit: First
Nationwide purchased approximately 15% and U.S. Bank purchased approximately 12%. Our secondary
marketing department chooses the purchaser for a particular loan. Commitments to purchase loans
are made on a loan-by-loan basis. We are not required to provide a certain number of loans to any
purchaser. Occasionally, two to three times per year, we are required to repurchase loans from investors.
The repurchase price is equal to the amount of the original purchase price, plus interest and fees
associated with the loan, less any payments made by the borrower. Our disposition of the loan upon
repurchase depends upon the reason for the repurchase. In most cases, the repurchase occurs
because the investor believes the loan does not meet guidelines. Usually, in these cases, we are
able to sell the loan to another investor as a seasoned loan with a payment history in three to six
months time. In the event of resale, there is little ultimate effect on our results of operations
other than a delay in recognition of income. In some cases, based upon our historical experience a
loss potential of ten to fifteen percent of the loan balance does exist. If the loan is not
resalable as is, we generally work with the borrower to refinance the loan into a different loan
program. On rare occasions, we are unable refinance or sell the loan and are forced to hold the
loan for a longer period of time. When this occurs, the institution extending us the warehouse
line of credit will require us to pay down the credit facility at a rate of 10% of the principal
balance per month until paid in full. Mortgage Loan Servicing Rights We currently sell the servicing rights on essentially all the loans we fund. At the time the
loan is sold, the purchaser of the loan typically pays us a premium for the release of the
servicing rights. The premium is paid for the right to collect the servicing fees for the period
the loan remains on the investors books. A typical spread for an A grade loan is 1/4 of 1%
annually. In the past, we occasionally retained servicing rights, but no longer do so on a regular
basis. Since we are not currently set up to service loans in-house, we contract with a third party
to sub-service any loans for which we have servicing rights. The sub-servicer is responsible for
accepting and posting all payments, maintaining escrow accounts and reporting to the end investors,
such as Fannie Mae. For this service, we typically pay the sub-servicer a monthly fee averaging $6
to $7 per loan. As of September 30, 2004, the sub-servicer sub-serviced 44 loans with
approximately $4,885,940 in total principal balance. The amounts paid to the sub-servicer will
decline as the loans are paid off. 10




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Regulation The consumer finance industry is highly regulated; therefore Ocean West Enterprises is subject
to extensive and complex rules and regulations of, and examinations by, various federal, state and
local government authorities. These rules impose obligations and restrictions on our loan
origination, credit activities and secured transactions. In addition, these rules limit the
interest rates, finance charges and other fees that we may assess, mandate extensive disclosure to
borrowers, prohibit discrimination, and impose multiple qualifications and licensing obligations.
Failure to comply with these requirements may result in, among other things, loss of HUD approved
status, demands by purchasers of mortgages for indemnification or mortgage loan repurchases,
exercise of rights of rescission of mortgage loans by borrowers, class action lawsuits by
borrowers, administrative enforcement actions, and civil and criminal liability. We use our
quality assurance program to monitor compliance and, based upon assessments of our compliance
staff, believe that we are in compliance with applicable rules and regulations in all material
respects. Our loan origination activities are subject to the laws and regulations in each state in which
we conduct lending activities. For example, state usury laws limit the interest rates that we can
charge on our loans. In connection with plans to expand our geographic reach, we have investigated
requirements in additional states. We currently hold licenses or exemption certificates in
thirty-five states. We do not have operations or significant loan activity in all of these states
at this time. Our current operations and loan activity is primarily in California. California
originations made up 45.4% of our total volume based on units. Other states that we originated
more than 1% of our total volume based on units were Louisiana (3.7%), Georgia (3.6%), Indiana
(3.6%), Nevada (3.6%), Ohio (3.5%), Florida (3.4%), Missouri (3.4%), Connecticut (3.0%),
Washington, Arizona, South Carolina, Texas, Tennessee, Michigan (2%), Massachusetts, Oregon,
Mississippi, and Kansas (1%). Our lending activities are also subject to various federal laws, including the
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Real
Estate Settlement Procedures Act and the Home Mortgage Disclosure Act. We are not currently making
loans subject to the Homeownership and Equity Protection Act of 1994. More specifically, we are
subject to disclosure requirements under the Truth-in-Lending Act and Regulation Z promulgated
thereunder. The Truth-in-Lending Act is designed to provide consumers with uniform, understandable
information relating to specify terms and conditions of loan and credit transactions and, by
standardizing the form of information provided, facilitate comparisons among available credit
options. The act also gives consumers the right to change their minds about a credit transaction
by guaranteeing consumers a three-day right to cancel some credit transactions, such as loans of
the type we originate. In addition, the Truth-in-Lending Act gives consumers the right to rescind
the loan transaction if the lender fails to provide the required disclosures to the consumer. We
are also required to comply with the Equal Credit Opportunity Act of 1994 and Regulation B
promulgated thereunder, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act of
1975 and the Home Mortgage Disclosure Act of 1975. The Equal Credit Opportunity Act prohibits
lenders from discriminating against an applicant for a loan on the basis of race, color, sex, age,
religion, national origin or marital status. Regulation B prohibits lenders from requesting some
types of information from 11




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loan applicants. The Fair Credit Reporting Act requires lenders to supply applicants with
information relating to the denial of any loan application. Beginning with loans originated in
1997, the Home Mortgage Disclosure Act requires that we file annual reports with HUD for collection
and reporting of statistical data in loan transactions. The Real Estate Settlement Procedures Act
mandates disclosures concerning settlement fees and charges and mortgage servicing transfer
practices. It also prohibits the payment or receipt of kickbacks or referral fees in connection
with the performance of settlement services. The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act) was signed into law by President Bush on
July 30, 2002 in response to public concerns regarding corporate accountability in connection with
the recent accounting scandals at Enron and WorldCom. The stated goals of the Sarbanes-Oxley Act
are to increase corporate responsibility, to provide for enhanced penalties for accounting and
auditing improprieties at publicly traded companies and to protect investors by improving the
accuracy and reliability of corporate disclosures pursuant to the securities laws. The
Sarbanes-Oxley Act is the most far-reaching U.S. securities legislation enacted in some time. The
Sarbanes-Oxley Act generally applies to all companies, both U.S. and non-U.S., that file or are
required to file periodic reports with the Securities and Exchange Commission (SEC), under the
Securities Exchange Act of 1934 (Exchange Act). The Sarbanes-Oxley Act includes very specific
additional disclosure requirements and new corporate governance rules, requires the SEC and
securities exchanges to adopt extensive additional disclosure, corporate governance and other
related rules and mandates further studies of certain issues by the SEC and the Comptroller
General. The Sarbanes-Oxley Act represents significant federal involvement in matters traditionally
left to state regulatory systems, such as the regulation of the accounting profession, and to state
corporate law, such as the relationship between a board of directors and management and between a
board of directors and its committees. Of the new requirements imposed by the Sarbanes-Oxley Act,
among others, we currently have no independent directors on our board of directors, no audit
committee, compensation committee nor nomination committee and we do not have any independent
financial experts on our board of directors. As a result, we currently would not be eligible to
have our shares listed on the NASDAQ, AMEX or NYSE, even if we were to meet the other listing
requirements of such self-regulatory organizations. We conduct telemarketing sales through which a portion of our retail loan business is
generated. In October 2003, a national do-not-call registry which a consumer can join to prevent
unwanted telemarketing calls became operational pursuant to rules promulgated by the Federal
Communications Commission as required by the Telephone Consumer Protection Act of 1991. In
addition, a number of states have enacted laws regulating telemarketing sales activities some of
which establish do-not-call registries and we will be required to comply with this new national
registry and will be prohibited from placing unsolicited marketing calls to any consumer who has
placed their name in the registry. The laws and regulations under which we operate are subject to change at any time. In
addition, new laws or regulations may be added at any time. There can be no assurance that any
change or addition of laws will not make compliance more difficult or more extensive, restrict
ability to originate, broker, purchase or sell loans, further limit the amount of commissions, 12




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interest or other charges which may be earned, or otherwise adversely affect our business or
prospects. Competition 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
array of competitive products, we compete with these entities by striving 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. Employees As of December 30, 2004, we had approximately 203 employees of which 166 are primarily
employed in sales approximately 30 in clerical positions and the remaining 7 employees inadministrative positions. 
 Item 2. Description of Property. The Companys principal operating offices are located at 15991 Redhill Ave., Suites 100 &110,
Tustin, California. We lease approximately 16,320 square feet of office space under a lease the
current term of which expires November 30, 2007. The two founding shareholders, Marshall Stewart
and Daryl Meddings, personally guaranteed the lease. Rent is currently $34,059 per month plus
overrides and increases annually beginning December 1, 2003 to $35,972 for the last year of the
term. We have the right to renew the lease for one additional sixty-month term. During the renewal
term, the rent will be adjusted to the then current market rate. We also have 57 branch offices of
which all are leased. The branch offices are leased properties of varying types. Lease periods
are typically twenty-four to thirty-six months in length. The average lease payment is
approximately fifteen-hundred dollars per month per office. The Company evaluates on a continuing basis the suitability and adequacy of all of its branch
office locations, and has active programs of relocating or closing any as necessary to maintain
efficient and attractive facilities. The Company believes its present facilities are adequate for
its operating purposes. 13




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Our primary branch offices are located at: Name
    
    AddressOcean West Funding
    
    3260 E. Indian School Rd.
    
    Phoenix, AZ 85018Ocean West Funding
    
    504 Ojai
    
    Granite Bay, CA 95746Ocean West Funding
    
    1514 S. Broadway
    
    Santa Ana, CA 92707AYI Financial
    
    4A N. Euclid Ave
    
    National City, CA 91950Pacific Loan Company
    
    40258 Hwy. 41, Ste. A
    
    Oakhurst, CA 93644Ocean West Funding
    
    25950 Acero, Suite 310
    
    Mission Viejo, CA 92691Ocean West Funding
    
    1954 Placentia Ave., #206
    
    Costa Mesa, CA 92627Ocean West Funding
    
    150N Santa Anita Blvd #890
    
    Arcadia, CA 91006Visionary Mortgage
    
    3353 Bradshaw Rd., #226
    
    Sacramento, CA 95827Ocean West Funding
    
    16710 Smokey Point Blvd.
    
    Arlington, WA 98223Capital Mortgage Solutions
    
    6929 Sunrise Blvd., Ste. 206
    
    Citrus Heights, CA 95610Ocean West Funding
    
    1215 Thomaston Ave.Bldg. 2, Ste. 7
    
    Waterbury, CT 06704Gold Star Mortgage
    
    3737 N. Meridian St., #204
    
    Indianapolis, IN 46208Ocean West Funding
    
    12510 W. 62 Terrace, #105
    
    Shawnee, KS 66216Ocean West Funding
    
    483D Monroe Turnpike
    
    Monroe, CT 06468CD Lending
    
    6330 Sandhill.Rd
    
    Las Vegas, NV 89120Straight Line Mortgage
    
    17125 S.W. Boones Ferry Rd.
    
    Lake Oswego, OR 97071Ocean West Funding
    
    2320 East North St.
    
    Greenville, SC 29650Ocean West Funding
    
    490 Mathis Airport Rd
    
    Suwanee, GA 30024Ocean West Funding
    
    955 S. Virginia St
    
    Reno, NV 89502Ocean West Funding
    
    25202 Crenshaw Blvd
    
    Torrance, CA 90505Ocean West Funding
    
    1578 West Jackson
    
    Painesville, OH 44077Perfect Mortgage
    
    9309 Office Park Circle
    
    Elk Grove, CA 95758Ocean West Funding
    
    2014 Downing Dr
    
    Pensacola, FL 32505No Bull Mortgage
    
    9805 NE 116th St., #7473
    
    Kirkland, WA 98034
 
 Item 3. 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. 14




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of the Companys security holders during the last quarter
of the fiscal year ended September 30, 2004. 
 PART II 
 Item 5. Market for Common Equity and Related Stockholder Matters. Ocean West Holding Corporation began trading on August 12, 2002 and shares of our common stock
are listed on the over-the-counter bulletin board (OTCBB) governed by the NASD. Our common stock
trades under the symbol OWHC and the warrants trade under the symbol OWHCW. The quotations
listed below reflect interim dealer prices without retail mark-up, mark-down or commission and may
not represent actual transactions. Trading of our common stock has been minimal with limited or
sporatic quotations and therefore we believe there is no established public market for the common
stock. There is no established public market for the warrants. The following table sets forth the high and low bid quotations per share or warrant of the
Companys registered securities for each quarter during the last two fiscal years, as reported by
OTCBB. Common StockCommon Shares
    
    
    Purchase WarrantsHigh
    
    
    Low
    
    
    High
    
    
    LowYear Ended September 30, 2003:Quarter Ended December 31, 2002
    
    $
    0.51
    
    
    $
    0.15
    
    
    None
    
    NoneQuarter Ended March 31, 2003
    
    $
    0.35
    
    
    $
    0.15
    
    
    None
    
    NoneQuarter Ended June 30, 2003
    
    $
    0.20
    
    
    $
    0.07
    
    
    None
    
    NoneQuarter Ended September 30, 2003
    
    $
    0.40
    
    
    $
    0.13
    
    
    None
    
    NoneYear Ended September 30, 2004:Quarter Ended December 31, 2003
    
    $
    0.35
    
    
    $
    0.15
    
    
    None
    
    NoneQuarter Ended March 31, 2004
    
    $
    0.45
    
    
    $
    0.09
    
    
    None
    
    NoneQuarter Ended June 30, 2004
    
    $
    0.27
    
    
    $
    0.11
    
    
    None
    
    NoneQuarter Ended September 30, 2004
    
    $
    0.25
    
    
    $
    0.15
    
    
    None
    
    None
 As of September 30, 2004 there were 1,122 holders of record of the common shares, two holders
of record of the Class B common shares, no holders of record of the Class D common shares, and no
holders of record of the common stock purchase warrants. We did not pay any cash dividends on any common shares, but did pay dividends on the preferred
shares. We do not intend on paying any dividends on common shares in the foreseeable future. In addition, our warehouse line providers restrict our ability to pay
cash 15




