Cover
Cover - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 26, 2021 | Jun. 30, 2020 | |
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, 2020 | ||
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 | $ 6,570,611 | ||
Entity Common Stock, Shares Outstanding | 38,221,292 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 957 | $ 1,194 |
Trade accounts receivable, less allowance for doubtful accounts of $9 for both December 31, 2020 and 2019 | 2,932 | 970 |
Inventories, net | 4,340 | 2,554 |
Prepaid expenses and other current assets | 606 | 267 |
Total current assets | 8,835 | 4,985 |
Equipment and leasehold improvements, net | 2,868 | 2,255 |
Operating leases, right of use | 1,827 | 2,119 |
Other assets, net | 10 | 13 |
Total assets | 13,540 | 9,372 |
Current liabilities: | ||
Line of credit, bank | 500 | 500 |
Line of credit, related party | 2,155 | 224 |
Current portion of long-term debt, related party | 500 | 500 |
Current portion of finance lease obligations | 177 | 218 |
Current portion of operating lease obligations | 431 | 357 |
Accounts payable | 2,126 | 1,748 |
Current portion of deferred revenue | 411 | 482 |
Accrued expenses | 484 | 380 |
Total current liabilities | 6,784 | 4,409 |
Long-term portion of finance lease obligations | 110 | 288 |
Long-term portion of operating lease obligations | 1,651 | 2,035 |
Long-term convertible loan, related party | 1,097 | 830 |
PPP Loan (SBA) | 952 | |
Long-term portion of deferred revenue | 93 | |
Asset retirement obligations | 214 | 206 |
Total long-term liabilities | 4,024 | 3,452 |
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; 38,221,292 and 38,136,792 shares issued and outstanding on December 31, 2020 and December 31, 2019, respectively | 382 | 381 |
Additional paid-in capital | 102,117 | 101,886 |
Accumulated deficit | (99,767) | (100,756) |
Total stockholders' equity | 2,732 | 1,511 |
Total liabilities and stockholders' equity | $ 13,540 | $ 9,372 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
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 | 38,221,292 | 38,136,792 |
Common stock, outstanding | 38,221,292 | 38,136,792 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue: | ||
Total revenue | $ 17,123 | $ 12,509 |
Operating expense: | ||
Cost of revenue | 11,133 | 9,893 |
Gross profit | 5,990 | 2,616 |
Research and development expense | 1,571 | 1,870 |
Selling, general and administrative expense | 2,934 | 3,542 |
Income (loss) from operations | 1,485 | (2,796) |
Interest expense | (496) | (210) |
Income (loss) before provision for income taxes | 989 | (3,006) |
Provision for income taxes | ||
Net income (loss) | $ 989 | $ (3,006) |
Net income (loss) per share-basic (in dollars per share) | $ 0.03 | $ (0.08) |
Weighted average number of basic common shares outstanding (in shares) | 38,158,586 | 36,596,372 |
Net income (loss) per share-diluted (in dollars per share) | $ 0.03 | $ (0.08) |
Weighted average number of diluted common shares outstanding (in shares) | 38,545,586 | 36,596,372 |
Product Revenue [Member] | ||
Revenue: | ||
Total revenue | $ 16,422 | $ 11,852 |
Other Revenue [Member] | ||
Revenue: | ||
Total revenue | $ 701 | $ 657 |
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, 2018 | $ 339 | $ 98,795 | $ (97,750) | $ 1,384 | |
Balance at beginning (in shares) at Dec. 31, 2018 | 33,911,792 | ||||
Increase (Decrease) in Shareholders' Equity [Roll Forward] | |||||
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 | |||
Stock conversion rights | 1,200 | 1,200 | |||
Net income (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 | ||||
Increase (Decrease) in Shareholders' Equity [Roll Forward] | |||||
Stock option exercises | $ 1 | 36 | 37 | ||
Stock option exercises (in shares) | 84,500 | ||||
Stock-based compensation | 195 | 195 | |||
Net income (loss) | 989 | 989 | |||
Balance at ending at Dec. 31, 2020 | $ 382 | $ 102,117 | $ (99,767) | $ 2,732 | |
Balance at ending (in shares) at Dec. 31, 2020 | 38,221,292 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating activities: | ||
Net Income (loss) | $ 989 | $ (3,006) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation and amortization | 358 | 315 |
Loss on disposal of fixed asset | 15 | |
Amortization of debt discount | 267 | 30 |
Share-based compensation | 195 | 242 |
Changes in assets and liabilities related to operations: | ||
Trade accounts receivable | (1,962) | (141) |
Inventories | (1,786) | (312) |
Prepaid expenses and other assets | (339) | 6 |
Accounts payable | 295 | 170 |
Deferred Revenue | (164) | 567 |
Accrued expenses | 113 | (592) |
Other long-term assets and liabilities | (27) | (70) |
Net cash used in operating activities | (2,061) | (2,776) |
Investing activities: | ||
Acquisition of equipment and leasehold improvements | (878) | (740) |
Net cash used in investing activities | (878) | (740) |
Financing activities: | ||
Principal payment on finance leases | (218) | (218) |
Proceeds from line of credit, bank | 2,000 | 1,500 |
Payments to the line of credit, bank | (2,000) | (1,000) |
Proceeds from related party convertible loan | 2,000 | |
Proceeds from PPP / SBA Loan | 952 | |
Proceeds from line of credit, Beachcorp LLC | 14,515 | 9,486 |
Payments to line of credit, Beachcorp LLC | (12,584) | (10,094) |
Proceeds from sale of common stock | 1,677 | |
Proceeds from exercise of stock options | 37 | 14 |
Net cash provided by financing activities | 2,702 | 3,365 |
Decrease in cash | (237) | (151) |
Cash at beginning of period | 1,194 | 1,345 |
Cash at end of period | 957 | 1,194 |
Supplemental cash flow information: | ||
Interest paid | 178 | 173 |
Supplemental non-cash investing and financing activities: | ||
Accounts payable incurred for the purchase of equipment and leasehold improvements | $ 83 | 22 |
Stock conversion rights related to convertible loan | $ 1,200 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2020 | |
