##### Table of Contents



---

---

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-QSB

(Mark One)



|[X] | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|--- | ---------------------------------------------------------------------------------

For the quarterly period ended May 31, 2002



|[  ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|---- | ----------------------------------------------------------------------------------

For the transition period from _____________ to ____________

Commission File Number 0-20866

WILSHIRE TECHNOLOGIES, INC.

(Exact name of small business issuer as specified in its charter)


|                                                                          |  |                                                
|------------------------------------------------------------------------- |  | -----------------------------------------------
|California
(State or other jurisdiction of incorporation or organization) |  | 33-0433823
(I.R.S. Employer Identification No.)

5861 Edison Place
Carlsbad, California 92008
(Address of principal executive offices)

(760) 929-7200
(Issuers telephone number)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [  ]

The number of shares outstanding of the registrants only class of Common
Stock, no par value, were 20,964,423 on June 28, 2002.

Transitional Small Business Disclosure Format. Yes [  ]       No [X]



---

---





---

TABLE OF CONTENTS



|                            |                                                                   |                                                 |  |  |  |  |  | 
|--------------------------- | ----------------------------------------------------------------- | ----------------------------------------------- |  |  |  |  |  | 
|PART 1                     
|                            | Item 1.                                                          
|                            |                                                                   | Condensed Consolidated Balance Sheets          
|                            |                                                                   | Condensed Consolidated Statements of Operations
|                            |                                                                   | Condensed Consolidated Statements of Cash Flows
|                            | Item 2. Managements Discussion and Analysis or Plan of Operation
|PART II  OTHER INFORMATION
|                            | Item 1. Legal Proceedings:                                       
|                            | Item 2. Changes in Securities:                                   
|                            | Item 3. Defaults Upon Senior Securities:                         
|                            | Item 4. Submission of Matters to a Vote of Security Holders:     
|                            | Item 5. Other Information:                                       
|                            | Item 6. Exhibits and Reports on Form 8-K                         
|SIGNATURES                 
|EXHIBIT 10.217             
|EXHIBIT 10.218             
|EXHIBIT 10.219             
|EXHIBIT 10.220             



---



##### Table of Contents



WILSHIRE TECHNOLOGIES, INC.

INDEX TO FORM 10-QSB

|                                           |                                                           |                                                                                                                    |    |  
|------------------------------------------ | --------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | -- | -
|                                          
|PART 1 - FINANCIAL INFORMATION (UNAUDITED) |                                                           | PAGE                                                                                                              
|                                          
|                                          
|Item 1.                                    | Financial Statements:                                     |                                                                                                                    |   
|                                          
|                                           |                                                           | Condensed Consolidated Balance Sheets as of
May 31, 2002 (Unaudited) and November 30, 2001                         |    | 3
|                                          
|                                           |                                                           | Condensed Consolidated Unaudited Statements of Operations
for the Three Months Ended May 31, 2002 and
May 31, 2001 |    | 4
|                                          
|                                           |                                                           | Condensed Consolidated Unaudited Statements of Operations
for the Six Months Ended May 31, 2002 and
May 31, 2001   |    | 5
|                                          
|                                           |                                                           | Condensed Consolidated Unaudited Statements of Cash Flows
for the Six Months Ended May 31, 2002 and May 31, 2001   |    | 6
|                                          
|                                           |                                                           | Notes to Condensed Consolidated Unaudited Financial Statements                                                     |    | 7
|                                          
|Item 2.                                    | Managements Discussion and Analysis
or Plan of Operation |                                                                                                                    | 11
|                                          
|                                          
|PART II - OTHER INFORMATION                |                                                           |                                                                                                                   
|                                          
|                                          
|Item 1.                                    | Legal Proceedings                                         |                                                                                                                    | 19
|                                          
|Item 2.                                    | Changes in Securities                                     |                                                                                                                    | 19
|                                          
|Item 3.                                    | Defaults Upon Senior Securities                           |                                                                                                                    | 20
|                                          
|Item 4.                                    | Submission of Matters to a Vote of Security Holders       |                                                                                                                    | 20
|                                          
|Item 5.                                    | Other Information                                         |                                                                                                                    | 20
|                                          
|Item 6.                                    | Exhibits and Reports on Form 8-K                          |                                                                                                                    | 20
|                                          
|Signatures                                 | 21                                                       

2



---



##### Table of Contents






PART 1




Item 1.




Wilshire Technologies, Inc.
Condensed Consolidated Balance Sheets
(See Note 2)

|                                              |                                                                                                               |   |             |             |              |   |             |             |   |  |  |  | 
|--------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | - | ----------- | ----------- | ------------ | - | ----------- | ----------- | - |  |  |  | 
|                                              |                                                                                                               |   | May 31,     |             | November 30, |   |             |             |  
|                                              |                                                                                                               |   | 2002        |             | 2001         |   |             |             |  
|                                              |                                                                                                               |   |             |             |              |   |             |             |  
|                                              |                                                                                                               |   | (Unaudited) |             | (Note 1)     |   |             |             |  
|Assets                                        |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|Current assets:                               |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|                                              | Cash                                                                                                          |   | $           | 635,000     |              |   | $           | 314,000     |   |  |  |  | 
|                                              | Accounts receivable trade, less allowance for
doubtful accounts of $375 at May 31, 2002 and
November 30, 2001 |   |             | 58,000      |              |   |             | 46,000      |   |  |  |  | 
|                                              | Inventories (Note 3)                                                                                          |   |             | 101,000     |              |   |             | 38,000      |   |  |  |  | 
|                                              | Other current assets                                                                                          |   |             | 466,000     |              |   |             | 320,000     |   |  |  |  | 
|                                              |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|Total current assets                          |                                                                                                               |   | 1,260,000   |             |              |   | 718,000     |             |   |  |  | 
|Property and equipment, net (Note 4)          |                                                                                                               |   | 4,631,000   |             |              |   | 2,644,000   |             |   |  |  | 
|Patents and trademarks, net                   |                                                                                                               |   | 31,000      |             |              |   | 29,000      |             |   |  |  | 
|Receivable due from sale of division (Note 5) |                                                                                                               |   | 179,000     |             |              |   | 687,000     |             |   |  |  | 
|                                              |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|                                              |                                                                                                               | $ | 6,101,000   |             |              | $ | 4,078,000   |             |   |  |  | 
|                                              |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|Liabilities and shareholders deficit         |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|Current liabilities:                          |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|                                              | Accounts payable                                                                                              |   | $           | 198,000     |              |   | $           | 171,000     |   |  |  |  | 
|                                              | Accrued expenses                                                                                              |   |             | 667,000     |              |   |             | 390,000     |   |  |  |  | 
|                                              | Interest payable-related party(Note 6)                                                                        |   |             | 6,126,000   |              |   |             | 5,164,000   |   |  |  |  | 
|                                              | Line of credit- related party due on demand (Note 6)                                                          |   |             | 22,596,000  |              |   |             | 18,704,000  |   |  |  |  | 
|                                              |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|Total current liabilities                     |                                                                                                               |   | 29,587,000  |             |              |   | 24,429,000  |             |   |  |  | 
|                                              |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|Commitments and contingencies                 |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|Shareholders deficit                         |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|                                              | Preferred stock, no par value, 2,000,000 shares
authorized and none issued or outstanding                     |   |             |            |              |   |             |            |   |  |  |  | 
|                                              | Common stock, no par value, 100,000,000 shares
authorized; 20,964,423 shares issued and
outstanding           |   |             | 27,204,000  |              |   |             | 25,912,000  |   |  |  |  | 
|                                              | Common stock warrants and options                                                                             |   |             | 870,000     |              |   |             | 495,000     |   |  |  |  | 
|                                              | Accumulated deficit                                                                                           |   |             | (51,560,000 | )            |   |             | (46,758,000 | ) |  |  |  | 
|                                              |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|Total shareholders deficit                   |                                                                                                               |   | (23,486,000 | )           |              |   | (20,351,000 | )           |   |  |  | 
|                                              |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 
|                                              |                                                                                                               | $ | 6,101,000   |             |              | $ | 4,078,000   |             |   |  |  | 
|                                              |                                                                                                               |   |             |             |              |   |             |             |   |  |  | 

See accompanying notes to financial statements.

