ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of Class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large Accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
Page |
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Item 1. |
3 | |||||
Item 1A. |
24 | |||||
Item 1B. |
41 | |||||
Item 2. |
41 | |||||
Item 3. |
42 | |||||
Item 4. |
42 | |||||
Item 5. |
43 | |||||
Item 6. |
43 | |||||
Item 7. |
43 | |||||
Item 7A. |
56 | |||||
Item 8. |
56 | |||||
Item 9. |
56 | |||||
Item 9A. |
57 | |||||
Item 9B. |
57 | |||||
Item 9C. |
57 | |||||
Item 10. |
58 | |||||
Item 11. |
58 | |||||
Item 12. |
58 | |||||
Item 13. |
58 | |||||
Item 14. |
58 | |||||
Item 15. |
59 | |||||
Item 16 |
60 |
Item 1 . |
Business . |
• | anti-kickback, false claims, and physician self-referral statutes; |
• | U.S. state laws and regulations regarding fee splitting and other relationships between healthcare providers and non-professional entities, such as companies that provide management and reimbursement support services; |
• | anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act, the UK Anti-Bribery Act, the Canadian Corruption of Foreign Public Officials Act, and guidance promulgated by certain multi-national groups, such as the United Nations Convention Against Corruption and the Organization for Economic Cooperation and Development Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions; |
• | laws regulating the privacy and security of health data, protected health information and personally identifiable information. These include the U.S. Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the Health Information Technology for Economic and Clinical Health Act, the |
General Data Protection Regulation (“GDPR”) in the EU, and the Personal Information Protection and Electronic Documents Act in Canada; and |
• | healthcare reform laws in the United States, such as the Affordable Care Act (“ACA”) and the 21st Century Cures Act, which include new regulatory mandates and other measures designed to reduce the rate of medical inflation. These include, among other things, stringent new reporting requirements of financial relationships between device manufacturers and physicians and teaching hospitals. |
• | the referral of an individual for a service or product for which payment may be made by Medicare, Medicaid or other government-sponsored healthcare program; or |
• | purchasing, ordering, arranging for, or recommending the ordering of, any service or product for which payment may be made by a government-sponsored healthcare program. |
• | whether the product or service is a covered benefit under its health plan; |
• | whether the product or service is appropriate and medically necessary for the specific indication; |
• | cost effectiveness of the product or service; |
• | whether the product is being used in a manner consistent with its FDA-approved or cleared label (i.e., “on-label”); and |
• | a determination that the product or service is neither experimental nor investigational (e.g., that its use is supported by relevant evidence in the peer reviewed literature, its use is supported by medical professional society treatment guidelines). |
Item 1A. |
Risk Factors. |
• | The Company has incurred significant losses from inception through 2021 and there can be no assurance that we will be able to achieve and sustain future profitability. |
• | The Company’s quarterly and annual operating and financial results and gross margins are likely to fluctuate significantly in future periods. |
• | Management expects the novel coronavirus (COVID-19) pandemic to continue to have a significant effect on the Company’s results of operations. A continuation or worsening of the pandemic will have a material adverse impact on iCAD’s business, results of operations and financial condition and on the market price of iCAD’s common stock. |
• | The markets for the Company’s products and treatments and newly introduced enhancements to iCAD’s existing products and treatments may not develop as expected, the Company may continue to face barriers to broad market acceptance. |
• | Sales and market acceptance of Company products is dependent upon the coverage and reimbursement decisions made by third-party payers, including carve-out radiology benefits managers. The failure of third-party payers to provide appropriate levels of coverage and reimbursement, and/or meeting prior authorization and other requirements for approval to use Company products and treatments facilitated by the Company’s products could harm the Company’s business and prospects. |
• | A limited number of customers account for a significant portion of the Company’s total revenue. The loss of a principal customer could seriously hurt the Company’s business. |
• | The markets for many of the Company’s products are subject to changing technology. |
• | Revenue from the Company’s new subscription license model may be difficult to predict. |
• | The Company distributes its products in highly competitive markets and the Company’s sales may suffer as a result. |
• | The Company relies on intellectual property and proprietary rights to maintain its competitive position and may not be able to protect these rights. |
• | The Company’s future prospects depend on its ability to retain current key employees and attract additional qualified personnel. |
