Document and Entity Information

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2018	Nov. 01, 2018
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018
Entity Registrant Name	COMMUNICATIONS SYSTEMS INC
Entity Central Index Key	0000022701
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		9,158,485

Condensed Consolidated Balance Sheets

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash and cash equivalents	$ 8,632,794	$ 12,453,663
Investments	2,618,322	5,540,744
Trade accounts receivable, less allowance for doubtful accounts of $99,000 and $106,000, respectively	11,448,146	12,183,217
Inventories	16,130,318	13,984,428
Prepaid income taxes	464,459	493,834
Other current assets	1,363,851	810,532
TOTAL CURRENT ASSETS	40,657,890	45,466,418
PROPERTY, PLANT AND EQUIPMENT, net	11,552,470	12,624,730
OTHER ASSETS:
Deferred income taxes	38,136	38,136
Other assets, net	7,784	16,977
TOTAL OTHER ASSETS	45,920	55,113
TOTAL ASSETS	52,256,280	58,146,261
CURRENT LIABILITIES:
Accounts payable	3,590,288	4,554,683
Accrued compensation and benefits	2,706,719	2,422,083
Other accrued liabilities	3,016,375	1,586,473
Dividends payable	368,783	397,151
TOTAL CURRENT LIABILITIES	9,682,165	8,960,390
LONG TERM LIABILITIES:
Long-term compensation plans		11,079
Uncertain tax positions		4,065
TOTAL LONG-TERM LIABILITIES		15,144
COMMITMENTS AND CONTINGENCIES (Footnote 8)
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00 per share; 3,000,000 shares authorized; none issued
Common stock, par value $.05 per share; 30,000,000 shares authorized; 9,149,877 and 8,973,708 shares issued and outstanding, respectively	457,494	448,685
Additional paid-in capital	42,622,449	42,006,750
Retained earnings	193,408	7,328,671
Accumulated other comprehensive loss	(699,236)	(613,379)
TOTAL STOCKHOLDERS' EQUITY	42,574,115	49,170,727
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 52,256,280	$ 58,146,261

Condensed Consolidated Balance Sheets (Parenthetical)

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets [Abstract]
Trade accounts receivable, allowance for doubtful accounts	$ 99	$ 106
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	3,000,000	3,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.05	$ 0.05
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	9,149,877	8,973,708
Common stock, shares outstanding	9,149,877	8,973,708

Condensed Consolidated Statements of Loss and Comprehensive Loss

Condensed Consolidated Statements of Loss and Comprehensive Loss - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Condensed Consolidated Statements of Loss and Comprehensive Loss [Abstract]
Sales	$ 15,291,993	$ 20,412,439	$ 47,103,837	$ 63,280,980
Cost of sales	10,051,419	17,108,532	32,699,559	48,001,368
Gross profit	5,240,574	3,303,907	14,404,278	15,279,612
Operating expenses:
Selling, general and administrative expenses	6,842,348	7,161,323	20,702,476	21,516,625
Impairment loss				1,617,389
Restructuring expense		796,231	0	2,325,861
Total operating expenses	6,842,348	7,957,554	20,702,476	25,459,875
Operating loss	(1,601,774)	(4,653,647)	(6,298,198)	(10,180,263)
Other income (expenses):
Investment and other income	70,638	38,869	263,890	78,888
(Loss) Gain on sale of assets	(6,147)	26,222	10,904	(32,024)
Interest and other expense	(9,586)	(42,799)	(28,774)	(61,839)
Other income (expense), net	54,905	22,292	246,020	(14,975)
Loss from operations before income taxes	(1,546,869)	(4,631,355)	(6,052,178)	(10,195,238)
Income tax benefit	(2,137)	(109,340)	(6,092)	(67,014)
Net loss	(1,544,732)	(4,522,015)	(6,046,086)	(10,128,224)
Other comprehensive income (loss), net of tax:
Unrealized loss (gain) on available-for-sale securities	2,403	(240)	405	(3,187)
Foreign currency translation adjustment	(15,357)	31,508	(86,262)	63,724
Total other comprehensive (loss) income	(12,954)	31,268	(85,857)	60,537
Comprehensive loss	$ (1,557,686)	$ (4,490,747)	$ (6,131,943)	$ (10,067,687)
Basic net loss per share:	$ (0.17)	$ (0.50)	$ (0.66)	$ (1.13)
Diluted net loss per share:	$ (0.17)	$ (0.50)	$ (0.66)	$ (1.13)
Weighted Average Basic Shares Outstanding	9,146,184	8,960,606	9,093,609	8,934,235
Weighted Average Dilutive Shares Outstanding	9,146,184	8,960,606	9,093,609	8,934,235
Dividends declared per share	$ 0.04	$ 0.04	$ 0.12	$ 0.12

