NNUP - great quarter, but it represents the entirety of a guaranteed 4 year revenue stream that begins in Sept 2019 and for which the present value is being recognized now in one lump sum rather than when the payments occur in accordance with new accounting rules -
10Q -
Revenues for the second quarter of 2018 were $1,873,700 compared to $359,600 in the second quarter of 2017, an increase of $1,514,100, or approximately 421%. Revenues in the second quarter of 2018 included, in accordance with ASU 214-09, Revenue from Contracts with Customers (“Topic 606”), revenue of $1,521,700 representing the present value of guaranteed royalty payments that will be payable over a four-year period beginning in the third quarter of 2019 as a result of an amendment to a license agreement with a licensee that, in addition to expanding the technologies that our licensee is permitted to market, provides for a four year extension to the license agreement beginning in July 2019. Since the performance obligation is to grant the license for the use of certain patented ink technology as it exists at the time that it is granted, the promise to grant the license is a performance obligation satisfied at a point in time in accordance with Topic 606. Previously, we recognized revenue from licenses and royalties on a straight-line basis over the term of the related license agreement. Licenses, royalties and fees increased by $1,523,700, or approximately 1,155%, to $1,655,600 in the second quarter of 2018 from $131,900 in the second quarter of 2017. The increase in licenses, royalties and fees is due primarily to the adoption of Topic 606 described above.
