UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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(Exact Name of Registrant as Specified in Its Charter)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter). Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.02. Termination of Material Definitive Agreement.
On April 27, 2021, iCAD, Inc. (the “Company”) repaid its obligations in the aggregate amount of $7,354,283 under and terminated its Loan and Security Agreement entered into on March 30, 2020, as amended, with Western Alliance Bank, and its collateral securing the facility was released.
Item 2.02. Results of Operations and Financial Condition.
On April 28, 2021, the Company issued a press release announcing its financial results for the quarter ended March 31, 2021. A copy of the Company’s press release is attached hereto as Exhibit 99.1. Exhibit 99.1 is being furnished pursuant to Item 2.02, is not to be considered filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be incorporated by reference into any of the Company’s previous or future filings under the Securities Act of 1933, as amended, or the Exchange Act.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As previously disclosed in a Current Report on Form 8-K filed on April 5, 2021, R. Scott Areglado resigned as the Company’s Chief Financial Officer, effective May 4, 2021.
Charles Carter was appointed Interim Chief Financial Officer and Secretary of the Company, effective May 4, 2021. Mr. Carter brings over 20 years of experience as a financial executive in the life science industry. Mr. Carter was Chief Financial Officer of GI Dynamics, Inc. (“GI Dynamics”), a medical device company (ASX: GID, delisted July 2020) from December 2018 to April 2021. Prior to joining GI Dynamics full time in 2019, Mr. Carter was a finance consultant with Danforth Advisors (“Danforth”) from March 2018 to September 2019, and 2012 to 2015. Within these periods, Mr. Carter served as the contract Chief Financial Advisor for GI Dynamics, finance executive for Marina Biotech (NASDAQ: MRNA) and Interelukin Genetics (NASDAQ: ILGN) and head of finance for numerous private life sciences companies. From 2015 to February 2018, Mr. Carter was Chief Financial Officer of The Guild for Human Services, a not-for-profit community-based residential school and program for special needs students and adults. Prior to joining Danforth in 2012, Mr. Carter held positions as CFO for Aeris Therapeutics, Inc. and Intelligent Medical Devices, Inc. and senior finance leadership positions at Adnexus Therapeutics, Inc. and Transkaryotic Therapies, Inc./Shire, PLC. (NASDAQ: TKT; NASDAQ: SHPG) (“TKT”). Prior to TKT, Mr. Carter was a partner with Mercer Management Consulting, Inc. Mr. Carter holds an M.B.A. and an M.S. in Molecular Genetics from the University of Chicago and a B.A. in Biology from Colgate University.
On April 16, 2021, Mr. Carter and the Company entered into a consulting agreement (the “Consulting Agreement”) having a six-month term (the “Term”). Pursuant to the terms and subject to the conditions set forth in the Consulting Agreement, the Company shall furnish to Mr. Carter a monthly cash fee of $35,000, with an additional lump-sum $35,000 cash payment due to Mr. Carter if the Consulting Agreement is terminated by the Company without “cause” as defined therein prior to the expiration of the Term. Mr. Carter is not due any equity or other compensation. The Consulting Agreement contains customary representations and warranties by the parties, as well as customary indemnification provisions. The foregoing is merely a summary and is qualified in its entirety by reference to the Consulting Agreement which attached hereto as Exhibit 10.1 and which is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
Exhibit Description | |
| 10.1 | Consulting Agreement, dated April 16, 2021, by and between iCAD, Inc. and Charles Carter | |
| 99.1 | Press release dated April 28, 2021 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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iCAD, INC. (Registrant) | ||
| By: | /s/ Michael Klein | |
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Michael Klein Chief Executive Officer | ||
Date: April 28, 2021
CONSULTING Agreement
THIS CONSULTING AGREEMENT (this “Agreement”) is made effective as of April 16, 2021 (the “Effective Date”), by and between iCAD, Inc., a Delaware corporation having a principal place of business at 98 Spit Brook Road, Suite 100, Nashua, NH 03062 ("iCAD"), and Carter Life Science Consulting, with its principal places of business at One Nashua Street, #2303, Boston, MA 02114 (“Contractor”).
WHEREAS, iCAD and Contractor desire to set forth the terms and conditions whereby the Company will engage Contractor and certain specified Contractor employees as independent contractors and/or independent subcontractors to provide certain consulting services.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Scope of Services.
(a) iCAD may, from time to time, engage Contractor personnel to provide iCAD with certain consulting services (the “Services”) specified and described in a Statement of Work (hereinafter a “SOW” or a “Statement of Work”). Such Services may be provided directly to iCAD or to an iCAD customer or client (a “Customer”) as more specified in the Statement of Work. The initial Services engagement is set forth and described in the Statement of Work that is attached hereto as Exhibit A. This Agreement does not impose on iCAD an obligation to deal exclusively with Contractor for services similar to the Services. Conversely, Contractor is free to, and will, engage in work and/or provide services or the like to third-parties other than the Company. The terms and provisions of this Agreement shall control over any conflicting provisions of the Statement of Work unless the Statement of Work expressly references the provision of this Agreement that it is to control over (in which case such provision in the Statement of Work shall control over such referenced provision but only as it pertains to that Statement of Work).
(b) An SOW may designate the individual or individuals who will perform the Services (each, along with any replacement or additional individuals, a “Designated Individual”). If any Designated Individual is terminated or becomes unavailable to perform the Services for reasons beyond Contractor’s reasonable control, Contractor may provide the Services through another Designated Individual with appropriate training and experience, provided that, (i) Contractor promptly notifies iCAD of the termination or unavailability of the Designated Individual, and (ii) iCAD approves any proposed replacement, which approval shall not be unreasonably withheld or delayed. iCAD may, from time to time, determine that additional Designated Individuals are required for the performance of the Services. In such event, iCAD shall approve any additional Designated Individuals proposed by Contractor for assignment, which approval shall not be unreasonably withheld or delayed. Contractor will remove such additional Designated Individuals at such time as iCAD reasonably determines that the Services no longer require such additional Designated Individuals. iCAD shall have the right to request the replacement of any Contractor personnel, whether or not a Designated Individual, at any time and for any reason. If iCAD becomes dissatisfied with any such personnel, iCAD may notify Contractor of the details of its dissatisfaction, and the parties shall cooperate to remedy the problem as soon as reasonably possible. If iCAD reasonably requests, Contractor shall reassign the individual who is the subject of iCAD’s dissatisfaction and replace that individual with another individual. iCAD shall not pay any personnel for vacation, sick time, travel time, or other non-working days.
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(c) If mutually agreed to in writing by the parties hereto, Contractor may perform or provide, from time to time, additional services and deliverables to iCAD in addition to the Services set forth in the initial Statement of Work attached hereto as Exhibit A ("Additional Services"). Any such Additional Services shall be evidenced by one or more additional Statements of Work which shall describe in detail the following information: (i) a detailed description of the Additional Services Contractor is to perform; (ii) an incorporation by reference of this Agreement; (iii) a projected timetable by which each of the identified phases of the Additional Services are to be completed; (iv) iCAD's special conditions of acceptance, if any; (v) the location where the Additional Services are to be performed; (vi) the projected commencement and termination dates; (vii) Contractor's compensation rates; (viii) maximum authorized fee for the Additional Services and maximum reimbursable expenses, if any; (ix) names of Contractor's employees who will provide such Services; (x) a timetable for invoicing; and (xi) such other requirements for the Additional Services as may be agreed to by the parties. As used herein, "Statement of Work" shall refer to the Statement of Work attached hereto as Exhibit A with respect to the Services and, once any additional statements of work for Additional Services are agreed to by both parties in writing, such additional statements of work for the Additional Services. Contractor shall not be obligated to undertake, and iCAD will not be obligated to pay for, any Additional Services prior to iCAD and Contractor having signed a valid and complete Statement of Work for such Additional Services.
