| Summary of significant accounting policies | (2) Summary of significant
accounting policies Cash and cash equivalents and
restricted cash
The Company considers all
highly liquid investments with a maturity of three months or less
when purchased to be cash equivalents.
The Company records cash
and cash equivalents as restricted when it is unable to freely use
such cash and cash equivalents for general operating purposes. At
September 30, 2020 and December 31, 2019, restricted cash
consists of cash on deposit in a financial institution that is
restricted from use for the Company’s corporate credit card
program.
The following table
provides a reconciliation of cash and cash equivalents and
restricted cash on the condensed consolidated balance sheets to the
totals presented on the condensed consolidated statements of cash
flows (in thousands):
September 30,
December 31,
Cash and cash equivalents $ $ 81,033
Restricted cash 270
Total cash and cash equivalents and
restricted cash as presented on the condensed consolidated
statements of cash flows $ $ 81,303
Trade accounts
receivable
Trade accounts receivable
are recorded at the invoiced amount and do not bear interest. The
Company maintains an allowance for doubtful accounts for estimated
losses inherent in its account receivable portfolio. In
establishing the required allowance, management considers
historical losses adjusted to take into account current market
conditions and the Company’s customers’ respective
financial conditions, the amounts of receivables in dispute and the
current receivables aging and current payment patterns. To the
extent identified, account balances are charged off against the
allowance after all means of collection have been exhausted and the
potential for recovery is considered remote. Revenue
recognition
The Company derives
revenue from two primary sources, product revenues, which are
comprised primarily of direct platform sales revenues and
consumables revenues, and service revenues, which are comprised of
revenue from joint development agreements, service and warranty,
platform support and feasibility studies on the Company’s
platforms. Revenues are recognized net of applicable taxes imposed
on the related transaction.
The Company recognizes
revenue when the Company satisfies the performance obligations
under the terms of a contract and control of its products and
services is transferred to its customers in an amount that reflects
the consideration the Company expects to receive from its customers
in exchange for those products and services. This process involves
identifying the contract with a customer, determining the
performance obligations in the contract, determining the contract
price, allocating the contract price to the distinct performance
obligations in the contract based on stand-alone selling price, and
recognizing revenue when the performance obligations have been
satisfied. A performance obligation is considered distinct from
other obligations in a contract when it provides a benefit to the
customer either on its own or together with other resources that
are readily available to the customer and is separately identified
in the contract. The Company considers a performance obligation
satisfied once it has transferred control of a good or service to
the customer, meaning the customer has the ability to use and
obtain the benefit of the good or service.
The Company’s
agreements with customers often include multiple performance
obligations, which can sometimes be included in separate contracts
entered into within a reasonably short period of time. The Company
considers an entire customer arrangement to determine if separate
contracts should be considered combined for the purposes of revenue
recognition.
In order to determine the
stand-alone selling price, the Company conducts a periodic analysis
to determine whether various goods or services have an observable
stand-alone selling price as well as to identify significant
changes to current stand-alone selling prices. If the Company does
not have an observable stand-alone selling price for a particular
good or service, then the stand-alone selling price for that
particular good or service is estimated using an approach that
maximizes the use of observable inputs. The Company’s process
for determining stand-alone selling price requires judgment and
considers multiple factors that are reasonably available and
maximizes the use of observable inputs that may vary over time
depending upon the unique facts and circumstances related to each
performance obligation. The Company believes that this method
results in an estimate that represents the price the Company would
charge for the product offerings if they were sold
separately.
