-----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, Pdd1wUIbhZWaffzw8leK7BTxdoG0QJnrIbFlhscexMiZ89x260uQkvuLdCjfqBOx JsoJWNQRs9qdmgXFopD4Rw== 0000914317-98-000366.txt : 19980518 0000914317-98-000366.hdr.sgml : 19980518 ACCESSION NUMBER: 0000914317-98-000366 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 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: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-13112 FILM NUMBER: 98625973 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 MARCH 31, 1998 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 of incorporation) (I.R.S. Employer Identification No.) 11 Old Westbury Road, Old Westbury, New York 11568 (Address of principal executive offices) Registrant's telephone number: (516) 997-1155 Former name, former address and former fiscal year, if changed since last report: Not applicable 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 May 13, 1998, there were 24,717,829 shares of Common Stock, $.001 par value outstanding. ================================================================================ CONTENTS PART I Financial Information Item 1. Financial Statements Consolidated Balance Sheet as of March 31, 1998 and December 31, 1997 Unaudited Consolidated Statements of Operations and Retained Earnings For The Three Months Ended March 31, 1998 and 1997 Unaudited Consolidated Statements of Cash Flows For The Three Months Ended March 31, 1998 and 1997 Unaudited Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Results of Operations Operations and Financial Condition PART II Other Information Signatures
DHB CAPITAL GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS UNAUDITED MARCH 31, 1998 DECEMBER 31, 1997 -------------- ----------------- ASSETS CURRENT ASSETS Cash and cash equivalents ...................... $ 562,612 $ 882,884 Marketable securities .......................... 88,335 1,703,806 Accounts receivable, less allowance for doubtful accounts of $353,320 and $303,320 ........ 7,614,332 6,285,181 Inventories .................................... 14,523,507 12,543,474 Prepaid expenses and other current assets ...... 1,457,942 727,421 ----------- ----------- Total Current Assets ............ 24,246,728 22,142,766 ----------- ----------- PROPERTY AND EQUIPMENT ........................ 6,867,426 2,374,085 ----------- ----------- OTHER ASSETS Intangible assets, net ....................... 1,051,878 588,017 Investments in non-marketable securities ..... 1,688,750 1,688,750 Deferred tax assets .......................... 455,300 455,300 Deposits and other assets .................... 449,324 425,711 ----------- ----------- Total Other Assets .............. 3,645,252 3,157,778 ----------- ----------- TOTAL ASSETS ...................................... 34,759,406 $27,674,629 =========== =========== DHB CAPITAL GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS UNAUDITED MARCH 31, 1998 DECEMBER 31, 1997 -------------- ----------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Note payable ................................. $ 3,375,000 $ 2,675,000 Current maturities of long term debt ......... 131,175 65,192 Accounts payable ............................. 5,868,403 5,072,929 Accrued expenses and other current liabilities 1,809,589 708,631 ----------- ----------- Total Current Liabilities ....... 11,184,167 8,521,752 ----------- ----------- LONG TERM LIABILITIES Long term debt, net of current maturities ..... 413,311 111,258 Note Payable - stockholder .................... 8,300,000 1,300,000 ----------- ----------- Total Long Term Debt ............ 8,713,311 1,411,258 ----------- ----------- Total Liabilities ............... 19,897,478 9,933,010 ----------- ----------- COMMITMENTS AND CONTINGENCIES Common Stock 24,743 25,347 Additional paid-in capital 18,569,676 20,953,107 Accumulated Deficit (3,715,771) (3,230,700) Foreign currency translation adjustment (16,720) (6,135) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY ..................... 14,861,928 17,741,619 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..... $34,759,406 $27,674,629 =========== ===========
See accompanying notes to financial statements.
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE THREE MONTHS ENDED MARCH 31, 1998 1997 ------------ ------------ Net sales ......................................................... $ 10,595,074 $ 7,144,676 Cost of sales ..................................................... 7,876,092 4,762,894 ------------ ------------ Gross Profit ................................................ 2,718,982 2,381,782 Selling, general and administrative expenses ..................... 3,101,742 1,925,056 ------------ ------------ Income(Loss) before other income (expense) .................. (382,760) 456,726 ------------ ------------ Other Income (Expense) Interest expense, net of interest income .................... (171,571) (50,371) Dividend income ............................................. 8 12,617 Other income ................................................... -- 21,131 Foreign currency translation ................................ 742 (4,544) Realized gain on marketable securities ...................... 46,460 229,941 Unrealized gain on marketable securities .................... 30,000 (288,450) ------------ ------------ Total Other Income (Expense) ....................... (94,361) (79,676) ------------ ------------ Income (loss) before income taxes (benefit) ................. (477,121) 377,050 Income taxes (benefit) ...................................... 7,950 13,000 ------------ ------------ Net Income (loss) ........................................... (485,071) 364,050 Retained Earnings (Deficit) - Beginning ............ (3,230,700) (4,771,590) ------------ ------------ Retained Earnings (Deficit) - End .................. $ (3,715,771) $ (4,407,540) ============ ============ Earnings (loss) per common share Primary ............................. $ (0.018) $ 0.015 ============ ============ Fully Diluted ....................... $ (0.017) $ 0.015 ============ ============ Weighted average number of common share outstanding: Primary ............................. 27,137,331 25,078,097 ============ ============ Fully Diluted ....................... 28,053,959 25,078,097 ============ ============
See accompanying notes to financial statements.
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998 1997 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income (loss) .................................. $ (485,071) $ 364,050 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ............... 265,754 88,027 Stock issued in settlement of a lawsuit ..... -- 150,000 Stock returned in settlement of a lawsuit ... -- (21,131) Stock issued to purchase a lease ............ -- 279,388 Changes in assets and liabilities (Increase) Decrease in: Accounts receivable .......................... (610,645) (1,292,927) Marketable securities ........................ 1,615,471 (1,313,713) Inventories .................................. (606,359) (489,475) Prepaid expenses and other current assets .... (718,283) (606,209) Deposits and other assets .................... (1,333) (22,081) Increase (decrease) in: Accounts payable ............................. (362,034) 1,860,367 Accrued expenses and other current liabilities 445,853 (29,550) State income taxes payable ................... -- 349 ----------- ----------- Net cash used by operating activities ................. (456,647) (1,032,905) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchase of assets of subsidiary, net of cash acquired ....................... (4,582,402) -- Payments made for property and equipment ..... (567,507) (118,458) ----------- ----------- Net Cash provided (used) by investing activities ...... (5,149,909) (118,458) ----------- ----------- DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998 1997 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds (repayments) of note payable- bank .. 700,000 -- Proceeds from shareholder note ............... 7,000,000 -- Principal payments on long-term debt ......... (19,116) (13,910) Dividends Paid ............................... -- -- Foreign Currency Translation ................. (10,585) 7,338 Purchase of treasury stock ................... (2,384,015) -- Net proceeds from sale of common stock ....... -- 100,000 ----------- ----------- Net cash provided (used) by financing activities ...... 5,286,284 93,428 ----------- ----------- NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS ....... (320,272) (1,057,935) CASH AND CASH EQUIVALENTS - BEGINNING ................. 882,884 1,398,905 ----------- ----------- CASH AND CASH EQUIVALENTS - END ....................... $ 562,612 $ 340,970 =========== =========== Supplemental Cash Flow Information Cash paid for Interest $ 123,296 $ 59,525 Taxes $ 1,817 $ 33,301
See accompanying notes to financial statements. DHB CAPITAL GROUP INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 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 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. The consolidated financial statements of DHB Capital Group, Inc. and Subsidiaries (the "Company") are unaudited and reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. The consolidated Company includes the following entities: Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations Three Months Ended March 31, 1998, Compared to the Three Months Ended March 31, 1997. Consolidated net sales for the three months ended March 31, 1998 increased by approximately $3,450,000 over sales for the three months ended March 31, 1997. Over $2,000,000 which represents 29% of this increase was the result of improved sales in both our armor and sports divisions. In February of 1998, DHB acquired two subsidiaries, Lanxide Armor Products Inc. (LAP) and Lanxide Electronic Components Inc. (LEC). These acquisitions contributed approximately, $1,364,000 to the Company's sales for the first quarter. LAP is involved in the design, manufacture, testing and sale of product for specific armor systems and components. These hard armor systems are based on patented and highly proprietary ceramic/metal composite systems. Lanxide Electronic Products designs, manufactures and sells unique and heavily patented thermal management packaging and structural components for the electronic industry. Both Lap and LEC were acquired from the same financially troubled parent corporation. The parent corporation's financial condition severely hampered their first quarter's performance. While there was a marked improvement from February to March under DHB management, the overall effect of the acquisitions resulted in a 7% decrease in the consolidated gross profit to 26% for quarter ending March 31, 1998 from 33% for the quarter ended March 31, 1997. Operating income was similarly impacted, resulting in a loss of $382,760 for the three months ended March 31, 1998 as compared to operating income of $456,726. The Company has instituted tighter production controls, restored financial well being and has hired a new management team at LAP and LEC to insure a quick turn around. Also contributing to the operating loss was a $173,000 advertising campaign incurred by the sports division in relation to their launching a new innovative line of therapeutic magnetic supports. The Company's interest expense increased to $172,000 from $50,000 as a result of the increased borrowings to finance the acquisition. Liquidity and Capital Resources The Company's primary capital requirements over the next twelve months are to assist PACA , Point Blank, NDL, OPI, Zunlindage, LAP, and LEC in financing their working capital requirements. Working capital is needed to finance the receivables, manufacturing process and inventory. Working Capital at March 31, 1998 was $13,063,000 as compared to $10,288,700 at March 31, 1998. The current ratio at March 31, 1998 is 2.17:1 as compared to 2.9:1 at March 31, 1997. Cash, cash equivalents, and marketable securities totaled $651,000 at March 31, 1998. Compared to $341,000 at March 31, 1997. The increase in cash, cash equivalents and marketable securities was derived from operations and a shareholder loan. The Company obtained a line of credit with the Bank of New York in May of 1998 for up to $5,000,000. The line is secured by the Company's account receivable. As of May 13, 1998 the Company has borrowed $500,000 on this line at 7.4% interest due November 9, 1998. During the first quarter, the Company repurchased 604,595 shares of its common stock in the open market. Effect of Inflation and Changing Prices. The Company did not experience increases in raw material prices during the three months ended March 31, 1998 and 1997. 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. Renaissance Financial Securities Corp. ("Renaissance") filed an action against the Company and David H. Brooks in the United States District Court for the Southern District of New York in connection with the breach of a consulting agreement pursuant to which Renaissance was to provide certain services to the Company. Renaissance seeks, among other things, compensatory damages of not less than $2,500,000, punitive damages of not less than $500,000 and an order enabling Renaissance to execute certain stock purchase warrants. The Company filed an Answer and Counter-Claim and intends to vigorously defend the claim and to pursue its Counter-Claims. In June 1996, the Company commenced a lawsuit against the former president of NDL, Mr. Barry Finn, for breach of his employment agreement. On December 13, 1996, Mr. Finn filed a counterclaim against the Company asserting Breach of Contract. The Company intends to vigorously pursue its claim and vigorously defend Mr. Finn's counterclaim. The Company is party to other litigation matters and claims which are normal in the course of its operations, and while the results of the litigation 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 consolidated financial position. 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: May 13, 1998 DHB CAPITAL GROUP INC. /S/ David H. Brooks ------------------------------- Chairman of the Board, Chief Executive Officer, and Director 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 May 14, 1998 - ---------------------- /S/ Mary Kreidell Chief Financial Officer May 14, 1998 - ---------------------- /S/ Gary Nadelman Director May 14, 1998 - ---------------------- EX-27 2
5 3-MOS DEC-31-1998 MAR-31-1998 526,612 148,335 7,614,332 369,369 14,523,507 24,306,728 6,867,426 1,105,986 34,819,406 11,184,167 0 24,743 0 0 14,897,185 34,819,406 10,595,074 10,595,074 7,876,092 3,101,742 0 0 171,571 (417,121) 7,950 (425,071) 0 0 0 (425,071) .018 .017
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