3



---



##### Table of Contents






Wilshire Technologies, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(See Note 2)

|                                       |                            |   |                          |         |         |   |            |         | 
|-------------------------------------- | -------------------------- | - | ------------------------ | ------- | ------- | - | ---------- | ------- | 
|                                       |                            |   | Three-Month Period Ended
|                                       |                            |   |                         
|                                       |                            |   | May 31,                  |         | May 31,
|                                       |                            |   | 2002                     |         | 2001   
|                                       |                            |   |                          |         |        
|Net sales                              |                            | $ | 148,000                  |         |         | $ | 119,000    |        
|Cost of sales                          |                            |   | 1,340,000                |         |         |   | 638,000    |        
|                                       |                            |   |                          |         |         |   |            |        
|Gross loss                             |                            |   | (1,192,000               | )       |         |   | (519,000   | )      
|                                       |                            |   |                          |         |         |   |            |        
|Operating expenses:                    |                            |   |                          |         |         |   |            |        
|                                       | Marketing and selling      |   |                          | 267,000 |         |   |            | 145,000 | 
|                                       | General and administrative |   |                          | 561,000 |         |   |            | 460,000 | 
|                                       | Research and development   |   |                          | 1,000   |         |   |            | 3,000   | 
|                                       |                            |   |                          |         |         |   |            |        
|Total operating expenses               |                            |   | 829,000                  |         |         |   | 608,000    |        
|                                       |                            |   |                          |         |         |   |            |        
|Loss from operations                   |                            |   | (2,021,000               | )       |         |   | (1,127,000 | )      
|Other income, net                      |                            |   | 67,000                   |         |         |   | 112,000    |        
|Interest expense, net                  |                            |   | (514,000                 | )       |         |   | (465,000   | )      
|                                       |                            |   |                          |         |         |   |            |        
|Loss before provision for income taxes |                            |   | (2,468,000               | )       |         |   | (1,480,000 | )      
|Provision for income taxes             |                            |   |                         |         |         |   |           |        
|                                       |                            |   |                          |         |         |   |            |        
|Net loss                               |                            | $ | (2,468,000               | )       |         | $ | (1,480,000 | )      
|                                       |                            |   |                          |         |         |   |            |        
|Weighted average shares outstanding    |                            |   | 20,964,000               |         |         |   | 12,953,000 |        
|                                       |                            |   |                          |         |         |   |            |        
|Basic and diluted loss per share       |                            | $ | (0.12                    | )       |         | $ | (0.11      | )      
|                                       |                            |   |                          |         |         |   |            |        

4



---



##### Table of Contents



Wilshire Technologies, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(See Note 2)

|                                       |                            |   |                        |           |         |   |            |         | 
|-------------------------------------- | -------------------------- | - | ---------------------- | --------- | ------- | - | ---------- | ------- | 
|                                       |                            |   | Six-Month Period Ended
|                                       |                            |   |                       
|                                       |                            |   | May 31,                |           | May 31,
|                                       |                            |   | 2002                   |           | 2001   
|                                       |                            |   |                        |           |        
|Net sales                              |                            | $ | 227,000                |           |         | $ | 130,000    |        
|Cost of sales                          |                            |   | 2,337,000              |           |         |   | 1,167,000  |        
|                                       |                            |   |                        |           |         |   |            |        
|Gross loss                             |                            |   | (2,110,000             | )         |         |   | (1,037,000 | )      
|                                       |                            |   |                        |           |         |   |            |        
|Operating expenses:                    |                            |   |                        |           |         |   |            |        
|                                       | Marketing and selling      |   |                        | 461,000   |         |   |            | 290,000 | 
|                                       | General and administrative |   |                        | 1,003,000 |         |   |            | 901,000 | 
|                                       | Research and development   |   |                        | 2,000     |         |   |            | 24,000  | 
|                                       |                            |   |                        |           |         |   |            |        
|Total operating expenses               |                            |   | 1,466,000              |           |         |   | 1,215,000  |        
|                                       |                            |   |                        |           |         |   |            |        
|Loss from operations                   |                            |   | (3,576,000             | )         |         |   | (2,252,000 | )      
|Other income                           |                            |   | 125,000                |           |         |   | 199,000    |        
|Interest expense, net                  |                            |   | (1,350,000             | )         |         |   | (909,000   | )      
|                                       |                            |   |                        |           |         |   |            |        
|Loss before provision for income taxes |                            |   | (4,801,000             | )         |         |   | (2,962,000 | )      
|Provision for income taxes             |                            |   | 1,000                  |           |         |   | 1,000      |        
|                                       |                            |   |                        |           |         |   |            |        
|Net loss                               |                            | $ | (4,802,000             | )         |         | $ | (2,963,000 | )      
|                                       |                            |   |                        |           |         |   |            |        
|Weighted average shares outstanding    |                            |   | 19,327,000             |           |         |   | 12,953,000 |        
|                                       |                            |   |                        |           |         |   |            |        
|Basic and diluted loss per share       |                            | $ | (0.25                  | )         |         | $ | (0.23      | )      
|                                       |                            |   |                        |           |         |   |            |        

See accompanying notes to financial statements.

5



---



##### Table of Contents






Wilshire Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(See Note 2)

|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |         |         |   |  |  |  | 
|--------------------------------------------------------------------------- | ----------------------------- | ---------------------------------------------- | ------------------------------------------------- | ---------- | ---------------------- | -------- | ---------- | --------- | ------- | ------- | - |  |  |  | 
|                                                                            |                               |                                                |                                                   |            | Six-Month Period Ended |          |            |           |        
|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |        
|                                                                            |                               |                                                |                                                   |            | May 31,                |          | May 31,    |           |         |         |  
|                                                                            |                               |                                                |                                                   |            | 2002                   |          | 2001       |           |         |         |  
|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |         |         |  
|Operating activities                                                        |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|Net loss                                                                    |                               | $                                              | (4,802,000                                        | )          |                        | $        | (2,963,000 | )         |         |         |   | 
|Adjustments to reconcile net loss to net cash used in
operating activities: |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|                                                                            |                               | Depreciation and amortization                  |                                                   |            | 356,000                |          |            |           | 327,000 |         |   |  |  | 
|                                                                            |                               | Options Issued to Majority Shareholder         |                                                   |            | 375,000                |          |            |           |        |         |   |  |  | 
|                                                                            |                               | Provision for inventory obsolescence           |                                                   |            | (10,000                | )        |            |           |        |         |   |  |  | 
|                                                                            |                               | Loss from Write Off of Assets                  |                                                   |            | 15,000                 |          |            |           |        |         |   |  |  | 
|                                                                            |                               | Net change in operating assets and liabilities |                                                   |            |                        |          |            |           |         |         |   |  |  | 
|                                                                            |                               |                                                | Increase in accounts receivable                   |            |                        | (12,000  | )          |           |         | (61,000 | ) |  |  |  | 
|                                                                            |                               |                                                | Increase in inventories                           |            |                        | (53,000  | )          |           |         | (78,000 | ) |  |  |  | 
|                                                                            |                               |                                                | Increase in other current assets                  |            |                        | (146,000 | )          |           |         | (82,000 | ) |  |  |  | 
|                                                                            |                               |                                                | Increase in accounts payable and
accrued expenses |            |                        | 304,000  |            |           |         | 224,000 |   |  |  |  | 
|                                                                            |                               |                                                | Increase in interest payable                      |            |                        | 962,000  |            |           |         | 910,000 |   |  |  |  | 
|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|Net cash used in operating activities                                       |                               |                                                | (3,011,000                                        | )          |                        |          | (1,723,000 | )         |         |         |   | 
|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|Investing activities                                                        |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|                                                                            | Purchases of equipment        |                                                |                                                   | (2,357,000 | )                      |          |            | (194,000  | )       |         |   |  | 
|                                                                            | Proceeds from note receivable |                                                |                                                   | 508,000    |                        |          |            |          |         |         |   |  | 
|                                                                            | Decrease in other assets      |                                                |                                                   | (2,000     | )                      |          |            |          |         |         |   |  | 
|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|Net cash used in investing activities                                       |                               |                                                | (1,851,000                                        | )          |                        |          | (194,000   | )         |         |         |   | 
|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|Financing activities                                                        |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|                                                                            | Proceeds from line of credit  |                                                |                                                   | 5,171,000  |                        |          |            | 2,200,000 |         |         |   |  | 
|                                                                            | Forgiveness of debt           |                                                |                                                   | 12,000     |                        |          |            |          |         |         |   |  | 
|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|Net cash provided by financing activities                                   |                               |                                                | 5,183,000                                         |            |                        |          | 2,200,000  |           |         |         |   | 
|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|Net increase in cash                                                        |                               |                                                | 321,000                                           |            |                        |          | 283,000    |           |         |         |   | 
|Cash  beginning of period                                                  |                               |                                                | 314,000                                           |            |                        |          | 413,000    |           |         |         |   | 
|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 
|Cash  end of period                                                        |                               | $                                              | 635,000                                           |            |                        | $        | 696,000    |           |         |         |   | 
|                                                                            |                               |                                                |                                                   |            |                        |          |            |           |         |         |   | 

