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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-QSB/A No. 1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER
ENDED
MARCH 31, 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 May 13, 1998, there were 24,717,829 shares of Common Stock,
$.001 par value outstanding.
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<PAGE>
The filing Form 10-QSB/A No. 1 amends the Quarterly Report on Form 10QSB Dated
May 14, 1998 of DHB Capital Group Inc. (the Company). The undersigned Registratn
hereby amends the following items, the weighted average number of shares on the
statements of operations and retained earnings on Form 10-QSB dated May 14,
1998.
CONTENTS
PART I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet as of March 31, 1998 and December 31, 1997
Unaudited Consolidated Statements of Operations and Retained Earnings
For The Three Months Ended March 31, 1998 and 1997
Unaudited Consolidated Statements of Cash Flows For The Three Months Ended
March 31, 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
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ...................... $ 562,612 $ 882,884
Marketable securities .......................... 88,335 1,703,806
Accounts receivable, less allowance for doubtful
accounts of $353,320 and $303,320 ........ 7,614,332 6,285,181
Inventories .................................... 14,523,507 12,543,474
Prepaid expenses and other current assets ...... 1,457,942 727,421
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Total Current Assets ............ 24,246,728 22,142,766
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PROPERTY AND EQUIPMENT ........................ 6,867,426 2,374,085
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OTHER ASSETS
Intangible assets, net ....................... 1,051,878 588,017
Investments in non-marketable securities ..... 1,688,750 1,688,750
Deferred tax assets .......................... 455,300 455,300
Deposits and other assets .................... 449,324 425,711
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Total Other Assets .............. 3,645,252 3,157,778
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TOTAL ASSETS ...................................... 34,759,406 $27,674,629
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable ................................. $ 3,375,000 $ 2,675,000
Current maturities of long term debt ......... 131,175 65,192
Accounts payable ............................. 5,868,403 5,072,929
Accrued expenses and other current liabilities 1,809,589 708,631
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Total Current Liabilities ....... 11,184,167 8,521,752
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LONG TERM LIABILITIES
Long term debt, net of current maturities ..... 413,311 111,258
Note Payable - stockholder .................... 8,300,000 1,300,000
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Total Long Term Debt ............ 8,713,311 1,411,258
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Total Liabilities ............... 19,897,478 9,933,010
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COMMITMENTS AND CONTINGENCIES
Common Stock, $.001 par value; 100,000,000 shares
authorized, 24,742,602 and 25,347,224 issued
and outstanding respectively ................. 24,743 25,347
Additional paid-in capital 18,569,676 20,953,107
Accumulated Deficit (3,715,771) (3,230,700)
Foreign currency translation adjustment (16,720) (6,135)
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TOTAL STOCKHOLDERS' EQUITY ..................... 14,861,928 17,741,619
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..... $34,759,406 $27,674,629
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</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31,
1998 1997
------------ ------------
<S> <C> <C>
Net sales ......................................................... $ 10,595,074 $ 7,144,676
Cost of sales ..................................................... 7,876,092 4,762,894
------------ ------------
Gross Profit ................................................ 2,718,982 2,381,782
Selling, general and administrative expenses ..................... 3,101,742 1,925,056
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Income(Loss) before other income (expense) .................. (382,760) 456,726
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Other Income (Expense)
Interest expense, net of interest income .................... (171,571) (50,371)
Dividend income ............................................. 8 12,617
Other income ................................................... -- 21,131
Foreign currency translation ................................ 742 (4,544)
Realized gain on marketable securities ...................... 46,460 229,941
Unrealized gain on marketable securities .................... 30,000 (288,450)
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Total Other Income (Expense) ....................... (94,361) (79,676)
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Income (loss) before income taxes (benefit) ................. (477,121) 377,050
Income taxes (benefit) ...................................... 7,950 13,000
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Net Income (loss) ........................................... (485,071) 364,050
Retained Earnings (Deficit) - Beginning ............ (3,230,700) (4,771,590)
