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| REVENUE | NOTE 4 – REVENUE
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, and, if applicable, royalties that exceed the minimum royalty payments and milestone license fees. The License Agreement is a non-exclusive material supply and license agreement.
In December 2025, Company entered into a memorandum of agreement (also referred to as “joint development agreement”) under which it, along with other parties, performs its respective part of the development work to develop an electro-optical polymer-based modulator chip for use in communication applications. The development work consists of preparing reference documentation and support of a multi-project wafer chip produced at a mutually agreed upon foundry, the design and post processing of fabricated chips, and complete product verification and volume manufacturing preparation, with each party to the agreement having responsibility over various deliverables for each phase.
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 ended December 31, 2023. $2,375 and $6,541 of this amount is recorded as a contract liability in current liabilities on the Company’s balance sheets as of March 31, 2026 and December 31, 2025, respectively. For the three months ended March 31, 2026 and 2025, the Company recognized $29,167 and $22,917, respectively, in revenue related to this agreement.
Revenues related to the joint development agreement are recognized at a point of time, when control over the performance obligations is transferred to a customer. For the three months ended March 31, 2026, the Company did not recognize any non-recurring engineering revenue related to this agreement.
Contract balances are as follows:
Significant changes in the contract balances for the three months ended March 31, 2026 are as follows:
Assets Recognized for the Costs to Obtain a Contract
There are no assets recognized for the costs to obtain the License Agreement.
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