Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Mar. 20, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'LAPOLLA INDUSTRIES INC | ' |
Entity Central Index Key | '0000875296 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 114,620,620 |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
Condensed_Balance_Sheets
Condensed Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ' | ' |
Cash | ' | ' |
Trade Receivables, Net | 8,191,398 | 7,694,589 |
Inventories | 4,824,929 | 5,421,935 |
Prepaid Expenses and Other Current Assets | 945,065 | 1,250,314 |
Total Current Assets | 13,961,392 | 14,366,838 |
Property, Plant and Equipment | 1,633,530 | 1,600,679 |
Other Assets: | ' | ' |
Goodwill | 4,234,828 | 4,234,828 |
Other Intangible Assets, Net | 1,175,987 | 1,165,157 |
Deposits and Other Non-Current Assets, Net | 662,650 | 686,658 |
Total Other Assets | 6,073,465 | 6,086,643 |
Total Assets | 21,668,387 | 22,054,160 |
Current Liabilities: | ' | ' |
Accounts Payable | 7,512,135 | 6,694,633 |
Accrued Expenses and Other Current Liabilities | 1,232,122 | 1,456,895 |
Current Portion of Long-Term Debt | ' | 4,599 |
Total Current Liabilities | 8,744,257 | 8,156,127 |
Other Liabilities: | ' | ' |
Non-Current Portion of Revolver Loan | 4,074,529 | 4,539,163 |
Non-Current Portion of Notes Payable- New Enhanced | 6,796,528 | 6,683,561 |
Non-Current Portion of Note Payable - Related Party | 1,300,000 | 1,300,000 |
Accrued Interest- Note Payable- Related Party | 135,427 | 117,633 |
Total Other Liabilities | 12,306,484 | 12,640,357 |
Total Liabilities | 21,050,741 | 20,796,484 |
Stockholders' Equity: | ' | ' |
Common Stock, $.01 Par Value; 140,000,000 Shares Authorized; 114,733,340 and 114,148,378 Issued and Outstanding for March 31, 2014 and December 31, 2013, respectively. | 1,147,333 | 1,141,484 |
Additional Paid-In Capital | 87,135,392 | 86,734,757 |
Accumulated (Deficit) | -87,542,168 | -86,495,654 |
Accumulated Other Comprehensive (Loss) | -122,911 | -122,911 |
Total Stockholders' Equity | 617,646 | 1,257,676 |
Total Liabilities and Stockholders' Equity | $21,668,387 | $22,054,160 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
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) | 114,733,340 | 114,148,378 |
Common Stock, shares outstanding (in shares) | 114,733,340 | 114,148,378 |
Condensed_Statements_of_Operat
Condensed Statements of Operations and Comprehensive Loss (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Statement [Abstract] | ' | ' |
Sales | $16,102,200 | $16,995,510 |
Cost of Sales | 13,032,873 | 13,361,463 |
Gross Profit | 3,069,327 | 3,634,047 |
Operating Expenses: | ' | ' |
Selling, General and Administrative | 3,303,507 | 3,275,264 |
Professional Fees | 19,951 | 306,868 |
Depreciation | 43,829 | 44,573 |
Amortization of Other Intangible Assets | 68,430 | 128,613 |
Consulting Fees | 136,933 | 82,439 |
Total Operating Expenses | 3,572,650 | 3,837,757 |
Operating (Loss) | -503,323 | -203,710 |
Other (Income) Expense: | ' | ' |
Interest Expense | 280,711 | 263,730 |
Interest Expense-Related Party | 198,991 | 183,202 |
Interest Expense- Amortization of Discount | 45,108 | ' |
(Gain) on Derivative Liability | ' | -45,913 |
Other, Net | 18,381 | -24,691 |
Total Other (Income) Expense | 543,191 | 376,328 |
Net Loss | -1,046,514 | -580,038 |
Net Loss Per Share- Basic and Diluted | ($0.01) | ($0.01) |
Weighted Average Shares Outstanding | 114,399,050 | 109,744,463 |
Other Comprehensive (Loss): | ' | ' |
Foreign Currency Translation Adjustment (Loss) | ' | -2,204 |
Total Other Comprehensive (Loss) | ' | -2,204 |
Comprehensive (Loss) | ($1,046,514) | ($582,242) |
Condensed_Statements_of_Cash_F
Condensed Statements of Cash Flows (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash Flows From Operating Activities | ' | ' |
Net Loss | ($1,046,514) | ($580,038) |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ' | ' |
Depreciation | 108,391 | 117,979 |
Amortization of Other Intangible Assets | 68,430 | 128,613 |
Provision for Losses on Accounts Receivable | 110,420 | 47,812 |
Share Based Compensation Expense | 225,285 | 309,949 |
Share Based Financial Consultant Fees | ' | 10,000 |
Interest Expense-Related Party | 198,991 | 183,202 |
Interest Expense - Enhanced Notes PIK | 67,859 | 21,415 |
Interest Expense- Amortization of Discount | 45,108 | ' |
Gain on Derivative Liability | ' | -45,913 |
Gain on Disposal of Assets | -5,584 | ' |
Loss on Foreign Currency Exchange | 24,871 | 1,800 |
Changes in Assets and Liabilities: | ' | ' |
Trade Receivables | -627,571 | -1,933,507 |
Inventories | 597,006 | 53,347 |
Prepaid Expenses and Other Current Assets | 305,249 | 127,684 |
Other Intangible Assets | -79,260 | 11,444 |
Deposits and Other Non-Current Assets | 24,008 | 22,813 |
Accounts Payable | 812,973 | 593,629 |
Accrued Expenses and Other Current Liabilities | -224,773 | -170,613 |
Net Cash Used in Operating Activities | 604,889 | -1,100,384 |
Cash Flows From Investing Activities | ' | ' |
Additions to Property, Plant and Equipment | -188,658 | -10,613 |
Proceeds from Disposal of Property, Plant and Equipment | 53,000 | ' |
Net Cash Used in Investing Activities | -135,658 | -10,613 |
Cash Flows From Financing Activities | ' | ' |
Proceeds from Revolver Loan | 16,164,029 | 17,299,423 |
Principal Repayments to Revolver Loan | -16,628,662 | -16,019,562 |
Principal Repayments to Note Payable- Prior Enhanced Note | ' | -159,999 |
Principal Repayments on Long Term Debt | -4,598 | -6,661 |
Net Cash Provided by Financing Activities | -469,231 | 1,113,201 |
Net Effect of Exchange Rate Changes on Cash | ' | -2,204 |
Net Increase (Decrease) In Cash | ' | ' |
Cash at Beginning of Year | ' | ' |
Cash at End of Year | ' | ' |
Supplemental Disclosure of Cash Flow Information: | ' | ' |
Cash Payments for Interest | 251,084 | 206,640 |
Supplemental Schedule of Non Cash Investing and Financing Activities: | ' | ' |
Issuances of Restricted Common Stock for Personal Guarantees by Related Party | $181,198 | $166,526 |
Summary_of_Organization_Basis_
Summary of Organization, Basis of Presentation, and Critical Accounting Policies, Estimates, and Assumptions | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Summary of Organization, Basis of Presentation, and Critical Accounting Policies, Estimates, and Assumptions | ' |
Note 1. Basis of Presentation, Critical Accounting Policies, Estimates, and Assumptions. | |
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring accruals) to present fairly the financial information contained therein. These statements do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP) for annual periods and should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2013. The Company prepared the unaudited condensed consolidated financial statements following the requirements of the U.S. Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. The results of operations for the three month period ended March 31, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or any other period(s). Certain amounts in the prior periods have been reclassified to conform to the 2014 unaudited condensed financial statement presentation. Reference is made to Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 14. Risk factors that could impact results are discussed in Part II – Other Information, Item 1A – Risk Factors on page 19. Refer to the Company’s 2013 Annual Report on Form 10-K for a description of major accounting policies. There have been no material changes to these accounting policies during the quarter ended March 31, 2014. | |
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 $23.1 Million and $22.7 Million at March 31, 2014 and December 31, 2013, respectively. The Company recorded a valuation allowance against the deferred tax asset of $23.1 Million and $22.7 Million at March 31, 2014 and December 31, 2013, respectively, reducing its net carrying value to zero. The Company had no increase or decrease in unrecognized income tax benefits or any accrued interest or penalties relating to tax uncertainties at March 31, 2014 and December 31, 2013. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. | |
Impairment of Long-Lived Assets | |
Property, Plant and Equipment | |
