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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT TO APPLICATION OR REPORT FILED PURSUANT
TO SECTION 12, 13, OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1994
Commission File No. 2-70197
OCEAN BIO-CHEM, INC.
(Exact name of registrant as specified in its charter)
Florida 59-1564329
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4041 S. W. 47 Avenue, Ft. Lauderdale, FL 33314
(Address of principal executive offices) (Zip Code)
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of this annual report for the period
ended December 31, 1994 as set forth in the pages attached hereto.
INDEX
Change 1 - Item 13 Certain Relationships and Related Transactions Page 2
Change 2 - Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. Page 2-3
Change 3 - Item 1 Business Page 3
Change 4 - Item 3 Legal Proceedings Page 3
Change 4 - Note 1 Organization and summary of significant
accounting policies Page 3-4
(a) - Income Taxes
(b) - Trademarks, Tradenames, Patents
Item 13. Certain Relationships and Related Transactions
On April 4, 1988, the Company entered a five year lease with a five year option
for approximately 12,000 square feet of office and warehouse facilities in Ft.
Lauderdale, Florida from an entity owned by officers of the registrant.
The lease requires a minimum rental of $84,000 with provision for yearly
increases based on the Consumer Price Index (base: March 1988=100) and has
provision for real estate taxes, operating and maintenance charge pass through.
Additionally, the annual rental can increase or decrease 7% annually for every
l% increase or decrease in the lessor's commercial bank's rate from a base of
8.5%.
The Registrant has rights to the "Star brite" name and products only for the
United States and Canada as a condition to its original public offering. The
president of the Registrant is the beneficial owner of three companies which
market Star brite products outside the United States. Registrant has advanced
monies to assist in such foreign marketing in order to establish an
international trademark. As of December 31, 1994 and 1993 amounts owed to
Registrant by the two companies was approximately $302,000 and $128,000,
respectively. These amounts have been advanced by the Registrant on open
account with requirements of repayment between 5 and 7 years. Advances bear
interest at the rate of interest charged to the Registrant on its bank line of
credit.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
The primary sources of the Registrant's liquidity are its operations and short-
term and long term borrowings from a commercial bank. In April 1994 the
registrant increased its financial commitments from its commercial bank. The
registrant will have $1,500,000 available to it through a one year renewable
line of credit expiring in March of 1995 and $350,000 on a 30 month term loan
expiring in July 1995. The 30 month loan was paid on time and was not renewed.
The line of credit was renewed on March 1995 for a one year period.
In February 1992, the Financial Accounting Standards board issued Statement of
Financial Accounting Standards No. 109 - "Accounting for Income Taxes."
Adoption is required for fiscal year beginning after December 15, 1992. The
adoption does not have any material effect on the registrant's liquidity or
capital resources. In 1993, none of the Company's revenues were classified as
nonrecurring.
The Registrant is involved in making sales in the Canadian market and must
deal with the currency fluctuations of the Canadian currency. The Registrant
does not engage in currency hedging and deals with such currency risk as a
pricing issue.
During the past few years Registrant has introduced various new products to the
market. This has required the Registrant to carry greater amounts of overall
inventory and has resulted in lower inventory turnover rates. The effects of
such inventory turnover have not been material to the overall operations of
Registrant. Registrant believes that all required capital to maintain such
increases can continue to be provided from operations and current lending
arrangements.
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Fourth Quarter results
For the quarter ended December 31, 1994 and 1993, Gross Margin percentages
were 41.1 % and 38.4%. This is primarily due to the product mix during these
quarters since the yearly gross profit percentage was 39% for both years.
Item l. Business
General: The Company was organized on November 13, 1973 under the laws of the
State of Florida. The Company is principally engaged in the manufacturing,
marketing and distribution of a broad line of appearance and maintenance
products for boats, recreational vehicles and aircraft under the Star brite
name.
The Registrant's trade name has been trademarked and the Registrant has had no
incidents of infringement. In the event of such infringement, the Registrant
would defend its trade name vigorously. The Registrant has two patents which it
believes are valuable in limited product lines, but not material to its success
or competiveness in general.
Item 3. Legal Proceedings
The Company is involved in two related lawsuits. On October 5, 1993, the
Company sued the Boden Co., d/b/a Adjust-A-Brush in the Circuit Court in
Pinellas County, Florida. This action involves the breakup of a business
arrangement between the Company's subsidiary, Star brite Distributing, Inc., and
the Boden Company. Boden has filed a counter suit. Both sides allege damages
in excess of $15,000. Subsequent to the state action, Boden, on August 19, 1994
and Duane H. Newville sued Star brite Distributing, Inc. and Peter Dornau, Sr.
in the United States District Court, Middle District of Florida. Star brite has
filed a counterclaim in this action. Although the plaintiff alleges $1,000,000
in damages, management believes this is nothing more than a frivolous pleading
allegation done for dramatic effect. The Registrant does not believe that the
results of this litigation would have a material adverse effect on the future
results of operations, and it has not accrued any amounts for loss contingencies
in this litigation because of its evaluation of the merits of this case.
(a)
Note 1 - Organization and summary of significant accounting policies
Income taxes - The Company and its subsidiaries file consolidated income tax
returns. During February 1992, the Financial Accounting Standard Board issued
Statement of Financial Accounting Standards 109, "Accounting for Income Taxes."
The statement is required to be implemented for fiscal years beginning after
December 15, 1992. The application of SFAS 109 caused no material changes on
the financial statements.
The Components of income taxes are as follows:
Year ended December 31,
1994 1993 1992
Current:
Federal $ 367,574 $ 290,616 $ 118,821
State 62,630 49,111 19,978
Total $ 430,204 $ 339,727 $ 138,799
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The reconciliation of income tax expense at the statutory rate to the reported
income tax expense is as follows:
Year Ended December 31,
1994 1993 1992
Computed at statutory rate 34.0 % 34.0 % 34.0 %
State tax, net of federal benefit 3.6 3.6 3.6
Other, net .6 .2 .1
Effective tax rate 38.2 % 37.8 % 37.7 %
(b)
Trademarks, trade names and patents - The Star brite trade name and trademark
were purchased in 1980 for $ 880,000. The cost of trademarks and trade names
is being amortized on a straight-line basis over the prescribed useful life of
40 years. The Registrant has two patents which it believes are valuable in
limited product lines, but not material to its success or competiveness in
general. There are no capitalized costs for these two patents. The Registrant's
trade name has been trademarked and the Registrant has had no incidents of
infringement.
Pursuant to the requirements of the Securities and exchange Act of 1934,
the registrant has duly caused this mendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date September 1, 1995
/s/ PETER DORNAU
Peter Dornau, President
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