Healthcare IT and advanced visualization developer Merge Healthcare of Milwaukee today offered up additional details on why the company is unable to file its second-quarter 10-Q financial reports with the U.S. Securities and Exchange Commission on time.
Merge said it postponed filing the report while it investigates whether it has been properly recognizing revenue for contracts involving software licensing and related maintenance and support going back to 2004 and earlier.
Merge and its accountants are reviewing whether the company should have recognized the entire value of the bundled contracts as revenue over the period for which maintenance and support were provided to the customer, the company said. Merge said its historical practice is to recognize the fair value of the software principally in the initial year of the contract and the fair value of the maintenance over the maintenance period.
Merge said that the issue involves accounting rules and does not affect the total amount of revenue that ultimately will be recognized from the contracts, but rather the timing and recognition of the revenue. The firm said it expects to file its 10-Q for the second quarter as soon as possible.
By AuntMinnie.com staff writers
August 10, 2007
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