For most of its
performance obligations, the Company has established stand-alone
selling price as a range rather than a single value, such range
being plus or minus 15% of the median of observable prices. If the
contractually stated prices of all the performance obligations in a
contract fall within their respective stand-alone selling price
ranges, the Company will allocate the transaction price at the
contractually stated amounts. In situations where the contractually
stated price for one or more performance obligations in a contract
fall(s) outside of their respective stand-alone selling price
range, the Company will use the mid-point
Taxes, such as sales,
value-add
The following describes
the nature of the Company’s primary types of revenue and the
revenue recognition policies and significant payment terms as they
pertain to the types of transactions the Company enters into with
its customers. Product revenues
Product revenues are
comprised of two major revenue streams, direct platform sales and
consumables. Direct platform sales revenues are comprised of
advanced automation systems (including fully paid workflow
licenses) as well as Culture Station instruments. Consumables
revenues are comprised of OptoSelect chips required to run the
system as well as reagent kits. The Company’s standard
arrangement with its customers is generally a purchase order or an
executed contract. Revenue on product sales is recognized when
control has transferred to the customer which typically occurs when
the product has been shipped to the customer, risk of loss has
transferred to the customer and the Company has a present right to
payment for the system, chip or kit, as applicable. In certain
limited circumstances when a product sale includes client
acceptance provisions, the Company will first assess such terms to
determine if the control of the good is being transferred to the
customer in accordance with the agreed-upon specifications in the
contract. To the extent that such acceptance provisions can be
objectively determined to be aligned with the standard
specifications of the arrangement, are defined and easily evaluated
for completion, as well as do not afford the customer any
additional rights or create additional performance obligations for
the Company, such provisions would be determined perfunctory and
would not preclude revenue recognition presuming all other criteria
are met. If such acceptance provisions are considered to be
substantive, revenue is recognized either when client acceptance
has been obtained, client acceptance provisions have lapsed, or the
Company has objective evidence that the criteria specified in the
client acceptance provisions have been satisfied. Payment terms are
generally thirty to ninety days from the date of
invoicing.
On a limited basis, the
Company also enters into fixed-term sales-type lease arrangements
with certain qualified customers. Revenue from sales-type lease
arrangements is generally recognized in a manner consistent with
platform equipment, assuming all other revenue recognition criteria
have been met. Service revenues
Service revenues
primarily consist of joint development agreements, service and
warranty, platform support and feasibility studies on the
Company’s advanced automation systems and workflows. The
Company’s services are provided primarily on a fixed fee
basis; from time to time these fixed fee contracts may be invoiced
at the outset of the arrangements. The Company recognizes revenue
from the sale of extended warranty and enhanced service warranty
arrangements over the respective period, while revenue on
feasibility studies is recognized over time, using an input measure
of progress based on costs incurred to date relative to total
expected costs. Revenue on platform support is recognized as the
services are performed. Service contracts are typically short-term
in nature. Payment terms are generally thirty to ninety days from
the date of invoicing.
Joint development
agreements are agreements whereby the Company provides services for
the development of customized advanced automation systems and
workflows to meet a specific customer’s needs. Such contracts
generally include defined milestones associated with these
development activities over extended periods of time, some in
excess of twenty-four months. Typically, there are formal customer
acceptance clauses as each milestone is completed, and an approval
to proceed with the next milestone is generally required. The
Company recognizes revenue over time, using an input measure of
progress based on costs incurred to date relative to total expected
costs. Payment terms are generally thirty to ninety days from the
achievement of each milestone.
The Company places a
constraint on a variable consideration estimate that focuses on
possible future downward revenue adjustments (i.e., revenue
reversals) if there is uncertainty that could prevent a faithful
depiction of the consideration to which the Company expects to be
entitled to. The constraint estimate is reassessed at each
reporting date until the uncertainty is resolved. Contract assets and contract
liabilities
Contract assets include
amounts where revenue recognized exceeds the amount invoiced to the
customer and the right to payment is not solely subject to the
passage of time. The Company’s contract asset balances of
$ million
and $5.2 million as of September 30, 2020 and
December 31, 2019, respectively, are primarily from its
development and feasibility study agreements.
Contract liabilities
consist of fees invoiced or paid by the Company’s customers
for which the associated services have not been performed and
revenues have not been recognized based on the Company’s
revenue recognition criteria described above. Such amounts are
reported as deferred revenue on the consolidated balance sheets.
Deferred revenue that is expected to be recognized during the
following twelve months is recorded as a current liability and the
remaining portion is recorded as non-current.
Contract assets and
contract liabilities are reported in a net position on an
individual contract basis at the end of each reporting period.
Contract assets are classified as current or long-term on the
condensed consolidated balance sheet based on the timing of when
the Company expects to complete the related performance obligations
and invoice the customers. Contract liabilities are classified as
current or long-term on the condensed consolidated balance sheet
based on the timing when the revenue recognition associated with
the related customer payments and invoicing is expected to
occur. Costs to obtain or fulfill a
contract
Origination costs relate
primarily to the payment of incentive bonuses that are directly
related to sales transactions. Fulfillment costs generally include
the direct cost of services such as platform support and
feasibility studies.
