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REVENUE
 12 Months Ended
Dec. 31, 2023
Revenue from Contract with Customer [Abstract]  
REVENUE

NOTE 13—REVENUE

 

OmniMetrix sells monitoring equipment (“HW”) and monitoring services (“Monitoring”). Prior to September 1, 2023, sales of OmniMetrix equipment typically did not qualify as a separate unit of accounting. As a result, revenue (and related costs) associated with sale of equipment was recorded to deferred revenue (and deferred cost of goods sold) upon shipment of PG and CP monitoring units. Revenue and related costs with respect to the sale of equipment were recognized over the estimated life of the units which was estimated to be three years. On September 1, 2023, OmniMetrix launched an updated version of its products that includes new functionality in its TrueGuard, AIRGuard, Patriot and Hero products that allows its customers to have options as it relates to obtaining and utilizing the data that is provided by its hardware devices. This new functionality allows for SIM card options, configuration options regarding IP address endpoints and DNS routes, and access to OmniMetrix’s over-the-air data protocol. This product update allows customers to have the option to purchase OmniMetrix’s monitoring service, monitor the products themselves if they have the ability in-house, or choose another monitoring provider if they so desire. OmniMetrix’s prior hardware product version could not function as a distinct product from its monitoring services. This new version’s functionality results in OmniMetrix’s hardware and monitoring services being capable of being two distinct products and services. OmniMetrix recognizes revenue, COGS and commissions from the sale of the new version of its hardware products sold when the product is shipped rather than over the estimated time that the unit is in service for the customer. The remaining balance of deferred hardware revenue from the prior version of these products will continue to be amortized each period until it is fully amortized. The modification to the circuit boards and embedded firmware of hardware enclosures in inventory as of August 31, 2023 were made such that only the new version of these products was sold subsequent to this date.

 

The following table disaggregates the Company’s revenue for the years ended December 31, 2023 and 2022 (in thousands):

 

   HW   Monitoring   Total 
Year ended December 31, 2023:               
PG Segment  $2,994   $4,006   $7,000 
CP Segment   803    256    1,059 
Total Revenue  $3,797   $4,262   $8,059 

 

   HW   Monitoring   Total 
Year ended December 31, 2022:               
PG Segment  $2,234   $3,660   $5,894 
CP Segment   854    252    1,106 
Total Revenue  $3,088   $3,912   $7,000 

 

Deferred revenue activity for the year ended December 31, 2023 can be seen in the table below (in thousands):

 

   HW   Monitoring   Total 
Balance at December 31, 2022  $3,751   $2,420   $6,171 
Additions during the period   1,595    4,461    6,056 
Recognized as revenue   (2,381)   (4,262)   (6,643)
Balance at December 31, 2023  $2,965   $2,619   $5,584 
                
Amounts to be recognized as revenue in the year ending:  
December 31, 2024  $1,841   $2,193   $4,034 
December 31, 2025   956    424    1,380 
December 31, 2026 and thereafter   168    2    170 
Total  $2,965   $2,619   $5,584 

 

 

The amount of hardware revenue recognized during the year ended December 31, 2023 that was included in deferred revenue at the beginning of the fiscal year was $1,890,000. The amount of monitoring revenue during the year ended December 31, 2023 that was included in deferred revenue at the beginning of the fiscal year was $2,054,000.

 

Deferred revenue activity for the year ended December 31, 2022 can be seen in the table below (in thousands):

 

   HW   Monitoring   Total 
Balance at December 31, 2021  $3,268   $2,125   $5,393 
Additions during the period   2,776    4,207    6,983 
Recognized as revenue   (2,293)   (3,912)   (6,205)
Balance at December 31, 2022  $3,751   $2,420   $6,171 

 

 

Reconciliation of Hardware Revenue  2023   2022 
Amortization of deferred revenue  $2,381   $2,293 
Sales of custom designed units and related accessories   259    — 
Hardware sales (new product versions)   475    — 
Other accessories, services, shipping and miscellaneous charges   682    795 
Total hardware revenue  $3,797   $3,088 

 

Deferred charges relate only to the sale of HW. Deferred charges activity for the year ended December 31, 2023 can be seen in the table below (in thousands):

 

      
Balance at December 31, 2022  $1,694 
Additions during the period   655 
Recognized as cost of sales   (1,064)
Balance at December 31, 2023  $1,285 
      
Amounts to be recognized as cost of sales in the year ending:     
December 31, 2024  $809 
December 31, 2025   406 
December 31, 2026 and thereafter   70 
   $1,285 

 

Deferred charges relate only to the sale of HW. Deferred charges activity for the year ended December 31, 2022 can be seen in the table below (in thousands):

 

      
Balance at December 31, 2021  $1,513 
Additions during the period   1,267 
Recognized as cost of sales   (1,086)
Balance at December 31, 2022  $1,694 

 

 

Reconciliation of COGS Expense  2023   2022 
Amortization of deferred COGS  $1,064   $1,086 
COGS of custom designed units and related accessories   67    — 
COGS of hardware sales (new product versions)   215    — 
Data costs for monitoring   299    325 
Other accessories, services, shipping and miscellaneous charges   410    518 
Total COGS expense  $2,055   $1,929 

 

 

The following table provides a reconciliation of the Company’s sales commissions contract assets for the year ended December 31, 2023 (in thousands):

 

   HW   Monitoring   Total 
Balance at December 31, 2022  $319   $80   $399 
Additions during the period   148    53    201 
Amortization of sales commissions   (199)   (37)   (236)
Balance at December 31, 2023  $268   $96   $364 

 

The capitalized sales commissions are included in other current assets ($202,000) and other assets ($162,000) in the Company’s Consolidated Balance Sheets at December 31, 2023.

 

     
Amounts to be recognized as sales commissions expense in the year ending:    
December 31, 2024  $202 
December 31, 2025   119 
December 31, 2026 and thereafter   43 
Total  $364 

 

The following table provides a reconciliation of the Company’s sales commissions contract assets for the year ended December 31, 2022 (in thousands):

 

   HW   Monitoring   Total 
Balance at December 31, 2021  $242   $53   $295 
Additions during the period   233    55    288 
Amortization of sales commissions   (156)   (28)   (184)
Balance at December 31, 2022  $319   $80   $399 

 

The capitalized sales commissions are included in other current assets ($196,000) and other assets ($203,000) in the Company’s Consolidated Balance Sheets at December 31, 2022.