Condensed Consolidated Statements of Changes in Stockholders' Equity

Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($)	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Total
BALANCE at Dec. 31, 2017	$ 448,685	$ 42,006,750	$ 7,328,671	$ (613,379)	$ 49,170,727
BALANCE, Shares at Dec. 31, 2017	8,973,708
Net loss			(6,046,086)		(6,046,086)
Issuance of common stock under Employee Stock Purchase Plan	$ 1,053	76,964			78,017
Issuance of common stock under Employee Stock Purchase Plan, Shares	21,053
Issuance of common stock to Employee Stock Ownership Plan	$ 5,982	419,908			425,890
Issuance of common stock to Employee Stock Ownership Plan, Shares	119,632
Issuance of common stock under Executive Stock Plan	$ 2,175				2,175
Issuance of common stock under Executive Stock Plan, Shares	43,501
Share based compensation		156,214			156,214
Other share retirements	$ (401)	(37,387)	9,325		(28,463)
Other share retirements, Shares	(8,017)
Shareholder dividends			(1,098,502)		(1,098,502)
Other comprehensive loss				(85,857)	(85,857)
BALANCE at Sep. 30, 2018	$ 457,494	42,622,449	193,408	(699,236)	42,574,115
BALANCE, Shares at Sep. 30, 2018	9,149,877
BALANCE at Jun. 30, 2018	$ 457,132	42,548,812	2,104,414	(686,282)	44,424,076
BALANCE, Shares at Jun. 30, 2018	9,142,649
Net loss			(1,544,732)		(1,544,732)
Issuance of common stock under Employee Stock Purchase Plan	$ 362	27,206			27,568
Issuance of common stock under Employee Stock Purchase Plan, Shares	7,228
Share based compensation		46,431			46,431
Shareholder dividends			(366,274)		(366,274)
Other comprehensive loss				(12,954)	(12,954)
BALANCE at Sep. 30, 2018	$ 457,494	$ 42,622,449	$ 193,408	$ (699,236)	$ 42,574,115
BALANCE, Shares at Sep. 30, 2018	9,149,877

Condensed Consolidated Statements Of Changes In Stockholders' Equity (Parenthetical)

Condensed Consolidated Statements Of Changes In Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Condensed Consolidated Statements of Changes in Stockholders' Equity [Abstract]
Shareholder dividends per share	$ 0.04	$ 0.12

Condensed Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (6,046,086)	$ (10,128,224)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	1,695,451	2,489,661
Share based compensation	156,214	327,261
Deferred taxes		(52,998)
Impairment loss		1,617,389
(Gain) loss on sale of assets	(10,904)	537,470
Changes in assets and liabilities:
Trade accounts receivable	704,698	765,055
Inventories	(2,181,679)	7,232,732
Prepaid income taxes	29,375	789,209
Other assets, net	(559,003)	358,160
Accounts payable	(893,578)	(1,648,259)
Accrued compensation and benefits	702,267	701,546
Other accrued liabilities	1,441,020	(157,422)
Income taxes payable	(4,065)	(103,215)
Net cash (used in) provided by operating activities	(4,966,290)	2,728,365
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(699,818)	(389,616)
Purchases of investments	(6,580,917)
Proceeds from the sale of property, plant and equipment	33,763	220,366
Proceeds from the sale of investments	9,503,744	5,076,978
Net cash provided by investing activities	2,256,772	4,907,728
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid	(1,126,870)	(1,096,726)
Proceeds from issuance of common stock, net of shares withheld	51,729	74,222
Net cash used in financing activities	(1,075,141)	(1,022,504)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH	(36,210)	9,622
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(3,820,869)	6,623,211
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	12,453,663	10,443,274
CASH AND CASH EQUIVALENTS AT END OF PERIOD	8,632,794	17,066,485
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income taxes refunded	(31,402)	(646,660)
Interest paid	18,969	29,297
Dividends declared not paid	368,783	398,210
Capital expenditures in accounts payable	$ 33,934	$ 75,525

