Revenue is recognized when all of the following steps have been taken and criteria met for each contract:

 

 

 

 

 

 

 

The Company generates revenue from the sales of information technology professional services, sales of -party software licenses and implementation and training services, sales of -party support and maintenance contracts based on those software products, and incentive payments received from -party software suppliers for facilitating sales directly between that supplier and a customer introduced by the Company. The Company sells through its direct relationships with end customers and under subcontractor arrangements. The Company accounts for its performance obligations in accordance with ASC and all related interpretations.

Professional services are offered through several arrangements – through time and materials arrangements, fixed-price-per-unit arrangements, fixed-price arrangements, or combinations of these arrangements within individual contracts. Revenue under time and materials arrangements is recognized over time in the period the hours are worked or the expenses are incurred, as control of the benefits of the work is deemed to have passed to the customer as the work is performed. Revenue under fixed-price-per-unit arrangements is recognized at a point in time when delivery of units have occurred and units are accepted by the customer or are reasonably expected to be accepted. Generally, revenue under fixed-price arrangements and mixed arrangements is recognized either over time or at a point in time based on the allocation of transaction pricing to each identified performance obligation as control of each is transferred to the customer. For fixed-price arrangements for which the Company is paid a fixed fee to make itself available to support a customer, with predetermined deliverables to which transaction prices can be estimated or allocated, revenue is recognized ratably over time.

 

Third-party software licenses are classified as enterprise server-based software licenses or desktop software licenses, and desktop licenses are further classified by the type of customer and whether the licenses are bulk licenses or individual licenses. The Company’s obligations as the seller for each class differ based on its reseller agreements and whether its customers are government or non-government customers. Revenue from enterprise server-based sales to either government or non-government customers is usually recognized in full at a point in time based on when the customer gains use of the full benefit of the licenses, after the licenses are implemented. If the transaction prices of the performance obligations related to implementation and customer support for the individual contract is material, these obligations are recognized separately over time, as performed. Revenue for desktop software licenses for government customers is usually recognized in full at a point in time, based on when the customer’s administrative contact gains training in and beneficial use of the administrative portal. If the transaction prices of the performance obligations related to implementing the government administrator’s use of the administrative portal and administrator support for the individual contract are material (rare), these obligations are recognized separately over time, as performed. Revenue for bulk desktop software licenses for non-government customers is usually recognized in full at a point in time, based on when the customer’s administrative contact gains training in and beneficial use of the administrative portal. For desktop software licenses sold on an individual license basis to non-government customers, where the Company has obligation to the customer after the -party makes delivery of the licenses, the Company has determined it is acting as an agent, and the Company recognizes revenue upon delivery of the licenses only for the net of the selling price and its contract costs.

 

Third-party support and maintenance contracts for enterprise server-based software include a performance obligation under the Company’s reseller agreements for it to be the line of support (direct support) and line of support (intermediary between customer and manufacturer) to the customer. Because of the support performance obligations, and because the amount of support is estimable, the Company recognizes revenue ratably over time as it makes itself available to provide the support.

 

Incentive payments are received under reseller agreements with software manufacturers and suppliers where the Company introduces and court a customer, but the sale occurs directly between the customer and the supplier or between the customer and the manufacturer. Since the transfer of control of the licenses cannot be measured from outside of these transactions, revenue is recognized when payment from the manufacturer or supplier is received.

 

Contract		3 Months ended 06/30/2019								3 Months ended 06/30/2018
Type		Amount				Percentage				Amount				Percentage
Services Time & Materials		$	577,779				15.6	%		$	728,940				19.6	%
Services Fixed Price			95,235				2.6	%			329,585				8.9	%
Services Combination			40,364				1.1	%			39,053				1.1	%
Services Fixed Price per Unit			48,251				1.3	%			6,570				0.2	%
Third-Party Software			2,789,648				75.3	%			2,455,719				66.2	%
Software Support & Maintenance			149,290				4.0	%			145,053				3.9	%
Incentive Payments			3,850				0.1	%			2,899				0.1	%
Total Revenue		$	3,704,417							$	3,707,819

 

Contract		6 Months ended 06/30/2019								6 Months ended 06/30/2018
Type		Amount				Percentage				Amount				Percentage
Services Time & Materials		$	1,174,530				24.1	%		$	1,526,136				29.9	%
Services Fixed Price			214,398				4.4	%			659,444				12.9	%
Services Combination			72,648				1.5	%			122,145				2.4	%
Services Fixed Price per Unit			62,171				1.3	%			10,070				0.2	%
Third-Party Software			3,057,367				62.5	%			2,483,133				48.7	%
Software Support & Maintenance			298,152				6.1	%			294,013				5.8	%
Incentive Payments			3,974				0.1	%			7,354				0.1	%
Total Revenue		$	4,883,240							$	5,102,295

 

 

 

Trade accounts receivable are recorded at the billable amount where the Company has the unconditional right to bill, net of allowances for doubtful accounts. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of accounts. Management regularly reviews the adequacy of the allowance for doubtful accounts by considering the age of each outstanding invoice, each customer's expected ability to pay and collection history, when applicable, to determine whether a specific allowance is appropriate. Accounts receivable deemed uncollectible are charged against the allowance for doubtful accounts when identified.

 

 

 

Contract assets consist of assets typically resulting when revenue recognized exceeds the amount billed or billable to the customer due to allocation of transaction price. There were contract assets balances of at and contract assets balance at

 

 

Contract liabilities, to which the Company formerly referred as deferred revenue, consist of amounts that have been invoiced and for which the Company has the right to bill, but that have been recognized as revenue because the related goods or services have been transferred. Contract liabilities balances were and at and respectively.  For the months and months ended revenue was recognized from previous contract liabilities balances in the amounts of and respectively.

 

When applicable, the Company recognizes an asset related to the costs incurred to obtain a contract only if it expects to recover those costs and it would have incurred those costs if the contract had been obtained. The Company recognizes an asset from the costs incurred to fulfill a contract if the costs (i) are specifically identifiable to a contract, (ii) enhance resources that will be used in satisfying performance obligations in the future, and (iii) are expected to be recovered. There were and of such assets at and respectively. These costs are amortized ratably over the periods of the contracts to which those costs apply.

 

In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing its products and services, to receive financing from its customers or to provide customers with financing. Examples include invoicing at the beginning of a software support and maintenance term with revenue recognized ratably over the contract period.

 

 

Deferred costs of revenue consist of the costs of -party support and maintenance contracts for enterprise server-based software. These costs are reported under the prepaid expenses caption on the Company’s balance sheets. The Company recognizes these direct costs ratably over time as it makes itself available to provide its performance obligation for software support, commensurate with its recognition of revenue. Deferred costs of revenue balances included in prepaid expenses were and at and respectively.