Nanophase Technologies (NANX) 10-Q 9 Aug 24 2024 Q2 Quarterly report Financial data

Cover

Cover - shares	6 Months Ended
	Jun. 30, 2024	Aug. 09, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
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		69,860,984

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited Consolidated Condensed) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash	$ 2,358	$ 1,722
Trade accounts receivable, less allowance for credit losses of $307 for June 30, 2024, and $225 for December 31, 2023	5,932	3,467
Inventories, net	13,874	10,031
Prepaid expenses and other current assets	2,096	1,082
Total current assets	24,260	16,302
Equipment and leasehold improvements, net	9,261	8,668
Operating leases, right of use	7,326	7,907
Other assets, net	2	4
Total assets	40,849	32,881
Current liabilities:
Lines of credit – accounts receivable, related party	2,272	2,810
Current portion of long-term debt, related party		2,000
Current portion of operating lease obligation	1,043	1,297
Accounts payable	5,577	6,260
Deferred revenue	3,077	2,353
Accrued expenses	1,800	869
Total current liabilities	13,769	15,589
Long-term portion of operating lease obligations	8,714	9,152
Long-term line of credit – inventory, related party	5,200	5,000
Long-term debt, related party	1,000	1,000
Asset retirement obligations	242	238
Total long-term liabilities	15,156	15,390
Shareholders’ equity:
Preferred stock, $.01 par value, 24,088 shares authorized on June 30, 2024, and December 31, 2023, respectively. No shares issued and outstanding on June 30, 2024, and December 31, 2023, respectively.
Common stock, $.01 par value, 95,000,000 and 60,000,000 shares authorized; 69,860,984 and 49,627,254 shares issued and outstanding on June 30, 2024 and December 31, 2023, respectively	698	496
Additional paid-in capital	114,140	106,069
Accumulated deficit	(102,914)	(104,663)
Total Shareholders’ equity	11,924	1,902
Total liabilities and shareholders’ equity	$ 40,849	$ 32,881

CONSOLIDATED BALANCE SHEETS (_2

CONSOLIDATED BALANCE SHEETS (Unaudited Consolidated Condensed) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 307	$ 225
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized	24,088	24,088
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized	95,000,000	60,000,000
Common stock, issued	69,860,984	49,627,254
Common stock, outstanding	69,860,984	49,627,254

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited Consolidated Condensed) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue:
Total revenue	$ 13,046	$ 11,872	$ 22,914	$ 21,329
Operating expense:
Cost of revenue	9,306	8,197	15,594	15,505
Gross profit	3,740	3,675	7,320	5,824
Research and development expense	864	991	1,776	1,994
Selling, general and administrative expense	1,829	2,105	3,388	4,255
Income (loss) from operations	1,047	579	2,156	(425)
Interest expense	191	246	409	400
Income (loss) before provision for income taxes	856	333	1,747	(825)
Provision for income taxes
Net income (loss)	$ 856	$ 333	$ 1,747	$ (825)
Net income (loss) per basic share	$ 0.02	$ 0.01	$ 0.03	$ (0.02)
Weighted average number of basic common shares outstanding	56,674,170	49,567,338	54,675,011	49,498,755
Net income (loss) per diluted share	$ 0.01	$ 0.01	$ 0.03	$ (0.02)
Weighted average number of diluted common shares outstanding	58,709,170	50,136,338	56,662,011	49,498,755
Product [Member]
Revenue:
Total revenue	$ 12,923	$ 11,844	$ 22,694	$ 21,180
Product and Service, Other [Member]
Revenue:
Total revenue	$ 123	$ 28	$ 220	$ 149

