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LAPOLLA
INDUSTRIES, INC.
NOTES
TO FINANCIAL STATEMENTS
(continued)
Note
7. Asset Purchase Agreement -
continued.
Purchase
Price Allocation
The
AirTight purchase price was allocated to tangible and intangible assets acquired
and liabilities assumed based on their estimated fair values at the acquisition
date. The excess of the purchase price over the fair value of net assets
acquired was allocated to goodwill. The goodwill acquired in the AirTight
acquisition is not deductible for federal income tax purposes. The
Company believes the fair values assigned to the AirTight assets acquired and
liabilities assumed were based on reasonable assumptions.
The
following table summarizes the estimated fair values of the assets acquired and
liabilities assumed at the date of purchase.
|
|
|
July
1, 2008
|
|
|
Current
Assets
|
|
$ |
1,088,325 |
|
|
Property,
Plant and Equipment
|
|
|
269,245 |
|
|
Identifiable
Intangible Assets
|
|
|
1,700,000 |
|
|
Goodwill
|
|
|
1,790,167 |
|
|
Current
Liabilities
|
|
|
(1,559,535 |
) |
|
Other
Liabilities
|
|
|
(288,553 |
) |
|
Total
|
|
$ |
2,999,649 |
|
In
connection with the allocation of the adjusted purchase price by Lapolla,
$1,700,000 was attributed to Other Intangible Assets, of which $700,000 was
assigned to trade names (15 year useful lives), $790,000 was assigned to the
customer list (5 year useful life), and $210,000 was assigned to the Shareholder
and sales force non-competes (5 year useful lives). The $1,790,167 of goodwill
was assigned to the Foam segment.
Pro
Forma Results of Operations
Unaudited
pro forma results of operations for the years ended December 31, 2008 and 2007,
as though the AirTight asset purchase had occurred as of January 1, 2007,
follow. The results from July 1, 2008 to December 31, 2008 have
already been included in Lapolla’s financial statements.
|
|
|
AirTight
|
|
|
Lapolla
|
|
|
Total
|
|
|
AirTight
|
|
|
Lapolla
|
|
|
Total
|
|
|
|
|
1/1/08-6/30/08
|
|
|
1/1/08-12/31/08
|
|
|
1/1/08-12/31/08
|
|
|
1/1/07-12/31/07
|
|
|
1/1/07-12/31/07
|
|
|
1/1/07-12/31/07
|
|
|
Sales
|
|
$ |
4,623,653 |
|
|
$ |
44,921,667 |
|
|
$ |
49,545,320 |
|
|
$ |
9,168,200 |
|
|
$ |
31,840,799 |
|
|
$ |
41,008,999 |
|
|
Cost
of Sales
|
|
$ |
3,451,309 |
|
|
$ |
36,235,891 |
|
|
$ |
39,687,200 |
|
|
$ |
6,568,890 |
|
|
$ |
26,967,721 |
|
|
$ |
33,536,611 |
|
|
Gross
Profit
|
|
$ |
1,172,344 |
|
|
$ |
8,685,776 |
|
|
$ |
9,858,120 |
|
|
$ |
2,599,310 |
|
|
$ |
4,873,078 |
|
|
$ |
7,472,388 |
|
|
Operating
Expenses
|
|
$ |
1,647,150 |
|
|
$ |
12,589,846 |
|
|
$ |
14,236,996 |
|
|
$ |
2,940,530 |
|
|
$ |
9,935,693 |
|
|
$ |
12,876,223 |
|
|
Net
(Loss)
|
|
$ |
(474,807 |
) |
|
$ |
(3,904,070 |
) |
|
$ |
(4,378,877 |
) |
|
$ |
(341,220 |
) |
|
$ |
(5,062,615 |
) |
|
$ |
(5,403,835 |
) |
|
Net
(Loss) Per Share-Basic and Diluted
|
|
$ |
(0.008 |
) |
|
$ |
(0.065 |
) |
|
$ |
(0.073 |
) |
|
$ |
(0.006 |
) |
|
$ |
(0.094 |
) |
|
$ |
(0.101 |
) |
|
Weighted
Average Shares Outstanding
|
|
|
59,209,198 |
|
|
|
59,834,396 |
|
|
|
59,834,396 |
|
|
|
53,677,675 |
|
|
|
53,677,675 |
|
|
|
53,677,675 |
|
Prior to
the AirTight asset purchase, AirTight was a customer of Lapolla. The
sales, costs of sales, and related gross profit related to sales from January 1,
2008 up to the date of closing of the asset purchase have been eliminated from
Lapolla’s results in the table above. The pro forma information is not
necessarily indicative of the actual results that would have been achieved had
the AirTight asset purchase occurred on the indicated date, or the results that
may be achieved in the future.
Note
8. Goodwill and Other Intangible
Assets.
The
following is a summary of Goodwill for the years ending December
31:
Goodwill
|
|
|
2008
|
|
|
2007
|
|
|
Foam
|
|
$ |
2,438,547 |
|
|
$ |
648,380 |
|
|
Coatings
|
|
|
1,302,620 |
|
|
|
1,302,620 |
|
|
|
|
$ |
3,741,167 |
|
|
$ |
1,951,000 |
|
The
Company its business segment structure at December 31, 2007 from seven
reportable units, consisting of coatings, foam, paints, sealants, adhesives,
equipment, and all other, to two, consisting of foam and coatings, to be more in
line with the Company’s core foam and coatings businesses. The carrying values
of the goodwill previously attributed to the former business segments were
aggregated and reassigned to the foam and coatings segments. See Note
19 - Business Segments for further information. See also
Note 7 – Asset Purchase Agreement.
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