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 September 30, 2000 Commission File No. 0-15148
NEWBRIDGE CAPITAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 33-0877143
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
4695 MacArthur Court, Suite 1450, Newport Beach, CA 92660
(Address of principal executive offices) (Zip Code)
(949) 833-2094
(Registrant's telephone number, including area code)
N/A
(Former Name, if Changed Since Last Report)
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 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of October 31, 2000, there were 3,202,390 shares of the Registrant's no
par value common stock issued and outstanding.
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NEWBRIDGE CAPITAL, INC.
INDEX
Page
PART I
Item 1. Financial Statements
Balance Sheet - September 30, 2000............................... 1
Statements of Operations - Three Months Ended
September 30, 2000 and 1999.................................... 2
Statements of Cash Flows - Three Months Ended
September 30, 2000 and 1999..................................... 3
Notes to Financial Statements..................................... 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................... 7
PART II
Item 1. Legal Proceedings................................................. 9
Item 2. Changes In Securities............................................. 9
Item 3. Defaults Upon Senior Securities................................... 9
Item 4. Submission of Matters to a Vote of
Security Holders................................................ 9
Item 5. Other Information................................................. 9
Item 6. Exhibits and Reports on Form 8-K.................................. 9
Signatures........................................................10
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NEWBRIDGE CAPITAL, INC.
Balance Sheet
As of September 30, 2000 (Unaudited)
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash and cash equivalents $ 582,381
Marketable securities 3,581
Notes and receivables from affiliates 1,143,860
Retainer held by related party 144,000
Other 5,000
Total current assets 1,878,822
Equity-method investments 538,489
Investments, held for sale 1,390,588
Investments, at cost 156,311
Property and equipment, net of accumulated depreciation
of $28,728 45,494
Related-party lease deposit 100,000
$ 4,109,704
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 72,109
Due to related party 100,210
Other current liabilities 1,216
Total current liabilities 173,535
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value; 25,000,000
shares authorized;
none outstanding -
Common stock, $.001 par value; 75,000,000
shares authorized; 3,310,390 shares
issued and outstanding 3,310
Additional paid-in capital 14,453,108
Accumulated deficit (10,515,556)
Accumulated other comprehensive income (4,693)
Total stockholders' equity 3,936,169
$ 4,109,704
</TABLE>
See accompanying notes to these financial statements
1
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NEWBRIDGE CAPITAL, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended
September 30, 2000 and 1999 (Unaudited)
<TABLE>
<CAPTION>
2000 1999
--------------- ---------------
<S> <C> <C>
Revenues- $ - $ -
Expenses-
General and administrative
expenses 152,125 86,341
Operating loss (152,125) (86,341)
Other Income 11,053 -
Income from affiliates 213,000 -
Impairment of investments,
held for sale (6,700,000) -
Equity in losses of investees (78,000) -
Net loss (6,706,072) (86,341)
Other comprehensive loss-
Unrealized loss on marketable
securities (4,816) -
Comprehensive loss $ (6,710,888) $ (86,341)
Basic and dilutive loss per share: $ (2.03) $ (0.03)
Weighted average number of shares
outstanding 3,310,390 3,202,390
</TABLE>
See accompanying notes to these financial statements
2
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NEWBRIDGE CAPITAL, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months
Ended September 30,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $(6,706,072) $ (86,341)
Adjustments to reconcile net loss to net cash
Provided by operating activities:
Common stock issued for services
rendered - 18,000
Equity in loss of equity method investments
expenses 78,000 -
Impairment of investment held for sale
expenses 6,700,000 -
Changes in operating assets and liabilities:
Increase in accounts payable and
accrued expenses 65,669 8,125
Additions to fixed assets (24,585) -
Increase (decrease) in other liabilities (24,132) 81,329
Net cash provided by operating activities 88,880 21,113
Cash flows from financing activities:
Increase in related party notes and accounts
receivable (296,500) -
Net cash (used in) financing activities (296,500) -
Net increase in cash (207,620) 21,113
Cash at beginning of period $ 790,001 $ 1,659
Cash at end of period $ 582,381 $ 22,772
Non-cash investing and financing activities:
Common stock issued for services rendered $ - $ 18,000
Unrealized losses on marketable securities $ 4,816 $ -
</TABLE>
See accompanying notes to these financial statements
3
<PAGE>
NEWBRIDGE CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 1. ORGANIZATION AND HISTORY
Business and Organization
NewBridge Capital, Inc. (formerly Scientific NRG, Incorporated, dba Scientific
Component Systems), (the "Company"), was incorporated in the state of Minnesota
in 1983. The Company historically designed, manufactured and marketed custom
energy efficient lighting products utilizing compact fluorescent lamp technology
primarily within the United States. The principal products were energy
efficient, compact fluorescent downlight fixtures primarily for the downlight
canister retrofit market.