CONSOLIDATED STATEMENTS OF SHAR

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited Consolidated Condensed) - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance at Dec. 31, 2022		$ 493	$ 105,226	$ (100,070)	$ 5,649
Beginning balance (in shares) at Dec. 31, 2022		49,320,680
Issuance of shares and stock option exercises		$ 2	99		101
Issuance of shares and stock option exercises (in shares)		199,891
Stock-based compensation			209		209
Cumulative effect of accounting changes related to expected credit losses				(203)	(203)
Net income (loss)				(1,159)	(1,159)
Ending balance at Mar. 31, 2023		$ 495	105,534	(101,432)	4,597
Ending balance (in shares) at Mar. 31, 2023		49,520,571
Beginning balance at Dec. 31, 2022		$ 493	105,226	(100,070)	5,649
Beginning balance (in shares) at Dec. 31, 2022		49,320,680
Net income (loss)					(825)
Ending balance at Jun. 30, 2023		$ 496	105,762	(101,099)	5,159
Ending balance (in shares) at Jun. 30, 2023		49,589,204
Beginning balance at Mar. 31, 2023		$ 495	105,534	(101,432)	4,597
Beginning balance (in shares) at Mar. 31, 2023		49,520,571
Issuance of shares and stock option exercises		$ 1	33		34
Issuance of shares and stock option exercises (in shares)		68,633
Stock-based compensation			195		195
Net income (loss)				333	333
Ending balance at Jun. 30, 2023		$ 496	105,762	(101,099)	5,159
Ending balance (in shares) at Jun. 30, 2023		49,589,204
Beginning balance at Dec. 31, 2023		$ 496	106,069	(104,663)	1,902
Beginning balance (in shares) at Dec. 31, 2023		49,627,254
Issuance of shares and stock option exercises		$ 52	1,944		1,996
Issuance of shares and stock option exercises (in shares)		5,233,730
Stock-based compensation			160		160
Net income (loss)				893	893
Ending balance at Mar. 31, 2024		$ 548	108,173	(103,770)	4,951
Ending balance (in shares) at Mar. 31, 2024		54,860,984
Beginning balance at Dec. 31, 2023		$ 496	106,069	(104,663)	1,902
Beginning balance (in shares) at Dec. 31, 2023		49,627,254
Net income (loss)					1,747
Ending balance at Jun. 30, 2024		$ 698	114,140	(102,914)	11,924
Ending balance (in shares) at Jun. 30, 2024		69,860,984
Beginning balance at Mar. 31, 2024		$ 548	108,173	(103,770)	4,951
Beginning balance (in shares) at Mar. 31, 2024		54,860,984
Issuance of shares and stock option exercises		$ 150	5,810		5,960
Issuance of shares and stock option exercises (in shares)		15,000,000
Stock-based compensation			157		157
Net income (loss)				856	856
Ending balance at Jun. 30, 2024		$ 698	$ 114,140	$ (102,914)	$ 11,924
Ending balance (in shares) at Jun. 30, 2024		69,860,984

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited Consolidated Condensed) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Operating activities:
Net income (loss)	$ 1,747	$ (825)
Adjustments to reconcile net income (loss) to cash used in operating activities:
Depreciation and amortization	469	346
Share-based compensation	317	404
Changes in assets and liabilities related to operations:
Trade accounts receivable	(2,465)	(1,187)
Inventories	(3,843)	427
Prepaid expenses and other assets	(1,011)	(177)
Accounts payable	(1,182)	(1,447)
Accrued expenses	935	419
Deferred revenue	724	(90)
Change in right of use (ROU) asset and lease liability, net	(111)	169
Net cash used in operating activities	(4,420)	(1,961)
Investing activities:
Acquisition of equipment and leasehold improvements	(562)	(811)
Net cash used in investing activities	(562)	(811)
Financing activities:
Proceeds from line of credit – AR, related party	14,875	16,804
Payments to line of credit – AR, related party	(15,414)	(16,494)
Proceeds from line of credit – inventory, related party	200	1,000
Proceeds from term loan, related party		1,338
Payments to term loan, related party	(2,000)
Proceeds from issuance of mezzanine preferred stock	6,000
Proceeds from issuance of stock and exercise of stock options	1,957	135
Net cash provided by financing activities	5,618	2,783
Increase in cash and cash equivalents	636	11
Cash and cash equivalents at beginning of period	1,722	2,186
Cash and cash equivalents at end of period	2,358	2,197
Supplemental cash flow information:
Interest paid	341	318
Supplemental non-cash investing and financing activities:
Accounts payable incurred for the purchase of equipment and leasehold improvements	499	39
Conversion of mezzanine preferred stock	6,000
ROU assets obtained in exchange for lease liabilities		$ 36

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2024
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 and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. These financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission.

Description of Business

Description of Business	6 Months Ended
	Jun. 30, 2024
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 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 demand decrease for our medical diagnostics ingredients. 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. Under SEC Release 33-10513; 34-83550, Amendments to Smaller Reporting Company Definition, the Company qualifies as a smaller reporting company and accordingly, it has scaled some of its disclosures of financial and non-financial information in this quarterly report. The Company will continue to determine whether to provide additional scaled disclosures of financial or non-financial information in future quarterly reports, annual reports and/or proxy statements if it remains a smaller reporting company under SEC rules.