• | The market price of the Company’s common stock has been, and may continue to be volatile, which could reduce the market price of the Company’s common stock. |
• | Future issuances of shares of the Company’s common stock may cause significant dilution of equity interests of existing holders of common stock and decrease the market price of shares of the Company’s common stock. |
• | market acceptance of the Company’s products; |
• | uncertainty of the development of a market for such product or treatment; |
• | trends relating to, or the introduction or existence of, competing products, technologies or alternative treatments or therapies that may be more effective, safer or easier to use than the Company’s products, technologies, treatments or therapies; |
• | the perceptions of the Company’s products or treatments as compared to other products and treatments; |
• | recommendation and support for the use of the Company’s products or treatments by influential customers, such as hospitals, radiological practices, breast surgeons and radiation oncologists and treatment centers and U.S. and international medical professional societies; |
• | the availability and extent of data demonstrating the clinical efficacy of the Company’s products or treatments; |
• | competition, including the presence of competing products sold by companies with longer operating histories, more recognizable names and more established distribution networks; and |
• | other technological developments. |
• | harm to the Company’s reputation; |
• | lost sales; |
• | delays in commercial releases; |
• | product liability claims; |
• | delays in or loss of market acceptance of the Company’s solutions; |
• | license terminations or renegotiations; |
• | unexpected expenses and diversion of resources to remedy errors; and |
• | privacy and security vulnerabilities. |
• | non-approval of an investigational device exemption (IDE), which is required by the FDA for the study in humans of a significant risk device that is not approved for the indication being studied; |
• | failure to reach an agreement with contract research organizations or clinical trial sites; |
• | failure of third-party contract research organizations to properly implement or monitor the clinical trial protocols; |
• | failure of IRBs to approve the Company’s clinical trial protocols or suspension or termination of the Company’s clinical trial by the IRB, DSMB, or the FDA; |
• | slower than expected rates of patient recruitment and enrollment, which may be further negatively impacted by the COVID-19 global pandemic; |
• | inability to retain patients in clinical trials, which may be further negatively impacted by the COVID-19 global pandemic; |
• | lack of effectiveness during clinical trials; |
• | unforeseen safety issues; |
• | inability or unwillingness of medical clinical investigators and institutional review boards to follow the Company’s clinical trial protocols; |
• | failure of clinical investigators or sites to maintain necessary licenses or permits or comply with good clinical practices, or GCP, or other regulatory requirements; and |
• | lack of sufficient funding to finance the clinical trials. |
Item 1B. |
Unresolved Staff Comments. |
Item 2. |
Properties. |
Item 3. |
Legal Proceedings. |
Item 4. |
Mine Safety Disclosures. |
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Item 6 . |
Reserved . |
Item 7 . |
Management’s Discussion and Analysis of Financial Condition and Results of Operations . |
For the year ended December 31, |
||||||||||||||||
2021 |
2020 |
$ Change |
% Change |
|||||||||||||
Detection revenue |
||||||||||||||||
Product revenue |
$ | 15,661 | $ | 16,291 | $ | (630 | ) | (3.9 | )% | |||||||
Service and supplies revenue |
6,358 | 5,706 | 652 | 11.4 | % | |||||||||||
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|
|
|||||||||
Subtotal |
22,019 | 21,997 | 22 | 0.1 | % | |||||||||||
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Therapy revenue |
||||||||||||||||
Product revenue |
5,530 | 2,612 | 2,918 | 111.7 | % | |||||||||||
Service and supplies revenue |
6,089 | 5,089 | 1,000 | 19.7 | % | |||||||||||
|
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|
|
|
|
|
|||||||||
Subtotal |
11,619 | 7,701 | 3,918 | 50.9 | % | |||||||||||
|
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|
|
|
|||||||||
$ | 33,638 | $ | 29,698 | $ | 3,940 | 13.3 | % | |||||||||
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|
|
For the year ended December 31, |
||||||||||||||||
2021 |
2020 |
Change |
% Change |
|||||||||||||
Products |
$ | 5,653 | $ | 5,000 | $ | 653 | 13.1 | % | ||||||||
Service and supplies |
3,425 | 2,965 | 460 | 15.5 | % | |||||||||||
Amortization and depreciation |
317 | 379 | (62 | ) | (16.4 | %) | ||||||||||
|
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|
|||||||||
Total cost of revenue |
9,395 | 8,344 | 1,051 | 12.6 | % | |||||||||||
|
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|
|
|
|||||||||
Gross profit |
$ | 24,243 | $ | 21,354 | $ | 2,889 | 13.5 | % | ||||||||
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|
|
|||||||||
Gross profit % |
72.1 | % | 71.9 | % |
For the year ended December 31, |
||||||||||||||||
2021 |
2020 |
Change |
% Change |
|||||||||||||
Detection gross profit |
$ | 18,510 | $ | 17,856 | $ | 654 | 3.7 | % | ||||||||
Therapy gross profit |
5,733 | 3,498 | 2,235 | 63.9 | % | |||||||||||
|
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|
|
|
|
|