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dividends. The decision to pay dividends on common shares will depend on our situation with
regard to profitability, cash availability and credit line restrictions. Currently, we do not have any securities authorized for issuance under any equity compensation
plans. Except as described below, there were no sales of unregistered securities by Ocean West during
the year ended September 30, 2004. In November 2002, we issued 500 shares of our Series M
preferred stock to one investor, at a purchase price of $1,000 per share for net cash proceeds of
$500,000. The issuance was made in reliance of Section 4(2) of the Securities Act of 1933. During
fiscal year ended September 30, 2003, the Company redeemed all 500 shares of its Series M
preferred stock for $1000 per share. Ocean West registered 5,247,676 common shares and 3,000,000 common stock purchase warrants on
a registration statement (file number 333-86484) which became effective on August 12, 2002. On
August 12, 2002 all of the warrants and 300,000 of the shares were sold to the underwriter,
Monogenesis Corporation, most of which were distributed by Monogenesis to its shareholders as
described in the registration statement. Each warrant may be exercised by holders to purchase one
common share at a price of $1.25 per share through June 12, 2003. The remaining shares registered
represent the 3,000,000 common shares underlying the warrants and 1,965,776 shares held by security
holders. Ocean West received $13,104 for such shares and warrants which it used as working
capital. In June 2003, 1,000 warrants were exercised with net proceeds of $1,250 received by Ocean
West which it used as working capital. The remaining warrants expired in accordance with their
terms as of June 30, 2003. There were no other net offering proceeds to Ocean West as the
unexercised warrants expired. The selling security holders are expected to offer their shares for sale from time to time
(but not through Monogenesis). The offering price for the sale of selling shareholder shares until
the shares were quoted on the OTC Bulletin Board was $1.70 per share. Ocean West does not know the
amount, if any, of shares sold by selling shareholders. On July 1, 2004, the
Company executed a subscription agreement (July
Agreement) with CDA. The July Agreement provides that the
Company would sell and CDA would subscribe for 1,500,000 shares
of senior preferred stock of the Company for $1,500,000. On July 15, 2004, Marshall L. Stewart, Daryl S. Meddings, Enfo Loan Corporation, Kingsley and
Nancy Cannon and Dale and Suzanne Delmege agreed to sell 4,921,930 of their shares of common stock
of the Company to Consumer Direct of America, a Nevada corporation (CDA) in exchange for 622,388
shares of CDA (the Transfer). The Transfer constitutes a change in control of the Company. On August 1, 2004, the
Company executed a subscription agreement (August
Agreement) with CDA. The August Agreement provides that the
Company would sell and CDA would subscribe for 500,000 shares of
senior preferred stock of the Company for $500,000. On September 1, 2004,
the Company executed a subscription agreement (September
Agreement) with CDA. The September Agreement provides that the
Company would sell and CDA would subscribe for 250,000 shares of
senior preferred stock of the Company for $250,000. On September 28, 2004,
the Company executed a cancellation agreement (Cancellation
Agreement) with CDA. The Cancellation Agreement provided that
the Company and CDA agree to cancel and rescind the July Agreement,
the August Agreement, and the September Agreement. The Agreement
also provides that the Company would upon board approval issue
2,250 shares of preferred stock of Ocean West Enterprises for a
value of $1,000 per share or $2,250,000, which was previously
subscribed to by CDA pursuant to the July Agreement, the August
Agreement, and the September Agreement, to CDA. During
the quarter ended September 30, 2004, the Ocean West Enterprises
issued 2,250 shares at a value of $1,000. At September 30,
2004 there was a stock subscription receivable of $1,022,425 of which
has subsequently been paid in full. 
 Item 6. Managements Discussion and Analysis or Plan of Operation. This section should be read in conjunction with Item 7. Financial Statements. 16




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Forward-Looking Statements Statements contained in this Form 10-KSB 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, intends 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 ableto
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. Critical Accounting Policies As set forth in greater detail in the Footnote (1) to Ocean Wests 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. New Accounting Pronouncements In June 2002, the FASB issued Statement No. 146, Accounting for Costs Associated with Exit or
Disposal Activities. This statement nullifies EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring). Statement No. 146 is different from EITF
Issue No. 94-3 in that Statement No. 146 requires that a liability be recognized for a cost
associated with an exit or disposal activity only when the liability is incurred, that is when it
meets the definition of a liability in the FASBs conceptual framework. Statement No. 146 also 17




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establishes fair value as the objective for initial measurement of liabilities related to exit or
disposal activities. In contrast, under EITF Issue 94-3, a company recognized a liability for an
exit cost when it committed to an exit plan. Statement No. 146 is effective for exit or disposal
activities that are initiated after December 31, 2002. The adoption of Statement No. 146 can be
expected to impact the timing of liability recognition associated with any future exit activities. In November 2002, the FASB issued FASB Interpretation No. 45 (FIN45), Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to
Others. This interpretation elaborates on the disclosures to be made by a guarantor in interim and
annual financial statements about its obligations under guarantees issued. FIN 45 also clarifies
that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair
value of the obligation undertaken. The Company was required to adopt FIN 45 on December 31, 2002.
The adoption of FIN 45 did not have a material effect on the Companys financial position or
results of operations. In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, effective for financial instruments entered into
or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. This statement establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a freestanding financial instrument that is within its
scope as a liability (or an asset in some circumstances). The adoption of SFAS 150 will not have an
impact on the Companys consolidated financial position, results of operations or cash flows. Results of Operations Our revenues are currently derived primarily from loan origination fees and net gain on the
sale of mortgage loans. 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 with an average premium.
Conventional conforming loans have lower premiums while government and Alternative A and Sub-Prime
products have higher premiums. Fees received also vary depending on loan type and origination
source and generally range from $495 to $995 per loan. For example, typically FHA refinance loans
generate $495 in fees and conventional conforming loans generate $995 in fees. Real estate purchase transactions and therefore the mortgage banking industry are subject to
seasonal trends. These trends generally reflect nationwide home sale patterns. Such sale
typically peak in the spring and summers months while declining in the late fall and winter months.
However, the refinance segment of the industry is less seasonal, changing instead as interest
rates rise and fall. Ocean West Holding Corporation changed its 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. 18




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Year Ended September 30, 2004, Compared to Year Ended September 30, 2003 During the fiscal year ended September 30, 2004, we made 3,296 loans with an aggregate dollar
value of approximately $602,946,521 compared to 5,928 loans with an aggregate dollar value of
approximately $1,128,717,574 for the year ended September 30, 2003. Most of the loans originated
were in principal amounts between $100,000 and $180,000. Net revenues from origination and/or sale of loans decreased during the fiscal year ended
September 30, 2004 to 45.3% from the year ending September 30, 2003. The decrease is primary due to
a reduction of loan origination due to the overall market conditions. Approximately $1.0 million
of the decrease can be attributed to the Company funding its loan production through Freedom
Mortgage, which then paid expenses relating to such. This also attributed to a decrease in
operating expenses of approximately $1.0 million As
a percentage, total operating expenses were 135.1% of the total revenues for the year
ended September 30, 2004, as compared to 97.4% of total revenues for the year ending September 30,
2003. The increase as a percentage is due to the reduction of net revenues of 44.6% from the prior
year. Operating expenses decreased 24.2% from 12.8 million to 9.7 million as compared to the year
ended September 30, 2003. The decrease is related to Freedom Mortgage assuming the expenses as an
offset to loan production it received for the quarter ended March 31, 2004. Salary, wages and
payroll taxes represented 51.0% of total revenues as compared to 50.5% of total revenues for the
year ending September 30, 2003. Salary, wages and payroll taxes decreased $3 million from $6.6
million for the year ended september 30, 2003 to $3.6 million for the year ended September 30,
2004. As a percentage of total revenues, administrative expenses
increased to 82.2% for the year
ended September 30, 2004 , as compared to 45.4% for the year ended September 30, 2003. General and
administrative expenses decreased 1.1% or $66,000 for the year ended September 30, 2004 as compared
to the year ended September 30, 2003. General and administrative expenses were primarily made up of
rent, advertising services, fees for professional services, insurance, office expenses and
interest. Salaries, wages and payroll taxes decreased due to the Companys downsizing efforts
during the later part of its fiscal quarter ended September 30, 2003 of which efforts were not
realized until fiscal year ended September 30, 2004. Rent, insurance and related office expenses
decreased due to the Companys downsizing efforts. Rent, insurance and related office expenses
increased slightly towards the end of the fiscal year ended September 30, 2003 as the Company
increased its corporate square footage by 3,160 square feet, due to moving our retail division from
another location into the corporate location in order to increase efficiencies. Depreciation and
amortization decreased 54,000 or 28% for the year ended September 30, 2004 as compared to the year
ended September 30, 2003. As a percentage of revenues depreciation and amortization increased to
1.9% of total revenues, due to the decrease in revenues as compared
to 1.5% of total revenues for
the year ended September 30, 2003. Ocean
West had loss from operations of $2,520,921 for the year ended September 30, 2004
compared to income of $340,086 for the year ended September 30,
2003. We had a net loss of $2,697,879 for the year ended September 30, 2004, net income of $105,155 for the year ended September
30, 2003. 19




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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 increases too rapidly, 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. The revenue is not
recognized until the loan is sold. Thus, it is crucial that we closely monitor loan volume. Since inception through September 30, 2004, the Company has suffered recurring losses from
operations; we have incurred aggregate net losses of $6,149,853. This raises 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, which are
included with this annual report. Net
cash used for operating activities for the year ended
September 30, 2004 was $97,748
compared to net cash provided by operating activities for the year ended September 30, 2003 of
$12,125,089. The primary sources of cash used for the year ended September 30, 2004 was from a
decrease in mortgage loans held for sale and receivable of loan sold of $1,070,812 and $574,475,
respectively, a decrease in other current assets of $760,571 offset by the Companys net loss for
the year ended September 30, 2004. The primary source of cash provided by for the year ended
September 30, 2003 was from a decrease in mortgage loans held for sale of $12,607,709. As
investors purchase loans, the amounts advanced for such loans through the warehouse line 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 used in investing activities during the year ended September 30, 2004 was $1,050,086,
which was primarily used to purchase property and equipment of $27,660 and the issuance of notes
receivable of $1,022,425. Net cash used in investing activities during the year ended September 30,
2003 was $12,674, which was primarily used to purchase property and equipment of $43,383 which was
offset by the proceeds from the sale of property of $26,104. Net cash provided by financing activities for the year ended September 30, 2004 was $813,945,
consisting primarily of payments under the warehouse line of credit
of $1,506,431 and net proceeds of
$289,875 on notes payable and long-term debt (including stockholder notes payable) payment of $53,091 on
capital leases and preferred stock dividends of $153,008, these items were offset by the issuance of preferred stock of
$2,250,000. Net cash used for financing activities for the year ended September 30, 2003 was
$11,842,308 consisting primarily of payments under the warehouse line of credit of $11,983,870, and
payments of $489,197 on notes payable and long-term debt (including stockholder notes payable), payment of $108,297 on capital leases,
preferred stock dividends of $216,729 and $500,000 for the redemption of preferred stock. These
items were offset by proceeds from notes payable and long-term debt of $915,888, proceeds from the
exercise of warrants of $1,250, as well as proceeds from the issuance of preferred stock of
$500,000. 20




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Based on dollar volume, during the year ended September 30, 2004 we funded approximately 18%
of our loans through our warehouse credit facilities. Loans that 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 5% and 6% per
annum. The average time between funding a mortgage and the receipt of proceeds from the sale of
the mortgage was approximately fifteen days during fiscal 2002 and continued as such for the year
ended September 30, 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 September 30, 2004 and September 30, 2003
the outstanding balance with First Collateral Services was $470,758 and $846,266, respectively. .
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, 2002 was 4.311%. Currently we fund loans through our warehouse lines of credit with Provident Consumer
Financial Services and Warehouse One Acceptance Company IV, LLC. As of September 30, 2003 the
outstanding balance with Provident Consumer Financial Services and Warehouse One was $6,455,760 and
$712,950, respectively. The lending limit on the line of credit through Provident Consumer
Financial Services is currently $8,000,000 and the Warehouse One lending limit is $5,000,000. 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 interest rates charged on our lines of
credit with Provident Consumer Financial Services and Warehouse One are approximately 1% higher
than the rate First Collateral charged. 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. Should we 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 September 30, 2004 the interest rate charged on our warehousing lines of credit with
Provident Consumer Financial Services and Warehouse One were approximately 4.43% and 5.61%,
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 21




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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 are 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 year ended September 30, 2004 was 3.6% based on dollar volume, compared to
9.2% for the year ended September 30, 2003. In addition, we frequently draw in excess of the
maximum amount provided for in the agreement on the primary line of credit. In the past, we have also funded operations through the issuance of our equity securities.
From April 1, 2000 through September 30, 2002, we received proceeds of $335,000 from the issuance
of 1,340 shares of Ocean West Enterprises common stock which were exchanged for 187,600 common
shares of Ocean West, $1,057,505 from the issuance of Ocean West Enterprises and Ocean West
preferred stock. From April 1, 2000 through September 30, 2002, we redeemed $10,000 of common
stock, redeemed $185,500 of preferred stock, converted 3,700 shares of preferred stock with a total
stated value of $967,500 to common stock, issued 250,400 Class B common shares in connection with
the exchange of shares of Ocean West Enterprises, converted 40,304 shares of Class B common stock
to 40,304 shares of common stock, issued 388,800 common shares in connection with the distribution
under the registration statement which became effective in August 2002 and received $10,104 in
proceeds for such shares, and paid dividends on preferred stock of $471,873. Of the shares that
were redeemed, $54,000 was redeemed in connection with a write off of a note receivable. On July 15, 2004, Marshall L. Stewart, Daryl S. Meddings, Enfo Loan Corporation, Kingsley and
Nancy Cannon and Dale and Suzanne Delmege agreed to sell 4,921,930 of their shares of common stock
of the Company to Consumer Direct of America, a Nevada corporation (CDA) in exchange for 622,388
shares of CDA (the Transfer) for an approximate value of $1,178,802, based on the average trading
prices of the respective stocks for the month of June 2004. The Transfer constitutes a change in
control of the Company. During the fourth quarter of fiscal year end September 30, 2004, 2,250
shares of the outstanding preferred stock of Ocean West Enterprises were exchanged for stock
subscription receivable of $2,250,000. Subsequent to September 30, 2004, the
remaining balance of the receivable had been paid. In March 2002, 3,700 shares of the outstanding preferred stock of Ocean West Enterprises were
exchanged for 774,000 common shares of Ocean West based on the following formula: stated value divided by five with the result multiplied by four. Ocean West
Enterprises also redeemed 15 shares of the preferred stock. The remaining 5,855 preferred shares
were exchanged for 5,855 preferred shares of Ocean West. In September 2002, the Company issued 500
shares of Preferred Stock Series M at a price of $1,000 per share. 22




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During fiscal year ended September 30, 2004, capital leases were incurred for equipment
purchases of $17,749. During fiscal year ended September 30, 2003, we incurred capital lease obligations of
$129,939 for equipment purchases. Management currently believes that cash flows from operations will be sufficient to meet the
Companys current liquidity and capital needs at least through fiscal 2005. In response to the
reduction in loan volume due to the rising interest rate market that began in July 2003, we have
reduced fixed overhead primarily through staff reductions. So long as there are no material
adverse changes to the terms or availability of our warehouse lines of credit, we believe we can
meet our liquidity and capital needs at current production levels at least through fiscal 2005.
However we are currently exploring possible liquidity sources either through additional borrowings
or potential capital partners to enable us to increase our loan production. Additionally, we
believe a development of a market in our stock should aid in increasing capital. We intend to
retain earnings for the foreseeable future to help increase liquidity. Future offerings are
possible, although we do not currently have any specific offering plans. In the event we are
required to raise additional equity financing, there can be no assurance that any such equity
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. Any equity financing could result in dilution to existing
stockholders. In the short term, our goal is to maintain current production levels with no significant
increases or decreases until our liquidity increases. We believe that an increase in net income
will aid liquidity. Interest Rate Risks The uncertainty, which potentially has the single largest effect on the results of operations
of the Company, is interest rate trends. Trends in interest rates are not only important to the
refinance business, but are also very important in the purchase market as well. As interest rates
rise, more individuals are eliminated as potential borrowers. The reason for this is simple - as
interest rates get higher, so do the mortgage payments. Higher payments mean fewer people have the
ability to qualify for loans. Historically, a rising interest rate market is more difficult for
mortgage bankers like us to deal with than for banks. The reason for this is that 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 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 banks still retain a
competitive advantage. Inflation has an impact on us because it typically has an impact on 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 Bank will revise short-term interest rates to
keep inflation in check. This concern ultimately affects interest rates. The primary market risks that we face are interest rate risks. Interest rate movements affect
the interest expense on our warehouse lines of credit, the interest income earned on loans 23




