TMCnet News
EASTBRIDGE INVESTMENT GROUP CORP - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(Edgar Glimpses Via Acquire Media NewsEdge) In this Quarterly Report on Form 10-Q, "Company," "EastBridge," "our company," "us," and "our" refer to EastBridge Investment Group Corporation and its subsidiaries unless the context requires otherwise. The Company's Form 10-K, this and any other Form 10-Q or any Form 8-K of the Company or any other written or oral statements made by or on behalf of the Company may contain forward-looking statements which reflect the Company's current views with respect to future events and financial performance. The words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," and similar expressions identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Such "forward-looking statements" are subject to risks and uncertainties set forth from time to time in the Company's SEC reports and include, among others, the Risk Factors set forth under Item 1A below and in the Company's Form 10-K for its fiscal year ended December 31, 2010. The risks included herein are not exhaustive. The Company's annual report on Form 10-K, this and other quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC include additional factors which could impact EastBridge Investment Group Corporation's business and financial performance. Moreover, EastBridge Investment Group Corporation operates in a rapidly changing and competitive environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors. Further, it is not possible to assess the impact of all risk factors on EastBridge Investment Group Corporation's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements as they speak only of the Company's views as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Overview EastBridge Investment Group Corporation (formerly ATC Technology Corporation) was incorporated in the State of Arizona on June 25, 2001. The Company's principal activity through June 30, 2005 was to manufacture mobile entertainment products that provided a means to play video game consoles made by Sony, Microsoft and Nintendo in a customer's car, RV, SUV, van or boat with attachable viewing monitors. In 2005, EastBridge decided to exit the mobile video game market and dedicate its activities to providing investment related services in Asia, with a strong focus on the high GDP growth countries, such as China and India. EastBridge is initially concentrating its efforts in China (Hong Kong, mainland China, Macao and Taiwan). We provide consulting services to provide viable corporate infrastructure necessary for small to medium-size companies to obtain capital to grow their business. EastBridge assists its clients in structuring joint ventures, wholly owned foreign enterprises, or guaranteed return ventures, and assists in locating investment banking, financial advisory and other financial services as allowed by the local government. EastBridge locates consultants which assist with marketing, sales and strategic planning services for its clients to prepare them to enter the United States market. EastBridge is one of a small group of United States companies solely concentrated in marketing business consulting services to closely held, small to mid-size Asian companies that require these services for expansion. In business sectors where EastBridge sees a unique opportunity for growth, EastBridge may form its own foreign subsidiaries with local partners to capture the opportunity. 15 -------------------------------------------------------------------------------- As of June 30, 2011, EastBridge was providing consulting services to fourteen clients to assist them with the auditing and legal processes to become public companies in the United States and become listed on a U.S. stock exchange. Eastbridge is also assisting Cambium Learning, a NASDAQ listed company (symbol: ABCD), with locating potential joint venture business partners in China. To learn more about our clients, review the Company's Form 10-K (filed with the SEC on April 14, 2011) and our subsequent Form 8-K filings (filed with the SEC on May 16, 2011, May 23, 2011 and June 7, 2011). EastBridge has formed three subsidiaries which have been consolidated with EastBridge from the date of formation. These subsidiaries are inactive. Results of Operations Revenues Net Revenues 2011 2010 Change Percent Three Months Ended June 30, $ 28,000 $ - $ 28,000 0 % Six Months Ended June 30, $ 28,000 $ - $ 28,000 0 % The Company received recordable revenue in the three and six months ending June 30, 2011 of which $20,000 was from client agreements, $5,000 from a month to month arrangement with a client and $3,000 from a onetime assistance service. The Company did not have any such revenue in the three and six months ended June 30, 2010. General and Administrative Expenses General & Administrative Expenses 2011 2010 Change Percent Three Months Ended June 30, $ 318,347 $ 335,059 $ (16,712 ) (5 )% Six Months Ended June 30, $ 629,669 $ 805,016 $ (175,347 ) (22 )% General and administrative expenses decreased in the three months ending June 30, 2011 as compared to the three months ending June 30, 2010 due to the following: a decrease in consulting, legal and accounting services of approximately $111,000, partially offset by an increase in payroll taxes of approximately $88,000, with rent and other expenses of approximately $6,000. General and administrative expenses decreased in the six months ending June 30, 2011 as compared to the six months ending June 30, 2010 due to the following: a decrease in consulting, legal and accounting services of approximately $304,000, partially offset by increases in payroll taxes of approximately $93,000 and rent and other expenses of approximately $36,000. 