Florida
|
59-1564329
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer ¨
|
Accelerated filer ¨
|
Non-accelerated filer ¨
|
Smaller reporting company x
|
Page
|
||
PART I
|
Financial Information:
|
|
Item 1. Financial Statements
|
3 | |
Condensed consolidated balance sheets at June 30, 2013 (unaudited) and December 31, 2012
|
3
|
|
Condensed consolidated statements of operations (unaudited) for the three and six months ended June 30, 2013 and 2012
|
4
|
|
Condensed consolidated statements of comprehensive income (unaudited) for the three and six months ended June 30, 2013 and 2012
|
5
|
|
Condensed consolidated statements of cash flows (unaudited) for the six months ended June 30, 2013 and 2012
|
6
|
|
Notes to condensed consolidated financial statements
|
7-12
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
13-16
|
|
Item 3. Quantitative and Qualitative Disclosures about Market Risk
|
17
|
|
Item 4. Controls and Procedures
|
17
|
|
PART II
|
Other Information:
|
|
Item 1A. Risk Factors
|
17
|
|
Item 6. Exhibits
|
18
|
|
Signatures
|
19
|
Item 1.
|
Financial Statements
|
June 30,
2013
|
December 31,
2012
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash
|
$
|
1,005,513
|
$
|
1,508,385
|
||||
Trade accounts receivable less allowances of approximately $76,000 and $73,000, respectively
|
3,867,868
|
2,931,479
|
||||||
Receivables due from affiliated companies
|
424,181
|
556,051
|
||||||
Inventories, net
|
9,689,948
|
9,256,589
|
||||||
Prepaid expenses and other current assets
|
576,570
|
530,305
|
||||||
Deferred tax asset
|
112,799
|
56,221
|
||||||
Total Current Assets
|
15,676,879
|
14,839,030
|
||||||
Property, plant and equipment, net
|
5,304,787
|
5,327,909
|
||||||
Other Assets:
|
||||||||
Trademarks, trade names and patents, net
|
793,470
|
819,194
|
||||||
Other assets
|
21,866
|
24,350
|
||||||
Total Other Assets
|
815,336
|
843,544
|
||||||
Total Assets
|
$
|
21,797,002
|
$
|
21,010,483
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable – trade
|
$
|
1,590,640
|
$
|
1,431,457
|
||||
Current portion of long term debt
|
411,391
|
407,095
|
||||||
Income taxes payable
|
3,793
|
65,944
|
||||||
Accrued expenses payable
|
916,242
|
913,129
|
||||||
Total Current Liabilities
|
2,922,066
|
2,817,625
|
||||||
Deferred tax liability
|
305,257
|
230,478
|
||||||
Long term debt, less current portion
|
1,325,502
|
1,532,286
|
||||||
Total Liabilities
|
4,552,825
|
4,580,389
|
||||||
Commitments and contingencies
|
||||||||
Shareholders' Equity:
|
||||||||
Common stock - $.01 par value, 12,000,000 shares authorized; 8,749,888 shares issued
|
87,499
|
87,499
|
||||||
Additional paid in capital
|
8,818,041
|
8,617,081
|
||||||
Less cost of common stock in treasury, 196,771 and 351,503 shares, respectively
|
(160,066
|
)
|
(288,013
|
)
|
||||
Accumulated other comprehensive loss
|
(268,420
|
)
|
(261,807
|
)
|
||||
Retained earnings
|
8,542,804
|
8,021,136
|
||||||
Total Shareholders' Equity of Ocean Bio-Chem, Inc.
