Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 25, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'LAPOLLA INDUSTRIES INC | ' |
Entity Central Index Key | '0000875296 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 112,914,465 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
Condensed_Balance_Sheets
Condensed Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Current Assets: | ' | ' |
Cash | ' | ' |
Trade Receivables, Net | 8,291,130 | 7,302,149 |
Inventories | 5,145,744 | 4,832,348 |
Prepaid Expenses and Other Current Assets | 731,541 | 726,737 |
Total Current Assets | 14,168,415 | 12,861,234 |
Property, Plant and Equipment | 1,645,223 | 1,969,998 |
Other Assets: | ' | ' |
Goodwill | 4,234,828 | 4,234,828 |
Other Intangible Assets, Net | 1,220,578 | 1,462,639 |
Deposits and Other Non-Current Assets, Net | 730,424 | 455,553 |
Total Other Assets | 6,185,830 | 6,153,020 |
Total Assets | 21,999,468 | 20,984,252 |
Current Liabilities: | ' | ' |
Accounts Payable | 8,348,721 | 7,637,141 |
Accrued Expenses and Other Current Liabilities | 1,450,665 | 1,345,014 |
Current Portion of Notes Payable - Enhanced | 3,664,003 | 1,219,998 |
Current Portion of Derivate Liability | ' | 65,656 |
Current Portion of Long-Term Debt | 9,511 | 21,077 |
Total Current Liabilities | 13,472,900 | 10,288,886 |
Other Liabilities: | ' | ' |
Non-Current Portion of Revolver Loan | 5,747,061 | 5,032,450 |
Non-Current Portion of Notes Payable- Enhanced | ' | 3,117,336 |
Non-Current Portion of Note Payable - Related Party | 1,300,000 | 1,300,000 |
Accrued Interest- Note Payable- Related Party | 99,672 | 47,038 |
Non-Current Portion of Long-Term Debt | ' | 4,430 |
Total Other Liabilities | 7,146,733 | 9,501,254 |
Total Liabilities | 20,619,633 | 19,790,140 |
Stockholders' Equity: | ' | ' |
Common Stock, $.01 Par Value; 140,000,000 Shares Authorized; 112,914,465 and 109,372,266 Issued and Outstanding for September 30, 2013 and December 31, 2012, respectively. | 1,129,145 | 1,093,723 |
Additional Paid-In Capital | 86,223,298 | 84,745,704 |
Accumulated (Deficit) | -85,849,697 | -84,524,609 |
Accumulated Other Comprehensive (Loss) | -122,911 | -120,706 |
Total Stockholders' Equity | 1,379,835 | 1,194,112 |
Total Liabilities and Stockholders' Equity | $21,999,468 | $20,984,252 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Stockholders' Equity: | ' | ' |
Common Stock, par value (in dollars per share) | $0.01 | $0.01 |
Common Stock, shares authorized (in shares) | 140,000,000 | 140,000,000 |
Common Stock, shares issued (in shares) | 112,914,465 | 109,372,266 |
Common Stock, shares outstanding (in shares) | 112,914,465 | 109,372,266 |
Condensed_Statements_of_Operat
Condensed Statements of Operations and Comprehensive Loss (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Sales | $18,074,101 | $17,619,928 | $52,837,387 | $54,055,922 |
Cost of Sales | 14,136,145 | 14,132,708 | 41,416,495 | 44,576,178 |
Gross Profit | 3,937,956 | 3,487,220 | 11,420,892 | 9,479,744 |
Operating Expenses: | ' | ' | ' | ' |
Selling, General and Administrative | 3,396,028 | 3,351,056 | 9,873,835 | 11,376,247 |
Professional Fees | 192,196 | 101,672 | 816,688 | 341,255 |
Depreciation | 41,786 | 55,400 | 131,046 | 176,138 |
Amortization of Other Intangible Assets | 80,325 | 125,666 | 338,776 | 373,867 |
Consulting Fees | 133,327 | 128,536 | 351,656 | 393,256 |
Total Operating Expenses | 3,843,662 | 3,762,330 | 11,512,001 | 12,660,763 |
Operating Income (Loss) | 94,294 | -275,110 | -91,109 | -3,181,019 |
Other (Income) Expense: | ' | ' | ' | ' |
Interest Expense | 226,808 | 271,206 | 783,590 | 575,171 |
Interest Expense-Related Party | 187,870 | 190,460 | 557,585 | 204,039 |
(Gain) on Derivative Liability | ' | -47,335 | -65,656 | -72,242 |
Other, Net | -23,206 | -13,843 | -41,540 | -18,620 |
Total Other (Income) Expense | 391,472 | 400,488 | 1,233,980 | 688,348 |
Net Loss | -297,178 | -675,598 | -1,325,088 | -3,869,367 |
Net Loss Per Share- Basic and Diluted | $0 | ($0.01) | ($0.01) | ($0.04) |
Weighted Average Shares Outstanding | 112,155,974 | 107,251,163 | 110,945,316 | 106,788,112 |
Other Comprehensive (Loss): | ' | ' | ' | ' |
Foreign Currency Translation Adjustment (Loss) | ' | 63,967 | -2,205 | 17,035 |
Total Other Comprehensive (Loss) | ' | 63,967 | -2,205 | 17,035 |
Comprehensive (Loss) | ($297,178) | ($611,631) | ($1,327,293) | ($3,852,332) |
Condensed_Statements_of_Cash_F
Condensed Statements of Cash Flows (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash Flows From Operating Activities | ' | ' |
Net Loss: | ($1,325,088) | ($3,869,367) |
Adjustments to Reconcile Net Loss to Net Cash (Used in) Provided by Operating Activities: | ' | ' |
Depreciation | 343,538 | 414,465 |
Amortization of Other Intangible Assets | 338,776 | 373,867 |
Provision for Losses on Accounts Receivable | 190,654 | 664,628 |
Share Based Compensation Expense | 1,008,063 | 900,050 |
Interest Expense- Related Party | 557,585 | 204,040 |
Gain on Derivative Liability | -65,656 | -72,242 |
Gain on Disposal of Asset | -7,148 | 9,075 |
Changes in Assets and Liabilities: | ' | ' |
Trade Receivables | -1,179,635 | 2,009,537 |
Inventories | -313,396 | 2,396,385 |
Prepaid Expenses and Other Current Assets | -4,804 | 1,053,921 |
Other Intangible Assets | -96,715 | -46,758 |
Deposits and Other Non-Current Assets | -274,871 | -93,836 |
Accounts Payable | 711,582 | -4,544,580 |
Accrued Expenses and Other Current Liabilities | 105,651 | -469,716 |
Net Cash (Used in) Provided by Operating Activities | -11,464 | -1,070,531 |
Cash Flows From Investing Activities | ' | ' |
Acquisitions of Property, Plant and Equipment | -40,401 | -86,501 |
Proceeds from Disposal of Property, Plant and Equipment | 28,786 | 13,649 |
Net Cash Provided by (Used in) Investing Activities | -11,615 | -72,852 |
Cash Flows From Financing Activities | ' | ' |
Proceeds from Revolver Loan | 56,715,217 | 61,858,039 |
Principal Repayments to Revolver Loan | -56,000,604 | -65,461,255 |
Principal Repayments to Notes Payable - Enhanced | -673,331 | ' |
Proceeds from Note Payable - Enhanced | ' | 4,400,000 |
Proceeds from Note Payable- Related Party | ' | 1,300,000 |
Principal Repayments to Term Loan | ' | -937,501 |
Principal Repayments on Long Term Debt | -15,998 | -32,935 |
Net Cash Provided by (Used in) Financing Activities | 25,284 | 1,126,348 |
Net Effect of Exchange Rate Changes on Cash | -2,205 | 17,035 |
Net Change in Cash | ' | ' |
Cash at Beginning of Period | ' | ' |
Cash at End of Period | ' | ' |
Supplemental Disclosure of Cash Flow Information: | ' | ' |
Cash Payments for Interest | 598,769 | 464,634 |
Supplemental Schedule of Non Cash Investing and Financing Activities: | ' | ' |
Issuance of Restricted Common Stock for Related Party Personal Guaranty on Note Payable | $504,863 | $173,836 |
Basis_of_Presentation_Critical
Basis of Presentation, Critical Accounting Policies, Estimates, and Assumptions | 9 Months Ended |
Sep. 30, 2013 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation, Critical Accounting Policies, Estimates, and Assumptions | ' |
Note 1. Basis of Presentation, Critical Accounting Policies, Estimates, and Assumptions. | |
The condensed financial statements included herein are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of the management, the accompanying statements reflect adjustments necessary to present fairly the financial position, results of operations and cash flows for those periods indicated, and contain adequate disclosure to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the Notes to the condensed financial statements. The condensed financial statements included herein should be read in conjunction with the financial statements and Notes thereto included in Lapolla’s latest annual report on Form 10-K in order to fully understand the basis of presentation. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year. Certain amounts in the prior years have been reclassified to conform to the 2013 unaudited condensed financial statement presentation. Reference is made to Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 12. Risk factors that could impact results are discussed in Part II – Other Information, Item 1A – Risk Factors on page 19. Refer to the Company’s 2012 Annual Report on Form 10-K for a description of major accounting policies. There have been no material changes to these accounting policies during the three and nine months ended September 30, 2013. | |
Derivatives and Fair Value | |
The Company recognizes derivatives on the balance sheet at fair value with changes in the values of these derivative liabilities reflected in the statements of operations. The fair value of our derivative liabilities was estimated to be $-0- and $65,656 as of September 30, 2013 and December 31, 2012, respectively. We review the underlying assumptions on our derivative liabilities quarterly and they are subject to change based primarily on management’s assessment at that time. Accordingly, changes to these assessments could materially affect the valuation, which could positively or negatively affect our financial performance in future periods. Disclosures related to our derivative liabilities are included in Note 10 to our condensed financial statements. | |
Income Taxes | |
The Company’s provision for income taxes is determined using the U.S. federal statutory rate. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities along with net operating loss and tax credit carryovers. The Company’s deferred tax asset was approximately $22.2 Million and $22.0 Million at September 30, 2013 and December 31, 2012, respectively. The Company recorded a valuation allowance against the deferred tax asset of $22.2 Million and $22.0 Million at September 30, 2013 and December 31, 2012, respectively, reducing its net carrying value to zero. The Company had no increase or decrease in unrecognized income tax benefits or any accrued interest or penalties relating to tax uncertainties at September 30, 2013 and December 31, 2012. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. | |
Impairment of Long-Lived Assets | |
Property, Plant and Equipment | |