|||||||||
Gross profit |
$ | 24,243 | $ | 21,354 | $ | 2,889 | 13.5 | % | ||||||||
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|
For the year ended December 31, |
||||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||
Operating expenses: |
||||||||||||||||
Engineering and product development |
$ | 9,194 | $ | 8,114 | $ | 1,080 | 13.3 | % | ||||||||
Marketing and sales |
15,135 | 13,312 | 1,823 | 13.7 | % | |||||||||||
General and administrative |
10,406 | 9,117 | 1,289 | 14.1 | % | |||||||||||
Amortization and depreciation |
240 | 199 | 41 | 20.6 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
$ | 34,975 | $ | 30,742 | $ | 4,233 | 13.8 | % | ||||||||
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|
|
|
|
|
For the year ended December 31, |
||||||||||||||||
2021 | 2020 | Change | Change % | |||||||||||||
Interest expense |
$ | (141 | ) | $ | (476 | ) | 335 | (70.4 | )% | |||||||
Interest income |
15 | 97 | (82 | ) | (84.5 | )% | ||||||||||
Loss on extinguishment of debt |
(386 | ) | (341 | ) | (45 | ) | 13.2 | % | ||||||||
Loss on fair value of debentures |
— | (7,464 | ) | 7,464 | (100.0 | )% | ||||||||||
|
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|
|
|
|
|
|
|||||||||
Total other expense |
$ | (512 | ) | $ | (8,184 | ) | $ | 7,672 | (93.7 | )% | ||||||
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|||||||||
Income tax expense |
$ | 1 | $ | 38 | (37 | ) | (97.4 | )% |
Twelve months ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
Detection revenue |
||||||||||||||||
Product revenue |
$ | 16,291 | $ | 16,788 | $ | (497 | ) | (3.0 | )% | |||||||
Service revenue |
5,706 | 5,531 | 175 | 3.2 | % | |||||||||||
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|
|||||||||
Subtotal |
21,997 | 22,319 | (322 | ) | (1.4 | )% | ||||||||||
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|||||||||
Therapy revenue |
||||||||||||||||
Product revenue |
2,612 | 2,979 | (367 | ) | (12.3 | )% | ||||||||||
Service revenue |
5,089 | 6,042 | (953 | ) | (15.8 | )% | ||||||||||
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|
|||||||||
Subtotal |
7,701 | 9,021 | (1,320 | ) | (14.6 | )% | ||||||||||
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|
|
|||||||||
Total revenue |
$ | 29,698 | $ | 31,340 | $ | (1,642 | ) | (5.2 | )% | |||||||
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Twelve months ended December 31, |
||||||||||||||||
2020 |
2019 |
Change |
% Change |
|||||||||||||
Products |
$ | 5,000 | $ | 3,278 | $ | 1,722 | 52.5 | % | ||||||||
Service and supplies |
2,965 | 3,438 | (473 | ) | (13.8 | )% | ||||||||||
Amortization and depreciation |
379 | 397 | (18 | ) | 100.0 | % | ||||||||||
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|
|||||||||
Total cost of revenue |
$ | 8,344 | $ | 7,113 | $ | 1,231 | 17.3 | % | ||||||||
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|
|||||||||
Gross profit |
$ | 21,354 | $ | 24,227 | $ | (2,873 | ) | (11.9 | )% | |||||||
profit % |
71.9 | % | 77.3 | % |
For the year ended December 31, |
||||||||||||||||
2020 |
2019 |
Change |
% Change |
|||||||||||||
Detection gross profit |
$ | 17,856 | $ | 18,627 | $ | (771 | ) | (4.1 | )% | |||||||
Therapy gross profit |
3,498 | 5,600 | (2,102 | ) | (37.5 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
$ | 21,354 | $ | 24,227 | $ | (2,873 | ) | (11.9 | )% | |||||||
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|
Year ended December 31, |
||||||||||||||||
2020 | 2019 | Change | Change % | |||||||||||||
Operating expenses: |
||||||||||||||||
Engineering and product development |
$ | 8,114 | $ | 9,271 | $ | (1,157 | ) | (12.5 | )% | |||||||
Marketing and sales |
13,312 | 13,634 | (322 | ) | (2.4 | )% | ||||||||||
General and administrative |
9,117 | 7,443 | 1,674 | 22.5 | % | |||||||||||
Amortization and depreciation |
199 | 276 | (77 | ) | (27.9 | )% | ||||||||||
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|
|||||||||
Total operating expenses |
$ | 30,742 | $ | 30,624 | $ | 118 | 0.4 | % | ||||||||
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|
Year ended December 31, |
||||||||||||||||
2020 | 2019 | Change | Change % | |||||||||||||
Interest expense |
$ | (476 | ) | $ | (784 | ) | $ | 308 | (39.3 | )% | ||||||
Interest income |
97 | 344 | (247 | ) | (71.8 | )% | ||||||||||
Loss on extinguishment of debt |
(341 | ) | — | (341 | ) | 0.0 | % | |||||||||
Loss on fair value of debentures |
(7,464 | ) | (6,671 | ) | (793 | ) | 11.9 | % | ||||||||
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|||||||||
$ | (8,184 | ) | $ | (7,111 | ) | $ | (1,073 | ) | 15.1 | % | ||||||
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Tax expense |
$ | 38 | $ | 43 | $ | (5 | ) | (11.6 | )% |
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Segment revenues: |
||||||||||||
Detection |
$ | 22,019 | $ | 21,997 | $ | 22,319 | ||||||
Therapy |
11,619 | 7,701 | 9,021 | |||||||||
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Total Revenue |
$ | 33,638 | $ | 29,698 | $ | 31,340 | ||||||
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Segment gross profit: |
||||||||||||
Detection |
$ | 18,510 | $ | 17,856 | $ | 18,627 | ||||||
Therapy |
5,733 | 3,498 | 5,600 | |||||||||
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Total gross profit |
$ | 24,243 | $ | 21,354 | $ | 24,227 | ||||||
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Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Segment operating income (loss): |