Origination and
fulfillment costs that are internal to the Company are generally
expensed when incurred because most of those costs are incurred
concurrently with the delivery of the related goods and services,
which are predominantly recognized at a point in time or are
short-term in nature. The origination costs that are related to
long-term development agreements are capitalized and amortized over
the relevant service period. Property and
equipment
Property and equipment
are stated at cost less accumulated depreciation. Depreciation on
property and equipment is computed using the straight-line method
over the estimated useful lives of the assets, as presented in the
table below. Expenditures for major additions and improvements to
property and equipment are capitalized and maintenance and repairs
are charged to expense as incurred. Assets not yet placed in use
are not depreciated.
The estimated useful
lives of Company’s property and equipment are as
follows:
Equipment, tooling and
molds
5-7
Computer equipment and
software
3-7
Furniture, fixtures and
other
3-7
Leasehold Improvements
Shorter of lease term or estimated
useful life
Other assets
Other current assets and
other assets consist primarily of prepaid rent, prepaid insurance
and advance payments made to certain vendors for future delivery of
goods or services and software implementation costs for cloud-based
hosting arrangements that are a service contract.
The Company expenses all
cloud-based hosting arrangement related costs (internal and
external) that were incurred in the planning and
post-implementation operation stages of such implementations and
capitalizes costs related to the application development stage of
such projects. The capitalized costs are amortized on a
straight-line basis over the estimated useful life of five years
starting on the date that the projects are placed into production
and are ready for their intended use. Deferred offering
costs
Deferred offering costs,
which consist of direct incremental legal, consulting, banking and
accounting fees relating to equity offerings, are capitalized and
will be offset against proceeds upon the consummation of the
offering within stockholders’ equity. Research and development
costs
Research and development
costs primarily consist of salaries, benefits, incentive
compensation, stock-based compensation, and allocated facilities
costs for employees and contractors engaged in development
arrangements, research, regulatory affairs, and product
development. The Company expenses all research and development
costs in the periods in which they are incurred. Income taxes
The Company accounts for
income taxes under an asset-and-liability
The Company determines
whether a tax position is more likely than not to be sustained upon
examination, including resolution of any related appeals or
litigation processes, based on the technical merits of the
position. The Company uses a two-step
For all periods
presented, the Company has provided a valuation reserve equal to
100% of its deferred tax assets as the Company is not in a position
to determine if its operating plans will be successful and result
in taxable income to absorb any loss carryforwards. Stock-based
compensation
The Company maintains an
incentive compensation plan under which incentive stock options and
non-qualified non-employee
Stock-based compensation
cost is measured at the grant date, based on the fair value of the
award, and is recognized as expense over the requisite service
period. The fair value of stock-based awards is estimated using the
Black-Scholes option pricing model. The Company records forfeitures
as they occur. Fair value
measurements
The Company utilizes
valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs to the extent possible. The
Company determines fair value based on assumptions that market
participants would use in pricing an asset or liability in the
principal or most advantageous market. When considering market
participant assumptions in fair value measurements, the following
fair value hierarchy distinguishes between observable and
unobservable inputs, which are categorized in one of the following
levels (see Note 6 to these condensed consolidated financial
statements):
•
Level 1 Inputs: Unadjusted quoted prices in active markets
for identical assets or liabilities accessible to the reporting
entity at the measurement date for identical assets and
liabilities.
•
Level 2 Inputs: Other than quoted prices included in
Level 1 inputs that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of
the asset or liability.
•
Level 3 Inputs: Unobservable inputs for the asset or
liability used to measure fair value to the extent that observable
inputs are not available, thereby allowing for situations in which
there is little, if any, market activity for the asset or liability
at measurement date.
The categorization of a
financial instrument within the valuation hierarchy is based on the
lowest level of input that is significant to the fair value
measurement.
