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Leases - Lessee Arrangements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Leases
Remaining lease term	1 year 2 months
Options to renew	false
Lease expenses	$ 68	$ 69
Future minimum rent expense for 2020	64
Future minimum rent expense for 2021	$ 11

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current Assets:
Cash	$ 7,741	$ 3,284
Trade accounts receivable, net of allowance for doubtful accounts of $36 and $52, respectively	3,486	2,801
Prepaid expenses and other current assets	216	153
Total current assets	11,443	6,238
Assets for lease, net	2,079	1,243
Property and equipment, net	249	223
Long-term deposits	15	15
Long-term deferred tax assets	4,501
Total assets	18,287	7,719
Current liabilities:
Accounts payable	338	280
Accrued expenses	3,914	2,797
Deferred revenue	955	435
Total current liabilities	5,207	3,512
Long-term liabilities:
Other long-term liabilities	7	11
Total long-term liabilities	7	11
Stockholders' equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 6,556,221, and 6,349,985 shares issued, and 6,531,221 and 6,324,985 shares outstanding (treasury shares of 25,000 and 25,000, respectively)	7	6
Additional paid-in capital	19,400	25,608
Accumulated deficit	(6,334)	(21,418)
Total stockholders' equity	13,073	4,196
Total liabilities and stockholders' equity	$ 18,287	$ 7,719

Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2017	$ 6		$ 23,843	$ (26,432)	$ (2,583)
Balance (in shares) at Dec. 31, 2017	5,902,244	(25,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares to settle related party loan			294		294
Issuance of shares to settle related party loan (in shares)	12,943
Warrant exercises			414		414
Warrant exercises (in shares)	212,517
Stock option exercises			456		$ 456
Stock option exercises (in shares)	222,281				222,281
Stock-based compensation			601		$ 601
Net income				5,014	5,014
Balance at Dec. 31, 2018	$ 6		25,608	(21,418)	4,196
Balance (in shares) at Dec. 31, 2018	6,349,985	(25,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Warrant Repurchase			(6,633)		(6,633)
Warrant exercises (in shares)	36,197
Stock option exercises	$ 1		60		$ 61
Stock option exercises (in shares)	170,039				179,865
Stock-based compensation			365		$ 365
Net income				15,084	15,084
Balance at Dec. 31, 2019	$ 7		$ 19,400	$ (6,334)	$ 13,073
Balance (in shares) at Dec. 31, 2019	6,556,221	(25,000)

Summary of Significant Accounting Policies and Estimates

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies and Estimates

Summary of Significant Accounting Policies and Estimates

2. Summary of Significant Accounting Policies and Estimates

Basis for Presentation

The Company’s financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Use of Estimates

The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses, and related disclosures during the reporting period. Significant items subject to such estimates include revenue recognition, allowance for doubtful accounts, valuation of equipment on lease, deferred tax asset valuation allowance, stock-based compensation and valuation of warrants. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from these estimates.

Revenue Recognition

The Company generates revenues primarily from the rental or license of its vascular testing product, or providing diagnostic testing service to its customers. The Company recognizes revenues from the licensing of its vascular testing product pursuant to agreements that automatically renew each month with revenue recognized on a daily convention basis. The Company’s arrangements with customers for its vascular testing product are normally on a month-to-month basis with fees billed at the rates established in the customer agreement. The Company recognizes revenues for providing diagnostic testing services on a per test basis to customers, as earned. The Company also recognizes revenue for hardware and supplies sales as of the date of shipment.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. The allowance for doubtful accounts is based on management’s assessment of the collectability of accounts. The Company regularly reviews the adequacy of this allowance for doubtful accounts by considering historical experience, the age of the accounts receivable balances, the credit quality of the customers, current economic conditions, and other factors that may affect customers’ ability to pay to determine whether a specific allowance is appropriate. Accounts receivable deemed uncollectable are charged against the allowance for doubtful accounts when identified.

Assets for Lease

Assets for lease are recorded at cost. At December 31, 2019 and 2018, assets for lease consisted of vascular testing devices, which are leased to customers. The cost of such assets for lease is depreciated on a straight-line basis over 36 months for the units outstanding and recorded as cost of revenues.

The Company regularly reviews whether facts and circumstances exist which indicate that the carrying amounts of assets, may not be recoverable or that the useful life of assets are shorter or longer than originally estimated. The Company assesses the recoverability of its assets by comparing the projected undiscounted net cash flows associated with the related assets over their estimated remaining lives against their respective carrying amounts. The Company considers factors such as estimated usage and expected lives of its assets for lease in this analysis. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. At December 31, 2019 and 2018, there were no impairment indicators.

Property and Equipment

Capital assets are recorded at cost. The cost of such capital assets is depreciated on a straight-line basis over a term depending on the assigned category (described below) and recorded as depreciation for capital assets recorded in engineering and product development, sales and marketing and general and administrative expenses.

At December 31, 2019 and 2018, capital assets are classified into one of the following categories:


Category Name		Description

Machinery & Equipment		Manufacturing, R&D, or other non-office equipment

Computer Equipment & Software		Software, computers, monitors, printers and other related equipment.

Furniture & Fixtures		Office equipment and furniture owned by the company

At December 31, 2019 and 2018, capital assets are depreciated based on the following estimated useful life for each category:


Account Name		Useful Life

Machinery & Equipment		Five years

Computer Equipment & Software		Three years

Furniture & Fixtures		Five years

The Company regularly reviews whether facts and circumstances exist which indicate that the carrying amounts of capital assets, may not be recoverable or that the useful life of assets are shorter or longer than originally estimated. The Company assesses the recoverability of its assets by comparing the projected fair value of the related asset over the estimated remaining life against the respective carrying amounts. The Company considers factors such as estimated usage and expected lives of its capital assets in this analysis. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. The Company did not have any impairments to record during either the years ended December 31, 2019 or 2018.

Fair Value of Financial Instruments

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 Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“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.

The financial instruments of the Company consist primarily of cash, accounts receivable, and accounts payable. These items are considered Level 1 due to their short term nature and their market interest rates and are therefore considered a reasonable estimate of fair value at December 31, 2019 and 2018.

Deferred Revenue

Deferred revenue represents amounts billed to or collected from customers for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The full amount is expected to be recognized as revenues within one year from the balance sheet date and, therefore, such deferred amounts have been classified as current liabilities in the balance sheets presented. The Company generally invoices its clients in advance of a rental period with payment due upon receipt of the invoice.

