Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2022 | May 16, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2022 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-22333 | |
Entity Registrant Name | Nanophase Technologies Corporation | |
Entity Central Index Key | 0000883107 | |
Entity Tax Identification Number | 36-3687863 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 1319 Marquette Drive | |
Entity Address, City or Town | Romeoville | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60446 | |
City Area Code | 630 | |
Local Phone Number | 771-6708 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 49,026,741 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited Consolidated Condensed) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 897 | $ 657 |
Trade accounts receivable, less allowance for doubtful accounts of $80 for March 31, 2022, and $60 for December 31, 2021 | 5,274 | 3,937 |
Inventories, net | 8,559 | 6,095 |
Prepaid expenses and other current assets | 1,005 | 910 |
Total current assets | 15,735 | 11,599 |
Equipment and leasehold improvements, net | 4,997 | 4,712 |
Operating leases, right of use | 11,718 | 12,075 |
Other assets, net | 7 | 8 |
Total assets | 32,457 | 28,394 |
Current liabilities: | ||
Line of credit, related party | 3,709 | 1,351 |
Current portion of finance lease obligations | 70 | 105 |
Current portion of operating lease obligations | 890 | 589 |
Accounts payable | 4,953 | 3,566 |
Current portion of deferred revenue | 848 | 783 |
Accrued expenses | 961 | 946 |
Total current liabilities | 11,431 | 7,340 |
Long-term portion of finance lease obligations | 4 | 6 |
Long-term portion of operating lease obligations | 11,389 | 11,700 |
Long-term debt, related party | 1,000 | 1,000 |
Long-term portion of deferred revenue | 661 | 661 |
Asset retirement obligations | 224 | 222 |
Total long-term liabilities | 13,278 | 13,589 |
Contingent liabilities | ||
Shareholders’ equity: | ||
Preferred stock, $.01 par value, 24,088 shares authorized, and no shares issued and outstanding | ||
Common stock, $.01 par value, 60,000,000 shares authorized; 49,026,741 and 48,893,573 shares issued and outstanding on March 31, 2022 and December 31, 2021, respectively | 490 | 489 |
Additional paid-in capital | 104,643 | 104,423 |
Accumulated deficit | (97,385) | (97,447) |
Total Shareholders’ equity | 7,748 | 7,465 |
Total liabilities and shareholders’ equity | $ 32,457 | $ 28,394 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited Consolidated Condensed) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 80 | $ 60 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 24,088 | 24,088 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 60,000,000 | 60,000,000 |
Common Stock, Shares, Outstanding | 49,026,741 | 48,893,573 |
Common Stock, Shares, Issued | 49,026,741 | 48,893,573 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited Consolidated Condensed) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue: | ||
Total revenue | $ 8,156 | $ 7,072 |
Cost of revenue | 5,988 | 5,042 |
Gross profit | 2,168 | 2,030 |
Operating expense: | ||
Research and development expense | 666 | 499 |
Selling, general and administrative expense | 1,397 | 1,034 |
Income from operations | 105 | 497 |
Interest expense | 43 | 139 |
Other income, net | (952) | |
Income before provision for income taxes | 62 | 1,310 |
Provision for income taxes | ||
Net income | $ 62 | $ 1,310 |
Net income per share-basic | $ 0 | $ 0.03 |
Weighted average number of basic common shares outstanding | 48,984,312 | 38,221,292 |
Net income per share-diluted | $ 0 | $ 0.03 |
Weighted average number of diluted common shares outstanding | 51,064,312 | 39,811,292 |
Product [Member] | ||
Revenue: | ||
Total revenue | $ 8,046 | $ 7,050 |
Product and Service, Other [Member] | ||
Revenue: | ||
Total revenue | $ 110 | $ 22 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balance on December 31, 2021 at Dec. 31, 2020 | $ 382 | $ 102,117 | $ (99,767) | $ 2,732 | |
Shares, Outstanding, Beginning Balance at Dec. 31, 2020 | 38,221,292 | ||||
Stock-based compensation | 42 | 42 | |||
Net income | 1,310 | 1,310 | |||
Balance on March 31, 2022 at Mar. 31, 2021 | $ 382 | 102,159 | (98,457) | 4,084 | |
Shares, Outstanding, Ending Balance at Mar. 31, 2021 | 38,221,292 | ||||
Balance on December 31, 2021 at Dec. 31, 2021 | $ 489 | 104,423 | (97,447) | 7,465 | |
Shares, Outstanding, Beginning Balance at Dec. 31, 2021 | 48,893,573 | ||||
Stock-based compensation | 148 | 148 | |||
Net income | 62 | 62 | |||
Issuance of shares and stock option exercises | $ 1 | 72 | 73 | ||
Stock Issued During Period, Shares, New Issues | 133,168 | ||||
Balance on March 31, 2022 at Mar. 31, 2022 | $ 490 | $ 104,643 | $ (97,385) | $ 7,748 | |
Shares, Outstanding, Ending Balance at Mar. 31, 2022 | 49,026,741 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited Consolidated Condensed) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating activities: | ||
Net income | $ 62 | $ 1,310 |
Adjustments to reconcile net income to cash used in operating activities: | ||
Depreciation and amortization | 136 | 101 |
Share-based compensation | 148 | 42 |
Gain on PPP loan forgiveness | (952) | |
Amortization of debt discount | 67 | |
Changes in assets and liabilities related to operations: | ||
Trade accounts receivable | (1,337) | (896) |
Inventories | (2,464) | (661) |
Prepaid expenses and other assets | (94) | (47) |
Accounts payable | 1,347 | 253 |
Accrued expenses | 15 | 571 |
Deferred revenue | 65 | 84 |
