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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 QUARTERLY PERIOD ENDED JUNE 30, 2000
COMMISSION FILE NUMBER: 0-22429
DHB CAPITAL GROUP INC
(Exact name of Registrant as specified in its charter)
DELAWARE 11-3129361
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
555 WESTBURY AVENUE, CARLE PLACE, NEW YORK 11514
(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
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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 9, 2000, there were 32,327,390 shares of Common Stock, $.001 par
value outstanding.
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CONTENTS
Page
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PART I Financial Information
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Item 1. Financial Statements
Consolidated Balance Sheet as of June 30, 2000 and December 31, 1999 2
Unaudited Consolidated Statements of Income and Accumulated Deficit
For The Three Months Ended June 30, 2000, 1999 and 1998 3
Unaudited Consolidated Statements of Operations and Accumulated Deficit
For The Six Months Ended June 30, 2000, 1999 and 1998 4
Unaudited Consolidated Statements of Cash Flows For The Three Months
Ended March 31, 2000, 1999 and 1998 5
Unaudited Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition 7-8
PART II Other Information 8
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Signatures 9
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<TABLE>
<CAPTION>
DHB CAPITAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Unaudited
ASSETS June 30, 2000 December 31, 1999
------ ------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 700,850 $ 473,441
Accounts receivable, less allowance for doubtful
Accounts of $751,150 and $757,741 4,715,981 5,208,365
Inventories 11,406,171 9,045,853
Net assets held for sale - 3,928,980
Prepaid expenses and other current assets 539,570 596,441
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Total Current Assets 17,362,572 19,253,080
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PROPERTY AND EQUIPMENT, net 2,357,098 2,252,693
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OTHER ASSETS
Intangible assets, net 6,728 14,353
Investments in non-marketable securities 1,000,000 1,000,000
Deferred tax assets 444,000 444,000
Deposits and other assets 196,726 335,371
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Total Other Assets 1,647,454 1,793,724
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TOTAL ASSETS $21,367,124 $23,299,497
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Notes payable-bank $ - $ 5,000,000
Accounts payable 7,775,434 9,495,663
Accrued expenses and other current liabilities 5,333,855 2,557,290
Current maturities of long term debt 85,810 152,815
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Total Current Liabilities 13,195,099 17,205,768
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LONG TERM LIABILITIES
Long term debt, net of current maturities 43,492 233,582
Note Payable - stockholder 16,046,469 16,046,469
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Total Long Term Debt 16,089,961 16,280,051
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Total Liabilities 29,285,060 33,485,819
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Common stock, $.001 par value, 100,000,000 shares
authorized, 32,327,390 and outstanding 32,327 32,332
Additional paid in capital 25,684,453 25,691,774
Subscription receivable - (700,025)
Foreign currency translation adjustment (45,614) 12,408
Accumulated deficit (33,589,102) (35,222,811)
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STOCKHOLDERS' DEFICIENCY (7,917,936) (10,186,322)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
$21,367,124 $23,299,497
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See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED JUNE 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Net sales $16,128,373 $8,347,387 $8,045,467
Cost of sales 11,516,371 4,667,251 4,963,208
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Gross Profit 4,612,002 3,680,136 3,082,259
Selling, general and administrative expenses 2,814,800 2,605,673 2,411,404
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Income before other income (expense) 1,797,202 1,074,463 670,855
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Other Expenses (762,998) (323,392) (139,617)
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Income from Continuing Operations 1,034,204 751,071 531,238
Discontinued operations
Loss from discontinued operations - (612,597) (419,014)
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Income before income taxes 1,034,204 138,474 112,224
Income taxes 22,878 9,410 3,534
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Net income 1,011,326 129,064 108,690
Accumulated Deficit Beginning (34,600,428) (3,069,488) (3,715,771)
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Accumulated Deficit Ending $(33,589,102) $(2,940,424) $(3,607,081)
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Earnings per common share
Continuing Operations
Basic shares .032 0.029 0.021
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Diluted shares .032 0.025 0.018
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Discontinued Operations
Basic shares - (0.024) (0.017)
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Diluted shares - (0.020) (0.014)
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Weighted shares outstanding
Basic shares 32,343,941 25,660,833 24,774,376
Warrants - 4,474,343 4,453,563
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Diluted shares 32,343,941 30,135,176 29,227,939
=========== ========== ==========
See accompanying notes to financial statements.
