Note 3 - Revenue Recognition

9 Months Ended

Sep. 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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)				(in thousands)
U.S.
Systems	$	-	$	-	$	-	$	-
Instruments and accessories		60		60		142		204
Services		75		105		225		307
Leases		46		78		211		259
Total U.S. revenue		181		243		578		770
Outside of U.S. ("OUS")
Systems		1,227		1,129		1,228		2,050
Instruments and accessories		677		733		1,195		1,397
Services		260		290		842		873
Leases		218		176		780		666
Total OUS revenue		2,382		2,328		4,045		4,986
Total
Systems		1,227		1,129		1,228		2,050
Instruments and accessories		737		793		1,337		1,601
Services		335		395		1,067		1,180
Leases		264		254		991		925
Total revenue	$	2,563	$	2,571	$	4,623	$	5,756

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 September 30, 2022 was $1.8 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 September 30, 2022 and 2021 that was included in the deferred revenue balance at the beginning of each reporting period was $0.2 million and $0.1 million, respectively. Revenue recognized for the nine months ended September 30, 2022 and 2021 that was included in the deferred revenue balance at the beginning of each reporting period was $0.7 million and $0.5 million, respectively.

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

	As of
	September 30, 2022		December 31, 2021
	(in thousands)
Contract Assets	$	68	$	91
Deferred Revenue	$	357	$	543

Senhance System Leasing

The Company enters into 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 nine months ended September 30, 2022, and 2021, variable lease revenue related to usage-based arrangements was not material.  

Trade Accounts Receivable

The allowance for expected credit losses 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 expected credit losses was $1.5 million and $1.7 million as of September 30, 2022, and December 31, 2021, respectively.  For the three and nine months ended September 30, 2022, and 2021, bad debt expense was not material.