Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 16, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | LAPOLLA INDUSTRIES INC | ||
Entity Central Index Key | 875,296 | ||
Document Type | 10-K/A | ||
Document Period End Date | Dec. 31, 2014 | ||
Amendment Flag | true | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 11,190,004 | ||
Entity Common Stock, Shares Outstanding | 120,999,016 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,014 | ||
Amendment | This amendment is to amend Note 11 and Items 7 and 15 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ||
Cash | ||
Trade Receivables, Net | $ 8,880,364 | $ 7,694,589 |
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | 18,411 | |
Inventories | 5,268,025 | 5,421,935 |
Prepaid Expenses and Other Current Assets | 1,149,279 | 1,250,314 |
Total Current Assets | 15,316,079 | 14,366,838 |
Property, Plant and Equipment | 1,364,613 | 1,600,679 |
Other Assets: | ||
Goodwill | 4,234,828 | 4,234,828 |
Other Intangible Assets, Net | 1,183,452 | 1,165,157 |
Deposits and Other Non-Current Assets, Net | 399,083 | 686,658 |
Total Other Assets | 5,817,363 | 6,086,643 |
Total Assets | 22,498,055 | 22,054,160 |
Current Liabilities: | ||
Accounts Payable | 6,985,373 | 6,694,633 |
Accrued Expenses and Other Current Liabilities | $ 1,758,660 | 1,456,895 |
Current Portion of Long-Term Debt | 4,599 | |
Total Current Liabilities | $ 8,744,033 | 8,156,127 |
Other Liabilities: | ||
Non-Current Portion of Revolver Loan | 5,435,005 | 4,539,163 |
Non-Current Portion of Note Payable- New Enhanced | 7,157,852 | 6,683,561 |
Non-Current Portion of Note Payable - Related Party | 250,000 | 1,300,000 |
Accrued Interest- Note Payable- Related Party | 3,173 | 117,633 |
Total Other Liabilities | 12,846,030 | 12,640,357 |
Total Liabilities | 21,590,063 | 20,796,484 |
Stockholders' Equity: | ||
Common Stock, $.01 Par Value; 140,000,000 Shares Authorized; 119,839,566 and 114,148,378 Issued | 1,198,396 | 1,141,484 |
Additional Paid-In Capital | 89,989,110 | 86,734,757 |
Accumulated Deficit | (90,156,603) | (86,495,654) |
Accumulated Other Comprehensive Loss | (122,911) | (122,911) |
Total Stockholders' Equity | 907,992 | 1,257,676 |
Total Liabilities and Stockholders' Equity | $ 22,498,055 | $ 22,054,160 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Dec. 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) | 119,839,566 | 114,148,378 |
Common Stock, shares outstanding (in shares) | 119,839,566 | 114,148,378 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | ||
Sales | $ 72,065,015 | $ 71,176,971 |
Cost of Sales | 58,460,940 | 56,152,602 |
Gross Profit | 13,604,075 | 15,024,369 |
Operating Expenses: | ||
Selling, General and Administrative | 13,259,920 | 13,489,457 |
Professional Fees | 915,369 | 1,076,153 |
Depreciation | 166,293 | 174,256 |
Amortization of Other Intangible Assets | 278,826 | 424,426 |
Consulting Fees | 498,963 | 476,247 |
Total Operating Expenses | 15,119,371 | 15,640,539 |
Operating Loss | (1,515,296) | (616,170) |
Other (Income) Expense: | ||
Interest Expense | 1,193,298 | 1,093,184 |
Interest Expense-Related Party | 805,608 | 749,291 |
Interest Expense- Amortization of Discount | $ 182,444 | 10,697 |
Gain on Derivative Liability | (65,656) | |
Gain on Extinguishment of Debt | (398,886) | |
Other, Net | $ (35,697) | (33,755) |
Total Other (Income) Expense | 2,145,653 | 1,354,875 |
Net Loss | $ (3,660,949) | $ (1,971,045) |
Net Loss Per Share- Basic and Diluted | $ (0.03) | $ (0.02) |
Weighted Average Shares Outstanding | 115,359,714 | 111,449,320 |
Other Comprehensive (Loss): | ||
Foreign Currency Translation Adjustment (Loss) | $ (2,205) | |
Total Other Comprehensive (Loss) | (2,205) | |
Comprehensive (Loss) | $ (3,660,949) | $ (1,973,250) |
Statements of Stockholders' Equ
Statements of Stockholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated (Deficit) | Accumulsted Other Comprehensive (Loss) | Total |
Beginning Balance, Shares at Dec. 31, 2012 | 109,372,266 | ||||
Beginning Balance, Amount at Dec. 31, 2012 | $ 1,093,723 | $ 84,745,704 | $ (84,524,609) | $ (120,706) | $ 1,194,112 |
Comprehensive (Loss), Net of Tax: | |||||
Net (Loss) | (1,971,045) | (1,971,045) | |||
Currency Translation (Loss) | (2,205) | $ (2,205) | |||
Issuance of Common Stock | $ 47,761 | (47,761) | |||
Issuance of Common Stock (in shares) | 4,776,112 | ||||
Financial Consultant Fees | 38,387 | $ 38,387 | |||
Share-Based Compensation Expense | 1,319,730 | 1,319,730 | |||
Interest Expense - Related Party | 678,697 | 678,697 | |||
Ending Balance, Shares at Dec. 31, 2013 | 114,148,378 | ||||
Ending Balance, Amount at Dec. 31, 2013 | $ 1,141,484 | 86,734,757 | (86,495,654) | (122,911) | 1,257,676 |
Comprehensive (Loss), Net of Tax: | |||||
Net (Loss) | (3,660,949) | $ (3,660,949) | |||
Currency Translation (Loss) | |||||
Issuance of Common Stock | $ 56,912 | (56,912) | |||
Issuance of Common Stock (in shares) | 5,691,188 | ||||
Conversion of Note Payable- Related Party and Accrued Interest-Related Party | 1,485,212 | $ 1,485,212 | |||
Share-Based Compensation Expense | 1,091,195 | 1,091,195 | |||
Interest Expense - Related Party | 734,858 | 734,858 | |||
Ending Balance, Shares at Dec. 31, 2014 | 119,839,566 | ||||
Ending Balance, Amount at Dec. 31, 2014 | $ 1,198,396 | $ 89,989,110 | $ (90,156,603) | $ (122,911) | $ 907,992 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flows From Operating Activities | ||
Net Loss | $ (3,660,949) | $ (1,971,045) |
Adjustments to Reconcile Net Loss to Net Cash (Used in) Operating Activities: | ||
Depreciation | 394,309 | 453,827 |
Amortization of Other Intangible Assets | 278,826 | 424,426 |
Provision for Losses on Accounts Receivable | 583,424 | 491,727 |
Share Based Compensation Expense | 1,091,195 | 1,358,117 |
Interest Expense-Enhanced Notes PIK | 291,847 | 15,750 |
Interest Expense-Related Party | 805,608 | 749,291 |
Interest Expense-Amortization of Discount | $ 182,444 | 10,697 |
Interest Expense-Write-Off of Old Debt Issuance Costs | 45,512 | |
Gain on Derivative Liability | (65,656) | |
Gain on Extinguishment of Debt | (398,886) | |
Gain on Disposal of Asset | $ (15,679) | (14,681) |
Loss on Foreign Currency Exchange | 68,767 | 22,131 |
Changes in Assets and Liabilities: | ||
Trade Receivables | (1,839,626) | (668,360) |
Inventories | 153,910 | $ (589,587) |
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contract | (18,411) | |
Prepaid Expenses and Other Current Assets | 101,035 | $ (569,089) |
Other Intangible Assets | (297,121) | (126,944) |
Deposits and Other Non-Current Assets | 287,575 | (467,842) |
Accounts Payable | 293,935 | (943,709) |
Accrued Expenses and Other Current Liabilities | 301,765 | 111,881 |
Net Cash (Used in) Operating Activities | (997,146) | (2,132,440) |
Cash Flows From Investing Activities | ||
Additions of Property, Plant and Equipment | (207,191) | (118,611) |
Proceeds from Disposal of Property, Plant and Equipment | 63,095 | 48,786 |
Net Cash Provided Used in Investing Activities | (144,096) | (69,825) |
Cash Flows From Financing Activities | ||
Proceeds from Revolver Loan | 75,459,796 | 81,608,230 |
Principal Repayments to Revolver Loan | $ (74,563,955) | (82,101,515) |
Principal Repayments to Notes Payable- New Enhanced Note | 7,056,000 | |
Principal Repayments to Note Payable-Prior Enhanced Note | $ (4,337,334) | |
Proceeds from Note Payable- Related Party | $ 250,000 | |
Principal Repayments on Long Term Debt | (4,599) | $ (20,911) |
Net Cash Provided by Financing Activities | $ 1,141,242 | 2,204,470 |
Net Effect of Exchange Rate Changes on Cash | $ (2,205) | |
Net Change in Cash | ||
Cash at Beginning of Period | ||
Cash at End of Period | ||
Supplemental Disclosure of Cash Flow Information: | ||
Cash Payments for Income Taxes | ||
Cash Payments for Interest | $ 782,424 | $ 825,356 |
Supplemental Schedule of Non Cash Investing and Financing Activities: | ||
Issuances of Restricted Common Stock for Personal Guarantees by Related Party Classified as Interest Expense | 734,858 | $ 678,697 |
Issuance of Restricted Common Stock in Exchange for Conversion of Note Payable- Related Party and Accrued Interest-Related Party | $ 1,485,212 |
Summary of Organization, Basis
Summary of Organization, Basis of Presentation, and Critical Accounting Policies, Estimates, and Assumptions | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Summary of Organization, Basis of Presentation, and Critical Accounting Policies, Estimates, and Assumptions | Note 1. Summary of Organization, Basis of Presentation, and Critical Accounting Policies, Estimates, and Assumptions. This summary briefly describes the Company’s organization, basis of presentation, and critical accounting policies, estimates, and assumptions, which are presented to assist in understanding these financial statements. The financial statements and notes are representations of management who are responsible for their integrity and objectivity. The accounting policies used conform to Generally Accepted Accounting Principles (GAAP) in the United States of America and have been consistently applied in the preparation of these financial statements. Judgments and estimates of uncertainties are required in applying our accounting policies in many areas. However, application of the critical accounting policies discussed below requires management’s significant judgments, often as the result of the need to make estimates of matters that are inherently uncertain. If actual results were to differ materially from the estimates made, the reported results could be materially affected. Organization History The Company was incorporated in the state of Delaware on October 20, 1989. The Company acquired 100% of the capital stock of Infiniti Products, Inc. (f/k/a Infiniti Paint Co., Inc.), a Florida corporation, effective September 1, 2001, which was engaged in the business of developing, marketing, selling, and distributing primarily acrylic roof coatings and polyurethane foam systems in the Southeastern United States (“Infiniti”). During the latter part of 2004, Infiniti built and began operating an acrylic roof coatings manufacturing plant in the Southeastern United States. On February 11, 2005, the Company acquired 100% of the capital stock of Lapolla Industries, Inc., an Arizona corporation (“Lapolla AZ”), which was engaged in the business of manufacturing acrylic roof coatings and sealants, and distributing polyurethane foam systems in the Southwestern United States. On April 1, 2005, Infiniti merged with and into Lapolla AZ whereas the existence of Infiniti ceased. On October 1, 2005, Lapolla AZ merged with and into the Company, under its former name of IFT Corporation, whereas the existence of Lapolla AZ ceased. On November 8, 2005, the Company changed its name to Lapolla Industries, Inc. On July 1, 2008, the Company acquired certain assets and liabilities of Air-Tight Marketing and Distribution, Inc. Reclassifications Certain reclassifications of prior year amounts have been made to conform to the current year presentation. The reclassifications did not affect net loss. Trade Receivables and Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of trade receivables. The Company’s customers consist primarily of contractors and distributors. Trade receivables consist primarily of uncollateralized customer obligations, including personal guarantees when obtainable, due under normal trade terms which usually require payment within 30 days of the invoice date. However, these payment terms are extended in select cases and many customers do not pay within stated trade terms. The Company has trade receivables from a diverse customer base. The Company has a credit insurance policy in place covering most customer account balances. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customers’ financial position and monitors accounts on a regular basis. Provisions to the allowance for doubtful accounts are reviewed quarterly and adjustments are made periodically (as circumstances warrant) based upon management’s best estimate of collectability of accounts. No customer represented more than 10% of sales for each of the years ended December 31, 2014 and 2013. No customer represented more than 10% of trade receivables at December 31, 2014 or 2013. Note Receivable The Company presents note receivables, net of reserves for losses, to ensure note receivables are not overstated due to uncollectible amounts. Reserves Goodwill and Other Intangible Assets Goodwill represents the excess of the cost over the fair value of net tangible and identifiable intangible assets of acquired businesses. Identifiable intangible assets acquired in business combinations are recorded based upon their fair value at the date of acquisition. According to GAAP, goodwill is required to be tested for impairment, on an annual basis and between annual tests in certain circumstances, and written down when impaired. The goodwill impairment test is performed by comparing the fair value of the associated reporting unit to its carrying value. GAAP also requires that intangible assets with estimable useful lives be amortized over their respective estimated lives to their estimated residual values, and reviewed for impairment, unless these lives are determined to be indefinite. Fair Value of Financial Instruments The Company adopted authoritative GAAP guidance regarding disclosures about fair value of financial instruments, which requires the disclosure of the fair value of off-and-on balance sheet financial instruments. Unless otherwise indicated, the fair values of all reported assets and liabilities, which represent financial instruments (none of which are held for trading purposes), approximate the carrying values of such amounts. The Company adopted authoritative GAAP guidance regarding fair value measurements, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. This guidance establishes three levels of inputs that may be used to measure fair value: (a) Level 1 - Quoted prices in active markets for identical assets or liabilities. (b) Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities; and (c) Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. The Company had no Level 1, 2, or 3 assets or liabilities at December 31, 2014 and 2013, respectively. The carrying value of cash and cash equivalents, trade receivables and payables, prepaid expenses and other current assets, and other payables and accruals approximate fair value due to short period of time to maturity. Litigation In the normal course of business, the Company is occasionally involved in legal proceedings. The Company accrues a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. Cash and Cash Equivalents The Company considers cash, checks, and credit card and ACH payments deposited with financial institutions to be cash and cash equivalents. Inventories Cost is determined on an actual and/or standard cost basis that approximates the first-in, first-out (FIFO) method using a perpetual inventory system. Inventories are valued at the lower of cost or market (replacement cost), which does not exceed net realizable value. Income Taxes The Company's provision for income taxes is determined using the U.S. federal statutory rate. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities along with net operating loss and tax credit pectively, reducing its net carrying value to zero. The Company has no unrecognized income tax benefits. Accordingly, the annual effective tax rate is unaffected. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and operating expense, respectively. At December 31, 2014, the Company had no increase or decrease in unrecognized income tax benefits for the year. There was no accrued interest or penalties relating to tax uncertainties at December 31, 2014. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. Depreciable Lives of Property, Plant and Equipment Property, plant and equipment is recorded at cost and depreciated using the straight-line method, which deducts equal amounts of the cost of each asset from earnings every year over its estimated economic useful life. Economic useful life is the duration of time an asset is expected to be productively employed by the Company, which may be less than its physical life. Assumptions on the following factors, among others, affect the determination of estimated economic useful life: wear and tear, obsolescence, technical standards, contract life, market demand, competitive position, raw material availability, and geographic location. The estimated economic useful life of an asset is monitored to determine its appropriateness, especially in light of changed business circumstances. For example, changes in technology and changes in the estimated future demand for products may result in a shorter estimated useful life than originally anticipated. In these cases, we would depreciate the remaining net book value over the new estimated remaining life, thereby increasing depreciation expense per year on a prospective basis. Net property, plant and equipment totaled $1,364,613 and depreciation expense totaled $394,309 as of and for the year ended December 31, 2014. Net property, plant and equipment totaled $1,600,679 and depreciation expense totaled $453,827 as of and for the year ended December 31, 2013. Impairment of Long-Lived Assets Property, Plant and Equipment Property, plant, and equipment held for use is grouped for impairment testing at the lowest level for which there is an identifiable cash flow. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Such circumstances would include a significant decrease in the market value of a long-lived asset grouping, a significant adverse change in the manner in which the asset grouping is being used or in its physical condition, a history of operating or cash flow losses associated with the use of the asset grouping, or changes in the expected useful life of the long-lived assets. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by that asset group is compared to the carrying value to determine whether impairment exists. If an asset group is determined to be impaired, the loss is measured based on the difference between the asset group’s fair value and its carrying value. An estimate of the asset group’s fair value is based on the discounted value of its estimated cash flows. Assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell. The assumptions underlying cash flow projections represent our best estimates at the time of the impairment review. Factors that we must estimate include industry and market conditions, sales volume and prices, costs to produce, etc. Changes in key assumptions or actual conditions that differ from estimates could result in an impairment charge. Management believes it uses reasonable and supportable assumptions when performing impairment reviews and cannot predict the occurrence of future events and circumstances that could result in impairment charges. There were no property, plant and equipment impairment charges recorded during the years ended December 31, 2014 or 2013. Goodwill Goodwill represents the excess of the aggregate purchase price over the fair value of net tangible and identifiable intangible asset of an acquired business. Goodwill was $4,234,828 at December 31, 2014 and 2013. The Company operates two reporting units, Foam and Coatings. Disclosures related to goodwill are included in Note 8 to the financial statements. The Company evaluates goodwill for impairment on an annual basis, or more frequently if Management believes indicators of impairment exist, by comparing the carrying value of each of reportable unit to their estimated fair values. The annual evaluation is performed as of the last day of a calendar year or December 31, and the most recent evaluation of goodwill impairment was performed on December 31, 2014. The impairment test requires the Company to compare the fair value of each reporting unit to its carrying value, including assigned goodwill. Management uses the income approach to estimate the fair market value of reporting units based on expected future economic benefits. This approach serves to estimate the value of the specific income stream with consideration given to the risk inherent in that income stream. The income approach is most relevant when valuing an equity interest that is based on the premise that Lapolla is considered a going concern or a viable business for the foreseeable future. Lapolla used the discounted cash flow method under the income approach in its analysis. In applying the discounted cash flow method, Lapolla identified the level of cash flow estimated for five years. The annual estimated cash flows and terminal value were then discounted to present value, at an appropriate discount rate, to arrive to the indication of fair market value for each reporting unit. The discount rate utilized reflected the estimate of investor-required rates of return for investments that are seen as similar to an investment in similarly situated companies like Lapolla. The assumptions were consistent with those utilized in the Company’s operating plan and long term financial planning process and considered historical experience and current and future expected market and industry conditions. Management judgment is required in the determination of each assumption used in the valuation model, and actual results could differ from the estimates. Upon completion of the 2014 and 2013 annual impairment assessments, the Company determined no impairment was indicated as the estimated fair value of each of the reporting units substantially exceeded its respective carrying value. Other Intangible Assets The Company had other intangible assets, net of $1,183,452 and $1,165,157 at December 31, 2014 and 2013, respectively, consisting of product formulations, and trade names that were acquired as part of business combinations, and trademarks and approvals and certifications obtained as part of entering into new markets. Amortization of other intangible assets totaled $278,826 and $424,426 for the years ended December 31, 2014 and 2013, respectively. Other intangible assets are tested for impairment as part of the long-lived asset grouping impairment tests. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. See Revenue Recognition Sales are recognized as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. Sales channels include direct sales, distributors, and independent representatives. Irrespective of the sales channel, returns and allowances are not a business practice in the industry. Amounts billed for shipping and handling are included in revenues (freight). Freight included in revenue was $998,803 and $1,106,250 in 2014 and 2013, respectively. Costs incurred for shipping and handling are included in cost of sales. Freight included in cost of sales was $4,441,402 and $3,493,579 in 2014 and 2013, respectively. Revenues are recorded net of sales tax. Research and Development Research and development costs related to both future and present products are charged to operations as incurred. Share-Based Compensation The Company accounts for the cost of employee or director services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of share based awards is estimated at the grant date using a Black-Scholes valuation model and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. The determination of fair value is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option exercise behaviors. Employee stock option exercise behavior is based on actual historical exercise activity and assumptions regarding future exercise activity of unexercised, outstanding options. The Company applies an estimated forfeiture rate to unvested awards for the purpose of calculating compensation cost. These estimates are subject to revision in future periods if actual forfeitures differ from the estimates and changes impact compensation cost in the period in which the change in estimate occurs. Disclosures related to share-based compensation are included in Note 17 to our financial statements. Share-based compensation expense was $1,058,327 and $1,319,730 in 2014 and 2013, respectively. If additional share based awards are granted, financial performance may be negatively affected, and if outstanding share based awards are forfeited or canceled, resulting in non-vesting of such stock awards, financial performance may be positively affected. In either instance, the Company’s financial performance may change depending on share based award activities in future periods. Allowance for Doubtful Accounts The Company presents trade receivables, net of allowances for doubtful accounts, to ensure trade receivables are not overstated due to uncollectible accounts. Allowances, when required, are calculated based on a detailed review of certain individual customer accounts, including credit insurance and other security when applicable, and an estimation of the overall economic conditions affecting our customer base. The Company reviews a customer’s credit history before extending credit. The allowance for doubtful accounts was approximately $617,000 and $317,000 at December 31, 2014 and 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. Cost of Sales and Selling, General and Administrative Costs The Cost of Sales line item includes all the material, overhead, packaging, and freight costs associated with products shipped, including resale finished goods and raw materials, as well as payroll costs associated with manufacturing the finished goods, inbound freight, sales tax expense, product containers, labels, and other miscellaneous items that are indirectly used in the manufacturing, packaging, and shipping (outbound freight) of finished goods, including inspection, and internal transfer costs, as well as depreciation of machinery, amortization of approvals and certifications, and an allocated portion of overhead. The Selling, General and Administrative line item includes selling, advertising, marketing, customer service, and technical support, as well as the costs of providing corporate functional support for all other areas of our business. Advertising and Marketing Expenses Advertising and marketing costs are generally expensed as incurred. Expenditures for certain advertising and marketing activities related to trade shows and trade magazines are deferred within the Company’s fiscal year when the benefits clearly extend beyond the interim period in which the expenditure is made, generally not to exceed 90 days. There were $168,817 and $-0- costs for advertising deferred on the Company’s balance sheets as of December 31, 2014 and 2013, respectively. Other advertising and marketing expenditures that do not meet the deferred criteria are expensed when the advertising and marketing occurs. Total advertising and marketing costs expensed were approximately $982,000 and $965,000 in 2014 and 2013, respectively. Debt Issuance Costs The Company capitalizes debt issuance costs, which are included in the Company’s balance sheets. These costs are amortized over the term of the financial instrument. Amortization of debt issuance costs is included in “Interest Expense” in the statements of operations. Net Income (Loss) Per Common Share Basic income (loss) per share is based upon the net income (loss) applicable to common shares after preferred dividend requirements and upon the weighted average number of common shares outstanding during the period. Diluted income (loss) per share reflects the effect of the assumed exercise of stock options and warrants only in periods in which such effect would have been dilutive. Disclosures related to net income (loss) per common share are included in Note 13 to our financial statements. Recently Adopted Accounting Standards In March 2013, the FASB issued an accounting standards update that provides guidance on the accounting for the cumulative translation adjustment (CTA) upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. Under this guidance, an entity should recognize the CTA in earnings based on meeting certain criteria, including when it ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated foreign entity or upon a sale or transfer that results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets resides. This guidance will be effective for fiscal years beginning on or after December 15, 2013, which will be the Company's fiscal year 2014, with early adoption permitted. The Company adopted the provisions of the guidance in the first quarter of 2014. The adoption did not have a material impact on the Company’s financial statements. In July 2013, the FASB issued an accounting standards update that requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carry-forward that would apply in settlement of the uncertain tax positions. This guidance will be effective for fiscal years beginning after December 15, 2013, which will be the Company's fiscal year 2014, with early adoption permitted. The Company adopted the provisions of the guidance in the first quarter of 2014. The adoption did not have a material impact on the Company’s 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 financial statements. In May 2014, the FASB issued ASU No. 2014-09, " Revenue from Contracts with Customers In June 2014, the FASB issued ASU No. 2014-12, “ Compensation — Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period In August 2014, the FASB issued ASU No. 2014-15, “ Presentation of Financial Statements—Going Concern: Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” |
Liquidity
Liquidity | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity | Note 2. Liquidity. The Company has an accumulated deficit of $90,156,603, a net loss of $3,660,949, and used $997,146 of cash in operating activities as of and for the year ended December 31, 2014. As a result, there are concerns about the liquidity of the Company at December 31, 2014. The Company has a working capital surplus of $6,572,046. Management believes that any 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 CompanyÂ’s operations, including capital expenditures, through 2015. |
Dependence on a few suppliers
Dependence on a few suppliers | 12 Months Ended |
Dec. 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 of its raw materials and finished goods. For 2014 and 2013, raw materials and finished goods purchased from the CompanyÂ’s three largest suppliers accounted for approximately 43% and 41% of purchases, respectively. |
Trade Receivables
Trade Receivables | 12 Months Ended |
Dec. 31, 2014 | |
Receivables [Abstract] | |
Trade Receivables | Note 4. Trade Receivables. Trade receivables are comprised of the following as of December 31: 2014 2013 Trade Receivables $ 9,497,247 $ 8,011,176 Less: Allowance for Doubtful Accounts (616,883 ) (316,587 ) Trade Receivables, Net $ 8,880,364 $ 7,694,589 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2014 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 5. Inventories. The following is a summary of inventories as of December 31: 2014 2013 Raw Materials $ 1,461,040 $ 1,804,959 Finished Goods 3,806,985 3,616,976 Total $ 5,268,025 $ 5,421,935 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 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 as of December 31: 2014 2013 Prepaid Insurances $ 568,088 $ 582,654 Prepaid Marketing 172,919 152,667 Prepaid Consulting 60,266 66,208 Prepaid Other 348,006 357,839 Note Receivable, Net — 90,946 Total Prepaid Expenses and Other Current Assets $ 1,149,279 $ 1,250,314 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 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 for the years ended December 31: 2014 2013 Estimated Useful Life Vehicles $ 475,357 $ 649,487 5 Years Leasehold Improvements 288,777 288,777 13 – 15 Years Office Furniture and Equipment 297,737 327,329 3 – 7 Years Computers and Software 897,102 1,185,333 3 – 5 Years Machinery and Equipment 2,503,062 2,466,007 3 – 20 Years Total Property, Plant and Equipment $ 4,462,035 $ 4,916,933 Less: Accumulated Depreciation (3,097,422 ) (3,316,254 ) Total Property, Plant and Equipment, Net $ 1,364,613 $ 1,600,679 Depreciation expense was $394,309 and $453,827 for the years ended 2014 and 2013, of which $228,016 and $279,571 were included in cost of sales for 2014 and 2013, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Note 8. Goodwill and Other Intangible Assets. The following is a summary of Goodwill as of December 31: Goodwill 2014 2013 Foam $ 2,932,208 $ 2,932,208 Coatings 1,302,620 1,302,620 $ 4,234,828 $ 4,234,828 The following is a summary of Other Intangible Assets as of December 31: Other Intangible Assets 2014 2013 Gross Accumulated Net Gross Accumulated Net Amortization Amount Amortization Amount Amount Amortization Amount Period Product Formulations $ 138,471 (90,775 ) $ 47,696 138,471 $ (81,544 ) 56,927 15 Years Trade Names 750,186 (319,224 ) 430,962 740,325 (269,212 ) 471,113 15 Years Approvals and Certifications 1,835,013 (1,130,219 ) 704,794 1,547,754 (910,637 ) 637,117 5 Years $ 2,723,670 $ (1,540,218 ) $ 1,183,452 $ 2,426,550 $ (1,261,393 ) $ 1,165,157 Based on the other intangible assets in service as of December 31, 2014, estimated amortization expense for the years ending December 31, 2015 through December 31, 2018 and thereafter is as follows: 2015 2016 2017 2018 Thereafter Product Formulations $ 9,231 $ 9,231 $ 9,231 $ 9,231 $ 10,772 Trade Names 50,012 50,012 50,012 50,012 230,914 Approvals and Certifications 206,346 206,346 206,346 85,756 — $ 265,589 $ 265,589 $ 265,589 $ 144,999 $ 241,686 |
Deposits and Other Non-Current
Deposits and Other Non-Current Assets, Net. | 12 Months Ended |
Dec. 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 as of December 31: 2014 2013 Deferred Financing Fees $ 195,201 $ 285,246 Prepaid Expenses 7,104 46,744 Other Receivables 43,193 55,293 Deposits 153,585 153,584 Note Receivable, Net — 145,791 Total Deposits and Other-Non-Current Assets $ 399,083 $ 686,658 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 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 December 31: 2014 2013 Accrued Payroll $ 206,364 $ 169,785 Accrued Commissions 113,193 61,000 Accrued Inventory 108,016 178,616 Accrued Taxes and Other 818,544 606,275 Accrued Insurance 482,007 427,395 Deferred Finance Charge Income 30,536 13,824 Total Accrued Expenses and Other Current Liabilities $ 1,758,660 $ 1,456,895 |
Financing Instruments
Financing Instruments | 12 Months Ended |
Dec. 31, 2014 | |
Transfers and Servicing [Abstract] | |
