UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission file number
iCAD, Inc.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| | | The |
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, an emerging growth company or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
As of the close of business on May 13, 2024, there were
INDEX
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| PART I |
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| Item 1 |
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| Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2024 and December 31, 2023 |
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| Notes to Condensed Consolidated Financial Statements (unaudited) |
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| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3 |
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| Item 4 |
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| PART II |
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| Item 1A |
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| Item 6 |
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Condensed Consolidated Balance Sheets
(In thousands, except for share data)
(Unaudited)
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Trade accounts receivable, net of allowance for credit losses of $ and $ as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net of accumulated depreciation of $ and $ as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Operating lease assets | ||||||||
| Other assets | ||||||||
| Intangible assets, net of accumulated amortization of $ and $ as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Goodwill | ||||||||
| Deferred tax assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued and other expenses | ||||||||
| Lease payable—current portion | ||||||||
| Deferred revenue—current portion | ||||||||
| Total current liabilities | ||||||||
| Lease payable, net of current | ||||||||
| Deferred revenue, net of current | ||||||||
| Deferred tax | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Notes 9 and 12) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ par value: authorized shares; issued. | ||||||||
| Common stock, $ par value: authorized shares; issued as of both March 31, 2024 and December 31, 2023, respectively; outstanding as of both March 31, 2024 and December 31, 2023, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock at cost, shares as of both March 31, 2024 and December 31, 2023 | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Operations
(In thousands, except for per share data)
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue: | ||||||||
| Products | $ | $ | ||||||
| Services | ||||||||
| Total revenue | ||||||||
| Cost of revenue: | ||||||||
| Products | ||||||||
| Services | ||||||||
| Amortization and depreciation | ||||||||
| Total cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Engineering and product development | ||||||||
| Marketing and sales | ||||||||
| General and administrative | ||||||||
| Amortization and depreciation | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income/ (expense): | ||||||||
| Interest expense | ||||||||
| Interest income | ||||||||
| Other income (expense), net | ||||||||
| Other income (expense), net | ||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ( | ) | ( | ) | ||||
| Loss from continuing operations | ( | ) | ( | ) | ||||
| Loss from discontinued operations, net of tax | ( | ) | ||||||
| Net loss and comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per share: | ||||||||
| Loss from continuing operations, basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Loss from discontinued operations, basic and diluted | $ | $ | ( | ) | ||||
| Net loss per share | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of shares used in computing loss per share: | ||||||||
| Basic and diluted | ||||||||
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except shares)
(Unaudited)
| For the three months ended March 31, 2024 | ||||||||||||||||||||||||
| Common Stock | Additional | |||||||||||||||||||||||
| Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
| Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| For the three months ended March 31, 2023 | ||||||||||||||||||||||||
| Common Stock | Additional | |||||||||||||||||||||||
| Number of | Paid-in | Accumulated | Treasury | Stockholders’ | ||||||||||||||||||||
| Shares Issued | Par Value | Capital | Deficit | Stock | Equity | |||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| For the Three Months ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||
| Amortization | ||||||||
| Depreciation | ||||||||
| Non-cash lease expense | ||||||||
| Bad debt provision | ||||||||
| Stock-based compensation | ||||||||
| Deferred tax | | | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ||||||||
| Prepaid and other assets | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued and other expenses | ( | ) | ( | ) | ||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ||||||
| Total adjustments | ||||||||
| Net cash used for operating activities | ( | ) | ( | ) | ||||
| Cash flow from investing activities: | ||||||||
| Additions to patents, technology and other | ||||||||
| Additions to property and equipment | ( | ) | ( | ) | ||||
| Capitalization of internal-use software development costs | ( | ) | ||||||
| Net cash used for investing activities | ( | ) | ( | ) | ||||
| Decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Right-of-use asset obtained in exchange for operating lease liability | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
iCAD, INC. AND SUBSIDIARIES
(In thousands, except for share and per share data or as noted)
Notes to Condensed Consolidated Financial Statements:
Note 1 – Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements of iCAD, Inc. and its subsidiaries (“iCAD” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting period and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. It is reasonably possible that changes may occur in the near term that would affect management’s estimates with respect to assets and liabilities. In the opinion of the Company’s management, these unaudited interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position of the Company at March 31, 2024, the results of operations of the Company for the three months ended March 31, 2024 and 2023, cash flows of the Company for the three months ended March 31, 2024 and 2023, and stockholders’ equity of the Company for the three months ended March 31, 2024 and 2023.
As discussed in Note 2, the Company completed the sale of its Xoft business line on October 23, 2023. Accordingly, the Company now operates in segment, Cancer Detection ("Detection"). Unless otherwise indicated, all disclosures and amounts in the Notes to Condensed Consolidated Financial Statements relate to the Company’s continuing operations, or its Detection segment.
Although the Company believes that the disclosures made in these interim financial statements are adequate to make the information presented not misleading, certain information normally included in the footnotes prepared in accordance with US GAAP has been omitted as permitted by the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 29, 2024. The results for the three months ended March 31, 2024, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024, or any interim or any future period.
