☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2021SeptemberJune 30, 2017☐
98 Spit Brook Road, Suite 100, Nashua, NH | 03062 | |
(Address of principal executive offices) | (Zip Code) |
and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulationand post such files). YES ☒ NO ☐.Large Accelerated filer ☐ Accelerated filer ☐ ☐ (do not check if a smaller reporting company)☒ Smaller reporting company ☒ Emerging growth company ☐
Page | ||||||
PART I | FINANCIAL INFORMATION | |||||
Item 1 | Financial Statements (unaudited) | |||||
3 | ||||||
4 | ||||||
5 | ||||||
8 | ||||||
Item 2 | ||||||
Item 3 | 41 | |||||
Item 4 | 41 | |||||
PART II | 42 | |||||
Item | 42 | |||||
Item 1A | ||||||
43 | ||||||
Item | ||||||
45 |
(Unaudited)
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 11,261 | $ | 8,585 | ||||
Trade accounts receivable, net of allowance for doubtful accounts of $209 in 2017 and $172 in 2016 | 7,189 | 5,189 | ||||||
Inventory, net | 3,340 | 3,727 | ||||||
Prepaid expenses and other current assets | 949 | 1,128 | ||||||
Assets held for sale | — | 1,304 | ||||||
|
|
|
| |||||
Total current assets | 22,739 | 19,933 | ||||||
|
|
|
| |||||
Property and equipment, net of accumulated depreciation of $7,245 in 2017 and $6,538 in 2016 | 972 | 1,385 | ||||||
Other assets | 53 | 53 | ||||||
Intangible assets, net of accumulated amortization of $7,333 in 2017 and $7,518 in 2016 | 2,055 | 3,183 | ||||||
Goodwill | 10,128 | 14,097 | ||||||
|
|
|
| |||||
Total assets | $ | 35,947 | $ | 38,651 | ||||
|
|
|
| |||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,346 | $ | 1,577 | ||||
Accrued and other expenses | 4,935 | 4,988 | ||||||
Lease payable - current portion | 12 | 86 | ||||||
Notes payable - current portion | 317 | — | ||||||
Liabilities held for sale | — | 832 | ||||||
Deferred revenue | 5,021 | 5,372 | ||||||
|
|
|
| |||||
Total current liabilities | 11,631 | 12,855 | ||||||
|
|
|
| |||||
Other long-term liabilities | 140 | 83 | ||||||
Lease payable, long-term portion | 30 | — | ||||||
Notes payable, long-term portion | 5,612 | — | ||||||
Deferred revenue, long-term portion | 525 | 668 | ||||||
Deferred tax | 12 | 7 | ||||||
|
|
|
| |||||
Total liabilities | 17,950 | 13,613 | ||||||
|
|
|
| |||||
Commitments and Contingencies (Note 6, 7 and 9) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $ .01 par value: authorized 1,000,000 shares; none issued. | — | — | ||||||
Common stock, $ .01 par value: authorized 30,000,000 shares; issued 16,627,705 in 2017 and 16,260,663 in 2016; outstanding 16,441,874 in 2017 and 16,074,832 in 2016 | 167 | 163 | ||||||
Additionalpaid-in capital | 216,875 | 213,899 | ||||||
Accumulated deficit | (197,630 | ) | (187,609 | ) | ||||
Treasury stock at cost, 185,831 shares in 2017 and 2016 | (1,415 | ) | (1,415 | ) | ||||
|
|
|
| |||||
Total stockholders’ equity | 17,997 | 25,038 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 35,947 | $ | 38,651 | ||||
|
|
|
|
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 37,889 | $ | 27,186 | ||||
Trade accounts receivable, net of allowance for doubtful accounts of $104 in 2021 and $111 in 2020 | 11,107 | 10,027 | ||||||
Inventory, net | 2,861 | 3,144 | ||||||
Prepaid expenses and other current assets | 1,742 | 1,945 | ||||||
Total current assets | 53,599 | 42,302 | ||||||
Property and equipment, net of accumulated depreciation of $6,935 in 2021 and $6,778 in 2020 | 921 | 744 | ||||||
Operating lease assets | 1,370 | 1,758 | ||||||
Other assets | 1,532 | 1,527 | ||||||
Intangible assets, net of accumulated amortization of $8,610 in 2021 and $8,494 in 2020 | 777 | 889 | ||||||
Goodwill | 8,362 | 8,362 | ||||||
Total assets | $ | 66,561 | $ | 55,582 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,039 | $ | 2,869 | ||||
Accrued and other expenses | 6,606 | 7,039 | ||||||
Lease payable - current portion | 851 | 726 | ||||||
Deferred revenue | 5,964 | 6,117 | ||||||
Total current liabilities | 14,460 | 16,751 | ||||||
Lease payable, long-term portion | 646 | 1,075 | ||||||
Notes payable, long-term portion | — | 6,960 | ||||||
Deferred revenue, long-term portion | 424 | 267 | ||||||
Deferred tax | 4 | 4 | ||||||
Total liabilities | 15,534 | 25,057 | ||||||
Commitments and Contingencies (Note 7) | 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 30,000,000 shares; issued 25,213,302 as of June 30, 2021 and23,693,735 as of December 31, 2020. | ||||||||
Outstanding 25,027,471 as of June 30, 2021 and 23,508,575 as of December 31, 2020. | 251 | 236 | ||||||
Additional paid-in capital | 299,049 | 273,639 | ||||||
Accumulated deficit | (246,858 | ) | (241,935 | ) | ||||
Treasury stock at cost, 185,831 shares in 2021 and 2020 | (1,415 | ) | (1,415 | ) | ||||
Total stockholders’ equity | 51,027 | 30,525 | ||||||
Total liabilities and stockholders’ equity | $ | 66,561 | $ | 55,582 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue: | ||||||||||||||||
Products | $ | 3,426 | $ | 2,014 | $ | 9,225 | $ | 7,460 | ||||||||
Service and supplies | 3,574 | 3,989 | 10,975 | 11,950 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total revenue | 7,000 | 6,003 | 20,200 | 19,410 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Products | 636 | 236 | 1,349 | 611 | ||||||||||||
Service and supplies | 1,458 | 1,370 | 4,169 | 3,911 | ||||||||||||
Amortization and depreciation | 263 | 296 | 847 | 899 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total cost of revenue | 2,357 | 1,902 | 6,365 | 5,421 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | 4,643 | 4,101 | 13,835 | 13,989 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | 2,254 | 2,360 | 7,060 | 6,835 | ||||||||||||
Marketing and sales | 2,580 | 2,322 | 8,172 | 7,379 | ||||||||||||
General and administrative | 1,944 | 1,783 | 6,067 | 5,586 | ||||||||||||
Amortization and depreciation | 107 | 288 | 345 | 867 | ||||||||||||
Gain on sale of MRI assets | — | — | (2,508 | ) | — | |||||||||||
Goodwill and long-lived asset impairment | 4,700 | — | 4,700 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | 11,585 | 6,753 | 23,836 | 20,667 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Loss from operations | (6,942 | ) | (2,652 | ) | (10,001 | ) | (6,678 | ) | ||||||||
Interest expense | (36 | ) | (15 | ) | (51 | ) | (59 | ) | ||||||||
Other income | 3 | 2 | 3 | 9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other expense, net | (33 | ) | (13 | ) | (48 | ) | (50 | ) | ||||||||
Loss before income tax expense | (6,975 | ) | (2,665 | ) | (10,049 | ) | (6,728 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Tax benefit (expense) | 42 | (10 | ) | 28 | (55 | ) | ||||||||||
Net loss and comprehensive loss | $ | (6,933 | ) | $ | (2,675 | ) | $ | (10,021 | ) | $ | (6,783 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Net loss per share: | ||||||||||||||||
Basic | $ | (0.42 | ) | $ | (0.17 | ) | $ | (0.62 | ) | $ | (0.43 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Diluted | $ | (0.42 | ) | $ | (0.17 | ) | $ | (0.62 | ) | $ | (0.43 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Weighted average number of shares used in computing loss per share: | ||||||||||||||||
Basic | 16,424 | 15,957 | 16,291 | 15,896 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted | 16,424 | 15,957 | 16,291 | 15,896 | ||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenue: | ||||||||||||||||
Products | $ | 4,552 | $ | 2,888 | $ | 10,109 | $ | 6,683 | ||||||||
Service and supplies | 3,274 | 2,679 | 6,361 | 5,435 | ||||||||||||
Total revenue | 7,826 | 5,567 | 16,470 | 12,118 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Products | 1,377 | 537 | 2,786 | 1,554 | ||||||||||||
Service and supplies | 832 | 575 | 1,699 | 1,502 | ||||||||||||
Amortization and depreciation | 79 | 98 | 158 | 195 | ||||||||||||
Total cost of revenue | 2,288 | 1,210 | 4,643 | 3,251 | ||||||||||||
Gross profit | 5,538 | 4,357 | 11,827 | 8,867 | ||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | 2,268 | 1,878 | 4,460 | 4,089 | ||||||||||||
Marketing and sales | 3,429 | 2,631 | 6,853 | 6,239 | ||||||||||||
General and administrative | 2,652 | 2,110 | 4,803 | 4,642 | ||||||||||||
Amortization and depreciation | 60 | 49 | 115 | 101 | ||||||||||||
Total operating expenses | 8,409 | 6,668 | 16,231 | 15,071 | ||||||||||||
Loss from operations | (2,871 | ) | (2,311 | ) | (4,404 | ) | (6,204 | ) | ||||||||
Interest expense | (28 | ) | (115 | ) | (140 | ) | (245 | ) | ||||||||
Other income | 5 | 33 | 7 | 75 | ||||||||||||
Loss on extinguishment of debt | (386 | ) | — | (386 | ) | (341 | ) | |||||||||
Loss on fair value of convertible debentures | — | — | — | (7,464 | ) | |||||||||||
Other expense, net | (409 | ) | (82 | ) | (519 | ) | (7,975 | ) | ||||||||
Loss before income tax expense | (3,280 | ) | (2,393 | ) | (4,923 | ) | (14,179 | ) | ||||||||
Tax expense | — | (5 | ) | — | (31 | ) | ||||||||||
Net loss and comprehensive loss | $ | (3,280 | ) | $ | (2,398 | ) | $ | (4,923 | ) | $ | (14,210 | ) | ||||
Net loss per share: | ||||||||||||||||
Basic | $ | (0.13 | ) | $ | (0.11 | ) | $ | (0.20 | ) | $ | (0.67 | ) | ||||
Diluted | $ | (0.13 | ) | $ | (0.11 | ) | $ | (0.20 | ) | $ | (0.67 | ) | ||||
Weighted average number of shares used in computing loss per share: | ||||||||||||||||
Basic | 24,989 | 22,396 | 24,462 | 21,275 | ||||||||||||
