Summary Of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2013 |
Summary Of Significant Accounting Policies [Abstract] | ' |
Summary Of Significant Accounting Policies | ' |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Consolidation |
The consolidated financial statements include the accounts of Syntroleum Corporation and our majority-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated. Companies in which we own a 20 percent to 50 percent interest, but in which we do not have a controlling interest are accounted for by the equity method. We own 50 percent and have a non-controlling interest in Dynamic Fuels. The entity is accounted for under the equity method and is not required to be consolidated in our financial statements; however, our share of the Dynamic Fuels results of operations activities is reflected in the Consolidated Statements of Operations and the subsidiary’s summarized financial information is reported in Note 4, “Investment in and Loans to Dynamic Fuels, LLC”. The carrying value of our investment in Dynamic Fuels is reflected in “Investment in and Loans to Dynamic Fuels, LLC” in our Consolidated Balance Sheets. |
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The consolidated financial statements for all prior periods have been retroactively adjusted to reflect the April 11, 2013 10-for-1 reverse stock split of the Company’s common stock, which allowed the Company to regain compliance with Nasdaq’s minimum price rule as of April 26, 2013. As a result of the reverse split, each ten (10) outstanding shares of pre-split common stock were automatically combined into one (1) share of post-split common stock. Fractional shares received cash and proportional adjustments were made to the Company’s outstanding stock options and other equity awards and to the Company’s equity compensation plans to reflect the reverse stock split. The consolidated financial statements for all prior periods have been retroactively adjusted to reflect this stock split for both common stock issued and options outstanding. |
Revenue Recognition |
We recognize revenues from technical services provided as such services are rendered. We recognize revenue for royalty fees upon production of finished product by the licensee. |
We recognized revenues from the transfer of technology documentation to customers or through licensing structures. Any deposits or advance payments for the technology documentation is recorded as deferred revenue in the consolidated balance sheets until recognized as revenue in the consolidated statement of operations. The Company recognizes revenue on the transfer of technology documentation upon the physical transfer of the technology documentation by the Company to the customer pursuant to the terms of the specific agreement. |
Cash and Cash Equivalents |
Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less, primarily in the form of money market instruments. The Company places its temporary cash investments with high credit quality financial institutions. At times such investments may be in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. |
Restricted Cash |
Restricted cash consisted of cash held in an escrow account for the prepayment of operations and invoices for a contractual project. The account was also recorded as a liability in current deposits on the consolidated balance sheet at December 31, 2012. |
Accounts Receivable |
The majority of our accounts receivable is due from technical service agreements. These accounts are typically due within 30 days and are stated as amounts due from customers. Accounts outstanding longer than the contractual payment terms are considered past due. We write off accounts receivable when they become uncollectible. Management determines accounts to be uncollectible when we have used all reasonable means of collection and settlement. Management believes that all amounts included in accounts receivable at December 31, 2013 and 2012 will be collected and therefore no allowance for uncollectible accounts has been recorded. |
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Property and Equipment |
Property and equipment is stated at cost less accumulated depreciation. Maintenance, repairs and replacement of minor items are expensed as incurred and major additions, expansions and betterments to physical properties are capitalized. When assets are sold or retired, the cost and accumulated depreciation related to those assets are removed from the accounts and any gain or loss is recognized. Depreciation of property and equipment is computed on the straight-line method over the estimated useful lives of three to seven years. Property and equipment consists of the following (in thousands): |
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| | December 31, | | December 31, | | | |
| | 2013 | | 2012 | | | |
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Furniture and office equipment | | $ | 495 | | $ | 441 | | | |
Leasehold improvements | | | 5 | | | 5 | | | |
| | | 500 | | | 446 | | | |
Less - accumulated depreciation | | | -423 | | | -388 | | | |
| | $ | 77 | | $ | 58 | | | |
Income Taxes |
Income taxes are accounted for using the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and on net operating loss carry-forwards. Deferred tax assets and liabilities are measured using the enacted tax rates and laws in effect or that will be in effect when the differences are expected to reverse. The Company records a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. |
Asset Retirement Obligations |
We follow FASB ASC Topic 410, Asset Retirement and Environmental Obligations, which requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The standard requires that we record the discounted fair value of the retirement obligation as a liability at the time the plants are constructed. The asset retirement obligations consisted primarily of costs associated with the future plant dismantlement of our pilot plant. As the pilot plant was directly related to research and development activities and had been expensed accordingly, no corresponding amount was capitalized as part of the related property’s carrying amount. The liability accretes over time with a charge to accretion expense. Based on a change in expected life of the pilot plant, no accretion expense was incurred in 2013 or 2012. See Footnote 3 for additional information. |
Other Assets |
Other assets include costs associated with patents and are amortized using the straight-line method over their estimated period of benefit, ranging from fifteen to seventeen years. All costs are capitalized, and amortization begins upon initial costs incurred. Amortization expense for the years ended December 31, 2013, 2012 and 2011 was $145,000, $141,000 and $137,000, respectively. We periodically evaluate the recoverability of intangible assets and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. Future amortization expense for patents as of December 31, 2013 is estimated to be $145,000 per year through 2020. Patent costs consist of the following (in thousands): |
