Revenue from Contracts with Customers (ASC 606)

The Company adopted ASC 606 on January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. 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.

Out-of-Period Error

During the year ended December 31, 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. In accordance with ASC 250, Accounting Changes and Error Corrections, the immaterial cumulative correction was recorded during the year ended December 31, 2019 and had the effect of increasing net loss by $250, comprised primarily of a $1,350 increase in product sales, a $1,591 increase in costs of product sales, and a $15 increase in sales, marketing and support expenses.

The balance sheet impact of correcting January 1, 2019 sales-type leases in effect as of January 1, 2018, was a reduction in accumulated deficit of $1,680, comprised of a reduction in current contract assets of $2,132, non-current contract assets of $3,110, current contract liabilities of $2,970, non-current contract liabilities of $4,018 and non-current deferred income tax asset of $66.

Disaggregation of Revenue

The following table summarizes net sales from contracts with customers for the years ended December 31, 2019 and 2018:



	Year Ended December 31,
	2019		2018
Mobile connectivity product, transferred at point in time	$	26,419	$	26,086
Mobile connectivity product, transferred over time (a)	5,204		5,265
Mobile connectivity service	90,392		84,575
Inertial navigation product	30,302		31,926
Inertial navigation service	5,576		5,177
Total net sales	$	157,893	$	153,029


(a)	Reflects the correction discussed above.

Revenue recognized during the years ended December 31, 2019 and 2018 from amounts included in contract liabilities at the beginning of the fiscal year was approximately $2,736 and $4,670.

For mobile connectivity product sales, the delivery of the Company’s performance obligations are generally transferred to the customer, and therefore associated revenue is generated, 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 are transferred to the customer, and therefore associated revenue is generated, over time. For inertial navigation product sales, the delivery of the Company’s performance obligations are generally transferred to the customer, and therefore associated revenue is generated, at a point in time. For inertial navigation service sales, the Company's performance obligations are generally transferred to customers, and therefore associated revenue is generated, 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.

The Company had no customers that accounted for 10% or more of its consolidated net sales for the years ended December 31, 2019 and 2018, respectively, or accounts receivable as of years ended December 31, 2019 and 2018.

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.