Revenues and Other Income

Revenues and Other Income	6 Months Ended
	Jun. 30, 2024
Revenue from Contract with Customer [Abstract]
Revenues and Other Income	(3) Revenues and Other Income 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 (which we do almost universally) we recognize the related revenue at the time of shipping. In the rare instances when we use FOB destination, we would not recognize revenue until the customer receives the product. 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 June 30, 2024, December 31, 2023, and December 31, 2022 are as follows: Accounts Receivable Contract Assets Contract Liabilities Balance, December 31, 2022 $ 4,734 $ — $ 2,188 Balance, December 31, 2023 3,467 — 2,353 Balance, June 30, 2024 5,932 — 3,077 Revenue recognized in the reporting period that was included in the contract liability balance at the beginning of the period was $924 $726 $1,603 $2,024 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 $123 $28 $220 $149 Nanophase Technologies subleases portions of its leased facilities that are used to support operations for the lessees. Total lease payment received for the three and six months ended June 30, 2024 was $70 $196 $274 $393 Payments received by the Company for these subleases are comprised of two components, which include base rent and Common Area Maintenance (CAM) charges. While the base rent is fixed, the CAM charges are indexed directly to the Master Lease and are expected to be adjusted periodically as actual costs are incurred. However, the executed sublease agreements specifically itemize these costs with a provision that informs the sublessee that the CAM charges will be adjusted (up or down) based on actual amounts once this information becomes known. As such, the nature of the charges is more closely representative of a fixed payment (an “in-substance fixed” charge) with the adjustments occurring simply to “true up” the listed CAM charges once actual charges from the head lessor become known. As sublessor, Nanophase Technologies has elected the practical expedient to not separate lease and nonlease components in disclosing future undiscounted cashflows and treats the combined components as a single lease component.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Jun. 30, 2024
Earnings Per Share [Abstract]
Earnings Per Share	(4) Earnings Per Share Options to purchase approximately 2,035,000 1,987,000 569,000 726,000 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 June 30, Six months ended June 30, 2024 2023 2024 2023 Numerator: (in Thousands) Net income (loss) $ 856 $ 333 $ 1,747 $ (825 ) Denominator: Weighted average number of basic shares outstanding 56,674,170 49,567,338 54,675,011 49,498,755 Weighted average additional shares assuming conversion of in-the-money stock options to common shares and assumed repurchase of common shares by the Company 2,035,000 569,000 1,987,000 — Weighted average number of diluted common shares outstanding 58,709,170 50,136,338 56,662,011 49,498,755 Basic earnings per common share: Net income (loss) per share – basic $ 0.02 $ 0.01 $ 0.03 $ (0.02 ) Diluted earnings per common share: Net income (loss) per share – diluted $ 0.01 $ 0.01 $ 0.03 $ (0.02 )

Financial Instruments

Financial Instruments	6 Months Ended
	Jun. 30, 2024
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 financial instruments adjusted to fair value on June 30, 2024 and December 31, 2023.

Related Party Notes and Lines o

Related Party Notes and Lines of Credit	6 Months Ended
	Jun. 30, 2024
Debt Disclosure [Abstract]
Related Party Notes and Lines of Credit	(6) Related Party Notes and Lines of Credit Notes and lines of credit consist of the following: As of June 30, 2024 As of December 31, 2023 Rate Total Borrowing Capacity Outstanding Total Outstanding Libertyville Bank & Trust (1) 9.50 $ 30 $ — $ 30 $ — Libertyville Bank & Trust (2) 9.50 500 — 500 — Beachcorp, LLC (3) 9.25 5,972 2,272 3,298 2,810 Beachcorp, LLC (4) 9.25 5,200 5,200 5,200 5,000 Strandler, LLC (5) 9.25 1,000 1,000 1,000 1,000 Strandler, LLC (6) 9.25 — — 2,000 2,000 1) Since July 2014, we have maintained a bank-issued letter of credit for up to $30 prime rate 1 2) On December 21, 2021, the existing credit agreement with Libertyville was converted for use to support our obligations under our newly leased manufacturing and warehouse space in Bolingbrook, Illinois. Interest on drawn balances will be at the prime rate 1 December 22, 2024 3) 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 $8,000 prime rate 0.75 March 31, 2024 October 1, 2025 4) 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 50 prime rate 0.75 March 31, 2024 $5,200 55 prime rate 0.75 October 1, 2025 5) 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 Term Loan to Strandler, LLC from Beachcorp, LLC. Interest on the New Term Loan is at the prime rate 0.75 October 1, 2025 6) On November 13, 2023, the Company entered into a new Promissory Note (the “Bridge Note”) with Strandler, LLC. The maximum borrowing amount under the Bridge Note was $2,000 0.75 May 13, 2024 The Company classifies the line of credit – accounts receivable as current because we are required to pay back the borrowings as cash is received from our customers. The company’s remaining debt is presented within the consolidated balance sheet as of June 30, 2024, and December 31, 2023, in accordance with the maturity dates in the financing agreements. 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. The Company’s loan agreements with Strandler, LLC and Beachcorp. LLC currently are set to expire on October 1, 2025, which could become an operating risk if we are not able to refinance or extend the maturity dates. Related party interest expense consists of the following: Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Interest expense, related parties $ 181 $ 211 $ 394 $ 361 Accrued interest expense, related parties 68 78 68 78 Outstanding debt balances obtained from related parties are as follows: June 30, December 31, 2023 Beachcorp, LLC $ 7,472 $ 7,810 Strandler, LLC 1,000 3,000

