Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 30, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 0-11668 | ||
Entity Registrant Name | Inrad Optics, Inc. | ||
Entity Address, State or Province | NJ | ||
Entity Tax Identification Number | 22-2003247 | ||
Entity Address, Address Line One | 181 Legrand Avenue | ||
Entity Address, City or Town | Northvale | ||
Entity Incorporation, State or Country Code | NJ | ||
Entity Address, Postal Zip Code | 07647 | ||
City Area Code | 201 | ||
Local Phone Number | 767-1910 | ||
Title of 12(g) Security | Common stock, par value $.01 Per Share | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
No Trading Symbol Flag | true | ||
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 | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 14,200,975 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000719494 | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Entity Public Float | $ 5,762,963 | ||
Auditor Name | PKF O’Connor Davies, LLP | ||
Auditor Location | New York | ||
Auditor Firm ID | 127 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 2,003,485 | $ 1,801,188 |
Accounts receivable, net | 1,389,867 | 1,287,653 |
Inventories, net | 2,825,987 | 2,524,871 |
Other current assets | 309,287 | 260,116 |
Total current assets | 6,528,626 | 5,873,828 |
Plant and equipment: | ||
Plant and equipment, at cost | 15,967,537 | 15,393,241 |
Less: Accumulated depreciation and amortization | (14,723,869) | (14,709,744) |
Total plant and equipment | 1,243,668 | 683,497 |
Precious metals | 561,909 | 561,909 |
Lease right-of-use, net | 737,743 | 125,724 |
Other assets | 26,993 | 26,993 |
Total Assets | 9,098,939 | 7,271,951 |
Current liabilities: | ||
Current portion of other long term notes | 67,513 | 16,403 |
Accounts payable and accrued liabilities | 741,281 | 554,604 |
Contract liabilities | 1,065,173 | 576,474 |
Current portion of lease obligation | 295,978 | 141,536 |
Total current liabilities | 2,169,945 | 1,289,017 |
Related party convertible notes payable | 2,500,000 | 2,500,000 |
Other long term notes, net of current portion | 316,740 | 157,578 |
Lease obligation, net of current portion | 444,462 | 2,692 |
Total liabilities | 5,431,147 | 3,949,287 |
Shareholders' equity: | ||
Common stock: $.01 par value; 60,000,000 authorized shares; 14,092,920 shares issued at December 31, 2022, and 13,967,257 shares issued at December 31, 2021 | 140,931 | 139,674 |
Capital in excess of par value | 19,925,292 | 19,733,996 |
Accumulated deficit | (16,383,481) | (16,536,056) |
Stockholders' Equity before Treasury Stock | 3,682,742 | 3,337,614 |
Less - Common stock in treasury, at cost (4,600 shares) | (14,950) | (14,950) |
Total shareholders' equity | 3,667,792 | 3,322,664 |
Total Liabilities and shareholders' equity | $ 9,098,939 | $ 7,271,951 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 14,092,920 | 13,967,257 |
Treasury stock, shares | 4,600 | 4,600 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Total revenue | $ 10,631,032 | $ 11,352,527 |
Cost and expenses: | ||
Cost of goods sold | 7,529,893 | 7,874,076 |
Selling, general and administrative expenses | 2,782,082 | 2,544,102 |
Cost and expenses, Total | 10,311,975 | 10,418,178 |
Income from operations | 319,057 | 934,349 |
Other expense: | ||
Gain on forgiveness of PPP loan | 973,166 | |
Interest expense-net | (166,482) | (158,618) |
Nonoperating Income (Expense) | (166,482) | 814,548 |
Income before income taxes | 152,575 | 1,748,897 |
Income tax (provision) benefit | 0 | 0 |
Net income | $ 152,575 | $ 1,748,897 |
Net income per common share - basic | $ 0.01 | $ 0.13 |
Net income per common share - diluted | $ 0.01 | $ 0.11 |
Weighted average shares outstanding - basic | 14,018,227 | 13,871,420 |
Weighted average shares outstanding - diluted | 14,724,895 | 16,630,239 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Common stock | Capital in excess of par value | Accumulated Deficit | Treasury Stock | Total |
Beginning balance at Dec. 31, 2020 | $ 138,251 | $ 19,516,363 | $ (18,284,953) | $ (14,950) | $ 1,354,711 |
Beginning balance (in shares) at Dec. 31, 2020 | 13,824,928 | ||||
401K contribution | $ 1,423 | 101,925 | 0 | 0 | 103,348 |
401K contribution (in shares) | 142,329 | ||||
Stock-based compensation expense | $ 0 | 115,708 | 0 | 0 | 115,708 |
Net income | 1,748,897 | 1,748,897 | |||
Ending balance at Dec. 31, 2021 | $ 139,674 | 19,733,996 | (16,536,056) | (14,950) | 3,322,664 |
Ending balance (in shares) at Dec. 31, 2021 | 13,967,257 | ||||
401K contribution | $ 597 | 50,158 | 0 | 0 | 50,755 |
401K contribution (in shares) | 59,663 | ||||
Common stock options exercised | $ 660 | 24,660 | 25,320 | ||
Common stock options exercised (in shares) | 66,000 | ||||
Stock-based compensation expense | 116,478 | 116,478 | |||
Net income | 152,575 | 152,575 | |||
Ending balance at Dec. 31, 2022 | $ 140,931 | $ 19,925,292 | $ (16,383,481) | $ (14,950) | $ 3,667,792 |
Ending balance (in shares) at Dec. 31, 2022 | 14,092,920 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 152,575 | $ 1,748,897 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities | ||
Depreciation and amortization | 249,265 | 166,987 |
401(k) common stock contribution - non cash item | 50,755 | 103,348 |
Stock based compensation | 116,478 | 115,708 |
Gain on forgiveness of PPP loan | (973,166) | |
Capitalized interest on promissory note | 5,538 | |
Change in inventory reserve | (99,662) | 9,700 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (102,214) | (463,200) |
Inventories | (201,454) | 671,485 |
Other current and non-current assets | (661,190) | (65,574) |
Other current and non-current liabilities | 596,212 | |
Accounts payable and accrued liabilities | 186,677 | (178,125) |
Contract liabilities | 488,699 | (280,327) |
Total adjustments and changes | 623,566 | (887,626) |
Net cash provided by operating activities | 776,141 | 861,270 |
Cash flows from investing activities: | ||
Capital expenditures | (539,116) | (221,838) |
Net cash (used in) investing activities | (539,116) | (221,838) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 25,320 | 0 |
Principal payments on notes payable-other | (60,048) | (8,360) |
Net cash (used in) provided by financing activities | (34,728) | (8,360) |
Net increase in cash and cash equivalents | 202,297 | 671,485 |
Cash and cash equivalents at beginning of year | 1,801,188 | 1,129,703 |
Cash and cash equivalents at end of year | 2,003,485 | 1,801,188 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 171,060 | $ 161,948 |
Significant non-cash activities: | ||
Lease right-of-use asset | 879,300 | |
Supplemental disclosure of non-cash investing and financing activities | ||
Acquisition of equipment by issuing a note payable | $ 270,320 |
Nature of Business and Operatio
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | 12 Months Ended |
Dec. 31, 2022 | |
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | |
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | 1. Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates a. Nature of Business and Operations Inrad Optics, Inc. and Subsidiaries (the “Company”) was incorporated in the state of New Jersey and is a manufacturer of products and services for use in the photonics industry enabling key applications for the semiconductor metrology, life sciences, and aerospace and defense industries. The company’s products include custom glass, single crystal, metal optical components and assemblies, and x-ray imaging crystals and assemblies. Company’s principal customers include commercial instrumentation companies and OEM laser systems manufacturers, research laboratories, government agencies, and defense contractors. The Company’s administrative offices and manufacturing operations are in Northvale, New Jersey. b. Liquidity As of December 31, 2022, the Company had working capital of $4.4 million and cash and cash equivalents of $2.0 million. Management believes based on the Company’s operations and its existing working capital resources together with existing cash flows, the Company has sufficient cash flows to fund operations through at least March 31, 2024. c. Principles of consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Upon consolidation, all inter-company accounts and transactions are eliminated. d. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts in the consolidated financial statements and accompanying notes. These estimates include, but are not limited to, determining our allowance for doubtful accounts, our allowance for inventory obsolescence, the fair value and depreciable lives of long-lived tangible and intangible assets, and deferred taxes and the associated valuation allowance. Actual results could differ from these estimates. e. Cash and cash equivalents The Company considers cash-on-hand and highly liquid investments with original maturity dates of three months or less at the date of purchase to be cash and cash equivalents. f. Accounts receivable Beginning in 2023, the Company adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The Company extends credit to its customers that satisfy pre-defined credit criteria. Accounts receivable are recorded net of an allowance for credit losses. The Company estimates the allowance for credit losses based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated bankruptcies, customer-specific circumstances, and an evaluation of current economic conditions. Actual write-off of receivables may differ from estimates due to changes in customer and economic circumstances. During 2022 and 2021, a net reduction of $46,000 and $90,000, respectively, in allowances related to customer receivables was recorded due to a change in customers' financial condition, actual and anticipated bankruptcies and other associated claims. g. Inventories Inventories are stated at the lower of cost (first-in, first-out method) or net-realizable value. Cost of manufactured goods includes material, labor and overhead. The Company records a reserve for slow moving inventory as a charge against earnings for all products identified as surplus, slow moving, or discontinued. Excess work-in-process costs are charged against earnings whenever estimated costs-of-completion exceed unbilled revenues. h. Plant and Equipment Plant and equipment are depreciated using the straight-line method over the estimated useful lives of the related assets which range between five Maintenance and repairs of property and equipment are charged to operations and major improvements are capitalized. Upon retirement, sale or other disposition of property and equipment, the cost and accumulated depreciation are eliminated from the accounts and a gain or loss is recorded. i. Income taxes Deferred taxes are provided on the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the amounts of assets and liabilities recorded for income tax and financial reporting purposes. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company recognizes the financial statement benefit of an uncertain tax position only after determining that the relevant tax authority would more likely than not sustain the position. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company classifies interest and penalties related to income taxes as income tax expense in its Consolidated Financial Statements. The Company had no unrecognized tax benefits or liabilities, and no adjustment to its financial position, results of operations, or cash flows relating to uncertain tax positions taken on all open tax years. The Company is no longer subject to federal income tax examinations by tax authorities for the years before 2019 and state or local income tax examinations by tax authorities for the years before 2019. j. Impairment of long-lived assets Long-lived assets, such as plant and equipment and purchased intangibles with finite lives, which are subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Long-lived assets held for sale would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and would no longer be depreciated. k. Stock-based compensation Stock based compensation expense is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options granted using the Black-Scholes option pricing model. The fair value of restricted stock units granted is estimated based on the closing market price of the Company’s common stock on the date of the grant. The fair value of these awards, adjusted for estimated forfeitures, is amortized over the requisite service period of the award, which is generally the vesting period. l. Revenue recognition The Company’s revenues are comprised of product sales as well as products and services provided under long-term government contracts with its customers. All revenue is recognized when the Company satisfies its performance obligation(s) under the contract (either implicit or explicit) by transferring the promised product or service to its customer either when (or as) its customer obtains control of the product or service. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. The majority of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the Company’s best estimate of standalone selling price for each distinct product or service in the contract, which is generally based on an observable price. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. As such, revenue is recorded net of returns, allowances, customer discounts, and incentives. Sales, value added, and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis. Shipping and handling costs are included in cost of goods sold. The Company’s performance obligations under long-term government contracts are generally satisfied over time. Revenue from products or services transferred to customers over time accounted for approximately 0.0% and 0.4% of revenue for 2022 and 2021, respectively. Revenue under these long-term government contracts is generally recognized over time using an input measure based upon the proportion of actual costs incurred to estimated total project costs, which is a method used to best depict the Company’s performance to date under the terms of the contract. Accounting for these long-term government contracts involves the use of various techniques to estimate total revenue and costs. The Company estimates profit on these long-term government contracts as the difference between total estimated revenue and expected costs to complete a contract and recognizes that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include, among other things, labor productivity, costs and availability of materials, and timing of funding by the U.S. government. The nature of these long-term agreements may give rise to several types of variable consideration, such as claims, awards, and incentive fees. Historically, these amounts of variable consideration are not considered significant. Additionally, contract estimates may include additional revenue for submitted contract modifications if there exists an enforceable right to the modification, the amount can be reasonably estimated, and its realization is probable. These estimates are based on historical collection experience, anticipated performance, and the Company’s best judgement at the time. These amounts are generally included in the contract’s transaction price and are allocated over the remaining performance obligations. Changes in judgments on these above estimates could impact the timing and amount of revenue recognized with a resulting impact on the timing and amount of associated income. Under these long-term government contracts, the Company may receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. In the event a contract loss becomes known, the entire amount of the estimated loss is recognized in the Consolidated Statements of Operations. m. Internal research and development costs Internal research and development costs are charged to expense as incurred. n. Precious metals Precious metals are stated at cost and consist of various fixtures used in the high temperature crystal growth manufacturing process. From time to time the quoted market values of these precious metals may be below cost. Management evaluates these market adjustments on a recurring basis and if it is determined that they are other than temporary the carrying value would be adjusted. o. Advertising costs Advertising costs included in selling, general and administrative expenses were $25,000 and $19,000 for the years ended December 31, 2022 and 2021, respectively. Advertising costs are charged to expense when the related services are incurred or related events take place. p. Concentrations and credit risk The concentration of credit risk in the Company’s accounts receivable is mitigated by the Company’s credit evaluation process, familiarity with its small base of recurring customers and reasonably short collection terms and the geographical dispersion of revenue. The Company generally does not require collateral but, in some cases, the Company negotiates cash advances prior to the undertaking of the work. These cash advances are recorded as current liabilities on the balance sheet until corresponding revenues are realized. The Company is subject to credit risk for cash accounts in a financial institution, which at times may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on these accounts. The Company does not believe there is significant credit risk with respect to such cash. The Company utilizes many relatively uncommon materials and compounds to manufacture its products and relies on outside vendors for certain manufacturing services. Therefore, any failure by its suppliers to deliver materials of an adequate quality and quantity could have an adverse effect on the Company’s ability to meet the commitments of its customers. For the year ended December 31, 2022, the Company had three customers who had sales representing 19.7%, 15.3% and 15.1% of total revenues. For the year ended December 31, 2021, the Company had three customers who had sales representing 20.3%, 13.6% and 9.5% of total revenues. Since the Company is a supplier of custom manufactured components to OEM customers, the relative size and identity of the largest customer accounts changes somewhat from year to year. In the short term, the loss of any one of these large customer accounts could have a material adverse effect on business, results of operations, and financial condition. q. Fair value measurements The Company follows U.S. GAAP accounting guidance which establishes a framework for measuring fair value and expanded related disclosures. The framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price), in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The valuation techniques required are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The accounting guidance requires the following fair value hierarchy: ● ● ● Long-lived assets may be measured at fair value if such assets are held for sale or if there is a determination that the asset is impaired. Management’s determination of fair value, although highly subjective, is based on the best information available, including internal projections of future earnings and cash flows discounted at an appropriate interest rate, quoted market prices when available, market prices for similar assets, broker quotes and independent appraisals, as appropriate. r. Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments" (“ASU 2016-13”) which amended guidance on the accounting for credit losses on financial instruments within its scope. The guidance introduces an expected loss model for estimating credit losses, replacing the incurred loss model. The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries). The new guidance is effective for interim and annual periods beginning in 2023, with earlier application permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU update is intended to simplify the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. This guidance is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company does not expect the adoption of this guidance will have a material impact on the Company’s consolidated financial statements. s. Subsequent events Management has performed an evaluation of subsequent events through the date that the financial statements were issued and has determined that it does not have any additional material subsequent events to disclose in these financial statements. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2022 | |
Revenue | |
Revenue | 2. Revenue Years Ended December 31, 2022 2021 Market (In thousands) Net Sales % Net Sales % Aerospace & Defense $ 3,008 28.3 $ 3,824 33.7 Process Control & Metrology 6,981 65.6 5,656 49.8 Laser Systems 188 1.8 724 6.4 Scientific / R&D 454 4.3 1,149 10.1 Total $ 10,631 100.0 $ 11,353 100.0 The majority of the Company’s revenue is from products and services transferred to customers at a point in time and were approximately 100% and 99.6% of revenue for 2022 and 2021, respectively. The Company recognizes revenue at the point in time in which the customer obtains control of the product or service, which is generally when product title passes to the customer upon shipment. In limited cases, title does not transfer, and revenue is not recognized until the customer has received the products at its physical location. Net sales by timing to transfers of goods and services is as follows: For the years ended December 31, 2022 2021 (in thousands) Transfer at point in time $ 10,631 $ 11,313 Transfer over time — 40 Total net sales $ 10,631 $ 11,353 The Company’s performance obligations under long-term government contracts are generally satisfied over time. Revenue from products or services transferred to customers over time accounted for approximately 0.0% and 0.4% of revenue for 2022 and 2021, respectively. |
