-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BL3Wi8xMnhtLYFREggVrItUw0XJHZnHRDPIzgyHmkPbAJrGklzxl2xT+0t+Wi/ns FhBMKBPeSYdGV+orKVIDEw== 0000350737-96-000010.txt : 19960814 0000350737-96-000010.hdr.sgml : 19960814 ACCESSION NUMBER: 0000350737-96-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OCEAN BIO CHEM INC CENTRAL INDEX KEY: 0000350737 STANDARD INDUSTRIAL CLASSIFICATION: SPECIALTY CLEANING, POLISHING AND SANITATION PREPARATIONS [2842] IRS NUMBER: 591564329 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11102 FILM NUMBER: 96609455 BUSINESS ADDRESS: STREET 1: 4041 SW 47TH AVE CITY: FORT LAUDERDALE STATE: FL ZIP: 33314 BUSINESS PHONE: 3055876280 MAIL ADDRESS: STREET 1: 4041 SW 47TH AVE CITY: FT LAUDERDALE STATE: FL ZIP: 33314 FORMER COMPANY: FORMER CONFORMED NAME: STAR BRITE CORP DATE OF NAME CHANGE: 19841204 10-Q 1 10Q696 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 Commission File No. 2-70197 OCEAN BIO-CHEM, INC. (Exact name of registrant as specified in its charter) Florida 59-1564329 (State of other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) Registrant's telephone number, including area code - 954-587-6280 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. $.01 Par Value Common Stock, 10,000,000 shares authorized. 3,517,169 issued and outstanding at June 30, 1996. PART I - Financial Information Item l. Financial Statement OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS JUNE 30, DEC. 31, 1996 1995 Current Assets: Cash $ 157,031 $ 997,309 Trade Accounts Receivable Net of Allowances for Doubtful Accounts of approximately $ 42,000 and $ 48,000 at June 30, 1995 and December 31, 1994, Respectively 2,140,040 2,006,418 Due from officers 157,880 154,420 Inventories 2,702,915 2,038,750 Prepaid Expenses 230,185 111,455 Total Current Assets 5,388,050 5,308,352 Office Equipment and Furnishings, Net 2,166,214 321,475 Other Assets Trademarks, Trade Names and Patents, Net 455,250 466,746 Deposits and Other Assets 11,411 18,818 Due From Affiliated Companies, Net 649,000 632,379 Total Other Assets 1,115,661 1,117,943 Total Assets $ 8,669,926 $ 6,747,770 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable - Trade $ 777,756 $ 485,105 Notes Payable - Bank 2,230,000 1,990,000 Current Portion of Long-Term Debt 220,000 7,592 Accrued Expenses Payable 129,030 89,068 Total Current Liabilities 3,356,786 2,571,765 Long-term Debt, Less Current Portion 770,000 - Shareholders' Equity: Common Stock 36,928 35,130 Additional Paid-in Capital 3,161,429 2,650,754 Retained Earnings 1,430,863 1,568,646 Foreign Currency Translation Adjustment ( 86,080) ( 78,525) Total Shareholders' Equity 4,543,140 4,176,005 Total Liabilities & Shareholders' Equity $ 8,669,926 $ 6,747,770 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) FOR THE THREE MONTHS FOR THE SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, 1996 1995 1996 1995 Gross Sales $3,815,253 $2,908,971 $6,302,864 $5,383,382 Allowances 99,177 131,625 232,146 282,776 Net Sales 3,716,076 2,777,346 6,070,718 5,100,606 Cost of Goods Sold 2,485,667 1,542,353 3,979,772 2,811,628 Gross Profit 1,230,409 1,234,993 2,090,946 2,288,978 Cost and Expenses: Advertising and Promotion 176,282 229,858 257,552 335,063 Selling and Administrative 537,434 472,153 1,143,690 1,018,943 Interest Expense 62,644 15,154 104,014 41,083 Total Cost and Expenses 776,360 717,165 1,505,256 1,395,089 Income From Operations 454,049 517,828 585,690 893,889 Interest Income 655 6,932 3,831 10,827 Income Before Income Taxes 454,704 524,760 589,521 904,716 Provision for Income Taxes 182,000 201,000 222,000 341,000 Net Income $ 272,704 $ 323,760 $ 367,521 $ 563,716 Net Per Share $ .07 $ .09 $ .10 $ .16 Earnings per share were calculated based on the weighted average common stock and common stock equivalent outstanding of 3,802,911 shares for the six months and three months ending June 30, 1996 and 3,513,495 shares for the six months and three months ended