|
17,019,858
|
16,175,896
|
||||||
Noncontrolling interest
|
224,319
|
254,198
|
||||||
Total Shareholders' Equity
|
17,244,177
|
16,430,094
|
||||||
Total Liabilities and Shareholders' Equity
|
$
|
21,797,002
|
$
|
21,010,483
|
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(UNAUDITED)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Gross sales
|
$
|
8,529,350
|
$
|
8,394,554
|
$
|
15,180,378
|
$
|
14,695,903
|
||||||||
Less: discounts, returns, and allowances
|
351,638
|
512,889
|
690,363
|
809,523
|
||||||||||||
Net sales
|
8,177,712
|
7,881,665
|
14,490,015
|
13,886,380
|
||||||||||||
Cost of goods sold
|
5,205,556
|
5,016,900
|
9,276,600
|
8,879,769
|
||||||||||||
Gross profit
|
2,972,156
|
2,864,765
|
5,213,415
|
5,006,611
|
||||||||||||
Operating Expenses:
|
||||||||||||||||
Advertising and promotion
|
820,012
|
641,318
|
1,386,823
|
1,106,915
|
||||||||||||
Selling and administrative
|
1,878,507
|
1,603,788
|
3,028,029
|
2,659,381
|
||||||||||||
Total operating expenses
|
2,698,519
|
2,245,106
|
4,414,852
|
3,766,296
|
||||||||||||
Operating income
|
273,637
|
619,659
|
798,563
|
1,240,315
|
||||||||||||
Other income (expense)
|
||||||||||||||||
Interest expense
|
(18,223
|
)
|
(25,773
|
)
|
(35,624
|
)
|
(53,448
|
)
|
||||||||
Other income
|
-
|
1,766
|
-
|
2,822
|
||||||||||||
Income before income taxes
|
255,414
|
595,652
|
762,939
|
1,189,689
|
||||||||||||
Provision for income taxes
|
91,994
|
241,239
|
271,150
|
481,824
|
||||||||||||
Net income
|
163,420
|
354,413
|
491,789
|
707,865
|
||||||||||||
Loss attributable to noncontrolling interests
|
9,196
|
8,546
|
29,879
|
19,439
|
||||||||||||
Net income attributable to Ocean Bio-Chem, Inc.
|
$
|
172,616
|
$
|
362,959
|
$
|
521,668
|
$
|
727,304
|
||||||||
Earnings per common share – basic
|
$
|
0.02
|
$
|
0.04
|
$
|
0.06
|
$
|
0.09
|
||||||||
Earnings per common share – diluted
|
$
|
0.02
|
$
|
0.04
|
$
|
0.06
|
$
|
0.09
|
||||||||
Weighted average shares - basic
|
8,493,559
|
8,204,520
|
8,446,235
|
8,155,704
|
||||||||||||
Weighted average shares - diluted
|
8,786,020
|
8,525,806
|
8,734,205
|
8,495,465
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Net Income
|
$
|
163,420
|
$
|
354,413
|
$
|
491,789
|
$
|
707,865
|
||||||||
Other comprehensive loss: | ||||||||||||||||
Foreign currency translation adjustment
|
(4,463
|
)
|
(4,353
|
) |
(6,613
|
)
|
(482
|
) | ||||||||
Comprehensive income
|
158,957
|
350,060
|
485,176
|
707,383
|
||||||||||||
Comprehensive loss attributable to noncontrolling interests
|
9,196
|
8,546
|
29,879
|
19,439
|
||||||||||||
Comprehensive income attributable to Ocean Bio-Chem, Inc.
