5.	Revenue Recognition

Product Sales

Our revenue is generated primarily from the sale of products. Product revenue primarily consists of sales of Celution devices and consumables for commercial and research purposes.

The Company’s contracts with customers only include one performance obligation (i.e., sale of the Company’s products). Typically, if there are multiple items included on a single order, they are delivered at the same time. Revenue is recognized at a point in time when delivery is completed and control of the promised goods is transferred to the customers. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for those goods. The Company’s contracts do not involve financing elements as payment terms with customers are less than one year. The sale arrangements do not include any variable consideration. Advance payments from customers are recorded as deferred revenue.

Shipping and handling activities that occur after the customer obtains control of the goods are considered part of the Company’s obligation to transfer the products and therefore are recorded as direct selling expenses, as incurred.

The following table represents revenue by product (in thousands):

	Three months ended				Six months ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Consumable	$	594	$	440	$	1,153	$	949
Device		-		496		94		526
Other products		66		33		144		85
	$	660	$	969	$	1,391	$	1,560

Product revenues, classified by geographic location, are as follows (in thousands):

	Three months ended										Six months ended
	June 30, 2018					June 30, 2017					June 30, 2018					June 30, 2017
	Product Revenues		% of Total			Product Revenues		% of Total			Product Revenues		% of Total			Product Revenues		% of Total
Americas	$	6		1	%	$	55		6	%	$	50		4	%	$	203		13	%
Japan		581		88	%		835		86	%		1,159		83	%		1,155		74	%
EMEA		57		9	%		74		8	%		148		11	%		186		12	%
Asia Pacific		16		2	%		5		0	%		34		2	%		16		1	%
Total product revenues	$	660		100	%	$	969		100	%	$	1,391		100	%	$	1,560		100	%

Concentration of Significant Customers

Two direct customers and one distributor comprised 67% of our revenue recognized for the six months ended June 30, 2018. Two direct customers and one distributor accounted for 81% of total outstanding accounts receivable (excluding receivables from the Biomedical Advanced Research Development Authority, a division of the U.S. Department of Health and Human Services (“BARDA”)) as of June 30, 2018.

Three direct customers comprised 63% of our revenue recognized for the six months ended June 30, 2017. Two direct customers accounted for 77% of total outstanding accounts receivable as of June 30, 2017.

Development Revenue

We earn revenue for performing tasks under research and development agreements with governmental agencies like BARDA which is outside of the scope of the new revenue recognition guidance. Revenues derived from reimbursement of direct out-of-pocket expenses for research costs associated with government contracts are recorded as government contracts and other within development revenues. Government contract revenue is recorded at the gross amount of the reimbursement. The costs associated with these reimbursements are reflected as a component of research and development expense in our statements of operations. We recognized $0.9 million and $1.8 million in development revenue for the three and six months ended June 30, 2018, as compared to $0.5 million and $1.5 million for the three and six months ended June 30, 2017.