Principles of Consolidation and Business Segments
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, iCAD France, LLC. All material inter-company transactions and balances have been eliminated in consolidation. The Company operates one reporting segment: Cancer Detection (“Detection”). The Detection segment consists of advanced image analysis and workflow products for the detection of cancer. As discussed in Note 2, the Company completed the sale of its Xoft business line on October 23, 2023. Unless otherwise indicated, all disclosures and amounts in the Notes to Condensed Consolidated Financial Statements relate to the Company’s continuing operations, or its Detection segment.
Risk and Uncertainty
On March 12, 2020, the World Health Organization declared COVID-19 to be a pandemic. In an effort to contain and mitigate the spread of COVID-19, the United States and most countries of the world imposed some level of unprecedented restrictions such as travel bans and business closures which caused substantial reductions in economic activity. While the worst of the disruptions appear to have subsided as of March 31, 2024, the Company continues to be impacted by slowness in the overall economic recovery. The Company’s expected results for future periods could reflect a continuing negative impact from the COVID-19 pandemic for similar or additional reasons.
In late February 2022, Russian military forces launched significant military action against Ukraine. In early October 2023, an armed conflict between Hamas-led Palestinian militant groups and Israeli military forces broke out with a Hamas attack on southern Israel, to which Israeli military forces retaliated.
Sustained conflict and disruption in these regions has continued through December 31, 2023 and beyond. Economic, civil, military and political uncertainty may arise or increase in regions where the Company operates or derives revenue. Further, countries from which the Company derives revenue may experience military action and/or civil and political unrest; may be subject to government export controls, economic sanctions, embargoes, or trade restrictions; and experience currency, inflation, and interest rate uncertainties. While the impact to the Company has been limited to date, it is not possible to predict the potential outcome should the conflict expand and/or additional sanctions be imposed. For the three months ended March 31, 2024 and 2023, approximately
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07). ASU 2023-07 is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses, including for single reportable segment entities. The new guidance is effective for us beginning with our annual reporting for fiscal year 2024 and for interim period reporting beginning in fiscal year 2025 and will be applied on a retrospective basis. We are evaluating the disclosure requirements related to the new standard.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 requires more detailed income tax disclosures. The guidance requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are evaluating the disclosure requirements related to the new standard.
Note 2 – Discontinued Operations
On October 22, 2023, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”), by and among (i) the Company, Xoft Solutions, LLC, a Delaware limited liability company, and Xoft, Inc., a Delaware corporation, each a wholly owned subsidiary of the Company (collectively with the Company, the “Sellers” and each, a “Seller”), and (ii) Elekta Inc., a Georgia corporation, and Nucletron Operations B.V., a company organized under the laws of the Netherlands (together, “Buyers” and each a “Buyer”), pursuant to which the Company agreed to transfer to the Buyers substantially all of the assets and liabilities primarily related to the Company’s Xoft business lines (the “Business”), including with respect to employees, contracts, intellectual property and inventory, for total cash consideration of approximately $
The closing of the Transaction occurred simultaneously with the execution of the Purchase Agreement.
In connection with the Transaction, the parties entered into a transition services agreement pursuant to which the Company will provide certain migration and transition services to facilitate an orderly transition of the operation of the Business to the Buyers during the five-month period following consummation of the Transaction, extendable at the option of the parties.
The Purchase Agreement contains certain representations, warranties, covenants and indemnification provisions, including for breaches of covenants and for losses resulting from the Company’s liabilities specifically excluded from the Transaction.
The Business, which had previously been presented as a separate reporting segment, meets the criteria for being reported as a discontinued operation and has been segregated from continuing operations. The following table summarizes the results from discontinued operations:
| Three Months Ended March 31, | ||||
| 2023 | ||||
| Revenue | $ | |||
| Total cost of sales | ||||
| Gross profit | $ | |||
| Total operating expenses | ||||
| Provision for income taxes | ||||
| Loss from discontinued operations, net of tax | $ | ( | ) | |
Total operating expenses presented in the table above exclude amounts that had previously been allocated to the Business for certain shared marketing expenses. The previously allocated amounts were $
The Business is included in the Company's Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023. Estimated cash provided by the Business during the three months ended March 31, 2023 was approximately $
Note 3 – Fair Value Measurements
The Company follows the provisions of FASB ASC Topic 820, “Fair Value Measurement and Disclosures” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company applies the fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, which are the following:
| • | Level 1 - Quoted prices in active markets for identical assets or liabilities. |
| • | Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| • | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value |
|
| The assigned level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Money market funds included in cash and cash equivalents in the accompanying consolidated balance sheet are considered a Level 1 measurement as they are valued at quoted market prices in active markets. |
|
| The following table sets forth the Company’s assets which are measured at fair value on a recurring basis by level within the fair value hierarchy: |
Fair Value Measurements as of March 31, 2024
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Money market accounts | $ | $ | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
Fair Value Measurements as of December 31, 2023
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Money market accounts | $ | $ | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
There were
Note 4 - Revenue
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these goods or services and excludes any sales incentives or taxes collected from customers which are subsequently remitted to government authorities. For the three months ended March 31, 2024, direct customer accounted for approximately
Disaggregation of Revenue
The following tables presents the Company’s revenues disaggregated by major good or service line, timing of revenue recognition, and sales channel, reconciled to its reportable segments.
