-----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, UNxhGI9KZC9e22J38OHrMkoQ8Pg8J324IInjhcFtfL2omVIXO0ouUXg9QRY7COBc aRjCowM7GGCG9Ug0blb/Mg== 0000891554-01-504184.txt : 20010815 0000891554-01-504184.hdr.sgml : 20010815 ACCESSION NUMBER: 0000891554-01-504184 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 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: 1934 Act SEC FILE NUMBER: 000-11102 FILM NUMBER: 1711761 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 d26581_10q.txt QUARTERLY REPORT 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, 2001 Commission File No. 2-70197 OCEAN BIO-CHEM, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) ------------------------------------------------------------------------------- Florida 59-156432 (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. 4,199,899 shares issued and outstanding at June 30, 2001 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES INDEX Description Page Part I: Item 1. - Financial Statements: Consolidated balance sheets as of June 30, 2001 and December 31, 2000 3 Consolidated statements of operations for the three and six months ended June 30, 2001 and 2000 4 Consolidated statements of changes in shareholders' equity for the six months ended June 30, 2001 and 2000 5 Consolidated statements of cash flows for the six months ended June 30, 2001 and 2000 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 10 Item 6. - Exhibits and Reports on Form 8-K 10 Signatures 11 2 PART I - Financial Information Item l. Financial Statements OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
JUNE 30, DECEMBER 31, 2001 2000 ----------- ------------- (Unaudited) Current assets: Cash $ 164,728 $ 123,515 Trade accounts receivable net of allowances for doubtful accounts of approximately $23,000 at June 30, 2001 and December 31, 2000, respectively 3,096,578 3,417,827 Inventories 4,662,124 4,506,987 Due from officer -- 161,100 Prepaid expenses and other current assets 378,284 289,441 ----------- ----------- Total current assets 8,301,714 8,498,870 ----------- ----------- Property, plant and equipment, net 6,070,659 5,643,550 ----------- ----------- Other assets: Funds held in escrow for equipment 27,380 41,506 Trademarks, trade names and patents, net 341,935 353,431 Deposits and other assets 333,115 274,670 Due from affiliated companies, net 398,934 598,237 ----------- ----------- Total other assets 1,101,364 1,267,844 ----------- ----------- Total assets $15,473,737 $15,410,264 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable - trade $ 1,999,480 $ 2,119,865 Note payable - bank 4,122,388 4,250,000 Current portion of long-term debt 464,982 355,306 Accrued expenses payable 231,979 120,356 ----------- ----------- Total current liabilities 6,818,829 6,845,527 ----------- ----------- Long-term debt, less current portion 3,946,708 3,892,445 ----------- ----------- Shareholders' equity: Common stock - $.01 par value 10,000,000 shares authorized, 4,199,889 and 4,105,889 shares issued and outstanding at June 30, 2001 and December 31, 2000, respectively 41,999 41,060 Additional paid-in capital 3,744,819 3,720,377 Foreign currency translation adjustment ( 227,124) ( 209,398) Retained earnings 1,156,701 1,128,448 ----------- ----------- 4,716,395 4,680,487 Less cost of common stock in treasury, 5,789 shares at June 30, 2001 and December 31, 2000, respectively ( 8,195) ( 8,195) ----------- ----------- 4,708,200 4,672,292 ----------- ----------- Total liabilities and shareholders' equity $15,473,737 $15,410,264 =========== ===========
