| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2022SeptemberJune 30, 2017☐
98 Spit Brook Road, Suite 100, Nashua, NH | 03062 | |
(Address of principal executive offices) | (Zip Code) | |
and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulationand post such files). YES ☒ NO ☐.Large Accelerated filer ☐ Accelerated filer ☐ ☐ (do not check if a smaller reporting company)☒ Smaller reporting company ☒ Emerging growth company ☐
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PART I | ||||||||||
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Item 1 | Financial Statements | |||||||||
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Item 2 | ||||||||||
Item 3 | ||||||||||
Item 4 | ||||||||||
PART II | ||||||||||
Item 1A | ||||||||||
Item 6 | ||||||||||
(Unaudited)
| September 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 11,261 | $ | 8,585 | ||||
Trade accounts receivable, net of allowance for doubtful accounts of $209 in 2017 and $172 in 2016 | 7,189 | 5,189 | ||||||
Inventory, net | 3,340 | 3,727 | ||||||
Prepaid expenses and other current assets | 949 | 1,128 | ||||||
Assets held for sale | — | 1,304 | ||||||
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Total current assets | 22,739 | 19,933 | ||||||
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Property and equipment, net of accumulated depreciation of $7,245 in 2017 and $6,538 in 2016 | 972 | 1,385 | ||||||
Other assets | 53 | 53 | ||||||
Intangible assets, net of accumulated amortization of $7,333 in 2017 and $7,518 in 2016 | 2,055 | 3,183 | ||||||
Goodwill | 10,128 | 14,097 | ||||||
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Total assets | $ | 35,947 | $ | 38,651 | ||||
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| Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,346 | $ | 1,577 | ||||
Accrued and other expenses | 4,935 | 4,988 | ||||||
Lease payable - current portion | 12 | 86 | ||||||
Notes payable - current portion | 317 | — | ||||||
Liabilities held for sale | — | 832 | ||||||
Deferred revenue | 5,021 | 5,372 | ||||||
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Total current liabilities | 11,631 | 12,855 | ||||||
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Other long-term liabilities | 140 | 83 | ||||||
Lease payable, long-term portion | 30 | — | ||||||
Notes payable, long-term portion | 5,612 | — | ||||||
Deferred revenue, long-term portion | 525 | 668 | ||||||
Deferred tax | 12 | 7 | ||||||
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Total liabilities | 17,950 | 13,613 | ||||||
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Commitments and Contingencies (Note 6, 7 and 9) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $ .01 par value: authorized 1,000,000 shares; none issued. | — | — | ||||||
Common stock, $ .01 par value: authorized 30,000,000 shares; issued 16,627,705 in 2017 and 16,260,663 in 2016; outstanding 16,441,874 in 2017 and 16,074,832 in 2016 | 167 | 163 | ||||||
Additionalpaid-in capital | 216,875 | 213,899 | ||||||
Accumulated deficit | (197,630 | ) | (187,609 | ) | ||||
Treasury stock at cost, 185,831 shares in 2017 and 2016 | (1,415 | ) | (1,415 | ) | ||||
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Total stockholders’ equity | 17,997 | 25,038 | ||||||
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Total liabilities and stockholders’ equity | $ | 35,947 | $ | 38,651 | ||||
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June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 27,180 | $ | 34,282 | ||||
Trade accounts receivable, net of allowance for doubtful accounts of $778 in 2022 and $268 in 2021 | 10,171 | 8,891 | ||||||
Inventory, net | 5,001 | 4,171 | ||||||
Prepaid expenses and other current assets | 2,953 | 2,962 | ||||||
Total current assets | 45,305 | 50,306 | ||||||
Property and equipment, net of accumulated depreciation of $7,275 in 2022 and $7,106 in 2021 | 968 | 882 | ||||||
Operating lease assets | 3,102 | 1,059 | ||||||
Other assets | 55 | 899 | ||||||
Intangible assets, net of accumulated amortization of $8,820 in 2022 and $8,724 in 2021 | 587 | 683 | ||||||
Goodwill | 8,362 | 8,362 | ||||||
Total assets | $ | 58,379 | $ | 62,191 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,198 | $ | 2,779 | ||||
Accrued and other expenses | 5,271 | 5,642 | ||||||
Lease payable—current portion | 566 | 889 | ||||||
Deferred revenue—current portion | 6,171 | 5,652 | ||||||
Total current liabilities | 14,206 | 14,962 | ||||||
Lease payable, net of current | 2,598 | 266 | ||||||
Deferred revenue, net of current | 581 | 441 | ||||||
Deferred tax | 4 | 5 | ||||||
Total liabilities | 17,389 | 15,674 | ||||||
Commitments and Contingencies (Note 13) | 0 | 0 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.01 par value: authorized 1,000,000 shares; NaN issued. | 0— | 0— | ||||||
Common stock, $0.01 par value: authorized 60,000,000 shares; issued 25,373,858 as of June 30, 2022 and 25,326,086 as of December 31, 2021. | ||||||||
Outstanding 25,188,027 as of June 30, 2022 and 25,140,255 as of December 31, 2021. | 254 | 253 | ||||||
Additional paid-in capital | 301,994 | 300,859 | ||||||
Accumulated deficit | (259,843 | ) | (253,180 | ) | ||||
Treasury stock at cost, 185,831 shares in 2022 and 2021 | (1,415 | ) | (1,415 | ) | ||||
Total stockholders’ equity | 40,990 | 46,517 | ||||||
Total liabilities and stockholders’ equity | $ | 58,379 | $ | 62,191 | ||||
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue: | ||||||||||||||||
Products | $ | 3,426 | $ | 2,014 | $ | 9,225 | $ | 7,460 | ||||||||
Service and supplies | 3,574 | 3,989 | 10,975 | 11,950 | ||||||||||||
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Total revenue | 7,000 | 6,003 | 20,200 | 19,410 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Products | 636 | 236 | 1,349 | 611 | ||||||||||||
Service and supplies | 1,458 | 1,370 | 4,169 | 3,911 | ||||||||||||
Amortization and depreciation | 263 | 296 | 847 | 899 | ||||||||||||
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Total cost of revenue | 2,357 | 1,902 | 6,365 | 5,421 | ||||||||||||
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Gross profit | 4,643 | 4,101 | 13,835 | 13,989 | ||||||||||||
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Operating expenses: | ||||||||||||||||
Engineering and product development | 2,254 | 2,360 | 7,060 | 6,835 | ||||||||||||
Marketing and sales | 2,580 | 2,322 | 8,172 | 7,379 | ||||||||||||
General and administrative | 1,944 | 1,783 | 6,067 | 5,586 | ||||||||||||
Amortization and depreciation | 107 | 288 | 345 | 867 | ||||||||||||
Gain on sale of MRI assets | — | — | (2,508 | ) | — | |||||||||||
Goodwill and long-lived asset impairment | 4,700 | — | 4,700 | — | ||||||||||||
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Total operating expenses | 11,585 | 6,753 | 23,836 | 20,667 | ||||||||||||
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Loss from operations | (6,942 | ) | (2,652 | ) | (10,001 | ) | (6,678 | ) | ||||||||
Interest expense | (36 | ) | (15 | ) | (51 | ) | (59 | ) | ||||||||
Other income | 3 | 2 | 3 | 9 | ||||||||||||
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Other expense, net | (33 | ) | (13 | ) | (48 | ) | (50 | ) | ||||||||
Loss before income tax expense | (6,975 | ) | (2,665 | ) | (10,049 | ) | (6,728 | ) | ||||||||
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Tax benefit (expense) | 42 | (10 | ) | 28 | (55 | ) | ||||||||||
Net loss and comprehensive loss | $ | (6,933 | ) | $ | (2,675 | ) | $ | (10,021 | ) | $ | (6,783 | ) | ||||
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Net loss per share: | ||||||||||||||||
Basic | $ | (0.42 | ) | $ | (0.17 | ) | $ | (0.62 | ) | $ | (0.43 | ) | ||||
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Diluted | $ | (0.42 | ) | $ | (0.17 | ) | $ | (0.62 | ) | $ | (0.43 | ) | ||||
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Weighted average number of shares used in computing loss per share: | ||||||||||||||||
Basic | 16,424 | 15,957 | 16,291 | 15,896 | ||||||||||||
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Diluted | 16,424 | 15,957 | 16,291 | 15,896 | ||||||||||||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenue: | ||||||||||||||||
Products | $ | 4,475 | $ | 4,552 | $ | 9,035 | $ | 10,109 | ||||||||
Service and supplies | 3,100 | 3,274 | 6,063 | 6,361 | ||||||||||||
Total revenue | 7,575 | 7,826 | 15,098 | 16,470 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Products | 1,008 | 1,377 | 2,095 | 2,786 | ||||||||||||
Service and supplies | 1,001 | 832 | 2,050 | 1,699 | ||||||||||||
Amortization and depreciation | 75 | 79 | 150 | 158 | ||||||||||||
Total cost of revenue | 2,084 | 2,288 | 4,295 | 4,643 | ||||||||||||
Gross profit | 5,491 | 5,538 | 10,803 | 11,827 | ||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | 2,367 | 2,268 | 4,642 | 4,460 | ||||||||||||
Marketing and sales | 3,435 | 3,429 | 7,000 | 6,853 | ||||||||||||
General and administrative | 2,742 | 2,652 | 5,673 | 4,803 | ||||||||||||
Amortization and depreciation | 61 | 60 | 124 | 115 | ||||||||||||
Total operating expenses | 8,605 | 8,409 | 17,439 | 16,231 | ||||||||||||
Loss from operations | (3,114 | ) | (2,871 | ) | (6,636 | ) | (4,404 | ) | ||||||||
Other income/ (expense): | ||||||||||||||||
Interest expense | — | (29 | ) | (1 | ) | (129 | ) | |||||||||
Interest income | 14 | 19 | 16 | 33 | ||||||||||||
| Other loss, net | (18 | ) | (13 | ) | (41 | ) | (37 | ) | ||||||||
| Loss on extinguishment of debt | — | (386 | ) | — | (386 | ) | ||||||||||
| Other expense, net | (4 | ) | (409 | ) | (26 | ) | (519 | ) | ||||||||
Loss before provision for income taxes | (3,118 | ) | (3,280 | ) | (6,662 | ) | (4,923 | ) | ||||||||
Provision for tax expense | — | — | (1 | ) | — | |||||||||||
Net loss and comprehensive loss | $ | (3,118 | ) | $ | (3,280 | ) | $ | (6,663 | ) | $ | (4,923 | ) | ||||
Net loss per share: | ||||||||||||||||
Basic and diluted | $ | (0.12 | ) | $ | (0.13 | ) | $ | (0.26 | ) | $ | (0.20 | ) | ||||
Weighted average number of shares used in computing loss per share: | ||||||||||||||||
Basic and diluted | 25,185 | 24,989 | 25,172 | 24,462 | ||||||||||||
For the three months ended June 30, 2022 | ||||||||||||||||||||||||
Common Stock | Additional | |||||||||||||||||||||||
Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
Balance at March 31, 2022 | 25,359,175 | $ | 253 | $ | 301,640 | $ | (256,725 | ) | $ | (1,415 | ) | $ | 43,753 | |||||||||||
Issuance of common stock related to vesting of restricted stock | — | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans | 6,000 | 1 | 12 | — | — | 13 | ||||||||||||||||||
Issuance of common stock pursuant Employee Stock Purchase Plans | 8,683 | — | 33 | — | — | 33 | ||||||||||||||||||
Stock-based compensation | — | — | 309 | — | — | 309 | ||||||||||||||||||
Net loss | — | — | — | (3,118 | ) | — | (3,118 | ) | ||||||||||||||||
Balance at June 30, 2022 | 25,373,858 | $ | 254 | $ | 301,994 | $ | (259,843 | ) | $ | (1,415 | ) | $ | 40,990 | |||||||||||
For the six months ended June 30, 2022 | ||||||||||||||||||||||||
Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
Balance at December 31, 2021 | 25,326,086 | $ | 253 | $ | 300,859 | $ | (253,180 | ) | $ | (1,415 | ) | $ | 46,517 | |||||||||||
Issuance of common stock related to vesting of restricted stock | 875 | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans | 28,833 | 1 | 78 | — | — | 79 | ||||||||||||||||||
Issuance of common stock pursuant Employee Stock Purchase Plans | 18,064 | — | 93 | — | — | 93 | ||||||||||||||||||
Stock-based compensation | — | — | 964 | — | — | 964 | ||||||||||||||||||
Net loss | — | — | — | (6,663 | ) | — | (6,663 | ) | ||||||||||||||||