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 science-driven company which, along with its wholly owned subsidiary, Solésence, LLC (our “Solésence subsidiary”), is focused in various beauty- and life-science markets. Skin health and medical diagnostics combined currently make up the great majority of our business and drive our forward growth strategy. We offer engineered materials, formulation development and commercial manufacturing through an integrated family of technologies. Our expertise in materials engineering allows us to effectively coat and disperse particles on a nano and “non-nano” scale for use in a variety of markets in skin care, including for use in sunscreens as active ingredients and as fully developed prestige skin care products, marketed and sold through our Solésence subsidiary. In terms of our life sciences focus, we have seen current conditions significantly increase demand for our medical diagnostics ingredients, as testing for various viruses, most notably COVID-19, has become a critical use of our technology. Additionally, we continue to sell products in markets for architectural coatings, industrial coating applications, abrasion-resistant additives, plastics additives, and surface finishing technologies (polishing) applications— all of which, along with medical diagnostics, fall into the advanced materials product category. We target markets, primarily related to skin health products and ingredients, and diagnostic life sciences ingredients where we believe our materials and products offer practical and competitive minerals-based solutions. We traditionally work closely with current customers in these target markets to identify their material and performance requirements and market our materials to various end-use applications manufacturers, and our Solésence® products to cosmetics and skin care brands. Over the past few years, we have expanded our marketing efforts for our Solésence products and are seeing more customers responding to our successful products being sold into their markets. Recently developed technologies have made certain new products possible and opened potential new markets. During 2015 we were granted a patent on a new type of particle surface treatment (coating) — now called Active Stress Defense ™ Technology — which became the cornerstone of our new product development in personal care, with first revenue recognized during 2016. In addition, through the creation of our Solésence subsidiary, we utilize this particle surface treatment to manufacture and sell fully developed solutions to targeted customers in the skin care industry, in addition to the ingredients we have traditionally sold in the personal care area. Although our primary strategic focus has been the North American market, we currently sell materials to customers overseas and have been working to expand our reach within foreign markets. Our common stock trades on the OTCQB marketplace under the symbol NANX. While product sales comprise the majority of our revenue, we also recognize revenue from other sources from time to time. These activities are not expected to drive the long-term growth of the business. For this reason, we classify such revenue as “other revenue” in our Consolidated Statements of Operations, as it does not represent revenue directly from the sale of our products. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 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. Cash is held at a federally insured institution, but our cash balances at times exceed insured limits. The Company has not experienced any losses related to these statutory limits. 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 frequently require deposits relating to the initial 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: 2020 2019 Balance, beginning $ 206 $ 198 Accretion of liability due to passage of time 8 8 Amortization of asset due to passage of time — — Balance, ending $ 214 $ 206 Financial Instruments We follow ASC Topic 820, Fair Value Measurements and Disclosures Our financial instruments include cash, any cash equivalents, accounts receivable, accounts payable and accrued expenses, along with 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 instruments adjusted to fair value on December 31, 2020 and 2019. Product Revenue 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 over time when the obligations under the agreed upon contractual arrangements are performed on our part. Revenue recognized over time was $701 and $657 for the years ended December 31, 2020 and 2019, respectively. Research and Development Expenses Research and development expenses are recognized as expense when incurred. 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, 2020, and 2019, we had no liability for unrecognized tax benefits. Earnings Per Share Options to purchase approximately 387,000 shares of common stock that were outstanding as of December 31, 2020 were included in the computation of earnings per share for the year ended December 31, 2020. 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. Earnings applicable to common stock and common stock shares used in the calculation of basic and diluted earnings per share are as follows: Years Ended December 31, 2020 2019 Numerator: (in Thousands) Net income (loss) $ 989 $ (3,006 ) Denominator Weighted average number of basic common shares outstanding 38,158,586 36,596,372 Weighted average additional shares assuming conversion of in-the-money stock options to common shares 387,000 — Weighted average number of diluted common shares outstanding 38,545,586 36,596,372 Basic earnings per common share: Net income (loss) per share – basic $ 0.03 $ (0.08 ) Diluted earnings per common share: Net income (loss) per share – diluted $ 0.03 $ (0.08 ) New Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which replaces existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost. The effective date for our adoption (as amended) of this updated Standard will be January 1, 2023. |
Going Concern _ Liquidity
Going Concern / Liquidity | 12 Months Ended |
Dec. 31, 2020 | |
Customer net volume rebate payable | |
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 2021. We are working to reduce these risks and the results of the Company in this regard have improved markedly, but some of this is dependent on several things over which we have limited control. Our largest customer made up 30% of our 2020 revenue, or $5.2M, while making up 63%, or $7.9M, of our 2019 revenue. We expect the more recent volume levels to be representative of 2021 demand. This has limited our flexibility and required us to make cash management a top priority. Fortunately, we have seen a significant increase in sales of our Solésence products in 2020, which we expect to continue in 2021. We have also seen a significant increase in revenue from our medical diagnostics customer between 2019 and 2020, relating to current conditions relative to enhanced degrees of testing for COVID-19 and other forms of viruses. We are unsure as to the extent to which this medical diagnostics material will develop or diminish over time. We had annual net income in 2020 for the first time in the Company’s history, and expect to have net income again for 2021. Generally, our growth has required significant additional investment in working capital. Given these issues, and other commercial realities, we are monitoring the additional working capital demands that this could create as we continue to execute on our Solésence growth strategy. The timing of cash flows is critical. If cash generated from operations is not materially consistent with our plans, we believe that we may need to seek additional funding to address working capital demands. This uncertainty has caused us to be unable to assert that, for the next twelve months, we have enough current cash and guaranteed access to financing to fund operations, and to continue with our current growth strategy in terms of investment in capital equipment and in operating expenses related to Solésence, without securing additional financing. These circumstances raise substantial 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 growth strategy, which could impede growth, and impact cost savings anticipated in 2021 and 2022. |
