Note 2 - Revenue Recognition

6 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

2. Revenue Recognition

In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when performance of contractual obligations are satisfied, generally when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services.

The Company primarily derives product revenue from the sale of its manufactured products. Revenue from these product sales, including the sale of used rental equipment, is recognized when obligations under the terms of a contract are satisfied, control is transferred and collectability of the sales price is probable. The Company records deferred revenue when customer funds are received prior to shipment or delivery or performance has not yet occurred. The Company assesses collectability during the contract assessment phase. In situations where collectability of the sales price is not probable, the Company recognizes revenue when it determines that collectability is probable or when non-refundable cash is received from its customers and there is not a significant right of return. Transfer of control generally occurs with shipment or delivery, depending on the terms of the underlying contract. The Company’s products are generally sold without any customer acceptance provisions, and the Company’s standard terms of sale do not allow customers to return products for credit.

Revenue from engineering services is recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenue is recognized when services are rendered and is generally priced on a per day rate.

The Company also generates revenue from short-term rentals under operating leases of its manufactured products. Rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured. Rentals of the Company’s equipment generally range from daily rentals to minimum rental periods of up to one year. The Company has determined that ASC 606 does not apply to rental contracts, which are within the scope of ASC Topic 842, Leases.

As permissible under ASC 606, sales taxes and transaction-based taxes are excluded from revenue. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Additionally, the Company expenses costs incurred to obtain contracts when incurred because the amortization period would have been one year or less. These costs are recorded in selling, general and administrative expenses.

The Company has elected to treat shipping and handling activities in a sales transaction after the customer obtains control of the goods as a fulfillment cost and not as a promised service. Accordingly, fulfillment costs related to the shipping and handling of goods are accrued at the time of shipment. Amounts billed to a customer in a sales transaction related to reimbursable shipping and handling costs are included in revenue and the associated costs incurred by the Company for reimbursable shipping and handling expenses are reported in cost of revenue.

At March 31, 2024, the Company had deferred contract liabilities of $0.3 million and no deferred contract cost.  At September 30, 2023, the Company had deferred liabilities of $0.7 million and no deferred contract costs.  During the three and six months ended March 31, 2024, revenue of $0.7 million and $0.7 million, respectively, was recognized from deferred contract liabilities.  During the three and six months ended March 31, 2024, no cost of revenue was recognized from deferred contract costs.  During the three and six months ended March 31, 2023, no revenue was recognized from deferred contract liabilities and no cost of revenue was recognized from deferred contract costs.  At March 31, 2024, all contracts had an original expected duration of one year or less.

For each of the Company’s operating segments, the following table presents revenue (in thousands) only from the sale of products and the performance of services under contracts with customers.  Therefore, the table excludes all revenue earned from rental contracts.

	Three Months Ended				Six Months Ended
	March 31, 2024		March 31, 2023		March 31, 2024		March 31, 2023
Oil and Gas Markets
Traditional exploration product revenue	$	3,472	$	3,296	$	5,234	$	6,051
Wireless exploration product revenue		2,679		1,411		34,548		7,170
Reservoir product revenue		41		132		114		287
Total revenue		6,192		4,839		39,896		13,508
Adjacent Markets
Industrial product revenue		9,023		9,642		15,466		17,572
Imaging product revenue		3,169		3,029		6,502		5,885
Total revenue		12,192		12,671		21,968		23,457
Emerging Markets
Revenue		1,113		191		1,347		284
Total	$	19,497	$	17,701	$	63,211	$	37,249

See Note 12 for more information on the Company’s operating segments.

For each of the geographic areas where the Company operates, the following table presents revenue (in thousands) from the sale of products and services under contracts with customers. The table excludes all revenue earned from rental contracts:

	Three Months Ended				Six Months Ended
	March 31, 2024		March 31, 2023		March 31, 2024		March 31, 2023
Asia (including Russian Federation)	$	3,672	$	1,443	$	35,888	$	7,977
Canada		1,002		333		2,228		1,094
Europe		1,507		1,792		2,885		2,926
United States		12,831		13,479		21,249		24,070
Other		485		654		961		1,182
Total	$	19,497	$	17,701	$	63,211	$	37,249

Revenue is attributable to countries based on the ultimate destination of the product sold, if known. If the ultimate destination is not known, revenue is attributable to countries based on the geographic location of the initial shipment.