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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, 1996
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 (I.R.S. Employer
of incorporation) Identification No.)
11 Old Westbury Road, Old Westbury, New York 11568
(Address of principal executive offices)
Registrant's telephone number: (516) 997-1155
Not applicable
Former name, former address and former fiscal year, if changed since last report
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 8, 1996, there were 22,954,529 shares of Common Stock,
$.001 par value outstanding.
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<PAGE>
CONTENTS
PART I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet as of September 30, 1996 and December 31,
1995
Unaudited Consolidated Statements of Income and Retained Earnings For
The Three Months Ended September 30, 1996 and 1995
Unaudited Consolidated Statements of Income and Retained Earnings
(Deficit) For The Nine Months Ended September 30, 1996 and 1995
Unaudited Consolidated Statements of Cash Flows For The Nine Months
Ended September 30, 1996 and 1995
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
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents ..................... $ 198,314 $ 475,108
Marketable securities ........................ 3,277,246 1,829,856
Accounts receivable, less allowance for
doubtful accounts of $80,695 & $70,000 ....... 5,510,197 3,819,571
Inventories .................................. 8,178,886 7,856,199
Prepaid expenses and other current assets .... 839,846 208,510
------------ ------------
Total Current Assets ......................... 18,004,489 14,189,244
------------ ------------
Property, and Equipment, at cost, less accumulated
depreciation of $498,313 and $325,454 ........ 1,632,438 1,077,066
------------ ------------
Other Assets
Intangible assets, net ....................... 733,895 721,327
Investment in non-marketable securities ...... 3,316,750 3,316,750
Deposits and other assets .................... 431,538 160,821
------------ ------------
Total Other Assets ........................... 4,482,183 4,198,898
------------ ------------
Total Assets ................................. $ 24,119,110 $ 19,465,208
============ ============
LIABILITIES AND EQUITY
Current Liabilities
Note payable ................................. $ 1,400,000 $ 2,550,000
Current Maturities ........................... 60,000 --
Accounts payable ............................. 2,133,923 2,847,690
Accrued expenses and other liabilities ....... 110,594 301,068
Deferred taxes payable ....................... 11,100 23,700
Income taxes payable ......................... 486,007 50,782
------------ ------------
Total Current Liabilities .................... 4,201,624 5,773,240
------------ ------------
Long Term Debt
Long Term Debt ............................... 160,765 --
Due to shareholder ........................... 1,300,000 1,890,000
------------ ------------
Total Long Term Debt ......................... 1,460,765 1,890,000
------------ ------------
Total Liabilities ............................ 5,662,389 7,663,240
------------ ------------
<PAGE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Stockholders' Equity
Preferred stock .............................. -- 219
Common stock ................................. 22,890 20,762
Additional paid-in capital ................... 17,058,770 12,116,549
Common stock subscription receivable ......... (227,500) (437,500)
Retained earnings ............................ 1,602,561 101,938
------------ ------------
Total Stockholders' Equity ................... 18,456,721 11,801,968
------------ ------------
Total Liabilities and Shareholders' Equity ....... $ 24,119,110 $ 19,465,208
============ ============
See Accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1996 1995
---- ----
<S> <C> <C>
Net Sales ........................................ $ 6,226,028 $ 4,402,281
Cost of sales .................................... 3,908,427 3,094,346
------------ ------------
Gross Profit .................................. 2,317,601 1,307,935
Selling, general and administrative expenses .... 1,911,889 1,535,331
------------ ------------
Income (loss) before other income (expense) ... 405,712 (227,396)
Other Income (Expense)
Interest expense, net of interest ............. (85,389) (107,570)
Dividend income ............................... 8,199 --
Realized gain (loss) on marketable securities . (94,799) 607,184
Unrealized gain (loss) on marketable securities 343,039 (96,812)
------------ ------------
Total Other Income (Expense) ................ 171,050 402,802
------------ ------------
Income before income taxes .................... 576,762 175,406
Income taxes .................................. 176,890 4,453
------------ ------------
Net Income .................................... 399,872 170,953
Retained Earnings - Beginning ................ 1,210,316 36,920