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Retained Earnings (Deficit) - End .................. $ (3,715,771) $ (4,407,540)
============ ============
Earnings (loss) per common share
Primary ............................. $ (0.018) $ 0.015
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Fully Diluted ....................... $ (0.017) $ 0.015
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Primary weighted average number of shares .......... 25,002,979 25,078,907
Add warrants ....................................... 4,553,765 1,716,333
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Fully diluted weighted average number of shares .... 29,556,774 26,795,240
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</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) .................................. $ (485,071) $ 364,050
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ............... 265,754 88,027
Stock issued in settlement of a lawsuit ..... -- 150,000
Stock returned in settlement of a lawsuit ... -- (21,131)
Stock issued to purchase a lease ............ -- 279,388
Changes in assets and liabilities
(Increase) Decrease in:
Accounts receivable .......................... (610,645) (1,292,927)
Marketable securities ........................ 1,615,471 (1,313,713)
Inventories .................................. (606,359) (489,475)
Prepaid expenses and other current assets .... (718,283) (606,209)
Deposits and other assets .................... (1,333) (22,081)
Increase (decrease) in:
Accounts payable ............................. (362,034) 1,860,367
Accrued expenses and other current liabilities 445,853 (29,550)
State income taxes payable ................... -- 349
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Net cash used by operating activities ................. (456,647) (1,032,905)
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CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of assets of subsidiary,
net of cash acquired ....................... (4,582,402) --
Payments made for property and equipment ..... (567,507) (118,458)
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Net Cash provided (used) by investing activities ...... (5,149,909) (118,458)
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<PAGE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) of note payable- bank .. 700,000 --
Proceeds from shareholder note ............... 7,000,000 --
Principal payments on long-term debt ......... (19,116) (13,910)
Dividends Paid ............................... -- --
Foreign Currency Translation ................. (10,585) 7,338
Purchase of treasury stock ................... (2,384,015) --
Net proceeds from sale of common stock ....... -- 100,000
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Net cash provided (used) by financing activities ...... 5,286,284 93,428
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NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS ....... (320,272) (1,057,935)
CASH AND CASH EQUIVALENTS - BEGINNING ................. 882,884 1,398,905
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CASH AND CASH EQUIVALENTS - END ....................... $ 562,612 $ 340,970
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Supplemental Cash Flow Information
Cash paid for
Interest $ 123,296 $ 59,525
Taxes $ 1,817 $ 33,301
</TABLE>
See accompanying notes to financial statements.
<PAGE>
DHB CAPITAL GROUP INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 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:
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
Three Months Ended March 31, 1998, Compared to the Three Months Ended March 31,
1997.
Consolidated net sales for the three months ended March 31, 1998 increased by
approximately $3,450,000 over sales for the three months ended March 31, 1997.
Over $2,000,000 which represents 29% of this increase was the result of improved
sales in both our armor and sports divisions. In February of 1998, DHB acquired
two subsidiaries, Lanxide Armor Products Inc. (LAP) and Lanxide Electronic
Components Inc. (LEC). These acquisitions contributed approximately, $1,364,000
to the Company's sales for the first quarter. LAP is involved in the design,
manufacture, testing and sale of product for specific armor systems and
components. These hard armor systems are based on patented and highly
proprietary ceramic/metal composite systems. Lanxide Electronic Products
designs, manufactures and sells unique and heavily patented thermal management
packaging and structural components for the electronic industry. Both Lap and
LEC were acquired from the same financially troubled parent corporation. The
parent corporation's financial condition severely hampered their first quarter's
performance. While there was a marked improvement from February to March under
DHB management, the overall effect of the acquisitions resulted in a 7% decrease
in the consolidated gross profit to 26% for quarter ending March 31, 1998 from
33% for the quarter ended March 31, 1997. Operating income was similarly
impacted, resulting in a loss of $382,760 for the three months ended March 31,
1998 as compared to operating income of $456,726. The Company has instituted
tighter production controls, restored financial well being and has hired a new
management team at LAP and LEC to insure a quick turn around. Also contributing
to the operating loss was a $173,000 advertising campaign incurred by the sports
division in relation to their launching a new innovative line of therapeutic
magnetic supports.
