Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 14, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | OCEAN BIO CHEM INC | |
Entity Central Index Key | 0000350737 | |
Trading Symbol | OBCI | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 9,366,119 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash | $ 563,426 | $ 1,401,047 |
Trade accounts receivable less allowances of approximately $138,000 and $171,000, respectively | 6,693,235 | 5,658,686 |
Receivables due from affiliated companies | 1,516,885 | 1,045,990 |
Restricted cash | 2,163,226 | 2,332,877 |
Inventories, net | 12,524,824 | 12,085,813 |
Prepaid expenses and other current assets | 1,090,088 | 1,010,641 |
Total Current Assets | 24,551,684 | 23,535,054 |
Property, plant and equipment, net | 9,719,404 | 9,649,237 |
Operating lease - right to use | 412,672 | |
Intangible assets, net | 1,986,732 | 2,050,212 |
Total Assets | 36,670,492 | 35,234,503 |
Current Liabilities: | ||
Current portion of long-term debt, net | 431,745 | 425,663 |
Current portion of operating lease liability | 81,014 | |
Accounts payable - trade | 1,586,908 | 1,472,230 |
Dividends payable | 468,306 | |
Accrued expenses payable | 1,380,299 | 1,108,905 |
Total Current Liabilities | 3,948,272 | 3,006,798 |
Deferred tax liability | 274,897 | 280,349 |
Operating lease liability, less current portion | 331,658 | |
Long-term debt, less current portion and debt issuance costs | 4,419,282 | 4,514,105 |
Total Liabilities | 8,974,109 | 7,801,252 |
COMMITMENTS AND CONTINGENCIES | ||
Shareholders' Equity: | ||
Common stock - $.01 par value, 12,000,000 shares authorized; 9,366,119 shares and 9,338,191 shares issued, respectively | 93,661 | 93,382 |
Additional paid in capital | 10,249,347 | 10,235,827 |
Accumulated other comprehensive loss | (294,237) | (295,734) |
Retained earnings | 17,647,612 | 17,399,776 |
Total Shareholders' Equity | 27,696,383 | 27,433,251 |
Total Liabilities and Shareholders' Equity | $ 36,670,492 | $ 35,234,503 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable less allowances | $ 138,000 | $ 171,000 |
Common stock, par value | $ .01 | $ 0.01 |
Common stock, shares authorized | 12,000,000 | 12,000,000 |
Common stock, shares issued | 9,366,119 | 9,338,191 |
Common stock, shares outstanding | 9,366,119 | 9,338,191 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Net sales | $ 9,081,117 | $ 8,384,213 |
Cost of goods sold | 5,660,138 | 5,406,117 |
Gross profit | 3,420,979 | 2,978,096 |
Operating Expenses: | ||
Advertising and promotion | 766,310 | 751,400 |
Selling and administrative | 1,700,393 | 1,554,777 |
Total operating expenses | 2,466,703 | 2,306,177 |
Operating income | 954,276 | 671,919 |
Interest (expense) income, net | (29,827) | 7,386 |
Income before income taxes | 924,449 | 679,305 |
Provision for income taxes | (209,279) | (155,925) |
Net income | $ 715,170 | $ 523,380 |
Earnings per common share - basic | $ 0.08 | $ 0.06 |
Earnings per common share - diluted | 0.08 | 0.06 |
Dividends declared per common share | $ 0.05 | $ 0.06 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 715,170 | $ 523,380 |
Foreign currency translation adjustment | 1,497 | (3,466) |
Comprehensive income | $ 716,667 | $ 519,914 |
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, 2017 | $ 92,546 | $ 9,931,634 | $ (288,051) | $ 15,159,802 | $ 24,895,931 |
Beginning balance, shares at Dec. 31, 2017 | 9,254,580 | ||||
Net income | 523,380 | 523,380 | |||
Dividends, common stock | (555,275) | (555,275) | |||
Foreign currency translation adjustment | (3,466) | (3,466) | |||
Ending Balance at Mar. 31, 2018 | $ 92,546 | 9,931,634 | (291,517) | 15,127,907 | 24,860,570 |
Ending balance, shares at Mar. 31, 2018 | 9,254,580 | ||||
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 | 715,170 | 715,170 | |||
Dividends, common stock | (468,306) | (468,306) | |||
Options exercised | $ 279 | 13,520 | 13,799 | ||
Options exercised, shares | 27,928 | ||||
Adoption of ASU 2016-02 Leases (Topic 842) | 972 | 972 | |||
Foreign currency translation adjustment | 1,497 | 1,497 | |||
Ending Balance at Mar. 31, 2019 | $ 93,661 | $ 10,249,347 | $ (294,237) | $ 17,647,612 | $ 27,696,383 |
Ending balance, shares at Mar. 31, 2019 | 9,366,119 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 715,170 | $ 523,380 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 320,791 | 238,984 |
