| Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
| Sep. 30, 2016 |
| Commitments and Contingencies Disclosure [Abstract] | |
| Revenue Recognition | Revenue Recognition
The Company recognizes revenue primarily from the sale of products
and from the sale of services and supplies. Revenue is
recognized when delivery has occurred, persuasive evidence of an
arrangement exists, fees are fixed or determinable and
collectability of the related receivable is probable. For
product revenue, delivery has occurred upon shipment provided title
and risk of loss have passed to the customer. Services and
supplies revenue are considered to be delivered as the services are
performed or over the estimated life of the supply agreement.
The Company recognizes revenue from the sale of its digital,
film-based CAD and cancer therapy products and services in
accordance with Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification
(“ASC”) Update No. 2009-13, “Multiple-Deliverable
Revenue Arrangements” (“ASU 2009-13”) and ASC
Update No. 2009-14, “Certain Arrangements That Contain
Software Elements” (“ASU 2009-14”) and ASC
985-605, “Software” (“ASC
985-605”). Revenue from the sale of certain CAD products
is
recognized in accordance with ASC 840 “Leases”
(“ASC 840”). For multiple element arrangements,
revenue is allocated to all deliverables based on their relative
selling prices. In such circumstances, a hierarchy is used to
determine the selling price to be used for allocating revenue to
deliverables as follows: (i) vendor-specific objective evidence of
fair value (“VSOE”), (ii) third-party evidence of
selling price (“TPE”) and (iii) best estimate of the
selling price (“BESP”). VSOE generally exists only
when the deliverable is sold separately and is the price actually
charged for that deliverable. The process for determining BESP for
deliverables without VSOE or TPE considers multiple factors
including relative selling prices, competitive prices in the
marketplace, and management judgment; however, these may vary
depending upon the unique facts and circumstances related to each
deliverable.
The Company uses customer purchase orders that are subject to the
Company’s terms and conditions or, in the case of an Original
Equipment Manufacturer (“OEM”) are governed by
distribution agreements. In accordance with the
Company’s distribution agreements, the OEM does not have a
right of return, and title and risk of loss passes to the OEM upon
shipment. The Company generally ships Free On Board shipping
point and uses shipping documents and third-party proof of delivery
to verify delivery and transfer of title. In addition, the Company
assesses whether collection is probable by considering a number of
factors, including past transaction history with the customer and
the creditworthiness of the customer, as obtained from third party
credit references.
If the terms of the sale include customer acceptance provisions and
compliance with those provisions cannot be demonstrated, all
revenue is deferred and not recognized until such acceptance
occurs. The Company considers all relevant facts and
circumstances in determining when to recognize revenue, including
contractual obligations to the customer, the customer’s
post-delivery acceptance provisions, if any, and the installation
process.
The Company has determined that iCAD’s digital and film based
sales generally follow the guidance of FASB ASC Topic 605
“Revenue Recognition” (“ASC 605”) as the
software has been considered essential to the functionality of the
product per the guidance of ASU 2009-14. Typically, the
responsibility for the installation process lies with the OEM
partner. On occasion, when iCAD is responsible for product
installation, the installation element is considered a separate
unit of accounting because the delivered product has stand-alone
value to the customer. In these instances, the Company
allocates revenue to the deliverables based on the framework
established within ASU 2009-13. Therefore, the installation
and training revenue is recognized as the services are performed
according to the BESP of the element. Revenue from the digital
and film based equipment, when there is installation, is recognized
based on the relative selling price allocation of the BESP, when
delivered.
Revenue from certain CAD products is recognized in accordance with
ASC 985-605. Sales of our software products typically include
training and PCS, and the Company has established VSOE for these
elements. Product revenue is determined based on the residual
value in the arrangement and is recognized when
delivered. Revenue for training is deferred and recognized
when the training has been completed.
Sales of the Company’s Therapy segment products typically
include a controller, accessories, source agreements and
services. The Company allocates revenue to the deliverables in
the arrangement based on the BESP in accordance with ASU
2009-13. Product revenue is generally recognized when the
product has been delivered and service and source revenue is
typically recognized over the life of the service and source
agreement. The Company includes the following in service and
supplies revenue: the sale of physics and management services, the
lease of electronic brachytherapy equipment, development fees,
supplies and the right to use the Company’s AxxentHub
software. Physics and management services revenue and
development fees are considered to be delivered as the services are
performed or over the estimated life of the agreement. The
Company typically bills items monthly over the life of the
agreement except for development fees, which are generally billed
in advance or over a 12 month period and the fee for treatment
supplies which is generally billed in advance.