||||||||||||
Detection |
$ | 1,563 | $ | 2,719 | $ | 2,564 | ||||||
Therapy |
(1,835 | ) | (3,028 | ) | (1,476 | ) | ||||||
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Segment operating income (loss) |
$ | (272 | ) | $ | (309 | ) | $ | 1,088 | ||||
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General administrative |
$ | (10,460 | ) | $ | (9,079 | ) | $ | (7,486 | ) | |||
Interest expense |
(141 | ) | (476 | ) | (784 | ) | ||||||
Loss on extinguishment of debt |
(386 | ) | (341 | ) | — | |||||||
Other income |
15 | 97 | 345 | |||||||||
Fair value of convertible debentures |
— | (7,464 | ) | (6,671 | ) | |||||||
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Loss before income tax |
$ | (11,244 | ) | $ | (17,572 | ) | $ | (13,508 | ) | |||
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Item 7A. |
Quantitative and Qualitative Disclosures about Market Risk. |
Item 8. |
Financial Statements and Supplementary Data. |
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
Item 9A. |
Controls and Procedures. |
Item 9B. |
Other Information. |
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. |
Item 10 . |
Directors, Executive Officers and Corporate Governance . |
Item 11 . |
Executive Compensation . |
Item 12 . |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . |
Item 13 . |
Certain Relationships and Related Transactions, and Director Independence . |
Item 14 . |
Principal Accounting Fees and Services . |
Item 15 . |
Exhibits, Financial Statement Schedules. |
* | Denotes a management compensation plan or arrangement. |
** | The Registrant has omitted certain schedules and exhibits pursuant to Item 601(b)(2) of Regulation S-K and shall furnish supplementally to the SEC copies any of the omitted schedules and exhibits upon request by the SEC. |
Item 16. |
Form 10-K Summary. |
By: | /s/ Stacey Stevens | |
Stacey Stevens | ||
Chief Executive Officer, President and Director |
Signature |
Title |
Date | ||
/s/ Stacey Stevens Stacey Stevens |
Chief Executive Officer, President, Director, (Principal Executive Officer) |
March 28, 2022 | ||
/s/ Charles R. Carter Charles R. Carter |
Chief Financial Officer (Principal Financial and Accounting Officer) |
March 28, 2022 | ||
/s/ Michael Klein Michael Klein |
Chairman, Director |
March 28, 2022 | ||
/s/ Dana Brown |
Director | March 28, 2022 | ||
Dana Brown |
||||
/s/ Timothy Norris Irish |
Director | March 28, 2022 | ||
Timothy Norris Irish |
||||
/s/ Nathaniel Dalton |
Director | March 28, 2022 | ||
Nathaniel Dalton |
||||
/s/ Rakesh Patel |
Director | March 28, 2022 | ||
Rakesh Patel, MD |
||||
/s/ Andy Sassine |
Director | March 28, 2022 | ||
Andy Sassine |
||||
/s/ Susan Wood |
Director | March 28, 2022 | ||
Susan Wood, Ph.D. |
Page |
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F-2 |
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F-4 |
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F-5 |
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F-6 |
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F-7 |
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F-8–F-35 |
• |
Evaluating management’s accounting policies and practices, including the reasonableness of management’s judgments and assumptions related to the identification of each distinct performance obligation and its pattern of delivery. |
• |
Testing a sample of these revenue agreements together with their underlying documents to evaluate management’s identification of each distinct performance obligation and its respective pattern of revenue recognition. |
December 31, |
December 31, |
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Assets |
2021 |
2020 |
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(in thousands except shares and per share data) |
Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Trade accounts receivable, net of allowance for doubtful accounts of $ |
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Inventory, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment: |
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Equipment |
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Leasehold improvements |
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Furniture and fixtures |
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Marketing assets |
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Less accumulated depreciation and amortization |
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Property and equipment, net |
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Other assets: |
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Operating lease assets |
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Other assets |
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Intangible assets, net of accumulated amortization of $ |
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Goodwill |
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Total other assets |
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Total assets |
$ | $ | ||||||
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
Accrued and other expenses |
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Lease payable, current |
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Deferred revenue, current |
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Total current liabilities |
