Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 29, 2019 | Jun. 30, 2018 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | NANOPHASE TECHNOLOGIES Corp | ||
Entity Central Index Key | 0000883107 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Trading Symbol | NANX | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Reporting Status Current | Yes | ||
Entity Small Business | true | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 32,493,881 | ||
Entity Common Stock, Shares Outstanding | 33,911,792 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 1,345 | $ 1,955 |
Trade accounts receivable, less allowance for doubtful accounts of $9 and $5 on December 31, 2018 and 2017 respectively | 829 | 1,115 |
Inventories, net | 2,242 | 1,385 |
Prepaid expenses and other current assets | 273 | 169 |
Total current assets | 4,689 | 4,624 |
Equipment and leasehold improvements, net | 1,865 | 1,624 |
Other assets, net | 15 | 18 |
Total assets | 6,569 | 6,266 |
Current liabilities: | ||
Line of credit, related party | 832 | |
Line of credit, bank | 300 | |
Current portion of capital lease obligations | 218 | 143 |
Accounts payable | 1,608 | 1,038 |
Accrued expenses | 979 | 543 |
Total current liabilities | 3,637 | 2,024 |
Long-term portion of capital lease obligations | 506 | 416 |
Long-term loan, related party | 500 | |
Long-term deferred rent | 344 | 410 |
Asset retirement obligations | 198 | 184 |
Total long-term liabilities | 1,548 | 1,010 |
Contingent liabilities | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value, 24,088 shares authorized, and no shares issued and outstanding | ||
Common stock, $.01 par value, 42,000,000 shares authorized; 33,911,792 and 33,847,793 shares issued and outstanding on December 31, 2018 and December 31, 2017, respectively | 339 | 338 |
Additional paid-in capital | 98,795 | 98,563 |
Accumulated deficit | (97,750) | (95,669) |
Total stockholders' equity | 1,384 | 3,232 |
Total liabilities and stockholders' equity | $ 6,569 | $ 6,266 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 9 | $ 5 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 24,088 | 24,088 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 42,000,000 | 42,000,000 |
Common stock, issued | 33,911,792 | 33,847,793 |
Common stock, outstanding | 33,911,792 | 33,847,793 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue: | ||
Total revenue | $ 14,193 | $ 12,471 |
Operating expense: | ||
Cost of revenue | 10,903 | 8,621 |
Gross profit | 3,290 | 3,850 |
Research and development expense | 2,057 | 1,736 |
Selling, general and administrative expense | 3,256 | 2,886 |
Loss from operations | (2,023) | (772) |
Interest expense | (58) | (34) |
Other, net | 17 | |
Loss before provision for income taxes | (2,081) | (789) |
Provision for income taxes | 0 | 0 |
Net loss | $ (2,081) | $ (789) |
Net loss per share-basic and diluted (in dollar per share) | $ (0.06) | $ (0.03) |
Weighted average number of basic and diluted common shares outstanding (in shares) | 33,871,815 | 31,335,956 |
Product Revenue [Member] | ||
Revenue: | ||
Total revenue | $ 14,040 | $ 12,129 |
Other Revenue [Member] | ||
Revenue: | ||
Total revenue | $ 153 | $ 342 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Dec. 31, 2016 | $ 312 | $ 97,359 | $ (94,880) | $ 2,791 |
Balance at beginning (in shares) at Dec. 31, 2016 | 31,229,996 | |||
Sale of common stock | $ 25 | 975 | 1,000 | |
Sale of common stock (in shares) | 2,500,000 | |||
Stock option exercises | $ 1 | 46 | 47 | |
Stock option exercises (in shares) | 117,797 | |||
Stock-based compensation | 183 | 183 | ||
Net loss | (789) | (789) | ||
Balance at ending at Dec. 31, 2017 | $ 338 | 98,563 | (95,669) | 3,232 |
Balance at ending (in shares) at Dec. 31, 2017 | 33,847,793 | |||
Stock option exercises | $ 1 | 28 | 29 | |
Stock option exercises (in shares) | 63,999 | |||
Stock-based compensation | 204 | 204 | ||
Net loss | (2,081) | (2,081) | ||
Balance at ending at Dec. 31, 2018 | $ 339 | $ 98,795 | $ (97,750) | $ 1,384 |
Balance at ending (in shares) at Dec. 31, 2018 | 33,911,792 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities: | ||
Net loss | $ (2,081) | $ (789) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation and amortization | 322 | 344 |
(Gain) on disposal of fixed asset | (12) | |
Share-based compensation | 204 | 183 |
Changes in assets and liabilities related to operations: | ||
Trade accounts receivable | 286 | (681) |
Inventories | (857) | (367) |
Prepaid expenses and other assets | (104) | 27 |
Accounts payable | 518 | 369 |
Accrued expenses | 370 | (34) |
Net cash used in operating activities | (1,342) | (960) |
Investing activities: | ||
Acquisition of equipment and leasehold improvements | (160) | (209) |
Proceeds from disposal of equipment | 137 | |
Net cash used in investing activities | (160) | (72) |
Financing activities: | ||
Principal payment on capital leases | (169) | (139) |
Proceeds from line of credit, bank | 1,200 | 300 |
Payments to the line of credit, bank | (1,500) | |
Proceeds from Beachcorp term loan | 500 | |
Proceeds from line of credit, Beachcorp LLC | 970 | |
Payments to line of credit, Beachcorp LLC | (138) | |
Proceeds from sale of common stock | 1,000 | |
Proceeds from exercise of stock options | 29 | 47 |
Net cash provided by financing activities | 892 | 1,208 |
(Decrease) Increase in cash and cash equivalents | (610) | 176 |
Cash and cash equivalents at beginning of period | 1,955 | 1,779 |
Cash and cash equivalents at end of period | 1,345 | 1,955 |
Supplemental cash flow information: | ||
Interest paid | 51 | 34 |
Supplemental non-cash investing and financing activities: | ||
Accounts payable incurred for the purchase of equipment and leasehold improvements | 52 | |
Capital lease obligations incurred in the purchase of equipment | $ 334 | $ 481 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | (1) Description of Business Nanophase Technologies Corporation (“Nanophase“, “Company“, “we“, “our“, or “us“) is a skin and sun care focused company that offers engineered materials, formulation development and commercial manufacturing with an integrated family of technologies. Our expertise in nanoscale engineering allows us to effectively coat and disperse particles on a nano and “non-nano“ scale for use in a variety of diverse markets: personal care ingredients, including sunscreens as active ingredients; full formulations of skin care products, marketed and sold by our wholly-owned subsidiary, Solesence, LLC (our “Solésence ® We target markets in which we believe practical solutions may be found using our products. We work closely with current and potential customers in these target markets to identify their material and performance requirements and market our materials to various end-use applications manufacturers, and our Solésence ® ® Although our primary strategic focus has been the North American market, we currently sell material to customers overseas and have been working to expand our reach within foreign markets. The Company was incorporated in Illinois on November 25, 1989, and became a Delaware corporation during November 1997. Our common stock trades on the OTCQB marketplace under the symbol NANX. While product sales comprise the majority of our revenue, we also recognize revenue from other sources from time to time. These activities are not expected to drive the long-term growth of the business. For this reason, we classify such revenue as “other revenue“ in our Statements of Operations, as it does not represent revenue directly from the sale of our products. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies Use of Estimates and Risks and Uncertainties The preparation of financial statements requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain assumptions are also necessary to assess the impact of risks and uncertainties on the financial statements, such as cash flow projections, availability of capital if needed to support the ongoing operations of the business, and our expected compliance with contractual commitments. These risks and uncertainties are further discussed in Note 12. Any changes in these assumptions or business plans could have a material impact on the financial statements. Cash The Cash balance on December 31, 2018 consists of funds borrowed from our Term Loan and Revolving Line of Credit, both of which are facilitated by Beachcorp, LLC. Our ability to access cash from our credit facility solely depends on carrying an Accounts Receivable balance greater than the outstanding loan balance in the Revolving Line of Credit. As part of the agreement, we are required to have a bank account in place to act as a depository account for our customers. This account is referred to as the Control Account. Furthermore, there is an Account Control Agreement in place which provides Beachcorp, LLC the ability to exercise control over the account via approval of requested transfers. According to our agreements with Beachcorp, LLC, Nanophase is to be the party initiating any transfers, whether to Nanophase or to Beachcorp, LLC, and approval to access any monies within this account can only be withheld by Beachcorp, LLC if the borrowing base falls below the Company’s qualified receivables, or if we are in arrears with respect to interest payments due Beachcorp, LLC. The failure of Nanophase to remedy the previously mentioned conditions could lead to Beachcorp, LLC gaining the right, through a “springing“ feature administered by Libertyville Bank and Trust, a Wintrust Community Bank (“Libertyville“), to transfer funds to itself without direct approval from Nanophase. Due to the restrictive nature on this account to Nanophase Technologies Corporation, any balance in the account constitutes restricted cash. The restricted cash balance in this account on December 31, 2018 was zero. Trade Accounts Receivable Trade accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. We determine the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received. Our typical credit terms are between thirty and sixty days from shipment and invoicing. Inventories Inventories are stated at the lower of cost, maintained on a first in, first out basis, or net realizable value. We have recorded allowances to reduce inventory relating to excess quantities of certain materials. Write-downs of inventories establish a new cost basis, which is not increased for future increases in market value of inventories or changes in estimated excess quantities. Equipment and Leasehold Improvements Equipment is stated at cost and is being depreciated over its estimated useful life (3-20 years) using the straight-line method. Leasehold improvements are stated at cost and are being amortized using the straight-line method over the shorter of the useful life of the asset or the term of the lease (3-7 years). Depreciation expense for leased assets is included with depreciation expense for owned assets. From time to time we have self-constructed assets. These assets are stated at cost plus the capitalization of labor and are depreciated over an estimated useful life (7-10 years) using the straight-line method. Long Lived Assets We review long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. We conduct long-lived asset impairment analyses in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets Asset Retirement Obligations In connection with our leased facilities, we are required to remove certain leasehold improvements upon termination of our occupancy. We follow the provisions of the FASB issued ASC 410-20, Asset Retirement Obligations Activity in the asset retirement obligation account for the years ended December 31, is as follows: 2018 2017 Balance, beginning $ 184 $ 178 Accretion of liability due to passage of time 14 6 Amortization of asset due to passage of time — — Balance, ending $ 198 $ 184 Financial Instruments We follow ASC Topic 820, Fair Value Measurements and Disclosures Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, along with the promissory note with no related borrowings described in Note 3, and any borrowings on the working capital line of credit from Libertyville Bank and Trust and any borrowings on the working capital line of credit and term loan from Beachcorp, LLC described in Note 3. The fair values of all financial instruments were not materially different from their carrying values. There were no financial assets or liabilities adjusted to fair value on December 31, 2018 and 2017. Product Revenue On January 1, 2018, we adopted Accounting Standards Updates (“ASU“) 2014-09 and 2015-14, Revenue from Contract with Customers (Topic 606) Revenues are recognized at a point in time, typically when control of the promised goods is transferred to customers, in an amount that reflects the consideration we expect to receive in exchange for those goods. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses. Customers’ deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in our statements of operations. We do not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less or contracts for which we recognize revenue that we have the right to invoice for goods completed. Other Revenue Other revenue may include revenue from technology license fees and paid development projects. Technology license fees and paid development projects are recognized when the obligation under the agreed upon contractual arrangement is performed on our part. We recognized a one-time technology development fee of $20,000 in 2018 relating to our agreement with Colorescience. We recognized a one-time technology fee of $250,000 in 2017 relating to our agreement with Eminess Technologies, Inc. Shipping and handling costs are included in other revenue when products are shipped and invoiced to the customer. We include the related cost of shipping and handling in cost of goods sold. Research and Development Expenses Research and development expenses are recognized as expense when incurred. Reclassifications Certain balances on the 2017 financial statements have been reclassified to conform to 2018 presentation with no impact to the net income. Income Taxes We account for income taxes using the liability method. As such, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated using the enacted tax rates and laws that are expected to be in effect when the anticipated reversal of these differences is scheduled to occur. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred tax assets will not be realized. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured, as described above, is reflected as a liability for uncertain tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. We have not recorded a reserve for any tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. We file tax returns in all appropriate jurisdictions, which includes a federal tax return and Illinois state tax return. When and if applicable, potential interest and penalty costs are accrued as incurred, with expenses recognized in selling, general and administrative expenses in the statements of operations. As of December 31, 2018, and 2017, we had no liability for unrecognized tax benefits. Earnings Per Share Options to purchase approximately 839,000 shares of common stock that were outstanding as of December 31, 2018 were not included in the computation of earnings per share for the year ended December 31, 2018, as the impact of such shares are anti-dilutive. Options to purchase approximately 646,000 shares of common stock that were outstanding as of December 31, 2017 were not included in the computation of earnings per share for the year ended December 31, 2017, as the impact of such shares are anti-dilutive. New Accounting Pronouncements During February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02“), Leases (Topic 842) |
Going Concern _ Liquidity
Going Concern / Liquidity | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern/ Liquidity | (3) Going Concern / Liquidity We believe that cash from operations and cash on hand, in addition to unused borrowing capacity, should be adequate to fund our operating plans through 2019, but this is dependent on several things over which we have limited control. Our largest customer made up 74% of our 2018 revenue, and expects a material reduction in orders from us in 2019, which has limited our flexibility and required us to make cash management a top priority. We also expect growth in our Solésence ® ® ® These circumstances raise significant doubt as to the Company’s ability to operate as a going concern under U.S. GAAP. The accompanying financial statements have been prepared on a going concern basis in accordance with U.S. GAAP. As such, no adjustments have been made to the consolidated financial statements for the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue operating as a going concern. We believe that we will be able to secure additional financing if needed, but we do not have any additional financing commitments in place as of today. However, we may not be able to secure additional financing in a timely manner under commercially reasonable terms, or at all. If we are unable to secure additional financing, we would need to delay capital expenditures related to our Solésence ® |
Note and Lines of Credit