Inventories

Inventories	6 Months Ended
	Jun. 30, 2024
Inventory Disclosure [Abstract]
Inventories	(7) Inventories Inventories consist of the following: June 30, 2024 December 31, 2023 Raw materials $ 10,825 $ 7,847 Finished goods 3,049 2,184 Total inventories, net $ 13,874 $ 10,031 The Company’s inventory includes an inventory reserve of $1,595 $677

Capital Stock

Capital Stock	6 Months Ended
	Jun. 30, 2024
Equity [Abstract]
Capital Stock	(8) Capital Stock On March 1, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”), between the Company and Strandler, LLC (“Strandler”). Pursuant to the Purchase Agreement, the Company issued to Strandler 15,000 $400 $6,000,000 Under the Purchase Agreement, the Company granted Strandler customary registration rights with respect to shares of the Company’s common stock, par value $0.01 At any time and from time to time, in whole or in part, following the Company properly filing an amendment (the “Certificate Amendment”) to its Certificate of Incorporation to increase the number of authorized shares of its Common Stock from 60,000,000 95,000,000 $420 10 $420 Holders of Series X Preferred Stock (i) are not entitled to receive dividends, subject to customary anti-dilution protections, (ii) have no voting rights, and (iii) receive a liquidation preference of $400 ASC 815-15-25-17D provides guidance for assessing host contracts in the form of preferred shares, in which 25-17D(b) states that an investor’s ability to “convert a preferred share into a fixed number of common shares generally is viewed as an equity-like characteristic”. Because conversion of the Series X Preferred Shares is at the discretion of the Holder, conversion is in a fixed number of shares, dividends are not typically paid and cash settlement would only occur in the unlikely event of change in control, the host contract has the characteristics of, and is classified as, an equity instrument, and the embedded derivatives and host contract are considered clearly and closely related. As such, the embedded derivative does not require bifurcation and the Series X Preferred Shares shall be reported as mezzanine equity on the balance sheet. Issuance costs associated with issuance of the Series X Preferred Stock were immaterial. On June 18, 2024, the Company held a special meeting of stockholders where the Certificate Amendment was approved. The Certificate Amendment was filed with the State of Delaware on June 19, 2024. On June 20, 2024, Strandler converted its 15,000 15,000,000

