UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended March 31, 1999
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Bridge Technology, Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada 59-3065437
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(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
12601 Monarch Street, Garden Grove, CA 92841
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(Address of principal executive offices)
(714) 891-6508
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [X] No []
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a court.
Yes [] No []
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date
6,782,936
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Transitional Small Business Disclosure Format (Check one): Yes [] No [X]
<PAGE>
PART 1 FINANCIAL INFORMATION
Item 1. Financial Statements
Bridge Technology, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
(Audited) (Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash $ 752,015 $1,011,685
Accounts receivable 4,710,197 3,702,943
Subscription receivable 25,000 25,000
Other receivables 98,004 86,916
Inventory 1,320,588 1,810,944
Advances to employees 27,500 17,453
Other current assets 195,789 155,214
Total current assets 7,129,093 6,810,155
Property and equipment, net 366,433 511,451
Trademark, net of amortization - 597
Deferred income tax 63,905 59,247
Other assets 229,676 265,688
Total assets $ 7,789,107 $7,647,138
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 3,710,781 $3,554,516
Payable to employee 41,161 -
Accrued liabilities 563,071 164,469
Loans payable 632,419 433,751
Other liabilities 23,969 340,582
Total current liabilities 4,971,401 4,493,318
Notes payable, less current portion 210,213 -
Notes payable, less current portion to shareholders 100,000 100,000
Total liabilities 5,281,614 4,593,318
Commitments and Contingencies
Shareholders' equity
Common stock; par value $0.01 per share, authorized
10,000,000 shares, 6,132,936 shares outstanding at
December 31, 1998, 6,732,936 shares outstanding at
March 31, 1999 61,329 67,329
Additional paid-in capital 3,600,111 4,044,111
Stock subscribed 25,000 25,000
Accumulated deficit (1,140,935)(1,062,657)
Translation adjustment (38,012) (19,963)
Total shareholders' equity 2,507,493 3,053,820
Total liabilities and shareholders' equity $7,789,107 $7,647,138
See accompanying summary of accounting policies and notes to
consolidated financial statements
</TABLE>
F1
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1999
(UnAudited) (Unaudited)
<S> <C> <C>
Net sales 4,740,388 7,717,557
Cost of sales 4,097,239 6,934,706
Gross profit 643,149 782,851
Selling, general and 737,549 658,399
administrative expense
Income (Loss) from operations (94,400) 124,452
Other income(expense):
Interest expense (6,289) (8,684)
Other income 10,421 3,018
Exchange gain(loss) 8,373 (208)
Income (Loss) before income taxes (81,895) 118,578
Income Taxes provision:
Current - 40,300
Deferred - -
Net income (loss) (81,895) 78,278
Net income (loss) applicable to common (81,895) 78,278
shares
Weighted average number of 3,482,936 6,239,603
common stock outstanding
Earnings (Loss) per share $ (0.02) $ 0.01
See accompanying summary of accounting policies and notes to
consolidated financial statements.
</TABLE>
F-2
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1999
(UnAudited) (Unaudited)
<S> <C> <C>
Cashflows from operating activities
Net income (loss) $ (81,895) $ 78,278
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization 19,484 26,042
Provision for doubtful accounts 145,904 -
Provision for slow moving inventory - 20,000
Increase (decrease) from changes in operating
assets and liabilities:
Trade receivables (157,206) 1,007,473
Inventory (580,874) (510,356)
Other receivables (223,320) 11,088
Prepaid and other assets (90,958) 50,622
Other assets (43,440) (36,012)
Accounts payable and accrued liabilities 746,575 (554,867)
Other liabilities 33,506 314,452
Net cash provided by (used in) operating (232,224) 367,720
activities
Cash flows from investing activities
Purchase of property, plant and equipment (32,817) (170,502)
Addition to intangible assets - (597)
Net cash used in investing activities (32,817) (171,099)
Cash flows from financing activities
Borrowings on loans payable 121,764 -
Payments on loans payable (1,177) (198,668)
Payments on notes payable and related interest (50,000) (210,213)
Net proceeds from issuance of common stock 646,000 450,000
Net cash provided by financing activities 716,587 41,119
Effect of exchange rate changes on cash 5,240 21,930
Net increase in cash and cash equivalents 456,786 259,670
Cash and cash equivalents, beginning of year 202,130 752,015
Cash and cash equivalents, end of year $ 658,916 $ 1,011,685
Supplemental information:
Cash paid during the year for:
Interest $ 7,086 $ 9,336
Income taxes 3,200 4,000
Supplemental disclosure of non-cash activities:
The company recorded subscription receivable of $25,000 and stock
subscribed of $25,000 as of March 31, 1999.