Inventories, net
Inventories, net | 12 Months Ended |
Dec. 31, 2022 | |
Inventories, net | |
Inventories, net | 3. Inventories, net Inventories are comprised of the following and are shown net of inventory reserves of approximately $2.4 million and $2.5 million at December 31, 2022 and 2021, respectively: December 31, 2022 2021 (in thousands) Raw materials $ 1,065 $ 1,160 Work in process, including manufactured parts and components 1,282 1,020 Finished goods 479 345 $ 2,826 $ 2,525 |
Plant and Equipment
Plant and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Plant and Equipment | |
Plant and Equipment | 4. Plant and Equipment Plant and equipment are comprised of the following: December 31, 2022 2021 (In thousands) Office and computer equipment $ 1,487 $ 1,482 Machinery and equipment 12,126 11,599 Leasehold improvements 2,354 2,312 15,967 15,393 Less accumulated depreciation and amortization (14,724) (14,710) $ 1,244 $ 683 Depreciation and amortization expense recorded by the Company totaled approximately $249,000 and $166,000 for 2022 and 2021, respectively. Fully depreciated assets of $235,000 and $20,000 were written off in 2022 and 2021, respectively. The Company evaluates its property and equipment for impairment when events or circumstances indicate an impairment may exist. Based on this evaluation, the Company concluded that, at December 31, 2022 and 2021, its long-lived assets were not impaired. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | 5. Related Party Transactions On July 22, 2020, the maturity dates of a $1,500,000 Subordinated Convertible Promissory Note to Clarex Limited (“Clarex”) and a $1,000,000 Subordinated Convertible Promissory Note to an affiliate of Clarex were each extended to April 1, 2024, from April 1, 2021. The notes bear interest at 6%. Interest accrues yearly and is payable on maturity. Unpaid interest, along with principal, may be converted into securities of the Company as follows: the notes are convertible in the aggregate into 1,500,000 units and 1,000,000 units, respectively, with each unit consisting of one share of common stock and one warrant. Each warrant allows the holder to acquire 0.75 shares of common stock at a price of $1.35 per share. As part of the agreement to extend the maturity date of the notes, the expiration dates of the warrants were extended from April 1, 2024, to April 1, 2027. The Company paid $0.2 million for interest on the subordinated convertible promissory notes for each of the years 2022 and 2021, respectively. Accrued interest of $37,500 is included in Accounts payable and accrued liabilities as of December 31, 2022 and 2021, respectively. |
Other Long-Term Notes
Other Long-Term Notes | 12 Months Ended |
Dec. 31, 2022 | |
Other Long-Term Notes | |
Other Long-Term Notes | 6. Other Long-Term Notes Other Long-Term Notes consist of the following: December 31, 2022 2021 (in thousands) U.S. Small Business Administration term note payable in equal monthly installments of $1,922 and bearing an interest rate of 4.0% and expiring in July 2029. $ 160 $ 174 Long-term equipment financing in equal installments of $5,236 and bearing an interest rate of 6.1% and expiring in January 2027 (1) 225 — Less current portion (68) (16) Long-term debt, excluding current portion $ 317 $ 158 (1) The Company purchased certain equipment in the six months ended June 30, 2022, financing approximately $282,000 at a fixed annual interest rate of 6.1% for five years payable in equal monthly installments. Other Long-Term Notes mature as follows: Year ending December 31: (In thousands) 2023 $ 68 2024 71 2025 75 2026 80 2027 25 Thereafter 66 $ 385 |
Payroll Protection Program
Payroll Protection Program | 12 Months Ended |
Dec. 31, 2022 | |
Payroll Protection Program | |
Payroll Protection Program | 7. Payroll Protection Program On May 6, 2020, the Company received loan proceeds of approximately $973,000 (the “PPP Loan”), under the Paycheck Protection Program (“PPP”). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) which was enacted March 27, 2020. On January 19, 2021, the Company received notification from the Small Business Association that the Company’s Forgiveness Application of the PPP Loan and accrued interest, totaling $980,000, was approved in full, and the Company had no further obligations related to the PPP Loan. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | 8. Accounts Payable and Accrued Liabilities Accounts payable and accrued expenses are comprised of the following: December 31, 2022 2021 Trade accounts payable and accrued purchases $ 446 $ 404 Accrued payroll 25 12 Accrued 401K company matching contribution 137 126 Accrued expenses – other 133 13 $ 741 $ 555 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 9. Income Taxes The Company did not record a current provision for either state tax or federal tax due to loss carry forwards incurred for both income tax and financial reporting purposes. A reconciliation of the income tax provision computed at the statutory federal income tax rate to our effective income tax rate follows (in percent): Years Ended December 31, 2022 2021 Federal statutory rate 21 % 21 % Reduction in state rate due to tax rate change 9 9 Change in Valuation Allowance (106) (14) Permanent Differences 33 (15) Return to provision adjustment 43 (1) Effective income tax rate — % — % At December 31, 2022 and 2021, the Company had estimated Federal net operating loss carry forwards of approximately $10.1 million and $9.5 million, respectively, and state net operating loss carry forwards of approximately $5.0 million and $4.5 million, respectively. Approximately $8.2 million net operating loss carryforwards expire during various years through 2037, and approximately $1.9 million may be carried forward indefinitely, subject to the 80% of taxable income limitation rule. Internal Revenue Code Section 382 places a limitation on the utilization of Federal net operating loss and other credit carry forwards when an ownership change, as defined by the tax law, occurs. Generally, this occurs when a greater than 50 percentage point change in ownership occurs. Accordingly, the actual utilization of the net operating loss and carryforwards for tax purposes may be limited annually to a percentage (based on the risk-free interest rate) of the fair market value of the Company at the time of any such ownership change. The Company has not prepared an analysis of ownership changes but does not believe that a greater than 50% change of ownership has occurred and such limitations would not apply to the Company. Deferred tax assets (liabilities) are comprised of the following: Years Ended December 31, 2022 2021 Account receivable reserves $ 13 $ 25 Inventory reserves 667 707 Inventory capitalization 92 71 Depreciation — 197 Loss carry forwards 2,562 2,386 Gross deferred tax assets 3,334 3,386 Deferred tax liability- depreciation (110) — Valuation allowance (3,224) (3,386) Net deferred tax asset $ — $ — In evaluating the Company’s ability to recover deferred tax assets in future periods, management considers the available positive and negative factors, including the Company’s recent operating results, the existence of cumulative losses and near-term forecasts of future taxable income that is consistent with the plans and estimates management is using to manage the underlying business. A significant piece of objective evidence evaluated was the cumulative loss incurred by the Company over the three-year period ended December 31, 2022. On the basis of this evaluation, as of December 31, 2022, the valuation allowance decreased by $162,000 due to the reduction of net operating loss carryforwards. The valuation allowance increased as of December 31, 2021, by $61,000. The company concluded it was more likely than not that it would not be able to realize a significant portion of the benefit on the deferred tax assets and adjusted the valuation allowance accordingly. The Company files income tax returns in the United States, which typically provides for a three-year statute of limitations on assessments. The Company is no longer subject to federal, state, or local income tax examinations by tax authorities for the years before 2019. The guidance for accounting for uncertainties in income taxes requires that we recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. There were no unrecognized tax benefits that impacted our effective tax rate and accordingly, there was no material effect to our financial position, results of operations or cash flows. Our policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense. To date, there have been no interest or penalties charged to us in relation to the underpayment of income taxes. We do not anticipate that our unrecognized tax benefits will significantly increase in the next 12 months. |
Equity Compensation Program and
Equity Compensation Program and Stock-based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Equity Compensation Program and Stock-based Compensation | |
