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 period ended Commission file
March 31, 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
There were 3,077,836 shares of the registrant's common stock outstanding as of
March 31, 1999.
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WESTBURY METALS GROUP, INC.
FORM 10-QSB
For the Quarter Ended March 31, 1999
TABLE OF CONTENTS
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PART 1 - FINANCIAL INFORMATION
ITEM 1-FINANCIAL STATEMENTS Page
Consolidated Balance Sheets as of March 31, 1999 and June 30,
1998................... ..................1
Consolidated Statements of
Operations for the nine months and three months
March 31, 1999 and 1998..............................................................2
Consolidated Statements of Stockholders' Equity for the nine months
ended March 31, 1999 and the year ended June 30,
1998................................................................................... 3
Consolidated Statements of Cash Flows for the nine months ended March
31, 1999 and 1998.... ....... 4
Notes to Consolidated Financial
Statements..................................................................... 5-6
ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS....................................................................7
ITEM 6-EXHIBITS AND REPORTS ON FORM 8-K...........................................................9
PART II - OTHER INFORMATION
SIGNATURES............... ........................................................................10
<PAGE>
WESTBURY METALS GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
MARCH 31, JUNE 30,
1999 1998
ASSETS
CURRENT ASSETS:
Cash $ 368,638 $ 877,520
Accounts receivable
2,287,764 788,749
Inventory
1,257,329 835,565
Prepaid expenses and other current assets
918,597 348,795
--------------------- ---------------
Total Current Assets
4,832,328 2,850,629
--------------------- ---------------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment
1,425,286 599,843
Less: accumulated depreciation and amortization
(269,685) (162,695)
---------------------
Property, Plant and Equipment - net
1,155,601 437,148
--------------------- ---------------
OTHER ASSETS:
Goodwill - net of accumulated amortization
228,040 230,720
Deposits
105,375 113,177
--------------------- ---------------
Total other assets
333,415 343,897
--------------------- ---------------
TOTAL ASSETS $ 6,321,344 $3,631,674
===================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $ 1,424,703 $ -
Due to customers
1,377,930 455,553
Accounts payable and accrued expenses
454,226 528,246
Current portion of mortgage payable
11,092
--------------------- ---------------
Total Current Liabilities
3,267,951 983,799
Mortgage payable, non-current portion
309,402
--------------------- ---------------
TOTAL LIABILITIES
3,577,353 983,799
--------------------- ---------------
STOCKHOLDERS' EQUITY:
Common stock $.001 par value; Authorized 50,000,000
shares; issued and outstanding 3,197,312 shares
3,197 3,197
Capital in excess of par value
3,171,879 3,171,879
Accumulated deficit
(431,085) (527,201)
Total Stockholders' Equity
2,743,991 2,647,875
--------------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,321,344 $3,631,674
===================== ===============
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WESTBURY METALS GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED FOR THE THREE MONTHS ENDED
MARCH 31, MARCH 31,
(UNAUDITED) (UNAUDITED)
-------------------------------------- ------------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues:
Sales $ 22,532,534 $ - $ 10,259,885 $ -
Refining
3,713,695 1,322,378 1,391,987 797,535
Other
71,741 119,421 11,687 46,628
---------------- ------------------ ------------------ --------------------
Total revenues
26,289,467 1,441,799 11,663,559 844,163
---------------- ------------------ ------------------ --------------------
Costs and expenses:
Cost of sales
21,347,007 - 9,986,697 -
Cost of refining
2,747,284 543,224 838,769 278,807
Selling, general and administrative
1,843,195 818,230 662,759 563,803
Depreciation and amortization
116,261 210,545 48,612 151,672
Interest
124,071 153,786 54,148 38,190
---------------- ------------------ ------------------ --------------------
Total costs and expenses 1,725,785
26,177,818 11,590,985 1,032,472
---------------- ------------------ ------------------ --------------------
Income before income taxes
140,152 (283,986) 72,574 (188,309)
Provision for income taxes
44,036 19,657 36,062 19,657
---------------- ------------------ ------------------ --------------------
Net income (loss) $ 96,116
(303,643) 36,512 (207,966)
================ ================== ================== ====================
Net income (loss) per share - basic $ 0.03 $ (0.16) $ 0.01 $ (0.11)
Net income (loss) per share - diluted $ 0.03 $ (0.16) $ 0.01 $ (0.11)
Average shares outstanding - basic
3,197,312 1,850,000 3,197,312 1,850,000
Average shares outstanding - diluted
3,522,312 1,850,000 3,522,312 1,850,000
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WESTBURY METALS GROUP, INC., AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
AND FOR THE YEAR ENDED JUNE 30, 1998
COMMON STOCK CAPITAL IN TOTAL
EXCESS OF ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT PAR VALUE DEFICIT EQUITY
BALANCE, JULY 1, 1997 $ 1,850 $ 98,150 $ (102,760) $ (2,760)
1,850,000
COMMON STOCK ISSUED
UPON MERGER WITH
ROSECAP, INC.