Property, plant and equipment is recorded at cost and depreciated using the straight-line method, which deducts equal amounts of the cost of each asset from earnings every year over its estimated economic useful life. The estimated economic useful life of an asset is monitored to determine its appropriateness, especially in light of changed business circumstances. Property, plant, and equipment held for use is grouped for impairment testing at the lowest level for which there is an identifiable cash flow. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Such circumstances would include a significant decrease in the market value of a long-lived asset grouping, a significant adverse change in the manner in which the asset grouping is being used or in its physical condition, a history of operating or cash flow losses associated with the use of the asset grouping, or changes in the expected useful life of the long-lived assets. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by that asset group is compared to the carrying value to determine whether impairment exists. If an asset group is determined to be impaired, the loss is measured based on the difference between the asset group’s fair value and its carrying value. An estimate of the asset group’s fair value is based on the discounted value of its estimated cash flows. Assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell. The assumptions underlying cash flow projections represent our best estimates at the time of the impairment review. Factors that we must estimate include industry and market conditions, sales volume and prices, costs to produce, etc. Changes in key assumptions or actual conditions that differ from estimates could result in an impairment charge. Management believes it uses reasonable and supportable assumptions when performing impairment reviews and cannot predict the occurrence of future events and circumstances that could result in impairment charges. The Company does not believe any indicators of impairment exist for property, plant and equipment at March 31, 2014. Net property, plant and equipment totaled $1,633,530 and $1,600,679 as of and for the quarter and year ended March 31, 2014 and December 31, 2013, respectively. Depreciation expense totaled $108,391 and $117,979, of which $64,562 and $73,406 was included in cost of sales, for the quarter ended March 31, 2014 and 2013, respectively. | |
Goodwill | |
Goodwill represents the excess of the aggregate purchase price over the fair value of net tangible and identifiable intangible asset of an acquired business. Goodwill was $4,234,828 at March 31, 2014 and December 31, 2013. The Company operates two reporting units or segments, Foam and Coatings. Disclosures related to goodwill are included in Note 7 to the financial statements. The Company evaluates goodwill for impairment on an annual basis, or more frequently if Management believes indicators of impairment exist, by comparing the carrying value of each reportable segment to their estimated fair values. The annual evaluation is performed in the fourth quarter of each calendar year. The impairment test requires the Company to compare the fair value of each reporting unit to its carrying value, including assigned goodwill. As of March 31, 2014, the Company does not believe any indicators of impairment exist for goodwill that would require additional analysis before the 2014 annual evaluation. | |
Other Intangible Assets | |
The Company had other intangible assets consisting primarily of customer lists, product formulations, trade names, and non-competes that were acquired as part of business combinations. Other intangible assets are tested for impairment as part of the long-lived asset grouping impairment tests. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. See impairment discussion above under Property, Plant and Equipment for a description of how impairment losses are determined. Disclosures related to other intangible assets are included in Note 7 to the financial statements. Significant management judgment is required in the forecasts of future operating results that are used in the Company’s impairment evaluations. The estimates used are consistent with the plans and estimates that Management uses to manage its business. It is possible, however, that the plans may change and estimates used may prove to be inaccurate. If the Company’s actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, then the Company could incur future impairment charges, which would adversely affect financial performance. The Company does not believe any indicators of impairment exist for other intangible assets at March 31, 2014. Net other intangible assets totaled $1,175,987 and $1,165,157 as of and for the quarter and year ended March 31, 2014 and December 31, 2013, respectively. Amortization expense totaled $68,430 and $128,613 for the quarters ended March 31, 2014 and 2013, respectively. | |
Revenue Recognition | |
Sales are recognized as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. Sales channels include direct sales, distributors, and independent representatives. Amounts billed for shipping and handling are included in sales (freight). Freight included in sales was $221,749 and $288,069 for the quarters ended March 31, 2014 and 2013, respectively. Costs incurred for shipping and handling are included in cost of sales. Sales are recorded net of sales tax. Freight included in cost of sales was $888,510 and $817,200 at March 31, 2014 and 2013, respectively. | |
Share Based Compensation | |
The Company accounts for stock based compensation by measuring and recognizing the cost of employee or director services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of share based awards is estimated at the grant date using a straight line closing trading stock price based valuation model and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. Share based compensation expense was $225,285 and $309,949 for the quarters ended March 31, 2014 and 2013, respectively. If additional stock options or stock awards are granted, financial performance will be negatively affected, and if outstanding stock options or stock awards are forfeited or canceled, resulting in non-vesting of such stock options or stock awards, financial performance will be positively affected. In either instance, the Company’s financial performance may change depending on stock option or stock award activities in future periods. | |
Allowance for Doubtful Accounts | |
The Company presents trade receivables, net of allowances for doubtful accounts, to ensure trade receivables are not overstated due to uncollectible accounts. Allowances, when required, are calculated based on a detailed review of certain individual customer accounts and an estimation of the overall economic conditions affecting our customer base. The Company reviews a customer’s credit history before extending credit. The allowance for doubtful accounts was approximately $382,000 and $317,000 at March 31, 2014 and December 31, 2013, respectively. If the financial condition of customers were to deteriorate based on worsening overall economic conditions, resulting in an impairment of their ability to make payments to the Company, then additional allowances may be required in future periods, which would adversely affect the Company’s financial performance. | |
Reserves for Losses | |
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 $470,000 and $473,000 at March 31, 2014 and December 31, 2013, respectively. The reserve for losses was approximately $237,000 at March 31, 2014 and December 31, 2013, respectively. | |
Advertising and Marketing | |
Advertising and marketing costs are generally expensed as incurred. Expenditures for trade magazines and television commercials are expensed at the time the first advertisement is printed or shown on television. Expenditures for certain advertising and marketing activities related to trade shows are deferred within the Company’s fiscal year when the benefits clearly extend beyond the interim period in which the expenditure is made, generally not to exceed 90 days. Other advertising and marketing expenditures that do not meet the deferred criteria are expensed when the advertising occurs. At March 31, 2014 and 2013, deferred advertising costs were $63,399 and $18,788, respectively. Total advertising and marketing costs expensed were $342,953 and $355,227 for the quarter ended March 31, 2014 and 2013, 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. | |
Recently Adopted Accounting Standards | |
In July 2013, the Financial Accounting Standards Board (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 became effective for fiscal years beginning after December 15, 2013, with early adoption permitted. The Company adopted the provisions of the guidance in the first quarter of 2014. The adoption did not have a material impact on the Company’s consolidated financial statements. | |
In March 2013, the FASB issued an accounting standards update that provides guidance on the accounting for the cumulative translation adjustment (CTA) upon de-recognition 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 became effective for fiscal years beginning on or after December 15, 2013, with early adoption permitted. The Company adopted the provisions of the guidance in the first quarter of 2014. The adoption did not have a material impact on the Company’s consolidated financial statements. | |
New Accounting Standards Not Yet Adopted | |
