-----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, LOnwY/aCnM0RnygWyWnFAggJgsSE7T2+A3IetFzpG1gqF2zd0oXJoY6afagQKYBf FCmOwC2vVTW74tXXrzHxpQ== 0000350737-98-000006.txt : 19981113 0000350737-98-000006.hdr.sgml : 19981113 ACCESSION NUMBER: 0000350737-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981112 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: 98744029 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 10q998 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, 1998 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 - 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 September 30, 1998. PART I - FINANCIAL INFORMATION Item l. Financial Statements OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS ------- SEPT. 30, DEC.31, 1998 1997 ------------ ----------- Current Assets: Cash $ 106,154 $ 787,411 Trade Accounts Receivable Net of Allowances for Doubtful Accounts of $34,000 and $26,000 at September 30, 1998 And December 31, 1997 Respectively 3,123,446 2,158,233 Due From Officers 179,100 197,200 Inventories 3,580,806 3,237,207 Prepaid Expenses 143,491 92,588 ------------ ----------- Total Current Assets 7,132,997 6,472,639 ------------ ----------- Property, Plant and Equipment, Net 4,200,373 4,141,031 ------------ ----------- Other Assets: Funds held in escrow for construction 785,270 1,042,612 Trademarks, Trade Names And Patents, Net 405,163 422,407 Due From Affiliated Companies, Net 681,147 733,644 Deposits And Other Assets 299,472 464,209 ------------ ----------- Total Other Assets 2,171,052 2,662,872 ------------ ----------- Total Assets $13,504,422 $13,276,542 ============ =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable Trade $ 1,585,113 $ 718,217 Notes Payable - Bank 2,835,945 3,254,158 Current Portion Of Long-Term Debt 310,000 340,000 Accrued Expenses Payable 117,697 183,747 ----------- ----------- Total Current Liabilities 4,848,755 4,496,122 ----------- ----------- Long-term Debt, Less Current Portion 4,140,000 4,370,000 ----------- ----------- Shareholders' Equity: Common Stock 37,530 37,530 Additional Paid-In Capital 3,232,327 3,232,327 Retained Earnings 1,386,351 1,249,508 Foreign Currency Translation Adjustment ( 140,541) ( 108,945) ----------- ----------- Total Shareholders' Equity 4,515,667 4,410,420 ----------- ----------- Total Liabilities & Shareholders' Equity $13,504,422 $13,276,542 =========== =========== 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, 1998 1997 1998 1997 ---------- ---------- ----------- ------------ Gross Sales $4,751,365 $3,929,232 $10,706,588 $9,533,416 Allowances 425,187 318,331 958,654 845,415 ---------- ---------- ----------- ------------ Net Sales 4,326,178 3,610,901 9,747,934 8,688,001 Cost Of Goods Sold 3,191,618 2,634,352 6,842,257 6,148,457 ---------- ---------- ----------- ----------- Gross Profit 1,134,560 976,549 2,905,677 2,539,544 Cost And Expenses Adv. And Promotion 193,856 219,716 514,619 525,476 Selling And Admin. 664,706 637,726 1,949,264 1,795,631 Interest Expense 98,408 87,090 259,958 276,091 ---------- ---------- ----------- ----------- Total Expenses 956,970 944,532 2,723,841 2,597,198 ---------- ---------- ----------- ----------- Income (Loss) From Operations 177,590 32,017 181,836 ( 57,654) Interest Income 9,841 29,222 34,008 95,146 ---------- ---------- ----------- ----------- Income before provision for income taxes 187,431 61,239 215,844 37,492 Provision for income taxes 73,527 13,672 79,000 9,000 ---------- ---------- ----------- ----------- Net Income $ 113,904 $ 47,567 $ 136,844 $ 28,492 Other Comprehensive Income: Foreign Currency Translation Adjustment net of tax: ( 11,588) ( 3,379) ( 20,032) ( 9,001) ----------- ---------- ----------- ----------- Comprehensive income $ 102,316 $ 44,188 $ 116,812 $ 19,491 =========== ========== =========== =========== Earnings Per Share: Net Income Per Share $ .03 $ .01 $ .04 $ .01 =========== ========== =========== =========== Earnings per share for the nine and three months ended September 30, 1998 were calculated on the basis of 3,753,017 weighted average common stock outstanding. For the nine and three months ended September 30, 1996, earnings per share were calculated using 3,746,718 weighted average common stock outstanding. The company has adopted Statement of Financial Accounting Standards No. 130 which requires items ofcomprehensive income to be stated as part of the basic financial statements. Prior periods have been restated to conform to statement No. 130. 