Other long-term assets and liabilities | 347 | (9) |
Net cash used in operating activities | (1,775) | (137) |
Investing activities: | ||
Acquisition of equipment and leasehold improvements | (378) | (166) |
Net cash used in investing activities | (378) | (166) |
Financing activities: | ||
Principal payments on finance leases | (38) | (46) |
Proceeds from line of credit, bank | 500 | |
Payments to the line of credit, bank | (500) | |
Proceeds from line of credit, related party | 8,125 | 6,500 |
Payments to line of credit, related party | (5,767) | (5,289) |
Payments from exercise of stock options | 73 | |
Net cash provided by financing activities | 2,393 | 1,165 |
Increase in cash and cash equivalents | 240 | 862 |
Cash and cash equivalents at beginning of period | 657 | 957 |
Cash and cash equivalents at end of period | 897 | 1,819 |
Supplemental cash flow information: | ||
Interest paid | 27 | 51 |
Supplemental non-cash investing and financing activities: | ||
Accounts payable incurred for the purchase of equipment and leasehold improvements | $ 40 | $ 69 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | (1) Basis of Presentation The accompanying unaudited consolidated condensed interim financial statements of Nanophase Technologies Corporation (“Nanophase”, “Company”, “we”, “our”, or “us”) reflect all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair statement of our financial position and operating results for the interim periods presented. All statements include the results from both Nanophase and our wholly-owned subsidiary, Solésence, LLC (“Solésence,” or our “Solésence® subsidiary”). Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission. |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | (2) Description of Business Nanophase Technologies Corporation (“Nanophase,” “Company,” “we,” “our,” or “us”) is a science-driven company which, along with its wholly owned subsidiary, Solésence, LLC (our “Solésence beauty science subsidiary”), is focused in various beauty- and life-science markets. Using consumer health as our end-goal and science and innovation to guide the path, skin health and medical diagnostics combined currently make up the great majority of our business and drive our forward growth strategy. We offer engineered materials, formulation development and commercial manufacturing through an integrated family of technologies. Our expertise in materials engineering allows us to effectively coat and disperse particles on a nano and “non-nano” scale for use in a variety of skin health markets, including for use in sunscreens as active ingredients and as fully developed prestige skin care and cosmetics products, marketed and sold through our Solésence beauty science subsidiary. In terms of our life sciences focus, we have seen current conditions significantly increase demand for our medical diagnostics ingredients, as testing for various viruses, most notably COVID-19, has become a critical use of our technology. Additionally, we continue to sell products in legacy markets, including architectural coatings, industrial coating applications, abrasion-resistant additives, plastics additives, and surface finishing technologies (polishing) applications, all of which, along with medical diagnostics, fall into the advanced materials product category. We target markets, primarily related to skin health products and ingredients, as well as diagnostic life sciences ingredients where we believe our materials and products offer practical and competitive minerals-based solutions. We traditionally work closely with current customers in these target markets to identify their material and performance requirements. We market our materials to various end-use applications manufacturers, and our Solésence® products to cosmetics and skin care brands. Recently developed technologies have made certain new products possible and opened potential new markets. During 2015 we were granted a patent on a new type of particle surface treatment (coating) — now called Active Stress Defense ™ Technology — which became the cornerstone of our new product development in personal care, with first revenue recognized during 2016. Active Stress Defense™ now refers to a suite of three proprietary technologies — Original Active Stress Defense™, Kleair™, and Bloom™ — all three of which either utilize a unique and proprietary, mineral-based technology or work synergistically with one of our unique and proprietary, mineral-based technologies to improve performance and/or aesthetics. Our ongoing innovation efforts include new IP in areas that advance environmental protection, align with market needs, and complement our existing technologies Through the creation of our Solésence beauty science subsidiary, we utilize our technology suite to manufacture and sell fully developed solutions to targeted customers in the skin care industry, typically in prestige skin care and cosmetics markets, in addition to the ingredients we have traditionally sold in the personal care area. Although our primary strategic focus has been the North American market, we currently sell materials to customers overseas and have been working to expand our reach within foreign markets. Our common stock trades on the OTCQB marketplace under the symbol NANX. While product sales comprise the majority of our revenue, we also recognize revenue from other sources from time to time. These activities are not expected to drive the long-term growth of the business. For this reason, we classify such revenue as “other revenue” in our Consolidated Statements of Operations, as it does not represent revenue directly from the sale of our products. |
