Q4 2023 iCAD Inc Earnings Call

Operator: Greetings and welcome to the ICAD Incorporated fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode, and a question and answer session will follow the formal presentation.

Greetings and welcome to the <unk> incorporated fourth quarter and full year 2023 earnings conference call.

At this time all participants are in a listen only mode.

And a question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Jeremy Bennett. Sir, the floor is yours.

If anyone should require operator assistance during the conference.

Please press star zero on your telephone keypad.

Please note this conference is being recorded.

I will now turn the conference over to your host Mr. Jeremy Bennett, Sir the floor is yours.

Jeremy Bennett: Thank you, Operator. Good afternoon, everyone. Thank you for joining us today for ICAD's fourth quarter and full year 2023 earnings call. On the call today, we have Dana Brown, our President and Chief Executive Officer, and Eric Lonnqvist, our Chief Financial Officer. Before turning the call over to Dana, I would like to remind everyone that we'll be making forward-looking statements on the call today. These forward-looking statements are based on ICAD's current expectations and are subject to uncertainty and changes in circumstances. However, actual results may differ materially from these expectations.

Thank you operator, good afternoon, everyone. Thank you for joining us today for <unk> fourth quarter and full year 2023 earnings call on the call today, we have Dana Brown, our president and Chief Executive Officer, and Eric Lindquist, Our Chief Financial Officer before turning the call over to Dana I would like to remind everyone that we'll be making forward looking statements on the call today. These forward looking.

Rents are based on <unk> current expectations and are subject to uncertainty and changes in circumstances actual results may differ materially from these expectations for a list of factors that could cause actual results to differ please see today's press release and our filings with the U S Securities and Exchange Commission.

Jeremy Bennett: For a list of factors that could cause actual results to differ, please see today's press release and our filings with the U.S. Securities and Exchange Commission. ICAD undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. Also, please note that management will refer to certain non-GAAP financial measures. Management believes that these measures provide meaningful information for investors and reflect the way they view the operating performance of the company. You can find a reconciliation of our GAAP to non-GAAP measures at the end of the earnings release. With that, I'll turn the call over to Dana. Thank you, Jeremy.

<unk> undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call.

Also please note that management will refer to certain non-GAAP financial measures.

Is that these measures provide meaningful information for investors and reflect the way. They view the operating performance of the company you can find a reconciliation of our GAAP to non-GAAP measures at the end of the earnings release with that I will turn the call over to Dan.

Thank you Jeremy and good afternoon, everyone. This week marks one year since I was named President and CEO of <unk>.

Dana R. Brown: And good afternoon, everyone. This week marks one year since I was named president and CEO of ICAT. I had my first earnings call on March 28th of last year, and during that call, I shared my background, why the board and I believe I am uniquely qualified to lead the company, and our confidence in the company's future. As I stated then, and reiterate now, I'm honored to be leading this incredible company. Working alongside our talented team, our board, our clients, and partners, I'm committed to upholding our vision to be the world's most pervasive and personalized suite of AI cancer detection solutions, changing lives for patients around the world and creating value for our shareholders and stakeholders. The management team we've assembled is uniquely prepared to leverage their experience and expertise to position this company for future growth, and I hope, as you have followed our progress over the course of the past year, you see we deliver on what we say we're going to do.

I had my first earnings call on March 28 of last year and during that call I shared my background why the board and I believe I was uniquely qualified to lead the company and our confidence in the company's future.

As I stated then and reiterate now I'm honored to be leading this incredible company.

Working alongside our talented team our board, our clients and partners and committed to uphold our vision to be the world's most pervasive and Personalised suite of AI cancer detection solutions changing lives for patients around the world and creating value for our shareholders and stakeholders.

The management team, we've assembled is uniquely prepared to leverage their experience and expertise to position. This company for future growth and I Hope as you followed our progress over the course of the past year you see we deliver on what we say we're going to do before.

Dana R. Brown: Before we get into financials, I want to take a few minutes, particularly in light of 2024 being our first year as a company solely focused on AI cancer detection and risk solutions, to recap our solution set and market opportunity. ICAT is a global leader in AI-powered cancer detection solutions. Our mission is to create a world where cancer can't hide. Because cancer wins when it hides, remaining undetected, it poses one of the greatest threats to life.

Before we get into financials I wanted to take a few minutes, particularly in light of 'twenty 'twenty four being our first year as a company solely focused on AI cancer detection and risk solutions to recap our solution set and market opportunity.

I cat as a global leader in AI powered cancer detection solutions. Our mission is to create a world where cancer can't tie because cancer wins when it hides remaining undetected cancer pose is one of the greatest threat to life.

Dana R. Brown: With our industry-leading, profound breast health suite, cancer has finally met its match. The Profound Breast Health Suite enables medical providers and professionals to accurately and reliably identify where cancer may be hiding and when it might make its move. The Profound suite offers solutions comprised of four areas. Number one, breast cancer detection. Number two, density assessment.

With our industry, leading profound breast health suite cancer has finally met its match the profound breast health suite enables medical providers and professionals to accurately and reliably identify where cancer, maybe heidi and when it might make it smooth.

The profound suite opera solutions is comprised of four areas number one breast cancer detection number two density assessment number three one or two year breast cancer risk evaluation and number four cardiovascular risk evaluation related to elevated levels of breath.

Dana R. Brown: Number three, one or two-year breast cancer risk evaluation. And number four, cardiovascular risk evaluation related to elevated levels of breast arterial calcification, powered by the latest innovations in artificial intelligence and built on one of the largest, most demographically and geographically diverse datasets. The Profound Suite offers unique 360-degree solutions for cancer detection, density assessment, and personalized risk evaluation, all based on a 2D or 3D mammogram collection of images. The Profound Detection Solution scores cases and suspiciously, helping radiologists identify and focus on areas of most concern and highest suspicion of disease.

Arterial calcification.

Powered by the latest innovations in artificial intelligence and built on one of the largest most demographically and geographically diverse dataset. The profound suite offers unique 360 degree solutions for cancer detection density assessment and personalized risk evaluation all based.

On a two D R <unk> D Mamograms collection of images.

The profound detection solution scores cases, and suspicious lesions, helping radiologists identify and focus on areas of most concern and highest suspicion of cancer.

Dana R. Brown: The Profound Density Assessment standardizes and simplifies breast density reporting, algorithmically examining a woman's breast anatomy from the mammogram. The profound risk solution provides a near-term probability of developing breast cancer in the next one or two years, making it more actionable and relevant than the generalized lifetime risk score. The profound heart health solution identifies the presence and quantity of breast arterial calcium, which is proven to correlate with calcifications elsewhere in the body, raising concern for cardiovascular or heart health concerns. Profound is used by thousands of providers serving millions of patients.

Profound density assessment, Standardizes and simplifies breast density reporting algorithmically examining a woman's breast anatomy from the mammogram image.

The profound risk solution provides a near term probability for developing breast cancer and the next one or two years, making it more actionable and relevant than generalized lifetime risk scores.

The profound heart health solution identifies the presence and quantity of breast arterial calcification, which has proven to correlate with calcification elsewhere in the body raising concern for cardiovascular or heart health concerns.

Used by thousands of providers, serving millions of patients profound is available in over 50 countries. We estimate that profound has been used for more than 40 million mamograms worldwide in the last five years alone.

Dana R. Brown: We estimate that Profound has been used for more than 40 million mammograms worldwide in the last five years alone. With over 25 years of experience in AI cancer detection, ICAT has secured 45 patents, completed over 50 clinical studies, and, as I just described, we train our algorithms on one of the largest and most diverse data sets, polling data regularly from over 100 global. ICAD's deep experience and unmatched set of capabilities differentiates ICAD from its competition and positions it as the industry leader with an AI solution that continuously gets better as the company continually refines its algorithm models using its extensive data set and research partners.

With over 25 years of experience and AI cancer detection I can't have secured 45 patents.

I'm pleased at over 50 clinical studies and then as I. Just described we train our algorithms on one of the largest and most diverse datasets pulling data regularly from over 100 global locations.

I catch deep experience and unmatched set of capabilities differentiate <unk> from its competition and positions it as the industry leader with an AI solution that continuously gets better as the company continually refines its algorithm models using its extensive dataset and research partners.

Dana R. Brown: As outlined during our 2023 third quarter earnings call, ICAT is increasing its leading position as the premier breast AI solution by transitioning into a platform-based, software-as-a-service, data-as-a-service organization by implementing a three-phase transformation, phase one, realigning our base, phase two, strengthening our foundation, and phase three, investing in growth initiatives. In 2023, we made good progress executing phases one EBITDA, which we view as a relevant metric to indicate operating cash flow, was a loss of $0.4 million in Q4-23 versus a loss of $3.6 million in Q1-20. This represents an improvement of nearly $3.2 million per quarter. Reduced cash.

As outlined during our 2023 third quarter earnings call I CAD is increasing its leading position as the premier breast AI solution by transitioning into a platform based software as a service data as a service organization by implementing a three phased transformation.

One realigning our base phase two strengthening our foundation and phase III investing in growth initiatives. In 2023, we made good progress executing phases, one and two including stabilize the business through reducing our cash burn.

EBITDA, which we view as a relevant metric to indicate operating cash flow was a loss of 4 million in Q4 23 versus a loss of $3 6 million in Q1 of 'twenty. Three this represents an improvement of nearly $3 2 million per quarter.

Reduced cash burn.

