<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
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, 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 requirements 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 May 31, 1999.
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31, NOVEMBER 30,
1999 1998
(UNAUDITED) (AUDITED)
---------- ----------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS
Cash $ 171,625 $ 249,729
Trade accounts receivable, less
allowance for doubtful accounts of
$0 and $206 respectively 420,106 296,312
Inventories 129,445 101,952
Prepaid expenses and other
current assets 30,573 15,651
---------- ----------
Total Current Assets 751,749 663,644
PROPERTY AND EQUIPMENT 506,469 442,768
Less accumulated depreciation [381,686] [370,515]
---------- ----------
Net Property and Equipment 124,783 72,253
PROCESSES AND FORMULAS, net of accumulated
amortization of $3,090,675 and
$3,050,506 respectively 6,694 46,863
PREPAID ROYALTY, net of accumulated
amortization of $50,976 and $41,418
respectively 144,966 154,524
LONG TERM ACCOUNTS RECEIVABLE, net 130,000 130,000
---------- ----------
TOTAL ASSETS $1,158,192 $1,067,284
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
2
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(continued)
<TABLE>
<CAPTION>
MAY 31, NOVEMBER 30,
1999 1998
(UNAUDITED) (AUDITED)
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 61,163 $ 69,791
Notes payable - related parties - 104,834
Accrued expenses 65,993 65,406
Current portion of capital
lease obligation 11,050 5,844
Current portion of long-term debt 2,093 48,203
---------- ----------
TOTAL CURRENT LIABILITIES 140,299 294,078
Long-term debt 39,445 8,979
Notes payable - related parties 260,231 149,366
Capital lease obligations:
net of current portion 40,549 16,686
---------- ----------
TOTAL LIABILITIES 480,524 469,109
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 [7,897,186] [7,976,679]
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 677,668 598,175
---------- ----------
TOTAL LIABILITIES & SHAREHOLDERS' $1,158,192 $1,067,284
EQUITY
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
3
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED MAY 31 ENDED MAY 31
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES $ 623,113 $ 626,662 $ 858,744 $ 788,200
COST OF SALES 225,591 220,890 306,074 287,317
---------- ---------- ---------- ----------
GROSS PROFIT 397,522 405,772 552,670 500,883
---------- ---------- ---------- ----------
OPERATING EXPENSES
Research and development 37,510 35,497 65,007 69,708
Selling 123,536 105,357 228,497 205,887
General and administration 55,588 58,797 103,164 115,813
Royalties 18,789 23,478 32,492 35,255
Amortization of formula 20,085 20,085 40,169 40,169
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 255,508 243,214 469,329 466,832
---------- ---------- ---------- ----------
Operating income 142,014 162,558 83,341 34,051
OTHER INCOME (EXPENSE)
Interest expense [6,153] [8,492] [12,578] [14,664]
Interest income 2,922 783 3,839 3,009
Other income/(expense) [1,600] -- 4,891 6,330
---------- ---------- ---------- ----------
Net income $ 137,183 $ 154,849 $ 79,493 $ 28,726
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic earnings per common share $ .07 $ .07 $ .04 $ .01
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average shares outstanding 2,103,438 2,103,438 2,103,438 2,103,438
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Diluted earnings per common share $ .06 $ .07 $ .03 $ .01
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average shares, options
and warrants outstanding $2,314,888 $2,302,338 $2,312,888 $2,300,338
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated
condensed financial statements.
