XML 27 R16.htm IDEA: XBRL DOCUMENT

Revenue

9 Months Ended

Sep. 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 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 nine- and three-month periods ended September 30, 2018 and 2017:

		HW				Monitoring				Total
Nine months ended September 30, 2018:
PG Segment		$	860			$	1,838			$	2,698
CP Segment			926				152				1,078
Total Revenue		$	1,786			$	1,990			$	3,776

		HW				Monitoring				Total
Nine months ended September 30, 2017:
PG Segment		$	960			$	1,565			$	2,525
CP Segment			631				70				701
Total Revenue		$	1,591			$	1,635			$	3,226

		HW				Monitoring				Total
Three months ended September 30, 2018:
PG Segment		$	292			$	639			$	931
CP Segment			354				52				406
Total Revenue		$	646			$	691			$	1,337

		HW				Monitoring				Total
Three months ended September 30, 2017:
PG Segment		$	293			$	520			$	813
CP Segment			244				28				272
Total Revenue		$	537			$	548			$	1,085

Deferred revenue activity for the nine months ended September 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			1,886				2,213				4,099
Recognized as revenue			(1,786	)			(1,990	)			(3,776	)
Balance at September 30, 2018			2,327				1,560			$	3,887

Amounts to be recognized as revenue in the year ending:
September 30, 2019			1,433				1,362				2,795
September 30, 2020			581				193				774
September 30, 2021 and thereafter			313				5				318
		$	2,327			$	1,560			$	3,887

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

Balance at December 31, 2017		$	1,374
Additions during the period			1,072
Recognized as cost of sales			(1,055	)
Balance at September 30, 2018		$	1,391

Amounts to be recognized as cost of sales in the year ending:
September 30, 2019		$	861
September 30, 2020			341	*
September 30, 2021 and thereafter			189	*
		$	1,391

* Amounts included in Other Assets in the Company’s Unaudited Condensed Consolidated Balance Sheets at September 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 nine-month period ended September 30, 2018:

		HW				Monitoring				Total
Balance at December 31, 2017		$	125			$	27			$	152
Additions during the period			67				15				82
Amortization of sales commissions			(69	)			(7	)			(76	)
Balance at September 30, 2018		$	123			$	35			$	158

The capitalized sales commissions are included in Other Current Assets ($117) and Other Assets ($41) in the Company’s Unaudited Condensed Consolidated Balance Sheets at September 30, 2018.