-----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, UR3xC433K03z+wKcuYuJY0dMKLXJn81TyvDMKID1EV6tOcv27kQIDh5sdwtjP7cw UGXor8/tW7tTcjGpm/4kbw== /in/edgar/work/0000350737-00-000014/0000350737-00-000014.txt : 20001114 0000350737-00-000014.hdr.sgml : 20001114 ACCESSION NUMBER: 0000350737-00-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 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: 758374 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 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, 2000 Commission File No. 2-70197 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, Fort Lauderdale, Florida 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. 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 issued and outstanding at September 30, 2000 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES INDEX Description Page ----------- ------ Part I: Item 1. - Financial Statements: Consolidated balance sheets as of September 30, 2000 and December 31, 1999 3 Consolidated statements of operations for the three and nine months ended September 30, 2000 and 1999 4 Consolidated statements of changes in shareholders' equity for the nine months ended September 30, 2000 and 1999 5 Consolidated statements of cash flows for the nine months ended September 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 Information 9 Item 6. - Exhibits and Reports on Form 8-K 9 Signatures 9 2 PART I - Financial Information Item l. Financial Statements OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
ASSETS SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ (Unaudited) Current assets: Cash $ 133,015 $ 433,772 Trade accounts receivable net of allowances for doubtful accounts of approximately $23,000 and $22,500 at September 30, 2000 and December 31, 1999, respectively 3,287,639 2,804,072 Due from officer 161,100 161,100 Inventories 4,920,254 3,730,321 Prepaid expenses 332,603 146,102 ----------- ------------ Total current assets 8,834,611 7,275,367 ----------- ------------ Property, plant and equipment, net 5,506,224 4,515,305 ----------- ------------ Other assets: Funds held in escrow for equipment 40,862 285,165 Trademarks, trade names and patents, net 359,179 376,423 Deposits and other assets 237,451 248,213 Due from affiliated companies, net 520,698 846,979 ----------- ------------ Total other assets 1,158,190 1,756,780 ----------- ------------ Total assets $15,499,025 $13,547,452 =========== ============ LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable - trade $ 2,022,371 $ 872,693 Note payable - bank 4,223,000 2,900,000 Current portion of long-term debt 355,505 314,359 Accrued expenses payable 28,183 390,607 ----------- ------------ Total current liabilities 6,629,059 4,477,659 ----------- ------------ Long-term debt, less current portion 3,973,129 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 September 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 ( 203,246) ( 160,872) Retained earnings 1,345,520 1,764,051 ----------- ------------ 4,903,712 4,924,336 Less cost of common stock in treasury, 5,789 shares at September 30, 2000 and December 31, 1999 ( 6,875) ( 6,875) ------------ ------------ 4,896,837 4,917,461 ------------ ------------ Total liabilities & shareholders' equity $15,499,025 $ 3,547,452 ============ ============ 3
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months For the nine months ended September 30, ended September 30, 2000 1999 2000 1999 ---- ---- ---- ---- Gross sales $5,256,263 $ 4,995,382 $ 13,080,208 $12,088,582 Allowances 561,620 567,324 1,398,366 1,258,762 ------------ ----------- ------------- ------------- Net sales 4,694,643 4,428,058 11,681,842 10,829,820 Cost of goods sold 3,735,976 3,102,576 8,528,862 7,396,507 ------------ ----------- ------------- ----------- Gross profit 958,667 1,325,482 3,152,980 3,433,313 ------------ ----------- ------------- ----------- Costs and expenses: Advertising and promotion 198,178 140,115 544,666 392,449 Selling and administrative 738,431 712,775 2,292,624 2,068,695 Interest expense 117,021 101,673 371,221 303,319 ------------ ----------- ------------- ----------- Total costs and expenses 1,053,630 954,563 3,208,511 2,764,463 ------------ ----------- ------------- ----------- Income (loss) from operations ( 94,963) 370,919 ( 55,531) 668,850 Interest income 3,845 4,394 12,781 16,226 ------------ ----------- ------------- ----------- Income (loss) before provision (benefit) for income taxes ( 91,118) 375,313 ( 42,750) 685,076 Provision (benefit) for income taxes ( 30,000) 141,200 ( 15,000) 257,700 ------------ ----------- ------------- ----------- Net income (loss) ( 61,118) 234,113 ($ 27,750) 427,376 Other comprehensive income, net of income taxes: Foreign currency translation adjustment ( 12,174) ( 4,104) ( 42,374) ( 26,571) ------------ ------------ ------------- ------------ Comprehensive income (loss) ($ 73,292) $ 230,009 ($ 70,124) $ 400,805 ============ ============ ============= ============ Earnings (loss) per common share ($ .02) $ .06 ($ .01) $ .11 ============ =========== ============= ============
Earnings (loss) per share for the nine and three months ended September 30, 2000 were calculated on the basis of 4,042,913 weighted average shares of common stock outstanding. For the nine and three months ended September 30, 1999, earnings per share were calculated using 3,794,618 weighted average shares of common stock outstanding. 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. 4 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 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 loss ( 27,750) ( 27,750) Issuances of stock 283,390 2,835 437,446 ( 390,781) 49,500 Foreign currency translation adjustment ( 42,374) 42,374) ----------- ----------- --------------- ----------- ---------- ---------- ----------- September 30, 2000 4,105,889 $ 41,060 $ 3,720,378 ($ 203,246) $1,345,520 ($ 6,875) $4,896,837 =========== =========== =============== =========== ========== ========== ============ January 1, 1999 3,753,017 $ 37,530 $ 3,232,327 ($ 145,666) $1,332,567 ($ - ) $4,456,758 Net income 427,376 427,376 Acquisition of treasury shares ( 6,875) ( 6,875) Issuances of stock 69,482 695 50,605 51,300 Foreign currency translation adjustment ( 26,571) ( 26,571) ----------- ----------- --------------- ----------- ---------- ---------- ----------- September 30, 1999 3,882,499 $ 38,225 $ 3,282,932 ($ 172,237) $1,759,943 ($ 6,875) $4,901,988 =========== =========== =============== =========== ========== ========== ===========
5 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, (UNAUDITED)
2000 1999 ------------- ------------ Cash flows provided by operating activities: Net Income (loss) ($ 27,750) $ 427,376 to net cash provided by operations: Depreciation and amortization 303,198 243,777 Changes in operating assets and liabilities: (Increase) in accounts receivable ( 483,567) ( 884,059) (Increase) decrease in inventories ( 1,189,933) 311,335 (Increase) in prepaid expenses ( 186,501) ( 22,602) Increase in accounts payable, accrued expenses, and other 798,016 368,151 ------------- ------------ Net cash provided by operating activities ( 786,537) 443,978 ------------- ------------ Cash flows from financing activities: Net increases (reductions) under line of credit 1,323,000 ( 428,115) Repayments of advances to affiliates 326,282 219,738 Borrowings (reductions) of debts, net ( 138,057) 167,819 Common stock transactions 49,500 44,425 ------------- ------------ Net cash provided (used) by financing activities 1,560,725 3,867 ------------- ------------ Cash flows from investing activities: Purchase of property, plant, and equipment, net ( 1,032,571) ( 92,181) ------------- ------------ Net cash used by investing activities ( 1,032,571) ( 92,181) ------------- ------------ Increase (decrease) in cash prior to effect of foreign currency translation ( 258,383) 355,664 Effect of foreign currency translation on cash ( 42,374) ( 26,571) ------------- ------------ Net increase (decrease) in cash ( 300,757) 329,093 Cash at beginning of period 433,772 8,871 ------------- ------------ Cash at end of period $ 133,015 $ 337,964 ============= ============ Supplemental Information: Cash used during the periods for payment of: Interest $ 371,221 $ 329,093 ============= ============ Income taxes $ 20,000 $ 36,000 ============= ============ The Company had no cash equivalents at September 30, 2000.