Revenues
Revenues | 3 Months Ended |
Mar. 31, 2022 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Revenues | (3) Revenues Revenues are recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration we expect to receive in exchange for those goods. When our ingredients and finished products are shipped, with control being transferred at the shipping point almost universally, is the point in time at which we recognize the related revenue. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses. Customers’ deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in our statements of operations. Contract balances at March 31, 2022 and December 31, 2021 are as follows: Accounts Receivable Contract Assets Contract Liabilities Balance, December 31, 2021 $ 3,937 $ 179 $ 1,444 Balance, March 31, 2022 5,274 229 1,509 The contract asset balance at March 31, 2022 consists of $ 50 179 179 Revenue recognized in the reporting period that was included in the contract liability balance at the beginning of the period was $ 123 142 Other revenue may include revenue from technology license fees and paid development projects. Technology license fees and paid development projects are recognized over time when the obligations under the agreed upon contractual arrangements are performed on our part. Other revenue recognized over time was $ 110 22 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | (4) Earnings Per Share Options to purchase approximately 2,080,000 1,590,000 Earnings applicable to common stock and common stock shares used in the calculation of basic and diluted earnings per share are as follows: Three months ended March 31, 2022 2021 Numerator: (in Thousands) Net income $ 62 $ 1,310 Denominator: Weighted average number of basic common shares outstanding 48,984,312 38,221,292 Weighted average additional shares assuming conversion of in-the-money stock options to common shares 2,080,000 1,590,000 Weighted average number of diluted common shares outstanding 51,064,312 39,811,292 Basic earnings per common share: Net income per share – basic $ 0.00 $ 0.03 Diluted earnings per common share: Net income per share – diluted $ 0.00 $ 0.03 |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2022 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | (5) Financial Instruments We follow ASC Topic 820, Fair Value Measurements and Disclosures Our financial instruments include cash, any cash equivalents, accounts receivable, accounts payable and accrued expenses, along with any short term and long-term borrowings as described in Note 6. There were no |
Notes and Lines of Credit
Notes and Lines of Credit | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Notes and Lines of Credit | (6) Notes and Lines of Credit Notes and lines of credit consist of the following: As of March 31, 2022 As of December 31, 2021 Rate Available Outstanding Balance Available Outstanding Balance Strandler, LLC (1) 4.00 % 1,000 1,000 n/a n/a Beachcorp, LLC (1) 5.25 % n/a n/a 1,000 1,000 Beachcorp, LLC (2) 4.00 % 4,972 3,709 3,753 3,365 Related party interest summary: Three Months Ended March 31, 2022 2021 Interest expense, related parties $ 39 $ 131 Accrued interest expense, related parties 16 $ 36 1) On January 28, 2022 the Company entered into an additional Business Loan Agreement (the “New Term Loan Agreement”) with Strandler, LLC, which effectively transferred or assigned the previously existing Term Loan to Strandler, LLC from Beachcorp, LLC. Interest on the New Term Loan is at the prime rate plus 0.75%, and it matures on March 31, 2024. Strandler, LLC is also an affiliate of Bradford T. Whitmore. 2) On January 28, 2022 the Company entered into an Amended and Restated Business Loan Agreement (the “A&R Loan Agreement”), which amends and restates the Master Agreement between the Company and Beachcorp, LLC, and a new promissory note in order to evidence the A/R Revolver facility, including an amendment to expand the limit on the A/R Revolver Facility from $6,000 to $8,000, reduce the interest rate to the prime rate plus 0.75%, and extend the maturity of the A/R Revolver Facility to March 31, 2024. On January 28, 2022 the Company entered into the A&R Loan Agreement and a new revolving loan agreement (“Inventory Facility”) with Beachcorp, LLC, and a new promissory note in order to evidence the Inventory Facility. The maximum borrowing amount under the Inventory Facility is $4,000, with a borrowing base consisting of up to 50% of the value of qualified inventory of the Company. The interest rate for the Inventory Revolver is at the prime rate plus 0.75%, and it matures on March 31, 2024. Beachcorp, LLC and Strandler, LLC are affiliates of Mr. Bradford T. Whitmore, who beneficially owns a majority of the Company’s common stock and is the brother of Ms. R. Janet Whitmore, a director of the Company and the chair of the Company’s board of directors. The A/R Revolver Facility, the Inventory Facility and the New Term Loan are all secured by all the unencumbered assets of the Company and subordinated to the Company’s credit facility with Libertyville Bank & Trust. Since July 2014, we have maintained a bank-issued letter of credit for up to $30 in borrowings to support our obligations under our Romeoville, Illinois facility lease agreement. No borrowings have been incurred under this promissory note. On December 21, 2021, Libertyville issued a letter of credit for up to $500 in borrowings to support our obligations under our newly leased manufacturing and warehouse space in Bolingbrook, Illinois. For both letters of credit, interest on drawn balances will be at the prime rate plus 1%. We expect to renew these agreements annually, as the respective leases require. These letters of credit are secured by all the unencumbered assets of the Company, and have superior collateral rights to those credit facilities with Beachcorp, LLC and Strandler, LLC. Because there were no amounts outstanding on either letter of credit at any time during 2022 or 2021, we have recorded no related liability on our balance sheet. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | (7) Inventories Inventories consist of the following: March 31, December 31, Raw materials $ 6,385 $ 4,819 Finished goods 2,374 1,682 Inventories, gross 8,759 6,501 Allowance for excess inventory quantities (200 ) (406 ) Inventories, net $ 8,559 $ 6,095 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Leases | (8) Leases The Company’s operating lease portfolio is comprised of operating leases for office, warehouse space and equipment. Certain of the Company’s leases include one or more options to renew or terminate the lease at the Company’s discretion. The Company regularly evaluates the renewal and termination options and when they are reasonably certain of exercise, includes the renewal or termination option in our lease term. During the first seven months of the term of our newly leased building, we have subleased a portion of the unused floorspace on a temporary basis. This sublease may convert to a month-to-month lease upon expiration. As of March 31, 2022, the ROU asset had a balance of $ 11,718 890 11,389 12,075 589 11,700 The office leases contain variable lease payments which consist primarily of rent escalations based on an established index or rate and taxes, insurance, and common area or other maintenance costs, which are paid based on actual costs incurred by the lessor. Additionally, the Company subleases space within its Bolingbrook, IL facility for which the term ends June 30, 2022. As of the date of filing the tenant has neither renewed the sublease nor expressed an intent to do so. Quantitative information regarding the Company’s leases is as follows: Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Components of lease cost Finance lease cost components: Amortization of finance lease assets $ 11 $ 14 Interest on finance lease liabilities 2 6 Total finance lease costs 13 20 Operating lease cost components: Operating lease cost 363 144 Variable lease cost 172 31 Short-term lease cost 21 10 Sublease income (183 ) — Total operating lease costs 373 185 Total lease cost $ 386 $ 205 Supplemental cash flow information related to leases is as follows for the three months ended March 31, 2022 and 2021: 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 190 $ 183 Weighted-average remaining lease term-finance leases (in years) 0.6 1.3 Weighted-average remaining lease term-operating leases (in years) 9.3 3.1 Weighted-average discount rate-finance leases 7.6 % 10.1 % Weighted-average discount rate-operating leases 7.5 % 14.2 % The future maturities of the Company’s finance and operating leases as of March 31, 2022 are as follows: Finance Operating Total 2022 $ 70 $ 1,267 $ 1,337 2023 6 2,099 2,105 2024 — 2,025 2,025 2025 — 1,470 1,470 2026 — 1,468 1,468 Thereafter — 8,668 8,668 Total payments $ 76 $ 16,997 $ 17,073 Less amounts representing interest (2 ) (4,719 ) (4,721 ) Total minimum payments required $ 74 $ 12,278 $ 12,352 The future maturities of the Company’s finance and operating leases as of March 31, 2021 were as follows: Finance Operating Total 2021 $ 144 $ 559 $ 703 2022 109 761 870 2023 5 747 752 2024 — 636 636 2025 — 42 42 Thereafter — 2 2 Total payments $ 258 $ 2,747 $ 3,005 Less amounts representing interest (17 ) (614 ) (631 ) Total minimum payments required $ 241 $ 2,133 $ 2,374 |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Share-Based Compensation | (9) Share-Based Compensation We follow ASC Topic 718, Share-Based Payments, in which compensation expense is recognized only for share-based payments expected to vest. Three months ended March 31, 2022 2021 Share-based compensation expense $ 148 $ 42 Remaining unrecognized compensation expense $ 1,567 Remaining weighted average-period, expense recognition (years) 2.7 The following table summarizes the option activity for our employees and directors during the three months ended March 31, 2022: Weighted Average Exercise Price Options Shares per Share Outstanding on January 1, 2022 3,193,216 $ 1.18 Granted 80,000 $ 3.65 Exercised (120,516 ) Forfeited or expired (12,000 ) Outstanding on March 31, 2022 3,140,700 $ 1.26 |
Significant Customers and Conti
Significant Customers and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