June 30, 1995. Common stock equivalents consist of options to purchase common stock. All earnings per share have been restated to reflect a 5% stock dividend distributed to shareholders of record as of May 1, 1996. OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THREE MONTHS ENDED JUNE 30 (Unaudited) 1996 1995 Cash flow used by operating activities: Net Income $ 367,521 $ 563,716 Adjustments to Reconcile Net Income to Net Cash Provided by Operations: Depreciation and Amortization 87,628 44,567 Change in Assets and Liabilities: (Increase) decrease in Accounts Receivable ( 133,622) 558,181 Increase in Inventory ( 664,165) ( 467,740) Increase in Prepaid Expenses ( 114,784) ( 145,426) Increase in Accounts Payable and Accrued Expenses: 338,082 501,271 Net Cash (Used) Provided by Operating Activities: ( 119,340) 1,054,569 Cash Flows From Financing Activities: Net Borrowings Under Line of Credit 240,000 ( 235,000) Advances (to) From Affiliates ( 16,621) ( 161,997) Borrowings (Payment) on Debts, Net 976,939 84,228 Sale of Stock 7,169 45,817 Net Cash Provided (Used) by Financing Activities: 1,207,487 ( 435,408) Cash Flows From Investing Activities: Purchase Property, Plant, Equipment ( 1,920,870) ( 39,931) Net Cash Used by Financing Activities: ( 1,920,870) ( 39,931) Decrease in Cash Prior to Effect of Exchange Rate on Cash ( 832,723) ( 579,230) Effect of Exchange Rate on Cash ( 7,555) ( 7,267) Net Decrease in Cash ( 840,278) ( 571,963) Cash at Beginning of Period 997,309 571,411 Cash at June 30, $ 157,031 $ 1,143,374 Supplemental Information Cash Used for Interest During Period $ 80,350 $ 41,300 Cash Used for Income Taxes During Period $ 194,000 $ 210,331 The company had no cash equivalents at June 30, 1996 and 1995. OCEAN BIO-CHEM, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS l. The information contained in this Report is unaudited, but reflects all adjustments which are, in the opinion of the management, necessary for a fair statement of results of the interim periods, consisting only of normal recurring accruals. The results for such interim periods are not necessarily indicative of results to be expected for the full year. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Liquidity and Capital Resources The primary sources of the Registrant's liquidity are its operations and a line of credit from a commercial bank to a limit of $2 million. On February 27, 1996 the Registrant obtained an increase to the line of credit for an additional $900,000 for temporary financing of the Registrant's asset purchase from Kinpak, Inc. in Alabama. The total borrowings under such line can aggregate up to $2,900,000 and is subject to renewal in April 1997. The Registrant is required to maintain minimum working capital of $1,500,000, debt to tangible net worth of 2 to 1 and debt service coverage of 1.5 times. As of year end Registrant was in compliance with all terms. The Registrant is involved in making sales in the Canadian market and must deal with the currency fluctuations of the Canadian currency. The Registrant does not engage in currency hedging and deals with such currency risk as a pricing issue. During the past few years Registrant has introduced various new products to the marketplace. This has required the Registrant to carry greater amounts of overall inventory and has resulted in lower inventory turnover rates. The effects of such inventory turnover have not been material to the overall operations of Registrant. Registrant believes that all required capital to maintain such increases can continue to be provided from operations and current lending arrangements. Results of Operations For The Three Month Period April 1-June 30: Gross Sales increased approximately $ 906,000 or 31% when comparing the quarter ended June 30, 1996 with the comparable period of the preceding year. Management attributes the increase to the introduction of new products and the filling operation of the Alabama