Quarterly report pursuant to Section 13 or 15(d)

REVENUE RECOGNITION

v3.19.3
REVENUE RECOGNITION
9 Months Ended
Sep. 30, 2019
Revenue From Contract With Customer [Abstract]  
REVENUE RECOGNITION

NOTE 3. REVENUE RECOGNITION

 

Revenue recognition. We generate revenue primarily from the licensing of our intellectual property. We also, occasionally, receive a one-time sale of certain products and/or reimbursement of our equipment.

 

License fees. We derive product lease and royalty revenue from negotiated recurring fee license agreements and the performance of our products. We account for these agreements as month-to-month contracts and recognize revenue each month as we satisfy our performance obligations by granting access to intellectual property to our clients. In addition, revenue associated with performance-based agreements is recognized during the month that the usage of the product or intellectual property occurs.  

 

Some of our intellectual property requires the installation of certain equipment and both the intellectual property and the related equipment are licensed in one bundled package. We have determined that the equipment is not distinct from the intellectual property and, therefore, we have only one performance obligation and, as a result, the allocation of the transaction price to different performance obligations is not necessary.

 

Product sales. Occasionally, we sell certain incidental products or receive reimbursement of our equipment after the commencement of the new license agreement. Revenue from such sales is recognized as a separate performance obligation when we ship the items.  

 

Disaggregation of revenue

 

The following table disaggregates our revenue by geographic location for the following periods:

 

 

 

Three Months

Ended September 30,

 

 

Nine Months

Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

North America and Caribbean

 

$

3,891,875

 

 

$

3,622,729

 

 

$

11,644,353

 

 

$

10,568,129

 

Europe

 

 

1,479,771

 

 

 

1,153,055

 

 

 

4,473,230

 

 

 

3,104,521

 

Total revenue

 

$

5,371,646

 

 

$

4,775,784

 

 

$

16,117,583

 

 

$

13,672,650

 

Revenue contract liability  

 

For a portion of our business, we invoice our clients monthly in advance for unlimited use of our intellectual property licenses and recognize a revenue contract liability that represents such advanced billing to our clients for unsatisfied performance.  We reduce the revenue contract liability and recognize revenue when we transfer those goods or services and, therefore, satisfy our performance obligation.

The table below summarizes changes in the revenue contract liability during the nine months ended September 30, 2019:

 

Beginning balance – January 1, 2019

 

$

1,438,492

 

Increase (advanced billings)

 

 

11,547,925

 

Decrease (revenue recognition)

 

 

(11,691,737

)

Ending balance – September 30, 2019

 

$

1,294,680

 

 

Revenue recognized during the nine months ended September 30, 2019 that was included in the beginning balance of revenue contract liability above was $1,436,410.