-----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, HB6e91y7sBhWC3853KVw/0dbhc24/EdAIZPAClFLoIznr6gzlzTv87dVKY8zm7KN 3F6wUyY7W8nbLOLWsSVQOQ== 0000350737-96-000011.txt : 19961113 0000350737-96-000011.hdr.sgml : 19961113 ACCESSION NUMBER: 0000350737-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 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: 96659116 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 10q996 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 September 30, 1996 Commission File No. 0-11102 OCEAN BIO-CHEM, INC. (Exact name of registrant as specified in its charter) Florida 59-1564329 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4041 S. W. 47 Avenue, Ft. Lauderdale, FL 33314 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code - 305-587-6280 Indicate by check mark whether the registrant (l) 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, 3,692,817 issued and outstanding at September 30, 1996. PART I - FINANCIAL INFORMATION Item l. Financial Statements OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS SEPT. 30, DEC.31, 1996 1995 Current Assets: Cash $ 845,180 $ 997,309 Trade Accounts Receivable Net Of Allowances For Doubtful Accounts Of $ 43,000 And $ 48,000 At September 30, 1996 And December 31, 1995 Respectively 2,451,979 2,006,418 Due From Officers 151,600 154,420 Inventories 2,657,244 2,038,750 Prepaid Expenses 192,977 111,455 Total Current Assets 6,298,980 5,308,352 Property, Plant and Equipment, Net 2,156,558 321,475 Other Assets: Trademarks, Trade Names And Patents, Net 449,602 466,746 Due From Affiliated Companies, Net 604,264 632,379 Deposits And Other Assets 42,987 18,818 Total Other Assets 1,096,853 1,117,943 Total Assets $ 9,552,301 $6,747,770 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable Trade $ 1,144,678 $ 485,105 Note Payable - Bank 2,890,000 1,990,000 Current Portion Of Long-Term Debt 240,000 7,592 Accrued Expenses Payable 85,473 89,068 Total Current Liabilities 4,360,151 2,571,765 Long-term Debt, Less Current Portion 530,000 - Shareholders' Equity: Common Stock 36,928 35,130 Additional Paid-In Capital 3,161,429 2,650,754 Retained Earnings 1,539,645 1,568,646 Foreign Currency Translation Adjustment ( 75,852) ( 78,525) Total Shareholders' Equity 4,662,150 4,176,005 Total Liabilities & Shareholders' Equity $ 9,552,301 $6,747,770 2 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, 1996 1995 1996 1995 Gross Sales $ 2,972,020 $ 1,958,245 $ 9,274,884 $ 7,341,627 Allowances 123,267 132,584 355,413 415,360 Net Sales 2,848,753 1,825,661 8,919,471 6,926,267 Cost Of Goods Sold 1,916,677 1,183,933 5,896,449 3,995,561 Gross Profit 932,076 641,728 3,023,022 2,930,706 Cost And Expenses Adv. And Promotion 138,035 206,912 395,587 541,975 Selling And Admin. 555,548 506,124 1,699,238 1,525,067 Interest Expense 67,863 21,143 171,877 62,226 Total Expenses 761,446 734,179 2,266,702 2,129,268 Income (Loss) From Operations 170,630 ( 92,451) 756,320 801,438 Interest Income 2,152 7,624 5,983 18,451 Income (Loss) before provision for income taxes 172,782 ( 84,827) 762,303 819,889 Provision (Benefit) for Income taxes 64,000 ( 33,000) 286,000 308,000 Net Income (Loss) 108,782 ( 51,827) $ 476,303 $ 511,889 Earnings Per Share: Net Income (Loss) Per Share $ .03 $ ( .01) $ .13 $ .14 Earnings per share for the nine months ended September 30, 1996 and the three months ended September 30, 1996 were calculated on the basis of 3,791,283 weighted average common stock and common stock equivalent outstanding. For the nine and three months ended September 30, 1995, earnings per share were calculated using 3,533,195 weighted average common stock and common stock equivalent outstanding. Common stock equivalents consist of options to purchase common stock. All earnings per share have been adjusted to reflect a 5% stock dividend distributed to shareholders of record as of May 1, 1996. 3 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 CASH FLOWS PROVIDED BY 1996 1995 OPERATING ACTIVITIES: Net Income $ 476,303 $ 511,889 Adjustment to Reconcile Net Income To Net Cash Provided by Operations: Depreciation and Amortization 139,821 70,870 Change in Assets and Liabilities: (Increase) Decrease in Accounts Receivable (442,741) 471,712 Increase in Inventory (618,494) ( 278,553) Increase in Prepaid Expenses (105,601) ( 149,748) (Increase) Decrease in Accounts Payable And Accrued Expenses 655,978 ( 120,742) Net Cash Provided by Operating Activities 105,266 505,428 Cash Flows From Financing Activities: Net Borrowings Under Line of Credit 900,000 ( 371,667) Advances to (from) Affiliates 28,115 ( 136,607) Borrowings (Repaymen)t of Debt 762,408 ( 21,938) Sale of Stock 7,169 181,818 Net Cash Provided (Used) by Financing Activities 1,697,692 ( 348,394) Cash Flows From Investing Activities Purchase Property, Plant, Equipment (1,957,760) ( 131,830) Net Cash Used by Investing Activities (1,957,760) ( 131,830) Increase (Decrease) in Cash Prior to Effect of Exchange Rate on Cash (154,802) 25,204 Effect of Exchange Rate on Cash 2,673 ( 586) Net Increase (Decrease) in Cash (152,129) 24,618 Cash at Beginning of Period 997,309 571,411 Cash at September 30, $ 845,180 $ 596,029 Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year for: Interest (Net of Amount capitalized) $ 132,000 $ 62,226 Income taxes $ 271,000 $ 314,751 Disclosure of accounting policy: For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchases with a maturity of three months or less to be cash equivalents. 4 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. 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 OPERATIONS 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. In February 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 1.7 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 July 1-September 30 Gross sales increased approximately $ 1,014,000 or 52% comparing the quarter ended September 30, 1996 with the comparable period of the preceding year. Management attributes this primarily to the packaging and sales of antifreeze products during the quarter. The Company packages antifreeze products for a third party on a contract basis. The Company's orders and backlog for the packaging of antifreeze expire in the fourth quarter of 1996. Cost of Goods Sold increased at approximately 4% as a percentage of gross sales for the quarter ended September 30, 1996 when compared to the 1995 quarter. This was primarily due to the increased proportion of lower margin products sold which was reflected in the product sales mix during this quarter. Advertising and promotion expenses decreased approximately $ 69,000 or 33 % comparing the three month period ended September 30, 1996 to 1995. This is primarily due to cost reductions implemented by management. Selling and administrative expenses increased approximately $ 49,000 or 10 % comparing the quarter ended September 30, 1996 to the comparable period in 1995. This was not attributed to any particular factor. Interest expense increased approximately $47,000 comparing the quarter ended September 30,1996 to the comparable period in 1995. This is primarily due to higher interest rates and debt levels outstanding. 5 Results Of Operations For The Nine Month Period January 1-September 30 Gross sales increased approximately $ 1,933,000 or 26 % comparing the nine month periods in 1996 and 1995. This is primarily due to the sales and packaging of antifreeze. Cost of goods sold increased approximately 9% as a percentage of gross sales when comparing the nine months ended September 30, 1996 and 1995. This reflects the effects of the antifreeze sales during this period. Advertising and promotion expenses decreased approximately $ 146,000 or 27% when comparing the nine months ended September 30, 1996 and 1995. This is the effects of cost reductions implemented by management. Selling and administrative expenses increased during 1996 by approximately $ 174,000 or 11% when compared to 1995. This was primarily due to the expenses associated with the Alabama operations. Interest expense increased in 1996 for the nine month period by approximately $ 110,000 reflecting increased borrowings outstanding during the period and the interest on the borrowings assumed in the purchase of the Alabama Plant. 6 PART II - OTHER INFORMATION Item 1 -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: Not Applicable Item 5 -Other Information: Not Applicable Item 6 -Exhibits and Reports on Form 8-K (A) Exhibits: Not Applicable (B) Reports on Form 8-K: Not Applicable SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned thereunto duly authorized. OCEAN BIO-CHEM, INC. DATE: November 12, 1996 /s/ Peter G. Dornau Peter G. Dornau Chairman of the Board of Directors /s/ Peter G. Dornau Peter G. Dornau Chief Financial Officer 7 EX-27 2
5 This schedule contains summary financial information extracted from the September 30, 1996 10-Q of ocean Bio-Chem, inc. and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1996 SEP-30-1996 845,180 0 2,451,979 43,000 2,657,244 6,298,980 2,547,974 381,761 9,552,301 4,360,151 0 0 0 36,928 4,625,222 9,552,301 9,274,884 9,280,867 5,896,449 2,266,702 0 0 171,877 762,303 286,000 476,303 0 0 0 476,303 .13 .13
-----END PRIVACY-ENHANCED MESSAGE-----