Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 09, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 1-13270 | |
Entity Registrant Name | FLOTEK INDUSTRIES INC/CN | |
Entity Incorporation, State | DE | |
Entity Tax Identification Number | 90-0023731 | |
Entity Address, Street | 8846 N. Sam Houston Parkway W. | |
Entity Address, City | Houston, | |
Entity Address, State | TX | |
Entity Address, Postal Zip Code | 77064 | |
City Area Code | 713 | |
Local Phone Number | 849-9911 | |
Title of each class | Common Stock, $0.0001 par value | |
Trading Symbol(s) | FTK | |
Name of each exchange on which registered | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 77,507,267 | |
Entity Central Index Key | 0000928054 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 8,508 | $ 11,534 |
Restricted cash | 100 | 1,790 |
Accounts receivable, net of allowance for doubtful accounts of $566 and $659 at September 30, 2022 and December 31, 2021, respectively | 17,597 | 11,997 |
Accounts receivable, related party | 25,916 | 1,300 |
Inventories, net | 19,189 | 9,454 |
Other current assets | 4,309 | 3,762 |
Current contract assets | 7,196 | 0 |
Assets held for sale | 535 | 2,762 |
Total current assets | 83,350 | 42,599 |
Long-term contract assets | 73,878 | 0 |
Property and equipment, net | 4,781 | 5,296 |
Operating lease right-of-use assets | 1,715 | 2,041 |
Deferred tax assets, net | 278 | 279 |
Other long-term assets | 17 | 29 |
Total assets | 164,019 | 50,244 |
Current liabilities: | ||
Accounts payable | 29,653 | 7,616 |
Accrued liabilities | 9,400 | 8,996 |
Income taxes payable | 104 | 4 |
Interest payable | 118 | 82 |
Current portion of operating lease liabilities | 653 | 602 |
Current portion of finance lease liabilities | 35 | 41 |
Current portion of long-term debt | 1,853 | 1,436 |
Convertible notes payable | 19,055 | 0 |
Contract consideration convertible notes payable | 73,030 | 0 |
Total current liabilities | 133,901 | 18,777 |
Deferred revenue, long-term | 74 | 91 |
Long-term operating lease liabilities | 6,582 | 7,779 |
Long-term finance lease liabilities | 29 | 53 |
Long-term debt | 2,935 | 3,352 |
TOTAL LIABILITIES | 143,521 | 30,052 |
Commitments and contingencies (See Note 12) | ||
Stockholders’ equity: | ||
Preferred stock, $0.0001 par value, 100,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $0.0001 par value, 240,000,000 shares authorized; 83,424,763 shares issued and 77,283,733 shares outstanding at September 30, 2022 ; 79,483,837 shares issued and 73,461,203 shares outstanding at December 31, 2021 | 8 | 8 |
Additional paid-in capital | 386,958 | 363,417 |
Accumulated other comprehensive income | 292 | 81 |
Accumulated deficit | (332,492) | (309,214) |
Treasury stock, at cost; 6,141,030 and 6,022,634 shares at September 30, 2022 and December 31, 2021 , respectively | (34,268) | (34,100) |
Total stockholders’ equity | 20,498 | 20,192 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 164,019 | $ 50,244 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 566 | $ 659 |
Preferred stock, at par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 100,000 | 100,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 240,000,000 | 240,000,000 |
Common stock, shares issued (in shares) | 83,424,763 | 79,483,837 |
Common stock, shares outstanding (in shares) | 77,283,733 | 73,461,203 |
Treasury stock, shares (in shares) | 6,141,030 | 6,022,634 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue: | ||||
Revenue from external customers | $ 15,206 | $ 8,847 | $ 38,412 | $ 29,782 |
Revenue from related party | 30,417 | 1,332 | 49,462 | 1,332 |
Total revenues | 45,623 | 10,179 | 87,874 | 31,114 |
Cost of goods sold | 47,465 | 4,022 | 92,500 | 26,876 |
Gross income (loss) | (1,842) | 6,157 | (4,626) | 4,238 |
Operating costs and expenses: | ||||
Selling, general, and administrative | 9,035 | 4,092 | 21,345 | 14,379 |
Depreciation of property and equipment | 177 | 233 | 554 | 793 |
Research and development | 985 | 1,186 | 3,515 | 4,194 |
(Gain) loss on sale of property and equipment | (10) | 14 | (1,916) | (55) |
Gain on lease termination | 0 | 0 | (584) | 0 |
(Gain) loss in fair value of contract consideration convertible notes payable | 4,250 | 0 | (9,016) | 0 |
Total operating costs and expenses | 14,437 | 5,525 | 13,898 | 19,311 |
Income (loss) from operations | (16,279) | 632 | (18,524) | (15,073) |
Other income (expense): | ||||
Paycheck protection plan loan forgiveness | 0 | 0 | 0 | 881 |
Interest expense | (2,321) | (18) | (4,586) | (53) |
Other expense, net | (187) | (102) | (67) | (62) |
Total other income (expense) | (2,508) | (120) | (4,653) | 766 |
Income (loss) before income taxes | (18,787) | 512 | (23,177) | (14,307) |
Income tax expense | (7) | (3) | (101) | (30) |
Net income (loss) | $ (18,794) | $ 509 | $ (23,278) | $ (14,337) |
Income (loss) per common share: | ||||
Basic (in dollars per share) | $ (0.25) | $ 0.01 | $ (0.31) | $ (0.21) |
Diluted loss per share (in dollars per share) | $ (0.25) | $ 0.01 | $ (0.31) | $ (0.21) |
Weighted average common shares: | ||||
Weighted average common shares used in computing basic income (loss) per common share (in shares) | 75,312 | 69,324 | 74,095 | 68,665 |
Weighted average common shares used in computing diluted income (loss) per common share (in shares) | 75,312 | 70,176 | 74,095 | 68,665 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (18,794) | $ 509 | $ (23,278) | $ (14,337) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 116 | 38 | 211 | 70 |
Comprehensive income (loss) | $ (18,678) | $ 547 | $ (23,067) | $ (14,267) |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (23,278) | $ (14,337) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Change in fair value of contingent consideration | (106) | (701) |
Change in fair value of contract consideration convertible notes payable | (9,016) | 0 |
Amortization of convertible note issuance cost | 663 | 0 |
Paid-in-kind interest expense | 3,861 | 0 |
Amortization of contract assets | 1,986 | 0 |
Depreciation and amortization | 554 | 793 |
Provision for doubtful accounts, net of recoveries | 147 | (42) |
Inventory purchase commitment settlement | 0 | (7,633) |
Inventory write down | 1,036 | 0 |
Provision for excess and obsolete inventory | 666 | 687 |
Gain on sale of property and equipment | (1,916) | (55) |
Gain on lease termination | (584) | 0 |
Non-cash lease expense | 168 | 223 |
Stock compensation expense | 2,262 | 2,710 |
Deferred income tax (benefit) expense | 1 | 13 |
Paycheck protection plan loan forgiveness | 0 | (881) |
Changes in current assets and liabilities: | ||
Accounts receivable | (5,748) | 111 |
Accounts receivable, related party | (24,616) | 0 |
Inventories | (11,373) | 2,330 |
Income taxes receivable | 3 | 405 |
Other assets | 537 | 1,696 |
Contract assets | (3,600) | 0 |
Accounts payable | 22,036 | (604) |
Accrued liabilities | 493 | 415 |
Operating lease liabilities | (404) | 0 |
Income taxes payable | 100 | (53) |
Interest payable | 36 | 36 |
Net cash used in operating activities | (47,166) | (18,279) |
Cash flows from investing activities: | ||
Capital expenditures | (175) | (31) |
Proceeds from sale of assets | 4,215 | 74 |
Net cash provided by investing activities | 4,040 | 43 |
Cash flows from financing activities: | ||
Proceeds from issuance of convertible notes | 21,150 | 0 |
Payment of issuance costs of convertible notes | (1,084) | 0 |
Proceeds from issuance of warrants | 19,500 | 0 |
Payment of issuance costs of stock warrants | (1,170) | 0 |
Payments to tax authorities for shares withheld from employees | (191) | (407) |
Proceeds from issuance of stock | 24 | 0 |
Payments for finance leases | (30) | (44) |
Net cash provided by (used in) financing activities | 38,199 | (451) |
Effect of changes in exchange rates on cash and cash equivalents | 211 | (70) |
Net change in cash, cash equivalents and restricted cash | (4,716) | (18,757) |
Cash and cash equivalents at the beginning of period | 11,534 | 38,660 |
Restricted cash at the beginning of period | 1,790 | 664 |
Cash and cash equivalents and restricted cash at beginning of period | 13,324 | 39,324 |
Cash and cash equivalents at end of period | 8,508 | 20,527 |
Restricted cash at the end of period | 100 | 40 |
Cash, cash equivalents and restricted cash at end of period | $ 8,608 | $ 20,567 |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit |
Beginning balance at Dec. 31, 2020 | $ 47,171 | $ 8 | $ (33,851) | $ 359,721 | $ (19) | $ (278,688) |
Beginning balance (in shares) at Dec. 31, 2020 | 78,669,000 | |||||
Beginning balance (in shares) at Dec. 31, 2020 | 5,581,000 | |||||
Increase (Decrease) in Equity | ||||||
Net loss | (14,337) | (14,337) | ||||
Foreign currency translation adjustment | 70 | 70 | ||||
Stock issued under employee stock purchase plan | (246) | $ (110) | (136) | |||
Stock issued under employee stock purchase plan (in shares) | (112,000) | |||||
Restricted stock granted (in shares) | 1,694,000 | |||||
Restricted stock forfeited | 76 | $ 72 | 4 | |||
Restricted stock forfeited (in shares) | (140,000) | (34,000) | ||||
Stock compensation expense | 2,710 | 2,710 | ||||
Shares withheld to cover taxes | (161) | $ (36) | (125) | |||
Shares withheld to cover taxes (in shares) | 146,000 | |||||
Other (shares) | (613,000) | |||||
Ending balance at Sep. 30, 2021 | 35,283 | $ 8 | $ (33,925) | 362,174 | 51 | (293,025) |
Ending balance (in shares) at Sep. 30, 2021 | 79,610,000 | |||||
Ending balance (in shares) at Sep. 30, 2021 | 5,649,000 | |||||
Beginning balance at Jun. 30, 2021 | 33,894 | $ 8 | $ (34,017) | 361,424 | 13 | (293,534) |
Beginning balance (in shares) at Jun. 30, 2021 | 79,607,000 | |||||
Beginning balance (in shares) at Jun. 30, 2021 | 5,628,000 | |||||
Increase (Decrease) in Equity | ||||||
Net loss | 509 | 509 | ||||
Foreign currency translation adjustment | 38 | 38 | ||||
Stock issued under employee stock purchase plan | (69) | $ 20 | (89) | |||
Stock issued under employee stock purchase plan (in shares) | (28,000) | |||||
Restricted stock granted (in shares) | 9,000 | |||||
Restricted stock forfeited | 11 | $ 8 | 3 | |||
Restricted stock forfeited (in shares) | (6,000) | (4,000) | ||||
Stock compensation expense | 961 | 961 | ||||
Shares withheld to cover taxes | (61) | $ 64 | (125) | |||
Shares withheld to cover taxes (in shares) | 45,000 | |||||
Ending balance at Sep. 30, 2021 | 35,283 | $ 8 | $ (33,925) | 362,174 | 51 | (293,025) |
Ending balance (in shares) at Sep. 30, 2021 | 79,610,000 | |||||
Ending balance (in shares) at Sep. 30, 2021 | 5,649,000 | |||||
Beginning balance at Dec. 31, 2021 | $ 20,192 | $ 8 | $ (34,100) | 363,417 | 81 | (309,214) |
Beginning balance (in shares) at Dec. 31, 2021 | 79,483,837 | 79,484,000 | ||||
Beginning balance (in shares) at Dec. 31, 2021 | 6,022,634 | 6,022,000 | ||||
Increase (Decrease) in Equity | ||||||
Net loss | $ (23,278) | (23,278) | ||||
Foreign currency translation adjustment | 211 | 211 | ||||
Stock issued under employee stock purchase plan | 24 | 24 | ||||
Stock issued under employee stock purchase plan (in shares) | (19,000) | |||||
Restricted stock granted (in shares) | 1,128,000 | |||||
Restricted stock forfeited (in shares) | (3,000) | (25,000) | ||||
Restricted stock units vested (in shares) | 58,000 | |||||
Stock compensation expense | 2,262 | 2,262 | ||||
Shares withheld to cover taxes | (191) | $ (168) | (23) | |||
Shares withheld to cover taxes (in shares) | (35,000) | 113,000 | ||||
Issuance of stock warrants, net of transaction fee | 9,930 | 9,930 | ||||
Equity contribution | 8,400 | $ 8,400 | ||||
Conversion of notes to common stock | 2,948 | |||||
Conversion of notes to common stock (in shares) | 2,793,000 | 2,948,000 | ||||
Ending balance at Sep. 30, 2022 | $ 20,498 | $ 8 | $ (34,268) | $ 386,958 | 292 | (332,492) |
Ending balance (in shares) at Sep. 30, 2022 | 83,424,763 | 83,425,000 | ||||
Ending balance (in shares) at Sep. 30, 2022 | 6,141,030 | 6,141,000 | ||||
Beginning balance at Jun. 30, 2022 | $ 38,558 | $ 8 | $ (34,238) | 386,310 | 176 | (313,698) |
Beginning balance (in shares) at Jun. 30, 2022 | 82,885,000 | |||||
Beginning balance (in shares) at Jun. 30, 2022 | 6,111,000 | |||||
Increase (Decrease) in Equity | ||||||
Net loss | (18,794) | (18,794) | ||||
Foreign currency translation adjustment | 116 | 116 | ||||
Restricted stock granted (in shares) | 502,000 | |||||
Restricted stock forfeited (in shares) | (5,000) | |||||
Restricted stock units vested (in shares) | 58,000 | |||||
Stock compensation expense | 671 | 671 | ||||
Shares withheld to cover taxes | (53) | $ (30) | (23) | |||
Shares withheld to cover taxes (in shares) | (20,000) | 25,000 | ||||
Ending balance at Sep. 30, 2022 | $ 20,498 | $ 8 | $ (34,268) | $ 386,958 | $ 292 | $ (332,492) |
Ending balance (in shares) at Sep. 30, 2022 | 83,424,763 | 83,425,000 | ||||
Ending balance (in shares) at Sep. 30, 2022 | 6,141,030 | 6,141,000 |
Organization and Nature of Oper
Organization and Nature of Operations | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations General Flotek Industries, Inc. (“Flotek” or the “Company”) creates solutions to reduce the environmental impact of energy on air, water, land and people. A technology-driven, specialty green chemistry and data company, Flotek helps customers across industrial, commercial, and consumer markets improve their environmental performance. The Company’s Chemistry Technologies (“CT”) segment develops, manufactures, packages, distributes, delivers, and markets green specialty chemicals that aim to enhance the profitability of hydrocarbon producers. The Company’s Data Analytics (“DA”) segment aims to enable users to maximize the value of their hydrocarbon associated processes by providing analytics associated with their hydrocarbon streams in seconds rather than minutes or days. The real-time access to information prevents waste, reduces reprocessing and allows users to pursue automation of their hydrocarbon streams to maximize their profitability. The Company’s two operating segments, CT and DA, are both supported by its Research & Innovation advanced laboratory capabilities. For further discussion of our operations and segments, see Note 17, “Business Segment, Geographic and Major Customer Information.” As a result of a series of transactions in 2022 with ProFrac Holdings, LLC, Flotek has become a consolidated subsidiary of ProFrac Holding Corp. since May 17, 2022. Sources and Uses of Liquidity The Company currently funds its operations and growth primarily from cash on hand and other liquid assets. The ability of the Company to grow and be competitive in the marketplace is dependent on the availability of adequate capital. The Company has a history of losses and negative cash flows from operations and expects to utilize a significant amount of cash in the twelve months subsequent to the date of filing the consolidated financial statements. The availability of capital is dependent on the Company’s operating cash flow principally derived from its long-term supply agreement with ProFrac Services, LLC (see Note 16, Related Party Transactions). We believe that our cash and other liquid assets and our forecasted operating cash flows expected to be generated from the ongoing execution of the long-term supply agreement with ProFrac Services, LLC will provide us with sufficient financial resources to fund operations and meet our capital requirements and anticipated obligations as they become due in the next twelve months. However, the Company cannot guarantee a sufficient level of cash flows in the future. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements reflect all adjustments, in the opinion of management, necessary for the fair statement of the financial condition and results of operations for the periods presented. All such adjustments are normal and recurring in nature. The financial statements, including selected notes, have been prepared in accordance with applicable rules and regulations of the SEC regarding interim financial reporting and do not include all information and disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for comprehensive financial statement reporting. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s 2021 Annual Report. A copy of the 2021 Annual Report is available on the SEC’s website, www.sec.gov, under the Company’s ticker symbol (“FTK”) or on Flotek’s website, www.flotekind.com. The information contained on the Company’s website does not form a part of this Quarterly Report. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company does not have investments in any unconsolidated subsidiaries. Cash Equivalents Cash equivalents consist of highly liquid investments with maturities of three months or less at the date of purchase. Restricted Cash The Company’s restricted cash is $0.1 million and $1.8 million as of September 30, 2022 and December 31, 2021, respectively. The Company’s restricted cash as of September 30, 2022 consists of cash that the Company is contractually obligated to maintain in accordance with the terms of its credit card program with a financial institution. The restricted cash balance as of December 31, 2021 included cash maintained in accordance with the credit card program and cash held in escrow of $1.75 million for amounts due under the terms of the legal settlement discussed in Note 12, “Commitments and Contingencies”. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable, including those with related party, arise from product sales and services and are stated at estimated net realizable value. This value incorporates an allowance for doubtful accounts to reflect any loss anticipated on accounts receivable balances. The Company regularly evaluates its accounts receivable to estimate amounts that will not be collected and records the appropriate allowance for doubtful accounts as a charge to operating expenses. The allowance for doubtful accounts is based on a combination of the age of the receivables, individual customer circumstances, credit conditions, and historical write-offs and collections. The Company writes off specific accounts receivable when they are determined to be uncollectible. The recovery of accounts receivable previously written off is recorded as a reduction to the allowance for doubtful accounts charged to operating expense. The majority of the Company’s customers are engaged in the energy industry. The cyclical nature of the energy industry may affect customers’ operating performance and cash flows, which directly impact the Company’s ability to collect on outstanding obligations. Additionally, certain customers are located in international areas that are inherently subject to risks of economic, political, and civil instability, which can impact the collectability of receivables. Contract Assets The Company’s contract assets represent consideration issued in the form of convertible notes and other incremental costs related to obtaining a contract with a related party customer. The contract assets are amortized over the term of the related party contract based on forecasted revenues as goods are transferred to the related party customer and the amortization is presented as a reduction of the transaction price included in related party revenue in the consolidated statements of operations. The contract assets are tested for recoverability on a recurring basis and the Company will recognize an impairment loss to the extent that the carrying amount of the contract assets exceeds the amount of consideration the Company expects to receive in the future for the transfer of goods under the contract less the direct costs that relate to providing those goods in the future. Inventories Inventories consist of raw materials and finished goods and are stated at the lower of cost determined using the weighted-average cost method, or net realizable value. Finished goods inventories include raw materials, direct labor and production overhead. The Company periodically reviews inventories on hand and current market conditions to determine if the cost of raw materials and finished goods inventories exceed current market prices and impairs the cost basis of the inventory accordingly. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its net realizable value if those amounts are determined to be less than cost. Write-downs or write-offs of inventory are charged to cost of goods sold. Property and equipment Property and equipment are stated at cost. The cost of ordinary maintenance and repair is charged to operating expense, while replacement of critical components and major improvements are capitalized. Depreciation or amortization of property and equipment, including right-of-use assets (“ROU”), is calculated using the straight-line method over the asset’s estimated useful life as follows: Buildings and leasehold improvements 2-30 years Machinery and equipment 7-10 years Furniture and fixtures 3 years Land improvements 20 years Transportation equipment 2-5 years Computer equipment and software 3-7 years Property and equipment, including ROU assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. If events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable, the Company first compares the carrying amount of an asset or asset group to the sum of the undiscounted future cash flows expected to result from the use and eventual disposal of the asset. If the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposal of the asset, the Company will determine the fair value of the asset or asset group. The amount of impairment loss recognized is the excess of the asset or asset group’s carrying amount over its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. Assets to be disposed of are reported as assets held for sale at the lower of the carrying amount or the asset’s fair value less cost to s ell and depreciation is ceased. Upon sale or other disposition of an asset, the Company recognizes a gain or loss on disposal measured as the difference between the net carrying amount of the asset and the net proceeds received. Convertible Notes Payable and Liability Classified Contract Consideration Convertible Notes Payable The Company accounts for the Convertible Notes Payable at amortized cost pursuant to Financial Accounting Standards Board (“FASB”) ASC Topic 470, Debt. The Company accounts for the Contract Consideration Convertible Notes Payable issued as consideration related to a related party contract (see Note 9, “Debt and Convertible Notes Payable”), as liability classified convertible instruments in accordance with FASB ASC 718, “Stock Compensation” (“ASC 718”). Under ASC 718, liability classified convertible instruments are measured at fair value at the grant date and at each reporting date (see Note 10, “Fair Value Measurements”) with the change in fair value included in the consolidated statements of operations. Fair Value Measurements The Company categorizes financial assets and liabilities using a three-tier fair value hierarchy, based on the nature of the inputs used to determine fair value. Inputs refer broadly to assumptions that market participants would use to value an asset or liability and may be observable or unobservable. When determining the fair value of assets and liabilities, the Company uses the most reliable measurement available. See Note 10, “Fair Value Measurements.” Revenue Recognition The Company recognizes revenue to depict the transfer of control of promised goods or services to its customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company recognizes revenue based on a five-step model when all of the following criteria have been met: (i) a contract with a customer exists, (ii) performance obligations have been identified, (iii) the price to the customer has been determined, (iv) the price to the customer has been allocated to the performance obligations, and (v) performance obligations are satisfied. Products and services are sold with fixed or determinable prices. Certain sales include right of return provisions, which are considered when recognizing revenue and deferred accordingly. Deposits and other funds received in advance of delivery are deferred until the transfer of control is complete. The Company applies several practical expedients including: • Sales commissions are expensed as selling, general and administrative expenses when incurred because the amortization period is generally one year or less. • The Company’s payment terms are short-term in nature with settlements of one year or less. As a result the Company does not adjust the promised amount of consideration for the effects of a significant financing component. • In most service contracts, the Company has the right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance obligations completed to date and as such the Company recognizes revenue in the amount to which it has a right to invoice. • The Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer. Such taxes are included in accrued liabilities on our consolidated balance sheet until remitted to the governmental agency. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold in our consolidated statement of operations. Foreign Currency Translation Financial statements of foreign subsidiaries are prepared using the currency of the primary economic environment of the foreign subsidiaries as the functional currency. Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at exchange rates in effect as of the end of identified reporting periods. Revenue and expense transactions are translated using the average monthly exchange rate for the reporting period. Resultant translation adjustments are recognized as other comprehensive income (loss) within stockholders’ equity. Comprehensive Income (Loss) Comprehensive income (loss) encompasses all changes in stockholders’ equity, except those arising from investments and distributions to stockholders. The Company’s comprehensive income (loss) includes consolidated net income (loss) and foreign currency translation adjustments. Research and Development Costs Expenditures for research activities relating to product development and improvement are charged to expense as incurred. Income Taxes Deferred tax assets and liabilities are recognized for temporary differences between financial statement carrying amounts and the tax bases of assets and liabilities and are measured using the tax rates expected to be in effect when the differences reverse. Deferred tax assets are also recognized for operating loss and tax credit carry forwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of a valuation allowance requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company’s policy is to record interest and penalties related to uncertain tax positions as income tax expense. Stock-Based Compensation Stock-based compensation expense, related to stock options, restricted stock awards and restricted stock units, is recognized based on their grant-date fair values. The Company recognizes compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period of the award. Estimated forfeitures are based on historical experience. Stock Warrants The Company evaluated the Prefunded Warrants issued in June 2022 in accordance with ASC 815-40, “Contracts in Entity’s Own Equity” and determined that the warrants meet the criteria to be classified within stockholders’ equity and recorded the proceeds received for the Prefunded Warrants within additional paid in capital in the consolidated balance sheets. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates. Significant items subject to estimates and assumptions include the useful lives of property and equipment; long lived asset impairment assessments; stock-based compensation expense; valuation allowances for accounts receivable, inventories, and deferred tax assets; recoverability and timing of the realization of contract assets; and fair value of liability classified Contract Consideration Convertible Notes Payable and equity classified Stock Warrants. Reclassifications Certain prior year amounts in the unaudited condensed consolidated statement of operations have been reclassified to conform to the current year presentation. In the fourth quarter of 2021, the Company changed its financial statement presentation to report cost of goods sold and gross loss and eliminated the reporting of operating expenses (excluding depreciation and amortization) on the consolidated statements of operations to conform to customary industry reporting practices. In connection with this change in presentation, the Company reclassified selling costs of $1.4 million and $4.4 million to selling, general and administrative expenses which were previously reported in operating expenses for the three and nine months ended September 30, 2021 respectively. The reclassifications and change in presentation of the statements of operations did not impact previously recorded income (loss) from operations, net income (loss) or stockholders’ equity. Recent Accounting Pronouncements Changes to U.S. GAAP are established by the FASB. We evaluate the applicability and impact of all authoritative guidance issued by the FASB. Guidance not listed below was assessed and determined to be either not applicable, clarifications of items listed below, immaterial or already adopted by the Company. New Accounting Standards Issued and Adopted as of January 1, 2022 The FASB issued ASU No. 2020-06, “ Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ” This standard changes the accounting for convertible instruments by reducing the number of accounting models, amends the requirements for a conversion option to be classified in equity and amends diluted earnings per share calculations for certain convertible debt instruments. The pronouncement is effective for smaller reporting companies for fiscal years beginning after December 15, 2023, with early adoption allowed for fiscal years beginning after December 15, 2020. The Company adopted this standard as of January 1, 2022, and the adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures as of January 1, 2022 as there were no convertible debt instruments outstanding as of that date. The FASB issued ASU No. 2021-10, “Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance.” This standard provides guidance on disclosures for transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The pronouncement is effective for fiscal years beginning after December 15, 2021.The Company adopted this standard as of January 1, 2022 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. New Accounting Standards Issued But Not Adopted as of September 30, 2022 The FASB issued ASU No. 2016-13, “ Measurement of Credit Losses on Financial Instruments .” This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects estimates of expected credit losses over their contractual life that are recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. The pronouncement is effective for smaller reporting companies for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact of this standard, including subsequent amendments, on the consolidated financial statements and related disclosures. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers Revenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled in exchange for those goods or services. In recognizing revenue for products and services, the Company determines the transaction price of purchase orders or contracts with customers, which may consist of fixed and variable consideration. Determining the transaction price may require significant judgment by management, which includes identifying performance obligations, estimating variable consideration to include in the transaction price, and determining whether promised goods or services can be distinguished in the context of the contract. Variable consideration typically consists of product returns and is estimated based on the amount of consideration the Company expects to receive and discounts offered to customers for prompt payment. The majority of the products from the CT segment are sold at a point in time and service contracts are short-term in nature. The DA segment recognizes revenue for sales of equipment at the time of sale. Revenue related to service and support is recognized on an over time basis. Payment terms are customarily 30-60 days for domestic and 90-120 days f or international from invoice receipt. In addition, sales taxes are excluded from revenues. Disaggregation of Revenue The Company differentiates revenue based on whether the source of revenue is attributable to product sales (point-in-time revenue recognition) or service revenue (over-time revenue recognition). Revenue disaggregated by revenue source is as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Revenue: Products (1) $ 44,574 $ 9,494 $ 85,356 $ 29,017 Services 1,049 685 2,518 2,097 $ 45,623 $ 10,179 $ 87,874 $ 31,114 (1) Product revenues for 2022 include sales to related parties as described in Note 16, “Related Party Transactions.” Arrangements with Multiple Performance Obligations The Company primarily sells chemicals and equipment recognized at a point in time based on when control transfers to the customer determined by agreed upon delivery terms. Additionally, the Company offers various services associated to products sold which includes field services, installation, maintenance, and other functions. Services are recognized upon completion of commissioning and installation due to the short-term nature of the performance obligation. There may be additional performance obligations related to providing ongoing or reoccurring maintenance. Revenue for these types of arrangements is recognized ratably over time throughout the contract period. Additionally, the Company may provide subscription-type arrangements with customers in which monthly reoccurring revenue is recognized ratably over time in accordance with agreed upon terms and conditions. Customers may be invoiced for such maintenance and subscription-type arrangements and revenue not yet recognizable is reported under accrued liabilities and deferred revenue on the balance sheet. Subscription-type arrangements were not a material revenue stream in the three and nine months ended September 30, 2022 and 2021. Under revenue contracts for both products and services, customers are invoiced once the performance obligations have been satisfied, at which point payment is unconditional. Contract assets associated with incomplete performance obligations are not material. Contract assets are as follows (in thousands): September 30, 2022 December 31, 2021 Contract assets $ 83,060 $ — Less accumulated amortization (1,986) — Contract assets, net $ 81,074 $ — In connection with entering into the ProFrac Agreements on February 2, 2022 and May 17, 2022 as discussed in Note 9, “Debt and Convertible Notes Payable”, the Company recognized contract assets of $10.0 million and $69.5 million, respectively, and associated fees of $3.6 million. As of September 30, 2022, $73.9 million of the contract assets are classified as long term based upon our estimate of the forecasted revenues from the ProFrac agreements which will not be realized within the next twelve months of the ProFrac Agreements. The Company’s estimate of the timing of the future contract revenues is evaluated on a quarterly basis. During the three and nine months ended September 30, 2022 the Company recognized $1.2 million and $2.0 million, respectively, of contract assets amortization which is presented as a reduction of the transaction price included in the related party revenue in the consolidated statement of operations. The below table reflects our estimated amortization per year (in thousands) based on the Company’s current forecasted revenues from the ProFrac Agreements. Years ending December 31, Amortization 2022 (excluding the nine months ended September 30, 2022 ) $ 1,451 2023 7,918 2024 8,692 2025 8,692 2026 8,692 Thereafter through May 2032 45,629 Total contract assets $ 81,074 Based on our tests of recoverability, we did not identify impairment of such contract assets as of September 30, 2022. |
Contract Assets
Contract Assets | 9 Months Ended |
Sep. 30, 2022 | |
Revenue Recognition [Abstract] | |
