Fourth Quarter Sales Increase 82% from Third Quarter Levels NASHUA,
N.H., March 14 /PRNewswire-FirstCall/ -- iCAD, Inc. (NASDAQ: ICAD),
an industry-leading provider of Computer-Aided Detection (CAD)
solutions for the early identification of cancer, today announced
preliminary, unaudited financial results for the fourth quarter and
year ended December 31, 2005. Final year end results will be
contained in the Company's Annual Report on Form 10-K. The Company
expects to request a fifteen-day extension of the filing date for
its Form 10-K. The Company reported revenue for the 2005 fourth
quarter of $6.2 million, compared with $3.4 million in the third
quarter of 2005 and $6.3 million for the quarter ended December 31,
2004. Additionally, iCAD reported a backlog of $788,000 as of
December 31, 2005. Total product orders taken in the fourth quarter
were in excess of any previous quarter in the Company's history.
Over 150 iCAD systems were shipped in the final quarter of 2005,
including 5 TotalLook systems for the comparative reading of
film-based breast studies on digital mammography viewing stations.
iCAD gross profit margin for the quarter ended December 31, 2005
approximated 76% of sales, compared with 77% of sales in the fourth
quarter of 2004. The Company reported a net loss of ($1,739,573),
or ($0.05) per share, in the fourth quarter of 2005, compared with
net income of $658,631, or $0.02 per share, in the prior-year
quarter. Legal expenses of approximately $1,200,000 were incurred
in the fourth quarter of 2005, including approximately $750,000
principally associated with the Company's current patent
arbitration proceedings and $450,000 associated with settlement and
merger discussions with its principal competitor that were
discontinued by iCAD in February in 2006. The Company also incurred
increased sales and marketing expenses in the fourth quarter of
2005 that were associated with a doubling in the size of its direct
sales force, along with the implementation of expanded direct mail,
advertising and trade show programs. For the year ended December
31, 2005, revenue declined to $19.8 million, compared with $23.3
million in the previous year. Gross profit margin improved to 76%
of sales, versus 72% of sales in year ended December 31, 2004. The
Company reported a 2005 net loss of ($4,744,137), or ($0.13) per
share, compared with a net loss of ($828,263), or ($0.03) per
share, in the year ended December 31, 2004. Legal expenses of
approximately $2,300,000 in 2005 were primarily associated with the
Company's ongoing patent arbitration proceedings, and the
previously referenced merger discussions. iCAD ended the year with
cash and cash equivalents of $4.6 million, and working capital of
$3.3 million. The Company also maintains a line of credit with its
Chairman in the amount of $5 million, of which $4,741,000 is
currently available. In April 2005, iCAD's principal competitor
claimed infringement by the Company of certain patents and
initiated a process that led to counterclaims by the Company and
arbitration of the conflicting issues. In addition to creating a
substantial legal expense for the Company, these proceedings have
consumed significant management time and other resources through
the first quarter of 2006. The Company has stated that it does not
believe it infringes on any valid and enforceable patent of its
competitor, and that its competitor does infringe on valid and
enforceable iCAD patents. A decision by the arbitrators in this
matter is expected by late March or early April 2006. During 2005
and early 2006, the Company's achievements in product development
and engineering, marketing, sales and channel management, included
the following: In Product Development and Engineering, the pace of
product releases was the highest in the Company's history.
Principal product releases included: * SecondLook 300, a fully
functional CAD system that is affordable to smaller,
price-sensitive mammography clinics, and the industry's first
compact, integrated, counter-top networkable CAD solution.
Continuing enhancements to the Second Look 300, as the year
progressed, included improved optics; enhanced film handling and
multiple workflow options, including case-separators for high
throughput customers, and ultra- simple "load and go" workflow for
smaller mammography centers. * An improved SecondLook Digital CAD
solution for GE Healthcare digital mammography users, with
increased sensitivity, reduced marker rates and improved marking
logic. * New SecondLook Digital CAD solutions for Hologic, Siemens
Medical Solutions and (for sales outside the United States) IMS
Giotto, an Italian manufacturer of digital mammography systems. *
PowerLook(TM) Viewer option, which offers digital mammography
workstation viewer benefits to film-based mammography practices. *
An improved PureLook(TM) digitizer technology that heightens image
quality and consistency and enables the Company's new comparative
reading products. * Total Look(TM) integrated hardware and software
solution for the digitization and integration of film-based studies
for comparative reading on digital mammography workstations; * The
Company has also begun development that extends digital CAD and
comparative reading applications to support the emerging Computed
Radiography (CR) market. In anticipation of what it believes will
be significant emerging market opportunity relating to growing
interest in screen for colon cancer, and expanding on its core
pattern recognition competencies, the Company is also currently
engaged in development of software and products for support of
colonic polyp detection through radiographic examination ("CT
colonography" or "virtual colonoscopy"). Initial products are
designed to assist in identification and description of colonic
polyps in conventional colonography, while future products in this
area seek to reduce the uncomfortable and unpleasant patient
preparation now required for radiographic colon examination and
studies - sometimes termed "electronic cleansing" or "electronic
prep". The Company is scheduling discussion with the FDA to review
its plans and strategy for seeking approval for its initial colonic
polyp detection products, and a schedule for FDA submissions will
be determined a that time. The Company anticipates that clinical
and field testing of its system for detection of colonic polyps
will begin in 2006. Based on continuing market opportunity and
competitive analyses, the Company has substantially reduced
emphasis on a previously announced program to support detection of
lung nodules in CT images. In general, the Company is not convinced
that the market for such products is maturing quickly enough to
justify the additional resources required to commercialize and
support such products, and may not continue the FDA process it
began with respect to a lung nodule marking tool. The Company
believes its resources are better employed in development and
commercialization of colonic polyp detection solutions at this
time. In Marketing, iCAD made significant organizational and
personnel changes at the beginning of the fourth quarter.
