-----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, T4S/TlSi2Ab841FcPRkaxdw5RnnJKFMHkyvTyOLZDjxCWf4vKFfWSpVkNPKbbIFf Tg1gTm44nFVoIptx+cyhhA== /in/edgar/work/20000811/0000350737-00-000013/0000350737-00-000013.txt : 20000921 0000350737-00-000013.hdr.sgml : 20000921 ACCESSION NUMBER: 0000350737-00-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OCEAN BIO CHEM INC CENTRAL INDEX KEY: 0000350737 STANDARD INDUSTRIAL CLASSIFICATION: [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: 694663 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 0001.txt QUARTERLY REPORT ON FORM 10-Q 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, 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 June 30, 2000 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES INDEX Description Page Part I: Item 1. - Financial Statements: Consolidated balance sheets as of June 30, 2000 and December 31, 1999 3 Consolidated statements of operations for the three and six months ended June 30, 2000 and 1999 4 Consolidated statements of changes in shareholders' equity for the six months ended June 30, 2000 and 1999 5 Consolidated statements of cash flows for the six months ended June 30, 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 9 Item 2. - Changes in Securities 9 Item 3. - Defaults upon Senior Securities 9 Item 4. - Submission of Matters to Vote by Security Holders 9 Item 5. - Other Matters 9 Item 6. - Exhibits and Reports on Form 8-K 9 Signatures 10 2 PART I - Financial Information Item l. Financial Statements OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
ASSETS JUNE 30, DECEMBER 31, 2000 1999 ----------- ------------ (Unaudited) Current assets: Cash $ 161,759 $ 433,772 Trade accounts receivable net of allowances for doubtful accounts of approximately $22,925 and $22,500 at June 30, 2000 and December 31, 1999, respectively 2,152,020 2,804,072 Due from officer 161,100 161,100 Inventories 4,346,534 3,730,321 Prepaid expenses 287,300 146,102 ------------ ------------ Total current assets 7,108,713 7,275,367 ------------ ------------ Property, plant and equipment, net 5,062,059 4,515,305 ------------ ------------ Other assets: Funds held in escrow for equipment 85,570 285,165 Trademarks, trade names and patents, net 364,927 376,423 Deposits and other assets 236,015 248,213 Due from affiliated companies, net 611,617 846,979 ------------ ------------ Total other assets 1,298,129 1,756,780 ------------ ----------- Total assets $13,468,901 $13,547,452 ============ ============ Liabilities and shareholders' equity Current liabilities: Accounts payable - trade $ 1,030,753 $ 872,693 Note payable - bank 3,100,000 2,900,000 Current portion of long-term debt 324,992 314,359 Accrued expenses payable 53,661 390,607 ------------ ------------ Total current liabilities 4,509,406 4,477,659 ------------ ------------ Long-term debt, less current portion 3,989,366 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 June 30, 2000 and December 31, 1999, respectively 41,060 38,225 Additional paid-in capital 3, 720,378 3,282,932 Foreign currency translation adjustment ( 191,072) ( 160,872) Retained earnings 1,406,638 1,764,051 ------------ ------------ 4,977,004 4,924,336 Less cost of common stock in treasury, 5,789 shares at June 30, 2000 and December 31, 1999 ( 6,875) ( 6,875) ------------ ------------ 4,970,129 4,917,461 ------------ ------------ Total liabilities & shareholders' equity $13,468,901 $13,547,452 ============ ============ < 3
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
FOR THE THREE MONTHS FOR THE SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, 2000 1999 2000 1999 ---------- ----------- ----------- ------------ Gross sales $4,118,783 $3,674,386 $7,823,945 $7,093,200 Allowances 403,718 312,316 836,746 691,438 ------------ ----------- ----------- ----------- Net sales 3,715,065 3,362,070 6,987,199 6,401,762 Cost of goods sold 2,530,688 2,186,708 4,792,886 4,293,931 ----------- ----------- ----------- ----------- Gross profit 1,184,377 1,175,362 2,194,313 2,107,831 ----------- ----------- ----------- ----------- Cost and expenses: Advertising and promotion 163,336 154,094 346,488 252,334 Selling and administrative 826,858 718,064 1,554,193 1,355,921 Interest expense 132,294 103,012 254,200 201,646 ----------- ----------- ----------- ----------- Total cost and expenses 1,122,488 975,170 2,154,881 1,809,901 ----------- ----------- ----------- ----------- Income from operations 61,889 200,192 39,432 297,930 Interest income 3,144 5,672 8,936 11,832 ----------- ----------- ----------- ----------- Income before income taxes 65,033 205,864 48,368 309,762 Provision for income taxes 21,500 77,500 15,000 116,500 ----------- ----------- ----------- ----------- Net income 43,533 128,364 33,368 193,262 Other comprehensive income, net of income taxes: Foreign currency translation adjustment ( 23,511) ( 9,723) ( 30,200) ( 22,467) ----------- ----------- ----------- ----------- Comprehensive income $ 20,022 $ 118,641 $ 3,168 $ 170,795 =========== =========== =========== =========== Earnings per common share $ .01 $ .03 $ .01 $ .05 =========== =========== =========== ===========