Equity Compensation Program and Stock-based Compensation | 10. Equity Compensation Program and Stock-based Compensation a. 2020 Equity Compensation Program On February 12, 2020, the Inrad Optics Board of Directors, adopted the Inrad Optics, Inc. 2020 Equity Compensation Program (the “2020 Program”), and received shareholder approval on June 23, 2020. The 2020 Program provides for grants of options, stock appreciation rights and restricted stock awards to employees, officers, directors, and others who render services to the Company. The 2020 Program is comprised of four parts including: (i) the Incentive Stock Option Plan which provides for grants of “incentive stock options,” (ii) the Supplemental Stock Option Plan which provides for grants of stock options that shall not be “incentive stock options,” (iii) the Stock Appreciation Rights Plan which allows the granting of stock appreciation rights and, (iv) the Restricted Stock Award Plan which provides for the granting of restrictive shares of Common Stock and restricted stock units. The 2020 Program is administered by the Compensation Committee of the Board of Directors. Under the 2020 Program, an aggregate of up to 4,000,000 shares of common stock may be granted. b. 2010 Equity Compensation Program The Company’s 2010 Equity Compensation Program (the “2010 Program”) provided for grants of options, stock appreciation rights and restricted stock awards to employees, officers, directors, and others who render services to the Company. The 2010 Program expired on March 23, 2020. All outstanding grants of options, stock appreciation rights and performance shares issued under the 2010 Program will remain outstanding and shall expire on the date determined by the terms of the original grant. The latest date of expiration for outstanding grants under the 2010 Program is March 23, 2030. c. Stock Option Expense The Company’s results include stock-based compensation expense for stock option grants totaling $116,000 and $113,000 for the years ended December 31, 2022 and 2021, respectively. Such amounts have been included in the Consolidated Statements of Operations within cost of goods sold ($13,000 and $21,000 for 2022 and 2021, respectively), and selling, general and administrative expenses ($103,000 and $92,000 for 2022 and 2021, respectively). As of December 31, 2022 and 2021, there were $222,000 and $120,000 of unrecognized compensation costs, net of estimated forfeitures, related to non-vested stock options, which are expected to be recognized over a weighted average period of approximately 1.54 and 1.57 years, respectively. The weighted average estimated fair value of stock options granted in the two years ended December 31, 2022 and 2021, was $1.20 and $0.62, respectively. The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an option award. The Company assumes a dividend yield of zero, as the Company has not paid dividends in the past and does not expect to in the foreseeable future. The expected volatility is based upon the historical volatility of our common stock which the Company believes results in the best estimate of the grant-date fair value of employee stock options because it reflects the market’s current expectations of future volatility. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant with maturity dates approximately equal to the expected life at the grant date. The expected life is based upon the period of expected benefit based on the Company’s evaluation of historical and expected future employee exercise behavior. The following range of weighted-average assumptions were used for to determine the fair value of stock option grants during the years ended December 31, 2022 and 2021: Years Ended December 31, 2022 2021 Expected dividend yield — % — % Expected volatility 104.62 % 106.35 % Risk-free interest rate 1.54 % 0.86 % Expected term 10 years 10 years d. Stock Option Activity A summary of the Company’s outstanding stock options as of and for the years ended December 31, 2022 and 2021, is presented below: Weighted Weighted Average Average Exercise Remaining Aggregate Number of Price per Contractual Intrinsic Stock Options Options Option Term (years) Value (a) Outstanding January 1, 2021 1,150,867 $ 0.64 6.61 $ 107,573 Granted 200,000 0.62 Exercised — — Expired/Forfeited (198,200) 0.86 Outstanding December 31, 2021 (b) 1,152,667 $ 0.60 7.40 $ 662,465 Granted 200,000 1.20 Exercised (66,000) 0.38 Expired/Forfeited — — Outstanding December 31, 2022 (b) 1,286,667 $ 0.71 7.52 $ 1,214,875 Exercisable at December 31, 2022 945,832 $ 0.61 6.13 $ 1,085,699 (a) Intrinsic value for purposes of this table represents the amount by which the fair value of the underlying stock, based on the respective market prices as of December 31, 2022, exceeds the exercise prices of the respective options. (b) Based on the Company’s historical forfeiture rate, the number of options expected to vest is the same as the total outstanding at December 31, 2022. The following table represents non-vested stock options granted, vested, and forfeited for the year ended December 31, 2022: Weighted-average Grant-date Fair Value Options ($) Non-Vested - January 1, 2022 276,670 0.66 Granted 200,000 1.09 Vested (135,836) 0.70 Forfeited — — Non-Vested – December 31, 2022 340,834 0.89 The total weighted average grant date fair value of options vested during the years ended December 31, 2022 and 2021, was $218,000 and $113,000, respectively. The following table summarizes information about stock options outstanding at December 31, 2022: Options Outstanding Options Exercisable Weighted Average Weighted Weighted Remaining Average Average Range of Number Contractual Exercise Number Exercise Exercise Price Outstanding Life in Years Price Outstanding Price $0.18 - $0.35 346,667 3.19 $ 0.30 346,667 $ 0.30 $0.50 - $1.00 702,500 7.10 $ 0.72 569,165 $ 0.74 $1.40 - $1.80 237,500 9.74 $ 1.26 30,000 $ 1.64 |
Net (Loss) Income per Share
Net (Loss) Income per Share | 12 Months Ended |
Dec. 31, 2022 | |
Net (Loss) Income per Share | |
Net (Loss) Income per Share | 11. Net (Loss) Income per Share Basic income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares and common stock equivalents outstanding, calculated on the treasury stock method for options, stock grants and warrants using the average market prices during the period, including potential common shares issuable upon conversion of outstanding convertible notes, except if the effect on the per share amounts is anti-dilutive. For the year ended December 31, 2022, a total of 2,500,000 common shares issuable upon conversion of outstanding convertible notes and 1,875,000 common shares underlying warrants issuable upon conversion of outstanding related party convertible notes have been excluded from the diluted computation of net income per share because their effect is anti-dilutive. A total of 706,668 common stock equivalents related to outstanding options have been included in the computation of diluted earnings per share because their effect is dilutive. 30,000 common stock equivalents related to outstanding stock options have been excluded from the computation of diluted earnings per share because their effect is anti-dilutive. For the year ended December 31, 2021, a total of 2,500,000 common shares issuable upon conversion of outstanding convertible notes have been included in the diluted calculation. 1,875,000 common shares underlying warrants issuable upon conversion of outstanding related party convertible notes have been excluded from the diluted computation of net income per share because their effect is anti-dilutive. A total of 258,819 common stock equivalents related to outstanding options have been included in the computation of diluted earnings per share because their effect is dilutive. 37,500 common stock equivalents related to outstanding stock options have been excluded from the computation of diluted earnings per share because their effect is anti-dilutive. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies a. Lease commitments Lease expense is recognized on a straight-line basis over the lease term and is included in cost of sales and general and administrative expenses on the consolidated statement of operations. An initial right-of-use asset of approximately $0.9 million was recognized as a non-cash asset addition with the signing of the July 25, 2022, lease amendment. Cash paid for amounts included in the present value of the operating lease liability was $0.2 million during the year ended December 31, 2022, and is included in operating cash flows. The following table presents information about the amount and timing of cash flows arising from the Company's operating and capital leases as of December 31, 2022: Maturity of Lease Liability (in thousands) 2023 $ 328 2024 325 2025 135 Total undiscounted operating and capital lease payments 788 Less: imputed interest (48) Present value of lease liabilities $ 740 Other Information Remaining lease term (in months) Opeating lease 29 Capital lease 2 Discount rate for operating lease 5.80 % Discount rate for capital lease 3.99 % The Company’s total rent expense for the years ended December 31, 2022 and 2021, was $0.3 million in each year. The Company also paid real estate taxes and insurance premiums under the terms of the lease that totaled approximately $0.1 million in both 2022 and 2021. b. Retirement plans The Company maintains a 401(k) savings plan (the “Plan”) for all eligible employees (as defined in the plan). The 401(k) Plan allows employees to contribute up to 70% of their compensation on a salary reduction, pre-tax basis up to the statutory limitation. The 401(k) Plan also provides that the Company, at the discretion of the Board of Directors, may match employee contributions based on a pre-determined formula. In 2022, the Company’s 401(k) matching contribution for employees was $137,000. This will be funded by way of a contribution of cash of $82,000 and 83,306 shares of the Company’s common stock, which will be issued to the Plan in February 2023. In 2021, the Company’s 401(k) matching contribution for employees was $127,000. This was funded by way of a contribution of cash of $76,000 and 149,156 shares of the Company’s common stock, which were issued to the Plan in June 2022. The Company records the distribution of the common shares in the Consolidated Statement of Shareholders’ Equity as of the date of distribution to the 401(k) Plan administrator. |
Product Sales, Foreign Sales an
Product Sales, Foreign Sales and Sales to Major Customers | 12 Months Ended |
Dec. 31, 2022 | |
Product Sales, Foreign Sales and Sales to Major Customers | |