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Communications Systems, Inc. (herein collectively referred to as “CSI,” “our,” “we” or the “Company”) is a Minnesota corporation organized in 1969 that operates directly and through its subsidiaries located in the United States (U.S.) and the United Kingdom (U.K.). CSI is principally engaged through its Suttle, Inc. (“Suttle”) subsidiary and business unit in the manufacture and sale of connectivity infrastructure products for broadband and voice communications, and through its Transition Networks, Inc. (“Transition Networks” or “Transition”) subsidiary and business unit in the manufacture and sale of core media conversion products, Ethernet switches, and other connectivity and data transmission products. Through its JDL Technologies, Inc. (“JDL Technologies” or “JDL”) business unit, CSI provides technology solutions including virtualization, managed services, wired and wireless network design and implementation, and hybrid cloud infrastructure and deployment. Through its Net2Edge Limited (“Net2Edge”) U.K.-based business unit, the Company develops, manufactures and sells products that enable telecommunications carriers to connect legacy networks to high-speed services.

The Company classifies its businesses into four segments corresponding to the Suttle, Transition Networks, JDL Technologies and Net2Edge business units. Non-allocated general and administrative expenses are separately accounted for as “Other” in the Company’s segment reporting. Intersegment revenues are eliminated upon consolidation.

Financial Statement Presentation

The condensed consolidated balance sheets and condensed consolidated statement of changes in stockholders’ equity as of September 30, 2018 and the related condensed consolidated statements of loss and comprehensive loss, and the condensed consolidated statements of cash flows for the periods ended September 30, 2018 and 2017 have been prepared by Company management. In the opinion of management, all adjustments (which include only normal recurring adjustments, except where noted) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2018 and 2017 and for the periods then ended have been made.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted. We recommend these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2017 Annual Report to Shareholders on Form 10-K. The results of operations for the period ended September 30, 2018 are not necessarily indicative of operating results for the entire year.

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. The estimates and assumptions used in the accompanying condensed consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the time of the financial statements. Actual results could differ from those estimates.

Except to the extent updated or described below, the significant accounting policies set forth in Note 1 to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, appropriately represent, in all material respects, the current status of accounting policies, and are incorporated herein by reference.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, are as follows:




	Foreign Currency Translation		Unrealized (loss)/gain on securities		Accumulated Other Comprehensive Loss
December 31, 2017	$	(625,000)	$	12,000	$	(613,000)

Net current period change		(87,000)		1,000		(86,000)

September 30, 2018	$	(712,000)	$	13,000	$	(699,000)

Summary of Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies [Abstract]

Description of Business

Financial Statement Presentation

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, are as follows:




	Foreign Currency Translation		Unrealized (loss)/gain on securities		Accumulated Other Comprehensive Loss
December 31, 2017	$	(625,000)	$	12,000	$	(613,000)

Net current period change		(87,000)		1,000		(86,000)

September 30, 2018	$	(712,000)	$	13,000	$	(699,000)

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies [Abstract]

Components of Accumulated Other Comprehensive Loss




	Foreign Currency Translation		Unrealized (loss)/gain on securities		Accumulated Other Comprehensive Loss
December 31, 2017	$	(625,000)	$	12,000	$	(613,000)

Net current period change		(87,000)		1,000		(86,000)

September 30, 2018	$	(712,000)	$	13,000	$	(699,000)

Summary Of Significant Accounting Policies (Narrative) (Details)

Summary Of Significant Accounting Policies (Narrative) (Details)	9 Months Ended
	Sep. 30, 2018 segment
Summary of Significant Accounting Policies [Abstract]
Number of segments	4

Summary of Significant Accounting Policies (Components of Accumulated Other Comprehensive Loss) (Details)

Summary of Significant Accounting Policies (Components of Accumulated Other Comprehensive Loss) (Details)	9 Months Ended
	Sep. 30, 2018 USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]
BALANCE	$ 49,170,727
BALANCE	42,574,115
Foreign Currency Translation [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
BALANCE	(625,000)
Net current period change	(87,000)
BALANCE	(712,000)
Unrealized (Loss)/Gain On Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
BALANCE	12,000
Net current period change	1,000
BALANCE	13,000
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
BALANCE	(613,379)
Net current period change	(86,000)
BALANCE	$ (699,236)