Note and Lines of Credit | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes and Lines of Credit | (4) Note and Lines of Credit During July 2014 we entered into a bank-issued letter of credit and related promissory note for up to $30 in borrowings to support our obligations under our facility lease agreement. No borrowings have been incurred under this promissory note. Should any borrowings occur in the future, the interest rate would be the prime rate plus 1%, with the bank having the right to “set off“ or apply unpaid balances against our checking account if we fail to meet our obligations under any borrowings under the note. It is our intention to renew this note annually, for as long as we need to do so pursuant to the terms of our facility lease agreement. Because there were no amounts outstanding on the note at any time during 2018 or 2017, we have recorded no related liability on our balance sheet. During March 2015, we entered into a Business Loan Agreement (the “Line of Credit Agreement“) with Libertyville Bank and Trust Company, a Wintrust Community Bank (“Libertyville“), our primary bank. This Line of Credit Agreement was subsequently amended on April 13, 2015 and was extended on each of March 4, 2016 and February 14, 2017. Under the Line of Credit Agreement, as amended, Libertyville will provide a maximum of $300 or 75% of our eligible accounts receivable, whichever was less, of revolving credit, collateralized by a senior priority lien on our accounts receivable, inventory, equipment, general intangibles and fixtures. Interest on any borrowings would be the prime rate at the time plus 1%. Availability to draw on the line required us to have at least $1 million in cash, including any amounts borrowed, at Libertyville on the date of any advance. Advances could only occur at the beginning or end of a fiscal quarter and were required to be repaid in full within five days of the advance. Borrowings on this line were $300 on December 31, 2017. These borrowings were repaid in January 2018. The Line of Credit Agreement expired on March 4, 2018. On March 22, 2019, we executed a New Business Loan Agreement, dated as of March 4, 2019, with Libertyville, which replaces the Line of Credit Agreement with Libertyville having a maturity date of March 4, 2019. Under the New Business Loan Agreement, Libertyville will provide a maximum of (i) $500 or (ii) two times the sum of (a) 75% our eligible accounts receivables and (b) our cash deposited with Libertyville, whichever is less, of revolving credit to us, collateralized by a senior priority lien on our accounts receivable, inventory, equipment, general intangibles and fixtures. Interest is payable monthly on any advances at a floating interest rate of the prime rate at the time plus 1%. We must have $500 in cash, inclusive of the borrowed amount, at Libertyville on the date of any advance. Advances may only occur at the beginning or end of a fiscal quarter and must be repaid in full within five business days of the advance. Amounts due under the Line of Credit Agreement must be paid in full on April 4, 2020. On November 16, 2018, we entered into a Business Loan Agreement (the “Master Agreement“) with Beachcorp, LLC. Beachcorp, LLC is managed by Bradford T. Whitmore, who, together with his affiliates Grace Brothers, Ltd. and Grace Investments, Ltd., beneficially owned approximately 47% of the outstanding shares of our common stock as of March 25, 2019. The Master Agreement relates to two loan facilities, each evidenced by separate promissory notes, each dated November 16, 2018: a term loan to the Company of up to $500 to be disbursed in a single advance (the “Term Loan“) with a fixed annual interest rate of 8.25%, payable quarterly, accruing from the date of such advance and with principal due on December 31, 2020; and an asset-based revolving loan facility for the Company of up to $2,000 (the “Revolver Facility“), with floating interest accruing at the prime rate plus 3% (8.25% minimum) per year, with a borrowing base consisting of qualified accounts receivable of the Company, and with all principal and accrued interest due March 31, 2020. The Term Loan and Revolver Facility are secured by all the unencumbered assets of the Company and subordinated to Libertyville’s secured interest under the New Business Loan Agreement. The Master Agreement substantially restricts the Company’s ability to incur additional indebtedness during the terms of both the Term Loan and the Revolver Facility. On December 31, 2018, the balance on the term loan was $500 and the balance on the Revolver Facility was $832, there was $7 in 2018 interest expense, all of which was accrued and unpaid at year-end. As Beachcorp, LLC is an affiliate of one of our shareholders, this amounts to interest to be paid to a related party. On December 31, 2018, the outstanding borrowings exceed the borrowing base per the credit agreement by $192, which was absorbed by an increase in the borrowing base. Nanophase is required to repay this amount to Beachcorp, LLC upon next receipt of funds, unless new billings are made which exceed any such amount before repayment is made. The balance of borrowing base, loan amount, and any excess payments required over the available borrowing base will change as frequently as daily, given the operational nature of the elements of the Revolver Facility. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | (5) Inventories Inventories consist of the following: As of December 31, 2018 2017 Raw materials $ 1,086 $ 543 Finished goods 1,243 863 2,329 1,406 Allowance for excess quantities (87 ) (21 ) $ 2,242 $ 1,385 |
Equipment and Leasehold Improve
Equipment and Leasehold Improvements | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Equipment and Leasehold Improvements | (6) Equipment and Leasehold Improvements Equipment and leasehold improvements consist of the following: As of December 31, 2018 2017 Machinery and equipment $ 15,513 $ 14,936 Office equipment 840 811 Office furniture 110 110 Leasehold improvements 4,839 4,839 Construction in progress 97 157 21,399 20,853 Less: Accumulated depreciation and amortization (19,534 ) (19,229 ) $ 1,865 $ 1,624 Depreciation expense was $305 and $336, for the years ended December 31, 2018 and 2017, respectively. |
Lease Commitments
Lease Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Lease Commitments | (7) Lease Commitments We lease our operating facilities under operating leases. During October 2016 we entered into a Third Lease Amendment related to our primary facility in Romeoville, Illinois, extending the term of the lease through December 31, 2024. The current monthly rent on this lease amounts to $37. During March 2017, we entered into a new Building Lease for our Burr Ridge, Illinois facility that began in September 2017 and extends through September 2021, with our having the option to further extend this lease by three additional one-year periods. The current monthly rent on this lease amounts to $15. During 2016 we also renewed the lease for our offsite warehouse in Romeoville, Illinois, through August 2019. The current monthly rent on this lease amounts to $7. The following is a schedule of future minimum lease payments including real estate taxes as required under the above operating leases, as well as the remaining lease payments under capital leases as referenced below: Operating Capital Year ending December 31: Leases Leases 2019 $ 689 $ 274 2020 587 255 2021 554 196 2022 420 109 2023 430 5 Thereafter 440 — Total payments 3,120 839 Less amounts representing interest — (115 ) Total minimum payments required: $ 3,120 $ 724 Rent expense, including real estate taxes, under these leases amounted to $644 and $621, for the years ended December 31, 2018 and 2017, respectively. Amortization expense related to assets under capital lease is included in depreciation expense. On December 31, 2018 equipment under capital leases had a cost of $957 with accumulated depreciation of $76, compared to $757 and $43, respectively, on December 31, 2017. Principal and interest payments are due monthly under the capital lease obligations through May 2023. The remaining payments under capital leases include principal of $724 and interest of $115. We entered into four new capital leases during 2018 for $334 and a 5 years duration (through 2023). We entered into three new capital leases during 2017 for $481 and a 5-year duration (through 2022). |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 8) Accrued Expenses Accrued expenses consist of the following: As of December 31, 2018 2017 Accrued payroll and related expenses $ 200 $ 196 Customer net volume rebate payable 540 214 Other 239 133 $ 979 $ 543 