Balance at June 30, 2022 | 25,373,858 | $ | 254 | $ | 301,994 | $ | (259,843 | ) | $ | (1,415 | ) | $ | 40,990 | |||||||||||
For the three months ended June 30, 2021 | ||||||||||||||||||||||||
Common Stock | Additional | |||||||||||||||||||||||
Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
Balance at March 31, 2021 | 25,143,432 | $ | 251 | $ | 298,106 | $ | (243,578 | ) | $ | (1,415 | ) | $ | 53,364 | |||||||||||
Issuance of common stock related to vesting of restricted stock | 9,166 | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock, net | 54,814 | — | 365 | — | — | 365 | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans | — | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock pursuant Employee Stock Purchase Plans | 5,890 | — | 67 | — | — | 67 | ||||||||||||||||||
Stock-based compensation | — | — | 511 | — | — | 511 | ||||||||||||||||||
Net loss | — | — | — | (3,280 | ) | — | (3,280 | ) | ||||||||||||||||
Balance at June 30, 2021 | 25,213,302 | $ | 251 | $ | 299,049 | $ | (246,858 | ) | $ | (1,415 | ) | $ | 51,027 | |||||||||||
For the six months ended June 30, 2021 | ||||||||||||||||||||||||
Common Stock | Additional | |||||||||||||||||||||||
Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
Balance at December 31, 2020 | 23,694,406 | $ | 236 | $ | 273,639 | $ | (241,935 | ) | $ | (1,415 | ) | $ | 30,525 | |||||||||||
Issuance of common stock related to vesting of restricted stock | 29,166 | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock, net | 1,393,738 | 14 | 23,215 | — | — | 23,229 | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans | 83,748 | 1 | 635 | — | — | 636 | ||||||||||||||||||
Issuance of common stock pursuant Employee Stock Purchase Plans | 12,244 | — | 114 | — | — | 114 | ||||||||||||||||||
Stock-based compensation | — | — | 1,446 | — | — | 1,446 | ||||||||||||||||||
Net loss | — | — | — | (4,923 | ) | — | (4,923 | ) | ||||||||||||||||
Balance at June 30, 2021 | 25,213,302 | $ | 251 | $ | 299,049 | $ | (246,858 | ) | $ | (1,415 | ) | $ | 51,027 | |||||||||||
(unaudited)
| For the nine months ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| (in thousands) | ||||||||
Cash flow from operating activities: | ||||||||
Net loss | $ | (10,021 | ) | $ | (6,783 | ) | ||
Adjustments to reconcile net loss to net cash used for by operating activities: | ||||||||
Amortization | 394 | 753 | ||||||
Depreciation | 798 | 1,013 | ||||||
Bad debt provision | 44 | 133 | ||||||
Stock-based compensation expense | 3,073 | 1,648 | ||||||
Amortization of debt discount and debt costs | (6 | ) | (13 | ) | ||||
Interest on settlement obligations | 26 | 69 | ||||||
Deferred tax expense | 6 | — | ||||||
Gain from acquisition litigation settlement | — | (249 | ) | |||||
Goodwill and long-lived asset impairment | 4,700 | — | ||||||
Loss on disposal of assets | 26 | 9 | ||||||
Gain on sale of MRI assets | (2,158 | ) | — | |||||
Changes in operating assets and liabilities (net of the effect of acquisitions): | ||||||||
Accounts receivable | (2,062 | ) | 2,706 | |||||
Inventory | 389 | (82 | ) | |||||
Prepaid and other current assets | 179 | (483 | ) | |||||
Accounts payable | (231 | ) | (281 | ) | ||||
Accrued expenses | (23 | ) | 78 | |||||
Deferred revenue | (699 | ) | (2,380 | ) | ||||
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Total adjustments | 4,456 | 2,921 | ||||||
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Net cash used for operating activities | (5,565 | ) | (3,862 | ) | ||||
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Cash flow from investing activities: | ||||||||
Additions to patents, technology and other | (2 | ) | (8 | ) | ||||
Additions to property and equipment | (362 | ) | (248 | ) | ||||
Acquisition of VuCompM-Vu CAD | — | (6 | ) | |||||
Sale of MRI assets | 2,850 | — | ||||||
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Net cash provided by (used for) investing activities | 2,486 | (262 | ) | |||||
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Cash flow from financing activities: | ||||||||
Stock option exercises | 57 | 188 | ||||||
Taxes paid related to restricted stock issuance | (151 | ) | (65 | ) | ||||
Debt issuance costs | (74 | ) | — | |||||
Principal payments of capital lease obligations | (77 | ) | (796 | ) | ||||
Proceeds from debt financing, net | 6,000 | — | ||||||
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Net cash provided by (used for) financing activities | 5,755 | (673 | ) | |||||
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Increase (decrease) in cash and equivalents | 2,676 | (4,797 | ) | |||||
Cash and equivalents, beginning of period | 8,585 | 15,280 | ||||||
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Cash and equivalents, end of period | $ | 11,261 | $ | 10,483 | ||||
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Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | 14 | $ | 63 | ||||
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Taxes paid | $ | 52 | $ | 65 | ||||
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Escrow due from MRI asset sale | $ | 350 | $ | — | ||||
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Equipment purchased under capital lease | $ | 42 | $ | — | ||||
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For the Six Months ended June 30, | ||||||||
2022 | 2021 | |||||||
Cash flow from operating activities: | ||||||||
Net loss | $ | (6,663 | ) | $ | (4,923 | ) | ||
Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
Amortization | 105 | 115 | ||||||
Depreciation | 169 | 157 | ||||||
Non-cash lease expense | 391 | 388 | ||||||
Bad debt provision | 510 | (3 | ) | |||||
Stock-based compensation | 964 | 1,446 | ||||||
Amortization of debt discount and debt costs | — | 17 | ||||||
Loss on extinguishment of debt | — | 386 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (1,790 | ) | (924 | ) | ||||
Inventory | (830 | ) | 284 | |||||
Prepaid and other assets | 853 | 122 | ||||||
Accounts payable | (581 | ) | (1,829 | ) | ||||
Accrued and other expenses | (371 | ) | (432 | ) | ||||
Lease liabilities | (425 | ) | (304 | ) | ||||
Deferred revenue | 659 | (77 | ) | |||||
Total adjustments | (346 | ) | (654 | ) | ||||
Net cash used for operating activities | (7,009 | ) | (5,577 | ) | ||||
Cash flow from investing activities: | ||||||||
Additions to patents, technology and other | (10 | ) | — | |||||
Additions to property and equipment | (255 | ) | (336 | ) | ||||
Net cash used for investing activities | (265 | ) | (336 | ) | ||||
Cash flow from financing activities: | ||||||||
Proceeds from option exercises pursuant to stock option plans | 79 | 636 | ||||||
Proceeds from issuance of common stock pursuant to Employee Stock Purchase Plans | 93 | 114 | ||||||
Proceeds from issuance of common stock, net | — | 23,229 | ||||||
Issuance of stock upon conversion of debentures | — | (7,363 | ) | |||||
Net cash provided by financing activities | 172 | 16,616 | ||||||
(Decrease) increase in cash and cash equivalents | (7,102 | ) | 10,703 | |||||
Cash and cash equivalents, beginning of period | 34,282 | 27,186 | ||||||
Cash and cash equivalents, end of period | $ | 27,180 | $ | 37,889 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | 9 | $ | 92 | ||||
Amendment to right-of-use | $ | 2,434 | $ | — | ||||
(Unaudited)
September 30, 2017
Revenue Recognition
treatment of certain cancers.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 22,047 | $ | — | $ | — | $ | 22,047 | ||||||||
Total Assets | $ | 22,047 | $ | — | $ | — | $ | 22,047 | ||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 30,573 | $ | — | $ | — | $ | 30,573 | ||||||||
Total Assets | $ | 30,573 | $ | — | $ | — | $ | 30,573 | ||||||||
The Company recognizes revenue from the salerecognition, and sales channel, reconciled to its reportable segments.
Three months ended June 30, 2022 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 3,467 | $ | 1,008 | $ | 4,475 | ||||||
Service contracts | 1,822 | 361 | 2,183 | |||||||||
Supply and source usage agreements | — | 367 | 367 | |||||||||
Disposable applicators | — | 463 | 463 | |||||||||
Other | — | 87 | 87 | |||||||||
$ | 5,289 | $ | 2,286 | $ | 7,575 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 3,455 | $ | 1,547 | $ | 5,002 | ||||||
Services transferred over time | 1,834 | 739 | 2,573 | |||||||||
$ | 5,289 | $ | 2,286 | $ | 7,575 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 3,505 | $ | 703 | $ | 4,208 | ||||||
OEM partners | 1,784 | — | 1,784 | |||||||||
Channel partners | — | 1,583 | 1,583 | |||||||||
$ | 5,289 | $ | 2,286 | $ | 7,575 | |||||||
Six months ended June 30, 2022 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 7,330 | $ | 1,705 | $ | 9,035 | ||||||
Service contracts | 3,479 | 747 | 4,226 | |||||||||
Supply and source usage agreements | — | 780 | 780 | |||||||||
Disposable applicators | — | 878 | 878 | |||||||||
Other | — | 179 | 179 | |||||||||
$ | 10,809 | $ | 4,289 | $ | 15,098 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 7,335 | $ | 2,812 | $ | 10,147 | ||||||
Services transferred over time | 3,474 | 1,477 | 4,951 | |||||||||
$10,809 | $4,289 | $15,098 | ||||||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 6,399 | $ | 1,519 | $ | 7,918 | ||||||
OEM partners | 4,410 | — | 4,410 | |||||||||
Channel partners | — | 2,770 | 2,770 | |||||||||
$ | 10,809 | $ | 4,289 | $ | 15,098 | |||||||
Three months ended June 30, 2021 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 3,164 | $ | 2,119 | $ | 5,283 | ||||||
Service contracts | 1,625 | 371 | 1,996 | |||||||||
Supply and source usage agreements | — | 529 | 529 | |||||||||
Other | — | 18 | 18 | |||||||||
$ | 4,789 | $ | 3,037 | $ | 7,826 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 3,164 | $ | 2,136 | $ | 5,300 | ||||||
Services transferred over time | 1,625 | 901 | 2,526 | |||||||||
$ | 4,789 | $ | 3,037 | $ | 7,826 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 3,188 | $ | 1,252 | $ | 4,440 | ||||||
OEM partners | 1,601 | — | 1,601 | |||||||||
Channel partners | — | 1,785 | 1,785 | |||||||||
$ | 4,789 | $ | 3,037 | $ | 7,826 | |||||||
Six months ended June 30, 2021 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 7,325 | $ | 4,222 | $ | 11,547 | ||||||
Service contracts | 3,183 | �� | 711 | 3,894 | ||||||||
Supply and source usage agreements | — | 1,010 | 1,010 | |||||||||
Other | — | 19 | 19 | |||||||||
$ | 10,508 | $ | 5,962 | $ | 16,470 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 7,325 | $ | 4,240 | $ | 11,565 | ||||||
Services transferred over time | 3,183 | 1,722 | 4,905 | |||||||||
$ | 10,508 | $ | 5,962 | $ | 16,470 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 7,063 | $ | 1,926 | $ | 8,989 | ||||||
OEM partners | 3,445 | — | 3,445 | |||||||||
Channel partners | — | 4,036 | 4,036 | |||||||||
$ | 10,508 | $ | 5,962 | $ | 16,470 | |||||||
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
recognized in accordance with ASC 840 “Leases” (“ASC 840”). For multiple element arrangements, revenue is allocated to all deliverables based on their relative selling prices. In such circumstances, a hierarchy is used to determine the selling price to be used for allocating revenue to deliverables as follows: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of the selling price (“BESP”). VSOE generally exists only when the deliverable is sold separately and is the price actually charged for that deliverable. The process for determining BESP for deliverables without VSOE or TPE considers multiple factors including relative selling prices; competitive prices in the marketplace, and management judgment; however, these may vary depending upon the unique facts and circumstances related to each deliverable.
