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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER
ENDED
MARCH 31, 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 May 14, 1999, there were 25,639,940 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 March 31, 1999 and December 31, 1998
Unaudited Consolidated Statements of Operations and Retained Earnings
For The Three Months Ended March 31, 1999, 1998 and 1997
Unaudited Consolidated Statements of Cash Flows For The Three Months Ended
March 31, 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
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ...................... $ 283,795 $ 519,117
Marketable securities .......................... 606,347 529,328
Accounts receivable, less allowance for doubtful
accounts of $353,320 and $303,320 ........ 8,410,087 8,997,354
Inventories .................................... 22,047,217 20,001,547
Prepaid expenses and other current assets ...... 3,152,875 1,948,347
----------- -----------
Total Current Assets ............ 34,500,321 31,995,693
----------- -----------
PROPERTY AND EQUIPMENT ........................ 7,088,355 7,104,233
----------- -----------
OTHER ASSETS
Intangible assets, net ....................... 1,236,351 1,271,668
Investments in non-marketable securities ..... 1,688,750 1,688,750
Deferred tax assets .......................... 458,680 334,000
Deposits and other assets .................... 560,638 584,891
----------- -----------
Total Other Assets .............. 3,944,419 3,879,309
----------- -----------
TOTAL ASSETS ...................................... 45,533,095 $42,979,235
=========== ===========
<PAGE>
<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 ................................. $ 5,000,000 $ 4,175,000
Current maturities of long term debt ......... 153,297 159,607
Accounts payable ............................. 6,465,514 6,233,131
Accrued expenses and other current liabilities 3,185,667 2,324,114
----------- -----------
Total Current Liabilities ....... 14,804,478 12,891,852
----------- -----------
LONG TERM LIABILITIES
Long term debt, net of current maturities ..... 369,660 387,512
Note Payable - stockholder .................... 11,421,604 11,527,604
----------- -----------
Total Long Term Debt ............ 11,791,264 11,915,116
----------- -----------
Total Liabilities ............... 26,595,742 24,806,968
----------- -----------
Common stock .................................. 25,640 25,447
Additional Paid in Capital .................... 22,080,657 21,215,849
Accumulated Deficit ........................... (3,069,488) (3,100,898)
Unrealized Loss ............................... (115,853) --
Foreign Currency .............................. 16,397 31,869
TOTAL STOCKHOLDERS' EQUITY ..................... 18,937,353 18,172,267
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..... $45,533,095 $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 MARCH 31,
1999 1998 1997
---------- ------------ ------------
<S> <C> <C> <C>
Net sales ......................................................... 9,446,730 $ 10,595,074 $ 7,144,676
Cost of sales ..................................................... 6,208,033 7,876,092 4,762,894
------------ ------------ ------------
Gross Profit ................................................ 3,238,697 2,718,982 2,381,782
Selling, general and administrative expenses ..................... 2,781,849 3,101,742 1,925,056
------------ ------------ ------------
Income(Loss) before other income (expense) .................. 456,848 (382,760) 456,726
------------ ------------ ------------
Other Income (Expense)
Interest expense, net of interest income .................... (499,196) (171,571) (50,371)
Dividend income ............................................. -- 8 12,617
Other income ................................................... 2,106 -- 21,131
Foreign currency translation ................................ 833 742 (4,544)
Realized gain on marketable securities ...................... 113,786 46,460 229,941
Unrealized gain on marketable securities .................... -- 30,000 (288,450)
------------ ------------ ------------
Total Other Income (Expense) ....................... (382,471) (94,361) (79,676)
------------ ------------ ------------
Income (loss) before income taxes (benefit) ................. 74,377 (477,121) 377,050
Income taxes (benefit) ...................................... 42,967 7,950 13,000
------------ ------------ ------------
Net Income (loss) ........................................... 31,410 (485,071) 364,050
Retained Earnings (Deficit) - Beginning ............ (3,100,898) (3,230,700) (4,771,590)
------------ ------------ ------------
Retained Earnings (Deficit) - End .................. (3,069,488) $ (3,715,771) $ (4,407,540)
============ ============ ============
Earnings (loss) per common share
Primary ............................. .001 $ (0.018) $ 0.015
============ ============ ============
Fully Diluted ....................... .001 $ (0.017) $ 0.015
============ ============ ============
Weighted average number of common share outstanding:
Primary ............................. 25,564,051 27,137,331 25,078,097
============ ============ ============
Fully Diluted ....................... 44,611,319 28,053,959 25,078,097
============ ============ ============
</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,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) .................................. 31,410 $ (485,071) $ 364,050