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held for sale, the value of mortgages held for sale and the ultimate gain recognized on mortgage loans which

are sold. In a high interest rate environment, borrower demands for mortgage loans, especially
refinancing of existing mortgages, decline. Higher interest rates may also adversely affect the
volume of mortgage loans. In a low interest rate market, typically one in which the interest rates
have declined sufficiently to make refinancing for lower rates economical, we may incur early
pay-off penalties when significant number of loans we originate are refinanced within the first six
months of the loan being sold to an investor. We protect against interest rate risks to the extent we can by pre-selling most loans to
investors prior to funding, locking in rates and returns. The method of locking in rates and
returns varies from investor to investor. Some investors will commit to rates by telephone while
others require written commitments via facsimile or e-mail. The investor responds with a
commitment or trade number upon confirmation. At that point, the rate and purchase price for that
loan are guaranteed for a definite period of time. We have the option with most investors to lock
in rates for either a best efforts or mandatory delivery. A mandatory delivery brings the best
price, typically 1/4 of 1% higher, but requires us to deliver the loan within the committed time
frame. If we do not meet the deadline, we may have to pay a penalty, usually ranging from $300 to
$1,000. The lock period that we give to the broker/borrower is typically a minimum of five days
before the loan package needs to be delivered to the investor. The loan must be in fundable form
when it is delivered to the investor. This means that both the credit and the collateral packages
must be complete. If this is not the case, which happens rarely, the investor may re-price the
loan. In such event, if the market has deteriorated, we have some interest rate risk. We also monitor and work to match the interest rates we charge on our loans to the interest
rates on the warehouse line of credit used to fund the loan. Since the time period that the
financing for any one loan is outstanding is short, typically ten to fifteen business days, the
risk of a negative interest rate gap continuing for an extended period time is lessened. Upon sale
of the loan, the interest rate risk shifts to the investor. In the past, management has at times
used hedging strategies to lessen the risks arising out of rising and falling interest rates, but
is not currently using hedging strategies due to the complexities involved in hedging and personnel
needed to properly manage it. Risk Factors Relating to Our Business and Our Industry 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.  
    the Company has suffered recurring losses from operations, has an accumulated
deficit as of September 30, 2004, that raise substantial doubt about the Companys
ability to continue as a going concern;
    the Companys dependence on its warehouse lines of credit, the limit of which have
been reduced. 24




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
    the Companys need for additional funding sources so that its ability to originate
and fund loans is not impaired; and
    the Companys ability to compete with banks and other mortgage lenders that are
significantly larger. If we are unable to maintain adequate funding sources, our ability to originate and fund
loans will be impaired.Our ability to originate and purchase mortgage loans depends to a large
extent upon our ability to secure financing upon acceptable terms to fund and hold the mortgage
loans until sold. We currently fund all but a few of the mortgage loans we purchase and originate
through credit facilities with commercial banks and financial institutions collateralized by loan
purchase agreements. On rare occasions, we fund loans out of cash flow without using our credit
facilities. These agreements are generally terminable at will by either party and must be renewed
each year. Our borrowings are in turn repaid with proceeds received when mortgage loans are sold.
We currently rely on Provident Consumer Financial Services and Warehouse One to provide our primary
credit facilities for our loan originations and purchases. Any failure to renew or obtain
adequate funding under our financing facilities or other financing arrangements, or any substantial
reduction in the size of or increase in the cost of such facilities, could have a material adverse
effect on our business, results of operations and financial condition. To the extent we are not
successful in maintaining or replacing existing financing, we may have to curtail our mortgage loan
origination and purchase activities, which could have a material adverse effect on our operations
and financial condition. In the past, we have also funded operations through the issuance of our preferred stock. In
the event we are required to raise additional equity financing, there can be no assurance that any
such equity 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. Any equity financing could result in dilution to existing
stockholders. General economic conditions may adversely affect our business.Economic conditions
affect the overall level of activity in the mortgage business. The decision to buy, sell or
refinance a residence is affected by such economic conditions as the overall growth or decline of
the economy, the level of consumer confidence, real estate values, interest rates and investment
returns expected by the financial community. These conditions can affect the number and size of
mortgage loans of the types we typically originate and make these mortgage loans less attractive to
borrowers or to investors in the mortgages. In addition, a decline in real estate values will have
an adverse effect on the loan-to-value ratios for the related mortgage loans, weakening the
collateral coverage and resulting in greater exposure in the event of a default. This greater exposure to default could make it more difficult for us to obtain interim
financing for mortgage loans we originate or purchase or decrease the availability of purchasers of
such mortgage loans. We are likely to originate and sell fewer mortgage loans if interest rates rise.In
periods of rising interest rates, historically the demand for mortgage loans has declined which 25




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could result in lower revenues for us. The refinancing segment of the mortgage business is usually
the first segment affected. The reason is that as interest rates rise, the costs of refinancing
outweigh any interest rate saving eliminating those who are refinancing solely to reduce their
interest rate. For the year ended September 30, 2004, refinance loans made up approximately 60% in
total dollar volume of our loans. Rising interest rates also affect the purchase segment of the
mortgage business. As interest rates increase, payment amounts rise decreasing the number of
potential borrowers who feel they can afford the payments and who qualify for the mortgages. Interest rate fluctuations can affect the profitability of our mortgage loans.
Changes in interest rates can affect the volume, net interest income and sale of mortgage loans
originated and purchased by us. When we purchase or originate a loan, we usually have a commitment
from a third party to purchase that loan. Generally, we fund the loan using borrowings from our
lines of credit that are limited to specific uses and are known as warehouse lines of credit. The
warehouse line of credit is repaid upon the sale of the warehoused loans. Before we sell the
mortgage loan, we are entitled to receive interest income on the loan from the borrower and we
simultaneously pay interest expense to the institution providing the warehouse line of credit. The
interest rate we receive during this period and the interest rate we pay are usually different.
The profitability of the loan is affected by this difference and fluctuations in interest rates
before the mortgage loan is sold. Although we generally have a commitment to sell the mortgage
loan before we commit to fund the mortgage loan, there are situations in which we bear a risk of
changes in interest rates prior to the mortgage loan being sold. In particular, if interest rates
increase during the time before we sell an uncommitted mortgage loan but after we have funded the
mortgage loan, we could be required to sell the principal of the mortgage loan for less than we
funded, thereby decreasing the mortgage loans profitability or incurring a loss on the mortgage
loans sale. Payments for mortgage loan servicing rights may be less in times of stable or declining
interest rates.The prices we receive upon the sale of mortgage loans and servicing rights
depend upon a number of factors, including the general supply of and demand for mortgage servicing
rights, as well as prepayment and delinquency rates on the portfolios of mortgage servicing rights
being sold. Interest rate changes can also affect the profitability of the sale of mortgage loan
servicing rights to a third party. Purchasers of mortgage loan servicing rights analyze a variety
of factors to determine the purchase price they are willing to pay, including the prepayment
sensitivity of servicing rights. Because of the increased likelihood of prepayment of loans in
periods of declining interest rates, the price of mortgage loan servicing rights related to higher
rate mortgage loans may be less than in times of stable or increasing interest rates, which could
adversely affect our operations and financial condition. We do not have significant servicing rights income to offset some of the effect of an
economic downturn.Mortgage companies often offset some of the effects of an economic downturn
caused by high interest rates through fees received for servicing mortgages. Currently, mortgage
servicers receive a minimum of one quarter of one percent of the outstanding mortgage loan balance
per annum for services rendered and consequently have a continuing revenue stream during periods
when the volume of new originations slows. However, we sell the servicing rights on more than 99%
of the mortgage loans we originate or purchase. Because we 26




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are not servicing a large portfolio of mortgage loans, we must rely upon the generation or purchase of mortgage loans for revenues. This
makes us more vulnerable to changes in the economic cycle and general economic health in the
geographic area or areas in which we operate. We depend in part on wholesale brokers that are not under our control to generate
loans.If we are not successful in maintaining or expanding our broker network, our loan
volume and therefore our revenues could decline significantly. During the year ended September 30,
2004, wholesale brokers originated approximately 15% of the mortgage loans closed or purchased by
us based on total dollar value. Our employees originated the remainder of our loans. None of
these brokers are contractually obligated to do business with us and, in fact, the brokers also
have relationships with our competitors who actively compete with us in efforts to expand broker
relationships. We must depend on brokers to be accurate in their representations regarding compliance and
loan quality and may incur losses if representations are inaccurate.In addition to depending
on brokers to generate mortgage loans, we depend on brokers to be accurate in their representations
and warranties regarding compliance with regulations and the quality of the loans to be funded.
During 1997, we suffered losses due to broker fraud predominantly with respect to two loans.
Primarily due to the misrepresentations made by brokers on two loans, the values of each of the
properties securing the loans were overstated by approximately $100,000. In addition, the assets
and employment status of each of the two borrowers appear to have been misrepresented. We estimate
that these misrepresentations cost us approximately $400,000. In order to address this situation,
we restructured our pre-funding quality control procedures. Shortly after the change in
procedures, our loan volume generated through brokers decreased causing additional losses. We depend on programs that purchase and guarantee loans.Generally, the institutional
investors that purchase mortgage loans that we originate generate funds by selling mortgage-backed
securities. This funding mechanism is largely dependent upon the continuation of programs
administered by national government-sponsored mortgage entities, such as Freddie Mac, Fannie Mae
and Ginnie Mae, which provide the context for, and facilitate the issuance of, such securities. We
also sell a small portion of our loans, less than 1%, directly to Fannie Mae. Although we are not
aware of any proposed changes in these programs, the discontinuation of, or a significant reduction
in, the operations of such programs could have a material adverse effect on our operations. In
addition, the sponsor may change the mortgage loan products eligible for these programs from time
to time. Changes could affect the profitability of specific types of mortgage loan products by
changing the administrative costs of purchasing or originating the mortgage loans or other aspects
of the programs. Our competitors in the mortgage banking industry are often larger making it more difficult
for us to compete successfully.We face strong competition in originating, purchasing and
selling mortgage loans and related mortgage servicing rights. Our competition is principally from
savings and loan 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. We
compete with these entities by striving to provide timely service to 27




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mortgage brokers and borrowers and develop competitive products. 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. Real property with environmental problems securing our loans may cause us to incur
liability.In the course of our business, we sometimes acquire residential real estate that
served as collateral for loans that are in default. It is possible that hazardous substances or
waste, contaminants or pollutants could be present on such properties and not discovered until
after we have taken possession. In such event, we might be required to remove such substances from
the affected properties at our expense. The cost of such removal could substantially exceed the
value of the affected properties or the loans secured by such properties. There can be no
assurance that we would have adequate remedies against the prior owners or other responsible
parties, or that we would not find it difficult or impossible to sell the affected real properties
either prior to or following such removal. These costs could have a material adverse effect on our
operations and financial condition. Most of our assets are pledged to secure debt leaving few if any assets that might be
distributed to shareholders in liquidation.Due to our financing needs, with the occasional
exception of loans funded by us, all of our mortgage assets will be used to secure purchase
agreements, bank borrowings or other credit arrangements for at least the near future. We hope to
be able to fund more loans ourselves at some point in the future, but may never be able to do so on
a significant scale. At most times, our debt under the line of credit is approximately equal to
the value of our mortgage loan assets. Therefore, such mortgage assets would not be distributed to
stockholders in the event of liquidation, except to the extent that the market value of the assets
exceeds amounts due our creditors. The market value of the mortgage assets will fluctuate as a
result of market factors such as interest rates and prepayment rates as well as the supply of, and
demand for, such mortgage assets. In the event of the bankruptcy of a counter-party with whom we
have an agreement, we might experience difficulty recovering our pledged mortgage assets, which may
adversely affect our operations and financial condition. We could be required to sell mortgage assets under adverse market conditions.If we
are not able to renew or replace credit facilities as they come up for renewal, we could be
required to sell mortgage assets under adverse market conditions and, as a result, could incur
permanent capital losses. A sharp rise in interest rates or increasing market concern about the
value or liquidity of mortgage assets in which we have a significant investment will reduce the
market value of the mortgage assets, which would likely cause lenders to require additional collateral. A number of such factors in combination may cause difficulties for us including a
possible liquidation of a major portion of our mortgage assets at disadvantageous prices with
consequent losses, which would have a material adverse effect on our financial status and could
render us insolvent. Additionally, although we intend generally to sell our mortgage assets within
ninety days or less of generation or purchase because such assets will be pledged under financing
agreements, our ability to sell mortgage assets to obtain cash will be greatly limited. 28




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Our inability to sell such assets could have a material adverse effect on our operations and financial
condition. We may need additional equity financing, which may or may not be available, to expand our
business and to reduce our interest costs.Our primary operating cash requirement is the
funding or payment of interest expense incurred on borrowings. We also must fund general operating
and administrative expenses and from time to time capital expenditures. We currently fund these
cash requirements primarily through our lines of credit and the sale of loans. Our current plan is
to decrease our reliance on the lines of credit and increase the volume of loan sales. Our ability
to implement this business strategy will depend upon our ability to increase stockholders equity
thereby establishing a reserve, which may be used to fund loans. There can be no assurance that we
will be able to raise additional equity on favorable terms. We cannot presently estimate the amount
and timing of additional equity financing requirements because such requirements are tied to, among
other things, our growth. If we were unable to raise such additional capital, our ability to
expand and our results of operations and financial condition could be adversely affected. Defaults in mortgage loans or characteristics of property securing the mortgages may
adversely affect our ability to sustain the volume of mortgages.We fund mortgage loans by
drawing on our line of credit, then as soon as possible and typically within fifteen days, sell the
loan in the secondary market. We use the proceeds of the sale of a loan to repay the amount
borrowed to fund that loan. Thus, the composition of mortgage loans we hold changes from day to
day. There are also loans that for one reason or another we do not sell, but hold. This is rare,
but does happen from time to time. During the time we hold any mortgage loans, we are subject to
increased credit risks, including risks of borrower defaults and bankruptcies and special hazard
losses that are not covered by standard hazard insurance, such as those occurring from earthquakes
or floods. In the event of a default on any mortgage loan we hold, we will bear the risk of loss
of principal to the extent that the value of the secured property and any payments from an insurer
or guarantor are less than the amount owed on the mortgage loan and the costs of realizing on the
collateral. Any loans in default will also cease to be eligible collateral for our borrowings,
which means we will have to finance the loan out of other funds until it is ultimately liquidated.
Although we intend to establish reserves in amounts we believe are adequate to cover these risks,
there can be no assurance that any such reserves will be sufficient to offset losses on mortgage
loans in the future. Even assuming that properties securing mortgage loans we hold provide
adequate security for such mortgage loans, there will likely be delays, which could be substantial,
in prosecuting foreclosures. State and local statutes and rules may delay or prevent foreclosure
on, or sale of, the mortgaged property and may limit revenues in which case proceeds we receive may
not be sufficient to repay all amounts due on the related mortgage loan. Some properties that
collateralize our mortgage loans may have unique characteristics or may be subject to seasonal factors that could materially prolong the
time period required to resell the property. Real estate is illiquid and its value is dependent on conditions beyond our control.
The fair market value of the real property underlying any mortgage we acquire may decrease. The
value is largely dependent on factors beyond our control and may be affected by adverse changes in
national or local economic conditions. The value may also be affected by the need to 29




