Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 30, 2018 | Jun. 30, 2017 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | SCOTTS LIQUID GOLD INC | ||
Entity Central Index Key | 88,000 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | SLGD | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 23,165,002 | ||
Entity Common Stock, Shares Outstanding | 12,023,716 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Net sales | $ 42,186,200 | $ 35,228,400 |
Operating costs and expenses: | ||
Cost of sales | 22,820,100 | 20,036,700 |
Advertising | 883,500 | 1,567,200 |
Selling | 6,543,100 | 5,838,000 |
General and administrative | 4,314,100 | 4,571,700 |
Total operating costs and expenses | 34,560,800 | 32,013,600 |
Income from operations | 7,625,400 | 3,214,800 |
Other income | 12,600 | |
Interest expense | (135,900) | (124,800) |
Income before income taxes | 7,489,500 | 3,102,600 |
Income tax expense | (2,827,100) | (1,248,100) |
Net income | $ 4,662,400 | $ 1,854,500 |
Net income per common share | ||
Basic | $ 0.39 | $ 0.16 |
Diluted | $ 0.38 | $ 0.15 |
Weighted average shares outstanding | ||
Basic | 11,852,271 | 11,735,202 |
Diluted | 12,267,240 | 11,971,249 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 4,113,800 | $ 2,097,300 |
Accounts receivable, net | 3,104,200 | 3,456,400 |
Inventories, net | 8,786,700 | 5,641,300 |
Income taxes receivable | 7,000 | |
Prepaid expenses | 285,100 | 319,600 |
Total current assets | 16,289,800 | 11,521,600 |
Property and equipment, net | 908,800 | 578,400 |
Deferred tax asset | 384,200 | 1,392,600 |
Goodwill | 1,520,600 | 1,520,600 |
Intangible assets, net | 6,148,400 | 6,769,100 |
Other assets | 49,100 | 51,000 |
Total assets | 25,300,900 | 21,833,300 |
Current liabilities: | ||
Accounts payable | 1,655,900 | 1,939,400 |
Accrued expenses | 935,400 | 964,800 |
Income taxes payable | 365,900 | |
Current maturities of long-term debt | 800,000 | 800,000 |
Total current liabilities | 3,757,200 | 3,704,200 |
Line-of-credit | 0 | 750,000 |
Long-term debt, net of current maturities and debt issuance costs | 362,400 | 1,137,300 |
Total liabilities | 4,119,600 | 5,591,500 |
Shareholders’ equity: | ||
Preferred stock, no par value, authorized 20,000,000 shares; no shares issued and outstanding | ||
Common stock; $0.10 par value, authorized 50,000,000 shares; issued and outstanding 11,885,839 shares (2017) and 11,749,589 shares (2016) | 1,188,600 | 1,175,000 |
Capital in excess of par | 6,441,300 | 6,177,800 |
Retained earnings | 13,551,400 | 8,889,000 |
Total shareholders’ equity | 21,181,300 | 16,241,800 |
Total liabilities and shareholders’ equity | $ 25,300,900 | $ 21,833,300 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock par value | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 11,885,839 | 11,749,589 |
Common stock, shares outstanding | 11,885,839 | 11,749,589 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Total | Common Stock | Capital in Excess of Par | Retained Earnings |
Beginning Balance, Value at Dec. 31, 2015 | $ 14,095,800 | $ 1,171,100 | $ 5,901,100 | $ 7,023,600 |
Beginning Balance, Shares at Dec. 31, 2015 | 11,710,745 | 11,710,745 | ||
Excess tax benefit, Value | $ 10,900 | 10,900 | ||
Stock-based compensation, Value | 248,600 | 248,600 | ||
Stock options exercised, Value | 32,000 | $ 3,900 | 28,100 | |
Stock options exercised, Shares | 38,844 | |||
Net income | 1,854,500 | 1,854,500 | ||
Ending Balance, Value at Dec. 31, 2016 | $ 16,241,800 | $ 1,175,000 | 6,177,800 | 8,889,000 |
Ending Balance, Shares at Dec. 31, 2016 | 11,749,589 | 11,749,589 | ||
Stock-based compensation, Value | $ 242,300 | 242,300 | ||
Stock options exercised, Value | 34,800 | $ 13,600 | 21,200 | |
Stock options exercised, Shares | 136,250 | |||
Net income | 4,662,400 | 4,662,400 | ||
Ending Balance, Value at Dec. 31, 2017 | $ 21,181,300 | $ 1,188,600 | $ 6,441,300 | $ 13,551,400 |
Ending Balance, Shares at Dec. 31, 2017 | 11,885,839 | 11,885,839 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 4,662,400 | $ 1,854,500 |
Adjustment to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 799,900 | 458,000 |
Stock-based compensation | 242,300 | 248,600 |
Excess tax benefit | 10,900 | |
Deferred income taxes | 1,008,400 | 1,163,600 |
Change in operating assets and liabilities: | ||
Accounts receivable | 352,200 | (2,441,700) |
Inventories | (3,145,400) | (542,700) |
Prepaid expenses and other assets | 36,400 | (92,400) |
Income taxes payable (receivable) | 372,900 | (12,300) |
Accounts payable and accrued expenses | (312,900) | 862,500 |
Total adjustments to net income | (646,200) | (345,500) |
Net cash provided by operating activities | 4,016,200 | 1,509,000 |
Cash flows from investing activities: | ||
Cash paid for Acquisition | (9,000,000) | |
Purchase of property and equipment | (484,500) | (283,600) |
Net cash used by investing activities | (484,500) | (9,283,600) |
Cash flows from financing activities: | ||
Borrowing under line-of-credit | 3,694,100 | |
Repayments under line-of-credit | (750,000) | (2,944,100) |
Proceeds from issuance of long-term debt | 2,400,000 | |
Repayments of long-term debt | (800,000) | (400,000) |
Debt issuance costs | (75,200) | |
Proceeds from exercise of stock options | 34,800 | 32,000 |
Net cash (used) provided by financing activities | (1,515,200) | 2,706,800 |
Net increase (decrease) in cash and cash equivalents | 2,016,500 | (5,067,800) |
Cash and cash equivalents, beginning of period | 2,097,300 | 7,165,100 |
Cash and cash equivalents, end of period | 4,113,800 | 2,097,300 |
Supplemental disclosures: | ||
Cash paid during the period for interest | 110,800 | $ 112,300 |
Cash paid during the period for income taxes | $ 1,445,700 |
Consolidated Statements of Cas7
Consolidated Statements of Cash Flows - (Parenthetical) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Supplemental disclosure of non-cash activity: | |
Inventory | $ 400,000 |
Intangible assets | 7,079,400 |
Goodwill | 1,520,600 |
Total assets acquired | $ 9,000,000 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | Note 1. Organization and Summary of Significant Accounting Policies (a) Company Background Scott’s Liquid Gold-Inc. (a Colorado corporation) was incorporated on February 15, 1954. Scott’s Liquid Gold-Inc. and its wholly-owned subsidiaries (collectively, the “Company,” “we,” “our” or “us”) develop, manufacture, market and sell quality household and skin and hair care products. We are also a distributor in the United States of Montagne Jeunesse skin sachets and Batiste Dry Shampoo manufactured by two other companies. Our business is comprised of two segments, household products and skin and hair care products. (b) Principles of Consolidation Our Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. (c) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the 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. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, intangible asset useful lives and amortization method, and stock-based compensation. Actual results could differ from our estimates. (d) Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. (e) Sale of Accounts Receivable On March 16, 2011, we entered into a financing agreement with Wells Fargo Bank, National Association (“Wells Fargo”) for the purpose of further lowering the cost of borrowing associated with the financing of our accounts receivable. Pursuant to this agreement, we were able to sell accounts receivable from Wal-Mart at a discount to Wells Fargo. On January 29, 2016 we terminated our agreement with Wells Fargo due to Wal-Mart changing its accounts payable policy. In 2017 and 2016, we sold approximately $0 and $306,800, respectively, of our relevant accounts receivable to Wells Fargo for approximately $0 and $305,200, respectively. The difference between the invoiced amount of the receivable and the cash that we received from Wells Fargo was a cost to us. This cost was in lieu of any cash discount our customer would have been allowed and, thus, was treated in a manner consistent with standard trade discounts granted to our customers. The reporting of the sale of accounts receivable to Wells Fargo was treated as a sale rather than as a secured borrowing. As a result, affected accounts receivable were relieved from the Company’s financial statements upon receipt of the cash proceeds. (f) Inventories Valuation and Reserves Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We estimate an inventory reserve for slow moving and obsolete products and raw materials based upon, among other things, an assessment of historical and anticipated sales of our products. In the event that actual results differ from our estimates, the results of future periods may be impacted. (g) Property, Plant and Equipment Property, plant and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from three to 20 years. Production equipment and production support equipment are estimated to have useful lives of 15 to 20 years and three to 10 years, respectively. Office furniture and office machines are estimated to have useful lives of 10 to 20 and three to five years, respectively. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the asset or provide improved efficiency are capitalized. (h) Intangible Assets Intangible assets consist of customer relationships, trade names, formulas and batching processes and a non-compete agreement. The fair value of the intangible assets is amortized over their estimated useful lives and range from a period of five to 15 years and are reviewed for impairment when changes in market circumstances occur and written down to fair value if impaired. ( i ) Goodwill Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired in the Acquisition discussed in Notes 4 and 5. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests at the reporting unit level, which include the review of factors to determine if it is more-likely-than-not that the fair values of its reporting units were below carrying value. In certain circumstances, these assets are written down to fair value if impaired. (j) Financial Instruments Financial instruments which potentially subject us to concentrations of credit risk include cash and cash equivalents and accounts receivable. We maintain our cash balances in the form of bank demand deposits with financial institutions that we believe are creditworthy. As of December 31, 2017, and periodically throughout the year, we have maintained balances in various operating accounts in excess of federally insured limits. We establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. We have no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements. The recorded amounts for cash and cash equivalents, receivables, other current assets, accounts payable, accrued expenses, and current maturities of long-term debt approximate fair value due to the short-term nature of these financial instruments. The recorded amount of long-term debt approximates fair value and is estimated primarily based on current market rates for debt with similar terms and remaining maturities. At December 31, 2017 we had long-term debt of $1,200,000 and no outstanding balance on our line-of-credit. At December 31, 2016 we had long-term debt of $2,000,000 and a $750,000 outstanding balance on our line-of-credit. (k) Income Taxes Income taxes reflect the tax effects of transactions reported in the Consolidated Financial Statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is provided when it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits or expense. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the Consolidated Statements of Income or accrued on the Consolidated Balance Sheets. (l) Revenue Recognition Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until it is met. In our case, the criteria generally are met when we have an arrangement to sell a product, we have delivered the product in accordance with that arrangement, the sales price of the product is determinable and we believe that we will be paid for the sale. We establish reserves for customer returns of our products and customer allowances. We estimate these reserves based upon, among other things, an assessment of historical trends, information from customers and anticipated returns related to current sales activity. These reserves are established in the period of sale and reduce our revenue in that period. Our reserve for customer allowances includes primarily reserves for trade promotions to support price features, displays, slotting fees and other merchandising of our products to our customers. The actual level of returns and customer allowances are influenced by several factors, including the promotional efforts of our customers, changes in the mix of our customers, changes in the mix of the products we sell and the maturity of the product. We may change our estimates based on actual results and consideration of other factors that cause returns and allowances. In the event that actual results differ from our estimates, the results of future periods may be impacted. We also establish reserves for coupons, rebates and certain other promotional programs for consumers. We estimate these reserves based upon, among other things, an assessment of historical trends and current sales activity. These reserves are recorded as a reduction of revenue at the later of the date at which the revenue is recognized or the date at which the sale incentive is offered. In the event that actual results differ from our estimates, the results of future periods may be impacted. We have also established an allowance for doubtful accounts. We estimate this allowance based upon, among other things, an assessment of the credit risk of specific customers and historical trends. We believe our allowance for doubtful accounts is adequate to absorb any losses which may arise. In the event that actual losses differ from our estimates, the results of future periods may be impacted. At December 31, 2017 and December 31, 2016 approximately $1,069,700 and $1,184,700, respectively, had been reserved for as a reduction of accounts receivable. Trade promotions to our customers and incentives such as coupons and rebates to the consumer are deducted from gross sales and totaled $3,409,500 and $2,574,800 for the years ended December 31, 2017 and 2016, respectively. (m) Advertising Costs We expense advertising costs as incurred. (n) Stock-Based Compensation We account for share based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. We determine the estimated grant-date fair value of stock options using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including the estimated fair value of underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. The Company recognizes compensation costs ratably over the vesting period using the straight-line method, which approximates the service period. (o) Operating Costs and Expenses Classification Cost of sales includes costs associated with manufacturing and distribution including labor, materials, freight-in, purchasing and receiving, quality control, internal transfer costs, repairs, maintenance and other indirect costs, as well as warehousing and distribution costs. We classify shipping and handling costs comprised primarily of freight-out as selling expenses. Other selling expenses consist primarily of wages and benefits for sales and sales support personnel, travel, brokerage commissions and promotional costs, as well as certain other indirect costs. Shipping and handling costs totaled $2,614,300 and $1,799,900, for the years ended December 31, 2017 and 2016, respectively. General and administrative expenses consist primarily of wages and benefits associated with management and administrative support departments, business insurance costs, professional fees, amortization of intangible assets, office facility rent and related expenses and other general support costs. (p) Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Payments” In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” In May 2017, the FASB issued ASU 2017-09, “Compensation–Stock Compensation (Topic 718): Scope of Modification Accounting” In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” In June 2016, FASB issued ASU No. 2016-13, “ Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” . (q) Recently Adopted Accounting Standards In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment” |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 2. Inventories Inventories, consisting of materials, labor and overhead at December 31 were comprised of the following: 2017 2016 Finished goods $ 6,983,600 $ 2,668,700 Raw materials 1,811,200 3,035,000 Inventory reserve for obsolescence (8,100 ) (62,400 ) $ 8,786,700 $ 5,641,300 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property Plant And Equipment [Abstract] | |
Property, Plant and Equipment | Note 3. Property, Plant and Equipment Property, plant and equipment at December 31 were comprised of the following: 2017 2016 Production equipment $ 5,397,200 $ 4,995,600 Office furniture and equipment 706,200 674,600 Other 217,900 202,400 6,321,300 5,872,600 Less accumulated depreciation (5,412,500 ) (5,294,200 ) $ 908,800 $ 578,400 Depreciation expense for the years ended December 31, 2017 and 2016 was $154,100 and $135,200, respectively. |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisition | Note 4. Acquisition On June 30, 2016, Neoteric Cosmetics, Inc. (“Neoteric”), a wholly-owned subsidiary of the Company, entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Ultimark Products, Inc. (“Ultimark”) and consummated the transaction contemplated thereby (the “Acquisition”), pursuant to which Neoteric purchased from Ultimark all intellectual property assets and certain related assets owned by Ultimark as well as inventory of finished goods owned by Ultimark and used in connection with the manufacture, sale and distribution of the Prell ® ® ® |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 5. Goodwill and Intangible Assets Intangible assets consisted of the following: As of December 31, 2017 As of December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Intangible assets: Customer relationships $ 4,022,100 $ 603,300 $ 3,418,800 $ 4,022,100 $ 201,100 $ 3,821,000 Trade names 2,362,400 236,100 2,126,300 2,362,400 78,700 2,283,700 Formulas and batching processes 668,600 83,700 584,900 668,600 27,900 640,700 Non-compete agreement 26,300 7,900 18,400 26,300 2,600 23,700 7,079,400 931,000 6,148,400 7,079,400 310,300 6,769,100 Goodwill 1,520,600 1,520,600 Total intangible assets $ 7,669,000 $ 8,289,700 The amortization expense for the years ended December 31, 2017 and 2016 was $620,700 and $310,300, respectively. Estimated amortization expense for 2018 and subsequent years is as follows: 2018 $ 620,700 2019 620,700 2020 620,700 2021 617,600 2022 615,400 Thereafter 3,053,300 Total $ 6,148,400 |
Long-Term Debt and Line-of-Cred
Long-Term Debt and Line-of-Credit | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Line-of-Credit | Note 6. Long-Term Debt and Line-of- Credit On June 30, 2016, Neoteric and the Company, as borrowers, entered into a Credit Agreement, as amended (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (“Chase”), as lender, pursuant to which Chase provided a term loan and a revolving credit facility that was used to finance a portion of the Acquisition and for the Company’s general corporate purposes and working capital. The term loan amount is $2.4 million with quarterly payments fully amortized over three years and interest of (i) the LIBO Rate + 3.75% or (ii) the Prime Rate + 1.00%, with a floor of the one month LIBO Rate + 2.5%. At December 31, 2017, our rate was 5.10%. The revolving credit facility amount is $4 million with interest of (i) the LIBO Rate + 3.00% or (ii) the Prime Rate + 0.25%, with a floor of the one month LIBO Rate + 2.5%. At December 31, 2017, our rate was 4.35%. The revolving credit facility will terminate on June 30, 2019 or any earlier date on which the revolving commitment is otherwise terminated pursuant to the Credit Agreement. Under the Credit Agreement we are obligated to pay quarterly an unused commitment fee equal to 0.5% per annum on the daily amount of the undrawn portion of the revolving line-of-credit. The loans are secured by all of the assets of the Company and all of its subsidiaries. On January 10, 2018, the Company entered into the First Amendment to the Credit Agreement (the “First Amendment”) which lowered interest rates for the term loan and the revolving credit facility. The term loan bears interest of: (i) the LIBO Rate + 2.5%; or (ii) the Prime Rate, with a floor of the one month LIBO Rate + 2.5%. The revolving credit facility bears interest of (i) the LIBO Rate + 2.5% or (ii) the Prime Rate, with a floor of the one month LIBO Rate + 2.5%. There were no changes to any other key terms of the Credit Agreement. The Credit Agreement requires, among other things, that beginning on December 31, 2016, the Company maintain a Debt Service Coverage Ratio of no less than 1.25 to 1.0 and a Funded Indebtedness to Adjusted EBITDA Ratio of no greater than 3.0 to 1.0. The Credit Agreement also contains covenants typical of transactions of this type, including among others, limitations on the Company’s ability to: create, incur or assume any indebtedness or lien on our assets; pay dividends or make other distributions; redeem, retire or acquire the Company’s outstanding common stock, options, warrants or other rights; make fundamental changes to its corporate structure or business; make investments or asset sales; or engage in certain other activities as set forth in the Credit Agreement. The Company was in compliance with the covenants in the Credit Agreement as of December 31, 2017. Capitalized terms used but not defined shall have the meanings provided in the Credit Agreement. Maturities of long-term debt and line-of-credit are as follows as of December 31, 2017: 2018 $ 800,000 2019 400,000 1,200,000 Less unamortized debt issuance costs (37,600 ) Total $ 1,162,400 Debt issuance costs recognized as a component of interest expense for the years ended December 31, 2017 and 2016 were $25,100 and $12,500, respectively. These costs are amortized using the effective interest method over the term of the Credit Agreement. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 7. Income Taxes The provision for income tax for the years ended December 31 is as follows: 2017 2016 Current provision: Federal $ 1,806,900 $ 71,100 State 11,800 2,400 Total current provision 1,818,700 73,500 Deferred provision: Federal 858,800 1,071,300 State 149,600 103,300 Total deferred provision 1,008,400 1,174,600 Provision: Federal 2,665,700 1,142,400 State 161,400 105,700 Total provision $ 2,827,100 $ 1,248,100 Income tax expense at the statutory tax rate is reconciled to the overall income tax expense for the years ended December 31 as follows: 2017 2016 Federal income tax at statutory rates $ 2,546,400 $ 1,054,900 State income taxes, net of federal tax effect 228,900 94,800 Permanent differences 11,400 12,900 Nondeductible stock-based compensation 87,900 81,800 Benefit from domestic manufacturing deduction (229,300 ) - Impact of change in U.S. corporate income tax rate 193,200 - Other (11,400 ) 3,700 Provision for income taxes $ 2,827,100 $ 1,248,100 Deferred income taxes are based on estimated future tax effects of differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes given the provision of enacted tax laws. On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted which, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018, and resulted in a one-time adjustment to deferred tax assets and liabilities. The TCJA also repealed the domestic manufacturing deduction beginning in 2018. In 2017, we realized a one-time benefit from the domestic manufacturing deduction in the amount disclosed above. The net deferred tax assets and liabilities as of December 31, 2017 and 2016 are comprised of the following: 2017 2016 Deferred tax assets: Net operating loss carryforwards $ - $ 611,800 Tax credit and other carryforwards - 491,700 Accounts receivable 196,200 80,000 Inventories 114,400 60,800 Accrued vacation and bonus 24,500 32,600 Intangibles and Goodwill 82,600 113,800 Other 15,200 23,500 Total deferred tax assets 432,900 1,414,200 Deferred tax liabilities: Accumulated depreciation for tax purposes (48,700 ) (21,600 ) Total deferred tax liabilities (48,700 ) (21,600 ) Net deferred tax asset $ 384,200 $ 1,392,600 As of December 31, 2017, the Company has utilized all federal and state net operating loss carryovers of approximately $960,000 and $8,220,000, respectively. As of December 31, 2017, the Company also has utilized all federal tax credit carryforwards related to research and development efforts of approximately $300,000, and all alternative minimum tax credits of approximately $189,000. During the year ended December 31, 2016, the Company has early adopted ASU 2016-09 relating to stock compensation and appropriately recorded the cumulative effect adjustment to retained earnings. Accounting for uncertainty in income taxes is based on a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We recognize in our consolidated financial statements only those tax positions that are more-likely-than-not of being sustained as of the adoption date, based on the technical merits of the position. Each year we perform a comprehensive review of our material tax positions. Our policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. As we had no uncertain tax benefits during 2017 and 2016, we had no accrued interest or penalties related to uncertain tax positions in either year. We and our subsidiaries are subject to the following material taxing jurisdictions: United States and Colorado. The tax years that remain open to examination by the Internal Revenue Service are 2014 and years thereafter. The tax years that remain open to examination by the State of Colorado are 2013 and years thereafter. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Shareholders' Equity | Note 8. Shareholders’ Equity During 2017, we granted: (i) options to acquire 16,560 shares of our common stock to employees at prices ranging between $1.80 and $2.25 per share; and (ii) options to acquire 30,000 shares of our common stock to a non-employee board member at a price of $2.25 per share. During 2016, we granted: (i) options to acquire 45,576 shares of our common stock to employees at prices ranging between $1.20 and $1.26 per share; and (ii) options to acquire 90,072 shares of our common stock to non-employee board members at a price of $1.26 per share. The weighted average fair market value of the options granted during the years ended December 31 were estimated on the date of grant, using a Black-Scholes option pricing model with the following assumptions: 2017 2016 Expected life of options (using the “simplified” method) 4 years 4 years Average risk-free interest rate 1.44% 1.10% Average expected volatility of stock 78% 87% Expected dividend rate None None Fair value of options granted $55,100 $104,935 Compensation cost related to stock options recognized in operating results (included in general and administrative expenses) totaled $242,300 and $248,600 for the years ended December 31, 2017 and 2016, respectively. Approximately $436,200 of total unrecognized compensation costs related to non-vested stock options is expected to be recognized over the next In 2005, we adopted a stock option plan for our employees, officers and directors (the “2005 Plan”). At the Annual Shareholders’ Meeting in May 2011, shareholders approved an amendment to the 2005 Plan to increase the number of shares issuable under the plan from 1,500,000 shares to a total of 3,000,000 shares. In 2015, we adopted a stock option plan for our employees, officers and directors (the “2015 Plan”) to replace the 2005 Plan, which expired on March 31, 2015. At the Annual Shareholders’ Meeting in June 2015, shareholders approved the adoption of the 2015 Plan. Stock option activity under the 2005 and 2015 Plans are as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value 2005 Plan Maximum number of shares under the plan 3,000,000 Outstanding, December 31, 2015 676,513 $ 0.63 4.7 years $ 525,300 Granted - $ - Exercised (27,051 ) $ 0.64 Cancelled/Expired (21,149 ) $ 0.78 Outstanding, December 31, 2016 628,313 $ 0.63 3.8 years $ 510,000 Exercisable, December 31, 2016 445,818 $ 0.55 2.8 years $ 398,200 Available for issuance, December 31, 2016 - Granted - $ - Exercised (136,250 ) $ 0.26 Cancelled/Expired - $ - Outstanding, December 31, 2017 492,063 $ 0.73 3.8 years $ 1,067,000 Exercisable, December 31, 2017 396,646 $ 0.70 3.1 years $ 872,100 Available for issuance, December 31, 2017 - 2015 Plan Maximum number of shares under the plan 2,000,000 Outstanding, December 31, 2015 716,500 $ 1.27 8.4 years $ 102,100 Granted 135,648 $ 1.26 Exercised (11,793 ) $ 1.25 Cancelled/Expired (52,740 ) $ 1.25 Outstanding, December 31, 2016 787,615 $ 1.27 7.2 years $ 136,000 Exercisable, December 31, 2016 261,293 $ 1.27 6.5 years $ 45,500 Available for issuance, December 31, 2016 1,212,385 Granted 46,560 $ 2.18 Exercised - $ - Cancelled/Expired (49,491 ) $ 1.26 Outstanding, December 31, 2017 784,684 $ 1.32 6.4 years $ 1,238,200 Exercisable, December 31, 2017 422,335 $ 1.31 6.0 years $ 672,900 Available for issuance, December 31, 2017 1,215,316 A summary of additional information related to the options outstanding as of December 31, 2017 under the 2005 and 2015 Plans are as follows: Range of Exercise Prices Number of Options Weighted Average Remaining Contractual Life Weighted Average Exercise Price 2005 Plan $0.41-$0.62 131,563 0.4 years $ 0.43 $0.63-$0.86 360,500 5.0 years $ 0.84 Total 492,063 3.8 years $ 0.73 2015 Plan $1.20-$1.25 535,500 7.1 years $ 1.25 $1.26-$1.38 202,624 4.3 years $ 1.32 $1.80-$2.25 46,560 6.4 years $ 2.18 Total 784,684 6.4 years $ 1.32 We have an Employee Stock Ownership Plan (“Plan”) to provide retirement benefits for our employees. The Plan is designed to invest primarily in our common stock and is non-contributory on the part of our employees. Contributions to the Plan are discretionary as determined by our Board of Directors. We expense the cost of contributions to the Plan. No contributions were made to the Plan in 2017 and 2016. At December 31, 2017 and 2016, a total of 617,624 and 633,426 shares of our common stock, respectively, have been allocated and earned by our employees. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 9. Earnings per Share Per share data is determined by using the weighted average number of common shares outstanding. Common equivalent shares are considered only for diluted earnings per share, unless considered anti-dilutive. Common equivalent shares, determined using the treasury stock method, result from stock options with exercise prices that are below the average market price of the common stock. Basic earnings per share include no dilution and are computed by dividing income available to common shareholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential of securities that could share in our earnings. A reconciliation of the weighted average number of common shares outstanding for the years ended December 31 is as follows: 2017 2016 Common shares outstanding, beginning of the year 11,749,589 11,710,745 Weighted average common shares issued 102,682 24,457 Weighted average number of common shares outstanding 11,852,271 11,735,202 Dilutive effect of common share equivalents 414,969 236,047 Diluted weighted average number of common shares outstanding 12,267,240 11,971,249 Common stock equivalents that have been excluded from the calculation of earnings per share as of December 31 because they would have been anti-dilutive are as follows: 2017 2016 Stock options 89,136 787,615 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Note 10. Segment Information We operate in two different segments: household products and skin and hair care products. Our products are sold nationally and internationally (primarily Canada and China), directly through our sales force and indirectly through independent brokers and manufacturer’s representatives, to mass merchandisers, drugstores, supermarkets, hardware stores, e-commerce retailers, and other retail outlets and to wholesale distributors. We have chosen to organize our business around these segments based on differences in the products sold. Accounting policies for our segments are the same as those described in Note 1. We evaluate segment performance based on segment income or loss before income taxes. The following provides information on our segments as of and for the years ended December 31: 2017 Household Products Skin and Hair Care Products Corporate Total Net sales $ 5,668,100 $ 36,518,100 $ - $ 42,186,200 Operating (loss) income (327,800 ) 7,953,200 - 7,625,400 Identifiable assets 2,195,500 22,721,200 384,200 25,300,900 Capital and intangible asset expenditures 190,400 294,100 - 484,500 Depreciation and amortization 126,400 673,500 - 799,900 2016 Household Products Skin and Hair Care Products Corporate Total Net sales $ 5,992,600 $ 29,235,800 $ - $ 35,228,400 Operating (loss) income (1,042,100 ) 4,256,900 - 3,214,800 Identifiable assets 1,957,900 18,479,400 1,396,000 21,833,300 Capital and intangible asset expenditures 273,400 8,610,200 - 8,883,600 Depreciation and amortization 66,600 391,400 - 458,000 Corporate assets noted above are comprised of our deferred tax assets. In 2017 and 2016, Wal-Mart accounted for approximately $10,983,400 and $7,221,400, respectively, of our consolidated net sales, Ulta accounted for approximately $9,164,300 and $8,479,800, respectively, of our consolidated net sales, and TJ Maxx and Marshalls (collectively, “TJ Maxx”) together accounted for approximately $3,168,100 and $4,137,200, respectively, of our consolidated net sales. We sell both household products and skin and hair care products to Wal-Mart, but we sell only skin and hair care products to Ulta and TJ Maxx. These customers are not related to us. The outstanding accounts receivable from Wal-Mart accounted for 53.8% and 48.9% of our total accounts receivable at December 31, 2017 and 2016, respectively. The outstanding accounts receivable from Ulta accounted for 17.5% and 9.7% of our total accounts receivable at December 31, 2017 and 2016, respectively. The outstanding accounts receivable from TJ Maxx accounted for 0.0% and 16.3% of our total accounts receivable at December 31, 2017 and 2016, respectively. On July 17, 2017, our distribution agreement with Church & Dwight was amended such that, effective September 1, 2017, TJ Maxx was eliminated from the authorized specialty retailers to whom we distribute. A loss of Wal-Mart or Ulta could have a material adverse effect on us because it is uncertain whether our consumer base served by these customers would purchase our products at other retail outlets. No long-term contracts exist between us and these customers. |
Retirement Plans
Retirement Plans | 12 Months Ended |
Dec. 31, 2017 | |
Compensation And Retirement Disclosure [Abstract] | |
Retirement Plans | Note 11. Retirement Plans We have a 401(k) Profit Sharing Plan (“401(k) Plan”) covering our full-time employees who have completed four months of service as defined in the 401(k) Plan and are age 18 or older. Participants may defer up to 75% of their compensation up to the maximum limit determined by law. We may make discretionary “matching” contributions up to a maximum of 6% of each participant’s compensation, but only for those employees earning no more than $50,000 annually. Additionally, we can make discretionary “profit sharing” contributions to eligible employees. Participants are always fully vested in their contributions, matching contributions and allocated earnings thereon. Vesting in our profit sharing contribution is based on years of service, with a participant fully vested after five years. Our Company matching contributions totaled $7,000 in 2017 and 2016, respectively. We made no discretionary profit sharing contributions in 2017 and 2016. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12. Commitments and Contingencies Operating Leases On February 1, 2013, we entered into a lease with an unrelated third party for approximately 16,078 square feet of office space (the “Office Lease”) and approximately 113,620 square feet of manufacturing and warehouse space (the “Warehouse Lease”). Each of the Office Lease and the Warehouse Lease had an initial term of three years, with options to extend the term for two additional terms of three years each. Effective February 1, 2016, we exercised our first option to extend the term of the Office Lease and Warehouse Lease for three years. The initial rent for the Office Lease was $13.00 per square foot per annum, with annual 3% increases. The initial rent for the Warehouse Lease was $3.25 per square foot per annum, with annual 3% increases, and we will pay an additional $1.25 per square foot per annum as our share of the purchaser’s operating expenses under the Warehouse Lease (including taxes, insurance and common area maintenance charges). If certain uncontrollable operating expenses increase by more than 5% per year, our share of operating expenses under the Warehouse Lease may be increased. On March 25, 2016, we entered into a lease with an unrelated third party for approximately 53,440 square feet of warehouse space that connects to our current warehouse space (the “Expansion Lease”). The initial rent for Expansion Lease is $4.90 per square foot per annum, with annual increases ranging from 7% in the second year of the lease to 3% in the last two years of the lease. The term of the Expansion Lease will be coterminous with the Warehouse Lease and will be subject to all of the terms and conditions for the Warehouse Lease. The Office Lease and Warehouse Lease are subject to escalation clauses for rent, which have been straight-lined over the life of the respective lease agreements. Annual rental expense under the Office Lease and Warehouse Lease for 2017 was $216,700 and $912,800, respectively. Annual rental expense under the Office Lease and Warehouse Lease for 2016 was $227,900 and $555,300, respectively. We have entered into various operating lease agreements, primarily for office equipment. Annual rental expense under these leases totaled $47,800 and $42,300 in 2017 and 2016, respectively. Future minimum annual lease payments are as follows: 2018 $ 992,800 2019 90,800 $ 1,083,600 Contingencies We are subject to lawsuits from time to time in the ordinary course of business. While we expect those lawsuits not to have a material effect on us, an adverse development in any such lawsuit or the insurance coverage for a lawsuit could materially and adversely affect our financial condition and cash flow. We regularly review all pending litigation matters in which we might be involved and establish accruals deemed appropriate by us for these litigation matters when a probable loss estimate can be made. As of December 31, 2017 there were no pending litigation matters that required an accrual. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. Subsequent Events Exclusive Distribution Agreement Effective January 1, 2018, we entered into a distribution agreement with HK NFS Limited (“HK NFS”), a Hong Kong limited company, where we appointed HK NFS to act as the exclusive distributor of Alpha ® First Amendment to Credit Agreement On January 10, 2018, the Company entered into the First Amendment which lowered interest rates for the term loan and the revolving credit facility. See Note 6 for further discussion. |
Organization and Summary of S21
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | (b) Principles of Consolidation Our Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. |
Use of Estimates | (c) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the 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. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, intangible asset useful lives and amortization method, and stock-based compensation. Actual results could differ from our estimates. |
Cash Equivalents | (d) Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. |
Sale of Accounts Receivable | (e) Sale of Accounts Receivable On March 16, 2011, we entered into a financing agreement with Wells Fargo Bank, National Association (“Wells Fargo”) for the purpose of further lowering the cost of borrowing associated with the financing of our accounts receivable. Pursuant to this agreement, we were able to sell accounts receivable from Wal-Mart at a discount to Wells Fargo. On January 29, 2016 we terminated our agreement with Wells Fargo due to Wal-Mart changing its accounts payable policy. In 2017 and 2016, we sold approximately $0 and $306,800, respectively, of our relevant accounts receivable to Wells Fargo for approximately $0 and $305,200, respectively. The difference between the invoiced amount of the receivable and the cash that we received from Wells Fargo was a cost to us. This cost was in lieu of any cash discount our customer would have been allowed and, thus, was treated in a manner consistent with standard trade discounts granted to our customers. The reporting of the sale of accounts receivable to Wells Fargo was treated as a sale rather than as a secured borrowing. As a result, affected accounts receivable were relieved from the Company’s financial statements upon receipt of the cash proceeds. |
Inventories Valuation and Reserves | (f) Inventories Valuation and Reserves Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We estimate an inventory reserve for slow moving and obsolete products and raw materials based upon, among other things, an assessment of historical and anticipated sales of our products. In the event that actual results differ from our estimates, the results of future periods may be impacted. |