Stock Dividend Paid ........................... (7,627) --
------------ ------------
Retained Earnings - End ...................... $ 1,602,561 $ 207,873
============ ============
Earnings per common share:
Primary ..................................... $ 0.018 $ 0.009
Fully Diluted ............................... $ 0.018 $ 0.009
Weighted average number of common shares outstanding
after giving effect to the 50% stock dividend.:
Primary ..................................... 22,216,440 19,467,222
Fully Diluted ............................... 22,738,440 19,467,222
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
------------ ------------
<S> <C> <C>
Net Sales ............................................ $ 19,875,112 $ 9,671,801
Cost of sales ........................................ 13,448,751 6,583,232
------------ ------------
Gross Profit ....................................... 6,426,361 3,088,569
Selling, general and administrative expenses ......... 5,674,660 3,683,942
------------ ------------
Income (loss) before other income (expense) ........ 751,701 (595,373)
Other Income (Expense)
Interest expense, net of interest .................. (247,990) (195,955)
Dividend income .................................... 24,329 --
Realized gain (loss) on marketable securities ...... (383) 646,271
Unrealized gain (loss) on marketable securities .... 1,469,702 513,580
------------ ------------
Total Other Income (Expense) ..................... 1,245,658 963,896
------------ ------------
Income before income taxes ......................... 1,997,359 368,523
Income taxes ....................................... 489,109 18,113
------------ ------------
Net Income ......................................... 1,508,250 350,410
Retained Earnings (Deficit) - Beginning ............ 101,938 (142,537)
Stock Dividend Paid ................................ (7,627) --
------------ ------------
Retained Earnings - End ............................ $ 1,602,561 $ 207,873
============ ============
Earnings per common share:
Primary .......................................... $ 0.068 $ 0.018
Fully Diluted .................................... $ 0.066 $ 0.018
Weighted average number of common shares outstanding
after giving effect to 50% stock dividend
Primary .......................................... 22,216,440 19,467,222
Fully Diluted .................................... 22,738,440 19,467,222
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ..................................... $ 1,508,250 $ 350,410
----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ................ 193,084 76,431
Changes in assets and liabilities
(Increase) Decrease in:
Accounts receivable .......................... (1,690,626) (1,286,734)
Marketable securities ........................ (1,447,390) (748,853)
Inventories .................................. (322,687) (2,711,948)
Prepaid expenses and other current assets .... (631,336) (228,548)
Other assets ................................. (270,717) (201,862)
Increase (Decrease) in:
Accounts payable ............................. (713,767) 642,017
Accrued expenses and other current liabilities (190,473) 629,351
Deferred taxes payable ....................... (12,600) --
State income taxes payable ................... 435,224 --
----------- -----------
Net cash used by operating activities ........... (3,143,038) (3,479,736)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash payments for the purchase of property ..... (761,024) (239,432)
Net advances to broker ......................... -- (1,938,750)
----------- -----------
Net cash used by investing activities .......... (761,024) (2,178,182)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long term debt .......... (22,808) --
Proceeds from the issuance of debt ............ 243,573 --
Net repayments on line of credit .............. (1,150,000) --
Net borrowings (repayment) of shareholder loans (590,000) 750,000
Net proceeds from sale of common stock ........ 5,146,503 4,582,500
----------- -----------
Net cash provided by financing activities ...... 3,627,268 5,332,500
----------- -----------
NET DECREASE IN CASH AND EQUIVALENT ............. (276,794) (325,418)
CASH AND CASH EQUIVALENTS - BEGINNING ............ 475,108 407,425
----------- -----------
CASH AND CASH EQUIVALENTS - END .................. $ 198,314 $ 82,007
=========== ===========
</TABLE>
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION/REPORTING ENTITIES
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:
DHB Capital Group, Inc.
DHB Capital Group Inc. ("DHB") was incorporated on October 22, 1992 under the
laws of the State of New York. DHB was organized to seek, acquire and finance,
as appropriate, one or more operating companies. On February 15, 1995, the
holders of the common stock approved a re-incorporation of DHB as a Delaware
corporation, through a merger with a newly formed Delaware corporation.