Meaningful achievements, many resulting from such changes, include:
* The development and launch of new "Bridge to Digital" and
"ClickCAD" marketing programs. * Increased lead generation through
multiple direct mail and outbound telemarketing programs. *
Improved and increasingly competitive product marketing tools and
collaterals. * Increased and more directed trade show
participation. * Increased support of clinical and research studies
highlighting the advantages of iCAD products and solutions.
Clinical studies in support of iCAD products released during 2005
include findings that the Company's products demonstrate superior
cancer detection in digital mammography; that iCAD's cancer
detection performance is equivalent in dense breasts; that iCAD
demonstrates superior detection of subtle lesions and chest wall
lesions; and that tele-medicine is effective and permissible for
digital mammography and CAD (the remote reading of digital
mammograms with a view towards pending iCAD products that enable
and facilitate such a workflow for resource-constrained film-based
mammography practices). The Company's film-based mammography
products are distributed through resellers and a direct sales
force. Digital mammography products are distributed through OEM
channels, including GE Healthcare, Hologic and Siemens. In 2005,
the Company's achievements in Sales and Sales Management included:
* A doubling in the size of iCAD's domestic sales force, from 8 to
16 sales professionals. * Fourth quarter Implementation of
Salesforce.com as an effective, web based solution for lead
generation, opportunity and sales management. * The addition of
Hologic, Inc. and Siemens Medical Solutions as active and
contributing OEM sales channels for SecondLook Digital CAD
products. * An expansion in iCAD products marketed and sold by
Siemens Medical Solutions to include the TotalLook solution for
comparative reading. * The addition of IMS Giotto as a new
international OEM sales channel, with initial sales occurring in
the fourth quarter of 2005. * New national buying group and group
purchasing organization (GPO) affiliations and sales. * The receipt
of a contract for the purchase of at least 100 film-based CAD
systems from the Chinese Anti-Cancer Association. * Increased
support and training of reseller sales personnel. "In general,"
stated W. Scott Parr, iCAD's President and CEO, "Market acceptance
of CAD for early detection of breast cancer has continued to grow
during 2005, Reflecting this trend, Signa Insurance has termed CAD
"a standard of care for large radiology practices', and Aetna, in
April of 2005, termed CAD 'a necessary adjunct to screening
mammography.'" iCAD's management will host a conference call today
at 11:00am ET. Shareholders and other interested parties may
participate by dialing +1 800 688 0836 (domestic) or +1 617 614
4072 (international) and entering passcode 40236087, a few minutes
before the start of the conference call. The call will also be
broadcast live on the Internet at http://www.streetevents.com/ ,
http://www.fulldisclosure.com/ or http://www.icadmed.com/ . A
replay of the conference call will be accessible two hours after
its completion through March 21, 2006 by dialing +1 888 286 8010
(domestic) or +1 617 801 6888 (international) and entering passcode
84723134. The call will also be archived for 90 days at
http://www.streetevents.com/ , http://www.fulldisclosure.com/ and
http://www.icadmed.com/ . About iCAD, Inc. iCAD, Inc. is an
industry-leading provider of Computer-Aided Detection (CAD)
solutions that enable healthcare professionals to identify cancer
and other life-threatening conditions earlier by making medical
services more effective, more accessible and more affordable for
patients worldwide. Recipient of Frost & Sullivan's Growth
Strategy Leadership award, iCAD offers a comprehensive range of
high-performance, upgradeable CAD systems for the high, mid and low
volume mammography markets. As the most frequently selected CAD
solution for film-based and digital breast screening, iCAD is
entrusted with the task of early cancer detection by almost one
thousand women's healthcare centers worldwide. For more
information, call +1 877 iCADnow or visit http://www.icadmed.com/ .