In April 2014, the FASB issued an accounting standards update that raises the threshold for disposals to qualify as discontinued operations and allows companies to have significant continuing involvement with and continuing cash flows from or to the discontinued operation. It also requires additional disclosures for discontinued operations and new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. This guidance will be effective for fiscal years beginning after December 15, 2014, which will be the Company's fiscal year 2015, with early adoption permitted. The Company does not expect the adoption of the guidance will have a material impact on the Company's consolidated financial statements. |
Liquidity
Liquidity | 3 Months Ended |
Mar. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Liquidity | ' |
Note 2. Liquidity. | |
Although the Company generated $604,889 of cash from operating activities and has a working capital surplus of $5,217,135, it has an accumulated deficit of $87,542,168 and a net loss of $1,046,514 as of and for the quarter ended March 31, 2014. As a result, there are concerns about the liquidity of the Company at March 31, 2014. 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, for the next 12 months. |
Dependence_on_a_few_suppliers
Dependence on a few suppliers | 3 Months Ended |
Mar. 31, 2014 | |
Risks and Uncertainties [Abstract] | ' |
Dependence on a few suppliers | ' |
Note 3. Dependence on Few Suppliers. | |
The Company is dependent on a few suppliers for certain raw materials and finished goods. For the quarters ended March 31, 2014 and 2013, raw materials and finished goods purchased from the three largest suppliers accounted for approximately 47% and 47% of purchases, respectively. |
Trade_Receivables
Trade Receivables | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
Trade Receivables | ' | ||||||||
Note 4. Trade Receivables. | |||||||||
Trade receivables are comprised of the following at: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Trade Receivables | $ | 8,573,407 | $ | 8,011,176 | |||||
Less: Allowance for Doubtful Accounts | (382,009 | ) | (316,587 | ) | |||||
Trade Receivables, Net | $ | 8,191,398 | $ | 7,694,589 | |||||
Inventories
Inventories | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
Note 5. Inventories. | |||||||||
The following is a summary of inventories at: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Raw Materials | $ | 1,183,974 | $ | 1,804,959 | |||||
Finished Goods | 3,640,955 | 3,616,976 | |||||||
Total Inventories | $ | 4,824,929 | $ | 5,421,935 | |||||
Prepaid_Expenses_and_Other_Cur
Prepaid Expenses and Other Current Assets | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Prepaid Expenses and Other Current Assets | ' | ||||||||
Note 6. Prepaid Expenses and Other Current Assets. | |||||||||
The following is a summary of prepaid expenses and other current assets at: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Prepaid Insurances | $ | 599,028 | $ | 582,654 | |||||
Prepaid Marketing | 153,589 | 152,667 | |||||||
Prepaid Consulting | 10,888 | 66,208 | |||||||
Prepaid Other | 70,956 | 357,839 | |||||||
Note Receivable, Net | 110,604 | 90,946 | |||||||
Total Prepaid Expenses and Other Current Assets | $ | 945,065 | $ | 1,250,314 | |||||
Property_Plant_and_Equipment
Property, Plant and Equipment | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property, Plant and Equipment | ' | ||||||||
Note 7. Property, Plant and Equipment. | |||||||||
The following is a summary of property, plant and equipment at: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Vehicles | $ | 605,518 | $ | 649,487 | |||||
Leasehold Improvements | 288,777 | 288,777 | |||||||
Office Furniture and Equipment | 327,329 | 327,329 | |||||||
Computers and Software | 1,191,026 | 1,185,333 | |||||||
Machinery and Equipment | 2,493,869 | 2,466,007 | |||||||
Plant Construction in Progress | 37,056 | — | |||||||
Total Property, Plant and Equipment | $ | 4,943,575 | $ | 4,916,933 | |||||
Less: Accumulated Depreciation | (3,310,045 | ) | (3,316,254 | ) | |||||
Total Property, Plant and Equipment, Net | $ | 1,633,530 | $ | 1,600,679 |
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
Goodwill and Other Intangible Assets | ' | ||||||||||||||||||||||||
Note 8. Goodwill and Other Intangible Assets. | |||||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||||
The following is a summary of Goodwill at: | |||||||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||||||||
Foam | $ | 2,932,208 | $ | 2,932,208 | |||||||||||||||||||||
Coatings | 1,302,620 | 1,302,620 | |||||||||||||||||||||||
Total Goodwill | $ | 4,234,828 | $ | 4,234,828 | |||||||||||||||||||||
Other Intangible Assets | |||||||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||||||
Product Formulation | $ | 138,471 | $ | (83,852 | ) | $ | 54,619 | $ | 138,471 | $ | (81,544 | ) | $ | 56,927 | |||||||||||
Trade Names | 750,186 | (281,714 | ) | 468,472 | 740,325 | (269,212 | ) | 471,113 | |||||||||||||||||
Approvals and Certifications | 1,617,153 | (964,257 | ) | 652,896 | 1,547,754 | (910,637 | ) | 637,117 | |||||||||||||||||
$ | 2,505,810 | $ | (1,329,823 | ) | $ | 1,175,987 | $ | 2,426,550 | $ | (1,261,393 | ) | $ | 1,165,157 | ||||||||||||
Deposits_and_Other_NonCurrent_
Deposits and Other Non-Current Assets, Net. | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
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 at: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Deferred Financing Fees | $ | 266,582 | $ | 285,246 | |||||
Prepaid Expenses | 40,923 | 46,744 | |||||||
Other Receivables | 78,793 | 55,293 | |||||||
Deposits | 153,584 | 153,584 | |||||||
Note Receivable, Net | 122,768 | 145,791 | |||||||
Total Deposits and Other-Non-Current Assets | $ | 662,650 | $ | 686,658 |
Accrued_Expenses_and_Other_Cur
Accrued Expenses and Other Current Liabilities | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
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: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Accrued Payroll | $ | 49,889 | $ | 169,785 | |||||
Accrued Commissions | 87,252 | 61,000 | |||||||
Accrued Inventory Purchases | 34,217 | 178,616 | |||||||
Accrued Taxes and Other | 674,015 | 606,275 | |||||||
Accrued Insurance | 362,744 | 427,395 | |||||||
Deferred Finance Charge Income | 24,005 | 13,824 | |||||||
Total Accrued Expenses and Other Current Liabilities | $ | 1,232,122 | $ | 1,456,895 |
Financing_Instruments
Financing Instruments | 3 Months Ended |
Mar. 31, 2014 | |
Transfers and Servicing [Abstract] | ' |
Financing Instruments | ' |
Note 11. Financing Instruments | |
(a) Loan and Security Agreement. The Company maintains a $13,000,000 revolver loan (“Revolver Loan”) pursuant to a Loan and Security Agreement with Bank of America, N.A. (“Bank”), which matures on March 31, 2016, under which the Company granted the Bank a continuing security interest in and lien upon all Company assets ("Loan Agreement”). 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%. At March 31, 2014 and December 31, 2013, the balance outstanding on the Revolver Loan was $4,074,529 and $4,539,163, and the weighted-average interest rate was 4.4% and 4.5%, respectively. At March 31, 2014, we were in compliance with all of our Loan Agreement debt covenants. | |
(b) Note Purchase Agreements. | |
(i) New Enhanced Note. The Company authorized the issuance of an aggregate of $7.2 Million in Subordinated Secured Promissory Notes with Enhanced Jobs for Texas Fund, LLC (“Enhanced Jobs”) and Enhanced Credit Supported Loan Fund, LP (“Enhanced Credit”), pursuant to a Note Purchase Agreement, of which $5.7 Million was to Enhanced Credit and $1.5 Million was to Enhanced Jobs, both of which mature on December 10, 2016, under which the Company granted Enhanced a second lien on all assets of the Company after the Bank (“New Enhanced Note”). 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%. In connection with the Prior Enhanced Note being refinanced in connection with the New Enhanced Note (Refer to (iii) below), a purchase discount of $542,886 was recognized and 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 March 31, 2014 and December 31, 2013, the balance outstanding on the New Enhanced Note was $6,796,528 and $6,683,561 and the effective interest rate was 23.6% and 29.0%, respectively. At March 31, 2014, interest expense – amortization of discount was $18,622. At March 31, 2014, we were in compliance with all of our New Enhanced Note debt covenants. See also Note 16 – Subsequent Events, Item (a) 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 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 March 31, 2014 and December 31, 2013, there were 301,996 and 73,821 New Guaranty Shares vested, valued and recorded in the aggregate at $181,198 and $44,293, respectively. | |
(iii) Prior Enhanced Note. Upon receipt of the $7.2 Million under the New Enhanced Note described in (i) above on December 10, 2013, 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, were terminated. 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%. | |
(b) Note Purchase Agreements - continued | |
