UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

~~UNITED STATES~~

~~SECURITIES AND EXCHANGE COMMISSION~~10-Q

~~WASHINGTON, D.C. 20549~~

~~FORM~~

~~10-Q~~

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2020~~2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number

001-09341

iCAD, Inc.

(Exact name of registrant as specified in its charter)


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)

(603)

882-5200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading ~~Trading~~ symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	ICAD	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. YES ☒ NO ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, an emerging growth company or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐.

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act) YES ☐ NO ☒.

As of the close of business on November 1, ~~2020,~~2021, there were

~~22,993,102~~

25,109,380 shares outstanding of the registrant’s Common Stock, $0.01 par value.

Table of Contents

iCAD, Inc.

INDEX


				~~Page~~
~~PART I~~		~~FINANCIAL INFORMATION~~
		Page
~~Item 1~~ PART I		FINANCIAL INFORMATION	~~Financial Statements (unaudited)~~
Item 1
	Financial Statements (unaudited)
		Condensed Consolidated Balance Sheets as of September 30, ~~2020~~2021 (unaudited) and December 31, ~~2019~~2020			3
		3
			Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020			4
		4
			Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020			5
		5
			Consolidated Statements of Stockholders’ Equity (unaudited) for the three and nine months ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020			~~6-7~~
		6
			Notes to Condensed Consolidated Financial Statements (unaudited)			~~8-35~~
		8
Item 2			Management’s Discussion and Analysis of Financial Condition and Results of Operations			~~35-51~~
		28
Item 3			Quantitative and Qualitative Disclosures about Market Risk			52
		39
Item 4			Controls and Procedures			52
		39
PART II			OTHER INFORMATION
	40
Item 1		~~Legal Proceedings~~			53
1A
~~Item 1A~~		Risk Factors			54
		40
Item 6			Exhibits			56
		41
			Signatures			57	42

Table of Contents

iCAD, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

~~(Unaudited)~~

(In thousands except for share data)

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 of
September
30, 2020

and 19,546,151 as of December 31, 2019. Outstanding 22,969,651 as of September 30, 2020 and 19,360,320

as of December 31, 2019.
   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


	(Unaudited)
	September 30,			December 31,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	35,805		$	27,186
Trade accounts receivable, net of allowance for doubtful accounts of $87 in 2021 and $111 in 2020		11,792			10,027
Inventory, net		3,290			3,144
Prepaid expenses and other current assets		1,989			1,945

Total current assets		52,876			42,302

Property and equipment, net of accumulated depreciation of $7,020 in 2021 and $6,778 in 2020		925			744
Operating lease assets		1,176			1,758
Other assets		1,657			1,527
Intangible assets, net of accumulated amortization of $8,667 in 2021 and $8,494 in 2020		741			889
Goodwill		8,362			8,362

Total assets	$	65,737		$	55,582

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,651		$	2,869
Accrued and other expenses		5,523			7,039
Lease payable — current portion		856			726
Deferred revenue		5,930			6,117

Total current liabilities		14,960			16,751

Lease payable, long-term portion		431			1,075
Notes payable, long-term portion		—			6,960
Deferred revenue, long-term portion		520			267
Deferred tax		5			4

Total liabilities		15,916			25,057

Commitments and Contingencies	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 25,287,837 as of September 30, 2021 and 23,693,735 as of December 31, 2020.
Outstanding 25,102,006 as of September 30, 2021 and 23,508,575 as of December 31, 2020.		253			236
Additional paid-in capital		300,017			273,639
Accumulated deficit		(249,034	)		(241,935	)
Treasury stock at cost, 185,831 shares in 2021 and 2020		(1,415	)		(1,415	)

Total stockholders’ equity		49,821			30,525

Total liabilities and stockholders’ equity	$	65,737		$	55,582

See accompanying notes to condensed consolidated financial statements.

Table of Contents

iCAD, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands except for per share data)

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenue:
Products	$	6,320		$	4,538		$	16,429		$	11,220
Service and supplies		3,041			2,591			9,401			8,027

Total revenue		9,361			7,129			25,830			19,247
Cost of revenue:
Products		1,807			1,345			4,592			2,899
Service and supplies		763			667			2,462			2,169
Amortization and depreciation		79			92			237			287

Total cost of revenue		2,649			2,104			7,291			5,355

Gross profit		6,712			5,025			18,539			13,892

Operating expenses:
Engineering and product development		2,285			1,849			6,745			5,938
Marketing and sales		3,886			2,979			10,739			9,218
General and administrative		2,658			1,834			7,461			6,476
Amortization and depreciation		64			52			178			153

Total operating expenses		8,893			6,714			25,123			21,785

Loss from operations		(2,181	)		(1,689	)		(6,584	)		(7,893	)
Interest expense		0			(115	)		(141	)		(360	)
Other income		5			10			12			85
Loss on extinguishment of debt		0			—			(386	)		(341	)
Loss on fair value of convertible debentures		—			—			—			(7,464	)

Other income (expense), net		5			(105	)		(515	)		(8,080	)
Loss before income tax expense		(2,176	)		(1,794	)		(7,099	)		(15,973	)

Tax expense		—			(3	)		—			(34	)

Net loss and comprehensive loss	$	(2,176	)	$	(1,797	)	$	(7,099	)	$	(16,007	)

Net loss per share:
Basic	$	(0.09	)	$	(0.08	)	$	(0.29	)	$	(0.73	)

Diluted	$	(0.09	)	$	(0.08	)	$	(0.29	)	$	(0.73	)

Weighted average number of shares used in computing loss per share:
Basic		25,053			23,173			24,662			21,827

Diluted		25,053			23,173			24,662			21,827

See accompanying notes to

condensed

consolidated

financial statements.

Table of Contents

iCAD, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	For the Nine Months ended September 30,
	2021			2020
	(in thousands)
Cash flow from operating activities:
Net loss	$	(7,099	)	$	(16,007	)
Adjustments to reconcile net loss to net cash used for operating activities:
Amortization		176			234
Depreciation		242			206
Bad debt provision		(25	)		80
Stock-based compensation		2,102			2,542
Amortization of debt discount and debt costs		17			65
Loss on extinguishment of debt		386			341
Deferred tax expense		—			1
Change in fair value of convertible debentures		—			7,464
Changes in operating assets and liabilities:
Accounts receivable		(1,827	)		1,151
Inventory		(146	)		(535	)
Prepaid and other assets		493			69
Accounts payable		(217	)		96
Accrued expenses		(2,028	)		(2,322	)
Deferred revenue		65			532

Total adjustments		(762	)		9,924

Net cash used for operating activities		(7,861	)		(6,083	)

Cash flow from investing activities:
Additions to patents, technology and other		(24	)		(11	)
Additions to property and equipment		(426	)		(275	)

Net cash used for investing activities		(450	)		(286	)

Cash flow from financing activities:
Issuance of common stock pursuant to stock option plans		933			415
Issuance of common stock pursuant to Employee Stock Purchase Plan		190			209
Proceeds from issuance of common stock, net		23,229			12,174
Taxes paid related to restricted stock issuance		(59	)		(225	)
Principal payments of capital lease obligations		—			(4,638	)
Repayment of debt financing		(7,363	)		775
Repayment on line of credit		—			(2,000	)
Proceeds from notes payable		—			6,957
Debt issuance costs		—			22

Net cash provided by financing activities		16,930			13,689

Increase in cash and equivalents		8,619			7,320
Cash and cash equivalents, beginning of period		27,186			15,313

Cash and cash equivalents, end of period	$	35,805		$	22,633

Supplemental disclosure of cash flow information:
Interest paid	$	92		$	127

Taxes paid	$	—		$	34

Issuance of common stock upon conversion of debentures		—			21,164

Right-of-use assets obtained in exchange for new operating lease liabilities	$	—		$	69

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
assets obtained in exchange for new operating lease liabilities
   $ 69 $ 2,641

See accompanying notes to condensed consolidated financial statements.


~~See accompanying notes to condensed consolidated financial statements.~~

Table of Contents

Consolidated Statements of Stockholders’ Equity Year to Date

(In thousands except shares)

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


	Common Stock				Additional Paid-in Capital
	Number of Shares Issued		Par Value		Additional Paid-in Capital			Accumulated Deficit			Treasury Stock			Stockholders’ Equity
Balance at December 31, 2020		23,694,406		236		273,639			(241,935	)		(1,415)		$	30,525
Issuance of common stock relative to vesting of restricted stock		43,831		1		(60	)		—			—			(59	)
Issuance of common stock, net		1,393,738		14		23,215			—			—			23,229
Issuance of common stock pursuant to stock option plans		138,450		2		931			—			—			933
Issuance of common stock pursuant Employee Stock Purchase Plan		17,412		—		190			—			—			190
Stock-based compensation		—		—		2,102			—			—			2,102
Net loss		—		—		—			(7,099	)		—			(7,099	)

Balance at September 30, 2021		25,287,837	$	253	$	300,017		$	(249,034	)	$	(1,415	)	$	49,821

~~Consolidated Statements of Stockholders’ Equity Quarter to Date~~

~~(In thousands except shares)~~

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

~~Table of Contents~~

~~iCAD, INC. AND SUBSIDIARIES~~

~~Consolidated Statements of Stockholders’ Equity Year to Date~~

~~(In thousands except shares)~~

   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

Consolidated Statements of Stockholders’ Equity Quarter to Date

(In thousands except shares)

   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


	Common Stock				Additional Paid-in Capital
	Number of Shares Issued		Par Value		Additional Paid-in Capital			Accumulated Deficit			Treasury Stock			Stockholders’ Equity
Balance at June 30, 2021		25,213,302		251		299,049			(246,858	)		(1,415	)	$	51,027
Issuance of common stock relative to vesting of restricted stock		14,665		1		(60	)		—			—			(59	)
Issuance of common stock, net		54,702		1		296			—			—			297
Issuance of common stock pursuant to stock option plans		—		—		—			—			—			—
Issuance of common stock pursuant Employee Stock Purchase Plan		5,168		—		76			—			—			76
Stock-based compensation		—		—		656			—			—			656
Net loss		—		—		—			(2,176	)		—			(2,176	)

Balance at September 30, 2021		25,287,837	$	253	$	300,017		$	(249,034	)	$	(1,415	)	$	49,821

Table of Contents

Consolidated Statements of Stockholders’ Equity Year to Date

(In thousands except shares)


	Common Stock				Additional Paid-in Capital
	Number of Shares Issued		Par Value		Additional Paid-in Capital			Accumulated Deficit			Treasury Stock			Stockholders’ Equity
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, net		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

Consolidated Statements of Stockholders’ Equity Quarter to Date

(In thousands except shares)


	Common Stock				Additional Paid-in Capital
	Number of Shares Issued		Par Value		Additional Paid-in Capital			Accumulated Deficit			Treasury Stock			Stockholders’ Equity
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

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Notes to Condensed Consolidated Financial Statements:

Note 1 – Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements of iCAD, Inc. and its subsidiaries ~~(“iCAD”~~(together “iCAD” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). In the opinion of the Company’s management, these unaudited interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position of the Company at September 30, ~~2020,~~2021, the results of operations of the Company for the three and ~~nine-month periods~~nine-months ended September 30, ~~2020~~2021 and ~~2019,~~2020, cash flows of the Company for the ~~nine-month periods~~nine-months ended September 30, ~~2020~~2021 and ~~2019~~2020, and stockholders’ equity for the Company for the three and ~~nine-month periods~~nine-months ended September 30, ~~2020~~2021 and ~~2019.~~2020.

Although the Company believes that the disclosures made in these interim financial statements are adequate to make the information presented not misleading, certain information normally included in the footnotes prepared in accordance with US GAAP has been omitted as permitted by the rules and regulations of the Securities and Exchange Commission ~~(“SEC”~~(the “SEC”). The accompanying interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10

-10-K

K for the fiscal year ended December 31, ~~2019~~2020 filed with the SEC on March ~~11, 2020.~~15, 2021. The results for the three and ~~nine-month periods~~nine-months ended September 30, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, ~~2020,~~2021, or any future period.

Segments

The Company

reports the results of 2 segments: Cancer Detection (“Detection”) and Cancer Therapy (“Therapy”). The Detection segment consists of advanced image analysis and workflow products. The Therapy segment consists of radiation therapy (“Axxent”) products.

Risk and Uncertainty

On March

12, 2020, the World Health Organization declared

COVID-19

to be a pandemic. In an effort to contain and mitigate the spread of the

COVID-19

pandemic, the United States, many countries in Europe, as well as Canada and China, ~~have~~ imposed unprecedented restrictions on travel, and there have been business closures and ~~a substantial reduction~~reductions in economic activity in countries that have had significant outbreaks of

COVID-19.

As a provider of devices and services to the health care industry, the Company’s operations have been materially affected in part due to

stay-at-home

and social distancing orders as well as uncertainty in the market. Significant uncertainty remains as to the continuing impact of the

COVID-19

pandemic on the Company’s operations and on the global economy as a whole.

