UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 1-9341
ICAD, INC.
(Exact name of registrant as specified in its charter)
Delaware 02-0377419
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4 Townsend West, Suite 17, Nashua, New Hampshire 03063
(Address of principal executive offices) (Zip Code)
(603) 882-5200
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. YES |X| NO |_|.
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) YES |_| NO |X|
As of the close of business on May 8, 2003 there were 26,350,248 shares
outstanding of the issuer's Common Stock, $.01 par value.
2
ICAD, INC.
INDEX
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2003
(unaudited) and December 31, 2002 4
Consolidated Statements of Operations for the
three month periods ended March 31, 2003
and 2002 (unaudited) 5
Consolidated Statements of Cash Flows for the three month
periods ended March 31, 2003 and 2002 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
Item 4. Controls and Procedures 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Certifications 15-16
3
ICAD, INC.
Consolidated Balance Sheets
March 31, 2003 December 31, 2002
-------------- -----------------
Assets (unaudited) (audited)
Current assets:
Cash and equivalents $ 712,069 $ 1,091,029
Trade accounts receivable, net of allowance for doubtful
accounts of $62,000 in 2003 and $40,000 in 2002 1,622,239 1,550,167
Inventory 287,726 390,349
Prepaid and other 90,112 85,120
------------ ------------
Total current assets 2,712,146 3,116,665
------------ ------------
Property and equipment:
Equipment 885,931 840,410
Leasehold improvements 19,175 8,051
Furniture and fixtures 35,569 22,271
------------ ------------
Less accumulated depreciation and amortization 940,675 870,732
Net property and equipment 606,898 579,545
------------ ------------
333,777 291,187
------------ ------------
Other assets:
Technology intangible 3,676,036 3,740,553
Distribution agreement 1,487,128 1,513,228
Goodwill 17,415,723 17,415,723
------------ ------------
Total other assets 22,578,887 22,669,504
------------ ------------
Total assets $ 25,624,810 $ 26,077,356
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,137,795 $ 2,232,262
Accrued interest 231,220 229,078
Accrued expenses 1,392,506 1,776,824
Convertible subordinated debentures 10,000 10,000
Current maurities of notes payable 66,680 65,526
------------ ------------
Total current liabilities 3,838,201 4,313,690
Loans payable to related party 200,000 200,000
Notes payable, less current maturities 91,281 108,390
------------ ------------
Total liabilities 4,129,482 4,622,080
------------ ------------
Stockholders' equity:
Convertible preferred stock, $.01 par value: authorized
1,000,000 shares; issued and outstanding
8,550 in 2003 and 2002, with the aggregated
liquidation value of $2,115,000 in 2002 and 2003,
plus 7% annual dividend 86 86
Common stock, $ .01 par value: authorized
50,000,000 shares; issued 26,418,124 in 2003
and 2002; outstanding 26,350,248 shares in
2003 and 2002 264,181 264,181
Additional paid-in capital 85,792,977 85,829,483
Accumulated deficit (63,611,652) (63,688,210)
Treasury stock, at cost (67,876 shares) (950,264) (950,264)
------------ ------------
Total stockholders' equity 21,495,328 21,455,276
------------ ------------
Total liabilities and stockholders' equity $ 25,624,810 $ 26,077,356
============ ============
See accompanying notes to financial statements.
4
ICAD, INC.
Consolidated Statements of Operations
Three Months Three Months
March 31, 2003 March 31, 2002
-------------- --------------
(unaudited) (unaudited)
Sales $ 2,214,012 $ 775,633
Cost of sales 909,585 595,412
------------ ------------
Gross margin 1,304,427 180,221
------------ ------------
Operating expenses:
Engineering and product development 584,253 189,756
General and administrative 396,232 225,355
Marketing and sales 239,712 267,080
------------ ------------
Total operating expenses 1,220,197 682,191
------------ ------------
Income (loss) from operations 84,230 (501,970)
Interest expense - net 7,672 19,152
------------ ------------
Net income (loss) 76,558 (521,122)
Preferred dividend 36,505 36,505
------------ ------------
Net income (loss) available to common stockholders $ 40,053 $ (557,627)
============ ============
Net income (loss) per share
Basic and diluted $ 0.00 $ (0.04)
Weighted average number of shares used in
computing earnings per share
Basic and diluted 26,350,248 15,251,426
See accompanying notes to financial statements.