| Three months ended March 31, 2024 | ||||
| Major Goods/Service Lines | ||||
| Products | $ | |||
| Service contracts | ||||
| $ | ||||
| Timing of Revenue Recognition | ||||
| Goods transferred at a point in time | $ | |||
| Services transferred over time | ||||
| $ | ||||
| Sales Channels | ||||
| Direct sales force | ||||
| OEM partners | ||||
| $ | ||||
| Three months ended March 31, 2023 | ||||
| Major Goods/Service Lines | ||||
| Products | $ | |||
| Service contracts | ||||
| $ | ||||
| Timing of Revenue Recognition | ||||
| Goods transferred at a point in time | $ | |||
| Services transferred over time | ||||
| $ | ||||
| Sales Channels | ||||
| Direct sales force | $ | |||
| OEM partners | ||||
| $ | ||||
Products. Product revenue consists of sales of cancer detection systems and perpetual licenses. The Company also sells cancer detection systems in the form of term licenses which generally commit the customer to a three year, non cancellable subscription with annual billing at the start of each year. The Company transfers control and recognizes a sale when the product is shipped from the manufacturing or warehousing facility to the customer.
Service Contracts. The Company sells service contracts in which the Company provides professional services including product installations, maintenance, training and service repairs. The service contracts range from
As discussed in Note 2, the Company completed the sale of its Xoft (Therapy) business line on October 23, 2023.
Contract Balances
Contract liabilities are a component of deferred revenue, current contract assets are a component of prepaid and other assets and non-current contract assets are a component of other assets. The following table provides information about receivables, current and non-current contract assets, and contract liabilities from contracts with customers.
Contract balances
| Balance at | Balance at | Balance at | ||||||||||
| March 31, 2024 | December 31, 2023 | December 31, 2022 | ||||||||||
| Receivables, which are included in ‘Trade accounts receivable’ | $ | $ | $ | |||||||||
| Current contract assets, which are included in “Prepaid and other assets” | $ | $ | $ | |||||||||
| Non-current contract assets, which are included in “other assets” | $ | $ | $ | |||||||||
| Contract liabilities, which are included in “Deferred revenue” | $ | $ | $ | |||||||||
Timing of revenue recognition may differ from timing of invoicing of customers. The Company records a receivable when revenue is recognized prior to receipt of cash payment and the Company has the unconditional right to such consideration, or unearned revenue when cash payments are received or due in advance of performance. For multi-year agreements, the Company generally invoices customers annually at the beginning of each annual service period.
The Company records net contract assets or contract liabilities on a contract-by-contract basis. The Company records a contract asset for unbilled revenue when the Company’s performance is in excess of amounts billed or billable. The Company classifies the net contract asset as either a current or non-current based on the expected timing of the Company’s right to bill under the terms of the contract. The current contract asset balance primarily relates to a net unbilled revenue balance, which the Company expects to be able to bill for within one year. The non-current contract asset balance consists of net unbilled revenue balances with several customer which the Company expects to be able to bill for in more than one year.
Changes in deferred revenue from contracts with customers were as follows:
| Three Months | ||||
| Ended March 31, | ||||
| 2024 | ||||
| Balance at beginning of period | $ | |||
| Deferral of revenue | ||||
| Recognition of deferred revenue | ( | ) | ||
| Balance at end of period | $ | |||
As of March 31, 2024, the aggregate amount of unsatisfied, or partially satisfied, performance obligations from contracts with customers was $
Note 5– Net Loss per Common Share
The Company’s basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period.
A summary of the Company’s calculation of loss per share is as follows (in 000s, except for Net loss per share):
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Loss from discontinued operations | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Shares used in the calculation of basic and diluted net loss per share | ||||||||
| Loss per share from continuing operations - basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Loss per share from discontinued operations - basic and diluted | ( | ) | ||||||
| Net loss per share - basic and diluted | $ | ( | ) | $ | ( | ) | ||
The shares of the Company’s common stock issuable upon the exercise of stock options that were excluded from the calculation of diluted net loss per share because their effect would have been antidilutive are as follows:
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Stock options | ||||||||
| Total | ||||||||
Note 6 – Inventories
The Company values its inventory at the lower of cost or net realizable value. Cost includes materials, labor, and manufacturing overhead and is determined using the first-in, first-out (FIFO) method. On a quarterly basis, management reviews inventory quantities on hand and analyzes the provision for excess and obsolete inventory based primarily on product expiration dating and estimated sales forecast, which is based on sales history and anticipated future demand. Inventory consisted of the following at March 31, 2024 and December 31, 2023, respectively:
| March 31, 2024 | December 31, 2023 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Inventory gross | ||||||||
| Inventory reserve | ( | ) | ( | ) | ||||
| Inventory net | $ | $ | ||||||
Note 7 – Goodwill
The Company tests goodwill for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of the reporting unit is less than its carrying value. Factors the Company considers important, which could trigger an impairment of such asset, include the following:
• significant underperformance relative to historical or projected future operating results;
• significant changes in the manner or use of the assets or the strategy for the Company’s overall business;
• significant negative industry or economic trends;
• significant decline in the Company’s stock price for a sustained period; and
• a decline in the Company’s market capitalization below net book value.
