UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

Quarterly Report Under Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

 

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended February 28, 2013

 

OR

 

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

Commission file number 2-92261

 

WESTBRIDGE RESEARCH GROUP

(Exact name of registrant as specified in its charter)

 

California	95-3769474
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

 

1260 Avenida Chelsea

Vista, California 92081-8315

(Address of principal executive office) (Zip Code)

 

(760) 599-8855

(Registrant’s telephone number, including area code)

 

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 S No £

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes £  No S

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer  ¨	Accelerated Filer  ¨
Non-Accelerated Filer  ¨	Smaller reporting company  x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £No S

 

The number of shares of issuer’s Common Stock, no par value, outstanding as of April 15, 2013 was 2,240,438.

 

 

Westbridge Research Group

 

FORM 10-Q

 

FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2013

 

Table of Contents

---

 

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Condensed Balance Sheets as of February 28, 2013 (unaudited) and November 30, 2012 (audited)	4
	Consolidated Condensed Statements of Operations for the three months ended February 28, 2013 and February 29, 2012 (unaudited)	5
	Consolidated Condensed Statements of Cash Flows for the three months ended February 28, 2013 and February 29, 2012 (unaudited)	6
	Notes to Consolidated Condensed Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	18
SIGNATURES

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1 - FINANCIAL STATEMENTS

 

WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY

CONSOLIDATED CONDENSED BALANCE SHEETS

 

 

ASSETS

 

		FEBRUARY 28,				NOVEMBER 30,
		2013				2012
		(unaudited)				(audited)
CURRENT ASSETS
Cash and cash equivalents		$	1,032,181			$	1,531,686
Short term investments			1,000				1,000
Accounts receivable, less allowance for doubtful accounts of $15,000 and $3,600, respectively			774,871				155,693
Inventories			1,505,854				1,211,170
Deferred taxes			142,400				172,000
Prepaid expenses and other current assets			188,900				322,283
TOTAL CURRENT ASSETS			3,645,206				3,393,832
PROPERTY AND EQUIPMENT, net			534,562				545,439
INTANGIBLE ASSETS			151,600				151,600
TOTAL ASSETS		$	4,331,368			$	4,090,871

 

See accompanying notes to consolidated

condensed financial statements.

 

 

WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY

CONSOLIDATED CONDENSED BALANCE SHEETS

(continued)

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

		FEBRUARY 28,				NOVEMBER 30,
		2013				2012
		(unaudited)				(audited)
CURRENT LIABILITIES
Accounts payable		$	220,399			$	58,079
Accrued expenses			267,762				336,802
Line of credit			100,000				–
Current portion of note payable			4,660				4,623
TOTAL CURRENT LIABILITIES			592,821				399,504
Note payable, net of current portion			17,913				19,152
Deferred taxes			137,400				137,400
TOTAL LIABILITIES			748,134				556,056
Commitments (Note 5)
SHAREHOLDERS' EQUITY
Preferred stock, no par value:
Authorized 5,000,000 shares no shares issued and outstanding			–				–
Common stock, no par value:
Authorized 37,500,000 shares issued and outstanding 2,228,438 shares at February 28, 2013 and 2,223,438 at November 30, 2012			8,511,104				8,509,854
Paid-in capital			247,902				247,902
Accumulated deficit			(5,175,772	)			(5,222,941	)
TOTAL SHAREHOLDERS' EQUITY			3,583,234				3,534,815
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	4,331,368			$	4,090,871

 

See accompanying notes to consolidated

condensed financial statements.