Deferred income taxes | (5,452) | 143,991 |
Provision for bad debts | (32,700) | 1,826 |
Other operating non-cash items | 1,076 | 974 |
Changes in assets and liabilities: | ||
Trade accounts receivable | (1,001,849) | (41,156) |
Receivables due from affiliated companies | (470,895) | 325,150 |
Inventories | (439,011) | (897,157) |
Prepaid expenses and other current assets | (79,447) | (37,503) |
Accounts payable - trade | 114,678 | 121,899 |
Accrued expenses payable | 271,394 | 142,085 |
Net cash (used in) provided by operating activities | (606,245) | 522,473 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (303,901) | (571,720) |
Net cash used in investing activities | (303,901) | (571,720) |
Cash flows from financing activities: | ||
Payments on long-term debt | (111,346) | (66,239) |
Proceeds from exercise of stock options | 13,799 | |
Net cash used in financing activities | (97,547) | (66,239) |
Effect of exchange rate on cash | 421 | (748) |
Net decrease in cash and restricted cash | (1,007,272) | (116,234) |
Cash and restricted cash at beginning of period | 3,733,924 | 5,165,844 |
Cash and restricted cash at end of period | 2,726,652 | 5,049,610 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest during period | 38,065 | 6,374 |
Cash paid for income taxes during period | ||
Cash paid under operating lease | 23,700 | 23,700 |
Cash | 563,426 | 2,294,648 |
Restricted cash | 2,163,226 | 2,754,962 |
Total cash and restricted cash | 2,726,652 | 5,049,610 |
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 | 44,979 | |
Total lease right to use assets exchanged for lease liabilities | $ 477,445 |
Summary of Accounting Policies
Summary of Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
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 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, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019. 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, 2018. 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, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 2. RECENT ACCOUNTING PRONOUNCEMENTS Accounting Guidance Adopted by the Company In February 2016, the Financial Accounting Standards Board (“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 the previous guidance, and leases classified as operating leases) 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 previous guidance, operating leases were not recognized on the balance sheet. The Company adopted ASU 2016-02 on January 1, 2019 utilizing a modified retrospective method, under which the Company recorded an immaterial cumulative adjustment to retained earnings rather than retrospectively adjusting prior periods. As a result, the Company’s balance sheet presentation at March 31, 2019 is not comparable to the presentation at December 31, 2018. The adoption of ASU 2016-02 resulted in the recognition of approximately $432,000 as an operating lease right to use asset and a corresponding operating lease liability, and the derecognition of office equipment with a net book value of approximately $27,000, which is now classified as a finance lease – right to use asset within property, plant and equipment. As permitted under the new guidance, the Company has made an accounting policy election not to apply the recognition provisions of the new guidance to short term leases (leases with a lease term of 12 months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short term leases on a straight-line basis over the lease term. The Company did not have any short term leases at March 31, 2019. Accounting Guidance Not Yet Adopted by the Company 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, 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. 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 statements. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 3. INVENTORIES The Company's inventories at March 31, 2019 and December 31, 2018 consisted of the following: March 31, 2019 December 31, 2018 Raw materials $ 4,808,916 $ 4,320,131 Finished goods 8,000,017 8,049,791 Inventories, gross 12,808,933 12,369,922 Inventory reserves (284,109 ) (284,109 ) Inventories, net $ 12,524,824 $ 12,085,813 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 $468,000 and $495,000 at March 31, 2019 and December 31, 2018, respectively. |