Product Sales, Foreign Sales and Sales to Major Customers | 13. Product Sales, Foreign Sales, and Sales to Major Customers The Company’s export sales, which are primarily to customers in countries within Europe, Israel, Asia, and Japan, amounted to approximately 37.7% and 36.6% of product sales in 2022 and 2021, respectively. The Company had sales to three major customers which accounting for approximately 50.1% of sales in 2022. One customer, a capital equipment company supplies process and control and yield management systems for the semiconductor industry, accounted for 19.7% of sales in 2022. The two other customers included a foreign-based manufacturer of process control and metrology equipment and a U.S.-based customer in the aerospace defense industry whose sales represented 15.3% and 15.1% of sales, respectively. For 2021, the top three customers represented 20.3%, 13.6% and 9.5% of sales. During the past two years, sales to the Company’s top five customers represented approximately 68.6% and 53.9%, respectively. Given the concentration of sales within a small number of customers, the loss of any of these customers would have a significant negative impact on the Company and its business units. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 14. Shareholders’ Equity a. Common shares reserved for future issuances at December 31, 2022, are as follows: 2020 Equity compensation plan 3,600,000 2010 Equity compensation plan 886,667 Subordinated convertible notes 2,500,000 Warrants issuable on conversion of Subordinated convertible notes 1,875,000 8,861,667 b. Warrants The Company had no outstanding warrants as of December 31, 2022 and 2021. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 15. Fair Value of Financial Instruments The methods and assumptions used to estimate the fair value of the following classes of financial instruments were: Current Assets and Current Liabilities: The carrying amount of cash, current receivables and payables and certain other short-term financial instruments approximate their fair value as of December 31, 2022, due to their short-term maturities. Long-Term Debt: The fair value of the Company’s long-term debt, including the current portion, for notes payable and subordinated convertible debentures, was estimated using a discounted cash flow analysis, based on the Company’s assumed incremental borrowing rates for similar types of borrowing arrangements. The fair value of long-term debt is estimated to be $2.6 million compared to its carrying amount of $2.8 million as of December 31, 2022. |
Nature of Business and Operat_2
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | |
Nature of Business and Operations | a. Nature of Business and Operations Inrad Optics, Inc. and Subsidiaries (the “Company”) was incorporated in the state of New Jersey and is a manufacturer of products and services for use in the photonics industry enabling key applications for the semiconductor metrology, life sciences, and aerospace and defense industries. The company’s products include custom glass, single crystal, metal optical components and assemblies, and x-ray imaging crystals and assemblies. Company’s principal customers include commercial instrumentation companies and OEM laser systems manufacturers, research laboratories, government agencies, and defense contractors. The Company’s administrative offices and manufacturing operations are in Northvale, New Jersey. |
Liquidity | b. Liquidity As of December 31, 2022, the Company had working capital of $4.4 million and cash and cash equivalents of $2.0 million. Management believes based on the Company’s operations and its existing working capital resources together with existing cash flows, the Company has sufficient cash flows to fund operations through at least March 31, 2024. |
Principles of consolidation | c. Principles of consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Upon consolidation, all inter-company accounts and transactions are eliminated. |
Use of estimates | d. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts in the consolidated financial statements and accompanying notes. These estimates include, but are not limited to, determining our allowance for doubtful accounts, our allowance for inventory obsolescence, the fair value and depreciable lives of long-lived tangible and intangible assets, and deferred taxes and the associated valuation allowance. Actual results could differ from these estimates. |
Cash and cash equivalents | e. Cash and cash equivalents The Company considers cash-on-hand and highly liquid investments with original maturity dates of three months or less at the date of purchase to be cash and cash equivalents. |
Accounts receivable | f. Accounts receivable Beginning in 2023, the Company adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The Company extends credit to its customers that satisfy pre-defined credit criteria. Accounts receivable are recorded net of an allowance for credit losses. The Company estimates the allowance for credit losses based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated bankruptcies, customer-specific circumstances, and an evaluation of current economic conditions. Actual write-off of receivables may differ from estimates due to changes in customer and economic circumstances. During 2022 and 2021, a net reduction of $46,000 and $90,000, respectively, in allowances related to customer receivables was recorded due to a change in customers' financial condition, actual and anticipated bankruptcies and other associated claims. |
Inventories | g. Inventories Inventories are stated at the lower of cost (first-in, first-out method) or net-realizable value. Cost of manufactured goods includes material, labor and overhead. The Company records a reserve for slow moving inventory as a charge against earnings for all products identified as surplus, slow moving, or discontinued. Excess work-in-process costs are charged against earnings whenever estimated costs-of-completion exceed unbilled revenues. |
Plant and Equipment | h. Plant and Equipment Plant and equipment are depreciated using the straight-line method over the estimated useful lives of the related assets which range between five Maintenance and repairs of property and equipment are charged to operations and major improvements are capitalized. Upon retirement, sale or other disposition of property and equipment, the cost and accumulated depreciation are eliminated from the accounts and a gain or loss is recorded. |
Income taxes | i. Income taxes Deferred taxes are provided on the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the amounts of assets and liabilities recorded for income tax and financial reporting purposes. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company recognizes the financial statement benefit of an uncertain tax position only after determining that the relevant tax authority would more likely than not sustain the position. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company classifies interest and penalties related to income taxes as income tax expense in its Consolidated Financial Statements. The Company had no unrecognized tax benefits or liabilities, and no adjustment to its financial position, results of operations, or cash flows relating to uncertain tax positions taken on all open tax years. The Company is no longer subject to federal income tax examinations by tax authorities for the years before 2019 and state or local income tax examinations by tax authorities for the years before 2019. |
Impairment of long-lived assets | j. Impairment of long-lived assets Long-lived assets, such as plant and equipment and purchased intangibles with finite lives, which are subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Long-lived assets held for sale would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and would no longer be depreciated. |
Stock-based compensation | k. Stock-based compensation Stock based compensation expense is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options granted using the Black-Scholes option pricing model. The fair value of restricted stock units granted is estimated based on the closing market price of the Company’s common stock on the date of the grant. The fair value of these awards, adjusted for estimated forfeitures, is amortized over the requisite service period of the award, which is generally the vesting period. |
Revenue recognition | l. Revenue recognition The Company’s revenues are comprised of product sales as well as products and services provided under long-term government contracts with its customers. All revenue is recognized when the Company satisfies its performance obligation(s) under the contract (either implicit or explicit) by transferring the promised product or service to its customer either when (or as) its customer obtains control of the product or service. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. The majority of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the Company’s best estimate of standalone selling price for each distinct product or service in the contract, which is generally based on an observable price. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. As such, revenue is recorded net of returns, allowances, customer discounts, and incentives. Sales, value added, and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis. Shipping and handling costs are included in cost of goods sold. The Company’s performance obligations under long-term government contracts are generally satisfied over time. Revenue from products or services transferred to customers over time accounted for approximately 0.0% and 0.4% of revenue for 2022 and 2021, respectively. Revenue under these long-term government contracts is generally recognized over time using an input measure based upon the proportion of actual costs incurred to estimated total project costs, which is a method used to best depict the Company’s performance to date under the terms of the contract. Accounting for these long-term government contracts involves the use of various techniques to estimate total revenue and costs. The Company estimates profit on these long-term government contracts as the difference between total estimated revenue and expected costs to complete a contract and recognizes that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include, among other things, labor productivity, costs and availability of materials, and timing of funding by the U.S. government. The nature of these long-term agreements may give rise to several types of variable consideration, such as claims, awards, and incentive fees. Historically, these amounts of variable consideration are not considered significant. Additionally, contract estimates may include additional revenue for submitted contract modifications if there exists an enforceable right to the modification, the amount can be reasonably estimated, and its realization is probable. These estimates are based on historical collection experience, anticipated performance, and the Company’s best judgement at the time. These amounts are generally included in the contract’s transaction price and are allocated over the remaining performance obligations. Changes in judgments on these above estimates could impact the timing and amount of revenue recognized with a resulting impact on the timing and amount of associated income. Under these long-term government contracts, the Company may receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. In the event a contract loss becomes known, the entire amount of the estimated loss is recognized in the Consolidated Statements of Operations. |