Property, plant and equipment is recorded at cost and depreciated using the straight-line method, which deducts equal amounts of the cost of each asset from earnings every year over its estimated economic useful life. The estimated economic useful life of an asset is monitored to determine its appropriateness, especially in light of changed business circumstances. Property, plant, and equipment held for use is grouped for impairment testing at the lowest level for which there is an identifiable cash flow. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Such circumstances would include a significant decrease in the market value of a long-lived asset grouping, a significant adverse change in the manner in which the asset grouping is being used or in its physical condition, a history of operating or cash flow losses associated with the use of the asset grouping, or changes in the expected useful life of the long-lived assets. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by that asset group is compared to the carrying value to determine whether impairment exists. If an asset group is determined to be impaired, the loss is measured based on the difference between the asset group’s fair value and its carrying value. An estimate of the asset group’s fair value is based on the discounted value of its estimated cash flows. Assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell. The assumptions underlying cash flow projections represent our best estimates at the time of the impairment review. Factors that we must estimate include industry and market conditions, sales volume and prices, costs to produce, etc. Changes in key assumptions or actual conditions that differ from estimates could result in an impairment charge. Management believes it uses reasonable and supportable assumptions when performing impairment reviews and cannot predict the occurrence of future events and circumstances that could result in impairment charges. The Company does not believe any indicators of impairment exist for property, plant and equipment at September 30, 2013. Net property, plant and equipment totaled $1,645,223 and $1,969,998 as of and for the quarter and year ended September 30, 2013 and December 31, 2012, respectively. Depreciation expense totaled $110,838 and $131,317, of which $69,052 and $75,917, and $343,538 and $414,465, of which $212,492 and $238,327, was included in cost of sales, for the three and nine months ended September 30, 2013 and 2012, respectively. | |
Goodwill | |
Goodwill represents the excess of the aggregate purchase price over the fair value of net tangible and identifiable intangible asset of an acquired business. Goodwill was $4,234,828 at September 30, 2013 and December 31, 2012. The Company operates two reporting units or segments, Foam and Coatings. Disclosures related to goodwill are included in Note 7 to the financial statements. The Company evaluates goodwill for impairment on an annual basis, or more frequently if Management believes indicators of impairment exist, by comparing the carrying value of each reportable segment to their estimated fair values. The annual evaluation is performed in the fourth quarter of each calendar year. The impairment test requires the Company to compare the fair value of each reporting unit to its carrying value, including assigned goodwill. As of September 30, 2013, the Company does not believe any indicators of impairment exist for goodwill that would require additional analysis before the 2013 annual evaluation. | |
Other Intangible Assets | |
The Company had other intangible assets consisting primarily of customer lists, product formulations, trade names, and non-competes that were acquired as part of business combinations. Other intangible assets are tested for impairment as part of the long-lived asset grouping impairment tests. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. See impairment discussion above under Property, Plant and Equipment for a description of how impairment losses are determined. Disclosures related to other intangible assets are included in Note 7 to the financial statements. Significant management judgment is required in the forecasts of future operating results that are used in the Company’s impairment evaluations. The estimates used are consistent with the plans and estimates that Management uses to manage its business. It is possible, however, that the plans may change and estimates used may prove to be inaccurate. If the Company’s actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, then the Company could incur future impairment charges, which would adversely affect financial performance. The Company does not believe any indicators of impairment exist for other intangible assets at September 30, 2013. Net other intangible assets totaled $1,220,578 and $1,462,639 as of September 30, 2013 and December 31, 2012, respectively. Amortization expense totaled $80,325 and $125,666, and $338,776 and $373,867, for the three and nine months ended September 30, 2013 and 2012, respectively. | |
Revenue Recognition | |
Sales are recognized as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. Sales channels include direct sales, distributors, and independent representatives. Amounts billed for shipping and handling are included in sales (freight). Freight included in sales totaled $291,466 and $373,708, and $851,699 and $952,627, for the three and nine months ended September 30, 2013 and 2012, respectively. Costs incurred for shipping and handling are included in cost of sales. Sales are recorded net of sales tax. Freight included in cost of sales totaled $882,121 and $980,049, and $2,549,389 and $3,248,085, for the three and nine months ended September 30, 2013 and 2012, respectively. | |
Share Based Compensation | |
The Company accounts for stock based compensation by measuring and recognizing the cost of employee or director services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of share based awards is estimated at the grant date using a straight line closing trading stock price based valuation model and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. Share based compensation expense was $309,762 and $298,241, and $969,676 and $900,050, for the three and nine months ended September 30, 2013 and 2012, respectively. If additional stock options or stock awards are granted, financial performance will be negatively affected, and if outstanding stock options or stock awards are forfeited or canceled, resulting in non-vesting of such stock options or stock awards, financial performance will be positively affected. In either instance, the Company’s financial performance may change depending on stock option or stock award activities in future periods. | |
Allowance for Doubtful Accounts | |
The Company presents trade receivables, net of allowances for doubtful accounts, to ensure trade receivables are not overstated due to uncollectible accounts. Allowances, when required, are calculated based on a detailed review of certain individual customer accounts and an estimation of the overall economic conditions affecting our customer base. The Company reviews a customer’s credit history before extending credit. The allowance for doubtful accounts was approximately $504,000 and $996,000 at September 30, 2013 and December 31, 2012, respectively. If the financial condition of customers were to deteriorate based on worsening overall economic conditions, resulting in an impairment of their ability to make payments to the Company, then additional allowances may be required in future periods, which would adversely affect the Company’s financial performance. | |
Advertising and Marketing | |
Advertising and marketing costs are generally expensed as incurred. Expenditures for trade magazines and television commercials are expensed at the time the first advertisement is printed or shown on television. Expenditures for certain advertising and marketing activities related to trade shows are deferred within the Company’s fiscal year when the benefits clearly extend beyond the interim period in which the expenditure is made, generally not to exceed 90 days. Other advertising and marketing expenditures that do not meet the deferred criteria are expensed when the advertising occurs. Deferred advertising capitalized was $66,719 and $48,255 for the nine months ended September 30, 2013 and 2012, respectively. Total advertising and marketing costs expensed were $129,176 and $204,947, and $732,493 and $1,102,110, for the three and nine months ended September 30, 2013 and 2012, respectively. | |
Net Income (Loss) Per Common Share | |
Basic income (loss) per share is based upon the net income (loss) applicable to common shares after preferred dividend requirements and upon the weighted average number of common shares outstanding during the period. Diluted income (loss) per share reflects the effect of the exercise of stock options or warrants only in periods in which such effect would have been dilutive. For the three and nine months ended September 30, 2013 and 2012, basic and diluted net (loss) per share are the same since (a) the Company has reflected a net loss for the period presented and (b) the potential issuance of shares of common stock of the Company would be anti-dilutive. There were 350,000 and -0- in-the-money vested and exercisable stock options or warrants includable in but excluded from the computation of net (loss) per share – diluted due to the net (loss) that could potentially dilute net (loss) per share in the future for the three and nine month periods ended September 30, 2013 and 2012, respectively. | |
Recently Adopted Accounting Standards | |
In February 2013, the FASB issued an accounting standards update that requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amounts are required to be reclassified in their entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. This guidance will be effective for reporting periods beginning after December 15, 2012, which will be the Company's fiscal year 2013, with early adoption permitted. The Company adopted the provisions of the guidance in the first quarter of 2013. The adoption did not have a material impact on the Company’s consolidated financial statements. | |
