UNAUDITED PRO FORMA FINANCIAL INFORMATION
Exhibit 99.2
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On October 22, 2023, iCAD, Inc. (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”), by and among (i) the Company, Xoft Solutions, LLC, a Delaware limited liability company, and Xoft, Inc., a Delaware corporation, each a wholly owned subsidiary of the Company (collectively with the Company, the “Sellers” and each, a “Seller”), and (ii) Elekta Inc., a Georgia corporation, and Nucletron Operations B.V., a company organized under the laws of the Netherlands (together, “Buyers” and each a “Buyer”), pursuant to which the Company agreed to transfer to the Buyers substantially all of the assets and liabilities primarily related to the Company’s Xoft business lines (the “Business”), including with respect to employees, contracts, intellectual property and inventory, for a cash payment of approximately $5.76 million dollars from the Buyers to the Company.
The closing of the Transaction occurred simultaneously with the execution of the Purchase Agreement.
In connection with the Transaction, the parties entered a transition services agreement pursuant to which the Company will provide certain migration and transition services to facilitate an orderly transaction of the operation of the Businesses to the Buyers in the 5- month period following consummation of the Transaction, extendable at the option of the parties.
The Purchase Agreement contains certain representations, warranties, covenants and indemnification provisions, including for breaches of covenants and for losses resulting from the Company’s liabilities specifically excluded from the Transaction.
The Company has agreed that, for the period commencing on the date of closing of the Transaction until the three-year anniversary thereof, neither the Company nor any of its affiliates will, directly or indirectly, compete with the Businesses, subject to certain limitations. The Company has also agreed that, for a period of three years following the closing of the Transaction, neither the Company nor any of its affiliates will, directly or indirectly, solicit to employ or employ any employee transferred to the Buyers as part of the Transaction.
The following unaudited pro forma condensed consolidated financial information is intended to show how the Transaction might have affected the historical financial statements of the Company if the Transaction had been completed at an earlier time as indicated therein, and such unaudited pro forma consolidated financial information is derived from, and should be read in conjunction with, the Company’s historical condensed consolidated financial statements and notes thereto, as presented in the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2023 filed with the Securities and Exchange Commission (“SEC”) on August 11, 2023 (the “Form 10-Q”) and the Company’s historical financial statements and notes thereto, as presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 31, 2023 (the “Form 10-K”).
The unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X.
The unaudited pro forma consolidated financial statement information is presented for informational purposes only and is based upon estimates by the Company’s management, which are based upon available information and certain assumptions that the Company’s management believes are reasonable as of the date of this filing. The unaudited pro forma consolidated financial information is not intended to be indicative of the actual financial position or results of operations that would have been achieved had the Transaction been consummated as of the periods indicated, nor does it purport to indicate results which may be attained in the future. Actual amounts could differ materially from these estimates.
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2023 and the unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2023 and the years ended December 31, 2022, December 31, 2021 and December 31, 2020 should be read in conjunction with the notes thereto. The pro forma impact is presented on the pro forma consolidated balance sheet as of June 30, 2023 as if the transaction occurred on that date. In addition, the pro forma condensed consolidated statement of operations for the six months ended June 30, 2023 is presented as if the transaction occurred at the beginning of calendar year 2020.