See accompanying summary of accounting policies and notes to
consolidated financial statements.
</TABLE>
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Organization and Business
Bridge Technology, Inc. (The Company) was organized under the law of the
State of Nevada on April 15, 1969. The Company is currently located in
California and is in the business of developing, buying, assembling,
testing, packaging, manufacturing, marketing, and selling computer
peripherals and computer system enhancement products. The Company
established operating divisions and subsidiaries under several separate
business names. Each of these operating entities is focused on certain
specific products and sales channels. Currently the Company has four
wholly owned subsidiaries: PTI Enclosures, Inc., Newcorp Technology Ltd.
(Japan), Newcorp Technology, Inc. (USA), and Bridge R&D, Inc.
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB
and Article 10 of Regulation S-X. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for fair presentation have been included.
Operating results for the three months period ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 1999. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended December 31,
1998.
Note 2. Income Taxes
As of December 31, 1998, for federal income tax purposes, the Company
had approximately $582,000 in net operating loss carryforwards expiring
through 2018. The annual utilization of the operating loss carryforward
may be significantly limited due to the adverse resolution, if any, with
respect to the loss carryover provisions of Internal Revenue Code
Section 382 in connection with certain stock issuances by the Company.
Note 3. Shareholders' Equity
In March, 1999, the Company received proceeds of $450,000 to issue
600,000 shares of its common stock to a sophisticated investor through a
private placement at a price of $0.75 per share.
F-4
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Except for historical information contained herein, the matters set
forth in this report are forward-looking statements within the meaning
of the "Safe Harbor" provisions of the Private Securities Litigation Act
of 1995. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially. The
Company disclaims any obligations to update these forward-looking
statements.
Results of Operations for the Three Months ended March 31, 1999 as
compared to the Three Months Ended March 31, 1998.
Net Sales of $7,717,557 for the three months ended March 31, 1999
increased by $2,977,169 (62.8%) over net sales of $4,740,388 for the
same period of 1998. The increase was due primarily to the Company's
entry into the RAID business and increased sales by PTI Enclosures, Inc.
Gross Profit for three months ended March 31, 1999 was $782,851 a
22% increase when compared to $643,149 for the three months ended
March 31, 1998, reflecting higher gross margins attributed to the
Company's PTI Enclosures, Inc. acquisition. Gross profit as a
percentage of net sales increased from 10.1% to 13.6% for the three
months ended March 31, 1999.
Selling, general and administrative expenses decreased by $79,150
to $658,399 in the three months ended March 31, 1999 compared to
$737,549 for the three months ended March 31, 1998. As a percentage of
revenue, these expenses decreased from 15.6% in the three months ended
March 31, 1998 to 8.5% in the three months ended March 31, 1999.
The difference is due to lower sales costs related to higher volume for
the DataStor division.
Operating results increased from a loss of $94,400 in three
months ended March 31, 1998 to an income of $124,452 in the three
months ended March 31, 1999 principally reflecting higher volume of
sales in the three months ended March 31, 1999. Operating results as
a percentage of revenue increased 3.2% from a 1.7% loss in the three
months ended March 31, 1998 to 1.5% profit in the three months ended
March 31, 1999.
Other expenses increased by $18,379 from $12,505 other income in
the three months ended March 31, 1998 compared to other expenses of
$5,874 for the three months ended March 31, 1999.
Net profit increased to $78,278 or $0.01 per share for the three
months ended March 31, 1999 compared to a loss of $81,895 or a loss of
$0.02 per share on a lower number of shares outstanding for the three
months ended March 31, 1998.