(d) Contractor and iCAD may modify the terms of this Agreement or the Statement of Work (or provisions thereof) only in a written agreement which is signed by both parties (a “Change Order”). If iCAD delivers to Contractor a written request for a Change Order, Contractor will prepare an estimate setting out the proposed changes which will be required to the Services, any increase or decrease in the cost, and any impact to the time frame for delivery and/or completion of the Services. If, after receipt of the foregoing information, iCAD elects to continue with the Change Order, the parties hereto shall enter into a written Change Order which identifies the foregoing changes, and the Statement of Work shall be deemed so modified upon the execution of such Change Order by both parties hereto.
(e) Contractor may render the Services at such times and from a location of the Contractor’s choosing unless stipulated otherwise. Consultant shall bear his own costs for securing and maintaining appropriate workspace, equipment and other resources and tools necessary to perform the Services.
2. Term. The initial term of this Agreement shall commence as of the Effective Date and shall continue in effect until terminated by the parties pursuant to Section 9 below.
3. Payment Terms and Invoicing.
(a) Fees. Fees to be paid to Contractor for the Services shall be as set forth in each applicable Statement of Work.
(b) Expenses. iCAD shall not be obligated to reimburse Contractor or any Contractor employee for any out-of-pocket expenses incurred in connection with the performance of the Services, except for extraordinary or unusual expenses incurred by the Contractor as reasonably necessitated in the performance of the Services, provided that Contractor first received the prior written consent of iCAD prior to incurring any such expenses. Contractor shall record such approved expenses on the invoice described in paragraph 3(c) below. As a condition to receipt of reimbursement for such expenses, Contractor shall submit to the Company reasonable evidence or proof that the amount involved was expended and related to Services provided under this Agreement. The Company shall have no obligation to reimburse Contractor for unreasonable expenses, expenses that are not related to Company business and the Services, expenses in excess of the amount, if any, that were approved in advance by the Company, or expenses that are demonstrably not in accord with this Agreement.
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(c) Invoicing. Contractor shall render invoices to iCAD in accordance with the invoicing terms set forth in the Statement of Work. Unless otherwise specified in the Statement of Work, Contractor shall present an invoice to iCAD monthly in arrears within two days following the end of each calendar month. The invoice shall indicate the nature of the work performed, the hours expended, the hourly rate for the Contractor employee providing such work (if applicable), and any reasonable expenses incurred by Contractor which are to be paid by iCAD pursuant to Section 3(b) above, (including any reasonable documentation required by iCAD), as well as the total amount then due. In such invoices, Consultant shall set forth sufficient detail to permit the Company to reasonably ascertain the tasks performed during the hours billed, and, upon the Company’s request, Consultant shall deliver to the Company in a reasonably usable form and format his work product. Undisputed invoices shall be due and payable within thirty (30) days after receipt of the invoice and all required documentation, unless other terms of payment are expressly set forth in the Statement of Work.
(d) Taxes. Contractor shall be responsible for the withholding and/or payment, as required by law, of all federal, state and local taxes or contributions required or imposed on Contractor or its employees because of the performance of the Services hereunder. Further, Contractor shall comply with all federal and state benefits laws applicable to Contractor or its employees, if any, including making deductions and contributions to social security, unemployment tax, and any other payment due. Each party shall be responsible for the payment of other taxes, if any, imposed upon it in connection with, or as a result of, this Agreement. Notwithstanding the foregoing, taxes or similar liabilities chargeable against the income or gross receipts of Contractor shall be paid by Contractor. The Company will record payments to Contractor on an Internal Revenue Service Form 1099, and will not withhold any federal, state or local employment taxes on Contractor’s behalf. Contractor shall defend, indemnify and hold harmless the Company for any claim, proceeding, damages and liability, including but not limited to attorney’s fees and costs, arising from Contractor’s breach of the provisions of this paragraph.
4. Confidential Information.
(a) During the term of this Agreement, each party may provide the other party with access to information that is confidential and proprietary information of the disclosing party or its customers (the "Proprietary Information"). Proprietary Information shall include any information or trade secrets of the disclosing party and of any third party that the disclosing party is under obligation to keep confidential, including without limitation information respecting technology inventions, products, designs, methods, know-how, techniques, systems, processes, prototypes, software programs, customer identities, projects, plans and proposals, pricing and market data, business plans and strategies, contracts, research, customer and prospect lists. Additional Proprietary Information shall be so designated by the disclosing party. The receiving party acknowledges that the Proprietary Information is and shall remain, the sole and exclusive confidential property of the disclosing party or its customers or licensors notwithstanding any access to the Proprietary Information provided hereunder by the disclosing party to the receiving party. For the sake of clarity, any Proprietary Information of any iCAD Customer shall be deemed “Proprietary Information” under this Agreement. All information to be designated as Proprietary Information shall be so designated in writing by the disclosing party, whether by letter or by the use of an appropriate proprietary stamp or legend, prior to or at the time any such trade secret or confidential or proprietary information is disclosed by the disclosing party to the receiving party. Information which is orally or visually disclosed to the receiving party by the disclosing party, or is disclosed in writing without an appropriate letter, proprietary stamp or legend, shall constitute Proprietary Information if it would be apparent to a reasonable person, familiar with the disclosing party’s business and the industry in which it operates, that such information is of a confidential or proprietary nature the maintenance of which is important to the disclosing party.
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(b) The receiving party shall treat and hold the Proprietary Information as strictly confidential and shall take all actions necessary to protect the confidentiality of the Proprietary Information. The receiving party shall not: (i) copy or reproduce the Proprietary Information or sell, assign, license, sublicense, or transfer, in whole or in part, or disclose, the Proprietary Information to any other person or entity, including without limitation any parent, subsidiary or affiliate, without the prior written consent of the disclosing party; or (ii) decompile, disassemble or reverse engineer any computer program supplied to receiving party as part of the Proprietary Information. The receiving party shall limit access to the Proprietary Information to those of its employees who are directly involved in any work, Services, or other activities to be performed pursuant to this Agreement. The receiving party shall only disclose the disclosing party’s Proprietary Information to those of its employees who have a need to know such information to provide the Services or perform their obligations under this Agreement and who are bound by a written confidentiality and nondisclosure agreement that contains the terms and provisions regarding confidentiality that are substantially similar to those contained in this Section 4. All Proprietary Information made available to the receiving party, including any copies thereof, shall be returned immediately to the disclosing party upon request by the disclosing party and, in any event, upon expiration or termination of this Agreement.
(c) Notwithstanding anything herein to the contrary, the obligations of the receiving party described in subparagraph (b) with respect to maintaining the confidentiality of Proprietary Information shall not apply with respect to any information which would be Proprietary Information, except that it: (i) was previously known to the receiving party, free from any obligations of confidentiality; (ii) is disclosed to the receiving party by a third party whom the receiving party has no reasonable basis for believing is subject to a confidentiality and nondisclosure agreement; (iii) is or becomes available to the public other than by the unauthorized disclosure by the receiving party; (iv) is independently developed by the receiving party without the use of the disclosing party’s Proprietary Information; or (v) is disclosed by the receiving party pursuant to law or administrative or regulatory authority.
5. Contractor Representations.
(a) Contractor represents and warrants that it has full power to enter into this Agreement, to carry out its obligations under this Agreement and to grant the rights granted herein to iCAD. Contractor represents that Contractor’s performance hereunder does not and will not breach any agreement with any third party or cause Contractor to be in default with any third party and Contractor will not disclose to iCAD or induce iCAD to use any confidential or proprietary information or material belonging to any third party. Contractor and its employees shall comply with all federal, state and local laws, ordinances, codes, regulations, rules, policies, regulations and procedures and the requirements of any other public or private authority, in each case as applicable to the performance by Contractor of its duties and responsibilities under this Agreement.
(b) Contractor represents and warrants that it and its employees have the requisite skill, experience and resources to perform the work described in the Statement of Work and that the Services shall be performed in a professional and workmanlike manner consistent with industry standards, exercising due skill and care and consistent with applicable law.
(c) Contractor represents and warrants that the Deliverables (as defined below) and any other material provided to iCAD by Contractor for use in connection with Contractor’s obligations hereunder shall not violate any third party's intellectual property rights.