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, 2001 2000 2001 2000 ---- ---- ---- ---- Gross sales $5,033,602 $4,118,783 $8,578,349 $7,823,945 Allowances 420,293 403,718 731,834 836,746 ---------- ---------- ---------- ---------- Net sales 4,613,309 3,715,065 7,846,515 6,987,199 Cost of goods sold 3,298,286 2,530,688 5,847,920 4,792,886 ---------- ---------- ---------- ---------- Gross profit 1,315,023 1,184,377 1,998,595 2,194,313 ---------- ---------- ---------- ---------- Costs and expenses: Advertising and promotion 152,990 163,336 292,812 346,488 Selling and administrative 672,581 826,858 1,382,258 1,554,193 Interest expense 140,010 132,294 285,010 254,200 ---------- ---------- ---------- ---------- Total cost and expenses 965,581 1,122,488 1,960,080 2,154,881 ---------- ---------- ---------- ---------- Income from operations 349,442 61,889 38,515 39,432 Interest income 285 3,144 1,738 8,936 ---------- ---------- ---------- ---------- Income before income taxes 349,727 65,033 40,253 48,368 Provision for income taxes 12,000 21,500 12,000 15,000 ---------- ---------- ---------- ---------- Net income 337,727 43,533 28,253 33,368 Other comprehensive income, net of income taxes: Foreign currency translation adjustment 6,030 (23,511) (17,726) (30,200) ---------- ---------- ---------- ---------- Comprehensive income $ 343,757 $ 20,022 $ 10,527 $ 3,168 ========== ========== ========== ========== Earnings per common share $ .09 $ .01 $ .01 $ .01 ========== ========== =========== ==========
Earnings per share were calculated on the basis of 4,114,037 and 4,011,426 weighted average shares of common stock outstanding for the six months and three months ended June 30, 2001 and 2000, 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, 2001 AND 2000 (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, 2001 4,105,889 $41,060 $3,720,377 ($ 209,398) $1,128,448 ($ 8,195) $4,672,292 ==== ========= ======= ========== =========== ========== ========= ========== Net income 28,253 28,253 Issuances of stock 94,000 939 24,442 25,381 Foreign currency translation adjustment ( 17,726) ( 17,726) --------- ------- ---------- ------------ --------- --------- ---------- June 30, 2001 4,199,889 $41,999 $3,744,819 ($ 227,124) $1,156,701 ($ 8,195) $4,708.200 ==== ========= ======= ========== =========== ========== ========= ==========
5 OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, (Unaudited)
2001 2000 Cash flow provided by operating activities: Net income $ 28,253 $ 33,368 ------------ ----------- Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 215,145 168,997 Changes in assets and liabilities: Decrease in accounts receivable 321,249 652,051 (Increase) in inventory ( 155,137) ( 616,213) (Increase) decrease in prepaid expenses and other current assets 72,257 ( 141,198) Increase (decrease) in accounts payable, accrued expenses and other ( 67,208) ( 166,689) ------------- ------------ Net cash provided (used) by operating activities 414,559 ( 69,684) ------------- ------------ Cash flows from financing activities: Net increases (reductions) under line of credit ( 127,611) 200,000 Reduction in advances from affiliates 199,303 235,362 Borrowings (payments) on debts, net 163,939 ( 152,333) Common stock transactions 25,381 49,500 ------------- ------------ Net cash provided by financing activities 261,012 332,529 ------------- ------------ Cash flows from investing activities: Purchases of property, plant, equipment, net of funds held in escrow ( 616,632) ( 504,658) ------------- ------------ Net cash (used) by investing activities ( 616,632) ( 504,658) ------------- ------------ Increase (decrease) in cash prior to effect of foreign currency translation adjustment 58,939 ( 241,813) Effect of foreign currency translation adjustment on cash ( 17,726) ( 30,200) ------------- ------------ Net increase (decrease) in cash 41,213 ( 272,013) Cash at beginning of period 123,515 433,772 ------------- ------------ Cash at end of period $ 164,728 $ 161,759 ============= ============ Supplemental information: Cash used for payment of interest during period $ 285,010 $ 254,200 ============= ============ Cash used for payment of income taxes during period $ -0- $ 257,800 ============= ============ The company had no cash equivalents at June 30, 2001 and 2000.
