-----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, VDRyxgP++RW+GD/5to/arJHzvchCdJ7QTNMD0NuEBzG/JcIFLmVMu8aP/AJTX+d1 6gMQbEdwD0IDIBd9Eio9IQ== 0000350737-00-000012.txt : 20000512 0000350737-00-000012.hdr.sgml : 20000512 ACCESSION NUMBER: 0000350737-00-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000511 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: 625589 BUSINESS ADDRESS: STREET 1: 4041 SW 47TH AVE CITY: FORT LAUDERDALE STATE: FL ZIP: 33314 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 QUARTERLY REPORT ON FORM 10-Q 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 March 31, 2000 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, 4,105,889 shares issued and outstanding at March 31, 2000. OCEAN BIO-CHEM, INC. AND SUBSIDIARIES INDEX Description Page Part I: Item 1. - Financial Statements: Consolidated balance sheets as of March 31, 2000 and December 31, 1999 3 Consolidated statements of operations for the three months ended March 31, 2000 and 1999 4 Consolidated statements of changes in shareholders' equity for the three months ended March 31, 2000 and 1999 5 Consolidated statements of cash flows for the three months ended March 31, 2000 and 1999 6 Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 Part II: Item 1. - Legal Proceedings 8 Item 2. - Changes in Securities 8 Item 3. - Defaults upon Senior Securities 8 Item 4. - Submission of Matters to Vote by Security Holders 8 Item 5. - Other Matters 8 Item 6. - Exhibits and Reports on Form 8-k 8 Signatures 9 2 PART I - FINANCIAL INFORMATION Item l. Financial Statements: OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
ASSETS MARCH 31, DEC. 31, 2000 1999 ------------- ----------- (UNAUDITED) Current assets: Cash $ 346,925 $ 433,772 Trade accounts receivable net of allowance for doubtful accounts of $22,600 and $26,000 at March 31, 2000 and December 31, 1999, respectively 2,526,251 2,804,072 Due from officer 161,100 161,100 Inventories 4,061,980 3,730,321 Prepaid expenses 96,283 146,102 ------------- ----------- Total current assets 7,192,539 7,275,367 ------------- ----------- Property, plant and equipment, net 4,623,514 4,515,305 ------------- ----------- Other assets: Trademarks, trade names and patents, net of accumulated amortization 370,675 376,423 Funds held in escrow for construction and equipment 121,201 285,165 Due from affiliated companies, net 739,228 846,979 Deposits and other assets 244,551 248,213 ------------- ----------- Total Other Assets 1,475,655 1,756,780 ------------- ----------- Total assets $13,291,708 13,547,452 ============= =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable - trade $ 892,246 872,693 Note payable - bank 2,840,000 2,900,000 Current portion of long term debt 324,881 314,359 Other accrued liabilities 213,817 390,607 ------------- ----------- Total Current Liabilities 4,270,944 4,477,659 ------------- ----------- Long term debt, less current portion 4,070,656 4,152,332 ------------- ----------- Shareholders' equity: Common stock - $.01 par value, 10,000,000 shares authorized; 4,105,889 and 3,822,499 shares issued and outstanding at March 31, 2000 and December 31, 1999, respectively 41,060 38,225 Additional paid-in capital 3,720,378 3,282,932 Retained earnings 1,363,106 1,764,051 Foreign currency translation adjustment ( 167,561) ( 160,872) ------------- ----------- 4,956,983 4,924,336 Less cost of common stock in treasury, 5,789 shares at March 31, 2000 and December 31, 1999 ( 6,875) 6,875) ------------- ----------- 4,950,108 4,917,461 ------------- ----------- Total liabilities and shareholders' equity $13,291,708 $13,547,452 ============= =========== 3
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 and 1999 (UNAUDITED) 2000 1999 ----------- ------------ Gross sales $ 3,705,163 $3,418,814 Allowances 433,028 379,122 ----------- ---------- Net sales 3,272,135 3,039,692 Cost of goods sold 2,262,198 2,107,223 ----------- ---------- Gross profit 1,009,937 932,469 ----------- ---------- Costs and expenses: Advertising and promotion 183,152 98,240 Selling and administrative 727,334 637,857 Interest expense 121,906 98,634 ----------- ---------- Total costs and expenses 1,032,392 834,731 ----------- ---------- Operating income ( 22,455) 97,738 Interest income 5,791 6,160 ----------- ---------- Income before income taxes ( 16,664) 103,898 Provision (benefit) for income taxes ( 6,500) 39,000 ----------- ---------- Net income (loss) ( 10,164) 64,898 Other comprehensive income, net of tax Foreign currency translation adjustment 6,689 12,744 ----------- ---------- Comprehensive income (loss) ( 16,853) $ 52,154 =========== ========== Earnings (loss) per common share $ - $ .02 =========== ========== Earnings per share were calculated on the basis of 3,915,033 and 3,757,517 weighted average shares of common stock outstanding for the quarters ended March 31, 2000 and 1999, respectively. The Company has adopted Statement of Financial Accounting Standards No. 130 that 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 is its foreign currency translation adjustment. 4 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