Financing Instruments | Note 11. Financing Instruments. (a) Loan and Security Agreement (b) Note Purchase Agreements (i) New Enhanced Note Adjusted] EBITDA, Refer to See also (ii) New Guaranty Agreement (iii) Prior Enhanced Note (iv) Prior Guaranty Agreement (c) Notes Payable – Related Party (i) April 16, 2012 Promissory Note Refer to (ii) November 14, 2014 Promissory Note Refer to |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 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. Mr. Zajaczkowski resigned on December 18, 2014. (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 (“2/17/14 Schnitzer Option”). Pursuant to the 2/7/14 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 2/7/14 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 $61,489, which was estimated using the Black-Scholes option pricing model and will be expensed over the requisite vesting period. (e) On February 7, 2014, the Company entered into a Stock Bonus Agreement with Mr. Schnitzer (“Schnitzer Stock Bonus”). Pursuant to the Schnitzer Stock Bonus, Mr. Schnitzer was granted 100,000 shares of the Company’s common stock, $0.01 par value per share (“Bonus Shares”). No monetary payment (other than applicable tax withholding) is required as a condition of receiving the Bonus Shares, as the consideration is continued satisfactory employment with the Company during the vesting period. The Bonus Shares vest in four equal 25,000 share increments, on February 7, 2014, December 31, 2014, December 31, 2015, and February 6, 2016, respectively, subject to continued employment with the Company. Once vested, such Bonus Shares are freely transferable. The transaction was valued at $65,000 (calculated by multiplying the 100,000 shares by the $.65 closing price of the common stock on the date of grant) and is being expensed over the requisite service period on the respective vesting dates. (f) On April 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. The transactions were valued in the aggregate at $155,027, which was estimated using the Black-Scholes option pricing model and will be expensed over the requisite vesting period. (g) On April 28, 2014, the Company granted an aggregate of 1,025,000 five-year stock options to eight key employees, including the 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, 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 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. The transactions were valued at in the aggregate at $319,743, which was estimated using the Black-Scholes option pricing model and will be expensed over the requisite vesting period. (h) On May 14, 2014, the Company granted five-year stock options to Richard J. Kurtz, Chairman of the Board and principal stockholder, for an aggregate of 400,000 shares of the Company’s common stock, par value $0.01 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 $0.54 per share. The foregoing stock options vest over a period of two (2) years at the rate of 200,000 options on May 14, 2015 and May 14, 2016, respectfully, and once vested, are immediately exercisable. Upon commencement of a change in control, all unvested stock options automatically vest. The transaction was valued at $199,306, which was estimated using the Black-Scholes option pricing model and will be expensed over the requisite vesting period. (i) On October 14, 2014, the Company granted Douglas J. Kramer, CEO and President, the right to acquire 1,150,000 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 $.425 per share, which options were immediately vested and exercisable at the time of grant (“10/14/15 Kramer Options”). The 10/14/15 Kramer Options were granted as partial replacement for 2,000,000 stock options were granted on July 12, 2005 which expired July 12, 2013 (the “7/12/15 Kramer Prior Expired Options”). The 7/12/15 Kramer Prior Expired Options were inadvertently extended to December 31, 2015, however, due to the 8 year life limitation, they were deemed canceled at the end of 8 years. The Company also undertook to grant the additional 850,000 stock options (to make up for the total 2,000,000 stock options) in January 2015 since the equity Incentive Plan only permits the grant of a total of 2,000,000 stock options during any calendar year (and Mr. Kramer was previously granted 850,000 stock options during the 2014 year for other incentives). The transaction was valued at $199,683, which was estimated using the Black-Scholes option pricing model and expensed on date of grant. (j) On November 14, 2014, the Company and Enhanced Jobs and Enhanced Capital entered an amendment, effective August 31, 2014, to the Note Purchase Agreement dated December 10, 2013, as amended, between the Company and Enhanced Jobs for Texas Fund, LLC and Enhanced Credit Supported Loan Fund, LP (the “New Enhanced Note”), which amended the definition of FCCR to 1.0 to 1.0 and certain the EBITDA requirements, to enable the Company to regain compliance with its FCCR and EBITDA requirements at the time under the New Enhanced Note, and changed the PIK interest rate from 3.75% to 4.25% (“Second Enhanced Amendment”). Refer to (k) On November 14, 2014, the Company borrowed $250,000 from the Chairman of the Board and majority stockholder as a condition precedent to entering into the Second Enhanced Note and entered into a promissory note (the “11/14/14 Kurtz Note”). Pursuant the 11/14/14 Kurtz Note, the Company agreed to pay eight percent (8%) per annum on the principal balance of $250,000 and repay the principle balance on June 10, 2017. The 11/14/14 Kurtz Note is subordinated to the Loan Agreement and the New Enhanced Note. See also (l) On November 14, 2014, the Chairman of the Board and majority stockholder provided Management with a financial commitment to ensure payment of the amount outstanding under the Revolver Loan pursuant to the Loan Agreement, which matured at the time of entering into this financial commitment on February 15, 2015, and make available working capital of up to $1.5 Million for the Company’s ongoing operations from the date hereof and on or after the maturity date of the Loan Agreement (“Financial Substitution Commitment”). This Financial Substitution Commitment will either be satisfied from his personal funds, or, from funds caused by him to be otherwise provided by an appropriate lending or other institution, and any funds provided thereunder will have a maturity date of June 10, 2017. The Financial Substitution Commitment will be superseded in the event and to the extent that the Company is independently funded by a third party source, either privately or institutionally, at or before the time the Financial Substitution Commitment is due and the Revolver Loan is repaid and Loan Agreement obligation is fully satisfied, and working capital of $1.5 Million for the Company’s ongoing operations is obtained from the date hereof and on or after the maturity date of the Loan Agreement. Management requested that the Chairman of the Board fund $250,000 under this Financial Substitution Commitment to meet a request from Bank of America which payment was made on November 14, 2014. This Financial Substitution Commitment was satisfied upon the Company entering into the Twelfth Amendment. Refer to (m) On November 26, 2014, the Company entered into a new three year Executive Employment Agreement with Michael T. Adams, its CGO, EVP, and Corporate Secretary (“Adams Employment Agreement”). Pursuant to the terms and conditions of the Adams Employment Agreement, Mr. Adams is entitled to: (i) annual base salary of $180,000; (ii) auto allowance of $750 per month; (iii) non-discretionary annual bonus of $5,000; (iv) annual bonus equal to 25% of his annual base salary if Company achieves its budgeted earnings before interest, taxes, depreciation, amortization, and share based compensation (“Adjusted EBITDA”) for the Company’s fiscal year, which may be increased to 30% and 35% if Company achieves 110% and 120% of its budgeted Adjusted EBITDA, respectively, or more than 35% if the Company achieves greater than 120% of its budgeted Adjusted EBITDA in the CEO’s discretion subject to review and approval by the Compensation Committee, in its discretion; (v) paid medical, dental, life, vision, and disability insurance; and (vi) a Transaction Bonus equal to 1½% upon a change in control of the Company. (n) On November 26, 2014, the Company granted replacement stock options to Mr. Adams, for the right to acquire 80,000 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 $.38 per share, which options were immediately vested and exercisable at the time of grant and expire July 12, 2017. The foregoing stock options were granted as replacement for 80,000 stock options granted on July 12, 2005 which expired July 12, 2013 (the “Prior Expired Options”). The Prior Expired Options were inadvertently extended to July 12, 2017, however, due to the 8 year life limitation, they were deemed canceled at the end of 8 years, or on July 12, 2013. The transaction was valued at $24,326, which was estimated using the Black-Scholes option pricing model and expensed on date of grant. (o) On December 2, 2014, the Company issued 3,908,453 shares of its Common Stock, par value $.01, to Richard J. Kurtz, Chairman of the Board and principal stockholder, in exchange for the cancellation of $1,485,212 of debt owed by the Company to him, of which $1,300,000 was the principal amount of a promissory note dated April 16, 2012 and $185,212 was the accrued and unpaid interest thereon. The purchase price for each share of Common Stock was based on the closing price of the Company's Common Stock on December 1, 2014, or $.38 per share. The shares of Common Stock sold to Mr. Kurtz were exempt from the registration requirements of the Securities Act of 1933, as amended, in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder. Mr. Kurtz was an accredited investor (as defined by Rule 501 under the Securities Act of 1933, as amended) at the time of the sale. (p) During 2014, the Company vested an aggregate of 1,224,763 shares of restricted common stock, par value $.01 per share, to the Chairman of the Board and majority stockholder in connection with his personal guarantees related to financings with Enhanced Capital for the benefit of the Company, which transactions were valued and recorded in the aggregate at $734,858, and classified as interest expense – related party. (q) During 2014, the Company vested an aggregate of 347,972 shares, including anti-dilution issuances, of restricted common stock, par value $.01 per share, to a director for advisory and consulting services, which transactions were valued and recorded in the aggregate at $214,113. (r) During 2014, the Company accrued an aggregate of $70,752 for interest on two Notes Payable – Related Party, of which $67,579 related to a $1,300,000 promissory note with the Chairman of the Board and majority stockholder, bearing interest at 5% per annum, which was paid via a debt conversion for common stock on December 2, 2013 ( Refer to Refer to (s) During 2014, the Company vested the remaining 160,000 shares of the restricted common stock under the Non-Employee Director Share Based Compensation Program, of which 100,000 shares were for Mr. Nadel, and 20,000 shares were for Mr. Gregg, Mr. Brown, and Mr. Larson, respectively, which transactions were valued and recorded in the aggregate at $104,000. See also Director Plan See also Note 19 – Subsequent Events, Items (a), (b), (c), (e), and (f) for more information. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13. Income Taxes. The components of income tax expense (benefit) for the years ended at December 31: 2014 2013 Current: Federal $ — $ — State 29,304 22,206 Total Current 29,304 22,206 Deferred: Federal — — State — — Total Deferred — — Total Tax Provision $ 29,304 $ 22,206 The following is a reconciliation of expected tax expense to actual expense for the years ended at December 31: 2014 2013 Federal Income Tax Expense/(Benefit) $ (1,244,723 ) $ (670,155 ) State Income Tax 29,304 22,206 Nondeductible Expenses 36,920 46,240 Prior Year Adjustments (597,810 ) 8,678 Change in Valuation Allowance 1,805,613 615,237 Total Tax Provision $ 29,304 $ 22,206 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities, for financial reporting purposes, and amounts used for Federal income tax purposes. Significant components of the Company's deferred tax asset at December 31: Deferred Tax Assets: 2014 2013 Net Operating Loss Carry-Forward $ 72,198,767 $ 66,888,140 Statutory Tax Rate 34 % 34 % Total Deferred Tax Assets 24,547,581 22,741,968 Valuation Allowance for Deferred Tax Assets (24,547,581 ) (22,741,968 ) Net Deferred Taxes $ — $ — At December 31, 2014, the Company had available, net operating loss carry-forwards of approximately $24,600,000 for Federal income tax purposes. Utilization by the Company is subject to limitations based on the Company's future income, and pursuant to Section 382 of the Internal Revenue Code, as amended. The usage of some of these net operating loss carry-forwards may be limited due to changes in ownership that have occurred or may occur in the future. The loss carry-forwards, if not used, will expire as follows: $6,022,543 in 2018, $2,528,950 in 2019, $4,557,566 in 2020, $7,870,612 in 2021, $10,869,699 in 2022, $9,811,811 in 2023, $4,244,336 in 2024, $3,280,473 in 2025, $2,359,786 in 2026, $3,629,828 in 2027, $2,117,913 in 2028, $2,547,714 in 2029, $2,198,439 in 2031, $3,038,952 in 2032, $1,437,631 in 2033, and $3,127,535 in 2034. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 14. Commitments and Contingencies. Leases The Company conducts operations in leased facilities located in Texas and New Jersey. The Texas lease includes lease concessions which amounts are included as part of the aggregate minimum lease payments and recognized on a straight-line basis over the minimum lease terms. Future minimum lease payments required under the non-cancelable operating lease as and for the years ending December 31 are as follows: 2015 2016 2017 $ 374,894 $ 408,719 $ 183,219 Rent expense for the years ended December 31, 2014 and 2013 was $116,887 and $204,907, respectively. Legal Proceedings. (a) Neil and Kristine Markey, et al., Plaintiffs v. Lapolla Industries, Inc., Delfino Insulation, et al, Defendants A complaint initially entitled Neil and Kristine Markey, individually, and on behalf of all others similarly situated, Plaintiffs, vs. Lapolla industries, Inc. (b) Great American E & S Insurance Company, Plaintiff v. Lapolla Industries, Inc., Defendant Great American E & S Insurance Company Lapolla Industries, Inc. (c) Robert and Cynthia Gibson, individually, and as parents and natural guardians of Robert Harvey Lee Gibson, Plaintiffs v. Lapolla Industries, Inc. and Air Tight Insulation of Mid-Florida, LLC, Southern Foam Insulation, Inc., and Tailored Chemical Products, Inc., Defendants On March 5, 2014, the GibsonÂ’s re-filed their claims, which were previously pending in the federal district court in the Middle District of Florida, against Lapolla Industries, Inc. and Air Tight Insulation of Mid-Florida, LLC and two new defendants, Southern Foam Insulation, Inc. and Tailored Chemical Products, Inc. The complaint was filed in the Circuit Court of the 18th Judicial Circuit in and for Seminole County, Florida and alleges, among other things, negligence, strict liability design defect, strict liability failure to warn, breach of express and implied warranties, unjust enrichment, and violation of FloridaÂ’s deceptive and unfair trade practices act, relating to the design, manufacture, distribution, and installation of LapollaÂ’s spray polyurethane foam insulation, resulting in personal injuries and real property damage. Plaintiffs seek, among other things: actual, compensatory, statutory, and punitive damages; injunctive relief; medical monitoring, and attorney fees. Lapolla considers the allegations to be without merit and is vigorously defending the allegations. The outcome of this litigation cannot be determined at this time. (d) Michael Commaroto, Kimberly S. Commaroto, and Gretchen Schlegel v. Pasquale Guzzo a/k/a Pasqualino Guzzo PDB Home Improvements, Perfect Wall, LLC, and Jozsef Finta Pasquale Guzzo a/k/a Pasqualino Guzzo PDB Home Improvements (e) Evanston Insurance Company v. Lapolla Industries, Inc. On October 28, 2013, Evanston Insurance Company filed its original complaint for declaratory judgment against Lapolla industries, Inc. in the Southern District of Texas, Houston Division. Evanston seeks a declaratory judgment that it has no duty to defend or indemnify Lapolla in the Guzzo Litigation. Lapolla made an appearance in the case on February 14, 2014 after being served with a First Amended Complaint. Lapolla considers the allegations to be without merit and is seeking declaration from the court that Evanston does have a duty to defend and indemnify Lapolla. The court ruled on the summary judgment motions on February 23, 2015, finding that Great American had no duty to defend. The Court signed a final judgment on March 18, 2015. The final outcome, including any appeals, of this litigation cannot be determined at this time. (f) Joseph Greco and Penny Greco v. Lapolla Industries, Inc., Jagodzinski Construction, Inc., and John Does. On August 27, 2014, Joseph Greco and Penny Greco filed a Complaint in New York State Court, County of Monroe, against Lapolla, Jagodzinski Construction, Inc., and John Does. The complaint alleges, among other things, negligence, strict liability failure to warn, breach of express and implied warranties, unjust enrichment, violations of the NY deceptive trade practices act, and a NY false advertising statute, relating to the design, manufacture, distribution, and installation of LapollaÂ’s spray polyurethane foam insulation, allegedly resulting in personal injuries and real property damage. Grecos seek, among other things: general, compensatory, and punitive damages; restitution, and attorney fees, costs, and disbursements. Lapolla considers the allegations to be without merit and is vigorously defending the allegations. The outcome of this litigation cannot be determined at this time. (g) V arious Lawsuits and Claims Arising in the Ordinary Course of Business We are involved in various lawsuits and claims arising in the ordinary course of business, which are, in our opinion, immaterial both individually and in the aggregate with respect to our consolidated financial position, liquidity or results of operations. |
Net Income (Loss) per Common Sh
Net Income (Loss) per Common Share - Basic and Diluted | 12 Months Ended |
