UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission file number
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)
(Registrant’sRegistrant’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 Section12(b) of the Act:
Title of each class | 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. YESYes ☒ NONo ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
Large Accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
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
As of the close of business on
INDEX
Page | ||||||
PART I | ||||||
Item 1 | ||||||
Item 2 | ||||||
Item 3 | ||||||
Item 4 | ||||||
PART II | ||||||
Item 1A | ||||||
Item 6 | ||||||
Condensed Consolidated Balance Sheets
(In thousands, except for share data)
(Unaudited)
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 19,663 | $ | 21,313 | ||||
Trade accounts receivable, net of allowance for credit losses of $922 as of both March 31, 2023 and December 31, 2022 | 7,381 | 8,898 | ||||||
Inventory, net | 4,866 | 5,389 | ||||||
Prepaid expenses and other current assets | 2,292 | 2,641 | ||||||
Total current assets | 34,202 | 38,241 | ||||||
Property and equipment, net of accumulated depreciation of $2,151 and $2,135 as of March 31, 2023 and December 31, 2022, respectively | 1,153 | 1,074 | ||||||
Operating lease assets | 3,200 | 3,361 | ||||||
Other assets | 55 | 69 | ||||||
Intangible assets, net of accumulated amortization of $8,980 and $8,932 as of March 31, 2023 and December 31, 2022, respectively | 436 | 482 | ||||||
Goodwill | 8,362 | 8,362 | ||||||
Deferred tax assets | 111 | 116 | ||||||
Total assets | $ | 47,519 | $ | 51,705 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,888 | $ | 1,973 | ||||
Accrued and other expenses | 4,213 | 4,681 | ||||||
Lease payable—current portion | 569 | 582 | ||||||
Deferred revenue—current portion | 6,211 | 6,216 | ||||||
Total current liabilities | 12,881 | 13,452 | ||||||
Lease payable, net of current | 2,639 | 2,803 | ||||||
Deferred revenue, net of current | 283 | 542 | ||||||
Deferred tax | 6 | 6 | ||||||
Total liabilities | 15,809 | 16,803 | ||||||
Commitments and Contingencies (Note 12) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.01 par value: authorized 1,000,000 shares; none issued. | — | — | ||||||
Common stock, $0.01 par value: authorized 60,000,000 shares; issued 25,446,407 as of both March 31, 2023 and December 31, 2022. | ||||||||
Outstanding 25,260,576 as of both March 31, 2023 and December 31, 2022. | 254 | 254 | ||||||
Additional paid-in capital | 303,485 | 302,899 | ||||||
Accumulated deficit | (270,614 | ) | (266,836 | ) | ||||
Treasury stock at cost, 185,831 shares as of both March 31, 2023 and December 31, 2022 | (1,415 | ) | (1,415 | ) | ||||
Total stockholders’ equity | 31,710 | 34,902 | ||||||
Total liabilities and stockholders’ equity | $ | 47,519 | $ | 51,705 | ||||
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
(Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 29,798 | $ | 34,282 | ||||
| Trade accounts receivable, net of allowance for doubtful accounts of $573 in 2022 and $268 in 2021 | 10,309 | 8,891 | ||||||
| Inventory, net | 4,736 | 4,171 | ||||||
| Prepaid expenses and other current assets | 3,090 | 2,962 | ||||||
| Total current assets | 47,933 | 50,306 | ||||||
| Property and equipment, net of accumulated depreciation of $7,192 in 2022 and $7,106 in 2021 | 947 | 882 | ||||||
| Operating lease assets | 859 | 1,059 | ||||||
| Other assets | 104 | 899 | ||||||
| Intangible assets, net of accumulated amortization of $8,776 in 2022 and $8,724 in 2021 | 640 | 683 | ||||||
| Goodwill | 8,362 | 8,362 | ||||||
| Total assets | $ | 58,845 | $ | 62,191 | ||||
Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,681 | $ | 2,779 | ||||
| Accrued and other expenses | 5,128 | 5,642 | ||||||
| Lease payable—current portion | 887 | 889 | ||||||
| Deferred revenue | 5,765 | 5,652 | ||||||
| Total current liabilities | 14,461 | 14,962 | ||||||
| Lease payable, long-term portion | 54 | 266 | ||||||
| Deferred revenue, long-term portion | 571 | 441 | ||||||
| Deferred tax | 6 | 5 | ||||||
| Total liabilities | 15,092 | 15,674 | ||||||
| Commitments and Contingencies (Note 13) | 0 | 0 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $0.01 par value: authorized 1,000,000 shares; NaN issued. | 0— | 0— | ||||||
| Common stock, $0.01 par value: authorized 60,000,000 shares; issued 25,359,175 as of March 31, 2022 and 25,326,086 as of December 31, 2021. | ||||||||
| Outstanding 25,173,344 as of March 31, 2022 and 25,140,255 | 253 | 253 | ||||||
| as of December 31, 2021. | ||||||||
Additional paid-in capital | 301,640 | 300,859 | ||||||
| Accumulated deficit | (256,725 | ) | (253,180 | ) | ||||
| Treasury stock at cost, 185,831 shares in 2022 and 2021 | (1,415 | ) | (1,415 | ) | ||||
| Total stockholders’ equity | 43,753 | 46,517 | ||||||
| Total liabilities and stockholders’ equity | $ | 58,845 | $ | 62,191 | ||||
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Operations
(In thousands, except for per share data)
(Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Revenue: | ||||||||
Products | $ | 2,744 | $ | 4,560 | ||||
Service and supplies | 3,034 | 2,963 | ||||||
Total revenue | 5,778 | 7,523 | ||||||
Cost of revenue: | ||||||||
Products | 586 | 1,087 | ||||||
Service and supplies | 993 | 1,049 | ||||||
Amortization and depreciation | 69 | 75 | ||||||
Total cost of revenue | 1,648 | 2,211 | ||||||
Gross profit | 4,130 | 5,312 | ||||||
Operating expenses: | ||||||||
Engineering and product development | 2,281 | 2,275 | ||||||
Marketing and sales | 2,857 | 3,565 | ||||||
General and administrative | 2,862 | 2,931 | ||||||
Amortization and depreciation | 55 | 63 | ||||||
Total operating expenses | 8,055 | 8,834 | ||||||
Loss from operations | (3,925 | ) | (3,522 | ) | ||||
Other income/ (expense): | ||||||||
Interest expense | — | (9 | ) | |||||
Interest income | 150 | — | ||||||
Other income (expense), net | 2 | (13 | ) | |||||
Other income (expense), net | 152 | (22 | ) | |||||
Loss before provision for income taxes | (3,773 | ) | (3,544 | ) | ||||
Provision for tax expense | (5 | ) | (1 | ) | ||||
Net loss and comprehensive loss | $ | (3,778 | ) | $ | (3,545 | ) | ||
Net loss per share: | ||||||||
Basic and diluted | $ | (0.15 | ) | $ | (0.14 | ) | ||
Weighted average number of shares used in computing loss per share: | ||||||||
Basic and diluted | 25,261 | 25,160 | ||||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
| Revenue: | ||||||||
| Products | $ | 4,560 | $ | 5,557 | ||||
| Service and supplies | 2,963 | 3,087 | ||||||
| Total revenue | 7,523 | 8,644 | ||||||
| Cost of revenue: | ||||||||
| Products | 1,087 | 1,409 | ||||||
| Service and supplies | 1,049 | 867 | ||||||
| Amortization and depreciation | 75 | 79 | ||||||
| Total cost of revenue | 2,211 | 2,355 | ||||||
| Gross profit | 5,312 | 6,289 | ||||||
| Operating expenses: | ||||||||
| Engineering and product development | 2,275 | 2,192 | ||||||
| Marketing and sales | 3,565 | 3,424 | ||||||
| General and administrative | 2,931 | 2,151 | ||||||
| Amortization and depreciation | 63 | 55 | ||||||
| Total operating expenses | 8,834 | 7,822 | ||||||
| Loss from operations | (3,522 | ) | (1,533 | ) | ||||
| Interest expense | (9 | ) | (112 | ) | ||||
| Other income (expense) | (13 | ) | 2 | |||||
| Other expense, net | (22 | ) | (110 | ) | ||||
| Loss before income tax expense | (3,544 | ) | (1,643 | ) | ||||