cancer therapy applicators. The Company uses customer purchase orders that are subject to the Company’s termstransfers control and conditions or, in the case of an Original Equipment Manufacturer (“OEM”) are governed by distribution agreements. In accordance with the Company’s distribution agreements, the OEM does not haverecognizes a right of return, and title and risk of loss passes to the OEM upon shipment. The Company generally ships Free On Board shipping point and uses shipping documents and third-party proof of delivery to verify delivery and transfer of title. In addition, the Company assesses whether collection is probable by considering a number of factors, including past transaction history with the customer and the creditworthiness of the customer, as obtained from third party credit references.
If the terms of the sale include customer acceptance provisions and compliance with those provisions cannot be demonstrated, all revenue is deferred and not recognized until such acceptance occurs. The Company considers all relevant facts and circumstances in determining when to recognize revenue, including contractual obligations to the customer, the customer’s post-delivery acceptance provisions, if any, and the installation process.
The Company has determined that iCAD’s digital and film based sales generally follow the guidance of FASB ASC Topic 605 “Revenue Recognition” (“ASC 605”) as the software has been considered essential to the functionality of the product per the guidance of ASU2009-14. Typically, the responsibility for the installation process lies with the OEM partner. On occasion, when iCAD is responsible for product installation, the installation element is considered a separate unit of accounting because the delivered product has stand-alone value to the customer. In these instances, the Company allocates revenue to the deliverables based on the framework established within ASU2009-13. Therefore, the installation and training revenue is recognized as the services are performed according to the BESP of the element. Revenue from the digital and film based equipment, when there is installation, is recognized based on the relative selling price allocation of the BESP, when delivered.
Revenue from certain CAD products is recognized in accordance with ASC985-605. Sales of these products include training, and the Company has established VSOE for this element. Product revenue is determined based on the residual value in the arrangement and is recognized when delivered. Revenue for training is deferred and recognized when the training has been completed.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
The Company recognizes post contract customer support revenue together with the initial licensing fee for certain MRI products in accordance with ASC985-605-25-71. In January 2017 the Company sold certain MRI assets to Invivo.
Sales of the Company’s Therapy segment products typically include a controller, accessories, source agreements and services. The Company allocates revenue to the deliverables in the arrangement based on the BESP in accordance with ASU2009-13. Product revenue is generally recognized when the product has been deliveredis shipped from the manufacturing or warehousing facility to the customer.
The Company defers revenue from the sale of certain service contracts and recognizes the related revenue on a straight-line basis in accordance with ASC Topic605-20, “Services”over the term of the agreement.
Balance at | Balance at | |||||||
June 30, 2022 | December 31, 2021 | |||||||
Receivables, which are included in ‘Trade accounts receivable’ | $ | 10,171 | $ | 8,891 | ||||
Current contract assets, which are included in “Prepaid and other assets” | $ | 1,399 | $ | 1,895 | ||||
Non-current contract assets, which are included in “other assets” | $ | — | $ | 844 | ||||
Contract liabilities, which are included in “Deferred revenue” | $ | 6,752 | $ | 6,093 | ||||
Costeach annual service period.
Six Months Ended June 30, 2022 | ||||
Balance at beginning of period | $ | 6,093 | ||
Deferral of revenue | 6,333 | |||
Recognition of deferred revenue | (5,674 | ) | ||
Balance at end of period | $ | 6,752 | ||
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
approximately $4.6 million in 2022, $3.5 million in 2023, $1.3 million in 2024, $1.1 million in 2025 and $0.1 million thereafter.
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Net loss | $ | (6,933 | ) | $ | (2,675 | ) | $ | (10,021 | ) | $ | (6,783 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Shares used in the calculation of basic and diluted net loss per share | 16,424 | 15,957 | 16,291 | 15,896 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options | — | — | — | — | ||||||||||||
Restricted stock | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted shares used in the calculation of net loss per share | 16,424 | 15,957 | 16,291 | 15,896 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loss per share - basic and diluted | $ | (0.42 | ) | $ | (0.17 | ) | $ | (0.62 | ) | $ | (0.43 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
follows:
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2022 | 2021 | 2022 | 202 1 | |||||||||||||
Net loss | $ | (3,118 | ) | $ | (3,280 | ) | $ | (6,663 | ) | $ | (4,923 | ) | ||||
Shares used in the calculation of basic and diluted net loss per share | 25,185 | 24,989 | 25,172 | 24,462 | ||||||||||||
Net loss per share - basic and diluted | $ | (0.12 | ) | $ | (0.13 | ) | $ | (0.26 | ) | $ | (0.20 | ) | ||||
| Period Ended | ||||||||
| September 30, | ||||||||
| 2017 | 2016 | |||||||
Stock options | 1,426,513 | 1,569,166 | ||||||
Restricted stock | 507,147 | 392,148 | ||||||
|
|
|
| |||||
Stock options and restricted stock | 1,933,660 | 1,961,314 | ||||||
|
|
|
| |||||
June 30, | ||||||||
2022 | 2021 | |||||||
| Stock options | 1,819,897 | 2,176,607 | ||||||
| Restricted stock | — | 21,613 | ||||||
| Total | 1,819,897 | 2,198,220 | ||||||
Acquisition5 – Inventories
cost or net realizable value. Cost includes materials, labor, and manufacturing overhead and is determined using the
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
December 31, 2021.
June 30, 2022 | December 31, 2021 | |||||||
Raw materials | $ | 2,549 | $ | 2,962 | ||||
Work in process | 218 | 173 | ||||||
Finished Goods | 2,503 | 1,279 | ||||||
Inventory Gross | 5,270 | 4,414 | ||||||
Inventory Reserve | (269 | ) | (243 | ) | ||||
Inventory Net | $ | 5,001 | $ | 4,171 | ||||
| Amount (000’s) | ||||
Cash | $ | 6 | ||
Acquisition litigation settlement | 249 | |||
|
| |||
Purchase price | $ | 255 | ||
|
| |||
The amount allocated toassets or the acquired assets was estimated primarily throughstrategy for the use of discounted cash flow valuation techniques. Appraisal assumptions utilized under this method include a forecast of estimated future net cash flows, as well as discounting the future net cash flows to their present value. The following is a summary of the preliminary allocation of the total purchase price based on the estimated fair values as of the date of the acquisition and the amortizable life:
| Amount (000’s) | Estimated amortizable life | |||||||
Current assets | $ | 84 | ||||||
Property and equipment | 65 | 3 Years | ||||||
Identifiable intangible assets | 699 | 1-10 Years | ||||||
Goodwill | 293 | |||||||
Current liabilities | (280 | ) | ||||||
Long-term liabilities | (606 | ) | ||||||
|
| |||||||
Purchase price | $ | 255 | ||||||
|
| |||||||
The assets obtainedCompany’s overall business;
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Company’s market capitalization below net book value.
In December 2016, the
The Company determined the sale constituted the sale of a business in accordance with ASC 805. The Company performed an evaluation to determine if the sale constituted discontinued operations and concludedcircumstances indicate it is more likely than not that the sale did not represent a major strategic shift, and accordingly it was not considered to be discontinued operations. In connection with the transaction, the Company allocated $394,000 of goodwill which was a component of the gain on the sale. The allocation was based on the fair value of the assets sold relative toasset group is less than its carrying value.
The value of the net assets soldwhen, if at all, an asset (or asset group) is as follows (in thousands):
Assets | ||||
Accounts Receivable | $ | 116 | ||
Intangible assets | 810 | |||
Allocated Goodwill | 394 | |||
|
| |||
Total Assets | $ | 1,320 | ||
|
| |||
Liabilities | ||||
Deferred Revenue | $ | 746 | ||
|
| |||
Total Liabilities | $ | 746 | ||
|
| |||
Net Assets Sold | $ | 574 | ||
|
|
In connection with the sale the Company agreed to provide certain transition services to Invivo. The fair value of the transition services were determined based on the cost to provide plus a reasonable profit margin and have been recognized as revenue over the term of approximately ninety days from the closing date. The Company recorded a gain of $2.5 million as of January 30, 2017. The components of the gain on the sale are as follows (in thousands):
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Gain on Sale | ||||
Cash received | $ | 2,850 | ||
Holdback reserve | 350 | |||
Fair value of transition services | (118 | ) | ||
Net Assets sold | (574 | ) | ||
|
| |||
Total | $ | 2,508 | ||
|
|
Note 5 - Inventory
The components of inventory, net of allowanceevaluated for obsolete, unmarketable or slow-moving inventories, are summarized as follows (in thousands):
| as of September 30, 2017 | as of December 31, 2016 | |||||||
Raw materials | $ | 2,033 | $ | 2,503 | ||||
Work in process | 139 | 75 | ||||||
Finished Goods | 1,168 | 1,149 | ||||||
|
|
|
| |||||
Inventory | $ | 3,340 | $ | 3,727 | ||||
|
|
|
| |||||
Note 6 - Debt financing
On August 7, 2017 the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (the “Bank”) that provides an initial term loan facility (the “Term Loan”) of $6.0 million and a $4.0 million revolving line of credit (the “Revolving Loan”). The Company also has the option to secure an additional $3.0 million under the Loan Agreement for a total of $9.0 million in 2018, subject to meeting a net revenue minimum of at least $35.0 million for a trailing twelve month period ending prior to July 30, 2018 (the “Revenue Milestone”).
The Term Loan accrues interest at prime rate. The Company will begin repayment on Sept 1, 2018 in 36 equal monthly installments of principal. Subject to meeting the Revenue Milestone, the Company could elect to defer repayment of the Term Loan to March 1, 2019 in 30 equal monthly payments.