Contract Assets | Revenue from Contracts with Customers Revenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled in exchange for those goods or services. In recognizing revenue for products and services, the Company determines the transaction price of purchase orders or contracts with customers, which may consist of fixed and variable consideration. Determining the transaction price may require significant judgment by management, which includes identifying performance obligations, estimating variable consideration to include in the transaction price, and determining whether promised goods or services can be distinguished in the context of the contract. Variable consideration typically consists of product returns and is estimated based on the amount of consideration the Company expects to receive and discounts offered to customers for prompt payment. The majority of the products from the CT segment are sold at a point in time and service contracts are short-term in nature. The DA segment recognizes revenue for sales of equipment at the time of sale. Revenue related to service and support is recognized on an over time basis. Payment terms are customarily 30-60 days for domestic and 90-120 days f or international from invoice receipt. In addition, sales taxes are excluded from revenues. Disaggregation of Revenue The Company differentiates revenue based on whether the source of revenue is attributable to product sales (point-in-time revenue recognition) or service revenue (over-time revenue recognition). Revenue disaggregated by revenue source is as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Revenue: Products (1) $ 44,574 $ 9,494 $ 85,356 $ 29,017 Services 1,049 685 2,518 2,097 $ 45,623 $ 10,179 $ 87,874 $ 31,114 (1) Product revenues for 2022 include sales to related parties as described in Note 16, “Related Party Transactions.” Arrangements with Multiple Performance Obligations The Company primarily sells chemicals and equipment recognized at a point in time based on when control transfers to the customer determined by agreed upon delivery terms. Additionally, the Company offers various services associated to products sold which includes field services, installation, maintenance, and other functions. Services are recognized upon completion of commissioning and installation due to the short-term nature of the performance obligation. There may be additional performance obligations related to providing ongoing or reoccurring maintenance. Revenue for these types of arrangements is recognized ratably over time throughout the contract period. Additionally, the Company may provide subscription-type arrangements with customers in which monthly reoccurring revenue is recognized ratably over time in accordance with agreed upon terms and conditions. Customers may be invoiced for such maintenance and subscription-type arrangements and revenue not yet recognizable is reported under accrued liabilities and deferred revenue on the balance sheet. Subscription-type arrangements were not a material revenue stream in the three and nine months ended September 30, 2022 and 2021. Under revenue contracts for both products and services, customers are invoiced once the performance obligations have been satisfied, at which point payment is unconditional. Contract assets associated with incomplete performance obligations are not material. Contract assets are as follows (in thousands): September 30, 2022 December 31, 2021 Contract assets $ 83,060 $ — Less accumulated amortization (1,986) — Contract assets, net $ 81,074 $ — In connection with entering into the ProFrac Agreements on February 2, 2022 and May 17, 2022 as discussed in Note 9, “Debt and Convertible Notes Payable”, the Company recognized contract assets of $10.0 million and $69.5 million, respectively, and associated fees of $3.6 million. As of September 30, 2022, $73.9 million of the contract assets are classified as long term based upon our estimate of the forecasted revenues from the ProFrac agreements which will not be realized within the next twelve months of the ProFrac Agreements. The Company’s estimate of the timing of the future contract revenues is evaluated on a quarterly basis. During the three and nine months ended September 30, 2022 the Company recognized $1.2 million and $2.0 million, respectively, of contract assets amortization which is presented as a reduction of the transaction price included in the related party revenue in the consolidated statement of operations. The below table reflects our estimated amortization per year (in thousands) based on the Company’s current forecasted revenues from the ProFrac Agreements. Years ending December 31, Amortization 2022 (excluding the nine months ended September 30, 2022 ) $ 1,451 2023 7,918 2024 8,692 2025 8,692 2026 8,692 Thereafter through May 2032 45,629 Total contract assets $ 81,074 Based on our tests of recoverability, we did not identify impairment of such contract assets as of September 30, 2022. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are as follows (in thousands): September 30, 2022 December 31, 2021 Raw materials $ 7,000 $ 5,610 Finished goods 21,490 13,985 Inventories 28,490 19,595 Less reserve for excess and obsolete inventory (9,301) (10,141) Inventories, net $ 19,189 $ 9,454 The provision recorded in the three months ended September 30, 2022 and 2021 was $44.8 thousand and $0.1 million for the CT segment and $14.4 thousand and nil for the DA segment, respectively. The provision recorded in the nine months ended September 30, 2022 and 2021 was $0.8 million and $0.5 million for the CT segment and $0.1 million and $0.2 million for the DA segment, respectively . The Company wrote off inventory of $1.0 million in the three and nine months ended September 30, 2022 relating to the Company’s decision to cease the manufacture and sale of hand sanitizers. There were no inventory write offs in the three and nine months ended September 30, 2021. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment are as follows (in thousands): September 30, 2022 December 31, 2021 Land $ 886 $ 886 Land improvements 520 520 Buildings and leasehold improvements 5,356 5,473 Machinery and equipment 6,683 6,843 Furniture and fixtures 545 620 Transportation equipment 806 878 Computer equipment and software 1,288 1,176 Property and equipment 16,084 16,396 Less accumulated depreciation (11,303) (11,100) Property and equipment, net $ 4,781 $ 5,296 Depreciation expense totaled $0.2 million and $0.2 million for the three months ended September 30, 2022 a nd 2021, and $0.6 million and $0.8 million for the nine months ended September 30, 2022 and 2021, respectively. During 2021, the Company committed to plans to sell its warehouse facility in Monahans, Texas in its current condition and as a result the associated assets in the amount of $0.5 million are classified as held for sale as of September 30, 2022 and |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | Leases In July 2021, the Company entered into a long-term rental agreement to lease its manufacturing facility in Waller, Texas, for $40.0 thousand per month for sixty-four months. Rental income recognized during nine months ended September 30, 2022 was $121.0 thousand, and was included in other expense, net in the consolidated statement of operations. Rental income recognized during the three and nine months ended September 30, 2021 was nil. As discussed in Note 6, “Property and Equipment” this facility was sold on April 18, 2022 and the lease agreement between the tenant and the Company terminated. In August 2021, the Company entered into a five-year triple net operating lease agreement to lease its warehouse facility in Monahans, Texas, for $21.0 thousand per month, and the tenant occupied the warehouse facility in September 2021. Rental income recognized during the three and nine months ended September 30, 2022 was $65.0 thousand and $196.0 thousand, respectively, and was included in other expense, net in the consolidated statement of operations. Rental income recognized during the three and nine months ended September 30, 2021 was $12.0 thousand and was included in other expense, net in the consolidated statement of operations. The components of lease expense and supplemental cash flow information are as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Operating lease expense $ 217 $ 247 $ 665 $ 735 Finance lease expense: Amortization of right-of-use assets 4 4 11 11 Interest on lease liabilities 1 2 5 9 Total finance lease expense 5 6 16 20 Short-term lease expense 68 15 270 44 Total lease expense $ 290 $ 268 $ 951 $ 799 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 461 $ 380 $ 1,186 $ 1,107 Operating cash flows from finance leases 13 10 32 62 Financing cash flows from finance leases 1 2 5 8 Maturities of lease liabilities as of September 30, 2022 are as follows (in thousands): Years ending December 31, Operating Leases Finance Leases 2022 (excluding the nine months ended September 30, 2022) $ 262 $ 9 2023 1,221 39 2024 1,247 22 2025 1,274 — 2026 1,302 — Thereafter 4,782 — Total lease payments $ 10,088 $ 70 Less: Interest (2,853) (6) Present value of lease liabilities $ 7,235 $ 64 Supplemental balance sheet information related to leases is as follows (in thousands): September 30, 2022 December 31, 2021 Operating Leases Operating lease right-of-use assets $ 1,715 $ 2,041 Current portion of operating lease liabilities 653 602 Long-term operating lease liabilities 6,582 7,779 Total operating lease liabilities $ 7,235 $ 8,381 Finance Leases Property and equipment $ 147 $ 147 Accumulated depreciation (52) (33) Property and equipment, net $ 95 $ 114 Current portion of finance lease liabilities $ 35 $ 41 Long-term finance lease liabilities 29 53 Total finance lease liabilities $ 64 $ 94 Weighted Average Remaining Lease Term Operating leases 8.9 years 9.1 years Finance leases 1.8 years 2.9 years Weighted Average Discount Rate Operating leases 8.9 % 8.9 % Finance leases 9.0 % 8.9 % |
Leases | Leases In July 2021, the Company entered into a long-term rental agreement to lease its manufacturing facility in Waller, Texas, for $40.0 thousand per month for sixty-four months. Rental income recognized during nine months ended September 30, 2022 was $121.0 thousand, and was included in other expense, net in the consolidated statement of operations. Rental income recognized during the three and nine months ended September 30, 2021 was nil. As discussed in Note 6, “Property and Equipment” this facility was sold on April 18, 2022 and the lease agreement between the tenant and the Company terminated. In August 2021, the Company entered into a five-year triple net operating lease agreement to lease its warehouse facility in Monahans, Texas, for $21.0 thousand per month, and the tenant occupied the warehouse facility in September 2021. Rental income recognized during the three and nine months ended September 30, 2022 was $65.0 thousand and $196.0 thousand, respectively, and was included in other expense, net in the consolidated statement of operations. Rental income recognized during the three and nine months ended September 30, 2021 was $12.0 thousand and was included in other expense, net in the consolidated statement of operations. The components of lease expense and supplemental cash flow information are as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Operating lease expense $ 217 $ 247 $ 665 $ 735 Finance lease expense: Amortization of right-of-use assets 4 4 11 11 Interest on lease liabilities 1 2 5 9 Total finance lease expense 5 6 16 20 Short-term lease expense 68 15 270 44 Total lease expense $ 290 $ 268 $ 951 $ 799 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 461 $ 380 $ 1,186 $ 1,107 Operating cash flows from finance leases 13 10 32 62 Financing cash flows from finance leases 1 2 5 8 Maturities of lease liabilities as of September 30, 2022 are as follows (in thousands): Years ending December 31, Operating Leases Finance Leases 2022 (excluding the nine months ended September 30, 2022) $ 262 $ 9 2023 1,221 39 2024 1,247 22 2025 1,274 — 2026 1,302 — Thereafter 4,782 — Total lease payments $ 10,088 $ 70 Less: Interest (2,853) (6) Present value of lease liabilities $ 7,235 $ 64 Supplemental balance sheet information related to leases is as follows (in thousands): September 30, 2022 December 31, 2021 Operating Leases Operating lease right-of-use assets $ 1,715 $ 2,041 Current portion of operating lease liabilities 653 602 Long-term operating lease liabilities 6,582 7,779 Total operating lease liabilities $ 7,235 $ 8,381 Finance Leases Property and equipment $ 147 $ 147 Accumulated depreciation (52) (33) Property and equipment, net $ 95 $ 114 Current portion of finance lease liabilities $ 35 $ 41 Long-term finance lease liabilities 29 53 Total finance lease liabilities $ 64 $ 94 Weighted Average Remaining Lease Term Operating leases 8.9 years 9.1 years Finance leases 1.8 years 2.9 years Weighted Average Discount Rate Operating leases 8.9 % 8.9 % Finance leases 9.0 % 8.9 % |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Current accrued liabilities are as follows (in thousands): September 30, 2022 December 31, 2021 Severance costs $ 2,606 $ 2,581 Loss on purchase commitments — 1,750 Payroll and benefits 2,866 1,054 Legal costs 41 1,013 Contingent liability for earn-out provision 502 608 Deferred revenue, current 283 528 Taxes other than income taxes 1,359 241 Other 1,743 1,221 Total current accrued liabilities $ 9,400 $ 8,996 |
Debt and Convertible Notes Paya
Debt and Convertible Notes Payable | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt and Convertible Notes Payable | Debt and Convertible Notes Payable Long Term Debt In April 2020, the Company received a $4.8 million loan (the “Flotek PPP loan”) under the Paycheck Protection Program (“PPP”), which was created through the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). In connection with the acquisition of JP3 in May 2020, the Company assumed a PPP loan of $0.9 million obtained by JP3 (the “JP3 PPP loan”) in April 2020 prior to its acquisition by Flotek. The PPP loans had a fixed interest rate of 1% and originally a two-year term, maturing in April and May 2022, respectively. No payments of principal or interest were required during the three or nine months ended September 30, 2022 and 2021. A portion of the loans may be eligible for forgiveness by the SBA depending on the extent of proceeds used for payroll costs and other designated expenses incurred for up to 24 weeks following loan origination, subject to adjustments for headcount reductions and compensation limits and provided that at least 60% of the eligible costs incurred were used for payroll. Receipt of these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support ongoing operations of the Company. This certification further required the Company to take into account current business activity and the ability to access other sources of liquidity sufficient to support ongoing operations in a manner that was not significantly detrimental to the business. The forgiveness of the loans is dependent on the Company having initially qualified for the loans and qualifying for the forgiveness of such loans based on our past and future adherence to the forgiveness criteria. The PPP loans are subject to any new guidance and new requirements released by the Department of the Treasury, which initially indicated that all companies that have received funds in excess of $2.0 million will be subject to audit by the SBA to further ensure PPP loans are limited to eligible borrowers in need. During the second quarter of 2021, the Company applied for forgiveness of the JP3 PPP loan with the SBA. In June 2021, the Company received notice from the SBA that the JP3 PPP loan and accrued interest were fully forgiven. Accordingly, during the second quarter of 2021, the Company recorded $0.9 million for the amount of principal and accrued interest forgiven associated with the JP3 PPP loan in other expense, net on the consolidated statement of operations. In October 2021, the Flotek PPP loan maturity date was extended from April 15, 2022 to April 15, 2025. During the third quarter of 2021, the Company submitted to the S BA, request for forgiveness of substantially all of the Flotek PPP loan. As of the date of this filing, the Company has not received a forgiveness notice. If the loan is not forgiven, monthly payments will be due over the remaining term o f the loan upon notice from the SBA that it will not be forgiven. Long-term debt, including current portion, assuming forgiveness is not obtained, is as follows (in thousands): September 30, 2022 December 31, 2021 Flotek PPP loan $ 4,788 $ 4,788 Less current maturities (1,853) (1,436) Total long-term debt, net of current portion $ 2,935 $ 3,352 Convertible Notes Payable On February 2, 2022, Flotek entered into a Private Investment in Public Equity transaction (the “PIPE transaction”) with a consortium of investors to secure growth capital for the Company. The PIPE transaction was exempted from the registration under the Securities Act of 1933, as amended (the “Securities Act”) in reliance on Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state securities laws. Pursuant to the PIPE transaction, Flotek issued $21.2 million in aggregate initial principal amount of Convertible Notes Payable for net cash proceeds of approximately $20.1 million. The investors are ProFrac Holdings, LLC, Burlington Ventures Ltd., entities associated with North Sound Management, certain funds associated with one of Flotek's directors including the D3 Family Fund and the D3 Bulldog Fund, and Firestorm Capital LLC. The Convertible Notes Payable accrue paid-in-kind interest at a rate of 10% per annum, have a maturity of one year, and are converted into common stock of Flotek (a) at the holder's option at any time prior to maturity, at a price of $1.088125 per share, (b) at Flotek's option, if the volume-weighted average trading price of Flotek's common stock equals or exceeds $2.50 for 20 trading days during a 30 consecutive trading day period, or (c) at maturity, at a price of $0.8705. On March 21, 2022, $3.0 million of the Convertible Notes Payable, plus accrued paid-in-kind interest thereon, were converted at the holder’s option into approximately 2.8 million shares of common stock. As of September 30, 2022, the remaining Convertible Notes Payable are recorded at carrying value of $19.1 million, including accrued paid-in-kind interest of $1.3 million, and net of unamortized issuance costs of $0.3 million. The estimated fair value of the Convertible Notes Payable at September 30, 2022 was $22.8 million. ProFrac Agreement Contract Consideration Convertible Notes Payable On February 2, 2022, the Company entered into a long-term supply agreement with ProFrac Services, LLC (the “ProFrac Agreement”), a subsidiary of ProFrac Holdings LLC, in exchange for $10 million in aggregate principal amount of Contract Consideration Convertible Notes Payable (“ProFrac Agreement Contract Consideration Convertible Notes Payable”), under the same terms as the Convertible Notes Payable issued in the PIPE transaction. This offering of the Contract Consideration Convertible Notes Payable was exempted from the registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state securities laws. The ProFrac Agreement Contract Consideration Convertible Notes Payable are accounted for as liability classified convertible instruments and were initially recorded at fair value of $10.0 million on the issuance date and remeasured to fair value of $12.6 million as of September 30, 2022 which includes paid-in-kind interest of $0.7 million. The fair value adjustment was an increase of $0.6 million and a $1.9 million in the three and nine months ended September 30, 2022, respectively. See Note 10, “Fair Value Measurements”. Amended ProFrac Agreement Contract Consideration Convertible Notes Payable On May 17, 2022, the Company entered into an amendment to the ProFrac Agreement (the “Amended ProFrac Agreement”) upon issuance of $50 million in aggregate principal amount of Contract Consideration Convertible Notes Payable (“Amended ProFrac Agreement Contract Consideration Convertible Notes Payable”) to ProFrac. This offering of the Amended ProFrac Agreement Contract Consideration Convertible Notes Payable was exempted from the registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state securities laws. The Amended ProFrac Agreement Contract Consideration Convertible Notes Payable may be converted at any time prior to the maturity date, which is one year from the date of issuance under the same stock conversion terms as the Convertible Notes Payable issued in the PIPE transaction. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets and liabilities into the three levels of the fair value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value and bases categorization within the hierarchy on the lowest level of input that is available and significant to the fair value measurement. • Level 1 — Quoted prices in active markets for identical assets or liabilities; • Level 2 — Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 — Significant unobservable inputs that are supported by little or no market activity or that are based on the reporting entity’s assumptions about the inputs. Fair Value of Other Financial Instruments The carrying amounts of certain financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accrued liabilities and accounts payable approximate fair value due to the short-term nature of these accounts. Liabilities Measured at Fair Value on a Recurring Basis The following table presents the Company’s liabilities that are measured at fair value on a recurring basis and the level within the fair value hierarchy (in thousands): September 30, December 31, Level 1 Level 2 Level 3 2022 Level 1 Level 2 Level 3 2021 Contingent earnout consideration $ — $ — $ 502 $ 502 $ — $ — $ 608 $ 608 ProFrac Agreement contract consideration convertible notes $ — $ — 12,570 $ 12,570 $ — $ — $ — $ — Amended ProFrac Agreement contract consideration convertible notes $ — $ — 60,460 $ 60,460 $ — $ — $ — $ — Total $ — $ — $ 73,532 $ 73,532 $ — $ — $ 608 $ 608 Contingent Earnout Consideration Key Inputs The estimated fair value of the remaining stock performance earn-out provision, with respect to the JP3 transaction, is included in accrued liabilities as of September 30, 2022 and December 31, 2021. The estimated fair value of the earn-out provision at the end of each period was valued using a Monte Carlo model analyzing 20,000 simulations performed using Geometric Brownian Motion with inputs such as risk-neutral expected growth and volatility. The key inputs into the Monte Carlo simulation used to estimate the fair value of the earn-out provision were as follows: September 30, 2022 December 31, 2021 Risk-free interest rate 4.24% 1.02% Expected volatility 100.0% 90.0% Term until liquidation (years) 2.63 3.38 Stock price $1.00 $1.13 Discount rate 11.91% 6.71% ProFrac Agreement Contract Consideration Notes Payable Key Inputs The ProFrac Agreement Contract Consideration Convertible Notes Payable were measured at fair value at issuance and on a recurring basis. The ProFrac Agreement Contract Consideration Convertible Notes Payable had an initial fair value of $10.0 million on February 2, 2022. The ProFrac Agreement Contract Consideration Convertible Notes Payable were classified as Level 2 at the initial measurement due to the use of a quoted price for a similar liability, and classified as Level 3 subsequently due to the use of unobservable inputs. The estimated value of the ProFrac Agreement Contract Consideration Convertible Notes Payable as of September 30, 2022 was valued using a Monte Carlo simulation with inputs such as the market trading price of the Company’s common stock, the expected volatility of the Company’s stock price based on historical trends, a risk-free rate of interest based on US Treasury note rates and the term of the debt, the time to liquidation based on the maturity date of the notes, and a discount rate based on the risk free rate of interest. The key inputs into the Monte Carlo simulation used to estimate the fair value of the ProFrac Agreement Contract Consideration Convertible Notes Payable maturing February 2, 2023, as of September 30, 2022 were as follows: September 30, 2022 Risk-free interest rate 3.55% Expected volatility 100.0% Term until liquidation (years) 0.342 Stock price $1.00 Discount rate 3.55% The valuation of the ProFrac Agreement Contract Consideration Convertible Notes Payable was $12.6 million as of September 30, 2022. Amended ProFrac Agreement Contract Consideration Convertible Notes Payable Key Inputs On May 17, 2022, the Company measured the Amended ProFrac Agreement Contract Consideration Convertible Notes Payable classified as Level 3 using a Monte Carlo simulation at an estimated fair value of $69.5 million. The estimated value of the Amended ProFrac Agreement Contract Consideration Convertible Notes Payable was valued using a Monte Carlo simulation with inputs such as the market trading price of the Company’s common stock, the expected volatility of the Company’s stock price based on historical trends, a risk-free rate of interest based on US Treasury note rates and the term of the debt, the time to liquidation based on the maturity date of the notes, and a discount rate based on the risk free rate of interest. The key inputs into the Monte Carlo simulation used to estimate the fair value of the Amended ProFrac Agreement Contract Consideration Convertible Notes Payable, as of September 30, 2022 were as follows: September 30, 2022 Risk-free interest rate 3.95% Expected volatility 100.0% Term until liquidation (years) 0.63 Stock price $1.00 Discount rate 3.95% The value of the Amended ProFrac Agreement Contract Consideration Convertible Notes Payable as of September 30, 2022 was $60.5 million. Assets Measured at Fair Value on a Nonrecurring Basis The Company’s non-financial assets, including property and equipment and operating lease right-of-use assets, are measured at fair value on a non-recurring basis and are subject to fair value adjustment in certain circumstances. Level 3 Rollforward for Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company estimated the fair value of the remaining stock performance earn-out provision as of September 30, 2022 and 2021 and adjusted the estimated fair value of the contingent liability to $0.5 million and $0.7 million, respectively. The Company records changes in the fair value of the contingent consideration and achievement of performance targets in cost of goods sold. The Company estimated the initial fair value of $10.0 million of the ProFrac Agreement Contract Consideration Convertible Notes Payable on February 2, 2022, by reference to the cash purchase price paid by third party investors for equivalent notes issued simultaneously by the Company. The Company estimated the fair value of the additional $69.5 million of the Amended ProFrac Agreement Contract Consideration Convertible Notes Payable on the issuance date of May 17, 2022 using a Monte Carlo simulation. The Company adjusted the estimated fair value of the Contract Consideration Convertible Notes Payable to $73.0 million as of September 30, 2022. The following table presents the changes in the assets and liabilities measured at fair value on a recurring basis classified as Level 3 (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Balance - beginning of period $ 67,694 $ 1,115 $ 608 $ 1,416 Transfer of ProFrac Agreement contract consideration convertible notes payable from Level 2 — — 10,000 — Issuance of Amended ProFrac Agreement contract consideration convertible notes payable — — 69,460 — Increase in principle of ProFrac Agreement contract consideration convertible notes payable for paid-in-kind interest 266 — 681 — Increase in principle of Amended ProFrac Agreement contract consideration convertible notes payable for paid-in-kind interest 1,293 — 1,905 — Change in fair value of contingent earnout consideration 28 (400) (106) (701) Change in fair value of ProFrac Agreement contract consideration convertible notes payable 634 — 1,889 — Change in fair value of Amended ProFrac Agreement contract consideration convertible notes payable 3,617 — (10,905) — Balance - end of period $ 73,532 $ 715 $ 73,532 $ 715 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes A reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows: Three months ended September 30, 2022 Nine months ended September 30, 2022 2022 2021 2022 2021 U.S. federal statutory tax rate 21.0 % 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit — — — (0.2) Non-U.S. income taxed at different rates 0.2 0.8 (0.3) 0.3 Increase (reduction) in tax benefit related to stock-based awards — (0.3) (0.4) 1.2 Non-deductible expenses 0.5 5.8 0.4 1.1 Increase in valuation allowance (21.7) (27.3) (20.7) (23.6) 2018 IRS exam assessment — — (0.4) — Effective income tax rate — % — % (0.4) % (0.2) % |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation The Company is subject to routine litigation and other claims that arise in the normal course of business. Management is not aware of any pending or threatened lawsuits or proceedings that are expected to have a material effect on the Company’s financial position, results of operations or liquidity. Former CEO Matter During the year ended December 31, 2021, Flotek commenced an internal investigation into the activities of John Chisholm (Flotek’s previous CEO) due to irregularities in expenses and transactions during the years from 2014 to 2018. The investigation revealed evidence of related party transactions/self-dealing, inappropriate personal expenses, and general corporate waste. Flotek’s board engaged a third party to review the findings of the investigation. After the third-party review, Flotek concluded that its current and historical financial statements can be relied upon, that proper action had been taken, and that no members of current management were implicated in any way. Beginning in December 2021, Flotek sent demand letters to, and subsequently filed arbitration or other legal proceedings against, John Chisholm, Casey Doherty/Doherty & Doherty LLP (Flotek’s former outside general counsel) and Moss Adams LLP (Flotek’s former independent public audit firm) to recover damages. John Chisholm subsequently filed a counterclaim against Flotek in the arbitration proceeding for his remaining severance (currently accrued by the Company, but payment for which was suspended). Although Flotek believes its claims are supported by the available evidence, the timing and amount of any outcome cannot reasonably be predicted. Terpene Supply Agreement On October 29, 2021, the Company reached agreement (“the ADM Settlement) with Archer-Daniels-Midland Company (“ADM”), Florida Chemical Company (“FCC”) and other parties to pay $1.75 million and resolve all claims between the parties in relation to lawsuit claiming damages relating to the terpene supply agreement between Flotek Chemistry, LCC (“Flotek Chemistry”), a wholly owned subsidiary of the Company and FCC. The one-time payment of $1.75 million from Flotek to ADM was paid on January 3, 2022 and was included as restricted cash on the consolidated balance sheet as of December 31, 2021. Other Commitments and Contingencies The Company is subject to concentrations of credit risk within trade accounts receivable, and related party accounts receivable, as the Company does not generally require collateral as support for trade receivables. In addition, the majority of the Company’s cash is invested in three major U.S. financial institutions and balances often exceed insurable amounts. |
Stockholders_ Equity
Stockholders’ Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Stockholders’ Equity | Stockholders’ Equity On March 21, 2022, the Convertible Notes Payable which had been purchased by certain funds associated with one of the Company’s directors, which aggregated $3.0 million plus $39 thousand of accrued interest, were converted into 2,793,030 shares of the Company’s common stock. On June 21, 2022, ProFrac Holdings II, LLC paid $19.5 million for PreFunded Warrants of the Company. The PreFunded Warrants were recorded at their fair value of $11.1 million, less $1.2 million of transaction costs paid. The remaining cash received of $8.4 million was recognized as an equity contribution. This offering of the Prefunded Warrants was exempted from the registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and in reliance on similar exemptions under applicable state securities laws. The Prefunded Warrants will permit ProFrac Holdings II, LLC to purchase 13,104,839 shares of common stock of the Company at an exercise price equal to $0.0001 per share, representing a 20% premium to the 30-day volume average price of the Company’s common stock at the close of business on the day prior to the date of the issuance of the Prefunded Warrants. The Prefunded Warrants, net of transaction fees of $1.1 million, and the equity contribution of $8.4 million from ProFrac are included in additional paid-in capital as of September 30, 2022. ProFrac Holdings and its affiliates may not receive any voting or consent rights in respect of the Prefunded Warrants or the underlying shares unless and until (i) the Company has obtained approval from a majority of its shareholders excluding ProFrac Holdings and its affiliates and (ii) ProFrac Holdings has paid an additional $4.5 million to the Company. The additional $4.5 million will be accounted for as equity contribution when received. During the first quarter 2021, the Company identified 0.6 million shares that were improperly included in the December 31, 2020 issued share count, and the Company adjusted the issued share count presented on the statement of stockholders’ equity. This adjustment was not material to the September 30, 2022 consolidated financial statements or basic and diluted earnings per share. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share Basic income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per common share is calculated by dividing the adjusted net income (loss) by the weighted average number of common shares outstanding combined with dilutive common share equivalents outstanding, if the effect is dilutive. Potentially dilutive common share equivalents consist of incremental shares of common stock issuable upon conversion of convertible notes payable, exercise of stock warrants and vesting and settlement of stock awards. The dilutive effect of non-vested stock issued under share‑based compensation plans, shares issuable under the Employee Stock Purchase Plan (ESPP), employee stock options outstanding, and the prefunded stock warrants are computed using the treasury stock method. The dilutive effect of the Convertible Notes is computed using the if‑converted method in accordance with ASU 2020-06, which was adopted by the Company on January 1, 2022 (see Note 2, “Summary of Significant Accounting Policies”). The calculation of the basic and diluted income (loss) per share for the three and nine months ended September 30, 2022 is as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2022 Numerator: Net income (loss) for basic earnings per share $ (18,794) $ (23,278) Anti-dilutive Adjustment to Net Income available to shareholders excluded from Numerator for Diluted Earnings Computation Paid-in-Kind interest expense on convertible notes payable, net of tax 2,043 3,861 Valuation (gain) loss on convertible notes carried at FV, net of tax 4,250 (9,016) Total numerator adjustment excluded from diluted earnings computation $ 6,293 $ (5,155) Denominator: Basic and diluted weighted average shares outstanding 75,312 74,095 Anti-dilutive Incremental Shares Excluded from Denominator for Diluted Earnings Computation Average number of diluted shares for convertible notes payable 74,395 47,354 Average number of diluted shares for stock warrants 8,897 3,324 Average number of diluted shares for options and restricted 418 571 Basic and diluted loss per share (0.25) (0.31) For the three and nine months ended September 30, 2022 paid-in-kind interest expense, net of tax, on convertible notes payable and the change in fair value related to the contract consideration convertible notes payable, net of tax, were not included in the dilution calculation since including them would have an anti-dilutive effect on the loss per share due to the net loss incurred during the periods. For the three and nine months ended September 30, 2022 weighted average shares for convertible notes payable, weighted average shares for stock warrants and weighted average shares for employee stock awards were not included in the dilution calculation since including them would have an anti-dilutive effect on the loss per share due to the net loss incurred during the periods. For the three months ended September 30, 2021, diluted earnings per common share included 851,702 common share equivalents. For the nine months ended September 30, 2021, weighted average shares for employee stock awards of 1,130,719, were not included in the calculation of diluted loss per share since including them would have an anti-dilutive effect on the loss per share due to the net loss incurred during the periods. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Supplemental cash flow information is as follows (in thousands): Nine months ended September 30, 2022 2021 Supplemental cash flow information: Interest paid $ 25 $ 17 Income taxes received — (351) Supplemental non-cash activities: Employee retention credit — 2,851 Non cash financing and investing activities: Issuance of convertible notes payable as consideration for ProFrac Agreements 79,460 — Conversion of convertible notes payable to common stock 2,948 — |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions In January 2017, the Internal Revenue Service (“IRS”) notified the Company that it was examining the Company’s federal tax returns for the year ended December 31, 2014. As a result of this examination, the IRS informed the Company on May 1, 2019, that certain employment taxes related to the compensation of our former CEO, Mr. Chisholm, were not properly withheld in 2014 and proposed an adjustment. Mr. Chisholm’s affiliated companies through which he provided his services have agreed to indemnify the Company for any such taxes, and Mr. Chisholm executed a personal guaranty in favor of the Company, supporting this indemnification. In October 2019, an amendment to the employment agreement of Mr. Chisholm was executed, giving the Company the contractual right of offset for any amounts owed by Mr. Chisholm to the Company for the IRS matter, and giving the Company the right to withhold payments to Mr. Chisholm equal to amounts reasonably estimated to potentially become due to the Company by the affiliated companies for the IRS matter from any amounts owed under the employment agreement. On December 31, 2019, the Company netted the related party receivable against the severance payable and recorded $1.8 million for potential liability to the IRS. On January 5, 2020, Mr. Chisholm ceased to be an employee of the Company. In September 2020, the Company informed Mr. Chisholm it would cease payment of future severance. During first quarter of 2020, an additional accrual was recorded for $0.2 million related to potential penalties and interest on the IRS obligation. As of September 30, 2022 and December 31, 2021, the receivable from Mr. Chisholm was $1.4 million, which equaled the payable to the IRS and netted with Mr. Chisholm’s severance liability. Both the IRS and severance liabilities are recorded in accrued liabilities on the consolidated balance sheet. Mr. Ted D. Brown was a Director of the Company beginning in November of 2013 and is the President and CEO of Confluence Resources LP (“Confluence”), a private oil and gas exploration and production company. As of April 15, 2022 Ted D. Brown stepped down from being a Director of the Company and Confluence will no longer be considered a related party as of April 15, 2022. The Company’s revenues for chemical sales to Confluence were $1.4 million through April 15, 2022. The Company’s revenues from chemical sales to Confluence for the three and nine months ended September 30, 2021 were $1.3 million and $1.3 million, respectively. As of December 31, 2021, Confluence owed $1.3 million which is recorded in accounts receivable, related party on the consolidated balance sheet. On February 2, 2022, the Company entered into a long-term supply agreement with ProFrac Services, LLC (the “ProFrac Agreement”) upon issuance of $10 million in aggregate principal amount of the convertible notes (the “Contract Consideration Convertible Notes Payable”) to ProFrac Holdings LLC (see Note 9, “Debt and Convertible Notes Payable”). Under the ProFrac Agreement, ProFrac Services, LLC is obligated to order chemicals from the Company at least equal to the greater of (a) the chemicals required for 33% of ProFrac Services, LLC’s hydraulic fracturing fleets and (b) a baseline measured by the first ten hydraulic fracturing fleets deployed by ProFrac Services, LLC during the term of the ProFrac Agreement. If the minimum volumes are not achieved in any given year, ProFrac Services LLC shall pay to the Company, as liquidated damages an amount equal to twenty-five percent (25%) of the difference between (i) the aggregate purchase price of the quantity of products comprising the minimum purchase obligation and (ii) the actual purchased volume during such calendar year. The term of the ProFrac Agreement is three years starting on April 1, 2022. On May 17, 2022, the Company entered into an amendment to the ProFrac Agreement (the “Amended ProFrac Agreement” and collectively the “ProFrac Agreements”) upon issuance of $50 million in aggregate principal amount of Contract Consideration Convertible Notes Payable (see Note 9, “Debt and Convertible Notes Payable”). The ProFrac Agreement was amended to (a) increase ProFrac Services LLC’s minimum purchase obligation for each year to the greater of 70% of ProFrac Services LLC’s requirements and a baseline measured by ProFrac Services LLC’s first 30 hydraulic fracturing fleets, and (b) increase the term to 10 years. On June 21, 2022, the Company issued prefunded warrants (the “PreFunded Warrants”) to ProFrac Holdings II, LLC, in exchange for $19.5 million in cash as discussed in Note 13, “Stockholders’ Equity”. During the three and nine months ended September 30, 2022, the Company’s revenues from c hemical sales to ProFrac Services LLC were $30.4 million and $48.1 million respectively. These revenues were net of amortization of contract assets of $1.2 million and $2.0 million for the three and nine months ended September 30, 2022, respectively. As of September 30, 2022 and December 31, 2021, our accounts receivable from ProFrac Services, LLC was $25.9 million and zero, respectively which is recorded in accounts receivable, related party on the consolidated balance sheet. On March 21, 2022, the Convertible Notes Payable which had been purchased by certain funds associated with one of the Company’s directors including the D3 Family Fund and the D3 Bulldog Fund, which aggregated $3.0 million plus $39 thousand of accrued interest, were converted into 2,793,030 shares of the Company’s common stock. |
Business Segment, Geographic an
Business Segment, Geographic and Major Customer Information | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Business Segment, Geographic and Major Customer Information | Business Segment, Geographic and Major Customer Information Segment Information Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision-maker in deciding how to allocate resources and assess performance. The operations of the Company are categorized into the following reportable segments: CT and DA. Chemistry Technologies. The CT segment includes green specialty chemistries, logistics and technology services, which enable its customers to pursue improved efficiencies and performance throughout the life cycle of their wells, helping customers improve their environmental, social and governance (“ESG) and operational goals. Customers of the CT segment include major integrated oil and gas companies, oilfield services companies, independent oil and gas companies, national and state-owned oil companies, and international supply chain management companies . Data Analytics. The DA segment, created in the second quarter of 2020 in conjunction with the acquisition of JP3 on May 18, 2020, includes the design, development, production, sale and support of equipment and services that create and provide valuable information on the composition and properties of energy customers’ hydrocarbon fluids. The company markets products and services that support in-line data analysis of hydrocarbon components and properties. Customers of the DA segment span across the entire oil and gas market, from upstream production to midstream facilities to refineries and distribution networks Performance is based upon a variety of criteria. The primary financial measure is segment operating income (loss). Various functions, including certain sales and marketing activities and general and administrative activities, are provided centrally by the corporate office. Costs associated with corporate office functions, other corporate income and expense items, and income taxes are not allocated to the reportable segment. Summarized financial information of the reportable segments is as follows (in thousands): As of and for the three months ended September 30, Chemistry Technologies Data Analytics Corporate and Other Total 2022 Revenue from external customers $ 13,511 $ 1,695 $ — $ 15,206 Revenue from related party 30,417 — — 30,417 Change in fair value of contract consideration convertible notes 4,250 — — 4,250 Loss from operations (10,603) (745) (4,931) (16,279) Depreciation and amortization 162 14 1 177 Additions to long-lived assets 25 33 112 170 2021 Revenue from external customers $ 8,044 $ 803 $ — $ 8,847 Revenue from related party 1,332 — — 1,332 Income (loss) from operations 4,399 (1,071) (2,696) 632 Depreciation and amortization 215 17 1 233 Additions to long-lived assets — — — — As of and for the nine months ended September 30, Chemistry Technologies Data Analytics Corporate and Other Total 2022 Revenue from external customers $ 34,933 $ 3,479 $ — $ 38,412 Revenue from related party 49,462 — — 49,462 Change in fair value of contract consideration convertible notes (9,016) — — (9,016) Loss from operations (1,716) (2,751) (14,057) (18,524) Depreciation and amortization 507 45 2 554 Additions to long-lived assets 30 33 112 175 2021 Revenue from external customers $ 26,033 $ 3,749 $ — $ 29,782 Revenue from related party 1,332 — — 1,332 Loss from operations (3,009) (2,138) (9,926) (15,073) Depreciation and amortization 739 52 2 793 Additions to long-lived assets 31 — — 31 Assets of the Company by reportable segments are as follows (in thousands): September 30, 2022 December 31, 2021 Chemistry Technologies $ 150,160 $ 34,387 Data Analytics 7,215 7,329 Corporate and Other 6,644 8,528 Total assets $ 164,019 $ 50,244 The increase in Chemistry Technologies assets is primarily due to contact assets of $81.1 million. Geographic Information Revenue by country is based on the location where services are provided and products are sold. No individual countries other than the U.S. and the United Arab Emirates (“UAE”) accounted for more than 10% of revenue. Revenue by geographic location is as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 U.S. (1) $ 42,670 $ 8,094 $ 78,959 $ 24,624 UAE 2,242 1,319 6,692 3,741 Other countries 711 766 2,223 2,749 Total revenue $ 45,623 $ 10,179 $ 87,874 $ 31,114 (1) Includes revenue from related party Long-lived assets held in countries other than the U.S. are not considered material to the consolidated financial statements. Major Customers Revenue from major customers, as a percentage of consolidated revenue, is as follows (in thousands): Three months ended September 30, Revenue % of Total Revenue 2022 Customer A (Related Party) $ 30,417 66.7 % 2021 Customer C $ 3,041 29.9 % Customer D 1,332 13.1 % Nine months ended September 30, Revenue % of Total Revenue 2022 Customer A (Related Party) $ 48,074 54.7 % Customer B 10,905 12.4 % 2021 Customer C $ 7,701 24.8 % Customer D 4,067 13.1 % The majority of t he Company’s revenue consists predominantly of customers within the oil and gas industry. Customers within the oil and gas industry include ProFrac and other oilfield services companies, integrated oil and natural gas companies, independent oil and natural gas companies, and state-owned national oil companies. The concentration with ProFrac and in the oil and gas industry increases credit and business risk . |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated the effects of events that have occurred subsequent to September 30, 2022, and there have been no material events that would require recognition in the September 30, 2022 interim financial statements or disclosure in the notes to the consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of PresentationThe accompanying unaudited consolidated financial statements reflect all adjustments, in the opinion of management, necessary for the fair statement of the financial condition and results of operations for the periods presented. All such adjustments are normal and recurring in nature. The financial statements, including selected notes, have been prepared in accordance with applicable rules and regulations of the SEC regarding interim financial reporting and do not include all information and disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for comprehensive financial statement reporting. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s 2021 Annual Report. |
Consolidation | All significant intercompany accounts and transactions have been eliminated in consolidation. The Company does not have investments in any unconsolidated subsidiaries. |
Cash Equivalents | Cash Equivalents Cash equivalents consist of highly liquid investments with maturities of three months or less at the date of purchase. |
Restricted Cash | Restricted Cash The Company’s restricted cash is $0.1 million and $1.8 million as of September 30, 2022 and December 31, 2021, respectively. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable, including those with related party, arise from product sales and services and are stated at estimated net realizable value. This value incorporates an allowance for doubtful accounts to reflect any loss anticipated on accounts receivable balances. The Company regularly evaluates its accounts receivable to estimate amounts that will not be collected and records the appropriate allowance for doubtful accounts as a charge to operating expenses. The allowance for doubtful accounts is based on a combination of the age of the receivables, individual customer circumstances, credit conditions, and historical write-offs and collections. The Company writes off specific accounts receivable when they are determined to be uncollectible. The recovery of accounts receivable previously written off is recorded as a reduction to the allowance for doubtful accounts charged to operating expense. The majority of the Company’s customers are engaged in the energy industry. The cyclical nature of the energy industry may affect customers’ operating performance and cash flows, which directly impact the Company’s ability to collect on outstanding obligations. Additionally, certain customers are located in international areas that are inherently subject to risks of economic, political, and civil instability, which can impact the collectability of receivables. |
Contract Assets | Contract Assets The Company’s contract assets represent consideration issued in the form of convertible notes and other incremental costs related to obtaining a contract with a related party customer. The contract assets are amortized over the term of the related party contract based on forecasted revenues as goods are transferred to the related party customer and the amortization is presented as a reduction of the transaction price included in related party revenue in the consolidated statements of operations. The contract assets are tested for recoverability on a recurring basis and the Company will recognize an impairment loss to the extent that the carrying amount of the contract assets exceeds the amount of consideration the Company expects to receive in the future for the transfer of goods under the contract less the direct costs that relate to providing those goods in the future. |
Inventories | Inventories Inventories consist of raw materials and finished goods and are stated at the lower of cost determined using the weighted-average cost method, or net realizable value. Finished goods inventories include raw materials, direct labor and production overhead. The Company periodically reviews inventories on hand and current market conditions to determine if the cost of raw materials and finished goods inventories exceed current market prices and impairs the cost basis of the inventory accordingly. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its net realizable value if those amounts are determined to be less than cost. Write-downs or write-offs of inventory are charged to cost of goods sold. |
Property and Equipment | Property and equipment Property and equipment are stated at cost. The cost of ordinary maintenance and repair is charged to operating expense, while replacement of critical components and major improvements are capitalized. Depreciation or amortization of property and equipment, including right-of-use assets (“ROU”), is calculated using the straight-line method over the asset’s estimated useful life as follows: Buildings and leasehold improvements 2-30 years Machinery and equipment 7-10 years Furniture and fixtures 3 years Land improvements 20 years Transportation equipment 2-5 years Computer equipment and software 3-7 years Property and equipment, including ROU assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. If events or changes in circumstances indicate |
Liability Classified Convertible Notes Payable and Contingent Convertible Notes Payable | The Company accounts for the Convertible Notes Payable at amortized cost pursuant to Financial Accounting Standards Board (“FASB”) ASC Topic 470, Debt. The Company accounts for the Contract Consideration Convertible Notes Payable issued as consideration related to a related party contract (see Note 9, “Debt and Convertible Notes Payable”), as liability classified convertible instruments in accordance with FASB ASC 718, “Stock Compensation” (“ASC 718”). Under ASC 718, liability classified convertible instruments are measured at fair value at the grant date and at each reporting date (see Note 10, “Fair Value Measurements”) with the change in fair value included in the consolidated statements of operations. |
Fair Value Measurements | Fair Value Measurements The Company categorizes financial assets and liabilities using a three-tier fair value hierarchy, based on the nature of the inputs used to determine fair value. Inputs refer broadly to assumptions that market participants would use to value an asset or liability and may be observable or unobservable. When determining the fair value of assets and liabilities, the Company uses the most reliable measurement available. See Note 10, “Fair Value Measurements.” Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets and liabilities into the three levels of the fair value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value and bases categorization within the hierarchy on the lowest level of input that is available and significant to the fair value measurement. • Level 1 — Quoted prices in active markets for identical assets or liabilities; • Level 2 — Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 — Significant unobservable inputs that are supported by little or no market activity or that are based on the reporting entity’s assumptions about the inputs. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue to depict the transfer of control of promised goods or services to its customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company recognizes revenue based on a five-step model when all of the following criteria have been met: (i) a contract with a customer exists, (ii) performance obligations have been identified, (iii) the price to the customer has been determined, (iv) the price to the customer has been allocated to the performance obligations, and (v) performance obligations are satisfied. Products and services are sold with fixed or determinable prices. Certain sales include right of return provisions, which are considered when recognizing revenue and deferred accordingly. Deposits and other funds received in advance of delivery are deferred until the transfer of control is complete. The Company applies several practical expedients including: • Sales commissions are expensed as selling, general and administrative expenses when incurred because the amortization period is generally one year or less. • The Company’s payment terms are short-term in nature with settlements of one year or less. As a result the Company does not adjust the promised amount of consideration for the effects of a significant financing component. • In most service contracts, the Company has the right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance obligations completed to date and as such the Company recognizes revenue in the amount to which it has a right to invoice. • The Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer. Such taxes are included in accrued liabilities on our consolidated balance sheet until remitted to the governmental agency. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold in our consolidated statement of operations. |
