WESTBRIDGE RESEARCH GROUP - FORM 10-Q

Attached files

file	filename
EX-32.2 - CERTIFICATION - WESTBRIDGE RESEARCH GROUP	westbridge_10q-ex3202.htm
EX-31.2 - CERTIFICATION - WESTBRIDGE RESEARCH GROUP	westbridge_10q-ex3102.htm
EX-31.1 - CERTIFICATION - WESTBRIDGE RESEARCH GROUP	westbridge_10q-ex3101.htm
EX-32.1 - CERTIFICATION - WESTBRIDGE RESEARCH GROUP	westbridge_10q-ex3201.htm
EXCEL - IDEA: XBRL DOCUMENT - WESTBRIDGE RESEARCH GROUP	Financial_Report.xls

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

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

For the quarterly period ended August 31, 2011

o	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 of incorporation or organization)	(I.R.S. Employer 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 x No o

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 o No x

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 o	Accelerated filer o

	Non-accelerated filer o	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 o No x

The number of shares of issuer’s Common Stock, no par value, outstanding as of October 13, 2011 was 2,148,438.

Westbridge Research Group

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2011

Table of Contents

		Page
PART I	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

	Consolidated Condensed Balance Sheets as of August 31, 2011 (unaudited) and November 30, 2010 (audited)	3

	Consolidated Condensed Statements of Operations for the three and nine months ended August 31, 2011 and 2010 (unaudited)	5

	Consolidated Condensed Statements of Cash Flow for the nine months ended August 31, 2011 and 2010 (unaudited)	6

	Notes to Consolidated Condensed Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	17

PART II	OTHER INFORMATION	18

Item 1.	Legal Proceedings	18

Item 1A.	Risk Factors	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Removed and Reserved	18

Item 5.	Other Information	18

Item 6.	Exhibits	18

SIGNATURES		19

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements.

WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY

CONSOLIDATED CONDENSED BALANCE SHEETS

	AUGUST 31, 2011 (unaudited)		NOVEMBER 30, 2010 (audited)

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	1,701,820	$	1,493,142
Short term investments		1,000		1,000
Trade accounts receivable, less allowance for doubtful accounts of $6,600 and $3,000, respectively		294,025		192,696
Inventories		878,176		577,450
Deferred tax asset		72,000		72,000
Prepaid expenses and other current assets		256,480		210,011

TOTAL CURRENT ASSETS		3,203,501		2,546,299


PROPERTY AND EQUIPMENT, net		500,305		502,909
INTANGIBLE ASSET		151,600		151,600
DEFERRED TAX ASSET, net of current portion		70,000		70,000


TOTAL ASSETS	$	3,925,406	$	3,270,808

See accompanying notes to consolidated condensed financial statements.

WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY

CONSOLIDATED CONDENSED BALANCE SHEETS

(continued)

	AUGUST 31, 2011 (unaudited)			NOVEMBER 30, 2010 (audited)

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	92,654		$	64,306
Accrued expenses		378,349			502,436
Current portion of capital leases		16,682			19,814
Note payable		--			3,974

TOTAL CURRENT LIABILITIES		487,685			590,530


Capital leases, net of current portion		--			11,899


TOTAL LIABILITIES		487,685			602,429


Commitments (Note 7)

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 2,148,438 and 2,103,438 shares at August 31, 2011 and November 30, 2010, respectively		8,491,104			8,479,854
Paid in capital		237,650			224,172
Accumulated deficit		(5,291,033	)		(6,035,647	)

TOTAL SHAREHOLDERS' EQUITY		3,437,721			2,668,379

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	3,925,406		$	3,270,808

See accompanying notes to consolidated condensed financial statements.

WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

	THREE MONTHS ENDED AUGUST 31						NINE MONTHS ENDED AUGUST 31
	2011			2010			2011			2010

NET SALES	$	1,171,058		$	914,852		$	4,190,721		$	3,889,663

COST OF SALES		562,585			453,977			1,740,998			1,594,078

GROSS PROFIT		608,473			460,875			2,449,723			2,295,585

OPERATING EXPENSES
Research and development		64,342			68,044			186,612			187,756
Selling		291,987			284,551			916,447			958,043
General and administration		211,493			216,200			661,074			570,624
TOTAL OPERATING EXPENSES		567,822			568,795			1,764,133			1,716,423

Operating income [loss]		40,651			(107,920	)		685,590			579,162

OTHER INCOME [EXPENSE]
Interest expense		(84	)		(2,560	)		(7,714	)		(9,609	)
Interest income		249			976			707			1,595
Other income		15,896			34,875			117,631			115,187

Income [loss] before income taxes		56,712			(74,629	)		796,214			686,335

Provision (benefit) for income taxes		0			(15,000	)		51,600			36,600

Net income [loss]	$	56,712		$	(59,629	)	$	744,614		$	649,735

Basic earnings per common share	$	0.03		$	(0.03	)	$	0.35		$	0.31

Basic weighted average shares outstanding		2,148,438			2,103,438			2,143,438			2,103,438

Diluted earnings per common share	$	0.03		$	N/A		$	0.33		$	0.29

Diluted weighted average shares outstanding		2,246,735			N/A			2,241,735			2,232,846

See accompanying notes to consolidated condensed financial statements.

WESTBRIDGE RESEARCH GROUP AND SUBSIDIARY

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

	NINE MONTHS ENDED
	AUGUST 31, 2011			AUGUST 31, 2010

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	744,614		$	649,735

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization		106,878			107,161
Stock compensation expense		13,478			41,296
Increase [decrease] in allowance for doubtful accounts		3,600			(3,416	)

Changes in Operating Assets and Liabilities:
Increase in trade accounts receivable		(104,929	)		(133,967	)
Receipts of long-term account receivable		--			157,766
[Increase] decrease in inventories		(300,726	)		56,025
[Increase] decrease in prepaid expenses		(46,469	)		4,560
Increase in accounts payable		28,348			22,090
[Decrease] increase in accrued expenses		(124,087	)		44,344

Net cash provided by operating activities		320,707			945,594

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(104,274	)		(64,931	)

Net cash used in investing activities		(104,274	)		(64,931	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations		(15,031	)		(14,272	)
Proceeds from issuance of common stock		11,250			--
Net payments on line of credit		--			(120,000	)
Payments on long-term debt		(3,974	)		(5,761	)

Net cash used in financing activities		(7,755	)		(140,033	)

INCREASE IN CASH AND CASH EQUIVALENTS		208,678			740,630

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		1,493,142			1,267,254

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,701,820		$	2,007,884

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	7,714		$	9,609
Taxes	$	1,600		$	1,600

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 2010 Annual Report on Form 10-K, filed February 28, 2011. The results of operations for the quarter and nine months ended August 31, 2011, are not necessarily indicative of the operating results for the full year.

Revenue Recognition

The Company recognizes revenues from the sale of its products to customers at the time of shipping. Products are shipped from the Company’s facility to our customers with FOB shipping point terms at which time revenues are considered earned. The Company will replace product which is considered “substandard”, however this occurs infrequently and the Company records a warranty accrual for these anticipated replacements.

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.

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

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.

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.

Shipping and Handling Costs

The Company has historically classified income from freight charges to customers in “Net Sales”. The Company classifies shipping and handling costs in “Cost of Sales”.

Concentrations

A majority of the Company’s domestic sales are concentrated in Washington, California and Minnesota. The majority of the Company’s foreign sales are concentrated in Peru and South Korea. As of August 31, 2011, three customers represented 70% of accounts receivable and as of August 31, 2010, three customers represented 49% of accounts receivable. The Company has four large customers whose combined purchases amounted to 35% and three large customers whose combined purchases amounted to 29% of the Company’s net sales for the nine months ended August 31, 2011 and 2010, respectively. Total international sales represent 14% and 13% of total sales for the nine months ended August 31, 2011 and 2010, 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.