6



---



##### Table of Contents



NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Wilshire Technologies, Inc. (the Company) operates in one business segment,
which is to develop, manufacture and market engineered polymer products for
industrial cleanroom use. The Company has historically developed, manufactured
and marketed engineered polymer products for industrial cleanroom use. In 1996,
the Company divested its Medical Products and Transdermal Products divisions
and focused primarily on products used in industrial cleanrooms, such as gloves
and contamination control products. From 1996 through 2000, substantially all
of the Companys reported historic revenues have been related to sales of its
contamination control products. On May 19, 2000, the Company completed the sale
of certain assets and selected liabilities of the Companys Wilshire
Contamination Control division (the division) to Foamex Asia Co. LTD. (see
Note 5). During the third quarter of fiscal 2000, sales of the Companys
polyurethane glove ceased and the Company focused upon securing a strategic
partner for the new product development. Effective September 18, 2000, the
Company signed a Product Development, Purchase and License Agreement (the
Agreement) with the Lycra® division of E. I. DuPont de Nemours and Company
(DuPont). Under the Agreement, DuPont developed and began to supply a new
proprietary polyurethane material which is used by Wilshire to manufacture and
sell a disposable polyurethane glove for industrial cleanroom applications. The
Company, based in Carlsbad, California manufactures its products at the
Tijuana, Mexico facility of its wholly owned subsidiary, Wilshire International
de Mexico S.A. de C.V.

Basis of Presentation

The Company has incurred substantial losses since its inception in 1990, and
has relied on working capital provided by Trilon Dominion Partners, LLC
(Trilon Dominion"-previously Dominion Capital, Inc.) in the form of both debt
and equity to fund its operations. Management believes that Trilon Dominion
will continue to support the Company as necessary through the end of fiscal
year 2002.

The accompanying condensed consolidated unaudited financial statements have
been prepared in accordance with accounting principles generally accepted in
the United States of America for interim financial information and with the
instructions to Form 10-QSB for quarterly reports under Section 13 or 15(d) of
the Securities Exchange Act of 1934. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and six months ended May 31, 2002 is not
necessarily indicative of the results that may be expected for the fiscal year
ending November 30, 2002. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Companys annual
report on Form 10-KSB for the fiscal year ended November 30, 2001.

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary. Significant intercompany amounts and transactions
have been eliminated.

NOTE 2. GOING CONCERN

The Companys consolidated financial statements included elsewhere herein have
been prepared assuming that the Company will continue as a going concern. The
Company has a working capital deficiency of $28,327,000, shareholders deficit
of $23,486,000 as of May 31, 2002, has suffered substantial recurring losses
from operations and is economically dependent on its majority shareholder to
finance operations. These matters, among others, raise substantial doubt about
the Companys ability to continue as a going concern. Continuation of the
Company is dependent on the Companys ability to negotiate additional
arrangements with its majority shareholder, raise additional capital and to
achieve profitability. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty. Although
management has been successful in obtaining working capital from its majority
shareholder to fund operations to date, there can be no assurance that the
Company will be able to raise additional capital in the future.

The Company anticipates continuing substantial negative cash flow from
operating and investing activities through the next twelve months. The Company
has projected its cash flow needs to be approximately $5 million for the
remainder of calendar 2002. Trilon Dominion, the Companys largest shareholder
with over 83% of the shares outstanding, has acknowledged the Companys cash
flow needs and has indicated its commitment to provide

7



---



##### Table of Contents



financial support to the Company through the end of the calendar year 2002 to
the extent of such budgeted cash flow requirements. However given that no
written commitment exists, the Company is exposed to the substantial risk that
it will not receive the funds from Trilon Dominion to fund present and future
working capital needs. In the event that such funds are not received it is
unlikely that the Company will be successful in raising capital from other
sources. If adequate funds are not available to finance current operations,
the Company will be unable to execute its business development efforts and may
be unable to continue as a going concern.

The Companys continuation as a going concern is dependent upon its ability to
(a) generate sufficient cash flow to fund working capital and investment
activities, (b) to obtain additional outside financing, and (c) ultimately
sustain profitability. Managements recent actions in regard to these matters
are as follows:

1) During fiscal 2000, the Company sold selected assets and liabilities
totaling $945,000 related to the Companys Wilshire Contamination Control to
Foamex Asia Co. LTD. (the Buyer), an affiliate of Foamex International (FMX:
NASDAQ) for a potential sales price up to $2,500,000. (See Note 5). Payments
of the sale price are due from the Buyer on a quarterly basis based on a fixed
percentage of sales by the Buyer of certain products. Foamex International is
an international developer, manufacturer and supplier of high-quality foam,
including key materials utilized in contamination control environments. Foamex
Asia Co. Ltd., located in Singapore and in Thailand, is currently a major
supplier of specialty foam products to the Asian market.

As part of the sale agreement, Foamex Asia Co. Ltd. agreed to invest $1,000,000
of capital in equipment and machinery which, the Company believes, will lead to
lower manufacturing costs of the Buyer over the term of the agreement. The
Company further believes the transaction was in its best interests as the
likelihood of increased sales due to the lower manufacturing costs may provide
not only a return of the initial investment of $945,000, but additional
payments from the Buyer up to a total of $2,500,000.

In accordance with the terms of the sale agreement, a payment in the amount of
$258,000 was received from Foamex Asia Co. Ltd., on November 29, 2001 and
applied against the receivable. During the first six months of 2002, the
Company received two additional payments totaling approximately $508,000 from
Foamex Asia Co. Ltd., which further reduced the principal balance to $179,000
at May 31, 2002.

2) In addition to the sale of assets to Foamex Asia Co. Ltd., the Company
entered into an agreement with Foamex to provide, for due consideration,
certain labor, facilities, services, personnel and other items with respect to
Foamexs ongoing operation of the Divisions business. The agreement, which
commenced on May 19, 2000, has been amended to extend through December 31, 2002
and will provide additional funds to offset operating expenses of approximately
$550,000 for fiscal year 2002.

3) In September 2000, the Company signed a Product Development, Purchase and
License Agreement (the Agreement) with the LYCRA® division of E. I. DuPont de
Nemours and Company (DuPont). Under the Agreement, DuPont developed and began
to supply a new proprietary polyurethane material, which is used by Wilshire to
manufacture and sell a disposable polyurethane glove for industrial and
non-industrial cleanroom applications.

The Company began production of the new gloves in the second quarter of 2001
and believes that the new, improved DuraCLEAN® gloves using LYCRA® eglantine
fiber will offer the market a glove with improved cleanliness, durability and
comfort. The glove will also have excellent ESD properties. The glove has the
distinct advantage of being able to be used as a one time disposable product
or, because of its durability, can be relaundered and used multiple times. The
relaunderability benefit is a significant factor as it allows for a reduction
in the cost of the glove and a large reduction in the waste stream of the
customer, which is a growing concern in the market.

Although the new gloves will be premium priced, management believes they will
be cost effective for users because the enhanced cleanliness will reduce
contamination and increase yield. Also, because of excellent abrasion
resistance they can be worn longer and changed less frequently than less
expensive gloves.

Because of the inherent cleanliness and the absence of chemical accelerators,
the new DuraCLEAN® with LYCRA® glove has expanded applications outside
traditional cleanroom markets. Some of the fastest growing market-segments for
Wilshire Technologies Inc. are medical device manufacturing,
telecommunications, biotechnology and highly sensitive laboratories. The
ability to re-launder and re-use the DuraCLEAN® glove has appeal in waste
sensitive markets in Japan.

8



---



##### Table of Contents



The Glove will be marketed under the trademark DuraCLEAN® with LYCRA®. DuPont
will be active with the Company in the marketing of the product. The Company
will distribute the product through a variety of channels both in the US and
overseas.

The Company believes that with the potential of a return of $2,500,000 on the
sale of its contamination control division to Foamex Asia Co., Ltd., with the
cost-sharing agreements in place to lower operating costs, with the sales of
its new glove, and with continued funding from Trilon Dominion, the Company
will position itself to begin generating sufficient cash flow to fund working
capital and investment activities by the end of 2003. If the Company does
attain its sales goals, it believes that it will be able to raise additional
capital, as needed in the future. There can be no assurances, however, that the
Company will be successful in any of the above mentioned actions or plans on a
timely basis, or at all.