Earnings per share were calculated on the basis of 4,011,426 and 3,780,678 weighted average shares of common stock outstanding for the six months and three months ended June 30, 2000 and 1999, 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 items of comprehensive income of the registrant which are reflected in the accompanying financial statements are foreign currency translation adjustments. 4 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 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 income 33,368 33,368 Issuances of stock 283,390 2,835 437,446 ( 390,781) 49,500 Foreign currency translation adjustment ( 30,200) ( 30,200) --------- ------- --------------- ----------- ----------- ---------- ----------- June 30, 2000 4,105,889 $41,060 $ 3,720,378 ($ 191,072) $1,406,638 ($ 6,875) $4,970,129 ========= ======= =============== =========== =========== ========== =========== January 1, 1999 3,753,017 $37,530 $ 3,232,327 ($ 145,666) $1,332,567 ($ - ) $4,456,758 Net income 309,762 309,762 Acquisition of treasury shares ( 6,875) ( 6,875) Issuances of stock 69,482 695 50,605 51,300 Foreign currency translation adjustment ( 22,467) ( 22,467) --------- ------- --------------- ----------- ----------- ---------- ----------- June 30, 1999 3,882,499 $38,225 $ 3,282,932 ($ 168,133) $1,642,329 ($ 6,875) $4,788,478 ========= ======= =============== =========== =========== ========== ===========
5 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, (Unaudited)
2000 1999 ------------ ----------- Cash flow provided by operating activities: Net income $ 33,368 $ 193,262 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 168,997 159,496 Changes in assets and liabilities: Decrease in accounts receivable 652,051 239,239 (Increase) in inventory ( 616,213) ( 28,248) (Increase) decrease in prepaid expenses ( 141,198) ( 26,557) Increase (decrease) in accounts payable, accrued expenses and other ( 166,689) 29,551 ------------ ----------- Net cash provided (used) by operating activities ( 69,684) 566,743 ------------- ----------- Cash flows from financing activities: Net increases (reductions) under line of credit 200,000 ( 852,422) Reduction in advances from affiliates 235,362 296,853 Borrowings (payments) on debts, net ( 152,333) 243,922 Common stock transactions 49,500 44,425 ------------ ----------- Net cash provided (used) by financing activities 332,529 ( 267,222) ------------ ----------- Cash flows from investing activities: Purchases of property, plant, equipment, net of funds held in escrow ( 504,658) ( 28,955) ------------ ----------- Net cash (used) by investing activities ( 504,658) ( 28,955) ------------ ----------- Increase (decrease) in cash prior to effect of foreign currency translation adjustment ( 241,813) 270,566 Effect of foreign currency translation adjustment on cash ( 30,200) ( 22,467) ------------ ----------- Net increase (decrease) in cash ( 272,013) 248,099 Cash at beginning of period 433,772 8,871 ------------ ----------- Cash at end of period $ 161,759 $ 256,970 Supplemental information: Cash used for payment of interest during period $ 254,200 $ 193,534 ============ =========== Cash used for payment of income taxes during period $ 257,800 $ 16,000 ============ =========== The company had no cash equivalents at June 30, 2000 and 1999
6 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. Certain financial statement items for the three and six months ended June 30, 1999 have been reclassified to conform with the 2000 presentation. 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, 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 $5,000,000. 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 $2,500,000, 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. 