ver. N
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended March 31, 2002
-----------------------
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 ______________
Bridge Technology, Inc.
------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 59-3065437
------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
12601 Monarch Street, Garden Grove, California 92841
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714) 891-6508
------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Secion 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $0.01 Par Value - 10,863,186 shares as of March 31, 2001
-------------------------------------------------------------------------
1
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
Bridge Technology, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, March 31,
2001 2002
(Audited) (Unaudited)
------------ ------------
Assets (Note 4)
Current assets:,
Cash $ 2,413,295 $ 1,750,607
Accounts receivable less allowance
for doubtful accounts of $308,106
and $302,005 11,035,057 7,752,134
Tax refund receivable 500,000 500,000
Other receivables 76,296 40,014
Inventory 21,692,543 30,997,650
Due from related party 22,143 12,787
------------ ------------
Total current assets 35,739,334 41,053,192
Property and equipment, net 2,681,018 2,545,176
Goodwill, net of amortization of $1,242,917 1,949,417 1,949,417
Investments 198,717 194,149
Other assets 96,213 98,487
------------ ------------
Total assets $ 40,664,699 $ 45,840,421
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Bank overdraft $ 36,152 $ 49,260
Line of credit 9,000,000 8,900,000
Current portion of long term debt 46,901 46,901
Accounts payable, net of accrued rebates
and credits of $698,470 and $981,298 18,019,422 19,589,522
Accrued taxes payable 6,400 107,907
Deferred income tax 4,097 640
Accrued liabilities 1,941,560 2,955,689
Current portion of related party loan 75,118 75,118
Shareholder loan 2,130,000 4,918,215
------------ ------------
Total current liabilities 31,150,690 36,643,252
Related party loans less current portion 914,861 904,733
Long term debt, less current portion 328,300 316,750
------------ ------------
Total liabilities 32,393,851 37,864,735
------------ ------------
2
Minority interest 820,378 853,330
Commitments and Contingencies
Shareholders' equity
Common stock; par value $0.01 per share,
authorized 100,000,000 shares, 10,863,186
shares outstanding 108,632 108,632
Additional paid-in capital 9,783,013 9,783,013
Related party receivable (340,000) (340,000)
Treasury stock, 1,000 shares at cost (2,000) (2,000)
Retained earnings (accumulated deficit) (2,187,679) (2,406,560)
Accumulated other comprehensive loss (20,496) (20,729)
------------ ------------
Total shareholders' equity 7,450,470 7,122,356
------------ ------------
Total liabilities and shareholders' equity $ 40,664,699 $ 45,840,421
============ ============
See accompanying summary of accounting policies and notes to consolidated
financial statements.
3
Bridge Technology, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended Mar. 31,
-----------------------------
2001 2002
(Unaudited) (Unaudited)
------------ ------------
Net sales $ 27,790,364 $ 27,289,867
Cost of sales 25,092,394 25,688,331
------------ ------------
Gross profit 2,697,970 1,601,536
Research and development 206,135 198,258
Selling, general and
administrative expense 2,057,646 1,710,739
------------ ------------
Income from operations 434,189 (307,461)
Other income (expense):
Interest income (expense), net (147,438) (193,199)
Other income 68,848 55,064
Gain on sale of investment - 320,871
------------ ------------
Income before income taxes 355,599 (124,725)
Income taxes provision 102,024 61,204
------------ ------------
Net income (loss) 253,575 (185,929)
Minority interest (40,540) (32,952)
------------ ------------
Net income (loss) applicable
to common shares $ 213,035 $ (218,881)
============ ============
Basic weighted average number of
common stock outstanding 10,863,186 10,863,186
============ ============
Basic earnings (loss) per share $ 0.02 $ (0.02)
============ ============
Diluted weighted average number
of common stock outstanding 11,095,427 10,863,186
============ ============
Diluted earnings per share $ 0.02 $ (0.02)
============ ============
Comprehensive income (loss) and
its components consist of the
following:
Net income (loss) $ 213,035 $ (218,881)
Foreign currency translation
adjustment, net of tax 15,716 (233)
------------ ------------
Comprehensive income (loss) $ 228,751 $ (219,114)
============ ============
See accompanying summary of accounting policies and notes to consolidated
financial statements.