16 -------------------------------------------------------------------------------- Sales and Marketing Expenses Sales & Marketing Expenses 2011 2010 Change Percent Three Months Ended June 30, $ 48,785 $ 32,383 $ 16,402 51 % Six Months Ended June 30, $ 61,652 $ 72,668 $ (11,016 ) (15 )% Sales and marketing expenses increased in the three months ended June 30, 2011 as compared to the three months ended June 30, 2010 due to increased other marketing related expenses of approximately $28,000, partially offset by decreased travel of approximately $12,000. Sales and marketing expenses increased in the six months ended June 30, 2011 as compared to the six months ended June 30, 2010 due to decreased travel of approximately $40,000, partially offset by increased other marketing related expenses of approximately $29,000. Operating Loss Operating Loss 2011 2010 Change Percent Three Months Ended June 30, $ (339,132 ) $ (367,442 ) $ 28,310 (8 )% Six Months Ended June 30, $ (663,321 ) $ (877,684 ) $ 214,363 (24 )% The decrease in our operating loss for the three and six months ended June 30, 2011 as compared to the three and six months ended June 30, 2010 is primarily due to the decreases in general and administrative expenses and sales & marketing expenses and increases in revenue, each of which is described above. Total Other Income (Expense) Total Other Income (Expense) 2011 2010 Change Percent Three Months Ended June 30, $ 2,050 $ 2,330 $ (280 ) (12 )% Six Months Ended June 30, $ 6,142 $ 481,567 $ (475,425 ) (99 )% In the three months ended June 30, 2011, we incurred slightly less interest expense as compared to the three months ended June 30, 2010, due to credit card interest charges. In the six months ended June 30, 2011, we incurred additional interest expense of approximately $1,000 as compared to the six months ended June 30, 2010, due to credit card interest charges. Plus, in the six months ended June 30, 2010, we incurred extinguishment of debt expense of approximately $476,000. 17 -------------------------------------------------------------------------------- Income Tax Provision (Benefit) Income Tax Provision (Benefit) 2011 2010 Change Percent Three Months Ended June 30, $ - $ - $ - 0 % Six Months Ended June 30, $ - $ - $ - 0 % While we have optimistic plans for our business strategy, we determined that a valuation allowance was necessary given the current and expected near term losses and the uncertainty with respect to our ability to generate sufficient profits from our business model. Therefore, we established a valuation allowance for all deferred tax assets. Net Loss Net Loss 2011 2010 Change Percent Three Months Ended June 30, $ (341,182 ) $ (369,772 ) $ 28,590 (8 )% Six Months Ended June 30, $ (669,463 ) $ (1,359,251 ) $ 689,788 (51 )% Changes in net loss are primarily attributable to changes in operating loss and other income (expense), each of which is described above. Comprehensive Net Loss Comprehensive Net Loss 2011 2010 Change Percent Three Months Ended June 30, $ (443,994 ) $ (369,772 ) $ (74,222 ) 20 % Six Months Ended June 30, $ (623,769 ) $ (1,359,251 ) $ 735,482 (54 )% For the three months ended June 30, 2011, we recorded an unrecognized loss on investments of approximately $103,000. For the three months ended June 30, 2010, we did not have such investments. For the six months ended June 30, 2011, we recorded an unrecognized gain on investments of approximately $46,000. For the six months ended June 30, 2010, we did not have such investments. LIQUIDITY AND CAPITAL RESOURCES Net cash used in operating activities was $140,379 and $120,012 for the six months ended June 30, 2011 and 2010, respectively. The increase is mainly attributable to the decrease in our net loss of approximately $690,000 and offset by the increases in stock issued for services of approximately $689,000, and increases in working capital and other current assets of approximately $21,000. 18 -------------------------------------------------------------------------------- Our primary source of cash inflows has historically been from listing agreement customers. Since late 2009, we received advance payments for shares of client companies whose listings are expected to be completed in 2011 and 2012. As of June 30, 2011 and 2010, no single customer accounted for greater than 10% of accounts receivable as part of the agreements require deposits in advance rather than billing after the fact. Cash provided by (used in) financing activities was $124,595 and $(16,000) for the six months ended June 30, 2011 and 2010, respectively. During the six months ended June 30, 2011, we made repayments of $18,750 on our line of credit, offset by $143,345 of amounts advanced from affiliates. During the six months ended June 30, 2010, we made repayments of $22,500 on our line of credit, offset by $6,500 of amounts advanced from affiliates. We had working capital of $(1,897,528) as of June 30, 2011 compared to $(1,555,219) as of December 31, 2010. Our cash position decreased to $34,114 at June 30, 2011 compared to $49,898 at December 31, 2010, as we had a decrease in cash flows from operations, offset by cash provided by investing activities. Our monthly cash requirement amount is approximately $15,000, and as of June 30, 2011, cash on hand would fund operations for approximately two months. In the past, we have received cash through loans extended by our management to the Company and through sales of shares of common stock to individual investors. As we are a consulting company with no proprietary technology it is doubtful we will obtain capital from institutional or other sources and will need to rely on our officers for cash infusions, which they are under no obligation to provide. As much of our revenue will come through sales of equity in our clients it may be several months until we obtain positive cash flows as this will occur only if and when our clients have registration statements cleared by the SEC which include client shares of common stock owned by the Company and these clients become listed on U.S. stock exchanges or over-the-counter markets. 19 -------------------------------------------------------------------------------- |