Diluted | 24,989 | 22,396 | 24,462 | 21,275 | ||||||||||||
(unaudited)
For the nine months ended September 30, | ||||||||
2017 | 2016 | |||||||
(in thousands) | ||||||||
Cash flow from operating activities: | ||||||||
Net loss | $ | (10,021 | ) | $ | (6,783 | ) | ||
Adjustments to reconcile net loss to net cash used for by operating activities: | ||||||||
Amortization | 394 | 753 | ||||||
Depreciation | 798 | 1,013 | ||||||
Bad debt provision | 44 | 133 | ||||||
Stock-based compensation expense | 3,073 | 1,648 | ||||||
Amortization of debt discount and debt costs | (6 | ) | (13 | ) | ||||
Interest on settlement obligations | 26 | 69 | ||||||
Deferred tax expense | 6 | — | ||||||
Gain from acquisition litigation settlement | — | (249 | ) | |||||
Goodwill and long-lived asset impairment | 4,700 | — | ||||||
Loss on disposal of assets | 26 | 9 | ||||||
Gain on sale of MRI assets | (2,158 | ) | — | |||||
Changes in operating assets and liabilities (net of the effect of acquisitions): | ||||||||
Accounts receivable | (2,062 | ) | 2,706 | |||||
Inventory | 389 | (82 | ) | |||||
Prepaid and other current assets | 179 | (483 | ) | |||||
Accounts payable | (231 | ) | (281 | ) | ||||
Accrued expenses | (23 | ) | 78 | |||||
Deferred revenue | (699 | ) | (2,380 | ) | ||||
|
|
|
| |||||
Total adjustments | 4,456 | 2,921 | ||||||
|
|
|
| |||||
Net cash used for operating activities | (5,565 | ) | (3,862 | ) | ||||
|
|
|
| |||||
Cash flow from investing activities: | ||||||||
Additions to patents, technology and other | (2 | ) | (8 | ) | ||||
Additions to property and equipment | (362 | ) | (248 | ) | ||||
Acquisition of VuCompM-Vu CAD | — | (6 | ) | |||||
Sale of MRI assets | 2,850 | — | ||||||
|
|
|
| |||||
Net cash provided by (used for) investing activities | 2,486 | (262 | ) | |||||
|
|
|
| |||||
Cash flow from financing activities: | ||||||||
Stock option exercises | 57 | 188 | ||||||
Taxes paid related to restricted stock issuance | (151 | ) | (65 | ) | ||||
Debt issuance costs | (74 | ) | — | |||||
Principal payments of capital lease obligations | (77 | ) | (796 | ) | ||||
Proceeds from debt financing, net | 6,000 | — | ||||||
|
|
|
| |||||
Net cash provided by (used for) financing activities | 5,755 | (673 | ) | |||||
|
|
|
| |||||
Increase (decrease) in cash and equivalents | 2,676 | (4,797 | ) | |||||
Cash and equivalents, beginning of period | 8,585 | 15,280 | ||||||
|
|
|
| |||||
Cash and equivalents, end of period | $ | 11,261 | $ | 10,483 | ||||
|
|
|
| |||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | 14 | $ | 63 | ||||
|
|
|
| |||||
Taxes paid | $ | 52 | $ | 65 | ||||
|
|
|
| |||||
Escrow due from MRI asset sale | $ | 350 | $ | — | ||||
|
|
|
| |||||
Equipment purchased under capital lease | $ | 42 | $ | — | ||||
|
|
|
|
For the Six Months ended | ||||||||
June 30, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Cash flow from operating activities: | ||||||||
Net loss | $ | (4,923 | ) | $ | (14,210 | ) | ||
Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
Amortization | 157 | 154 | ||||||
Depreciation | 115 | 142 | ||||||
Bad debt provision | (3 | ) | 119 | |||||
Stock-based compensation | 1,446 | 2,077 | ||||||
Amortization of debt discount and debt costs | 17 | 53 | ||||||
Loss on extinguishment of debt | 386 | 341 | ||||||
Deferred tax expense | — | 1 | ||||||
Change in fair value of convertible debentures | — | 7,464 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (924 | ) | 3,201 | |||||
Inventory | 284 | (737 | ) | |||||
Prepaid and other assets | 510 | (19 | ) | |||||
Accounts payable | (1,829 | ) | (569 | ) | ||||
Accrued expenses | (736 | ) | (1,650 | ) | ||||
Deferred revenue | (77 | ) | 60 | |||||
Total adjustments | (654 | ) | 10,637 | |||||
Net cash used for operating activities | (5,577 | ) | (3,573 | ) | ||||
Cash flow from investing activities: | ||||||||
Additions to patents, technology and other | — | (6 | ) | |||||
Additions to property and equipment | (336 | ) | (180 | ) | ||||
Net cash used for investing activities | (336 | ) | (186 | ) | ||||
Cash flow from financing activities: | ||||||||
Issuance of common stock pursuant to stock option plans | 636 | 100 | ||||||
Issuance of common stock pursuant to Employee Stock Purchase Plan | 114 | — | ||||||
Proceeds from issuance of common stock, net | 23,229 | 12,289 | ||||||
Principal repayment of debt financing | (7,363 | ) | (4,638 | ) | ||||
Repayment on line of credit | — | (2,000 | ) | |||||
Proceeds from notes payable | — | 6,957 | ||||||
Debt issuance costs | — | (37 | ) | |||||
Net cash provided by financing activities | 16,616 | 12,671 | ||||||
Increase in cash and equivalents | 10,703 | 8,912 | ||||||
Cash and cash equivalents, beginning of period | 27,186 | 15,313 | ||||||
Cash and cash equivalents, end of period | $ | 37,889 | $ | 24,225 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | 92 | $ | 127 | ||||
Taxes paid | $ | — | $ | 31 | ||||
Issuance of common stock upon conversion of debentures | — | 21,164 | ||||||
Right-of-use | $ | — | $ | 69 | ||||
iCAD, INC. AND SUBSIDIARIES
Common Stock | Additional | |||||||||||||||||||||||
Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
Shares Issued | Par Value | Capital | Deficit | Stock | 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 | 29,166 | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock, net | 1,393,738 | 14 | 23,215 | — | — | 23,229 | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans | 83,748 | 1 | 635 | — | — | 636 | ||||||||||||||||||
Issuance of common stock pursuant Employee Stock Purchase Plan | 12,244 | — | 114 | — | — | 114 | ||||||||||||||||||
Stock-based compensation | — | — | 1,446 | — | — | 1,446 | ||||||||||||||||||
Net loss | — | — | — | (4,923 | ) | — | (4,923 | ) | ||||||||||||||||
Balance at June 30, 2021 | 25,213,302 | $ | 251 | $ | 299,049 | $ | (246,858 | ) | $ | (1,415 | ) | $ | 51,027 | |||||||||||
Common Stock | Additional | |||||||||||||||||||||||
Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
Balance at March 31, 2021 | 25,143,432 | 251 | 298,106 | (243,578 | ) | (1,415 | ) | $ | 53,364 | |||||||||||||||
Issuance of common stock relative to vesting of restricted stock | 9,166 | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock, net | 54,814 | — | 365 | — | — | 365 | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans | — | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock pursuant Employee Stock Purchase Plan | 5,890 | — | 67 | — | — | 67 | ||||||||||||||||||
Stock-based compensation | — | — | 511 | — | — | 511 | ||||||||||||||||||
Net loss | — | — | — | (3,280 | ) | — | (3,280 | ) | ||||||||||||||||
Balance at June 30, 2021 | 25,213,302 | $ | 251 | $299,049 | $ | (246,858 | ) | $ | (1,415 | ) | $ | 51,027 | ||||||||||||
Common Stock | ||||||||||||||||||||||||
Number of Shares Issued | Par Value | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Stockholders’ Equity | |||||||||||||||||||
Balance December 31, 2019 | $ | 19,546,151 | 196 | $ | 230,615 | $ | (224,325 | ) | $ | (1,415 | ) | $ | 5,071 | |||||||||||
Issuance of common stock relative to vesting of restricted stock | 68,724 | — | (131 | ) | — | — | (131 | ) | ||||||||||||||||
Issuance of common stock pursuant to stock option plans | 44,966 | 1 | 231 | — | 232 | |||||||||||||||||||
Stock Issuance Net | 1,562,500 | 16 | 12,158 | — | — | 12,174 | ||||||||||||||||||
ESPP Issuance | 18,465 | — | 115 | — | — | 115 | ||||||||||||||||||
Issuance of stock upon conversion of Debentures | 1,819,466 | 18 | 21,146 | — | — | 21,164 | ||||||||||||||||||
Stock-based compensation | — | — | 2,077 | — | — | 2,077 | ||||||||||||||||||
Net loss | — | — | — | (14,210 | ) | — | (14,210 | ) | ||||||||||||||||
Balance at June 30, 2020 | $ | 23,060,272 | $ | 231 | $ | 266,211 | $ | (238,535 | ) | $ | (1,415 | ) | $ | 26,492 | ||||||||||
Common Stock | Additional Paid-in Capital | |||||||||||||||||||||||
Number of Shares Issued | Par Value | Accumulated Deficit | Treasury Stock | Stockholders’ Equity | ||||||||||||||||||||
Balance at March 31, 2020 | 21,425,916 | $ | 215 | $ | 252,420 | $ | (236,137 | ) | $ | (1,415 | ) | $ | 15,083 | |||||||||||
Issuance of common stock relative to vesting of restricted stock | 45,224 | — | (131 | ) | — | — | (131 | ) | ||||||||||||||||
Issuance of common stock pursuant to stock option plans | 8,167 | — | 36 | — | — | 36 | ||||||||||||||||||
Stock Issuance Net | 1,562,500 | 16 | 12,158 | — | — | 12,174 | ||||||||||||||||||
ESPP Issuance | 18,465 | 115 | — | — | 115 | |||||||||||||||||||
Stock-based compensation | — | — | 1,613 | — | — | 1,613 | ||||||||||||||||||
Net loss | — | — | — | (2,398 | ) | — | (2,398 | ) | ||||||||||||||||
Balance at June 30, 2020 | 23,060,272 | $ | 231 | $ | 266,211 | $ | (238,535 | ) | $ | (1,415 | ) | $ | 26,492 | |||||||||||
(Unaudited)
September 30, 2017
Revenue Recognition
quarter ending June 30, 2021 reflect a negative impact from the
Three months ended June 30, 2021 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 3,164 | $ | 2,119 | $ | 5,283 | ||||||
Service contracts | 1,625 | 371 | 1,996 | |||||||||
Supply and source usage agreements | — | 529 | 529 | |||||||||
Professional services | — | 18 | 18 | |||||||||
Other | — | — | �� | — | ||||||||
$ | 4,789 | $ | 3,037 | $ | 7,826 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 3,164 | $ | 2,136 | $ | 5,300 | ||||||
