Revenue Recognition Revenue consists primarily of the sale of the Viveve System, single-use treatment tips and ancillary consumables. The Company applies the following five steps: ( 1 ) identify the contract with a customer, ( 2 ) identify the performance obligations in the contract, ( 3 ) determine the transaction price, ( 4 ) allocate the transaction price to the performance obligations in the contract, and ( 5 ) recognize revenue when a performance obligation is satisfied. The Company considers customer purchase orders to be the contracts with a customer. Revenues, net of expected discounts, are recognized when the performance obligations of the contract with the customer are satisfied and when control of the promised goods are transferred to the customer, typically when products, which have been determined to be the only distinct performance obligations, are shipped to the customer. Expected costs of assurance warranties and claims are recognized as expense. Revenue is recognized net of any sales taxes from the sale of the products. Sales of our products are subject to regulatory requirements that vary from country to country. The Company has regulatory clearance for differing indications, or can sell its products without a clearance, in many countries throughout the world, including countries within the following regions: North America, Latin America, Europe, the Middle East and Asia Pacific. In North America, we market and sell primarily through a direct sales force. Outside of North America, we market and sell primarily through distribution partners. The Company does not provide its customers with a right of return. Customer Advance Payments From time to time, customers will pay for a portion of the products ordered in advance. Upon receipt of such payments, the Company records the customer advance payment as a component of accrued liabilities. The Company will remove the customer advance payment from accrued liabilities when revenue is recognized upon shipment of the products. Contract Assets and Liabilities The Company continually evaluates whether the revenue generating activities and advanced payment arrangements with customers result in the recognition of contract assets or liabilities. No such assets existed as of December 31, 2018 or 2017. The Company had customer contract liabilities in the amount of $686,000, primarily related to marketing programs that performance had not yet been delivered to its customers as of December 31,2018. No such contract liabilities existed as of December 31, 2017. Separately, accounts receivable, net represents receivables from contracts with customers. Significant Financing Component The Company applies the practical expedient to not make any adjustment for a significant financing component if, at contract inception, the Company does not expect the period between customer payment and transfer of control of the promised goods or services to the customer to exceed one year. During the year ended December 31, 2018, the Company did not have any contracts for the sale of its products with its customers with a significant financing component. Contract Costs The Company has elected the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less. During the year ended December 31, 2018, the Company expensed the incremental costs of obtaining the contract as an expense when incurred as the amortization period was one year or less. Shipping and Handling Shipping costs billed to customers are recorded as revenue. Shipping and handling expense related to costs incurred to deliver product are recognized within cost of goods sold. The Company accounts for shipping and handling activities that occur after control has transferred as a fulfillment cost as opposed to a separate performance obligation, and the costs of shipping and handling are recognized concurrently with the related revenue. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statement of operations for the year ended December 31, 2018 and consolidated balance sheet as of December 31, 2018 was as follows (in thousands): For the year ended December 31, 2018 As Reported Balances Without Adoption of ASC 606 Effect of Change Higher/(Lower) Consolidated Statement of Operations Revenue $ 18,517 $ 17,780 $ 737 (1) Cost of revenue $ 11,197 $ 11,209 $ (12 ) (2) Gross profit $ 7,320 $ 6,571 $ 749 (3) Loss from operations $ (44,965 ) $ (45,714 ) $ 749 (3) Comprehensive and net loss $ (49,981 ) $ (50,730 ) $ 749 (3) Net loss per share: Basic and diluted $ (1.61 ) $ (1.63 ) $ 0.02 Weighted average shares 31,059,483 31,059,483 ( 1 ) Change relates to revenue from extended assurance warranties for which no deferral is required on the adoption of ASC 606. ( 2 ) Change relates to the future costs associated with extended assurance warranties required to be recorded on the adoption of ASC 606. ( 3 ) Change relates to the net gain adjustment on the adoption of ASC 606. As of December 31, 2018 As Reported Balances Without Adoption of ASC 606 Effect of Change Higher/(Lower) Consolidated Balance Sheets Liabilities Accrued liabilities $ 6,766 $ 7,014 $ (248 ) (1) Other noncurrent liabilities $ 634 $ 1,313 $ (679 ) (2) Equity Accumulated deficit $ (155,385 ) $ (156,311 ) $ 926 (3) ( 1 ) Change relates to the current portion of deferred revenue in connection with the extended warranties not required to be recorded under ASC 606, partially offset by future costs associated with extended warranties required to be recorded on the adoption of ASC 606. ( 2 ) Change relates to noncurrent portion of deferred revenue in connection with the extended warranties not required to be recorded under ASC 606. ( 3 ) Change relates to $177,000 cumulative effect adjustment on the adoption of ASC 606 and the net gain adjustment of $749,000 for the year ended December 31, 2018. Revenue by Geographic Area: Management has determined that the sales by geography is a key indicator for understanding the Companys financials because of the different sales and business models that are required in the various regions of the world (including regulatory, selling channels, pricing, customers and marketing efforts). Year Ended December 31, 2018 2017 United States $ 13,606 11,004 Asia Pacific 2,891 3,178 Europe and Middle East 1,369 667 Canada 563 79 Latin America 51 360 Other 37 - Total $ 18,517 $ 15,288 The Company determines geographic location of its revenue based upon the destination of the shipments of its products.