5
ICAD, INC.
Consolidated Statements of Cash Flows
Three Months Three Months
March 31, 2003 March 31, 2002
-------------- --------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income (loss) $ 76,558 $ (521,122)
----------- -----------
Adjustments to reconcile net loss
to net cash used for operating activities:
Depreciation 27,354 40,519
Amortization 90,616 31,426
Changes in operating assets and liabilities:
Accounts receivable (72,072) 380,222
Inventory 102,623 (126,342)
Other current assets (4,992) (19,051)
Accounts payable (94,468) 188,912
Accrued expenses (418,681) 2,652
----------- -----------
Total adjustments (369,620) 498,338
----------- -----------
Net cash used for operating activities (293,062) (22,784)
----------- -----------
Cash flows from investing activities:
Additions to patents, software development and other -- (30,040)
Additions to property and equipment (69,943) (37,820)
----------- -----------
Net cash used for investing activities (69,943) (67,860)
----------- -----------
Cash flows from financing activities:
Issuance of common stock for cash -- 47,013
Proceeds of convertible note payable to principal
stockholders -- 500,000
Payment of demand note payable to principal
stockholders -- (500,000)
Payment of note payable (15,955) (14,880)
----------- -----------
Net cash provided by (used for) financing activities (15,955) 32,133
----------- -----------
Decrease in cash and equivalents (378,960) (58,511)
Cash and equivalents, beginning of period 1,091,029 495,360
----------- -----------
Cash and equivalents, end of period $ 712,069 $ 436,849
=========== ===========
Non-cash items from investing and financing activities:
Conversion of loan to related party into
Common Stock $ -- $ 500,000
=========== ===========
Accrued dividends on convertible preferred stock $ 36,505 $ 36,505
=========== ===========
Accrual of deferred merger costs $ -- $ 95,466
=========== ===========
See accompanying notes to financial statements.
6
ICAD, INC.
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2003
(1) Accounting Policies
In the opinion of management all adjustments and accruals (consisting only
of normal recurring adjustments), which are necessary for a fair
presentation of operating results are reflected in the accompanying
consolidated financial statements. Reference should be made to iCAD Inc.'s
("iCAD" or "Company") Annual Report on Form 10-K for the year ended
December 31, 2002 for a summary of significant accounting policies.
Interim period amounts are not necessarily indicative of the results of
operations for the full fiscal year.
(2) Loan Payable to Related Party
The Company has a Revolving Loan and Security Agreement (the "Loan
Agreement") with Mr. Robert Howard, Chairman of the Board of Directors of
the Company, under which Mr. Howard has agreed to advance funds, or to
provide guarantees of advances made by third parties in an amount up to
$3,000,000. Outstanding advances are collateralized by substantially all
of the assets of the Company and bear interest at prime interest rate plus
2%. Mr. Howard is entitled to convert outstanding advances made by him
under the Loan Agreement into shares of the Company's common stock at any
time based on the outstanding closing market price of the Company's common
stock at the lesser of the market price at the time each advance is made
or at the time of conversion. At March 31, 2003, $200,000 was outstanding
under the Loan Agreement and $2,800,000 was available for future
borrowings.
(3) Litigation
The Company has been dismissed from a complaint filed against the Company
in the United States District Court for the Eastern District of Texas,
entitled The Massachusetts Institute of Technology and Electronics for
Imaging, Inc. v. Abacus Software Inc. et al., Case No. 501CV344, The
plaintiff claimed initially that the Company had infringed a United States
patent alleged to cover color reproduction system technology through sale
of certain Company products to customers in the graphic arts/prepress and
photographic markets. The Company has no liability in this matter, and
anticipates no further legal expenses will be incurred with respect to
this litigation. As a result, general and administrative expenses incurred
during the first quarter of 2003 were reduced by the reversal of the
accrued settlement cost in the amount of $383,000.
7
ICAD, INC.
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2003
(3) Litigation (continued)
On June 3, 2002, Intelligent Systems Software, Inc. ("ISSI") was sued in
United States District Court for the District of Delaware by R2
Technology, Inc. and Shih-Ping Wang. The lawsuit alleges that ISSI's
MammoReader device infringes certain patents owned by R2 Technology, Inc.
