<PAGE>
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 February 28, 1999
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 February 28, 1999.
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
1999 1998
(UNAUDITED) (AUDITED)
------------- -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 142,139 $ 249,729
Trade accounts receivable, less
allowance for doubtful accounts of
$206 and $206 respectively 288,185 296,312
Inventories 128,547 101,952
Prepaid expenses and other
current assets 26,992 15,651
------------- -------------
Total Current Assets 585,863 663,644
PROPERTY AND EQUIPMENT 495,452 442,768
Less accumulated depreciation [376,100] [370,515]
Net Property and Equipment 119,352 72,253
PROCESSES AND FORMULAS, net of accumulated
amortization of $3,070,590 and
$3,050,506 respectively 26,779 46,863
PREPAID ROYALTY, net of accumulated
amortization of $46,197 and $41,418
respectively 149,745 154,524
LONG TERM ACCOUNTS RECEIVABLE, net 130,000 130,000
------------- -------------
TOTAL ASSETS $ 1,011,739 $1,067,284
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(continued)
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
1999 1998
(UNAUDITED) (AUDITED)
--------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 84,973 $ 69,791
Notes payable - related parties -- 104,834
Accrued expenses 59,419 65,406
Current portion of capital
lease obligation 6,100 5,844
Current portion of long-term debt 7,565 48,203
--------------- -------------
TOTAL CURRENT LIABILITIES 158,057 294,078
Long-term debt 39,564 8,979
Notes payable - related parties 258,553 149,366
Capital lease obligations:
net of current portion 15,081 16,686
--------------- -------------
TOTAL LIABILITIES 471,255 469,109
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: 95,000 95,000
Accumulated deficit [8,034,370] [7,976,679]
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TOTAL SHAREHOLDERS' EQUITY 540,484 598,175
--------------- -------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $1,011,739 $1,067,284
--------------- -------------
--------------- -------------
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
3
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WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED FEBRUARY 28,
1999 1998
---------- ----------
<S> <C> <C>
NET SALES $ 235,631 $ 161,538
COST OF SALES 80,483 66,427
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GROSS PROFIT 155,148 95,111
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OPERATING EXPENSES
Research and development 27,497 34,211
Selling 104,961 100,530
General and administration 47,576 57,016
Royalties 13,705 11,777
Amortization of formula 20,084 20,084
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TOTAL OPERATING EXPENSES 213,823 223,618
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Operating loss [58,675] [128,507]
OTHER INCOME (EXPENSE)
Interest expense [6,425] [6,172]
Interest income 917 2,226
Other income 6,490 6,330
Net loss $ [57,693] $ [126,123]
---------- ----------
---------- ----------
Basic loss per common share $ [.03] $ [.06]
---------- ----------
---------- ----------
Weighted average shares outstanding 2,103,438 2,103,438
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
4
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
1999 1998
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ [57,693] $ [126,123]
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Amortization of prepaid royalty 4,779 4,779
Depreciation and amortization 25,669 24,218
Changes in Operating Assets and Liabilities:
Decrease in trade accounts receivable 8,127 66,918
Increase in inventories [26,595] [66,798]
Increase in prepaid expenses [11,342] [13,549]
Increase in accounts payable 15,182 30,601
Decrease in accrued liabilities [5,987] [27,160]
------------- ------------
Net cash used in operating activities [47,860] [107,114]
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment [52,684] [10,878]
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Net cash used in investing activities [52,684] [10,878]
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable [10,053] [9,451]
Decrease in deferred rent -- [963]
Payments on capital lease obligations [1,346] [2,416]
Borrowings on notes payable and notes payable-
related parties 4,353 4,287
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Net Cash used in financing activities [7,046] [8,543]
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DECREASE IN CASH [107,590] [126,535]
CASH AT BEGINNING OF PERIOD 249,729 251,781
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CASH AT END OF PERIOD $ 142,139 $ 125,246
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
5
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION:
The consolidated balance sheet as of February 28, 1999, the
consolidated statement of operations for the three-month periods ended
February 28, 1999, and 1998, respectively, and the consolidated statements
of cash flows for the three-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 1998 Annual Report
on Form 10-KSB. The results of operations for the quarter ended February
28, 1999, are not necessarily indicative of the operating results for the
full year.