Dana R. Brown: 2023 cash burn from operating activities of 5 million compared to 2022 cash burn from operating activities of 12.8 million. We believe CashBurn is stabilized, and I'm pleased to affirm the company does not need to raise additional funding to pursue current growth initiatives or continue to manage the shift to a subscription-based annual recurring revenue. We'll talk more about ARR growth later in this call, but in summary, we had a 36% increase in ARR since the start of the subscription transition. And we achieved a 16% compounded annual growth rate in total ARR over the two-year period through the end of Q4 2020. We expanded our leadership team with the appointment of our permanent CFO, Eric, and the addition of a COO, Chief Product Officer, Vice President of Marketing, and Vice President of Customer Success. In December, we announced expanding our sales leadership team to accommodate growth. Bill Kyes shifted and expanded his role to Senior Vice President, Global Sales Operations, and Peter Graham joined us as Senior Vice President, North American Sales.

2023 cash burn from operating activities of 5 million compared to 2022 cash burn from operating activities of $12 8 million. We believe cash burn has stabilized and I am pleased to affirm the company does not need to raise additional funding to pursue current growth initiatives.

Continued to manage the shift to a subscription based annual reoccurring revenue cycle will talk more about our growth later in this call but in summary, we had a 36% increase in <unk> since the start of the subscription transition we have achieved 16% compounded annual growth rate in total a R. R.

Over the two year period through the end of Q4 'twenty three.

We expanded our leadership team with the appointment of our permanent CFO, Eric and the addition of the C O O Chief product Officer, Vice President of marketing and Vice President of customer success.

In December we announced expanding our sales leadership team to accommodate growth Bill Chi's shifted and expanded his role to senior Vice President Global sales operations and Peter Graham joined US as senior Vice President North American sales.

Dana R. Brown: We also made good progress in recruiting new board members, and you may have seen the recent announcements about those additions. We upgraded our brand by transitioning from a product focus to a patient-centric value proposition, resulting in our new tagline of creating a world where cancer can't hide. You can see more of this brand upgrade in our new investor deck, available for download via the investor section of our website, icadmed.com, announced game-changing collaborations with esteemed partners, exemplifying our company's commitment to creating the world's most pervasive and personalized suite of AI cancer detection solutions. And last but not least, the divestiture of Zost also resulted in a reduction in cash burn and an influx of cash.

We also made good progress in recruiting New board members and you may have seen the recent announcements on those additions we upgraded our brand by transitioning from a product focus to patient centric value proposition, resulting in our new tagline of creating a world where cancer can't tie you can see more of this brand upgrade in our new investor deck.

Available for download via the investors section of our website I CAD med dot com.

Announced game changing collaborations with the steamed partners exemplifying our company's commitment to creating the world's most pervasive and personalized suite of AI cancer detection solutions and last but not least the divestiture of <unk> also resulted in a reduction to cash burn and an influx of cash completing this.

Dana R. Brown: Completing this divestiture has enabled us to put our focus into scaling this profound, sweet business, immediately prioritizing expanding our sales and partnership models to grow revenue. The company's next phase of transformation phase three has begun in 2024 and includes launching initiatives that strengthen and deepen business with existing accounts and growing through expanding our direct and indirect sales channels, including expanding ICAD's geographic focus. We believe U.S. sales declined due in part to a significant reduction in the sales force in fiscal year 2022.

Divestiture has enabled us to put our focus into scaling the profound suite business immediately prioritizing expanding our sales and partnership models to grow revenue.

The company's next phase of transformation phase III has begun in 2024 and includes launching initiatives that strengthen and deepen business with existing accounts and growing through expanding our direct and indirect sales channels, including expanding <unk> geographic footprint.

We believe U S sales had declined due in part to significant reduction in the sales force in fiscal year 2022 as of Q3 2023 in the U S. We had six sales reps versus 12 in Q3 of 2022.

Dana R. Brown: As of Q3 2023 in the U.S., we had six sales reps versus 12 in Q3 2022. After a thorough analysis of rep performance over the past three years, we believe adding additional sales reps focused on new business, given our large addressable market opportunity, which I'm going to discuss next, and reps focused on large national accounts will lead revenue growth. Since our Q3 call, we have added four new team members to the sales organization. I'll take a few minutes now to outline our large addressable market opportunities. When diagnosing breast cancer, early detection matters. Identified in Stage 1, cancer is more likely to respond to treatment and can result in a greater survival rate.

After a thorough analysis of breath performance over the past three years, we believe adding additional sales reps focused on new business, given our large addressable market opportunity, which I'm going to discuss snacks and reps focused on large national accounts will lead to revenue growth since our Q3 call. We added four new team.

Members to the sales organization.

I'll take a few minutes now to outline our large addressable market opportunity.

When diagnosing breast cancer early detection matters identified as stage one cancer is more likely to respond to treatment and can result in greater survival rates in fact, according to the American cancer Society, the relative five year survival rate for breast cancer is 99% when detected early however.

Dana R. Brown: In fact, according to the American Cancer Society, the relative five-year survival rate from breast cancer is 99% when detected early. However, the incidence of breast cancer is growing. According to the World Health Organization, breast cancer is the most common cancer worldwide, recently surpassing lung cancer, with 2.26 million new cases diagnosed worldwide in 2020.

Over the incidence of breast cancer is growing according to the World Health organization breast cancer is the most common cancer worldwide recently, surpassing lung cancer with 2.26 million new cases diagnosed worldwide in 2020.

Dana R. Brown: One in eight women will get breast cancer in their lifetime, and every 14 seconds, a woman is diagnosed with breast cancer worldwide. Compounding the situation, 59% of women in the U.S. missed their recommended screening mammograms. And for those who regularly screen for breast cancer, 20 to 40% of cancers are missed in mammogram screenings, with up to 50% missed in women with dense breast cancer. Traditional risk assessment models have relied on family history of the disease as a leading risk factor when, in fact, and most surprising, 89% of women diagnosed with breast cancer have no direct family history of the disease, and 90 to 95% are not related to an inherited gene mutation.

One in eight women will get breast cancer in their lifetime, and every 14 seconds of women diagnosed with breast cancer worldwide.

Compounding this situation, 59% of women in the U S missed their recommended screening mammograms and for those who regularly screened for breast cancer, 20% to 40% of cancers are missed in mammogram screenings with up to 50% mis in women with dense breast tissue tree.

Additional risk assessment models have relied on family history of the disease as the leading risk factor when in fact in most surprising 89% of women diagnosed with breast cancer had no direct family history of the disease and 90% to 95% are not related to inherited gene mute.

Patient.

Dana R. Brown: As breast cancer detection is becoming increasingly complex, AI can help radiologists spot cancer faster with greater accuracy and save more lives. However, with the continuing migration from 2D reading systems to 3D, known as DBT or TOMO systems, radiologists are spending two times the amount of time reading hundreds more images per 3D case compared to the four images captured with 2D. This geometric increase in the number of images to read leads to stress. 50% of radiologists are overworked, and burnout is reported to be 49%, per Medscape Radiologist Lifestyle, Happiness, and Burnout Report, 2020.

As breast cancer detection is becoming increasingly complex.

I can help radiologists spot cancer faster with greater accuracy and save more lives with the continuing migration from two D. Reading systems to three D known as DVT or tomo systems Radiologists are spending two times the amount of time reading hundreds more images per three.

D case compared to the four images captured with two D.

This geometric increase in the number of images to read leads to stress, 50% of radiologists are overworked and burnout is reported to be 49% for med scape radiologists lifestyle happiness and Burnout report 2022.

Dana R. Brown: Simultaneously, false positives and unnecessary recalls for suspected cancers have continued at similar rates, while hard-to-detect interval cancers are being missed or diagnoses are delayed. The rise in workload for radiologists is felt by patients, too, anxiously waiting weeks for results or receiving unnecessary recalls and biopsies, leading to undue stress and anxiety, not to mention distress of the healthcare system. On average, only 10% of women recalled from a routine screening mammogram for a diagnostic workup are ultimately found to have breast cancer, resulting in the patient being confused and frustrated. Additionally, a significant economic burden is placed upon patients and payors that extends throughout multiple years when a breast cancer diagnosis is missed in its early stages and instead diagnosed at a later, more advanced stage. Beyond Associated Clinical Benefits

Simultaneously false positives and unnecessary recalls for suspected cancers have continued at similar rates, while hard to detect interval cancers are being missed.

Or diagnoses are delayed.

The ryzen workload for radiologists is felt by patients to anxiously waiting weeks for our results are receiving unnecessary recalls and biopsies lead to undue stress and anxiety not to mentioned distressed or the health care system.

On average only 10% of women recalled back from a routine screening mammogram for a diagnostic workup are ultimately found to have cancer, resulting in the patient being confused and frustrated with the process.

Additionally, a significant economic burden has placed upon patient N pay ores that extend throughout multiple years when a breast cancer diagnosis is missed in its early stages and instead diagnosed at a later more advanced stage.

Beyond associated clinical benefit finding and treating breast cancer earlier may limit the need for more intensive and expensive treatments increased patient health related quality of life.

Dana R. Brown: Finding and treating breast cancer earlier may limit the need for more intensive and expensive treatment, increase patients health related quality of life, have a significant impact in managing health care costs among cancer patients, and Reduce Caregiver and Societal Burden. ICAT calculates if diagnoses were shifted one stage earlier for just 20% of the 280,000 women in the U.S. diagnosed with breast cancer each year would result in a savings of approximately $3.7 billion across two years of patient treatment and healthcare costs. Our AI-powered mammograms are setting a new standard of care in cancer detection. Density Assessment and Short-Term Risk Evaluation.