New Accounting Standards Not Yet Adopted | |
In July 2013, the FASB issued an accounting standards update that requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carry-forward that would apply in settlement of the uncertain tax positions. This guidance will be effective for fiscal years beginning after December 15, 2013, which will be the Company's fiscal year 2014, with early adoption permitted. The Company currently does not expect the adoption of the guidance will have a material impact on the Company's consolidated financial statements. |
Liquidity
Liquidity | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Liquidity | ' |
Note 2. Liquidity. | |
The Company has an accumulated deficit of $85,849,697, had a net loss of $1,325,088, and used $11,464 of cash in operating activities. As a result, there are concerns about the liquidity of the Company at September 30, 2013. The Company has a working capital surplus of $695,515. Management believes that the cash generated from operations and the Revolver Loan availability, subject to borrowing base limitations, based on budgeted sales and expenses and implemented minimum sales margin and cost controls, and incidental financial assistance from the Chairman of the Board and principal stockholder for cash flow fluctuations, are sufficient to fund the Company’s operations, including capital expenditures, for the next 12 months. Notwithstanding the foregoing, the Company is seeking to raise additional capital from private placements of debt or common or preferred stock with accredited sophisticated investors to fund growth. |
Dependence_on_a_few_suppliers
Dependence on a few suppliers | 9 Months Ended |
Sep. 30, 2013 | |
Risks and Uncertainties [Abstract] | ' |
Dependence on a few suppliers | ' |
Note 3. Dependence on Few Suppliers. | |
The Company is dependent on a few suppliers for certain raw materials and finished goods. For the three and nine month periods ended September 30, 2013 and 2012, raw materials and finished goods purchased from the three largest suppliers accounted for approximately 43% and 53%, and 44% and 43%, of purchases, respectively. |
Trade_Receivables
Trade Receivables | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Receivables [Abstract] | ' | ||||||||
Trade Receivables | ' | ||||||||
Note 4. Trade Receivables. | |||||||||
Trade receivables are comprised of the following at: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Trade Receivables | $ | 8,795,511 | $ | 8,298,527 | |||||
Less: Allowance for Doubtful Accounts | (504,381 | ) | (996,378 | ) | |||||
Trade Receivables, Net | $ | 8,291,130 | $ | 7,302,149 | |||||
Inventories
Inventories | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
Note 5. Inventories. | |||||||||
The following is a summary of inventories at: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Raw Materials | $ | 1,208,734 | $ | 1,663,901 | |||||
Finished Goods | 3,937,010 | 3,168,447 | |||||||
Total Inventories | $ | 5,145,744 | $ | 4,832,348 |
Property_Plant_and_Equipment
Property, Plant and Equipment | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property, Plant and Equipment | ' | ||||||||
Note 6. Property, Plant and Equipment. | |||||||||
The following is a summary of property, plant and equipment at: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Vehicles | $ | 636,185 | $ | 758,408 | |||||
Leasehold Improvements | 283,961 | 283,961 | |||||||
Office Furniture and Equipment | 327,329 | 324,237 | |||||||
Computers and Software | 1,181,487 | 1,144,496 | |||||||
Machinery and Equipment | 2,453,760 | 2,449,987 | |||||||
Plant Construction in Progress | — | 10,788 | |||||||
Total Property, Plant and Equipment | $ | 4,882,722 | $ | 4,971,877 | |||||
Less: Accumulated Depreciation | (3,237,499 | ) | (3,001,879 | ) | |||||
Total Property, Plant and Equipment, Net | $ | 1,645,223 | $ | 1,969,998 |
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
Goodwill and Other Intangible Assets | ' | ||||||||||||||||||||||||
Note 7. Goodwill and Other Intangible Assets. | |||||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||||
The following is a summary of Goodwill at: | |||||||||||||||||||||||||
30-Sep-13 | 31-Dec-12 | ||||||||||||||||||||||||
Foam | $ | 2,932,208 | $ | 2,932,208 | |||||||||||||||||||||
Coatings | 1,302,620 | 1,302,620 | |||||||||||||||||||||||
Total Goodwill | $ | 4,234,828 | $ | 4,234,828 | |||||||||||||||||||||
Other Intangible Assets | |||||||||||||||||||||||||
30-Sep-13 | 31-Dec-12 | ||||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||||||
Customer Lists | $ | 859,235 | $ | (859,235 | ) | $ | — | $ | 859,235 | $ | (780,235 | ) | $ | 79,000 | |||||||||||
Product Formulation | 138,471 | (79,236 | ) | 59,235 | 138,471 | (72,312 | ) | 66,159 | |||||||||||||||||
Trade Names | 740,325 | (256,874 | ) | 483,451 | 740,325 | (219,857 | ) | 520,468 | |||||||||||||||||
Non-Competes | 210,000 | (210,000 | ) | — | 210,000 | (189,000 | ) | 21,000 | |||||||||||||||||
Approvals and Certifications | 1,517,525 | (839,633 | ) | 677,892 | 1,420,808 | (644,796 | ) | 776,012 | |||||||||||||||||
$ | 3,465,556 | $ | (2,244,978 | ) | $ | 1,220,578 | $ | 3,368,839 | $ | (1,906,200 | ) | $ | 1,462,639 | ||||||||||||
Accrued_Expenses_and_Other_Cur
Accrued Expenses and Other Current Liabilities | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued Expenses and Other Current Liabilities | ' | ||||||||
Note 8. Accrued Expenses and Other Current Liabilities. | |||||||||
The following is a summary of accrued expenses and other current liabilities as of: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Accrued Payroll | $ | 17,438 | $ | 138,677 | |||||
Accrued Commissions | 58,000 | 64,000 | |||||||
Accrued Inventory Purchases | 180,379 | — | |||||||
Accrued Taxes and Other | 1,101,483 | 917,244 | |||||||
Accrued Insurance | 64,935 | 220,715 | |||||||
Deferred Finance Charge Income | 28,430 | 4,378 | |||||||
Total Accrued Expenses and Other Current Liabilities | $ | 1,450,665 | $ | 1,345,014 | |||||
Financing_Instruments
Financing Instruments | 9 Months Ended |
Sep. 30, 2013 | |
Transfers and Servicing [Abstract] | ' |
Financing Instruments | ' |
Note 9. Financing Instruments | |
(a) Loan and Security Agreement. The Company entered into a Loan and Security Agreement with Bank of America, N.A. (“Bank”), effective September 1, 2010 (“Loan Agreement”), as amended from time to time, under which the Bank agreed to loan $13,000,000 under a revolver loan ("Revolver Loan"). The Company granted the Bank a continuing security interest in and lien upon all Company assets. The Base Rate is equal to the greater of (a) the Prime Rate; (b) the Federal Funds Rate, plus 0.50%; or (c) LIBOR for a 30 day interest period, plus 1.50%. Effective March 31, 2013, the Bank extended the revolver termination date to the earliest to occur of (a) March 31, 2016, (b) 90 days prior to the maturity date of the Subordinated Term Debt [Enhanced Notes], which mature on June 29, 2014, provided, however, that this clause (b) shall not be applicable if either (i) the Enhanced Notes have been refinanced, on or before March 31, 2014, on terms acceptable to the Bank in its sole discretion, or the Enhanced Notes have been paid in full on or before 90 days prior to their maturity date of June 29, 2014, or (c) 90 days prior to the maturity date of the Junior Note among the Company, Richard J. Kurtz, and the Bank, which matures October 1, 2014. The Company is currently seeking to raise additional capital from investors to refinance the Enhanced Notes, however, to be sure, the Company also has received a financial commitment from the Chairman of the Board and principal stockholder to ensure the Enhanced Notes are paid in full on or before March 31, 2014 (See Note 12 – Related Party Transactions, Item (e), for more information). At September 30, 2013, the balance outstanding on the Revolver Loan was $5,747,061 and the weighted-average interest rate was 4.3%. The Company was in compliance with its Loan Agreement debt covenants at September 30, 2013. | |
(b) Note Purchase Agreement. On June 29, 2012, the Company and Enhanced Jobs for Texas Fund, LLC (“Enhanced Jobs for Texas”) and Enhanced Capital Texas Fund, LP (“Enhanced Texas Fund”), entered into a Note Purchase Agreement for $4.4 Million Subordinated Secured Variable Rate Notes due June 29, 2014 (“Note Purchase Agreement”), of which $2.2 Million was with Enhanced Jobs for Texas and $2.2 Million was with Enhanced Texas Fund (collectively, the “Enhanced Notes”). Repayment of the principal amount of the Enhanced Notes is at the rate of $53,333 per month from October 31, 2012 through June 30, 2013, $150,000 per month from July 2013 through May 31, 2014, and $2,270,000 on June 30, 2014. The Chairman of the Board and principal stockholder has provided a financial commitment to assure the Company funding for the $2,270,000 due on June 30, 2014. Interest on the Enhanced Notes is at a rate equal to 10.0% per annum from June 29, 2012 until December 31, 2012, 10.75% per annum from January 1, 2013 until March 31, 2013, and at a rate 0.75% higher each quarter thereafter until June 29, 2014, and an additional rate of 2.0% per annum from June 29, 2012 through June 29, 2014 on the principal balance of the Enhanced Notes on each monthly payment date, with the default interest rate 6% higher. The Company is required in the event of a liquidity event, to prepay any outstanding balance under the Enhanced Notes, plus accrued interest, the net proceeds arising from a casualty event, the net proceeds arising from an asset disposition, and the amounts paid to the Company pursuant to the issuance of capital stock (other than permitted issuances) or indebtedness (other than permitted indebtedness) following June 29, 2012. The Company has the right to prepay the Enhanced Notes without premium or penalty. The Company also entered into a security agreement with the Note Purchase Agreement providing for a second lien on all assets of the corporation after the Bank, which has a first lien on all asset of the corporation. The debt covenants agreed upon by the Company under the Note Purchase agreement consist of a minimum EBITDA which cannot for the three (3) months ending on the last day of each month set forth in a schedule be less than the corresponding amount set forth in the schedule for such period. The minimum EBITDA targets for the three month periods ended January 31, February 28, March 31, April 30, May 31, June 30, July 31, August 31, and September 30, 2013 were $254,742, $232,294, $242,601, $343,071, $443,729, $557,116, $634,895, $672,864, and $678,102, respectively. The Note Purchase Agreement was personally guaranteed by the Chairman of the Board and majority stockholder of the Company (“Guarantor”), in exchange for the Company issuing the Guarantor 5 Million shares of restricted common stock, par value $.01, which vests monthly on a pro rata basis over the two year term of the Note Purchase Agreement. The shares of restricted common stock were valued at $.27 per share for an aggregate amount of $1,350,000, and which amount is being recorded as interest expense – related party, thereby increasing the effective interest rate on the Enhanced Notes. At September 30, 2013, the balance outstanding on the Enhanced Notes was $3,664,003 and the weighted-average effective interest rate was approximately 32.1%. The Company was in compliance with its Note Purchase Agreement debt covenants at September 30, 2013. See also Note 12 – Related Party Transactions, Item (e), for more information. | |