| iCAD, Inc. and Subsidiaries | ||||||||||||||||
| Unaudited Pro Forma Condensed Consolidated Balance Sheet | ||||||||||||||||
| $ in thousands | June 30, | Pro Forma | iCAD, Inc. | |||||||||||||
| 2023 | Adjustments | Notes | Pro Forma | |||||||||||||
| Assets | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 19,037 | $ | 4,830 | A | $ | 23,867 | |||||||||
| Trade accounts receivable, net of allowance for credit losses | 5,747 | (2,058 | ) | B | 3,689 | |||||||||||
| Inventory, net | 4,248 | (3,154 | ) | B | 1,094 | |||||||||||
| Prepaid expenses and other current assets | 2,304 | (1,041 | ) | B | 1,263 | |||||||||||
| Total current assets | 31,336 | (1,423 | ) | 29,913 | ||||||||||||
| Property and equipment, net of accumulated depreciation | 1,471 | (360 | ) | B | 1,111 | |||||||||||
| Operating lease assets | 3,113 | (2,548 | ) | B | 565 | |||||||||||
| Other assets | 54 | (50 | ) | B | 4 | |||||||||||
| Intangible assets, net of accumulated amortization | 388 | (182 | ) | B | 206 | |||||||||||
| Goodwill | 8,362 | — | 8,362 | |||||||||||||
| Deferred tax assets | 108 | — | 108 | |||||||||||||
| Total assets | $ | 44,832 | $ | (4,563 | ) | $ | 40,269 | |||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable | $ | 857 | $ | (349 | ) | B | $ | 508 | ||||||||
| Accrued and other expenses | 4,363 | (1,713 | ) | B | 2,650 | |||||||||||
| Lease payable—current portion | 644 | (440 | ) | B | 204 | |||||||||||
| Deferred revenue—current portion | 6,027 | (2,579 | ) | B | 3,448 | |||||||||||
| Total current liabilities | 11,891 | (5,081 | ) | 6,810 | ||||||||||||
| Lease payable, net of current | 2,478 | (2,117 | ) | B | 361 | |||||||||||
| Deferred revenue, net of current | 283 | — | 283 | |||||||||||||
| Deferred tax | 6 | (6 | ) | B | — | |||||||||||
| Total liabilities | 14,658 | (7,204 | ) | 7,454 | ||||||||||||
| Stockholders’ equity: | ||||||||||||||||
| Preferred stock, $0.01 par value: authorized 1,000,000 shares; none issued. | — | — | ||||||||||||||
| Common stock, $0.01 par value: authorized 60,000,000 shares; issued 25,446,407 as of both June 30, 2023 and December 31, 2022; outstanding 25,260,576 as of both June 30, 2023 and December 31, 2022. | 254 | — | 254 | |||||||||||||
| Additional paid-in capital | 303,699 | — | 303,699 | |||||||||||||
| Accumulated deficit | (272,364 | ) | 2,641 | C | (269,723 | ) | ||||||||||
| Treasury stock at cost, 185,831 shares as of both June 30, 2023 and December 31, 2022 | (1,415 | ) | — | (1,415 | ) | |||||||||||
| Total stockholders’ equity | 30,174 | 2,641 | 32,815 | |||||||||||||
| Total liabilities and stockholders’ equity | $ | 44,832 | $ | (4,563 | ) | $ | 40,269 | |||||||||
| iCAD, Inc. and Subsidiaries | ||||||||||||||
| Unaudited Pro Forma Condensed Consolidated Statement of Operations | ||||||||||||||
| $ in thousands | Six Months Ended | Pro Forma | iCAD, Inc. | |||||||||||
| June 30, 2023 | Adjustments | Notes | Pro Forma | |||||||||||
| Revenue | $ | 11,643 | $ | (3,137 | ) | D | $ | 8,506 | ||||||
| Cost of revenue | 3,165 | (1,601 | ) | D | 1,564 | |||||||||
| Gross profit | 8,478 | (1,536 | ) | 6,942 | ||||||||||
| Operating expenses: | ||||||||||||||
| Engineering and product development | 3,544 | (782 | ) | D | 2,762 | |||||||||
| Marketing and sales | 4,967 | (1,044 | ) | D | 3,923 | |||||||||
| General and administrative | 5,695 | (78 | ) | D, E | 5,617 | |||||||||
| Amortization and depreciation | 120 | — | 120 | |||||||||||
| Total operating expenses | 14,326 | (1,904 | ) | 12,422 | ||||||||||
| (Loss) income from operations | (5,848 | ) | 368 | (5,480 | ) | |||||||||
| Other income/ (expense): | ||||||||||||||
| Interest expense | — | — | — | |||||||||||
| Interest income | 332 | — | 332 | |||||||||||
| Other income (expense), net | (3 | ) | 1 | D | (2 | ) | ||||||||
