Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 14-May-15 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | OCEAN BIO CHEM INC | |
Entity Central Index Key | 350737 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 8,922,118 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash | $2,011,559 | $3,062,729 |
Trade accounts receivable less allowances of approximately $69,000 and $76,000, respectively | 3,482,159 | 4,850,282 |
Receivables due from affiliated companies | 1,047,742 | 715,034 |
Inventories, net | 10,097,107 | 8,109,333 |
Prepaid expenses and other current assets | 1,065,321 | 844,783 |
Deferred tax asset | 125,957 | 123,360 |
Total Current Assets | 17,829,845 | 17,705,521 |
Property, plant and equipment, net | 5,271,944 | 5,172,882 |
Other Assets: | ||
Intangible assets, net | 1,078,110 | 1,095,458 |
Other assets | 5,175 | 6,550 |
Total Other Assets | 1,083,285 | 1,102,008 |
Total Assets | 24,185,074 | 23,980,411 |
Current Liabilities: | ||
Accounts payable - trade | 1,995,712 | 1,439,868 |
Current portion of long term debt | 427,036 | 425,658 |
Income taxes payable | 16,465 | |
Accrued expenses payable | 916,597 | 1,115,514 |
Total Current Liabilities | 3,339,345 | 2,997,505 |
Deferred tax liability | 252,267 | 258,682 |
Long term debt, less current portion | 585,383 | 692,104 |
Total Liabilities | 4,176,995 | 3,948,291 |
Commitments and contingencies | ||
Shareholders' Equity: | ||
Common stock - $.01 par value, 12,000,000 shares authorized; 8,922,118 and 8,914,274 shares issued | 89,221 | 89,142 |
Additional paid in capital | 9,131,873 | 9,131,952 |
Foreign currency translation adjustment | -287,278 | -279,163 |
Retained earnings | 11,074,263 | 11,090,189 |
Total Shareholders' Equity | 20,008,079 | 20,032,120 |
Total Liabilities and Shareholders' Equity | $24,185,074 | $23,980,411 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Balance Sheets [Abstract] | ||
Trade accounts receivable, allowance for doubtful accounts | $69,000 | $76,000 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 12,000,000 | 12,000,000 |
Common stock, shares issued | 8,922,118 | 8,914,274 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Statements Of Operation [Abstract] | ||
Gross sales | $6,328,343 | $6,240,025 |
Less: discounts, returns, and allowances | 325,914 | 319,326 |
Net sales | 6,002,429 | 5,920,699 |
Cost of goods sold | 3,965,780 | 3,833,036 |
Gross profit | 2,036,649 | 2,087,663 |
Operating Expenses: | ||
Advertising and promotion | 615,872 | 583,869 |
Selling and administrative | 1,421,546 | 1,152,025 |
Total operating expenses | 2,037,418 | 1,735,894 |
Operating (loss) income | -769 | 351,769 |
Other (expense) | ||
Interest, net (expense) | -10,075 | -11,382 |
Other (expense) | -12,522 | |
(Loss) income before income taxes | -23,366 | 340,387 |
Benefit (provision) for income taxes | 7,440 | -123,220 |
Net (loss) income | -15,926 | 217,167 |
Loss attributable to noncontrolling interests | 6,431 | |
Net (loss) income attributable to Ocean Bio-Chem, Inc. | ($15,926) | $223,598 |
Earnings per common share - basic and diluted | $0.03 | |
Dividends per common share | $0.05 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Statements Of Comprehensive Income [Abstract] | ||
Net (loss) income | ($15,926) | $217,167 |
Foreign currency translation adjustment | -8,115 | -4,161 |
Comprehensive (loss) income | -24,041 | 213,006 |
Comprehensive loss attributable to noncontrolling interests | 6,431 | |
Comprehensive (loss) income attributable to Ocean Bio-Chem, Inc. | ($24,041) | $219,437 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities: | ||
Net (loss) income | ($15,926) | $217,167 |
Adjustments to reconcile net income to net cash used in operating activities | ||
Depreciation and amortization | 221,559 | 201,005 |
Deferred income taxes | -9,012 | -2,131 |
Loss on sale of property, plant and equipment | 12,522 | |
Other operating non-cash items | 23,874 | -36,886 |
Changes in assets and liabilities: | ||
Trade accounts receivable | 1,374,194 | 1,493,516 |
Inventories | -2,001,274 | -1,395,797 |
Other assets | 1,375 | 1,241 |
Prepaid expenses and other current assets | -220,538 | -152,556 |
Receivables due from affiliated companies | -332,708 | -492,619 |
Accounts payable and other accrued expenses | 340,462 | 164,541 |
Net cash used in operating activities | -605,472 | -2,519 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | -370,795 | -183,490 |
Proceeds from sale of property, plant, and equipment | 55,000 | |
Net cash used in investing activities | -315,795 | -183,490 |
Cash flows from financing activities: | ||
Payments on long-term debt | -105,343 | -103,627 |
Proceeds from exercise of stock options | 63,250 | |
Net cash used in financing activities | -105,343 | -40,377 |
Effect of exchange rates on cash | -24,560 | -15,271 |
Net decrease in cash | -1,051,170 | -241,657 |
Cash at beginning of period | 3,062,729 | 3,071,887 |