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Lease payable, long-term |
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Deferred revenue, long-term |
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Notes payable, long-term |
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Deferred tax |
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Total liabilities |
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Commitments and contingencies (Note 15) |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
( |
) | ( |
) | ||||
Treasury stock at cost, |
( |
) | ( |
) | ||||
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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For the Years Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
(in thousands except per share data) | ||||||||||||
Revenue: |
||||||||||||
Products |
$ | $ | $ | |||||||||
Service and supplies |
||||||||||||
Total revenue |
||||||||||||
Cost of Revenue: |
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Products |
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Service and supplies |
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Amortization and depreciation |
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Total cost of revenue |
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Gross profit |
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Operating expenses: |
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Engineering and product development |
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Marketing and sales |
||||||||||||
General and administrative |
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Amortization and depreciation |
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Total operating expenses |
||||||||||||
Loss from operations |
( |
) | ( |
) | ( |
) | ||||||
Other expense |
||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ||||||
Interest income |
||||||||||||
Loss on extinguishment of debt |
( |
) | ( |
) | ||||||||
Loss on fair value of convertible debentures |
( |
) | ( |
) | ||||||||
Other expense, net |
( |
) | ( |
) | ( |
) | ||||||
Loss before income tax expense |
( |
) | ( |
) | ( |
) | ||||||
Income tax expense |
||||||||||||
Net loss and comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Net loss per share: |
||||||||||||
Basic |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Weighted average number of shares used in computing net loss per share: |
||||||||||||
Basic |
||||||||||||
Diluted |
Common Stock |
Additional Paid-in Capital |
|||||||||||||||||||||||
Number of Shares Issued |
Par Value |
Accumulated Deficit |
Treasury Stock |
Stockholders’ Equity |
||||||||||||||||||||
Balance at December 31, 2018 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Issuance of common stock relative to vesting of restricted stock, net of |
( |
) | — | — | ( |
) | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans |
— | — | ||||||||||||||||||||||
Issuance of common stock, net |
— | — | ||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | ||||||||||||||||||||
Net Loss |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2019 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Issuance of common stock relative to vesting of restricted stock, net of |
( |
) | — | — | ( |
) | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans |
— | — | ||||||||||||||||||||||
Issuance of common stock, net |
— | — | ||||||||||||||||||||||
Issuance of common stock pursuant employee stock purchase plan |
— | — | ||||||||||||||||||||||
Issuance of common stock upon conversion of debentures |
— | — | ||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | ||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Issuance of common stock relative to vesting of restricted stock, net of |
( |
) | — | — | ( |
) | ||||||||||||||||||
Issuance of common stock pursuant to stock option plans |
— | — | ||||||||||||||||||||||
Issuance of common stock, net |
— | — | ||||||||||||||||||||||
Issuance of common stock pursuant to employee stock purchase plan |
— | — | ||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | ||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
(in thousands) | ||||||||||||
Cash flow from operating activities: |
||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Adjustments to reconcile net loss to net cash used for operating activities: |
||||||||||||
Amortization |
||||||||||||
Depreciation |
||||||||||||
Bad debt provision |
||||||||||||
Stock-based compensation expense |
||||||||||||
Amortization of debt discount and debt costs |
||||||||||||
Loss on extinguishment of debt |
— | |||||||||||
Deferred tax |
||||||||||||
Loss on disposal of assets |
— | — | ||||||||||
Change in fair value of convertible debentures |
— | |||||||||||
Changes in operating assets and liabilities, net of acquisition: |
||||||||||||
Accounts receivable |
( |
) | ( |
) | ||||||||
Inventory |
( |
) | ( |
) | ( |
) | ||||||
Prepaid and other assets |
( |
) | ||||||||||
Accounts payable |
( |
) | ||||||||||
Accrued and other expenses |
( |
) | ( |
) | ||||||||
Deferred revenue |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Total adjustments |
||||||||||||
|
|
|
|
|
|
|||||||
Net cash used for operating activities |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Cash flow used for investing activities: |
||||||||||||
Additions to patents, technology and other |