The fair value and principal value of the Convertible Debentures as of December 31, 2019 and the Conversion Date was as follows (in thousands):


Convertible Debentures	December 31, 2019		February 21, 2020		December 31, 2019		February 21, 2020

Fair value, in accordance with fair value option	$	13,642	$	21,164	$	13,642	$	21,164

Principal value outstanding	$	6,970	$	6,970	$	6,970	$	6,970

~~The~~In February 2020 the Company recorded a loss from the change in fair value of the Convertible Debentures of approximately $7.5 million for period through the

~~onversion~~

~~ate~~ Conversion Date which

described in the additional fair value disclosures related to the Convertible Debentures in Note 8.

Upon the consummation of the

forced conversion,

the Company issued 1,816,466 shares of common stock with a fair value of approximately $21.2 million, which was reclassified to stockholders’ equity.

(d) Principal and Interest Payments Related to Financing Arrangements

~~Future principal, interest payments, and final payment related to the Loan Agreement are as follows (in thousands):~~

The Company no longer has any financing agreements as of September 30, 2021.

Fiscal Year


Amount Due

2020
   $ 94
2021
   1,238
2022
   2,875
2023
   2,735
2024
   1,003


Total
   $ 7,945

The following amounts are included in interest expense in

the ~~Company’~~

Company’s consolidated

statement of operations for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

Cash interest expense	$	0	$	94	$	141	$	232
Interest on convertible debentures		—		—		—		49
Accrual of notes payable final payment		—		8		—		47
Amortization of debt costs		—		13		—		32

Total interest expense	$	0	$	115	$	141	$	360

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Note 5 – Le

~~ase~~Lease Commitments

Under ASC 842, “Leases” (“ASC 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 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 uses its incremental borrowing rate to determine the present value of the lease payments. The Company determines 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 the

non-cancellable

period for which the Company has the right to use the underlying asset, together with any periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option. The Company considers a number of factors when evaluating whether the options in its lease contracts are 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.

Right-of-use

assets and obligations for short-term leases (leases with an initial term of 12 months or less) are not recognized in the consolidated balance sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term. The Company does not sublease any of its leased assets to third parties. The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. The Company has lessor agreements that contain lease and

non-lease

components. As the Company has determined that the

non-lease

component of these agreements is the predominant component, the Company accounted for the complete agreement under ASC 606 upon adoption of ASC 842.

ASC 842 includes a number of reassessment and

re-measurement

requirements for lessees based on certain triggering events or conditions, including whether a contract is or contains a lease, assessment of lease term and purchase options, measurement of lease payments, assessment of lease classification and assessment of the discount rate. The Company reviewed the reassessment and

re-measurement

requirements and identified two lease modifications which are reflected in the table below showing the maturity of the Company’s lease liabilities as of September 30, ~~2020.~~2021. This includes an extension of an operating lease for the facility leased by the Company in San Jose, California as well as some equipment. In addition, there were no impairment indicators identified during the quarter ended September 30, ~~2020~~2021 that required an impairment test for the Company’s

right-of-use

assets or other long-lived assets in accordance with ASC 360 10 “Property Plant and Equipment” (“ASC 360”).

Certain of the Company’s leases include variable lease costs to reimburse the lessor for real estate tax and insurance expenses, and certain

non-lease

components that transfer a distinct service to the Company, such as common area maintenance services. The Company has elected to not separate its accounting of lease components and

non-lease

components for real estate and equipment leases.

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Components of Le

aLeases:

~~ses:~~

The Company has leases for office space and office equipment. The leases have remaining lease terms ranging from less than one year to ~~three~~four years and

~~hree~~

six months as of September 30, ~~2020.~~2021.

The components of lease expense for the ~~period~~three and nine months ended September 30, 2021 are as follows (in thousands):

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


Lease Cost	Classification	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Operating lease cost—Right of Use Asset	Operating expenses	$	214	$	649
Operating lease cost—Variable	Operating expenses		63	$	127

Total		$	277	$	776

Other information related to le

~~ses~~leases was as

follows

~~(in~~ (in thousands):

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 September 30, 2021		Nine Months Ended September 30, 2021
Cash paid from operating cash flows for operating leases	$	230	$	581


	As of September 30, 2021

Weighted-average remaining lease term of operating leases (in years)		1.47
Weighted-average discount rate for operating leases		5.5	%

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Maturity of the Company’s lease liabilities as of September 30, ~~2020~~2021 was as follows (in thousands):

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


As of September 30, 2021:	Operating Leases

2021		229
2022		899
2023		211
2024		5

Total lease payments		1,344
Less: imputed interest		(57	)

Total lease liabilities		1,287
Less: current portion of lease liabilities		(856	)

Long-term lease liabilities	$	431

Note 6 – Stockholders Equity

(a) Financing Activity

On March 2, 2021, the Company entered into an underwriting agreement with Guggenheim Securities, LLC, as representative of the several underwriters thereto, in connection with an underwritten public offering of 1,393,738 shares of the Company’s common stock at an offering price of $18.00 per share. The offering closed on March 5, 2021 for gross proceeds of approximately $25.1 million and net proceeds of approximately $23.2 million to the Company.

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(b) Stock-Based Compensation

The Company

granted options to purchase ~~17,029~~403,000 and ~~540,886~~831,938 shares of the Company’s stock during the three and nine months ~~ended~~ e

nded

September 30, ~~2020,~~2021 respectively. Options granted under the Company’s stock incentive plans were valued utilizing the Black-Scholes model using the following assumptions and had the following fair ~~values:~~

  Three Months Ended

  Nine Months Ended

September 30,

September 30,





  2020









20
19








   2020





       20
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

~~The Company’s stock-based compensation expense, including options and restricted stock by category is as follows~~values (in thousands):

Three Months Ended

Nine Months Ended


September 30,

September 30,




   2020







   20
19







2020




    2019



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


	Three Months Ended September 30,				Nine Months Ended September 30,

	2021		2020		2021		2020

Average risk-free interest rate	0.41	%	0.15	%	0.28	%	0.79	%
Expected dividend yield	NaN		NaN		NaN		NaN
Expected life	3.5 years		3.5 years		3.5 years		3.5 years
Expected volatility	65.57% to 67.42	%	66.0% to 66.0	%	65.57% to 67.42	%	50.2 to 65.7	%
Weighted average exercise price	$15.04		$8.84		$16.61		$10.08
Weighted average fair value	$6.18		$4.11		$7.34		$4.34


	Three Months Ended September 30,				Nine Months Ended September 30,

	2021		2020		2021		2020

Cost of revenue	$	3	$	3	$	20	$	28
Engineering and product development		73		64		281		406
Marketing and sales		149		61		629		608
General and administrative		431		337		1,172		1,500

	$	656	$	465	$	2,102	$	2,542

2422

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As of September 30, ~~2020,~~2021, unrecognized compensation cost (in thousands) related to unvested options and unvested restricted stock and the weighted average term of such equity instruments is as follows:


Remaining expense	$	1,060	$	4,972
Weighted average term		1.0		1.3

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 the grant

date.

The Company ~~granted 0 and 14,000~~

did 0t grant any shares of restricted stock during the ~~nine-month periods~~three-months ended September 30, 2021 or 2020. The Company granted 22,488 and 0 shares of restricted stock during the nine-months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

The Company’s aggregate intrinsic value for stock options and restricted stock outstanding is as follows (in thousands):


	As of				As of September 30,
	September 30,
Aggregate intrinsic value	2020		2019		2021		2020
Stock options	$	6,679	$	4,154	$	8,765	$	6,679
Restricted stock		257		1,315		19		257

The Company

issued ~~49,712~~54,702 and ~~94,678~~138,450 shares of common stock upon the exercise of

outstanding

stock options in the three and ~~nine-month periods~~nine-months ended September 30, ~~2020,~~2021 respectively. The Company received cash proceeds of approximately ~~$185,000~~$0.3

million and ~~$417,000~~

$0.9

million

in the three and ~~nine-month periods~~nine-months ended September 30, ~~2020,~~2021 respectively. The intrinsic value of restricted shares that vested in the three and nine months ended September 30, ~~2020~~2021 was ~~$0.6 million. 38,160~~$0.0 million and $0.5 million respectively. There were 19,863 and 49,904 restricted shares that vested in the three and nine months ended September 30, ~~2020 while another 3,666 were cancelled.~~2021 respectively.

Employee Stock Purchase Plan

In December 2019, the 2019 ~~Empl~~

Employee Stock Purchase Plan (“ESPP”) was adopted by the Company’s Board of Directors (the “Board”) and approved by stockholders, effective January 1, 2020.

The ESPP

provides for the issuance of up to 950,000 shares of common stock, subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. The ESPP may be terminated or amended by the Board at any time. Certain amendments to the ESPP require stockholder approval.

Substantially

all of the Company’s employees whose customary employment is for more than 20 hours a week are eligible to participate in the ESPP. Any employee who owns 5% or more of the voting power or value of the Company’s shares of common stock is not eligible to participate in the ESPP.

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Any eligible employee can enroll in the ESPP as of the beginning of a respective quarterly accumulation period. Employees who participate in the ESPP may purchase shares by authorizing payroll deductions of up to 15% of their base compensation during an accumulation period. Unless the participating employee withdraws from participation, accumulated payroll deductions are used to purchase shares of common stock on the last business day of the accumulation period (the “Purchase Date”) at a price equal to 85% of the lower of the fair market value on (i) the Purchase Date or (ii) the first day of such accumulation period. Under applicable tax rules, no employee may purchase more than ~~$25,000~~ $

25,000

worth of common stock, valued at the start of the purchase period, under the ESPP in any calendar year.

The Company issued ~~16,392~~5,168 and ~~34,857~~17,412 shares under the ESPP in the three and ~~nine-month periods~~nine-months ended September 30, ~~2020,~~2021 respectively. The Company recorded approximately ~~$19,000~~$23,000 and ~~$84,000~~$76,000 of stock-based compensation expense pursuant to ESPP for the three and ~~nine-month periods~~nine-months ended September 30, ~~2020,~~2021 respectively. The ~~third~~

accumulation period under the ESPP commenced on July 1, ~~2020~~2021 and

ended

on September 30,

~~2020,~~ 2021, and the related shares ~~purcha~~

edpurchased by the participants were issued in October ~~2020.~~2021. As of September 30, ~~2020,~~2021, the Company recorded a liability of $

~~58,000~~

approximately $89,000 related to employee withholdings in connection with the ESPP accumulation period ended September 30, ~~2020,~~2021, which was included as a component of accrued expenses and other current liabilities.

Note 7 – Commitments and Contingencies

~~Foreign Tax Claim~~

~~In July 2007, a dissolved former Canadian subsidiary of the Company, CADx Medical Systems Inc. (“CADx Medical”), received a tax~~

~~re-assessment~~

of approximately $6,800,000 from the Canada Revenue Agency (“CRA”) resulting from the CRA’s audit of CADx Medical’s Canadian federal tax return for the year ended December 31, 2002. In February 2010, the CRA reviewed the matter and reduced the tax

~~re-assessment~~

~~to approximately $703,000, excluding interest and penalties.~~

~~The CRA had the right to pursue the matter until July 2020 and did not do so, and accordingly no accrual has been recorded for this matter as of September 30, 2020.~~

Other Commitments

The Company is obligated to pay approximately ~~$4.2~~$4.3 million for firm purchase obligations to suppliers for future product and service ~~deliverables.~~deliverables and $0.2 million for minimum royalty obligations.

Litigation

In December 2016, the Company entered into an Asset Purchase Agreement ~~with Invivo Corporation~~ (the “Asset Purchase Agreement”) with Invivo Corporation (“Invivo”). In accordance with the Asset Purchase Agreement, the Company sold to Invivo all right, title and interest to certain intellectual property relating to the Company’s VersaVue Software and DynaCAD product and related assets for

~~3.2~~

$3.2 million. The Company closed the transaction on January

30,

2017

less a holdback reserve of $

~~350,000~~

$350,000 (the “Escrowed Amount”) for net

~~ceeds~~

proceeds of approximately $

~~2.9~~

$2.9 million.

~~Table of Contents~~

On September 5, 2018, third-party Yeda Research and Development Company Ltd. (“Yeda”), filed a complaint (the “Complaint”) against the Company and Invivo in the United States District Court for the Southern District of New York, captioned Yeda Research and Development Company Ltd. v. iCAD, Inc. and Invivo Corporation, Case No.