The Company's interest expense increased to $172,000 from $50,000 as a result of
the increased borrowings to finance the acquisition.
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, and LEC in financing their
working capital requirements. Working capital is needed to finance the
receivables, manufacturing process and inventory. Working Capital at March 31,
1998 was $13,063,000 as compared to $10,288,700 at March 31, 1998. The current
ratio at March 31, 1998 is 2.17:1 as compared to 2.9:1 at March 31, 1997.
Cash, cash equivalents, and marketable securities totaled $651,000 at March 31,
1998. Compared to $341,000 at March 31, 1997. The increase in cash, cash
equivalents and marketable securities was derived from operations and a
shareholder loan. The Company obtained a line of credit with the Bank of New
York in May of 1998 for up to $5,000,000. The line is secured by the Company's
account receivable. As of May 13, 1998 the Company has borrowed $500,000 on this
line at 7.4% interest due November 9, 1998.
During the first quarter, the Company repurchased 604,595 shares of its common
stock in the open market.
Effect of Inflation and Changing Prices.
The Company did not experience increases in raw material prices during the three
months ended March 31, 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.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Renaissance Financial Securities Corp. ("Renaissance") filed an action against
the Company and David H. Brooks in the United States District Court for the
Southern District of New York in connection with the breach of a consulting
agreement pursuant to which Renaissance was to provide certain services to the
Company. Renaissance seeks, among other things, compensatory damages of not less
than $2,500,000, punitive damages of not less than $500,000 and an order
enabling Renaissance to execute certain stock purchase warrants. The Company
filed an Answer and Counter-Claim and intends to vigorously defend the claim and
to pursue its Counter-Claims.
In June 1996, the Company commenced a lawsuit against the former
president of NDL, Mr. Barry Finn, for breach of his employment agreement. On
December 13, 1996, Mr. Finn filed a counterclaim against the Company asserting
Breach of Contract. The Company intends to vigorously pursue its claim and
vigorously defend Mr. Finn's counterclaim.
The Company is party to other litigation matters and claims which are
normal in the course of its operations, and while the results of the litigation
and claims cannot be predicted with certainty, management believes, based on
advice of counsel, the final outcome of such matters will not have a materially
adverse effect on the consolidated financial position.
<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: August 24, 1998 DHB CAPITAL GROUP INC.
/S/ David H. Brooks
-------------------------------
Chairman of the Board, Chief
Executive Officer, 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 Chairman of the Board August 24, 1998
- ----------------------
/S/ Mary Kreidell Chief Financial Officer August 24, 1998
- ----------------------
/S/ Gary Nadelman Director August 24, 1998
- ----------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 526,612
<SECURITIES> 148,335
<RECEIVABLES> 7,614,332
<ALLOWANCES> 369,369
<INVENTORY> 14,523,507
<CURRENT-ASSETS> 24,306,728
<PP&E> 6,867,426
<DEPRECIATION> 1,105,986
<TOTAL-ASSETS> 34,819,406
<CURRENT-LIABILITIES> 11,184,167
<BONDS> 0
24,743
0
<COMMON> 0
<OTHER-SE> 14,897,185
<TOTAL-LIABILITY-AND-EQUITY> 34,819,406
<SALES> 10,595,074
<TOTAL-REVENUES> 10,595,074
<CGS> 7,876,092
<TOTAL-COSTS> 3,101,742
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 171,571
<INCOME-PRETAX> (417,121)
<INCOME-TAX> 7,950
<INCOME-CONTINUING> (425,071)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (425,071)
<EPS-PRIMARY> .018
<EPS-DILUTED> .017
</TABLE>
