ClearPoint Neuro, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition

Revenue Recognition

6 Months Ended

Jun. 30, 2018

3.	Revenue Recognition

Revenue by Service Line

	Three Months Ended June 30,
	2018		2017
Products:
Disposable products:
Functional neurology	$	1,159,527	$	1,343,425
Biologics and drug delivery		111,792		92,479
Capital equipment		141,280		456,734
Total product revenue		1,412,599		1,892,638
Services:
Capital equipment and other		71,736		83,367
Biologics and drug delivery		162,000		-
Total service revenue		233,736		83,367
Total revenue	$	1,646,335	$	1,976,005

	Six Months Ended June 30,
	2018		2017
Products:
Disposable products:
Functional neurology	$	2,338,862	$	2,931,867
Biologics and drug delivery		292,258		167,486
Capital equipment		320,078		715,500
Total product revenue		2,951,198		3,814,853
Services:
Capital equipment and other		156,504		168,224
Biologics and drug delivery		162,000		-
Total service revenue		318,504		168,224
Total revenue	$	3,269,702	$	3,983,077

Contract Balances

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Contract assets – Substantially all the Company’s contracts with customers are based on customer-issued purchase orders for distinct products or services. Customers are billed upon delivery of such products or services, and the related contract assets comprise the accounts receivable balances included in the accompanying condensed consolidated balance sheets.

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Contract liabilities – The Company generally bills and collects capital equipment-related service fees at the inception of the service agreements, which have terms ranging from one to three years. The unearned portion of such service fees are classified as deferred revenue.

During the three and six months ended June 30, 2018, the Company recognized capital equipment-related service revenue of $43,811 and $87,401, respectively, which was previously included in deferred revenue in the accompanying condensed consolidated balance sheet at December 31, 2017.

Remaining Performance Obligations

The Company’s contracts with customers are predominantly of terms less than one year. Accordingly, the transaction price of remaining performance obligations related to such contracts at June 30, 2018 are not material.

Revenue with respect to remaining performance obligations related to capital equipment-related service agreements with original terms in excess of one year amounted to $191,203 at June 30, 2018. The Company expects to recognize this revenue within the next three years.

One contract with a customer has a stated term of three years. However, the customer has the right to terminate the contract for convenience upon a 30-day notice, in which event the customer would be obligated to compensate the Company for up to three months of previously forecast purchases. Based on the foregoing, the Company uses the practical expedient available under Topic 606 pursuant to which such contracts are considered to have a term of less than one year and for which disclosure of the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue is not required. Accordingly, the Company has not included such disclosure for this contract.