Foreign Common stock Additional currency Retained Treasury Shares Amount paid-in capital adjustment earnings stock Total --------- ------- --------------- ---------- ---------- --------- ---------- January 1, 2000 3,822,499 $38,225 $3,282,932 ($ 160,872) $1,764,051 ($ 6,875) $4,917,461 Net loss ( 10,164) ( 10,164) Issuances of stock 283,390 2,835 437,446 ( 390,781) 49,500 Foreign currency translation adjustment ( 6,689) ( 6,689) --------- ------- ---------- ----------- ---------- ---------- ----------- March 31, 2000 4,105,889 $41,060 $3,720,378 ($ 167,561) $1,363,106 ($ 6,875) $4,950,108 ========= ======= ========== =========== ========== ---------- =========== January 1, 1999 3,753,017 $37,530 $3,232,327 ($ 145,666) $1,332,567 ($ - ) $4,456,758 Net income 64,898 64,898 Acquisition of treasury shares ( 6,875) ( 6,875) Issuance of stock 13,500 135 9,265 9,400 Foreign currency translation adjustment ( 12,744) ( 12,744) --------- ------- ---------- ----------- ---------- ---------- ----------- March 31, 1999 3,766,517 $37,665 $3,241,592 ($ 158,410) $1,397,465 ($ 6,875) $4,511,437 ========= ======= ========== =========== ========== ========== ===========
5 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 and 1999 (UNAUDITED) 2000 1999 ---------- ---------- Cash flow provided (used) by operating activities: Net income (loss) ($ 10,164) $ 64,898 Adjustments to reconcile net income to net cash provided (used) by operations: Depreciation and amortization 82,939 78,578 Changes in assets and liabilities: Decrease in accounts receivable 277,821 21,300 (Increase) decrease in inventory ( 331,659) 372,179 Decrease in prepaid expenses 49,819 4,924 Decrease in accounts payable, accrued expenses and other ( 153,575) ( 411,184) ----------- ---------- Net cash provided (used) by operating activities ( 84,819) 130,695 ----------- ---------- Cash provided (used) by financing activities: Net reductions under line of credit ( 60,000) ( 451,312) Net reductions in advances to affiliates 107,751 345,350 Net (reductions), increases in current portion of long term debt 10,522 ( 5,925) Net (reductions) increases in long term borrowings ( 81,676) 325,925 Common stock transactions, net 49,500 2,525 ----------- ---------- Net cash provided by financing activities 26,097 216,563 ----------- ---------- Cash provided (used) by investing activities: Purchase property, plant, equipment, net ( 21,436) 9,893 ----------- ---------- Net cash used by investing activities ( 21,436) 9,893 ----------- ---------- Increase (decrease) in cash prior to effect of foreign currency translation on cash ( 80,158) 357,151 Effect of foreign currency translation on cash ( 6,689) ( 26,406) ----------- ---------- Increase (decrease) in cash ( 86,847) 330,745 Cash at beginning of period 433,772 8,871 ----------- ---------- Cash at end of period $ 346,925 $ 339,616 =========== ========== Supplemental Information: Cash used for interest during period $ 121,906 $ 85,192 =========== ========== Cash used for income taxes during period $ 204,743 $ - =========== ========== The company had no cash equivalents at March 31, 2000 and 1999. 6 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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. Certain financial statement items for the quarter ended March 31, 1999 have been reclassified to conform to the 2000 presentation. Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations Liquidity and Capital Resources: - ------------------------------- The primary sources of the Registrant's liquidity are its operations, short-term borrowings from a commercial bank pursuant to a revolving line of credit arrangement, and other borrowings. The total borrowings under the line are secured by trade receivables, inventories, and other assets, and can aggregate a maximum amount of $3,500,000. Borrowings under the line are due on demand from the bank. Under the terms of the line, the Registrant is required to maintain minimum working capital of $1,500,000, a maximum debt to tangible net worth of ratio of 2.5 to 1 and a minimum debt service coverage factor of 1.15 times. On March 25, 