10q397
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, 1997
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 - 954-587-6280
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.
3,702,078 issued and outstanding at March 31, 1997.
<PAGE>
PART I - Financial Information
Item l. Financial Statement
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
MARCH 31, DEC. 31,
1997 1996
---------- ----------
Current Assets:
Cash $ 438,397 $ 394,569
Trade accounts receivable net of allowance
for doubtful accounts of $27,000 at March 31,
1997 and December 31, 1996. 2,326,646 2,235,183
Due from Officers 142,360 141,880
Inventories 2,757,215 2,534,862
Prepaid Expenses 164,165 132,238
---------- -----------
Total Current Assets 5,828,783 5,438,732
---------- -----------
Property, Plant and Equipment, Net 2,152,257 2,138,815
---------- -----------
Other Assets:
Trademarks, trade names and patents, net 438,006 443,754
Funds held in escrow for construction 3,129,534 3,100,001
Due from Affiliated Companies, Net 725,913 648,866
Deposits and other assets 393,905 185,229
----------- -----------
Total Other Assets 4,687,358 4,377,850
----------- -----------
Total Assets $12,668,398 $11,955,397
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable - trade $ 1,274,264 $ 643,409
Notes payable - bank 1,888,001 1,658,001
Current portion of long term debt 240,000 280,000
Other Accrued Liabilities 91,163 119,503
----------- -----------
Total Current Liabilities 3,493,428 2,700,913
----------- -----------
Long term debt, less current portion 4,750,000 4,710,000
----------- -----------
Shareholders' Equity:
Common Stock - $.01 par value, 10,000,000
Shares authorized, 3,702,078 shares issued
and outstanding 37,020 37,020
Additional paid-in capital 3,172,337 3,172,337
Foreign Currency Translation Adjustment ( 91,024) ( 82,887)
Retained Earnings 1,306,637 1,418,014
----------- -----------
Total Shareholders' Equity 4,424,970 4,544,484
----------- -----------
Total Liabilities & Shareholders' Equity $ 12,668,398 $ 11,955,397
============ ============
<PAGE>
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THREE MONTHS ENDED MARCH 31,
1997 1996
------------ -------------
Gross Sales $ 2,572,793 $ 2,487,611
Allowances 288,914 132,969
----------- ------------
Net Sales 2,283,879 2,354,642
Cost of goods sold 1,661,883 1,494,105
----------- ------------
Gross Profit 621,996 860,537
Cost and expenses:
Advertising and promotion 117,707 81,270
Selling and administrative 614,109 606,256
Interest expense 99,552 41,370
----------- -----------
Total Cost and Expenses 831,368 728,896
----------- -----------
Operating Income (Loss) ( 209,372) 131,641
Interest Income 30,797 3,176
----------- -----------
Income (Loss) before income taxes ( 178,575) 134,817
(Benefit) provision for income taxes ( 67,198) 40,000
----------- -----------
Net Income (loss) ( 111,377) $ 94,817
=========== ===========
Net earnings (loss) per common and common
equivalent share, diluted ($ .03) $ .03
=========== ===========
Earnings per share were calculated on the basis of 3,745,374 and 3,645,925
shares of common stock and common stock equivalent outstanding for the
quarters ended March 31, 1997 and 1996, respectively. Common stock
equivalents consist of options to purchase common stock. The March 31, 1996
shares outstanding included a 5% stock dividend .
<PAGE>
OCEAN BIO-CHEM, INC.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THREE MONTHS ENDED MARCH 31
1997 1996
----------- -----------
Cash flow provided (used)
by operating activities:
Net Income (Loss) $( 111,377) $ 94,817
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 46,225 29,326
Change in assets and liabilities:
Increase in accounts receivable ( 91,463) ( 47,910)
Increase in inventory ( 222,353) ( 412,310)
(Increase) decrease in prepaid expenses ( 73,027) 3,178
Increase in accounts payable and
accrued expenses: 404,926 482,594
------------ ------------
Net cash provided (used)
by operating activities: ( 47,069) 149,695
------------ ------------
Cash provided by financing activities:
Net payments under line of credit 230,000 ( 170,000)
Advances to affiliates ( 77,047) ( 10,391)
Short term borrowings, net ( 40,000) 212,408
Long term borrowings, net 40,000 770,000
------------ ------------
Net cash provided by financing activities: 152,953 802,017
------------ ------------
Cash used by investing activities:
Purchase property, plant, equipment ( 53,919) ( 1,893,726)
------------ ------------
Net cash used by investing activities: ( 53,919) ( 1,893,726)
------------ ------------
Increase (decrease) in cash prior to effect
of exchange rate on cash 51,965 ( 942,014)
Effect of exchange rate on cash ( 8,137) 33,673
------------ ------------
Increase (decrease) in cash 43,828 ( 908,341)
Cash at beginning of period 394,569 997,309
------------ ------------
Cash at end of period $ 438,397 $ 88,968
============ ============
Supplemental Information
Cash used for interest during period $ 99,552 $ 34,758
Cash used for income taxes during period $ 69,790 $ -
------------ ------------
The company had no cash equivalents at March 31, 1997 and 1996.
<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, 1996 have
been reclassified to conform to the 1997 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 its operations and
short-term borrowings from a commercial bank. During 1996 the Registrant's
line of credit commitment was increased from $2 million to $2.9 million by its
commercial bank. The total borrowings under such line can aggregate up to
$2,900,000 and is subject to renewal in April 1998. The Registrant is
required to maintain minimum working capital of $1,500,000, debt to tangible
net worth of 2 to 1 and debt service coverage of 1.7 times.
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 3% for the quarter ended March 31, 1997
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, 1997 with the comparable quarter in 1996. The
percentages were 64.6% and 60.1% for the quarters ended 1997 and 1996,
respectively. This was primarily due to idle plant operations during the
construction period.
Selling and Administrative expenses increased approximately $8,000 when
comparing the quarter ended March 31, 1997 with March 31, 1996. This was not
due to any one factor but included increased personnel expense and decreased
legal expense.
Advertising and Promotion increased approximately $36,000 comparing the three
months ended March 31, 1997 with the same period in 1996. This was due to
increased cooperative advertisement with customers.
Interest Expense increased when comparing the March 31, 1997 quarter to the
corresponding quarter in 1996 by approximately $58,000 due primarily to
interest on the industrial revenue bonds assumed in connection with the
acquisition and expansion of the Alabama facility.
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
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: May 14, 1997 By: /s/ Peter G. Dornau
----------------------------
Peter G. Dornau
Chairman of the Board and
Chief Executive Officer
By: /s/ Peter G. Dornau
---------------------------
Peter G. Dornau
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 438,397
<SECURITIES> 0
<RECEIVABLES> 2,326,646
<ALLOWANCES> 27,000
<INVENTORY> 2,757,215
<CURRENT-ASSETS> 5,828,783
<PP&E> 2,678,951
<DEPRECIATION> 526,694
<TOTAL-ASSETS> 12,668,398
<CURRENT-LIABILITIES> 3,493,428
<BONDS> 4,750,000
0
0
<COMMON> 37,020
<OTHER-SE> 4,387,950
<TOTAL-LIABILITY-AND-EQUITY> 12,668,398
<SALES> 2,572,793
<TOTAL-REVENUES> 2,603,590
<CGS> 1,661,883
<TOTAL-COSTS> 831,368
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99,552
<INCOME-PRETAX> (178,575)
<INCOME-TAX> (67,198)
<INCOME-CONTINUING> (111,377)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (111,377)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
