Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 27, 2020 | Jun. 28, 2019 | |
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, 2019 | ||
Entity File Number | 000-22333 | ||
Entity Incorporation, State Code | DE | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Reporting Status Current | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Small Business | true | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 8,291,014 | ||
Entity Common Stock, Shares Outstanding | 38,136,792 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 1,194 | $ 1,345 |
Trade accounts receivable, less allowance for doubtful accounts of $9 and $9 on December 31, 2019 and 2018 respectively | 970 | 829 |
Inventories, net | 2,554 | 2,242 |
Prepaid expenses and other current assets | 267 | 273 |
Total current assets | 4,985 | 4,689 |
Equipment and leasehold improvements, net | 2,255 | 1,865 |
Operating leases, Right of Use | 2,119 | |
Other assets, net | 13 | 15 |
Total assets | 9,372 | 6,569 |
Current liabilities: | ||
Line of credit, bank | 500 | |
Line of credit, related party | 224 | 832 |
Current portion of long-term debt, related party | 500 | |
Current portion of capital lease obligations | 218 | 218 |
Current portion of operating lease obligations | 357 | |
Accounts payable | 1,748 | 1,608 |
Current portion of deferred revenue | 482 | 8 |
Accrued expenses | 380 | 971 |
Total current liabilities | 4,409 | 3,637 |
Long-term portion of capital lease obligations | 288 | 506 |
Long-term portion of operating lease obligations | 2,035 | |
Long-term convertible loan, related party | 830 | |
Long-term portion of related party loan | 500 | |
Long-term deferred rent | 344 | |
Long-term portion of deferred revenue | 93 | |
Asset retirement obligations | 206 | 198 |
Total long-term liabilities | 3,452 | 1,548 |
Contingent liabilities | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value, 24,088 shares authorized, and no shares issued and outstanding | ||
Common stock, $.01 par value, 55,000,000 shares authorized; 38,136,792 and 33,911,792 shares issued and outstanding on December 31, 2019 and December 31, 2018, respectively | 381 | 339 |
Additional paid-in capital | 101,886 | 98,795 |
Accumulated deficit | (100,756) | (97,750) |
Total stockholders' equity | 1,511 | 1,384 |
Total liabilities and stockholders' equity | $ 9,372 | $ 6,569 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 9 | $ 9 |
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 | 55,000,000 | 55,000,000 |
Common stock, issued | 38,136,792 | 33,911,792 |
Common stock, outstanding | 38,136,792 | 33,911,792 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue: | ||
Total revenue | $ 12,509 | $ 14,193 |
Operating expense: | ||
Cost of revenue | 9,893 | 10,903 |
Gross profit | 2,616 | 3,290 |
Research and development expense | 1,870 | 2,057 |
Selling, general and administrative expense | 3,542 | 3,256 |
Loss from operations | (2,796) | (2,023) |
Interest expense | (210) | (58) |
Loss before provision for income taxes | (3,006) | (2,081) |
Provision for income taxes | ||
Net loss | $ (3,006) | $ (2,081) |
Net loss per share-basic and diluted (in dollars per share) | $ (0.08) | $ (0.06) |
Weighted average number of basic and diluted common shares outstanding (in shares) | 36,596,372 | 33,871,815 |
Product Revenue [Member] | ||
Revenue: | ||
Total revenue | $ 11,852 | $ 14,040 |
Other Revenue [Member] | ||
Revenue: | ||
Total revenue | $ 657 | $ 153 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Dec. 31, 2017 | $ 338 | $ 98,563 | $ (95,669) | $ 3,232 | |
Balance at beginning (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 | ||||
Sale of common stock | $ 42 | 1,635 | 1,677 | ||
Sale of common stock (in shares) | 4,189,000 | ||||
Stock option exercises | 14 | 14 | |||
Stock option exercises (in shares) | 36,000 | ||||
Stock-based compensation | 242 | 242 | |||
Net loss | (3,006) | (3,006) | |||
Balance at ending at Dec. 31, 2019 | $ 381 | $ 101,886 | $ (100,756) | $ 1,511 | |
Balance at ending (in shares) at Dec. 31, 2019 | 38,136,792 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating activities: | ||
Net loss | $ (3,006) | $ (2,081) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation and amortization | 315 | 322 |
(Loss) on disposal of fixed asset | 15 | |
Amortization of debt discount | 30 | |
Share-based compensation | 242 | 204 |
Changes in assets and liabilities related to operations: | ||
Trade accounts receivable | (141) | 286 |
Inventories | (312) | (857) |
Prepaid expenses and other assets | 6 | (104) |
Accounts payable | 170 | 518 |
Deferred Revenue | 567 | |
Accrued expenses | (662) | 370 |
Net cash used in operating activities | (2,776) | (1,342) |
Investing activities: | ||
Acquisition of equipment and leasehold improvements | (740) | (160) |
Net cash used in investing activities | (740) | (160) |
Financing activities: | ||
Principal payment on capital leases | (218) | (169) |
Proceeds from line of credit, bank | 1,500 | 1,200 |
Payments to the line of credit, bank | (1,000) | (1,500) |
Proceeds from related party convertible loan | 2,000 | |
Proceeds from Beachcorp term loan | 500 | |
Proceeds from line of credit, Beachcorp LLC | 9,486 | 970 |
Payments to line of credit, Beachcorp LLC | (10,094) | (138) |
Proceeds from sale of common stock | 1,677 | |
Proceeds from exercise of stock options | 14 | 29 |
Net cash provided by financing activities | 3,365 | 892 |
(Decrease) Increase in cash and cash equivalents | (151) | (610) |
Cash and cash equivalents at beginning of period | 1,345 | 1,955 |
Cash and cash equivalents at end of period | 1,194 | 1,345 |
Supplemental cash flow information: | ||
Interest paid | 173 | 51 |
Supplemental non-cash investing and financing activities: | ||
Accounts payable incurred for the purchase of equipment and leasehold improvements | 22 | 52 |
Capital lease obligations incurred in the purchase of equipment | $ 334 | |
Stock conversion rights related to convertible loan | $ 1,200 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019 | |
