<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 August 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 August 31, 1999.
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31, NOVEMBER 30,
1999 1998
(UNAUDITED) (AUDITED)
-------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 275,193 $ 249,729
Trade accounts receivable, less
allowance for doubtful accounts of
$0 and $206 respectively 392,668 296,312
Inventories 120,688 101,952
Prepaid expenses and other
current assets 35,027 15,651
---------- ----------
Total Current Assets 823,576 663,644
PROPERTY AND EQUIPMENT 508,710 442,768
Less accumulated depreciation [387,272] [370,515]
---------- ----------
Net Property and Equipment 121,438 72,253
PROCESSES AND FORMULAS, net of accumulated
amortization of $3,097,368 and
$3,050,506 respectively -- 46,863
PREPAID ROYALTY, net of accumulated
amortization of $55,755 and $41,418
respectively 140,187 154,524
LONG TERM ACCOUNTS RECEIVABLE, net 130,000 130,000
---------- ----------
TOTAL ASSETS $1,215,201 $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>
AUGUST 31, NOVEMBER 30,
1999 1998
(UNAUDITED) (AUDITED)
------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 98,672 $ 69,791
Notes payable - related parties -- 104,834
Accrued expenses 67,966 65,406
Current portion of capital
lease obligations 10,553 5,844
Current portion of long-term debt 2,615 48,203
---------- ----------
TOTAL CURRENT LIABILITIES 179,806 294,078
Long-term debt 37,771 8,979
Notes payable - related parties 256,556 149,366
Capital lease obligations:
net of current portion 36,697 16,686
---------- ----------
TOTAL LIABILITIES 510,830 469,109
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 [7,870,483] [7,976,679]
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 704,371 598,175
---------- ----------
TOTAL LIABILITIES & SHAREHOLDERS' $1,215,201 $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 NINE MONTHS
ENDED AUGUST 31 ENDED AUGUST 31
1999 1998 1999 1998
============================ ============================
<S> <C> <C> <C> <C>
NET SALES $ 461,918 $ 510,765 $1,320,662 $1,298,965
COST OF SALES 208,929 232,436 515,003 519,753
---------- ---------- ---------- ----------
GROSS PROFIT 252,989 278,329 805,659 779,212
---------- ---------- ---------- ----------
OPERATING EXPENSES
Research and development 41,675 40,853 106,682 110,561
Selling 101,077 95,450 329,574 301,337
General and administration 59,784 56,442 162,947 172,255
Royalties 17,022 20,442 49,514 55,697
Amortization of formula 6,694 20,084 46,863 60,253
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 226,252 233,271 695,580 700,103
---------- ---------- ---------- ----------
Operating income 26,737 45,058 110,079 79,109
OTHER INCOME (EXPENSE)
Interest expense [6,468] [6,869] [19,046] [21,533]
Interest income 5,584 391 9,423 3,400
Other income/(expense) 850 -- 5,740 6,330
---------- ---------- ---------- ----------
Net income $ 26,703 $ 38,580 $ 106,196 $ 67,306
========== ========== ========== ==========
Basic earnings per common share $ .02 $ .02 $ .05 $ .04
========== ========== ========== ==========
Weighted average shares outstanding 2,103,438 2,103,438 2,103,438 2,103,438
========== ========== ========== ==========
Diluted earnings per common share $ .02 $ .02 $ .05 $ .03
========== ========== ========== ==========
Weighted average shares, options
and warrants outstanding $2,333,588 $2,308,221 $2,328,955 $2,302,966
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE>
WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
1999 1998
(UNAUDITED) (UNAUDITED)
=============================
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $106,196 $ 67,306
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Amortization of prepaid royalty 14,337 14,337
Depreciation and amortization 63,620 81,242
Changes in Operating Assets and Liabilities:
Increase in trade accounts receivable [96,356] [230,624]
Increase in inventories [18,736] [19,191]
Increase in prepaid expenses [19,376] [7,031]
Increase in accounts payable 28,881 50,587
Increase [decrease] in accrued liabilities 2,560 [27,301]
-------- ----------
Net cash provided by [used in]
operating activities 81,126 [70,675]
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment [65,942] [13,733]
