v3.25.2
Revenue Recognition and Related Costs
 6 Months Ended
Mar. 31, 2025
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer [Text Block]
Note 8 – Revenue Recognition and Related Costs
The Company recognizes revenue under Accounting Standards Update (“ASU”)
No. 2014-09,
Revenue from Contracts with Customers
(Topic 606). The following table disaggregates the Company’s net revenue by major source for the quarters and six months ended March 31, 2025 and 2024:
 
     Quarter Ended March 31,      Six Months Ended March 31,  
     2025      2024      2025      2024  
Equipment sales recognized over time
    $ 14,116,000      $ 12,380,000      $ 30,947,000      $ 22,213,000  
Equipment sales recognized at a point in time
      12,121,000        17,394,000        19,709,000        24,575,000  
Parts and component sales
      8,874,000        8,591,000        15,025,000        16,387,000  
Freight revenue
      2,588,000        1,762,000        3,333,000        2,897,000  
Other
      505,000        549,000        606,000        622,000  
  
 
 
     
 
 
     
 
 
     
 
 
  
Net revenue
    $ 38,204,000      $ 40,676,000      $ 69,620,000      $ 66,694,000  
  
 
 
     
 
 
     
 
 
     
 
 
  
Revenues from contracts with customers for the design, manufacture and sale of custom equipment are recognized over time when the performance obligation is satisfied by transferring control of the equipment. Control of the equipment transfers over time, as the equipment is unique to the specific contract and thus does not create an asset with an alternative use to the Company. Revenues and costs are recognized in proportion to actual labor costs incurred, as compared with total estimated labor costs expected to be incurred, during the entire contract. All incremental costs related to obtaining a contract are expensed as incurred, as the amortization period is less than
one year
. Changes to total estimated contract costs or losses, if any, are recognized in the period in which they are determined.
Contract assets (excluding accounts receivable) under contracts with customers represent revenue recognized in excess of amounts billed on equipment sales recognized over time. These contract assets were $4,380,000 and $9,339,000 at March 31, 2025 and September 30, 2024, respectively, and are included in current assets on the Company’s condensed consolidated balance sheets. Contract liabilities (excluding customer deposits) under contracts with customers represent amounts billed in excess of revenue recognized on equipment sales recognized over time. These contract liabilities were $2,796,000 and zero at March 31, 2025 and September 30, 2024, respectively, and are included in current liabilities on the Company’s condensed consolidated balance sheets. The Company anticipates that all of the contract assets at March 31, 2025, will be billed and collected within
one year
.
Revenues from all other contracts for the design and manufacture of equipment, for service and for parts sales, net of any discounts and return allowances, are recorded at a point in time when control of the goods or services has been transferred. Control of the goods or service typically transfers at time of shipment or upon completion of the service.
Payment for equipment under contract with customers is typically due prior to shipment. Payment for services under contract with customers is due as services are completed. Accounts receivable related to contracts with customers for equipment sales were $161,000 and $163,000 at March 31, 2025 and September 30, 2024, respectively.
 
Product warranty costs are estimated using historical experience and known issues and are charged to production costs as revenue is recognized.
Under certain contracts with customers, recognition of a portion of the consideration received may be deferred and recorded as a contract liability if the Company has to satisfy a future obligation, such as to provide installation assistance. There were no such contract liabilities at March 31, 2025 and September 30, 2024. Customer deposits related to contracts with customers were $5,550,000 and $5,018,000 at March 31, 2025 and September 30, 2024, respectively, and are included in current liabilities on the Company’s condensed consolidated balance sheets.
The Company records revenues earned for shipping and handling as freight revenue at the time of shipment, regardless of whether or not it is identified as a separate performance obligation. The cost of shipping and handling is classified as cost of goods sold concurrently with the revenue recognition.
All product engineering and development costs, and selling, general and administrative expenses are charged to operations as incurred. Provision is made for any anticipated contract losses in the period that the loss becomes evident.
The allowance for credit losses is determined by performing a specific review of all account balances greater than 90 days past due and other higher risk amounts to determine collectability, and also adjusting for any known customer payment issues with account balances in the
less-than-90-day
past due aging category. The measurement and recognition of credit losses involves judgment and represents the Company’s estimate of expected credit losses based on consideration of historical credit loss experience, the aging of account balances, customer credit worthiness, and current and expected economic, market and industry factors impacting the Company’s customers, including their financial condition. Account balances are charged off against the allowance for credit losses when they are determined to be uncollectible. Any recoveries of account balances previously considered in the allowance for credit losses reduce future additions to the allowance for credit losses. The allowance for credit losses also includes an estimate for returns and allowances. Provisions for estimated returns and allowances and other adjustments, are provided for in the same period the related sales are recorded. Returns and allowances, which reduce product revenue, are estimated using known issues and historical experience.
Changes in the allowance for credit losses as of March 31, 2025 consisted of the following:
 
Balance, September 30, 2024
  
$
390,000
 
Provision for credit losses
  
 
— 
 
Provision for estimated returns and allowances
  
 
275,000
 
Uncollectible accounts written off
  
 
(12,000
) 
Returns and allowances issued
  
 
(155,000
) 
  
 
 
 
Balance, March 31, 2025
  
$
498,000