Note and Lines of Credit
Note and Lines of Credit | 12 Months Ended |
Dec. 31, 2020 | |
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 have a Business Loan Agreement with Libertyville Bank and Trust Company, a Wintrust Community Bank (“Libertyville”). Under the 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, 2021. It is management’s expectation that the Line of Credit Agreement will be renewed in April 2021. 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 affiliate Grace Investments, Ltd., beneficially owned approximately 63% of the outstanding shares of our common stock as of March 26, 2020. The Master Agreement relates to two loan facilities, each evidenced by a separate promissory note dated as of November 16, 2018: a term loan to the Company of up to $500,000 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 $2,000,000 (the “Revolver Facility”), and to extend the maturity date, 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, as amended. 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. Effective September 8, 2020, the Company and Beachcorp, LLC executed the Second Amendment to our Master Agreement that expands the limit on the Revolver Facility from $2,000,000 to $2,750,000. On December 23, 2020, the Company and Beachcorp, LLC executed the Third Amendment to our Master Agreement that expands the limit on the Revolver Facility from $2,750,000 to $4,000,000 and extends the maturities of both the Term Loan and the Revolver Facility to March 31, 2022. 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 Credit 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 $1,097, net of a discount of $903 at December 31, 2020, and $830, net of a discount of $1,170, at December 31, 2019. On April 17, 2020, we entered into a Promissory Note, dated as of April 16, 2020, in favor of Libertyville in the principal amount of $952 for our loan under the PPP. The Company may apply for forgiveness of the amount due on the loan in an amount equal to the sum of the following costs incurred during the 24-week period beginning on the date of the first disbursement of the Loan: (a) payroll costs, (b) any payment of interest on a covered obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation), (c) any payment on a covered rent obligation, and (d) any covered utility payment, calculated in accordance with the terms of the CARES Act. No assurance can be provided that the Company will obtain forgiveness of the Loan in whole or in part. The principal amount of the PPP note accrues interest at the rate of 1.00% per year. The Company will be required to pay any unforgiven principal and interest under the PPP note in eighteen equal monthly installments, with the first payment originally being due on November 17, 2020 and continuing on the same day of each subsequent month until April 17, 2022. Management applied for loan forgiveness in February, 2021. Principal and interest are not yet due, and recognition of such will be dependent upon the outcome of the Company’s request for loan forgiveness under the PPP. On December 31, 2020, the balance under the PPP note was $952. On December 31, 2020, the balance on the term loan was $500, the balance on the Revolver Facility was $2,155, and the balance on the Convertible Note was $2,000. For 2020 and 2019, there was $452 and $116, respectively, 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 $20, and $4, at December 31, 2020 and December 31, 2019, 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, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | (5) Inventories Inventories consist of the following: As of December 31, 2020 2019 Raw materials $ 2,825 $ 1,425 Finished goods 1,545 1,170 4,370 2,595 Allowance for excess quantities (30 ) (41 ) $ 4,340 $ 2,554 |
Equipment and Leasehold Improve
Equipment and Leasehold Improvements | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 2019 Machinery and equipment $ 16,758 $ 16,126 Office equipment 870 855 Office furniture 110 110 Leasehold improvements 4,850 4,839 Construction in progress 445 163 23,033 22,093 Less: Accumulated depreciation and amortization (20,165 ) (19,838 ) $ 2,868 $ 2,255 Depreciation expense was $348 and $305, for the years ended December 31, 2020 and 2019, respectively. |
Lease Commitments
Lease Commitments | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Lease Commitments | (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 at January 1, 2019 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, 2020, the ROU asset had a balance of $1,827 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 $431 and $1,651, respectively. 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. These amounts 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 adoption had no impact to the Consolidated Statement of Cash Flows, the Consolidated Statement of Operations or the Consolidated Statement of Changes in Stockholders’ Equity for the year ended December 31, 2019. 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, 2020 Twelve Months Ended December 31, 2019 Components of lease cost Finance lease cost components: Amortization of finance lease assets $ 70 $ 69 Interest on finance lease liabilities 36 56 Total finance lease costs 106 125 Operating lease cost components: Operating lease cost 565 515 Variable lease cost 146 108 Short-term lease cost 33 68 Total operating lease costs 744 691 Total financing and operating lease cost components: $ 850 $ 816 Supplemental cash flow information related to leases is as follows for the years ended December 31, 2020 and 2019: 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 690 $ 694 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ — $ 205 Weighted-average remaining lease term-finance leases (in years) 1.4 1.9 Weighted-average remaining lease term-operating leases (in years) 3.2 3.0 Weighted-average discount rate-finance leases 9.3 % 9.1 % Weighted-average discount rate-operating leases 14.3 % 14.5 % The future maturities of the Company’s finance and operating leases as of December 31, 2020 are as follows: Finance Leases Operating Leases Total 2021 $ 196 $ 701 $ 897 2022 109 720 829 2023 5 705 710 2024 — 595 595 2025 — 1 1 Thereafter — — — Total payments $ 310 $ 2,722 $ 3,032 Less amounts representing interest (23 ) (640 ) (663 ) Total minimum payments required: $ 287 $ 2,082 $ 2,369 The future maturities of the Company’s finance and operating leases as of December 31, 2019 were 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 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | (8) Accrued Expenses Accrued expenses consist of the following: As of December 31, 2020 2019 Accrued payroll and related expenses $ 315 $ 237 Other 169 143 $ 484 $ 380 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