 

 

WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

 

		THREE MONTHS ENDED
		FEBRUARY 28,				FEBRUARY 29,
		2013				2012
NET SALES		$	1,335,317			$	1,208,079
COST OF SALES			499,664				511,141
GROSS PROFIT			835,653				696,938
OPERATING EXPENSES
Research and development			112,178				68,041
Selling			365,577				365,371
General and administration			236,406				219,241
TOTAL OPERATING EXPENSES			714,161				652,653
Income from operations			121,492				44,285
OTHER INCOME [EXPENSE]
Other income			–				12,577
Interest expense			(125	)			(819	)
Interest income			402				172
Income before income taxes			121,769				56,215
Provision for income taxes			74,600				10,000
Net income		$	47,169			$	46,215
Basic earnings per common share		$	0.02			$	0.02
Basic weighted average common shares outstanding			2,227,605				2,148,438
Diluted earnings per common share		$	0.02			$	0.02
Diluted weighted average common shares outstanding			2,322,507				2,250,909

 

See accompanying notes to consolidated

condensed financial statements.

 

 

WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

 

		THREE MONTHS ENDED
		FEBRUARY 28,				FEBRUARY 29,
		2013				2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	47,169			$	46,215
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization			35,181				35,623
Decrease in deferred tax asset			29,600				–
Increase in allowance for doubtful accounts			11,400				10,000
Changes in Operating Assets and Liabilities:
Increase in accounts receivable			(630,578	)			(605,113	)
Increase in inventories			(294,684	)			(168,312	)
Decrease in prepaid expenses and other current assets			133,383				83,800
Increase in accounts payable			162,320				155,056
Decrease in accrued expenses			(69,040	)			(141,867	)
Net cash used in operating activities			(575,249	)			(584,598	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(24,304	)			(19,268	)
Net cash used in investing activities			(24,304	)			(19,268	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations			–				(4,970	)
Proceeds from exercise of stock options			1,250				–
Borrowings on line of credit			100,000				100,000
Payments on long-term debt			(1,202	)			–
Net cash provided by financing activities			100,048				95,030
DECREASE IN CASH AND CASH EQUIVALENTS			(499,505	)			(508,836	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			1,531,686				1,319,648
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	1,032,181			$	810,812
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	125			$	819
Taxes		$	26,000			$	16,500

 

See accompanying notes to consolidated

condensed financial statements.

 

 

WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY

 

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

 

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Business

 

Westbridge Research Group and Subsidiary (the “Company”) was incorporated in California on April 12, 1982 for the acquisition, research, development, manufacturing, and marketing of biotechnological products in the agricultural and energy industries.

 

Basis of Presentation

 

The accompanying unaudited consolidated condensed interim financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.  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 accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the 2012 Annual Report on Form 10-K, filed March 6, 2013. The results of operations for the quarter ended February 28, 2013, are not necessarily indicative of the operating results for the full year.

 

Principles of Consolidation

 

The accompanying financial statements consolidate the accounts of the Company and its wholly-owned subsidiary Westbridge Agricultural Products.  All significant inter-company transactions have been eliminated in consolidation.

 

Seasonality

 

Agricultural product sales are typically seasonal in nature with heavier sales in the spring months. The Company is seeking to temper the seasonality of its agronomic sales by marketing its products in Latin American countries which typically produces sales in December, January and February of each year.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

 

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(Continued)

 

Revenue Recognition

 

Revenues are recorded on the accrual basis of accounting when title transfers to the customer, which is typically at the shipping point. The Company records estimated reductions to revenue for return allowances and product performance, based upon a percentage of sales. The Company also allows for returns based upon pre-approval or for damaged goods. Such returns are estimated based on historical experience and an allowance is provided at the time of sale.

 

Shipping and Handling Costs

 

The Company incurs expenses for the shipment of goods to customers. These expenses are recognized in the period in which they occur and are classified as gross revenues if billed to the customer and cost of goods sold if incurred by the Company. Such costs amounted to approximately $23,000 and $25,000 for the three month periods ended February 28, 2013 and February 29, 2012, respectively.