Protective Apparel Corporation of America
Protective Apparel Corporation of America ("PACA") was organized in 1975 and is
engaged in the development, manufacture and distribution of bullet and
projectile resistant garments, including bullet resistant vests, fragmentation
vests, bomb projectile blankets and tactical load bearing vests. In addition,
PACA distributes other ballistic protection devices including helmets and
shields. PACA is dependent upon a few suppliers for the raw materials utilized
to manufacture its products. On November 6, 1992, PACA became a wholly-owned
subsidiary of DHB, when DHB purchased all of the issued and outstanding stock of
PACA from PACA's former parent, E.S.C. Industries, Inc, for $800,000. The
transaction was accounted for as a purchase and resulted in an excess purchase
price over the fair market value of the identifiable assets acquired and
liabilities assumed of $465,278, of which $312,086 was allocated to on-going
government contracts and $153,192 was allocated to goodwill.
Intelligent Data Corp.
On April 1, 1994, the Company acquired 4,530,000 common shares (60.4% interest)
and 1,100,000 preferred shares of stock in Intelligent Data Corp. ("ID"), in
exchange for 425,000 shares of the Company's common stock. ID is engaged in the
development of sophisticated telecommunication systems. On July 1, 1994, a put
option was exercised by certain shareholders of ID resulting in an increase in
the Company's ownership to 89.58%. In December 1994, the Company converted all
of its preferred shares to common shares, increasing the Company's ownership to
98.35%. This transaction was accounted for as a purchase, and resulted in an
excess purchase price over the fair value of identifiable assets acquired and
liabilities assumed of $472,666 which was allocated to patents owned by ID.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
DHB Media Group, Inc.
On April 15, 1994, DHB Media Group, Inc. ("Media"), a wholly-owned subsidiary of
the Company acquired all of the outstanding common stock of Royal Acquisition
Corp. in exchange for 100,000 shares of the Company's common stock, for a
purchase price of $300,000. Subsequent negotiations resulted in the reduction of
the acquisition cost by $36,550. Royal Acquisition Corp.'s primary assets were a
film library and a loan receivable of $150,000. The transaction was accounted
for as a purchase and resulted in the excess purchase price over the fair market
value of $113,450, of which $54,000 was allocated to the film library and
$59,450 was allocated to goodwill. Media intends to syndicate and market these
films. The loan receivable was collected in full during the year ended December
31, 1994.
NDL Products, Inc.
On December 20, 1994, the Company through a newly organized, wholly-owned
subsidiary, DHB Acquisition, Inc., ("Acquisition") purchased certain assets from
a debtor-in-possession, N.D.L. Products, Inc. for $3,080,000. Acquisition did
not assume any continuing obligations of the debtor-in-possession, nor did the
management of the debtor-in-possession continue. On February 21, 1995,
Acquisition changed its corporate name to NDL Products, Inc. NDL manufactures
and distributes specialized protective athletic apparel and equipment.
DHB Armor Group, Inc.
On August 8, 1995, the Company formed a new Delaware Corporation which is a
wholly-owned subsidiary of the Company. The subsidiary, DHB Armor Group, Inc.,
("Armor"), now wholly owns PACA and Point Blank Body Armor, Inc., ("Point
Blank").
Point Blank Body Armor, Inc.
In August 1995, the Company, through a wholly-owned subsidiary known as USA
Fitness & Protection Corp, a Delaware Corporation, acquired from a trustee in
bankruptcy certain assets of Point Blank Body Armor, L.P. and an affiliated
company ("Old Point Blank"), for a cash payment of $2,000,000, free of all
liabilities. Prior to the filing of the petition in bankruptcy, Old Point Blank
had been a leading U.S. manufacturer of bullet-resistant garments and related
accessories. After acquiring the Old Point Blank, USA Fitness & Protection
Corp., amended its articles of incorporation to change their name to Point Blank
Body Armor, Inc. ("Point Blank").
Orthopedic Products, Inc.
