-----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, BLENNkzpx1KPCPnOomHeaEPH+qmgxhOtlPAk88jDOdEfA4Det0Y+DmTMMsv5AhDj +bTqaNt66hjyd4lTukBbFQ== 0000350737-98-000005.txt : 19980813 0000350737-98-000005.hdr.sgml : 19980813 ACCESSION NUMBER: 0000350737-98-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 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: SEC FILE NUMBER: 000-11102 FILM NUMBER: 98684008 BUSINESS ADDRESS: STREET 1: 4041 SW 47TH AVE CITY: FORT LAUDERDALE STATE: FL ZIP: 33028 BUSINESS PHONE: 9545876280 MAIL ADDRESS: STREET 1: 4041 SW 47TH AVE CITY: FT LAUDERDALE STATE: FL ZIP: 33028 FORMER COMPANY: FORMER CONFORMED NAME: STAR BRITE CORP DATE OF NAME CHANGE: 19841204 10-Q 1 U. S. 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, 1998 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. 3,753,017 issued and outstanding at June 30, 1998. PART I - Financial Information Item l. Financial Statement OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS ------ JUNE 30, DEC. 31, 1998 1997 ----------- ----------- Current Assets: Cash $ 142,639 $ 787,411 Trade Accounts Receivable Net of Allowances for Doubtful Accounts of approximately $31,000 and $27,000 at June 30, 1998 and December 31, 1997, Respectively 2,103,720 2,158,233 Due from officers 171,100 197,200 Inventories 3,378,670 3,237,207 Prepaid Expenses 188,845 92,588 ---------- ---------- Total Current Assets 5,984,974 6,472,639 ---------- ---------- Property, plant and equipment, Net 4,214,175 4,141,031 ---------- ---------- Other Assets: Funds held in escrow for construction 842,552 1,042,612 Trademarks, Trade Names and Patents, Net 410,911 422,407 Deposits and Other Assets 254,226 464,209 Due From Affiliated Companies, Net 705,928 733,644 ---------- ---------- Total Other Assets 2,213,617 2,662,872 ---------- ---------- Total Assets $12,412,766 $13,276,542 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable - Trade $ 804,220 $ 718,217 Note Payable - Bank 2,623,945 3,254,158 Current Portion of Long-Term Debt 320,000 340,000 Accrued Expenses Payable 26,700 183,747 ----------- ----------- Total Current Liabilities 3,774,865 4,496,122 ----------- ----------- Long-term Debt, Less Current Portion 4,215,000 4,370,000 ----------- ----------- Shareholders' Equity: Common Stock 37,530 37,530 Additional Paid-in Capital 3,232,327 3,232,327 Retained Earnings 1,272,448 1,249,508 Foreign Currency Translation Adjustment ( 119,404) ( 108,945) ------------ ------------ Total Shareholders' Equity 4,422,901 4,410,420 ------------ ------------ Total Liabilities & Shareholders' Equity $12,412,766 $13,276,542 ============ ============ 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, 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Gross Sales $3,167,782 $3,031,391 $5,955,223 $5,604,184 Allowances 273,508 238,170 533,467 527,084 ---------- ---------- ---------- ---------- Net Sales 2,894,274 2,793,221 5,421,756 5,077,100 Cost of Goods Sold 1,830,335 1,852,222 3,650,639 3,514,105 ---------- ---------- ---------- ---------- Gross Profit 1,063,939 940,999 1,771,117 1,562,995 Cost and Expenses: Advertising and Promotion 249,963 188,053 320,763 305,760 Selling and Administrative 716,931 543,796 1,284,558 1,157,905 Interest Expense 102,268 89,449 162,550 189,001 --------- ---------- ---------- ---------- Total Cost and Expenses 1,069,162 821,298 1,766,871 1,652,666 --------- ---------- ---------- ---------- Income (Loss) From Operations ( 5,223) 119,701 4,246 ( 89,671) Interest Income 8,485 35,127 24,167 65,924 ---------- ---------- ---------- ---------- Income Before Income Taxes 3,262 154,828 28,413 ( 23,747) Provision for Income Taxes 307 62,526 5,473 ( 4,672) ---------- ---------- ---------- ----------- Net Income (Loss) $ 2,955 $ 92,302 $ 22,940 $( 19,075) Other Comprehensive Income, net of tax: Foreign currency translation adjustment ( 5,183) ( 770) ( 8,444) ( 5,622) ---------- ----------- ----------- ---------- Comprehensive Income (Loss) $( 2,228) $ 91,532 $ 14,496 $( 24,697) ========== =========== ========== =========== Basic earnings (loss) per common share $ - $ .02 $ .01 $ (.01) ========== =========== ========== =========== Earnings per share were calculated on the basis of 3,753,017 and 3,746,718 weighted average shares of common stock outstanding for the six months and three months ended June 30, 1998 and 1997, respectively. The Company has adopted Statement of Financial Accounting Standards No. 130 which requires items of comprehensive income to be stated as part of the basic financial statements. The only item of comprehensive income that the registrant has are foreign currency translation adjustments. The prior periods have been restated to conform with statement No. 130. OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR SIX MONTHS ENDED JUNE 30 (Unaudited) 1998 1997 Cash Flow used by Operating Activities: ----------- ------------ Net Income (Loss) $ 22,940 ($ 19,075) Adjustments to Reconcile Net Income to Net Cash Provided by Operations: Depreciation and Amortization 136,416 107,776 Change in Assets and Liabilities: Decrease in Accounts Receivable 54,513 548,556 Increase in Inventory ( 