SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 of 15(d)
of the Securities Exchange Act of 1934
For Quarter ended May 31, 1998
commission file number 2-92261
WESTBRIDGE RESEARCH GROUP
- -------------------------------------------------------------------------------
California 95-3769474
- -------------------------------------- --------------------------------
(State or other jurisdiction or (I.R.S. Employer
incorporation or organization) Identification No.)
1150 Joshua Way
Vista, California 92083
- ---------------------------------------
(Address of principal executive office)
Registrant's telephone number, including (760) 599-8855
area code: -------------------------------
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 requirements for the past 90 days. Yes _____ No _____.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of a recent date: 2,103,438 shares of common stock,
no par value as of May 31, 1998.
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
MAY 31, NOV. 30,
1998 1997
(unaudited) (audited)
----------------- -----------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 187,111 $ 251,781
Trade accounts receivable, less
allowance for doubtful accounts of
$206 and $206 respectively 249,923 191,036
Inventories 105,595 82,059
Prepaid expenses and other current
assets 26,002 14,391
------------ -----------
Total Current Assets 568,631 539,267
PROPERTY AND EQUIPMENT 428,565 416,517
Less accumulated depreciation [349,385] [341,117]
Net Property and Equipment 79,180 75,400
PROCESSES AND FORMULAS, net of
accumulated amortization of $3,010,337
and $2,970,168 respectively 87,031 127,200
PREPAID ROYALTY, net of accumulated
amortization of $31,860 and $22, 302
respectively 164,082 173,640
LONG TERM ACCOUNTS RECEIVABLE, net 130,000 130,000
----------- -----------
TOTAL ASSETS $1,028,924 $1,045,507
=========== ===========
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
2
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATE CONDENSED BALANCE SHEETS
(Continued)
<TABLE>
MAY 31, NOV. 30,
1998 1997
(unaudited) (audited)
------------------- ----------------
LIABILITIES AND SHAREHOLDER'S EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 48,738 $ 57,396
Notes payable - related parties 245,554 236,914
Notes payable 29,955 29,106
Accrued expenses 70,726 95,190
Current portion of capital
lease obligation 3,131 3,845
Current portion of long-term debt 36,129 39,475
----------- -----------
TOTAL CURRENT LIABILITIES 434,233 461,926
Long-term debt 10,428 26,067
Deferred rent -- 1,284
Capital lease obligations:
net of current portion 10,957 11,650
---------- ----------
TOTAL LIABILITIES 455,618 500,927
SHAREHOLDERS' EQUITY
Common stock, no par value:
Authorized 9,375,000 shares
Issued and outstanding 2,103,438
shares 8,479,854 8,479,854
Paid in Capital: Warrants 95,000 95,000
Accumulated deficit [8,001,548] [8,030,274]
TOTAL SHAREHOLDERS' EQUITY 573,306 544,580
------------ ------------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $1,028,924 $1,045,507
========== ==========
</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 SIX MONTHS
ENDED MAY 31 ENDED MAY 31
1998 1997 1998 1997
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $ 626,662 $ 596,366 $ 788,200 $869,028
COST OF SALES 220,890 171,068 287,317 239,536
---------- ----------- ----------- -----------
GROSS PROFIT 405,772 425,298 500,883 629,492
---------- ----------- ----------- ----------
OPERATING EXPENSES
Research and development 35,497 20,020 69,708 42,252
Selling 105,357 72,834 205,887 125,118
General and administration 58,797 55,606 115,813 106,907
Royalties 23,478 22,702 35,255 37,117
Amortization of formula 20,085 20,084 40,169 40,169
----------- ----------- ----------- ----------
TOTAL OPERATING EXPENSES 43,214 191,246 466,832 351,623
---------- ---------- ---------- ----------
Operating income 162,558 234,052 34,051 277,869
OTHER INCOME (EXPENSE)
Interest expense [8,492] [6,855] [14,664] [15,663]
Interest income 783 770 3,009 1,376
Other income -- -- 6,330 6,050
------------- -------------- ------------- ------------
Net income $ 154,849 $ 227,967 $ 28,726 $ 269,632
=========== ========== ============ ===========
Net income per common share $ .07 $ .11 $ .01 $ .13
=============== ============== =============== ===============
Weighted average common and common $2,103,438 $2,103,438 $2,103,438 $2,103,438
equivalent shares outstanding ========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
4
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
SIX MONTHS ENDED
MAY 31, MAY 31,
1998 1997
----------------- --------- --------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 28,726 $ 269,632
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Amortization of prepaid royalty 9,558 9,558
Depreciation and amortization 48,437 48,435
Changes in Operating Assets and Liabilities:
Increase in trade accounts receivable [58,887] [235,647]
Increase in inventories [23,536] [13,316]
Increase in prepaid expenses [11,611] [5,984]
[Decrease] increase in accounts payable [8,658] 27,143
Decrease in accrued liabilities [24,464] [13,791]
------------- -------------
Net cash used in provided by operating activities [40,435] 86,030
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment [12,048] [2,934]
------------- --------------
Net cash (used in) investing activities [12,048] [2,934]
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable [18,985] [20,846]
Decrease in deferred rent [1,284] [1,926]
Payments on capital lease obligations [1,407] [2,141]
Borrowings on notes payable and notes
payable-related parties 9,489 9,028
------------ ---------------
Net Cash used in financing activities [12,187] [15,885]
----------- ------------
[DECREASE] INCREASE IN CASH [64,670] 67,211
CASH AT BEGINNING OF PERIOD 51,781 115,719
----------- -----------
CASH AT END OF PERIOD $ 187,111 $ 182,930
========= ==========
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
5
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basic of Presentation:
The consolidated balance sheet as of May 31, 1998,
the consolidated statement of operations for the six-month
periods ended May 31, 1998, and 1997, respectively, and the
consolidated statements of cash flows for the six-month
periods 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 1997 Annual
Report on Form 10-KSB. The results of operations for the
quarter ended May 31, 1998, are not necessarily indicative of
the operating results for the full year.