The Company recognizes
transfers between levels of the fair value hierarchy on the date of
the event or change in circumstances that caused the
transfer. Product
warranties
The Company provides a
one year assurance-type warranty on its platforms and chip
consumables. At the time revenue is recognized, the Company
establishes an accrual for estimated warranty expenses based on
historical data and trends of product reliability and costs of
repairing and replacing defective products. The Company exercises
judgment in estimating the expected product warranty costs, using
data such as the actual and projected product failure rates,
estimated repair costs, freight, material, labor, and overhead
costs. While management believes that historical experience
provides a reliable basis for estimating such warranty cost,
unforeseen quality issues or component failure rates could result
in future costs in excess of such estimates, or alternatively,
improved quality and reliability in the Company’s products
could result in actual expenses that are below those currently
estimated. Leases
The Company determines
the initial classification and measurement of its right-of-use
Lease expense for
operating leases is recognized on a straight-line basis over the
reasonably assured lease term based on the total lease payments and
is included in operating expenses in the condensed consolidated
statements of operations and comprehensive loss.
For all leases, rent
payments that are based on a fixed index or rate at the lease
commencement date are included in the measurement of lease assets
and lease liabilities at the lease commencement date.
The Company has elected
the practical expedient to not separate lease and non-lease non-lease
The Company also acts as
a lessor to provide equipment financing through sales-type lease
arrangements with certain qualified customers. Revenue from
sales-type leases is presented on a gross basis when the company
enters into a lease to realize value from a product that it would
otherwise sell in its ordinary course of business. Amounts due and
receivable under these arrangements are recorded at the outset of
the arrangement as a contract asset in prepaid expenses and other
current assets until such time that invoices are issued in
accordance with the terms of the lease, at which point they are
recorded as trade accounts receivable in the condensed consolidated
balance sheets. Net loss attributable to common
stockholders per share
Net loss attributable to
common stockholders per share is computed by dividing the
weighted-average number of common shares outstanding for the
period. Diluted net loss per share reflects the potential dilution
that would occur if securities or other contracts to issue common
stock were exercised or converted into common stock; however,
potential common equivalent shares are excluded if their effect is
anti-dilutive. In computing diluted net loss per share, the Company
utilizes the treasury stock method.
The Company applies the
two-class two-class two-class two-class Recently issued and adopted
accounting standards
In June 2016, the
Financial Accounting Standards Board (“FASB”) issued
ASU No. 2016-13, Credit losses (Topic 326) off-balance Recently issued but not yet
adopted accounting standards
In December 2019, the
FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income
Taxes 2019-12 2019-12 | (2) Summary of significant
accounting policies Principles of
consolidation
The consolidated
financial statements include the accounts of the Company and its
wholly-owned subsidiary. All intercompany accounts and transactions
have been eliminated. Use of
estimates
The preparation of
financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Significant items subject to such estimates and assumptions include
the estimate of the standalone selling price of performance
obligations and allocation of contract price in multiple-element
revenue arrangements, total expected costs associated with
development agreements, estimated transaction price, including
variable consideration, of the Company’s revenue contracts,
accruals for product warranties, the fair value of equity awards
and related share-based compensation, the collectability of
accounts receivable, valuation of inventory and the realizability
of deferred income taxes. Actual results could significantly differ
from those estimates. Cash and cash equivalents and
restricted cash
The Company considers all
highly liquid investments with a maturity of three months or less
when purchased to be cash equivalents.
The Company records cash
and cash equivalents as restricted when it is unable to freely use
such cash and cash equivalents for general operating purposes. As
of December 31, 2018 and 2019, restricted cash consists of
cash on deposit in a financial institution that is restricted from
use for the Company’s corporate credit card
program.
The following table
provides a reconciliation of cash and cash equivalents and
restricted cash on the consolidated balance sheets to the totals
presented on the consolidated statements of cash flows (in
thousands):
December 31,
2018
2019
Cash and cash equivalents $ 99,617 $ 81,033
Restricted cash 270 270
Total cash and cash equivalents and
restricted cash as presented on the consolidated statements of cash
flows $ 99,887 $ 81,303
Trade accounts
receivable
Trade accounts receivable
are recorded at the invoiced amount and do not bear interest. The
Company maintains an allowance for doubtful accounts for estimated
losses inherent in its accounts receivable portfolio. In
establishing the required allowance, management considers
historical losses adjusted to take into account current market
conditions and the Company’s customers’ respective
financial conditions, the amounts of receivables in dispute and the
current receivables aging and current payment patterns. To the
extent identified, account balances are charged off against the
allowance after all means of collection have been exhausted and the
potential for recovery is considered remote. To date its customers
have primarily been large biopharmaceutical and related companies
and therefore we have not had any material write-offs or allowance
for doubtful accounts in the years ended December 31, 2018 and
2019. Inventory
Inventories are stated at
the lower of cost and net realizable value. Cost is computed using
standard cost, which approximates actual cost on a first-in, first-out Revenue
recognition
The Company early adopted
Accounting Standards Update (“ASU”) No. 2014-09, Revenue from
Contracts with Customers (Topic 606)
The Company derives
revenue from two primary sources, Product revenues, which are
comprised primarily of direct platform sales revenues and
consumables revenues, and Service revenues, which are comprised of
revenue from joint development agreements, service and warranty,
platform support and feasibility studies on the Company’s
platforms. Revenues are recognized net of applicable taxes imposed
on the related transaction.