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 13. Any changes in these assumptions or business plans could have a material impact on the financial statements. Cash The Cash balance on December 31, 2019 consists of funds borrowed from our Convertible Promissory Note, held by Bradford T. Whitmore, and 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, 2019 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 Deferred Revenue The Company records deferred revenue for development projects due to the contractual billing of these projects not always aligning with revenue recognition. In addition, it is now the Company’s policy to require deposits relating to the production of our Solésence products. 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: 2019 2018 Balance, beginning $ 198 $ 184 Accretion of liability due to passage of time 8 14 Amortization of asset due to passage of time — — Balance, ending $ 206 $ 198 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 4, any borrowings on the working capital line of credit from Libertyville Bank and Trust, and any borrowings on the working capital line of credit, along with the term loan from Beachcorp, LLC, and the promissory note payable associated with the convertible loan described in Note 4. 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, 2019 and 2018. 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 $211,000 one-time buy out of bulk material by a Solesence customer and a $289,000 one-time contractual capacity adjustment fee from our largest customer in 2019. We recognized a one-time technology development fee of $20,000 in 2018 relating to our agreement with Colorescience. On July 31, 2019, we entered into a Joint Development Agreement, with an initial term of ten years, with Sumitomo Corporation of Americas (“SCOA”) to jointly develop certain coated materials for the use in the personal care market. In return for the Company’s exclusive efforts on SCOA’s behalf, SCOA has paid a commitment fee of $250 and will pay two subsequent payments, of $125 each, for the development of products. The two subsequent payments are contingent upon the achievement of certain performance obligations as defined in the agreement. We began recognizing revenue recognizing revenue from the commitment fee in November 2019 and will continue to do so as we fulfill our contractual performance obligations. The Company is recognizing revenue over time using an input method. 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 2018 financial statements have been reclassified to conform to 2019 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, 2019, and 2018, we had no liability for unrecognized tax benefits. Earnings Per Share Options to purchase approximately 243,000 shares of common stock that were outstanding as of December 31, 2019 were not included in the computation of earnings per share for the year ended December 31, 2019, as the impact of such shares are anti-dilutive. 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. New Accounting Pronouncements On January 1, 2019, the Company adopted Accounting Standards Update ("ASU") No. 2016-02, Leases, ASU No. 2018-10, Codification Improvements to Topic 842 (Leases) and ASU No. 2018-11, Targeted Improvements to Topic 842 (Leases). The guidance is intended to increase transparency and comparability among companies for leasing transactions, including a requirement for companies that lease assets to recognize on their balance sheets the assets and liabilities for the rights and obligations created by those leases. The guidance also provides for disclosures that allow the users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted the guidance on January 1, 2019 using the modified retrospective method without restatement of comparative periods. As such, periods prior to the date of adoption are presented in accordance with ASC 840 - Leases. The Company utilized the available practical expedient that allowed for the Company to not reassess whether existing contracts contain a lease under the new definition of a lease, lease classification for existing leases and whether previously capitalized initial direct costs would qualify for capitalization under the new guidance. The adoption of this guidance had a material impact on the Consolidated Balance Sheet as of December 31, 2019 due to the recognition of equal right-of-use assets and lease liabilities for the Company's portfolio of operating leases. The right-of-use asset balance was then adjusted by the reclassification of pre-existing accrued rent balances from other line items within the Consolidated Balance Sheet. The adoption had an immaterial impact to the Consolidated Statement of Cash Flows and to the Consolidated Statement of Operations for the year ended December 31, 2019. The adoption had no impact to the Consolidated Statement of Changes in Stockholders' Equity for the year ended December 31, 2019. Additional information and disclosures required by the new standard are contained in Note 7, Lease Commitments. |
Going Concern _ Liquidity
Going Concern / Liquidity | 12 Months Ended |
Dec. 31, 2019 | |
Going Concern Liquidity | |
Going Concern / Liquidity | (3) Going Concern / Liquidity We believe that cash from operations and cash on hand, in addition to unused borrowing capacity, may not be adequate to fund our operating plans through 2020. We are working to reduce these risks, but some of this is dependent on several things over which we have limited control. Our largest customer made up 63% of our 2019 revenue, and expects a reduction in orders from us in 2020, which has limited our flexibility and required us to make cash management a top priority. We have seen an increase in sales of 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, the operations of the Company might need to be curtailed to a certain degree, and 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, 2019 | |
Debt Disclosure [Abstract] | |
Note 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 2019 or 2018, we have recorded no related liability on our balance sheet. We maintained a Line of Credit Agreement with Libertyville Bank and Trust Company, a Wintrust Community Bank (“Libertyville”), our primary bank during 2018 which had a maturity date of March 4, 2019. There were no borrowings on this line at December 31, 2018. On March 22, 2019, we executed a New Business Loan Agreement with Libertyville, which replaced the maturing Line of Credit Agreement with Libertyville. 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 63% of the outstanding shares of our common stock as of March 25, 2020. 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. On March 23, 2020, the Company and Beachcorp, LLC executed the First Amendment to our Master Agreement that extends the maturities of both the Term Loan and the Revolver Facility to March 31, 2021. 