U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT ISSUED UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended Commission file
September 30, 1999 Number 33-42408-NY
WESTBURY METALS GROUP, INC.
(Exact name of registrant as specified in its charter)
New York 11-3023099
(State or other jurisdiction of (IRS Employer Identification
incorporation) Number)
750 Shames Drive, Westbury, New York 11590
(Address of principal executive offices)
Registrant's telephone number, including area code:
(516) 997-8333
-------------------------------------------
(Former name or address if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all
documents and reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes _______ No _______
APPLICABLE ONLY TO CORPORATE ISSUERS
As at November 15, 1999, 3,257,312 shares of the issuer's Common Stock, $.001
par value, were outstanding.
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WESTBURY METALS GROUP, INC.
FORM 10-QSB
For the Quarter Ended September 30, 1999
TABLE OF CONTENTS
PART 1 - FINANCIAL INFORMATION
ITEM 1-FINANCIAL STATEMENTS Page
Consolidated Balance Sheets as of
September 30, 1999 and June 30,1999.........................1
Consolidated Statements of Operations for
the three months ended September 30, 1999 and 1998............2
Consolidated Statements of Cash Flows for the three
months ended September 30, 1999 and 1998........................3
Notes to Consolidated Financial Statements.......................4-7
ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................8-12
PART II - OTHER INFORMATION
SIGNATURES..................................................................13
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WESTBURY METALS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, JUNE 30,
1999 1999
ASSETS (UNAUDITED)
CURRENT ASSETS:
Cash $ 125,169 $ 1,242,230
Accounts receivable, net of allowance of $17,000 3,082,028 2,824,949
Inventory (Note 3) 2,570,152 1,076,237
Prepaid expenses and other current assets 392,222 161,364
--------------------- -------------------
Total current assets 6,169,571 5,304,780
--------------------- -------------------
PROPERTY, PLANT AND EQUIPMENT - Net 2,250,817 2,273,233
GOODWILL, Net of accumulated amortization of
$116,997 and $80,720 respectively 1,393,046 1,410,480
OTHER ASSETS 310,015 168,452
--------------------- -------------------
TOTAL ASSETS $ 10,123,449 $ 9,156,945
===================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,598,472 $ 611,574
Due to former Reliable shareholder - 1,192,578
Current portion of long-term debt (Note 4) 2,020,944 1,721,758
Due to customers 727,470 1,773,663
--------------------- -------------------
Total current liabilities 4,346,886 5,299,573
--------------------- -------------------
LONG-TERM DEBT (Note 5) 3,304,939 1,342,369
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value - authorized, 50,000,000 shares; 3,257,312 and
3,247,312 shares issued and outstanding as of
September 30, 1999 and 1998, respectively
3,257 3,247
Capital in excess of par value 3,327,299 3,284,329
Accumulated comprehensive loss
(68,275) (60,678)
Accumulated deficit (790,657) (711,895)
--------------------- -------------------
Total stockholders' equity 2,471,624 2,515,003
--------------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,123,449 $ 9,156,945
=========================================
See notes to consolidated financial statements
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WESTBURY METALS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED)
1999 1998
-------------------- ----------------------
REVENUE:
Precious metal sales $ 17,495,095 $ 4,906,229
Refining 2,216,654 420,240
-------------------- ----------------------
Total revenue 19,711,749 5,326,469
-------------------- ----------------------
COST OF SALES:
Cost of precious metal sales 16,785,709 4,459,215
Cost of refining 1,785,786 141,971
-------------------- ----------------------
Total cost of sales 18,571,495 4,601,186
-------------------- ----------------------
GROSS PROFIT 1,140,254 725,283
-------------------- ----------------------
OPERATING EXPENSES:
Selling, general and administrative expenses
875,290 634,482
Depreciation and amortization 113,614 33,808
-------------------- ----------------------
Total operating expenses
988,904 668,290
-------------------- ----------------------
EARNINGS FROM OPERATIONS
151,350 56,993
-------------------- ----------------------
OTHER EXPENSES (INCOME):
Interest expense
231,364 36,208
Interest income
(1,252) (4,180)
Other income
- (6,193)
-------------------- ----------------------
Total other expenses
230,112 25,835
-------------------- ----------------------
(LOSS) EARNINGS BEFORE PROVISION FOR INCOME TAXES
(78,762) 31,158
PROVISION FOR INCOME TAXES
- 6,017
-------------------- ----------------------
NET (LOSS) INCOME $ (78,762) $ 25,141
==================== ======================