Property, Plant and Equipment | (g) Property, Plant and Equipment Property, plant and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from three to 20 years. Production equipment and production support equipment are estimated to have useful lives of 15 to 20 years and three to 10 years, respectively. Office furniture and office machines are estimated to have useful lives of 10 to 20 and three to five years, respectively. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the asset or provide improved efficiency are capitalized. |
Intangible Assets | (h) Intangible Assets Intangible assets consist of customer relationships, trade names, formulas and batching processes and a non-compete agreement. The fair value of the intangible assets is amortized over their estimated useful lives and range from a period of five to 15 years and are reviewed for impairment when changes in market circumstances occur and written down to fair value if impaired. |
Goodwill | ( i ) Goodwill Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired in the Acquisition discussed in Notes 4 and 5. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests at the reporting unit level, which include the review of factors to determine if it is more-likely-than-not that the fair values of its reporting units were below carrying value. In certain circumstances, these assets are written down to fair value if impaired. |
Financial Instruments | (j) Financial Instruments Financial instruments which potentially subject us to concentrations of credit risk include cash and cash equivalents and accounts receivable. We maintain our cash balances in the form of bank demand deposits with financial institutions that we believe are creditworthy. As of December 31, 2017, and periodically throughout the year, we have maintained balances in various operating accounts in excess of federally insured limits. We establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. We have no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements. The recorded amounts for cash and cash equivalents, receivables, other current assets, accounts payable, accrued expenses, and current maturities of long-term debt approximate fair value due to the short-term nature of these financial instruments. The recorded amount of long-term debt approximates fair value and is estimated primarily based on current market rates for debt with similar terms and remaining maturities. At December 31, 2017 we had long-term debt of $1,200,000 and no outstanding balance on our line-of-credit. At December 31, 2016 we had long-term debt of $2,000,000 and a $750,000 outstanding balance on our line-of-credit. |
Income Taxes | (k) Income Taxes Income taxes reflect the tax effects of transactions reported in the Consolidated Financial Statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is provided when it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits or expense. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the Consolidated Statements of Income or accrued on the Consolidated Balance Sheets. |
Revenue Recognition | (l) Revenue Recognition Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until it is met. In our case, the criteria generally are met when we have an arrangement to sell a product, we have delivered the product in accordance with that arrangement, the sales price of the product is determinable and we believe that we will be paid for the sale. We establish reserves for customer returns of our products and customer allowances. We estimate these reserves based upon, among other things, an assessment of historical trends, information from customers and anticipated returns related to current sales activity. These reserves are established in the period of sale and reduce our revenue in that period. Our reserve for customer allowances includes primarily reserves for trade promotions to support price features, displays, slotting fees and other merchandising of our products to our customers. The actual level of returns and customer allowances are influenced by several factors, including the promotional efforts of our customers, changes in the mix of our customers, changes in the mix of the products we sell and the maturity of the product. We may change our estimates based on actual results and consideration of other factors that cause returns and allowances. In the event that actual results differ from our estimates, the results of future periods may be impacted. We also establish reserves for coupons, rebates and certain other promotional programs for consumers. We estimate these reserves based upon, among other things, an assessment of historical trends and current sales activity. These reserves are recorded as a reduction of revenue at the later of the date at which the revenue is recognized or the date at which the sale incentive is offered. In the event that actual results differ from our estimates, the results of future periods may be impacted. We have also established an allowance for doubtful accounts. We estimate this allowance based upon, among other things, an assessment of the credit risk of specific customers and historical trends. We believe our allowance for doubtful accounts is adequate to absorb any losses which may arise. In the event that actual losses differ from our estimates, the results of future periods may be impacted. At December 31, 2017 and December 31, 2016 approximately $1,069,700 and $1,184,700, respectively, had been reserved for as a reduction of accounts receivable. Trade promotions to our customers and incentives such as coupons and rebates to the consumer are deducted from gross sales and totaled $3,409,500 and $2,574,800 for the years ended December 31, 2017 and 2016, respectively. |
Advertising Costs | (m) Advertising Costs We expense advertising costs as incurred. |
Stock-Based Compensation | (n) Stock-Based Compensation We account for share based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. We determine the estimated grant-date fair value of stock options using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including the estimated fair value of underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. The Company recognizes compensation costs ratably over the vesting period using the straight-line method, which approximates the service period. |
Operating Costs and Expenses Classification | (o) Operating Costs and Expenses Classification Cost of sales includes costs associated with manufacturing and distribution including labor, materials, freight-in, purchasing and receiving, quality control, internal transfer costs, repairs, maintenance and other indirect costs, as well as warehousing and distribution costs. We classify shipping and handling costs comprised primarily of freight-out as selling expenses. Other selling expenses consist primarily of wages and benefits for sales and sales support personnel, travel, brokerage commissions and promotional costs, as well as certain other indirect costs. Shipping and handling costs totaled $2,614,300 and $1,799,900, for the years ended December 31, 2017 and 2016, respectively. General and administrative expenses consist primarily of wages and benefits associated with management and administrative support departments, business insurance costs, professional fees, amortization of intangible assets, office facility rent and related expenses and other general support costs. |
Recently Issued Accounting Standards | (p) Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Payments” In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” In May 2017, the FASB issued ASU 2017-09, “Compensation–Stock Compensation (Topic 718): Scope of Modification Accounting” In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” In June 2016, FASB issued ASU No. 2016-13, “ Financial Instruments —Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” . |
Recently Adopted Accounting Standards | (q) Recently Adopted Accounting Standards In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment” |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Composition of Inventory | Inventories, consisting of materials, labor and overhead at December 31 were comprised of the following: 2017 2016 Finished goods $ 6,983,600 $ 2,668,700 Raw materials 1,811,200 3,035,000 Inventory reserve for obsolescence (8,100 ) (62,400 ) $ 8,786,700 $ 5,641,300 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment at December 31 were comprised of the following: 2017 2016 Production equipment $ 5,397,200 $ 4,995,600 Office furniture and equipment 706,200 674,600 Other 217,900 202,400 6,321,300 5,872,600 Less accumulated depreciation (5,412,500 ) (5,294,200 ) $ 908,800 $ 578,400 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consisted of the following: As of December 31, 2017 As of December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Intangible assets: Customer relationships $ 4,022,100 $ 603,300 $ 3,418,800 $ 4,022,100 $ 201,100 $ 3,821,000 Trade names 2,362,400 236,100 2,126,300 2,362,400 78,700 2,283,700 Formulas and batching processes 668,600 83,700 584,900 668,600 27,900 640,700 Non-compete agreement 26,300 7,900 18,400 26,300 2,600 23,700 7,079,400 931,000 6,148,400 7,079,400 310,300 6,769,100 Goodwill 1,520,600 1,520,600 Total intangible assets $ 7,669,000 $ 8,289,700 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for 2018 and subsequent years is as follows: 2018 $ 620,700 2019 620,700 2020 620,700 2021 617,600 2022 615,400 Thereafter 3,053,300 Total $ 6,148,400 |
Long-Term Debt and Line-of-Cr25
Long-Term Debt and Line-of-Credit (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-Term Debt and Line-of-Credit | Maturities of long-term debt and line-of-credit are as follows as of December 31, 2017: 2018 $ 800,000 2019 400,000 1,200,000 Less unamortized debt issuance costs (37,600 ) Total $ 1,162,400 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Tax | The provision for income tax for the years ended December 31 is as follows: 2017 2016 Current provision: Federal $ 1,806,900 $ 71,100 State 11,800 2,400 Total current provision 1,818,700 73,500 Deferred provision: Federal 858,800 1,071,300 State 149,600 103,300 Total deferred provision 1,008,400 1,174,600 Provision: Federal 2,665,700 1,142,400 State 161,400 105,700 Total provision $ 2,827,100 $ 1,248,100 |
