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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER
ENDED
JUNE 30, 1999 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 August 11, 1999 there were 25,933,379 shares of Common Stock,
$.001 par value outstanding.
<PAGE>
CONTENTS
PART I Financial Information
---------------------
Item 1. Financial Statements
Consolidated Balance Sheet as of June 30, 1999 and December 31, 1998
Unaudited Consolidated Statements of Operations and Retained Earnings
For The Three Months Ended June 30, 1999, 1998 and 1997
Unaudited Consolidated Statements of Operations and Retained Earnings
For The Six Months Ended June 30, 1999, 1998 and 1997
Unaudited Consolidated Statements of Cash Flows For The Six Months Ended
June 30, 1999, 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
JUNE 30, 1999 DECEMBER 31, 1998
------------- -----------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents ................................ $ 313,423 $ 519,117
Marketable securities .................................... 102,086 529,328
Accounts receivable, less allowance for doubtful
accounts of $507,739 ..................................... 8,351,932 8,997,354
Inventories .............................................. 24,597,751 20,001,547
Prepaid expenses and other current assets ................ 2,583,540 1,948,347
------------ ------------
Total Current Assets ..................................... 35,948,732 31,995,693
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation of
$2,030,416 and $1,657,951, respectively .................. 7,050,784 7,104,233
------------ ------------
OTHER ASSETS
Intangible assets, net ................................... 1,192,704 1,271,668
Investments in non-marketable securities ................. 1,688,750 1,688,750
Deferred tax assets ...................................... 434,000 334,000
Deposits and other assets ................................ 597,558 584,891
------------ ------------
Total Other Assets ....................................... 3,913,012 3,879,309
------------ ------------
TOTAL ASSETS ............................................. $ 46,912,528 $ 42,979,235
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
JUNE 30, 1999 DECEMBER 31, 1998
------------- -----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable ............................................. $ 5,000,000 $ 4,175,000
Current maturities of long term debt ..................... 153,173 159,607
Accounts payable ......................................... 6,635,010 6,233,131
Accrued expenses and other current liabilities ........... 3,737,716 2,324,114
------------ ------------
Total Current Liabilities ................................ 15,525,899 12,891,852
------------ ------------
LONG TERM LIABILITIES
Long term debt, net of current maturities ................ 340,378 387,512
Note Payable - stockholder ............................... 11,527,604 11,527,604
------------ ------------
Total Long Term Debt ..................................... 11,867,982 11,915,116
------------ ------------
Total Liabilities ........................................ 27,393,881 24,806,968
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 100,000,000
shares authorized, ....................................... 25,933 25,447
25,932,579 and 25,447,224, issued and
outstanding, respectively
Additional paid-in capital ............................... 22,419,774 21,215,849
Accumulated deficit ...................................... (2,940,424) (3,100,898)
Foreign currency translation adjustment .................. 13,364 31,869
------------ ------------
STOCKHOLDERS' EQUITY ..................................... 19,518,647 18,172,267
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............... $ 46,912,528 $ 42,979,235
============ ============
</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 JUNE 30,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net sales ..................................... $ 10,539,318 $ 10,523,527 $ 8,400,842
Cost of sales ................................. 6,578,124 6,848,302 5,758,367
------------ ------------ ------------
Gross Profit .................................. 3,961,194 3,675,225 2,642,475
Selling, general and administrative expenses .. 3,468,669 3,319,788 2,609,411
------------ ------------ ------------
Income(Loss) before other income (expense) .... 492,525 355,437 33,064
------------ ------------ ------------
Other Income (Expense)
Interest expense, net of interest income ...... (482,667) (329,672) (99,449)
Other Income .................................. 251,831 7 5,003
Foreign currency translation .................. 6,620 (658) 3,914
Realized gain on marketable securities ........ (129,835) 73,359 (262,323)
Unrealized gain on marketable securities ...... 0 13,751 895,687
------------ ------------ ------------
Total Other Income (Expense) .................. (354,051) (243,213) 542,832
------------ ------------ ------------
Income (loss) before income taxes (benefit) ... 138,474 112,224 575,896
Income taxes (benefit) ........................ 9,410 3,534 115,392
------------ ------------ ------------
Net Income .................................... 129,064 108,690 460,504
Retained Earnings (Deficit) - Beginning ....... (3,069,488) (3,715,771) (4,407,540)
------------ ------------ ------------
Retained Earnings (Deficit) - End ............. $ (2,940,424) $ (3,607,081) $ (3,947,036)
============ ============ ============
Earnings (loss) per common share
Primary ....................................... $ 0.005 $ 0.004 $ 0.019
============ ============ ============
Fully Diluted ................................. $ 0.004 $ 0.004 $ 0.017
