NVUS 2018 Annual Report

As a result of the Reverse Merger, historical common stock, stock options and additional paid-in capital, including share and per share amounts, have been retroactively adjusted to reflect the equity structure of the Company.

Reportable Segments Operating segments under GAAP are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM), or decision-making group, in deciding how to allocate resources and in assessing performance. The CODM is the &RPSDQ\¶V Chief Executive Officer and the Company has determined that it operates in one business segment, which is the development of products for disorders of the ear, nose, and throat. Goodwill Goodwill represents the difference between the consideration transferred and the fair value of the net assets acquired under the acquisition method of accounting. Goodwill is not amortized but is evaluated for impairment as of October 1 of each year or if indicators of impairment exist that would, more likely than not, reduce the fair value from its carrying amount. 7KH &RPSDQ\ SHUIRUPV LWV JRRGZLOO LPSDLUPHQW DQDO\VLV DW WKH UHSRUWLQJ XQLW OHYHO ZKLFK DOLJQV ZLWK WKH &RPSDQ\¶V reporting structure and availability of discrete financial inform The Company performs its annual impairment analysis ation. by either comparing the UHSRUWLQJ XQLW¶V HVWLPDWHG IDLU YDOXH WR LWV FDUU\LQJ DPRXQW RU GRLQJ D TXDOLWDWLYH DVVHVVPHQW RI D UHSRUWLQJ XQLW¶V IDLU YDOXH IURP WKH ODVW TXDQWLWDWLYH DVVHVVPHQW WR GHWHUPLQH LI WKHUH LV SRWHQWLDO LPSDLUPHQW 7KH &RPSDQ\ may do a qualitative assessmen W ZKHQ WKH UHVXOWV RI WKH SUHYLRXV TXDQWLWDWLYH WHVW LQGLFDWHG WKH UHSRUWLQJ XQLW¶V HVWLPDWHG IDLU value was significantly in excess of the carrying value of its net assets and it does not believe there have been significant FKDQJHV LQ WKH UHSRUWLQJ XQLW¶V operations that would significantly decrease its estimated fair value or significantly increase its net assets. If a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future projections and/or use of a market approach by looking at market values of comparable companies. Key assumptions for these projections include revenue growth, future gross and operating margin growth, and its weighted cost of capital and terminal growth rates. The revenue and margin growth is based on increased sales of new products as the Company maintains investments in research and development. Additional assumed value creators may include increased efficiencies from capital spending. The resulting cash flows are discounted using a weighted average cost of capital. Operating mechanisms and requirements to ensure that growth and efficiency assumptions will ultimately be realized are also considered in the evaluation, including timing and probability of regulatory approvals for Company products WR EH FRPPHUFLDOL]HG 7KH &RPSDQ\¶V PDUNHW FDSLWDOL]DWLRQ LV DOVR FRQVLGHUHG DV D SDUW RI LWV DQDO\VLV 7KH &RPSDQ\¶V DQQXDO HYDOXDWLRQ IRU LPSDLUPHQW RI JRRGZLOO FRQVLVWV RI RQH UHSRUWLQJ XQLW In accordance with the Compa Q\¶V SROLF\ WKH &RPSDQ\ FRPSOHWHG LWV PRVW UHFHQW DQQXDO HYDOXDWLRQ IRU LPSDLUPHQW DV RI 2FWREHU 1, 2018 using the qualitative assessment and determined that no impairment existed. No impairments were recorded for the years ended December 31, 2018 and 2017. Long-Lived Assets Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Additions, major renewals and improvements are capitalized and repair and maintenance costs are charged to expense as incurred. Leasehold improvements are amortized over the remaining life of the initial lease term or the estimated useful lives of the assets, whichever is shorter. The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when estimated future undiscounted cash flows relating to the asset are less than its carrying amount. An impairment loss is measured as the amount by which the carrying amount of an asset exceeds its fair value. Significant management judgment is required in the forecast of future operating results that are used in the preparation of expected cash flows. No impairments of tangible assets have been identified during the years presented. Research and Development Expenses Research and development expenses include personnel and facility-related expenses, outside contracted services including clinical trial costs, manufacturing and process development costs, research costs and other consulting services and non-cash stock-based compensation. Research and development costs are expensed as incurred. Amounts due under contracts with third parties may be either fixed fee or fee for service, and may include upfront payments, monthly payments and

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