Plant. Cost of Goods Sold increased approximately 11% as a percentage of gross sales when comparing the quarter ended June 30, 1996 with the quarter ended June 30, 1995. This increase was mainly attributable to the higher cost of sales of the filling operation in Alabama and a change in the product sales mix. Advertising and Promotion expenses decreased approximately $ 54,000 or 23% when comparing the three months ended June 30, 1996 to the three months ended June 30, 1995. This was not due to any one factor. Selling and Administrative expenses increased approximately $ 65,000 or 14% when comparing the quarter ended June 30, 1996 to the comparable period in 1995. This included increases in sales representatives expense and personnel cost. Interest Expense increased approximately $ 47,000 comparing the quarter ended June 30, 1996 to the comparable period in 1995. This was primarily due to increased borrowings outstanding of the registrant's line of credit during this period and the interest on the borrowings assumed in the purchase of the Alabama Plant. Results of Operations For the Six Month Period January 1 - June 30 Gross Sales increased 17% or approximately $ 919,000 when comparing the six month periods of 1996 and 1995. Management attributes the increase to the introduction of new products and the filling operation of the Alabama Plant. Cost of Goods Sold increased approximately 11% as a percentage of gross sales when comparing the six months ended June 30, 1996 to the six months ended June 30, 1995. This increase was mainly attributable to the cost of sales of the filling operation in Alabama and a change in the product sales mix. Advertising and promotion expenses decreased approximately 23% or $ 78,000 when comparing the six months ended June 30, 1996 to the six months ended June 30, 1995. This was primarily due to seasonal variations. Selling and administrative expenses increased for the six months ended June 30, 1996 by approximately $ 125,000 or 12% when compared to the six months ended June 30, 1995. This was caused primarily by increases in sales representative expenses, personnel cost and administrative overhead of the Alabama facility. Interest expense increased in 1996 for the six month period by approximately $ 63,000 when compared to the six month period of 1995 reflecting increased levels of borrowings outstanding from the Company's commercial lender during this period and the cost of debt associated with the Alabama Plant purchase. PART II: OTHER INFORMATION Item l - Legal Proceedings: See the Registrant's 10K for the year ended December 31, 1995 Item 2 - Changes in Securities: Not applicable Item 3 - Defaults Upon Senior Securities: Not applicable Item 4 - Submission of Matters to Vote of Security Holders: On May 14, 1996, at the Registrant's annual meeting, shareholders elected two directors; Peter Dornau and Jeffrey Tieger, 2,226,079 voted for the directors, 0 shares voted against. Shareholders also approved Infante, Lago & Co., Certified Public Accountants, by a vote of 2,226,079 for and 0 shares against, as the Registrant's auditors for 1996. Item 5 - Other Matters: Not applicable Item 6 - Exhibits: Not applicable (A) Exhibits - Not applicable (B) Reports on Form 8-K - Not Applicable SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OCEAN BIO-CHEM, INC. Date: August 13,1996 /s/ Peter Dornau Peter G. Dornau Chairman of the Board and Chief Executive Officer /s/ Peter Dornau Peter G. Dornau Chief Financial Officer EX-27 2
5 This schedule contains summary financial information extracted from the June 30, 1996 10-Q of Ocean Bio-Chem,Inc. and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JUN-30-1996 157,031 0 2,140,040 42,000 2,702,915 5,388,050 2,547,974 381,760 8,669,926 3,356,786 0 36,928 0 0 4,506,212 8,669,926 6,302,864 6,306,695 3,979,772 1,401,242 0 0 104,014 589,521 222,000 585,690 0 0 0 367,521 .10 .10
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