Property, Plant & Equipment
Property, Plant & Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT & EQUIPMENT | 4. PROPERTY, PLANT & EQUIPMENT The Company’s property, plant and equipment at March 31, 2019 and December 31, 2018 consisted of the following: Estimated Useful Life March 31, 2019 December 31, 2018 Land $ 278,325 $ 278,325 Building and Improvements 30 years 9,565,791 9,548,922 Manufacturing and warehouse equipment 6-20 years 10,892,015 10,736,161 Office equipment and furniture 3-5 years 1,778,493 1,838,360 Leasehold improvements 10-15 years 577,068 577,068 Finance leases – right to use 5 years 45,951 - Vehicles 3 years 10,020 10,020 Construction in process 181,284 80,682 Property, plant and equipment, gross 23,328,947 23,069,538 Less accumulated depreciation (13,609,543 ) (13,420,301 ) Property, plant and equipment, net $ 9,719,404 $ 9,649,237 The Company is engaged in a project involving the expansion of the manufacturing, warehouse and distribution facilities of the Company’s wholly-owned subsidiary, KINPAK Inc. (“Kinpak”) in Montgomery, Alabama, as well as the purchase and installation of associated machinery and equipment (the “Expansion Project”). As of March 31, 2019, the remaining work on the Expansion Project involves the completion of a bottle filling line and the purchase and installation of additional equipment. At March 31, 2019, the Company’s expenditures on the Expansion Project aggregated approximately $6.1 million. The total cost of the Expansion Project is estimated to be approximately $6.7 million. Construction in progress at March 31, 2019 and December 31, 2018 includes $74,215 and $46,996, respectively, relating to the expansion of Kinpak’s manufacturing, warehouse and distribution facilities. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
LEASES | 5 . LEASES The Company has one operating lease and two 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 for the three months ended March 31, 2019 was approximately $25,000, compared to rent expense of approximately $24,000 for the three months ended March 31, 2018. At March 31, 2019, the Company has a right to use asset and a corresponding liability of $412,672 related to the operating lease. Set forth below is a schedule of future minimum rent payments under the operating lease. Year ending March 31, 2020 $ 94,800 2021 94,800 2022 94,800 2023 94,800 2024 71,100 Total future minimum lease payments 450,300 Less imputed interest (37,628 ) Total operating lease liability $ 412,672 The Company’s two finance leases relate to office equipment. See Note 4 for right to use asset information regarding the carrying value of the finance leases 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 quarter ended March 31, 2019 are set forth below. Quarter Ended March 31, 2019 Operating lease expense $ 25,000 Finance leases amortization 5,000 Finance lease interest 205 Total lease expense $ 30,205 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 March 31, 2019 are set forth below: March 31, 2019 Remaining lease term – operating lease 4.75 years Weighted average remaining lease term – finance leases 2.77 years Discount rate – operating lease 3.7 % Weighted average discount rate – finance leases 2.6 % |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | 6 . INTANGIBLE ASSETS The Company's intangible assets at March 31, 2019 and December 31, 2018 consisted of the following: March 31, 2019 Intangible Assets Cost Accumulated Net Patents $ 622,733 $ 453,057 $ 169,676 Trade names and trademarks 1,649,880 567,933 1,081,947 Customer list 525,663 74,469 451,194 Product formulas 262,832 37,235 225,597 Royalty rights 160,000 101,682 58,318 Total intangible assets $ 3,221,108 $ 1,234,376 $ 1,986,732 December 31, 2018 Intangible Assets Cost Accumulated Net Patents $ 622,733 $ 439,972 $ 182,761 Trade names and trademarks 1,649,880 561,449 1,088,431 Customer list 525,663 48,186 477,477 Product formulas 262,832 24,093 238,739 Royalty rights 160,000 97,196 62,804 Total intangible assets $ 3,221,108 $ 1,170,896 $ 2,050,212 Amortization expense related to intangible assets was $63,480 and $17,570 for the three months ended March 31, 2019 and 2018. |
Revolving Line of Credit
