It's certainly a very good time to be in the AI business. After all, the technology has been getting huge amounts of positive publicity since December 2022, and it's being viewed as a powerful, helpful tool for humans. As a result, many AI stocks, such as Palantir (NYSE:PLTR), SoundhoundAI (NASDAQ:SOUN) and Nvidia (NASDAQ:NVDA), have skyrocketed. But there are still a multitude of small-cap AI stocks that are laboring in obscurity. These firms have all the advantages of being involved in AI, but their stock ...

[Executive Summary & Q1 2024 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q1%202024%20Highlights) iCAD is executing a three-phased transformation plan, with Phase 3 focusing on growth initiatives, while reporting a 14% increase in total revenue to $5.0 million for Q1 2024, improved gross profit margin, and a reduced GAAP net loss [Strategic Transformation and Growth Initiatives](index=1&type=section&id=Strategic%20Transformation%20and%20Growth%20Initiatives) iCAD is executing a three-phased transformation plan, with Phases 1 and 2 focused on realignment and strengthening the foundation, leading to stabilized cash burn and increased cash. Phase 3, "Investing in Growth," commenced in Q1 2024, focusing on expanding into key accounts and new markets, showing early signs of success from targeted lead generation, a revamped commercial model, sales team additions, and ProFound Breast Health Suite enhancements including ProFound Cloud - Company is in Phase 3 of its transformation plan, "**Investing in Growth**," focusing on expanding into key accounts and new markets[2](index=2&type=chunk) - Early signs of success are observed from growth initiatives including targeted lead generation, revamped commercial model, strategic sales team additions, and ProFound Breast Health Suite enhancements (e.g., ProFound Cloud)[2](index=2&type=chunk) [Key Financial and Operational Highlights](index=1&type=section&id=Key%20Financial%20and%20Operational%20Highlights) iCAD reported a 14% increase in total revenue to $5.0 million for Q1 2024, with product revenue up 26.1%. Gross profit margin improved to 83%. The company significantly reduced its GAAP net loss from continuing operations to ($1.2) million from ($3.1) million year-over-year, and operating cash flow also improved. Total Annual Recurring Revenue (ARR) grew by 10% to $9.0 million | Metric | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :--------------------------------- | :-------- | :-------- | :--------- | :--------- | | Total Revenue | $5.0M | $4.3M | $0.6M | 14% | | Product Revenue | $3.102M | $2.460M | $0.642M | 26.1% | | Service and Supplies Revenue | $1.852M | $1.874M | ($0.022M) | -1.2% | | Gross Profit Margin | 83% | 82% | 1% | - | | GAAP Net Loss (continuing operations) | ($1.2M) | ($3.1M) | $1.9M | 61.3% improvement | | Operating Cash Flow | ($1.2M) | ($1.5M) | $0.3M | 20% improvement | | Total ARR | $9.0M | - | - | 10% | [Q1 2024 Financial Performance](index=1&type=section&id=Q1%202024%20Financial%20Performance) Total revenue for Q1 2024 increased by 14.3% to $4.954 million, driven by product revenue growth, alongside improved gross profit margin, reduced operating expenses, and a significantly narrowed net loss [Revenue Breakdown](index=1&type=section&id=Revenue%20Breakdown) Total revenue for Q1 2024 increased by 14.3% year-over-year to $4.954 million. This growth was primarily driven by a 26.1% increase in product revenue, reaching $3.102 million, while service and supplies revenue saw a slight decrease of 1.2% to $1.852 million | Revenue Type | Q1 2024 (in 000's) | Q1 2023 (in 000's) | Change ($) | Change (%) | | :------------------- | :----------------- | :----------------- | :--------- | :--------- | | Product revenue | $3,102 | $2,460 | $642 | 26.1% | | Service and supplies revenue | $1,852 | $1,874 | ($22) | -1.2% | | Total revenue | $4,954 | $4,334 | $620 | 14.3% | [Gross Profit Analysis](index=1&type=section&id=Gross%20Profit%20Analysis) Gross profit for Q1 2024 was $4.113 million, representing an 83% gross profit margin, an improvement from $3.543 million or 82% in Q1 2023. This indicates improved efficiency in cost of revenue relative to sales | Metric | Q1 2024 (in 000's) | Q1 2023 (in 000's) | | :----------------- | :----------------- | :----------------- | | Gross Profit | $4,113 | $3,543 | | Gross Profit Margin | 83% | 82% | [Operating Expenses Overview](index=1&type=section&id=Operating%20Expenses%20Overview) Total operating expenses for Q1 2024 decreased by 18% to $5.554 million, down from $6.783 million in Q1 2023. This reduction was primarily driven by decreases in marketing and sales expenses (down $278 thousand) and general and administrative expenses (down $951 thousand), while engineering and product development remained relatively stable | Operating Expense Category | Q1 2024 (in 000's) | Q1 2023 (in 000's) | Change ($) | Change (%) | | :------------------------- | :----------------- | :----------------- | :--------- | :--------- | | 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% | [Net Loss and Earnings Per Share (EPS)](index=1&type=section&id=Net%20Loss%20and%20Earnings%20Per%20Share%20%28EPS%29) The GAAP net loss from continuing operations significantly improved in Q1 2024, narrowing to ($1.222) million, or ($0.05) per diluted share, compared to a loss of ($3.091) million, or ($0.12) per diluted share, in Q1 2023. Non-GAAP adjusted net loss also showed a similar improvement | Metric | Q1 2024 | Q1 2023 | | :------------------------------------------ | :-------- | :-------- | | GAAP Net Loss from continuing operations | ($1,222) | ($3,091) | | GAAP Loss from continuing operations, basic and diluted per share | ($0.05) | ($0.12) | | Non-GAAP Adjusted Net Loss from continuing operations | ($1,222) | ($2,919) | | Non-GAAP Adjusted Loss per share from continuing operations | ($0.05) | ($0.12) | [Cash and Liquidity](index=2&type=section&id=Cash%20and%20Liquidity) As of March 31, 2024, iCAD reported cash and cash equivalents of $20.3 million. The company believes it has sufficient cash resources to fund its planned operations without needing additional funding. Net cash used for operating activities improved to ($1.180) million in Q1 2024 from ($1.528) million in Q1 2023 | Metric | As of March 31, 2024 | As of December 31, 2023 | | :-------------------------- | :------------------- | :---------------------- | | Cash and cash equivalents | $20,284 | $21,670 | - Company believes it has sufficient cash resources to fund planned operations without needing additional funding[9](index=9&type=chunk) | Metric | Q1 2024 (in 000's) | Q1 2023 (in 000's) | | :-------------------------- | :----------------- | :----------------- | | Net cash used for operating activities | ($1,180) | ($1,528) | [Annual Recurring Revenue (ARR)](index=1&type=section&id=Annual%20Recurring%20Revenue%20%28ARR%29) Total Annual Recurring Revenue (ARR) increased by 10% year-over-year, reaching $9.0 million. This metric is used to assess the transition to a subscription-based business model - Total ARR was **$9.0 million**, up **10%** year-over-year[7](index=7&type=chunk) - ARR is a key metric for assessing progress in transitioning to a subscription-based business model[26](index=26&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's financial position, operational results, and cash flows for Q1 2024, detailing changes in assets, liabilities, equity, revenue, expenses, and cash movements [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets decreased slightly from $41.418 million at December 31, 2023, to $40.395 million at March 31, 2024. Cash and cash equivalents decreased, while trade accounts receivable and prepaid expenses increased. Total liabilities also saw a minor decrease | Balance Sheet Item (in 000's) | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Total assets | $40,395 | $41,418 | | Cash and cash equivalents | $20,284 | $21,670 | | Trade accounts receivable, net | $6,515 | $6,392 | | Inventory, net | $750 | $917 | | Prepaid expenses and other current assets | $1,495 | $699 | | Total current assets | $29,044 | $29,678 | | Total liabilities | $7,935 | $8,001 | | Total stockholders' equity | $32,460 | $33,417 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations details the revenue, cost of revenue, operating expenses, and net loss. Total revenue increased to $4.954 million, while total cost of revenue slightly increased to $841 thousand. Operating expenses decreased significantly, leading to a reduced loss from operations and a lower net loss from continuing operations | Statement of Operations Item (in 000's) | Q1 2024 | Q1 2023 | | :--------------------------------------- | :------ | :------ | | Total revenue | $4,954 | $4,334 | | Total cost of revenue | $841 | $791 | | Gross profit | $4,113 | $3,543 | | Total operating expenses | $5,554 | $6,783 | | Loss from operations | ($1,441) | ($3,240) | | Loss before provision for income taxes | ($1,218) | ($3,086) | | Loss from continuing operations | ($1,222) | ($3,091) | | Net loss and comprehensive loss | ($1,222) | ($3,778) | | Net loss per share, basic and diluted | ($0.05) | ($0.15) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement shows an improvement in net cash used for operating activities, decreasing from ($1.528) million in Q1 2023 to ($1.180) million in Q1 2024. Net cash used for investing activities increased due to capitalization of internal-use software. Overall, cash and cash equivalents decreased by $1.386 million during the quarter | Cash Flow Item (in 000's) | Q1 2024 | Q1 2023 | | :--------------------------------------- | :------ | :------ | | Net loss | ($1,222) | ($3,778) | | Net cash used for operating activities | ($1,180) | ($1,528) | | Net cash used for investing activities | ($206) | ($122) | | (Decrease) increase in cash and cash equivalents | ($1,386) | ($1,650) | | Cash and cash equivalents, end of period | $20,284 | $19,663 | [Non-GAAP Financial Measures and Definitions](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Definitions) iCAD utilizes non-GAAP measures like Adjusted EBITDA and Adjusted Net Loss to provide insights into ongoing operational trends by excluding specific non-cash or non-recurring items, and defines various Annual Recurring Revenue (ARR) metrics [Purpose and Exclusions of Non-GAAP Measures](index=7&type=section&id=Purpose%20and%20Exclusions%20of%20Non-GAAP%20Measures) iCAD uses non-GAAP financial measures, such as Adjusted EBITDA and Adjusted Net Loss, to supplement GAAP results. Management believes these measures provide a better understanding of short-term and long-term financial trends by excluding non-cash or non-recurring items like stock-based compensation, amortization, depreciation, severance, and certain litigation-related expenses, which are not considered part of ongoing operating results - Non-GAAP measures are used to understand short-term and long-term financial and operational trends by considering the impact of certain non-cash or non-recurring items[21](index=21&type=chunk) - Excluded items include interest expense, stock-based compensation, amortization and depreciation, severance and furlough, loss on fair value of convertible debentures, litigation-related expenses, and loss on extinguishment of debt, as they are not considered part of ongoing operating results or directly correlated to future business operations[24](index=24&type=chunk)[27](index=27&type=chunk) [Non-GAAP Adjusted EBITDA and Net Loss Reconciliation](index=9&type=section&id=Non-GAAP%20Adjusted%20EBITDA%20and%20Net%20Loss%20Reconciliation) Non-GAAP Adjusted EBITDA loss improved significantly to ($1.073) million in Q1 2024 from ($2.407) million in Q1 2023. Similarly, Non-GAAP Adjusted Net Loss from continuing operations improved to ($1.222) million, or ($0.05) per diluted share, from ($2.919) million, or ($0.12) per diluted share, in the prior year | Metric (in 000's) | Q1 2024 | Q1 2023 | | :------------------------------------------ | :-------- | :-------- | | GAAP Net Loss from continuing operations | ($1,222) | ($3,091) | | Non-GAAP Adjusted EBITDA | ($1,073) | ($2,407) | | Non-GAAP Adjusted Net Loss from continuing operations | ($1,222) | ($2,919) | | Non-GAAP Adjusted Loss per share from continuing operations | ($0.05) | ($0.12) | [Annual Recurring Revenue (ARR) Definitions](index=8&type=section&id=Annual%20Recurring%20Revenue%20%28ARR%29%20Definitions) iCAD defines several types of Annual Recurring Revenue (ARR) to track its transition to a subscription-based business model. These include Total ARR (T-ARR), Maintenance Services ARR (M-ARR), Subscription ARR (S-ARR), and Cloud ARR (C-ARR), each representing the annualized value of different contract types at the end of a reporting period - ARR is a useful metric for assessing progress in transitioning to a subscription-based business model[26](index=26&type=chunk) - Definitions of ARR metrics: * **Total ARR (T-ARR):** Annualized value of subscription license, maintenance contracts, and active cloud services * **Maintenance Services ARR (M-ARR):** Annualized value of active perpetual license maintenance service contracts * **Subscription ARR (S-ARR):** Annualized value of active subscription or term licenses * **Cloud ARR (C-ARR):** Annualized value of active cloud services contracts[28](index=28&type=chunk) [Company Overview and Disclosures](index=2&type=section&id=Company%20Overview%20and%20Disclosures) This section provides an overview of iCAD as a leader in AI-powered breast health solutions, includes cautionary forward-looking statements, and details investor communication channels [About iCAD, Inc.](index=2&type=section&id=About%20iCAD%2C%20Inc.) iCAD, Inc. is a global leader in AI-powered breast health solutions, aiming to detect cancer earlier and improve patient outcomes. Their flagship product, ProFound Breast Health Suite, offers AI-powered mammography analysis for detection, density assessment, and risk evaluation, used by thousands of providers in over 50 countries - iCAD is a global leader providing clinically proven AI-powered breast health solutions for early cancer detection and improved patient outcomes[11](index=11&type=chunk) - The company's ProFound Breast Health Suite offers AI-powered mammography analysis for breast cancer detection, density assessment, and risk evaluation, used in over 50 countries[11](index=11&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding future performance, product expansion, and technology benefits, which are subject to various known and unknown risks and uncertainties. Readers are cautioned not to place undue reliance on these statements, and the company is not obligated to provide updates - The news release contains forward-looking statements about product expansion, performance improvement, adoption acceleration, and benefits of ProFound AI[12](index=12&type=chunk) - These statements involve known and unknown risks and uncertainties that may cause actual results to differ materially[12](index=12&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, and the company is under no obligation to provide updates[12](index=12&type=chunk) [Conference Call and Investor Relations](index=2&type=section&id=Conference%20Call%20and%20Investor%20Relations) iCAD held a conference call on May 15, 2024, to discuss the Q1 2024 results. The company also provides information on its website regarding non-GAAP reconciliations and SEC filings for investors - A conference call was held on May 15, 2024, to discuss financial results[10](index=10&type=chunk) - Investors can find non-GAAP reconciliations and SEC filings on the company's website[10](index=10&type=chunk)[13](index=13&type=chunk)

