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United States securities and exchange commission logo
May 25, 2022
Sandra Gardiner
Chief Financial Officer, Executive Vice President and Treasurer
Pulse Biosciences, Inc.
3957 Point Eden Way
Hayward, California 94545
Re: Pulse Biosciences,
Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2021
Filed March 31,
2022
File No. 001-37744
Dear Ms. Gardiner:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2021
Notes to the Consolidated Financial Statements
9. Revenue
Performance Obligations, page 86
1. You state that the
Cycle Units (CUs) are credits that authorize the customer to perform a
procedure and that each
procedure requires a specific number of CUs. Once the CUs are
reduced to zero, the
customer is required to purchase additional CUs to perform additional
procedures. Please
address the following with regard to your revenue recognition policy
for your Cycle Units:
Tell us, and
clarify in future filings, if the CUs are bundled together into a single
performance
obligation when you record the initial sale of the CellFX System
pursuant to ASC
606-10-25-22. If such is the case, please tell us why recognition at a
point in time for
the sale is appropriate given the CUs are utilized over time and the
System cannot be
used without the CUs. Refer to ASC 606-10-25-27. In your
Sandra Gardiner
FirstName LastNameSandra Gardiner
Pulse Biosciences, Inc.
Comapany
May NamePulse Biosciences, Inc.
25, 2022
May 25,
Page 2 2022 Page 2
FirstName LastName
analysis, please distinguish your accounting treatment between
sales of the CellFX
Systems in and outside the Controlled Launch Program.
Tell us your basis for concluding the CUs represent a "good"
vs. a "service" (e.g. not
accompanied by subsequent Pulse Bio consultation regarding CUs
necessary for a
novel dermatological procedure). Tell us the nature/form of the
CUs, how they are
delivered to the customer and how unused CUs are stored.
For sales of additional CUs outside the initial sale of the
CellFX System, tell us, and
clarify in future filings, why immediate revenue recognition at a
point in time is
appropriate upon delivery to the CellFX CloudConnect given the
performance
obligation does not appear to have been met until the customer
redeems the CU upon
performing a procedure.
Transaction Price, page 86
2. Disclose how you determine the transaction price. Refer to ASC
606-10-50-20.
Controlled Launch Agreements, page 87
3. You state on page 85 that as patient procedures and surveys are
completed under the
Controlled Launch, you accrue the value of credits earned by the
participants in accrued
expenses with a corresponding charge to sales and marketing expense.
You state on page
55 that the majority of your revenue for the year-ended December 31,
2021 was
recognized on a non-cash basis when Controlled Launch Program
participants applied
their earned credits towards the purchase of a CellFX System. You
disaggregate your
revenue on page 87 of the 10-K by product and disclose on page 85 the
amount of the
accrued liability related to the Controlled Launch that was relieved
and recognized as
revenue on a non-cash basis. Please address the following:
Provide us an analysis of the basis for your accounting treatment
for the earned
credits.
o Help us understand your basis for recognizing revenue on
the sale of the CellFX
System that in substance has been provided
"free-of-charge".
o Tell us your accounting treatment and the basis thereof for
relieving the accrued
expenses for CellFX Systems included in the Controlled
Launch Program.
Separately discuss when the accrued expenses are relieved
for a sale and for
which a sale is not ultimately consummated.
o Tell us the basis for initially recording the earned
credits as sales and marketing
expenses. In this regard, we note on page 5 that you are
expanding your clinical
studies to broaden the approved uses of the CellFX System.
Reference key
terms in the contractual arrangements with the physicians
and practices that
support your accounting as sales and marketing expense.
Confirm that the customer has title to the CellFX System upon
consummation of the
sale transaction. If the CellFX System may revert back to the
company, tell us your
consideration of recording the portion of the sale relating to
the System as a lease
pursuant to ASC 842.
Sandra Gardiner
Pulse Biosciences, Inc.
May 25, 2022
Page 3
Notwithstanding the above, tell us why you believe recognizing
the revenue recorded
on a non-cash basis in the same line item on the Statement of
Operations as revenue
earned on a cash basis is appropriate.
Tell us why the presentation of relieving the accrued expenses
as Revenue is
appropriate when the cost of revenue was previously recorded as
sales and marketing
expense. In addition, we note that revenue is being recorded
without a related cost of
sales.
Cite any applicable guidance you used in determining the
accounting treatment.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Frank Wyman at 202-551-3660 or Mary Mast at 202-551-3613
with
any questions.
FirstName LastNameSandra Gardiner Sincerely,
Comapany NamePulse Biosciences, Inc.
Division of
Corporation Finance
May 25, 2022 Page 3 Office of Life
Sciences
FirstName LastName