Ocean Bio Chem (OBCI) 10-Q 15 May 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 14, 2018
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	Mar. 31, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		9,254,580

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Current Assets:
Cash	$ 2,294,648	$ 2,418,484
Trade accounts receivable less allowances of approximately $81,000 and $79,000, respectively	5,003,225	4,963,895
Receivables due from affiliated companies	1,259,215	1,584,365
Restricted cash	2,754,962	2,747,360
Inventories, net	9,967,891	9,074,426
Prepaid expenses and other current assets	1,050,716	1,013,213
Total Current Assets	22,330,657	21,801,743
Property, plant and equipment, net	9,646,877	9,291,667
Intangible assets, net	879,838	897,408
Total Assets	32,857,372	31,990,818
Current Liabilities:
Current portion of long-term debt, net	240,357	240,017
Accounts payable - trade	1,929,019	1,807,120
Dividends payable	555,275
Accrued expenses payable	954,147	812,062
Total Current Liabilities	3,678,798	2,859,199
Deferred tax liability	297,886	153,895
Long-term debt, less current portion and debt issuance costs	4,020,118	4,081,793
Total Liabilities	7,996,802	7,094,887
Commitments and contingencies
Shareholders' Equity:
Common stock - $.01 par value, 12,000,000 shares authorized; 9,254,580 shares issued and outstanding	92,546	92,546
Additional paid in capital	9,931,634	9,931,634
Accumulated other comprehensive loss	(291,517)	(288,051)
Retained earnings	15,127,907	15,159,802
Total Shareholders' Equity	24,860,570	24,895,931
Total Liabilities and Shareholders' Equity	$ 32,857,372	$ 31,990,818

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Consolidated Balance Sheets [Abstract]
Trade accounts receivable less allowances	$ 81,000	$ 79,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	12,000,000	12,000,000
Common stock, shares issued	9,254,580	9,254,580
Common stock, shares outstanding	9,254,580	9,254,580

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Condensed Consolidated Statements of Operations [Abstract]
Net sales	$ 8,384,213	$ 8,220,554
Cost of goods sold	5,406,117	5,243,843
Gross profit	2,978,096	2,976,711
Operating Expenses:
Advertising and promotion	751,400	690,352
Selling and administrative	1,554,777	1,544,023
Total operating expenses	2,306,177	2,234,375
Operating income	671,919	742,336
Interest income (expense), net	7,386	(1,948)
Income before income taxes	679,305	740,388
Provision for income taxes	(155,925)	(236,464)
Net income	$ 523,380	$ 503,924
Earnings per common share - basic	$ 0.06	$ 0.06
Earnings per common share - diluted	0.06	0.05
Dividends declared per common share	$ 0.06

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Condensed Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 523,380	$ 503,924
Foreign currency translation adjustment	(3,466)	(1,559)
Comprehensive income	$ 519,914	$ 502,365

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income	$ 523,380	$ 503,924
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	238,984	246,596
Deferred income taxes	143,991	42,210
Other operating non-cash items	2,800	20,736
Changes in assets and liabilities:
Trade accounts receivable	(41,156)	148,143
Receivables due from affiliated companies	325,150	(625,660)
Inventories	(897,157)	(1,570,114)
Prepaid expenses and other current assets	(37,503)	178,534
Accounts payable - trade	121,899	1,034,827
Accrued expenses and income taxes payable	142,085	383,659
Net cash provided by operating activities	522,473	362,855
Cash flows from investing activities:
Purchases of property, plant and equipment	(571,720)	(904,552)
Net cash used in investing activities	(571,720)	(904,552)
Cash flows from financing activities:
Payments on long-term debt	(66,239)	(116,819)
Net cash used in financing activities	(66,239)	(116,819)
Effect of exchange rate on cash	(748)	(12,817)
Net decrease in cash and restricted cash	(116,234)	(671,333)
Cash and restricted cash at beginning of period	5,165,844	4,070,445
Cash and restricted cash at end of period	5,049,610	3,399,112
Supplemental disclosure of cash flow information:
Cash paid for interest during period	6,374	2,275
Cash paid for income taxes during period		11,000
Cash	2,294,648	3,399,112
Restricted cash	2,754,962
Total cash and restricted cash	$ 5,049,610	$ 3,399,112