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the company's unaudited financial statements and management's analysis for the quarter [Item 1 Financial Statements](index=3&type=section&id=Item%201%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of iCAD, Inc. for the three months ended March 31, 2024 and 2023, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, significant events, and specific financial line items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)%20as%20of%20March%2031%2C%202024%20and%20December%2031%2C%202023) This section presents the company's financial position, including assets, liabilities, and equity, at specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $20,284 | $21,670 | | Total current assets | $29,044 | $29,678 | | Total assets | $40,395 | $41,418 | | Total current liabilities | $6,160 | $6,748 | | Total liabilities | $7,935 | $8,001 | | Total stockholders' equity | $32,460 | $33,417 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) This section details the company's revenues, expenses, and net loss for the three-month periods Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :------------------------ | :------------- | | Products Revenue | $3,102 | $2,460 | $642 | 26.1% | | Services Revenue | $1,852 | $1,874 | $(22) | (1.2)% | | **Total Revenue** | **$4,954** | **$4,334** | **$620** | **14.3%** | | Total Cost of Revenue | $841 | $791 | $50 | 6.3% | | **Gross Profit** | **$4,113** | **$3,543** | **$570** | **16.1%** | | Total Operating Expenses | $5,554 | $6,783 | $(1,229) | (18.1)% | | Loss from Operations | $(1,441) | $(3,240) | $1,799 | (55.5)% | | Net Loss | $(1,222) | $(3,778) | $2,556 | (67.7)% | | Net Loss per Share (Basic & Diluted) | $(0.05) | $(0.15) | $0.10 | (66.7)% | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(unaudited)%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) This section outlines changes in the company's equity, including net loss and stock-based compensation * Total stockholders' equity **decreased from $33,417 thousand to $32,460 thousand**, primarily due to a net loss of **$1,222 thousand**, partially offset by **$265 thousand** in stock-based compensation[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) This section reports cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | | Net cash used for operating activities | $(1,180) | $(1,528) | | Net cash used for investing activities | $(206) | $(122) | | Decrease in cash and cash equivalents | $(1,386) | $(1,650) | | Cash and cash equivalents, end of period | $20,284 | $19,663 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) The notes provide detailed explanations of the company's accounting policies, significant events like the Xoft business sale, fair value measurements, revenue recognition, and specific financial statement line items, offering crucial context to the unaudited financial statements * The Company operates in one segment, **Cancer Detection ("Detection")**, following the sale of its Xoft business line on October 23, 2023[24](index=24&type=chunk)[26](index=26&type=chunk) * The financial statements are prepared in accordance with US GAAP and reflect all necessary adjustments for a fair presentation, though certain information normally included in footnotes has been omitted as permitted by SEC rules[23](index=23&type=chunk)[25](index=25&type=chunk) * The Company is evaluating new FASB ASUs (**2023-07 on Segment Reporting** and **2023-09 on Income Tax Disclosures**) which will be effective for fiscal years 2024/2025 and 2025 respectively[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 1 – Basis of Presentation and Significant Accounting Policies](index=8&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note describes the company's operational segment, economic impacts, and new accounting pronouncements * The Company operates solely in the **Cancer Detection segment** after the Xoft business sale in October 2023[24](index=24&type=chunk)[26](index=26&type=chunk) * The Company continues to be impacted by slowness in the overall economic recovery following the COVID-19 pandemic and faces risks from ongoing global conflicts, with **18% of Q1 2024 revenue from outside the US**[27](index=27&type=chunk)[29](index=29&type=chunk) * New accounting pronouncements, **ASU 2023-07 (Segment Reporting)** and **ASU 2023-09 (Income Tax Disclosures)**, are being evaluated for their disclosure requirements, with effective dates in fiscal years 2024/2025 and 2025, respectively[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 2 – Discontinued Operations](index=10&type=section&id=Note%202%20%E2%80%93%20Discontinued%20Operations) This note details the sale of the Xoft business line and its financial impact as a discontinued operation * The Company completed the sale of its Xoft business line on October 23, 2023, for approximately **$5.76 million in cash consideration**, with **$0.7 million held in escrow**[33](index=33&type=chunk) * The Xoft business is reported as a discontinued operation, with a loss from discontinued operations of **$(687) thousand** for the three months ended March 31, 2023[36](index=36&type=chunk) * Cash provided by the Xoft business from operating activities was approximately **$0.4 million** for the three months ended March 31, 2023[37](index=37&type=chunk) [Note 3 – Fair Value Measurements](index=11&type=section&id=Note%203%20%E2%80%93%20Fair%20Value%20Measurements) This note describes the company's assets measured at fair value, primarily money market accounts, classified as Level 1 * The Company's assets measured at fair value on a recurring basis consist solely of money market accounts, classified as **Level 1 measurements**[39](index=39&type=chunk)[44](index=44&type=chunk) Fair Value Measurements (in thousands) | Date | Level 1 (in thousands) | Total (in thousands) | | :---------------- | :--------------------- | :------------------- | | March 31, 2024 | $16,042 | $16,042 | | December 31, 2023 | $15,475 | $15,475 | [Note 4 – Revenue](index=12&type=section&id=Note%204%20%E2%80%93%20Revenue) This note provides a breakdown of revenue by major goods/service lines, timing of recognition, and sales channels * One direct customer accounted for approximately **12% of total revenue** for the three months ended March 31, 2024[45](index=45&type=chunk) Revenue Breakdown (in thousands) | Category | Three months ended March 31, 2024 (in thousands) | Three months ended March 31, 2023 (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | | **Major Goods/Service Lines** | | | | Products | $3,102 | $2,460 | | Service contracts | $1,852 | $1,874 | | **Total** | **$4,954** | **$4,334** | | **Timing of Revenue Recognition** | | | | Goods transferred at a point in time | $2,285 | $2,028 | | Services transferred over time | $2,669 | $2,306 | | **Total** | **$4,954** | **$4,334** | | **Sales Channels** | | | | Direct sales force | $3,572 | $2,778 | | OEM partners | $1,382 | $1,556 | | **Total** | **$4,954** | **$4,334** | * Deferred revenue increased from **$4,374 thousand** at the beginning of the period to **$5,016 thousand** at March 31, 2024, with **$2,982 thousand deferred** and **$2,340 thousand recognized** during the quarter[55](index=55&type=chunk) * The Company expects to recognize approximately **$3.6 million** of its remaining performance obligations as revenue over the next 12 months[55](index=55&type=chunk) [Note 5 – Net Loss per Common Share](index=14&type=section&id=Note%205%20%E2%80%93%20Net%20Loss%20per%20Common%20Share) This note details the calculation of net loss per common share, including discontinued operations and antidilutive options Net Loss per Common Share (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Loss from continuing operations | $(1,222) | $(3,091) | | Loss from discontinued operations | - | $(687) | | **Net loss** | **$(1,222)** | **$(3,778)** | | Shares used in calculation (000s) | 26,354 | 25,261 | | **Net loss per share (basic and diluted)** | **$(0.05)** | **$(0.15)** | * Stock options totaling **3,015,924 shares** as of March 31, 2024, were excluded from diluted net loss per share calculation as their effect would have been antidilutive[57](index=57&type=chunk) [Note 6 – Inventories](index=15&type=section&id=Note%206%20%E2%80%93%20Inventories) This note provides a breakdown of inventory by category, including raw materials, work in process, and finished goods Inventory Breakdown (in thousands) | Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--------------- | :---------------------------- | :----------------------------- | | Raw materials | $504 | $583 | | Work in process | $50 | $55 | | Finished goods | $257 | $324 | | Inventory gross | $811 | $962 | | Inventory reserve | $(61) | $(45) | | **Inventory net** | **$750** | **$917** | [Note 7 – Goodwill](index=15&type=section&id=Note%207%20%E2%80%93%20Goodwill) This note confirms that no goodwill impairment charges were recorded during the reporting periods * No impairment charges were recorded for goodwill during the three months ended March 31, 2024 or 2023, as no triggering events were identified[59](index=59&type=chunk) [Note 8 – Long-lived Assets](index=15&type=section&id=Note%208%20%E2%80%93%20Long-lived%20Assets) This note states that no impairment testing for long-lived assets was required during the reporting periods * The Company determined there were no triggering events during the three months ended March 31, 2024 or 2023 that would require impairment testing of long-lived assets[64](index=64&type=chunk) [Note 9 – Lease Commitments](index=17&type=section&id=Note%209%20%E2%80%93%20Lease%20Commitments) This note details a new warehouse lease agreement and the company's total lease liabilities * In January 2024, the Company entered into a new **36-month lease** for a warehouse in Nashua, NH, for approximately **3,000 square feet** with annual rent payments of **$46,000**[71](index=71&type=chunk) * The Company recorded a right-of-use asset and lease liability of approximately **$0.1 million** upon commencement of the new lease[71](index=71&type=chunk) Lease Payments (in thousands) | Year | Lease Payments (in thousands) | | :--- | :---------------------------- | | 2024 | $190 | | 2025 | $250 | | 2026 | $131 | | 2027 | $4 | | **Total lease payments** | **$575** | | Less: effects of discounting | $(53) | | **Total lease liabilities** | **$522** | [Note 10 – Stockholders Equity](index=19&type=section&id=Note%2010%20%E2%80%93%20Stockholders%20Equity) This note covers stock option grants, stock-based compensation expense, and unrecognized compensation costs * The Company granted options to purchase **429,328 shares** during Q1 2024[76](index=76&type=chunk) Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :------------------------------ | :-------------------------------- | :-------------------------------- | | Cost of revenue | $1 | $1 | | Engineering and product development | $56 | $73 | | Marketing and sales | $62 | $131 | | General and administrative | $146 | $381 | | **Total** | **$265** | **$586** | * As of March 31, 2024, there was approximately **$1.2 million** of total unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of **2.14 years**[78](index=78&type=chunk) Stock Option Activity | Metric | Number of Options | Weighted Average Exercise Price | Intrinsic Value (in thousands) | | :-------------------------------- | :---------------- | :------------------------------ | :----------------------------- | | Outstanding as of Dec 31, 2023 | 2,897,663 | $5.57 | $252 | | Granted | 429,328 | $1.52 | | | Cancelled | (311,067) | $9.73 | | | Outstanding as of March 31, 2024 | 3,015,924 | $4.56 | $206 | [Note 11 – Income Taxes](index=20&type=section&id=Note%2011%20%E2%80%93%20Income%20Taxes) This note discusses the company's income tax expense and the reasons for its low effective tax rates * Income tax expense was approximately **$4 thousand** for Q1 2024 and **$5 thousand** for Q1 2023, with effective tax rates less than **1%** in both periods[83](index=83&type=chunk) * The low effective tax rates are primarily due to valuation allowances against substantially all net operating loss carryforwards and tax credit carryforwards[83](index=83&type=chunk) [Note 12 – Commitments and Contingencies](index=21&type=section&id=Note%2012%20%E2%80%93%20Commitments%20and%20Contingencies) This note outlines the company's firm purchase and royalty obligations, and its assessment of legal proceedings * The Company is obligated to pay approximately **$1.2 million** for firm purchase obligations to suppliers and **$0.4 million** for minimum royalty obligations[85](index=85&type=chunk) * The Company believes there are no current legal proceedings or claims that would have a material adverse effect on its financial condition or results of operations[86](index=86&type=chunk) [Note 13 – Restructuring](index=21&type=section&id=Note%2013%20%E2%80%93%20Restructuring) This note details the restructuring plan implemented in March 2023, including workforce reductions and associated charges * In March 2023, the Company implemented a restructuring plan (RIF), reducing its workforce by approximately **28% (23 employees)** in the detection business unit and furloughing **12 Xoft employees**[87](index=87&type=chunk) * Total charges related to the RIF were **$0.2 million** in 2023, with **$0.1 million recorded in Q1 2023**, primarily in Cost of revenue and Marketing and sales, with no further charges expected[88](index=88&type=chunk) [Note 14 – Issuances of Common Stock](index=21&type=section&id=Note%2014%20%E2%80%93%20Issuances%20of%20Common%20Stock) This note describes the company's at-the-market (ATM) issuance sales agreement and recent activity * The Company has an at-the-market (ATM) issuance sales agreement to sell up to **$25 million** of common stock, but no sales occurred during the three months ended March 31, 2024 or 2023[89](index=89&type=chunk) [Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and cash flows for the three months ended March 31, 2024, compared to the prior year, highlighting key drivers of revenue, expenses, and liquidity, and discussing the impact of external factors and strategic initiatives [Overview](index=22&type=section&id=Overview) This overview introduces iCAD, Inc. as a global leader in AI-powered cancer detection, detailing its core product suite and operational segment * iCAD, Inc. is a global leader in **AI-powered cancer detection**, offering the ProFound Breast Health Suite for breast cancer detection, density assessment, risk evaluation, and cardiovascular risk assessment[94](index=94&type=chunk)[95](index=95&type=chunk) * The ProFound Breast Health Suite is FDA cleared, CE marked, and Health Canada licensed, used by thousands of providers in over **50 countries**, and has been used for over **40 million mammograms worldwide** in the last five years[96](index=96&type=chunk) * The Company now operates in a single segment, **Detection**, following the sale of its Xoft business line in October 2023[94](index=94&type=chunk) [COVID-19 Impact](index=23&type=section&id=COVID-19%20Impact) This section discusses the lingering effects of the COVID-19 pandemic on the company's economic recovery and potential future results * While the worst disruptions from COVID-19 have subsided, the Company continues to experience the impact of slowness in the overall economic recovery, which could negatively affect future results[98](index=98&type=chunk) [Global Conflicts Impact](index=24&type=section&id=Global%20Conflicts%20Impact) This section addresses the potential impact of ongoing global conflicts on the company's operations and revenue in various regions * Ongoing conflicts in Eastern Europe and the Middle East create economic, civil, military, and political uncertainty, potentially impacting regions where the Company operates or derives revenue[101](index=101&type=chunk) * Approximately **18% of the Company's total revenue** for Q1 2024 was derived from customers outside the United States, up from **14% in Q1 2023**[101](index=101&type=chunk) [Xoft Sale](index=24&type=section&id=Xoft%20Sale) This section confirms the completion of the Xoft business line sale and its reclassification as discontinued operations * The sale of the Xoft business line was completed on October 23, 2023, with its results now reflected as discontinued operations, and the Company operating as a single Detection segment[102](index=102&type=chunk) [Critical Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Estimates) This section explains the role of management judgments and estimates in financial reporting and confirms no material updates were required in the current period * The preparation of financial statements requires management judgments, assumptions, and estimates, which are evaluated ongoingly based on historical experience and current conditions[104](index=104&type=chunk) * No specific event or circumstance as of March 31, 2024, required an update to estimates or a revision of asset/liability carrying values, despite global economic uncertainties[105](index=105&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section details the financial performance for the three months ended March 31, 2024, compared to the same period in 2023, showing improvements in total revenue, gross profit, and a significant reduction in operating expenses and net loss [Revenue](index=24&type=section&id=Revenue) This