Revenue Recognition

9 Months Ended

Sep. 30, 2018

Revenue Recognition [Abstract]

Revenue Recognition

NOTE 2 – REVENUE RECOGNITION

The Company adopted ASC 606, “Revenue from Contracts with Customers,” on January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2018 reflect the application of ASC 606 guidance while the reported results for 2017 were prepared under the guidance of ASC 605, “Revenue Recognition” (ASC 605), which is also referred to herein as "legacy GAAP" or the "previous guidance". The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company's goods and services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration that the Company expects to receive in exchange for these goods or services.

Suttle, Inc. & Transition Networks

The Company’s Suttle business unit manufactures and markets a broad range of products that support broadband and telephone service under the Suttle brand name in the United States and internationally. Suttle markets its outside plant and premise distribution products globally to telecommunications companies, service providers, residential builders, and low-voltage installers through distributors and the Company’s sales staff. Suttle’s customers include telephone, CATV, internet service providers, distributors, and enterprise networks.

The Company’s Transition Networks business unit sells media converter devices, NIDs, Ethernet switches and other connectivity products that make it possible to transmit telecommunications signals across networks and between systems using various types of media. Transition sells its products through distributors, resellers, integrators, and OEMs.

The Company has determined that the performance obligation for its Suttle and Transition Networks divisions occurs upon delivery of the Company’s connectivity infrastructure and data transmission products. To determine when revenue should be recognized, it is important to determine when the transfer of control has occurred. The Company has determined that control transfers for these products upon shipment or delivery to the customer, in accordance with the agreed upon shipping terms. As such, the timing of revenue recognition occurs at a specific point in time.

JDL Technologies, Inc.

The Company’s JDL Technologies, Inc. division is a managed service provider and a value-added reseller supplying IT solutions focused on IT service and support management; network design, deployment and integration; cloud, hosted and virtualized services; and network operations center management. Major technology solutions include networking, virtualization, cloud and infrastructure services, most of which are available under JDL managed service contracts.

The Company has determined that the following performance obligations identified in its JDL Technologies, Inc. division are transferred over time: managed services and professional services (time and materials (“T&M”) and fixed price). The division’s managed services performance obligation is a bundled solution, a series of distinct services that are substantially the same and that have the same pattern of transfer to the customer and are recognized evenly over the term of the contract. T&M professional services arrangements are measured over time with an input method based on hours expended towards satisfying this performance obligation. Fixed price professional service arrangements under a relatively longer-term service will also be measured over time with an input method based on hours expended.

The Company has also identified the following performance obligations within its JDL Technologies division that are recognized at a point in time which include resale of third-party hardware and software, installation, arranging for another party to transfer services to the customer, and certain professional services. The resale of third-party hardware and software is recognized at a point in time, when the goods are shipped or delivered to the customer’s location, in accordance with the shipping terms. Installation services are recognized at a point in time when the services are completed. The service the Company provides to arrange for another party to transfer services to the customer is satisfied at a point in time as the Company has transferred control upon the service first being made available to the customer by the third party vendor, which are required to be presented on a net basis. Depending on the nature of the service, certain professional services transfer control at a point in time. The Company evaluates these circumstances on a case by case basis to determine if revenue should be recognized over time or at a point in time.

Net2Edge Limited

The Company’s Net2Edge division manufactures and markets Ethernet based network access devices. The Company principally sells its products through approved partners and integrators outside the United States. The Company has determined that the performance obligation in the Net2Edge division is recognized at a point in time, upon the delivery of its connectivity infrastructure and data transmission products.

Significant Judgments

To determine the transaction price, the Company estimates the amount of variable consideration at the outset of the contract, depending on the facts and circumstances relative to the contract. The Company may provide credits or incentives to its customers, which are accounted for as either variable consideration or consideration payable to the customer. The Company estimates product returns based on historical return rates. The Company constrains (reduces) the estimates of variable consideration such that it is probable that a significant revenue reversal of previously recognized revenue will not occur throughout the life of the contract. When determining if variable consideration should be constrained, management considers whether there are factors outside the Company’s control that could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal of revenue. The Company will assess if any incentives it offers to its customer is a consideration payable. The Company accounts for consideration payable to a customer as a reduction of the transaction price, and therefore, of revenue. For contracts with more than one performance obligation, the consideration is allocated between separate products and services based on their stand-alone selling prices. Judgment is required to determine standalone selling prices for each distinct performance obligation. The Company generally determines standalone selling prices based on the actual prices charged to customers and has an established range of amounts that fall within stand-alone selling price for its distinct performance obligations. The Company evaluates this range quarterly.