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 November 20, 2019, we entered into a 2% Secured Convertible Promissory Note with Bradford T. Whitmore in the principal amount of $2,000,000 (the “Convertible Note”). The principal amount is payable in a single payment on May 15, 2024 (the “Maturity Date”). The principal amount of the Convertible Note accrues interest at the rate of 2.0% per year, which interest is payable semi-annually on the 15th day of May and November, commencing on May 15, 2020. The principal amount and, at the holder’s option, accrued interest under the Convertible Note is convertible at the holder’s option into additional shares of the Company’s common stock in whole or in part and from time to time up to the Maturity Date at a conversion price of $0.20 per share. The convertible note contains a beneficial conversion feature since the Company’s stock was trading at $0.32 per share on the date the Company entered into the agreement. The intrinsic value of the beneficial conversion feature was $1.2 million on November 20, 2019 and is recorded as a discount on the convertible note. The discount will be accreted to the convertible note over the life of the note using the straight-line method. The balance on the convertible note was $830, net of a discount of $1,170 at December 31, 2019. On December 31, 2019, the balance on the term loan was $500, the balance on the Revolver Facility was $224, and the balance on the Convertible Note was $2,000. In 2019 there was $116 in interest expense relating to these credit facilities held by Beachcorp, LLC and Bradford T. Whitmore. The accrued interest expense balance on these related party credit facilities amounted to $4, and $7, at December 31, 2019 and December 31, 2018, respectively. The obligations under the Convertible Note are secured by a security interest in all of the Company’s personal property pursuant to a Commercial Security Agreement among Mr. Whitmore, the Company and Solésence, LLC, the Company’s sole subsidiary. Given that Beachcorp, LLC is an affiliate of Mr. Whitmore, this amounts to all of this interest being owed to a related party. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | (5) Inventories Inventories consist of the following: As of December 31, 2019 2018 Raw materials $ 1,425 $ 1,086 Finished goods 1,170 1,243 2,595 2,329 Allowance for excess quantities (41 ) (87 ) $ 2,554 $ 2,242 |
Equipment and Leasehold Improve
Equipment and Leasehold Improvements | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019 2018 Machinery and equipment $ 16,126 $ 15,513 Office equipment 855 840 Office furniture 110 110 Leasehold improvements 4,839 4,839 Construction in progress 163 97 22,093 21,399 Less: Accumulated depreciation and amortization (19,838 ) (19,534 ) $ 2,255 $ 1,865 Depreciation expense was $305 and $305, for the years ended December 31, 2018 and 2019, respectively. |
Lease Commitments
Lease Commitments | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | (7) Lease Commitments The Company's operating lease portfolio is comprised of operating leases for office, warehouse space and equipment. Certain of the Company's leases include one or more options to renew or terminate the lease at the Company's discretion. The Company regularly evaluates the renewal and termination options and when they are reasonably certain of exercise, includes the renewal or termination option in our lease term. The adoption of Topic 842 resulted in the Company recognizing operating lease liabilities totaling $2,556 with a corresponding right-of-use (“ROU”) asset of $2,212 based on the present value of the minimum rental payments of such leases. The variance between the ROU asset balance and the lease liability is deferred rent liability that existed prior to the adoption of the ASC 842 and was offset against the ROU asset balance during the adoption. As of December 31, 2019, the ROU asset had a balance of $2,119 which is included in the “Operating lease right-of-use assets” line item of these consolidated financial statements and current and non-current lease liabilities related to the ROU asset of $357 and $2,035, respectively, and are included in the “Current portion of operating lease obligations” and “Long-term portion of operating lease obligations” line items of these consolidated financial statements. The discount rates used for leases accounted for under ASC 842 are based on an interest rate yield curve developed for the leases in the Company’s portfolio. The office leases contain variable lease payments which consist primarily of rent escalations based on an established index or rate and taxes, insurance, and common area or other maintenance costs, which are paid based on actual costs incurred by the lessor. The Company has elected to utilize the available practical expedient to not separate lease and non-lease components. Quantitative information regarding the Company’s leases is as follows: Twelve Months Ended December 31, 2019 Components of lease cost Finance lease cost components: Amortization of finance lease assets $ 69 Interest on finance lease liabilities 56 Total finance lease costs 125 Operating lease cost components: Operating lease cost 515 Variable lease cost 108 Short-term lease cost 68 Total operating lease costs 691 Total financing and operating lease cost components: $ 816 Supplemental cash flow information related to leases is as follows for the year ended December 31, 2019: 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 694 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 205 Weighted-average remaining lease term-finance leases (in years) 1.9 Weighted-average remaining lease term-operating leases (in years) 3.0 Weighted-average discount rate-finance leases 9.1 % Weighted-average discount rate-operating leases 14.5 % The future maturities of the Company’s finance and operating leases as of December 31, 2019 are as follows: Finance Leases Operating Leases Total 2020 $ 255 $ 676 $ 931 2021 196 687 883 2022 109 705 814 2023 5 690 695 2024 — 580 580 Thereafter — — — Total payments $ 565 $ 3,338 $ 3,903 Less amounts representing interest (59 ) (946 ) (1,005 ) Total minimum payments required: $ 506 $ 2,392 $ 2,898 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 as of December 31, 2018: 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
Accrued Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | (8) Accrued Expenses Accrued expenses consist of the following: As of December 31, 2019 2018 Accrued payroll and related expenses $ 237 $ 200 Customer net volume rebate payable — 540 Other 143 231 $ 380 $ 971 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