Services transferred over time | 1,625 | 901 | 2,526 | |||||||||
$ | 4,789 | $ | 3,037 | $ | 7,826 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 3,188 | $ | 1,252 | $ | 4,440 | ||||||
OEM partners | 1,601 | — | 1,601 | |||||||||
Channel partners | — | 1,785 | 1,785 | |||||||||
$ | 4,789 | $ | 3,037 | $ | 7,826 | |||||||
Six months ended June 30, 2021 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 7,325 | $ | 4,222 | $ | 11,547 | ||||||
Service contracts | 3,183 | 711 | 3,894 | |||||||||
Supply and source usage agreements | — | 1,010 | 1,010 | |||||||||
Professional services | — | 19 | 19 | |||||||||
Other | — | — | — | |||||||||
$ | 10,508 | $ | 5,962 | $ | 16,470 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 7,325 | $ | 4,240 | $ | 11,565 | ||||||
Services transferred over time | 3,183 | 1,722 | 4,905 | |||||||||
$ | 10,508 | $ | 5,962 | $ | 16,470 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 7,063 | $ | 1,926 | $ | 8,989 | ||||||
OEM partners | 3,445 | — | 3,445 | |||||||||
Channel partners | — | 4,036 | 4,036 | |||||||||
$ | 10,508 | $ | 5,962 | $ | 16,470 | |||||||
Three months ended June 30, 2020 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 2,702 | $ | 575 | $ | 3,277 | ||||||
Service contracts | 1,403 | 385 | 1,788 | |||||||||
Supply and source usage agreements | — | 490 | 490 | |||||||||
Professional services | — | — | — | |||||||||
Other | 12 | — | 12 | |||||||||
$ | 4,117 | $ | 1,450 | $ | 5,567 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 2,714 | $ | 605 | $ | 3,319 | ||||||
Services transferred over time | 1,403 | 845 | 2,248 | |||||||||
$ | 4,117 | $ | 1,450 | $ | 5,567 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 2,709 | $ | 805 | $ | 3,514 | ||||||
OEM partners | 1,408 | — | 1,408 | |||||||||
Channel partners | — | 645 | 645 | |||||||||
$ | 4,117 | $ | 1,450 | $ | 5,567 | |||||||
Six months ended June 30, 2020 | ||||||||||||
Reportable Segments | ||||||||||||
Detection | Therapy | Total | ||||||||||
Major Goods/Service Lines | ||||||||||||
Products | $ | 5,802 | $ | 1,921 | $ | 7,723 | ||||||
Service contracts | 2,750 | 732 | 3,482 | |||||||||
Supply and source usage agreements | — | 861 | 861 | |||||||||
Professional services | — | 11 | 11 | |||||||||
Other | 41 | — | 41 | |||||||||
$ | 8,593 | $ | 3,525 | $ | 12,118 | |||||||
Timing of Revenue Recognition | ||||||||||||
Goods transferred at a point in time | $ | 5,843 | $ | 1,988 | $ | 7,831 | ||||||
Services transferred over time | 2,750 | 1,537 | 4,287 | |||||||||
$ | 8,593 | $ | 3,525 | $ | 12,118 | |||||||
Sales Channels | ||||||||||||
Direct sales force | $ | 4,881 | $ | 2,274 | $ | 7,155 | ||||||
OEM partners | 3,712 | — | 3,712 | |||||||||
Channel partners | — | 1,251 | 1,251 | |||||||||
$ | 8,593 | $ | 3,525 | $ | 12,118 | |||||||
typically shipped with a cancer therapy system. The Company transfers control and generally recognizes revenuea sale when the product is shipped 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”) UpdateNo. 2009-13, “Multiple-Deliverable Revenue Arrangements” (“ASU2009-13”) and ASC UpdateNo. 2009-14, “Certain Arrangements That Contain Software Elements” (“ASU2009-14”) and ASC985-605, “Software” (“ASC985-605”). Revenue from the sale of certain CAD products is
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
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 VSOEmanufacturing 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 obligationswarehousing facility to the customer the customer’s post-delivery acceptance provisions, if any, and the installation process.
unless an individual contract states otherwise.
Revenue from certain CAD products is recognized in accordance with ASC985-605. Sales of these products include training, and the Company has established VSOE for this element. 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.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
The Company recognizes post contract customer support revenue together with the initial licensing fee for certain MRI products in accordance with ASC985-605-25-71. In January 2017 the Company sold certain MRI assets to Invivo.
Sales of the Company’s Therapy segment products typically include a controller, accessories, source agreements and services.Company. The Company allocates revenue to the deliverables in the arrangementeach performance obligation based on the BESP in accordanceStandalone Selling Price (“SSP”). Revenue for lease and
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 Topic605-20, “Services”.over the term of the agreement.
Balance at | Balance at | |||||||
June 30, 2021 | December 31, 2020 | |||||||
Receivables, which are included in ‘Trade accounts receivable’ | $ | 11,107 | $ | 10,027 | ||||
Current contract assets, which are included in “Prepaid and other assets” | 742 | 481 | ||||||
Non-current contract assets, which are included in “other assets” | 1,478 | 1,434 | ||||||
Contract liabilities, which are included in “Deferred revenue” | 6,388 | 6,384 |
Costeach annual service period.
Costallowance for doubtful accounts, was $
Contract liabilities | June 30, 2021 | December 31, 2020 | ||||||
Short term | $ | 5,964 | $ | 6,117 | ||||
Long term | 424 | 267 | ||||||
Total | $ | 6,388 | $ | 6,384 | ||||
Six Months Ended June 30, 2021 | ||||
Balance at beginning of period | $ | 6,384 | ||
Deferral of revenue | 6,393 | |||
Recognition of deferred revenue | (6,389 | ) | ||
Balance at end of period | $ | 6,388 | ||
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
2023 through 2025.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net loss | $ | (6,933 | ) | $ | (2,675 | ) | $ | (10,021 | ) | $ | (6,783 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Shares used in the calculation of basic and diluted net loss per share | 16,424 | 15,957 | 16,291 | 15,896 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options | — | — | — | — | ||||||||||||
Restricted stock | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted shares used in the calculation of net loss per share | 16,424 | 15,957 | 16,291 | 15,896 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loss per share - basic and diluted | $ | (0.42 | ) | $ | (0.17 | ) | $ | (0.62 | ) | $ | (0.43 | ) | ||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net loss | $ | (3,280 | ) | $ | (2,398 | ) | $ | (4,923 | ) | $ | (14,210 | ) | ||||
Shares used in the calculation of basic and diluted net loss per share | 24,989 | 22,396 | 24,462 | 21,275 | ||||||||||||
Diluted shares used in the calculation of net loss per share | 24,989 | 22,396 | 24,462 | 21,275 | ||||||||||||
Net loss per share - basic and diluted | $ | (0.13 | ) | $ | (0.11 | ) | $ | (0.20 | ) | $ | (0.67 | ) | ||||
Period Ended | ||||||||
September 30, | ||||||||
2017 | 2016 | |||||||
Stock options | 1,426,513 | 1,569,166 | ||||||
Restricted stock | 507,147 | 392,148 | ||||||
|
|
|
| |||||
Stock options and restricted stock | 1,933,660 | 1,961,314 | ||||||
|
|
|
|
As of June 30, | ||||||||
2021 | 2020 | |||||||
Stock options | 2,176,607 | 2,006,221 | ||||||
Restricted stock | 21,613 | 70,992 | ||||||
Total | 2,198,220 | 2,077,213 | ||||||
Acquisition– Inventory
On January 13, 2016,cost or net realizable value, with cost determined by the
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
The Company acquired VuComp’sM-Vu Breast Density product in April 2015. In connection with the diligence of the January 2016 acquisition, VuComp disclosed that it had previously entered into a license agreement pursuant to which it issued an irrevocable, royalty-free worldwide license to a third party. On December 24, 2015, iCAD notified VuComp of a claim under the April 2015 asset purchase agreement based on the disclosure of the third party license agreement, which iCAD believed constituted a breach of VuComp’s representation as to its exclusive ownershipestimated usage of its intellectual property at the time of the April 2015 transaction. In connection with the purchase of the VuComp cancer detection portfolio, the Company provided a release of the aforementioned claim. The Company determined that this claim was a component of the purchase price. The Company determined the value of litigation settlement as the excess of the fair value of the business acquired over the cash consideration paid. As a result the Company recorded a gain on litigation settlement of $249,000 in general and administrative expenses during the first quarter of 2016, which is a component of the purchase price as noted below:
Amount (000’s) | ||||
Cash | $ | 6 | ||
Acquisition litigation settlement | 249 | |||
|
| |||
Purchase price | $ | 255 | ||
|
|
The amount allocated to the acquired assets was estimated primarily through the use of discounted cash flow valuation techniques. Appraisal assumptions utilized under this method include a forecast of estimated future net cash flows,inventory as well as discounting the future net cash flows to their present value. The following is a summaryother factors. Inventory consisted of the preliminary allocationfollowing (in thousands) and includes an inventory reserve of the total purchase price based on the estimated fair values asapproximately $0.2 million for both periods ended June 30, 2021 and December 31, 2020.