NET(LOSS) INCOME PER SHARE - Basic $ (0.02) $ 0.01
==================== ======================
NET(LOSS) INCOME PER SHARE - Diluted $ (0.02) $ 0.01
==================== ======================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING;
Basic 3,257,586 3,197,312
==================== ======================
Diluted 3,257,586 3,522,312
==================== ======================
See notes to consolidated financial statements
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WESTBURY METALS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ----------------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED)
1999 1998
------------------- ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income ($78,762) $25,141
Adjustments to reconcile net (loss) income to net
cash used in operating activities:
Depreciation and amortization
113,614 33,808
Warrant conversion inducement charge -
2,500
Changes in assets and liabilities:
Inventory
(1,493,915) 529,169
Accounts receivable
(257,079) (641,223)
Prepaid expenses and other current assets
(230,858) (889,366)
Other noncurrent assets
(122,438) 31,289
Due to customers
(1,046,193) 111,239
Accounts payable and accrued expenses
986,898 332,147
------------------- ---------------------
Net cash used in operating activities
(2,126,233) (467,796)
CASH FLOWS FROM INVESTING ACTIVITIES -
Equipment additions
(67,486) (239,270)
------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable to former Reliable shareholder
(1,192,578) -
Proceeds from issuance of subordinated debt
2,000,000 -
Net proceeds from credit line
295,321 -
Repayment of long-term
debt (46,085) -
Proceeds from stock warrants exercised
20,000 -
------------------- ---------------------
Net cash provided by financing activities
1,076,658 -
------------------- ---------------------
NET DECREASE IN CASH
(1,117,061) (707,066)
BEGINNING CASH BALANCE
1,242,230 877,520
------------------- ---------------------
ENDING CASH BALANCE $ 125,169 $ 170,454
=================== =====================
See notes to consolidated financial statements
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NOTE 1- GENERAL
The accompanying consolidated financial statements as of and for the three
months ended September 30,1999 and 1998 include the accounts of Westbury Alloys,
Inc.("Westbury"), Alloy Trading S.A. ("Alloy"), Reliable-West Tech, Inc.
("RWT"), Westbury International, Inc. ("International"), Westbury Realty
Management Corp. ("Realty"), and Westbury Metals Group, Inc. ("WMG")
(collectively, the "Company").
In the opinion of management, the accompanying unaudited financial statements
contain all the adjustments necessary to present fairly the results of
operations for each of the three month periods ended September 30, 1999 and
1998, the financial position at September 30, 1999 and the cash flows for the
three month periods ended September 30, 1999 and 1998, respectively. Such
adjustments consist of normal recurring items. The consolidated financial
statements and notes thereto should be read in conjunction with the Company's
Annual Report on Form 10-K for the fiscal year ending June 30, 1999 as filed
with the Securities and Exchange Commission.
The interim financial results are not necessarily indicative of the results to
be expected for the full year.
NOTE 2 - ACQUISITION
Effective June 30, 1999, the Company purchased assets consisting of land,
building, inventory, customer lists, and the business name from Reliable
Corporation for $2,350,655, including related acquisition costs of $58,077. The
acquisition was accounted for as a purchase. Accordingly, the assets of the
acquired business are included in the consolidated balance sheet as of June 30,
1999. The acquisition was financed through amounts payable to the former owner
of Reliable. A cash payment of $1,192,578 was made on July 16, 1999, with the
remaining balance financed through the issuance of promissory notes which bear
interest at an annual interest rate of 7% and are payable over six years. The
purchase price exceeded the fair value of net assets acquired by $1,190,000,
which is being amortized on a straight-line basis over 20 years.
NOTE 3 - INVENTORIES
Inventories are stated at current market value. Consistent with industry
practice, some of the Company's gold, platinum, palladium and silver
requirements are furnished by customers and suppliers on a consignment basis.
Title to the consigned precious metals remains with the Consignor. The value of
consigned precious metals held by the Company is not included in the Company's
balance sheet. On September 30, 1999, the Company held $5,016,517 of precious
metals under a consignment agreement with a bank. The Company's precious metal
requirements are provided from a combination of owned inventories, precious
metals which have been purchased and sold for future delivery, and precious
metals received from suppliers and customers on a consignment basis.