(d) Contractor shall ensure that its personnel shall comply with iCAD’s Customer’s requests, rules and regulations (i) regarding conduct of Contractor’s personnel, (ii) regarding security at Customer sites or in connection with Customer’s systems, and (iii) regarding document retention. Unless otherwise agreed by iCAD, Contractor’s personnel will observe the working hours, working rules, and holiday schedules of such Customer while working on such Customer’s premises.
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(e) Contractor represents and warrants that (i) no Deliverable (as defined below) shall contain any material owned by any third party, except as disclosed to iCAD in writing prior to Contractor's incorporating such material into any Deliverable, and that as to any such material, Contractor shall have all rights necessary to provide to iCAD the full, unrestricted benefits to such material as incorporated into the Deliverable, including without limitation the right to use, market, distribute and copy, and to provide such rights to others; (ii) all computer software delivered hereunder (if any), and the media on which any copy is so delivered, shall not contain any code which will destroy or alter data or program code or interfere with the operation of the computer on which the software is used, or any other computer with which such computer exchanges data or storage media, except to the extent such actions are described in written documentation furnished with the Deliverables so as to be under the knowing control of the user of the software; and (iii) unless otherwise approved in advance by iCAD in writing all computer software delivered hereunder (if any) shall not contain any software subject to or governed by open source licenses, including, without limitation, the GNU general public license.
For purposes of this Agreement, acceptance of the Services and Deliverables described in each Statement of Work shall occur on the date such Services and Deliverables have met the completion criteria specified in the Statement of Work to the satisfaction of iCAD, as evidenced by issuance of written confirmation of completion and acceptance by iCAD. iCAD may withhold payment for such Services or Deliverables in its discretion until it has accepted such Services and Deliverables.
6. Ownership.
(a) All documentation, algorithms, program code, discoveries, creations, any inventions and ideas, material or other property, tangible or intangible, arising out of or resulting from Contractor’s performance of this Agreement or the Services and all proprietary and intellectual property rights thereto, including patent rights and copyright rights therein and all items developed pursuant to a Statement of Work or delivered to iCAD hereunder by Contractor, (collectively, the “Deliverables”) shall belong to iCAD immediately upon development and shall be treated as iCAD’s Proprietary Information. As to copyrights, Contractor agrees that all Deliverables shall be deemed a “work made for hire” and that iCAD shall be deemed the author thereof for copyright purposes; provided, however, that if any Deliverable is at any time determined to not be a work made for hire, this Agreement shall be deemed an irrevocable assignment of the copyright to the entire Deliverable. The assignment of the Deliverables under this Agreement includes all rights of paternity, integrity, attribution and withdrawal and any other rights known as, or substantially similar to, “moral rights.” To the extent such moral rights may not be assigned under applicable law, Contractor hereby waives such moral rights and consents to any action in connection therewith, including any violation of such moral rights, in the absence of such consent. During the term of this Agreement and thereafter at any reasonable time when called upon to do so by iCAD, Contractor shall execute patent applications, assignments to iCAD, and other papers and shall render such other reasonable assistance at iCAD’s expense that iCAD believes necessary to secure for iCAD the full protection and ownership of all rights in and to the Deliverables. The filing of patent applications on inventions made by Contractor shall be decided by iCAD and shall be for such countries as iCAD shall elect. iCAD shall bear all the expense in connection with the preparation, filing, and prosecution of applications for patents and for all matters provided in this Section 6 requiring the time and/or assistance of Contractor as to inventions.
(b) Notwithstanding the above, Contractor shall continue to own all right, title and interest in and to all techniques, methodologies, objects, modules, software, or other materials (including all intellectual property rights therein) created or obtained by Contractor prior to performing any Services under this Agreement or developed independent of this Agreement (“Contractor Technology”). To the extent any Contractor Technology is incorporated into any Deliverable, Contractor hereby grants to iCAD a non-exclusive, perpetual, irrevocable, worldwide, royalty free, fully paid-up license (with the right to sublicense) to use, copy, modify, and create derivative works of and from such Contractor Technology for iCAD’s use, distribution or exploitation of the Deliverables. Contractor shall also be free to use and employ its general skills, know-how, and expertise, and to use and employ any generalized ideas, concepts, know-how, methods, techniques, or skills gained or learned during the course of any assignment, so long as it acquires and applies such information without disclosure of any confidential or Proprietary Information of iCAD and provided further that in no event shall the Deliverables be used or provided to any third party without iCAD's prior written consent.
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7. Indemnification.
(a) Indemnity. Contractor will defend, indemnify and hold harmless iCAD and its affiliates, and each of their directors, officers, employees and agents (collectively, the “Indemnified Parties”), from and against any and all claims, losses, liabilities, damages and expenses (including, without limitation, reasonable attorneys’ fees) arising from or relating to any claim, action or proceeding (each a “Claim”) brought by any third party based upon: (a) any actual or alleged breach of Contractor’s representations, warranties or covenants set forth in this Agreement or any personal injury, death or damage to property caused by Contractor or its personnel; or (b) actual or alleged infringement, violation or misappropriation of any third-party patent, copyright, trademark, trade secret or other intellectual property or proprietary right by any Services or Deliverable. Contractor will use counsel reasonably satisfactory to the Indemnified Parties to defend each Claim. Contractor will at all times keep the Indemnified Parties advised of the status of each Claim and the defense of such Claim. The Indemnified Parties will cooperate (at Contractor’s cost) with Contractor in the defense. Any Indemnified Party may participate in the defense at its own expense. If at any time any Indemnified Party reasonably determines that any Claim might adversely affect any Indemnified Party, such Indemnified Party may take control of the defense of the Claim at such Indemnified Party’s expense (without limiting Contractor’s indemnification obligations), and in such event such Indemnified Party and its counsel will proceed diligently and in good faith with such defense. Contractor will not consent to the entry of any judgment or enter into any settlement without the Indemnified Parties’ prior written consent, which may not be unreasonably withheld. Contractor’s duty to defend is independent of its duty to indemnify.
(b) Infringement Remedy. If all or any part of any Services or Deliverable is held, or Contractor determines that it could be held, to infringe, violate or misappropriate any third-party patent, copyright, trademark, trade secret or other intellectual property or proprietary right, Contractor at no cost to iCAD (and without limiting any of Contractor’s obligations under Section 7(a)) will (a) procure for iCAD the right to continue using the item in accordance with the rights under this Agreement, (b) replace the item with a reasonable replacement (including with respect to functionality, interoperability with other software and systems, and levels of security and performance; collectively, a “Replacement Item”) that does not infringe, wrongfully use or misappropriate any third-party patent, copyright, trademark, trade secret or other intellectual property or proprietary right, or (c) modify the item so that it is a Replacement Item that no longer infringes, wrongfully uses or misappropriates any third-party patent, copyright, trademark, trade secret or other intellectual property or proprietary right. If Contractor is unable to successfully accomplish any of the actions described above after promptly using its best efforts to accomplish each of them, Contractor will, without limiting any other rights or remedies available to iCAD hereunder, refund to iCAD upon written request all amounts paid by iCAD hereunder in connection with the affected Services and Deliverables.
(c) Limitation. Contractor’s obligations under Sections 7(a) and 7(b) will not apply to the extent the any Services or Deliverable infringes, violates or misappropriates any third-party patent, copyright, trademark, trade secret or other intellectual property or proprietary right solely as a result of modifications made by iCAD other than as authorized by Contractor or its agents.