Financial Statement Impact of Adopting ASC 606

The Company adopted ASC 606 using the modified retrospective method. The cumulative effect of applying the new guidance to all contracts with customers that were not completed as of January 1, 2018 would require an adjustment to the opening balance of retained earnings as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue guidance, the Company determined that there were no significant adjustments to be made to its consolidated balance sheet as of January 1, 2018.

Costs to Obtain or Fulfill a Contract

In addition to the new revenue recognition guidance, “Other Assets and Deferred Costs” (ASC 340-40), was added to provide guidance on the accounting for certain costs to obtain and fulfill contracts (or, in some cases, an anticipated contract) with a customer. ASC 340-40 is applicable only to incremental contract costs, those that an entity would not have incurred if the contract had not been obtained, and requires the capitalization of such costs as well as provides guidance on the amortization and impairment considerations. The Company elects the practical expedient and expenses certain costs to obtain contracts when applicable. There were no material costs to obtain a contract in the nine months ended September 30, 2018.

Impact of New Revenue Guidance on Financial Statement Line Items

The following table compares the reported condensed consolidated balance sheet, statement of loss and comprehensive loss and cash flows, as of and for the three and nine months ended September 30, 2018, to the pro-forma amounts had the previous guidance been in effect:



		As of September 30, 2018
		As Reported		Balances without adoption of ASC 606		Effect of Change Higher/(Lower)

Trade accounts receivable	$	11,448,000	$	10,264,000	$	1,184,000
Inventories		16,130,000		16,735,000		(605,000)
Other current assets		1,364,000		759,000		605,000
Other accrued liabilities		3,016,000		1,832,000		1,184,000



		Three Months Ended September 30, 2018
		As Reported		Balances without adoption of ASC 606		Effect of Change Higher/(Lower)

Revenue	$	15,292,000	$	15,473,000	$	(181,000)
Gross Profit		5,241,000		5,422,000		(181,000)
Selling, general and administrative expenses		6,842,000		7,023,000		(181,000)
Operating Loss		(1,602,000)		(1,602,000)		-



		Nine Months Ended September 30, 2018
		As Reported		Balances without adoption of ASC 606		Effect of Change Higher/(Lower)

Revenue	$	47,104,000	$	47,576,000	$	(472,000)
Gross Profit		14,404,000		14,876,000		(472,000)
Selling, general and administrative expenses		20,702,000		21,174,000		(472,000)
Operating Loss		(6,298,000)		(6,298,000)		-

Transaction Price Allocated to Future Performance Obligations

To determine the allocation of the transaction price and amounts allocated to the performance obligations, the Company first determined the standalone selling price for each distinct performance obligation in the contract in order to determine the allocations of the transaction price in proportion to the standalone selling price for each performance obligation in the contract in accordance with ASC 606-10-32-31 and 32-33. Judgment is required to determine standalone selling price for each distinct performance obligation. The Company generally determines standalone selling prices based on the actual prices charged to customers and has an established range of amounts that fall within stand-alone selling price for its distinct performance obligations. The Company will evaluate this range quarterly.

Practical Expedients and Exemptions

The Company adopted various practical expedients and policy elections related to the accounting for significant finance components, sales taxes, shipping and handling, costs to obtain a contract and immaterial promised goods or services, which will mitigate certain impacts of adopting this new standard. The practical expedient to disclose the unfulfilled performance obligations was not made as they are expected to be fulfilled within one year.

Disaggregation of revenue

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that best reflects the consideration we expect to receive in exchange for those goods or services. In accordance with ASC 606-10-50-5, the following tables present how we disaggregate our revenues, which is different for each segment.