6 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED CONDENSED 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 three and nine months ended September 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 $1,500,000, and certain other financial covenants. 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 in excess of $ 1,050,000 of its resources during the nine months ended September 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. Through September 30, 2000, the financial impact of these transactions was a reduction in both liquidity and profitability. Although limited production commenced and initial customer orders were received during July, 2000, it is not contemplated that full-scale operations related to this line will be accomplished until late 2000 or early 2001. 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 JULY 1- SEPTEMBER 30: Gross sales increased approximately 5% or $261,000 for the quarter ended September 30, 2000 when compared to the same quarter of the preceding year. This was primarily due to increased sales of the Company's existing core product line. Cost of goods sold increased as a percentage of net sales when comparing the quarter ended September 30, 2000 with the comparable quarter in 1999. The percentages were 79.6% and 70.1% for the quarters during 2000 and 1999, respectively. This change was due the lower than anticipated margins on anti-freeze products resulting from increased materials costs and, decreased absorption of manufacturing overhead at the Company's Alabama plant somewhat related to the above mentioned Automotive Oils and Related Fluids Program. 7 Advertising and promotion increased approximately $ 58,000 comparing the three months ended September 30, 2000 and 1999. This was primarily due to a planned increases in the advertising budget. Selling and administrative expenses increased approximately $ 25,700 when comparing the quarters ended September 30, 2000 and 1999. Such change was attributable to increased personnel costs and anticipated incremental costs of operations. Interest expense, which aggregated approximately $ 117,000 for the current quarter, increased approximately $15,000 when comparing the September 30, 2000 quarter to the corresponding quarter in 1999. Such increase was attributable to recently promulgated interest rate increases as well as increased borrowings. RESULTS OF OPERATIONS FOR THE NINE MONTH PERIOD JANUARY 1 - SEPTEMBER 30: Gross sales increased 8% or approximately $992,000 when comparing the nine month periods of 2000 and 1999. This was primarily due to increased sales of the Company's existing core product line. Cost of goods sold increased to 73% as a percentage of net sales versus 68.3% when comparing the nine months ended September 30, 2000 to the comparable period in the preceding year. This change was due the lower than anticipated margins on anti-freeze products resulting from increased materials costs and, decreased absorption of manufacturing overhead at the Company's Alabama plant somewhat related to the above mentioned Automotive Oils and Related Fluids Program. Advertising and promotion expenses increased approximately $152,000 when comparing the nine months ended September 30, 2000 to the nine months ended September 30, 1999. This was primarily due to a planned increases in the advertising budget. Selling and administrative expenses increased for the nine months ended September 30, 2000 by approximately $224,000 or 11% when compared to the nine months ended September 30, 1999. This was attributable to increased personnel costs primarily associated with the above mentioned Automotive Oils and Related Fluids Program and normal incremental costs of operations. Interest expense increased during the nine month period in 2000 by approximately $68 ,000 when compared to the nine month period of 1999 reflecting the effect of recently promulgated interest rate increases as well as increased borrowings. 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. 8 PART II - OTHER INFORMATION Item 1 - Legal Proceedings: See the Registrant's 10K for the year ended December 31, 1998 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, 2000 /s/ Peter Dornau -------------------------- --------------------------------- Peter G. Dornau Chairman of the Board of Directors and Chief Executive Officer /s/ Edward Anchel --------------------------------- Edward Anchel Chief Financial Officer 9 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 9-mos Dec-31-2000 Jan-01-2000 Sep-30-2000 133,012 0 3,310,639 23,000 4,920,254 8,834,611 6,830,317 1,324,093 15,499,025 6,629,059 0 0 0 41,060 4,855,777 15,499,025 11,681,842 11,694,623 8,528,862 2,837,290 0 0 371,221 (42,750) (15,000) (27,750) 0 0 0 (27,750) (.01) (.01)
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