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8. Consequential Damages/Liability. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW AND REGARDLESS OF WHETHER ANY REMEDY SET FORTH HEREIN FAILS OF ITS ESSENTIAL PURPOSE, IN NO EVENT WILL ICAD OR CONTRACTOR BE LIABLE TO THE OTHER PARTY FOR (i) ANY COSTS OF PROCUREMENT OF SUBSTITUTE OR REPLACEMENT GOODS AND SERVICES, LOSS OF PROFITS, LOSS OF USE, LOSS OF OR CORRUPTION TO DATA, BUSINESS INTERRUPTION, LOSS OF PRODUCTION, LOSS OF REVENUES, LOSS OF CONTRACTS, LOSS OF GOODWILL, OR ANTICIPATED SAVINGS OR WASTED MANAGEMENT AND STAFF TIME; (ii) ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES WHETHER ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, EVEN IF ICAD OR CONTRACTOR HAVE BEEN ADVISED SUCH DAMAGES MIGHT OCCUR OR (iii) ANY CLAIMS OR DAMAGES IN EXCESS OF THE FEES ICAD PAID OR OWES CONTRACTOR FOR THE SERVICES GIVING RISE TO THE CLAIM. NOTHING IN THIS AGREEMENT SHALL OPERATE SO AS TO EXCLUDE OR LIMIT A PARTY’S LIABILITY FOR DEATH OR PERSONAL INJURY ARISING OUT OF NEGLIGENCE OR FOR ANY OTHER LIABILITY WHICH CANNOT BE EXCLUDED OR LIMITED BY LAW. THE LIMITATIONS CONTAINED IN THIS SECTION 8 SHALL ALSO NOT APPLY TO (A) A BREACH BY A PARTY OF ITS OBLIGATIONS SET FORTH IN SECTION 4 ABOVE (CONFIDENTIAL INFORMATION), (B) A BREACH OF SECTION 6 (OWNERSHIP) OR (C) CONTRACTOR’S INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS AGREEMENT.
9. Termination.
(a) Default. If either party fails to comply in any material respect with any of the covenants, agreements or conditions herein and such failure continues for thirty (30) days after written notification from the non-breaching party, the non-breaching party may, at its sole discretion and in addition to any other right or remedy available under applicable law or in equity, immediately terminate this Agreement.
(b) Termination by iCAD. In addition, iCAD shall have the option to terminate this Agreement or any Statement of Work, for any reason or for no reason, upon five (5) days prior written notice to Contractor. iCAD shall pay Contractor for the Services performed and accepted up through the date of termination.
(c) Insolvency. Either party may terminate this Agreement by written notice to the other and may regard the other party as in default of this Agreement, if the other party becomes insolvent, makes a general assignment for the benefit of creditors, files a voluntary petition of bankruptcy, suffers or permits the appointment of a receiver for its business or assets, or becomes subject to any proceeding under any bankruptcy or insolvency law, whether domestic or foreign, or is wound up or liquidated, voluntarily or otherwise. In the event that any of the above events occurs, that party shall immediately notify the other of its occurrence.
(d) Return of Materials. Upon termination or expiration of this Agreement, Contractor and iCAD shall forthwith return to the other party all papers, materials and other properties of such other party held by each for purposes of performance of this Agreement. In addition, each party will assist the other party in orderly termination of this Agreement as may be necessary for the orderly, non-disrupted business continuation of each party.
(e) Survival. The rights and obligations of any party which by their nature extend beyond the expiration or termination of this Agreement shall continue in full force and effect notwithstanding the expiration or termination of this Agreement.
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10. Independent Contractor. It is understood and agreed that each of the parties hereto is an independent contractor and that neither party is, nor shall be considered to be, an employee, agent, partner, joint-ventures, distributor, representative or the like of the other party, or any formal or informal business organization, entity, partnership, venture, association or the like of the other party. This Agreement does not constitute, and shall not be construed as constituting, an employment relationship between the Company and any persons, nor as an undertaking by the Company to hire Contractor or any person as an employee of the Company. Neither party shall act or represent itself, directly or by implication, as an agent of the other or in any manner assume or create any obligation or commitment on behalf of, or in the name of, the other. Should Contractor engage other individuals or entities to perform the Services hereunder, including employees and subcontractors, Contractor shall obtain a signed nondisclosure and/or other restrictive covenants agreement or the like, in a form acceptable to the Company, from said person or entity prior to their performance of any acts arising from or in connection with this Agreement. All persons or entities supplied or used by Contractor shall be deemed employees or subcontractors of Contractor and will not be considered subcontractors, employees, agents or the like of iCAD for any purpose whatsoever. Contractor and its personnel shall perform the Services free of the direction, supervision and control of the Company, and shall perform the Services at a location of Contractor’s choosing. Contractor further agrees to furnish all tools and materials necessary to accomplish Contractor’s obligations or Services under this Agreement. Contractor shall assume full responsibility for the Services hereunder and shall bear the benefit/risk and all profit and loss in rendering the Services. Contractor agrees to maintain adequate insurance, including professional, employer and/or other insurance, to cover all exposure hereunder. Contractor and its employees or subcontractors will not be considered employees of the Company for any purpose, including, without limitation, any Company employment policy or any employment benefit plan, and will not be entitled to any benefits or compensation under any such policy or benefit plan (including without limitation unemployment and workers compensation benefits). Contractor assumes full responsibility for the actions of all such personnel while performing Services under this Agreement and for the payment of their compensation (including, if applicable, withholding of income taxes and the payment and withholding of social security and other payroll taxes), workers’ compensation, disability benefits and the like to the extent applicable. Contractor also agrees, represents and warrants that Contractor is solely and exclusively responsible for the payment of all taxes associated with the compensation or payments generated under this Agreement. Contractor shall defend, indemnify and hold harmless iCAD against all liability and loss in connection with, and shall assume full responsibility for, its actions and the actions of all persons or entities engaged by it, and the payment of all federal, state and local taxes or contributions imposed or required under this Agreement and/or law, with respect to Contractor or its employees engaged in performance of this Agreement. Contractor and Company expressly acknowledge and agree that this Agreement is not exclusive and Contractor can, and should, perform work for other persons and entities other than the Company, subject to the confidentiality, nondisclosure and other restrictive covenants herein.
11. Contractor Personnel. To the extent any employee or contractor of Contractor is on iCAD's or iCAD’s Customer’s premises, Contractor agrees that such persons will comply with all of iCAD or Customer rules, regulations and policies regarding the workplace as well as applicable security procedures. Contractor agrees that any equipment or other personal property brought onto such premises during any such visit shall be at Contractor's sole risk and iCAD nor its Customer shall be responsible for any loss or damage resulting to such equipment or personal property or to any person in connection with such equipment or personal property.
12. Notices. All notices or demands required or permitted to be given or made hereunder by a party shall be in writing and, except as otherwise expressly provided herein, shall be deemed to have been given if made by hand delivery with signed receipt, or one (1) day after mailing by nationally recognized overnight courier with signature required, postage prepaid, addressed to the other party at its address designated on page 1 to this Agreement, or at such other address as such other party shall have furnished in writing to the notifying party in accordance with this Section.
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13. Force Majeure. Neither party shall be liable for any delays or other non-performance resulting from circumstances or causes beyond its reasonable control, including, without limitation, fire or other casualty, act of God, strike or labor dispute, war or other violence, any law, order or requirement of any governmental agency or authority or other causes beyond the reasonable control of such party (other than causes related to such party’s financial condition or with respect to the payment of money), provided that such party has informed the other party of such force majeure event upon the occurrence thereof (including a reasonable estimate of the additional time required for performance) and such party uses best efforts and all due diligence to effect the required performance as soon as reasonably practicable.
14. General Terms.
(a) Severability. If any provision of this Agreement is declared or found to be illegal, unenforceable or void, then such provision shall be null and void but each other provision hereof not so affected shall be enforced to the full extent permitted by applicable law.
(b) Waiver. No waiver of any right or remedy hereunder with respect to any occurrence or event on one occasion shall be deemed a waiver of such right or remedy with respect to such occurrence or event on any other occasion.
(c) Governing Law; Specific Performance. The provisions of this Agreement shall be construed in accordance with the laws of the State of New Hampshire excluding its conflict of law provisions. The parties agree to sole venue in the state or federal courts located in the State of New Hampshire, and each party hereby consents to the jurisdiction of such courts over itself in any action relating to this Agreement. The parties further acknowledge that if they breach their respective obligations under Sections 4 and 11, the non-breaching party may sustain injuries that cannot be adequately compensated by an award of damages. The breaching party agrees that the non-breaching party shall be entitled to seek such injunctive relief as a court may determine to be appropriate therewith in addition to any other available equitable remedies and to available legal remedies.
(d) Modifications In Writing. Any modification or amendment of any provision of this Agreement must be in writing and bear the signature of the duly authorized representatives of both parties.
