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 March 31, 1996
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.
3,512,964 issued and outstanding at March 31, 1996.
<PAGE>
PART I - Financial Information
Item l. Financial Statement
OCEAN BIO-CHEM, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
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MARCH 31, DEC. 31,
1996 1995
Current Assets:
Cash $ 88,968 $ 997,309
Trade accounts receivable net of allowance
for doubtful accounts of $43,429 at March 31,
1996 and $48,000 at December 31, 1995. 2,054,328 2,006,418
Due from Officers 151,120 154,420
Inventories 2,451,060 2,038,750
Prepaid Expenses 105,315 111,455
Total Current Assets 4,850,791 5,308,352
Property, Plant and Equipment, Net 2,191,622 321,475
Other Assets:
Trademarks, trade names and patents, net 460,998 466,746
Due from Affiliated Companies, Net 642,770 632,379
Deposits and other assets 25,080 18,818
Total Other Assets 1,128,848 1,117,943
Total Assets $8,171,261 $6,747,770
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable - trade $ 967,404 $ 485,105
Notes payable - bank 1,820,000 1,990,000
Current portion of long term debt 220,000 7,592
Other Accrued Liabilities 89,362 89,068
Total Current Liabilities 3,096,766 2,571,765
Long term debt, less current portion 770,000 -
Shareholders' Equity:
Common Stock - $.01 par value, 10,000,000
Shares authorized, 3,512,964 shares issued
and outstanding 35,130 35,130
Additional paid-in capital 2,650,754 2,650,754
Foreign Currency Translation Adjustment ( 44,852) ( 78,525)
Retained Earnings 1,663,463 1,568,646
Total Shareholders' Equity 4,304,495 4,176,005
Total Liabilities & Shareholders' Equity $8,171,261 $6,747,770
</TABLE>
<PAGE>
OCEAN BIO-CHEM, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THREE MONTHS ENDED MARCH 31
1996 1995
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<S> <C> <C>
Gross Sales $2,487,611 $2,474,411
Allowances 132,969 151,151
Net Sales 2,354,642 2,323,260
Cost of goods sold 1,494,105 1,269,275
Gross Profit 860,537 1,053,985
Cost and expenses:
Advertising and promotion 81,270 105,205
Selling and administrative 606,256 546,790
Interest expense 41,370 25,929
Total Cost and Expenses 728,896 677,924
Operating Income 131,641 376,061
Interest Income 3,176 3,895
Income before provision for income taxes 134,817 379,956
Provision for Income taxes 40,000 140,000
Net Income $ 94,817 $ 239,956
Net earnings per common and common
equivalent share, diluted $ .03 $ .07
</TABLE>
Earnings per share were calculated on the basis of 3,645,925 and 3,563,151
shares of common stock and common stock equivalent outstanding for the quarters
ended March 31, 1996 and 1995, respectively. Common stock equivalents consist
of options to purchase common stock. The 1995 earnings per share have been
adjusted to reflect the 1995 stock dividend.
<PAGE>
OCEAN BIO-CHEM, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THREE MONTHS ENDED MARCH 31
1996 1995
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Cash flow used by operating activities:
Net Income $ 94,817 $ 239,955
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 29,326 21,664
Change in assets and liabilities:
(Increase) decrease in accounts receivable ( 47,910) 234,832
Increase in inventory ( 412,310) ( 148,374)
(Increase) decrease in prepaid expenses 3,178 ( 71,518)
Increase in accounts payable and
accrued expenses: 482,594 418,060
Net cash provided by operating activities: 149,695 694,619
Cash used by financing activities:
Net payments under line of credit ( 170,000) ( 850,000)
Advances to affiliates ( 10,391) ( 42,095)
Short term borrowings, net 212,408 ( 7,132)
Long term borrowings, net 770,000 -
Net cash provided (used)
by financing activities: 802,017 ( 899,227)
Cash used by investing activities:
Purchase property, plant, equipment ( 1,893,726) ( 4,324)
Net cash used by investing activities: ( 1,893,726) ( 4,324)
Decrease in cash prior to effect of
exchange rate on cash ( 942,014) ( 208,932)
Effect of exchange rate on cash 33,673 ( 1,686)
Decrease in cash ( 908,341) ( 210,618)
Cash at beginning of period 997,309 571,411
Cash at end of period $ 88,968 $ 360,793
Supplemental Information
Cash used for interest during period $ 34,758 $ 25,061
Cash used for income taxes during period $ - $ 73,651
</TABLE>
The company had no cash equivalents at March 31, 1996 and 1995.<PAGE>
<PAGE>
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.