4
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, MAY 31,
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 79,493 $ 28,726
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Amortization of prepaid royalty 9,558 9,558
Depreciation and amortization 51,340 48,437
Changes in Operating Assets and Liabilities:
Increase in trade accounts receivable [123,794] [58,887]
Increase in inventories [27,493] [23,536]
Increase in prepaid expenses [14,921] [11,611]
Decrease in accounts payable [8,628] [8,658]
Increase [decrease] in accrued liabilities 587 [24,464]
------------ ------------
Net cash used in operating activities [33,860] [40,435]
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment [63,702] [12,048]
Net cash used in investing activities [63,702] [12,048]
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable [16,493] [18,985]
Decrease in deferred rent -- [1,284]
Payments on capital lease obligations [5,910] [1,407]
Borrowings on capital lease obligations 34,979 --
Payments on notes payable - related parties [2,676] --
Borrowings on notes payable and notes payable-
related parties 9,556 9,489
------------ ------------
Net cash provided by [used in]
financing activities 19,456 [12,187]
DECREASE IN CASH [78,104] [64,670]
CASH AT BEGINNING OF PERIOD 249,729 251,781
------------ ------------
CASH AT END OF PERIOD $ 171,625 $ 187,111
------------ ------------
------------ ------------
</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 May 31, 1999, the consolidated
statement of operations for the six-month periods ended May 31, 1999, and
1998, 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 1998 Annual Report
on Form 10-KSB. The results of operations for the quarter ended May 31,
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 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, 1999 were $623,113,
representing a 1% decrease from the same period in the prior year. For the six
month period ended May 31, 1999, sales were $858,744 and represents an increase
of 9% from $788,200 in the prior year. The six month increase is due to a
significant increase in sales to two existing customers during the period.
Cost of sales as a percentage of net sales increased to 36% for the quarter
ended May 31, 1999 as compared with 35% for the same period in the prior year.
For the six month period ended May 31, 1999, cost of sales as a percentage of
net sales remained at 36% compared with the prior year.
Operating expenses for the three and six month periods ended May 31, 1999
increased 5% and 1%, respectively, compared with the same periods in the prior
year. The three month increase is primarily due to an increase in selling
expenses discussed below.
Research and development expenses as a percentage of net sales for the
three and six month periods ended May 31, 1999 were 6% and 8% respectively,
compared with 6% and 9% for the same periods in the prior year.
Selling expenses as a percentage of net sales for the three and six month
periods ended May 31, 1999 were 20% and 27%, respectively, compared with 17% and
9% for the same periods in the prior year. This increase is primarily due to
increased advertising during the period.
General and administrative expenses in the three and six month periods
ended May 31, 1999 decreased by $3,209 or 6%, and $12,649 or 11%, respectively,
when compared with the same periods in the prior year. These decreases are
primarily due to reduced legal fees and outside services from the same periods
in the prior year.
Net income for the quarter ended May 31, 1999 was $137,183 as compared with
net income of $158,849, for the same period in the prior year. Accordingly,
basic earnings per share remained at approximately $.07 for the quarters ended
May 31, 1999 and 1998.
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.
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 $611,450 at May 31, 1999, up from $369,566 at November
30, 1998. During the period ended May 31, 1999, the Company negotiated the
extensions of related party debt which was classified as current at November 30,
1998.
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 May 31, 1999, the
costs incurred to become Y2K compliant have been $21,647. The Company does not
expect any additional costs. The Company has contacted its major customers and
vendors to assess their status as to Year 2000 compliance. 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.
8
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
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
9
<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)
------------------------------
Christine Koenemann, President
Principal Executive Officer
Principal Financial Officer
Date: July 15, 1999
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-END> MAY-31-1999
<CASH> 171,625
<SECURITIES> 0
<RECEIVABLES> 420,106
<ALLOWANCES> 0
<INVENTORY> 129,445
<CURRENT-ASSETS> 751,749
<PP&E> 506,469
<DEPRECIATION> 381,686
<TOTAL-ASSETS> 1,158,192
<CURRENT-LIABILITIES> 140,299
<BONDS> 340,225
0
0
<COMMON> 8,479,854
<OTHER-SE> 95,000
<TOTAL-LIABILITY-AND-EQUITY> 1,158,192
<SALES> 858,744
<TOTAL-REVENUES> 858,744
<CGS> 306,074
<TOTAL-COSTS> 775,403
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,578
<INCOME-PRETAX> 79,493
<INCOME-TAX> 0
<INCOME-CONTINUING> 79,493
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,493
<EPS-BASIC> .04
<EPS-DILUTED> .03
</TABLE>