Internal research and development costs | m. Internal research and development costs Internal research and development costs are charged to expense as incurred. |
Precious metals | n. Precious metals Precious metals are stated at cost and consist of various fixtures used in the high temperature crystal growth manufacturing process. From time to time the quoted market values of these precious metals may be below cost. Management evaluates these market adjustments on a recurring basis and if it is determined that they are other than temporary the carrying value would be adjusted. |
Advertising costs | o. Advertising costs Advertising costs included in selling, general and administrative expenses were $25,000 and $19,000 for the years ended December 31, 2022 and 2021, respectively. Advertising costs are charged to expense when the related services are incurred or related events take place. |
Concentrations and credit risk | p. Concentrations and credit risk The concentration of credit risk in the Company’s accounts receivable is mitigated by the Company’s credit evaluation process, familiarity with its small base of recurring customers and reasonably short collection terms and the geographical dispersion of revenue. The Company generally does not require collateral but, in some cases, the Company negotiates cash advances prior to the undertaking of the work. These cash advances are recorded as current liabilities on the balance sheet until corresponding revenues are realized. The Company is subject to credit risk for cash accounts in a financial institution, which at times may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on these accounts. The Company does not believe there is significant credit risk with respect to such cash. The Company utilizes many relatively uncommon materials and compounds to manufacture its products and relies on outside vendors for certain manufacturing services. Therefore, any failure by its suppliers to deliver materials of an adequate quality and quantity could have an adverse effect on the Company’s ability to meet the commitments of its customers. For the year ended December 31, 2022, the Company had three customers who had sales representing 19.7%, 15.3% and 15.1% of total revenues. For the year ended December 31, 2021, the Company had three customers who had sales representing 20.3%, 13.6% and 9.5% of total revenues. Since the Company is a supplier of custom manufactured components to OEM customers, the relative size and identity of the largest customer accounts changes somewhat from year to year. In the short term, the loss of any one of these large customer accounts could have a material adverse effect on business, results of operations, and financial condition. |
Fair value measurements | q. Fair value measurements The Company follows U.S. GAAP accounting guidance which establishes a framework for measuring fair value and expanded related disclosures. The framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price), in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The valuation techniques required are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The accounting guidance requires the following fair value hierarchy: ● ● ● Long-lived assets may be measured at fair value if such assets are held for sale or if there is a determination that the asset is impaired. Management’s determination of fair value, although highly subjective, is based on the best information available, including internal projections of future earnings and cash flows discounted at an appropriate interest rate, quoted market prices when available, market prices for similar assets, broker quotes and independent appraisals, as appropriate. |
Recent Accounting Pronouncements | r. Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments" (“ASU 2016-13”) which amended guidance on the accounting for credit losses on financial instruments within its scope. The guidance introduces an expected loss model for estimating credit losses, replacing the incurred loss model. The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries). The new guidance is effective for interim and annual periods beginning in 2023, with earlier application permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU update is intended to simplify the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. This guidance is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company does not expect the adoption of this guidance will have a material impact on the Company’s consolidated financial statements. |
Subsequent events | s. Subsequent events Management has performed an evaluation of subsequent events through the date that the financial statements were issued and has determined that it does not have any additional material subsequent events to disclose in these financial statements. |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue | |
Schedule of disaggregation of revenue | Years Ended December 31, 2022 2021 Market (In thousands) Net Sales % Net Sales % Aerospace & Defense $ 3,008 28.3 $ 3,824 33.7 Process Control & Metrology 6,981 65.6 5,656 49.8 Laser Systems 188 1.8 724 6.4 Scientific / R&D 454 4.3 1,149 10.1 Total $ 10,631 100.0 $ 11,353 100.0 |
Schedule of net sales by timing of transfers of goods and services | For the years ended December 31, 2022 2021 (in thousands) Transfer at point in time $ 10,631 $ 11,313 Transfer over time — 40 Total net sales $ 10,631 $ 11,353 |
Inventories, net (Tables)
Inventories, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventories, net | |
Schedule of inventory reserves | December 31, 2022 2021 (in thousands) Raw materials $ 1,065 $ 1,160 Work in process, including manufactured parts and components 1,282 1,020 Finished goods 479 345 $ 2,826 $ 2,525 |
Plant and Equipment (Tables)
Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Plant and Equipment | |
Schedule of plant and equipment | December 31, 2022 2021 (In thousands) Office and computer equipment $ 1,487 $ 1,482 Machinery and equipment 12,126 11,599 Leasehold improvements 2,354 2,312 15,967 15,393 Less accumulated depreciation and amortization (14,724) (14,710) $ 1,244 $ 683 |
Other Long-Term Notes (Tables)
Other Long-Term Notes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Long-Term Notes | |
Schedule of long term notes | December 31, 2022 2021 (in thousands) U.S. Small Business Administration term note payable in equal monthly installments of $1,922 and bearing an interest rate of 4.0% and expiring in July 2029. $ 160 $ 174 Long-term equipment financing in equal installments of $5,236 and bearing an interest rate of 6.1% and expiring in January 2027 (1) 225 — Less current portion (68) (16) Long-term debt, excluding current portion $ 317 $ 158 (1) The Company purchased certain equipment in the six months ended June 30, 2022, financing approximately $282,000 at a fixed annual interest rate of 6.1% for five years payable in equal monthly installments. |
Schedule of maturities of long-term notes | Year ending December 31: (In thousands) 2023 $ 68 2024 71 2025 75 2026 80 2027 25 Thereafter 66 $ 385 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Payable and Accrued Liabilities | |
Schedule of accounts payable and accrued expenses | December 31, 2022 2021 Trade accounts payable and accrued purchases $ 446 $ 404 Accrued payroll 25 12 Accrued 401K company matching contribution 137 126 Accrued expenses – other 133 13 $ 741 $ 555 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of effective income tax rate reconciliation | Years Ended December 31, 2022 2021 Federal statutory rate 21 % 21 % Reduction in state rate due to tax rate change 9 9 Change in Valuation Allowance (106) (14) Permanent Differences 33 (15) Return to provision adjustment 43 (1) Effective income tax rate — % — % |
Schedule of deferred tax assets (liabilities) | Years Ended December 31, 2022 2021 Account receivable reserves $ 13 $ 25 Inventory reserves 667 707 Inventory capitalization 92 71 Depreciation — 197 Loss carry forwards 2,562 2,386 Gross deferred tax assets 3,334 3,386 Deferred tax liability- depreciation (110) — Valuation allowance (3,224) (3,386) Net deferred tax asset $ — $ — |
Equity Compensation Program a_2
Equity Compensation Program and Stock-based compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity Compensation Program and Stock-based Compensation | |
Schedule of fair value of stock option grants | Years Ended December 31, 2022 2021 Expected dividend yield — % — % Expected volatility 104.62 % 106.35 % Risk-free interest rate 1.54 % 0.86 % Expected term 10 years 10 years |
Summary of Company's outstanding stock options | Weighted Weighted Average Average Exercise Remaining Aggregate Number of Price per Contractual Intrinsic Stock Options Options Option Term (years) Value (a) Outstanding January 1, 2021 1,150,867 $ 0.64 6.61 $ 107,573 Granted 200,000 0.62 Exercised — — Expired/Forfeited (198,200) 0.86 Outstanding December 31, 2021 (b) 1,152,667 $ 0.60 7.40 $ 662,465 Granted 200,000 1.20 Exercised (66,000) 0.38 Expired/Forfeited — — Outstanding December 31, 2022 (b) 1,286,667 $ 0.71 7.52 $ 1,214,875 Exercisable at December 31, 2022 945,832 $ 0.61 6.13 $ 1,085,699 (a) Intrinsic value for purposes of this table represents the amount by which the fair value of the underlying stock, based on the respective market prices as of December 31, 2022, exceeds the exercise prices of the respective options. (b) Based on the Company’s historical forfeiture rate, the number of options expected to vest is the same as the total outstanding at December 31, 2022. |
Schedule of non-vested stock options granted, vested, and forfeited | Weighted-average Grant-date Fair Value Options ($) Non-Vested - January 1, 2022 276,670 0.66 Granted 200,000 1.09 Vested (135,836) 0.70 Forfeited — — Non-Vested – December 31, 2022 340,834 0.89 |
Schedule of information about stock options outstanding | The following table summarizes information about stock options outstanding at December 31, 2022: Options Outstanding Options Exercisable Weighted Average Weighted Weighted Remaining Average Average Range of Number Contractual Exercise Number Exercise Exercise Price Outstanding Life in Years Price Outstanding Price $0.18 - $0.35 346,667 3.19 $ 0.30 346,667 $ 0.30 $0.50 - $1.00 702,500 7.10 $ 0.72 569,165 $ 0.74 $1.40 - $1.80 237,500 9.74 $ 1.26 30,000 $ 1.64 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Schedule of other information | Maturity of Lease Liability (in thousands) 2023 $ 328 2024 325 2025 135 Total undiscounted operating and capital lease payments 788 Less: imputed interest (48) Present value of lease liabilities $ 740 Other Information Remaining lease term (in months) Opeating lease 29 Capital lease 2 Discount rate for operating lease 5.80 % Discount rate for capital lease 3.99 % |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