Dec. 31, 2014 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) per Common Share - Basic and Diluted | Note 15. Net Income (Loss) Per Common Share – Basic and Diluted. Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. Common stock equivalents were not considered in calculating diluted net loss per common share for the years ended December 31, 2014 and 2013 as their effect would be anti-dilutive. The computation of the Company’s basic and diluted earnings per share for the years ended: 2014 2013 Net loss available to common shareholders (A) $ (3,660,949 ) $ (1,971,045 ) Weighted average common shares outstanding (B) 115,359,714 111,449,320 Dilutive effect of employee equity incentive plans 880,000 4,740,000 Weighted average common shares outstanding, assuming dilution (C) 116,066,620 111,870,040 Basic earnings per common share (A)/(B) $ (0.03 ) $ (0.02 ) Diluted earnings per common share (A)/(C) $ (0.03 ) $ (0.02 ) For 2014, a total of 4,140,000 shares of common stock were excluded from the calculation of diluted earnings per common share, of which: (a) 3,260,000 shares were for outstanding, vested and exercisable stock options that had an exercise price greater than the market value of the common share as of the period then ended (“out-of-the-money”), and (b) 880,000 shares were for outstanding, vested and exercisable stock options that had an exercise price equal to or lesser than the market value of the common share as of the period then ended (“in-the-money”). For 2013, a total of 4,740,000 shares of common stock were excluded from the calculation of diluted earnings per common share, all of which shares were for outstanding, vested, and exercisable in-the-money stock options. Outstanding, vested and exercisable out-of-the money stock options could be included in the calculation in the future if the market value of the Company’s common shares increases and is greater than the exercise price, and outstanding, vested and exercisable in-the-money stock options could be included in the calculation in the future if the Company reports a profit. |
Securities Transactions
Securities Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Securities Transactions | Note 16. Securities Transactions. (a) During 2014, the Company issued an aggregate of 347,972 shares of restricted common stock, par value $.01, valued and recorded in the aggregate at $214,113 for advisory and consulting services. (b) During 2014, the Company issued an aggregate of 1,224,763 shares of restricted common stock, par value $.01, valued and recorded in the aggregate at $734,858 classified as interest expense – related party pursuant to a guaranty made in connection with a financing. (c) During 2014, the Company issued 50,000 shares of common stock, par value $.01 per share, for a stock bonus to an executive officer, employee, which transaction was valued and recorded at $25,000. (d) During 2014, the Company issued 3,908,453 shares of common stock, par value $.01 per share, in exchange for the cancellation of $1,485,212 of debt. (e) During 2014, the Company issued an aggregate of 160,000 shares of restricted common stock, par value $.01, valued and recorded in the aggregate at $104,000 for continuing Board of Directors services under the Director Plan. |
Share-Based Payment Arrangement
Share-Based Payment Arrangements | 12 Months Ended |
Dec. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Payment Arrangements | Note 17. Share–Based Payment Arrangements. The Company reports share-based compensation arrangements using a straight-line fair valuation model for stock awards and Black-Scholes fair valuation model for option awards to calculate compensation expense over the requisite service period of grants. At December 31, 2014, the Company had four share based compensation plans, including the Equity Incentive Plan (“Equity Plan”), Non-Employee Director Restricted Stock Plan ("Director Plan"), Advisory and Consulting Agreement Plan (“Advisor Plan”), and Guaranty Agreement Plans (“Guaranty Plans”) in effect. Compensation cost charged against income for all compensation and incentive plans for 2014 and 2013 was $1,826,051 and $1,998,426, respectively. Equity Incentive Plan The Company’s Equity Plan, which is shareholder-approved, permits the grant of stock awards to eligible participants for up to 10,000,000 shares of common stock. The purpose of the Equity Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward employees, directors and consultants performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company. The Equity Plan provides financial performance measures upon which specific performance goals would be based and limits on the numbers of shares or compensation that could be made. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Stock awards may provide for accelerated vesting if there is a change in control. The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation model and spread over the requisite service period. For 2014, there was an aggregate of 5,417,500 awards granted to directors, officers, and key employees, of which 5,317,500 were for options and 100,000 were for stock awards. For 2013, there were no option or stock awards granted. As of December 31, 2014, total compensation cost related to non-vested stock options was $2,605,910, which is expected to be recognized over 2.42 years after December 31, 2014 (29 months on a weighted-average basis). As of December 31, 2013, total compensation cost related to non-vested stock options was $-0-. Option Awards 2014 2013 Number Weighted-Average Number Weighted-Average Options of Options Exercise Price of Options Exercise Price Outstanding-Beginning of Year 5,040,000 $ 0.60 5,540,000 $ 0.61 Granted 5,317,500 0.45 — — Exercised — — — — Canceled, Expired or Forfeited (3,080,000 ) 0.61 (500,000 ) 0.74 Outstanding - End of Year 7,277,500 0.47 5,040,000 0.60 Exercisable - End of Year 4,415,000 $ 0.47 4,740,000 $ 0.61 The weighted-average grant-date fair value of option awards granted during 2014 and 2013 was $196,662 and $-0-, respectively. The following table summarizes options outstanding at: Outstanding Exercisable Outstanding Exercisable Weighted Weighted Average Weighted Weighted Average Weighted Weighted Range of Number Remaining Average Number Average Number Remaining Average Number Average Exercise Outstanding Contractual Exercise Exercisable Exercise Outstanding Contractual Exercise Exercisable Exercise Prices at 12/31/14 Life (Years) Price at 12/31/14 Price at 12/31/13 Life (Years) Price at 12/31/13 Price $.35 - $.59 4,417,500 5.20 $ 0.41 1,955,000 $ 0.41 650,000 1.69 $ 0.36 350,000 $ 0.36 $.60 - $.64 2,260,000 0.46 0.53 1,960,000 0.56 2,310,000 2.40 $ 0.60 2,310,000 $ 0.60 $.65 - $.80 600,000 4.08 $ 0.71 — — 2,080,000 1.30 $ 0.67 2,080,000 $ 0.67 Stock Awards 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year — $ — — $ — Granted 100,000 65,000 — — Vested (50,000 ) (32,500 ) — — Canceled, Expired or Forfeited — — — — Nonvested - End of Year 50,000 $ 32,500 — $ — Warrants The Company did not issue any warrants during 2014 or 2013. During 2007 and 2008, the Company issued an aggregate of 2,500,000 detachable warrants in connection with mezzanine style credit instruments, which were modified and re-priced from time to time based on anti-dilution down round price protections, all of which expired in 2013. As a result, there were no warrants outstanding as of the years ended December 31, 2014 and 2013, respectively. Director Plan The Company’s Board of Directors adopted a Director Plan, which is not shareholder-approved, that permits the grant of up to 800,000 shares of restricted common stock to non-employee directors in 2010. Effective July 1, 2010, the Board granted 800,000 shares of restricted common stock to four non-employee directors, of which 100,000 was granted to Mr. Gregg, Mr. Brown, and Mr. Larson, and 500,000 was granted to Mr. Nadel. All stock grants vest over a four-and-a-half year period, with one-fifth vesting at the end of each year beginning in 2010, for serving on the Board of Directors. The Company does not consider the shares of restricted common stock granted under the Director Plan as outstanding at the time of grant due to vesting restrictions. The shares of restricted common stock when granted are held in reserve by the Company until such time that they are earned and vested, after which the Company issues the vested portion of the shares and delivers them to the respective directors. At December 31, 2014 and 2013, there were -0- and 160,000 shares of restricted common stock unvested, respectively. The compensation cost charged against income for the Director Plan in 2014 and 2013 was $104,000 and $104,000, respectively. The fair value of each award was calculated by taking the closing price of the Company's common stock on the effective date of the grant, which was $.65 per share, for an aggregate amount of $520,000. The Company is using the straight-line method over the requisite service period for attribution of compensation expense. The expected term of the awards is the last day on which the last increment of stock is scheduled to vest, or December 31, 2014. A summary of awards activity under the Director Plan at December 31, 2014 and 2013, and changes during the year then ended, are as follows: 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year 160,000 $ 104,000 320,000 $ 208,000 Granted — — — — Vested (160,000 ) (104,000 ) (160,000 ) (104,000 ) Canceled, Expired or Forfeited — — — — Nonvested - End of Year — $ — 160,000 $ 104,000 Advisor Plan The Company and a non-employee director, Jay C. Nadel, entered into an advisory and consultant agreement for 3 years on February 22, 2011 (“Nadel Agreement”). The Company granted 5,000,000 shares of restricted common stock, par value $.01, which vest monthly over 3 years. The grant-date fair value was calculated by taking the closing price of the Company's common stock of $.57 per share on the date of grant and multiplying it by the number of shares granted, equaling $2,850,000. The Advisor Plan includes anti-dilution aspects. For 2014, anti-dilution transactions occurred, which required the Company to grant and vest an additional 110,733 shares of restricted common stock. The grant-date fair value was calculated by taking the closing price of the Company’s common stock on the anti-dilution dates for a weighted-average of approximately $0.58 per share and multiplying it by the number of shares granted, equaling $63,893. For 2013, anti-dilution transactions occurred, which required the Company to grant and vest an additional 272,969 shares of restricted common stock. The grant-date fair value was calculated by taking the closing price of the Company’s common stock on the anti-dilution dates for a weighted-average of approximately $0.35 per share and multiplying it by the number of shares granted, equaling $96,560. A summary of awards activity under the Advisor Plan at December 31, 2014 and 2013, and changes during the years then ended, are as follows: 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year 237,238 $ 135,219 1,902,380 $ 1,084,352 Granted 110,733 63,893 272,969 96,560 Vested (347,971 ) (199,112 ) (1,938,111 ) (1,045,693 ) Canceled, Expired or Forfeited — — — — Nonvested - End of Year — $ — 237,238 $ 135,219 Guaranty Plans The Company made two separate grants of restricted common stock in connection with personal guarantees provided by the Chairman of the Board and majority stockholder to secure working capital on favorable terms and the Company’s performance under financing instruments. Refer to New Guaranty Plan The Company granted 3,681,000 shares of restricted common stock, par value $.01, which shares vest monthly on a pro rata basis over the three year term of the New Enhanced Note (“New Guaranty Shares”). The New Guaranty Shares were valued at $.60 per share, the closing price of the Company’s common stock as quoted on the OTC Markets on the day preceding the closing date of December 10, 2013, for an aggregate amount of $2,208,600. The New Guaranty Shares are being recorded as interest expense – related party, thereby increasing the effective interest rate on the New Enhanced Note. A summary of grant activity under the New Guaranty Plan at December 31, 2014 and 2013, and changes during the years then ended, are: 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year 3,607,179 $ 2,164,307 — $ — Granted — — 3,681,000 2,208,600 Vested (1,224,763 ) (734,858 ) (73,821 ) (44,293 ) Canceled, Expired or Forfeited — — — — Nonvested - End of Year 2,382,416 $ 1,429,449 3,607,179 $ 2,164,307 As of December 31, 2014, there is $1,367,037 of total unrecognized compensation cost related to nonvested interest expense – related party arrangement granted under the New Guaranty Plan. The cost is expected to be recognized over a weighted-average period of 1.95 years. Prior Guaranty Plan The Company previously granted 5,000,000 shares of restricted common stock, par value $.01, which shares were vesting monthly on a pro rata basis over the two year term of the Prior Enhanced Note (“Prior Guaranty Shares”). The Prior Guaranty Shares were valued at $.27 per share, the closing price of the Company’s common stock as quoted on the OTC Markets on the day preceding the closing date of June 29, 2012, for an aggregate amount of $1,350,000. The Prior Guaranty Shares were recorded as interest expense – related party, thereby increasing the effective interest rate on the Prior Enhanced Note. As a result of the payoff of the Prior Enhanced Notes, the Company canceled an aggregate of 1,376,712 unvested shares (with an unrecorded valued of $371,801) which shares were previously issued in connection with the personal guaranty required for the Prior Enhanced Note that was paid off earlier than the maturity date of June 29, 2014. A summary of grant activity under the Prior Guaranty Plan at December 31, 2014 and 2013, and changes during the years then ended, are: 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year — $ — 3,726,027 $ 1,006,116 Granted — — — — Vested — — (2,349,315 ) (634,315 ) Canceled, Expired or Forfeited — — (1,376,712 ) (371,801 ) Nonvested - End of Year — $ — — $ — Guaranty Plans Summary The following table summarizes grants activity under all Guaranty Plans at December 31, 2014 and 2013, and changes during the years then ended: 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year 3,607,179 $2,164,307 3,726,027 $1,006,116 Granted — — 3,681,000 2,208,600 Vested (1,224,763 ) (734,858 ) (2,423,136 ) (678,608 ) Canceled, Expired or Forfeited — — (1,376,712 ) (371,801 ) Nonvested - End of Year 2,382,416 $ 1,429,449 3,607,179 $ 2,164,307 |
Business Segment Information
Business Segment Information | 12 Months Ended |
Dec. 31, 2014 | |
Segment Reporting [Abstract] | |
Business Segment Information | Note 18. Business Segments and Geographic Area Information. Business Segments The Company is a leading United States based manufacturer and global supplier operating two segments: Foam and Coatings. The Company’s segments are organized based on manufacturing competencies. Foam Foam Coatings Coatings Spray Rigs Spray Rigs The AirTight Division The AirTight Division The Company maintains centralized manufacturing and spray rig building operations in Houston, Texas. Each of the businesses in which the Company is engaged is highly competitive. However, diversification of products within these segments and national, including limited international, markets served tends to minimize the impact on the Company’s total sales and earnings of changes in demand for a particular product. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1. The Company allocates resources to segments and evaluates the performance of segments based upon reported segment income before income taxes. A substantial amount of administrative expenses are allocated to the segments. The portion not allocated to the segments represents the unallocated cost of certain corporate expenses and are included in Unallocated Amounts Segments 2014 Foam Coatings Totals Sales $ 62,477,449 $ 9,587,566 $ 72,065,015 Depreciation 129,752 19,911 149,664 Amortization of Other Intangible Assets 217,558 33,386 250,944 Interest Expense 945,571 145,104 1,090,675 Segment Profit 1,265,026 941,743 2,206,769 Segment Assets (1) 18,477,410 3,665,095 22,142,505 Expenditures for Segment Assets $ 179,626 $ 27,565 $ 207,191 2013 Foam Coatings Totals Sales $ 61,080,736 $ 10,096,235 $ 71,176,971 Depreciation 134,499 22,232 156,731 Amortization of Other Intangible Assets 327,800 54,183 381,983 Interest Expense 795,153 131,433 926,586 Segment Profit 2,293,601 1,456,975 3,750,576 Segment Assets (1) 17,917,746 3,743,801 21,661,547 Expenditures for Segment Assets $ 101,786 $ 16,825 $ 118,611 The following are reconciliations of reportable segment profit or loss, and assets, to the Company’s totals for the years indicated: Segments Profit 2014 2013 Total Profit for Reportable Segments $ 2,206,769 $ 3,750,576 Unallocated Amounts: Corporate Expenses (5,867,718 ) (5,721,621 ) Loss Before Income Taxes $ (3,660,949 ) $ (1,971,045 ) Assets 2014 2013 Total Assets for Reportable Segments (1) $ 22,142,505 $ 21,661,547 Other Unallocated Amounts (2) 355,550 392,612 Total $ 22,498,055 $ 22,054,160 Notes: (1) (2) 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 2014 Sales $ 69,746,725 $ 665,365 $ 3,505 $ 1,649,420 $ 72,065,015 Long-Lived Assets $ 21,661,547 $ — $ — $ — $ 21,661,547 2013 Sales $ 61,417,293 $ 1,741,485 $ 5,706,558 $ 2,311,635 $ 71,176,971 Long-Lived Assets $ 21,661,547 $ — $ — $ — $ 21,661,547 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 19. Subsequent Events. (a) On January 1, 2015, Jomarc C. Marukot and the Company entered into an Executive Employment Agreement, dated as of January 1, 2015 (the “Marukot Agreement”), pursuant to which Mr. Marukot shall serve as the Company’s CFO and Corporate Treasurer for a term commencing on January 1, 2015 and ending December 31, 2016 (the “Employment Term”). Pursuant to the Marukot Agreement, Mr. Marukot is entitled to: (i) an annual base salary of $190,000; (ii) annual bonus equal to 25% of his annual base salary if the Company achieves its budgeted earnings before interest, taxes, depreciation, amortization, and share based compensation (“Adjusted EBITDA”) per calendar year, which annual bonus may be increased to 30%, 35%, or more than 35% in the CEO’s discretion, of his annual base salary if the Company achieves 110%, 120%, or more than 120%, respectively, of its budgeted Adjusted EBITDA; (iii) change in control bonus of 25% of his annual base salary upon consummation of a change in control if he is still employed at the time; (iv) medical, dental, life insurance, and disability benefits; (v) four months’ portion of his annual base salary for termination due to death or disability; (vi) four months’ portion of his annual base salary, awards and benefit plans and the change in control bonus in the event of voluntary termination by the Company; and (vii) twelve months annual base salary if terminated within the first twelve months of the Employment Term or the remaining annual base salary if terminated after twelve months of his employment due to a change in control. Mr. Marukot is also entitled to earn awards under equity or other plans or programs that the Company, in its discretion, determine to put into effect and to participate in compensation and benefit programs offered by the Company to its executive officers. The Marukot Agreement also provides for a non-competition provision for the Employment Term and for a period of twelve months after the termination of Mr. Marukot’s employment. (b) (c) On January 16, 2015, the Company granted an eight-year stock option to Michael T. Adams, CGO, EVP, and Corporate Secretary, for 300,000 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 date of grant, determined based on the closing price on such date, or $0.325 per share (“1/16/15 Adams Option”). The foregoing stock options vest in three equal end of calendar year increments, subject to Mr. Adams meeting certain performance criteria, commencing on December 31, 2015 and ending December 31, 2017, or upon consummation of a change in control. Once vested, the stock options are immediately exercisable. The transaction was valued at $93,536, which was estimated using the Black-Scholes option pricing model and will be expensed over the requisite vesting period. (d) On January 23, 2015, the Company and Bank of America, N.A. entered into a Twelfth Amendment (the “Twelfth Amendment”) to that certain Loan and Security Agreement dated August 31, 2010, as amended from time to time (the “Loan Agreement”). Pursuant to the Twelfth Amendment, certain definitions were changed and a new definition was added in the Loan Agreement as follows: (1) Fixed Charge Coverage Ratio was changed to the ratio, determined for any period on a consolidated basis for the Company, of (a) the sum of (i) EBITDA, (ii) Subordinated Debt incurred during such period on or after August 31, 2014 (other than the Twelfth Amendment Subordinated Debt), and (iii) up to $267,000 in Accounts charged off by the Company in August, 2014, to (b) the sum of Capital Expenditures (except those financed with Borrowed Money other than Revolver Loans), cash taxes paid, interest expense (other than payment-in-kind), principal payments made on Borrowed Money other than Revolver Loans, excluding (solely) principal payments made on the Subordinated Term Debt due December 1, 2013, in an amount not exceeding $150,000, and Distributions made, in each case determined for such period; (2) Revolver Termination Date was changed (extended) to March 31, 2016; and (3) Twelfth Amendment Subordinated Debt was added defining Subordinated Debt loaned to the Company by Richard Kurtz in an amount at least equal to $250,000, required as a condition to the effectiveness of the Twelfth Amendment. Refer to (e) On January 21, 2015, the Company borrowed $250,000 from the Chairman of the Board and majority stockholder as a condition precedent to entering into the Twelfth Amendment and entered into a promissory note (the “1/21/15 Kurtz Note”). Pursuant the 1/21/15 Kurtz Note, the Company agreed to pay eight percent (8%) per annum on the principal balance of $250,000 and repay the principle balance on June 10, 2017. The 1/21/15 Kurtz Note is subordinated to the Loan Agreement and New Enhanced Note. See also (f) On March 23, 2015, the Company granted an eight-year stock option to Harvey L. Schnitzer, COO, for 300,000 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 date of grant, determined based on the closing price on such date, or $0.41 per share (“3/23/15 Schnitzer Option”). The foregoing stock options vest in three equal end of calendar year increments, subject to Mr. Schnitzer meeting certain performance criteria, commencing on December 31, 2015 and ending December 31, 2017, or upon consummation of a change in control. Once vested, the stock options are immediately exercisable. The transaction was valued at $118,122, which was estimated using the Black-Scholes option pricing model and will be expensed over the requisite vesting period. (g) The Company has evaluated subsequent events through the date of this report. |
Summary of Organization, Basi26
Summary of Organization, Basis of Presentation and Critical Accounting Policies, Estimates and Assumptions (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Summary of Organization, Basis of Presentation and Critical Accounting Policies, Estimates and Assumptions | This summary briefly describes the CompanyÂ’s organization, basis of presentation, and critical accounting policies, estimates, and assumptions, which are presented to assist in understanding these financial statements. The financial statements and notes are representations of management who are responsible for their integrity and objectivity. The accounting policies used conform to Generally Accepted Accounting Principles (GAAP) in the United States of America and have been consistently applied in the preparation of these financial statements. Judgments and estimates of uncertainties are required in applying our accounting policies in many areas. However, application of the critical accounting policies discussed below requires managementÂ’s significant judgments, often as the result of the need to make estimates of matters that are inherently uncertain. If actual results were to differ materially from the estimates made, the reported results could be materially affected. |
Organization History | Organization History The Company was incorporated in the state of Delaware on October 20, 1989. The Company acquired 100% of the capital stock of Infiniti Products, Inc. (f/k/a Infiniti Paint Co., Inc.), a Florida corporation, effective September 1, 2001, which was engaged in the business of developing, marketing, selling, and distributing primarily acrylic roof coatings and polyurethane foam systems in the Southeastern United States (“Infiniti”). During the latter part of 2004, Infiniti built and began operating an acrylic roof coatings manufacturing plant in the Southeastern United States. On February 11, 2005, the Company acquired 100% of the capital stock of Lapolla Industries, Inc., an Arizona corporation (“Lapolla AZ”), which was engaged in the business of manufacturing acrylic roof coatings and sealants, and distributing polyurethane foam systems in the Southwestern United States. On April 1, 2005, Infiniti merged with and into Lapolla AZ whereas the existence of Infiniti ceased. On October 1, 2005, Lapolla AZ merged with and into the Company, under its former name of IFT Corporation, whereas the existence of Lapolla AZ ceased. On November 8, 2005, the Company changed its name to Lapolla Industries, Inc. On July 1, 2008, the Company acquired certain assets and liabilities of Air-Tight Marketing and Distribution, Inc. |
Reclassifications | Reclassifications Certain reclassifications of prior year amounts have been made to conform to the current year presentation. The reclassifications did not affect net loss. |
Trade Receivables and Credit Risk | Trade Receivables and Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of trade receivables. The CompanyÂ’s customers consist primarily of contractors and distributors. Trade receivables consist primarily of uncollateralized customer obligations, including personal guarantees when obtainable, due under normal trade terms which usually require payment within 30 days of the invoice date. However, these payment terms are extended in select cases and many customers do not pay within stated trade terms. The Company has trade receivables from a diverse customer base. The Company has a credit insurance policy in place covering most customer account balances. The Company believes no significant concentration of credit risk exists. The Company evaluates the creditworthiness of its customersÂ’ financial position and monitors accounts on a regular basis. Provisions to the allowance for doubtful accounts are reviewed quarterly and adjustments are made periodically (as circumstances warrant) based upon managementÂ’s best estimate of collectability of accounts. No customer represented more than 10% of sales for each of the years ended December 31, 2014 and 2013. No customer represented more than 10% of trade receivables at December 31, 2014 or 2013. |
Note Receivable | Note Receivable The Company presents note receivables, net of reserves for losses, to ensure note receivables are not overstated due to uncollectible amounts. Reserves |
Goodwill | Goodwill and Other Intangible Assets Goodwill represents the excess of the cost over the fair value of net tangible and identifiable intangible assets of acquired businesses. Identifiable intangible assets acquired in business combinations are recorded based upon their fair value at the date of acquisition. According to GAAP, goodwill is required to be tested for impairment, on an annual basis and between annual tests in certain circumstances, and written down when impaired. The goodwill impairment test is performed by comparing the fair value of the associated reporting unit to its carrying value. GAAP also requires that intangible assets with estimable useful lives be amortized over their respective estimated lives to their estimated residual values, and reviewed for impairment, unless these lives are determined to be indefinite. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adopted authoritative GAAP guidance regarding disclosures about fair value of financial instruments, which requires the disclosure of the fair value of off-and-on balance sheet financial instruments. Unless otherwise indicated, the fair values of all reported assets and liabilities, which represent financial instruments (none of which are held for trading purposes), approximate the carrying values of such amounts. The Company adopted authoritative GAAP guidance regarding fair value measurements, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. This guidance establishes three levels of inputs that may be used to measure fair value: (a) Level 1 - Quoted prices in active markets for identical assets or liabilities. (b) Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities; and (c) Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. The Company had no Level 1, 2, or 3 assets or liabilities at December 31, 2014 and 2013, respectively. The carrying value of cash and cash equivalents, trade receivables and payables, prepaid expenses and other current assets, and other payables and accruals approximate fair value due to short period of time to maturity. |
Litigation | Litigation In the normal course of business, the Company is occasionally involved in legal proceedings. The Company accrues a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash, checks, and credit card and ACH payments deposited with financial institutions to be cash and cash equivalents. |
Inventories | Inventories Cost is determined on an actual and/or standard cost basis that approximates the first-in, first-out (FIFO) method using a perpetual inventory system. Inventories are valued at the lower of cost or market (replacement cost), which does not exceed net realizable value. |
Income Taxes | Income Taxes The Company's provision for income taxes is determined using the U.S. federal statutory rate. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities along with net operating loss and tax credit pectively, reducing its net carrying value to zero. The Company has no unrecognized income tax benefits. Accordingly, the annual effective tax rate is unaffected. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and operating expense, respectively. At December 31, 2014, the Company had no increase or decrease in unrecognized income tax benefits for the year. There was no accrued interest or penalties relating to tax uncertainties at December 31, 2014. Unrecognized tax benefits are not expected to increase or decrease within the next twelve months. |
Depreciable Lives of Property, Plant and Equipment | Depreciable Lives of Property, Plant and Equipment Property, plant and equipment is recorded at cost and depreciated using the straight-line method, which deducts equal amounts of the cost of each asset from earnings every year over its estimated economic useful life. Economic useful life is the duration of time an asset is expected to be productively employed by the Company, which may be less than its physical life. Assumptions on the following factors, among others, affect the determination of estimated economic useful life: wear and tear, obsolescence, technical standards, contract life, market demand, competitive position, raw material availability, and geographic location. The estimated economic useful life of an asset is monitored to determine its appropriateness, especially in light of changed business circumstances. For example, changes in technology and changes in the estimated future demand for products may result in a shorter estimated useful life than originally anticipated. In these cases, we would depreciate the remaining net book value over the new estimated remaining life, thereby increasing depreciation expense per year on a prospective basis. Net property, plant and equipment totaled $1,364,613 and depreciation expense totaled $394,309 as of and for the year ended December 31, 2014. Net property, plant and equipment totaled $1,600,679 and depreciation expense totaled $453,827 as of and for the year ended December 31, 2013. |
Property, Plant and Equipment | Impairment of Long-Lived Assets Property, Plant and Equipment Property, plant, and equipment held for use is grouped for impairment testing at the lowest level for which there is an identifiable cash flow. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Such circumstances would include a significant decrease in the market value of a long-lived asset grouping, a significant adverse change in the manner in which the asset grouping is being used or in its physical condition, a history of operating or cash flow losses associated with the use of the asset grouping, or changes in the expected useful life of the long-lived assets. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by that asset group is compared to the carrying value to determine whether impairment exists. If an asset group is determined to be impaired, the loss is measured based on the difference between the asset groupÂ’s fair value and its carrying value. An estimate of the asset groupÂ’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. There were no property, plant and equipment impairment charges recorded during the years ended December 31, 2014 or 2013. |
Goodwil | Goodwill Goodwill represents the excess of the aggregate purchase price over the fair value of net tangible and identifiable intangible asset of an acquired business. Goodwill was $4,234,828 at December 31, 2014 and 2013. The Company operates two reporting units, Foam and Coatings. Disclosures related to goodwill are included in Note 8 to the financial statements. The Company evaluates goodwill for impairment on an annual basis, or more frequently if Management believes indicators of impairment exist, by comparing the carrying value of each of reportable unit to their estimated fair values. The annual evaluation is performed as of the last day of a calendar year or December 31, and the most recent evaluation of goodwill impairment was performed on December 31, 2014. The impairment test requires the Company to compare the fair value of each reporting unit to its carrying value, including assigned goodwill. Management uses the income approach to estimate the fair market value of reporting units based on expected future economic benefits. This approach serves to estimate the value of the specific income stream with consideration given to the risk inherent in that income stream. The income approach is most relevant when valuing an equity interest that is based on the premise that Lapolla is considered a going concern or a viable business for the foreseeable future. Lapolla used the discounted cash flow method under the income approach in its analysis. In applying the discounted cash flow method, Lapolla identified the level of cash flow estimated for five years. The annual estimated cash flows and terminal value were then discounted to present value, at an appropriate discount rate, to arrive to the indication of fair market value for each reporting unit. The discount rate utilized reflected the estimate of investor-required rates of return for investments that are seen as similar to an investment in similarly situated companies like Lapolla. The assumptions were consistent with those utilized in the CompanyÂ’s operating plan and long term financial planning process and considered historical experience and current and future expected market and industry conditions. Management judgment is required in the determination of each assumption used in the valuation model, and actual results could differ from the estimates. Upon completion of the 2014 and 2013 annual impairment assessments, the Company determined no impairment was indicated as the estimated fair value of each of the reporting units substantially exceeded its respective carrying value. |