1:18-cv-08083-GBD,

related to the Company’s sale of the VersaVue software and DynaCAD product under the Asset Purchase Agreement. ~~In the Complaint,~~ Yeda asserted claims for: (i) copyright infringement and misappropriation of trade secrets against both the Company and Invivo, (ii) breach of contract against the Company only, and (iii) tortious interference with existing business relationships and unjust enrichment against Invivo only. The Company and Invivo filed Motions to Dismiss the Complaint on December 21, 2018. On January 18, 2019, Yeda filed Oppositions to the Motions to Dismiss. The Company and Invivo submitted responses to the Opposition to the Motion to Dismiss on February 8, 2019. The Court held oral argument on the Motions to Dismiss on March 27, 2019. On September 5, 2019, the Court granted Invivo’s Motion to Dismiss in its entirety and granted the Company’s Motion to Dismiss as it relates to Yeda’s breach of contract and misappropriation of trade secrets claims. On October 22, 2019, Yeda filed an Amended Complaint against only the Company asserting claims for (i) copyright infringement, and (ii) a replead breach of contract claim. The Company filed its Answer to Yeda’s Amended Complaint on November 5, 2019. Yeda alleges,alleged, among other things, that the Company infringed upon Yeda’s source code, which was originally licensed to the Company, by using it in the products that the Company sold to Invivo and that it is entitled to damages that could include, among other things, profits relating to the sales of these products. IfOn April 13, 2021, the Company ~~is found to have infringed Yeda’s copyright or breached its agreements with~~and Yeda entered into a Settlement and Release Agreement (the “Settlement Agreement”) whereby the Company ~~could be obligated to pay~~furnished to Yeda ~~substantial monetary damages.~~a

one-time

cash payment of $85,000 and received a full,

non-conditional

release from Yeda of any and all claims related to the Complaint and the subject of the Complaint. Neither the Company nor Invivo acknowledged any wrongdoing at any point in connection with the Complaint or the subject matter thereof. The Escrowed Amount was reserved, in part, to cover any legal expenses related to the Asset Purchase Agreement and the transactions contemplated therein. The remaining balance of the Escrowed Amount following such expenses is due and payable to the Company in accordance with the terms of the Asset Purchase Agreement. The Company and Invivo agreed that Invivo would pay $50,000 of the Escrowed Amount and the Company expensed approximately $93,000 in the second quarter of 2021.

The Company may be 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 no 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, other than as set forth above.~~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 the Company’s operating results and cash flows for that particular period. The Company may be a party to certain actions that have been filed against the Company which are being vigorously defended. The Company has determined that potential losses in these matters are neither probable or reasonably possible at this time. 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.

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Note 8 -– Fair Value Measurements

Fair value is defined 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 asset

or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The accounting 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:

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 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.~~

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.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and notes payable and convertible debentures. Due to their short-term nature and market rates of interest, the carrying amounts of the financial instruments (except the Convertible Debentures, which were measured at fair value in accordance with the fair value option election) approximated fair value as of February 21, 2020 and December 31, 2019.

The Company’s assets and liabilities that are measured at fair value on a recurring basis include the Company’s money market accounts and Convertible Debentures.

The money market accounts are included in cash and cash equivalents in the accompanying consolidated balance sheet and are considered a Level 1 measurement as they are valued at quoted market prices in active markets.

The Convertible Debentures were recorded as a separate component of the Company’s consolidated balance sheet and are considered a Level 3 measurement due to the utilization of significant unobservable inputs in their valuation. See Note 4(b) for a discussion of these fair value measurements.

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 (in thousands).


Fair Value Measurements as of December 31, 2020
	Level 1		Level 2		Level 3		Total

Assets
Money market accounts	$	27,186		—		—	$	27,186

Total Assets	$	27,186		—		—	$	27,186


Fair Value Measurements (in thousands) as of September 30, 2021
	Level 1		Level 2		Level 3		Total

Assets
Money market accounts	$	35,805		—		—	$	35,805

Total Assets	$	35,805		—		—	$	35,805

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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

~~The following sets forth a reconciliation of the changes in the fair value of the Convertible Debentures that were converted to equity during the nine months ended September 30, 2020 (in thousands):~~

   Convertible Debentures
Balance, December 31, 2019
   $ 13,642
Fair value adjustments
   7,522
Conversion
   (21,164 )


Balance as of September 30, 2020
   $ —

Note 9 -– Income Taxes

The Coronavirus Aid, Relief, and Economic

Security

Act was enacted on March 27, 2020 and did not have a material impact on the Company’s provision for income taxes for the three and nine months ended September 30, ~~2020.~~2021.

The Company recorded an income tax provision of $0 for the three and nine months ended September 30, 2021, and $3,000 and $34,000 for the three and nine months ended September 30, ~~2020, respectively,~~ 2020. The Company adopted ASU

2019-12

as of January 1, 2021, in accordance with this provision

non-income

and ~~$6,000~~state franchise taxes are now classified as a component of operating expenses in General and ~~$33,000~~Administrative expense. Income based tax expense will continue to be recognized as tax expense in the Consolidated Financial Statements. Tax expense for ~~the~~ three and

nine months ended September 30, ~~2019, respectively.~~ 2020 represent

non-income

and state franchise tax, however the expense was not reclassified to operating expenses in accordance with ASU

2019-12.

The Company had 0 material unrecognized tax benefits and a deferred tax liability of approximately $4,000 related to tax amortizable goodwill.

No other adjustments were required under ASC 740, “Income Taxes.” The Company does not expect that its unrecognized tax benefits will materially increase within the next 12 months. The Company did not recognize any interest or penalties related to uncertain tax positions at September 30, ~~2020.~~2021.

~~Table of Contents~~

The Company files United States federal income tax returns and income tax returns in various states and local jurisdictions. The Company’s three preceding tax years remain subject to examination by federal and state tax 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.

Note 10 -– Goodwill

The Company tests goodwill for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of the reporting unit is less than its carrying value.

~~Factors the Company considers important, which could trigger an impairment of such asset, include the following:~~

~~significant underperformance relative to historical or projected future operating results;~~

~~significant changes in the manner or use of the assets or the strategy for the Company’s overall business;~~

~~significant negative industry or economic trends;~~

~~significant decline in the Company’s stock price for a sustained period; and~~

~~a decline in the Company’s market capitalization below net book value.~~

~~The Company considered the goodwill impairment factors due to the uncertainty around the continuing impact of the~~

~~COVID-19~~

pandemic on the Company’s operations and on the global economy as a whole. Under this consideration the Company performed scenario testing as of March 31, 2020 updating the projections to the most recent impairment analysis performed as of October 1, 2019. The Company compared the scenario test again against current forecasts as of September 30, 2020 and concluded that it did not have a triggering event or impairment indicators in the quarter ended September 30, 2020.

The Company would record an impairment charge when such assessment indicates that the fair value of a reporting unit is 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.

~~Table of Contents~~

The Company determines 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 uses internal forecasts to estimate future cash flows and includes estimates of long-term future growth rates based on its most recent views of the long-term forecast for each segment. Accordingly, actual results can differ from those assumed in the Company’s forecasts. Discount rates are derived from a capital asset pricing model and by analyzing published rates for industries relevant to the Company’s 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 of its reporting units and in the Company’s 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 in similar 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 the Company, as well as the fact that market data may not be available for divisions within larger conglomerates or

~~non-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 corroborates 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. 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 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 weights the methodologies appropriately.

The Company has two operating segments, Detection and Therapy, as further discussed in Note 12 below.

~~Table of Contents~~

A rollforward of goodwill activity by reportable segment is as follows (in thousands)

	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	)

Balance at December 31, 2020 and September 30, 2021		—			8,362			—			8,362

There were 0 impairment indicators present as of September 30, 2021.

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

Note 11 – Long-lived assets

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 its carrying value.

There is no set interval or frequency for recoverability evaluation. Rather, the determination of when, if at all, an asset (or asset group) is evaluated for recoverability is based on “events and circumstances.” The following factors are examples of events or changes in circumstances that indicate the carrying amount of an asset (or asset group) may not be recoverable and thus is to be evaluated for recoverability.

•

~~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).

The Company determined there were no such triggering events in the quarter ended September 30, ~~2020.~~2021.

If the carrying amount of an asset or asset group (in use or under development) is evaluated and found not to be fully recoverable (e.g., the carrying amount exceeds the estimated gross, undiscounted cash flows from use and disposition), then an

~~impairment~~

~~loss must~~

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be recognized. The impairment loss is measured as the excess of the carrying amount over the fair value of the asset (or asset group). The Company determined the “Asset Group” of the Company to be the assets of the Therapy segment and the Detection segment, which the Company considers to be the lowest level for which the identifiable cash flows were largely independent of the cash flows of other assets and liabilities.

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 that its 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.

Note 12 – Segment Reporting

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 Chief Executive Officer. Each reportable segment generates revenue from the sale of medical equipment and related services and/or sale of supplies. The Company has determined there are ~~two~~2 segments, Detection and Therapy.

The Detection segment consists of the Company’s advanced image analysis and workflow products, and the Therapy segment consists of the Company’s radiation therapy products, “Axxent,” and related services. The primary factors used by the Company’s CODM to allocate resources are based on revenues, gross profit, operating income, and earnings or loss before interest, taxes, depreciation, amortization, and other specific and

non-recurring

items of each segment. Included in segment operating income are stock compensation, amortization of technology and depreciation expense. There are no intersegment revenues.

The Company does not track assets by operating segment and the Company’s CODM does not use asset information by segment to allocate resources or make operating decisions.

Segment revenues, gross profit, segment operating income or loss, and a reconciliation of segment operating income or loss to US GAAP loss before income tax is as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020

Segment revenues:
Detection	$	6,008		$	5,291		$	16,515		$	13,885
Therapy		3,353			1,838			9,315			5,362

Total Revenue	$	9,361		$	7,129		$	25,830		$	19,247

Segment gross profit:
Detection	$	5,058		$	4,227		$	13,788		$	11,227
Therapy		1,654			798			4,751			2,665

Segment gross profit	$	6,712		$	5,025		$	18,539		$	13,892

Segment operating income (loss):
Detection	$	671		$	866		$	1,664		$	721
Therapy		(173	)		(711	)		(735	)		(2,149	)

Segment operating income (loss)	$	498		$	155		$	929		$	(1,428	)

General, administrative, depreciation and amortization expense	$	(2,679	)	$	(1,844	)	$	(7,513	)	$	(6,465	)
Interest expense		—			(115	)		(141	)		(360	)
Other income		5			10			12			85
Loss on extinguishment of debt		—			—			(386	)		(341	)
Fair value of convertible debentures		—			—			—			(7,464	)

Loss before income tax	$	(2,176	)	$	(1,794	)	$	(7,099	)	$	(15,973	)

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   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 )

Note 13 -– Recent Accounting Pronouncements

Recently Adopted Accounting Standards

~~On January 1, 2020, the Company adopted ASU~~

~~2018-13,~~

~~“Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU~~

~~2018-13”).~~

~~ASU~~

~~2018-13~~

~~removes, modifies and adds certain disclosure requirements of ASC Topic 820. ASU~~

~~2018-13~~

~~is effective for Company for the fiscal year and interim periods therein beginning January 1, 2020. The Company notes that the adoption of ASU~~

~~2018-13~~

~~did not have a material impact on its consolidated financial statements.~~

~~Recently Issued Accounting Standards Not Yet Adopted~~

~~In June 2016, the Financial Accounting Standards Board (the “FASB”) issued~~

~~ASU 2016-13, “Financial~~

~~Instruments - Credit Losses (Topic 326)”~~

~~(“ASU 2016-13”), which~~

~~requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.~~

~~ASU 2016-13 replaces~~

~~the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking~~

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~~information to calculate~~

~~credit loss estimates. These changes will result in earlier recognition of credit losses. In November 2019, the FASB elected to defer the adoption date of ASU~~

~~2016-13~~

~~for public business entities that meet the definition of a smaller reporting company to fiscal years beginning after December 15, 2022. Early adoption of the guidance in ASU~~

~~2016-13~~

~~is permitted. The Company is currently evaluating the impact that the adoption of ASU~~

~~2016-13~~

~~will have on its consolidated financial statements.~~

In December 2019, the ~~FASB~~Financial Accounting Standard Board (the “FASB”) issued ASU

2019-12,

“Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU

2019-12”).

ASU

2019-12

is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU

2019-12

is effective for the Company for the fiscal year and interim periods therein beginning January 1, 2021. The Company ~~will adopt~~notes that the adoption of ASU

2019-12

~~on January 1, 2021~~resulted in the reclassification of an immaterial amount from income tax expense to

non-income

tax included in operating expenses related to the accounting for state and ~~will account for~~franchise taxes, with no impact to the Company’s consolidated income, ~~taxes in accordance with ASU~~equity or cash flows.

~~2019-12~~

Recently Issued Accounting Standards Not Yet Adopted

~~at that time.~~

In June 2016, the FASB issued

ASU 2016-13, “Financial

Instruments—Credit Losses (Topic 326)”

(“ASU 2016-13”),

which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

ASU 2016-13

replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. These changes will result in earlier recognition of credit losses. In November 2019, the FASB elected to defer the adoption date of ASU

2016-13

for public business entities that meet the definition of a smaller reporting company to fiscal years beginning after December 15, 2022. Early adoption of the guidance in ASU

2016-13

is permitted. The Company is currently evaluating the impact that the adoption of ASU

2016-13

will have on its consolidated financial statements.

In March 2020, the FASB issued ASU

2020-04,

“Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU

2020-04”). ASU

2020-04

was issued because the London Interbank Offered Rate (“LIBOR”) is a benchmark interest rate referenced in a variety of agreements that are used by all types of entities, and at the end of 2021, banks will no longer be required to report information that is used to determine LIBOR. As a result, LIBOR is expected to be discontinued as a benchmark interest rate. Other interest rates used globally could also be discontinued for similar reasons. ASU

2020-04

provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. Companies can apply the ASU immediately. However, the guidance will only be available for a limited time (generally through December 31, 2022). The Company is currently evaluating the impact that the adoption of ASU

2020-04

will have on its consolidated financial statements.