Cash at end of period | 2,011,559 | 2,830,230 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest during period | 10,379 | 13,974 |
Cash paid for income taxes during period | $87,000 | $130,000 |
Summary_of_Accounting_Policies
Summary of Accounting Policies | 3 Months Ended | |
Mar. 31, 2015 | ||
Organization and Summary of Significant Accounting Policies [Abstract] | ||
SUMMARY OF ACCOUNTING POLICIES | 1 | SUMMARY OF ACCOUNTING POLICIES |
Interim reporting | ||
The accompanying unaudited condensed consolidated financial statements include the accounts of Ocean Bio-Chem, Inc. and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. Certain prior-period data have been reclassified to conform to the current period presentation. Unless the context indicates otherwise, the term “Company” refers to Ocean Bio-Chem, Inc. and its subsidiaries. | ||
The unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. | ||
The financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015. | ||
The information included in this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. | ||
Prior to September 16, 2014, one of the Company’s subsidiaries, OdorStar Technology, LLC (“OdorStar”), was a joint venture in which the Company had a controlling interest and, therefore, OdorStar was included in the Company’s condensed consolidated financial statements for the three months ended March 31, 2014. On September 16, 2014, the Company acquired the joint venture partner’s interest in OdorStar, which became a wholly–owned subsidiary of the Company. | ||
Use of estimates | ||
The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 3 Months Ended | |
Mar. 31, 2015 | ||
Recent Accounting Pronouncements [Abstract] | ||
RECENT ACCOUNTING PRONOUNCEMENTS | 2 | RECENT ACCOUNTING PRONOUNCEMENTS |
There have been no accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2015 that are expected to have a material impact on the Company’s financial position, results of operations or cash flows. Accounting pronouncements that became effective during the three months ended March 31, 2015 did not have a material impact on disclosures or on the Company’s financial position, results of operations or cash flows. | ||
Inventories
Inventories | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventories [Abstract] | |||||||||
INVENTORIES | 3 | INVENTORIES | |||||||
The composition of inventories at March 31, 2015 and December 31, 2014 are as follows: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Raw materials | $ | 4,089,753 | $ | 3,365,093 | |||||
Finished goods | 6,298,150 | 5,021,536 | |||||||
Inventories, gross | 10,387,903 | 8,386,629 | |||||||
Inventory reserves | (290,796 | ) | (277,296 | ) | |||||
Inventories, net | $ | 10,097,107 | $ | 8,109,333 | |||||
The inventory reserves shown in the table above reflect slow moving and obsolete inventory. | |||||||||
The Company manages an inventory program for one of its customers to improve the promotion of the Company's products. The Company manages the inventory levels at the customer’s warehouses and recognizes revenue as the products are sold by the customer. The inventories managed at the customer’s warehouses amounted to approximately $474,000 and $493,000 at March 31, 2015 and December 31, 2014, respectively, and are included in inventories, net on the balance sheet. | |||||||||
Property_Plant_and_Equipment
Property, Plant and Equipment | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Property, Plant and Equipment:[Abstract] | |||||||||||
PROPERTY, PLANT, & EQUIPMENT | 4 | PROPERTY, PLANT, & EQUIPMENT | |||||||||
The Company’s property, plant and equipment consisted of the following at March 31, 2015 and December 31, 2014: | |||||||||||
Estimate | March 31, | December 31, | |||||||||
Useful Life | 2015 | 2014 | |||||||||
Land | $ | 278,325 | $ | 278,325 | |||||||
Building and improvements | 30 years | 4,650,349 | 4,648,089 | ||||||||
Manufacturing and warehouse equipment | 6-20 years | 8,635,428 | 8,486,397 | ||||||||
Office equipment and furniture | 3-5 years | 1,094,797 | 1,044,605 | ||||||||
Construction in process | 128,488 | 64,038 | |||||||||
Leasehold improvements | 10-15 years | 541,521 | 436,659 | ||||||||
Vehicles | 3 years | 42,283 | 131,828 | ||||||||
Property, plant and equipment, gross | 15,371,191 | 15,089,941 | |||||||||
Less accumulated depreciation | (10,099,247 | ) | (9,917,059 | ) | |||||||
Property, plant and equipment, net | $ | 5,271,944 | $ | 5,172,882 |
Revolving_Line_of_Credit
Revolving Line of Credit | 3 Months Ended | |
Mar. 31, 2015 | ||
Revolving Line of Credit and Long-term Debt [Abstract] | ||
Revolving line of credit: | 5 | REVOLVING LINE OF CREDIT |