B. Reclassification:
Certain amounts on the November 30, 1997 consolidated
condensed statement of liabilities and shareholders' equity
have been reclassified to conform to the current period
presentation.
C. Stock Split:
On July 17, 1997 the shareholders of the Company
voted to execute a one-for- four reverse stock split. The
reverse stock split was effective for shareholders of record
on February 6, 1998. Per share amounts in the accompanying
financial statements have been restated to give effect for the
reverse stock split as if it occurred on December 1, 1996.
D. Subsequent Events:
None.
6
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
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 month period ended May 31, 1998 were $626,662,
representing an increase of 5% from $596,366 for the same period in the prior
year. For the six month period ended May 31, 1998, sales were $788,200,
representing a decrease of 9% from $869,028 in the prior year. The three month
increase is associated with an increase in existing customer sales as well as
the add on of a new distributor and manufacturing of a new product. The six
month decrease is due to negative weather conditions causing a reduction in
sales of the Company's foreign markets as well as delayed planting of key crops
in regions of the Company's domestic market.
Cost of sales as a percentage of net sales increased to 35% for the
quarter ended May 31, 1998 as compared with 29% for the same period in the prior
year. For the six month period ended May 31, 1998, cost of sales as a percentage
of net sales increased to 36% from 28% 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 and six month periods ended May 31,
1998 increased 27% and 33%, respectively, compared with the same periods in the
prior year. These increases are primarily due to increases in selling expenses
and research and development expenses discussed below.
Research and development expenses as a percentage of net sales for the
three and six month periods ended May 31, 1998 were 6% and 8%, respectively,
compared with 3% and 5% for the same periods in the prior year. This increase is
a result of an increase in the research and development staff, thereby
increasing salaries and wages, and related expenses.
Selling expenses as a percentage of net sales for the three and six
month periods ended May 31, 1998 were 17% and 26%, respectively, compared with
12% and 14% for the same periods in the prior year. This increase is due to an
expansion in the sales and marketing staff and increased advertising.
General and administrative expenses in the three and six month periods
ended May 31, 1998 increased by $3,191 or 6%, and $8,906 or 8%, respectively,
when compared with the same periods in the prior year.
Net income for the quarter ended May 31, 1998 was $154,849 or $.07 per
common share compared with net income of $227,967, or $.11 per common share for
the same period in the prior year. This decrease is the result of a decrease in
net sales and an increase in selling expenses and research and development
expenses.
7
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
Income taxes have not been provided for in the accompanying financial
statements of operations due to the net operating loss carry forwards generated
in prior years that are available for carry forward against current year income.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Liquidity and Capital Resources:
The Company has no material commitments for capital expenditures.
Working capital was $134,398 at May 31, 1998, up from $77,341 at
November 30, 1997.
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
8
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
None
B. REPORTS ON FORM 8-K
None
9
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
SIGNATURES
Pursuant tot he 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
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-1-1997
<PERIOD-END> MAY-31-1998
<CASH> 187,111
<SECURITIES> 0
<RECEIVABLES> 249,923
<ALLOWANCES> 412
<INVENTORY> 105,595
<CURRENT-ASSETS> 568,631
<PP&E> 428,565
<DEPRECIATION> (349,385)
<TOTAL-ASSETS> 1,028,924
<CURRENT-LIABILITIES> 434,233
<BONDS> 0
0
0
<COMMON> 8,479,854
<OTHER-SE> (8,001,548)
<TOTAL-LIABILITY-AND-EQUITY> 1,028,924
<SALES> 626,662
<TOTAL-REVENUES> 405,772
<CGS> 220,890
<TOTAL-COSTS> 43,214
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8,492)
<INCOME-PRETAX> 154,849
<INCOME-TAX> 0
<INCOME-CONTINUING> 28,726
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 154,849
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