Significant Customers and Conti

Significant Customers and Contingencies	6 Months Ended
	Jun. 30, 2024
Risks and Uncertainties [Abstract]
Significant Customers and Contingencies	(9) Significant Customers and Contingencies The portion of total revenue from our significant customers are as follows for the periods ending June 30, 2024, and 2023: Three months ended June 30, Six months ended June 30, Customer # Product Category 2024 2023 2024 2023 1 Solésence® 33 % 16 % 34 % 11 % 2 Personal Care Ingredients 13 % 26 % 14 % 31 % 3 Solésence® 7 % 11 % 9 % 10 % 4 Solésence® 7 % 15 % 5 % 13 % Total 60 % 68 % 62 % 65 % Accounts receivable balances for these four customers were approximately: June 30, June 30, Customer # Product Category 2024 2023 1 Solésence® $ 3,062 $ 1,587 2 Personal Care Ingredients 702 824 3 Solésence® 291 914 4 Solésence® 410 643 Total $ 4,465 $ 3,968 We currently have exclusive supply agreements with BASF Corporation (“BASF”), that have contingencies outlined which could potentially result in 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. 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 equipment sale mentioned above, we would lose significant revenue. 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. On April 10, 2024, the Company and BASF entered into a Settlement Agreement and General Release (the “Settlement Agreement”), providing for settlement of the New Jersey Complaint and resolution of the parties’ disputes. Under the Settlement Agreement, the Company and BASF agreed to enter into the Amendment (defined below) in exchange for (i) a mutual release of all claims related to the New Jersey Complaint and any claims based on similar facts or legal theories (collectively, the “Claims”), (ii) the filing of a Stipulation of Dismissal with the SCNJ voluntarily dismissing the New Jersey Complaint with prejudice, (iii) mutual covenants by the Company and BASF not to sue the other party for the Claims, (iv) the Company and BASF entering into the Modified Product MOU (defined below), (v) mutual indemnification as to certain claims arising out of the making, use, purchase, sale, or development of products in connection with the Modified Product MOU, and (vi) provisions regarding confidentiality of settlement terms and other customary settlement terms. The Stipulation of Dismissal was filed with the SCNJ on April 11, 2024, thereby concluding the New Jersey Complaint. In connection with the Settlement Agreement, the Company and BASF entered into an Amendment No. 5 (the “Amendment”) to the Agreement, and a Binding Memorandum of Understanding regarding the Company using its commercially reasonable efforts to develop a modified zinc oxide product for BASF’s exclusive purchase under the Agreement (the “Modified Product MOU”). The Amendment includes provisions (a) amending the exclusivity section of the Agreement to provide that (i) BASF has the exclusive right to use zinc oxide materials that the Company develops, makes, or sells to BASF as an ingredient for uses in the Field, and (ii) the Company or its affiliates, including Solésence, can supply and sell both certain finished products containing zinc oxide for use in the Field to customers anywhere in the world and certain zinc oxide dispersions that the Company developed or develops for a particular customer, and (b) amending the provisions of the Agreement concerning order forecasting and procedures, operational planning, inventory and capacity requirements, and periodic facility shutdown arrangements, to more effective serve each party’s business needs with respect to all product that BASF purchases from the Company under the Agreement.

Business Segmentation and Geogr

Business Segmentation and Geographical Distribution	6 Months Ended
	Jun. 30, 2024
Segment Reporting [Abstract]
Business Segmentation and Geographical Distribution	(10) Business Segmentation and Geographical Distribution Revenue from international sources approximated $478 $755 $752 $2,187 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 and six months ended June 30, 2024 and 2023 are as follows: Three months ended June 30, Six months ended June 30, Product Category 2024 2023 2024 2023 Solésence $ 11,200 $ 7,779 $ 19,304 $ 12,823 Personal Care Ingredients 1,745 3,037 3,121 6,581 Advanced Materials 102 1,056 489 1,925 Total Sales $ 13,046 $ 11,872 $ 22,914 $ 21,329

Revenues and Other Income (Tabl

Revenues and Other Income (Tables)	6 Months Ended
	Jun. 30, 2024
Revenue from Contract with Customer [Abstract]
Contract balances at June 30, 2024, December 31, 2023, and December 31, 2022 are as follows:	Contract balances at June 30, 2024, December 31, 2023, and December 31, 2022 are as follows: Accounts Receivable Contract Assets Contract Liabilities Balance, December 31, 2022 $ 4,734 $ — $ 2,188 Balance, December 31, 2023 3,467 — 2,353 Balance, June 30, 2024 5,932 — 3,077

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2024
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 June 30, Six months ended June 30, 2024 2023 2024 2023 Numerator: (in Thousands) Net income (loss) $ 856 $ 333 $ 1,747 $ (825 ) Denominator: Weighted average number of basic shares outstanding 56,674,170 49,567,338 54,675,011 49,498,755 Weighted average additional shares assuming conversion of in-the-money stock options to common shares and assumed repurchase of common shares by the Company 2,035,000 569,000 1,987,000 — Weighted average number of diluted common shares outstanding 58,709,170 50,136,338 56,662,011 49,498,755 Basic earnings per common share: Net income (loss) per share – basic $ 0.02 $ 0.01 $ 0.03 $ (0.02 ) Diluted earnings per common share: Net income (loss) per share – diluted $ 0.01 $ 0.01 $ 0.03 $ (0.02 )