The Company recognizes
revenue when the Company satisfies the performance obligations
under the terms of a contract and control of its products and
services is transferred to its customers in an amount that reflects
the consideration the Company expects to receive from its customers
in exchange for those products and services. This process involves
identifying the contract with a customer, determining the
performance obligations in the contract, determining the contract
price, allocating the contract price to the distinct performance
obligations in the contract based on standalone selling price, and
recognizing revenue when the performance obligations have been
satisfied. A performance obligation is considered distinct from
other obligations in a contract when it provides a benefit to the
customer either on its own or together with other resources that
are readily available to the customer and is separately identified
in the contract. The Company considers a performance obligation
satisfied once it has transferred control of a good or service to
the customer, meaning the customer has the ability to use and
obtain the benefit of the good or service.
The Company’s
agreements with customers often include multiple performance
obligations, which can sometimes be included in separate contracts
entered into within a reasonably short period of time. The Company
considers an entire customer arrangement to determine if separate
contracts should be considered combined for the purposes of revenue
recognition.
In order to determine the
stand-alone selling price, the Company conducts a periodic analysis
to determine whether various goods or services have an observable
stand-alone selling price as well as to identify significant
changes to current stand-alone selling prices. If the Company does
not have an observable stand-alone selling price for a particular
good or service, then the stand-alone selling price for that
particular good or service is estimated using an approach that
maximizes the use of observable inputs. The Company’s process
for determining stand-alone selling price requires judgment and
considers multiple factors that are reasonably available and
maximizes the use of observable inputs that may vary over time
depending upon the unique facts and circumstances related to each
performance obligation. The Company believes that this method
results in an estimate that represents the price the Company would
charge for the product offerings if they were sold
separately.
For most of its
performance obligations, the Company has established stand-alone
selling price as a range rather than a single value, such range
being plus or minus 15% of the median of observables prices. If the
contractually stated prices of all the performance obligations in a
contract fall within their respective stand-alone selling price
ranges, the Company will allocate the transaction price at the
contractually stated amounts. In situations where the contractually
stated price for one or more performance obligations in a contract
fall(s) outside of their respective stand-alone selling price
range, the Company will use the mid-point
Taxes, such as sales,
value-add
The following describes
the nature of the Company’s primary types of revenue and the
revenue recognition policies and significant payment terms as they
pertain to the types of transactions the Company enters into with
its customers. Product revenues
Product revenues are
comprised of two major revenue streams, direct platform sales and
consumables. Direct platform sales revenues are comprised of
advanced automation systems (including workflow licenses) as well
as Culture Stations. Consumables revenues are comprised of
OptoSelect Chips required to run the system as well as reagent
kits. The Company’s standard arrangement with its customers
is generally a purchase order or an executed contract. Revenue is
recognized upon transfer of control of the products to the
customer, which, for the Company, generally occurs at a point in
time upon the completion of installation and training for advanced
automation systems or when the product is shipped or delivered for
consumables and Culture Stations. Payment terms are generally
thirty to ninety days from the date of invoicing.
On a limited basis, the
Company also enters into fixed-term sales-type lease arrangements
with certain qualified customers. Revenue from sales-type lease
arrangements is generally recognized in a manner consistent with
platform equipment, assuming all other revenue recognition criteria
have been met. Service revenues
Service revenues
primarily consist of joint development agreements, service and
warranty, platform support and feasibility studies on the
Company’s advanced automation systems and workflows. The
Company’s services are provided primarily on a fixed fee
basis; from time to time these fixed fee contracts may be invoiced
at the outset of the arrangements. The Company recognizes revenue
from the sale of an extended warranty, enhanced service warranty
arrangements and feasibility studies over the respective period,
while revenue on platform support is recognized as the services are
performed. Service contracts are typically short-term in nature.
