Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 13, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | OCEAN BIO CHEM INC | |
Entity Central Index Key | 350,737 | |
Trading Symbol | OBCI | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 9,234,580 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash | $ 1,320,287 | $ 4,070,445 |
Trade accounts receivable net of allowances for doubtful accounts of approximately $129,000 and $75,000, respectively | 8,454,319 | 4,931,792 |
Receivables due from affiliated companies | 1,279,936 | 1,190,103 |
Restricted cash | 3,433,613 | |
Inventories, net | 10,123,915 | 8,600,689 |
Prepaid expenses and other current assets | 1,086,170 | 1,013,952 |
Total Current Assets | 25,698,240 | 19,806,981 |
Property, plant and equipment, net | 7,785,816 | 4,895,973 |
Intangible assets, net | 914,978 | 967,688 |
Total Assets | 34,399,034 | 25,670,642 |
Current Liabilities: | ||
Current portion of long-term debt, net | 218,720 | 278,392 |
Revolving line of credit | 1,000,000 | |
Accounts payable - trade | 2,776,064 | 1,512,020 |
Income taxes payable | 1,447 | |
Accrued expenses payable | 1,427,655 | 1,099,919 |
Total Current Liabilities | 5,422,439 | 2,891,778 |
Deferred tax liability | 235,104 | 213,367 |
Long-term debt, less current portion, net | 4,164,856 | 50,426 |
Total Liabilities | 9,822,399 | 3,155,571 |
Commitments | ||
Shareholders' Equity: | ||
Common stock - $.01 par value, 12,000,000 shares authorized; 9,234,580 and 9,146,937 shares issued and outstanding | 92,346 | 91,469 |
Additional paid in capital | 9,905,434 | 9,604,634 |
Accumulated other comprehensive loss | (287,475) | (286,555) |
Retained earnings | 14,866,330 | 13,105,523 |
Total Shareholders' Equity | 24,576,635 | 22,515,071 |
Total Liabilities and Shareholders' Equity | $ 34,399,034 | $ 25,670,642 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Consolidated Balance Sheets [Abstract] | ||
Trade accounts receivable less allowances | $ 129,000 | $ 75,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 12,000,000 | 12,000,000 |
Common stock, shares issued | 9,234,580 | 9,146,937 |
Common stock, shares outstanding | 9,234,580 | 9,146,937 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Condensed Consolidated Statements of Operations [Abstract] | ||||
Net sales | $ 11,651,551 | $ 12,207,137 | $ 29,946,247 | $ 27,681,560 |
Cost of goods sold | 7,541,871 | 7,306,999 | 18,423,629 | 16,728,575 |
Gross profit | 4,109,680 | 4,900,138 | 11,522,618 | 10,952,985 |
Operating Expenses: | ||||
Advertising and promotion | 839,677 | 782,249 | 2,582,001 | 2,367,769 |
Selling and administrative | 2,010,617 | 1,911,317 | 5,538,478 | 6,191,142 |
Total operating expenses | 2,850,294 | 2,693,566 | 8,120,479 | 8,558,911 |
Operating income | 1,259,386 | 2,206,572 | 3,402,139 | 2,394,074 |
Other expense | ||||
Interest, net (expense) | (259) | (3,933) | (3,149) | (14,730) |
Income before income taxes | 1,259,127 | 2,202,639 | 3,398,990 | 2,379,344 |
Provision for income taxes | (405,501) | (674,195) | (1,088,928) | (735,161) |
Net income | $ 853,626 | $ 1,528,444 | $ 2,310,062 | $ 1,644,183 |
Earnings per common share - basic and diluted | $ 0.09 | $ 0.17 | $ 0.25 | $ 0.18 |
Dividends declared per common share | $ 0.06 | $ 0.06 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Condensed Consolidated Statements of Comprehensive Income [Abstract] | ||||
Net income | $ 853,626 | $ 1,528,444 | $ 2,310,062 | $ 1,644,183 |
Foreign currency translation adjustment | (120) | (885) | (920) | (1,091) |
Comprehensive income | $ 853,506 | $ 1,527,559 | $ 2,309,142 | $ 1,643,092 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 2,310,062 | $ 1,644,183 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 726,126 | 735,478 |
Deferred income taxes | 21,737 | (20,151) |
Stock based compensation | 324,145 | 305,780 |
Other operating non-cash items | 58,277 | 136,194 |
Changes in assets and liabilities: | ||
Trade accounts receivable | (3,576,111) | (4,386,416) |
Receivables due from affiliated companies | (89,833) | 228,497 |
Inventories | (1,529,362) | (1,109,493) |
Prepaid expenses and other current assets | (72,218) | (72,965) |
Accounts payable | 1,264,044 | 1,892,140 |
Income taxes payable | (1,447) | |
Accrued expenses payable | 327,736 | 391,364 |
Net cash used in operating activities | (236,844) | (255,389) |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (3,563,259) | (258,096) |
Increase in cash restricted for plant expansion | (3,433,613) | |
Net cash used in investing activities | (6,996,872) | (258,096) |
Cash flows from financing activities: | ||
Proceeds from long term debt | 4,500,000 | |
Payments on long-term debt | (275,220) | (338,445) |
Borrowings on revolving line of credit | 1,000,000 | |
Payments for taxes related to net share settlements of stock awards | (22,468) | (8,424) |
Dividends paid to common shareholders | (549,255) | (540,531) |
Payments for debt issuance costs | (170,022) | |
Proceeds from exercise of stock options | 21,600 | |
Net cash provided by (used in) financing activities | 4,483,035 | (865,800) |
Effect of exchange rates on cash | 523 | (3,363) |
Net decrease in cash | (2,750,158) | (1,382,648) |
Cash at beginning of period | 4,070,445 | 2,468,415 |
Cash at end of period | 1,320,287 | 1,085,767 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest during period | 2,336 | 15,683 |
Cash paid for income taxes during period | $ 1,157,400 | $ 744,000 |
Summary of Accounting Policies
Summary of Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Summary of 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 subsidiaries. All significant intercompany 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, promulgated by the Securities and Exchange Commission. 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 and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017. 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, 2016. 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 Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
