SEC Filing | Semler Scientific, Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024



	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File Number: 001-36305

SEMLER SCIENTIFIC, INC.

(Exact name of registrant as specified in its charter)

Delaware	26-1367393
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2340-2348 Walsh Avenue, Suite 2344 Santa Clara, CA	95051
(Address of principal executive offices)	(Zip Code)

(877) 774-4211

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		SMLR		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232,405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 1, 2024, there were 7,133,788 shares of the issuer’s common stock, $0.001 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS

		Page
Part I.	Financial Information	1

Item 1.	Condensed Financial Statements (Unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	23

Part II.	Other Information	23

Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51

Signatures		52

In this report, unless otherwise stated or as the context otherwise requires, references to “Semler Scientific,” “the Company,” “we,” “us,” “our” and similar references refer to Semler Scientific, Inc. The Semler Scientific logo, QuantaFlo and other trademarks or service marks of Semler Scientific, Inc. appearing in this report are the property of Semler Scientific, Inc. This report also contains registered marks, trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing in this report are the property of their respective holders.

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. In some cases, you can identify forward-looking statements by terminology, such as “expects,” “anticipates,” “intends,” “estimates,” “plans,” “believes,” “seeks,” “may,” “should,” “continue,” “could,” or the negative of such terms or other similar expressions. The forward-looking statements in this report include, but are not limited to, statements regarding:

●

our seeking to obtain a new U.S. Food and Drug Administration, or FDA, 510(k) clearance for expanded use of QuantaFlo;

●

the effects of the 2024 Medicare Advantage and Part D Final Rate Announcement issued by the Centers for Medicare and Medicaid Services, or CMS, on our revenues; and

●

implementation of our bitcoin treasury strategy and its effects on our business

Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this report. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements throughout this quarterly report on Form 10-Q.

You should read this quarterly report on Form 10-Q and the documents that we reference herein and therein and have filed as exhibits, completely and with the understanding that our actual future results may be materially different from what we expect. You should assume that the information appearing in this quarterly report on Form 10-Q is accurate as of the date we file this report only. Because the risk factors referred to herein could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. These risks and uncertainties, along with others, are described under the heading “Risk Factors” in Part II, Item 1A, as well as under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the information presented in this quarterly report on Form 10-Q, and particularly our forward-looking statements, by these cautionary statements.

This quarterly report on Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data.

RISK FACTOR SUMMARY

Our business involves significant risks. Below is a summary of the material risks that our business faces, which makes an investment in our common stock speculative and risky. This summary does not address all these risks. These risks are more fully described below under the heading “Risk Factors” in Part II, Item 1A of this quarterly report on Form 10-Q. Before making investment decisions regarding our common stock, you should carefully consider these risks. The occurrence of any of the events or developments described below could have a material adverse effect on our business, results of operations, financial condition, prospects and stock price. In such event, the market price of our common stock could decline, and you could lose all or part of your investment. In addition, there are also additional risks not described below that are either not presently known to us or that we currently deem immaterial, and these additional risks could also materially impair our business, operations or market price of our common stock.

●

If we do not successfully implement our business strategy, including our recently announced bitcoin treasury strategy, our business and results of operations will be adversely affected.

Table of Contents

●

We predominantly market only one FDA-cleared vascular testing product; it may not achieve broad market acceptance or be commercially successful. Recent changes in the regulatory reimbursement landscape, such as the 2023 “Advance Notice” issued by CMS could impact the perceived profitability of using our products to aid diagnosis of peripheral arterial disease, or PAD.

●

We have ceased marketing of QuantaFlo as an aid in the diagnosis of heart dysfunction and there is no guarantee that we will obtain a new FDA 510(k) clearance for the expanded use.

●

If healthcare providers are unable to obtain adequate coverage and reimbursement, it is unlikely that our product will gain widespread acceptance. QuantaFlo is generally but not specifically approved for reimbursement under any third-party payor codes.

●

We rely heavily upon the talents of a small number of key personnel, the loss of whom could severely damage our business.

●

We do not require our customers to enter into long-term licenses or maintenance contracts for our products or services and may therefore lose customers on short notice; and a significant portion of our revenues and accounts receivables are with a limited number of customers.

●

We rely on a small number of independent suppliers and facilities for the manufacturing of QuantaFlo. Any delay or disruption in the supply of the product or facility may negatively impact our operations.

●

We may not be sufficiently insured against product liability risk and may be subject to substantial claims.

●

We may implement a product recall or voluntary market withdrawal or stop shipment of our product due to product defects or product enhancements and modifications, which would significantly increase our costs.

●

An information security incident, including a cybersecurity breach, could have a negative impact on our business or reputation.

●

Our future financial performance will depend in part on the successful improvements and software updates to our vascular testing product on a cost-effective basis, as well as our ability to develop new products and service offerings, and expand the indications for QuantaFlo.

●

We operate in an intensely competitive and rapidly changing business environment, and there is a substantial risk our products or service offerings could become obsolete or uncompetitive.

●

Our business is subject to many laws and government regulations governing the manufacture and sale of medical devices, including the FDA’s 510(k) clearance process, and laws and regulations governing patient data and information, along with more general tax rules and regulations among others, all of which are subject to change.

●

Although part of our business strategy is based on payment provisions enacted under government healthcare reform, we also face significant uncertainty in the industry regarding the implementation, transformation or repeal and replacement of the Health Care Reform Law.