Other Intangible Assets | Other Intangible Assets The Company had other intangible assets, net of $1,183,452 and $1,165,157 at December 31, 2014 and 2013, respectively, consisting of product formulations, and trade names that were acquired as part of business combinations, and trademarks and approvals and certifications obtained as part of entering into new markets. Amortization of other intangible assets totaled $278,826 and $424,426 for the years ended December 31, 2014 and 2013, respectively. Other intangible assets are tested for impairment as part of the long-lived asset grouping impairment tests. Impairment testing of the asset group occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. See |
Revenue Recognition | Revenue Recognition Sales are recognized as risk and title to products transfers to the customer (which generally occurs at the time shipment is made), the sales price is fixed or determinable, and collectability is reasonably assured. Sales channels include direct sales, distributors, and independent representatives. Irrespective of the sales channel, returns and allowances are not a business practice in the industry. Amounts billed for shipping and handling are included in revenues (freight). Freight included in revenue was $998,803 and $1,106,250 in 2014 and 2013, respectively. Costs incurred for shipping and handling are included in cost of sales. Freight included in cost of sales was $4,441,402 and $3,493,579 in 2014 and 2013, respectively. Revenues are recorded net of sales tax. |
Research and Development | Research and Development Research and development costs related to both future and present products are charged to operations as incurred. |
Share Based Compensation | Share-Based Compensation The Company accounts for the cost of employee or director services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of share based awards is estimated at the grant date using a Black-Scholes valuation model and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period. The determination of fair value is affected by the CompanyÂ’s stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option exercise behaviors. Employee stock option exercise behavior is based on actual historical exercise activity and assumptions regarding future exercise activity of unexercised, outstanding options. The Company applies an estimated forfeiture rate to unvested awards for the purpose of calculating compensation cost. These estimates are subject to revision in future periods if actual forfeitures differ from the estimates and changes impact compensation cost in the period in which the change in estimate occurs. Disclosures related to share-based compensation are included in Note 17 to our financial statements. Share-based compensation expense was $1,058,327 and $1,319,730 in 2014 and 2013, respectively. If additional share based awards are granted, financial performance may be negatively affected, and if outstanding share based awards are forfeited or canceled, resulting in non-vesting of such stock awards, financial performance may be positively affected. In either instance, the CompanyÂ’s financial performance may change depending on share based award activities in future periods. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company presents trade receivables, net of allowances for doubtful accounts, to ensure trade receivables are not overstated due to uncollectible accounts. Allowances, when required, are calculated based on a detailed review of certain individual customer accounts, including credit insurance and other security when applicable, and an estimation of the overall economic conditions affecting our customer base. The Company reviews a customerÂ’s credit history before extending credit. The allowance for doubtful accounts was approximately $617,000 and $317,000 at December 31, 2014 and 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. |
Cost of Sales and Selling, General and Administrative Costs | Cost of Sales and Selling, General and Administrative Costs The Cost of Sales line item includes all the material, overhead, packaging, and freight costs associated with products shipped, including resale finished goods and raw materials, as well as payroll costs associated with manufacturing the finished goods, inbound freight, sales tax expense, product containers, labels, and other miscellaneous items that are indirectly used in the manufacturing, packaging, and shipping (outbound freight) of finished goods, including inspection, and internal transfer costs, as well as depreciation of machinery, amortization of approvals and certifications, and an allocated portion of overhead. The Selling, General and Administrative line item includes selling, advertising, marketing, customer service, and technical support, as well as the costs of providing corporate functional support for all other areas of our business. |
Advertising and Marketing | Advertising and Marketing Expenses Advertising and marketing costs are generally expensed as incurred. Expenditures for certain advertising and marketing activities related to trade shows and trade magazines are deferred within the CompanyÂ’s fiscal year when the benefits clearly extend beyond the interim period in which the expenditure is made, generally not to exceed 90 days. There were $168,817 and $-0- costs for advertising deferred on the CompanyÂ’s balance sheets as of December 31, 2014 and 2013, respectively. Other advertising and marketing expenditures that do not meet the deferred criteria are expensed when the advertising and marketing occurs. Total advertising and marketing costs expensed were approximately $982,000 and $965,000 in 2014 and 2013, respectively. |
Debt Issuance Costs | Debt Issuance Costs The Company capitalizes debt issuance costs, which are included in the Company’s balance sheets. These costs are amortized over the term of the financial instrument. Amortization of debt issuance costs is included in “Interest Expense” in the statements of operations. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Basic income (loss) per share is based upon the net income (loss) applicable to common shares after preferred dividend requirements and upon the weighted average number of common shares outstanding during the period. Diluted income (loss) per share reflects the effect of the assumed exercise of stock options and warrants only in periods in which such effect would have been dilutive. Disclosures related to net income (loss) per common share are included in Note 13 to our financial statements. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In March 2013, the FASB issued an accounting standards update that provides guidance on the accounting for the cumulative translation adjustment (CTA) upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. Under this guidance, an entity should recognize the CTA in earnings based on meeting certain criteria, including when it ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated foreign entity or upon a sale or transfer that results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets resides. This guidance will be effective for fiscal years beginning on or after December 15, 2013, which will be the Company's fiscal year 2014, with early adoption permitted. The Company adopted the provisions of the guidance in the first quarter of 2014. The adoption did not have a material impact on the CompanyÂ’s financial statements. In July 2013, the FASB issued an accounting standards update that requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carry-forward that would apply in settlement of the uncertain tax positions. This guidance will be effective for fiscal years beginning after December 15, 2013, which will be the Company's fiscal year 2014, with early adoption permitted. The Company adopted the provisions of the guidance in the first quarter of 2014. The adoption did not have a material impact on the CompanyÂ’s 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 financial statements. In May 2014, the FASB issued ASU No. 2014-09, " Revenue from Contracts with Customers In June 2014, the FASB issued ASU No. 2014-12, “ Compensation — Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period In August 2014, the FASB issued ASU No. 2014-15, “ Presentation of Financial Statements—Going Concern: Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” |
Trade Receivables (Tables)
Trade Receivables (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Receivables [Abstract] | |
Trade Receivables | 2014 2013 Trade Receivables $ 9,497,247 $ 8,011,176 Less: Allowance for Doubtful Accounts (616,883 ) (316,587 ) Trade Receivables, Net $ 8,880,364 $ 7,694,589 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Inventory Disclosure [Abstract] | |
Inventories | 2014 2013 Raw Materials $ 1,461,040 $ 1,804,959 Finished Goods 3,806,985 3,616,976 Total $ 5,268,025 $ 5,421,935 |
Prepaid Expenses and Other Cu29
Prepaid Expenses and Other Current Assets. (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | 2014 2013 Prepaid Insurances $ 568,088 $ 582,654 Prepaid Marketing 172,919 152,667 Prepaid Consulting 60,266 66,208 Prepaid Other 348,006 357,839 Note Receivable, Net — 90,946 Total Prepaid Expenses and Other Current Assets $ 1,149,279 $ 1,250,314 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | 2014 2013 Estimated Useful Life Vehicles $ 475,357 $ 649,487 5 Years Leasehold Improvements 288,777 288,777 13 – 15 Years Office Furniture and Equipment 297,737 327,329 3 – 7 Years Computers and Software 897,102 1,185,333 3 – 5 Years Machinery and Equipment 2,503,062 2,466,007 3 – 20 Years Total Property, Plant and Equipment $ 4,462,035 $ 4,916,933 Less: Accumulated Depreciation (3,097,422 ) (3,316,254 ) Total Property, Plant and Equipment, Net $ 1,364,613 $ 1,600,679 |
Goodwill and Other Intangible31
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 2014 2013 Foam $ 2,932,208 $ 2,932,208 Coatings 1,302,620 1,302,620 $ 4,234,828 $ 4,234,828 |
Other Intangible Assets | 2014 2013 Gross Accumulated Net Gross Accumulated Net Amortization Amount Amortization Amount Amount Amortization Amount Period Product Formulations $ 138,471 (90,775 ) $ 47,696 138,471 $ (81,544 ) 56,927 15 Years Trade Names 750,186 (319,224 ) 430,962 740,325 (269,212 ) 471,113 15 Years Approvals and Certifications 1,835,013 (1,130,219 ) 704,794 1,547,754 (910,637 ) 637,117 5 Years $ 2,723,670 $ (1,540,218 ) $ 1,183,452 $ 2,426,550 $ (1,261,393 ) $ 1,165,157 |
Amortization Expense | 2015 2016 2017 2018 Thereafter Product Formulations $ 9,231 $ 9,231 $ 9,231 $ 9,231 $ 10,772 Trade Names 50,012 50,012 50,012 50,012 230,914 Approvals and Certifications 206,346 206,346 206,346 85,756 — $ 265,589 $ 265,589 $ 265,589 $ 144,999 $ 241,686 |
Deposits and Other Non-Curren32
Deposits and Other Non-Current Assets, Net. (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Deposits and other non-current assets | 2014 2013 Deferred Financing Fees $ 195,201 $ 285,246 Prepaid Expenses 7,104 46,744 Other Receivables 43,193 55,293 Deposits 153,585 153,584 Note Receivable, Net — 145,791 Total Deposits and Other-Non-Current Assets $ 399,083 $ 686,658 |
Accrued Expenses and Other Cu33
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Payables and Accruals [Abstract] | |
Accrued expenses and other liabilities | 2014 2013 Accrued Payroll $ 206,364 $ 169,785 Accrued Commissions 113,193 61,000 Accrued Inventory 108,016 178,616 Accrued Taxes and Other 818,544 606,275 Accrued Insurance 482,007 427,395 Deferred Finance Charge Income 30,536 13,824 Total Accrued Expenses and Other Current Liabilities $ 1,758,660 $ 1,456,895 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |
Components of income tax expense (benefit) | 2014 2013 Current: Federal $ — $ — State 29,304 22,206 Total Current 29,304 22,206 Deferred: Federal — — State — — Total Deferred — — Total Tax Provision $ 29,304 $ 22,206 |
Reconciliation of expected tax expense to actual expense | 2014 2013 Federal Income Tax Expense/(Benefit) $ (1,244,723 ) $ (670,155 ) State Income Tax 29,304 22,206 Nondeductible Expenses 36,920 46,240 Prior Year Adjustments (597,810 ) 8,678 Change in Valuation Allowance 1,805,613 615,237 Total Tax Provision $ 29,304 $ 22,206 |
Deferred tax asset | Deferred Tax Assets: 2014 2013 Net Operating Loss Carry-Forward $ 72,198,767 $ 66,888,140 Statutory Tax Rate 34 % 34 % Total Deferred Tax Assets 24,547,581 22,741,968 Valuation Allowance for Deferred Tax Assets (24,547,581 ) (22,741,968 ) Net Deferred Taxes $ — $ — |
Commitments and Contingencies (
Commitments and Contingencies (Table) | 12 Months Ended |
Dec. 31, 2014 | |
Commitments And Contingencies Table | |
Future minimum lease payments | 2015 2016 2017 $ 374,894 $ 408,719 $ 183,219 |
Net Income (Loss) per Common 36
Net Income (Loss) per Common Share - Basic and Diluted (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Net Income Loss Per Common Share - Basic And Diluted Tables | |
Basic and Diluted earnings per share | 2014 2013 Net loss available to common shareholders (A) $ (3,660,949 ) $ (1,971,045 ) Weighted average common shares outstanding (B) 115,359,714 111,449,320 Dilutive effect of employee equity incentive plans 880,000 4,740,000 Weighted average common shares outstanding, assuming dilution (C) 116,066,620 111,870,040 Basic earnings per common share (A)/(B) $ (0.03 ) $ (0.02 ) Diluted earnings per common share (A)/(C) $ (0.03 ) $ (0.02 ) |
Share-Based Payment Arrangeme37
Share-Based Payment Arrangements (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
SharebasedPaymentArrangementsNewGuarantyPlanDetailsAbstract | |
Stock option activity - Equity Plan | 2014 2013 Number Weighted-Average Number Weighted-Average Options of Options Exercise Price of Options Exercise Price Outstanding-Beginning of Year 5,040,000 $ 0.60 5,540,000 $ 0.61 Granted 5,317,500 0.45 — — Exercised — — — — Canceled, Expired or Forfeited (3,080,000 ) 0.61 (500,000 ) 0.74 Outstanding - End of Year 7,277,500 0.47 5,040,000 0.60 Exercisable - End of Year 4,415,000 $ 0.47 4,740,000 $ 0.61 |
Options outstanding | Outstanding Exercisable Outstanding Exercisable Weighted Weighted Average Weighted Weighted Average Weighted Weighted Range of Number Remaining Average Number Average Number Remaining Average Number Average Exercise Outstanding Contractual Exercise Exercisable Exercise Outstanding Contractual Exercise Exercisable Exercise Prices at 12/31/14 Life (Years) Price at 12/31/14 Price at 12/31/13 Life (Years) Price at 12/31/13 Price $.35 - $.59 4,417,500 5.20 $ 0.41 1,955,000 $ 0.41 650,000 1.69 $ 0.36 350,000 $ 0.36 $.60 - $.64 2,260,000 0.46 0.53 1,960,000 0.56 2,310,000 2.40 $ 0.60 2,310,000 $ 0.60 $.65 - $.80 600,000 4.08 $ 0.71 — — 2,080,000 1.30 $ 0.67 2,080,000 $ 0.67 |
Stock Award | 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year — $ — — $ — Granted 100,000 65,000 — — Vested (50,000 ) (32,500 ) — — Canceled, Expired or Forfeited — — — — Nonvested - End of Year 50,000 $ 32,500 — $ — |
Stock award activity - Director Plan | 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year 160,000 $ 104,000 320,000 $ 208,000 Granted — — — — Vested (160,000 ) (104,000 ) (160,000 ) (104,000 ) Canceled, Expired or Forfeited — — — — Nonvested - End of Year — $ — 160,000 $ 104,000 |
Stock award activity - Advisor Plan | 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year 237,238 $ 135,219 1,902,380 $ 1,084,352 Granted 110,733 63,893 272,969 96,560 Vested (347,971 ) (199,112 ) (1,938,111 ) (1,045,693 ) Canceled, Expired or Forfeited — — — — Nonvested - End of Year — $ — 237,238 $ 135,219 |
Stock award activity - New Guaranty Plan | 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year 3,607,179 $ 2,164,307 — $ — Granted — — 3,681,000 2,208,600 Vested (1,224,763 ) (734,858 ) (73,821 ) (44,293 ) Canceled, Expired or Forfeited — — — — Nonvested - End of Year 2,382,416 $ 1,429,449 3,607,179 $ 2,164,307 |
Stock award activity - Prior Guaranty Plan | 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year — $ — 3,726,027 $ 1,006,116 Granted — — — — Vested — — (2,349,315 ) (634,315 ) Canceled, Expired or Forfeited — — (1,376,712 ) (371,801 ) Nonvested - End of Year — $ — — $ — |
Stock award activity - Guaranty Plan | 2014 2013 Number Weighted-Average Number Weighted-Average Nonvested Awards of Shares Grant-Date Fair Value of Shares Grant-Date Fair Value Nonvested - Beginning of Year 3,607,179 $2,164,307 3,726,027 $1,006,116 Granted — — 3,681,000 2,208,600 Vested (1,224,763 ) (734,858 ) (2,423,136 ) (678,608 ) Canceled, Expired or Forfeited — — (1,376,712 ) (371,801 ) Nonvested - End of Year 2,382,416 $ 1,429,449 3,607,179 $ 2,164,307 |
Business Segment Information (T
Business Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Segment Reporting [Abstract] | |