Recent Accounting Pronouncements [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 2. RECENT ACCOUNTING PRONOUNCEMENTS Accounting Guidance Adopted by the Company In November 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.” The guidance under ASU 2015-17 is designed to simplify the presentation of deferred tax assets and liabilities within the balance sheet by requiring generally that all deferred tax assets and liabilities be classified as non-current. Under previously applicable guidance, an entity was required to separate deferred tax liabilities and assets into a current amount and a noncurrent amount. The Company adopted this guidance in the quarter ended September 30, 2016, retrospectively to January 1, 2016. In July 2015, the FASB issued ASU No. 2015-11, “ Inventory” (Topic 330) Accounting Guidance Not Yet Adopted by the Company In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, "Revenue from Contracts with Customers (Topic 606).” ASU 2014-09, which has been modified on several occasions, provides new guidance designed to enhance the comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The core principle of the new guidance is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new guidance also requires disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for us beginning January 1, 2018. The Company will use the full retrospective method. Management has evaluated our current revenue recognition process and reviewed active customer agreements and assessed that under ASU 2014-09 our performance obligation to our customers is satisfied when the goods are shipped and title of the goods is transferred, or in the case in which our inventory is held in consignment upon sale to a third party, when we are notified of sales by the consignee. The timing of our revenue recognition will not change, however certain allowances given to customers primarily certain cooperative advertising will be considered a reduction of revenue instead of an advertising and promotion expense. This reclassification will not affect net income. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (“ASU 2016-02”), “Leases.” Generally, under ASU 2016-02, lessees will be required to recognize, at the commencement date of each lease having a term of more than 12 months, both a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, initially measured at the present value of the lease payments, and a right-to-use asset, which is an asset that represents the lessee’s right to use or control the use of the underlying asset for the lease term. Leases will be classified as either finance or operating; the classification will affect the manner of reporting expenses and cash flows. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The guidance must be adopted using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The guidance provides certain practical expedients. The Company is currently evaluating this guidance to determine its impact on the Company’s financial statements. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventories [Abstract] | |
INVENTORIES | 3. INVENTORIES The following table provides information regarding the composition of the Company’s inventories at September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Raw materials $ 4,240,755 $ 3,633,641 Finished goods 6,157,455 5,235,207 Inventories, gross 10,398,210 8,868,848 Inventory reserves (274,295 ) (268,159 ) Inventories, net $ 10,123,915 $ 8,600,689 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 $754,000 and $551,000 at September 30, 2017 and December 31, 2016, respectively, and are included in inventories, net on the condensed consolidated balance sheets. |
Property, Plant & Equipment
Property, Plant & Equipment | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant & Equipment [Abstract] | |
PROPERTY, PLANT & EQUIPMENT | 4. PROPERTY, PLANT & EQUIPMENT The following table provides information regarding the composition of the Company’s property, plant and equipment at September 30, 2017 and December 31, 2016: Estimated Useful Life September 30, 2017 December 31, 2016 Land $ 278,325 $ 278,325 Building and improvements 30 years 4,652,669 4,652,669 Manufacturing and warehouse equipment 6-20 years 9,585,077 9,239,876 Office equipment and furniture 3-5 years 1,358,780 1,344,732 Leasehold improvements 10-15 years 558,666 558,666 Vehicles 3 years 10,020 10,020 Construction in process 3,549,909 387,417 Property, plant and equipment, gross 19,993,446 16,471,705 Less accumulated depreciation (12,207,630 ) (11,575,732 ) Property, plant and equipment, net $ 7,785,816 $ 4,895,973 Construction in progress includes $3,438,319 relating to the expansion of the manufacturing, warehouse and distribution facilities of the Company’s wholly-owned subsidiary, KINPAK Inc. (“Kinpak”), in Montgomery, Alabama. The Company estimates that the total cost of this expansion project will be approximately $4.7 million, and the project will be completed and placed into service during the first quarter of 2018. A significant portion of the project is being performed under a $3.7 million construction contract, of which construction and related improvements aggregating $2.5 million have been completed at September 30, 2017. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | 5. INTANGIBLE ASSETS The Company’s intangible assets at September 30, 2017 and December 31, 2016 consisted of the following: September 30, 2017 Intangible Assets Cost Accumulated Amortization Net Patents $ 622,733 $ 374,552 $ 248,181 Trade names and trademarks 1,131,125 549,561 581,564 Royalty rights 160,000 74,767 85,233 Total intangible assets $ 1,913,858 $ 998,880 $ 914,978 December 31, 2016 Intangible Assets Cost Accumulated Amortization Net Patents $ 622,733 $ 335,300 $ 287,433 Trade names and trademarks 1,131,125 549,561 581,564 Royalty rights 160,000 61,309 98,691 Total intangible assets $ 1,913,858 $ 946,170 $ 967,688 At September 30, 2017 and December 31, 2016, the trade names and trademarks are considered indefinite-lived. The patents (the most significant of which (the “ClO2 Patents”) relate to a device for producing chlorine dioxide (ClO2) that is incorporated into the Company’s disinfectant, sanitizer and deodorizer products) had a carrying value, net of amortization, of $248,181 at September 30, 2017 (of which $244,377 is attributable to the ClO2 Patents). The ClO2 Patents expire in 2022 and the other patents expire in 2021. The royalty rights (which the Company purchased from an unaffiliated entity that previously owned the ClO2 Patents and retained the royalty rights after selling the patents) expire in December 2021 and are amortized on a straight line basis over their remaining useful lives. Amortization expense related to intangible assets was $17,570 ($13,084 attributable to the patents and $4,486 attributable to the royalty rights) for each of the three months ended September 30, 2017 and 2016, and $52,710 ($39,252 attributable to the patents and $13,458 attributable to the royalty rights) for each of the nine months ended September 30, 2017 and 2016. |