-------- ----------
Net cash used in investing activities [65,942] [13,733]
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable [18,070] [28,942]
Decrease in deferred rent -- [1,284]
Payments on capital lease obligations [10,259] [2,218]
Borrowings on capital lease obligations 34,979 --
Payments on notes payable - related parties [10,704] --
Borrowings on notes payable and notes payable-
related parties 14,334 14,267
-------- ----------
Net cash provided by [used in]
financing activities 10,280 [18,177]
-------- ----------
INCREASE [DECREASE] IN CASH 25,464 [102,585]
CASH AT BEGINNING OF PERIOD 249,729 251,781
-------- ----------
CASH AT END OF PERIOD $275,193 $ 149,196
======== ==========
</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 August 31, 1999, the
consolidated statements of operations for the three and nine-month periods
ended August 31, 1999, and 1998, respectively, and the consolidated
statements of cash flows for the three and 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 1998 Annual Report
on Form 10-KSB. The results of operations for the quarter ended August 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 August 31, 1999 were
$461,918, representing a 10% decrease from the same period in the prior year.
For the nine month period ended August 31, 1999, sales were $1,320,662 and
represents an increase of 2% from $1,298,965 in the prior year. The three
month decrease is due to a significant decrease in sales to two existing
customers during the period.
Cost of sales as a percentage of net sales increased to 46% from 39%
for the quarter ended August 31, 1999 when compared with the same period in
the prior year. For the nine month period ended August 31, 1999, cost of
sales as a percentage of net sales increased to 46% compared with 40% in the
prior year. These increases are due to increased sales of lower margin
products.
Operating expenses for the three and nine month periods ended August
31, 1999 decreased 3% and 1%, respectively, compared with the same periods in
the prior year. The three month decrease is primarily due to the formula
fully amortizing during the period.
Research and development expenses as a percentage of net sales for
the three and nine month periods ended August 31, 1999 were 9% and 8%
respectively, compared with 8% and 9% for the same periods in the prior year.
Selling expenses as a percentage of net sales for the three and nine
month periods ended August 31, 1999 were 22% and 25%, respectively, compared
with 19% and 24% for the same periods in the prior year. These increases are
primarily due to increased advertising during the periods.
General and administrative expenses in the three month period ended
August 31, 1999 increased by $3,342 or 6%, and decreased $9,308 or 6% for the
nine month period ended August 31, 1999 when compared with the same periods
in the prior year. The three month increase is primarily due to increases in
insurance expense, while the nine month decrease is primarily due to reduced
legal fees and outside services from the same period in the prior year.
Net income for the quarter ended August 31, 1999 was $26,703 as
compared with net income of $38,580, for the same period in the prior year.
Accordingly, basic earnings per share remained at approximately $.02 for the
quarters ended August 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 $643,770 at August 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 August 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: October 15, 1999
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-END> AUG-31-1999
<CASH> 275,193
<SECURITIES> 0
<RECEIVABLES> 392,668
<ALLOWANCES> 0
<INVENTORY> 120,688
<CURRENT-ASSETS> 823,576
<PP&E> 508,710
<DEPRECIATION> 387,272
<TOTAL-ASSETS> 1,215,201
<CURRENT-LIABILITIES> 179,806
<BONDS> 331,024
0
0
<COMMON> 8,479,854
<OTHER-SE> 95,000
<TOTAL-LIABILITY-AND-EQUITY> 1,215,201
<SALES> 1,320,662
<TOTAL-REVENUES> 1,320,662
<CGS> 515,003
<TOTAL-COSTS> 1,210,583
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,046
<INCOME-PRETAX> 106,196
<INCOME-TAX> 0
<INCOME-CONTINUING> 106,196
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 106,196
<EPS-BASIC> .05
<EPS-DILUTED> .05
</TABLE>