Payment terms are generally thirty to ninety days from the date of
invoicing.
Joint development
agreements are agreements whereby the Company provides services for
the development of customized advanced automation systems and
workflows to meet a specific customer’s needs. Such contracts
generally include defined milestones associated with these
development activities over extended periods of time, some in
excess of twenty-four months. There are formal customer acceptance
clauses as each milestone is completed, and an approval to proceed
with the next milestone is generally required. The Company
recognizes revenue over time, using an input measure of progress
based on costs incurred to date relative to total expected costs.
Payment terms are generally thirty to ninety days from the
achievement of each milestone.
The Company places a
constraint on a variable consideration estimate that focuses on
possible future downward revenue adjustments (i.e. revenue
reversals) if there is uncertainty that could prevent a faithful
depiction of the consideration that the Company expects to be
entitled to. The constraint estimate is reassessed at each
reporting date until the uncertainty is resolved. Contract assets and contract
liabilities
Contract assets include
amounts where revenue recognized exceeds the amount invoiced to the
customer and the right to payment is not solely subject to the
passage of time. The Company’s contract asset balances of
$0.6 million and $5.2 million as of December 31,
2018 and 2019, respectively, are primarily from its development and
feasibility study agreements. The Company does not have impairment
losses associated with contracts with customers for the years ended
December 31, 2018 and 2019.
Contract liabilities
consist of fees invoiced or paid by the Company’s customers
for which the associated services have not been performed and
revenues have not been recognized based on the Company’s
revenue recognition criteria described above. Such amounts are
reported as deferred revenue on the consolidated balance sheets.
Deferred revenue that is expected to be recognized during the
following twelve months is recorded as a current liability and the
remaining portion is recorded as non-current.
Contract assets and
contract liabilities are reported in a net position on an
individual contract basis at the end of each reporting period.
Contract assets are classified as current or long-term on the
consolidated balance sheet based on the timing of when the Company
expects to complete the related performance obligations and invoice
the customers. Contract liabilities are classified as current or
long-term on the consolidated balance sheet based on the timing
when the revenue recognition associated to the related customer
payments and invoicing is expected to occur.
Costs to obtain or fulfill a
contract
Origination costs relate
primarily to the payment of incentive bonuses that are directly
related to sales transactions. Fulfillment costs generally include
the direct cost of services such as platform support and
feasibility studies.
Origination and
fulfillment costs that are internal to the Company are generally
expensed when incurred because most costs are incurred concurrently
with the delivery of the related goods and services, which are
predominantly recognized at a point in time or short-term in
nature. The origination costs that are related to long-term
development agreements are capitalized and amortized over the
relevant service period.
The origination costs
that are related to long-term development agreements are not
material as of December 31, 2018 and 2019. Property and
equipment
Property and equipment
are stated at cost less accumulated depreciation. Depreciation on
plant and equipment is calculated on the straight-line method over
the estimated useful lives of the assets. Expenditures for major
additions and improvements to property and equipment are
capitalized and maintenance and repairs are charged to expense as
incurred. Assets not yet placed in use are not
depreciated.
The estimated useful
lives of Company’s property and equipment are as
follows:
Equipment, tooling and
molds
5—7 years
Computer equipment and
software
3—7 years
Furniture, fixtures and
other
3—7 years
Leasehold Improvements
Shorter of lease term or estimated
useful life
Other assets
Other current assets and
other assets consist primarily of prepaid rent, prepaid insurance
and advance payments made to certain vendors for future delivery of
goods or services and software implementation costs for cloud-based
hosting arrangements that are a service contract.
The Company expenses all
costs (internal and external) that were incurred in the planning
and post-implementation operation stages of such implementations
and capitalizes costs related to the application development stage
of such projects. The capitalized costs are amortized on a
straight-line basis over the estimated useful life of five years
starting on the date that the projects are placed into production
and are ready for their intended use. As of December 31, 2018
approximately $27,000 and $0.2 million of the capitalized
costs were classified in prepaid expenses and other current assets
and other assets, respectively. As of December 31, 2019,
approximately $0.2 million and $0.9 million of the
capitalized costs were classified in prepaid expenses and other
current assets and other assets, respectively. Deferred offering
costs
Deferred offering costs,
which consist of direct incremental legal, consulting, banking and
accounting fees relating to equity offerings, are capitalized and
will be offset against proceeds upon the consummation of the
offerings within stockholders’ equity. In the event an
anticipated offering is terminated, deferred offering costs will be
expensed. As of December 31, 2018 and 2019, there were no
capitalized deferred offering costs in the consolidated balance
sheets.