Summary of Accounting Policies

Summary of Accounting Policies	3 Months Ended
	Mar. 31, 2018
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 wholly-owned 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. 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, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018. 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, 2017. Use of estimates The preparation of condensed consolidated financial statements in conformity with GAAP 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	3 Months Ended
	Mar. 31, 2018
Recent Accounting Pronouncements [Abstract]
RECENT ACCOUNTING PRONOUNCEMENTS	2. RECENT ACCOUNTING PRONOUNCEMENTS Accounting Guidance Adopted by the Company In May 2014, the Financial Accounting Standards Board (“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 Company adopted the new guidance effective January 1, 2018, using the full retrospective method, under which the Company applies the new guidance to each comparative period presented. Under the new guidance, our performance obligation to our customers under agreements currently in force is satisfied when the goods are shipped or picked up by the customer and title of the goods is transferred (generally upon such shipment or pick up); with regard to a customer for which the Company’s inventory is held at the customer’s warehouses, the Company’s performance obligation is deemed satisfied when the Company is notified of sales by the customer. While the timing of the Company’s revenue recognition did not change, certain allowances provided by the Company to customers, primarily for cooperative advertising, are now considered a reduction of net sales instead of an advertising and promotion expense. This reclassification did not affect net income. In July 2015, the FASB issued ASU No. 2015-11, “ (Topic 330) In November 2016, the FASB issued ASU 2016-18, which requires that a statement of cash flows explain the change during the reporting period in the total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents. The new guidance also requires disclosure of such amounts in the statements of cash flows or in the financial statement footnotes if restricted cash and restricted cash equivalents are presented in separate line items in the balance sheet. The Company adopted this guidance effective January 1, 2018. In accordance with the new guidance, the Company has included additional disclosures regarding its cash and restricted cash amounts in its statement of cash flows for each comparative period presented. Accounting Guidance Not Yet Adopted by the Company In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Under this new guidance, lessees (including lessees under leases classified as finance leases, which are to be classified based on criteria similar to that applicable to capital leases under current guidance, and leases classified as operating leases) will recognize a right-to-use asset and a lease liability on the balance sheet, initially measured as the present value of lease payments under the lease. Under current guidance, operating leases are not recognized on the balance sheet. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new standard 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. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other,” which simplifies the quantitative test for goodwill impairment. Under current guidance, if a reporting unit’s carrying value exceeds its fair value, the entity must determine the implied value of goodwill. This determination is made by deducting the fair value of a reporting unit’s identifiable assets and liabilities from the fair value of the reporting unit as a whole as if the reporting unit had just been acquired. Under the new guidance, a determination of the implied value of goodwill will no longer be required; a goodwill impairment will be equal to the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on the Company’s financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses,” which replaces the “incurred loss” model under current GAAP with a forward-looking “expected loss” model, principally in connection with financial assets subject to credit losses. Under current GAAP, an entity reflects credit losses on financial assets measured on an amortized cost basis only when it is probable that losses have been incurred, generally considering only past events and current conditions in making these determinations. The guidance under ASU 2016-13 prospectively replaces this approach with a forward-looking methodology that reflects the expected credit losses over the lives of financial assets, beginning when such assets are first acquired. Under the expected loss model, credit losses will be measured based not only on past events and current conditions, but also on reasonable and supportable forecasts that affect the collectability of financial assets. The guidance also expands disclosure requirements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted as of January 1, 2019. The Company is currently evaluating the impact the adoption of this new standard will have on the Company’s financial statement s.

Inventories

Inventories	3 Months Ended
	Mar. 31, 2018
Inventories [Abstract]
INVENTORIES	3. INVENTORIES The Company’s inventories at March 31, 2018 and December 31, 2017 consisted of the following: March 31, December 31, Raw materials $ 4,341,844 $ 3,994,624 Finished goods 5,904,034 5,354,097 Inventories, gross 10,245,878 9,348,721 Inventory reserves (277,987 ) (274,295 ) Inventories, net $ 9,967,891 $ 9,074,426 The inventory reserves shown in the table above reflect slow moving and obsolete inventory. The Company operates a vendor managed inventory program with one of its customers to improve the promotion of the Company’s products. Under the program, Company inventory is held at the customer’s warehouses. The Company manages the inventory levels at the warehouses and recognizes revenue as the products are sold by the customer. The inventories managed at the customer’s warehouses, which are included in inventories, net, amounted to approximately $506,000 and $494,000 at March 31, 2018 and December 31, 2017, respectively.