●

The applicable healthcare fraud and abuse laws and regulations, along with the increased enforcement environment, may lead to an enforcement action targeting us, which could adversely affect our business.

●

We have had material weaknesses in our internal control over financial reporting. Although we have remediated our prior material weaknesses, if we identify additional material weaknesses in the future, or if our former material weaknesses recur, it could have an adverse effect on our company.

●

Our bitcoin treasury strategy exposes us to various risks associated with bitcoin.

●

Bitcoin is a highly volatile asset, and fluctuations in the price of bitcoin are likely to influence our financial results and the market price of our common stock.

●

Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.

●

Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our bitcoin holdings.

●

The availability of spot bitcoin ETPs may adversely affect the market price of our common stock.

●

Our bitcoin treasury strategy subjects us to enhanced regulatory oversight.

●

Due to the currently unregulated nature and lack of transparency surrounding the operations of many bitcoin trading venues, bitcoin trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in bitcoin trading venues and adversely affect the value of our bitcoin.

●

The concentration of our bitcoin holdings enhances the risks inherent in our bitcoin treasury strategy.

●

The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of bitcoin and adversely affect our financial condition and results of operations.

●

Our bitcoin holdings are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

iii

Table of Contents

●

If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our bitcoin, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our bitcoin and our financial condition and results of operations could be materially adversely affected.

●

We face risks relating to the custody of our bitcoin, including the loss or destruction of private keys required to access our bitcoin and cyberattacks or other data loss relating to our bitcoin.

●

Regulatory change reclassifying bitcoin as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940, as amended, or the 1940 Act, and could adversely affect the market price of bitcoin and the market price of our common stock.

●

We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition, and results of operations.

●

Our bitcoin treasury strategy exposes us to risk of non-performance by counterparties.

●

Our custodially-held bitcoin may become part of the custodian’s insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings.

●

A blockchain “fork” to bitcoin or other crypto assets could adversely affect our business.

●

The due diligence procedures conducted by us and our liquidity provider to mitigate transaction risk may fail to prevent transactions with a sanctioned entity.

●

Our executive officers, directors and significant stockholders, if they choose to act together, have the ability to significantly influence all matters submitted to stockholders for approval.

●

Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Semler Scientific, Inc.

Condensed Statements of Income

Unaudited

(In thousands of U.S. Dollars, except share and per share data)


	For the three months ended June 30,				For the six months ended June 30,
	2024		2023		2024		2023

Revenues	$	14,465	$	18,605	$	30,368	$	36,811
Operating expenses:
Cost of revenues		1,255		1,219		2,501		2,488
Engineering and product development		1,440		1,762		2,578		3,392
Sales and marketing		3,456		4,985		7,131		10,177
General and administrative		2,964		3,459		5,832		7,318
Total operating expenses		9,115		11,425		18,042		23,375
Income from operations		5,350		7,180		12,326		13,436
Interest and dividend income		714		597		1,534		1,080
Change in fair value of notes held for investment		128		(111)		128		(217)
Change in fair value of digital assets		(5,055)		—		(5,055)		—
Other (expense) income, net		(4,213)		486		(3,393)		863
Pre-tax income		1,137		7,666		8,933		14,299
Income tax provision		1,126		1,787		2,849		3,451
Net income	$	11	$	5,879	$	6,084	$	10,848
Net income per share, basic	$	0.00	$	0.88	$	0.88	$	1.62
Weighted average number of shares used in computing basic net income per share		6,944,664		6,707,341		6,918,709		6,704,306
Net income per share, diluted	$	0.00	$	0.75	$	0.78	$	1.38
Weighted average number of shares used in computing diluted net income per share		7,795,149		7,867,001		7,789,101		7,887,584

See accompanying notes to unaudited condensed financial statements.

Table of Contents

Semler Scientific, Inc.

Condensed Balance Sheets

(In thousands of U.S. Dollars, except share and per share data)


	June 30,		December 31,
	2024		2023
		Unaudited
Assets
Current Assets:
Cash and cash equivalents	$	7,332	$	57,200
Restricted cash		132		132
Trade accounts receivable, net of allowance for credit losses of $243 and $287, respectively		7,470		6,125
Short-term notes held for investments		6,100		—
Inventory, net		385		445
Prepaid expenses and other current assets		2,271		2,042
Total current assets		23,690		65,944
Assets for lease, net		1,768		2,285
Property and equipment, net		620		720
Long-term investments		512		512
Notes held for investment		—		5,372
Intangible digital assets		54,945		—
Other non-current assets		127		270
Deferred tax assets, net of valuation allowance of $1,207 and $0, respectively		3,124		2,962
Total assets	$	84,786	$	78,065

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	227	$	402
Accrued expenses		5,086		4,502
Deferred revenue		840		1,120
Other short-term liabilities		211		176
Total current liabilities		6,364		6,200

Long-term liabilities:
Other long-term liabilities		24		70
Total long-term liabilities		24		70
Commitments and contingencies (Note 15)
Stockholders’ equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 7,202,146 and 7,099,441 shares issued, and 6,987,724 and 6,885,019 shares outstanding (treasury shares of 214,422 and 214,422), respectively		7		7
Additional paid-in capital		12,504		11,985
Retained earnings		65,887		59,803
Total stockholders’ equity		78,398		71,795

Total liabilities and stockholders’ equity	$	84,786	$	78,065

See accompanying notes to unaudited condensed financial statements.