============ ============ ============
Primary weighted average number of shares ..... 25,660,833 24,774,376 24,713,138
Add warrants .................................. 4,474,344 4,453,563 1,720,891
------------ ------------ ------------
Fully Diluted weighted average number of shares 30,135,177 29,227,939 26,434,029
============ ============ ============
</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 SIX MONTHS ENDED JUNE 30,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net sales ..................................... $ 19,986,048 $ 21,118,599 $ 15,545,517
Cost of sales ................................. 12,786,157 14,724,382 10,527,531
------------ ------------ ------------
Gross Profit .................................. 7,199,891 6,394,217 5,017,986
Selling, general and administrative expenses .. 6,250,518 6,421,538 4,528,195
------------ ------------ ------------
Income(Loss) before other income (expense) .... 949 373 (27,321) 489,791
------------ ------------ ------------
Other Income (Expense)
Interest expense, net of interest income ...... (981,863) (501,244) (149,820)
Other Income .................................. 253,938 15 38,751
Foreign currency translation .................. 7,453 84 (630)
Realized gain on marketable securities ........ (16,050) 119,818 (32,382)
Unrealized gain on marketable securities ...... 0 43,751 607,237
------------ ------------ ------------
Total Other Income (Expense) .................. (736,522) (337,576) 463,156
------------ ------------ ------------
Income (loss) before income taxes (benefit) ... 212,851 (364,897) 952,947
Income taxes (benefit) ........................ 52,377 11,484 128,393
------------ ------------ ------------
Net Income (loss) ............................. 160,474 (376,381) 824,554
Retained Earnings (Deficit) - Beginning ....... (3,100,898) (3,230,700) (4,771,590)
------------ ------------ ------------
Retained Earnings (Deficit) - End ............. $ (2,940,424) $ (3,607,081) $ (3,947,036)
============ ============ ============
Earnings (loss) per common share
Primary ....................................... $ 0.006 $ (0.015) $ 0.034
============ ============ ============
Fully Diluted ................................. $ 0.005 $ (0.013) $ 0.032
============ ============ ============
Primary weighted average number of shares ..... 25,592,811 24,888,046 24,075,677
Add warrants .................................. 4,451,186 4,404,523 1,720,891
------------ ------------ ------------
Fully Diluted weighted average number of shares 30,043,997 29,292,569 25,796,568
============ ============ ============
</TABLE>
See accompanying notes to financial tatements.
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
CASH FLOWS FROM OPERATING ACTIVITIES 1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net Income (loss) ............................ $ 160,474 $ (376,381) $ 824,554
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization ................ 464,191 620,302 192,581
Stock issued in settlement of a lawsuit ...... 190,000 150,000
Stock returned in settlement of a lawsuit .... -- (21,131)
Stock issued for services .................... 65,156 372,000 210,000
Unrealized loss on marketable securities ..... -- -- 598,900
Changes in assets and liabilities
(Increase) Decrease in:
Accounts receivable .......................... 645,422 (800,606) (1,871,981)
Marketable securities ........................ 427,242 1,601,698 (261,487)
Inventories .................................. (4,596,204) (2,333,174) (1,817,859)
Prepaid expenses and other current assets .... (635,193) (977,712) (790,748)
Deferred taxes ............................... (100,000) (22,118) 49,000
Deposits and other assets .................... (12,667) (101,787) (61,883)
Increase (decrease) in:
Accounts payable ............................. 401,879 (566,507) 1,193,752
Accrued expenses and other current liabilities 1,403,207 841,270 (17,158)
State income taxes payable ................... 10,395 22,286 84,580
----------- ----------- -----------
Net cash used by operating activities ........ (1,576,098) (1,720,729) (1,538,880)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of assets of subsidiary,
net of cash acquired ........................ -- (4,924,073) --
Payments made for property and equipment ..... (331,778) (780,347) (417,730)
----------- ----------- -----------
Net Cash used by investing activities ........ (331,778) (5,704,420) (417,730)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) of note payable- bank .. 825,000 2,325,000 500,000
Proceeds from shareholder note ............... -- 7,100,000 --
Principal payments on long-term debt ......... (53,568) (41,417) (34,472)
Foreign Currency Translation ................. (18,505) (6,206) 12,163
Purchase of treasury stock ................... (240,245) (2,770,002) --
Stock warrant exercised ...................... 62,500 66,000 --
Net proceeds from sale of common stock ....... 1,127,000 -- 3,198,625
----------- ----------- -----------
Net cash provided by financing activities .... 1,702,182 6,673,375 3,676,316
=========== ----------- -----------
NET DECREASE IN CASH AND EQUIVALENTS ......... (205,694) (751,774) 1,719,706
CASH AND CASH EQUIVALENTS - BEGINNING ........ 519,117 882,884 1,398,905
----------- ----------- -----------
CASH AND CASH EQUIVALENTS - END .............. $ 313,423 $ 131,110 $ 3,118,611
=========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(continued)
Supplemental cash flow information
Cash paid for: 1999 1998 1997
-------- ---------- --------
<S> <C> <C> <C>
Interest $154,557 $174,350 $165,760
Taxes $57,468 $ 27,134 $17,160
</TABLE>
See accompanying notes to financial statements.
