Note

– Revenue Recognition

October 1, 2018,

the Company adopted ASU

2014

09,

Revenue from Contracts with Customers (Topic

606

), using the modified retrospective transition method. Management determined that there was

cumulative effect adjustment to the consolidated financial statements and the adoption of the standard did

not

require any adjustments to the consolidated financial statements for prior periods. Under the guidance of the standard, revenue is recognized at the time a good or service is transferred to a customer and the customer obtains control of that good or receives the service performed. Most of the Company’s sales arrangements with customers are short-term in nature involving single performance obligations related to the delivery of goods or repair of equipment and generally provide for transfer of control at the time of shipment to the customer. The Company generally permits returns of product or repaired equipment due to defects; however, returns are historically insignificant.

Additionally, the Company provides services related to the installation and upgrade of technology on cell sites and the construction of new small cells for

technology. The work under the purchase orders for wireless infrastructure services are generally completed in less than a month. These services generally consist of a single performance obligation which the Company recognizes as revenue over time.

The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for its products, repair services or wireless infrastructure services. The following steps are applied in determining the amount and timing of revenue recognition:

Identification of a contract with a customer is a sales arrangement involving a purchase order issued by the customer stating the goods or services to be transferred. Payment terms are generally due in net

days. Discounts on sales arrangements are generally

not

provided. Credit worthiness is determined by the Company based on payment experience and financial information available on the customer.

Identification of performance obligations in the sales arrangement which is predominantly the promise to transfer goods, repair services, recycle items or wireless infrastructure services provided to the customer.

Determination of the transaction price is specified in the purchase order based on the product or services to be transferred or provided to the customer. Wireless infrastructure services transaction prices are based on the Master Service Agreement contracts between the Company and the wireless customers.

Allocation of the transaction price to performance obligations. Substantially all the contracts are single performance obligations and the allocated purchase price is the transaction price.

Recognition of revenue occurs upon the satisfaction of the performance obligation and transfer of control. Transfer of control by the Telco segment generally occurs at the point the Company ships the product from its warehouse locations. Transfer of control for the Wireless segment generally occurs over time as the Company performs services. To measure progress towards completion on performance obligations for which revenue is recognized over time the Company utilizes an input method based upon a ratio of direct costs incurred to date to management’s estimate of the total direct costs to be incurred on each contract. The Company has established the systems and procedures to develop the estimates required to account for performance obligations over time. These procedures include monthly review by management of costs incurred, progress towards completion, changes in estimates of costs yet to be incurred and execution by subcontractors.

The Company’s principal sales are from Wireless services, sales of Telco equipment and Telco recycled equipment. Sales are primarily to customers in the United States. International sales are made by the Telco segment to customers in Central America, South America and, to a substantially lesser extent, other international regions that utilize the same technology which totaled approximately

$2.4

million,

$2.9

million and

$3.1

million in the years ended

September 30, 2019,

2018

and

2017,

respectively.

The Company’s customers include wireless carriers, wireless equipment providers, multiple system operators, resellers and direct sales to end-user customers. Sales to the Company’s largest customer totaled approximately

12%

of consolidated sales.

Sales by type were as follows:

	Years Ended September 30,
	2019			2018			2017

Wireless services sales	$	22,918,535		$	‒		$	‒
Equipment sales:
Telco		29,391,223			25,609,108			23,991,879
Intersegment		(54,541	)		(49,414	)		(86,950	)
Telco repair sales		43,442			‒			‒
Telco recycle sales		2,819,638			1,913,588			2,002,642
Total sales	$	55,118,297		$	27,473,282		$	25,907,571

The timing of revenue recognition from the wireless segment results in contract assets and contract liabilities. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from customers before revenue is recognized, resulting in contract liabilities. Contract assets and contract liabilities are included in Unbilled revenue and Deferred revenue, respectively, in the consolidated balance sheets. At

September 30, 2019

contract assets were

$2.7

million and contract liabilities were

$0.1

million. There were

contract assets at

September 30, 2018

and

2017,

and

contract liabilities at

September 30, 2018

and

2017.