(c) Note Payable – Related Party. On April 16, 2012, the Company entered into a consolidated $1,300,000 promissory note, bearing interest at 5% per annum, due, including interest, on October 31, 2013, and entered into a subordination agreement with the Bank. On June 29, 2012, in connection with the Note Purchase Agreement (described in Item (b) above), the maturity date of the promissory note was extended to October 1, 2014 and further subordinated to the Enhanced Notes. At September 30, 2013, the Company had accrued interest of $99,672 relating to this promissory note. | |
(d) Warrants. The Company previously entered into a Revolving Credit and Term Loan Agreement on February 21, 2007 with ComVest which matured and was paid off in 2010, however, certain registered detachable warrants (“Warrants”) issued to ComVest remained. The registered Warrants were for the purchase of an aggregate of 2,500,000 shares of common stock, of which 1,500,000 were exercisable at a price of $.53 per share and 1,000,000 were exercisable at a price of $.65 per share, all of which expired on June 30, 2013. As of September 30, 2013, there were no outstanding Warrants nor any related fair value recordable on said date. See also Note 10 – Derivatives and Fair Value for more information. | |
See also Note 12 – Related Party Transactions, Item (d). |
Derivatives_and_Fair_Value
Derivatives and Fair Value | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
Derivatives and Fair Value | ' |
Note 10. Derivatives and Fair Value. | |
The Company evaluated the application of GAAP with respect to certain detachable Warrants (See Note 9 – Financing Instruments, (d) Warrants, above) to purchase common stock and accounted for them prior to their expiration on June 30, 2013, as a derivative as of January 1, 2009 due to the down round protection feature on the exercise price. The Company records the fair value of derivatives on its balance sheet at fair value with changes in the value of derivatives reflected in the statements of operations as “(Gain) Loss on Derivative Liabilities.” The Company’s derivative instruments are not designated as hedging instruments under GAAP and are disclosed on the balance sheet under “Derivative Liabilities”. At September 30, 2013 there were no outstanding derivative liabilities, however, on December 31, 2012, there were derivative liabilities and they were categorized as Level 3 fair value assets. For December 31, 2012, the primary assumptions used in establishing a fair value included projected volatility curve based on the Company's historical volatility of 219% and holder exercise targets at 150% of exercise price for the Warrants, decreasing as the Warrants approached maturity. The fair value of the derivative liabilities were $-0- and estimated to be $65,656 at September 30, 2013 and December 31, 2012, respectively. |
Long_Term_Debt
Long Term Debt | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long Term Debt | ' | ||||||||
Note 11. Long Term Debt. | |||||||||
The following is a summary of long term debt at: | |||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Various notes payable on vehicles and equipment, due in monthly installments of $1,574 including interest, maturing through 2014. | $ | 9,511 | $ | 25,507 | |||||
Less: Current Maturities | (9,511 | ) | (21,077 | ) | |||||
Total Long-Term Debt | $ | — | $ | 4,430 |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
Note 12. Related Party Transactions. | |
(a) For the nine months ended September 30, 2013, the Company vested an aggregate of 1,417,472 shares, including anti-dilution shares, of restricted common stock, par value $.01 per share, to a non-employee director for advisory and consulting services, which transactions were valued and recorded in the aggregate at $757,208. | |
(b) For the nine months ended September 30, 2013, the Company vested an aggregate of 1,869,863 shares of restricted common stock, par value $.01 per share, to the Chairman of the Board and majority stockholder in connection with his personal guaranty for a Note Purchase Agreement, which transactions were valued and recorded in the aggregate at $504,952, and classified as interest expense – related party. See also Note 9 – Financing Instruments, Item (b) – Note Purchase Agreement, for more information. | |
(c) For the nine months ended September 30, 2013, the Company accrued an aggregate of $52,634 in interest relating to the Note Payable – Related Party. See also Note 9 – Financing Instruments, Item (c) – Note Payable – Related Party, for more information. | |
(d) The Chairman of the Board and principal stockholder made two $500,000 advances, one on July 2, 2013 and the other on August 5, 2013, to the Company to assist in cash flow fluctuations and the Company repaid the Chairman back on said dates. | |
(e) On July 26, 2013, the Chairman of the Board and principal stockholder provided Management with a financial commitment to ensure payment of the $2,314,000 balloon payment under the Note Purchase Agreement, and taking into account the Company’s obligations under the Revolver Loan, an additional $450,000, for a total amount of $2,764,000, which is required to be paid 90 days prior to the Note Purchase Agreement maturity date, or by March 31, 2014 (the “Total Commitment”). The Total Commitment will be superseded in the event and to the extent that: (a) the Company is independently funded by a third party source, either privately or institutionally, at or before the time the Total Commitment as such relates to the Note Purchase Agreement is fully satisfied; or (b) in the event any outstanding balance under the Note Purchase Agreement, plus accrued interest, is satisfied in connection with a liquidity event as defined in and pursuant to the Note Purchase Agreement. |
Net_Income_Loss_per_Common_Sha
Net Income (Loss) per Common Share - Basic and Diluted | 9 Months Ended |
Sep. 30, 2013 | |
Earnings Per Share [Abstract] | ' |
Net Income (Loss) per Common Share - Basic and Diluted | ' |
Note 13. Net Income (Loss) Per Common Share – Basic and Diluted. | |
Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. Common stock equivalents were not considered in calculating diluted net loss per common share for the three and nine month periods ended September 30, 2013 and 2012 as their effect would be anti-dilutive. For September 30, 2013, a total of 4,785,833 shares of common stock underlying vested and exercisable stock options were excluded from the calculation of diluted earnings per common share, of which 350,000 stock options had exercise prices less than the market value of the common shares (in-the-money) and 4,435,833 stock options had exercise prices greater than or equal to the market value of the common shares (out-of-the-money). For September 30, 2012, a total of 7,062,348 shares of common stock were excluded from the calculation of diluted earnings per common share: (a) 2,500,000 shares were for outstanding warrants, and (b) 4,562,348 shares were for vested and exercisable stock options, both of which were out-of-the-money. Out-of-the-money securities could be included in the calculation in the future if the market value of the Company’s common shares increases and is greater than the exercise price of these securities and they have not expired. |
Securities_Transactions
Securities Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
Securities Transactions | ' |
Note 14. Securities Transactions. | |
(a) During the third quarter of 2013, the Company vested an aggregate of 476,167 shares, including anti-dilution shares, of restricted common stock, par value $.01 per share, to a director for advisory and consulting services, which transactions were valued and recorded in the aggregate at $256,985. | |
(b) During the third quarter of 2013, the Company vested an aggregate of 630,137 shares of restricted common stock, par value $.01 per share, to the Chairman of the Board and majority stockholder in connection with his personal guaranty for a Note Purchase Agreement, which transactions were valued and recorded in the aggregate at $170,137, and classified as interest expense – related party. | |
(c) During the third quarter of 2013, the Company issued an aggregate of 52,741 shares of restricted common stock, par value $.01 per share, for consulting fees relating to capital raising efforts, which transactions were valued and recorded in the aggregate at $13,387. |
Business_Segment_Information
Business Segment Information | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||||||
Business Segment Information | ' | ||||||||||||||||||||||||
Note 15. Business Segment Information. | |||||||||||||||||||||||||
