Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 20, 2014 | Jun. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'LAPOLLA INDUSTRIES INC | ' | ' |
Entity Central Index Key | '0000875296 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-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 Public Float | ' | ' | $9,159,900 |
Entity Common Stock, Shares Outstanding | ' | 114,620,620 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Condensed_Balance_Sheets
Condensed Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current Assets: | ' | ' |
Cash | ' | ' |
Trade Receivables, Net | 7,694,589 | 7,302,149 |
Inventories | 5,421,935 | 4,832,348 |
Prepaid Expenses and Other Current Assets | 1,250,314 | 726,737 |
Total Current Assets | 14,366,838 | 12,861,234 |
Property, Plant and Equipment | 1,600,679 | 1,969,998 |
Other Assets: | ' | ' |
Goodwill | 4,234,828 | 4,234,828 |
Other Intangible Assets, Net | 1,165,157 | 1,462,639 |
Deposits and Other Non-Current Assets, Net | 686,658 | 455,553 |
Total Other Assets | 6,086,643 | 6,153,020 |
Total Assets | 22,054,160 | 20,984,252 |
Current Liabilities: | ' | ' |
Accounts Payable | 6,694,633 | 7,637,141 |
Accrued Expenses and Other Current Liabilities | 1,456,895 | 1,345,014 |
Current Portion of Notes Payable - Prior Enhanced Note | ' | 1,219,998 |
Current Portion of Derivate Liability | ' | 65,656 |
Current Portion of Long-Term Debt | 4,599 | 21,077 |
Total Current Liabilities | 8,156,127 | 10,288,886 |
Other Liabilities: | ' | ' |
Non-Current Portion of Revolver Loan | 4,539,163 | 5,032,450 |
Non-Current Portion of Notes Payable- New Enhanced | 6,683,561 | ' |
Non-Current Portion of Notes Payable- Prior Enhanced Note | ' | 3,117,336 |
Non-Current Portion of Note Payable - Related Party | 1,300,000 | 1,300,000 |
Accrued Interest- Note Payable- Related Party | 117,633 | 47,038 |
Non-Current Portion of Long-Term Debt | ' | 4,430 |
Total Other Liabilities | 12,640,357 | 9,501,254 |
Total Liabilities | 20,796,484 | 19,790,140 |
Stockholders' Equity: | ' | ' |
Common Stock, $.01 Par Value; 140,000,000 Shares Authorized; 114,148,378 and 109,372,266 Issued | 1,141,484 | 1,093,723 |
Additional Paid-In Capital | 86,734,757 | 84,745,704 |
Accumulated (Deficit) | -86,495,654 | -84,524,609 |
Accumulated Other Comprehensive (Loss) | -122,911 | -120,706 |
Total Stockholders' Equity | 1,257,676 | 1,194,112 |
Total Liabilities and Stockholders' Equity | $22,054,160 | $20,984,252 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (USD $) | Dec. 31, 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) | 114,148,378 | 109,372,266 |
Common Stock, shares outstanding (in shares) | 114,148,378 | 109,372,266 |
Condensed_Statements_of_Operat
Condensed Statements of Operations and Comprehensive Loss (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Statement [Abstract] | ' | ' |
Sales | $71,176,971 | $70,383,827 |
Cost of Sales | 56,152,602 | 57,413,413 |
Gross Profit | 15,024,369 | 12,970,414 |
Operating Expenses: | ' | ' |
Selling, General and Administrative | 13,489,457 | 14,608,934 |
Professional Fees | 1,076,153 | 438,674 |
Depreciation | 174,256 | 224,551 |
Amortization of Other Intangible Assets | 424,426 | 501,315 |
Consulting Fees | 476,247 | 514,244 |
Total Operating Expenses | 15,640,539 | 16,287,718 |
Operating (Loss) | -616,170 | -3,317,304 |
Other (Income) Expense: | ' | ' |
Interest Expense | 1,093,184 | 831,074 |
Interest Expense-Related Party | 749,291 | 390,922 |
Interest Expense- Amortization of Discount | 10,697 | ' |
(Gain) on Derivative Liability | -65,656 | -88,862 |
(Gain) on Extinguishment of Debt | -398,886 | ' |
Other, Net | -33,755 | -19,766 |
Total Other (Income) Expense | 1,354,875 | 1,113,368 |
Net Loss | -1,971,045 | -4,430,672 |
Net Loss Per Share- Basic and Diluted | ($0.02) | ($0.04) |
Weighted Average Shares Outstanding | 111,449,320 | 107,312,421 |
Other Comprehensive (Loss): | ' | ' |
Foreign Currency Translation Adjustment (Loss) | -2,205 | -3,031 |
Total Other Comprehensive (Loss) | -2,205 | -3,031 |
Comprehensive (Loss) | ($1,973,250) | ($4,433,703) |
Statements_of_Stockholders_Equ
Statements of Stockholders' Equity (USD $) | Series D Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated (Deficit) | Accumulsted Other Comprehensive (Loss) | Total |
Beginning Balance, Amount at Dec. 31, 2011 | ' | $1,062,065 | $83,219,373 | ($80,093,937) | ($117,675) | $4,069,826 |
Beginning Balance, Shares at Dec. 31, 2011 | ' | 106,206,488 | ' | ' | ' | ' |
Comprehensive (Loss), Net of Tax: | ' | ' | ' | ' | ' | ' |
Net (Loss) | ' | ' | ' | -4,430,672 | ' | -4,430,672 |
Currency Translation (Loss) | ' | ' | ' | ' | -3,031 | -3,031 |
Comprehensive (Loss) | ' | ' | ' | ' | ' | -4,433,703 |
Issuance of Common Stock | ' | 31,658 | -31,658 | ' | ' | ' |
Issuance of Common Stock (in shares) | ' | 3,165,778 | ' | ' | ' | ' |
Financial Consultant Fees | ' | ' | ' | ' | ' | ' |
Share-Based Compensation Expense | ' | ' | 1,214,105 | ' | ' | 1,214,015 |
Interest Expense - Related Party | ' | ' | 343,884 | ' | ' | 343,884 |
Ending Balance, Amount at Dec. 31, 2012 | ' | 1,093,723 | 84,745,704 | -84,524,609 | -120,706 | 1,194,112 |
Ending Balance, Shares at Dec. 31, 2012 | ' | 109,372,266 | ' | ' | ' | ' |
Comprehensive (Loss), Net of Tax: | ' | ' | ' | ' | ' | ' |
Net (Loss) | ' | ' | ' | -1,971,045 | ' | -1,971,045 |
Currency Translation (Loss) | ' | ' | ' | ' | -2,205 | -2,205 |
Comprehensive (Loss) | ' | ' | ' | ' | ' | -1,973,250 |
Issuance of Common Stock | ' | 47,761 | -47,761 | ' | ' | ' |
Issuance of Common Stock (in shares) | ' | 4,776,112 | ' | ' | ' | ' |
Financial Consultant Fees | ' | ' | 38,387 | ' | ' | 38,387 |
Share-Based Compensation Expense | ' | ' | 1,319,730 | ' | ' | 1,319,730 |
Interest Expense - Related Party | ' | ' | 678,697 | ' | ' | 678,697 |
Ending Balance, Amount at Dec. 31, 2013 | ' | $1,141,484 | $86,734,757 | ($86,495,654) | ($122,911) | $1,257,676 |
Ending Balance, Shares at Dec. 31, 2013 | ' | 114,148,378 | ' | ' | ' | ' |
Condensed_Statements_of_Cash_F
Condensed Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash Flows From Operating Activities | ' | ' |
Net Loss | ($1,971,045) | ($4,430,672) |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ' | ' |
Depreciation | 453,827 | 539,487 |
Amortization of Other Intangible Assets | 424,426 | 501,315 |
Provision for Losses on Accounts Receivable | 491,727 | 792,761 |
Share Based Compensation Expense | 1,319,730 | 1,214,105 |
Share Based Financial Consultant Fees | 38,387 | ' |
Interest Expense - Enhanced Notes PIK | 15,750 | 44,975 |
Interest Expense-Related Party | 749,291 | 390,922 |
Interest Expense- Amortization of Discount | 10,697 | ' |
Interest Expense- Write-Off of Old Debt Issuance Costs | 45,512 | ' |
Gain on Derivative Liability | -65,656 | -88,862 |
Gain on Extinguishment of Debt | -398,886 | ' |
Gain on Disposal of Assets | -14,681 | 21,972 |
Loss on Foreign Currency Exchange | 22,131 | ' |
Changes in Assets and Liabilities: | ' | ' |
Trade Receivables | -668,360 | 3,446,271 |
Inventories | -589,587 | 1,389,771 |
Prepaid Expenses and Other Current Assets | -569,089 | 703,536 |
Other Intangible Assets | -126,944 | -109,053 |
Deposits and Other Non-Current Assets | -467,842 | -23,213 |
Accounts Payable | -943,709 | -4,718,960 |
Accrued Expenses and Other Current Liabilities | 111,881 | -95,064 |
Net Cash Used in Operating Activities | -2,132,440 | -420,709 |
Cash Flows From Investing Activities | ' | ' |
Additions to Property, Plant and Equipment | -118,611 | -102,824 |
Proceeds from Disposal of Property, Plant and Equipment | 48,786 | 16,976 |
Net Cash Used in Investing Activities | -69,825 | -85,848 |
Cash Flows From Financing Activities | ' | ' |
Proceeds from Revolver Loan | 81,608,230 | 79,634,905 |
Principal Repayments to Revolver Loan | -82,101,515 | -83,735,611 |
Proceeds from Note Payable- New Enhanced Note | 7,056,000 | ' |
Proceeds from Note Payable-Prior Enhanced Note | ' | 4,400,000 |
Principal Repayments to Note Payable- Prior Enhanced Note | -4,337,334 | -106,666 |
Proceeds from Note Payable-Related Party | ' | 1,300,000 |
Principal Repayments to Term Loan | ' | -937,501 |
Principal Repayments on Long Term Debt | -20,911 | -45,539 |
Net Cash Provided by Financing Activities | 2,204,470 | 509,588 |
Net Effect of Exchange Rate Changes on Cash | -2,205 | -3,031 |
Net Increase (Decrease) In Cash | ' | ' |
Cash at Beginning of Year | ' | ' |
Cash at End of Year | ' | ' |
Supplemental Disclosure of Cash Flow Information: | ' | ' |
Cash Payments for Income Taxes | ' | ' |
Cash Payments for Interest | 825,356 | 669,610 |
Supplemental Schedule of Non Cash Investing and Financing Activities: | ' | ' |
Issuances of Restricted Common Stock for Personal Guarantees by Related Party | $678,697 | $343,884 |
Summary_of_Organization_Basis_
Summary of Organization, Basis of Presentation, and Critical Accounting Policies, Estimates, and Assumptions | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Summary of Organization, Basis of Presentation, and Critical Accounting Policies, Estimates, and Assumptions | ' |
Note 1. Summary of Organization, Basis of Presentation, and Critical Accounting Policies, Estimates, and Assumptions. | |
This summary briefly describes the Company’s organization, basis of presentation, and critical accounting policies, estimates, and assumptions, which are presented to assist in understanding these financial statements. The financial statements and notes are representations of management who are responsible for their integrity and objectivity. The accounting policies used conform to Generally Accepted Accounting Principles (GAAP) in the United States of America and have been consistently applied in the preparation of these financial statements. Judgments and estimates of uncertainties are required in applying our accounting policies in many areas. However, application of the critical accounting policies discussed below requires management’s significant judgments, often as the result of the need to make estimates of matters that are inherently uncertain. If actual results were to differ materially from the estimates made, the reported results could be materially affected. | |
Organization History | |
The Company was incorporated in the state of Delaware on October 20, 1989. The Company acquired 100% of the capital stock of Infiniti Products, Inc. (f/k/a Infiniti Paint Co., Inc.), a Florida corporation, effective September 1, 2001, which was engaged in the business of developing, marketing, selling, and distributing primarily acrylic roof coatings and polyurethane foam systems in the Southeastern United States (“Infiniti”). During the latter part of 2004, Infiniti built and began operating an acrylic roof coatings manufacturing plant in the Southeastern United States. On February 11, 2005, the Company acquired 100% of the capital stock of Lapolla Industries, Inc., an Arizona corporation (“Lapolla AZ”), which was engaged in the business of manufacturing acrylic roof coatings and sealants, and distributing polyurethane foam systems in the Southwestern United States. On April 1, 2005, Infiniti merged with and into Lapolla AZ whereas the existence of Infiniti ceased. On October 1, 2005, Lapolla AZ merged with and into the Company, under its former name of IFT Corporation, whereas the existence of Lapolla AZ ceased. On November 8, 2005, the Company changed its name to Lapolla Industries, Inc. On July 1, 2008, the Company acquired certain assets and liabilities of Air-Tight Marketing and Distribution, Inc. | |
Reclassifications | |
Certain reclassifications of prior year amounts have been made to conform to the current year presentation. The reclassifications did not affect net income (loss). | |
Trade Receivables and Credit Risk | |
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of trade receivables. The Company’s customers consist primarily of contractors and distributors. Trade receivables consist primarily of uncollateralized customer obligations, including personal guarantees when obtainable, due under normal trade terms which usually require payment within 30 days of the invoice date. However, these payment terms are extended in select cases and many customers do not pay within stated trade terms. The Company has trade receivables from a diversified customer base. The Company has a credit insurance policy in place covering most customer account balances. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customers’ financial position and monitors accounts on a regular basis. Provisions to the allowance for doubtful accounts are reviewed quarterly and adjustments are made periodically (as circumstances warrant) based upon management’s best estimate of collectability of accounts. No customer represented more than 10% of sales for each of the years ended December 31, 2013 and 2012. No customer represented more than 10% of trade receivables at December 31, 2013 or 2012. | |
Note Receivable | |
The Company presents note receivables, net of reserves for losses, to ensure note receivables are not overstated due to uncollectible amounts. Reserves, when required, are calculated based on a detailed review of the specific note, including other security when applicable, and an estimation of the credit worthiness of the debtor. Total Note Receivables were approximately $473,000 and $-0- at December 31, 2013 and 2012, respectively. The reserve for losses was approximately $237,000 and $-0- at December 31, 2013 and 2012, respectively. | |
Goodwill and Other Intangible Assets | |
Goodwill represents the excess of the cost over the fair value of net tangible and identifiable intangible assets of acquired businesses. Identifiable intangible assets acquired in business combinations are recorded based upon their fair value at the date of acquisition. According to GAAP, goodwill is required to be tested for impairment, on an annual basis and between annual tests in certain circumstances, and written down when impaired. The goodwill impairment test is performed by comparing the fair value of the associated reporting unit to its carrying value. GAAP also requires that intangible assets with estimable useful lives be amortized over their respective estimated lives to their estimated residual values, and reviewed for impairment, unless these lives are determined to be indefinite. | |
Fair Value of Financial Instruments | |
The Company adopted authoritative GAAP guidance regarding disclosures about fair value of financial instruments, which requires the disclosure of the fair value of off-and-on balance sheet financial instruments. Unless otherwise indicated, the fair values of all reported assets and liabilities, which represent financial instruments (none of which are held for trading purposes), approximate the carrying values of such amounts. The Company adopted authoritative GAAP guidance regarding fair value measurements, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. This guidance establishes three levels of inputs that may be used to measure fair value: (a) Level 1 - Quoted prices in active markets for identical assets or liabilities. The Company had no Level 1 assets or liabilities at December 31, 2013; (b) Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. The Company had no Level 2 assets or liabilities at December 31, 2013; and (c) Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. The Company had no Level 3 assets or liabilities at December 31, 2013. See Note 12 to our financial statements for prior level 3 assets and liabilities at December 31, 2012. The carrying value of cash and cash equivalents, trade receivables and payables, prepaid expenses and other current assets, amounts due to related parties, and other payables and accruals approximate fair value due to short period of time to maturity. | |
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 December 31, 2013 and 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 12 to our financial statements. | |
Litigation | |
In the normal course of business, the Company is occasionally involved in legal proceedings. The Company accrues a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. | |
Cash and Cash Equivalents | |
The Company considers cash, checks, and credit card and ACH payments deposited with financial institutions to be cash and cash equivalents. | |
Inventories | |
Cost is determined on an actual and/or standard cost basis that approximates the first-in, first-out (FIFO) method using a perpetual inventory system. Inventories are valued at the lower of cost or market (replacement cost), which does not exceed net realizable value. | |
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 $22.7 Million and $22.1 Million at December 31, 2013 and 2012, respectively. The Company's federal income tax returns are open to audit under the statute of limitations for the years ended December 31, 2009 through 2012. The Company recorded a valuation allowance against the deferred tax asset of $22.7 Million and $22.1 Million at December 31, 2013 and 2012, respectively, reducing its net carrying value to zero. The Company has no unrecognized income tax benefits. Accordingly, the annual effective tax rate is unaffected. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and operating expense, respectively. At December 31, 2013, the Company had no increase or decrease in unrecognized income tax benefits for the year. There was no accrued interest or penalties relating to tax uncertainties at December 31, 2013. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. | |
Depreciable Lives of 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. Economic useful life is the duration of time an asset is expected to be productively employed by the Company, which may be less than its physical life. Assumptions on the following factors, among others, affect the determination of estimated economic useful life: wear and tear, obsolescence, technical standards, contract life, market demand, competitive position, raw material availability, and geographic location. The estimated economic useful life of an asset is monitored to determine its appropriateness, especially in light of changed business circumstances. For example, changes in technology and changes in the estimated future demand for products may result in a shorter estimated useful life than originally anticipated. In these cases, we would depreciate the remaining net book value over the new estimated remaining life, thereby increasing depreciation expense per year on a prospective basis. Net property, plant and equipment totaled $1,600,679 and depreciation expense totaled $453,827 as of and for the year ended December 31, 2013. Net property, plant and equipment totaled $1,969,998 and depreciation expense totaled $539,487 as of and for the year ended December 31, 2012. | |
Impairment of Long-Lived Assets | |
Property, Plant and Equipment | |
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. | |
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 December 31, 2013 and 2012. The Company operates two reporting units, Foam and Coatings. Disclosures related to goodwill are included in Note 8 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 of reportable unit 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. In the fourth quarter of 2013 and 2012, the Company conducted the required annual test of goodwill for impairment. Management uses the income approach to estimate the fair market value of the business segments based on expected future economic benefits. This approach serves to estimate the value of the specific income stream with consideration given to the risk inherent in that income stream. The income approach is most relevant when valuing an equity interest that is based on the premise that Lapolla is considered a going concern or a viable business for the foreseeable future. Lapolla used the discounted cash flow method under the income approach in its analysis. In applying the discounted cash flow method, Lapolla identified the level of cash flow estimated for five years. The annual estimated cash flows and terminal value were then discounted to present value, at an appropriate discount rate, to arrive to the indication of fair market value for each reporting unit. The discount rate utilized reflected the estimate of investor-required rates of return for investments that are seen as similar to an investment in similarly situated companies like Lapolla. The assumptions were consistent with those utilized in the Company’s operating plan and long term financial planning process and considered historical experience and current and future expected market and industry conditions. | |