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 a 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, 2020 and 2019 is as follows: 2020 2019 Income tax credit at statutory rates $ 208 $ (631 ) Nondeductible expenses 5 3 State income tax, net of federal benefits 74 (226 ) Expiration of NOL & Credits 2,543 1,530 Tax basis in excess of book Convertible Debt — 342 Expiration of Stock Options 122 125 Other (7 ) — Change in valuation allowance (2,945 ) (1,143 ) $ — $ — 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, 2020 2019 Deferred tax liabilities: Excess tax basis convertible debt $ (257 ) $ (334 ) Total deferred tax liabilities (257 ) (334 ) Deferred tax assets: Net operating loss carryforwards $ 15,597 $ 21,912 Inventory and other allowances 23 14 Charitable contribution & other carryforwards 9 1 Excess (tax) book depreciation 375 451 Excess (tax) book amortization 61 59 Share-based compensation 624 693 Other accrued costs 138 127 Total deferred tax assets 16,827 23,257 Less: Valuation allowance (16,570 ) (22,923 ) Deferred income taxes $ — $ — The valuation allowance decreased approximately $6.4 million and $1.1 million for the years ended December 31, 2020 and 2019, respectively (net of approximately $6.3 million and $1.5 million for the years ended December 31, 2020 and 2019, respectively, for expiring net operating loss carryforwards and credits as well as net operating losses utilized in 2020 to offset taxable income), 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. 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, 2020, the amounts subject to limitations have not yet been determined. On December 31, 2020, we had a net operating loss carryforward of approximately $67 million for income tax purposes. If not utilized, $63 million of this loss carryforward will expire between 2021 and 2037. Given changes to the IRC, 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, 2020 | |
Equity [Abstract] | |
Capital Stock | (10) Capital Stock As of December 31, 2020, and 2019, 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, 2020 | |
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, 2019 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, 2020, there was approximately $243 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 1.8 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, 2020 2019 Weighted-average risk-free interest rates: 0.5 % 2.3 % Dividend yield: 0.00 % 0.00 % Weighted-average expected life of the option: 5 years 6 years Weighted-average expected stock price volatility: 95 % 94 % Weighted-average fair value of the options granted: $ 0.28 $ 0.41 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 2020 and 2019 grants is based on the daily market rate changes of our stock going back to January 1, 2012. The shares granted in fiscal 2020 and 2019 had a vesting period of three years, and a contractual life of 7 years for the shares granted in 2020 under the 2019 Plan, and 10 years for the shares granted in 2019 under the 2010 Plan. Forfeitures were estimated at 4% for the years ended December 31, 2020 and 2019, 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, 2020: Weighted Weighted Average Aggregate Average Remaining Intrinsic Shares Exercise Price Contractual Value Options (Rounded) per Share Term (Years) (000s) Outstanding on January 1, 2020 3,680,000 $ 0.64 Granted 545,000 $ 0.45 Exercised (84,500 ) $ 0.44 Forfeited or expired (727,500 ) $ 0.83 Outstanding on December 31, 2020 3,413,000 $ 0.57 4.9 $ 1,056 Exercisable on December 31, 2020 2,515,000 $ 0.59 4.1 $ 753 Shares available for grant 2,455,000 The aggregate intrinsic value in the table above is based on our closing stock price of $0.85 on the last business day for the year ended December 31, 2020. During the years ended December 31, 2020 and 2019, the total intrinsic value of our stock options exercised was $10 and $2, respectively. Cash received for option exercises was $37 and $14 during the years ended December 31, 2020 and 2019, respectively. We had 84,500 options exercised during the year ended December 31, 2020, compared to 36,000 in 2019. 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, 2020 and 2019. |
401(k) Profit-Sharing Plan
401(k) Profit-Sharing Plan | 12 Months Ended |
Dec. 31, 2020 | |
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 2020 and 2019 aggregated to $21 and $24, respectively. |
Significant Customers and Conti
Significant Customers and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Significant Customers and Contingencies | (13) Significant Customers and Contingencies Revenue from four customers constituted approximately 30%, 20%, 14% and 11%, respectively, of our 2020 revenue. Amounts included in accounts receivable on December 31, 2020 relating to these four customers were approximately $381, $735, $342, and $116, respectively. Revenue from these four customers constituted approximately 63%, 7%, 0% and 8% respectively, of our 2019 revenue. Amounts included in accounts receivable on December 31, 2019 relating to these four customers were approximately $449, $230 $25 and $16, 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, 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 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 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, 2020. 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, we may also have temporary working capital demands that we cannot fund with existing capital, while remaining in compliance with the covenants included in our BASF agreement described above. We expect our single biggest financing need in 2021, as it was in 2020, will relate to the funding of our working capital, which has grown significantly to support the growth of our business. In the likely event that we will need to seek additional financing, we may seek funding through public or private financing and through contracts with governmental entities or other companies. Additional financing may not be available on acceptable terms or at all, and any such additional financing could be dilutive to our shareholders. If we are unable to obtain adequate funds, we may be required to delay, scale-back or eliminate some of our manufacturing and marketing operations or we may need to obtain funds through arrangements on less favorable terms. Such circumstances raise doubt as to our ability to continue as a going concern. If we obtain funding on unfavorable terms, we may be required to relinquish rights to some of our intellectual property. |