Reportable Segments | Segments 2014 Foam Coatings Totals Sales $ 62,477,449 $ 9,587,566 $ 72,065,015 Depreciation 129,752 19,911 149,664 Amortization of Other Intangible Assets 217,558 33,386 250,944 Interest Expense 945,571 145,104 1,090,675 Segment Profit 1,265,026 941,743 2,206,769 Segment Assets (1) 18,477,410 3,665,095 22,142,505 Expenditures for Segment Assets $ 179,626 $ 27,565 $ 207,191 2013 Foam Coatings Totals Sales $ 61,080,736 $ 10,096,235 $ 71,176,971 Depreciation 134,499 22,232 156,731 Amortization of Other Intangible Assets 327,800 54,183 381,983 Interest Expense 795,153 131,433 926,586 Segment Profit 2,293,601 1,456,975 3,750,576 Segment Assets (1) 17,917,746 3,743,801 21,661,547 Expenditures for Segment Assets $ 101,786 $ 16,825 $ 118,611 |
Reconciliation of reportable segment profit or loss | Segments Profit 2014 2013 Total Profit for Reportable Segments $ 2,206,769 $ 3,750,576 Unallocated Amounts: Corporate Expenses (5,867,718 ) (5,721,621 ) Loss Before Income Taxes $ (3,660,949 ) $ (1,971,045 ) |
Reconciliation of reportable segment assets | Assets 2014 2013 Total Assets for Reportable Segments (1) $ 22,142,505 $ 21,661,547 Other Unallocated Amounts (2) 355,550 392,612 Total $ 22,498,055 $ 22,054,160 |
Geographic Area | Geographic Area United States Europe Middle East Rest of World Total 2014 Sales $ 69,746,725 $ 665,365 $ 3,505 $ 1,649,420 $ 72,065,015 Long-Lived Assets $ 21,661,547 $ — $ — $ — $ 21,661,547 2013 Sales $ 61,417,293 $ 1,741,485 $ 5,706,558 $ 2,311,635 $ 71,176,971 Long-Lived Assets $ 21,661,547 $ — $ — $ — $ 21,661,547 |
Basis of Presentation (Details
Basis of Presentation (Details Narrative) (USD $) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Notes Receivable | ||
Notes Receivable | $ 0 | $ 473,000 |
Reserve for loss | 0 | 237,000 |
Income Taxes | ||
Deferred Tax Asset | 24,600,000 | 22,700,000 |
Deferred Tax asset valuation allowance | 24,600,000 | 22,700,000 |
Property,Plant and Equipment | ||
Property, Plant and Equipment | 1,364,613 | 1,600,679 |
Depreciation Expense | 394,309 | 453,827 |
Depreciation in cost of sales | 228,016 | 279,571 |
Goodwill and Other Intangible Assets | ||
Goodwill | 4,234,828 | 4,234,828 |
Other Intangible Assets, Net | 1,183,452 | 1,165,157 |
Amortization Expense | 278,826 | 424,426 |
Revenue Recognition | ||
Freight included in sales | 998,803 | 1,106,250 |
Freight included in cost of sales | 4,441,402 | 3,493,579 |
Share Based compensation | ||
Share Based Compensation Expense | 1,058,327 | 1,319,730 |
Allowance for doubtful accounts | ||
Allowance for doubtful accounts | 617,000 | 317,000 |
Advertising and Marketing | ||
Deferred Advertising Costs | 168,817 | 0 |
Advertising and Marketing costs | $ 982,000 | $ 965,000 |
Liquidity (Details Narrative)
Liquidity (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated Deficit | $ 90,156,603 | $ 86,495,654 |
Net Loss | (3,660,949) | (1,971,045) |
Net Cash (Used in) Provided by Operating Activities | (997,146) | $ (2,132,440) |
Working Capital Surplus | $ 6,572,046 |
Dependence on a few suppliers (
Dependence on a few suppliers (Details Narrative) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Notes to Financial Statements | ||
Major Suppliers | 43% | 41% |
Trade Receivables - Trade Recei
Trade Receivables - Trade Receivables (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Accounts Receivable, Net, Current [Abstract] | ||
Trade Receivables | $ 9,497,247 | $ 8,011,176 |
Less: Allowance for Doubtful Accounts | (616,883) | (316,587) |
Trade Receivables, Net | $ 8,880,364 | $ 7,694,589 |
Inventories - Inventories (Deta
Inventories - Inventories (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Inventory Disclosure [Abstract] | ||
Raw Materials | $ 1,461,040 | $ 1,804,959 |
Finished Goods | 3,806,985 | 3,616,976 |
Inventories | $ 5,268,025 | $ 5,421,935 |
Prepaid Expenses and Other Cu44
Prepaid Expenses and Other Current Assets. - Prepaid Expenses and Other Current Assets (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid Insurances | $ 568,088 | $ 582,654 |
Prepaid Marketing | 172,919 | 152,667 |
Prepaid Consulting | 60,266 | 66,208 |
Prepaid Other | $ 348,006 | 357,839 |
Note Receivable, Net | 90,946 | |
Total Prepaid Expenses and Other Current Assets | $ 1,149,279 | $ 1,250,314 |
Property, Plant and Equipment -
Property, Plant and Equipment - Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment [Abstract] | ||
Vehicles | $ 475,357 | $ 649,487 |
Leasehold Improvements | 288,777 | 288,777 |
Office Furniture and Equipment | 297,737 | 327,329 |
Computers and Software | 897,102 | 1,185,333 |
Machinery and Equipment | 2,503,062 | 2,466,007 |
Total Property, Plant and Equipment | 4,462,035 | 4,916,933 |
Less: Accumulated Depreciation | (3,097,422) | (3,316,254) |
Property, Plant and Equipment | $ 1,364,613 | $ 1,600,679 |
Goodwill and Other Intangible46
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) | Dec. 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 Intangible47
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Gross | $ 2,723,670 | $ 2,426,550 |
Accumulated Amortization | (1,540,218) | (1,261,393) |
Intangible Assets, Net | 1,183,452 | 1,165,157 |
Approvals and Certifications | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Gross | 1,835,013 | 1,547,754 |
Accumulated Amortization | (1,130,219) | (910,637) |
Intangible Assets, Net | 704,794 | 637,117 |
Trade Names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Gross | 750,186 | 740,325 |
Accumulated Amortization | (319,224) | (269,212) |
Intangible Assets, Net | 430,962 | 471,113 |
Product Formulation | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Gross | 138,471 | 138,471 |
Accumulated Amortization | (90,775) | (81,544) |
Intangible Assets, Net | $ 47,696 | $ 56,927 |
Other Intangible Assets Amortiz
Other Intangible Assets Amortization (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Amortization Expense | $ 241,686 | $ 144,999 | $ 265,589 | $ 265,589 | $ 265,589 |
Trade Names | |||||
Amortization Expense | 230,914 | 50,012 | 50,012 | 50,012 | 50,012 |
Product Formulation | |||||
Amortization Expense | $ 10,772 | 9,231 | 9,231 | 9,231 | 9,231 |
Certifications in Progress | |||||
Amortization Expense | $ 85,756 | $ 206,346 | $ 206,346 | $ 206,346 |
Deposits and Other Non-Curren49
Deposits and Other Non-Current Assets, Net. - Deposits and other non-current assets (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Deferred Financing Fees | $ 195,201 | $ 285,246 |
Prepaid Expenses | 7,104 | 46,744 |
Other Receivables | 43,193 | 55,293 |
Deposits | $ 153,585 | 153,584 |
Note Receivable, Net | 145,791 | |
Total Deposits and Other-Non-Current Assets | $ 399,083 | $ 686,658 |
Accrued Expenses and Other Cu50
Accrued Expenses and Other Current Liabilities - Accrued expenses and other liabilities (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Accrued Payroll | $ 206,364 | $ 169,785 |
Accrued Commissions | 113,193 | 61,000 |
Accrued Inventory Purchases | 108,016 | 178,616 |
Accrued Taxes and Other | 818,544 | 606,275 |
Accrued Insurance | 482,007 | 427,395 |
Deferred Finance Charge Income | 30,536 | 13,824 |
Total Accrued Expenses and Other Current Liabilities | $ 1,758,660 | $ 1,456,895 |
Financing Instruments - Loan an
Financing Instruments - Loan and Security Agreement (Details Narrative) - USD ($) | Dec. 10, 2013 | Sep. 01, 2010 | Dec. 31, 2014 | Dec. 31, 2013 |
Note Purchase Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Bank Loans Funds Available | $ 7,200,000 | |||
Maturity Date | Dec. 10, 2016 | |||
Weighted-Average Interest Rate | 23.60% | |||
Revolver Loan | ||||
Line of Credit Facility [Line Items] | ||||
Bank Loans Funds Available | $ 13,000,000 | |||
Maturity Date | Mar. 31, 2016 | |||
Bank Loan Payable | $ 5,435,005 | $ 4,539,163 | ||
Weighted-Average Interest Rate | 4.30% | 4.50% | ||
Cash Available | $ 2,754,601 | $ 1,761,427 | ||
Enhanced Jobs for Texas | ||||
Line of Credit Facility [Line Items] | ||||
Bank Loans Funds Available | $ 5,700,000 | |||
Enhanced Texas Fund | ||||
Line of Credit Facility [Line Items] | ||||
Bank Loans Funds Available | $ 1,500,000 |
Financing Instruments Terms - L
Financing Instruments Terms - Loan and Security Agreement (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Note Purchase Agreement | |
Terms | Interest is payable monthly and broken down into Current Pay Interest at the rate of 7.25% per annum, and PIK Interest at the rate of 4.25% (which is added to the principal balance of the outstanding notes) to create the aggregate interest rate of 15%. The Company has the right to prepay the New Enhanced Note, subject to a prepayment premium equal to 3% for the first year or 2% for the second year. The Company also entered into a security agreement with the New Enhanced Note providing for a second lien on all assets of the Company after Bank of America, which has a first lien on all assets of the Company. The Company has four material debt covenants to comply with relating to its New Enhanced Note: (i) Capital expenditures are limited to $625,000 on an annual basis, (ii) A minimum [ Adjusted] EBITDA, |
Revolver Loan | |
Terms | The Base Rate is equal to the greater of (a) the Prime Rate; (b) the Federal Funds Rate, plus 0.50%; or (c) LIBOR for a 30 day interest period, plus 1.50%. The Company has four material debt covenants to comply with relating to its Loan Agreement: (i) Capital expenditures are limited to $625,000 on an annual basis, (ii) The amount outstanding under the revolver Loan may not exceed the Borrowing Base (calculation defined as an amount determined by a detailed calculation and includes an amount equal to 85% of eligible accounts receivable, plus 55% of eligible inventory); (iii) Maintain an FCCR, tested monthly as of the last day of each calendar month for the twelve month period then ended, of at least 1.0 to 1.0, and (iv) Maintain minimum liquidity of $500,000. |
Financing Instruments Note Purc
Financing Instruments Note Purchase Agreement - New Enhanced Note (Details Narrative) (USD $) - USD ($) | Dec. 10, 2013 | Sep. 01, 2010 | Dec. 31, 2014 | Dec. 31, 2013 |
Note Purchase Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Bank Loans Funds Available | $ 7,200,000 | |||
Maturity Date | Dec. 10, 2016 | |||
Interest Rate | 7.25% | 11.00% | ||
(Gain) on Extinguishment of Debt | $ (398,886) | |||
Interest Expense- Write-Off of Old Debt Issuance Costs | 45,512 | |||
Enhanced Notes Payable | $ 7,157,852 | |||
Effective Interest Rate | 23.60% | |||
Pruchase discount | $ 542,886 | |||
Revolver Loan | ||||
Line of Credit Facility [Line Items] | ||||
Bank Loans Funds Available | $ 13,000,000 | |||
Maturity Date | Mar. 31, 2016 | |||
Effective Interest Rate | 4.30% | 4.50% | ||
Enhanced Jobs for Texas | ||||
Line of Credit Facility [Line Items] | ||||
Bank Loans Funds Available | $ 5,700,000 | |||
Enhanced Notes Payable | $ 2,200,000 | |||
Prior Enhanced Note | ||||
Line of Credit Facility [Line Items] | ||||
Enhanced Notes Payable | 4,400,000 | |||
Enhanced Texas Fund | ||||
Line of Credit Facility [Line Items] | ||||
Bank Loans Funds Available | $ 1,500,000 | |||
Enhanced Notes Payable | $ 2,200,000 |
Financing Instruments Note Pu54
Financing Instruments Note Purchase Agreement - New Enhanced Note Terms (Details Narrative) | 12 Months Ended |
Dec. 31, 2014 | |
Note Purchase Agreement | |
Line of Credit Facility [Line Items] | |
Terms | Interest is payable monthly and broken down into Current Pay Interest at the rate of 7.25% per annum, and PIK Interest at the rate of 4.25% (which is added to the principal balance of the outstanding notes) to create the aggregate interest rate of 15%. The Company has the right to prepay the New Enhanced Note, subject to a prepayment premium equal to 3% for the first year or 2% for the second year. The Company also entered into a security agreement with the New Enhanced Note providing for a second lien on all assets of the Company after Bank of America, which has a first lien on all assets of the Company. The Company has four material debt covenants to comply with relating to its New Enhanced Note: (i) Capital expenditures are limited to $625,000 on an annual basis, (ii) A minimum [ Adjusted] EBITDA, |
Revolver Loan | |
Line of Credit Facility [Line Items] | |
Terms | The Base Rate is equal to the greater of (a) the Prime Rate; (b) the Federal Funds Rate, plus 0.50%; or (c) LIBOR for a 30 day interest period, plus 1.50%. The Company has four material debt covenants to comply with relating to its Loan Agreement: (i) Capital expenditures are limited to $625,000 on an annual basis, (ii) The amount outstanding under the revolver Loan may not exceed the Borrowing Base (calculation defined as an amount determined by a detailed calculation and includes an amount equal to 85% of eligible accounts receivable, plus 55% of eligible inventory); (iii) Maintain an FCCR, tested monthly as of the last day of each calendar month for the twelve month period then ended, of at least 1.0 to 1.0, and (iv) Maintain minimum liquidity of $500,000. |
Financing Instruments Note Pu55
Financing Instruments Note Purchase - New Guaranty Agreement (Details Narrative) - USD ($) | Dec. 10, 2013 | Jun. 29, 2012 | Dec. 31, 2014 |
Note Purchase Agreement | |||
Restricted Common Stock Issued, shares | 3,681,000 | 1,298,584 | |
Restricted Common Stock, par value | $ 0.01 | ||
Per Share | $ 0.60 | ||
Restricted Common Stock Issued, Amount | $ 2,208,600 | $ 779,151 | |
Prior Guaranty Agreement | |||
Cancelled unvested shares | 1,376,712 | ||
Cancelled unvested shares, amount | $ 371,801 | ||
Restricted Common Stock Issued, shares | 5,000,000 | ||
Per Share | $ .27 | ||
Restricted Common Stock Issued, Amount | $ 1,350,000 |
Financing Instruments Note Pu56
Financing Instruments Note Purchase Agreement - Prior Enhanced Note (Details Narrative) (USD $) - Dec. 31, 2014 - USD ($) | Total |
Enhanced Texas Fund | |
Payments on Notes Payable | $ 1,673,381 |
Enhanced Notes Payable | 2,200,000 |
Enhanced Jobs for Texas | |
Payments on Notes Payable | 1,673,381 |
Enhanced Notes Payable | 2,200,000 |
Prior Enhanced Note | |
Enhanced Notes Payable | 4,400,000 |
Note Purchase Agreement | |
Enhanced Notes Payable | $ 7,157,852 |
Financing Instruments Note Pu57
Financing Instruments Note Purchase - Prior Guaranty Agreement (Details Narrative) - USD ($) | Dec. 10, 2013 | Jun. 29, 2012 | Dec. 31, 2014 |
Note Purchase Agreement | |||
Restricted Common Stock Issued, shares | 3,681,000 | 1,298,584 | |
Restricted Common Stock, par value | $ 0.01 | ||
Per Share | $ 0.60 | ||
Restricted Common Stock Issued, Amount | $ 2,208,600 | $ 779,151 | |
Prior Guaranty Agreement | |||
Cancelled unvested shares | 1,376,712 | ||
Cancelled unvested shares, amount | $ 371,801 | ||
Restricted Common Stock Issued, shares | 5,000,000 | ||
Per Share | $ .27 | ||
Restricted Common Stock Issued, Amount | $ 1,350,000 |
Financing Instruments Note Paya
Financing Instruments Note Payable - Related Party (Details Narrative) - Dec. 31, 2014 - USD ($) | Total |
Promissory Note - November 14, 2014 | |
Related Party Transaction [Line Items] | |
Note due to related party | $ 250,000 |
Interest Rate | 8.00% |
Maturity Date | Jun. 10, 2014 |
Accrued interest | $ 3,173 |
Promissory Note - April 16, 2012 | |
Related Party Transaction [Line Items] | |
Note due to related party | $ 1,300,000 |
Interest Rate | 5.00% |
Maturity Date | Oct. 1, 2014 |
Cancellation of note due | $ 1,300,000 |
Accrued interest | $ 185,212 |
Financing Instruments Warrants(
Financing Instruments Warrants(Details Narrative) (USD $) - $ / shares | Dec. 31, 2014 | Dec. 31, 2013 |
$.65-$.80 | ||
Warrants Outstanding | 600,000 | 2,080,000 |
Warrants Exercise Price | $ 0.71 | $ 0.67 |
$.60-$.64 | ||
Warrants Outstanding | 2,260,000 | 2,310,000 |
Warrants Exercise Price | $ 0.53 | $ 0.60 |
$.36-$.59 | ||
Warrants Outstanding | 4,417,500 | 650,000 |
Warrants Exercise Price | $ 0.41 | $ 0.36 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employment Agreement | |||
Increase in Auto Allowance. monthly | $ 700 | ||
Annual Compensation | $ 400,000 | $ 400,000 | 350,000 |
Adams Employment Agreement | |||
Increase in Auto Allowance. monthly | 750 | ||
Annual Compensation | 180,000 | ||
Bonus | $ 5,000 | ||
Adjusted EBITDA | 110.00% | ||
Bonus Level 3 | |||
Bonus | $ 200,000 | ||
Adjusted EBITDA | 140.00% | ||
Bonus Level 1 | |||
Bonus | $ 120,000 | ||
Adjusted EBITDA | 100.00% | ||
Bonus Level 2 | |||
Bonus | $ 160,000 | ||
Adjusted EBITDA | 120.00% |
Related Party Transactions (D61
Related Party Transactions (Details Narrative 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | ||
Related Party Transaction [Line Items] | |||
Share based compensation expense | $ 1,826,051 | $ 1,998,426 | |
Chairman | |||
Related Party Transaction [Line Items] | |||
Common stock, shares | [1] | 400,000 | |
Share Price | $ 0.54 | ||
Stock options fair value | $ 199,306 | ||
Management [Member] | |||
Related Party Transaction [Line Items] | |||
Common stock, shares | [2] | 400,000 | |
Share Price | $ 0.42 | ||
Vested Shares, shares | 50,000 | ||
Vested term | 2 years | ||
Stock options fair value | $ 155,027 | ||
Schintzer Option | |||
Related Party Transaction [Line Items] | |||
Common stock, shares | 100,000 | ||
Common stock, amount | $ 61,489 | ||
Share Price | $ .65 | ||
Vested Shares, shares | 33,334 | ||
Schintzer Stock Bonus | |||
Related Party Transaction [Line Items] | |||
Common stock, shares | 100,000 | ||
Common stock, amount | $ 65,000 | ||
Share Price | $ 0.65 | ||
Vested Shares, shares | 25,000 | ||
Employment Agreement | |||
Related Party Transaction [Line Items] | |||
Common stock, shares | [3] | 1,025,000 | |
Share Price | $ 0.42 | ||
Stock options fair value | $ 319,743 | ||
New Kramer Option | |||
Related Party Transaction [Line Items] | |||
Common stock, shares | 500,000 | ||
Common stock, amount | $ 340,000 | ||
Share Price | $ .72 | ||
10/14/15 Kramer Options | |||
Related Party Transaction [Line Items] | |||
Common stock, shares | [4] | 1,150,000 | |