Management judgment is required in the determination of each assumption used in the valuation model, and actual results could differ from the estimates. Upon completion of the 2013 and 2012 annual impairment assessments, the Company determined no impairment was indicated as the estimated fair value of each of the reporting units exceeded its respective carrying value. At December 31, 2013, the aggregate amount of fair value that exceeded the carrying value of the Company's reporting units was approximately $9.9 Million, of which $9.2 Million was for Foam and $0.7 Million was for Coatings. At December 31, 2012, the aggregate amount of fair value that exceeded the carrying value of the Company's reporting units was approximately $7.7 Million, of which $7 Million was for Foam and $0.7 Million was for Coatings. | |
Other Intangible Assets | |
The Company had other intangible assets, net of $1,165,157 and 1,462,639 at December 31, 2013 and 2012, respectively, consisting of customer lists, product formulations, trade names, and non-competes that were acquired as part of business combinations, and trademarks and approvals and certifications obtained as part of entering into new markets. Amortization of other intangible assets totaled $424,426 and $501,315 for the years ended December 31, 2013 and 2012, respectively. 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 8 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. | |
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. Irrespective of the sales channel, returns and allowances are not a business practice in the industry. Amounts billed for shipping and handling are included in revenues (freight). Freight included in revenue was $1,106,250 and $1,301,496 in 2013 and 2012, respectively. Costs incurred for shipping and handling are included in cost of sales. Freight included in cost of sales was $3,493,579 and $4,038,251 in 2013 and 2012, respectively. Revenues are recorded net of sales tax. | |
Research and Development | |
Research and development costs related to both future and present products are charged to operations as incurred. | |
Share-Based Compensation | |
The Company accounts for 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 Black-Scholes valuation model and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. The determination of fair value is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option exercise behaviors. Employee stock option exercise behavior is based on actual historical exercise activity and assumptions regarding future exercise activity of unexercised, outstanding options. The Company applies an estimated forfeiture rate to unvested awards for the purpose of calculating compensation cost. These estimates are subject to revision in future periods if actual forfeitures differ from the estimates and changes impact compensation cost in the period in which the change in estimate occurs. Disclosures related to share based compensation are included in Note 19 to our financial statements. Share based compensation expense was $1,319,730 and $1,214,105 in 2013 and 2012, respectively. If additional share based awards are granted, financial performance may be negatively affected, and if outstanding share based awards are forfeited or canceled, resulting in non-vesting of such stock awards, financial performance may be positively affected. In either instance, the Company’s financial performance may change depending on share based 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, including credit insurance and other security when applicable, 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 $317,000 and $996,000 at December 31, 2013 and 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. See also Note Receivable above. | |
Cost of Sales and Selling, General and Administrative Costs | |
The Cost of Sales line item includes all the material, overhead, packaging, and freight costs associated with products shipped, including resale finished goods and raw materials, as well as payroll costs associated with manufacturing the finished goods, inbound freight, sales tax expense, product containers, labels, and other miscellaneous items that are indirectly used in the manufacturing, packaging, and shipping (outbound freight) of finished goods, including inspection, and internal transfer costs, as well as depreciation of machinery, amortization of approvals and certifications, and an allocated portion of overhead. The Selling, General and Administrative line item includes selling, advertising, marketing, customer service, and technical support, as well as the costs of providing corporate functional support for all other areas of our business. | |
Advertising and Marketing Expenses | |
Advertising and marketing costs are generally expensed as incurred. Expenditures for certain advertising and marketing activities related to trade shows and trade magazines 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. At December 31, 2013, there were no costs for advertising deferred on the Company’s balance sheets. Other advertising and marketing expenditures that do not meet the deferred criteria are expensed when the advertising and marketing occurs. Total advertising and marketing costs expensed were approximately $965,000 and $1,300,000 in 2013 and 2012, respectively. | |
Discount on Note Payable | |
The Company capitalizes discounts on certain notes payable, which are included in the Company’s balance sheets. These discounts are amortized using the effective-interest method. Amortization of discount is included in “Interest Expense – Amortization of Discount” in the statements of operations. | |
Debt Issuance Costs | |
The Company capitalizes debt issuance costs, which are included in the Company’s balance sheets. These costs are amortized over the term of the financial instrument. Amortization of debt issuance costs is included in “Interest Expense” in the statements of operations. | |
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 assumed exercise of stock options and warrants only in periods in which such effect would have been dilutive. Disclosures related to net income (loss) per common share are included in Note 17 to our financial statements. | |
Recently Adopted Accounting Standards | |
In July 2012, the FASB issued an accounting standards update that gives an entity the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. This guidance will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. 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. | |
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. 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 March 2013, the FASB issued an accounting standards update that provides guidance on the accounting for the cumulative translation adjustment (CTA) upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. Under this guidance, an entity should recognize the CTA in earnings based on meeting certain criteria, including when it ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated foreign entity or upon a sale or transfer that results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets resides. This guidance will be effective for fiscal years beginning on or 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. | |
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 | 12 Months Ended |
Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Liquidity | ' |
Note 2. Liquidity. | |
The Company has an accumulated deficit of $86,495,654, a net loss of $1,971,045, and used $2,132,440 of cash in operating activities as of and for the year ended December 31, 2013. As a result, there are concerns about the liquidity of the Company at December 31, 2013. The Company has a working capital surplus of $6,210,711. Management implemented credit, margin and expense controls served to reduce the Company net loss by $2,459,627 compared to 2012. Management believes that the cash generated from operations and the Revolver Loan availability, subject to borrowing base limitations, based on budgeted sales and expenses as supported by credit, margin and expense controls, are sufficient to fund the Company’s operations, including capital expenditures, through 2014. |
Trade_Receivables
Trade Receivables | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Receivables [Abstract] | ' | ||||||||
Trade Receivables | ' | ||||||||
Note 3. Trade Receivables. | |||||||||
Trade receivables are comprised of the following as of December 31: | |||||||||
2013 | 2012 | ||||||||
Trade Receivables | $ | 8,011,176 | $ | 8,298,527 | |||||
Less: Allowance for Doubtful Accounts | (316,587 | ) | (996,378 | ) | |||||
Trade Receivables, Net | $ | 7,694,589 | $ | 7,302,149 |
Inventories
Inventories | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
Note 4. Inventories. | |||||||||
The following is a summary of inventories as of December 31: | |||||||||
2013 | 2012 | ||||||||
Raw Materials | $ | 1,804,959 | $ | 1,663,901 | |||||
Finished Goods | 3,616,976 | 3,168,447 | |||||||
Total | $ | 5,421,935 | $ | 4,832,348 | |||||
Prepaid_Expenses_and_Other_Cur
Prepaid Expenses and Other Current Assets. | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Prepaid Expenses and Other Current Assets. | ' | ||||||||
Note 5. Prepaid Expenses and Other Current Assets. | |||||||||
The following is a summary of prepaid expenses and other current assets as of December 31: | |||||||||
2013 | 2012 | ||||||||
Prepaid Insurances | $ | 582,654 | $ | 293,814 | |||||
Prepaid Marketing | 152,667 | 149,916 | |||||||
Prepaid Consulting | 66,208 | 69,396 | |||||||
Prepaid Other | 357,839 | 213,611 | |||||||
Note Receivable, Net | 90,946 | — | |||||||
Total Prepaid Expenses and Other Current Assets | $ | 1,250,314 | $ | 726,737 |
Property_Plant_and_Equipment
Property, Plant and Equipment | 12 Months Ended | ||||||||||
Dec. 31, 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 for the years ended December 31: | |||||||||||
2013 | 2012 | Estimated Useful Life | |||||||||
Vehicles | $ | 649,487 | $ | 758,408 | 5 Years | ||||||
Leasehold Improvements | 288,777 | 283,961 | 13 – 15 Years | ||||||||
Office Furniture and Equipment | 327,329 | 324,237 | 3 – 7 Years | ||||||||
Computers and Software | 1,185,333 | 1,144,496 | 3 – 5 Years | ||||||||
Machinery and Equipment | 2,466,007 | 2,449,987 | 3 – 20 Years | ||||||||
Plant Construction in Progress | — | 10,788 | |||||||||
Total Property, Plant and Equipment | $ | 4,916,933 | $ | 4,971,877 | |||||||
Less: Accumulated Depreciation | (3,316,254 | ) | (3,001,879 | ) | |||||||
Total Property, Plant and Equipment, Net | $ | 1,600,679 | $ | 1,969,998 | |||||||
Depreciation expense was $453,827 and $539,487 for the years ended 2013 and 2012, of which $279,571 and $314,936 were included in cost of sales for 2013 and 2012, respectively. |
Dependence_on_a_few_suppliers
Dependence on a few suppliers | 12 Months Ended |
Dec. 31, 2013 | |
Risks and Uncertainties [Abstract] | ' |
Dependence on a few suppliers | ' |
Note 7. Dependence on Few Suppliers. | |
The Company is dependent on a few suppliers for certain of its raw materials and finished goods. For 2013 and 2012, raw materials and finished goods purchased from the Company’s three largest suppliers accounted for approximately 41% and 41% of purchases, respectively. |
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 12 Months Ended | ||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | ' | ||||||||||||||||||||||||||
Note 8. Goodwill and Other Intangible Assets. | |||||||||||||||||||||||||||
The following is a summary of Goodwill as of December 31: | |||||||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||
Foam | $ | 2,932,208 | $ | 2,932,208 | |||||||||||||||||||||||
Coatings | 1,302,620 | 1,302,620 | |||||||||||||||||||||||||
$ | 4,234,828 | $ | 4,234,828 | ||||||||||||||||||||||||
The following is a summary of Other Intangible Assets as of December 31: | |||||||||||||||||||||||||||
Other Intangible Assets | |||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | Amortization | |||||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | Period | |||||||||||||||||||||
Customer Lists | $ | 859,235 | $ | (859,235 | ) | $ | — | $ | 859,235 | $ | (780,235 | ) | $ | 79,000 | 5 Years | ||||||||||||
Product Formulations | 138,471 | (81,544 | ) | 56,927 | 138,471 | (72,312 | ) | 66,159 | 15 Years | ||||||||||||||||||
Trade Names | 740,325 | (269,212 | ) | 471,113 | 740,325 | (219,857 | ) | 520,468 | 15 Years | ||||||||||||||||||
Non-Competes | 210,000 | (210,000 | ) | — | 210,000 | (189,000 | ) | 21,000 | 5 Years | ||||||||||||||||||
Approvals and Certifications | 1,547,754 | (910,637 | ) | 637,117 | 1,420,808 | (644,796 | ) | 776,012 | 5 Years | ||||||||||||||||||
$ | 3,495,785 | $ | (2,330,628 | ) | $ | 1,165,157 | $ | 3,368,839 | $ | (1,906,200 | ) | $ | 1,462,639 | ||||||||||||||
Based on the other intangible assets in service as of December 31, 2013, estimated amortization expense for the years ending December 31, 2014 through December 31, 2017 and thereafter is as follows: | |||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | Thereafter | |||||||||||||||||||||||
Product Formulations | $ | 9,231 | $ | 9,231 | $ | 9,231 | $ | 9,231 | $ | 20,003 | |||||||||||||||||
Trade Names | 49,355 | 49,355 | 49,355 | 49,355 | 273,693 | ||||||||||||||||||||||
Approvals and Certifications | 265,841 | 265,841 | 105,435 | — | — | ||||||||||||||||||||||
$ | 324,427 | $ | 324,427 | $ | 164,021 | $ | 58,586 | $ | 293,696 | ||||||||||||||||||
The Company evaluates the amortization period of goodwill and other intangible assets on an ongoing basis, in light of any changes in business conditions, events or circumstances, which may indicate the potential impairment of goodwill and other intangible assets. |
Deposits_and_Other_NonCurrent_
Deposits and Other Non-Current Assets, Net. | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Deposits and Other Non-Current Assets, Net. | ' | ||||||||
Note 9. Deposits and Other Non-Current Assets, Net. | |||||||||
The following is a summary of deposits and other non-current assets as of December 31: | |||||||||
2013 | 2012 | ||||||||
Deferred Financing Fees | $ | 285,246 | $ | 304,112 | |||||
Prepaid Expenses | 46,744 | 18,545 | |||||||
Other Receivables | 55,293 | 60,274 | |||||||
Deposits | 153,584 | 72,622 | |||||||
Note Receivable, Net | 145,791 | — | |||||||
Total Deposits and Other-Non-Current Assets | $ | 686,658 | $ | 455,553 |
Accrued_Expenses_and_Other_Cur
Accrued Expenses and Other Current Liabilities | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued Expenses and Other Current Liabilities | ' | ||||||||
Note 10. Accrued Expenses and Other Current Liabilities. | |||||||||
The following is a summary of accrued expenses and other current liabilities as of December 31: | |||||||||
2013 | 2012 | ||||||||
Accrued Payroll | $ | 169,785 | $ | 138,677 | |||||
Accrued Commissions | 61,000 | 64,000 | |||||||
Accrued Inventory | 178,616 | — | |||||||
Accrued Taxes and Other | 606,275 | 917,244 | |||||||
Accrued Insurance | 427,395 | 220,715 | |||||||
Deferred Finance Charge Income | 13,824 | 4,378 | |||||||
Total Accrued Expenses and Other Current Liabilities | $ | 1,456,895 | $ | 1,345,014 |
Financing_Instruments
Financing Instruments | 12 Months Ended |
Dec. 31, 2013 | |
Transfers and Servicing [Abstract] | ' |
Financing Instruments | ' |
Note 11. 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 $2,500,000 under a term loan ("Term Loan") and $13,000,000 under a revolver loan, which matures on March 31, 2016 ("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%. The Company has four material debt covenants to comply with relating to the Loan Agreement: (i) Capital expenditures are limited to $625,000 on an annual basis, (ii) A borrowing base calculation defined as an amount determined by a detailed calculation equal to 85% of eligible accounts receivable, plus 55% of eligible inventory cannot be exceeded (“Borrowing Base”); (iii) Maintain an FCCR, tested monthly as of the last day of each calendar month, in each case for the most recently completed twelve calendar months, equal to a minimum ratio of 0.90 to 1.0 from December 2013 to February 2014, 0.80 to 1.0 from March 2014 to April 2014, 0.90 to 1.0 from May 2014 to June 2014, 1.0 to 1.0 for July 2014, and 1.25 to 1.0 from August 2014 and thereafter, and (iv) Maintain minimum liquidity equal to or greater than $500,000. The Company is required to submit its Borrowing Base calculation to the Bank daily. If, at any time, the Company’s Borrowing Base calculation is less than the amount outstanding under the Revolver Loan, and that amount remains unpaid or is not increased from future Borrowing Base calculations to an amount equal to the balance outstanding under the Revolver Loan at any given time, or the Bank, in its discretion, may accelerate any and all amounts outstanding under the Revolver Loan. The Term Loan was paid off out of the proceeds received from the Prior Enhanced Note (described in Item (b) below) on June 29, 2012. At December 31, 2013 and 2012, the balance outstanding on the Revolver Loan was $4,539,163 and $5,032,450, and the weighted-average interest rate was 4.5% and 4.5%, respectively. At December 31, 2013, we were in compliance with all of our Loan Agreement debt covenants. See also Note 21 – Subsequent Events, Item (f) for more information. | |
(b) Note Purchase Agreements. | |
(i) New Enhanced Note. The Company entered into a Note Purchase Agreement with Enhanced Jobs for Texas Fund, LLC (“Enhanced Jobs”) and Enhanced Credit Supported Loan Fund, LP (“Enhanced Credit”), on December 10, 2013, authorizing the issuance of an aggregate of $7.2 Million in Subordinated Secured Promissory Notes maturing December 10, 2016 (“New Enhanced Note”), of which $5.7 Million was to Enhanced Credit and $1.5 Million was to Enhanced Jobs. Repayment of the $7.2 Million is required on the maturity date of December 10, 2016. Interest is payable monthly and broken down into Current Pay Interest at the rate of 7.25% per annum, and PIK Interest at the rate of 3.75% (which is added to the principal balance of the outstanding notes) to create the Aggregate Interest Rate of 11%. The Company has the right to prepay the New Enhanced Note, subject to a prepayment premium equal to 3% for the first year or 2% for the second year. The Company also entered into a security agreement with the New Enhanced Note providing for a second lien on all assets of the Company after Bank of America, which has a first lien on all asset of the Company. The Company has four material debt covenants to comply with relating to the New Enhanced Note: (i) Capital expenditures are limited to $625,000 on an annual basis, (ii) A minimum Adjusted 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, (iii) Maintain an FCCR, tested monthly as of the last day of each calendar month, in each case for the most recently completed twelve calendar months, equal to a minimum ratio of 0.90 to 1.0 from December 2013 to February 2014, 0.80 to 1.0 from March 2014 to April 2014, 0.90 to 1.0 from May 2014 to June 2014, 1.0 to 1.0 for July 2014, and 1.25 to 1.0 from August 2014 and thereafter, and (iv) Maintain minimum liquidity equal to or greater than $500,000. Based on a Prior Enhanced Note being refinanced in connection with the New Enhanced Note (Refer to (iii) below), due to the effective interest rate on the refinanced balance of the Prior Enhanced Note being higher than the New Enhanced Note, a gain on extinguishment of debt resulted. The New Enhanced Note was recorded at fair value on December 10, 2013, resulting in a gain on extinguishment of debt of $398,886, a write off of $45,512 for old debt issuance costs, and a purchase discount of $542,886 which is being amortized to interest expense using the effective interest method over the three year term of the New Enhanced Note (See also (ii) below). At December 31, 2013, the balance outstanding on the New Enhanced Note was $6,683,561 and the effective interest rate was 29.0%. At December 31, 2013, we were in compliance with all of our New Enhanced Note debt covenants. See also Note 21 – Subsequent Events, Item (g) for more information. | |
(ii) New Guaranty Agreement. In connection with the New Enhanced Note described in (i) above, the Chairman of the Board and majority stockholder of the Company (the “Guarantor”), entered into a Guaranty Agreement with Enhanced Credit, as agent under the New Enhanced Note, to secure the Company’s performance under the New Enhanced Note. The Company, in exchange for Guarantor’s personal guarantee of the obligations under the New Enhanced Note, granted Guarantor 3,681,000 shares of restricted common stock, par value $.01, which shares vest monthly on a pro rata basis over the three year term of the New Enhanced Note (“New Guaranty Shares”). The New Guaranty Shares were valued at $.60 per share, the closing price of the Company’s common stock as quoted on the OTC Markets on the day preceding the closing date of December 10, 2013, for an aggregate amount of $2,208,600. The New Guaranty Shares are being recorded as interest expense – related party, thereby increasing the effective interest rate on the New Enhanced Note. At December 31, 2013, there were 73,821 New Guaranty Shares vested, valued and recorded at $44,293. | |