On August 15, 1998, the Company's Board of Directors approved the sale of the
Company's downlight business, which constitutes substantially all of the
Company's assets and operations. On June 29, 1999, the Company completed the
sale of its downlight business which included substantially all of the Company's
assets and operations.
Effective June 30, 1999, the Company consummated an asset purchase agreement
with NuVen Capital L.P. ("NuVen"), which resulted in the Company acquiring
certain assets of NuVen, in exchange for 22,344,652 shares of the Company's
common stock valued at $10,090,793, based the estimated fair value of the
underlying assets acquired. No liabilities were assumed in this transaction. The
assets obtained by the Company consisted of Series D Convertible Preferred Stock
of NuOasis Resorts, Inc., totaling $8,000,000; certain receivables, primarily
from affiliates, with a net carrying value of $403,200; marketable securities in
affiliates totaling $1,136,556; and other non-current assets totaling $551,037.
As a result of this transaction, NuVen obtained approximately 70% control of the
Company. The assets acquired were accounted for at historical bases similar to a
recapitalization.
On November 30, 1999, the Company was merged into NewBridge Capital, Inc., a
Nevada corporation formed by it on July 22, 1999, and changed its name from
Scientific NRG, Incorporated to NewBridge Capital, Inc. to better reflect its
new corporate direction. At that time, the newly formed Nevada corporation
exchanged one (1) share for every ten (10) shares of Scientific NRG,
Incorporated. The merger was recorded at historical costs since the companies
were under common control, and all amounts, including share information, have
been retroactively restated for the years presented.
In fiscal 2001 to date and fiscal 2000, the Company's operations consisted of
managing certain investments and seeking business opportunities.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The Company's plan is to liquidate or exchange its interests to acquire
interests in other ventures and new operating opportunities. Management believes
that its working capital is sufficient to meet its working capital requirements
for a period of 12 months from the balance sheet date.
4
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NEWBRIDGE CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2000
(Unaudited)
Unaudited Interim Financial Statements
The financial statements for the three months ended September 30, 2000 and 1999
are unaudited. In the opinion of management, the unaudited financial statements
include all adjustments (consisting of normal recurring accruals) necessary to
present fairly the Company's financial position, results of operation and cash
flows for the quarters ending September 30, 2000 and 1999. These results are not
necessarily indicative of the results expected for the year ended June 30, 2001.
Restatement of Shares Outstanding
All historical share and per share amounts have been restated to reflect the one
for ten exchange of shares resulting from the Company reincorporating in Nevada
and effecting the merger on November 30, 1999 (Note 1).
NOTE 3. RECEIVABLES FROM AFFILIATES
In August 2000, an officer of the Company agreed to exercise his rights under
option agreements with Hart Industries, Inc.("Hart"). In September 2000, the
Company advanced $378,494 for the purpose of exercising these options and
subsequently settled the advance in exchange for the shares underlying the
options.
Receivables from affiliates at September 30, 2000 represent interest bearing and
non-interest bearing amounts in the amount of $765,366. Of this amount, $725,575
is due from certain affiliated companies and $39,791 is due from an officer of
the Company.
NOTE 4. EQUITY-METHOD INVESTMENTS
YES Licensing Partners, LLC
In connection with the asset purchase agreement executed on June 30, 1999, the
Company acquired a 50% equity interest in YES Licensing Partners, LLC ("YLP") at
a cost of $389,481. YLP holds six (6) trademark licenses of YES Clothing Co.