Revolving Line of Credit
Revolving Line of Credit | 9 Months Ended |
Sep. 30, 2017 | |
Revolving Line of Credit and Long Term Debt [Abstract] | |
REVOLVING LINE OF CREDIT | 6. REVOLVING LINE OF CREDIT On August 31, 2017, the Company and Regions Bank entered into a Business Loan Agreement (the “Business Loan Agreement”), under which the Company was provided a revolving line of credit. Under the Business Loan Agreement, the Company may borrow up to the lesser of (i) $6,000,000 or (ii) a borrowing base equal to 85% of Eligible Accounts (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 one month LIBOR rate plus 1.5% per annum, computed on a 365/360 basis. Eligible Accounts do not include, among other things, accounts receivable from affiliated entities. 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 August 31, 2018, 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 and inventory. The Business Loan Agreement includes financial covenants requiring that the Company maintain a minimum fixed charge coverage ratio (generally, the ratio of (A) EBITDA minus the sum of Company’s distributions to its shareholders, taxes paid and unfunded capital expenditures to (B) current maturities of Company debt plus interest expense) of 1.20 to 1, tested quarterly calculated on a trailing twelve month basis, and a maximum “debt to cap” ratio (generally, funded debt divided by the sum of net worth and funded debt) of 0.75 to 1, tested quarterly. For purposes of computing the fixed charge coverage ratio, “EBITDA” generally is defined as net income before taxes and depreciation expense plus amortization expense, plus interest expense, plus non-recurring and/or non-cash losses and expenses, minus non-recurring and/or non-cash gains and income. “Unfunded capital expenditures” generally is defined as capital expenditures made from Company funds other than funds borrowed through term debt incurred to finance such capital expenditures. For the twelve months ended September 30, 2017, the Company’s fixed charge coverage ratio was approximately 2.07 to 1.00 and at September 30, 2017, the Company’s debt to capitalization ratio was approximately 0.18 to 1.00. The revolving 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. The Company’s principal obligations under its revolving line of credit in connection with the Business Loan Agreement and a predecessor agreement were $1,000,000 and $0 at September 30, 2017 and December 31, 2016, respectively. |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Revolving Line of Credit and Long Term Debt [Abstract] | |
LONG TERM DEBT | 7. LONG TERM DEBT Industrial Development Financing On September 26, 2017, Kinpak indirectly obtained a $4,500,000 loan from Regions Capital Advantage, Inc. (the “Lender”). The proceeds of the loan will be used principally to pay or reimburse costs of constructing an approximately 85,000 square foot addition to Kinpak’s manufacturing, warehouse and distribution facilities in Montgomery, Alabama, and costs of purchasing and installing associated machinery and equipment (the “Project”). The loan was funded by the Lender’s purchase of a $4,500,000 industrial development bond (the “Bond”) issued by The Industrial Development Board of the City of Montgomery, Alabama (the “IDB”). The Bond is a limited obligation of the IDB and is payable solely out of revenues and receipts derived from the leasing or sale of Kinpak’s facilities. In this regard, Kinpak will fund the IDB’s payment obligations by providing rental payments under a lease between the IDB and Kinpak (the “Lease”), under which Kinpak leases its facilities from the IDB. Under the Lease, prior to the maturity date of the Bond, Kinpak may repurchase the facilities for $1,000 if the Bond has been redeemed or fully paid. The Bond bears interest at the rate of 3.07% per annum, calculated on the basis of a 360-day year and the actual number of days elapsed (subject to increase to 6.07% per annum upon the occurrence of an event of default), and will be payable in 118 monthly installments of $31,324 beginning on November 1, 2017 and ending on August 1, 2027, with a final principal and interest payment to be made on September 1, 2027 in the amount of $1,799,201. The Bond provides that the interest rate will be subject to adjustment if it is determined that the interest on the Bond is includable in the gross income of the Lender for federal income tax purposes. Under the Lease, Kinpak is required to make rental payments for the account of the IDB to the Lender in such amounts and at such times as are necessary to enable the payment of all principal and interest due on the Bond and other charges, if any, payable in respect of the Bond. The Lease also provides that Kinpak may redeem the Bond, in whole or in part, by prepaying its rental payment obligations in an amount sufficient to effect the redemption. In addition, the Lease contains provisions relating to the Project, including limitations on utilization of Bond proceeds, deposit of unused proceeds into a custodial account (as described below) and investment of monies held in the custodial account. Payment of amounts due and payable under the Bond and other related agreements are guaranteed by the Company and its other consolidated subsidiaries. In connection with its guarantee, the Company is subject to certain covenants, including financial covenants that are substantially the same as the financial covenants included in the Business Loan Agreement described in Note 6. Through