Revolving Line of Credit | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019, 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. At March 31, 2019 and December 31, 2018, the Company had no borrowings under the revolving line of credit provided by the Business Loan Agreement. |
Long Term Debt
Long Term Debt | 3 Months Ended |
Mar. 31, 2019 | |
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 a 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 1.2 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 March 31, 2019, the Company was in compliance with these financial covenants. Through March 31, 2019, of the $4,500,000 proceeds of the Bond sale, approximately $2,343,000 has been applied to reimburse Kinpak for Expansion Project expenditures and approximately $54,000 was paid directly to other parties for certain transaction costs. The remaining amount is held in a custodial account and may be drawn by Kinpak from time to time to fund additional expenditures related to the Expansion 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 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. At March 31, 2019 and December 31, 2018, the Company was obligated under lease agreements covering equipment utilized in the Company’s operations. The equipment leases, aggregating approximately $43,000 and $31,000 at March 31, 2019 and December 31, 2018, respectively, have maturities through 2024 and carry an interest rates ranging from 2% to 4% per annum. The equipment leases are classified as finance leases. During each of the three months ended March 31, 2019 and 2018, the Company paid approximately $5,200 ($5,000 principal and $200 interest), under these lease agreements. The following table provides information regarding the Company’s long-term debt at March 31, 2019 and December 31, 2018: Current Portion Long Term Portion March 31, December 31, March 31, December 31, Obligations related to industrial development bond financing $ 249,558 $ 247,985 $ 3,910,969 $ 3,974,256 Note payable related to asset acquisition 178,980 177,701 635,047 680,274 Equipment leases 22,823 19,593 20,383 11,596 Total principal of long term debt 451,361 445,279 4,566,399 4,666,126 Debt issuance costs (19,616 ) (19,616 ) (147,117 ) (152,021 ) Total long term debt $ 431,745 $ 425,663 $ 4,419,282 $ 4,514,105 Required principal payments under the Company’s long term obligations are set forth below: Twelve month period ending March 31, 2020 $ 451,361 2021 451,853 2022 458,826 2023 472,853 2024 352,615 Thereafter 2,830,252 Total $ 5,017,760 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 9. RELATED PARTY TRANSACTIONS During the three months ended March 31, 2019 and 2018, 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 and pays certain business related expenditures for the affiliated companies, for which the Company is reimbursed. During the three months ended March 31, 2019 and 2018, sales to the affiliated companies aggregated approximately $752,000 and $820,000, respectively; fees for administrative services aggregated approximately $155,000 and $149,000, respectively; and amounts billed to the affiliated companies to reimburse the Company for business related expenditures made on behalf of the affiliated companies aggregated approximately $32,000 and $29,000, respectively. The Company had accounts receivable from the affiliated companies in connection with the product sales, administrative services and business related expenses aggregating approximately $1,517,000 and $1,046,000 at March 31, 2019 and December 31, 2018, 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 $27,000 ($10,500 for research and development services and $16,500 for charter boat services that the Company used to provide sales incentives for external sales representatives) and $15,000 ($10,500 for research and development services and $4,500 for charter boat services that the Company used to provide sales incentives for external sales representatives) for the three months ended March 31, 2019 and 2018, respectively. Expenditures for the research and development services are included in the consolidated statements of operations within selling and administrative expenses. Expenditures for the charter boat services are included in the 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 March 31, 2019 and 2018, the Company paid an aggregate of approximately $225,000 and $188,000, respectively, in insurance premiums on policies obtained through the insurance broker. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