Property, Plant & Equipment

Property, Plant & Equipment	3 Months Ended
	Mar. 31, 2018
Property, Plant & Equipment [Abstract]
PROPERTY, PLANT & EQUIPMENT	4. PROPERTY, PLANT & EQUIPMENT The Company’s property, plant and equipment at March 31, 2018 and December 31, 2017 consisted of the following: Estimated March 31, December 31, Land $ 278,325 $ 278,325 Building and Improvements 30 years 5,248,064 4,673,409 Manufacturing and warehouse equipment 6-20 years 9,682,440 9,616,086 Office equipment and furniture 3-5 years 1,419,360 1,367,244 Leasehold improvements 10-15 years 567,898 567,898 Vehicles 3 years 10,020 10,020 Construction in process 5,081,279 5,197,780 Property, plant and equipment, gross 22,287,386 21,710,762 Less accumulated depreciation (12,640,509 ) (12,419,095 ) Property, plant and equipment, net $ 9,646,877 $ 9,291,667 Construction in progress at March 31, 2018 and December 31, 2017 includes $4,974,808 and $5,087,897, respectively, relating to the expansion of the manufacturing, warehouse and distribution facilities of the Company’s wholly-owned subsidiary, KINPAK Inc. (“Kinpak”), in Montgomery, Alabama. Depreciation totaled $221,414 (of which $177,655 is included in cost of goods sold and $43,759 is included in selling and administrative expenses) and $229,026 (of which $179,348 is included in cost of goods sold and $49,678 is included in selling and administrative expenses) for the three months ended March 31, 2018 and 2017, respectively.

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2018
Intangible Assets [Abstract]
INTANGIBLE ASSETS	5. INTANGIBLE ASSETS The Company’s intangible assets at March 31, 2018 and December 31, 2017 consisted of the following: March 31, 2018 Intangible Asset Cost Accumulated Net Patents $ 622,733 $ 400,720 $ 222,013 Trade names and trademarks 1,131,125 549,561 581,564 Royalty rights 160,000 83,739 76,261 Total intangible assets $ 1,913,858 $ 1,034,020 $ 879,838 December 31, 2017 Intangible Asset Cost Accumulated Net Patents $ 622,733 $ 387,636 $ 235,097 Trade names and trademarks 1,131,125 549,561 581,564 Royalty rights 160,000 79,253 80,747 Total intangible assets $ 1,913,858 $ 1,016,450 $ 897,408 At March 31, 2018 and December 31, 2017, the trade names and trademarks are considered indefinite-lived. The patents (the most significant of which (the “ClO 2 2 2 2 2 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 March 31, 2018 and 2017.

Revolving Line of Credit

Revolving Line of Credit	3 Months Ended
	Mar. 31, 2018
Revolving Line of Credit [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 .

Long Term Debt

Long Term Debt	3 Months Ended
	Mar. 31, 2018
Long Term Debt [Abstract]
LONG TERM DEBT	7. LONG TERM DEBT Industrial Development Bond 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 are being 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 is obligated to 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 is 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 by the United States Treasury Department, the Internal Revenue Service, or a similar government entity 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 effectively are substantially the same as the financial covenants included in the Business Loan Agreement described in Note 6. Through March 31, 2018, of the $4,500,000 proceeds of the Bond sale, approximately $1,699,000 has been applied to reimburse Kinpak for Project expenditures and approximately $54,000 was paid directly to other parties for certain transaction costs. The remaining amount is 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 Kinpak may utilize funds held in the custodial account, such funds are classified as restricted cash on the Company’s balance sheets. The Company incurred debt issuance costs of $196,095 in connection with the financing. These costs are shown as a reduction of the debt balance and are being amortized in accordance with the effective interest method. Capital Lease Obligations At March 31, 2018 and December 31, 2017, the Company was obligated under capital lease agreements covering equipment utilized in the Company’s operations. The capital leases, aggregating approximately $44,000 and $50,000 at March 31, 2018 and December 31, 2017, 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 March 31, 2018 and December 31, 2017: Current Portion Long Term Portion March 31, December 31, March 31, December 31, Obligations related to industrial development bond financing $ 242,244 $ 240,395 $ 4,160,526 $ 4,222,241 Capitalized equipment leases 17,729 19,238 26,324 31,188 Total principal of long term debt 259,973 259,633 4,186,850 4,253,429 Debt issuance costs (19,616 ) (19,616 ) (166,732 ) (171,636 ) Total long term debt $ 240,357 $ 240,017 $ 4,020,118 $ 4,081,793 Required principal payments under the Company’s long term obligations are set forth below: Twelve month period ending March 31, 2019 $ 259,973 2020 269,240 2021 264,414 2022 265,912 2023 274,307 Thereafter 3,112,977 Total $ 4,446,823