On March 22 and March 26, 1996, the Company exchanged a total of 180,000 shares
of its registered common stock to acquire 100% of the common stock of OPI, a
Florida Corporation engaged in the manufacturing and distribution of orthopedic
products to the medical industry. This transaction was accounted for as a
purchase, and resulted in an excess purchase price over the fair value of
identifiable assets acquired and liabilities assumed which was allocated to
goodwill. Fifty thousand of these shares are restricted as follows: 25,000
shares cannot be sold until March 22, 1997 and 25,000 shares cannot be sold
until March 22, 1998.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
PRINCIPLES OF CONSOLIDATION
All material intercompany transactions have been eliminated in the consolidated
financial statements.
MARKETABLE/NON-MARKETABLE SECURITIES
Effective for calendar year 1994, the Company adopted Financial Accounting
Standards Board Statement No. 115 "Accounting for Certain Investments in Debt
and Equity Securities." In accordance with this standard, Securities which are
classified as "trading securities" are recorded in the Company's balance sheet
at fair market value, with the resulting unrealized gain or loss recognized as
income in the current period. Securities which are classified as "available for
sale" are also reported at fair market value, however, the unrealized gain or
loss on these securities is listed as a separate component of shareholder's
equity.
Non-marketable securities, such as investments in privately-held companies are
carried at historical cost, if necessary, reduced by a valuation allowance to
net realizable value. The Company actively seeks to acquire and finance, as
appropriate, additional operating companies or interest therein.
SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Cash paid for interest and taxes 1996 1995
---- ----
<S> <C> <C>
Interest 285,238 51,106
Taxes 33,301 24,612
</TABLE>
Noncash transactions: The Company had noncash transactions in March 1996 when
the Company issued 180,000 shares of their common stock in lieu of a cash
payment of $579,000 to acquire OPI and in June 1996 when the Company's preferred
stock was converted into two shares of Common Stock for each share of preferred
stock outstanding.
50% STOCK DIVIDEND
On July 1, 1996, the Board of Directors of the Company declared a 50% Stock
Dividend payable on July 16, 1996, to shareholders of record as of July 15,
1996. As a result thereof, the number of outstanding shares of the Common Stock
has been increased from 15,303,019 to 22,954,529. The weighted average number of
shares and earnings per share have been restated to give effect to the 50% stock
dividend.
EARNINGS PER SHARE
The computation of earnings per common share is based on the weighted average
number of outstanding common shares outstanding during the period. Primary
earnings per share and fully diluted earnings per share amounts assume the
conversion of the Cumulative Convertible Preferred Stock, and the exercise of
the stock warrants.
<PAGE>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
2. SUBSEQUENT EVENTS
Merger with The Lehigh Group
On July 8, 1996, the Company and The Lehigh Group, Inc. entered into a
definitive merger agreement whereby the Company would merge into a wholly-owned
subsidiary of Lehigh. Lehigh, whose common stock is listed on the New York Stock
Exchange, is engaged in the distribution of electrical supplies for export and
import. On October 11, 1996 the Company terminated the merger agreement. This
action was taken pursuant to the provisions of the merger agreement which
provided for termination if any action or proceeding is brought before a court
to prohibit the transaction contemplated. A lawsuit was recently filed against
Lehigh seeking to restrain or prohibit the transaction. The Company experienced
no material expenses associated with this transaction or the termination of this
transaction.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following analysis of the Company's financial condition and results of
operations should be read in conjunction with the financial statements,
including the notes thereto, contained elsewhere in this report.
Results of Operations
Three Months Ended September 30, 1996 Compared to The Three Months Ended
September 30, 1995
Consolidated net sales of the Company for the quarter ended September 30, 1996
was $6,226,028 versus $4,402,281 for the quarter ended September 30, 1995. This
41% increase was primarily due to the inclusion of Point Blank and OPI. The
Company had a consolidated net income for the three months ended September 30,
1996 and 1995 of $399,872 and $170,953, respectively, principally attributable
to both increased sales over the previous year from PACA and NDL and the
inclusion of Point Blank and OPI.