Common stock, amount | $ 199,683 | ||
Share Price | $ .425 | ||
Prior Expired Options | |||
Related Party Transaction [Line Items] | |||
Common stock, shares | 80,000 | ||
Common stock, amount | $ 24,326 | ||
Share Price | $ .38 | ||
Chairman and Principal Stockholder | |||
Related Party Transaction [Line Items] | |||
Common stock, shares | 3,908,453 | ||
Share Price | $ 0.38 | ||
Interest Expense | $ 67,579 | ||
Cancellation of note due | $ 1,485,212 | ||
Personal guarantor | |||
Related Party Transaction [Line Items] | |||
Vested Shares, shares | 1,224,763 | ||
Interest Expense | $ 734,858 | ||
Note Payable | |||
Related Party Transaction [Line Items] | |||
Interest Expense | [5] | $ 70,752 | |
NonEmployeeDirectorMember | |||
Related Party Transaction [Line Items] | |||
Restricted common stock, shares | [6] | 160,000 | |
Restricted common stock, value | $ 104,000 | ||
Non-employee director | |||
Related Party Transaction [Line Items] | |||
Vested Shares, shares | 347,972 | ||
Vested Shares, amount | $ 214,113 | ||
[1] | The foregoing stock options vest over a period of two (2) years at the rate of 200,000 options on May 14, 2015 and May 14, 2016 | ||
[2] | Four non-employee directors, 100,000 shares each | ||
[3] | 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 | ||
[4] | 10/14/15 Kramer Options were granted as partial replacement for 2,000,000 stock options were granted on July 12, 2005 which expired July 12, 2013 (the 7/12/15 Kramer Prior Expired Options). The 7/12/15 Kramer Prior Expired Options were inadvertently extended to December 31, 2015, however, due to the 8 year life limitation, they were deemed canceled at the end of 8 years. The Company also undertook to grant the additional 850,000 stock options (to make up for the total 2,000,000 stock options) in January 2015 since the equity Incentive Plan only permits the grant of a total of 2,000,000 stock options during any calendar year (and Mr. Kramer was previously granted 850,000 stock options during the 2014 year for other incentives). | ||
[5] | $67,579 related to a $1,300,000 promissory note with the Chairman of the Board and majority stockholder | ||
[6] | 100,000 shares were for Mr. Nadel, and 20,000 shares were for Mr. Gregg, Mr. Brown, and Mr. Larson |
Income Taxes - Components of Ta
Income Taxes - Components of Tax (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Current: | ||
Federal | ||
State | $ 29,304 | $ 22,206 |
Total Current | $ 29,304 | $ 22,206 |
Deferred: | ||
Federal | ||
State | ||
Total Deferred | ||
Total Tax Provision | $ 29,304 | $ 22,206 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Tax (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes - Reconciliation Of Tax Details | ||
Federal Income Tax Expense/(Benefit) | $ (1,244,723) | $ (670,155) |
State Income Tax | 29,304 | 22,206 |
Nondeductible Expenses | 36,920 | 46,240 |
Prior Year Adjustments | (597,810) | 8,678 |
Change in Valuation Allowance | 1,805,613 | 615,237 |
Total Tax Provision | $ 29,304 | $ 22,206 |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax asset (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Deferred Tax Assets: | ||
Net Operating Loss Carry-Forward | $ 72,198,767 | $ 66,888,140 |
Statutory Tax Rate | 34.00% | 34.00% |
Total Deferred Tax Assets | $ 24,547,581 | $ 22,741,968 |
Valuation Allowance for Deferred Tax Assets | $ (24,547,581) | $ (24,547,581) |
Net Deferred Taxes |
Deferred Income Tax (Details Na
Deferred Income Tax (Details Narrative) | Dec. 31, 2014USD ($) |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | $ 24,600,000 |
2,018 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 6,022,543 |
2,019 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 2,528,950 |
2,020 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 4,557,566 |
2,021 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 7,870,612 |
2,022 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 10,869,699 |
2,023 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 9,811,811 |
2,024 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 4,244,336 |
2,025 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 3,280,473 |
2,026 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 2,359,786 |
2,027 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 3,629,828 |
2,028 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 2,117,913 |
2,029 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 2,547,714 |
2,031 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 2,198,439 |
2,032 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 3,038,952 |
2,033 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | 1,437,631 |
2,034 | |
Tax Credit Carryforward [Line Items] | |
Net operating Loss Carryforward Expiring, amount | $ 3,127,535 |
Commitments and Contingencies66
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Lease Payments | ||
2,015 | $ 374,894 | |
2,016 | 408,719 | |
2,017 | 183,219 | |
Rent Expense | $ 116,887 | $ 204,907 |
Commitments and Contingencies-L
Commitments and Contingencies-Legal Proceedings (Details Narrative) | 12 Months Ended |
Dec. 31, 2014USD ($) | |
Commitments And Contingencies-Legal Proceedings Details Narrative | |
Recoverable Legal Fees | $ 70,000 |
Award of Legal Fees | $ 40,000 |
Net Income (Loss) per Common 68
Net Income (Loss) per Common Share - Basic and Diluted (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Earnings Per Share [Abstract] | ||
Net loss available to common shareholders (A) | $ (3,660,949) | $ (1,971,045) |
Weighted average common shares outstanding (B) | 115,359,714 | 111,449,320 |
Dilutive effect of employee equity incentive plans | $ 880,000 | $ 4,740,000 |
Weighted average common shares outstanding, assuming dilution (C) | 116,066,620 | 111,870,040 |
Basic earnings per common share (A)/(B) | $ (0.03) | $ (0.02) |
Diluted earnings per common share (A)/(C) | $ (0.03) | $ (0.02) |
Net Income (Loss) per Common 69
Net Income (Loss) per Common Share - Basic and Diluted (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Antidilutive Secuities | 4,140,000 | 4,740,000 |
In-the-money | ||
Antidilutive Secuities | 880,000 | |
Out-of-the-money | ||
Antidilutive Secuities | 3,260,000 |
Securities Transactions (Detail
Securities Transactions (Details Narrative) - 12 months ended Dec. 31, 2014 - USD ($) | Total |
Related Party | |
Restricted Stock issued for Guaranty of Note, shares | 1,224,763 |
Restricted Stock issued for Guaranty of Note, amount | $ 734,858 |
Restricted Stock issued for Employee, shares | 50,000 |
Restricted Stock issued for Employee, amount | $ 25,000 |
Advisory and Consulting | |
Restricted Stock issued for Services, shares | 347,972 |
Restricted Stock issued for Services, amount | $ 214,113 |
Share-Based Payment Arrangeme71
Share-Based Payment Arrangements (Details) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2010 | Dec. 31, 2008 | Dec. 31, 2007 | Dec. 31, 2012 | |
Share based compensation Expense | $ 1,826,051 | $ 1,998,426 | ||||
Detachable Warrants | 0 | 0 | 2,500,000 | 2,500,000 | ||
Guaranty Plan | ||||||
Excercise Price on origination | $ 0.60 | |||||
Unrecognized Compensation Costs | $ 1,367,037 | |||||
Weight-average period | 1 year 9 months 5 days | |||||
Equity | ||||||
Compensation Expense | $ 100,000 | |||||
Advisor Plan | ||||||
Share based compensation Expense | $ 2,850,000 | |||||
Awards, granted | 5,000,000 | |||||
Excercise Price on origination | $ 0.57 | |||||
Weight-average period | 3 years | |||||
Options | ||||||
Compensation Expense | $ 5,317,500 | |||||
Equity Plan | ||||||
Awards, granted | 5,417,500 | 10,000,000 | ||||
Compensation Expense | $ 2,605,910 | $ 0 | ||||
Options availble for grant | 2,622,500 | |||||
Weight-average period | 2 years 4 months 2 days | |||||
Restricted Common Stock, per share | $ 0.47 | $ 0.60 | $ 0.61 | |||
Director Plan | ||||||
Awards, granted | 800,000 | |||||
Director Plan | NonEmployeeDirectorMember | ||||||
Awards, granted | 400,000 | |||||
Director Plan | Four Non-employee director | ||||||
Awards, granted | 100,000 | |||||
Stock Awards | ||||||
Restricted Common Stock, per share | $ 32,500 | |||||
Prior Guaranty Plan | ||||||
Restricted Common Stock, shares | 5,000,000 | |||||
Restricted Common Stock, per share | $ 0.27 | |||||
Restricted Common Stock, amount | 1,350,000 |
Share-Based Payment Arrangeme72
Share-Based Payment Arrangements Equity Incentive Plan(Details) (USD $) - Equity Plan - $ / shares | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Options | ||
Beginning of year | 5,040,000 | 5,540,000 |
Granted | 5,317,500 | |
Canceled, Expired or Forfeited | (3,080,000) | (500,000) |
End of Year | 7,277,500 | 5,040,000 |
Exercisable, end of year | 4,415,000 | 4,740,000 |
Weighted Average Exercise Price | ||
Outstanding - Beginning of year | $ 0.60 | $ 0.61 |
Granted | $ 0.45 | |
Exercised | ||
Canceled, Expired or Forfeited | $ 0.61 | $ 0.74 |
Outstanding - End of year | 0.47 | 0.60 |
Exercisable - end of year | $ 0.47 | $ 0.61 |
Weighted Average Grant-Date Fair Value | ||
Granted | ||
Exercised | ||
Forfeited | ||
End of Year | $ 196,662 |
Share-Based Payment Arrangeme73
Share-Based Payment Arrangements Equity Plan and Warrant Summary (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
$.65-$.80 | ||
Number Outstanding | 600,000 | 2,080,000 |
Weighted Average Remaining Life in years | 4 years 8 days | 1 year 3 months |
Weighted Average Exercise Price, outstanding | $ 0.71 | $ 0.67 |
Number Exercisable | 2,080,000 | |
Weighted Average Exercise Price, exercisable | $ 0.67 | |
$.60-$.64 | ||
Number Outstanding | 2,260,000 | 2,310,000 |
Weighted Average Remaining Life in years | 4 months 6 days | 2 years 4 months |
Weighted Average Exercise Price, outstanding | $ 0.53 | $ 0.60 |
Number Exercisable | 1,960,000 | 2,310,000 |
Weighted Average Exercise Price, exercisable | $ 0.56 | $ 0.60 |
$.36-$.59 | ||
Number Outstanding | 4,417,500 | 650,000 |
Weighted Average Remaining Life in years | 5 years 2 months | 1 year 6 months 9 days |
Weighted Average Exercise Price, outstanding | $ 0.41 | $ 0.36 |
Number Exercisable | 1,955,000 | 350,000 |
Weighted Average Exercise Price, exercisable | $ 0.41 | $ 0.36 |
Share-Based Payment Arrangeme74
Share-Based Payment Arrangements Stock Awards Plan(Details) (USD $) - Stock Awards - $ / shares | 12 Months Ended |
Dec. 31, 2014 | |
Nonvested Awards | |
Beginning of year | |
Granted | 100,000 |
Exercised | (50,000) |
Canceled, Expired or Forfeited | |
End of Year | 50,000 |
Weighted Average Grant-Date Fair Value | |
Beginning of Year | |
Granted | $ 65,000 |
Exercised | $ (32,500) |
Forfeited | |
End of Year | $ 32,500 |
Share-Based Payment Arrangeme75
Share-Based Payment Arrangements Director Plan (Details) - Non-employee director - $ / shares | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Nonvested Awards | ||
Beginning of year | 160,000 | 320,000 |
Granted | ||
Exercised | (160,000) | (160,000) |
Canceled, Expired or Forfeited | ||
End of Year | 160,000 | |
Weighted Average Grant-Date Fair Value | ||
Beginning of Year | $ 104,000 | $ 208,000 |
Granted | ||
Exercised | $ (104,000) | $ (104,000) |
Forfeited | ||
End of Year | $ 104,000 |
Share-Based Payment Arrangeme76
Share-Based Payment Arrangements Stock Advisor Plan (Details) - Advisor Plan - $ / shares | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Nonvested Awards | ||
Beginning of year | 237,238 | 1,902,380 |
Granted | 110,733 | 272,969 |
Exercised | (347,971) | (1,938,111) |
Canceled, Expired or Forfeited | ||
End of Year | 237,238 | |
Weighted Average Grant-Date Fair Value | ||
Beginning of Year | $ 135,219 | $ 1,084,352 |
Granted | 63,893 | 96,560 |
Exercised | $ (199,112) | $ (1,045,693) |
Forfeited | ||
End of Year | $ 135,219 |
Share-Based Payment Arrangeme77
Share-Based Payment Arrangements New Guaranty Plan (Details) - New Guaranty Plan - $ / shares | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Nonvested Awards | ||
Beginning of year | 3,607,179 | |
Granted | 3,681,000 | |
Exercised | (1,224,763) | (73,821) |
Canceled, Expired or Forfeited | ||
End of Year | 2,382,416 | 3,607,179 |
Weighted Average Grant-Date Fair Value | ||
Beginning of Year | $ 2,164,307 | |
Granted | $ 2,208,600 | |
Exercised | $ (734,858) | $ (44,293) |
Forfeited | ||
End of Year | $ 1,429,449 | $ 2,164,307 |
Share-Based Payment Arrangeme78
Share-Based Payment Arrangements Prior Guaranty Plan (Details) - Prior Guaranty Plan - $ / shares | 12 Months Ended |
Dec. 31, 2013 | |
Nonvested Awards | |
Beginning of year | 3,726,027 |
Granted | |
Exercised | (2,349,315) |
Canceled, Expired or Forfeited | (1,376,712) |
End of Year | |
Weighted Average Grant-Date Fair Value | |
Beginning of Year | $ 1,006,116 |
Granted | |
Exercised | $ (634,315) |
Forfeited | $ (371,801) |
End of Year |
Share-Based Payment Arrangeme79
Share-Based Payment Arrangements Stock Guaranty Plan (Details) - Guaranty Plan - $ / shares | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Nonvested Awards | ||
Beginning of year | 3,607,179 | 3,726,027 |
Granted | 3,681,000 | |
Exercised | (1,224,763) | (2,423,136) |
Canceled, Expired or Forfeited | (1,376,712) | |
End of Year | 2,382,416 | 3,607,179 |
Weighted Average Grant-Date Fair Value | ||
Beginning of Year | $ 2,164,307 | $ 1,006,116 |
Granted | 2,208,600 | |
Exercised | $ (734,858) | (678,608) |
Forfeited | (371,801) | |
End of Year | $ 1,429,449 | $ 2,164,307 |
Business Segment Information -
Business Segment Information - Reportable Segments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting Information [Line Items] | ||
Sales | $ 72,065,015 | $ 71,176,971 |
Depreciation | 149,664 | 156,731 |
Amortization of Other Intangible Assets | 250,944 | 381,983 |
Interest Expense | 1,090,675 | 926,586 |
Segment Profit | 2,206,769 | 3,750,576 |
Segment Assets (1) | 22,142,505 | 21,661,547 |
Expenditures for Segment Assets | 207,191 | 118,611 |
Coatings | ||
Segment Reporting Information [Line Items] | ||
Sales | 9,587,566 | 10,096,235 |
Depreciation | 19,911 | 22,232 |
Amortization of Other Intangible Assets | 33,386 | 54,183 |
Interest Expense | 145,104 | 131,433 |
Segment Profit | 941,743 | 1,456,975 |
Segment Assets (1) | 3,665,095 | 3,743,801 |
Expenditures for Segment Assets | 27,565 | 16,825 |
Foam | ||
Segment Reporting Information [Line Items] | ||
Sales | 62,477,449 | 61,080,736 |
Depreciation | 129,752 | 134,499 |
Amortization of Other Intangible Assets | 217,558 | 327,800 |
Interest Expense | 945,571 | 795,153 |
Segment Profit | 1,265,026 | 2,293,601 |
Segment Assets (1) | 18,477,410 | 17,917,746 |
Expenditures for Segment Assets | $ 179,626 | $ 101,786 |
Business Segment Information 81
Business Segment Information - Reconciliation of reportable segment profit or loss (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ||
Total Profit or Loss for Reportable Segments | $ 2,206,769 | $ 3,750,576 |
Corporate Expenses | (5,867,718) | (5,721,621) |
Income (Loss) Before Income Taxes | $ (3,660,949) | $ (1,971,045) |
Business Segment Information 82
Business Segment Information - Reconciliation of reportable segment assets (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Segment Reporting [Abstract] | ||
Total Assets for Reportable Segments | $ 22,142,505 | $ 21,661,548 |
Other Unallocated Amounts | 355,550 | 392,612 |
Total Assets | $ 22,498,055 | $ 22,054,160 |
Business Segment Information 83
Business Segment Information - Geographic Area Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | $ 72,065,015 | $ 71,176,971 |
Long Lived Assets | 21,661,547 | 21,661,547 |
Middle East | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | 3,505 | 5,706,558 |
Europe | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | 665,365 | 1,741,485 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | 69,746,725 | 61,417,293 |
Long Lived Assets | 21,661,547 | 21,661,547 |
Rest of the World | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | $ 1,649,420 | $ 2,311,635 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Mar. 23, 2015 | Jan. 23, 2015 | Jan. 16, 2015 | Jan. 02, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Subsequent Event [Line Items] | |||||||
Payments to Related Party | $ 250,000 | ||||||
Twelfth Amendment | |||||||
Subsequent Event [Line Items] | |||||||
Accounts charged off | $ 267,000 | ||||||
Capital expenditures | $ 150,000 | ||||||
Kramer Options | |||||||
Subsequent Event [Line Items] | |||||||
Common stock, shares | 850,000 | ||||||
Share Price | $ 0.325 | ||||||
Options Canceled,Expired or Forfeited | 2,000,000 | ||||||
Options Granted | 1,150,000 | ||||||
Weighted-average grant-date fair value of option awards | $ 86,147 | ||||||
1/16/15 Adams Option | |||||||
Subsequent Event [Line Items] | |||||||
Common stock, shares | 300,000 | ||||||
Share Price | $ 0.325 | ||||||
Weighted-average grant-date fair value of option awards | $ 93,536 | ||||||
3/23/15 Schnitzer Option | |||||||
Subsequent Event [Line Items] | |||||||
Common stock, shares | 300,000 | ||||||
Share Price | $ 0.41 | ||||||
Weighted-average grant-date fair value of option awards | $ 118,122 | ||||||
Employment Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Annual Compensation | [1] | $ 190,000 | |||||
[1] | (ii) annual bonus equal to 25% of his annual base salary if the Company achieves its budgeted earnings before interest, taxes, depreciation, amortization, and share based compensation (Adjusted EBITDA) per calendar year, which annual bonus may be increased to 30%, 35%, or more than 35% in the CEOs discretion, of his annual base salary if the Company achieves 110%, 120%, or more than 120%, respectively, of its budgeted Adjusted EBITDA; (iii) change in control bonus of 25% of his annual base salary upon consummation of a change in control if he is still employed at the time; |