September 30, 2017, of the $4,500,000 proceeds of the Bond sale, approximately $1,012,000 was applied to reimburse Kinpak for previous Project expenditures and approximately $54,000 was paid directly to other parties for certain transaction costs. The remaining amount was deposited into a custodial account and will be drawn by Kinpak from time to time to fund additional expenditures related to the Project. Because the Lease contains limitations on the manner in which the Kinpak may utilize funds held in the custodial account, such funds are classified as restricted cash on the Company’s balance sheet. The Company incurred debt financing costs of $170,022 in connection with the financing. These costs are shown as a reduction of the debt balance and are being amortized on a straight line basis over the life of the bond. Other Long Term Obligations On July 6, 2011, in connection with a credit agreement among the Company, Kinpak, Regions Bank and Regions Equipment Finance Corporation (“REFCO”), an Equipment Finance Addendum to the credit agreement (the “Addendum”) was entered into by the Company, Kinpak and REFCO. Under the Addendum, REFCO provided to the Company a $2,430,000 term loan with a fixed interest rate of 3.54% per annum. The proceeds of the term loan were used to pay Kinpak’s remaining obligations under a lease agreement relating to industrial revenue bonds used to fund a previous expansion of Kinpak’s facilities and acquisition of related equipment. The term loan matured on July 6, 2017, and the Company paid all remaining principal and interest at maturity. At September 30, 2017 and December 31, 2016, the Company was obligated under capital lease agreements covering equipment utilized in the Company’s operations. The capital leases, aggregating approximately $54,000 and $69,000 at September 30, 2017 and December 31, 2016, respectively, mature on July 1, 2020 and carry an interest rate of 2%. The following table provides information regarding the Company’s long term debt at September 30, 2017 and December 31, 2016: Current Portion Long Term Portion September 30, December 31, 2016 September 30, December 31, Obligations related to industrial development bond financing $ 216,869 $ — $ 4,283,131 $ — Term loan — 259,503 — — Capitalized equipment leases 17,567 18,889 36,031 50,426 Total principal of long term debt 234,436 278,392 4,319,162 50,426 Debt issuance costs (15,716 ) — (154,306 ) — Total long term debt $ 218,720 $ 278,392 $ 4,164,856 $ 50,426 Required principal payments under the Company’s long term obligations are set forth below: 12 month period ending September 30, 2018 $ 234,436 2019 265,574 2020 270,027 2021 261,844 2022 270,111 Thereafter 3,251,606 Total $ 4,553,598 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 8. RELATED PARTY TRANSACTIONS During the three and nine months ended September 30, 2017 and 2016, the Company sold products to companies affiliated with Peter G. Dornau, the Company’s Chairman, President and Chief Executive Officer. The affiliated companies distribute the Company’s products outside of the United States and Canada. The Company also provides administrative services to these companies. Sales to the affiliated companies aggregated approximately $239,000 and $263,000 during the three months ended September 30, 2017 and 2016, respectively, and approximately $1,525,000 and $1,269,000 for the nine months ended September 30, 2017 and 2016, respectively. Administrative fees aggregated approximately $232,000 and $183,000 during the three months ended September 30, 2017 and 2016, respectively, and approximately $612,000 and $485,000 for the nine months ended September 30, 2017 and 2016, respectively. The Company had accounts receivable from the affiliated companies in connection with the product sales and administrative services aggregating approximately $1,280,000 and $1,190,000 at September 30, 2017 and December 31, 2016, respectively. An entity that is owned by the Company’s Chairman, President and Chief Executive Officer provides several services to the Company. Under this arrangement, the Company paid the entity $10,500 for research and development services for each of the three month periods ended September 30, 2017 and 2016, and $31,500 for such services during each of the nine month periods ended September 30, 2017 and 2016. The research and development expenses are included in the Company’s statements of operations for the three and nine months ended September 30, 2017 and 2016 as a selling and administrative expense. In addition, during the three and nine months ended September 30, 2017, the Company paid this entity $8,750 and $53,750, respectively, for providing charter boat services for entertainment of Company customers. The charter boat services are included in the Company’s statement of operations for the three and nine months ended September 30, 2017 as an advertising and promotion expense. During the nine months ended September 30, 2016, the Company paid this entity $25,000 for the production of television commercials and $9,000 for providing charter boat services for entertainment of Company customers. The $25,000 for the production of television commercials was expensed on a straight line basis from May 2016 to March 2017; this expense, and the $9,000 expense for charter boat services were included in the Company’s statement of operations for the nine months ended September 30, 2016 as advertising and promotion expenses. The Company leases office and warehouse facilities in Fort Lauderdale, Florida from an entity controlled by its Chairman, President and Chief Executive Officer. See Note 9 for a description of the lease terms. A director of the Company is Regional Executive Vice President of an insurance broker through which the Company has sourced most of its general and liability insurance and, commencing in 2017, its health insurance. During the three months ended September 30, 2017 and 2016, the Company paid an aggregate of approximately $673,000 and $371,000, respectively, and during the nine months ended September 30, 2017 and 2016, the Company paid an aggregate of approximately $1,112,000 and $552,000, respectively, in insurance premiums on policies obtained through the insurance broker. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2017 | |