("YSCO") which have a remaining life of one to four years. In accordance with
generally accepted accounting principles, the acquisition of the YLP was
recorded at predecessor basis. The Company has reflected its proportionate share
of the equity in losses of YLP in the accompanying statement of operations for
fiscal 2001. YLP has no significant operations and no tangible assets at
September 30, 2000. YLP intends to pursue licensing to strategic partners. YLP
is scheduled to dissolve on December 31, 2003. Equity in losses of YLP totaled
approximately $30,000 during fiscal 2001. The carrying value of YLP at September
30, 2000 was $223,813.
YES Clothing Co.
In connection with the asset purchase agreement executed on June 30, 1999, the
Company acquired 3,500,000 shares of YSCO common stock at an original cost of
$91,382. The Company's interest in YSCO represents 27% of the voting common
stock of YSCO. YSCO is an inactive company. Equity in losses of YSCO totaled
$10,000 in fiscal 2001. The carrying value of YES at September 30, 2000, was
$40,147. YES common stock is traded on the Over-the-Counter Bulletin Board
Exchange (OTCBB).
5
<PAGE>
NEWBRIDGE CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2000
(Unaudited)
Oasis Resorts International, Inc.
In connection with the asset purchase agreement executed on June 30, 1999, the
Company acquired 200,000 shares of Oasis common stock at an original cost of
$343,500. Because the President of NewBridge is also defined as a control person
of Oasis and Oasis is a consolidated subsidiary of NuOasis, the Company
reclassified its investment in Oasis as a security held for sale rather than a
marketable security. Equity in losses of Oasis totaled approximately $38,000 in
fiscal 2001. The carrying value of Oasis at September 30, 2000, was $275,028.
Oasis common stock is now traded on the OTCBB.
Hart Industries, Inc.
The Company holds 750,000 shares of common stock in Hart, representing 43% of
the voting control of Hart at September 30, 2000. The Company's equity in losses
during fiscal 2000 were not significant. Subsequent to June 30, 2000, the
Company's interest was reduced to 17%. Hart's common stock did not resume
trading until September 15, 2000. The Company's carrying value of its investment
in Hart is $7,500. Hart common stock is traded on the OTCBB.
NOTE 5. INVESTMENT HELD FOR SALE
NuOasis Resorts, Inc.
NuOasis operates as a holding company for leisure and entertainment-related
businesses. The President of NewBridge is also defined as a control person of
NuOasis. The NuOasis investment consists of a designated Series D voting,
convertible preferred stock (the "D Preferred"). The D Preferred consists of
24,000,000 shares, which were issued to NuVen Advisors, Inc. ("NuVen Advisors")
in 1993 in exchange for the investment securities with an estimated market
value, based upon independent legal and valuation opinions at the time,
discounted approximately 50% at the date of transfer, or $10,000,000. The D
Preferred is redeemable, in whole or in part, at the option of the Board of
Directors, at any time, at a redemption price of up to $24,000,000. The
Preferred D is convertible, at the option of the holder, into shares of NuOasis
common stock at an exchange rate of 0.41667 per share, or convertible into
shares having a market value at the time of such conversion of $0.41667 per
share. Market value is determined based on 50% of the closing bid price for 30
days preceding notice of conversion. The right to convert the D Preferred
expires on December 31, 2001.
In connection with asset purchase agreement with NuVen Capital in fiscal 1999,
the Company acquired 19,200,000 shares of D Preferred on June 30, 1999 with a
carrying value of $8,000,000. The Company obtained an independent appraisal of
the D Preferred at a fair market value of approximately $10,900,000 as of the
date of the acquisition. Since the Company is required to record the asset using
the predecessor's basis, the Company recorded the investment at $8,000,000.
6
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NEWBRIDGE CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2000
(Unaudited)
At June 30, 2000, NuOasis has a stockholders' deficit of approximately
$12,000,000 and requires significant working capital to meet its obligations as
they become due. Accordingly, the carrying value of the Company's D Preferred
held substantially exceeds the net book value of NuOasis. However, NuOasis owns
investments which have a fair value which exceeds their carrying value.