Table of Contents

Semler Scientific, Inc.

Condensed Statements of Stockholders’ Equity

Unaudited

(In thousands of U.S. Dollars, except share and per share data)


	For the Three Months Ended June 30, 2023
	Common Stock			Treasury Stock	Additional				Total
		Common Stock			Paid-In		Retained		Stockholders'
	Shares Issued	Amount		Shares	Capital		Earnings		Equity
Balance at March 31, 2023	6,920,643	$	7	(214,422)	$	17,005	$	44,189	$	61,201
Common stock warrants acquired	—		—	—		(1,949)				(1,949)
Employee stock grants	3,875		—	—		152		—		152
Taxes paid related to net share settlement of equity awards	(1,072)		—	—		(27)		—		(27)
Stock-based compensation	—		—	—		7		—		7
Net income	—		—	—		—		5,879		5,879
Balance at June 30, 2023	6,923,446	$	7	(214,422)	$	15,188	$	50,068	$	65,263


	For the Six Months Ended June 30, 2023
	Common Stock			Treasury Stock	Additional				Total
		Common Stock			Paid-In		Retained		Stockholders'
	Shares Issued	Amount		Shares	Capital		Earnings		Equity
Balance at December 31, 2022	6,906,544	$	7	(214,422)	$	16,449	$	39,220	$	55,676
Common stock warrants acquired	—		—	—		(1,949)		—		(1,949)
Employee stock grants	21,923		—	—		846		—		846
Taxes paid related to net share settlement of equity awards	(5,021)		—	—		(172)		—		(172)
Stock-based compensation	—		—	—		14		—		14
Net income	—		—	—		—		10,848		10,848
Balance at June 30, 2023	6,923,446	$	7	(214,422)	$	15,188	$	50,068	$	65,263


	For the Three Months Ended June 30, 2024
	Common Stock			Treasury Stock	Additional				Total
		Common Stock			Paid-In		Retained		Stockholders'
	Shares Issued	Amount		Shares	Capital		Earnings		Equity
Balance at March 31, 2024	7,134,193	$	7	(214,422)	$	12,023	$	65,876	$	77,906
Employee stock grants	6,546		—	—		150		—		150
Stock option exercises	61,407		—	—		213		—		213
Stock-based compensation			—	—		118		—		118
Net income	—		—	—		—		11		11
Balance at June 30, 2024	7,202,146	$	7	(214,422)	$	12,504	$	65,887	$	78,398


	For the Six Months Ended June 30, 2024
	Common Stock			Treasury Stock	Additional				Total
		Common Stock			Paid-In		Retained		Stockholders'
	Shares Issued	Amount		Shares	Capital		Earnings		Equity
Balance at December 31, 2023	7,099,441	$	7	(214,422)	$	11,985	$	59,803	$	71,795
Employee stock grant	6,546		—	—		150		—		150
Taxes paid related to net share settlement of equity awards	(1,029)		—	—		(45)		—		(45)
Stock option exercises	97,188		—	—		269		—		269
Stock-based compensation	—		—	—		145		—		145
Net income	—		—	—		—		6,084		6,084
Balance at June 30, 2024	7,202,146	$	7	(214,422)	$	12,504	$	65,887	$	78,398

See accompanying notes to unaudited condensed financial statements

Table of Contents

Semler Scientific, Inc.

Condensed Statements of Cash Flows

Unaudited

(In thousands of U.S. Dollars)


	Six months ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,084	$	10,848

Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Depreciation		346		279
Deferred tax expense		(163)		(207)
Loss on disposal of assets for lease		319		114
Gain on short-term investments		—		(237)
Allowance for credit losses		(44)		92
Change in fair value of notes held for investment		(128)		217
Change in fair value of digital assets		5,055		—
Stock-based compensation		295		860
Changes in Operating Assets and Liabilities:
Trade accounts receivable		(1,292)		(2,240)
Inventory		60		(7)
Prepaid expenses and other current assets		(135)		(950)
Other non-current assets		43		106
Accounts payable		(175)		(326)
Accrued expenses		584		3,495
Other current and non-current liabilities		(291)		13
Net Cash Provided by Operating Activities		10,558		12,057

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(48)		(260)
Purchase of notes held for investment		(500)		(500)
Purchase of digital assets		(60,000)		—
Proceeds from maturities of short-term investments		—		57,707
Purchase of short-term investments		—		(49,728)
Purchase of assets for lease				(674)
Net Cash (Used in) Provided by Investing Activities		(60,548)		6,545

CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of warrants		—		(1,949)
Taxes paid related to net settlement of equity awards		(45)		(172)
Stock issuance expenses		(102)		—
Proceeds from exercise of stock options		269		—
Net Cash Provided by (Used in) Financing Activities		122		(2,121)
(DECREASE) INCREASE IN CASH		(49,868)		16,481
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD		57,332		23,014
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	7,464	$	39,495

See accompanying notes to unaudited condensed financial statements

Table of Contents

Semler Scientific, Inc.

Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

1.Basis of Presentation

Semler Scientific, Inc., a Delaware corporation (“Semler” or “the Company”), prepared the unaudited interim financial statements included in this report in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 7, 2024 (the “Annual Report”). In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any future period, including the full year.

Intangible Digital Assets

The Company accounts for its digital assets, which are comprised solely of bitcoin, as indefinite-lived intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles—Goodwill and Other. The Company has ownership of and control over its bitcoin and uses third-party custodial services at multiple locations that are geographically dispersed to store its bitcoin. The Company’s digital assets are initially recorded at cost and subsequently, remeasured to fair value at the end of each reporting period, with changes recognized in net income.

