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 | ☐ | |||
☒ | Smaller reporting company | |||||
Emerging growth company |
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. |
• | We have incurred significant losses from inception through 2020 and there can be no assurance that we will be able to achieve and sustain future profitability. |
• | Our quarterly and annual operating and financial results and our gross margins are likely to fluctuate significantly in future periods. |
• | We expect the novel coronavirus (COVID-19) pandemic to have a significant effect on our results of operations. In addition, it has resulted in significant financial market volatility, and its impact on the global economy appears to be significant. A continuation or worsening of the pandemic will have a material adverse impact on our business, results of operations and financial condition and on the market price of our common stock. |
• | The markets for our products and treatments and newly introduced enhancements to our existing products and treatments may not develop as expected, we continue to face barriers to broad market acceptance. |
• | An unfavorable resolution of the Yeda litigation could have a material adverse effect on our business, financial condition, results of operations and cash flows. |
• | Sales and market acceptance of our 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 our products and treatments facilitated by our products could harm our business and prospects. |
• | A limited number of customers account for a significant portion of our total revenue. The loss of a principal customer could seriously hurt our business. |
• | The markets for many of our products are subject to changing technology. |
• | We distribute our products in highly competitive markets and our sales may suffer as a result. |
• | We rely on intellectual property and proprietary rights to maintain our competitive position and may not be able to protect these rights. |
• | Our future prospects depend on our ability to retain current key employees and attract additional qualified personnel. |
• | The market price of our common stock has been, and may continue to be volatile, which could reduce the market price of our common stock. |
• | Future issuances of shares of our common stock may cause significant dilution of equity interests of existing holders of common stock and decrease the market price of shares of our common stock. |
• | market acceptance of our 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 our products, technologies, treatments or therapies; |
• | the perceptions of our products or treatments as compared to other products and treatments; |
• | recommendation and support for the use of our 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 our 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 our reputation; |
• | lost sales; |
• | delays in commercial releases; |
• | product liability claims; |
• | delays in or loss of market acceptance of our 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 our clinical trial protocols or suspension or termination of our 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 our 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. |
• | requires us to dedicate a portion of our cash flow to payments on our debt obligations, which reduces the availability of our cash flow to fund working capital, capital expenditures and other corporate requirements; |
• | imposes restrictions on our ability to incur indebtedness, other than permitted indebtedness, and could impede us from obtaining additional financing in the future for working capital, capital expenditures, mergers, acquisitions and general corporate purposes; |
• | imposes restrictions on us with respect to the use of our available cash, including in connection with future acquisitions; |
• | requires us to agree by a certain date with the Bank regarding minimum revenue levels for the 2021 calendar year. Failure to agree will result in acceleration of the indebtedness under the Loan Agreement; and |
• | requires us to provide certain financial information on a monthly and annual basis. Failure to do so will result in acceleration of the indebtedness under the Loan Agreement. |
• | could impair our liquidity; |
• | could make it more difficult for us to satisfy our other obligations; |
• | make us more vulnerable in the event of a downturn in our business prospects and could limit our flexibility to plan for, or react to, changes in our licensing markets; |
• | could result in a prepayment or make-whole premium if we elected to prepay the indebtedness under the Loan Agreement prior to its maturity date; and |
• | could place us at a competitive disadvantage when compared to our competitors who have less debt. |
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 . |
Selected Financial Data . |
Item 7 . |
Management’s Discussion and Analysis of Financial Condition and Results of Operations . |
• | Revenue recognition; |
• | Valuation of long-lived and intangible assets; |
• | Goodwill; |
• | Stock based compensation; and |
• | Income taxes; |
1) | Identify the contract(s) with a customer |
2) | Identify the performance obligations in the contract |
3) | Determine the transaction price |
4) | Allocate the transaction price to the performance obligations in the contract |
5) | Recognize revenue when (or as) the Company satisfies a performance obligation |
• | significant underperformance relative to historical or projected future operating results; |
• | significant changes in the manner or use of the assets or the strategy for the Company’s overall business; |
• | significant negative industry or economic trends; |
• | significant decline in the Company’s stock price for a sustained period; and |
• | a decline in the Company’s market capitalization below net book value. |
• | 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). |
Twelve months ended December 31, |
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2020 |
2019 |
$ Change |
% Change |
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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 |
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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, |
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2020 |
2019 |
Change |
% Change |
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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, |
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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 | )% | ||||||||||
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Gross profit |
