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Revenue and Contract Liabilities
 6 Months Ended
Jun. 30, 2024
Revenue and Contract Liabilities [Abstract]  
Revenue and Contract Liabilities

Note 2 — Revenue and Contract Liabilities

 

Revenue

 

The Company sells its equipment and services to customers under a combination of a contract and purchase order. Equipment revenue includes sales from proprietary products designed and engineered by the Company such a VFUs, container farms, integrated grow racks, and LED grow lights, and non-proprietary products designed, engineered, and manufactured by third parties such as air cleaning systems and pesticide-free surface protection.

 

Construction contracts normally provide for payment upon completion of specified work or units of work as identified in the contract. Although there is considerable variation in the terms of these contracts, they are primarily structured as time-and-materials contracts. The Company enters into time-and-materials contracts under which the Company is paid for labor and equipment at negotiated hourly billing rates and other expenses, including materials, as incurred at rates agreed to in the contract. The Company uses three main sub-contractors to execute the construction contracts.

 

The following table provides the Company’s revenue disaggregated by the timing of revenue recognition:

 

   Three months ended
June 30,		   Six months ended
June 30,		 
(In thousands)  2024   2023   2024   2023 
Transferred at a point in time  $2,760   $4,583   $5,225   $9,553 
Transferred over time   234    483    367    1,317 
Total revenue  $2,994   $5,066   $5,592   $10,870 

 

In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the Company’s contracts, these reporting requirements are not applicable because the majority of the Company’s remaining contracts meet certain exemptions as defined in ASC 606-10-50-14 through 606-10-50-14A, including (i) performance obligation is part of a contract that has an original expected duration of one year or less and (ii) the right to invoice practical expedient.

 

Contract Liabilities

 

Changes in the Company’s current contract liabilities balance for the six months ended June 30, 2024 and for the year ended December 31, 2023 were as follows:

 

(In thousands)  Six months
ended
June 30,
2024		   Year
ended
December 31,
2023		 
Contract liabilities – beginning of period  $4,019   $4,112 
Additions   2,383    4,905 
Recognized   (2,555)   (4,998)
Contract liabilities – end of period  $3,847   $4,019 

 

Contract liabilities balances primarily consist of customer deposits on the Company’s cultivation and extraction solutions equipment. As of June 30, 2024 and December 31, 2023, all of the Company’s contract liabilities balances were reported as current liabilities in the accompanying condensed consolidated balance sheets.