☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 02-0377419 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
98 Spit Brook Road, Suite 100, Nashua, NH | 03062 | |
(Address of principal executive offices) | (Zip Code) |
Large Accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
Page | ||||||||||
PART I | FINANCIAL INFORMATION | |||||||||
Item 1 | ||||||||||
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3 | ||||||||||
4 | ||||||||||
5 | ||||||||||
6-7 | ||||||||||
8-35 | ||||||||||
Item 2 | 35-51 | |||||||||
Item 3 | 52 | |||||||||
Item 4 | 52 | |||||||||
PART II | OTHER INFORMATION | |||||||||
Item 1 | 53 | |||||||||
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Item 1A | 54 | |||||||||
Item 6 | 56 | |||||||||
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57 |
March 31, | December 31, | |||||||
2020 | 2019 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 14,256 | $ | 15,313 | ||||
Trade accounts receivable, net of allowance for doubtful accounts of $255 in 2020 and $136 in 2019 | 7,090 | 9,819 | ||||||
Inventory, net | 2,462 | 2,611 | ||||||
Prepaid expenses and other current assets | 1,497 | 1,453 | ||||||
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Total current assets | 25,305 | 29,196 | ||||||
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Property and equipment, net of accumulated depreciation of $6,580 in 2020 and $6,510 in 2019 | 636 | 551 | ||||||
Operating lease assets | 2,322 | 2,406 | ||||||
Other assets | 93 | 50 | ||||||
Intangible assets, net of accumulated amortization of $8,263 in 2020 and $8,186 in 2019 | 1,107 | 1,183 | ||||||
Goodwill | 8,362 | 8,362 | ||||||
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Total assets | $ | 37,825 | $ | 41,748 | ||||
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Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,674 | $ | 1,990 | ||||
Accrued and other expenses | 6,100 | 6,590 | ||||||
Notes payable - current portion | — | 4,250 | ||||||
Lease payable - current portion | 809 | 758 | ||||||
Deferred revenue | 5,259 | 5,248 | ||||||
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Total current liabilities | 13,842 | 18,836 | ||||||
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Lease payable, long-term portion | 1,707 | 1,837 | ||||||
Notes payable, long-term portion | 6,957 | 2,003 | ||||||
Convertible debentures payable tonon-related parties, at fair value | — | 12,409 | ||||||
Convertible debentures payable to related parties, at fair value | — | 1,233 | ||||||
Deferred revenue, long-term portion | 232 | 356 | ||||||
Deferred tax | 4 | 3 | ||||||
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Total liabilities | 22,742 | 36,677 | ||||||
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Commitments and Contingencies (Note 7) | ||||||||
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 21,425,916 in 2020 and 19,546,151 in 2019 outstanding 21,240,085 in 2020 and 19,360,320 in 2019. | 215 | 195 | ||||||
Additionalpaid-in capital | 252,419 | 230,615 | ||||||
Accumulated deficit | (236,136 | ) | (224,324 | ) | ||||
Treasury stock at cost, 185,831 shares in 2020 and 2019 | (1,415 | ) | (1,415 | ) | ||||
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Total stockholders’ equity | 15,083 | 5,071 | ||||||
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Total liabilities and stockholders’ equity | $ | 37,825 | $ | 41,748 | ||||
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September 30, | December 31, | |||||||
Assets | 2020 | 2019 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 22,633 | $ | 15,313 | ||||
Trade accounts receivable, net of allowance for doubtful accounts of $216 in 2020 and $136 in 2019 | 8,376 | 9,819 | ||||||
Inventory, net | 3,146 | 2,611 | ||||||
Prepaid expenses and other current assets | 1,662 | 1,453 | ||||||
Total current assets | 35,817 | 29,196 | ||||||
Property and equipment, net of accumulated depreciation of $6,716 in 2020 and $6,510 in 2019 | 620 | 551 | ||||||
Operating lease assets | 1,945 | 2,406 | ||||||
Other assets | 101 | 50 | ||||||
Intangible assets, net of accumulated amortization of $8,418 in 2020 and $8,186 in 2019 | 962 | 1,183 | ||||||
Goodwill | 8,362 | 8,362 | ||||||
Total assets | $ | 47,807 | $ | 41,748 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,084 | $ | 1,990 | ||||
Accrued and other expenses | 4,679 | 6,590 | ||||||
Notes payable - current portion | 994 | 4,250 | ||||||
Lease payable - current portion | 822 | 758 | ||||||
Deferred revenue | 5,644 | 5,248 | ||||||
Total current liabilities | 14,223 | 18,836 | ||||||
Lease payable, long-term portion | 1,287 | 1,837 | ||||||
Notes payable, long-term portion | 6,729 | 2,003 | ||||||
Convertible debentures payable to non-related parties, at fair value | — | 12,409 | ||||||
Convertible debentures payable to related parties, at fair value | — | 1,233 | ||||||
Deferred revenue, long-term portion | 219 | 356 | ||||||
Deferred tax | 4 | 3 | ||||||
Total liabilities | 22,462 | 36,677 | ||||||
Commitments and Contingencies (Note 7) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.01 par value: authorized 1,000,000 shares; NaN issued. | — | — | ||||||
Common stock, $ 0.01 par value: authorized 30,000,000 shares; issued 23,155,482 as ofSeptember 30, 2020 | 231 | 195 | ||||||
Additional paid-in capital | 266,861 | 230,615 | ||||||
Accumulated deficit | (240,332 | ) | (224,324 | ) | ||||
Treasury stock at cost, 185,831 shares in 2020 and 2019 | (1,415 | ) | (1,415 | ) | ||||
Total stockholders’ equity | 25,345 | 5,071 | ||||||
Total liabilities and stockholders’ equity | $ | 47,807 | $ | 41,748 | ||||
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Revenue: | ||||||||
Products | $ | 3,795 | $ | 3,822 | ||||
Service and supplies | 2,756 | 2,951 | ||||||
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Total revenue | 6,551 | 6,773 | ||||||
Cost of revenue: | ||||||||
Products | 1,017 | 680 | ||||||
Service and supplies | 927 | 717 | ||||||
Amortization and depreciation | 97 | 94 | ||||||
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Total cost of revenue | 2,041 | 1,491 | ||||||
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Gross profit | 4,510 | 5,282 | ||||||
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Operating expenses: | ||||||||
Engineering and product development | 2,211 | 2,127 | ||||||
Marketing and sales | 3,608 | 2,573 | ||||||
General and administrative | 2,532 | 1,546 | ||||||
Amortization and depreciation | 52 | 70 | ||||||
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Total operating expenses | 8,403 | 6,316 | ||||||
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Loss from operations | (3,893 | ) | (1,034 | ) | ||||
Interest expense | (130 | ) | (209 | ) | ||||
Other income | 42 | 59 | ||||||
Loss on extinguishment of debt | (341 | ) | — | |||||
Loss on fair value of convertible debentures | (7,464 | ) | (2,525 | ) | ||||
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Other expense, net | (7,893 | ) | (2,675 | ) | ||||
Loss before income tax expense | (11,786 | ) | (3,709 | ) | ||||
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Tax expense | (26 | ) | (8 | ) | ||||
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Net loss and comprehensive loss | $ | (11,812 | ) | $ | (3,717 | ) | ||
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Net loss per share: | ||||||||
Basic | $ | (0.59 | ) | $ | (0.22 | ) | ||
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Diluted | $ | (0.59 | ) | $ | (0.22 | ) | ||
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Weighted average number of shares used in computing loss per share: | ||||||||
Basic | 20,175 | 17,200 | ||||||
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Diluted | 20,175 | 17,200 | ||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenue: | ||||||||||||||||
Products | $ | 4,538 | $ | 5,156 | $ | 11,220 | $ | 13,331 | ||||||||
Service and supplies | 2,591 | 2,701 | 8,027 | 8,628 | ||||||||||||
Total revenue | 7,129 | 7,857 | 19,247 | 21,959 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Products | 1,345 | 809 | 2,899 | 2,134 | ||||||||||||
Service and supplies | 667 | 891 | 2,169 | 2,466 | ||||||||||||
Amortization and depreciation | 92 | 103 | 287 | 297 | ||||||||||||
Total cost of revenue | 2,104 | 1,803 | 5,355 | 4,897 | ||||||||||||
Gross profit | 5,025 | 6,054 | 13,892 | 17,062 | ||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | 1,849 | 2,485 | 5,938 | 6,751 | ||||||||||||
Marketing and sales | 2,979 | 3,588 | 9,218 | 9,281 | ||||||||||||
General and administrative | 1,834 | 1,872 | 6,476 | 5,276 | ||||||||||||