subsection analyzes the drivers of the company's revenue growth, highlighting increases in product sales and the shift towards subscription licenses Revenue (in thousands) | Category | 2024 (in thousands) | 2023 (in thousands) | $ 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 **14.3% YoY**, primarily driven by a **26.1% increase in product revenue** due to higher software license sales and a shift towards subscription licenses[108](index=108&type=chunk)[109](index=109&type=chunk) * An increase in subscription revenue could negatively impact short-term revenue recognition as it is recognized over time, unlike perpetual licenses[108](index=108&type=chunk) [Cost of Revenue and Gross Profit](index=26&type=section&id=Cost%20of%20Revenue%20and%20Gross%20Profit) This subsection examines the changes in cost of revenue and gross profit, noting the impact of the ProFound Cloud solution Cost of Revenue and Gross Profit (in thousands) | Category | 2024 (in thousands) | 2023 (in thousands) | $ Change | % Change | | :-------------------------- | :------------------ | :------------------ | :------- | :------- | | Products Cost | $480 | $425 | $55 | 12.9% | | Services Cost | $321 | $345 | $(24) | (7.0)% | | Amortization and depreciation | $40 | $21 | $19 | 90.5% | | **Total cost of revenue** | **$841** | **$791** | **$50** | **6.3%** | | **Gross profit** | **$4,113** | **$3,543** | **$570** | **16.1%** | * Gross profit increased by **16.1% to $4.1 million**, representing **83% of revenue**, up from **82%** in the prior year[110](index=110&type=chunk) * Amortization and depreciation in cost of revenue increased by **90.5%** due to expenses associated with the ProFound Cloud solution, which went live in March 2024[113](index=113&type=chunk) [Operating Expenses](index=27&type=section&id=Operating%20Expenses) This subsection analyzes the significant decrease in operating expenses, attributing it to cost-saving initiatives Operating Expenses (in thousands) | Category | 2024 (in thousands) | 2023 (in thousands) | $ Change | % Change | | :------------------------------ | :------------------ | :------------------ | :------- | :------- | | 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)%** | * Total operating expenses decreased by **18.1% YoY**, primarily due to management's cost-saving actions implemented in early 2023, particularly impacting marketing and sales (down **11.8%**) and general and administrative (down **33.3%**) payroll costs[114](index=114&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) [Other Income and Expense](index=28&type=section&id=Other%20Income%20and%20Expense) This subsection details changes in interest income, other income, and the impact of discontinued operations on the financial results Other Income and Expense (in thousands) | Category | 2024 (in thousands) | 2023 (in thousands) | $ Change | % Change | | :---------------------- | :------------------ | :------------------ | :------- | :------- | | Interest income | $203 | $151 | $52 | 34.4% | | Other income, net | $20 | $3 | $17 | 566.7% | | Tax expense | $(4) | $(5) | $1 | (100.0)% | | Loss from discontinued operations | $0 | $(687) | $687 | (100.0)% | * Interest income increased by **34.4%** due to higher interest rates[120](index=120&type=chunk) * Other income, net, significantly increased due to services rendered under the transition services agreement related to the Xoft business sale[121](index=121&type=chunk) * The absence of loss from discontinued operations in Q1 2024 (compared to **$(687) thousand** in Q1 2023) reflects the sale of the Xoft business in October 2023[123](index=123&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations, reviewing cash position, working capital, and cash flow activities * The Company believes its cash and cash equivalents of **$20.3 million** as of March 31, 2024, along with anticipated revenue and cost savings, are sufficient to sustain operations for at least the next 12 months[125](index=125&type=chunk) * Net working capital was **$22.9 million** as of March 31, 2024, with a current assets to current liabilities ratio of **4.72**, an improvement from **4.40** at December 31, 2023[126](index=126&type=chunk) * Net cash used for operating activities improved to **$(1.2) million** in Q1 2024 from **$(1.5) million** in Q1 2023, primarily due to cost-saving initiatives[127](index=127&type=chunk) * Net cash used for investing activities increased to **$(206) thousand** in Q1 2024, primarily due to the completion of the ProFound Cloud software project[128](index=128&type=chunk) * The Company has firm purchase obligations of **$1.2 million** and minimum royalty obligations of **$0.4 million**[129](index=129&type=chunk) [Recent Accounting Pronouncements](index=29&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 1 for details on recently issued accounting pronouncements and their potential impact * The Company refers to Note 1 for details on recently issued accounting pronouncements, specifically **ASU 2023-07 on Segment Reporting** and **ASU 2023-09 on Income Tax Disclosures**[130](index=130&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Item 3 Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that the information is not applicable for the Company * The Company has no quantitative or qualitative disclosures about market risk to report[131](index=131&type=chunk) [Item 4 Controls and Procedures](index=29&type=section&id=Item%204%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of March 31, 2024, with no material changes to internal controls over financial reporting during the quarter * The Company's disclosure controls and procedures were evaluated as effective at a reasonable level of assurance as of March 31, 2024[132](index=132&type=chunk) * No material changes to the Company's internal controls over financial reporting occurred during the quarter ended March 31, 2024[134](index=134&type=chunk) [PART II OTHER INFORMATION](index=30&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional information, including risk factors, exhibits, and official signatures [Item 1A Risk Factors](index=30&type=section&id=Item%201A%20Risk%20Factors) This section refers readers to the Company's Annual Report on Form 10-K for a comprehensive discussion of risk factors, stating that no material changes have occurred since that filing * There have been no material changes to the risk factors described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023[136](index=136&type=chunk) [Item 6 Exhibits](index=31&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications, a lease agreement, and XBRL financial data * Key exhibits include certifications of the Principal Executive Officer and Principal Financial Officer (**31.1, 31.2, 32.1, 32.2**), a lease agreement (**10.1**), and Inline XBRL financial statements (**101, 104**)[138](index=138&type=chunk)[139](index=139&type=chunk) [Signatures](index=32&type=section&id=Signatures) This section contains the official signatures of the Company's Chief Executive Officer and Chief Financial Officer, certifying the filing of the report * The report is signed by **Dana Brown, Chief Executive Officer**, and **Eric Lonnqvist, Chief Financial Officer**, on May 14, 2024[140](index=140&type=chunk)

NASHUA, N.H., May 08, 2024 (GLOBE NEWSWIRE) -- iCAD, Inc. (NASDAQ:ICAD), a global leader in clinically proven AI-powered cancer detection solutions, announced today it will release financial results for the first quarter ended March 31, 2024, pre-market and host a conference call at 8:30 AM Eastern Time on Wednesday, May 15, 2024. Earnings call details are as follows: Domestic: 877-545-0523International: 973-528-0016Participant Access Code: 730845Webcast: https://www.webcaster4.com/Webcast/Page/2879/50453 A ...

NASHUA, N.H., May 08, 2024 (GLOBE NEWSWIRE) -- iCAD, Inc. (NASDAQ: ICAD), a global leader in clinically proven AI-powered cancer detection solutions, announced today it will release financial results for the first quarter ended March 31, 2024, pre-market and host a conference call at 8:30 AM Eastern Time on Wednesday, May 15, 2024. Earnings call details are as follows: Domestic: 877-545-0523International: 973-528-0016Participant Access Code: 730845Webcast: https://www.webcaster4.com/Webcast/Page/2879/50453 ...