On August 4, 2014, the Company and Regions Bank entered into a Business Loan Agreement (the“Business Loan Agreement”), under which the Company was provided a renewed revolving line of credit. Under the renewed revolving line of credit, the Company may borrow up to the lesser of (i) $6 million or (ii) a borrowing base equal to 80% of eligible accounts receivable (as defined in the Business Loan Agreement) plus 50% of eligible inventory (as defined in the Business Loan Agreement).Interest on amounts borrowed under the revolving line of credit is payable monthly at the 30 day LIBOR rate plus 1.65% per annum (unless the Company’s debt service coverage ratio (generally, net operating profit plus depreciation, amortization and lease/rent expense divided by current maturities of long-term debt plus interest and lease/rent expense, calculated on a trailing twelve month basis) falls to or below 2.0 to 1, in which case interest is payable at the 30 day LIBOR rate plus 2.65% per annum). | ||
Outstanding amounts under the revolving line of credit are payable on demand. If no demand is made, the Company may repay and reborrow funds from time to time until expiration of the revolving line of credit on July 6, 2016, at which time all outstanding principal and interest will be due and payable. The Company’s obligations under the revolving line of credit are secured by, among other things, the Company’s accounts receivable, inventory, contract rights and general intangibles and, as a result of cross-collateralization of the Company’s obligations under the term loan described in Note 6 and the revolving line of credit, real property and equipment at the Montgomery, Alabama facility of the Company’s subsidiary, Kinpak, Inc. ("Kinpak"). The Business Loan Agreement includes financial covenants requiring a minimum debt service coverage ratio of 1.75 to 1.00, calculated on a trailing twelve month basis, and a maximum debt to capitalization ratio (generally, funded debt divided by the sum of total net worth and funded debt) of 0.75 to 1, tested quarterly. At March 31, 2015 and December 31, 2014, the Company was in compliance with these covenants. The line of credit is subject to several events of default, including a decline in the majority shareholder’s ownership below 50% of all outstanding shares. At March 31, 2015 and December 31, 2014, the Company had no borrowings under the revolving line of credit. |
Longterm_Debt
Long-term Debt | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Revolving Line of Credit and Long-term Debt [Abstract] | |||||||||||||||||
Long-term debt: | 6 | LONG TERM DEBT | |||||||||||||||
On July 6, 2011, under the Equipment Finance Addendum to the Credit Agreement, REFCO provided to the Company a $2,430,000 term loan with a fixed interest rate of 3.54%, subject to an increase to 4.55% in the event the Company's debt service coverage ratio (net profit plus taxes, interest, depreciation, amortization and rent expense divided by debt service plus interest and lease/rent expense, calculated on a trailing four-quarter basis) falls to or below 2.0 to 1. Principal and interest on the term loan are payable in equal monthly installments through July 6, 2017, the date on which the term loan matures. The proceeds of the term loan were used to pay the Company’s remaining obligations under a lease agreement relating to industrial revenue bonds used to fund the expansion of Kinpak’s facilities and acquisition of related equipment. At March 31, 2015, approximately $1,007,000 was outstanding under the term loan. The term loan and the revolving line of credit under the Bank Loan Agreement are cross-defaulted (i.e., a default under one instrument is a default under the other). | |||||||||||||||||
At March 31, 2015 and December 31, 2014, the Company was obligated under various capital lease agreements covering equipment utilized in the Company’s operations. The capital leases, aggregating $5,753 and $8,081 at March 31, 2015 and December 31, 2014, respectively, have varying maturities through 2015 and carry an interest rate of 14%. | |||||||||||||||||
The following table provides information regarding the Company’s long term debt at March 31, 2015 and December 31, 2014: | |||||||||||||||||
Current Portion | Long Term Portion | ||||||||||||||||
March 31, | December 31, | March 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Term loan | $ | 421,283 | $ | 417,577 | $ | 585,383 | $ | 692,104 | |||||||||
Capitalized equipment leases | 5,753 | 8,081 | --- | --- | |||||||||||||
Total long term debt | $ | 427,036 | $ | 425,658 | $ | 585,383 | $ | 692,104 | |||||||||
Required principal payments under the Company’s long term obligations are set forth below: | |||||||||||||||||
12 month period ending | |||||||||||||||||
March 31, | |||||||||||||||||
2016 | $ | 427,036 | |||||||||||||||
2017 | 436,441 | ||||||||||||||||
2018 | 148,942 | ||||||||||||||||
Total | $ | 1,012,419 |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended | |
Mar. 31, 2015 | ||
Related Party Transactions [Abstract] | ||
Related party transactions: | 7 | RELATED PARTY TRANSACTIONS |
