Quarterly report pursuant to Section 13 or 15(d)

Revenue

v3.21.2
Revenue
9 Months Ended
Sep. 30, 2021
Revenue from Contract with Customer [Abstract]  
Revenue

Note 12. Revenue

We recognize revenue from product sales and services in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). We derive our revenues primarily from: 1) product sales of developed compostable resins based on polylactic acid (“PLA”),

polyhydroxyalkanoates (“PHA”), and other renewable materials; and 2) research and development (“R&D”) services related to developing customized formulations of biodegradable resins based on PHA.

We generally produce and sell finished products, for which we recognize revenue upon shipment. Due to the highly specialized nature of our products, returns are infrequent, and therefore we do not estimate amounts for sales returns and allowances. There are no forms of variable consideration such as discounts, rebates, or volume discounts that we estimate to reduce our transaction price.

We defer certain contract fulfillment costs. These costs are amortized to cost of revenue on a per-pound basis as we sell the related product. During the three and nine months ended September 30, 2021, we charged $0.2 million and $0.5 million, respectively, of fulfillment costs to cost of revenue. At September 30, 2021 and December 31, 2020 we had recorded gross contract assets of $2.2 million and $1.5 million, respectively, related to these fulfillment costs.

R&D service revenues generally involve milestone-based contracts under which we work with a customer to develop a PHA-based specific solution designed to the customer’s specifications, which may involve a single or multiple performance obligations. At the inception of our R&D services contracts, customers generally pay consideration at the commencement of the agreement and at milestones or other intervals as outlined in the contracts. We recognize contract liabilities for such progress with an input method based on personnel hours incurred to date as a percentage of total estimated personnel hours, and then reduce each contract liability by recognizing revenue for our R&D services over time by measuring progress for each performance obligation identified within each contract. To the extent collectible revenue recognized under this method exceeds the consideration received, we recognize contract assets for unbilled consideration.

The following table shows the significant changes in the R&D contract asset and contract liability balances for the periods ended September 30, 2021 and December 31, 2020.

 

 

September 30,
2021

 

 

December 31, 2020

 

(in thousands)

 

Contract Assets

 

 

Contract Liabilities

 

 

Contract Liabilities

 

Beginning balance

 

$

-

 

 

$

(2,115

)

 

$

(4,240

)

Revenue recognized

 

 

 

 

 

 

 

 

 

Revenue recognized in the quarter ended:

 

 

 

 

 

 

 

 

 

March 31

 

 

-

 

 

 

1,397

 

 

 

412

 

June 30

 

 

1,530

 

 

 

1,513

 

 

 

845

 

September 30

 

 

6

 

 

 

572

 

 

 

1,187

 

December 31

 

 

-

 

 

 

-

 

 

 

2,268

 

Total revenue recognized

 

 

1,536

 

 

 

3,482

 

 

 

4,712

 

Unearned consideration received in the quarter ended:

 

 

 

 

 

 

 

 

 

March 31

 

 

-

 

 

 

(1,600

)

 

 

-

 

June 30

 

 

-

 

 

 

-

 

 

 

(350

)

September 30

 

 

-

 

 

 

-

 

 

 

(350

)

December 31

 

 

-

 

 

 

-

 

 

 

(1,887

)

Total unearned consideration received

 

 

-

 

 

 

(1,600

)

 

 

(2,587

)

Ending balance

 

$

1,536

 

 

$

(233

)

 

$

(2,115

)