Foreign Currency Translation | Foreign Currency Translation Financial statements of foreign subsidiaries are prepared using the currency of the primary economic environment of the foreign subsidiaries as the functional currency. Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at exchange rates in effect as of the end of identified reporting periods. Revenue and expense transactions are translated using the average monthly exchange rate for the reporting period. Resultant translation adjustments are recognized as other comprehensive income (loss) within stockholders’ equity. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) encompasses all changes in stockholders’ equity, except those arising from investments and distributions to stockholders. The Company’s comprehensive income (loss) includes consolidated net income (loss) and foreign currency translation adjustments. |
Research and Development Costs | Research and Development Costs Expenditures for research activities relating to product development and improvement are charged to expense as incurred. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for temporary differences between financial statement carrying amounts and the tax bases of assets and liabilities and are measured using the tax rates expected to be in effect when the differences reverse. Deferred tax assets are also recognized for operating loss and tax credit carry forwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of a valuation allowance requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company’s policy is to record interest and penalties related to uncertain tax positions as income tax expense. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense, related to stock options, restricted stock awards and restricted stock units, is recognized based on their grant-date fair values. The Company recognizes compensation expense, net of estimated forfeitures, on a straight-line basis over the requisite service period of the award. Estimated forfeitures are based on historical experience. |
Stock Warrants | Stock Warrants The Company evaluated the Prefunded Warrants issued in June 2022 in accordance with ASC 815-40, “Contracts in Entity’s Own Equity” and determined that the warrants meet the criteria to be classified within stockholders’ equity and recorded the proceeds received for the Prefunded Warrants within additional paid in capital in the consolidated balance sheets. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results could differ from these estimates. Significant items subject to estimates and assumptions include the useful lives of property and equipment; long lived asset impairment assessments; stock-based compensation expense; valuation allowances for accounts receivable, inventories, and deferred tax assets; recoverability and timing of the realization of contract assets; and fair value of liability classified Contract Consideration Convertible Notes Payable and equity classified Stock Warrants. |
Reclassifications | Reclassifications Certain prior year amounts in the unaudited condensed consolidated statement of operations have been reclassified to conform to the current year presentation. In the fourth quarter of 2021, the Company changed its financial statement presentation to report cost of goods sold and gross loss and eliminated the reporting of operating expenses (excluding depreciation and amortization) on the consolidated statements of operations to conform to customary industry reporting practices. In connection with this change in presentation, the Company reclassified selling costs of $1.4 million and $4.4 million to selling, general and administrative expenses which were previously reported in operating expenses for the three and nine months ended September 30, 2021 respectively. The reclassifications and change in presentation of the statements of operations did not impact previously recorded income (loss) from operations, net income (loss) or stockholders’ equity. |
Recent Accounting Pronouncements And New Accounting Standards Issued and Adopted | Recent Accounting Pronouncements Changes to U.S. GAAP are established by the FASB. We evaluate the applicability and impact of all authoritative guidance issued by the FASB. Guidance not listed below was assessed and determined to be either not applicable, clarifications of items listed below, immaterial or already adopted by the Company. New Accounting Standards Issued and Adopted as of January 1, 2022 The FASB issued ASU No. 2020-06, “ Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ” This standard changes the accounting for convertible instruments by reducing the number of accounting models, amends the requirements for a conversion option to be classified in equity and amends diluted earnings per share calculations for certain convertible debt instruments. The pronouncement is effective for smaller reporting companies for fiscal years beginning after December 15, 2023, with early adoption allowed for fiscal years beginning after December 15, 2020. The Company adopted this standard as of January 1, 2022, and the adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures as of January 1, 2022 as there were no convertible debt instruments outstanding as of that date. The FASB issued ASU No. 2021-10, “Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance.” This standard provides guidance on disclosures for transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The pronouncement is effective for fiscal years beginning after December 15, 2021.The Company adopted this standard as of January 1, 2022 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. New Accounting Standards Issued But Not Adopted as of September 30, 2022 The FASB issued ASU No. 2016-13, “ Measurement of Credit Losses on Financial Instruments .” This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects estimates of expected credit losses over their contractual life that are recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. The pronouncement is effective for smaller reporting companies for fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact of this standard, including subsequent amendments, on the consolidated financial statements and related disclosures. |
Earnings (Loss) Per Share | Basic income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per common share is calculated by dividing the adjusted net income (loss) by the weighted average number of common shares outstanding combined with dilutive common share equivalents outstanding, if the effect is dilutive. Potentially dilutive common share equivalents consist of incremental shares of common stock issuable upon conversion of convertible notes payable, exercise of stock warrants and vesting and settlement of stock awards. The dilutive effect of non-vested stock issued under share‑based compensation plans, shares issuable under the Employee Stock Purchase Plan (ESPP), employee stock options outstanding, and the prefunded stock warrants are computed using the treasury stock method. The dilutive effect of the Convertible Notes is computed using the if‑converted method in accordance with ASU 2020-06, which was adopted by the Company on January 1, 2022 (see Note 2, “Summary of Significant Accounting Policies”). |
Segment Information | Segment Information Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision-maker in deciding how to allocate resources and assess performance. The operations of the Company are categorized into the following reportable segments: CT and DA. Chemistry Technologies. The CT segment includes green specialty chemistries, logistics and technology services, which enable its customers to pursue improved efficiencies and performance throughout the life cycle of their wells, helping customers improve their environmental, social and governance (“ESG) and operational goals. Customers of the CT segment include major integrated oil and gas companies, oilfield services companies, independent oil and gas companies, national and state-owned oil companies, and international supply chain management companies . Data Analytics. The DA segment, created in the second quarter of 2020 in conjunction with the acquisition of JP3 on May 18, 2020, includes the design, development, production, sale and support of equipment and services that create and provide valuable information on the composition and properties of energy customers’ hydrocarbon fluids. The company markets products and services that support in-line data analysis of hydrocarbon components and properties. Customers of the DA segment span across the entire oil and gas market, from upstream production to midstream facilities to refineries and distribution networks Performance is based upon a variety of criteria. The primary financial measure is segment operating income (loss). Various functions, including certain sales and marketing activities and general and administrative activities, are provided centrally by the corporate office. Costs associated with corporate office functions, other corporate income and expense items, and income taxes are not allocated to the reportable segment. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment | Depreciation or amortization of property and equipment, including right-of-use assets (“ROU”), is calculated using the straight-line method over the asset’s estimated useful life as follows: Buildings and leasehold improvements 2-30 years Machinery and equipment 7-10 years Furniture and fixtures 3 years Land improvements 20 years Transportation equipment 2-5 years Computer equipment and software 3-7 years Property and equipment are as follows (in thousands): September 30, 2022 December 31, 2021 Land $ 886 $ 886 Land improvements 520 520 Buildings and leasehold improvements 5,356 5,473 Machinery and equipment 6,683 6,843 Furniture and fixtures 545 620 Transportation equipment 806 878 Computer equipment and software 1,288 1,176 Property and equipment 16,084 16,396 Less accumulated depreciation (11,303) (11,100) Property and equipment, net $ 4,781 $ 5,296 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue | Revenue disaggregated by revenue source is as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Revenue: Products (1) $ 44,574 $ 9,494 $ 85,356 $ 29,017 Services 1,049 685 2,518 2,097 $ 45,623 $ 10,179 $ 87,874 $ 31,114 (1) Product revenues for 2022 include sales to related parties as described in Note 16, “Related Party Transactions.” |
Contract Assets (Tables)
Contract Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue Recognition [Abstract] | |
Schedule of outstanding contract assets | Contract assets are as follows (in thousands): September 30, 2022 December 31, 2021 Contract assets $ 83,060 $ — Less accumulated amortization (1,986) — Contract assets, net $ 81,074 $ — Years ending December 31, Amortization 2022 (excluding the nine months ended September 30, 2022 ) $ 1,451 2023 7,918 2024 8,692 2025 8,692 2026 8,692 Thereafter through May 2032 45,629 Total contract assets $ 81,074 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventory | Inventories are as follows (in thousands): September 30, 2022 December 31, 2021 Raw materials $ 7,000 $ 5,610 Finished goods 21,490 13,985 Inventories 28,490 19,595 Less reserve for excess and obsolete inventory (9,301) (10,141) Inventories, net $ 19,189 $ 9,454 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Depreciation or amortization of property and equipment, including right-of-use assets (“ROU”), is calculated using the straight-line method over the asset’s estimated useful life as follows: Buildings and leasehold improvements 2-30 years Machinery and equipment 7-10 years Furniture and fixtures 3 years Land improvements 20 years Transportation equipment 2-5 years Computer equipment and software 3-7 years Property and equipment are as follows (in thousands): September 30, 2022 December 31, 2021 Land $ 886 $ 886 Land improvements 520 520 Buildings and leasehold improvements 5,356 5,473 Machinery and equipment 6,683 6,843 Furniture and fixtures 545 620 Transportation equipment 806 878 Computer equipment and software 1,288 1,176 Property and equipment 16,084 16,396 Less accumulated depreciation (11,303) (11,100) Property and equipment, net $ 4,781 $ 5,296 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Schedule of components of lease expense and supplemental cash flow information | The components of lease expense and supplemental cash flow information are as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Operating lease expense $ 217 $ 247 $ 665 $ 735 Finance lease expense: Amortization of right-of-use assets 4 4 11 11 Interest on lease liabilities 1 2 5 9 Total finance lease expense 5 6 16 20 Short-term lease expense 68 15 270 44 Total lease expense $ 290 $ 268 $ 951 $ 799 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 461 $ 380 $ 1,186 $ 1,107 Operating cash flows from finance leases 13 10 32 62 Financing cash flows from finance leases 1 2 5 8 |
Schedule of maturities of operating leases liabilities | Maturities of lease liabilities as of September 30, 2022 are as follows (in thousands): Years ending December 31, Operating Leases Finance Leases 2022 (excluding the nine months ended September 30, 2022) $ 262 $ 9 2023 1,221 39 2024 1,247 22 2025 1,274 — 2026 1,302 — Thereafter 4,782 — Total lease payments $ 10,088 $ 70 Less: Interest (2,853) (6) Present value of lease liabilities $ 7,235 $ 64 |
Schedule of maturities of finance leases liabilities | Maturities of lease liabilities as of September 30, 2022 are as follows (in thousands): Years ending December 31, Operating Leases Finance Leases 2022 (excluding the nine months ended September 30, 2022) $ 262 $ 9 2023 1,221 39 2024 1,247 22 2025 1,274 — 2026 1,302 — Thereafter 4,782 — Total lease payments $ 10,088 $ 70 Less: Interest (2,853) (6) Present value of lease liabilities $ 7,235 $ 64 |
Schedule of supplemental balance sheet information | Supplemental balance sheet information related to leases is as follows (in thousands): September 30, 2022 December 31, 2021 Operating Leases Operating lease right-of-use assets $ 1,715 $ 2,041 Current portion of operating lease liabilities 653 602 Long-term operating lease liabilities 6,582 7,779 Total operating lease liabilities $ 7,235 $ 8,381 Finance Leases Property and equipment $ 147 $ 147 Accumulated depreciation (52) (33) Property and equipment, net $ 95 $ 114 Current portion of finance lease liabilities $ 35 $ 41 Long-term finance lease liabilities 29 53 Total finance lease liabilities $ 64 $ 94 Weighted Average Remaining Lease Term Operating leases 8.9 years 9.1 years Finance leases 1.8 years 2.9 years Weighted Average Discount Rate Operating leases 8.9 % 8.9 % Finance leases 9.0 % 8.9 % |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of current accrued liabilities | Current accrued liabilities are as follows (in thousands): September 30, 2022 December 31, 2021 Severance costs $ 2,606 $ 2,581 Loss on purchase commitments — 1,750 Payroll and benefits 2,866 1,054 Legal costs 41 1,013 Contingent liability for earn-out provision 502 608 Deferred revenue, current 283 528 Taxes other than income taxes 1,359 241 Other 1,743 1,221 Total current accrued liabilities $ 9,400 $ 8,996 |
Debt and Convertible Notes Pa_2
Debt and Convertible Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of debt | Long-term debt, including current portion, assuming forgiveness is not obtained, is as follows (in thousands): September 30, 2022 December 31, 2021 Flotek PPP loan $ 4,788 $ 4,788 Less current maturities (1,853) (1,436) Total long-term debt, net of current portion $ 2,935 $ 3,352 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value measurements, recurring | The following table presents the Company’s liabilities that are measured at fair value on a recurring basis and the level within the fair value hierarchy (in thousands): September 30, December 31, Level 1 Level 2 Level 3 2022 Level 1 Level 2 Level 3 2021 Contingent earnout consideration $ — $ — $ 502 $ 502 $ — $ — $ 608 $ 608 ProFrac Agreement contract consideration convertible notes $ — $ — 12,570 $ 12,570 $ — $ — $ — $ — Amended ProFrac Agreement contract consideration convertible notes $ — $ — 60,460 $ 60,460 $ — $ — $ — $ — Total $ — $ — $ 73,532 $ 73,532 $ — $ — $ 608 $ 608 |
Schedule of valuation techniques | The key inputs into the Monte Carlo simulation used to estimate the fair value of the earn-out provision were as follows: September 30, 2022 December 31, 2021 Risk-free interest rate 4.24% 1.02% Expected volatility 100.0% 90.0% Term until liquidation (years) 2.63 3.38 Stock price $1.00 $1.13 Discount rate 11.91% 6.71% September 30, 2022 Risk-free interest rate 3.55% Expected volatility 100.0% Term until liquidation (years) 0.342 Stock price $1.00 Discount rate 3.55% The key inputs into the Monte Carlo simulation used to estimate the fair value of the Amended ProFrac Agreement Contract Consideration Convertible Notes Payable, as of September 30, 2022 were as follows: September 30, 2022 Risk-free interest rate 3.95% Expected volatility 100.0% Term until liquidation (years) 0.63 Stock price $1.00 Discount rate 3.95% |
