Annual report pursuant to Section 13 and 15(d)

Revenue Recognition

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Revenue Recognition
12 Months Ended
Dec. 31, 2019
Revenue from Contract with Customer [Abstract]  
Revenue Recognition

NOTE 4 - REVENUE RECOGNITION

 

The following table presents the Company’s revenues disaggregated by revenue source for the years ended December 31, 2017, 2018 and 2019.

 

    Year Ended December 31,  
    2017     2018     2019  
                   
Products   $ 23,552     $ 36,897     $ 45,416  
Services     17,406       16,167       36,499  
                         
    $ 40,958     $ 53,064     $ 81,915  

 

The balances of contract assets, and contract liabilities from contracts with customers are as follows as of December 31, 2018 and 2019 are as follows:

 

    December 31,  
    2018     2019  
             
Assets:                
Deferred sales commissions to employees   $ 585     $ 2,196  
Deferred costs   $ 9,069     $ 8,530  
                 
Liabilities:                
Contract liabilities (1)   $ -     $ 1,098  
Deferred revenue -other (1)     305       227  
Deferred maintenance and SaaS revenue (1)     4,607       5,072  
Deferred logistics visibility solutions product revenue (1)     12,176       10,932  
                 
      17,088       17,329  
Less: Deferred revenue and contract liabilities - Current portion     7,902       (8,536 )
                 
Deferred revenue and contract liabilities - less current portion   $ 9,186     $ 8,793  

 

(1) The Company record deferred revenues when cash payments are received or due in advance of the Company’s performance. For the years ended December 31, 2018 and 2019, the Company recognized revenue of $11,813 and $12,082, respectively, that was included in the deferred revenue balance at the beginning of each reporting period. The Company expects to recognize as revenue before year 2024, when it transfers those goods and services and, therefore, satisfies its performance obligation to the customers.

 

Development projects with Avis Budget Car Rental, LLC

 

On March 18, 2017 (the “SOW#4 Effective Date”), the Company entered into a statement of work (the “SOW#4”) with Avis Budget Car Rental, LLC (“ABCR”), a subsidiary of Avis Budget Group, Inc. (“Avis”), for 50,000 units of the Company’s cellular-enabled rental fleet car management system (the “System”) and maintenance and support of the System (“Maintenance Services”) for sixty months from installation of the equipment for the consideration of approximately $21,270. ABCR has an option to purchase additional units and has the option to renew the Maintenance Services period for an additional twelve months upon its expiry, and then after such twelve-month period, ABCR can purchase additional Maintenance Services on a month-to-month basis (during which ABCR can terminate the Maintenance Services) for up to forty-eight additional months.

 

The Company recognized SOW#4 development project revenue of $2,470 and $-0- during the years ended December 31, 2017 and 2018, respectively. The Company recognized SOW#4 product revenue of $-0- and $8,491 during the years ended December 31, 2017 and 2018, respectively.

 

On December 3, 2018 (the “SOW#5 Effective Date”), the Company entered into a statement of work (the “SOW#5”) with ABCR for 75,000 units of the System and Maintenance Services for sixty months from installation of the equipment and the non-recurring engineering (“NRE”) services for development of additional features and functionality for the consideration of approximately $33,000. ABCR has an option to purchase additional units and has the option to renew the Maintenance Services period for an additional twelve months upon its expiry, and then after such twelve-month period, ABCR can purchase additional Maintenance Services on a month-to-month basis (during which ABCR can terminate the Maintenance Services) for up to forty-eight additional months.

 

For the years ended December 31, 2018 and 2019, the Company recognized SOW#5 NRE revenue of $-0- and $3,823 respectively.

 

The SOW#5 may be terminated by ABCR for cause (which is generally I.D. Systems’ material breach of its obligations under the SOW#5), for convenience (subject to a termination fee), upon a material adverse change to I.D. Systems, or for intellectual property infringement. I.D. Systems does not have the right to unilaterally terminate the SOW#5. In the event that ABCR terminates the SOW#4, then ABCR would be liable to I.D. Systems for the net present value of all future remaining charges under the SOW#5 at a negotiated discount rate per annum, with the payment due on the effective date of termination.

 

The SOW#5 provides for a period of exclusivity commencing on the SOW#5 Effective Date and ending twelve months after the SOW#5 Effective Date, which may be extended in six-month increments by Avis under certain conditions. The period of exclusivity expired and was not renewed.