Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition

v3.19.3
Revenue Recognition
9 Months Ended
Sep. 30, 2019
Revenue Recognition [Abstract]  
Revenue Recognition
3. Revenue Recognition

 

Revenue by Service Line

 

  Three Months Ended
September 30,
 
  2019     2018  
Products:              
Disposable products:              
Functional neurosurgery $ 1,854,251     $ 1,448,850  
Biologics and drug delivery   491,257       190,993  
Therapy   64,095       -  
Capital equipment   184,825       99,961  
Total product revenue   2,594,428       1,739,804  
Services:              
Capital equipment and other   210,538       62,238  
Biologics and drug delivery   72,500       5,000  
Therapy   50,000       -  
Total service revenue   333,038       67,238  
Total revenue $ 2,927,466     $ 1,807,042  

 

  Nine Months Ended
September 30,
 
  2019     2018  
Products:              
Disposable products:              
Functional neurosurgery $ 5,212,460     $ 3,787,712  
Biologics and drug delivery   957,673       483,251  
Therapy   81,925       -  
Capital equipment   700,517       420,039  
Total product revenue   6,952,575       4,691,002  
Services:              
Capital equipment and other   515,695       218,742  
Biologics and drug delivery   335,500       167,000  
Therapy   202,612       -  
Total service revenue   1,053,807       385,742  
Total revenue $ 8,006,382     $ 5,076,744  

 

Contract Balances

 

  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.

 

  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 nine months ended September 30, 2019, the Company recognized capital equipment-related service revenue of $38,093 and $173,247, respectively, which was previously included in deferred revenue in the accompanying condensed consolidated balance sheet at December 31, 2018. 

 

In September 2019, the Company entered into a Development Services Agreement with a customer under which the Company was entitled to bill the customer for an upfront payment of $127,600, which the Company received in September 2019 and which is included in accounts receivable and deferred revenue in the accompanying consolidated balance sheet. Also, in September 2019, the Company entered into a Letter of Intent (the “LOI”) with a customer who is a stockholder and whose Chief Operating Officer is a member of the Company’s Board of Directors. The purpose of the LOI is to permit the commencement of a product development project in anticipation of negotiating a detailed Statement of Work (as described in the LOI) by December 31, 2019. Under the terms of the LOI, the Company was entitled to bill the customer for an upfront, nonrefundable payment of $500,000, which amount is included in accounts receivable and deferred revenue in the accompanying September 30, 2019 condensed consolidated balance sheet. The Company intends to recognize each of the upfront payments described in this paragraph in proportional relationship to the transaction prices of the performance obligations contained in the related agreements.

 

During the three and nine months ended September 30, 2019, the Company offered an upgraded version of its software at no additional charge to customers purchasing a three-year systems service agreement. The transaction prices of the software and the service agreement were determined through an allocation of the service agreement price based on the standalone prices of the software and the service agreements. The transaction price of the software was recognized as revenue upon its installation and comprised approximately $113,000 of unbilled accounts receivable at September 30, 2019.

 

Remaining Performance Obligations

 

The Company’s contracts with customers, other than capital equipment-related service agreements discussed below, are predominantly of terms less than one year. Accordingly, the transaction price of remaining performance obligations related to such contracts at September 30, 2019 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 $398,943 at September 30, 2019. The Company expects to recognize this revenue within the next three years.