June 30, 2021 | December 31, 2020 | |||||||
Raw materials | $ | 1,518 | $ | 1,538 | ||||
Work in process | 192 | 76 | ||||||
Finished Goods | 1,381 | 1,774 | ||||||
Inventory Gross | 3,091 | 3,388 | ||||||
Inventory Reserve | (230 | ) | (244 | ) | ||||
Inventory Net | $ | 2,861 | $ | 3,144 | ||||
In December 2016, the Company entered into an Asset Purchase– Financing Arrangements
The Company determined the sale constituted the sale of a business in accordance with ASC 805. The Company performed an evaluation to determine if the sale constituted discontinued operations and concluded that the sale did not represent a major strategic shift, and accordingly it was not considered to be discontinued operations. In connection with the transaction, the Company allocated $394,000 of goodwill which was a component of the gain on the sale. The allocation was based on the fair value of the assets sold relative to the fair value of the Detection reporting unit as of the date of the agreement, based on the guidance from ASC350-20-40-3.
The value of the net assets sold is as follows (in thousands):
Assets | ||||
Accounts Receivable | $ | 116 | ||
Intangible assets | 810 | |||
Allocated Goodwill | 394 | |||
|
| |||
Total Assets | $ | 1,320 | ||
|
| |||
Liabilities | ||||
Deferred Revenue | $ | 746 | ||
|
| |||
Total Liabilities | $ | 746 | ||
|
| |||
Net Assets Sold | $ | 574 | ||
|
|
In connection with the sale the Company agreed to provide certain transition services to Invivo. The fair value of the transition services were determined based on the cost to provide plus a reasonable profit margin and have been recognized as revenue over the term of approximately ninety days from the closing date. The Company recorded a gain of $2.5 million as of January 30, 2017. The components of the gain on the sale are as follows (in thousands):
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Gain on Sale | ||||
Cash received | $ | 2,850 | ||
Holdback reserve | 350 | |||
Fair value of transition services | (118 | ) | ||
Net Assets sold | (574 | ) | ||
|
| |||
Total | $ | 2,508 | ||
|
|
Note 5 - Inventory
The components of inventory, net of allowance for obsolete, unmarketable or slow-moving inventories, are summarized as follows (in thousands):
as of September 30, 2017 | as of December 31, 2016 | |||||||
Raw materials | $ | 2,033 | $ | 2,503 | ||||
Work in process | 139 | 75 | ||||||
Finished Goods | 1,168 | 1,149 | ||||||
|
|
|
| |||||
Inventory | $ | 3,340 | $ | 3,727 | ||||
|
|
|
|
Note 6 - Debt financing
On August 7, 20172020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon ValleyWestern Alliance Bank (the “Bank”) that providesprovided an initial term loan facility (the “Term(“Term Loan”) facility of $6.0$7.0 million and a $4.0$5.0 million revolving line of credit (the “Revolving Loan”).credit.
The Term Loan accrues interest at prime rate. The Company will begin repayment on Sept 1, 2018 in 36 equal monthly installments of principal. Subject to meeting the Revenue Milestone, the Company could elect to defer repaymentMoney Rates section of the Term Loan to March 1, 2019 in 30 equal monthly payments.
The outstanding Revolving Advances will accrue interest at a floating per annum rate equal to 1.50% above the prime rate for periods when the ratioWestern Edition of the Company’s unrestricted cash to the Company’s outstanding liabilities to the Bank plus the amountWall Street Journal. The Prime Rate as of the Company’s total liabilities that mature within one year is at least 1.25 to 1.0. At all other times, the interest rate shall be 0.50% above the prime rate. The outstanding Term Loan Advances will accrue interest at a floating per annum rate equal to the prime rate.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
The maturity date of the Revolving Advances and the Term Loan Advances is August 7, 2021. However, the maturity date will become April 30, 2019, AprilJune 30, 2020 or April 30, 2021 if, on or before October 30, 2018, or 2019 or 2020, as applicable, the Company does not agree in writing to the net revenue covenant levels proposed by the Bank with respect to the upcoming applicable calendar year.
If the Revolving Advances are paid in full and the Loan Agreement is terminated prior to the maturity date, then the Company will pay to the Bank a termination fee in an amount equal to two percent (2.0%) of the maximum revolving line of credit. If the Company prepays the Term Loan Advances prior to the maturity date, then the Company will pay to the Bank an amount equal to1.0%-3.0% of the Term Loan Advances, depending on when such Term Loan Advances are repaid. The Loan Agreement requires the Company to maintain net revenues during the trailing six month period ending on the last day of each calendar quarter as follows: June 30, 2017 - $10.25 million; September 30, 2017 - $11.5 million; December 31, 2017 - $14 million; March 31, 2018 - $15 million; June 30, 2018 - $15.25 million; and September 30, 2018 and December 31, 2018 - $15.5 million. As of September 30, 2017 the Company is in compliance with the revenue covenants in the Loan Agreement.
was 3.25%.
the Term Loan.
Input | December 31, 2019 | February 21, 2020 | ||||||
Company’s stock price | $ | 7.77 | $ | 11.64 | ||||
Conversion price | 4.00 | 4.00 | ||||||
Remaining term (years) | 1.97 | 0.00 | ||||||
Equity volatility | 49.00 | % | N/A | |||||
Risk free rate | 1.57 | % | N/A | |||||
1 Probability of default event | 0.45 | % | N/A | |||||
1 Utilization of Forced Conversion (if available) | 100.00 | % | 100.00 | % | ||||
1 Exercise of Default Redemption (if available) | 100.00 | % | N/A | |||||
1 Effective discount rate | 18.52 | % | N/A |
1 | Represents a Level 3 unobservable input, as defined in Note 8 - Fair Value Measurements, below. |
September 30, 2017 | ||||
Short-term | $ | 317 | ||
Long-term | 5,612 | |||
|
| |||
Total | $ | 5,929 | ||
|
|
Interest expense
Convertible Debentures | December 31, 2019 | February 21, 2020 | ||||||
Fair value, in accordance with fair value option | $ | 13,642 | $ | 21,164 | ||||
Principal value outstanding | $ | 6,970 | $ | 6,970 | ||||
September 30, 2017 | ||||
Three months ended | $ | 33 | ||
Nine month ended | 33 |
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Cash interest expense | $ | 26 | $ | 95 | $ | 118 | $ | 138 | ||||||||
Interest on convertible debentures | — | 0 | — | 49 | ||||||||||||
Accrual of notes payable final payment | 2 | 8 | 9 | 39 | ||||||||||||
Amortization of debt costs | — | 12 | 13 | 19 | ||||||||||||
Total interest expense | $ | 28 | $ | 115 | $ | 140 | $ | 245 | ||||||||
Operating leases
Facilities
Future minimum lease payments as of September 30, 2017 under operating leases are as follows: (in thousands)
Fiscal Year | Operating Leases | |||
2017 | $ | 318 | ||
2018 | 738 | |||
2019 | 746 | |||
2020 | 174 | |||
|
| |||
Total | $ | 1,976 | ||
|
|
Capital leases
In August, 2017, the Company assumed an equipment lease obligation with payments totaling $50,000. The leases were determined to be capital leases and accordingly the equipment was capitalized and a liability of $42,000 was recorded. The equipment will be depreciated over the expected life of 3 years. Minimum lease payments2021 are as follows (in thousands):
iCAD, INC. AND SUBSIDIARIES
Notes
Three Months | Six Months | |||||||||
Ended June 30, | Ended June 30, | |||||||||
Lease Cost | Classification | 2021 | 2021 | |||||||
Operating lease cost - Right of Use Asset | Operating expenses | $ | 217 | $ | 434 | |||||
Operating lease cost - Variable | Operating expenses | 7 | $ | 64 | ||||||
Total | $ | 224 | $ | 498 | ||||||
(Unaudited)
September 30, 2017
Fiscal Year | Capital Lease | |||
2017 | 4 | |||
2018 | 16 | |||
2019 | 17 | |||
2020 | 13 | |||
|
| |||
subtotal minimum lease obligation | 50 | |||
less interest | (8 | ) | ||
|
| |||
Total, net | 42 | |||
less current portion | (12 | ) | ||
|
| |||
long term portion | $ | 30 | ||
|
|
In connection with the Radion/DermEbx Acquisition which closed in July 2014, the Company assumed two separate equipment lease obligations with payments totaling approximately $2.6 million through May 2017. The leases were determined to be capital leases and accordingly the equipment was capitalized and a liabilityas follows (in thousands):
Three Months | Six Months | |||||||
Ended June 30, | Ended June 30, | |||||||
2021 | 2021 | |||||||
Cash paid from operating cash flows for operating leases | $ | 233 | $ | 351 |
As of June 30, 2021 | ||||
Weighted-average remaining lease term of operating leases | 1.72 | |||
Weighted-average discount rate for operating leases | 5.6 | % |
As of June 30, 2021: | Operating Leases | |||
2021 | 459 | |||
2022 | 899 | |||
2023 | 211 | |||
2024 | 5 | |||
Total lease payments | 1,574 | |||
Less: imputed interest | (77 | ) | ||
Total lease liabilities | 1,497 | |||
Less: current portion of lease liabilities | (851 | ) | ||
Long-term lease liabilities | $ | 646 | ||
Note 8 -Company.
The Company follows the guidance in ASC Topic 718, “Compensation – Stock Compensation”, (“ASC 718”).
