3. ASC Topic 606, Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2018

Asc Topic 606 Revenue From Contracts With Customers

ASC Topic 606, Revenue from Contracts with Customers

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which was adopted on January 1, 2018 using the modified retrospective method. Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services. Revenue is recognized based on the following five step model:

- Identification of the contract with a customer

- Identification of the performance obligations in the contract

- Determination of the transaction price

- Allocation of the transaction price to the performance obligations in the contract

- Recognition of revenue when, or as, the Company satisfies a performance obligation

Details of this five-step process are as follows:

Identification of the contract with a customer

Customer purchase orders are generally considered to be contracts under ASC 606. Purchase orders typically identify specific terms of products to be delivered, create the enforceable rights and obligations of both parties, and result in commercial substance.

No other forms of contract revenue recognition, such as the completed contract or percentage of completion methods, were utilized by the Company in either 2017 or 2018.

Performance obligations

The Company has established prices for its products. These prices are effectively agreed to when customers place purchase orders with the Company. Rebates and discounts, if any, are recognized in full at the time of sale as a reduction of net revenue. Allocation of transaction prices is not necessary where one performance obligation exists.

Determination and allocation of the transaction price

The Company has established prices for its products these prices are effectively agreed to when customers place purchase orders with the Company. Allocation of transaction prices is not necessary where one performance obligation exists.

Recognition of revenue as performance obligations are satisfied

Product revenues are recognized when the products are delivered and title passes to the customer.

Disaggregation of Revenue

Revenue streams from product sales and royalties are summarized below for the twelve-months ended December 31, 2018 and 2017. All revenue was generated in the United States; therefore, no geographical disaggregation is necessary.

	Twelve months Ended
	December 31
	2018		2017
Product sales revenue	$	5,636,839	$	6,103,741
Royalty revenue		201,000		201,000
Total Revenue	$	5,837,839	$	6,304,741