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 2019 2018 Earnings per common share –Basic and Diluted Net income $ 715,170 $ 523,380 Weighted average number of common shares outstanding 9,363,368 9,254,580 Earnings per common share – Basic $ 0.08 $ 0.06 Earnings per common share – Diluted Net income $ 715,170 $ 523,380 Weighted average number of common shares outstanding 9,363,368 9,254,580 Dilutive effect of outstanding stock options 10,962 42,712 Weighted average number of common shares outstanding - Diluted 9,374,330 9,297,292 Earnings per common share - Diluted $ 0.08 $ 0.06 The Company had no stock options outstanding at March 31, 2019 and 2018, respectively, that were antidilutive and therefore not included in the diluted earnings per common share calculation. |
Securities Authorized for Issua
Securities Authorized for Issuance Under Equity Compensation Plans | 3 Months Ended |
Mar. 31, 2019 | |
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, 2019 and 2018, and at March 31, 2019, there was no unrecognized compensation expense related to stock No stock awards were issued during the three months ended March 31, 2019 and 2018. In 2010, the Company granted, under its 2018 Non-Qualified Stock Option Plan, stock options to purchase 20,000 shares of its common stock at an exercise price per share of $2.07. The stock options expire on April 25, 2020. |
Cash Dividends
Cash Dividends | 3 Months Ended |
Mar. 31, 2019 | |
Cash Dividends [Abstract] | |
CASH DIVIDENDS | 12. CASH DIVIDENDS 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. 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. There were 9,254,580 shares of common stock outstanding on April 2, 2018; therefore, dividends aggregating $555,275 were paid on April 16, 2018. |
Customer Concentration
Customer Concentration | 3 Months Ended |
Mar. 31, 2019 | |
Customer Concentration [Abstract] | |
CUSTOMER CONCENTRATION | 13. CUSTOMER CONCENTRATION During the three months ended March 31, 2019 and 2018, the Company had net sales to one customer that constituted in excess of 10% of its net sales. Net sales to this customer accounted for approximately 25.6% and 22.0% of consolidated net sales, respectively, for the three months ending March 31, 2019 and 2018. This customer also comprised approximately 35.0% and 25.2% of the Company’s gross trade accounts receivable, respectively, at March 31, 2019 and December 31, 2018. |
Summary of Accounting Policies
Summary of Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
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 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, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019. 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, 2018. |
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, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | March 31, 2019 December 31, 2018 Raw materials $ 4,808,916 $ 4,320,131 Finished goods 8,000,017 8,049,791 Inventories, gross 12,808,933 12,369,922 Inventory reserves (284,109 ) (284,109 ) Inventories, net $ 12,524,824 $ 12,085,813 |
Property, Plant & Equipment (Ta
Property, Plant & Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | Estimated Useful Life March 31, 2019 December 31, 2018 Land $ 278,325 $ 278,325 Building and Improvements 30 years 9,565,791 9,548,922 Manufacturing and warehouse equipment 6-20 years 10,892,015 10,736,161 Office equipment and furniture 3-5 years 1,778,493 1,838,360 Leasehold improvements 10-15 years 577,068 577,068 Finance leases – right to use 5 years 45,951 - Vehicles 3 years 10,020 10,020 Construction in process 181,284 80,682 Property, plant and equipment, gross 23,328,947 23,069,538 Less accumulated depreciation (13,609,543 ) (13,420,301 ) Property, plant and equipment, net $ 9,719,404 $ 9,649,237 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of future minimum rent payments | Year ending March 31, 2020 $ 94,800 2021 94,800 2022 94,800 2023 94,800 2024 71,100 Total future minimum lease payments 450,300 Less imputed interest (37,628 ) Total operating lease liability $ 412,672 |