Research and Development

The Company expenses costs related to the research and development associated with the design, development, testing and enhancement of its products and services. Such expenses include salaries and related employee benefits, and fees paid to external service providers.

Stock-Based Compensation

Stock-based compensation expense is measured based on the grant-date fair value of the stock-based awards. The Company recognizes stock-based compensation expense for the portion of each option grant or stock award that is expected to vest over the estimated period of service and vesting. The Company uses the Black-Scholes option pricing model as the method for determining the estimated grant-date fair value of stock options. The Black-Scholes option pricing model requires the use of subjective assumptions which determine the fair value of stock-based awards, including the option’s expected volatility. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the grant.

Employee Benefit Plan

The Company has a savings plan that qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). There were no matching or discretionary employer contributions made to this plan during the years ended December 31, 2019 and 2018.

Income Taxes

The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the expected tax consequences attributable to the differences between financial reporting and the tax bases of existing assets and liabilities and net operating loss (“NOL”) carry forwards, and they are measured using enacted tax rates expected to be in effect when differences are expected to reverse. The U.S. Tax Cuts & Jobs Act of 2017 reduced the U.S. corporate income tax rate to 21%, effective January 1, 2018. In addition, NOLs generated after December 31, 2017 are carried forward indefinitely with yearly NOL utilization limited to 80% of taxable income. A valuation allowance is recorded for loss carry-forwards and other deferred tax assets where it is more likely than not that such loss carry-forward and deferred tax assets will not be realized. The estimate for the valuation allowance for deferred tax assets requires management to make significant estimates and judgments about projected future operating results. If actual results differ from these projections or if management’s expectations of future results change, it may be necessary to adjust the valuation allowance

Recently Issued Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In May 2014, the FASB issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU No. 2014-09”). The amendment in this ASU provides guidance on the revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The core principle of this update provides guidance to identify the performance obligations under the contract(s) with a customer and how to allocate the transaction price to the performance obligations in the contract. It further provides guidance to recognize revenue when (or as) the entity satisfies a performance obligation. This standard replaced most existing revenue recognition guidance. On August 8, 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU No. 2014-09 by one year, and permits early adoption as long as the adoption date is not before the original public entity effective date. Since the issuance of ASU 2014-09, the FASB has issued several amendments that clarify certain points, including ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing (“Topic 606”), ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 Emerging Issues Task Force Meeting, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606. The updated revenue standard allows two methods of adoption: (1) retrospectively to each prior period presented (“full retrospective method”), or (2) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption (“modified retrospective method”). The new standard further requires new disclosures about contracts with customers, including the significant judgments the company has made when applying the guidance. The Company adopted the new standard effective January 1, 2019, using the modified retrospective method. The Company determined that the adoption of this new standard did not have a material impact on its financial statements.

Topic 606 affects revenue recognition for the Company’s variably-priced (i.e., fee per test) license fee contracts and sales of hardware equipment and accessories. Total variably-priced license fees represent approximately $8,927 and $4,759 of revenues for the years ended December 31, 2019 and 2018, respectively. Total sales of hardware and equipment accessories represents approximately $927 and $386 of revenues for the years ended December 31, 2019 and 2018, respectively. Essentially all of the variably-priced license fee contracts are with large healthcare organizations. The initial contract is for a specified time period with automatic renewal each period thereafter until canceled. In case there is a violation of any term of the contract, the Company may deactivate the service remotely, so that the customer cannot continue to use the product. The reusable hardware equipment or accessories may be provided to a customer for a set price and then use of the associated software is billed to the customer monthly based on volume of use. Under this scenario, revenue is recognized when and only when the customer uses the product. The sale of the equipment or accessories is recognized as hardware sales upon shipment to the customer. It was determined that the impact of the new standard has no effect on the way revenue is currently being recognized. The remainder of the revenue is earned from leasing the Company’s testing product for a fixed monthly fee, which is not subject to Topic 606.

In February 2016, the FASB issued ASU No. 2016-02, Leases. This standard, along with other guidance subsequently issued by the FASB (collectively, “ASC 842”), requires lessees to recognize lease assets and liabilities for all leases with lease terms of more than 12 months. The standard makes similar changes to lessor accounting and aligns key aspects of the lessor accounting model with the revenue recognition standard. Presentation of leases within the statements of operations and statements of cash flows will primarily depend on its classification as a finance or operating lease. ASC 842 is effective for the Company in the first quarter of fiscal 2020 with early adoption permitted. The Company adopted ASC 842 on January 1, 2019 using the modified retrospective transition method. Therefore, upon adoption, the Company recognized and measured leases without revising comparative period information or disclosures. The adoption of this standard did not have an impact on the Company's revenue recognition. In addition, the Company has elected to apply the package of practical expedients permitted under the transition guidance within ASC 842 which does not require reassessment of initial direct costs, classiﬁcation of a lease and deﬁnition of a lease which resulted in the Company foregoing a reassessment of (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for any expired or existing leases; and (3) the initial direct costs for an existing lease. See Note 7 for additional information and details of the effects of adopting the new standard.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”). This ASU requires timelier recording of credit losses on loans and other financial instruments held. Instead of reserves based on a current probability analysis, Topic 326 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. All organizations will now use forward-looking information to better inform their credit loss estimates. Topic 326 requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide information about the amounts recorded in the financial statements. In addition, Topic 326 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In April 2019, the FASB issued ASU2019-04 Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments to introduce amendments which will affect the recognition and measurement of financial instruments, including derivatives and hedging. In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326); Targeted Transition Relief. The amendments in this ASU provide entities that have certain instruments within the scope of Subtopic 326-20 with an option to irrevocably elect the fair value option in Subtopic 825-10, applied on an instrument-by-instrument basis for eligible instruments upon adoption of Topic 326. This standard and related amendments are effective for the Company’s fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2023. The Company does not anticipate this new standard will have a material impact on its financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of costs. The ASU specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. This standard is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2020. The Company does not anticipate this new standard will have a material impact on its financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU modify the disclosure requirements on fair value measurements removing the requirements to disclosure amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. In addition, it modified certain disclosures related to Level 3 fair value measurements and added additional disclosures regarding the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. This update is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2020. The Company does not anticipate this new standard to have a material impact on its financial statements.

