Jim Phillips will not be the one to lead Springdale-based nanotechnology company NanoMech through a lawsuit.
Phillips retired from the company as chairman and CEO earlier this month, his former assistant said. When asked if he retired March 1, she said yes.
Phillips could not be reached for comment, but a recent update to his LinkedIn profile and a bio on the website for Covenant Ventures shows he’s chairman and CEO of the company with a portfolio that includes NanoMech, The Chosen and ZipHat. Phillips previously said he has invested in NanoMech. Following is listed on the website under Covenant Ventures: “Manufacturing. Material science. Textiles. The internet of things.”
NanoMech has yet to respond to the lawsuit filed against the company Feb. 4 in the Supreme Court of New York, alleging it has not made payments on $7 million in loans. Fayetteville attorney Todd Lewis of Conner & Winters is Phillips’ personal attorney. He did not immediately respond to a request for comment.
New York-based technology financing company Michaelson Capital Partners sued NanoMech for not paying on the loans provided to the company in April 2018. Michaelson Capital filed suit in the Supreme Court of New York and asked for an $8.91 million judgment against the company.
John Michaelson, chief investment officer of Michaelson Capital Partners, has said he wants to work with NanoMech’s equity shareholders and investors, including the Arkansas Economic Development Commission, to save the company and keep the technology and jobs in Arkansas. “Unfortunately, as our filings state, the current executive leadership of the company has repeatedly failed to meet its obligations and is in breach of its agreements,” Michaelson said previously. “This action is a last resort to save a great Arkansas company.”
Michaelson Capital has a nearly 5% equity position in NanoMech, said Robbie Wills, a Conway attorney representing Michaelson Capital. “Our company has been disappointed in the current executive leadership of NanoMech, and we look forward to working with the shareholders in the future to address that,” he said previously. Wills also noted NanoMech took on more debt after it received the loans from Michaelson Capital, and this violated a condition of the loans.
When asked if the lawsuit was an attempt by Michaelson Capital to take control of NanoMech, Wills said “Michaelson Capital is a lender and is primarily concerned with getting its loan proceeds repaid. It is a de minimis stockholder, holding a small percentage of the stock of the company. It hopes that the company, with the right management and focus, can grow and be a strong Arkansas company.”
The Arkansas Economic Development Commission provided $10.88 million in loans, grants and tax credits to NanoMech, all before 2015. The incentives NanoMech received have specific requirements that must be met, and these are being reviewed, said Mike Preston, executive director of the Arkansas Economic Development Commission. NanoMech has faced “claw backs” and “penalties,” but because of the lawsuit, the commission declined to provide more details.
“The specialty lubrications manufactured by NanoMech use macromolecular technology developed at the University of Arkansas to improve functionality and have the potential to radically change the energy industry, as well as aerospace, transportation and automotive,” Preston said previously. “It is our desire to see the company become an industry leader, keeping their dedicated employees and stakeholders in Arkansas while competing in the national and international arena.”
NanoMech has paid more than $1 million to the UA, Phillips said in an exclusive interview with the Northwest Arkansas Business Journal the day before the lawsuit was made public. It pays licensing fees to the UA to use its technology to produce the products. “The university has licensing agreements with companies that commercialize and use intellectual property — new technology — developed and owned by the university,” said Amy Schlesing, executive director of strategic communications for the UA.
NanoMech has about 60 employees and nearly 150,000 square feet of nanotechnology manufacturing and office space across four locations in Dallas, Detroit, Houston and Springdale. About 75% of the company’s business comes from the oil and gas industry. Since it was established in 2002, NanoMech has received between $45 million and $50 million in investments.
Todd Lewis, Jim Phillips’ personal attorney, provided the following statement to the Northwest Arkansas Business Journal:
“After being with NanoMech for over 10 years, at age 67, Jim decided to retire. Under his leadership, NanoMech experienced positive growth. When Jim was recruited to invest in and join NanoMech, the company was a start-up with virtually no products or customers. During Jim’s tenure, NanoMech developed hundreds of products that are utilized by some of the top companies in the world. Also, during this time, NanoMech has received international awards for the products it developed. Jim is extremely proud of NanoMech’s accomplishments during his tenure. Given his passions for technology, Jim will remain involved in the innovation and development of new technology as he strikes the right balance between his work and personal life. Having worked nonstop for NanoMech over 10 years, Jim looks forward to spending time with his wife of 42 years and their five grandchildren and ‘recharging his batteries.'”
Robbie Wills said Michaelson Capital is “monitoring the situation” but offered no additional comment.