Quarterly report pursuant to Section 13 or 15(d)

New Accounting Standards Implemented

v3.10.0.1
New Accounting Standards Implemented
 6 Months Ended
Jun. 30, 2018
Accounting Changes and Error Corrections [Abstract]  
New Accounting Standards Implemented
(2)
New Accounting Standards Implemented
 
Revenue Recognition
Effective January 1, 2018, we adopted ASC 606 using the modified retrospective transition method. The cumulative effect of applying the standard was an increase of $3.7 million to stockholders’ equity as of January 1, 2018. Our statement of operations for the quarterly period ended June 30, 2018 and our balance sheet as of June 30, 2018 are presented under ASC 606, while our statement of operations for the second quarter and six months ended June 30, 2017 and our balance sheet as of December 31, 2017 are presented under ASC 605. See below for disclosure of the impact of the adoption of ASC 606 on our statement of operations and balance sheet for the quarterly period ended June 30, 2018, and the effect of changes made to our consolidated balance sheet as of January 1, 2018.
 
The table below presents the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet due to the adoption of ASC 606.
 
Balance Sheet
(in thousands)
 
December 31, 2017,
As Reported Under
ASC 605
 
 
Adjustments Due
to ASC 606
 
 
January 1, 2018
As Adjusted
Under ASC 606
 
 
 
  
 
 
  
 
 
  
 
Liabilities
 
 
  
 
 
 
  
 
 
 
  
 
Current liabilities
 
 
  
 
 
 
  
 
 
 
  
 
Current portion of deferred revenue
 
 $ 3,214
 
 
 $ (602 )
 
 $ 2,612
 
Total current liabilities
 
 
 3,214
 
 
 
 (602 )
 
 
 2,612
 
Deferred revenue, net of current portion
 
 
 3,061
 
 
 
 (3,061 )
 
 
 -
 
Total liabilities
 
 
 8,668
 
 
 
 (3,663 )
 
 
 5,005
 
Stockholders’ Equity
 
 
  
 
 
 
  
 
 
 
  
 
Accumulated deficit
 
 
 (359,792 )
 
 
 3,663
 
 
 
 (356,129 )
Total equity
 
 $ 170,098
 
 
 $ -
 
 
 $ 170,098
 
 
The table below presents the impact of the adoption of ASC 606 on our statement of operations.
 
 
 
Second Quarter Ended June 30, 2018
 
STATEMENT OF OPERATIONS
(in thousands except per share amounts)
 
Under
ASC 605
 
 
Effect of
ASC 606
 
 
As Reported
Under ASC 606
 
Revenues
 
 
  
 
 
 
  
 
 
 
  
 
License revenues
 
 $ 150
 
 
 $ (150 )
 
 $ -
 
Total revenues
 
 
 969
 
 
 
 (150 )
 
 
 819
 
 
 
 
  
 
 
 
  
 
 
 
  
 
Loss from operations
 
 $ (11,864 )
 
 $ (150 )
 
 $ (12,014 )
Net loss
 
 $ (11,550 )
 
 $ (150 )
 
 $ (11,700 )
 
 
 
  
 
 
 
  
 
 
 
  
 
Basic and diluted loss per common share
 
 $ (0.25 )
 
 $ 0.00
 
 
 $ (0.25 )
 
 
 
Six Months Ended June 30, 2018
 
STATEMENT OF OPERATIONS
(in thousands except per share amounts)
 
Under
ASC 605
 
 
Effect of
ASC 606
 
 
As Reported
Under ASC 606
 
Revenues
 
 
  
 
 
 
  
 
 
 
  
 
License revenues
 
 $ 301
 
 
 $ (301 )
 
 $ -
 
Total revenues
 
 
 3,718
 
 
 
 (301 )
 
 
 3,417
 
 
 
 
  
 
 
 
  
 
 
 
  
 
Loss from operations
 
 $ (20,329 )
 
 $ (301 )
 
 $ (20,630 )
Net loss
 
 $ (19,862 )
 
 $ (301 )
 
 $ (20,163 )
 
 
 
  
 
 
 
  
 
 
 
  
 
Basic and diluted loss per common share
 
 $ (0.42 )
 
 $ (0.01 )
 
 $ (0.43 )
 
The table below presents the impact of the adoption of ASC 606 on our balance sheet.
 
 
 
June 30, 2018
 
Balance Sheet
(in thousands)
 
Under
ASC 605
 
 
Effect of
ASC 606
 
 
As Reported
Under ASC 606
 
Liabilities and Stockholders’ Equity
 
 
  
 
 
 
  
 
 
 
  
 
Current liabilities
 
 
  
 
 
 
  
 
 
 
  
 
Current portion of deferred revenue
 
 $ 602
 
 
 $ (602 )
 
 $ -
 
Total current liabilities
 
 
 6,385
 
 
 
 (602 )
 
 
 5,783
 
Deferred revenue, net of current portion
 
 
 2,760
 
 
 
 (2,760 )
 
 
 -
 
Total liabilities
 
 
 9,145
 
 
 
 (3,362 )
 
 
 5,783
 
 
 
 
  
 
 
 
  
 
 
 
  
 
Stockholders’ Equity
 
 
  
 
 
 
  
 
 
 
  
 
Accumulated deficit
 
 
 (379,254 )
 
 
 3,662
 
 
 
 (375,829 )
Total stockholders’ equity
 
 $ 164,256
 
 
 $ (3,662 )
 
 $ 160,914
 
 
We received upfront cash payments for licenses of our technology in years 2008-2014. The revenue was recognized straight-line over the life of the patent. Our obligation was performed at the time the license was granted. Following the revenue recognition policies in accordance with ASC 606, we decreased the accumulated deficit by $3,663,000 as of January 1, 2018 and decreased deferred revenue by the same amount.
 
Royalty revenues will continue to be recognized in the period of sales. Royalties recognized in the second quarter of 2018 are $17,000 and for the first six months of 2018 are $67,000.
 
On October 16, 2017, we announced a collaborative agreement between nine Sanfilippo foundations to provide up to approximately $13.85 million of grants to Abeona in installments for the advancement of the Company’s clinical stage gene therapies for MPS IIIA and MPS IIIB, subject to the achievement of certain milestones. As of June 30, 2018, we received $3.4 million in grants ($2.6 million in the fourth quarter 2017 and $0.8 million in the six months of 2018) and recorded them first as deferred revenue. We recorded $2.6 million of the $3.4 million in grants as revenue in the first quarter of 2018, and we recorded $0.8 million in grants as revenue in the second quarter of 2018.
 
We recorded revenue for Foundation Grants of $802,000 in the second quarter of 2018 and no revenues for the same period of 2017, an increase of $802,000. We recorded revenue for Foundation Grants of $3,350,000 in the first six months of 2018 and no revenues for the same period of 2017, an increase of $3,350,000. We record revenue to match expenses for the advancement of the Company’s clinical stage gene therapies for MPS IIIA and MPS IIIB.
 
Restricted cash disclosure
In November 2016, the FASB issued ASU 2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash
, requiring restricted cash and restricted cash equivalents to be included with cash and cash equivalents on the statement of cash flows when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. We adopted this standard during the first quarter of 2018. Restricted cash is now included as a component of cash, cash equivalents, and restricted cash on our unaudited condensed consolidated statements of cash flows. Restricted cash is recorded within other non-current assets in the accompanying unaudited condensed consolidated balance sheets. The inclusion of restricted cash increased beginning balances of the unaudited condensed consolidated statements of cash flows by $560,000 and $0, respectively, and the ending balances by $560,000 and $0, respectively, for the six months ended June 30, 2018 and 2017.