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 zero. 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, 2019 and 2018 is as follows: 2019 2018 Income tax credit at statutory rates $ (631 ) $ (437 ) Nondeductible expenses 3 4 State income tax, net of federal benefits (226 ) (156 ) Expiration of NOL & Credits 1,530 1,559 Tax basis in excess of book Convertible Debt 342 0 Expiration of Stock Options 125 179 Other 0 0 Change in valuation allowance (1,143 ) (1,149 ) $ — $ — 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, 2019 2018 Deferred tax liabilities: Excess tax basis convertible debt $ (334 ) $ — Total deferred tax liabilities (334 ) — Deferred tax assets: Net operating loss carryforwards $ 21,912 $ 22,560 Inventory and other allowances 14 35 Charitable contribution carryforwards 1 2 Excess (tax) book depreciation 451 524 Excess (tax) book amortization 59 57 Share-based compensation 693 749 Other accrued costs 127 141 Total deferred tax assets 23,257 24,068 Less: Valuation allowance (22,923 ) (24,068 ) Deferred income taxes $ — $ — The valuation allowance decreased approximately $1.1 million and $1.1 million for the years ended December 31, 2019 and 2018, respectively (net of approximately $1.5 million and $1.6 million for the years ended December 31, 2019 and 2018, respectively, for expiring net operating loss carryforwards and credits) due principally to the change in the net operating loss carryforward and uncertainty as to whether future taxable income will be generated prior to the expiration of the carryforward period. Management believes that significant uncertainty exists surrounding the recoverability of deferred tax assets due to our recurring losses. As a result, the Company has recorded a full valuation allowance against our net deferred tax assets. 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, 2019, the amounts subject to limitations have not yet been determined. We have net operating loss carryforwards for tax purposes of approximately $77 million on December 31, 2019. $72 million expire between 2020 and 2037. All net operating loss carryforwards generated after January 1, 2018 do not expire. Therefore, $5 million in net operating losses generated since January 1, 2018 do not expire. |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Capital Stock | (10) Capital Stock As of December 31, 2019, and 2018, we had 24,088 authorized but unissued shares of preferred stock. In addition, as of December 31, 2019, we had 10,000,000 authorized but unissued shares of common stock reserved to meet the conversion requirement of the Convertible Note discussed in Note 4. |
Stock Options and Stock Grants
Stock Options and Stock Grants | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [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 granted prior to the adoption of the 2019 Equity Compensation Plan (the “2019 Plan”) on November 19, 2020 generally expire ten years from the date of grant. Future options to be granted under the 2019 Plan will expire seven years from the date of grant. Employee Stock Options We follow ASC Topic 718, Share-Based Payments As of December 31, 2019, there was approximately $352 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 1.9 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, 2019 2018 Weighted-average risk-free interest rates: 2.3 % 2.9 % Dividend yield: 0.00 % 0.00 % Weighted-average expected life of the option: 6 years 6 years Weighted-average expected stock price volatility: 94 % 94 % Weighted-average fair value of the options granted: $ 0.41 $ 0.64 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 2019 and 2018 grants is based on the daily market rate changes of our stock going back to January 1, 2012. The shares granted in fiscal 2019 and 2018 had a vesting period of three years and a contractual life of 10 years. Forfeitures were estimated at 2% for the years ended December 31, 2019 and 2018, 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, 2019: Weighted Weighted Average Average Remaining Exercise Price Contractual Aggregate Shares per Term Intrinsic Options (Rounded) Share (Years) Value (000s) Outstanding on January 1, 2019 3,415,000 $ 0.67 Granted 563,000 $ 0.51 Exercised (36,000 ) $ 0.44 Forfeited or expired (262,000 ) $ 0.81 Outstanding on December 31, 2019 3,680,000 $ 0.64 5.5 $ — Exercisable on December 31, 2019 2,690,000 $ 0.64 4.4 $ — Shares available for grant 3,000,000 The aggregate intrinsic value in the table above is based on our closing stock price of $0.28 on the last business day for the year ended December 31, 2019. During the years ended December 31, 2019 and 2018, the total intrinsic value of our stock options exercised was $2 and $25, respectively. Cash received for option exercises was $14 and $29 during the years ended December 31, 2019 and 2018, respectively. We had approximately 36,000 options exercised during the year ended December 31, 2019, compared to 64,000 in 2018. 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, 2019 and 2018. |
401(k) Profit-Sharing Plan
401(k) Profit-Sharing Plan | 12 Months Ended |
Dec. 31, 2019 | |
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 2019 and 2018 aggregated to $24 and $21, respectively. |
Significant Customers and Conti
Significant Customers and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Significant Customers and Contingencies | (13) Significant Customers and Contingencies Revenue from two customers constituted approximately accounted for 63%, and 8%, respectively, of our 2019 revenue. Amounts included in accounts receivable on December 31, 2019 relating to these two customers were approximately $449 and $16, respectively. Revenue from these two customers constituted approximately 74% and 7%, respectively, of our 2018 revenue. Amounts included in accounts receivable on December 31, 2018 relating to these two customers were approximately $316 and $74, 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. The Company met its safety stock requirements at December 31, 2019. 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 cash from operations and cash on hand, in addition to unused borrowing capacity, may not be adequate to fund our operating plans through 2020. If a triggering event were to occur and BASF elected to proceed with the license and related equipment sale mentioned above, we would receive royalty payments from this customer for products sold using our technology; however, we would lose both significant revenue and the ability to generate significant revenue to replace that which was lost in the near term. Replacement of necessary equipment that could be purchased and removed by the customer pursuant to this triggering event could take in excess of twelve months. Any additional capital outlays required to rebuild capacity would probably be greater than the proceeds from the purchase of the assets as dictated by our agreement with the customer. Similar consequences would occur if we were determined to have materially breached certain other provisions of the supply agreement with BASF. Any such event would also likely result in the loss of many of our key staff and line employees due to economic realities. We believe that our employees are a critical component of our success and it could be difficult to replace them quickly. Given the occurrence of any such event, we might not be able to hire and retain skilled employees given the stigma relating to such an event and its impact on us. Finally, any shortfall in capital needed to operate the business as management intends, including with respect to avoiding this triggering event as described above, may result in a curtailment of certain activities or anticipated investments. 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, 2019 | |