MARCH 31, 1998
180,000 180 40,857 41,037
COMMON STOCK ISSUED
IN PRIVATE PLACEMENT
MARCH 31, 1998
814,503 815 2,015,224 2,016,039
COMMON STOCK ISSUED
UPON CONVERSION OF
BRIDGEHOLDER LOANS
MARCH 31, 1998
233,333 233 699,767 700,000
COMMON STOCK ISSUED
IN PRIVATE PLACEMENT
MAY 8, 1998
119,476 119 317,881 318,000
NET LOSS FOR THE YEAR
ENDED JUNE 30, 1998
(424,441) (424,441)
-------------------------------------------------------------------------------------------
BALANCE JUNE 30, 1998
3,197,312 3,197 3,171,879 (527,201) 2,647,875
NET INCOME FOR THE
NINE MONTHS ENDED
MARCH 31, 1999
(UNAUDITED)
96,116 96,116
-------------------------------------------------------------------------------------------
BALANCE
MARCH 31, 1999
(UNAUDITED) $ 3,197 $ 3,171,879 $ (431,085) $ 2,743,991
3,197,312
===========================================================================================
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WESTBURY METALS GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998
---- ----
Operating activities:
Net Income (loss) $ 96,116 $ (303,643)
Adjustments to reconcile net income (loss) to net cash
Used in operating activities net of assets and
Liabilities acquired in merger:
Depreciation and amortization
109,670 70,799
Changes in assets and liabilities:
Accounts receivable
(1,499,015) (49,577)
Inventories
(421,764) 720,948
Due from Affiliates
- 81,445
Prepaid expenses
(569,802) (72,557)
Deposits
7,802 (16,145)
Notes Payable
474,328 -
Due to customers
922,377 205,469
Accounts payable and accrued expenses
(74,020) 418,314
---------------- -----------------
Net cash used in operating activities
(954,308) 1,055,053
---------------- -----------------
Investing activities
Property, plant and equipment
(500,443) (75,883)
---------------- -----------------
Net cash used by investing activities (75,883)
(500,443)
---------------- -----------------
Financing Activities
Issuance of common stock
2,016,039
Stock subscription receivable
(100,000)
Bridge financing
700,000
Repayment of long term debt.
(4,506) (568,983)
Notes payable - accounts receivable financing
950,375 (973,046)
---------------- -----------------
Net cash provided by financing activities
945,869 1,074,010
---------------- -----------------
Cash from merged subsidiary
- 41,418
Net Increase (decrease) in cash
(508,882) 2,094,598
Beginning cash balance
877,520 73,136
---------------- -----------------
Ending Cash Balance $ 368,638 $ 2,167,734
================ =================
-
Supplemental cash flow information:
Cash paid for interest $ 124,071 $ -
Property, plant and land addition financed
by long-term debt $ 325,000 $ -
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NOTE 1- GENERAL
The accompanying financial information should be read in conjunction with
the audited financial statements including the notes thereto, as of and for the
year ended June 30, 1998. The June 30, 1998 statements have been amended as of
February 15, 1999 to show the accounting treatment for the merger of Westbury
Alloys, Inc. and Rosecap, Inc. as Westbury Alloys, Inc. being the acquirer
rather than the Rosecap, Inc.
The information furnished in this report reflects all adjustments (consisting of
only normal recurring accruals) which are, in the opinion of management,
necessary for a fair statement of the results for the interim periods.
