-----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, Am9zWYJnYtXgj34TaMMC3/ia51T952lrjXfmaYAsNLCmthrqFO2cTxbV58OYRyQo oizpSwo6bl4O6oIbrRItNA== 0000914317-98-000693.txt : 19981116 0000914317-98-000693.hdr.sgml : 19981116 ACCESSION NUMBER: 0000914317-98-000693 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 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: 98747908 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, 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 November 9, 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 September 30, 1998 and December 31, 1997 Unaudited Consolidated Statements of Operations and Retained Earnings For The Three Months Ended September 30, 1998 and 1997 Unaudited Consolidated Statements of Operations and Retained Earnings For The Nine Months Ended September 30, 1998 and 1997 Unaudited Consolidated Statements of Cash Flows For The Six Months Ended September 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 SEPT. 30, 1998 DECEMBER 31, 1997 -------------- ----------------- ASSETS ------ CURRENT ASSETS Cash and cash equivalents ............................... $ 29,551 $ 882,884 Marketable securities ................................... 102,086 1,703,806 Accounts receivable, less allowance for doubtful accounts of $369,369 and $303,320 ................. 8,574,072 6,285,181 Inventories ............................................. 18,797,668 12,543,474 Prepaid expenses and other current assets ............... 1,644,889 727,421 ------------ ------------ Total Current Assets ..................... 29,148,266 22,142,766 ------------ ------------ PROPERTY AND EQUIPMENT, at cost, net of accumulated depreciation of $1,972,375 and $978,770, respectively 6,679,333 2,374,085 ------------ ------------ OTHER ASSETS Intangible assets, net ................................ 1,314,904 588,017 Investments in non-marketable securities .............. 1,688,750 1,688,750 Deferred tax assets ................................... 455,300 455,300 Deposits and other assets ............................. 568,054 425,711 ------------ ------------ Total Other Assets ....................... 4,027,008 3,157,778 ------------ ------------ TOTAL ASSETS ............................................... $ 39,854,607 $ 27,674,629 ============ ============ DHB CAPITAL GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS UNAUDITED SEPT. 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 .................. 123,923 65,192 Accounts payable ...................................... 5,708,212 5,072,929 Accrued expenses and other current liabilities ........ 2,758,333 708,631 ------------ ------------ Total Current Liabilities ................ 13,590,468 8,521,752 ------------ ------------ LONG TERM LIABILITIES Long term debt, net of current maturities .............. 365,288 111,258 Note Payable - stockholder .............................. 10,350,900 1,300,000 ------------ ------------ Total Long Term Debt ..................... 10,716,188 1,411,258 ------------ ------------ Total Liabilities ........................ 24,306,656 9,933,010 ------------ ------------ STOCKHOLDERS' EQUITY Common stock, $.001 par value, 100,000,000 shares authorized, 24,855,872 and 25,347,224 issued and outstanding, respectively .. 24,856 25,347 Additional paid-in capital ................................. 18,861,597 20,953,107 Accumulated deficit .................................... (3,351,259) (3,230,700) Foreign currency translation adjustment ................ 12,757 (6,135) ------------ ------------ STOCKHOLDERS' EQUITY .................................... 15,547,931 17,741,619 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .............. $ 39,854,607 $ 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 SEPTEMBER 30, 1998 1997 ------------ ------------ Net sales .......................................... $ 10,191,753 $ 9,004,476 Cost of sales ...................................... 5,983,494 6,320,158 ------------ ------------ Gross Profit ........................................... 4,208,259 2,684,318 Selling, general and administrative expenses ........ 3,553,922 2,444,343 ------------ ------------ Income before other income (expense) ................... 654,337 239,975 ------------ ------------ Other Income (Expense) Interest expense, net of interest income ............... (381,549) (93,391) Dividend income ........................................ 0 100 Foreign currency translation gain (loss) ............... (9,493) 4,259 Realized gain (loss) on marketable securities .......... -- (28,124) Unrealized gain on marketable securities ............... -- 113,693 ------------ ------------ Total Other Income (Expense) .................. (391,042) (3,463) ------------ ------------ Income (loss) before income taxes ...................... 263,295 236,512 Income taxes ........................................... 7,473 10,739 ------------ ------------ Net Income ............................................. 255,822 225,773 Accumulated Deficit - Beginning ........................ (3,607,081) (3,947,036) ------------ ------------ Accumulated Deficit - End .............................. $ (3,351,259) $ (3,721,263) ============ ============ Earnings per common share Primary ........................ $ 0.010 $ 0.009 ============ ============ Fully Diluted .................. $ 0.009 $ 0.007 ============ ============ Primary weighted average number of shares ..... 24,832,394 25,775,527 Add warrants .................................. 4,673,200 4,402,188 ------------ ------------ Fully Diluted weighted average number of shares 29,505,594 30,177,714 ============ ============
See accompanying notes to financial statements.