(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 from the Chairman of the Board and majority stockholder to secure the Company’s performance under the Prior Enhanced Note (“Prior Guaranty Shares”). The Prior Guaranty Shares were valued at $.27 per share 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. The Company authorized the issuance of a consolidated $1,300,000 promissory note, bearing interest at 5% per annum, with the Chairman of the Board and principal stockholder, which is subordinate to the Loan Agreement and the New Enhanced Note described in (a) and (b)(i) above and matures on June 10, 2017. At March 31, 2014 and 2013, interest expense – related party was $17,794 and $16,676. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
Note 12. Related Party Transactions. | |
(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. The Company vested 25,000 of the Bonus Shares on February 7, 2014, which transaction was valued and recorded at $16,250. | |
(f) The Company vested an aggregate of 257,966 shares, including anti-dilution issuances, of restricted common stock, par value $.01 per share, for Jay C. Nadel, a director, pursuant to his agreement for advisory and consulting services, which transactions were valued and recorded in the aggregate at $148,683. | |
(g) The Company vested an aggregate of 301,996 shares of restricted common stock, par value $.01 per share, for Richard J. Kurtz, Chairman of the Board and majority stockholder, granted to him in connection with his personal guaranty of the New Enhanced Note, which transactions were valued and recorded in the aggregate at $181,198, and classified as interest expense – related party. See also Note 11 – Financing Instruments, Item (b)(ii), for more information. | |
(h) The Company accrued an aggregate of $17,794 in interest expense relating to the Note Payable – Related Party. See also Note 11 – Financing Instruments, Item (c), for more information. | |
See also Note 16 – Subsequent Events, Items (b) and (c) for more information. |
Net_Income_Loss_per_Common_Sha
Net Income (Loss) per Common Share - Basic and Diluted | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Net Income (Loss) per Common Share - Basic and Diluted | ' | ||||||||
Note 13. Net Income (Loss) Per Common Share – Basic and Diluted. | |||||||||
Basic 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. | |||||||||
The computation of the Company’s basic and diluted earnings per share at: | |||||||||
31-Mar-14 | 31-Mar-13 | ||||||||
Net loss available to common shareholders (A) | $ | (1,046,514 | ) | $ | (580,038 | ) | |||
Weighted average common shares outstanding (B) | 114,399,050 | 109,744,463 | |||||||
Dilutive effect of equity incentive plans | 2,460,000 | — | |||||||
Weighted average common shares outstanding, assuming dilution (C) | 115,796,196 | 109,744,463 | |||||||
Basic earnings per common share (A)/(B) | $ | (0.01 | ) | $ | (0.01 | ) | |||
Diluted earnings per common share (A)/(C) | $ | (0.01 | ) | $ | (0.01 | ) | |||
For March 31, 2014, a total of 2,080,000 shares of common stock underlying vested and exercisable stock options were excluded from the calculation of diluted earnings per common share as the exercise prices of the stock options were greater than the market value of the common shares (out-of-the-money). For March 31, 2013, a total of 7,285,833 shares of common stock, of which 4,785,833 shares underlie vested and exercisable stock options and 2,500,000 shares underlie warrants, were excluded from the calculation of diluted earnings per common share as they were out-of-the-money. Out-of-the money options and warrants could be included in the calculation in the future if the market value of the Company’s common shares increases and is greater than their exercise price. |
Securities_Transactions
Securities Transactions | 3 Months Ended |
Mar. 31, 2014 | |
Notes to Financial Statements | ' |
Securities Transactions | ' |
Note 14. Securities Transactions. | |
(a) During the first quarter of 2014, the Company vested an aggregate of 257,966 shares of restricted common stock, par value $.01 per share, to a director for advisory and consulting services, which transactions were valued and recorded in the aggregate at $148,683. | |
(b) During the first quarter of 2014, the Company vested an aggregate of 301,996 shares of restricted common stock, par value $.01 per share, to the Chairman of the Board and majority stockholder in connection with his personal guaranty of the New Enhanced Note, which transactions were valued and recorded in the aggregate at $181,198, and classified as interest expense – related party. | |
(c) During the first quarter of 2014, the Company vested 25,000 shares of common stock, par value $.01 per share, of a 100,000 shares stock bonus grant to an employee pursuant to the Company’s Equity Incentive Plan, which transaction was valued and recorded in the aggregate at $16,250. |
Business_Segment_Information
Business Segment Information | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||
Business Segment Information | ' | ||||||||||||||||||||
Note 15. Business Segment and Geographic Area Information. | |||||||||||||||||||||
Business Segments | |||||||||||||||||||||
The Company is a leading national manufacturer and supplier operating two segments, Foam and Coatings, based on manufacturing competencies. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company allocates resources to segments and evaluates the performance of segments based upon reported segment sales. Administrative expenses are allocated to both segments. Unallocated costs reflect certain corporate expenses, insurance, investor relations, and gains and losses related to the disposal of corporate assets and derivative liabilities and are included in Unallocated Amounts. There are no intersegment sales or transfers. | |||||||||||||||||||||
Segments | |||||||||||||||||||||
31-Mar-14 | Foam | Coatings | Totals | ||||||||||||||||||
Sales | $ | 14,020,272 | $ | 2,081,928 | $ | 16,102,200 | |||||||||||||||
Cost of Sales | 11,495,604 | 1,537,269 | 13,032,873 | ||||||||||||||||||
Gross Profit | 2,524,668 | 544,659 | 3,069,327 | ||||||||||||||||||
Depreciation | 34,346 | 5,100 | 39,446 | ||||||||||||||||||
Amortization of Other Intangible Assets | 53,624 | 7,963 | 61,587 | ||||||||||||||||||
Interest Expense | 228,477 | 33,928 | 262,405 | ||||||||||||||||||
Segment Profit | $ | 518 | $ | 169,838 | $ | 170,356 | |||||||||||||||
Segment Assets (1) | 17,843,756 | 3,506,688 | 21,350,444 | ||||||||||||||||||
Expenditures for Segment Assets | $ | 164,266 | $ | 24,392 | $ | 188,658 | |||||||||||||||
31-Mar-13 | Foam | Coatings | Totals | ||||||||||||||||||
Sales | $ | 14,901,225 | $ | 2,094,285 | $ | 16,995,510 | |||||||||||||||
Cost of Sales | 11,892,096 | 1,469,367 | 13,361,463 | ||||||||||||||||||
Gross Profit | 3,009,129 | 624,918 | 3,634,047 | ||||||||||||||||||
Depreciation | 35,172 | 4,943 | 40,115 | ||||||||||||||||||
Amortization of Other Intangible Assets | 101,488 | 14,264 | 115,752 | ||||||||||||||||||
Interest Expense | 195,929 | 27,537 | 223,466 | ||||||||||||||||||
Segment Profit | $ | 541,691 | $ | 278,134 | $ | 819,825 | |||||||||||||||
Segment Assets (1) | 18,674,967 | 3,499,020 | 22,173,987 | ||||||||||||||||||
Expenditures for Segment Assets | $ | 9,305 | $ | 1,308 | $ | 10,613 | |||||||||||||||
The following are reconciliations of reportable segment profit or loss, and assets, to the Company’s totals at: | |||||||||||||||||||||
Segments Profit | |||||||||||||||||||||
31-Mar-14 | 31-Mar-13 | ||||||||||||||||||||
Total Profit for Reportable Segments | $ | 170,356 | $ | 819,825 | |||||||||||||||||
Unallocated Amounts: | |||||||||||||||||||||
Corporate Expenses | (1,216,870 | ) | (1,399,863 | ) | |||||||||||||||||
Loss Before Income Taxes | $ | (1,046,514 | ) | $ | (580,038 | ) | |||||||||||||||
Assets | 31-Mar-14 | 31-Mar-13 | |||||||||||||||||||
Total Assets for Reportable Segments (1) | $ | 21,350,444 | $ | 22,173,987 | |||||||||||||||||
Other Unallocated Amounts (2) | 317,943 | 242,895 | |||||||||||||||||||
Total | $ | 21,668,387 | $ | 22,416,882 | |||||||||||||||||
(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 | |||||||||||||||||
31-Mar-14 | |||||||||||||||||||||
Sales | $ | 14,562,577 | $ | 409,496 | $ | 660,000 | $ | 470,127 | $ | 16,102,200 | |||||||||||
Long-Lived Assets | 21,350,444 | — | — | — | 21,350,444 | ||||||||||||||||
31-Mar-13 | |||||||||||||||||||||
Sales | $ | 15,168,030 | $ | 431,663 | $ | 1,018,132 | $ | 377,685 | $ | 16,995,510 | |||||||||||
Long-Lived Assets | 22,173,987 | — | — | — | 22,173,987 | ||||||||||||||||
12 |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Note 16. Subsequent Events. | |
(a) 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. | |