NOTE 3. FINANCIAL STATEMENT INFORMATION

Inventories consist of the following:

|                   |  |         |         |              |  |   |         |  
|------------------ |  | ------- | ------- | ------------ |  | - | ------- | -
|                   |  | May 31, |         | November 30,
|                   |  | 2002    |         | 2001        
|                   |  |         |         |             
|Raw materials      |  | $       | 86,000  |              |  | $ | 40,000  |  
|Finished goods     |  |         | 37,000  |              |  |   | 30,000  |  
|Inventory reserves |  |         | (22,000 | )            |  |   | (32,000 | )
|                   |  |         |         |              |  |   |         |  
|                   |  | $       | 101,000 |              |  | $ | 38,000  |  
|                   |  |         |         |              |  |   |         |  

NOTE 4. LONG TERM ASSETS

The Company has adopted the provisions of SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
This statement requires that long-lived assets and certain identifiable
intangibles be 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
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 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.

The Company has evaluated the recoverability of the assets associated with its
existing glove plant by measuring the carrying cost of those assets against the
estimated undiscounted future cash flows associated with those assets. The
future cash flows calculated by the analysis appeared sufficient to recover the
value of the assets and thus no write down of the asset was recorded.

However, the Company acknowledges that the losses associated with the
development of a polyurethane glove extended beyond the initial plan due to the
extension of the time related to the strategic decision to find another source
of polymer (a new proprietary polyurethane material developed and supplied by
DuPont). The Company further acknowledges that the recoverability of its long
term assets depends upon the Company increasing its manufacturing capacity of
its glove dipping plant and also increasing sales of its glove beyond historic
sales recorded for the previous twelve months.

During the second quarter of fiscal 2002, the Company continued extensive
capital expansion programs to increase capacity levels and production
efficiencies of the glove plant. The Company entered into a contract with a
glove line manufacturer to construct two additional glove lines, with
installation of the first of the two lines to take place in the third fiscal
quarter of 2002. Due to the length of time needed to expand manufacturing
capacity, (9 to 12 months per glove line), the Company anticipates that full
capacity and manufacturing efficiencies associated with the new lines will not
be attained until mid 2003.

9



---



##### Table of Contents



However, if the Company continues to experience production delays and does not
achieve higher production output and corresponding sales growth by the end of
fiscal 2002, the Company may have to substantially reduce its assumptions
regarding the future cash flow associated with certain long term assets (i.e.
the initial glove line) and recognize a write of down of assets at that time.
As a result, given the Companys unprofitable past financial performance and
the unpredictably of its future performance, there is uncertainty as to the
Companys ability to recover its investment in its long-term assets through the
generation of future net cash flows. Precedent to such evaluation under the
provisions of SFAS 121, however, the Company would have to reconsider its
ability to continue as a going concern. (See discussion on Going Concern in
Note 2 of the Notes to the Consolidated Financial Statements).

NOTE 5. SALE OF DIVISION

On May 19, 2000, the Company completed the sale of certain assets and selected
liabilities of the Companys Wilshire Contamination Control division (the
division) to Foamex Asia Co. LTD. (the Buyer), an affiliate of Foamex
International (FMX:NASDAQ) for a potential sales price up to $2,500,000.
Substantially all of the historic revenues reported by the Company related to
this division.

Payments are due from the Buyer on a quarterly basis based on a fixed
percentage of sales by the Buyer of certain products, as defined in the asset
purchase agreement, subject to certain cash flow provisions.

As no proceeds were due to the Company on the date of closing, the Company
recorded a receivable, which equated to the net book value of the net assets
sold. Such receivable totaled $945,000. The Company has a secured interest in
the net assets sold. All payments of the sales price will be applied against
the receivable, under the cost recovery method, with no recognition of gain
until the receivable is paid in full. The Company believes that the asset
recorded is not impaired. On November 29, 2001, the Company received a payment
of $258,000 from Foamex Asia Co. Ltd., in compliance with the terms of the
Agreement, which was applied against the receivable. During the first six
months of 2002, the Company received two additional payments totaling $508,000
from Foamex Asia Co. Ltd., which further reduced the principal balance to
$179,000 at May 31, 2002.

In addition to the sale of assets, the Buyer and Seller entered into an
agreement (the Ongoing Service Agreement) where the Company agreed to provide
Foamex, for due consideration, certain labor, facilities, services, personnel
and other items with respect to Foamexs ongoing operation of the Divisions
business. The agreement commenced on May 19, 2000 and has been subsequently
amended to continue until December 31, 2002. The Company anticipates receiving
approximately $550,000 from the agreement during fiscal year 2002, of which
$228,000 has been received through May 31, 2002.

The Buyer has made all payments as required by the sale agreement on a timely
basis, and has represented both verbally and in writing to the Company that it
has the financial ability to meet its payment obligations. Management has not
received any financial information with which to evaluate the Buyers ability
to pay the receivable, as the Buyer is not obligated to provide the financial
statements. As such, while uncertainty exists as to the collectibility of the
receivable, management has no reason to believe that the receivable will not be
collected on a timely basis.

NOTE 6. LINE OF CREDIT

On March 31, 1998, the Company and Trilon Dominion Partners, L.L.C. (Trilon)
completed an Amended and Restated Credit Agreement and Revolving Line of Credit
(the Amended Agreement), secured by the Companys assets.

The Agreement has been extended through a number of amendments to January 31,
2003. Through fiscal 1999, the Company issued $11,935,000 of demand notes
bearing interest at rates of 11.5% and prime plus 3%.

In fiscal 2000, the Company issued demand notes totaling $2,813,000 under the
line of credit agreement. The notes issued in fiscal 2000 bear interest at a
rate of prime plus 3% (13.0% at November 30, 2000).

In fiscal 2001, the Company issued demand notes totaling $3,956,000 at a rate
of prime plus 3%. All of the notes are due on demand.

On December 17, 2001, the Company signed a Stock Option Agreement with Trilon.
Under the Trilon agreement, the Company issued to Trilon 8,011,038 shares of
the Companys unissued authorized stock in cancellation of three

10



---



##### Table of Contents



demand notes plus accrued interest which totaled $1,291,000. The fair value of
the option granted was estimated to be $375,000, which was recorded as a charge
to earnings in the first quarter of 2002.

The Company issued two additional demand notes during the first quarter of
fiscal 2002. On January 9, 2002, and February 13, 2002, demand notes totaling
$2,155,000 were issued at a rate of prime plus 3% (4.75% at
May 31, 2002). During the second quarter of fiscal 2002, the Company issued three additional
demand notes. On March 11, 2002, April 22, 2002 and
May 9, 2002, demand notes totaling $2,528,000 were issued at a rate of prime plus 3% (4.75% at
May 31, 2002).

NOTE 7. COMMITMENTS AND CONTINGENCIES

Breast Implant Litigation

During the first six months of 2002, there have been no significant
developments in the Breast Implant Litigation. For information regarding legal
proceedings, refer to the information contained in the Companys Annual Report
on Form 10-KSB for the fiscal year ended November 30, 2001, under Note 7 to the
consolidated financial statements included therein.




Item 2. Managements Discussion and Analysis or Plan of Operation

With the exception of discussions regarding historical information,
Managements Discussion and Analysis or Plan of Operation contains forward
looking statements. Such statements are based on current expectations subject
to uncertainties and other factors which may involve known and unknown risks
that could cause actual results of operations to differ materially from those
projected or implied. Further, certain forward-looking statements are based
upon assumptions about future events which may not prove to be accurate.

Risks and uncertainties inherent in forward looking statements include, but are
not limited to, the Companys future cash flows and ability to obtain
sufficient financing, timing and volume of sales orders, level of gross margins
and operating expenses, lack of market acceptance or demand for new product
lines, price competition, conditions in the contamination control industry and
the economy in general, as well as legal proceedings. The economic risk
associated with material cost fluctuations and inventory obsolescence is
significant to the Company. The ability to manage inventories through
procurement and utilization of component materials and the ability to generate
new glove sales could have a significant impact on future results of operations
or financial condition. Historical results are not necessarily indicative of
the operating results for any future period.

Subsequent written and oral forward looking statements attributable to the
Company or persons acting on the Companys behalf are expressly qualified in
their entirety by cautionary statements in this Form 10-QSB and in other
reports that have been filed with the Securities and Exchange Commission. The
following discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto included elsewhere in this filing.