( |
) | ( |
) | ( |
) | ||||||
Additions to property and equipment |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net cash used for investing activities |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Cash flow from financing activities: |
||||||||||||
Issuance of common stock for cash, net |
||||||||||||
Issuance of common stock pursuant to Employee Stock Purchase Plan |
— | |||||||||||
Issuance of common stock pursuant to stock option plans |
||||||||||||
Taxes paid related to restricted stock issuance |
( |
) | ( |
) | ( |
) | ||||||
Principal payments of capital lease obligations |
— | — | ( |
) | ||||||||
Proceeds from notes payable |
— | |||||||||||
Principal repayment of notes payable |
( |
) | ( |
) | ( |
) | ||||||
Debt issuance costs |
— | ( |
) | — | ||||||||
Proceeds from line of credit |
— | |||||||||||
Repayment of line of credit |
— | ( |
) | ( |
) | |||||||
|
|
|
|
|
|
|||||||
Net cash provided by financing activities |
||||||||||||
|
|
|
|
|
|
|||||||
Increase in cash and equivalents |
||||||||||||
Cash and equivalents, beginning of year |
||||||||||||
|
|
|
|
|
|
|||||||
Cash and equivalents, end of year |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Supplemental disclosure of cash flow information: |
||||||||||||
Interest paid |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Taxes paid |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Right-of-use |
||||||||||||
|
|
|
|
|
|
|||||||
Issuance of common stock upon conversion of debentures |
$ | |||||||||||
|
|
|
|
|
|
• | significant and sustained underperformance relative to historical or projected future operating results; |
• | significant changes in the manner or use of the Company’s assets in the strategy for the Company’s overall business; |
• | significant negative industry or economic trends; |
• | significant and sustained decline in the Company’s stock price; and |
• | a decline in the Company’s market capitalization below net book value. |
• |
A significant decrease in the market price of a long-lived asset (asset group); |
• |
A significant adverse change in the extent or manner in which a long-lived asset (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 (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 (asset group); |
• |
A current period operating 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 (asset group). |
1) |
Identify the contract(s) with a customer |
2) |
Identify the performance obligations in the contract |
3) |
Determine the transaction price , the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. |
4) |
Allocate the transaction price to the performance obligations in the contract that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative Stand-alone Sales Price (“SSP”) basis unless the transaction price is variable and meets the criteria to be allocated entirely to a |
performance obligation or to a distinct good or service that forms part of a performance obligation. The Company determines SSP based on the price at which the performance obligation is sold separately. If the SSP is not observable through past transactions, the Company estimates the SSP taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. |
5) |
Recognize revenue when (or as) the Company satisfies a performance obligation |
• | 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 |
Fair Value Measurements (in thousands) as of December 31, 2021 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Assets |
||||||||||||||||
Money market accounts |
$ | — | — | $ | ||||||||||||
Total Assets |
$ | — | — | $ | ||||||||||||
Fair Value Measurements (in thousands) as of December 31, 2020 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Assets |
||||||||||||||||
Money market accounts |
$ | $ | — | $ | — | $ | ||||||||||
Total Assets |
$ | $ | — | $ | — | $ | ||||||||||
Convertible Debentures | ||||
Balance, December 31, 2019 |
$ | |||
Issuances |
||||
Fair value adjustments |
||||
Conversion |
( |
) | ||
Balance, December 31, 2020 |
$ | |||
Year ended December 31, 2021 |
||||||||||||
Reportable Segments |
||||||||||||
Detection |
Therapy |
Total |
||||||||||
Major Goods/Service Lines |
||||||||||||
Products |
$ | $ | $ | |||||||||
Service contracts |
||||||||||||
Supply and source usage agreements |
— | |||||||||||
Professional services |
— | |||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Timing of Revenue Recognition |
||||||||||||
Goods transferred at a point in time |
$ | $ | $ | |||||||||
Services transferred over time |
||||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Sales Channels |
||||||||||||
Direct sales force |
$ | $ | $ | |||||||||
OEM partners |
— | |||||||||||
Channel partners |
— | |||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
Year ended December 31, 2020 |
||||||||||||
Reportable Segments |
||||||||||||
Detection |
Therapy |
Total |
||||||||||
Major Goods/Service Lines |
||||||||||||
Products |
$ | $ | $ | |||||||||
Service contracts |
||||||||||||
Supply and source usage agreements |
— | |||||||||||
Professional services |
— | |||||||||||
Other |
||||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Timing of Revenue Recognition |
||||||||||||
Goods transferred at a point in time |
$ | $ | $ | |||||||||
Services transferred over time |
||||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Sales Channels |
||||||||||||
Direct sales force |
$ | $ | $ | |||||||||