In August 2020, the FASB issued ASU

2020-06,

“Debt – Debt with Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic

815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU

2020-06”).

ASU

2020-06

was issued to simplify the accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. ASU

2020-06

removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. ASU

2020-06

also simplifies the diluted earnings per share calculation in certain areas. ASU

2020-06

is effective for the Company for the fiscal year and interim periods therein beginning January 1, 2022. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU

2020-06

will have on its consolidated financial statements.

Note 14 – Subsequent Events

None.

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:~~ Certain information included in this Item 2 and elsewhere in this Form

10-Q

that are not historical facts contain ~~forward~~statements that may be deemed “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements ~~that~~involve or may involve a number of known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward looking statements. These risks and uncertainties include, but are not limited to following: the impact of the

COVID-19

pandemic on ~~our~~the Company’s business and the global economy; uncertainty of future sales and expense levels, protection of patents and other proprietary rights, the impact of supply and manufacturing constraints or difficulties, regulatory changes and requirements applicable to ~~our~~the Company’s products, product market acceptance, possible technological obsolescence of products, increased competition, integration of acquired businesses, the impact of litigation and/or ~~government regulation, changes in Medicare reimbursement policies,~~

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government regulation, changes in Medicare reimbursement policies, competitive factors, the effects of a decline in the economy in markets served by the Company and other risks detailed in the Company’s other filings with the Securities and Exchange Commission. The words “believe”, “plan”, “intend”, “expect”, “estimate”, “anticipate”, “likely”, “seek”, “should”, “would”, “could” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date the statement was made. Except as required by law, ~~we undertake~~iCAD undertakes no obligation to update any such forward-looking statements to reflect events or circumstances after the date of such statements.

Results of Operations

Overview

iCAD, Inc. is a global medical technology company providing innovative cancer detection and therapy solutions. The Company reports in two segments: Detection and Therapy.

In the Detection segment, the Company’s solutions include (i) advanced image analysis and workflow solutions that enable healthcare professionals to better serve patients by identifying pathologies and pinpointing the most prevalent cancers earlier, and (ii) a comprehensive range of high-performance, Artificial Intelligence and Computer-Aided Detection (CAD) systems and workflow solutions for 2D and 3D mammography, Magnetic Resonance Imaging (MRI) and Computed Tomography (CT).

In the Therapy segment, the Company offers the Xoft ~~Electronic Brachytherapy~~ System, ~~(“Xoft System”),~~ an isotope-free cancer radiation treatment platform technology. The Xoft System can be used for the treatment of early-stage breast cancer, endometrial cancer, cervical cancer ~~glioblastoma,~~ and nonmelanoma skin cancer. ~~We believe~~

On January 30, 2017, the Xoft System platform indications represent strategic opportunities in the United States and international markets to offer differentiated treatment alternatives. In addition, the Xoft System generates additional recurring revenue fromCompany completed the sale of ~~consumables~~certain intellectual property relating to the VersaVue Software and the DynaCAD product and related ~~accessories which~~assets to Invivo for $3,200,000 in cash with a holdback amount of $350,000. The Company recently settled litigation with a third-party relating to this transaction, as further described in Note 7 hereto. The nine months ended September 30, 2020 and 2021 includes a $0.3 and $0.4 million charge related to the loss on the extinguishment of debt respectively, while the nine months ended September 30, 2020 included a $7.8 million charge related to the losses on the extinguishment of debentures and debt. In April 2021, the Company ~~expects will continue~~used approximately $7.4 million of cash to ~~drive growth~~repay its credit facility in ~~this segment.~~full.

The Company’s headquarters are located in Nashua, New Hampshire, with a manufacturing facility in New Hampshire and an operations, research, development, manufacturing and warehousing facility in San Jose, California.

COVID-19

Impact

On March 12, 2020, the World Health Organization declared

COVID-19

to be a pandemic. In an effort to contain and mitigate the spread of the

COVID-19

pandemic, the United States, many countries in Europe, as well as Canada and China, have imposed unprecedented restrictions on travel, and there have been business closures and a substantial reduction in economic activity in countries that have had significant outbreaks of

COVID-19.

As a provider of devices and services to the health care industry, ~~our~~the Company’s operations have been materially affected. Significant uncertainty remains as to the continuing impact of the

COVID-19

pandemic on ~~our~~the Company’s operations and on the global economy as a whole. It is currently not

~~Table of Contents~~

possible to predict how long the pandemic will last or the time that it will take for economic activity to return to prior levels. The

COVID-19

pandemic has resulted in significant financial market volatility and uncertainty. A ~~continuation or~~ worsening ~~of the levels~~level of market disruption and volatility seen in the recent past will have an adverse effect on ~~our~~the Company’s ability to access capital, on ~~our~~the Company’s business, results of operations and financial condition, and on the market price of ~~our~~the Company’s common stock. ~~Our~~The Company’s results for the quarter ending September 30, 2021, as well as our results for all prior quarters beginning with Q1 2020, reflect a negative impact from the

COVID-19

pandemic, ~~as the typical sales cycle and ordering patterns were disrupted~~ due to some healthcare facilities’ additional focus on

~~COVID-19.~~COVID-19

and from the effect on our customers and potential customers of supply chain issues relating thereto. Although ~~we do~~the Company does not provide guidance to investors relating to ~~our~~the Company’s results of operations, ~~our~~the Company’s results for the quarter ending December 31, ~~2020,~~2021, and possibly future quarters, could reflect a ~~continuing~~continued negative impact from the

COVID-19

pandemic for similar reasons. ~~The Company continued to follow steps taken during the second quarter to reduce operating expenses during the three-month period ended September 30, 2020, including cutting~~

~~non-essential~~

~~travel, implementing employee furloughs and terminations, reducing employee salaries by 10%, and cancelling most~~

~~in-person~~

trade shows. Depending upon the duration and severity of the pandemic, the continuing effect on our results over the long term is uncertain. We will continue to evaluate the nature and extent of the impact of

~~COVID-19~~

~~on our business and cost structure.~~

During the first quarter of fiscal 2020, the Company entered into an equity distribution agreement with JMP Securities to provide for an

at-

the-market

offering program to provide additional potential liquidity through the sale of common stock having a value of up to $25.0 million (the “ATM Facility”). On December 17, 2020 the Company sold 470,704 shares of common stock under the ATM Facility for gross proceeds of approximately $6.6 million and net proceeds of approximately $6.1 million. On March 2, 2021, the Company terminated the ATM Facility. Also on March 2, 2021, the Company entered into an underwriting agreement with Guggenheim Securities, LLC, as representative of the several underwriters thereto, in connection with an underwritten public offering of 1,393,738 shares of the Company’s common stock at an offering price of $18.00 per share. The ~~Company did not make any sales under this equity distribution agreement in~~offering closed on March 5, 2021 for gross proceeds of approximately $25.1 million and net proceeds of approximately $23.2 million to the ~~three months ended September 30, 2020.~~Company. The Company believes that its current liquidity and capital resources are sufficient to sustain operations through at least the next 12 months, primarily due to cash on hand of ~~$22.6~~$35.8 million at September 30, 2021 and anticipated revenue and cash collections. However, the resurgence of the

COVID-19

pandemic could affect ~~our~~the Company’s liquidity.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020. The Company received an Employee Retention Credit of $0.3 million associated with the CARES Act. The Company does not currently expect any material impact on its financial statements from other provisions under the CARES Act.

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Critical Accounting ~~Policies~~Estimates

The Company’s discussion and analysis of its financial condition, results of operations, and cash flows are based on the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United ~~States of America.~~States.

The preparation of these financial statements requires usthe Company 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 an ongoing basis, the Company evaluates these estimates, including those related to revenue recognition, allowance for doubtful accounts, inventory valuation and obsolescence, intangible assets, goodwill, income taxes, contingencies, and litigation. Additionally, the Company uses assumptions and estimates in calculations to determine stock-based compensation, the fair value of convertible debentures, 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.

Due to the

COVID-19

pandemic, there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form

10-Q.

These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

Other than as described herein, there have been no additional material changes to ~~our~~the Company’s critical accounting policies as discussed in ~~our 2019~~the Company’s Annual Report on Form

10-K

(for the ~~“2019~~fiscal year ended December 31, 2020 filed with the SEC on March 15, 2021 (the “2020

10-K”).

For a comprehensive list of the Company’s critical accounting policies, reference should be made to the ~~2019~~2020

10-K.

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Three and nine months ended September 30, ~~2020~~2021 compared to three and nine months ended September 30, ~~2019.~~2020.

Revenue: (in thousands)

Three months ended September 30, ~~2020~~2021 and ~~2019:~~

2020:


	Three months ended September 30,
	2021		2020		Change		% Change
Detection revenue
Product revenue	$	4,454	$	3,889	$	565		14.5	%
Service and supplies revenue		1,554		1,402		152		10.8	%

Subtotal		6,008		5,291		717		13.6	%

Therapy revenue
Product revenue		1,866		649		1,217		187.5	%
Service and supplies revenue		1,487		1,189		298		25.1	%

Subtotal		3,353		1,838		1,515		82.4	%

Total revenue	$	9,361	$	7,129	$	2,232		31.3	%

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
)%

Total revenue ~~decreased~~increased by approximately ~~$0.7~~$2.2 million, or ~~9.3%~~31.3%, from ~~$7.9 million for the three months ended September 30, 2019 to~~ $7.1 million for the three months ended September 30, ~~2020. The decrease is due~~2020 to a decrease in Detection revenue of approximately $0.8 million offset by an increase in Therapy revenue of $0.1 million. The Company believes that Detection product revenue was adversely affected in the third quarter of 2020 by the

~~COVID-19~~

~~pandemic, as the typical sales cycle and ordering patterns were disrupted due to some healthcare facilities’ additional focus on~~

~~COVID-19.~~

~~The Company is not able to predict how the~~

~~COVID-19~~

~~pandemic will affect future revenue and order volume.~~

~~Detection product revenue decreased by approximately $0.9 million, or 18.1%, from $4.8~~$9.4 million for the three months ended September 30, ~~2019~~2021. The increase is due to an increase in Therapy revenue of approximately $1.5 million and Detection revenue of $0.7 million.

Detection product revenue increased by approximately $0.6 million, or 14.5%, from $3.9 million for the three months ended September 30, ~~2020.~~2020 to $4.5 million for the three months ended September 30, 2021. The ~~decrease~~overall increase is due primarily to ~~decreases~~an increase in ~~(i)~~ direct customer revenue of ~~$0.5 million.~~$0.4 million and ~~(ii) OEM~~an increase in original equipment manufacturer customer revenue of ~~$0.4~~$0.2 million, in each case relating primarily to revenue from 3D imaging and density assessment products.

Detection service and supplies revenue, which is primarily sold to direct customers, increased by ~~$0.1~~$0.2 million, or 10.8%, from ~~$1.3 million in the three months ended September 30, 2019 to~~ $1.4 million in the three months ended September 30, ~~2020. The increase is due primarily~~2020 to ~~an increase in service revenue from direct customers. The Company did not see a significant impact of the COVID-19 pandemic on Detection service and supplies revenue~~$1.6 million in the ~~third quarter of 2020 but is not able to predict how the COVID-19 pandemic will affect future Detection service and supplies revenue.~~three months ended September 30, 2021.

~~Table of Contents~~

Therapy product revenue increased by approximately ~~$0.2~~$1.2 million, or ~~59.5%~~187.5%, from ~~$0.4~~$0.7 million for the three months ended September 30, ~~2019~~2020 to ~~$0.6~~$1.9 million for the three months ended September 30, ~~2020.~~2021. Therapy product revenue is related to the sale of ~~our~~the Company’s Axxent 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 three months ended September 30, 2020, due to

stay-at-home

and social distancing orders as well as the uncertainty in the market.

Therapy service and supplies revenue ~~decreased~~increased by approximately ~~$0.2~~$0.3 million, or ~~12.8%~~25.1%, from ~~$1.4 million for the three months ended September 30, 2019 to~~ $1.2 million for the three months ended September 30, ~~2020.~~2020 to $1.5 million for the three months ended September 30, 2021. The Company believes that Therapy service and supplies revenue, specifically the use of balloons for procedures, was adversely affected by the

COVID-19

pandemic during the three months ended September 30, 2020, due to

stay-at-home

and social distancing orders as well as the uncertainty in the market. The Company saw higher service and supplies revenues due to higher balloon sales in the three months ended September 30, 2021 as compared to the three months ended September 30, 2020. The Company is not able to predict how the

COVID-19

pandemic will affect future Therapy service and supplies revenue.