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 1997 ------------ ------------ Net sales .......................................... $ 31,310,351 $ 24,549,991 Cost of sales ...................................... 20,707,864 16,993,707 ------------ ------------ Gross Profit ........................................... 10,602,487 7,556,284 Selling, general and administrative expenses ........ 9,975,477 6,826,504 ------------ ------------ Income before other income (expense) ................... 627,010 729,780 ------------ ------------ Other Income (Expense) Interest expense, net of interest income ............... (882,795) (243,225) Other income .......................................... 19 38,851 Foreign currency translation gain (loss) ............... (9,409) 3,629 Realized gain (loss) on marketable securities .......... 119,818 (60,506) Unrealized gain on marketable securities ............... 43,751 720,929 ------------ ------------ Total Other Income (Expense) .................. (728,616) 459,678 ------------ ------------ Income (loss) before income taxes ...................... (101,606) 1,189,458 Income taxes ........................................... (18,953) 139,131 ------------ ------------ Net Income ............................................. (120,559) 1,050,327 Accumulated Deficit - Beginning ........................ (3,230,700) (4,771,590) ------------ ------------ Accumulated Deficit - End .............................. $ (3,351,259) $ (3,721,263) ============ ============ Earnings (loss) per common share Primary ........................ $ (0.005) $ 0.043 ============ ============ Fully Diluted .................. $ (0.004) $ 0.038 ============ ============ Primary weighted average number of shares ..... 24,869,291 24,648,520 Add warrants .................................. 4,543,219 2,945,978 ------------ ------------ Fully Diluted weighted average number of shares 29,412,511 27,594,498 ============ ============
See accompanying notes to financial statements.
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 1997 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income (loss) ........................................................... $ (120,559) $ 1,050,327 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ........................................ 894,763 305,313 Stock issued for services ............................................ 372,000 67,500 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 ................................................... (1,570,385) (2,777,321) Marketable securities ................................................. 1,601,720 (138,687) Inventories ........................................................... (4,880,520) (2,164,571) Deferred taxes ........................................................ -- 49,000 Prepaid expenses and other current assets ............................. (905,230) (479,472) Deposits and other assets ............................................. (120,063) (96,691) Increase (decrease) in: Accounts payable ...................................................... (522,225) 1,135,179 Accrued expenses and other current liabilities ........................ 1,394,597 247,101 ----------- ----------- Net cash used by operating activities .......................................... (3,855,902) (3,062,353) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchase of assets of subsidiary, net of cash acquired ......................................... (4,924,075) 134,356 Payments made for property and equipment .......................... (929,755) (610,173) ----------- ----------- Net Cash used by investing activities .......................................... (5,853,830) (475,817) ----------- ----------- DHB CAPITAL GROUP, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 1997 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds (repayments) of note payable- bank ........................ 2,325,000 500,000 Proceeds from shareholder note ..................................... 9,050,900 -- Principal payments on long-term debt ............................... (74,391) (51,231) Stock warrant exercised ............................................ 66,000 -- Foreign Currency Translation ....................................... 18,892 4,113 Purchase of treasury stock ......................................... (2,770,002) (1,028,300) Net proceeds from sale of common stock ............................. 240,000 3,248,330 ----------- ----------- Net cash provided by financing activities ...................................... 