|
$
|
168,153
|
$
|
358,606
|
$
|
515,055
|
$
|
726,822
|
OCEAN BIO-CHEM, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
Six Months Ended
|
||||||||
June 30,
|
||||||||
2013
|
2012
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 491,789 | $ | 707,865 | ||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
Depreciation and amortization
|
376,805 | 345,923 | ||||||
Deferred income taxes
|
18,201 | 11,871 | ||||||
Stock based compensation
|
315,412 | 257,058 | ||||||
Other operating non-cash items
|
24,211 | 18,493 | ||||||
Changes in assets and liabilities:
|
||||||||
Trade accounts receivable
|
(939,741 | ) | (396,423 | ) | ||||
Inventories
|
(442,666 | ) | 474,499 | |||||
Other assets
|
2,484 | 6,609 | ||||||
Prepaid expenses and other current assets
|
(46,265 | ) | (159,258 | ) | ||||
Receivables due from affiliated companies
|
131,870 | 134,823 | ||||||
Accounts payable and other accrued expenses
|
100,145 | (53,870 | ) | |||||
Net cash provided by operating activities
|
32,245 | 1,347,590 | ||||||
Cash flows from investing activities:
|
||||||||
Purchases of property, plant and equipment
|
(327,959 | ) | (229,421 | ) | ||||
Net cash used in investing activities
|
(327,959 | ) | (229,421 | ) | ||||
Cash flows from financing activities:
|
||||||||
Net repayments under revolving line of credit
|
- | (450,000 | ) | |||||
Payments on long-term debt
|
(202,488 | ) | (200,754 | ) | ||||
Proceeds from exercise of stock options
|
- | 78,020 | ||||||
Net cash used in financing activities
|
(202,488 | ) | (572,734 | ) | ||||
Effect of exchange rates on cash
|
(4,670 | ) | (2,946 | ) | ||||
Net (decrease) increase in cash
|
(502,872 | ) | 542,489 | |||||
Cash at beginning of period
|
1,508,385 | 585,357 | ||||||
Cash at end of period
|
$ | 1,005,513 | $ | 1,127,846 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest during period
|
$ | 35,451 | $ | 55,014 | ||||
Cash paid for income taxes during period
|
$ | 315,100 | $ | 832,000 |
1.
|
SUMMARY OF ACCOUNTING POLICIES
|
2.
|
RECENT ACCOUNTING PRONOUNCEMENTS
|
3.
|
INVENTORIES
|
June 30,
2013
|
December 31,
2012
|
|||||||
Raw materials
|
$
|
3,751,837
|
$
|
4,055,812
|
||||
Finished goods
|
6,219,412
|
5,472,771
|
||||||
Inventories, gross
|
9,971,249
|
9,528,583
|
||||||
Inventory reserves
|
(281,301
|
)
|
(271,994
|
)
|
||||
Inventories, net
|
$
|
9,689,948
|
$
|
9,256,589
|
4.
|
PROPERTY, PLANT, & EQUIPMENT
|
Estimate
Useful Life
|
June 30,
2013
|
December 31,
2012
|
|||||||
Land
|
$
|
278,325
|
$
|
278,325
|
|||||
Building and improvements
|
30 years
|
4,509,795
|
4,489,377
|
||||||
Manufacturing and warehouse equipment
|
6-20 years
|
8,116,633
|
7,982,669
|
||||||
Office equipment and furniture
|
3-5 years
|
789,154
|
738,584
|
||||||
Construction in process
|
68,303
|
249,027
|
|||||||
Leasehold improvements
|
10-15 years
|
394,112
|
122,644
|
||||||
Automobile
|
3 years
|
32,263
|
-
|
||||||
Property, plant and equipment, gross
|
14,188,585
|
13,860,626
|
|||||||
Less accumulated depreciation
|
(8,883,798
|
)
|
(8,532,717
|
)
|
|||||
Property, plant and equipment, net
|
$
|
5,304,787
|
$
|
5,327,909
|
5.
|
NONCONTROLLING INTEREST
|
6.
|
REVOLVING LINE OF CREDIT
|
7.
|
LONG TERM DEBT
|
Current Portion
|
Long Term Portion
|
|||||||||||||||
June 30,
2013
|
December 31,
2012
|
June 30,
2013
|
December 31,
2012
|
|||||||||||||
Term loan
|
$
|
396,013
|
$
|
389,075
|
$
|
1,312,998
|
$
|
1,512,754
|
||||||||
Capitalized equipment leases
|
15,378
|
18,020
|
12,504
|
19,532
|
||||||||||||
Total long term debt
|
$
|
411,391
|
$
|
407,095
|
$
|
1,325,502
|
$
|
1,532,286
|
12 month period ending June 30,
|
||||
2014
|
$
|
411,391
|
||
2015
|
419,422
|
|||
2016
|
428,365
|
|||
2017
|
440,315
|
|||
2018
|
37,400
|
|||
Total
|
$
|
1,736,893
|
8.
|
RELATED PARTY TRANSACTIONS
|
9.
|
COMMITMENTS
|
10.