The Company is a leading national manufacturer and supplier operating two segments, Foam and Coatings, based on manufacturing competencies. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company allocates resources to segments and evaluates the performance of segments based upon reported segment sales. Administrative expenses are allocated to both segments. Unallocated costs reflect certain corporate expenses, insurance, investor relations, and gains and losses related to the disposal of corporate assets and derivative liabilities and are included in Unallocated Amounts. There are no intersegment sales or transfers. | |||||||||||||||||||||||||
Operating Segments | |||||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Foam | Coatings | Totals | Foam | Coatings | Totals | ||||||||||||||||||||
Sales | $ | 15,299,778 | $ | 2,774,323 | $ | 18,074,101 | $ | 14,350,255 | $ | 3,269,673 | $ | 17,619,928 | |||||||||||||
Cost of Sales | 12,209,091 | 1,927,054 | 14,136,145 | 11,617,846 | 2,514,862 | 14,132,708 | |||||||||||||||||||
Gross Profit | 3,090,687 | 847,269 | 3,937,956 | 2,732,409 | 754,811 | 3,487,220 | |||||||||||||||||||
Depreciation | 31,835 | 5,773 | 37,608 | 40,607 | 9,252 | 49,859 | |||||||||||||||||||
Amortization of Other Intangible Assets | 61,196 | 11,097 | 72,293 | 92,112 | 20,988 | 113,100 | |||||||||||||||||||
Interest Expense | 175,513 | 31,826 | 207,339 | 187,998 | 42,835 | 230,833 | |||||||||||||||||||
Segment Profit | $ | 695,746 | $ | 412,992 | $ | 1,108,738 | $ | 387,817 | $ | 220,602 | $ | 608,419 | |||||||||||||
Segment Assets (1) | 17,791,684 | 3,942,638 | 21,734,322 | $ | 16,879,159 | $ | 4,330,826 | $ | 21,209,985 | ||||||||||||||||
Expenditures for Segment Assets | $ | 15,707 | $ | 2,848 | $ | 18,555 | $ | 15,276 | $ | 3,481 | $ | 18,757 | |||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Foam | Coatings | Totals | Foam | Coatings | Totals | ||||||||||||||||||||
Sales | $ | 45,103,935 | $ | 7,733,452 | $ | 52,837,387 | $ | 44,984,386 | $ | 9,071,536 | $ | 54,055,922 | |||||||||||||
Cost of Sales | 36,044,975 | 5,371,520 | 41,416,495 | 37,177,828 | 7,398,350 | 44,576,178 | |||||||||||||||||||
Gross Profit | 9,058,960 | 2,361,932 | 11,420,892 | 7,806,558 | 1,673,186 | 9,479,744 | |||||||||||||||||||
Depreciation | 100,579 | 17,262 | 117,841 | 131,959 | 26,565 | 158,524 | |||||||||||||||||||
Amortization of Other Intangible Assets | 260,272 | 44,626 | 304,898 | 279,748 | 56,732 | 336,480 | |||||||||||||||||||
Interest Expense | 572,439 | 98,149 | 670,588 | 289,058 | 63,365 | 352,423 | |||||||||||||||||||
Segment Profit | $ | 1,909,559 | $ | 1,136,106 | $ | 3,045,665 | $ | 1,603 | $ | 92,261 | $ | 93,864 | |||||||||||||
Segment Assets (1) | 17,907,817 | 3,826,505 | 21,734,322 | $ | 16,879,159 | $ | 4,330,826 | $ | 21,209,985 | ||||||||||||||||
Expenditures for Segment Assets | $ | 34,488 | $ | 5,913 | $ | 40,401 | $ | 72,805 | $ | 13,696 | $ | 86,501 | |||||||||||||
The following are reconciliations of reportable segment profit or loss, and assets, to the Company’s consolidated totals: | |||||||||||||||||||||||||
For The Three Months Ended September 30, | For The Nine Months Ended September 30, | ||||||||||||||||||||||||
Profit or Loss | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||
Total Profit or Loss for Reportable Segments | $ | 1,108,738 | $ | 608,419 | $ | 3,045,665 | $ | 93,864 | |||||||||||||||||
Unallocated Amounts: | |||||||||||||||||||||||||
Corporate Expenses | (1,405,916 | ) | (1,284,017 | ) | (4,370,753 | ) | (3,963,231 | ) | |||||||||||||||||
Income (Loss) Before Income Taxes | $ | (297,178 | ) | $ | (675,598 | ) | $ | (1,325,088 | ) | $ | (3,869,367 | ) | |||||||||||||
Assets | At September 30, 2013 | At December 31, 2012 | |||||||||||||||||||||||
Total Assets for Reportable Segments (1) | $ | 21,734,322 | $ | 20,704,068 | |||||||||||||||||||||
Other Unallocated Amounts (2) | 265,146 | 280,184 | |||||||||||||||||||||||
Consolidated Total | $ | 21,999,468 | $ | 20,984,252 | |||||||||||||||||||||
(1) Segment assets are the total assets used in the operation of each segment. | |||||||||||||||||||||||||
(2) Includes corporate assets which are principally cash and cash equivalents and deposits. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Note 16. Subsequent Events. | |
(a) The Company has evaluated subsequent events through the date of filing this report. | |
Summary_of_Organization_Basis_
Summary of Organization, Basis of Presentation and Critical Accounting Policies, Estimates and Assumptions (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation, Critical Accounting Policies, Estimates, and Assumptions | ' |
The condensed financial statements included herein are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of the management, the accompanying statements reflect adjustments necessary to present fairly the financial position, results of operations and cash flows for those periods indicated, and contain adequate disclosure to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the Notes to the condensed financial statements. The condensed financial statements included herein should be read in conjunction with the financial statements and Notes thereto included in Lapolla’s latest annual report on Form 10-K in order to fully understand the basis of presentation. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year. Certain amounts in the prior years have been reclassified to conform to the 2013 unaudited condensed financial statement presentation. Reference is made to Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 12. Risk factors that could impact results are discussed in Part II – Other Information, Item 1A – Risk Factors on page 19. Refer to the Company’s 2012 Annual Report on Form 10-K for a description of major accounting policies. There have been no material changes to these accounting policies during the three and nine months ended September 30, 2013. | |
Derivatives and Fair Values | ' |
Derivatives and Fair Value | |
The Company recognizes derivatives on the balance sheet at fair value with changes in the values of these derivative liabilities reflected in the statements of operations. The fair value of our derivative liabilities was estimated to be $-0- and $65,656 as of September 30, 2013 and December 31, 2012, respectively. We review the underlying assumptions on our derivative liabilities quarterly and they are subject to change based primarily on management’s assessment at that time. Accordingly, changes to these assessments could materially affect the valuation, which could positively or negatively affect our financial performance in future periods. Disclosures related to our derivative liabilities are included in Note 10 to our condensed financial statements. | |
Income Taxes | ' |
Income Taxes | |
The Company’s provision for income taxes is determined using the U.S. federal statutory rate. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities along with net operating loss and tax credit carryovers. The Company’s deferred tax asset was approximately $22.2 Million and $22.0 Million at September 30, 2013 and December 31, 2012, respectively. The Company recorded a valuation allowance against the deferred tax asset of $22.2 Million and $22.0 Million at September 30, 2013 and December 31, 2012, respectively, reducing its net carrying value to zero. The Company had no increase or decrease in unrecognized income tax benefits or any accrued interest or penalties relating to tax uncertainties at September 30, 2013 and December 31, 2012. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. | |
Property, Plant and Equipment | ' |
Property, Plant and Equipment | |
Property, plant and equipment is recorded at cost and depreciated using the straight-line method, which deducts equal amounts of the cost of each asset from earnings every year over its estimated economic useful life. The estimated economic useful life of an asset is monitored to determine its appropriateness, especially in light of changed business circumstances. Property, plant, and equipment held for use is grouped for impairment testing at the lowest level for which there is an identifiable cash flow. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Such circumstances would include a significant decrease in the market value of a long-lived asset grouping, a significant adverse change in the manner in which the asset grouping is being used or in its physical condition, a history of operating or cash flow losses associated with the use of the asset grouping, or changes in the expected useful life of the long-lived assets. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by that asset group is compared to the carrying value to determine whether impairment exists. If an asset group is determined to be impaired, the loss is measured based on the difference between the asset group’s fair value and its carrying value. An estimate of the asset group’s fair value is based on the discounted value of its estimated cash flows. Assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell. The assumptions underlying cash flow projections represent our best estimates at the time of the impairment review. Factors that we must estimate include industry and market conditions, sales volume and prices, costs to produce, etc. Changes in key assumptions or actual conditions that differ from estimates could result in an impairment charge. Management believes it uses reasonable and supportable assumptions when performing impairment reviews and cannot predict the occurrence of future events and circumstances that could result in impairment charges. The Company does not believe any indicators of impairment exist for property, plant and equipment at September 30, 2013. Net property, plant and equipment totaled $1,645,223 and $1,969,998 as of and for the quarter and year ended September 30, 2013 and December 31, 2012, respectively. Depreciation expense totaled $110,838 and $131,317, of which $69,052 and $75,917, and $343,538 and $414,465, of which $212,492 and $c, was included in cost of sales, for the three and nine months ended September 30, 2013 and 2012, respectively. | |