(e) Integration. This Agreement sets forth the entire agreement and understandings between the parties hereto with respect to the subject matter hereof. This Agreement merges all previous and contemporaneous discussions and negotiations between the parties and supersedes and replaces any other agreement that may have existed between Contractor and iCAD with respect to the subject matter hereof.
(f) iCAD Affiliates. The rights granted to iCAD hereunder shall be deemed to include all affiliates of iCAD and the purchaser of all or substantially all of iCAD's assets.
(g) Assignment. Contractor shall not assign or delegate its rights or obligations hereunder without iCAD's advance written consent. Subject to the foregoing, the Agreement and each of the provisions hereof shall inure to the benefit of and be binding upon the parties and their respective successors, administrators and permitted assigns.
(h) Headings/No Presumption Against Drafter. The captions and headings throughout this Agreement are for convenience and reference only, and the words contained therein shall in no way be held or deemed to define, limit, describe, explain, modify, amplify, or add to the interpretation, construction, or meaning of any provision of or the scope or intent of this Agreement, nor in any way affect the Agreement. This Agreement shall be construed and interpreted fairly, in accordance with the plain meaning of its terms, and there shall be no presumption or inference against the party drafting this Agreement in construing or interpreting the provisions hereof.
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(i) Publicity. Contractor will not issue any press releases, make any other disclosures regarding this Agreement or its terms or the nature or existence of any relationship between the parties, or use iCAD’s trademarks, trade names or other proprietary marks in any manner in connection with this Agreement without iCAD’s prior written consent.
(j) Counterparts. This Agreement and each SOW may be executed in two or more counterparts, each of which shall be deemed to be an original as against any Party whose signature appears thereon, but all of which together shall constitute but one and the same instrument. Signatures to this Agreement or SOW transmitted by facsimile, by electronic mail in “portable document format” (“.pdf”), or by any other electronic means which preserves the original graphic and pictorial appearance of the Agreement or SOW, shall have the same effect as physical delivery of the paper document bearing the original signature.
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the date first written above.
| Contractor: | iCAD, Inc. | ||||
| By: | /s/ Charles R. Carter | By: | /s/ Michael Klein | ||
| Signature | Signature | ||||
| Charles R. Carter | Michael Klein | ||||
| Printed Name | Printed Name | ||||
| Managing Director | Executive Chairman & CEO | ||||
| Title | Title | ||||
iCAD Consulting Agreement |
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EXHIBIT A
STATEMENT OF WORK
This Statement of Work sets forth certain terms and conditions regarding the performance of Services by Carter Life Sciences Consulting (“Contractor”) and shall be incorporated by reference into the Consulting Agreement by and between Contractor and iCAD, Inc. (the “Agreement”). Capitalized terms used but not defined herein shall have the meaning set forth in the Agreement. The parties acknowledge and agree that the terms and conditions of the Agreement fully apply to the Services and to this Statement of Work, and that each party has reviewed such terms and conditions and agrees to be bound thereby.
| 1. | Timeline of Services to be Provided by Contractor/ Estimated Completion Date: |
The project timeline will be an April 16, 2021 start date with a duration of 6 months, ending on October 15, 2021.
The services shall commence April 16, 2021 and shall continue for a period of six (6) months, ending October 15, 2021. Termination by iCAD without cause prior to October 15, 2021 shall require a lump-sum payment equal to one month’s flat fee amount of $35,000 within thirty (30) days of the notification of the termination of this contract.
| 2. | Services to be Provided: |
iCAD agrees to engage the Contractor to provide iCAD with the following consulting
services (the "Services") including but not limited to: See Appendix A
| 3. | Name(s) of Contractor Employees Conducting Services: |
Charles R. Carter
| 4. | Services Site(s)/Locations(s): |
Nashua NH and remote as needed
| 5. | Compensation: |
$35,000.00 per month on a flat fee, discounted $1,520 per weekday, or $250 per hour for the month of April, not included as worked within partial, pro-rated months.
| 6. | iCAD Indemnification of Contractor: On appointment of Contractor to any role as an authorized Officer of the Corporation, iCAD will fully indemnify Contractor to the fullest extent consistent with the By-Laws of the Corporation (if applicable) and permitted by, and except as prohibited under, applicable law from and against any liabilities, costs, claims and expenses, including all costs and expenses incurred in defense of any proceeding (including attorneys’ fees) in which the Contractor is made a party by reason of the fact that Contractor is serving as an officer of the Corporation. This indemnification provision shall not apply to any proceeding (i) initiated by Contractor or the Company relating to a dispute between Contractor and the Company with respect to this Agreement; or (ii) in connection with any proceeding in which the Contractor is found by a final judicial or regulatory decision to have acted in bad faith or with willful disregard for any law, rule or regulation. |
Carter Life Sciences Consulting
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Directors’ and Officers’ Insurance: The Corporation represents that it will use best efforts to maintain directors’ and officers’ liability insurance during the term of Consultant’s engagement as an officer of the Corporation, providing coverage to Consultant on terms that are no less favorable than the coverage provided to the directors and senior most executives of the Corporation, subject to the terms and exclusions of the applicable policy.
| 7. | Consistent with the final sentence of Section 10 above, iCAD recognizes Consultant may have other Consulting engagements. Consultant warrants to use his best efforts to perform the Services and will make every attempt to not engage in any activity which would present a conflict of interest with iCAD’s business or Consultant’s provision of Services to iCAD under this Agreement. Notwithstanding this Agreement, iCAD agrees to allow Consultant’s other consulting engagements. |
Carter Life Sciences Consulting
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IN WITNESS WHEREOF, the parties have caused this Statement of Work to be executed by their respective duly authorized officers and attached to the Agreement this _____ day of ___________, 2021.
| Contractor: Charles Carter | iCAD, Inc. | ||||
| By: | ________________ | By: | ________________ | ||
| Signature | Signature | ||||
| Charles Carter | Michael Klein – Executive Chairman & CEO | ||||
| Printed Name | Printed Name & Title | ||||
| iCAD, Inc. Human Resources | |||||
| By: | ________________ | ||||
| Signature | |||||
| Brian Testa – People & Culture | |||||
| Printed Name & Title | |||||
Carter Life Sciences Consulting
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Appendix A
Primary Responsibilities
• Strategic Advisor: Serve as a business partner and strategic advisor to the CEO and to other members of the top leadership team. Provide insightful focus on critical business levers to drive growth. Contribute actively to the evolution and execution of strategic and business plans across functions. Work closely with the senior management team to evaluate current and future operating performance with the objective of maximizing shareholder value, maintaining and improving financial flexibility and enhancing the company’s overall financial position. Provide leadership in the planning and execution of fundraising, including equity financings and all forms of debt as necessary and appropriate.
• Financial Leadership: Communicate a clear vision for the company to investors, business partners and employees, enhancing the company’s credibility with shareholders, analysts, and the financial community. Develop and maintain excellent relationships and effectively represent company interests with shareholders, financial institutions and the investment community. Communicate regularly and clearly to institutional investors and analysts to facilitate proper valuation of corporate equity and debt securities.
• Financial Management: Think strategically about how best to leverage the company’s resources to ensure that it continues to have sufficient access to capital, liquidity and funding sources: equity, debt and other mechanisms as appropriate.
• Financial Operations: Lead, manage and direct all financial affairs of the company today and in the future; this includes financial planning, forecasting and budgeting, audit, regulatory filings and compliance, finance operations including billing systems, accounts payable, accounts receivable, SOX compliance and timely close of financial reporting each month. Also ensure the integrity and compliance of all financial and regulatory reporting, controls, systems, policies and procedures.
• Team leadership: Provide leadership, mentorship and coaching to the finance organization. Establish an environment of problem solving and improved business practices, attract and retains superior financial talent.
• Investor Relations: Serve as a key spokesman for the company to broad constituents, ensuring transparency in communications, while positioning the company effectively to prospective investors.
• Relationship Management: Develop long-term relationships and credibility with key external constituencies including external auditors, bankers, investors, shareholders, legal counsel and other advisors.
• Risk Management: Interface directly with the Board and Audit Committee of the Board, ensuring they have a clear sense of the overall financial health and potential risk areas of the company. Maintain prudent risk policies and exposures and establish balance sheet management and forecasting discipline.