(b) On April 28, 2014, the Company granted an aggregate of 400,000 five-year stock options to four non-employee directors, consisting of Jay C. Nadel, Arthur J. Gregg, Augustus J. Larson, and Howard L. Brown, each for 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 $0.42 per share. Each of the foregoing stock options vest over a period of two (2) years at the rate of 50,000 options on April 30, 2015 and 50,000 options on April 30, 2016, and are exercisable after one (1) year from each respective vesting date. All stock options automatically vest and are exercisable upon a change in control. In addition, the cash compensation to the foregoing non-employee directors was increased from $10,000 per year, payable quarterly, to $12,500 per year, effective January 1, 2014. | |
(c) On April 28, 2014, the Company granted an aggregate of 1,025,000 five-year stock options to eight key employees, including the named executive officers, consisting of Douglas J. Kramer, Michael T. Adams, Harvey L. Schnitzer, and Charles A. Zajaczkowski, of which 350,000 options were for Mr. Kramer, 150,000 options each were for Mr. Adams and Mr. Schnitzer, and 100,000 options were for Mr. Zajaczkowski, and 275,000 options were for other key employees, each for 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 $0.42 per share. Each of the foregoing stock options vest over a period of three (3) years at the rate of 33 and 1/3 percent at December 31, 2014, December 31, 2015, and December 31, 2016, and are exercisable upon vesting. All stock options automatically vest upon a change in control. | |
(d) The Company has evaluated subsequent events through the date of filing this report. |
Summary_of_Organization_Basis_1
Summary of Organization, Basis of Presentation and Critical Accounting Policies, Estimates and Assumptions (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Summary of Organization, Basis of Presentation and Critical Accounting Policies, Estimates and Assumptions | ' |
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring accruals) to present fairly the financial information contained therein. These statements do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP) for annual periods and should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2013. The Company prepared the unaudited condensed consolidated financial statements following the requirements of the U.S. Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. The results of operations for the three month period ended March 31, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or any other period(s). Certain amounts in the prior periods have been reclassified to conform to the 2014 unaudited condensed financial statement presentation. Reference is made to Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 14. Risk factors that could impact results are discussed in Part II – Other Information, Item 1A – Risk Factors on page 19. Refer to the Company’s 2013 Annual Report on Form 10-K for a description of major accounting policies. There have been no material changes to these accounting policies during the quarter ended March 31, 2014. | |
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 $23.1 Million and $22.7 Million at March 31, 2014 and December 31, 2013, respectively. The Company recorded a valuation allowance against the deferred tax asset of $23.1 Million and $22.7 Million at March 31, 2014 and December 31, 2013, respectively, reducing its net carrying value to zero. The Company had no increase or decrease in unrecognized income tax benefits or any accrued interest or penalties relating to tax uncertainties at March 31, 2014 and December 31, 2013. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. | |
Property, Plant and Equipment | ' |
Impairment of Long-Lived Assets | |
Property, Plant and Equipment | |
Property, plant and equipment is recorded at cost and depreciated using the straight-line method, which deducts equal amounts of the cost of each asset from earnings every year over its estimated economic useful life. The estimated economic useful life of an asset is monitored to determine its appropriateness, especially in light of changed business circumstances. Property, plant, and equipment held for use is grouped for impairment testing at the lowest level for which there is an identifiable cash flow. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Such circumstances would include a significant decrease in the market value of a long-lived asset grouping, a significant adverse change in the manner in which the asset grouping is being used or in its physical condition, a history of operating or cash flow losses associated with the use of the asset grouping, or changes in the expected useful life of the long-lived assets. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by that asset group is compared to the carrying value to determine whether impairment exists. If an asset group is determined to be impaired, the loss is measured based on the difference between the asset group’s fair value and its carrying value. An estimate of the asset group’s fair value is based on the discounted value of its estimated cash flows. Assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell. The assumptions underlying cash flow projections represent our best estimates at the time of the impairment review. Factors that we must estimate include industry and market conditions, sales volume and prices, costs to produce, etc. Changes in key assumptions or actual conditions that differ from estimates could result in an impairment charge. Management believes it uses reasonable and supportable assumptions when performing impairment reviews and cannot predict the occurrence of future events and circumstances that could result in impairment charges. The Company does not believe any indicators of impairment exist for property, plant and equipment at March 31, 2014. Net property, plant and equipment totaled $1,633,530 and $1,600,679 as of and for the quarter and year ended March 31, 2014 and December 31, 2013, respectively. Depreciation expense totaled $108,391 and $117,979, of which $64,562 and $73,406 was included in cost of sales, for the quarter ended March 31, 2014 and 2013, respectively. | |
Goodwill | ' |
Goodwill | |
Goodwill represents the excess of the aggregate purchase price over the fair value of net tangible and identifiable intangible asset of an acquired business. Goodwill was $4,234,828 at March 31, 2014 and December 31, 2013. The Company operates two reporting units or segments, Foam and Coatings. Disclosures related to goodwill are included in Note 7 to the financial statements. The Company evaluates goodwill for impairment on an annual basis, or more frequently if Management believes indicators of impairment exist, by comparing the carrying value of each reportable segment to their estimated fair values. The annual evaluation is performed in the fourth quarter of each calendar year. The impairment test requires the Company to compare the fair value of each reporting unit to its carrying value, including assigned goodwill. As of March 31, 2014, the Company does not believe any indicators of impairment exist for goodwill that would require additional analysis before the 2014 annual evaluation. | |
Other Intangible Assets | ' |
Other Intangible Assets | |
The Company had other intangible assets consisting primarily of customer lists, product formulations, trade names, and non-competes that were acquired as part of business combinations. Other intangible assets are tested for impairment as part of the long-lived asset grouping impairment tests. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. See impairment discussion above under Property, Plant and Equipment for a description of how impairment losses are determined. Disclosures related to other intangible assets are included in Note 7 to the financial statements. Significant management judgment is required in the forecasts of future operating results that are used in the Company’s impairment evaluations. The estimates used are consistent with the plans and estimates that Management uses to manage its business. It is possible, however, that the plans may change and estimates used may prove to be inaccurate. If the Company’s actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, then the Company could incur future impairment charges, which would adversely affect financial performance. The Company does not believe any indicators of impairment exist for other intangible assets at March 31, 2014. Net other intangible assets totaled $1,175,987 and $1,165,157 as of and for the quarter and year ended March 31, 2014 and December 31, 2013, respectively. Amortization expense totaled $68,430 and $128,613 for the quarters ended March 31, 2014 and 2013, respectively. | |
Revenue Recognition | ' |
Revenue Recognition | |
Sales are recognized as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. Sales channels include direct sales, distributors, and independent representatives. Amounts billed for shipping and handling are included in sales (freight). Freight included in sales was $221,749 and $288,069 for the quarters ended March 31, 2014 and 2013, respectively. Costs incurred for shipping and handling are included in cost of sales. Sales are recorded net of sales tax. Freight included in cost of sales was $888,510 and $817,200 at March 31, 2014 and 2013, respectively. | |