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| | December 31, | | December 31, | | | |
| | 2013 | | 2012 | | | |
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Patents | | $ | 2,416 | | $ | 2,226 | | | |
Less - accumulated amortization | | | -1,304 | | | -1,203 | | | |
| | $ | 1,112 | | $ | 1,023 | | | |
Impairment of Assets |
We follow the provisions of FASB ASC Topic 360, Property, Plant and Equipment, for assets. Management reviews assets for impairment when certain events have occurred or changes in circumstances indicate that the asset may be impaired. An asset is considered to be impaired when the estimated undiscounted future cash flows are less than the carrying value of the asset. The impairment provision is based on the excess of carrying value over fair value. |
Accounting for Guarantees |
We follow the provisions of FASB ASC Topic 460, Guarantees for any guarantees entered into after December 2002. Under ASC Topic 460, we are required to record a liability for the fair value of the obligation undertaken in issuing the guarantees. |
Stock-Based Compensation |
Employee Stock-Based Compensation. We account for stock-based compensation in accordance with FASB ASC Topic 718, Compensation – Stock Based. Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the applicable vesting period of the stock award (generally three years) using the straight line method. |
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Non-Employee Stock-Based Compensation. We also grant stock-based incentives to certain non-employees. These stock based incentives are accounted for in accordance with FASB ASC Topic 505 – Equity-Based Payments to Non-Employees. Stock awards that are tied to performance criteria are expensed at the time the performance goals are met. |
Earnings Per Share |
Basic earnings (losses) per common share were computed by dividing net loss by the weighted average number of shares of common stock outstanding during the reporting period. Diluted earnings per common share for each of the three years ended December 31 are calculated by dividing net loss by weighted-average common shares outstanding during the period plus dilutive potential common shares, which are determined as follows: |
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| | Year ended December 31, | | | |
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| | 2013 | | 2012 | | 2011 | | | |
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Basic weighted-average shares | | 9,932 | | 9,835 | | 8,977 | | | |
Effect of dilutive securities: | | | | | | | | | |
Stock options | | - | | - | | - | | | |
Dilutive weighted-average shares | | 9,932 | | 9,835 | | 8,977 | | | |
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The table below includes information related to stock options, warrants and restricted stock that were outstanding at December 31 of each respective year, but have been excluded from the computation of weighted-average stock options due to (i) the option exercise price exceeding the twelve-month weighted-average market price of our common shares or (ii) their inclusion would have been anti-dilutive to our loss per share. |
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| | Year ended December 31, |
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| | 2013 | | 2012 | | 2011 |
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Options and warrants (in thousands) | | | 2,360 | | | 1,974 | | | 2,597 |
Weighted-average exercise price of options and warrants | | $ | 25.69 | | $ | 30.00 | | $ | 24.90 |
Average market price of common shares | | $ | 4.90 | | $ | 7.90 | | $ | 14.60 |
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Defined Contribution Plan - 401(k) |
We sponsor a defined contribution plan, named the Syntroleum 401(k) Plan (the “401(k) Plan”), covering virtually all of our employees who have met the eligibility requirements. Our employees may participate in the 401(k) Plan upon employment. Participants become eligible for matching and profit sharing contributions upon employment on the last day of the 401(k) Plan quarter. |
We contribute a matching contribution equal to 50 percent of employees’ contributions quarterly in the form of shares of our common stock. No employee purchase of our stock is permitted. We recorded expense of $125,000, $129,000 and $137,000 from issuing 27,498, 19,942 and 12,120 shares of Syntroleum Stock for the years ended December 31, 2013, 2012 and 2011, respectively, of which 10,197 shares were issued in January 2014. |
Use of Estimates |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates made by management include, but are not limited to, the valuation of stock-based compensation, estimates for accrued liabilities and estimates for asset retirement obligations. Actual results could differ from these estimates. |
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Going Concern |
The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. As a result of the factors described in Note 1, and in connection with our accumulated deficit of $362.7 million, and our expectation of future cash requirements exceeding our capital availability there is substantial doubt about our ability to continue as a going concern. |
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The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. If the consolidated financial statements were prepared on a liquidation basis, the carrying value of our assets and liabilities would be adjusted to the net realizable amounts. In addition, the classification of the assets and liabilities would be adjusted to reflect the liquidation basis of accounting. |
Foreign Currency Transactions |
All of our subsidiaries use the U.S. dollar for their functional currency. Assets and liabilities denominated in other currencies are translated into U.S. dollars at the rate of exchange in effect at the balance sheet date. Transaction gains and losses that arise from exchange rate fluctuations applicable to transactions denominated in a currency other than the U.S. dollar are included in the consolidated results of operations as incurred. |
New Accounting Pronouncements |
The Financial Accounting Standards Board (“FASB”) periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting. We have reviewed the recently issued pronouncements and concluded that there are no recently issued accounting standards applicable to us. |
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