Significant Customers and Contingencies | (10) Significant Customers and Contingencies Our significant customers are as follows for the periods ending March 31, 2022, and 2021: For the three months ended March 31, Customer # Product Category 2022 2021 1 Personal Care Ingredients 29 % 20 % 2 Solésence® 18 % 17 % 3 Solésence® 13 % 10 % 4 Solésence® 9 % 24 % 5 Advanced Materials (Medical Diagnostics customer) — 15 % Total 69 % 86 % Accounts receivable balances for these five customers were approximately: For the three months ended March 31, Customer # Product Category 2022 2021 1 Personal Care Ingredients $ 1,489 $ 812 2 Solésence® 880 476 3 Solésence® 1,050 875 4 Solésence® 371 837 5 Advanced Materials (Medical Diagnostics customer) — 855 Total $ 3,790 $ 3,855 We currently have exclusive supply agreements with BASF Corporation (“BASF”), our largest customer, that have contingencies outlined which could potentially result in the license of technology and/or the sale of production equipment from the Company to the customer intended to provide capacity sufficient to meet the customer’s production needs. This outcome may occur if we fail to meet certain performance requirements. Our supply agreements with BASF also “trigger” a technology transfer right in the event of our insolvency, as further defined within the agreements. In the event of an equipment sale, upon incurring a triggering event, the equipment would be sold to the customer at either 115 30 115 If a triggering event were to occur and BASF elected to proceed with the license and related equipment sale mentioned above, we would receive royalty payments from this customer for products sold using our technology; however, we would lose both significant revenue and the ability to generate significant revenue to replace that which was lost in the near term. Replacement of necessary equipment that could be purchased and removed by the customer pursuant to this triggering event could take in excess of twelve months. Any additional capital outlays required to rebuild capacity would probably be greater than the proceeds from the purchase of the assets as dictated by our agreement with the customer. Similar consequences would occur if we were determined to have materially breached certain other provisions of the supply agreement with BASF. Any such event would also likely result in the loss of many of our key staff and line employees due to economic realities. We believe that our employees are a critical component of our success, and it could be difficult to replace them quickly. Given the occurrence of any such event, we might not be able to hire and retain skilled employees given the stigma relating to such an event and its impact on us. |
Business Segmentation and Geogr
Business Segmentation and Geographical Distribution | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Business Segmentation and Geographical Distribution | (11) Business Segmentation and Geographical Distribution Revenue from international sources approximated $ 55 1,285 Our operations comprise a single business segment and all of our long-lived assets are located within the United States. We categorize our revenue stream into three main product categories, Personal Care Ingredients, Advanced Materials and Solésence. The revenues, by category, for the three months ended March 31, 2022 and 2021 are as follows: Three months ended March 31, Product Category 2022 2021 Solésence $ 5,560 $ 4,299 Personal Care Ingredients 2,382 1,395 Advanced Materials 214 1,378 Total Sales $ 8,156 $ 7,072 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Contract balances at March 31, 2022 and December 31, 2021 are as follows: | Contract balances at March 31, 2022 and December 31, 2021 are as follows: Accounts Receivable Contract Assets Contract Liabilities Balance, December 31, 2021 $ 3,937 $ 179 $ 1,444 Balance, March 31, 2022 5,274 229 1,509 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings applicable to common stock and common stock shares used in the calculation of basic and diluted earnings per share are as follows: | Earnings applicable to common stock and common stock shares used in the calculation of basic and diluted earnings per share are as follows: Three months ended March 31, 2022 2021 Numerator: (in Thousands) Net income $ 62 $ 1,310 Denominator: Weighted average number of basic common shares outstanding 48,984,312 38,221,292 Weighted average additional shares assuming conversion of in-the-money stock options to common shares 2,080,000 1,590,000 Weighted average number of diluted common shares outstanding 51,064,312 39,811,292 Basic earnings per common share: Net income per share – basic $ 0.00 $ 0.03 Diluted earnings per common share: Net income per share – diluted $ 0.00 $ 0.03 |
Notes and Lines of Credit (Tabl
Notes and Lines of Credit (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Notes and lines of credit consist of the following: | Notes and lines of credit consist of the following: As of March 31, 2022 As of December 31, 2021 Rate Available Outstanding Balance Available Outstanding Balance Strandler, LLC (1) 4.00 % 1,000 1,000 n/a n/a Beachcorp, LLC (1) 5.25 % n/a n/a 1,000 1,000 Beachcorp, LLC (2) 4.00 % 4,972 3,709 3,753 3,365 |
Related party interest summary: | Related party interest summary: Three Months Ended March 31, 2022 2021 Interest expense, related parties $ 39 $ 131 Accrued interest expense, related parties 16 $ 36 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories consist of the following: | Inventories consist of the following: March 31, December 31, Raw materials $ 6,385 $ 4,819 Finished goods 2,374 1,682 Inventories, gross 8,759 6,501 Allowance for excess inventory quantities (200 ) (406 ) Inventories, net $ 8,559 $ 6,095 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Quantitative information regarding the Company’s leases is as follows: | Quantitative information regarding the Company’s leases is as follows: Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Components of lease cost Finance lease cost components: Amortization of finance lease assets $ 11 $ 14 Interest on finance lease liabilities 2 6 Total finance lease costs 13 20 Operating lease cost components: Operating lease cost 363 144 Variable lease cost 172 31 Short-term lease cost 21 10 Sublease income (183 ) — Total operating lease costs 373 185 Total lease cost $ 386 $ 205 |
