EX-99.1 3 icad_ex99-1.txt NEWS RELEASE For Immediate Release ICAD REPORTS 2003 SECOND QUARTER RESULTS RECORD NUMBER OF COMPUTER AIDED BREAST CANCER DETECTION SYSTEMS SHIPPED TO END USERS IN MOST RECENT QUARTER NASHUA, New Hampshire (August 7, 2003) - iCAD, Inc. (Nasdaq: ICAD), which designs, develops and markets Computer Aided Detection (CAD) imaging technology and systems for the early detection of breast cancer, today reported its financial results for the second quarter and first half of 2003. Sales of the Company's CAD and medical imaging products for the three months ended June 30, 2003, totaled $1,337,517, compared with sales of medical imaging products and total sales of $485,686 and $776,600, respectively, in the quarter ended June 30, 2002. This reflects an increase of 175% in medical sales and 72% in total sales when compared with the prior-year period. Sales of graphic arts and photographic products totaled $290,914 in the second quarter of 2002. The Company exited the graphic arts and photographic products business in June 2002, and there were no sales of such products in the most recent quarter. Sales of the Company's CAD and medical imaging products for the six months ended June 30, 2003, totaled $3,551,529, compared with sales of medical imaging products and total sales of $911,585 and $1,552,233, respectively, in the first half of 2002. This reflects an increase of 290% in medical sales and 129% in total sales when compared with the corresponding period of the previous year. Sales of graphic arts and photographic products totaled $640,648 for the six-month period ended June 30, 2002. For reasons noted above, there were no sales of graphic arts and photographic products in the first half of 2003. During the second quarter and first half of 2003, gross margins improved to 56% and 58%, respectively, compared to (343%) and (160%), for the same periods in 2002 as a result of increasing sales of higher margin CAD products and write-offs of inventory relating to graphic arts and photographic products recorded in the quarter ended June 30, 2002. If such write-offs are excluded, gross margins for the second quarter of 2003 improved to 56% compared to 22% in the prior-year quarter, while gross margins in the first half of 2003 improved to 58%, compared to 23% for the six month period ended June 30, 2002. 1 The Company, without giving effect to the payment of preferred stock dividends, recorded a net loss of ($1,285,144), or ($0.05) per share, for the quarter ended June 30, 2003, compared with a net loss of ($7,359,510), or ($0.47) per share, for the prior-year quarter. The net loss for the six-month period ended June 30, 2003 totaled ($1,208,586), or ($0.05) per share, compared with a net loss of ($7,880,632). or ($0.51) per share, in the first half of 2002. During the most recent quarter, Instrumentarium Imaging, Inc. ("Instrumentarium"), which has been the exclusive distributor of the Company's MammoReader(TM) computer aided detection products, received orders for a record 24 MammoReader systems and shipped a record 17 MammoReader systems to hospitals, women's health centers and Mammography clinics. iCAD reports that, to date, approximately 70 MammoReader systems have been sold and installed by Instrumentarium. In May 2003 the MammoReader was designated the top-rated CAD system for early breast cancer detection by MD Buyline, an independent evaluator of medical capital equipment. During the second quarter of 2003, in anticipation of iCAD's release of new products and the proposed acquisition of Instrumentarium by General Electric Medical Systems, the Company converted Instrumentarium from a stocking distributor to a non-stocking distributor, thus allowing Instrumentarium to deplete its inventory of MammoReader systems in partial fulfillment of end-user orders received. This change reduced iCAD's shipments of MammoReader systems to Instrumentarium during the second quarter of 2003 which resulted in a corresponding reduction in iCAD's MammoReader sales recorded in the second quarter. "With our recent announcement of the iCAD iQ system, we have targeted a large segment of the market that is currently under served by the more expensive CAD systems," continued Parr. "Capitalizing on the cost advantages achieved through our vertically integrated corporate structure, we believe iQ can provide our Company with a sustainable competitive advantage among smaller and more price-sensitive Mammography and breast care centers. We believe the iCAD iQ will represent a category-defining CAD system for this under served market by relying on iCAD's proprietary inventions and significant cost advantages to offer a simpler, more reliable and substantially