-----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, AzYdb3ydOAk+7hN1xtp0QEpgUGaZydgVxXRTBV8jSqra4ZBLc634dmgtk21clHkz 3srzj2LCSk1iOFZESZyyAA== 0000350737-99-000008.txt : 19991109 0000350737-99-000008.hdr.sgml : 19991109 ACCESSION NUMBER: 0000350737-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991108 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: 99742937 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 10Q 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, 1999 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 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; 3,822,499 issued and outstanding at September 30, 1999 PART I - FINANCIAL INFORMATION Item l. Financial Statements OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS September 30, December 31, 1999 1998 ------------ ------------ Current assets: Cash $ 337,964 $ 8,871 Trade accounts receivable, net of allowances for doubtful accounts of $22,600 and $26,000 at September 30, 1999 and December 31, 1998, respectively 3,213,771 2,329,712 Due from officer 161,100 161,100 Inventories 3,380,542 3,691,877 Prepaid expenses 107,725 85,123 ----------- ------------ Total current assets 7,201,102 6,276,683 ----------- ------------ Property, plant and equipment, net 4,526,444 4,374,991 ----------- ------------ Other assets: Funds held in escrow for equipment 297,627 583,432 Trademarks, trade names and patents, net 382,171 399,415 Due from affiliated companies, net 650,412 870,150 Deposits and other assets 279,016 342,123 ------------ ------------ Total other assets 1,609,226 2,195,120 ------------ ------------ Total assets $13,336,772 $12,846,794 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable - trade $ 896,081 $ 932,927 Notes payable - bank 2,581,003 3,009,118 Current portion of long-term debt 299,667 300,000 Accrued expenses payable 418,881 77,991 ------------ ------------ Total current liabilities 4,196,632 4,320,036 ------------ ------------ Long-term debt, less current portion 4,238,152 4,070,000 ------------ ------------ Shareholders' equity: Common stock - $.01 par value 10,000,000 shares authorized, 3,822,499 and 3,753,017 shares issued and outstanding at September 30, 1999 and December 31, 1998, respectively 38,225 37,530 Additional paid-in capital 3,282,932 3,232,327 Retained earnings 1,759,943 1,332,567 Foreign currency translation adjustment ( 172,237) ( 145,666) ------------ ------------ 4,908,863 4,456,758 Less cost of common stock in treasury, 5,789 shares at September 30, 1999 ( 6,875) - ------------ ------------ 4,901,988 4,456,758 ------------ ------------ Total liabilities & shareholders' equity $13,336,772 $12,846,794 ============ ============
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, 1999 1998 1999 1998 ---- ---- ---- ----
Gross sales $ 4,995,382 $ 4,751,365 $12,088,582 $10,706,588 Allowances 567,324 425,187 1,258,762 958,654 ------------ ------------ ------------ ------------ Net sales 4,428,058 4,326,178 10,829,820 9,747,934 Cost of goods sold 3,102,576 3,191,618 7,396,507 6,842,257 ------------ ------------ ------------ ------------ Gross profit 1,325,482 1,134,560 3,433,313 2,905,677 ------------ ------------ ------------ ------------ Costs and expenses: Advertising and promotion 140,115 193,856 392,449 514,619 Selling and administrative 712,775 664,706 2,068,695 1,949,264 Interest expense 101,673 98,408 303,319 259,958 ------------ ------------ ------------ ------------ Total costs and expenses 954,563 956,970 2,764,463 2,723,841 ------------ ------------ ------------ ------------ Income from operations 370,919 177,590 668,850 181,836 Interest income 4,394 9,841 16,226 34,008 ------------ ------------ ------------ ------------ Income before provision for income taxes 375,313 187,431 685,076 215,844 Provision for income taxes 141,200 73,527 257,700 79,000 ------------ ------------ ------------ ------------ Net income 234,113 113,904 427,376 136,844 Other comprehensive income, net of income taxes: Foreign currency translation adjustment ( 4,104) ( 11,588) ( 26,571) ( 20,032) ------------------------- ------------ ------------ Comprehensive income $ 230,009 $ 102,316 $ 400,805 $ 116,812 ============ ============ ============ ============ Basic earnings per common share $ .06 $ .03 $ .11 $ .04 ============ ============ =========== ========== Earnings per share for the nine and three months ended September 30, 1999 were calculated on the basis of 3,794,618 weighted average shares of common stock outstanding. For the nine and three months ended September 30, 1998, earnings per share were calculated using 3,753,017 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.