4
Bridge Technology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
Three Months Ended Mar. 31,
---------------------------
2001 2002
(Unaudited) (Unaudited)
----------- -----------
Cash flows from operating activities
Net income (loss) $ 213,035 $ (218,881)
Adjustments to reconcile net loss to
net cash provided by (used in) operating
activities:
Depreciation and amortization 214,161 144,725
Provision for doubtful accounts 10,000 5,677
(Gain) loss on sale of investment - (320,856)
Provision for slow moving inventory 21,263 -
Deferred taxes 32,194 (3,457)
Minority interest 40,540 32,952
Increase (decrease) from changes in
operating assets and liabilities:
Trade receivables 10,004,246 3,277,246
Inventory (8,777,099) (9,305,107)
Other receivables 543,177 27,205
Other assets (15,000) 6,803
Accounts payable (3,740,323) 1,570,100
Accrued liabilities (31,313) 1,014,128
Income taxes payable (233,296) 101,468
Payable to employee (35,000) -
Due from related party 8,682 -
----------- -----------
Net cash provided by (used in) operating activities (1,744,733) (3,667,997)
=========== ===========
Cash flows from investing activities
Purchase of property, plant and equipment (48,888) (8,883)
Investment in affiliate (1,180,907) -
Repayment from (advance to) shareholder 180,006 -
Due from related party - 9,356
Proceeds from sale of investment - 325,424
----------- -----------
Net cash used in investing activities (1,049,789) 325,897
=========== ===========
Cash flows from financing activities
Bank overdraft - 13,108
Repayments on loans payable (41,680) (11,550)
Proceeds from shareholder loans - 2,818,215
Repayments on shareholder loans (600,000) (30,000)
Proceeds from line of credit 2,016,136 -
Repayments on line of credit - (100,000)
Repayments on related party - (10,128)
----------- -----------
Net cash provided by financing activities 1,374,456 2,679,645
=========== ===========
Effect of exchange rate changes on cash (22,127) (233)
=========== ===========
Net increase in cash and cash equivalents (1,442,193) (662,688)
Cash and cash equivalents, beginning of period 4,870,836 2,413,295
----------- -----------
Cash and cash equivalents, end of period $ 3,428,643 $ 1,750,607
=========== ==========
Supplemental information:
Cash paid during the year for:
Interest $ 140,063 $ 39,391
Income taxes 300,000 2,586
----------- -----------
See accompanying summary of accounting policies and notes to consolidated
financial statements.
5
Bridge Technology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Organization and Business
-------------------------
Bridge Technology, Inc. ("The Company") was incorporated under the laws
of the State of Nevada on April 15, 1969. Starting from April 1997,
the Company registered to do business in the State of California and
is primarily engaged in development and distribution of various
hardware, software, and peripheral products used in computer systems
and sales to value added resellers and system integrators. The
company started to enter into wireless internet business in 1999.
The Company has the following subsidiaries:
Ownership
---------
Bridge R&D, Inc. 100% Established on June 1, 1997
PTI Enclosures, Inc. 100% Merged on December 14, 1998
Pacific Bridge Net, Inc. 80% Established on August 16, 1999
and ceased operation in 2000
Autec Power Systems, Inc. 100% Merged on December 1, 1999
CMS Technology Limited 90% Acquired on January 3, 2000 (60%)
acquired on May 15, 2000 (30%)
Bridge Technology Ningbo Co. Ltd. 100% Established on May 28, 2001
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for fair presentation have been included. Operating results for
the three months period ended March 31, 2002 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2002.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 2001.
6
Note 2. Reclassification
Certain amounts in the consolidated financial statements for March 31, 2001
have been reclassified to conform to the March 31, 2002 presentation. Such
reclassification had no effect on shareholders' equity as previously
reported.