Share Based Compensation | ' |
Share Based Compensation | |
The Company accounts for stock based compensation by measuring and recognizing the cost of employee or director services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of share based awards is estimated at the grant date using a straight line closing trading stock price based valuation model and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. Share based compensation expense was $225,285 and $309,949 for the quarters ended March 31, 2014 and 2013, respectively. If additional stock options or stock awards are granted, financial performance will be negatively affected, and if outstanding stock options or stock awards are forfeited or canceled, resulting in non-vesting of such stock options or stock awards, financial performance will be positively affected. In either instance, the Company’s financial performance may change depending on stock option or stock award activities in future periods. | |
Allowance for Doubtful Accounts | ' |
Allowance for Doubtful Accounts | |
The Company presents trade receivables, net of allowances for doubtful accounts, to ensure trade receivables are not overstated due to uncollectible accounts. Allowances, when required, are calculated based on a detailed review of certain individual customer accounts and an estimation of the overall economic conditions affecting our customer base. The Company reviews a customer’s credit history before extending credit. The allowance for doubtful accounts was approximately $382,000 and $317,000 at March 31, 2014 and December 31, 2013, respectively. If the financial condition of customers were to deteriorate based on worsening overall economic conditions, resulting in an impairment of their ability to make payments to the Company, then additional allowances may be required in future periods, which would adversely affect the Company’s financial performance. | |
Reserves for Loans | ' |
Reserves for Losses | |
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 $470,000 and $473,000 at March 31, 2014 and December 31, 2013, respectively. The reserve for losses was approximately $237,000 at March 31, 2014 and December 31, 2013, respectively. | |
Advertising and Marketing | ' |
Advertising and Marketing | |
Advertising and marketing costs are generally expensed as incurred. Expenditures for trade magazines and television commercials are expensed at the time the first advertisement is printed or shown on television. Expenditures for certain advertising and marketing activities related to trade shows are deferred within the Company’s fiscal year when the benefits clearly extend beyond the interim period in which the expenditure is made, generally not to exceed 90 days. Other advertising and marketing expenditures that do not meet the deferred criteria are expensed when the advertising occurs. At March 31, 2014 and 2013, deferred advertising costs were $63,399 and $18,788, respectively. Total advertising and marketing costs expensed were $342,953 and $355,227 for the quarter ended March 31, 2014 and 2013, 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. | |
Recently Adopted Accounting Standards | ' |
Recently Adopted Accounting Standards | |
In July 2013, the Financial Accounting Standards Board (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 became effective for fiscal years beginning after December 15, 2013, with early adoption permitted. The Company adopted the provisions of the guidance in the first quarter of 2014. The adoption did not have a material impact on the Company’s consolidated financial statements. | |
In March 2013, the FASB issued an accounting standards update that provides guidance on the accounting for the cumulative translation adjustment (CTA) upon de-recognition 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 became effective for fiscal years beginning on or after December 15, 2013, with early adoption permitted. The Company adopted the provisions of the guidance in the first quarter of 2014. The adoption did not have a material impact on the Company’s consolidated financial statements. | |
New Accounting Standards Not Yet Adopted | ' |
New Accounting Standards Not Yet Adopted | |
In April 2014, the FASB issued an accounting standards update that raises the threshold for disposals to qualify as discontinued operations and allows companies to have significant continuing involvement with and continuing cash flows from or to the discontinued operation. It also requires additional disclosures for discontinued operations and new disclosures for individually material disposal transactions that do not meet the definition of a discontinued operation. This guidance will be effective for fiscal years beginning after December 15, 2014, which will be the Company's fiscal year 2015, with early adoption permitted. The Company does not expect the adoption of the guidance will have a material impact on the Company's consolidated financial statements. |
Trade_Receivables_Tables
Trade Receivables (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
Trade Receivables | ' | ||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Trade Receivables | $ | 8,573,407 | $ | 8,011,176 | |||||
Less: Allowance for Doubtful Accounts | (382,009 | ) | (316,587 | ) | |||||
Trade Receivables, Net | $ | 8,191,398 | $ | 7,694,589 |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Raw Materials | $ | 1,183,974 | $ | 1,804,959 | |||||
Finished Goods | 3,640,955 | 3,616,976 | |||||||
Total Inventories | $ | 4,824,929 | $ | 5,421,935 |
Prepaid_Expenses_and_Other_Cur1
Prepaid Expenses and Other Current Assets. (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Prepaid Expenses and Other Current Assets | ' | ||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Prepaid Insurances | $ | 599,028 | $ | 582,654 | |||||
Prepaid Marketing | 153,589 | 152,667 | |||||||
Prepaid Consulting | 10,888 | 66,208 | |||||||
Prepaid Other | 70,956 | 357,839 | |||||||
Note Receivable, Net | 110,604 | 90,946 | |||||||
Total Prepaid Expenses and Other Current Assets | $ | 945,065 | $ | 1,250,314 |
Property_Plant_and_Equipment_T
Property, Plant and Equipment (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property, Plant and Equipment | ' | ||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Vehicles | $ | 605,518 | $ | 649,487 | |||||
Leasehold Improvements | 288,777 | 288,777 | |||||||
Office Furniture and Equipment | 327,329 | 327,329 | |||||||
Computers and Software | 1,191,026 | 1,185,333 | |||||||
Machinery and Equipment | 2,493,869 | 2,466,007 | |||||||
Plant Construction in Progress | 37,056 | — | |||||||
Total Property, Plant and Equipment | $ | 4,943,575 | $ | 4,916,933 | |||||
Less: Accumulated Depreciation | (3,310,045 | ) | (3,316,254 | ) | |||||
Total Property, Plant and Equipment, Net | $ | 1,633,530 | $ | 1,600,679 |
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||
Goodwill | ' | ||||||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||||||||
Foam | $ | 2,932,208 | $ | 2,932,208 | |||||||||||||||||||||
Coatings | 1,302,620 | 1,302,620 | |||||||||||||||||||||||
Total Goodwill | $ | 4,234,828 | $ | 4,234,828 | |||||||||||||||||||||
Other Intangible Assets | ' | ||||||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||||||
Product Formulation | $ | 138,471 | $ | (83,852 | ) | $ | 54,619 | $ | 138,471 | $ | (81,544 | ) | $ | 56,927 | |||||||||||
Trade Names | 750,186 | (281,714 | ) | 468,472 | 740,325 | (269,212 | ) | 471,113 | |||||||||||||||||
Approvals and Certifications | 1,617,153 | (964,257 | ) | 652,896 | 1,547,754 | (910,637 | ) | 637,117 | |||||||||||||||||
$ | 2,505,810 | $ | (1,329,823 | ) | $ | 1,175,987 | $ | 2,426,550 | $ | (1,261,393 | ) | $ | 1,165,157 |
Deposits_and_Other_NonCurrent_1
Deposits and Other Non-Current Assets, Net. (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Deposits and other non-current assets | ' | ||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Deferred Financing Fees | $ | 266,582 | $ | 285,246 | |||||
Prepaid Expenses | 40,923 | 46,744 | |||||||
Other Receivables | 78,793 | 55,293 | |||||||
Deposits | 153,584 | 153,584 | |||||||
Note Receivable, Net | 122,768 | 145,791 | |||||||
Total Deposits and Other-Non-Current Assets | $ | 662,650 | $ | 686,658 |
Accrued_Expenses_and_Other_Cur1
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued expenses and other liabilities | ' | ||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Accrued Payroll | $ | 49,889 | $ | 169,785 | |||||
Accrued Commissions | 87,252 | 61,000 | |||||||
Accrued Inventory Purchases | 34,217 | 178,616 | |||||||
Accrued Taxes and Other | 674,015 | 606,275 | |||||||
Accrued Insurance | 362,744 | 427,395 | |||||||
Deferred Finance Charge Income | 24,005 | 13,824 | |||||||