Segment Reporting [Abstract] | |
Business Segmentation and Geographical Distribution | (14) Business Segmentation and Geographical Distribution Revenue from international sources approximated $1,200 and $600 for the years ended December 31, 2019 and 2018, respectively. As part of our revenue from international sources, we recognized approximately $1,100 and $534 in product revenue from a number of German companies, in the aggregate, for the years ended December 31, 2019 and 2018, 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 2019 2018 Personal Care Ingredients $ 7,919 $ 10,573 Advanced Materials 2,733 2,253 Solésence ® 1,857 1,367 Total Sales $ 12,509 $ 14,193 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | (15) Subsequent Events On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (SARS-CoV-2) to be a global pandemic (COVID-19), which continues to spread throughout the United States and around the world. On March 20, 2020, the Governor of the State of Illinois ordered that all non-essential businesses cease all activities within the State of Illinois except for certain minimum basic operations until April 7, 2020. During this disruption, we are doing everything we can to allow as many of our employees as possible to shelter-in-place. Relative to the executive order in Illinois, management believes that Nanophase Technologies and its Solésence subsidiary qualify as essential businesses as defined, due to our product offerings supporting healthcare, and critical manufacturing and chemical products within sectors that have been designated as critical infrastructure, the continued operation of which is vital for national public health, economic security, and safety. The Company believes that its customers and suppliers may have similar disruptions, which may lead to greater reductions in their normal operations as a result of responses to the coronavirus pandemic in Illinois and in other jurisdictions in the United States and worldwide. As of March 25, 2020, the Company is consequently aware of changes in its business as a result of the coronavirus pandemic, but uncertain of the impacts of those changes on its consolidated statements of position, operations or cash flows. The Company’s management believes the resulting cessations, reductions, and disruptions in its customers’ and suppliers’ operations could be temporary; however, the Company’s management also believes the duration and, hence, the potential impact of such cessations, reductions, and disruptions is currently unknowable. As a result, we are unable to estimate the potential impact on our business as of the date of this filing. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
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 13. 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, 2019 consists of funds borrowed from our Convertible Promissory Note, held by Bradford T. Whitmore, and 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, 2019 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 |
Deferred Revenue | Deferred Revenue The Company records deferred revenue for development projects due to the contractual billing of these projects not always aligning with revenue recognition. In addition, it is now the Company’s policy to require deposits relating to the production of our Solésence products. |
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: 2019 2018 Balance, beginning $ 198 $ 184 Accretion of liability due to passage of time 8 14 Amortization of asset due to passage of time — — Balance, ending $ 206 $ 198 |
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 4, any borrowings on the working capital line of credit from Libertyville Bank and Trust, and any borrowings on the working capital line of credit, along with the term loan from Beachcorp, LLC, and the promissory note payable associated with the convertible loan described in Note 4. 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, 2019 and 2018. |
Product 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 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 $211,000 one-time buy out of bulk material by a Solesence customer and a $289,000 one-time contractual capacity adjustment fee from our largest customer in 2019. We recognized a one-time technology development fee of $20,000 in 2018 relating to our agreement with Colorescience. On July 31, 2019, we entered into a Joint Development Agreement, with an initial term of ten years, with Sumitomo Corporation of Americas (“SCOA”) to jointly develop certain coated materials for the use in the personal care market. In return for the Company’s exclusive efforts on SCOA’s behalf, SCOA has paid a commitment fee of $250 and will pay two subsequent payments, of $125 each, for the development of products. The two subsequent payments are contingent upon the achievement of certain performance obligations as defined in the agreement. We began recognizing revenue recognizing revenue from the commitment fee in November 2019 and will continue to do so as we fulfill our contractual performance obligations. The Company is recognizing revenue over time using an input method. 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 2018 financial statements have been reclassified to conform to 2019 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, 2019, and 2018, we had no liability for unrecognized tax benefits. |
Earnings Per Share | Earnings Per Share Options to purchase approximately 243,000 shares of common stock that were outstanding as of December 31, 2019 were not included in the computation of earnings per share for the year ended December 31, 2019, as the impact of such shares are anti-dilutive. 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. |