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comply with environmental laws or the ongoing need for capital improvements, particularly in older structures.
National disasters could result in unusual loss, as could adverse changes in zoning laws and other
factors that are beyond our control. We are liable for representations and warranties made to purchasers and insurers.In
the ordinary course of business, we make representations and warranties to the purchasers and
insurers of mortgage loans and the related mortgage servicing rights regarding compliance with
laws, regulations and program standards. In broker-generated loans, we generally receive similar
representations and warranties from the brokers from whom we purchase the loans. If any of these
representations and warranties is inaccurate, we may be required to repurchase the corresponding
mortgage loans and/or may be liable for damages. Although we were not required to repurchase any
loans during the last year, for the two previous years, we were required to repurchase one loan
each year. Prior to that, we typically were required to repurchase two to three loans each year.
These loans averaged approximately $165,000. In some cases, a portion of the costs of a repurchase
are covered by our errors and omissions insurance. Some or all of the costs are also often
recovered upon the sale of the collateral for the loan or by ultimate repayment. There can be no
assurances that we will not experience greater losses in the future. Mortgage loans are subject to significant government regulation.Federal, state and
local governmental authorities regulate our activities as a lender. Our subsidiary, Ocean West
Enterprises, is a licensed lender under the California Department of Corporations Residential
Mortgage Lenders Act and is similarly licensed in the 35 states in which we do business. The Truth
in Lending Act, and Regulation Z promulgated there under, mandate that mortgage lenders meet
requirements designed to provide consumers with uniform, understandable information on the terms
and conditions of mortgage loans and credit transactions. The Equal Credit Opportunity Act
prohibits creditors from discriminating against applicants on the basis of race, color, sex, age or
marital status, among other restrictions and requirements. In instances in which the applicant is
denied credit, or the rate or charge for a mortgage loan increases as a result of information
obtained from a consumer credit agency, the Fair Credit Reporting Act of 1970 requires the lender
to supply the applicant with a name and address of the reporting agency. The Real Estate
Settlement Procedures Act and the Debt Collection Practices Act require us to file an annual report
with HUD. If we fail to comply with any of these regulations, we could be prohibited from engaging
in operations which would have a material adverse effect on our results of operations and financial
condition. Our business is concentrated in the California area.Based on the number of loans
funded, 50% of our mortgage loan originations and purchases are typically secured by property in
the California area. Although we are working to diversify our holdings, there is no assurance that
we will be successful in entering any other markets. Even if we do expand to new markets, there is no assurance that we will be able to generate revenues exceeding the costs associated
with activities in the new markets or that the business activity in those new markets will match
that achieved in the Southern California area. Whether or not we enter into new geographic
markets, general trends in the economy and the real estate market in the California area will
significantly affect our results of operations and financial condition for the foreseeable future. 30




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CDA controls the Company.Ocean West has four classes of stock
authorized in its Certificate of Incorporation and currently has three classes of voting stock that
are issued and outstanding. Although each holder of common shares, Class B common shares and
currently outstanding Preferred Shares is entitled to one vote for each share of stock held, the
holders of Class B common shares are entitled to elect 75% of the members of the board of directors
of Ocean West which is presently one member out of two. Holders of common shares and currently
outstanding Preferred Shares, together with holders of Class D common shares and any additional
series of voting Preferred Shares which are created, are only entitled to elect 25% of the members
of the board of directors, presently one member. Thus, holders of Class B common shares have the
ability to control the board of directors and, therefore, Ocean West.
CDA (CDA) owns 100% of the issued and outstanding Class B common shares and will, therefore, control
votes by holders of Class B common shares. In addition, they own 84.3% of the issued and
outstanding common shares and will therefore also elect the remaining director so long as they hold
more than 50% of the number of issued and outstanding common shares. On all matters other than the
election of directors, CDA controls 85% of the issued and outstanding shares of voting stock of
Ocean West and therefore will control the Company. No payment of dividends on common shares is expected in the near future.Ocean West
recently became active and has not paid dividends. We have not historically paid dividends to its
common shareholders, although we have paid dividends on outstanding preferred stock. Ocean West
will be required to pay dividends on all currently issued classes of Preferred Stock. Dividends on
Series C shares are 12% per annum or $12 per share and based on $100,000 in investment total
$12,000 per year. Dividends on Series E shares are 18% per annum or $45 per share and based on
$170,000 in investment total $30,600 per year. Dividends on Series F shares are 14% per annum or
$14 per share and based on $105,000 in investment total $14,700 per year. Dividends on Series G
shares are 24% per annum or $24 per share and based on $200,000 in investment total $48,000 per
year. Dividends on Series I shares are 15% per annum or $15 per share and based on $12,500 in
investment total $1,875 per year. Dividends on Series L shares are 12% per annum or $120 per share
and based on $1,000,000 in investment total $120,000 per year. Dividends on Series M shares were
12% per annum or $120 per share and based on $500,000 in investment total $60,000 per year.
Dividends on all our Preferred Stock in the aggregate total $287,175 annually less $60,000 for the
redemption of the Series M preferred, assuming no changes in outstanding preferred stock. Ocean
West has no present plans to institute a policy of declaring dividends on any class other than
Preferred Shares. In the foreseeable future, our capital requirements will likely consume all
operating profits and other available cash. There is no guarantee that we will pay dividends in
the future or will pay dividends in excess of those owed on the Preferred Shares. We have issued and may issue additional Preferred Shares which have preferences over
common shares.Our Certificate of Incorporation authorizes the issuance of Preferred Shares
with designations, rights and preferences as determined from time to time by its Board of
Directors. Currently, there are 5,855 Preferred Shares of Ocean West Holding Corporation, in six
series outstanding. Ocean West Enterprises, a wholly owned subsidiary of the holding corporation,
has 2,250 shares outstanding. The Board of Directors is empowered, without shareholder approval, to
issue additional series of Preferred Shares with dividends, liquidation, 31




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conversion, voting or other rights that could adversely affect the rights of the holders of common shares. The voting
rights of any Preferred Shares, however, are limited by the Certificate of Incorporation and cannot
exceed the voting rights of any common shares. The issuance of preferred shares can be used as a
method of discouraging, delaying or preventing a change of control of Ocean West. We currently do not meet certain corporate governance requirements imposed by the
Sarbanes-Oxley Act and are not eligible to have our shares listed on NASDAQ, AMEX or the NYSE.
The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act) was signed into law by President Bush on July
30, 2002 in response to public concerns regarding corporate accountability in connection with the
recent accounting scandals at Enron and WorldCom. The stated goals of the Sarbanes-Oxley Act are to
increase corporate responsibility, to provide for enhanced penalties for accounting and auditing
improprieties at publicly traded companies and to protect investors by improving the accuracy and
reliability of corporate disclosures pursuant to the securities laws. The Sarbanes-Oxley Act
generally applies to all companies, both U.S. and non-U.S., that file or are required to file
periodic reports with the Securities and Exchange Commission (SEC), under the Securities Exchange
Act of 1934 (Exchange Act). The Sarbanes-Oxley Act includes very specific additional disclosure
requirements and new corporate governance rules, requires the SEC and securities exchanges to adopt
extensive additional disclosure, corporate governance and other related rules. Of the new
requirements imposed by the Sarbanes-Oxley Act, among others, we currently have no independent
directors on our board of directors, no audit committee, compensation committee nor nomination
committee and we do not have any independent financial experts on our board of directors. As a
result, we currently would not be eligible to have our shares listed on the NASDAQ, AMEX or NYSE,
even if we were to meet the other listing requirements of such self-regulatory organizations. This
may have the effect of depressing the prevailing market price of our common shares on the OTC
Bulletin Board. Future sales of shares by substantial shareholders may adversely affect the price of
shares. Pursuant to the Companys registration statement (file number 333-86484) which became
effective on August 12, 2002, currently there are 2,248,676 shares registered and available for
public sale. The remaining outstanding common shares, including the 210,096 Class B common shares,
which may be converted to common shares, numbering 3,547,524, are restricted securities as
defined in Rule 144 promulgated under the Securities Act of 1933. The restricted shares constitute
approximately 61% of the issued and outstanding common shares including shares that would be issued
upon conversion of the Class B common shares. Sales of securities by affiliates of Ocean West may
also be subject to Rule 144 resale limitations. Rule 144 provides a safe harbor from registration
requirements for some sales of restricted securities or securities held by affiliates. Currently,
CDA holds all of the restricted common shares. In general, under Rule 144, if adequate public information on Ocean West is available, beginning
ninety days after the date of this prospectus, a person who has satisfied a one year holding period
may sell, during any three month period, up to 1% of the then outstanding common shares for
companies listed on the OTC Bulletin Board. Sales under Rule 144 are also subject to restrictions
relating to manner of sale and notice. Sales of restricted securities by a person who is not an
affiliate of Ocean West under the Securities Act and who has satisfied a two year holding period
may be made without regard to volume limitations, notice or other requirements of Rule 144. 32




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Management is unable to predict the effect that sales made pursuant to Rule 144 or other exemptions
under the 1933 Act may have on the prevailing market price of the registered common shares, or when
such sales may begin under Rule 144. 33




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Item 7. Financial Statements. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors
Ocean West Holding
Corporation and Subsidiary
Tustin, California We have audited the consolidated balance sheet of Ocean West Holding Corporation and
Subsidiary (the Company) as of September 30, 2004 and the related consolidated statements of
operations, stockholders equity (deficit) and cash flows for the year ended September 30, 2004.
These consolidated financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). 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
disclosure 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 consolidated financial statement referred to above presently fairly, in
all material respects, the financial position of Ocean West Holding Corporation and Subsidiary as
of September 30, 2004 and the results of their operations and their cash flows for the year ended
September 30, 2004, in conformity with U.S. generally accepted accounting principles. The accompanying consolidated financial statement has been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial statements, the Company
has suffered recurring losses from operations, has an accumulated deficit and was not in compliance
with certain loan covenants under one of its warehouse lines of credit as of September 30, 2004,
that raise substantial doubt about the Companys ability to continue as a going concern.
Managements plans in regard to these matters are also described in Note 1. The consolidated
financial statements do not include any adjustments that might result from the outcome of these
uncertainties. /s/ Chavez and Koch CPAs.
CERTIFIED PUBLIC ACCOUNTANTS Henderson, Nevada
January 12, 2005 34




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors
Ocean West Holding
Corporation and Subsidiary
Tustin, California We have audited the consolidated balance sheet of Ocean West Holding Corporation and
Subsidiary (the Company) as of September 30, 2003 and the related consolidated statements of
operations, stockholders equity (deficit) and cash flows for the year ended September 30, 2003.
These consolidated financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). 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
disclosure 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 consolidated financial statement referred to above presently fairly, in
all material respects, the financial position of Ocean West Holding Corporation and Subsidiary as
of September 30, 2003 and the results of their operations and their cash flows for the year ended
September 30, 2003, in conformity with accounting principles generally accepted in the United
States of America. The accompanying consolidated financial statement has been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial statements, the Company
has suffered recurring losses from operations, has an accumulated deficit and was not in compliance
with certain loan covenants under one of its warehouse lines of credit as of September 30, 2003,
that raise substantial doubt about the Companys ability to continue as a going concern.
Managements plans in regard to these matters are also described in Note 1. The consolidated
financial statements do not include any adjustments that might result from the outcome of these
uncertainties. /s/ Hein & Associates LLC. Orange, California
December 30, 2003 35




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS ASSETS September 30,
    
    
    September 30,2004
    
    
    2003Current assets:Cash and cash equivalents
    
    $
    124,080
    
    
    $
    457,969Restricted cash
    
    
    
    
    
    
    3,010Receivable from loans sold
    
    
    6,137,020
    
    
    
    6,711,495Mortgage loans held for sale
    
    
    357,006
    
    
    
    1,427,818Stock subscription receivable
    
    
    1,022,425
    
    
    
    Due from related party
    
    
    
    
    
    
    45,000Prepaid and other current assets
    
    
    268,748
    
    
    
    984,319Total current assets
    
    
    7,909,279
    
    
    
    9,629,611Property and equipment, net
    
    
    251,696
    
    
    
    357,522Other assets:Originated mortgage servicing rights
    
    
    37,587
    
    
    
    44,163Loans held for investment
    
    
    327,700
    
    
    
    480,300Property held for sale
    
    
    
    
    
    
    Deposits
    
    
    66,430
    
    
    
    62,630Total other assets
    
    
    431,717
    
    
    
    587,093$
    8,592,692
    
    
    $
    10,574,226
 See accompanying independent auditors reports and notes to consolidated financial statements. 36




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) September 30,
    
    
    September 30,2004
    
    
    2003Current liabilities:Accounts payable and accrued expenses
    
    $
    1,239,735
    
    
    $
    1,487,333Client trust payable
    
    
    
    
    
    
    3,010Due to stockholder
    
    
    25,247
    
    
    
    38,647Current maturities of long-term debt
    
    
    892,000
    
    
    
    829,375Current maturities of capital lease obligations
    
    
    50,672
    
    
    
    63,022Current maturities of notes payable  stockholders
    
    
    
    
    
    
    Warehouse lines of credit
    
    
    6,526,545
    
    
    
    8,032,976Total current liabilities
    
    
    8,734,199
    
    
    
    10,454,363Long-term liabilities:Long-term debt,less current maturities
    
    
    542,250
    
    
    
    85,000Capital lease obligations,less current maturities
    
    
    12,440
    
    
    
    53,181Accrued expenses
    
    
    
    
    
    
    Amount due to related party
    
    
    15,000
    
    
    
    15,000Notes payable  stockholders, less current maturities
    
    
    
    
    
    
    230,000Total long-term liabilities
    
    
    569,690
    
    
    
    383,181Total liabilities
    
    
    9,303,889
    
    
    
    10,837,544Stockholders equity (deficit):Preferred stock, $0.01 par value; 10,000,000 shares authorized:Series C, 1,000 shares issued and outstanding
    
    
    100,000
    
    
    
    100,000Series E, 680 shares issued and outstanding
    
    
    170,000
    
    
    
    170,000Series F, 1,050 shares issued and outstanding
    
    
    105,000
    
    
    
    105,000Series G, 2,000 shares issued and outstanding
    
    
    200,000
    
    
    
    200,000Series I, 125 shares issued and outstanding
    
    
    12,500
    
    
    
    12,500Series K, no shares issued and outstanding
    
    
    
    
    
    
    Series L, 1,000 shares issued and outstanding
    
    
    1,000,000
    
    
    
    1,000,000Series M, 5,000 shares authorized, 0 and 500 shares issued
and outstanding, respectively
    
    
    
    
    
    
    Preferred stock, $1,000 par value; 50,000 shares authorized:Series N, 2,250 shares issued and outstanding
    
    
    2,250,000
    
    
    
    Class B common stock; $0.01 par value, 5,000,000 authorized,
210,096 shares issued and outstanding
    
    
    2,101
    
    
    
    2,101Class D common stock; $0.01 par value, 600,000
shares authorized, none issued and outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value; 30,000,000 shares
authorized; 5,586,104 and 5,585,104 shares issued
and outstanding, respectively
    
    
    55,861
    
    
    
    55,851Additional paid-in capital
    
    
    1,543,194
    
    
    
    1,543,194Accumulated deficit
    
    
    (6,149,853
    )
    
    
    (3,451,974
    )Total stockholders (deficit) equity
    
    
    (711,197
    )
    
    
    (263,318
    )$
    8,592,692
    
    
    $
    10,574,226
 See accompanying independent auditors reports and notes to consolidated financial statements. 37




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OCEAN WEST HOLDING CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended
    
    
    Year EndedSeptember 30,
    
    
    September 30,2004
    
    
    2003Revenues:Revenues from origination and
sale of mortgage loans and commissions,
net
    
    $
    7,187,688
    
    
    $
    13,156,597Operating expenses:Salaries and wages
    
    
    3,071,317
    
    
    
    5,764,547Payroll taxes
    
    
    591,241
    
    
    
    885,945Other general and administrative
expenses
    
    
    5,905,989
    
    
    
    5,971,636Depreciation and amortization
    
    
    140,062
    
    
    
    194,383Total operating expenses
    
    
    9,708,609
    
    
    
    12,816,511(Loss) income before provision
for income taxes
    
    
    (2,520,921
    )
    
    
    340,086Provision for income taxes
    
    
    23,950
    
    
    
    18,203Net income (loss)
    
