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REVENUE RECOGNITION
 6 Months Ended
Mar. 31, 2019
Revenue from Contract with Customer [Abstract]  
REVENUE RECOGNITION
11.
REVENUE RECOGNITION
 
In accordance with ASC 606, the Company disaggregates its revenue from customers into two revenue streams, service revenue and product revenue. At contract inception the Company assesses the services promised in the contract with the customers to identify performance obligations in the arrangements.
 
Service revenue
 
The Company enters into contracts with customers to provide drug discovery and development services with payments based on mainly fixed-fee arrangements. The Company also offers free archive storage services on certain contracts. Customers can also enter into separate archive storage contracts after the expiration of the free storage period.
 
The Company’s drug discovery and development services contracts that include a free storage period are considered a single performance obligation because the company provides a highly integrated service. The inclusion of free storage fee in the measurement of progress under the discovery and development service contracts creates a timing difference between the amounts the company is entitled to receive in reimbursement of cost incurred and amount of revenue recognized on such costs, which is recognized as deferred revenue and classified as customer advances on the condensed consolidated balance sheet.
 
The Company’s fixed fee arrangements may involve bioanalytical and pharmaceutical method development and validation, nonclinical research services and the analysis of bioanalytical and pharmaceutical samples. For bioanalytical and pharmaceutical method validation services and nonclinical research services, revenue is recognized over time using the input method based on the ratio of direct costs incurred to total estimated direct costs. For contracts that involve method development or the analysis of bioanalytical and pharmaceutical samples, revenue is recognized over time when samples are analyzed or when services are performed. The Company generally bills for services on a milestone basis. These contracts represent a single performance obligation and due to the Company’s right to payment for work performed, revenue is recognized over time. Research services contract fees received upon acceptance are deferred until earned, and classified within customer advances on the condensed consolidated balance sheet. Unbilled revenues represent revenues earned under contracts in advance of billings.
 
Archive services provide climate controlled archiving for client’s data and samples. The archive revenue is recognized over time, generally when the service is provided. These arrangements typically include only one performance obligation. Amounts related to future archiving or prepaid archiving contracts for customers where archiving fees are billed in advance are accounted for as deferred revenue and recognized ratably over the period the applicable archive service is performed.
 
Product revenue
 
The Company’s products can be sold to multiple customers and have alternative use. Both the transaction sales price and shipping terms are agreed upon in the customer order. For these products, all revenue is recognized at a point in time, generally when title of the product and risk of loss is transferred to the customer based upon shipping terms. These arrangements typically include only one performance obligation. Certain products have maintenance agreements available for customers to purchase. These are typically billed in advance and are accounted for as deferred revenue and recognized ratably over the applicable maintenance period.
 
The impact of adoption of ASC 606 to the Company’s condensed consolidated financial statements for the three months ended March 31, 2019 is as follows:
 
Statements of Operations and Comprehensive (Loss) Income
 
 
 
As Reported
 
 
Effect of
Change
Higher/(Lower)
 
 
Amount Without
Adoption of ASC
606
 
Service revenue
 
$
8,131
 
 
$
(25
)
 
$
8,156
 
Product revenue
 
 
1,213
 
 
 
 
 
 
 
1,213
 
Total revenue
 
 
9,344
 
 
 
(25
)
 
 
9,369
 
Total cost of revenue
 
 
6,783
 
 
 
 
 
 
 
6,783
 
Gross profit
 
 
2,561
 
 
 
(25
)
 
 
2,586
 
Operating loss
 
 
(449
)
 
 
(25
)
 
 
(424
)
Net loss before income taxes
 
 
(568
)
 
 
(25
)
 
 
(543
)
Income taxes expense
 
 
1
 
 
 
 
 
 
 
1
 
Net loss
 
$
(569
)
 
$
(25
)
 
$
(544
)
Diluted net loss per share
 
$
(0.06
)
 
$
(0.00
)
 
$
(0.06
)
 
Balance Sheet
 
  
 
 
As Reported
  
 
Effect of 
Change 
Higher/(Lower)
  
Amount Without
Adoption of ASC 
606
 
          
Current Liabilities:            
Customer advances $5,583  $(95) $5,489 
             
Shareholder’s equity:            
Accumulated deficit $(16,961) $95  $(16,867)
 
The impact of adoption of ASC 606 to the Company’s condensed consolidated financial statements for the six months ended March 31, 2019 is as follows:
 
Statements of Operations and Comprehensive (Loss) Income
 
 
 
As Reported
 
 
Effect of
Change
Higher/(Lower)
 
 
Amount Without
Adoption of ASC
606
 
Service revenue
 
$
15,866
 
 
$
(19
)
 
$
15,885
 
Product revenue
 
 
2,103
 
 
 
 
 
 
 
2,103
 
Total revenue
 
 
17,969
 
 
 
(19
)
 
 
17,988
 
Total cost of revenue
 
 
12,989
 
 
 
 
 
 
 
12,989
 
Gross profit
 
 
4,980
 
 
 
(19
)
 
 
4,999
 
Operating loss
 
 
(408
)
 
 
(19
)
 
 
(389
)
Net loss before income taxes
 
 
(652
)
 
 
(19
)
 
 
(633
)
Income taxes expense
 
 
2
 
 
 
 
 
 
 
2
 
Net loss
 
$
(654
)
 
$
(19
)
 
$
(635
)
Diluted net loss per share
 
$
(0.06
)
 
$
(0.00
)
 
$
(0.06
)
 
Balance Sheet
 
 
 
As Reported
 
 
Effect of
Change
Higher/(Lower)
 
 
Amount Without
Adoption of
ASC 606
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Customer advances
 
$
5,583
 
 
$
(95
)
 
$
5,489
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholder’s equity:
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated deficit
 
$
(16,961
)
 
$
95
 
 
$
(16,867
)