Total Accrued Expenses and Other Current Liabilities | $ | 1,232,122 | $ | 1,456,895 |
Net_Income_Loss_per_Common_Sha1
Net Income (Loss) per Common Share - Basic and Diluted (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Net Income Loss Per Common Share - Basic And Diluted Tables | ' | ||||||||
Basic and Diluted earnings per share | ' | ||||||||
31-Mar-14 | 31-Mar-13 | ||||||||
Net loss available to common shareholders (A) | $ | (1,046,514 | ) | $ | (580,038 | ) | |||
Weighted average common shares outstanding (B) | 114,399,050 | 109,744,463 | |||||||
Dilutive effect of equity incentive plans | 2,460,000 | — | |||||||
Weighted average common shares outstanding, assuming dilution (C) | 115,796,196 | 109,744,463 | |||||||
Basic earnings per common share (A)/(B) | $ | (0.01 | ) | $ | (0.01 | ) | |||
Diluted earnings per common share (A)/(C) | $ | (0.01 | ) | $ | (0.01 | ) |
Business_Segment_Information_T
Business Segment Information (Tables) | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||||||
Reportable Segments | ' | ||||||||||||||||||||
Segments | |||||||||||||||||||||
31-Mar-14 | Foam | Coatings | Totals | ||||||||||||||||||
Sales | $ | 14,020,272 | $ | 2,081,928 | $ | 16,102,200 | |||||||||||||||
Cost of Sales | 11,495,604 | 1,537,269 | 13,032,873 | ||||||||||||||||||
Gross Profit | 2,524,668 | 544,659 | 3,069,327 | ||||||||||||||||||
Depreciation | 34,346 | 5,100 | 39,446 | ||||||||||||||||||
Amortization of Other Intangible Assets | 53,624 | 7,963 | 61,587 | ||||||||||||||||||
Interest Expense | 228,477 | 33,928 | 262,405 | ||||||||||||||||||
Segment Profit | $ | 518 | $ | 169,838 | $ | 170,356 | |||||||||||||||
Segment Assets (1) | 17,843,756 | 3,506,688 | 21,350,444 | ||||||||||||||||||
Expenditures for Segment Assets | $ | 164,266 | $ | 24,392 | $ | 188,658 | |||||||||||||||
31-Mar-13 | Foam | Coatings | Totals | ||||||||||||||||||
Sales | $ | 14,901,225 | $ | 2,094,285 | $ | 16,995,510 | |||||||||||||||
Cost of Sales | 11,892,096 | 1,469,367 | 13,361,463 | ||||||||||||||||||
Gross Profit | 3,009,129 | 624,918 | 3,634,047 | ||||||||||||||||||
Depreciation | 35,172 | 4,943 | 40,115 | ||||||||||||||||||
Amortization of Other Intangible Assets | 101,488 | 14,264 | 115,752 | ||||||||||||||||||
Interest Expense | 195,929 | 27,537 | 223,466 | ||||||||||||||||||
Segment Profit | $ | 541,691 | $ | 278,134 | $ | 819,825 | |||||||||||||||
Segment Assets (1) | 18,674,967 | 3,499,020 | 22,173,987 | ||||||||||||||||||
Expenditures for Segment Assets | $ | 9,305 | $ | 1,308 | $ | 10,613 | |||||||||||||||
Reconciliation of reportable segment profit or loss | ' | ||||||||||||||||||||
Segments Profit | |||||||||||||||||||||
31-Mar-14 | 31-Mar-13 | ||||||||||||||||||||
Total Profit for Reportable Segments | $ | 170,356 | $ | 819,825 | |||||||||||||||||
Unallocated Amounts: | |||||||||||||||||||||
Corporate Expenses | (1,216,870 | ) | (1,399,863 | ) | |||||||||||||||||
Loss Before Income Taxes | $ | (1,046,514 | ) | $ | (580,038 | ) | |||||||||||||||
Reconciliation of reportable segment assets | ' | ||||||||||||||||||||
Assets | 31-Mar-14 | 31-Mar-13 | |||||||||||||||||||
Total Assets for Reportable Segments (1) | $ | 21,350,444 | $ | 22,173,987 | |||||||||||||||||
Other Unallocated Amounts (2) | 317,943 | 242,895 | |||||||||||||||||||
Total | $ | 21,668,387 | $ | 22,416,882 | |||||||||||||||||
Geographic Area | ' | ||||||||||||||||||||
Geographic Area | |||||||||||||||||||||
United States | Europe | Middle East | Rest of World | Total | |||||||||||||||||
31-Mar-14 | |||||||||||||||||||||
Sales | $ | 14,562,577 | $ | 409,496 | $ | 660,000 | $ | 470,127 | $ | 16,102,200 | |||||||||||
Long-Lived Assets | 21,350,444 | — | — | — | 21,350,444 | ||||||||||||||||
31-Mar-13 | |||||||||||||||||||||
Sales | $ | 15,168,030 | $ | 431,663 | $ | 1,018,132 | $ | 377,685 | $ | 16,995,510 | |||||||||||
Long-Lived Assets | 22,173,987 | — | — | — | 22,173,987 |
Basis_of_Presentation_Details_
Basis of Presentation (Details Narrative) (USD $) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Income Taxes | ' | ' | ' |
Deferred Tax Asset | $23,100,000 | ' | $22,700,000 |
Deferred Tax asset valuation allowance | 23,100,000 | ' | 22,700,000 |
Property,Plant and Equipment | ' | ' | ' |
Property, Plant and Equipment | 1,633,530 | ' | 1,600,679 |
Depreciation Expense | 108,391 | 117,979 | ' |
Depreciation in cost of sales | 64,562 | 73,406 | ' |
Goodwill and Other Intangible Assets | ' | ' | ' |
Goodwill | 4,234,828 | ' | 4,234,828 |
Other Intangible Assets, Net | 1,175,987 | ' | 1,165,157 |
Amortization Expense | 68,430 | 128,613 | ' |
Revenue Recognition | ' | ' | ' |
Freight included in sales | 221,749 | 288,069 | ' |
Freight included in cost of sales | 888,510 | 817,200 | ' |
Share Based compensation | ' | ' | ' |
Share Based Compensation Expense | 225,285 | 309,949 | ' |
Allowance for doubtful accounts | ' | ' | ' |
Allowance for doubtful accounts | 382,000 | ' | 317,000 |
Notes Receivable | ' | ' | ' |
Notes Receivable | 470,000 | ' | 473,000 |
Reserve for loss | 237,000 | ' | 237,000 |
Advertising and Marketing | ' | ' | ' |
Deferred Advertising Costs | 63,399 | ' | 18,788 |
Advertising and Marketing costs | $342,953 | $355,227 | ' |
Liquidity_Details_Narrative
Liquidity (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' | ' |
Accumulated Deficit | $87,542,168 | ' | $86,495,654 |
Net Loss | 1,046,514 | 580,038 | ' |
Net Cash (Used in) Provided by Operating Activities | 604,889 | -1,100,384 | ' |
Working Capital Surplus | $5,217,135 | ' | ' |
Dependence_on_a_few_suppliers_
Dependence on a few suppliers (Details Narrative) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Notes to Financial Statements | ' | ' |
Major Suppliers | '47% | '47% |
Trade_Receivables_Trade_Receiv
Trade Receivables - Trade Receivables (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Accounts Receivable, Net, Current [Abstract] | ' | ' |
Trade Receivables | $8,573,407 | $8,011,176 |
Less: Allowance for Doubtful Accounts | -382,009 | -316,587 |
Trade Receivables, Net | $8,191,398 | $7,694,589 |
Inventories_Inventories_Detail
Inventories - Inventories (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Inventory Disclosure [Abstract] | ' | ' |
Raw Materials | $1,183,974 | $1,804,959 |
Finished Goods | 3,640,955 | 3,616,976 |
Inventories | $4,824,929 | $5,421,935 |
Prepaid_Expenses_and_Other_Cur2
Prepaid Expenses and Other Current Assets. - Prepaid Expenses and Other Current Assets (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ' |
Prepaid Insurances | $599,028 | $582,654 |
Prepaid Marketing | 153,589 | 152,667 |
Prepaid Consulting | 10,888 | 66,208 |
Prepaid Other | 70,956 | 357,839 |
Note Receivable, Net | 110,604 | 90,946 |
Total Prepaid Expenses and Other Current Assets | $945,065 | $1,250,314 |
Property_Plant_and_Equipment_P
Property, Plant and Equipment - Property, Plant and Equipment (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment [Abstract] | ' | ' |
Vehicles | $605,518 | $649,487 |
Leasehold Improvements | 288,777 | 288,777 |
Office Furniture and Equipment | 327,329 | 327,329 |
Computers and Software | 1,191,026 | 1,185,333 |
Machinery and Equipment | 2,493,869 | 2,466,007 |
Plant Construction in Progress | 37,056 | ' |
Total Property, Plant and Equipment | 4,943,575 | 4,916,933 |
Less: Accumulated Depreciation | -3,310,045 | -3,316,254 |
Property, Plant and Equipment | $1,633,530 | $1,600,679 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets - Goodwill (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
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 $) | Mar. 31, 2014 | Dec. 31, 2013 |
Intangible Assets, Gross | $2,505,810 | $2,426,550 |
Accumulated Amortization | -1,329,823 | -1,261,393 |
Intangible Assets, Net | 1,175,987 | 1,165,157 |
Product Formulation | ' | ' |
Intangible Assets, Gross | 138,471 | 138,471 |
Accumulated Amortization | -83,852 | -81,544 |
Intangible Assets, Net | 54,619 | 56,927 |
Trade Names | ' | ' |
Intangible Assets, Gross | 750,186 | 740,325 |
Accumulated Amortization | -281,714 | -256,874 |
Intangible Assets, Net | 468,472 | 471,113 |
Approvals and Certifications | ' | ' |
Intangible Assets, Gross | 1,617,153 | 1,547,754 |
Accumulated Amortization | -964,257 | -910,637 |
Intangible Assets, Net | $652,896 | $637,117 |
Deposits_and_Other_NonCurrent_2
Deposits and Other Non-Current Assets, Net. - Deposits and other non-current assets (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ' |
Deferred Financing Fees | $266,582 | $285,246 |
Prepaid Expenses | 40,923 | 46,744 |
Other Receivables | 78,793 | 55,293 |
Deposits | 153,584 | 153,584 |
Note Receivable, Net | 122,768 | 145,791 |
Total Deposits and Other-Non-Current Assets | $662,650 | $686,658 |
Accrued_Expenses_and_Other_Cur2
Accrued Expenses and Other Current Liabilities - Accrued expenses and other liabilities (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Accrued Liabilities and Other Liabilities [Abstract] | ' | ' |