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2018
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	8. RELATED PARTY TRANSACTIONS During the three months ended March 31, 2018 and 2017, the Company sold products to companies affiliated with Peter G. Dornau, who is the Company’s 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 $820,000 and $747,000 during the three months ended March 31, 2018 and 2017, respectively, and fees for administrative services aggregated approximately $178,000 and $169,000 (including approximately $29,000 and $21,000, respectively, to reimburse the Company for business related expenditures that it made on behalf of the affiliated companies) during the three months ended March 31, 2018 and 2017, respectively. The Company had accounts receivable from the affiliated companies in connection with the product sales and administrative services aggregating approximately $1,259,000 and $1,584,000 at March 31, 2018 and December 31, 2017, 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 March 31, 2018 and 2017. The research and development expenses are included in the statements of operations for the three months ended March 31, 2018 and 2017 as a selling and administrative expense. In addition, during the three months ended March 31, 2018 and 2017, the Company paid this entity $4,500 and $45,000, respectively, for providing charter boat services for marketing and entertainment of Company customers. The charter boat services are included in the statements of operations for the three months ended March 31, 2018 and 2017 as an advertising and promotion expense. 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 sources most of its insurance needs. During the three months ended March 31, 2018 and 2017, the Company paid an aggregate of approximately $188,000 and $195,000, respectively in insurance premiums on policies obtained through the insurance broker.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2018
Commitments and Contingencies [Abstract]
COMMITMENTS AND CONTINGENCIES	9. COMMITMENTS AND CONTINGENCIES 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 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, 2018 and 2017. The Company also leases a 15,000 square foot warehouse in Montgomery, AL 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. Upon expiration of the lease, the Company plans to relocate the operations from the warehouse to Kinpak’s facilities, which are being expanded in connection with the Project. See Note 7 above. The Company pays monthly rent of $4,375 under the lease.

Earnings Per Share

Earnings Per Share	3 Months Ended
	Mar. 31, 2018
Earnings Per Share [Abstract]
EARNINGS PER SHARE	10. EARNINGS PER SHARE Basic earnings per share are 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 issuances 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 2018 2017 Earnings per common share –Basic and Diluted Net income $ 523,380 $ 503,924 Weighted average number of common shares outstanding 9,254,580 9,146,937 Earnings per common share – Basic $ 0.06 $ 0.06 Earnings per common share – Diluted Net income $ 523,380 $ 503,924 Weighted average number of common shares outstanding 9,254,580 9,146,937 Dilutive effect of outstanding stock options 42,712 71,333 Weighted average number of common shares outstanding - assuming dilution 9,297,292 9,218,270 Earnings per common share - Diluted $ 0.06 $ 0.05 The Company had no stock options outstanding at March 31, 2018 and 2017 that were anti-dilutive and therefore not included in the diluted earnings per share calculation.

Securities Authorized for Issua

Securities Authorized for Issuance under Equity Compensation Plans	3 Months Ended
	Mar. 31, 2018
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 No stock compensation expense was incurred during the three months ended March 31, 2018 and 2017, and at March 31, 2018, there was no unrecognized compensation expense related to stock No stock awards were issued during the three months ended March 31, 2018 and 2017. The following table provides information regarding outstanding stock options, all of which were granted under the Company’s 2008 Non-Qualified Stock Option Plan. Date Shares Shares Exercise Expiration Date Weighted 1/11/09 40,000 40,000 $ 0.69 1/10/19 0.8 4/26/10 20,000 20,000 $ 2.07 4/25/20 2.1 60,000 60,000 $ 1.15 1.2

Cash Dividends

Cash Dividends	3 Months Ended
	Mar. 31, 2018
Cash Dividends [Abstract]
CASH DIVIDENDS	12. CASH DIVIDENDS On March 19, 2018, the Company’s Board of Directors declared a special cash dividend of $0.06 per common share payable on April 16, 2018 to all shareholders of record on April 2, 2018. On April 2, 2018, there were 9,254,580 shares of common stock outstanding; therefore, dividends aggregating $555,275 were paid on April 16, 2018.