| Tax expense | (1 | ) | 0 | |||||
| Net loss and comprehensive loss | $ | (3,545) | $ | (1,643) | ||||
| Net loss per share: | ||||||||
| Basic | $ | (0.14 | ) | $ | (0.07 | ) | ||
| Diluted | $ | (0.14 | ) | $ | (0.07 | ) | ||
| Weighted average number of shares used in computing loss per share: | ||||||||
| Basic | 25,160 | 23,929 | ||||||
| Diluted | 25,160 | 23,929 | ||||||
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Cash FlowsStockholders’ Equity
(In thousands, except shares)
(Unaudited)
For the three months ended March 31, 2023 | ||||||||||||||||||||||||
Common Stock | Additional | |||||||||||||||||||||||
Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
Balance at December 31, 2022 | 25,446,407 | $ | 254 | $ | 302,899 | $ | (266,836 | ) | $ | (1,415 | ) | $ | 34,902 | |||||||||||
Stock-based compensation | — | — | 586 | — | — | 586 | ||||||||||||||||||
Net loss | — | — | — | (3,778 | ) | — | (3,778 | ) | ||||||||||||||||
Balance at March 31, 2023 | 25,446,407 | $ | 254 | $ | 303,485 | $ | (270,614 | ) | $ | (1,415 | ) | $ | 31,710 | |||||||||||
For the three months ended March 31, 2022 | ||||||||||||||||||||||||
Common Stock | Additional | |||||||||||||||||||||||
Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
Balance at December 31, 2021 | 25,326,086 | $ | 253 | $ | 300,859 | $ | (253,180 | ) | $ | (1,415 | ) | $ | 46,517 | |||||||||||
Issuance of common stock related to vesting of restricted stock | 875 | 1 | — | — | — | — | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans | 22,833 | 1 | 66 | — | — | 66 | ||||||||||||||||||
Issuance of common stock pursuant Employee Stock Purchase Plans | 9,381 | — | 60 | — | — | 60 | ||||||||||||||||||
Stock-based compensation | — | — | 655 | — | — | 655 | ||||||||||||||||||
Net loss | — | — | — | (3,545 | ) | — | (3,545 | ) | ||||||||||||||||
Balance at March 31, 2022 | 25,359,175 | $ | 253 | $ | 301,640 | $ | (256,725 | ) | $ | (1,415 | ) | $ | 43,753 | |||||||||||
For the three months ended March 31, | ||||||||
2022 | 2021 | |||||||
| (in thousands) | ||||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | (3,545) | $ | (1,643) | ||||
| Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
| Amortization | 53 | 58 | ||||||
| Depreciation | 86 | 76 | ||||||
| Bad debt provision | 305 | 0 | ||||||
| Stock-based compensation | 655 | 935 | ||||||
| Deferred tax | 1 | 0 | ||||||
| Amortization of debt discount and debt costs | 0 | 12 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,723 | ) | (622 | ) | ||||
| Inventory | (565 | ) | 647 | |||||
| Prepaid and other assets | 653 | (89 | ) | |||||
| Accounts payable | (98 | ) | (1,617 | ) | ||||
| Accrued expenses | (514 | ) | (1,313 | ) | ||||
| Deferred revenue | 243 | (7 | ) | |||||
| Total adjustments | (904 | ) | (1,920 | ) | ||||
| Net cash used for operating activities | (4,449 | ) | (3,563 | ) | ||||
| Cash flow from investing activities: | ||||||||
| Additions to patents, technology and other | (10 | ) | 0 | |||||
| Additions to property and equipment | (151 | ) | (262 | ) | ||||
| Net cash used for investing activities | (161 | ) | (262 | ) | ||||
| Cash flow from financing activities: | ||||||||
| Proceeds from option exercises pursuant to stock option plans | 66 | 270 | ||||||
| Proceeds from issuance of common stock pursuant to Employee Stock Purchase Plans | 60 | 47 | ||||||
| Proceeds from issuance of common stock, net | 0 | 23,229 | ||||||
| Net cash provided by financing activities | 126 | 23,546 | ||||||
| (Decrease) increase in cash and cash equivalents | (4,484 | ) | 19,721 | |||||
| Cash and cash equivalents, beginning of period | 34,282 | 27,186 | ||||||
| Cash and cash equivalents, end of period | $ | 29,798 | $ | 46,907 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | 9 | $ | 92 | ||||
| Taxes paid | $ | 0 | $ | 0 | ||||
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Stockholders’ Equity Year to Date 2022
(In thousands except shares)thousands)
(Unaudited)
For the Three Months ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Cash flow from operating activities: | ||||||||
Net loss | $ | (3,778 | ) | $ | (3,545 | ) | ||
Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
Amortization | 46 | 53 | ||||||
Depreciation | 78 | 86 | ||||||
Non-cash lease expense | 161 | 200 | ||||||
Bad debt provision | — | 305 | ||||||
Stock-based compensation | 586 | 655 | ||||||
Deferred tax | 5 | 1 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 1,517 | (1,723 | ) | |||||
Inventory | 523 | (565 | ) | |||||
Prepaid and other assets | 363 | 653 | ||||||
Accounts payable | (120 | ) | (84 | ) | ||||
Accrued and other expenses | (468 | ) | (514 | ) | ||||
Lease liabilities | (177 | ) | (214 | ) | ||||
Deferred revenue | (264 | ) | 243 | |||||
Total adjustments | 2,250 | (904 | ) | |||||
Net cash used for operating activities | (1,528 | ) | (4,449 | ) | ||||
Cash flow from investing activities: | ||||||||
Additions to patents, technology and other | — | (10 | ) | |||||
Additions to property and equipment | (122 | ) | (151 | ) | ||||
Net cash used for investing activities | (122 | ) | (161 | ) | ||||
Cash flow from financing activities: | ||||||||
Proceeds from option exercises pursuant to stock option plans | — | 66 | ||||||
Proceeds from issuance of common stock pursuant to Employee Stock Purchase Plans | — | 60 | ||||||
Net cash provided by financing activities | — | 126 | ||||||
(Decrease) increase in cash and cash equivalents | (1,650 | ) | (4,484 | ) | ||||
Cash and cash equivalents, beginning of period | 21,313 | 34,282 | ||||||
Cash and cash equivalents, end of period | $ | 19,663 | $ | 29,798 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | — | $ | 9 | ||||
Common Stock | Additional | |||||||||||||||||||||||
Number of Shares Issued | Par Value | Paid-in Capital | Accumulated Deficit | Treasury Stock | Stockholders’ Equity | |||||||||||||||||||
| Balance at December 31, 2021 | 25,326,086 | $ | 253 | $ | 300,859 | $ | (253,180 | ) | $ | (1,415 | ) | $ | 46,517 | |||||||||||
| Issuance of common stock relative to vesting of restricted stock | 875 | 0 | 0 | — | — | 0 | ||||||||||||||||||
| Issuance of common stock pursuant to stock option plans | 22,833 | 0 | 66 | — | — | 66 | ||||||||||||||||||
| Issuance of common stock pursuant Employee Stock Purchase Plans | 9,381 | 0 | 60 | — | — | 60 | ||||||||||||||||||
| Stock-based compensation | — | — | 655 | — | — | 655 | ||||||||||||||||||
| Net loss | — | — | — | (3,545 | ) | — | (3,545 | ) | ||||||||||||||||
| Balance at March 31, 2022 | 25,359,175 | $ | 253 | $ | 301,640 | $ | (256,725 | ) | $ | (1,415 | ) | $ | 43,753 | |||||||||||
Common Stock | Additional | |||||||||||||||||||||||
Number of Shares Issued | Par Value | 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 | 20,000 | 0 | 0 | — | — | 0 | ||||||||||||||||||
| Issuance of common stock, net | 1,393,738 | 14 | 23,215 | — | — | 23,229 | ||||||||||||||||||
| Issuance of common stock pursuant to stock option plans | 28,934 | 1 | 270 | — | — | 271 | ||||||||||||||||||
| Issuance of common stock pursuant Employee Stock Purchase Plan | 6,354 | — | 47 | — | — | 47 | ||||||||||||||||||
| Stock-based compensation | — | — | 935 | — | — | 935 | ||||||||||||||||||
| Net loss | — | — | — | (1,643 | ) | — | (1,643 | ) | ||||||||||||||||
| Balance at March 31, 2021 | 25,143,432 | $ | 251 | $ | 298,106 | $ | (243,578 | ) | $ | (1,415 | ) | $ | 53,364 | |||||||||||
See accompanying notes to condensed consolidated financial statements.