ProFound Cloud, powered by Google Cloud architecture and Google's Health AI innovations, redefines accessibility to critical insights, empowering radiologists in early breast cancer detectionNew partnership with Densitas provides end-to-end breast health solution ensuring every aspect of a woman's breast health journey is addressedEnhanced ProFound Detection Workstation features streamline mammogram interpretation for radiologists NASHUA, N.H., April 11, 2024 (GLOBE NEWSWIRE) -- iCAD, Inc. (NASDAQ:ICAD), a ...

Provides a holistic breast health solution, including breast cancer screening focused on quality, safety and efficiency, breast cancer detection, breast density assessment, and risk evaluationExpands access to iCAD's AI-powered ProFound Breast Health Suite and Densitas' AI solutions to patients and medical professionals worldwide NASHUA, N.H. and HALIFAX, Nova Scotia, April 09, 2024 (GLOBE NEWSWIRE) -- iCAD, Inc. (NASDAQ:ICAD), a global leader in clinically proven AI-powered cancer detection solutions, ann ...

PART I [Business](index=4&type=section&id=Item%201.%20Business) iCAD leads in AI-powered cancer detection, focusing on breast health and transitioning to a SaaS/DaaS model post-Xoft divestiture - iCAD is a **global leader** in AI-powered cancer detection, focusing on breast health with its **ProFound Breast Health Suite**, which offers solutions for detection, density assessment, risk evaluation, and cardiovascular risk[15](index=15&type=chunk)[16](index=16&type=chunk) - The company is transitioning to a platform-based **SaaS/DaaS** (Software as a Service/Data as a Service) organization through a three-phase strategy: Realigning our Base, Strengthening our Foundation, and Investing in Growth Initiatives[18](index=18&type=chunk)[19](index=19&type=chunk)[35](index=35&type=chunk) - In **October 2023**, iCAD sold its **Xoft (Cancer Therapy) business** line to strengthen its financial position and focus solely on the Cancer Detection segment[21](index=21&type=chunk)[264](index=264&type=chunk) - The **ProFound Breast Health Suite** is cleared by the **US FDA**, has received **CE mark** and **Health Canada licensing**, is available in over **50 countries**, and has been used for more than **40 million mammograms** worldwide in the last five years[17](index=17&type=chunk)[30](index=30&type=chunk)[266](index=266&type=chunk) - iCAD holds approximately **46%** of the US AI mammography market, serving **1,488 facilities** out of 3,268 using AI, representing about **17%** of the total US market of 8,834 certified facilities[31](index=31&type=chunk)[67](index=67&type=chunk) - Key strategic initiatives include a **20-year partnership** with **Google Health** to expand 2D AI solutions as an independent second reader and integration with **GE Health's MyBreastAI suite**[38](index=38&type=chunk)[39](index=39&type=chunk)[60](index=60&type=chunk)[62](index=62&type=chunk)[74](index=74&type=chunk) - The company's next-generation **ProFound Detection V4.0**, built on deep-learning neural network AI, is under FDA review and is expected to deliver significant improvements in specificity, sensitivity, and AUC (**92.5%**)[34](index=34&type=chunk)[49](index=49&type=chunk) - iCAD's products and operations are subject to **extensive government regulation** as medical devices, including **FDA premarket clearance/approval**, quality system regulations, and various healthcare laws (anti-kickback, false claims, physician self-referral, data privacy)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - Emerging regulations for AI and machine learning, such as the **EU AI Act**, are expected to have a **material impact** on the company's operations, potentially requiring additional compliance measures and changes to its services[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) Research and Development Expenses | Year Ended December 31, | 2023 (in millions) | 2022 (in millions) | | :---------------------- | :----------------- | :----------------- | | R&D Expense | $5.2 | $5.5 | Employee Headcount (as of December 31, 2023) | Category | Number of Employees | | :----------------------- | :------------------ | | Total Employees | 69 | | Full-time Employees | 67 | | Sales and Marketing | 24 | | Research and Development | 16 | | Service, Manufacturing, QA, Tech Support, Operations | 12 | | Administrative | 15 | [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces financial, operational, and regulatory risks, including historical losses, SaaS transition, AI challenges, and data privacy - The company has incurred significant losses since inception, with a net loss of approximately **$4.9 million** in 2023 and an accumulated deficit of **$272 million** as of December 31, 2023, with no assurance of future profitability[137](index=137&type=chunk)[140](index=140&type=chunk) - The FDA has indicated that the **ProFound AI® Risk** product is suitable for classification through the **De Novo pathway**, leading the company to pause US sales until regulatory clearance is obtained, which could impact commercialization efforts[133](index=133&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) - The company's success in transitioning to a **SaaS model** is uncertain, with potential for slower or faster adoption than forecasted, impacting revenue recognition and cash flow[135](index=135&type=chunk)[136](index=136&type=chunk) - Sales and market acceptance are highly dependent on coverage and reimbursement decisions by **third-party payers**, and cost containment measures in healthcare could adversely affect demand and pricing[133](index=133&type=chunk)[154](index=154&type=chunk) - The use of **AI, machine learning**, and automated decision-making technologies in its products (ProFound Breast Health Suite) introduces legal, business, and operational risks, including potential for incorrect design, biased data, cybersecurity threats, and evolving regulatory scrutiny (e.g., **EU AI Act**)[133](index=133&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[217](index=217&type=chunk) - A limited number of customers and distribution partners account for a significant portion of total revenue; in **2023**, **GE Healthcare** accounted for **22%** of total revenue, and one direct customer accounted for **8%**[161](index=161&type=chunk)[470](index=470&type=chunk) - The company's **intellectual property**, primarily patents, trade secrets, and copyrights, is crucial for its competitive position, but faces risks of challenges, invalidation, infringement, and the finite nature of patent protection[138](index=138&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - Compliance with complex and evolving US and foreign laws regarding privacy and data protection (e.g., **HIPAA, GDPR**) is critical, with potential for significant penalties (up to **4% of worldwide revenue** for GDPR breaches) and reputational harm from security breaches[138](index=138&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[216](index=216&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) [Unresolved Staff Comments](index=42&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - The company has no unresolved staff comments[235](index=235&type=chunk) [Cybersecurity](index=42&type=section&id=Item%201C.%20Cybersecurity) iCAD integrates cybersecurity risk management with Board oversight and has not experienced material cybersecurity incidents to date - iCAD has **integrated cybersecurity risk management** into its broader risk management framework, fostering a company-wide culture of cybersecurity awareness[237](index=237&type=chunk) - The company engages **external cybersecurity consultants** for threat assessments and security enhancement consultations to leverage specialized knowledge and ensure adherence to industry best practices[238](index=238&type=chunk) - Stringent processes are in place to oversee and manage **third-party cybersecurity risks**, including thorough security assessments before engagement and ongoing monitoring[239](index=239&type=chunk) - The **Board's Audit Committee** is responsible for cybersecurity risk oversight, receiving **regular briefings** (at least annually) from the Risk Management Team (CPrO, CTO, COO, CPO) and CEO on threats, initiatives, incidents, and compliance[242](index=242&type=chunk)[244](index=244&type=chunk) - As of the reporting date, the company has **not encountered cybersecurity challenges** that have materially impaired its operations or financial standing[240](index=240&type=chunk) [Properties](index=43&type=section&id=Item%202.