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ............... 229,484 265,754 88,027
Stock issued in settlement of a lawsuit ..... 695,001 150,000
Stock returned in settlement of a lawsuit ... (21,131)
Stock issued for services ................... 70,000 279,388
Unrealized loss ............................. (115,853)
Changes in assets and liabilities
(Increase) Decrease in:
Accounts receivable .......................... 587,267 (610,645) (1,292,927)
Marketable securities ........................ (77,019) 1,615,471 (1,313,713)
Inventories .................................. (2,045,670) (606,359) (489,475)
Prepaid expenses and other current assets .... (1,204,528) (718,283) (606,209)
Deferred tax assets .......................... (124,681)
Deposits and other assets .................... 24,253 (1,333) (22,081)
Increase (decrease) in:
Accounts payable ............................. 232,384 (362,034) 1,860,367
Accrued expenses and other current liabilities 861,553 (29,550)
State income taxes payable ................... -- -- 349
----------- ----------- -----------
Net cash used by operating activities ................. (836,399) (456,647) (1,032,905)
----------- ----------- -----------
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 ..... (178,289) (567,507) (118,458)
----------- ----------- -----------
Net Cash provided (used) by investing activities ...... (178,289) (5,149,909) (118,458)
----------- ----------- -----------
<PAGE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) of note payable- bank .......... 825,000 700,000 --
Proceeds from shareholder note ....................... (106,000) 7,000,000 --
Principal payments on long-term debt ................. (24,162) (19,116) (13,910)
Dividends Paid ....................................... -- -- --
Foreign Currency Translation ......................... (15,472) (10,585) 7,338
Purchase of treasury stock ........................... -- (2,384,015) --
Net proceeds from sale of common stock ............... 100,000 -- 100,000
----------- ----------- -----------
Net cash provided (used) by financing activities .............. 779,366 5,286,284 93,428
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS ............... (235,322) (320,272) (1,057,935)
CASH AND CASH EQUIVALENTS - BEGINNING ......................... 519,117 882,884 1,398,905
----------- ----------- -----------
CASH AND CASH EQUIVALENTS - END ............................... 283,795 $ 562,612 $ 340,970
=========== =========== ===========
Supplemental Cash Flow Information
Cash paid for
Interest .............................................. $ 92,112 $ 123,296 $ 59,525
Taxes ................................................. $ 43,327 $ 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, 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.
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,
1998 and 1997.
Consolidated net sales were approximately $9,447,000, $10,600,000 and $7,145,000
for the three months ended March 31, 1999, March 31, 1998 and March 31, 1997.
Sales decreased by approximately $1,150,000 due to delays in shipping dates for
a major customer. The increase in sales of $3,450,000 for the three months ended
March 31, 1998 over the three months ended March 31, 1997 was the result of
DHB's February 1998 acquisition of Lanxide Electronics Components Inc. and
Lanxide Armor Products, Inc. as well as improved sales in both our Armor and
Sports divisions. Consolidated gross profits increased to 34% for quarter ended
March 31, 1999. The increase of 8% is the result of the turn around of Lanxide
Electronic Components. Net income increased $500,000 for the quarter ended March
31, 1999 primarily as a result of improved performance of our Electronics
Division and Soft Armor companies.
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, DHBKKIC 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, 1999 was $19,696,000 as compared to $13,063,000 in 1998 and
$10,288,700 at March 31, 1998. The current ratio at March 31, 1999 is 2.33 and
at March 31, 1999 it was is 2.17:1 as compared to 2.9:1 at March 31, 1997.
Cash, cash equivalents, and marketable securities totaled $283,795 at March 31,
1999. Compared to $651,000 and at March 31, 1998 and 1997 $341,000 in 1997. 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 of 1998 for up to $5,000,000. The line is
secured by the Company's assets. As of May 13, 1998 the Company has borrowed
$5,000,000 on this line at 7.4% interest due June 1, 1999.
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
No change.
<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: May 14, 1999 DHB CAPITAL GROUP INC.
/S/ 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 May 14, 1999
- ----------------------
/S/ Mary Kreidell Chief Financial Officer May 14, 1999
- ----------------------
/S/ Gary Nadelman Co-Chairman of the Board May 14, 1999
- ----------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 283,795
<SECURITIES> 606,347
<RECEIVABLES> 22,047,217
<ALLOWANCES> 507,739
<INVENTORY> 22,047,217
<CURRENT-ASSETS> 34,500,321
<PP&E> 7,088,355
<DEPRECIATION> 45,533,095
<TOTAL-ASSETS> 14,804,447
<CURRENT-LIABILITIES> 11,184,167
<BONDS> 0
0
0
<COMMON> 25,640
<OTHER-SE> 22,006,684
<TOTAL-LIABILITY-AND-EQUITY> 45,533,095
<SALES> 9,446,730
<TOTAL-REVENUES> 9,446,730
<CGS> 6,208,032
<TOTAL-COSTS> 2,781,847
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 499,196
<INCOME-PRETAX> 42,972
<INCOME-TAX> 0
<INCOME-CONTINUING> 31,405
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,405
<EPS-PRIMARY> .001
<EPS-DILUTED> .001
</TABLE>