The Company considered indicators of impairment, and there were no triggering events identified, no indication of impairment of the Company’s goodwill and
Note 8 – Long-lived Assets
The Company assesses long-lived assets for impairment if events and circumstances indicate it is more likely than not that the fair value of the asset group is less than its carrying value.
There is no set interval or frequency for recoverability evaluation. Rather, the determination of when, if at all, an asset (or asset group) is evaluated for recoverability is based on “events and circumstances.” The following factors are examples of events or changes in circumstances that indicate the carrying amount of an asset (or asset group) may not be recoverable and thus is to be evaluated for recoverability.
• A significant decrease in the market price of a long-lived asset (or asset group);
• A significant adverse change in the extent or manner in which a long-lived asset (or asset group) is being used or in its physical condition;
• A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (or asset group), including an adverse action or assessment by a regulator;
• An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (or asset group); and
• A current operating period, or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (or asset group).
The Company determined there were no such triggering events during the three months ended March 31, 2024 or 2023.
Note 9 – Lease Commitments
In accordance with ASC Topic 842, "Leases" ("ASC 842"), the Company determines if an arrangement contains a lease at inception. A lease is an operating or financing contract, or part of a contract, that conveys the right to control the use of an identified tangible asset for a period of time in exchange for consideration.
At lease inception, the Company recognizes a lease liability equal to the present value of the remaining lease payments, and a right of use asset equal to the lease liability, subject to certain adjustments, such as for lease incentives. In determining the present value of the lease payments, the Company calculates an incremental borrowing rate, which is determined by estimating the Company’s applicable, fully collateralized borrowing rate, with adjustment as appropriate for lease term. The lease term at the lease commencement date is determined based on the non-cancellable period for which the Company has the right to use the underlying asset, together with any periods covered by an extension option if the Company is reasonably certain to exercise that option.
Assumptions made by the Company at the commencement date of each lease are re-evaluated upon occurrence of certain events, including a lease modification. A lease modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original lease and when lease payments increase commensurate with the standalone price for the additional right of use. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease.
Right-of-use assets and obligations for leases with an initial term of 12 months or less are considered short term and are a) not recognized in the consolidated balance sheet and b) recognized as an expense on a straight-line basis over the lease term. The Company does not sublease any of its leased assets to third parties and the Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. The Company has lessor agreements that contain lease and non-lease components, but the Company is accounting for the complete agreement under ASC 606 after determining that the non-lease component is the predominant component of these agreements.
ASC 842 includes a number of reassessment and remeasurement requirements for lessees based on certain triggering events or conditions. There were
Certain of the Company’s leases include variable lease costs to reimburse the lessor for real estate tax and insurance expenses, and certain non-lease components that transfer a distinct service to the Company, such as common area maintenance services. The Company has elected to separate the accounting for lease components and non-lease components for real estate and equipment leases.
In January 2024, in anticipation of the March 2024 end date of its leased warehouse in Nashua, NH, the Company entered into a
Components of Leases:
The Company has leases for office space and office equipment. The leases expire at various dates through 2028.
| Three Months Ended | |||||
| Lease Cost | Classification | March 31, 2024 | |||
| Operating lease cost - Right of Use Asset | Operating expenses | $ | |||
Other information related to leases was as follows:
| Three Months | ||||
| Ended March 31, 2024 | ||||
| Cash paid from operating cash flows for operating leases | $ | |||
| As of March 31, | ||||
| 2024 | ||||
| Weighted-average remaining lease term of operating leases (years) | ||||
| Weighted-average discount rate for operating leases | % | |||
Maturity of the Company’s lease liabilities as of March 31, 2024 was as follows:
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Total lease payments | ||||
| Less: effects of discounting | ( | ) | ||
| Total lease liabilities | ||||
| Less: current portion of lease liabilities | ||||
| Long-term lease liabilities | $ |
Note 10– Stockholders Equity
Stock-Based Compensation
The Company granted options to purchase
The Company’s stock-based compensation expense, including options and restricted stock by category is as follows:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cost of revenue | $ | $ | ||||||
| Engineering and product development | ||||||||
| Marketing and sales | ||||||||
| General and administrative | ||||||||
| $ | $ | |||||||
During the three months ended March 31, 2023, the Company recorded incremental stock-based compensation of approximately $
As of March 31, 2024, there was approximately $
Options granted under the Company’s stock incentive plans were valued utilizing the Black-Scholes model using the following assumptions and had the following fair values:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Average risk-free interest rate | % | % | ||||||
| Expected dividend yield |
|
| ||||||
| Expected life (average, in years) | ||||||||
| Expected volatility | ||||||||
| Weighted average exercise price | $ | $ | ||||||
| Weighted average fair value | $ | $ | ||||||
The Company’s 2024 and 2023 average expected volatility and average expected life is based on the average of the Company’s historical information. The risk-free rate is based on the rate of U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of option grants. The Company has paid no dividends on its common stock in the past and does not anticipate paying any dividends in the future.