%20Properties) iCAD leases executive offices and warehouse space in Nashua, New Hampshire, and an office in Lyon, France - The company leases approximately **11,000 square feet** for its executive offices in Nashua, New Hampshire, with the lease extended through **May 31, 2026**, at a monthly base rent of **$16,983**[249](index=249&type=chunk) - A new **36-month lease** for approximately **3,000 square feet** of warehouse space in Nashua, New Hampshire, commenced in **January 2024**, with annual rent payments totaling approximately **$46,000** for the entire term[250](index=250&type=chunk) - iCAD also leases office space in Lyon, France[251](index=251&type=chunk) [Legal Proceedings](index=44&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings that would adversely affect its financial condition - The company is not currently a party to any material legal proceedings[252](index=252&type=chunk) [Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to iCAD, Inc[253](index=253&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=45&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) iCAD's common stock trades on NASDAQ under 'ICAD', with 80 holders of record, no cash dividends, and no equity repurchases in 2023 - The company's common stock is traded on the **NASDAQ Capital Market** under the symbol "**ICAD**"[256](index=256&type=chunk) - As of **March 22, 2024**, there were **80 holders** of record of the company's common stock[257](index=257&type=chunk) - The company has **not paid any cash dividends** on its common stock to date and does not expect to pay cash dividends in the foreseeable future[258](index=258&type=chunk) - The company did not have any **repurchases** of equity securities in the year ended **December 31, 2023**[260](index=260&type=chunk) [Reserved](index=45&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - Item 6 is reserved[262](index=262&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) iCAD's 2023 revenue decreased by **12.5%**, operating expenses fell **16.8%**, and net cash used in operations improved by **61%**, supported by the Xoft sale - iCAD completed the sale of its **Xoft (Therapy) business** line on **October 23, 2023**, and now operates as a single reporting segment: **Cancer Detection** The results of Xoft's operations are reflected as discontinued operations[264](index=264&type=chunk) Revenue Components (in thousands) | Category | 2023 | 2022 | $ Change | % Change | | :--------------- | :---------- | :---------- | :---------- | :--------- | | Product revenue | $9,930 | $12,620 | $(2,690) | (21.3)% | | Services revenue | $7,388 | $7,182 | $206 | 2.9% | | **Total Revenue**| **$17,318** | **$19,802** | **$(2,484)**| **(12.5)%**| - The decrease in total revenue is primarily attributed to **reduced demand**, a reduction in the sales force, and a strategic shift towards a **subscription model**, alongside continued weakness in post-pandemic recovery[269](index=269&type=chunk) Gross Profit (in thousands) | Metric | 2023 | 2022 | $ Change | % Change | | :----------------- | :---------- | :---------- | :---------- | :--------- | | Total Cost of Revenue | $2,533 | $2,983 | $(450) | (15.1)% | | Gross Profit | $14,785 | $16,819 | $(2,034) | (12.1)% | | Gross Profit % | 85.4% | 84.9% | | | Operating Expenses (in thousands) | Expense Category | 2023 | 2022 | $ Change | % Change | | :------------------------------ | :---------- | :---------- | :---------- | :--------- | | Engineering and product development | $5,161 | $5,493 | $(332) | (6.0)% | | Marketing and sales | $7,740 | $10,790 | $(3,050) | (28.3)% | | General and administrative | $9,324 | $10,517 | $(1,193) | (11.3)% | | Amortization and depreciation | $249 | $217 | $32 | 14.7% | | **Total Operating Expenses** | **$22,474** | **$27,017** | **$(4,543)**| **(16.8)%**| Other Income, Tax and Expense (in thousands) | Item | 2023 | 2022 | $ Change | % Change | | :------------------------------------ | :---------- | :---------- | :---------- | :--------- | | Interest expense | $(16) | $(10) | $(6) | 60.0% | | Interest income | $729 | $213 | $516 | 242.3% | | Income tax expense (benefit) | $(20) | $116 | $(136) | (117.2)% | | Income (loss) from discontinued operations, net of tax | $2,163 | $(3,738) | $5,901 | (157.9)% | - Cash and cash equivalents totaled **$21.7 million** as of December 31, 2023, an increase of approximately **$0.4 million** year-over-year, primarily due to the sale of the Xoft business line[283](index=283&type=chunk) - Net cash used for operating activities improved by approximately **61%** year-over-year, decreasing from **$12.8 million** in 2022 to **$5.0 million** in 2023, driven by cost savings initiatives[284](index=284&type=chunk) - Net cash provided by investing activities was **$3.3 million** in 2023, a significant improvement from **$0.5 million** used in 2022, mainly due to **$4.5 million** (net) from the Xoft sale, partially offset by investments in a new ERP system[285](index=285&type=chunk) - Net cash provided by financing activities was **$2.0 million** in 2023, primarily from the At-the-Market (ATM) sales of common stock[286](index=286&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is not materially exposed to foreign currency risk, with most transactions in USD, and does not use derivative instruments - The company does not believe it is **subject to material foreign currency exchange rate fluctuations**, as most sales and expenses are denominated in the U.S. dollar[305](index=305&type=chunk) - iCAD **does not hold derivative securities** or engage in contracts with embedded derivative instruments[305](index=305&type=chunk) [Financial Statements and Supplementary Data](index=53&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates audited consolidated financial statements and notes, detailing iCAD's financial position, operating results, cash flows, and equity [Report of Independent Registered Public Accounting Firm](index=61&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) BDO USA, P.C. issued an unqualified opinion on iCAD's 2023 and 2022 consolidated financial statements, with revenue contract performance obligations as a critical audit matter - BDO USA, P.C. issued an **unqualified opinion** on the consolidated financial statements for the years ended December 31, 2023 and 2022[334](index=334&type=chunk) - The determination of distinct performance obligations within certain revenue contracts was identified as a **critical audit matter** due to the judgment and subjectivity involved[338](index=338&type=chunk)[339](index=339&type=chunk) [Consolidated Balance Sheets](index=63&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2023, total assets decreased to **$41.4 million** from **$51.7 million** in 2022, mainly due to the Xoft divestiture Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :-------------------------- | :---------------- | :---------------- | | Cash and cash equivalents | $21,670 | $21,313 | | Total current assets | $29,678 | $38,241 | | Property and equipment, net | $1,823 | $704 | | Goodwill | $8,362 | $8,362 | | Total assets | $41,418 | $51,705 | | Total current liabilities | $6,748 | $13,452 | | Total liabilities | $8,001 | $16,803 | | Total stockholders' equity | $33,417 | $34,902 | - The decrease in total assets and liabilities is largely attributable to the classification and subsequent sale of the **Xoft business line's assets and liabilities** as held for sale in 2022 and completed in 2023[344](index=344&type=chunk)[357](index=357&type=chunk)[361](index=361&type=chunk) [Consolidated Statements of Operations](index=64&type=section&id=Consolidated%20Statements%20of%20Operations) iCAD reported a net loss of **$4.8 million** in 2023, a significant improvement from **$13.7 million** in 2022, driven by discontinued operations gain Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | 2023 | 2022 | | :-------------------------------------- | :---------- | :---------- | | Total revenue | $17,318 | $19,802 | | Gross profit | $14,785 | $16,819 | | Total operating expenses | $22,474 | $27,017 | | Loss from operations | $(7,689) | $(10,198) | | Other income, net | $699 | $164 | | Loss from continuing operations | $(7,010) | $(9,918) | | Income (loss) from discontinued operations | $2,163 | $(3,738) | | **Net loss and comprehensive loss** | **$(4,847)**| **$(13,656)**| | Net loss per share, basic and diluted | $(0.19) | $(0.54) | - The significant improvement in net loss is primarily due to a **$2.6 million gain** on the sale of discontinued operations (Xoft business) in 2023, offsetting operational losses from that segment earlier in the year[281](index=281&type=chunk)[346](index=346&type=chunk)[360](index=360&type=chunk) [Consolidated Statements of Stockholders' Equity](index=65&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity decreased to **$33.4 million** in 2023 from **$34.9 million** in 