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 June 30, 1995
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 of (I.R.S. Employer
incorporation or organization) Identification No.)
Registrant's telephone number, including area code - 305-587-6280
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.
3,366,338 issued and outstanding at June 30, 1995.
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PART I - Financial Information
Item l. Financial Statement
OCEAN BIO-CHEM, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
JUNE 30, DEC. 31,
1995 1994
Current Assets:
Cash $1,143,374 $ 571,411
Trade Accounts Receivable Net of Allowances
for Doubtful Accounts of $ 36,000 and $ 35,000
at June 30, 1995 and December 31, 1994,
Respectively 1,432,377 1,990,558
Due From Officers 28,600 12,520
Inventories 2,395,386 1,927,646
Prepaid Expenses 209,186 102,967
Current Assets 5,208,923 4,605,102
Office Equipment and Furnishings, Net 250,977 244,119
Other Assets
Trademarks, Trade Names and Patents, Net 478,242 489,738
Deposits and Other Assets 35,451 12,322
Due From Affiliated Companies, Net 532,744 370,747
Total Other Assets 1,046,437 872,807
Total Assets $ 6,506,337 $ 5,722,028
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable - Trade $ 939,681 $ 536,611
Notes Payable - Bank 1,331,667 1,566,667
Current Portion of Long-Term Debt - 29,570
Accrued Expenses Payable 168,103 117,059
Total Current Liabilities 2,439,451 2,249,907
Long-term Debt, Less Current Portion - 7,501
Shareholders' Equity:
Common Stock 33,663 30,448
Additional Paid-in Capital 2,516,220 2,016,915
Retained Earnings 1,591,821 1,484,808
Foreign Currency Translation Adjustment ( 74,818) ( 67,551)
Total Shareholders' Equity 4,066,886 3,464,620
Total Liabilities & Shareholders' Equity $ 6,506,337 $ 5,722,028
OCEAN BIO-CHEM, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1995 1994 1995 1994
Gross Sales $2,908,971 $2,819,649 $5,383,382 $4,816,037
Allowances 131,625 101,909 282,776 285,674
Net Sales 2,777,346 2,717,740 5,100,606 4,530,363
Cost of Goods Sold 1,542,353 1,480,524 2,811,628 2,532,364
Gross Profit 1,234,993 1,237,216 2,288,978 1,997,999
Cost and Expenses:
Advertising and Promotion 229,858 185,040 335,063 278,375
Selling and Administrative 472,153 502,603 1,018,943 934,819
Interest Expense 15,154 10,596 41,083 27,370
Total Cost and Expenses 717,165 698,239 1,395,089 1,240,564
Income From Operations 517,828 538,977 893,889 757,435
Interest Income 6,932 - 10,827 -
Income before provision
for income taxes 524,760 538,977 904,716 757,435
Provision for Income Taxes 201,000 205,000 341,000 281,000
Net Income $ 323,760 $ 333,977 $ 563,716 $ 476,435
Net Per Share $ .09 $ .10 $ .16 $ .14
Earnings per share were calculated based on the weighted average common stock
and common stock equivalent outstanding of 3,513,495 shares for the six months
and three months ending June 30, 1995 and 3,387,671 shares for the six months
and three months ended June 30, 1994. Common stock equivalents consist of
options to purchase common stock. All earnings per share have been restated to
reflect a 5% stock dividend distributed to shareholders of record as of
March 31, 1995.
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OCEAN BIO-CHEM, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR SIX MONTHS ENDED JUNE 30
1995 1994
Cash flow used by operating activities:
Net Income $ 563,716 $ 476,435
Adjustments to Reconcile Net Income
to Net Cash Provided by Operations:
Depreciation and Amortization 44,567 38,596
Change in Assets and Liabilities:
Decrease in Accounts Receivable 558,181 291,274
Increase in Inventory ( 467,740) ( 386,656)
Increase in Prepaid Expenses ( 145,426) ( 118,601)
Increase in Accounts Payable
and Accrued Expenses: 501,271 61,355
Net Cash Provided by
Operating Activities: 1,054,569 362,403
Cash Flows From Financing Activities:
Net Borrowings Under Line of Credit ( 235,000) 95,000
Advances (to) From Affiliates, net ( 161,997) ( 241,387)
Borrowings (Payment) on Debts, Net ( 84,228) ( 141,854)
Sale of Stock 45,817 3,240
Net Cash Used by Financing Activities: ( 435,408) ( 285,001)
Cash Flows From Investing Activities:
Purchase Property, Plant, Equipment ( 39,931) ( 106,884)
Net Cash Used by Financing Activities: ( 39,931) ( 106,884)
Increase (Decrease) in Cash Prior to
Effect of Exchange Rate on Cash 579,230 ( 29,482)
Effect of Exchange Rate on Cash ( 7,267) ( 117)
Net Increase (Decrease) in Cash 571,963 ( 29,599)
Cash at Beginning of Period 571,411 516,892
Cash at June 30, $ 1,143,374 $ 487,293
Supplemental Information
Cash Used for Interest During Period $ 41,300 $ 15,375
Cash Used for Income Taxes During Period $ 210,331 $ 187,000
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
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.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Liquidity and Capital Resources
The primary sources of the Registrant's liquidity are its operations and short
term borrowings from a commercial lender. During 1994 the registrant
increased its financial commitments from its commercial bank. Currently the
Registrant has $1,500,000 available through a one year renewable line of
credit. The line was renewed in March of 1995 for a one year period. Management
believes that the normal cash flows generated from operations and the line of
credit are sufficient to cover the capital requirements of the Registrant in
the foreseeable future.