Advertising

Advertising expense is comprised of media, agency and promotion costs. Advertising expenses are charged to expense as incurred.

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

Net Income Per Share

Basic income 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 weighted average diluted shares outstanding for the periods ended August 31, 2011 and 2010 excludes the dilutive effect of approximately 192,500 stock options since such options have an exercise price in excess of the average market value of the Company’s common stock during the respective periods.

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

	Three Months Ended August 31, 2011 and 2010					Nine Months Ended August 31, 2011 and 2010

Net income [loss]	$	56,712	$	[59,629	]	$	744,614	$	649,735

Denominator for basic earnings per common share		2,148,438		2,103,438			2,143,438		2,103,438

Effect of dilutive securities		98,297		N/A			98,297		129,408

Denominator for diluted earnings per common share		2,246,735		N/A			2,241,735		2,232,846

Net income [loss] per common share:
Basic	$	0.03	$	[0.03	]	$	0.35	$	0.31
Diluted	$	0.03	$	N/A		$	0.33	$	0.29

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

Income Taxes

The Company accounts for income taxes under the asset and liability approach. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when 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 assets 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

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 taxing authorities, based on the technical merits of the position. The Company also makes a determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of August 31, 2011, the Company has no accrued interest or penalties related to uncertain tax positions.

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.

Long-Lived Assets

The Company investigates potential impairments of its long-lived assets on an individual basis when evidence exists that events or changes in circumstances may have made recovery of an asset’s carrying value unlikely. An impairment loss is recognized when the sum of the expected undiscounted future net cash flows is less than the carrying amount of the asset. No such losses have been identified.

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

Intangible Assets

The Company does not amortize indefinite lived intangible assets, but test 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 US EPA 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 2010, 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

Additionally, 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 – MEXICO PROPERTY

At November 30, 1989, the Company had an account receivable totaling $451,270 due from a foreign distributor. The account was collateralized by a perfected security interest in unimproved real property in Baja California, Mexico. The Company was unsuccessful in its efforts to collect the amounts due on this account and, accordingly, during fiscal 1993, retained Mexican legal counsel to initiate foreclosure proceedings on the property. On February 8, 2007, the real property was to be sold through a public auction. As there were no bids placed, the Company obtained the right to take title to the land.

On August 15, 2008, the Company entered into an agreement to sell its rights to the property for a purchase price of $1,250,000 with a $300,000 deposit, and the balance of payment expected on December 15, 2008. There have been amendments to the agreement as the buyers needed additional time to complete the purchase. In November 2010, the parties agreed upon Amendment No. 3 which extends the time to complete the purchase to September 30, 2011. As of August 31, 2011, the Company has received non-refundable payments from the buyers totaling $1,023,548 and are awaiting the remaining $76,452 of the $100,000 payment due August 31, 2011. The Company is also in negotiations with the buyers to extend the time to complete the purchase to February, 2012. The last payment of $150,000 would be due no later than February 29, 2012 to complete the purchase.

The Company has applied the deposits, first against its long-term receivable and the remainder is being recognized as other income. As part of the arrangement with its Mexican legal counsel and American broker, the Company is obligated to pay them a portion of any collection received on its long-term receivable. As of August 31, 2011, the Company has paid $299,273 and accrued $7,088 under these arrangements from the deposits collected.

To prevent claims being raised against the Company and the property in the Mexican courts, the Company and buyer entered into a new agreement whereby the rights to the property were transferred to buyer in exchange for a promissory note in the amount of $550,000 which allows foreclosure on the property if the note is not paid in accordance with the scheduled payments previously agreed.