|
EARNINGS PER SHARE
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Earnings per common share -Basic
|
||||||||||||||||
Net income attributable to OBCI
|
$
|
172,616
|
$
|
362,959
|
$
|
521,668
|
$
|
727,304
|
||||||||
Weighted average number of common shares outstanding
|
8,493,559
|
8,204,520
|
8,446,235
|
8,155,704
|
||||||||||||
Earnings per common share - Basic
|
$
|
0.02
|
$
|
0.04
|
$
|
0.06
|
$
|
0.09
|
||||||||
Earnings per common share – Diluted
|
||||||||||||||||
Net income attributable to OBCI
|
$
|
172,616
|
$
|
362,959
|
$
|
521,668
|
$
|
727,304
|
||||||||
Weighted average number of common shares outstanding
|
8,493,559
|
8,204,520
|
8,446,235
|
8,155,704
|
||||||||||||
Effect of employee stock-based awards
|
292,461
|
321,286
|
287,970
|
339,761
|
||||||||||||
Weighted average number of common shares outstanding - assuming dilution
|
8,786,020
|
8,525,806
|
8,734,205
|
8,495,465
|
||||||||||||
Earnings per common share - Diluted
|
$
|
0.02
|
$
|
0.04
|
$
|
0.06
|
$
|
0.09
|
11.
|
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
|
Plan
|
Date
Granted
|
Options Outstanding
|
Exercisable
Options
|
Exercise
Price
|
Expiration
Date
|
Weighted
Average
Remaining Life
|
|||||||||
Non Plan
|
3/25/09
|
115,000
|
115,000
|
$
|
0.55
|
3/24/14
|
0.7
|
||||||||
2008 ISO
|
8/25/08
|
141,400
|
107,680
|
$
|
0.97
|
8/24/13
|
0.2
|
||||||||
2002NQ
|
5/25/04
|
30,000
|
30,000
|
$
|
1.46
|
5/24/14
|
.9
|
||||||||
2002NQ
|
4/03/06
|
40,000
|
40,000
|
$
|
1.08
|
4/02/16
|
2.8
|
||||||||
2002NQ
|
12/17/07
|
40,000
|
40,000
|
$
|
1.32
|
12/16/17
|
4.5
|
||||||||
2008NQ
|
1/11/09
|
40,000
|
40,000
|
$
|
0.69
|
1/10/19
|
5.6
|
||||||||
2008NQ
|
4/26/10
|
20,000
|
20,000
|
$
|
2.07
|
4/25/20
|
6.9
|
||||||||
426,400
|
392,680
|
$
|
0.96
|
1.9
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Item 4.
|
Controls and Procedures
|
Exhibit No.
|
Description
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act. *
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act. *
|
|
32.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350. *
|
|
32.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350. *
|
|
101
|
The following materials from Ocean Bio-Chem, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June, 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012, (ii) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 and 2012; (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012 and (v) Notes to Condensed Consolidated Financial Statements. .
|
OCEAN BIO-CHEM, INC.
|
||
Dated: August 14, 2013
|
/s/ Peter G. Dornau
|
|
Peter G. Dornau
|
||
Chairman of the Board, President and
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
||
Dated: August 14, 2013
|
/s/ Jeffrey S. Barocas
|
|
Jeffrey S. Barocas
|
||
Vice President and
|
||
Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
Dated: August 14, 2013
|
By:
|
/s/ Peter G. Dornau
|
|
Peter G. Dornau
|
|||
Chairman of the Board, President and
|
|||
Chief Executive Officer
|
|||
(Principal Executive Officer)
|
Dated: August 14, 2013
|
By:
|
/s/ Jeffrey S. Barocas
|
|
Jeffrey S. Barocas
|
|||
Vice President
|
|||
Chief Financial Officer
|
|||
(Principal Financial and Accounting Officer)
|
1.
|
The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: August 14, 2013
|
By:
|
/s/ Peter G. Dornau
|
|
Peter G. Dornau
|
|||
Chairman of the Board, President and
|
|||
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: August 14, 2013
|
By:
|
/s/ Jeffrey S. Barocas
|
|
Jeffrey S. Barocas
|
|||
Vice President
|
|||
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Securities Authorized for Issuance under Equity Compensation Plans
|
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Jun. 30, 2013
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Securities Authorized for Issuance under Equity Compensation Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS |
During the three months ended June 30, 2013, stock options to purchase an aggregate of 55,000 shares were exercised. Following the withholding of an aggregate of 21,268 shares in connection with the net exercise feature of the stock options, the Company delivered an aggregate of 33,732 shares to the option holders who exercised their options. There were no stock option exercises during the first quarter of 2013.