In November 2019, the FASB issued ASU 2019-08 – Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). The amendments on this update require that an entity measure and classify share-based payment awards granted to a customer by applying the guidance in Topic 718. The amount recorded as a reduction in the transaction price should be based on the grant-date fair value of the share-based payment award. This standard is effective for the Company’s annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2020. The Company does not anticipate this new standard will have a material impact on its financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. This update is effective for the Company’s annual periods beginning after December 15, 2020, including interim periods within those fiscal years. The Company will adopt the new standard in the first quarter of fiscal year 2021. The Company does not anticipate this update to have a material impact on its financial statements.

Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Tax Credit Carryforward [Line Items]
Net change in the valuation allowance	$ (5,337)
Net operating loss carryforwards for federal	10,256
Net operating loss carryforwards for California	$ 5,769
Effective taxable rate	80%
Research and development tax credit carryforwards for federal income tax	$ 732
Unrecognized Tax Benefits	$ 295	$ 218	$ 29
Federal
Tax Credit Carryforward [Line Items]
Operating Loss Carryforwards Expiration Period	2033
Income penalties expense	$ 0	$ 0
Company's tax years beginning for examination	3 years
State
Tax Credit Carryforward [Line Items]
Operating Loss Carryforwards Expiration Period	2032
Company's tax years beginning for examination	4 years

Stockholders' Equity

12 Months Ended

Dec. 31, 2019

Stockholders' Equity

Stockholders' Equity

9. 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.

For the years ended December 31, 2019 and 2018, a total of 1,658,457 and 2,037,661 shares of common stock, respectively, were reserved for issuance upon (i) exercise of common stock warrants, and (ii) the exercise of outstanding stock options, as follows:


	Year ended December 31,
	2019	2018
Common stock warrants	76,875	276,214
Stock options	1,581,582	1,761,447
Total	1,658,457	2,037,661

Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2019

Stockholders' Equity

Schedule of common stock reserved for issuance


	Year ended December 31,
	2019	2018
Common stock warrants	76,875	276,214
Stock options	1,581,582	1,761,447
Total	1,658,457	2,037,661

Income Taxes - Summary of components of the (benefit) provision for income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Current tax provision:
Federal	$ 0	$ 0
State	118	26
Subtotal current tax expense	118	26
Deferred tax provision:
Federal	(3,645)	0
State	(856)	0
Subtotal deferred tax (benefit)	(4,501)	0
Total income tax (benefit) expense	$ (4,383)	$ 26

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2019

Accrued Expenses

Schedule of accrued expenses


	As of December 31,
	2019		2018
Compensation	$	2,803	$	2,442
Accrued Taxes		66		81
Miscellaneous Accruals		1,045		354
Total Accrued Expenses	$	3,914	$	2,797

Net Income Per Share, Basic and Diluted - Summary of Basic and diluted net EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Net Income Per Share, Basic and Diluted
Basic EPS (in shares)	6,440,724	6,079,326
Common stock warrants (in shares)	69,068	191,445
Common stock options (in shares)	1,520,117	1,358,752
Diluted EPS (in shares)	8,029,909	7,629,523
Net Income - Basic EPS	$ 15,084	$ 5,014
Net Income - Common stock warrants	0	0
Net Income - Common stock options	0	0
Net Income - Diluted EPS	$ 15,084	$ 5,014
Basic EPS (in dollars per share)	$ 2.34	$ 0.82
Diluted EPS (in dollars per share)	$ 1.88	$ 0.66

Income Taxes - Summary of Deferred tax assets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Net operating loss carryforwards	$ 2,646	$ 3,864
Deferred revenue	233	106
Depreciation and amortization	14	45
Stock based compensation	751	670
Accrual and reserves	145	119
Research and development credits, net of tax reserve	711	533
Other	1	0
Total gross deferred tax assets	4,501	5,337
Less valuation allowance	0	(5,337)
Net deferred tax assets	$ 4,501	$ 0

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Taxes

Income Taxes

12. Income Taxes

The components of the (benefit) provision for income taxes are as follows:


	2019		2018
Current tax provision:
Federal	$	—	$	—
State		118		26
Subtotal current tax expense		118		26
Deferred tax provision:
Federal		(3,645)		—
State		(856)		—
Subtotal deferred tax (benefit)		(4,501)		—
Total income tax (benefit) expense	$	(4,383)	$	26

A summary of the differences between the Company’s effective income tax rate and the federal statutory income tax rate for the years ended December 31, 2019 and 2018 are as follows:


	2019		2018
Federal statutory rate	21.00	%	21.00	%
State income tax rate, net of federal benefit	1.83	%	0.95	%
Change in valuation allowance	(49.89)	%	(2.28)	%
Stock-based compensation	(13.12)	%	(13.61)	%
Permanent Items	0.40	%	0.42	%
Other	(1.18)	%	(5.97)	%
Effective income tax rate	(40.96)	%	0.51	%

Deferred tax assets are comprised of the following at December 31:


	2019		2018
Net operating loss carryforwards		2,646		3,864
Deferred revenue		233		106
Depreciation and amortization		14		45
Stock based compensation		751		670
Accrual and reserves		145		119
Research and development credits, net of tax reserve		711		533
Other		1		—
Total gross deferred tax assets		4,501		5,337
Less valuation allowance		—		(5,337)
Net deferred tax assets	$	4,501	$	—

The net change in the valuation allowance for December 31, 2019 was ($5,337). In assessing the realizability of deferred tax assets, management determined there was sufficient positive evidence that it was more likely than not that the federal and state NOL carryforwards and other related deferred tax assets would be realized and therefore, released the valuation allowance against the deferred tax assets.

Federal and California tax laws impost significant restrictions on the utilization of NOL carryforwards in the event of a change in ownership of the Company, as defined by Internal Revenue Code Section 382 (“Section 382”). The Company has completed a formal Section 382 study for the period January 1, 2012 through June 30, 2019 and believed a change in ownership has occurred. The Company has NOL carryforwards for federal and California income tax purposes of approximately $10,256 and $5,769, respectively, as of December 31, 2019. The federal NOL carryforwards, if not utilized, will expire beginning in [2033]. The state NOL carryforwards, if not utilized, will expire beginning in [2032]. Under The U.S. Tax Cuts & Jobs Act, passed into law in December 2017, effective January 1, 2018, NOLs generated after December 31, 2017 will be carried forward indefinitely with the yearly NOL utilization limited to 80% of taxable income. The Company has research and development (“R&D”) tax credit carryforwards for federal income tax purposes of approximately $732 as of December 31, 2019. The federal R&D credit carryforward, if not utilized will expire beginning in 2032.

