| Section 16 Filings Only |
|
LAPOLLA
INDUSTRIES, INC.
NOTES
TO FINANCIAL STATEMENTS
(continued)
Note
17. Share–Based Payment Arrangements - continued.
Warrants
The
Company issued 1,000,000 new warrants during 2008 in connection with an amended
Loan Agreement (“New Warrants”). The new warrants were granted at a price per
share equal to $.78 per share, or the ten (10) day volume weighted average price
(VWAP) of the Company’s common stock as traded on the NASDAQ OTC Bulletin Board
prior to, with a fair value established on, the date of grant. The Company also
modified the exercise price with respect to all of the previously issued and
remaining 1,500,000 warrants (“Prior Warrants”). The Prior Warrants were
previously priced at $.74 for 750,000 and $.61 for 750,000 and repriced at $.60,
with a new fair value re-estimated on the date of the repricing. The
fair values were calculated using a lattice-based valuation model that uses the
assumptions noted in the following table. Because lattice-based valuation models
incorporate ranges of assumptions for inputs, those ranges are disclosed.
Expected volatilities are based on the historical volatility of the Company’s
common stock. The expected term of New and Prior Warrants granted is derived
from the output of the valuation model and represents the periods of time that
the warrants granted are expected to be outstanding. The risk-free rate for
periods within the contractual life of the warrants is based on the U.S.
Treasury yield curve in effect at the time of grant.
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2008
|
|
|
2007
|
|
|
Expected
Volatility
|
|
|
220.67 |
% |
|
|
233.77
% – 263.99 |
% |
|
Weighted-Average
Volatility
|
|
|
220.67 |
% |
|
|
249.49 |
% |
|
Expected
Dividends
|
|
|
— |
|
|
|
— |
|
|
Expected
Term (in years)
|
|
|
3.7 |
|
|
|
3.75
– 4.4 |
|
|
Risk
Free Rate
|
|
|
3.14 |
% |
|
|
3.38
% – 5.01 |
% |
See Note
10 - Revolving Credit and Term Loan Agreement and Related Agreements, Item C,
for more detailed information on the Warrants.
Warrant
activity as of the year ended December 31, is summarized below:
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|
|
2008
|
|
|
2007
|
|
|
|
|
Number
of
|
|
|
Weighted
Average
|
|
|
Number
of
|
|
|
Weighted
Average
|
|
|
Options
|
|
Warrants
|
|
|
Exercise
Price
|
|
|
Warrants
|
|
|
Exercise
Price
|
|
|
Outstanding-Beginning
of Year
|
|
|
1,750,000 |
|
|
$ |
0.66 |
|
|
|
— |
|
|
$ |
— |
|
|
Granted
|
|
|
1,000,000 |
|
|
|
0.78 |
|
|
|
1,750,000 |
|
|
|
0.66 |
|
|
Exercised
|
|
|
(250,000 |
) |
|
|
0.54 |
|
|
|
— |
|
|
|
— |
|
|
Canceled,
Expired or Forfeited
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Outstanding-End
of Year
|
|
|
2,500,000 |
|
|
|
0.67 |
|
|
|
1,750,000 |
|
|
|
0.66 |
|
|
Exercisable-End
of Year
|
|
|
2,500,000 |
|
|
$ |
0.67 |
|
|
|
1,750,000 |
|
|
$ |
0.66 |
|
Non
Plan Options
The
Company granted restricted stock options (Non Plan Options) from time to time
for special circumstances in the past. The Company did not grant any Non Plan
Options in 2008 and 2007 and all Non Plan Options outstanding expired in 2007.
No fair value existed or was recorded for any Non Plan Options.
Stock
option activity under the Company’s Non Plan Options as of the years ended
December 31, is summarized below:
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|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
Number
of
|
|
|
Average
|
|
|
Number
of
|
|
|
Average
|
|
|
Options
|
|
Options
|
|
|
Exercise
Price
|
|
|
Options
|
|
|
Exercise
Price
|
|
|
Outstanding-Beginning
of Year
|
|
|
— |
|
|
$ |
— |
|
|
|
70,000 |
|
|
$ |
3.36 |
|
|
Granted
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Exercised
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Canceled,
Expired or Forfeited
|
|
|
— |
|
|
|
— |
|
|
|
(70,000 |
) |
|
|
3.36 |
|
|
Outstanding-End
of Year
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Exercisable-End
of Year
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
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|
Prior SEC Filings are through the
SEC EDGAR SERVICE.
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