The Registrant is involved in making sales in the Canadian market and must
deal with the currency fluctuations of the Canadian currency. The Registrant
does not engage in currency hedging and deals with such currency risk as a
pricing issue.
During the past few years Registrant has introduced various new products to the
market. This has required the Registrant to carry greater amounts of overall
inventory and has resulted in lower inventory turnover rates. The effects of
such inventory turnover have not been material to the overall operations of
Registrant. Registrant believes that all required capital to maintain such
increases can continue to be provided from operations and current lending
arrangements.
Results of Operations For The Three Month Period April 1-June 30:
Gross Sales increased approximately $89,000 or 3 % when comparing the
quarter ended June 30, 1995 with the comparable period of the preceding year.
Management attributes the lower than expected increase of gross sales due to
the inclement weather during the latter part of the second quarter.
Cost of Goods Sold remained constant remained constant as a percentage of
sales when comparing the quarter ended June 30, 1995 with the quarter ended
June 30, 1994.
Advertising and Promotion expenses increased approximately $ 45,000 or 24 %
when comparing the three months ended June 30, 1995 tot he three months ended
June 30, 1994. This was primarily the results of special promotions on selected
products relating to market penetration.
Selling and Administrative expenses decreased approximately $30,000 or 6% when
comparing the quarter ended June 30, 1995 to the comparable period in 1994.
This was not due to any one particular factors.
Interest Expense increased approximately $5,000 or 43% comparing the quarter
ended June 30, 1995 to the comparable period in 1994. This was primarily due to
increased levels of borrowings outstanding and increased interest rates of the
registrant's line of credit during this period.
Result of Operations For the Six Month Period January 1 - June 30
Gross Sales creased 12 % or approximately $567,000 when comparing the six
month periods of 1995 and 1994. Management attributes the increase to the
record sales levels experienced during the first quarter.
Cost of Goods sold increased approximately 1% as a percentage of gross sales
when comparing the six months ended June 30, 1995 to the six months ended June
30, 1995. This was not due to any one particular factor.
Advertising and promotion expenses increased approximately 20% or $57,000 when
comparing the six months ended June 30, 1995 to the six months ended June 30,
1994. This was primarily due to the results of special promotions on selected
products relating to market penetration expended in the second quarter.
Selling and administrative expenses increased for the six months ended June
30, 1995 by approximately $ 84,000 or 9 % when compared to the six months
ended June 30, 1994. This was primarily due to the increased selling, mailing
and administrative expenses of the first quarter.
Interest expense increased in 1995 for the six month period by approximately
$14,000 or 52% when compared to the six month period of 1994 reflecting
increased levels of borrowings outstanding and increased rates on the
Registrants line of credit during this period.
PART II: OTHER INFORMATION
Item l - Legal Proceedings: See the Registrant's 10K for the year ended
December 31, 1993
Item 2 - Changes in Securities: Not applicable
Item 3 - Defaults Upon Senior Securities: Not applicable
Item 4 - Submission of Matters to Vote of Security Holders:
On May 16, 1995, at the Registrant's annual meeting, shareholders
elected two directors; Peter Dornau and Jeffrey Tieger, 2,074,789
voted for the directors, none voted against. Shareholders also approved
Levi, Rattner, Cahlin & Co., P.A., Certified Public Accountants, by a vote
of 2,074,128 for and 661 shares against, as the Registrant's auditors for
1995.
Item 5 - Other Matters: Not applicable
Item 6 - Exhibits: Not applicable
(A) Exhibits - Not applicable
(B) Reports on Form 8-K - 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 thereunto duly authorized.
OCEAN BIO-CHEM, INC.
Date: 8/11/95 By:
Peter G. Dornau
Chairman of the Board and
Chief Executive Officer
By:
Peter G. Dornau
Chief Financial Officer