NOTE 3 – INVENTORIES

Inventories, consisting of agricultural products, is stated at the lower of cost (determined on a first-in, first-out basis) or market. The Company’s inventories increased as of the quarter ended August 31, 2011 as the Company is able to store additional raw materials that require longer lead times as well as utilizing forecasting tools to build inventory. Inventories consist of the following at:

	August 31, 2011		November 30, 2010

Raw materials	$	439,031	$	285,696
Finished goods		439,145		291,754
Total inventories	$	878,176	$	577,450

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

NOTE 4 – 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:

	August 31, 2011			November 30, 2010

Machinery & equipment	$	766,991		$	704,186
Furniture & fixtures		169,002			128,091
Vehicles		55,442			55,442
Leasehold improvements		369,298			368,740

Total Property and Equipment		1,360,733			1,256,459
Less accumulated depreciation and amortization		[860,428	]		[753,550	]

Property and Equipment, net	$	500,305		$	502,909

NOTE 5 – ACCRUED EXPENSES

Accrued expenses consist of the following at:

	August 31, 2011		November 30, 2010

Sales commissions	$	92,150	$	183,615
Deferred rent		85,910		78,202
Warranty		27,500		36,363
Accrued vacation		74,475		74,475
Accrued state income tax		50,200		20,200
Accrued payroll		27,000		71,000
Due customers		18,684		25,056
Other		2,430		13,525

Total accrued expenses	$	378,349	$	502,436

NOTE 6 – STOCK BASED COMPENSATION

For stock options issued under the Company’s stock-based compensation plan, the fair value of each option grant is estimated on the date of grant using the Black-Scholes pricing model, and an estimated forfeiture rate is used when calculating stock-based compensation expense for the period. The Company recognizes the compensation cost of stock-based awards on a straight-line basis over the vesting period of the award.

As there is no public market for its common stock, the Company determined the volatility for options granted based on an analysis of reported data for a peer group of companies that issued options with substantially similar terms. The expected volatility of options granted has been determined using an average of the historical volatility measures of this peer group of companies as well as the historical volatility of the Company’s common stock. The expected life of options has been determined utilizing the “simplified” method. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid and does not anticipate paying cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. For the nine month period ended August 31, 2011 and 2010, the Company expensed $13,478 and $41,296, respectively, of stock option expense.

NOTE 7 – COMMITMENTS

The Company entered into a lease of a freestanding industrial building with 19,504 square feet of office, storage and production space on December 5, 2006. The lease originally had an expiration date of January 31, 2015 and monthly base rent was $13,653 with annual increases. In August, 2010, the Company negotiated to extend the term for an additional four years to January 31, 2019 with the option of an additional three year extension through January 31, 2021, and in exchange received a $1,000 per month rent decrease beginning September 1, 2010 through the end of the initial lease term, January 31, 2015. The rent will be set at fair market value effective February 1, 2015 for the remaining term of the lease. The rent under the lease for the initial year is approximately $13,650 per month, with three percent increases each year. The Company must also pay certain other customary expenses under the lease. Rent is expensed on a straight-line basis over the term of the lease.

The Company entered into a lease of a freestanding industrial building with 11,300 square feet of primarily storage space on April 8, 2011. The lease commenced on May 1, 2011, with early occupancy on April 8, 2011. The lease has a term of four years with an option to extend the term for an additional forty-five months at the fair market rate at the time of extension. The rent under the new lease is $2,750 per month through December 31, 2011, $6,215 per month for the period January 1, 2012 through December 31, 2012, and $6,441 per month for the period January 1, 2013 through April 30, 2015.

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 August 31, 2011, there were no outstanding borrowings against the line. 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 August 31, 2011 is 5%. Interest is payable monthly.

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.

Results of Operations:

Net sales for the three month period ended August 31, 2011 were $1,171,058, representing an increase of 28%, or $256,206, from the same period in the prior year. For the nine month period ended August 31, 2011, sales were $4,190,721 which represents an increase of 8%, or $301,058, from the prior year’s sales of $3,889,663. These increases are primarily due to greater sales in the mid-west and to growers of vine crops on the west coast. Additionally, 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 decreased to 48% for the quarter ended August 31, 2011 as compared with 50% for the same period in the prior year. For the nine month period ended August 31, 2011, cost of sales as a percentage of net sales increased to 42% as compared with 41% for the same period in the prior year. These changes are primarily due to the product mix.