Overview

The Company has incurred substantial losses since its inception in 1990, and
has relied on working capital provided by Trilon Dominion (previously Dominion
Capital, Inc.) in the form of both debt and equity to fund its operations.
Management believes that Trilon Dominion will continue to support the Companys
working capital needs as necessary through the end of fiscal year 2002.

Accordingly, the accompanying condensed consolidated financial statements have
been prepared assuming the Company will continue to operate as a going concern.
Should Trilon Dominion discontinue providing working capital support to the
Company, the Company would have insufficient working capital to meet its
operational needs for the foreseeable future.

In May of fiscal year 2000, the Company sold certain assets and selected
liabilities of the Companys Wilshire Contamination Control division (the
Division) to Foamex Asia Co. Ltd. (the Buyer), an affiliate of Foamex
International (FMX:NASDAQ) for a potential sales price of $2,500,000 or more.
The sale was finalized on May 19, 2000. Substantially all of the historic
revenues reported by the Company related to this division.

11



---



##### Table of Contents



Payments are due from the Buyer on a quarterly basis based on a fixed
percentage of sales by the Buyer of certain products, as defined in the asset
purchase agreement, subject to certain cash flow provisions.

As no proceeds were due to the Company on the date of closing, the Company
recorded a receivable in the amount of $945,000, which equated to the net book
value of the net assets sold. The Company has a secured interest in the net
assets sold. All payments of the sales price shall be applied against the
receivable, under the cost recovery method, with no recognition of gain until
the receivable is paid in full. The Company believes that the asset recorded is
not impaired. On November 29, 2001, the Company received a payment of $258,000
from Foamex Asia Co. Ltd., in compliance with the terms of the Agreement, which
was applied against the receivable. During the first six months of 2002, the
Company received two additional payments totaling $508,000 from Foamex Asia Co.
Ltd., which further reduced the principal balance to $179,000 at May 31, 2002.

In addition to the sale of assets, the Buyer and Seller entered into an
agreement (the Ongoing Service Agreement) where the Company agreed to provide
Foamex, for due consideration, certain labor, facilities, services, personnel
and other items with respect to Foamexs ongoing operation of the Divisions
business. The agreement commenced on May 19, 2000, and has been subsequently
amended to continue until December 31,2002. The Company anticipates receiving
approximately $550,000 from the agreement during fiscal year 2002, of which
$228,000 has been received through May 31, 2002.

The Company believes the transaction was in its best interests due to the
likelihood of increased sales over the next three years from lower
manufacturing costs that could be achieved by Foamex Asia Co. Ltd. Furthermore,
the sale of the Division to Foamex Asia Co. Ltd., allowed the Company to better
focus its efforts on the polyurethane glove business.

Effective September 18, 2000, the Company signed a Product Development,
Purchase and License Agreement (the Agreement) with the LYCRA® division of E.
I. DuPont de Nemours and Company (DuPont). Under the Agreement, DuPont
developed and began to supply a new proprietary polyurethane material (the
Material) used by Wilshire to manufacture and sell a disposable polyurethane
glove for industrial and non-industrial cleanroom applications.

The Agreement grants the Company an exclusive two-year license to purchase the
Material for the manufacture of its glove for sale into the cleanroom,
non-medical glove markets of North America, Asia (ex-Japan) and Japan. The
Agreement allows for up to three annual extensions of the exclusivity period
for the purchasing rights and for the selling rights into North America and
Asia (ex-Japan) upon the Company meeting certain performance criteria. In
order to maintain the exclusivity of the purchasing and selling rights beyond
the initial two-year period, the Company is required to meet annual revenue
thresholds of $6.9M, $16.3M and $26.5M for the 12-month periods ending June 30,
2003, 2004 and 2005, respectively. If the Company does not meet the stated
minimum revenue requirement, the Company can obtain annual non-exclusive rights
in these markets upon achievement of lesser annual thresholds of $3.45M, $8.15M
and $13.25M for the 12-month periods ending June 30, 2003, 2004 and 2005,
respectively. There can be no assurance that the Company will achieve these
revenue levels to satisfy the minimum revenue requirements to extend its rights
to use DuPonts Material, on an exclusive basis, for periods beyond the initial
two-year period.

Under the Agreement, the Company is required to purchase all its polyurethane
requirements from DuPont through the end of 2005, if the extensions are
exercised. In conjunction with the Agreement, the Company also entered into a
Trademark License Agreement with Dupont that allows the Company to market the
new polyurethane glove under the LYCRA® trademark.

As partial consideration, in fiscal year 2000, the Company granted a stock
option to DuPont to purchase up to 2,000,000 shares of its common stock at an
exercise price of $.50 a share. This option was cancelled effective December
17, 2001 at which time the Company granted DuPont a different option with an
exercise price of $1 million.

Upon exercise of the new option, DuPont would receive 10% of the proceeds (as
defined in the option) from (i) any voluntary or involuntary liquidation,
dissolution or winding up of the Company, (ii) the sale of substantially all of
the Companys assets by the Company, or (iii) the acquisition of the Company by
another entity, not affiliated with Trilon Dominion, by means of a merger or
other form of corporate reorganization in which the outstanding shares of the
Company are exchanged for securities or other consideration issued by or on
behalf of the acquiring corporation (collectively a Liquidation).

12



---



##### Table of Contents



In the event of Liquidation before December 31, 2004, the option becomes
exercisable on the day the Liquidation occurs. If there has been no
Liquidation before December 31, 2004, the option becomes exercisable on
December 30, 2004 and, if not exercised, expires at the close of business on
that day. The Company, may in its sole discretion, extend the December 31,
2004 date on at least 15 calendar days prior written notice to DuPont.

During fiscal year 2001, the Company finalized a commercial version of
DuraCLEAN® with Lycra® glove. The Company began a controlled production ramp as
it focused on process and yield improvement programs.

The process and yield improvement programs were completed in the last half of
fiscal year 2001, along with the completion of extensive tests for cleanliness,
durability, strength and comfort.

The Company initially targeted its glove sales to the Japanese semiconductor
and diskdrive industries and introduced the glove for evaluations at key
customer sites. In the second half of 2001, the Company introduced the new
glove into the US Medical Device market.

In October 2001, the Company finished a retrofit of its glove dipping line to
maximize production capacity for the new glove. As part of the retrofit
program, the Company made a strategic decision to design new glove formers in
order to improve the fit of the glove and thus improve product yields. Vendor
design changes pushed the delivery of the formers to the second quarter of
fiscal year 2002. Consequently, during the first six months of fiscal 2002, the
Company experienced lower production levels than planned as it continued to
produce gloves on the old glove formers.

The Company has adopted the provisions of SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
This statement requires that long-lived assets and certain identifiable
intangibles be 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
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 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.

The Company has evaluated the recoverability of the assets associated with its
existing glove plant by measuring the carrying cost of those assets against the
estimated undiscounted future cash flows associated with those assets. The
future cash flows calculated by the analysis appeared sufficient to recover the
value of the assets and thus no write down of the asset was recorded.

However, the Company acknowledges that the losses associated with the
development of a polyurethane glove extended beyond the initial plan due to the
extension of the time related to the strategic decision to find another source
of polymer (a new proprietary polyurethane material developed and supplied by
DuPont). The Company further acknowledges that the recoverability of its long
term assets depends upon the Company increasing its manufacturing capacity of
its glove dipping plant and also increasing sales of its glove beyond historic
sales recorded for the previous twelve months.

During the second quarter of fiscal 2002, the Company continued extensive
capital expansion programs to increase capacity levels and production
efficiencies of the glove plant. The Company entered into a contract with a
glove line manufacturer to construct two additional glove lines, with
installation of the first of the two lines to take place in the third fiscal
quarter of 2002. Due to the length of time needed to expand manufacturing
capacity, (9 to 12 months per glove line), the Company anticipates that full
capacity and manufacturing efficiencies associated with the new lines will not
be attained until mid 2003.

However, if the Company continues to experience production delays and does not
achieve higher production output and corresponding sales growth by the end of
fiscal 2002, the Company may have to substantially reduce its assumptions
regarding the future cash flow associated with certain long term assets (i.e.
the initial glove line) and recognize a write of down of assets at that time.
As a result, given the Companys unprofitable past financial performance and
the unpredictably of its future performance, there is uncertainty as to the
Companys ability to recover its investment in its long-term assets through the
generation of future net cash flows. Precedent to such evaluation under the
provisions of SFAS 121, however, the Company would have to reconsider its
ability to continue as a going concern.(See discussion on Going Concern in Note
2 of the Notes to the Consolidated Financial Statements).

