(14)Revenue Disaggregation and Operating Segments

The following table presents the Company’s revenue disaggregated by product and geography:


	Year Ended December 31, 2019
	U.S.		OUS *		Total Revenues
LAP-BAND product	$	13,309	$	1,780	$	15,089
ReShape vBloc product		—		—		—
Total	$	13,309	$	1,780	$	15,089


	Year Ended December 31, 2018
	U.S.		OUS *		Total Revenues
LAP-BAND product	$	447	$	3	$	450
ReShape vBloc product		157		—		157
Total	$	604	$	3	$	607

The next largest individual country outside the U.S. for the year ended December 31, 2019 was Australia, which was 7.7% of total revenues in 2019. Sales to Apollo for Europe were included in the U.S. sales column through quarter ended September 30, 2019. For quarter ended December 31, 2019, the Company recognized sales in Europe directly through their own distributors and sales channels and were included with OUS sales. All revenues outside the United States for the year ended December 31, 2018 were in Canada.

Lap-Band product sales for the year ended December 31, 2018 are for the period from the date of acquisition of the product line assets of December 17, 2018 through December 31, 2018. As a result of the acquisition of the Lap-Band product line, the Company has no longer been actively marketing its ReShape vBloc product. The Company’s standard payment terms for its customers are generally 30 to 60 days after shipment.

Variable Consideration

The Company records revenue from customers in an amount that reflects the transaction price it expects to be entitled to after transferring control of the goods. Customers and distributors of the Lap-Band product generally have the right to return or exchange products purchased for up to thirty days from the date of product shipment contingent upon a 10% restocking fee. Any such return or exchange of Lap-Band products will be recorded as a reduction of revenue in the period incurred until sufficient historical information is available to enable management to estimate a returns reserve.

Certain Lap-Band customers may receive volume rebates or discounts. Discounts are treated as a reduction in sales price and therefore corresponding revenue at the point of sale. Any volume rebates offered would be estimated and reserved as a reduction in revenue.

Warranty

The Company generally provides warranties against defects in materials and workmanship, and provides replacements at no charge to the customer, as long as the customer has notified the Company within 30 days of delivery and returns such products in accordance with the Company’s instructions. As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations. Warranty reserve requirements are based on a specific assessment of the products sold with warranties where a customer asserts a claim for warranty or a product defect.

For the vBloc product line, the Company has a 5 year warranty on all implantable parts. vBloc sales began in 2015 and ended in 2018, so this warranty will go through 2023.

Contract Balances

The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied.

Practical Expedients

The Company has elected the practical expedient not to determine whether contracts with customers contain significant financing components.

Operating Segments

The Company’s operating segments consist of the Lap-Band segment and the ReShape Vest segment. These two operating segments are reported based on the financial information provided to the Chief Operating Decision Maker (the Chief Executive Officer, or “CODM”). The Company’s CODM evaluates segment performance based on gross profit. The Company’s CODM does not use operating segment assets information to allocate resources or to assess performance of the operating segments and thus total segment assets have not been disclosed

The Company acquired the established Lap-Band product line in December 2018, and the Lap-Band product line accounted for all of the Company’s revenues and gross profit for the year ended December 31, 2019. There were no revenues or gross profit recorded for the ReShape Vest operating segment in 2019 or 2018 because the ReShape Vest is still in the development stage.

The Company’s CODM does not evaluate performance related to ReShape vBloc, as revenues and gross profit for the year ended December 31, 2018 were insignificant, and there have been no revenues or gross profit associated with the ReShape vBloc product since September 30, 2018. In addition, the Company is no longer actively marketing the ReShape vBloc product.