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2017 | 2016 | 2017 | 2016 | |||||
Average risk-free interest rate | 1.56% | 0.84% | 1.52% | 0.87% | ||||
Expected dividend yield | None | None | None | None | ||||
Expected life | 3.5 years | 3.5 years | 3.5 years | 3.5 years | ||||
Expected volatility | 64.2% to 67.0% | 68.6% to 75.3% | 64.2% to 72.0% | 68.6% to 75.3% | ||||
Weighted average exercise price | $4.28 | $5.49 | $4.39 | $5.57 | ||||
Weighted average fair value | $2.02 | $2.67 | $2.12 | $2.71 |
The Company’s stock-based compensation expense, including options and restricted stock by category is as followsvalues (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Cost of revenue | $ | 1 | $ | 1 | 5 | $ | 5 | |||||||||
Engineering and product development | 76 | 82 | 633 | 289 | ||||||||||||
Marketing and sales | 132 | 162 | 854 | 476 | ||||||||||||
General and administrative | 294 | 201 | �� | 1,581 | 878 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 503 | $ | 446 | $ | 3,073 | $ | 1,648 | |||||||||
|
|
|
|
|
|
|
|
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
2021 | 2020 | 2021 | 2020 | |||||
Average risk-free interest rate | N/A | 0.26% | 0.20% | 0.79% | ||||
Expected dividend yield | NaN | NaN | NaN | NaN | ||||
Expected life | 3.5 years | 3.5 years | 3.5 years | 3.5 years | ||||
Expected volatility | N/A | 64.0% to 65.7% | 66.0% to 66.0% | 50.2 to 65.7% | ||||
Weighted average exercise price | N/A | $10.76 | $18.00 | $10.11 | ||||
Weighted average fair value | N/A | $4.96 | $8.37 | $4.34 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Cost of revenue | $ | 2 | $ | 24 | $ | 16 | $ | 24 | ||||||||
Engineering and product development | 58 | 288 | 208 | 343 | ||||||||||||
Marketing and sales | 128 | 490 | 481 | 548 | ||||||||||||
General and administrative | 323 | 811 | 741 | 1,162 | ||||||||||||
$ | 511 | $ | 1,613 | $ | 1,446 | $ | 2,077 | |||||||||
Remaining expense | $ | 2,504 | ||
Weighted average term | 1.1 years |
Remaining expense | $ | 3,113 | ||
Weighted average term | 1.2 |
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Period Ended September 30, | ||||||||
Aggregate intrinsic value | 2017 | 2016 | ||||||
Stock options | $ | 1,050 | $ | 1,748 | ||||
Restricted stock | 2,242 | 2,039 |
As of | ||||||||
June 30, | ||||||||
Aggregate intrinsic value | 2021 | 2020 | ||||||
Stock options | $ | 20,324 | $ | 8,992 | ||||
Restricted stock | 374 | 709 |
Foreign Tax Claim
In July 2007, a dissolved former Canadian subsidiary of the Company, CADx Medical Systems Inc. (“CADx Medical”), received a taxre-assessment of approximately $6,800,000 from the Canada Revenue Agency (“CRA”) resulting from CRA’s audit of CADx Medical’s Canadian federal tax return for the year ended December 31, 2002. In February 2010 the CRA reviewed the matter and reduced the taxre-assessment to approximately $703,000, excluding interest and penalties. The Company believes that it is not liable for there-assessment against CADx Medical and no accrual has been recorded for this matter as of September 30, 2017.
Settlement Obligations
In connection with the acquisition of Xoft in 2010, the Company recorded a royalty obligation pursuant to a settlement agreement entered into between Xoft and Hologic in August 2007. Xoft received a nonexclusive, irrevocable, perpetual, worldwide license, including the right to sublicense certain Hologic patents, and anon-compete covenant as well as an agreement not to seek further damages with respect to the alleged patent violations. In return, the Company had a remaining obligation to pay a minimum annual royalty payment to Hologic, of $250,000 payable through 2016. In addition to the minimum annual royalty payments, the litigation settlement agreement with Hologic also provided for payment of royalties based upon a specified percentage of future net sales on
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
any products that utilize the licensed rights. The Company has a liability within accounts payable and accrued expenses for future payment and for the remaining minimum royalty obligations totaling $448,000 as of September 30, 2017. The Company recorded interest expense of approximately $10,000 and $30,000 in the three and nine months September 30, 2016, respectively, related to this obligation.
In December, 2011, the Company agreed to a settlement related to litigation with Carl Zeiss Meditec AG. In July 2017, the Company paid the remaining $500,000 due and there is no further obligation to Zeiss. The Company recorded interest expense of approximately $0 and $26,000 in the three and nine months ended September 30, 2017, respectively and $13,000 and $39,000 in the three and nine months ended September 30, 2016, respectively related to this obligation.
deliverables and $0.5 million for minimum royalty obligations.
The Company follows the provisions of ASC Topic 820, “Fair Value Measurement and Disclosures”, (“ASC 820”). This topic defines fair value, establishes a framework for measuring fair value under US GAAP and enhances disclosures about fair value measurements.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Our
February 21, 2020 and December 31, 2019.
accounts and Convertible Debentures.
Fair value measurements using: (000’s) as of December 31, 2016 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 6,622 | $ | — | $ | — | $ | 6,622 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 6,622 | $ | — | $ | — | $ | 6,622 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Fair value measurements using: (000’s) as of September 30, 2017 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 10,054 | $ | — | $ | — | $ | 10,054 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 10,054 | $ | — | $ | — | $ | 10,054 | ||||||||
|
|
|
|
|
|
|
|
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Items Measured at Fair Value on a Nonrecurring Basis
Certain assets, including long-lived assets and goodwill, are measured at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be impaired. The Company recorded a $4.7 million impairment in the quarter ended September 30, 2017 which consistedhierarchy (in thousands).
Fair Value Measurements as of December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 27,186 | — | — | $ | 27,186 | ||||||||||
Total Assets | $ | 27,186 | — | — | $ | 27,186 | ||||||||||
Fair Value Measurements (in thousands) as of June 30, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Money market accounts | $ | 37,889 | — | — | $ | 37,889 | ||||||||||
Total Assets | $ | 37,889 | — | — | $ | 37,889 | ||||||||||
Fair value measurements using: (000’s) as of September 30, 2017 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Non-recurring assets | ||||||||||||||||
Long-lived and intangible assets | $ | — | $ | — | $ | 780 | $ | 780 | ||||||||
Goodwill | — | — | 1,766 | 1,766 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | — | $ | — | $ | 2,546 | $ | 2,546 | ||||||||
|
|
|
|
|
|
|
|
Note 119 - Income Taxes
On January 1, 2017, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)No. 2016-09,Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU2016-09”). Under ASU2016-09, excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement, and excess tax benefits are recognized regardless of whether the benefit reduces taxes payable in the current period. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. As a result of the adoption, the net operating loss deferred tax assets increased by $2.1 million and are offset by a corresponding increase in the valuation allowance. 2021.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
income tax returns in various states and local jurisdictions. The Company’s three preceding tax years remain subject to examination by federal and state taxingtax 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.
In accordance with FASB ASC Topic350-20, “Intangibles - Goodwill and Other”, (“ASC350-20”), the
June 30, 2021.
As a result
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
The Company elected to early adopt ASU2017-04, Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment (“ASU2017-04”). ASU2017-04 specifies that goodwill impairment is the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. In accordance with the standard, the fair value of the Therapy reporting unit was $3.5 million and the carrying value was $7.5 million. The deficiency of $4.0 million was recorded as an impairment charge in the quarter ended September 30, 2017.
The carrying values of the reporting units were determined based on an allocation of our assets and liabilities through specific allocation of certain assets and liabilities to the reporting units and an apportionment of the remaining net assets based on the relative size of the reporting units’ revenues and operating expenses compared to the Company as a whole. The determination of reporting units also requires management judgment.
The Company determineddetermines the fair values for each reporting unit using a weighting of the income approach and the market approach. For purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk adjusted rate. The Company useduses internal forecasts to estimate future cash flows and includes an estimateestimates of long-term future growth rates based on theits most recent views of the long-term forecast for each segment. Accordingly, actual results can differ from those assumed in the Company’s forecasts. The discount rate of approximately 18% isDiscount rates are derived from a capital asset pricing model and by analyzing published rates for industries relevant to the Company’s reporting units to estimate the cost of equity financing. The Company uses discount rates that are commensurate with the risks and uncertainty inherent in the respective businesses of its reporting units and in the Company’s internally developed forecasts.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
sensitivities can be developed for alternative future states that may not be reflected in an observable market price. The Company will assess each valuation methodology based upon the relevance and availability of the data at the time the valuation is performed and weightweights the methodologies appropriately.
As
Detection | Therapy | Total | ||||||||||
Balance at December 31, 2016 | 8,362 | 5,735 | 14,097 | |||||||||
|
|
|
|
|
| |||||||
Impairment | — | (3,969 | ) | (3,969 | ) | |||||||
|
|
|
|
|
| |||||||
Balance at September 30, 2017 | $ | 8,362 | $ | 1,766 | $ | 10,128 | ||||||
|
|
|
|
|
| |||||||
Accumulated Goodwill | 699 | 6,270 | 54,906 | |||||||||
Fair value allocation | 7,663 | 13,446 | — | |||||||||
Accumulated impairment | — | (17,950 | ) | (44,778 | ) | |||||||
|
|
|
|
|
| |||||||
Balance at September 30, 2017 | $ | 8,362 | $ | 1,766 | $ | 10,128 | ||||||
|
|
|
|
|
|
Consolidated reporting unit | Detection | Therapy | Total | |||||||||||||
Accumulated Goodwill | $ | 47,937 | $ | — | $ | — | $ | 47,937 | ||||||||
Accumulated impairment | (26,828 | ) | — | — | (26,828 | ) | ||||||||||
Fair value allocation | (21,109 | ) | 7,663 | 13,446 | — | |||||||||||
Acquisition of DermEbx and Radion | — | — | 6,154 | 6,154 | ||||||||||||
Acquisition measurement period adjustments | — | — | 116 | 116 | ||||||||||||
Acquisition of VuComp | — | 1,093 | — | 1,093 | ||||||||||||
Sale of MRI assets | — | (394 | ) | (394 | ) | |||||||||||
Impairment | — | — | (19,716 | ) | (19,716 | ) | ||||||||||
Balance at December 31, 2020 and June 30, 2021 | — | 8,362 | — | 8,362 | ||||||||||||
In accordance with FASB ASC Topic 360, “Property, Plant and Equipment” (“ASC 360”), the
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
ASC360-10-35 uses “events and circumstances” criteria to determine when, if at all, an asset (or asset group) is evaluated for recoverability. Thus, thererecoverability is no set interval or frequency for recoverability evaluation. In accordance with ASC360-10-35-21 thebased on “events and circumstances.” The following factors are examples of events or changes in circumstances that indicate the carrying amount of an asset (asset(or asset group) may not be recoverable and thus is to be evaluated for recoverability.