Amortization and depreciation | 52 | 69 | 153 | 206 | ||||||||||||
Total operating expenses | 6,714 | 8,014 | 21,785 | 21,514 | ||||||||||||
Loss from operations | (1,689 | ) | (1,960 | ) | (7,893 | ) | (4,452 | ) | ||||||||
Interest expense | (115 | ) | (193 | ) | (360 | ) | (604 | ) | ||||||||
Other income | 10 | 103 | 85 | 226 | ||||||||||||
Loss on extinguishment of debt | — | — | (341 | ) | — | |||||||||||
Loss on fair value of convertible debentures | — | (900 | ) | (7,464 | ) | (5,340 | ) | |||||||||
Other expense, net | (105 | ) | (990 | ) | (8,080 | ) | (5,718 | ) | ||||||||
Loss before income tax expense | (1,794 | ) | (2,950 | ) | (15,973 | ) | (10,170 | ) | ||||||||
Tax expense | (3 | ) | (6 | ) | (34 | ) | (33 | ) | ||||||||
Net loss and comprehensive loss | $ | (1,797 | ) | $ | (2,956 | ) | $ | (16,007 | ) | $ | (10,203 | ) | ||||
Net loss per share: | ||||||||||||||||
Basic | $ | (0.08 | ) | $ | (0.15 | ) | $ | (0.73 | ) | $ | (0.57 | ) | ||||
Diluted | $ | (0.08 | ) | $ | (0.15 | ) | $ | (0.73 | ) | $ | (0.57 | ) | ||||
Weighted average number of shares used in computing loss per share: | ||||||||||||||||
Basic | 23,173 | 19,284 | 21,827 | 18,049 | ||||||||||||
Diluted | 23,173 | 19,284 | 21,827 | 18,049 | ||||||||||||
For the three months ended March 31 | ||||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Cash flow from operating activities: | ||||||||
Net loss | $ | (11,812 | ) | $ | (3,717 | ) | ||
Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
Amortization | 79 | 95 | ||||||
Depreciation | 70 | 69 | ||||||
Bad debt provision | 119 | — | ||||||
Stock-based compensation expense | 464 | 212 | ||||||
Amortization of debt discount and debt costs | 40 | 39 | ||||||
Loss on extinguishment of debt | 341 | — | ||||||
Deferred tax expense | 1 | — | ||||||
Change in fair value of convertible debentures | 7,464 | 2,525 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 2,610 | (984 | ) | |||||
Inventory | 149 | (403 | ) | |||||
Prepaid and other current assets | (72 | ) | (347 | ) | ||||
Accounts payable | (317 | ) | 330 | |||||
Accrued expenses | (439 | ) | 414 | |||||
Deferred revenue | (113 | ) | (46 | ) | ||||
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Total adjustments | 10,396 | 1,904 | ||||||
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Net cash used for operating activities | (1,416 | ) | (1,813 | ) | ||||
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Cash flow from investing activities: | ||||||||
Additions to patents, technology and other | (1 | ) | (1 | ) | ||||
Additions to property and equipment | (155 | ) | (28 | ) | ||||
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Net cash used for investing activities | (156 | ) | (29 | ) | ||||
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Cash flow from financing activities: | ||||||||
Stock option exercises | 196 | 1,175 | ||||||
Principal payments of capital lease obligations | — | (3 | ) | |||||
Principal repayment of debt financing | (4,638 | ) | (200 | ) | ||||
Repayment of line of credit | (2,000 | ) | — | |||||
Proceeds from debt financing | 7,000 | — | ||||||
Debt issuance costs | (43 | ) | — | |||||
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Net cash provided by financing activities | 515 | 972 | ||||||
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Decrease in cash and equivalents | (1,057 | ) | (870 | ) | ||||
Cash and equivalents, beginning of period | 15,313 | 12,185 | ||||||
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Cash and equivalents, end of period | $ | 14,256 | $ | 11,315 | ||||
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Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | 122 | $ | 82 | ||||
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Taxes paid | $ | 26 | $ | 8 | ||||
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Issuance of stock upon conversion of debentures | 21,164 | — | ||||||
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Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 69 | $ | 907 | ||||
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For the Nine Months ended September 30, | ||||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Cash flow from operating activities: | ||||||||
Net loss | $ | (16,007 | ) | $ | (10,203 | ) | ||
Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
Amortization of Intangible Assets | 234 | 283 | ||||||
Depreciation | 206 | 220 | ||||||
Bad debt provision | 80 | 62 | ||||||
Stock-based compensation | 2,542 | 856 | ||||||
Amortization of debt discount and debt costs | 65 | 109 | ||||||
Loss on extinguishment of debt | 341 | — | ||||||
Deferred tax expense | 1 | — | ||||||
Change in fair value of convertible debentures | 7,464 | 5,340 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 1,151 | (1,672 | ) | |||||
Inventory | (535 | ) | (800 | ) | ||||
Prepaid and other current assets | 69 | 165 | ||||||
Accounts payable | 96 | 101 | ||||||
Accrued expenses | (2,322 | ) | 837 | |||||
Deferred revenue | 532 | (70 | ) | |||||
Total adjustments | 9,924 | 5,431 | ||||||
Net cash used for operating activities | (6,083 | ) | (4,772 | ) | ||||
Cash flow from investing activities: | ||||||||
Additions to patents, technology and other | (11 | ) | (8 | ) | ||||
Additions to property and equipment | (275 | ) | (211 | ) | ||||
Net cash used for investing activities | (286 | ) | (219 | ) | ||||
Cash flow from financing activities: | ||||||||
Issuance of common stock pursuant to stock option plans | 415 | 1,396 | ||||||
Issuance of common stock pursuant to Employee Stock Purchase Plan | 209 | — | ||||||
Taxes paid related to restricted stock issuance | (225 | ) | (106 | ) | ||||
Principal payments of capital lease obligations | — | (10 | ) | |||||
Principal repayment of debt financing | (4,638 | ) | (1,400 | ) | ||||
Proceeds from Line of Credit | 775 | 1,000 | ||||||
Repayment to Line of Credit | (2,000 | ) | — | |||||
Proceeds from debt financing | 6,957 | — | ||||||
Debt issuance costs | 22 | — | ||||||
Proceeds from issuance of common stock, net | 12,174 | 9,353 | ||||||
Net cash provided by financing activities | 13,689 | 10,233 | ||||||
Increase in cash and equivalents | 7,320 | 5,242 | ||||||
Cash and cash equivalents, beginning of period | 15,313 | 12,185 | ||||||
Cash and cash equivalents, end of period | $ | 22,633 | $ | 17,427 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | 127 | $ | 404 | ||||
Taxes paid | $ | 34 | $ | 33 | ||||
Issuance of stock upon conversion of debentures | 21,164 | — | ||||||
Right-of-use | $ | 69 | $ | 2,641 | ||||
See accompanying notes to condensed consolidated financial statements. |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Stockholders’ Equity | ||||||||||||||||||||
Number of Shares Issued | Par Value | |||||||||||||||||||||||
Balance at December 31, 2019 | 19,546,151 | $ | 196 | $ | 230,615 | $ | (224,325 | ) | $ | (1,415 | ) | $ | 5,071 | |||||||||||
Issuance of common stock relative to vesting of restricted stock | 97,830 | — | (225 | ) | (225 | ) | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans | 94,678 | 1 | 416 | — | — | 417 | ||||||||||||||||||
Stock Issuance Net | 1,562,500 | 16 | 12,158 | — | — | 12,174 | ||||||||||||||||||
Issuance of common stock pursuant Employee Stock Purchase Plan | 34,857 | 209 | 209 | |||||||||||||||||||||
Issuance of stock upon conversion of Debentures | 1,819,466 | 18 | 21,146 | — | — | 21,164 | ||||||||||||||||||
Stock-based compensation | — | — | 2,542 | 2,542 | ||||||||||||||||||||
Net loss | — | — | — | (16,007 | ) | — | (16,007 | ) | ||||||||||||||||
Balance at September 30, 2020 | 23,155,482 | $ | 231 | $ | 266,861 | $ | (240,332 | ) | $ | (1,415 | ) | $ | 25,345 | |||||||||||
to Date
Common Stock | Additional | |||||||||||||||||||||||
Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
Balance at December 31, 2019 | 19,546,151 | $ | 196 | $ | 230,616 | $ | (224,325 | ) | $ | (1,415 | ) | $ | 5,071 | |||||||||||
Issuance of common stock relative to vesting of restricted stock | 23,500 | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans | 36,799 | 1 | 195 | — | — | 196 | ||||||||||||||||||
Issuance of stock for Debentures | 1,819,466 | 18 | 21,146 | — | — | 21,164 | ||||||||||||||||||
Stock-based compensation | 464 | 464 | ||||||||||||||||||||||
Net loss | — | — | — | (11,812 | ) | — | (11,812 | ) | ||||||||||||||||
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Balance at March 31, 2020 | 21,425,916 | $ | 215 | $ | 252,421 | $ | (236,137 | ) | $ | (1,415 | ) | $ | 15,083 | |||||||||||
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Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Stockholders’ Equity | ||||||||||||||||||||