| Other income (expense), net | 329 | 1 | 330 | |||||||||||
| Loss before provision for income taxes | (5,519 | ) | 369 | (5,150 | ) | |||||||||
| Provision for tax expense | (9 | ) | — | (9 | ) | |||||||||
| Net loss and comprehensive loss | $ | (5,528 | ) | $ | 369 | $ | (5,159 | ) | ||||||
| Net loss per share: | ||||||||||||||
| Basic and diluted | $ | (0.22 | ) | $ | 0.01 | $ | (0.21 | ) | ||||||
| Weighted average number of shares used in computing loss per share: | ||||||||||||||
| Basic and diluted | 25,261 | 25,261 | 25,261 | |||||||||||
| iCAD, Inc. and Subsidiaries | ||||||||||||||
| Unaudited Pro Forma Condensed Consolidated Statement of Operations | ||||||||||||||
| $ in thousands | 12 Months Ended | Pro Forma | iCAD, Inc. | |||||||||||
| December 31, 2022 | Adjustments | Notes | Pro Forma | |||||||||||
| Revenue | $ | 27,944 | $ | (8,142 | ) | D | $ | 19,802 | ||||||
| Cost of revenue | 8,132 | (5,154 | ) | D | 2,978 | |||||||||
| Gross profit | 19,812 | (2,988 | ) | 16,824 | ||||||||||
| Operating expenses: | ||||||||||||||
| Engineering and product development | 8,593 | (3,099 | ) | D | 5,494 | |||||||||
| Marketing and sales | 13,691 | (2,969 | ) | D | 10,722 | |||||||||
| General and administrative | 11,234 | (717 | ) | D, E | 10,517 | |||||||||
| Amortization and depreciation | 224 | (13 | ) | D | 211 | |||||||||
| Total operating expenses | 33,742 | (6,798 | ) | 26,944 | ||||||||||
| Loss from operations | (13,930 | ) | 3,810 | (10,120 | ) | |||||||||
| Other income/ (expense): | ||||||||||||||
| Interest expense | (10 | ) | — | (10 | ) | |||||||||
| Interest income | 213 | — | 213 | |||||||||||
| Other income (expense), net | (45 | ) | (2 | ) | D | (47 | ) | |||||||
| Other income (expense), net | 158 | (2 | ) | 156 | ||||||||||
| Loss before provision for income taxes | (13,772 | ) | 3,808 | (9,964 | ) | |||||||||
| Provision for tax expense | 116 | — | 116 | |||||||||||
| Net loss and comprehensive loss | $ | (13,656 | ) | $ | 3,808 | $ | (9,848 | ) | ||||||
| Net loss per share: | ||||||||||||||
| Basic and diluted | $ | (0.54 | ) | $ | 0.15 | $ | (0.39 | ) | ||||||
| Weighted average number of shares used in computing loss per share: | ||||||||||||||
| Basic and diluted | 25,202 | 25,202 | 25,202 | |||||||||||
| iCAD, Inc. and Subsidiaries | ||||||||||||||
| Unaudited Pro Forma Condensed Consolidated Statement of Operations | ||||||||||||||
| $ in thousands | 12 Months Ended | Pro Forma | iCAD, Inc. | |||||||||||
| December 31, 2021 | Adjustments | Notes | Pro Forma | |||||||||||
| Revenue | $ | 33,638 | $ | (11,619 | ) | D | $ | 22,019 | ||||||
| Cost of revenue | 9,395 | (5,911 | ) | D | 3,484 | |||||||||
| Gross profit | 24,243 | (5,708 | ) | 18,535 | ||||||||||
| Operating expenses: | ||||||||||||||
| Engineering and product development | 9,194 | (3,019 | ) | D | 6,175 | |||||||||
| Marketing and sales | 15,135 | (3,865 | ) | D | 11,270 | |||||||||
| General and administrative | 10,406 | (494 | ) | D, E | 9,912 | |||||||||
| Amortization and depreciation | 240 | (13 | ) | D | 227 | |||||||||
| Total operating expenses | 34,975 | (7,391 | ) | 27,584 | ||||||||||
| Loss from operations | (10,732 | ) | 1,683 | (9,049 | ) | |||||||||
| Other income/ (expense): | ||||||||||||||
| Interest expense | (141 | ) | — | (141 | ) | |||||||||
| Interest income | 15 | — | 15 | |||||||||||
| Loss on extinguishment of debt | (386 | ) | — | (386 | ) | |||||||||
| Other income (expense), net | (512 | ) | — | (512 | ) | |||||||||
| Loss before provision for income taxes | (11,244 | ) | 1,683 | (9,561 | ) | |||||||||
| Provision for tax expense | (1 | ) | — | (1 | ) | |||||||||
| Net loss and comprehensive loss | $ | (11,245 | ) | $ | 1,683 | $ | (9,562 | ) | ||||||
| Net loss per share: | ||||||||||||||
| Basic and diluted | $ | (0.45 | ) | $ | 0.07 | $ | (0.39 | ) | ||||||