~~Nine months ended September 30, 2020 and 2019:~~

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 )%

Total revenue decreased by approximately $2.7 million, or 12.4%, from $22.0 million for the nine months ended September 30, 2019 to $19.3 million for the nine months ended September 30, 2020. The decrease is due to a decrease in Therapy revenue of approximately $1.1 million and a decrease in Detection revenue of approximately $1.6 million. The Company believes that Detection product revenue and order volume, and both Therapy product and Therapy service and supplies revenue were adversely affected in the nine months ended September 30, 2020, by the

~~COVID-19~~

~~pandemic, as the typical sales cycle and ordering patterns were disrupted due to some healthcare facilities’ additional focus on~~

~~COVID-19.~~

~~This was particularly evident in the second quarter but also impacted the third quarter of 2020. The Company is not able to predict how the~~

~~COVID-19~~

~~pandemic will affect future revenue and order volume.~~

Table of Contents

Nine months ended September 30, 2021 and 2020:

~~Detection product~~


	Nine months ended September 30,
	2021		2020		Change		% Change
Detection revenue
Product revenue	$	11,779	$	9,691	$	2,088		21.5	%
Service revenue	$	4,736		4,194		542		12.9	%

Subtotal		16,515		13,885		2,630		18.9	%

Therapy revenue
Product revenue	$	4,650		1,529		3,121		204.1	%
Service revenue	$	4,665		3,833		832		21.7	%

Subtotal		9,315		5,362		3,953		73.7	%

Total revenue	$	25,830	$	19,247	$	6,583		34.2	%

Total revenue ~~decreased~~increased by approximately ~~$1.7~~$6.6 million, or ~~14.6%~~34.2%, from ~~$11.4~~$19.2 million for the nine months ended September 30, ~~2019~~2020 to $25.8 million for the nine months ended September 30, 2021. The increase is due to an increase in Therapy revenue of approximately $4.0 million and an increase in Detection revenue of $2.6 million.

Detection

product revenue increased by approximately $2.1 million, or 21.5%, from $9.7 million for the nine months ended September 30, ~~2020.~~2020 to $11.8 million for the nine months ended September 30, 2021. The ~~decrease~~overall increase is due primarily to ~~decreases~~an increase in ~~(i)~~ direct customer ~~revenue of $1.0 million. and (ii) OEM customer revenue of $0.7 million, in each case relating primarily to~~ revenue from 3D imaging and density assessment products. The Company believes that the

COVID-19

pandemic also adversely affected revenues during the nine months ended September

30, 2020.

Detection service and supplies revenue, which is primarily sold to direct customers, increased by ~~approximately $0.1~~$0.5 million, or ~~1.9%~~12.9%, from ~~$4.1 million for the nine months ended September 30, 2019 to~~ $4.2 million ~~for the nine months ended September 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 the~~

~~COVID-19~~

~~pandemic on Detection service and supplies revenue for~~ the nine months ended September 30, 2020 ~~but is not able~~ to ~~predict how the~~

~~COVID-19~~

~~pandemic will affect future Detection service and supplies revenue.~~

~~Therapy product revenue decreased by approximately $0.5~~$4.7 million ~~or 22.9%, from $2.0 million for~~in the nine months ended September 30, ~~2019 to~~2021.

Therapy product revenue increased by approximately $3.1 million, or 204.1%, from $1.5 million for the nine months ended September 30, ~~2020. Although Therapy product revenue increased in the three months ended September 30, 2019, Therapy product revenue~~2020 to $4.6 million for the nine months ended September 30, ~~2020 was adversely affected by the~~

~~COVID-19~~

~~pandemic, due to~~

~~stay-at-home~~

~~and social distancing orders as well as the uncertainty in the market.~~2021. Therapy product revenue is related to the sale of ~~our~~the Company’s Axxent systems and can vary significantly from quarter to quarter due to changes in the number of units sold, and the average selling price.

Therapy service and supplies revenue decreased by approximately $0.7 million, or 15%, from $4.5 million for the nine months ended September 30, 2019 to $3.8 million for the nine months ended September 30, 2020. The Company believes that Therapy ~~service and supplies~~product revenue was adversely affected by the

COVID-19

pandemic during the nine months ended September 30, 2020, due to

stay-at-home

and social distancing orders as well as the uncertainty in the market.

Therapy service and supplies revenue increased by approximately $0.8 million, or 21.7%, from $3.8 million for the nine months ended September 30, 2020 to $4.7 million for the nine months ended September 30, 2021. The Company believes that Therapy service and supplies revenue, primarily the use of balloons for procedures, was adversely affected by the

COVID-19

pandemic during the nine months ended September 30, 2020, due to

stay-at-home

and social distancing orders as well as the uncertainty in the market. The Company saw higher service and supplies revenues due to higher balloon sales in the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020. The Company is not able to predict how the

COVID-19

pandemic will affect future Therapy service and supplies revenue.

Table of Contents

Cost of Revenue and Gross Profit: (in thousands)

Three months ended September 30, ~~2020~~2021 and ~~2019:~~2020:


	Three months ended September 30,										Three months ended September 30,
	2020		2019		Change			% Change			2021		2020		Change			% Change
Products	$	1,345	$	809	$	536			66.3	%	$	1,807	$	1,345	$	462			34.3	%
Service and supplies		667		891		(224	)		(25.1	)%		763		667		96			14.4	%
Amortization and depreciation		92		103		(11	)		(10.7	)%		79		92		(13	)		(14.1	)%

Total cost of revenue	$	2,104	$	1,803	$	301			16.7	%	$	2,649	$	2,104	$	545		��	25.9	%


Gross profit	$	5,025	$	6,054	$	(1,029	)		(17.0	)%	$	6,712	$	5,025	$	1,687			33.6	%


	Three months ended September 30,
	2021		2020		Change		% Change
Detection gross profit	$	5,058	$	4,227	$	831		19.7	%
Therapy gross profit		1,654		798		856		107.3	%

Gross profit		6,712		5,025		1,687		33.6	%

Table of Contents

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 %)

Gross profit for the three months ended September 30, ~~2020~~2021 was approximately ~~$5.0~~$6.7 million, or ~~70.5%~~71.7% of revenue, as compared to ~~$6.0~~$5.0 million, or ~~77.1%~~70.5% of revenue, for the three months ended September 30, ~~2019.~~2020. The

COVID-19

pandemic adversely affected revenues from Detection products and the Therapy segment in the three months ended September 30, 2020, ~~and as a result,~~which resulted in lower gross profit in both ~~segments. This was particularly evident~~segments in ~~the second quarter but also impacted the third quarter~~2020. The higher gross profit as a percentage of ~~2020. However, the Company continued to follow steps taken during the second quarter to reduce operating expenses during~~sales in the three months ended September 30, ~~2020, including cutting~~

~~non-essential~~

~~travel, implementing employee furloughs and terminations and reducing employee salaries by 10%. These measures offset some~~2021 was primarily related to product mix, with lower margin Therapy products being a greater percentage of total sales in the ~~impact on gross profit caused by~~three months ended September 30, 2021 than in the ~~lower than expected revenue numbers.~~three month period ended September 30, 2020.

Cost of products increased by approximately $0.5 million, or ~~66.3%~~34.3%, from ~~$0.8 million for the three months ended September 30, 2019 to~~ $1.3 million for the three months ended September 30, ~~2020.~~2020 to $1.8 million for the three months ended September 30, 2021. Cost of product revenue as a percentage of product revenue was approximately ~~15.7% for the three months ended September 30, 2019 as compared to~~ 29.6% for the three months ended September 30, ~~2020.~~2020 as compared to 28.6% for the three months ended September 30, 2021. The increase in cost of products is primarily due to the increased sales in both Therapy and Detection. The decrease in cost of products as a percentage of product revenue in the three months ended September 30, 2021 was primarily due to a hardware upgrade sale for the Detection business with a lower than standard average selling price ~~and the mix of sales on the Therapy business with lower margins on sales outside of the United States.~~

~~Cost of service and supplies decreased by approximately $0.2 million, or 25.1%, from $0.9 million for~~in the three months ended September 30, ~~2019 to~~2020.

Cost

of service and supplies increased by approximately $0.1 million, or 14.4%, from $0.7 million for the three months ended September 30, ~~2020.~~2020 to $0.8 million for the three months ended September 30, 2021. Cost of service and supplies revenue as a percentage of service and supplies revenue was approximately ~~34.4% for the three months ended September 30, 2019 as compared to~~ 25.7% for the three months ended September 30, ~~2020.~~2020 as compared to 25.1% for the three months ended September 30, 2021. The ~~decrease~~lower cost of service and supplies as a percentage of sales in the three months ended September 30, 2021 was primarily related to an overall increase in service and supplies ~~costs is due primarily~~revenue of approximately 17.4% in the three month period ended September 30, 2021 compared to the three month period ended September 30, 2020 with only a ~~decrease~~limited increase in personnel ~~costs.~~costs

Amortization and depreciation, which relates primarily to acquired intangible assets and depreciation of machinery and equipment, was approximately $0.1 million for ~~each of~~ the three months ended September 30, ~~2020~~2021 and ~~2019.~~2020.

~~Table of Contents~~

Nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:


	Nine months ended September 30,
	2020		2019		Change			% Change			2021		2020		Change			% Change
Products	$	2,899	$	2,134	$	765			35.8	%	$	4,592	$	2,899	$	1,693			58.4	%
Service and supplies		2,169		2,466		(297	)		(12.0	)%		2,462		2,169		293			13.5	%
Amortization and depreciation		287		297		(10	)		(3.4	)%		237		287		(50	)		(17.4	)%

Total cost of revenue	$	5,355	$	4,897	$	458			9.4	%	$	7,291	$	5,355	$	1,936			36.2	%


Gross profit	$	13,892	$	17,062	$	(3,170	)		(18.6	)%	$	18,539	$	13,892	$	4,647			33.5	%


	Nine months ended September 30,										Nine months ended September 30,
	2020		2019		Change			% Change			2021		2020		Change		% Change
Detection gross profit	$	11,227	$	12,874	$	(1,647	)		(12.8	%)	$	13,788	$	11,227	$	2,561		22.8	%
Therapy gross profit		2,665		4,188		(1,523	)		(36.4	%)		4,751		2,665		2,086		78.3	%

Gross profit	$	13,892	$	17,062	$	(3,170	)		(18.6	%)		18,539		13,892		4,647		33.5	%

Gross profit for the nine months ended September 30, ~~2020~~2021 was approximately ~~$13.9~~$18.5 million, or ~~72.2%~~71.8% of revenue, as compared to ~~$17.1~~$13.9 million, or ~~77.7%~~72.2% of revenue, for the nine months ended September 30, ~~2019.~~2020. The

COVID-19

pandemic adversely affected revenues from Detection products and the Therapy segment in the nine month ended September 30, 2020, which

Table of Contents

resulted in lower gross profit in both segments in 2020. The higher gross profit as a percentage of sales in the nine months ended September 30, 2020 ~~and as~~was primarily related to product mix, with lower margin Therapy products being a ~~result, gross profit in both segments. This was particularly evident~~greater percentage of total sales in the ~~second quarter but also impacted~~nine months ended September 30, 2021 than in the ~~third quarter of~~nine month period ended September 30, 2020. ~~However, the Company continued to follow steps taken during the second quarter to reduce operating expenses, including cutting~~

~~non-essential~~

~~travel, implementing employee furloughs and terminations, reducing employee salaries by 10%, and cancelling most~~

~~in-person~~

~~trade shows. These measures offset some of the impact on gross profit caused by the impact of~~

~~COVID-19.~~

Cost of products increased by approximately ~~$0.8~~$1.7 million, or ~~35.8%~~58.4%, from ~~$2.1 million for the nine months ended September 30, 2019 to~~ $2.9 million for the nine months ended September 30, ~~2020.~~2020 to $4.6 million for the nine months ended September 30, 2021. Cost of product revenue as a percentage of product revenue was approximately ~~16.0% for the nine months ended September 30, 2019 as compared to~~ 25.8% for the nine months ended September 30, ~~2020.~~2020 as compared to 28.0% for the nine months ended September 30, 2021. The increase in cost of products is primarily due ~~primarily~~ to the increased ~~personnel costs~~sales in both Therapy and Detection resulting in increases in cost of products of $1.6 and $0.1 million respectively. The higher cost of products as a percentage of sales in the ~~three~~nine months ended ~~period March 31, 2020 prior~~September 30, 2021 was primarily related to ~~the~~

~~COVID-19~~

~~cost cutting measures,~~product mix, with lower margin Therapy products being a ~~hardware upgrade sale~~greater percentage of total sales in the ~~three~~nine months ended September 30, 2021 than in the nine month period ended September 30, 2020.

Cost

of service and supplies increased by approximately $0.3 million, or 13.5%, from $2.2 million for the nine months ended September 30, 2020 ~~for the Detection business with a lower than standard average selling price and the mix of sales in the Therapy business with lower margins on sales outside of the United States.~~

~~Cost of service and supplies decreased by approximately $0.3 million, or 12.0%, from~~to $2.5 million for the nine months ended September 30, ~~2019 to $2.2 million for the nine months ended September 30, 2020.~~2021. Cost of service and supplies revenue as a percentage of service and supplies revenue was approximately ~~28.6% for the nine months ended September 30, 2019 as compared to~~ 27.0% for the nine months ended September 30, ~~2020.~~2020 as compared to 26.2% for the nine months ended September 30, 2021. The ~~decrease~~lower cost of service and supplies as a percentage of sales in the nine months ended September 30, 2021 was primarily related to an overall increase in service and supplies ~~costs is due primarily~~revenue of approximately 17.1% in the nine month period ended September 30, 2021 compared to ~~decreased~~the nine month period ended September 30, 2020 with only limited increase in personnel

costs ~~in cost of sales.~~

~~Table of Contents~~

Amortization and depreciation, which relates primarily to acquired intangible assets and depreciation of machinery and equipment, was approximately $0.3 million for ~~each of~~ the nine months ended September 30, 2020 ~~and 2019.~~as compared to $0.2 million for the nine months ended September 30, 2021.