Schedule of Income Tax Expense at the Statutory Tax Rate | Income tax expense at the statutory tax rate is reconciled to the overall income tax expense for the years ended December 31 as follows: 2017 2016 Federal income tax at statutory rates $ 2,546,400 $ 1,054,900 State income taxes, net of federal tax effect 228,900 94,800 Permanent differences 11,400 12,900 Nondeductible stock-based compensation 87,900 81,800 Benefit from domestic manufacturing deduction (229,300 ) - Impact of change in U.S. corporate income tax rate 193,200 - Other (11,400 ) 3,700 Provision for income taxes $ 2,827,100 $ 1,248,100 |
Schedule of Net Deferred Tax Assets and Liabilities | The net deferred tax assets and liabilities as of December 31, 2017 and 2016 are comprised of the following: 2017 2016 Deferred tax assets: Net operating loss carryforwards $ - $ 611,800 Tax credit and other carryforwards - 491,700 Accounts receivable 196,200 80,000 Inventories 114,400 60,800 Accrued vacation and bonus 24,500 32,600 Intangibles and Goodwill 82,600 113,800 Other 15,200 23,500 Total deferred tax assets 432,900 1,414,200 Deferred tax liabilities: Accumulated depreciation for tax purposes (48,700 ) (21,600 ) Total deferred tax liabilities (48,700 ) (21,600 ) Net deferred tax asset $ 384,200 $ 1,392,600 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Weighted Average Fair Market Value of the Options Granted Estimated on the Date of Grant Assumptions | The weighted average fair market value of the options granted during the years ended December 31 were estimated on the date of grant, using a Black-Scholes option pricing model with the following assumptions: 2017 2016 Expected life of options (using the “simplified” method) 4 years 4 years Average risk-free interest rate 1.44% 1.10% Average expected volatility of stock 78% 87% Expected dividend rate None None Fair value of options granted $55,100 $104,935 |
Schedule of Activity Under Stock Option Plans | Stock option activity under the 2005 and 2015 Plans are as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value 2005 Plan Maximum number of shares under the plan 3,000,000 Outstanding, December 31, 2015 676,513 $ 0.63 4.7 years $ 525,300 Granted - $ - Exercised (27,051 ) $ 0.64 Cancelled/Expired (21,149 ) $ 0.78 Outstanding, December 31, 2016 628,313 $ 0.63 3.8 years $ 510,000 Exercisable, December 31, 2016 445,818 $ 0.55 2.8 years $ 398,200 Available for issuance, December 31, 2016 - Granted - $ - Exercised (136,250 ) $ 0.26 Cancelled/Expired - $ - Outstanding, December 31, 2017 492,063 $ 0.73 3.8 years $ 1,067,000 Exercisable, December 31, 2017 396,646 $ 0.70 3.1 years $ 872,100 Available for issuance, December 31, 2017 - 2015 Plan Maximum number of shares under the plan 2,000,000 Outstanding, December 31, 2015 716,500 $ 1.27 8.4 years $ 102,100 Granted 135,648 $ 1.26 Exercised (11,793 ) $ 1.25 Cancelled/Expired (52,740 ) $ 1.25 Outstanding, December 31, 2016 787,615 $ 1.27 7.2 years $ 136,000 Exercisable, December 31, 2016 261,293 $ 1.27 6.5 years $ 45,500 Available for issuance, December 31, 2016 1,212,385 Granted 46,560 $ 2.18 Exercised - $ - Cancelled/Expired (49,491 ) $ 1.26 Outstanding, December 31, 2017 784,684 $ 1.32 6.4 years $ 1,238,200 Exercisable, December 31, 2017 422,335 $ 1.31 6.0 years $ 672,900 Available for issuance, December 31, 2017 1,215,316 |
Summary of Additional Information Related to the Options Outstanding | A summary of additional information related to the options outstanding as of December 31, 2017 under the 2005 and 2015 Plans are as follows: Range of Exercise Prices Number of Options Weighted Average Remaining Contractual Life Weighted Average Exercise Price 2005 Plan $0.41-$0.62 131,563 0.4 years $ 0.43 $0.63-$0.86 360,500 5.0 years $ 0.84 Total 492,063 3.8 years $ 0.73 2015 Plan $1.20-$1.25 535,500 7.1 years $ 1.25 $1.26-$1.38 202,624 4.3 years $ 1.32 $1.80-$2.25 46,560 6.4 years $ 2.18 Total 784,684 6.4 years $ 1.32 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Reconciliation of the Weighted Average Number of Common Shares Outstanding | A reconciliation of the weighted average number of common shares outstanding for the years ended December 31 is as follows: 2017 2016 Common shares outstanding, beginning of the year 11,749,589 11,710,745 Weighted average common shares issued 102,682 24,457 Weighted average number of common shares outstanding 11,852,271 11,735,202 Dilutive effect of common share equivalents 414,969 236,047 Diluted weighted average number of common shares outstanding 12,267,240 11,971,249 |
Common Stock Equivalents Excluded From the Calculation of Earnings Per Share | Common stock equivalents that have been excluded from the calculation of earnings per share as of December 31 because they would have been anti-dilutive are as follows: 2017 2016 Stock options 89,136 787,615 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Information on Segments | The following provides information on our segments as of and for the years ended December 31: 2017 Household Products Skin and Hair Care Products Corporate Total Net sales $ 5,668,100 $ 36,518,100 $ - $ 42,186,200 Operating (loss) income (327,800 ) 7,953,200 - 7,625,400 Identifiable assets 2,195,500 22,721,200 384,200 25,300,900 Capital and intangible asset expenditures 190,400 294,100 - 484,500 Depreciation and amortization 126,400 673,500 - 799,900 2016 Household Products Skin and Hair Care Products Corporate Total Net sales $ 5,992,600 $ 29,235,800 $ - $ 35,228,400 Operating (loss) income (1,042,100 ) 4,256,900 - 3,214,800 Identifiable assets 1,957,900 18,479,400 1,396,000 21,833,300 Capital and intangible asset expenditures 273,400 8,610,200 - 8,883,600 Depreciation and amortization 66,600 391,400 - 458,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Future minimum Annual Lease Payments | Future minimum annual lease payments are as follows: 2018 $ 992,800 2019 90,800 $ 1,083,600 |
Organization and Summary of S31
Organization and Summary of Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2017USD ($)Segment | Dec. 31, 2016USD ($) | |
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Number of business segment | Segment | 2 | |
Wells Fargo | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Sale of account receivable | $ 0 | $ 306,800 |
Proceeds from sale of account receivable | $ 0 | $ 305,200 |
Organization and Summary of S32
Organization and Summary of Significant Accounting Policies - Additional Information 1 (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Significant financial instruments with off-balance sheet risk | $ 0 | |
Long-term debt | 1,200,000 | $ 2,000,000 |
Line-of-credit outstanding balance | 0 | 750,000 |
Interest and penalties recognized in consolidated statements of income | 0 | |
Accrued interest or penalties related to uncertain tax positions | 0 | 0 |
Reserve for reduction in account receivable | 1,069,700 | 1,184,700 |
Trade promotions to customers | $ 3,409,500 | $ 2,574,800 |
Minimum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 3 years | |
Useful lives of intangible assets | 5 years | |
Maximum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 20 years | |
Useful lives of intangible assets | 15 years | |
Production Equipment | Minimum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 15 years | |
Production Equipment | Maximum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 20 years | |
Production Support Equipment | Minimum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 3 years | |
Production Support Equipment | Maximum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 10 years | |
Office Furniture and Equipment | Minimum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 10 years | |
Office Furniture and Equipment | Maximum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 20 years | |
Office Equipment | Minimum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 3 years | |
Office Equipment | Maximum | ||
Schedule Of Organization And Presentation Of Financial Statements [Line Items] | ||
Useful life of property, plant and equipment | 5 years |
Organization and Summary of S33
Organization and Summary of Significant Accounting Policies - Additional Information 2 (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Shipping and handling costs | $ 2,614,300 | $ 1,799,900 |
Inventories - Composition of In
Inventories - Composition of Inventory (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 6,983,600 | $ 2,668,700 |
Raw materials | 1,811,200 | 3,035,000 |
Inventory reserve for obsolescence | (8,100) | (62,400) |
Inventories, net | $ 8,786,700 | $ 5,641,300 |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of Property, Plant and Equipment | ||
Property, Plant and Equipment, gross | $ 6,321,300 | $ 5,872,600 |
Less accumulated depreciation | (5,412,500) | (5,294,200) |
Property, Plant and Equipment, Total | 908,800 | 578,400 |
Production Equipment | ||
Schedule of Property, Plant and Equipment | ||
Property, Plant and Equipment, gross | 5,397,200 | 4,995,600 |
Office Furniture and Equipment | ||
Schedule of Property, Plant and Equipment | ||
Property, Plant and Equipment, gross | 706,200 | 674,600 |
Other | ||
Schedule of Property, Plant and Equipment | ||
Property, Plant and Equipment, gross | $ 217,900 | $ 202,400 |
Property, Plant and Equipment36
Property, Plant and Equipment - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property Plant And Equipment [Abstract] | ||
Depreciation expense | $ 154,100 | $ 135,200 |
Acquisition - Additional Inform
Acquisition - Additional Information (Details) - Neoteric Cosmetics, Inc - Ultimark Products, Inc - USD ($) $ in Millions | Jun. 30, 2016 | Jun. 30, 2016 |
Business Acquisition [Line Items] | ||
Business acquisition, date of asset purchase agreement | Jun. 30, 2016 | |
Total consideration paid for acquisition | $ 9 |
Goodwill and Intangible Asset38
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 7,079,400 | $ 7,079,400 |
Accumulated Amortization | 931,000 | 310,300 |
Net Carrying Value | 6,148,400 | 6,769,100 |
Goodwill | 1,520,600 | 1,520,600 |
Total intangible assets | 7,669,000 | 8,289,700 |
Customer Relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,022,100 | 4,022,100 |
Accumulated Amortization | 603,300 | 201,100 |
Net Carrying Value | 3,418,800 | 3,821,000 |
Trade Names | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,362,400 | 2,362,400 |
Accumulated Amortization | 236,100 | 78,700 |