Number of Shares Issued | Par Value | |||||||||||||||||||||||
Balance at June 30, 2020 | 23,060,272 | $ | 231 | $ | 266,211 | $ | (238,535 | ) | $ | (1,415 | ) | $ | 26,492 | |||||||||||
Issuance of common stock relative to vesting of restricted stock | 29,106 | — | (94 | ) | — | — | (94 | ) | ||||||||||||||||
Issuance of common stock pursuant to stock option plans | 49,712 | — | 185 | — | — | 185 | ||||||||||||||||||
Stock Issuance Net | — | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock pursuant Employee Stock Purchase Plan | 16,392 | — | 94 | — | — | 94 | ||||||||||||||||||
Issuance of stock upon conversion of Debentures | — | — | — | — | — | — | ||||||||||||||||||
Stock-based compensation | — | — | 465 | — | — | 465 | ||||||||||||||||||
Net loss | — | — | — | (1,797 | ) | — | (1,797 | ) | ||||||||||||||||
Balance at September 30, 2020 | 23,155,482 | $ | 231 | $ | 266,861 | $ | (240,332 | ) | $ | (1,415 | ) | $ | 25,345 | |||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Stockholders’ Equity | ||||||||||||||||||||
Number of Shares Issued | Par Value | |||||||||||||||||||||||
Balance at December 31, 2018 | 17,066,510 | $ | 171 | $ | 218,914 | $ | (210,774 | ) | $ | (1,415 | ) | $ | 6,896 | |||||||||||
Issuance of common stock relative to vesting of restricted stock shares forfeited for tax obligations | 122,993 | 1 | (106 | ) | — | — | (106 | ) | ||||||||||||||||
Issuance of common stock pursuant to stock option plans | 428,980 | 4 | 1,392 | — | — | 1,396 | ||||||||||||||||||
Stock Issuance net of issuance costs | 1,881,818 | 19 | 9,334 | 9,353 | ||||||||||||||||||||
Stock-based compensation | — | — | 856 | — | — | 856 | ||||||||||||||||||
Net loss | — | — | — | (10,203 | ) | — | (10,203 | ) | ||||||||||||||||
Balance at September 30, 2019 | 19,500,301 | $ | 195 | $ | 230,390 | $ | (220,977 | ) | $ | (1,415 | ) | $ | 8,192 | |||||||||||
to Date
Common Stock | Additional | |||||||||||||||||||||||
Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
Balance at December 31, 2018 | 17,066,510 | $ | 171 | $ | 218,914 | $ | (210,774 | ) | $ | (1,415 | ) | $ | 6,896 | |||||||||||
Issuance of common stock relative to vesting of restricted stock | 66,334 | 1 | (1 | ) | — | — | — | |||||||||||||||||
Issuance of common stock pursuant to stock option plans | 367,421 | 3 | 1,172 | — | — | 1,175 | ||||||||||||||||||
Stock-based compensation | — | — | 212 | — | — | 212 | ||||||||||||||||||
Net loss | — | — | — | (3,717 | ) | — | (3,717 | ) | ||||||||||||||||
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Balance at March 31, 2019 | 17,500,265 | $ | 175 | $ | 220,297 | $ | (214,491 | ) | $ | (1,415 | ) | $ | 4,566 | |||||||||||
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Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Stockholders’ Equity | ||||||||||||||||||||
Number of Shares Issued | Par Value | |||||||||||||||||||||||
Balance at June 30, 2019 | 19,447,763 | $ | 194 | $ | 230,141 | $ | (218,021 | ) | $ | (1,415 | ) | $ | 10,899 | |||||||||||
Issuance of common stock relative to vesting of restricted stock shares forfeited for tax obligations | 51,871 | 1 | (91 | ) | — | — | (91 | ) | ||||||||||||||||
Issuance of common stock pursuant to stock option plans | 667 | — | — | — | — | — | ||||||||||||||||||
Stock-based compensation | 340 | 340 | ||||||||||||||||||||||
Net loss | — | — | — | (2,956 | ) | — | (2,956 | ) | ||||||||||||||||
Balance at September 30, 2019 | 19,500,301 | $ | 195 | $ | 230,390 | $ | (220,977 | ) | $ | (1,415 | ) | $ | 8,192 |
Our results for the quarter ending March 31,September 30, 2020 reflect a negative impact from among other things, theshipping, logistics, acceptance and installation and training have been delayedthe typical sales cycle and ordering patterns disrupted. were still disrupted due to some healthcare facilities’ additional focus onwe dothe Company does not provide guidance to investors relating to ourits future results of operations, we expect that ourits results for the quarter ending June 30,December 31, 2020, and possibly future quarters, willcould reflect a continuing negative impact from theourthe Company’s results over the long term is uncertain.
The Company’s exposure
Three months ended March 31, 2020 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 3,100 | $ | 1,346 | $ | 4,446 | ||||||
Service contracts | 1,347 | 347 | 1,694 | |||||||||
Supply and source usage agreements | — | 371 | 371 | |||||||||
Professional services | — | 11 | 11 | |||||||||
Other | 29 | — | 29 | |||||||||
|
|
|
|
|
| |||||||
$ | 4,476 | $ | 2,075 | $ | 6,551 | |||||||
|
|
|
|
|
| |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 3,129 | $ | 1,383 | $ | 4,512 | ||||||
Services transferred over time | 1,347 | 692 | 2,039 | |||||||||
|
|
|
|
|
| |||||||
$ | 4,476 | $ | 2,075 | $ | 6,551 | |||||||
|
|
|
|
|
| |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 2,172 | $ | 1,469 | $ | 3,641 | ||||||
OEM partners | 2,304 | — | 2,304 | |||||||||
Channel partners | — | 606 | 606 | |||||||||
|
|
|
|
|
| |||||||
$ | 4,476 | $ | 2,075 | $ | 6,551 | |||||||
|
|
|
|
|
|
Three months ended March 31, 2019 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 2,790 | $ | 1,519 | $ | 4,309 | ||||||
Service contracts | 1,322 | 516 | 1,838 | |||||||||
Supply and source usage agreements | — | 537 | 537 | |||||||||
Professional services | — | 33 | 33 | |||||||||
Other | 56 | — | 56 | |||||||||
|
|
|
|
|
| |||||||
$ | 4,168 | $ | 2,605 | $ | 6,773 | |||||||
|
|
|
|
|
| |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 2,790 | $ | 1,632 | $ | 4,422 | ||||||
Services transferred over time | 1,378 | 973 | 2,351 | |||||||||
|
|
|
|
|
| |||||||
$ | 4,168 | $ | 2,605 | $ | 6,773 | |||||||
|
|
|
|
|
| |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 2,057 | $ | 1,812 | $ | 3,869 | ||||||
OEM partners | 2,111 | — | 2,111 | |||||||||
Channel partners | — | 793 | 793 | |||||||||
|
|
|
|
|
| |||||||
$ | 4,168 | $ | 2,605 | $ | 6,773 | |||||||
|
|
|
|
|
|
Three months ended September 30, 2020 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 3,889 | $ | 1,038 | $ | 4,927 | ||||||
Service contracts | 1,400 | 347 | 1,747 | |||||||||
Supply and source usage agreements | — | 444 | 444 | |||||||||
Professional services | — | 9 | 9 | |||||||||
Other | 2 | — | 2 | |||||||||
$ | 5,291 | $ | 1,838 | $ | 7,129 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 3,889 | $ | 1,051 | $ | 4,940 | ||||||
Services transferred over time | 1,402 | 787 | 2,189 | |||||||||
$ | 5,291 | $ | 1,838 | $ | 7,129 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 2,904 | $ | 857 | $ | 3,761 | ||||||
OEM partners | 2,387 | — | 2,387 | |||||||||
Channel partners | — | 981 | 981 | |||||||||
$ | 5,291 | $ | 1,838 | $ | 7,129 | |||||||
Nine months ended September 30, 2020 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 9,690 | $ | 2,959 | $ | 12,649 | ||||||
Service contracts | 4,151 | 1,079 | 5,230 | |||||||||
Supply and source usage agreements | — | 1,305 | 1,305 | |||||||||
Professional services | — | 20 | 20 | |||||||||
Other | 43 | — | 43 | |||||||||
$ | 13,884 | $ | 5,363 | $ | 19,247 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 9,731 | $ | 3,039 | $ | 12,770 | ||||||
Services transferred over time | 4,153 | 2,324 | 6,477 | |||||||||
$ | 13,884 | $ | 5,363 | $ | 19,247 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 7,785 | $ | 3,131 | $ | 10,916 | ||||||
OEM partners | 6,099 | — | 6,099 | |||||||||
Channel partners | — | 2,232 | 2,232 | |||||||||
$ | 13,884 | $ | 5,363 | $ | 19,247 | |||||||
Three months ended September 30, 2019 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 4,749 | $ | 841 | $ | 5,590 | ||||||
Service contracts | 1,336 | 446 | 1,782 | |||||||||
Supply and source usage agreements | — | 465 | 465 | |||||||||
Professional services | — | 18 | 18 | |||||||||
Other | 2 | — | 2 | |||||||||
$ | 6,087 | $ | 1,770 | $ | 7,857 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 4,749 | $ | 892 | $ | 5,641 | ||||||
Services transferred over time | 1,338 | 878 | 2,216 | |||||||||
$ | 6,087 | $ | 1,770 | $ | 7,857 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 3,467 | $ | 1,280 | $ | 4,747 | ||||||
OEM partners | 2,620 | — | 2,620 | |||||||||
Channel partners | — | 490 | 490 | |||||||||
$ | 6,087 | $ | 1,770 | $ | 7,857 | |||||||
Nine months ended September 30, 2019 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 11,347 | $ | 3,410 | $ | 14,757 | ||||||
Service contracts | 4,012 | 1,437 | 5,449 | |||||||||
Supply and source usage agreements | — | 1,528 | 1,528 | |||||||||
Professional services | — | 59 | 59 | |||||||||