On May 1, 2013, the Company issued stock awards covering 121,000 shares of common stock under its 2011 Omnibus Equity Compensation Plan. The Company recognized compensation expense based upon the average of the high and low trading price of its common stock on the issuance date.
We delivered 154,732 treasury shares in connection with the stock awards and stock option exercises described above.
Non cash stock based compensation recognized during the three and six months ended June 30, 2013 and 2012 attributable to stock awards totaled approximately $306,000 and $223,000, respectively. Non cash stock compensation expense attributable to stock options was $4,000 and $15,000 for the three months ended June 30, 2013 and 2012, respectively, and $9,000 and $34,000 for the six months ended June 30, 2013 and 2012, respectively.
At June 30, 2013, there was approximately $3,000 of unrecognized compensation expense related to stock options awarded to employees. This compensation expense will be recognized during the third quarter of 2013.
The following table provides information at June 30, 2013 regarding outstanding stock options under the Company’s stock option plans as well as a grant made outside of the Company’s stock option plans. As used in the table below, “2008 ISO” refers to the Company’s 2008 Incentive Stock Option Plan, “2002 NQ” refers to the Company’s 2002 Non-Qualified Stock Option Plan and “2008 NQ” refers to the Company’s 2008 Non-Qualified Stock Option Plan.
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Condensed Consolidated Statements of Operations (Unaudited) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Statements of Operation [Abstract] | ||||
Gross sales | $ 8,529,350 | $ 8,394,554 | $ 15,180,378 | $ 14,695,903 |
Less: discounts, returns, and allowances | 351,638 | 512,889 | 690,363 | 809,523 |
Net sales | 8,177,712 | 7,881,665 | 14,490,015 | 13,886,380 |
Cost of goods sold | 5,205,556 | 5,016,900 | 9,276,600 | 8,879,769 |
Gross profit | 2,972,156 | 2,864,765 | 5,213,415 | 5,006,611 |
Operating Expenses: | ||||
Advertising and promotion | 820,012 | 641,318 | 1,386,823 | 1,106,915 |
Selling and administrative | 1,878,507 | 1,603,788 | 3,028,029 | 2,659,381 |
Total operating expenses | 2,698,519 | 2,245,106 | 4,414,852 | 3,766,296 |
Operating income | 273,637 | 619,659 | 798,563 | 1,240,315 |
Other income (expense) | ||||
Interest expense | (18,223) | (25,773) | (35,624) | (53,448) |
Other income | 1,766 | 2,822 | ||
Income before income taxes | 255,414 | 595,652 | 762,939 | 1,189,689 |
Provision for income taxes | 91,994 | 241,239 | 271,150 | 481,824 |
Net income | 163,420 | 354,413 | 491,789 | 707,865 |
Loss attributable to noncontrolling interests | 9,196 | 8,546 | 29,879 | 19,439 |
Net income attributable to Ocean Bio-Chem, Inc. | $ 172,616 | $ 362,959 | $ 521,668 | $ 727,304 |
Earnings per common share - basic | $ 0.02 | $ 0.04 | $ 0.06 | $ 0.09 |
Earnings per common share - diluted | $ 0.02 | $ 0.04 | $ 0.06 | $ 0.09 |
Weighted average shares - basic | 8,493,559 | 8,204,520 | 8,446,235 | 8,155,704 |
Weighted average shares - diluted | 8,786,020 | 8,525,806 | 8,734,205 | 8,495,465 |
Property, Plant, & Equipment
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Jun. 30, 2013
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Property, Plant, & Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT, & EQUIPMENT |
The Company’s property, plant and equipment consisted of the following at June 30, 2013 and December 31, 2012:
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Inventories (Details) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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Summary of composition of inventories | ||
Raw materials | $ 3,751,837 | $ 4,055,812 |
Finished goods | 6,219,412 | 5,472,771 |
Inventories, gross | 9,971,249 | 9,528,583 |
Inventory reserves | (281,301) | (271,994) |
Inventories, net | $ 9,689,948 | $ 9,256,589 |
Summary of Accounting Policies (Policies)
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6 Months Ended |
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Jun. 30, 2013
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Summary of Accounting Policies [Abstract] | |
Interim reporting | Interim reporting
The accompanying unaudited condensed consolidated financial statements include the accounts of Ocean Bio-Chem, Inc. and its subsidiaries, all of which are wholly-owned, and OdorStar Technology LLC (“OdorStar”), a joint venture in which the Company has a controlling interest. All significant intercompany transactions and balances have been eliminated in consolidation. Certain prior-period data have been reclassified to conform to the current period presentation. Unless the context indicates otherwise, the term “Company” refers to Ocean Bio-Chem, Inc. and its subsidiaries
The unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.
The financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results to be expected for the year ending December 31, 2013.
The information included in this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. |
Use of estimates | Use of estimates
The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. |
Noncontrolling Interest (Details) (USD $)
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3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Noncontrolling Interest (Textual) | |||||
Assets | $ 21,797,002 | $ 21,797,002 | $ 21,010,483 | ||
Liabilities | 4,552,825 | 4,552,825 | 4,580,389 | ||
Operating losses | 273,637 | 619,659 | 798,563 | 1,240,315 | |
OdorStar [Member]
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Noncontrolling Interest (Textual) | |||||
Assets | 490,000 | 490,000 | 496,000 | ||
Liabilities | 4,000 | 4,000 | 7,000 | ||
Operating losses | $ 18,000 | $ 17,000 | $ 59,000 | $ 39,000 |
Property, Plant, & Equipment (Details) (USD $)
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6 Months Ended | |||||||||
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Jun. 30, 2013
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Dec. 31, 2012
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Jun. 30, 2013
Building and improvements [Member]
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Jun. 30, 2013
Manufacturing and warehouse equipment [Member]
Maximum [Member]
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Jun. 30, 2013
Manufacturing and warehouse equipment [Member]
Minimum [Member]
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Jun. 30, 2013
Office equipment and furniture [Member]
Maximum [Member]
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Jun. 30, 2013
Office equipment and furniture [Member]
Minimum [Member]
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Jun. 30, 2013
Leasehold improvements [Member]
Maximum [Member]
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Jun. 30, 2013
Leasehold improvements [Member]
Minimum [Member]
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Jun. 30, 2013
Automobile [Member]
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Summary of property, plant and equipment | ||||||||||
Land | $ 278,325 | $ 278,325 | ||||||||
Building and improvements | 4,509,795 | 4,489,377 | ||||||||
Manufacturing and warehouse equipment | 8,116,633 | 7,982,669 | ||||||||
Office equipment and furniture | 789,154 | 738,584 | ||||||||
Construction in process | 68,303 | 249,027 | ||||||||
Leasehold improvements | 394,112 | 122,644 | ||||||||
Automobile | 32,263 | |||||||||
Property, plant and equipment, gross | 14,188,585 | 13,860,626 | ||||||||
Less accumulated depreciation | (8,883,798) | (8,532,717) | ||||||||
Property, plant and equipment, net | $ 5,304,787 | $ 5,327,909 | ||||||||
Estimated Useful Life | 30 years | 20 years | 6 years | 5 years | 3 years | 15 years | 10 years | 3 years |
Earnings Per Share (Details) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Earnings per common share - Basic | ||||
Net income attributable to OBCI | $ 172,616 | $ 362,959 | $ 521,668 | $ 727,304 |
Weighted average number of common shares outstanding | 8,493,559 | 8,204,520 | 8,446,235 | 8,155,704 |
Earnings per common share - Basic | $ 0.02 | $ 0.04 | $ 0.06 | $ 0.09 |
Earnings per common share - Diluted | ||||
Net income attributable to OBCI | $ 172,616 | $ 362,959 | $ 521,668 | $ 727,304 |
Weighted average number of common shares outstanding | 8,493,559 | 8,204,520 | 8,446,235 | 8,155,704 |
Effect of employee stock-based awards | 292,461 | 321,286 | 287,970 | 339,761 |
Weighted average number of common shares outstanding - assuming dilution | 8,786,020 | 8,525,806 | 8,734,205 | 8,495,465 |
Earnings per common share - Diluted | $ 0.02 | $ 0.04 | $ 0.06 | $ 0.09 |
Earnings Per Share (Textual) | ||||
Anti-dilutive stock options outstanding | 0 | 0 | 0 | 0 |
Long Term Debt (Details Textual) (USD $)
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6 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Dec. 31, 2012
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Jun. 30, 2013
