-----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, SylaDMktU1ua/G7jMXkgMRt0irfbHNnmlaEBGI/cj42pgxd7sexm1antjqzdHv3H 6aaktk6sS16btF+WL9l/DQ== 0000914317-97-000564.txt : 19971117 0000914317-97-000564.hdr.sgml : 19971117 ACCESSION NUMBER: 0000914317-97-000564 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: BSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DHB CAPITAL GROUP INC /DE/ CENTRAL INDEX KEY: 0000899166 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 113129361 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-13112 FILM NUMBER: 97720977 BUSINESS ADDRESS: STREET 1: 11 OLD WESTBURY RD CITY: OLD WESTBURY STATE: NY ZIP: 11568 BUSINESS PHONE: 5166212552 MAIL ADDRESS: STREET 1: 11 OLD WESTBURY RD CITY: OLD WESTBURY STATE: NY ZIP: 11568 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- Form 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 1997 Commission File No. 0-22429 DHB CAPITAL GROUP INC (Exact name of Registrant as specified in its charter) Delaware 11-3129361 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) 11 Old Westbury Road, Old Westbury, New York 11568 (Address of principal executive offices) Registrant's telephone number: (516) 997-1155 Not applicable Former name, former address and former fiscal year, if changed since last report Indicate by check whether the registrant (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act 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 [ ] As of November 12, 1997, there were 25,643,931 shares of Common Stock, $.001 par value outstanding. TABLE OF CONTENTS PART I : FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 Unaudited Consolidated Statements of Operations and Retained Earnings For The Three Months Ended September 30, 1997 and 1996 Unaudited Consolidated Statements of Operations and Retained Earnings For The Nine Months Ended September 30, 1997 and 1996 Unaudited Consolidated Statements of Cash Flows For The Nine Months Ended September 30, 1997 and 1996 Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition PART II : OTHER INFORMATION Item 1. Legal Proceedings PART I: FINANCIAL INFORMATION Item 1. Financial Statements
DHB CAPITAL GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS UNAUDITED SEPTEMBER 30, DECEMBER 31, 1997 1996 ----------- ----------- ASSETS CURRENT ASSETS Cash and cash equivalents .......................... $ 384,397 $ 1,249,655 Marketable securities .............................. 3,079,614 1,342,027 Accounts receivable, less allowance for doubtful accounts of $303,320 ............................. 6,398,937 3,499,535 Inventories ........................................ 9,689,359 7,290,205 Prepaid expenses and other current assets .......... 734,690 255,218 ----------- ----------- Total Current Assets ........................ $20,286,997 $13,636,640 ----------- ----------- PROPERTY AND EQUIPMENT, at cost, net of accumulated depreciation of $786,217 and $522,907, respectively 2,276,620 1,834,777 ----------- ----------- OTHER ASSETS Intangible assets, net ............................ 618,664 214,213 Investments in non-marketable securities .......... 1,316,750 2,316,750 Deferred tax assets ............................... 770,300 819,300 Deposits and other assets ......................... 435,430 338,739 ----------- ----------- Total Other Assets .......................... 3,141,144 3,689,002 ----------- ----------- TOTAL ASSETS .......................................... $25,704,761 $19,160,419 =========== ===========
(Continued)
DHB CAPITAL GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued) UNAUDITED SEPTEMBER 30, DECEMBER 31, 1997 1996 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Note payable ..................................... $ 1,900,000 $ 1,400,000 Current maturities of long term debt ............. 64,720 61,664 Accounts payable ................................. 4,194,974 3,019,804 Accrued expenses and other current liabilities ... 426,968 243,763 State income taxes payable ....................... 103,522 11,011 ------------ ------------ Total Current Liabilities ................... $ 6,690,184 $ 4,736,242 ------------ ------------ LONG TERM LIABILITIES Long-term debt, net of current maturities ......... 106,156 144,091 Due to shareholder ................................ 1,300,000 1,300,000 ------------ ------------ Total Long Term Debt ....................... 1,406,156 1,444,091 ------------ ------------ Total Liabilities ..................... 8,096,340 6,180,333 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, $.001 par value; 100,000,000 shares authorized, 25,559,931 issued and outstanding ................................... 25,560 23,146 Additional paid-in capital ......................... 21,970,011 17,956,030 Common stock subscription receivable ............... (670,000) (227,500) Accumulated deficit ................................ (3,721,263) (4,771,590) Foreign currency translation adjustment ............ 4,113 -- ------------ ------------ Total Stockholders' Equity ....... 17,608,421 12,980,086 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......... $ 25,704,761 $ 19,160,419 ============ ============
See accompanying notes to consolidated financial statements.
