Note 3 - Revenue Recognition

6 Months Ended

Jun. 30, 2023

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,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
U.S.
Systems	$	-	$	-	$	-	$	-
Instruments and accessories		38		18		98		82
Services		76		75		151		149
Leases		19		51		90		164
Total U.S. revenue		133		144		339		395
Outside of U.S. ("OUS")
Systems		-		-		-		-
Instruments and accessories		260		236		493		519
Services		213		349		333		583
Leases		475		265		892		563
Total OUS revenue		948		850		1,718		1,665
Total
Systems		-		-		-		-
Instruments and accessories		298		254		591		601
Services		289		424		484		732
Leases		494		316		982		727
Total revenue	$	1,081	$	994	$	2,057	$	2,060

Remaining Performance Obligations

The 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. The transaction price allocated to remaining performance obligations as of June 30, 2023 was $0.8 million, which is expected to be recognized over one to four years. 

Contract Assets and Liabilities

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 (included in accounts receivable, net in the consolidated balance sheets) for the periods presented.

Revenue recognized for the three months ended June 30, 2023 and 2022 that was included in the deferred revenue balance at the beginning of each reporting period was $0.1 million and $0.3 million, respectively. Revenue recognized for the six months ended June 30, 2023 and 2022 that was included in the deferred revenue balance at the beginning of each reporting period was $0.3 million and $0.5 million, respectively.

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

	As of
	June 30, 2023		December 31, 2022
	(in thousands)
Contract Assets	$	70	$	116
Deferred Revenue	$	376	$	465

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 right to purchase the leased Senhance 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 Senhance System. For the three and six months ended June 30, 2023, and 2022, variable lease revenue related to usage-based arrangements was not material.  

Accounts Receivable

Accounts receivable are recorded at net realizable value, which includes an allowance for expected credit losses. The allowance for expected credit losses is based on the Company’s assessment of the 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 $1.6 million and $1.6 million as of June 30, 2023 and December 31, 2022, respectively. The Company recorded immaterial amounts for expected credit losses during the three and six months ended June 30, 2023 and 2022.

The Company had two customers that accounted for 43% and 13%, respectively, of the Company’s net accounts receivable as of June 30, 2023. The Company had one customer that accounted for 69% of the Company’s net accounts receivable as of December 31, 2022.