Commitments [Abstract] | |
COMMITMENTS | 9. COMMITMENTS The Company leases its executive offices and warehouse facilities in Fort Lauderdale, Florida from an entity controlled by Peter G. Dornau, the Company’s Chairman, President and Chief Executive Officer. The lease, as extended, expires on December 31, 2023. The lease requires an annual minimum 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 with the leasing entity 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 September 30, 2017 and 2016 and was approximately $73,000 for each of the nine month periods ended September 30, 2017 and 2016. The Company also leases a 15,000 square foot warehouse from an unrelated third party in Montgomery, Alabama near its Kinpak manufacturing facility for the purpose of fabricating and assembling brushes used for cleaning boats, automobiles and recreational vehicles. The lease commenced on August 1, 2016 and expires on July 31, 2018. The Company pays monthly rent of $4,375 under the lease. As further discussed in Note 4, The Company entered into a construction contract for the expansion of our manufacturing facility. The total commitment under the contract is $3.7 million of which approximately $1.2 million of construction has not been completed as of September 30, 2017. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 10. EARNINGS PER SHARE Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the reporting period. Diluted earnings per share reflect additional dilution from potential common stock issuable upon the exercise of outstanding stock options. 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 Nine Months Ended 2017 2016 2017 2016 Earnings per common share – Basic Net income $ 853,626 $ 1,528,444 $ 2,310,062 $ 1,644,183 Weighted average number of common shares outstanding 9,220,401 9,096,852 9,174,305 9,030,764 Earnings per common share – Basic $ 0.09 $ 0.17 $ 0.25 $ 0.18 Earnings per common share – Diluted Net income $ 853,626 $ 1,528,444 $ 2,310,062 $ 1,644,183 Weighted average number of common shares outstanding 9,220,401 9,096,852 9,174,305 9,030,764 Dilutive effect of employee stock-based awards 59,067 50,732 65,705 52,511 Weighted average number of common shares outstanding – Diluted 9,279,468 9,147,584 9,240,010 9,083,275 Earnings per common share – Diluted $ 0.09 $ 0.17 $ 0.25 $ 0.18 The Company had no stock options outstanding during each of the three and nine month periods ended September 30, 2017 and 2016, respectively, that were antidilutive and therefore not included in the diluted earnings per common share calculation. |
Securities Authorized for Issua
Securities Authorized for Issuance under Equity Compensation Plans | 9 Months Ended |
Sep. 30, 2017 | |
Securities Authorized for Issuance under Equity Compensation Plans [Abstract] | |
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS | 11. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS On April 18, 2017, a former director exercised a stock option to purchase 10,000 shares of stock. The Company withheld 2,694 shares in connection with the net exercise feature of the stock option and delivered 7,306 shares to the former director. On May 19, 2017, as part of the Company’s regular compensation for its non-employee directors, the Company issued to the directors stock awards, aggregating 4,000 shares of Company common stock, under the Ocean Bio-Chem, Inc. 2015 Equity Compensation Plan. On July 18, 2017, the Company issued 69,600 shares of common stock (net of 5,500 shares retained by the Company due to recipients’ tax withholding elections) to its officers, other employees and a consultant as stock awards under the Ocean Bio-Chem, Inc. 2015 Equity Compensation Plan. On July 19, 2017, a former director exercised a stock option to purchase 10,000 shares of stock. The Company withheld 3,263 shares in connection with the net exercise feature of the stock option and delivered 6,737 shares to the former director. Stock compensation expense during the three months ended September 30, 2017 and 2016 was $306,785 and $305,780, respectively, and during the nine months ended September 30, 2017 and 2016 was $324,145 and $305,780, respectively. At September 30, 2017, there was no unrecognized compensation expense related to stock The following table provides information regarding outstanding stock options under the Company’s stock option plans at September 30, 2017. 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 Granted Shares Underlying Options Outstanding Shares Underlying Exercisable Options Exercise Price Expiration Date Weighted Average Remaining Term 2002NQ 12/17/07 20,000 20,000 $ 1.32 12/16/17 0.2 2008NQ 1/11/09 40,000 40,000 $ 0.69 1/10/19 1.3 2008NQ 4/26/10 20,000 20,000 $ 2.07 4/25/20 2.6 80,000 80,000 $ 1.19 1.4 |
Cash Dividends
Cash Dividends | 9 Months Ended |
Sep. 30, 2017 | |
Cash Dividends [Abstract] | |
CASH DIVIDENDS | 12. CASH DIVIDENDS On April 13, 2017, the Company’s Board of Directors declared a special cash dividend of $0.06 per common share payable on May 11, 2017 to all shareholders of record on April 27, 2017. On April 27, 2017, there were 9,154,243 shares of common stock outstanding; therefore, dividends aggregating $549,255 were paid on May 11, 2017. On March 25, 2016, the Company’s Board of Directors declared a special cash dividend of $0.06 per common share payable on April 26, 2016 to all shareholders of record on April 12, 2016. On April 12, 2016, there were 9,008,855 shares of common stock outstanding; therefore, dividends aggregating $540,531 were paid on April 26, 2016. |
Summary of Accounting Policies
Summary of Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Accounting Policies [Abstract] | |
Interim reporting | Interim reporting The accompanying unaudited condensed consolidated financial statements include the accounts of Ocean Bio-Chem, Inc. and its subsidiaries. All significant intercompany 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, promulgated by the Securities and Exchange Commission. 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 and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017. 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, 2016. |