Accrued Payroll | $49,889 | $169,785 |
Accrued Commissions | 87,252 | 61,000 |
Accrued Inventory Purchases | 34,217 | 178,616 |
Accrued Taxes and Other | 674,015 | 606,275 |
Accrued Insurance | 362,744 | 427,395 |
Deferred Finance Charge Income | 24,005 | 13,824 |
Total Accrued Expenses and Other Current Liabilities | $1,232,122 | $1,456,895 |
Financing_Instruments_Loan_and
Financing Instruments - Loan and Security Agreement (Details Narrative) (Revolver Loan, USD $) | 1 Months Ended | ||
Sep. 01, 2010 | Mar. 31, 2014 | Dec. 31, 2013 | |
Revolver Loan | ' | ' | ' |
Bank Loans Funds Available | $13,000,000 | ' | ' |
Maturity Date | 31-Mar-16 | ' | ' |
Bank Loan Payable | ' | $4,074,529 | $4,539,163 |
Weighted-Average Interest Rate | ' | 4.40% | 4.50% |
Financing_Instruments_Note_Pur
Financing Instruments Note Purchase Agreement - New Enhanced Note (Details Narrative) (USD $) (USD $) | 3 Months Ended | 0 Months Ended | 3 Months Ended | ||||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 10, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 10, 2013 | Dec. 10, 2013 | |
Note Purchase Agreement | Note Purchase Agreement | Note Purchase Agreement | Enhanced Jobs for Texas | Enhanced Texas Fund | |||
Bank Loans Funds Available | ' | ' | $7,200,000 | ' | ' | $5,700,000 | $1,500,000 |
Maturity Date | ' | ' | 10-Dec-16 | ' | ' | ' | ' |
Interest Rate | ' | ' | 7.25% | 11.00% | ' | ' | ' |
Enhanced Notes Payable | ' | ' | ' | 6,796,528 | 6,683,561 | ' | ' |
Effective Interest Rate | ' | ' | ' | 23.60% | 29.00% | ' | ' |
Pruchase discount | ' | ' | ' | ' | 542,886 | ' | ' |
Amortization of discount | ($45,108) | ' | ' | $18,622 | ' | ' | ' |
Financing_Instruments_Note_Pur1
Financing Instruments Note Purchase - New Guaranty Agreement (Details Narrative) (Note Purchase Agreement, USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended |
Dec. 10, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | |
Note Purchase Agreement | ' | ' | ' |
Restricted Common Stock Issued, shares | 3,681,000 | 73,821 | 301,996 |
Restricted Common Stock, par value | $0.01 | ' | ' |
Per Share | $0.60 | ' | ' |
Restricted Common Stock Issued, Amount | $2,208,600 | $44,293 | $181,198 |
Financing_Instruments_Note_Pur2
Financing Instruments Note Purchase Agreement - Prior Enhanced Note (Details Narrative) (USD $) (USD $) | 0 Months Ended |
Dec. 08, 2013 | |
Enhanced Jobs for Texas | ' |
Payments on Notes Payable | $1,673,381 |
Enhanced Texas Fund | ' |
Payments on Notes Payable | $1,673,381 |
Financing_Instruments_Note_Pur3
Financing Instruments Note Purchase - Prior Guaranty Agreement (Details Narrative) (Prior Guaranty Agreement, USD $) | 1 Months Ended |
Jun. 29, 2012 | |
Prior Guaranty Agreement | ' |
Cancelled unvested shares | 1,376,712 |
Cancelled unvested shares, amount | $371,801 |
Per Share | $0.27 |
Restricted Common Stock Issued, Amount | $1,350,000 |
Financing_Instruments_Note_Pay
Financing Instruments Note Payable - Related Party(Details Narrative) (USD $) | 3 Months Ended | ||
Apr. 16, 2012 | Mar. 31, 2014 | Mar. 31, 2013 | |
Financing Instruments Note Payable - Related Partydetails Narrative | ' | ' | ' |
Note due to related party | $1,300,000 | ' | ' |
Interest Rate | 5.00% | ' | ' |
Maturity Date | 1-Oct-14 | ' | ' |
Accrued interest | ' | $17,794 | $16,676 |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Employment Agreement | ' | ' | |
Increase in Auto Allowance. monthly | ' | $700 | |
New Kramer Option | ' | ' | |
Annual Compensation | 400,000 | 350,000 | |
Common stock, shares | ' | 500,000 | |
Common stock, amount | ' | 340,000 | |
Share Price | ' | $0.72 | |
Bonus Level 1 | ' | ' | |
Bonus | ' | 120,000 | |
Bonus Level 2 | ' | ' | |
Bonus | ' | 160,000 | |
Bonus Level 3 | ' | ' | |
Bonus | ' | 200,000 | |
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 | |
Vested Shares, shares | ' | 25,000 | |
Vested Shares, amount | ' | 16,250 | |
Advisory and Consulting | ' | ' | |
Common stock, shares | ' | 257,996 | |
Common stock, amount | ' | 146,683 | |
Note Payable | ' | ' | |
Common stock, shares | ' | 301,996 | |
Common stock, amount | ' | 181,198 | |
Interest Expense | ' | $17,794 | |
[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, respectively, subject to continued employment with the Company. Once vested, such Bonus Shares are freely transferable |
Net_Income_Loss_per_Common_Sha2
Net Income (Loss) per Common Share - Basic and Diluted (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Net Income Loss Per Common Share - Basic And Diluted Details | ' | ' |
Net loss available to common shareholders (A) | ($1,046,514) | ($580,038) |
Weighted average common shares outstanding (B) | 114,399,050 | 109,744,463 |
Dilutive effect of employee equity incentive plans | $2,460,000 | ' |
Weighted average common shares outstanding, assuming dilution (C) | 115,796,196 | 109,744,463 |
Basic earnings per common share (A)/(B) | ($0.01) | ($0.01) |
Diluted earnings per common share (A)/(C) | ($0.01) | ($0.01) |
Net_Income_Loss_per_Common_Sha3
Net Income (Loss) per Common Share - Basic and Diluted (Details Narrative) (Equity) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Equity | ' | ' |
Antidilutive Secuities | 2,080,000 | 7,285,833 |
Securities_Transactions_Detail
Securities Transactions (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | |
Chairman of the Board | Advisory and Consulting | ||
Restricted Stock issued for Services, shares | ' | ' | 257,966 |
Restricted Stock issued for Services, amount | ' | ' | $148,683 |
Restricted Stock issued for Guaranty of Note, shares | ' | 301,996 | ' |
Restricted Stock issued for Guaranty of Note, amount | ' | 181,198 | ' |
Restricted Stock issued for Employee, shares | 25,000 | ' | ' |
Restricted Stock issued for Employee, amount | $16,250 | ' | ' |
Business_Segment_Information_R
Business Segment Information - Reportable Segments (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Sales | $16,102,200 | $16,995,510 |
Cost of sales | 13,032,873 | 13,361,463 |
Gross Profit | 3,069,327 | 3,634,047 |
Depreciation | 39,446 | 40,115 |
Amortization of Other Intangible Assets | 61,587 | 115,752 |
Interest Expense | 262,405 | 223,466 |
Segment Profit | 170,356 | 819,825 |
Segment Assets (1) | 21,350,444 | 22,173,987 |
Expenditures for Segment Assets | 188,658 | 10,613 |
Foam | ' | ' |
Sales | 14,020,272 | 14,901,225 |
Cost of sales | 11,495,604 | 11,892,096 |
Gross Profit | 2,524,668 | 3,009,129 |
Depreciation | 34,346 | 35,172 |
Amortization of Other Intangible Assets | 53,624 | 101,488 |
Interest Expense | 228,477 | 195,929 |
Segment Profit | 518 | 541,691 |
Segment Assets (1) | 17,843,756 | 18,674,967 |
Expenditures for Segment Assets | 164,266 | 9,305 |
Coatings | ' | ' |
Sales | 2,081,928 | 2,094,285 |
Cost of sales | 1,537,269 | 1,469,367 |
Gross Profit | 544,659 | 624,918 |
Depreciation | 5,100 | 4,943 |
Amortization of Other Intangible Assets | 7,963 | 14,264 |
Interest Expense | 33,928 | 27,537 |
Segment Profit | 169,838 | 278,134 |
Segment Assets (1) | 3,506,688 | 3,499,020 |
Expenditures for Segment Assets | $24,392 | $1,308 |
Business_Segment_Information_R1
Business Segment Information - Reconciliation of reportable segment profit or loss (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ' | ' |
Total Profit or Loss for Reportable Segments | $170,356 | $819,825 |
Corporate Expenses | -1,216,870 | -1,399,863 |
Income (Loss) Before Income Taxes | ($1,046,514) | ($580,038) |
Business_Segment_Information_R2
Business Segment Information - Reconciliation of reportable segment assets (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
Segment Reporting [Abstract] | ' | ' | ' |
Total Assets for Reportable Segments | $21,350,444 | ' | $22,173,987 |
Other Unallocated Amounts | 317,943 | ' | 242,895 |
Total Assets | $21,668,387 | $22,054,160 | $22,416,882 |
Business_Segment_Information_G
Business Segment Information - Geographic Area Information (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Sales | $16,102,200 | $16,995,510 |
Long Lived Assets | 21,350,444 | 22,173,987 |
United States | ' | ' |
Sales | 14,562,577 | 15,168,030 |
Long Lived Assets | 21,350,444 | 22,173,987 |
Europe | ' | ' |
Sales | 409,496 | 431,663 |
Long Lived Assets | ' | ' |
Middle East | ' | ' |
Sales | 660,000 | 1,018,132 |
Long Lived Assets | ' | ' |
Rest of the World | ' | ' |
Sales | 470,127 | 377,685 |
Long Lived Assets | ' | ' |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | ||
Non-employee director | ' | ' | |
Common stock, shares | 400,000 | [1] | ' |
Share Price | $0.42 | ' | |
Vested Shares, shares | 50,000 | ' | |
Vested term | '2 years | ' | |
Compensation | $12,500 | $10,000 | |
Employment Agreement | ' | ' | |
Common stock, shares | 1,025,000 | [2] | ' |
[1] | Four non-employee directors, 100,000 shares each | ||
[2] | 350,000 options were for Mr. Kramer, 150,000 options each were for Mr. Adams and Mr. Schnitzer, and 100,000 options were for Mr. Zajaczkowski, and 275,000 options were for other key employees |