The Company is headquartered in Nashua, New Hampshire and its
common stock is listed on The Nasdaq Stock Market under the symbol
"ICAD". "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.
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 risks
of uncertainty of patent protection, the impact of supply and
manufacturing constraints or difficulties, product market
acceptance, possible technological obsolescence, increased
competition, customer concentration and other risks detailed in the
Company's filings with the Securities and Exchange Commission. The
words "believe", "demonstrate", "intend", "expect", "estimate",
"anticipate", "likely", 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. iCAD is a registered trademarks of iCAD, Inc. iCAD,
INC. Consolidated Statements of Operations Three Months Ended For
the Years Ended December 31, December 31, 2005 2004 2005 2004
Unaudited Unaudited Unaudited Sales $6,170,707 $6,267,947
$19,803,222 $23,308,462 Cost of sales 1,461,080 1,424,815 4,676,059
6,533,296 Gross margin 4,709,627 4,843,132 15,127,163 16,775,166
Operating expenses: Engineering and product development 1,377,150
963,809 4,785,092 4,832,842 General and administrative 2,334,879
1,329,865 6,851,349 5,126,110 Marketing and sales 2,787,422
1,780,899 8,125,898 7,083,433 Total operating expenses 6,499,451
4,074,573 19,762,339 17,042,385 Income (loss) from operations
(1,789,824) 768,559 (4,635,176) (267,219) Interest expense -- net
(50,251) 109,928 3,961 561,044 Net loss before provision for income
taxes (1,739,573) 658,631 (4,639,137) (828,263) Provision for
income taxes - - 105,000 - Net income (loss) $(1,739,573) $658,631
$(4,744,137) $(828,263) Preferred dividend 29,418 32,142 121,730
133,000 Net income (loss) available to common shareholders
$(1,768,991) $626,489 $(4,865,867) $(961,263) Net income (loss) per
share Basic and diluted $(0.05) $ 0.02 $(0.13) $(0.03) Weighted
average number of shares used in computing income (loss) per share
Basic and diluted 36,767,326 34,587,495 36,627,696 34,057,775 iCAD,
INC. Consolidated Balance Sheets December 31, December 31, Assets
2005 2004 Unaudited Current assets: Cash and cash equivalents
$4,604,863 $8,008,163 Trade accounts receivable, net of allowance
for doubtful accounts of $450,000 in 2005 and 2004 3,958,392
5,006,333 Inventory 2,677,861 1,013,806 Prepaid and other current
assets 176,133 261,286 Total current assets 11,417,249 14,289,588
Property and equipment: Equipment 2,837,950 2,078,306 Leasehold
improvements 120,012 37,904 Furniture and fixtures 149,803 135,544
3,107,765 2,251,754 Less accumulated depreciation and amortization
1,496,772 944,121 Net property and equipment 1,610,993 1,307,633
Other assets: Patents, net of accumulated amortization 224,519
302,644 Technology intangibles, net of accumulated amortization
4,348,008 4,964,090 Tradename, distribution agreements and other,
net of accumulated amortization 398,733 756,867 Goodwill 43,515,285
43,515,285 Total other assets 48,486,545 49,538,886 Total assets
$61,514,787 $65,136,107 Liabilities and Stockholders' Equity
Current liabilities: Accounts payable $4,256,574 $2,006,500 Accrued
interest 48,167 671,154 Accrued salaries and other expenses
1,868,736 1,373,191 Deferred revenue 465,879 439,717 Current
maturities of notes payable 1,500,000 1,500,000 Total current
liabilities 8,139,356 5,990,562 Loans payable to related party
258,906 300,000 Notes payable, less current maturities 375,000
1,875,000 Total liabilities 8,773,262 8,165,562 Commitments and
contingencies Stockholders' equity: Convertible preferred stock, $
.01 par value: authorized 1,000,000 shares; issued and outstanding
6,374 in 2005 and 7,435 in 2004, with an aggregate liquidation
value of $1,127,000 and $1,257,500 plus 7% annual dividend, in 2005
and 2004, respectively. 64 74 Common stock, $ .01 par value:
authorized 50,000,000 shares; issued 36,931,262 in 2005 and
36,410,170 shares in 2004; outstanding 36,863,386 in 2005 and
36,342,294 shares in 2004 369,312 364,101 Additional paid-in
capital 130,781,430 130,271,515 Accumulated deficit (77,459,017)
(72,714,881) Treasury stock at cost (67,876 shares) (950,264)
(950,264) Total Stockholders' equity 52,741,525 56,970,545 Total
liabilities and stockholders' equity $61,514,787 $65,136,107
DATASOURCE: iCAD, Inc. CONTACT: Kevin McGrath of Cameron Associates
for iCAD, Inc., +1-212-245-4577, Web site: http://www.icadmed.com/
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