Neuraxis, INC Revenue Disclosure

Revenue Recognition

 

In accordance with FASB’s ASC 606, Revenue from Contracts with Customers, (“ASC 606”), the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, it performs the following five steps:

 

	(i)	identify the contract(s) with a customer;
	(ii)	identify the performance obligations in the contract;
	(iii)	determine the transaction price;
	(iv)	allocate the transaction price to the performance obligations in the contract; and
	(v)	recognize revenue when (or as) the entity satisfies a performance obligation.

 

The Company applies the five-step model to contracts when it determines that it is probable it will collect substantially all the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price, after consideration of variability and constraints, if any, that is allocated to the respective performance obligation when the performance obligation is satisfied.

 

The Company estimates credit losses on accounts receivable by utilizing an aging schedule.

 

The Company offers a Patient Assistance Program for patients without insurance coverage for IB-Stim. This program offers potential self-pay discounts for IB-Stim devices, based upon household income and size.

 

Also, the Company offers providers an opt-in program to address adequate insurance claim payments on IB-Stim devices. This program may extend a rebate or invoice credit where the insurance payment and patient responsibility (i.e., deductible, co-payment, and/or co-insurance amounts required by the Payer) are less than the acquisition cost of the IB-Stim device. The Company recognizes revenue at such a time that collection of the amount due is assured.

 

The following table disaggregates the Company’s revenue based on the customer’s location by state for the years ended December 31:

 Schedule of Disaggregation of Revenue 

		2024				2023
California		$	778,209			$	601,235
Ohio			431,328				407,632
Illinois			246,217				117,963
Wisconsin			157,786				292,601
Massachusetts			154,407				127,300
Florida			149,985				186,840
All other states			767,993				726,478
		$	2,685,925			$	2,460,049

 

Certain economic factors affect the nature, amount, timing, and uncertainty of the Company’s revenue and cash flows. All of the Company’s products are sold to healthcare customers including hospitals and clinics. Sales to healthcare customers lack seasonality and have a mild correlation with economic cycles. All of the Company’s sales are to customers located within the United States. Sales contracts consist of purchase orders that are short-term (i.e., less than or equal to one year).

 

 

Neuraxis, Inc.

Notes to Financial Statements

 

The Company typically satisfies its performance obligations for goods at a point in time as they are received at the customer’s destination (rather than over time). Goods are shipped by common carrier to customers under FOB destination terms. As such, ownership of goods in transit is transferred to the customer upon receipt as the Company bears the associated risks (e.g., loss, damage, delay). Management typically relies on shipping information from common carriers to evaluate when the customer has obtained control of the goods. Shipping and handling costs are recorded as Cost of Goods Sold in the Statements of Operations.

 

The Company’s contracts with customers typically do not involve variable consideration. The information that the Company uses to determine the transaction price for a contract is similar to the information that the Company’s management uses in establishing the prices of goods to be sold.

 

Orders may not be cancelled after shipment. Customers may return devices within 10 days of delivery if the goods are found to be defective, nonconforming, or otherwise do not meet the stated technical specifications. At the option of the customer, the Company shall either:

 

	●	Refund the price paid for any defective or nonconforming products.
	●	Supply and deliver to the customer replacement conforming products.
	●	Reimburse the customer for the cost of repairing any defective or nonconforming products.

 

At the time revenue is recognized, the Company estimates expected returns and excludes those amounts from revenue. The Company also maintains appropriate accounts to reflect the effects of expected returns on the Company’s financial position and periodically adjusts those accounts to reflect its actual return experience. Estimated returns totaled $5,000 and $0 as of December 31, 2024 and 2023, respectively.

 

Payment for goods sold by the Company is typically due after an invoice is sent to the customer, within 30 days. The Company does not offer discounts if the customer pays some or all of an invoiced amount prior to the due date. None of the Company’s contracts have a significant financing component.

 

Medical devices that the Company contracts to sell and transfer to customers are manufactured by one specific third-party manufacturer located within the state of Indiana. In no case does the Company act as an agent (i.e., the Company does not provide a service of arranging for another party to transfer goods to the customer).

 

 

Neuraxis, Inc.

Notes to Financial Statements