Stereotaxis
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10-Q
STEREOTAXIS, INC. filed this Form 10-Q on 08/08/2018
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Disposables:

 

Revenue from sales of disposable products is recognized when control is transferred to the customers, which generally occurs at the time of shipment, but can also occur at the time of delivery depending on the customer arrangement. Disposable products are covered by an assurance type warranty that provides for the return of defective products. Warranty costs were not material for the periods presented. Disposable revenue represented 34% and 33% of revenue for the six months ended June 30, 2018 and 2017, respectively.

 

Royalty:

 

The Company is entitled to royalty payments from Biosense Webster, payable quarterly based on net revenues from sales of the co-developed catheters. Royalty revenue from the co-developed catheters remained relatively unchanged at 10% of revenue for the six months ended June 30, 2018 and 2017.

 

Other Recurring Revenue:

 

Other recurring revenue includes revenue from software licenses, product maintenance plans, and other post warranty maintenance. Revenue from services and license fees is deferred and amortized over the service or license fee period, which is typically one year. Revenue related to services performed on a time-and-materials basis is recognized when performed. Other recurring revenue represented 54% and 44% of revenue for the six months ended June 30, 2018 and 2017, respectively.

 

   Three months ended June 30,   Six months ended June 30, 
   2018   2017   2018   2017 
Systems  $310,751   $1,828,439   $328,026   $2,047,334 
Disposables, service and accessories   7,240,650    6,638,587    14,195,008    13,397,364 
Total revenue  $7,551,401   $8,467,026   $14,523,034   $15,444,698 

 

Transaction price allocated to remaining performance obligations relates to amounts allocated to products and services for which the revenue has not yet been recognized. A significant portion of this amount relates to the Company’s systems contracts and obligations that will be recognized as revenue in future periods. These obligations are generally satisfied within two years after contract inception but may occasionally extend longer. Transaction price representing revenue to be earned on remaining performance obligations on system contracts was approximately $1.3 million as of June 30, 2018. Performance obligations arising from contracts for disposables, royalty and service are generally expected to be satisfied within one year after entering into the contract.

 

The following information summarizes the Company’s contract assets and liabilities:

 

   June 30, 2018   December 31, 2017 
Contract Assets - Unbilled Receivables  $9,167   $2,917 
           
Product shipped, revenue deferred   934,136    941,724 
Deferred service and license fees   6,499,720    5,372,908 
Total deferred revenue   7,433,856    6,314,632 
Less: Long-term deferred revenue   (523,646)   (611,863)
Total current deferred revenue  $6,910,210   $5,702,769 

 

The Company invoices its customers based on the billing schedules in its sales arrangements. Contract assets primarily represent the difference between the revenue that was earned but not billed on service contracts and revenue from system contracts that was recognized based on the relative selling price of the related performance obligations and the contractual billing terms in the arrangements. Deferred revenue is primarily related to service contracts, for which the service fees are billed up-front, generally quarterly or annually, and for amounts billed in advance for system contracts for which some performance obligations remain outstanding. For service contracts, the associated deferred revenue is generally recognized ratably over the service period. For system contracts, the associated deferred revenue is recognized when the remaining performance obligations are satisfied. The Company did not have any impairment losses on its contract assets for the periods presented.

 

Revenue recognized for the six months ended June 30, 2018 and 2017, that was included in the deferred revenue balance at the beginning of each reporting period was $4,152,694 and $5,504,863, respectively.

 

Assets Recognized from the Costs to Obtain a Contract with a Customer

 

The Company has determined that sales incentive programs for the Company’s sales team meet the requirements to be capitalized as the Company expects to generate future economic benefits from the related revenue generating contracts after the initial capital sales transaction. The costs capitalized as contract acquisition costs included in prepaid expenses and other assets, in the Company’s balance sheet was $0.4 million as of June 30, 2018. The Company did not incur any impairment losses during any of the periods presented.

 

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