Note 3. Earnings Per Share Computation
We compute earnings per share in accordance with Statement of Financial
Accounting Standards Board's No. 128 which requires presentation of basic
and diluted earnings per share. Basic earnings per share is computed by
dividing income or loss available to common shareholders by the weighted
average number of common shares outstanding for the reporting period.
Diluted earnings per share reflects the potential dilution that could
occur if securities or other contracts, such as stock options and warrants
to issue common stock, were exercised or converted into common stock.
The computation of the weighted-average common shares used in the
computation of basic and diluted net loss per share is based on
10,863,186 shares for the three months ended March 31, 2002.
Potential dilutive securities were not included in the EPS calculation
since their effect would be antidilutive. Potential dilutive securities
consisted of outstanding stock options and stock warrants. The
computations of the weighted average common shares used in the computation
of basic and diluted net income per share is based on 10,863,186 and
11,095,427 shares, respectively, for the three months ended March 31, 2001,
respectively.
Note 4. Income Taxes
As of December 31, 2001, a valuation allowance has been provided for that
portion of the net deferred tax asset which management cannot determine,
with reasonable certainty, that the benefit will be realized.
One of the subsidiaries of the Company has net operating loss
carryforwards which are separate return year losses in the amount
of approximately $157,191, and will begin to expire in 2008. On
December 14, 1998, the subsidiary had a change in ownership as defined
under Internal Revenue Code Section 382. The net operating loss
carryforward is subject to an annual limitation.
7
Note 5. Inventory
Inventory consists of:
December 31, March 31,
2001 2002
------------- -------------
Service parts $ 1,633,919 $ 1,418,807
Work in process 329,730 608,804
Finished goods 20,528,669 29,681,550
Allowance for slow moving items (799,775) (671,733)
------------- -------------
$ 21,692,543 $ 31,037,428
============= =============
8
Note 6. Goodwill
Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 142 Goodwill and Other Intangible Assets
(SFAS 142). Under SFAS 142, Goodwill and indefinite life intangible
assets are no longer amortized but will be reviewed annually, or more
frequently if impairment indicators arise, for impairment. The Company
discontinued the amortization of its goodwill balances effective
January 1, 2002. As provided under SFAS 142, the initial testing of
goodwill for possible impairment will be completed within the first
six months of 2002 and final testing, if possible impairment has been
identified, by the end of the year.
In accordance with SFAS 142, prior period amounts were not restated.
A reconciliation of reported net income to net income adjusted for
the exclusion of amortization of goodwill and indefinite life
intangible assets follows:
March 31,
--------------------------
2001 2002
---------- -----------
Reported net income (loss) $ 213,035 $ (218,881)
Add back: Goodwill amortization 159,227 -
---------- -----------
Adjusted net income (loss) 372,262 (218,881)
Basic weighted average number of
common shares outstanding 10,863,186 10,863,186
Basic earnings (loss) per share 0.02 (0.02)
Adjusted earnings (loss) per share 0.03 (0.02)
Diluted weighted average number of
common shares outstanding 11,095,427 10,863,186
Diluted earnings (loss) per share 0.02 (0.02)
Adjusted diluted earnings (loss)
per share 0.03 (0.02)
---------- ----------
Note 7. Subsequent Events
On July 24, 2002 the Company entered into a loan modification and extensions
agreement with a commercial bank for its outstanding balance of $4 million at
December 31, 2001, which was reduced by $100,000 payment made in 2002. Pursuant
to the terms of the new agreement, monthly interest only payments are to be
made through maturity, $50,000 is due by September 15, 2002 and no less than
$1,000,000 is due on November 30, 2002. The Company owns 90% of all issued and
outstanding shares in CMS and pledged 65% of all issued and outstanding shares
in CMS against this outstanding balance and the maturity date of the note has
been extended until November 30, 2002. However, if the Company makes all of
the foregoing payments on a timely basis and has not otherwise defaulted on
the loan, the maturity date for the remaining unpaid balance will be extended
until June 30, 2003.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
--------------------------------------------------------------------
Except for historical information contained herein, the matters set forth
in this report are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Act of 1995.
These forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially. The Company disclaims
any obligations to update these forward-looking statements.
Results of Operations for the Three Months Ended March 31, 2002 as
Compared to the Three Months Ended March 31, 2001
------------------------------------------------------------------
Net sales of $27,289,867 for the three months ended March 31, 2002
decreased by $500,497, representing approximately a 2% decrease, over
net sales of $27,790,364 for the same period of 2001. The decrease
was due primarily to the decrease in Autec Power Systems, Inc. ("Autec")
sales for the quarter ended March 31, 2002. Autec sales decreased by
approximately $2.6 million due to a weak overall economy and soft
customer demand as a result of customers overstocking in previous
quarters. The decrease in Autec sales was partially offset by increases
in sales relating to the Company's distribution business in Asia.
Asia revenues for the three months ended March 31, 2002 were $21,538,901
compared to $19,802,160 for the three months ended March 31, 2001, an
increase of $1,736,741 or 8.8%. Increases relate primarily to increased
sales volume at CMS Technology Limited.
United States revenues for the three months ended March 31, 2002 were
$5,750,966 compared to $7,988,204 for the three months ended March 31,
2001, a decrease of $2,237,238 or 28.0%. Decreases relate primarily to
decreased sales at Autec.
Revenues for the Company's distribution businesses were $25,182,908 for
the three months ended March 31, 2002 compared to $22,787,935 for the
three months ended March 31, 2001, an increase of $2,394,973 or 10.5%.
Increases relate primarily to increased sales volume at CMS Technology
Limited. Also, Bridge R&D, Inc. sales increased due to a large sales to
distributors during the three months ended March 31, 2002.
Revenues for the Company's manufacturing businesses were $2,106,959 for
the three months ended March 31, 2002 compared to $5,002,429 for the three
months ended March 31, 2001, a decrease of $2,895,470 or 57.9%. The
decrease relates primarily to decreased sales at Autec.
Gross profit for the three months ended March 31, 2002 was $1,601,536,
decreasing by $1,096,434 and representing approximately a 41% decrease,
compared to $2,619,514 for the same period of 2001. The reason for this
decrease is due mainly to the decrease in sales of Autec for the quarter
ended March 31, 2002. Gross profit as a percentage of net sales declined
from 9.7% for the three months ended March 31, 2001 to 5.9% for the three
months ended March 31, 2002. The decrease is principally due to the
lower margin generated through the sales of Autec. Autec's product mix has
changed to lower profit products.
Asia gross profit as a percentage of sales for the three months ended
March 31, 2002 was 3.6% compared to 5.0% for the three months ended March
31, 2001.
United States gross profit as a percentage of sales for the three months
ended March 31, 2002 was 14.3% compared to 21.3% for the three months ended
March 31, 2001. The decrease is primarily attributable to decreased gross
margins at Autec.
Gross profits for the Company's distribution businesses as a percentage of
sales for the three months ended March 31, 2002 was 5.1% compared to 4.7% for
the three months ended March 31, 2001.
10
Gross profits for the Company's manufacturing businesses as a percentage of
sales for the three months ended March 31, 2002 was 14.9% compared to 32.6%
for the three months ended March 31, 2001. The decrease is primarily
attributable to decreased gross margins at Autec.
Research and development expenses decreased by $7,877 to $198,258 in the
three months ended March 31, 2002, compared to $206,135 for the three
months ended March 31, 2001. This represents approximately a 4%
decrease.
Selling, general and administrative expenses decreased by $346,907 to
$1,710,739 in the three months ended March 31, 2002 compared to $2,057,646
for the three months ended March 31, 2001. As a percentage of revenue,
these expenses decreased from 7.4% in the three months ended March 31,
2001 to 6.3% in the three months ended March 31, 2002. The decline is
due to the cost saving effort implemented by management for the quarter
ended March 31, 2002. Cost saving efforts included significant layoffs at
Autec as well as less cutbacks in operating expenses such as travel expense
and purchases of supplies.