The outstanding Revolving Advances will accrue interest at a floating per annum rate equal to 1.50% above the prime rate for periods when the ratio of the Company’s unrestricted cash to the Company’s outstanding liabilities to the Bank plus the amount of the Company’s total liabilities that mature within one year is at least 1.25 to 1.0. At all other times, the interest rate shall be 0.50% above the prime rate. The outstanding Term Loan Advances will accrue interest at a floating per annum rate equal to the prime rate.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
The maturity date of the Revolving Advances and the Term Loan Advances is August 7, 2021. However, the maturity date will become April 30, 2019, April 30, 2020 or April 30, 2021 if, on or before October 30, 2018, or 2019 or 2020, as applicable, the Company does not agree in writing to the net revenue covenant levels proposed by the Bank with respect to the upcoming applicable calendar year.
If the Revolving Advances are paid in full and the Loan Agreement is terminated prior to the maturity date, then the Company will pay to the Bank a termination fee in an amount equal to two percent (2.0%) of the maximum revolving line of credit. If the Company prepays the Term Loan Advances prior to the maturity date, then the Company will pay to the Bank an amount equal to1.0%-3.0% of the Term Loan Advances, depending on when such Term Loan Advances are repaid. The Loan Agreement requires the Company to maintain net revenues during the trailing six month period ending on the last day of each calendar quarter as follows: June 30, 2017 - $10.25 million; September 30, 2017 - $11.5 million; December 31, 2017 - $14 million; March 31, 2018 - $15 million; June 30, 2018 - $15.25 million; and September 30, 2018 and December 31, 2018 - $15.5 million. As of September 30, 2017 the Company is in compliance with the revenue covenants in the Loan Agreement.
In connection with the credit line, the Company incurred approximately $74,000 of closing costs. In accordance with ASU2015-03 the closing costs have been deducted from the carrying value of the debt and will be amortized over the expected term of 36 months.
The current repayment schedule for the term loanrecoverability is based on repayment beginning on September 1, 2018. If“events and circumstances.” The following factors are examples of events or changes in circumstances that indicate the Revenue Milestonecarrying amount of an asset (or asset group) may not be recoverable and thus is met, the Company could elect to defer repayment until March 2019. The carrying value of the Term Loan (net of debt issuance costs) as of September 30, 2017 is as follows (in thousands):
| September 30, 2017 | ||||
Short-term | $ | 317 | ||
Long-term | 5,612 | |||
|
| |||
Total | $ | 5,929 | ||
|
| |||
Interest expense related to the loan for the three and nine month periods ended September 30, 2017 is as follows (in thousands):
| September 30, 2017 | ||||
Three months ended | $ | 33 | ||
Nine month ended | 33 | |||
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Note 7 - Lease Commitments
Operating leases
Facilities are leased under operating leases expiring at various dates through March 2020. Certain of these leases contain renewal options. Rent expense under operating leases was $229,000 and $665,000 for the three and nine months ended September 30, 2017, respectively and $178,000 and $516,000 for the three and nine months ended September 30, 2016, respectively.
Future minimum lease payments as of September 30, 2017 under operating leases are as follows: (in thousands)
Fiscal Year | Operating Leases | |||
2017 | $ | 318 | ||
2018 | 738 | |||
2019 | 746 | |||
2020 | 174 | |||
|
| |||
Total | $ | 1,976 | ||
|
| |||
Capital leases
In August, 2017, the Company assumed an equipment lease obligation with payments totaling $50,000. The leases were determined to be capital leases and accordingly the equipment was capitalized and a liability of $42,000 was recorded. The equipment will be depreciated over the expected life of 3 years. Minimum lease payments are as follows (in thousands):
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Fiscal Year | Capital Lease | |||
2017 | 4 | |||
2018 | 16 | |||
2019 | 17 | |||
2020 | 13 | |||
|
| |||
subtotal minimum lease obligation | 50 | |||
less interest | (8 | ) | ||
|
| |||
Total, net | 42 | |||
less current portion | (12 | ) | ||
|
| |||
long term portion | $ | 30 | ||
|
| |||
In connection with the Radion/DermEbx Acquisition which closed in July 2014, the Company assumed two separate equipment lease obligations with payments totaling approximately $2.6 million through May 2017. The leases were determined to be capital leases and accordingly the equipment was capitalized and a liability of $2.5 million was recorded. In connection with the acquisition, the Company recorded a fair value adjustment to interest expense and amortized the adjustment over the life of the related lease. As of September 30, 2017, there was no further liabilityevaluated for the acquired equipment leases.
Related Party Lease:
Kamal Gogineni is an employee of one of the Company’s subsidiaries and a stockholder of the Company’s common stock. Additionally, Mr. Gogineni is a shareholder of Radion Capital Partners (“RCP”). RCP was the lessor under a lease between RCP and DermEbx (the “Lease”). In connection with the Company’s acquisition of assets of Radion, Inc. and DermEbx that closed in July 2014, one of the assets and obligations that the Company acquired was the Lease. Pursuant to the Lease, the Company paid approximately $76,000 to RCP in 2017. As of September 30, 2017, there is no further obligation.
Note 8 - Stock-Based Compensation
The Company follows the guidance in ASC Topic 718, “Compensation – Stock Compensation”, (“ASC 718”).
The Company granted options to purchase 57,352 shares of the Company’s stockrecoverability.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2017 | 2016 | 2017 | 2016 | |||||
Average risk-free interest rate | 1.56% | 0.84% | 1.52% | 0.87% | ||||
Expected dividend yield | None | None | None | None | ||||
Expected life | 3.5 years | 3.5 years | 3.5 years | 3.5 years | ||||
Expected volatility | 64.2% to 67.0% | 68.6% to 75.3% | 64.2% to 72.0% | 68.6% to 75.3% | ||||
Weighted average exercise price | $4.28 | $5.49 | $4.39 | $5.57 | ||||
Weighted average fair value | $2.02 | $2.67 | $2.12 | $2.71 | ||||
The Company’s stock-based compensation expense, including options and restricted stock by category is as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Cost of revenue | $ | 1 | $ | 1 | 5 | $ | 5 | |||||||||
Engineering and product development | 76 | 82 | 633 | 289 | ||||||||||||
Marketing and sales | 132 | 162 | 854 | 476 | ||||||||||||
General and administrative | 294 | 201 | �� | 1,581 | 878 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| $ | 503 | $ | 446 | $ | 3,073 | $ | 1,648 | |||||||||
|
|
|
|
|
|
|
| |||||||||
As of September 30, 2017, unrecognized compensation cost (in thousands) related to unexercisable options and unvested restricted stock and the weighted average remaining period is as follows:
Remaining expense | $ | 2,504 | ||
Weighted average term | 1.1 years |
The Company’s restricted stock awards typically vest in either one year or three equal annual installments with the first installment vesting one year from grant date. The Company granted a total of 162,500 shares of performance based restricted stock during 2016 with performance measured on meeting a revenue target based on growth for fiscal year 2017 and vesting in three equal installments with the first installment vesting upon measurement of the goal. In addition, a maximum of 108,333 additional shares are available to be earned based on exceeding the revenue goal. Assumptions used to determinebusiness climate that could affect the value of performance based grantsa long-lived asset (or asset group), including an adverse action or assessment by a regulator;
Three Months | Six Months | |||||||||
Ended June 30, | Ended June 30, | |||||||||
Lease Cost | Classification | 2022 | 2022 | |||||||
Operating lease cost - Right of Use Asset | Operating expenses | $ | 215 | $ | 430 | |||||
Three Months | Six Months | |||||||
Ended June 30, | Ended June 30, | |||||||
2022 | 202 2 | |||||||
Cash paid from operating cash flows for operating leases | $ | 236 | $ | 465 | ||||
| As of June 30, 2022 | ||||
Weighted-average remaining lease term of operating leases (year s ) | 5.7 | |||
Weighted-average discount rate for operating leases | 7.4 | % | ||
2022 | $ | 467 | ||
2023 | 611 | |||
2024 | 642 | |||
2025 | 644 | |||
2026 | 664 | |||
2027 | 684 | |||
2028 | 172 | |||
Total lease payments | 3,884 | |||
Less: imputed interest | (720 | ) | ||
Total lease liabilities | 3,164 | |||
Less: current portion of lease liabilities | (566 | ) | ||
Long-term lease liabilities | $ | 2,598 | ||
Foreign Tax Claim
In July 2007,Security Agreement – Western Alliance Bank
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Cash interest expense | $ | — | $ | 27 | $ | — | $ | 107 | ||||||||
Accrual of notes payable final payment | — | 2 | — | 9 | ||||||||||||
Amortization of debt costs | — | — | — | 13 | ||||||||||||
Total interest expense | $ | — | $ | 29 | $ | — | $ | 129 | ||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Cost of revenue | $ | 1 | $ | 2 | $ | 1 | $ | 16 | ||||||||
Engineering and product development | 70 | 58 | 138 | 208 | ||||||||||||
Marketing and sales | 109 | 128 | 308 | 481 | ||||||||||||
General and administrative | 129 | 323 | 517 | 741 | ||||||||||||
| $ | 309 | $ | 511 | $ | 964 | $ | 1446 | |||||||||
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Average risk-free interest rate | 2.56% | N/A | 1.90% | 0.20% | ||||
Expected dividend yield | NaN | NaN | NaN | NaN | ||||
Expected life | 3.5 years | 3.5 years | 3.5 years | 3.5 years | ||||
Expected volatility | 69.7% to 70.5% | N/A | 66.3% to 70.5% | 66.0% to 66.0% | ||||
Weighted average exercise price | $5.19 | N/A | $5.22 | $18.00 | ||||
Weighted average fair value | $1.72 | N/A | $2.46 | $8.37 | ||||
| Number of Options | Weighted Average Exercise Price | Intrinsic Value | ||||||||||
Outstanding as of December 31, 2021 | 2,486,511 | $ | 9.27 | $ | 3,820 | |||||||
Granted | 760,000 | $ | 5.22 | $ | 3 | |||||||
Exercised | (28,833 | ) | $ | 2.74 | $ | 75 | ||||||
Cancelled | (479,797 | ) | $ | 12.33 | $ | — | ||||||
Outstanding as of June 30, 2022 | 2,737,881 | $ | 7.68 | $ | 833 | |||||||
Options Exercisable as of December 31, 2021 | 1,619,855 | $ | 6.47 | $ | 3,730 | |||||||
Options Exercisable as of June 30, 2022 | 1,819,897 | $ | 7.44 | $ | 830 | |||||||
Settlement Obligations
In connection with the acquisition of Xoft in 2010,2022, the Company recorded a royalty obligation pursuantliability of approximately $34,000 related to employee withholdings in connection with the ESPP accumulation period ended June 30, 2022, which was included as a settlement agreement entered into between Xoft and Hologic in August 2007. Xoft received a nonexclusive, irrevocable, perpetual, worldwide license, including the right to sublicense certain Hologic patents, and anon-compete covenant as well as an agreement not to seek further damages with respect to the alleged patent violations. In return, the Company had a remaining obligation to pay a minimum annual royalty payment to Hologic,component of $250,000 payable through 2016. In addition to the minimum annual royalty payments, the litigation settlement agreement with Hologic also provided for payment of royalties based upon a specified percentage of future net sales on
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
any products that utilize the licensed rights. The Company has a liability within accounts payable and accrued expenses for future payment and for the remaining minimum royalty obligations totaling $448,000 as of September 30, 2017. The Company recorded interest expense of approximately $10,000 and $30,000 in the three and nine months September 30, 2016, respectively, related to this obligation.
In December, 2011, the Company agreed to a settlement related to litigation with Carl Zeiss Meditec AG. In July 2017, the Company paid the remaining $500,000 due and there is no further obligation to Zeiss. The Company recorded interest expense of approximately $0 and $26,000 in the three and nine months ended September 30, 2017, respectively and $13,000 and $39,000 in the three and nine months ended September 30, 2016, respectively related to this obligation.