Goodwill | ' |
Goodwill | |
Goodwill represents the excess of the aggregate purchase price over the fair value of net tangible and identifiable intangible asset of an acquired business. Goodwill was $4,234,828 at September 30, 2013 and December 31, 2012. The Company operates two reporting units or segments, Foam and Coatings. Disclosures related to goodwill are included in Note 7 to the financial statements. The Company evaluates goodwill for impairment on an annual basis, or more frequently if Management believes indicators of impairment exist, by comparing the carrying value of each reportable segment to their estimated fair values. The annual evaluation is performed in the fourth quarter of each calendar year. The impairment test requires the Company to compare the fair value of each reporting unit to its carrying value, including assigned goodwill. As of September 30, 2013, the Company does not believe any indicators of impairment exist for goodwill that would require additional analysis before the 2013 annual evaluation. | |
Other Intangible Assets | ' |
Other Intangible Assets | |
The Company had other intangible assets consisting primarily of customer lists, product formulations, trade names, and non-competes that were acquired as part of business combinations. Other intangible assets are tested for impairment as part of the long-lived asset grouping impairment tests. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. See impairment discussion above under Property, Plant and Equipment for a description of how impairment losses are determined. Disclosures related to other intangible assets are included in Note 7 to the financial statements. Significant management judgment is required in the forecasts of future operating results that are used in the Company’s impairment evaluations. The estimates used are consistent with the plans and estimates that Management uses to manage its business. It is possible, however, that the plans may change and estimates used may prove to be inaccurate. If the Company’s actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, then the Company could incur future impairment charges, which would adversely affect financial performance. The Company does not believe any indicators of impairment exist for other intangible assets at September 30, 2013. Net other intangible assets totaled $1,220,578 and $1,462,639 as of September 30, 2013 and December 31, 2012, respectively. Amortization expense totaled $80,325 and $125,666, and $338,776 and $373,867, for the three and nine months ended September 30, 2013 and 2012, respectively. | |
Revenue Recognition | ' |
Revenue Recognition | |
Sales are recognized as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. Sales channels include direct sales, distributors, and independent representatives. Amounts billed for shipping and handling are included in sales (freight). Freight included in sales totaled $291,466 and $373,708, and $851,699 and $952,627, for the three and nine months ended September 30, 2013 and 2012, respectively. Costs incurred for shipping and handling are included in cost of sales. Sales are recorded net of sales tax. Freight included in cost of sales totaled $882,121 and $980,049, and $2,549,389 and $3,248,085, for the three and nine months ended September 30, 2013 and 2012, respectively. | |
Share Based Compensation | ' |
Share Based Compensation | |
The Company accounts for stock based compensation by measuring and recognizing the cost of employee or director services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of share based awards is estimated at the grant date using a straight line closing trading stock price based valuation model and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. Share based compensation expense was $309,762 and $298,241, and $969,676 and $900,050, for the three and nine months ended September 30, 2013 and 2012, respectively. If additional stock options or stock awards are granted, financial performance will be negatively affected, and if outstanding stock options or stock awards are forfeited or canceled, resulting in non-vesting of such stock options or stock awards, financial performance will be positively affected. In either instance, the Company’s financial performance may change depending on stock option or stock award activities in future periods. | |
Allowance for Doubtful Accounts | ' |
Allowance for Doubtful Accounts | |
The Company presents trade receivables, net of allowances for doubtful accounts, to ensure trade receivables are not overstated due to uncollectible accounts. Allowances, when required, are calculated based on a detailed review of certain individual customer accounts and an estimation of the overall economic conditions affecting our customer base. The Company reviews a customer’s credit history before extending credit. The allowance for doubtful accounts was approximately $504,000 and $996,000 at September 30, 2013 and December 31, 2012, respectively. If the financial condition of customers were to deteriorate based on worsening overall economic conditions, resulting in an impairment of their ability to make payments to the Company, then additional allowances may be required in future periods, which would adversely affect the Company’s financial performance. | |
Advertising and Marketing | ' |
Advertising and Marketing | |
Advertising and marketing costs are generally expensed as incurred. Expenditures for trade magazines and television commercials are expensed at the time the first advertisement is printed or shown on television. Expenditures for certain advertising and marketing activities related to trade shows are deferred within the Company’s fiscal year when the benefits clearly extend beyond the interim period in which the expenditure is made, generally not to exceed 90 days. Other advertising and marketing expenditures that do not meet the deferred criteria are expensed when the advertising occurs. Deferred advertising capitalized was $66,719 and $48,255 for the nine months ended September 30, 2013 and 2012, respectively. Total advertising and marketing costs expensed were $129,176 and $204,947, and $732,493 and $1,102,110, for the three and nine months ended September 30, 2013 and 2012, respectively. | |
Net Income (Loss) Per Common Share | ' |
Net Income (Loss) Per Common Share | |
Basic income (loss) per share is based upon the net income (loss) applicable to common shares after preferred dividend requirements and upon the weighted average number of common shares outstanding during the period. Diluted income (loss) per share reflects the effect of the exercise of stock options or warrants only in periods in which such effect would have been dilutive. For the three and nine months ended September 30, 2013 and 2012, basic and diluted net (loss) per share are the same since (a) the Company has reflected a net loss for the period presented and (b) the potential issuance of shares of common stock of the Company would be anti-dilutive. There were 350,000 and -0- in-the-money vested and exercisable stock options or warrants includable in but excluded from the computation of net (loss) per share – diluted due to the net (loss) that could potentially dilute net (loss) per share in the future for the three and nine month periods ended September 30, 2013 and 2012, respectively. | |
Recently Adopted Accounting Standards | ' |
Recently Adopted Accounting Standards | |
In February 2013, the FASB issued an accounting standards update that requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amounts are required to be reclassified in their entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. This guidance will be effective for reporting periods beginning after December 15, 2012, which will be the Company's fiscal year 2013, with early adoption permitted. The Company adopted the provisions of the guidance in the first quarter of 2013. The adoption did not have a material impact on the Company’s consolidated financial statements. | |
New Accounting Standards Not Yet Adopted | ' |
New Accounting Standards Not Yet Adopted | |
In July 2013, the FASB issued an accounting standards update that requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carry-forward that would apply in settlement of the uncertain tax positions. This guidance will be effective for fiscal years beginning after December 15, 2013, which will be the Company's fiscal year 2014, with early adoption permitted. The Company currently does not expect the adoption of the guidance will have a material impact on the Company's consolidated financial statements. |
Trade_Receivables_Tables
Trade Receivables (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Receivables [Abstract] | ' | ||||||||
Trade Receivables | ' | ||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Trade Receivables | $ | 8,795,511 | $ | 8,298,527 | |||||
Less: Allowance for Doubtful Accounts | (504,381 | ) | (996,378 | ) | |||||
Trade Receivables, Net | $ | 8,291,130 | $ | 7,302,149 |
Inventories_Tables
Inventories (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Raw Materials | $ | 1,208,734 | $ | 1,663,901 | |||||
Finished Goods | 3,937,010 | 3,168,447 | |||||||
Total Inventories | $ | 5,145,744 | $ | 4,832,348 |
Property_Plant_and_Equipment_T
Property, Plant and Equipment (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property, Plant and Equipment | ' | ||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Vehicles | $ | 636,185 | $ | 758,408 | |||||
Leasehold Improvements | 283,961 | 283,961 | |||||||
Office Furniture and Equipment | 327,329 | 324,237 | |||||||
Computers and Software | 1,181,487 | 1,144,496 | |||||||
Machinery and Equipment | 2,453,760 | 2,449,987 | |||||||
Plant Construction in Progress | — | 10,788 | |||||||
Total Property, Plant and Equipment | $ | 4,882,722 | $ | 4,971,877 | |||||
Less: Accumulated Depreciation | (3,237,499 | ) | (3,001,879 | ) | |||||
Total Property, Plant and Equipment, Net | $ | 1,645,223 | $ | 1,969,998 |
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
Goodwill | ' | ||||||||||||||||||||||||