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 1996 ------------ ------------ Net sales ............................................. $ 9,004,476 $ 6,226,028 Cost of sales ......................................... 6,320,158 3,908,427 ------------ ------------ Gross profit .................................... 2,684,318 2,317,601 Selling, general and administrative expenses ......... 2,444,343 1,911,889 ------------ ------------ Income before other income (expense) ............ 239,975 405,712 ------------ ------------ Other Income (Expense) Interest expense ................................ (94,110) (85,930) Interest income ................................. 719 541 Dividend income ................................. 100 8,199 Foreign currency translation .................... 4,259 -- Realized loss on marketable securities .......... (28,124) (94,799) Unrealized gain on marketable securities ........ 113,693 343,039 ------------ ------------ Total Other Income (Expense) ........... (3,463) 171,050 ------------ ------------ Income before income tax expense ...................... 236,512 576,762 Income tax expense .................................... 10,739 176,890 ------------ ------------ Net Income ............................................ $ 225,773 $ 399,872 Retained Earnings(Deficit) - Beginning ................ (3,947,036) 1,210,316 Stock Dividend Paid ................................... -- (7,627) ------------ ------------ Retained Earnings(Deficit) - Ending ................... ($ 3,721,263) $ 1,602,561 ============ ============ Earnings per common share: Primary ......................................... $ 0.01 $ 0.02 ============ ============ Fully Diluted ................................... $ 0.01 $ 0.02 ============ ============ Weighted average number of common share outstanding: Primary ......................................... 29,021,184 22,216,440 ============ ============ Fully Diluted ................................... 29,021,184 22,738,440 ============ ============
See accompanying notes to consolidated financial statements
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 1996 ------------ ------------ Net sales ............................................ $ 24,549,991 $ 19,875,112 Cost of sales ........................................ 16,993,707 13,448,751 ------------ ------------ Gross profit ................................... 7,556,284 6,426,361 Selling, general and administrative expenses ........ 6,826,504 5,674,660 ------------ ------------ Income before other income (expense) ........... 729,780 751,701 ------------ ------------ Other Income (Expense) Interest expense ............................... (262,633) (249,794) Interest income ................................ 19,408 1,804 Dividend income ................................ 17,717 24,329 Other income ................................... 21,134 -- Foreign currency translation ................... 3,629 -- Realized loss on marketable securities ......... (60,506) (383) Unrealized gain on marketable securities ....... 720,929 1,469,702 ------------ ------------ Total Other Income (Expense) .......... 459,678 1,245,658 ------------ ------------ Income before income tax expense .................... 1,189,458 1,997,359 Income tax expense ................................... 139,131 489,109 ------------ ------------ Net Income ........................................... $ 1,050,327 $ 1,508,250 Retained Earnings(Deficit) - Beginning ............... (4,771,590) 101,938 Stock Dividend Paid .................................. -- (7,627) ------------ ------------ Retained Earnings(Deficit) - Ending .................. ($ 3,721,263) $ 1,602,561 ============ ============ Earnings per common share: Primary ........................................ $ 0.04 $ 0.07 ============ ============ Fully Diluted .................................. $ 0.04 $ 0.07 ============ ============ Weighted average number of common share outstanding: Primary ........................................ 27,023,433 22,216,440 ============ ============ Fully Diluted .................................. 27,609,756 22,738,440 ============ ============
See accompanying notes to consolidated financial statements
DHB CAPITAL GROUP, INC AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 1997 1996 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income ................................................... $ 1,050,327 $ 1,508,250 ----------- ----------- Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization ........................ 305,313 193,084 Stock return in settlement of lawsuit ................ (21,131) Stock issued to purchase lease ....................... 210,000 -- Stock issued for services ............................ 67,500 -- Stock issued in settlement of a lawsuit ............. 150,000 -- Unrealized gain on the transfer of securities from non-marketable securities to marketable securities (598,900) -- Changes in assets and liabilities (Increase) Decrease in: Accounts receivable ................................... (2,777,321) (1,690,626) Marketable securities ................................. (138,687) (1,447,390) Inventories ........................................... (2,164,571) (322,687) Prepaid expenses and other current assets ............. (479,472) (631,336) Deferred Taxes ........................................ 49,000 (12,600) Deposits and other assets ............................. (96,691) (270,717) Increase (decrease) in: Accounts payable ...................................... 1,135,179 (713,767) Accrued expenses and other current liabilities ........ 180,163 (190,473) State income taxes payable ............................ 66,938 435,224 ----------- ----------- Total Adjustments ........................................ (4,112,680) (4,651,288) ----------- ----------- Net cash used by operating activities .... (3,062,353) (3,143,038) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of business, net of cash ......................... 134,356 Payments made for property and equipment ..................... (610,173) (761,024) ----------- ----------- Net cash used by investing activities .... (475,817) (761,024) ----------- -----------
