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				Nine months ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Consumable	$	692	$	389	$	1,845	$	1,338
Device		101		25		194		551
Other products		65		53		210		138
	$	858	$	467	$	2,249	$	2,027

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

	Three months ended										Nine months ended
	September 30, 2018					September 30, 2017					September 30, 2018					September 30, 2017
	Product Revenues		% of Total			Product Revenues		% of Total			Product Revenues		% of Total			Product Revenues		% of Total
Americas	$	199		23	%	$	112		24	%	$	249		11	%	$	315		15	%
Japan		535		62	%		279		60	%		1,693		75	%		1,434		71	%
EMEA		114		14	%		18		4	%		262		12	%		204		10	%
Asia Pacific		10		1	%		58		12	%		45		2	%		74		4	%
Total product revenues	$	858		100	%	$	467		100	%	$	2,249		100	%	$	2,027		100	%

Concentration of Significant Customers

Two direct customers accounted for 58% of our revenue recognized for the nine months ended September 30, 2018. Three direct customers accounted for 72% of total outstanding accounts receivable (excluding receivables from BARDA) as of September 30, 2018.

Six direct customers comprised 61% of our revenue recognized for the nine months ended September 30, 2017. Four direct customers accounted for 78% of total outstanding accounts receivable as of September 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 $0.5 million and $2.3 million in development revenue for the three and nine months ended September 30, 2018, as compared to $1.3 million and $2.9 million for the three and nine months ended September 30, 2017.