During the three months ended March 31, 2015 and 2014, the Company sold products to companies affiliated with its Chairman, President and Chief Executive Officer. The affiliated companies distribute the products outside of the United States and Canada. The Company also provides administrative services to these companies. Sales to the affiliated companies aggregated approximately $725,000 and $713,000 during the three months ended March 31, 2015 and 2014, respectively. Administrative fees aggregated approximately $107,000 and $92,000 during the three months ended March 31, 2015 and 2014, respectively. The Company had accounts receivable from the affiliated companies in connection with the product sales and administrative services aggregating approximately $1,048,000 and $715,000 at March 31, 2015 and December 31, 2014, respectively. Transactions with the affiliated companies were made in the ordinary course of business. While the terms of sale to the affiliated companies differed from the terms applicable to other customers, the affiliated companies bear their own warehousing, distribution, advertising, selling and marketing costs, as well as their own freight charges (the Company pays freight charges in connection with sales to its domestic customers on all but small orders). Moreover, the Company does not pay sales commissions with respect to products sold to the affiliated companies. As a result, the Company believes its profit margins with respect to sales to the affiliated companies are similar to the profit margins with respect to sales to its larger domestic customers. Management believes that the sales transactions did not involve more than normal credit risk or present other unfavorable features. | ||
A subsidiary of the Company currently uses the services of an entity that is owned by its Chairman, President and Chief Executive Officer to conduct product research and development and to assist in the production of television commercials. Under this arrangement, the Company paid the entity $10,500 for each of the three month periods ended March 31, 2015 and 2014, for research and development services. In addition, during the year ended December 31, 2014, the Company made a $40,000 prepayment to this entity for the production of television commercials. The Company’s condensed consolidated balance sheets include the $40,000 prepayment in prepaid expenses and other current assets at March 31, 2015 and December 31, 2014, respectively. | ||
The Company leases office and warehouse facilities in Fort Lauderdale, Florida from an entity controlled by its Chairman, President and Chief Executive Officer. The Company believes that the rental payments are below market rates. See Note 8 for a description of the lease terms. | ||
A director of the Company is Regional Executive Vice President of an entity from which the Company sources most of its insurance needs at an arm’s length competitive basis. During the three months ended March 31, 2015 and 2014, the Company paid an aggregate of approximately $216,000 and $217,000, respectively, in insurance premiums on policies obtained through the entity. | ||
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | |
Mar. 31, 2015 | ||
Commitments and Contingencies [Abstract] | ||
Commitments and contingencies: | 8 | COMMITMENTS AND CONTINGENCIES |
The Company leases its executive offices and warehouse facilities in Fort Lauderdale, Florida from an entity controlled by its Chairman, President and Chief Executive Officer. The lease, as extended, expires on December 31, 2023. The lease requires an annual minimum base rent of $94,800 and provides for a maximum annual 2% increase in subsequent years, although the entity has not raised the minimum rent since the Company entered into a previous lease agreement in 1998. Additionally, the leasing entity is entitled to reimbursement of all taxes, assessments, and any other expenses that arise from ownership. Each of the parties to the lease has agreed to review the terms of the lease every three years at the request of the other party. Rent expense under the lease was approximately $24,000 for each of the three months ended March 31, 2015 and 2014, respectively. | ||
On November 25, 2013, OdorStar and Kinpak filed a Second Amended Complaint in the United States District Court for the Southern District of Florida, which amended a complaint initially filed on January 18, 2013, alleges that Biocide manufactured, used, sold and continues to sell an odor-eliminating product that infringes OdorStar's U.S. Patent No. 6,764,661 (“the ‘661 patent”), relating to a device for producing chlorine dioxide. Biocide denied infringement and both sides moved for summary judgment. On January 27, 2014, the District Court granted the defendants' motion for summary judgment of non-infringement and denied the plaintiffs' motion. On January 8, 2015 the Court of Appeal affirmed the District Court’s judgement. On March 27, 2014, SSM Distributors LLC, d/b/a Biocide Systems, and SSM Manufacturing, Inc. (SMM Distributors LLC is now defunct) filed a motion with the District Court seeking payment by OdorStar and Kinpak of their attorneys’ fees and non-taxable costs in the amount of $259,550, based on, among other things, the defendants’ contention that the plaintiffs' patent infringement claims were vexatious and intended to intimidate the defendants into withdrawing from competition with the plaintiffs. OdorStar and Kinpak filed an opposition to the motion, essentially denying the defendants' contentions and stating that defendants were not entitled to payment of their attorneys’ fees under applicable legal standards. On March 2, 2015, the District Court denied the defendants’ motion. |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Earnings per share: | 9 | EARNINGS PER SHARE | |||||||