 

Concentrations

 

A majority of the Company’s domestic sales are concentrated in states west of the Mississippi. The majority of the Company’s foreign sales are concentrated in South America and Asia. As of February 28, 2013, five customers represented 74% of accounts receivable and as of February 29, 2012, three customers represented 55% of accounts receivable. Three of the Company’s largest customers had combined purchases amounting to 61% of the Company’s net sales for the three months ended February 28, 2013. Four of the Company’s largest customers had combined purchases amounting to 54% of the Company’s net sales for the three months ended February 29, 2012. Total international sales represent 7% and 20% of total sales for the three months ended February 28, 2013 and February 29, 2012, respectively. The Company has no assets located in foreign countries.

 

Research and Development

 

It is the Company’s policy to expense research and development costs when incurred. During the three month periods ended February 28, 2013 and February 29, 2012, the Company expensed $112,178 and $68,041, respectively, of research and development costs.

 

Advertising

 

Advertising expense is comprised of media, agency and promotion costs. Advertising expenses are charged to expense as incurred. Advertising expenses totaled $47,863 and $34,596 during the three month periods ended February 28, 2013 and February 29, 2012, respectively.

 

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(Continued)

 

Earnings Per Share

 

Basic earnings per common share is based upon the weighted average number of common shares outstanding during the period. Diluted earnings per common share is based upon the weighted average number of common shares outstanding adjusted for the assumed conversion of dilutive stock options using the treasury stock method. The calculation of weighted average diluted shares outstanding excludes all anti-dilutive shares. During the periods ended February 28, 2013 and February 29, 2012, the Company excluded 0 and 147,500 stock options, respectively, from the calculation of diluted weighted-average shares outstanding as the stock options were considered anti-dilutive.

 

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the periods presented below:

 

		Period Ended
		February 28,				February 29,
		2013				2012
Numerator for earnings per common share		$	47,169			$	46,215
Denominator for basic earnings per common share			2,227,605				2,148,438
Effect of dilutive securities			94,902				102,471
Denominator for diluted earnings per common share			2,322,507				2,250,909
Net income per common share:
Basic		$	0.02			$	0.02
Diluted		$	0.02			$	0.02

 

 

 

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Income Taxes

 

The Company follows ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the asset will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

 

ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

 

The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of February 28, 2013 and February 29, 2012, the Company had no accrued interest or penalties related to uncertain tax positions.

 

The Company is subject to U.S. federal or state income tax examinations by tax authorities for years after 2008. During the periods open to examination, the Company has net operating loss and tax credit carry-forwards for U.S. federal and state tax purposes that have attributes from closed periods. Since these net operating losses and tax credit carry-forwards may be utilized in future periods, they remain subject to examination.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 

Accounts Receivable and Allowances for Uncollectible Accounts

 

The Company extends unsecured credit to most of its customers. Accounts receivable are stated at the historical carrying amount net of write-offs and allowances for uncollectible accounts. The Company establishes an allowance for uncollectible accounts based on historical experience and any specific customer collection issues that the Company has identified. Uncollectible accounts receivable are written off when a settlement is reached for an amount that is less than the outstanding balance or when the Company has determined that balance will not be collected.

 

 

 

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(Continued)

 

Impairment of Long-Lived Assets and Intangibles

 

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

 

Intangible Assets

 

The Company does not amortize indefinite lived intangible assets, but tests these assets for impairment annually or whenever indicators of impairments arise. Intangible assets that have finite lives are amortized over their estimated useful lives and tested for impairment as described above for long-lived assets.  The Company’s intangible assets with indefinite lives primarily consist of purchased formulas. Generally, the Company has determined that its formulas have indefinite useful lives due to the following:

 

·

Formulas and trade secret applications which are classified as pesticides or bio-pesticides are generally authorized by the United States Environmental Protection Agency subject to certain conditions, without substantial cost under a stable regulatory, legislative and legal environment;

·

Maintenance expenditures to obtain future cash flows are not significant;

·

The Soil TRIGGRR® and Foliar TRIGGRR® formulations are not technologically dependent; and

·

The Company intends to use these assets indefinitely.