Business Segmentation and Geogr
Business Segmentation and Geographical Distribution | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Business Segmentation and Geographical Distribution | (14) Business Segmentation and Geographical Distribution Revenue from international sources approximated $3,714 and $1,200 for the years ended December 31, 2020 and 2019, respectively. As part of our revenue from international sources, we recognized approximately $3,450 and $1,100 in product revenue from a number of German companies, in the aggregate, for the years ended December 31, 2020 and 2019, 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 . The revenues for 2020 and 2019 by category are as follows: Product Category 2020 2019 Personal Care Ingredients $ 5,536 $ 7,919 Advanced Materials 4,850 2,733 Solésence 6,737 1,857 Total Sales $ 17,123 $ 12,509 |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | (15) Contingencies In December 2019, a novel strain of coronavirus (SARS-CoV-2) emerged in Wuhan, Hubei Province, China, which has subsequently been announced by the World Health Organization to be causing a global pandemic (COVID-19). Some of the raw materials that are critical to the production of our products and parts that are critical to the operation of our equipment are sourced from single suppliers, suppliers from China and Korea, and in some cases, a single supplier from China. operations of our third-party suppliers were disrupted to a certain extent in 2020 from the pandemic, particularly related to receiving packaging for our Solésence products on a timely basis, we are currently seeing a more limited impact relating to COVID-19 on our suppliers. However, we could be disrupted by conditions unrelated to our business operations or that are beyond our control, including but not limited to international trade restrictions and conditions related to COVID-19 or other epidemics. We typically maintain no less than one month’s supply of raw materials and parts that are sourced from sole suppliers and make efforts to identify additional suppliers who may be able to provide such raw materials or parts. Some of the same supplier dynamics may be affected as the global economy rebounds from the COVID-19 pandemic, which could strain our supplier’s capacity. The Company is aware that such changes in its business as a result of COVID-19 could occur, but is uncertain of the impacts of those changes on its consolidated statements of position, operations, or cash flows. The Company’s management believes any resulting cessations, reductions, and disruptions in its customers’ and suppliers’ operations would probably 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, 2020 | |
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, 2020 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. Cash is held at a federally insured institution, but our cash balances at times exceed insured limits. The Company has not experienced any losses related to these statutory limits. |
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 frequently require deposits relating to the initial 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: 2020 2019 Balance, beginning $ 206 $ 198 Accretion of liability due to passage of time 8 8 Amortization of asset due to passage of time — — Balance, ending $ 214 $ 206 |
Financial Instruments | Financial Instruments We follow ASC Topic 820, Fair Value Measurements and Disclosures Our financial instruments include cash, any cash equivalents, accounts receivable, accounts payable and accrued expenses, along with 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 instruments adjusted to fair value on December 31, 2020 and 2019. |
Product Revenue | Product Revenue 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 over time when the obligations under the agreed upon contractual arrangements are performed on our part. Revenue recognized over time was $701 and $657 for the years ended December 31, 2020 and 2019, respectively. |
Research and Development Expenses | Research and Development Expenses Research and development expenses are recognized as expense when incurred. |
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, 2020, and 2019, we had no liability for unrecognized tax benefits. |
Earnings Per Share | Earnings Per Share Options to purchase approximately 387,000 shares of common stock that were outstanding as of December 31, 2020 were included in the computation of earnings per share for the year ended December 31, 2020. 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. Earnings applicable to common stock and common stock shares used in the calculation of basic and diluted earnings per share are as follows: Years Ended December 31, 2020 2019 Numerator: (in Thousands) Net income (loss) $ 989 $ (3,006 ) Denominator Weighted average number of basic common shares outstanding 38,158,586 36,596,372 Weighted average additional shares assuming conversion of in-the-money stock options to common shares 387,000 — Weighted average number of diluted common shares outstanding 38,545,586 36,596,372 Basic earnings per common share: Net income (loss) per share – basic $ 0.03 $ (0.08 ) Diluted earnings per common share: Net income (loss) per share – diluted $ 0.03 $ (0.08 ) |
New Accounting Pronouncements | New Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which replaces existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost. The effective date for our adoption (as amended) of this updated Standard will be January 1, 2023. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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: 2020 2019 Balance, beginning $ 206 $ 198 Accretion of liability due to passage of time 8 8 Amortization of asset due to passage of time — — Balance, ending $ 214 $ 206 |