Basic earnings per share is calculated based on net income attributable to Ocean Bio-Chem, Inc. and the weighted average number of shares outstanding during the reported period. Diluted earnings per share reflect additional dilution from potential common stock issuable upon the exercise of outstanding stock options using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per common share, as well as a reconciliation of the weighted average number of common shares outstanding to the weighted average number of shares outstanding on a diluted basis. | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Earnings per common share -Basic | |||||||||
Net (loss) income attributable to OBCI | $ | (15,926 | ) | $ | 223,598 | ||||
Weighted average number of common shares outstanding | 8,920,288 | 8,690,074 | |||||||
Earnings per common share - Basic | $ | 0 | $ | 0.03 | |||||
Earnings per common share – Diluted | |||||||||
Net (loss) income attributable to OBCI | $ | (15,926 | ) | $ | 223,598 | ||||
Weighted average number of common shares outstanding | 8,920,288 | 8,690,074 | |||||||
Dilutive effect of employee stock-based awards | --- | 173,050 | |||||||
Weighted average number of common shares outstanding - assuming dilution | 8,920,288 | 8,863,124 | |||||||
Earnings per common share - Diluted | $ | 0 | $ | 0.03 | |||||
For the three months ended March 31, 2015 and March 31, 2014, 99,689 and 0 shares underlying outstanding stock awards were not included in the computation of earnings per common share – diluted because their effect was antidilutive. |
Securities_Authorized_for_Issu
Securities Authorized for Issuance under Equity Compensation Plans | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||
Securities Authorized For Issuance Under Equity Compensation Plans [Abstract] | |||||||||||||||||||||
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS | 10. | SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS | |||||||||||||||||||
During the three months ended March 31, 2015, stock options to purchase an aggregate of 10,000 shares were exercised. Following the withholding of an aggregate of 2,156 shares in connection with the net exercise feature of the stock options, the Company delivered an aggregate of 7,844 shares to the option holder who exercised his options. | |||||||||||||||||||||
There was no stock compensation expense attributable to stock options during the three months ended March 31, 2015 and 2014. At March 31, 2015, there was no unrecognized compensation expense related to stock options. | |||||||||||||||||||||
There were no stock awards issued during the three months ended March 31, 2015 and 2014. | |||||||||||||||||||||
The following table provides information at March 31, 2015 regarding outstanding stock options under the Company’s stock option plans. As used in the table below, “2002 NQ” refers to the Company’s 2002 Non-Qualified Stock Option Plan and “2008 NQ” refers to the Company’s 2008 Non-Qualified Stock Option Plan. | |||||||||||||||||||||
Plan | Date | Options Outstanding | Exercisable | Exercise | Expiration | Weighted | |||||||||||||||
Granted | Options | Price | Date | Average | |||||||||||||||||
Remaining Life | |||||||||||||||||||||
2002NQ | 4/3/06 | 30,000 | 30,000 | $ | 1.08 | 4/2/16 | 1 | ||||||||||||||
2002NQ | 12/17/07 | 40,000 | 40,000 | $ | 1.32 | 12/16/17 | 2.8 | ||||||||||||||
2008NQ | 1/11/09 | 40,000 | 40,000 | $ | 0.69 | 1/10/19 | 3.8 | ||||||||||||||
2008NQ | 4/26/10 | 20,000 | 20,000 | $ | 2.07 | 4/25/20 | 5.1 | ||||||||||||||
130,000 | 130,000 | $ | 1.19 | 3.1 |
Summary_of_Accounting_Policies1
Summary of Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Organization and Summary of Significant Accounting Policies [Abstract] | |
Interim reporting | Interim reporting |
The accompanying unaudited condensed consolidated financial statements include the accounts of Ocean Bio-Chem, Inc. and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. Certain prior-period data have been reclassified to conform to the current period presentation. Unless the context indicates otherwise, the term “Company” refers to Ocean Bio-Chem, Inc. and its subsidiaries. | |
The unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. | |
The financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015. | |