Supplemental cash flow information related to leases is as follows for the three months ended March 31, 2022 and 2021: | Supplemental cash flow information related to leases is as follows for the three months ended March 31, 2022 and 2021: 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 190 $ 183 Weighted-average remaining lease term-finance leases (in years) 0.6 1.3 Weighted-average remaining lease term-operating leases (in years) 9.3 3.1 Weighted-average discount rate-finance leases 7.6 % 10.1 % Weighted-average discount rate-operating leases 7.5 % 14.2 % |
The future maturities of the Company’s finance and operating leases as of March 31, 2022 are as follows: | The future maturities of the Company’s finance and operating leases as of March 31, 2022 are as follows: Finance Operating Total 2022 $ 70 $ 1,267 $ 1,337 2023 6 2,099 2,105 2024 — 2,025 2,025 2025 — 1,470 1,470 2026 — 1,468 1,468 Thereafter — 8,668 8,668 Total payments $ 76 $ 16,997 $ 17,073 Less amounts representing interest (2 ) (4,719 ) (4,721 ) Total minimum payments required $ 74 $ 12,278 $ 12,352 The future maturities of the Company’s finance and operating leases as of March 31, 2021 were as follows: Finance Operating Total 2021 $ 144 $ 559 $ 703 2022 109 761 870 2023 5 747 752 2024 — 636 636 2025 — 42 42 Thereafter — 2 2 Total payments $ 258 $ 2,747 $ 3,005 Less amounts representing interest (17 ) (614 ) (631 ) Total minimum payments required $ 241 $ 2,133 $ 2,374 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
We follow ASC Topic 718, Share-Based Payments, in which compensation expense is recognized only for share-based payments expected to vest. | We follow ASC Topic 718, Share-Based Payments, in which compensation expense is recognized only for share-based payments expected to vest. Three months ended March 31, 2022 2021 Share-based compensation expense $ 148 $ 42 Remaining unrecognized compensation expense $ 1,567 Remaining weighted average-period, expense recognition (years) 2.7 |
The following table summarizes the option activity for our employees and directors during the three months ended March 31, 2022: | The following table summarizes the option activity for our employees and directors during the three months ended March 31, 2022: Weighted Average Exercise Price Options Shares per Share Outstanding on January 1, 2022 3,193,216 $ 1.18 Granted 80,000 $ 3.65 Exercised (120,516 ) Forfeited or expired (12,000 ) Outstanding on March 31, 2022 3,140,700 $ 1.26 |
Significant Customers and Con_2
Significant Customers and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
Our significant customers are as follows for the periods ending March 31, 2022, and 2021: | Our significant customers are as follows for the periods ending March 31, 2022, and 2021: For the three months ended March 31, Customer # Product Category 2022 2021 1 Personal Care Ingredients 29 % 20 % 2 Solésence® 18 % 17 % 3 Solésence® 13 % 10 % 4 Solésence® 9 % 24 % 5 Advanced Materials (Medical Diagnostics customer) — 15 % Total 69 % 86 % |
Accounts receivable balances for these five customers were approximately: | Accounts receivable balances for these five customers were approximately: For the three months ended March 31, Customer # Product Category 2022 2021 1 Personal Care Ingredients $ 1,489 $ 812 2 Solésence® 880 476 3 Solésence® 1,050 875 4 Solésence® 371 837 5 Advanced Materials (Medical Diagnostics customer) — 855 Total $ 3,790 $ 3,855 |
Business Segmentation and Geo_2
Business Segmentation and Geographical Distribution (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
The revenues, by category, for the three months ended March 31, 2022 and 2021 are as follows: | Our operations comprise a single business segment and all of our long-lived assets are located within the United States. We categorize our revenue stream into three main product categories, Personal Care Ingredients, Advanced Materials and Solésence. The revenues, by category, for the three months ended March 31, 2022 and 2021 are as follows: Three months ended March 31, Product Category 2022 2021 Solésence $ 5,560 $ 4,299 Personal Care Ingredients 2,382 1,395 Advanced Materials 214 1,378 Total Sales $ 8,156 $ 7,072 |
Contract balances at March 31,
Contract balances at March 31, 2022 and December 31, 2021 are as follows: (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Revenue Recognition and Deferred Revenue [Abstract] | ||
Accounts receivable net | $ 5,274 | $ 3,937 |
Contract assets | 229 | 179 |
Contract liability | $ 1,509 | $ 1,444 |
Revenues (Details Narrative)
Revenues (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Unbilled receivables | $ 50 | ||
Other contract assets | 179 | $ 179 | |
Revenue from contract with customer excluding assessed tax | 123,000 | $ 142,000 | |
Other revenue | 8,156,000 | 7,072,000 | |
Product and Service, Other [Member] | |||
Other revenue | $ 110,000 | $ 22,000 |
Earnings applicable to common s
Earnings applicable to common stock and common stock shares used in the calculation of basic and diluted earnings per share are as follows: (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Numerator: (in Thousands) | ||
Net income | $ 62 | $ 1,310 |
Denominator: | ||
Weighted average number of basic common shares outstanding | 48,984,312 | 38,221,292 |
Weighted average additional shares assuming conversion of in-the-money stock options to common shares | 2,080,000 | 1,590,000 |
Weighted average number of diluted common shares outstanding | 51,064,312 | 39,811,292 |