iCAD, INC. AND SUBSIDIARIES
(In thousands, except for share and per share data or as noted)
Note 1– Organization and Business
Basis of Presentation
The accompanying condensed consolidated financial statements of iCAD, Inc. and its subsidiaries (together “iCAD” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting period and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. It is reasonably possible that changes may occur in the near term that would affect management’s estimates with respect to assets and liabilities. 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 March 31, 2022,2023, the results of operations of the Company for the three-month periodsthree months ended March 31, 2022 2023 and 2021,2022, cash flows of the Company for the three-month periodsthree months ended March 31, 2022 2023 and 2021,2022, and stockholders’ equity for the Company for the three-month periodsthree months ended March 31, 2022 2023 and 2021.
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 (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
Principles of Consolidation and Business Segments
The condensed consolidated financial statements include the accounts of iCAD, Inc. and its wholly owned subsidiaries: Xoft, Inc., Xoft Solutions, LLC, iCAD France, LLC and iCAD France,Italy, LLC. All material inter-company transactions and balances have been eliminated in consolidation.
The Company reports the results of
Risk and Uncertainty
On March 12,2020, the World Health Organization declared
In late February 2022, Russian military forces launched significant military action against Ukraine. Sustained conflict and disruption in the three-month period ended region has continued through March 31, 2022, the Company’s exposure may increase if its customers are adversely affected by changes in healthcare laws, coverage, 2023 and reimbursement, economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the current
Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU
Recently Issued Accounting Standards (Not Yet Adopted)
There are no recently issued accounting pronouncements that have not yet been adopted as of March 31, 2023 that are expected to have a material impact on the Company's financial statements.
Note 2 -– Fair Value Measurements
The Company follows the provisions of FASB ASC Topic 820, “Fair “Fair Value Measurement and Disclosures”Disclosures” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about 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 Company applies the fair value hierarchy based on three levels of inputs, of which the firsttwo are considered observable and the last unobservable, which are the following:
• | 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 |
The assigned level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Money market funds included in cash and cash equivalents in the accompanying consolidated balance sheet are considered a Level 1 measurement as they are valued at quoted market prices in active markets. |
The following table sets forth the Company’s assets which are measured at fair value on a recurring basis by level within the fair value hierarchy: |
Fair Value Measurements 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 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 14,949 | $ | — | $ | — | $ | 14,949 | ||||||||
Total Assets | $ | 14,949 | $ | — | $ | — | $ | 14,949 | ||||||||
Fair Value Measurements as of any input that is significant to the fair value measurement.
Fair Value Measurements (in thousands) as of March 31, 2022 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Money market accounts | $ | 24,235 | — | — | $ | 24,235 | ||||||||||
| Total Assets | $ | 24,235 | — | — | $ | 24,235 | ||||||||||
Fair Value Measurements (in thousands) as of December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Money market accounts | $ | 30,573 | — | — | $ | 30,573 | ||||||||||
| Total Assets | $ | 30,573 | — | — | $ | 30,573 | ||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 15,067 | $ | — | $ | — | $ | 15,067 | ||||||||
Total Assets | $ | 15,067 | $ | — | $ | — | $ | 15,067 | ||||||||
There were no Level 2 or 3 instruments measured at fair value as of March 31, 20222023 or December 31, 2021.
Note 3 - Revenue
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these goods or services and excludes any sales incentives or taxes collected from customers which are subsequently remitted to government authorities.
Disaggregation of Revenue
The following tables presents the Company’s revenues disaggregated by major good or service line, timing of revenue recognition, and sales channel, reconciled to its reportable segments (in thousands).segments.
Three months ended March 31, 2023 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 2,460 | $ | 284 | $ | 2,744 | ||||||
Service contracts | 1,874 | 372 | 2,246 | |||||||||
Supply and source usage agreements | — | 493 | 493 | |||||||||
Disposable applicators | — | 225 | 225 | |||||||||
Other | — | 70 | 70 | |||||||||
| $ | 4,334 | $ | 1,444 | $ | 5,778 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 2,028 | $ | 608 | $ | 2,636 | ||||||
Services transferred over time | 2,306 | 836 | 3,142 | |||||||||
| $ | 4,334 | $ | 1,444 | $ | 5,778 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 2,778 | $ | 1,056 | $ | 3,834 | ||||||
OEM partners | 1,556 | — | 1,556 | |||||||||
Channel partners | — | 388 | 388 | |||||||||
| $ | 4,334 | $ | 1,444 | $ | 5,778 | |||||||
Three months ended March 31, 2022 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 3,864 | $ | 696 | $ | 4,560 | ||||||
Service contracts | 1,657 | 386 | 2,043 | |||||||||
Supply and source usage agreements | — | 413 | 413 | |||||||||
Disposable applicators | — | 415 | 415 | |||||||||
Other | — | 92 | 92 | |||||||||
| $ | 5,521 | $ | 2,002 | $ | 7,523 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 3,881 | $ | 1,264 | $ | 5,145 | ||||||
Services transferred over time | 1,640 | 738 | 2,378 | |||||||||
| $ | 5,521 | $ | 2,002 | $ | 7,523 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 2,895 | $ | 815 | $ | 3,710 | ||||||
OEM partners | 2,626 | — | 2,626 | |||||||||
Channel partners | — | 1,187 | 1,187 | |||||||||
| $ | 5,521 | $ | 2,002 | $ | 7,523 | |||||||
Three months ended March 31, 2022 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
| Products | $ | 3,864 | $ | 696 | $ | 4,560 | ||||||
| Service | 1,657 | 386 | 2,043 | |||||||||
| Sources and source usage agreements | — | 413 | 413 | |||||||||
| Disposable applicators | — | 415 | 415 | |||||||||
| Other | — | 92 | 92 | |||||||||
| $ | 5,521 | $ | 2,002 | $ | 7,523 | |||||||
Timing of Revenue Recognition | ||||||||||||
| Goods transferred at a point in time | $ | 3,881 | $ | 1,264 | $ | 5,145 | ||||||
| Services transferred over time | 1,640 | 738 | 2,378 | |||||||||
| $ | 5,521 | $ | 2,002 | $ | 7,523 | |||||||
Sales Channels | ||||||||||||
| Direct sales force | $ | 2,895 | $ | 815 | $ | 3,710 | ||||||
| OEM partners | 2,626 | — | 2,626 | |||||||||
| Channel partners | — | 1,187 | 1,187 | |||||||||
| $ | 5,521 | $ | 2,002 | $ | 7,523 | |||||||
Three months ended March 31, 2021 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
| Products | $ | 4,161 | $ | 1,396 | $ | 5,557 | ||||||
| Service | 1,558 | 350 | 1,908 | |||||||||
| Sources and source usage agreements | — | 629 | 629 | |||||||||
| Disposable applicators | — | 495 | 495 | |||||||||
| Other | — | 55 | 55 | |||||||||
| $ | 5,719 | $ | 2,925 | $ | 8,644 | |||||||
Timing of Revenue Recognition | ||||||||||||
| Goods transferred at a point in time | $ | 4,161 | $ | 2,104 | $ | 6,265 | ||||||
| Services transferred over time | 1,558 | 821 | 2,379 | |||||||||
| $ | 5,719 | $ | 2,925 | $ | 8,644 | |||||||
Sales Channels | ||||||||||||
| Direct sales force | $ | 3,875 | $ | 674 | $ | 4,549 | ||||||
| OEM partners | 1,844 | — | 1,844 | |||||||||
| Channel partners | — | 2,251 | 2,251 | |||||||||
| $ | 5,719 | $ | 2,925 | $ | 8,644 | |||||||
Products. Product revenue consists of sales of cancer detection systems and perpetual licenses and cancer therapy systems and cancer therapy applicators. The Company transfers control and recognizes a sale when the product is shipped from the manufacturing or warehousing facility to the customer.