The Company purchases bitcoins for long term investment. It intends to hold its digital assets for long term gains and treats them as long term capital assets for tax purposes. Unrealized gains/losses are treated as capital gains/losses for tax purposes. A valuation allowance is recorded for unrealized capital losses. See Note 10 to the Unaudited Condensed Financial Statements for additional information regarding the Company’s purchases and sales of digital assets.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires enhanced disclosures surrounding income taxes, particularly related to rate reconciliation and income taxes paid information. In particular, on an annual basis, companies will be required to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Companies will also be required to disclose, on an annual basis, the amount of income taxes paid, disaggregated by federal, state, and foreign taxes, and also disaggregated by individual jurisdictions above a quantitative threshold. The standard is effective for the Company for annual periods beginning January 1, 2025 on a prospective basis, with retrospective application permitted for all prior periods presented. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its disclosures.

Recently Adopted Accounting Pronouncement

In December 2023, the FASB issued ASU No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires in-scope crypto assets to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within the scope of the standard. The standard is effective for the Company for interim and annual periods beginning January 1, 2025, with a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period in which the Company adopts the guidance. Early adoption is permitted in any interim or annual period for which an entity's financial statements have not been issued as of the beginning of the annual reporting period. The Company early adopted ASU 2023-08 in the

Table of Contents

Semler Scientific, Inc.
Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

second quarter ended June 30, 2024, effective retroactively as of January 1, 2024 with no cumulative-adjustment to the retained earnings as of beginning of the annual period of adoption.

2.Variable-Fee Revenue

The Company recognizes variable-fee licenses (i.e., fee per test) and sales of hardware equipment and accessories in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Total fees from variable-fee licenses represent approximately $6,981 and $8,376 for the three months ended June 30, 2024 and 2023, respectively. Total fees from variable-fee licenses represent approximately $14,988 and $16,938 for the six months ended June 30, 2024 and 2023, respectively. Total sales of hardware and equipment accessories represent approximately $710 and $611 of revenues for the three months ended June 30, 2024 and 2023, respectively. Total sales of hardware and equipment accessories represent approximately $1,527 and $951 of revenues for the six months ended June 30, 2024 and 2023, respectively. The remainder of the revenue is earned from leasing the Company's testing product for a fixed fee, which is not subject to ASC 606. See Note 14 to the Unaudited Condensed Financial Statements for more information.

Upon shipment under variable-fee license contracts, assets for lease are sold to the customers, and the asset is recognized as cost of revenue.

3. Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recorded at the invoiced amount, net of allowance for credit losses. The allowance for credit losses is based on management’s assessment of the collectability of accounts. The Company regularly reviews the adequacy of this allowance for credit losses by considering historical experience, the age of the accounts receivable balances, the credit quality of the customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect customers’ ability to pay to determine whether a specific reserve is appropriate. Accounts receivable deemed uncollectable are charged against the allowance for credit losses when identified. Accounts receivable, net of $7,470 and $6,125 as of June 30, 2024 and December 31, 2023, respectively, include $5,123 and $3,373, respectively, related to revenue recognized under ASC 606.

As of June 30, 2024, the allowance for credit losses was $243. During the three months period ended June 30, 2024, the Company provided an additional reserve of $31 and recovered $27 from customers. During the six months period ended June 30, 2024, the Company provided an additional reserve of $31 and recovered $75 from customers. The allowance for credit losses as of December 31, 2023, was $287.

4. Inventory

Inventory, which is made up of finished goods, is recorded at the lower of cost or net realizable value. Cost is determined on the first-in, first-out method. The Company periodically analyzes its inventory levels to identify inventory that has a cost basis in excess of its estimated realizable value and writes down such inventory as appropriate. The inventory balance was $385 and $445 as of June 30, 2024 and December 31, 2023, respectively.

5. Assets for Lease, net

The Company provides financing of certain equipment through operating leases (see Note 14 to the Unaudited Condensed Financial Statements).

Table of Contents

Semler Scientific, Inc.
Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

Assets for lease consist of the following:


	June 30,		December 31,
	2024		2023
Assets for lease	$	2,906	$	3,375
Less: accumulated depreciation		(1,138)		(1,090)
Assets for lease, net	$	1,768	$	2,285

Depreciation expense amounted to $74 and $77 for the three months ended June 30, 2024 and 2023, respectively. Depreciation expense amounted to $151 and $147 for the six months ended June 30, 2024 and 2023, respectively. Reduction to accumulated depreciation for returned and retired items was $50 and $67 for the three months ended June 30, 2024 and 2023, respectively. Reduction to accumulated depreciation for returned and retired items was $104 and $264 for the six months ended June 30, 2024 and 2023, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $130 and $36 for the three months ended June 30, 2024 and 2023, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $319 and $114 for the six months ended June 30, 2024 and 2023, respectively.

