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Revenues and Other Income
 6 Months Ended
Jun. 30, 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 (which we do almost universally) we recognize the related revenue at the time of shipping. In the rare instances when we use FOB destination, we would not recognize revenue until the customer receives the product.

 

 

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 June 30, 2024, December 31, 2023, and December 31, 2022 are as follows:

 

      Accounts Receivable     Contract Assets     Contract Liabilities  
Balance, December 31, 2022     $ 4,734     $ —     $ 2,188  
Balance, December 31, 2023       3,467       —       2,353  
Balance, June 30, 2024       5,932       —       3,077  

  

Revenue recognized in the reporting period that was included in the contract liability balance at the beginning of the period was $924 and $726, for the three months ended June 30, 2024 and 2023, respectively, and $1,603 and $2,024 for the six months ended June 30, 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 $123 and $28, for the three months ended June 30, 2024 and 2023, respectively, and $220 and $149 for the six months ended June 30, 2024 and 2023, respectively.

 

Nanophase Technologies subleases portions of its leased facilities that are used to support operations for the lessees. Total lease payment received for the three and six months ended June 30, 2024 was $70 and $196, respectively. Total lease payment received for the three and six months ended June 30, 2023 was $274 and $393, respectively. The arrangements are 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.