ASC Topic No. 740. requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any tax benefit can be recorded in the financial statements. The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:


	Gross		Gross
	Unrecognized		Unrecognized
	Tax Benefits 2019		Tax Benefits 2018
Unrecognized tax benefits – January 1	$	218	$	29
Gross increases related to prior tax positions		—		126
Gross increases related to current tax positions		77		62
Unrecognized tax benefits – December 31	$	295	$	218

As of December 31, 2019, and 2018, the Company had $295 and $218, respectively, unrecognized tax benefits and no adjustments to liabilities or operations that were required for uncertain tax positions under ASC 740‑10. The Company’s practice is to recognize interest and penalty expenses related to uncertain tax positions in income tax expense, which was zero for the years ended December 31, 2019 and 2018. The Company files income tax returns in the U.S. federal and several state tax jurisdictions.

The Company’s tax years beginning in 2015 remain open for examination by the state tax authorities for four years. The Company's tax years beginning in 2016 remain open for examination by the federal tax authorities for three years. Tax years beginning in 2012 will remain open for examination from the date of utilization of any NOL or credits. The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized tax benefits will increase or decrease within 12 months of the year-ended December 31, 2019.

Income Taxes - Summary of activity related to the Company's gross unrecognized tax benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Unrecognized tax benefits:
Unrecognized tax benefits - January 1	$ 218	$ 29
Gross increases related to prior tax positions	0	126
Gross increases related to current tax positions	77	62
Unrecognized tax benefits - December 31	$ 295	$ 218

Leases	12 Months Ended
Leases	Dec. 31, 2019
Leases
Leases	7. Leases Lessee Arrangements The Company leases facilities under a long term lease arrangement that has been determined to be an operating lease under new lease accounting standard that would require the Company to reflect a right of use (“ROU”) lease asset and lease liabilities associated with this lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As of December 31, 2019, the remaining lease term is one year and two months with no options to renew. Upon adoption of ASC 2016-02, in accordance with the elected practical expedient transition rules, the ROU asset and liability related to this lease was immaterial. The Company recognized facilities lease expenses of $68 and $69 for the years ended December 31, 2019 and 2018, respectively. Future minimum rent expense for 2020 and 2021 is $64 and $11, respectively. 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). The Company allocates the consideration in a bundled contract with its customers based on relative standalone selling prices of the lease and non-lease components. 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 separately identified in the Balance Sheet as Assets for Lease and separately disclosed in Note 3. During the year ended December 31, 2019, the Company recognized approximately $22,858 in lease revenue related to these arrangements, which is included in revenue on the Statements of Income.

Assets for Lease, net (Tables)

12 Months Ended

Dec. 31, 2019

Assets for Lease, net

Schedule of assets for lease


	As of December 31,
	2019		2018
Assets for lease	$	3,374	$	2,218
Less: accumulated depreciation		(1,295)		(975)
Assets for lease, net	$	2,079	$	1,243

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 31, 2019
Commitments and Contingencies.
Commitments and Contingencies	8. 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 of the 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 had 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.

Warrant Repurchase - Related Party (Details) - USD ($) $ / shares in Units, $ in Thousands	Nov. 06, 2019	May 03, 2019	Dec. 31, 2019	Dec. 31, 2018
Warrant Repurchase
Shares of common stock held			6,531,221	6,324,985
Warrant Repurchase Agreement \| Murphy Chutorian Family Trust
Warrant Repurchase
Repurchase of warrant to acquire shares		65,542
Warrant exercise price		$ 4.50
Warrant expiration date		Jul. 31, 2023
Warrant aggregate purchase price	$ 3,946	$ 2,687
Repurchase of warrants to acquire shares	93,797
Warrant Repurchase Agreement \| Murphy Chutorian Family Trust \| Warrants
Warrant Repurchase
Warrant exercise price	$ 4.00
Shares of common stock held	16,875
Warrant Repurchase Agreement \| Murphy Chutorian Family Trust \| Common Stock
Warrant Repurchase
Warrant exercise price	$ 4.50
Shares of common stock held	60,000
Warrant Repurchase Agreement \| Murphy Chutorian Family Trust \| Minimum
Warrant Repurchase
Aggregate purchase price	$ 2.00
Warrant Repurchase Agreement \| Murphy Chutorian Family Trust \| Maximum
Warrant Repurchase
Aggregate purchase price	$ 4.50

Concentration of Credit Risk (Details) $ in Thousands	12 Months Ended
Concentration of Credit Risk (Details) $ in Thousands	Dec. 31, 2019 USD ($) item customer	Dec. 31, 2018 USD ($) item customer
Concentration of Credit Risk
Allowance for doubtful accounts \| $	$ 36	$ 52
Customer concentration risk \| Revenue
Concentration of Credit Risk
Number of customers	3	2
Customer concentration risk \| Revenue \| Customer one
Concentration of Credit Risk
Concentration risk percentage	49.40%	52.00%
Customer concentration risk \| Revenue \| Customer two
Concentration of Credit Risk
Concentration risk percentage	13.20%	19.50%
Customer concentration risk \| Revenue \| Customer three
Concentration of Credit Risk
Concentration risk percentage	12.50%
Customer concentration risk \| Accounts receivable
Concentration of Credit Risk
Number of customers	3	2
Customer concentration risk \| Accounts receivable \| Customer one
Concentration of Credit Risk
Concentration risk percentage	55.90%	43.50%
Customer concentration risk \| Accounts receivable \| Customer two
Concentration of Credit Risk
Concentration risk percentage	17.60%	40.40%
Customer concentration risk \| Accounts receivable \| Customer three
Concentration of Credit Risk
Concentration risk percentage	12.00%
Vendor concentration risk \| Accounts payable
Concentration of Credit Risk
Number of vendors \| item	2	2
Vendor concentration risk \| Accounts payable \| Vendor one
Concentration of Credit Risk
Concentration risk percentage	15.90%	11.00%
Vendor concentration risk \| Accounts payable \| Vendor two
Concentration of Credit Risk
Concentration risk percentage	14.10%	10.80%

Stock Option Plan - Summary of assumptions fair value of the options granted is estimated on the date of grant using the Black-Scholes pricing model (Details)	12 Months Ended
	Dec. 31, 2018
Stock Option Plan
Expected term (in years)	5 years
Risk free interest rate	2.20%
Expected volatility	99.00%
Expected dividend rate	0.00%

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2019	Feb. 28, 2020	Jun. 30, 2019
Document and Entity Information
Entity Registrant Name	Semler Scientific, Inc.
Entity Central Index Key	0001554859
Trading Symbol	smlr
Current Fiscal Year End Date	--12-31
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		6,534,076
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Public Float			$ 171,150,529.52

Property and Equipment, net (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Property and Equipment, net
Capital assets	$ 636	$ 457
Less: accumulated depreciation	(387)	(234)
Total	$ 249	$ 223

Summary of Significant Accounting Policies and Estimates (Policies)

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies and Estimates

Basis of Presentation

Basis for Presentation

The Company’s financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Use of Estimates

Revenue Recognition

Accounts Receivable and Allowance for Doubtful Accounts

Assets for Lease

Property and Equipment

At December 31, 2019 and 2018, capital assets are classified into one of the following categories:


Category Name		Description

Machinery & Equipment		Manufacturing, R&D, or other non-office equipment

Computer Equipment & Software		Software, computers, monitors, printers and other related equipment.

