Revenue Recognition
We earn a fee for each telephone solicitor's call attempt (whether or not the call is completed) which generates a query to a data base of Do-Not-Call telephone numbers. We establish the price for this service. Through our principal subsidiary, we have an annually renewable contract with our data base distributor to perform the following functions: (1) provide connectivity to the telephone companies and access database information from the database that we manage, update and maintain, as required to operate the telephone call processing platform. This platform is where the telephone call queries are routed from the telemarketers over various telephone carrier networks; (2) contract with telephone carriers to sell our TeleBlock® service to their end users; (3) provide billing and collection services.
As compensation for these services, we pay the distributor contractually determined amounts on a per query basis. The distributor submits monthly remittances together with the related monthly activity reports. We have a contractual right to audit such reports. Revenue is accrued based upon the remittances and reports submitted. We routinely audit the monthly call counts submitted to us. Any adjustments to revenue resulting from these audits are recorded when earned if significant. Historically, these adjustments have not been significant. In the event that such adjustments do become material in the future, it is possible that, at times, we may have to revise previously reported interim results. The telephone carriers in turn sell the TeleBlock® service to their customers. The carriers bill their customers for TeleBlock® and assume all credit risk with regard to their customers. We have no credit risk with respect to the end-users.
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