Basic earnings per common share: | ||
Net income per share – basic | $ 0 | $ 0.03 |
Diluted earnings per common share: | ||
Net income per share – diluted | $ 0 | $ 0.03 |
Earnings Per Share (Details Nar
Earnings Per Share (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Weighted average additional shares assuming conversion of in-the-money stock options to common shares | 2,080,000 | 1,590,000 |
Financial Instruments (Details
Financial Instruments (Details Narrative) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Investments, All Other Investments [Abstract] | ||
Financial Instruments, Owned, at Fair Value | $ 0 | $ 0 |
Notes and lines of credit consi
Notes and lines of credit consist of the following: (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Strandler LLC [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Description | Strandler, LLC | |
Line of Credit Facility, Commitment Fee Percentage | 4.00% | |
Line of Credit Facility, Current Borrowing Capacity | $ 1,000 | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,000 | |
Beachcorp, LLC [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Description | Beachcorp, LLC | |
Line of Credit Facility, Commitment Fee Percentage | 5.25% | |
Line of Credit Facility, Current Borrowing Capacity | $ 1,000 | |
Line of Credit Facility, Maximum Borrowing Capacity | 1,000 | |
Beachcorp LLC One [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Description | Beachcorp, LLC | |
Line of Credit Facility, Commitment Fee Percentage | 4.00% | |
Line of Credit Facility, Current Borrowing Capacity | $ 4,972 | 3,753 |
Line of Credit Facility, Maximum Borrowing Capacity | $ 3,709 | $ 3,365 |
Related party interest summary_
Related party interest summary: (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Debt Disclosure [Abstract] | ||
Interest expense, related parties | $ 39 | $ 131 |
Accrued interest expense, related parties | $ 16 | $ 36 |
Notes and Lines of Credit (Deta
Notes and Lines of Credit (Details Narrative) | Jan. 28, 2022 |
A And R Loan Agreement [Member] | Strandler LLC [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Borrowing Capacity, Description | the Company entered into an additional Business Loan Agreement (the “New Term Loan Agreement”) with Strandler, LLC, which effectively transferred or assigned the previously existing Term Loan to Strandler, LLC from Beachcorp, LLC. Interest on the New Term Loan is at the prime rate plus 0.75%, and it matures on March 31, 2024. Strandler, LLC is also an affiliate of Bradford T. Whitmore. |
A And R Loan Agreement [Member] | Beachcorp, LLC [Member] | Revolving Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Borrowing Capacity, Description | the Company entered into the A&R Loan Agreement and a new revolving loan agreement (“Inventory Facility”) with Beachcorp, LLC, and a new promissory note in order to evidence the Inventory Facility. The maximum borrowing amount under the Inventory Facility is $4,000, with a borrowing base consisting of up to 50% of the value of qualified inventory of the Company. The interest rate for the Inventory Revolver is at the prime rate plus 0.75%, and it matures on March 31, 2024. |
Business Loan Agreement [Member] | Beachcorp, LLC [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Borrowing Capacity, Description | the Company entered into an Amended and Restated Business Loan Agreement (the “A&R Loan Agreement”), which amends and restates the Master Agreement between the Company and Beachcorp, LLC, and a new promissory note in order to evidence the A/R Revolver facility, including an amendment to expand the limit on the A/R Revolver Facility from $6,000 to $8,000, reduce the interest rate to the prime rate plus 0.75%, and extend the maturity of the A/R Revolver Facility to March 31, 2024. |
Inventories consist of the foll
Inventories consist of the following: (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 6,385 | $ 4,819 |
Finished goods | 2,374 | 1,682 |
Inventories, gross | 8,759 | 6,501 |
Allowance for excess inventory quantities | (200) | (406) |
Inventories, net | $ 8,559 | $ 6,095 |
Quantitative information regard
Quantitative information regarding the Company’s leases is as follows: (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Finance lease cost components: | ||
Amortization of finance lease assets | $ 11 | $ 14 |
Interest on finance lease liabilities | 2 | 6 |
Total finance lease costs | 13 | 20 |
Operating lease cost components: | ||
Operating lease cost | 363 | 144 |
Variable lease cost | 172 | 31 |
Short-term lease cost | 21 | 10 |
Sublease income | (183) | |
Total operating lease costs | 373 | 185 |
Total lease cost | $ 386 | $ 205 |
Supplemental cash flow informat
Supplemental cash flow information related to leases is as follows for the three months ended March 31, 2022 and 2021: (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Leases [Abstract] | |||
Operating cash outflow from operating leases | $ 190 | $ 183 | |
Weighted-average remaining lease term-finance leases (in years) | 18 days | 1 year 3 months 18 days | |
Weighted-average remaining lease term-operating leases (in years) | 9 years 3 months 18 days | 3 years 1 month 6 days | |
Weighted-average discount rate-finance leases | 7.60% | 10.10% | |
Weighted-average discount rate-operating leases | 7.50% | 14.20% |
The future maturities of the Co
The future maturities of the Company’s finance and operating leases as of March 31, 2022 are as follows: (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Mar. 31, 2021 |