Carter Life Sciences Consulting
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• Planning/Budget: Provide overall leadership to the management reporting, financial planning and budgeting processes. Lead efforts to improve the analytical rigor of the finance team so that business decisions throughout the organization are informed by analytical insight.
CANDIDATE SPECIFICATION: KEY SELECTION CRITERIA
Professional
• Demonstrated record of executive leadership, ideally of multi-faceted, dynamic, and growth-oriented organizations. Ideally this experience would include functioning for a significant period as the CFO of a publicly traded company.
• Professional stature and a record of organizational impact, both within the finance function across all functions as a tenured member of senior leadership teams.
• Credibility within the investment community; broad experience in the structuring and implementing of various financial and business transactions including capital raising.
• Expertise within diagnostics, and an ability to grasp and articulate scientific concepts. Recent leadership experience in a dynamic and growth-oriented organization is ideal.
• Experience from within established, disciplined, successful organizations; recent leadership within a company that has scaled from discovery through to late stage clinical development.
• A demonstrated track record of serving as a business partner to the CEO, the Board and the senior leadership team with the ability to influence key business decisions and track performance against key objectives.
Personal
• An energetic, positive, ambitious and communicative executive who maintains transparency both internally and externally. Excellent interpersonal communications, public speaking, and presentation skills.
• A desire to work with purpose and passion; demonstrates tenacity and works towards continuous improvement.
• A team orientation. Someone who focuses on collective results rather than individual achievements.
• The highest ethics and moral standards; unquestioned integrity.
• Outstanding intellectual ability with judgment that reflects reasoned and creative business views.
• A broad-minded and practical business-minded individual who can grasp the impact of financial and operating decisions to the overall strategy.
• A well-organized, high energy, detail-oriented, and persistent executive with the ability to identify/focus on key issues, prioritize efforts, and ensure follow up with timely/quality results
Carter Life Sciences Consulting
ICAD REPORTS FINANCIAL RESULTS FOR FIRST QUARTER ENDED MARCH 31, 2021
First Quarter Revenues of $8.6 Million Represented 32% Year-Over-Year Growth Driven by 28% Growth in Detection Revenue and 41% Growth in Therapy Revenue
ProFound AI ® Product Revenue Increased 34% in the First Quarter of 2021 as Compared to 2020 First Quarter with Continued Adoption of ProFound AI ® Risk Assessment
Net Loss Declined 86% to $0.07 Per Share in the First Quarter of 2021 as Compared to 2020 First Quarter Driven by a $1.8 Million Gross Margin Increase and a $0.6 Million Decrease in Operating Expenses
Conference Call Today at 4:30 PM ET
NASHUA, N.H. – April 28, 2021 – iCAD, Inc. (NASDAQ: ICAD), a global medical technology leader providing innovative cancer detection and therapy solutions, today reported its financial and operating results for the three months ended March 31, 2021.
Recent Highlights:
| · | Continued market penetration with ProFound AI® Risk, the first and only commercially available clinical decision support tool providing two-year breast cancer risk estimation personalized for each woman, for 2D mammography in the U.S. and Europe |
| · | Significant number of agreements signed leveraging momentum from Q4 2020 partnership with Solis Mammography, the largest independent provider of mammography and breast health services in the U.S. |
| · | Received FDA clearance for ProFound AI® Version 3.0 for 3D Mammography |
| o | Company’s third-generation AI solution offers significant improvement in algorithm specificity performance and faster processing time compared to the prior versions |
| · | Raised approximately $25.1 million in gross proceeds from a public offering of approximately 1.4 million shares of common stock at a price of $18 per share |
“We are extremely pleased with the overall performance of our business in the first quarter,” said Mike Klein, Chairman and CEO. “Our first quarter total revenue of $8.6 million represented a 32 percent increase over our 2020 first quarter and we generated 34% year-over-year growth in AI product revenue in the first quarter, as we continue to drive further adoption of ProFound AI®. Importantly, these impressive growth rates were achieved while we maintained our prudent operating expense management measures, which resulted in a 86% decline in net loss to $0.07 per share. We ended the quarter with $46.9 million in cash, and just applied approximately $7.4 million of that cash to repay our credit facility in full.”
“Moreover, ProFound AI® Risk was included in several of the agreements we signed in the first quarter and we continue to receive highly positive feedback from customers on this innovative new offering,” continued Mr. Klein. “The first quarter was defined by improved market penetration and a significant number of smaller deals, which we view as a positive indicator of the strength of our business, as we are not reliant on large scale deals to achieve our revenue growth goals. Also, we were thrilled in March to receive FDA clearance for Version 3.0 of ProFound AI for 3D mammography, which keeps iCAD at the forefront of cancer detection innovation.”
“Looking ahead, we anticipate in the coming weeks that the first patient will be treated in our multi-site international clinical trial of Xoft Brain IORT in the high-value indication of GBM. We continue to expect the availability of early progression-free survival data from this study by the end of 2021,” concluded Klein.
First Quarter 2020 Financial Results
Total Detection and Therapy revenue for the first quarter of 2021 was $8.6 million, an increase of $2.1 million, or 32%, as compared to the first quarter of 2020, reflecting a 46% increase in product revenue, and a 12% increase in service and supplies revenue.
In $000's
| Three months ended March 31, | ||||||||||||||||
| 2021 | 2020 | $ Change | % Change | |||||||||||||
| Product revenue | $ | 5,557 | $ | 3,795 | $ | 1,762 | 46 | % | ||||||||
| Service and supplies revenue | 3,087 | 2,756 | 331 | 12 | % | |||||||||||
| Total Revenue | $ | 8,644 | $ | 6,551 | $ | 2,093 | 32 | % | ||||||||
Revenue: Cancer Detection revenue for the first quarter of 2021, which includes the Company’s mammography and breast density products, and the associated service and supplies revenue, increased by approximately $1.2 million, or 28%, to $5.7 million, as compared to the first quarter of 2020. Therapy revenue for the first quarter of 2021, which includes Xoft® Axxent® eBx® System® sales, as well as the associated service and supplies revenue, increased by $0.9 million, or 41%, to $2.9 million, as compared to the first quarter of 2020.
In $000's
| Three months ended March 31, | ||||||||||||||||
| 2021 | 2020 | $ Change | % Change | |||||||||||||
| Detection revenue | ||||||||||||||||
| Product revenue | $ | 4,161 | $ | 3,100 | $ | 1,061 | 34 | % | ||||||||
| Service and supplies revenue | 1,558 | 1,376 | 182 | 13 | % | |||||||||||
| Detection Revenue | $ | 5,719 | $ | 4,476 | $ | 1,243 | 28 | % | ||||||||
| Therapy revenue | ||||||||||||||||
| Product revenue | $ | 1,396 | $ | 695 | $ | 701 | 101 | % | ||||||||
| Service and supplies revenue | 1,529 | 1,380 | 149 | 11 | % | |||||||||||
| Therapy Revenue | $ | 2,925 | $ | 2,075 | $ | 850 | 41 | % | ||||||||
| Total Revenue | $ | 8,644 | $ | 6,551 | $ | 2,093 | 32 | % | ||||||||
Gross Profit: Gross profit for the first quarter of 2021 was $6.3 million, or 73% of revenue, as compared to $4.5 million, or 69% of revenue, in the first quarter of 2020.
Operating Expenses: Total operating expenses for the first quarter of 2021 were $7.8 million, a $0.6 million, or 7%, decrease from $8.4 million in the first quarter of 2020.
GAAP Net Loss: Net loss for the first quarter of 2021 was ($1.6) million, or ($0.07) per diluted share, as compared to a net loss of ($11.8) million, or ($0.59) per diluted share, for the first quarter of 2020. GAAP Net Loss in 2020 included a $7.8 million charge related to the losses on the extinguishment of debentures and debt.
Non-GAAP Adjusted Net Loss: Non-GAAP Adjusted Net Loss, a non-GAAP financial measure as defined below, for the first quarter of 2021 was ($1.6) million, or ($0.07) per diluted share, as compared to a Non-GAAP Adjusted Net Loss of ($3.9) million, or ($0.20) per diluted share, for the first quarter of 2020. Please refer to the section entitled “Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures” and the accompanying financial table included at the end of this release for a reconciliation of GAAP Net Loss to Non-GAAP Adjusted Net Loss results for the three-month periods ended March 31, 2021 and 2020, respectively.
