Accounting Policies and Estimates
discussion and analysis of our financial condition and results of operations are based on our financial statements, which have
been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and
related disclosures. We review our estimates and judgments on an ongoing basis. We base our estimates and judgments on historical
experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ
from these estimates. We believe the following accounting policies are critical to the judgments and estimates we use in preparing
our financial statements.
Company adopted Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”), Revenue from
Contracts with Customers, on January 1, 2018 using the modified retrospective method. Upon 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 twelve months ended December 31, 2018, the Company recorded no material impact to 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 software 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. Revenue from this performance obligation 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.
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
Company is entitled to royalty payments from Biosense Webster, payable quarterly based on net revenues from sales of the co-developed
recurring revenue includes revenue from product maintenance plans, other post warranty maintenance, and the implied obligation
to provide software enhancements if and when available for one year following installation. Revenue from services and software
enhancements is deferred and amortized over the service or update period, which is typically one year.