Operating Expenses: (in thousands)

The Company’s investments in its business and the resulting operating expenses continued to grow throughout 2019. The Company had similar revenue expectations for 2020 due to the expectation of continued levels of sales orders, shipments, and overall revenue, which would have necessitated similar levels of operating expenses in 2020. Although the

~~COVID-19~~

pandemic impacted revenue throughout the nine months ended September 30, 2020, the Company began to implement significant reductions to operating expenses in April 2020. Steps taken thereafter to reduce operating expenses included cutting

~~non-essential~~

~~travel, implementing employee furloughs and terminations, reducing employee salaries by 10%, and cancelling most~~

~~in-person~~

~~trade shows. The Company will continue to monitor and manage the cost structure based on the impact that~~

~~COVID-19~~

~~has on the Company’s revenues.~~

Three months ended September 30, ~~2020~~2021 and ~~2019:~~2020:


											Three months ended September 30,
	Three months ended September 30,										2021		2020		Change		Change %
Operating expenses:	2020		2019		Change			Change %
Engineering and product development	$	1,849	$	2,485	$	(636	)		(25.6	)%	$	2,285	$	1,849	$	436		23.6	%
Marketing and sales		2,979		3,588		(609	)		(17.0	)%		3,886		2,979		907		30.4	%
General and administrative		1,834		1,872		(38	)		(2.0	)%		2,658		1,834		824		44.9	%
Amortization and depreciation		52		69		(17	)		(24.6	)%		64		52		12		23.1	%

Total operating expenses	$	6,714	$	8,014	$	(1,300	)		(16.2	)%	$	8,893	$	6,714	$	2,179		32.5	%

Operating expenses ~~decreased~~increased by approximately ~~$1.3~~$2.2 million, or ~~16.2%~~32.5%, from ~~$8.0 million in the three months ended September 30, 2019 to~~ $6.7 million in the three months ended September 30, ~~2020.~~2020 to $8.9 million in the three months ended September 30, 2021. The Company took steps ~~during the second quarter of~~throughout 2020 to reduce operating expenses ~~including cutting~~during the

~~non-essential~~COVID-19

pandemic and this was evident in the three-months ended September 30, 2020. The Company has since reinstated furloughed employees and resumed some business travel ~~implementing employee furloughs~~based on relaxation of

COVID-19

restrictions and ~~terminations, reducing employee salaries by 10%, and cancelling most~~the strength of the business, but the Company continues to take a disciplined approach with expenses, given the lingering risk of

~~in-person~~COVID-19

~~trade shows.~~related negative impacts to the business.

Engineering and Product Development

. Engineering and product development costs ~~decreased~~increased by approximately ~~$0.6~~$0.4 million, or ~~25.6%~~23.6%, from ~~$2.5 million for the three months ended September 30, 2019 to~~ $1.9 million for the three months ended September 30, ~~2020.~~2020 to $2.3 million for the three-months ended September 30, 2021. The increase is primarily due to personnel costs related to reinstatement of furloughed employees.

Marketing and Sales

. Marketing and sales expenses increased by approximately $0.9 million, or 30.4%, from $3.0 million in the three months ended September 30, 2020, to $3.9 million in the three months ended September 30, 2021. Detection ~~engineering~~marketing and ~~product development~~sales increased by approximately $0.7 million and Therapy marketing and sales increased by $0.2 million. The increases are primarily due to personnel costs ~~decreased~~and increased travel as compared to the three months ended September 30, 2020 when travel was impacted by ~~$0.5~~the

COVID-19

pandemic.

General and Administrative

. General and administrative expenses increased by approximately $0.8 million, or 44.9%, from $1.8 million in the three months ended September 30, 2020 to $2.7 million for the three months ended September 30, ~~2019~~2021. The increase is primarily due to $1.3 million for the three months ended September 30, 2020. Therapy engineering and product development costs decreased $0.1 million, from $0.7 million in the three months ended September 30, 2019 to $0.6 million for the three months ended September 30, 2020. The decreases were due primarily to decreased personnel costs ~~as a result~~related to reinstatement of furloughed employees, new hires, consulting costs, and costs associated with recruiting personnel across the ~~Company’s~~

~~COVID-19~~

~~related cost-cutting efforts.~~

organization.

Table of Contents

Amortization and Depreciation.

Amortization and depreciation, which relates primarily to acquired intangible assets and depreciation of machinery and equipment, increased by approximately $12,000, or 23.1% from $52,000 for the three months ended September 30, 2020 to $64,000 for the three months ended September 30, 2021.

Other Income and Expense: (in thousands)

Three months ended September 30, 2021 and 2020:


	Three months ended September 30,
	2021		2020			Change			Change %
Interest expense	$	—	$	(115	)	$	115			(100.0	)%
Other income		5		10			(5	)		(50.0	)%

	$	5	$	(105	)	$	110			(104.8	)%

Tax benefit (expense)	$	—	$	(3	)	$	3			(100.0	)%

Interest expense

. Interest expense decreased $115,000, or 100%, from $115,000 in the three months ended September 30, 2020 to $0 for the three months ended September 30, 2021. The decrease is due to the timing of termination of the Loan Agreement.

Other income

. Other income decreased by approximately $5,000, or 50.0%, from $10,000 for the three months ended September 30, 2020 to $5,000 for the three months ended September 30, 2021.

Tax expense

. Tax expense decreased by approximately $3,000, or 100%, from $3,000 for the three months ended September 30, 2020 to $0 for the three months ended September 30, 2021. The Company has approximately $42,000 in

non-income

related tax expense classified in operating expenses under ASU

2019-12

that had previously been classified here in tax expense. Tax expense includes state

non-income

and franchise-based taxes.

Operating Expenses: (in thousands)

Nine months ended September 30, 2021 and 2020:


	Nine months ended September 30,
	2021		2020		Change		Change %
Operating expenses:
Engineering and product development	$	6,745	$	5,938	$	807		13.6	%
Marketing and sales		10,739		9,218		1,521		16.5	%
General and administrative		7,461		6,476		985		15.2	%
Amortization and depreciation		178		153		25		16.3	%

Total operating expenses	$	25,123	$	21,785	$	3,338		15.3	%

Operating expenses increased by approximately $3.3 million, or 15.3%, from $21.8 million in the nine months ended September 30, 2020 to $25.1 million in the nine months ended September 30, 2021. The Company took steps throughout 2020 to reduce operating expenses during the

COVID-19

pandemic and this was evident in the nine months ended September 30, 2020. The Company has since reinstated furloughed employees and resumed some business travel based on relaxation of

COVID-19

restrictions and the strength of the business, but the Company continues to take a disciplined approach with expenses, given the lingering risk of

COVID-19

related negative impacts to the business.

Engineering and Product Development

. Engineering and product development costs increased by approximately $0.8 million, or 13.6%, from $5.9 million for the nine months ended September 30, 2020, to $6.7 million for the nine months ended September 30, 2021. The increase is primarily due to personnel costs related to reinstatement of furloughed employees.

Marketing and Sales

. Marketing and sales expenses ~~decreased~~increased by approximately ~~$0.6~~$1.5 million, or ~~17.0%~~16.5%, from ~~$3.6~~$9.2 million in the ~~three~~nine months ended September 30, ~~2019~~2020, to ~~$3.0~~$10.7 million in the ~~three~~nine months ended September 30, ~~2020.~~2021. Detection marketing and sales ~~expense decreased~~increased by ~~$0.2~~approximately $1.1 million from $2.3 million in the three months ended September 30, 2019 to $2.1 million in the three months ended September 30, 2020. Therapy marketing and sales expense decreased by $0.4 million, from $1.3 million in the three months ended September 30, 2019 to $0.9 million in the three months ended September 30, 2020. The decrease in both Detection and Therapy marketing and sales ~~expense is~~increased by $0.4 million. The increases are primarily due ~~primarily~~ to ~~decreased~~ personnel costs including new hires, commissions on higher sales, and increased travel ~~and reduced trade show costs~~ as ~~a result~~compared to the nine months ended September 30, 2020 when travel was impacted by the

COVID-19

pandemic.

Table of ~~the Company’s COVID-19 related cost-cutting efforts.~~Contents

General and Administrative

. General and administrative expenses ~~decreased~~increased by approximately ~~$0.1~~$1.0 million, or ~~3.0%~~15.2%, from ~~$1.9~~$6.5 million in the ~~three~~nine months ended September 30, ~~2019~~2020 to ~~$1.8~~$7.5 million for the ~~three~~nine months ended September 30, ~~2020.~~2021. The ~~decrease~~increase is primarily due ~~primarily~~ to ~~a decrease in and~~ personnel costs ~~as a result~~related to reinstatement of furloughed employees, new hires, consulting costs, and costs associated with recruiting personnel across the ~~Company’s~~

~~COVID-19~~

~~related cost-cutting efforts.~~organization.

Amortization and Depreciation.

Amortization and depreciation which relates primarily to acquired intangible assets and depreciation of machinery and equipment, ~~decreased by approximately $17,000, or 24.6% from $69,000 for the three months ended September 30, 2019 to $52,000 for the three months ended September 30, 2020.~~

~~Nine months ended September 30, 2020 and 2019:~~

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 %

~~Operating expenses~~ increased by approximately ~~$0.3 million,~~$25,000, or ~~1.3%,~~16.3% from ~~$21.5 million in the nine months ended September 30, 2019 to $21.8 million in the nine months ended September 30, 2020. Although the Company implemented cost-cutting measures related to~~

~~COVID-19~~

~~and was able to achieve a reduction in operating expenses in the three months ended September 30, 2020, there were still no such measures related to~~

~~COVID-19~~

in the three months ended March 31, 2020, resulting in an overall increase in operating expenses for the nine months ended September 30, 2020. The increase in operating expenses was also offset by the $0.3 million Employee Retention Credit that the Company recorded in the second quarter of 2020, pursuant to the CARES Act.

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~~Engineering and Product Development~~

. Engineering and product development costs decreased by approximately $0.8 million, or 12.0%, from $6.7 million for the nine months ended September 30, 2019 to $5.9 million for the nine months ended September 30, 2020. Detection engineering and product development costs decreased by $0.8 million, from $4.8 million for the nine months ended September 30, 2019 to $4.0 million$153,000 for the nine months ended September 30, 2020, ~~due primarily~~ to decreased personnel costs. Therapy engineering and product development costs remained at approximately $1.9 million in the nine months ended September 30, 2019 and 2020. The decreases were due primarily to decreased personnel costs as a result of the Company’s

~~COVID-19~~

~~related cost-cutting efforts.~~

~~Marketing and Sales~~

. Marketing and sales expenses decreased by approximately $0.1 million, or 0.7%, from $9.3 million in the nine months ended September 30, 2019 to $6.2 million in the nine months ended September 30, 2020. Detection marketing and sales expense increased by $0.4 million, from $6.1 million in the nine months ended September 30, 2019 to $6.5 million in the nine months ended September 30, 2020. Therapy marketing and sales expense decreased by $0.3 million, from $3.2 million in the nine months ended September 30, 2019 to $2.9 million in the nine months ended September 30, 2020.

~~The increase in Detection marketing and sales expense is due primarily to increased personnel costs, which were incurred prior to implementation of cost-cutting measures prompted by the~~

~~COVID-19~~

pandemic. This increase was especially prevalent in the first three months of the year when the Company invested in additional commercial resources to help drive sales of the new Detection products prior to the

~~COVID-19~~

pandemic. The decrease in Therapy marketing and sales expense is primarily due to a decrease in costs related to trade shows and personnel. The decrease in total marketing and sales expense also included the Employee Retention Credit of $0.1 million in Marketing and sales between the Detection and Therapy segments.

~~General and Administrative~~

~~. General and administrative expenses increased by approximately $1.2 million, or 22.4%, from $5.3 million in the nine months ended September 30, 2019 to $6.5 million~~$178,000 for the nine months ended September 30, ~~2020. The increase is due primarily to increases in stock compensation expense and legal costs and was offset by cost-cutting measures prompted by the~~

~~COVID-19~~

~~pandemic.~~

~~Amortization and Depreciation.~~

Amortization and depreciation, which relates primarily to acquired intangible assets and depreciation of machinery and equipment, decreased by approximately $53,000, or 25.7% from $206,000 for the nine months ended September 30, 2019 to $153,000 for the nine months ended September 30, 2020.2021.

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Other Income and Expense: (in thousands)

~~Three~~Nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:


	Three months ended September 30,												Nine months ended September 30,
	2020			2019			Change			Change %			2021			2020			Change			Change %
Interest expense	$	(115	)	$	(193	)	$	78			(40.4	)%	$	(141	)	$	(360	)	$	219			(60.8	)%
Other income		10			103			(93	)		(90.3	)%		12			85			(73	)		(85.9	)%
Loss on extinguishment of debt														(386	)		(341	)		(45	)		13.2	%
Loss on fair value of debentures		—			(900	)		900			(100.0	)%		—			(7,464	)		7,464			(100.0	)%

	$	(105	)	$	(990	)	$	885			(89.4	)%	$	(515)		$	(8,080	)	$	7,565			(93.6	)%


Tax benefit (expense)	$	(3	)	$	(6	)	$	3			(50.0	)%	$	—		$	(34	)	$	34			(100.0	)%

Interest expense

. Interest expense decreased ~~by approximately $0.1 million,~~$219,000, or ~~40.4%~~60.8%, from ~~$0.2 million for~~$360,000 in the ~~three~~nine months ended September 30, ~~2019~~2020 to ~~$0.1 million~~$141,000 for the ~~three~~nine months ended September 30, ~~2020.~~2021. The decrease is due ~~primarily~~ to the ~~interest on~~timing of termination of the ~~Company’s loans with Silicon Valley Bank (“SVB”) and Western Alliance Bank (the “Bank”).~~Loan Agreement.

Other income

. Other income decreased by approximately ~~$93,000,~~$73,000, or ~~90.3%~~85.9%, from $103,000 for the three months ended September 30, 2019 to $10,000 for the three months ended September 30, 2020. The decrease resulted primarily from lower cash balances in interest-generating accounts and investments as well as lower interest rates during the

~~COVID-19~~

~~pandemic.~~

~~Loss on fair value of debentures~~

. The Company recorded a loss of approximately $0.9 million in the three months ended September 30, 2019, which reflected an increase in the fair value of the unsecured subordinated convertible debentures issued in December 2018 (the “Convertible Debentures”) from $11.4 million at March 31, 2019 to $12.3 million at September 30, 2019. Upon the consummation of the forced conversion, the Company issued 1,816,466 shares of common stock with a fair value of approximately $21.2 million, which was reclassified to stockholders’ equity during the three-month ending March 31, 2020. As a result of the forced conversion there was no fair value adjustment for the three months ended September 30, 2020.

~~Tax expense~~

. Tax expense decreased by approximately $3,000, or 50.0%, from $6,000 for the three months ended September 30, 2019 to $3,000 for the three months ended September 30, 2020. Tax expense is due primarily to state

~~non-income~~

~~and franchise-based taxes.~~

~~Table of Contents~~

~~Nine months ended September 30, 2020 and 2019:~~

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 %

~~Interest expense~~

. Interest expense decreased by approximately $0.2 million, or 40.4%, from $0.6 million for the nine months ended September 30, 2019 to $0.4 million for the nine months ended September 30, 2020. The decrease is due primarily to the interest on the Company’s loans with SVB and the Bank.

~~Other income~~

~~. Other income decreased by approximately $141,000, or 62.4%, from $226,000 for the nine months ended September 30, 2019 to~~ $85,000 for the nine months ended September 30, ~~2020.~~ 2020 to $12,000 for the nine months ended September 30, 2021.

Loss on extinguishment of debt:

The ~~decrease resulted primarily~~Company recorded a loss on extinguishment of approximately $386,000 related to the repayment and retirement of the Loan Agreement as of the nine months ended September 30, 2021. The loss on extinguishment was composed of approximately $140,000 for a prepayment fee, $122,000 for the unaccrued final payment, $65,000 termination, and other fees, and $58,000 for the unamortized and other closing costs from ~~lower cash balances in interest-generating accounts~~opening the loan. In March 2020 the Company recorded a loss on extinguishment of approximately $341,000 related to the repayment and ~~investments as well as lower interest rates during~~retirement of the

~~COVID-19~~

~~pandemic.~~ 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 of unamortized and other closing costs.

Loss on fair value of debentures

. The Company recorded a loss of approximately $7.5 million in the nine months ended September 30, 2020, which reflected an increase in the fair value of the ~~Convertible Debentures~~unsecured subordinated convertible debentures issued in December 2018 from $13.7 million atas of December 31, 2019 to $21.2 million as of February 21, 2020. The Company recorded a loss of approximately $5.3 million in the nine months ended September 30, 2019, which reflected an increase in the fair value of Convertible Debentures from $7.0 million at December 31, 2018 to $12.3 million at September 30, 2019. Upon the consummation of the forced conversion of the debentures, the Company issued 1,816,466 shares of common stock with a fair value of approximately $21.2 million, which was reclassified to stockholders’ ~~equity.~~

~~Loss on extinguishment of debt~~

~~: The Company recorded~~equity during the nine-months ending September 30, 2020. As a ~~loss on extinguishment of approximately $341,000 related to the repayment and retirement~~result of the ~~loan with SVB. The loss on extinguishment~~forced conversion there was ~~composed of approximately $185,000~~no fair value adjustment 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.~~nine months ended September 30, 2021.

Tax expense

. Tax expense ~~increased~~decreased by approximately ~~$1,000,~~$34,000, or ~~3.0%~~100%, from ~~$33,000 for the nine months ended September 30, 2019 to~~ $34,000 for the nine months ended September 30, ~~2020.~~2020 to $0 for the nine months ended September 30, 2021. The Company has approximately $98,000 in

non-income

related tax expense classified in operating expenses under ASU

2019-12

that had previously been classified here in tax expense. Tax expense ~~is due primarily to~~includes state

non-income

and franchise-based taxes.

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Liquidity and Capital Resources

The Company’s cash on hand includes proceeds from the Loan and Security Agreement entered into with the Bank on March 31, 2020. The Company and the Bank amended the Loan and Security Agreement on June 22, 2020 (as amended, the “Loan Agreement”). The Loan Agreement includes certain financial covenants tied to minimum revenue and the ratio of the Company’s unrestricted cash at the Bank to its indebtedness under the Loan Agreement. The

~~COVID-19~~

pandemic has resulted in significant financial market volatility and uncertainty. A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on the Company’s ability to maintain compliance with the covenants under the Loan Agreement. If at any point the Company is not in compliance with certain covenants and is unable to obtain an amendment or waiver from the Bank, such noncompliance may result in an event of default under the Loan Agreement, which could permit acceleration of the outstanding indebtedness and require the Company to repay such indebtedness before the scheduled due date.

~~Even if an event of default were to occur under the Loan Agreement, the~~ Company believes that its ~~current liquidity~~cash and ~~capital resources~~cash equivalents balance of $35.8 million as of September 30, 2021, and projected cash balances are sufficient to sustain operations ~~through~~for at least the next 12twelve months ~~primarily due to cash on hand~~following the filing of ~~$22.6 million and anticipated revenue and cash collections. However, the resurgence of the~~this Form

~~COVID-19~~10-Q.

~~pandemic could affect our liquidity. The Company has also entered into an~~

~~at-the-market~~

offering program with JMP Securities (the “ATM”) to provide for additional potential liquidity. The Company’s ATM facility provides for the sale of common stock having a value of up to $25.0 million. As of September 30, 2020, no sales had been made pursuant to the ATM facility and $25.0 million in capacity remains under the facility.

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 $12.3 million.

~~Our projected cash needs include planned capital expenditures, loan interest payments, lease commitments, and other long-term obligations.~~ The Company’s ability to generate cash adequate to meet its future capital requirements will depend primarily on operating cash flow. If sales or cash collections are reduced from current expectations, or if expenses and cash requirements are increased, the Company may require additional financing, although there are no guarantees that the Company will be able to obtain ~~necessary~~the financing ~~at all or on terms favorable or acceptable to it.~~

Asif necessary. In addition, the resurgence of ~~September 30, 2020,~~the

COVID-19

pandemic could affect the Company had 22,969,651 shares of common stock issued and outstanding, 1,971,704 shares reserved for future issuance upon the exercise of options granted, and 950,000 shares reserved for issuance under the ESPP, out of 30,000,000 authorized shares of

~~Table of Contents~~

common stock. Given this relatively limited number of shares available for issuance in a capital markets transaction, the Company may not be able to raise significant financing through a capital markets transaction and accordingly, the Company will seek approval from its stockholders to amend its Certificate of Incorporation to increase its authorized shares of common stock at a later date and subject to the filing with the SEC of a proxy statement and solicitation of stockholder approval. The Company will incur additional costs and expenses in seeking approval for such amendment and as a result of the failure to obtain valid approval of a related amendment at its earlier stockholder meeting.Company’s liquidity. The Company will continue to closely monitor its liquidity and the capital and credit markets.

AsThe Company’s cash on hand as of September 30, 2021 includes proceeds from the March 2, 2021 underwritten public offering described below. On April 27, 2021, the Company repaid its obligations in the aggregate amount of $7,354,283 under and terminated the Loan Agreement entered into with the Bank on March 30, 2020 and amended on June 22, 2020 and the Company’s collateral securing the facility was released.

On April 27, 2020, the Company ~~had current assets~~issued 1,562,500 shares of ~~$35.8 million including $22.6 million~~common stock to several institutional investors at a price of ~~cash and cash equivalents. Current liabilities are $14.2~~$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 $12.3 million. The Company also entered into the ATM Facility with JMP Securities in March 2020 to provide for additional potential liquidity. The ATM facility provided for the sale of common stock having a value of up to $25.0 million. On December 17, 2020 the Company sold 470,704 shares of common stock under the ATM Facility for gross proceeds of approximately $6.6 million and net proceeds of approximately $6.1 million. As of December 31, 2020, $18.4 million in capacity remained under the ATM Facility. On March 2, 2021, the Company terminated the ATM Facility.

The Company had net working capital ~~is $21.6 million.~~of $38.0 million as of September 30, 2021. The ratio of current assets to current liabilities ~~is 2.52:1.~~as of September 30, 2021 and December 31, 2020 was 3.53 and 2.53 respectively.


	For the nine-months ended September 30,						For the nine months ended September 30,
	2020			2019			2021			2020
	(in thousands)						(in thousands)
Net cash used for operating activities	$	(6,083	)	$	(4,772	)	$	(7,861	)	$	(6,083	)
Net cash used for investing activities		(286	)		(219	)		(450	)		(286	)
Net cash provided by financing activities		13,689			10,233			16,930			13,689

Increase in cash and equivalents	$	7,320		$	5,242		$	8,619		$	7,320

Net cash used for operating activities for the nine months ended September 30, ~~2020~~2021 was ~~$6.1~~$7.9 million, compared to ~~$4.8~~$6.1 million for the nine months ended September 30, ~~2019.~~2020. The net cash used for operating activities for the nine months ended September 30, ~~2020 resulted~~2021 primarily ~~from our~~reflects the Company’s net loss ~~as adjusted for~~

~~non-cash~~

~~items,~~ and ~~was offset by~~ working capital changes resulting from decreases in accounts ~~receivable~~payable and accrued expenses as well as an increase in ~~deferred revenue,~~accounts receivable offset by ~~increases~~a decrease in ~~inventory~~prepaid and ~~decreases in accrued expenses. We expect~~other assets. iCAD expects that net cash used for or provided by operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in ~~our~~the Company’s operating results, the timing of when ~~we recognize~~the Company recognizes revenue, collections of accounts receivable and the timing of other payments.

Net cash used for investing activities for the nine months ended September 30, ~~2020~~2021 was ~~$286,000,~~$450,000, compared to ~~$219,000~~$286,000 for the nine months ended September 30, ~~2019.~~2020. The net cash used for investing activities for the nine months ended September 30, 2021 and 2020 ~~and 2019 is~~was primarily for purchases of property and equipment.

Net cash provided by financing activities for the nine months ended September 30, ~~2020~~2021 was ~~$13.7~~$16.9 million, compared to ~~$10.2~~$13.7 million for the nine months ended September 30, ~~2019.~~2020. Net cash provided by financing activities for the nine months ended September 30, 2021 was primarily from the March 2, 2021 underwritten public offering of 1,393,738 shares of the Company’s common stock at an offering price of $18.00 per share resulting in net proceeds of approximately $23.2 million. This was offset by repayment of the Loan Agreement to the Bank. The company also received $0.9 million from the issuance of

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common stock pursuant the Company’s stock option plan and $0.2 million for from the issuance of common stock pursuant the Employee Stock Purchase Plan. Net cash provided by financing activities for the nine months ended September 30, 2020 iswas $13.7 million primarily from the $12.3 million in net proceeds from the issuance of common stock ~~in the April 2020 registered direct offering,~~and $7.0 million from the Loan Agreement ~~with the Bank and $775,000 from the revolving line of credit~~ with the Bank, offset by $4.6 million in repayment of the term loan with SVB and $2.0 million in repayment of the revolving loan with SVB. Cash provided by financing activities for the nine months ended September 30, 2019 is due primarily to cash from the issuance of common stock. 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.

~~Table of Contents~~

~~Contractual Obligations~~

~~The Company had the following commitments as of September 30, 2020:~~

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


$
—

~~Operating Lease and Capital Lease Obligations are the minimum payments due under these obligations.~~

~~Settlement Obligations represent the remaining payments under a settlement agreement with Hologic, Inc which are reflected in accounts payable and accrued liabilities.~~

~~Notes Payable – principal and interest represents the payments due under the term loan from the Bank.~~

~~Other Commitments represent firm purchase obligations to suppliers for future product and service deliverables.~~

Recent Accounting Pronouncements

See Note 13 to the Condensed Consolidated Financial Statements.