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NOTE 4 - LONG TERM DEBT
In July 1999, RWT, International and Alloys (the "Co-borrowers") entered into a
two year revolving credit agreement with a bank under which it may borrow up to
$12,000,000. Of this total, $7,000,000 has been designated for the consignment
of precious metals, $1,000,000 for a forward contract facility, and the
remaining balance may be utilized to meet working capital requirements. Interest
on the consignment of precious metals accrues at the Gold Cost of Funds rate
plus 2.50% (5.85% at September 30, 1999). Interest on the remaining borrowings
accrues at the option of the Company at LIBOR plus 2.50% or Prime plus .5%
(8.75% at September 30, 1999). Borrowings for the consignment of precious metals
is limited to the balance of eligible inventory, with the remaining borrowings
limited to the balance of eligible accounts receivables. The facility is secured
by the assets of the Co-borrowers, and guaranteed by WMG. The agreement requires
the Company to maintain certain financial ratios and other financial conditions.
The Company has agreed to pay fees of .375% on the unused amount of the facility
payable monthly. The Company was in default of certain financial covenants at
September 30, 1999 and has received a waiver from the bank.
NOTE 5 - SUBORDINATED DEBT
In July 1999, the Co-borrowers and WMG issued a two year subordinated term note
(the "Note") for the receipt of $2,000,000 from a financing company. Interest on
the Note accrues at a rate equal to prime plus 4% and is payable monthly. The
principal portion of the Note becomes due July 2001. In conjunction with the
issuance of the Note, the Company granted 90,000 warrants to purchase the
Company's common stock at an exercise price of $9.00.
NOTE 6 - NET (LOSS) INCOME PER COMMON SHARE
Basic net (loss) income per common share is calculated using the weighted
average number of common shares outstanding during the period. Diluted (loss)
income per share is calculated by including all dilutive potential common Shares
such as stock options and warrants. A reconciliation between the numerators and
denominators of the basic and diluted net income per common share is as follows:
Three Months Ended
September 30,
1999 1998
---- ----
Net (loss) income (numerator for basic and
diluted net (loss) income per common share) $ (78,762) $ 25,141
--------- ------
Weighted average common shares
(denominator for basic net (loss) income
per common share) 3,257,586 3,197,312
Effect of dilutive securities:
Employee stock options - 325,000
--------- ---------
Weighted average common and potential common shares
outstanding (denominator
For diluted (loss) income per common share) 3,257,586 3,522,312
----------- ----------
Net (loss) income per common share-Basic $ (0.02) $ 0.01
------------- ------------
Net (loss)income per common share-Diluted $ (0.02) $ 0.01
-------------- -------------
Potential common shares are not included for the quarter ended
September 30, 1999 because they would be anti-dilutive.
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NOTE 7 - INDUSTRY SEGMENTS
The Company operates in three reportable segments, industrial commodities
management, manufacturing, and refining. The Industrial Commodities Management
segment consists principally of the sale of precious metals to end users. The
Manufacturing segment provides silver in various forms and shapes, plating salt,
tin and tin-lead anodes which are used in manufacturing to consumers of the
Company. The Refining segment provides refining services to customers of the
Company. The Corporate segment combines activity for non-reportable segments.
Industrial
Commodities
Management Manufacturing Refining Corporate Consolidated
Three months ended September 30, 1999
Sales to unaffiliated customers 12,397,164 $ 5,097,931 $ 2,216,654 $ $ 19,711,749
Transfers between segments $ 5,764,307 - - $ (5,764,307) -
Total revenues $ 18,161,471 $ 5,097,931 $ 2,216,654 $ (5,764,307) $ 19,711,749
Interest expenses $ 72,364 $ 62,155 $ 15,253 $ 81,593 $ 231,364
Depreciation and amortization $ 504 $ 66,381 $ 38,977 $ 7,752 $ 113,614
(Loss) Income before income tax
Benefit provision $ (26,482) $ 86,935 $ 61,930 $ (201,145) $ (78,762)
Industrial
Commodities
Management Manufacturing Refining Corporate Consolidated
Three months ended September 30, 1998
Sales to unaffiliated customers $ 2,685,440 $ 2,220,789 $ 420,240 $ $ 5,326,469
-
Transfers between segments $ 6,744,478 - - $ (6,744,478) -
Total revenues $ 9,429,918 $ 2,220,789 $ 420,240 $ 6,744,478 $ 5,326,409
Interest expenses $ 25,616 $ - $ 10,436 $ 156 $ 36,208
Depreciation and amortization $ 662 $ 6,959 $ 26,187 $ - $ 33,808
Income (Loss) before income tax
Benefit provision $ 170,355 $ 27,564 $ (160,714) $ (6,047) $ 31,148
NOTE 8 - COMPREHENSIVE LOSS
Effective June 30, 1999, the Company adopted Statement of Financial Standards
No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130
requires the reporting and display of comprehensive loss and its components in
the financial statements.