3 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, CASH FLOWS PROVIDED BY 1998 1997 ------------ ------------- OPERATING ACTIVITIES: Net Income $ 136,844 $ 28,492 Adjustment to Reconcile Net Income To Net Cash Provided by Operations: Depreciation and Amortization: 198,190 164,185 Change in Assets and Liabilities: Increase in Accounts Receivable ( 965,213) ( 526,625) Increase in Inventory ( 343,599) (1,284,445) Decrease in Prepaid Expenses And other assets 389,276 1,576,074 Decrease in Accounts Payable And Accrued Expenses 800,846 918,430 ----------- ----------- Net Cash Provided by Operating Activities 216,344 876,111 ----------- ----------- Cash Flows From Financing Activities: Net Borrowings Under Line of Credit ( 418,213) 1,046,000 Advances ( to) from Affiliates 52,497 ( 8,650) Borrowings (Repayment) of Debt, Net ( 260,000) ( 190,000) Sale of Stock - 5,500 Net Cash Provided (used) by ----------- ----------- Financing Activities ( 625,716) 852,850 ----------- ----------- Cash Flows From Investing Activities Purchase Property, Plant, Equipment ( 240,289) (1,959,544) ------------ ----------- Net Cash Used by Investing Activities ( 240,289) (1,959,544) ------------ ----------- Decrease in Cash Prior to Effect of Exchange Rate on Cash ( 649,661) ( 230,583) Effect of Exchange Rate on Cash ( 31,596) ( 11,843) ------------ ----------- Net Decrease in Cash ( 681,257) ( 242,426) Cash at Beginning of Period 787,411 394,569 ------------ ----------- Cash at September 30, $ 106,154 $ 152,143 ============ =========== Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year for: Interest (Net of Amount capitalized) $ 259,000 $ 276,000 Income taxes - $ 70,000 ----------- ----------- Disclosure of accounting policy: For purpose 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 short term borrowings from a commercial bank. During October the registrant changed its commercial banking relations. The new credit facilities enable the registrant to borrow up to $5.0 million based on a combination of accounts receivable and inventories. 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 1.1 times. As of sEPTEMBER 30, 1998 the 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 risks as a pricing issue. During the past few years the 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 $ 822,000 or 20.9 % comparing the quarter ended September 30, 1998 with the comparable period of the preceding year. Management attributes this primarily to increased sales of the marine and antifreeze lines during the quarter. Cost of Goods Sold remained constant as a percentage of gross sales for the quarter ended September 30, 1998 when compared to the 1997 quarter. Advertising and promotion expenses decreased approximately $ 26,000 or 11.7% comparing the three month period ended September 30, 1998 to 1997. This is primarily due to lower customer advertising allowances. Selling and administrative expenses increased approximately $ 27,000 or 4.2 % comparing the quarter ended September 30, 1998 to the comparable period in 1997. This was not attributed to any particular factor. Interest expense increased approximately $ 11,000 comparing the quarter ended September 30, 1998 to the comparable period in 1997. This reflects the effects of financing the Alabama facility and higher debt levels outstanding during the period. 5 Results Of Operations For The Nine Month Period January 1-September 30 Gross sales increased approximately $ 1,173,000 or 12.3 % comparing the nine month periods in 1998 and 1997. This is due to the increased sales of the antifreeze, private label, brush, and strap lines. Cost of goods sold decreased approximately 0.5 % as a percentage of gross sales when comparing the nine months ended September 30, 1998 and 1997. This is not due to any one factor. Advertising and promotion expenses decreased approximately $ 11,000 or 2.0 % when comparing the nine months ended September 30, 1998 and 1997. This reflects seasonal variations. Selling and administrative expenses increased during 1998 by approximately $ 154,000 or 8.6 % when compared to 1997. This was primarily due to expenses associated with the Alabama operations. Interest expense increased in 1998 for the nine month period by approximately $16,000 reflecting increased borrowings outstanding during the period and the interest on the borrowings associated with 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, 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: 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 Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned there unto duly authorized. OCEAN BIO-CHEM, INC. Date: November 10, 1998 /s/ Peter Dornau ----------------------------------- Peter G. Dornau Chairman of the Board of Directors and Chief Executive Officer /s/ Peter Dornau ----------------------------------- Peter G. Dornau Chief Financial Officer 7 EX-27 2 ART. 5 FDS FOR 3RD QUARTER 1998 10Q
5 9-MOS DEC-31-1998 SEP-30-1998 106,154 0 3,157,446 34,000 3,580,806 7,132,997 4,979,024 778,651 13,504,422 4,848,755 0 0 0 37,530 4,478,137 13,504,422 10,706,588 10,740,596 6,842,257 2,723,841 0 0 259,958 215,844 79,000 181,836 0 0 0 136,844 .04 .04
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