(iii) Prior Enhanced Note. Upon receipt of the $7.2 Million under the New Enhanced Note described in (i) above, the Company paid off the outstanding balances due under the prior Note Purchase Agreement dated as of June 29, 2012 entered into with Enhanced Jobs For Texas Fund, LLC (“Enhanced Jobs”) and Enhanced Capital Texas Fund LP (“Enhanced Capital”), in the amount of $1,673,381 for Enhanced Jobs and $1,673,381 for Enhanced Texas (“Prior Enhanced Note”), and all related agreements, including but not limited to the Prior Enhanced Note, security agreement, and Prior Guaranty Agreement each dated June 29, 2012, were terminated. Under the Prior Enhanced Note, Enhanced Jobs and Enhanced Capital agreed to loan $4.4 Million under subordinated secured variable rate notes due June 29, 2014, of which $2.2 Million was with Enhanced Jobs and $2.2 Million was with Enhanced Texas (collectively, “Prior Enhanced Note”). Repayments of the principal amount of the Prior Enhanced Note was 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. Interest on the Prior Enhanced Note was 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. At December 31, 2012, the balance outstanding on the Prior Enhanced Note was $4,337,334 and the effective interest rate was 27.7%. At December 9, 2013 and prior to the payoff of the balance outstanding on the Prior Enhanced Note of $3,346,762 (as described above), the effective interest rate was 29.2%. | |
(iv) Prior Guaranty Agreement. As a result of the payoff of the Prior Enhanced Notes as described in (iii) above, the Company canceled an aggregate of 1,376,712 unvested shares (with an unrecorded valued of $371,801) which shares were previously issued in connection with the personal guaranty required for the Prior Enhanced Note that was paid off earlier than the maturity date of June 29, 2014. The Chairman of the Board and majority stockholder of the Company, as Guarantor, entered into a Guaranty Agreement with Enhanced Credit, as agent under the Prior Enhanced Note, to secure the Company’s performance under the Prior Enhanced Note. The Company, in exchange for Guarantor’s personal guarantee of the obligations under the Prior Enhanced Note, granted Guarantor 5,000,000 shares of restricted common stock, par value $.01, which shares were vesting monthly on a pro rata basis over the two year term of the Prior Enhanced Note (“Prior Guaranty Shares”). The Prior Guaranty Shares were valued at $.27 per share, the closing price of the Company’s common stock as quoted on the OTC Markets on the day preceding the closing date of June 29, 2012, for an aggregate amount of $1,350,000. The Prior Guaranty Shares were recorded as interest expense – related party, thereby increasing the effective interest rate on the Prior Enhanced Note. | |
(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, which matures on June 10, 2017 and is subordinate to the Loan Agreement and the New Enhanced Note described in (a) and (b)(i) above. At December 31, 2013 and 2012, the Company had accrued interest of $70,595 and $47,038, respectively. | |
(d) Warrants. The Company previously entered into a Revolving Credit and Term Loan Agreement on February 21, 2007 with ComVest Capital, which matured and was paid off in 2010, however, certain registered detachable warrants issued to ComVest remained outstanding. The registered warrants were for the purchase of an aggregate of 2,500,000 shares of common stock at varying prices, all of which expired in 2013. As of December 31, 2013, there were no outstanding warrants. See also Note 12 – Derivatives and Fair Value. |
Derivatives_and_Fair_Value
Derivatives and Fair Value | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Derivatives and Fair Value | ' | ||||||||||||||||
Note 12. Derivatives and Fair Value. | |||||||||||||||||
The Company evaluated the application of GAAP with respect to certain detachable Warrants (See Note 11 – 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 December 31, 2013 there were no outstanding derivative liabilities, however, at 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 December 31, 2012. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3 financial liabilities consist of the freestanding Warrants that contain down round provisions for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. We have valued the freestanding Warrants using a lattice model, with the assistance of a valuation consultant, for which management understands the methodologies. This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of January 1, and December 31, 2012, respectively. The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3): | |||||||||||||||||
Fair Value Measurements Using Level 3 Inputs | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Derivative Liabilities | Totals | Derivative Liabilities | Totals | ||||||||||||||
Beginning Balance on January 1, | $ | 65,656 | $ | 65,656 | $ | 154,518 | $ | 154,518 | |||||||||
Total Gains or Losses (realized/unrealized) | |||||||||||||||||
included in Net Income (Loss) | (65,656 | ) | (65,656 | ) | (88,862 | ) | (88,862 | ) | |||||||||
Purchases, Issuances and Settlements | — | — | — | — | |||||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | |||||||||||||
Ending Balance on December 31, | $ | — | $ | — | $ | 65,656 | $ | 65,656 | |||||||||
Long_Term_Debt
Long Term Debt | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long Term Debt | ' | ||||||||
Note 13. Long Term Debt. | |||||||||
The following is a summary of long term debt for the years ending December 31: | |||||||||
2013 | 2012 | ||||||||
Various notes payable on vehicles and equipment, due in monthly installments of $1,533 including interest, maturing through March 2014. | $ | 4,599 | $ | 25,507 | |||||
Less: Current Maturities | (4,599 | ) | (21,077 | ) | |||||
Total Long-Term Debt | $ | — | $ | 4,430 |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
Note 14. Related Party Transactions. | |
(a) During 2013, the Company vested an aggregate of 2,423,136 shares of restricted common stock, par value $.01 per share, to the Chairman of the Board and majority stockholder in connection with his personal guarantees related to financings with Enhanced Capital for the benefit of the Company, which transactions were valued and recorded in the aggregate at $678,697, and classified as interest expense – related party. | |
(b) During 2013, the Company vested an aggregate of 1,938,111 shares, including anti-dilution issuances, 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 $1,045,693. See also Item 11, Director Compensation Table, Footnote 3, for more information. | |
(c) During 2013, the Company accrued an aggregate of $70,595 for interest relating to the $1,300,000 Note Payable – Related Party with the Chairman of the Board and majority stockholder, bearing interest at 5% per annum. The Note Payable – Related Party’s maturity date was extended to June 10, 2017 in connection with the New Enhanced Note financing. | |
(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 Prior Enhanced Note (formerly referred to as the “June 29, 2012 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 before the Prior Enhanced Note’s 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 Prior Enhanced Note is fully satisfied; or (b) in the event any outstanding balance under the Prior Enhanced Note, plus accrued interest, is satisfied in connection with a liquidity event as defined in and pursuant to the Prior Enhanced Note. The Total Commitment was superseded when the Company entered into the New Enhanced Note on December 10, 2013, which included a personal guaranty from the Chairman of the Board. See (f) below. | |
(f) On December 10, 2013, in connection with the New Enhanced Note entered into of even date, Richard J. Kurtz, Chairman of the Board and majority stockholder of the Company (the “Guarantor”), entered into a Guaranty Agreement with Enhanced Credit, to secure the Company’s performance under the New Enhanced Note. The Company, in exchange for Guarantor’s personal guarantee of the obligations under the New Enhanced Note, issued Guarantor 3,681,000 Million shares of restricted common stock, par value $.01, which shares vest monthly on a pro rata basis over the three year term of the New Enhanced Note (the “Guaranty Shares”). The Guaranty Shares were valued at $.60 per share, which was the closing price of the Company common stock as quoted on the OTC Markets on the day preceding the closing date for the New Enhanced Note, for an aggregate amount of $2,208,600. As a result of the payoff of the Prior Enhanced Note, the Company canceled an aggregate of 1,376,712 unvested Prior Guaranty Shares (with an unrecorded valued of $371,801) previously issued in connection with the personal guaranty required from the Chairman due to the Prior Enhanced Note being paid off earlier than the maturity date (The Company had previously issued 5,000,000 shares to the Chairman valued at $1,350,000 in connection with such Prior Enhanced Note which was vesting monthly on a pro rata basis over its 2 year term. | |
(g) On December 31, 2013, the Company vested an additional 160,000 shares of the restricted common stock under the Board adopted Non-Employee Director Share Based Compensation Program (“Director Plan”), of which 100,000 shares were for Mr. Nadel, and 20,000 shares were for Mr. Gregg, Mr. Brown, and Mr. Larson, respectively, and paid an aggregate of $40,000 in cash to non-employee directors during 2013. The Director Plan, effective July 1, 2010, provides for the grant of an aggregate of 800,000 shares of restricted common stock with each outside director receiving a stock grant of 100,000 shares (Mr. Gregg, Mr. Brown, and Mr. Larson), and Mr. Nadel who will receive a stock grant of 500,000 shares (Mr. Nadel was an outside director at the time of approval of the Director Plan), and each outside director will receive cash payments of $2,500 each quarter, payable at the end of each quarter. All stock grants will vest over a four and half year period, with one fifth vesting at the end of each calendar year beginning in 2010; provided, however, if there is a change in the control of the Company, all stock grants, which have not vested, will vest immediately upon the change in control. As of December 31, 2013, a total of 640,000 shares of restricted common stock have vested with a corresponding share based compensation expense of $416,000, of which $104,000 was for 2013, 2012, 2011, and 2010, respectively. | |
See also Note 21 – Subsequent Events for additional information. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Income Taxes | ' | ||||||||
Note 15. Income Taxes. | |||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities, for financial reporting purposes, and amounts used for Federal income tax purposes. Significant components of the Company's continuing operations deferred tax asset at December 31: | |||||||||
Deferred Tax Assets: | 2013 | 2012 | |||||||
Net Operating Loss Carry-Forward | $ | 66,888,140 | $ | 65,078,622 | |||||
Statutory Tax Rate | 34 | % | 34 | % | |||||
Total Deferred Tax Assets | 22,741,968 | 22,126,731 | |||||||
Valuation Allowance for Deferred Tax Assets | (22,741,968 | ) | (22,126,731 | ) | |||||
Net Deferred Taxes | $ | — | $ | — | |||||
At December 31, 2013, the Company had available, net operating loss carry-forwards of approximately $22,800,000 for Federal income tax purposes. Utilization by the Company is subject to limitations based on the Company's future income, and pursuant to Section 382 of the Internal Revenue Code, as amended. The usage of some of these net operating loss carry-forwards may be limited due to changes in ownership that have occurred or may occur in the future. The loss carry-forwards, if not used, will expire as follows: $6,022,543 in 2018, $2,528,950 in 2019, $4,557,566 in 2020, $7,870,612 in 2021, $10,869,699 in 2022, $9,811,811 in 2023, $4,244,336 in 2024, $3,280,473 in 2025, $2,359,786 in 2026, $3,629,828 in 2027, $2,117,913 in 2028, $2,547,714 in 2029, $2,198,439 in 2031, $3,038,952 in 2032, and $1,809,518 in 2033. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
Note 16. Commitments and Contingencies. | |
Leases | |
The Company conducts operations in leased facilities located in Texas and New Jersey. The Texas lease includes lease concessions which amounts are included as part of the aggregate minimum lease payments and recognized on a straight-line basis over the minimum lease terms. Future minimum lease payments required under the non-cancelable operating lease as and for the years ending December 31 are as follows: $416,726 for 2013; $374,894 for 2014; $408,719 for 2015; and $183,219 for 2016. Rent expense for the years ended December 31, 2012 and 2011 was $255,229 and $357,145, respectively. | |
Legal Proceedings | |
(a) Neil and Kristine Markey, et al., Plaintiffs v. Lapolla Industries, Inc., Delfino Insulation, et al, Defendants | |
A complaint initially entitled Neil and Kristine Markey, individually, and on behalf of all others similarly situated, Plaintiffs, vs. Lapolla industries, Inc., a Delaware corporation; Lapolla International, Inc., a Delaware corporation; and Delfino Insulation Company, Inc., a New York Corporation, Defendants, was filed in the United States District Court for the Eastern District of New York and served on or about October 10, 2012 and amended last on November 11, 2013 (“Markey Litigation”). Plaintiffs now bring this lawsuit only individually, having amended out any request for a class action. The complaint alleges, among other things, that Lapolla designs, labels, distributes, and manufactures spray polyurethane foam (“SPF”) insulation, which creates a highly toxic compound when applied as insulation resulting in exposure to harmful gases. Plaintiffs are seeking: (i) actual, compensatory, and punitive damages; (ii) injunctive relief; and (iii) attorney fees. Lapolla considers the allegations to be without merit and is vigorously defending the allegations. The outcome of this litigation cannot be determined at this time. See also (b) below. | |
(b) Lapolla Industries, Inc., Plaintiff v. Aspen Specialty Insurance Company, et al, Defendants | |
Lapolla filed a complaint entitled Lapolla Industries, Inc., Plaintiff, v. Aspen Specialty Insurance Company; Aspen Specialty Insurance Management, Inc., Defendants, in the United States District Court for the Eastern District of New York on November 29, 2012 in a dispute related to the Markey Litigation described in (a) above. The Complaint alleges that defendants initially wrongfully denied insurance coverage in the Markey Litigation, and later wrongfully conditionally agreed to provide insurance coverage. We are seeking declaratory relief as follows: (i) an order that pursuant to existing policies issued by Defendants insuring Lapolla that Defendants must defend Plaintiff in the Markey Litigation; (ii) an order declaring that Plaintiff may select its own legal counsel; (iii) damages in an amount to be determined based upon Defendants’ breach of good faith, plus interest; (iv) an award of reasonable attorney fees plus costs and expenses incurred by Lapolla; and (v) pre- and post-judgment statutory interest. The Eastern District of New York granted a motion to dismiss on September 18, 2013 finding that a total pollution exclusion clause barred defense coverage. On November 18, 2013, Lapolla appealed to the Second Circuit Court of Appeals where the parties have completed primary briefing. The outcome of this litigation cannot be determined at this time. See also (a) above. | |
(c) Robert and Cynthia Gibson, et al., Plaintiffs v. Lapolla Industries, Inc. and Air Tight Insulation of Mid-Florida, LLC, Defendants | |
A complaint entitled Robert and Cynthia Gibson, individually and on behalf of others similarly situated, Plaintiffs v. Lapolla Industries, Inc., a Delaware corporation, and Air Tight Insulation of Mid-Florida, LLC, Defendants, was filed in the United States District Court for the Middle District of Florida on April 22, 2003 and served on or about April 23, 2013 (“Gibson Litigation”). The Plaintiffs brought this lawsuit individually and on behalf of a nationwide class against the Defendants as well as two Florida subclasses. The complaint alleged, among other things, negligence in connection with the design, manufacture, distribution, and installation of Lapolla’s SPF, resulting in exposure to harmful gases, breach of express and implied warranties, and violation of various state statutes. Plaintiffs sought, among other things: (i) actual, compensatory, statutory, and punitive damages; (ii) injunctive relief; and (iii) attorney fees. On February 3, 2014, the court dismissed the federal court case without prejudice per the Gibson’s notice of voluntary dismissal. See also (e) below. | |
(d) Great American E & S Insurance Company, Plaintiff v. Lapolla Industries, Inc., Defendant | |
Great American E & S Insurance Company (“Plaintiff”) filed a Petition for Declaratory Judgment against Lapolla Industries, Inc. in the Judicial District Court of Harris County, Texas on July 13, 2013 and served on or about July 21, 2013. The Petition seeks a declaratory Judgment that Plaintiff has no duty to defend or indemnify Lapolla under a general liability policy issued to Lapolla with respect to, among other things, contamination claims asserted in the Gibson Litigation. The Gibson Litigation alleges, among other things, that Lapolla’s proprietary SPF is a defective and toxic substance creating irritants which cause damages to the persons in the homes in which the SPF is applied. In addition to describing the terms of the insurance policy, Plaintiff alleges that the insurance of Lapolla under the policy excludes and does not apply to, among other things, damages from pollution, pre-existing damages known to Lapolla for products manufactured, distributed, or sold by Lapolla, or any damage to Lapolla’s product, or repair of Lapolla’s product, and seeks reasonable attorney fees. On January 9, 2014, the trial court denied Plaintiff’s Motion for Final Summary Judgment, which sought a final declaration that Plaintiff had no duty to defend in the Gibson Litigation. On February 25, 2004, Plaintiff filed a motion seeking permission to make an interlocutory appeal to the court of appeals of the trial court’s order denying Plaintiff’s Motion for Final Summary Judgment. Lapolla considers the allegations to be without merit and is seeking declaration from the court that Great American does have a duty to defend and indemnify Lapolla in the Gibson Litigation. The outcome of this litigation cannot be determined at this time. See also (c) above and (e) below. | |
(e) Robert and Cynthia Gibson, individually, and as parents and natural guardians of Robert Harvey Lee Gibson, Plaintiffs v. Lapolla Industries, Inc. and Air Tight Insulation of Mid-Florida, LLC, Southern Foam Insulation, Inc., and Tailored Chemical Products, Inc., Defendants | |
On March 5, 2014, the Gibson’s re-filed their claims, which were previously pending in the federal district court in the Middle District of Florida, against Lapolla Industries, Inc. and Air Tight Insulation of Mid-Florida, LLC (See Item (c) above) and two new defendants, Southern Foam Insulation, Inc. and Tailored Chemical Products, Inc. The complaint was filed in the Circuit Court of the 18th Judicial Circuit in and for Seminole County, Florida and alleges, among other things, negligence, strict liability design defect, strict liability failure to warn, breach of express and implied warranties, unjust enrichment, and violation of Florida’s deceptive and unfair trade practices act, relating to the design, manufacture, distribution, and installation of Lapolla’s spray polyurethane foam insulation, resulting in personal injuries and real property damage. Plaintiffs seek: (i) actual, compensatory, statutory, and punitive damages; (ii) injunctive relief; (iii) medical monitoring, and (iv) attorney fees. Lapolla considers the allegations to be without merit and is vigorously defending the allegations. The outcome of this litigation cannot be determined at this time. | |
(f) Michael Commaroto, Kimberly S. Commaroto, and Gretchen Schlegel v. Pasquale Guzzo a/k/a Pasqualino Guzzo PDB Home Improvements, Perfect Wall, LLC, and Jozsef Finta | |