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 1998 ---- ----
Cash flows provided by operating activities: Net Income $ 427,376 $ 136,844 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 243,777 198,190 Changes in operating assets and liabilities: (Increase) in accounts receivable ( 884,059) ( 965,213) (Increase) decrease in inventories 311,335 ( 343,599) (Increase) decrease in prepaid expenses ( 22,602) 389,276 Increase (decrease) in accounts payable, accrued expenses, and other 368,151 800,846 ------------ --------------- Net cash provided by operating activities 443,978 216,344 ------------ --------------- Cash flows from financing activities: Net (reductions) under line of credit ( 428,115) ( 418,213) Repayments of advances to affiliates 219,738 52,497 Borrowings (reductions) of debts, net 167,819 ( 260,000) Common stock transactions 44,425 - ------------ --------------- Net cash provided(used)by financing activities 3,867 ( 625,716) ------------ --------------- Cash flows from investing activities: Purchase of property, plant, and equipment, net ( 92,181) ( 240,289) ------------ --------------- Net cash used by investing activities ( 92,181) ( 240,289) ------------ --------------- Increase (decrease) in cash prior to effect of foreign currency translation on cash 355,664 ( 649,661 Effect of foreign currency translation on cash ( 26,571) ( 31,596) ------------ --------------- Net increase (decrease) in cash 329,093 ( 681,257) Cash at beginning of period 8,871 787,411 ------------ --------------- Cash at end of period $ 337,964 $ 106,154 ============ =============== Supplemental Information: Cash used during the periods for payment of: Interest $ 329,093 $ 259,000 ============ =============== Income taxes $ 36,000 $ - ============ =============== The company had no cash equivalents at September 30, 1999 and 1998.
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED CONDENSED 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, 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 and inventories and can aggregate a maximum amount of $5,000,000. The line matures in August, 2001. Under the terms of the line, the Registrant is required to maintain minimum working capital of $1,500,000, a debt to tangible net worth of ratio 2 to 1 and debt service coverage of 1.1 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 the 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 for the three month period July 1- September 30: Gross sales increased approximately 5% or $244,000 for the quarter ended September 30, 1999 when compared to the same quarter of the preceding year. Management attributes this primarily to increased sales of new products introduced late last year and a sales price increase on selected products initiated during the first quarter of 1999. Cost of goods sold decreased as a percentage of net sales when comparing the quarter ended September 30, 1999 with the comparable quarter in 1998. The percentages were 70.1% and 73.8% for the quarters during 1999 and 1998, respectively. This change was due the aforementioned sales price increase, increased absorption of manufacturing overhead at the Company's Alabama plant and is somewhat offset by increasing raw chemical costs. Advertising and promotion decreased approximately $ 53,000 comparing the three months ended September 30, 1999 and 1998. This was primarily due to a planned decrease in the advertising budget. Selling and administrative expenses increased approximately $ 48,000 when comparing the quarters ended September 30, 1999 and 1998. Such change is attributable to increased personnel costs and anticipated incremental costs of operations. Interest expense which aggregated approximately $101,000 for the current quarter was substantially unchanged when comparing the September 30, 1999 quarter to the corresponding quarter in 1998. Results of operations for the nine month period January 1 - September 30: Gross sales increased 13% or approximately $1,382,000 when comparing the nine month periods of 1999 and 1998. Management attributes this primarily to increased sales of new products introduced late last year and a sales price increase on selected products initiated during the first quarter of 1999. Cost of goods sold decreased to 68.3% as a percentage of net sales versus 70.2% when comparing the nine months ended September 30, 1999 to the comparable period in the preceding year. This change was due the aforementioned sales price increase, increased absorption of manufacturing overhead at the Company's Alabama plant and is somewhat offset by increasing raw chemical costs. Advertising and promotion expenses decreased approximately $122,000 when comparing the nine months ended September 30, 1999 to the nine months ended September 30, 1998. This was primarily due to a planned decrease in the advertising budget. Selling and administrative expenses increased for the nine months ended September 30, 1999 by approximately $119,000 or 6% when compared to the nine months ended September 30, 1998. This was attributable to increased personnel costs and anticipated incremental costs of operations. Interest expense increased during the nine month period in 1999 by approximately $43 ,000 when compared to the nine month period of 1998 reflecting the higher levels of borrowings during the earlier periods of 1999. 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 7, 1999 /s/ Peter Dornau ----------------------------------- Peter G. Dornau Chairman of the Board of Directors and Chief Executive Officer Date: November 7, 1999 /s/ Edward Anchel ------------------------------------ Edward Anchel Chief Financial Officer EX-27 2 FDS --
5 9-MOS DEC-31-1999 JAN-01-1999 SEP-01-1999 337,964 0 3,236,371 (22,600) 3,380,542 7,201,102 5,607,781 (1,081,337) 13,336,772 4,196,632 0 0 0 38,225 4,863,763 13,336,772 12,088,582 12,104,808 7,396,507 2,764,463 0 0 303,319 685,076 257,700 427,376 0 0 0 427,376 .11 .11
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