(Continued)
DHB CAPITAL GROUP, INC AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (continued) 1997 1996 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt .................. (51,231) (22,808) Repayment of shareholder loan, net .................... -- (590,000) Issuance of long term debt ............................ -- 243,573 Foreign currency exchange ............................. 4,113 -- Net proceeds (repayments) of line of credit ........... 500,000 (1,150,000) Purchase of treasury stock ............................ (1,028,300) -- Net proceeds from issuance of common stock ............ 3,248,330 5,146,503 ----------- ----------- Net cash provided by financing activities 2,672,912 3,627,268 ----------- ----------- NET (DECREASE) IN CASH AND EQUIVALENTS ................... (865,258) (276,794) CASH AND CASH EQUIVALENTS - BEGINNING .................... 1,249,655 475,108 ----------- ----------- CASH AND CASH EQUIVALENTS - ENDING ....................... $ 384,397 $ 98,314 =========== =========== SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for: Interest ......................................... $ 211,414 $ 285,238 Income taxes ..................................... $ 17,739 $ 33,301 Non-cash investing and financing activities Issuance of 180,000 common shares to acquire OPI . -- $ 570,000 Return of 38,625 common shares in settlement of OPI lawsuit ................................. $ (73,635) -- Issuance of 144,000 common shares for lease of warehouse facility ........................... $ 210,000 -- Issuance of 666,000 common shares to acquire Zublindage, SA ............................... $ 1,000,000 -- Issuance of 75,000 common shares in settlement of a lawsuit ................................. $ 150,000 -- Issuance of 13,500 common shares for services .... $ 67,500 --
See accompanying notes to consolidated financial statements DHB CAPITAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 1. Consolidated Financial Statements The consolidated balance sheet at the end of the preceding year has been derived from the audited consolidated balance sheet contained in the Company's Form 10-KSB and is presented for comparative purposes. All other financial statements are unaudited. All unaudited amounts are subject to year-end adjustments and audit, but the Company believes all adjustments, consisting only of normal and recurring adjustments, necessary to present fairly the financial condition, results of operations and changes in cash flows for all interim periods have been made. The results of operations for interim periods are not necessarily indicative of the operating results for the full year. Footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted in accordance with published rules and regulations of the Securities and Exchange Commission. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Form 10-KSB for the most recent fiscal year. 2. Repurchase of Common Stock During the quarter ended September 30, 1997, and pursuant to a resolution of the Board of Directors, the Company purchased 296,152 shares of common stock in the open market for $1,028,300. These shares were recorded as treasury stock when purchased and were subsequently cancelled and returned to treasury as authorized but unissued shares of the Company's common stock. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Three Months Ended September 30, 1997 Compared to the Three Months Ended September 30, 1996. The Company continued its aggressive marketing campaign targeted at new and existing customers as well as launching new product lines. These marketing efforts resulted in increased sales for the three months ended September 30, 1997 of approximately $2,778,000, or 45%, as compared to the three months ended September 30, 1996. Advertising, marketing and promotional expenses for the three months ended September 30, 1997 increased approximately $250,000 over the three months ended September 30, 1996. These costs are the result of management's continued focus on capturing increased market share by expanding the Company's customer base nationwide and internationally. While management believes these expenses are necessary for future sales growth, they resulted in a current decrease in operating income of approximately $166,000 for the three months ended September 30, 1997 over the three months ended September 30, 1996. Nine Months Ended September 30, 1997 Compared to the Nine Months Ended September 30, 1996. Consolidated net sales for the nine months ended September 30, 1997 increased by approximately 24% to $24,550,000 as compared to net sales for the nine months ended September 30, 1996 of $19,875,000. Advertising, marketing and promotional costs for the nine months ended September 30, 1997 increased by approximately $699,000 over the same period last year. This is the direct result of the Company's continued campaign