Service
Sources and Source Usage Agreements
Disposable applicators
Other. Other revenue consists primarily of miscellaneous products and services. The Company transfers control and recognizes a sale when the installation services are performed or when the Company ships the product from the Company’s manufacturing or warehouse facility to the customer.
Contract Balances
Contract liabilities are a component of deferred revenue, current contract assets are a component of prepaid and other assets and
Contract balances
Balance at | Balance at | |||||||
March 31, 2023 | December 31, 2022 | |||||||
Receivables, which are included in ‘Trade accounts receivable’ | $ | 7,381 | $ | 8,898 | ||||
Current contract assets, which are included in “Prepaid and other assets” | $ | 638 | $ | 759 | ||||
Non-current contract assets, which are included in “other assets” | $ | — | $ | 15 | ||||
Contract liabilities, which are included in “Deferred revenue” | $ | 6,494 | $ | 6,758 | ||||
Balance at March 31, 2022 | Balance at December 31, 2021 | |||||||
| Receivables, which are included in ‘Trade accounts receivable’ | $ | 10,309 | $ | 8,891 | ||||
| Current contract assets, which are included in “Prepaid and other assets” | $ | 1,174 | $ | 1,895 | ||||
Non-current contract assets, which are included in “other assets” | $ | 49 | $ | 844 | ||||
| Contract liabilities, which are included in “Deferred revenue” | $ | 6,336 | $ | 6,093 | ||||
Timing of revenue recognition may differ from timing of invoicing of customers. The Company records a receivable when revenue is recognized prior to receipt of cash payment and the Company has the unconditional right to such consideration, or unearned revenue when cash payments are received or due in advance of performance. For multi-year agreements, the Company generally invoices customers annually at the beginning of each annual service period.
The Company records net contract assets or contract liabilities on a
Changes in deferred revenue from contracts with customers were as follows (in thousands):
Three Months Ended March 31, 2022 | ||||
| Balance at beginning of period | $ | 6,093 | ||
| Deferral of revenue | 2,940 | |||
| Recognition of deferred revenue | (2,697 | ) | ||
| Balance at end of period | $ | 6,336 | ||
Three Months | ||||
Ended March 31, | ||||
2023 | ||||
Balance at beginning of period | $ | 6,758 | ||
Deferral of revenue | 5,514 | |||
Recognition of deferred revenue | (5,778 | ) | ||
Balance at end of period | $ | 6,494 | ||
The Company expects to recognize estimated revenues related to performance obligation that are unsatisfied (or partially satisfied) in the amounts of approximately $5.9$3.4 million in 2022, $2.2 million in 2023, $1.3 million in 2024, and $1.1 $1.0 million in 2025.
Note 4– Net Loss per Common Share
The Company’s basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period.
A summary of the Company’s calculation of net loss per share is as follows (in thousands000s, except for Net loss per share amounts)share):
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Net loss | $ | (3,545) | $ | (1,643) | ||||
| Shares used in the calculation of basic and diluted net loss per share | 25,160 | 23,929 | ||||||
| Diluted shares used in the calculation of net loss per share | 25,160 | 23,929 | ||||||
| Net loss per share—basic and diluted | $ | (0.14 | ) | $ | (0.07 | ) | ||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Net loss | $ | (3,778 | ) | $ | (3,545 | ) | ||
Shares used in the calculation of basic and diluted net loss per share | 25,261 | 25,160 | ||||||
Net loss per share - basic and diluted | $ | (0.15 | ) | $ | (0.14 | ) | ||
The shares of the Company’s common stock issuable upon the exercise of stock options and vesting of restricted stock that were excluded from the calculation of diluted net loss per share because their effect would have been antidilutive are as follows:
As of March 31, | ||||||||
2022 | 2021 | |||||||
| Stock options | 2,894,449 | 2,246,776 | ||||||
| Restricted stock | 0 | 31,654 | ||||||
| Total | 2,894,449 | 2,278,430 | ||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Stock options | 2,946,470 | 2,894,449 | ||||||
Total | 2,946,470 | 2,894,449 | ||||||
Note 5– Inventories
The Company values its inventory at the lower of cost or net realizable value. Cost includes materials, labor, and manufacturing overhead and is determined using the
March 31, 2022 | December 31, 2021 | |||||||
| Raw materials | $ | 3,333 | $ | 2,962 | ||||
| Work in process | 504 | 173 | ||||||
| Finished Goods | 1,174 | 1,279 | ||||||
| Inventory Gross | 5,011 | 4,414 | ||||||
| Inventory Reserve | (275 | ) | (243 | ) | ||||
| Inventory Net | $ | 4,736 | $ | 4,171 | ||||
March 31, 2023 | December 31, 2022 | |||||||
Raw materials | $ | 3,113 | $ | 2,658 | ||||
Work in process | 213 | 101 | ||||||
Finished Goods | 1,802 | 2,892 | ||||||
Inventory Gross | 5,128 | 5,651 | ||||||
Inventory Reserve | (262 | ) | (262 | ) | ||||
Inventory Net | $ | 4,866 | $ | 5,389 | ||||
Note 6 -– 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. There were 0 impairment indicators present as of March 31, 2022.
• 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 indicators of impairment, and there were no triggering events identified, no indication of impairment of the Company’s goodwill and no impairment charges recorded during the three months ended March 31, 2023 or 2022.
Note 7– 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 quarterperiod ended March 31, 2022.
Note 8– Lease Commitments
In accordance with ASC Topic 842, "Leases" ("ASC 842"), the Company determines if an arrangement contains a lease at inception. A lease is an operating or financing contract, or part of a contract, that conveys the right to control the use of an identified tangible asset for a period of time in exchange for consideration.
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. In determining the present value of the lease payments, the Company uses itscalculates an incremental borrowing rate, which is determined by estimating the Company’s applicable, fully collateralized borrowing rate, with adjustment as appropriate for lease term. The lease term at the lease commencement date is determined based on the
Assumptions made by the Company at the commencement date of each lease are re-evaluated upon occurrence of certain events, including a lease modification. A lease modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original lease and when lease payments increase commensurate with the standalone price for the additional right of use. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease.
Right-of-use
ASC 842 includes a number of reassessment and
Certain of the Company’s leases include variable lease costs to reimburse the lessor for real estate tax and insurance expenses, and certain
Components of Leases:
The Company has leases for office space and office equipment. The leases expire at various dates through 2024.2028.