13



---



##### Table of Contents



The Company received orders from key Japanese semiconductor and diskdrive
customers totaling $155,000 during the first quarter of fiscal 2002, and
shipped $79,000 of product against those orders. During the second quarter of
2002, the Company received additional orders from customers totaling $241,000
and shipped $148,000 of product against the orders, leaving a backlog of $
153,000 as of May 31, 2002. Even though the delay of the new formers has
reduced the Companys production levels, the Company believes it will be able
to meet all open purchase order commitments.

In addition to serving its Japanese customers, during the first six months of
fiscal 2002 the Company focused on expanding the introduction of the glove to
domestic markets, with particular focus in the personal protection and medical
device markets. The Company has sent samples to a number of customers within
these markets and received its first order in June 2002 for use by a customer
as personal protection.

The sale of the Companys Wilshire Contamination Control Division along with
the extensive development cycle of the new glove has continued to impact the
Companys ability to generate cash. The Company further anticipates that
additional funding of working capital totaling approximately $5 Million through
calendar year 2002, will be required as the Company focuses on ramping up
production capacity and sales of its new polyurethane glove.

As of November 30, 2001, the Company had used its current credit facilities.
Consequently, in order to raise funds to support its working capital needs for
fiscal 2002, the Company signed a Stock Option Agreement (Agreement) with
Trilon Dominion Partners, L.L.C. (Trilon).

Under the Trilon Agreement, on December 17, 2001 the Company issued to Trilon
(the Companys largest shareholder owning over 83% of the Companys outstanding
shares), 8,011,038 shares of the Companys unissued authorized stock in
cancellation of $1,291,000 of indebtedness and interest. The Agreement also
granted to Trilon the following three options: (i) an option, issued on
December 17, 2001, to purchase 16,445,900 shares of Common Stock at $0.14 per
share, exercisable at any time before 2003; (ii) an option, to be issued upon
approval of an increase in the Companys authorized stock, to purchase an
additional 1,600,000 shares of Common Stock, which may also be purchased at
$0.14 per share at any time before 2003; and (iii) an additional option to
purchase from the Company at $0.14 per share that number of shares of Common
Stock necessary to increase Trilons beneficial ownership of the Companys
Common Stock to 90% of the shares outstanding after exercise of all options
granted in the Agreement and after the deemed exercise of all other then
outstanding options and warrants. The options granted to Trilon under the
Agreement may be exercised for cash or, at Trilons election, by canceling
outstanding indebtedness of the Company to Trilon in an amount equal to the
exercise price. An Amendment to the Articles of Incorporation to increase the
Companys authorized number of shares of common stock by 50,000,000 to
100,000,000 was approved by the Companys shareholders at its Annual Meeting of
Shareholders on May 13, 2002 and became effective on
May 17, 2002.

The Agreement contains certain covenants regarding corporation events which
restrict the Company, without the prior written consent of Trilon, from (a)
issuing any shares of its Preferred Stock, (b) issuing any shares of its Common
Stock except pursuant to warrants or options outstanding on the date of the
Agreement, (c) paying any dividend payable in stock (of any class or classes)
or in any obligations or stock convertible into or exchangeable for shares of
Common Stock, upon its Common Stock or make any distribution (other than
ordinary cash dividends) to holders of its Common Stock, (d) granting to
holders of its Common Stock generally any rights or options, (e) effecting any
capital reorganization or reclassification of capital stock of the Company, (f)
consolidating with, or merging into, any other corporation or to transfer its
property as an entirety or substantially as an entirety, or (g) effecting the
liquidation, dissolution or winding up of the Company. These covenants remain
in effect until the option and additional option have been exercised or
expired. In connection with any consent of Trilon to the foregoing, Trilon may
require adjustments to the exercise price in order to protect its purchase
rights with respect to the option. Trilon may exercise the option at any time
before 2003. The fair value of the option granted was estimated to be $375,000,
which was recorded as a charge to earnings in the first quarter of 2002.

Trilon Dominion has advised the Company that it will continue to support the
Company as necessary through the end of calendar year 2002; however no
assurance of their support can be given. (See discussion on Going Concern in
Note 2 of the Notes to the Consolidated Financial Statements).

14



---



##### Table of Contents



Results of Operations

Net Sales

The Company markets its products directly to end-users through a limited number
of internal sales personnel as well as through international, national and
regional distributors. Revenue for all sales is recognized when title
transfers, generally when products are shipped.

Net sales increased by $29,000 (24%) to $148,000 in the second quarter of 2002
as compared to sales of $119,000 for the comparable period in 2001. Net sales
increased by $97,000 (75%) to $227,000 for the first six months of 2002 as
compared to $130,000 for the first six months of 2001. The increase in sales
for quarter and first six months is due to an increase in orders for the
Companys DuraCLEAN® with Lycra® glove from key Japanese semiconductor and
diskdrive customers.

Gross Margin

For the second quarter ended May 31, 2002, the Company recorded a negative
gross margin of $1,192,000 as compared to a negative gross margin of $519,000
in the same period of 2001. For the first six months of 2002, the Company
recorded a negative gross margin of $2,110,000 as compared to a negative gross
margin of $ 1,037,000 for the comparable period in 2001. The losses for the
quarter and first six months were primarily attributable to high-unabsorbed
operating costs of its glove manufacturing plant as the Company ramped up
production in 2002 of its a new polyurethane glove made with proprietary
material supplied by Dupont and began extensive capital expansion projects.

Marketing and Selling Expenses

Marketing and selling expenses increased by $122,000 (84%) to $267,000 for the
quarter ended May 31, 2002 from $145,000 for the comparable period of 2001. The
first six months of Marketing and selling expenses increased by $171,000 (59%)
to $461,000 from $290,000 for the first six months of 2001. The increase in
expenses for the quarter and first six months, as compared to 2001, was
primarily attributable to an increase in headcount as well as an increase in
marketing, tradeshow and travel expenses associated with the introduction of
the new glove to customers.

General and Administrative Expenses

General and administrative expenses include costs related to the Companys
administrative costs such as executive and office salaries, related payroll
expenses, investor relations, professional fees, supplies and utilities.

General and administrative expenses increased by $101,000 (22%) to $561,000 for
the second quarter of 2002 from $460,000 in the second quarter of 2001. For the
first six months of fiscal 2002, General and Administrative expenses increased
by $102,000 (11%) to $1,003,000 from $901,000 for the first six months of
fiscal 2001. The increase in expenses for the quarter and first six months was
primarily due to the accrual of a Company bonus plan for 2002.

Research and Development

Research and development expenses decreased by $2,000 (67.0%) to $1,000 for the
second quarter of fiscal 2002 from $3,000 for the comparable period in 2001.
Research and development expenses decreased by $22,000 (92%) to $2,000 as
compared to Research and development expenses of $24,000 for the first six
months of 2001. The decrease in expenses for the quarter and first six months
was primarily due to the commercialization of the Companys DuraCLEAN® with
Lycra® glove during the last half of fiscal year 2001.

Other Income/Expense

Other income of $67,000 decreased by $45,000 (40%) for the quarter ended May
31,2002 as compared to $112,000 of Other income for the comparable period in
2001. Other income of $125,000 for the first six months of 2002 decreased by
$74,000 (37%) as compared to Other income of $199,000 for the first six months
of 2001. The decrease in Other income for the quarter is primarily due to a
write off of assets totaling $15,000 and an increase in royalty expense to
Dupont totaling $21,000 related to sales of its new glove as stipulated by the
Product Development, Purchase and License Agreement with the LYCRA® division of
DuPont. The decrease in Other

15



---



##### Table of Contents



income for the first six months is due to the items noted above as well as the
payment of $44,000 for the purchase of a new automobile for Mr. Steve Scibelli,
a former President and CEO of the Company, as dictated by Mr. Scibellis
Employment Agreement.

Interest Expense, Net

Interest expense increased by $49,000 (11%) to $514,000 for the second quarter
of fiscal year 2002 as compared to $465,000 of Interest expense for the
comparable period in 2001. Interest expense of $1,350,000 for the first six
months of 2002 increased by $441,000 (49%) from Interest expense of $909,000
for the first six months of 2001. The increase in Interest expense for the
quarter is due to an increase in debt outstanding mitigated by a decrease in
prime rate. The increase in Interest expense for the first six months is
primarily due to a charge of $375,000 in the first quarter of 2002 related to
the fair value of a stock option agreement entered into with Trilon on December
17, 2001 as well as an increase in debt outstanding. Interest expense related
primarily to the line of credit due to Trilon Dominion Partners, LLC. (See
Note 6).