For Suttle, we analyze revenues by product and customer group, which is as follows for the three and nine months ended September 30, 2018 and 2017:



	Suttle Sales by Product Group
	Three Months Ended September 30				Nine Months Ended September 30
		2018		2017		2018		2017
Structured cabling and connecting system products	$	4,748,000	$	7,230,000	$	16,490,000	$	22,798,000
DSL and other products		261,000		306,000		1,365,000		2,090,000
	$	5,009,000	$	7,536,000	$	17,855,000	$	24,888,000



	Suttle Sales by Customer Group
	Three Months Ended September 30				Nine Months Ended September 30
		2018		2017		2018		2017
Communication service providers	$	4,258,000	$	6,912,000	$	14,705,000	$	22,468,000
International		350,000		173,000		1,696,000		545,000
Distributors		401,000		451,000		1,454,000		1,875,000
	$	5,009,000	$	7,536,000	$	17,855,000	$	24,888,000

For Transition Networks, we analyze revenue by region and product group, which is as follows for the three and nine months ended September 30, 2018 and 2017:



	Transition Networks Sales by Region
	Three Months Ended September 30				Nine Months Ended September 30
		2018		2017		2018		2017
North America	$	8,015,000	$	7,404,000	$	22,107,000	$	22,560,000
Rest of World		690,000		1,301,000		2,530,000		3,751,000
Europe, Middle East, Africa ("EMEA")		526,000		622,000		1,582,000		1,520,000
	$	9,231,000	$	9,327,000	$	26,219,000	$	27,831,000



	Transition Networks Sales by Product Group
	Three Months Ended September 30				Nine Months Ended September 30
		2018		2017		2018		2017
Media converters	$	5,059,000	$	4,950,000	$	14,735,000	$	16,004,000
Ethernet switches and adapters		2,563,000		2,263,000		6,650,000		5,750,000
Other products		1,609,000		2,114,000		4,834,000		6,077,000
	$	9,231,000	$	9,327,000	$	26,219,000	$	27,831,000

For JDL, we analyze revenue by customer group, which is as follows for the three and nine months ended September 30, 2018 and 2017:



	JDL Revenue by Customer Group
	Three Months Ended September 30				Nine Months Ended September 30
		2018		2017		2018		2017
Education	$	185,000	$	2,870,000	$	574,000	$	8,085,000
Healthcare and commercial clients		674,000		743,000		1,908,000		2,419,000
	$	859,000	$	3,613,000	$	2,482,000	$	10,504,000

The Company does not currently analyze revenue for Net2Edge on a disaggregated basis. Revenues from Net2Edge were $405,000 and $182,000 for the three months ended September 30, 2018 and 2017, respectively. Revenues were $1,251,000 and $719,000 for the nine months ended September 30, 2018 and 2017, respectively.

Contract Balances

The Company does not have material costs to obtain a contract or material contract liabilities.

Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2018

Revenue Recognition [Abstract]

Schedule of Impact from Initial Application Period Cumulative Effect Transition



		As of September 30, 2018
		As Reported		Balances without adoption of ASC 606		Effect of Change Higher/(Lower)

Trade accounts receivable	$	11,448,000	$	10,264,000	$	1,184,000
Inventories		16,130,000		16,735,000		(605,000)
Other current assets		1,364,000		759,000		605,000
Other accrued liabilities		3,016,000		1,832,000		1,184,000



		Three Months Ended September 30, 2018
		As Reported		Balances without adoption of ASC 606		Effect of Change Higher/(Lower)

Revenue	$	15,292,000	$	15,473,000	$	(181,000)
Gross Profit		5,241,000		5,422,000		(181,000)
Selling, general and administrative expenses		6,842,000		7,023,000		(181,000)
Operating Loss		(1,602,000)		(1,602,000)		-



		Nine Months Ended September 30, 2018
		As Reported		Balances without adoption of ASC 606		Effect of Change Higher/(Lower)

Revenue	$	47,104,000	$	47,576,000	$	(472,000)
Gross Profit		14,404,000		14,876,000		(472,000)
Selling, general and administrative expenses		20,702,000		21,174,000		(472,000)
Operating Loss		(6,298,000)		(6,298,000)		-

Schedule of Disaggregation of Revenues

For Suttle, we analyze revenues by product and customer group, which is as follows for the three and nine months ended September 30, 2018 and 2017:



	Suttle Sales by Product Group
	Three Months Ended September 30				Nine Months Ended September 30
		2018		2017		2018		2017
Structured cabling and connecting system products	$	4,748,000	$	7,230,000	$	16,490,000	$	22,798,000
DSL and other products		261,000		306,000		1,365,000		2,090,000
	$	5,009,000	$	7,536,000	$	17,855,000	$	24,888,000



