10-Q

Large Accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number

001-09341

iCAD, Inc.

(Exact name of registrant as specified in its charter)


Delaware		02-0377419
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

98 Spit Brook Road, Suite 100, Nashua, NH		03062
(Address of principal executive offices)		(Zip Code)

(603)

882-5200

(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
Common Stock, $0.01 par value	ICAD	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. YES ☒ NO ☐.

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). YES ☒ NO ☐.

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.

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 ☐ NO ☒.

As of the close of business on

April 30, 2021

, there were

24,983,491 shares outstanding of the registrant’s Common Stock, $0.01 par value.

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iCAD, Inc.

INDEX


		Page
PART I	FINANCIAL INFORMATION

Item 1	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020		3

	Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2021 and March 31, 2020		4

	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2021 and March 31, 2020		5

	Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended March 31, 2021 and March 31, 2020		6

	Notes to Condensed Consolidated Financial Statements (unaudited)		7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		30

Item 3	Quantitative and Qualitative Disclosures about Market Risk		40

Item 4	Controls and Procedures		40

PART II	OTHER INFORMATION		41

Item 1	Legal Proceedings		41

Item 1A	Risk Factors		42

Item 6	Exhibits		43

	Signatures		44

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iCAD, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands except for share data)


	March 31,			December 31,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	46,907		$	27,186
Trade accounts receivable, net of allowance for doubtful accounts of $111 in 2021 and $111 in 2020		10,649			10,027
Inventory, net		2,498			3,144
Prepaid expenses and other current assets		2,188			1,945

Total current assets		62,242			42,302

Property and equipment, net of accumulated depreciation of $6,854 in 2021 and $6,778 in 2020		930			744
Operating lease assets		1,565			1,758
Other assets		1,564			1,527
Intangible assets, net of accumulated amortization of $8,552 in 2021 and $8,494 in 2020		831			889
Goodwill		8,362			8,362

Total assets	$	75,494		$	55,582

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,251		$	2,869
Accrued and other expenses		5,819			7,039
Notes payable - current portion		269			—
Lease payable - current portion		847			726
Deferred revenue		5,957			6,117

Total current liabilities		14,143			16,751

Lease payable, long-term portion		860			1,075
Notes payable, long-term portion		6,703			6,960
Deferred revenue, long-term portion		420			267
Deferred tax		4			4

Total liabilities		22,130			25,057

Commitments and Contingencies (Note 7)

Stockholders’ equity:
Preferred stock, $0.01 par value: authorized 1,000,000 shares; none issued .		—			—
Common stock, $0.01 par value: authorized 30,000,000 shares; issued 25,143,432 a s of March 31, 2021 and 23,693,735 as of December 31, 2020 .
Outstanding 24,957,601 as of March 31, 2021 and 23,508,575 as of December 31, 2020 .		251			236
Additional paid-in capital		298,106			273,639
Accumulated deficit		(243,578	)		(241,935	)
Treasury stock at cost, 185,831 shares in 2021 and 2020		(1,415	)		(1,415	)

Total stockholders’ equity		53,364			30,525

Total liabilities and stockholders’ equity	$	75,494		$	55,582

See accompanying notes to condensed consolidated financial statements.

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iCAD, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands except for per share data)


	Three Months Ended March 31,
	2021			2020
Revenue:
Products	$	5,557		$	3,795
Service and supplies		3,087			2,756

Total revenue		8,644			6,551

Cost of revenue:
Products		1,409			1,017
Service and supplies		867			927
Amortization and depreciation		79			97

Total cost of revenue		2,355			2,041

Gross profit		6,289			4,510

Operating expenses:
Engineering and product development		2,192			2,211
Marketing and sales		3,424			3,608
General and administrative		2,151			2,532
Amortization and depreciation		55			52

Total operating expenses		7,822			8,403

Loss from operations		(1,533	)		(3,893	)

Interest expense		(112	)		(130	)
Other income		2			42
Loss on extinguishment of debt		—			(341	)
Loss on fair value of convertible debentures		—			(7,464	)

Other expense, net		(110	)		(7,893	)
Loss before income tax expense		(1,643	)		(11,786	)

Tax expense		—			(26	)

Net loss and comprehensive loss	$	(1,643	)	$	(11,812	)

Net loss per share:
Basic	$	(0.07	)	$	(0.59	)

Diluted	$	(0.07	)	$	(0.59	)

Weighted average number of shares used in computing loss per share:
Basic		23,929			20,175

Diluted		23,929			20,175

See accompanying notes to condensed consolidated financial statements.

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iCAD, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	For the three months ended March 31,
	2021			2020
	(in thousands)
Cash flow from operating activities:
Net loss	$	(1,643	)	$	(11,812	)
Adjustments to reconcile net loss to net cash used for operating activities:
Amortization		58			78
Depreciation		76			71
Bad debt provision		—			119
Stock-based compensation		935			464
Amortization of debt discount and debt costs		12			40
Loss on extinguishment of debt		—			341
Deferred tax expense		—			1
Change in fair value of convertible debentures		—			7,464
Changes in operating assets and liabilities:
Accounts receivable		(622	)		2,610
Inventory		647			149
Prepaid and other assets		(89	)		(72	)
Accounts payable		(1,617	)		(317	)
Accrued expenses		(1,313	)		(439	)
Deferred revenue		(7	)		(113	)

Total adjustments		(1,920	)		10,396

Net cash used for operating activities		(3,563	)		(1,416	)

Cash flow from investing activities:
Additions to patents, technology and other		—			(1	)
Additions to property and equipment		(262	)		(155	)

Net cash used for investing activities		(262	)		(156	)

Cash flow from financing activities:
Issuance of common stock pursuant to stock option plans		270			196
Issuance of common stock pursuant to Employee Stock Purchase Plan		47			—
Proceeds from issuance of common stock, net		23,229			—
Principal repayment of debt financing		—			(4,638	)
Repayment on line of credit		—			(2,000	)
Proceeds from notes payable		—			7,000
Debt issuance costs		—			(43	)

Net cash provided by financing activities		23,546			515

Increase (decrease ) in cash and equivalents		19,721			(1,057	)
Cash and cash equivalents, beginning of period		27,186			15,313

Cash and cash equivalents, end of period	$	46,907		$	14,256

Supplemental disclosure of cash flow information:
Interest paid	$	92		$	122

Taxes paid	$	—		$	26

Issuance of common stock upon conversion of debentures		—			21,164

Right-of-use assets obtained in exchange for new operating lease liabilities	$	—		$	69

See accompanying notes to condensed consolidated financial statements.

