Note 2 - Revenue and Product Costs

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

2.          REVENUE AND PRODUCT COSTS

Revenue consists of product revenue and other revenue. Product sales include BolaWrap products and accessories. Other revenue includes VR revenue, service, training and shipping revenue.

The timing of revenue recognition may differ from the timing of invoicing to customers. The Company generally has an unconditional right to consideration when customers are invoiced, and a receivable is recorded. A contract asset is recognized when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. The Company recognizes an asset if there are incremental costs of obtaining a contract with a customer such as commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contract. The Company may receive consideration, per terms of a contract, from customers prior to transferring goods to the customer. The Company records customer deposits as a contract liability. Additionally, the Company may receive payments, most typically for service and warranty contracts, at the onset of the contract and before the services have been performed. In such instances, a deferred revenue liability is recorded. The Company recognizes these contract liabilities as revenue after all revenue recognition criteria are met. The table below details the activity in the Company's contract liabilities during the nine months ended September 30, 2024.

	Customer			Deferred
	Deposits			Revenue
Balance at January 1, 2024	$	1,002		$	544
Additions, net		65			724
Transfer to revenue		(1,022	)		(595	)
Balance at September 30, 2024	$	45		$	673
Current portion	$	45		$	622
Long-term portion	$	-		$	51

As of September 30, 2024, the Company’s deferred revenue of $673 consisted of $97 related to VR, $463 related to Intrensic, $98 related to BolaWrap extended warranties and services and $15 related to training.

Estimated costs for the Company’s standard warranty, generally one-year, are charged to cost of products sold when revenue is recorded for the related product. Royalties are also charged to the cost of products sold.