Contract Receivables

12 Months Ended

Dec. 31, 2023

Contract Receivables [Abstract]

Contract Receivables

7.  Contract Receivables

Contract receivables represent our unconditional rights to consideration due from a broad base of both domestic and international customers. Net contract receivables are considered to be collectible within twelve months.

Recoverable costs and accrued profit not billed represent costs incurred and associated profit accrued on contracts that will become billable upon future milestones or completion of contracts. The components of contract receivables are as follows:

(in thousands)	December 31,
	2023			2022
Billed receivables	$	5,720		$	6,074
Unbilled receivables		4,729			5,146
Allowance for credit loss		(283	)		(1,156	)
Total contract receivables, net	$	10,166		$	10,064

During the first quarter of 2023, the Company adopted ASU 2016-13, “Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments.” This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including accounts receivable. Under the new guidance, an entity recognizes its estimate of lifetime expected credit losses as an allowance, which the FASB believes will result in more timely recognition of such losses. Under the CECL impairment model, the Company develops and documents its allowance for credit losses on its contract receivables based on three portfolio segments by customer geographic location:  North America, China, Rest of World (ROW). The determination of portfolio segments is based primarily on the qualitative consideration of the nature of the Company’s business operations and the characteristics of the underlying trade receivables. During the years ended December 31, 2023 and 2022, we recorded credit loss expense of $232 thousand and $221 thousand, respectively.

During January 2024, we invoiced $4.5 million of the unbilled amounts related to the balance at December 31, 2023.

The following table sets forth the activity in allowance for credit losses:

(in thousands)	As of and for the
	Years ended December 31,
	2023			2022
Beginning balance	$	1,156		$	1,010
Adoption of ASC326 Current Expected Credit Losses (CECL)		57			-
Adjusted beginning balance		1,213			1,010
Current period provision for expected credit loss		178			221
Write-offs charged against the allowance, net of recoveries		(1,070	)		(7	)
Currency adjustment		(38	)		(68	)
Ending balance	$	283		$	1,156