REVENUE

3 Months Ended

Mar. 31, 2024

Revenue

REVENUE

NOTE 3 – REVENUE

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (Topic 606). The standard establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows from a contract with a customer.

The Company's first commercial agreement occurred in May 2023, in the form of a four-year material supply and license agreement (the “License Agreement”) that incorporates the Company's patented electro-optic polymer materials for use in manufacturing of photonic devices (the “Licensed Product”). The licensee shall pay the Company a running royalty with a minimum royalty paid on an annual basis over the term of the License Agreement. Additional future revenue will be generated from royalties from the licensee’s sale of Licensed Product that exceed the minimum royalty payments and milestone license fees. The License Agreement is a non-exclusive material supply and license agreement.

During 2024, the Company performed device poling work for a customer.

Timing of Revenue Recognition and Contract Balances

Revenues related to the initial license fee and a minimum annual royalty are recognized over time commencing with the License Agreement in May 2023. An up-front license fee in the amount of $50,000 was paid during the period ending December 31, 2023. $35,708 of this amount is recorded in short term liability deferred revenue in the Company’s balance sheet as of March 31, 2024. For the three months ended March 31, 2024, the Company recognized $16,667 in revenue related to this agreement.

In March 2024, the Company completed coating and poling work on the devices supplied by a customer. Revenue for this contract was recognized at the time of shipment of the devices back to the customer and amounted to $13,750 for the three months ended March 31, 2024.

Contract balances are as follows:

	March 31, 2024		December 31, 2023
Accounts receivable, net	$	56,760	$	30,376
Short-term contract assets	$	—	$	—
Long-term contract assets	$	—	$	—
Short-term liability deferred revenue	$	35,708	$	39,875
Long-term liability deferred revenue	$	—	$	—

Significant changes in the contract balances for the period ended March 31, 2024 are as follows:

	March 31, 2024
	Assets		Liabilities
Balance at December 31, 2023	$	30,376	$	(39,875	)
Revenue recognized that was previously included in deferred revenue		—		4,167
Billed receivables recorded		13,884		—
Unbilled receivables recorded		12,500		—
Balance at March 31, 2024	$	56,760	$	(35,708	)

Assets Recognized for the Costs to Obtain a Contract

There are no assets recognized for the costs to obtain the License Agreement.