~~Table of Contents~~

Item

Quantitative and Qualitative Disclosures about Market Risk

The Company believes that it is not subject to material foreign currency exchange rate fluctuations, as substantially all of its sales and expenses are denominated in the U.S. dollar. The Company does not hold derivative securities and has not entered into contracts embedded with derivative instruments, such as foreign currency and interest rate swaps, options, forwards, futures, collars or warrants, either to hedge existing risks or for speculative purposes. ~~The Company is subject to a 19% fluctuation in interest expense on for every 1% change in interest rate on its floating rate Term Loan with the Bank.~~

Item

Controls and Procedures

The Company’s management, with the participation of its principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, as of September 30, ~~2020,~~2021, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures (as defined in Rule

13a-15(e)

of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were effective at a reasonable level of assurance.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. The Company conducts periodic evaluations to enhance, where necessary, its controls and procedures.

The Company’s principal executive officer and principal financial officer conducted an evaluation of the Company’s internal control over financial reporting (as defined in ~~Exchange Act~~ Rule

13a-15(f))

of the Exchange Act) and have determined there are no changes in its internal controls over financial reporting during the quarter ended September 30, ~~2020~~2021 that have materially affected or which are reasonably likely to materially affect internal control over financial reporting.

5239

Table of Contents

PART II OTHER INFORMATION

Item 1.

~~Legal Proceedings~~

~~Please refer to the detailed discussion regarding litigation set forth in Note 7 of the Notes to Condensed Consolidated Financial Statements in this Form~~

~~10-Q.~~

In December 2016, the Company entered into an Asset Purchase Agreement with Invivo Corporation. In accordance with the agreement, the Company sold to Invivo all right, title and interest to certain intellectual property relating to the Company’s VersaVue Software and DynaCAD product and related assets for $3.2 million. The Company closed the transaction on January 30, 2017 less a holdback reserve of $350,000 for a net of approximately $2.9 million.

~~1:18-cv-08083-GBD,~~

related to the Company’s sale of the VersaVue software and DynaCAD product under the Asset Purchase Agreement. In the Complaint, Yeda asserted claims for: (i) copyright infringement and misappropriation of trade secrets against both the Company and Invivo; (ii) breach of contract against the Company only; and (iii) tortious interference with existing business relationships and unjust enrichment against Invivo only. The Company and Invivo filed Motions to Dismiss the Complaint on December 21, 2018. On January 18, 2019, Yeda filed Oppositions to the Motions to Dismiss. The Company and Invivo submitted responses to the Opposition to the Motion to Dismiss on February 8, 2019. The Court held oral argument on the Motions to Dismiss on March 27, 2019. On September 5, 2019, the Court granted Invivo’s Motion to Dismiss in its entirety and granted the Company’s Motion to Dismiss as it relates to Yeda’s breach of contract and misappropriation of trade secrets claims. On October 22, 2019, Yeda filed an Amended Complaint against only the Company asserting claims for (i) copyright infringement; and (ii) a replead breach of contract claim. The Company filed its Answer to Yeda’s Amended Complaint on November 5, 2019. Yeda alleges, among other things, that the Company infringed upon Yeda’s source code, which was originally licensed to the Company, by using it in the products that the Company sold to Invivo and that it is entitled to damages that could include, among other things, profits relating to the sales of these products. If the Company is found to have infringed Yeda’s copyright or breached its agreements with Yeda, the Company could be obligated to pay to Yeda substantial monetary damages.

In addition to the forgoing, the Company may be party to 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.

~~Table of Contents~~

~~Item~~ 1A.

Risk Factors:

~~We operate~~

iCAD operates in a changing environment that involves numerous known and unknown risks and uncertainties that could materially adversely affect ~~our~~the Company’s operations. In addition to the risk factor below, factors that have affected ~~our~~the Company are described in Part I, Item 1A of ~~our~~the Company’s Annual Report on Form

10-K

for the year ended December 31, ~~2019~~2020 as filed with the SEC on March ~~11, 2020~~15, 2021 and are incorporated by reference herein.

~~We expect~~iCAD expects the novel coronavirus

(COVID-19)

pandemic to have a significant effect on ~~our~~the Company’s results of operations. In addition, it has resulted in significant financial market volatility, and its impact on the global economy appears to be significant. A ~~continuation or~~ worsening of the pandemic will have a material adverse impact on ~~our~~the Company’s business, results of operations and financial condition and on the market price of ~~our~~the Company’s common stock.

On March 12, 2020, the World Health Organization declared

COVID-19

to be a pandemic. In an effort to contain and mitigate the spread of the

COVID-19

COVID-19.

As a provider of devices and services to the health care industry, ~~our~~the Company’s operations have been materially affected. Significant uncertainty remains as to the ~~continuing~~ impact of the

COVID-19

pandemic on ~~our~~the Company’s operations and on the global economy as a whole. It is currently not possible to predict how long the pandemic will last or the time that it will take for economic activity to return to prior levels. The

COVID-19

pandemic has resulted in significant financial market volatility and uncertainty. A ~~continuation or~~ worsening of the levels of market disruption and volatility seen in the recent past will have an adverse effect on ~~our~~the Company’s ability to access capital, on ~~our~~the Company’s business, results of operations and financial condition, and on the market price of ~~our~~the Company’s common stock. ~~Our~~The Company’s results for the quarter ending September 30, ~~2020~~2021 reflect a negative impact from the

COVID-19

pandemic ~~as the typical sales cycle and ordering patterns were still disrupted~~ due to some healthcare facilities’ additional focus on

~~COVID-19.~~COVID-19

and from the effect on our customers and potential customers of supply chain issues relating thereto. Although ~~we do~~the Company does not provide guidance to investors relating to our results of operations, ~~our~~the Company’s results for the quarter ending December 31, ~~2020,~~2021, and possibly future quarters, could reflect a ~~continuing~~ negative impact from the

COVID-19

pandemic for similar reasons. Depending upon the duration and severity of the pandemic, the ~~continuing~~ effect on ~~our~~the Company’s results over the long term is uncertain.

~~The impact of the~~

~~COVID-19~~

pandemic on our future revenue is also relevant to the minimum revenue covenant under our Loan and Security Agreement with Western Alliance Bank. If at any point the Company is not in compliance with such covenant and is unable to obtain an amendment or waiver from Western Alliance Bank, such noncompliance may result in an event of default under the Loan Agreement, which could permit acceleration of the outstanding indebtedness and require the Company to repay such indebtedness before the scheduled due date. The Company was required, historically, to seek modifications from its prior lender to avoid

~~non-compliance~~

~~with certain earlier covenants. With the~~

~~COVID-19~~

~~pandemic affecting the world economy, the company cannot assure that it will be able to continue to satisfy the applicable minimum revenue covenant.~~

~~Table of Contents~~

The Company’s exposure to trade accounts receivable losses may increase if its customers are adversely affected by changes in healthcare laws, coverage, and reimbursement, economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the current

COVID-19

pandemic, or other customer-specific factors. The Company has historically not experienced significant trade account receivable losses, but it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade account receivables as hospitals’ cash flows are impacted by their response to the

COVID-19

pandemic.

5540

Table of Contents

Item 6.

Exhibits


Exhibit No.		Description

31.1 * 3.1		Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q filed on August 6, 2021).

10.1		2016 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on August 6, 2021).

10.2		Employment Agreement dated August 4, 2021, by and between iCAD, Inc. and Charles Carter (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 6, 2021).

31.1*		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 * 31.2*		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 32.1		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 32.2		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 101		The following materials formatted in XBRL (eXtensible Business Reporting Language); (i) Condensed Consolidated Balance Sheets as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, (iii) Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, (iv) Condensed Statements of Stockholders’ Equity for the three and nine months ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020 and (v) Notes to Condensed Consolidated Financial Statements.

104 104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

*	Filed herewith

**	Furnished herewith

5641

Table of Contents

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



iCAD, Inc.
		(Registrant)


	Three months ended September 30, 2021
	Reportable Segments
	Detection		Therapy		Total
Major Goods/Service Lines
Products	$	4,454	$	2,358	$	6,812
Service contracts		1,554		398		1,952
Supply and source usage agreements		—		562		562
Professional services		—		35		35
Other		—		—		—

	$	6,008	$	3,353	$	9,361
Timing of Revenue Recognition
Goods transferred at a point in time	$	4,454	$	2,393	$	6,847
Services transferred over time		1,554		960		2,514

	$	6,008	$	3,353	$	9,361
Sales Channels
Direct sales force	$	3,629	$	1,403	$	5,032
OEM partners		2,379		—		2,379
Channel partners		—		1,950		1,950

	$	6,008	$	3,353	$	9,361

	Nine months ended September 30, 2021
	Reportable Segments
	Detection		Therapy		Total
Major Goods/Service Lines

Products	$	11,778	$	6,580	$	18,358
Service contracts		4,737		1,109		5,846
Supply and source usage agreements		—		1,572		1,572
Professional services		—		54		54
Other		—		—		—

	$	16,515	$	9,315	$	25,830

Timing of Revenue Recognition
Goods transferred at a point in time	$	11,778	$	6,633	$	18,411
Services transferred over time		4,737	$	2,682		7,419

	$	16,515	$	9,315	$	25,830
Sales Channels
Direct sales force	$	10,691	$	3,632	$	14,323
OEM partners		5,824		—		5,824
Channel partners		—		5,683		5,683

	$	16,515	$	9,315	$	25,830


	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						Three months ended September 30, 2020
	Reportable Segments						Reportable Segments
	Detection		Therapy		Total		Detection		Therapy		Total
Major Goods/Service Lines
Products	$	9,690	$	2,959	$	12,649	$	3,889	$	1,038	$	4,927
Service contracts		4,151		1,079		5,230		1,400		347		1,747
Supply and source usage agreements		—		1,305		1,305		—		444		444
Professional services		—		20		20		—		9		9
Other		43		—		43		2		—		2

	$	13,884	$	5,363	$	19,247	$	5,291	$	1,838	$	7,129

Timing of Revenue Recognition
Goods transferred at a point in time	$	9,731	$	3,039	$	12,770	$	3,889	$	1,051	$	4,940
Services transferred over time		4,153		2,324		6,477		1,402		787		2,189

	$	13,884	$	5,363	$	19,247	$	5,291	$	1,838	$	7,129

Sales Channels
Direct sales force	$	7,785	$	3,131	$	10,916	$	2,904	$	857	$	3,761
OEM partners		6,099		—		6,099		2,387		—		2,387
Channel partners		—		2,232		2,232		—		981		981

	$	13,884	$	5,363	$	19,247	$	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


	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


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


	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


	Common Stock				Additional Paid-in Capital			Accumulated Deficit			Treasury Stock			Stockholders’ Equity
	Number of Shares Issued		Par Value		Additional Paid-in Capital			Accumulated Deficit			Treasury Stock			Stockholders’ Equity

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


	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


Contract balances
	Balance at		Balance at
	September 30, 2021		December 31, 2020
Receivables, which are included in ‘Trade accounts receivable’	$	11,792	$	10,027
Current contract assets, which are included in “Prepaid and other assets”		658		481
Non-current contract assets, which are included in “other assets”		1,602		1,434
Contract liabilities, which are included in “Deferred revenue”		6,450		6,384


Contract liabilities	September 30, 2020		December 31, 2019
Short term	$	5,644	$	5,248
Long term		219		356

Total	$	5,863	$	5,604


				Nine Months Ended September 30, 2021
	Nine Months Ended September 30, 2020
Balance at beginning of period	$	5,604		$	6,384
Deferral of revenue		8,092			9,761
Recognition of deferred revenue		(7,833	)		(9,695	)

Balance at end of period	$	5,863		$	6,450


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Net loss	$	(1,797	)	$	(2,956	)	$	(16,007	)	$	(10,203	)	$	(2,176	)	$	(1,797	)	$	(7,099	)	$	(16,007	)

Shares used in the calculation of basic and diluted net loss per share		23,173			19,284			21,827			18,049			25,053			23,173			24,662			21,827

Diluted shares used in the calculation of net loss per share		23,173			19,284			21,827			18,049			25,053			23,173			24,662			21,827

Net loss per share - basic and dilute d	$	(0.08	)	$	(0.15	)	$	(0.73	)	$	(0.57	)

Net loss per share—basic and diluted													$	(0.09	)	$	(0.08	)	$	(0.29	)	$	(0.73	)


	As of September 30,

	2021		2020

Stock options		2,509,511		1,971,704
Restricted stock		1,750		29,166

Total		2,511,261		2,000,870


	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


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
Probability of default event 1		0.45	%		N/A
Utilization of Forced Conversion (if available) 1		100.00	%		100.00	%
Exercise of Default Redemption (if available) 1		100.00	%		N/A
Effective discount rate 1		18.52	%		N/A


Fiscal Year	Amount Due
2020	$	94
2021		1,238
2022		2,875
2023		2,735
2024		1,003

Total	$	7,945


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


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


	Convertible Debentures
Balance, December 31, 2019	$	13,642
Fair value adjustments		7,522
Conversion		(21,164	)

Balance as of September 30, 2020	$	—


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	$	—

Large Accelerated filer

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Non-accelerated
filer

Smaller reporting company

Emerging growth company