Net Carrying Value | 2,126,300 | 2,283,700 |
Formulas and Batching Processes | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 668,600 | 668,600 |
Accumulated Amortization | 83,700 | 27,900 |
Net Carrying Value | 584,900 | 640,700 |
Non-compete Agreement | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 26,300 | 26,300 |
Accumulated Amortization | 7,900 | 2,600 |
Net Carrying Value | $ 18,400 | $ 23,700 |
Goodwill and Intangible Asset39
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Amortization expense of intangible assets | $ 620,700 | $ 310,300 |
Goodwill and Intangible Asset40
Goodwill and Intangible Assets - Schedule of Estimated Amortization Expense (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
2,018 | $ 620,700 | |
2,019 | 620,700 | |
2,020 | 620,700 | |
2,021 | 617,600 | |
2,022 | 615,400 | |
Thereafter | 3,053,300 | |
Net Carrying Value | $ 6,148,400 | $ 6,769,100 |
Long-Term Debt and Line-of-Cr41
Long-Term Debt and Line-of-Credit - Additional Information (Details) - USD ($) | Jan. 10, 2018 | Jun. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||||
Debt issuance costs | $ 25,100 | $ 12,500 | ||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Credit facility, frequency of commitment fee payment | quarterly | |||
Unused commitment fee percentage | 0.50% | |||
Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Minimum debt service coverage ratio | 125.00% | |||
Maximum funded indebtedness to adjusted EBITDA ratio | 300.00% | |||
JPMorgan Chase Bank, N. A. | Credit Agreement | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, effective interest rate | 4.35% | |||
Credit facility amount | $ 4,000,000 | |||
Credit facility, terminate date | Jun. 30, 2019 | |||
JPMorgan Chase Bank, N. A. | Term Loan | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, amount | $ 2,400,000 | |||
Debt instrument, periodic payment | quarterly payments | |||
Debt instrument, term | 3 years | |||
Debt instrument, effective interest rate | 5.10% | |||
JPMorgan Chase Bank, N. A. | LIBO Rate | Credit Agreement | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable interest rate | 3.00% | |||
JPMorgan Chase Bank, N. A. | LIBO Rate | Credit Agreement | Revolving Credit Facility | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable interest rate | 2.50% | |||
JPMorgan Chase Bank, N. A. | LIBO Rate | Term Loan | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable interest rate | 3.75% | |||
JPMorgan Chase Bank, N. A. | LIBO Rate | Term Loan | Credit Agreement | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable interest rate | 2.50% | |||
JPMorgan Chase Bank, N. A. | Prime Rate | Credit Agreement | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable interest rate | 0.25% | |||
JPMorgan Chase Bank, N. A. | Prime Rate | Term Loan | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable interest rate | 1.00% | |||
JPMorgan Chase Bank, N. A. | Floor Rate | Credit Agreement | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable interest rate | 2.50% | |||
JPMorgan Chase Bank, N. A. | Floor Rate | Term Loan | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable interest rate | 2.50% | |||
JPMorgan Chase Bank, N. A. | Prime Rate and Floor Rate | Credit Agreement | Revolving Credit Facility | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable interest rate | 2.50% | |||
JPMorgan Chase Bank, N. A. | Prime Rate and Floor Rate | Term Loan | Credit Agreement | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable interest rate | 2.50% |
Long-Term Debt and Line-of-Cr42
Long-Term Debt and Line-of-Credit - Schedule of Maturities of Long-Term Debt and Line-of-Credit (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Long Term Debt By Maturity [Abstract] | ||
2,018 | $ 800,000 | |
2,019 | 400,000 | |
Long-term debt and line-of-credit, gross | 1,200,000 | $ 2,000,000 |
Less unamortized debt issuance costs | (37,600) | |
Total | $ 1,162,400 |
Income Taxes - Schedule of Prov
Income Taxes - Schedule of Provision for Income Tax (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Current provision: | ||
Federal | $ 1,806,900 | $ 71,100 |
State | 11,800 | 2,400 |
Total current provision | 1,818,700 | 73,500 |
Deferred provision: | ||
Federal | 858,800 | 1,071,300 |
State | 149,600 | 103,300 |
Total deferred provision | 1,008,400 | 1,174,600 |
Provision: | ||
Federal | 2,665,700 | 1,142,400 |
State | 161,400 | 105,700 |
Total provision | $ 2,827,100 | $ 1,248,100 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Expense at the Statutory Tax Rate (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Schedule of income tax expense at the statutory tax rate | ||
Federal income tax at statutory rates | $ 2,546,400 | $ 1,054,900 |
State income taxes, net of federal tax effect | 228,900 | 94,800 |
Permanent differences | 11,400 | 12,900 |
Nondeductible stock-based compensation | 87,900 | 81,800 |
Benefit from domestic manufacturing deduction | (229,300) | |
Impact of change in U.S. corporate income tax rate | 193,200 | |
Other | (11,400) | 3,700 |
Total provision | $ 2,827,100 | $ 1,248,100 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax [Line Items] | |||
U.S. Corporate income tax rate | 35.00% | ||
Deferred tax assets, tax credit carryforwards, alternative minimum tax | $ 189,000 | ||
Uncertain tax benefits | 0 | $ 0 | |
Accrued interest or penalties related to uncertain tax positions | $ 0 | $ 0 | |
Federal Tax Authority | |||
Income Tax [Line Items] | |||
Income tax year open to examination | 2,014 | ||
Federal Tax Authority | Internal Revenue Service (IRS) | |||
Income Tax [Line Items] | |||
Operating loss carryovers | $ 960,000 | ||
Federal Tax Authority | Research and Development Expense | Internal Revenue Service (IRS) | |||
Income Tax [Line Items] | |||
Tax credit carryforward, amount | $ 300,000 | ||
State and Local Jurisdiction | |||
Income Tax [Line Items] | |||
Income tax year open to examination | 2,013 | ||
State and Local Jurisdiction | Internal Revenue Service (IRS) | |||
Income Tax [Line Items] | |||
Operating loss carryovers | $ 8,220,000 | ||
Scenario, Plan | |||
Income Tax [Line Items] | |||
U.S. Corporate income tax rate | 21.00% |
Income Taxes - Schedule of Net
Income Taxes - Schedule of Net Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 611,800 | |
Tax credit and other carryforwards | 491,700 | |
Accounts receivable | $ 196,200 | 80,000 |
Inventories | 114,400 | 60,800 |
Accrued vacation and bonus | 24,500 | 32,600 |
Intangibles and Goodwill | 82,600 | 113,800 |
Other | 15,200 | 23,500 |
Total deferred tax assets | 432,900 | 1,414,200 |
Deferred tax liabilities: | ||
Accumulated depreciation for tax purposes | (48,700) | (21,600) |
Total deferred tax liabilities | (48,700) | (21,600) |
Net deferred tax asset | $ 384,200 | $ 1,392,600 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | May 31, 2011 | Dec. 31, 2005 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation | $ 242,300 | $ 248,600 | ||
Unrecognized compensation costs related to non-vested stock options | $ 436,200 | |||
Period over which compensation costs related to non-vested stock options recognize | 4 years | |||
Tax benefit from recording non-cash expense relates to options granted to employees | $ 0 | |||
Number of shares issuable under 2005 Plan | 3,000,000 | |||
Employer discretionary contribution to defined plan | $ 0 | $ 0 | ||
Shares Held in Employee Stock Option Plan, Allocated | 617,624 | 633,426 | ||
2005 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Number of shares issuable under 2005 Plan | 3,000,000 | 1,500,000 | ||
Stock option plan expiry date | Mar. 31, 2015 | |||
General and Administrative Expense | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation | $ 242,300 | $ 248,600 | ||
Non-employee Board Member | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Number of options granted | 30,000 | 90,072 | ||
Weighted average exercise price of options granted | $ 2.25 | $ 1.26 | ||
Employees | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Number of options granted | 16,560 | 45,576 | ||
Employees | Minimum | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Weighted average exercise price of options granted | $ 1.80 | $ 1.20 | ||
Employees | Maximum | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Weighted average exercise price of options granted | $ 2.25 | $ 1.26 |
Shareholders' Equity - Weighted
Shareholders' Equity - Weighted Average Fair Market Value of the Options Granted Estimated on the Date of Grant Assumptions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Expected life of options (using the “simplified” method) | 4 years | 4 years |
Average risk-free interest rate | 1.44% | 1.10% |
Average expected volatility of stock | 78.00% | 87.00% |
Expected dividend rate | 0.00% | 0.00% |
Fair value of options granted | $ 55,100 | $ 104,935 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Activity Under Stock Option Plans (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | May 31, 2011 | Dec. 31, 2005 | |
Schedule of options granted | |||||
Maximum number of shares under the plan | 3,000,000 | ||||
2005 Plan | |||||
Schedule of options granted | |||||
Maximum number of shares under the plan | 3,000,000 | 1,500,000 | |||
Number of Options Outstanding Beginning Balance | 628,313 | 676,513 | |||
Number of Options Exercised | (136,250) | (27,051) | |||
Number of Options Cancelled/Expired | (21,149) | ||||
Number of Options Outstanding Ending Balance | 492,063 | 628,313 | 676,513 | ||
Number of Options Exercisable | 396,646 | 445,818 | |||
Weighted Average Exercise Price | |||||
Outstanding Weighted Average Exercise Price Beginning Balance | $ 0.63 | $ 0.63 | |||
Weighted Average Exercise Price Exercised | 0.26 | 0.64 | |||
Weighted Average Exercise Price Cancelled/Expired | 0.78 | ||||
Outstanding Weighted Average Exercise Price Ending Balance | 0.73 | 0.63 | $ 0.63 | ||
Weighted Average Exercise Price Exercisable Ending Balance | $ 0.70 | $ 0.55 | |||
Weighted Average Remaining Contractual Life | |||||
Weighted Average Remaining Contractual Life Options Outstanding | 3 years 9 months 18 days | 3 years 9 months 18 days | 4 years 8 months 12 days | ||
Weighted Average Remaining Contractual Life Options Exercisable | 3 years 1 month 6 days | 2 years 9 months 18 days | |||
Aggregate Intrinsic Value | |||||
Outstanding Aggregate Intrinsic Value | $ 1,067,000 | $ 510,000 | $ 525,300 | ||
Aggregate Intrinsic Value Exercisable | $ 872,100 | $ 398,200 | |||