Have a significant impact in managing health care costs in lung cancer patients and reduce caregiver and societal burden.

I can calculate if diagnoses were shifted one stage earlier for just 20% of the 280000 women in the U S diagnosed with breast cancer. Each year would result in a savings of approximately $3 $7 billion across two years Ah patient.

Treatment and health care costs.

Our AI powered mammograms are setting a new standard of care in cancer detection density assessment is short term risk evaluation.

Dana R. Brown: With ICAD's profound breast health suite, radiologist's reading times may be cut in half with improved accuracy and specificity in finding suspicious cancerous leads. Radiologists benefit from standard, objective, inclusive results measured by an algorithm built upon many millions of images; patients benefit from receiving timely, personalized results, including Fact-Based Assessment of the Breast Density, and short-term risk assessments that inform their screening plan.

With ICANN profound breast health suite radiologist reading time, maybe cut in half with improved accuracy and specificity and finding suspicious cancerous lesions.

Radiologists benefit from standard objective inclusive results measured by an algorithm built upon many millions of images and patients benefit from receiving timely personalized results.

Fact, based assessment of their breast density and short term risk assessments that inform their screening plans.

Dana R. Brown: As noted above, ICAD's mission is to create a world where cancer can't hide, because when cancer wins, we all lose, for the health of women everywhere and the benefit of their community. ICAD's AI-powered, image-based solutions help detect cancer faster, earlier, and with greater accuracy, as well as evaluate breast cancer and cardiovascular risk from a single mammogram. The Profound Breast Health suite is cleared by the FDA and has received the European CE mark and Health Canada license. As I noted earlier, PROFOUND is used by thousands of providers serving millions of patients and is found as available in over 50 countries. According to a December 2023 report, approximately 40.5 million annual mammograms are conducted in the U.S. across 8,834 certified facilities, as measured by the FDA Mammography Quality Standards Index.

As noted above <unk> mission is to create a world where cancer can't tied because when cancer wins, we all lose for the health of women everywhere and the benefit of their communities.

<unk> AI powered image based solutions help detect cancer faster earlier, and with greater accuracy as well as evaluate breast cancer and cardiovascular risk from a single mammogram.

The profound breast health suite is cleared by the FDA and has received European CE, Mark and Health, Canada licensing as I noted earlier profound is used by thousands of providers serving millions of patients profound is available in over 50 countries.

According to a December 2023 report approximately $45 million annual mammograms are conducted in the U S across 8834 certified facilities as measured by the F. D. A mammography quality standards Act yet only.

Dana R. Brown: Yet, only 37% of facilities are using an AI mammography solution, according to Research and Markets, United States Mammography and Breast Imaging Market Outlook Report, 2022 to 2025, leaving room for growth. Of the 3,268 facilities using AI, ICAT has an active customer base of 1,488, or 46% of the AI market and 17% of the total US market. In the last five years alone, ICAD estimates it has read more than 40 million mammograms worldwide. Based on the number of DBT units relative to the total units left to be converted to DBT and the associated large number of installation opportunities.

37% the facilities are using an AI mammography solution. According to research and markets, United States Mammography and breast imaging market outlook report 2022 to 2025.

Leaving room for growth.

3268 facilities using AI I can has an active customer base of 1488 or 46% of the AI market and 17% of the total U S market.

And the last five years alone I cat estimates reading more than 40 million mammograms worldwide.

Based on the number of DBT units relative to the total units left to be converted to DVT and the associated large number of installation opportunities. We believe our profound solutions for three D may represent a significant growth opportunity in the United States. We also believe that there is a growth opportunity.

Dana R. Brown: We believe our profound solutions for 3D may represent a significant growth opportunity in the United States. We also believe that there is a growth opportunity for 2D mammography and DBT AI solutions in international markets, both from the analog to digital conversion, as well as more countries adopt the practice of each exam being read by a single radiologist using AI, rather than the current practice of having two radiologists read each exam. Furthermore, additional Western European countries have already implemented, or are planning to implement, mammography screening programs, which may increase the number of screening mammograms performed in those countries.

Community for two D mammography and DVT AI solutions in international markets, both from the analog to digital conversion as well as more countries adopt the practice as each exam being read by a single radiologists using AI rather than the current practice of having two radiologists read each exam.

Furthermore, additional western European countries have already implemented or are planning to implement mammography screening programs, which may increase the number of screening mammograms performed in those countries.

Dana R. Brown: Since having released our first FDA-cleared product in 2002, ICAT has remained committed to innovation in artificial intelligence by continuously improving and releasing the highest performing and most widely available solutions in breast care with FDA clearances, CE marks, and Health Canada licenses. The latest versions of ICAD Profound Breast Health Suite Solutions are currently under review with the FDA, including version 4.0 of our profound detection solution built on the newest deep learning neural network AI. Per regulatory test data, ICAD has observed that detection version 4.0 will deliver significant improvements in specificity, sensitivity, and the highest AUC, or area under the curve, for specificity and sensitivity for breast cancer detection at 92.5%.

Since having released our first FDA cleared product in 2002, ICANN has remained committed to innovation and artificial intelligence by continuously improving and releasing the highest performing and most widely available solutions in breast care with FDA clearances C E.

Mark's and health, Canada licenses the latest versions of ikat profound breast health suite solutions are currently under review with the FDA, including version four point out of our profound detection solution built on the newest deep learning neural network AI.

Her regulatory test data I Cat has observed detection version 4.0 will deliver significant improvement in specificity sensitivity and the highest AUC or area under the curve for specificity and sensitivity for breast cancer detection.

At 92, 5%.

Dana R. Brown: Along with the new heart health solution measuring the level of calcification in breast arteries, identifying cardiovascular concerns, and new cloud deployment options, ICAD's overall value and ease of implementation continue to improve. In 2023, we strengthened our market-leading partnership. Recognized as the leader in breast AI-powered solutions, iCAD partners with industry leaders across technology, academic research, integration, and advocacy organizations to iterate and improve upon iCAD software and make solutions more accessible to everyone. Our solutions are interoperable with more than 50 PAX vendors worldwide.

Along with the new heart health solution measuring the level of calcification in breast arteries, identifying cardiovascular concerns and new cloud deployment options I can.

Overall value and ease of implementation continues to improve.

In 2023, we strengthened our market leading partnerships recognized as the leader in breast AI powered solutions I kept partners with industry leaders across technology academic research integration and advocacy organizations to iterate and improve upon I catch software.

Sure and make solutions more accessible to customers.

Our solutions are interoperable with more than 50 Pacs vendors worldwide.

Dana R. Brown: With 22 global distributors and growing, ICAD's market share is on the rise. In 2023, ICAD continued its work with Duke University, Indiana University, University of Pennsylvania, and Karolinska Institute on artificial intelligence advancements and clinical testing. Additionally, ICAT expanded its partnership with Google Health to enhance the company's technology and expand access to millions of women and providers worldwide. ICAD's new 20-year research and development agreement includes co-development, testing, and integration of Google's AI technology with the profound Breast Health Suite for 2D mammography for worldwide commercialization to potentially ease radiologist workload and reduce health care disparities for women. The conventional double-reed workflow used by most countries where mammograms are assessed by two separate radiologists has become increasingly challenging as there is a global radiologist workforce shortage. Leveraging AI as a viable alternative to current double reading, by introducing ICAD as a secondary independent reader, can help radiology departments run more efficiently.

With 22 global distributors in growing <unk> market share is on the rise.

In 2023, I had continued its work with Duke University, Indiana University University of Pennsylvania, and Karolinska Institute, an artificial intelligence advancements in clinical testing.

Additionally, ikat expanded its partnership with Google health to enhance the Companys technology and expand access to millions of women and providers worldwide.

<unk>, New 20 year research and development agreement includes co development testing and integration of Google's AI technology with the profound breast health suite for two D mammography for worldwide commercialization to potentially ease radiologists workload and reduce <unk>.

Care disparities for women.

The conventional double Reed workflow used by most countries were mammograms are assessed by two separate radiologists has become increasingly challenging as theres, a global radiologists workforce shortage.

Leveraging AI as a viable alternative to current double reading by introducing ICANN as secondary independent reader can help radiology departments run more efficiently.

Dana R. Brown: To make ICATS solutions more available to customers, we expanded into new platform and channel partners, technology partners, and health systems. In November of 2023, we announced ICAD is the only breast cancer AI detection solution integrated into GE's new MyBreastAI suite, an all-in-one platform made up of three workflow algorithms from ICAD's profound breast cancer research. GE has released My Breast AI Suite first in the US and plans to release it globally in 2024, simplifying the sales and implementation process for GE and enabling AI use by customers across the globe. Additionally, ICAD has developed several new partnerships and integrations with several AI distributors and marketplace aggregators, implementing profound AI via the cloud, such as Ferrum, Change Healthcare, Blackford, and have several others currently under negotiation to further expand ICANN. Looking forward, ICAD is dedicated to serving those in need by establishing free, equitable access to AI-RED mammograms. In the first instance, ICAD will bring profound detection to the countries of Ghana and Guyana in partnership with RAAD-AID, a non-profit entity that works in over 30 countries, to improve and optimize access to medical imaging and radiology in low-resource regions of the world.