6. Property and Equipment, net

Property and equipment, net consists of the following:


	June 30,		December 31,
	2024		2023
Property and equipment, gross	$	1,591	$	1,544
Less: accumulated depreciation		(971)		(824)
Property and equipment, net	$	620	$	720

Depreciation expense amounted to $73 for each of the three months ended June 30, 2024 and 2023, respectively. Depreciation expense amounted to $147 and $132 for the six months ended June 30, 2024 and 2023, respectively

7.Long-Term Investments

Long term investments consist of the following for the periods presented:


	June 30,		December 31,
	2024		2023
Investments in SYNAPS Dx	$	512	$	512
Total long-term investments	$	512	$	512

In September 2020, the Company acquired a promissory note from NeuroDiagnostics Inc., which is doing business as SYNAPS Dx, in the principal amount of $500, $100 of which was retained for expense reimbursement. Subsequently, in December 2020, the Company agreed to convert the promissory note, together with all accrued interest thereon, into shares of preferred stock of SYNAPS Dx as repayment in full of the promissory note. The value of the note exchanged for the shares of preferred stock of SYNAPS Dx held by the Company as of June 30, 2024 and December 31, 2023 was approximately $512.

The investments in SYNAPS Dx were recorded in accordance with ASC 321, Investments – Equity Securities (“ASC 321”), which provides that investments in equity securities in privately-held companies without readily determinable fair values are generally recorded at cost, plus or minus subsequent observable price changes in orderly transactions for identical or similar investments, less impairments. The Company elected the practical expedient permitted by ASC 321 and recorded the above investments on a cost basis. As a part of the assessment for impairment indicators, the Company considers significant deterioration in the earnings performance

Table of Contents

Semler Scientific, Inc.
Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

and overall business prospects of the investee as well as significant adverse changes in the external environment these investments operate. If qualitative assessment indicates the investments are impaired, the fair value of these equity securities would be estimated, which would involve a significant degree of judgement and subjectivity.

The Company qualitatively assessed the investment for impairment in accordance with ASC 321. As of June 30, 2024 and December 31, 2023, the Company determined that there was no impairment for the investment in SYNAPS Dx.

8.Fair Value Measurements

The following table presents fair value hierarchy of the Company’s financial assets measured at fair value on a recurring basis:


	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total
As of June 30, 2024
U.S. Government money market fund accounts	$	3,551	$	—	$	—	$	3,551
(Included in cash and cash equivalents)
Bitcoin investments		54,945		—		—		54,945
(Included in Intangible digital assets)
Investment in debt securities		—		—		5,000		5,000
(Included in short-term notes held for investment)
Total Assets	$	58,496	$	—	$	5,000	$	63,496


	Level 1		Level 2		Level 3		Total
As of December 31, 2023
U.S. Government money market fund accounts	$	41,373	$	—	$	—	$	41,373
(Included in cash and cash equivalents)
U.S. Treasury bill		—		10,494		—		10,494
(Included in cash and cash equivalents)
Investment in debt securities		—		—		4,372		4,372
(Included in notes held for investment)
Total Assets	$	41,373	$	10,494	$	4,372	$	56,239

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the fair value hierarchy under FASB ASC 820, Fair Value Measurement, are described as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 — Inputs other than quoted prices included in Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and

Level 3 — Unobservable inputs that are supported by little or no market activity, which requires the Company to develop its own models.

Table of Contents

Semler Scientific, Inc.
Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

The financial instruments of the Company consist primarily of cash, U.S. government money market fund accounts, trade receivables, trade payables, bitcoins, U.S. treasury bill investments and debt securities. Because carrying values of cash, trade receivables, and payables are equal to or approximate their fair value, the Company excluded them from the leveling requirements. U.S. government money market fund accounts are classified as Level 1 due to their short-term nature, their market interest rates and also based on the fact that they are publicly traded. Bitcoins purchased for investments, which are included in Intangible digital assets are classified as Level 1 as the unadjusted quoted prices in active markets are used for the fair valuation. The Company also invested in non-convertible promissory notes and equity securities in a privately held company, which were recorded on cost basis. See Notes 7 and 9 to the Unaudited Condensed Financial Statements for more information.

The Company's privately held debt security is recorded at fair value on a recurring basis. The estimation of fair value for these investments requires the use of significant unobservable inputs, and as a result, the Company deems these assets as Level 3 within the fair value measurement framework.

As of June 30, 2024, the Company valued the debt security at face value of $5,000 as the issuer of the debt security notified their intention to repay the debt before the maturity date of December 6, 2024. The Company valued the debt security at face value due to the expected repayment. The fair value of the Company’s privately held debt security was estimated at $4,372 as of December 31, 2023.

9.Notes Held for Investment

Notes receivable consists of the following for the periods presented:


	June 30,			December 31,
	2024			2023
Senior secured promissory notes	$	1,000	$	1,000
Secured convertible promissory notes		5,100		4,372
Total notes held for investment	$	6,100	$	5,372

In June 2022, the Company loaned Mellitus an aggregate of $1,000 through the purchase of two senior secured promissory notes that bear interest at a rate of 5% per annum, which mature in three years unless accelerated due to an event of default as provided in the notes. Repayment of notes is secured by a first priority interest in all of Mellitus’ assets. As of June 30, 2024, this note was reclassified to short-term notes held for investments.