The Company did grant any shares of restricted stock during the three-months ended March 31, 2024 or 2023. The Company’s restricted stock awards typically vest in either year or equal annual installments with the first installment vesting year from the grant date. The grant date fair value for restricted stock awards is based on the quoted market value of Company stock on the grant date.
A summary of stock option activity for all stock option plans for the period ended March 31, 2024 is as follows:
| Number of | Weighted Average | Intrinsic | ||||||||||
| Options | Exercise Price | Value | ||||||||||
| Outstanding as of December 31, 2023 | $ | $ | ||||||||||
| Granted | $ | |||||||||||
| Exercised | $ | $ | ||||||||||
| Cancelled | ( | ) | $ | |||||||||
| Outstanding as of March 31, 2024 | $ | $ | ||||||||||
| Options Exercisable as of December 31, 2023 | $ | $ | ||||||||||
| Options Exercisable as of March 31, 2024 | $ | $ | ||||||||||
Note 11– Income Taxes
The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which the Company operates and the development of tax planning strategies during the year. As such, there can be significant volatility in interim tax provisions.
Income tax expense was approximately $
Note 12 – Commitments and Contingencies
Other Commitments
The Company is obligated to pay approximately $
Litigation
The Company may be a party to various legal proceedings and claims arising out of the ordinary course of its business. Although the final results of all such matters and claims cannot be predicted with certainty, the Company currently believes that there are no current proceedings or claims pending against it the ultimate resolution of which would have a material adverse effect on its financial condition or results of operations. However, should the Company fail to prevail in any legal matter or should several legal matters be resolved against the Company in the same reporting period, such matters could have a material adverse effect on the Company’s operating results and cash flows for that particular period. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, “Contingencies.” Legal costs are expensed as incurred.
Note 13 – Restructuring
On March 20, 2023, the Company committed to a restructuring plan intended to support its long-term strategic goals and reduce operating expenses by further aligning its cost structure to focus on areas the Company believes are more likely to generate the best long-term results, in light of current industry and macroeconomic environments (the “RIF”). The Company reduced its workforce by approximately
The Company incurred total charges of $
Note 14 – Issuances of Common Stock
As previously disclosed, on August 11, 2023, the Company entered into an at-the-market issuance sales agreement (the “Sales Agreement”) with Craig-Hallum Capital Group LLC whereby the Company, at its discretion, may issue and sell up to $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 29, 2024. Some of the information contained in this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. As a result of many factors, including those factors set forth in the section titled “Risk Factors,” our actual results could differ materially from those discussed in or implied by these forward-looking statements. Please also refer to the section titled “Special Note Regarding Forward Looking Statements.”
Special Note Regarding Forward Looking Statements
Certain information included in this Item 2 and elsewhere in this Form 10-Q that are not historical facts contain statements that may be deemed “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements involve or may involve a number of known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward looking statements. These risks and uncertainties include, but are not limited to the following: the continuing impact of the COVID-19 pandemic, the outcomes of our commercial and strategic arrangements (including our respective arrangements with Google Health and Radiology Partners), the continuing impact of military and political conflict in Eastern Europe and the Middle East, the ability to achieve business and strategic objectives, the risks of uncertainty of patent protection, the impact of supply and manufacturing constraints or difficulties, 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, risks relating to potential future debt obligations, competitive factors, the effects of a decline in the economy or markets served by the Company, and other risks detailed in this report and in the Company’s other filings with the United States Securities and Exchange Commission (the “SEC”). The words “believe”, “plan”, “intend”, “expect”, “estimate”, “anticipate”, “likely”, “seek”, “should”, “would”, “could” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date the statement was made. Except as required by law, we undertake no obligation to update any such forward-looking statements to reflect events or circumstances after the date of such statements.
Unless the context otherwise requires, the terms “iCAD”, the “Company”, “we”, “our”, “registrant”, and “us” mean iCAD, Inc. and its consolidated subsidiaries.
Overview
iCAD, Inc. is a global leader in AI-powered cancer detection on a mission to create a world where cancer can’t hide. Cancer wins when it hides. Remaining undetected, cancer poses one of the greatest threats to life. The Company’s ProFound Breast Health Suite enables medical providers and professionals to accurately and reliably identify where cancer may be hiding and when it might make its move. The ProFound Breast Health Suite offers solutions for breast cancer detection, density assessment, one or two years breast cancer risk evaluation, and cardiovascular risk related to elevated levels of breast arterial calcifications. As discussed in Note 2, the Company completed the sale of its Xoft business line on October 23, 2023. Unless otherwise indicated, all disclosures and amounts in the Notes to Condensed Consolidated Financial Statements relate to the Company’s continuing operations, or its Detection segment.