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. In connection with the previously announced Automotive Oils and Related Fluids Program, the Company expended approximately $440,000 of its resources during the six months ended June 30, 2000. Such amount was net of the balance which remained in escrow from its Alabama Industrial Revenue Bond Issue for future equipment needs aggregating $285,000 at January 1, 2000 and represented new equipment, personnel and related costs associated with the Program. The financial impact of these transactions was a short-term reduction in liquidity and profitability. Production commenced and initial customer orders were received during late July, 2000. The Program comprises approximately forty (40) new line items in the Company's product line and represents the Company's re-entry into the automotive aftermarket. RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD APRIL 1- JUNE 30: Gross sales increased approximately 11 % or $444,400 for the quarter ended June 30, 2000 when compared to the same quarter of the preceding year. Management attributes this primarily to increased sales of new products introduced last year and a sales price increase on selected products. 7 Cost of goods sold increased as a percentage of net sales when comparing the quarter ended June 30, 2000 with the comparable quarter in 1999. The percentages were 68.1% and 65% for the quarters ended 2000 and 1999, respectively. This change was primarily due to increasing raw chemical costs and manufacturing overhead at the Company's Alabama plant. Selling and administrative expenses increased approximately $109,000 or 13% comparing the quarters ended June 30, 2000 and June 30, 1999. Such increase was primarily due to increased professional fees and personnel costs associated with the new automotive line of products. Advertising and promotion increased approximately $9,200 or 6% comparing the three months ended June 30, 2000 and 1999. This was primarily due to a planned increase in the advertising budget. Interest expense increased approximately $29,300 during the current quarter. This change was primarily due to the Federal Reserve's recently enacted series of interest rate increases which was passed on by the Company's lender. RESULTS OF OPERATIONS FOR THE SIX MONTH PERIOD JANUARY 1 - JUNE 30: Gross Sales increased 10 % or approximately $730,700 when comparing the six month periods of 2000 and 1999. Management attributes this primarily to increased sales of new products introduced last year and a sales price increase on selected products. Cost of Goods Sold increased to 68.6 % as a percentage of net sales versus 67.1% when comparing the six months ended June 30, 2000 to the comparable period in the preceding year. This change was primarily due to increasing raw chemical costs and manufacturing overhead at the Company's Alabama plant. Advertising and promotion expenses increased approximately 37% or $94,200 when comparing the six months ended June 30, 2000 to the six months ended June 30, 1999. This was primarily due to a planned increase in the advertising budget. Selling and administrative expenses increased for the six months ended June 30, 2000 by approximately $198,300 or 14.6% when compared to the six months ended June 30, 1999. Such increase was primarily due to increased professional fees and personnel costs associated with the new automotive line of products. Interest expense increased during the six month period in 2000 by approximately $52,500 when compared to the six month period of 1999. This change was primarily due to the Federal Reserve's recently enacted series of interest rate increases which was passed on by the Company's lender. 8 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: See the Registrant's Form 10-K for the year ended December 31, 1999 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 June 9, 2000, at the Registrant's annual meeting of shareholders, six directors; Peter Dornau, Jeffrey Tieger, Edward Anchel, Laz Schneider, James Kolisch and John B. Turner were elected. 3,841,411 votes were cast in favor and 606 votes were cast against certain directors. Shareholders also approved Berkovits, Lago & Co., LLP, Certified Public Accountants, by a vote of 3,840,295 for and 1,722 against, as the Registrant's auditors for the year ending December 31, 2000. Item 5 - Other Matters: Not applicable Item 6 - Exhibits: Not applicable (A) Exhibits - Not applicable (B) Reports on Form 8-K - Not applicable 9 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, 2000 /s/ Peter Dornau ------------------------ Peter G. Dornau Chairman of the Board and Chief Executive Officer /s/ Edward Anchel ------------------------ Edward Anchel Chief Financial Officer 10 EX-27 2 0002.txt FDINANCIAL DATA SCHEDULE
5 6-mos DEC-31-2000 JAN-01-2000 JUN-30-2000 161,759 0 2,174,945 22,925 4,346,534 7,108,713 6,380,873 1,318,814 13,468,901 4,509,406 0 0 0 41,060 4,929,069 13,468,901 7,823,945 7,832,881 4,792,886 1,900,681 0 0 254,200 48,368 15,000 33,368 0 0 0 33,368 .01 .01
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