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 August 31, 1998
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: (760) 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: 2,103,438 shares of common stock, no par
value, as of August 31, 1998
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
AUGUST 31, NOVEMBER 30,
1998 1997
(unaudited) (audited)
----------- ------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 149,196 $ 251,781
Trade accounts receivable, less
allowance for doubtful accounts of
$206 and $206 respectively 421,660 191,036
Inventories 101,250 82,059
Prepaid expenses and other
current assets 21,422 14,391
----------- -----------
Total Current Assets 693,528 539,267
PROPERTY AND EQUIPMENT 430,250 416,517
Less accumulated depreciation [362,106] [341,117]
----------- -----------
Net Property and Equipment 68,144 75,400
PROCESSES AND FORMULAS, net of accumulated
amortization of $3,030,421 and
$2,970,168 respectively 66,947 127,200
PREPAID ROYALTY, net of accumulated
amortization of $36,639 and $22,302
respectively 159,303 173,640
LONG TERM ACCOUNTS RECEIVABLE, net 130,000 130,000
----------- -----------
TOTAL ASSETS $1,117,922 $1,045,507
=========== ===========
</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,
1998 1997
(unaudited) (audited)
----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 107,983 $ 57,396
Notes payable - related parties 249,907 236,914
Notes payable 30,380 29,106
Accrued expenses 67,889 95,190
Current portion of capital
lease obligation 3,572 3,845
Current portion of long-term debt 26,969 39,475
----------- -----------
TOTAL CURRENT LIABILITIES 486,700 461,926
Long-term debt 9,631 26,067
Deferred rent -- 1,284
Capital lease obligations:
net of current portion 9,705 11,650
----------- -----------
TOTAL LIABILITIES 506,036 500,927
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 [7,962,968] [8,030,274]
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 611,886 544,580
----------- -----------
TOTAL LIABILITIES & SHAREHOLDERS' $1,117,922 $1,045,507
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
1998 1997 1998 1997
=========================== ============================
<S> <C> <C> <C> <C>
NET SALES $ 510,765 $ 349,915 $1,298,965 $1,218,943
COST OF SALES 232,436 148,873 519,753 388,409
---------- ---------- ---------- -----------
GROSS PROFIT 278,329 201,042 779,212 830,534
---------- ---------- ---------- -----------
OPERATING EXPENSES
Research and development 40,853 35,597 110,561 77,849
Selling 95,450 60,622 301,337 185,740
General and administration 56,442 54,006 172,255 160,913
Royalties 20,442 16,539 55,697 53,716
Amortization of formula 20,084 20,084 60,253 60,253
---------- ---------- ---------- -----------
TOTAL OPERATING EXPENSES 233,271 186,848 700,103 538,471
---------- ---------- ---------- -----------
Operating income 45,058 14,194 79,109 292,063
OTHER INCOME (EXPENSE)
Interest expense [6,869] [6,551] [21,533] [22,214]
Interest income 391 1,819 3,400 3,195
Other income -- 100 6,330 6,150
---------- ---------- ---------- -----------
Net income $ 38,580 $ 9,562 $ 67,306 $ 279,194
========== ========== ========== ===========
Net income per common share $ .02 $ .01 $ .04 $ .14
========== ========== ========== ===========
Weighted average common and common
equivalent shares outstanding 2,103,438 2,103,438 2,103,438 2,103,438
========== ========== ========== ===========
</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,
1998 1997
========================================
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 67,306 $ 279,194
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Amortization of prepaid royalty 14,337 14,337
Depreciation and amortization 81,242 72,653
Changes in Operating Assets and Liabilities:
Increase in trade accounts receivable [230,624] [187,355]
Increase in inventories [19,191] [22,048]
Increase in prepaid expenses [7,031] [8,213]
Increase in accounts payable 50,587 27,236
Decrease in accrued liabilities [27,301] [8,121]
------------ ----------
Net cash [used in] provided by operating activities [70,675] 167,683
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment [13,733] [9,850]
------------ ----------
Net cash used in investing activities [13,733] [9,850]
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable [28,942] [29,326]
Decrease in deferred rent [1,284] [2,890]
Payments on capital lease obligations [2,218] [3,187]
Borrowings on notes payable and notes payable-
related parties 14,267 13,607
------------ ----------
Net Cash used in financing activities [18,177] [21,796]
------------ ----------
[DECREASE] INCREASE IN CASH [102,585] 136,037
CASH AT BEGINNING OF PERIOD 251,781 115,719
----------- ----------
CASH AT END OF PERIOD $ 149,196 $ 251,756
=========== ==========
</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, 1998, the
consolidated statement of operations for the nine-month periods ended
August 31, 1998, and 1997, respectively, and the consolidated
statements of cash flows for the nine-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 August 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 and nine-month periods ended August
31, 1998 were $510,765, and $1,298,965, representing increases of 46% and 7%,
respectively, over the same periods in the prior year. This increase for the
quarter ended August 31, 1998 is primarily due to the delayed sales in the
second quarter being consummated in the third quarter.