Schedule of fair value, liabilities measured on recurring basis, unobservable input reconciliation | The following table presents the changes in the assets and liabilities measured at fair value on a recurring basis classified as Level 3 (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Balance - beginning of period $ 67,694 $ 1,115 $ 608 $ 1,416 Transfer of ProFrac Agreement contract consideration convertible notes payable from Level 2 — — 10,000 — Issuance of Amended ProFrac Agreement contract consideration convertible notes payable — — 69,460 — Increase in principle of ProFrac Agreement contract consideration convertible notes payable for paid-in-kind interest 266 — 681 — Increase in principle of Amended ProFrac Agreement contract consideration convertible notes payable for paid-in-kind interest 1,293 — 1,905 — Change in fair value of contingent earnout consideration 28 (400) (106) (701) Change in fair value of ProFrac Agreement contract consideration convertible notes payable 634 — 1,889 — Change in fair value of Amended ProFrac Agreement contract consideration convertible notes payable 3,617 — (10,905) — Balance - end of period $ 73,532 $ 715 $ 73,532 $ 715 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective income tax rate reconciliation | A reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows: Three months ended September 30, 2022 Nine months ended September 30, 2022 2022 2021 2022 2021 U.S. federal statutory tax rate 21.0 % 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit — — — (0.2) Non-U.S. income taxed at different rates 0.2 0.8 (0.3) 0.3 Increase (reduction) in tax benefit related to stock-based awards — (0.3) (0.4) 1.2 Non-deductible expenses 0.5 5.8 0.4 1.1 Increase in valuation allowance (21.7) (27.3) (20.7) (23.6) 2018 IRS exam assessment — — (0.4) — Effective income tax rate — % — % (0.4) % (0.2) % |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted | The calculation of the basic and diluted income (loss) per share for the three and nine months ended September 30, 2022 is as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2022 Numerator: Net income (loss) for basic earnings per share $ (18,794) $ (23,278) Anti-dilutive Adjustment to Net Income available to shareholders excluded from Numerator for Diluted Earnings Computation Paid-in-Kind interest expense on convertible notes payable, net of tax 2,043 3,861 Valuation (gain) loss on convertible notes carried at FV, net of tax 4,250 (9,016) Total numerator adjustment excluded from diluted earnings computation $ 6,293 $ (5,155) Denominator: Basic and diluted weighted average shares outstanding 75,312 74,095 Anti-dilutive Incremental Shares Excluded from Denominator for Diluted Earnings Computation Average number of diluted shares for convertible notes payable 74,395 47,354 Average number of diluted shares for stock warrants 8,897 3,324 Average number of diluted shares for options and restricted 418 571 Basic and diluted loss per share (0.25) (0.31) |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of supplemental cash flow information | Supplemental cash flow information is as follows (in thousands): Nine months ended September 30, 2022 2021 Supplemental cash flow information: Interest paid $ 25 $ 17 Income taxes received — (351) Supplemental non-cash activities: Employee retention credit — 2,851 Non cash financing and investing activities: Issuance of convertible notes payable as consideration for ProFrac Agreements 79,460 — Conversion of convertible notes payable to common stock 2,948 — |
Business Segment, Geographic _2
Business Segment, Geographic and Major Customer Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Financial information regarding reportable segments | Summarized financial information of the reportable segments is as follows (in thousands): As of and for the three months ended September 30, Chemistry Technologies Data Analytics Corporate and Other Total 2022 Revenue from external customers $ 13,511 $ 1,695 $ — $ 15,206 Revenue from related party 30,417 — — 30,417 Change in fair value of contract consideration convertible notes 4,250 — — 4,250 Loss from operations (10,603) (745) (4,931) (16,279) Depreciation and amortization 162 14 1 177 Additions to long-lived assets 25 33 112 170 2021 Revenue from external customers $ 8,044 $ 803 $ — $ 8,847 Revenue from related party 1,332 — — 1,332 Income (loss) from operations 4,399 (1,071) (2,696) 632 Depreciation and amortization 215 17 1 233 Additions to long-lived assets — — — — As of and for the nine months ended September 30, Chemistry Technologies Data Analytics Corporate and Other Total 2022 Revenue from external customers $ 34,933 $ 3,479 $ — $ 38,412 Revenue from related party 49,462 — — 49,462 Change in fair value of contract consideration convertible notes (9,016) — — (9,016) Loss from operations (1,716) (2,751) (14,057) (18,524) Depreciation and amortization 507 45 2 554 Additions to long-lived assets 30 33 112 175 2021 Revenue from external customers $ 26,033 $ 3,749 $ — $ 29,782 Revenue from related party 1,332 — — 1,332 Loss from operations (3,009) (2,138) (9,926) (15,073) Depreciation and amortization 739 52 2 793 Additions to long-lived assets 31 — — 31 Assets of the Company by reportable segments are as follows (in thousands): September 30, 2022 December 31, 2021 Chemistry Technologies $ 150,160 $ 34,387 Data Analytics 7,215 7,329 Corporate and Other 6,644 8,528 Total assets $ 164,019 $ 50,244 |
Schedule of Revenue by geographic location | Revenue by geographic location is as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 U.S. (1) $ 42,670 $ 8,094 $ 78,959 $ 24,624 UAE 2,242 1,319 6,692 3,741 Other countries 711 766 2,223 2,749 Total revenue $ 45,623 $ 10,179 $ 87,874 $ 31,114 (1) Includes revenue from related party |
Schedule of Revenue by major customers | Revenue from major customers, as a percentage of consolidated revenue, is as follows (in thousands): Three months ended September 30, Revenue % of Total Revenue 2022 Customer A (Related Party) $ 30,417 66.7 % 2021 Customer C $ 3,041 29.9 % Customer D 1,332 13.1 % Nine months ended September 30, Revenue % of Total Revenue 2022 Customer A (Related Party) $ 48,074 54.7 % Customer B 10,905 12.4 % 2021 Customer C $ 7,701 24.8 % Customer D 4,067 13.1 % |
Organization and Nature of Op_2
Organization and Nature of Operations (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operation segments (segments) | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Restricted cash | $ 100 | $ 1,790 |
Funds held in escrow | $ 1,750 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Property and Equipment (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Buildings and leasehold improvements | Minimum | |
Property, Plant and Equipment | |
Property, Plant and equipment, useful life | 2 years |
Buildings and leasehold improvements | Maximum | |
Property, Plant and Equipment | |
Property, Plant and equipment, useful life | 30 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment | |
Property, Plant and equipment, useful life | 7 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment | |
Property, Plant and equipment, useful life | 10 years |
Furniture and fixtures | |
Property, Plant and Equipment | |
Property, Plant and equipment, useful life | 3 years |
Land improvements | |
Property, Plant and Equipment | |
Property, Plant and equipment, useful life | 20 years |
Transportation equipment | Minimum | |
Property, Plant and Equipment | |
Property, Plant and equipment, useful life | 2 years |
Transportation equipment | Maximum | |
Property, Plant and Equipment | |
Property, Plant and equipment, useful life | 5 years |
Computer equipment and software | Minimum | |
Property, Plant and Equipment | |
Property, Plant and equipment, useful life | 3 years |
Computer equipment and software | Maximum | |
Property, Plant and Equipment | |
Property, Plant and equipment, useful life | 7 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
New Accounting Pronouncements or Change in Accounting Principle | ||||
Selling, general, and administrative | $ 9,035 | $ 4,092 | $ 21,345 | $ 14,379 |
Adjustment | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Selling, general, and administrative | $ 1,400 | $ 4,400 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue | ||||
Total revenues | $ 45,623 | $ 10,179 | $ 87,874 | $ 31,114 |
Products | ||||
Disaggregation of Revenue | ||||
Total revenues | 44,574 | 9,494 | 85,356 | 29,017 |
Services | ||||
Disaggregation of Revenue | ||||
Total revenues | $ 1,049 | $ 685 | $ 2,518 | $ 2,097 |
Contract Assets - Contract Asse
Contract Assets - Contract Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Contract Asset | ||
Contract assets | $ 83,060 | $ 0 |
Less accumulated amortization | 1,986 | 0 |
Total contract assets | $ 81,074 | $ 0 |
Contract Assets - Narrative (De
Contract Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2022 | May 17, 2022 | Feb. 02, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue | |||||
Contract assets | $ 83,060 | $ 83,060 | $ 0 | ||
Capitalized contract fees | 3,600 | 3,600 | |||
Long-term contract assets | 73,878 | 73,878 | $ 0 | ||
Amortization of contract into revenue | $ 1,200 | $ 2,000 | |||
ProFrac Agreement | |||||
Disaggregation of Revenue | |||||
Contract assets | $ 10,000 | ||||
Amended ProFrac Agreement | |||||
Disaggregation of Revenue | |||||
Contract assets | $ 69,500 |
Contract Assets - Estimated Amo
Contract Assets - Estimated Amortization (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Revenue Recognition [Abstract] | ||
2022 (excluding the nine months ended September 30, 2022 ) | $ 1,451 | |
2023 | 7,918 | |
2024 | 8,692 | |
2025 | 8,692 | |
2026 | 8,692 | |
Thereafter through May 2032 | 45,629 | |
Total contract assets | $ 81,074 | $ 0 |
Inventories - Components of inv
Inventories - Components of inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 7,000 | $ 5,610 |
Finished goods | 21,490 | 13,985 |
Inventories | 28,490 | 19,595 |
Less reserve for excess and obsolete inventory | (9,301) | (10,141) |
Inventories, net | $ 19,189 | $ 9,454 |
Inventories - Narratives (Detai
Inventories - Narratives (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Inventory | ||||
Provision for excess and obsolete inventory | $ 666,000 | $ 687,000 | ||
Provision recorded | $ 1,000,000 | $ 0 | 1,036,000 | 0 |
Chemistry Technologies | ||||
Inventory | ||||
Provision for excess and obsolete inventory | 44,800 | 100,000 | 800,000 | 500,000 |
Data Analytics | ||||
Inventory | ||||
Provision for excess and obsolete inventory | $ 14,400 | $ 0 | $ 100,000 | $ 200,000 |
Property and Equipment - Compon
Property and Equipment - Components of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Components of Property, Plant and Equipment | ||
Property and equipment | $ 16,084 | $ 16,396 |
Less accumulated depreciation | (11,303) | (11,100) |
Property and equipment, net | 4,781 | 5,296 |
Land | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 886 | 886 |
Land improvements | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 520 | 520 |
Buildings and leasehold improvements | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 5,356 | 5,473 |
Machinery and equipment | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 6,683 | 6,843 |
Furniture and fixtures | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 545 | 620 |
Transportation equipment | ||
Components of Property, Plant and Equipment | ||
Property and equipment | 806 | 878 |
Computer equipment and software | ||
Components of Property, Plant and Equipment | ||
Property and equipment | $ 1,288 | $ 1,176 |
Property and Equipment - Narrat
Property and Equipment - Narratives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |||||
Depreciation expense | $ 177 | $ 233 | $ 554 | $ 793 | |
Property, Plant and Equipment | |||||
Assets held for sale | 535 | 535 | $ 2,762 | ||
Gain on the sales of property | $ 10 | $ (14) | 1,916 | $ 55 | |
Warehouse facility in Monahans, Texas | |||||
Property, Plant and Equipment | |||||
Assets held for sale | $ 2,300 | ||||
Property In Waller, Texas | |||||
Property, Plant and Equipment | |||||
Gain on the sales of property | $ 1,900 |
Leases - Narratives (Details)
Leases - Narratives (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Aug. 31, 2021 | Jul. 31, 2021 | |
Property In Waller, Texas | ||||||
Lessee, Lease, Description | ||||||
Monthly rent | $ 40,000 | |||||
Operating lease term | 64 months | |||||
Sublease rent | $ 0 | $ 121,000 | $ 0 | |||
Warehouse facility in Monahans, Texas | ||||||
Lessee, Lease, Description | ||||||
Monthly rent | $ 21,000 | |||||
Operating lease term | 5 years | |||||
Sublease rent | $ 65,000 | $ 12,000 | $ 196,000 | $ 12,000 |
Leases - Components of Lease Ex
Leases - Components of Lease Expense and Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Operating lease expense | $ 217 | $ 247 | $ 665 | $ 735 |
Finance lease expense: | ||||
Amortization of right-of-use assets | 4 | 4 | 11 | 11 |
Interest on lease liabilities | 1 | 2 | 5 | 9 |
Total finance lease expense | 5 | 6 | 16 | 20 |
Short-term lease expense | 68 | 15 | 270 | 44 |
Total lease expense | 290 | 268 | 951 | 799 |
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows used in operating leases | 461 | 380 | 1,186 | 1,107 |
Operating cash flows from finance leases | 13 | 10 | 32 | 62 |
Financing cash flows from finance leases | $ 1 | $ 2 | $ 5 | $ 8 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Operating Leases | ||
2022 (excluding the nine months ended September 30, 2022) | $ 262 | |
2023 | 1,221 | |
2024 | 1,247 | |
2025 | 1,274 | |
2026 | 1,302 | |
Thereafter | 4,782 | |
Total lease payments | 10,088 | |
Less: Interest | (2,853) | |
Present value of lease liabilities | 7,235 | $ 8,381 |
Finance Leases | ||
2022 (excluding the nine months ended September 30, 2022) | 9 | |
2023 | 39 | |
2024 | 22 | |
2025 | 0 | |
2026 | 0 | |
Thereafter | 0 | |
Total lease payments | 70 | |
Less: Interest | (6) | |
Present value of lease liabilities | $ 64 | $ 94 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Operating Leases | ||
Operating lease right-of-use assets | $ 1,715 | $ 2,041 |
Current portion of operating lease liabilities | 653 | 602 |
Long-term operating lease liabilities | 6,582 | 7,779 |
Total operating lease liabilities | 7,235 | 8,381 |
Finance Leases | ||
Property and equipment | 147 | 147 |
Accumulated depreciation | (52) | (33) |
Property and equipment, net | 95 | 114 |
Current portion of finance lease liabilities | 35 | 41 |
Long-term finance lease liabilities | 29 | 53 |
Total finance lease liabilities | $ 64 | $ 94 |
Weighted Average Remaining Lease Term | ||
Operating leases (in years) | 8 years 10 months 24 days | 9 years 1 month 6 days |
Finance leases (in years) | 1 year 9 months 18 days | 2 years 10 months 24 days |
Weighted Average Discount Rate | ||
Operating leases (in percentage) | 8.90% | 8.90% |
Finance leases (in percentage) | 9% | 8.90% |
Accrued Liabilities - Schedule
Accrued Liabilities - Schedule of Current Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued liabilities, current | ||
Severance costs | $ 2,606 | $ 2,581 |
Loss on purchase commitments | 0 | 1,750 |
Payroll and benefits | 2,866 | 1,054 |
Legal costs | 41 | 1,013 |
Contingent liability for earn-out provision | 502 | 608 |
Deferred revenue, current | 283 | 528 |
Taxes other than income taxes | 1,359 | 241 |
Other | 1,743 | 1,221 |
Total current accrued liabilities | $ 9,400 | $ 8,996 |
Debt and Convertible Notes Pa_3
Debt and Convertible Notes Payable - Narratives (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Mar. 21, 2022 USD ($) shares | Feb. 02, 2022 USD ($) d $ / shares | May 31, 2020 USD ($) | Apr. 30, 2020 USD ($) | Sep. 30, 2022 USD ($) $ / shares | Sep. 30, 2021 USD ($) | Jun. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) $ / shares | Sep. 30, 2021 USD ($) | May 17, 2022 USD ($) | Dec. 31, 2021 USD ($) $ / shares | |
Debt Instrument | |||||||||||
Other income | $ 0 | $ 0 | $ 900,000 | $ 0 | $ 881,000 | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.8705 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Debt converted instrument, face amount | $ 2,948,000 | 0 | |||||||||
Convertible notes payable | $ 19,055,000 | 19,055,000 | $ 0 | ||||||||
Interest payable | 118,000 | 118,000 | $ 82,000 | ||||||||
Paid-in-kind interest expense | 3,861,000 | $ 0 | |||||||||
Unsecured Debt | Flotek PPP loan | |||||||||||
Debt Instrument | |||||||||||
Proceeds from debt | $ 4,800,000 | ||||||||||
Debt instrument stated interest rate (percent) | 1% | ||||||||||
Debt instrument term (years) | 2 years | ||||||||||
Percentage of cost allocable to payroll costs (percent) | 60% | ||||||||||
Convertible Debt | PIPE Transaction | |||||||||||
Debt Instrument | |||||||||||
Debt instrument stated interest rate (percent) | 10% | ||||||||||
Debt instrument, face amount | $ 21,200,000 | ||||||||||
Proceeds from convertible notes | $ 20,100,000 | ||||||||||
Conversion price (in dollar per share) | $ / shares | $ 1.088125 | ||||||||||
Stock price trigger (in dollars per share) | $ / shares | $ 2.50 | ||||||||||
Threshold trading days | d | 20 | ||||||||||
Consecutive trading days | d | 30 | ||||||||||
Debt converted instrument, face amount | $ 3,000,000 | ||||||||||
Conversion of notes to common stock (shares) | shares | 2,800,000 | ||||||||||
Convertible notes payable | 19,100,000 | 19,100,000 | |||||||||
Paid-in-kind interest expense | 1,300,000 | 1,300,000 | |||||||||
Unamortized issuance cost | 300,000 | 300,000 | |||||||||
Fair value of the convertible notes | 22,800,000 | 22,800,000 | |||||||||
Convertible Debt | ProFrac Agreement Contract | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, face amount | $ 10,000,000 | ||||||||||
Convertible Debt | ProFrac Agreement Contract | Estimate of Fair Value Measurement | |||||||||||
Debt Instrument | |||||||||||
Convertible debt, fair value disclosures | $ 10,000,000 | 12,600,000 | 12,600,000 | ||||||||
Interest payable | 700,000 | 700,000 | |||||||||
Convertible Debt | ProFrac Agreement Contract | Changes Measurement | 3 month change | |||||||||||
Debt Instrument | |||||||||||
Convertible debt, fair value disclosures | 600,000 | 600,000 | |||||||||
Convertible Debt | ProFrac Agreement Contract | Changes Measurement | 9 Month Change | |||||||||||
Debt Instrument | |||||||||||
Convertible debt, fair value disclosures | 1,900,000 | 1,900,000 | |||||||||
Convertible Debt | Amended ProFrac Agreement | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, face amount | $ 50,000,000 | ||||||||||
Convertible Debt | Amended ProFrac Agreement | Estimate of Fair Value Measurement | |||||||||||
Debt Instrument | |||||||||||
Convertible debt, fair value disclosures | 60,500,000 | 60,500,000 | $ 69,500,000 | ||||||||
Interest payable | 1,900,000 | 1,900,000 | |||||||||
Convertible Debt | Amended ProFrac Agreement | Changes Measurement | 3 month change | |||||||||||
Debt Instrument | |||||||||||
Convertible debt, fair value disclosures | 3,600,000 | 3,600,000 | |||||||||