    
    (2,544,871
    )
    
    
    321,883Dividends on preferred shares
    
    
    (153,008
    )
    
    
    (216,728
    )Net (loss) income applicable to
common shareholders
    
    $
    (2,697,879
    )
    
    $
    105,155Net (loss) income applicable to
common shareholders per common
share - basic and diluted
    
    $
    (0.48
    )
    
    $
    0.02Weighted average number of
common shares outstanding -
basic and diluted
    
    
    5,586,104
    
    
    
    5,586,104
 See accompanying independent auditors reports and notes to consolidated financial statements. 38




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003 Preferred StockSeries C
    
    Series D
    
    Series E
    
    

    Series FShares
    Amount
    
    Shares
    Amount
    
    Shares
    Amount
    
    
    Shares
    AmountBalance at October 1, 2002
    
    
    1,000
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    680
    
    
    
    170,000
    
    
    
    1,050
    
    
    
    105,000Dividends on preferred stockRedemption of Series M preferred
stockExercise of warrant to common stockNet Income for the year ended
September 30, 2003Balance at September 30, 2003
    
    
    1,000
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    680
    
    
    
    170,000
    
    
    
    1,050
    
    
    
    105,000Dividends on preferred stockIssuance of Series N Preferred StockNet loss for the year ended
September 30, 2004Balance at September 30, 2004
    
    
    1,000
    
    
    $
    100,000
    
    
    
    
    
    
    
    
    
    
    
    680
    
    
    $

    170,000
    
    
    
    1,050
    
    
    $
    105,000
 See accompanying independent auditors reports and notes to consolidated financial statements. 39




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003 Preferred StockSeries G
    
    
    Series I
    
    
    Series K
    
    
    Series LShares
    Amount
    
     Shares
    Amount

    
    Shares
    Amount
    
    
    Shares
    AmountBalance at October 1, 2002
    
    
    2,000
    
    
    
    100,000
    
    
    
    125
    
    
    
    12,500
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    1,000,000Dividends on preferred stockRedemption of Series M preferred StockExercise of warrant to common stockNet Income for the year ended
September 30, 2003Balance at September 30, 2003
    
    
    2,000
    
    
    
    100,000
    
    
    
    125
    
    
    
    12,500
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    1,000,000Dividends on preferred stockIssuance of Series N Preferred StockNet loss for the year ended September
30, 2004Balance at September 30, 2004
    
    
    2,000
    
    
    $
    100,000
    
    
    
    125
    
    
    $
    12,500
    
    
    
    

    
    
    $
    
    
    
    
    1,000
    
    
    $
    1,000,000
 See accompanying independent auditors reports and notes to consolidated financial statements. 40




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##### Table of Contents



OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003 Class BSeries M
    
    
    Series N
    
    
    Common Stock
    
    
    Common StockShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    AmountBalance at October 1, 2002
    
    
    500
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    210,096
    
    
    
    2,101
    
    
    
    5,585,104
    
    
    
    55,851Dividends on preferred stockRedemption of Series M
Preferred stock
    
    
    (500
    )
    
    
    (5
    )Exercise of warrant to
common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    10Net income for year ended
September 30, 2003Balance at September 30, 2003
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    210,096
    
    
    
    2,101
    
    
    
    5,586,104
    
    
    
    55,861Dividends on preferred stockIssuance of Series N
Preferred stock
    
    
    
    
    
    
    
    
    
    
    2,250
    
    
    
    2,250,000Net loss for the year ended
September 30, 2004Balance at September 30, 2004
    
    
    
    
    
    $
    
    
    
    
    2,250
    
    
    $
    2,250,000
    
    
    
    210,096
    
    
    
    2,101
    
    
    
    5,586,104
    
    
    
    55,861
 See accompanying independent auditors reports and notes to consolidated financial statements. 41




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003 Additional paid-incapital
    
    
    Accumulated Deficit
    
    
    TotalBalance at October 1, 2002
    
    
    2,041,949
    
    
    
    (3,557,129
    )
    
    
    130,277Dividends on preferred stock
    
    
    
    
    
    
    (216,728
    )
    
    
    (216,728
    )Redemption of Series M Preferred Stock
    
    
    (499,995
    )
    
    
    
    
    
    
    (500,000
    )Exercise of warrant to common stock
    
    
    1,240
    
    
    
    
    
    
    
    1,250Net income for year ended September
30, 2003
    
    
    
    
    
    
    321,883
    
    
    
    321,883Balance at September 30, 2003
    
    
    1,543,194
    
    
    
    (3,451,974
    )
    
    
    (263,318
    )Dividends on preferred stock
    
    
    
    
    
    
    (153,008
    )
    
    
    (153,008
    )Issuance of Series N Preferred Stock
    
    
    
    
    
    
    
    
    
    
    2,250,000Net loss for the year ended September
30, 2004
    
    
    
    
    
    
    (2,544,871
    )
    
    
    (2,544,871
    )Balance at September 30, 2004
    
    $
    1,543,194
    
    
    $
    (6,149,853
    )
    
    $
    (711,197
    )
 See accompanying independent auditors reports and notes to consolidated financial statements. 42




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003 September 30,
    
    
    September 30,2004
    
    
    2003Cash flows provided by (used for) operating activities:Net (loss) income
    
    $
    (2,544,871
    )
    
    $
    321,883Adjustments
to reconcile net income (loss) to net cash  provided by (used for) operating activities:Depreciation and amortization
    
    
    140,063
    
    
    
    194,383Loss on sale of property
    
    
    
    
    
    
    39,040Reserve on loans held for investment
    
    
    152,600Compensation expense for stock sold
    
    
    
    
    
    
    Changes in operating assets and liabilities:Increase) decrease in assets:Restricted cash
    
    
    3,010
    
    
    
    113,467Mortgage loans held for sale
    
    
    1,070,812
    
    
    
    12,607,709Receivable from loans sold
    
    
    574,475
    
    
    
    (291,306
    )Other current assets
    
    
    760,571
    
    
    
    (553,545
    )Deposits
    
    
    (3,080
    )
    
    
    (40,082
    )Increase (decrease) in liabilities:Accounts payable and accrued expenses
    
    
    (248,317
    )
    
    
    (266,460
    )Client trust payable
    
    
    (3,010
    )
    
    
    Net cash provided by (used for) operating activities
    
    
    (97,748
    )
    
    
    12,125,089Cash flows used for investing activities:(Issuance) of stock receivable
    
    
    (1,022,425
    )Collection (issuance) of stock receivable
    
    
    
    
    
    
    4,605Proceeds from the sale of property
    
    
    
    
    
    
    26,104Purchases of property and equipment
    
    
    (27,661
    )
    
    
    (43,383
    )Net cash used for investing activities
    
    
    (1,050,086
    )
    
    
    (12,674
    )Cash flows (used for) provided by financing activities:Net (repayments) borrowings under warehouse lines of credit
    
    
    (1,506,431
    )
    
    
    (11,983,871
    )Proceeds from notes payable and long-term debt
    
    
    289,875
    
    
    
    915,888Payments on notes payable and long-term debt
    
    
    
    
    
    
    (251,795
    )Reclass to notes payable
    
    
    230,000Payments on capital lease obligations
    
    
    (53,091
    )
    
    
    (108,297
    )Payments to stockholder
    
    
    (13,400
    )
    
    
    38,647Proceeds from notes payable-stockholder
    
    
    
    
    
    
    Reclass on notes-payable-stockholder
    
    
    (230,000
    )
    
    
    (237,402
    )Proceeds from exercise of warrants
    
    
    
    
    
    
    1,250Proceeds from issuance of preferred stock
    
    
    2,250,000
    
    
    
    500,000Preferred
stock dividends
    
    
    (153,008
    )
    
    
    (216,728
    )Net cash provided by (used for) financing activities
    
    
    813,945
    
    
    
    (11,842,308
    )Net (decrease) increase in cash and cash equivalents
    
    
    (333,889
    )
    
    
    270,107Cash and cash equivalents,beginning of year
    
    
    457,969
    
    
    
    187,862Cash and cash equivalents,end of year
    
    $
    124,080
    
    
    $
    457,969
 See accompanying independent auditors reports and notes to consolidated financial statements. 43




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003 September 30,
    
    
    September 30,2004
    
    
    2003Supplemental disclosure of cash flow information:Interest paid
    
    $
    161,255
    
    
    $
    519,500Income taxes paid
    
    $
    4,781
    
    
    $
    800
 Supplemental schedule of non cash investing and financing activities: During the year ended September 30, 2004, the Company elected to reduce the amount of loans from
loans held for investment by $152,600, which represented loans the Company felt were not
collectible. During the year ended September 30, 2004, the Company entered into a stock subscription agreement
to issue 2,250 shares of Series N preferred stock for a total consideration of $2,250,000. During the year ended
September 30, 2004, the Company incurred capital lease obligations for
equipment of $17,749. During the year ended September 30, 2003, the Company incurred capital lease obligations of
$129,939 for equipment. During the year ended September 30, 2003, the Company reclassified $480,300 of loans from loan sale
receivable to loans held for investment. See accompanying independent auditors reports and notes to consolidated financial statements. 44




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENT YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (1)
    Summary of Significant Accounting Policies:  Basis of Presentation:Ocean West Holding Corporation (OWHC) was organized in the State of Delaware on August 15,
2000 as a holding company with negligible assets and liabilities. During March 2002, OWHC
acquired all of the issued and outstanding shares of preferred and common stock of Ocean West
Enterprises, Inc. dba Ocean West Funding (OWE) in an exchange of shares. Since the
shareholders of OWE are the controlling shareholders of OWHC after the exchange, the
transaction was treated as an acquisition by OWE, and the historical financial statements
reflect the operations of OWE.Since inception through September 30, 2004, the Company has suffered recurring losses from
operations; we have incurred aggregate net losses of $ 6,149,853. 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, which are
included with this annual report.Management believes that cash flows from operations will be sufficient to meet the Companys
current liquidity and capital needs at least through fiscal 2005. To compensate for the
reduction in loan volume due to the rising interest rate market that began in July 2003, the
Company has reduced fixed overhead primarily through staff reductions. Management believes
the Company can now meet its liquidity and capital needs at current production levels.
However management is currently exploring possible liquidity sources either through
additional borrowings or potential capital partners to enable the Company to increase its
loan production. Additionally, management believes a development of a market in the
Companys stock should aid in increasing capital. The Company intends to retain earnings for
the foreseeable future to help increase liquidity. Future offerings are possible, although
the Company does not currently have any specific offering plans.Nature of Business:OWE, a California C corporation, was incorporated in November 1988 in the State of California
for the purpose of engaging in mortgage banking activities. OWE 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. HUD-insured loans comprised 3.6% and
9.2%, of total loans originated by the Company during the year ended September 30, 2004 and
the year ended September 30, 2003. Certain of the non-government-insured loans are sold
servicing retained whereby the Company receives a fee for
servicing the loans. Based on number of loans funded, 50.2% of our
mortgage loan originations
and purchases are typically secured by property in the California area.OWHC and OWE are collectively referred to as the Company. 45




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (1)
    Summary of Significant Accounting Policies (continued):  Principles of Consolidation:The consolidated financial statements include the accounts of OWHC and its wholly owned
subsidiary, OWE. All significant intercompany accounts and transactions have been eliminated
in consolidation.Risks and Uncertainties:The Company originates HUD and other government-insured loans in the United States,
generating revenue from the origination, sale, and servicing of these loans. Significant
changes in interest rates or the underlying economic condition of the United States or any
specific region of the United States real estate market could have a materially adverse
impact on the Companys operations.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 amounts of revenues and expenses during
the reported periods. Significant estimates made by the Companys management include, but
are not limited to, the realizability of mortgage loans held for sale, mortgage servicing
rights and property held for sale, the collectibility of notes receivable, and the
recoverability of property and equipment through future operating profits. Actual results
could materially differ from those estimates.Concentration of Credit Risk:The Company maintains, at times, cash balances at certain financial institutions in excess of
amounts insured by federal agencies.For the year ended September 30, 2004 and the year ended September 30, 2003;
four buyers purchased 25%, 23%, 20% and 10% (September 30, 2004),
four buyers purchased 27%, 15 %, 11% and 10%, (September 30, 2003), of loans funded.Cash and Cash Equivalents:For the purpose of the statement of cash flows, the Company considers all highly liquid
holdings with maturities of three months or less at the time of purchase to be cash
equivalents.Restricted Cash:Restricted cash represents amounts deposited in escrow for the Company to pay expenses for
the benefit of a borrower who advanced funds to the Company. 46




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (1)
    Summary of Significant Accounting Policies (continued):  Mortgage Loans Held for Sale:Mortgage loans held for sale to investors are stated at the lower of cost or market value
computed on the aggregate method by residential loan type (unrealized losses are offset by
unrealized gains) and are evaluated at the end of each year, and are determined by
outstanding commitments from investors or current investor yield requirements. The amount by
which cost exceeds market value is accounted for as a valuation allowance and any changes in
the valuation allowance are included in the determination of net income. As of September 30,
2004 and September 30, 2003, there was no valuation allowance required as cost was estimated
not to exceed market value. A substantial portion of loans was sold to investors within 30
days subsequent to September 30, 2004 and September 30, 2003.Property and Equipment:Property and equipment are stated at cost, less accumulated depreciation. Depreciation is
recorded using the straight-line method over the estimated useful lives of the related
assets, ranging from three to thirty years. Depreciation expense related to property and
equipment was $133,487 and $187,894 for the year ended September 30, 2004 and the year ended
September 30, 2003. Maintenance and repairs are charged to operations when incurred. Major
betterments and renewals are capitalized. Gains or losses are recognized upon sale or
disposition of assets.Long-Lived Assets:The Company accounts for its long-lived assets in accordance with SFAS No. 144, Accounting
For The Impairment or Disposal of Long-Lived Assets which requires that long-lived assets
and certain identifiable intangibles to be held and used by any entity be reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Pursuant to SFAS 144, management of the Company assesses
the recoverability of property and equipment by determining whether the depreciation of such
assets over their remaining lives can be recovered through projected undiscounted cash flows.
The amount of impairment, if any, is measured based on fair value (projected discounted cash
flows) and is charged to operations in the period in which such impairment is determined by
management. To date, management has not identified any impairment of property and equipment.
There can be no assurance, however, that market conditions or demands for the Companys services will not change which could result in future long-lived
asset impairment.Mortgage Servicing:The Company recognizes as separate assets or liabilities the obligation to service
mortgage loans for others, through loan origination, by allocating total costs incurred
between the loan and the servicing rights retained based on their relative fair values.
Amortization of mortgage service assets or rights (MSRs) is based on the ratio of net
servicing income received in the current period to total net servicing income projected to be
realized from the MSRs. Amortization of mortgage service liabilities 47




