Note 12 - Revenues

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

12. Revenues

The Company’s revenues primarily consist of device sales and service revenue.

Device Sales

Device sales include devices and consumables for BioArchive, AXP, CAR-TXpress and manual disposables. Revenue is recognized when control of the devices passes to the customer, and the Company’s performance obligation has been satisfied.

Service Revenue

Service revenue principally consists of maintenance contracts for BioArchive, AXP and CAR-TXpress products. Devices sold have warranty periods of one to two years. After the warranty expires, the Company offers separately priced annual maintenance contracts. Under these contracts, customers pay in advance. These prepayments are recorded as deferred revenue and recognized over time as the contract performance obligations are satisfied.

Revenue is recognized based on the following five-step process as outlined in the Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”: (i) Identify the Contract with the Customer; (ii) Identify Performance Obligations in the Contract; (iii) Determine the Transaction Price; (iv) Allocate the Transaction Price; and (v) Satisfaction of the Performance Obligations (and Recognize Revenue).

Revenues are recorded net of discounts. Shipping and handling fees billed to customers are included in net revenues, while the related costs are included in cost of revenues. Most sales are made with FOB origin shipping terms, with title and control of the goods passing to the customer at the time of shipment. Payments from domestic customers are normally due in two months or less after the title transfers, the service contract is executed, or the services have been rendered. For international customers, payment terms may extend up to 120 days. All sales have fixed pricing and there are currently no variable components included in the Company’s revenue.

Generally, all sales are contract sales (with either an underlying contract or purchase order). The Company does not have any material contract assets. When invoicing occurs prior to revenue recognition, a contract liability is recorded (as deferred revenue on the consolidated balance sheet).

Except for limited exceptions, there is no right of return provided for distributors or customers. For distributors, the Company has no control over the movement of goods to the end customer. The Company’s distributors control the timing, terms and conditions of the transfer of goods to the end customer. Additionally, for sales of products made to distributors, the Company considers a number of factors in determining when revenue is recognized. These factors include, but are not limited to, whether the payment terms offered to the distributor are considered to be non-standard, the distributor’s history of adhering to the terms of its contractual arrangements with the Company, whether the Company has a pattern of granting concessions for the benefit of the distributor, and whether there are other conditions that may indicate that the sale to the distributor is not substantive.

The following table presents net sales by geographic areas:

	Years Ended December 31,
	2023		2022
United States	$	6,029,000	$	6,641,000
China		98,000		1,984,000
United Arab Emirates		570,000		–
Vietnam		225,000		515,000
Other		2,523,000		1,343,000
Total	$	9,445,000	$	10,483,000

The following table summarizes the revenues by product line and type:

	Year Ended December 31, 2023
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
AXP	$	4,970,000	$	232,000	$	–	$	5,202,000
BioArchive		1,484,000		1,361,000		–		2,845,000
X-Series		121,000		152,000		779,000		1,052,000
Other		288,000		–		58,000		346,000
Total	$	6,863,000	$	1,745,000	$	837,000	$	9,445,000

	Year Ended December 31, 2022
	Device Revenue		Service Revenue		Other Revenue		Total Revenue
AXP	$	5,911,000	$	480,000	$	–	$	6,391,000
BioArchive		1,247,000		968,000		–		2,215,000
X-Series		654,000		190,000		285,000		1,129,000
Other		719,000		–		29,000		748,000
Total	$	8,531,000	$	1,638,000	$	314,000	$	10,483,000

Contract Balances

Generally, all sales are contract sales (with either an underlying contract or purchase order). The Company does not have any material contract assets. When invoicing occurs prior to revenue recognition, a contract liability is recorded (as deferred revenue on the consolidated balance sheet). Revenues recognized during the year ended December 31, 2023 and 2022 that were included in the beginning balance of deferred revenue were $782,000 and $719,000, respectively. Short-term deferred revenues were $670,000 and $782,000 at December 31, 2023 and 2022, respectively. Long-term deferred revenue was $127,000 and $911,000 at December 31, 2023 and 2022, respectively.

Exclusivity Fee

In 2019, the Company entered into a Supply Agreement with Corning Incorporated (the “Supply Agreement”). The Supply Agreement has an initial term of five years with Corning having two options to renew for an additional two years (up to four years total), unless terminated by either party in accordance with the terms of the Supply Agreement (collectively, the “Term”). Pursuant to the Supply Agreement, the Company has granted Corning exclusive worldwide distribution rights for substantially all X-Series® products for the duration of the Term, subject to certain geographical and other exceptions. In addition to any amounts payable throughout the Term for the Products, as consideration for the exclusive worldwide distribution rights Corning paid a $2,000,000 exclusivity fee. In February 2024, the Company’s distribution agreement with Corning was not extended as was available in the agreement. As a result, the Company revised its estimate of the term for the recognition of the revenue related to the exclusivity fee resulting in an additional $495,000 recognized in 2023. The Company recorded $781,000 and $286,000 in revenue for the years ended December 31, 2023 and 2022.

Distribution Agreement

The Company signed an agreement with its AXP distributor in China through May 2024. The agreement contains annual purchase minimums. In return for the minimum purchase commitment, the Company provided the distributor with AXP processing devices to use during the term of the agreement. The Company maintains ownership of these devices and they must be returned to the Company at the end of the agreement. The Company analyzed the relevant accounting guidance and determined that the equipment and AXP bagsets represented distinct performance obligations. The equipment was concluded to be an embedded lease, accounted for as a sales-type operating lease. For the years December 31, 2023 and 2022, the Company recorded $82,000 in revenue relating to the lease.

Backlog of Remaining Customer Performance Obligations

The following table represents revenue expected to be recognized in the future from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period:

	Remainder of 2024		2025		2026		2027		2028 and beyond		Total
Service revenue	$	1,186,000	$	514,000	$	125,000		–	$	–	$	1,825,000
Device revenue (1)		41,000		–		–		–		–		41,000
Exclusivity fee		267,000		–		–		–		–		267,000
Clinical revenue		13,000		13,000		13,000		13,000		83,000		135,000
Total	$	1,507,000	$	527,000	$	138,000	$	13,000	$	83,000	$	2,268,000

(1) Represents the minimum purchase requirements under the distribution agreement the Company signed with its AXP distributor in China and other revenue deferred at December 31, 2023.