Cost of sales as a percentage of net sales increased to 46% for the
quarter ended August 31, 1998 as compared with 43% for the same period in the
prior year. For the nine month period ended August 31, 1998, cost of sales as a
percentage of net sales increased to 40% from 32% 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 and an increase in raw material
costs.
Operating expenses for the three month and nine month periods ended
August 31, 1998 increased by 25% and 30%, respectively, over the same periods in
the prior year. These increases are primarily due to an increase in selling
expenses and research and development expenses discussed below.
Research and development expenses increased by $5,256, or 15% over the
prior year's third quarter. Research and development expenses also increased
$32,712, or 42% for the nine month period. These increases are a result of an
increase in the research and development staff, thereby increasing salaries and
wages, and related expenses attributed to research and development.
Selling expenses as a percentage of net sales for the three and nine
month periods ended August 31, 1998 were approximately 19% and 24%,
respectively, compared with 18% and 16% for the same periods in the prior year.
The nine month increase is the result of increased advertising and an increase
in the sales and marketing staff during the 3rd quarter of fiscal 1997, thereby
increasing the 1st and 2nd quarter totals over the prior year.
General and administrative expenses in the three and nine month periods
ended August 31, 1998 increased by $2,436 or 5%,
7
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
and $11,342 or 7%, respectively, when compared with the same periods in the
prior year. This increase is primarily due to increased legal expense due to the
reverse stock split and an increase in insurance expense.
Net income for the quarter ended August 31, 1998 was $38,580 or $.02
per common share compared with net income of $9,562, or $.01 per common share
for the same period in the prior year. This increase is primarily the result of
an increase in net sales as discussed above.
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.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Liquidity and Capital Resources:
The Company has no material commitments for capital expenditures.
Working capital was $206,828 at August 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
8
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
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
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 15, 1998
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> JUN-01-1998
<PERIOD-END> AUG-31-1998
<CASH> 149,196
<SECURITIES> 0
<RECEIVABLES> 421,660
<ALLOWANCES> 8,172
<INVENTORY> 101,250
<CURRENT-ASSETS> 693,528
<PP&E> 430,250
<DEPRECIATION> (362,106)
<TOTAL-ASSETS> 1,117,922
<CURRENT-LIABILITIES> 486,700
<BONDS> 0
0
0
<COMMON> 8,479,854
<OTHER-SE> 611,886
<TOTAL-LIABILITY-AND-EQUITY> 1,117,922
<SALES> 1,298,965
<TOTAL-REVENUES> 779,212
<CGS> 519,753
<TOTAL-COSTS> 779,212
<OTHER-EXPENSES> 700,103
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (21,533)
<INCOME-PRETAX> 67,306
<INCOME-TAX> 0
<INCOME-CONTINUING> 79,109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,306
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