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (9) Income Taxes Our net income tax provision, including both current and deferred, related to U.S. federal and state income taxes, is none. A reconciliation of income tax expense to the amount computed by applying the Federal income tax rate to loss before provision for income taxes as of December 31, 2018 and 2017 is as follows: 2018 2017 Income tax credit at statutory rates $ (437 ) $ (268 ) Nondeductible expenses 4 2 State income tax, net of federal benefits (156 ) (45 ) Expiration of NOL 1,559 — Effect of US tax rate change — 9,284 Expiration of stock options 180 188 Change in valuation allowance (1,148 ) (9,161 ) $ — $ — Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred income taxes consist of the following: As of December 31, 2018 2017 Deferred tax assets: Net operating loss carryforwards $ 22,560 $ 23,520 Inventory and other allowances 35 12 Charitable contribution carryforwards 2 2 Excess (tax) book depreciation 524 577 Excess (tax) book amortization 57 53 Share-based compensation 749 885 Other accrued costs 141 167 Total deferred tax assets 24,068 25,216 Less: Valuation allowance (24,068 ) (25,216 ) Deferred income taxes $ — $ — The valuation allowance decreased approximately $1.1 million and decreased $9.2 million for the years ended December 31, 2018 and 2017, respectively (net of approximately $1.6 million and $0 million for the years ended December 31, 2018 and 2017, respectively, for expiring net operating loss carryforwards) due principally to the expiring of net operating loss carryforwards. Under the Internal Revenue Code, certain ownership changes, including the prior issuance of preferred stock and our public offering of common stock, may subject us to annual limitations on the utilization of our net operating loss carryforward. As of December 31, 2018, the amounts subject to limitations have not yet been determined. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax reform legislation. This legislation makes significant changes in U.S. tax law, including a reduction in the corporate tax rates, changes in net operating loss carryforwards and carrybacks and a repeal of the corporate alternative minimum tax. The legislation reduced the U.S. corporate tax rate from the current rate of 34% to 21%. As a result of the enacted law, the Company was required to revalue deferred tax assets and liabilities at the enacted rate. This revaluation resulted in a reduction in the deferred tax asset and valuation allowance of $9.3 million. The other provisions of the Tax Cuts and Jobs Act did not have a material impact on the financial statements as of December 31, 2017 and for the year then ended. With the new legislation, the Securities and Exchange Commission issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118“) directing taxpayers to consider the impact of the U.S. legislation as “provisional“ when it does not have the necessary information prepared or analyzed in reasonable detail to complete its accounting for the change in tax law. There was no impact on the income tax expense for the federal corporate tax rate change for the period ended December 31, 2017 due to the tax period’s taxable loss and the calculation related to the change is complete. We have net operating loss carryforwards for tax purposes of approximately $79 million on December 31, 2018. $77 million expire between 2019 and 2037. All net operating loss carryforwards generated after January 1, 2018, do not expire. Therefore, the $2 million generated this year will not expire. |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Capital Stock | (10) Capital Stock As of December 31, 2018, and 2017, we had 24,088 authorized but unissued shares of preferred stock. In addition, as of December 31, 2018, 664,000 authorized but unissued shares of common stock have been reserved for future equity grants under our 2010 Equity Compensation Plan. |
Stock Options and Stock Grants
Stock Options and Stock Grants | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options and Stock Grants | (11) Stock Options and Stock Grants We have entered into stock option agreements with certain officers, employees and directors. The stock options generally expire ten years from the date of grant. Employee Stock Options We follow ASC Topic 718, Share-Based Payments As of December 31, 2018, there was approximately $392 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under our stock option plans. That cost is expected to be recognized over a remaining weighted-average period of 2.1 years. The following table illustrates the various assumptions used to calculate the Black-Scholes option pricing model for options granted for all years presented: Years Ended December 31, 2018 2017 Weighted-average risk-free interest rates: 2.9 % 2.1 % Dividend yield: 0.00 % 0.00 % Weighted-average expected life of the option: 7 years 7 years Weighted-average expected stock price volatility: 94 % 94 % Weighted-average fair value of the options granted: $ 0.64 $ 0.55 We use the Black−Scholes option pricing model to determine the fair value of stock-based compensation. The Black−Scholes model requires us to make several assumptions, including the estimated length of time employees will retain their vested stock options before exercising them (“expected term”), the estimated volatility of our common stock price over the expected term and estimated forfeitures. Expected price volatility of the fiscal 2018 and 2017 grants is based on the daily market rate changes of our stock going back to January 1, 2011. The shares granted in fiscal 2018 and 2017 had a vesting period of three years and a contractual life of 10 years. Forfeitures were estimated at 4% for the years ended December 31, 2018 and 2017, based on our historical experience. The Black−Scholes model also requires a risk-free interest rate, which is based on the U.S. Treasury yield curve in effect at the time of the grant, and the dividend yield on our common stock, which is assumed to be zero since we do not pay dividends and have no current plans to do so in the future. Changes in these assumptions can materially affect the estimate of fair value of stock-based compensation and consequently, the related expense recognized on the statement of operations. We recognize stock-based compensation expense on a straight-line basis. The following table summarizes the option activity for our employees and directors during the year ended December 31, 2018: Weighted Weighted Average Average Remaining Exercise Price Contractual Aggregate (rounded) per Term Intrinsic Options Shares Share (years) Value (000s) Outstanding on January 1, 2018 3,141,000 $ 0.73 Granted 571,000 $ 0.80 Exercised (64,000 ) $ 0.45 Forfeited or expired (233,000 ) $ 1.81 Outstanding on December 31, 2018 3,415,000 $ 0.67 5.8 $ 590 Exercisable on December 31, 2018 2,448,000 $ 0.65 4.7 $ 527 Shares available for grant 664,000 The aggregate intrinsic value in the table above is based on our closing stock price of $0.73 on the last business day for the year ended December 31, 2018. During the years ended December 31, 2018 and 2017, the total intrinsic value of our stock options exercised was $25 and $26, respectively. Cash received for option exercises was $29 and $47 during the years ended December 31, 2018 and 2017, respectively. We had approximately 64,000 options exercised during the year ended December 31, 2018, compared to 118,000 in 2017. Based on our election of the “with and without“ approach, no realized tax benefits from stock options were recognized for the years ended December 31, 2018 and 2017. |
401(k) Profit-Sharing Plan
401(k) Profit-Sharing Plan | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
401(k) Profit-Sharing Plan | (12) 401(k) Profit-Sharing Plan We have a 401(k) profit-sharing plan covering substantially all employees who meet defined service requirements. During 2017, we implemented a new Company contribution program, in which 10% of the employee’s contribution will be matched up to an 8% contribution (for a match of up to 0.8% of a participant’s salary). Contributions made in 2018 and 2017 aggregated to $21 and $19, respectively. |
Significant Customers and Conti