Income from operation decreased from income of $434,189 for the three
months ended March 31, 2001 to loss of $307,461 in the three months
ended March 31, 2002. The decrease primarily reflects the decline in
profitability at Autec. Income from operations as a percentage of revenue
decreased from 1.6% for the three months ended March 31, 2001 to a loss
from operations as a percentage of revenue to 1.1% for the three months
ended March 31, 2002.
Net interest expense increased by $45,761 from $147,438 for the three
months ended March 31, 2001 to net interest expense of $193,199 for the
three months ended March 31, 2002. The increase is mainly the result of
increased borrowings from shareholders during the three months ended March
31, 2002.
Other income decreased by $13,784 from $68,848 for the three months
ended March 31, 2001 to $55,064 for the three months ended March 31, 2002.
Net income decreased by $431,916 from net income of $213,035 for the three
months ended March 31, 2001 to net loss of $218,881 for the three months
ended March 31, 2002. These results reflect an income of $0.02 per share
for the three months ended March 31, 2001 to a loss of $0.02 per share for
the three months ended March 31, 2002.
11
Capital Resources and Liquidity
-------------------------------
The Company's capital requirements have been and will continue to be
significant and its cash and cash equivalents have been sufficient to
cover its cash flow from operations. At March 31, 2002, the Company
had working capital approximately $4.4 million and cash of $1.8 million
compared to a working capital of approximately $4.6 million and cash
of $2.4 million at December 31, 2001.
Net cash used in oprating activities for the three months ended March
31, 2002 was $3,667,997 as compared to $1,744,733 used in operating
activities for the three months ended March 31, 2001. The difference
is mainly due to decrease in accounts payable and increase in inventory.
Net cash provided in investing activities for the three months ended
March 31, 2002 was $325,897 mainly from the proceeds from sale of
investment, as compared to $1,049,789 net cash used in investing
actiivities for the three months ended March 31, 2001 for the
investment in China and other affiliates.
Net cash provided by financing activities for the three months ended
March 31, 2002 was $2,679,645 as compared to $1,374,456 in the three
months ended March 31, 2001. The significant change is attributable
to proceeds from shareholder loans.
Management believes that the Company does have the economic where-
withal to maintain its operations for the foreseeable future. In
July, 2002 the Company entered into a loan modification and extension
agreement with a commercial bank for its outstanding balance of $4 million
at December 31, 2001, which was reduced by $100,000 payment made in 2002.
Pursuant to the terms of the new agreement, monthly interest only payments
are to be made through maturity, $50,000 is due by September 15, 2002 and
no less than $1,000,000 is due on November 30, 2002. The Company owns 90%
of all issued and outstanding shares in CMS and pledged 65% of all issued
and outstanding shares in CMS against this outstanding balance and the
maturity date of the note has been extended until November 30, 2002.
However, if the Company makes all of the foregoing payments on a timely
basis and has not otherwise defaulted on the loan, the maturity date for
the remaining unpaid principal balance will be extended until June 30, 2003.
In addition, management is negotiating with the Company's major shareholders
to convert a portion of the Company's indebtedness to them into equity in
order to improve the Company's working capital position. Operationally,
management's plans include continuing actions to cut or curb non-essential
expenses and focusing on improving the sales of Autec. No asurance can be
given that the Company will be successful in extending or modifying its
line of credit beyond June 30, 2003 or that the Company will be able to
return to profitable operations. Looking for alternatives, the Company
is currently seeking global financing agreement with a major international
bank to replace existing credit lines in U.S. and Hong Kong. No assurance
can be given that the alternative funding source will be available.
Effects of Inflation
--------------------
The Company believes that inflation has not had a material effect on its
net sales and results of operations.
Effects of Fluctuation in Foreign Exchange Rates
------------------------------------------------
The Company continues to buy products and services from foreign
suppliers. The Company contracts for such products and services in
U.S. dollars, thus eliminating the possible effect of currency
fluctuations. However, there is continuous risk in market demand
fluctuations with CMS Technology's operations in China. To date
the risk has been minimal.