Three Months Ended | |||||
Lease Cost | Classification | March 31, 2023 | |||
Operating lease cost - Right of Use Asset | Operating expenses | $ | 216 | ||
Lease Cost | Classification | Three Months Ended March 31, 2022 | ||||
| Operating lease cost—Right of Use Asset | Operating expenses | $ | 215 | |||
| Operating lease cost—Variable | Operating expenses | 61 | ||||
| Total | $ | 276 | ||||
Other information related to leases was as follows (in thousands):
Three Months Ended March 31, 2022 | ||||
| Cash paid from operating cash flows for operating leases | $ | 229 | ||
As of March 31, 2022 | ||||
| Weighted-average remaining lease term of operating leases (in year) | 1.02 | |||
| Weighted-average discount rate for operating leases | 5.5 | % | ||
Three Months | ||||
Ended March 31, 2023 | ||||
Cash paid from operating cash flows for operating leases | $ | 232 | ||
As of March 31, | ||||
2023 | ||||
Weighted-average remaining lease term of operating leases (years) | 3.6 | |||
Weighted-average discount rate for operating leases | 7.0 | % | ||
Maturity of the Company’s lease liabilities as of March 31, 20222023 was as follows (in thousands):
| 2022 | 701 | |||
| 2023 | 253 | |||
| 2024 | 16 | |||
| Total lease payments | 970 | |||
| Less: imputed interest | (29 | ) | ||
| Total lease liabilities | 941 | |||
| Less: current portion of lease liabilities | (887 | ) | ||
| Long-term lease liabilities | $ | 54 | ||
2023 | $ | 549 | ||
2024 | 846 | |||
2025 | 848 | |||
2026 | 749 | |||
2027 | 685 | |||
2028 | 172 | |||
Total lease payments | 3,849 | |||
Less: effects of discounting | (641 | ) | ||
Total lease liabilities | 3,208 | |||
Less: current portion of lease liabilities | 569 | |||
Long-term lease liabilities | $ | 2,639 |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
| Cash interest expense | $ | 0 | $ | 92 | ||||
| Accrual of notes payable final payment | 0 | 7 | ||||||
| Amortization of debt costs | 0 | 13 | ||||||
| Total interest expense | $ | 0 | $ | 112 | ||||
Note 10 9– Stockholders Equity
Stock-Based Compensation
The Company granted options to purchase up to an aggregate of 675,000541,142 shares of the Company’s stock during the three months ended March 31, 2022. 2023. The full amount of options were granted in the firstthree months of 2023.
The Company’s stock-based compensation expense, including options and restricted stock by category is as follows:
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Cost of revenue | $ | 1 | $ | — | ||||
Engineering and product development | 73 | 68 | ||||||
Marketing and sales | 131 | 199 | ||||||
General and administrative | 381 | 388 | ||||||
| $ | 586 | $ | 655 | |||||
During the three months ended March 31, 2023, the Company recorded incremental stock-based compensation of approximately $0.23 million as a result of modifications of certain stock option awards. The modifications related to extending the contractual life of certain stock options by five years for four grantees whose awards were scheduled to expire during 2023. In addition, the amount of time to exercise vested stock options upon termination for one grantee was extended from 60 days to 24 months.
As of March 31, 2023, there was approximately $1.6 million of total unrecognized compensation cost related to unvested options. That cost is expected to be recognized over a weighted average period of 2.09 years.
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 March 31, | ||||
2022 | 2021 | |||
| Average risk-free interest rate | 1.46% | 0.20% | ||
| Expected dividend yield | NaN | NaN | ||
| Expected life | 3.5 years | 3.5 years | ||
| Expected volatility | 66.3% to 69.5% | 66.0% to 66.0% | ||
| Weighted average exercise price | $5.22 | $18.00 | ||
| Weighted average fair value | $2.56 | $8.37 | ||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Average risk-free interest rate | 4.19 | % | 1.46 | % | ||||
Expected dividend yield | None | None | ||||||
Expected life (in years) | 3.0 | 3.5 | ||||||
Expected volatility | 72.69% - 77.53% | 66.3% - 69.5% | ||||||
Weighted average exercise price | $ | 2.16 | $ | 5.22 | ||||
Weighted average fair value | $ | 1.14 | $ | 2.56 | ||||
The Company’s stock-based compensation expense, including options2023 and restricted stock by category2022 average expected volatility and average expected life is as follows (amounts in thousands):
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
| Cost of revenue | $ | 0 | $ | 14 | ||||
| Engineering and product development | 68 | 149 | ||||||
| Marketing and sales | 199 | 353 | ||||||
| General and administrative | 388 | 419 | ||||||
| $ | 655 | $ | 935 | |||||
The Company did not grant any shares of restricted stock during the three-month periodsthree-months ended March 31, 2023 or 2022 and 2021, respectively.
A summary of stock option activity for all stock options and restricted stock outstandingoption plans for the period ended March 31, 2023 is as follows (in thousands):
As of March 31, | ||||||||
| Aggregate intrinsic value | 2022 | 2021 | ||||||
| Stock options | $ | 1,311 | $ | 29,305 | ||||
| Restricted stock | 0 | 672 | ||||||
Number of | Weighted Average | Intrinsic | ||||||||||
Options | Exercise Price | Value | ||||||||||
Outstanding as of December 31, 2022 | 2,610,992 | $ | 7.54 | $ | — | |||||||
Granted | 541,142 | $ | 2.16 | $ | — | |||||||
Exercised | — | $ | — | $ | — | |||||||
Cancelled | (204,331 | ) | $ | 9.27 | $ | — | ||||||
Outstanding as of March 31, 2023 | 2,947,803 | $ | 9.44 | $ | — | |||||||
Options Exercisable as of December 31, 2022 | 1,619,855 | $ | 6.47 | $ | — | |||||||
Options Exercisable as of March 31, 2023 | 1,985,026 | $ | 7.44 | $ | — | |||||||
The Company issued 0 and 22,833 shares of common stock upon the exercise of outstanding stock options in the three-month periodthree months ended March 31, 2022.2023 and 2022, respectively. The Company received cash proceeds from stock option exercises of approximately $66,000 induring the three -month period months ended March 31, 2022. The intrinsic value of 20,000 restricted shares that vested in the three months ended March 31, 2021 was $0.3 million.
Employee Stock Purchase Plan
In December 2019, the Company’s Board of Directors adopted, and the stockholders approved the 2019 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 of Directors 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 inpurchase shares under the ESPP.
Prior to the Company's suspension of the Plan, any eligible employee cancould enroll in the ESPP as of the beginning of a respective quarterly accumulation period. Employees who participateparticipated in the ESPP maywere able to purchase shares by authorizing payroll deductions of up to 15% of their base compensation during an accumulation period. Unless the participating employee withdrawswithdrew from participation, accumulated payroll deductions arewere 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 maywas able to purchase more than $25,000 worth of common stock, valued at the start of the purchase period, under the ESPP in any calendar year.
The Company issued 9,381 shares under the ESPP in the three-monththree-month period ended March 31,2022. The Company recorded approximately $10,000 of stock-based compensation expense pursuant to ESPP for the three-monththree-month period ended March 31,2022.
Note 10– Income Taxes
The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which the Company operates and the development of tax planning strategies during the year. As such, there can be significant volatility in interim tax provisions.
Income tax expense was approximately $5,000 and $1,000 for the three months ended March 31, 2022.2023 and 2022, respectively. The next accumulation period undereffective tax rates for the ESPP commenced on January 31, 2022 andthree months ended on March 31, 2022, 2023 and 2022 were less than 1% in each period. The difference between the related shares purchased byCompany’s effective tax rates in 2023 and 2022 compared to the participants were issuedU.S. statutory tax rate of 21% is primarily due changes in April 2022. As of March 31, 2022, the Company recorded a liability of approximately $33,000 related to employee withholdings in connectionvaluation allowances associated with the ESPP accumulation period ended March 31, 2022, which was included as a componentCompany’s assessment of accrued expenses and other current liabilities.