Schedule of components lease costs, lease term and discount rate | Quarter Ended March 31, 2019 Operating lease expense $ 25,000 Finance leases amortization 5,000 Finance lease interest 205 Total lease expense $ 30,205 March 31, 2019 Remaining lease term – operating lease 4.75 years Weighted average remaining lease term – finance leases 2.77 years Discount rate – operating lease 3.7 % Weighted average discount rate – finance leases 2.6 % |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible Assets Cost Accumulated Net Patents $ 622,733 $ 453,057 $ 169,676 Trade names and trademarks 1,649,880 567,933 1,081,947 Customer list 525,663 74,469 451,194 Product formulas 262,832 37,235 225,597 Royalty rights 160,000 101,682 58,318 Total intangible assets $ 3,221,108 $ 1,234,376 $ 1,986,732 December 31, 2018 Intangible Assets Cost Accumulated Net Patents $ 622,733 $ 439,972 $ 182,761 Trade names and trademarks 1,649,880 561,449 1,088,431 Customer list 525,663 48,186 477,477 Product formulas 262,832 24,093 238,739 Royalty rights 160,000 97,196 62,804 Total intangible assets $ 3,221,108 $ 1,170,896 $ 2,050,212 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule 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 $ 249,558 $ 247,985 $ 3,910,969 $ 3,974,256 Note payable related to asset acquisition 178,980 177,701 635,047 680,274 Equipment leases 22,823 19,593 20,383 11,596 Total principal of long term debt 451,361 445,279 4,566,399 4,666,126 Debt issuance costs (19,616 ) (19,616 ) (147,117 ) (152,021 ) Total long term debt $ 431,745 $ 425,663 $ 4,419,282 $ 4,514,105 |
Schedule of principal payments under long term obligations | Twelve month period ending March 31, 2020 $ 451,361 2021 451,853 2022 458,826 2023 472,853 2024 352,615 Thereafter 2,830,252 Total $ 5,017,760 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted earnings per common share | Three Months Ended 2019 2018 Earnings per common share –Basic and Diluted Net income $ 715,170 $ 523,380 Weighted average number of common shares outstanding 9,363,368 9,254,580 Earnings per common share – Basic $ 0.08 $ 0.06 Earnings per common share – Diluted Net income $ 715,170 $ 523,380 Weighted average number of common shares outstanding 9,363,368 9,254,580 Dilutive effect of outstanding stock options 10,962 42,712 Weighted average number of common shares outstanding - Diluted 9,374,330 9,297,292 Earnings per common share - Diluted $ 0.08 $ 0.06 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) | Jan. 02, 2019USD ($) |
Recent Accounting Pronouncements (Textual) | |
Operating lease right to use asset and liability | $ 432,000 |
Office equipment | $ 27,000 |
Inventories (Details)
Inventories (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Summary of inventories | ||
Raw materials | $ 4,808,916 | $ 4,320,131 |
Finished goods | 8,000,017 | 8,049,791 |
Inventories, gross | 12,808,933 | 12,369,922 |
Inventory reserves | (284,109) | (284,109) |
Inventories, net | $ 12,524,824 | $ 12,085,813 |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Inventories (Textual) | ||
Inventories managed at the customer's warehouses | $ 468,000 | $ 495,000 |
Property, Plant & Equipment (De
Property, Plant & Equipment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Summary of property, plant and equipment | ||
Land | $ 278,325 | $ 278,325 |
Building and Improvements | 9,565,791 | 9,548,922 |
Manufacturing and warehouse equipment | 10,892,015 | 10,736,161 |
Office equipment and furniture | 1,778,493 | 1,838,360 |
Leasehold improvements | 577,068 | 577,068 |
Finance leases - right to use | 45,951 | |
Vehicles | 10,020 | 10,020 |
Construction in process | 181,284 | 80,682 |
Property, plant and equipment, gross | 23,328,947 | 23,069,538 |
Less accumulated depreciation | (13,609,543) | (13,420,301) |
Property, plant and equipment, net | $ 9,719,404 | $ 9,649,237 |
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) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Property, Plant & Equipment (Textual) | ||
Construction in progress | $ 181,284 | $ 80,682 |
Kinpak Inc. [Member] | ||
Property, Plant & Equipment (Textual) | ||
Construction in progress | 74,215 | $ 46,996 |
Estimated total cost of expansion project | 6,700,000 | |
Aggregate Amount For Expansion Project | $ 6,100,000 |
Leases (Details)
Leases (Details) - Operating lease [Member] | Mar. 31, 2019USD ($) |