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) | 9 Months Ended |
Sep. 30, 2017 | |
Inventories [Abstract] | |
Summary of inventories | September 30, 2017 December 31, 2016 Raw materials $ 4,240,755 $ 3,633,641 Finished goods 6,157,455 5,235,207 Inventories, gross 10,398,210 8,868,848 Inventory reserves (274,295 ) (268,159 ) Inventories, net $ 10,123,915 $ 8,600,689 |
Property, Plant & Equipment (Ta
Property, Plant & Equipment (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant & Equipment [Abstract] | |
Summary of property plant and equipment | Estimated Useful Life September 30, 2017 December 31, 2016 Land $ 278,325 $ 278,325 Building and improvements 30 years 4,652,669 4,652,669 Manufacturing and warehouse equipment 6-20 years 9,585,077 9,239,876 Office equipment and furniture 3-5 years 1,358,780 1,344,732 Leasehold improvements 10-15 years 558,666 558,666 Vehicles 3 years 10,020 10,020 Construction in process 3,549,909 387,417 Property, plant and equipment, gross 19,993,446 16,471,705 Less accumulated depreciation (12,207,630 ) (11,575,732 ) Property, plant and equipment, net $ 7,785,816 $ 4,895,973 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets [Abstract] | |
Schedule of intangible assets | September 30, 2017 Intangible Assets Cost Accumulated Net Patents $ 622,733 $ 374,552 $ 248,181 Trade names and trademarks 1,131,125 549,561 581,564 Royalty rights 160,000 74,767 85,233 Total intangible assets $ 1,913,858 $ 998,880 $ 914,978 December 31, 2016 Intangible Assets Cost Accumulated Net Patents $ 622,733 $ 335,300 $ 287,433 Trade names and trademarks 1,131,125 549,561 581,564 Royalty rights 160,000 61,309 98,691 Total intangible assets $ 1,913,858 $ 946,170 $ 967,688 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Revolving Line of Credit and Long Term Debt [Abstract] | |
Summary of company's long term debt | Current Portion Long Term Portion September 30, December 31, 2016 September 30, December 31, Obligations related to industrial development bond financing $ 216,869 $ — $ 4,283,131 $ — Term loan — 259,503 — — Capitalized equipment leases 17,567 18,889 36,031 50,426 Total principal of long term debt 234,436 278,392 4,319,162 50,426 Debt issuance costs (15,716 ) — (154,306 ) — Total long term debt $ 218,720 $ 278,392 $ 4,164,856 $ 50,426 |
Summary of principal payments under long term obligations | 12 month period ending September 30, 2018 $ 234,436 2019 265,574 2020 270,027 2021 261,844 2022 270,111 Thereafter 3,251,606 Total $ 4,553,598 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Summary of computation of basic and diluted earnings per common share | Three Months Ended Nine Months Ended 2017 2016 2017 2016 Earnings per common share – Basic Net income $ 853,626 $ 1,528,444 $ 2,310,062 $ 1,644,183 Weighted average number of common shares outstanding 9,220,401 9,096,852 9,174,305 9,030,764 Earnings per common share – Basic $ 0.09 $ 0.17 $ 0.25 $ 0.18 Earnings per common share – Diluted Net income $ 853,626 $ 1,528,444 $ 2,310,062 $ 1,644,183 Weighted average number of common shares outstanding 9,220,401 9,096,852 9,174,305 9,030,764 Dilutive effect of employee stock-based awards 59,067 50,732 65,705 52,511 Weighted average number of common shares outstanding – Diluted 9,279,468 9,147,584 9,240,010 9,083,275 Earnings per common share – Diluted $ 0.09 $ 0.17 $ 0.25 $ 0.18 |
Securities Authorized for Iss25
Securities Authorized for Issuance under Equity Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Securities Authorized for Issuance under Equity Compensation Plans [Abstract] | |
Schedule of outstanding stock options under company's stock options plans | Plan Date Granted Shares Underlying Options Outstanding Shares Underlying Exercisable Options Exercise Price Expiration Date Weighted Average Remaining Term 2002NQ 12/17/07 20,000 20,000 $ 1.32 12/16/17 0.2 2008NQ 1/11/09 40,000 40,000 $ 0.69 1/10/19 1.3 2008NQ 4/26/10 20,000 20,000 $ 2.07 4/25/20 2.6 80,000 80,000 $ 1.19 1.4 |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Summary of inventories | ||
Raw materials | $ 4,240,755 | $ 3,633,641 |
Finished goods | 6,157,455 | 5,235,207 |
Inventories, gross | 10,398,210 | 8,868,848 |
Inventory reserves | (274,295) | (268,159) |
Inventories, net | $ 10,123,915 | $ 8,600,689 |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Inventories (Textual) | ||
Inventories managed at the customer's warehouses | $ 754,000 | $ 551,000 |
Property, Plant & Equipment (De
Property, Plant & Equipment (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Summary of property, plant and equipment | ||
Land | $ 278,325 | $ 278,325 |
Building and improvements | 4,652,669 | 4,652,669 |
Manufacturing and warehouse equipment | 9,585,077 | 9,239,876 |
Office equipment and furniture | 1,358,780 | 1,344,732 |
Leasehold improvements | 558,666 | 558,666 |
Vehicles | 10,020 | 10,020 |
Construction in process | 3,549,909 | 387,417 |
Property, plant and equipment, gross | 19,993,446 | 16,471,705 |
Less accumulated depreciation | (12,207,630) | (11,575,732) |
Property, plant and equipment, net | $ 7,785,816 | $ 4,895,973 |
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 |
Property, Plant & Equipment (29
Property, Plant & Equipment (Details Textual) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Property, Plant & Equipment (Textual) | |
Cost related to expansion of the manufacturing, warehouse and distribution facilities | $ 3,438,319 |
Construction contract description | A significant portion of the project is being performed under a $3.7 million construction contract, of which construction and related improvements aggregating $2.5 million have been completed, at September 30, 2017. |
Construction in progress [Member] | |
Property, Plant & Equipment (Textual) | |
Estimated cost of expansion project | $ 4,700,000 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | $ 1,913,858 | $ 1,913,858 |
Intangible assets, Accumulated Amortization | 998,880 | 946,170 |
Intangible assets, Net | 914,978 | 967,688 |
Patents [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 622,733 | 622,733 |
Intangible assets, Accumulated Amortization | 374,552 | 335,300 |