	Suttle Sales by Customer Group
	Three Months Ended September 30				Nine Months Ended September 30
		2018		2017		2018		2017
Communication service providers	$	4,258,000	$	6,912,000	$	14,705,000	$	22,468,000
International		350,000		173,000		1,696,000		545,000
Distributors		401,000		451,000		1,454,000		1,875,000
	$	5,009,000	$	7,536,000	$	17,855,000	$	24,888,000

For Transition Networks, we analyze revenue by region and product group, which is as follows for the three and nine months ended September 30, 2018 and 2017:



	Transition Networks Sales by Region
	Three Months Ended September 30				Nine Months Ended September 30
		2018		2017		2018		2017
North America	$	8,015,000	$	7,404,000	$	22,107,000	$	22,560,000
Rest of World		690,000		1,301,000		2,530,000		3,751,000
Europe, Middle East, Africa ("EMEA")		526,000		622,000		1,582,000		1,520,000
	$	9,231,000	$	9,327,000	$	26,219,000	$	27,831,000



	Transition Networks Sales by Product Group
	Three Months Ended September 30				Nine Months Ended September 30
		2018		2017		2018		2017
Media converters	$	5,059,000	$	4,950,000	$	14,735,000	$	16,004,000
Ethernet switches and adapters		2,563,000		2,263,000		6,650,000		5,750,000
Other products		1,609,000		2,114,000		4,834,000		6,077,000
	$	9,231,000	$	9,327,000	$	26,219,000	$	27,831,000

For JDL, we analyze revenue by customer group, which is as follows for the three and nine months ended September 30, 2018 and 2017:



	JDL Revenue by Customer Group
	Three Months Ended September 30				Nine Months Ended September 30
		2018		2017		2018		2017
Education	$	185,000	$	2,870,000	$	574,000	$	8,085,000
Healthcare and commercial clients		674,000		743,000		1,908,000		2,419,000
	$	859,000	$	3,613,000	$	2,482,000	$	10,504,000

Revenue Recognition (Narrative) (Details)

Revenue Recognition (Narrative) (Details) - USD ($)	3 Months Ended		9 Months Ended
Revenue Recognition (Narrative) (Details) - USD ($)	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Sales	$ 15,291,993	$ 20,412,439	$ 47,103,837	$ 63,280,980
Net2Edge [Member]
Segment Reporting Information [Line Items]
Sales	$ 405,000	$ 182,000	$ 1,251,000	$ 719,000

Revenue Recognition (Schedule of Impact from Initial Application Period Cumulative Effect Transition) (Details)

Revenue Recognition (Schedule of Impact from Initial Application Period Cumulative Effect Transition) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Trade accounts receivable	$ 11,448,146		$ 11,448,146		$ 12,183,217
Inventories	16,130,318		16,130,318		13,984,428
Other current assets	1,363,851		1,363,851		810,532
Other accrued liabilities	3,016,375		3,016,375		$ 1,586,473
Revenues	15,291,993	$ 20,412,439	47,103,837	$ 63,280,980
Gross profit	5,240,574	3,303,907	14,404,278	15,279,612
Selling, general and administrative expenses	6,842,348	7,161,323	20,702,476	21,516,625
Operating loss	(1,601,774)	$ (4,653,647)	(6,298,198)	$ (10,180,263)
Balances without adoption of ASC 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Trade accounts receivable	10,264,000		10,264,000
Inventories	16,735,000		16,735,000
Other current assets	759,000		759,000
Other accrued liabilities	1,832,000		1,832,000
Revenues	15,473,000		47,576,000
Gross profit	5,422,000		14,876,000
Selling, general and administrative expenses	7,023,000		21,174,000
Operating loss	(1,602,000)		(6,298,000)
Accounting Standards Update 2014-09 [Member] \| Effect of ChangeHigher/(Lower) [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Trade accounts receivable	1,184,000		1,184,000
Inventories	(605,000)		(605,000)
Other current assets	605,000		605,000
Other accrued liabilities	1,184,000		1,184,000
Revenues	(181,000)		(472,000)
Gross profit	(181,000)		(472,000)
Selling, general and administrative expenses	$ (181,000)		$ (472,000)