 

The Company combines all its indefinite lived formulas which mainly consist of Soil TRIGGRR^® and Foliar TRIGGRR^® into a single unit of accounting. The analysis encompasses future cash flows from sales of Soil TRIGGRR^® and Foliar TRIGGRR^® product lines. In conducting the annual impairment test in 2012, the Company determined that the estimated fair value of the formulas, calculated using a discounted cash flow analysis, exceeded their carrying amounts. No changes have occurred since the impairment test that would require the Company to re-evaluate its formulas.

 

Recent Accounting Pronouncements

 

There are no recently issued accounting standards with pending adoptions that the Company’s management currently anticipates will have any material impact upon its financial statements.

 

 

NOTE 2 – INVENTORIES

 

Inventories, consisting of material, material overhead, labor, and manufacturing overhead, are stated at the lower of cost (determined on a first-in, first-out basis) or market. Inventories consist of the following at:

 

 

		February 28,				November 30,
		2013				2012
Raw materials		$	541,003			$	559,421
Finished goods			964,851				651,749
Total inventories		$	1,505,854			$	1,211,170

 

There are a limited number of suppliers for certain raw materials used by the Company in its products.

 

NOTE 3 – PROPERTY AND EQUIPMENT, NET

 

Property and equipment are recorded at cost. Depreciation is calculated on the straight-line basis over the estimated useful lives of the depreciable assets, or related lease life, if shorter, which range from three to ten years. Machinery and equipment is depreciated over a five to ten year period, depending on the type of equipment. Office furniture and fixtures is depreciated over a five-year period and vehicles are depreciated over a three-year period. Leasehold improvements are amortized over the life of the lease and included in depreciation expense. Capital leases are amortized using the straight-line method over the estimated useful life or the remaining term of the related lease, whichever is less. Property and equipment consists of the following at:

 

		February 28,				November 30,
		2013				2012
Machinery and equipment		$	946,324			$	923,929
Furniture and fixtures			188,696				186,787
Vehicles			71,080				71,080
Leasehold improvements			383,401				383,401
Total Property and Equipment			1,589,501				1,565,197
Less accumulated depreciation and amortization			(1,054,939	)			(1,019,758	)
Property and Equipment, net		$	534,562			$	545,439

 

 

 

NOTE 4 – ACCRUED EXPENSES

 

Accrued expenses consist of the following at:

 

		February 28,				November 30,
		2013				2012
Sales commissions		$	7,670			$	48,721
Deferred rent			93,026				92,938
Warranty			32,000				32,000
Accrued vacation			88,196				88,196
Accrued income taxes			22,488				3,488
Accrued payroll			24,000				–
Other			382				71,459
Total accrued expenses		$	267,762			$	336,802

 

NOTE 5 – COMMITMENTS

 

The Company has a $500,000 line of credit with a bank, secured by all the Company’s assets with usual banking covenants.  As of February 28, 2013, the Company has drawn $100,000 on the line of credit. Borrowings under the line of credit bear interest at the bank’s prime rate plus 1%, but not less than 5% per annum. The interest rate as of February 28, 2013 is 5%. Interest is payable monthly. The line of credit expires August 5, 2013.

 

In January 2013, the Company entered into a month to month agreement with a third party warehouse and distribution center. The monthly rent is dependent upon activity but no less than $250 per month. The Company expects to keep rent to a minimum and not to exceed $500 per month.

 

NOTE 6 - STOCK OPTIONS

 

In December, 2012, Mr. Fruehling, the Company’s Chairman of the Board, exercised an option granted in 2002 and purchased 5,000 shares of the Company’s common stock for $0.25 per share. In addition, Mr. Fruehling exercised an option in March, 2013 which was granted in 2003 and purchased 12,000 shares of the Company’s common stock for $0.25 per share.