12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
------------------------------------------------------------------
Bridge Technology, Inc. develops and procures products in the United
States, Japan and Hong Kong, and the Company sells primarily in North
America, Asia and Europe. As a result, financial results could be
affected by factors such as changes in foreign currency exchange rates
or weak economic conditions in foreign markets. Since the Company's
products are generally initially priced in U.S. Dollars and translated
to local currency amounts, a strengthening of the dollar could make
our Company's products less competitive in foreign markets.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
--------------------------
On November 14, 2001, a complaint was filed by Oppenheimer Wolff &
Donnelly LLP in the Orange County Superior Court, Santa Ana, California
against the Company for fees allegedly owed by the Company. The Company
intends to vigorously defend this claim because the amount invoiced was
deemed excessive comparing to the quality of services rendered. The estimated
liability including interest, costs and statutory attorney's fees was
approximately $100,000. At December 31, 2001 the Company has recorded
liabilites for this amount. In 2002, a non-binding arbitration was initiated
and the Company is waiting for the final decision from the arbitrators.
On April 16, 2002, a complaint was filed by Danton Mak Esq. in the
Superior Court of Los Angeles against Autec Power Systems, Inc. for
fees allegedly owed by Autec. The matter has been submitted to binding
arbitration schedule for hearing in April 2002. An estimated liability
of $136,000 has been recorded at December 31, 2001. In July 2002 this
matter has been settled by the stipulation of four equal payments of
$27,500 due on June 1, July 1, August 1 and September 1, 2002.
On April 24, 2002 a complaint was filed against the Company in the Orange
County Superior Court, Santa Ana, California by Mason Tarkeshian for fees
alleged to be due on an acquisition which was not consummated. The
complaint seeks for damage of approximately $2 million where as the Company
believes that the complaint is without merit and will be resolved in favor
of the Company. The Company tendered this case to the insurance carrier for
settlement and has not accrued any liabilities for this matter as of
December 31, 2001. In 2002, this complaint was settled by the Company's
insurance carrier and the Company. The Company's portion of contribution to
the settlement was to issue a warrant to purchase 25,000 shares of common
stock of Bridge at $0.55 per share. The Company issued that warrant in 2002
and is awaiting the receipt of a specific and general release.
13
On October 1, 2001 a complaint was filed by a trustee in U.S. Bankruptcy
Court against the Company for alleged transfer of assets, technology, trade
secrets, confidential information, business opportunities from Allied Web,
Inc, a corporation owned by the Company's former President, which filed for
liquidation under Federal Bankruptcy laws on April 6, 2000. At December 31,
2001, management of the Company was unable to assess the possibility of
incurring future liability and estimate the reasonable amount of the
contingent liability. Therefore, the Company did not record any accrued
liability for this matter. In July 2002, this case was settled by the
Company's insurance carrier and the Company in principal.
The Company is awaiting for the finalized documents to be signed soon.
On December 12, 2001, a former shareholder of Autec Power Systems has filed
a complaint in Ventura County Superior Court against the controlling
shareholder of Autec, Mr. Winston Gu and Bridge Technology, Inc. alleging
that the complaint did not receive sufficient exchange of shares in this
acquisition by Bridge Technology, Inc. The Company believes that the
complaint without merit and will defend it vigorously. At December 31,
2001, management of the Company was unable to assess the possibility of
incurring future liability and estimate the reasonable amount of
contingent liability. Therefore, the Company did not record any accrued
liability for this matter at December 31, 2001. As of July 24, 2002, the
Company is unable to predict any consequence about this matter.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
--------------------------------------------------
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
----------------------------------------
There are no defaults upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
There are no matters submitted to a vote of security holders.
ITEM 5. OTHER INFORMATION
--------------------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
There are no exhibits and reports on Form 8-K.
14
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Bridge Technology, Inc.
------------------------------
(Registrant)
Date: July 24, 2002
-------------- ------------------------------
Winston Gu, Chairman
Date: July 24, 2002
-------------- ------------------------------
James Djen, CEO and President
Date: July 24, 2002
-------------- ------------------------------
John T. Gauthier, CFO
15