Significant Customers and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Significant Customers and Contingencies | (13) Significant Customers and Contingencies Revenue from three customers constituted approximately 74%, 7% and 3%, respectively, of our 2018 revenue. Amounts included in accounts receivable on December 31, 2018 relating to these three customers were approximately $316, $74 and $31, respectively. Revenue from these three customers constituted approximately 61%, 0% and 11%, respectively, of our 2017 revenue. Amounts included in accounts receivable on December 31, 2017 relating to these three customers were approximately $6, $1 and $432, respectively. The loss of one of these significant customers or the failure to attract new customers could have a material adverse effect on our business, results of operations and financial condition. We currently have exclusive supply agreements with BASF Corporation (“BASF“), our largest customer, that have contingencies outlined which could potentially result in the license of technology and/or the sale of production equipment from the Company to the customer intended to provide capacity sufficient to meet the customer’s production needs. This outcome may occur if we fail to meet certain performance requirements, certain other obligations and/or certain financial condition covenants. The financial condition covenants in one of our supply agreements with BASF “trigger“ a technology transfer right (license and equipment sale at BASF’s option) in the event (a) that earnings for the twelve-month period ending with our most recently published quarterly financial statements are less than zero and our cash, cash equivalents and certain investments are less than $500,000, or (b) of an acceleration of any debt maturity having a principal amount of more than $10 million. There are certain minimum finished goods inventory requirements with the new amendment to the supply agreement. This agreement also requires Nanophase to maintain certain finished goods inventory levels as “safety stock,“ beginning in the first quarter of 2019, and increasing through the third quarter of 2019 to a negotiated level based on agreed demand metrics, in order to maintain the $500,000 non-cash component discussed above. After September 30, 2019, should our safety stock fall below the prescribed amount of material, the quarter-end cash requirement would revert to $1,000,000 in cash, cash equivalents, and certain investments. The safety stock requirement may be adjusted upon mutual agreement. Our supply agreements with BASF also “trigger“ a technology transfer right in the event of our insolvency, as further defined within the agreements. In the event of an equipment sale, upon incurring a triggering event, the equipment would be sold to the customer at either 115% of the equipment’s net book value or the greater of 30% of the original book value of such equipment, and any associated upgrades to it, or 115% of the equipment’s net book value, depending on the equipment and related products. We believe that we should have sufficient cash and credit availability (See Liquidity and Capital Resources in Management’s Discussion and Analysis in Part II, Item 7 of this Form 10-K for a further discussion, as well as the description of our Line of Credit Agreement described in Note 3 ) We expect to expend resources on research, development and product testing, and in expanding current capacity or capability for new business. In addition, we may incur significant costs in preparing, filing, prosecuting, maintaining and enforcing our patents and other proprietary rights. We may need additional financing if we were to lose an existing customer or suffer a significant decrease in revenue from one or more of our customers or because of currently unknown capital requirements, new regulatory requirements or the need to meet the cash requirements discussed above to avoid a triggering event under our BASF agreement. Given our expected growth in our Solésence ® |
Business Segmentation and Geogr
Business Segmentation and Geographical Distribution | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Business Segmentation and Geographical Distribution | (14) Business Segmentation and Geographical Distribution Revenue from international sources approximated $600 and $1,835 for the years ended December 31, 2018 and 2017, respectively. As part of our revenue from international sources, we recognized approximately $534 and $1,713 in product revenue from a number of German companies, in the aggregate, for the years ended December 31, 2018 and 2017, respectively. Our Operations comprise a single business segment and all of our long-lived assets are located within the United States. We categorize our revenue stream into three main product categories, Personal Care Ingredients, Advanced Materials and Solésence ® Product Category 2018 2017 Personal Care Ingredients $ 10,573 $ 7,874 Advanced Materials 2,253 4,543 Solésence ® 1,367 54 Total Sales $ 14,193 $ 12,471 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | (15) Subsequent Events As discussed in Note 3, the Line of Credit Agreement with our primary bank (Libertyville) expired in March 2019, but during March 2019 we executed the New Business Loan Agreement with Libertyville. Under the New Business Loan Agreement, Libertyville will provide a maximum of (i) $500,000 or (ii) two times the sum of (a) 75% of our eligible accounts receivable and (b) our cash deposited with Libertyville, whichever is less, of revolving credit to us, collateralized by a senior priority lien on our accounts receivable, inventory, equipment, general intangibles and fixtures. Interest is payable monthly on any advances at a floating interest rate of the prime rate at the time plus 1%. We must have $500,000 in cash, inclusive of the borrowed amount, at Libertyville on the date of any advance. Advances may only occur at the beginning or end of a fiscal quarter and must be repaid in full within five business days of the advance. Amounts due under the New Business Loan Agreement must be paid in full on April 4, 2020. While the New Business Loan Agreement is in effect, we cannot, among other things, engage in any business activities substantially different than those in which we are presently engaged, and there are limitations imposed on our ability to, among other things, incur additional indebtedness for borrowed money, including capital leases, sell, transfer, mortgage, assign, pledge, lease or grant a security interest in or encumber any of our assets, sell with recourse any of our accounts other than to Libertyville, cease operations, merge, transfer, acquire or consolidate with any other entity, change our name, dissolve or transfer or sell collateral outside the ordinary course of business, pay any cash dividends, loan, invest in or advance money or assets to any other person or entity, purchase, create or acquire any interest in any other entity, or incur any obligation as a surety or guarantor other than in the ordinary course of business, in each case without Libertyville’s prior written consent. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates and Risks and Uncertainties | Use of Estimates and Risks and Uncertainties The preparation of financial statements requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain assumptions are also necessary to assess the impact of risks and uncertainties on the financial statements, such as cash flow projections, availability of capital if needed to support the ongoing operations of the business, and our expected compliance with contractual commitments. These risks and uncertainties are further discussed in Note 12. Any changes in these assumptions or business plans could have a material impact on the financial statements. |
Cash | Cash The Cash balance on December 31, 2018 consists of funds borrowed from our Term Loan and Revolving Line of Credit, both of which are facilitated by Beachcorp, LLC. Our ability to access cash from our credit facility solely depends on carrying an Accounts Receivable balance greater than the outstanding loan balance in the Revolving Line of Credit. As part of the agreement, we are required to have a bank account in place to act as a depository account for our customers. This account is referred to as the Control Account. Furthermore, there is an Account Control Agreement in place which provides Beachcorp, LLC the ability to exercise control over the account via approval of requested transfers. According to our agreements with Beachcorp, LLC, Nanophase is to be the party initiating any transfers, whether to Nanophase or to Beachcorp, LLC, and approval to access any monies within this account can only be withheld by Beachcorp, LLC if the borrowing base falls below the Company’s qualified receivables, or if we are in arrears with respect to interest payments due Beachcorp, LLC. The failure of Nanophase to remedy the previously mentioned conditions could lead to Beachcorp, LLC gaining the right, through a “springing“ feature administered by Libertyville Bank and Trust, a Wintrust Community Bank (“Libertyville“), to transfer funds to itself without direct approval from Nanophase. Due to the restrictive nature on this account to Nanophase Technologies Corporation, any balance in the account constitutes restricted cash. The restricted cash balance in this account on December 31, 2018 was zero. |