 

 

 

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Certain statements contained in this report that are not historical facts are forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933) that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. Westbridge Research Group and its wholly-owned subsidiary, Westbridge Agricultural Products may hereinafter be referred to collectively as “Westbridge,” the “Company,” “we,” “our,” “us,” and “our company”. When we use the words “anticipates”, “plans”, “expects”, “believes”, “should”, “could”, “may”, and similar expressions, we are identifying forward-looking statements. These risks and uncertainties include, but are not limited to, a slow-down in the domestic or international markets for the Company’s products; greater competition for customers from businesses who are larger and better capitalized; local, state, federal or international regulatory changes which adversely impact the Company’s ability to manufacture or sell its products, particularly its organic products; the reliance of the Company on limited sources of raw materials; an increase in the Company’s costs of raw materials. For a discussion of factors that could cause our actual results to differ from forward-looking statements contained herein, please see the discussion under the heading “Risk Factors” of our most recent Annual Report filed on Form 10-K.

 

Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward looking statements contained in this Quarterly Report on Form 10-Q as a result of new information or future events or developments. You should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business. Results for any period should not be relied upon as being indicative of performance in future periods.

 

We are a manufacturer and seller of environmentally compatible products for the agricultural industry. Our products include, among others, both conventional and organic fertilizers and growth regulators. During the past several years, the Company has placed an emphasis on the sale of agricultural inputs that meet the organic requirements as defined under the USDA’s National Organic Program.

 

Agricultural product sales are typically seasonal in nature with heavier sales in the spring months. The Company is seeking to temper the seasonality of its agronomic sales by marketing its products in Latin American countries which typically produces sales in January, February and March of each year.

 

Results of Operations for the Three Month Period Ended February 28, 2013 Compared to the Three Month Period Ended February 29, 2012

 

Net sales for the three month period ended February 28, 2013 were $1,335,317, representing an increase of 11%, or $127,238, from the same period in the prior year. This increase is primarily due to increased sales to parts of the Mid West and increased sales in California and Arizona. In addition, the increase is due to the Company’s expanded sales and educational efforts over a number of years resulting in its products gaining acceptance with growers and distributors.

 

Cost of sales as a percentage of net sales decreased to 37% for the quarter ended February 28, 2013 as compared with 42% for the same period in the prior year. This decrease is primarily due to the product mix of sales during the quarter ended February 29, 2012 as compared with the same period in the prior year. The increase in sales during the period ended February 28, 2013 was primarily in the Company’s high and mid margin products.

 

 

Research and development expenses for the three month period ended February 28, 2013 increased 65%, or $44,137 compared with the same period in the prior year. These increases are primarily due to the addition of research and development staff and increased trials of prospective products.

 

Selling expenses for the three month period ended February 28, 2013 increased less than 1%, or $206, to $365,577 compared with the same period in the prior year.

 

General and administrative expenses for the three month period ended February 28, 2013 increased $17,165 or 8% when compared with the same period in the prior year. This increase is primarily due to increased salaries and related expenses.

 

Other income for the three month period ended February 28, 2013 decreased $12,577 compared to the same period in the prior year. This decrease in other income primarily reflects that the installments from the sale of the Mexico property were completed in 2012. Please refer to the Company’s 2012 Form 10-K filed March 6, 2013 for a full discussion.

 

Net income for the three month period ended February 28, 2013 was $47,169 as compared with net income of $46,215 for the same period in the prior year. The increase in net income is primarily due to the increase in revenue. As a result, basic earnings per share remained the same at $0.02 for the three month period ended February 28, 2013 compared with the same period in the prior year.

 

Results of Operations for the Three Month Period Ended February 29, 2012 Compared to the Three Month Period Ended February 28, 2011

 

Net sales for the three month period ended February 29, 2012 were $1,208,079, representing an increase of 21%, or $211,410, from the same period in the prior year. This increase is primarily due to early ordering by existing customers as well as, in management’s view, the Company’s sales and educational efforts over a number of years have resulted in its products gaining acceptance with growers and distributors.

 

Cost of sales as a percentage of net sales increased to 42% for the quarter ended February 29, 2012 as compared with 40% for the same period in the prior year. This increase is primarily due to the product mix of sales during the quarter ended February 29, 2012 as compared with the same period in the prior year.