Convertible Debt | Amended ProFrac Agreement | Changes Measurement | 9 Month Change | |||||||||||
Debt Instrument | |||||||||||
Convertible debt, fair value disclosures | $ (10,900,000) | $ (10,900,000) | |||||||||
JP3 Measurement, LLC | |||||||||||
Debt Instrument | |||||||||||
Assumed PPP loan | $ 900,000 |
Debt and Convertible Notes Pa_4
Debt and Convertible Notes Payable - Schedule of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Instrument | ||
Flotek PPP loan | $ 4,788 | $ 4,788 |
Less current maturities | (1,853) | (1,436) |
Unsecured Debt | Flotek PPP loan | ||
Debt Instrument | ||
Long-term debt, net of current portion | $ 2,935 | $ 3,352 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2022 | May 17, 2022 | Feb. 02, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contingent earnout consideration | $ 502 | $ 608 | ||
Liabilities measured at fair value on a recurring basis | 73,532 | 608 | ||
ProFrac Agreement | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contract consideration, convertible notes | 12,570 | 0 | ||
Amended ProFrac Agreement | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contract consideration, convertible notes | 60,460 | 0 | ||
Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contingent earnout consideration | 0 | 0 | ||
Liabilities measured at fair value on a recurring basis | 0 | 0 | ||
Level 1 | ProFrac Agreement | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contract consideration, convertible notes | 0 | 0 | ||
Level 1 | Amended ProFrac Agreement | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contract consideration, convertible notes | 0 | 0 | ||
Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contingent earnout consideration | 0 | 0 | ||
Liabilities measured at fair value on a recurring basis | 0 | 0 | ||
Level 2 | ProFrac Agreement | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contract consideration, convertible notes | 0 | 0 | ||
Level 2 | Amended ProFrac Agreement | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contract consideration, convertible notes | 0 | 0 | ||
Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contingent earnout consideration | 502 | 608 | ||
Contract consideration, convertible notes | $ 69,500 | $ 10,000 | ||
Liabilities measured at fair value on a recurring basis | 73,532 | 608 | ||
Level 3 | ProFrac Agreement | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contract consideration, convertible notes | 12,570 | 0 | ||
Level 3 | Amended ProFrac Agreement | ||||
Fair Value, Assets and Liabilities Measured on Recurring | ||||
Contract consideration, convertible notes | $ 60,460 | $ 0 |
Fair Value Measurements - Monte
Fair Value Measurements - Monte Carlo Simulation (Details) | Sep. 30, 2022 | Dec. 31, 2021 |
Risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Earn out provision, measurement input | 0.0424 | 0.0102 |
Risk-free interest rate | ProFrac Agreement | Convertible Debt | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt instrument, measurement input | 0.0355 | |
Risk-free interest rate | Amended ProFrac Agreement | Convertible Debt | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt instrument, measurement input | 0.0395 | |
Expected volatility | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Earn out provision, measurement input | 1 | 0.900 |
Expected volatility | ProFrac Agreement | Convertible Debt | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt instrument, measurement input | 1 | |
Expected volatility | Amended ProFrac Agreement | Convertible Debt | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt instrument, measurement input | 1 | |
Term until liquidation (years) | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Earn out provision, measurement input | 2.63 | 3.38 |
Term until liquidation (years) | ProFrac Agreement | Convertible Debt | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt instrument, measurement input | 0.342 | |
Term until liquidation (years) | Amended ProFrac Agreement | Convertible Debt | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt instrument, measurement input | 0.63 | |
Stock price | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Earn out provision, measurement input | 1 | 1.13 |
Stock price | ProFrac Agreement | Convertible Debt | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt instrument, measurement input | 1 | |
Stock price | Amended ProFrac Agreement | Convertible Debt | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt instrument, measurement input | 1 | |
Discount rate | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Earn out provision, measurement input | 0.1191 | 0.0671 |
Discount rate | ProFrac Agreement | Convertible Debt | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt instrument, measurement input | 0.0355 | |
Discount rate | Amended ProFrac Agreement | Convertible Debt | ||
Fair Value Measurement Inputs and Valuation Techniques | ||
Debt instrument, measurement input | 0.0395 |
Fair Value Measurements - Narra
Fair Value Measurements - Narratives (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | May 17, 2022 | Feb. 02, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Contract consideration convertible notes payable | $ 73,030 | $ 0 | |||
ProFrac Agreement Contract | Estimate of Fair Value Measurement | Convertible Debt | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Convertible debt, fair value disclosures | 12,600 | $ 10,000 | |||
Amended ProFrac Agreement | Estimate of Fair Value Measurement | Convertible Debt | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Convertible debt, fair value disclosures | 60,500 | $ 69,500 | |||
Recurring | ProFrac Agreement | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Convertible debt, fair value disclosures | 12,570 | 0 | |||
Recurring | Amended ProFrac Agreement | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Convertible debt, fair value disclosures | 60,460 | 0 | |||
Recurring | Level 3 | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Convertible debt, fair value disclosures | $ 69,500 | $ 10,000 | |||
Contingent consideration | 500 | $ 700 | |||
Recurring | Level 3 | ProFrac Agreement | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Convertible debt, fair value disclosures | 12,570 | 0 | |||
Recurring | Level 3 | Amended ProFrac Agreement | |||||
Assets Measured at Fair Value on a Nonrecurring Basis | |||||
Convertible debt, fair value disclosures | $ 60,460 | $ 0 |
Fair Value Measurements - Rollf
Fair Value Measurements - Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||||
Balance - beginning of period | $ 67,694 | $ 1,115 | $ 608 | $ 1,416 |
Transfer of ProFrac Agreement contract consideration convertible notes payable from Level 2 | 0 | 0 | 10,000 | 0 |
Issuance of Amended ProFrac Agreement contract consideration convertible notes payable | 0 | 0 | 69,460 | 0 |
Balance - end of period | 73,532 | 715 | 73,532 | 715 |
ProFrac Agreement | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||||
Increase in principle of Amended ProFrac Agreement contract consideration convertible notes payable for paid-in-kind interest | 266 | 0 | 681 | 0 |
Amended ProFrac Agreement | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||||
Increase in principle of Amended ProFrac Agreement contract consideration convertible notes payable for paid-in-kind interest | 1,293 | 0 | 1,905 | 0 |
Change in fair value | 3,617 | 0 | (10,905) | 0 |
Change in fair value of contingent earnout consideration | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||||
Change in fair value | 28 | (400) | (106) | (701) |
Contingent Portion Of Convertible Debt | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||||
Change in fair value | $ 634 | $ 0 | $ 1,889 | $ 0 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Effective Tax Rate (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
U.S. federal statutory tax rate | 21% | 21% | 21% | 21% |
State income taxes, net of federal benefit | 0% | 0% | 0% | (0.20%) |
Non-U.S. income taxed at different rates | 0.20% | 0.80% | (0.30%) | 0.30% |
Increase (reduction) in tax benefit related to stock-based awards | 0% | (0.30%) | (0.40%) | 1.20% |
Non-deductible expenses | 0.50% | 5.80% | 0.40% | 1.10% |
Increase in valuation allowance | (21.70%) | (27.30%) | (20.70%) | (23.60%) |
2018 IRS exam assessment | 0% | 0% | (0.40%) | 0% |
Effective income tax rate | 0% | 0% | (0.40%) | (0.20%) |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Terpene Supply Agreement - USD ($) $ in Thousands | Jan. 03, 2022 | Oct. 29, 2021 |
Other Commitments | ||
Litigation settlement, amount due to other party | $ 1,750 | |
Settlement payments | $ 1,750 |
Stockholders_ Equity - Narrativ
Stockholders’ Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |||||
Jun. 21, 2022 | Mar. 21, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Mar. 31, 2021 | |
Common and Preferred Stock | ||||||
Debt converted instrument, face amount | $ 2,948 | $ 0 | ||||
Proceeds from issuance of warrants | 19,500 | 0 | ||||
Equity contribution | 8,400 | |||||
Payments of transaction fees of warrants | $ 1,170 | $ 0 | ||||
Common stock, shares issued (in shares) | 83,424,763 | 79,483,837 | ||||
Convertible Notes Payable | ||||||
Common and Preferred Stock | ||||||
Debt converted instrument, face amount | $ 3,000 | |||||
Debt converted, accrued interest | $ 39 | |||||
Conversion of notes to common stock (shares) | 2,793,030 | |||||
ProFrac Services, LLC | Prefunded Warrants | ||||||
Common and Preferred Stock | ||||||
Exchanged value of warrants | $ 19,500 | |||||
Equity contribution | $ 8,400 | $ 8,400 | ||||
Number of securities called by warrants or rights (in shares) | 13,104,839 | |||||
Exercise price of warrants or rights (in dollars per share) | $ 0.0001 | |||||
Warrant premium on average price, percent | 20% | |||||
Payments of transaction fees of warrants | $ 1,100 | |||||
Proceeds from related party debt | $ 4,500 | |||||
Due from related party | $ 4,500 | |||||
Revisions | ||||||
Common and Preferred Stock | ||||||
Common stock, shares issued (in shares) | (600,000) |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||
Net income (loss) for basic earnings per share | $ (18,794) | $ (23,278) | ||
Anti-dilutive Adjustment to Net Income available to shareholders excluded from Numerator for Diluted Earnings Computation | ||||
Paid-in-kind interest expense | 3,861 | $ 0 | ||
Total numerator adjustment excluded from diluted earnings computation | $ 6,293 | $ (5,155) | ||
Denominator: | ||||
Basic weighted average shares outstanding (in shares) | 75,312,000 | 69,324,000 | 74,095,000 | 68,665,000 |
Diluted weighted average shares outstanding (in shares) | 75,312,000 | 70,176,000 | 74,095,000 | 68,665,000 |
Basic loss per share (in dollars per share) | $ (0.25) | $ 0.01 | $ (0.31) | $ (0.21) |
Diluted loss per share (in dollars per share) | $ (0.25) | $ 0.01 | $ (0.31) | $ (0.21) |
Convertible Notes Payable | ||||
Anti-dilutive Adjustment to Net Income available to shareholders excluded from Numerator for Diluted Earnings Computation | ||||
Paid-in-kind interest expense | $ 2,043 | $ 3,861 | ||
Valuation (gain) loss on convertible notes carried at FV, net of tax | $ 4,250 | $ (9,016) | ||
Denominator: | ||||
Anti-dilutive Incremental Shares Excluded from Denominator for Diluted Earnings Computation | 74,395,000 | 47,354,000 | ||
Stock Warrants | ||||
Denominator: | ||||
Anti-dilutive Incremental Shares Excluded from Denominator for Diluted Earnings Computation | 8,897,000 | 3,324,000 | ||
Options and Restricted | ||||
Denominator: | ||||
Anti-dilutive Incremental Shares Excluded from Denominator for Diluted Earnings Computation | 418,000 | 851,702 | 571,000 | 1,130,719 |
Net Loss Per Share - Narrative
Net Loss Per Share - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Employee Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 418,000 | 851,702 | 571,000 | 1,130,719 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Supplemental cash flow information: | ||
Interest paid | $ 25 | $ 17 |
Income taxes received | 0 | (351) |
Supplemental non-cash activities: | ||
Employee retention credit | 0 | 2,851 |
Non cash financing and investing activities: | ||
Issuance of convertible notes payable as consideration for ProFrac Agreements | 79,460 | 0 |
Conversion of convertible notes payable to common stock | $ 2,948 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||
Jun. 21, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | May 17, 2022 | Feb. 02, 2022 | Dec. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2019 | |
Related Party Transaction | ||||||||||
Accrual for potential penalties and interest | $ 200 | |||||||||
Revenue from related party | $ 30,417 | $ 1,332 | $ 49,462 | $ 1,332 | ||||||
Accounts receivable, related party | 25,916 | 25,916 | $ 1,300 | |||||||
Proceeds from issuance of warrants | 19,500 | 0 | ||||||||
Amortization of contract into revenue | 1,200 | 2,000 | ||||||||
Debt converted instrument, face amount | 2,948 | 0 | ||||||||
ProFrac Services, LLC | Convertible Debt | ||||||||||
Related Party Transaction | ||||||||||
Debt instrument, face amount | $ 50,000 | $ 10,000 | ||||||||
Fleet purchase commitment percentage | 70% | 33% | ||||||||
Conditional revenue shortfall rate (percent) | 25% | |||||||||
ProFrac Holdings | ||||||||||
Related Party Transaction | ||||||||||
Proceeds from issuance of warrants | $ 19,500 | |||||||||
Affiliated Entity | ProFrac Holdings | ||||||||||
Related Party Transaction | ||||||||||
Revenue from related party | 30,400 | 48,100 | ||||||||
Accounts receivable, related party | 25,900 | 25,900 | 0 | |||||||
Chief Executive Officer | Affiliated Entity | ||||||||||
Related Party Transaction | ||||||||||
Due from related party | $ 1,400 | 1,400 | 1,400 | $ 1,800 | ||||||
Director | Affiliated Entity | Confluence | ||||||||||
Related Party Transaction | ||||||||||
Revenue from related party | $ 1,300 | $ 1,400 | $ 1,300 | |||||||
Accounts receivable, related party | $ 1,300 |
Business Segment, Geographic _3
Business Segment, Geographic and Major Customer Information - Reportable Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Summarized financial information regarding reportable segments | ||||
Revenue from external customers | $ 15,206 | $ 8,847 | $ 38,412 | $ 29,782 |
Revenue from related party | 30,417 | 1,332 | 49,462 | 1,332 |
Change in fair value of contract consideration convertible notes | 4,250 | (9,016) | ||
Loss from operations | (16,279) | 632 | (18,524) | (15,073) |
Depreciation and amortization | 177 | 233 | 554 | 793 |
Additions to long-lived assets | 170 | 0 | 175 | 31 |
Operating Segments | Chemistry Technologies | ||||
Summarized financial information regarding reportable segments | ||||
Revenue from external customers | 13,511 | 8,044 | 34,933 | 26,033 |
Revenue from related party | 30,417 | 1,332 | 49,462 | 1,332 |
Change in fair value of contract consideration convertible notes | 4,250 | (9,016) | ||
Loss from operations | (10,603) | 4,399 | (1,716) | (3,009) |
Depreciation and amortization | 162 | 215 | 507 | 739 |
Additions to long-lived assets | 25 | 0 | 30 | 31 |
Operating Segments | Data Analytics | ||||
Summarized financial information regarding reportable segments | ||||
Revenue from external customers | 1,695 | 803 | 3,479 | 3,749 |
Revenue from related party | 0 | 0 | 0 | 0 |
Change in fair value of contract consideration convertible notes | 0 | 0 | ||
Loss from operations | (745) | (1,071) | (2,751) | (2,138) |
Depreciation and amortization | 14 | 17 | 45 | 52 |
Additions to long-lived assets | 33 | 0 | 33 | 0 |
Corporate and Other | ||||
Summarized financial information regarding reportable segments | ||||
Revenue from external customers | 0 | 0 | 0 | 0 |
Revenue from related party | 0 | 0 | 0 | 0 |
Change in fair value of contract consideration convertible notes | 0 | 0 | ||
Loss from operations | (4,931) | (2,696) | (14,057) | (9,926) |
Depreciation and amortization | 1 | 1 | 2 | 2 |
Additions to long-lived assets | $ 112 | $ 0 | $ 112 | $ 0 |
Business Segment, Geographic _4
Business Segment, Geographic and Major Customer Information - Assets by Reportable Segments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Segment Reporting Information | ||
Total assets | $ 164,019 | $ 50,244 |
Operating Segments | Chemistry Technologies | ||
Segment Reporting Information | ||
Total assets | 150,160 | 34,387 |
Operating Segments | Data Analytics | ||
Segment Reporting Information | ||
Total assets | 7,215 | 7,329 |
Corporate and Other | ||
Segment Reporting Information | ||
Total assets | $ 6,644 | $ 8,528 |
Business Segment, Geographic _5
Business Segment, Geographic and Major Customer Information - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information | ||
Increase in customer asset | $ 3,600 | $ 0 |
Chemistry Technologies | ||
Segment Reporting Information | ||
Increase in customer asset | $ 81,100 |
Business Segment, Geographic _6
Business Segment, Geographic and Major Customer Information - Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | $ 45,623 | $ 10,179 | $ 87,874 | $ 31,114 |
U.S. | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 42,670 | 8,094 | 78,959 | 24,624 |
UAE | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 2,242 | 1,319 | 6,692 | 3,741 |
Other countries | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | $ 711 | $ 766 | $ 2,223 | $ 2,749 |
Business Segment, Geographic _7
Business Segment, Geographic and Major Customer Information - Major Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information | ||||
Revenue from external customers | $ 15,206 | $ 8,847 | $ 38,412 | $ 29,782 |
Customer Concentration Risk | Sales | Customer A (Related Party) | Chemistry Technologies | ||||
Segment Reporting Information | ||||
Revenue from external customers | $ 30,417 | $ 48,074 | ||
Percentage of revenue by major customers (in percentage) | 66.70% | 54.70% | ||
Customer Concentration Risk | Sales | Customer B | Chemistry Technologies | ||||
Segment Reporting Information | ||||
Revenue from external customers | $ 10,905 | |||
Percentage of revenue by major customers (in percentage) | 12.40% | |||
Customer Concentration Risk | Sales | Customer C | Chemistry Technologies | ||||
Segment Reporting Information | ||||
Revenue from external customers | $ 3,041 | $ 7,701 | ||
Percentage of revenue by major customers (in percentage) | 29.90% | 24.80% | ||
Customer Concentration Risk | Sales | Customer D | Chemistry Technologies | ||||
Segment Reporting Information | ||||
Revenue from external customers | $ 1,332 | $ 4,067 | ||
Percentage of revenue by major customers (in percentage) | 13.10% | 13.10% |