The complaint requests treble damages, but does not specify the amount of
damages sought. The complaint also seeks to enjoin ISSI from further
infringement. On July 11, 2002, subsequent to the acquisition of ISSI by
the Company, the plaintiffs amended their complaint to add the Company and
its subsidiary ISSI Acquisition Corp. as additional parties. The Company
believes the lawsuit is without merit and intends to vigorously defend
itself. The Company filed an initial answer to the lawsuit, denying all
claims and asserting a counterclaim challenging the validity of the
patents in question.
In patent litigation of this type, each party proposes "constructions" or
meanings for disputed terms of the patents-in-suit and the Court
"construes" or decides the meaning of the terms in dispute. R2 Technology,
Inc. had proposed a set of generally broad definitions to the Court, while
the Company proposed more narrow constructions drawn directly, in its
view, from the patent specifications and prosecution histories. Following
briefing and a hearing, the Court entered an order on April 30, 2003,
adopting R2 Technology, Inc.'s constructions. The Company believes the
constructions adopted by the Court could provide advantages and
disadvantages to each party on the issues of infringement and invalidity
as the litigation proceeds. A jury trial has been scheduled for October of
2003.
(4) Stock-Based Compensation
At March 31, 2003, the Company continued to account for its stock-based
compensation plans using the fair value method. The Company accounts for
its stock based compensation plans in accordance with the provisions of
APB Opinion 25, "Accounting for Stock Issued to Employees," and comply
with the disclosure provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation," and SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure". Under APB Opinion 25, when the
exercise price of the Company's employee stock options equals the market
price of the exercise price of the underlying stock on the date of grant,
no compensation cost is recognized.
The Company estimates the fair value of each granting of options at the
grant date using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 2003: no dividends paid;
expected volatility of 80.2%; risk-free interest rate of 2.91% and
expected live of 5 years. The weighted-average assumptions used for grants
in 2002 were: no dividends paid; expected volatility of 78.5%; risk-free
interest rate of 2.01% and expected live of 1 year.
8
ICAD, INC.
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2003
(4) Stock-Based Compensation (continued)
Had compensation cost for the Company's option plans been determined using
the fair value method at the grant dates, the effect on the Company's net
income (loss) and income (loss) per share for the three month periods
ended March 31, 2003 and 2002 would have been as follows:
For the Three Months Ended March 31,
------------------------------------
2003 2002
---------- ----------
Net income (loss) available to
common stockholders as reported $ 40,053 $ (557,627)
Deduct: Total stock-based
employee compensation
determined under fair value
method for all awards, net
of related tax effects (69,623) (40,772)
---------- ----------
Pro forma net loss available to
common stockholders $ (29,570) $ (598,399)
---------- ----------
Basic and diluted loss per share
As reported $ .00 $ (.04)
---------- ----------
Pro forma $ .00 $ (.04)
---------- ----------
9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Certain information included in this Item 2 and elsewhere in this Form
10-Q that are not historical facts contain forward looking statements that
involve a number of known and unknown risks, uncertainties and other factors
that could cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievement
expressed or implied by such forward looking statements. These risks and
uncertainties include, but are not limited to, uncertainty of future sales
levels, protection of patents and other proprietary rights, the impact of supply
and manufacturing constraints or difficulties, product market acceptance,
possible technological obsolescence of products, increased competition,
litigation and/or government regulation, changes in Medicare reimbursement
policies, competitive factors, the effects of a decline in the economy in
markets served by the Company and other risks detailed in the Company's other
filings with the Securities and Exchange Commission. The words "believe",
"demonstrate", "intend", "expect", "estimate", "anticipate", "likely", "seek"
and similar expressions identify forward-looking statements. Readers are
cautioned not to place undue reliance on those forward-looking statements, which
speak only as of the date the statement was made.
Results of Operations
Overview
On June 28, 2002, the Company completed the acquisition of ISSI pursuant to a
previously reported plan and agreement of merger. The Company acquired all of
the issued and outstanding capital stock of ISSI, a privately held company based
in Boca Raton, Florida. Consistent with the Company's intention to concentrate
its efforts after the merger in the imaging and scanning business on higher
margin medical and Computer Aided Detection (CAD) applications, the Company has
discontinued sales of its graphic arts and photographic product lines.