The information included in this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. | |
Prior to September 16, 2014, one of the Company’s subsidiaries, OdorStar Technology, LLC (“OdorStar”), was a joint venture in which the Company had a controlling interest and, therefore, OdorStar was included in the Company’s condensed consolidated financial statements for the three months ended March 31, 2014. On September 16, 2014, the Company acquired the joint venture partner’s interest in OdorStar, which became a wholly–owned subsidiary of the Company. | |
Use of estimates | Use of estimates |
The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. | |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventories [Abstract] | |||||||||
Summary of composition of inventories | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Raw materials | $ | 4,089,753 | $ | 3,365,093 | |||||
Finished goods | 6,298,150 | 5,021,536 | |||||||
Inventories, gross | 10,387,903 | 8,386,629 | |||||||
Inventory reserves | (290,796 | ) | (277,296 | ) | |||||
Inventories, net | $ | 10,097,107 | $ | 8,109,333 |
Property_Plant_and_Equipment_T
Property, Plant and Equipment (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Property, Plant and Equipment:[Abstract] | |||||||||||
Summary of property, plant and equipment | Estimate | March 31, | December 31, | ||||||||
Useful Life | 2015 | 2014 | |||||||||
Land | $ | 278,325 | $ | 278,325 | |||||||
Building and improvements | 30 years | 4,650,349 | 4,648,089 | ||||||||
Manufacturing and warehouse equipment | 6-20 years | 8,635,428 | 8,486,397 | ||||||||
Office equipment and furniture | 3-5 years | 1,094,797 | 1,044,605 | ||||||||
Construction in process | 128,488 | 64,038 | |||||||||
Leasehold improvements | 10-15 years | 541,521 | 436,659 | ||||||||
Vehicles | 3 years | 42,283 | 131,828 | ||||||||
Property, plant and equipment, gross | 15,371,191 | 15,089,941 | |||||||||
Less accumulated depreciation | (10,099,247 | ) | (9,917,059 | ) | |||||||
Property, plant and equipment, net | $ | 5,271,944 | $ | 5,172,882 |
Longterm_Debt_Tables
Long-term Debt (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Revolving Line of Credit and Long-term Debt [Abstract] | |||||||||||||||||
Summary of company's long term debt | |||||||||||||||||
Current Portion | Long Term Portion | ||||||||||||||||
March 31, | December 31, | March 31, | December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Term loan | $ | 421,283 | $ | 417,577 | $ | 585,383 | $ | 692,104 | |||||||||
Capitalized equipment leases | 5,753 | 8,081 | --- | --- | |||||||||||||
Total long term debt | $ | 427,036 | $ | 425,658 | $ | 585,383 | $ | 692,104 | |||||||||
Summary of principal payments under Company's long term obligations | |||||||||||||||||
12 month period ending | |||||||||||||||||
March 31, | |||||||||||||||||
2016 | $ | 427,036 | |||||||||||||||
2017 | 436,441 | ||||||||||||||||
2018 | 148,942 | ||||||||||||||||
Total | $ | 1,012,419 |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Summary of computation of basic and diluted earnings per common share | Three Months Ended | ||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Earnings per common share -Basic | |||||||||
Net (loss) income attributable to OBCI | $ | (15,926 | ) | $ | 223,598 | ||||
Weighted average number of common shares outstanding | 8,920,288 | 8,690,074 | |||||||
Earnings per common share - Basic | $ | 0 | $ | 0.03 | |||||
Earnings per common share – Diluted | |||||||||
Net (loss) income attributable to OBCI | $ | (15,926 | ) | $ | 223,598 | ||||
Weighted average number of common shares outstanding | 8,920,288 | 8,690,074 | |||||||
Dilutive effect of employee stock-based awards | --- | 173,050 | |||||||
Weighted average number of common shares outstanding - assuming dilution | 8,920,288 | 8,863,124 | |||||||
Earnings per common share - Diluted | $ | 0 | $ | 0.03 |
Securities_Authorized_for_Issu1
Securities Authorized for Issuance under Equity Compensation Plans (Tables) | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||
Securities Authorized For Issuance Under Equity Compensation Plans [Abstract] | |||||||||||||||||||||
Schedule of outstanding stock options under company's stock options plans | |||||||||||||||||||||
Plan | Date | Options Outstanding | Exercisable | Exercise | Expiration | Weighted | |||||||||||||||
Granted | Options | Price | Date | Average | |||||||||||||||||
Remaining Life | |||||||||||||||||||||
2002NQ | 4/3/06 | 30,000 | 30,000 | $ | 1.08 | 4/2/16 | 1 | ||||||||||||||
2002NQ | 12/17/07 | 40,000 | 40,000 | $ | 1.32 | 12/16/17 | 2.8 | ||||||||||||||
2008NQ | 1/11/09 | 40,000 | 40,000 | $ | 0.69 | 1/10/19 | 3.8 | ||||||||||||||
2008NQ | 4/26/10 | 20,000 | 20,000 | $ | 2.07 | 4/25/20 | 5.1 | ||||||||||||||
130,000 | 130,000 | $ | 1.19 | 3.1 |
Inventories_Details
Inventories (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Summary of composition of inventories | ||
Raw materials | $4,089,753 | $3,365,093 |
Finished goods | 6,298,150 | 5,021,536 |