Note 12 11– Segment Reporting
Operating segments are the components of the Company’s business for which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM is the chief executive officer. The Company’s operating segments are generally organized by the type of product or service offered and by geography.
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, and related services. The primary factors used by the Company’s CODM to allocate resources are based on revenues, gross profit, operating income or loss, and earnings or loss before interest, taxes, depreciation, amortization, and other specific and
The Company does not track its assets by operating segment and the CODM does not use asset information by segment to allocate resources or make operating decisions.
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
Segment revenues: | ||||||||
| Detection | $ | 5,521 | $ | 5,719 | ||||
| Therapy | 2,002 | 2,925 | ||||||
| Total Revenue | $ | 7,523 | $ | 8,644 | ||||
Segment gross profit: | ||||||||
| Detection | $ | 4,661 | $ | 4,725 | ||||
| Therapy | 651 | 1,564 | ||||||
| Segment gross profit | $ | 5,312 | $ | 6,289 | ||||
Segment operating income (loss): | ||||||||
| Detection | $ | 622 | $ | 941 | ||||
| Therapy | (1,209 | ) | (312 | ) | ||||
| Segment operating income (loss) | $ | (587 | ) | $ | 629 | |||
| General, administrative, depreciation and amortization expense | $ | (2,935 | ) | $ | (2,162 | ) | ||
| Interest expense | (9 | ) | (112 | ) | ||||
| Other (expense) income | (13 | ) | 2 | |||||
| Loss before income tax | $ | (3,544 | ) | $ | (1,643 | ) | ||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Segment revenues: | ||||||||
Detection | $ | 4,334 | $ | 5,521 | ||||
Therapy | 1,444 | 2,002 | ||||||
Total revenue | $ | 5,778 | $ | 7,523 | ||||
Segment gross profit: | ||||||||
Detection | $ | 3,544 | $ | 4,661 | ||||
Therapy | 586 | 651 | ||||||
Segment gross profit | $ | 4,130 | $ | 5,312 | ||||
Segment operating income (loss): | ||||||||
Detection | $ | (124 | ) | $ | 622 | |||
Therapy | (883 | ) | (1,209 | ) | ||||
Segment operating income (loss): | $ | (1,007 | ) | $ | (587 | ) | ||
General, administrative, depreciation and amortization expense | $ | (2,918 | ) | $ | (2,935 | ) | ||
Interest expense | — | (9 | ) | |||||
Interest income | 150 | — | ||||||
Other expense | 2 | (13 | ) | |||||
Loss before income tax | $ | (3,773 | ) | $ | (3,544 | ) | ||
Note 13 12– Commitments and Contingencies
Other Commitments
The Company is obligated to pay approximately $5.8$4.2 million for firm purchase obligations to suppliers for future product and service deliverables and $0.2 million for minimum royalty obligations.
Litigation
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. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, “Contingencies.” Legal costs are expensed as incurred.
Note 13– Restructuring
On March 20,2023, the Company committed to a restructuring plan intended to support its long term strategic goals and reduce operating expenses by further aligning its cost structure to focus on areas the Company believes are more likely to generate the best long-term results, in light of current industry and macroeconomic environments (the “RIF”). The Company reduced its workforce by approximately 28%, decreasing its headcount by approximately 23 employees, predominantly from the Company’s detection business unit. Xoft, Inc., a wholly-owned subsidiary of the Company, furloughed 12 of its employees, or approximately 50% of its workforce.
During the three months ended March 31, 2023, the Company incurred pre-tax charges to its statements of operations of $0.08 million related to cash severance and benefits. The Company expects to incur additional charges of $0.1 million during the remainder of the 2023 and no additional charges beyond that time. All of the incurred and estimated future charges are one-time, cash expenses. Estimated amounts are subject to change until finalized and the Company may incur additional costs during the remainder of 2023.
The Company's accrual for restructuring charges for the three months ended March 31, 2023 was follows (in thousands):
| Balance of as January 31, 2023 | $ | — |
Charges | 76 | |
Cash payments | — | |
Balance as of March 31, 2023 | $ | 76 |
Note 14 – Subsequent Events
The Company has evaluated events and transactions subsequent to the balance sheet date to the date of the filing and is not aware of any events or transactions that occurred subsequent to the balance sheet date that would require recognition or disclosure in the consolidated financial statements.
Item2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December31, 2022. Some of the information contained in this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. As a result of many factors, including those factors set forth in the section titled “Risk Factors,” our actual results could differ materially from those discussed in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors.” Please also refer to the section titled “Special Note Regarding Forward Looking Statements.”
Special Note Regarding Forward Looking Statements
Certain information included in this Item 2 and elsewhere in this Form
Unless the context otherwise requires, the terms “iCAD”, the “Company”, “we”, “our”, “registrant”, and “us” mean iCAD, Inc. and its consolidated subsidiaries.
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 solutions suite 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) that focus on cancer detection, breast density assessment, and short-term cancer risk estimation.
In the Therapy segment, the Company offers the Xoft System, an isotope-free cancer treatment platform technology. The Xoft System can be used for the treatment of early-stage breast cancer, endometrial cancer, cervical cancer and nonmelanoma skin cancer and is in clinical studies for treatment of brain cancers.
The Company’s headquarters are located in Nashua, New Hampshire, with a manufacturing facility in New Hampshire, an operations, research, development, manufacturing and warehousing facility in San Jose, California, and an office in Lyon, France.
COVID-19
On March 12, 2020, the World Health Organization declared
We believe that itsour current liquidity and capital resources are sufficient to sustain operations through at least the next 12 months, primarily due to cash on hand of $29.7$19.7 million at March 31, 20222023 and anticipated revenue and cash collections. However, the resurgence of the
Eastern European Conflict Impact
In late February 2022, Russian military forces launched significant military action against Ukraine. Sustained conflict and disruption in the region is likely. The aggregatehas continued through March 31, 2023 and beyond. Economic, civil, military and political uncertainty may arise or increase in regions where the Company operates or derives revenue. Further, countries from which we derive revenue may experience military action and/or civil and political unrest; may be subject to government export controls, economic sanctions, embargoes, or trade restrictions; and experience currency, inflation, and interest rate uncertainties. While the impact to Eastern Europe and Europe as a whole, as well as actions taken by other countries, including new and stricter sanctions by the United States, Canada, the United Kingdom, the European Union, and other countries and organizations against officials, individuals, regions, and industries in Russia, Belarus and Ukraine, and each country’s potential responseus has been limited to such sanctions, tensions and military actions,date, it is not knowable at this time, and could have a material adverse effect onpossible to predict the Company, its business and operations. Any such material adverse effect frompotential outcome should the conflict and enhancedexpand and/or additional sanctions activity may disrupt the Company’s sales to customers in the region. Prolonged unfavorable economic conditions or uncertainty may have an adverse effect on the Company’s sales and profitability.be imposed. For the fiscal yearthree months ended 2021,March 31, 2023, approximately 8.6%15% of the Company’s total revenue and approximately 39.0% of the Company’s exportCompany's revenue was derived from customers located in Europe.
Critical Accounting Estimates
Our discussion and analysis of its financial condition, results of operations, and cash flows are based on the Company’sour consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluateswe evaluate these estimates, including those related to revenue recognition, allowanceallowances for doubtfulcredit losses on accounts receivable, inventory valuation and obsolescence, intangible assets, goodwill, income taxes, contingencies, and litigation. Additionally, the Company useswe use assumptions and estimates in calculations to determine stock-based compensation, and evaluation of litigation. The Company bases itsWe base 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
Other than as described herein, there have been no additional material changes to our critical accounting policies as discussed in our 20212022 Annual Report on Form
Three months ended March 31, 20222023 compared to three months ended March 31, 2021.