To make eye care solutions more available to customers, we expanded into new platform and channel partners Technology partners and health system partners.

In November of 2023, we announced I CAD is the only breast cancer AI detection solution integrated into Ges, New my breast AI suite and all in one platform made up of three workflow algorithms from Ike had profound breast health suite G.

<unk> has released my breast AI suite first in the U S and plans to release globally in 2020 for simplifying the sales and implementation process for GE and enabling AI use by customers across the globe.

Additionally, <unk> developed several new partnerships and integrations with several AI distributors and marketplace aggregators to implement profound AI via cloud options, such as Ferrum change healthcare Blackbird and have several others currently under negotiation to further expand.

I catch footprint.

Looking forward I CAD is dedicated to serving those in need by establishing free equitable access to AI Red Mamograms to start ICANN will bring profound detection to the countries of Ghana and Guiana in partnership with Red aid a nonprofit entity that works in over 30.

Countries to improve and optimize access to medical imaging and radiology in low resource regions of the world together I've had and Rad aid plan to improve diagnosis of breast cancer or breast cancer mortality rates are the highest.

Eric Lonnqvist: Together, ICAD and RAD-AID plan to improve the diagnosis of breast cancer where breast cancer mortality rates are the highest. I'll now turn the call over to Eric for a detailed review of our Q4 and year-end 2023 financials. Good afternoon, everyone.

I'll now turn the call over to Eric for a detailed review of our Q4 and year end 2023 financials.

Good afternoon, everyone and thank you Dana.

Eric Lonnqvist: And thank you, Dana. I'll now summarize our financial results for the 4th quarter and year ended December 31st, 2023. Please note that these results exclude the divested Zopf business unless otherwise noted. Results relating to the Zoff Business Line are presented in Note 2 of our Annual Report on Form 10-K. Revenue for the year ended December 31, 2023 was $17.3 million, a decrease of $2.5 million or 13% from $19.8 million in fiscal 2022. Product revenue declined $2.7 million, offset by a $0.2 million increase in service revenue.

I will now summarize our financial results for the fourth quarter and year ended December 31 2023.

Please note that these results exclude the divested <unk> business unless otherwise noted.

Results relating to the golf business line are presented in note two of our annual report on Form 10-K.

Revenue for the year ended December 31, 2023 was $17 3 million a decrease of $2 5 million or 13% from $19 8 million in fiscal 2022.

Product revenues declined $2 7 million offset by $1 2 million increase in service revenue.

Eric Lonnqvist: The revenue decline was driven primarily by a reduction in the sales force, along with our continued shift from perpetual to subscription-based revenue. Revenue for Q4 2023 was $4.7 million, an increase of 0.1 million or 2% from the fourth quarter of 2022. Fourth quarter 2023 product revenue was $3 million, up 8% from the prior year. Service revenue was $1.8 million, down 6% over the prior year.

The revenue decline was driven primarily by a reduction in sales force along with our continued shift from a perpetual to a subscription based revenue model.

Revenue for Q4, 2023 was $4 7 million, an increase of $1 million or 2% from the fourth quarter of 2022.

Fourth quarter 2023 product revenue was $3 million.

8% from the prior year.

Service revenue was $1 8 million down 6% over the prior year.

Eric Lonnqvist: Moving on to gross profit. On a percentage of revenue basis, gross profit was 91% for the fourth quarter of 2023, which was up from 84% in the fourth quarter of 2022. On a pure dollar basis, gross profit for the quarter was $4.3 million, as compared to $3.9 million last year.

Moving on to gross profit.

On a percentage of revenue basis gross profit was 91% for the fourth quarter of 2023, which was up from 84% in the fourth quarter of 2022.

On a pure dollar basis gross profit for the quarter was $4 3 million as compared to $3 9 million last year.

Eric Lonnqvist: Total operating expenses for the fourth quarter of 2023 were $5 million, a 1.4 million or 22% decrease year over year. This improved run rate reflects the cost-cutting measures implemented previously announced. Gap net loss for the fourth quarter of 2023 was $0.5 million or $0.02 per diluted share compared with a gap net loss of $2.2 million or $0.09 per diluted share for the fourth quarter of 2022.

Total operating expenses for the fourth quarter of 2023 were $5 million at $1 4 million or 22% decrease year over year.

Improved run rate reflects the implemented cost cutting measures previously announced.

GAAP net loss for the fourth quarter of 2023 was <unk> 5 million or <unk> <unk> per diluted share compared with GAAP net loss of $2 2 million or <unk> <unk> per diluted share for the fourth quarter of 2022.

Eric Lonnqvist: This year-over-year decrease in the gap lost per share is primarily due to the operating expense reduction. Non-GAAP-adjusted EBITDA loss decreased $1.7 million to $2.4 million in the quarter ended December 31, 2023 from the same period in 2022. Note that the non-GAAP-adjusted EBITDA loss for the quarter ended December 31, 2022 was $3.1 million, with the ZOPF business unit included. Moving to the balance sheet. As of December 31, 2023, the company had cash and cash equivalents of $21.7 million compared to cash and cash equivalents of $21.3 million as of December 31, 2022. Net cash used for operating activities for the year ended December 31st, 2023 was $5 million, compared to $12.8 million for 2022. This improvement of approximately 61% year-over-year relates primarily to cost-savings initiatives implemented during the first quarter of 2022.

This year over year decrease in the GAAP loss per share was primarily due to the operating expense reductions.

non-GAAP adjusted EBITDA loss decreased $1 7 million $2 4 million in the quarter ended December 31, 2023 from the same period in 2022.

Note that the non-GAAP adjusted EBITDA loss for quarter ended December 31, 2022 was $3 1 million with resource business units, including.

Moving to the balance sheet.

As of December 31, 2023, the company had cash and cash equivalents of $21 7 million compared to cash and cash equivalents of $21 3 million as of December 31, 2022.

Net cash used for operating activities for the year ended December 31, 2023 was $5 million compared to $12 8 million for 2022.

This improvement of approximately 61% year over year is due primarily to cost savings initiatives implemented during the first quarter of 2023.

Please note that the cash balance and net cash used in operating activities. Both reflect total igen boards often detection.

As David noted earlier, we believe we have sufficient cash resources to fund our planned current operations with no need to raise additional funding.

Eric Lonnqvist: Please note that the cash balance and net cash used in operating activities both reflect total ICAD, both zopped and detected. As Dana noted earlier, we believe we have sufficient cash resources to fund our planned current operations with no need to raise additional funds. The cash balance as of December 31, 2023 includes net proceeds of $4.5 million from the Zopf sale in October 2023, as well as net proceeds of approximately $2 million from the issuance of shares of common stock in at-the-market, or ATM, offerings.

The cash balance as of December 31, 2023 includes net proceeds of $4 5 million from the <unk> sale in October 2023, as well as net proceeds of approximately $2 million from the issuance of shares of common stock in aftermarket or ATM offerings.

The ATM proceeds were generated primarily in Q3 2023.

As noted in our prior earnings call the steady shift to a recurring revenue model from a perpetual model has numerous benefits, including better business visibility more efficient expense management, and an improved ability to predict future cash flow.

Eric Lonnqvist: The ATM proceeds were generated primarily in Q3 2022. As noted in our prior earnings call, the steady shift to a recurring revenue model from a perpetual model has numerous benefits, including better business visibility, more efficient expense management, and an improved ability to predict future cash flows. It also has risks, including short-term, lower gap revenue and negative cash flow impact for the next three. To help illustrate our progress in this transition, we began reporting the following annual recurring, or ARR, metrics in Q3 2020. Total ARR, or TAR, represents the annualized value of subscription licenses, maintenance contracts, and active cloud services at the end of a reporting period. Maintenance Services MARR, or MARR, represents the annualized value of active perpetual license maintenance service contracts at the end of the reporting period.

It also has risks, including short term lower GAAP revenue and.

And negative cash flow impact for the next three years.

To help illustrate our progress in this transition we began reporting the following annual recurring ear are metrics in Q3 23.

Totally or or or.

<unk> represents the annualized value of subscription license maintenance contracts inactive cloud services at the end of a reporting period.

Maintenance services.

<unk> or <unk> represents the annualized value of active perpetual license maintenance service contracts at the end of the reporting period.

Subscription E R R.

<unk> represents the annualized value of active subscription or term licenses at the end of day reporting period.

Eric Lonnqvist: Subscription ARR, or SAR, represents the annualized value of active subscription or term licenses at the end of a reporting period. Cloud ARR, or CARR, represents the annualized value of active cloud service contracts at the end of a reporting period. Total ARR, or TAR, was $8.7 million as of December 31, 2023, up from $8.3 million at the end of the prior fiscal quarter.

Cloud <unk> <unk> represents the annualized value of active cloud service contracts at the end of the reporting period.

Total IRR for T. A R was $8 7 million as of December 31, 2023 up from $8 3 million at the end of the prior fiscal quarter.

Maintenance services or <unk>.

<unk> was $7 million up from $6 9 million at the end of the prior fiscal quarter.

Eric Lonnqvist: Maintenance Services ARR or MARR was $7 million, up from $6.9 million at the end of the prior fiscal quarter. Subscription ARR or SARR was $1.7 million, up from $1.4 million at the end of the prior fiscal quarter. Once we have released our commercial cloud platform, we'll begin tracking cloud ARO. In addition to the recurring revenue metrics noted above, we also began disclosing the number of orders relating to perpetual product, subscription, and cloud deals. The intent of this metric is to illustrate the pure volume of sales without the complexity of the multiple gap revenue stream.