Furniture & Fixtures		Office equipment and furniture owned by the company

At December 31, 2019 and 2018, capital assets are depreciated based on the following estimated useful life for each category:


Account Name		Useful Life

Machinery & Equipment		Five years

Computer Equipment & Software		Three years

Furniture & Fixtures		Five years

Fair Value of Financial Instruments

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

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

Deferred revenue

Deferred Revenue

Research and Development

Stock-Based Compensation

Employee Benefit Plan

Income Taxes

Recently Issued Accounting Pronouncements

Accounting Pronouncements Recently Adopted

Accounting Pronouncements Not Yet Adopted

Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Balance Sheets
Allowance for doubtful accounts on trade accounts receivable (in dollars)	$ 36	$ 52
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	6,556,221	6,349,985
Common stock, shares outstanding	6,531,221	6,324,985
Treasury stock, shares	25,000	25,000

The Company	12 Months Ended
The Company	Dec. 31, 2019
The Company
The Company	1. The Company Semler Scientific, Inc. (the “Company”) was incorporated in the State of Oregon on August 9, 2007, established C-corporation status in 2012, and reincorporated as a Delaware corporation during 2013. The Company is a company providing technology solutions to improve the clinical effectiveness and efficiency of healthcare providers. In 2011, the Company began commercializing its first patented and U.S. Food and Drug Administration (“FDA”) cleared product, which measured arterial blood flow in the extremities to aid in the diagnosis of peripheral arterial disease (“PAD”). In March 2015, the Company received FDA 510(k) clearance for the next generation version of its product, QuantaFlo®, which the Company commercially launched in August 2015. The Company has one operating segment and generates revenues domestically primarily through direct licensing to direct customers. The Company is based in San Jose, California.

Stockholders' Equity - Additional Information (Details) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Stockholders' Equity
Common stock, shares authorized	50,000,000	50,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Number of shares in reserve	1,658,457	2,037,661

Stock Option Plan (Tables)

12 Months Ended

Dec. 31, 2019

Stock Option Plan

Schedule of stock option activity


	Options Outstanding
				Weighted
	Number of	Weighted		Average
	Stock	Average		Remaining	Aggregate
	Options	Exercise		Contractual	Intrinsic Value
	Outstanding	Price		Term (In Years)	(In Thousands)
Balance, December 31, 2017	1,855,138	$	2.69	7.48	$	9,850
Options granted	135,000		8.00	—		—
Options exercised	(222,281)		2.05	—		—
Options forfeited/cancelled	(6,410)		3.44	—		—
Balance, December 31, 2018	1,761,447	$	3.18	6.84	$	55,000
Options exercised	(179,865)		2.72	—		—
Balance, December 31, 2019	1,581,582	$	3.23	5.86	$	70,827
Exercisable as of December 31, 2018	1,481,591	$	2.83	6.57	$	46,780
Exercisable as of December 31, 2019	1,477,020	$	3.06	5.73	$	66,389

Schedule of assumptions used to determining the fair value of stock options


	Year ended December 31, 2018
Expected term (in years)	5
Risk-free interest rate	2.2	%
Expected volatility	99.0	%
Expected dividend rate	0	%

Schedule of stock-based compensation


	Year ended December 31,
	2019		2018
Cost of Revenues	$	1	$	2
Engineering and Product Development		16		36
Sales and Marketing		46		92
General and Administrative		302		471
Total	$	365	$	601

Accrued Expenses - Summary of accrued expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Accrued Expenses
Compensation	$ 2,803	$ 2,442
Accrued Taxes	66	81
Miscellaneous Accruals	1,045	354
Total Accrued Expenses	$ 3,914	$ 2,797

Stock Option Plan

12 Months Ended

Dec. 31, 2019

Stock Option Plan

Stock Option Plan

11. Stock Option 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”) or the stockholder-approved 2014 Stock Incentive Plan (“2014 Plan”). Stockholder approval of the 2014 Plan 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. The Share Reserve is currently 2,783,616 shares for the year ending December 31, 2019.

In light of stockholder approval of the 2014 Plan, the Company no longer grants equity awards under the 2007 Plan. As of December 31, 2019, there were no shares available for future stock-based compensation grants under the 2007 Plan and 997,163 shares of an aggregate total of 2,783,616 shares available for future stock-based compensation grants under the 2014 Plan.

Aggregate intrinsic value represents the difference between the closing market value as of December 31, 2019 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 2019 and 2018 is as follows:


	Options Outstanding
				Weighted
	Number of	Weighted		Average
	Stock	Average		Remaining	Aggregate
	Options	Exercise		Contractual	Intrinsic Value
	Outstanding	Price		Term (In Years)	(In Thousands)
Balance, December 31, 2017	1,855,138	$	2.69	7.48	$	9,850
Options granted	135,000		8.00	—		—
Options exercised	(222,281)		2.05	—		—
Options forfeited/cancelled	(6,410)		3.44	—		—
Balance, December 31, 2018	1,761,447	$	3.18	6.84	$	55,000
Options exercised	(179,865)		2.72	—		—
Balance, December 31, 2019	1,581,582	$	3.23	5.86	$	70,827
Exercisable as of December 31, 2018	1,481,591	$	2.83	6.57	$	46,780
Exercisable as of December 31, 2019	1,477,020	$	3.06	5.73	$	66,389

The total compensation cost related to unvested stock option awards not yet recognized was $435 as of December 31, 2019. The weighted average period over which the total unrecognized compensation cost related to these unvested stock awards will be recognized is 1.03 years. The total number of unvested shares was 104,563 and 279,856 as of December 31, 2019 and 2018, respectively. The total estimated grant date fair value of unvested options was $435 and $1,038 as of December 31, 2019 and 2018, respectively. The total estimated grant date fair value of options vested during the years ended December 31, 2019 and 2018 was $365 and $601, respectively. There were no options granted or forfeited during the year ended December 31, 2019. The weighted average grant date fair value of options granted during the year ended December 31, 2018 is $5.97 per share or an aggregate grant date fair value of $806. The weighted average grant date fair value of options forfeited during the year ended December 31, 2018 was $1.42.

