Concern, Liquidity and Management’s Plan
Company believes the cash on hand at June 30, 2018 will be sufficient to meet its obligations as they become due in the ordinary
course of business for at least 12 months following the date these financial statements are issued. The Company has sustained
operating losses throughout its corporate history and expects that its 2018 expenses will exceed its 2018 gross margin. The Company
expects to continue to incur operating losses and negative cash flows until revenues reach a level sufficient to support ongoing
operations or expense reductions are in place. The Company’s liquidity needs will be largely determined by the success of
clinical adoption within the installed base of Niobe systems as well as by new placements of capital systems.
instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and debt. The carrying value of such
amounts reported at the applicable balance sheet dates approximates fair value.
Company measures certain financial assets and liabilities, including warrants, at fair value on a recurring basis. General accounting
principles for fair value measurement established a fair value hierarchy that prioritizes the inputs to valuation techniques used
to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
and liabilities (“Level 1”) and the lowest priority to unobservable inputs (“Level 3”). See Note 10 for
and Costs of Revenue
Company adopted ASC 606, Revenue from Contracts with Customers, on January 1, 2018 using
the modified retrospective method. As part of the Company’s adoption of ASC 606, the Company elected to use the following
practical expedients (i) applying the modified retrospective method only to open contracts as of December 31, 2017; (ii) not to
adjust the promised amount of consideration for the effects of a significant financing component when the Company expects, at
contract inception, that the period between the Company’s transfer of a promised product or service to a customer and when
the customer pays for that product or service will be one year or less; (iii) to expense costs as incurred for costs to obtain
a contract when the amortization period would have been one year or less; and (iv) not to assess whether promised goods or services
are performance obligations if they are immaterial in the context of the contract with the customer.
adoption of the new revenue guidance, the Company recorded a cumulative-effect reduction
to accumulated deficit of $0.3 million on January 1, 2018 relating primarily to the deferral of previously expensed costs to obtain
a contract. The Company capitalized sales commissions paid in connection with multi-year service contracts and is amortizing
such asset over the economic life of those contracts. Previously, sales commissions on multi-year service contracts were expensed
as incurred. The impact of this change on operating expenses in any given period will depend, in part, on the amount of such commissions
incurred and capitalized in relation to the amount of ongoing amortization expense. For the six months ending June 30, 2018, the
Company recorded $0.1 million less in commission expense as a result of adopting the new standard. The Company did not otherwise
experience significant changes in the timing or method of revenue recognition for any of
its material revenue streams.
generate revenue from initial capital sales of systems as well as recurring revenue from the sale of our proprietary disposable
devices, from royalties paid to the Company on the sale by Biosense Webster of co-developed catheters, and from other recurring
revenue including ongoing license and service contracts.
account for a contract with a customer when there is a legally enforceable contract between the Company and the customer, the
rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration
is probable. We record our revenue based on consideration specified in the contract with each customer, net of any taxes collected
from customers that are remitted to government authorities.
contracts containing multiple products and services the Company accounts for individual products and services as separate performance
obligations if they are distinct, which is if a product or service is separately identifiable from other items in the bundled
package, and if a customer can benefit from it on its own or with other resources that are readily available to the customer.
The Company recognizes revenues as the performance obligations are satisfied by transferring control of the product or service
to a customer.
multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price.
Standalone selling prices are based on observable prices at which the Company separately sells the products or services. If a
standalone selling price is not directly observable, then the Company estimates the standalone selling price considering market
conditions and entity-specific factors including, but not limited to, features and functionality of the products and services
and market conditions. The Company regularly reviews standalone selling prices and updates these estimates as necessary.
related to the sale of systems typically contain separate obligations for the delivery of system(s), installation and an implied
obligation to provide software enhancements if and when available for one year following installation. Revenue is recognized when
the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer
acknowledgment of delivery or installation, depending on the terms of the arrangement. Revenue from the implied obligation to
deliver software enhancements if and when available is recognized ratably over the first year following installation of the system
as the customer receives the right to software updates throughout the period and is included in Other Recurring Revenue. The Company’s
system contracts generally do not provide a right of return. Systems are generally covered by a one-year assurance type warranty;
warranty costs were not material for the periods presented. Revenue from system delivery and installation represented 2% and 13%
of revenue for the six months ended June 30, 2018 and 2017, respectively.