Research and development
costs
Research and development
costs primarily consist of salaries, benefits, incentive
compensation, stock-based compensation, laboratory supplies,
materials expenses and allocated facilities costs for employees and
contractors engaged in development arrangements, research,
regulatory affairs, and product development. The Company expenses
all research and development costs in the periods in which they are
incurred. Advertising
expenses
The cost of advertising,
marketing and media is expensed as incurred. For the years ended
December 31, 2018 and 2019, advertising costs totaled
$0.5 million and $1.0 million, respectively. Income taxes
The Company accounts for
income taxes under an asset-and-liability
The Company determines
whether a tax position is more likely than not to be sustained upon
examination, including resolution of any related appeals or
litigation processes, based on the technical merits of the
position. The Company uses a two-step
Currently, the Company
has provided a valuation reserve equal to 100% of its deferred tax
assets as the Company is not in a position to determine if its
operating plans will be successful and result in taxable income to
absorb any loss carryforwards. Stock-based
compensation
The Company maintains an
incentive compensation plan under which incentive stock options and
nonqualified stock options are granted primarily to employees and
non-employee
Stock-based compensation
cost is measured at the grant date, based on the fair value of the
award, and is recognized as expense over the requisite service
period. The fair value of stock-based awards to employees is
estimated using the Black-Scholes option pricing model. The Company
records forfeitures as they occur.
Stock-based compensation
expense for nonemployee stock options is measured at the grant date
based on fair market value using the Black-Scholes option pricing
model and is recorded as the options vest. Prior to January 1,
2019, nonemployee stock options subject to vesting were revalued
periodically over the requisite service period, which was generally
the same as the vesting term of the award. From January 1,
2019, the grant date fair market value of nonemployee stock options
is recognized in the consolidated statements of operations on a
straight-line basis over the requisite service period and
forfeitures are recognized as they occur. Long-lived
assets
Long-lived assets, such
as property and equipment, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability is
measured by comparison of the carrying amount to the future
undiscounted net cash flows which the assets are expected to
generate. If the carrying amount of the long-lived asset or asset
group is not recoverable on an undiscounted cash flow basis, an
impairment is recognized to the extent that the carrying amount
exceeds its fair value. Fair value is determined through various
valuation techniques including discounted cash flow models, quoted
market values and third-party independent appraisals, as considered
necessary.
During the years ended
December 31, 2018 and 2019, the Company recorded asset
impairments totaling $0.7 million and $0.8 million,
respectively, on certain equipment (see Note 7 of these
consolidated financial statements). Fair value
measurements
The Company utilizes
valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs to the extent possible. The
Company determines fair value based on assumptions that market
participants would use in pricing an asset or liability in the
principal or most advantageous market. When considering market
participant assumptions in fair value measurements, the following
fair value hierarchy distinguishes between observable and
unobservable inputs, which are categorized in one of the following
levels (see Note 6 to these consolidated financial
statements):
•
Level 1 Inputs: Unadjusted quoted prices in active markets
accessible to the reporting entity at the measurement date for
identical assets or liabilities.
•
Level 2 Inputs: Other than quoted prices included in
Level 1 inputs that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of
the asset or liability.
•
Level 3 Inputs: Unobservable inputs for the asset or
liability used to measure fair value to the extent that observable
inputs are not available, thereby allowing for situations in which
there is little, if any, market activity for the asset or liability
at measurement date.
The categorization of a
financial instrument within the valuation hierarchy is based on the
lowest level of input that is significant to the fair value
measurement.
The Company recognizes
transfers between levels of the fair value hierarchy on the date of
the event or change in circumstances that caused the
transfer. Product
warranties
The Company provides a
one-year Foreign currency translation
and transactions
The Company has
determined that the functional and reporting currency for its
operations in the United Kingdom is the U.S. Dollar. Gains or
losses arising from currency exchange rate fluctuations on
transactions denominated in a currency other than the local
functional currency are included in other income (expense),
net. Leases
Prior to 2019, the
Company recognized rent expense associated with its operating lease
agreements on a straight-line basis over the terms of the leases.
