Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 12, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | OCEAN BIO CHEM INC | |
Entity Central Index Key | 0000350737 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 9,462,105 | |
Entity File Number | 0-11102 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | FL |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash | $ 6,581,944 | $ 6,125,322 |
Trade accounts receivable less allowances of approximately $345,000 and $162,000, respectively | 16,262,414 | 7,132,256 |
Receivables due from affiliated companies | 1,107,994 | 962,154 |
Insurance claim receivable | 50,520 | |
Restricted cash | 739,036 | 1,885,098 |
Inventories, net | 12,320,830 | 9,555,071 |
Prepaid expenses and other current assets | 978,806 | 935,022 |
Total Current Assets | 37,991,024 | 26,645,443 |
Property, plant and equipment, net | 10,091,375 | 9,338,227 |
Operating lease - right to use | 290,024 | 352,190 |
Intangible assets, net | 1,736,461 | 1,949,947 |
Total Assets | 50,108,884 | 38,285,807 |
Current Liabilities: | ||
Current portion of long-term debt, net | 501,161 | 483,477 |
Current portion of operating lease liability | 85,590 | 83,270 |
Accounts payable - trade | 3,757,132 | 1,047,385 |
Income taxes payable | 311,428 | 44,026 |
Accrued expenses payable | 2,051,931 | 1,170,912 |
Total Current Liabilities | 6,707,242 | 2,829,070 |
Deferred tax liability | 399,751 | 311,374 |
Operating lease liability, less current portion | 204,434 | 268,920 |
Long-term debt, less current portion and debt issuance costs | 3,853,630 | 4,142,179 |
Total Liabilities | 11,165,057 | 7,551,543 |
COMMITMENTS AND CONTINGENCIES | ||
Shareholders' Equity: | ||
Common stock - $.01 par value, 12,000,000 shares authorized; 9,462,105 and 9,442,809 shares issued and outstanding | 94,621 | 94,428 |
Additional paid in capital | 10,545,898 | 10,503,171 |
Accumulated other comprehensive loss | (296,154) | (294,491) |
Retained earnings | 28,599,462 | 20,431,156 |
Total Shareholders' Equity | 38,943,827 | 30,734,264 |
Total Liabilities and Shareholders' Equity | $ 50,108,884 | $ 38,285,807 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable allowance for doubtful accounts | $ 345,000 | $ 162,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 12,000,000 | 12,000,000 |
Common stock, shares issued | 9,462,105 | 9,442,809 |
Common stock, shares outstanding | 9,462,105 | 9,442,809 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Net sales | $ 19,161,372 | $ 12,502,782 | $ 42,682,497 | $ 32,528,596 |
Cost of goods sold | 10,414,131 | 8,096,637 | 23,085,473 | 20,184,359 |
Gross profit | 8,747,241 | 4,406,145 | 19,597,024 | 12,344,237 |
Operating Expenses: | ||||
Advertising and promotion | 723,446 | 782,158 | 2,265,382 | 2,523,829 |
Selling and administrative | 2,030,787 | 2,149,333 | 6,242,862 | 6,061,942 |
Total operating expenses | 2,754,233 | 2,931,491 | 8,508,244 | 8,585,771 |
Operating income | 5,993,008 | 1,474,654 | 11,088,780 | 3,758,466 |
Other income (expense) | ||||
Interest (expense), net | (39,615) | (31,186) | (93,695) | (96,423) |
Gain on insurance settlement | 126,210 | |||
Income before income taxes | 5,953,393 | 1,443,468 | 11,121,295 | 3,662,043 |
Provision for income taxes | (1,296,563) | (318,813) | (2,385,263) | (812,650) |
Net income | $ 4,656,830 | $ 1,124,655 | $ 8,736,032 | $ 2,849,393 |
Earnings per common share - basic | $ 0.49 | $ 0.12 | $ 0.92 | $ 0.30 |
Earnings per common share - diluted | 0.49 | 0.12 | 0.92 | 0.30 |
Dividends declared per common share | $ 0.02 | $ 0 | $ 0.06 | $ 0.05 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 4,656,830 | $ 1,124,655 | $ 8,736,032 | $ 2,849,393 |
Foreign currency translation adjustment | (281) | (1,232) | (1,663) | 778 |
Comprehensive income | $ 4,656,549 | $ 1,123,423 | $ 8,734,369 | $ 2,850,171 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) | Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total |
Beginning balance at Dec. 31, 2018 | $ 93,382 | $ 10,235,827 | $ (295,734) | $ 17,399,776 | $ 27,433,251 |
Beginning balance, shares at Dec. 31, 2018 | 9,338,191 | ||||
Net income | 2,849,393 | 2,849,393 | |||
Dividends, common stock | (468,306) | (468,306) | |||
Options exercised | $ 279 | 13,520 | 13,799 | ||
Options exercised, shares | 27,928 | ||||
Stock based compensation | $ 830 | 274,710 | 275,540 | ||
Stock based compensation, shares | 83,000 | ||||
Stock based compensation, net of shares withheld for employee taxes | $ (63) | (20,886) | (20,949) | ||
Stock based compensation, net of shares withheld for employee taxes, shares | (6,310) | ||||
Cumulative effect adjustment on adoption of ASU 2016-02 Leases (Topic 842) | 972 | 972 | |||
Foreign currency translation adjustment | 778 | 778 | |||
Ending Balance at Sep. 30, 2019 | $ 94,428 | 10,503,171 | (294,956) | 19,781,835 | 30,084,478 |
Ending balance, shares at Sep. 30, 2019 | 9,442,809 | ||||
Beginning balance at Jun. 30, 2019 | $ 93,701 | 10,262,567 | (293,724) | 18,657,180 | 28,719,724 |
Beginning balance, shares at Jun. 30, 2019 | 9,370,119 | ||||
Net income | 1,124,655 | 1,124,655 | |||
Stock based compensation | $ 790 | 261,490 | 262,280 | ||
Stock based compensation, shares | 79,000 | ||||
Stock based compensation, net of shares withheld for employee taxes | $ (63) | (20,886) | (20,949) | ||
Stock based compensation, net of shares withheld for employee taxes, shares | (6,310) | ||||
Foreign currency translation adjustment | (1,232) | (1,232) | |||
Ending Balance at Sep. 30, 2019 | $ 94,428 | 10,503,171 | (294,956) | 19,781,835 | 30,084,478 |
Ending balance, shares at Sep. 30, 2019 | 9,442,809 | ||||
Beginning balance at Dec. 31, 2019 | $ 94,428 | 10,503,171 | (294,491) | 20,431,156 | 30,734,264 |
Beginning balance, shares at Dec. 31, 2019 | 9,442,809 | ||||
Net income | 8,736,032 | 8,736,032 | |||
Dividends, common stock | (567,726) | (567,726) | |||
Options exercised | $ 153 | 20,547 | 20,700 | ||
Options exercised, shares | 15,296 | ||||
Stock based compensation | $ 40 | 22,180 | 22,220 | ||
Stock based compensation, shares | 4,000 | ||||
Foreign currency translation adjustment | (1,663) | (1,663) | |||
Ending Balance at Sep. 30, 2020 | $ 94,621 | 10,545,898 | (296,154) | 28,599,462 | 38,943,827 |
Ending balance, shares at Sep. 30, 2020 | 9,462,105 | ||||
Beginning balance at Jun. 30, 2020 | $ 94,621 | 10,545,898 | (295,873) | 24,131,874 | 34,476,520 |
Beginning balance, shares at Jun. 30, 2020 | 9,462,105 | ||||
Net income | 4,656,830 | 4,656,830 | |||
Dividends, common stock | (189,242) | (189,242) | |||
Foreign currency translation adjustment | (281) | (281) | |||