Research and development expenses for the three and nine month periods ended August 31, 2011 decreased 5%, or $3,702, and 1%, or $1,144, respectively, compared with the same periods in the prior year. These decreases are primarily due to decreased travel and product trial expenses.

Selling expenses for the three and nine month periods ended August 31, 2011 increased 3%, or $7,436, to $291,987 and decreased 4%, or $41,596, to $916,447, respectively compared with the same periods in the prior year. The three month increase is primarily due to an increase in salaries related to the addition of sales and marketing staff. The nine month decrease is primarily due to a reduction in advertising expenses as well as a reduction in commission expense associated with the customer mix.

General and administrative expenses for the three and nine month periods ended August 31, 2011 decreased $4,707 or 2% and increased $90,450 or 16%, respectively, when compared with the same periods in the prior year. The three month decrease is primarily due to a timing difference in business personal property taxes and a reduction in stock compensation expense related to no issuance of stock options to the Director’s in 2011. The nine month increase is primarily due to the addition of a financial consultant in the third quarter of 2010 and a timing difference in expensing certain services performed.

Other income for the three and nine month periods ended August 31, 2011 decreased $18,979 and increased $2,444, respectively, compared to the same periods in the prior year. These decreases and increases in other income primarily represent the net proceeds of installment payments from the sale of the Mexico property as discussed in Note 2 to the financial statements.

Net income for the quarter ended August 31, 2011 was $56,712 as compared with net loss of $59,629, for the same period in the prior year. Net income for the nine month period ended August 31, 2011 was $744,614 as compared with net income of $649,735 in the prior year. As a result, basic earnings per share increased to $0.35 for the nine months ended August 31, 2011 compared with $0.31 per share for the nine months ended August 31, 2010.

Federal income taxes have not been provided for in the accompanying consolidated condensed statements of operations due to the net operating loss carryforwards generated in prior years that are available for carryforward against current year income. The Company has approximately $959,000 of federal net operating loss carryforwards at November 30, 2010, which it is currently utilizing as offsets against current earnings to reduce or eliminate its income taxes. Management has provided for California state income taxes. In addition, management has assessed the recoverable value of its deferred tax assets at $142,000 as the Company has been able to achieve its budgeted targets and the Company expects to utilize these benefits over the next three years.

Liquidity and Capital Resources:

Working capital was $2,715,816 at August 31, 2011, an increase of $760,047, from $1,955,769 at November 30, 2010. This increase is primarily due to increased cash from collections during the second and third quarter which is consistently the Company’s busiest time of the year as well as increased inventory compared to year end.

The Company has secured a $500,000 line of credit available to be drawn down if required, of which, $0 has been drawn as of August 31, 2011. This line of credit is secured by all the assets of the Company.

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 August 31, 2011, 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 officer, 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 August 31, 2011, 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, 2010, 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. REMOVED AND RESERVED.

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 Schema Document
	101.CAL	XBRL Calculation Linkbase Document
	101.DEF	XBRL Definition Linkbase Document
	101.LAB	XBRL Label Linkbase Document
	101.PRE	XBRL Presentation Linkbase Document

B. REPORTS ON FORM 8-K

Form 8-K, filed on August 25, 2011, disclosing the Employment Agreement by and between Company and Richard T. Forsyth.

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: October 13, 2011	By:	/s/ Christine Koenemann
		Christine Koenemann, President
		Principal Executive Officer



	By:	/s/ Richard Forsyth
		Richard Forsyth, Chief Financial Officer
		and General Counsel
		Principal Financial Officer

WESTBRIDGE RESEARCH GROUP - FORM 10-Q - October 13, 2011

Attached files

WESTBRIDGE RESEARCH GROUP Reports