Inventories, gross | 10,387,903 | 8,386,629 |
Inventory reserves | -290,796 | -277,296 |
Inventories, net | $10,097,107 | $8,109,333 |
Inventories_Details_Textual
Inventories (Details Textual) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Inventories (Textual) | ||
Inventories managed at the customer's warehouses | $474,000 | $493,000 |
Property_Plant_and_Equipment_D
Property, Plant and Equipment (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Summary of property, plant and equipment | ||
Land | 278,325 | $278,325 |
Building and Improvements | 4,650,349 | 4,648,089 |
Manufacturing and warehouse equipment | 8,635,428 | 8,486,397 |
Office equipment and furniture | 1,094,797 | 1,044,605 |
Construction in process | 128,488 | 64,038 |
Leasehold improvements | 541,521 | 436,659 |
Vehicles | 42,283 | 131,828 |
Property, plant and equipment, gross | 15,371,191 | 15,089,941 |
Less accumulated depreciation | -10,099,247 | -9,917,059 |
Property, plant and equipment, net | 5,271,944 | $5,172,882 |
Building and Improvements [Member] | ||
Summary of property, plant and equipment | ||
Estimated Useful Life | 30 years | |
Manufacturing and warehouse equipment [Member] | Minimum [Member] | ||
Summary of property, plant and equipment | ||
Estimated Useful Life | 6 years | |
Manufacturing and warehouse equipment [Member] | Maximum [Member] | ||
Summary of property, plant and equipment | ||
Estimated Useful Life | 20 years | |
Office equipment and furniture [Member] | Minimum [Member] | ||
Summary of property, plant and equipment | ||
Estimated Useful Life | 3 years | |
Office equipment and furniture [Member] | Maximum [Member] | ||
Summary of property, plant and equipment | ||
Estimated Useful Life | 5 years | |
Leasehold improvements [Member] | Minimum [Member] | ||
Summary of property, plant and equipment | ||
Estimated Useful Life | 10 years | |
Leasehold improvements [Member] | Maximum [Member] | ||
Summary of property, plant and equipment | ||
Estimated Useful Life | 15 years | |
Vehicles [Member] | ||
Summary of property, plant and equipment | ||
Estimated Useful Life | 3 years |
Revolving_Line_of_Credit_Detai
Revolving Line of Credit (Details) (USD $) | 0 Months Ended |
In Millions, unless otherwise specified | Aug. 04, 2014 |
Revolving line of credit (Textual) | |
Term of revolving line of credit | The Company may borrow up to the lesser of (i) $6 million or (ii) a borrowing base equal to 80% of eligible accounts receivable (as defined in the Business Loan Agreement) plus 50% of eligible inventory (as defined in the Business Loan Agreement). |
Maximum borrowing capacity of the company | $6 |
Percentage of eligible accounts receivables as part of borrowing base | 80.00% |
Percentage of eligible inventory as part of the borrowing base | 50.00% |
Description of interest on the revolving line of credit | 30 day LIBOR rate plus 1.65% per annum |
Minimum debt service coverage ratio to qualify for LIBOR plus 1.74% | 2.0 to 1 |
Alternate interest rate condition if it doesn't satisfy the debt coverage ratio | 30 day LIBOR rate plus 2.65% per annum |
Due date of outstanding principal and interest borrowed under revolving line of credit | 6-Jul-16 |
Financial covenants under credit agreement | A minimum debt service coverage ratio of 1.75 to 1.00, calculated on a trailing twelve month basis, and a maximum debt to capitalization ratio (generally, funded debt divided by the sum of total net worth and funded debt) of 0.75 to 1, tested quarterly. |
Debt service coverage ratio | 1.75 to 1.00 |
Debt capitalization ratio | 0.75 to 1 |
Ownership requirement of majority shareholder to prevent default | The line of credit is subject to several events of default, including a decline in the majority shareholder's ownership below 50% of all outstanding shares. |
Longterm_Debt_Details
Long-term Debt (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Summary of long term debt | ||
Total long term debt, Current Portion | $427,036 | $425,658 |
Total long term debt, Long Term Portion | 585,383 | 692,104 |
Term loan [Member] | ||
Summary of long term debt | ||
Total long term debt, Current Portion | 421,283 | 417,577 |
Total long term debt, Long Term Portion | 585,383 | 692,104 |
Capitalized equipment leases [Member] | ||
Summary of long term debt | ||
Total long term debt, Current Portion | 5,753 | 8,081 |
Total long term debt, Long Term Portion |
Longterm_Debt_Details_1
Long-term Debt (Details 1) (USD $) | Mar. 31, 2015 |
Summary of principal payments under Company's long term obligations | |
2016 | $427,036 |
2017 | 436,441 |
2018 | 148,942 |
Total | $1,012,419 |
Longterm_Debt_Details_Textual
Long-term Debt (Details Textual) (USD $) | 3 Months Ended | 0 Months Ended | |
Mar. 31, 2015 | Jul. 06, 2011 | Dec. 31, 2014 | |
Long Term Debt (Textual) | |||
Term loan | $1,007,000 | ||
Aggregate capital lease | 5,753 | 8,081 | |
Maturity period for capital lease | Through 2015 | ||
Percentage of interest rates | 14.00% | ||
