UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 0-11102

OCEAN BIO-CHEM, INC.

(Exact name of registrant as specified in its charter)

Florida

59-1564329

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

4041 SW 47 Avenue, Fort Lauderdale, Florida		33314
(Address of principal executive offices)		(Zip Code)

954-587-6280

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act.

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $0.01 par value		OBCI		The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

At August 16, 2021, 9,485,799 shares of the registrant’s common stock were outstanding.

OCEAN BIO-CHEM, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
PART I	Financial Information:

Item 1.	Financial Statements	1

	Condensed consolidated balance sheets at June 30, 2021 (unaudited) and December 31, 2020	1

	Condensed consolidated statements of operations (unaudited) for the three and six months ended June 30, 2021 and 2020	2

	Condensed consolidated statements of comprehensive income (unaudited) for the three and six months ended June 30, 2021 and 2020	3

	Condensed consolidated statements of shareholders’ equity (unaudited) for the three and six months ended June 30, 2021 and 2020	4-5

	Condensed consolidated statements of cash flows (unaudited) for the six months ended June 30, 2021 and 2020	6

	Notes to condensed consolidated financial statements	7-16

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17-21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22

Item 4.	Controls and Procedures	22

PART II	Other Information:

Item 1A.	Risk Factors	23

Item 6.	Exhibits	23

	Signatures	24

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

OCEAN BIO-CHEM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2021			December 31, 2020
	(Unaudited)
ASSETS
Current Assets:
Cash	$	8,304,377		$	11,123,726
Trade accounts receivable less allowances of approximately $413,000 and $326,000, respectively		12,657,952			8,326,939
Receivables due from affiliated companies		898,278			1,496,104
Restricted cash		-			477,426
Inventories, net		16,741,489			13,175,756
Prepaid expenses and other current assets		1,527,435			1,259,786
Total Current Assets		40,129,531			35,859,737

Property, plant and equipment, net		12,449,925			10,101,962
Operating lease – right to use		226,127			268,920
Intangible assets, net		1,522,976			1,665,299
Total Assets	$	54,328,559		$	47,895,918

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt, net	$	483,166		$	500,694
Current portion of operating lease liability		87,974			86,377
Accounts payable – trade		4,293,300			1,966,010
Income taxes payable		3,107			-
Accrued expenses payable		1,575,316			1,142,825
Total Current Liabilities		6,442,863			3,695,906

Deferred tax liability		380,589			380,218
Operating lease liability, less current portion		138,153			182,543
Long-term debt, less current portion and debt issuance costs		3,466,946			3,730,180
Total Liabilities		10,428,551			7,988,847

COMMITMENTS AND CONTINGENCIES

Shareholders’ Equity:
Common stock - $.01 par value, 12,000,000 shares authorized; 9,485,799 and 9,481,799 shares issued and outstanding		94,858			94,818
Additional paid in capital		10,871,840			10,816,100
Accumulated other comprehensive loss		(293,843	)		(294,324	)
Retained earnings		33,227,153			29,290,477
Total Shareholders’ Equity		43,900,008			39,907,071

Total Liabilities and Shareholders’ Equity	$	54,328,559		$	47,895,918

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

OCEAN BIO-CHEM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020

Net sales	$	15,688,985		$	15,701,622		$	28,820,209		$	23,521,125

Cost of goods sold		8,416,553			7,994,110			16,167,056			12,671,342

Gross profit		7,272,432			7,707,512			12,653,153			10,849,783

Operating Expenses:
Advertising and promotion		1,265,583			804,263			2,207,397			1,541,936
Selling and administrative		2,641,657			2,498,659			4,614,469			4,212,075
Total operating expenses		3,907,240			3,302,922			6,821,866			5,754,011

Operating income		3,365,192			4,404,590			5,831,287			5,095,772

Other (expense) income
Interest (expense), net		(40,823	)		(38,206	)		(78,010	)		(54,080	)
Gain on insurance settlement		-			-			-			126,210

Income before income taxes		3,324,369			4,366,384			5,753,277			5,167,902

Provision for income taxes		(723,054	)		(914,063	)		(1,247,693	)		(1,088,700	)

Net income	$	2,601,315		$	3,452,321		$	4,505,584		$	4,079,202

Earnings per common share – basic	$	0.27		$	0.37		$	0.48		$	0.43

Earnings per common share – diluted	$	0.27		$	0.36		$	0.48		$	0.43

Dividends declared per common share	$	0.03		$	0.04		$	0.06		$	0.04

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

OCEAN BIO-CHEM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net income	$	2,601,315	$	3,452,321	$	4,505,584	$	4,079,202

Foreign currency translation adjustment		1,077		946		481		(1,382	)

Comprehensive income	$	2,602,392	$	3,453,267	$	4,506,065	$	4,077,820

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

OCEAN BIO-CHEM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

THREE MONTHS ENDED JUNE 30, 2021 AND 2020

(UNAUDITED)

					Additional		Accumulated Other
	Common Stock				Paid In		Comprehensive			Retained
	Shares		Amount		Capital		Loss			Earnings			Total
March 31, 2021		9,481,799	$	94,818	$	10,816,100	$	(294,920	)	$	30,910,292		$	41,526,290

Net income		-		-		-		-			2,601,315			2,601,315

Dividends, common stock		-		-		-		-			(284,454	)		(284,454	)

Stock based compensation		4,000		40		55,740		-			-			55,780

Foreign currency translation adjustment		-		-		-		1,077			-			1,077

June 30, 2021		9,485,799	$	94,858	$	10,871,840	$	(293,843	)	$	33,227,153		$	43,900,008

					Additional		Accumulated Other
	Common Stock				Paid In		Comprehensive			Retained
	Shares		Amount		Capital		Loss			Earnings			Total
March 31, 2020		9,448,105	$	94,481	$	10,503,118	$	(296,819	)	$	21,058,037		$	31,358,817

Net income		-		-		-		-			3,452,321			3,452,321

Dividends, common stock		-		-		-		-			(378,484	)		(378,484	)

Options exercised		10,000		100		20,600		-			-			20,700

Stock based compensation		4,000		40		22,180		-			-			22,220

Foreign currency translation adjustment		-		-		-		946			-			946

June 30, 2020		9,462,105	$	94,621	$	10,545,898	$	(295,873	)	$	24,131,874		$	34,476,520

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

OCEAN BIO-CHEM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(UNAUDITED)

					Additional		Accumulated Other
	Common Stock				Paid In		Comprehensive			Retained
	Shares		Amount		Capital		Loss			Earnings			Total
December 31, 2020		9,481,799	$	94,818	$	10,816,100	$	(294,324	)	$	29,290,477		$	39,907,071

Net income		-		-		-		-			4,505,584			4,505,584

Dividends, common stock		-		-		-		-			(568,908	)		(568,908	)

Stock based compensation		4,000		40		55,740		-			-			55,780

Foreign currency translation adjustment		-		-		-		481			-			481

June 30, 2021		9,485,799	$	94,858	$	10,871,840	$	(293,843	)	$	33,227,153		$	43,900,008

					Additional		Accumulated Other
	Common Stock				Paid In		Comprehensive			Retained
	Shares		Amount		Capital		Loss			Earnings			Total
December 31, 2019		9,442,809	$	94,428	$	10,503,171	$	(294,491	)	$	20,431,156		$	30,734,264

Net income		-		-		-		-			4,079,202			4,079,202

Dividends, common stock		-		-		-		-			(378,484	)		(378,484	)

SEC Form 10-Q filed by Ocean Bio-Chem, Inc.