In accordance with ASC360-10-35-17, if
The Company completed an interim goodwill impairment assessment for the Therapy reporting unit and noted that there was a goodwill impairment (see Note 13). As a result, the Company determined this was a triggering event for long-lived assets. Accordingly, the Company completed an analysis pursuant to ASC360-10-35-17 and determined that the carrying value of the asset group exceeded(or asset group). The Company determined the undiscounted“Asset Group” of the Company to be the assets of the Therapy segment and the Detection segment, which the Company considers to be the lowest level for which the identifiable cash flows and that long-lived assets were impaired. The Company recorded long-lived asset impairment charges of approximately $0.7 million in the third quarter ended September 30, 2017 based on the deficiency between the book valuelargely independent of the cash flows of other assets and the fair value as determined in the analysis. At September 30, 2017, the long lived assets in the asset group are recorded at their current fair values.
liabilities.
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
In accordance with FASB Topic ASC 280, “Segments”, operating
Our
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
Segment revenues, gross profit, segment operating income or loss, and a reconciliation of segment operating income or loss to US GAAP loss before income tax is as follows (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Segment revenues: | ||||||||||||||||
Detection | $ | 4,346 | $ | 4,134 | $ | 13,066 | $ | 12,961 | ||||||||
Therapy | 2,654 | 1,869 | 7,134 | 6,449 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Revenue | $ | 7,000 | $ | 6,003 | $ | 20,200 | $ | 19,410 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Segment gross profit: | ||||||||||||||||
Detection | $ | 3,822 | $ | 3,586 | $ | 11,553 | $ | 11,429 | ||||||||
Therapy | 821 | 515 | 2,282 | 2,560 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Segment gross profit | $ | 4,643 | $ | 4,101 | $ | 13,835 | $ | 13,989 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Segment operating income (loss): | ||||||||||||||||
Detection | 1,475 | 1,250 | 4,261 | 4,494 | ||||||||||||
Therapy | (6,451 | ) | (2,055 | ) | (10,627 | ) | (5,398 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Segment operating income (loss) | $ | (4,976 | ) | $ | (805 | ) | $ | (6,366 | ) | $ | (904 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
General, administrative, depreciation and amortization expense | $ | (1,966 | ) | $ | (1,847 | ) | $ | (6,143 | ) | $ | (5,774 | ) | ||||
Interest expense | (36 | ) | (15 | ) | (51 | ) | (59 | ) | ||||||||
Gain on sale of MRI assets | — | — | 2,508 | — | ||||||||||||
Other income | 3 | 2 | 3 | 9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Loss before income tax | $ | (6,975 | ) | $ | (2,665 | ) | $ | (10,049 | ) | $ | (6,728 | ) | ||||
|
|
|
|
|
|
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Segment revenues: | ||||||||||||||||
Detection | $ | 4,789 | $ | 4,117 | $ | 10,508 | $ | 8,593 | ||||||||
Therapy | 3,037 | 1,450 | 5,962 | 3,525 | ||||||||||||
Total Revenue | $ | 7,826 | $ | 5,567 | $ | 16,470 | $ | 12,118 | ||||||||
Segment gross profit: | ||||||||||||||||
Detection | $ | 4,005 | $ | 3,533 | $ | 8,730 | $ | 7,000 | ||||||||
Therapy | 1,533 | 824 | 3,097 | 1,867 | ||||||||||||
Segment gross profit | $ | 5,538 | $ | 4,357 | $ | 11,827 | $ | 8,867 | ||||||||
Segment operating income (loss): | ||||||||||||||||
Detection | $ | 52 | $ | 201 | $ | 993 | $ | (145 | ) | |||||||
Therapy | (250 | ) | (432 | ) | (562 | ) | (1,438 | ) | ||||||||
Segment operating income (loss) | $ | (198 | ) | $ | (231 | ) | $ | 431 | $ | (1,583 | ) | |||||
General, administrative, depreciation and amortization expense | $ | (2,673 | ) | $ | (2,080 | ) | $ | (4,835 | ) | $ | (4,621 | ) | ||||
Interest expense | (28 | ) | (115 | ) | (140 | ) | (245 | ) | ||||||||
Other income | 5 | 33 | 7 | 75 | ||||||||||||
Loss on extinguishment of debt | (386 | ) | 0 | (386 | ) | (341 | ) | |||||||||
Fair value of convertible debentures | — | — | — | (7,464 | ) | |||||||||||
Loss before income tax | $ | (3,280 | ) | $ | (2,393 | ) | $ | (4,923 | ) | $ | (14,179 | ) | ||||
iCAD, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2017
reflecting the application of the standard in each reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU2014-09 recognized at the date of adoption (which includes additional footnote disclosures).
2021. The Company has performed an assessment of its revenue streams and customer classes. The Company has used this information to develop an implementation plan which it expects to complete duringnotes that the fourth quarter of 2017. The Company does not expect that its revenue recognition will be materially impacted by the new guidance. The Company is also assessing the impact of the guidance on its contract costs in order to determine the magnitude of impact. The Company currently expects to adopt the guidance using the modified retrospective approach, and will finalize this selection along with completion of the implementation plan.
There are also certain considerations related to internal control over financial reporting that are associated with implementing Topic 606. The Company is evaluating its internal control framework over revenue recognition to identify any changes that may need to be made in relation to the implementation process, as well as upon adoption of ASU
In addition, disclosure requirements under the new guidancereclassification of an immaterial amount from income tax expense to
The Company expects to adopt certain practical expedients and make certain policy electionsoperating expenses related to the accounting for significant finance components, salesstate and Franchise taxes, shipping and handling, costswith no impact to obtain a contract and immaterial promised goodsthe Company’s consolidated income, equity or services, which will mitigate certain impacts of adopting Topic 606. The Company also expects to review the tax impact, if any, that Topic 606 will have on the financial statements.
cash flows.
iCAD, INC. AND SUBSIDIARIES
NotesConvertible Instruments and Contracts in an Entity’s Own Equity” (“ASU
(Unaudited)
September 30, 2017
On January 1, 2017, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)No. 2016-09, “Compensation—Stock Compensation” (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU2016-09”), which simplifies several aspects ofsimplify the accounting for employee share-based payment transactions, including income taxes consequences, classification of awardsconvertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as eithera single liability instrument and more convertible preferred stock as a single equity or liabilities, and classificationinstrument with no separate accounting for embedded conversion features. ASU
In August 2016, the FASB issued ASU2016-15, “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
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:
Except as required by law, we undertake no obligation to update any such forward-looking statements to reflect events or circumstances after the date of such statements.
solutions. The Company has grown primarily through acquisitions including CADx, Qualia Computing, CAD Sciences, Xoft, DermEbx, Radionreports in two segments: Detection and VuComp. The Radion/DermEbx acquisition extended the Company’s position as a larger player in the oncology market, including the components that enable dermatologists and radiation oncologists to develop, launch and manage their electronic brachytherapy (“eBx”) programs for the treatment ofnon-melanoma skin cancer (“NMSC”). The VuComp acquisition included an extensive library of related clinical data which we use for cancer detection research and patents, as well as key personnel and expanded our customer base.
Therapy.
In the Therapy segment, the Company offers an isotope-free cancer treatment platform technology. The Xoft Electronic Brachytherapy System (“Xoft eBx”) can be used for the treatmentapproximately $7.4 million of early- stage breast cancer, endometrial cancer, cervical cancer and skin cancer. We believe the Xoft eBx system platform indications represent strategic opportunitiescash to repay its credit facility in the United States and international markets to offer differentiated treatment alternatives. In addition, the Xoft eBx system generates additional recurring revenue for the sale of consumables and related accessories and offer solutions that enable dermatologists and radiation oncologists to develop, launch and manage their eBx programs for the treatment of NMSC.
As we have discussed in our risk factors noted in our Annual Report on Form10-K filed with the SEC for the year ended December 31, 2016, our business can be affected by coverage policies adopted by federal and state governmental authorities, such as Medicare and Medicaid, as well as private payers, which often follow the coverage policies of these public programs. Such policies may affect which products customers purchase and the prices customers are willing to pay for those products in a particular jurisdiction.
full.
Estimates
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 anon-going ongoing basis, the Company evaluates these estimates, including those related to revenue recognition, allowance for doubtful accounts, receivable allowance, inventory valuation and obsolescence, intangible assets, goodwill, income taxes, warranty obligations, contingencies, and litigation. Additionally, the Company uses assumptions and estimates in calculations to determine stock-based compensation.compensation, the fair value of convertible debentures, and evaluation of litigation. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
June 30, 2021 compared to three and six months ended June 30, 2020.
Three months ended June 30, | ||||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 3,164 | $ | 2,702 | $ | 462 | 17.1 | % | ||||||||
Service and supplies revenue | 1,625 | 1,415 | 210 | 14.8 | % | |||||||||||
Subtotal | 4,789 | 4,117 | 672 | 16.3 | % | |||||||||||
Therapy revenue | ||||||||||||||||
Product revenue | 1,388 | 186 | 1,202 | 646.2 | % | |||||||||||
Service and supplies revenue | 1,649 | 1,264 | 385 | 30.5 | % | |||||||||||
Subtotal | 3,037 | 1,450 | 1,587 | 109.4 | % | |||||||||||
Total revenue | $ | 7,826 | $ | 5,567 | $ | 2,259 | 40.6 | % | ||||||||
Revenue: (in thousands)
Three months ended September 30, | ||||||||||||||||
2017 | 2016 | Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 2,758 | $ | 1,991 | $ | 767 | 38.5 | % | ||||||||
Service revenue | 1,588 | 2,143 | (555 | ) | (25.9 | )% | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | 4,346 | 4,134 | 212 | 5.1 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Therapy revenue | ||||||||||||||||
Product revenue | 668 | 23 | 645 | 2804.3 | % | |||||||||||
Service revenue | 1,986 | 1,846 | 140 | 7.6 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | 2,654 | 1,869 | 785 | 42.0 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total revenue | $ | 7,000 | $ | 6,003 | $ | 997 | 16.6 | % | ||||||||
|
|
|
|
|
|
|
|
Three months ended September 30, 2017 and 2016:
Total revenue for the three month period ended September 30, 2017 was $7.0 million compared with revenue of $6.02020 to $7.8 million for the three month periodmonths ended SeptemberJune 30, 2016, an increase of approximately $1.0 million, or 16.6%.2021. The increase in revenue wasis due to increases in Detection revenues of approximately $0.2 million and an increase in Therapy revenue of approximately $0.8$1.6 million and Detection revenue of $0.7 million.
revenue from 3D imaging and density assessment products. The Company also believes that the COVID-19 pandemic adversely affected revenues during the three months ended June 30, 2020.