Subscription <unk>.

Or.

<unk> was $1 7 million up from $1 4 million at the end of the prior fiscal quarter.

Once we have released our commercial cloud platform will begin tracking cloud era.

In.

<unk> to the recurring revenue metrics noted above we also began disclosing the number of orders relating to perpetual product subscription and cloud deals.

The intent of this metric is to illustrate the pure volume of sales without the complexity of the multiple GAAP revenue streams.

We are pleased to report that in the fourth quarter of 2023, we closed 80 perpetual and non subscription orders.

This brought our 2023 year to date total to 273 perpetual and 31 subscription orders.

Eric Lonnqvist: We are pleased to report that in the fourth quarter of 2023, we closed 80 perpetual and 9 subscription orders. This brought our 2023 year-to-date total to 273 perpetual and 31 subscriptions. This concludes the financial highlights of our presentation. I would now like to turn the call back over to the operator to lead the Q&A. Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. Your confirmation tone will indicate your line is in the question, and you may press star 2 if you would like to remove your question.

This concludes the financial highlights of our presentation I would now like to turn the call back over to the operator to lead the Q&A.

Thank you.

This time, we will be conducting a question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue.

And you May press Star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing Mr. Keyes.

One moment, please while we pull for questions.

Thank you.

Our first question is coming from per Ostlund with Craig Hallum Capital Group. Your line is life.

Thanks, Good afternoon, Eric.

Bob.

Now that we've gotten through the divestiture obviously.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we poll for questions. Thank you. Our first question is coming from Per Ostlund with Craig Hallam. Your line is:

It seems like the margin profile of the types of businesses very much running through what I think the growth profile ultimately well as well.

Now that you really you have the singular focus on the.

The detection side I wanted to I want to start out with some of the new product activity that you go into two.

Per Erik Ostlund: Thanks. Good afternoon, Dana and Eric. Now that we've gotten through the divestiture, obviously, like the margin profile, very much so now that you really have the singular focus on the detection side. I want to start out with some of the new products in your remarks, Dana. So you mentioned Profound 4.0, which is under review at FDA, and talked about the Google Health combined algorithm. I'm kind of curious as to how the timing of those three things might start to phase in. I assume 4.0 is probably the nearest and in my half.

So you mentioned profile for <unk>.

Under review at FDA.

We've talked about the Google Health combined algorithm talked about broker Julien cost for patients kind of curious as to how the timing of those.

Things might start to say, Jim I assume four point.

Probably the nearest in and might have some impact to your 2024.

You told me and then with respect to Google Health as a reader study there what kind of timing there and then same goes for breast or jewelry roll classifications.

Dana R. Brown: But you tell me. And then, with respect to Google Health, is there a reader study there? Timing there. Sure. So, I think your sequence is, is correct.

Sure.

So I think your your sequences is correct. So it may be just to reiterate them first of all big caveat right. It's all dependent upon regulatory approval.

Dana R. Brown: So, maybe just to reiterate, and first of all, big caveat, right? It's all dependent upon regulatory approval. And if I've learned anything in the last year, that can be unpredictable. So, all of this comes with the best laid plans. Right? So, but 4.0 is a new version of the algorithm that is under review with the FDA because it's an update to an existing product that has already received device classification. I'm using air quotes here because, allegedly, it should move the fastest.

And if I've learned anything in the last year that can be unpredictable.

So so all of this.

With like best laid plans alright, so but 4.0 is it a new version of the algorithm that is under review with the FDA because just an update to an existing product that's already received the device classification.

I'm using air quotes here allegedly it should move the fastest so yes, we hope.

Dana R. Brown: So, yes, we hope that the FDA can get through their review and give us clearance to take that algorithm to market here within this calendar year, and we'll keep everyone updated as we move along through that process. Breast Filterial Calcification, which is a new standalone solution that works with the entire suite, is also in the FDA process. It's a new product, not just for us, but for the market in general, so lots of Q&A going back and forth with the FDA. But it's moving forward, so likewise, we hope to receive clearance this year, but you just don't know when it's a brand new product. And we have our partner, Solus Mammography, helping us with answering questions for the FDA based upon, you know, real-world experience. And in fact, they'll be kicking off a truthing exercise to help prepare some of the additional data needed to answer some of the FDA's questions. The third one is the combined kind of the Google algorithm, in particular the use of the algorithm for independent and second readers.

You bet.

They can get through their review.

And give us clearance to take that algorithm to market here within this calendar year and we'll keep everyone updated as is.

As we move along through that project.

Prescott Purion calcification, which is a new standalone solution that works with the entire suite is also in the FDA process.

It's a new product.

Not just for us, but for the market in general so blasted Q&A going back and forth with the FDA.

But it's moving forward so likewise.

We hope to receive clearance this year, but you just don't know whether it's a brand new product.

And we have our partners solace mammography, helping us with answering questions for the FDA based on you know real world experience.

And in fact, there'll be kicking off our treating exercise to help prepare some of the additional data needed to answer some of the fda's questions.

The third one is the combined kind of Google algorithm in particular do you see the algorithm for independent and second leader.

That is a European union focused effort.

Dana R. Brown: That is a European Union-focused effort, not something that has widespread applicability in the United States as of today. And that's going to be a very long-term effort. So that's probably going to take a few years to get through regulatory approvals. There are studies already underway, but we're expecting to have to do multiple studies across different countries to get that algorithm through clearances.

Not something that has widespread a possibility in the United States as of today I mean that can be a very long term effort. So that's probably going to take a few years to get through regulatory approvals. There are studies already underway.

But we're expecting you know tap to do multiple studies across different countries to get that algorithms through clearance. So it's not anything that we've built into our commercial model from a revenue standpoint.

Dana R. Brown: So, it's not anything that we've built into our commercial model from a revenue standpoint this calendar year. Okay, excellent. Let me add one more product, profound risk, as I understand it when we spoke at RS&A. FDA has some new guidance related to those, you know, that product and those type of tools. Right. Where does that stand today?

In this calendar year.

Okay excellent.

Just one more.

Sure.

Preferred risks.

Yes, as I understand it.

Spoken a lot today.

FDA has some new guidance related to those.

Our product and those type of tools right or just where does that stand today.

Dana R. Brown: Yes. Are you still into data gathering mode there, or is that also now back at FDA, kind of where we are? Yeah, so it is. Yeah, the RISC is already cleared in the European Union, so it has its CE mark.

Are you still in the data gathering.

Mode, There or is that also now pocket FDA kind of where are we looking at.

Yeah.

Yes.

Yeah, Yeah. So.

Risky is already cleared in the European Union. So it Hasnt CE Mark. It also has its health Canada licensing that we are actively selling in those regions.

Dana R. Brown: It also has its Health Canada license, so we are actively selling it in those regions. But here in the U.S., we did hear back, so the first step with the FDA, once the FDA had released its final guidance, was to resubmit the RISC product and ask the FDA to classify it. They did come back, and we have a firm answer from them that it is classified as a de novo, or a brand new device. There is no precedent device in the market today, so we're definitely breaking ground with something brand new. So we are going through the process right now of preparing all of the data and the documentation information needed for a de novo device submission to the FDA. So that will be a longer process, so I think our estimates are, you know, it's probably going to be sometime in early 2025, we hope, if everything goes well when we receive any form of clearance back from the FDA.

Here in the U S. We did hear back so that's the first step with the FDA once the FDA had released its final guidance was to.

Resubmit the risk product.

And ask the FDA to classify it.

They did come back and which we have a firm answer from them that it is classified as a de novo or brand new device. There is no predicate device in the market today.

So we're definitely breaking ground with something brand new so we are going through the process right now preparing all.

All of the data and the documentation information needed for de Novo device submission to the FDA. So.

That will be a longer process.

So I think our estimates are it's probably going to be sometime early 2025, we hope if everything goes well when you know we received any form of clearance back from the FDA.

Dana R. Brown: But again, you never know kind of what questions they'll come back with, but it is moving forward. It seems to be better understood now that we've submitted some of the answers to prior questions that we received, and so it's just a matter of, you know, going through the FDA process.

But again, you never know kind of what questions they come back with but it is moving forward.

It seems to be better understood now that we have submitted some of their answers to prior questions that we've received and so it's just a matter of going through the FDA process.

Sure that makes sense.

This may be a leading question, but indulge me.

Dana R. Brown: The fact that it's being treated as a de novo, obviously adds a little bit of time to the equation, but does it also, at the same time, actually strengthen your hand in the sense that there are other decision support tools out there that are kind of coin flips? Where you come out with a de novo clearance from FDA on your risk product, shouldn't that kind of move put everybody sort of ahead of the line? What they would want to use in that sort of scenario, it does.

<unk>.

The fact that it's.

Being treated as a de novo.

Obviously adds a little bit of time to the equation, but yes.

Does it also at the same time actually strengthen your hand in the sense that there are other decision support tools out there that are chronically blips, where you come out with a de novo clearance from FDA on on your risk product in terms of economy.

What is sort of out of the line for what they would want to use them that sort of scenario.

Dana R. Brown: I mean, and part of, you know, I'll say a bit of the benefit in being de novo is that we can kind of set the bar, right, for what additional products we need to provide in terms of functionality and their accuracy in order to claim, you know, we're a predicate device for them. So, and it is also still available today for investigational use. So, we still have customers using the product and, you know, deriving some benefit for their customers. They're just not able to commercialize it.