Pasquale Guzzo a/k/a Pasqualino Guzzo PDB Home Improvements (“Guzzo”) filed a third-party complaint against Lapolla Industries, Inc. in the Superior Court, Judicial District of Stamford/Norwalk, in Connecticut on January 3, 2013 (“Guzzo Litigation”). Guzzo is alleging Lapolla’s SPF product is a defective product under Connecticut law and seeking indemnification and attorney’s fees. On August 28, 2013, Michael Commaroto, Kimberly S. Commaroto, and Gretchen Schlegel (collectively “Plaintiffs”) filed an amended complaint against Lapolla also asserting the SPF is a defective product. Plaintiffs seek monetary damages, punitive damages, and attorney’s fees, among other relief. This matter was previously being handled by insurance coverage counsel with Evanston Insurance Company. Lapolla considers the allegations to be without merit and is vigorously defending the allegations. The outcome of this litigation cannot be determined at this time. See also (g) below. | |
(g) Evanston Insurance Company v. Lapolla Industries, Inc. | |
Evanston Insurance Company (“Evanston”) filed its first amended complaint for declaratory judgment against Lapolla Industries, Inc.. Evanston seeks a declaratory judgment that it has no duty to defend or indemnify Lapolla in the Guzzo Litigation. Lapolla made an appearance in the case on February 14, 2014. The court entered a scheduling order on February 27, 2014 for briefing on summary judgment motions, which is to be completed by May 23, 2014. Lapolla considers the allegations to be without merit and is seeking declaration from the court that Evanston does have a duty to defend and indemnify Lapolla. The outcome of this litigation cannot be determined at this time. See also (f) above. | |
(h) Various Lawsuits and Claims Arising in the Ordinary Course of Business | |
We are involved in various lawsuits and claims arising in the ordinary course of business, which are, in our opinion, immaterial both individually and in the aggregate with respect to our consolidated financial position, liquidity or results of operations. |
Net_Income_Loss_per_Common_Sha
Net Income (Loss) per Common Share - Basic and Diluted | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Net Income (Loss) per Common Share - Basic and Diluted | ' | ||||||||
Note 17. 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 years ended December 31, 2013 and 2012 as their effect would be anti-dilutive. The computation of the Company’s basic and diluted earnings per share for the years ended: | |||||||||
2013 | 2012 | ||||||||
Net loss available to common shareholders (A) | $ | (1,971,045 | ) | $ | (4,430,672 | ) | |||
Weighted average common shares outstanding (B) | 111,449,320 | 107,312,421 | |||||||
Dilutive effect of employee equity incentive plans | 4,740,000 | 7,473,333 | |||||||
Weighted average common shares outstanding, assuming dilution (C) | 114,218,275 | 114,785,754 | |||||||
Basic earnings per common share (A)/(B) | $ | (0.02 | ) | $ | (0.04 | ) | |||
Diluted earnings per common share (A)/(C) | $ | (0.02 | ) | $ | (0.04 | ) | |||
For 2013, a total of 4,740,000 shares of common stock were excluded from the calculation of diluted earnings per common share, all of which shares were for outstanding, vested, and exercisable in-the-money stock options. For 2012, a total of 7,473,333 shares of common stock were excluded from the calculation of diluted earnings per common share, of which: (a) 2,500,000 shares were for outstanding warrants, all of which had an exercise price greater than the market value of the common share as of the periods then ended (“out-of-the-money”), and (b) 4,973,333 shares were for outstanding and vested out-of-the-money stock options, of which 4,629,015 are exercisable and 344,318 are not exercisable. Outstanding out-of-the money warrants and stock options 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, the Company reports a profit, and the exercisability restrictions are met. |
Securities_Transactions
Securities Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
Securities Transactions | ' |
Note 18. Securities Transactions. | |
(a) During 2013, the Company issued an aggregate of 1,938,111 shares of restricted common stock, par value $.01, valued and recorded in the aggregate at $1,045,693 for advisory and consulting services. See also Note 14 – Related Party Transactions, Item (b). | |
(b) During 2013, the Company issued an aggregate of 2,423,136 shares of restricted common stock, par value $.01, valued and recorded in the aggregate at $678,697 classified as interest expense – related party pursuant to a guaranty made in connection with a financing. See also Note 14 - Related Party Transactions, Items (a) and (f). | |
(c) During 2013, the Company issued an aggregate of 160,000 shares of restricted common stock, par value $.01, valued and recorded in the aggregate at $104,000 for continuing Board of Directors services under the Director Plan. See also Note 14 - Related Party Transactions, Item (g). | |
(d) During 2013, the Company issued an aggregate of 150,697 shares of restricted common stock, par value $.01, valued and recorded in the aggregate at $38,387 for consulting fees relating to capital raising efforts. | |
(e) During 2013, the Company issued 104,167 shares of restricted common stock, par value $.01 per share, to an employee, which transaction was valued and recorded at $25,000. | |
ShareBased_Payment_Arrangement
Share-Based Payment Arrangements | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangements | ' | ||||||||||||||||||||||||||||||||||||||||
Note 19. Share–Based Payment Arrangements. | |||||||||||||||||||||||||||||||||||||||||
The Company reports share-based compensation arrangements primarily using a straight-line option valuation model to calculate compensation expense over the requisite service period of grants. At December 31, 2013, the Company had four share based compensation plans, including the Equity Incentive Plan (“Equity Plan”), Non-Employee Director Restricted Stock Plan ("Director Plan"), Advisory and Consulting Agreement Plan (“Advisor Plan”), and Guaranty Agreement Plans (“Guaranty Plans”) in effect, and Warrants (“Warrants”). Compensation cost charged against income for all compensation and incentive plans for 2013 and 2012 was $1,998,426 and $1,557,988, respectively. | |||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan | |||||||||||||||||||||||||||||||||||||||||
The Company’s Equity Plan, which is shareholder-approved, permits the grant of stock awards to eligible participants for up to 10,000,000 shares of common stock. The purpose of the Equity Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward employees, directors and consultants performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company. The Equity Plan provides financial performance measures upon which specific performance goals would be based and limits on the numbers of shares or compensation that could be made. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Stock awards may provide for accelerated vesting if there is a change in control. The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation model and spread over the requisite service period. | |||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan - continued | |||||||||||||||||||||||||||||||||||||||||
For 2013, there were no options granted or extended. For 2012, there were option extensions approved for an aggregate of 2,350,000 previously vested stock options, of which 2,000,000 options were for a Mr. Kramer and 350,000 were for key employees. For Mr. Kramer, an extension was approved for the 2,000,000 vested 6-year stock options originally granted on July 12, 2005, at an exercise price of $.67 per share, expiring December 31, 2012, for an additional 3 years, now expiring December 31, 2015. The closing price of the Company’s common stock as traded on the OTC Markets on December 31, 2012, the date of the approval of the extension, was $.18 per share. As a result, there was no incremental cost associated with the extension. For the key employees, extensions were approved for an aggregate of 350,000 vested 5-year stock options originally granted on November 5, 2007, at an exercise price of $.36 per share, expiring November 5, 2012, for an additional 3 years, now expiring November 5, 2015. The closing price of the Company’s common stock as traded on the OTC Markets on November 5, 2012, the date of the approval of the extension, was $.18 per share. As a result, there was no incremental cost associated with the extensions. | |||||||||||||||||||||||||||||||||||||||||
As of December 31, 2013, total compensation cost related to non-vested stock options was $-0-. As of December 31, 2012, total compensation cost related to non-vested stock options was $145,037, which is expected to be recognized over 1 year after December 31, 2012 (12 months on a weighted-average basis). Stock option activity under the Company’s Equity Plan as of the years ended December 31, is summarized below: | |||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Options | of Options | Exercise Price | of Options | Exercise Price | |||||||||||||||||||||||||||||||||||||
Outstanding-Beginning of Year | 5,540,000 | $ | 0.61 | 5,948,333 | $ | 0.61 | |||||||||||||||||||||||||||||||||||
Granted | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | (500,000 | ) | 0.74 | (408,333 | ) | 0.55 | |||||||||||||||||||||||||||||||||||
Outstanding-End of Year | 5,040,000 | 0.6 | 5,540,000 | 0.61 | |||||||||||||||||||||||||||||||||||||
Exercisable-End of Year | 4,740,000 | $ | 0.61 | 4,629,015 | $ | 0.62 | |||||||||||||||||||||||||||||||||||
The weighted-average grant-date fair value of options granted during 2013 and 2012 was $-0- and $-0-, respectively. The weighted-average modification-date fair value of vested options extended during 2013 and 2012 was $-0- and $0.62, respectively. There were 4,960,000 options available for grant at December 31, 2013. Refer to Equity Plan and Warrants Summary below for range of exercise prices. | |||||||||||||||||||||||||||||||||||||||||
Warrants | |||||||||||||||||||||||||||||||||||||||||
The Company did not issue any warrants during 2013 or 2012. During 2007 and 2008, the Company issued an aggregate of 2,500,000 detachable warrants in connection with its mezzanine styled credit instruments, which were modified and re-priced from time to time based on anti-dilution down round price protections, all of which expired in 2013. Warrant activity as of the year ended December 31, is summarized below: | |||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Options | of Warrants | Exercise Price | of Warrants | Exercise Price | |||||||||||||||||||||||||||||||||||||
Outstanding-Beginning of Year | 2,500,000 | $ | 0.58 | 2,500,000 | $ | 0.58 | |||||||||||||||||||||||||||||||||||
Granted | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | (2,500,000 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||
Outstanding-End of Year | — | $ | — | 2,500,000 | $ | 0.58 | |||||||||||||||||||||||||||||||||||
Exercisable-End of Year | — | $ | — | 2,500,000 | $ | 0.58 | |||||||||||||||||||||||||||||||||||
See also Note 11 – Financing Instruments, (d) Warrants, for more information. | |||||||||||||||||||||||||||||||||||||||||
Equity Plan and Warrants Summary | |||||||||||||||||||||||||||||||||||||||||
The following table summarizes stock options and warrants outstanding at: | |||||||||||||||||||||||||||||||||||||||||
Outstanding | Exercisable | Outstanding | Exercisable | ||||||||||||||||||||||||||||||||||||||
Weighted | Weighted | ||||||||||||||||||||||||||||||||||||||||
Average | Weighted | Weighted | Average | Weighted | Weighted | ||||||||||||||||||||||||||||||||||||
Range of | Number | Remaining | Average | Number | Average | Number | Remaining | Average | Number | Average | |||||||||||||||||||||||||||||||
Exercise | Outstanding | Contractual | Exercise | Exercisable | Exercise | Outstanding | Contractual | Exercise | Exercisable | Exercise | |||||||||||||||||||||||||||||||
Prices | at 12/31/13 | Life (Years) | Price | at 12/31/13 | Price | at 12/31/11 | Life (Years) | Price | at 12/31/11 | Price | |||||||||||||||||||||||||||||||
$.35 - $.59 | 650,000 | 1.69 | $ | 0.36 | 350,000 | $ | 0.36 | 2,150,000 | 2.85 | $ | 0.48 | 1,850,000 | $ | 0.5 | |||||||||||||||||||||||||||
$.60 - $.64 | 2,310,000 | 2.4 | $ | 0.6 | 2,310,000 | $ | 0.6 | 2,310,000 | 3.03 | $ | 0.6 | 1,907,365 | $ | 0.6 | |||||||||||||||||||||||||||
$.65 - $.80 | 2,080,000 | 1.3 | $ | 0.67 | 2,080,000 | $ | 0.67 | 3,580,000 | 2.01 | $ | 0.67 | 3,371,650 | $ | 0.67 | |||||||||||||||||||||||||||
Director Plan | |||||||||||||||||||||||||||||||||||||||||
The Company’s Board of Directors adopted a Director Plan, which is not shareholder-approved, that permits the grant of up to 800,000 shares of restricted common stock to non-employee directors in 2010. Effective July 1, 2010, the Board granted 800,000 shares of restricted common stock to four non-employee directors, of which 100,000 was granted to Mr. Gregg, Mr. Brown, and Mr. Larson, and 500,000 was granted to Mr. Nadel. All stock grants vest over a four-and-a-half year period, with one-fifth vesting at the end of each year beginning in 2010, for serving on the Board of Directors. The Company does not consider the shares of restricted common stock granted under the Director Plan as outstanding at the time of grant due to vesting restrictions. The shares of restricted common stock when granted are held in reserve by the Company until such time that they are earned and vested, after which the Company issues the vested portion of the shares and delivers them to the respective directors. At December 31, 2013 and 2012, there were 160,000 and 320,000 shares of restricted common stock unvested, respectively. The compensation cost charged against income for the Director Plan in 2013 and 2012 was $104,000 and $104,000, respectively. The fair value of each award was calculated by taking the closing price of the Company's common stock on the effective date of the grant, which was $.65 per share, for an aggregate amount of $520,000. The Company is using the straight-line method over the requisite service period for attribution of compensation expense. The expected term of the awards is the last day on which the last increment of stock is scheduled to vest, or December 31, 2015. A summary of awards activity under the Director Plan at December 31, 2013, and changes during the year then ended, are as follows: | |||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Nonvested Awards | of Shares | Grant-Date Fair Value | of Shares | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||
Nonvested - Beginning of Year | 320,000 | $ | 208,000 | 480,000 | $ | 312,000 | |||||||||||||||||||||||||||||||||||
Granted | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Vested | (160,000 | ) | (104,000 | ) | (160,000 | ) | (104,000 | ) | |||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Nonvested - End of Year | 160,000 | $ | 104,000 | 320,000 | $ | 208,000 | |||||||||||||||||||||||||||||||||||
As of December 31, 2013, there is $102,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Director Plan. The cost is expected to be recognized over a weighted-average period of 1 year. | |||||||||||||||||||||||||||||||||||||||||
Advisor Plan | |||||||||||||||||||||||||||||||||||||||||
The Company and a non-employee director entered into an advisory and consultant agreement for 3 years on February 22, 2011. The Company granted 5,000,000 shares of restricted common stock, par value $.01, which vest monthly over 3 years. The grant-date fair value was calculated by taking the closing price of the Company's common stock of $.57 per share on the date of grant and multiplying it by the number of shares granted, equaling $2,850,000. The Advisor Plan includes anti-dilution aspects. For 2013, anti-dilution transactions occurred, which required the Company to grant and vest an additional 272,969 shares of restricted common stock. The grant-date fair value was calculated by taking the closing price of the Company’s common stock on the anti-dilution dates for a weighted-average of approximately $.35 per share and multiplying it by the number of shares granted, equaling $96,560. For 2012, anti-dilution transactions occurred, which required the Company to grant and vest an additional 62,101 shares of restricted common stock. The grant-date fair value was calculated by taking the closing price of the Company’s common stock on the anti-dilution dates for a weighted-average of approximately $.20 per share and multiplying it by the number of shares granted, equaling $12,160. A summary of awards activity under the Advisor Plan at December 31, 2013 and 2012, and changes during the years then ended, are as follows: | |||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Nonvested Awards | of Shares | Grant-Date Fair Value | of Shares | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||
Nonvested - Beginning of Year | 1,902,380 | $ | 1,084,352 | 3,572,084 | $ | 2,036,086 | |||||||||||||||||||||||||||||||||||
Granted | 272,969 | 96,560 | 62,101 | 12,160 | |||||||||||||||||||||||||||||||||||||
Vested | (1,938,111 | ) | (1,045,693 | ) | (1,731,805 | ) | (963,894 | ) | |||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Nonvested - End of Year | 237,238 | $ | 135,219 | 1,902,380 | $ | 1,084,352 | |||||||||||||||||||||||||||||||||||
As of December 31, 2013, there is $135,219 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Advisor Plan. The cost is expected to be recognized over a weighted-average period of 0.14 years. See also Note 14 – Related Party Transactions, Item (b). | |||||||||||||||||||||||||||||||||||||||||
Guaranty Plans | |||||||||||||||||||||||||||||||||||||||||
The Company made two separate grants of restricted common stock in connection with personal guarantees provided by the Chairman of the Board and majority stockholder to secure working capital on favorable terms and the Company’s performance under financing instruments. Refer to Note 11 – Financing Instruments, Items (b)(i) – New Enhanced Note and (b)(iii) – Prior Enhanced Note for information on the financial instruments. | |||||||||||||||||||||||||||||||||||||||||
New Guaranty Plan | |||||||||||||||||||||||||||||||||||||||||
The Company granted 3,681,000 shares of restricted common stock, par value $.01, which shares vest monthly on a pro rata basis over the three year term of the New Enhanced Note (“New Guaranty Shares”). The New Guaranty Shares were valued at $.60 per share, the closing price of the Company’s common stock as quoted on the OTC Markets on the day preceding the closing date of December 10, 2013, for an aggregate amount of $2,208,600. The New Guaranty Shares are being recorded as interest expense – related party, thereby increasing the effective interest rate on the New Enhanced Note. A summary of grant activity under the New Guaranty Plan at December 31, 2013, and changes during the year then ended, are: | |||||||||||||||||||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||||
Nonvested Awards | of Shares | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||||
Nonvested - Beginning of Year | — | $ | — | ||||||||||||||||||||||||||||||||||||||
Granted | 3,681,000 | 2,208,600 | |||||||||||||||||||||||||||||||||||||||
Vested | (73,821 | ) | (44,293 | ) | |||||||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | — | — | |||||||||||||||||||||||||||||||||||||||
Nonvested - End of Year | 3,607,179 | $ | 2,164,307 | ||||||||||||||||||||||||||||||||||||||
As of December 31, 2013, there is $2,164,307 of total unrecognized compensation cost related to nonvested interest expense – related party arrangement granted under the New Guaranty Plan. The cost is expected to be recognized over a weighted-average period of 2.96 years. | |||||||||||||||||||||||||||||||||||||||||
Prior Guaranty Plan | |||||||||||||||||||||||||||||||||||||||||
The Company previously granted 5,000,000 shares of restricted common stock, par value $.01, which shares were vesting monthly on a pro rata basis over the two year term of the Prior Enhanced Note (“Prior Guaranty Shares”). The Prior Guaranty Shares were valued at $.27 per share, the closing price of the Company’s common stock as quoted on the OTC Markets on the day preceding the closing date of June 29, 2012, for an aggregate amount of $1,350,000. The Prior Guaranty Shares were recorded as interest expense – related party, thereby increasing the effective interest rate on the Prior Enhanced Note. As a result of the payoff of the Prior Enhanced Notes, the Company canceled an aggregate of 1,376,712 unvested shares (with an unrecorded valued of $371,801) which shares were previously issued in connection with the personal guaranty required for the Prior Enhanced Note that was paid off earlier than the maturity date of June 29, 2014. A summary of grant activity under the Prior Guaranty Plan at December 31, 2013 and 2012, and changes during the years then ended, are: | |||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Nonvested Awards | of Shares | Grant-Date Fair Value | of Shares | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||