| Weighted average number of shares used in computing loss per share: | ||||||||||||||
| Basic and diluted | 24,778 | 24,778 | 24,778 | |||||||||||
| iCAD, Inc. and Subsidiaries | ||||||||||||||
| Unaudited Pro Forma Condensed Consolidated Statement of Operations | ||||||||||||||
| $ in thousands | 12 Months Ended | Pro Forma | iCAD, Inc. | |||||||||||
| December 31, 2020 | Adjustments | Notes | Pro Forma | |||||||||||
| Revenue | $ | 29,698 | $ | (7,701 | ) | D | $ | 21,997 | ||||||
| Cost of Revenue | 8,344 | (4,203 | ) | D | 4,141 | |||||||||
| Gross profit | 21,354 | (3,498 | ) | 17,856 | ||||||||||
| Operating expenses: | ||||||||||||||
| Engineering and product development | 8,114 | (2,678 | ) | D | 5,436 | |||||||||
| Marketing and sales | 13,312 | (3,190 | ) | D | 10,122 | |||||||||
| General and administrative | 9,117 | (343 | ) | D, E | 8,774 | |||||||||
| Amortization and depreciation | 199 | (83 | ) | D | 116 | |||||||||
| Total operating expenses | 30,742 | (6,294 | ) | 24,448 | ||||||||||
| Loss from operations | (9,388 | ) | 2,796 | (6,592 | ) | |||||||||
| Other income/ (expense): | ||||||||||||||
| Interest expense | (476 | ) | — | (476 | ) | |||||||||
| Interest income | 97 | — | 97 | |||||||||||
| Other income (expense), net | (341 | ) | 31 | D | (310 | ) | ||||||||
| Loss on fair value of convertible debentures | (7,464 | ) | — | (7,464 | ) | |||||||||
| Other income (expense), net | (8,184 | ) | 31 | (8,153 | ) | |||||||||
| Loss before provision for income taxes | (17,572 | ) | 2,827 | (14,745 | ) | |||||||||
| Provision for tax expense | (38 | ) | — | (38 | ) | |||||||||
| Net loss and comprehensive loss | $ | (17,610 | ) | $ | 2,827 | $ | (14,783 | ) | ||||||
| Net loss per share: | ||||||||||||||
| Basic and diluted | $ | (0.80 | ) | $ | 0.13 | $ | (0.67 | ) | ||||||
| Weighted average number of shares used in computing loss per share: | ||||||||||||||
| Basic and diluted | 22,140 | 22,140 | 22,140 | |||||||||||
| Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information | |||||||||||||||||
| A. This adjustment represents $5.5 million of cash proceeds to be received by November 6, 2023 offset by $0.93 million for estimated transaction costs. | |||||||||||||||||
| Cash received | $5.76 million | ||||||||||||||||
| Less: estimated transaction costs | $(0.93) million | ||||||||||||||||
| Net cash proceeds | $4.83 million | ||||||||||||||||
| B. These adjustments represent the elimination of the assets and liabilities primarily related to the Company’s Xoft business lines sold to Elekta in connection with the Purchase Agreement. | |||||||||||||||||
| C. This adjustment represents the estimated gain on the sale of Xoft by iCAD, Inc. to Elekta. The estimated gain has not been reflected in the pro forma consolidated statement of operations as it is not included in continuing operations. | |||||||||||||||||
| Net cash proceeds (as noted in A.) | $4.83 million | ||||||||||||||||
| Less: Net book value of assets sold | $2.19 million | ||||||||||||||||
| Estimated gain on sale | $2.64 million | ||||||||||||||||
| D. These adjustment represent elimination of the Xoft business from continuing financial operations. | |||||||||||||||||
| X. xXXX, Inc. and Elekta entered into a Transition Services Agreement ("TSA"), pursuant to which iCAD, Inc. will provide certain transition services to Elekta. The services provided under the TSA will run for a period of up to 5 months following the closing. The services to be provided under the TSA relate primarily to information technology and accounting and may vary from current estimates. Any fees earned under TSA by iCAD will be substantially offset by the cost of engaging third party contractors. Accordingly, minimal to no net earnings are expected to be realized by iCAD under the TSA. | |||||||||||||||||