Summary of Accounting Policies

Summary of Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2018
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 wholly-owned 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. 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, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018. 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, 2017.
Use of estimates	Use of estimates The preparation of condensed consolidated financial statements in conformity with GAAP 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, 2018
Inventories [Abstract]
Schedule of inventories	March 31, December 31, Raw materials $ 4,341,844 $ 3,994,624 Finished goods 5,904,034 5,354,097 Inventories, gross 10,245,878 9,348,721 Inventory reserves (277,987 ) (274,295 ) Inventories, net $ 9,967,891 $ 9,074,426

Property, Plant & Equipment (Ta

Property, Plant & Equipment (Tables)	3 Months Ended
	Mar. 31, 2018
Property, Plant & Equipment [Abstract]
Schedule of property, plant and equipment	Estimated March 31, December 31, Land $ 278,325 $ 278,325 Building and Improvements 30 years 5,248,064 4,673,409 Manufacturing and warehouse equipment 6-20 years 9,682,440 9,616,086 Office equipment and furniture 3-5 years 1,419,360 1,367,244 Leasehold improvements 10-15 years 567,898 567,898 Vehicles 3 years 10,020 10,020 Construction in process 5,081,279 5,197,780 Property, plant and equipment, gross 22,287,386 21,710,762 Less accumulated depreciation (12,640,509 ) (12,419,095 ) Property, plant and equipment, net $ 9,646,877 $ 9,291,667

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2018
Intangible Assets [Abstract]
Schedule of intangible assets	March 31, 2018 Intangible Asset Cost Accumulated Net Patents $ 622,733 $ 400,720 $ 222,013 Trade names and trademarks 1,131,125 549,561 581,564 Royalty rights 160,000 83,739 76,261 Total intangible assets $ 1,913,858 $ 1,034,020 $ 879,838 December 31, 2017 Intangible Asset Cost Accumulated Net Patents $ 622,733 $ 387,636 $ 235,097 Trade names and trademarks 1,131,125 549,561 581,564 Royalty rights 160,000 79,253 80,747 Total intangible assets $ 1,913,858 $ 1,016,450 $ 897,408

Long Term Debt (Tables)

Long Term Debt (Tables)	3 Months Ended
	Mar. 31, 2018
Long Term Debt [Abstract]
Summary of company's long term debt	Current Portion Long Term Portion March 31, December 31, March 31, December 31, Obligations related to industrial development bond financing $ 242,244 $ 240,395 $ 4,160,526 $ 4,222,241 Capitalized equipment leases 17,729 19,238 26,324 31,188 Total principal of long term debt 259,973 259,633 4,186,850 4,253,429 Debt issuance costs (19,616 ) (19,616 ) (166,732 ) (171,636 ) Total long term debt $ 240,357 $ 240,017 $ 4,020,118 $ 4,081,793
Summary of principal payments under long term obligations	Twelve month period ending March 31, 2019 $ 259,973 2020 269,240 2021 264,414 2022 265,912 2023 274,307 Thereafter 3,112,977 Total $ 4,446,823

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2018
Earnings Per Share [Abstract]
Summary of computation of basic and diluted earnings per common share	Three Months Ended 2018 2017 Earnings per common share –Basic and Diluted Net income $ 523,380 $ 503,924 Weighted average number of common shares outstanding 9,254,580 9,146,937 Earnings per common share – Basic $ 0.06 $ 0.06 Earnings per common share – Diluted Net income $ 523,380 $ 503,924 Weighted average number of common shares outstanding 9,254,580 9,146,937 Dilutive effect of outstanding stock options 42,712 71,333 Weighted average number of common shares outstanding - assuming dilution 9,297,292 9,218,270 Earnings per common share - Diluted $ 0.06 $ 0.05

Securities Authorized for Iss25

Securities Authorized for Issuance under Equity Compensation Plans (Tables)	3 Months Ended
	Mar. 31, 2018
Securities Authorized for Issuance under Equity Compensation Plans [Abstract]
Schedule of outstanding stock options under company's stock options plans	Date Shares Shares Exercise Expiration Date Weighted 1/11/09 40,000 40,000 $ 0.69 1/10/19 0.8 4/26/10 20,000 20,000 $ 2.07 4/25/20 2.1 60,000 60,000 $ 1.15 1.2