Related Party Notes and Lines_2

Related Party Notes and Lines of Credit (Tables)	6 Months Ended
	Jun. 30, 2024
Debt Disclosure [Abstract]
Notes and lines of credit consist of the following:	Notes and lines of credit consist of the following: As of June 30, 2024 As of December 31, 2023 Rate Total Borrowing Capacity Outstanding Total Outstanding Libertyville Bank & Trust (1) 9.50 $ 30 $ — $ 30 $ — Libertyville Bank & Trust (2) 9.50 500 — 500 — Beachcorp, LLC (3) 9.25 5,972 2,272 3,298 2,810 Beachcorp, LLC (4) 9.25 5,200 5,200 5,200 5,000 Strandler, LLC (5) 9.25 1,000 1,000 1,000 1,000 Strandler, LLC (6) 9.25 — — 2,000 2,000 1) Since July 2014, we have maintained a bank-issued letter of credit for up to $30 prime rate 1 2) On December 21, 2021, the existing credit agreement with Libertyville was converted for use to support our obligations under our newly leased manufacturing and warehouse space in Bolingbrook, Illinois. Interest on drawn balances will be at the prime rate 1 December 22, 2024 3) 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 $8,000 prime rate 0.75 March 31, 2024 October 1, 2025 4) 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 50 prime rate 0.75 March 31, 2024 $5,200 55 prime rate 0.75 October 1, 2025 5) 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 Term Loan to Strandler, LLC from Beachcorp, LLC. Interest on the New Term Loan is at the prime rate 0.75 October 1, 2025 6) On November 13, 2023, the Company entered into a new Promissory Note (the “Bridge Note”) with Strandler, LLC. The maximum borrowing amount under the Bridge Note was $2,000 0.75 May 13, 2024
Related party interest expense consists of the following:	Related party interest expense consists of the following: Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Interest expense, related parties $ 181 $ 211 $ 394 $ 361 Accrued interest expense, related parties 68 78 68 78 Outstanding debt balances obtained from related parties are as follows: June 30, December 31, 2023 Beachcorp, LLC $ 7,472 $ 7,810 Strandler, LLC 1,000 3,000

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Jun. 30, 2024
Inventory Disclosure [Abstract]
Inventories consist of the following:	Inventories consist of the following: June 30, 2024 December 31, 2023 Raw materials $ 10,825 $ 7,847 Finished goods 3,049 2,184 Total inventories, net $ 13,874 $ 10,031

Significant Customers and Con_2

Significant Customers and Contingencies (Tables)	6 Months Ended
	Jun. 30, 2024
Risks and Uncertainties [Abstract]
The portion of total revenue from our significant customers are as follows for the periods ending June 30, 2024, and 2023:	The portion of total revenue from our significant customers are as follows for the periods ending June 30, 2024, and 2023: Three months ended June 30, Six months ended June 30, Customer # Product Category 2024 2023 2024 2023 1 Solésence® 33 % 16 % 34 % 11 % 2 Personal Care Ingredients 13 % 26 % 14 % 31 % 3 Solésence® 7 % 11 % 9 % 10 % 4 Solésence® 7 % 15 % 5 % 13 % Total 60 % 68 % 62 % 65 %
Accounts receivable balances for these four customers were approximately:	Accounts receivable balances for these four customers were approximately: June 30, June 30, Customer # Product Category 2024 2023 1 Solésence® $ 3,062 $ 1,587 2 Personal Care Ingredients 702 824 3 Solésence® 291 914 4 Solésence® 410 643 Total $ 4,465 $ 3,968

Business Segmentation and Geo_2

Business Segmentation and Geographical Distribution (Tables)	6 Months Ended
	Jun. 30, 2024
Segment Reporting [Abstract]
The revenues, by category, for the three and six months ended June 30, 2024 and 2023 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 and six months ended June 30, 2024 and 2023 are as follows: Three months ended June 30, Six months ended June 30, Product Category 2024 2023 2024 2023 Solésence $ 11,200 $ 7,779 $ 19,304 $ 12,823 Personal Care Ingredients 1,745 3,037 3,121 6,581 Advanced Materials 102 1,056 489 1,925 Total Sales $ 13,046 $ 11,872 $ 22,914 $ 21,329

Contract balances at June 30, 2

Contract balances at June 30, 2024, December 31, 2023, and December 31, 2022 are as follows: (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Accounts Receivable	$ 5,932	$ 3,467	$ 4,734
Contract Assets
Contract Liabilities	$ 3,077	$ 2,353	$ 2,188

Revenues and Other Income (Deta

Revenues and Other Income (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue recognized included in contract liability balance at beginning of period	$ 924	$ 726	$ 1,603	$ 2,024
Revenue	13,046	11,872	22,914	21,329
Sublease payment received	70	274	196	393
Product and Service, Other [Member]
Revenue	123	28	220	149
Product and Service, Other [Member] | Transferred over Time [Member]
Revenue	$ 123	$ 28	$ 220	$ 149

Earnings Per Share (Details Nar

Earnings Per Share (Details Narrative) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Earnings Per Share [Abstract]
Potential common stock included in computation of diluted earnings per share	2,035,000	569,000	1,987,000
Anti-dilutive options excluded from computation of earnings per share				726,000