Schedule of earnings per share | Earnings applicable to common stock and common stock shares used in the calculation of basic and diluted earnings per share are as follows: Years Ended December 31, 2020 2019 Numerator: (in Thousands) Net income (loss) $ 989 $ (3,006 ) Denominator Weighted average number of basic common shares outstanding 38,158,586 36,596,372 Weighted average additional shares assuming conversion of in-the-money stock options to common shares 387,000 — Weighted average number of diluted common shares outstanding 38,545,586 36,596,372 Basic earnings per common share: Net income (loss) per share – basic $ 0.03 $ (0.08 ) Diluted earnings per common share: Net income (loss) per share – diluted $ 0.03 $ (0.08 ) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following: As of December 31, 2020 2019 Raw materials $ 2,825 $ 1,425 Finished goods 1,545 1,170 4,370 2,595 Allowance for excess quantities (30 ) (41 ) $ 4,340 $ 2,554 |
Equipment and Leasehold Impro_2
Equipment and Leasehold Improvements (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 2019 Machinery and equipment $ 16,758 $ 16,126 Office equipment 870 855 Office furniture 110 110 Leasehold improvements 4,850 4,839 Construction in progress 445 163 23,033 22,093 Less: Accumulated depreciation and amortization (20,165 ) (19,838 ) $ 2,868 $ 2,255 |
Lease Commitments (Tables)
Lease Commitments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Summary of quantitative information about leases | Quantitative information regarding the Company’s leases is as follows: Twelve Months Ended December 31, 2020 Twelve Months Ended December 31, 2019 Components of lease cost Finance lease cost components: Amortization of finance lease assets $ 70 $ 69 Interest on finance lease liabilities 36 56 Total finance lease costs 106 125 Operating lease cost components: Operating lease cost 565 515 Variable lease cost 146 108 Short-term lease cost 33 68 Total operating lease costs 744 691 Total financing and operating lease cost components: $ 850 $ 816 |
Summary of supplemental cash flow information related to leases | Supplemental cash flow information related to leases is as follows for the years ended December 31, 2020 and 2019: 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 690 $ 694 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ — $ 205 Weighted-average remaining lease term-finance leases (in years) 1.4 1.9 Weighted-average remaining lease term-operating leases (in years) 3.2 3.0 Weighted-average discount rate-finance leases 9.3 % 9.1 % Weighted-average discount rate-operating leases 14.3 % 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, 2020 are as follows: Finance Leases Operating Leases Total 2021 $ 196 $ 701 $ 897 2022 109 720 829 2023 5 705 710 2024 — 595 595 2025 — 1 1 Thereafter — — — Total payments $ 310 $ 2,722 $ 3,032 Less amounts representing interest (23 ) (640 ) (663 ) Total minimum payments required: $ 287 $ 2,082 $ 2,369 The future maturities of the Company’s finance and operating leases as of December 31, 2019 were 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 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consist of the following: As of December 31, 2020 2019 Accrued payroll and related expenses $ 315 $ 237 Other 169 143 $ 484 $ 380 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 and 2019 is as follows: 2020 2019 Income tax credit at statutory rates $ 208 $ (631 ) Nondeductible expenses 5 3 State income tax, net of federal benefits 74 (226 ) Expiration of NOL & Credits 2,543 1,530 Tax basis in excess of book Convertible Debt — 342 Expiration of Stock Options 122 125 Other (7 ) — Change in valuation allowance (2,945 ) (1,143 ) $ — $ — |
Schedule of significant components of deferred income taxes | Significant components of our deferred income taxes consist of the following: As of December 31, 2020 2019 Deferred tax liabilities: Excess tax basis convertible debt $ (257 ) $ (334 ) Total deferred tax liabilities (257 ) (334 ) Deferred tax assets: Net operating loss carryforwards $ 15,597 $ 21,912 Inventory and other allowances 23 14 Charitable contribution & other carryforwards 9 1 Excess (tax) book depreciation 375 451 Excess (tax) book amortization 61 59 Share-based compensation 624 693 Other accrued costs 138 127 Total deferred tax assets 16,827 23,257 Less: Valuation allowance (16,570 ) (22,923 ) Deferred income taxes $ — $ — |
Stock Options and Stock Grants
Stock Options and Stock Grants (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 2019 Weighted-average risk-free interest rates: 0.5 % 2.3 % Dividend yield: 0.00 % 0.00 % Weighted-average expected life of the option: 5 years 6 years Weighted-average expected stock price volatility: 95 % 94 % Weighted-average fair value of the options granted: $ 0.28 $ 0.41 |
Schedule of option activity | The following table summarizes the option activity for our employees and directors during the year ended December 31, 2020: Weighted Weighted Average Aggregate Average Remaining Intrinsic Shares Exercise Price Contractual Value Options (Rounded) per Share Term (Years) (000s) Outstanding on January 1, 2020 3,680,000 $ 0.64 Granted 545,000 $ 0.45 Exercised (84,500 ) $ 0.44 Forfeited or expired (727,500 ) $ 0.83 Outstanding on December 31, 2020 3,413,000 $ 0.57 4.9 $ 1,056 Exercisable on December 31, 2020 2,515,000 $ 0.59 4.1 $ 753 Shares available for grant 2,455,000 |
Business Segmentation and Geo_2
Business Segmentation and Geographical Distribution (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segments, Geographical Areas [Abstract] | |
Schedule of revenues by category | The revenues for 2020 and 2019 by category are as follows: Product Category 2020 2019 Personal Care Ingredients $ 5,536 $ 7,919 Advanced Materials 4,850 2,733 Solésence 6,737 1,857 Total Sales $ 17,123 $ 12,509 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Balance, beginning | $ 206 | $ 198 |
Accretion of liability due to passage of time | 8 | 8 |
Balance, ending | $ 214 | $ 206 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator: (in Thousands) | ||
Net income (loss) | $ 989 | $ (3,006) |
Denominator: | ||
Weighted average number of basic common shares outstanding | 38,158,586 | 36,596,372 |
Weighted average additional shares assuming conversion of in-the-money stock options to common shares | 387,000 | |
Weighted average number of diluted common shares outstanding | 38,545,586 | 36,596,372 |
Basic earnings per common share: | ||
Net income (loss) per share - basic | $ 0.03 | $ (0.08) |
Diluted earnings per common share: | ||
Net income (loss) per share - diluted | $ 0.03 | $ (0.08) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Line Items] | ||
Revenue | $ 17,123 | $ 12,509 |