Early detection of breast cancer saves lives. The Company designs, develops,
manufactures and markets CAD imaging technology for mammography applications.
Computer-aided detection from iCAD, Inc. can detect 23% of breast cancers, an
average of 14 months earlier than screening mammography alone. iCAD offers the
fastest CAD system available, the only system to look for asymmetries, and the
most effective system available to detect breast masses.
The iCAD system is the only CAD system designed on a relational database
platform, which can improve productivity and reduce operating and capital costs
at women's health centers by offering computer-assisted detection as an
integrated or integration-ready part of current or anticipated informatics
systems, digital imaging resources, and workflows.
iCAD, the only vertically integrated company in its market, also manufactures
medical film digitizers for a variety of medical imaging and other applications.
The Company's CAD systems
10
include proprietary software technology and a radiographic film digitizer
manufactured by the Company, together with standard computer and display
equipment.
Critical Accounting Policies
The Company's critical accounting policies are set forth in its Annual Report on
Form 10-K for the fiscal year ended December 31, 2002.
Quarter Ended March 31, 2003 compared to Quarter Ended March 31, 2002
Sales. Sales of the Company's CAD and medical imaging products for the three
months ended March 31, 2003 were $2,214,012, compared with sales of medical
imaging products and total sales for the quarter ended March 31, 2002 of
$425,899 and $775,633, respectively. This reflects an increase of 420% in
medical sales and 185% in total sales from period to period. Sales increased
during the first quarter of 2003 as a result of the addition of its CAD product
line. Sales of graphic arts and photographic products were $349,734 for the
quarter ended March 31, 2002. There were no sales of the Company's graphic arts
and photographic products during the first quarter of 2003 due to the exiting
from these products lines in fiscal 2002.
Gross Margins. Gross margin increased in the three months ended March 31, 2003
to 59% compared to 23% in the comparable period in 2002. The increase in gross
margin is due primarily to sales of the Company's CAD and medical imaging
products, which have higher gross margins than the sales of products in the
Company's previous product lines.
Engineering and Product Development. Engineering and product development costs
for the three months ended March 31, 2003 increased from $189,756 in 2002 to
$584,253 in 2003. The increase in engineering and product development costs
results primarily from the Company's addition, as a result of its acquisition of
ISSI, of a software technology development group to support its Computer Aided
Detection products. Additionally, the Company continues its development of its
new Fulcrum(TM) medical film digitizer product. The Company expects engineering
and product development costs to increase for the remainder of 2003 over the
comparable period of 2002.
General and Administrative. General and administrative expenses in the three
months ended March 31, 2003 increased from $225,355 in 2002 to $396,232 in 2003.
The increase in general and administrative expenses results primarily from
increases in salaries, consulting fees, provision of doubtful accounts and
relocation expenses. Additionally, the Company incurred approximately $380,000
in legal expenses during the first three months of 2003 in connection with the
Company's litigation with R2 Technology, Inc. General and administrative
expenses were offset by the reversal of the accrued settlement cost of $383,000
in connection with the dismissal of the Company as a defendant in the action
brought by the Company by The Massachusetts Institute of Technology and
Electronics for Imaging, Inc. The Company believes that its general and
administrative expenses will increase in the second quarter of 2003 as a result
of continuing legal expenses associated with the R2 Technology litigation. See
Part II, Item 1 - Legal Proceedings.
11
Marketing and Sales Expenses. Marketing and sales expenses for the three months
ended March 31, 2003 decreased from $267,080 in 2002 to $239,712 in 2003. This
decrease is due primarily to the reduction of personnel and trade show expenses
related to the Company's traditional graphic arts and FotoFunnel lines due to
the termination of sales of these products in fiscal 2002. The Company expects
marketing and sales expenses to increase over the remainder of 2003 over the
comparable period of 2002, as we add staff to develop a more comprehensive
internal sales support structure, including inside and outside sales staff, to
support our distributor's sales activities.
Interest Expense. Net interest expense for the three months ended March 31, 2003
decreased 60%, from $19,152 in 2002 to $7,672 in 2003. This decrease is due
primarily to a decrease in loan balances and interest rates.