Ending Balance at Sep. 30, 2020 | $ 94,621 | $ 10,545,898 | $ (296,154) | $ 28,599,462 | $ 38,943,827 |
Ending balance, shares at Sep. 30, 2020 | 9,462,105 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 8,736,032 | $ 2,849,393 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,020,179 | 967,628 |
Deferred income taxes | 88,377 | 54,399 |
Stock based compensation | 22,220 | 275,540 |
Provision for bad debts | 213,398 | 32,908 |
Provision for slow moving and obsolete inventory | 47,146 | |
Impairment of equipment | 65,725 | |
Other operating non-cash items | (1,061) | (884) |
Cash used related to 2019 chemical incident | (200,665) | |
Gain on insurance settlement | (126,210) | |
Changes in assets and liabilities: | ||
Trade accounts receivable | (9,343,556) | (4,628,183) |
Receivables due from affiliated companies | (145,840) | 195,963 |
Inventories | (2,812,905) | 677,828 |
Prepaid expenses and other current assets | (43,784) | (104,008) |
Accounts payable - trade | 2,709,747 | 1,068,715 |
Income taxes payable | 267,402 | 172,242 |
Accrued expenses payable | 881,019 | 26,362 |
Net cash provided by operating activities | 1,377,224 | 1,587,903 |
Cash flows from investing activities: | ||
Insurance proceeds received for damaged machinery and equipment | 411,657 | |
Purchases of property, plant and equipment | (1,549,077) | (526,775) |
Net cash used in investing activities | (1,137,420) | (526,775) |
Cash flows from financing activities: | ||
Payments on long-term debt | (381,616) | (335,015) |
Borrowings on revolving line of credit | 1,000,000 | |
Repayments on revolving line of credit | (1,000,000) | |
Payments for taxes related to net share settlements of stock awards | (20,949) | |
Proceeds from CARES Act note | 1,556,800 | |
Repayment of CARES Act note | (1,556,800) | |
Dividends paid to common shareholders | (567,726) | (468,306) |
Proceeds from exercise of stock options | 20,700 | 13,799 |
Net cash used in financing activities | (928,642) | (810,471) |
Effect of exchange rate on cash | (602) | 1,662 |
Net (decrease) increase in cash and restricted cash | (689,440) | 252,319 |
Cash and restricted cash at beginning of period | 8,010,420 | 3,733,924 |
Cash and restricted cash at end of period | 7,320,980 | 3,986,243 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest during period | 107,147 | 120,164 |
Cash paid for income taxes during period | 2,029,484 | 586,009 |
Cash paid under operating lease | 71,100 | 71,100 |
Cash | 6,581,944 | 2,109,439 |
Restricted cash | 739,036 | 1,876,804 |
Total cash and restricted cash | 7,320,980 | 3,986,243 |
Noncash lease activities: | ||
Operating lease right to use asset exchanged for operating lease liability | 432,466 | |
Finance lease right to use assets exchanged for finance lease liabilities | 96,039 | 44,979 |
Total lease right to use assets exchanged for lease liabilities | $ 96,039 | $ 477,445 |
Summary of Accounting Policies
Summary of Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
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 Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all 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, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020. 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, 2019. 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 | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 2. RECENT ACCOUNTING PRONOUNCEMENTS Accounting Guidance Adopted by the Company In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, "Financial Instruments ā 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, expected credit losses will be measured based not only on past events and current conditions, but also on reasonable and supportable forecasts. 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. The Company adopted ASU 2016-13 on January 1, 2020. The adoption of ASU 2016-13 did not have a material impact on the Company's financial statements. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 3. INVENTORIES The Company's inventories at September 30, 2020 and December 31, 2019 consisted of the following: September 30, 2020 December 31, 2019 Raw materials $ 5,609,324 $ 3,872,752 Finished goods 7,002,858 5,926,525 Inventories, gross 12,612,182 9,799,277 Inventory reserves (291,352 ) (244,206 ) Inventories, net $ 12,320,830 $ 9,555,071 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. The Company manages the inventory levels at this customer's 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 $749,000 and $562,000 at September 30, 2020 and December 31, 2019, respectively. |
Property, Plant & Equipment
Property, Plant & Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT & EQUIPMENT | 4. PROPERTY, PLANT & EQUIPMENT The Company's property, plant and equipment at September 30, 2020 and December 31, 2019 consisted of the following: Estimated Useful Life September 30, December 31, 2019 Land $ 278,325 $ 278,325 Building and improvements 30 years 9,563,406 9,563,406 Manufacturing and warehouse equipment 6-20 years 11,782,276 10,699,461 Office equipment and furniture 3-5 years 1,872,721 1,778,781 Leasehold improvements 10-15 years 587,183 577,068 Finance leases ā right to use 5 years 113,741 45,951 Vehicles 3 years 10,020 10,020 Construction in process 361,477 142,612 Property, plant and equipment, gross 24,569,149 23,095,624 Less accumulated depreciation (14,477,774 ) (13,757,397 ) Property, plant and equipment, net $ 10,091,375 $ 9,338,227 The Company's wholly owned subsidiary, Kinpak Inc. ("Kinpak"), has been engaged since 2017 in a project involving the expansion of its manufacturing, warehouse and distribution facilities in Montgomery, Alabama, as well as the purchase and installation of associated machinery and equipment (the "Expansion Project"). Kinpak has completed the construction of, and placed into service, an approximately 85,000 square foot addition to the facilities and an expansion of a tank farm to accommodate an additional 500,000 gallons of tank capacity. The final phase of the Expansion Project entails the evaluation, purchase and installation of additional equipment. The Company is financing the Expansion Project through a $4,500,000 industrial development bond, which is described in Note 8. At September 30, 2020, the Company had unused proceeds from the industrial development bond of approximately $739,000 in a custodial account restricted for the use of funding additional capital improvements. The Company intends to utilize the remaining proceeds to purchase machinery and equipment to expand production capacity of its disinfectant/sanitizing product group including Performacide Ā® Ā® Depreciation expense totaled $273,490 (of which $248,528 is included in cost of goods sold and $24,962 is included in selling and administrative expenses) and $253,140 (of which $226,395 is included in cost of goods sold and $26,745 is included in selling and administrative expenses) for the three months ended September 30, 2020 and 2019, respectively, and $791,981 (of which $717,907 is included in cost of goods sold and $74,074 is included in selling and administrative expenses) and $762,479 (of which $679,388 is included in cost of goods sold and $83,091 is included in selling and administrative expenses) for the nine months ended September 30, 2020 and 2019, respectively. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
