Note 3 - Revenue Recognition

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

3. Revenue Recognition

The following table presents revenue disaggregated by type and geography:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)				(in thousands)
U.S.
Systems	$	-	$	-	$	-	$	3
Instruments and accessories		18		79		82		141
Services		75		104		149		202
Leases		51		91		164		181
Total U.S. revenue		144		274		395		527
Outside of U.S. ("OUS")
Systems		-		-		-		921
Instruments and accessories		236		284		519		661
Services		349		302		583		583
Leases		265		242		563		493
Total OUS revenue		850		828		1,665		2,658
Total
Systems		-		-		-		924
Instruments and accessories		254		363		601		802
Services		424		406		732		785
Leases		316		333		727		674
Total revenue	$	994	$	1,102	$	2,060	$	3,185

Remaining Performance Obligations

Transaction price allocated to remaining performance obligations relates to amounts allocated to products and services for which the revenue has not yet been recognized. A significant portion of this amount relates to service obligations performed under the Company's system sales contracts that will be invoiced and recognized as revenue in future periods. Transaction price allocated to remaining performance obligations as of June 30, 2022 was $2.1 million, which is expected to be recognized over one to four years. 

Contract Assets and Liabilities

The Company invoices its customers based on the billing schedules in its sales arrangements. Contract assets for the periods presented primarily represent the difference between the revenue that was recognized based on the relative selling price of the related performance obligations and the contractual billing terms in the arrangements. Deferred revenue for the periods presented was primarily related to service obligations, for which the service fees are billed up-front, generally annually. The associated deferred revenue is generally recognized ratably over the service period. The Company did not have any significant impairment losses on its contract assets for the periods presented. Revenue recognized for the three months ended June 30, 2022 and 2021 that was included in the deferred revenue balance at the beginning of each reporting period was $0.3 million and $0.2 million, respectively. Revenue recognized for the six months ended June 30, 2022 and 2021 that was included in the deferred revenue balance at the beginning of each reporting period was $0.5 million and $0.4 million, respectively.

The following information summarizes the Company’s contract assets and liabilities:

	As of
	June 30, 2022		December 31, 2021
	(in thousands)
Contract Assets	$	57	$	91
Deferred Revenue	$	510	$	543

Senhance System Leasing

The Company enters into operating lease arrangements with certain qualified customers. Revenue related to arrangements including lease elements are allocated to lease and non-lease elements based on their relative standalone selling prices. Lease elements generally include a Senhance System, while non-lease elements generally include instruments, accessories, and services. For some lease arrangements, the customers are provided with the option to purchase the leased System at some point during and/or at the end of the lease term. In some arrangements lease payments are based on the usage of the System. For the three and six months ended June 30, 2022, and 2021, variable lease revenue related to usage-based arrangements was not material.  

Trade Accounts Receivable

The allowance for doubtful accounts is based on the Company’s assessment of collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The allowance for doubtful accounts was $1.5 million and $1.7 million as of June 30, 2022, and December 31, 2021, respectively. For the three and six months ended June 30, 2022, and 2021, bad debt expense was not material.