Other | 105 | 61 | 166 | |||||||||
$ | 15,464 | $ | 6,495 | $ | 21,959 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 11,347 | $ | 3,668 | $ | 15,015 | ||||||
Services transferred over time | 4,117 | 2,827 | 6,944 | |||||||||
$ | 15,464 | $ | 6,495 | $ | 21,959 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 8,441 | $ | 4,793 | $ | 13,234 | ||||||
OEM partners | 7,023 | — | 7,023 | |||||||||
Channel partners | — | 1,702 | 1,702 | |||||||||
$ | 15,464 | $ | 6,495 | $ | 21,959 | |||||||
accordance with ASC 606. The consideration allocated to the lease component was recognized as lease revenue on a straight-line basis over the specified term of the agreement, as this is consistent with how the service is consumed. Revenue for thelease and
customer
Contract balances
Balance at | ||||
March 31, 2020 | ||||
Receivables, which are included in ‘Trade accounts receivable’ | $ | 7,090 | ||
Contract assets, which are included in “Prepaid and other current assets” | 14 | |||
Contract liabilities, which are included in “Deferred revenue” | 5,491 |
Contract balances | ||||
Balance at September 30, 2020 | ||||
Receivables, which are included in “Trade accounts receivable” | $ | 8,376 | ||
Contract assets, which are included in “Prepaid and other current assets” | 7 | |||
Contract liabilities, which are included in “Deferred revenue” | 5,863 |
Contract liabilities
March 31, 2020 | December 31, 2019 | |||||||
Short term | $ | 5,259 | $ | 5,248 | ||||
Long term | 232 | 356 | ||||||
|
|
|
| |||||
Total | $ | 5,491 | $ | 5,604 | ||||
|
|
|
|
Contract liabilities | September 30, 2020 | December 31, 2019 | ||||||
Short term | $ | 5,644 | $ | 5,248 | ||||
Long term | 219 | 356 | ||||||
Total | $ | 5,863 | $ | 5,604 | ||||
Three Months Ended | ||||
March 31, 2020 | ||||
Balance at beginning of period | $ | 5,604 | ||
Deferral of revenue | 2,226 | |||
Recognition of deferred revenue | (2,339 | ) | ||
|
| |||
Balance at end of period | $ | 5,491 | ||
|
|
Nine Months Ended September 30, | ||||
Balance at beginning of period | $ | 5,604 | ||
Deferral of revenue | 8,092 | |||
Recognition of deferred revenue | (7,833 | ) | ||
Balance at end of period | $ | 5,863 | ||
Three Months Ended | ||||||||
March 31, | ||||||||
2020 | 2019 | |||||||
Net loss | $ | (11,812 | ) | $ | (3,717 | ) | ||
|
|
|
| |||||
Shares used in the calculation of basic and diluted net loss per share | 20,175 | 17,200 | ||||||
|
|
|
| |||||
Diluted shares used in the calculation of net loss per share | 20,175 | 17,200 | ||||||
|
|
|
| |||||
Net loss per share - basic and diluted | $ | (0.59 | ) | $ | (0.22 | ) | ||
|
|
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net loss | $ | (1,797 | ) | $ | (2,956 | ) | $ | (16,007 | ) | $ | (10,203 | ) | ||||
Shares used in the calculation of basic and diluted net loss per share | 23,173 | 19,284 | 21,827 | 18,049 | ||||||||||||
Diluted shares used in the calculation of net loss per share | 23,173 | 19,284 | 21,827 | 18,049 | ||||||||||||
Net loss per share - basic and dilute d | $ | (0.08 | ) | $ | (0.15 | ) | $ | (0.73 | ) | $ | (0.57 | ) | ||||
Period Ended | ||||||||
March 31, | ||||||||
2020 | 2019 | |||||||
Stock options | 1,747,363 | 1,548,818 | ||||||
Restricted stock | 74,492 | 270,064 | ||||||
Convertible Debentures | — | 1,742,500 | ||||||
|
|
|
| |||||
Stock options and restricted stock | 1,821,855 | 3,561,382 | ||||||
|
|
|
|
As of September 30, | ||||||||
2020 | 2019 | |||||||
Stock options | 1,971,704 | 1,509,292 | ||||||
Restricted stock | 29,166 | 191,909 | ||||||
Convertible Debentures | — | 1,742,500 | ||||||
Total | 2,000,870 | 3,443,701 | ||||||
as of March 31, 2020 | as of December 31, 2019 | |||||||
Raw materials | $ | 1,502 | $ | 1,572 | ||||
Work in process | 97 | 39 | ||||||
Finished Goods | 1,147 | 1,469 | ||||||
|
|
|
| |||||
Inventory Gross | 2,746 | 3,080 | ||||||
Inventory Reserve | (284 | ) | (469 | ) | ||||
|
|
|
| |||||
Inventory Net | $ | 2,462 | $ | 2,611 | ||||
|
|
|
|
As of September 30, 2020 | As of December 31, 2019 | |||||||
Raw materials | $ | 1,422 | $ | 1,572 | ||||
Work in process | 324 | 39 | ||||||
Finished Goods | 1,629 | 1,469 | ||||||
Inventory Gross | 3,375 | 3,080 | ||||||
Inventory Reserve | (229 | ) | (469 | ) | ||||
Inventory Net | $ | 3,146 | $ | 2,611 | ||||
On August 7, 2017, the Company entered into a Loan and Security Agreement, which has since been modified, most recently by the Fifth Loan Modification Agreement dated as of November 1, 2019 (as amended, the “SVB Loan Agreement”) with Silicon Valley Bank (“SVB”) that provided an initial term loan facility of $6.0 million and a $4.0 million revolving line of credit.
On March 30, 2020, the Company elected to repay all outstanding obligations (including accrued interest) and retire the SVB Loan Agreement. The Company accounted for this repayment and retirement as an extinguishment of the SVB Loan Agreement. In addition to the outstanding principal and accrued interest, the Company was required to pay the $510,000 final payment (of which approximately $325,000 was accrued through March 31, 2020), a termination fee of $114,000 and other costs totaling $10,000. The Company also wrote off any unamortized original closing costs as of the extinguishment date. The Company recorded a loss on extinguishment of approximately $341,000 related to the repayment and retirement of the SVB Loan Agreement. The loss on extinguishment was composed of approximately $185,000 for the unaccrued final payment, $114,000 termination fee, and $42,000 for the unamortized and other closing costs.
(b) Loan and Security Agreement – Western Alliance Bank
Interest in arrears on the Term Loan will beginbegan to be repaid on April 1, 2020 and continueswill continue to be paid on the first of each successive month thereafter until the principal repayment starts. Commencing on the principal repayment date on of September 1, 2021 (or March 1, 2022 if the Company achieves a specified revenue target for any trailing six month
The Prime Rate as of September 30, 2020 was 3.25%.
above or
On June 21, 2019, the Company commenced paying interest to the Investors on the outstanding principal amount of the Convertible Debentures at the rate of 5.0% per annum, payable semi-annually on December 21st and June 21st as well as on each conversion date (as to that principal amount then being converted) and on the maturity date. The Convertible Debentures were due to mature on December 21, 2021.
At any time prior to the maturity date, the Convertible Debentures were convertible into shares of the Company’s common stock at a conversion price of $4.00 per share, at an Investor’s option, subject to certain anti-dilution adjustments. Upon the satisfaction of certain conditions, the Company had the right to cause the Investors to convert all or part of the then outstanding principal amount of the Convertible Debentures (a “Forced Conversion”). In connection with such Forced Conversion, the Company was required to pay accrued but unpaid interest, an interest make-whole amount determined based on the timing of the Forced Conversion and interest payments made to that date, liquidated damages and other amounts owing to the Investors under the Convertible Debentures. The conversion price in both the optional conversion and Forced Conversion provisions were subject to adjustment due to certain ‘down-round’ dilutive issuances as well for typical anti-dilutive actions, such as stock splits and stock dividends.
The Convertible Debentures also included certain liquidated damages provisions, whereby the Company would have been required to compensate the Investors for certain contingent events, such as the failure to timely deliver conversion shares of common stock, failure to timely pay any accrued interest when due and failure to timely issue certain public reports.
Certain Investors in the Convertible Debentures included directors and employees of the Company. These related parties comprised approximately 9.6% of the principal value of the Convertible Debentures, or $670,000. The Convertible Debentures issued to the related parties had substantially the same rights and provisions as the unrelated third party investors, with the exception of certain terms where the related parties received less favorable terms than the unrelated third parties (such as with determination of the make-whole conversion rate, as defined in the SPA; or limits on the impact of potential ‘down-round’ adjustments to the conversion price).
On the Conversion Date, the required conditions were met, and the Company elected to exercise its forced conversion right under the terms of the Convertible Debentures.