REFCO [Member]
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Jul. 06, 2011
REFCO [Member]
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Long Term Debt (Textual) | ||||
Term loan | $ 1,709,000 | $ 2,430,000 | ||
Interest rate | 3.54% | |||
Term loan maturity date | Jul. 06, 2017 | |||
Aggregate capital lease | $ 27,882 | $ 37,552 | ||
Maturity period for capital lease | Through 2015. | |||
Interest rates minimum | 7.00% | |||
Interest rates maximum | 14.00% |
Inventories (Details Textual) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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Inventories (Textual) | ||
Inventories managed at the customer's warehouses | $ 500,000 | $ 487,000 |
Recent Accounting Pronouncements
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6 Months Ended | ||
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Jun. 30, 2013
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Recent Accounting Pronouncements [Abstract] | |||
RECENT ACCOUNTING PRONOUNCEMENTS |
There have been no accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2013 that are expected to have a material impact on the Company’s financial position, results of operations or cash flows. Accounting pronouncements that became effective during the six months ended June 30, 2013 did not have a material impact on disclosures or on the Company’s financial position, results of operations or cash flows. |
Noncontrolling Interest
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6 Months Ended | ||
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Jun. 30, 2013
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Noncontrolling Interest [Abstract] | |||
NONCONTROLLING INTEREST |
On May 10, 2010, the Company and BBL Distributors, LLC formed OdorStar. OdorStar owns patents that relate to a formula and delivery system, for use with products containing chlorine dioxide, designed to safely prevent and eliminate odors relating to mold, mildew and other sources of unpleasant odors. The Company and BBL Distributors, LLC share equally in profits or losses from OdorStar. Because the Company manages OdorStar, it has consolidated OdorStar in its financial statements. The Company’s condensed consolidated financial statements include approximately $490,000 and $496,000 in assets and $4,000 and $7,000 in liabilities of OdorStar at June 30, 2013 and December 31, 2012, respectively. The Company’s condensed consolidated financial statements also include OdorStar’s operating losses of approximately $18,000 and $17,000 during the three months ended June 30, 2013 and 2012, respectively, and $59,000 and $39,000 during the six months ended June 30, 2013 and 2012, respectively.
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Inventories
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES |
The composition of inventories at June 30, 2013 and December 31, 2012 are as follows:
The inventory reserves shown in the table above reflect slow moving and obsolete inventory.
The Company manages an inventory program for one of its customers to improve the promotion of the Company's products. In connection with the program, the Company manages the inventory levels at the customer’s warehouses and recognizes revenue as the products are sold by the customer. The inventories managed at the customer’s warehouses amounted to approximately $500,000 and $487,000 at June 30, 2013 and December 31, 2012, respectively, and are included in inventories, net on the balance sheet.
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Related Party Transactions (Details) (USD $)
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3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Related Party Transactions (Textual) | |||||
Sales to the affiliated companies | $ 469,000 | $ 384,000 | $ 940,000 | $ 611,000 | |
Administrative fees | 134,000 | 86,000 | 236,000 | 146,000 | |
Accounts receivable from the affiliated companies | 424,181 | 424,181 | 556,051 | ||
Amount paid to entity for services | 10,500 | 10,500 | 21,000 | 21,000 | |
Insurance premiums paid | $ 150,000 | $ 123,000 | $ 333,000 | $ 272,000 |