Nonvested - Beginning of Year | 3,726,027 | $ | 1,006,116 | — | $ | — | |||||||||||||||||||||||||||||||||||
Granted | — | — | 5,000,000 | 1,350,000 | |||||||||||||||||||||||||||||||||||||
Vested | (2,349,315 | ) | (634,315 | ) | (1,273,973 | ) | (343,884 | ) | |||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | (1,376,712 | ) | (371,801 | ) | — | — | |||||||||||||||||||||||||||||||||||
Nonvested - End of Year | — | $ | — | 3,726,027 | $ | 1,006,116 | |||||||||||||||||||||||||||||||||||
Guaranty Plans Summary | |||||||||||||||||||||||||||||||||||||||||
The following table summarizes grants activity under all Guaranty Plans at December 31, 2013 and 2012, and changes during the years then ended: | |||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Nonvested Awards | of Shares | Grant-Date Fair Value | of Shares | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||
Nonvested - Beginning of Year | 3,726,027 | $ | 1,006,116 | — | $ | — | |||||||||||||||||||||||||||||||||||
Granted | 3,681,000 | 2,208,600 | 5,000,000 | 1,350,000 | |||||||||||||||||||||||||||||||||||||
Vested | (2,423,136 | ) | (678,608 | ) | (1,273,973 | ) | (343,884 | ) | |||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | (1,376,712 | ) | (371,801 | ) | — | — | |||||||||||||||||||||||||||||||||||
Nonvested - End of Year | 3,607,179 | $ | 2,164,307 | 3,726,027 | $ | 1,006,116 | |||||||||||||||||||||||||||||||||||
See also Note 11 – Financing Instruments, (b), for more information. |
Business_Segment_Information
Business Segment Information | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||
Business Segment Information | ' | ||||||||||||||||||||
Note 20. Business Segments and Geographic Area Information. | |||||||||||||||||||||
Business Segments | |||||||||||||||||||||
The Company is a leading United States based manufacturer and global supplier operating two segments: Foam and Coatings. The Company’s segments are organized based on manufacturing competencies. | |||||||||||||||||||||
Foam. The Foam segment primarily supplies both roofing and building envelope insulation applications. Roofing applications consist of foam and coatings systems in new and retrofit commercial and industrial applications. Insulation is used in commercial and industrial, as well as residential, applications. We manufacture our own roofing and wall insulation foams. Additionally, this segment also supplies polyurethane as an adhesive for board stock insulation to roofing substrates for commercial and industrial applications, sundry items, and application equipment. | |||||||||||||||||||||
Coatings. The Coatings segment primarily supplies a variety of protective coatings for roofing systems for new and retrofit commercial and industrial applications, as well as residential, applications. Additionally, this segment also supplies caulking for general application in the construction industry, and sundry items. We manufacture our own roof coatings. | |||||||||||||||||||||
Spray Rigs. Spray Rigs are an integral part of our business insofar that they are required for the application of our foam and used for large scale coating jobs. We began making and selling our own spray rigs during 2008. This is a basic assembly operation and we undertake this task to provide turnkey service to our customers. We allocate sales amounts for Spray Rigs to either our foam or coatings segments, as applicable. | |||||||||||||||||||||
The Company maintains centralized manufacturing and spray rig building operations in Houston, Texas. Each of the businesses in which the Company is engaged is highly competitive. However, diversification of products within these segments and national, including limited international, markets served tends to minimize the impact on the Company’s total sales and earnings of changes in demand for a particular product. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1. The Company allocates resources to segments and evaluates the performance of segments based upon reported segment income before income taxes. A substantial amount of administrative expenses are allocated to the segments. The portion not allocated to the segments represents the unallocated cost of certain corporate expenses and are included in Unallocated Amounts. There are no intersegment sales or transfers. The following are selected results of reportable segments: | |||||||||||||||||||||
Segments | |||||||||||||||||||||
2013 | Foam | Coatings | Totals | ||||||||||||||||||
Sales | $61,080,736 | $10,096,235 | $71,176,971 | ||||||||||||||||||
Depreciation | 134,499 | 22,232 | 156,731 | ||||||||||||||||||
Amortization of Other Intangible Assets | 327,800 | 54,183 | 381,983 | ||||||||||||||||||
Interest Expense | 795,153 | 131,433 | 926,586 | ||||||||||||||||||
Segment Profit | 2,293,601 | 1,456,975 | 3,750,576 | ||||||||||||||||||
Segment Assets (1) | 17,917,746 | 3,743,801 | 21,661,547 | ||||||||||||||||||
Expenditures for Segment Assets | $ | 101,786 | $ | 16,825 | $ | 118,611 | |||||||||||||||
2012 | Foam | Coatings | Totals | ||||||||||||||||||
Sales | $ | 58,871,570 | $ | 11,512,257 | $ | 70,383,827 | |||||||||||||||
Depreciation | 169,018 | 33,078 | 202,096 | ||||||||||||||||||
Amortization of Other Intangible Assets | 377,306 | 73,878 | 451,184 | ||||||||||||||||||
Interest Expense | 477,357 | 96,459 | 573,816 | ||||||||||||||||||
Segment Profit | 634,872 | 196,144 | 831,016 | ||||||||||||||||||
Segment Assets (1) | 16,999,244 | 3,704,824 | 20,704,068 | ||||||||||||||||||
Expenditures for Segment Assets | $ | 86,688 | $ | 16,136 | $ | 102,824 | |||||||||||||||
The following are reconciliations of reportable segment profit or loss, and assets, to the Company’s totals for the years indicated: | |||||||||||||||||||||
Segments Profit | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Total Profit for Reportable Segments | $ | 3,750,576 | $ | 831,016 | |||||||||||||||||
Unallocated Amounts: | |||||||||||||||||||||
Corporate Expenses | (5,721,621 | ) | (5,261,688 | ) | |||||||||||||||||
Loss Before Income Taxes | $ | (1,971,045 | ) | $ | (4,430,672 | ) | |||||||||||||||
Assets | 2013 | 2012 | |||||||||||||||||||
Total Assets for Reportable Segments (1) | $ | 21,661,548 | $ | 20,704,068 | |||||||||||||||||
Other Unallocated Amounts (2) | 392,612 | 280,184 | |||||||||||||||||||
Total | $ | 22,054,160 | $ | 20,984,252 | |||||||||||||||||
Notes: | |||||||||||||||||||||
(1) Segment assets are the total assets used in the operation of each segment. | |||||||||||||||||||||
(2) Includes corporate assets which are principally cash and prepaid expenses. | |||||||||||||||||||||
Geographic Area Information | |||||||||||||||||||||
The Company does not operate any manufacturing sites nor maintain a permanent establishment in any particular country outside of the United States at this time. The Company’s products are sold to independent distributors globally for select target markets. Sales are attributed to geographic areas based on customer location. Long-lived assets are attributable to geographic areas based on asset location. | |||||||||||||||||||||
Geographic Area | |||||||||||||||||||||
United States | Europe | Middle East | Rest of World | Total | |||||||||||||||||
2013 | |||||||||||||||||||||
Sales | $ | 61,417,293 | $ | 1,741,485 | $ | 5,706,558 | $ | 2,311,635 | $ | 71,176,971 | |||||||||||
Long-Lived Assets | $ | 21,661,547 | $ | — | $ | — | $ | — | $ | 21,661,547 | |||||||||||
2012 | |||||||||||||||||||||
Sales | $ | 66,296,251 | $ | 574,395 | $ | 469,890 | $ | 3,043,291 | $ | 70,383,827 | |||||||||||
Long-Lived Assets | $ | 20,704,068 | $ | — | $ | — | $ | — | $ | 20,704,068 | |||||||||||
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Note 21. Subsequent Events. | |
(a) On January 7, 2014 and effective December 31, 2013, the Company entered into a Fourth Amendment to that certain Executive Employment Agreement dated May 10, 2010, as amended, with its CFO and Treasurer, Mr. Zajaczkowski, extending his agreement to December 31, 2015 and increasing his auto allowance to $700 per month. | |
(b) On January 22, 2014, the Company entered into a new three year Executive Employment Agreement with its CEO and President, Mr. Kramer, effective as of January 1, 2014 (“Kramer Agreement”), pursuant to which he is entitled to: (a) annual base salary for 2014 calendar year of $350,000, and provided the Company meets the positive earnings and cash flow budgets for 2014 established by the Board of Directors for calendar years 2015 and 2016, $400,000; (b) annual performance bonus of $120,000, $160,000, or $200,000 if Company achieves 100%, 120%, or 140%, respectively, of its budgeted earnings before interest, taxes, depreciation, amortization, and share based compensation (Adjusted EBITDA) for a particular fiscal year; (c) sales bonus of 1% for all new and ½% for certain existing international accounts, subject to such sales meeting certain gross profit margin criteria and credit and payment terms; (d) a transaction bonus subject to certain minimum and maximum transaction value limitations and offsets for a Change in Control up to 8.5% of the transaction, and including upon consummation of the Change in Control, the transfer to Mr. Kramer ownership of company provided automobile then being used by him; (e) upon termination by the Company without cause or by Mr. Kramer for good reason: (i) severance for lesser of 24 months base salary, or base salary for the remainder of the term, reduced by any earned income during severance period; (ii) the product of the value, as of the last day of calendar year of termination, of any Company equity or equity based awards granted, which he can show that he reasonably would have received had he remained employed through the end of the calendar year, or 4 months after the termination date, whichever is greater, multiplied by a fraction, the numerator is the number of days in the calendar year of termination through termination date and the denominator is 365, but only to extent not previously vested, exercised and/or paid; (iii) for 12 months from termination, continued participation in any plans providing medical, hospitalization and dental coverage; and (iv) all bonuses and stock options previously earned, or which may be earned in the event of a consummation of a Change in Control within one year immediately following termination; (f) upon termination by the Company for cause or by Mr. Kramer without good reason”, any bonuses, salaries, benefits or other compensation accrued through the date of employment termination or required by law to be provided; (g) upon termination on account of Mr. Kramer’s death or disability, the Company shall treat his termination as a termination without cause; and (h) upon termination following a Change in Control, if the Company or any successor or assignee terminates his employment following a “Change in Control” (as defined below) of the Company: (i) an amount equal to the base salary which would otherwise be payable over the remaining term of this Agreement, payable in a lump sum within thirty (30) days after the date of such termination of employment; (ii) any outstanding Awards held by him or other benefits under any Company plan or program, which have not vested in accordance with their terms will become fully vested and exercisable at the time of such termination; and (iii) all bonuses and stock options previously earned, or which may be earned in the event of the consummation of a Change in Control within one year immediately following the termination of his employment. | |
(c) On January 22, 2014, and in connection with the Kramer Agreement described in Item (b) above, the Company entered into a new Option Agreement dated January 22, 2014 (“New Kramer Option”). Pursuant to the New Kramer Option, Mr. Kramer was granted the right to acquire 500,000 shares of the Company’s common stock, $0.01 par value per share, at an exercise price per share equal to the fair market value of a share of the Company’s common stock on the date of grant, determined based on the per share closing price on such date, or $.72 per share, for a term of five (5) years. The New Kramer Option vests over a three-year period running from the date of grant, with one-third of the New Kramer Option vesting on each of the first (1st), second (2nd) and third (3rd) anniversaries of the date of grant, subject in each case to his continued satisfactory employment through the vesting date. The transaction was valued at approximately $340,000, which was estimated using the Black-Scholes option pricing model and will be expensed over the 3 year vesting period. | |
(d) On February 7, 2014, the Company entered into an Option Agreement with its COO, Mr. Schnitzer (“Schnitzer Option”). Pursuant to the Schnitzer Option, Mr. Schnitzer was granted the right to acquire 100,000 shares of the Company’s common stock, $0.01 par value per share, at an exercise price per share equal to the fair market value of a share of the Company’s common stock on the date of grant, determined based on the per share closing price on such date, or $.65 per share, for a term of five (5) years. The Schnitzer Option vests annually over a consecutive three year period in the following respective increments: 33,334 Options on February 6, 2015 and 33,333 Options on each of the next two successive anniversaries thereof, subject to continued satisfactory employment with the Company prior to and upon exercise. Once vested, the Options are immediately exercisable. The transaction was valued at approximately $61,000, which was estimated using the Black-Scholes option pricing model and will be expensed over the 3 year vesting period. | |
(e) On February 7, 2014, the Company entered into a Stock Bonus Agreement with Mr. Schnitzer (“Schnitzer Stock Bonus”). Pursuant to the Schnitzer Stock Bonus, Mr. Schnitzer was granted 100,000 shares of the Company’s common stock, $0.01 par value per share (“Bonus Shares”). No monetary payment (other than applicable tax withholding) is required as a condition of receiving the Bonus Shares, as the consideration is continued satisfactory employment with the Company during the vesting period. The Bonus Shares vest in four equal 25,000 share increments, on February 7, 2014, December 31, 2014, December 31, 2015, and February 6, 2016, respectively, subject to continued employment with the Company. Once vested, such Bonus Shares are freely transferable. The transaction was valued at $65,000 (calculated by multiplying the 100,000 shares by the $.65 closing price of the common stock on the date of grant) and is being expensed over the requisite service period on the respective vesting dates. | |
(f) On April 8, 2014, with an effective date of February 28, 2014, the Company and Enhanced Jobs for Texas Fund, LLC and Enhanced Credit Supported Loan Fund, LP, entered into an amendment to that certain Note Purchase Agreement dated December 10, 2013 (“New Enhanced Note”), which amended and restated the Minimum [Adjusted] EBITDA schedule for the three (3) months ending on the last day of each month starting February 28, 2014 for the remaining term of the New Enhanced Note. The Company was initially out of compliance with its three month February 28, 2014 [Adjusted] EBITDA requirement. This amendment enabled the Company to regain compliance at February 28, 2014. | |
(g) The Company has evaluated subsequent events through the date of this report. |
Summary_of_Organization_Basis_1
Summary of Organization, Basis of Presentation and Critical Accounting Policies, Estimates and Assumptions (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Summary of Organization, Basis of Presentation and Critical Accounting Policies, Estimates and Assumptions | ' |
This summary briefly describes the Company’s organization, basis of presentation, and critical accounting policies, estimates, and assumptions, which are presented to assist in understanding these financial statements. The financial statements and notes are representations of management who are responsible for their integrity and objectivity. The accounting policies used conform to Generally Accepted Accounting Principles (GAAP) in the United States of America and have been consistently applied in the preparation of these financial statements. Judgments and estimates of uncertainties are required in applying our accounting policies in many areas. However, application of the critical accounting policies discussed below requires management’s significant judgments, often as the result of the need to make estimates of matters that are inherently uncertain. If actual results were to differ materially from the estimates made, the reported results could be materially affected. | |
Organization History | ' |
Organization History | |
The Company was incorporated in the state of Delaware on October 20, 1989. The Company acquired 100% of the capital stock of Infiniti Products, Inc. (f/k/a Infiniti Paint Co., Inc.), a Florida corporation, effective September 1, 2001, which was engaged in the business of developing, marketing, selling, and distributing primarily acrylic roof coatings and polyurethane foam systems in the Southeastern United States (“Infiniti”). During the latter part of 2004, Infiniti built and began operating an acrylic roof coatings manufacturing plant in the Southeastern United States. On February 11, 2005, the Company acquired 100% of the capital stock of Lapolla Industries, Inc., an Arizona corporation (“Lapolla AZ”), which was engaged in the business of manufacturing acrylic roof coatings and sealants, and distributing polyurethane foam systems in the Southwestern United States. On April 1, 2005, Infiniti merged with and into Lapolla AZ whereas the existence of Infiniti ceased. On October 1, 2005, Lapolla AZ merged with and into the Company, under its former name of IFT Corporation, whereas the existence of Lapolla AZ ceased. On November 8, 2005, the Company changed its name to Lapolla Industries, Inc. On July 1, 2008, the Company acquired certain assets and liabilities of Air-Tight Marketing and Distribution, Inc. | |
Reclassifications | ' |
Reclassifications | |
Certain reclassifications of prior year amounts have been made to conform to the current year presentation. The reclassifications did not affect net income (loss). | |
Trade Receivables and Credit Risk | ' |
Trade Receivables and Credit Risk | |
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of trade receivables. The Company’s customers consist primarily of contractors and distributors. Trade receivables consist primarily of uncollateralized customer obligations, including personal guarantees when obtainable, due under normal trade terms which usually require payment within 30 days of the invoice date. However, these payment terms are extended in select cases and many customers do not pay within stated trade terms. The Company has trade receivables from a diversified customer base. The Company has a credit insurance policy in place covering most customer account balances. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customers’ financial position and monitors accounts on a regular basis. Provisions to the allowance for doubtful accounts are reviewed quarterly and adjustments are made periodically (as circumstances warrant) based upon management’s best estimate of collectability of accounts. No customer represented more than 10% of sales for each of the years ended December 31, 2013 and 2012. No customer represented more than 10% of trade receivables at December 31, 2013 or 2012. | |
Note Receivable | ' |
Note Receivable | |
The Company presents note receivables, net of reserves for losses, to ensure note receivables are not overstated due to uncollectible amounts. Reserves, when required, are calculated based on a detailed review of the specific note, including other security when applicable, and an estimation of the credit worthiness of the debtor. Total Note Receivables were approximately $473,000 and $-0- at December 31, 2013 and 2012, respectively. The reserve for losses was approximately $237,000 and $-0- at December 31, 2013 and 2012, respectively. | |
Goodwill and Other Intangible Assets | ' |
Goodwill and Other Intangible Assets | |
Goodwill represents the excess of the cost over the fair value of net tangible and identifiable intangible assets of acquired businesses. Identifiable intangible assets acquired in business combinations are recorded based upon their fair value at the date of acquisition. According to GAAP, goodwill is required to be tested for impairment, on an annual basis and between annual tests in certain circumstances, and written down when impaired. The goodwill impairment test is performed by comparing the fair value of the associated reporting unit to its carrying value. GAAP also requires that intangible assets with estimable useful lives be amortized over their respective estimated lives to their estimated residual values, and reviewed for impairment, unless these lives are determined to be indefinite. | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments | |
The Company adopted authoritative GAAP guidance regarding disclosures about fair value of financial instruments, which requires the disclosure of the fair value of off-and-on balance sheet financial instruments. Unless otherwise indicated, the fair values of all reported assets and liabilities, which represent financial instruments (none of which are held for trading purposes), approximate the carrying values of such amounts. The Company adopted authoritative GAAP guidance regarding fair value measurements, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. This guidance establishes three levels of inputs that may be used to measure fair value: (a) Level 1 - Quoted prices in active markets for identical assets or liabilities. The Company had no Level 1 assets or liabilities at December 31, 2013; (b) Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. The Company had no Level 2 assets or liabilities at December 31, 2013; and (c) Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. The Company had no Level 3 assets or liabilities at December 31, 2013. See Note 12 to our financial statements for prior level 3 assets and liabilities at December 31, 2012. The carrying value of cash and cash equivalents, trade receivables and payables, prepaid expenses and other current assets, amounts due to related parties, and other payables and accruals approximate fair value due to short period of time to maturity. | |
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 December 31, 2013 and 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 12 to our financial statements. | |
Litigation | ' |
Litigation | |
In the normal course of business, the Company is occasionally involved in legal proceedings. The Company accrues a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. | |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents | |
The Company considers cash, checks, and credit card and ACH payments deposited with financial institutions to be cash and cash equivalents. | |
Inventories | ' |
Inventories | |
Cost is determined on an actual and/or standard cost basis that approximates the first-in, first-out (FIFO) method using a perpetual inventory system. Inventories are valued at the lower of cost or market (replacement cost), which does not exceed net realizable value. | |
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 $22.7 Million and $22.1 Million at December 31, 2013 and 2012, respectively. The Company's federal income tax returns are open to audit under the statute of limitations for the years ended December 31, 2009 through 2012. The Company recorded a valuation allowance against the deferred tax asset of $22.7 Million and $22.1 Million at December 31, 2013 and 2012, respectively, reducing its net carrying value to zero. The Company has no unrecognized income tax benefits. Accordingly, the annual effective tax rate is unaffected. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and operating expense, respectively. At December 31, 2013, the Company had no increase or decrease in unrecognized income tax benefits for the year. There was no accrued interest or penalties relating to tax uncertainties at December 31, 2013. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. | |
Depreciable Lives of Property, Plant and Equipment | ' |
Depreciable Lives of 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. Economic useful life is the duration of time an asset is expected to be productively employed by the Company, which may be less than its physical life. Assumptions on the following factors, among others, affect the determination of estimated economic useful life: wear and tear, obsolescence, technical standards, contract life, market demand, competitive position, raw material availability, and geographic location. The estimated economic useful life of an asset is monitored to determine its appropriateness, especially in light of changed business circumstances. For example, changes in technology and changes in the estimated future demand for products may result in a shorter estimated useful life than originally anticipated. In these cases, we would depreciate the remaining net book value over the new estimated remaining life, thereby increasing depreciation expense per year on a prospective basis. Net property, plant and equipment totaled $1,600,679 and depreciation expense totaled $453,827 as of and for the year ended December 31, 2013. Net property, plant and equipment totaled $1,969,998 and depreciation expense totaled $539,487 as of and for the year ended December 31, 2012. | |
Property, Plant and Equipment | ' |
Impairment of Long-Lived Assets | |
Property, Plant and Equipment | |
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. | |
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 December 31, 2013 and 2012. The Company operates two reporting units, Foam and Coatings. Disclosures related to goodwill are included in Note 8 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 of reportable unit 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. In the fourth quarter of 2013 and 2012, the Company conducted the required annual test of goodwill for impairment. Management uses the income approach to estimate the fair market value of the business segments based on expected future economic benefits. This approach serves to estimate the value of the specific income stream with consideration given to the risk inherent in that income stream. The income approach is most relevant when valuing an equity interest that is based on the premise that Lapolla is considered a going concern or a viable business for the foreseeable future. Lapolla used the discounted cash flow method under the income approach in its analysis. In applying the discounted cash flow method, Lapolla identified the level of cash flow estimated for five years. The annual estimated cash flows and terminal value were then discounted to present value, at an appropriate discount rate, to arrive to the indication of fair market value for each reporting unit. The discount rate utilized reflected the estimate of investor-required rates of return for investments that are seen as similar to an investment in similarly situated companies like Lapolla. The assumptions were consistent with those utilized in the Company’s operating plan and long term financial planning process and considered historical experience and current and future expected market and industry conditions. | |
Management judgment is required in the determination of each assumption used in the valuation model, and actual results could differ from the estimates. Upon completion of the 2013 and 2012 annual impairment assessments, the Company determined no impairment was indicated as the estimated fair value of each of the reporting units exceeded its respective carrying value. At December 31, 2013, the aggregate amount of fair value that exceeded the carrying value of the Company's reporting units was approximately $9.9 Million, of which $9.2 Million was for Foam and $0.7 Million was for Coatings. At December 31, 2012, the aggregate amount of fair value that exceeded the carrying value of the Company's reporting units was approximately $7.7 Million, of which $7 Million was for Foam and $0.7 Million was for Coating | |
Other Intangible Assets | ' |
Other Intangible Assets | |
The Company had other intangible assets, net of $1,165,157 and 1,462,639 at December 31, 2013 and 2012, respectively, consisting of customer lists, product formulations, trade names, and non-competes that were acquired as part of business combinations, and trademarks and approvals and certifications obtained as part of entering into new markets. Amortization of other intangible assets totaled $424,426 and $501,315 for the years ended December 31, 2013 and 2012, respectively. 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 8 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. | |
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. Irrespective of the sales channel, returns and allowances are not a business practice in the industry. Amounts billed for shipping and handling are included in revenues (freight). Freight included in revenue was $1,106,250 and $1,301,496 in 2013 and 2012, respectively. Costs incurred for shipping and handling are included in cost of sales. Freight included in cost of sales was $3,493,579 and $4,038,251 in 2013 and 2012, respectively. Revenues are recorded net of sales tax. | |
Research and Development | ' |
Research and Development | |
Research and development costs related to both future and present products are charged to operations as incurred. | |
Share Based Compensation | ' |
Share-Based Compensation | |
The Company accounts for 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 Black-Scholes valuation model and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. The determination of fair value is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option exercise behaviors. Employee stock option exercise behavior is based on actual historical exercise activity and assumptions regarding future exercise activity of unexercised, outstanding options. The Company applies an estimated forfeiture rate to unvested awards for the purpose of calculating compensation cost. These estimates are subject to revision in future periods if actual forfeitures differ from the estimates and changes impact compensation cost in the period in which the change in estimate occurs. Disclosures related to share based compensation are included in Note 19 to our financial statements. Share based compensation expense was $1,319,730 and $1,214,105 in 2013 and 2012, respectively. If additional share based awards are granted, financial performance may be negatively affected, and if outstanding share based awards are forfeited or canceled, resulting in non-vesting of such stock awards, financial performance may be positively affected. In either instance, the Company’s financial performance may change depending on share based 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, including credit insurance and other security when applicable, 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 $317,000 and $996,000 at December 31, 2013 and 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. See also Note Receivable above. | |
Cost of Sales and Selling, General and Administrative Costs | ' |
Cost of Sales and Selling, General and Administrative Costs | |
The Cost of Sales line item includes all the material, overhead, packaging, and freight costs associated with products shipped, including resale finished goods and raw materials, as well as payroll costs associated with manufacturing the finished goods, inbound freight, sales tax expense, product containers, labels, and other miscellaneous items that are indirectly used in the manufacturing, packaging, and shipping (outbound freight) of finished goods, including inspection, and internal transfer costs, as well as depreciation of machinery, amortization of approvals and certifications, and an allocated portion of overhead. The Selling, General and Administrative line item includes selling, advertising, marketing, customer service, and technical support, as well as the costs of providing corporate functional support for all other areas of our business. | |
Advertising and Marketing | ' |
Advertising and Marketing Expenses | |
Advertising and marketing costs are generally expensed as incurred. Expenditures for certain advertising and marketing activities related to trade shows and trade magazines 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. At December 31, 2013, there were no costs for advertising deferred on the Company’s balance sheets. Other advertising and marketing expenditures that do not meet the deferred criteria are expensed when the advertising and marketing occurs. Total advertising and marketing costs expensed were approximately $965,000 and $1,300,000 in 2013 and 2012, respectively. | |
Discount on notes payable | ' |
Discount on Note Payable | |
The Company capitalizes discounts on certain notes payable, which are included in the Company’s balance sheets. These discounts are amortized using the effective-interest method. Amortization of discount is included in “Interest Expense – Amortization of Discount” in the statements of operations. | |
Debt Issuance Costs | ' |
Debt Issuance Costs | |
The Company capitalizes debt issuance costs, which are included in the Company’s balance sheets. These costs are amortized over the term of the financial instrument. Amortization of debt issuance costs is included in “Interest Expense” in the statements of operations. | |
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 assumed exercise of stock options and warrants only in periods in which such effect would have been dilutive. Disclosures related to net income (loss) per common share are included in Note 17 to our financial statements. | |
Recently Adopted Accounting Standards | ' |
Recently Adopted Accounting Standards | |
In July 2012, the FASB issued an accounting standards update that gives an entity the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. This guidance will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. 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. | |
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. 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 | ' |
Recently Adopted Accounting Standards | |
In July 2012, the FASB issued an accounting standards update that gives an entity the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. This guidance will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. 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. | |
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. 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. |
Trade_Receivables_Tables
Trade Receivables (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Receivables [Abstract] | ' | ||||||||
Trade Receivables | ' | ||||||||
2013 | 2012 | ||||||||
Trade Receivables | $ | 8,011,176 | $ | 8,298,527 | |||||
Less: Allowance for Doubtful Accounts | (316,587 | ) | (996,378 | ) | |||||
Trade Receivables, Net | $ | 7,694,589 | $ | 7,302,149 |
Inventories_Tables
Inventories (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
2013 | 2012 | ||||||||
Raw Materials | $ | 1,804,959 | $ | 1,663,901 | |||||
Finished Goods | 3,616,976 | 3,168,447 | |||||||
Total | $ | 5,421,935 | $ | 4,832,348 |
Prepaid_Expenses_and_Other_Cur1
Prepaid Expenses and Other Current Assets. (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Prepaid Expenses and Other Current Assets | ' | ||||||||
2013 | 2012 | ||||||||
Prepaid Insurances | $ | 582,654 | $ | 293,814 | |||||
Prepaid Marketing | 152,667 | 149,916 | |||||||
Prepaid Consulting | 66,208 | 69,396 | |||||||
Prepaid Other | 357,839 | 213,611 | |||||||
Note Receivable, Net | 90,946 | — | |||||||
Total Prepaid Expenses and Other Current Assets | $ | 1,250,314 | $ | 726,737 |
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended | ||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||||
Goodwill | ' | ||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||
Foam | $ | 2,932,208 | $ | 2,932,208 | |||||||||||||||||||||||
Coatings | 1,302,620 | 1,302,620 | |||||||||||||||||||||||||
$ | 4,234,828 | $ | 4,234,828 | ||||||||||||||||||||||||
Other Intangible Assets | ' | ||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | Amortization | |||||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | Period | |||||||||||||||||||||
Customer Lists | $ | 859,235 | $ | (859,235 | ) | $ | — | $ | 859,235 | $ | (780,235 | ) | $ | 79,000 | 5 Years | ||||||||||||
Product Formulations | 138,471 | (81,544 | ) | 56,927 | 138,471 | (72,312 | ) | 66,159 | 15 Years | ||||||||||||||||||
Trade Names | 740,325 | (269,212 | ) | 471,113 | 740,325 | (219,857 | ) | 520,468 | 15 Years | ||||||||||||||||||
Non-Competes | 210,000 | (210,000 | ) | — | 210,000 | (189,000 | ) | 21,000 | 5 Years | ||||||||||||||||||
Approvals and Certifications | 1,547,754 | (910,637 | ) | 637,117 | 1,420,808 | (644,796 | ) | 776,012 | 5 Years | ||||||||||||||||||
$ | 3,495,785 | $ | (2,330,628 | ) | $ | 1,165,157 | $ | 3,368,839 | $ | (1,906,200 | ) | $ | 1,462,639 | ||||||||||||||
Amortization Expense | ' | ||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | Thereafter | |||||||||||||||||||||||
Product Formulations | $ | 9,231 | $ | 9,231 | $ | 9,231 | $ | 9,231 | $ | 20,003 | |||||||||||||||||
Trade Names | 49,355 | 49,355 | 49,355 | 49,355 | 273,693 | ||||||||||||||||||||||
Approvals and Certifications | 265,841 | 265,841 | 105,435 | — | — | ||||||||||||||||||||||
$ | 324,427 | $ | 324,427 | $ | 164,021 | $ | 58,586 | $ | 293,696 |
Deposits_and_Other_NonCurrent_1
Deposits and Other Non-Current Assets, Net. (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Deposits and other non-current assets | ' | ||||||||
2013 | 2012 | ||||||||
Deferred Financing Fees | $ | 285,246 | $ | 304,112 | |||||
Prepaid Expenses | 46,744 | 18,545 | |||||||
Other Receivables | 55,293 | 60,274 | |||||||
Deposits | 153,584 | 72,622 | |||||||
Note Receivable, Net | 145,791 | — | |||||||
Total Deposits and Other-Non-Current Assets | $ | 686,658 | $ | 455,553 |
Accrued_Expenses_and_Other_Cur1
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued expenses and other liabilities | ' | ||||||||
2013 | 2012 | ||||||||
Accrued Payroll | $ | 169,785 | $ | 138,677 | |||||
Accrued Commissions | 61,000 | 64,000 | |||||||
Accrued Inventory | 178,616 | — | |||||||
Accrued Taxes and Other | 606,275 | 917,244 | |||||||
Accrued Insurance | 427,395 | 220,715 | |||||||
Deferred Finance Charge Income | 13,824 | 4,378 | |||||||
Total Accrued Expenses and Other Current Liabilities | $ | 1,456,895 | $ | 1,345,014 |
Derivatives_and_Fair_Value_Tab
Derivatives and Fair Value (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Financial Assets and Liabilities measured at fair value | ' | ||||||||||||||||
Changes in Fair Value | ' | ||||||||||||||||
Fair Value Measurements Using Level 3 Inputs | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Derivative Liabilities | Totals | Derivative Liabilities | Totals | ||||||||||||||
Beginning Balance on January 1, | $ | 65,656 | $ | 65,656 | $ | 154,518 | $ | 154,518 | |||||||||
Total Gains or Losses (realized/unrealized) | |||||||||||||||||
included in Net Income (Loss) | (65,656 | ) | (65,656 | ) | (88,862 | ) | (88,862 | ) | |||||||||
Purchases, Issuances and Settlements | — | — | — | — | |||||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | |||||||||||||
Ending Balance on December 31, | $ | — | $ | — | $ | 65,656 | $ | 65,656 |
Long_Term_Debt_Tables
Long Term Debt (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long Term Debt | ' | ||||||||
2013 | 2012 | ||||||||
Various notes payable on vehicles and equipment, due in monthly installments of $1,533 including interest, maturing through March 2014. | $ | 4,599 | $ | 25,507 | |||||
Less: Current Maturities | (4,599 | ) | (21,077 | ) | |||||
Total Long-Term Debt | $ | — | $ | 4,430 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Deferred tax asset | ' | ||||||||
Deferred Tax Assets: | 2013 | 2012 | |||||||
Net Operating Loss Carry-Forward | $ | 66,888,140 | $ | 65,078,622 | |||||
Statutory Tax Rate | 34 | % | 34 | % | |||||
Total Deferred Tax Assets | 22,741,968 | 22,126,731 | |||||||
Valuation Allowance for Deferred Tax Assets | (22,741,968 | ) | (22,126,731 | ) | |||||
Net Deferred Taxes | $ | — | $ | — |
Net_Income_Loss_per_Common_Sha1
Net Income (Loss) per Common Share - Basic and Diluted (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Net Income Loss Per Common Share - Basic And Diluted Tables | ' | ||||||||
Basic and Diluted earnings per share | ' | ||||||||
2013 | 2012 | ||||||||
Net loss available to common shareholders (A) | $ | (1,971,045 | ) | $ | (4,430,672 | ) | |||
Weighted average common shares outstanding (B) | 111,449,320 | 107,312,421 | |||||||
Dilutive effect of employee equity incentive plans | 4,740,000 | 7,473,333 | |||||||
Weighted average common shares outstanding, assuming dilution (C) | 114,218,275 | 114,785,754 | |||||||
Basic earnings per common share (A)/(B) | $ | (0.02 | ) | $ | (0.04 | ) | |||
Diluted earnings per common share (A)/(C) | $ | (0.02 | ) | $ | (0.04 | ) |
ShareBased_Payment_Arrangement1
Share-Based Payment Arrangements (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangements Tables | ' | ||||||||||||||||||||||||||||||||||||||||