LEASES | 5. LEASES The Company has one operating lease and three finance leases. Under the operating lease, 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 base 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. Operating lease expense was approximately $25,000 and $25,000 for the three months ended September 30, 2020 and 2019, respectively, and approximately $74,000 and $75,000 for the nine months ended September 30, 2020 and 2019, respectively. At September 30, 2020 and December 31, 2019, the Company had a right to use asset and a corresponding liability of $290,024 and $352,190, respectively, related to the operating lease. Set forth below is a schedule of future minimum rent payments under the operating lease. Twelve-month period ending September 30, 2021 $ 94,800 2022 94,800 2023 94,800 2024 23,700 Total future minimum lease payments 308,100 Less imputed interest (18,076 ) Total operating lease liability $ 290,024 The Company's three finance leases relate to office equipment. See Note 4 for information regarding the carrying value of the Company's finance lease right to use assets and Note 8 for information regarding the finance lease payment schedule. Expenses incurred with respect to the Company's leases during the three and nine months ended September 30, 2020 and 2019 are set forth below. Three Three Months Ended Operating lease expense $ 24,521 $ 24,858 Finance lease amortization 5,406 5,692 Finance lease interest 361 234 Total lease expense $ 30,288 $ 30,784 Nine Nine Months Ended Operating lease expense $ 73,564 $ 74,844 Finance lease amortization 16,938 17,037 Finance lease interest 679 739 Total lease cost $ 91,181 $ 92,620 The remaining lease term with respect to the operating lease, weighted average remaining lease term with respect to the finance leases and discount rate with respect to the operating lease and finance leases at September 30, 2020 and December 31, 2019 are set forth below: September 30, Remaining lease term ā operating lease 3.25 years Weighted average remaining lease term ā finance leases 4.9 years Discount rate ā operating lease 3.7 % Weighted average discount rate ā finance leases 1.8 % December 31, Remaining lease term ā operating lease 4.0 years Weighted average remaining lease term ā finance leases 2.6 years Discount rate ā operating lease 3.7 % Weighted average discount rate ā finance leases 3.0 % |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | 6. INTANGIBLE ASSETS The Company's intangible assets at September 30, 2020 and December 31, 2019 consisted of the following: September 30, 2020 Intangible Assets Cost Accumulated Net Patents $ 622,733 $ 531,560 $ 91,173 Trade names and trademarks 1,715,325 616,653 1,098,672 Customer list 584,468 240,988 343,480 Product formulas 292,234 120,499 171,735 Royalty rights 160,000 128,599 31,401 Total intangible assets $ 3,374,760 $ 1,638,299 $ 1,736,461 December 31, 2019 Intangible Assets Cost Accumulated Net Patents $ 622,733 $ 492,308 $ 130,425 Trade names and trademarks 1,715,325 587,387 1,127,938 Customer list 584,468 153,319 431,149 Product formulas 292,234 76,659 215,575 Royalty rights 160,000 115,140 44,860 Total intangible assets $ 3,374,760 $ 1,424,813 $ 1,949,947 Amortization expense related to intangible assets was $71,162 and $63,479 for the three months ended September 30, 2020 and 2019, respectively, and $213,486 and $190,438 for the nine months ended September 30, 2020 and 2019, respectively. |
Revolving Line of Credit
Revolving Line of Credit | 9 Months Ended |
Sep. 30, 2020 | |
Line of Credit Facility [Abstract] | |
REVOLVING LINE OF CREDIT | 7. REVOLVING LINE OF CREDIT On August 31, 2018, 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 1.35% 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, 2021, at which time all outstanding principal and interest will be due and payable. The Company's obligations under the revolving line of credit are principally secured by 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 for the most recently completed four fiscal quarters minus the sum of the Company's distributions to its shareholders, taxes paid and unfunded capital expenditures during such period to (B) prior year current maturities of Company long term debt plus 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; "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," and "prior year current maturities of long term debt" generally is defined as the principal portions of long-term debt maturing within one year as listed at the last quarter end of the prior completed four fiscal quarters. At September 30, 2020, the Company was in compliance with these financial covenants. 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. There has been no impact in the availability of funds to the Company as a result of the COVID-19 pandemic. At September 30, 2020 and December 31, 2019, the Company had no borrowings under the revolving line of credit provided by the Business Loan Agreement. |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