The Company defers revenue from the sale of certain service
contracts and recognizes the related revenue on a straight-line
basis in accordance with ASC Topic 605-20, “Services”.
The Company provides for estimated warranty costs on original
product warranties at the time of sale. |
| Cost of Revenue | Cost of Revenue
Cost of revenue consists of the costs of products purchased for
resale, costs relating to service including personnel costs for
physicists, management services and radiation therapists, costs of
service contracts to maintain equipment after the warranty period,
product installation, training, customer support, certain warranty
repair costs, inbound freight and duty, cost of supplies,
manufacturing, warehousing, material movement, inspection, scrap,
rework, amortization, depreciation and in-house product warranty
repairs. Included in cost of revenue for the nine months ended
September 30, 2016 is a credit of $467,000 related to a refund of
the Medical Device Excise Tax (“MDET”). The MDET
refund of $467,000 for the nine months ended September 30, 2016
related to refunds of the MDET for the periods from April 2013 to
December 2015. The MDET refunds were not material to any prior
period; accordingly, prior periods have not been restated. |
| Leases | Under the guidance of ASC Topic 840, “ Leases |
| Compensation - Stock Compensation | The Company follows the guidance in ASC Topic 718,
“ Compensation – Stock
Compensation , |
| Litigation | Litigation
The Company is a party to various legal proceedings and claims
arising out of the ordinary course of its business. Although
the final results of all such matters and claims cannot be
predicted with certainty, the Company currently believes that there
are 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. However,
should the Company fail to prevail in any legal matter or should
several legal matters be resolved against the Company in the same
reporting period, such matters could have a material adverse effect
on our operating results and cash flows for that particular period.
In all cases, at each reporting period, the Company evaluates
whether or not a potential loss amount or a potential range of loss
is probable and reasonably estimable under ASC 450,
Contingencies. Legal costs are expensed as incurred. |
| Fair Value Measurement and Disclosures | Fair Value Measurements
The Company follows the provisions of ASC Topic 820, “ Fair
Value Measurement and Disclosures
• 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.
A financial instrument’s level within the fair value
hierarchy is based on the lowest level of any input that is
significant to the fair value measurement.
Our financial instruments include cash and cash equivalents,
accounts receivable, accounts payable and certain accrued
liabilities. The carrying amounts of our cash and cash
equivalents (which are composed primarily of deposit and overnight
sweep accounts), accounts receivable, accounts payable and certain
accrued liabilities approximate fair value due to the short
maturity of these instruments.
The Company’s assets that are measured at fair value on a
recurring basis relate to the Company’s money market
accounts.
The Company’s money market funds are included in cash and
cash equivalents in the accompanying balance sheets and are
considered a Level 1 investment as they are valued at quoted market
prices in active markets.
The following table sets forth the Company’s assets and
liabilities which are measured at fair value on a recurring basis
by level within the fair value hierarchy. |
| Income Taxes | The Company recorded an income tax provision of $10,000 and $55,000
in the three and nine months ended September 30, 2016,
respectively, as compared to income tax expense of $16,000 and an
income tax benefit of $12,000, in the three and nine months ended
September 30, 2015, respectively. The income tax benefit as of
September 30, 2015 primarily related to a state tax provision and a
benefit from the reversal of a deferred tax liability relating to
tax amortizable goodwill. Because of the Company’s
goodwill impairment, the tax basis in amortizable goodwill is
greater than book basis which results in a deferred tax asset that
is subject to a valuation allowance. At September 30, 2016,
the Company had no material unrecognized tax benefits and no
adjustments to liabilities or tax expense were required under ASC
740, “Income Taxes”. The Company does not expect
that the unrecognized tax benefits will materially increase within
the next twelve months. The Company did not recognize any interest
or penalties related to uncertain tax positions at September 30,
2016. 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 taxing 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. |
| Long-lived Assets | Long-lived assets
In accordance with FASB ASC Topic 360, “Property, Plant and
Equipment”, (“ASC 360”), the Company assesses
long-lived assets for impairment if events and circumstances
indicate it is more likely than not that the fair value of the
asset group is less than the carrying value of the asset group.
