XML 25 R16.htm IDEA: XBRL DOCUMENT

Significant Customers and Contingencies

3 Months Ended

Mar. 31, 2022

(10) Significant Customers and Contingencies

Our significant customers are as follows for the periods ending March 31, 2022, and 2021:


		For the three months ended March 31,
Customer #	Product Category	2022			2021
1	Personal Care Ingredients		29	%		20	%
2	Solésence®		18	%		17	%
3	Solésence®		13	%		10	%
4	Solésence®		9	%		24	%
5	Advanced Materials (Medical Diagnostics customer)		—			15	%
	Total		69	%		86	%

Accounts receivable balances for these five customers were approximately:

		For the three months ended March 31,
Customer #	Product Category	2022		2021
1	Personal Care Ingredients	$	1,489	$	812
2	Solésence®		880		476
3	Solésence®		1,050		875
4	Solésence®		371		837
5	Advanced Materials (Medical Diagnostics customer)		—		855
	Total	$	3,790	$	3,855

We currently have exclusive supply agreements with BASF Corporation (“BASF”), our largest customer, that have contingencies outlined which could potentially result in the license of technology and/or the sale of production equipment from the Company to the customer intended to provide capacity sufficient to meet the customer’s production needs. This outcome may occur if we fail to meet certain performance requirements. Our supply agreements with BASF also “trigger” a technology transfer right in the event of our insolvency, as further defined within the agreements. In the event of an equipment sale, upon incurring a triggering event, the equipment would be sold to the customer at either 115% of the equipment’s net book value or the greater of 30% of the original book value of such equipment, and any associated upgrades to it, or 115% of the equipment’s net book value, depending on the equipment and related products.

If a triggering event were to occur and BASF elected to proceed with the license and related equipment sale mentioned above, we would receive royalty payments from this customer for products sold using our technology; however, we would lose both significant revenue and the ability to generate significant revenue to replace that which was lost in the near term. Replacement of necessary equipment that could be purchased and removed by the customer pursuant to this triggering event could take in excess of twelve months. Any additional capital outlays required to rebuild capacity would probably be greater than the proceeds from the purchase of the assets as dictated by our agreement with the customer. Similar consequences would occur if we were determined to have materially breached certain other provisions of the supply agreement with BASF. Any such event would also likely result in the loss of many of our key staff and line employees due to economic realities. We believe that our employees are a critical component of our success, and it could be difficult to replace them quickly. Given the occurrence of any such event, we might not be able to hire and retain skilled employees given the stigma relating to such an event and its impact on us.