Revenue Recognition and Deferred Revenue General Effective January 1, 2018, the Company adopted ASC 606. In accordance with ASC 606, the Companys analysis indicated that there was no change to how the Company records revenue and that the standard only impacted enhanced disclosure regarding revenue recognition, including disclosures of revenue streams, performance obligations and the related judgments and estimates necessary to apply the new standard. ASC 606 was applied using the modified retrospective method. There was no cumulative effect of the initial application to be recognized as an adjustment to opening retained earnings at January 1, 2018. Accordingly, comparative periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue Recognition . The majority of license fees and services revenue are generated from fixed-price contracts, which provide for licenses to software products and services to customize such software to meet the customers use. In certain instances, customization services are determined to be essential to the functionality of the delivered software. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company measures revenue based on the consideration specified in a customer arrangement, and revenue is recognized when the performance obligations in an arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Companys services as they are performed. Substantially all customer contracts provide that the Company is compensated for services performed to date. Invoicing is based on schedules established in customer contracts. Payment terms are generally established at 30 days from the invoice date. Product returns are recorded as a reduction to revenue. Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. 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 those goods or services. Furthermore, the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Nature of goods and services The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each: Hosted Subscription Services Revenue Subscription services allows customers to access a set of data for a predetermined period of time. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entitys performance as the entity performs. Accordingly, subscription revenue should be recognized over time based on the usage of the hosted subscription services, which can vary from month to month. The revenue is typically based on a formula such as number of stores using the service in a given month multiplied by a fee per store. License Revenue The Company also recognizes revenues from licensing of its software to customers. The license allows customers to access a set of data for a predetermined period of time. The licensed software requires continuing service or post contractual customer support and performance. As the customer obtains access at a point in time but continues to have access for the remainder of the subscription period, the customer is considered to simultaneously receive and consume the benefits provided by the entitys performance as the entity performs. Accordingly, the revenue should be recognized over time based on usage, which can vary from month to month. The revenue is typically based on a formula such as number of stores in a given month multiplied by a fee per store. Royalties from the licensing of the Companys technology are recognized as revenues in the period they are earned. Equipment Revenue Revenue from the sale of equipment is recognized at a point in time. The point in time that the revenue is recognized is when the customer has control of the equipment which is when the customer receives the benefit and the Companys performance obligation has been satisfied. Depending on the contract terms, that could either be at the time the equipment is shipped or at the time the equipment is received. Non-Recurring Services Revenue The non-recurring services include items such as training, installation, customization, and configuration. The Company recognizes revenue from non-recurring services contracts ratably over the service contract period as the customer consumes the benefit as it is provided and the Companys performance obligation has been satisfied. Extended Warranty Extended warranty revenues is generated when a warranty is provided to the customer separately of other performance obligations when the equipment is sold. As the customer obtains access at a point in time and continues to have access for the remainder of the warranty term, the customer is considered to simultaneously receive and consume the benefits provided by the Companys performance as the Company performs. The related revenue is recognized ratably over the specified term of the warranty period. The extended warranty is separate to the Companys standard warranty of usually one year that it receives from its vendor. Disaggregation of revenue In the following tables, revenue is disaggregated by product and service and the timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue. For the Three Months Ended September 30, 2018 2017 Products and services Hosted subscription services $ 491,822 $ 468,585 Licensing 364,688 327,106 Equipment 110,291 86,477 Non-recurring Services 41,638 34,808 Extended warranties on equipment 29,683 44,317 Other 1,459 5,397 $ 1,039,581 $ 966,690 Timing of revenue recognition Products transferred at a point in time $ 111,750 $ 91,874 Services transferred over time 927,831 874,816 $ 1,039,581 $ 966,690 For the Nine Months Ended September 30, 2018 2017 Products and services Hosted subscription services $ 1,604,081 $ 1,052,940 Licensing 1,036,684 937,242 Equipment 292,748 388,514 Non-recurring Services 113,575 183,497 Extended warranties on equipment 36,790 52,670 Other 19,183 15,821 $ 3,103,061 $ 2,630,684 Timing of revenue recognition Products transferred at a point in time $ 311,931 $ 404,335 Services transferred over time 2,791,130 2,226,349 $ 3,103,061 $ 2,630,684 Contract balances The current portion of deferred revenue at September 30, 2018 and December 31, 2017 was $752,848 and $739,980, respectively, and primarily consists of revenue that is recognized over time for one-year software license contracts and hosted subscription services. The changes in these balances are related to the satisfaction or partial satisfaction of these contracts. Of this balance at December 31, 2017, $146,221 and $683,094 was recognized as revenue for the three and nine months ended September 30, 2018, respectively. The long-term portion of deferred revenue is $41,108 and $87,736 as of September 30, 2018 and December 31, 2017, respectively. The Company did not recognize any material revenue in the current reporting period for performance obligations that were fully satisfied in previous periods. Transaction price allocated to the remaining performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period: 2018 2019 Thereafter Total Hosted subscription services $ 83,155 $ 145,102 $ - $ 228,257 Licensing $ 224,947 $ 231,854 $ 4,327 $ 461,128 Non-recurring services $ 881 - - $ 881 Extended warranties on equipment $ 23,216 $ 56,349 $ 24,125 $ 103,690 All consideration from contracts with customers is included in the amounts presented above.