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				6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Numerator: (in Thousands)
Net income (loss)	$ 856	$ 893	$ 333	$ (1,159)	$ 1,747	$ (825)
Denominator:
Weighted average number of basic shares outstanding	56,674,170		49,567,338		54,675,011	49,498,755
Weighted average additional shares assuming conversion of in-the-money stock options to common shares and assumed repurchase of common shares by the Company	2,035,000		569,000		1,987,000
Weighted average number of diluted common shares outstanding	58,709,170		50,136,338		56,662,011	49,498,755
Basic earnings per common share:
Net income (loss) per share – basic	$ 0.02		$ 0.01		$ 0.03	$ (0.02)
Diluted earnings per common share:
Net income (loss) per share – diluted	$ 0.01		$ 0.01		$ 0.03	$ (0.02)

Notes and lines of credit consi

Notes and lines of credit consist of the following: (Details) - USD ($) $ in Thousands					1 Months Ended		6 Months Ended
		Mar. 01, 2024	Nov. 13, 2023	Jan. 28, 2022	Dec. 21, 2021	Jul. 31, 2014	Jun. 30, 2024	Dec. 31, 2023	Jan. 27, 2022
Libertyville Bank and Trust [Member]
Line of Credit Facility [Line Items]
Rate	[1]						9.50%
Total Borrowing Capacity	[1]						$ 30	$ 30
Outstanding Borrowed Balance	[1]
Libertyville Bank and Trust One [Member]
Line of Credit Facility [Line Items]
Rate	[2]						9.50%
Total Borrowing Capacity	[2]						$ 500	500
Outstanding Borrowed Balance	[2]
Beachcorp, LLC [Member]
Line of Credit Facility [Line Items]
Rate	[3]						9.25%
Total Borrowing Capacity	[3]						$ 5,972	3,298
Outstanding Borrowed Balance	[3]						$ 2,272	2,810
Beachcorp, LLC One [Member]
Line of Credit Facility [Line Items]
Rate	[4]						9.25%
Total Borrowing Capacity	[4]						$ 5,200	5,200
Outstanding Borrowed Balance	[4]						$ 5,200	5,000
Strandler, LLC [Member]
Line of Credit Facility [Line Items]
Rate	[5]						9.25%
Total Borrowing Capacity	[5]						$ 1,000	1,000
Outstanding Borrowed Balance	[5]						$ 1,000	1,000
Strandler LLC One [Member]
Line of Credit Facility [Line Items]
Rate	[6]						9.25%
Total Borrowing Capacity	[6]							2,000
Outstanding Borrowed Balance	[6]							$ 2,000
Letter of Credit [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity						$ 30
Debt Instrument, Description of Variable Rate Basis					prime rate	prime rate
Debt Instrument, Basis Spread on Variable Rate					1%	1%
Line of Credit Facility, Expiration Date					Dec. 22, 2024
Revolving Credit Facility [Member] | Business Loan Agreement [Member] | Beachcorp, LLC [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity				$ 8,000					$ 6,000
Debt Instrument, Description of Variable Rate Basis				prime rate
Debt Instrument, Basis Spread on Variable Rate				0.75%
Line of Credit Facility, Expiration Date		Oct. 01, 2025		Mar. 31, 2024
Inventory Facility [Member] | Business Loan Agreement [Member] | Beachcorp, LLC [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity				$ 4,000
Debt Instrument, Description of Variable Rate Basis				prime rate
Debt Instrument, Basis Spread on Variable Rate				0.75%
Line of Credit Facility, Expiration Date				Mar. 31, 2024
Line of Credit Percentage of Eligible inventory				50%
Replacement Promissory Note [Member] | Business Loan Agreement [Member] | Beachcorp, LLC [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 5,200
Debt Instrument, Description of Variable Rate Basis			prime rate
Debt Instrument, Basis Spread on Variable Rate			0.75%
Line of Credit Facility, Expiration Date		Oct. 01, 2025
Line of Credit Percentage of Eligible inventory			55%
Term Loan [Member] | Strandler, LLC [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Description of Variable Rate Basis				prime rate
Debt Instrument, Basis Spread on Variable Rate				0.75%
Line of Credit Facility, Expiration Date		Oct. 01, 2025
Bridge Note [Member] | Strandler, LLC [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 2,000
Debt Instrument, Basis Spread on Variable Rate			0.75%
Line of Credit Facility, Expiration Date			May 13, 2024
[1]Since July 2014, we have maintained a bank-issued letter of credit for up to $30 prime rate 1 prime rate 1 December 22, 2024 $6,000 $8,000 prime rate 0.75 March 31, 2024 October 1, 2025 $4,000 50 prime rate 0.75 March 31, 2024 $5,200 55 prime rate 0.75 October 1, 2025 prime rate 0.75 October 1, 2025 $2,000 0.75 May 13, 2024