Input | December 31, 2019 | February 21, 2019 | ||||||||
Company’s stock price | $ | 7.77 | $ | 11.64 | ||||||
Conversion price | 4.00 | 4.00 | ||||||||
Remaining term (years) | 1.97 | 0.00 | ||||||||
Equity volatility | 49.00 | % | N/A | |||||||
Risk free rate | 1.57 | % | N/A | |||||||
1 | Probabilty of default event | 0.45 | % | N/A | ||||||
1 | Utilization of Forced Conversion (if available) | 100.00 | % | 100.00 | % | |||||
1 | Exercise of Default Redemption (if available) | 100.00 | % | N/A | ||||||
1 | Effective discount rate | 18.52 | % | N/A |
|
Input | December 31, 2019 | February 21, 2020 | ||||||
Company’s stock price | $ | 7.77 | $ | 11.64 | ||||
Conversion price | 4.00 | 4.00 | ||||||
Remaining term (years) | 1.97 | 0.00 | ||||||
Equity volatility | 49.00 | % | N/A | |||||
Risk free rate | 1.57 | % | N/A | |||||
1 Probabilty of default event | 0.45 | % | N/A | |||||
1 Utilization of Forced Conversion (if available) | 100.00 | % | 100.00 | % | ||||
1 Exercise of Default Redemption (if available) | 100.00 | % | N/A | |||||
1 Effective discount rate | 18.52 | % | N/A | |||||
1 Represents a Level 3 unobservable input, as defined in Note 8 - Fair Value Measurements, below. |
Convertible Debentures | December 31, 2019 | February 21, 2020 | ||||||
Fair value, in accordance with fair value option | $ | 13,642 | $ | 21,164 | ||||
|
|
|
| |||||
Principal value outstanding | $ | 6,970 | $ | 6,970 | ||||
|
|
|
|
Convertible Debentures | December 31, 2019 | February 21, 2020 | ||||||
Fair value, in accordance with fair value option | $ | 13,642 | $ | 21,164 | ||||
Principal value outstanding | $ | 6,970 | $ | 6,970 |
Fiscal Year | Amount Due | |||
2020 | $ | 281 | ||
2021 | $ | 1,238 | ||
2022 | $ | 2,875 | ||
2023 | $ | 2,735 | ||
2024 | $ | 1,004 | ||
|
| |||
Total | $ | 8,133 | ||
|
|
Amount Due | ||||
2020 | $ | 94 | ||
2021 | 1,238 | |||
2022 | 2,875 | |||
2023 | 2,735 | |||
2024 | 1,003 | |||
Total | $ | 7,945 | ||
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Cash interest expense | $ | 43 | $ | 82 | ||||
Interest on convertible debentures | 49 | 87 | ||||||
Accrual of notes payable final payment | 31 | 32 | ||||||
Amortization of debt costs | 7 | 7 | ||||||
Interest expense capital lease | — | 1 | ||||||
|
|
|
| |||||
Total interest expense | $ | 130 | $ | 209 | ||||
|
|
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Cash interest expense | $ | 94 | $ | 65 | $ | 232 | $ | 222 | ||||||||
Interest on convertible debentures | 0 | 87 | 49 | 261 | ||||||||||||
Accrual of notes payable final payment | 8 | 34 | 47 | 98 | ||||||||||||
Amortization of debt costs | 13 | 7 | 32 | 21 | ||||||||||||
Interest expense capital lease | 0 | 0 | 0 | 2 | ||||||||||||
Total interest expense | $ | 115 | $ | 193 | $ | 360 | $ | 604 | ||||||||
On January 1, 2019, the Company adopted
Under ASC 842,842”), the Company determines if an arrangement contains a lease at inception. A lease is a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment (i.e., an identified asset) for a period of time in exchange for consideration. Leases are classified as either operating leases or financing.financing leases. At lease inception, the Company recognizes a lease liability equal to the present value of the remaining lease payments, and a right of use asset equal to the lease liability, subject to certain adjustments, such as for lease incentives. The Company useduses its incremental borrowing rate to determine the present value of the lease payments. The Company determineddetermines the incremental borrowing rates for its leases by applying its applicable, fully collateralized borrowing rate, with adjustment as appropriate for the lease term. The lease term at the lease commencement date is determined based on theconsideredconsiders a number of factors when evaluating whether the options in its lease contracts wereare reasonably certain of exercise, such as length of time before option exercise, expected value of the leased asset at the end of the initial lease term, importance of the lease to overall operations, costs to negotiate a new lease, and any contractual or economic penalties.is accountingaccounted for the complete agreement under ASC 606 upon adoption of ASC 842.
Required Disclosures under ASC 842
Lease Cost | Classification | Three Months Ended March 31, 2020 | ||||
Operating lease cost | Operating expenses | $ | 224 | |||
Finance lease costs | ||||||
Amortization of leased assets | Amortization and depreciation | 4 | ||||
Interest on lease liabilities | Interest expense | 1 | ||||
|
| |||||
Total | $ | 229 | ||||
|
|
Lease Cost | Classification | Three Months Ended September 30, 2020 | Year Ended December 31, 2019 | |||||||
Operating lease cost | Operating expenses | $ | 217 | $ | 804 | |||||
Finance lease costs | ||||||||||
Amortization of leased assets | Amortization and depreciation | 4 | 15 | |||||||
Interest on lease liabilities | Interest expense | 0 | 2 | |||||||
Total | $ | 221 | $ | 821 | ||||||
Three Months Ended March 31, 2020 | ||||
Cash paid for operating cash flows from operating leases | $ | 216 | ||
Cash paid for operating cash flows from finance leases | 1 | |||
Cash paid for financing cash flows from finance leases | 4 |
| ||||
| ||||
| ||||
|
Three Months Ended September 30, 2020 | ||||
Cash paid from operating cash flows for operating leases | $ | 229 | ||
Cash paid from operating cash flows for finance leases | 0 | |||
Cash paid from financing cash flows for finance leases | 4 | |||
As of September 30, 2020 | ||||
Weighted-average remaining lease term of operating leases (in years) | 2.45 | |||
Weighted-average remaining lease term of finance leases (in years) | — | |||
Weighted-average discount rate for operating leases | 5.6 | % | ||
Weighted-average discount rate for finance leases | 0 |
Three Months Ended March 31: | Operating Leases | Finance Leases | Total | |||||||||
2020 | 692 | 9 | 701 | |||||||||
2021 | 920 | — | 920 | |||||||||
2022 | 899 | — | 899 | |||||||||
2023 | 211 | — | 211 | |||||||||
2024 | 5 | — | 5 | |||||||||
|
|
|
|
|
| |||||||
Total lease payments | 2,727 | 9 | 2,736 | |||||||||
Less: imputed interest | (219 | ) | (1 | ) | (220 | ) | ||||||
|
|
|
|
|
| |||||||
Total lease liabilities | 2,508 | 8 | 2,516 | |||||||||
Less: current portion of lease liabilities | (801 | ) | (8 | ) | (809 | ) | ||||||
|
|
|
|
|
| |||||||
Long-term lease liabilities | $ | 1,707 | $ | — | $ | 1,707 | ||||||
|
|
|
|
|
|
As of September 30, 2020: | Operating Leases | Finance Leases | Total | |||||||||
2020 | $ | 228 | — | 228 | ||||||||
2021 | 920 | — | 920 | |||||||||
2022 | 899 | — | 899 | |||||||||
2023 | 211 | — | 211 | |||||||||
2024 | 5 | — | 5 | |||||||||
Total lease payments | 2,263 | — | 2,263 | |||||||||
Less: imputed interest | (154 | ) | — | (154 | ) | |||||||
Total lease liabilities | 2,109 | — | 2,109 | |||||||||
Less: current portion of lease liabilities | (822 | ) | — | (822 | ) | |||||||
Long-term lease liabilities | $ | 1,287 | $ | — | $ | 1,287 | ||||||
Three Months Ended March 31, | ||||
2020 | 2019 | |||
Average risk-free interest rate | 1.24% | 2.38% | ||
Expected dividend yield | None | None | ||
Expected life | 3.5 years | 3.5 years | ||
Expected volatility | 50.2% to 64.0% | 53.1% to 54.2% | ||
Weighted average exercise price | $8.26 | $4.35 | ||
Weighted average fair value | $3.19 | $1.78 | ||
Remaining expense | $1,632 | $1,579 | ||
Weighted average term | 1.0 | 1.0 |
Three Months Ended | Nine Months Ended | |||||||
September 30, | September 30, | |||||||
19 | 19 | |||||||
Average risk-free interest rate | 0.15% | 1.60% | 0.79% | 1.99% | ||||
Expected dividend yield | NaN | NaN | NaN | NaN | ||||
Expected life | 3.5 years | 3.5 years | 3.5 years | 3.5 years | ||||
Expected volatility | 66.0% to 66.0% | 51.04% to 51.37% | 50.2 to 65.7% | 51.04% to 54.23% | ||||
Weighted average exercise price | $8.84 | $6.78 | $10.08 | $5.69 | ||||
Weighted average fair value | $4.11 | $2.63 | $4.34 | $2.26 |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Cost of revenue | $ | 1 | $ | 1 | ||||
Engineering and product development | 54 | 87 | ||||||
Marketing and sales | 58 | 59 | ||||||
General and administrative | 351 | 65 | ||||||
|
|
|
| |||||
$ | 464 | $ | 212 | |||||
|
|
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
19 | ||||||||||||||||
Cost of revenue | $ | 3 | $ | 1 | $ | 28 | $ | 2 | ||||||||
Engineering and product development | 64 | 62 | 406 | 182 | ||||||||||||
Marketing and sales | 61 | 62 | 608 | 178 | ||||||||||||
General and administrative | 337 | 215 | 1,500 | 494 | ||||||||||||
$ | 465 | $ | 340 | $ | 2,542 | $ | 856 | |||||||||
Remaining expense | $ | 1,632 | ||
Weighted average term | 1.0 |
Remaining expense | $ | 1,060 | ||
Weighted average term | 1.0 |
During the three-month period ended March 31, 2020, thegrant
Three Months Ended March 31, | ||||||||
Aggregate intrinsic value | 2020 | 2019 | ||||||
Stock options | $ | 4,749 | $ | 2,273 | ||||
Restricted stock | 547 | 1,396 |
As of | ||||||||
September 30, | ||||||||
Aggregate intrinsic value | 2020 | 2019 | ||||||
Stock options | $ | 6,679 | $ | 4,154 | ||||
Restricted stock | 257 | 1,315 |
while another 3,666 were cancelled.