SFAS No. 130 also requires the Company to classify items of other comprehensive
income or loss by their nature in financial statements.
<PAGE>
Changes in stockholders' equity and comprehensive loss during the three months
ended September 30, 1999:
Three Months Ended
September 30
1999
--------
Net (loss) income $ (78,762)
Foreign currency translation adjustment (7,597)
--------------
Total $ ( 86,359)
---------------
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Form 10-QSB contains forward-looking statements. Additional written and
oral forward-looking statements may be made by the Company from time to time in
Securities and Exchange Commission ("SEC") filings and otherwise. The Company
cautions readers that results predicted by forward-looking Statements,
including, without limitation, those relating to the Company's future business
prospects, revenues, working capital, liquidity, capital needs and income are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those indicated in the forward-looking statements due to
risks and factors identified in this Form 10-QSB and as may be identified from
time to time in the Company's future filings with the SEC.
General
The Company has positioned itself through its subsidiaries to engage in
four significant areas of the precious metals business.
o Westbury International, Inc.
Commodity and risk management services, including metals leasing,
financing arrangements, cash and forward purchases and sales for internal
metals management requirements. This newly formed entity is responsible for
the ongoing management and operations of the Peruvian subsidiary, which is
98 percent owned by the Company.
It is expected that long-term contracts for metals will be entered into for
both the procurement and sales of precious metals on both a domestic and
international basis.
o Reliable-West Tech, Inc. ("RWT")
Manufacture and sale of precious and base metal products for use by
industry.
o Westbury Alloys, Inc.
Refining services to accumulators and manufacturers of precious metals.
o West-Cat (trade name)
Catalyst procurement and collection for the purpose of processing and
recovery of platinum group metals. Revenues from this activity are combined
with refining revenues.
Results of Operations
The following table sets forth, as a percentage of revenue, certain
items appearing in the Company's Statements of Operations for the indicated
three month periods ended September 30.
1999 1998
------ -------
Revenues:
Sales 88.8% 92.1%
Refining 11.2 7.9
----- -------
Total Revenues 100.0% 100.0%
------ ------
The net (loss) income for the three months ended September 30, 1999 and
September 30, 1998 was ($78,762) and $25,141, respectively. The net (loss)
income per diluted share for the three months ended September 30, 1999 and
September 30, 1998 was ($.02) and $.01 respectively.
<PAGE>
Comparison of Three Months Ended September 30, 1999 versus Three Months Ended
September 30, 1998
Revenues were $19,711,749 for three months ended September 30, 1999
compared to $5,326,469 for three months ended September 30, 1998. Of the total
increase, $12,588,866 related to our industrial product sales and our industrial
commodities management divisions, while $1,796,414 related to our refining and
processing activities. The increases at our industrial product sales and our
industrial commodities management divisions are directly related to the new
financing arrangement with the bank, the acquisition of Reliable Corporation,
and the expansion of the operations of the refining division.
Through the diversification of the refining area and greater
efficiencies in the catalyst operations, net refining revenues for three months
ended September 30, 1999 were $2,216,654 compared to $420,240 for the three
months ended September 30, 1998 for an increase of $1,796,414.
RWT commenced operations on April 1, 1998 and acquired substantially
all of the assets of Reliable Corporation on June 30, 1999. For the three months
ended September 30, 1999, this subsidiary recorded gross revenues of $5,097,931.
The industrial products management division which started business in July 1998
was responsible for an additional $12,397,164 in gross revenues for the three
months ended September 30, 1999. The revenues relate to precious metal sales to
industrial end users. Combined product and precious metal sales were $17,495,095
for the three months ended September 30, 1999 compared to $4,906,229 for the
three months ended September 30, 1998, resulting in an increase of $12,588,866.
The percentage of total revenues for the three months ended September
30, 1999 compared to the three months ended September 30, 1998 by revenue source
were as follows: product and precious metal sales were 88.8% and 92.1%,
respectively, and refining revenues were 11.2% and 7.9%, respectively.
