Significant Customers and Contingencies

9 Months Ended

Sep. 30, 2024

Risks and Uncertainties [Abstract]

Significant Customers and Contingencies

(10) Significant Customers and Contingencies

The portion of total revenue from our significant customers are as follows for the periods ending September 30, 2024, and 2023:

		Three months ended September 30,						Nine months ended September 30,
Customer #	Product Category	2024			2023			2024			2023
1	Solésence®	34		%	21		%	34		%	11		%
2	Personal Care Ingredients		17	%		30	%		14	%		31	%
3	Solésence®		5	%		18	%		5	%		13	%
4	Solésence®		6	%		2	%		9	%		10	%
	Total		62	%		71	%		62	%		65	%

Accounts receivable balances for these customers were approximately:

		September 30,		December 31,
Customer #	Product Category	2024		2023
1	Solésence®	$	3,976	$	1,288
2	Personal Care Ingredients		1,034		—
3	Solésence®		342		864
4	Solésence®		1,084		—
	Total	$	6,436	$	2,152

We currently have exclusive supply agreements with BASF Corporation (“BASF”), that have contingencies outlined which could potentially result in 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. 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 equipment sale mentioned above, we would lose significant revenue. 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.

We recently amended our Zinc Oxide Supply Agreement with BASF regarding using our commercially reasonable efforts to develop a modified zinc oxide product for BASF’s exclusive purchase. The amendment also includes provisions (a) amending the exclusivity section of the Agreement to provide that (i) BASF has the exclusive right to use zinc oxide materials that we develop, make, or sell to BASF as an ingredient for uses in the field of use designated in the Agreement, and (ii) we can supply and sell both certain finished products containing zinc oxide for use in the field of use to customers anywhere in the world and certain zinc oxide dispersions that we developed or develop for a particular customer, and (b) amending the provisions of the Agreement concerning order forecasting and procedures, operational planning, inventory and capacity requirements, and periodic facility shutdown arrangements, to more effectively serve each party’s business needs with respect to all product that BASF purchases from us under the Agreement.