OEM partners |
— | |||||||||||
Channel partners |
— | |||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
Year ended December 31, 2019 |
||||||||||||
Reportable Segments |
||||||||||||
Detection |
Therapy |
Total |
||||||||||
Major Goods/Service Lines |
||||||||||||
Products |
$ | $ | $ | |||||||||
Service contracts |
||||||||||||
Supply and source usage agreements |
— | |||||||||||
Professional services |
— | |||||||||||
Other |
||||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Timing of Revenue Recognition |
||||||||||||
Goods transferred at a point in time |
$ | $ | $ | |||||||||
Services transferred over time |
||||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Sales Channels |
||||||||||||
Direct sales |
$ | $ | $ | |||||||||
OEM partners |
— | |||||||||||
Channel partners |
— | |||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
Balance at December 31, 2021 |
Balance at December 31, 2020 |
|||||||
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” |
$ | $ |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|||||||
Balance at beginning of period |
$ | $ | ||||||
Deferral of revenue |
||||||||
Recognition of deferred revenue |
( |
) | ( |
) | ||||
Balance at end of period |
$ | $ | ||||||
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Balance at beginning of period |
$ | $ | ||||||
Deferral of costs to obtain a contract |
||||||||
Recognition of costs to obtain a contract |
( |
) | ( |
) | ||||
Balance at end of period |
$ | $ | ||||||
2021 |
2020 |
2019 |
||||||||||
Net loss available to common shareholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Basic shares used in the calculation of earnings per share |
||||||||||||
Effect of dilutive securities: |
||||||||||||
Stock options |
— | — | — | |||||||||
Restricted stock |
— | — | — | |||||||||
Diluted shares used in the calculation of earnings per share |
||||||||||||
Net loss per share |
||||||||||||
Basic |
$ | ( |
) |
$ | ( |
) | $ | ( |
) | |||
Diluted |
$ | ( |
) |
$ | ( |
) | $ | ( |
) |
Year Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Common stock options |
||||||||||||
Restricted Stock |
||||||||||||
Convertible Debentures |
— | — | ||||||||||
2021 |
2020 |
2019 |
||||||||||
Balance at beginning of period |
$ | $ | $ | |||||||||
Additions charged to costs and expenses |
||||||||||||
Reductions |
( |
) | ( |
) | ( |
) | ||||||
Balance at end of period |
$ | $ | $ | |||||||||
December 31, 2021 |
December 31, 2020 |
|||||||
Raw materials |
$ | $ | ||||||
Work in process |
||||||||
Finished Goods |
||||||||
|
|
|
|
|||||
Inventory Gross |
||||||||
Inventory Reserve |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Inventory Net |
$ | $ | ||||||
|
|
|
|
2021 |
2020 |
2019 |
Weighted average useful life |
|||||||||||||
Gross Carrying Amount |
||||||||||||||||
Patents and licenses |
$ | $ | $ | |||||||||||||
Technology |
||||||||||||||||
Customer relationships |
||||||||||||||||
Tradename |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
Total amortizable intangible assets |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
Accumulated Amortization |
||||||||||||||||
Patents and licenses |
$ | $ | $ | |||||||||||||
Technology |
||||||||||||||||
Customer relationships |
||||||||||||||||
Tradename |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
Total accumulated amortization |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
Total amortizable intangible assets, net |
$ | $ | $ | |||||||||||||
|
|
|
|
|
|
For the years ended December 31: |
Estimated amortization expense |
|||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
|
|
|||
$ | ||||
|
|
2021 | 2020 | |||||||
Accrued salary and related expenses |
$ | $ | ||||||
Accrued accounts payable |
||||||||
Accrued professional fees |
||||||||
Other accrued expenses |
||||||||
|
|
|
|
|||||
$ |
$ |
|||||||
|
|
|
|
Year Ended December 31, |
||||||||||
Lease Cost |
Classification |
2021 |
2020 |
|||||||
Operating lease cost - Right of Use |
Operating expenses | $ | $ | |||||||
Operating lease cost - Variable Costs |
Operating expenses | |||||||||
|
|
|
|
|||||||
Total |
$ | $ | ||||||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Cash paid for operating cash flows from operating leases |
$ | $ |
As of December 31, |
||||||||
2021 |
2020 |
|||||||
Weighted-average remaining lease term of operating leases (in years) |
||||||||
Weighted-average discount rate for operating leases |
% | % |
Year Ended December 31: |
Total |
|||
2022 |
||||
2023 |
||||
2024 |
||||
|
|
|||
Total lease payments |
||||
Less: imputed interest |
( |
) | ||
|
|
|||
Total lease liabilities |
||||
Less: current portion of lease liabilities |
( |
) | ||
|
|
|||
lease liabilities |
$ | |||
|
|
Number of Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term |
||||||||||
Outstanding, December 31, 2019 |
$ | |||||||||||
Granted |
$ | |||||||||||
Exercised |
( |
) | $ | |||||||||
Forfeited |
( |
) | $ | |||||||||
|
|
|
|
|||||||||
Outstanding, December 31, 2020 |
$ | |||||||||||
Granted |
$ | |||||||||||
Exercised |
( |
) | $ | |||||||||
Forfeited |
( |
) | $ | |||||||||
|
|
|
|
|||||||||
Outstanding, December 31, 2021 |
$ | |||||||||||
Exercisable at December 31, 2019 |
$ | |||||||||||
|
|
|
|
|||||||||
Exercisable at December 31, 2020 |
$ | |||||||||||
|
|
|
|
|||||||||
Exercisable at December 31, 2021 |
$ | |||||||||||
|
|
|
|
Year Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Cost of revenue |