Income Taxes

For the quarters ended May 31, 2002, and May 31, 2001, the Company sustained
losses for both financial reporting and income tax purposes. A tax provision of
$1,000 related to state income taxes was recorded in the condensed financial
statements for 2001 and 2002.

Going Concern

The Companys consolidated financial statements included elsewhere herein have
been prepared assuming that the Company will continue as a going concern. The
Company has a working capital deficiency of $28,327,000, shareholders deficit
of $23,486,000 as of May 31, 2002, has suffered substantial recurring losses
from operations and is economically dependent on its majority shareholder to
finance operations. These matters, among others, raise substantial doubt about
the Companys ability to continue as a going concern. Continuation of the
Company is dependent on the Companys ability to negotiate additional
arrangements with its majority shareholder, raise additional capital and to
achieve profitability. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty. Although
management has been successful in obtaining working capital from its majority
shareholder to fund operations to date, there can be no assurance that the
Company will be able to raise additional capital in the future.

The Company anticipates continuing substantial negative cash flow from
operating and investing activities through the next twelve months. The Company
has projected its cash flow needs to be approximately $5 million for the
remainder of calendar 2002. Trilon Dominion, the Companys largest shareholder
with over 83% of the shares outstanding, has acknowledged the Companys cash
flow needs and has indicated its commitment to provide financial support to the
Company through the end of the calendar year 2002 to the extent of such
budgeted cash flow requirements. However given that no written commitment
exists, the Company is exposed to the substantial risk that it will not receive
the funds from Trilon Dominion to fund present and future working capital
needs. In the event that such funds are not received it is unlikely that the
Company will be successful in raising capital from other sources. If adequate
funds are not available to finance current operations, the Company will be
unable to execute its business development efforts and may be unable to
continue as a going concern.

The Companys continuation as a going concern is dependent upon its ability to
(a) generate sufficient cash flow to fund working capital and investment
activities, (b) to obtain additional outside financing, and (c) ultimately
sustain profitability. Managements recent actions in regard to these matters
are as follows:

1) During fiscal 2000, the Company sold selected assets and liabilities
totaling $945,000 related to the Companys Wilshire Contamination Control to
Foamex Asia Co. LTD. (the Buyer), an affiliate of Foamex International (FMX:
NASDAQ) for a potential sales price up to $2,500,000. (See Note 5). Payments
of the sale price are due from the Buyer on a quarterly basis based on a fixed
percentage of sales by the Buyer of certain products. Foamex International is
an international developer, manufacturer and supplier of high-quality foam,
including key materials utilized in contamination control environments. Foamex
Asia Co. Ltd., located in Singapore and in Thailand, is currently a major
supplier of specialty foam products to the Asian market.

As part of the sale agreement, Foamex Asia Co. Ltd. agreed to invest $1,000,000
of capital in equipment and machinery which, the Company believes, will lead to
lower manufacturing costs of the Buyer over the term of the

16



---



##### Table of Contents



agreement. The Company further believes the transaction was in its best
interests as the likelihood of increased sales due to the lower manufacturing
costs may provide not only a return of the initial investment of $945,000, but
additional payments from the Buyer up to a total of $2,500,000.

In accordance with the terms of the sale agreement, a payment in the amount of
$258,000 was received from Foamex Asia Co. Ltd., on November 29, 2001 and
applied against the receivable. During the first six months of 2002, the
Company received two additional payments totaling approximately $508,000 from
Foamex Asia Co. Ltd., which further reduced the principal balance to $179,000
at May 31, 2002.

2) In addition to the sale of assets to Foamex Asia Co. Ltd., the Company
entered into an agreement with Foamex to provide, for due consideration,
certain labor, facilities, services, personnel and other items with respect to
Foamexs ongoing operation of the Divisions business. The agreement, which
commenced on May 19, 2000, has been amended to extend through December 31, 2002
and will provide additional funds to offset operating expenses of approximately
$550,000 for fiscal year 2002.

3) In September 2000, the Company signed a Product Development, Purchase and
License Agreement (the Agreement) with the LYCRA® division of E. I. DuPont de
Nemours and Company (DuPont). Under the Agreement, DuPont developed and began
to supply a new proprietary polyurethane material, which is used by Wilshire to
manufacture and sell a disposable polyurethane glove for industrial and
non-industrial cleanroom applications.

The Company began production of the new gloves in the second quarter of 2001
and believes that the new, improved DuraCLEAN® gloves using LYCRA® eglantine
fiber will offer the market a glove with improved cleanliness, durability and
comfort. The glove will also have excellent ESD properties. The glove has the
distinct advantage of being able to be used as a one time disposable product
or, because of its durability, can be relaundered and used multiple times. The
relaunderability benefit is a significant factor as it allows for a reduction
in the cost of the glove and a large reduction in the waste stream of the
customer, which is a growing concern in the market.

Although the new gloves will be premium priced, management believes they will
be cost effective for users because the enhanced cleanliness will reduce
contamination and increase yield. Also, because of excellent abrasion
resistance they can be worn longer and changed less frequently than less
expensive gloves.

Because of the inherent cleanliness and the absence of chemical accelerators,
the new DuraCLEAN® with LYCRA® glove has expanded applications outside
traditional cleanroom markets. Some of the fastest growing market-segments for
Wilshire Technologies Inc. are medical device manufacturing,
telecommunications, biotechnology and highly sensitive laboratories. The
ability to re-launder and re-use the DuraCLEAN® glove has appeal in waste
sensitive markets in Japan.

The Glove will be marketed under the trademark DuraCLEAN® with LYCRA®. DuPont
will be active with the Company in the marketing of the product. The Company
will distribute the product through a variety of channels both in the US and
overseas.

The Company believes that with the potential of a return of $2,500,000 on the
sale of its contamination control division to Foamex Asia Co., Ltd., with the
cost-sharing agreements in place to lower operating costs, with the sales of
its new glove, and with continued funding from Trilon Dominion, the Company
will position itself to begin generating sufficient cash flow to fund working
capital and investment activities by the end of 2003. If the Company does
attain its sales goals, it believes that it will be able to raise additional
capital, as needed in the future. There can be no assurances, however, that the
Company will be successful in any of the above mentioned actions or plans on a
timely basis, or at all.

Liquidity and Capital Resources

Management assesses the Companys liquidity by its ability to generate cash to
fund its operations. Significant factors in the management of liquidity are:
funds generated by operations; levels of accounts receivable, inventories,
accounts payable and capital expenditures; adequate lines of credit; and
financial flexibility to attract long-term capital on satisfactory terms.

During 2001 and for the first six months of 2002, the Company has not generated
sufficient cash from operations to fund its working capital and equipment
purchase requirements. Net cash used in operating activities was

17



---



##### Table of Contents



$ 3,011,000 for the first six months of 2002 versus net cash used in operating
activities of $1,723,000 for the corresponding period in 2001. The increase in
the cash used in operating activities was primarily due to the expansion of the
Companys glove factory during the first six months of fiscal 2002.

Net cash used in investing activities was $1,851,000 for the first six months
of 2002, versus net cash used in investing activities of $194,000 for the first
six months of 2001. The higher investing activities for fiscal 2002 were
related to capital expansion projects to the Companys glove factory, offset by
proceeds received in connection with the sale of assets to Foamex.

Net cash provided by financing activities was $5,183,000 for the first six
months of fiscal 2002 versus $2,200,000, for 2001, respectively. The debt
financing in both years was obtained from Trilon Dominion Partners, LLC.

On March 31, 1998, the Company and Trilon Dominion completed an Amended and
Restated Credit Agreement and Revolving Line of Credit (the Amended
Agreement) secured by the Companys assets.

The Agreement has been extended through a number of amendments to January 31,
2003. Through fiscal 1999, the Company issued $11,935,000 of demand notes
bearing interest at rates of 11.5% and prime plus 3%.

In fiscal 2000, the Company issued demand notes totaling $2,813,000 under the
line of credit agreement. The notes issued in fiscal 2000 bear interest at a
rate of prime plus 3% (13.0% at November 30, 2000).

In fiscal 2001, the Company issued demand notes totaling $3,956,000 at a rate
of prime plus 3%. All of the notes are due on demand.