to increase sales by launching new product line technologies as well as to increase recognition for existing brands and product lines. As such, operating income decreased slightly by $22,000 to $730,000 for the nine months ended September 30, 1997 as compared to $752,000 for the nine months ended September 30, 1996. Although these expenditures impact operating income in the short term, management believes they are necessary for continued sales growth in the fourth quarter and into 1998. Liquidity and Capital Resources The Company's primary goal over the fourth quarter and into 1998 will be to manage and finance the working capital needs of its operating subsidiaries and to make possible acquisitions of additional operating companies. Specifically, management is currently evaluating the working capital and production facility requirements for Point Blank in light of the U.S. Military Modular Body Armor System contract awarded in July 1997. Now that development and testing for this contract is substantially complete, the Company anticipates production will commence in the fourth quarter. As such, Point Blank is expanding its production capabilities within its existing facility and has implemented the necessary additional internal controls and cash management policies given the magnitude of this contract. Management believes that existing facilities will not be sufficient to accommodate the anticipated growth that will result from the Military contract when it's in full production combined with the continued growth in existing operations as experienced during the first nine months of 1997. Cash, cash equivalents and marketable securities totalled approximately $3,464,000 at September 30, 1997 and $2,592,000 at December 31, 1996. The $872,000 increase in cash, cash equivalents and marketable securities results primarily from the issuance of common stock. Working capital at September 30, 1997 was approximately $13,597,000, an increase of $4,696,000 from December 31, 1996. This increase results primarily from increases in both accounts receivable and inventory from December 31, 1996 to September 30, 1997 where the total of such amounts were $10,789,000 and $16,089,000, respectively. The Company's current ratio was 3.03:1 at September 30, 1997 compared to 2.88:1 at December 31, 1996. Total stockholders' equity at September 30, 1997 was $17,608,000 compared to $12,980,000 at December 31, 1996. The Company, since its inception, has obtained some of its working capital from bank credit lines which have been secured, in part, by the controlling shareholder's pledging of personal assets. In the past, the Company has been able to roll over such obligations into new notes at prevailing interest rates. In June 1997, the Company increased its current bank borrowing from $1,400,000 to $1,900,000 which is due in May 1998. There is no assurance that the Company will be able to roll over such loans in the future as they become due. The Company expects to renew its current borrowing facility, at prevailing interest rates, when it matures. The Company's principal commitments at September 30, 1997 consisted substantially of obligations under certain operating leases for its manufacturing and warehouse facilities. The Company's capital expenditures for the nine months ended September 30, 1997 were approximately $610,000. They resulted primarily from the expansion of the manufacturing facility in Florida. The Company's capital expenditures for the year ended December 31, 1996 were $1,123,739. The Company has investments in the securities of certain privately held companies and restricted securities of certain public companies, which are included in "Investments in Non-marketable Securities" on the Company's Balance Sheet. Effect of Inflation and Changing Prices. The Company did not experience increases in raw material prices during the nine months ended September 30, 1997 and 1996. The Company believes it will be able to increase prices on their products to meet future price increases in raw materials, should they occur. PART II. OTHER INFORMATION Item 1. Legal Proceedings. The Company is party to various litigation matters and claims which are normal in the course of its operations, and while the results of these ligations and claims cannot be predicted with certainty, management believes, based on advice of counsel, the final outcome of such matters will not have a materially adverse effect on the Company's consolidated financial condition or the results of operations. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized. Dated: November 12, 1997 DHB CAPITAL GROUP, INC. /S/ David H. Brooks ------------------- David H. Brooks Chairman of the Board & Chief E xecutive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on behalf of the Registrant and in capacities and at the dates indicated: Signature Capacity Date --------- -------- ---- /S/ David H. Brooks Chairman of the Board & November 12, 1997 - ------------------- Chief Executive Officer David H. Brooks /S/ Mary Kreidell Chief Financial Officer November 12, 1997 - ----------------- Mary Kreidell /S/ Gary Nadelman Director November 12, 1997 - ------------------ Gary Nadelman EX-27 2
5 9-MOS DEC-31-1997 SEP-30-1997 384,397 3,079,614 6,398,937 303,320 9,698,937 20,286,997 2,276,620 786,217 25,704,761 6,690,184 0 0 0 25,560 17,582,861 25,704,761 24,549,991 24,549,991 16,993,707 6,826,504 (459,678) 0 262,633 1,189,458 139,131 1,050,327 0 0 0 1,050,327 .04 .04
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