Intangible assets, Net | 248,181 | 287,433 |
Trade names and trademarks [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 1,131,125 | 1,131,125 |
Intangible assets, Accumulated Amortization | 549,561 | 549,561 |
Intangible assets, Net | 581,564 | 581,564 |
Royalty rights [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 160,000 | 160,000 |
Intangible assets, Accumulated Amortization | 74,767 | 61,309 |
Intangible assets, Net | $ 85,233 | $ 98,691 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Intangible Assets (Textual) | |||||
Amortization expense | $ 17,570 | $ 17,570 | $ 52,710 | $ 52,710 | |
Net of amortization | 914,978 | 914,978 | $ 967,688 | ||
Patents [Member] | |||||
Intangible Assets (Textual) | |||||
Amortization expense | 13,084 | 13,084 | $ 39,252 | 39,252 | |
Expiry date of intangible assets | 2,022 | ||||
Net of amortization | 248,181 | $ 248,181 | 287,433 | ||
ClO2 Patents [Member] | |||||
Intangible Assets (Textual) | |||||
Net of amortization | 244,377 | 244,377 | |||
Trade names and trademarks [Member] | |||||
Intangible Assets (Textual) | |||||
Net of amortization | 581,564 | 581,564 | 581,564 | ||
Royalty rights [Member] | |||||
Intangible Assets (Textual) | |||||
Amortization expense | 4,486 | $ 4,486 | $ 13,458 | $ 13,458 | |
Expiry date of intangible assets | 2,021 | ||||
Net of amortization | $ 85,233 | $ 85,233 | $ 98,691 |
Revolving Line of Credit (Detai
Revolving Line of Credit (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
Aug. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Revolving Line of Credit (Textual) | |||
Term of revolving line of credit | The Company was provided a revolving line of credit. Under the Business Loan Agreement, the Company may borrow up to the lesser of (i) $6,000,000 or (ii) a borrowing base equal to 85% of Eligible Accounts (as defined in the Business Loan Agreement) plus 50% of Eligible Inventory (as defined in the Business Loan Agreement). | ||
Maximum revolving credit line of credit provided in business loan agreement | $ 6,000,000 | ||
Percentage of eligible accounts receivables as part of borrowing base | 85.00% | ||
Percentage of eligible inventory as part of the borrowing base | 50.00% | ||
Description of interest on the revolving line of credit | Interest on amounts borrowed under the revolving line of credit is payable monthly at the one month LIBOR rate plus 1.5% per annum, computed on a 365/360 basis. | ||
Due date of outstanding principal and interest borrowed under revolving line of credit | Aug. 31, 2018 | ||
Financial covenants under credit agreement | A minimum fixed charge coverage ratio (generally, the ratio of (A) EBITDA minus the sum of Company’s distributions to its shareholders, taxes paid and unfunded capital expenditures to (B) current maturities of Company debt plus interest expense) of 1.20 to 1, tested quarterly calculated on a trailing twelve month basis, and a maximum “debt to cap” ratio (generally, funded debt divided by the sum of net worth and funded debt) of 0.75 to 1, tested quarterly. For purposes of computing the fixed charge coverage ratio, “EBITDA” generally is defined as net income before taxes and depreciation expense plus amortization expense, plus interest expense, plus non-recurring and/or non-cash losses and expenses, minus non-recurring and/or non-cash gains and income. “Unfunded capital expenditures” generally is defined as capital expenditures made from Company funds other than funds borrowed through term debt incurred to finance such capital expenditures . | ||
Debt service coverage ratio | 1.20 to 1.00 | 2.07 to 1.00 | |
Debt capitalization ratio | 0.75 to 1 | 0.18 to 1.00 | |
Ownership requirement of majority shareholder to prevent default | The revolving 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. | ||
Ownership percentage | 50.00% | ||
Revolving line of credit | $ 1,000,000 | $ 0 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Summary of long term debt | ||
Total principal of long term debt, Current Portion | $ 234,436 | $ 278,392 |
Total principal of long term debt, Long Term Portion | 4,319,162 | 50,426 |
Total long term debt, Current Portion | 218,720 | 278,392 |
Total long term debt, Long Term Portion | 4,164,856 | 50,426 |
Debt issuance costs, Current Portion | (15,716) | |
Debt issuance costs, Long Term Portion | (154,306) | |
Obligations related to industrial development bond financing [Member] | ||
Summary of long term debt | ||
Term loan, Current Portion | 216,869 | |
Term loan, Long Term Portion | 4,283,131 | |
Term loan [Member] | ||
Summary of long term debt | ||
Term loan, Current Portion | 259,503 | |
Term loan, Long Term Portion | ||
Capitalized equipment leases [Member] | ||
Summary of long term debt | ||
Capitalized equipment leases, Current Portion | 17,567 | 18,889 |
Capitalized equipment leases, Long Term Portion | $ 36,031 | $ 50,426 |
Long Term Debt (Details 1)
Long Term Debt (Details 1) | Sep. 30, 2017USD ($) |
Summary of principal payments under Company's long term obligations | |
2,018 | $ 234,436 |
2,019 | 265,574 |
2,020 | 270,027 |
2,021 | 261,844 |
2,022 | 270,111 |
Thereafter | 3,251,606 |
Total | $ 4,553,598 |
Long Term Debt (Details Textual
Long Term Debt (Details Textual) | Jul. 06, 2011USD ($) | Sep. 26, 2017USD ($)ft² | Sep. 30, 2017USD ($)Installments | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Long Term Debt (Textual) | |||||
Area of land | ft² | 85,000 | ||||
Aggregate capital lease | $ 540,000 | $ 69,000 | |||
Maturity period for capital lease | Mature on July 1, 2020. | ||||
Percentage of interest rates | 2.00% | ||||
Term loan description | Of the $4,500,000 proceeds of the Bond sale, approximately $1,012,000 was applied to reimburse Kinpak for previous Project expenditures and approximately $54,000 was paid directly to other parties for certain transaction costs. | ||||
Purchase value of bond | $ 4,500,000 | ||||
Repurchase of bond redeemed or fully paid | $ 1,000 | ||||
Bond redemptions, description | The Bond bears interest at the rate of 3.07% per annum, calculated on the basis of a 360-day year and the actual number of days elapsed (subject to increase to 6.07% per annum upon the occurrence of an event of default), and will be payable in 118 monthly installments of $31,324 beginning on November 1, 2017 and ending on August 1, 2027, with a final principal and interest payment to be made on September 1, 2027 in the amount of $1,799,201. | ||||