On December 17, 2001, the Company signed a Stock Option Agreement with Trilon.
Under the Trilon agreement, the Company issued to Trilon 8,011,038 shares of
the Companys unissued authorized stock in cancellation of three demand notes
plus respective interest which totaled $1,291,000. The fair value of the option
granted was estimated to be $375,000, which was recorded as a charge to
earnings in the first quarter of 2002.

The Company issued two additional demand notes during the first quarter of
fiscal 2002. On January 9, 2002, and February 13, 2002, demand notes totaling
$2,155,000 were issued at a rate of prime plus 3% (4.75 % at May 31, 2002).
During the second quarter of fiscal 2002, the Company issued three additional
demand notes. On March 11, 2002, April 22, 2002 and May 9, 2002, demand notes
totaling $2,528,000 were issued at a rate of prime plus 3% (4.75% at May
31, 2002).

As of June 1, 2002, the Company has used its current credit facilities and
anticipates continuing negative cash flow from operating and investing
activities through calendar 2002. The Company has projected its cash flow needs
to be approximately $5 Million for the remainder of calendar 2002. Trilon
Dominion, the Companys largest shareholder with over 83% of the shares
outstanding, has acknowledged the Companys cash flow needs and has indicated
its commitment to provide financial support to the Company through
calendar year
2002 to the extent of such budgeted cash flow requirements. However, given that
no written commitment exists, the Company is exposed to the substantial risk
that it will not receive the funds from Trilon Dominion to fund present and
future working capital needs. If such commitment is not met, it is likely that
the Company will not have the necessary resources to fund its operations for
the next 12 months.

Risk Factors

The Companys business depends on the free flow of products and services
through the channels of commerce. Recently, in response to terrorists
activities and threats aimed at the United States, transportation, mail,
financial and other services have been slowed or stopped altogether. Further
delays or stoppages in transportation, mail, financial or other services could
have a material adverse effect on the Companys business, results of operations
and financial condition. Furthermore, the Company may experience an increase in
operating costs, such as costs for transportation, insurance and security as a
result of the activities and potential activities. The Company may also
experience delays in receiving payments from payers that have been affected by
the terrorist activities and potential activities. The U.S. economy, in
general, is being adversely affected by the terrorist activities and potential
activities and any economic downturn could adversely impact the Companys
results of operations, impair its ability to raise capital or otherwise
adversely affect its ability to grow the business.

18



---



##### Table of Contents



Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 141 (SFAS 141), Business Combinations,
which eliminates the pooling method of accounting for intangible assets and
goodwill acquired in a business combination initiated after June 30, 2001. In
addition, SFAS 141 addresses the accounting for intangible assets and goodwill
acquired in a business combination. This portion of SFAS 141 is effective for
business combinations completed after June 30, 2001. The Company does not
expect SFAS 141 will have material impact on its financial position or results
of operations.

In July 2001, The FASB issued Statement of Financial Accounting Standards No.
142 (SFAS 142), Goodwill and Intangible Assets, which revises the accounting
for purchased goodwill and intangible assets. Under SFAS 142, goodwill and
intangible assets with indefinite lives will no longer be amortized and will be
tested for impairment at least annually. SFAS 142 is effective for fiscal
years beginning after December 15, 2001, with earlier adoption permitted. The
Company does not expect SFAS 142 will have a material impact on the Companys
financial position or results of operations.

In August 2001, FASB issued SFAS No. 144, Impairment or Disposal of Long-Lived
Assets, which addresses accounting and financial reporting for the impairment
or disposal of long-lived assets. This standard is effective for the Companys
financial statements beginning December 1, 2002. The Company is currently
evaluating the impact, if any, the implementation of this Statement will have
on the Companys financial position or results of operations.




PART II  OTHER INFORMATION




Item 1. Legal Proceedings:

For information regarding legal proceedings, refer to the information
contained in the Companys annual report on Form 10-KSB for the fiscal
year ended November 30, 2001 under the heading, Legal Proceedings and
Note 7 to the financial statements therein.




Item 2. Changes in Securities:

On May 16, 1995 a Settlement Agreement was approved by the United States
District Court for the Southern District of California between the
Company and members of the Settlement Class in an Amended Consolidated
Class Action Complaint against the Company. Under the Settlement
Agreement, the Company issued warrants for 2,750,000 shares of common
stock to the Settlement Class at an exercise price of $2.33 per share
subject to adjustment to protect against dilution. The Company valued
the warrants at $0.10 per underlying common share and recorded a charge
to earnings of $275,000 in fiscal 1994. The Settlement Warrants are
exercisable between November 28, 1999 and November 28, 2002, but only
after the Companys common stock underlying the Settlement Warrants has
been registered under the Securities Act of 1933. The Company is obliged
to register the underlying shares of common stock at the later of (i)
the second anniversary of the date of issuance of the warrants or (ii)
as soon as commercially reasonable after the date when the average
closing price of the Companys common stock over fifteen consecutive
trading days is more than the revised warrant exercise price as
discussed below.

Effective November 30, 2000 the Company performed a cumulative
calculation of the impact of the equity transactions since January 1996
and determined that the revised exercise price of each settlement
warrant as of that date was $1.39 and the total number of shares
issuable under the settlement warrants equaled 4,613,658 at the same
date.

On December 17, 2001, the Company signed Stock Option Agreements with
Trilon Dominion Partners, L.L.C. (Trilon) and E.I. DuPont de Nemours
(DuPont), respectively.

Under the Trilon agreement, the Company issued to Trilon (the Companys
largest shareholder owning over 83% of the Companys outstanding shares), 8,011,038 shares of the Companys unissued authorized stock in
cancellation of $1,291,000 of indebtedness. The option agreement further
reserved an initial 16,445,900 shares of stock (subject to further
adjustments) at a price of $.14 per share, for further sale to Trilon.
Trilon may exercise the option at any time before 2003.

19



---



##### Table of Contents



In concurrence with the Trilon Stock Option Agreement, the Company also
entered into an agreement with DuPont whereby DuPont surrendered its
option to purchase 2 million shares of the Companys common stock at
$.50 per share in return for an option with an exercise price of $1
million. Upon exercise of the option, DuPont would receive 10% of the
net proceeds if the Company were liquidated through a sale of assets or
common stock to another company, which is not an affiliate of Trilon
Dominion. Unless extended, the option expires on December 31, 2004.

The execution of the Trilon Agreement and the DuPont Agreement caused
certain anti-dilution adjustments under Warrant Agreement. Effective
December 31, 2001, the Company performed a cumulative calculation of the
impact of the equity transactions and determined that the revised
exercise price of each settlement warrant was $.69 and the total number
of shares issuable under the settlement warrants equaled 9,343,961 at
the same date.




Item 3. Defaults Upon Senior Securities:

None.




Item 4. Submission of Matters to a Vote of Security Holders:

Registrant has solicited proxies pursuant to regulation 14A of the
Securities Exchange Act (Proxy Statement dated April 4, 2002) for its
Annual Meeting of Shareholders on May 13, 2002. There was no
opposition to managements nominees for the directors listed in the
Proxy Statement. All such nominees were elected by the affirmative
vote of 20,637,363 shares, which were the number of shares
represented at the meeting. The number of shares not voted were
327,029. Additionally, an amendment to Articles of Incorporation to
increase the number of authorized shares of common stock from
50,000,000 to 100,000,000 was adopted by the affirmative vote of
17,936,519 shares, with 110,552 shares against the motion and
2,917,352 shares not voted.




Item 5. Other Information:

None.




Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits:

|       |  |                                                                                             
|------ |  | --------------------------------------------------------------------------------------------
|10.217 |  | Demand note dated March 11, 2002 between the Registrant and
Trilon Dominion Partners, L.L.C.
|      
|10.218 |  | Demand note dated April 22, 2002 between the Registrant and
Trilon Dominion Partners, L.L.C.
|      
|10.219 |  | Demand note dated May 9, 2001 between the Registrant and Trilon
Dominion Partners, L.L.C.   
|      
|10.220 |  | Certificate of Amendment to Registrars Articles of
Incorporation.                          

(b)  Reports on Form 8-K:

None.

20



---



##### Table of Contents






SIGNATURES

In accordance with requirements of the Securities Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

|                     |                                                                                                          |                      
|-------------------- | -------------------------------------------------------------------------------------------------------- | ---------------------
|                     | WILSHIRE TECHNOLOGIES, INC                                                                              
|                    
|Dated: June 28, 2002 | By:                                                                                                      | /S/ Kathleen E. Terry
|                     |                                                                                                         
|                     | Kathleen E. Terry
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

21