Revenue Recognition

3 Months Ended

Mar. 31, 2019

Disaggregation of Revenue [Abstract]

REVENUE RECOGNITION

We record contract assets and contract liabilities in connection with revenue recognized for filter design projects.

Contract Assets - Contract assets, other than accounts receivable, consist of unbilled revenue and generally arise when revenue is recognized on a contract whose transaction price includes an estimate of variable consideration from milestone payments. We do not have material amounts of contract assets as we have relatively few contracts, only modest design service fees and a small number of contracts containing milestone payments. Contract asset balances are included in prepaid expenses and other current assets in our condensed consolidated balance sheets.

Contract Liabilities - Our contract liabilities consist of customer deposits and deferred revenue. We classify contract liabilities as current or noncurrent based on the timing of when we expect to recognize revenue. Generally, our contract liabilities are expected to be recognized in one year or less. Customer deposits and deferred revenue are separately stated in our condensed consolidated balance sheets.

Summary of changes in contract assets and liabilities for the quarter ended March 31, 2019 and 2018:



	Three Months Ended March 31,
	2019			2018
Contract assets
Contract assets, beginning	$	36,000		$	67,000
Contract assets at beginning of year transferred to accounts receivable	—			(42,000		)
Contract assets recorded on contracts during the period	13,000			2,000
Contract assets, ending	$	49,000		$	27,000

Contract liabilities
Contract liabilities, beginning	$	271,000		$	140,000
Recognition of revenue included in beginning of year contract liabilities	(112,000		)	(72,000		)
Contract liabilities, net of revenue recognized on contracts during the period	45,000			208,000
Foreign currently translation	$	—		$	2,000
Contract liabilities, ending	$	204,000		$	278,000

The following table presents our disaggregated revenue by region and source:



	Three Months Ended March 31,
	2019		2018
Revenue by geographic region:
United States	$	134,000	$	137,000
Switzerland	—		20,000
Total revenue	$	134,000	$	157,000

Revenue by source:
Design services	$	125,000	$	107,000
Royalties	9,000		50,000
Total revenue	$	134,000	$	157,000