<PAGE>
DHB CAPITAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1999, 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.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Results of Operations
Three Months Ended June 30, 1999, Compared to the Three Months Ended June 30,
1998 and 1997.
Consolidated net sales were approximately $10,539,318, $10,523,527 and
$8,400,842 for the three months ended June 30, 1999, 1998 and 1997,
respectively. Gross profit for the three months ended June 30, 1999 increased
approximately $286,000 to $3,961,194 over the gross profit for the three months
ended June 30, 1998 and increased $1,318,719 over the gross profit for the three
months ended June 30, 1997. This is a result of improved operating efficiencies
and tighter production controls. Operating income increased 39% to $492,525 for
the three months ended June 30, 1999 as compared to operating income of $355,437
for the three months ended June 30, 1998.
Liquidity and Capital Resources
The Company's primary capital requirements over the next twelve months are to
assist PACA , Point Blank, NDL, OPI, Point Blank International, LAP, DHB KK and
LEC in financing their working capital requirements. Working capital is needed
to finance the receivables, manufacturing process and inventory. Working Capital
at June 30, 1999 was approximately $20,423,000 as compared to $12,979,000 in
1998 and $14,403,000 at June 30, 1997. The current ratio at June 30, 1999 is
2.31 and at June 30, 1998 it was 2:1 as compared to 3.2:1 at June 30, 1997.
<PAGE>
Cash, cash equivalents, and marketable securities totaled $415,509 at June 30,
1999 compared to $233,218 at June 30, 1998 and at June 30, 1997 cash and
marketable securities totaled $5,123,225. The 1998 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 1998 for up to $5,000,000. The line is secured by the Company's
assets. As of August 11, 1999 the Company has borrowed $5,000,000 on this line
at a rate of 7.4% interest. The line of credit expires in November of 1999.
Effect of Inflation and Changing Prices.
The Company did not experience increases in raw material prices during the six
months ended June 30, 1999, 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 5 - Other information
On July 16, 1999 the Company terminated its Chief Financial Officer and is
currently taking steps to hire a new Chief Financial Officer.
<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 11, 1999 DHB CAPITAL GROUP INC.
/S/ David H. Brooks
-------------------
David H. Brooks
Co-Chairman of the Board,
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 Co-Chairman of the Board August 11, 1999
-------------------
David H. Brooks
/S/ Dawn M. Schlegel Chief Accounting Officer August 11, 1999
- ---------------------
Dawn M. Schlegel
/S/ Robert A. Bruno Vice President August 11, 1999
- -------------------
Robert A. Bruno
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 313,423
<SECURITIES> 102,086
<RECEIVABLES> 8,351,932
<ALLOWANCES> 369,369
<INVENTORY> 24,597,751
<CURRENT-ASSETS> 35,948,732
<PP&E> 7,050,784
<DEPRECIATION> 2,030,416
<TOTAL-ASSETS> 46,912,528
<CURRENT-LIABILITIES> 15,525,899
<BONDS> 0
<COMMON> 25,933
0
0
<OTHER-SE> 19,492,714
<TOTAL-LIABILITY-AND-EQUITY> 46,912,528
<SALES> 19,986,048
<TOTAL-REVENUES> 19,986,048
<CGS> 12,786,157
<TOTAL-COSTS> 6,250,518
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 981,863
<INCOME-PRETAX> 212,851
<INCOME-TAX> 52,377
<INCOME-CONTINUING> 160,474
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 160,474
<EPS-BASIC> 0.006
<EPS-DILUTED> 0.005
</TABLE>