In December 2022, the Company entered into a senior convertible promissory note arrangement with Monarch, providing Monarch with up to $5,000 in available funding, which was fully drawn down as of June 30, 2024. The Monarch debt security accrues interest at 10% per annum, payable monthly, and the principal balance is due December 6, 2024. The note together with $100 of transaction expenses is due and payable on the occurrence of an event of default or change of control unless accelerated due to the conversion into preferred stock prior thereto at the option of the Company. The Company has the option to extend the maturity date for two consecutive one-year terms. The Monarch debt security can be converted into Monarch’s shares at the Company’s option upon (a) an equity financing at Monarch, (b) upon a change of control at Monarch, or (c) at the Company’s option at any time prior to the maturity date. If converted upon a change of control, the Company has the right to receive a cash payment equal to the balance of the Monarch debt security or the amount payable upon conversion into Monarch’s shares. The Monarch debt security is redeemable at any time at Monarch’s option or automatically upon an event of default (as defined in the note). Monarch notified the Company of its intention to repay the debt before its maturity. Hence, this note, including transaction fees receivable of $100, was reclassified to short-term notes held for investment as of June 30, 2024. As of December 31, 2023, the note was classified as long-term note held for investment.

The Company made an irrevocable election to account for the Mellitus and Monarch debt securities using the fair value option under ASC 825 – Financial Instruments (“ASC 825”) and will measure the fair value of such debt securities in accordance with ASC 820. The Company made the fair value option election to present the debt securities in their entirety at fair value, which it

Table of Contents

Semler Scientific, Inc.
Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

believes to be preferable to recognizing the host instrument at fair value under ASC 320 and potentially separately recognizing certain embedded features as bifurcated derivatives under ASC 815. As of June 30, 2024 and December 31, 2023, the Company estimated the fair value of the Monarch debt security to be $5,100, which includes transaction fees receivable of $100 and $4,372, respectively.

The Company recognizes interest income on the Monarch debt securities, which is included in interest and dividend income in the Unaudited Condensed Statements of Income. For the three months ended June 30, 2024 and 2023, the Company recognized $133 and $118 of interest income from Monarch and Mellitus notes, respectively, which is included in prepaid expenses and other current assets. For the six months ended June 30, 2024 and 2023, the Company recognized $258 and $227, of interest income from Monarch and Mellitus notes, respectively. Accrued interest is included in prepaid and other current assets. The Company recognizes changes in fair value of the notes in the statements of income separately from the interest income. For the six months ended June 30, 2024, the Company recorded change in fair value of $128.

10.Intangible Digital Assets

On May 28, 2024, the Company announced that its board of directors adopted bitcoin as its primary treasury reserve asset. Under this new treasury strategy, the Company purchases and holds bitcoins for long term investment purposes. The Company accounts for its bitcoin as an indefinite-lived intangible asset in accordance with ASC 350, Intangibles—Goodwill and Other and has ownership of and control over its bitcoin, which are included in Intangible digital assets in the Unaudited Condensed Balance Sheets. As of June 30, 2024, there were no contractual restrictions on the sale of bitcoins.

Bitcoin Investment

The Company early adopted ASU No. 2023-08 in the second quarter of 2024 effective retroactively as of January 1, 2024. See Recently Adopted Accounting Pronouncement in Note 1 to the Unaudited Condensed Financial Statements.

The Company’s bitcoin purchased for investment purpose are initially recorded at cost, inclusive of transaction costs and fees. Subsequently, the Company remeasures its bitcoin investment at fair value at the end of each reporting period with changes recognized in net income through “Other (expense) income, net” in the Company’s Unaudited Condensed Statements of Income. As of June 30, 2024, the Company held approximately 877 bitcoins with a cost basis of $60,000 (all of which were purchases in the quarter ended June 30, 2024) and a fair value of $54,945.

Table of Contents

Semler Scientific, Inc.
Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

Reconciliation of fair value

The following table represents a reconciliation of the fair values of the Company’s Intangible digital assets held:


	For the		For the
	Three-Months		Six-Months
	Period Ended		Period Ended
	June 30, 2024		June 30, 2024

Intangible digital assets held:
Beginning balance at fair value	$	—	$	—
Additions		60,000		60,000
Dispositions		—		—
Unrealized gain, net		87		87
Unrealized loss, net		(5,142)		(5,142)
Ending Balance	$	54,945	$	54,945

11. Other Non-current assets

Other non-current assets consist of the following for the periods presented:


	June 30,		December 31,
	2024		2023
Other	$	127	$	270
Total other non-current assets	$	127	$	270

Other includes right-of-use assets (“ROU”) of $108 and long-term deposits of $19 as of June 30, 2024. As of December 31, 2023, ROU asset of $150, miscellaneous receivable of $100 and long term deposits balances of $20, respectively.

12.Accrued Expenses

Accrued expenses consist of the following:


	June 30,		December 31,
	2024		2023
Compensation	$	2,697	$	2,008
Accrued Taxes		1,708		1,991
Miscellaneous Accruals		681		503
Total Accrued Expenses	$	5,086	$	4,502

13.Concentration of Credit Risk

Credit risk is the risk of loss from amounts owed by the financial counterparties. Credit risk can occur at multiple levels; as a result of broad economic conditions, challenges within specific sectors of the economy, or from issues affecting individual companies. Financial instruments that potentially subject the Company to credit risk consist of cash, bitcoins and accounts receivable.

Table of Contents

Semler Scientific, Inc.
Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

The Company maintains cash with major financial institutions. The Company’s cash consists of bank deposits held with banks that, at times, exceed federally insured limits. As of June 30, 2024 and December 31, 2023, the Company held deposits of $3,913 and $5,465, respectively. These deposits are largely uninsured. The Company also invested in U.S. government money market funds in the amount of $3,551 as of June 30, 2024. As of December 31, 2023, the Company invested in U.S. treasury bills of $10,494 and U.S.government money markets funds of $41,373. The Company limits its credit risk by dealing with counterparties that are considered to be of high credit quality and by performing periodic evaluations of the relative credit standing of these financial institutions. The Company invested in bitcoins of $60,000 as of June 30, 2024. Fair value of bitcoins as of June 30, 2024 was $54,945.