Powered by the latest innovations in artificial intelligence (AI), and built on one of the largest, most diverse US-based and global data sets, the ProFound Suite uniquely offers 360-degree solutions for cancer detection, density assessment, and personalized risk evaluation, all based on a 2D or 3D mammogram’s collection of images. The ProFound Detection solution scores cases and suspicious lesions, helping radiologists identify and focus on areas of most concern and highest suspicion of cancer. The ProFound Density Assessment standardizes and simplifies breast density reporting, algorithmically examining a woman’s breast anatomy from the mammogram image. The ProFound Risk solution provides a near-term probability for developing breast cancer in the next one or two years, making it more actionable and relevant than generalized lifetime risk scores. The ProFound Heart Health solution identifies the presence and quantity of breast arterial calcification which is proven to correlate with calcifications elsewhere in the body, raising concern for cardiovascular or heart health concerns.
The ProFound Breast Health Suite is cleared by the US Food & Drug Administration (FDA) and has received CE mark and Health Canada licensing. Used by thousands of providers serving millions of patients, ProFound is available in over 50 countries. iCAD estimates that ProFound has been used for more than 40 million mammograms worldwide in the last five years.
The Company’s headquarters is located in Nashua, New Hampshire, with a manufacturing facility in New Hampshire and an office in Lyon, France.
COVID-19 Impact
On March 12, 2020, the World Health Organization declared COVID-19 to be a pandemic. In an effort to contain and mitigate the spread of COVID-19, the United States and most countries of the world imposed some level of unprecedented restrictions such as travel bans and business closures which caused substantial reductions in economic activity. While the worst of the disruptions seem to have subsided as of March 31, 2024, and the pandemic emergency has been deemed to be over, we continue dealing with the impact of slowness in the overall economic recovery. Our expected results for the year ended December 31, 2024, including any interim or future periods, could reflect a continuing negative impact from continuing negative economic conditions.
We believe that our current liquidity and capital resources are sufficient to sustain operations through at least the next 12 months, primarily due to cash on hand of $20.3 million at March 31, 2024 and anticipated revenue and cash collections as well as cost savings actions taken.
Global Conflicts Impact
In late February 2022, Russian military forces launched significant military action against Ukraine. In early October 2023, an armed conflict between Hamas-led Palestinian militant groups and Israeli military forces broke out with a Hamas attack on southern Israel, to which Israeli military forces retaliated. Sustained conflict and disruption in the regions has continued and is likely to continue. Economic, civil, military and political uncertainty may arise or increase in regions where the Company operates or derives revenue. Further, countries from which we derive revenue may experience military action and/or civil and political unrest; may be subject to government export controls, economic sanctions, embargoes, or trade restrictions; and experience currency, inflation, and interest rate uncertainties. While the impact to us has been limited to date, it is not possible to predict the potential outcome should the conflict expand and/or additional sanctions be imposed. For the three months ended March 31, 2024 and 2023, approximately 18% and 14%, respectively, of the Company's revenue was derived from customers located outside the United States.
Xoft Sale
The Company completed the sale of its Xoft business line on October 23, 2023. The results of its operations for all periods presented are reflected as discontinued operations in the Condensed Consolidated Statements of Income. Unless otherwise indicated, all disclosures and amounts relate to the Company’s continuing operations. In addition, the Company now has one reporting segment, Detection.
Critical Accounting Estimates
Our discussion and analysis of financial condition, results of operations, and cash flows are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the U.S. requires management to make judgments, assumptions and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company considers an accounting estimate to be critical to the financial statements if the estimate is complex in nature, requires judgment, and if different estimates were used, the results could have a material impact on the consolidated financial statements. On an ongoing basis, the Company evaluates its estimates and the application of its policies. The Company bases its estimates on historical experience, current conditions and on various other assumptions that are believed to be reasonable under the circumstances. See the section entitled "Critical Accounting Estimates" in our annual report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 29, 2024 for further discussion.
Due to the COVID-19 pandemic and its lingering impact, global armed conflicts and related political uncertainty, as well as dramatic inflation, there has been uncertainty and disruption in the global economy and financial markets. We are not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Other than as described herein, there have been no additional material changes to our critical accounting estimates as discussed in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 29, 2024. For a comprehensive list of our critical accounting estimates, reference should be made to the 2023 10-K.
Results of Operations (in thousands, except share data or as noted)
Three months ended March 31, 2024 compared to three months ended March 31, 2023
Revenue
Three months ended March 31, 2024 and 2023:
| Three Months Ended March 31, |
||||||||||||||||
| 2024 |
2023 |
$ Change |
% Change |
|||||||||||||
| Product revenue |
$ | 3,102 | $ | 2,460 | $ | 642 | 26.1 | % | ||||||||
| Services |
1,852 | 1,874 | (22 | ) | (1.2 | )% | ||||||||||
| Total revenue |
4,954 | 4,334 | 620 | 14.3 | % | |||||||||||
Total revenue increased by approximately $0.6 million or 14.3%, from $4.3 million for the three months ended March 31, 2023 to $5.0 million for the three months ended March 31, 2024. The increase is due primarily to higher product revenue. During the first quarter of 2024, we have seen an increase in customer demand for subscription licenses, which currently remains a small portion of the Company’s total license revenue. We believe this trend could accelerate, and we have begun to shift our marketing efforts to a subscription model. An increase in subscription revenue would negatively impact revenue in the short term, because revenue from subscription licenses are recognized over time, as opposed to being recognized upon delivery for perpetual licenses.