No
Level 1 - Quoted prices in active markets for identical assets or liabilities.
◾ | Level 1 - Quoted prices in active markets for identical assets or liabilities. |
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
◾ | Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value.
◾ | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value. |
Convertible Debentures.
Fair Value Measurements (000’s) as of December 31, 2019 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 15,313 | $ | — | $ | — | $ | 15,313 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 15,313 | $ | — | $ | — | $ | 15,313 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Convertible debentures | $ | — | $ | — | $ | 13,642 | $ | 13,642 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | 13,642 | $ | 13,642 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Fair Value Measurements (000’s) as of March 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 14,256 | $ | — | $ | — | $ | 14,256 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 14,256 | $ | — | $ | — | $ | 14,256 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Convertible debentures | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
Fair Value Measurements (in thousands) as of December 31, 2019 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 15,313 | $ | $ | — | $ | 15,313 | |||||||||
Total Assets | $ | 15,313 | $ | — | $ | — | $ | 15,313 | ||||||||
Liabilities | ||||||||||||||||
Convertible debentures | $ | — | $ | — | $ | 13,642 | $ | 13,642 | ||||||||
Total Liabilities | $ | — | $ | — | $ | 13,642 | $ | 13,642 | ||||||||
Fair Value Measurements as of September 30, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 22,633 | $ | $ | $ | 22,633 | ||||||||||
Total Assets | $ | 22,633 | $ | — | $ | — | $ | 22,633 | ||||||||
Convertible Debenture | ||||
Balance, December 31, 2019 | $ | 13,642 | ||
Fair value adjustments | 7,522 | |||
Conversion | (21,164 | ) | ||
|
| |||
Balance, March 31, 2020 | $ | — | ||
|
|
Convertible Debentures | ||||
Balance, December 31, 2019 | $ | 13,642 | ||
Fair value adjustments | 7,522 | |||
Conversion | (21,164 | ) | ||
Balance as of September 30, 2020 | $ | — | ||
value.
Note 12 below.
Consolidated reporting unit | Detection | Therapy | Total | |||||||||||||
Accumulated Goodwill | 47,937 | $ | — | $ | — | 47,937 | ||||||||||
Accumulated impairment | (26,828 | ) | — | — | (26,828 | ) | ||||||||||
Fair value allocation | (21,109 | ) | 7,663 | 13,446 | — | |||||||||||
Acquisition of DermEbx and Radion | — | — | 6,154 | 6,154 | ||||||||||||
Acquisition measurement period adjustments | — | — | 116 | 116 | ||||||||||||
Acquisition of VuComp | — | 1,093 | — | 1,093 | ||||||||||||
Sale of MRI assets | — | (394 | ) | (394 | ) | |||||||||||
Impairment | — | — | (19,716 | ) | (19,716 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Prior to December 31, 2018 | — | 8,362 | — | 8,362 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balance at December 31, 2018 | $ | — | $ | 8,362 | $ | — | $ | 8,362 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Balance at December 31, 2019 | $ | — | $ | 8,362 | $ | — | $ | 8,362 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Balance at March 31, 2020 | $ | — | $ | 8,362 | $ | — | $ | 8,362 | ||||||||
|
|
|
|
|
|
|
|
Consolidated reporting unit | Detection | Therapy | Total | |||||||||||||
Accumulated Goodwill | $ | 47,937 | $ | — | $ | — | $ | 47,937 | ||||||||
Accumulated impairment | (26,828 | ) | — | — | (26,828 | ) | ||||||||||
Fair value allocation | (21,109 | ) | 7,663 | 13,446 | — | |||||||||||
Acquisition of DermEbx and Radion | — | — | 6,154 | 6,154 | ||||||||||||
Acquisition measurement period adjustments | — | — | 116 | 116 | ||||||||||||
Acquisition of VuComp | — | 1,093 | — | 1,093 | ||||||||||||
Sale of MRI assets | — | (394 | ) | (394 | ) | |||||||||||
Impairment | — | — | (19,716 | ) | (19,716 | ) | ||||||||||
Prior to December 31, 2019 | — | 8,362 | — | 8,362 | ||||||||||||
Balance at September 30, 2020 | $ | — | $ | 8,362 | $ | — | $ | 8,362 | ||||||||
value.
A significant decrease in the market price of a long-lived asset (asset group);
A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition;
A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator;
An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group);
A current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group).
• | A significant decrease in the market price of a long-lived asset (or asset group); |
• | A significant adverse change in the extent or manner in which a long-lived asset (or asset group) is being used or in its physical condition; |
• | A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (or asset group), including an adverse action or assessment by a regulator; |
• | An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (or asset group); and |
• | A current operating period, or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (or asset group). |
Three Months Ended | ||||||||
March 31, | ||||||||
2020 | 2019 | |||||||
Segment revenues: | ||||||||
Detection | $ | 4,476 | $ | 4,168 | ||||
Therapy | 2,075 | 2,605 | ||||||
|
|
|
| |||||
Total Revenue | $ | 6,551 | $ | 6,773 | ||||
|
|
|
| |||||
Segment gross profit: | ||||||||
Detection | $ | 3,467 | $ | 3,467 | ||||
Therapy | 1,043 | 1,815 | ||||||
|
|
|
| |||||
Segment gross profit | $ | 4,510 | $ | 5,282 | ||||
|
|
|
| |||||
Segment operating income (loss): | ||||||||
Detection | $ | (346 | ) | $ | 302 | |||
Therapy | (1,006 | ) | 221 | |||||
|
|
|
| |||||
Segment operating income (loss) | $ | (1,352 | ) | $ | 523 | |||
|
|
|
| |||||
General, administrative, depreciation and amortization expense | $ | (2,541 | ) | $ | (1,557 | ) | ||
Interest expense | (130 | ) | (209 | ) | ||||
Other income | 42 | 59 | ||||||
Loss on extinguishment of debt | (341 | ) | — | |||||
Fair value of convertible debentures | (7,464 | ) | (2,525 | ) | ||||
|
|
|
| |||||
Loss before income tax | $ | (11,786 | ) | $ | (3,709 | ) | ||
|
|
|
|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Segment revenues: | ||||||||||||||||
Detection | $ | 5,291 | $ | 6,087 | $ | 13,885 | $ | 15,464 | ||||||||
Therapy | 1,838 | 1,770 | 5,362 | 6,495 | ||||||||||||
Total Revenue | $ | 7,129 | $ | 7,857 | $ | 19,247 | $ | 21,959 | ||||||||
Segment gross profit: | ||||||||||||||||
Detection | $ | 4,227 | $ | 5,051 | $ | 11,227 | $ | 12,874 | ||||||||
Therapy | 798 | 1,003 | 2,665 | $ | 4,188 | |||||||||||
Segment gross profit | $ | 5,025 | $ | 6,054 | $ | 13,892 | $ | 17,062 | ||||||||
Segment operating income (loss): | ||||||||||||||||
Detection | $ | 866 | $ | 943 | $ | 721 | $ | 1,918 | ||||||||
Therapy | (711 | ) | (1,022 | ) | (2,149 | ) | $ | (1,065 | ) | |||||||
Segment operating income (loss) | $ | 155 | $ | (79 | ) | $ | (1,428 | ) | $ | 853 | ||||||
General, administrative, depreciation and amortization expense | $ | (1,844 | ) | $ | (1,881 | ) | $ | (6,465 | ) | $ | (5,305 | ) | ||||
Interest expense | (115 | ) | (193 | ) | (360 | ) | (604 | ) | ||||||||
Other income | 10 | 103 | 85 | 226 | ||||||||||||
Loss on extinguishment of debt | — | — | (341 | ) | — | |||||||||||
Fair value of convertible debentures | — | (900 | ) | (7,464 | ) | (5,340 | ) | |||||||||
Loss before income tax | $ | (1,794 | ) | $ | (2,950 | ) | $ | (15,973 | ) | $ | (10,170 | ) | ||||
time.
Note 14 – Subsequent Events
On April 27, 2020, the Company issued 1,562,500 shares of common stock to several institutional investors at a price of $8.00 per share in a registered direct offering. The gross proceeds of the offering were approximately $12.5 million, and the Company received net proceeds of approximately $12.2 million. The Company intends to use the net proceeds for working capital and for other general corporate purposes, including for the conduct of post-market studies for the Company’s Xoft intra-operative radiation therapy (IORT) for glioblastoma and other brain cancers.
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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.
On April 27, 2020, the Company issued 1,562,500 shares of common stock to several institutional investors at a price of $8.00 per share in a registered direct offering. The gross proceeds of the offering were approximately $12.5 million,business and the Company received net proceeds of approximately $12.2 million. cost structure.