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (1)
    Summary of Significant Accounting Policies (Continued):  (MSLs) is based on the ratio of net servicing costs paid in the current period to total net
servicing costs projected to be paid from the MSL. Projected net servicing income is in turn
determined by the estimated future balance of the underlying mortgage loan portfolio, which
declines over time from prepayments and scheduled loan amortization. The Company estimates
future prepayment rates based on current interest rate levels, other economic conditions and
market forecasts, as well as relevant characteristics of the servicing portfolio, such as
loan types, interest rate stratification and recent prepayment experience. MSRs are
periodically evaluated for impairment, which is recognized in the statement of operations
during the applicable period through additions to an impairment reserve. For purposes of
performing its impairment evaluation, the Company stratifies its servicing portfolio on the
basis of certain risk characteristics including loan type and interest rate. The Company has
determined that no impairment allowance is needed as of September 30, 2004 and September 30,
2003.For the year ended September 30, 2003, $13,259 were capitalized as mortgage servicing rights.
No mortgage servicing rights were capitalized during the year ended September 30, 2004.
Amortization expense related to mortgage servicing rights for the years ended September 30,
2004 and September 30, 2003, was $6,576 and $6,489, respectively.Revenue and Cost Recognition:Revenue from the sale of loans is recognized at the time the loans are sold or when the
Company has shipped the loan file to independent investors consistent with the criteria
established in SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. At this point, all of the services required to be performed
for such revenues have been completed. Loan origination costs and incremental direct costs
are deferred and recognized over the term of the loan as an adjustment of the loan yield
until the loan is sold. Incremental direct costs include credit reports, appraisal fees,
document preparation fees, wire fees, tax and filing fees, funding fees and commissions.
When the loan is sold and service is released, the unamortized loan origination costs and
incremental direct selling costs are netted against the revenue and recorded to the statement
of operations. Revenue from the servicing of loans is recognized as earned.Basic and Diluted Loss Per Share:In accordance with SFAS No. 128, Earnings Per Share, the basic loss per common share is
computed by dividing net loss available to common stockholders after reducing net income by
preferred stock dividend, by the weighted average common shares outstanding during the
period. Diluted earnings per share reflect per share amounts that would have resulted if
diluted potential common stock had been converted to common stock. Common stock equivalents,
which consist of 3,000,000 shares of warrants, have not been included in the earnings per
share computation for the six months ended September 30, 2002, as the amounts are
anti-dilutive. There were no anti-dilutive securities at September 30, 2004 or September 30,
2003. 48




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (1)
    Summary of Significant Accounting Policies (Continued):  Advertising:The Company expenses advertising costs as incurred. The advertising costs for the year ended
September 30, 2004 and the year ended September 30, 2003
were $922,624 and $1,123,178,
respectively.Income Taxes:The Company accounts for income taxes under SFAS No. 109, Accounting for Income Taxes.
Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities 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.
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. Under SFAS No. 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period the enactment occurs. A
valuation allowance is provided for certain deferred tax assets if it is more likely than not
that the Company will not realize tax assets through future operations.Fair Value of Financial Instruments:The Company has adopted SFAS No. 107, Disclosures About Fair Value of Financial
Instruments. SFAS No. 107 requires disclosure of fair value information about financial
instruments when it is practicable to estimate that value. For certain of the Companys
financial instruments including cash, receivables, and accounts payable and accrued expenses,
the carrying amounts approximate fair value due to their short maturities. The amounts shown
for notes payable also approximate fair value because current interest rates and terms
offered to the Company for similar debt are substantially the same.New Accounting Pronouncements:In June 2002, the FASB issued Statement No. 146, Accounting for Costs Associated with Exit
or Disposal Activities. This statement nullifies EITF Issue No. 94-3, Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). Statement No. 146 is different from EITF Issue
No. 94-3 in that Statement No. 146 requires that a liability be recognized for a cost
associated with an exit or disposal activity only when the liability is incurred, that is
when it meets the definition of a liability in the FASBs conceptual framework. Statement No.
146 also establishes fair value as the objective for initial measurement of liabilities
related to exit or disposal activities. In contrast, under EITF Issue 94-3, a company
recognized a liability for an exit cost when it committed to an exit plan. Statement No. 146
is effective for exit or disposal activities that are initiated after December 31, 2002. The
adoption of Statement No. 146 can be expected to impact the timing of liability recognition
associated with any future exit activities.In November 2002, the FASB issued FASB Interpretation No. 45 (FIN45), Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to
Others. This interpretation elaborates on the disclosures to be made by a guarantor in
interim and annual financial 49




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (1)
    Summary of Significant Accounting Policies (Continued):  statements about its obligations under guarantees issued. FIN 45 also clarifies that a
guarantor is required to recognize, at inception of a guarantee, a liability for the fair
value of the obligation undertaken. The Company was required to adopt FIN 45 on December 31,
2002. The adoption of FIN 45 did not have a material effect on the Companys financial
position or results of operations.In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, effective for financial instruments entered
into or modified after May 31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. This statement establishes standards for how an
issuer classifies and measures certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a freestanding financial
instrument that is within its scope as a liability (or an asset in some circumstances). The
adoption of SFAS 150 will not have an impact on the Companys consolidated financial
position, results of operations or cash flows.Reclassifications:Certain prior year balances have been reclassified to conform with current year
presentation. Such classifications had no effect on net income.(2)
    
    Property and Equipment:A summary is as follows: September 30,
    
    
    September 30,2004
    
    
    2003Office equipment and leasehold improvements
    
    $
    484,377
    
    
    $
    474,565Property under capital lease (Note 6)
    
    
    628,517
    
    
    
    610,768Furniture and fixtures
    
    
    140,552
    
    
    
    140,552Automobiles
    
    
    12,000
    
    
    
    12,0001,265,446
    
    
    
    1,237,785Less accumulated depreciation
and amortization
    
    
    (1,013,750
    )
    
    
    (880,263
    )$
    251,696
    
    
    $
    357,522
  (3)
    Originated Mortgaging Servicing Rights:  A summary is as follows: September 30,
    
    
    September 30,2004
    
    
    2003Balance, beginning of period
    
    $
    44,163
    
    
    $
    37,393Additions, net
    
    
    
    
    
    
    13,259Amortization
    
    
    (6,576
    )
    
    
    (6,489
    )Balance, end of period
    
    $
    37,587
    
    
    $
    44,163
 50




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (3)
    Originated Mortgaging Servicing Rights (continued): The estimated fair market value of mortgage servicing rights approximated their
respective book values as of September 30, 2004 and September 30, 2003. The fair market
value was determined by discounting estimated net future cash flows from loan servicing using
discount and repayment rates that approximate current market rates.  (4)
    Stock Subscription Receivable: During the year ended September 30, 2004, the Ocean West Enterprises entered into an
agreement to sell 2,250 shares of Series N preferred stock for a consideration of $2,250,000
to CDA, the Companys largest shareholder of approximately 84.9% of
the companys outstanding common stock. At September 30, 2004
there was a stock subscription receivable of $1,022,425 of which has
subsequently been paid in full.  During the period ended September 30, 2002, the Company entered into an agreement to sell 500
shares of Series M preferred stock for $500,000. The funds were received in October 2002.
During the last two quarters of the year ended September 30, 2003 the Company redeemed all
of the 500 shares of Series M preferred for $500,000.  (5)
    Warehouse Lines of Credit: At September 30, 2002, the Company had a $15,000,000 mortgage loan purchasing warehouse
line with First Collateral Services, collateralized by the related mortgage loans receivable
with a carrying value of $18,927,137 at September 30, 2002. Interest was due monthly at the
bank reference rate plus an established percentage (totaling 4.3% at September 30, 2002). At
September 30, 2002, the outstanding balance under the warehouse line of credit was
$18,226,626. First Collateral ceased providing Ocean West funds under the line effective
April 30, 2003. The remaining balance on the line ($470,758 at September 30, 2004) is being
paid off as the loans securing the line are sold.  The Company has an $8,000,000 mortgage loan purchasing warehouse line of credit with
Provident Consumer Financial Services, collateralized by the related mortgage loans
receivable with a carrying value of $5,718,473 at September 30, 2004. Interest is due monthly
at the bank reference rate plus an established percentage (totaling 6.93% at September 30,
2004). At September 30, 2004 the outstanding balance under the warehouse line of credit was
$5,656,668.The Company has another $5,000,000 mortgage loan purchasing warehouse line of credit,
collateralized by the related mortgage loans receivable with a carrying value of $404,892 and
$734,177 as of September 30, 2004 and 2003, respectively. The line of credit is personally
guaranteed by Marshall L. Stewart and Daryl S. Meddings, officers of the Company. Interest is
due monthly at prime plus an established percentage ranging from 3.0% to 4.5%, respectively.
Each advance is to be repaid within 45 51




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (5)
    Warehouse Lines of Credit (continued):  days of the advance. At September 30, 2004 and 2003 the outstanding balance under this
warehouse line of credit was $399,119 and $712,950, respectively.The warehouse line of credit has restrictions as to the types of loans (and the maximum
amounts per individual loans) for which said line can be used. Furthermore, the line can
only be used to fund 98% of loan amounts, as defined; the remaining 2% must be funded by the
Company utilizing its own cash resources.The warehouse line of credit agreement contains restrictive covenants relating to net worth,
tangible net worth, and various ratios, as defined. The Company is currently in compliance
with such covenant. For the year ended September 30, 2003 violations of the restrictive
covenants have been waived by the lender, which did continue to provide financing. At the end
of each quarterly reporting period, the lender reviews the operating results of the Company
prior to waiving the covenant violations.Interest expense incurred under the warehouse lines of credit
was $14,181 and $437,606, for the year ended September 30, 2004 and 2003, respectively,
and is included in revenue from origination and sale of
mortgage loans and commissions, net on the statement of operations.  (6)
    Long-Term Debt and Capital Lease Obligations:  Long-Term DebtA summary of long-term debt is as follows: September 30,
    
    
    September 30,2004
    
    
    2003Note payable to a related party,
originally bearing interest at 15% per
annum, payable in monthly interest
installments with all unpaid principal
and interest due March 1, 2007. At
September 30, 2002, the interest rate
was reduced to 12%.
    
    $
    35,000
    
    
    $
    35,000Note payable to a related party,
originally bearing interest at 24% per
annum, payable in monthly interest
installments with all unpaid principal
and interest due March 1, 2007. At
September 30, 2002, the interest rate
was reduced to 12%.
    
    
    50,000
    
    
    
    50,000Note payable to finance company for
insurance, bearing interest at 7.75%,
payments of $6,171 are due monthly,
including interest through February
2004.
    
    
    -0-
    
    
    
    24,375Note payable to bank bearing interest
at 4.5% due November 7, 2003. Secured
by certificate of deposit. (A)
    
    
    92,000
    
    
    
    75,000
 52




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003 September 30,
    
    
    September 30,2004
    
    
    2003Note payable to an individual, bearing
interest at 12% per annum, payable in
monthly interest installments with all
unpaid principal and interest due
December 1, 2003. (A)
    
    
    280,000
    
    
    
    280,000Note payable to an individual, bearing
interest at 12% per annum, payable in
monthly interest installments with all
unpaid principal and interest due
March 1, 2004.
    
    
    200,000
    
    
    
    200,000Note payable to an individual,
bearing interest at 12% per annum,
payable in monthly interest
installments with all unpaid
principal and interest due November
1, 2003. (A)
    
    
    250,000
    
    
    
    250,000Note payable to an individual, bearing
interest at 10% per annum, payable in
monthly interest and principal
installments of $2,193.93 with all
unpaid principal and interest due
December 31, 2019.
    
    
    149,090
    
    
    
    Note payable to former
stockholder, bearing
interest at 13% per
annum payable in
monthly interest
installments with all
unpaid principal and
interest due June 30,
2008.
    
    $
    45,000
    
    
    
    Note payable to former
stockholder, bearing
interest at 14% per
annum payable in
monthly payments of
$2,203 including
principal and
interest; with all
unpaid principal and
interest due April 1,
2017.
    
    
    249,232
    
    
    
    Note payable
to Indy Mac, bearing interest at 0% per annum payable in monthly
payments of $12,500 with all unpaid principal due October, 2005
    
    
    163,928
    
    
    
    1,434,250
    
    
    
    914,375Less current maturities
    
    
    (892,000
    )
    
    
    (829,375
    )$
    542,250
    
    
    $
    85,000
 (A) These loans have not been paid as of their due dates. Management is in the process
of negotiating extended terms. The following table summarizes the aggregate maturities of long-term debt: Years endingSeptember 30,2005
    
    $
    892,0002006
    
    
    8482007
    
    
    86,1282008
    
    
    1,3692009
    
    
    46,573Thereafter
    
    
    407,332$
    1,434,250
 53




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (6)
    Long-Term Debt and Capital Lease Obligations (continued): Interest expense incurred
under long-term debt obligations amounted to $25,374 and $37,647, for
the year ended September 30, 2004 and the year ended 2003. Interest expense incurred
under related party debt obligations amounted to $0 and $11,628,
for the year ended September 30, 2004 and the year ended September 30, 2003. Capital Leases The Company leases certain equipment under capital leases, which expire through 2006, with
effective interest rates ranging from 14% to 18.37%. These leases are secured by related
equipment costing $628,517 (see Note 2). The assets are depreciated over their estimated
useful lives. Depreciation of the assets of $124,734 and $121,184, was included in
depreciation and amortization for the year ended September 30,
2004 and the year ended September
30, 2003. Accumulated depreciation of the assets
of $528,892 and $404,158 is included in accumulated depreciation and amortization in the
accompanying balance sheets at September 30, 2004 and September 30, 2003, respectively. The following is a schedule by years of future minimum lease payments required under the
capital lease together with the present value of the net minimum lease payments: Years ending September 30,2005
    
    $
    54,8992006
    
    
    15,534Total minimum lease payments
    
    
    70,433Less amount representing interest
    
    
    7,320Present value of net minimum lease payments
    
    
    63,113Less current maturities
    
    
    50,672$
    12,441
 Interest expense incurred
under capital lease obligations amounted to $16,546 and $11,961 for
the year ended September 30, 2004 and the year ended September 30, 2003, respectively. 54




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (7) Notes Payable  Stockholders: September 30,
    
    
    September 30,2004
    
    
    2003Note payable to
stockholder, bearing
interest at 13% per
annum payable in
monthly interest
installments with all
unpaid principal and
interest due June 30,
2008.
    
    $
    
    
    
    $
    45,000Note payable to
stockholder, bearing
interest at 14% per
annum payable in
monthly payments of
$2,203 including
principal and interest;
with all unpaid
principal and interest
due April 1, 2017.
    