REFCO [Member] | |||
Long Term Debt (Textual) | |||
Term loan | $2,430,000 | ||
Interest rate | 3.54% | ||
Term loan maturity date | 6-Jul-17 | ||
Term loan, Description | Term loan with a fixed interest rate of 3.54%, subject to an increase to 4.55% in the event the Company's debt service coverage ratio (net profit plus taxes, interest, depreciation, amortization and rent expense divided by debt service plus interest and lease/rent expense, calculated on a trailing four-quarter basis) falls to or below 2.0 to 1. |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Related Party Transactions (Textual) | |||
Sales to the affiliated companies | $725,000 | $713,000 | |
Administrative services to Accounts receivable from affiliated companies | 1,047,742 | 715,034 | |
Administrative fees | 107,000 | 92,000 | |
Amount paid to entity for services | 10,500 | 10,500 | |
Insurance premiums paid | 216,000 | 217,000 | |
Advance for the production of television commercials | 40,000 | ||
Prepayment in prepaid expenses and other current assets | $40,000 | $40,000 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 1 Months Ended | 3 Months Ended | |
Mar. 27, 2015 | Mar. 31, 2015 | Mar. 31, 2014 | |
Commitments (Textual) | |||
Attorneys fees and non taxable costs | $259,550 | ||
Fort Lauderdale Florida Facility [Member] | |||
Commitments (Textual) | |||
Extended expiration date of lease | 31-Dec-23 | ||
Minimum base rent | 94,800 | ||
Maximum annual percentage increase in base rent | 2.00% | ||
Period to review term of lease | 3 years | ||
Rent expense under the lease | $24,000 | $24,000 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Earnings per common share - Basic | ||
Net (loss) income attributable to OBCI | ($15,926) | $223,598 |
Weighted average number of common shares outstanding | 8,920,288 | 8,690,074 |
Earnings per common share - Basic | $0 | $0.03 |
Earnings per common share - Diluted | ||
Net (loss) income attributable to OBCI | ($15,926) | $223,598 |
Weighted average number of common shares outstanding | 8,920,288 | 8,690,074 |
Dilutive effect of employee stock-based awards | 173,050 | |
Weighted average number of common shares outstanding - assuming dilution | 8,920,288 | 8,863,124 |
Earnings per common share - Diluted | $0 | $0.03 |
Earnings_Per_Share_Details_Tex
Earnings Per Share (Details Textual) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Earnings Per Share (Textual) | ||
Anti-dilutive stock options outstanding | 99,689 | 0 |
Securities_Authorized_for_Issu2
Securities Authorized for Issuance under Equity Compensation Plans (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Summary of outstanding options, exercisable options, exercise price, expiration date, weighted average remaining life under company stock option plans | |
Options Outstanding | 130,000 |
Exercisable Options | 130,000 |
Exercise Price | $1.19 |
Weighted Average Remaining Life | 3 years 1 month 6 days |
2002NQ (Member) | |
Summary of outstanding options, exercisable options, exercise price, expiration date, weighted average remaining life under company stock option plans | |
Date Granted | 3-Apr-06 |
Options Outstanding | 30,000 |
Exercisable Options | 30,000 |
Exercise Price | $1.08 |
Expiration Date | 4-Feb-16 |
Weighted Average Remaining Life | 1 year |
2002NQ One (Member) | |
Summary of outstanding options, exercisable options, exercise price, expiration date, weighted average remaining life under company stock option plans | |
Date Granted | 17-Dec-07 |
Options Outstanding | 40,000 |
Exercisable Options | 40,000 |
Exercise Price | $1.32 |
Expiration Date | 16-Dec-17 |
Weighted Average Remaining Life | 2 years 9 months 18 days |
2002NQ Two (Member) | |
Summary of outstanding options, exercisable options, exercise price, expiration date, weighted average remaining life under company stock option plans | |
Date Granted | 11-Jan-09 |
Options Outstanding | 40,000 |
Exercisable Options | 40,000 |
Exercise Price | $0.69 |
Expiration Date | 10-Jan-19 |
Weighted Average Remaining Life | 3 years 9 months 18 days |
2002NQ Three (Member) | |
Summary of outstanding options, exercisable options, exercise price, expiration date, weighted average remaining life under company stock option plans | |
Date Granted | 26-Apr-10 |
Options Outstanding | 20,000 |
Exercisable Options | 20,000 |
Exercise Price | $2.07 |
Expiration Date | 25-Apr-20 |
Weighted Average Remaining Life | 5 years 1 month 6 days |
Securities_Authorized_for_Issu3
Securities Authorized for Issuance under Equity Compensation Plans (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Securities Authorized For Issuance Under Equity Compensation Plans [Abstract] | ||
Stock option exercised | 10,000 | |
Number of shares withhold in connection with net exercise feature of options | 2,156 | |
Shares issued to option holders | 7,844 | |
Stock compensation expense attributable to stock options | ||
Unrecognized compensation expense related to stock options |