It does it mean in part of you know I'll say, it's a bit of the benefit is being de novo as we can kind of set the bar for what additional products.

No it would need to provide in terms of functionality and.

Their accuracy in order to claim.

A predicate device for that so and it's also still available today for investigational use so we still have customers using the product and driving some benefit for their customers, they're just not able to commercialize it but you know that strengthened.

Dana R. Brown: But, you know, that strengthens the analysis and the data that we can provide to the FDA through their use of it in an investigative mode. Very good. I'm gonna ask two more if I can.

The analysis and the data that we can provide to the FDA through their use of it in an investigational mode.

Okay very good.

Two more if I can.

Yeah.

B.

Per Erik Ostlund: Yeah. The revenue performance in Q4 was... hazarded guess that you know we all probably tried to be a little bit conservative because of the moving parts, Yeah. Transition, and what have you. Did the quarter surprise you at all versus your and Eric and the team's internal expectations because, you know, an 80.

The revenue performance in Q4 was was nicely ahead of my forecast.

Central installation.

Hazard a guess that.

I'll, probably trying to be a little bit conservative because of the moving parts.

That transition will happen.

Did the quarter surprise you at all.

<unk> versus your <unk> and the Tianjin internal expectations because it <unk>.

Dana R. Brown: 80% sale and nine subscriptions seems like a pretty good number. Mm-hmm. [inaudible] I'm trying to think of like, Lilia Jackson.

Agent module sale and non subscription seems like a pretty good number.

Probably all implicitly outcomes.

I'm trying to think like.

So.

Dana R. Brown: So... The part that didn't surprise us is that we have a pretty rigorous forecasting and pipeline review process that happens every single week, very consistently. So we began to see deals moving through stages of the pipeline, obviously much earlier than it's at a point where it's something you could announce, right? So I would say, you know, we began seeing that movement happen. The flip side is, you know, it was the first time through that pipeline for kind of all of us as a team, right? And so, while you might have a sales rep, you know, forecasting a deal at stage three, right? And, you know, stage four is kind of getting to the final stages.

Yes.

It did it did not surprise US is we have a pretty rigorous forecasting and pipeline review process.

That happens every single week [laughter] very consistently so we began to see new deals moving through the stages of the pipeline obviously much earlier than its at a point, where it's something you could announce right. So I would say we began seeing that movement happen.

The flip side is you know it was first time through that pipeline for kind of all of us as a team right and so while you might have a sales rep you know.

Forecasting a deal it at stage three right you have stage four is kind of getting to the final stages. Yeah. We ask as many questions as we can to try to validate that but you still got a little bit of you know fingers crossed that we're all speaking apples to apples in terms of expectations that things are moving through the stages. So.

Dana R. Brown: You know, we ask as many questions as we can to try to validate that, but you still have a little bit of, you know, fingers crossed that we're all speaking apples to apples in terms of expectations as things are moving through the stages. So, um, So, you know, I would say it's like a roundabout answer, but on the one hand, you know, we stopped building and began to have some of that predictability. On the other hand, it was my first time through the process.

And so you know I.

I would say it's.

It's like a round about answer back on the one hand, we stopped building and we're beginning to have some of that predictability on the other hand. It was first time through the process and so we hope you know everybody was a qualifying deals in categorizing them as stages that you know we're all on the same wavelength.

Dana R. Brown: And so we hope, you know, everybody was qualifying deals and categorizing them at stages that, you know, we're all on the same wavelength. I think fourth quarter, in general, just having spent literally decades in software, it's always the best quarter, right? It's always very seasonal.

I think fourth quarter in general just having spent literally decades in software.

It's always the best quarter right, it's always very seasonal.

Dana R. Brown: So there was some expectation there in terms of just like the quantity, right, and deals that might come through. Everybody likes to take advantage of any discounts or just kind of end-of-year budget money that's available. So that part, I would say, kind of played out in terms of, like, a traditional software business, especially software as a service business. But I'll ask Eric if he wants to chime in, and he can feel free to, you know, have the exact opposite point of view. I agree, Dana.

So there was some expectation there in terms of just like the quantity rate of deals that might come through everybody likes to take advantage of any discounts or just kind of end of year budget money that's available so.

That part I would say kind of played through in terms of like a traditional software business, especially software as a service business, but.

I'll ask Eric if he wants to chime in and he can feel free to ask you now have the exact opposite point of view [laughter].

Hi, I agree Dan.

Eric Lonnqvist: I wasn't really that surprised by the results. Honestly, we had a few deals that slipped out of Q3. I think maybe my take would be that Q3 was a little lower than we expected and Q4 might have got a slight benefit from that. But no, I think it was in line with what we expected coming into Q4. I don't think it's an anomaly for the business at all. I think it's... I think it's a good quarter, we're happy with it, but it's not so ridiculously high that we're surprised by it.

I wasn't really that surprised by the results honestly, we had a few deals that slipped out of Q3.

I think maybe you might think would be the Q3 was a little lower than we expected in Q Q4 might have got a slight benefit from that.

But no I think it was in line with what we expected coming into Q4 internally.

I don't think it's an anomaly.

For the business at all I think it's.

I think it's a good quarter, we're happy with it but it's not.

It's not ridiculous Lee I that we're surprised by it and it gets.

Per Erik Ostlund: I think we executed on two expectations in Q4. Okay, that's great. All right, one last one. I apologize.

I think we executed two expectations in Q4.

That's great.

One last one I apologize pelican polygon to queue, but.

Dana R. Brown: I feel like I'm hollering in the queue, but... Maybe just a super big picture question. Arsenae, I think it was your first time at Arsenae's, and I was just curious if you had sort of a high-level takeaway of what you felt like. ICAD's overall presence and messaging and what the interest was, and did you see other really interesting things out there that gave you pause as far as your competitive standing, kind of just anything you kind of thought coming away from that. So, Overall, I think our show presence and level of activity exceeded my expectations. You know, so we had a bit of an internal competition and kind of a high bar in terms of what would count as a meeting, right, that was booked during RS&A, a meeting with a prospect or a customer, and it had to meet certain criteria.

Yes.

Maybe just a big picture question.

<unk> I think it was your first time at RSA I believe yeah.

Just curious if you had sort of a high level takeaway of what you felt like.

<unk> presence in rest of January what the interest was in the JV other really interesting things out there that.

Pause as far as your competitive standing.

Yeah.

You kind of thought coming away from that show.

No.

Overall, I think our show presence and level activity exceeded my expectations.

We had a bit of an internal competition.

A high bar in terms of what would count as a meeting right that was booked during Ars Tonight and meeting with the prospect of our customer and I had to meet certain criteria you heard on the call right.

Dana R. Brown: You heard on the call, right, my prepared remarks. You know, we were a sales force 50% larger than the year before, and we had far, far more meetings and qualified meetings at RS&A generated by that, you know, small and mighty team. So, both, you know, U.S.-based as well as international-based meetings.

Prepared remarks, yes, we were at Salesforce, 50% half the size of the year before and we had far far more meetings and qualified meetings at our SG&A generated by that small and mighty team so and in both.

U S space as well as the international base meeting so I think our shelf presence was great we add people expressing genuine interest.

Dana R. Brown: So, I think our show presence was great. We had people, you know, expressing genuine interest. I would say the flip side is that because I was so busy in all those meetings, I probably didn't get to walk the show floor and check out other things that were going on as much as I thought that I might have. But I did get to spend time, you know, at some of our competitors' booths. You know, everybody's kind of a bit more friendly in a tray show environment. You know, they know folks are walking around and open to talking.

I'd say the flip side is because I was so busy in all of those meetings I probably didn't get to walk the show floor.

And check out other things that were going on as much as I thought that I might but I did get to spend time at some of our competitors' booths, everybody is kind of a bit more friendly in the trade show environment, Yeah. They know theyre walking around and open to talk so that was great obviously seeing the presence of companies like.

Dana R. Brown: So, that was great. Obviously, seeing the presence of companies like GE was just fabulous and getting to get a glimpse at some of their innovations, things that were important to them in terms of articulating their innovation and the way that they wanted to see their products positioned. As I mentioned, it was very timely because we were able to announce this full-blown integration into their MyBreast AI suite at the show. So, that was good. I think, you know, if I flip it around and I'm the radiologist walking the show floor, I think it can still be a bit overwhelming figuring out how all of these technology components fit together and kind of how I make my decisions, right, on what to use and in what order.

G E.

With just fabulous.

And getting to get a peek at some of their innovations things that were important to them in terms of articulating their innovation.

And the way that they want to see their products positioned.

And Brian I was very timely because we were able to announce this full blown integration into their my breast AI suite at the show. So that was funded I think if I flip it around and I am the radiologist walking the show floor.

I think it can still be a bit overwhelming figuring out how all of these technology components fit together and kind of how how I make my decisions on what to use and in what order. So that gave us more insight when we when we came back home after the show.

Dana R. Brown: So, that gave us more insights when we came back home after the show on ways in which to really improve our messaging, our product demos, and even our initial kind of introduction to ICAD pitches. So, we've been spending a lot of time on that. We are developing a new kind of adoption campaign and some training materials, trying to make sure that we don't underestimate the amount of change management and cultural adoption that needs to happen with AI. You heard me quote the stat, and we actually talked about this with Hologic.

On ways in which to really improve our messaging.