Stock option activity - Equity Plan | ' | ||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Options | of Options | Exercise Price | of Options | Exercise Price | |||||||||||||||||||||||||||||||||||||
Outstanding-Beginning of Year | 5,540,000 | $ | 0.61 | 5,948,333 | $ | 0.61 | |||||||||||||||||||||||||||||||||||
Granted | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | (500,000 | ) | 0.74 | (408,333 | ) | 0.55 | |||||||||||||||||||||||||||||||||||
Outstanding-End of Year | 5,040,000 | 0.6 | 5,540,000 | 0.61 | |||||||||||||||||||||||||||||||||||||
Exercisable-End of Year | 4,740,000 | $ | 0.61 | 4,629,015 | $ | 0.62 | |||||||||||||||||||||||||||||||||||
Warrant Activity | ' | ||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Options | of Warrants | Exercise Price | of Warrants | Exercise Price | |||||||||||||||||||||||||||||||||||||
Outstanding-Beginning of Year | 2,500,000 | $ | 0.58 | 2,500,000 | $ | 0.58 | |||||||||||||||||||||||||||||||||||
Granted | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | (2,500,000 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||
Outstanding-End of Year | — | $ | — | 2,500,000 | $ | 0.58 | |||||||||||||||||||||||||||||||||||
Exercisable-End of Year | — | $ | — | 2,500,000 | $ | 0.58 | |||||||||||||||||||||||||||||||||||
Equity plan and Warrants Summary | ' | ||||||||||||||||||||||||||||||||||||||||
Outstanding | Exercisable | Outstanding | Exercisable | ||||||||||||||||||||||||||||||||||||||
Weighted | Weighted | ||||||||||||||||||||||||||||||||||||||||
Average | Weighted | Weighted | Average | Weighted | Weighted | ||||||||||||||||||||||||||||||||||||
Range of | Number | Remaining | Average | Number | Average | Number | Remaining | Average | Number | Average | |||||||||||||||||||||||||||||||
Exercise | Outstanding | Contractual | Exercise | Exercisable | Exercise | Outstanding | Contractual | Exercise | Exercisable | Exercise | |||||||||||||||||||||||||||||||
Prices | at 12/31/13 | Life (Years) | Price | at 12/31/13 | Price | at 12/31/11 | Life (Years) | Price | at 12/31/11 | Price | |||||||||||||||||||||||||||||||
$.35 - $.59 | 650,000 | 1.69 | $ | 0.36 | 350,000 | $ | 0.36 | 2,150,000 | 2.85 | $ | 0.48 | 1,850,000 | $ | 0.5 | |||||||||||||||||||||||||||
$.60 - $.64 | 2,310,000 | 2.4 | $ | 0.6 | 2,310,000 | $ | 0.6 | 2,310,000 | 3.03 | $ | 0.6 | 1,907,365 | $ | 0.6 | |||||||||||||||||||||||||||
$.65 - $.80 | 2,080,000 | 1.3 | $ | 0.67 | 2,080,000 | $ | 0.67 | 3,580,000 | 2.01 | $ | 0.67 | 3,371,650 | $ | 0.67 | |||||||||||||||||||||||||||
Stock award activity - Director Plan | ' | ||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Nonvested Awards | of Shares | Grant-Date Fair Value | of Shares | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||
Nonvested - Beginning of Year | 320,000 | $ | 208,000 | 480,000 | $ | 312,000 | |||||||||||||||||||||||||||||||||||
Granted | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Vested | (160,000 | ) | (104,000 | ) | (160,000 | ) | (104,000 | ) | |||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Nonvested - End of Year | 160,000 | $ | 104,000 | 320,000 | $ | 208,000 | |||||||||||||||||||||||||||||||||||
Stock award activity - Advisor Plan | ' | ||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Nonvested Awards | of Shares | Grant-Date Fair Value | of Shares | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||
Nonvested - Beginning of Year | 1,902,380 | $ | 1,084,352 | 3,572,084 | $ | 2,036,086 | |||||||||||||||||||||||||||||||||||
Granted | 272,969 | 96,560 | 62,101 | 12,160 | |||||||||||||||||||||||||||||||||||||
Vested | (1,938,111 | ) | (1,045,693 | ) | (1,731,805 | ) | (963,894 | ) | |||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Nonvested - End of Year | 237,238 | $ | 135,219 | 1,902,380 | $ | 1,084,352 | |||||||||||||||||||||||||||||||||||
Stock award activity - New Guaranty Plan | ' | ||||||||||||||||||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||||
Nonvested Awards | of Shares | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||||
Nonvested - Beginning of Year | — | $ | — | ||||||||||||||||||||||||||||||||||||||
Granted | 3,681,000 | 2,208,600 | |||||||||||||||||||||||||||||||||||||||
Vested | (73,821 | ) | (44,293 | ) | |||||||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | — | — | |||||||||||||||||||||||||||||||||||||||
Nonvested - End of Year | 3,607,179 | $ | 2,164,307 | ||||||||||||||||||||||||||||||||||||||
Stock award activity - Prior Guaranty Plan | ' | ||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Nonvested Awards | of Shares | Grant-Date Fair Value | of Shares | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||
Nonvested - Beginning of Year | 3,726,027 | $ | 1,006,116 | — | $ | — | |||||||||||||||||||||||||||||||||||
Granted | — | — | 5,000,000 | 1,350,000 | |||||||||||||||||||||||||||||||||||||
Vested | (2,349,315 | ) | (634,315 | ) | (1,273,973 | ) | (343,884 | ) | |||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | (1,376,712 | ) | (371,801 | ) | — | — | |||||||||||||||||||||||||||||||||||
Nonvested - End of Year | — | $ | — | 3,726,027 | $ | 1,006,116 | |||||||||||||||||||||||||||||||||||
Stock award activity - Guaranty Plan | ' | ||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||||||||||
Number | Weighted-Average | Number | Weighted-Average | ||||||||||||||||||||||||||||||||||||||
Nonvested Awards | of Shares | Grant-Date Fair Value | of Shares | Grant-Date Fair Value | |||||||||||||||||||||||||||||||||||||
Nonvested - Beginning of Year | 3,726,027 | $ | 1,006,116 | — | $ | — | |||||||||||||||||||||||||||||||||||
Granted | 3,681,000 | 2,208,600 | 5,000,000 | 1,350,000 | |||||||||||||||||||||||||||||||||||||
Vested | (2,423,136 | ) | (678,608 | ) | (1,273,973 | ) | (343,884 | ) | |||||||||||||||||||||||||||||||||
Canceled, Expired or Forfeited | (1,376,712 | ) | (371,801 | ) | — | — | |||||||||||||||||||||||||||||||||||
Nonvested - End of Year | 3,607,179 | $ | 2,164,307 | 3,726,027 | $ | 1,006,116 |
Business_Segment_Information_T
Business Segment Information (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||
Reportable Segments | ' | ||||||||||||||||||||
Segments | |||||||||||||||||||||
2013 | Foam | Coatings | Totals | ||||||||||||||||||
Sales | $61,080,736 | $10,096,235 | $71,176,971 | ||||||||||||||||||
Depreciation | 134,499 | 22,232 | 156,731 | ||||||||||||||||||
Amortization of Other Intangible Assets | 327,800 | 54,183 | 381,983 | ||||||||||||||||||
Interest Expense | 795,153 | 131,433 | 926,586 | ||||||||||||||||||
Segment Profit | 2,293,601 | 1,456,975 | 3,750,576 | ||||||||||||||||||
Segment Assets (1) | 17,917,746 | 3,743,801 | 21,661,547 | ||||||||||||||||||
Expenditures for Segment Assets | $ | 101,786 | $ | 16,825 | $ | 118,611 | |||||||||||||||
2012 | Foam | Coatings | Totals | ||||||||||||||||||
Sales | $ | 58,871,570 | $ | 11,512,257 | $ | 70,383,827 | |||||||||||||||
Depreciation | 169,018 | 33,078 | 202,096 | ||||||||||||||||||
Amortization of Other Intangible Assets | 377,306 | 73,878 | 451,184 | ||||||||||||||||||
Interest Expense | 477,357 | 96,459 | 573,816 | ||||||||||||||||||
Segment Profit | 634,872 | 196,144 | 831,016 | ||||||||||||||||||
Segment Assets (1) | 16,999,244 | 3,704,824 | 20,704,068 | ||||||||||||||||||
Expenditures for Segment Assets | $ | 86,688 | $ | 16,136 | $ | 102,824 | |||||||||||||||
Reconciliation of reportable segment profit or loss | ' | ||||||||||||||||||||
Segments Profit | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Total Profit for Reportable Segments | $ | 3,750,576 | $ | 831,016 | |||||||||||||||||
Unallocated Amounts: | |||||||||||||||||||||
Corporate Expenses | (5,721,621 | ) | (5,261,688 | ) | |||||||||||||||||
Loss Before Income Taxes | $ | (1,971,045 | ) | $ | (4,430,672 | ) | |||||||||||||||
Reconciliation of reportable segment assets | ' | ||||||||||||||||||||
Assets | 2013 | 2012 | |||||||||||||||||||
Total Assets for Reportable Segments (1) | $ | 21,661,548 | $ | 20,704,068 | |||||||||||||||||
Other Unallocated Amounts (2) | 392,612 | 280,184 | |||||||||||||||||||
Total | $ | 22,054,160 | $ | 20,984,252 | |||||||||||||||||
Geographic Area | ' | ||||||||||||||||||||
Geographic Area | |||||||||||||||||||||
United States | Europe | Middle East | Rest of World | Total | |||||||||||||||||
2013 | |||||||||||||||||||||
Sales | $ | 61,417,293 | $ | 1,741,485 | $ | 5,706,558 | $ | 2,311,635 | $ | 71,176,971 | |||||||||||
Long-Lived Assets | $ | 21,661,547 | $ | — | $ | — | $ | — | $ | 21,661,547 | |||||||||||
2012 | |||||||||||||||||||||
Sales | $ | 66,296,251 | $ | 574,395 | $ | 469,890 | $ | 3,043,291 | $ | 70,383,827 | |||||||||||
Long-Lived Assets | $ | 20,704,068 | $ | — | $ | — | $ | — | $ | 20,704,068 |
Basis_of_Presentation_Details_
Basis of Presentation (Details Narrative) (USD $) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Notes Receivable | ' | ' |
Notes Receivable | $473,000 | $0 |
Reserve for loss | 237,000 | 0 |
Derivatives and Fair Value | ' | ' |
Warrant Liabilities, Carrying Value | 0 | 65,656 |
Income Taxes | ' | ' |
Deferred Tax Asset | 22,700,000 | 22,100,000 |
Deferred Tax asset valuation allowance | 22,700,000 | 22,100,000 |
Property,Plant and Equipment | ' | ' |
Property, Plant and Equipment | 1,600,679 | 1,969,998 |
Depreciation Expense | 453,827 | 539,487 |
Depreciation in cost of sales | 279,571 | 314,936 |
Goodwill and Other Intangible Assets | ' | ' |
Goodwill | 4,234,828 | 4,234,828 |
Impairment Assessment Fair Value | 9,900,000 | 7,700,000 |
Other Intangible Assets, Net | 1,165,157 | 1,462,639 |
Amortization Expense | 424,426 | 501,315 |
Revenue Recognition | ' | ' |
Freight included in sales | 1,106,250 | 1,301,496 |
Freight included in cost of sales | 3,493,579 | 4,038,251 |
Share Based compensation | ' | ' |
Share Based Compensation Expense | 1,319,730 | 1,214,105 |
Allowance for doubtful accounts | ' | ' |
Allowance for doubtful accounts | 317,000 | 996,000 |
Advertising and Marketing | ' | ' |
Advertising and Marketing costs | 965,000 | 1,300,000 |
Foam | ' | ' |
Goodwill and Other Intangible Assets | ' | ' |
Impairment Assessment Fair Value | 9,200,000 | 7,000,000 |
Coatings | ' | ' |
Goodwill and Other Intangible Assets | ' | ' |
Impairment Assessment Fair Value | $700,000 | $700,000 |
Liquidity_Details_Narrative
Liquidity (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' |
Accumulated Deficit | $86,495,654 | $84,524,609 |
Net Loss | 1,971,045 | 4,430,672 |
Net Cash (Used in) Provided by Operating Activities | -2,132,440 | -420,709 |
Working Capital Surplus | 6,210,711 | ' |
Credit, margin and expense controls | $2,459,627 | ' |
Trade_Receivables_Trade_Receiv
Trade Receivables - Trade Receivables (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accounts Receivable, Net, Current [Abstract] | ' | ' |
Trade Receivables | $8,011,176 | $8,298,527 |
Less: Allowance for Doubtful Accounts | -316,587 | -996,378 |
Trade Receivables, Net | $7,694,589 | $7,302,149 |
Inventories_Inventories_Detail
Inventories - Inventories (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Inventory Disclosure [Abstract] | ' | ' |
Raw Materials | $1,804,959 | $1,663,901 |
Finished Goods | 3,616,976 | 3,168,447 |
Inventories | $5,421,935 | $4,832,348 |
Prepaid_Expenses_and_Other_Cur2
Prepaid Expenses and Other Current Assets. - Prepaid Expenses and Other Current Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ' |
Prepaid Insurances | $582,654 | $293,814 |
Prepaid Marketing | 152,667 | 149,916 |
Prepaid Consulting | 66,208 | 69,396 |
Prepaid Other | 357,839 | 213,611 |
Note Receivable, Net | 90,946 | ' |
Total Prepaid Expenses and Other Current Assets | $1,250,314 | $726,737 |
Property_Plant_and_Equipment_P
Property, Plant and Equipment - Property, Plant and Equipment (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property, Plant and Equipment [Abstract] | ' | ' |
Vehicles | $649,487 | $758,408 |
Leasehold Improvements | 288,777 | 283,961 |
Office Furniture and Equipment | 327,329 | 324,237 |
Computers and Software | 1,185,333 | 1,144,496 |
Machinery and Equipment | 2,466,007 | 2,449,987 |
Plant Construction in Progress | ' | 10,788 |
Total Property, Plant and Equipment | 4,916,933 | 4,971,877 |
Less: Accumulated Depreciation | -3,316,254 | -3,001,879 |
Property, Plant and Equipment | $1,600,679 | $1,969,998 |
Dependence_on_a_few_suppliers_
Dependence on a few suppliers (Details Narrative) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | ' | ' |
Major Suppliers | '41% | '41% |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets - Goodwill (Details) (USD $) | Dec. 31, 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 $) | Dec. 31, 2013 | Dec. 31, 2012 |
Intangible Assets, Gross | $3,495,785 | $3,368,839 |
Accumulated Amortization | -2,330,628 | -1,906,200 |
Intangible Assets, Net | 1,165,157 | 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 | -81,544 | -72,312 |
Intangible Assets, Net | 56,927 | 66,159 |
Trade Names | ' | ' |
Intangible Assets, Gross | 740,325 | 740,325 |
Accumulated Amortization | -256,874 | -269,212 |
Intangible Assets, Net | 471,113 | 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 | 471,113 | 1,420,808 |
Accumulated Amortization | -910,637 | -644,796 |
Intangible Assets, Net | $637,117 | $776,012 |
Other_Intangible_Assets_Amorti
Other Intangible Assets Amortization (Details) (USD $) | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Amortization Expense | $293,696 | $58,586 | $164,021 | $324,427 | $324,427 |
Product Formulations | ' | ' | ' | ' | ' |
Amortization Expense | 20,003 | 9,231 | 9,231 | 9,231 | 9,231 |
Trade Names | ' | ' | ' | ' | ' |
Amortization Expense | 273,693 | 49,355 | 49,355 | 49,355 | 49,355 |
Approvals and Certifications | ' | ' | ' | ' | ' |
Amortization Expense | ' | ' | $105,435 | $265,841 | $265,841 |
Deposits_and_Other_NonCurrent_2
Deposits and Other Non-Current Assets, Net. - Deposits and other non-current assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ' |
Deferred Financing Fees | $285,246 | $304,112 |
Prepaid Expenses | 46,744 | 18,545 |
Other Receivables | 55,293 | 60,274 |
Deposits | 153,584 | 72,622 |
Note Receivable, Net | 145,791 | ' |
Total Deposits and Other-Non-Current Assets | $686,658 | $455,553 |
Accrued_Expenses_and_Other_Cur2
Accrued Expenses and Other Current Liabilities - Accrued expenses and other liabilities (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accrued Liabilities and Other Liabilities [Abstract] | ' | ' |
Accrued Payroll | $169,785 | $138,677 |
Accrued Commissions | 61,000 | 64,000 |
Accrued Inventory Purchases | 178,616 | ' |
Accrued Taxes and Other | 606,275 | 917,244 |
Accrued Insurance | 427,395 | 220,715 |
Deferred Finance Charge Income | 13,824 | 4,378 |
Total Accrued Expenses and Other Current Liabilities | $1,456,895 | $1,345,014 |
Financing_Instruments_Loan_and
Financing Instruments - Loan and Security Agreement (Details Narrative) (USD $) | 1 Months Ended | ||
Sep. 01, 2010 | Dec. 31, 2013 | Dec. 31, 2012 | |
Term Loan | ' | ' | ' |
Bank Loans Funds Available | $2,500,000 | ' | ' |
Revolver Loan | ' | ' | ' |
Bank Loans Funds Available | 13,000,000 | ' | ' |
Maturity Date | 31-Mar-16 | ' | ' |
Bank Loan Payable | ' | $4,539,163 | $5,032,450 |
Weighted-Average Interest Rate | ' | 4.50% | 4.50% |
Financing_Instruments_Terms_Lo
Financing Instruments Terms - Loan and Security Agreement (Details Narrative) (USD $) (Revolver Loan) | 12 Months Ended |
Dec. 31, 2013 | |
Revolver Loan | ' |
Terms | ' |
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%. The Company has four material debt covenants to comply with relating to the Loan Agreement: (i) Capital expenditures are limited to $625,000 on an annual basis, (ii) A borrowing base calculation defined as an amount determined by a detailed calculation equal to 85% of eligible accounts receivable, plus 55% of eligible inventory cannot be exceeded (“Borrowing Base”); (iii) Maintain an FCCR, tested monthly as of the last day of each calendar month, in each case for the most recently completed twelve calendar months, equal to a minimum ratio of 0.90 to 1.0 from December 2013 to February 2014, 0.80 to 1.0 from March 2014 to April 2014, 0.90 to 1.0 from May 2014 to June 2014, 1.0 to 1.0 for July 2014, and 1.25 to 1.0 from August 2014 and thereafter, and (iv) Maintain minimum liquidity equal to or greater than $500,000. |
Financing_Instruments_Note_Pur
Financing Instruments Note Purchase Agreement - New Enhanced Note (Details Narrative) (USD $) (USD $) | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | 0 Months Ended | |||||||
Dec. 31, 2013 | Dec. 10, 2013 | Jun. 29, 2012 | Dec. 31, 2013 | Dec. 08, 2013 | Dec. 31, 2012 | Dec. 08, 2013 | Dec. 10, 2013 | Jun. 29, 2012 | Dec. 08, 2013 | Dec. 10, 2013 | Jun. 29, 2012 | |
Note Purchase Agreement | Note Purchase Agreement | Note Purchase Agreement | Note Purchase Agreement | Note Purchase Agreement | Enhanced Jobs for Texas | Enhanced Jobs for Texas | Enhanced Jobs for Texas | Enhanced Texas Fund | Enhanced Texas Fund | Enhanced Texas Fund | ||
Bank Loans Funds Available | ' | $7,200,000 | $4,400,000 | ' | $4,400,000 | ' | ' | $5,700,000 | $2,200,000 | ' | $1,500,000 | $2,200,000 |
Maturity Date | ' | 10-Dec-16 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted-Average Interest Rate | ' | ' | ' | ' | 29.20% | 27.70% | ' | ' | ' | ' | ' | ' |
Enhanced Notes Payable | ' | ' | ' | 6,683,561 | 3,346,762 | 4,337,334 | ' | ' | ' | ' | ' | ' |
Payments on Notes Payable | ' | ' | ' | ' | ' | ' | 1,673,381 | ' | ' | 1,673,381 | ' | ' |
Monthly payments:October 31, 2012 - June 30,2013 | ' | ' | 53,333 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Monthly payments:July, 2013 - May 31, 2014 | ' | ' | 150,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Monthly payments:June 30, 2014 | ' | ' | 2,270,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Rate | ' | 7.25% | 10.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Defult Interest Rate | ' | ' | 6.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
(Gain) on Extinguishment of Debt | -398,886 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Expense- Write-Off of Old Debt Issuance Costs | 45,512 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pruchase discount | ' | ' | ' | $542,886 | ' | ' | ' | ' | ' | ' | ' | ' |
Financing_Instruments_Note_Pur1
Financing Instruments Note Purchase Agreement - New Enhanced Note Terms(Details Narrative) (Note Purchase Agreement) | 0 Months Ended |
Dec. 10, 2013 | |
Note Purchase Agreement | ' |
Terms | ' |
Interest is payable monthly and broken down into Current Pay Interest at the rate of 7.25% per annum, and PIK Interest at the rate of 3.75% (which is added to the principal balance of the outstanding notes) to create the Aggregate Interest Rate of 11%. The Company has the right to prepay the New Enhanced Note, subject to a prepayment premium equal to 3% for the first year or 2% for the second year. | |
The Company has four material debt covenants to comply with relating to the New Enhanced Note: (i) Capital expenditures are limited to $625,000 on an annual basis, (ii) A minimum Adjusted 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, (iii) Maintain an FCCR, tested monthly as of the last day of each calendar month, in each case for the most recently completed twelve calendar months, equal to a minimum ratio of 0.90 to 1.0 from December 2013 to February 2014, 0.80 to 1.0 from March 2014 to April 2014, 0.90 to 1.0 from May 2014 to June 2014, 1.0 to 1.0 for July 2014, and 1.25 to 1.0 from August 2014 and thereafter, and (iv) Maintain minimum liquidity equal to or greater than $500,000. |
Financing_Instruments_Note_Pur2
Financing Instruments Note Purchase - New Guaranty Agreement (Details Narrative) (Note Purchase Agreement, USD $) | 0 Months Ended | 1 Months Ended | |
Dec. 10, 2013 | Dec. 31, 2013 | Jun. 29, 2012 | |
Note Purchase Agreement | ' | ' | ' |
Cancelled unvested shares | ' | ' | 1,376,712 |
Restricted Common Stock Issued, shares | 3,681,000 | 73,821 | 5,000,000 |
Restricted Common Stock, par value | $0.01 | ' | $0.01 |
Per Share | $0.60 | ' | $0.27 |
Restricted Common Stock Issued, Amount | $2,208,600 | $44,293 | $1,350,000 |
Financing_Instruments_Note_Pur3
Financing Instruments Note Purchase Agreement - Prior Enhanced Note (Details Narrative) (USD $) (USD $) | 0 Months Ended | 1 Months Ended | 0 Months Ended | 0 Months Ended | |||||||
Dec. 10, 2013 | Jun. 29, 2012 | Dec. 31, 2013 | Dec. 08, 2013 | Dec. 31, 2012 | Dec. 08, 2013 | Dec. 10, 2013 | Jun. 29, 2012 | Dec. 08, 2013 | Dec. 10, 2013 | Jun. 29, 2012 | |
Note Purchase Agreement | Note Purchase Agreement | Note Purchase Agreement | Note Purchase Agreement | Note Purchase Agreement | Enhanced Jobs for Texas | Enhanced Jobs for Texas | Enhanced Jobs for Texas | Enhanced Texas Fund | Enhanced Texas Fund | Enhanced Texas Fund | |