2020 | $ 94,800 |
2021 | 94,800 |
2022 | 94,800 |
2023 | 94,800 |
2024 | 71,100 |
Total future minimum lease payments | 450,300 |
Less imputed interest | (37,628) |
Total operating lease liability | $ 412,672 |
Leases (Details1)
Leases (Details1) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease expense | $ 25,000 |
Finance leases amortization | 5,000 |
Finance lease interest | 205 |
Total lease expense | $ 30,205 |
Remaining lease term – operating lease | 4 years 9 months |
Weighted average remaining lease term - finance leases | 2 years 9 months 7 days |
Discount rate - operating lease | 3.70% |
Weighted average discount rate - finance leases | 2.60% |
Leases (Details Textual)
Leases (Details Textual) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Leases (Textual) | |||
Expires date | Dec. 31, 2023 | ||
Annual minimum base rent | $ 94,800 | ||
Operating lease expense | $ 25,000 | ||
Annual lease, description | 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. | ||
Rent expense | $ 24,000 | ||
Operating lease right to use asset and corresponding liability | $ 412,672 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | $ 3,221,108 | $ 3,221,108 |
Intangible assets, Accumulated Amortization | 1,234,376 | 1,170,896 |
Intangible assets, Net | 1,986,732 | 2,050,212 |
Patents [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 622,733 | 622,733 |
Intangible assets, Accumulated Amortization | 453,057 | 439,972 |
Intangible assets, Net | 169,676 | 182,761 |
Trade names and trademarks [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 1,649,880 | 1,649,880 |
Intangible assets, Accumulated Amortization | 567,933 | 561,449 |
Intangible assets, Net | 1,081,947 | 1,088,431 |
Customer list [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 525,663 | 525,663 |
Intangible assets, Accumulated Amortization | 74,469 | 48,186 |
Intangible assets, Net | 451,194 | 477,477 |
Product formulas [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 262,832 | 262,832 |
Intangible assets, Accumulated Amortization | 37,235 | 24,093 |
Intangible assets, Net | 225,597 | 238,739 |
Royalty rights [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, Cost | 160,000 | 160,000 |
Intangible assets, Accumulated Amortization | 101,682 | 97,196 |
Intangible assets, Net | $ 58,318 | $ 62,804 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Intangible Assets (Textual) | ||
Amortization expense related to intangible assets | $ 63,480 | $ 17,570 |
Revolving Line of Credit (Detai
Revolving Line of Credit (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Aug. 31, 2018 | Mar. 31, 2019 | |
Revolving Line of Credit (Textual) | ||
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. 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. | |
Business Loan Agreement [Member] | ||
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 | 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 | |
Majority shareholder's ownership, percentage | 50.00% |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Summary of long term debt | ||
Total principal of long term debt, Current Portion | $ 451,361 | $ 445,279 |
Total principal of long term debt, Long Term Portion | 4,566,399 | 4,666,126 |
Debt issuance costs, Current Portion | (19,616) | (19,616) |
Debt issuance costs, Long Term Portion | (147,117) | (152,021) |
Total long term debt, Current Portion | 431,745 | 425,663 |
Total long term debt, Long Term Portion | 4,419,282 | 4,514,105 |
Obligations related to industrial development bond financing [Member] | ||
Summary of long term debt | ||
Obligations related to industrial development bond financing, Current Portion | 249,558 | 247,985 |
Obligations related to industrial development bond financing, Long Term portion | 3,910,969 | 3,974,256 |
Note payable related to asset acquisition [Member] | ||
Summary of long term debt | ||
Note payable related to asset acquisition, Current Portion | 178,980 | 177,701 |
Note payable related to asset acquisition, Long Term Portion | 635,047 | 680,274 |
Capitalized Equipment Leases [Member] | ||
Summary of long term debt | ||
Equipment leases, Current Portion | 22,823 | 19,593 |
Equipment leases, Long Term Portion | $ 20,383 | $ 11,596 |
Long Term Debt (Details 1)
Long Term Debt (Details 1) | Mar. 31, 2019USD ($) |