Options included in computation of earnings per share | 387,000 | |
Anti-dilutive securities excluded from computation of earnings per share | 243,000 | |
Other Revenue [Member] | ||
Accounting Policies [Line Items] | ||
Revenue | $ 701 | $ 657 |
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) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | $ 17,123 | $ 12,509 |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||
Concentration risk, percentage | 30.00% | 63.00% |
Revenue | $ 5,200 | $ 7,900 |
Note and Lines of Credit (Detai
Note and Lines of Credit (Details Narrative) $ / shares in Units, $ in Thousands | Dec. 23, 2020USD ($) | Apr. 17, 2020USD ($) | Mar. 23, 2020 | Nov. 20, 2019USD ($)$ / shares | Mar. 22, 2019USD ($)Number | Nov. 16, 2018USD ($) | Jul. 31, 2014USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 08, 2020USD ($) | Mar. 26, 2020 |
Interest expense | $ 496 | $ 210 | |||||||||
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 | ||||||||||
Payment frequency | interest is payable semi-annually on the 15th day of May and November | ||||||||||
Date of first payment | May 15, 2020 | ||||||||||
Debt conversion price (in dollars per share) | $ / shares | $ 0.20 | ||||||||||
Share price (in dollars per share) | $ / shares | $ 0.32 | ||||||||||
Debt discount | $ 1,200 | 903 | 1,170 | ||||||||
Principal balance | 1,097 | 830 | |||||||||
Debt balance | 2,000 | ||||||||||
Promissory Note (PPP) [Member] | Libertyville [Member] | |||||||||||
Fixed annual interest rate | 1.00% | ||||||||||
Maturity date | Apr. 17, 2022 | ||||||||||
Principal amount | $ 952 | ||||||||||
Payment frequency | eighteen equal monthly installments | ||||||||||
Date of first payment | Nov. 17, 2020 | ||||||||||
Debt balance | 952 | ||||||||||
Related Party Credit Facilities [Member] | |||||||||||
Interest expense | 452 | 116 | |||||||||
Accrued interest expense | 20 | $ 4 | |||||||||
Business Loan Agreement [Member] | Beachcorp, LLC [Member] | |||||||||||
Ownership percentage | 63.00% | ||||||||||
Business Loan Agreement [Member] | Beachcorp, LLC [Member] | Term Loan [Member] | |||||||||||
Maximum borrowing capacity | $ 500 | ||||||||||
Fixed annual interest rate | 8.25% | ||||||||||
Maturity date | Dec. 31, 2020 | ||||||||||
Debt balance | 500 | ||||||||||
Business Loan Agreement [Member] | Beachcorp, LLC [Member] | Asset-Based Revolving Loan Facility [Member] | |||||||||||
Basis spread variable interest rate | 3.00% | ||||||||||
Variable interest rate basis | Prime rate | ||||||||||
Maximum borrowing capacity | $ 2,000 | ||||||||||
Maturity date | Mar. 31, 2020 | ||||||||||
Line of credit | $ 2,155 | ||||||||||
Business Loan Agreement [Member] | Beachcorp, LLC [Member] | Asset-Based Revolving Loan Facility [Member] | Greater than [Member] | |||||||||||
Fixed annual interest rate | 8.25% | ||||||||||
First Amendment [Member] | Beachcorp, LLC [Member] | |||||||||||
Maturity date | Mar. 31, 2021 | ||||||||||
Second Amendment [Member] | Beachcorp, LLC [Member] | Asset-Based Revolving Loan Facility [Member] | |||||||||||
Maximum borrowing capacity | $ 2,750 | ||||||||||
Third Amendment [Member] | Beachcorp, LLC [Member] | |||||||||||
Maturity date | Mar. 31, 2022 | ||||||||||
Third Amendment [Member] | Beachcorp, LLC [Member] | Asset-Based Revolving Loan Facility [Member] | |||||||||||
Maximum borrowing capacity | $ 4,000 | ||||||||||
Letter of Credit [Member] | |||||||||||
Letter of credit and related promissory note | $ 30 | ||||||||||
Basis spread variable interest rate | 1.00% | ||||||||||
Variable interest rate basis | Prime rate | ||||||||||
Line of Credit [Member] | 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, 2021 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 2,825 | $ 1,425 |
Finished goods | 1,545 | 1,170 |
Inventory gross, Total | 4,370 | 2,595 |
Allowance for excess quantities | (30) | (41) |
Inventories, net | $ 4,340 | $ 2,554 |
Equipment and Leasehold Impro_3
Equipment and Leasehold Improvements (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 23,033 | $ 22,093 |
Less: Accumulated depreciation and amortization | (20,165) | (19,838) |
Property, Plant and Equipment, Net, Total | 2,868 | 2,255 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 16,758 | 16,126 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 870 | 855 |
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 | 4,850 | 4,839 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 445 | $ 163 |
Equipment and Leasehold Impro_4
Equipment and Leasehold Improvements (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 348 | $ 305 |
Lease Commitments (Details)
Lease Commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Finance lease cost components: | ||
Amortization of finance lease assets | $ 70 | $ 69 |
Interest on finance lease liabilities | 36 | 56 |
Total finance lease costs | 106 | 125 |
Operating lease cost components: | ||
Operating lease cost | 565 | 515 |
Variable lease cost | 146 | 108 |
Short-term lease cost | 33 | 68 |
Total operating lease costs | 744 | 691 |
Total financing and operating lease cost components: | $ 850 | $ 816 |
Lease Commitments (Details 1)
Lease Commitments (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash outflow from operating leases | $ 690 | $ 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 4 months 24 days | 1 year 10 months 24 days |
Weighted-average remaining lease term-operating leases (in years) | 3 years 2 months 12 days | 3 years |
Weighted-average discount rate-finance leases | 9.30% | 9.10% |
Weighted-average discount rate-operating leases | 14.30% | 14.50% |
Lease Commitments (Details 2)
Lease Commitments (Details 2) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Finance Leases: | ||
Year 1 | $ 196 | $ 255 |
Year 2 | 109 | 196 |
Year 3 | 5 | 109 |
Year 4 | 5 | |
Total payments | 310 | 565 |
Less amounts representing interest | (23) | (59) |
Total minimum payments required: | 287 | 506 |
Operating Leases: | ||
Year 1 | 701 | 676 |
Year 2 | 720 | 687 |
Year 3 | 705 | 705 |
Year 4 | 595 | 690 |
Year 5 | 1 | 580 |
Total payments | 2,722 | 3,338 |
Less amounts representing interest | (640) | (946) |
Total minimum payments required: | 2,082 | 2,392 |
Total: | ||
Year 1 | 897 | 931 |
Year 2 | 829 | 883 |
Year 3 | 710 | 814 |
Year 4 | 595 | 695 |
Year 5 | 1 | 580 |
Total payments | 3,032 | 3,903 |
Less amounts representing interest | (663) | (1,005) |
Total minimum payments required: | $ 2,369 | $ 2,898 |
Lease Commitments (Details Narr
Lease Commitments (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 02, 2019 |
Operating Leased Assets [Line Items] | |||
Operating lease right-of-use assets | $ 1,827 | $ 2,119 | |
