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Revenue from Contracts with Customers (ASC 606) | 6 Months Ended
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Jun. 30, 2020
Revenue from Contract with Customer [Abstract] |
Revenue from Contracts with Customers (ASC 606) | Revenue from Contracts with Customers (ASC 606) The adoption of ASC 606 represents a change in accounting principle that was intended to more closely align revenue recognition with the delivery of the Company's products and services and provide enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised products and services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these products and services. During the three months ended September 30, 2019, the Company identified an out-of-period immaterial error related to the implementation and application of ASC 606 with respect to the recognition of revenue associated with sales-type leases. During the implementation of ASC 606 effective January 1, 2018, the Company treated the leased products and services for these contracts as single performance obligations as if they were not distinct in the context of the contract; however, the leased product portion should have continued to have been accounted for under ASC 840 (now ASC 842). In general, the error was to defer recognition of product revenue and associated expenses for sales-type leases rather than to recognize those items upon shipment. The following table reflects these financial statement line items for the three and six months ended June 30, 2019, as reported and as adjusted (in thousands):
|  | Three Months Ended |  |  |  | Six Months Ended |  |
|  | June 30, 2019 |  |  |  | June 30, 2019 |  |
|  | As reported |  | As adjusted |  | As reported |  | As adjusted
Product sales |  | $ | 14,694 |  |  | $ | 15,189 |  |  | $ | 27,568 |  |  | $ | 28,404 |
Cost of product sales |  | 12,308 |  |  | 12,649 |  |  | 20,161 |  |  | 20,933 |
Net loss |  | (3,454) |  |  | (3,294) |  |  | (9,876) |  |  | (9,791) |
The Company has evaluated this error and does not believe the amounts are material for the periods impacted. Disaggregation of Revenue The following table summarizes net sales from contracts with customers for the three and six months ended June 30, 2020 and 2019:
|  | Three Months Ended |  |  |  | Six Months Ended |  |
|  | June 30, |  |  |  | June 30, |  |
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Mobile connectivity product, transferred at point in time |  | $ | 6,080 |  |  | $ | 8,074 |  |  | $ | 12,066 |  |  | $ | 14,996 |
Mobile connectivity product, transferred over time (a) |  | 623 |  |  | 489 |  |  | 1,229 |  |  | 970 |
Mobile connectivity service |  | 22,483 |  |  | 22,906 |  |  | 44,787 |  |  | 44,417 |
Inertial navigation product |  | 7,246 |  |  | 6,626 |  |  | 13,748 |  |  | 12,438 |
Inertial navigation service |  | 494 |  |  | 1,635 |  |  | 1,664 |  |  | 3,285 |
Total net sales |  | $ | 36,926 |  |  | $ | 39,730 |  |  | $ | 73,494 |  |  | $ | 76,106 |
(a) reflects the correction above |  |  |  |  |  |  |  |
Revenue recognized during the three months ended June 30, 2020 and 2019 from amounts included in contract liabilities at the beginning of the period was $610 and $434, respectively. Revenue recognized during the six months ended June 30, 2020 and 2019 from amounts included in contract liabilities at the beginning of the period was $1,216 and $907, respectively. For mobile connectivity product sales, the delivery of the Company’s performance obligations, and associated revenue, are generally transferred to the customer at a point in time, with the exception of certain mini-VSAT contracts which are transferred to customers over time. For mobile connectivity service sales, the delivery of the Company’s performance obligations and associated revenue are transferred to the customer over time. For inertial navigation product sales, the delivery of the Company’s performance obligations, and associated revenue, are generally transferred to the customer at a point in time. For inertial navigation service sales, the Company's performance obligations, and associated revenue, are generally transferred to customers over time. Business and Credit Concentrations Concentrations of risk with respect to trade accounts receivable are generally limited due to the large number of customers and their dispersion across several geographic areas. Although the Company does not foresee that credit risk associated with these receivables will deviate from historical experience, repayment is dependent upon the financial stability of those individual customers. The Company establishes allowances for potential bad debts and evaluates, on a monthly basis, the adequacy of those reserves based upon historical experience and its expectations for future collectability concerns. The Company performs ongoing credit evaluations of the financial condition of its customers and generally does not require collateral. No single customer accounted for 10% or more of consolidated net sales for three or six months ended June 30, 2020 or 2019 or accounts receivable at June 30, 2020 or December 31, 2019. Certain components from third parties used in the Company’s products are procured from single sources of supply. The failure of a supplier, including a subcontractor, to deliver on schedule could delay or interrupt the Company’s delivery of products and thereby materially adversely affect the Company’s revenues and operating results.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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