Management periodically monitors the creditworthiness of its customers and believes that it has adequately provided for exposure to potential credit loss. For the three months ended June 30, 2024, three customers (including affiliates) accounted for 43.6%, 26.6% and 10.8% of the Company’s revenues, respectively. For the three months ended June 30, 2023, two customers (including affiliates) accounted for 37.2% and 33.5% of the Company’s revenues, respectively. For the six months ended June 30, 2024, three customers accounted for 44.3%, 25.6% and 10.6%, of the Company’s revenues, respectively. For the six months ended June 30, 2023, two customers accounted for 39.0% and 33.5%, of the Company’s revenues, respectively. As of June 30, 2024, three customers accounted for 54.3%, 16.0%, and 12.8% of the Company’s accounts receivable, respectively. As of December 31, 2023, three customers accounted for 27.5%, 27.5%, and 23.6% of the Company’s accounts receivable, respectively. The Company’s largest customer in terms of both revenues and accounts receivable in the six months ended June 30, 2024 is a U.S. diversified healthcare company and its affiliated plans.

As of June 30, 2024, three vendors accounted for 24.7%, 21.8% and 11.5% of the Company’s accounts payable, respectively. As of December 31, 2023, two vendors accounted for 24.0% and 10.1% of the Company’s accounts payable, respectively.

14.Leases

Lessee Arrangements

On July 31, 2020, the Company entered into a 61-month lease agreement for office space to use, as necessary, for office administration, lab space and assembly and storage purposes, located in Santa Clara, California. The Company took possession of the leased office space in September 2020, and the lease is effective through September 30, 2025.

As of June 30, 2024, the remaining lease term is 15 months with no options to renew. The Company recognized facilities lease expenses of $22 and $22 for the three months ended June 30, 2024 and 2023, respectively. The Company recognized facilities lease expenses of $44 and $44 for the six months ended June 30, 2024 and 2023, respectively. The following table summarizes the future minimum rental payments required under operating leases that had initial or remaining non-cancelable lease terms greater than one year as of June 30, 2024:


	Total
2024 Remaining period		47
2025		71
Total undiscounted future minimum lease payments		118
Less: present value discount		(2)
Total lease liabilities		116
Lease expense in excess cash payment		(8)
Total ROU asset	$	108

As of June 30, 2024, the Company’s ROU asset was $108, which was recorded on the Company’s balance sheet as other noncurrent assets, and the Company’s current and noncurrent lease liabilities were $92 and $24, respectively, which were recorded on the Company’s balance sheet as other short-term liabilities and other long-term liabilities, respectively. The Company used a discount rate of 2.5% for calculating ROU and lease liability.

Table of Contents

Semler Scientific, Inc.
Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

Lessor Arrangements

The Company enters into contracts with customers for the Company’s QuantaFlo product. The Company has determined these contracts meet the definition of a lease under Topic 842. The lease portfolio primarily consists of operating leases that are short-term in nature (monthly, quarterly or one year, all of which have renewal options). During the three months ended June 30, 2024 and 2023, the Company recognized approximately $6,774 and $9,618, respectively, in lease revenues related to these arrangements, which is included in Revenues on the Unaudited Condensed Statements of Income. During the six months ended June 30, 2024 and 2023, the Company recognized approximately $13,853 and $18,922, respectively, in lease revenues related to these arrangements, which is included in Revenues on the Unaudited Condensed Statements of Income. The Company made an accounting policy election to apply the practical expedient to not separate lease and eligible non-lease components. The lease component is the predominant component and consists of fees charged for use of the equipment over the period of the arrangement. The nature of the eligible non-lease component is primarily software support. The assets associated with these leasing arrangements are included in Assets for Lease, net on the Unaudited Condensed Balance Sheets as Assets (see Note 5).

15.Commitments and Contingencies

Indemnification Obligations

The Company enters into agreements with customers, partners, lenders, consultants, lessors, contractors, sales representatives and parties to certain transactions in the ordinary course of the Company’s business. These agreements may require the Company to indemnify the other party against third party claims alleging that its product infringes a patent or copyright. Certain of these agreements require the Company to indemnify the other party against losses arising from: a breach of representations or covenants, claims relating to property damage, personal injury or acts or omissions of the Company, its employees, agents or representatives. The Company has also agreed to indemnify the directors and certain officers and employees in accordance with the by-laws of the Company. These indemnification provisions will vary based upon the nature and terms of the agreements. In many cases, these indemnification provisions do not contain limits on the Company’s liability, and the occurrence of contingent events that will trigger payment under these indemnities is difficult to predict. As a result, the Company cannot estimate its potential liability under these indemnities. The Company believes that the likelihood of conditions arising that would trigger these indemnities is remote and, historically, the Company has not made any significant payment under such indemnification provisions. Accordingly, the Company has not recorded any liabilities relating to these agreements. In certain cases, the Company has recourse against third parties with respect to the aforesaid indemnities, and the Company believes it maintains adequate levels of insurance coverage to protect the Company with respect to potential claims arising from such agreements.