Liquidity and Capital Resources
Since current management acquired control of the Company in early 1997,
the Company has financed its operations with internally generated cash
and with the private placement of its securities totaling in excess of
$2,000,000 to a limited number of accredited investors with knowledge of
the Company's operations and plans to expand. The initial private
placement commenced in June 1997 and was completed on or about December
31, 1998. A second private placement was initiated and completed in the
first quarter of 1999.
The Company's capital requirements have been and will continue to
be significant and its cash and cash requirements have been sufficient
to cover its cash flow from operations. At March 31, 1999, the Company
had a working capital of $2,316,837 and cash of $1,011,685 compared to a
working capital of $2,157,692 and cash of $752,015 at December 31,
1998. Since restarting operations, the Company has satisfied its
working capital requirements with cash generated through operations and
the issuance of equity securities, and obtaining working capital bank
loans.
Net cash provided by operating activities in the three months ended
March 31, 1999 was $367,720 as compared to $232,224 used in the three
months ended March 31, 1998, the difference is mainly due to increase in
accounts receivable collections, decrease in accounts payable and
accrued liabilities.
Net cash used in investing activities in the three months ended
March 31, 1999 was $171,099 for the purchase of fixed assets and
intangible assets in Japan, as compared to $32,817 for the purchase
of fixed assets in the three months ended March 31, 1998.
Net cash provided by financing activities in the three months
ended March 31, 1999 was $41,119 as compared to $716,587 in the three
months ended March 31, 1998. Compared to the private placement
conducted in the first quarter of 1998 there was only one private
placement of $450,000 in the first quarter of 1999.
The Company believes that it can fund the growth of its core
business with internally generated cash flow in addition to an
occasional private placement of its common stock.
Effects of Inflation
The Company believes that inflation has not had a material effect on its
net sales and results of operations.
Effects of Fluctuation in Foreign Exchange Rates
The Company continues to buy products and services from foreign
suppliers. The Company contracts for such products and services in U.S.
dollars, thus eliminating the possible effect of currency fluctuations.
The Company's wholly-owned subsidiary, Newcorp Technology (Japan), was
subject to such currency fluctuations and subsequently suffered losses
due mainly to the decline of Japanese yen from 106 Yen/dollar to present
rate of 138.29 Yen/dollar. In May, 1998, Newcorp Japan changed its
sales contracts with its OEM customers from Japanese Yen to U.S. dollars
in order to eliminate future material effect of currency fluctuations on
its net sales and results of operations.
Year 2000 Effect
The Company's accounting software currently does not utilize a four
digit year field, however, the Company has been assured by the software
manufacturer that all necessary modifications for the year 2000 have
been or will be made and tested timely.
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceeding
There are no legal proceedings either against the Company or
against third parties.
Item 2. Changes in Securities
Recent Sales
The Company sold 600,000 shares of common stock at $0.75 per share
to an accredited investor and Director on March 15, 1999.
Item 3. Defaults upon Senior Securities
There are no defaults upon senior securities.
Item 4. Submission of Matters to a Vote of Security Holders
There are no matters submitted to a vote of security holders.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
There are no exhibits and reports on Form 8-K.
SIGNATURES
Bridge Technology, Inc.
Registrant
Date ____________________ __________________________
Signature
John J. Harwer, CEO
Date ____________________ ____________________________
Signature
John T. Gauthier, CFO
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,011,685
<SECURITIES> 0
<RECEIVABLES> 3,987,526
<ALLOWANCES> 0
<INVENTORY> 1,810,944
<CURRENT-ASSETS> 6,810,155
<PP&E> 836,983
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,647,138
<CURRENT-LIABILITIES> 4,493,318
<BONDS> 100,000
0
0
<COMMON> 67,329
<OTHER-SE> 2,986,491
<TOTAL-LIABILITY-AND-EQUITY> 7,647,138
<SALES> 7,717,557
<TOTAL-REVENUES> 7,717,557
<CGS> 6,934,706
<TOTAL-COSTS> 658,399
<OTHER-EXPENSES> 2,810
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,684
<INCOME-PRETAX> 118,578
<INCOME-TAX> 40,300
<INCOME-CONTINUING> 78,278
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78,278
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