Other Commitments
The Company is obligated to pay approximately $0.8 million for firm purchase obligations to suppliers for future product and service deliverables.
Litigation
The Company is a party to various legal proceedings and claims arising out of the ordinary course of its business. Although the final results of all such matters and claims cannot be predicted with certainty, the Company currently believes that there are noother current proceedings or claims pending against it the ultimate resolution of which would have a material adverse effect on its financial condition or results of operations. However, should the Company fail to prevail in any legal matter or should several legal matters be resolved against the Company in the same reporting period, such matters could have a material adverse effect on our operating results and cash flows for that particular period. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies. Legal costs are expensed as incurred.
Note 10 - Fair Value Measurements
The Company follows the provisions of ASC Topic 820, “Fair Value Measurement and Disclosures”, (“ASC 820”). This topic defines fair value, establishes a framework for measuring fair value under US GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the assetor liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable certain accrued liabilities and debt. The carrying amounts of our cash and cash equivalents (which are composed primarily of deposit and overnight sweep accounts), accounts receivable, accounts payable and certain accrued liabilities approximate fair value due to the short maturity of these instruments. The carrying value of our term loan approximates fair value due to the market rate of the stated interest rate.
The Company’s assets that are measured at fair value on a recurring basis relate to the Company’s money market accounts.
The Company’s money market funds are included in cash and cash equivalents in the accompanying balance sheets and are considered a Level 1 investment as they are valued at quoted market prices in active markets.
The following table sets forth the Company’s assets and liabilities which are measured at fair value on a recurring basis by level within the fair value hierarchy.
Fair value measurements using: (000’s) as of December 31, 2016 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 6,622 | $ | — | $ | — | $ | 6,622 | ||||||||
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Total Assets | $ | 6,622 | $ | — | $ | — | $ | 6,622 | ||||||||
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Fair value measurements using: (000’s) as of September 30, 2017 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 10,054 | $ | — | $ | — | $ | 10,054 | ||||||||
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Total Assets | $ | 10,054 | $ | — | $ | — | $ | 10,054 | ||||||||
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iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Items Measured at Fair Value on a Nonrecurring Basis
Certain assets, including long-lived assets and goodwill, are measured at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be impaired. The Company recorded a $4.7 million impairment in the quarter ended September 30, 2017 which consisted of $4.0 million related to goodwill and $0.7 million related to long-lived assets as discussed in Note 12 and Note 13 and remeasured long-lived assets and goodwill of the Therapy reporting unit at fair value as of the impairment date as noted in the following table. The fair values of long-lived assets and goodwill were measured using Level 3 inputs.
Fair value measurements using: (000’s) as of September 30, 2017 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Non-recurring assets | ||||||||||||||||
Long-lived and intangible assets | $ | — | $ | — | $ | 780 | $ | 780 | ||||||||
Goodwill | — | — | 1,766 | 1,766 | ||||||||||||
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Total Assets | $ | — | $ | — | $ | 2,546 | $ | 2,546 | ||||||||
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On January 1, 2017, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)No. 2016-09,Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU2016-09”). Under ASU2016-09, excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement, and excess tax benefits are recognized regardless of whether the benefit reduces taxes payable in the current period. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. As a result of the adoption, the net operating loss deferred tax assets increased by $2.1 million and are offset by a corresponding increase in the valuation allowance. 2022.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
income tax returns in various states and local jurisdictions. The Company’s three preceding tax years remain subject to examination by federal and state taxingtax authorities. In addition, because the Company has net operating loss carry-forwards, the Internal Revenue Service and state jurisdictions are permitted to audit earlier years and propose adjustments up to the amount of net operating loss generated in those years. The Company is not currently under examination by any federal or state jurisdiction for any tax years.
In accordance with FASB ASC Topic350-20, “Intangibles - Goodwill and Other”, (“ASC350-20”),– Segment Reporting
Factors the Company considers important, which could trigger an impairment of such asset, include the following:
The Company would record an impairment charge if such an assessment were to indicate that the fair value of a reporting unit was less than the carrying value. In evaluating potential impairments outside of the annual measurement date, judgment is required in determining whether an event has occurred that may impair the value of goodwill or intangible assets. The Company utilizes either discounted cash flow models or other valuation models, such as comparative transactions and market multiples, to determine the fair value of reporting units. The Company makes assumptions about future cash flows, future operating plans, discount rates, comparable companies, market multiples, purchase price premiums and other factors in those models. Different assumptions and judgment determinations could yield different conclusions that would result in an impairment charge to income in the period that such change or determination was made.
As a result of the underperformance of the Therapy reporting unit as compared to expected future results, the Company determined there was a triggering event in the third quarter of 2017. As a result, the Company completed an interim impairment assessment. The interim test resulted in the fair value of the Therapy reporting unit being less than the carrying value of the reporting unit. The Company did not identify a triggering event within the Detection reporting unit and accordingly did not perform an interim test.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
The Company elected to early adopt ASU2017-04, Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment (“ASU2017-04”). ASU2017-04 specifies that goodwill impairment is the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. In accordance with the standard, the fair value of the Therapy reporting unit was $3.5 million and the carrying value was $7.5 million. The deficiency of $4.0 million was recorded as an impairment charge in the quarter ended September 30, 2017.
The carrying values of the reporting units were determined based on an allocation of our assets and liabilities through specific allocation of certain assets and liabilities to the reporting units and an apportionment of the remaining net assets based on the relative size of the reporting units’ revenues and operating expenses compared to the Company as a whole. The determination of reporting units also requires management judgment.
The Company determined the fair values for each reporting unit using a weighting of the income approach and the market approach. For purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk adjusted rate. The Company used internal forecasts to estimate future cash flows and includes an estimate of long-term future growth rates based on the most recent views of the long-term forecast for each segment. Accordingly, actual results can differ from those assumed in the forecasts. The discount rate of approximately 18% is derived from a capital asset pricing model and analyzing published rates for industries relevant to the reporting units to estimate the cost of equity financing. The Company uses discount rates that are commensurate with the risks and uncertainty inherent in the respective businesses and in the internally developed forecasts.
In the market approach, the Company uses a valuation technique in which values are derived based on market prices of publicly traded companies with similar operating characteristics and industries. A market approach allows for comparison to actual market transactions and multiples. It can be somewhat limited in its application because the population of potential comparable publicly-traded companies can be limited due to differing characteristics of the comparative business and ours, as well as market data may not be available for divisions within larger conglomerates ornon-public subsidiaries that could otherwise qualify as comparable, and the specific circumstances surrounding a market transaction (e.g., synergies between the parties, terms and conditions of the transaction, etc.) may be different or irrelevant with respect to the business.
The Company corroborated the total fair values of the reporting units using a market capitalization approach; however, this approach cannot be used to determine the fair value of each reporting unit value. The blend of the income approach and market approach is more closely aligned to the business profile of the Company, including markets served and products available. In addition, required rates of return, along with uncertainties inherent in the forecast of future cash flows, are reflected in the selection of the discount rate. In addition, under the blended approach, reasonably likely scenarios and associated
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
sensitivities can be developed for alternative future states that may not be reflected in an observable market price. The Company will assess each valuation methodology based upon the relevance and availability of the data at the time the valuation is performed and weight the methodologies appropriately.
As discussed in Note 3, in April 2015, the Company acquired VuComp’sM-Vu® Breast Density product for $1.7 million. The product was integrated into the Company’s Powerlook AMP system, which is a component of the Detection reporting unit. The Company determined that the acquisition was a business combination and recorded goodwill of $0.8 million to the Detection segment. In January 2016, the Company completed the acquisition of VuComp’sM-Vu CAD and other assets for $6,000. The customers, related technology and clinical data acquired are being used for the Company’s Cancer Detection workflow products, and the Company recorded goodwillTherapy segment consists of $293,000the Company’s radiation therapy products, and related services. The primary factors used by the Company’s CODM to the Detectionallocate resources are based on revenues, gross profit, operating income or loss, and earnings or loss before interest, taxes, depreciation, amortization, and other specific and
In December 2016, the Company entered into an Asset Purchase Agreement with Invivo Corporation. Included in segment operating income are stock compensation, amortization of technology and depreciation expense. There are no intersegment revenues.
A roll forward of goodwill activity by reportable segmentGAAP loss before income tax is as follows (in thousands):
| Detection | Therapy | Total | ||||||||||
Balance at December 31, 2016 | 8,362 | 5,735 | 14,097 | |||||||||
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Impairment | — | (3,969 | ) | (3,969 | ) | |||||||
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Balance at September 30, 2017 | $ | 8,362 | $ | 1,766 | $ | 10,128 | ||||||
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Accumulated Goodwill | 699 | 6,270 | 54,906 | |||||||||
Fair value allocation | 7,663 | 13,446 | — | |||||||||
Accumulated impairment | — | (17,950 | ) | (44,778 | ) | |||||||
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Balance at September 30, 2017 | $ | 8,362 | $ | 1,766 | $ | 10,128 | ||||||
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Note 13 - Long-lived assets
In accordance with FASB ASC Topic 360, “Property, Plant and Equipment” (“ASC 360”), the Company assesses long-lived assets for impairment if events and circumstances indicate it is more likely than not that the fair value of the asset group is less than the carrying value of the asset group.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
ASC360-10-35 uses “events and circumstances” criteria to determine when, if at all, an asset (or asset group) is evaluated for recoverability. Thus, there is no set interval or frequency for recoverability evaluation. In accordance with ASC360-10-35-21 the following factors are examples of events or changes in circumstances that indicate the carrying amount of an asset (asset group) may not be recoverable and thus is to be evaluated for recoverability.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Segment revenues: | ||||||||||||||||
Detection | $ | 5,289 | $ | 4,789 | $ | 10,809 | $ | 10,508 | ||||||||
Therapy | 2,286 | 3,037 | 4,289 | 5,962 | ||||||||||||
Total Revenue | $ | 7,575 | $ | 7,826 | $ | 15,098 | $ | 16,470 | ||||||||
Segment gross profit: | ||||||||||||||||
Detection | $ | 4,554 | $ | 4,005 | $ | 9,215 | $ | 8,730 | ||||||||
Therapy | 937 | 1,533 | 1,588 | 3,097 | ||||||||||||
Segment gross profit | $ | 5,491 | $ | 5,538 | $ | 10,803 | $ | 11,827 | ||||||||
Segment operating income (loss): | ||||||||||||||||
Detection | $ | 446 | $ | 52 | $ | 1,068 | $ | 993 | ||||||||
Therapy | (797 | ) | (250 | ) | (2,006 | ) | (562 | ) | ||||||||
Segment operating income (loss): | $ | (351 | ) | $ | (198 | ) | $ | (938 | ) | $ | 431 | |||||
General, administrative, depreciation and amortization expense | $ | (2,763 | ) | $ | (2,673 | ) | $ | (5,698 | ) | $ | (4,835 | ) | ||||
Interest expens e | — | (29 | ) | (1 | ) | (129 | ) | |||||||||
Interest income | 14 | 19 | 16 | 33 | ||||||||||||
Other expense | (18 | ) | (13 | ) | (41 | ) | (37 | ) | ||||||||
Loss on extinguishment of debt | — | (386 | ) | — | (386 | ) | ||||||||||
Loss before income tax | $ | (3,118 | ) | $ | (3,280 | ) | $ | (6,662 | ) | $ | (4,923 | ) | ||||
In accordance with ASC360-10-35-17, if the carrying amount of an asset or asset group (in use or under development) is evaluated and found not to be fully recoverable (the carrying amount exceeds the estimated gross, undiscounted cash flows from use and disposition), then an impairment loss must be recognized. The impairment loss is measured as the excess of the carrying amount over the assets (or asset group’s) fair value.