30-Sep-13 | 31-Dec-12 | ||||||||||||||||||||||||
Foam | $ | 2,932,208 | $ | 2,932,208 | |||||||||||||||||||||
Coatings | 1,302,620 | 1,302,620 | |||||||||||||||||||||||
Total Goodwill | $ | 4,234,828 | $ | 4,234,828 | |||||||||||||||||||||
Other Intangible Assets | ' | ||||||||||||||||||||||||
30-Sep-13 | 31-Dec-12 | ||||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||||||
Customer Lists | $ | 859,235 | $ | (859,235 | ) | $ | — | $ | 859,235 | $ | (780,235 | ) | $ | 79,000 | |||||||||||
Product Formulation | 138,471 | (79,236 | ) | 59,235 | 138,471 | (72,312 | ) | 66,159 | |||||||||||||||||
Trade Names | 740,325 | (256,874 | ) | 483,451 | 740,325 | (219,857 | ) | 520,468 | |||||||||||||||||
Non-Competes | 210,000 | (210,000 | ) | — | 210,000 | (189,000 | ) | 21,000 | |||||||||||||||||
Approvals and Certifications | 1,517,525 | (839,633 | ) | 677,892 | 1,420,808 | (644,796 | ) | 776,012 | |||||||||||||||||
$ | 3,465,556 | $ | (2,244,978 | ) | $ | 1,220,578 | $ | 3,368,839 | $ | (1,906,200 | ) | $ | 1,462,639 |
Accrued_Expenses_and_Other_Cur1
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued expenses and other liabilities | ' | ||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Accrued Payroll | $ | 17,438 | $ | 138,677 | |||||
Accrued Commissions | 58,000 | 64,000 | |||||||
Accrued Inventory Purchases | 180,379 | — | |||||||
Accrued Taxes and Other | 1,101,483 | 917,244 | |||||||
Accrued Insurance | 64,935 | 220,715 | |||||||
Deferred Finance Charge Income | 28,430 | 4,378 | |||||||
Total Accrued Expenses and Other Current Liabilities | $ | 1,450,665 | $ | 1,345,014 |
Long_Term_Debt_Tables
Long Term Debt (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long Term Debt | ' | ||||||||
30-Sep-13 | 31-Dec-12 | ||||||||
Various notes payable on vehicles and equipment, due in monthly installments of $1,574 including interest, maturing through 2014. | $ | 9,511 | $ | 25,507 | |||||
Less: Current Maturities | (9,511 | ) | (21,077 | ) | |||||
Total Long-Term Debt | $ | — | $ | 4,430 |
Business_Segment_Information_T
Business Segment Information (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||||||
Reportable Segments | ' | ||||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Foam | Coatings | Totals | Foam | Coatings | Totals | ||||||||||||||||||||
Sales | $ | 15,299,778 | $ | 2,774,323 | $ | 18,074,101 | $ | 14,350,255 | $ | 3,269,673 | $ | 17,619,928 | |||||||||||||
Cost of Sales | 12,209,091 | 1,927,054 | 14,136,145 | 11,617,846 | 2,514,862 | 14,132,708 | |||||||||||||||||||
Gross Profit | 3,090,687 | 847,269 | 3,937,956 | 2,732,409 | 754,811 | 3,487,220 | |||||||||||||||||||
Depreciation | 31,835 | 5,773 | 37,608 | 40,607 | 9,252 | 49,859 | |||||||||||||||||||
Amortization of Other Intangible Assets | 61,196 | 11,097 | 72,293 | 92,112 | 20,988 | 113,100 | |||||||||||||||||||
Interest Expense | 175,513 | 31,826 | 207,339 | 187,998 | 42,835 | 230,833 | |||||||||||||||||||
Segment Profit | $ | 695,746 | $ | 412,992 | $ | 1,108,738 | $ | 387,817 | $ | 220,602 | $ | 608,419 | |||||||||||||
Segment Assets (1) | 17,791,684 | 3,942,638 | 21,734,322 | $ | 16,879,159 | $ | 4,330,826 | $ | 21,209,985 | ||||||||||||||||
Expenditures for Segment Assets | $ | 15,707 | $ | 2,848 | $ | 18,555 | $ | 15,276 | $ | 3,481 | $ | 18,757 | |||||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Foam | Coatings | Totals | Foam | Coatings | Totals | ||||||||||||||||||||
Sales | $ | 45,103,935 | $ | 7,733,452 | $ | 52,837,387 | $ | 44,984,386 | $ | 9,071,536 | $ | 54,055,922 | |||||||||||||
Cost of Sales | 36,044,975 | 5,371,520 | 41,416,495 | 37,177,828 | 7,398,350 | 44,576,178 | |||||||||||||||||||
Gross Profit | 9,058,960 | 2,361,932 | 11,420,892 | 7,806,558 | 1,673,186 | 9,479,744 | |||||||||||||||||||
Depreciation | 100,579 | 17,262 | 117,841 | 131,959 | 26,565 | 158,524 | |||||||||||||||||||
Amortization of Other Intangible Assets | 260,272 | 44,626 | 304,898 | 279,748 | 56,732 | 336,480 | |||||||||||||||||||
Interest Expense | 572,439 | 98,149 | 670,588 | 289,058 | 63,365 | 352,423 | |||||||||||||||||||
Segment Profit | $ | 1,909,559 | $ | 1,136,106 | $ | 3,045,665 | $ | 1,603 | $ | 92,261 | $ | 93,864 | |||||||||||||
Segment Assets (1) | 17,907,817 | 3,826,505 | 21,734,322 | $ | 16,879,159 | $ | 4,330,826 | $ | 21,209,985 | ||||||||||||||||
Expenditures for Segment Assets | $ | 34,488 | $ | 5,913 | $ | 40,401 | $ | 72,805 | $ | 13,696 | $ | 86,501 | |||||||||||||
Reconciliation of reportable segment profit or loss | ' | ||||||||||||||||||||||||
For The Three Months Ended September 30, | For The Nine Months Ended September 30, | ||||||||||||||||||||||||
Profit or Loss | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||
Total Profit or Loss for Reportable Segments | $ | 1,108,738 | $ | 608,419 | $ | 3,045,665 | $ | 93,864 | |||||||||||||||||
Unallocated Amounts: | |||||||||||||||||||||||||
Corporate Expenses | (1,405,916 | ) | (1,284,017 | ) | (4,370,753 | ) | (3,963,231 | ) | |||||||||||||||||
Income (Loss) Before Income Taxes | $ | (297,178 | ) | $ | (675,598 | ) | $ | (1,325,088 | ) | $ | (3,869,367 | ) | |||||||||||||
Reconciliation of reportable segment assets | ' | ||||||||||||||||||||||||
Assets | At September 30, 2013 | At December 31, 2012 | |||||||||||||||||||||||
Total Assets for Reportable Segments (1) | $ | 21,734,322 | $ | 20,704,068 | |||||||||||||||||||||
Other Unallocated Amounts (2) | 265,146 | 280,184 | |||||||||||||||||||||||
Consolidated Total | $ | 21,999,468 | $ | 20,984,252 | |||||||||||||||||||||
Basis_of_Presentation_Details_
Basis of Presentation (Details Narrative) (USD $) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Derivatives and Fair Value | ' | ' | ' | ' | ' |
Warrant Liabilities, Carrying Value | $0 | ' | $0 | ' | $65,656 |
Income Taxes | ' | ' | ' | ' | ' |
Deferred Tax Asset | 22,200,000 | ' | 22,200,000 | ' | 22,000,000 |
Deferred Tax asset valuation allowance | 22,200,000 | ' | 22,200,000 | ' | 22,000,000 |
Property,Plant and Equipment | ' | ' | ' | ' | ' |
Property, Plant and Equipment | 1,645,223 | ' | 1,645,223 | ' | 1,969,998 |
Depreciation Expense | 110,838 | 131,317 | 343,538 | 414,465 | ' |
Depreciation in cost of sales | 69,052 | 75,917 | 212,492 | 212,492 | ' |
Goodwill and Other Intangible Assets | ' | ' | ' | ' | ' |
Goodwill | 4,234,828 | ' | 4,234,828 | ' | 4,234,828 |
Other Intangible Assets, Net | 1,220,578 | ' | 1,220,578 | ' | 1,462,639 |
Amortization Expense | 80,325 | 125,666 | 338,776 | 373,867 | ' |
Revenue Recognition | ' | ' | ' | ' | ' |
Freight included in sales | 291,466 | 291,466 | 851,699 | 952,627 | ' |
Freight included in cost of sales | 882,121 | 980,049 | 2,549,389 | 3,248,085 | ' |
Share Based compensation | ' | ' | ' | ' | ' |
Share Based Compensation Expense | 309,762 | 298,241 | 1,008,063 | 900,050 | ' |
Allowance for doubtful accounts | ' | ' | ' | ' | ' |
Allowance for doubtful accounts | 504,000 | ' | 504,000 | ' | 996,000 |
Advertising and Marketing | ' | ' | ' | ' | ' |
Deferred Advertising Costs | 66,719 | 48,255 | 66,719 | 48,255 | ' |
Advertising and Marketing costs | $129,176 | $447,457 | $732,493 | $1,102,110 | ' |
Net Income (Loss) Per Share | ' | ' | ' | ' | ' |
Stock options | ' | ' | 350,000 | 0 | ' |
Liquidity_Details_Narrative
Liquidity (Details Narrative) (USD $) | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' | ' |
Accumulated Deficit | $85,849,697 | ' | $84,524,609 |
Net Loss | -1,325,088 | ' | ' |
Net Cash (Used in) Provided by Operating Activities | -11,464 | -1,070,531 | ' |
Working Capital Surplus | $695,515 | ' | ' |
Dependence_on_a_few_suppliers_
Dependence on a few suppliers (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Notes to Financial Statements | ' | ' | ' | ' |
Major Suppliers | '43% | '53% | '44% | '43% |
Trade_Receivables_Trade_Receiv
Trade Receivables - Trade Receivables (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Accounts Receivable, Net, Current [Abstract] | ' | ' |
Trade Receivables | $8,795,511 | $8,298,527 |
Less: Allowance for Doubtful Accounts | -504,381 | -996,378 |
Trade Receivables, Net | $8,291,130 | $7,302,149 |
Inventories_Inventories_Detail
Inventories - Inventories (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Inventory Disclosure [Abstract] | ' | ' |
Raw Materials | $1,208,734 | $1,663,901 |
Finished Goods | 3,937,010 | 3,168,447 |
Inventories | $5,145,744 | $4,832,348 |
Property_Plant_and_Equipment_P
Property, Plant and Equipment - Property, Plant and Equipment (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Property, Plant and Equipment [Abstract] | ' | ' |
Vehicles | $636,185 | $758,408 |
Leasehold Improvements | 283,961 | 283,961 |
Office Furniture and Equipment | 327,329 | 324,237 |
Computers and Software | 1,181,487 | 1,144,496 |
Machinery and Equipment | 2,453,760 | 2,449,987 |
Plant Construction in Progress | ' | 10,788 |
Total Property, Plant and Equipment | 4,882,722 | 4,971,877 |
Less: Accumulated Depreciation | -3,237,499 | -3,001,879 |
Property, Plant and Equipment | $1,645,223 | $1,969,998 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets - Goodwill (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
Foam | $2,932,208 | $2,932,208 |
Coatings | 1,302,620 | 1,302,620 |
Goodwill | $4,234,828 | $4,234,828 |
Goodwill_and_Other_Intangible_3
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Intangible Assets, Gross | $3,465,556 | $3,368,839 |
Accumulated Amortization | -2,244,978 | -1,906,200 |
Intangible Assets, Net | 1,220,578 | 1,462,639 |
Customer Lists | ' | ' |
Intangible Assets, Gross | 859,235 | 859,235 |
Accumulated Amortization | -859,235 | -780,235 |
Intangible Assets, Net | ' | 79,000 |
Product Formulation | ' | ' |
Intangible Assets, Gross | 138,471 | 138,471 |
Accumulated Amortization | -79,236 | -72,312 |
Intangible Assets, Net | 59,235 | 66,159 |
Trade Names | ' | ' |
Intangible Assets, Gross | 740,325 | 740,325 |
Accumulated Amortization | -256,874 | -219,857 |
Intangible Assets, Net | 483,451 | 520,468 |
Non-Competes | ' | ' |
Intangible Assets, Gross | 210,000 | 210,000 |
Accumulated Amortization | -210,000 | -189,000 |
Intangible Assets, Net | ' | 21,000 |
Approvals and Certifications | ' | ' |
