SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter ended August 31, 1997
Commission file number 2-92261
WESTBRIDGE RESEARCH GROUP
California 95-3769474
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1150 Joshua Way
Vista, California 92083
(Address of principal executive office) (Zip Code)
Registrant's telephone number,
including area code: (619) 599-8855
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing require- ments for the past 90 days. Yes X No ______
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of a recent date: 8,413,753 shares of common stock, no par
value, as of August 31, 1997.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
AUGUST 31, NOVEMBER 30,
1997 1996
(unaudited) (audited)
----------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 251,756 $ 115,719
Trade accounts receivable, less
allowance for doubtful accounts of
$3,699 and $4,473 respectively 315,797 128,442
Inventories 96,417 74,369
Prepaid expenses and other
current assets 18,451 10,237
---------- ----------
Total Current Assets 682,421 328,767
PROPERTY AND EQUIPMENT 373,325 363,475
Less accumulated depreciation [335,808] [323,408]
---------- -----------
Net Property and Equipment 37,517 40,067
PROCESSES AND FORMULAS, net of accumulated
amortization of $2,950,083 and
$2,889,830 respectively 147,285 207,538
PREPAID ROYALTY, net of accumulated
amortization of $17,523 and $3,186
respectively 178,419 192,756
LONG TERM ACCOUNTS RECEIVABLE, net 130,000 130,000
----------- -----------
TOTAL ASSETS $1,175,642 $ 899,128
=========== ==========
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
2
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
(continued)
<TABLE>
AUGUST 31, NOVEMBER 30,
1997 1996
(unaudited) (audited)
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 45,080 $ 17,844
Notes payable - related parties 232,757 --
Notes payable 28,681 --
Accrued expenses 70,346 78,467
Current portion of capital
lease obligation 4,187 4,187
Current portion of long-term debt 36,113 39,239
---------- ----------
TOTAL CURRENT LIABILITIES 417,164 139,737
Notes payable - related parties -- 220,423
Long-term debt 27,011 80,619
Deferred rent 2,247 5,137
Capital lease obligations:
net of current portion 242 3,428
---------- ----------
TOTAL LIABILITIES 446,664 449,344
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, no par value:
Authorized 37,500,000 shares
Issued and outstanding 8,413,753 shares 8,479,854 8,479,854
Paid in Capital: Warrants 95,000 95,000
Accumulated deficit [7,845,876] [8,125,070]
TOTAL SHAREHOLDERS' EQUITY 728,978 449,784
----------- -----------
TOTAL LIABILITIES & SHAREHOLDERS' $1,175,642 $ 899,128
EQUITY =========== ===========
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
3
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
THREE MONTHS NINE MONTHS
ENDED AUGUST 31 ENDED AUGUST 31
1997 1996 1997 1996
===================== =====================
<S> <C> <C> <C> <C>
NET SALES $ 349,915 $ 126,505 $1,218,943 $ 750,230
COST OF SALES 148,873 57,475 388,409 217,349
--------- --------- ---------- ---------
GROSS PROFIT 201,042 69,030 830,534 532,881
--------- --------- ---------- ---------
OPERATING EXPENSES
Research and development 35,597 43,424 77,849 114,570
Selling 60,622 43,528 185,740 131,945
General and administration 54,006 65,615 160,913 221,926
Royalties 16,539 106,173 53,716 609,975
Amortization of formula 20,084 20,084 60,253 60,253
--------- --------- --------- ---------
TOTAL OPERATING EXPENSES 186,848 278,824 538,471 1,138,669
--------- --------- --------- ---------
Operating income (loss) 14,194 [209,794] 292,063 [605,788]
OTHER INCOME (EXPENSE)
Interest expense [6,551] [6,940] [22,214] [22,194]
Interest income 1,819 636 3,195 2,225
Other income 100 2,029 6,150 10,154
---------- ---------- ----------- ----------
Net income (loss) $ 9,562 $[214,069] $ 279,194$ [615,603]
========== ========== =========== ==========
Net income (loss) per common
share $ .01 $ [.03] $ .04 $ [.08]
========== ========== =========== ==========
Weighted average common and common
equivalent shares outstanding 8,413,753 8,413,753 8,413,753 8,413,753
========== ========== =========== ==========
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
4
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
1997 1996
========================================