Schedule of Common shares reserved | 2020 Equity compensation plan 3,600,000 2010 Equity compensation plan 886,667 Subordinated convertible notes 2,500,000 Warrants issuable on conversion of Subordinated convertible notes 1,875,000 8,861,667 |
Nature of Business and Operat_3
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) customer | Dec. 31, 2021 USD ($) customer | |
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | ||
Working capital | $ 4,400,000 | |
Cash and cash equivalents | 2,003,485 | $ 1,801,188 |
Net reduction of allowances related to customers | 46,000 | $ 90,000 |
Unrecognized tax benefits | $ 0 | |
Percentage of remaining performance obligation | 0% | 0.40% |
Advertising expense | $ 25,000 | $ 19,000 |
Top three major customers | Sales revenue | Customer concentration risk | ||
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | ||
Number of major customers | customer | 3 | 3 |
Concentration risk percentage | 50.10% | |
Customer one | Sales revenue | Customer concentration risk | ||
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | ||
Concentration risk percentage | 19.70% | 20.30% |
Customer two | Sales revenue | Customer concentration risk | ||
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | ||
Concentration risk percentage | 15.30% | 13.60% |
Customer three | Sales revenue | Customer concentration risk | ||
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | ||
Concentration risk percentage | 15.10% | 9.50% |
Minimum | Property and equipment excluding leasehold improvements | ||
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | ||
Plant and equipment useful life | 5 years | |
Maximum | Property and equipment excluding leasehold improvements | ||
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | ||
Plant and equipment useful life | 7 years | |
Maximum | Leasehold improvements | ||
Nature of Business and Operations and Summary of Significant Accounting Policies and Estimates | ||
Plant and equipment useful life | 10 years |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue | ||
Revenues | $ 10,631,032 | $ 11,352,527 |
Percentage of revenue from products or services | 100% | 100% |
Aerospace & Defense | ||
Revenue | ||
Revenues | $ 3,008,000 | $ 3,824,000 |
Percentage of revenue from products or services | 28.30% | 33.70% |
Process Control & Metrology | ||
Revenue | ||
Revenues | $ 6,981,000 | $ 5,656,000 |
Percentage of revenue from products or services | 65.60% | 49.80% |
Laser Systems | ||
Revenue | ||
Revenues | $ 188,000 | $ 724,000 |
Percentage of revenue from products or services | 1.80% | 6.40% |
Scientific / R&D | ||
Revenue | ||
Revenues | $ 454,000 | $ 1,149,000 |
Percentage of revenue from products or services | 4.30% | 10.10% |
Revenue - Transfer of Goods and
Revenue - Transfer of Goods and Services (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue | ||
Revenues | $ 10,631,032 | $ 11,352,527 |
Percentage of remaining performance obligation | 0% | 0.40% |
Transfer at point in time | ||
Revenue | ||
Revenues | $ 10,631,000 | $ 11,313,000 |
Transfer over time | ||
Revenue | ||
Revenues | $ 40,000 | |
Percentage of remaining performance obligation | 0% | 0.40% |
Revenue - Additional Informatio
Revenue - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue | ||
Percentage of revenue from products or services | 100% | 100% |
Transfer at point in time | ||
Revenue | ||
Percentage of revenue from products or services | 100% | 99.60% |
Inventories, net - Schedule of
Inventories, net - Schedule of inventory (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Inventories, net | ||
Raw materials | $ 1,065,000 | $ 1,160,000 |
Work in process, including manufactured parts and components | 1,282,000 | 1,020,000 |
Finished goods | 479,000 | 345,000 |
Inventories, net | $ 2,825,987 | $ 2,524,871 |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Inventories, net | ||
Inventory reserves | $ 2.4 | $ 2.5 |
Plant and Equipment - Schedule
Plant and Equipment - Schedule of plant and equipment (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Plant and Equipment | ||
Plant and equipment, at cost | $ 15,967,537 | $ 15,393,241 |
Less accumulated depreciation and amortization | (14,723,869) | (14,709,744) |
Total plant and equipment | 1,243,668 | 683,497 |
Office and computer equipment | ||
Plant and Equipment | ||
Plant and equipment, at cost | 1,487,000 | 1,482,000 |
Machinery and equipment | ||
Plant and Equipment | ||
Plant and equipment, at cost | 12,126,000 | 11,599,000 |
Leasehold improvements | ||
Plant and Equipment | ||
Plant and equipment, at cost | $ 2,354,000 | $ 2,312,000 |
Plant and Equipment (Details)
Plant and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Plant and Equipment | ||
Depreciation and amortization expense | $ 249,000 | $ 166,000 |
Depreciated assets were written off | $ 235,000 | $ 20,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - Affiliate of Clarex | 12 Months Ended | ||
Jul. 22, 2020 USD ($) item $ / shares shares | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Subordinated convertible note | |||
Related Party Transaction | |||
Fixed interest rate | 6% | ||
Interest paid | $ 200,000 | $ 200,000 | |
Interest payable | $ 37,500 | $ 37,500 | |
Subordinated convertible note | Common stock | |||
Related Party Transaction | |||
Number of shares/warrants comprised in a unit (in shares) | shares | 1 | ||
Number of shares of common stock to be purchased by each warrant | shares | 0.75 | ||
Common stock at a price | $ / shares | $ 1.35 | ||
Subordinated convertible note | Warrant | |||
Related Party Transaction | |||
Number of shares/warrants comprised in a unit (in shares) | shares | 1 | ||
Convertible subordinated debt, $1,500,000 | |||
Related Party Transaction | |||
Convertible subordinated debt | $ 1,500,000 | ||
Debt instrument, convertible, number of equity instruments | item | 1,500,000 | ||
Convertible subordinated debt, $1,000,000 | |||
Related Party Transaction | |||
Convertible subordinated debt | $ 1,000,000 | ||
Debt instrument, convertible, number of equity instruments | item | 1,000,000 |
Other Long-Term Notes (Details)
Other Long-Term Notes (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Other Long-Term Notes | ||
U.S. Small Business Administration term note payable in equal monthly installments of $1,922 and bearing an interest rate of 4.0% and expiring in July 2029 | $ 385,000 | |
Less current portion | (67,513) | $ (16,403) |
Long-term debt, excluding current portion | 317,000 | 158,000 |
U.S. small business administration note payable | ||
Other Long-Term Notes | ||
U.S. Small Business Administration term note payable in equal monthly installments of $1,922 and bearing an interest rate of 4.0% and expiring in July 2029 | 160,000 | $ 174,000 |
Long-term equipment financing | ||
Other Long-Term Notes | ||
Long-term equipment financing in equal installments of $5,236 and bearing an interest rate of 6.1% and expiring in January 2027 | $ 225,000 |
Other Long-Term Notes - Additio
Other Long-Term Notes - Additional information (Details) - USD ($) | 6 Months Ended | 12 Months Ended | 24 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | |
Other Long-Term Notes | ||||
Equal installment | $ 5,236 | |||
U.S. small business administration note payable | ||||
Other Long-Term Notes | ||||
Monthly installment payment | $ 1,922 | $ 1,922 | ||
Fixed interest rate | 4% | 4% | 4% | |
Long-term equipment financing | ||||
Other Long-Term Notes | ||||
Debt term | 5 years | |||
Debt, face amount | $ 282,000 | |||
Fixed interest rate | 6.10% | 6.10% | 6.10% |
Other Long-Term Notes - Schedul
Other Long-Term Notes - Schedule of other long-term note maturities (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Other Long-Term Notes | |
2023 | $ 68 |
2024 | 71 |
2025 | 75 |
2026 | 80 |
2027 | 25 |
Thereafter | 66 |
Total | $ 385 |
Payroll Protection Program (Det
Payroll Protection Program (Details) - USD ($) | May 06, 2020 | Jan. 19, 2021 |
Payroll Protection Program | ||
PPP Loan and accrued interest forgiven | $ 980,000 | |
PPP Loan | ||
Payroll Protection Program | ||
Proceeds from PPP Loan | $ 973,000 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Accounts Payable and Accrued Liabilities | ||
Trade accounts payable and accrued purchases | $ 446,000 | $ 404,000 |
Accrued payroll | 25,000 | 12,000 |
Accrued 401K company matching contribution | 137,000 | 126,000 |
Accrued expenses - other | 133,000 | 13,000 |
Accounts payable and accrued liabilities, current, total | $ 741,281 | $ 554,604 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of income tax provision (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Federal statutory rate | 21% | 21% |
Change in Valuation Allowance | (106.00%) | (14.00%) |
Permanent Differences | 33% | (15.00%) |
Return to provision adjustment | 43% | (1.00%) |
State and local jurisdiction | ||
Income Taxes | ||
Reduction in state rate due to tax rate change | 9% | 9% |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets (liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Income Taxes | ||
Account receivable reserves | $ 13 | $ 25 |
Inventory reserves | 667 | 707 |
Inventory capitalization | 92 | 71 |
Depreciation | 0 | 197 |
Loss carry forwards | 2,562 | 2,386 |
Gross deferred tax assets | 3,334 | 3,386 |
Deferred tax liability- depreciation | (110) | 0 |
Valuation allowance | (3,224) | (3,386) |
Net deferred tax asset | $ 0 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Net operating loss carryforward subject to expiration | $ 8,200,000 | |
Net operating loss carryforward not subject to expiration | 1,900,000 | |
Effective income tax rate reconciliation, change in deferred tax assets valuation allowance, amount | 162,000 | $ 61,000 |
Unrecognized tax benefits that would impact effective tax rate | 0 | |
Unrecognized tax benefits, income tax penalties and interest expense | 0 | |
Significant change in unrecognized tax benefits is reasonably possible, amount of unrecorded benefit | 0 | |
Federal | ||
Income Taxes | ||
Operating loss carryforwards | 10,100,000 | 9,500,000 |
State and local jurisdiction | ||
Income Taxes | ||
Operating loss carryforwards | $ 5,000,000 | $ 4,500,000 |