Trade Accounts Receivable | Trade Accounts Receivable Trade accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. We determine the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received. Our typical credit terms are between thirty and sixty days from shipment and invoicing. |
Inventories | Inventories Inventories are stated at the lower of cost, maintained on a first in, first out basis, or net realizable value. We have recorded allowances to reduce inventory relating to excess quantities of certain materials. Write-downs of inventories establish a new cost basis, which is not increased for future increases in market value of inventories or changes in estimated excess quantities. |
Equipment and Leasehold Improvements | Equipment and Leasehold Improvements Equipment is stated at cost and is being depreciated over its estimated useful life (3-20 years) using the straight-line method. Leasehold improvements are stated at cost and are being amortized using the straight-line method over the shorter of the useful life of the asset or the term of the lease (3-7 years). Depreciation expense for leased assets is included with depreciation expense for owned assets. From time to time we have self-constructed assets. These assets are stated at cost plus the capitalization of labor and are depreciated over an estimated useful life (7-10 years) using the straight-line method. |
Long Lived Assets | Long Lived Assets We review long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. We conduct long-lived asset impairment analyses in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets |
Asset Retirement Obligations | Asset Retirement Obligations In connection with our leased facilities, we are required to remove certain leasehold improvements upon termination of our occupancy. We follow the provisions of the FASB issued ASC 410-20, Asset Retirement Obligations Activity in the asset retirement obligation account for the years ended December 31, is as follows: 2018 2017 Balance, beginning $ 184 $ 178 Accretion of liability due to passage of time 14 6 Amortization of asset due to passage of time — — Balance, ending $ 198 $ 184 |
Financial Instruments | Financial Instruments We follow ASC Topic 820, Fair Value Measurements and Disclosures Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, along with the promissory note with no related borrowings described in Note 3, and any borrowings on the working capital line of credit from Libertyville Bank and Trust and any borrowings on the working capital line of credit and term loan from Beachcorp, LLC described in Note 3. The fair values of all financial instruments were not materially different from their carrying values. There were no financial assets or liabilities adjusted to fair value on December 31, 2018 and 2017. |
Product Revenue/Other Revenue | Product Revenue On January 1, 2018, we adopted Accounting Standards Updates (“ASU“) 2014-09 and 2015-14, Revenue from Contract with Customers (Topic 606) Revenues are recognized at a point in time, typically when control of the promised goods is transferred to customers, in an amount that reflects the consideration we expect to receive in exchange for those goods. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses. Customers’ deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in our statements of operations. We do not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less or contracts for which we recognize revenue that we have the right to invoice for goods completed. Other Revenue Other revenue may include revenue from technology license fees and paid development projects. Technology license fees and paid development projects are recognized when the obligation under the agreed upon contractual arrangement is performed on our part. We recognized a one-time technology development fee of $20,000 in 2018 relating to our agreement with Colorescience. We recognized a one-time technology fee of $250,000 in 2017 relating to our agreement with Eminess Technologies, Inc. Shipping and handling costs are included in other revenue when products are shipped and invoiced to the customer. We include the related cost of shipping and handling in cost of goods sold. |
Research and Development Expenses | Research and Development Expenses Research and development expenses are recognized as expense when incurred. |
Reclassifications | Reclassifications Certain balances on the 2017 financial statements have been reclassified to conform to 2018 presentation with no impact to the net income. |
Income Taxes | Income Taxes We account for income taxes using the liability method. As such, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated using the enacted tax rates and laws that are expected to be in effect when the anticipated reversal of these differences is scheduled to occur. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred tax assets will not be realized. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured, as described above, is reflected as a liability for uncertain tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. We have not recorded a reserve for any tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. We file tax returns in all appropriate jurisdictions, which includes a federal tax return and Illinois state tax return. When and if applicable, potential interest and penalty costs are accrued as incurred, with expenses recognized in selling, general and administrative expenses in the statements of operations. As of December 31, 2018, and 2017, we had no liability for unrecognized tax benefits. |
Earnings Per Share | Earnings Per Share Options to purchase approximately 839,000 shares of common stock that were outstanding as of December 31, 2018 were not included in the computation of earnings per share for the year ended December 31, 2018, as the impact of such shares are anti-dilutive. Options to purchase approximately 646,000 shares of common stock that were outstanding as of December 31, 2017 were not included in the computation of earnings per share for the year ended December 31, 2017, as the impact of such shares are anti-dilutive. |
New Accounting Pronouncements | New Accounting Pronouncements During February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02“), Leases (Topic 842) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of activity in asset retirement obligations | Activity in the asset retirement obligation account for the years ended December 31, is as follows: 2018 2017 Balance, beginning $ 184 $ 178 Accretion of liability due to passage of time 14 6 Amortization of asset due to passage of time — — Balance, ending $ 198 $ 184 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following: As of December 31, 2018 2017 Raw materials $ 1,086 $ 543 Finished goods 1,243 863 2,329 1,406 Allowance for excess quantities (87 ) (21 ) $ 2,242 $ 1,385 |
Equipment and Leasehold Impro_2
Equipment and Leasehold Improvements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of components of equipment and leasehold improvements | Equipment and leasehold improvements consist of the following: As of December 31, 2018 2017 Machinery and equipment $ 15,513 $ 14,936 Office equipment 840 811 Office furniture 110 110 Leasehold improvements 4,839 4,839 Construction in progress 97 157 21,399 20,853 Less: Accumulated depreciation and amortization (19,534 ) (19,229 ) $ 1,865 $ 1,624 |
Lease Commitments (Tables)
Lease Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Schedule of future minimum lease payments | The following is a schedule of future minimum lease payments including real estate taxes as required under the above operating leases, as well as the remaining lease payments under capital leases as referenced below: Operating Capital Year ending December 31: Leases Leases 2019 $ 689 $ 274 2020 587 255 2021 554 196 2022 420 109 2023 430 5 Thereafter 440 — Total payments 3,120 839 Less amounts representing interest — (115 ) Total minimum payments required: $ 3,120 $ 724 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consist of the following: As of December 31, 2018 2017 Accrued payroll and related expenses $ 200 $ 196 Customer net volume rebate payable 540 214 Other 239 133 $ 979 $ 543 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of reconciliation of income tax expense by applying federal income tax rate to loss before provision for income taxes | A reconciliation of income tax expense to the amount computed by applying the Federal income tax rate to loss before provision for income taxes as of December 31, 2018 and 2017 is as follows: 2018 2017 Income tax credit at statutory rates $ (437 ) $ (268 ) Nondeductible expenses 4 2 State income tax, net of federal benefits (156 ) (45 ) Expiration of NOL 1,559 — Effect of US tax rate change — 9,284 Expiration of stock options 180 188 Change in valuation allowance (1,148 ) (9,161 ) $ — $ — |