On January 2, 2018 the Compensation Committee of the Company’s Board of Directors granted, and the full Board ratified, an option to acquire an aggregate of 125,000 shares under the 2014 Plan to the Company’s CEO. This option vests 25% on the one-year anniversary of the grant date and monthly thereafter for 36 months, such that the option is vested in full on the four-year anniversary of the grant date. On January 2, 2018 the Company’s Compensation Committee granted, and the full Board ratified, options to each of the then-seated non-employee Directors to acquire 5,000 shares, for an aggregate of 10,000 shares, under the 2014 Plan. These options vest on the one-year anniversary of their grant date. On February 28, 2018 the Compensation Committee of the Company’s Board of Directors accelerated the vesting on stock options issued to consultants such that all unvested shares were vested on that date. This resulted in a one-time expense of $49 during year ended December 31, 2018.

Determining the Fair Value of Stock Options

The fair value of the options granted is estimated on the date of grant using the Black-Scholes pricing model and the following assumptions for the periods presented:


	Year ended December 31, 2018
Expected term (in years)	5
Risk-free interest rate	2.2	%
Expected volatility	99.0	%
Expected dividend rate	0	%

The assumptions are based on the following for each of the years presented:

Valuation Method — The Company estimates the fair value of its stock options using the Black-Scholes option pricing model.

Expected Term — The Company estimates the expected term consistent with the simplified method identified by the Securities and Exchange Commission (“SEC”). The Company elected to use the simplified method because of its limited history of stock option exercise activity and its stock options meet the criteria of the “plain-vanilla” options as defined by the SEC. The simplified method calculates the expected term as the average of the vesting and contractual terms of the award.

Volatility — The Company derives this number from the historical stock volatilities of the Company’s stock over a period approximately equal to the expected term of the options.

Risk-free Interest Rate — The risk-free interest rate is based on median U.S. Treasury zero coupon issues with remaining terms similar to the expected term on the options.

Expected Dividend — The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, used an expected dividend yield of zero in the valuation model.

The Company has recorded an expense of $365 and $601 as it relates to stock-based compensation for the years ended December 31, 2019 and 2018, respectively, which was allocated as follows based on the role and responsibility of the recipient in the Company:


	Year ended December 31,
	2019		2018
Cost of Revenues	$	1	$	2
Engineering and Product Development		16		36
Sales and Marketing		46		92
General and Administrative		302		471
Total	$	365	$	601

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

Schedule of components of the (benefit) provision for income taxes


	2019		2018
Current tax provision:
Federal	$	—	$	—
State		118		26
Subtotal current tax expense		118		26
Deferred tax provision:
Federal		(3,645)		—
State		(856)		—
Subtotal deferred tax (benefit)		(4,501)		—
Total income tax (benefit) expense	$	(4,383)	$	26

Schedule of differences between the Company's effective income tax rate and the Federal statutory income tax rate


	2019		2018
Federal statutory rate	21.00	%	21.00	%
State income tax rate, net of federal benefit	1.83	%	0.95	%
Change in valuation allowance	(49.89)	%	(2.28)	%
Stock-based compensation	(13.12)	%	(13.61)	%
Permanent Items	0.40	%	0.42	%
Other	(1.18)	%	(5.97)	%
Effective income tax rate	(40.96)	%	0.51	%

Schedule of deferred tax assets


	2019		2018
Net operating loss carryforwards		2,646		3,864
Deferred revenue		233		106
Depreciation and amortization		14		45
Stock based compensation		751		670
Accrual and reserves		145		119
Research and development credits, net of tax reserve		711		533
Other		1		—
Total gross deferred tax assets		4,501		5,337
Less valuation allowance		—		(5,337)
Net deferred tax assets	$	4,501	$	—

Schedule of activity related to unrecognized tax benefits


	Gross		Gross
	Unrecognized		Unrecognized
	Tax Benefits 2019		Tax Benefits 2018
Unrecognized tax benefits – January 1	$	218	$	29
Gross increases related to prior tax positions		—		126
Gross increases related to current tax positions		77		62
Unrecognized tax benefits – December 31	$	295	$	218

Warrant Repurchase - Related Party	12 Months Ended
Warrant Repurchase - Related Party	Dec. 31, 2019
Warrant Repurchase - Related Party
Warrant Repurchase - Related Party	10. Warrant Repurchases – Related Party On May 3, 2019, the Company entered into a warrant purchase agreement (the “May Repurchase Agreement”), with the Murphy-Chutorian Family Trust U/D/T dated January 13, 1997 (the “Murphy-Chutorian Family Trust”), of which Dr. Murphy-Chutorian, the Company’s director and chief executive officer is co-Trustee with his spouse and of which he is a beneficiary. Pursuant to the May Repurchase Agreement, the Company repurchased a warrant to acquire 65,542 shares of its common stock (the “May Repurchase Warrant”), held by the Murphy-Chutorian Family Trust, which warrant had an exercise price equal to $4.50 per share and an expiration date of July 31, 2023, at an aggregate purchase price of $2,687. The purchase price reflects the difference between the aggregate exercise price of the May Repurchase Warrant and the aggregate fair market value of the shares underlying the May Repurchase Warrant, based on the last trade price of the Company’s common stock on May 3, 2019, the date of the May Repurchase Agreement. Following this repurchase, the May Repurchased Warrant was cancelled and is no longer issued and outstanding. On November 6, 2019, the Company entered into a warrant purchase agreement (the “November Repurchase Agreement”), with the Murphy-Chutorian Family Trust. Pursuant to the November Repurchase Agreement, the Company repurchased warrants to acquire an aggregate of 93,797 shares of its common stock (collectively, the “November Repurchase Warrants”), held by the Murphy-Chutorian Family Trust, which warrants had exercise prices ranging from $2.00 to $4.50 per share and an expiration date of July 31, 2023, at an aggregate purchase price of $3,946. The purchase price reflects the difference between the aggregate exercise price of the November Repurchase Warrants and the aggregate fair market value of the shares underlying the November Repurchase Warrants, based on the last trade price of the Company’s common stock on November 6, 2019, the date of the November Repurchase Agreement. Following this repurchase, the November Repurchased Warrants were cancelled and are no longer issued and outstanding. Following these repurchases, the Murphy-Chutorian Family Trust holds warrants to acquire 16,875 shares of the Company’s common stock at an exercise price of $4.00 per share, and 60,000 shares of the Company’s common stock at an exercise price of $4.50 per share, all of which are exercisable and expire July 31, 2023.