 

Research and development expenses for the three month period ended February 29, 2012 increased 19%, or $10,739 compared with the same period in the prior year. This increase is primarily due to additional consulting fees paid to our regulatory consultant related to matters concerning the U.S. Environmental Protection Agency and other authorities.

 

Selling expenses for the three month period ended February 29, 2012 increased 34%, or $91,739, to $365,371 compared with the same period in the prior year. This increase is primarily due to an increase in salaries related to the addition of sales and marketing staff, increased international travel and increased trade show expenses.

 

General and administrative expenses for the three month period ended February 29, 2012 decreased $2,754 or 1% when compared with the same period in the prior year

 

 

Other income for the three month period ended February 29, 2012 decreased $88,943 compared to the same period in the prior year. This decrease in other income primarily represents the reduction in net proceeds of installment payments from the sale of the Mexico property. Please refer to the Company’s 2012 Form 10-K filed March 6, 2013 for a full discussion.

 

Net income for the quarter ended February 29, 2012 was $46,215 as compared with net income of $133,079 for the same period in the prior year. The decrease in net income is primarily due to the reduction in other income as discussed above. As a result, basic earnings per share decreased to $0.02 for the quarter ended February 29, 2012 compared with $0.06 per share for the same period in the prior year.

 

Liquidity and Capital Resources:

 

Working capital was $3,052,385 at February 28, 2013, an increase of $58,057, from $2,994,328 at November 30, 2012. Working capital was $2,364,111 at February 29, 2012, an increase of $62,570, from $2,301,541 at November 30, 2011. These increases are primarily due to increased trade receivables. Agricultural product sales are typically seasonal in nature with heavier sales in the spring months, resulting in increased cash flow during the spring and summer months while normally reducing cash flow significantly during the fall and winter months.

 

During the period ended February 28, 2013, the Company used cash flows from operating activities of approximately $575,000 compared with approximately $585,000 for the period ended February 29, 2012. This increase was primarily due to cash flows used to increase inventory. Cash used in investing activities was approximately $24,000 and $19,000 for the periods ended February 28, 2013 and February 29, 2012, respectively. This increase is primarily due to purchases of production equipment during the three month period ended February 28, 2013. Cash provided by financing activities was approximately $100,000 and $95,000 for the periods ended February 28, 2013 and February 29, 2012, respectively. This increase is primarily due to capital lease payments in 2012.

 

The Company has secured a $500,000 line of credit available to be drawn down if required, of which, $100,000 has been drawn as of February 28, 2013. This line of credit is secured by all the assets of the Company.

 

Off-Balance Sheet Arrangements

 

None

 

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide this information under this item.

 

ITEM 4. Controls and Procedures

 

The Company's management with the participation of the Company's principal executive and principal financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of February 28, 2013, the end of the quarterly fiscal period covered by this quarterly report. Based on this evaluation, the Company's principal executive and principal financial officer concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

 

 

There has been no change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company's fiscal quarter ended February 28, 2013, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

ITEM 1.	LEGAL PROCEEDINGS
	None

 

ITEM 1A.

RISK FACTORS

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended November 30, 2012, which could materially affect our business, financial condition or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
	None

 

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES
	None

 

ITEM 4.	MINE SAFETY DISCLOSURES
	Not Applicable

 

ITEM 5.	OTHER INFORMATION
	None

 

 

 

 

 

 

ITEM 6.

EXHIBITS

 

A. EXHIBITS

 

31.1  Certification of the Principal Executive Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

31.2  Certification of the Principal Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101.INS XBRL Instance Document

 

101.SCH XBRL Taxonomy Extension Schema Document

 

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

 

101.LAB XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

 

 

B. REPORTS ON FORM 8-K

None

 

 

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
Dated: April 15, 2013	/s/ Christine Koenemann
	Christine Koenemann, President
	Principal Executive Officer
Dated: April 15, 2013	/s/ Richard Forsyth
	Richard Forsyth, Chief Financial Officer
	Principal Financial Officer