Gross profit ratio for the three months ended September 30, 1996 increased to
37% compared to a gross profit percentage of 30% for the three months ended
September 30, 1995. The Company's gross profit increased approximately
$1,010,000 to $2,317,601 for the three months ended September 30, 1996 as
compared to the three months ended September 30, 1995. The change in the gross
profit ratio is primarily due to the diversity of the product mix being sold in
the different companies.
The Company's selling, general, and administrative expenses for the three months
ended September 30, 1996 increased to $1,911,889 from $1,535,331 for the three
months ended September 30, 1995. However, as a percentage of net sales, expenses
decreased to 31% of net sales for the quarter ended September 30, 1996, compared
to 35% for the quarter ended September 30, 1995. This decrease principally
resulted from the efficiencies of operating NDL, Point Blank, and OPI at the
same location and stricter fiscal controls.
Interest expense, net of interest income, for the three months ended September
30, 1996 decreased to $85,389 from $107,570 for 1995, principally due to the
repayment of one of the lines of credit and the repayment of one of the
shareholders loan in September 1996.
The Company had a net realized loss of $94,799 and an unrealized gain on its
investments in marketable securities of $343,039 for the three months ended
September 30, 1996, as compared to a net realized gain of $607,184 and an
unrealized loss of $96,812 for the three months ended September 30, 1995.
Nine Months ended September 30, 1996 compared to the nine months ended September
30, 1995.
Consolidated net sales of the Company for the nine months ended September 30,
1996 compared to the nine months ended September 30, 1995, increased from
$9,671,801 to $19,875,112. The increase was primarily due to the inclusion of
Point Blank, NDL and OPI. The Company had a consolidated net income for 1996 and
1995 of $1,508,250 and $350,410, respectively, principally because of the
appreciation of marketable securities and increased sales volume.
Gross profit in 1996 increased 108% over 1995 to $6,426,361. The Company's gross
profit ratio remained constant at 32% in 1995 and in 1996. Although the sales
volume increased the diversity of the product mix has changed.
<PAGE>
The Company's selling, general, and administrative expenses for 1996 increased
to $5,674,660 from $3,683,942 in 1995. However, as a percentage of net sales,
expenses decreased to 29% of net sales in 1996, compared to 38% in 1995. This
decrease principally resulted from the efficiencies of operating NDL, Point
Blank, and OPI at the same location and management's efforts to enforce tighter
fiscal controls.
Interest expense, net of interest income, for the nine months ended September
30, 1996 increased to $247,990 from $195,955 for 1995, principally due to
increases in the borrowings of the Company, however the Company repaid
$1,740,000 of debt in September 1996.
The Company had a net realized loss of $383 and an unrealized gain on its
investments in marketable securities of $1,469,702 for the nine months ended
September 30, 1996, as compared to a net realized gain of $646,271 and an
unrealized gain of $513,580 for the nine months ended September 30, 1995.
Liquidity and Capital Resources
The Company's primary requirements over the next twelve months are to assist
PACA, Point Blank, NDL, ID, Media, and OPI in financing their working capital
requirements, and to make possible acquisitions. PACA, Point Blank, NDL, and OPI
sell most of their products on 60-90 day terms, and working capital is needed to
finance the receivables and inventory.
The Company's principal sources of cash to date have been proceeds from private
offerings of the Company's securities, and, the Company has throughout its
existence, obtained funds for acquisitions and operations from term bank loans
of up to a year's duration, guaranteed by Mr. David H. Brooks, Chairman of the
Board, and certain affiliated persons. At the present time, the company has a
loan of $1,400,000 from the Bank of New York coming due in February 1997 bearing
interest at 6.1250%. The Company expects to renew this loan, at prevailing
interest rates when it becomes due. The Company had a $1,150,000 Chase Loan
which was paid in full in September 1996. Of the proceeds drawn down to date,
$1,400,000 were used by the Company to refinance PACA's obligations to another
financial institution, and $1,150,000 were used to purchase the NDL Assets and
provide NDL with working capital.