Three months ended March 31, | ||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 3,100 | $ | 2,790 | $ | 310 | 11.1 | % | ||||||||
Service and supplies revenue | 1,376 | 1,378 | (2 | ) | (0.1 | )% | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | 4,476 | 4,168 | 308 | 7.4 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Therapy revenue | ||||||||||||||||
Product revenue | 695 | 1,032 | (337 | ) | (32.7 | )% | ||||||||||
Service and supplies revenue | 1,380 | 1,573 | (193 | ) | (12.3 | )% | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | 2,075 | 2,605 | (530 | ) | (20.3 | )% | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total revenue | $ | 6,551 | $ | 6,773 | $ | (222 | ) | (3.3 | )% | |||||||
|
|
|
|
|
|
|
|
Three months ended September 30, | ||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 3,889 | $ | 4,749 | $ | (860 | ) | (18.1 | )% | |||||||
Service revenue | 1,402 | 1,338 | 64 | 4.8 | % | |||||||||||
Subtotal | 5,291 | 6,087 | (796 | ) | (13.1 | )% | ||||||||||
Therapy revenue | ||||||||||||||||
Product revenue | 649 | 407 | 242 | 59.5 | % | |||||||||||
Service revenue | 1,189 | 1,363 | (174 | ) | (12.8 | )% | ||||||||||
Subtotal | 1,838 | 1,770 | 68 | 3.8 | % | |||||||||||
Total revenue | $ | 7,129 | $ | 7,857 | $ | (728 | ) | (9.3 | )% | |||||||
The Company believes that Detection product revenue increasedwas adversely affected in the third quarter of 2020 by the
Detection service and supplies revenue remained relatively the same at $1.4 million in each of the three months ended March 31, 2019 andSeptember 30, 2020. The increase is due primarily to an increase in service revenue from direct customers. The Company did not see a significant impact of theCOVID-19 pandemic on Detection service and supplies revenue forin the three months ended March 31,third quarter of 2020 however the Companybut is not able to estimatepredict how the extent of the negative impact that theCOVID-19 pandemic will have onaffect future Detection service revenues.
and supplies revenue.
Therapy service and supplysupplies revenue decreased by approximately $0.2 million, or 12.3%12.8%, from $1.6 million for the three-months ended March 31, 2019 to $1.4 million for the three months ended March 31,September 30, 2019 to $1.2 million for the three months ended September 30, 2020. The Company believes that Therapy service and supplies revenue, specifically the use of balloons for procedures, was adversely affected by the
Nine months ended September 30, | ||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 9,691 | $ | 11,347 | $ | (1,656 | ) | (14.6 | )% | |||||||
Service revenue | 4,194 | 4,117 | 77 | 1.9 | % | |||||||||||
Subtotal | 13,885 | 15,464 | (1,579 | ) | (10.2 | )% | ||||||||||
Therapy revenue | ||||||||||||||||
Product revenue | 1,529 | 1,984 | (455 | ) | (22.9 | )% | ||||||||||
Service revenue | 3,833 | 4,511 | (678 | ) | (15.0 | )% | ||||||||||
Subtotal | 5,362 | 6,495 | (1,133 | ) | (17.4 | )% | ||||||||||
Total revenue | $ | 19,247 | $ | 21,959 | $ | (2,712 | ) | (12.4 | )% | |||||||
supplies revenue.
Three months ended March 31, | ||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||
Products | $ | 1,017 | $ | 680 | $ | 337 | 49.6 | % | ||||||||
Service and supplies | 927 | 717 | 210 | 29.3 | % | |||||||||||
Amortization and depreciation | 97 | 94 | 3 | 3.2 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total cost of revenue | $ | 2,041 | $ | 1,491 | $ | 550 | 36.9 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | $ | 4,510 | $ | 5,282 | $ | (772 | ) | (14.6 | )% | |||||||
Gross profit % | 68.8 | % | 78.0 | % | ||||||||||||
Three months ended March 31, | ||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||
Detection gross profit | $ | 3,467 | $ | 3,467 | $ | — | .0 | % | ||||||||
Therapy gross profit | 1,043 | 1,815 | (772 | ) | (42.5 | %) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | $ | 4,510 | $ | 5,282 | $ | (772 | ) | (14.6 | %) | |||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit % | 68.8 | % | 78.0 | % |
Three months ended September 30, | ||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||
Products | $ | 1,345 | $ | 809 | $ | 536 | 66.3 | % | ||||||||
Service and supplies | 667 | 891 | (224 | ) | (25.1 | )% | ||||||||||
Amortization and depreciation | 92 | 103 | (11 | ) | (10.7 | )% | ||||||||||
Total cost of revenue | $ | 2,104 | $ | 1,803 | $ | 301 | 16.7 | % | ||||||||
Gross profit | $ | 5,025 | $ | 6,054 | $ | (1,029 | ) | (17.0 | )% |
Three months ended September 30, | ||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||
Detection gross profit | $ | 4,227 | $ | 5,051 | $ | (824 | ) | (16.3 | %) | |||||||
Therapy gross profit | 798 | 1,003 | (205 | ) | (20.4 | %) | ||||||||||
Gross profit | $ | 5,025 | $ | 6,054 | $ | (1,029 | ) | (17.0 | %) | |||||||
revenue numbers.
costs.
Nine months ended September 30, | ||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||
Products | $ | 2,899 | $ | 2,134 | $ | 765 | 35.8 | % | ||||||||
Service and supplies | 2,169 | 2,466 | (297 | ) | (12.0 | )% | ||||||||||
Amortization and depreciation | 287 | 297 | (10 | ) | (3.4 | )% | ||||||||||
Total cost of revenue | $ | 5,355 | $ | 4,897 | $ | 458 | 9.4 | % | ||||||||
Gross profit | $ | 13,892 | $ | 17,062 | $ | (3,170 | ) | (18.6 | )% |
Nine months ended September 30, | ||||||||||||||||
2020 | 2019 | Change | % Change | |||||||||||||
Detection gross profit | $ | 11,227 | $ | 12,874 | $ | (1,647 | ) | (12.8 | %) | |||||||
Therapy gross profit | 2,665 | 4,188 | (1,523 | ) | (36.4 | %) | ||||||||||
Gross profit | $ | 13,892 | $ | 17,062 | $ | (3,170 | ) | (18.6 | %) | |||||||
Three months ended September 30, | ||||||||||||||||
Operating expenses: | 2020 | 2019 | Change | Change % | ||||||||||||
Engineering and product development | $ | 1,849 | $ | 2,485 | $ | (636 | ) | (25.6 | )% | |||||||
Marketing and sales | 2,979 | 3,588 | (609 | ) | (17.0 | )% | ||||||||||
General and administrative | 1,834 | 1,872 | (38 | ) | (2.0 | )% | ||||||||||
Amortization and depreciation | 52 | 69 | (17 | ) | (24.6 | )% | ||||||||||
Total operating expenses | $ | 6,714 | $ | 8,014 | $ | (1,300 | ) | (16.2 | )% | |||||||
Operating Expenses: (in thousands)
Three months ended March 31, | ||||||||||||||||
2020 | 2019 | Change | Change % | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 2,211 | $ | 2,127 | $ | 84 | 3.9 | % | ||||||||
Marketing and sales | 3,608 | 2,573 | 1,035 | 40.2 | % | |||||||||||
General and administrative | 2,532 | 1,546 | 986 | 63.8 | % | |||||||||||
Amortization and depreciation | 52 | 70 | (18 | ) | �� | (25.7 | )% | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | $ | 8,403 | $ | 6,316 | $ | 2,087 | 33.0 | % | ||||||||
|
|
|
|
|
|
|
|
Operating expenses increased by approximately $2.1 million, or 33.0%, from $6.3 million in the three months ended March 31,September 30, 2019 to $8.4 million in the three months ended March 31, 2020. The Company’s operating expenses continued to grow throughout 2019 and the Company had the same expectation for three months ended March 31, 2020 due to the expectation of increased sales orders, shipments, and overall revenue. Although the onset of theCOVID-19 pandemic impacted revenue, due to its onset late in the three-month period ended March 31, 2020, the Company was unable to make significant changes to operating expenses for the period. The Company has since taken steps to lower operating expenses and will continue to assess its cost structure while theCOVID-19 pandemic is still impacting the Company. These steps include but are not limited to cuttingnon-essential travel, employee furloughs and terminations, and cutting most in person trade shows.
Engineering and Product Development. Engineering and product development costs increased by $0.1 million, or 3.9%, from $2.1$1.9 million for the three months ended March 31, 2019 to $2.2 million for the three months ended March 31,September 30, 2020. Detection engineering and product development costs remained relatively constant at $1.4decreased by $0.5 million, in both periods.from $1.8 million for the three months ended September 30, 2019 to $1.3 million for the three months ended September 30, 2020. Therapy engineering and product development costs increaseddecreased $0.1 million, from $0.7 million in the three months ended March 31,September 30, 2019 to $0.8$0.6 million for the three months ended March 31,September 30, 2020. The increase wasdecreases were due primarily to increaseddecreased personnel costs.
costs as a result of the Company’s
Nine months ended September 30, | ||||||||||||||||
Operating expenses: | 2020 | 2019 | Change | Change % | ||||||||||||
Engineering and product development | $ | 5,938 | $ | 6,751 | $ | (813 | ) | (12.0 | )% | |||||||
Marketing and sales | 9,218 | 9,281 | (63 | ) | (0.7 | )% | ||||||||||
General and administrative | 6,476 | 5,276 | 1,200 | 22.7 | % | |||||||||||
Amortization and depreciation | 153 | 206 | (53 | ) | (25.7 | )% | ||||||||||
Total operating expenses | $ | 21,785 | $ | 21,514 | $ | 271 | 1.3 | % | ||||||||
$1.0approximately $1.2 million, or 63.8%22.4%, from $1.5$5.3 million in the threenine months ended March 31,September 30, 2019 to $2.5$6.5 million for the threenine months ended March 31,September 30, 2020. The increase is due primarily to increases in stock compensation expense and legal costs and other costs associated withwas offset by cost-cutting measures prompted by the conversion of the debentures, and personnel costs.