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income [loss] $ 279,194 $ [615,603]
Adjustments to reconcile net income
[loss] to net cash provided by (used in)
operating activities:
Amortization of prepaid royalty 14,337 --
Depreciation and amortization 72,653 73,482
Changes in Operating Assets and Liabilities:
Increase in trade accounts receivable [187,355] [31,580]
Increase in inventories [22,048] [5,169]
Increase in prepaid expenses [8,213] [542]
Increase [decrease] in accounts payable 27,236 [2,996]
[Decrease] increase in accrued liabilities [8,121] 9,390
---------- -----------
Net cash provided by (used in)
operating activities 167,683 [573,018]
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment of royalty expense through
forgiveness of notes receivable -- 579,476
Purchase of property and equipment [9,850] [4,610]
Proceeds from notes receivable -- 83,990
----------- -----------
Net cash (used in) provided by
investing activities [9,850] 658,856
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable [29,326] [20,904]
Borrowings on notes payable 1,273 --
Increase in deferred rent -- 6,100
Decrease in deferred rent [2,890] --
Payments on capital lease obligation [3,187] [3,283]
Borrowings on notes payable-related parties 12,334 11,481
----------- -----------
Net Cash (used in) financing activities [21,796] [6,606]
INCREASE IN CASH 136,037 79,232
CASH AT BEGINNING OF PERIOD 115,719 120,672
------------ -----------
CASH AT END OF PERIOD $ 251,756 $ 199,904
============ ===========
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation:
The consolidated balance sheet as of August 31, 1997, the consolidated
statement of operations for the nine-month periods ended August 31, 1997, and
1996, respectively, and the consolidated statements of cash flows for the
nine-month period then ended have been prepared by the Company without audit. In
the opinion of management, all adjustments (which include only normal recurring
adjustments except as noted in management's discussion and analysis of financial
condition and results of operations) necessary to present fairly the financial
position, results of operations and changes in cash flows have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the financial statements and
notes thereto included in the 1996 Annual Report on Form 10-KSB. The results of
operations for the quarter ended August 31, 1997, are not necessarily indicative
of the operating results for the full year.
B. Subsequent Events:
None
MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations:
Net sales for the three and nine-month periods ended August 31, 1997 were
$349,915, and $1,218,943, representing increases of 177% and 63%, respectively,
over the same periods in the prior year. The increase in net sales is primarily
related to an increase in net foreign sales and sales of additional new products
being manufactured for an existing domestic customer.
(Continued)
6
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
Cost of sales as a percentage of net sales decreased to 43% for the quarter
ended August 31, 1997 as compared with 46% for the same period in the prior
year. For the nine month period ended August 31, 1997, cost of sales as a
percentage of net sales increased to 32% from 29% for the same period in the
prior year. The nine month increase resulted primarily from an increased
percentage of lower margin products in the product sales mix.
Operating expenses for the three month and nine month periods ended August
31, 1997 decreased by 33% and 53%, respectively, over the same periods in the
prior year. This decrease is primarily due to a decrease in royalty expenses
which resulted from the restructuring in the terms of the Company's licensing
agreement during fiscal 1996.
Research and development expenses decreased by $7,827, or 18% over the
prior year's third quarter. Research and development expenses also decreased
$36,721, or 32% for the nine month period. These decreases are due to decreased
contract research and reallocation of salaries and wages.
Selling expenses as a percentage of net sales for the three and nine month
periods ended August 31, 1997 were approximately 18% and 16%, respectively,
compared with 35% and 18% for the same periods in the prior year. The decrease
is primarily due to increased sales.