    
    
    
    
    
    185,000
    
    
    
    230,000Less current maturities
    
    
    
    
    
    
    $
    
    
    
    $
    230,000
 The Company reclassed this obligation to notes payable, since the individuals are no
longer shareholders.  (8)
    Commitments and Contingencies:  Operating LeasesThe Company leases its facilities and certain equipment under noncancellable operating leases
that expire through the year 2008. These agreements generally provide that the Company pay
operating costs such as taxes, insurance, and maintenance.Future annual minimum payments under operating leases are as follows: Years ending September 30,2005
    
    $
    456,7382006
    
    
    436,1622007
    
    
    431,6642008
    
    
    71,944$
    1,396,578
 Rental expense under
operating leases for the year ended September 30, 2004, and the year ended
September 30, 2003 was $913,152 and $922,410, respectively. 55




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (8)
    Commitments and Contingencies (continued):  LitigationIn the normal course of business, the Company is involved in various legal actions. It is
the opinion of management that none of these legal actions will have a material effect on the
financial position or results of operations of the Company.Consulting AgreementsAs part of the Series D preferred stock purchase agreement (see Notes 9 and 14), the Company
entered into a financial consulting agreement whereby the Series D preferred stockholder is
entitled to consulting fees of $6,000 per month. The agreement expires upon the redemption
of the Series D preferred stock. Consulting fees charged to operations totaled $5,000 for
the year ended September 30, 2004 and $5,000 for the year ended September 30, 2003.Employment AgreementsOn September 1, 2004, the Company entered into
employment agreements with its President, CEO and
its Executive Vice President (collectively, the Employees). These agreements provide for
an annual base salary of not less than $180,000 each for a three-year term plus certain
additional benefits. Also, the agreements call for Executive will receive additional
compensation in the form of shares of common stock of CDA based on
OWEs financial performance during the three year period commencing on the date of this
Agreement (the Performance Period). The Performance Period will not start until the
warehouse line capacity of OWE reaches $40 million.No amounts are accrued for the deferred compensation as the Company has had no pre-tax
profits.  (9)
    Preferred Stock:  In 2002, concurrent with the acquisition between OWHC and OWE, 10,000,000 shares of preferred
stock were authorized. The Company may divide the preferred stock into any number of series
and the Board of Directors shall fix the designation and number of shares of each series.
The Company established the same series as was outstanding at the time of acquisition. All
conversions of preferred shares to common shares were calculated by dividing the value of the
preferred shares by five and multiplying by four.Currently, the Company has established the following series of preferred stock.Preferred Stock, Series CIn 1993, the Board of Directors authorized the issuance of up to 1,000 shares of Series C
preferred stock at $100 per share. At September 30, 2003, September 30, 2002 and March 31,
2002, 1,000 shares of the Series C preferred stock were outstanding. The Series C preferred
stock is non-voting and is redeemable 56




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003 Preferred Stock, Series C (continued)
by the Company. The redemption price will include an annual rate of return of 12% on the
original issuance price. The Series C preferred stock shall have a preference over the
common stock of the Company. The Company has been paying a monthly dividend at an annual
rate of 12% in lieu of the increased redemption price. Dividends of $12,000 were declared
and paid for the year ended September 30, 2004 and for the year ended September 30, 2003. Preferred Stock, Series D In 1997, the Board of Directors authorized the issuance of up to 1,500 shares of Series D
preferred stock at $400 per share. During March 2002, all of the outstanding shares (1,500)
were converted into 480,000 common shares. The Series D preferred stock is voting and is
redeemable by the Company. The Series D preferred stock shall have a preference in
liquidation over the common stock of the Company but shall be subject to the preference in
liquidation of the Series C preferred stock. The Series D preferred stock entitles the
holder to receive, on a cumulative basis, dividends at an annual rate of 3%, payable on a
monthly basis. In connection with the original purchase of the Series D preferred stock, the
Company entered into a financial consulting agreement whereby the Series D preferred
stockholder was entitled to $6,000 per month until such time that the Series D preferred
stock was redeemed by the Company. Redemption took place during fiscal year ended March 31,
2002. Preferred Stock, Series E In 1997, the Board of Directors authorized the issuance of up to 1,200 shares of Series E
preferred stock at $250 per share. During March 2002, 520 of the outstanding Series E
preferred shares were converted into 104,000 common shares. At September 30, 2004 and
September 30, 2003, 680 shares, of Series E preferred stock were outstanding. The Series E
preferred stock is non-voting and is redeemable at the Companys option. The redemption
price shall equal the issuance price. The Series E preferred stock shall have a preference
in liquidation over the common stock of the Company but shall be subject to the preference in
liquidation of the Series C and D preferred stock. The Series E preferred stock entitles the
holder to receive, on a cumulative basis, dividends at an annual rate of $45 per share,
payable on a monthly basis. Dividends of $84,100 and $30,600 were paid for the years ended
September 30, 2004 and September 30, 2003, respectively. Preferred Stock, Series F In 1998, the Board of Directors authorized the issuance of up to 1,250 shares of Series F
preferred stock at $100 per share. During March 2002, 200 of the outstanding Series F
preferred shares were converted to 16,000 common shares. At September 30, 2004 and September
30, 2003, 1,050 shares of Series F preferred stock were outstanding. The Series F preferred
stock is voting and is redeemable at the Companys option. The redemption price shall equal
the issuance price. The Series F preferred stock shall have a preference in liquidation over
the common stock of the Company but shall be subject to the preference in liquidation of the
Series C, D, and E preferred stock. The Series F preferred stock entitles the holder to
receive, on a cumulative basis, dividends at an annual rate of $14 per share, payable on a
monthly basis. Dividends of $14,700 and $14,700 were declared and paid for the years ended
September 30, 2004 and September 30, 2003, respectively. 57




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003 Preferred Stock, Series G In 1999, the Board of Directors authorized the issuance of up to 2,000 shares of Series
Gpreferred stock at $100 per share. At September 30, 2003, 2,000 shares of Series G
preferred stock were outstanding. The Series G preferred stock is voting and is redeemable
at the Companys option The redemption price shall equal the issuance price plus any unpaid
dividends. The Series G preferred stock shall have a preference in liquidation over the
common stock of the Company but shall be subject to the preference in liquidation of the
Series C, D, E, and F preferred stock. The Series G preferred stock entitles the holder to
receive, on a cumulative basis, dividends at an annual rate of $24 per share, payable on a
monthly basis. Dividends of $28,333 were declared and paid for the year ended September
30, 2004. Dividends of $50,000 were declared and paid for the year ended September 30,
2003., Preferred Stock, Series I In 1999, the Board of Directors authorized the issuance of up to 550 shares of Series I
preferred stock at $100 per share. During March 2002, 425 shares of Series I preferred stock
were converted into 34,000 shares of common stock. At September 30, 2004 and September 30,
2003, 125 shares of Series I preferred stock were outstanding. The Series I preferred stock
is voting and is redeemable at the Companys option. The redemption price shall equal the
issuance price plus any unpaid dividends. The Series I preferred stock shall have a
preference in liquidation over the common stock of the Company but shall be subject to the
preference in liquidation of the Series C, D, E, F and G preferred stock. The Series I
preferred stock entitles the holder to receive, on a cumulative basis, dividends at an annual
rate of $15 per share, payable on a monthly basis. Dividends of $1,875 were declared and
paid for the year ended September 30, 2004, $1,875 were declared and paid for the year ended
September 30, 2003 Preferred Stock, Series K In 1999, the Board of Directors authorized the issuance of up to 1,000 shares of Series K
preferred stock at $120 per share. During March 2002, all 1,000 shares outstanding were
converted into 96,000 common shares. The Series K preferred stock is voting and is
redeemable at the Companys option. The redemption price shall equal the issuance price plus
any unpaid dividends. The Series K preferred stock shall have a preference in liquidation
over the common stock of the Company but shall be subject to the preference in liquidation of
the Series C, D, E, F, G, and I preferred stock. The Series K preferred stock entitles the
holder to receive, on a cumulative basis, dividends at an annual rate of 5%, payable on a
monthly basis. The Company declared and paid dividends of $3,000 for the year ended March
31, 2002. Preferred Stock, Series L In 1999, the Board of Directors authorized the issuance of up to 1,000 shares of Series L
preferred stock at $1,000 per share. During the fiscal year ended March 31, 2002, 55 shares
of Series L preferred stock were converted into 44,000 shares of common stock. Also during
fiscal year ended March 31, 2002, the Company sold 300 shares of series L preferred stock for
$300,000 and redeemed 126 shares for 58




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  Preferred Stock, Series L (continued)$125,500. At September 30, 2004 and September 30, 2003, 1,000 shares of Series L preferred
stock were outstanding. The Series L preferred stock is voting and is redeemable at the
Companys option. The redemption price shall equal the issuance price plus any unpaid
dividends. The Series L preferred stock shall have a preference in liquidation over the
common stock of the Company but shall be subject to the preference in liquidation of the
Series C, D, E, F, G, I, and K preferred stock. The Series L preferred stock entitles the
holder to receive, on a cumulative basis, dividends at an annual rate of $120 per share,
payable on a monthly basis. Dividends of $12,000 were declared and paid for the year ended
September 30, 2004 and $70,317 were declared and paid for the year ended September 30, 2003.Preferred Stock, Series MIn 2002, the Board of Directors authorized issuance of up to 5,000 shares of Series M
preferred stock at $1,000 per share. During the period ended September 30, 2002, the Company
sold 500 shares of series M preferred stock for $500,000. The series M preferred stock is
voting and is redeemable at the Companys option. The redemption price shall equal the
issuance price plus any unpaid dividends. The
Series M preferred stock shall have a preference in liquidation over the common stock of the
Company but shall be subject to the preference in liquidation of the Series C, D, E, F, G, I,
K, and L preferred stock. The Series M preferred stock entitles the holder to receive, on a
cumulative basis, dividends at an annual rate of $120 per share, payable on a monthly basis.
During the last two fiscal quarters of the year ended September 30, 2003, the company
redeemed all 500 shares of Series M for $500,000 to the holder. During the year ended
September 30, 2003, dividends were paid in the amount of $37,237.Preferred Stock, Series NDuring the year ended September 30, 2004, the Board of Directors of Ocean West Enterprises
authorized the issuance of up to 2,250 shares of Series N preferred stock at $1000 per share.
The Series N preferred stock is non voting and is redeemable at the Companys option. The
redemption price shall equal the issuance price. The Series N preferred stock shall have a
preference in liquidation over the common stock of the Company but shall be subject to the
preference in liquidation of the Series C, D, E, F, G, I, and K preferred stock. The Series
N preferred stock does not entitles the holder to receive dividends.  (10)
    Common Stock and Warrants:  In March 2002, concurrent with the acquisition between OWHC and OWE, a stock split of 140 to
one occurred. This transaction has been reflected for all periods presented.During the year ended March 31, 2002, the Company redeemed 40 shares (5,600 post split) of
common stock for $10,000. 59




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (10)
    Common Stock and Warrants (continued):  During August 2002 and in connection with the effective date of the S-1 filing, the Company
issued 388,800 shares and 3,000,000 common stock purchase warrants, collectively valued at
$234,058 based upon an independent appraisal. The value, net of cash consideration received,
was recorded as a charge to earnings of $220,954 during the six months ended September 30,
2002.Each warrant entitles the holder to purchase one common share. The exercise price is $1.25
per share. The warrants expired June 12, 2003.  (11)
    Class B Common Stock  Concurrent to the acquisition between OWHC and OWE, the Company issued Class B common stock
to the holder of OWE common stock in a ratio of 1 to 8. In March 2002, 250,400 shares of
Class B common stock were issued. Concurrently, 40,304 shares of Class B common stock were
converted into the same number of common shares.  (12)
    Mortgage Loan Servicing:  Mortgage loans serviced by the Company amounting to approximately $4.9 million and $6.4
million, at September 30, 2004 and September 30, 2003, respectively, are not included in the
accompanying balance sheets. Funds held in trust on behalf of the owners of such serviced
loans are also not reflected in the accompanying balance sheets. The Company subcontracts
its servicing through a third-party sub-servicer. Either party may cancel the contract with
120 days written notice. Loan sub-servicing fees are based on a fixed monthly fee per
outstanding loan being serviced.  (13)
    Provision For Income Taxes:  The income tax provision for the year ended September 30, 2004 and the year ended September
30, 2003 differed from the amounts computed by applying the U.S. Federal tax rate of 34
percent to the income (loss) from operations before provision (benefit) for income taxes as a
result of the following: Year ended
    
    
    Year endedSeptember 30,
    
    
    September 30,2004
    
    
    2003Computed expected tax benefit
    
    $
    (833,983
    )
    
    $
    115,629Increase (decrease) in income
taxes resulting from:Non-deductible expenses
    
    
    23,131
    
    
    
    11,552State taxes, net of Federal benefit
    
    
    
    
    
    
    12,014Increase (decrease) in valuation
allowance
    
    
    810,852
    
    
    
    (120,992
    )$
    
    
    
    $
    18,203
 60




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (13)
    Provision For Income Taxes (continued):  The tax effect of temporary differences that give rise to significant portions of deferred
tax assets and liabilities at September 30, 2004 and 2003, are as follows: September
    
    
    September2004
    
    
    2003Deferred tax assets:Net operating loss carryforwards
    
    $
    1,354,367
    
    
    $
    727,826Accrued vacation
    
    
    5,265
    
    
    
    10,290Less valuation allowance
    
    
    (1,261,227
    )
    
    
    (572,208
    )Deferred tax assets
    
    
    98,405
    
    
    
    165,908Deferred tax liabilities:Deferred costs
    
    
    (98,405
    )
    
    
    (114,417
    )Other
    
    
    
    
    
    
    (51,491
    )Deferred tax liability
    
    
    (98,405
    )
    
    
    (165,908
    )Net deferred tax asset
    
    $
    
    
    
    $
    
  The net change in the total valuation allowance for the year ended September 30, 2004
and the year ended September 30, 2003 was an
increase/(decrease) of $810,852 and $(120,992)
respectively.At 2004, the Company has net operating loss carryforwards (NOLs) of approximately
$3,983,443, for Federal income tax reporting purposes and
approximately and $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.  (14)
    Related-Party Transactions:  The Company advanced funds in the amount of $57,605 to an entity owned by a stockholder of
the Company. Funds will be repaid through services rendered. Services rendered in relation
to this amount were $12,605 leaving a balance of $45,000 at
September 30, 2003. During the year ended September 30,
2004 services rendered in relation to this amount were $45,000 leaving
a balance of $0 at September 30, 2004.On July 15, 2004, Marshall L. Stewart, Daryl S. Meddings, Enfo Loan Corporation, Kingsley and
Nancy Cannon and Dale and Suzanne Delmege agreed to sell 4,921,930 of their shares of common
stock of the Company to CDA in exchange
for 622,388 shares of CDA (the Transfer) for an approximate value of $1,178,802, based on
the average trading prices of the respective stocks for the month of June 2004. The Transfer
constitutes a change in control of the Company. 61




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OCEAN WEST HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) YEAR ENDED SEPTEMBER 30, 2004 AND THE YEAR ENDED SEPTEMBER 30, 2003  (14)
    Related-Party Transactions (continued):  During the fourth quarter of fiscal year end September 30, 2004, 2,250 shares of the
outstanding preferred stock of Ocean West Enterprises were exchanged for stock subscription
receivable of $2,250,000. At September 30, 2004 there was a
stock subscription receivable of $1,022,425 which has subsequently
been paid in full.  (15)
    Profit Sharing Plan:  The Company has a 401(k) profit sharing plan covering substantially all of its employees.
Any matching or profit sharing contributions are determined annually at the discretion of
management and vest at the rate of 20% per year of employment starting the second year. For
the 2001 plan year, management elected to make a matching contribution equal to 10% of
amounts contributed by an employee to a maximum of $250 per employee. No matching or profit
sharing contributions were made during the year ended September 30, 2004 and the year ended
September 30, 2003. 
 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.  Previously reported and not reported here in accordance with the Instructions to Item 304 of
Regulation S-B. 
    Item 8A.
    Controls and Procedures. The Companys Chief Executive Officer and Chief Financial Officer are responsible for
establishing and maintaining disclosure controls and procedures for the Company. The
Companys Chief Executive Officer and Chief Financial Officer have designed such disclosure
controls and procedures to ensure that material information is made known to them,
particularly during the period in which this report was prepared. As of the end of the
period covered by this annual report on Form 10-KSB, the Company carried out an evaluation,
under the supervision and with the participation of the Companys Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the Companys
disclosure controls and procedures pursuant to Exchange Act Rule 15d-1-5. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company (including its consolidated subsidiary) required
to be included in reports the Company files with the SEC pursuant to the Securities Exchange
Act of 1934. Subsequent to the date of that evaluation, there have been no significant
changes in the Companys internal controls or in other factors that could significantly
affect the internal controls. 62