less expensive CAD solution. Furthermore, the iQ will be available to Mammography facilities that cannot afford the outright purchase of a CAD system, through a simple `fee-per-procedure' program that we have branded ClickCAD(TM). Under the ClickCAD program, iQ(TM) systems will be installed in qualified Mammography clinics at no up-front capital cost. The clinics will then pay iCAD a fee approximating $6.50 for each CAD procedure performed, an amount that represents less than 35% of the standard $19.13 Federal reimbursement rate for CAD procedures. This program will allow many Mammography clinics to improve the health care delivered to women at risk, strengthen their marketing position in attracting and keeping patients concerned about breast cancer, reduce the legal risks associated with failure to detect early-stage cancers, and increase their net revenues - all without a capital investment." 2 "While we expect the impact of iCAD iQ system shipments upon 2003 sales to be modest, the new product line should contribute materially to our sales and shipments in future years," noted Parr. "In support of this new product, we have established an internal field sales support team that has already begun to identify and develop a broad reseller channel for the iCAD iQ. Additionally, this team is working closely with Instrumentarium to increase sales of our full-featured MammoReader systems." The Company also announced the addition of computer aided detection product distribution relationships in Canada, the United Kingdom, Korea, the Middle East, Hawaii and Puerto Rico during the second quarter of 2003. Legal expenses related to ongoing patent infringement litigation with R2 Technology, Inc. continued to represent a major expense item for iCAD during the second quarter of 2003. Since the Company's acquisition of Intelligent Systems Software, Inc. in June 2002, iCAD has recorded over $1,155,274 in legal and related expenses associated with the R2 litigation which are recorded under general and administrative expenses. Approximately $612,900 of such legal expenses were recorded during the second quarter of 2003. "A court trial on R2's claims is now scheduled for October 2003," noted Parr. "We are committed to a successful conclusion to this litigation, as we seek to bring the benefits of computer aided breast cancer detection to all women at risk, on an affordable basis. iCAD will host an investor conference call at 11:00 am EDT today to review second quarter operating results. Shareholders and other interested parties may participate in the conference call by dialing 800-915-4836 or for international/local participants by dialing 973-317-5319, a few minutes before 11:00 a.m. EDT on August 7, 2003. The call will also be broadcast live on the Internet at http://www.firstcallevents.com/service/ajwz386962661gf12.html. A replay of the conference call will be available two hours after the completion of the conference call from August 7, 2003 until August 14, 2003 by dialing 800-428-6051 for participants in the US/Canada or for international/local participants, call 973-709-2089 and enter the conference ID 302639. The call will also be archived for 90 days at http://www.firstcallevents.com/service/ajwz386962661gf12.html ABOUT ICAD, INC. Computer aided detection from iCAD, Inc. can detect 23% of breast cancers an average of 14 months earlier than traditional mammography screening. Computer aided detection provides the radiologist with a "second set of eyes", thus enhancing the probability of identifying suspicious areas that may have been missed by a standard mammogram. 3 iCAD offers the fastest CAD system available, the only CAD system to look for clinical asymmetries as an indicator of breast cancer, and the most sensitive system available to detect breast masses and cancers overall. The iCAD system is the only CAD system designed on a relational database platform, which can improve productivity and reduce operating and capital costs at women's health centers by offering computer aided detection as an integrated or integration-ready part of current or anticipated informatics systems, digital imaging resources, and workflows. In January 2002, the Company received approval from the U.S. Food and Drug Administration (FDA) to market its computer aided detection systems in the United States. iCAD, the only vertically integrated company in its market, also manufactures film digitizers for a variety of medical imaging and other applications. The Company is headquartered in Nashua, New Hampshire and its common stock is listed on The Nasdaq Stock Market under the symbol "ICAD". Certain statements contained in this News Release constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from