LONG TERM DEBT | 8. 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 relating to the Expansion 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. Kinpak inherited the lease structure when it first acquired its facilities from its predecessor-in-interest in 1996. The Lease provides that 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 Expansion 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 the guarantee agreement under which the Company provided its guarantee, the Company is subject to certain covenants, including financial covenants requiring that the Company maintain (i) a minimum fixed charge 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 long-term debt plus interest expense) of 1.20 to 1, tested quarterly, and (ii) a ratio of funded debt (as defined in the guaranty agreement) 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. At September 30, 2020, the Company was in compliance with these financial covenants. Through September 30, 2020, of the $4,500,000 proceeds of the Bond sale, there are unused proceeds of approximately $739,000 remaining that are held in a custodial account and may be drawn by Kinpak from time to time to fund additional expenditures related to the Expansion Project. Due to restrictions under, among other things, the Internal Revenue Code and the Lease on Kinpak's utilization of the funds held in the custodial account, such funds are classified as restricted cash on the Company's condensed consolidated balance sheets. The Company intends to utilize the remaining proceeds to purchase machinery and equipment to expand its production capacity of its disinfectant product group including Performacide Ā® Ā® The Company incurred debt financing costs of $196,095 in connection with the financing. These costs are shown as a reduction of the debt balance and are being amortized over the life of the Bond. Other Long-Term Obligations In connection with the Company's agreement to purchase assets of Snappy Marine, Inc. ("Snappy Marine") on July 13, 2018, the Company provided to Snappy Marine a promissory note in the amount of $1,000,000, including interest (of the $1,000,000 amount of the promissory note, $930,528 was recorded as principal, and the remaining $69,472, representing an imputed interest rate of 2.87% per annum, is being recorded as interest expense over the term of the note). The note is payable in equal installments of $16,667 over a 60- month period that commenced on August 1, 2018, with a final payment due and payable on July 1, 2023. If the note is prepaid in full, the entire outstanding balance of the note (including all unpaid amounts allocated to interest over the remaining term of the note) must be paid. In connection with the Company's agreement to purchase assets of Check Corporation, the Company agreed to pay Check Corporation (dba Damp Check Ā® On June 22, 2020, the Company entered into a lease agreement with Canon Solutions America, Inc. to lease office equipment. The lease obligates the Company to pay $100,009 in 63 equal monthly payments of $1,587. The lease is classified as a finance lease. The Company recorded a lease liability which is included in long term debt and a corresponding right to use asset that is included in property, plant and equipment of $96,039 based on a discount rate of 1.53%. At September 30, 2020 and December 31, 2019, the Company was obligated under lease agreements covering office equipment utilized in the Company's operations (inclusive of the lease referenced in the preceding paragraph). The office equipment leases, aggregating approximately $105,000 and $26,000 at September 30, 2020 and December 31, 2019, respectively, have maturities through 2025 and carry interest rates ranging from approximately 1.53% to 3.86% per annum. The office equipment leases are classified as finance leases. During the three months ended September 30, 2020 and 2019, the Company paid $5,767 ($5,406 principal and $361 interest) and $5,926 ($5,692 principal and $234 interest), respectively, and during the nine months ended September 30, 2020 and 2019, the Company paid $17,617 ($16,938 principal and $679 interest)and $17,776 ($17,037 principal and $739 interest), respectively,under the lease agreements. The following table provides information regarding the Company's long-term debt at September 30, 2020 and December 31, 2019: Current Portion Long Term Portion September 30, December 31, September 30, December 31, Obligations related to industrial development bond financing $ 261,844 $ 255,471 $ 3,521,717 $ 3,718,785 Note payable related to Snappy Marine asset acquisition 186,843 182,869 356,772 497,405 Obligation related to Check Corporation asset acquisition 51,027 49,930 8,661 47,082 Office equipment leases 21,063 14,823 84,173 11,312 Total principal of long- term debt 520,777 503,093 3,971,323 4,274,584 Debt issuance costs (19,616 ) (19,616 ) (117,693 ) (132,405 ) Total long- term debt $ 501,161 $ 483,477 $ 3,853,630 $ 4,142,179 Required principal payments under the Company's long- term obligations are set forth below: Twelve-month period ending September 30, 2021 $ 520,777 2022 492,504 2023 464,991 2024 307,599 2025 315,374 Thereafter 2,390,855 Total $ 4,492,100 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 9. RELATED PARTY TRANSACTIONS The Company sells products to companies affiliated with Peter G. Dornau, who is the Company's Chairman, President and Chief Executive Officer. The affiliated companies resell, outside of the United States and Canada, products they purchase from the Company. The Company also provides administrative services to these companies and pays certain business-related expenditures for the affiliated companies, for which the Company is reimbursed. Sales to the affiliated companies aggregated approximately $334,000 and $277,000 for the three months ended September 30, 2020 and 2019, respectively, and approximately $1,366,000 and $1,531,000 for the nine months ended September 30, 2020 and 2019, respectively. Fees for administrative services aggregated approximately $166,000 and $221,000 for the three months ended September 30, 2020 and 2019, respectively, and approximately $646,000 and $591,000 for the nine months ended September 30, 2020 and 2019, respectively. Amounts billed to the affiliated companies to reimburse the Company for business related expenditures made on behalf of the affiliated companies aggregated approximately $28,000 and $23,000 during the three months ended September 30, 2020 and 2019, respectively, and approximately $79,000 and $80,000 during the nine months ended September 30, 2020 and 2019, respectively. The Company had accounts receivable from the affiliated companies in connection with the product sales, administrative services and business- related expenditures aggregating approximately $1,108,000 and $962,000 at September 30, 2020 and December 31, 2019, 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 an aggregate of $12,000 for research and development services and $21,000 ($10,500 for research and development services and $10,500 for charter boat services that the Company used to provide sales incentives for customers) for the three months ended September 30, 2020 and 2019, respectively, and $47,000 ($36,000 for research and development services, $9,000 for charter boat services that the Company used to provide sales incentives for customers and $2,000 for the production of television commercials) and $62,000 ($31,500 for research and development services and $30,500 for charter boat services that the Company used to provide sales incentives for customers) for the nine months ended September 30, 2020 and 2019, respectively. Expenditures for the research and development services are included in the condensed consolidated statements of operations within selling and administrative expenses. Expenditures for the charter boat services are included in the condensed consolidated statements of operations within 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 5 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 September 30, 2020 and 2019, the Company paid an aggregate of approximately $471,000 and $674,000, respectively, and during the nine months ended September 30, 2020 and 2019, the Company paid an aggregate of approximately $984,000 and $1,174,000, respectively, in insurance premiums on policies obtained through the insurance broker. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