$ | $ | $ | |||||||||
Engineering and product development |
||||||||||||
Marketing and sales |
||||||||||||
General and administrative expense |
||||||||||||
|
|
|
|
|
|
|||||||
$ |
$ |
$ |
||||||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Average risk-free interest rate |
% | % | % | |||||||||
Expected dividend yield |
||||||||||||
Expected life |
||||||||||||
Expected volatility |
2 % |
% | % | |||||||||
Weighted average fair value |
$ |
$ |
$ |
Year Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Outstanding |
$ | $ | $ | |||||||||
Exercisable |
$ | $ | $ | |||||||||
Exercised |
$ | $ | $ | |||||||||
Company’s stock price at December 31 |
$ | $ | $ |
Year Ended December 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Beginning outstanding balance |
||||||||||||
Granted |
||||||||||||
Vested |
( |
) | ( |
) | ( |
) | ||||||
Forfeited |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Ending outstanding balance |
||||||||||||
|
|
|
|
|
|
2021 | 2020 | 2019 | ||||||||||
Current provision: |
||||||||||||
Federal |
$ | $ | — | $ | — | |||||||
State |
||||||||||||
Foreign |
— | — | ||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Deferred provision: |
||||||||||||
Federal |
$ | $ | $ | |||||||||
State |
— | — | ||||||||||
Foreign |
— | — | ||||||||||
|
|
|
|
|
|
|||||||
$ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||
Total |
$ | $ | $ | |||||||||
|
|
|
|
|
|
2021 | 2020 | 2019 | ||||||||||
Federal statutory rate |
% | % | % | |||||||||
State income taxes, net of federal benefit |
% | % | % | |||||||||
Net state impact of deferred rate change |
% | ( |
%) | ( |
%) | |||||||
Stock compensation expense |
% | % | ( |
%) | ||||||||
Other permanent differences |
( |
%) | ( |
%) | % | |||||||
Change in valuation allowance |
( |
%) | ( |
%) | ( |
%) | ||||||
Tax credits |
% | % | % | |||||||||
Accrual to TR |
( |
%) | % | % | ||||||||
FV Mark to market on convertible notes |
% | ( |
%) | ( |
%) | |||||||
Foreign Rate Differential |
% | % | % | |||||||||
True Ups - NOL Expiration/162(m) limits |
( |
%) | ( |
%) | % | |||||||
|
|
|
|
|
|
|||||||
Effective income tax |
% | ( |
%) | ( |
%) | |||||||
|
|
|
|
|
|
2021 | 2020 | |||||||
Inventory (Section 263A) |
$ | $ | ||||||
Inventory reserves |
||||||||
Receivable reserves |
||||||||
Other accruals |
||||||||
Deferred revenue |
||||||||
Accumulated depreciation/amortization |
||||||||
Stock options |
||||||||
Developed technology |
||||||||
Tax credits |
||||||||
NOL carryforward |
||||||||
Lease Liability |
||||||||
|
|
|
|
|||||
Deferred tax assets |
||||||||
Valuation allowance |
( |
) | ( |
) | ||||
Right of Use Asset |
( |
) | ( |
) | ||||
Goodwill tax amortization |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Deferred tax liability |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Segment revenues: |
||||||||||||
Detection |
$ | $ | $ | |||||||||
Therapy |
||||||||||||
|
|
|
|
|
|
|||||||
Total Revenue |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Segment gross profit: |
||||||||||||
Detection |
$ | $ | $ | |||||||||
Therapy |
||||||||||||
|
|
|
|
|
|
|||||||
Total gross profit |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Segment operating income (loss): |
||||||||||||
Detection |
$ | $ | $ | |||||||||
Therapy |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Segment operating income (loss) |
$ | ( |
) | $ | ( |
) | $ | |||||
|
|
|
|
|
|
|||||||
General administrative |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Interest expense |
( |
) | ( |
) | ( |
) | ||||||
Loss on extinguishment of debt |
( |
) | ( |
) | — |
|||||||
Other income |
||||||||||||
Fair value of convertible debentures |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Loss before income tax |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
|
|
|
|
|
Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Detection depreciation and amortization |
||||||||||||
Depreciation |
$ | $ | $ | |||||||||
Amortization |
$ | |||||||||||
Therapy depreciation and amortization |
||||||||||||
Depreciation |
$ | $ | $ | |||||||||
Amortization |
$ |
Percent of Export sales |
||||||||||||
Region |
2021 | 2020 | 2019 | |||||||||
Europe |
% | % | % | |||||||||
Taiwan |
% | % | % | |||||||||
Canada |
% | % | % | |||||||||
China |
% | % | % | |||||||||
Other |
% | % | % | |||||||||
Total |
% | % | % | |||||||||
Total Export Revenue |
$ | $ | $ |
Percent of Export sales |
||||||||||||
Region |
2021 | 2020 | 2019 | |||||||||
France |
% | % | % | |||||||||
Spain |
% | % | % | |||||||||
Russia |
% | % | % | |||||||||
Switzerland |
% | % | % | |||||||||
Italy |
% | % | % | |||||||||
Germany |
% | % | % | |||||||||
United Kingdom |
% | % | % |
Input |
December 31, 2019 |
February 21, 2020 |
||||||
Company’s stock price |
$ | $ | ||||||
Conversion price |
||||||||
Remaining term (years) |
||||||||
Equity volatility |
% | N/A | ||||||
Risk free rate |
% | N/A | ||||||
1 Probability of default event |
% | N/A | ||||||
1 Utilization of Forced Conversion (if available) |
% | % | ||||||
1 Exercise of Default Redemption (if available) |
% | N/A | ||||||
1 Effective discount rate |
% | N/A |
1 |
Represents a Level 3 unobservable input, as defined in Note 4 - Fair Value Measurements, below. |
Convertible Debentures |
December 31, 2019 |
February 21, 2020 |
||||||
Fair value, in accordance with fair value option |
$ | $ | ||||||
Principal value outstanding |
$ | $ | ||||||