2015 Plan | |||||
Schedule of options granted | |||||
Maximum number of shares under the plan | 2,000,000 | ||||
Number of Options Outstanding Beginning Balance | 787,615 | 716,500 | |||
Number of Options Granted | 46,560 | 135,648 | |||
Number of Options Exercised | (11,793) | ||||
Number of Options Cancelled/Expired | (49,491) | (52,740) | |||
Number of Options Outstanding Ending Balance | 784,684 | 787,615 | 716,500 | ||
Number of Options Exercisable | 422,335 | 261,293 | |||
Available for Issuance Number of Options Ending Balance | 1,215,316 | 1,212,385 | |||
Weighted Average Exercise Price | |||||
Outstanding Weighted Average Exercise Price Beginning Balance | $ 1.27 | $ 1.27 | |||
Weighted Average Exercise Price Granted | 2.18 | 1.26 | |||
Weighted Average Exercise Price Exercised | 1.25 | ||||
Weighted Average Exercise Price Cancelled/Expired | 1.26 | 1.25 | |||
Outstanding Weighted Average Exercise Price Ending Balance | 1.32 | 1.27 | $ 1.27 | ||
Weighted Average Exercise Price Exercisable Ending Balance | $ 1.31 | $ 1.27 | |||
Weighted Average Remaining Contractual Life | |||||
Weighted Average Remaining Contractual Life Options Outstanding | 6 years 4 months 24 days | 7 years 2 months 12 days | 8 years 4 months 24 days | ||
Weighted Average Remaining Contractual Life Options Exercisable | 6 years | 6 years 6 months | |||
Aggregate Intrinsic Value | |||||
Outstanding Aggregate Intrinsic Value | $ 1,238,200 | $ 136,000 | $ 102,100 | ||
Aggregate Intrinsic Value Exercisable | $ 672,900 | $ 45,500 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Additional Information Related to the Options Outstanding (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
2005 Plan | |
Summary of additional information related to the options outstanding | |
Exercisable Weighted Average Number of Option Outstanding | shares | 492,063 |
Average Option Price Per share Exercised | 3 years 9 months 18 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 0.73 |
2005 Plan | Range One | |
Summary of additional information related to the options outstanding | |
Lower range of Exercise prices | 0.41 |
Upper range of Exercise prices | $ 0.62 |
Exercisable Weighted Average Number of Option Outstanding | shares | 131,563 |
Average Option Price Per share Exercised | 4 months 24 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 0.43 |
2005 Plan | Range Two | |
Summary of additional information related to the options outstanding | |
Lower range of Exercise prices | 0.63 |
Upper range of Exercise prices | $ 0.86 |
Exercisable Weighted Average Number of Option Outstanding | shares | 360,500 |
Average Option Price Per share Exercised | 5 years |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 0.84 |
2015 Plan | |
Summary of additional information related to the options outstanding | |
Exercisable Weighted Average Number of Option Outstanding | shares | 784,684 |
Average Option Price Per share Exercised | 6 years 4 months 24 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 1.32 |
2015 Plan | Range One | |
Summary of additional information related to the options outstanding | |
Lower range of Exercise prices | 1.20 |
Upper range of Exercise prices | $ 1.25 |
Exercisable Weighted Average Number of Option Outstanding | shares | 535,500 |
Average Option Price Per share Exercised | 7 years 1 month 6 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 1.25 |
2015 Plan | Range Two | |
Summary of additional information related to the options outstanding | |
Lower range of Exercise prices | 1.26 |
Upper range of Exercise prices | $ 1.38 |
Exercisable Weighted Average Number of Option Outstanding | shares | 202,624 |
Average Option Price Per share Exercised | 4 years 3 months 18 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 1.32 |
2015 Plan | Range Three | |
Summary of additional information related to the options outstanding | |
Lower range of Exercise prices | 1.80 |
Upper range of Exercise prices | $ 2.25 |
Exercisable Weighted Average Number of Option Outstanding | shares | 46,560 |
Average Option Price Per share Exercised | 6 years 4 months 24 days |
Options Outstanding and Exercisable Weighted Average Exercise Price | $ 2.18 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of the Weighted Average Number of Common Shares Outstanding (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Beginning Balance, Shares | 11,749,589 | 11,710,745 |
Weighted average common shares issued | 102,682 | 24,457 |
Weighted average number of common shares outstanding | 11,852,271 | 11,735,202 |
Dilutive effect of common share equivalents | 414,969 | 236,047 |
Diluted weighted average number of common shares outstanding | 12,267,240 | 11,971,249 |
Earnings Per Share - Common Sto
Earnings Per Share - Common Stock Equivalents Excluded From the Calculation of Earnings Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Options | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from calculation of earnings per share | 89,136 | 787,615 |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2017USD ($)Segment | Dec. 31, 2016USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of business segment | Segment | 2 | |
Wal-Mart | ||
Segment Reporting Information [Line Items] | ||
Entity wide revenue, net sales from major customer | $ 10,983,400 | $ 7,221,400 |
Wal-Mart | Customer Concentration Risk | Accounts Receivable | ||
Segment Reporting Information [Line Items] | ||
Entity wide outstanding accounts receivable percentage from major customer | 53.80% | 48.90% |
Ulta | ||
Segment Reporting Information [Line Items] | ||
Entity wide revenue, net sales from major customer | $ 9,164,300 | $ 8,479,800 |
Ulta | Customer Concentration Risk | Accounts Receivable | ||
Segment Reporting Information [Line Items] | ||
Entity wide outstanding accounts receivable percentage from major customer | 17.50% | 9.70% |
TJ Maxx | ||
Segment Reporting Information [Line Items] | ||
Entity wide revenue, net sales from major customer | $ 3,168,100 | $ 4,137,200 |
TJ Maxx | Customer Concentration Risk | Accounts Receivable | ||
Segment Reporting Information [Line Items] | ||
Entity wide outstanding accounts receivable percentage from major customer | 0.00% | 16.30% |
Segment Information - Informati
Segment Information - Information on Segments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 42,186,200 | $ 35,228,400 |
Operating (loss) income | 7,625,400 | 3,214,800 |
Identifiable assets | 25,300,900 | 21,833,300 |
Capital and intangible asset expenditures | 484,500 | 8,883,600 |
Depreciation and amortization | 799,900 | 458,000 |
Household Products | ||
Segment Reporting Information [Line Items] | ||
Net sales | 5,668,100 | 5,992,600 |
Operating (loss) income | (327,800) | (1,042,100) |
Identifiable assets | 2,195,500 | 1,957,900 |
Capital and intangible asset expenditures | 190,400 | 273,400 |
Depreciation and amortization | 126,400 | 66,600 |
Skin And Hair Care Products | ||
Segment Reporting Information [Line Items] | ||
Net sales | 36,518,100 | 29,235,800 |
Operating (loss) income | 7,953,200 | 4,256,900 |
Identifiable assets | 22,721,200 | 18,479,400 |
Capital and intangible asset expenditures | 294,100 | 8,610,200 |
Depreciation and amortization | 673,500 | 391,400 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Identifiable assets | $ 384,200 | $ 1,396,000 |
Retirement Plans - Additional I
Retirement Plans - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] | ||
Minimum Completed years of service for eligible in plan | 4 months | |
Minimum age of employee for becoming eligible in plan | 18 years | |
Maximum limit of Employee Compensation Defer percentage | 75.00% | |
Percentage of discretionary contributions | 6.00% | |
Maximum Annual earnings limit for employer contribution | $ 50,000 | |
Vesting period of service to employee for profit sharing contribution | 5 years | |
Amount of matching contribution | $ 7,000 | $ 7,000 |
Discretionary profit sharing contribution | $ 0 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | Feb. 01, 2013ft²Extension$ / ft² | Dec. 31, 2017USD ($)Litigation | Dec. 31, 2016USD ($) | Mar. 25, 2016ft²$ / ft² |
Property Subject To Or Available For Operating Lease [Line Items] | ||||
Term of operating lease, additional rent per square foot criteria for uncontrolled operating expenses increase minimum percentage | 5.00% | |||
Annual rental expense under operating lease agreements | $ | $ 47,800 | $ 42,300 | ||
Number of pending litigation | Litigation | 0 | |||
Office Lease | ||||
Property Subject To Or Available For Operating Lease [Line Items] | ||||
Area of lease | ft² | 16,078 | |||
Operating leases term of contract | 3 years | |||
Operating lease term, number of additional extensions allowed | Extension | 2 | |||
Operating lease extension period | 3 years | |||
Operating lease initial rent per square foot per annum | $ / ft² | 13 | |||
Operating lease incremental rent percentage per annum | 3.00% | |||
Annual rent expenses under operation lease | $ | $ 216,700 | 227,900 | ||
Warehouse Lease | ||||
Property Subject To Or Available For Operating Lease [Line Items] | ||||
Area of lease | ft² | 113,620 | 53,440 | ||
Operating leases term of contract | 3 years | |||
Operating lease term, number of additional extensions allowed | Extension | 2 | |||
Operating lease extension period | 3 years | |||
Operating lease initial rent per square foot per annum | $ / ft² | 3.25 | 4.90 | ||
Operating lease incremental rent percentage per annum | 3.00% | |||
Additional rent per square foot related to operating expenses | $ / ft² | 1.25 | |||
Percentage of operating lease annual increase from second year | 7.00% | |||
Percentage of operating lease annual increase in last two years | 3.00% | |||
Annual rent expenses under operation lease | $ | $ 912,800 | $ 555,300 |
Commitments and Contingencies57
Commitments and Contingencies - Future minimum Annual Lease Payments (Details) | Dec. 31, 2017USD ($) |
Operating Leases Future Minimum Payments Due [Abstract] | |
2,018 | $ 992,800 |
2,019 | 90,800 |
Operating leases, future minimum annual lease payments | $ 1,083,600 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - HK NFS Limited | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Event [Line Items] | |
Distribution agreement effective term | 1 year |
Distribution agreement automatic additional renewal term | 1 year |
Distribution agreement nonrenewal notice period before end of current term | 90 days |