8,856,399 2,672,912 ----------- ----------- NET DECREASE IN CASH AND EQUIVALENTS ........................................... (853,333) (865,258) CASH AND CASH EQUIVALENTS - BEGINNING .......................................... 882,884 1,249,655 ----------- ----------- CASH AND CASH EQUIVALENTS - END ................................................ $ 29,551 $ 384,397 =========== =========== Supplemental cash flow information Cash paid for: 1998 1997 ----------- ----------- Interest .............................................................. $ 280,399 $ 211,414 Taxes ................................................................. $ 78,877 $ 17,739
See accompanying notes to financial statements. DHB CAPITAL GROUP INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 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: 2. NASDAQ Small Cap Listing. On September 4, 1998, the Company's stock was listed on the NASDAQ Small Cap MarketTM. The listing was granted pursuant to satisfying certain conditions imposed by the NASDAQ Listing Qualifications Panel and subject to approval by the NASDAQ Review Committee. The following conditions were required by NASDAQ: (1) David Brooks, the Chairman of the Board, CEO, and majority shareholder of DHB and his brother, Jeffrey Brooks, were required to placed all shares beneficially owned by them into two separate voting trusts administered by a an independent trustee; who will vote the shares the way the majority shareholders vote; (2) Mr. David Brooks entered into a Standstill Agreement which prohibits him from buying or selling any stock of DHB for three years; Jeffrey Brooks entered into a Standstill Agreement which prohibited him from buying any stock of DHB for three years. (3) Mr. David Brooks was required to resign as Chief Executive Officer and a member of the Audit Committee; (4) An independent member was elected to serve as Co-Chairman of the Board along with Mr. David Brooks. (5) Jeffrey Brooks was required to lower his ownership of DHB to below 4.9% of the shares outstanding. Both David Brooks and Jeffrey Brooks complied with the NASDAQ requirements to help facilitate the listing on NASDAQ. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations Three Months Ended September 30, 1998, Compared to the Three Months Ended September 30, 1997. Consolidated net sales for the three months ended September 30, 1998 increased by approximately $2,187,000 over sales for the three months ended September 30, 1997, an increase of 13%. Operating income increased from $239,975 for the three months ended September 30, 1997 to $654,337 for the quarter ended September 30, 1998. This improvement is attributed to a higher sales volume and greater profit margins. The Company's interest expense for the quarter ended September 30, 1998 increased to approximately $382,000 from $93,000 for the quarter ended September 30, 1997 as a result of the increased borrowings to finance the acquisitions and to support working capital requirements. 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 September 30, 1998 was approximately $15,558,000 as compared to $13,621,000 at December 31, 1997. Working Capital is needed to finance the receivables, the manufacturing process, and inventory. The current ratio is 2.2:1 at September 30, 1998 compared to 2.6:1 at December 31, 1997. Cash, cash equivalents, and marketable securities totaled $132,000 at September 30, 1998 and $2,587,000 at December 31, 1997. The Company's capital expenditures for the nine months ended September 30, 1998 was approximately $930,000 which primarily was the result of equipment purchased for LEC. Capital Expenditures for the nine months ended September 30, 1997 was approximately $610,000. 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 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 10, 1998 DHB CAPITAL GROUP INC. /S/ David H. Brooks Co-Chairman of the Board 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 Co-Chairman of the Board November 10, 1998 /S/ Mary Kreidell Chief Financial Officer November 10, 1998 /S/ Gary Nadelman Co-Chairman of the Board November 10, 1998 EX-27 2
5 9-MOS DEC-31-1998 SEP-30-1998 29,551 102,086 8,574,072 369,369 18,797,668 29,148,266 6,679,333 1,972,375 39,854,607 13,590,468 0 24,856 0 0 15,547,931 39,854,607 31,310,351 31,310,351 20,707,864 9,975,477 0 0 882,795 (101,606) 18,953 (120,559) 0 0 0 (120,559) (.005) (.004)
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