ASC 360-10-35 uses “events and circumstances” criteria
to determine when, if at all, an asset (or asset group) is
evaluated for recoverability. Thus, there is no set interval or
frequency for recoverability evaluation. In accordance with ASC
360-10-35-21 the following factors are examples of events or
changes in circumstances that indicate the carrying amount of an
asset (asset group) may not be recoverable and thus is to be
evaluated for recoverability.
• A significant decrease in the market
price of a long-lived asset (asset group);
• A significant adverse change in the
extent or manner in which a long-lived asset (asset group) is being
used or in its physical condition;
• A significant adverse change in legal
factors or in the business climate that could affect the value of a
long-lived asset (asset group), including an adverse action or
assessment by a regulator;
• An accumulation of costs
significantly in excess of the amount originally expected for the
acquisition or construction of a long-lived asset (asset
group);
• A current period operating or cash
flow loss combined with a history of operating or cash flow losses
or a projection or forecast that demonstrates continuing losses
associated with the use of a long-lived asset (asset group).
The Company did not have any triggering events in the quarter ended
September 30, 2016. |
| Intangibles - Goodwill and Other | In accordance with FASB ASC Topic 350-20, “Intangibles -
Goodwill and Other”, (“ASC 350-20”), 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 the
carrying value of the reporting unit. |
| Segment Reporting | In accordance with FASB Topic ASC 280,
“ Segments |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) 2014-09 “Revenue from Contracts with
Customers” (“ASU 2014-09”), which amends ASC 605
“Revenue Recognition” and creates a new Topic 606
“Revenue from Contracts with Customers.” This update
provides guidance on how an entity should recognize revenue to
depict the transfer of promised goods or services to customers in
an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.
Upon initial application, the provisions of this update are
required to be applied retrospectively to each prior reporting
period presented or retrospectively with the cumulative effect of
initially applying this update recognized at the date of initial
application. This update also expands the disclosure requirements
surrounding revenue recorded from contracts with customers. In
August 2015, the FASB issued ASU 2015-14 “Deferral of the
Effective Date”. The amendments in this Update defer the
effective date of Update 2014-09 for all entities by one
year. Public business entities, certain not-for-profit
entities, and certain employee benefit plans should apply the
guidance in Update 2014-09 to annual reporting periods beginning
after December 15, 2017, including interim reporting periods within
that reporting period. Earlier application is permitted only
as of annual reporting periods beginning after December 15, 2016,
including interim reporting periods within that reporting
period. We are currently evaluating the effect of this update
on our financial statements and have not yet determined the method
of initial application we will use.
In February 2016, the FASB issued ASU No. 2016-02,
“Leases”. The standard establishes a right-of-use
(“ROU”) model that requires a lessee to record a ROU
asset and a lease liability on the balance sheet for all leases
with terms longer than 12 months. Leases will be classified as
either finance or operating, with classification affecting the
pattern of expense recognition in the income statement. The
new standard is effective for fiscal years beginning after December
15, 2018, including interim periods within those fiscal years. A
modified retrospective transition approach is required for lessees
for capital and operating leases existing at, or entered into
after, the beginning of the earliest comparative period presented
in the financial statements, with certain practical expedients
available. We are currently evaluating the impact of our
pending adoption of the new standard on our consolidated financial
statements.
In March 2016, the FASB issued ASU 2016-09, “Improvements to
Employee Share-Based Payment Accounting.” This update was
issued as part of a simplification effort for the accounting of
share-based payment transactions, including the income tax
consequences, classification of awards as either equity or
liabilities, and classification on the statement of cash flows. The
amendment is effective for annual periods beginning after December
15, 2016, and interim periods thereafter. Early adoption is
permitted. We are currently evaluating the effect this amendment
may have on our consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, “Statement of
Cash Flows (Topic 230)”, a consensus of the FASB’s
Emerging Issues Task Force. This update is intended to reduce
diversity in practice in how certain transactions are classified in
the statement of cash flows. The update requires cash payments for
debt prepayment or debt extinguishment costs to be classified as
cash outflows for financing activities. It also requires cash
payments made soon after an acquisition’s consummation date
(approximately three months or less) to be classified as cash
outflows for investing activities. Payments made thereafter should
be classified as cash outflows for financing activities up to the
amount of the original contingent consideration liability. Payments
made in excess of the amount of the original contingent
consideration liability should be classified as cash outflows for
operating activities. The amendment is effective for annual periods
beginning after December 15, 2017, and interim periods thereafter.
Early adoption is permitted. We are currently evaluating the effect
this amendment may have on our consolidated financial
statements. |