General and administrative expenses in the three and nine month periods
ended August 31, 1997 decreased by $11,609 or 18%, and $61,013 or 28%,
respectively, when compared with the same periods in the prior year. These
decreases are primarily due to a decrease in contract labor allocated to the
general and administrative function as well as increased moving expenses
incurred in the prior year.
Net income for the quarter ended August 31, 1997 was $9,562 or $.01 per
common share compared with a net loss of $214,069, or $.03 per common share for
the same period in the prior year. This increase is primarily the result of an
increase in net sales and a decrease in royalty expense.
Income taxes have not been provided for in the accompanying financial
statements of operations due to the net operating loss carryforwards generated
in prior years that are available for carryforward against current year income.
7
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
Liquidity and Capital Resources:
The Company has no material commitments for capital expenditures.
Working capital was $265,257 at August 31, 1997, up from $189,030 at
November 30, 1996.
Based on current cash flow projections management expects that the Company
can continue operations for the current year without infusions of additional
cash.
Impact of Inflation
The Company does not believe inflation has had a significant effect on its
operations.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of shareholders ("Annual Meeting") was held on July
17, 1997. The certified list of shareholders prepared by the Company's transfer
agent certified that the number of shares of common stock of the Company issued,
outstanding and entitled to vote at the Annual Meeting was 8,413,753. The
shareholders present at the Annual Meeting, in person and by proxy, held
5,560,521 shares of common stock of the Company.
The following matters were voted upon at the Annual Meeting:
(i) The amendment to the Company's Articles of Incorporation to effect a
one-for-four reverse stock split was approved. The votes cast were as follows:
VOTES VOTES VOTES
FOR AGAINST ABSTAINED
5,211,612 254,496 94,413
(ii) The amendment of the Company's Articles of Incorporation to authorize
the establishment of a class of preferred stock was approved. The votes cast
were as follows:
VOTES VOTES VOTES ABSTAINED/
FOR AGAINST NOT VOTED
5,044,370 328,599 187,552
9
<PAGE>
(iii) The following members were elected to the Board of Directors of the
Company:
VOTES VOTES
FOR WITHHELD
William J. Dale 5,495,522 64,969
William F. Fruehling 5,495,552 64,969
Christine Koenemann 5,495,552 64,969
William M. Witherspoon 5,487,219 73,302
(iv) The appointment of independent accountants for the Company was
approved. The votes cast were as follows:
VOTES VOTES VOTES
FOR AGAINST ABSTAINED
5,463,752 22,663 74,106
10
<PAGE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
None
B. REPORTS ON FORM 8-K
None
11
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTBRIDGE RESEARCH GROUP
(Registrant)
By: /s/ Christine Koenemann
-------------------------------------
Christine Koenemann, President
Principal Executive Officer
Principal Financial Officer
Date: October 10, 1997
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> JUN-01-1997
<PERIOD-END> AUG-31-1997
<CASH> 251,756
<SECURITIES> 0
<RECEIVABLES> 316,797
<ALLOWANCES> 8,172
<INVENTORY> 96,417
<CURRENT-ASSETS> 682,421
<PP&E> 373,325
<DEPRECIATION> (335,808)
<TOTAL-ASSETS> 1,175,642
<CURRENT-LIABILITIES> 417,164
<BONDS> 0
0
0
<COMMON> 8,479,854
<OTHER-SE> 728,978
<TOTAL-LIABILITY-AND-EQUITY> 1,175,642
<SALES> 1,218,943
<TOTAL-REVENUES> 830,534
<CGS> 388,409
<TOTAL-COSTS> 830,534
<OTHER-EXPENSES> 538,471
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (22,214)
<INCOME-PRETAX> 279,194
<INCOME-TAX> 0
<INCOME-CONTINUING> 292,063
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 279,194
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.03)
</TABLE>