Current portion of operating lease obligations | 431 | 357 | |
Long-term portion of operating lease obligations | 1,651 | 2,035 | |
Operating lease liability | $ 2,082 | $ 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, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued payroll and related expenses | $ 315 | $ 237 |
Other | 169 | 143 |
Total | $ 484 | $ 380 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income tax credit at statutory rates | $ 208 | $ (631) |
Nondeductible expenses | 5 | 3 |
State income tax, net of federal benefits | 74 | (226) |
Expiration of NOL & Credits | 2,543 | 1,530 |
Tax basis in excess of book Convertible Debt | 342 | |
Expiration of Stock Options | 122 | 125 |
Other | (7) | |
Change in valuation allowance | (2,945) | $ (1,143) |
Total |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax liabilities: | ||
Excess tax basis convertible debt | $ (257) | $ (334) |
Total deferred tax liabilities | (257) | (334) |
Deferred tax assets: | ||
Net operating loss carryforwards | 15,597 | 21,912 |
Inventory and other allowances | 23 | 14 |
Charitable contribution & other carryforwards | 9 | 1 |
Excess (tax) book depreciation | 375 | 451 |
Excess (tax) book amortization | 61 | 59 |
Share-based compensation | 624 | 693 |
Other accrued costs | 138 | 127 |
Total deferred tax assets | 16,827 | 23,257 |
Less: Valuation allowance | (16,570) | (22,923) |
Deferred income taxes | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Increase (decrease) in valuation allowance | $ (6,400) | $ (1,100) | |
Net operating loss carryforwards | $ 67,000 | ||
Operating loss carryforwards expiration period start | 2021 | ||
Operating loss carryforwards expiration period end | 2037 | ||
Expiring Operating Loss Carryforwards [Member] | |||
Increase (decrease) in valuation allowance | $ 6,300 | $ 1,500 | |
Net operating loss carryforwards | $ 63,000 | ||
Tax Year 2018 [Member] | |||
Net operating loss carryforwards | $ 5,000 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - shares | Dec. 31, 2020 | Dec. 31, 2019 |
Equity [Abstract] | ||
Preferred stock, shares authorized | 24,088 | 24,088 |
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, 2020 | Dec. 31, 2019 | |
Weighted-average risk-free interest rates: | 0.50% | 2.30% |
Dividend yield: | 0.00% | 0.00% |
Weighted-average expected life of the option: | 5 years | 6 years |
Weighted-average expected stock price volatility | 95.00% | 94.00% |
Weighted-average fair value of the options granted: | $ 0.28 | $ 0.41 |
Stock Options and Stock Grant_3
Stock Options and Stock Grants (Details 1) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stock Options: | ||
Stock options outstanding, beginning | 3,680,000 | |
Granted | 545,000 | |
Exercised | (84,500) | (36,000) |
Forfeited or expired | (727,500) | |
Stock options outstanding, ending | 3,413,000 | 3,680,000 |
Exercisable, ending | 2,515,000 | |
Shares available for grant, ending | 2,455,000 | |
Weighted Average Exercise Price | ||
Beginning Balance | $ 0.64 | |
Granted | 0.45 | |
Exercised | 0.44 | |
Forfeited or expired | 0.83 | |
Ending Balance | 0.57 | $ 0.64 |
Exercisable | $ 0.59 | |
Weighted Average Remaining Contractual Term, Outstanding, end | 4 years 10 months 24 days | |
Weighted Average Remaining Contractual Term Years, Exercisable, end | 4 years 1 month 6 days | |
Aggregate Intrinsic Value | ||
Intrinsic Value, Outstanding, end | $ 1,056 | |
Intrinsic Value, Exercisable, end | $ 753 |
Stock Options and Stock Grant_4
Stock Options and Stock Grants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Proceeds from exercise of stock options | $ 37 | $ 14 |
Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 195 | $ 242 |
Total unrecognized compensation cost related to nonvested share-based compensation arrangements granted | $ 243 | |
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 | |
Forfeiture rate | 4.00% | 4.00% |
Share Price | $ 0.85 | |
Total intrinsic value | $ 10 | $ 2 |
Proceeds from exercise of stock options | $ 37 | $ 14 |
Number of options exercised (shares) | 84,500 | 36,000 |
2010 Equity Compensation Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Option expiration period | 10 years | |
2019 Equity Compensation Plan [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, 2020 | Dec. 31, 2019 | |
Retirement Benefits [Abstract] | ||
Contributions under profit sharing plan | $ 21 | $ 24 |
Employer's matching contribution percentage | 10.00% | |
Percentage of employee's contribution for matching | 8.00% | |
Participant's salary percentage matched | 0.80% |
Significant Customers and Con_2
Significant Customers and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | |
Accounts receivable | $ 2,932 | $ 970 | |
Finished goods inventory | $ 1,545 | 1,170 | |
BASF [Member] | |||
Equipment sale - original book value of equipment and upgrades | 30.00% | ||
Equipment sale - net book value equipment | 115.00% | ||
BASF [Member] | Less than [Member] | |||
Cash, cash equivalents and investments trigger under supply agreeement | $ 500 | ||
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 | ||
Customer One [Member] | |||
Accounts receivable | 381 | 449 | |
Customer Two [Member] | |||
Accounts receivable | 735 | 230 | |
Customer Three [Member] | |||
Accounts receivable | 342 | 25 | |
Customer Four [Member] | |||
Accounts receivable | $ 116 | $ 16 | |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | |||
Revenue from customers | 30.00% | 63.00% | |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer One [Member] | |||
Revenue from customers | 30.00% | 63.00% | |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer Two [Member] | |||
Revenue from customers | 20.00% | 7.00% | |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer Three [Member] | |||
Revenue from customers | 14.00% | 0.00% | |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer Four [Member] | |||
Revenue from customers | 11.00% | 8.00% |
Business Segmentation and Geo_3
Business Segmentation and Geographical Distribution (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Sales | $ 17,123 | $ 12,509 |
Personal Care Ingredients [Member] | ||
Sales | 5,536 | 7,919 |
Advanced Materials [Member] | ||
Sales | 4,850 | 2,733 |
Solesence [Member] | ||
Sales | $ 6,737 | $ 1,857 |
Business Segmentation and Geo_4
Business Segmentation and Geographical Distribution (Details Narrative) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020USD ($)Number | Dec. 31, 2019USD ($) | |
Number of business segments | Number | 1 | |
Germany [Member] | ||
Revenue from international sources | $ 3,450 | $ 1,100 |
International Sources [Member] | ||
Revenue from international sources | $ 3,714 | $ 1,200 |