Equity Compensation Program a_3
Equity Compensation Program and Stock-based Compensation - Weighted-average assumptions (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equity Compensation Program and Stock-based Compensation | ||
Expected Dividend yield | 0% | 0% |
Expected Volatility | 104.62% | 106.35% |
Risk-free interest rate | 1.54% | 0.86% |
Expected term | 10 years | 10 years |
Equity Compensation Program a_4
Equity Compensation Program and Stock-based Compensation- Stock Option Activity (Details) - Employee Stock Option - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Equity Compensation Program and Stock-based Compensation | |||
Options outstanding at beginning | 1,152,667 | 1,150,867 | |
Options, Granted | 200,000 | 200,000 | |
Options, Exercised | (66,000) | 0 | |
Option, Expired/Forfeited | 0 | (198,200) | |
Options outstanding at ending | 1,286,667 | 1,152,667 | 1,150,867 |
Options, Exercisable at Ending | 945,832 | ||
Weighted Average Exercise Price Per Options Outstanding at Beginning (in dollars per share) | $ 0.60 | $ 0.64 | |
Weighted Average Exercise Price per Option, Granted | 1.20 | 0.62 | |
Weighted Average Exercise Price per Option, Exercised | 0.38 | 0 | |
Weighted Average Exercise Price per Option, Expired/Forfeited | 0 | 0.86 | |
Weighted Average Exercise Price Options Outstanding at Ending (in dollars per share) | 0.71 | $ 0.60 | $ 0.64 |
Weighted Average Exercise Price per Option, Exercisable at ending | $ 0.61 | ||
Weighted Average Remaining Contractual Term, Options Outstanding at Beginning | 7 years 6 months 7 days | 7 years 4 months 24 days | 6 years 7 months 9 days |
Weighted Average Remaining Contractual Term, Options Outstanding at Ending | 7 years 6 months 7 days | 7 years 4 months 24 days | 6 years 7 months 9 days |
Weighted Average Remaining Contractual Term, Exercisable at Ending | 6 years 1 month 17 days | ||
Aggregate Intrinsic Value, Options Outstanding at Beginning (in dollars) | $ 662,465 | $ 107,573 | |
Aggregate Intrinsic Value, Options Outstanding at Ending (in dollars) | 1,214,875 | $ 662,465 | $ 107,573 |
Aggregate Intrinsic Value, Options Exercisable at Ending | $ 1,085,699 |
Equity Compensation Program a_5
Equity Compensation Program and Stock-based Compensation - Non-vested stock option activity (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Equity Compensation Program and Stock-based Compensation | |
Options - Non-vested | shares | 276,670 |
Options - Granted | shares | 200,000 |
Options - Vested | shares | (135,836) |
Options - Forfeited | shares | 0 |
Options - Non-vested | shares | 340,834 |
Weighted-Average Grant-Date Fair Value - Non-vested at Ending balance (in dollars per share) | $ / shares | $ 0.66 |
Weighted-Average Grant-Date Fair Value - Granted (in dollars per share) | $ / shares | 1.09 |
Weighted-Average Grant-Date Fair Value - Vested (in dollars per share) | $ / shares | 0.70 |
Weighted-Average Grant-Date Fair Value - Forfeited (in dollars per share) | $ / shares | 0 |
Weighted-Average Grant-Date Fair Value - Non-vested at Ending balance (in dollars per share) | $ / shares | $ 0.89 |
Equity Compensation Program a_6
Equity Compensation Program and Stock-based Compensation- Option exercise prices (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Exercise price range one | |
Equity Compensation Program and Stock-based Compensation | |
Exercise Price, Lower Range | $ 0.18 |
Exercise Price, Upper Range | $ 0.35 |
Options Outstanding, Number | shares | 346,667 |
Outstanding Options, Weighted Average Remaining Contractual Life in Years | 3 years 2 months 8 days |
Outstanding Options, Weighted Average Exercise Price | $ 0.30 |
Options Exercisable, Number Outstanding | shares | 346,667 |
Options Exercisable, Weighted Average Exercise Price | $ 0.30 |
Exercise price range two | |
Equity Compensation Program and Stock-based Compensation | |
Exercise Price, Lower Range | 0.50 |
Exercise Price, Upper Range | $ 1 |
Options Outstanding, Number | shares | 702,500 |
Outstanding Options, Weighted Average Remaining Contractual Life in Years | 7 years 1 month 6 days |
Outstanding Options, Weighted Average Exercise Price | $ 0.72 |
Options Exercisable, Number Outstanding | shares | 569,165 |
Options Exercisable, Weighted Average Exercise Price | $ 0.74 |
Exercise price range three | |
Equity Compensation Program and Stock-based Compensation | |
Exercise Price, Lower Range | 1.40 |
Exercise Price, Upper Range | $ 1.80 |
Options Outstanding, Number | shares | 237,500 |
Outstanding Options, Weighted Average Remaining Contractual Life in Years | 9 years 8 months 26 days |
Outstanding Options, Weighted Average Exercise Price | $ 1.26 |
Options Exercisable, Number Outstanding | shares | 30,000 |
Options Exercisable, Weighted Average Exercise Price | $ 1.64 |
Equity Compensation Program a_7
Equity Compensation Program and Stock-based Compensation - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) item shares | Dec. 31, 2021 USD ($) | |
Equity Compensation Program and Stock-based Compensation | ||
Expected Dividend yield | 0% | 0% |
Weighted average estimated fair value of stock options granted | $ 1.20 | $ 0.62 |
Equity Compensation 2010 Program | ||
Equity Compensation Program and Stock-based Compensation | ||
Number of parts of the 2010 Equity Compensation Program | item | 4 | |
Expected Dividend yield | 0% | |
Aggregate shares of common stock | shares | 4,000,000 | |
Employee Stock Option | ||
Equity Compensation Program and Stock-based Compensation | ||
Allocated share-based compensation expense | $ 116,000 | 113,000 |
Employee service share-based compensation, unrecognized compensation costs, net of estimated forfeitures | $ 222,000 | $ 120,000 |
Employee service share-based compensation, expected to be recognized over a weighted average period (in years) | 1 year 6 months 14 days | 1 year 6 months 25 days |
Total weighted average grant date fair value of options | $ 218,000 | $ 113,000 |
Employee Stock Option | Cost of Sales | ||
Equity Compensation Program and Stock-based Compensation | ||
Allocated share-based compensation expense | 13,000 | 21,000 |
Employee Stock Option | Selling, General and Administrative | ||
Equity Compensation Program and Stock-based Compensation | ||
Allocated share-based compensation expense | $ 103,000 | $ 92,000 |
Net (Loss) Income per Share (De
Net (Loss) Income per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Employee Stock Option [Member] | ||
Net (Loss) Income per Share | ||
Shares excluded from computation of net income per share because their effect is anti-dilutive | 30,000 | 37,500 |
Shares included in computation of net income per share because their effect is dilutive | 258,819 | |
Common stock | Employee Stock Option [Member] | ||
Net (Loss) Income per Share | ||
Shares included in computation of net income per share because their effect is dilutive | 706,668 | |
Convertible Notes Payable | ||
Net (Loss) Income per Share | ||
Shares excluded from computation of net income per share because their effect is anti-dilutive | 2,500,000 | |
Convertible Notes Payable | Employee Stock Option [Member] | ||
Net (Loss) Income per Share | ||
Shares included in computation of net income per share because their effect is dilutive | 2,500,000 | |
Convertible Notes Payable | Warrant | ||
Net (Loss) Income per Share | ||
Shares excluded from computation of net income per share because their effect is anti-dilutive | 1,875,000 | |
Convertible Notes Payable | Common stock | ||
Net (Loss) Income per Share | ||
Shares excluded from computation of net income per share because their effect is anti-dilutive | 1,875,000 |
Commitments and Contingencies -
Commitments and Contingencies - Maturity of Lease Liability (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Commitments and Contingencies | |
2023 | $ 328 |
2024 | 325 |
2025 | 135 |
Total undiscounted operating and capital lease payments | 788 |
Less: imputed interest | (48) |
Present value of lease liabilities | $ 740 |
Lease, Cost | |
Operating lease | 29 months |
Capital lease | 2 months |
Discount rate for operating lease | 5.80% |
Discount rate for capital lease | 3.99 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Jul. 08, 2019 | |
Commitments and Contingencies | |||
Lease right-of-use, net | $ 737,743 | $ 125,724 | $ 900,000 |
Rent expense | 300,000 | 300,000 | |
Operating lease payments | 200,000 | ||
Real estate taxes and insurance premiums | $ 100,000 | 100,000 | |
Maximum annual contributions per employee, percent | 70% | ||
Maximum annual contributions per employee, amount | $ 137,000 | $ 127,000 | |
Defined contribution employer matching contribution (in Shares) | 83,306 | 149,156 | |
Employer matching contribution in cash | $ 82,000 | $ 76,000 |
Product Sales, Foreign Sales _2
Product Sales, Foreign Sales and Sales to Major Customers (Details) - Sales revenue - Customer concentration risk - customer | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Customers in Europe Asia and Japan | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 37.70% | 36.60% |
Top three major customers | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 50.10% | |
Number of major customers | 3 | 3 |
Major customers three | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 15.10% | 9.50% |
Top five customers | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 68.60% | 53.90% |
Number of major customers | 5 | 5 |
Major customers one | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 19.70% | 20.30% |
Major customers two | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 15.30% | 13.60% |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Equity Compensation Program and Stock-based Compensation | ||
Common shares reserved for future issuances | 8,861,667 | |
Outstanding warrants | $ 0 | $ 0 |
2020 Equity compensation plan | ||
Equity Compensation Program and Stock-based Compensation | ||
Common shares reserved for future issuances | 3,600,000 | |
2010 Equity compensation plan | ||
Equity Compensation Program and Stock-based Compensation | ||
Common shares reserved for future issuances | 886,667 | |
Warrants issuable on conversion of Subordinated convertible notes | ||
Equity Compensation Program and Stock-based Compensation | ||
Common shares reserved for future issuances | 1,875,000 | |
Subordinated convertible note | ||
Equity Compensation Program and Stock-based Compensation | ||
Common shares reserved for future issuances | 2,500,000 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Fair Value of Financial Instruments | |
Fair value of long-term debt | $ 2.6 |
Carrying amount | $ 2.8 |