As a result of the foregoing, the Company recorded net income of $76,558 for the
three month period ended March 31, 2003 on sales of $2,214,012 compared to a net
loss of ($521,122) for the comparable period in 2002 on sales of $775,633.
Liquidity and Capital Resources
The Company's ability to generate cash adequate to meet its requirements depends
primarily on operating cash flow and the availability of a $3,000,000 credit
line under the Loan Agreement with its Chairman, Mr. Robert Howard, of which
$2,800,000 was available at March 31, 2003.
At March 31, 2003 the Company had current assets of $2,712,146, current
liabilities of $3,838,201 and working capital deficit of $1,126,055. The ratio
of current assets to current liabilities was .7:1
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
a) Evaluation of Disclosure Controls and Procedures
Based upon an evaluation conducted by the Company's Chief Executive Officer and
Chief Financial Officer of the Company's disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of
1934) as of a date within 90 days of the filing date of this Quarterly Report on
Form 10-Q, the Chief Executive Officer and Chief Financial Officer have
concluded that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed in the reports that the Company
files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities Exchange Commission's rules and forms.
b) Changes in internal controls
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their most recent evaluation.
12
PART II OTHER INFORMATION
Item 1. Legal Proceedings
In April, 2003 the Company was dismissed as a defendant in the action filed
against the Company and others in the United States District Court for the
Eastern District of Texas, entitled The Massachusetts Institute of Technology
and Electronics for Imaging, Inc. v. Abacus Software Inc. et al., Case No.
501CV344, The plaintiff claimed initially that the Company had infringed a
United States patent alleged to cover color reproduction system technology
through sale of certain Company products to customers in the graphic
arts/prepress and photographic markets. The Company has no liability in this
matter, and anticipates no further legal expenses will be incurred with respect
to this litigation.
On June 3, 2002, ISSI was sued in United States District Court for the District
of Delaware by R2 Technology, Inc. and Shih-Ping Wang. The lawsuit alleges that
ISSI's MammoReader device infringes certain patents owned by R2 Technology, Inc.
The complaint requests treble damages, but does not specify the amount of
damages sought. The complaint also seeks to enjoin ISSI from further
infringement. On July 11, 2002, subsequent to the acquisition of ISSI by the
Company, the plaintiffs amended their complaint to add the Company and its
subsidiary ISSI Acquisition Corp. as additional parties. The Company believes
the lawsuit is without merit and intends to vigorously defend itself. The
Company filed an initial answer to the lawsuit, denying all claims and asserting
a counterclaim challenging the validity of the patents in question.
In patent litigation of this type, each party proposes "constructions" or
meanings for disputed terms of the patents-in-suit and the Court "construes" or
decides the meaning of the terms in dispute. R2 Technology, Inc. had proposed a
set of generally broad definitions to the Court, while the Company proposed more
narrow constructions drawn directly, in its view, from the patent specifications
and prosecution histories. Following briefing and a hearing, the Court entered
an order on April 30, 2003, adopting R2 Technology, Inc.'s constructions. The
Company believes the constructions adopted by the Court could provide advantages
and disadvantages to each party on the issues of infringement and invalidity as
the litigation proceeds. A jury trial has been scheduled for October of 2003.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
- ----------- -----------
99.1 Certification of Chief Executive Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
(b) No reports on Form 8-K were filed during the quarter ended March 31,
2003.
13
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
iCAD, Inc.
---------------------------------
(Registrant)
Date: May 15, 2003 By: /s/ W. Scott Parr
---------------------------------
W. Scott Parr
Chief Executive Officer,
Director
Date: May 15, 2003 By: /s/ Annette L. Heroux
---------------------------------
Annette L. Heroux
Chief Financial Officer, Controller
14
CERTIFICATION
I, W. Scott Parr, certify that:
1. I have reviewed this quarterly report on Form 10-Q of iCAD, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 15, 2003 By: /s/ W. Scott Parr
---------------------------------
W. Scott Parr
Chief Executive Officer
15
CERTIFICATION
I, Annette L. Heroux, certify that:
1. I have reviewed this quarterly report on Form 10-Q of iCAD, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 15, 2003 By: /s/ Annette L. Heroux
---------------------------------
Annette L. Heroux
Chief Financial Officer
16