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REVENUE RECOGNITION
 12 Months Ended
Dec. 31, 2021
Revenue from Contract with Customer [Abstract]  
REVENUE RECOGNITION REVENUE RECOGNITION
Contract Liabilities - Our contract liabilities consist of deferred revenue, which represents the revenue associated with remaining performance obligations within our customer contracts. We classify contract liabilities as current or long-term based on the timing of the remaining performance obligations. Our contract liabilities are expected to be recognized over various periods of generally one to four years, but could be longer as certain performance obligations surrounding material rights of the customer are at the discretion of the customer. Deferred revenue, current and long-term, is separately stated in our consolidated balance sheets.
Summary of changes in contract liabilities for the years ended December 31, 2021 and 2020 (in thousands):

20212020
Contract liabilities
Contract liabilities, beginning$1,783 $1,731 
Recognition of revenue included in beginning of year contract liabilities(1,475)(1,720)
Contract liabilities, net of revenue recognized on contracts during the period6,688 1,772 
Reversal of contract liabilities due to changes in transaction price(200)— 
Contract liabilities, ending$6,796 $1,783 

We derive a substantial majority of our revenue from a single customer. Effective September 30, 2019 we entered into a collaboration and license agreement with Murata Manufacturing Co., Ltd. (Murata). Pursuant to the collaboration agreement, we have agreed with Murata to collaborate on the development of proprietary circuit designs using our XBAR® technology, and we licensed to Murata rights for products in four specific radio frequencies, or bands. Murata has agreed to pay us up to an aggregate of $9.0 million of total contract consideration in the form of pre-paid royalties for the licensed designs and certain other intellectual property developed in the collaboration, payable in installments over a multi-year development period, with each installment conditional upon our achievement of certain milestones and deliverables acceptable to Murata in its discretion. Murata may terminate the collaboration agreement at any time upon thirty (30) days prior written notice to us.
Murata’s rights to our XBAR® technology are exclusive for a period of 30 months, through March 2022, during which period we may not grant to any third party the right to develop, make, have made, use, sell, offer for sale or import any filter or resonator produced through the use of the XBAR® technology for use in mobile communication devices.
Under the collaboration agreement, the first payment of $2.0 million was a non-refundable upfront payment received on October 11, 2019. The second payment of $2.5 million was received on September 29, 2020 upon the achievement of the second milestone. As of December 31, 2021 there is $4.5 million remaining potential contract consideration for the achievement of certain milestones outlined in the collaboration and license agreement.
On September 30, 2021, we entered into Addendum 1 to the collaboration agreement with Murata, which amends and supplements the collaboration agreement to provide for the development of XBAR®-based designs for up to four additional bands. For rights to these additional bands, Murata has agreed to pay us a $4.0 million non-refundable upfront payment, which was paid on November 10, 2021, and up to an aggregate of between $8.0 million and $36.0 million in pre-paid royalties and other fees, with the amount of the aggregate payments determined based on the complexity of the filter designs selected for development. The future payments will be made in two installments per band over a multi-year development period, with each installment conditional upon our achievement of certain milestones and deliverables acceptable to Murata in its discretion. Murata retains the right to terminate the collaboration agreement and addendum at any time upon thirty (30) days prior written notice to us. We evaluated whether or not Addendum 1 should be treated as a contract modification and we determined that Addendum 1 represented a separate contract and is not a modification to the existing contract. We also considered whether Addendum 1 provided material rights of the customer for future designs and determined that the customer does have material rights to enter into future design development contracts. We allocated the $4.0 million non-refundable upfront payment to each of the four bands at $1.0 million per band as the prepayment provides Murata with a material right to receive future services. Addendum 1 allows Murata with certain time periods in which to choose the next design. Once a design is chosen, the amount
of time to complete the design can be up to three years but is highly dependent on the complexity of the chosen design. We entered into a contract for the first of the four designs in October 2021. Addendum 1 allows Murata to choose the second design no later than March 2022, the third design no later than December 2022 and the fourth design no later than March 2023.
Under the Murata agreements, we enter into individual statements of work for the designs, each of which have been identified as separate contracts. On October 31, 2021, Murata entered into the first statement of work under Addendum 1 for a total transaction price of $7.0 million. The first non-refundable upfront installment payment of $3.0 million related to this agreement was received on November 10, 2021.
In accordance with the guidance of ASC 606, we are required to evaluate the variable consideration within the contract, primarily the milestone payments, and assess the likelihood of achievement in determining our transaction price. Additionally, we must assess whether the variable consideration is constrained and whether recording such variable revenue may result in a significant reversal of revenue due to uncertainties. We continue to evaluate variable consideration for inclusion in the transaction price, and ultimately the revenue recognized, at each reporting period. We recognize revenue for the performance obligations in the Murata contracts over the estimated design development period based on the level of effort expended, as measured by costs incurred relative to total expected costs, as the services are performed. For the periods ended December 31, 2021 and 2020, we have determined that the milestone payments due upon achievement of certain performance criteria are constrained and are thus not included in the transaction price. Therefore, revenue related to those milestone payments has not been recognized. Revenue recognition related to each milestone payment will commence once the constraint is lifted. Consequently, revenue recognition related to the Murata contract will vary from quarter to quarter. During the years ended December 31, 2021 and 2020, we recognized $1.6 million and $2.7 million, respectively, of revenue related to the Murata contracts.
For the years ended December 31, 2021 and 2020, the majority of our revenue was recognized over time as services were provided. At December 31, 2021, deferred revenue totaled $6.8 million and will be recognized over the balance of the respective contracts, which is generally the next four years.