1999, The Registrant borrowed $400,000 from an entity owned by certain officers of the Company. The obligation requires monthly payments of principal and interest at prevailing rates through maturity during April, 2004, when a final balloon payment is due. The Registrant is involved in making sales in the Canadian market and, accordingly, is subject to fluctuations of the Canadian currency. The Registrant does not engage in currency hedging and deals with such risk as a pricing issue. Results of Operations: - --------------------- Gross sales increased approximately 8% or $232,500 for the quarter ended March 31, 2000 when compared to the same quarter of the preceding year. Such increase was consistent with prevailing trends and not associated with any single product or customer. Cost of goods sold decreased as a percentage of net sales when comparing the quarter ended March 31, 2000 with the comparable quarter in 1999. The percentages were 69.1 % and 69.3% for the quarters ended during 2000 and 1999, respectively. This change was not significant and is not attributable to any one individual factor. Selling and administrative expenses increased approximately $89,500 or 14% when comparing the quarters ended March 31, 2000 and 1999. This change was primarily due to increased personnel costs and professional fees. The Company has recently announced the pending introduction of a new automotive product line and has opted to charge off costs associated with this project as incurred rather than deferring them until the quarter in which revenues commence. It is currently anticipated that initial revenues will be earned during the quarter ending June 30, 2000. 7 Advertising and promotion increased approximately $84,900 or 86% comparing the three months ended March 31, 2000 and 1999. This was primarily due to increased catalog costs and co- operative advertising. The Company has previously reported intentional levels of decreased advertising in prior quarters and has now strategically decided to expand advertising efforts of the Star brite brand during the current fiscal year. Interest expense increased by approximately $23,300 when comparing the March 31, 2000 quarter to the corresponding quarter in 1999. This increase resulted primarily due to recently promulgated prime interest rate increases. Forward-looking Statements: - -------------------------- Certain statements contained herein, including without limitation expectations as to future sales and operating results, constitute forward-looking statements. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "will"', "expect"', "anticipate", "intend", "could" or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors which may affect the Company's results include, but are not limited to, the highly competitive nature of the Company's industry; reliance on certain key customers; consumer demand for marine, recreational vehicle and automotive products; advertising and promotional efforts, and other factors. The Company will not undertake and specifically declines any obligation to update or correct any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. PART II - OTHER INFORMATION Item l - Legal Proceedings: Not applicable. Item 2 - Changes in Securities: During March, 2000, 195,390 shares of the Registrant's Common Stock were issued to shareholders pursuant to the recently announced 5% stock dividend; and 88,000 shares of the Common Stock were issued to certain employees as a bonus for their respective services to the Company. Such awards were not made pursuant to a formal Employee Bonus Plan. The financial impact of these issuances aggregated approximately $45,900 which was charged to operations during the quarter ended March 31, 2000. Item 3 - Defaults Upon Senior Securities: Not applicable Item 4 - Submission of Matters to Vote of Security Holders: Not applicable Item 5 - Other Matters: Not applicable Item 6 - Exhibits and Reports on Form 8-K: Not applicable 8 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 hereunto duly authorized. OCEAN BIO-CHEM, INC. Date: May 11, 2000 By: /s/ PETER G. DORNAU ---------------- ----------------------- Peter G. Dornau Chairman of the Board and Chief Executive Officer By: /s/ EDWARD ANCHEL --------------------- Edward Anchel Chief Financial Officer 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 346,925 0 2,548,851 22,600 4,061,980 7,192,539 5,862,018 1,238,504 13,291,708 4,270,944 0 0 0 41,060 4,909,048 13,291,708 3,272,135 3,277,926 2,262,198 910,486 0 0 121,906 (16,664) (6,500) (10,164) 0 0 0 (10,164) .00 .00
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