Demos, even our initial kind of introductory to ikat pitches. So we've been spending a lot of time on that we are developing a new kind of adoption campaign and some training materials trying to make sure that we don't underestimate the amount of change management and cultural adoption.

That needs to happen with AI right you heard me put the staff and we actually talked about this even with Hologic.

Team members at the show of only 37%.

Dana R. Brown: Team members at the show said that only 37% of, you know, screening, right, mammography screening centers are using AI. There's still a long way to go to really, you know, saturate that market. And so, what are the barriers to adoption?

Right as you know screening right mammography screening centers are using AI.

Still a long ways to go do you really you know saturate that market and so what are the barriers to adoption and a lot of it's just cultural and change and so we've been focusing a lot more on that.

Dana R. Brown: And a lot of it's just culture and change. And so, we've been focusing a lot more on that to complement maybe the technical aptitude and knowledge that we try to share in our presentations in the past. So, that's great. That's very thorough.

To complement maybe the technical aptitude and knowledge that we try to share in our presentations in the past.

That's great that's very thorough thank you.

Marie Yoko Thibault: Thank you. Yep. Thank you. Our next question is coming from Marie Thibault with BTIG. Your line is... Hi, good evening.

Oh answers.

Yes.

Okay.

Thank you. Our next question is coming from Marie Thibault with BT Itchy Your line is life.

Hi, good evening, thanks for taking the questions Stan and Eric wanted to ask here about your new head of sales.

Dana R. Brown: Thanks for taking the questions, Dana and Eric. I wanted to ask you about your new head of sales and the new folks that you have welcomed onto your sales team. Tell me a little bit about when they came on, when you expect them to ramp, what they're focused on, is this perpetual, is this subscription, a bit of both, and how we can expect to see OpEx maybe step up a little bit. I know that's been very nicely controlled, but I'd guess you'd have to spend a bit on some of these new folks.

And the new folks that you welcomed onto your sales team tell me a little bit about when they came on.

When do you expect them to ramp what they're focused on is as perpetual or subscription a bit of both and how we can expect to see opex, maybe step up a little bit I know that's been very nicely controlled but I'd guess you'd have to spend a bit on some of these new folks.

Dana R. Brown: Yeah, so I'll talk a bit about the, I'll say kind of like the new structure for the sales team and then hand it over to Eric to talk about the OPEX side. So maybe just a step back, you know, when we had the six sales reps and we had a head of sales. I would say everybody was kind of doing everything. And, you know, when you really get to know a salesperson, I would say their DNA skews to either really being excited about cold calls and new business, right?

Yeah, So I'll talk a bit about that at.

I'll say kind of like the new structure for the sales team and then I'll.

I hand, it over to Harry to talk about the Opex side. So maybe.

Maybe just a step back you know when we had the six sales reps and we had a head of sales I'll say everybody is kind of doing everything.

And you do when you really get to know US salesperson I would say, most often and their DNA skus to either really being excited about cold calls and new business right or they may like more of the ongoing relationship management account management.

Dana R. Brown: Or they may like more of the ongoing relationship management, account management, just kind of care and feeding of existing accounts. And given our large installed base, we were skewing much more to that side of the equation, much more to an account management DNA versus a new business type in the sales team. So when we thought about, you know, the way in which we wanted to restructure the team going forward, we wanted to do a bit of a division of roles and responsibilities. So the new head of sales we brought on board is the new SVP for commercial for North America, so both the U.S. and Canada. He's definitely wired as a new business guy.

I'm, just kind of care and feeding right of existing accounts and given our large installed base. We were skewing much more right to that side of the equation much more to an account management versus the new business types of DNA in the sales team. So when we thought about the way in which we wanted to restructure the team.

Going forward, we wanted to do a better division of roles and responsibilities. So I'm the new head of sales we brought onboard I'm used to the new SVP for commercial for North America, both the U S and Canada.

Definitely wired as a new business guy so he likes getting the net new logos.

Dana R. Brown: So he likes getting the net new logos, breaking ground, right, in new accounts. So to complement that, I would say of the six that we had, we had one other individual who was really clearly kind of a new business person, and we had one who was a strong hybrid, and the rest were really great at account management. So of the four that we've added, one was the new leader that I just mentioned. We added two more account reps that are focused on new business, so we have three people kind of double clicking on new business. We added a new strategic national accounts executive, and so she's on board. So that makes up the four new people that we have, and we moved the existing sales team into more of that account management role. And as account managers, they're really focused on expanding within an existing account, making sure accounts are staying current on upgrades and updates, maintenance and support agreements, whereas the new business team is really kind of netting new logos.

Breaking ground right in new new accounts.

So to complement that I would say of the six that we had we had one of their individual who is really clearly kind of a new business person and we had one was a strong high grade and the rest were really great at account management. So so of the four that we've added one was the new leader that I just mentioned.

We added two more.

Account reps that are focused on new business. So we have three people kind.

Double cooking on new business, we added a new strategic national accounts executives.

And so she's on board so that makes up the four new people that we have and then Luke that existing sales team into more of that account management role and as account managers, they're really focused on are.

Expanding within an existing account.

Making sure accounts are staying current on upgrades.

Maintenance and support agreements, whereas the new business team is really kind of net new logos so everyone.

Dana R. Brown: So everyone, the head, the new SVP, started very late December, and the other three new individuals started in mid-January. So their pipelines are beginning to build. A couple of them have some very small deals on the board, as our SVP likes to describe them, and we're expecting that they've got a couple quarters of ramping up. So far, they're on track with what our expectations are, and we hope they begin to contribute in the second half of the year. So, Eric, do you want to talk a bit? I would say a couple of other, you know, I would say kind of holes in our team that we filled. We did add a couple of others, a regulatory resource, and a couple of engineering resources as well. Right? So, to your point, when you think about OPEX, in addition to some of the sales hires, we had a couple of others in those other departments as well. Anything from Eric there, then? Yeah, yeah, I can. I can add in a little bit of color, too.

They had the new SVP started very late December.

And the other three new individuals started in mid January so their pipelines are beginning to build them. A couple of them have some very small deals on the board and see if he likes to describe it.

And we're expecting Brian that that you know they've got a couple of quarters here of ramping up so far there are they are on track with what our expectations are and hope they begin to contribute in the second half of the year. So.

Eric do you want to talk about it I would say.

A couple of other you know I would say kind of hold in our team that we felt we did add a couple of other regulatory resource.

Of engineering resources as well right. So to your point when you think about Opex.

In addition to some of the sales hires we had a couple of others in those other departments as well.

Anything from Eric there are.

Yeah, Yeah, I can I can add a little bit of color too. So in Q4, our opex was right around $5 million I think.

Eric Lonnqvist: So in Q4, our OpEx was right around 5 million. As you think about what that means, it's kind of the first clean quarter without Zost. We did have some benefit in the quarter, I think one time, kind of favorable P&L impact, so I'd say in the $200,000 to $300,000 range. So I think about Q4 is kind of where we're at in OPEX post-soft. But going forward, it's going to change quite a bit. As Dana has mentioned, and talked about.

As you're thinking about what that means is kind of the first clean quarter without soft we did have some benefit in the quarter I think one time.

Got it.

Favorable P&L impact so I'd say in the two to $300000 range.

So I would think about Q4 is kind of where we're at.

And opex posted off but going forward. It is going to change quite a bit. So so Dan has mentioned and you've talked about we really publicly since these increases in the sales team.

Eric Lonnqvist: We released publicly these increases in the sales team. There are the four new heads and their, They're pretty senior level people, some of them, so it will be... It will be an expense that largely isn't in our run rate for Q4. And there are also some of the things Dana mentioned in terms of... Investments in Regulatory Affairs are part of the plan as we enter this kind of third investment phase after we've stabilized the cash burn. So you will see a bump for these initiatives in August. Okay, that's helpful detail from both of you. Thank you for that. I wanted a quick update. In Q3, you mentioned that about a quarter of the customer base had lapsed their maintenance agreements, and there was an effort there to try to renew some of that.

The four new heads and they're pretty.

Are they pretty senior senior level people some of them. So it will be it.

There will be an expense it is largely isn't in our run rate for Q4.

And there is also some of the things Dana mentioned in terms of our investments.

Investments in regulatory as part of the plan.

As we enter this just kind of a third investment phase after we've stabilized the cash burn.

You will see a bump for these initiatives in Opex.

Okay. That's helpful detail from both of you. Thank you for that wanted a quick update on Q3, you mentioned that about a quarter of the customer base had lapsed, they're maintenance agreements and then there was an effort there to try to renew some of that any early progress updates on all of that effort.

Eric Lonnqvist: Any early progress updates on that effort? You know, because it happened here? Just the recent first quarter that we're still in the midst of, we don't have anything that we are able to disclose yet, but I can tell you, anecdotally, it's going well. We actually have a service pack, which is an update to quite a bit of functionality that will be released next week. So, that's also spurring customers to get current on the version of the software because they want to take advantage of those new features and functions. But it is, to your point, we didn't make that information known in the third quarter.

We.

Because it's happened here like just the recent first quarter that were still in the midst of we don't have anything that we are able to disclose yet, but I can tell you anecdotally, it's going well.

We have added a service pack them, which is an update a quite a bit of functionality that will be released next week. So that's also spring customers to get current on diversion of the software because it wouldnt take advantage of those new features and functions, but it is to your point we didn't make.

That information known in third quarter.