Leases [Abstract] | ||
Finance Leases, Year 1 | $ 70 | $ 144 |
Operating Leases, Year 1 | 1,267 | 559 |
Total, Year 1 | 1,337 | 703 |
Finance Leases, Year 2 | 6 | 109 |
Operating Leases, Year 2 | 2,099 | 761 |
Total, Year 2 | 2,105 | 870 |
Finance Lease Liabilty, Year 3 | 0 | 5 |
Operating Leases, Year 3 | 2,025 | 747 |
Total, Year 3 | 2,025 | 752 |
Operating Leases, Year 4 | 1,470 | 636 |
Total, Year 4 | 1,470 | 636 |
Operating Leases, Year 5 | 1,468 | 42 |
Total, Year 5 | 1,468 | 42 |
Operating Leases, thereafter | 8,668 | 2 |
Total, thereafter | 8,668 | 2 |
Finance Lease, Liability, Payment, Due | 76 | 258 |
Lessee, Operating Lease, Liability, to be Paid | 16,997 | 2,747 |
Total payments | 17,073 | 3,005 |
Finance Lease, Liability, Undiscounted Excess Amount | (2) | (17) |
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | (4,719) | (614) |
Less amounts representing interest | (4,721) | (631) |
Finance Leases, Total minimum payments required | 74 | 241 |
Operating Leases, Total minimum payments required | 12,278 | 2,133 |
Total, Total minimum payments required | $ 12,352 | $ 2,374 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Operating leases, right of use | $ 11,718 | $ 12,075 |
Current portion of operating lease obligations | 890 | 589 |
Long-term portion of operating lease obligations | $ 11,389 | $ 11,700 |
We follow ASC Topic 718, Share-
We follow ASC Topic 718, Share-Based Payments, in which compensation expense is recognized only for share-based payments expected to vest. (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years 8 months 12 days | |
Share-Based Payment Arrangement, Option [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Share-based compensation expense | $ 148 | $ 42 |
Remaining unrecognized compensation expense | $ 1,567 |
The following table summarizes
The following table summarizes the option activity for our employees and directors during the three months ended March 31, 2022: (Details) | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Equity [Abstract] | |
Shares Outstanding, Beginning | 3,193,216 |
Shares Outstanding Beginning, (per share) | $ / shares | $ 1.18 |
Granted | 80,000 |
Granted (per share) | $ / shares | $ 3.65 |
Stock option exercises (in shares) | (120,516) |
Forfeited or expired | (12,000) |
Shares Outstanding, Ending | 3,140,700 |
Shares Outstanding Ending, (per share) | $ / shares | $ 1.26 |
Our significant customers are a
Our significant customers are as follows for the periods ending March 31, 2022, and 2021: (Details) - Customer Concentration Risk [Member] - Revenue Benchmark [Member] | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Customer One - Personal Care Ingredients [Member] | ||
Concentration Risk [Line Items] | ||
Revenue from customers (in percentage) | 29.00% | 20.00% |
Customer Two - Solesence [Member] | ||
Concentration Risk [Line Items] | ||
Revenue from customers (in percentage) | 18.00% | 17.00% |
Customer Three - Solesence [Member] | ||
Concentration Risk [Line Items] | ||
Revenue from customers (in percentage) | 13.00% | 10.00% |
Customer Four - Solesence [Member] | ||
Concentration Risk [Line Items] | ||
Revenue from customers (in percentage) | 9.00% | 24.00% |
Customer Five - Medical Diagnostics [Member] | ||
Concentration Risk [Line Items] | ||
Revenue from customers (in percentage) | 15.00% | |
Customers One through Five [Member] | ||
Concentration Risk [Line Items] | ||
Revenue from customers (in percentage) | 69.00% | 86.00% |
Accounts receivable balances fo
Accounts receivable balances for these five customers were approximately: (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Contract with Customer, Receivable, after Allowance for Credit Loss, Current | $ 3,790 | $ 3,855 |
Customer One - Personal Care Ingredients [Member] | ||
Contract with Customer, Receivable, after Allowance for Credit Loss, Current | 1,489 | 812 |
Customer Two - Solesence [Member] | ||
Contract with Customer, Receivable, after Allowance for Credit Loss, Current | 880 | 476 |
Customer Three - Solesence [Member] | ||
Contract with Customer, Receivable, after Allowance for Credit Loss, Current | 1,050 | 875 |
Customer Four - Solesence [Member] | ||
Contract with Customer, Receivable, after Allowance for Credit Loss, Current | $ 371 | 837 |
Customer Five - Medical Diagnostics [Member] | ||
Contract with Customer, Receivable, after Allowance for Credit Loss, Current | $ 855 |
Significant Customers and Con_3
Significant Customers and Contingencies (Details Narrative) | Mar. 31, 2022 |
Supply Commitment [Line Items] | |
Equipment sale - net book value | 115.00% |
Supply Commitment [Member] | |
Supply Commitment [Line Items] | |
Equipment sale - net book value | 115.00% |
Equipment sale- original book value | 30.00% |
The revenues, by category, for
The revenues, by category, for the three months ended March 31, 2022 and 2021 are as follows: (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue from External Customer [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 8,156 | $ 7,072 |
Personal Care Ingredients [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 5,560 | 4,299 |
Advanced Materials [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 2,382 | 1,395 |
Solesence [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 214 | $ 1,378 |
Business Segmentation and Geo_3
Business Segmentation and Geographical Distribution (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Product [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenues | $ 55 | $ 1,285 |