Bank Loans Funds Available | $7,200,000 | $4,400,000 | ' | $4,400,000 | ' | ' | $5,700,000 | $2,200,000 | ' | $1,500,000 | $2,200,000 |
Maturity Date | 10-Dec-16 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted-Average Interest Rate | ' | ' | ' | 29.20% | 27.70% | ' | ' | ' | ' | ' | ' |
Enhanced Notes Payable | ' | ' | 6,683,561 | 3,346,762 | 4,337,334 | ' | ' | ' | ' | ' | ' |
Payments on Notes Payable | ' | ' | ' | ' | ' | 1,673,381 | ' | ' | 1,673,381 | ' | ' |
Monthly payments:October 31, 2012 - June 30,2013 | ' | 53,333 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Monthly payments:July, 2013 - May 31, 2014 | ' | 150,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Monthly payments:June 30, 2014 | ' | $2,270,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Rate | 7.25% | 10.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase in interest rate,per quarter | ' | 0.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase in interest rate,per annum | ' | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Defult Interest Rate | ' | 6.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financing_Instruments_Note_Pur4
Financing Instruments Note Purchase - Prior Guaranty Agreement (Details Narrative) (Note Purchase Agreement, USD $) | 0 Months Ended | 1 Months Ended | |
Dec. 10, 2013 | Dec. 31, 2013 | Jun. 29, 2012 | |
Note Purchase Agreement | ' | ' | ' |
Cancelled unvested shares | ' | ' | 1,376,712 |
Restricted Common Stock Issued, shares | 3,681,000 | 73,821 | 5,000,000 |
Restricted Common Stock, par value | $0.01 | ' | $0.01 |
Per Share | $0.60 | ' | $0.27 |
Restricted Common Stock Issued, Amount | $2,208,600 | $44,293 | $1,350,000 |
Financing_Instruments_Note_Pay
Financing Instruments Note Payable - Related Party(Details Narrative) (USD $) | 3 Months Ended | ||
Apr. 16, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
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 | ' | $70,595 | $47,038 |
Financing_Instruments_Warrants
Financing Instruments Warrants(Details Narrative) (USD $) | Feb. 21, 2007 |
Warrants Authorized | 2,500,000 |
Derivatives_and_Fair_Value_Ass
Derivatives and Fair Value Assumptions (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 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 |
Derivatives_and_Fair_Value_Cha
Derivatives and Fair Value - Changes in Fair Value (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Fair Value, Assets, Liabilities and Stockholders' Equity Measured on Recurring Basis [Abstract] | ' | ' |
Beginning Balance on January 1, | $65,656 | $154,518 |
Total Gains (realized/unrealized) included in Net Income (Loss) | -65,656 | -88,862 |
Ending Balance | ' | $65,656 |
Long_Term_Debt_Long_Term_Debt_
Long Term Debt - Long Term Debt (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Long-term Debt, Unclassified [Abstract] | ' | ' |
Various notes payable on vehicles and equipment, due in monthly installments of $1,533 including interest, maturing through March 2014. | $4,599 | $25,507 |
Less: Current Maturities | -4,599 | -21,077 |
Total Long-Term Debt | ' | $4,430 |
Long_Term_Debt_Long_Term_Debt_1
Long Term Debt - Long Term Debt (Details) (Parenthetical) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
Montlhy Installments | $1,533 |
Maturity Date | '2014 |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | ||
Share based compensation expense | $1,998,426 | $1,557,988 | |
Advances from notes payable | ' | 4,400,000 | |
Director Plan | ' | ' | |
Advances from notes payable | 500,000 | ' | |
Guaranty Commitment on Loan Payable | 2,764,000 | [1] | ' |
Restricted Stock issued for Services, shares | 160,000 | ' | |
Chairman of the Board and prinicpal stockholder | ' | ' | |
Restricted common stock, shares | 2,423,136 | ' | |
Restricted common stock, value | 678,697 | ' | |
Note Payable | ' | ' | |
Accrued Interest | 70,595 | ' | |
Advances from notes payable | 1,300,000 | ' | |
Advisory and Consulting | ' | ' | |
Restricted common stock, shares | 1,938,111 | ' | |
Restricted common stock, value | 1,045,693 | ' | |
Restricted Stock issued for Services, shares | 1,938,111 | ' | |
Director Plan | ' | ' | |
Restricted common stock, shares | 640,000 | ' | |
Restricted common shares, granted | 800,000 | [2] | ' |
Restricted common stock, value | 40,000 | ' | |
Share based compensation expense | $416,000 | [3] | ' |
Restricted Stock issued for Services, shares | 160,000 | [4] | ' |
[1] | $2,314,000 balloon payment under the Prior Enhanced Note (formerly referred to as the June 29, 2012 Note Purchase Agreement) and taking into account the Company obligations under the Revolver Loan, an additional $450,000 | ||
[2] | Each outside director receiving a stock grant of 100,000 shares (Mr. Gregg, Mr. Brown, and Mr. Larson), and Mr. Nadel who will receive a stock grant of 500,000 shares (Mr. Nadel was an outside director at the time of approval of the Director Plan), and each outside director will receive cash payments of $2,500 each quarter, payable at the end of each quarter. | ||
[3] | $104,000 was for 2013, 2012, 2011, and 2010, respectively. | ||
[4] | 100,000 shares were for Mr. Nadel, and 20,000 shares were for Mr. Gregg, Mr. Brown, and Mr. Larson, respectively, |
Income_Taxes_Deferred_tax_asse
Income Taxes - Deferred tax asset (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Deferred Tax Assets: | ' | ' |
Net Operating Loss Carry-Forward | $66,888,140 | $65,078,622 |
Statutory Tax Rate | 34.00% | 34.00% |
Total Deferred Tax Assets | 22,741,968 | 22,126,731 |
Valuation Allowance for Deferred Tax Assets | -22,741,968 | -22,126,731 |
Net Deferred Taxes | ' | ' |
Deferred_Income_Tax_Details_Na
Deferred Income Tax (Details Narrative) (USD $) | Dec. 31, 2013 |
Net operating Loss Carryforward | $22,800,000 |
2018 | ' |
Net operating Loss Carryforward Expiring, amount | 6,022,543 |
2019 | ' |
Net operating Loss Carryforward Expiring, amount | 2,528,950 |
2020 | ' |
Net operating Loss Carryforward Expiring, amount | 4,557,566 |
2021 | ' |
Net operating Loss Carryforward Expiring, amount | 7,870,612 |
2022 | ' |
Net operating Loss Carryforward Expiring, amount | 10,869,699 |
2023 | ' |
Net operating Loss Carryforward Expiring, amount | 9,811,811 |
2024 | ' |
Net operating Loss Carryforward Expiring, amount | 4,244,336 |
2025 | ' |
Net operating Loss Carryforward Expiring, amount | 3,280,473 |
2026 | ' |
Net operating Loss Carryforward Expiring, amount | 2,359,786 |
2027 | ' |
Net operating Loss Carryforward Expiring, amount | 3,629,828 |
2028 | ' |
Net operating Loss Carryforward Expiring, amount | 2,117,913 |
2029 | ' |
Net operating Loss Carryforward Expiring, amount | 2,547,714 |
2031 | ' |
Net operating Loss Carryforward Expiring, amount | 2,198,439 |
2032 | ' |
Net operating Loss Carryforward Expiring, amount | 3,038,952 |
2033 | ' |
Net operating Loss Carryforward Expiring, amount | $1,809,518 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Lease Payments | ' | ' |
2013 | ' | $416,726 |
2014 | ' | 374,894 |
2015 | ' | 408,719 |
2016 | ' | 183,219 |
Rent Expense | $225,229 | $357,145 |
Net_Income_Loss_per_Common_Sha2
Net Income (Loss) per Common Share - Basic and Diluted (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Net Income Loss Per Common Share - Basic And Diluted Details | ' | ' |
Net loss available to common shareholders (A) | ($1,971,045) | ($4,430,672) |
Weighted average common shares outstanding (B) | 111,449,320 | 107,312,421 |
Dilutive effect of employee equity incentive plans | $4,740,000 | $7,473,333 |
Weighted average common shares outstanding, assuming dilution (C) | 114,218,275 | 114,785,754 |
Basic earnings per common share (A)/(B) | ($0.02) | ($0.04) |
Diluted earnings per common share (A)/(C) | ($0.02) | ($0.04) |
Net_Income_Loss_per_Common_Sha3
Net Income (Loss) per Common Share - Basic and Diluted (Details Narrative) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Antidilutive Secuities | 4,740,000 | 7,473,333 |
Warrants | ' | ' |
Antidilutive Secuities | 2,500,000 | ' |
Vested and Exercisable | ' | ' |
Antidilutive Secuities | 4,973,333 | ' |
Exercisable | ' | ' |
Antidilutive Secuities | 4,629,015 | ' |
Non Exercisable | ' | ' |
Antidilutive Secuities | 344,318 | ' |
Securities_Transactions_Detail
Securities Transactions (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Restricted Stock issued for Interest Expense, shares | 2,423,136 |
Restricted Stock issued for Interest Expense, amount | $678,697 |
Restricted Stock issued for Consulting Fees, shares | 150,697 |
Restricted Stock issued for Consulting Fees, amount | 38,387 |
Restricted Stock issued for Employee, shares | 104,167 |
Restricted Stock issued for Employee, amount | 25,000 |
Director Plan | ' |
Restricted Stock issued for Services, shares | 160,000 |
Restricted Stock issued for Services, amount | 104,000 |
Advisory and Consulting | ' |
Restricted Stock issued for Services, shares | 1,938,111 |
Restricted Stock issued for Services, amount | $1,045,693 |
ShareBased_Payment_Arrangement2
Share-Based Payment Arrangements (Details) (USD $) | 12 Months Ended | ||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2010 | Dec. 31, 2011 | ||
Share based compensation Expense | $1,998,426 | $1,557,988 | ' | ' | |
Equity Plan | ' | ' | ' | ' | |
Stock Awards, granted | 0 | 2,350,000 | 10,000,000 | ' | |
Compensation Expense | 0 | 145,037 | ' | ' | |
Excercise Price on origination | ' | ' | ' | ' | |
Options availble for grant | 4,960,000 | ' | ' | ' | |
Weight-average period | '0 years | '0 years | ' | ' | |
Restricted Common Stock, per share | $0.60 | $0.61 | ' | $0.61 | |
Equity Plan | CEO President | ' | ' | ' | ' | |
Stock Awards, granted | ' | 2,000,000 | ' | ' | |
Excercise Price on origination | ' | $0.67 | ' | ' | |
Closing Price at extension | ' | $0.18 | ' | ' | |
Equity Plan | Key Employees | ' | ' | ' | ' | |
Stock Awards, granted | ' | 350,000 | ' | ' | |
Excercise Price on origination | ' | $0.36 | ' | ' | |
Closing Price at extension | ' | $0.18 | ' | ' | |
Director Plan | ' | ' | ' | ' | |
Share based compensation Expense | 520,000 | ' | ' | ' | |
Stock Awards, granted | 800,000 | [1] | ' | ' | ' |
Excercise Price on origination | $0.65 | ' | ' | ' | |
Unrecognized Compensation Costs | 102,000 | ' | ' | ' | |
Weight-average period | '2 years 0 months | ' | ' | ' | |
Advisor Plan | ' | ' | ' | ' | |
Share based compensation Expense | 2,850,000 | ' | ' | ' | |
Stock Awards, granted | 5,000,000 | ' | ' | ' | |
Excercise Price on origination | $0.57 | ' | ' | ' | |
Unrecognized Compensation Costs | 135,219 | ' | ' | ' | |
Weight-average period | ' | '0 years 1 month 4 days | ' | ' | |
Restricted Common Stock, shares | 272,969 | 62,101 | ' | ' | |
Restricted Common Stock, per share | $0.35 | $0.20 | ' | ' | |
Restricted Common Stock, amount | 96,560 | 12,160 | ' | ' | |
New Guaranty Plan | ' | ' | ' | ' | |
Share based compensation Expense | 2,208,600 | ' | ' | ' | |
Stock Awards, granted | 3,681,000 | ' | ' | ' | |
Unrecognized Compensation Costs | 2,164,307 | ' | ' | ' | |
Weight-average period | '2 years 9 months 6 days | ' | ' | ' | |
Prior Guaranty Plan | ' | ' | ' | ' | |
Share based compensation Expense | $1,350,000 | ' | ' | ' | |
Stock Awards, granted | 5,000,000 | ' | ' | ' | |
Excercise Price on origination | $0.27 | ' | ' | ' | |
[1] | Each outside director receiving a stock grant of 100,000 shares (Mr. Gregg, Mr. Brown, and Mr. Larson), and Mr. Nadel who will receive a stock grant of 500,000 shares (Mr. Nadel was an outside director at the time of approval of the Director Plan), and each outside director will receive cash payments of $2,500 each quarter, payable at the end of each quarter. |
ShareBased_Payment_Arrangement3
Share-Based Payment Arrangements Equity Plan (Details) (Equity Plan, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Equity Plan | ' | ' |
Options | ' | ' |
Outstanding - Beginning of year | 5,540,000 | 5,948,333 |
Granted | ' | ' |
Exercised | ' | ' |
Canceled,Expired or Forfeited | -500,000 | -408,333 |
Outstanding - End of year | 5,040,000 | 5,540,000 |
Exercisable - End of year | 4,740,000 | 4,629,015 |
Weighted Average Exercise Price | ' | ' |
Outstanding - Beginning of year | $0.61 | $0.61 |
Granted | ' | ' |
Exercised | ' | ' |
Canceled,Expired or Forfeited | $0.74 | $0.55 |
Outstanding - End of year | $0.60 | $0.61 |
Exercisable - end of year | $0.61 | $0.06 |
ShareBased_Payment_Arrangement4
Share-Based Payment Arrangements Warrant Activity (Details) (Warrants, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Warrants | ' | ' |
Warrant Activity | ' | ' |
Outstanding - Beginning of year | 2,500,000 | 2,500,000 |
Granted | ' | ' |
Exercised | ' | ' |
Canceled,Expired or Forfeited | -2,500,000 | ' |
Outstanding and exercisable - End of year | ' | 2,500,000 |
Weighted Average Exericse Price | ' | ' |
Outstanding - Beginning of year | $0.58 | $0.58 |
Granted | ' | ' |
Exercised | ' | ' |
Canceled,Expired or Forfeited | ' | ' |
Outstanding - End of year | ' | $0.58 |
ShareBased_Payment_Arrangement5
Share-Based Payment Arrangements Equity Plan and Warrant Summary (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
$.36-$.59 | ' | ' |
Number Outstanding | 650,000 | 2,150,000 |
Weighted Average Remaining Life in years | '1 year 6 months 9 days | '2 years 8 months 5 days |
Weighted Average Exercise Price, outstanding | 0.36 | 0.48 |
Number Exercisable | 350,000 | 1,850,000 |
Weighted Average Exercise Price, exercisable | $0.36 | $0.50 |
$.60-$.64 | ' | ' |
Number Outstanding | 2,310,000 | 2,310,000 |
Weighted Average Remaining Life in years | '4 years 4 months 0 days | '3 years 0 months 3 days |
Weighted Average Exercise Price, outstanding | 0.6 | 0.6 |
Number Exercisable | 2,310,000 | 1,907,365 |
Weighted Average Exercise Price, exercisable | $0.60 | $0.60 |
$.65-$.80 | ' | ' |
Number Outstanding | 2,080,000 | 3,580,000 |
Weighted Average Remaining Life in years | '1 year 3 months 0 days | '2 years 0 months 1 day |
Weighted Average Exercise Price, outstanding | 0.67 | 0.67 |
Number Exercisable | 2,080,000 | 3,371,650 |
Weighted Average Exercise Price, exercisable | $0.67 | $0.67 |
ShareBased_Payment_Arrangement6
Share-Based Payment Arrangements Director Plan (Details) (Director Plan, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Director Plan | ' | ' |
Stock Awards Non Vested | ' | ' |
Nonvested - Beginning of Year | 320,000 | 480,000 |
Granted | ' | ' |
Vested | -160,000 | -160,000 |
Canceled, Expired or Forfeighted | ' | ' |
Nonvested - End of Year | 160,000 | 320,000 |
Weighted Average Grant Date Fair Value | ' | ' |
Nonvested - Beginning of Year | $208,000 | $132,000 |
Granted | ' | ' |
Vested | -104,000 | -104,000 |
Nonvested - End of Year | $104,000 | $208,000 |
ShareBased_Payment_Arrangement7
Share-Based Payment Arrangements Advisor Plan (Details) (Advisor Plan, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Advisor Plan | ' | ' |
Stock Awards Non Vested | ' | ' |
Nonvested - Beginning of Year | 1,902,380 | 3,572,084 |
Granted | 272,969 | 62,101 |
Vested | -1,938,111 | -1,731,805 |
Canceled, Expired or Forfeighted | ' | ' |
Nonvested - End of Year | 237,238 | 1,902,380 |
Weighted Average Grant Date Fair Value | ' | ' |
Nonvested - Beginning of Year | $1,084,352 | $2,036,086 |
Granted | 96,560 | 12,160 |
Vested | -1,045,693 | -963,894 |
Nonvested - End of Year | $135,219 | $1,084,352 |
ShareBased_Payment_Arrangement8
Share-Based Payment Arrangements New Guaranty Plan (Details) (New Guaranty Plan, USD $) | 12 Months Ended |
Dec. 31, 2013 | |
New Guaranty Plan | ' |
Stock Awards Non Vested | ' |
Nonvested - Beginning of Year | ' |
Granted | 3,681,000 |
Vested | -73,821 |
Canceled, Expired or Forfeighted | ' |
Nonvested - End of Year | 3,607,179 |
Weighted Average Grant Date Fair Value | ' |
Nonvested - Beginning of Year | ' |
Granted | 2,208,600 |
Vested | -44,293 |
Cancelled, Expired or Forfeited | ' |
Nonvested - End of Year | $2,164,307 |
ShareBased_Payment_Arrangement9
Share-Based Payment Arrangements Prior Guaranty Plan (Details) (Prior Guaranty Plan, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Prior Guaranty Plan | ' | ' |
Stock Awards Non Vested | ' | ' |
Nonvested - Beginning of Year | 3,726,027 | ' |
Granted | ' | 5,000,000 |
Vested | -2,349,315 | -1,273,973 |
Canceled, Expired or Forfeighted | -1,376,712 | ' |
Nonvested - End of Year | ' | 3,726,027 |
Weighted Average Grant Date Fair Value | ' | ' |
Nonvested - Beginning of Year | $1,006,116 | ' |
Granted | ' | 1,350,000 |
Vested | -634,315 | -343,884 |
Cancelled, Expired or Forfeited | -371,801 | ' |
Nonvested - End of Year | ' | $1,006,116 |
Recovered_Sheet1
Share-Based Payment Arrangements Guaranty Plan (Details) (Guaranty Plan, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Guaranty Plan | ' | ' |
Stock Awards Non Vested | ' | ' |
Nonvested - Beginning of Year | 3,726,027 | ' |
Granted | 3,681,000 | 5,000,000 |
Vested | -2,423,136 | -1,273,973 |
Canceled, Expired or Forfeighted | -1,376,712 | ' |
Nonvested - End of Year | 3,607,179 | 3,726,027 |
Weighted Average Grant Date Fair Value | ' | ' |
Nonvested - Beginning of Year | $1,006,116 | ' |
Granted | 2,208,600 | 1,350,000 |
Vested | -678,608 | -343,884 |
Cancelled, Expired or Forfeited | -371,801 | ' |
Nonvested - End of Year | $2,164,307 | $1,006,116 |
Business_Segment_Information_R
Business Segment Information - Reportable Segments (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Sales | $71,176,971 | $70,383,827 |
Depreciation | 156,731 | 202,096 |
Amortization of Other Intangible Assets | 381,983 | 451,184 |
Interest Expense | 926,586 | 573,816 |
Segment Profit | 3,750,576 | 831,016 |
Segment Assets (1) | 21,661,547 | 20,704,068 |
Expenditures for Segment Assets | 118,611 | 102,824 |
Foam | ' | ' |
Sales | 61,080,736 | 58,871,570 |
Depreciation | 134,499 | 169,018 |
Amortization of Other Intangible Assets | 327,800 | 377,306 |
Interest Expense | 795,153 | 477,357 |
Segment Profit | 2,293,601 | 634,872 |
Segment Assets (1) | 17,917,746 | 16,999,244 |
Expenditures for Segment Assets | 101,786 | 86,688 |
Coatings | ' | ' |
Sales | 10,096,235 | 11,512,257 |
Depreciation | 22,232 | 33,078 |
Amortization of Other Intangible Assets | 54,183 | 73,878 |
Interest Expense | 131,433 | 96,459 |
Segment Profit | 1,456,975 | 196,144 |
Segment Assets (1) | 3,743,801 | 3,704,824 |
Expenditures for Segment Assets | $16,825 | $16,136 |
Business_Segment_Information_R1
Business Segment Information - Reconciliation of reportable segment profit or loss (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ' | ' |
Total Profit or Loss for Reportable Segments | $3,750,576 | $831,016 |
Corporate Expenses | -5,721,621 | -5,261,688 |
Income (Loss) Before Income Taxes | ($1,971,045) | ($4,430,672) |
Business_Segment_Information_R2
Business Segment Information - Reconciliation of reportable segment assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Reporting [Abstract] | ' | ' |
Total Assets for Reportable Segments | $21,661,548 | $20,704,068 |
Other Unallocated Amounts | 392,612 | 280,184 |
Total Assets | $22,054,160 | $20,984,252 |
Business_Segment_Information_G
Business Segment Information - Geographic Area Information (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Sales | $71,176,971 | $70,383,827 |
Long Lived Assets | 21,661,547 | 20,704,068 |
United States | ' | ' |
Sales | 61,417,293 | 66,296,251 |
Long Lived Assets | 21,661,547 | 20,704,068 |
Europe | ' | ' |
Sales | 1,741,485 | 574,395 |
Middle East | ' | ' |
Sales | 5,706,558 | 469,890 |
Rest of the World | ' | ' |
Sales | $2,311,635 | $3,043,291 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Employment Agreement | ' | ' | ' | ' | |
Increase in Auto Allowance. monthly | ' | ' | ' | $700 | |
Annual Compensation | 400,000 | 400,000 | 350,000 | ' | |
Bonus Level 1 | ' | ' | ' | ' | |
Bonus | ' | ' | 120,000 | ' | |
Bonus Level 2 | ' | ' | ' | ' | |
Bonus | ' | ' | 160,000 | ' | |
Bonus Level 3 | ' | ' | ' | ' | |
Bonus | ' | ' | 200,000 | ' | |
New Kramer Option | ' | ' | ' | ' | |
Common stock, shares | ' | ' | ' | 500,000 | |
Common stock, amount | ' | ' | ' | 340,000 | |
Share Price | ' | ' | ' | $0.72 | |
Schintzer Option | ' | ' | ' | ' | |
Common stock, shares | ' | ' | ' | 100,000 | [1] |
Common stock, amount | ' | ' | ' | 61,000 | |
Share Price | ' | ' | ' | $0.65 | |
Schintzer Stock Bonus | ' | ' | ' | ' | |
Common stock, shares | ' | ' | ' | 100,000 | [2] |
Common stock, amount | ' | ' | ' | $65,000 | |
Share Price | ' | ' | ' | $0.65 | |
[1] | The Schnitzer Option vests annually over a consecutive three year period in the following respective increments: 33,334 Options on February 6, 2015 and 33,333 Options on each of the next two successive anniversaries | ||||
[2] | The Bonus Shares vest in four equal 25,000 share increments, on February 7, 2014, December 31, 2014, December 31, 2015, and February 6, 2016, |