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 Quarter ended May 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 May 31, 1997.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
May 31, NOVEMBER 30,
1997 1996
(unaudited) (audited)
-------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 182,930 $ 115,719
Trade accounts receivable, less
allowance for doubtful accounts of
$4,473 and $4,473 respectively 364,089 128,442
Inventories 87,685 74,369
Prepaid expenses and other
current assets 16,221 10,237
Total Current Assets 650,925 328,767
PROPERTY AND EQUIPMENT 366,409 363,475
Less accumulated depreciation [331,674] [323,408]
Net Property and Equipment 34,735 40,067
PROCESSES AND FORMULAS, net of accumulated
amortization of $2,929,999 and
$2,889,830 respectively 167,369 207,538
PREPAID ROYALTY, net of accumulated
amortization of $12,744 and $3,186
respectively 183,198 192,756
LONG TERM ACCOUNTS RECEIVABLE, net 130,000 130,000
TOTAL ASSETS $1,166,227 $ 899,128
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
(continued)
<TABLE>
MAY 31, NOVEMBER 30,
1997 1996
(unaudited) (audited)
-----------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 44,987 $ 17,844
Notes payable - related parties 228,602 --
Notes payable 28,257 --
Accrued expenses 64,676 78,467
Current portion of capital
lease obligation 4,187 4,187
Current portion of long-term debt 35,225 39,239
TOTAL CURRENT LIABILITIES 405,934 139,737
Notes payable - related parties -- 220,423
Long-term debt 36,379 80,619
Deferred rent 3,211 5,137
Capital lease obligations:
net of current portion 1,287 3,428
TOTAL LIABILITIES 446,811 449,344
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 [7,855,438] [8,125,070]
TOTAL SHAREHOLDERS' EQUITY 719,416 449,784
TOTAL LIABILITIES & SHAREHOLDERS' $1,166,227 $ 899,128
EQUITY
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
THREE MONTHS SIX MONTHS
ENDED MAY 31 ENDED MAY 31
1997 1996 1997 1996
-------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $ 596,366 $ 505,201 $ 869,028 $ 623,725
COST OF SALES 171,068 98,413 239,536 159,874
GROSS PROFIT 425,298 406,788 629,492 463,851
OPERATING EXPENSES
Research and development 20,020 39,138 42,252 71,146
Selling 72,834 38,168 125,118 88,417
General and administration 55,606 102,177 106,907 156,311
Royalties 22,702 398,105 37,177 503,802
Amortization of formula 20,084 20,085 40,169 40,169
TOTAL OPERATING EXPENSES 191,246 597,673 351,623 859,845
Operating income (loss) 234,052 [190,885] 277,869 [395,994]
OTHER INCOME (EXPENSE)
Interest expense [6,855] [7,428] [15,663] [15,254]
Interest income 770 904 1,376 1,589
Other income -- 8,902 6,050 8,125
Net income (loss) $ 227,967 $[188,507] $ 269,632 $[401,534]
Net income (loss) per common
share $ .03 $ [.03] $ .04 $ [.05]
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.
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
SIX MONTHS ENDED
MAY 31, MAY 31,
1997 1996
-----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income [loss] $ 269,632 $ [401,534]
Adjustments to reconcile net income
[loss] to net cash provided by
(used in) operating activities:
Notes receivable forgiven as payment
for royalties -- 503,802
Amortization of prepaid royalty 9,558 --
Depreciation and amortization 48,435 48,617
Changes in Operating Assets and Liabilities:
Increase in trade accounts receivable [235,647] [224,603]
Increase in inventories [13,316] [12,818]
[Increase] decrease in prepaid expenses [5,984] 1,382
Increase in accounts payable 27,143 10,706
[Decrease] increase in accrued liabilities [13,791] 10,212
Net cash provided by (used in)
operating activities 86,030 [568,038]
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment [2,934] [4,610]
Proceeds from sale of investments -- 52,787
Net cash (used in) provided by
investing activities [2,934] 551,979
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable [20,846] [10,027]
Borrowings on notes payable 849 --
Decrease in deferred rent [1,926] --
Payments on capital lease obligation [2,141] [2,117]
Borrowings on notes payable-related parties 8,179 7,407
Net Cash (used in) financing activities [15,885] [4,737]
INCREASE (DECREASE) IN CASH 67,211 [20,796]
CASH AT BEGINNING OF PERIOD 115,719 120,672
CASH AT END OF PERIOD $ 182,930 $ 99,876
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation:
The consolidated balance sheet as of May 31, 1997, the consolidated
statement of operations for the six-month periods ended May 31, 1997,
and 1996, respectively, and the consolidated statements of cash flows
for the six-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 May 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 six month periods ended May 31, 1997 were
$596,366, and $869,028, representing increases of 18% and 40%,
respectively, over the same periods in the prior year. The increase in
net sales is primarily related to an increase in net foreign sales
resulting from an intensified international marketing effort.
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
(Continued)
Cost of sales as a percentage of net sales increased to 29% for the
quarter ended May 31, 1997 as compared with 20% for the same period in
the prior year. For the six month period ended May 31, 1997, cost of
sales as a percentage of net sales increased to 28% form 26% for the
same period in the prior year. These increases resulted primarily from
an increased percentage of lower margin products in the product sales
mix.
Operating expenses for the three month and six month periods ended May
31, 1997 decreased by 67% and 59%, 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 as a percentage of net sales for the
three and six month periods ended May 31, 1997 were approximately 4%
and 5%, respectively, compared with 8% and 12% for the same periods in
the prior year. The decrease resulted primarily from a reduction of
resources, including labor, being allocated to research and
development activities.
Selling expenses as a percentage of net sales for the three and six
month periods ended May 31, 1997 were approximately 13% and 15%,
respectively, compared with 8% and 14% for the same periods in the
prior year. The increase is primarily due to increased commissions and
advertising.
General and administrative expenses in the three and six month periods
ended May 31, 1997 decreased by $46,571 or 46%, and $49,404 or 32%,
respectively, when compared with the same periods in the prior year.
Net income for the quarter ended May 31, 1997 was $227,967 or $.03 per
common share compared with a net loss of $188,507, or $.03 per common
share for the same period in the prior year. This increase is 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.
<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 $244,991 at May 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.
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
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
None
B. REPORTS ON FORM 8-K
None
<PAGE>
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)
/s/ Christine Koenemann
--------------------------------------
Christine Koenemann, President
Principal Executive Officer
Principal Financial Officer
Date: July 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> DEC-1-1996
<PERIOD-END> May-31-1997
<CASH> 182,930
<SECURITIES> 0
<RECEIVABLES> 364,089
<ALLOWANCES> 4,473
<INVENTORY> 87,685
<CURRENT-ASSETS> 650,925
<PP&E> 366,409
<DEPRECIATION> 331,674
<TOTAL-ASSETS> 1,166,227
<CURRENT-LIABILITIES> 405,935
<BONDS> 0
0
0
<COMMON> 8,479,854
<OTHER-SE> (7,855,438)
<TOTAL-LIABILITY-AND-EQUITY> 1,166,227
<SALES> 596,366
<TOTAL-REVENUES> 425,298
<CGS> 171,068
<TOTAL-COSTS> 191,246
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (6,855)
<INCOME-PRETAX> 277,967
<INCOME-TAX> 0
<INCOME-CONTINUING> (41,666)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,666)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.03)
</TABLE>