Schedule of significant components of deferred income taxes | Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred income taxes consist of the following: As of December 31, 2018 2017 Deferred tax assets: Net operating loss carryforwards $ 22,560 $ 23,520 Inventory and other allowances 35 12 Charitable contribution carryforwards 2 2 Excess (tax) book depreciation 524 577 Excess (tax) book amortization 57 53 Share-based compensation 749 885 Other accrued costs 141 167 Total deferred tax assets 24,068 25,216 Less: Valuation allowance (24,068 ) (25,216 ) Deferred income taxes $ — $ — |
Stock Options and Stock Grants
Stock Options and Stock Grants (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of assumptions used to calculate black-scholes option pricing model for options granted | The following table illustrates the various assumptions used to calculate the Black-Scholes option pricing model for options granted for all years presented: Years Ended December 31, 2018 2017 Weighted-average risk-free interest rates: 2.9 % 2.1 % Dividend yield: 0.00 % 0.00 % Weighted-average expected life of the option: 7 years 7 years Weighted-average expected stock price volatility: 94 % 94 % Weighted-average fair value of the options granted: $ 0.64 $ 0.55 |
Schedule of option activity | The following table summarizes the option activity for our employees and directors during the year ended December 31, 2018: Weighted Weighted Average Average Remaining Exercise Price Contractual Aggregate (rounded) per Term Intrinsic Options Shares Share (years) Value (000s) Outstanding on January 1, 2018 3,141,000 $ 0.73 Granted 571,000 $ 0.80 Exercised (64,000 ) $ 0.45 Forfeited or expired (233,000 ) $ 1.81 Outstanding on December 31, 2018 3,415,000 $ 0.67 5.8 $ 590 Exercisable on December 31, 2018 2,448,000 $ 0.65 4.7 $ 527 Shares available for grant 664,000 |
Business Segmentation and Geo_2
Business Segmentation and Geographical Distribution (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segments, Geographical Areas [Abstract] | |
Schedule of business segmentation and geographical distribution | The revenues for 2018 and 2017 by category are as follows: Product Category 2018 2017 Personal Care Ingredients $ 10,573 $ 7,874 Advanced Materials 2,253 4,543 Solésence ® 1,367 54 Total Sales $ 14,193 $ 12,471 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Balance, beginning | $ 184 | $ 178 |
Accretion of liability due to passage of time | 14 | 6 |
Balance, ending | $ 198 | $ 184 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Line Items] | ||
Technology development fee | $ 14,193 | $ 12,471 |
Threshold percentage | 50.00% | |
Anti-dilutive securities excluded from computation of earnings per share | 839,000 | 646,000 |
Technology Development Fee [Member] | ||
Accounting Policies [Line Items] | ||
Technology development fee | $ 20 | $ 250 |
Equipment [Member] | Greater than [Member] | ||
Accounting Policies [Line Items] | ||
Equipment leasehold improvements and leased assets useful life | 3 years | |
Equipment [Member] | Less than [Member] | ||
Accounting Policies [Line Items] | ||
Equipment leasehold improvements and leased assets useful life | 20 years | |
Leasehold Improvements [Member] | Greater than [Member] | ||
Accounting Policies [Line Items] | ||
Equipment leasehold improvements and leased assets useful life | 3 years | |
Leasehold Improvements [Member] | Less than [Member] | ||
Accounting Policies [Line Items] | ||
Equipment leasehold improvements and leased assets useful life | 7 years | |
Self-Constructed Assets [Member] | Greater than [Member] | ||
Accounting Policies [Line Items] | ||
Equipment leasehold improvements and leased assets useful life | 7 years | |
Self-Constructed Assets [Member] | Less than [Member] | ||
Accounting Policies [Line Items] | ||
Equipment leasehold improvements and leased assets useful life | 10 years |
Going Concern_ Liquidity (Detai
Going Concern/ Liquidity (Details Narrative) | 12 Months Ended |
Dec. 31, 2018 | |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | |
Concentration risk, percentage | 74.00% |
Notes and Lines of Credit (Deta
Notes and Lines of Credit (Detail Narratives) $ in Thousands | Mar. 22, 2019USD ($)Number | Nov. 16, 2018USD ($) | Mar. 31, 2015USD ($) | Jul. 31, 2014USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Line of Credit | $ 300 | |||||
Business Loan Agreement [Member] | Beachcorp, LLC [Member] | ||||||
Term loan | $ 500 | $ 500 | ||||
Fixed annual interest rate | 8.25% | |||||
Maturity date | Dec. 31, 2020 | |||||
Ownership percentage | 47.00% | |||||
Term loan collateral | The Term Loan and Revolver Facility are secured by all the unencumbered assets of the Company and subordinated to Libertyville’s secured interest under the New Business Loan Agreement. | |||||
Borrowing base per the credit agreement | $ 192 | |||||
Business Loan Agreement [Member] | Beachcorp, LLC [Member] | Asset-Based Revolving Loan Facility [Member] | ||||||
Basis spread variable interest rate | 3.00% | |||||
Variable interest rate basis | Prime rate | |||||
Line of credit facility, maximum borrowing capacity | $ 2 | |||||
Facility, expiration date | Mar. 31, 2020 | |||||
Term loan | $ 832 | |||||
Letter of Credit [Member] | ||||||
Letter of credit and related promissory note | $ 30 | |||||
Basis spread variable interest rate | 1.00% | |||||
Variable interest rate basis | Prime rate | |||||
Line of Credit [Member] | Business Loan Agreement [Member] | Libertyville [Member] | ||||||
Basis spread variable interest rate | 1.00% | |||||
Variable interest rate basis | Prime rate | |||||
Line of credit facility, maximum borrowing capacity | $ 300 | |||||
Borrowing capacity as percentage of accounts receivable | 75.00% | |||||
Facility, expiration date | Mar. 4, 2018 | |||||
Line of Credit | $ 300 | |||||
Repayment Terms | 5 days | |||||
Line of Credit [Member] | Business Loan Agreement [Member] | Libertyville [Member] | Greater than [Member] | ||||||
Minimum amount of cash on hand before advance is given | $ 1,000 | |||||
Line of Credit [Member] | New Business Loan Agreement [Member] | Subsequent Event [Member] | ||||||
Basis spread variable interest rate | 1.00% | |||||
Variable interest rate basis | Prime rate | |||||
Line of credit facility, maximum borrowing capacity | $ 500 | |||||
Borrowing capacity as percentage of accounts receivable | 75.00% | |||||
Borrowing capacity as multiple of accounts receivable | Number | 2 | |||||
Minimum amount of cash on hand before advance is given | $ 500 | |||||
Facility, expiration date | Apr. 4, 2020 | |||||
Line of Credit | $ 500 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,086 | $ 543 |
Finished goods | 1,243 | 863 |
Inventory gross, Total | 2,329 | 1,406 |
Allowance for excess quantities | (87) | (21) |
Inventories, net | $ 2,242 | $ 1,385 |
Equipment and Leasehold Impro_3
Equipment and Leasehold Improvements (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 21,399 | $ 20,853 |
Less: Accumulated depreciation and amortization | (19,534) | (19,229) |
Property, Plant and Equipment, Net, Total | 1,865 | 1,624 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 15,513 | 14,936 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 840 | 811 |
Office Furniture [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 110 | 110 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 4,839 | 4,839 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 97 | $ 157 |
Equipment and Leasehold Impro_4
Equipment and Leasehold Improvements (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 305 | $ 336 |
Lease Commitments (Details)
Lease Commitments (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Operating Leases: | |
2019 | $ 689 |
2020 | 587 |
2021 | 554 |
2022 | 420 |
2023 | 430 |
Thereafter | 440 |
Total payments | 3,120 |
Total minimum payments required under operating leases | 3,120 |
Capital Leases: | |
2019 | 274 |
2020 | 255 |
2021 | 196 |
2022 | 109 |
2023 | 5 |
Total payments | 839 |
Less amounts representing interest | (115) |
Total minimum payments required under capital leases | $ 724 |