3
</TABLE>
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<TABLE>
<CAPTION>
DHB CAPITAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Net sales $29,704,021 $15,717,519 $16,646,148
Cost of sales 21,110,712 9,365,071 10,822,850
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Gross Profit 8,593,309 6,352,448 5,823,298
Selling, general and administrative expenses 5,701,489 4,547,191 5,129,913
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Income before other income (expense) 2,891,820 1,805,257 693,385
----------- ----------- -----------
Other Expenses (1,548,032) (645,938) (233,176)
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Income (Loss) from Continuing Operations 1,343,788 1,159,319 460,209
Discontinued operations
Loss from discontinued operations (517,288) (946,468) (825,106)
Gain on disposal of discontinued operations 857,860 - -
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Total income (loss) from discontinued operations 340,572 (946,468) (825,106)
Income (loss) before income taxes 1,684,360 212,851 (364,897)
Income taxes 50,651 52,377 11,484
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Net income (loss) 1,633,709 160,474 (376,381)
Accumulated Deficit Beginning (35,222,811) (3,100,898) (3,230,700)
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Accumulated Deficit Ending (33,589,102) $(2,940,424) $(3,607,081)
=========== =========== ===========
Earnings (loss) per common share
Continuing Operations:
Basic shares .042 0.045 0.018
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Diluted shares .042 0.039 0.016
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Discontinued Operations:
Basic shares .011 (0.037) (0.033)
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Diluted shares .011 (0.032) (0.028)
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Weighted shares outstanding:
Basic shares 32,338,061 25,592,811 24,888,046
Warrants - 4,451,186 4,404,523
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Diluted shares 32,338,061 30,043,997 29,292,569
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See accompanying notes to financial statements.
4
</TABLE>
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<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 2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Net Income (loss) $ 1,633,709 $ 160,474 $(376,381)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 210,801 464,191 620,302
Stock issued in settlement of a lawsuit -- 190,000 --
Stock issued for services 32,600 65,156 372,000
Changes in assets and liabilities (Increase) Decrease in:
Accounts receivable 492,385 645,422 (800,606)
Marketable securities -- 427,242 1,601,698
Inventories (2,360,317) (4,596,204) (2,333,174)
Prepaid expenses and other current assets 56,871 (635,193) (977,712)
Deferred taxes -- (100,000) (22,118)
Deposits and other assets 138,645 (12,667) (101,787)
Increase (decrease) in:
Accounts payable (1,720,229) 401,879 (566,507)
Accrued expenses and other current liabilities 2,776,564 1,403,207 841,270
State income taxes payable -- 10,395 22,286
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Net cash provided (used) by operating activities 1,261,029 (1,576,098) (1,720,729)
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CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of assets of subsidiary, net of cash acquired 3,933,980 -- (4,924,073)
Payments made for property and equipment (312,581) (331,778) (780,347)
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Net Cash provided (used) by investing activities 3,621,399 (331,778) (5,704,420)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) of note payable- bank (5,000,000) 825,000 2,325,000
Proceeds from shareholder note -- -- 7,100,000
Principal payments on long-term debt (257,095) (53,568) (41,417)
Foreign Currency Translation (58,022) (18,505) (6,206)
Purchase of treasury stock (31,026) (240,245) (2,770,002)
Stock warrant exercised -- 62,500 66,000
Net proceeds from sale of common stock 691,125 1,127,000 --
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Net cash provided by financing activities (4,655,018) 1,702,182 6,673,375
NET DECREASE IN CASH AND EQUIVALENTS 227,409 (205,694) (751,774)
CASH AND CASH EQUIVALENTS - BEGINNING 473,441 519,117 882,884
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CASH AND CASH EQUIVALENTS - END $ 700,850 $ 313,423 $131,110
=========== ========== ==========
Supplemental cash flow information Cash paid for:
Interest $88,272 $154,557 $174,350
Taxes $26,206 $57,468 $ 27,134
See accompanying notes to financial statements.
5
</TABLE>
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DHB CAPITAL GROUP INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000, 1999 AND 1998
ITEM 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-K and is presented for comparative purposes. All other
financial statements are unaudited. All unaudited amounts are subject to
year-end adjustments and audit, but the 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-K 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: DHB Capital
Group Inc., Lanxide Armor Products Inc., Lanxide Electronic Components
Inc., NDL Products Inc., Orthopedic Products Inc., Point Blank Body Armor
Inc. and Protective Apparel Corporation of America.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000, COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1999.