Inventories (Details)

Inventories (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Summary of inventories
Raw materials	$ 4,341,844	$ 3,994,624
Finished goods	5,904,034	5,354,097
Inventories, gross	10,245,878	9,348,721
Inventory reserves	(277,987)	(274,295)
Inventories, net	$ 9,967,891	$ 9,074,426

Inventories (Details Textual)

Inventories (Details Textual) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Inventories (Textual)
Inventories managed at the customer's warehouses	$ 506,000	$ 494,000

Property, Plant & Equipment (De

Property, Plant & Equipment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Summary of property, plant and equipment
Land	$ 278,325	$ 278,325
Building and Improvements	5,248,064	4,673,409
Manufacturing and warehouse equipment	9,682,440	9,616,086
Office equipment and furniture	1,419,360	1,367,244
Leasehold improvements	567,898	567,898
Vehicles	10,020	10,020
Construction in process	5,081,279	5,197,780
Property, plant and equipment, gross	22,287,386	21,710,762
Less accumulated depreciation	(12,640,509)	(12,419,095)
Property, plant and equipment, net	$ 9,646,877	$ 9,291,667
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) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Property, Plant & Equipment (Textual)
Construction in process	$ 5,081,279		$ 5,197,780
Depreciation	221,414	$ 229,026
Depreciation included in cost of goods sold	177,655	179,348
Selling and administrative expenses	43,759	$ 49,678
Kinpak [Member]
Property, Plant & Equipment (Textual)
Construction in process	$ 4,974,808		$ 5,087,897

Intangible Assets (Details)

Intangible Assets (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Cost	$ 1,913,858	$ 1,913,858
Intangible assets, Accumulated Amortization	1,034,020	1,016,450
Intangible assets, Net	879,838	897,408
Patents [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Cost	622,733	622,733
Intangible assets, Accumulated Amortization	400,720	387,636
Intangible assets, Net	222,013	235,097
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	83,739	79,253
Intangible assets, Net	$ 76,261	$ 80,747

Intangible Assets (Details Text

Intangible Assets (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Intangible Assets (Textual)
Amortization expense	$ 17,570	$ 17,570
Net of amortization	879,838		$ 897,408
Patents [Member]
Intangible Assets (Textual)
Amortization expense	$ 13,084	13,084
Expiry date of intangible assets	2,021
Net of amortization	$ 222,013		$ 235,097
ClO2 Patents [Member]
Intangible Assets (Textual)
Expiry date of intangible assets	2,022
Net of amortization	$ 218,653
Royalty rights [Member]
Intangible Assets (Textual)
Amortization expense	$ 4,486	$ 4,486

Revolving Line of Credit (Detai

Revolving Line of Credit (Details) - USD ($)	1 Months Ended	3 Months Ended
	Aug. 31, 2017	Mar. 31, 2018
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	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 for the most recently completed four fiscal quarters minus the sum of Company's distributions to its shareholders, taxes paid and unfunded capital expenditures during such period to (B) current maturities of Company long term debt as of the end of the most recent fiscal quarter plus scheduled interest expense incurred over the most recently completed four fiscal quarters) of 1.20 to 1, tested quarterly, 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, as of the end of each fiscal quarter. 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; and "long term debt" generally is defined as "debt instruments with a maturity principal due date of one year or more in length," including, among other listed contractual debt instruments, "revolving lines of credit" and "capital leases obligations." For the four quarters ended March 31, 2018, the Company's fixed charge coverage ratio was approximately 7.30 to 1.00, and at March 31, 2018, the Company's debt to capitalization ratio was approximately 0.15 to 1.00.
Debt service coverage ratio	1.20 to 1	7.30 to 1.00
Debt capitalization ratio	0.75 to 1	0.15 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.
Majority shareholder's ownership, percentage		50.00%
Debt instrument maturity term		1 year

Long Term Debt (Details)

Long Term Debt (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Summary of long term debt
Total principal of long term debt, Current Portion	$ 259,973	$ 259,633
Total principal of long term debt, Long Term Portion	4,186,850	4,253,429
Debt issuance costs, Current Portion	(19,616)	(19,616)
Debt issuance costs, Long Term Portion	(166,732)	(171,636)
Total long term debt, Current Portion	240,357	240,017
Total long term debt, Long Term Portion	4,020,118	4,081,793
Obligations related to industrial development bond financing [Member]
Summary of long term debt
Total principal of long term debt, Current Portion	242,244	240,395
Total principal of long term debt, Long Term Portion	4,160,526	4,222,241
Capitalized equipment leases [Member]
Summary of long term debt
Capitalized equipment leases, Current Portion	17,729	19,238
Capitalized equipment leases, Long Term Portion	$ 26,324	$ 31,188