The Company completed an interim goodwill impairment assessment for the Therapy reporting unit and noted that there was a goodwill impairment (see Note 13). As a result, the Company determined this was a triggering event for long-lived assets. Accordingly, the Company completed an analysis pursuant to ASC360-10-35-17 and determined that the carrying value of the asset group exceeded the undiscounted cash flows, and that long-lived assets were impaired. The Company recorded long-lived asset impairment charges of approximately $0.7 million in the third quarter ended September 30, 2017 based on the deficiency between the book value of the assets and the fair value as determined in the analysis. At September 30, 2017, the long lived assets in the asset group are recorded at their current fair values.
A considerable amount of judgment and assumptions are required in performing the impairment tests, principally in determining the fair value of the asset group and the reporting unit. While the Company believes the judgments and assumptions are reasonable, different assumptions could change the estimated fair values and, therefore additional impairment charges could be required. Significant negative industry or economic trends, disruptions to the Company’s business, loss of significant customers, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets may adversely impact the assumptions used in the fair value estimates and ultimately result in future impairment charges.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
In accordance with FASB Topic ASC 280, “Segments”, operating segments, are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance.
The Company’s CODM is the CEO. Each segment generates revenue from the sale of medical equipment and related services and/or sale of supplies. – Subsequent Events
The Detection segment consists of our advanced image analysis and workflow products, andtransactions subsequent to the Therapy segment consists of our radiation therapy Axxent products, and related services. The primary factors used by our CODM to allocate resources are based on revenues, gross profit, operating income, and earnings or loss before interest, taxes, depreciation, amortization, and other specific andnon-recurring items (“Adjusted EBITDA”) of each segment. Included in segment operating income are stock compensation, amortization of technology and depreciation expense. There are no intersegment revenues.
Our CODM does not use asset information by segment to allocate resources or make operating decisions.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Segment revenues, gross profit, segment operating income or loss, and a reconciliation of segment operating income or loss to GAAP loss before income tax is as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Segment revenues: | ||||||||||||||||
Detection | $ | 4,346 | $ | 4,134 | $ | 13,066 | $ | 12,961 | ||||||||
Therapy | 2,654 | 1,869 | 7,134 | 6,449 | ||||||||||||
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Total Revenue | $ | 7,000 | $ | 6,003 | $ | 20,200 | $ | 19,410 | ||||||||
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Segment gross profit: | ||||||||||||||||
Detection | $ | 3,822 | $ | 3,586 | $ | 11,553 | $ | 11,429 | ||||||||
Therapy | 821 | 515 | 2,282 | 2,560 | ||||||||||||
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Segment gross profit | $ | 4,643 | $ | 4,101 | $ | 13,835 | $ | 13,989 | ||||||||
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Segment operating income (loss): | ||||||||||||||||
Detection | 1,475 | 1,250 | 4,261 | 4,494 | ||||||||||||
Therapy | (6,451 | ) | (2,055 | ) | (10,627 | ) | (5,398 | ) | ||||||||
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Segment operating income (loss) | $ | (4,976 | ) | $ | (805 | ) | $ | (6,366 | ) | $ | (904 | ) | ||||
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General, administrative, depreciation and amortization expense | $ | (1,966 | ) | $ | (1,847 | ) | $ | (6,143 | ) | $ | (5,774 | ) | ||||
Interest expense | (36 | ) | (15 | ) | (51 | ) | (59 | ) | ||||||||
Gain on sale of MRI assets | — | — | 2,508 | — | ||||||||||||
Other income | 3 | 2 | 3 | 9 | ||||||||||||
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Loss before income tax | $ | (6,975 | ) | $ | (2,665 | ) | $ | (10,049 | ) | $ | (6,728 | ) | ||||
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Note 15 - Recent Accounting Pronouncements
In May 2014, the FASB issued ASUNo. 2014-09, “Revenue from Contracts with Customers” (Topic 606), or ASU2014-09, which superseded nearly all existing revenue recognition guidance under U.S. GAAP. Since then, the FASB has also issued ASU2016-08, Revenue from Contracts with Customers (Topic 606), Principals versus Agent Considerations and ASU2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing, which further elaborate on the original ASUNo. 2014-09. The core principle of these updates is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled for those goods or services. ASU2014-09 defines a five step process to achieve this core principle and, in doing so, more judgments and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. In July 2015, the FASB approved aone-year deferral of the effectivebalance sheet date to January 1, 2018, with early adoption to be permitted as of the original effective date of January 1, 2017. Once this standard becomes effective, companies may use either of the following transition methods: (i) a full retrospective approach
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
reflecting the application of the standard in each reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU2014-09 recognized at the date of adoption (which includes additional footnote disclosures).
The Company has performed an assessmentthe filing and is not aware of its revenue streams and customer classes. The Company has used this informationany events or transactions that occurred subsequent to develop an implementation plan which it expects to complete during the fourth quarter of 2017. The Company does not expect that its revenue recognition will be materially impacted by the new guidance. The Company is also assessing the impact of the guidance on its contract costs in order to determine the magnitude of impact. The Company currently expects to adopt the guidance using the modified retrospective approach, and will finalize this selection along with completion of the implementation plan.
There are also certain considerations related to internal control over financial reporting that are associated with implementing Topic 606. The Company is evaluating its internal control framework over revenue recognition to identify any changes that may need to be made in relation to the implementation process, as well as upon adoption of the new guidance.
In addition, disclosure requirements under the new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance. The Company’s implementation phase includes designing and implementing the appropriate internal controls to obtain and disclose the information required under Topic 606.
The Company expects to adopt certain practical expedients and make certain policy elections related to the accounting for significant finance components, sales taxes, shipping and handling, costs to obtain a contract and immaterial promised goods or services, which will mitigate certain impacts of adopting Topic 606. The Company also expects to review the tax impact, if any, that Topic 606 will have on the financial statements.
In February 2016, the FASB issued ASUNo. 2016-02, “Leases”. The standard establishes aright-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financedate that would require recognition or operating, with classification affecting the pattern of expense recognitiondisclosure in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements, however the adoption of the standard is expected to increase both assets and liabilities for leases that would previously have beenoff-balance sheet operating leases.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
On January 1, 2017, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)No. 2016-09, “Compensation—Stock Compensation” (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU2016-09”), which simplifies several aspects of the accounting for employee share-based payment transactions, including income taxes consequences, classification of awards as either equity or liabilities, and classification in the statement of cash flows. Under ASU2016-09, excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement, and excess tax benefits are recognized regardless of whether the benefit reduces taxes payable in the current period. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. As a result of the adoption, the net operating loss deferred tax assets increased by $2.1 million and are offset by a corresponding increase in the valuation allowance.
In August 2016, the FASB issued ASU2016-15, “Statement of Cash Flows (Topic 230)”, a consensus of the FASB’s Emerging Issues Task Force. This update is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The update requires cash payments for debt prepayment or debt extinguishment costs to be classified as cash outflows for financing activities. It also requires cash payments made soon after an acquisition’s consummation date (approximately three months or less) to be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities. The amendment is effective for annual periods beginning after December 15, 2017, and interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption of this amendment will have a material impact on our consolidated financial statements.
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
Except as required by law, we undertake no obligation to update any such forward-looking statements to reflect events or circumstances after the date of such statements.
solutions. The Company has grown primarily through acquisitions including CADx, Qualia Computing, CAD Sciences, Xoft, DermEbx, Radionreports in two segments: Detection and VuComp. The Radion/DermEbx acquisition extended the Company’s position as a larger player in the oncology market, including the components that enable dermatologists and radiation oncologists to develop, launch and manage their electronic brachytherapy (“eBx”) programs for the treatment ofnon-melanoma skin cancer (“NMSC”). The VuComp acquisition included an extensive library of related clinical data which we use for cancer detection research and patents, as well as key personnel and expanded our customer base.
Therapy.
The Company intends to continue the extension of its image analysis and clinical decision support solutions for mammography and CT imaging. The Company believes that advances in digital imaging techniques, such as 3D mammography, should bolster its efforts to develop additional commercially viable CAD/advanced image analysis and workflow products. In January 2016, the Company completed the acquisition of VuComp’sM-Vufocus on cancer detection, portfolio includingM-Vu CAD for $6,000. The acquisition provided clinical data for researchbreast density assessment, and an additional customer install base to sell the Company’s
risk estimation.
As we have discussed in our risk factors noted in our Annual Report on Form10-K filed with the SEC for the year ended December 31, 2016, our business can be affected by coverage policies adopted by federal and state governmental authorities, such as Medicare and Medicaid, as well as private payers, which often follow the coverage policies of these public programs. Such policies may affect which products customers purchase and the prices customers are willing to pay for those products in a particular jurisdiction.
brain cancers.
California, and an office in Lyon, France.
Estimates
preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On anon-going ongoing basis, the Company evaluates these estimates, including those related to revenue recognition, allowance for doubtful accounts, receivable allowance, inventory valuation and obsolescence, intangible assets, goodwill, income taxes, warranty obligations, contingencies, and litigation. Additionally, the Company uses assumptions and estimates in calculations to determine stock-based compensation.compensation, and evaluation of litigation. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
June 30, 2022 compared to three and six months ended June 30, 2021 (in thousands, except share data or as noted)
Three months ended June 30 | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 3,467 | $ | 3,164 | $ | 303 | 9.6 | % | ||||||||
Service and supplies revenue | 1,822 | 1,625 | 197 | 12.1 | % | |||||||||||
Subtotal | 5,289 | 4,789 | 500 | 10.4 | % | |||||||||||
Therapy revenue | ||||||||||||||||
Product revenue | 1,008 | 1,388 | (380 | ) | -27.4 | % | ||||||||||
Service and supplies revenue | 1,278 | 1,649 | (371 | ) | -22.5 | % | ||||||||||
Subtotal | 2,286 | 3,037 | (751 | ) | -24.7 | % | ||||||||||
Total revenue | $ | 7,575 | $ | 7,826 | $ | (251 | ) | -3.2 | % | |||||||
Revenue: (in thousands)
| Three months ended September 30, | ||||||||||||||||
| 2017 | 2016 | Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 2,758 | $ | 1,991 | $ | 767 | 38.5 | % | ||||||||
Service revenue | 1,588 | 2,143 | (555 | ) | (25.9 | )% | ||||||||||
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Subtotal | 4,346 | 4,134 | 212 | 5.1 | % | |||||||||||
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Therapy revenue | ||||||||||||||||
Product revenue | 668 | 23 | 645 | 2804.3 | % | |||||||||||
Service revenue | 1,986 | 1,846 | 140 | 7.6 | % | |||||||||||
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Subtotal | 2,654 | 1,869 | 785 | 42.0 | % | |||||||||||
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Total revenue | $ | 7,000 | $ | 6,003 | $ | 997 | 16.6 | % | ||||||||
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Three months ended September 30, 2017 and 2016:
Total revenue for the three month period ended September 30, 2017 was $7.0 million compared with revenue of $6.02021 to $7.6 million for the three month periodmonths ended SeptemberJune 30, 2016,2022. The decrease is due to an increase in Detection revenue of approximately $1.0$0.5 million or 16.6%. The increase in revenue was due to increases in Detection revenues of approximately $0.2 million and an increaseoffset by a decrease in Therapy revenue of approximately $0.8$0.7 million.