Property and Equipment, net (Tables)

12 Months Ended

Dec. 31, 2019

Property and Equipment, net

Schedule of capital assets


	As of December 31,
	2019		2018
Capital assets	$	636	$	457
Less: accumulated depreciation		(387)		(234)
Capital assets, net	$	249	$	223

Statements of Income - USD ($) $ in Thousands	12 Months Ended
Statements of Income - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statements of Income
Revenues	$ 32,767	$ 21,491
Operating expenses:
Cost of revenues	3,661	2,703
Engineering and product development	2,479	2,085
Sales and marketing	8,965	7,202
General and administrative	6,954	4,159
Total operating expenses	22,059	16,149
Income from operations	10,708	5,342
Interest income (expense)	2	(59)
Related party interest expense		(239)
Other expense	(9)	(4)
Other expense	(7)	(302)
Pre-tax net income	10,701	5,040
Income tax (benefit) provision	(4,383)	26
Net income	$ 15,084	$ 5,014
Net income per share, basic	$ 2.34	$ 0.82
Weighted average number of shares used in computing basic income per share	6,440,724	6,079,326
Net income per share, diluted	$ 1.88	$ 0.66
Weighted average number of shares used in computing diluted income per share	8,029,909	7,629,523

Net Income Per Share, Basic and Diluted

12 Months Ended

Dec. 31, 2019

Net Income Per Share, Basic and Diluted

Net Income Per Share, Basic and Diluted

13. Net Income Per Share, Basic and Diluted

Basic earnings per share (“EPS”) represent net income attributable to common shareholders divided by the weighted average number of common shares outstanding during the measurement period. Diluted EPS represents net income attributable to common shareholders divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period using the treasury stock method. As of December 31, 2019, there are no warrants or options outstanding that are antidilutive.

Basic and diluted net EPS is calculated as follows:


	For the year ended December 31,
	2019					2018
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic EPS	6,440,724	$	15,084	$	2.34	6,079,326	$	5,014	$	0.82
Common stock warrants	69,068		—		—	191,445		—		—

Common stock options	1,520,117		—		—	1,358,752		—		—
Diluted EPS	8,029,909	$	15,084	$	1.88	7,629,523	$	5,014	$	0.66

Summary of Significant Accounting Policies and Estimates (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Depreciation method	straight-line basis
Description of assets for lease	assets for lease is depreciated on a straight-line basis over 36 months for the units outstanding and recorded as cost of revenues.
Capital assets depreciated assumed useful life	P36M
Corporate income tax rate effective in 2018	21.00%
Carried forward NOL utilization limit	80%
Revenue from variably-priced license fees	$ 8,927	$ 4,759
Revenue from sales of hardware and equipment accessories	$ 927	$ 386
Machinery & Equipment
Property, Plant and Equipment [Line Items]
Capital assets depreciated assumed useful life	P5Y
Computer Equipment & Software
Property, Plant and Equipment [Line Items]
Capital assets depreciated assumed useful life	P3Y
Furniture & Fixtures
Property, Plant and Equipment [Line Items]
Capital assets depreciated assumed useful life	P5Y

Assets for Lease, net

12 Months Ended

Dec. 31, 2019

Assets for Lease, net

Assets for Lease, net

3. Assets for Lease, net

The Company provides financing of certain equipment through operating leases (see Note 7). Assets for lease consist of the following:


	As of December 31,
	2019		2018
Assets for lease	$	3,374	$	2,218
Less: accumulated depreciation		(1,295)		(975)
Assets for lease, net	$	2,079	$	1,243

Depreciation expense amounted to $483 and $395 for the years ended December 31, 2019 and 2018, respectively. Reduction to accumulated depreciation for returned items was $163 and $120 for the years ended December 31, 2019 and December 31, 2018, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $206 and $200 for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019 and 2018, total assets for lease, net, in use at customer locations were $849 and $640, respectively.

Accrued Expenses

12 Months Ended

Dec. 31, 2019

Accrued Expenses

Accrued Expenses

5. Accrued Expenses

Accrued expenses consist of the following:


	As of December 31,
	2019		2018
Compensation	$	2,803	$	2,442
Accrued Taxes		66		81
Miscellaneous Accruals		1,045		354
Total Accrued Expenses	$	3,914	$	2,797

Income Taxes - Summary of differences between the Company's effective income tax rate and the federal statutory income tax (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Taxes
Federal statutory rate	21.00%	21.00%
State income tax rate, net of federal benefit	1.83%	0.95%
Change in valuation allowance	(49.89%)	(2.28%)
Stock-based compensation	(13.12%)	(13.61%)
Permanent Items	0.40%	0.42%
Other	(1.18%)	(5.97%)
Effective income tax rate	(40.96%)	0.51%

Assets for Lease, net - Summary of assets for lease (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Assets for Lease, net
Assets for lease	$ 3,374	$ 2,218
Less: accumulated depreciation	(1,295)	(975)
Assets for lease, net	$ 2,079	$ 1,243

Net Income Per Share, Basic and Diluted (Tables)

12 Months Ended

Dec. 31, 2019

Net Income Per Share, Basic and Diluted

Schedule of basic and diluted net EPS


	For the year ended December 31,
	2019					2018
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic EPS	6,440,724	$	15,084	$	2.34	6,079,326	$	5,014	$	0.82
Common stock warrants	69,068		—		—	191,445		—		—

Common stock options	1,520,117		—		—	1,358,752		—		—
Diluted EPS	8,029,909	$	15,084	$	1.88	7,629,523	$	5,014	$	0.66

Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
Statements of Cash Flows - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 15,084	$ 5,014
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Amortization of debt discount		22
Accretion of non-cash interest		231
Depreciation	632	503
Deferred tax benefit	(4,501)	0
Loss on disposal of assets for lease	206	200
Allowance for doubtful accounts	48	46
Stock-based compensation expense	365	601
Changes in Operating Assets and Liabilities:
Trade accounts receivable	(734)	(1,503)
Prepaid expenses and other assets	(63)	(42)
Accounts payable	58	(208)
Accrued expenses	1,113	(71)
Deferred revenue	520	(96)
Net Cash Provided by Operating Activities	12,728	4,697
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment	(174)	(138)
Proceeds from sale of property and equipment		1
Purchase of assets for lease	(1,524)	(706)
Net Cash Used in Investing Activities	(1,698)	(843)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of warrants	(6,633)
Proceeds from exercise of warrants		414
Proceeds from exercise of stock options	60	456
Payments of loans payable		(2,897)
Net Cash Used in Financing Activities	(6,573)	(2,027)
INCREASE IN CASH	4,457	1,827
CASH, BEGINNING OF PERIOD	3,284	1,457
CASH, END OF PERIOD	7,741	3,284
Cash paid for interest		575
Cash paid for taxes	$ 123	18
Supplemental disclosure of noncash financing activity:
Issuance of shares to settle related party loan		$ 294

Stock Option Plan - Summary of the Company's stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Number of Stock Options Outstanding
Balance, Beginning	1,761,447	1,855,138
Options granted	0	135,000
Options exercised	(179,865)	(222,281)
Forfeited/Cancelled	0	(6,410)
Balance, Ending	1,581,582	1,761,447	1,855,138
Exercisable, Ending	1,477,020	1,481,591
Weighted Average Exercise Price
Balance, Beginning	$ 3.18	$ 2.69
Granted		8.00
Options exercised	2.72	2.05
Forfeited/Cancelled		3.44
Balance, Ending	3.23	3.18	$ 2.69
Exercisable, Ending	$ 3.06	$ 2.83
Weighted Average Remaining Contractual Term, Options Outstanding (in years)	5 years 10 months 10 days	6 years 10 months 2 days	7 years 5 months 23 days
Weighted Average Remaining Contractual Term, Options Exercisable (in years)	5 years 8 months 23 days	6 years 6 months 26 days
Aggregate Intrinsic Value, Options Outstanding	$ 70,827	$ 55,000	$ 9,850
Aggregate Intrinsic Value, Options Exercisable	$ 66,389	$ 46,780

Property and Equipment, net - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property and Equipment, net
Depreciation expense	$ 149	$ 108

Stock Option Plan - Stock-based compensation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 365	$ 601
Cost of Revenue
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	1	2
Engineering and Product Development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	16	36
Sales and Marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	46	92
General and Administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 302	$ 471

Leases - Lessor Arrangements (Details) $ in Thousands	12 Months Ended
Leases - Lessor Arrangements (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Leases
Lease revenue	$ 22,858

Net Income Per Share, Basic and Diluted - Computation of weighted average shares outstanding of common stock equivalents of anti-dilutive diluted net loss per share (Details)	12 Months Ended
	Dec. 31, 2019 shares
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	0
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	0

Property and Equipment, net

12 Months Ended

Dec. 31, 2019

Property and Equipment, net

Property and Equipment, net

4. Property and Equipment, net

Capital assets consist of the following:


	As of December 31,
	2019		2018
Capital assets	$	636	$	457
Less: accumulated depreciation		(387)		(234)
Capital assets, net	$	249	$	223

Depreciation expense amounted to $149 and $108 for the years ended December 31, 2019 and 2018, respectively.

Stockholders' Equity - Summary of exercise of common stock outstanding stock options (Details) - shares	Dec. 31, 2019	Dec. 31, 2018
Stockholders' Equity
Total	1,658,457	2,037,661
Common stock warrants
Stockholders' Equity
Total	76,875	276,214
Stock options
Stockholders' Equity
Total	1,581,582	1,761,447

Assets for Lease, net - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Assets for Lease, net
Depreciation expense	$ 483	$ 395
Reduction to accumulated depreciation for returned items	163	120
Loss on disposal of assets for lease	(206)	(200)
Total assets for lease, net, in use at customer locations	$ 849	$ 640

Concentration of Credit Risk	12 Months Ended
Concentration of Credit Risk	Dec. 31, 2019
Concentration of Credit Risk
Concentration of Credit Risk	6. 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 and accounts receivable. 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. 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. Management periodically monitors the creditworthiness of its customers and believes that it has adequately provided for any exposure to potential credit loss. For the year ended December 31, 2018, two customers accounted for 52.0% and 19.5% of the Company’s revenue. For the year ended December 31, 2019, three customers accounted for 49.4%, 13.2% and 12.5% of the Company’s revenue. As of December 31, 2018, two customers accounted for 43.5% and 40.4% of the Company’s accounts receivable, respectively. As of December 31, 2019, three customers accounted for 55.9%,17.6% and 12.0% of the Company’s accounts receivable, respectively. As of December 31, 2019 and 2018 the allowance for doubtful accounts was $36 and $52, respectively. As of December 31, 2018, two vendors accounted for 11.0% and 10.8% of the Company’s accounts payable, respectively. As of December 31, 2019, two vendors accounted for 15.9% and 14.1% of the Company’s accounts payable, respectively.

Stock Option Plan - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	12 Months Ended
	Jan. 02, 2018	Oct. 31, 2015	Dec. 31, 2019	Dec. 31, 2018	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost related to non-vested awards			$ 435
Weighted average period of unvested stock awards			1 year 11 days
Total number of unvested shares			104,563	279,856
Total estimated grant date fair value of options non-vested			$ 435	$ 1,038
Total estimated grant date fair value of options vested			$ 365	$ 601
Number of stock option granted			0	135,000
Number of stock option forfeited			0	6,410
Weighted average grant date fair value of options granted				$ 5.97
Aggregate grant date fair value				$ 806
Weighted average grant date fair value of options forfeited				$ 1.42
One-time expense				$ 49
Stock-based compensation expense			$ 365	$ 601
2014 Stock Incentive Plan \| Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares issued pursuant to awards granted under plan			2,783,616		450,000
Number of share reserve increased		1,500,000
Maximum term of stock option grants		10 years
Percentage of shares reserve increased		4.00%
Number of shares available for future stock-based compensation grants			997,163
2014 Stock Incentive Plan \| Options \| CEO
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for future stock-based compensation grants	125,000
Percentage of shares vested on one year anniversary	25.00%
2014 Stock Incentive Plan \| Options \| Non Employee Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares issued pursuant to awards granted under plan	10,000
Number of shares available for future stock-based compensation grants	5,000
Number of years in options fully vested	1 year