Cost of precious metal sales were $16,785,709 or 95.9% of sales for
three months ended September 30, 1999 compared to $4,459,215 or 90.9% of sales
for three months ended September 30, 1998. This increase of 5.0% in cost of
sales is due to the nature of precious metals sales at the industrial products
management division, which are high volume and low margin transactions.
Cost of refining revenues were $1,785,786 or 80.6% of refining fees for
three months ended September 30, 1999 compared to $141,971 or 33.8% of refining
fees for three months ended September 30, 1998. This increase of 46.8% in cost
of refining is primarily due to the increased activity in catalysts and the
related labor, facility and transportation costs.
Selling, general and administrative expenses increased by $240,808 or
38%, from $634,482 for the three months ended September 30, 1998 to $875,290 for
the three months ended September 30, 1999. This increase is the result of new
employees hired at the sales, and operations levels to facilitate the expansion
of RWT.
Depreciation and amortization expense was $113,614 for the three months
ended September 30, 1999 compared to $33,808 for the three months ended
September 30, 1998. This increase of $79,806, or 236%, was due to the
depreciation on the acquired building, machinery and equipment, and related
goodwill from the acquisition of Reliable Corporation.
<PAGE>
Interest expense was $231,364 for the three months ended September 30,
1999 compared to $36,208 for the three months ended September 30, 1998. The
increase of $195,156 or 539% was primarily due to the expanded credit facility
with a bank along with debt service for the Reliable Corporation acquisition and
interest charges for subordinated debt.
Liquidity, Capital Resources and Other Financial Data
Operating activities
Net cash used in operating activities was ($2,192,233) for the three
months ended September 30, 1999 compared to ($467,796) for the three months
ended September 30, 1998 which represents an increase of $1,724,437. There was
an increase in working capital of $1,822,685 which was primarily due to an
increase in inventory and partially offset by a decrease in due to customers.
Investing activities
Net cash used in investing activities for the three months ended September 30,
1999 was ($67,486) and primarily included the acquisition of equipment for the
processing of materials from the film industry.
Net cash used in investing activities in three months ended September 30, 1998
included the acquisition of the 900 Shames Drive, Westbury, NY facility, for
$510,000, which is primarily used for the processing of catalysts, as well as
for administrative offices.
Financing activities
Net cash provided by financing activities for the three months ended
September 30, 1999 is primarily due to the proceeds received under the new
revolving credit agreement which commenced in July 1999, as well as from the
issuance of a note for $2,000,000 in subordinated debt. This was primarily
offset by the repayment of the note payable to the former Reliable shareholder
in the amount of $1,192,578.
During the three months ended September 30, 1999, the Company issued
10,000 shares of common stock to warrant holders at an exercise price of $2.00
per share for net proceeds of $20,000.
The Company has been relying on a gold consignment program and internally
generated funds to finance its metal purchases, inventories and accounts
receivable. Inventories are stated at market value. Consistent with other
companies that refine and produce precious metal fabricated products, customers
and suppliers on a consignment basis furnish some of the Company's gold,
platinum, palladium and silver requirements. Title to the consigned precious
metals remains with the Consignor. The value of consigned gold, platinum,
palladium and silver held by the Company is not included in the Company's
inventory and there is no related liability recorded. At September 30, 1999 the
Company held $5,016,517 of precious metal under a consignment agreement with a
bank for which the Company is charged a consignment fee based on current market
rates. There can be no assurances that fluctuations in the precious metals
markets and credit would not result in an interruption of the Company's gold,
platinum, palladium and silver supply or the credit arrangements necessary to
allow the Company to support its accounts receivable and continue the use of
consigned precious metals.
<PAGE>
On July 13, 1999 the Company entered into a financing agreement with a
bank for a $12,000,000 credit facility used for working capital requirements.
The Company was charged an origination fee of .5% of the available line, an
underutilized loan fee of .375% and interest at the prime rate plus .5% for cash
transactions and libor plus 2.5% for precious metals transactions.
Year 2000
Many currently installed computer systems, software products and
manufactured products that utilize microprocessors are coded to accept only
two-digit entries in the date code field. These date code fields will need to
accept four-digit entries to distinguish twenty-first century dates. This is
commonly referred to as the "Year 2000 issue". The Company is aware of the Year
2000 issue and during fiscal 1998 commenced a program to identify, remediate,
test and develop contingency plans for the Year 2000 issue (the "Y2K Program").
This program has been substantially completed and will be finalized before year
end.
Under the Y2K Program, the Company began to assess the Year 2000
readiness of the software and computer information systems used in the internal
business ("CIS") of the Company ("Company CIS"); and the CIS of its key
customers. Although the Y2K Program is still underway, the Company does not
currently anticipate that the cost of the Y2K Program will be material to its
financial condition or results of operations. Satisfactorily addressing the Year
2000 issue is dependent on many factors, some of which are not completely within
the Company's control, such as the availability of certain resources,
third-party remediation plans and other factors.
As of September 30, 1999, the results of the assessment being conducted
under the Y2K Program were as follows:
Computer Information Systems (Company CIS): The company has acquired new
software and hardware to replace all non-compliant aspects of existing CIS.
Customers: The Company has solicited statements of compliance from its
key customers with respect to their CIS. In the event that its key customers are
unable to certify that they will be Year 2000 compliant by the fall of 1999, the
Company will be assessing the accounts receivable collection risk of such key
customers.
Costs: The cost to replace the existing software programs used in the
Company CIS of approximately $100,000 has already been expended by the Company.
There are no significant expenditures anticipated by the company to complete its
Year 2000 compliance program.
The Year 2000 issue presents far-reaching implications, some of which
cannot be anticipated with any degree of certainty. Based on the assessment that
has been made under the Y2K Program, and other than as stated above, the Company
has no other contingency plans in the event of any Year 2000 noncompliance and
does not currently believe that any other contingency plans are necessary.
However, management is not able to determine the effect of any Year 2000
noncompliance (including with respect to a "worst-case scenario") on the
Company, but there can be no guarantee that any such noncompliance would not
have an adverse effect on the Company's CIS, results of operations or financial
condition.
<PAGE>
Inflation
The Company does not believe that inflation has had, or will have in
the foreseeable future, a material impact upon the Company's operating results.
Recent Pronouncements of the Financial Accounting Standards Board
Recent pronouncements of the Financial Accounting Standards Board which
are not required to be adopted at this date include Statement of Financial
Standards No.133 "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"). SFAS 133, as deferred by SFAS No. 137, is effective for fiscal
quarters of all fiscal years beginning after June 15, 1999. Based upon current
data, the adoption of this pronouncement is not expected to have a material
impact on the Company's consolidated financial statements.
Forward Looking Statements
Management has been concentrating on building market share at RWT
through its internal sales force. With the acquisition of Reliable management
anticipates annual sales at RWT to increase 300% from the prior fiscal year.
Due to the current constraints on working capital resulting from the $1
million in cash required for the Reliable acquisition, management has elected to
reduce activities at its Peruvian subsidiary. This resulted in reduced
anticipated net profit for the three months ended September 30,1999 of
approximately $100,000. Management expects that the operations in Peru will
increase revenues and profitability by the third quarter of fiscal 2000.
At this time management has entered into an agreement with an
investment banking organization to raise additional equity. The success of this
activity will have a significant impact on the ability of Westbury Metals Group
to reach its goals of greater sales volumes and increased profits.
Through its continued efforts to diversify refining activities,
consolidate manufacturing activities and broaden its activities in industrial
products management divisions, management anticipates higher profits for the
fiscal year ended June 30, 2000, although there can be no assurances that
management will continue to be successful in its efforts.
<PAGE>
SIGNATURE
In accordance with the requirements of the exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WESTBURY METALS GROUP, INC.
By:______________________________
David Nadler
Chief Financial Officer
Date: November 17, 1999
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-QSB AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 125,169
<SECURITIES> 0
<RECEIVABLES> 3,099,028
<ALLOWANCES> 17,000
<INVENTORY> 2,570,152
<CURRENT-ASSETS> 6,169,571
<PP&E> 2,660,071
<DEPRECIATION> 409,254
<TOTAL-ASSETS> 10,123,449
<CURRENT-LIABILITIES> 4,346,886
<BONDS> 0
0
0
<COMMON> 3,257
<OTHER-SE> 2,468,367
<TOTAL-LIABILITY-AND-EQUITY> 10,123,449
<SALES> 19,711,749
<TOTAL-REVENUES> 19,711,749
<CGS> 18,571,495
<TOTAL-COSTS> 18,571,495
<OTHER-EXPENSES> 988,904
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 231,364
<INCOME-PRETAX> (78,762)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (78,762)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