Revenue
Three months ended March 31, 20222023 and 2021:
Three months ended March 31, | ||||||||||||||||
2022 | 2021 | Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 3,864 | $ | 4,161 | $ | (297 | ) | (7.1 | )% | |||||||
Service and supplies revenue | 1,657 | 1,558 | 99 | 6.4 | % | |||||||||||
Subtotal | 5,521 | 5,719 | (198 | ) | (3.5 | )% | ||||||||||
Therapy revenue | ||||||||||||||||
Product revenue | 696 | 1,396 | (700 | ) | (50.1 | )% | ||||||||||
Service and supplies revenue | 1,306 | 1,529 | (223 | ) | (14.6 | )% | ||||||||||
Subtotal | 2,002 | 2,925 | (923 | ) | (31.6 | )% | ||||||||||
Total revenue | $ | 7,523 | $ | 8,644 | $ | (1,121 | ) | (13.0 | )% | |||||||
Three months ended March 31 | ||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 2,460 | $ | 3,864 | $ | (1,404 | ) | (36.3 | )% | |||||||
Service and supplies revenue | 1,874 | 1,657 | 217 | 13.1 | % | |||||||||||
Subtotal | 4,334 | 5,521 | (1,187 | ) | (21.5 | )% | ||||||||||
Therapy revenue | ||||||||||||||||
Product revenue | 284 | 696 | (412 | ) | (59.2 | )% | ||||||||||
Service and supplies revenue | 1,160 | 1,306 | (146 | ) | (11.2 | )% | ||||||||||
Subtotal | 1,444 | 2,002 | (558 | ) | (27.9 | )% | ||||||||||
Total revenue | $ | 5,778 | $ | 7,523 | $ | (1,745 | ) | (23.2 | )% | |||||||
Total revenue decreased by approximately $1.1$1.7 million or 13.0%(23.2%), from $8.6 million for the three months ended March 31, 2021 to $7.5 million for the three months ended March 31, 2022. The change is due2022 to decreases in Detection revenue of $0.2 million and Therapy revenue of $0.9 million, respectively.
Detection product revenue decreased by approximately $1.4 million, or (36.3%), from $3.9 million for the three months ended March 31, 2022.2022 to $2.5 million for the three months ended March 31, 2023. The changeoverall decrease is due primarily to the impact of our transition to a decrease of $1.1 million in direct customer revenue related tosubscription model and ongoing COVID related restrictions earlychallenges faced in the quarter combined with impact fromeconomic recovery due to the reorganization and refocusing of the U.S. commercial organization offset by a $0.8 million increase in original equipment manufacturer customer revenue.
Detection service and supplies revenue, which is primarily sold to direct customers, increased by $0.1approximately $0.2 million, or 6.4%13.1%, from $1.6$1.7 million for the three months ended March 31, 2022 to $1.9 million in the three months ended March 31, 20212023. The increase is due primarily to $1.7 million in the three months ended March 31, 2022.
Therapy product revenue decreased by $0.7approximately $0.4 million, or 50.1%(59.2)%, from $1.4$0.7 million for the three months ended March 31, 20212022 to $.7$0.3 million for the three months ended March 31, 2022. The decline in2023. Therapy product sales was largelyrevenue is related to the sale of our Axxent systems and can vary significantly from quarter to quarter due to changes in the timingnumber of a significant additional capital raise by one of our skin distributors.
Therapy service and supplies revenue decreased by approximately $0.2$0.1 million, or 14.6%(11.2)%, from $1.5 million for the three months ended March 31, 2021 to $1.3 million for the three months ended March 31, 2022. The decline was largely2022 to $1.2 million for the three months ended March 31, 2023. We saw lower service and supplies revenues due to reducedlower balloon sales of sources forin the Axxent system and a temporary reduction in average selling price for certain suppliesthree months ended March 31, 2023 as compared to certain customers, including clinical trial participants.
Cost of Revenue and Gross Profit: (in thousands)
Three months ended March 31, 20222023 and 2021:
Three months ended March 31, | ||||||||||||||||
2022 | 2021 | Change | % Change | |||||||||||||
Products | $ | 1,087 | $ | 1,409 | $ | (322 | ) | (22.9 | )% | |||||||
Service and supplies | 1,049 | 867 | 182 | 21.0 | % | |||||||||||
Amortization and depreciation | 75 | 79 | (4 | ) | (5.1 | )% | ||||||||||
Total cost of revenue | $ | 2,211 | $ | 2,355 | $ | (144 | ) | (6.1 | )% | |||||||
Three months ended March 31, | ||||||||||||||||
2022 | 2021 | Change | % Change | |||||||||||||
Detection gross profit | $ | 4,661 | $ | 4,725 | $ | (64 | ) | (1.4 | %) | |||||||
Therapy gross profit | 651 | 1,564 | (913 | ) | (58.4 | %) | ||||||||||
Gross profit | $ | 5,312 | $ | 6,289 | $ | (977 | ) | (15.5 | %) | |||||||
Cost of Revenue and Gross Profit: | Three months ended March 31 | |||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||
Products | $ | 586 | $ | 1,087 | $ | (501 | ) | (46.1 | )% | |||||||
Service and supplies | 993 | 1,049 | (56 | ) | (5.3 | )% | ||||||||||
Amortization and depreciation | 69 | 75 | (6 | ) | (8.0 | )% | ||||||||||
Total cost of revenue | $ | 1,648 | $ | 2,211 | $ | (563 | ) | (25.5 | )% | |||||||
Three months ended March 31 | ||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||
Detection gross profit | $ | 3,544 | $ | 4,661 | $ | (1,117 | ) | (24.0 | )% | |||||||
Therapy gross profit | 586 | 651 | (65 | ) | (10.0 | )% | ||||||||||
Gross profit | $ | 4,130 | $ | 5,312 | $ | (1,182 | ) | (22.3 | )% | |||||||
Gross profit for the three months ended March 31, 20222023 was approximately $5.3$4.1 million, or 70.6%71.4% of revenue, as compared to $6.3$5.3 million, or 72.8%70.1% of revenue, for the three months ended March 31, 2021. Detection gross profit percentage increased from 82.6% for the three months ended March 31, 2021 to 84.4% for the three months ended March 31, 2022. Therapy gross profit percentage decreased from 53.5% for the three months ended March 31, 2021 to 32.5% for the three months ended March 31, 2022. Detection gross profit percentage increased from 84.2% for the three months ended March 31, 2022 to 85.0% for the three months ended March 31, 2023. Therapy gross profit percentage decreased from 49.3% for the three months ended March 31, 2022 to 33.5% for the three months ended March 31, 2023. Detection gross profit represented 75.1%86.0% of total Company gross profit for the three months ended March 31, 20212022 compared to 87.7% for the three months ended March 31, 2022.
Cost of products decreased by approximately $0.3$0.5 million, or 22.9%(46.1%), from $1.4 million for the three months ended March 31, 2021 to $1.1 million for the three months ended March 31, 2022.2022 to $0.6 million for the three months ended March 31, 2023. Cost of product revenue as a percentage of product revenue was approximately 25.4%21.4% for the three months ended March 31, 20212022 as compared to 23.8%30.1% for the three months ended March 31, 2022.2023. The product mix in the three-month period ended March 31, 20222023 compared to the same period in 20212022 included more Detection products which havewith a lowerhigher relative cost of sales.
Cost of service and supplies increaseddecreased by approximately $0.1$0.06 million, or (5.3%) from $0.9$1.1 million for the three months ended March 31, 20212022 to $1.0 million for the three months ended March 31, 2022.2023. Cost of service and supplies revenue as a percentage of service and supplies revenue was approximately 28.1%32.7% for the three months ended March 31, 20212022 as compared to 35.4%22.6% for the three months ended March 31, 2022.2023. The cost of service and supplies as a percentage of revenue increaseddecreased primarily as a result of a temporary reductionthe relative mix of service and supplies in average selling price for certain supplies to certain customers, including clinical trial participants.