Certain financial statement items for the quarter ended March 31, 1995 have been
reclassified to conform to the 1996 presentation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The primary sources of the Registrant's liquidity are cash flow from operations
and short-term borrowing from a commercial bank. The Registrant has available a
$2,900,000 line of credit of which $900,000 has been allocated to purchase the
of assets of Kinpak, Inc., a Georgia corporation, which were acquired on
February 27, 1996 (the "Acquisition"). In addition to the allocated amount,
the Registrant assumed $990,000 of industrial revenue bonds in connection with
the acquisition. The line of credit is subject to renewal in April 1997.
The Registrant is involved in making sales in the Canadian market and
accordingly must deal with fluctuations of the Canadian currency. The
Registrant does not engage in currency hedging and deals with such risk as a
pricing issue.
Results of Operations:
Gross Sales increased approximately $13,000 for the quarter ended March 31, 1996
when compared to the same quarter of the preceding year.
Cost of Goods Sold increased as a percentage of gross sales when comparing the
quarter ended March 31, 1996 with the comparable quarter in 1995. The
percentages were 60% and 51.3% for the quarters ended 1996 and 1995,
respectively. This was primarily due to a shift in the product sales mix to
lower sales of higher margin products.
Selling and Administrative expenses increased approximately $59,000 when
comparing the quarter ended March 31, 1996 with March 31, 1995. This was
primarily due to higher legal fees incurred.
Advertising and Promotion decreased approximately $24,000 comparing the three
months ended March 31, 1996 with the same period in 1995. This is due to timing
differences.
Interest Expense increased when comparing the March 31, 1996 quarter to the
corresponding quarter in 1995 by approximately $15,000 due to higher loan
balances outstanding on the line of credit and interest on the industrial
revenue bonds assumed in connection with the acquisition.
PART II - Other Information
Item l - Legal Proceedings: Not applicable.
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: Not
applicable
Item 5 - Other Matters: Not applicable
Item 6 - Exhibits and Reports on Form 8-K
(A) Exhibits: Not Applicable
(B) Registrant filed an 8K on March 12, 1996 relating to Item 2 and
Item 7
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: March 15, 1996 By:
/S/ Peter G. Dornau
Chairman of the Board and
Chief Executive Officer
By:
/S/ Peter G. Dornau
Chief Financial Officer
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the March
31, 1996 10-Q of Ocean Bio-Chem, Inc. and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 88,968
<SECURITIES> 0
<RECEIVABLES> 2,097,757
<ALLOWANCES> 43,429
<INVENTORY> 2,451,060
<CURRENT-ASSETS> 4,850,791
<PP&E> 2,191,622
<DEPRECIATION> 329,206
<TOTAL-ASSETS> 8,171,261
<CURRENT-LIABILITIES> 3,096,766
<BONDS> 0
0
0
<COMMON> 35,130
<OTHER-SE> 4,269,365
<TOTAL-LIABILITY-AND-EQUITY> 8,171,261
<SALES> 2,487,611
<TOTAL-REVENUES> 2,490,787
<CGS> 1,494,105
<TOTAL-COSTS> 687,526
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,370
<INCOME-PRETAX> 134,817
<INCOME-TAX> 40,000
<INCOME-CONTINUING> 94,817
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 94,817
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