Management obtained an independent appraisal of certain assets held by NuOasis
as of June 30, 2000, totaling $8.1 million. Data used to determine fair value at
June 30, 2000 adversely changed through September 30, 2000. Management continues
to negotiate a sale or an exchange of its interest in the D Preferred. Based on
factors known to management at September 30, 2000, the Company recorded an
impairment of $6,700,000 as a charge to operations in the first quarter of
fiscal 2001 to reflect the adverse change that affected the data used to
appraise the asset at June 30, 2000.
NOTE 6. SUBSEQUENT EVENTS
Acquisition
On October 5, 2000, the Company entered into a definitive agreement to acquire
the assets and assume certain liabilities of SkateSurfSnow.com from
PacificTradingPost.com Inc. The Company issued 136,000 shares of its common
stock and warrants to acquire 1,204,004 shares of the Company's common stock for
$4.00 per share for the assets. SkateSurfSnow Inc., ("SSS") a California
corporation and wholly owned subsidiary of the Company, also assumed $89,316.63
in liabilities in the transaction. SSS operates an e-commerce web site and
retail store in Huntington Beach, CA., serving the skateboarding, surfing and
snowboarding markets. SSS sells core action sports products, the latest hard and
soft goods, apparel and accessories.
Yes Clothing Co.
In September 2000, the Company notified YSCO of its intention to convert 177,005
shares of YSCO Series A Preferred into common stock. Upon issuance of the common
shares, the Company will own approximately 49% of the outstanding common stock
of YSCO.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Quarter Ended September 30, 2000 Compared to Quarter Ended September 30, 1999
During the quarter ended September 30, 2000, the Company was actively managing
affiliated companies under the advisory assumed from NuVen Advisors, Inc. in
fiscal 2000, while there were no operations during the quarter ended September
30, 1999. The Company earned advisory fees in fiscal 2001 from affiliated
companies of $213,000.
As there were no operations other than with affiliated companies, the Company
recorded no revenues or cost of revenues recorded during the quarters.
7
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NEWBRIDGE CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2000
(Unaudited)
General and administrative expenses was $153,000 in the current quarter compared
to $86,000 in the comparable period last year. The change is attributable to
costs associated with the advisory agreements in fiscal 2001.
In connection with asset purchase agreement with NuVen Capital in fiscal 1999,
the Company acquired 19,200,000 shares of D Preferred of NuOasis on June 30,
1999 with a carrying value of $8,000,000. Management obtained independent
appraisals of the NuOasis D Preferred as of June 30, 2000, and 1999, totaling
$10.9 million and $8.1 million, respectively. However, the data used to
determine fair value at June 30, 2000 adversely changed through September 30,
2000. Management is negotiating a sale or an exchange of its interest in the D
Preferred; however, to date management has been unsuccessful. Based on factors
known to management at September 30, 2000, the Company recorded an impairment of
$6,700,000 as a charge to operations in the first quarter of fiscal 2001 to
reflect the adverse change that affected the data used to appraise the asset at
June 30, 2000.
Liquidity and Capital Resources
The Company had cash balances of approximately $582,000 and $790,000 at
September 30, 2000 and June 30, 2000, respectively.
As of September 30, 2000, the Company had a positive working capital of $1.7
million. Management fully expects to realize fully its current assets including
the receivables from affiliates within the next fiscal year. The Company expects
to have additional working capital available as it negotiates the sale, exchange
or liquidation of its equity investments held for sale. Management believes that
the Company's working capital is sufficient to meet the operating needs for next
12 months.
The Company has no commitments for capital expenditures or additional equity or
debt financing.
8
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NEWBRIDGE CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2000
(Unaudited)
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) None
9
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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.
NEWBRIDGE CAPITAL, INC.
(Registrant)
Date: November 20, 2000 By: /s/ Leonard J. Roman
Leonard J. Roman
Chief Financial Officer
10
