Revenues and Other Income

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Revenues and Other Income

(3) Revenues and Other Income

Revenues are recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration we expect to receive in exchange for those goods. When our ingredients and finished products are shipped, with control being transferred at the shipping point almost universally, is the point in time at which we recognize the related revenue.

We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses. Customers’ deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in our statements of operations.

Contract balances at March 31, 2024, December 31, 2023, and December 31, 2022 are as follows:

	Accounts Receivable, net		Contract Assets		Contract Liabilities
Balance, December 31, 2022	$	4,734	$	—	$	2,188
Balance, December 31, 2023		3,467		—		2,353
Balance, March 31, 2024		5,227		—		2,592

Revenue recognized in the reporting period that was included in the contract liability balance at the beginning of the period was $679 and $1,297 for the three months ended March 31, 2024 and 2023, respectively.

Other revenue may include revenue from technology license fees and paid development projects. Technology license fees and paid development projects are recognized over time when the obligations under the agreed upon contractual arrangements are performed on our part.  Other revenue recognized over time was $96 and $121 for the three months ended March 31, 2024 and 2023, respectively.

Nanophase Technologies also had $55 in Other Receivables which consisted of pending sublease rental payments.

Nanophase Technologies subleases portions of its leased facilities that are used to support operations for the lessees. Total lease payment received for the period of March 31, 2024 and 2023 was $204 and $196, respectively. The arrangement is not with a related party.

Payments received by the Company for these subleases are comprised of two components, which include base rent and Common Area Maintenance (CAM) charges. While the base rent is fixed, the CAM charges are indexed directly to the Master Lease and are expected to be adjusted periodically as actual costs are incurred. However, the executed sublease agreements specifically itemize these costs with a provision that informs the sublessee that the CAM charges will be adjusted (up or down) based on actual amounts once this information becomes known. As such, the nature of the charges is more closely representative of a fixed payment (an “in-substance fixed” charge) with the adjustments occurring simply to “true up” the listed CAM charges once actual charges from the head lessor become known. As sublessor, Nanophase Technologies has elected the practical expedient to not separate lease and nonlease components in disclosing future undiscounted cashflows and treats the combined components as a single lease component.

The one sublease arrangement that is not now month to month automatically renews following expiration of the initial term on May 31, 2025, with a one-year notice required to terminate the lease. As of the issuance of these financial statements the sublessee has not yet provided notice of their intent to renew or terminate said arrangement. The Company believes the sublease will not be renewed.

The future undiscounted lease payments associated with this arrangement are provided below, and only include the period for which enforceable rights and obligations exist as of the date of financial statement issuance. The below is taken from the December 31, 2023 Form 10-K and is still relevant at March 31, 2024.

	For the Year
Months	2024		2025
January - May	$	124,015	$	128,640
June - December		173,621		—
Total	$	297,636	$	128,640