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Consolidated Statements of Stockholders’ Equity Year to Date

(In thousands except shares)


	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		20,000		—		—		—			—			—
Issuance of common stock, net		1,393,738		14		23,215		—			—			23,229
Issuance of common stock pursuant to stock option plans		28,934		1		270		—			—			271
Issuance of common stock pursuant Employee Stock Purchase Plan		6,354		—		47		—			—			47
Stock-based compensation		—		—		935		—			—			935
Net loss		—		—		—		(1,643	)		—			(1,643	)
Balance at March 31, 2021		25,143,432	$	251	$	298,106	$	(243,578	)	$	(1,415	)	$	53,364

Consolidated Statements of Stockholders’ Equity Quarter to Date

(In thousands except shares)


	Common Stock				Additional
	Number of				Paid-in		Accumulated			Treasury			Stockholders’
	Shares Issued		Par Value		Capital		Deficit			Stock			Equity
Balance at 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		23,500		—		—		—			—			—
Issuance of common stock pursuant to stock option plans		36,799		1		195		—			—			196
Issuance of stock upon conversion of Debentures		1,819,466		18		21,146		—			—			21,164
Stock-based compensation						464								464
Net loss		—		—		—		(11,812	)		—			(11,812	)

Balance at March 31, 2020		21,425,916	$	215	$	252,420	$	(236,137	)	$	(1,415	)	$	15,083

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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 (together “iCAD” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). 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, 2021, the results of operations of the Company for the three -month periods ended March 31, 2021 and 2020, cash flows of the Company for the three-month periods ended March 31, 2021 and 2020, and stockholders’ equity for the Company for the three-month periods ended March 31, 2021 and 2020.

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, 2020 filed with the SEC on March 15, 2020, as amended on April 30, 2021. The results for the three -month period ended March 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021, or any future period.

Segments

The Company reports the results of two segments: Cancer Detection (“Detection”) and Cancer Therapy (“Therapy”). The Detection segment consists of advanced image analysis and workflow products. The Therapy segment consists of radiation therapy (“Axxent”) products.

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 the

COVID-19

pandemic, the United States, many countries in Europe, as well as Canada and China, imposed unprecedented restrictions on travel, and there have been business closures and reductions in economic activity in countries that have had significant outbreaks of

COVID-19.

As a provider of devices and services to the health care industry, the Company’s operations have been materially affected in part due to

stay-at-home

and social distancing orders as well as uncertainty in the market. Significant uncertainty remains as to the continuing impact of the

COVID-19

pandemic on the Company’s operations and on the global economy as a whole.

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It is currently not possible to predict the duration of the pandemic or the time needed for economic activity to return to prior levels. The

COVID-19

pandemic has resulted in significant financial market volatility and uncertainty. Although the United States and other countries have made significant progress related to vaccinating significant portions of their populations, the efficacy of each individual vaccine against the multiple strains of the

COVID-19

virus is unknown. Moreover, a new “wave” of

COVID-19

cases may exacerbate the increased levels of market disruption and volatility seen in the recent past will have an adverse effect on the Company’s ability to access capital, on its business, results of operations and financial condition, and on the market price of its common stock.

The Company’s results for the quarter ending March 31, 2021 reflect a negative impact from the

COVID-19

pandemic due to some healthcare facilities’ additional focus on

COVID-19.

Although the Company does not provide guidance to investors relating to its future results of operations, its results for the quarter ending June 30, 2021, and possibly future quarters, could reflect a continued negative impact from the

COVID-19

pandemic for similar reasons. The duration and severity of the pandemic is unknown, and so the continued effect on the Company’s results over the long term is uncertain.

Although the Company did not experience any material impact to trade accounts receivable losses in the quarter ended March 31, 2021, the Company’s exposure may increase if its customers are adversely affected by changes in healthcare laws, coverage, and reimbursement, economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the current

COVID-19

pandemic, or other customer-specific factors. The Company has not historically experienced significant trade account receivable losses, but it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade account receivables as hospitals’ cash flows are impacted by their response to the

COVID-19

pandemic.

Recently Adopted Accounting Pronouncements

There are no significant recently adopted accounting pronouncements. For a full list of the Company’s response to all relevant recent accounting pronouncements, please refer to Note 13 below.

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Revenue Recognition

Revenue is recognized wh

n a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these goods or services and excludes any sales incentives or taxes collected from customers which are subsequently remitted to government authorities.

Disaggregation of Revenue

The following tables presents the Company’s revenues disaggregated by major good or service line, timing of revenue recognition, and sales channel, reconciled to its reportable segments (in thousands).


	Three months ended March 31, 2021
	Reportable Segments
	Detection		Therapy		Total
Major Goods/Service Lines
Products	$	4,161	$	2,103	$	6,264
Service contracts		1,558		340		1,898
Supply and source usage agreements		—		481		481
Professional services		—		1		1

SEC Form 10-Q filed by icad inc.