Number of installments | Installments | 118 | ||||
Loan obtained from related party | $ 4,500,000 | ||||
proceeds from sale of Bond | $ 4,500,000 | ||||
Incurred debt financing costs | $ 170,022 | ||||
REFCO [Member] | |||||
Long Term Debt (Textual) | |||||
Interest rate | 3.54% | ||||
Term loan maturity date | Jul. 6, 2017 | ||||
Term loan | $ 2,430,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 10 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Mar. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions (Textual) | ||||||
Sales to the affiliated companies | $ 239,000 | $ 263,000 | $ 1,525,000 | $ 1,269,000 | ||
Administrative fees | 232,000 | 183,000 | 612,000 | 485,000 | ||
Receivables due from affiliated companies | 1,280,000 | 1,280,000 | $ 1,190,000 | |||
Amount paid to entity for research and development services | 10,500 | 10,500 | 31,500 | 31,500 | ||
Insurance premiums paid | 673,000 | 371,000 | 1,112,000 | 552,000 | ||
Amount paid for the production of television commercials | 25,000 | 25,000 | ||||
Entertainment of company customers | 8,750 | $ 9,000 | 53,750 | $ 9,000 | ||
Advertising and promotion expense | $ 9,000 | $ 9,000 | $ 25,000 |
Commitments (Details)
Commitments (Details) | Aug. 01, 2016USD ($) | Sep. 30, 2017USD ($)ft² | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)ft² | Sep. 30, 2016USD ($) |
Commitments (Textual) | |||||
Area of rent leases | ft² | 15,000 | 15,000 | |||
Commitment under contract, description | The total commitment under the contract is $3.7 million of which approximately $1.2 million of construction has not been completed as of September 30, 2017. | ||||
Fort Lauderdale Florida Facility [Member] | |||||
Commitments (Textual) | |||||
Extended expiration date of lease | Dec. 31, 2023 | ||||
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 | $ 73,000 | $ 73,000 | |
Kinpak Manufacturing Facility [Member] | |||||
Commitments (Textual) | |||||
Monthly rent | $ 4,375 | ||||
Expiration date | Jul. 31, 2018 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings per common share - Basic | ||||
Net income | $ 853,626 | $ 1,528,444 | $ 2,310,062 | $ 1,644,183 |
Weighted average number of common shares outstanding | 9,220,401 | 9,096,852 | 9,174,305 | 9,030,764 |
Earnings per common share - Basic | $ 0.09 | $ 0.17 | $ 0.25 | $ 0.18 |
Earnings per common share - Diluted | ||||
Net income | $ 853,626 | $ 1,528,444 | $ 2,310,062 | $ 1,644,183 |
Weighted average number of common shares outstanding | 9,220,401 | 9,096,852 | 9,174,305 | 9,030,764 |
Dilutive effect of employee stock-based awards | 59,067 | 50,732 | 65,705 | 52,511 |
Weighted average number of common shares outstanding - Diluted | 9,279,468 | 9,147,584 | 9,240,010 | 9,083,275 |
Earnings per common share - Diluted | $ 0.09 | $ 0.17 | $ 0.25 | $ 0.18 |
Securities Authorized for Iss39
Securities Authorized for Issuance under Equity Compensation Plans (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Summary of outstanding options, exercisable options, exercise price, expiration date, weighted average remaining life under company stock option plans | |
Shares Underlying Options Outstanding | 80,000 |
Shares Underlying Exercisable Options | 80,000 |
Exercise Price | $ / shares | $ 1.19 |
Weighted Average Remaining Term | 1 year 4 months 24 days |
2002NQ [Member] | |
Summary of outstanding options, exercisable options, exercise price, expiration date, weighted average remaining life under company stock option plans | |
Date Granted | Dec. 17, 2007 |
Shares Underlying Options Outstanding | 20,000 |
Shares Underlying Exercisable Options | 20,000 |
Exercise Price | $ / shares | $ 1.32 |
Expiration Date | Dec. 16, 2017 |
Weighted Average Remaining Term | 2 months 12 days |
2008NQ One [Member] | |
Summary of outstanding options, exercisable options, exercise price, expiration date, weighted average remaining life under company stock option plans | |
Date Granted | Jan. 11, 2009 |
Shares Underlying Options Outstanding | 40,000 |
Shares Underlying Exercisable Options | 40,000 |
Exercise Price | $ / shares | $ 0.69 |
Expiration Date | Jan. 10, 2019 |
Weighted Average Remaining Term | 1 year 3 months 19 days |
2008NQ Two [Member] | |
Summary of outstanding options, exercisable options, exercise price, expiration date, weighted average remaining life under company stock option plans | |
Date Granted | Apr. 26, 2010 |
Shares Underlying Options Outstanding | 20,000 |
Shares Underlying Exercisable Options | 20,000 |
Exercise Price | $ / shares | $ 2.07 |
Expiration Date | Apr. 25, 2020 |
Weighted Average Remaining Term | 2 years 7 months 6 days |
Securities Authorized for Iss40
Securities Authorized for Issuance under Equity Compensation Plans (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Jul. 19, 2017 | Jul. 18, 2017 | May 19, 2017 | Apr. 18, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Securities Authorized for Issuance under Equity Compensation Plans (Textual) | ||||||||
Shares of stock issued upon stock option exercised | 10,000 | 10,000 | ||||||
Stock issued under 2015 Equity Compensation Plan | 4,000 | |||||||
Stock compensation expense | $ 306,785 | $ 305,780 | $ 324,145 | $ 305,780 | ||||
Number of shares withheld in connection with net exercise feature of options | 3,263 | 2,694 | ||||||
Shares issued to option holders shares | 6,737 | 7,306 | ||||||
Common stock, net of retained shares | 5,500 | |||||||
Common stock shares issued | 69,600 |
Cash Dividends (Details)
Cash Dividends (Details) - USD ($) | May 11, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Apr. 27, 2017 | Apr. 13, 2017 | Dec. 31, 2016 | Apr. 26, 2016 | Apr. 12, 2016 | Mar. 25, 2016 |
Cash Dividends (Textual) | |||||||||
Common stock, shares outstanding | 9,234,580 | 9,154,243 | 9,146,937 | 9,008,855 | |||||
Dividends paid to common shareholders | $ 549,255 | $ 549,255 | $ 540,531 | ||||||
Dividends aggregating amount paid | $ 540,531 | ||||||||
Dividends declared per common share | $ 0.06 | $ 0.06 |