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 Nine Months Ended 2020 2019 2020 2019 Earnings per common share ā Basic Net income $ 4,656,830 $ 1,124,655 $ 8,736,032 $ 2,849,393 Weighted average number of common shares outstanding 9,462,105 9,390,662 9,454,639 9,373,893 Earnings per common share ā Basic $ 0.49 $ 0.12 $ 0.92 $ 0.30 Earnings per common share ā Diluted Net income $ 4,656,830 $ 1,124,655 $ 8,736,032 $ 2,849,393 Weighted average number of common shares outstanding 9,462,105 9,390,662 9,454,639 9,373,893 Dilutive effect of outstanding stock options - 7,970 4,708 8,700 Weighted average number of common shares outstanding - Diluted 9,462,105 9,398,632 9,459,347 9,382,593 Earnings per common share ā Diluted $ 0.49 $ 0.12 $ 0.92 $ 0.30 The Company had no stock options outstanding during any . |
Securities Authorized for Issua
Securities Authorized for Issuance Under Equity Compensation Plans | 9 Months Ended |
Sep. 30, 2020 | |
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 Stock compensation expense during the three months ended September 30, 2020 and 2019 was $0 and $262,280, respectively, and during the nine months ended September 30, 2020 and 2019 was $22,220 and $275,540, respectively. At September 30, 2020, there were no outstanding stock options or unrecognized compensation expense related to stock |
Cash Dividends
Cash Dividends | 9 Months Ended |
Sep. 30, 2020 | |
Cash Dividends [Abstract] | |
CASH DIVIDENDS | 12. CASH DIVIDENDS On August 26, 2020, the Company's Board of Directors declared a regular quarterly dividend of $0.02 per common share payable on September 23, 2020 to all shareholders of record on September 9, 2020. There were 9,462,105 shares of common stock outstanding on September 9, 2020; therefore, dividends aggregating $189,242 were paid on September 23, 2020. On May 26, 2020, the Company's Board of Directors declared a regular quarterly dividend of $0.02 per common share and a one-time special cash dividend of $0.02 per common share both payable on June 23, 2020 to all shareholders of record on June 9, 2020. There were 9,462,105 shares of common stock outstanding on June 9, 2020; therefore, dividends aggregating $378,484 were paid on June 23, 2020. On March 22, 2019, the Company's Board of Directors declared a special cash dividend of $0.05 per common share payable on April 19, 2019 to all shareholders of record on April 5, 2019. There were 9,366,119 shares of common stock outstanding on April 5, 2019; therefore, dividends aggregating $468,306 were paid on April 19, 2019. |
Customer Concentration
Customer Concentration | 9 Months Ended |
Sep. 30, 2020 | |
Customer Concentration [Abstract] | |
CUSTOMER CONCENTRATION | 13. CUSTOMER CONCENTRATION During the three months ended September 30, 2020, the Company had net sales to each of three customers that constituted in excess of 10% of its net sales. Net sales to these three customers represented approximately 45.0% (17.8%, 13.8% and 13.4%) of the Company's net sales for the three months ended September 30, 2020. During the three months ended September 30, 2019, the Company had net sales to each of two customers that constituted in excess of 10% of its net sales. Net sales to these two customers represented approximately 38.0% (20.1% and 17.9%) of the Company's net sales for the three months ended September 30, 2019. During the nine months ended September 30, 2020, the Company had net sales to each of two customers that constituted in excess of 10% of its net sales. Net sales to these two customers represented approximately 32.8% (17.4% and 15.4%) of the Company's net sales for the nine months ended September 30, 2020. During the nine months ended September 30, 2019, the Company had net sales to each of four customers that constituted in excess of 10% of its net sales. Net sales to these four customers represented approximately 53.2% (21.7%, 11.0%, 10.5 and 10.0%) of the Company's net sales for the nine months ended September 30, 2019. At September 30, 2020 two customers constituted at least 10% of the Company's gross trade accounts receivable. The gross trade accounts receivable balances for these customers represented approximately 44.1% (25.5% and 18.6%) of the Company's gross trade accounts receivable. At December 31, 2019 three customers constituted at least 10% of the Company's gross trade accounts receivable. The gross trade accounts receivable balances for these customers represented approximately 56.8% (28.0%, 15.3% and 13.5%) of the Company's gross trade accounts receivable. |
Summary of Accounting Policies
Summary of Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
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 Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all 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, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020. 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, 2019. |
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) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | September 30, 2020 December 31, 2019 Raw materials $ 5,609,324 $ 3,872,752 Finished goods 7,002,858 5,926,525 Inventories, gross 12,612,182 9,799,277 Inventory reserves (291,352 ) (244,206 ) Inventories, net $ 12,320,830 $ 9,555,071 |
Property, Plant & Equipment (Ta
Property, Plant & Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | Estimated Useful Life September 30, December 31, 2019 Land $ 278,325 $ 278,325 Building and improvements 30 years 9,563,406 9,563,406 Manufacturing and warehouse equipment 6-20 years 11,782,276 10,699,461 Office equipment and furniture 3-5 years 1,872,721 1,778,781 Leasehold improvements 10-15 years 587,183 577,068 Finance leases ā right to use 5 years 113,741 45,951 Vehicles 3 years 10,020 10,020 Construction in process 361,477 142,612 Property, plant and equipment, gross 24,569,149 23,095,624 Less accumulated depreciation (14,477,774 ) (13,757,397 ) Property, plant and equipment, net $ 10,091,375 $ 9,338,227 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of future minimum rent payments | Twelve-month period ending September 30, 2021 $ 94,800 2022 94,800 2023 94,800 2024 23,700 Total future minimum lease payments 308,100 Less imputed interest (18,076 ) Total operating lease liability $ 290,024 |
