-----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, C9IbwRE8zlTafrirYSPR4usj3Pp8usWLblQHfVPVSbhzJzdtTEv/l32uHnlfQPLg G4bOXNUhOTungESXbXwk0A== 0000891554-99-000919.txt : 19990512 0000891554-99-000919.hdr.sgml : 19990512 ACCESSION NUMBER: 0000891554-99-000919 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990511 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: 99616520 BUSINESS ADDRESS: STREET 1: 4041 SW 47TH AVE CITY: FORT LAUDERDALE STATE: FL ZIP: 33028 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, 1999 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 (I.R.S. Employer of 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, 3,766,517 shares issued and outstanding at March 31, 1999. PART I - Financial Information Item l. Financial Statement OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
ASSETS MARCH 31, DEC. 31, Current Assets: 1999 1998 ------------ ------------ Cash $ 339,616 $ 8,871 Trade accounts receivable net of allowance for doubtful accounts of $26,000 and $35,000 at March 31, 1999 and December 31, 1998, respectively 2,308,412 2,329,712 Due from officer 161,000 161,100 Inventories 3,319,698 3,691,877 Prepaid expenses 80,199 85,123 ------------ ------------ Total Current Assets 6,209,025 6,276,683 ------------ ------------ Property, Plant and Equipment, net 4,345,624 4374,991 ------------ ------------ Other Assets: Trademarks, trade names and patents, net of accumulated amortization 393,687 399,415 Funds held in escrow for construction and equipment 530,055 583,432 Due from affiliated companies, net 524,800 870,150 Deposits and other assets 331,418 342,123 ------------ ------------ Total Other Assets 1,779,960 2,195,120 ------------ ------------ Total Assets $12,334,609 $12,846,794 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable - trade $508,259 $932,927 Note payable - bank 2,557,806 3,009,118 Current portion of long term debt 294,075 300,000 Other accrued liabilities 80,770 77,991 ------------ ------------ Total Current Liabilities 3,440,910 4,320,036 ------------ ------------ Long term debt, less current portion 4,395,925 4,070,000 ------------ ------------ Shareholders' Equity: Common stock - $.01 par value, 10,000,000 shares authorized, 3,766,517 and 3,753,017 shares issued and outstanding at March 31, 1999 and December 31, 1998, respectively 37,665 37,530 Additional paid-in capital 3,241,592 3,232,327 Retained earnings 1,397,464 1,332,567 Foreign currency translation adjustment (172,072) (145,666) ------------ ------------ 4,504,649 4,456,758 Less cost of common stock in treasury, 5,789 shares at March 31, 1999 (6,875) -- ------------ ------------ 4,497,774 4,456,758 ------------ ------------ Total Liabilities & Shareholders' Equity $12,334,609 $12,846,794 ============ ============
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THREE MONTHS ENDED MARCH 31, 1999 1998 ----------- ------------ Gross sales $ 3,418,814 $ 2,787,441 Allowances 379,122 259,959 ----------- ----------- Net sales 3,039,692 2,527,482 Cost of goods sold 2,107,223 1,820,304 ----------- ----------- Gross profit 932,469 707,178 Costs and expenses: Advertising and promotion 98,240 70,800 Selling and administrative 637,857 567,627 Interest expense 98,634 59,282 ----------- ----------- Total costs and expenses 834,761 697,709 ----------- ----------- Operating income 97,738 9,469 Interest income 6,160 15,682 ----------- ----------- Income before income taxes 103,898 25,151 Provision for income taxes 39,000 5,166 ----------- ----------- Net income 64,898 19,985 ----------- ----------- Other comprehensive income, net of tax Foreign currency translation adjustment 12,744 (3,191) ----------- ----------- Comprehensive income $ 52,154 $ 16,794 =========== =========== Earnings per common share $ .02 $ .01 =========== =========== Earnings per share were calculated on the basis of 3,757,517 and 3,753,017 weighted average shares of common stock outstanding for the quarters ended March 31, 1999 and 1998, 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 are foreign currency translation adjustments. OCEAN BIO-CHEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THREE MONTHS ENDED MARCH 31 1999 1998 --------- ---------- Cash flow provided (used) by operating activities: Net Income $ 64,898 $ 19,985 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 78,578 64,597 