Long Term Debt (Details 1)

Long Term Debt (Details 1)	Mar. 31, 2018USD ($)
Summary of principal payments under Company's long term obligations
2,019	$ 259,973
2,020	269,240
2,021	264,414
2,022	265,912
2,023	274,307
Thereafter	3,112,977
Total	$ 4,446,823

Long Term Debt (Details Textual

Long Term Debt (Details Textual)	1 Months Ended	3 Months Ended
	Sep. 26, 2017USD ($)ft²	Mar. 31, 2018USD ($)Installments	Dec. 31, 2017USD ($)
Long Term Debt (Textual)
Area of land | ft²	85,000
Aggregate capital lease		$ 44,000	$ 50,000
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 $1,699,000 has been applied to reimburse Kinpak for Project expenditures and approximately $54,000 was paid directly to other parties for certain transaction costs.
Lender's purchase of industrial development bond	$ 4,500,000
Repurchase price of facilities if bond has been 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 is 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 Regions Capital Advantage, Inc.	$ 4,500,000
Proceeds from sale of bond		$ 4,500,000
Incurred debt issuance costs		$ 196,095

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Related Party Transactions (Textual)
Sales to the affiliated companies	$ 820,000	$ 747,000
Administrative fees	178,000	169,000
Receivables due from affiliated companies	1,259,000		$ 1,584,000
Amount paid to entity for research and development services	10,500	10,500
Reimburse business related expenditures	29,000	21,000
Services provided for marketing events	4,500	45,000
Insurance broker [Member]
Related Party Transactions (Textual)
Insurance premiums paid	$ 188,000	$ 195,000

Commitments and Contingencies (

Commitments and Contingencies (Details)	Aug. 01, 2016USD ($)	Mar. 31, 2018USD ($)ft²	Mar. 31, 2017USD ($)
Commitments and contingencies (Textual)
Area of rent leases | ft²		15,000
Fort Lauderdale Florida Facility [Member]
Commitments and contingencies (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
Kinpak Manufacturing Facility [Member]
Commitments and contingencies (Textual)
Monthly rent	$ 4,375
Expiration date	Jul. 31, 2018

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Earnings per common share - Basic and Diluted
Net income	$ 523,380	$ 503,924
Weighted average number of common shares outstanding	9,254,580	9,146,937
Earnings per common share - Basic	$ 0.06	$ 0.06
Earnings per common share - Diluted
Net income	$ 523,380	$ 503,924
Weighted average number of common shares outstanding	9,254,580	9,146,937
Dilutive effect of outstanding stock options	42,712	71,333
Weighted average number of common shares outstanding - assuming dilution	9,297,292	9,218,270
Earnings per common share - Diluted	$ 0.06	$ 0.05

Securities Authorized for Iss39

Securities Authorized for Issuance under Equity Compensation Plans (Details)	3 Months Ended
	Mar. 31, 2018$ / sharesshares
Summary of outstanding options, exercisable options, exercise price, expiration date, weighted average remaining life under company stock option plans
Shares Underlying Options Outstanding	60,000
Shares Underlying Exercisable Options	60,000
Exercise Price | $ / shares	$ 1.15
Weighted Average Remaining Term	1 year 2 months 12 days
1/11/09 [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	Oct. 1, 2019
Weighted Average Remaining Term	9 months 18 days
4/26/10 [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 1 month 6 days

Cash Dividends (Details)

Cash Dividends (Details) - USD ($)	1 Months Ended
	Apr. 16, 2018	Apr. 02, 2018	Mar. 31, 2018	Mar. 19, 2018	Dec. 31, 2017
Cash Dividends (Textual)
Common stock, shares outstanding			9,254,580		9,254,580
Shareholders [Member]
Cash Dividends (Textual)
Dividends declared per common share				$ 0.06
Shareholders [Member] | Subsequent Event [Member]
Cash Dividends (Textual)
Common stock, shares outstanding		9,254,580
Dividends paid to common shareholders	$ 555,275