Product revenue increased by approximately $0.6 million, or 26.1%, from $2.5 million for the three months ended March 31, 2023 to $3.1 million for the three months ended March 31, 2024. The overall increase is due primarily to higher software license revenue, including the impact of our transition to a subscription model.
Services revenue, which is primarily sold to direct customers, was flat at approximately $1.9 million for each of the three months ended March 31, 2023 and March 31, 2024.
Cost of Revenue and Gross Profit:
Three months ended March 31, 2024 and 2023:
| Cost of Revenue and Gross Profit: |
Three Months Ended March 31, |
|||||||||||||||
| 2024 |
2023 |
$ Change |
% Change |
|||||||||||||
| Products |
$ | 480 | $ | 425 | $ | 55 | 12.9 | % | ||||||||
| Services |
321 | 345 | (24 | ) | (7.0 | )% | ||||||||||
| Amortization and depreciation |
40 | 21 | 19 | 90.5 | % | |||||||||||
| Total cost of revenue |
$ | 841 | $ | 791 | $ | 50 | 6.3 | % | ||||||||
| Three Months Ended March 31, |
||||||||||||||||
| 2024 |
2023 |
$ Change |
% Change |
|||||||||||||
| Gross profit |
$ | 4,113 | $ | 3,543 | $ | 570 | 16.1 | % | ||||||||
Gross profit for the three months ended March 31, 2024 was approximately $4.1 million, or 83% of revenue, as compared to $3.5 million, or 82% of revenue, for the three months ended March 31, 2023.
Cost of products increased by approximately $55,000, or 12.9%, from $425,000 for the three months ended March 31, 2023 to $480,000 for the three months ended March 31, 2024. The increase is due primarily to higher product sales. Cost of product revenue as a percentage of product revenue was approximately 17.3% for the three months ended March 31, 2023 as compared to 15.5% for the three months ended March 31, 2024.
Cost of services was approximately flat for the three months ended March 31, 2023 and March 31, 2024. Cost of services as a percentage of service and supplies revenue was approximately 18.4% for the three months ended March 31, 2023 as compared to 17.3% for the three months ended March 31, 2024.
Amortization and depreciation, which relates primarily to intangible assets and depreciation of property and equipment, increased by approximately $19,000, or 90.5%, from $21,000 for the three months ended March 31, 2023 to $40,000 for the three months ended March 31, 2024. The increase results from the expense associated with the Company's ProFound Cloud solution which went live in March 2024.
Operating Expenses:
Three months ended March 31, 2024 and 2023:
| Three Months Ended March 31, |
||||||||||||||||
| 2024 |
2023 |
$ Change |
% Change |
|||||||||||||
| Operating expenses: |
||||||||||||||||
| Engineering and product development |
$ | 1,507 | $ | 1,516 | $ | (9 | ) | (0.6 | )% | |||||||
| Marketing and sales |
2,082 | 2,360 | (278 | ) | (11.8 | )% | ||||||||||
| General and administrative |
1,902 | 2,853 | (951 | ) | (33.3 | )% | ||||||||||
| Amortization and depreciation |
63 | 54 | 9 | 16.7 | % | |||||||||||
| Total operating expenses |
$ | 5,554 | $ | 6,783 | $ | (1,229 | ) | (18.1 | )% | |||||||
Operating expenses decreased by approximately $1.2 million, or (18.1)%, from $6.8 million in the three months ended March 31, 2023 to $5.6 million in the three months ended March 31, 2024.
Engineering and Product Development. Engineering and product development costs were approximately flat at $1.5 million when comparing the three months ended March 31, 2023 to the three months ended March 31, 2024.
Marketing and Sales. Marketing and sales expenses decreased by approximately $0.3 million, or (11.8)%, from $2.4 million in the three months ended March 31, 2023 to $2.1 million in the three months ended March 31, 2024. The decrease was primarily related to management's cost saving actions implemented in early 2023 and is primarily related to payroll costs.
General and Administrative. General and administrative expenses decreased by approximately $1.0 million, or (33.3%), from $2.9 million in the three months ended March 31, 2023 to $1.9 million in the three months ended March 31, 2024. The decrease was primarily related to management's cost saving actions implemented in early 2023 and is primarily related to payroll costs.
Amortization and Depreciation. Amortization and depreciation, which relates primarily to intangible assets and depreciation of property and equipment, was approximately flat when comparing the three months ended March 31, 2023 to the three months ended March 31, 2024.
Other Income and Expense:
Three months ended March 31, 2024 and 2023:
| Other Income and Expense: |
||||||||||||||||
| Three Months Ended March 31, |
||||||||||||||||
| 2024 |
2023 |
$ Change |
% Change |
|||||||||||||
| Interest income |
$ | 203 | $ | 151 | $ | 52 | 34.4 | % | ||||||||
| Other income, net |
20 | 3 | 17 | 566.7 | % | |||||||||||
| $ | 223 | $ | 154 | $ | 69 | 44.8 | % | |||||||||
| Tax expense |
$ | (4 | ) | $ | (5 | ) | $ | 1 | (100.0 | )% | ||||||
| Loss from discontinued operations |
$ | — | $ | (687 | ) | $ | 687 | (100.0 | )% | |||||||
Interest income. Interest income increased by approximately $52,000, or 34.4%, from $151,000 for the three months ended March 31, 2023 to $203,000 for the three months ended March 31, 2024. The increase results from higher interest rates in 2024 compared to 2023.
Other income. Other income was $3,000 during the three months ended March 31, 2023 compared to $20,000 during the three months ended March 31, 2024. Included in the three months ended March 31, 2024 were amounts related to services rendered in connection with the transition services agreement related to the October 2023 sale of the former Xoft business.
Tax (expense). Income tax expense was approximately $4,000 and $5,000 for the three months ended March 31, 2024 and March 31, 2023, respectively. The effective tax rates for the three months ended March 31, 2024 and 2023 were less than 1% in each period. The difference between the Company’s effective tax rates in 2024 and 2023 compared to the U.S. statutory tax rate of 21% is primarily due to changes in valuation allowances associated with the Company’s assessment of the likelihood of the recoverability of deferred tax assets. The Company has valuation allowances against substantially all of its net operating loss carryforwards and tax credit carryforwards.
Discontinued operations, net of tax. This line represents the net loss of the Company's former Xoft business line which was sold in October, 2023.
Liquidity and Capital Resources (in thousands, except as noted)
The Company believes that its cash and cash equivalents balance of $20.3 million as of March 31, 2024, and projected cash balances are sufficient to sustain operations through at least the next 12 months. The Company’s ability to generate cash adequate to meet its future capital requirements will depend primarily on operating cash flow. If sales or cash collections are reduced from current expectations, or if expenses and cash requirements are increased, the Company may require additional financing, although there are no guarantees that the Company will be able to obtain the financing if necessary. We will continue to closely monitor liquidity and the capital and credit markets.
The Company had net working capital of $22.9 million as of March 31, 2024. The ratio of current assets to current liabilities at March 31, 2024 and December 31, 2023 was 4.72 and 4.40, respectively.
| Three Months Ended March 31, |
||||||||
| 2024 |
2023 |
|||||||
| Net cash used for operating activities |
$ | (1,180 | ) | $ | (1,528 | ) | ||
| Net cash used for investing activities |
(206 | ) | (122 | ) | ||||
| Decrease in cash and equivalents |
$ | (1,386 | ) | $ | (1,650 | ) | ||
Net cash used for operating activities for the three months ended March 31, 2024 was $1.2 million, compared to $1.5 million for the three months ended March 31, 2023. The improvement in net cash used for operating activities for the three months ended March 31, 2024 resulted primarily from the Company’s focus on cost saving initiatives. We expect that net cash used for or provided by operating activities to fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, the timing of when we recognize revenue, collections of accounts receivable, inventory expansion due to supply chain risk, and the timing of other payments. Included in these figures are the cash flows from our discontinued Xoft business. For the three months ended March 31, 2023, the impact on cash flows from operating activities related to the Xoft business was cash inflows of approximately $0.4 million when excluding previously allocated marketing expenses.
Net cash used for investing activities for the three months ended March 31, 2024 was $206,000, compared to $122,000 for the three months ended March 31, 2023. The net cash used for investing activities for the three months ended March 31, 2024 was primarily related to the completion of the ProFound Cloud software project.
The Company is obligated to pay approximately $1.2 million for firm purchase obligations to suppliers for future product and service deliverables and $0.4 million for minimum royalty obligations.
Recent Accounting Pronouncements
See Note 1 to the Condensed Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
The Company’s management, with the participation of its principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, as of March 31, 2024, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) were effective at a reasonable level of assurance.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. The Company conducts periodic evaluations to enhance, where necessary, its controls and procedures.
There were no changes to the Company's internal controls over financial reporting during the quarter ended March 31, 2024 that have materially affected or which are reasonably likely to materially affect internal control over financial reporting.
INFORMATION
Item 1A. Risk Factors:
Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 29, 2024 (our "Annual Report"), which we strongly encourage you to review. There have been no material changes to the risk factors described in the Annual Report.
Item 6. Exhibits
| Exhibit No. |
Description |
|
| 10.1 | Lease between Anita R. Jacques Revocable Trust, dated January 6, 2024 and iCAD, Inc. (filed as Exhibit 10.19 to the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2024). | |
| 31.1* |
||
| 31.2* |
||
| 32.1** |
||
| 32.2** |
||
| 101* |
The following materials formatted in Inline XBRL (eXtensible Business Reporting Language); (i) Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023, (iii) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023 and (v) Notes to Condensed Consolidated Financial Statements. |
|
| 104* |
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). |
* Filed herewith
** Furnished herewith
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 14, 2024 |
By: |
/s/ Dana Brown |
|
| Name: Title: |
Dana Brown Chief Executive Officer (Principal Executive Officer) |
||
| Date: May 14, 2024 | By: |
/s/ Eric Lonnqvist |
|
| Name: Title: |
Eric Lonnqvist Chief Financial Officer (Principal Financial Officer) |
||