NOTE 2- ORGANIZATION
On June 18, 1998, the Company name was changed from Rosecap, Inc. to Westbury
Metals Group, Inc. ("WMG"). On March 31, 1998 the Company entered into a merger
between Westbury Acquisition Corp. ("WAC"), a wholly owned subsidiary of the
Company, and Westbury Alloys, Inc., ("Westbury") a Delaware Corporation, the
surviving entity. The merger is a reverse merger whereby the principals of
Westbury became the principals and the largest shareholders of the Company. The
Company commenced operating the business of Westbury after the consummation of
the merger. Prior to the merger, the Company, which was incorporated in 1990,
had not conducted any operations and reported as a development stage enterprise.
Westbury reclaims principally gold, silver, platinum and palladium from scrap
and residues from the electronics, jewelry, petroleum, dental, chemical,
automotive, mining and aerospace industries. After controlled weighing,
sampling, and assaying to determine values and to settle with the customer,
Westbury either purchases the precious metal or returns metal to the customer.
Through its Peruvian subsidiary Alloy Trading S.A. ("Alloy"), Westbury imports
metals for its own use as well as for direct sale to third parties.
Alloy, a 98% owned subsidiary of Westbury, was incorporated in Peru in 1996. The
remaining 2% of the capital stock of Alloy are owned by the two local managers
of Alloy. The long range purpose of Alloy is to develop trading opportunities
between Peruvian companies and their counterparts worldwide and to explore
opportunities in metal related activities including gold and silver bullion,
transactions with the mining industry, jewelry manufacturers, and other similar
activities.
NOTE 3 - INVENTORIES
Inventories are stated at current market value. Consistent with other companies
that refine and produce precious metal fabricated products; some of the
Company's gold and silver requirements are furnished by customers and suppliers
on a consignment basis.
Title to the consigned gold and silver remains with the Consignor. The value of
consigned gold and silver held by the Company is not included in the Company's
Balance Sheet. On March 31, 1999 the Company held $2,426,921 of precious metals
under a consignment agreement with Republic National Bank. The Company's gold
and silver requirements are provided from a combination of owned inventories,
precious metals which have been purchased and sold for future delivery, and gold
and silver received from suppliers and customers on a consignment basis.
NOTE 4 - NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share is calculated using the weighted
average number of common shares outstanding during the period. Diluted income
(loss) per share is calculated by including all dilutive potential common share
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:
Nine Months Ended
March 31,
1999
1998
Net income (loss) (numerator for basic and diluted net income
(loss) per common share) $ 96,116 $ (303,643)
---------- -----------
Weighted average common shares
(denominator for basic net income (loss) per common share) 3,197,312 1,850,000
Effect of dilutive securities:
Employee stock options 325,000 0 .
---------- --------------------------
Weighted average common and potential common shares
outstanding (denominator for diluted income (loss) per
common share) 3,522,312 1,850,000
--------- ---------
Net income (loss) per common share-Basic $ .03 $ (.05)
------------- -------------
Net income (loss) per common share-Diluted $ .03 $ (.05)
------------- -------------
Potential common shares are not included for the nine months ended March 31,
1998 because they would be anti-dilutive.
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ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity, Capital Resources and Other Financial Data
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 and
silver requirements. Title to the consigned gold and silver remains with the
Consignor. The value of consigned gold and silver held by the Company is not
included in the Company's inventory and there is no related liability recorded.
At March 31, 1999 the Company held $2,426,921 of precious metal under a
consignment agreement with Republic National Bank for which the Company is
charged a consignment fee based on current 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 supply or the credit arrangements
necessary to allow the Company to support its accounts receivable and continue
the use of consigned gold. The Company has entered into an agreement for the
financing of its accounts receivable up to a maximum credit limit of $2,000,000.
Management has entered into an agreement to purchase the assets and business of
Reliable Corporation of Waterbury, CT.. Closing of this acquisition is expected
by July 1, 1999. Reliable Corporation is a major manufacturer of silver
semi-fabricated products to the industrial manufacturing and plating industries.
The activities of this acquisition will be integrated with our West Tech
subsidiary. With the addition of plant and equipment management believes that
there will be significant growth in this area.