Consolidated net sales increased 93% to $16,128,373 for the three
months ended June 30, 2000 as compared to $8,347,387 for the three months ended
June 30, 1999 as a result of increased sales volumes in all of the operating
companies. Operating income rose to $1,797,202 for the second quarter of 2000
versus $1,074,403 for the second quarter of 1999. Net income was approximately
$1,011,000 for the three months ended June 30, 2000 as compared to approximately
$129,000 for the three months ended June 30, 1999.
THREE MONTHS ENDED JUNE 30, 1999, COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1998
Consolidated net sales were approximately $8,347,387 and $8,045,467 for
the three
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months ended June 30, 1999and 1998, respectively. Gross profit for the three
months ended June 30, 1999 increased approximately $598,000 to $3,680,136 over
the gross profit for the three months ended June 30, 1998. This is a result of
improved operating efficiencies and tighter production controls. Operating
income increased 60% to $670,855 for the three months ended June 30, 1999 as
compared to operating income of $1,074,463 for the three months ended June 30,
1998.
SIX MONTHS ENDED JUNE 30, 2000, COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1999.
For the six months ending June 30, 2000 operating income rose approxi-
mately $1,086,000 to $2,891,000 from $1,805,000 for the comparable period in the
prior year. Net income was approximately $1,634,000 for the six months ended
June 30, 000 as compared to $160,000 for the six months ended June 30, 1999. On
March 10, 2000 the Company sold its Electronics Division. For the period ended
June 30, 2000, the company showed a gain from discontinued operations of
$340,572 as compared to a loss of $946,468 for the six months ended June 30,
1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements over the next twelve months are to
assist PACA, Point Blank, NDL, and Point Blank International in financing their
working capital requirements. Working capital is needed to finance the
receivables, manufacturing process and inventory. Working capital at June 30,
2000 was approximately $4.17 million as compared to $19.7 million and $13
million at June 30, 1999 and 1998, respectively. The current ratio at June 30,
2000 improved to 1.31 as of June 30, 2000 as compared to $1.24 as of March 31,
2000 and $1.11 as of December 31, 1999. The Company's cash flow statement showed
net cash provided by operating activities for the six months ended June 30, 2000
of $1,261,029 as compared to cash used by operating activities of and
($1,576,098) for the periods ended June 30, 1999.
Cash, cash equivalents, and marketable securities totaled $700,850 at June 30,
2000 as compared to $313,423 at June 30, 1999. As of December 31, 1999, the
Company had a line of credit with the Bank of New York for $5,000,000 and all of
the Company's assets secured the line. On March 10, 2000 the Company repaid the
entire line of credit using the proceeds from the sale of the Electronics Group.
EFFECT OF INFLATION AND CHANGING PRICES.
The Company did not experience significant increases in raw material prices
during the six months ended June 30, 2000, 1999 and 1998. The Company believes
it will be able to increase prices on their products to meet future price
increases in raw materials, should they occur.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
7
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This Annual Report contains certain forward-looking statements and information
relating to the Company that is based on the beliefs of the Company's management
as well as assumptions made by and information currently available to the
Company's management. When used in this document, the words "anticipate,"
"believe," "estimate", "expect", "going forward", and the similar expressions,
as they relate to the Company or Company management, are intended to identify
forward-looking statements. Such statements reflect the current views of the
Company with respect to future events and are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should the underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated or expected. The Company does not intend to update these
forward-looking statements.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On July 21, 2000 the Company held its annual meeting of Security Holders. David
Brooks was elected Chairman of the Board, Morton Cohen, Dawn Schlegel and Jerome
Krantz were elected to the board. The board elected Mr. David Brooks to be the
Chief Executive Officer of the Company. Also voted on at the meeting was to
continue the use of Paritz and Company P.A. as the Company's independent
auditors.
8
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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 9, 2000 DHB CAPITAL GROUP INC.
By: /s/ DAVID H. BROOKS
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David H. Brooks
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
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By: /s/ DAVID H. BROOKS Chairman of the Board August 9, 2000
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David H. Brooks
By: /s/ DAWN SCHLEGEL Chief Financial Officer August 9, 2000
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Dawn Schlegel
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