During the first half of 2022, the Company has seen increased customer demand for subscription licenses, which currently remains a small portion of the Company’s total license revenue. The Company believes this trend could accelerate. An increase in subscription revenue would negatively impact revenue in the short term, because revenue from subscription licenses are recognized over time, as opposed to on delivery for perpetual licenses.
Six months ended June 30 | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 7,331 | $ | 7,325 | $ | 6 | 0.1 | % | ||||||||
Service and supplies revenue | 3,478 | 3,183 | 295 | 9.3 | % | |||||||||||
Subtotal | 10,809 | 10,508 | 301 | 2.9 | % | |||||||||||
Therapy revenue | ||||||||||||||||
Product revenue | 1,704 | 2,784 | (1,080 | ) | -38.8 | % | ||||||||||
Service and supplies revenue | 2,585 | 3,178 | (593 | ) | -18.7 | % | ||||||||||
Subtotal | 4,289 | 5,962 | (1,673 | ) | -28.1 | % | ||||||||||
Total revenue | $ | 15,098 | $ | 16,470 | $ | (1,372 | ) | -8.3 | % | |||||||
DetectionAxxent systems and can vary significantly from quarter to quarter due to changes in the number of units sold, and the average selling price. The Company believes that Therapy product revenue was adversely affected by the COVID-19 pandemic during the six months ended June 30, 2022 and 2021.
Cost of Revenue and Gross Profit: | Three months ended June 30 | |||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
| Products | $ | 1,008 | $ | 1,377 | $ | (369 | ) | -26.8 | % | |||||||
| Service and supplies | 1,001 | 832 | 169 | 20.3 | % | |||||||||||
| Amortization and depreciation | 75 | 79 | (4 | ) | -5.1 | % | ||||||||||
| Total cost of revenue | $ | 2,084 | $ | 2,288 | $ | (204 | ) | -8.9 | % | |||||||
Three months ended June 30 | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
| Detection gross profit | $ | 4,554 | $ | 4,005 | $ | 549 | 13.7 | % | ||||||||
| Therapy gross profit | 937 | 1,533 | (596 | ) | -38.9 | % | ||||||||||
| Gross profit | $ | 5,491 | $ | 5,538 | $ | (47 | ) | -0.8 | % | |||||||
Therapy product revenue was approximately $0.7$1.4 million for the three months ended SeptemberJune 30, 2017 as compared2021 to $23,000 for the three months ended September 30, 2016. The increase in product revenue for the quarter ended September 30, 2017 is due to the sale of Axxent eBx systems in the quarter. Product revenue from the sale of our Axxent eBx systems can vary significantly due to an increase or decrease in the number of units sold which can cause a significant fluctuation in product revenue in the period.
Therapy service and supply revenue was approximately $2.0 million for the three months ended
September 30, 2017 as compared to $1.9$1.0 million for the three months ended SeptemberJune 30, 2016. Therapy service and supplies revenue is primarily the services related to electronic brachytherapy fornon-melanoma skin cancer (“NMSC”).
2022. Cost of Revenue and Gross Profit: (in thousands)
| Three months ended September 30, | ||||||||||||||||
| 2017 | 2016 | Change | % Change | |||||||||||||
Products | $ | 636 | $ | 236 | $ | 400 | 169.5 | % | ||||||||
Service and supplies | 1,458 | 1,370 | 88 | 6.4 | % | |||||||||||
Amortization and depreciation | 263 | 296 | (33 | ) | (11.1 | )% | ||||||||||
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Total cost of revenue | $ | 2,357 | $ | 1,902 | $ | 455 | 23.9 | % | ||||||||
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Gross profit | $ | 4,643 | $ | 4,101 | $ | 542 | 13.2 | % | ||||||||
Gross profit % | 66.3 | % | 68.3 | % | (2.0 | )% | ||||||||||
| Three months ended September 30, | ||||||||||||||||
| 2017 | 2016 | Change | % Change | |||||||||||||
Detection gross profit | $ | 3,822 | $ | 3,586 | $ | 236 | 6.6 | % | ||||||||
Therapy gross profit | 821 | 515 | 306 | 59.4 | % | |||||||||||
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Gross profit | $ | 4,643 | $ | 4,101 | $ | 542 | 13.2 | % | ||||||||
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Gross profit for the three month period ended September 30, 2017 was $4.6 million, or 66.3% of revenue as compared to $4.1 million or 68.3% of revenue in the three month period ended September 30, 2016. Gross profit percent changes are primarily due to changes in the mix of business, consulting costs related tonon-recurring engineering revenue, additional manufacturing investments and amortization of acquired intangibles.
Operating Expenses: (in thousands)
| Three months ended September 30, | ||||||||||||||||
| 2017 | 2016 | Change | Change % | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 2,254 | $ | 2,360 | $ | (106 | ) | (4.5 | )% | |||||||
Marketing and sales | 2,580 | 2,322 | 258 | 11.1 | % | |||||||||||
General and administrative | 1,944 | 1,783 | 161 | 9.0 | % | |||||||||||
Amortization and depreciation | 107 | 288 | (181 | ) | (62.8 | )% | ||||||||||
Goodwill and long-lived asset impairment | 4,700 | — | 4,700 | 0.0 | % | |||||||||||
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Total operating expenses | $ | 11,585 | $ | 6,753 | $ | 4,832 | 71.6 | % | ||||||||
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Operating expenses increased by approximately $4.8 million or 71.6% in the three months ended SeptemberJune 30, 2017. The increase is due primarily2021 as compared to the goodwill and long lived asset impairment of $4.7 million.
Engineering and Product Development.Engineering and product development costs were approximately $2.3 million32.3% for the three month periodmonths ended SeptemberJune 30, 20172022. The cost of service and supplies as compareda percentage of revenue increased primarily as a result of a temporary reduction in average selling price for certain supplies to $2.4 million for the three month periods ended September 30, 2016. Detection engineeringcertain customers, including clinical trial participants.
Marketing and Sales.Marketing and sales expenses increased by $0.3 million or 11.1%, from $2.3 million in the three month period ended September 30, 2016 to $2.6 million in the three month period ended September 30, 2017. Detection marketing and sales expense increased $0.2 million from $0.9 million in the three months ended September 30, 2016 to $1.1 million for the three months ended September 30, 2017. The increase in Detection marketing and sales expenses was due primarily to increases in commissions and stock compensation. Therapy marketing and sales expense increased by $0.1 million from $1.5 million in the three months ended September 30, 2016 to $1.6 million in the three months ended September 30, 2017.
General and Administrative.General and administrative expenses increased by $0.2 million or 9.0%, from $1.8 million in the three month period ended September 30, 2016 to $1.9 million in the three month period ended September 30, 2017. The increase was due primarily to an increase in consulting and personnel costs.
Amortization and Depreciation.Amortization and depreciation is primarily related to acquired intangible assets and depreciation related to machinery and equipment. Amortization and depreciation decreased to approximately $0.1 million in the quarter ended September 30, 2017 from $0.3 million for the quarter ended September 30, 2016. The decrease is due primarily to the sale of MRI assets in January 2017.
Goodwill and long-lived asset impairment.In the third quarter of 2017, the Company determined there was a triggering event, and accordingly completed an interim goodwill and long-lived asset impairment In the quarter ended September 30, 2017, the Company recorded an impairment charge of $4.0 million related to goodwill and $0.7 million related to intangible assets.
Other Income and Expense: (in thousands)
| Three months ended September 30, | ||||||||||||||||
| 2017 | 2016 | Change | Change % | |||||||||||||
Interest expense | $ | (36 | ) | $ | (15 | ) | (21 | ) | 140.0 | % | ||||||
Interest income | 3 | 2 | 1 | 50.0 | % | |||||||||||
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| $ | (33 | ) | $ | (13 | ) | $ | (20 | ) | 153.8 | % | ||||||
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Tax benefit (expense) | $ | 42 | $ | (10 | ) | $ | 52 | (520.0 | )% | |||||||
Interest expense. Interest expense of $36,000 increased by $21,000 or 140.0% for the three month period ended September 30, 2017 as compared to interest expense of $15,000 in the three month period ended September 30, 2016. The increase in interest expense is due primarily to the interest expense associated with the Silicon Valley Bank term loan signed in August, 2017.
Other income. Other income was $3,000 and $2,000, respectively, for the three month periods ended September 30, 2017 and 2016.
Tax benefit (expense). The Company had a tax benefit of $42,000 for the three month period ended September 30, 2017 as compared to tax expense of $10,000 for the three month period ended September 30, 2016. The tax benefit for the quarter ended September 30, 2017 is the result of applying for New Hampshire research and development credits. Tax expense for the quarter ended September 30, 2016 is due primarily to statenon-income and franchise based taxes.
Nine months ended September 30, 2017 compared to the nine months ended September 30, 2016
Revenue: (in thousands)
Detection revenue Product revenue Service revenue Subtotal Therapy revenue Product revenue Service revenue Subtotal Total revenue Nine months ended September 30, 2017 2016 Change % Change $ 7,970 $ 6,580 $ 1,390 21.1 % 5,096 6,381 (1,285 ) (20.1 )% 13,066 12,961 105 0.8 % 1,255 880 375 42.6 % 5,879 5,569 310 5.6 % 7,134 6,449 685 10.6 % $ 20,200 $ 19,410 $ 790 4.1 %
Nine months ended September 30, 2017 and 2016:
Total revenue for the nine month period ended September 30, 2017 was $20.2 million compared with revenue of $19.4 million for the nine month period ended September 30, 2016, an increase of approximately $0.8 million, or 4.1%. The increase in revenue was due to a $0.7 million increase in Therapy revenue and an increase in Detection revenues of approximately $0.1 million.
Detection product revenue increased by approximately $1.4 million from $6.6 million to $8.0 million or 21.1% in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase is due primarily to an increase in CAD revenues of $2.2 million offset by decreases in MRI revenue of approximately $0.7 million and $0.1 million in colon revenue. The decrease in MRI revenue is due primarily to the sale of the Company’s MRI assets in January 2017.
Detection service and supplies revenue decreased by approximately $1.3 million from $6.4 million in the nine months ended September 30, 2016 to $5.1 million in the nine months ended September 30, 2017. The decrease in service and supplies is due primarily to the sale of the Company’s MRI assets in January 2017. Service and supplies revenue reflects the sale of service contracts to our installed base of customers. We expect service and supplies revenue related to our installed base of customers to vary from quarter to quarter as customers transition from 2D CAD to digital tomosynthesis.
Therapy product revenue was approximately $1.3 million for the nine months ended September 30, 2017 as compared to $0.9 million for the nine months ended September 30, 2016. Product revenue from the sale of our Axxent eBx systems can vary significantly due to an increase or decrease in the number of units sold which can cause a significant fluctuation in product revenue in the period.
Therapy service and supplies revenue increased approximately $0.3 million from $5.6 million in the nine months ended September 30, 2016 to $5.9 million for the nine months ended September 30, 2017. The increase in Therapy service and supplies revenue is due primarily to an increase in the services related to electronic brachytherapy for NMSC.