New Accounting Pronouncements | New Accounting Pronouncements On January 1, 2019, the Company adopted Accounting Standards Update ("ASU") No. 2016-02, Leases, ASU No. 2018-10, Codification Improvements to Topic 842 (Leases) and ASU No. 2018-11, Targeted Improvements to Topic 842 (Leases). The guidance is intended to increase transparency and comparability among companies for leasing transactions, including a requirement for companies that lease assets to recognize on their balance sheets the assets and liabilities for the rights and obligations created by those leases. The guidance also provides for disclosures that allow the users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted the guidance on January 1, 2019 using the modified retrospective method without restatement of comparative periods. As such, periods prior to the date of adoption are presented in accordance with ASC 840 - Leases. The Company utilized the available practical expedient that allowed for the Company to not reassess whether existing contracts contain a lease under the new definition of a lease, lease classification for existing leases and whether previously capitalized initial direct costs would qualify for capitalization under the new guidance. The adoption of this guidance had a material impact on the Consolidated Balance Sheet as of December 31, 2019 due to the recognition of equal right-of-use assets and lease liabilities for the Company's portfolio of operating leases. The right-of-use asset balance was then adjusted by the reclassification of pre-existing accrued rent balances from other line items within the Consolidated Balance Sheet. The adoption had an immaterial impact to the Consolidated Statement of Cash Flows and to the Consolidated Statement of Operations for the year ended December 31, 2019. The adoption had no impact to the Consolidated Statement of Changes in Stockholders' Equity for the year ended December 31, 2019. Additional information and disclosures required by the new standard are contained in Note 7, Lease Commitments. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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: 2019 2018 Balance, beginning $ 198 $ 184 Accretion of liability due to passage of time 8 14 Amortization of asset due to passage of time — — Balance, ending $ 206 $ 198 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following: As of December 31, 2019 2018 Raw materials $ 1,425 $ 1,086 Finished goods 1,170 1,243 2,595 2,329 Allowance for excess quantities (41 ) (87 ) $ 2,554 $ 2,242 |
Equipment and Leasehold Impro_2
Equipment and Leasehold Improvements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019 2018 Machinery and equipment $ 16,126 $ 15,513 Office equipment 855 840 Office furniture 110 110 Leasehold improvements 4,839 4,839 Construction in progress 163 97 22,093 21,399 Less: Accumulated depreciation and amortization (19,838 ) (19,534 ) $ 2,255 $ 1,865 |
Lease Commitments (Tables)
Lease Commitments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Summary of quantitative information about leases | Quantitative information regarding the Company’s leases is as follows: Twelve Months Ended December 31, 2019 Components of lease cost Finance lease cost components: Amortization of finance lease assets $ 69 Interest on finance lease liabilities 56 Total finance lease costs 125 Operating lease cost components: Operating lease cost 515 Variable lease cost 108 Short-term lease cost 68 Total operating lease costs 691 Total financing and operating lease cost components: $ 816 |
Summary of supplemental cash flow information related to leases | Supplemental cash flow information related to leases is as follows for the year ended December 31, 2019: 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 694 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 205 Weighted-average remaining lease term-finance leases (in years) 1.9 Weighted-average remaining lease term-operating leases (in years) 3.0 Weighted-average discount rate-finance leases 9.1 % Weighted-average discount rate-operating leases 14.5 % |
Schedule of future maturities of finance and operating leases | The future maturities of the Company’s finance and operating leases as of December 31, 2019 are as follows: Finance Leases Operating Leases Total 2020 $ 255 $ 676 $ 931 2021 196 687 883 2022 109 705 814 2023 5 690 695 2024 — 580 580 Thereafter — — — Total payments $ 565 $ 3,338 $ 3,903 Less amounts representing interest (59 ) (946 ) (1,005 ) Total minimum payments required: $ 506 $ 2,392 $ 2,898 |
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 as of December 31, 2018: 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, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consist of the following: As of December 31, 2019 2018 Accrued payroll and related expenses $ 237 $ 200 Customer net volume rebate payable — 540 Other 143 231 $ 380 $ 971 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019 and 2018 is as follows: 2019 2018 Income tax credit at statutory rates $ (631 ) $ (437 ) Nondeductible expenses 3 4 State income tax, net of federal benefits (226 ) (156 ) Expiration of NOL & Credits 1,530 1,559 Tax basis in excess of book Convertible Debt 342 0 Expiration of Stock Options 125 179 Other 0 0 Change in valuation allowance (1,143 ) (1,149 ) $ — $ — |
Schedule of significant components of deferred income taxes | Significant components of our deferred income taxes consist of the following: As of December 31, 2019 2018 Deferred tax liabilities: Excess tax basis convertible debt $ (334 ) $ — Total deferred tax liabilities (334 ) — Deferred tax assets: Net operating loss carryforwards $ 21,912 $ 22,560 Inventory and other allowances 14 35 Charitable contribution carryforwards 1 2 Excess (tax) book depreciation 451 524 Excess (tax) book amortization 59 57 Share-based compensation 693 749 Other accrued costs 127 141 Total deferred tax assets 23,257 24,068 Less: Valuation allowance (22,923 ) (24,068 ) Deferred income taxes $ — $ — |
Stock Options and Stock Grants
Stock Options and Stock Grants (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [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, 2019 2018 Weighted-average risk-free interest rates: 2.3 % 2.9 % Dividend yield: 0.00 % 0.00 % Weighted-average expected life of the option: 6 years 6 years Weighted-average expected stock price volatility: 94 % 94 % Weighted-average fair value of the options granted: $ 0.41 $ 0.64 |
Schedule of option activity | The following table summarizes the option activity for our employees and directors during the year ended December 31, 2019: Weighted Weighted Average Average Remaining Exercise Price Contractual Aggregate Shares per Term Intrinsic Options (Rounded) Share (Years) Value (000s) Outstanding on January 1, 2019 3,415,000 $ 0.67 Granted 563,000 $ 0.51 Exercised (36,000 ) $ 0.44 Forfeited or expired (262,000 ) $ 0.81 Outstanding on December 31, 2019 3,680,000 $ 0.64 5.5 $ — Exercisable on December 31, 2019 2,690,000 $ 0.64 4.4 $ — Shares available for grant 3,000,000 |
Business Segmentation and Geo_2