Mr. David H. Brooks, Chairman of the Board, and/or his wife, Mrs. Terry Brooks,
made term loans due in April, 1997 of $1,140,000, bearing interest at 9% per
year. Presently there is $550,000 outstanding on this loan. Mr. and Mrs. Brooks
also entered into a collateral agreement [third party] (the "Collateral
Agreement") with the bank to pledge certain marketable securities owned by Mr.
Brooks and Mrs. Brooks to partially secure the term loans and other obligations
of the Company to the bank. In exchange for this, the Company granted to Mrs.
Terry Brooks, on December 20, 1994, 5-year warrants to purchase 2,500,000 shares
of the Company's Common Stock, at a price of $1.33 per share. The warrants
contain provisions for a one-time demand registration, and piggyback
registration rights. All of the aforesaid loans were made directly to the
Company, and the Company has loaned the proceeds to NDL. Mr. David Brooks also
loaned $2,000,000 to the Company to provide the funds needed to purchase the
Point Blank Assets. $1,250,000 have been repaid thus far. Mr. and Mrs. Brooks
have also pledged certain of their personal assets to secure the BNY Loan.
The Company relocated substantially all the NDL, Point Blank, and OPI's assets
to a 67,000 square foot office and warehouse facility located at 4031 N.E. 12th
Terrace, Oakland Park, Florida 33334, which is now owned by affiliates of Mr.
Brooks. In January 1996, the Company purchased a new corporate headquarters
located in Old Westbury, New York.
<PAGE>
The Company's consolidated working capital at September 30, 1996 and 1995 were
$13,802,865 and $8,615,588, respectively. The Company believes that it has
sufficient resources to meet its working capital requirements for the next
twelve months.
ID's working capital requirements are to finance the manufacturing and marketing
costs associated with its initial product, and research and development costs
associated with product enhancements and new products. ID's principal sources of
working capital will be generated from borrowings. Media's working capital
requirements will be determined as different avenues for the exploitation of its
film library are researched and developed. The film library is not expected to
bring in significant revenues to the Company. The Company believes that it has
sufficient funds to meet Media's anticipated needs for the next twelve months.
The Company invested approximately $3,316,750 (as of September 30, 1996, on a
historical cost basis) in the securities of certain privately held companies,
which are included in "Investments in Non-marketable Securities" on the Company
balance sheet.
Effect of Inflation and Changing Prices.
The Company did not experience increases in raw material prices during the nine
month period ended September 30, 1996 an 1995. 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
NONE
<PAGE>
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 8, 1996 DHB CAPITAL GROUP INC.
/S/ Mary Kreidell
-----------------
Mary Kreidell
Chief Financial Officer
/S/ David Brooks
----------------
David Brooks
Chairman of the Board
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:
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/S/ David Brooks Chairman of the Board November 8, 1996
- ----------------
David Brooks
/S/ Mary Kreidell Chief Financial Officer November 8, 1996
- -----------------
Mary Kreidell
/S/ Mel Paikoff Director November 8, 1996
- ---------------
Mel Paikoff
/S/ Gary Nadleman Director November 8, 1996
- -----------------
Gary Nadleman
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ART. 5 FINANCIAL DATA SCHEDULE FOR 3RD QUARTER 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 198,314
<SECURITIES> 3,277,246
<RECEIVABLES> 5,510,197
<ALLOWANCES> 80,695
<INVENTORY> 8,178,886
<CURRENT-ASSETS> 18,004,489
<PP&E> 1,632,438
<DEPRECIATION> 498,313
<TOTAL-ASSETS> 24,119,110
<CURRENT-LIABILITIES> 4,201,624
<BONDS> 0
0
0
<COMMON> 22,890
<OTHER-SE> 18,433,831
<TOTAL-LIABILITY-AND-EQUITY> 24,119,110
<SALES> 19,875,112
<TOTAL-REVENUES> 19,875,112
<CGS> 13,448,751
<TOTAL-COSTS> 5,674,660
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 247,990
<INCOME-PRETAX> 1,997,359
<INCOME-TAX> 489,109
<INCOME-CONTINUING> 1,508,250
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,508,250
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
