REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

NOTE 3 - REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

Net Revenue

For the three and nine months ended September 30, 2024 and 2023, the components of revenue from contracts with customers and the related timing of revenue recognition is set forth in the table below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Product revenue
Appliances		1,583			1,195			4,498			3,959
Guides		375			271			1,110			824
Total product revenue		1,958	(1)		1,466	(1)		5,608	(1)		4,783	(1)
Service revenue
VIP		926			980			3,007			3,184
Billing intelligence services		206	(2)		218	(2)		644	(2)		651	(2)
Sleep testing services		329			308			954			882
Myofunctional therapy services		147			228			472			666
Sponsorship/seminar/other		294			101			648			387
Total service revenue		1,902			1,835			5,725			5,770
Total revenue	$	3,860		$	3,301		$	11,333		$	10,553

(1)	Product revenue from the sale of appliances and guides is typically fixed at the inception of the contract and is recognized at the point in time when shipment of the related products occurs.
(2)	Service revenue from the sale of VIP enrollments, billing services and therapy is typically fixed at the inception of the contract and is recognized ratably over time as the services are performed and the performance obligations completed.

Changes in Contract Liabilities

The key components of changes in contract liabilities for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):

	2024			2023
Beginning balance, December 31	$	3,038		$	3,038
New contracts, net of cancellations		855			1,255
Revenue recognized		(962	)		(1,396	)
Ending balance, March 31	$	2,931		$	2,897
New contracts, net of cancellations		411			794
Revenue recognized		(1,195	)		(1,068	)
Ending balance, June 30	$	2,147		$	2,623
New contracts, net of cancellations		275			1,046
Revenue recognized		(931	)		(1,056	)
Ending balance, September 30	$	1,491		$	2,613

The current portion of deferred revenue is approximately $1.3 million, which is expected to be recognized over the next 12 months from the date of the period presented. Additionally, revenue from breakage on contract liabilities was approximately $0.5 and $0.3 million for the three months ended September 30, 2024 and 2023, and approximately $1.5 and $0.4 million for the nine months ended September 30, 2024 and 2023 respectively.

Changes in Accounts Receivable

Our customers are billed based on fees agreed upon in each customer contract. Receivables from customers were $0.2 million at December 31, 2023, and $0.5 million at September 30, 2024. An allowance is maintained for accounts receivable which is generally based on a combination of factors, including the aging of the receivables, historical collection trends, and charge-offs. Adjustments to the allowance are recorded in bad debt expense under general and administrative expenses in the consolidated statement of operations. An allowance of $0.3 million existed as of September 30, 2024 and December 31, 2023.