2021.
market.
September June 30, 2017 as compared2020 to $1.9$1.7 million for the three months ended SeptemberJune 30, 2016.2021. The Company believes that Therapy service and supplies revenue, specifically the use of balloons for procedures, was adversely affected by the
Six months ended June 30, | ||||||||||||||||
2021 | 2020 | $ Change | % Change | |||||||||||||
Detection revenue | ||||||||||||||||
Product revenue | $ | 7,325 | $ | 5,802 | $ | 1,523 | 26.2 | % | ||||||||
Service revenue | 3,183 | 2,791 | 392 | 14.0 | % | |||||||||||
Subtotal | 10,508 | 8,593 | 1,915 | 22.3 | % | |||||||||||
Therapy revenue | ||||||||||||||||
Product revenue | 2,784 | 881 | 1,903 | 216.0 | % | |||||||||||
Service revenue | 3,178 | 2,644 | 534 | 20.2 | % | |||||||||||
Subtotal | 5,962 | 3,525 | 2,437 | 69.1 | % | |||||||||||
Total revenue | $ | 16,470 | $ | 12,118 | $ | 4,352 | 35.9 | % | ||||||||
the six months ended June 30, 2020 to $3.2 million for the six months ended June 30, 2021. The Company believes that Therapy service and supplies revenue, specifically the use of balloons for procedures, was adversely affected by the
Three months ended September 30, | ||||||||||||||||
2017 | 2016 | Change | % Change | |||||||||||||
Products | $ | 636 | $ | 236 | $ | 400 | 169.5 | % | ||||||||
Service and supplies | 1,458 | 1,370 | 88 | 6.4 | % | |||||||||||
Amortization and depreciation | 263 | 296 | (33 | ) | (11.1 | )% | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total cost of revenue | $ | 2,357 | $ | 1,902 | $ | 455 | 23.9 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | $ | 4,643 | $ | 4,101 | $ | 542 | 13.2 | % | ||||||||
Gross profit % | 66.3 | % | 68.3 | % | (2.0 | )% | ||||||||||
Three months ended September 30, | ||||||||||||||||
2017 | 2016 | Change | % Change | |||||||||||||
Detection gross profit | $ | 3,822 | $ | 3,586 | $ | 236 | 6.6 | % | ||||||||
Therapy gross profit | 821 | 515 | 306 | 59.4 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | $ | 4,643 | $ | 4,101 | $ | 542 | 13.2 | % | ||||||||
|
|
|
|
|
|
|
|
Three months ended June 30, | ||||||||||||||||
2021 | 2020 | $ Change | % Change | |||||||||||||
Products | $ | 1,377 | $ | 537 | $ | 840 | 156.4 | % | ||||||||
Service and supplies | 832 | 575 | 257 | 44.7 | % | |||||||||||
Amortization and depreciation | 79 | 98 | (19 | ) | (19.4 | )% | ||||||||||
Total cost of revenue | $ | 2,288 | $ | 1,210 | $ | 1,078 | 89.1 | % | ||||||||
Gross profit | $ | 5,538 | $ | 4,357 | $ | 1,181 | 27.1 | % |
Three Months Ended | ||||||||
June 30, | ||||||||
2021 | 2020 | |||||||
Segment gross profit: | ||||||||
Detection | $ | 4,005 | $ | 3,533 | ||||
Therapy | 1,533 | 824 | ||||||
Segment gross profit | $ | 5,538 | $ | 4,357 | ||||
Operating Expenses: (in thousands)
Three months ended September 30, | ||||||||||||||||
2017 | 2016 | Change | Change % | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 2,254 | $ | 2,360 | $ | (106 | ) | (4.5 | )% | |||||||
Marketing and sales | 2,580 | 2,322 | 258 | 11.1 | % | |||||||||||
General and administrative | 1,944 | 1,783 | 161 | 9.0 | % | |||||||||||
Amortization and depreciation | 107 | 288 | (181 | ) | (62.8 | )% | ||||||||||
Goodwill and long-lived asset impairment | 4,700 | — | 4,700 | 0.0 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | $ | 11,585 | $ | 6,753 | $ | 4,832 | 71.6 | % | ||||||||
|
|
|
|
|
|
|
|
Operating expenses increased by approximately $4.8 million or 71.6%sales in the three months ended SeptemberJune 30, 2017. The increase is due2021 was primarily related to product mix, with lower margin Therapy products being a greater percentage of total sales in the goodwill and long lived asset impairment of $4.7 million.
Engineering and Product Development.Engineering and product development costs were approximately $2.3 million forthree months ended June 30, 2021 than in the three month period ended SeptemberJune 30, 2017 as compared2020.
Marketing and Sales.Marketing and sales expenses increased by $0.3 million or 11.1%, from $2.3 million in the three month period ended September 30, 2016 to $2.6 million in the three month period ended September 30, 2017. Detection marketing and sales expense increased $0.2 million from $0.9 million in the three months ended September 30, 2016 to $1.1 million for the three months ended September 30, 2017. The increase in Detection marketing and sales expenses was due primarily to increases in commissions and stock compensation. Therapy marketing and sales expense increased by $0.1 million from $1.5 million in the three months ended September 30, 2016 to $1.6 million in the three months ended September 30, 2017.
General and Administrative.General and administrative expenses increased by $0.2 million or 9.0%, from $1.8 million in the three month period ended September 30, 2016 to $1.9 million in the three month period ended September 30, 2017. The increase was due primarily to an increase in consulting and personnel costs.
Amortization and Depreciation.Amortization and depreciation is primarily related to acquired intangible assets and depreciation related to machinery and equipment. Amortization and depreciation decreased to approximately $0.1 million in the quarter ended September 30, 2017 from $0.3 million for the quarter ended September 30, 2016. The decrease is due primarily to the sale of MRI assets in January 2017.
Goodwill and long-lived asset impairment.In the third quarter of 2017, the Company determined there was a triggering event, and accordingly completed an interim goodwill and long-lived asset impairment In the quarter ended September 30, 2017, the Company recorded an impairment charge of $4.0 million related to goodwill and $0.7 million related to intangible assets.
Other Income and Expense: (in thousands)
Three months ended September 30, | ||||||||||||||||
2017 | 2016 | Change | Change % | |||||||||||||
Interest expense | $ | (36 | ) | $ | (15 | ) | (21 | ) | 140.0 | % | ||||||
Interest income | 3 | 2 | 1 | 50.0 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | (33 | ) | $ | (13 | ) | $ | (20 | ) | 153.8 | % | ||||||
|
|
|
|
|
|
|
| |||||||||
Tax benefit (expense) | $ | 42 | $ | (10 | ) | $ | 52 | (520.0 | )% |
Interest expense. Interest expense of $36,000 increased by $21,000 or 140.0% for the three month period ended September 30, 2017 as compared to interest expense of $15,000 in the three month period ended September 30, 2016. The increase in interest expense is due primarily to the interest expense associated with the Silicon Valley Bank term loan signed in August, 2017.
Other income. Other income was $3,000 and $2,000, respectively, for the three month periods ended September 30, 2017 and 2016.
Tax benefit (expense). The Company had a tax benefit of $42,000 for the three month period ended September 30, 2017 as compared to tax expense of $10,000 for the three month period ended September 30, 2016. The tax benefit for the quarter ended September 30, 2017 is the result of applying for New Hampshire research and development credits. Tax expense for the quarter ended September 30, 2016 is due primarily to statenon-income and franchise based taxes.
Nine months ended September 30, 2017 compared to the nine months ended September 30, 2016
Revenue: (in thousands)
Detection revenue Product revenue Service revenue Subtotal Therapy revenue Product revenue Service revenue Subtotal Total revenue Nine months ended September 30, 2017 2016 Change % Change $ 7,970 $ 6,580 $ 1,390 21.1 % 5,096 6,381 (1,285 ) (20.1 )% 13,066 12,961 105 0.8 % 1,255 880 375 42.6 % 5,879 5,569 310 5.6 % 7,134 6,449 685 10.6 % $ 20,200 $ 19,410 $ 790 4.1 %
Nine months ended September 30, 2017 and 2016:
Total revenue for the nine month period ended September 30, 2017 was $20.2 million compared with revenue of $19.4 million for the nine month period ended September 30, 2016, an increase of approximately $0.8 million, or 4.1%. The increase in revenue was due to a $0.7 million increase in Therapy revenue and an increase in Detection revenues of approximately $0.1 million.
Detection product revenue increased by approximately $1.4 million from $6.6 million to $8.0 million or 21.1% in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increase is due primarily to an increase in CAD revenues of $2.2 million offset by decreases in MRI revenue of approximately $0.7 million and $0.1 million in colon revenue. The decrease in MRI revenue is due primarily to the sale of the Company’s MRI assets in January 2017.
Detection service and supplies revenue decreased by approximately $1.3 million from $6.4 million in the nine months ended September 30, 2016 to $5.1 million in the nine months ended September 30, 2017. The decrease in service and supplies is due primarily to the sale of the Company’s MRI assets in January 2017. Service and supplies revenue reflects the sale of service contracts to our installed base of customers. We expect service and supplies revenue related to our installed base of customers to vary from quarter to quarter as customers transition from 2D CAD to digital tomosynthesis.
Therapy product revenue was approximately $1.3 million for the nine months ended September 30, 2017 as compared to $0.9 million for the nine months ended September 30, 2016. Product revenue from the sale of our Axxent eBx systems can vary significantly due to an increase or decrease in the number of units sold which can cause a significant fluctuation in product revenue in the period.
Therapy service and supplies revenue increased approximately $0.3 million from $5.6 million in the nine months ended September 30, 2016 to $5.9 million for the nine months ended September 30, 2017. The increase in Therapy service and supplies revenue is due primarily to an increase in the services related to electronic brachytherapy for NMSC.
Cost of Revenue and Gross Profit: (in thousands)
Nine months ended September 30, | ||||||||||||||||
2017 | 2016 | Change | % Change | |||||||||||||
Products | $ | 1,349 | $ | 611 | $ | 738 | 120.8 | % | ||||||||
Service and supplies | 4,169 | 3,911 | 258 | 6.6 | % | |||||||||||
Amortization and depreciation | 847 | 899 | (52 | ) | (5.8 | )% | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total cost of revenue | $ | 6,365 | $ | 5,421 | $ | 944 | 17.4 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | $ | 13,835 | $ | 13,989 | $ | (154 | ) | (1.1 | )% | |||||||
Gross profit % | 68.5 | % | 72.1 | % | (3.6 | )% | ||||||||||
Nine months ended September 30, | ||||||||||||||||
2017 | 2016 | Change | % Change | |||||||||||||
Detection gross profit | $ | 11,553 | $ | 11,429 | $ | 124 | 1.1 | % | ||||||||
Therapy gross profit | 2,282 | 2,560 | (278 | ) | (10.9 | %) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | $ | 13,835 | $ | 13,989 | $ | (154 | ) | (1.1 | %) | |||||||
|
|
|
|
|
|
|
|
2020:
Six months ended June 30, | ||||||||||||||||
2021 | 2020 | $ Change | % Change | |||||||||||||
Products | $ | 2,786 | $ | 1,554 | $ | 1,232 | 79.3 | % | ||||||||
Service and supplies | 1,699 | 1,502 | 197 | 13.1 | % | |||||||||||
Amortization and depreciation | 158 | 195 | (37 | ) | (19.0 | )% | ||||||||||
Total cost of revenue | $ | 4,643 | $ | 3,251 | $ | 1,392 | 42.8 | % | ||||||||
Gross profit | $ | 11,827 | $ | 8,867 | $ | 2,960 | 33.4 | % |
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Segment gross profit: | ||||||||
Detection | $ | 8,730 | $ | 7,000 | ||||
Therapy | 3,097 | 1,867 | ||||||
Segment gross profit | $ | 11,827 | $ | 8,867 | ||||
Nine months ended September 30, | ||||||||||||||||
2017 | 2016 | Change | Change % | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 7,060 | $ | 6,835 | $ | 225 | 3.3 | % | ||||||||
Marketing and sales | 8,172 | 7,379 | 793 | 10.7 | % | |||||||||||
General and administrative | 6,067 | 5,586 | 481 | 8.6 | % | |||||||||||
Amortization and depreciation | 345 | 867 | (522 | ) | (60.2 | )% | ||||||||||
Goodwill and long-lived asset impairment | 4,700 | — | 4,700 | 0.0 | % | |||||||||||
Gain from sale of MRI assets | (2,508 | ) | — | (2,508 | ) | 0.0 | % | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | $ | 23,836 | $ | 20,667 | $ | 3,169 | 15.3 | % | ||||||||
|
|
|
|
|
|
|
|
Three months ended June 30, | ||||||||||||||||
2021 | 2020 | Change | Change % | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 2,268 | $ | 1,878 | $ | 390 | 20.8 | % | ||||||||
Marketing and sales | 3,429 | 2,631 | 798 | 30.3 | % | |||||||||||
General and administrative | 2,652 | 2,110 | 542 | 25.7 | % | |||||||||||
Amortization and depreciation | 60 | 49 | 11 | 22.4 | % | |||||||||||
Total operating expenses | $ | 8,409 | $ | 6,668 | $ | 1,741 | 26.1 | % | ||||||||
business.
furloughed employees.
furloughed employees.
Nine months ended September 30, | ||||||||||||||||
2017 | 2016 | Change | Change % | |||||||||||||
Interest expense | $ | (51 | ) | $ | (59 | ) | $ | 8 | (13.6 | )% | ||||||
Interest income | 3 | 9 | (6 | ) | (66.7 | )% | ||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | (48 | ) | $ | (50 | ) | $ | 2 | (4.0 | )% | |||||||
|
|
|
|
|
|
|
| |||||||||
Tax benefit (expense) | $ | 28 | $ | (55 | ) | $ | 83 | (150.9 | )% |
Three months ended June 30, | ||||||||||||||||
2021 | 2020 | Change | Change % | |||||||||||||
Interest expense | $ | (28 | ) | $ | (115 | ) | $ | 87 | (75.7 | )% | ||||||
Other income | 5 | 33 | (28 | ) | (84.8 | )% | ||||||||||
Loss on extinguishment of debt | (386 | ) | — | — | 0.0 | % | ||||||||||
$ | (409 | ) | $ | (82 | ) | $ | 59 | (72.0 | )% | |||||||
Tax benefit (expense) | — | (5 | ) | 5 | (100.0 | )% |
Six months ended June 30, | ||||||||||||||||
2021 | 2020 | Change | Change % | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and product development | $ | 4,460 | $ | 4,089 | $ | 371 | 9.1 | % | ||||||||
Marketing and sales | 6,853 | 6,239 | 614 | 9.8 | % | |||||||||||
General and administrative | 4,803 | 4,642 | 161 | 3.5 | % | |||||||||||
Amortization and depreciation | 115 | 101 | 14 | 13.9 | % | |||||||||||
Total operating expenses | $ | 16,231 | $ | 15,071 | $ | 1,160 | 7.7 | % | ||||||||
Six months ended June 30, | ||||||||||||||||
2021 | 2020 | Change | Change % | |||||||||||||
Interest expense | $ | (140 | ) | $ | (245 | ) | $ | 105 | (42.9 | )% | ||||||
Other income | 7 | 75 | (68 | ) | (90.7 | )% | ||||||||||
Loss on extinguishment of debt | (386 | ) | (341 | ) | (45 | ) | 13.2 | % | ||||||||
Loss on fair value of debentures | — | (7,464 | ) | 7,464 | (100.0 | )% | ||||||||||
$ | (519 | ) | $ | (7,975 | ) | $ | 7,456 | (93.5 | )% | |||||||
Tax expense | $ | — | $ | (31 | ) | $ | 31 | (100.0 | )% |
Interest income. Interestthe timing of termination of the Loan Agreement.
$13.7 million at December 31, 2019 to $21.2 million at February 21, 2020. Upon the consummation of the forced conversion of the debentures, the Company issued 1,816,466 shares of common stock with a fair value of approximately $21.2 million, which was reclassified to stockholders’ equity during the three and
We believe
amended on June 22, 2020 and the Company’s collateral securing the facility was released.
For the nine months ended September 30, | ||||||||
2017 | 2016 | |||||||
(in thousands) | ||||||||
Net cash used for operating activities | $ | (5,565 | ) | $ | (3,862 | ) | ||
Net cash provided by (used for) investing activities | 2,486 | (262 | ) | |||||
Net cash provided by (used for) financing activities | 5,755 | (673 | ) | |||||
|
|
|
| |||||
Increase (decrease) in cash and equivalents | $ | 2,676 | $ | (4,797 | ) | |||
|
|
|
|
2.53 respectively.
For the six months ended June 30, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Net cash used for operating activities | $ | (5,577 | ) | $ | (3,573 | ) | ||
Net cash used for investing activities | (336 | ) | (186 | ) | ||||
Net cash provided by financing activities | 16,616 | 12,671 | ||||||
Increase in cash and equivalents | $ | 10,703 | $ | 8,912 | ||||
The net
Contractual Obligations
The following table summarizes, for the periods presented, our future estimated cash payments under existing contractual obligations (in thousands).
Contractual Obligations | Payments due by period | |||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | 5+ years | ||||||||||||||||
Operating Lease Obligations | $ | 1,848 | $ | 742 | $ | 1,106 | $ | — | $ | — | ||||||||||
Capital lease obligations | 42 | $ | 12 | 30 | — | — | ||||||||||||||
Settlement Obligations | 500 | 500 | — | — | — | |||||||||||||||
Notes Payable | 6,615 | 591 | 4,324 | 1,700 | — | |||||||||||||||
Other Commitments | 825 | 632 | 84 | 32 | 77 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Contractual Obligations | $ | 9,830 | $ | 2,477 | $ | 5,544 | $ | 1,732 | $ | 77 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Operating lease obligations are the minimum payments due under these obligations.
Settlement obligations represent the remaining payments$2.0 million in repayment of the obligations to Hologic. The Company paid $0.5 million in July 2017 which represented the remaining settlement obligation to Zeiss.
Other commitments represent firm purchase obligations to suppliers for future product and service deliverables.
revolving loan with SVB.
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
We believe we are
Item 4. | Controls and Procedures |
Our
Ourprocedures.
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item | Exhibits |
Month of purchase | Total number of shares purchased (1) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum dollar value of shares that may yet be purchaed under the plans or programs | ||||||||||||
July 1 - July 31, 2017 | — | $ | — | $ | — | $ | — | |||||||||
August 1 - August 30, 2017 | 7,629 | 3.77 | — | — | ||||||||||||
September 1 - September 31, 2017 | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 7,629 | $ | 3.77 | $ | — | $ | — | |||||||||
|
|
|
|
|
|
|
|
Certification of | ||
Certification of | ||
The following materials formatted in XBRL (eXtensible Business Reporting Language); (i) Condensed Consolidated Balance Sheets as of | ||
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: | By: | /s/ | ||||||||
Name: | ||||||||||
Title: | Chief Executive Officer
(Principal Executive Officer) | |||||||||
Date: | By: | /s/ | ||||||||
Name: |
Charles R. Carter | |||||||||
Title: | Chief Financial Officer (Principal Financial Officer) |