Intangible Assets, Gross | 1,517,525 | 1,420,808 |
Accumulated Amortization | -839,633 | -644,796 |
Intangible Assets, Net | $677,892 | $776,012 |
Accrued_Expenses_and_Other_Cur2
Accrued Expenses and Other Current Liabilities - Accrued expenses and other liabilities (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Accrued Liabilities and Other Liabilities [Abstract] | ' | ' |
Accrued Payroll | $17,438 | $138,677 |
Accrued Commissions | 58,000 | 64,000 |
Accrued Inventory Purchases | 180,379 | ' |
Accrued Taxes and Other | 1,101,483 | 917,244 |
Accrued Insurance | 64,935 | 220,715 |
Deferred Finance Charge Income | 28,430 | 4,378 |
Total Accrued Expenses and Other Current Liabilities | $1,450,665 | $1,345,014 |
Financing_Instruments_Details_
Financing Instruments (Details Narrative) (Revolver Loan, USD $) | 1 Months Ended | |
Sep. 01, 2010 | Sep. 30, 2013 | |
Revolver Loan | ' | ' |
Bank Loans Funds Available | $13,000,000 | ' |
Maturity Date | 31-Mar-16 | ' |
Bank Loan Payable | ' | $5,747,061 |
Weighted-Average Interest Rate | ' | 4.30% |
Financing_Instruments_Terms_De
Financing Instruments Terms (Details Narrative) (USD $) (Revolver Loan) | 9 Months Ended |
Sep. 30, 2013 | |
Revolver Loan | ' |
Terms | ' |
The Company granted the Bank a continuing security interest in and lien upon all Company assets. The Base Rate is equal to the greater of (a) the Prime Rate; (b) the Federal Funds Rate, plus 0.50%; or (c) LIBOR for a 30 day interest period, plus 1.50%. Effective March 31, 2013, the Bank extended the revolver termination date to the earliest to occur of (a) March 31, 2016, (b) 90 days prior to the maturity date of the Subordinated Term Debt [Enhanced Notes], which mature on June 29, 2014, provided, however, that this clause (b) shall not be applicable if either (i) the Enhanced Notes have been refinanced, on or before March 31, 2014, on terms acceptable to the Bank in its sole discretion, or the Enhanced Notes have been paid in full on or before 90 days prior to their maturity date of June 29, 2014, or (c) 90 days prior to the maturity date of the Junior Note among the Company, Richard J. Kurtz, and the Bank, which matures October 1, 2014. |
Financing_Instruments_Note_Pur
Financing Instruments Note Purchase Agreement (Details Narrative) (USD $) (USD $) | 1 Months Ended | |
Jun. 29, 2012 | Sep. 30, 2013 | |
Note Purchase Agreement | ' | ' |
Bank Loans Funds Available | $4,400,000 | ' |
Maturity Date | 29-Jun-14 | ' |
Weighted-Average Interest Rate | 10.00% | 32.10% |
Enhanced Notes Payable | ' | 3,664,003 |
Enhanced Jobs for Texas | ' | ' |
Bank Loans Funds Available | 2,200,000 | ' |
Enhanced Texas Fund | ' | ' |
Bank Loans Funds Available | $2,200,000 | ' |
Financing_Instruments_Note_Pur1
Financing Instruments Note Purchase Agreement Payments (Details Narrative) (USD $) (USD $) | 1 Months Ended | 6 Months Ended | 9 Months Ended | 24 Months Ended | ||||||||
Sep. 30, 2013 | Aug. 31, 2013 | Jul. 31, 2013 | Jun. 30, 2013 | 31-May-13 | Apr. 30, 2013 | Mar. 31, 2013 | Feb. 28, 2013 | Jan. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Jun. 29, 2014 | |
Financing Instruments Note Purchase Agreement Payments Details Narrative Usd | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Monthly payments:October 31, 2012 - June 30,2013 | $53,333 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $53,333 | ' |
Monthly payments:July, 2013 - May 31, 2014 | 150,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 150,000 | ' |
Monthly payments:June 30, 2014 | 2,270,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,270,000 | ' |
Interest Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | 10.75% | ' |
Increase in interest rate,per quarter | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.75% | 0.75% |
Increase in interest rate,per annum | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% |
Defult Interest Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6.00% |
Minimum EBITDA requirement | $678,102 | $672,864 | $634,895 | $557,116 | $443,729 | $343,071 | $242,601 | $232,294 | $254,742 | ' | ' | ' |
Financing_Instruments_Note_Pur2
Financing Instruments Note Purchase Agreement Payments Terms (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Financing Instruments Note Purchase Agreement Payments Terms Details Narrative | ' |
Vesting terms | 'Monthly, over two years |
Restricted Common Stock, par value | $0.01 |
Per Share | $0.27 |
Restricted Common Stock Issued, Amount | $1,350,000 |
Financing_Instruments_Note_Pay
Financing Instruments Note Payable - Related Party(Details Narrative) (USD $) | 3 Months Ended | |
Apr. 16, 2012 | Sep. 30, 2013 | |
Financing Instruments Note Payable - Related Partydetails Narrative | ' | ' |
Note due to related party | $1,300,000 | ' |
Interest Rate | 5.00% | ' |
Maturity Date | 1-Oct-14 | ' |
Accrued interest | ' | $81,939 |
Financing_Instruments_Warrants
Financing Instruments Warrants(Details Narrative) (USD $) | 1 Months Ended |
Feb. 21, 2007 | |
Warrants Authorized | 2,500,000 |
Expiration Date | '2013-06-30 |
$0.53 | ' |
Warrants Outstanding | 1,500,000 |
Warrants Exercise Price | 0.53 |
$0.65 | ' |
Warrants Outstanding | 1,000,000 |
Warrants Exercise Price | 0.65 |
Derivatives_and_Fair_Value_Ass
Derivatives and Fair Value Assumptions (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Sep. 30, 2013 | |
Fair Value Assumptions and Methodology for Assets and Liabilities [Abstract] | ' | ' |
Historical Volatility | 219.00% | ' |
Exercise Targets of exercise price | 150.00% | ' |
Warrant Liabilities, Carrying Value | $65,656 | $0 |
Long_Term_Debt_Long_Term_Debt_
Long Term Debt - Long Term Debt (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Long-term Debt, Unclassified [Abstract] | ' | ' |
Various notes payable on vehicles and equipment, due in monthly installments of $1,669 including interest, maturing through 2014. | $9,511 | $25,507 |
Less: Current Maturities | -9,511 | -21,077 |
Total Long-Term Debt | ' | $4,430 |
Long_Term_Debt_Long_Term_Debt_1
Long Term Debt - Long Term Debt (Details) (Parenthetical) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
Montlhy Installments | $1,574 |
Maturity Date | '2014 |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Director | ' |
Restricted common stock, shares | 1,417,472 |
Restricted common stock, value | $757,208 |
Chairman of the Board and prinicpal stockholder | ' |
Restricted common stock, shares | 1,869,863 |
Restricted common stock, value | 504,952 |
Note Payable | ' |
Accrued Interest | 52,634 |
Advances from notes payable | $500,000 |
Net_Income_Loss_per_Common_Sha1
Net Income (Loss) per Common Share - Basic and Diluted (Details Narrative) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Antidilutive Secuities | 4,785,833 | 7,062,348 |
Oustanding Warrants | ' | ' |
Antidilutive Secuities | ' | 2,500,000 |
Vested and Exercisable | ' | ' |
Antidilutive Secuities | ' | 4,562,348 |
Securities_Transactions_Detail
Securities Transactions (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Securities Financing Transactions [Abstract] | ' |
Restricted Stock issued for Services, shares | 476,167 |
Restricted Stock issued for Services, amount | $256,985 |
Restricted Stock issued for Interest Expense, shares | 630,137 |
Restricted Stock issued for Interest Expense, amount | 170,137 |
Restricted Stock issued for Consulting Fees, shares | 52,741 |
Restricted Stock issued for Consulting Fees, amount | $13,387 |
Business_Segment_Information_R
Business Segment Information - Reportable Segments (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Sales | $18,074,101 | $17,619,928 | $52,837,387 | $54,055,922 |
Cost of Sales | 14,136,145 | 14,132,708 | 41,416,495 | 44,576,178 |
Gross Profit | 3,937,956 | 3,487,220 | 11,420,892 | 9,479,744 |
Depreciation | 37,608 | 49,859 | 117,841 | 158,524 |
Amortization of Other Intangible Assets | 72,293 | 113,100 | 304,898 | 336,480 |
Interest Expense | 207,339 | 230,833 | 670,588 | 352,423 |
Segment Profit | 1,108,738 | 608,419 | 3,045,665 | 93,864 |
Segment Assets (1) | 21,734,322 | 21,209,985 | 21,734,322 | 21,209,985 |
Expenditures for Segment Assets | 18,555 | 18,757 | 40,401 | 86,501 |
Foam | ' | ' | ' | ' |
Sales | 15,299,778 | 14,350,255 | 45,103,935 | 44,984,386 |
Cost of Sales | 12,209,091 | 11,617,846 | 36,044,975 | 37,177,828 |
Gross Profit | 3,090,687 | 2,732,409 | 9,058,960 | 7,806,558 |
Depreciation | 31,835 | 40,607 | 100,579 | 131,959 |
Amortization of Other Intangible Assets | 61,196 | 92,112 | 260,272 | 279,748 |
Interest Expense | 175,513 | 187,998 | 572,439 | 289,058 |
Segment Profit | 695,746 | 387,817 | 1,909,559 | 1,603 |
Segment Assets (1) | 17,791,684 | 16,879,159 | 17,907,817 | 16,879,159 |
Expenditures for Segment Assets | 15,707 | 15,276 | 34,488 | 72,805 |
Coatings | ' | ' | ' | ' |
Sales | 2,774,323 | 3,269,673 | 7,733,452 | 9,071,536 |
Cost of Sales | 1,927,054 | 2,514,862 | 5,371,520 | 7,398,350 |
Gross Profit | 847,269 | 754,811 | 2,361,932 | 1,673,186 |
Depreciation | 5,773 | 9,252 | 17,262 | 26,565 |
Amortization of Other Intangible Assets | 11,097 | 20,988 | 44,626 | 56,732 |
Interest Expense | 31,826 | 42,835 | 98,149 | 63,365 |
Segment Profit | 412,992 | 220,602 | 1,136,106 | 92,261 |
Segment Assets (1) | 3,942,638 | 4,330,826 | 3,826,505 | 4,330,826 |
Expenditures for Segment Assets | $2,848 | $3,481 | $5,913 | $13,696 |
Business_Segment_Information_R1
Business Segment Information - Reconciliation of reportable segment profit or loss (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ' | ' | ' | ' |
Total Profit or Loss for Reportable Segments | $1,108,738 | $608,419 | $3,045,665 | $93,864 |
Corporate Expenses | -1,405,916 | -1,284,017 | -4,370,753 | -3,963,231 |
Income (Loss) Before Income Taxes | ($297,178) | ($675,598) | ($1,325,088) | ($3,869,367) |
Business_Segment_Information_R2
Business Segment Information - Reconciliation of reportable segment assets (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Segment Reporting [Abstract] | ' | ' |
Total Assets for Reportable Segments | $21,734,322 | $20,704,068 |
Other Unallocated Amounts | 265,146 | 280,184 |
Total Assets | $21,999,468 | $20,984,252 |