B. RECLASSIFICATION:
Certain amounts on the November 30, 1998 consolidated balance
sheet 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
6
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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
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 first quarter of fiscal 1999 were $235,631,
representing a increase of 46% over the same period in 1998. The increase in net
sales is due to a significant increase in sales to two customers during the
period.
Cost of sales as a percentage of net sales decreased to 34% for the
quarter ended February 28, 1999 as compared with 41% for the same period in the
prior year. This decrease is due to increased sales during the quarter as well
as a shift in sales of higher margin products.
Operating expenses for the three month period ended February 28, 1999
decreased by 4% from the same period in the prior year. The decrease is
primarily due to a reduction in general and administrative expenses as discussed
below.
Research and development expenses decreased by $6,714, or 20% over the
prior year's first quarter. This decrease is due to a reduction in wages and
related expense attributable to the research and development function.
7
<PAGE>
Selling expenses as a percentage of net sales for the three month
period ended February 28, 1999 were approximately 45% compared with 62% for the
same period in the prior year. This decrease is primarily due to the increase in
sales over the prior year while expenses remained relatively constant.
General and administrative expenses during the three month period ended
February 28, 1999 decreased by $9,440 or 17%, compared with the same period in
the prior year. This decrease is due to reduced legal expenses. During early
fiscal 1998 the Company executed a reverse stock split and incurred higher than
usual legal expenses.
Net loss for the quarter ended February 28, 1999 was $57,693 or $.03
per common share compared with a net loss of $126,123, or $.06 per common share
for the same period in the prior year. This increase is due to an increase in
overall sales as well as a shift in sales of higher margin products while
keeping operating expenses relatively constant.
Income taxes have not been provided for in the accompanying
consolidated 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 $427,806 at February 28, 1999, up from $369,566 at
November 30, 1998.
8
<PAGE>
Based on current cash flow projections management expects that the
Company can continue operations for the current year without infusions of
additional cash.
YEAR 2000
The company has completed its Year 2000 assessment and believes that it
is Year 2000 compliant on internal hardware and software. As of February 28,
1999, the costs incurred to become Y2K compliant have been $20,356. The Company
expects an additional $2,000 in consulting costs. The Company is still in the
process of contacting major customers and vendors to assess their status as to
Year 2000 compliance. The Company expects that this process will be completed in
the first half of fiscal 1999. Once this process is completed, however, there is
no assurance that service interruptions will not occur from vendors, suppliers
or service providers, including financial institutions or governments. The
Company believes that alternative suppliers exist and, therefore, if services
are interrupted from suppliers, the situation should be temporary.
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
9
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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)
/s/ Christine Koenemann
--------------------------------------
Christine Koenemann, President
Principal Executive Officer
Principal Financial Officer
Date: April 14, 1999
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 142,139
<SECURITIES> 0
<RECEIVABLES> 288,391
<ALLOWANCES> 206
<INVENTORY> 128,547
<CURRENT-ASSETS> 585,863
<PP&E> 495,452
<DEPRECIATION> 376,100
<TOTAL-ASSETS> 1,011,739
<CURRENT-LIABILITIES> 158,057
<BONDS> 471,255
0
0
<COMMON> 8,479,854
<OTHER-SE> 95,000
<TOTAL-LIABILITY-AND-EQUITY> 1,011,739
<SALES> 235,631
<TOTAL-REVENUES> 235,631
<CGS> 80,483
<TOTAL-COSTS> 294,306
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,425
<INCOME-PRETAX> (57,693)
<INCOME-TAX> 0
<INCOME-CONTINUING> (57,693)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (57,693)
<EPS-PRIMARY> .03
<EPS-DILUTED> 0
</TABLE>