Non-GAAP Adjusted EBITDA: Non-GAAP Adjusted EBITDA, a non-GAAP financial measure as defined below, for the first quarter of 2021 was a loss of ($0.4) million, a $2.7 million decrease as compared to the first quarter 2020 Non-GAAP Adjusted EBITDA loss of ($3.1) million. Please refer to the section entitled “Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures” and the accompanying financial table included at the end of this release for a reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA results for the three-month periods ended March 31, 2021 and 2020, respectively.
Conference Call
Wednesday April 28 at 4:30 PM ET
| Domestic: | 877-407-0784 |
| International: | 201-689-8560 |
| Conference ID: | 13718927 |
| Webcast: | http://public.viavid.com/index.php?id=144476 |
Use of Non-GAAP Financial Measures
In its quarterly news releases, conference calls, slide presentations or webcasts, the Company may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measures most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the condensed consolidated financial statements. When analyzing the Company's operating performance, investors should not consider these non-GAAP measures as a substitute for the comparable financial measures prepared in accordance with GAAP. The Company's quarterly news releases containing such non-GAAP reconciliations can be found on the Investors section of the Company's website at www.icadmed.com.
About iCAD, Inc.
Headquartered in Nashua, NH, iCAD is a global medical technology leader providing innovative cancer detection and therapy solutions. For more information, visit www.icadmed.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
Certain statements contained in this News Release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For example, when the Company discusses the potential of ProFound AI® Risk, the benefits of the Company’s products, and clinical plans and updates, it is using forward-looking statements. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited, to the Company’s ability to achieve business and strategic objectives, increase sales and acceptance of products, adoption by CMS of a new payment model, and that such model will prove beneficial to the Company, which is not assured, implement expansion plans, the risks of uncertainty of patent protection, the impact of supply and manufacturing constraints or difficulties, uncertainty of future sales levels, protection of patents and other proprietary rights, the impact of supply and manufacturing constraints or difficulties, product market acceptance, possible technological obsolescence of products, increased competition, to successfully defend itself in litigation matters, government regulation, changes in Medicare or other reimbursement policies, risks relating to our existing and future debt obligations, competitive factors, the effects of a decline in the economy or markets served by the Company; the effects of a global pandemic, and other risks detailed in the Company’s filings with the Securities and Exchange Commission. The words “believe,” “demonstrate,” “intend,” “expect,” “estimate,” “will,” “continue,” “anticipate,” “likely,” “seek,” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. The Company is under no obligation to provide any updates to any information contained in this release. For additional disclosure regarding these and other risks faced by iCAD, please see the disclosure contained in our public filings with the Securities and Exchange Commission, available on the Investors section of our website at http://www.icadmed.com and on the SEC’s website at http://www.sec.gov.
Contact:
Media Inquiries:
Jessica Burns, iCAD
1-201-423-4492
jburns@icadmed.com
Investor Relations:
Jeremy Feffer, LifeSci Advisors
+ 1-212-915-2568
jeremy@lifesciadvisors.com
| iCAD, INC. AND SUBSIDIARIES | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| (In thousands) | ||||||||
| March 31, | December 31, | |||||||
| Assets | 2021 | 2020 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 46,907 | $ | 27,186 | ||||
| Trade accounts receivable, net of allowance for doubtful | ||||||||
| accounts of $111 in 2021 and $111 in 2020 | 10,649 | 10,027 | ||||||
| Inventory, net | 2,498 | 3,144 | ||||||
| Prepaid expenses and other current assets | 2,188 | 1,945 | ||||||
| Total current assets | 62,242 | 42,302 | ||||||
| Property and equipment, net of accumulated depreciation | ||||||||
| of $6,854 in 2021 and $6,778 in 2020 | 930 | 744 | ||||||
| Operating lease assets | 1,565 | 1,758 | ||||||
| Contract and other assets | 1,564 | 1,527 | ||||||
| Intangible assets, net of accumulated amortization | ||||||||
| of $8,552 in 2021 and $8,494 in 2020 | 831 | 889 | ||||||
| Goodwill | 8,362 | 8,362 | ||||||
| Total assets | $ | 75,494 | $ | 55,582 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,251 | $ | 2,869 | ||||
| Accrued and other expenses | 5,819 | 7,039 | ||||||
| Notes payable - current portion | 269 | — | ||||||
| Lease payable - current portion | 847 | 726 | ||||||
| Deferred revenue | 5,957 | 6,117 | ||||||
| Total current liabilities | 14,143 | 16,751 | ||||||
| Notes payable, long-term portion | 6,703 | 6,960 | ||||||
| Lease payable - long-term portion | 860 | 1,075 | ||||||
| Deferred revenue, long-term portion | 420 | 267 | ||||||
| Deferred tax | 4 | 4 | ||||||
| Total Liabilities | 22,130 | 25,057 | ||||||
| Stockholders' Equity: | ||||||||
| Preferred stock, $ 0.01 par value: authorized 1,000,000 shares; | ||||||||
| none issued. | — | — | ||||||
| Common stock, $0.01 par value: authorized 30,000,000 | ||||||||
| shares; issued 25,143,432 in 2021 and 23,693,735 in 2020. | ||||||||
| Outstanding 24,957,601 in 2021 and 23,508,575 in 2020. | 251 | 236 | ||||||
| Additional paid-in capital | 298,106 | 273,639 | ||||||
| Accumulated deficit | (243,578 | ) | (241,935 | ) | ||||
| Treasury stock at cost, 185,831 shares in 2020 and 2019 | (1,415 | ) | (1,415 | ) | ||||
| Total Stockholders' Equity | 53,364 | 30,525 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 75,494 | $ | 55,582 | ||||
| iCAD, INC. AND SUBSIDIARIES | ||||||||
| Condensed Consolidated Statements of Operations | ||||||||
| (Unaudited) | ||||||||
| (In thousands except for per share data) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Revenue: | ||||||||
| Products | $ | 5,557 | $ | 3,795 | ||||
| Service and supplies | 3,087 | 2,756 | ||||||
| Total revenue | 8,644 | 6,551 | ||||||
| Cost of revenue: | ||||||||
| Products | 1,409 | 1,017 | ||||||
| Service and supplies | 867 | 927 | ||||||
| Amortization and depreciation | 79 | 97 | ||||||
| Total cost of revenue | 2,355 | 2,041 | ||||||
| Gross profit | 6,289 | 4,510 | ||||||
| Operating expenses: | ||||||||
| Engineering and product development | 2,192 | 2,211 | ||||||
| Marketing and sales | 3,424 | 3,608 | ||||||
| General and administrative | 2,151 | 2,532 | ||||||
| Amortization and depreciation | 55 | 52 | ||||||
| Total operating expenses | 7,822 | 8,403 | ||||||
| Loss from operations | (1,533 | ) | (3,893 | ) | ||||
| Interest expense | (112 | ) | (130 | ) | ||||
| Loss on fair value of convertible debentures | — | (7,464 | ) | |||||
| Loss on extinguishment of debt | — | (341 | ) | |||||
| Other income | 2 | 42 | ||||||
| Other expense, net | (110 | ) | (7,893 | ) | ||||
| Loss before income tax expense | (1,643 | ) | (11,786 | ) | ||||
| Tax expense | — | (26 | ) | |||||
| Net loss and comprehensive loss | $ | (1,643 | ) | $ | (11,812 | ) | ||
| Net loss per share: | ||||||||
| Basic | $ | (0.07 | ) | $ | (0.59 | ) | ||
| Diluted | $ | (0.07 | ) | $ | (0.59 | ) | ||
| Weighted average number of shares | ||||||||
| used in computing loss per share: | ||||||||
| Basic | 23,929 | 20,175 | ||||||
| Diluted | 23,929 | 20,175 | ||||||
| iCAD, INC. AND SUBSIDIARIES | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (Unaudited) | ||||||||
| (In thousands) | ||||||||
| For the three months ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | (1,643 | ) | $ | (11,812 | ) | ||
| Adjustments to reconcile net loss to net cash | ||||||||
| used for operating activities: | ||||||||
| Amortization | 76 | 79 | ||||||
| Depreciation | 58 | 70 | ||||||
| Bad debt provision | — | 119 | ||||||
| Stock-based compensation expense | 935 | 464 | ||||||
| Amortization of debt discount and debt costs | 12 | 40 | ||||||
| Change in fair value of convertible debentures | — | 7,464 | ||||||
| Deferred tax | — | 1 | ||||||
| Loss on extinguishment of debt | — | 341 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (622 | ) | 2,610 | |||||