Management believes that operations will continue to improve in the fourth
quarter of fiscal 1999. Through diversification in it's refining area and
greater efficiencies in its catalyst operations higher profits are anticipated,
although there can be no assurances that management will continue to be
successful in its efforts.
Results of Operations
Westbury Metals Group, through its subsidiaries engages in four significant
areas of the precious metals business as follows: -industrial commodities
management services including metals leasing, financing arrangements, cash and
forward purchases and sales for internal metals management requirements
- -manufacturing and sale of precious and base metal products for use by industry
- -refining services to generators and manufacturers of precious metals -catalyst
procurement and collection for the purpose of processing and recovery of
platinum group metals.
On September 29, 1998 the Company acquired a property adjoining its refining
facility to house the catalyst procurement and processing operation.
Operating activities
Net cash provided (used) in operating activities amounted to ($954,000) in 1999
and $1,055,000 in 1998. The cash used for operating activities increased by
$2,009,000. There was an increase in working capital requirements of $1,840,000,
which was necessitated by our new industrial products and industrial commodities
management divisions.
Investing activities
Net cash used by investing activities for 1999 included the September 1998
acquisition of 900 Shames Drive, Westbury, NY, in the amount of $530,000 for the
processing of catalysts and for administrative offices.
Financing activities
Net cash provided by financing activities for 1999 is from new accounts
receivable financing credit facility of up to $2,00,000 which commenced in
October of 1998.
Comparison of Third Quarter 1999 versus Third Quarter 1998
Revenues were $11,664,000 for 1999 compared to $844,000 for 1998. There was an
increase of $10,260,000 from new activities related to our industrial product
sales and our industrial commodities management divisions and an increase of
$594,000 from our refining and processing activities. This increase is primarily
a result of expanded operations outside of the refining services offered in the
past.
Selling, general and administrative expenses increased by $104,000 for the
current quarter as a result of new employees hired to facilitate the expansion
of Westbury Metals Group, Inc. and for operations at the new divisions.
Income before taxes same periods was $72,574 and $ (188,309) respectively.
Included in depreciation and amortization for the quarter ended 1998 was
$140,600 of goodwill related to the acquisition of the industrial products
division which was written off in total. The provision for taxes is related to
our Peruvian subsidiary.
Comparison of Nine Months of 1999 versus Nine Months of 1998
Revenues were $26,318,000 for 1999 compared to $1,442,000 for 1998. There was an
increase of $22,533,000 from new activities related to our industrial products'
sales and our industrial commodities management divisions and an increase of
$2,392,000 from our refining and processing activities. This increase is
primarily a result of expanded operations outside of the refining services
offered in the past.
Selling, general and administrative expenses increased by $1,025,000 for the
current period as a result of new employees hired to facilitate the expansion of
Westbury Metals Group, Inc. and for operations at the new divisions.
Income from operations for the same periods was $140,152 and $ (283,986)
respectively. Included in depreciation and amortization for the nine months
ended 1998 was $140,600 of goodwill related to the acquisition of the industrial
products division which was written off in total. The provision for taxes is
related to our Peruvian subsidiary
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"), to be
substantially completed by the fall of 1999.
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 March 31, 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 intends to solicit 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 has already been expended.
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.
ITEM 6- EXHIBITS AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K
On May 5, 1999 the Company filed a report on Form 8-K, Item 2- Acquisition
of Disposition of Assets.
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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: May 17, 1999
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-QSB/A AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-1-1998
<PERIOD-END> JUN-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,287,764
<ALLOWANCES> 0
<INVENTORY> 1,257,329
<CURRENT-ASSETS> 4,832,328
<PP&E> 1,425,286
<DEPRECIATION> 269,685
<TOTAL-ASSETS> 6,321,344
<CURRENT-LIABILITIES> 2,267,951
<BONDS> 0
0
0
<COMMON> 3,197
<OTHER-SE> 2,740,794
<TOTAL-LIABILITY-AND-EQUITY> 6,321,244
<SALES> 26,246,229
<TOTAL-REVENUES> 26,317,970
<CGS> 24,094,291
<TOTAL-COSTS> 26,177,818
<OTHER-EXPENSES> 2,083,527
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 124,071
<INCOME-PRETAX> 140,152
<INCOME-TAX> 44,036
<INCOME-CONTINUING> 96,116
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 96,116
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