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, 2000 have been reclassified to conform with the 2001 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, 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. As of June 30, 2001, the amount outstanding pursuant to this facility was $4,122,388 and, as of such date the Registrant was not in compliance with certain of the applicable loan covenants. The lender has agreed to waive such violations through September 30, 2001. 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 For The Three Month Period April 1- June 30: - ----------------------------------------------------------------- Gross sales increased approximately 22.2 % or $914,800 for the quarter ended June 30, 2001 when compared to the same quarter of the preceding year. Management attributes this primarily to increased sales of new automotive fluids products and a sales price increase implemented late in the first quarter of 2001. 7 Cost of goods sold increased as a percentage of net sales when comparing the quarter ended June 30, 2001 with the comparable quarter in 2000. The percentages were 71.5% and 68.1% for the quarters ended 2001 and 2000, respectively. This change was primarily due to higher raw chemical costs, anticipated lower margins on the automotive fluids as compared to the marine product line and higher manufacturing overhead at the Company's Alabama plant. Selling and administrative expenses decreased approximately $154,300 or 18.7% comparing the quarters ended June 30, 2001 and June 30, 2000. Such decrease was primarily due to decreased professional fees offset by increased personnel costs associated with the new automotive line of products. Advertising and promotion decreased approximately $10,300 or 6.3% comparing the three months ended June 30, 2001 and 2000. This was primarily due to timing of advertising in 2001. The overall program for 2001 is lower than 2000. Interest expense increased approximately $7,700 during the current quarter. This change was primarily due to costs associated with increased borrowings which were mitigated by the impact of decreasing interest rates. Results of Operations For the Six Month Period January 1 - June 30: - ------------------------------------------------------------------ Gross Sales increased 9.6% or approximately $754,400 when comparing the six month periods of 2001 and 2000. Management attributes this primarily to increased sales of new automotive fluids products and a sales price increase implemented late in the first quarter of 2001. Cost of goods sold increased as a percentage of net sales when comparing the six months ended June 30, 2001 with the comparable period in 2000. The percentages were 74.5% and 68.6% for the six month periods ended 2001 and 2000, respectively. This change was primarily due to higher raw chemical costs, anticipated lower margins on the automotive fluids as compared to the marine product line and higher manufacturing overhead at the Company's Alabama plant. Advertising and promotion expenses decreased approximately 15.5% or $53,700 when comparing the six months ended June 30, 2001 to the six months ended June 30, 2000. This was primarily due to a planned increase in the advertising budget. Selling and administrative expenses decreased for the six months ended June 30, 2001 by approximately $171,900 or 11.1% when compared to the six months ended June 30, 2000. Such decrease was primarily due to decreased professional fees offset by increased personnel costs associated with the new automotive line of products. Interest expense increased during the six month period in 2001 by approximately $30,800 when compared to the six month period of 2000. This change was primarily due to costs associated with increased borrowings which were mitigated by the impact of decreasing interest rates. 8 Forward-looking Statements: Certain statements contained herein, including without limitation expectations as to future sales and operating results, constitute forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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-Q for the quarter ended March 31, 2001 for disclosure of matters associated with North American Oil Company, Inc. v. Star Brite Distributing, Inc. with respect to a court ruling dated March 30, 2001. Subsequent thereto, the court ruled to defer ruling on further issues related to the case, specifically including the subject of awarding legal fees to the plaintiff, until the Company's appeal is resolved. 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 15, 2001, 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. Shareholders also approved Berkovits, Lago & Co., LLP, Certified Public Accountants, as independent auditors for the year ending December 31, 2001. The tabulation of voting for the foregoing was as follows: For Against Abstain Peter Dornau 3,852,651 4,748 12,198 Edward Anchel 3,852,651 4,748 12,198 Jeffrey Tieger 3,852,651 4,748 12,198 Laz Schneider 3,852,441 4,958 12,198 James Kolisch 3,852,441 4,958 12,198 John B. Turner 3,852,441 4,958 12,198 Berkovits, Lago & Co.,LLP, CPA's 3,865,477 3,879 242 9 Item 5 - Other Matters: Not applicable Item 6 - Exhibits: Not applicable (A) Exhibits - Not applicable (B) Reports on Form 8-K - Not applicable 10 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 13, 2001 /s/ Peter Dornau Peter G. Dornau Chairman of the Board and Chief Executive Officer /s/ Edward Anchel Edward Anchel Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----