Business Segmentation and Geographical Distribution (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segments, Geographical Areas [Abstract] | |
Schedule of business segmentation and geographical distribution | The revenues for 2019 and 2018 by category are as follows: Product Category 2019 2018 Personal Care Ingredients $ 7,919 $ 10,573 Advanced Materials 2,733 2,253 Solésence ® 1,857 1,367 Total Sales $ 12,509 $ 14,193 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Balance, beginning | $ 198 | $ 184 |
Accretion of liability due to passage of time | 8 | 14 |
Balance, ending | $ 206 | $ 198 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jul. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Line Items] | |||
Threshold percentage | 50.00% | ||
Anti-dilutive securities excluded from computation of earnings per share | 243,000 | 839,000 | |
Commitment fee | $ 250 | ||
Technology Development Fee [Member] | |||
Accounting Policies [Line Items] | |||
Technology development fee | $ 211 | $ 20 | |
Technology Development Fee [Member] | |||
Accounting Policies [Line Items] | |||
Technology development fee | $ 289 | ||
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 (Deta
Going Concern / Liquidity (Details Narrative) | 12 Months Ended |
Dec. 31, 2019 | |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | |
Concentration risk, percentage | 63.00% |
Note and Lines of Credit (Detai
Note and Lines of Credit (Detail Narratives) $ / shares in Units, $ in Thousands | Mar. 23, 2020 | Nov. 20, 2019USD ($)$ / shares | Mar. 22, 2019USD ($)Number | Nov. 16, 2018USD ($) | Jul. 31, 2014USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Interest expense | $ 210 | $ 58 | |||||
2% Secured Convertible Promissory Note Due on May 15, 2024 [Member] | |||||||
Balance as of convertible note | 2 | ||||||
2% Secured Convertible Promissory Note Due on May 15, 2024 [Member] | Bradford T. Whitmore [Member] | |||||||
Fixed annual interest rate | 2.00% | ||||||
Principal amount | $ 2,000 | ||||||
Interest rate terms | The principal amount of the Convertible Note accrues interest at the rate of 2.0% per year, which interest is payable semi-annually on the 15th day of May and November, commencing on May 15, 2020. | ||||||
Debt conversion price (in dollars per share) | $ / shares | $ 0.20 | ||||||
Share price (in dollars per share) | $ / shares | $ 0.32 | ||||||
Discount on the convertible note | $ 1,200 | 1,170 | |||||
Balance as of convertible note | 830 | ||||||
Asset-Based Revolving Loan Facility [Member] | |||||||
Letter of credit and related promissory note | 224 | ||||||
Business Loan Agreement [Member] | Beachcorp, LLC [Member] | |||||||
Maximum borrowing capacity | $ 500 | ||||||
Fixed annual interest rate | 8.25% | ||||||
Maturity date | Dec. 31, 2020 | ||||||
Ownership percentage | 63.00% | ||||||
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. | ||||||
Business Loan Agreement [Member] | Asset-Based Revolving Loan Facility [Member] | Beachcorp, LLC [Member] | |||||||
Basis spread variable interest rate | 3.00% | ||||||
Variable interest rate basis | Prime rate | ||||||
Maximum borrowing capacity | $ 2 | ||||||
Facility, expiration date | Mar. 31, 2020 | ||||||
First Amendment Too Our Master Agreement [Member] | Term Loan and The Revolver Facility [Member] | Beachcorp, LLC [Member] | Subsequent Event [Member] | Extended Maturity [Member] | |||||||
Maturity date | Mar. 31, 2021 | ||||||
Line of Credit [Member] | New Business Loan Agreement [Member] | |||||||
Basis spread variable interest rate | 1.00% | ||||||
Variable interest rate basis | Prime rate | ||||||
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 [Member] | Business Loan Agreement [Member] | Libertyville [Member] | |||||||
Facility, expiration date | Mar. 4, 2019 | ||||||
Letter of Credit [Member] | |||||||
Letter of credit and related promissory note | $ 30 | 500 | |||||
Basis spread variable interest rate | 1.00% | ||||||
Variable interest rate basis | Prime rate | ||||||
Credit Facility [Member] | |||||||
Interest expense | 116 | ||||||
Accrued interest expense on related party | $ 4 | $ 7 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,425 | $ 1,086 |
Finished goods | 1,170 | 1,243 |
Inventory gross, Total | 2,595 | 2,329 |
Allowance for excess quantities | (41) | (87) |
Inventories, net | $ 2,554 | $ 2,242 |
Equipment and Leasehold Impro_3
Equipment and Leasehold Improvements (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 22,093 | $ 21,399 |
Less: Accumulated depreciation and amortization | (19,838) | (19,534) |
Property, Plant and Equipment, Net, Total | 2,255 | 1,865 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 16,126 | 15,513 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 855 | 840 |
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 | $ 163 | $ 97 |
Equipment and Leasehold Impro_4
Equipment and Leasehold Improvements (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 305 | $ 305 |
Lease Commitments (Details)
Lease Commitments (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Finance lease cost components: | |
Amortization of finance lease assets | $ 69 |
Interest on finance lease liabilities | 56 |
Total finance lease costs | 125 |
Operating lease cost components: | |
Operating lease cost | 515 |
Variable lease cost | 108 |
Short-term lease cost | 68 |
Total operating lease costs | 691 |
Total financing and operating lease cost components: | $ 816 |
Lease Commitments (Details 1)
Lease Commitments (Details 1) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash outflow from operating leases | $ 694 |
Right-of-use assets obtained in exchange for lease obligations: | |
Operating leases | $ 205 |
Weighted-average remaining lease term-finance leases (in years) | 1 year 10 months 25 days |
Weighted-average remaining lease term-operating leases (in years) | 3 years |
Weighted-average discount rate-finance leases | 9.10% |
Weighted-average discount rate-operating leases | 14.00% |
Lease Commitments (Details 2)
Lease Commitments (Details 2) $ in Thousands | Dec. 31, 2019USD ($) |
Finance Leases: | |
2020 | $ 255 |
2021 | 196 |
2022 | 109 |
2023 | 5 |
Total payments | 565 |
Less amounts representing interest | (59) |
Total minimum payments required: | 506 |
Operating Leases: | |
2020 | 676 |
2021 | 687 |
2022 | 705 |
2023 | 690 |
2024 | 580 |
Total payments | 3,338 |
Less amounts representing interest | (946) |
Total minimum payments required: | 2,392 |
Total: | |
2020 | 931 |
2021 | 883 |
2022 | 814 |
2023 | 695 |
2024 | 580 |
Total payments | 3,903 |
Less amounts representing interest | (1,005) |
Total minimum payments required: | $ 2,898 |
Lease Commitments (Details 3)
