Note 3 - Revenue Recognition

9 Months Ended

Sep. 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 September 30,				Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
U.S.
Systems	$	-	$	-	$	-	$	-
Instruments and accessories		71		60		169		142
Services		77		75		228		225
Leases		40		46		130		211
Total U.S. revenue		188		181		527		578
Outside of U.S. ("OUS")
Systems		-		1,227		-		1,228
Instruments and accessories		230		677		723		1,195
Services		218		260		551		842
Leases		453		218		1,345		780
Total OUS revenue		901		2,382		2,619		4,045
Total
Systems		-		1,227		-		1,228
Instruments and accessories		301		737		892		1,337
Services		295		335		779		1,067
Leases		493		264		1,475		991
Total revenue	$	1,089	$	2,563	$	3,146	$	4,623

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 September 30, 2023 was $0.7 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 condensed consolidated balance sheets) for the periods presented.

Revenue recognized for the three months ended September 30, 2023 and 2022 that was included in the deferred revenue balance at the beginning of each reporting period was $0.2 million. Revenue recognized for the nine months ended September 30, 2023 and 2022 that was included in the deferred revenue balance at the beginning of each reporting period was $0.5 million and $0.7 million, respectively.

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

	September 30, 2023		December 31, 2022		December 31, 2021
(In thousands)
Contract Assets	$	54	$	116	$	91
Deferred Revenue	$	456	$	465	$	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 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 nine months ended September 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 as of September 30, 2023 and December 31, 2022. The Company recorded immaterial amounts for expected credit losses during the three and nine months ended September 30, 2023 and 2022.

The Company had four customers that accounted for 18%, 16%, 15% and 14%, respectively, of the Company’s net accounts receivable as of September 30, 2023. The Company had one customer that accounted for 69% of the Company’s net accounts receivable as of December 31, 2022.