XML 28 R16.htm IDEA: XBRL DOCUMENT

Revenue

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue

NOTE 10—REVENUE

The core principle of ASC 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASC 606 defines a five-step process to achieve this core principle, which includes: (1) identifying contracts with customers, (2) identifying performance obligations within those contracts, (3) determining the transaction price, (4) allocating the transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and (5) recognizing revenue when or as each performance obligation is satisfied.

Sales of OmniMetrix monitoring systems include the sale of equipment (“HW”) and of monitoring services (“Monitoring”). Sales of OmniMetrix monitoring systems have multiple elements which include the sale of equipment and of monitoring services. Sales of OmniMetrix equipment do not qualify as a separate unit of accounting. As a result, revenue (and related costs) associated with sale of equipment are recorded to deferred revenue (and deferred charges) upon shipment for PG and CP monitoring units. Revenue and related costs with respect to the sale of equipment are recognized over the estimated life of the units which are currently estimated to be three years (two years up to December 31, 2017). Revenues from the prepayment of monitoring fees (generally paid twelve months in advance) are initially recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period.

The following table disaggregates the Company’s revenue for the six- and three-month periods ended June 30, 2018 and 2017:

		HW				Monitoring				Total
Six months ended June 30, 2018:
PG Segment		$	568			$	1,199			$	1,767
CP Segment			572				100				672
Total Revenue		$	1,140			$	1,299			$	2,439

		HW				Monitoring				Total
Six months ended June 30, 2017:
PG Segment		$	667			$	1,045			$	1,712
CP Segment			387				42				429
Total Revenue		$	1,054			$	1,087			$	2,141

		HW				Monitoring				Total
Three months ended June 30, 2018:
PG Segment		$	275			$	606			$	881
CP Segment			298				51				349
Total Revenue		$	573			$	657			$	1,230

		HW				Monitoring				Total
Three months ended June 30, 2017:
PG Segment		$	293			$	521			$	814
CP Segment			207				24				231
Total Revenue		$	500			$	545			$	1,045

Deferred revenue activity for the six months ended June 30, 2018 can be seen in the table below:

		HW				Monitoring				Total
Balance at December 31, 2017		$	2,227			$	1,337			$	3,564
Additions during the period			1,217				1,385				2,602
Recognized as revenue			(1,140	)			(1,299	)			(2,439	)
Balance at June 30, 2018			2,304				1,423			$	3,727

Amounts to be recognized as revenue in the year ending:
June 30, 2019			1,515				1,247				2,762
June 30, 2020			527				171				698
June 30, 2021 and thereafter			262				5				267
		$	2,304			$	1,423			$	3,727

Deferred charges relate only to the sale of equipment. Deferred charges activity for the six months ended June 30, 2018 can be seen in the table below:

Balance at December 31, 2017		$	1,374
Additions during the period			681
Recognized as cost of sales			(691	)
Balance at June 30, 2018		$	1,364

Amounts to be recognized as cost of sales in the year ending:
June 30, 2019		$	917
June 30, 2020			304	*
June 30, 2021 and thereafter			143	*
		$	1,364

* Amounts included in Other Assets in the Company’s Unaudited Condensed Consolidated Balance Sheets at June 30, 2018.

The Company pays its employees sales commissions for sales of HW and for first sales of monitoring services (not for renewals). In accordance with Topic 606, Revenue from Contracts with Customers, of the FASB Accounting Standards Codification (“ASC 606”), the Company capitalizes as a contract asset the sales commissions on these sales. Contract assets associated with HW are amortized over the estimated life of the units which are currently estimated to be three years (two years up to December 31, 2017). Contract assets associated with monitoring services are amortized over the expected monitoring life including renewals. The contract asset balance at December 31, 2017 of $152 has been recorded as an adjustment to retained earnings in adopting ASC 606 under the modified retrospective method.

The following table provides a reconciliation of the Company’s sales commissions contract assets for the six-month period ended June 30, 2018:

		HW				Monitoring				Total
Balance at December 31, 2017		$	125			$	27			$	152
Additions during the period			45				9				54
Amortization of sales commissions			(47	)			(5	)			(52	)
Balance at June 30, 2018		$	123			$	31			$	154

The capitalized sales commissions are included in Other Current Assets ($121) and Other Assets ($33) in the Company’s Unaudited Condensed Consolidated Balance Sheets at June 30, 2018.