Summary of principal payments under Company's long term obligations | |
2020 | $ 451,361 |
2021 | 451,853 |
2022 | 458,826 |
2023 | 472,853 |
2024 | 352,615 |
Thereafter | 2,830,252 |
Total | $ 5,017,760 |
Long Term Debt (Details Textual
Long Term Debt (Details Textual) | 1 Months Ended | 3 Months Ended | ||
Sep. 26, 2017USD ($) | Mar. 31, 2019USD ($)Installments | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
Industrial Development Bond Financing [Member] | ||||
Long Term Debt (Textual) | ||||
Term loan, description | The $4,500,000 proceeds of the Bond sale, approximately $2,343,000 has been applied to reimburse Kinpak for Expansion 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 | |||
Proceeds of the bond sale | $ 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 1.2 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. | |||
Other Long Term Obligations [Member] | ||||
Long Term Debt (Textual) | ||||
Aggregate equipment lease | $ 43,000 | $ 31,000 | ||
Maturity period for capital lease | Maturities through 2024 | |||
Percentage of interest rates | 2.00% | 4.00% | ||
Promissory note, description | The Company's agreement to purchase the assets of 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). | |||
Monthly 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 | $ 5,200 | $ 5,200 | ||
Principal under lease agreement | 5,000 | 5,000 | ||
Interest under lease agreement | $ 200 | $ 200 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Related Party Transactions (Textual) | |||
Sales to the affiliated companies | $ 752,000 | $ 820,000 | |
Aggregate payments to affiliated entity | 27,000 | 15,000 | |
Administrative fees | 155,000 | 149,000 | |
Receivables due from affiliated companies | 1,517,000 | $ 1,046,000 | |
Reimburse business related expenditures | 32,000 | 29,000 | |
Insurance Broker [Member] | |||
Related Party Transactions (Textual) | |||
Insurance premiums paid | 225,000 | 188,000 | |
Service [Member] | |||
Related Party Transactions (Textual) | |||
Charter boat services | 16,500 | 4,500 | |
Research and development costs | $ 10,500 | $ 10,500 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings per common share - Basic | ||
Net income | $ 715,170 | $ 523,380 |
Weighted average number of common shares outstanding | 9,363,368 | 9,254,580 |
Earnings per common share - Basic | $ 0.08 | $ 0.06 |
Earnings per common share - Diluted | ||
Net income | $ 715,170 | $ 523,380 |
Weighted average number of common shares outstanding | 9,363,368 | 9,254,580 |
Dilutive effect of outstanding stock options | 10,962 | 42,712 |
Weighted average number of common shares outstanding - Diluted | 9,374,330 | 9,297,292 |
Earnings per common share - Diluted | $ 0.08 | $ 0.06 |
Securities Authorized for Iss_2
Securities Authorized for Issuance Under Equity Compensation Plans (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Securities Authorized for Issuance Under Equity Compensation Plans (Textual) | |
Aggregating shares under stock plan | shares | 20,000 |
Exercise price | $ / shares | $ 2.07 |
Expiring date | Apr. 25, 2020 |
Cash Dividends (Details)
Cash Dividends (Details) - USD ($) | 1 Months Ended | |||||
Apr. 19, 2019 | Apr. 16, 2018 | Apr. 05, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Apr. 02, 2018 | |
Cash Dividends (Textual) | ||||||
Common stock, shares outstanding | 9,366,119 | 9,338,191 | ||||
Majority Shareholder [Member] | ||||||
Cash Dividends (Textual) | ||||||
Common stock, shares outstanding | 9,254,580 | |||||
Dividends paid to common shareholders | $ 555,275 | |||||
Dividends paid per common share | $ 0.06 | |||||
Majority Shareholder [Member] | Subsequent Event [Member] | ||||||
Cash Dividends (Textual) | ||||||
Common stock, shares outstanding | 9,366,119 | |||||
Dividends paid to common shareholders | $ 468,306 | |||||
Dividends paid per common share | $ 0.05 |
Customer Concentration (Details
Customer Concentration (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Customer Concentration (Textual) | |||
Customer Concentration percentage | 10.00% | 10.00% | |
Sales Revenue, Net [Member] | |||
Customer Concentration (Textual) | |||
Customer Concentration percentage | 25.60% | 22.00% | |
Accounts Receivable [Member] | |||
Customer Concentration (Textual) | |||
Customer Concentration percentage | 35.00% | 25.20% |