Lease Commitments (Details Narr
Lease Commitments (Details Narrative) $ in Thousands | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Operating Leased Assets [Line Items] | |||
Rent Expense | $ 644 | $ 621 | |
Cost of equipment under capital lease | $ 757 | 957 | 757 |
Accumulated depreciation | $ 43 | $ 76 | $ 43 |
Number of capital leases | 3 | ||
Capital lease term | 5 years | 5 years | |
Payments to acquire capital lease | $ 334 | $ 481 | |
Total minimum payments required under capital leases | 724 | ||
Total future interest under capital leases | $ 115 | ||
Greater than [Member] | |||
Operating Leased Assets [Line Items] | |||
Capital lease term | 3 years | ||
Less than [Member] | |||
Operating Leased Assets [Line Items] | |||
Capital lease term | 5 years | ||
Romeoville Illinois [Member] | |||
Operating Leased Assets [Line Items] | |||
Operating lease number of renewals | 1 | ||
Monthly rent on lease amounts | $ 37 | ||
Burr Ridge Facility [Member] | |||
Operating Leased Assets [Line Items] | |||
Operating lease number of renewals | 1 | ||
Monthly rent on lease amounts | $ 15 | ||
Offsite Warehouse [Member] | |||
Operating Leased Assets [Line Items] | |||
Operating lease number of renewals | 3 | ||
Monthly rent on lease amounts | $ 7 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued payroll and related expenses | $ 200 | $ 196 |
Customer net volume rebate payable | 540 | 214 |
Other | 239 | 133 |
Total | $ 979 | $ 543 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income tax credit at statutory rates | $ (437) | $ (268) |
Nondeductible expenses | 4 | 2 |
State income tax, net of federal benefits | (156) | (45) |
Expiration of NOL | 1,559 | |
Effect of US tax rate change | 9,284 | |
Expiration of stock options | 180 | 188 |
Change in valuation allowance | (1,148) | (9,161) |
Total | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 22,560 | $ 23,520 |
Inventory and other allowances | 35 | 12 |
Charitable contribution carryforwards | 2 | 2 |
Excess (tax) book depreciation | 524 | 577 |
Excess (tax) book amortization | 57 | 53 |
Share-based compensation | 749 | 885 |
Other accrued costs | 141 | 167 |
Total deferred tax assets | 24,068 | 25,216 |
Less: Valuation allowance | $ (24,068) | $ (25,216) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Increase (decrease) in valuation allowance | $ (1,100) | $ (9,200) |
Net operating loss carryforwards | $ 79,000 | $ 77,000 |
Capital loss carryforwards expiration period start | 2019 | |
Capital loss carryforwards expiration period end | 2037 | |
U.S. corporate tax rate | 34.00% | 21.00% |
Tax Year 2018 [Member] | ||
Net operating loss carryforwards | $ 2,000 | |
Change In Enacted Rate [Member] | ||
Increase (decrease) in valuation allowance | (9,300) | |
Expiring Operating Loss Carryforwards [Axis] | ||
Increase (decrease) in valuation allowance | $ 1,600 | $ 0 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - shares | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred stock, shares authorized | 24,088 | 24,088 |
2010 Equity Compensation Plan [Member] | ||
Authorized, unissued shares of common stock | 664,000 |
Stock Options and Stock Grant_2
Stock Options and Stock Grants (Details) - Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted-average risk-free interest rates | 2.90% | 2.10% |
Dividend yield | 0.00% | 0.00% |
Weighted-average expected life of the option | 7 years | 7 years |
Weighted-average expected stock price volatility | 94.00% | 94.00% |
Weighted-average fair value of the options granted | $ 0.64 | $ 0.55 |
Stock Options and Stock Grant_3
Stock Options and Stock Grants (Details 1) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Options: | ||
Stock options outstanding, beginning | 3,141,000 | |
Granted | 571,000 | |
Exercises | (64,000) | (118,000) |
Forfeited or expired | (233,000) | |
Stock options outstanding, ending | 3,415,000 | 3,141,000 |
Exercisable, ending | 2,448,000 | |
Shares available for grant, ending | 664,000 | |
Weighted Average Exercise Price | ||
Beginning Balance | $ 0.73 | |
Granted | 0.80 | |
Exercised | 0.45 | |
Forfeited or expired | 1.81 | |
Ending Balance | 0.67 | $ 0.73 |
Exercisable | $ 0.65 | |
Weighted Average Remaining Contractual Term, Outstanding, end | 5 years 9 months 18 days | |
Weighted Average Remaining Contractual Term Years, Exercisable, end | 4 years 8 months 12 days | |
Aggregate Intrinsic Value | ||
Intrinsic Value, Outstanding, end | $ 590 | |
Intrinsic Value, Exercisable, end | $ 527 |
Stock Options and Stock Grant_4
Stock Options and Stock Grants (Detail Narratives) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 204 | $ 183 |
Total unrecognized compensation cost related to nonvested share-based compensation arrangements granted | $ 392 | |
Weighted-average period over which unrecognized compensation is expected to be recognized | 2 years 1 month 6 days | |
Proceeds from exercise of stock options | $ 29 | $ 47 |
Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock options granted | 571,000 | |
Vesting period of stock options | 3 years | |
Weighted average exercise price | $ 0.67 | $ 0.73 |
Forfeitures rates | 4.00% | |
Share Price | $ 0.73 | |
Total intrinsic value | $ 25 | $ 26 |
Proceeds from exercise of stock options | $ 29 | $ 47 |
Common stock issued pursuant to option exercises (shares) | 64,000 | 118,000 |
401(k) Profit-Sharing Plan (Det
401(k) Profit-Sharing Plan (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Retirement Benefits [Abstract] | ||
Contributions under profit sharing plan | $ 21 | $ 19 |
Employer's matching contribution | 8.00% | |
Employee's contribution for matching | 10.00% | |
Participant's salary for employer matching | 0.80% |
Significant Customers and Con_2
Significant Customers and Contingencies (Detail Narratives) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($)Number | Dec. 31, 2017USD ($) | Sep. 30, 2019USD ($) | Mar. 31, 2019USD ($) | |
Number of major customers | Number | 3 | |||
Accounts receivable | $ 829 | $ 1,115 | ||
Finished goods inventory | $ 1,243 | 863 | ||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||
Revenue from customers | 74.00% | |||
Customers One [Member] | ||||
Accounts receivable | $ 316 | $ 6 | ||
Customers One [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||
Revenue from customers | 74.00% | 61.00% | ||
Customers Two [Member] | ||||
Accounts receivable | $ 74 | $ 1 | ||
Customers Two [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||
Revenue from customers | 7.00% | 0.00% | ||
Customers Three [Member] | ||||
Accounts receivable | $ 31 | $ 432 | ||
Customers Three [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||
Revenue from customers | 3.00% | 11.00% | ||
BASF [Member] | ||||
Equipment sale - original book value of equipment and upgrades | 30.00% | |||
Equipment sale - net book value equipment | 115.00% | |||
BASF [Member] | Greater than [Member] | ||||
Accelerated debt maturity - principal amount debt | $ 10,000 | |||
BASF [Member] | Less than [Member] | ||||
Earnings trigger under supply agreeement | 0 | |||
Cash, cash equivalents and investments trigger under supply agreeement | $ 500 | |||
Subsequent Event [Member] | BASF [Member] | Greater than [Member] | ||||
Cash, cash equivalents and investments trigger under supply agreeement | $ 1,000 | |||
Finished goods inventory | $ 500 |
Business Segmentation and Geo_3
Business Segmentation and Geographical Distribution (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Sales | $ 14,193 | $ 12,471 |
Product Revenue [Member] | ||
Sales | 14,040 | 12,129 |
Advanced Materials [Member] | ||
Sales | 2,253 | 4,543 |
Solesence [Member] | ||
Sales | $ 1,367 | $ 54 |
Business Segmentation and Geo_4
Business Segmentation and Geographical Distribution (Detail Narratives) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | |
Number of business segments | segment | 1 | |
International Sources [Member] | ||
Revenue from international sources | $ 600 | $ 1,835 |
Germany [Member] | ||
Revenue from international sources | $ 534 | $ 1,713 |
Subsequent Events (Detail Narra
Subsequent Events (Detail Narrative) - Subsequent Event [Member] - Line of Credit [Member] - New Business Loan Agreement [Member] $ in Thousands | Mar. 22, 2019USD ($)Number |
Basis spread variable interest rate | 1.00% |
Variable interest rate basis | Prime rate |
Line of credit facility, maximum borrowing capacity | $ 500 |
Borrowing capacity as percentage of accounts receivable | 75.00% |
Borrowing capacity as multiple of accounts receivable | Number | 2 |
Facility, expiration date | Apr. 4, 2020 |
Minimum amount of cash on hand before advance is given | $ 500 |