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Item 8B. Other Information. Entry of Material Definitive
Agreements On July 1, 2004, the
Company executed a subscription agreement with CDA (July
Agreement). The July Agreement provides that the Company would
sell and that CDA will subscribe for 1,500,000 shares of senior
preferred stock of the Company for $1,500,000. On August 1, 2004, the
Company executed a subscription agreement with CDA (August
Agreement). The August Agreement provides that the Company
would sell and that CDA would subscribe for 500,000 shares of
senior preferred stock of the Company for $500,000. On September 1, 2004,
the Company executed a subscription agreement with CDA
(September Agreement). The September Agreement provides
that the Company would sell and that CDA would subscribe for
250,000 shares of senior preferred stock of the company for
$250,000. On September 28, 2004,
Ocean West Enterprises executed a subscription agreement with CDA.
The Agreement provides that the Company would sell and that CDA would
subscribe for 2,250 shares of senior preferred stock of the
company as an exchange for the cancellation of the July, August and
September Agreements. CDA is the majority
shareholder of the Company. Termination of Material
Definitive Agreements On
September 28, 2004, the Company executed a cancellation
agreement (Cancellation Agreement) with CDA. The
Cancellation Agreement provided that the Company and CDA agree to
cancel and rescind the July Agreement, the August Agreement, and the
September Agreement. The Agreement also provides that the Company
would upon board approval issue 2,250 shares of preferred stock
of Ocean West Enterprises for a value of $1,000 per share or
$2,250,000, which was previously subscribed to by CDA pursuant to the
July Agreement, the August Agreement, and the September Agreement to
CDA. PART III 
  Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section
16(a)of the Exchange Act. Executive Officers and Directors of Ocean West and Ocean West Enterprises Name
    
    Position with Ocean West(1)
    
    Position with Ocean West EnterprisesMarshall L. Stewart
    
    President, Chief Executive
Officer, Director
    
    President, Chief Executive Officer,
DirectorDaryl S. Meddings
    
    Executive Vice President,
Secretary/Treasurer,
Director
    
    Executive Vice President, Chief
Financial Officer,
Secretary/Treasurer, DirectorWayne K. Bailey
    
    Chief Financial Officer,
Director
    
    
  (1)
    All persons listed were appointed to such positions in 2000, except for Mr. Bailey who was
appointed in September of 2004. Officers serve at the discretion of the Board of Directors. Directors hold office until the
next annual meeting of shareholders and until their successors have been elected and accept office. Marshall J. Stewart, 47, has worked in the mortgage industry since 1982. He was
founder of Ocean West Enterprises and has been President, a director and a shareholder since 1988.
Prior to founding Ocean West Enterprises, from 1986 to 1988, Mr. Stewart was a Vice President of
Westport Savings Bank in Laguna Beach, California. His responsibilities included overseeing the
mortgage banking department, secondary marketing and the Laguna Bank Savings branch. Prior to
joining Westport Savings Bank, from 1984 to 1986, he was Production Manager of Irvine City Savings
in Newport Beach, California and had the responsibilities of staffing and training the loan
origination department and overseeing production, underwriting, funding, shipping and the sale of
funded loans to institutional investors such as FNMA and FHLMC. Mr. Stewart received his B.A. in
English with a minor in Business Administration from California State University in Fullerton,
California in 1980. Daryl S. Meddings, 39, was also a founder of Ocean West Enterprises and has been
Executive Vice President, Chief Financial Officer, Secretary/Treasurer and a director and a
shareholder since 1988. As Chief Financial Officer at Ocean West Enterprises, Mr. Meddings
implemented and monitors accounting and financial reporting system. Other duties include budget
planning, expense control, commercial banking relationships and oversight of quality control, loan
servicing and loss mitigation. From late 1987 to 1988, Mr. Meddings was a production manager with
Westport Savings Bank in Laguna Beach, California. His duties included establishing both retail
and wholesale production departments and recruiting, hiring and training mortgage origination
personnel. Prior to that, he began his career in mortgage banking in 1986 as a loan officer at Pro
Mortgage Services in Diamond Bar, California and worked his way up to top producer at Irvine City
Savings in Irvine, California. Mr. Meddings received his B.S. in Finance, Real Estate and
Insurance with a concentration in Real Estate from California Polytechnic State University-Pomona
in 1987. 63




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##### Table of Contents



Wayne K. Bailey, 55, has been appointed to the position of Chief Financial Officer and
Director since September 28, 2004. Mr. Bailey currently
also holds the position of President/CFO of
CDA since the fall of 2002. CDA currently holds 84.9% of the
Company. From January 1990  2002 he was Chief Operating Officer and Chief Financial Officer of a
network of companies in the Aerospace, steel processing, Specialty Rebar, and metal forming
industries. These companies grew to employ over 350 people with revenues in excess of $35 million.
All of these companies were acquired from financially troubled situations and became very
profitable after being restructured. This restructuring included the debt both secured and
unsecured, installing information systems, and management systems. During this time Mr. Bailey
also served as a consultant to companies in the Mortgage business, wood laminating, bottled water,
bookbinding, wholesale siding, cabinet manufacturing and plastics industries. Mr. Bailey attended
the University of Utah, Henager College of Business and LDS Business College earning degrees in
Accounting and Business. Section 16(a) Beneficial Ownership Reporting Compliance with Section 16(a) of the Exchange
Act Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act),
requires the Companys executive officers, directors and persons who own more than ten percent of a
registered class of the Companys equity securities to file reports of ownership and changes in
ownership with the SEC. Executive officers, directors, and greater-than-ten percent stockholders
are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on the Companys review of the copies of such forms received by it and written
representations from the Companys reporting persons, the Company believes that all of the
Companys reporting persons have filed their respective Section 16(a) forms for the year ended
September 30, 2003. Code of Ethics The Company has adopted a Code of Ethics that applies to its principal executive officer,
principal financial officer, principal accounting officer or controller or persons performing
similar functions. A copy of the Companys Code of Ethics will be furnished, without charge, to
any person who requests such copy by writing to the Secretary, Ocean West Holding Corporation,
15991 Redhill Avenue, Suite 110, Tustin, California 92780. 64




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##### Table of Contents



Item 10. Executive Compensation. The following table shows information concerning all compensation paid for services to the
Company in all capacities during the year ended September 30, 2004 and the year ended September 30,
2003. or accrued within the current fiscal year as to the Chief Executive Officer and each of the
other two most highly compensated executive officers of the Company who served in such capacity at
the end of the last fiscal year (the Named Executive Officers) whose total annual salary and
bonus exceeded $100,000: Summary Compensation Table Annual CompensationName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other AnnualPrincipal Position
    
    Year
    
    
    Salary ($)
    
    
    Bonus ($)
    
    
    Compensation ($)Marshall L. Stewart,
President, Chief Executive
    
    
    09/30/04
    
    
    
    180,000
    
    
    
    0
    
    
    
    0Officer
    
    
    09/30/03
    
    
    
    170,000
    
    
    
    0
    
    
    
    0Daryl Meddings, Executive
Vice President, Chief
    
    
    09/30/04
    
    
    
    180,000
    
    
    
    0
    
    
    
    0Financial Officer
    
    
    09/30/03
    
    
    
    170,000
    
    
    
    0
    
    
    
    44,779Wayne K.
Bailey, Chief Financial
Officer
    
    
    09/30/04
    
    
    
    0
    
    
    
    0
    
    
    
    0
 Ocean West Enterprises has entered into substantially identical employment agreements with
each of Marshall Stewart, its President and CEO, and Daryl Meddings, its Executive Vice President. The term
of each agreement is three years beginning on September 1, 2004. Ocean West Enterprises may
terminate the agreement for just cause or if it ceases operations; the employees may terminate
the agreement on thirty days notice. Each employee is entitled to a base annual salary of $180,000
with amounts not paid to be considered deferred compensation. Mr. Stewart and Mr. Meddings have
waived their rights to salaries not paid in fiscal year ended September 30, 2003 and no
compensation has been deferred. Compensation Committee Interlocks and Insider Participation in Compensation Decisions For all years referenced in the Summary Compensation Table, two former shareholders of Ocean
West Enterprises, Mark Stewart and Daryl Meddings, determined executive compensation. On July 15,
2004 Both Mr. Stewart and Mr. Meddings sold their common stock in the Company. Ocean West has not
paid any compensation to date and does not expect to pay any in the near future. 65




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Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters Persons and groups owning in excess of five percent of our Common Stock are required to file
certain reports with the SEC disclosing such ownership pursuant to the Exchange Act. Based upon
such reports, as of September 30, 2004, management knows of no persons other than those identified
below who were beneficial owners of more than five percent of the outstanding shares of Common
Stock. The following table sets forth information with respect to beneficial ownership of issued and
outstanding stock and warrants of Ocean West by each director, the Chief Executive Officer of the
Corporation, the other named executive officers, all executive officers and directors as a group
and beneficial owners of more than five percent of the outstanding shares of Common Stock as of
December 30, 2004: Total Number of
    
    
    PercentSecurities Owned
    
    
    ofName of Beneficial Owner
    
    Title of Class
    
    Beneficially
    
    
    Class (1)Daryl S. Meddings (2)(4)
    
    Common Shares
    
    
    0
    
    
    
    Class B Common Shares
    
    
    0
    
    
    
    Series L Preferred
    
    
    210
    
    
    
    21.0
    %Marshall L. Stewart (2)(3)
    
    Common Shares
    
    
    0
    
    
    
    Class B Common Shares
    
    
    0
    
    
    
    Series L Preferred
    
    
    205
    
    
    
    20.5
    %Consumer Direct of America(5)
    
    Common Shares
    
    
    4,900,000
    
    
    
    84.9
    %Class B Common Shares
    
    
    210,096
    
    
    
    100
    %Series N Preferred Shares
    
    
    2,250,000
    
    
    
    100
    %Total number of shares owned
by directors and executive officers as a group (2 persons) (6)
    
    Common Shares
    
    
    0
    
    
    
    Class B Common Shares
    
    
    0
    
    
    
    Series L Preferred Shares
    
    
    415
    
    
    
    41.5
    %
    (1)
    Our preferred stock consists of Series C,E,F,G,I,L and M. Series C and E are non
voting stock and redeemable to the Company. Series F through M are voting stock as well as
redeemable to the Company.(2)
    Except as otherwise indicated the mailing address of each person shown is c/o Ocean
West Holding Corporation, 15991 Redhill Avenue, Tustin, California 92780.   (4) Includes 0 shares of Class A common stock, 0 shares of Class B common stock and 210
shares of Series L preferred stock. (5) The mailing address is, Sandhill Road, Las Vegas, NV. (6) Includes 0 shares of Class A common stock, 0 shares of Class B common stock and 415
shares of Series L preferred stock. 66




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Item 12. Certain Relationships and Related Transactions On July 15, 2004, Marshall L. Stewart, Daryl S. Meddings, Enfo Loan Corporation, Kingsley and
Nancy Cannon and Dale and Suzanne Delmege agreed to sell 4,921,930 of their shares of common stock
of the CDA in exchange for 622,388
shares of CDA (the Transfer) for an approximate value of $1,178,802, based on the average trading
prices of the respective stocks for the month of June 2004. The Transfer constitutes a change in
control of the Company. 
 Item 13. Exhibits and Reports on Form 8-K  1.
    Exhibits. ExhibitNo.
    
    Description of Exhibit
    
    Location3.1
    
    Certificate of Incorporation of Ocean
West Holding Corporation
    
    Previously filed as
an exhibit to the
Registration
Statement of Ocean
West Holding
Corporation (File
No. 333-95927)
filed on February
1, 2000.3.2
    
    Bylaws of Ocean West Holding Corporation
    
    Previously filed as
an exhibit to the
Registration
Statement of Ocean
West Holding
Corporation (File
No. 333-95927)
filed on February
1, 2000.4.1
    
    Common Stock Purchase Warrant Agreement
Between Ocean West Holding Corporation
and Registrar and Transfer Company
    
    Previously filed as
an exhibit to the
Registration
Statement of Ocean
West Holding
Corporation (File
No. 333-86484).16.1
    
    Letter from Stonefield Josephson dated
November 7, 2003
    
    Previously filed as
an exhibit to Form
8K, dated October
29, 2003, Changes
in Registrants
Certifying
Accountant21.1
    
    Subsidiaries of the Registrant
    
    Previously filed as
an exhibit to
Pre-Effective
Amendment No. 3 to
the Registration
Statement of Ocean
West Holding
Corporation (File
No. 333-95927)
filed on January
28, 2002.31.1
    
    Certificate of Chief Executive Officer
pursuant to section 302 of the
Sarbanes-Oxley Act of 2002
    
    Filed herewith.31.2
    
    Certificate of Chief Financial Officer
pursuant to section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith.32.1
    
    Certificate of the Chief Executive
Officer and Chief Financial Officer
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
    
    Filed herewith.
    67




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2. Reports filed on Form 8K The Company filed a report on Form 8K on November 4, 2003 and amended the report on November
12, 2003, reporting Changes in Registrants Independent Accountant. The Company filed an additional
report dated January 22, 2004, reporting the registrant issued a press release announcing an
agreement with Freedom Mortgage Corporation and First Fidelity Capital Markets. On February 20,
2004, Registrant, Freedom Mortgage Corporation and First Fidelity Capital Markets mutually
terminated their agreement On August 3, 2004, the Company filed a report n Form 8-K disclosing that several of its
shareholders exchanged 4,921,930 shares for 622,388 shares of CDA, which
resulted in a change of control whereby CDA is a 84.9% holder of Ocean
Wests stock. On September 8, 2004 the Company filed a Form 8-K reporting the resignation of its auditors,
Hein and Associates. On September 28, 2004, the Company reported the resignation of its CFO, Daryl S. Meddings, the
appointment of Wayne K. Bailey to the position of CFO and the appointment of Daryl S. Meddings to
Executive Vice President. The Form also reported the Companys entered into employment agreements
with Marcshall L. Stewart as President and Daryl S. Meddings as Executive Vice President. The
Company filled a vacancy on its board by the appointment of Wayne K. Bailey as director. On November 29, 2004 the Company reported on Form 8-K the engagement of its auditors, Chavez
and Koch. 
  ITEM 14. Principal Accountant Fees and Services Chavez and Koch CPAs (Chavez) was the Companys independent auditor and examined the
financial statements of the Company for the fiscal year ending September 30, 2004. Hein and
Associates LLC (Hein) was the Companys independent auditor and examined the financial statements
of the Company for the fiscal year ending September 30, 2003. Audit Fees Chavez
expects aggregate fees of approximately $19,000 for the fiscal year ended September 30,
2004 for professional services rendered for the audit of the Companys annual financial statements.
Hein was paid aggregate fees of approximately $71,405 for the fiscal year ended September 30,
2003, for professional services rendered for the audit of the Companys annual financial statements
and for the reviews of the financial statements included in the Companys quarterly reports on Form
10-QSB during the fiscal ended September 30, 2004. 68




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ITEM 14. Principal Accountant Fees and Services (continued) Audit Related Fees Chavez and Hein were not paid additional fees for either of the fiscal years ended September
30, 2003 or September 30, 2004 for assurance and related services reasonably related to the
performance of the audit or review of the Companys financial statements. Tax Fees Chavez
estimates fees in the amount of $2,500 for the fiscal year ended September 30, 2004 for
professional services rendered for tax compliance, tax advice and tax planning during the fiscal
year ended September 30, 2004. Hein was paid fees in the amount of $10,331 for professional services rendered for tax compliance, tax advice and tax
planning during the fiscal year ended September 30, 2004. All Other Fees Chavez and Hein were not paid any other fees for professional services during the fiscal years
ended September 30, 2003 and September 30, 2004. Audit Committee The Company does not have an audit committee. 69




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SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized. Ocean West Holding Corporation By:
    
    /s/ Marshall L. Stewart
    
    January 13, 2005Marshall L. Stewart, President, Chief Executive Officer
(Principal Executive Officer)By:
    
    /s/ Wayne K. Bailey
    
    January 13, 2005Wayne K. Bailey, Chief Financial Officer, Director
(Principal Financial Officer)
 In accordance with the Exchange Act, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates indicated. /s/ Marshall L. StewartMarshall L. Stewart, Director
    
    January 13, 2005/s/ Wayne K. Bailey
    
    January 13, 2005Wayne K. Bailey, Director
 70