Cost of Revenue and Gross Profit: (in thousands)
| Nine months ended September 30, | ||||||||||||||||
| 2017 | 2016 | Change | % Change | |||||||||||||
Products | $ | 1,349 | $ | 611 | $ | 738 | 120.8 | % | ||||||||
Service and supplies | 4,169 | 3,911 | 258 | 6.6 | % | |||||||||||
Amortization and depreciation | 847 | 899 | (52 | ) | (5.8 | )% | ||||||||||
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Total cost of revenue | $ | 6,365 | $ | 5,421 | $ | 944 | 17.4 | % | ||||||||
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Gross profit | $ | 13,835 | $ | 13,989 | $ | (154 | ) | (1.1 | )% | |||||||
Gross profit % | 68.5 | % | 72.1 | % | (3.6 | )% | ||||||||||
| Nine months ended September 30, | ||||||||||||||||
| 2017 | 2016 | Change | % Change | |||||||||||||
Detection gross profit | $ | 11,553 | $ | 11,429 | $ | 124 | 1.1 | % | ||||||||
Therapy gross profit | 2,282 | 2,560 | (278 | ) | (10.9 | %) | ||||||||||
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Gross profit | $ | 13,835 | $ | 13,989 | $ | (154 | ) | (1.1 | %) | |||||||
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2021:
Cost of Revenue and Gross Profit: | ||||||||||||||||
Six months ended June 30 | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
| Products | $ | 2,095 | $ | 2,786 | $ | (691 | ) | -24.8 | % | |||||||
| Service and supplies | 2,050 | 1,699 | 351 | 20.7 | % | |||||||||||
| Amortization and depreciation | 150 | 158 | (8 | ) | -5.1 | % | ||||||||||
| Total cost of revenue | $ | 4,295 | $ | 4,643 | $ | (348 | ) | -7.5 | % | |||||||
Six months ended June 30 | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
| Detection gross profit | $ | 9,215 | $ | 8,730 | $ | 485 | 5.6 | % | ||||||||
| Therapy gross profit | 1,588 | 3,097 | (1,509 | ) | -48.7 | % | ||||||||||
| Gross profit | $ | 10,803 | $ | 11,827 | $ | (1,024 | ) | -8.7 | % | |||||||
Operating Expenses: (in thousands)
| Nine months ended September 30, | ||||||||||||||||
| 2017 | 2016 | Change | Change % | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 7,060 | $ | 6,835 | $ | 225 | 3.3 | % | ||||||||
Marketing and sales | 8,172 | 7,379 | 793 | 10.7 | % | |||||||||||
General and administrative | 6,067 | 5,586 | 481 | 8.6 | % | |||||||||||
Amortization and depreciation | 345 | 867 | (522 | ) | (60.2 | )% | ||||||||||
Goodwill and long-lived asset impairment | 4,700 | — | 4,700 | 0.0 | % | |||||||||||
Gain from sale of MRI assets | (2,508 | ) | — | (2,508 | ) | 0.0 | % | |||||||||
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Total operating expenses | $ | 23,836 | $ | 20,667 | $ | 3,169 | 15.3 | % | ||||||||
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Three months ended June 30, | ||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 2,367 | $ | 2,268 | $ | 99 | 4.4 | % | ||||||||
Marketing and sales | 3,435 | 3,429 | 6 | 0.2 | % | |||||||||||
General and administrative | 2,742 | 2,652 | 90 | 3.4 | % | |||||||||||
Amortization and depreciation | 61 | 60 | 1 | 1.7 | % | |||||||||||
Total operating expenses | $ | 8,605 | $ | 8,409 | $ | 196 | 2.3 | % | ||||||||
2022.
Other Income and Expense: | ||||||||||||||||
Three months ended June 30 | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Interest expense | $ | — | $ | (29 | ) | $ | 29 | -100.0 | % | |||||||
Interest income | 14 | 19 | (5 | ) | -26.3 | % | ||||||||||
Other loss | (18 | ) | (13 | ) | (5 | ) | 38.5 | % | ||||||||
Loss on extinguishment of debt | — | (386 | ) | 386 | -100.0 | % | ||||||||||
| $ | (4 | ) | $ | (409 | ) | $ | 405 | -99.0 | % | |||||||
Tax benefit (expense) | $ | — | $ | — | $ | — | 0.0 | % | ||||||||
Six months ended June 30 | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 4,642 | $ | 4,460 | $ | 182 | 4.1 | % | ||||||||
Marketing and sales | 7,000 | 6,853 | 147 | 2.1 | % | |||||||||||
General and administrative | 5,673 | 4,803 | 870 | 18.1 | % | |||||||||||
Amortization and depreciation | 124 | 115 | 9 | 7.8 | % | |||||||||||
Total operating expenses | $ | 17,439 | $ | 16,231 | $ | 1,208 | 7.4 | % | ||||||||
study expenses.
resulting from the reduction of pandemic travel restrictions.
allowance for doubtful accounts.
Other Income and Expense: Six months ended June 30, 2022 and 2021: |
Other Income and Expense: | ||||||||||||||||
Six months ended June 30 | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Interest expense | $ | (1 | ) | $ | (129 | ) | $ | 128 | -99.2 | % | ||||||
Interest income | 16 | 33 | (17 | ) | -51.5 | % | ||||||||||
Other loss | (41 | ) | (37 | ) | (4 | ) | 10.8 | % | ||||||||
Loss on extinguishment of debt | — | (386 | ) | 386 | -100.0 | % | ||||||||||
| $ | (26 | ) | $ | (519 | ) | $ | 493 | -95.0 | % | |||||||
Tax benefit (expense) | $ | (1 | ) | $ | — | $ | (1 | ) | 0.0 | % | ||||||
Gain2021.
Goodwill and long-lived asset impairment.In the third quarter of 2017, the Company determined there was a triggering event, and accordingly completed an interim goodwill and long-lived asset impairment In the quarter ended September 30, 2017, the Company recorded an impairment charge of $4.0 millionapproximately $386,000 related to goodwillthe repayment and $0.7 million related to intangible assets.
Other Income and Expense: (in thousands)
| Nine months ended September 30, | ||||||||||||||||
| 2017 | 2016 | Change | Change % | |||||||||||||
Interest expense | $ | (51 | ) | $ | (59 | ) | $ | 8 | (13.6 | )% | ||||||
Interest income | 3 | 9 | (6 | ) | (66.7 | )% | ||||||||||
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| $ | (48 | ) | $ | (50 | ) | $ | 2 | (4.0 | )% | |||||||
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Tax benefit (expense) | $ | 28 | $ | (55 | ) | $ | 83 | (150.9 | )% | |||||||
Interest expense. Interest expenseretirement of $51,000 decreased by $8,000 or 13.6%the Loan Agreement as of the six months ended June 30, 2021. The loss on extinguishment was composed of approximately $140,000 for a prepayment fee, $122,000 for the nine month period ended September 30, 2017 as compared to interest expense of $59,000 in the nine month period ended September 30, 2016. Interest expenseunaccrued final payment, $65,000 termination, and other fees, and $58,000 for the nineunamortized and other closing costs from opening the loan
Interest income. Interest income was $3,000 and $9,000 for the nine month period ended September 30, 2017 and September 30, 2016, respectively which reflected income earned from our money market accounts.
Tax benefit (expense). The Company had a tax benefit of $28,000 for the nine month period ended September 30, 2017 as compared to tax expense of $55,000 for the nine month period ended September 30, 2016. The tax benefit for the nine months ended September 30, 2017 is the result of applying for New Hampshire research and development credits. Tax expense for the nine months ended September 30, 2016 is due primarily to statenon-income and franchise based taxes.
2022.
We believe (in thousands, except as noted)
As of September 30, 2017,cash requirements are increased, the Company has current assetsmay require additional financing, although there are no guarantees that the Company will be able to obtain the financing if necessary. In addition, the resurgence of $22.4 million which includes $11.3 million of cashthe
| For the nine months ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| (in thousands) | ||||||||
Net cash used for operating activities | $ | (5,565 | ) | $ | (3,862 | ) | ||
Net cash provided by (used for) investing activities | 2,486 | (262 | ) | |||||
Net cash provided by (used for) financing activities | 5,755 | (673 | ) | |||||
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Increase (decrease) in cash and equivalents | $ | 2,676 | $ | (4,797 | ) | |||
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3.36, respectively.
For the six months ended June 30, | ||||||||
2022 | 2021 | |||||||
Net cash used for operating activities | $ | (7,009 | ) | $ | (5,577 | ) | ||
Net cash used for investing activities | (265 | ) | (336 | ) | ||||
Net cash provided by financing activities | 172 | 16,616 | ||||||
(Decrease) increase in cash and equivalents | $ | (7,102 | ) | $ | 10,703 | |||
The net
Contractual Obligations
The following table summarizes, for the periods presented, our future estimated cash payments under existing contractual obligations (in thousands).
Contractual Obligations | Payments due by period | |||||||||||||||||||
| Total | Less than 1 year | 1-3 years | 3-5 years | 5+ years | ||||||||||||||||
Operating Lease Obligations | $ | 1,848 | $ | 742 | $ | 1,106 | $ | — | $ | — | ||||||||||
Capital lease obligations | 42 | $ | 12 | 30 | — | — | ||||||||||||||
Settlement Obligations | 500 | 500 | — | — | — | |||||||||||||||
Notes Payable | 6,615 | 591 | 4,324 | 1,700 | — | |||||||||||||||
Other Commitments | 825 | 632 | 84 | 32 | 77 | |||||||||||||||
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Total Contractual Obligations | $ | 9,830 | $ | 2,477 | $ | 5,544 | $ | 1,732 | $ | 77 | ||||||||||
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Operating lease obligations are the minimum payments due under these obligations.
Settlement obligations represent the remaining payments1,393,738 shares of the obligations to Hologic. The Company paid $0.5 millionCompany’s common stock at an offering price of $18.00 per share resulting in July 2017 which represented the remaining settlement obligation to Zeiss.
Other commitments represent firm purchase obligations to suppliers for future product and service deliverables.
net proceeds of approximately $23.2 million.
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
We believe we are
Item 4. | Controls and Procedures |
Our
Ourprocedures.
Please refer to the detailed discussion regarding litigation set forth in Note 8 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q.
The Company is involved in various legal matters that are in the process of litigation or settled in the ordinary course of business. Although the final results of all such matters and claims cannot be predicted with certainty, we believe that the ultimate resolution of all such matters and claims will not have a material adverse effect on our financial condition. However, such matters could have a material adverse effect on our operating results and cash flows for a particular period.
Item 1A. | Risk Factors: |
| Item | Exhibits |
Month of purchase | Total number of shares purchased (1) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum dollar value of shares that may yet be purchaed under the plans or programs | ||||||||||||
July 1 - July 31, 2017 | — | $ | — | $ | — | $ | — | |||||||||
August 1 - August 30, 2017 | 7,629 | 3.77 | — | — | ||||||||||||
September 1 - September 31, 2017 | — | — | — | — | ||||||||||||
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Total | 7,629 | $ | 3.77 | $ | — | $ | — | |||||||||
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| Certification of | ||
| Certification of | ||
| The following materials formatted in XBRL (eXtensible Business Reporting Language); (i) Condensed Consolidated Balance Sheets as of | ||
| 104* | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). | |
| * | Filed herewith |
| ** | Furnished herewith |
iCAD, Inc. | ||||
| (Registrant) |
| Date: August 15, 2022 | ||||||
| By: | /s/ | |||||
Name: Title: | Stacey Stevens Chief Executive Officer (Principal Executive Officer) | |||||
| Date: August 15, 2022 |
| |||||
| By: | /s/ | ||||
Name: Title: |
Stephen P. Sarno Interim Chief Financial Officer (Principal Financial Officer) | |||||
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