Dana R. Brown: And so it's something that we are tracking, and those are metrics that we plan on being able to talk about on next quarter's call. Okay, we look forward to it. One last quick one.

And so it's something that we are tracking and those are metrics that we plan on being able to talk about on next quarter's call.

Okay, we look forward to it and one last quick one just as I look ahead on your pipeline you've got some nice new products like breast arterial calcification.

Marie Yoko Thibault: Just as I look ahead in your pipeline, you've got some nice new products, like breast arterial calcification, potentially risk being added to kind of the suite of products that you offer. How should I think about how that impacts pricing or ASP as you kind of go out and offer these opportunities? Would that increase, you know, the subscription ASPs? Is that all going to be part of one package? How should we think about that? Mm hmm. Well, both products are under review but not by the FDA right now. So I would say when you think about 2024, you're not going to see a big impact, right? It's going to take time for the FDA to approve them, but they're available for investigational use right now. But, under that categorization, we actually can't, you know, generate revenue from them from customers. So, but they're helping patients.

Potentially risk being added to kind of a suite of products that you offer how should I think about how that impacts pricing or ASP.

As you kind of go out and offer these opportunities would that increase you know the subscription asps is that all going to be part of one package, how how to think about that.

Hmm.

Well both products are under review, but from me with the FDA right now so I would say when you think about 2024, you're not going to see a big a big impact right because it's going to take time to get through the FDA.

They are available for investigational use right now but.

Under that categorization, we actually can't you know generate revenue from them from customers, So but of course I am well.

Dana R. Brown: I'm looking into the future. Yeah. Thank you. Yeah. So, the solutions are priced both, I would say, individually, right?

Looking into the future, but the <unk> yeah. Thank you yeah.

So.

The solutions are priced both I would say individually right. So if you're an existing customer and you want to add it on you can the products are available in the cloud. So they can be an incremental you know price rate of revenue to an existing subscription and then we also offer you know the whole bundle.

Dana R. Brown: So, if you're an existing customer and you want to add it on, you can. The products are available in the cloud. So, they can be an incremental, you know, price, right? A revenue to an existing subscription. And then we also offer, you know, the whole bundle. So, I don't know, Eric, if you have any more color you want to add to how we think about the pricing. I think the sales team is super excited to have the door open with our core suite of detection products, and they're chomping at the bit to have these add-ons to go to customers with kind of a, [inaudible] Yeah, okay Thanks so much for taking the questions.

So I don't know Eric if you have any more like color you want to add to how we think about.

The pricing.

I think the sales team is super excited to again kind of in the door with our core suite of detection products and they're chomping at the bit are these add ons to go to customers with a with kind of a.

Our land and expand type strategy so.

I can't get approved fast enough I think for our new sales team.

Marie Yoko Thibault: Mm-hmm. Thank you. Our final question today will be coming from Yale Chen with Laidlaw and Company. Your line is live. Good afternoon, and thanks for squeezing me in. This is to do a quick one.

Yeah, Okay. Good to hear thanks, so much for taking the questions.

Sure.

Thank you.

Final question for me will be coming from Yale Jen with Laidlaw and company your line of sight.

Good afternoon, and thanks for squeezing me in.

Just two quick ones. The first one just I appreciate that you provided the detail.

Yale Chen: The first one is I appreciate that you provide the details of the number of deals done in the fourth quarter. My question to that is, uh, does the perpetual order a fourth quarter generally refer to the fraud numbers or a referable number for let's say 2024, or that also is very fluctuating quarter over quarter? I think you're asking if the perpetual deals fluctuate a lot between quarters. I mean, I didn't know whether that's improved a lot.

Number of deals.

In the fourth quarter my question to that is that.

Doug the perpetual order of fourth quarter generally.

For the full number of.

Referable number for let's say 2024, or all sorts of other fluctuating quarter over quarters.

Yeah.

Okay.

Hi, Dan I don't know if you wanted to take that one yes, yes. Please.

Yeah, I think youre, asking if youre asking of the perpetual deals fluctuate a lot between quarters.

I mean.

I didn't know what does that perpetuate a lot.

Eric Lonnqvist: I mean, between quarters, I'm just having we have the 80 as the one for the fourth quarter. So I wonder whether, going forward, would that be a relatively consistent number, roughly quarter over quarter, or that could actually also fluctuate quite a bit over time. Yeah, they do.

Between quarters, So I'm, just having we have the 81.

The number of ideas the one for the fourth quarter, So I wonder whether going forward would that be a sort of relatively consistent number then roughly quarter over quarter or that's actually also could be fluctuate quite a bit oh.

Overtime.

Yeah, they do they do fluctuate a little bit.

Eric Lonnqvist: They do fluctuate a little bit. And I'll order a magnitude, not a ton. Instead of looking forward, I'm kind of looking back at the last few quarters. I mean, we're, you know, we're up a bit from Q3. I think, If you're trying to think about how to model it going forward, I'd probably look at, we did release the number in Q3. I think it was closer to 60 DDOs for perpetual, and we're up to 80-ish in Q4, so that's a movement right there, so it can move around. But, you know, not like two X's or anything, it's just been... It's been fairly consistent in the last few quarters.

And the order of magnitude the magnitude not a ton of them instead of looking forward I'm kind of looking back at the last few quarters, I mean, where.

We're up a bit from Q3.

I think.

Patrick if youre trying to think about how to model it going forward I'd, probably look at what we do.

Released the number in Q3 I.

He was closer to 60 deals for perpetual and we're up to 80 ish in.

Q4, so that's a movement right there.

Can move around.

But.

Now I'd like to extra.

Then.

It's been it's been fairly consistent the last few quarters I think more what can change the perpetual deals of the size of the deals too they can to get one or two real big ones. It can it can swing the revenue if you're if you're trying to model.

Eric Lonnqvist: I think more what can change with perpetual deals is the size of the deals, too. To get one or two real big ones, it can swing the revenue if you're trying to model. Okay, great. That's very helpful. Okay, that's also very helpful. Maybe just one more added to here, which is that now you are a pure play on the detection side. So I also noticed that the gross margin has been sort of more stable from the last quarter. So should we consider this quarter's number as a reference point for 2024? I can't speak to the future, but for this quarter, it was the first quarter without Zop. With Cleanview, we had a 91% margin. I think there were a few pieces in this quarter that did drive it up a tick. The mixed shift of what we sold; we sold more licenses and less hardware this quarter, so our margins are higher on the licenses.

Okay, great, that's very helpful or stable, but yeah.

Okay. That's very helpful. Maybe just one more add to here, which is now a pure play in the detection side. So I also noticed that the margin the gross margin as being sort of more stable.

From the last quarter, so should we consider this quarters number.

I'll I'll reference point for 2024 and maybe beyond.

Okay.

Yeah, Yeah I can.

Can't speak to the future, but for this quarter. It is the first quarter without the opt in.

Clean view, we had the 91% margin I think there's a few pieces in this quarter that.

It did drive it in Opex at the mix shift of what we saw we sold.

More licenses unless hardware this quarter so.

Our margins are higher on the licenses so that drove it up a bit so going forward if that mix shift changes more towards licenses our margins will be better.

Eric Lonnqvist: That drove it up a bit, so going forward, if that mix shifts more towards licenses, our margins will be better. [inaudible] So. I think somewhere in that range is where we're kind of looking for detection; the 85 to 91 is what we've seen to date. But it could change due to a number of factors, such as the mixed shift in sales. The Mixed Shift, more from Perpetual to Cloud, there are a number of factors that could move that number going forward.

More towards hardware sales and the margins will come down a little bit.

So this quarter, we did benefit from that.

Well I think last year, we reported also in our continuing business would be which would be detection alone.

Our margin was 85% in 2022.

<unk>.

No.

And I think somewhere in that range is where we're we're kind of looking for detection. The 85 to 90 wise what we've seen.

To date, but it could be it could change due to a number of factors the mix shift in sales the mix shift more from perpetual to cloud. There's there's a number of factors in that.

Could move that number going forward.

Yale Chen: Okay, great. That's very helpful. It helped us with the modeling.

Okay, Great. That's very helpful. It helps us doing the modeling so again congrats on the progress to look forward to talking to you guys too.

Dana R. Brown: So again, congrats on all the progress. I look forward to talking to you guys. [inaudible] Thank you. As we have no further questions in queue, I shall hand it back to management for any closing remarks. Thank you, operator. In conclusion, we're making bold moves to rapidly transform this company with a focus on maintaining stability, preserving our cash, and building a defensible and competitive long-term strategy. Demand for our technology continues to be strong, the evidence supporting it continues to grow, and our team continues to secure opportunities with some of the most prestigious and esteemed health care facilities worldwide. I remain optimistic about the company and its future, and I firmly believe in the bright future of the company and our ability to generate significant shareholder value. Thank you, and have a great evening. Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.

Great. Thanks.

Thank you as we have no further questions in queue I shall hand back to management for any closing remarks.

Thank you operator.

In conclusion, we're making bold moves rapidly transformed this company with a focus on maintaining stability preserving our cash and building a defensible and competitive long term strategy.

Demand for our technology continues to be strong the evidence supporting it continues to grow and our team continues to secure opportunities with some of the most prestigious and his team health care facilities worldwide.

I remain optimistic about the company and its future and I firmly believe in the bright future of the company and our ability to generate significant shareholder value. Thank you and have a great evening.

Thank you. This concludes today's conference you may disconnect your lines at this time.

Thank you for your participation.

Okay.