2022, due to net loss and stock issuance Stockholders' Equity Changes (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :--------------------------- | :---------------- | :---------------- | | Balance at beginning of year | $34,902 | $46,517 | | Issuance of common stock, net| $1,966 | — | | Stock-based compensation | $1,316 | $1,686 | | Net loss | $(4,847) | $(13,656) |\ | Balance at end of year | $33,417 | $34,902 | - The company issued **1,057,814 shares** of common stock in 2023 at a weighted average price of **$2.18 per share**, generating **$2.0 million** in cash proceeds (net of issuance costs) through an At-the-Market (ATM) sales agreement[349](index=349&type=chunk)[445](index=445&type=chunk) [Consolidated Statements of Cash Flows](index=66&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In 2023, net cash used for operating activities decreased to **$5.0 million**, with investing activities providing **$3.3 million** from the Xoft sale Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 2023 | 2022 | | :---------------------------------- | :---------- | :---------- | | Net cash used for operating activities | $(4,964) | $(12,790) | | Net cash provided by (used for) investing activities | $3,275 | $(534) | | Net cash provided by financing activities | $2,046 | $355 | | Increase (decrease) in cash and cash equivalents | $357 | $(12,969) | | Cash and cash equivalents, end of year | $21,670 | $21,313 | - Proceeds from the sale of the Xoft business, net of transaction costs, contributed **$4.5 million** in cash from investing activities in 2023[352](index=352&type=chunk) - Issuance of common stock for cash, net, provided **$2.0 million** in financing activities during 2023[352](index=352&type=chunk) [Notes to Consolidated Financial Statements](index=67&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail iCAD's accounting policies, Xoft as discontinued operations, revenue recognition, and recent accounting pronouncements - The company completed the sale of its **Xoft business line** in October 2023, and its results are now reported as **discontinued operations**, with assets and liabilities classified as held for sale in prior periods[355](index=355&type=chunk)[357](index=357&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk) - iCAD adopted **ASU 2016-13**, "Financial Instruments—Credit Losses (Topic 326)" effective **January 1, 2023**, modifying its approach to estimating allowance for expected credit losses, though it did not have a material impact[371](index=371&type=chunk)[415](index=415&type=chunk) - New accounting standards, **ASU 2023-07** (Segment Reporting) and **ASU 2023-09** (Income Tax Disclosures), are effective for fiscal years beginning after December 15, 2023, and 2024, respectively, and are currently being evaluated for disclosure requirements[416](index=416&type=chunk)[417](index=417&type=chunk) Revenue Disaggregation by Sales Channels (in thousands) | Sales Channels | 2023 | 2022 | | :---------------- | :---------- | :---------- | | Direct sales force| $11,634 | $12,468 | | OEM partners | $5,684 | $7,334 | | **Total** | **$17,318** | **$19,802** | Net Loss Per Share (in thousands, except per share amounts) | Metric | 2023 | 2022 | | :-------------------------------------- | :---------- | :---------- | | Loss from continuing operations | $(7,010) | $(9,918) | | Income (loss) from discontinued operations | $2,163 | $(3,738) | | Net loss | $(4,847) | $(13,656) | | Weighted average shares (basic & diluted)| 25,613 | 25,202 | | Net loss per share (basic & diluted) | $(0.19) | $(0.54) | Goodwill and Intangible Assets (in thousands) | Asset Category | 2023 Gross Carrying Amount | 2022 Gross Carrying Amount | 2023 Net | 2022 Net | | :------------------------- | :------------------------- | :------------------------- | :------- | :------- | | Goodwill | $8,362 | $8,362 | $8,362 | $8,362 | | Total amortizable intangible assets, net | $148 | $264 | | | - As of December 31, 2023, the company has federal net operating loss carryforwards totaling approximately **$158.4 million**, with **$48.6 million** carried forward indefinitely and the remainder expiring between 2024 and 2037 A valuation allowance has been provided for U.S. federal and state NOLs[460](index=460&type=chunk) - The company operates as **one reportable operating segment: Detection**, following the divestiture of the Xoft business[466](index=466&type=chunk) - In **January 2024**, the company entered into a new **36-month lease** for warehouse space in Nashua, NH, commencing February 1, 2024[478](index=478&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=53&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There are no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in or disagreements with accountants on accounting and financial disclosure[307](index=307&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded iCAD's disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective as of December 31, 2023**[308](index=308&type=chunk) - Management assessed the effectiveness of internal control over financial reporting using the COSO 2013 framework and concluded it was **effective as of December 31, 2023**[312](index=312&type=chunk) - **No material changes** in internal control over financial reporting occurred during the fourth quarter of the year ended December 31, 2023[313](index=313&type=chunk) [Other Information](index=54&type=section&id=Item%209B.%20Other%20Information) There is no other information to report under this item - There is no other information to report under this item[314](index=314&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=54&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) There are no disclosures regarding foreign jurisdictions that prevent inspections - There are no disclosures regarding foreign jurisdictions that prevent inspections[315](index=315&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=55&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement - Information for this item is **incorporated by reference** from the company's 2024 Proxy Statement[317](index=317&type=chunk) [Executive Compensation](index=55&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the company's 2024 Proxy Statement - Information for this item is **incorporated by reference** from the company's 2024 Proxy Statement[318](index=318&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=55&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and related stockholder matters is incorporated by reference from the 2024 Proxy Statement - Information for this item is **incorporated by reference** from the company's 2024 Proxy Statement[319](index=319&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=55&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2024 Proxy Statement - Information for this item is **incorporated by reference** from the company's 2024 Proxy Statement[320](index=320&type=chunk) [Principal Accounting Fees and Services](index=55&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the company's 2024 Proxy Statement - Information for this item is **incorporated by reference** from the company's 2024 Proxy Statement[321](index=321&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=56&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Annual Report on Form 10-K, including financial statements, schedules, and exhibits - The section includes **financial statements**, **financial statement schedules**, and a list of **exhibits** filed with the Annual Report on Form 10-K[323](index=323&type=chunk) - Exhibits include the **At-The-Market Issuance Sales Agreement**, **Asset Purchase Agreement for Xoft business**, Certificate of Incorporation, Amended and Restated By-laws, various employment and lease agreements, and certifications[323](index=323&type=chunk)[325](index=325&type=chunk) [Form 10-K Summary](index=58&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[326](index=326&type=chunk)

Exhibit 99.1 iCAD Announces Fiscal Fourth Quarter and Full-Year 2024 Financial Results Annual Recurring Revenue of $8.7 million, an increase of 15% year-over-year Full-Year Operating Cash Flow ($5) million vs. ($12.8) million prior year Year ending cash balance of $21.7M NASHUA, N.H. – March 12, 2024 (GLOBE NEWSWIRE) -- a global leader in clinically proven AI-powered solutions that enable medical providers to accurately and reliably detect cancer earlier and improve patient outcomes, today announced results ...

Table of Contents 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 September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-09341 iCAD, Inc. (Exact name of registrant as specified in its charter) Delaware 02-0377419 (State or othe ...