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 March 31, 20222023 and 2021.
Operating Expenses: (in thousands)
Three months ended March 31, 20222023 and 2021:
Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | Change $ | Change % | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 2,275 | $ | 2,192 | $ | 83 | 3.8 | % | ||||||||
Marketing and sales | 3,565 | 3,424 | 141 | 4.1 | % | |||||||||||
General and administrative | 2,931 | 2,151 | 780 | 36.3 | % | |||||||||||
Amortization and depreciation | 63 | 55 | 8 | 14.5 | % | |||||||||||
Total operating expenses | $ | 8,834 | $ | 7,822 | $ | 1,012 | 12.9 | % | ||||||||
Three Months Ended March 31, | ||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 2,281 | $ | 2,275 | $ | 6 | 0.3 | % | ||||||||
Marketing and sales | 2,857 | 3,565 | (708 | ) | (19.9 | )% | ||||||||||
General and administrative | 2,862 | 2,931 | (69 | ) | (2.4 | )% | ||||||||||
Amortization and depreciation | 55 | 63 | (8 | ) | (12.7 | )% | ||||||||||
Total operating expenses | $ | 8,055 | $ | 8,834 | $ | (779 | ) | (8.8 | )% | |||||||
Operating expenses increaseddecreased by approximately $1.0$0.1 million, or 12.9%(8.8%), from $7.8 million in the three months ended March 31, 2021 to $8.8 million in the three months ended March 31, 2022. The increase is largely due2022 to limited employee-related expenses$8.1 million in the three-month periodthree months ended March 31, 2021 due to
Engineering and Product Development
Marketing and Sales
General and Administrative
Amortization and Depreciation.
Three months ended March 31, | ||||||||||||||||
| 2022 | 2021 | Change $ | Change % | |||||||||||||
Interest expense | $ | (9 | ) | $ | (112 | ) | $ | 103 | (92.0 | )% | ||||||
Other income (expense) | (13 | ) | 2 | (15 | ) | (750.0 | )% | |||||||||
| $ | (22 | ) | $ | (110 | ) | $ | 88 | (80.0 | )% | |||||||
Tax expense | $ | (1 | ) | $ | — | $ | (1) | 0.0 | % | |||||||
Other Income and Expense:
Three months ended March 31, 2023 and 2022:
Other Income and Expense: | ||||||||||||||||
Three months ended March 31 | ||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||
Interest expense | $ | — | $ | (9 | ) | $ | 9 | (100 | )% | |||||||
Interest income | $ | 150 | $ | — | $ | 150 | 100 | % | ||||||||
Other income (expense) | 2 | (13 | ) | 15 | (115.4 | )% | ||||||||||
| $ | 152 | $ | (22 | ) | $ | 174 | (790.9 | )% | ||||||||
Tax (expense) | $ | (5 | ) | $ | (1 | ) | $ | (4 | ) | 400.0 | % | |||||
Interest expense. Interest expense was approximately $9,000$(9,000) for the three months ended March 31, 2022. The decreaseThere was due tono interest expense during the Company retiring the Loan agreement with Western Alliance Bank on April 27, 2021.
Interest income
Other income (expense). Other income (expense) was a loss of $(13,000) during the three months ended March 31, 2022 compared to income of $2,000 during the three months ended March 31, 2023. The change is driven lower foreign exchange losses recorded in 2023 compared to 2022.
Tax (expense). Income tax expense was $5,000 and $1,000 for the three months ended March 31, 2023 and 2022, respectively. The effective tax rates for the three months ended March 31, 2023 and 2022 were less than 1% in each period. The difference between the Company’s effective tax rates in 2023 and 2022 compared to the U.S. statutory tax rate of 21% is primarily due changes in valuation allowances associated with the Company’s assessment of the likelihood of the recoverability of deferred tax assets. The Company has valuation allowances against substantially all of its net operating loss carryforwards and tax credit carryforwards.
Liquidity and Capital Resources
The Company believes that its cash and cash equivalents balance of $29.7$19.7 million as of March 31, 2022,2023, and projected cash balances are sufficient to sustain operations through at least the next 12 months. 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 the financing if necessary. In addition, the resurgence of the
The Company had net working Capitalcapital of $33.5$21.3 million at March 31, 2022.2023. The ratio of current assets to current liabilities at March 31, 20222023 and December 31, 20212022 was 3.322.66 and 3.36,2.84, respectively.
For the three months ended March 31, | ||||||||
2022 | 2021 | |||||||
| (in thousands) | ||||||||
Net cash used for operating activities | $ | (4,449 | ) | $ | (3,563 | ) | ||
Net cash used for investing activities | (161 | ) | (262 | ) | ||||
Net cash provided by financing activities | 126 | 23,546 | ||||||
(Decrease) increase in cash and cash equivalents | $ | (4,484 | ) | $ | 19,721 | |||
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Net cash used for operating activities | $ | (1,528 | ) | $ | (4,449 | ) | ||
Net cash used for investing activities | (122 | ) | (161 | ) | ||||
Net cash provided by financing activities | — | 126 | ||||||
Decrease in cash and equivalents | $ | (1,650 | ) | $ | (4,484 | ) | ||
Net cash used for operating activities for the three months ended March 31, 20222023 was $4.4$1.5 million, compared to $3.6$4.4 million for the three months ended March 31, 2021.2022. The improvement in net cash used for operating activities for the three months ended March 31, 20222023 resulted primarily from the Company’s net loss and working capital changes resulting from increases infocus on collections of accounts receivable and inventory, which increased in order to
Net cash used for investing activities for the three months ended March 31, 20222023 was $161,000,$122,000, compared to $262,000$161,000 for the three months ended March 31, 2021.2022. The net cash used for investing activities for the three months ended March 31, 20222023 and 20212022 is primarily for purchases of property and equipment.
Net cash provided by financing activities for the three months ended March 31, 2021 was $0.1 million, compared to $23.6 million for the three months ended March 31, 2021. Net cash provided by financing activities for the three months ended March 31, 2022 is duewas $126,000 related to cash of $126,000 from the issuance of common stock pursuant to the Company’s stock option and employee stock purchase plans. Net cash provided by financing activities
The Company is obligated to pay approximately $4.2 million for the three months ended March 31, 2021 is from the 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 $23.2firm purchase obligations to suppliers for future product and service deliverables and $0.2 million and $0.3 million from the issuance of common stock pursuant the Company’s stock option and employee stock purchase plans.
Recent Accounting Pronouncements
See Note 1 to the Condensed Consolidated Financial Statements.
Item3.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’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 March 31, 2022,2023, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures (as defined in Rule
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 Rule
Item1A.Risk Factors:
Our business is subject to various risks, and uncertainties that could materially adversely affect our operations. In addition to the risk factors below, factors that have affected our Company areincluding those described in Part I, Item 1A of our Annual Report on Form
Exhibit No. | Description | |
| 10.1 | Employment | |
| 10.2 | Separation agreement dated March 10, 2023, by and between iCAD, Inc. and Stacey Stevens | |
31.1* | ||
31.2* | ||
32.1** | ||
32.2** | ||
101* | The following materials formatted in Inline XBRL (eXtensible Business Reporting Language); (i) Condensed Consolidated Balance Sheets as of March 31, | |
104* | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). | |
* Filed herewith
** Furnished herewith
iCAD, Inc. | |||||
| | |||||
(Registrant) | ||||
Date: May 15, 2023 | By: | /s/ Dana Brown | ||
Name: Title: | Dana Brown Chief Executive Officer (Principal Executive Officer) | |||
Date: May 15, 2023 | By: | /s/ | ||
Name: Title: | ||||
Eric Lonnqvist Chief Financial Officer (Principal Financial Officer) | ||||