Changes in assets and liabilities: (Increase) decrease in accounts receivable 21,300 (258,718) (Increase) decrease in inventory 372,179 (284,757) Decrease in prepaid expenses 4,924 67,223 Increase (decrease) in accounts payable, accrued expenses and other (411,184) 417,674 --------- --------- Net cash provided by operating activities 130,695 26,004 --------- --------- Cash provided by financing activities: Net reduction under line of credit (451,312) (671,213) Net reductions in advances to affiliates 345,350 17,795 Net reductions in current portion of long term debt (5,925) (10,000) Long term borrowings, net 325,925 (80,000) Common stock transactions, net 2,525 -- --------- --------- Net cash provided (used) by financing activities 216,563 (743,418) --------- --------- Cash provided (used) by investing activities: Purchase property, plant, equipment, net 9,893 (55,485) --------- --------- Net cash used by investing activities 9,893 (55,485) --------- --------- Increase (decrease) in cash prior to effect of exchange rate on cash 357,151 (772,899) Effect of exchange rate on cash (26,406) (4,039) --------- --------- Increase (decrease) in cash 330,745 (776,938) Cash at beginning of period 8,871 787,411 --------- --------- Cash at end of period $ 339,616 $ 10,473 ========= ========= Supplemental Information: Cash used for interest during period $ 85,192 $ 101,114 Cash used for income taxes during period $ -- $ -- ========= ========= The company had no cash equivalents at March 31, 1999 and 1998. OCEAN BIO-CHEM, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS l. 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, 1998 have been reclassified to conform to the 1999 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 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 ration 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 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 22% for the quarter ended March 31, 1999 when compared to the same quarter of the preceding year. Cost of goods sold decreased as a percentage of gross sales when comparing the quarter ended March 31, 1999 with the comparable quarter in 1998. The percentages were 61.6 % and 65.3% for the quarters ended 1999 and 1998, respectively. This change was primarily due to an improved product mix and a general sales price increase. Selling and administrative expenses increased approximately $83,700 when comparing the quarter ended March 31, 1999 with March 31, 1998. This change was primarily due to personnel costs and professional fees. Advertising and promotion increased approximately $27,400 comparing the three months ended March 31, 1999 and 1998. This was primarily due to increased co-operative advertising. Interest expense increased when comparing the March 31, 1999 quarter to the corresponding quarter in 1998 by approximately $25,900 due primarily to increased borrowings. PART II - Other Information Item l - Legal Proceedings: Not applicable. Item 2 - Changes in Securities: During March, 1999, 13,500 shares of the Registrant's Common Stock were issued to Edward Anchel in exchange for financial consulting services rendered to the Company during the period December 1, 1998 trough February 28, 1999. During March, 1999, the Registrant acquired 5,789 shares of its Common Stock as Treasury Shares in exchange for cancellation of an employee loan in the amount of $6,875. During May, 1999, 55,982 shares of the Registrant's 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, approximately $41,900, will be charged to operations during the quarter ending June 30, 1999. 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 (A) Exhibits: 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 its behalf by the undersigned hereunto duly authorized. OCEAN BIO-CHEM, INC. Date: May 10, 1999 By: /s/ PETER G. DORNAU --------------------------------- ----------------------------------- Peter G. Dornau Chairman of the Board and Chief Executive Officer By: /s/ PETER G. DORNAU ---------------------------------- Peter G. Dornau Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 339,616 0 2,334,412 (26,000) 3,319,698 80,199 5,273,278 (927,654) 12,334,609 3,440,910 0 0 0 37,665 4,460,109 12,334,609 3,418,814 3,424,974 2,107,223 0 736,126 0 98,634 103,989 39,000 64,898 0 0 0 64,898 .02 .02
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