$ | 21,354 | $ | 24,227 | $ | (2,873 | ) | (11.9 | )% | |||||||
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Year ended December 31, |
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2020 | 2019 | Change | Change % | |||||||||||||
Operating expenses: |
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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, |
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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 | )% |
Twelve months ended December 31, |
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2019 |
2018 |
Change |
% Change |
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Detection revenue |
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Product revenue |
$ | 16,788 | $ | 10,783 | $ | 6,005 | 55.7 | % | ||||||||
Service revenue |
5,531 | 6,081 | (550 | ) | (9.0 | )% | ||||||||||
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Subtotal |
22,319 | 16,864 | 5,455 | 32.3 | % | |||||||||||
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Therapy revenue |
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Product revenue |
2,979 | 2,328 | 651 | 28.0 | % | |||||||||||
Service revenue |
6,042 | 6,429 | (387 | ) | (6.0 | )% | ||||||||||
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Subtotal |
9,021 | 8,757 | 264 | 3.0 | % | |||||||||||
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Total revenue |
$ | 31,340 | $ | 25,621 | $ | 5,719 | 22.3 | % | ||||||||
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Twelve months ended December 31, |
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2019 |
2018 |
Change |
% Change |
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Products |
$ | 3,278 | $ | 2,161 | $ | 1,117 | 51.7 | % | ||||||||
Service and supplies |
3,438 | 3,627 | (189 | ) | (5.2 | )% | ||||||||||
Amortization and depreciation |
397 | 403 | (6 | ) | 100.0 | % | ||||||||||
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Total cost of revenue |
$ | 7,113 | $ | 6,191 | $ | 922 | 14.9 | % | ||||||||
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Gross profit |
$ | 24,227 | $ | 19,430 | $ | 4,797 | 24.7 | % | ||||||||
profit % |
77.3 | % | 75.8 | % |
For the year ended December 31, |
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2019 |
2018 |
Change |
% Change |
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Operating expenses: |
||||||||||||||||
Engineering and product development |
$ | 9,271 | $ | 9,445 | $ | (174 | ) | (1.8 | )% | |||||||
Marketing and sales |
13,634 | 8,693 | 4,941 | 56.8 | % | |||||||||||
General and administrative |
7,443 | 9,117 | (1,674 | ) | (18.4 | )% | ||||||||||
Amortization and depreciation |
276 | 305 | (29 | ) | (9.5 | )% | ||||||||||
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Total operating expenses |
$ | 30,624 | $ | 27,560 | $ | 3,064 | 11.1 | % | ||||||||
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For the year ended December 31, |
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2019 |
2018 |
Change |
Change % |
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Interest expense |
$ | (784 | ) | $ | (504 | ) | (280 | ) | 55.6 | % | ||||||
Interest income |
344 | 110 | 234 | 212.7 | % | |||||||||||
Financing costs |
— | (451 | ) | 451 | (100.0 | )% | ||||||||||
Loss on fair value of debentures |
(6,671 | ) | — | (6,671 | ) | — | ||||||||||
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|||||||||
$ | (7,111 | ) | $ | (845 | ) | $ | (6,266 | ) | 741.5 | % | ||||||
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Income tax (benefit) expense |
$ | 43 | $ | 42 | 1 | 2.4 | % |
Year Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Segment revenues: |
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Detection |
$ | 21,997 | $ | 22,319 | $ | 16,864 | ||||||
Therapy |
7,701 | 9,021 | 8,757 | |||||||||
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Total Revenue |
$ | 29,698 | $ | 31,340 | $ | 25,621 | ||||||
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Segment gross profit: |
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Detection |
$ | 17,856 | $ | 18,627 | $ | 14,709 | ||||||
Therapy |
3,498 | 5,600 | 4,721 | |||||||||
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Segment gross profit |
$ | 21,354 | $ | 24,227 | $ | 19,430 | ||||||
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Segment operating income (loss): |
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Detection |
$ | 2,719 | $ | 2,564 | $ | 3,412 | ||||||
Therapy |
(3,028 | ) | (1,476 | ) | (2,373 | ) | ||||||
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Segment operating income (loss) |
$ | (309 | ) | $ | 1,088 | $ | 1,039 | |||||
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General administrative |
$ | (9,079 | ) | $ | (7,486 | ) | $ | (9,169 | ) | |||
Interest expense |
(476 | ) | (784 | ) | (504 | ) | ||||||
Financing costs |
— | — | (451 | ) | ||||||||
Loss on extinguishment of debt |
(341 | ) | ||||||||||
Other income |
97 | 345 | 110 | |||||||||
Fair value of convertible debentures |
(7,464 | ) | (6,671 | ) | ||||||||
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Loss before income tax |
$ | (17,572 | ) | $ | (13,508 | ) | $ | (8,975 | ) | |||
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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 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. |
21.1 |
| |
23.1 |
Consent of BDO USA, LLP, Independent Registered Public Accounting Firm. | |
31.1 |
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 |
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 |
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 |
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101 |
The following materials formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets as of December 31, 2020 and December 31, 2019, (ii) Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018, (iii) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2020, 2019 and 2018, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018, and (v) Notes to Consolidated Financial Statements. | |
104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* | 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/ Michael Klein | |
Michael Klein | ||
Chief Executive Officer, Executive Chairman |
Signature |
Title |
Date | ||
/s/ Michael Klein |
Executive Chairman, Director, Chief Executive Officer (Principal Executive Officer) |
March 15, 2021 | ||
Michael Klein | ||||
/s/ R. Scott Areglado |
Chief Financial Officer (Principal Financial and Accounting Officer) |
March 15, 2021 | ||
R. Scott Areglado | ||||
/s/ Nathaniel Dalton |
Director | March 15, 2021 | ||