Incentives granted under its facility leases, including rent
holidays, were capitalized and recognized as adjustments to rent
expense on a straight-line basis over the terms of the
leases.
Effective January 1,
2019, the Company early adopted ASU 2016-02, Leases (Topic 842)
The Company determines
the initial classification and measurement of its right-of-use
Lease expense for
operating leases is recognized on a straight-line basis over the
reasonably assured lease term based on the total lease payments and
is included in operating expenses in the consolidated statements of
operations and comprehensive income.
For all leases, rent
payments that are based on a fixed index or rate at the lease
commencement date are included in the measurement of lease assets
and lease liabilities at the lease commencement date.
The Company has elected
the practical expedient to not separate lease and non-lease non-lease
The Company also act as a
lessor to provide equipment financing through sales-type lease
arrangements with certain qualified customers. Revenue from
sales-type leases is presented on a gross basis when the company
enters into a lease to realize value from a product that it would
otherwise sell in its ordinary course of business. Amounts due and
receivable under these arrangements are recorded at the outset of
the arrangement as a contract asset in prepaid expenses and other
current assets until such time that invoices are issued in
accordance with the terms of the lease, at which point they are
recorded as trade accounts receivable in the consolidated balance
sheets. Net loss attributable to common
stockholders per share
Net loss attributable to
common stockholders per share is computed by dividing the
weighted-average number of common shares outstanding for the
period. Diluted net loss per share reflects the potential dilution
that would occur if securities or other contracts to issue common
stock were exercised or converted into common stock; however,
potential common equivalent shares are excluded if their effect is
anti-dilutive. In computing diluted net loss per share, the Company
utilizes the treasury stock method.
The Company applies the
two-class i two-class two-class two-class Recently issued and adopted
accounting standards
In May 2014, the
Financial Accounting Standards Board (“FASB”) issued
ASC 606, which supersedes the revenue recognition requirements in
ASC 605, Revenue Recognition (Topic 605) 340-40, 340-40
In February 2016, the
FASB issued Topic 842, which requires a lessee to recognize on the
balance sheets a right-of-use right-of-use 2016-02
Effective January 1,
2019, the Company early adopted ASC Topic 842 using the optional
transition method and applied the standard only to leases that
existed at that date. Under the optional transition method, the
Company does not need to restate the comparative periods in
transition and will continue to present financial information and
disclosures for periods before January 1, 2019 in accordance
with ASC Topic 840. The Company elected the package of practical
expedients allowed under ASC Topic 842, which permits the Company
to carry forward its historical lease classification, without
reassessing the Company’s prior conclusions about lease
identification, lease classification and initial direct cost.
Further, the Company elected the short-term lease exception as a
practical expedient.
As a result of the
adoption of the new lease accounting guidance, on January 1,
2019, the Company recognized operating lease right-of-use right-of-use
In June 2018, the FASB
issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to
Nonemployee Share-Based Payment Accounting
In July 2017, the FASB
issued ASU 2017-11, Earnings Per Share (ASC Topic 260); Distinguishing Liabilities
from Equity (ASC Topic 480); Derivatives and Hedging (ASC Topic
815): (Part I) Accounting for Certain Financial Instruments with
Down Round Features, (Part II) Replacement of the Indefinite
Deferral for Mandatorily Redeemable Financial Instruments of
Certain Nonpublic Entities and Certain Mandatorily Redeemable
Noncontrolling Interests with a Scope Exception (ASU 2017-11)
ASU 2017-11 2017-11 2017-11
As of
Adjustments
As of
Liabilities and
Stockholders’ Equity:
Accrued expenses and other current
liabilities $ 2,480 $ (319 ) $ 2,161
Total current liabilities 10,433 (319 ) 10,114
Additional paid-in 2,439 270 2,709
Accumulated deficit (108,710 ) 49 (108,661 )
Total liabilities and
stockholders’ equity 23,701 319 24,020
With the exception of the
new standards discussed above, there have been no other new
accounting pronouncements that have significance, or potential
significance, to the Company’s financial position, results of
operations and cash flows.
In June 2016, the FASB
issued ASU No. 2016-13, Credit losses
(Topic 326) off-balance Recently issued but not yet
adopted accounting standards
In December 2019, the
FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income
Taxes 2019-12 |