| Inventory | 647 | 149 | ||||||
| Prepaid and other assets | (89 | ) | (72 | ) | ||||
| Accounts payable | (1,617 | ) | (317 | ) | ||||
| Accrued expenses | (1,313 | ) | (439 | ) | ||||
| Deferred revenue | (7 | ) | (113 | ) | ||||
| Total adjustments | (1,920 | ) | 10,396 | |||||
| Net cash used for operating activities | (3,563 | ) | (1,416 | ) | ||||
| Cash flow from investing activities: | ||||||||
| Additions to patents, technology and other | — | (1 | ) | |||||
| Additions to property and equipment | (262 | ) | (155 | ) | ||||
| Net cash used for investing activities | (262 | ) | (156 | ) | ||||
| Cash flow from financing activities: | ||||||||
| Issuance of common stock pursuant to stock option plans | 270 | 196 | ||||||
| Issuance of common stock pursuant to Employee Stock Purchase Plan | 47 | — | ||||||
| Principal repayment of debt financing | — | (4,638 | ) | |||||
| Repayment to Line of Credit | — | (2,000 | ) | |||||
| Proceeds from debt financing | — | 7,000 | ||||||
| Debt issuance costs | — | (43 | ) | |||||
| Proceeds from issuance of common stock, net | 23,229 | — | ||||||
| Net cash provided by financing activities | 23,546 | 515 | ||||||
| Increase (decrease) in cash and equivalents | 19,721 | (1,057 | ) | |||||
| Cash and equivalents, beginning of period | 27,186 | 15,313 | ||||||
| Cash and equivalents, end of period | $ | 46,907 | $ | 14,256 | ||||
Reconciliation of Non-GAAP Financial Measures to Comparable GAAP Measures
The Company reports its financial results in accordance with United States generally accepted accounting principles, or GAAP. However, management believes that in order to understand the Company's short-term and long-term financial and operational trends, investors may wish to consider the impact of certain non-cash or non-recurring items, when used as a supplement to financial performance measures in accordance with GAAP. These items result from facts and circumstances that vary in frequency and/or impact on continuing operations. Management also uses results of operations before such items to evaluate the operating performance of the Company and compare it against past periods, make operating decisions, and serve as a basis for strategic planning. These non-GAAP financial measures provide management with additional means to understand and evaluate the operating results and trends in the Company's ongoing business by eliminating certain non-cash expenses and other items that management believes might otherwise make comparisons of the Company's ongoing business with prior periods more difficult, obscure trends in ongoing operations or reduce management's ability to make useful forecasts. Management believes that these non-GAAP financial measures provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing the Company's financial and operational performance and comparing this performance to its peers and competitors.
Management defines "Non-GAAP Adjusted EBITDA" as the sum of GAAP Net Loss before provisions for interest expense, other income, stock-based compensation expense, depreciation and amortization, tax expense, severance, gain on sale of assets, loss on disposal of assets, acquisition and litigation related expenses. Management considers this non-GAAP financial measure to be an indicator of the Company's operational strength and performance of its business and a good measure of its historical operating trends, in particular the extent to which ongoing operations impact the Company's overall financial performance.
The non-GAAP financial measures do not replace the presentation of the Company's GAAP financial results and should only be used as a supplement to, not as a substitute for, the Company’s financial results presented in accordance with GAAP. The Company has provided a reconciliation of each non-GAAP financial measure used in its financial reporting and investor presentations to the most directly comparable GAAP financial measure.
Management excludes each of the items identified below from the applicable non-GAAP financial measure referenced above for the reasons set forth with respect to that excluded item:
| · | Interest expense: The Company excludes interest expense which includes interest from the facility agreement, interest on capital leases and interest on the convertible debentures from its non-GAAP Adjusted EBITDA calculation. |
| · | Stock-based compensation expense: excluded as these are non-cash expenses that management does not consider part of ongoing operating results when assessing the performance of the Company's business, and also because the total amount of expense is partially outside of the Company's control as it is based on factors such as stock price volatility and interest rates, which may be unrelated to our performance during the period in which the expense is incurred. |
| · | Amortization and Depreciation: Purchased assets and intangibles are amortized over a period of several years and generally cannot be changed or influenced by management after they are acquired. Accordingly, these non-cash items are not considered by management in making operating decisions, and management believes that such expenses do not have a direct correlation to future business operations. Thus, including such charges does not accurately reflect the performance of the Company's ongoing operations for the period in which such charges are incurred. |
| · | Loss on fair value of convertible debentures. The Company excludes this non-cash item as it is not considered by management in making operating decisions, and management believes that such item does not have a direct correlation to future business operations. |
| · | Litigation related: These expenses consist primarily of settlement, legal and other professional fees related to litigation. The Company excludes these costs from its non-GAAP measures primarily because the Company believes that these costs have no direct correlation to the core operations of the Company. |
| · | Loss on extinguishment of debt: The Company excludes this non-cash item as it is not considered by management in making operating decisions, and management believes that such item does not have a direct correlation to future business operations. |
On occasion in the future, there may be other items, such as loss on extinguishment of debt, significant asset impairments, restructuring charges or significant gains or losses from contingencies that the Company may exclude if it believes that doing so is consistent with the goal of providing useful information to investors and management.
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| GAAP Net Loss | $ | (1,643 | ) | $ | (11,812 | ) | ||
| Interest Expense | 112 | 130 | ||||||
| Other income | (2 | ) | (42 | ) | ||||
| Stock Compensation | 935 | 464 | ||||||
| Depreciation | 76 | 71 | ||||||
| Amortization | 58 | 78 | ||||||
| Tax expense | — | 26 | ||||||
| Loss on extinguishment of debt | — | 341 | ||||||
| Loss of fair value of convertble debentures | — | 7,464 | ||||||
| Litigation related | 21 | 145 | ||||||
| Non-GAAP Adjusted EBITDA | $ | (443 | ) | $ | (3,135 | ) | ||
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| GAAP Net Loss | $ | (1,643 | ) | $ | (11,812 | ) | ||
| Adjustments to Net Loss: | ||||||||
| Loss from extinguishment of debt | — | 341 | ||||||
| Litigation related | 21 | 145 | ||||||
| Loss of fair value of convertble debentures | — | 7,464 | ||||||
| Non-GAAP Adjusted Net Loss | $ | (1,622 | ) | $ | (3,862 | ) | ||
| Net Loss per share | ||||||||
| GAAP Net Loss per share | $ | (0.07 | ) | $ | (0.59 | ) | ||
| Adjustments to Net Loss (as detailed above) | — | 0.39 | ||||||
| Non-GAAP Adjusted Net Loss per share | $ | (0.07 | ) | $ | (0.20 | ) | ||
Cover |
Apr. 27, 2021 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Apr. 27, 2021 |
| Entity File Number | 001-09341 |
| Entity Registrant Name | ICAD INC |
| Entity Central Index Key | 0000749660 |
| Entity Tax Identification Number | 02-0377419 |
| Entity Incorporation, State or Country Code | DE |
| Entity Address, Address Line One | 98 Spit Brook Road |
| Entity Address, Address Line Two | Suite 100 |
| Entity Address, City or Town | Nashua |
| Entity Address, State or Province | NH |
| Entity Address, Postal Zip Code | 03062 |
| City Area Code | (603) |
| Local Phone Number | 882-5200 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, $0.01 par value |
| Trading Symbol | ICAD |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | false |
| Entity Information, Former Legal or Registered Name | Not Applicable |
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