141,463) ( 549,573) Decrease in Prepaid Expenses 339,886 511,227 Increase (Decrease) in Accounts Payable and Accrued Expenses: ( 10,081) 198,738 ----------- ---------- Net Cash Provided by Operating Activities: 402,211 797,649 ----------- ---------- Cash Flows From Financing Activities: Net Borrowings Under Line of Credit ( 630,213) ( 155,000) Advances (to) From Affiliates 27,716 ( 17,672) Borrowings (Payment) on Debts, Net ( 235,963) ( 138,454) Sale of Stock - 5,500 ----------- ---------- Net Cash (Used) by Financing Activities ( 838,460) ( 305,626) ----------- ---------- Cash Flows From Investing Activities: Purchase Property, Plant, Equipment ( 198,064) ( 783,867) ----------- ---------- Net Cash Used by Investing Activities: ( 198,064) ( 783,867) ----------- ---------- Decrease in Cash Prior to Effect of Exchange Rate on Cash ( 634,313) ( 291,844) Effect of Exchange Rate on Cash ( 10,459) ( 9,427) ----------- ----------- Net Decrease in Cash ( 644,772) ( 301,271) Cash at Beginning of Period 787,411 394,567 ----------- ----------- Cash at June 30, $ 142,639 $ 93,296 =========== =========== Supplemental Information Cash Used for Interest During Period $ 206,817 $ 173,710 Cash Used for Income Taxes During Period $ - $ 70,000 The company had no cash equivalents at June 30, 1998 and 1997. 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 $2.9 million. 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 June 30, 1998 Registrant was not in compliance with all terms, however, registrant has received a waiver from it's commercial bank. The registrant is in the process of negotiating a new line of credit to replace the current line. Registrant expects to complete this change within the next few weeks. 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 $136,000 or 5% when comparing the quarter ended June 30, 1998 with the comparable period of the preceding year. Management attributes this to increased sales of the brush and private label lines. Cost of Goods Sold decreased approximately 3% as a percentage of gross sales when comparing the quarter ended June 30, 1998 with the quarter ended June 30, 1997. This decrease was due to changes in the product sales mix. Advertising and Promotion expenses increased approximately $61,000 or 33% when comparing the three months ended June 30, 1998 to the three months ended June 30, 1997. This was not due to any one factor, but reflects the effect of timing differences. Selling and Administrative expenses increased approximately $173,000 or 32 % when comparing the quarter ended June 30, 1998 to the comparable period in 1997. The increase was not attributable to any one factor. Interest Expense increased approximately $13,000 comparing the quarter ended June 30, 1998 to the comparable period in 1997. This was primarily due to the interest on the borrowings to purchase the Alabama Plant. Results of Operations For the Six Month Period January 1 - June 30 Gross Sales increased 6% or approximately $351,000 when comparing the six month periods of 1998 and 1997. Management attributes this to increased sales of the Company's private label and brush product lines. Cost of Goods Sold decreased approximately 1% as a percentage of gross sales when comparing the six months ended June 30, 1998 to the six months ended June 30, 1997. This decrease corresponds to the change in product sales mix. Advertising and promotion expenses increased approximately 5% or $15,000 when comparing the six months ended June 30, 1998 to the six months ended June 30, 1997. This was primarily due to timing variations. Selling and administrative expenses increased for the six months ended June 30, 1998 by approximately $127,000 or 11% when compared to the six months ended June 30, 1997. This was not due to any one factor but included cost of implementing new data processing system, legal and travel costs. Interest expense decreased in 1998 for the six month period by approximately $27,000 when compared to the six month period of 1997 reflecting the lower costs achieved in the first quarter of 1998 due primarily to reduced levels of borrowing during that quarter. PART II: OTHER INFORMATION Item l - Legal Proceedings: See the Registrant's 10K for the year ended December 31, 1997 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 8, 1998, at the Registrant's annual meeting, shareholders elected five directors; Peter Dornau, Jeffrey Tieger, Ed Anchel, Laz Schneider, and James Kolish. The results of the voting is as follows; 2,121,125 voted for all directors and 578 voted against. Shareholders also approved Infante, Lago & Co., Certified Public Accountants, by a vote of 2,121,125 for and 578 shares against, as the Registrant's auditors for 1998. 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 11, 1998 /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 ART. 5 FDS FOR 2ND QUARTER 1998 10Q
5 6-MOS DEC-31-1998 JUN-30-1998 142,639 0 2,134,720 31,000 3,378,670 5,984,974 4,925,249 711,078 12,412,766 3,774,865 0 0 0 37,530 4,385,371 12,412,766 5,955,223 5,979,390 3,650,639 1,766,871 0 0 162,550 28,413 5,473 4,246 0 0 0 22,940 .01 .01
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