Lease Commitments (Details 3) $ in Thousands | Dec. 31, 2019USD ($) |
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) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 02, 2019 |
Operating Leased Assets [Line Items] | ||
Operating lease right-of-use assets | $ 2,119 | |
Current portion of operating lease obligations | 357 | |
Long-term portion of operating lease obligations | 2,035 | |
Operating lease liability | $ 2,392 | |
Topic 842 [Member] | ||
Operating Leased Assets [Line Items] | ||
Operating lease right-of-use assets | $ 2,212 | |
Operating lease liability | $ 2,556 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accrued payroll and related expenses | $ 237 | $ 200 |
Customer net volume rebate payable | 540 | |
Other | 143 | 231 |
Total | $ 380 | $ 971 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax credit at statutory rates | $ (631) | $ (437) |
Nondeductible expenses | 3 | 4 |
State income tax, net of federal benefits | (226) | (156) |
Expiration of NOL & Credits | 1,530 | 1,559 |
Tax basis in excess of book Convertible Debt | 342 | 0 |
Expiration of Stock Options | 125 | 179 |
Other | 0 | 0 |
Change in valuation allowance | (1,143) | $ (1,149) |
Total |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax liabilities: | ||
Excess tax basis convertible debt | $ (334) | |
Total deferred tax liabilities | (334) | |
Deferred tax assets: | ||
Net operating loss carryforwards | 21,912 | $ 22,560 |
Inventory and other allowances | 14 | 35 |
Charitable contribution carryforwards | 1 | 2 |
Excess (tax) book depreciation | 451 | 524 |
Excess (tax) book amortization | 59 | 57 |
Share-based compensation | 693 | 749 |
Other accrued costs | 127 | 141 |
Total deferred tax assets | 23,257 | 24,068 |
Less: Valuation allowance | (22,923) | (24,068) |
Deferred income taxes | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Increase (decrease) in valuation allowance | $ (1,100) | $ (1,100) |
Net operating loss carryforwards | $ 77,000 | 72,000 |
Capital loss carryforwards expiration period start | 2020 | |
Capital loss carryforwards expiration period end | 2037 | |
Expiring Operating Loss Carryforwards [Axis] | ||
Increase (decrease) in valuation allowance | $ 1,500 | 1,600 |
Tax Year 2018 [Member] | ||
Net operating loss carryforwards | $ 5,000 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - shares | Dec. 31, 2019 | Dec. 31, 2018 |
Preferred stock, shares authorized | 24,088 | 24,088 |
2010 Equity Compensation Plan [Member] | ||
Authorized, unissued shares of common stock | 10,000,000 |
Stock Options and Stock Grant_2
Stock Options and Stock Grants (Details) - Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Weighted-average risk-free interest rates: | 2.30% | 2.90% |
Dividend yield: | 0.00% | 0.00% |
Weighted-average expected life of the option: | 6 years | 6 years |
Weighted-average expected stock price volatility | 94.00% | 94.00% |
Weighted-average fair value of the options granted: | $ 0.41 | $ 0.64 |
Stock Options and Stock Grant_3
Stock Options and Stock Grants (Details 1) - Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock Options: | ||
Stock options outstanding, beginning | 3,415,000 | |
Granted | 563,000 | |
Exercises | (36,000) | (64,000) |
Forfeited or expired | (262,000) | |
Stock options outstanding, ending | 3,680,000 | 3,415,000 |
Exercisable, ending | 2,690,000 | |
Shares available for grant, ending | 3,000,000 | |
Weighted Average Exercise Price | ||
Beginning Balance | $ 0.67 | |
Granted | 0.51 | |
Exercised | 0.44 | |
Forfeited or expired | 0.81 | |
Ending Balance | 0.64 | $ 0.67 |
Exercisable | $ 0.64 | |
Weighted Average Remaining Contractual Term, Outstanding, end | 5 years 6 months | |
Weighted Average Remaining Contractual Term Years, Exercisable, end | 4 years 4 months 24 days |
Stock Options and Stock Grant_4
Stock Options and Stock Grants (Detail Narratives) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Proceeds from exercise of stock options | $ 14 | $ 29 |
Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 242 | 204 |
Total unrecognized compensation cost related to nonvested share-based compensation arrangements granted | $ 352 | |
Weighted-average period over which unrecognized compensation is expected to be recognized | 1 year 10 months 24 days | |
Vesting period of stock options | 3 years | |
Forfeitures rates | 2.00% | |
Share Price | $ 0.28 | |
Total intrinsic value | $ 2 | 25 |
Proceeds from exercise of stock options | $ 14 | $ 29 |
Common stock issued pursuant to option exercises (shares) | 36,000 | 64,000 |
Option expiration period | 10 years | |
2019 Equity Compensation Plan(The "2019 Plan") [Member] | Future Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Option expiration period | 7 years |
401(k) Profit-Sharing Plan (Det
401(k) Profit-Sharing Plan (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | ||
Contributions under profit sharing plan | $ 24 | $ 21 |
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) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | Mar. 31, 2019 | |
Accounts receivable | $ 970 | $ 829 | ||
Finished goods inventory | $ 1,170 | 1,243 | ||
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] | ||||
Cash, cash equivalents and investments trigger under supply agreeement | $ 1,000 | |||
Accelerated debt maturity - principal amount debt | $ 10,000 | |||
Finished goods inventory | $ 500 | |||
BASF [Member] | Less than [Member] | ||||
Cash, cash equivalents and investments trigger under supply agreeement | 500 | |||
Customers One [Member] | ||||
Accounts receivable | 449 | 316 | ||
Customers Two [Member] | ||||
Accounts receivable | $ 16 | $ 74 | ||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||
Revenue from customers | 63.00% | |||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customers One [Member] | ||||
Revenue from customers | 63.00% | 74.00% | ||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customers Two [Member] | ||||
Revenue from customers | 8.00% | 7.00% |
Business Segmentation and Geo_3
Business Segmentation and Geographical Distribution (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Sales | $ 12,509 | $ 14,193 |
Personal Care Ingredients [Member] | ||
Sales | 7,919 | 10,573 |
Advanced Materials [Member] | ||
Sales | 2,733 | 2,253 |
Solesence [Member] | ||
Sales | $ 1,857 | $ 1,367 |
Business Segmentation and Geo_4
Business Segmentation and Geographical Distribution (Detail Narratives) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)Number | Dec. 31, 2018USD ($) | |
Number of business segments | Number | 1 | |
Germany [Member] | ||
Revenue from international sources | $ 1,100 | $ 534 |
International Sources [Member] | ||
Revenue from international sources | $ 1,200 | $ 600 |