Related party interest expense

Related party interest expense consists of the following: (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Related Party Transaction [Line Items]
Interest expense	$ 191	$ 246	$ 409	$ 400
Related Party [Member]
Related Party Transaction [Line Items]
Interest expense	181	211	394	361
Accrued interest expense	$ 68	$ 78	68	78
Beachcorp, LLC [Member]
Related Party Transaction [Line Items]
Outstanding debt balances obtained from related parties			7,472	7,810
Strandler, LLC [Member]
Related Party Transaction [Line Items]
Outstanding debt balances obtained from related parties			$ 1,000	$ 3,000

Inventories consist of the foll

Inventories consist of the following: (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Raw materials	$ 10,825	$ 7,847
Finished goods	3,049	2,184
Total inventories, net	$ 13,874	$ 10,031

Inventories (Details Narrative)

Inventories (Details Narrative) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Inventory reserve	$ 1,595	$ 677

Capital Stock (Details Narrativ

Capital Stock (Details Narrative)			3 Months Ended
	Jun. 20, 2024 shares	Mar. 01, 2024 USD ($) $ / shares shares	Jun. 30, 2024 $ / shares shares	Mar. 31, 2024 shares	Jun. 30, 2023 shares	Mar. 31, 2023 shares	Dec. 31, 2023 $ / shares shares
Class of Stock [Line Items]
Common stock, par value (in dollars per share) | $ / shares		$ 0.01	$ 0.01				$ 0.01
Common stock, authorized		60,000,000	95,000,000				60,000,000
Common Stock [Member]
Class of Stock [Line Items]
Number of shares issued			15,000,000	5,233,730	68,633	199,891
Shares issed upon conversion	15,000,000
Series X Preferred Stock [Member]
Class of Stock [Line Items]
Number of shares issued		15,000
Price per share | $ / shares		$ 400
Consideration from sale of shares | $		$ 6,000,000
Common stock, authorized for conversion of preferred stock		95,000,000
Conversion price | $ / shares		$ 420
Interest rate		0.10
Liquidation preference | $ / shares		$ 400
Shares converted	15,000

The portion of total revenue fr

The portion of total revenue from our significant customers are as follows for the periods ending June 30, 2024, and 2023: (Details) - Customer Concentration Risk [Member] - Revenue Benchmark [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Customer One [Member]
Concentration Risk [Line Items]
Revenue from customers	33%	16%	34%	11%
Customer Two [Member]
Concentration Risk [Line Items]
Revenue from customers	13%	26%	14%	31%
Customer Three [Member]
Concentration Risk [Line Items]
Revenue from customers	7%	11%	9%	10%
Customer Four [Member]
Concentration Risk [Line Items]
Revenue from customers	7%	15%	5%	13%
Customers One Through Four [Member]
Concentration Risk [Line Items]
Revenue from customers	60%	68%	62%	65%

Accounts receivable balances fo

Accounts receivable balances for these four customers were approximately: (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023
Total	$ 4,465	$ 3,968
Customer One [Member]
Total	3,062	1,587
Customer Two [Member]
Total	702	824
Customer Three [Member]
Total	291	914
Customer Four [Member]
Total	$ 410	$ 643

Significant Customers and Con_3

Significant Customers and Contingencies (Details Narrative) - Supply Commitment [Member]	Jun. 30, 2024
Supply Commitment [Line Items]
Equipment sale - net book value	115%
Equipment sale- original book value	30%

The revenues, by category, for

The revenues, by category, for the three and six months ended June 30, 2024 and 2023 are as follows: (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue from External Customer [Line Items]
Total revenue	$ 13,046	$ 11,872	$ 22,914	$ 21,329
Solesence [Member]
Revenue from External Customer [Line Items]
Total revenue	11,200	7,779	19,304	12,823
Personal Care Ingredients [Member]
Revenue from External Customer [Line Items]
Total revenue	1,745	3,037	3,121	6,581
Advanced Materials [Member]
Revenue from External Customer [Line Items]
Total revenue	$ 102	$ 1,056	$ 489	$ 1,925

Business Segmentation and Geo_3

Business Segmentation and Geographical Distribution (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Non-US [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 478	$ 752	$ 755	$ 2,187