· Acquisitions
- As part of
our business strategy, we regularly consider and, as appropriate, make
acquisitions of technologies, products and businesses that we believe are
complementary to our business. Our primary acquisition criterion is sales volume
in our core foam and coatings competencies. Acquisitions may involve risks and
could result in difficulties in integrating the operations, personnel,
technologies and products of the companies acquired, some of which may result in
significant charges to earnings. If we are unable to successfully integrate our
acquisitions with our existing businesses, we may not obtain the advantages that
the acquisitions were intended to create, which may materially adversely affect
our business, results of operations, financial condition and cash flows, our
ability to develop and introduce new products and the market price of our stock.
In connection with acquisitions, we could experience disruption in our business
or employee base, or key employees of companies that we acquire may seek
employment elsewhere, including with our competitors. Furthermore, the products
of companies we acquire may overlap with our products or those of our customers,
creating conflicts with existing relationships or with other commitments that
are detrimental to the integrated businesses.
·
SEC
Reviews - The reports of
publicly-traded companies are subject to review by the SEC from time to time for
the purpose of assisting companies in complying with applicable disclosure
requirements and to enhance the overall effectiveness of companies’ public
filings, and comprehensive reviews of such reports are now required at least
every three years under the Sarbanes-Oxley Act of 2002. SEC reviews may be
initiated at any time. While we believe that our previously filed SEC reports
comply, and we intend that all future reports will comply in all material
respects with the published rules and regulations of the SEC, we could be
required to modify or reformulate information contained in prior filings as a
result of an SEC review. Any modification or reformulation of information
contained in such reports could be significant and could result in material
liability to us and have a material adverse impact on the trading price of our
common stock.
Item 1B. Unresolved Staff
Comments
None.
We
conduct our operations in leased facilities. Our corporate headquarters and
primary administrative, manufacturing, distribution, and warehousing facility is
located in Texas. Our present facilities are adequate for our currently known
and projected needs in the near term.
Item 3. Legal
Proceedings
Legal
Proceedings
(a) Larry P. Medford, Plaintiff vs.
Lapolla Industries, Inc., Defendant
On March
27, 2009, the Plaintiff filed a complaint against the Defendants in the Superior
Court of Morgan County, State of Georgia. Defendant was served on
April 3, 2009. On July 1, 2009, pursuant to an Asset Purchase
Agreement (the “Agreement”), the Company acquired certain assets and liabilities
of Air-Tight Marketing and Distribution, Inc. from the selling shareholders,
Larry P. Medford and Ted J. Medford in exchange for cash, restricted common
stock, and forgiveness of debt owed to Lapolla by AirTight. The
complaint alleges breach of payment of the promissory note and breach of
contract seeking monetary damages of up to $1,400,000 on the promissory note and
other damages aggregating approximately $2 million plus interest in connection
with the Agreement. Lapolla denies the allegations in the complaint
and maintains that it has multiple valid defenses to the lawsuit. The
outcome of this litigation cannot be determined at this time.
(b) Various Lawsuits and Claims Arising
in the Ordinary Course of Business
We are
involved in various lawsuits and claims arising in the ordinary course of
business. These other matters are, in our opinion, immaterial both individually
and in the aggregate with respect to our financial position, liquidity or
results of operations.
Item 4. Submission of Matters to a Vote of
Security Holders
We did
not submit any matter during the fourth quarter of the fiscal year covered by
this report to a vote of security holders, through the solicitation of proxies
or otherwise.