such forward-looking statements. Such risks include, but are not limited to, uncertainties associated with litigation and/or government regulation, changes in Medicare reimbursement policies, competitive factors, and other risks that are detailed in the Company's periodic filings with the Securities and Exchange Commission. The words "believe", "demonstrate", "intend", "expect", "estimate", "anticipate", "likely", "should", and similar expressions identify forward-looking statements. Readers are cautioned to avoid placing undue reliance on such forward-looking statements, which speak only as of the date the statements were made. For further information, please contact: RJ Falkner & Company, Inc., Investor Relations Counsel (800) 377-9893 or via email atinfo@rjfalkner.com 4 ICAD, INC. Consolidated Statements of Operations
Three Months Six Months June 30, June 30, ------------------------------- ------------------------------- 2003 2002 2003 2002 (unaudited) (unaudited) Sales $ 1,337,517 $ 776,600 $ 3,551,529 $ 1,552,233 Cost of Sales 592,583 3,442,347 1,502,168 4,037,759 ------------ ------------ ------------ ------------ Gross Margin 744,934 (2,665,747) 2,049,361 (2,485,526) ------------ ------------ ------------ ------------ Operating expenses: Engineering and product development 609,545 337,139 1,193,798 526,895 General and administrative 1,104,063 4,059,232 1,500,295 4,284,587 Marketing and sales 306,992 287,315 546,704 554,395 ------------ ------------ ------------ ------------ Total operating expenses 2,020,600 4,683,686 3,240,797 5,365,877 ------------ ------------ ------------ ------------ Loss from operations (1,275,666) (7,349,433) (1,191,436) (7,851,403) Interest expense - net 9,478 10,077 17,150 29,229 ------------ ------------ ------------ ------------ Net loss $ (1,285,144) $ (7,359,510) $ (1,208,586) $ (7,880,632) Preferred dividend 36,912 36,911 73,417 73,416 ------------ ------------ ------------ ------------ Net loss available to common shareholders $ (1,322,056) $ (7,396,421) $ (1,282,003) $ (7,954,048) ============ ============ ============ ============ Net loss per share Basic and diluted $ (0.05) $ (0.47) $ (0.05) $ (0.51) Weighted average number of shares used in computing loss per share Basic and diluted 26,378,729 15,889,910 26,364,567 15,572,432
5 ICAD, INC. Consolidated Balance Sheets
June 30, 2003 December 31, 2002 ------------- ----------------- Assets (unaudited) (audited) Current assets: Cash and equivalents $ 501,648 $ 1,091,029 Trade accounts receivable, net of allowance for doubtful accounts of $75,500 in 2003 and $40,000 in 2002 1,171,940 1,550,167 Inventory 356,490 390,349 Prepaid and other 178,202 85,120 ----------- ----------- Total current assets 2,208,280 3,116,665 ----------- ----------- Property and equipment: Equipment 892,472 840,410 Leasehold improvements 19,175 8,051 Furniture and fixtures 35,569 22,271 ----------- ----------- Less accumulated depreciation and amortization 947,216 870,732 Net property and equipment 634,851 579,545 ----------- ----------- 312,365 291,187 ----------- ----------- Other assets: Patents 49,286 -- Technology intangible 3,611,520 3,740,553 Distribution agreement 1,461,028 1,513,228 Goodwill 17,415,723 17,415,723 ----------- ----------- Total other assets 22,537,557 22,669,504 ----------- ----------- Total assets $25,058,202 $26,077,356 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 2,498,173 $ 2,232,262 Accrued interest 236,432 229,078 Accrued expenses 1,095,514 1,776,824 Convertible subordinated debentures 10,000 10,000 Current maurities of notes payable 66,680 65,526 ----------- ----------- Total current liabilities 3,906,799 4,313,690 Loans payable to related party 830,000 200,000 Notes payable, less current maturities 75,045 108,390 ----------- ----------- Total liabilities 4,811,844 4,622,080 ----------- ----------- Stockholders' equity: Convertible preferred stock, $.01 par value: authorized 1,000,000 shares; issued and outstanding 8,550 in 2003 and 2002, with the aggregated liquidation value of $2,115,000 in 2002 and 2003, plus 7% annual dividend 86 86 Common stock, $ .01 par value: authorized 50,000,000 shares; issued 26,487,324 in 2003 and 26,418,124 shares in 2002; outstanding 26,419,448 in 2003 and 26,350,248 share in 2002. 264,873 264,181 Additional paid-in capital 85,828,459 85,829,483 Accumulated deficit (64,896,796) (63,688,210) Treasury stock, at cost (67,876 shares) (950,264) (950,264) ----------- ----------- Total stockholders' equity $20,246,358 21,455,276 ----------- ----------- Total liabilities and stockholders' equity $25,058,202 $26,077,356 ============ ===========
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