401(K) Plan

Effective January 1, 2022, the Company started to match 50% of employee’s 401(k) deferral up to a maximum of 6% of the employee’s eligible earnings. For the three month periods ended June 30, 2024 and 2023, the Company matched $71 and $104, respectively. For the six month periods ended June 30, 2024 and 2023, the Company matched $135 and $205, respectively.

Other

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provides for an employee retention payroll tax credit for certain employers, which is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020 and before December 31, 2021. For each employee, wages (including health plan costs) up to $10,000 can be counted to determine the amount of the 50% credit. The Company started claiming this credit on its July 2020 payroll until mid-April 2021 when it determined that it no longer qualified given the change in government restrictions on travel that had impacted its sales activities. The Company’s determination that it qualified to claim the employee retention payroll tax credit is subjective and subject to audit by the Internal Revenue Service (“IRS”). If the IRS were to disagree with the Company’s tax position, it could be required to pay back the retention credit earned, along with penalties. As of June 30, 2024, the

Table of Contents

Semler Scientific, Inc.
Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

Company has collected $1.24 million in this retention credit. No credit was claimed for the three months ended June 30, 2024 and 2023.

Litigation

From time to time in the normal course of business, the Company is subject to various legal matters, such as threatened or pending claims or litigation. Although the results of claims and litigation cannot be predicted with certainty, the Company does not believe it is a party to any claim or litigation the outcome of which, if determined adversely to it, would individually or in the aggregate be reasonably expected to have a material adverse effect on its results of operations or financial condition.

16.Stockholders’ Equity

The Company has 50,000,000 authorized shares of capital stock, all of which are designated as common stock with par value of $0.001 per share. Each holder of shares of common stock is entitled to one vote for each share held.

Issuance of Common Stock

On June 6, 2024, the Company filed a shelf registration statement on Form S-3, and filed amendments thereto on July 11, 2024 and July 31, 2024, under which the Company may, from time to time, once declared effective, offer common stock at-the-market price up to a total amount of $150 million.

At the same time, the Company filed an “at the market” offering prospectus covering the offering, issuance and sale of up to $50.0 million of common stock that may be issued and sold from time to time under the Controlled Equity Offering^SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co once the registration statement is declared effective. Upon termination of the Sales Agreement or suspension or termination of the “at the market” offering prospectus, any amounts included in that prospectus that remain unsold will be available for sale in other offerings pursuant to the base prospectus and a corresponding prospectus supplement, and if no shares are sold under the Sales Agreement, the full $50.0 million of securities may be sold in other offerings pursuant to the base prospectus and a corresponding prospectus supplement once the registration statement is declared effective.

17.Stock Incentive Plan

The Company’s stock-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of its stockholders. Stock options have been granted to employees under the stockholder-approved 2007 Key Person Stock Option Plan (“2007 Plan”) and stock options and restricted stock have been granted to employees under the stockholder-approved 2014 Stock Incentive Plan (“2014 Plan”). As of June 30, 2024, there were no longer any awards outstanding options under the 2007 Plan. Stockholder approval of the 2014 Plan (which expired per its terms on July 24, 2024) became effective in September 2014. The 2014 Plan originally provided that the aggregate number of shares of common stock that may be issued pursuant to awards granted under the 2014 Plan may not exceed 450,000 shares (the “Share Reserve”), however in October 2015, the stockholders approved a 1,500,000 increase to the Share Reserve. In addition, the Share Reserve automatically increases on January 1st of each year, for a period of not more than 10 years, beginning on January 1st of the year following the year in which the 2014 Plan became effective and ending on (and including) January 1, 2024, in an amount equal to 4% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year. The Company’s board of directors may act prior to January 1st of a given year to provide that there will be no January 1st increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be a lesser number of shares of common stock than would otherwise occur. On January 1, 2024, the Share Reserve increased by 275,401. The Share Reserve is currently 3,858,289 shares as of June 30, 2024.

As of June 30, 2024, there were 1,909,361 shares of an aggregate total of 3,858,289 shares available for future stock-based compensation grants under the 2014 Plan.

Table of Contents

Semler Scientific, Inc.
Notes to Condensed Financial Statements

Unaudited

(In thousands of U.S. Dollars, except share and per share data)

Treasury Stock Acquired- Related Party Transaction

On March 14, 2022, the Company’s board of directors authorized a share repurchase program under which it may repurchase up to $20.0 million of its outstanding common stock. Under this program the Company may purchase shares on a discretionary basis from time to time through open market purchases, privately negotiated transactions or other means, including through Rule 10b5-1 trading plans or through the use of other techniques such as accelerated share repurchases. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions and other opportunities that it may have for the use or investment of its cash balances. The repurchase program has no expiration date, does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice. Since the inception of the program, the Company purchased 148,500 shares at a cost of approximately $4,991 as of June 30, 2024.

Stock Awards

The Company granted fully vested stock awards of 6,546 shares of common stock to the non-employee members of the board of directors during the six months ended June 30, 2024. Fair value of these stock awards on grant date was $150. The Company granted fully vested stock awards of 21,923 shares of common stock to non-employee members of the board of directors and employees as compensation during the six months ended June 30, 2023. Net shares issued after deducting taxes paid on these grants were 16,902. Fair value of these stock awards on grant date was $798.

Stock Options

Aggregate intrinsic value represents the difference between the closing market value as of June 30, 2024 of the underlying common stock and the exercise price of outstanding, in-the-money options. A summary of the Company’s stock option activity and related information for the six months ended June 30, 2024 is as follows: