-----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, BM1BcrButekRVOZKAFj4KOfQx4qzYd8eiRqU5NhOlIE/Pg2MfLxv4pnWHjZ29pvs En7rjtJWTokMth41DTEyFg== 0000914317-98-000533.txt : 19980817 0000914317-98-000533.hdr.sgml : 19980817 ACCESSION NUMBER: 0000914317-98-000533 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: 98689981 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 JUNE 30, 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 August 13, 1998, there were 24,855,872 shares of Common Stock, $.001 par value outstanding. CONTENTS PART I Financial Information Item 1. Financial Statements Consolidated Balance Sheet as of June 30, 1998 and December 31, 1997 Unaudited Consolidated Statements of Operations and Retained Earnings For The Three Months Ended June 30, 1998 and 1997 Unaudited Consolidated Statements of Operations and Retained Earnings For The Six Months Ended June 30, 1998 and 1997 Unaudited Consolidated Statements of Cash Flows For The Six Months Ended June 30, 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 JUNE 30, 1998 DECEMBER 31, 1997 ------------- ----------------- ASSETS CURRENT ASSETS Cash and cash equivalents ............................................... $ 131,110 $ 882,884 Marketable securities ................................................... 102,108 1,703,806 Accounts receivable, less allowance for doubtful accounts of $369,369 and $303,320 ................................. 7,804,293 6,285,181 Inventories ............................................................. 16,250,322 12,543,474 Prepaid expenses and other current assets ............................... 1,717,371 727,421 ------------ ------------ Total Current Assets ..................................... 26,005,204 22,142,766 ------------ ------------ PROPERTY AND EQUIPMENT, at cost, net of accumulated depreciation of $1,421,780 and $742,460, respectively ............... 6,764,473 2,374,085 ------------ ------------ OTHER ASSETS Intangible assets, net ................................................ 1,354,795 588,017 Investments in non-marketable securities .............................. 1,688,750 1,688,750 Deferred tax assets ................................................... 477,418 455,300 Deposits and other assets ............................................. 549,778 425,711 ------------ ------------ Total Other Assets ....................................... 4,070,741 3,157,778 ------------ ------------ TOTAL ASSETS ............................................................... $ 36,840,418 $ 27,674,629 ============ ============
DHB CAPITAL GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) UNAUDITED JUNE 30, 1998 DECEMBER 31, 1997 ------------- ----------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Note payable .......................................................... $ 5,000,000 $ 2,675,000 Current maturities of long term debt .................................. 135,069 65,192 Accounts payable ...................................................... 5,663,930 5,072,929 Accrued expenses and other current liabilities ........................ 2,227,292 708,631 ------------ ------------ Total Current Liabilities ................................ 13,026,291 8,521,752 ------------ ------------ LONG TERM LIABILITIES Long term debt, net of current maturities .............................. 387,116 111,258 Note Payable - stockholder .............................................. 8,400,000 1,300,000 ------------ ------------ Total Long Term Debt ..................................... 8,787,116 1,411,258 ------------ ------------ Total Liabilities ........................................ 21,813,407 9,933,010 ------------ ------------ STOCKHOLDERS' EQUITY Common stock ........................................................... 24,796 25,347 Additional paid-in capital ............................................. 18,621,637 20,953,107 Accumulated deficit .................................................... (3,607,081) (3,230,700) Foreign currency translation adjustment ................................ (12,341) (6,135) ------------ ------------ STOCKHOLDERS' EQUITY .................................................... 15,027,011 17,741,619 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .............................. $ 36,840,418 $ 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 JUNE 30, 1998 1997 ------------ ------------ Net sales ................................................... $ 10,523,527 $ 8,400,842 Cost of sales ............................................... 6,848,302 5,758,367 ------------ ------------ Gross Profit ................................................ 3,675,225 2,642,475 Selling, general and administrative expenses ................ 3,319,788 2,609,411 ------------ ------------ Income(Loss) before other income (expense) .................. 355,437 33,064 ------------ ------------ Other Income (Expense) Interest expense, net of interest income .................... (329,672) (99,449) Dividend income ............................................. 7 5,003 Foreign currency translation ................................ (658) 3,914 Realized gain on marketable securities ...................... 73,359 (262,323) Unrealized gain on marketable securities .................... 13,751 895,687 ------------ ------------ Total Other Income (Expense) ....................... (243,213) 542,832 ------------ ------------ Income (loss) before income taxes (benefit) ................. 112,224 575,896 Income taxes (benefit) ...................................... 3,534 115,392 ------------ ------------ Net Income (loss) ........................................... 108,690 460,504 Retained Earnings (Deficit) - Beginning ..................... (3,715,771) (4,407,540) ------------ ------------ Retained Earnings (Deficit) - End ........................... $ (3,607,081) $ (3,947,036) ============ ============ Earnings (loss) per common share Primary ............................. $ 0.004 $ 0.018 ============ ============ Fully Diluted ....................... $ 0.004 $ 0.018 ============ ============ Weighted average number of common share outstanding: Primary ............................. 29,702,704 25,720,460 ============ ============ Fully Diluted ....................... 29,728,599 25,720,460 ============ ============
See accompanying notes to financial statements.
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE SIX MONTHS ENDED JUNE 30, 1998 1997 ------------ ------------- Net sales ................................................... $ 21,118,599 $ 15,545,517 Cost of sales ............................................... 14,724,382 10,527,531 ------------ ------------ Gross Profit ................................................ 6,394,217 5,017,986 Selling, general and administrative expenses ................ 6,421,538 4,528,195 ------------ ------------ Income(Loss) before other income (expense) .................. (27,321) 489,791 ------------ ------------ Other Income (Expense) Interest expense, net of interest income .................... (501,244) (149,820) Other income ............................................... 15 38,751 Foreign currency translation ................................ 84 (630) Realized gain on marketable securities ...................... 119,818 (32,382) Unrealized gain on marketable securities .................... 43,751 607,237 ------------ ------------ Total Other Income (Expense) ....................... (337,576) 463,156 ------------ ------------ Income (loss) before income taxes (benefit) ................. (364,897) 952,947 Income taxes (benefit) ...................................... 11,484 128,393 ------------ ------------ Net Income (loss) ........................................... (376,381) 824,554 Retained Earnings (Deficit) - Beginning ..................... (3,230,700) (4,771,590) ------------ ------------ Retained Earnings (Deficit) - End ........................... $ (3,607,081) $ (3,947,036) ============ ============ Earnings (loss) per common share Primary ............................. $ (0.013) $ 0.032 ============ ============ Fully Diluted ....................... $ (0.013) $ 0.032 ============ ============ Weighted average number of common share outstanding: Primary ............................. 28,530,291 25,720,460 ============ ============ Fully Diluted ....................... 28,584,093 25,720,460 ============ ============
See accompanying notes to financial statements.
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, CASH FLOWS FROM OPERATING ACTIVITIES 1998 1997 ----------- ----------- Net Income (loss) ....................................................... $ (376,381) $ 824,554 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .................................... 620,302 192,581 Stock issued for services ........................................ 372,000 -- Stock issued to purchase a lease ................................. -- 210,000 Stock issued in settlement of a lawsuit .......................... -- 150,000 Stock returned in settlement of a lawsuit ........................ -- (21,131) Unrealized gain on transfer from non-marketable to marketable .... -- 598,900 Changes in assets and liabilities (Increase) Decrease in: Accounts receivable ............................................... (800,606) (1,871,981) Marketable securities ............................................. 1,601,698 (261,487) Inventories ....................................................... (2,333,174) (1,817,859) Deferred taxes .................................................... (22,118) 49,000 Prepaid expenses and other current assets ......................... (977,712) (790,748) Deposits and other assets ......................................... (101,787) (61,883) Increase (decrease) in: Accounts payable .................................................. (566,507) 1,193,752 Accrued expenses and other current liabilities .................... 841,270 (17,158) State income taxes payable ........................................ 22,286 84,580 ----------- ----------- Net cash used by operating activities ...................................... (1,720,729) (1,538,880) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchase of assets of subsidiary, net of cash acquired (4,924,073) -- Payments made for property and equipment .......................... (780,347) (417,730) ----------- ----------- Net Cash used by investing activities ...................................... (5,704,073) (417,730) ----------- -----------
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, CASH FLOWS FROM FINANCING ACTIVITIES 1998 1997 ----------- ----------- Proceeds (repayments) of note payable- bank ....................... 2,325,000 500,000 Proceeds from shareholder note .................................... 7,100,000 -- Principal payments on long-term debt .............................. (41,417) (34,472) Stock warrant exercised ........................................... 66,000 -- Foreign Currency Translation ...................................... (6,206) 12,163 Purchase of treasury stock ........................................ (2,770,002) -- Net proceeds from sale of common stock ............................ -- 3,198,625 ----------- ----------- Net cash provided by financing activities .................................. 6,673,375 3,676,316 ----------- ----------- NET DECREASE IN CASH AND EQUIVALENTS ....................................... (751,774) 1,719,706 CASH AND CASH EQUIVALENTS - BEGINNING ...................................... 882,884 1,398,905 ----------- ----------- CASH AND CASH EQUIVALENTS - END ............................................ $ 131,110 $ 3,118,611 =========== =========== Supplemental cash flow information Cash paid for: .................................................... 1998 1997 ----------- ----------- Interest .......................................................... $ 174,350 $ 165,760 Taxes ............................................................. $ 27,134 $ 17,160
See accompanying notes to financial statements. DHB CAPITAL GROUP INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 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 June 30, 1998, Compared to the Three Months Ended June 30, 1997. Consolidated net sales for the three months ended June 30, 1998 increased by approximately $2,182,000 over sales for the three months ended June 30, 1997. In February of 1998, DHB acquired two subsidiaries, Lanxide Armor Products Inc. (LAP) and Lanxide Electronic Components Inc. (LEC). These acquisitions contributed approximately, $1,770,000 to the Company's sales for the quarter. The gross profit improved by 4% for the quarter ended June 30, 1998 over the quarter ending June 30, 1997 due to new product lines which yield a larger profit margin. Operating income increased from $63,069 for the three months ended June 30, 1997 to $410,555 for the quarter ended June 30, 1998. This improvement is attributed to a higher sales volume and greater profit margins. The Company's interest expense for the quarter ended June 30, 1998 increased to approximately $329,000 from $82,000 for the quarter ended June 30, 1997 as a result of the increased borrowings to finance the acquisitions. 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, LEC and DHB KK in financing their working capital requirements. Working Capital at June 30, 1998 was $12,979,000 as compared to $14,403,000 at June 30, 1997. Working capital is needed to finance the receivables, manufacturing process and inventory. The current ratio is 2:1 at June 30, 1998 as compared to 3.20:1 at June 30, 1997. Cash, cash equivalents, and marketable securities totaled $233,000 at June 30, 1998 and $5,122,000 at June 30, 1997. The Company repurchased and retired approximately $386,000 of its common stock in the open market during the quarter ended June 30, 1998. Effect of Inflation and Changing Prices. The Company did not experience increases in raw material prices during the three months ended June 30, 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. DL Cromwell Investments Inc. filed an action against the Company in the United States District Court Eastern Division of New York in connection with the breach of a consulting agreement. The Company and its attorneys believe the case is meritless and intends to vigorously defend the claim and to pursue a counterclaim. 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: August 13, 1998 DHB CAPITAL GROUP INC. /S/ David H. Brooks ------------------- 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 August 13, 1998 ------------------- David H. Brooks /S/ Mary Kreidell Chief Financial Officer August 13, 1998 ----------------- Mary Kreidell /S/ Gary Nadelman Director August 13, 1998 ----------------- Gary Nadelman EX-27 2
5 1 6-MOS DEC-31-1998 JUN-30-1998 131,110 102,108 7,804,293 369,369 16,250,322 26,005,204 6,764,473 1,421,780 36,840,418 13,026,291 0 24,796 0 0 15,002,215 36,840,418 21,118,599 21,118,599 14,724,382 6,421,538 0 0 501,244 (364,897) 11,484 (376,381) 0 0 0 (376,381) (.013) (.013)
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