Schedule of costs incurred with respect to the company's leases | Three Three Months Ended Operating lease expense $ 24,521 $ 24,858 Finance lease amortization 5,406 5,692 Finance lease interest 361 234 Total lease expense $ 30,288 $ 30,784 Nine Nine Months Ended Operating lease expense $ 73,564 $ 74,844 Finance lease amortization 16,938 17,037 Finance lease interest 679 739 Total lease cost $ 91,181 $ 92,620 |
Schedule of components lease costs, lease term and discount rate | September 30, Remaining lease term ā operating lease 3.25 years Weighted average remaining lease term ā finance leases 4.9 years Discount rate ā operating lease 3.7 % Weighted average discount rate ā finance leases 1.8 % December 31, Remaining lease term ā operating lease 4.0 years Weighted average remaining lease term ā finance leases 2.6 years Discount rate ā operating lease 3.7 % Weighted average discount rate ā finance leases 3.0 % |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | September 30, 2020 Intangible Assets Cost Accumulated Net Patents $ 622,733 $ 531,560 $ 91,173 Trade names and trademarks 1,715,325 616,653 1,098,672 Customer list 584,468 240,988 343,480 Product formulas 292,234 120,499 171,735 Royalty rights 160,000 128,599 31,401 Total intangible assets $ 3,374,760 $ 1,638,299 $ 1,736,461 December 31, 2019 Intangible Assets Cost Accumulated Net Patents $ 622,733 $ 492,308 $ 130,425 Trade names and trademarks 1,715,325 587,387 1,127,938 Customer list 584,468 153,319 431,149 Product formulas 292,234 76,659 215,575 Royalty rights 160,000 115,140 44,860 Total intangible assets $ 3,374,760 $ 1,424,813 $ 1,949,947 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of company's long term debt | Current Portion Long Term Portion September 30, December 31, September 30, December 31, Obligations related to industrial development bond financing $ 261,844 $ 255,471 $ 3,521,717 $ 3,718,785 Note payable related to Snappy Marine asset acquisition 186,843 182,869 356,772 497,405 Obligation related to Check Corporation asset acquisition 51,027 49,930 8,661 47,082 Office equipment leases 21,063 14,823 84,173 11,312 Total principal of long- term debt 520,777 503,093 3,971,323 4,274,584 Debt issuance costs (19,616 ) (19,616 ) (117,693 ) (132,405 ) Total long- term debt $ 501,161 $ 483,477 $ 3,853,630 $ 4,142,179 |
Schedule of principal payments under long term obligations | Twelve-month period ending September 30, 2021 $ 520,777 2022 492,504 2023 464,991 2024 307,599 2025 315,374 Thereafter 2,390,855 Total $ 4,492,100 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted earnings per common share | Three Months Ended Nine Months Ended 2020 2019 2020 2019 Earnings per common share ā Basic Net income $ 4,656,830 $ 1,124,655 $ 8,736,032 $ 2,849,393 Weighted average number of common shares outstanding 9,462,105 9,390,662 9,454,639 9,373,893 Earnings per common share ā Basic $ 0.49 $ 0.12 $ 0.92 $ 0.30 Earnings per common share ā Diluted Net income $ 4,656,830 $ 1,124,655 $ 8,736,032 $ 2,849,393 Weighted average number of common shares outstanding 9,462,105 9,390,662 9,454,639 9,373,893 Dilutive effect of outstanding stock options - 7,970 4,708 8,700 Weighted average number of common shares outstanding - Diluted 9,462,105 9,398,632 9,459,347 9,382,593 Earnings per common share ā Diluted $ 0.49 $ 0.12 $ 0.92 $ 0.30 |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Summary of inventories | ||
Raw materials | $ 5,609,324 | $ 3,872,752 |
Finished goods | 7,002,858 | 5,926,525 |
Inventories, gross | 12,612,182 | 9,799,277 |
Inventory reserves | (291,352) | (244,206) |
Inventories, net | $ 12,320,830 | $ 9,555,071 |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Inventories (Textual) | ||
Inventories managed at the customer's warehouses | $ 749,000 | $ 562,000 |
Property, Plant & Equipment (De
Property, Plant & Equipment (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Summary of property, plant and equipment | ||
Land | $ 278,325 | $ 278,325 |
Building and improvements | 9,563,406 | 9,563,406 |
Manufacturing and warehouse equipment | 11,782,276 | 10,699,461 |
Office equipment and furniture | 1,872,721 | 1,778,781 |
Leasehold improvements | 587,183 | 577,068 |
Finance leases - right to use | 113,741 | 45,951 |
Vehicles | 10,020 | 10,020 |
Construction in process | 361,477 | 142,612 |
Property, plant and equipment, gross | 24,569,149 | 23,095,624 |
Less accumulated depreciation | (14,477,774) | (13,757,397) |
Property, plant and equipment, net | $ 10,091,375 | $ 9,338,227 |
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 | |
Finance leases - right to use [Member] | ||
Summary of property, plant and equipment | ||
Estimated Useful Life | 5 years | |
Vehicles [Member] | ||
Summary of property, plant and equipment | ||
Estimated Useful Life | 3 years |
Property, Plant & Equipment (_2
Property, Plant & Equipment (Details Textual) - Kinpak Inc [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant & Equipment (Textual) | ||||
Project involving the expansion of manufacturing, warehouse and distribution facilities, description | Kinpak has completed the construction of, and placed into service, an approximately 85,000 square foot addition to the facilities and an expansion of a tank farm to accommodate an additional 500,000 gallons of tank capacity. The final phase of the Expansion Project entails the evaluation, purchase and installation of additional equipment. | |||
Industrial development bond | $ 4,500,000 | |||
Restricted cash | $ 739,000 | 739,000 | ||
Depreciation expense | 273,490 | $ 253,140 | 791,981 | $ 762,479 |
Depreciation included in cost of goods sold | 248,528 | 226,395 | 717,907 | 679,388 |
Depreciation included in selling and administrative expenses | $ 24,962 | $ 26,745 | $ 74,074 | $ 83,091 |
Leases (Details)
Leases (Details) - Operating lease [Member] | Sep. 30, 2020USD ($) |
2021 | $ 94,800 |
2022 | 94,800 |
2023 | 94,800 |
2024 | 23,700 |
Total future minimum lease payments | 308,100 |
Less imputed interest | (18,076) |
Total operating lease liability | $ 290,024 |
Leases (Details 1)
Leases (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease expense | $ 24,521 | $ 24,858 | $ 73,564 | $ 74,844 |
Finance lease amortization | 5,406 | 5,692 | 16,938 | 17,037 |
Finance lease interest | 361 | 234 | 679 | 739 |
Total lease cost | $ 30,288 | $ 30,784 | $ 91,181 | $ 92,620 |
Leases (Details 2)
Leases (Details 2) | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Remaining lease term - operating lease | 3 years 2 months 30 days | 4 years |
Weighted average remaining lease term - finance leases | 4 years 10 months 25 days | 2 years 7 months 6 days |
Discount rate - operating lease | 3.70% | 3.70% |
Weighted average discount rate - finance leases | 1.80% | 3.00% |
Leases (Details Textual)
Leases (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Leases (Textual) | |||||
Expires date | Dec. 31, 2023 | ||||
Annual minimum base rent | $ 94,800 | ||||
Operating lease expense | $ 25,000 | $ 25,000 | $ 74,000 | $ 75,000 | |
Percentage of maximum annual increase from base rent | 2.00% | ||||
Operating lease right to use asset and corresponding liability | $ 290,024 | $ 290,024 | $ 352,190 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | $ 3,374,760 | $ 3,374,760 |
Intangible assets, Accumulated Amortization | 1,638,299 | 1,424,813 |
Intangible assets, Net | 1,736,461 | 1,949,947 |
Patents [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 622,733 | 622,733 |
Intangible assets, Accumulated Amortization | 531,560 | 492,308 |
Intangible assets, Net | 91,173 | 130,425 |
Trade names and trademarks [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 1,715,325 | 1,715,325 |
Intangible assets, Accumulated Amortization | 616,653 | 587,387 |
Intangible assets, Net | 1,098,672 | 1,127,938 |
Customer list [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 584,468 | 584,468 |
Intangible assets, Accumulated Amortization | 240,988 | 153,319 |
Intangible assets, Net | 343,480 | 431,149 |
Product formulas [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 292,234 | 292,234 |
Intangible assets, Accumulated Amortization | 120,499 | 76,659 |
Intangible assets, Net | 171,735 | 215,575 |
Royalty rights [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 160,000 | 160,000 |
Intangible assets, Accumulated Amortization | 128,599 | 115,140 |
Intangible assets, Net | $ 31,401 | $ 44,860 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Intangible Assets (Textual) | ||||
Amortization expense related to intangible assets | $ 71,162 | $ 63,479 | $ 213,486 | $ 190,438 |
Revolving Line of Credit (Detai
Revolving Line of Credit (Details) - Business Loan Agreement [Member] - USD ($) | 1 Months Ended | |
Aug. 31, 2018 | Sep. 30, 2020 | |
Revolving Line of Credit (Textual) | ||
Term of revolving line of credit, description | 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 | The revolving line of credit is payable monthly at the one-month LIBOR rate plus 1.35% per annum, computed on a 365/360 basis. | |
Due date of outstanding principal and interest borrowed under revolving line of credit | Aug. 31, 2021 | |
Financial covenants under credit agreement, description | The Company maintain a minimum fixed charge coverage ratio (generally, the ratio of (A) EBITDA for the most recently completed four fiscal quarters minus the sum of the Company's distributions to its shareholders, taxes paid and unfunded capital expenditures during such period to (B) prior year current maturities of Company long term debt plus 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. | |
Majority shareholder's ownership, percentage | 50.00% |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Summary of long term debt | ||
Total principal of long- term debt, Current Portion | $ 520,777 | $ 503,093 |
Total principal of long- term debt, Long Term Portion | 3,971,323 | 4,274,584 |
Debt issuance costs, Current Portion | (19,616) | (19,616) |
Debt issuance costs, Long Term Portion | (117,693) | (132,405) |
Total long term debt, Current Portion | 501,161 | 483,477 |
Total long term debt, Long Term Portion | 3,853,630 | 4,142,179 |
Obligations related to industrial development bond financing [Member] | ||
Summary of long term debt | ||
Obligations related to industrial development bond financing, Current Portion | 261,844 | 255,471 |
Obligations related to industrial development bond financing, Long Term portion | 3,521,717 | 3,718,785 |
Note payable related to Snappy Marine asset acquisition [Member] | ||
Summary of long term debt | ||
Note payable related to Snappy Marine asset acquisition, Current Portion | 186,843 | 182,869 |
Note payable related to Snappy Marine asset acquisition, Long Term Portion | 356,772 | 497,405 |
Obligation related to Check Corporation asset acquisition [Member] | ||
Summary of long term debt | ||
Obligation related to Check Corporation asset acquisition, Current Portion | 51,027 | 49,930 |
Obligation related to Check Corporation asset acquisition, Long Term portion | 8,661 | 47,082 |
Office equipment leases [Member] | ||
Summary of long term debt | ||
Equipment leases, Current Portion | 21,063 | 14,823 |
Equipment leases, Long Term Portion | $ 84,173 | $ 11,312 |
Long Term Debt (Details 1)
Long Term Debt (Details 1) | Sep. 30, 2020USD ($) |
Twelve-month period ending September 30, | |
2021 | $ 520,777 |
2022 | 492,504 |
2023 | 464,991 |
2024 | 307,599 |
2025 | 315,374 |
Thereafter | 2,390,855 |
Total | $ 4,492,100 |
Long Term Debt (Details Textual
Long Term Debt (Details Textual) | Jul. 13, 2018USD ($) | Sep. 26, 2017USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)Integerl | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Industrial Development Bond Financing [Member] | |||||||
Long Term Debt (Textual) | |||||||
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 | Integerl | 118 | ||||||
Proceeds of the bond sale | $ 4,500,000 | $ 4,500,000 | |||||
Payments for debt issuance costs | $ 196,095 | ||||||
Financial covenants under credit agreement, description | The Company is subject to certain covenants, including financial covenants requiring that the Company maintain (i) a minimum fixed charge 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 long-term debt plus interest expense) of 1.20 to 1, tested quarterly, and (ii) a ratio of funded debt (as defined in the guaranty agreement) 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. | ||||||
Restricted cash | $ 739,000 | $ 739,000 | |||||
Other Long Term Obligations [Member] | |||||||
Long Term Debt (Textual) | |||||||
Aggregate equipment lease | 105,000 | $ 105,000 | $ 26,000 | ||||
Maturity period for equipment lease | Maturities through 2025 | ||||||
Promissory note, description | The Company provided to Snappy Marine a promissory note in the amount of $1,000,000, including interest (of the $1,000,000 amount of the promissory note, $930,528 was recorded as principal, and the remaining $69,472, representing an imputed interest rate of 2.87% per annum, is being recorded as interest expense over the term of the note). | ||||||
Notes payable equal installment | $ 16,667 | ||||||
Debt payment, terms | Over a 60- month period that commenced on August 1, 2018, with a final payment due and payable on July 1, 2023. | ||||||
Payments of lease agreement | 5,767 | $ 5,926 | $ 17,617 | $ 17,776 | |||
Principal under lease agreement | 5,406 | 5,692 | 16,938 | 17,037 | |||
Interest under lease agreement | $ 361 | $ 234 | $ 679 | $ 739 | |||
Lease agreement, description | The lease obligates the Company to pay $100,009 in 63 equal monthly payments of $1,587. The lease is classified as a finance lease. The Company recorded a lease liability which is included in long term debt and a corresponding right to use asset that is included in property, plant and equipment of $96,039 based on a discount rate of 1.53%. | ||||||
Other Long Term Obligations [Member] | Minimum [Member] | |||||||
Long Term Debt (Textual) | |||||||
Percentage of interest rates | 1.53% | 1.53% | |||||
Other Long Term Obligations [Member] | Maximum [Member] | |||||||
Long Term Debt (Textual) | |||||||
Percentage of interest rates | 3.86% | 3.86% | |||||
Other Long Term Obligations [Member] | Check Corporation [Member] | |||||||
Long Term Debt (Textual) | |||||||
Notes payable, description | The Company's agreement to purchase assets of Check Corporation, the Company agreed to pay Check Corporation (dba Damp CheckĀ®) $100,000 in equal installments of approximately $4,348 over a 23-month period that commenced on January 15, 2020, with a final payment due and payable on November 15, 2021. The Company recorded $97,012 as principal, and the remaining $2,988, representing an imputed interest rate of 3.15% per annum, will be recorded as interest expense over the 23 months. |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Related Party Transactions (Textual) | |||||
Sales to the affiliated companies | $ 334,000 | $ 277,000 | $ 1,366,000 | $ 1,531,000 | |
Charges to the affiliated companies for services | 166,000 | 221,000 | 646,000 | 591,000 | |
Receivables due from affiliated companies | 1,108,000 | 1,108,000 | $ 962,000 | ||
Reimburse business related expenditures | 28,000 | 23,000 | 79,000 | 80,000 | |
Insurance Broker [Member] | |||||
Related Party Transactions (Textual) | |||||
Insurance premiums paid | 471,000 | 674,000 | 984,000 | 1,174,000 | |
Service [Member] | |||||
Related Party Transactions (Textual) | |||||
The production of television commercials | 2,000 | ||||
Charter boat services | 10,500 | 9,000 | 30,500 | ||
Research and development costs | 12,000 | 10,500 | 36,000 | 31,500 | |
Total payments to affiliated company | $ 12,000 | $ 21,000 | $ 47,000 | $ 62,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings per common share - Basic | ||||
Net income | $ 4,656,830 | $ 1,124,655 | $ 8,736,032 | $ 2,849,393 |
Weighted average number of common shares outstanding | 9,462,105 | 9,390,662 | 9,454,639 | 9,373,893 |
Earnings per common share - Basic | $ 0.49 | $ 0.12 | $ 0.92 | $ 0.30 |
Earnings per common share - Diluted | ||||
Net income | $ 4,656,830 | $ 1,124,655 | $ 8,736,032 | $ 2,849,393 |
Weighted average number of common shares outstanding | 9,462,105 | 9,390,662 | 9,454,639 | 9,373,893 |
Dilutive effect of outstanding stock options | 7,970 | 4,708 | 8,700 | |
Weighted average number of common shares outstanding - Diluted | 9,462,105 | 9,398,632 | 9,459,347 | 9,382,593 |
Earnings per common share - Diluted | $ 0.49 | $ 0.12 | $ 0.92 | $ 0.30 |
Securities Authorized for Iss_2
Securities Authorized for Issuance Under Equity Compensation Plans (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Securities Authorized for Issuance Under Equity Compensation Plans (Textual) | ||||
Stock based compensation | $ 0 | $ 262,280 | $ 22,220 | $ 275,540 |
Cash Dividends (Details)
Cash Dividends (Details) - USD ($) | Jun. 09, 2020 | Sep. 23, 2020 | Aug. 26, 2020 | Jun. 23, 2020 | May 26, 2020 | Apr. 19, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 09, 2020 | Dec. 31, 2019 | Apr. 05, 2019 |
Cash Dividends (Textual) | |||||||||||
Common stock, shares outstanding | 9,462,105 | 9,442,809 | |||||||||
Dividends paid to common shareholders | $ 567,726 | $ 468,306 | |||||||||
Majority Shareholder [Member] | |||||||||||
Cash Dividends (Textual) | |||||||||||
Common stock, shares outstanding | 9,462,105 | 9,462,105 | 9,366,119 | ||||||||
Dividends paid to common shareholders | $ 189,242 | $ 378,484 | $ 468,306 | ||||||||
Dividends paid per common share | $ 0.02 | $ 0.02 | $ 0.02 | $ 0.02 | $ 0.05 |
Customer Concentration (Details
Customer Concentration (Details) - Customers | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Net Sales [Member] | |||||
Customer Concentration (Textual) | |||||
Concentration risk, percentage | 45.00% | 38.00% | 32.80% | 53.20% | |
Number of customers | 3 | 2 | 2 | 4 | |
Concentration risk, description | Constituted in excess of 10% of its net sales. | Constituted in excess of 10% of its net sales. | Constituted in excess of 10% of its net sales. | Constituted in excess of 10% of its net sales. | |
Net Sales [Member] | Customer One [Member] | |||||
Customer Concentration (Textual) | |||||
Concentration risk, percentage | 17.80% | 20.10% | 17.40% | 21.70% | |
Net Sales [Member] | Customer Two [Member] | |||||
Customer Concentration (Textual) | |||||
Concentration risk, percentage | 13.80% | 17.90% | 15.40% | 11.00% | |
Net Sales [Member] | Customer Three [Member] | |||||
Customer Concentration (Textual) | |||||
Concentration risk, percentage | 13.40% | 10.50% | |||
Net Sales [Member] | Customer Four [Member] | |||||
Customer Concentration (Textual) | |||||
Concentration risk, percentage | 10.00% | ||||
Trade accounts receivable [Member] | |||||
Customer Concentration (Textual) | |||||
Concentration risk, percentage | 44.10% | 56.80% | |||
Number of customers | 2 | 3 | |||
Concentration risk, description | Constituted at least 10% of the Company's gross trade accounts receivable. | Constituted at least 10% of the Company's gross trade accounts receivable. | |||
Trade accounts receivable [Member] | Customer One [Member] | |||||
Customer Concentration (Textual) | |||||
Concentration risk, percentage | 25.50% | 28.00% | |||
Trade accounts receivable [Member] | Customer Two [Member] | |||||
Customer Concentration (Textual) | |||||
Concentration risk, percentage | 18.60% | 15.30% | |||
Trade accounts receivable [Member] | Customer Three [Member] | |||||
Customer Concentration (Textual) | |||||
Concentration risk, percentage | 13.50% |