Three months ended March 31, | ||||||||||||||||
2020 | 2019 | Change | Change % | |||||||||||||
Interest expense | $ | (130 | ) | $ | (209 | ) | $ | 79 | (37.8 | )% | ||||||
Loss on extinguishment of debt | $ | (341 | ) | $ | — | $ | (341 | ) | 0.0 | % | ||||||
Other income | 42 | 59 | (17 | ) | (28.8 | )% | ||||||||||
Loss on fair value of debentures | (7,464 | ) | (2,525 | ) | (4,939 | ) | 195.6 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
$ | (7,893 | ) | $ | (2,675 | ) | $ | (5,218 | ) | 195.1 | % | ||||||
|
|
|
|
|
|
|
| |||||||||
Tax expense | $ | (26 | ) | $ | (8 | ) | $ | (18 | ) | 225.0 | % |
Three months ended September 30, | ||||||||||||||||
2020 | 2019 | Change | Change % | |||||||||||||
Interest expense | $ | (115 | ) | $ | (193 | ) | $ | 78 | (40.4 | )% | ||||||
Other income | 10 | 103 | (93 | ) | (90.3 | )% | ||||||||||
Loss on fair value of debentures | — | (900 | ) | 900 | (100.0 | )% | ||||||||||
$ | (105 | ) | $ | (990 | ) | $ | 885 | (89.4 | )% | |||||||
Tax benefit (expense) | $ | (3 | ) | $ | (6 | ) | $ | 3 | (50.0 | )% |
Silicon Valley Bank (“SVB”) and Western Alliance Bank (the “Bank”).
investments as well as lower interest rates during the
Nine months ended September 30, | ||||||||||||||||
2020 | 2019 | Change | Change % | |||||||||||||
Interest expense | $ | (360 | ) | $ | (604 | ) | $ | 244 | (40.4 | )% | ||||||
Other income | 85 | 226 | (141 | ) | (62.4 | )% | ||||||||||
Loss on extinguishment of debt | (341 | ) | — | (341 | ) | 0.0 | % | |||||||||
Loss on fair value of debentures | (7,464 | ) | (5,340 | ) | (2,124 | ) | 39.8 | % | ||||||||
$ | (8,080 | ) | $ | (5,718 | ) | $ | (2,362 | ) | 41.3 | % | ||||||
Tax benefit (expense) | $ | (34 | ) | $ | (33 | ) | $ | (1 | ) | 3.0 | % |
SVB Loan Agreement.loan with SVB. The loss on extinguishment was composed of approximately $185,000 for the unaccrued final payment, the $114,000 termination fee, and $42,000 for the unamortized and other closing costs. There were no such costs in 2019.
Subsequentthe Company’s unrestricted cash at the Bank to March 31, 2020 the Company, in accordance withits indebtedness under the Loan Agreement, triggered the equity event that relieved the covenant related to maximum net loss, leaving only the minimum revenue requirement.Agreement. The
The Company believes even
For the three months ended March 31, | ||||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Net cash used for operating activities | $ | (1,416 | ) | $ | (1,813 | ) | ||
Net cash used for investing activities | (156 | ) | (29 | ) | ||||
Net cash provided by financing activities | 515 | 972 | ||||||
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Decrease in cash and equivalents | $ | (1,057 | ) | $ | (870 | ) | ||
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For the nine-months ended September 30, | ||||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Net cash used for operating activities | $ | (6,083 | ) | $ | (4,772 | ) | ||
Net cash used for investing activities | (286 | ) | (219 | ) | ||||
Net cash provided by financing activities | 13,689 | 10,233 | ||||||
Increase in cash and equivalents | $ | 7,320 | $ | 5,242 | ||||
In June 2019, the Company completed an underwritten public offering of approximately 1.9 million shares of common stock. The Company received net proceeds of approximately $9.4 million after deducting underwriting and other offering expenses.
In accordance with the transition disclosure requirements under ASC 840, the
Contractual Obligations
Payments due by period | ||||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | 5+ years | ||||||||||||||||
Operating Lease Obligations | $ | 2,640 | $ | 880 | $ | 1,760 | $ | — | ||||||||||||
Capital Lease Obligations | 9 | 9 | — | — | — | |||||||||||||||
Settlement Obligations | 463 | 463 | — | — | — | |||||||||||||||
Notes Payable - principal and interest | 8,133 | 373 | 4,021 | 3,739 | — | |||||||||||||||
Other Commitments | 5,905 | 5,874 | 31 | |||||||||||||||||
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Total Contractual Obligations | $ | 17,150 | $ | 7,599 | $ | 5,812 | $ | 3,739 | $ | — | ||||||||||
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Contractual Obligations | Payments due by period | |||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | 5+ years | ||||||||||||||||
Operating Lease Obligations | $ | 2,262 | $ | 918 | $ | 1,337 | $ | 7 | $ | — | ||||||||||
Capital Lease Obligations | 1 | 1 | — | — | — | |||||||||||||||
Settlement Obligations | 463 | 463 | — | — | — | |||||||||||||||
Notes Payable - principal and interest | 7,946 | 590 | 5,682 | 1,674 | — | |||||||||||||||
Other Commitments | 4,179 | 4,179 | — | — | ||||||||||||||||
Total Contractual Obligations | $ | 14,851 | $ | 6,151 | $ | 7,019 | $ | 1,681 | $ | — | ||||||||||
Inc which are reflected in accounts payable and accrued liabilities.
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
procedures.
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors: |
herein.
These effects could
On March 20, 2019, the Company issued 3,377 shares of its common stock to certain holders of its Convertible Debentures as a make-whole payment under the Securities Purchase Agreement pursuant to which the Convertible Debentures were issued. Such shares of common stock were exempt from registration in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended.
ContentsItem 5. Other Information.
Given the timing of the events, the following information is included in this Form 10-Q pursuant to Item 5.02 “Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers,” Item 5.08 “Shareholder Director Nominations,” and Item 8.01 “Other Information” of Form 8-K in lieu of filing a Form 8-K.
Bonus Awards
On May 7, 2020, the Compensation Committee and the Company’s Board of Directors approved bonus payments to the Company’s officers attributable to performance for the year ended December 31, 2019, as follows: Michael Klein, Chief Executive Officer, was awarded $95,370, with $71,527 of such amount to be paid in stock options granted on May 7, 2020; Stacey Stevens, President, was awarded $163,519, with $122,639 of such amount to be paid in stock options granted on May 7, 2020; R. Scott Areglado, Chief Financial Officer, was awarded $94,500, with $70,875 of such amount to be paid in stock options granted on May 7, 2020; and Jonathan Go, Chief Technology Officer was awarded $135,000, with $101,250 of such amount to be paid in stock options granted on May 7, 2020. In addition, on May 7, 2020, the Compensation Committee and the Company’s Board of Directors approved an additional bonus payment to Michael Klein, the Company’s Chief Executive Officer, for his performance during 2020, in the form of a cash bonus of $32,408 and options to purchase up to 18,373 shares of the Company’s common stock. All options are immediately exercisable at an exercise price of $12.84 per share.
Scheduling of Annual Meeting; Stockholder Proposals and Nominations
On May 7, 2020, the Company scheduled its 2020 annual meeting of stockholders (the “2020 Annual Meeting”) to be held virtually via the internet, on June 26, 2020. The Company has established April 29, 2020, as the record date for determining stockholders entitled to notice of, and to vote at, the 2020 Annual Meeting.
Because the date of the 2020 Annual Meeting will be more than 30 days from the anniversary of the Company’s 2019 annual meeting of stockholders, the deadline for submission of proposals by stockholders for inclusion in the Company’s proxy materials in accordance with Rule 14a-8 under the Exchange Act, will be the close of business on May 21, 2020, which the Company has determined to be a reasonable time before it expects to begin to print and distribute its proxy materials prior to the 2020 Annual Meeting. Any such proposal must also meet the requirements set forth in the rules and regulations of the Exchange Act and the Company’s Amended and Restated Bylaws (the “Bylaws”) in order to be eligible for inclusion in the proxy materials for the 2020 Annual Meeting.
In accordance with the Bylaws, any stockholder who wishes to nominate a person for election as a director or submit a proposal for inclusion at the 2020 Annual Meeting must provide written notice (“Stockholder Notice”) on or before May 21, 2020. Any Stockholder Notice must comply with the specific requirements set forth in the Bylaws in order to be considered at the 2020 Annual Meeting. Any such proposal must be mailed to the Nominating and Corporate Governance Committee, c/o Corporate Secretary, iCAD, Inc., 98 Spit Brook, Suite 100, Nashua, NH 03062, and received by May 21, 2020.
Item 6. | Exhibits |
* | Filed herewith |
** | Furnished herewith |
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iCAD, Inc. | ||
(Registrant) |
: November 6, 2020 | By: | /s/ Michael Klein | ||||
Name: | Michael Klein | |||||
Title: | Chief Executive Officer | |||||
(Principal Executive Officer) |
: November 6, 2020 | By: | /s/ R. Scott Areglado | ||||
Name: | R. Scott Areglado | |||||
Title: | Chief Financial Officer | |||||
(Principal Financial Officer) |
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