0001554859-22-000008 | 10-K | XBRL Viewer

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Condensed Statements of Cash Flows (Parentheticals)	12 Months Ended
Condensed Statements of Cash Flows (Parentheticals)	Dec. 31, 2021 shares
Statements of Cash Flows
Exercised put option of common stock in SYNAPS Dx (in shares)	211,928
Exercised put option for number of common stock of the company (in shares)	40,922

Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
Statements of Cash Flows - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 17,222	$ 14,007
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Depreciation	628	576
Deferred tax expense	408	2,136
Loss on disposal of assets for lease	362	271
Loss on disposal of inventory	1,202
Allowance for doubtful accounts	63	55
Non-cash interest income		(12)
Gain on sale of Mellitus Health Inc. securities		(442)
Stock-based compensation expense	749	253
Changes in Operating Assets and Liabilities:
Trade accounts receivable	(874)	623
Inventory	(1,412)	(303)
Prepaid expenses and other current assets	(2,657)	(1,160)
Other non-current assets	86	(403)
Accounts payable	(234)	339
Accrued expenses	638	(1,235)
Other current and non-current liabilities	(125)	409
Net Cash Provided by Operating Activities	16,056	15,114
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment	(318)	(149)
Payment for long-term note receivable from SYNAPS Dx		(457)
Payment for long-term note receivable from Mellitus Health Inc.		(59)
Purchase of shares of preferred stock from Mellitus Health Inc.		(250)
Payment for long-term note receivable from Mellitus Health Inc.		(1,424)
Proceeds from sale of Mellitus Health Inc.		1,942
Purchase of assets for lease	(507)	(609)
Net Cash Used in Investing Activities	(825)	(1,006)
CASH FLOWS FROM FINANCING ACTIVITIES:
Taxes paid related to settlement of equity awards	(45)
Proceeds from exercise of stock options	58	230
Net Cash Provided by Financing Activities	13	230
INCREASE IN CASH	15,244	14,338
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	22,079	7,741
CASH AND CASH EQUIVALENTS, END OF PERIOD	37,323	22,079
Supplemental Disclosure of Cash Flow Information:
Cash paid for taxes	2,647	285
Long-term note receivable from SYNAPS Dx settled by stock issuance		512
Exchange of SMLR common stock for preferred stock of SYNAPS Dx		2,230
Exercised put option of 211,928 common stock in SYNAPS Dx for 40,922 common stock of the company	$ (2,230)
Long-term note receivable from Mellitus Health Inc. settled by stock issuance		$ 59

Property and Equipment, net (Tables)

12 Months Ended

Dec. 31, 2021

Property and Equipment, net

Schedule of capital assets


	December 31,		December 31,
	2021		2020
Capital assets	$	882	$	786
Less: accumulated depreciation		(488)		(525)
Capital assets, net	$	394	$	261

Stockholders' Equity - Additional Information (Details)	Dec. 31, 2021 Vote $ / shares shares	Dec. 31, 2020 $ / shares shares
Stockholders' Equity
Common stock, shares authorized	50,000,000	50,000,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.001	$ 0.001
Number of votes for each share \| Vote	1
Number of shares in reserve	1,433,120	1,528,295

Leases (Tables)

12 Months Ended

Dec. 31, 2021

Leases

Schedule of future minimum rental payments required under operating leases


	Total
2022	$	87
2023		90
2024		93
2025		71
Thereafter		—
Total undiscounted future minimum lease payments		341
Less: present value discount		(16)
Total lease liabilities		325
Lease expense in excess cash payment		(11)
Total ROU asset	$	314

Long-Term Investments (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Equity Securities without Readily Determinable Fair Value [Line Items]
Long-term investments	$ 821	$ 3,051
Investments in SYNAPS Dx
Equity Securities without Readily Determinable Fair Value [Line Items]
Long-term investments	512	2,742
Investments in Mellitus Health Inc.
Equity Securities without Readily Determinable Fair Value [Line Items]
Long-term investments	$ 309	$ 309

Summary of Significant Accounting Policies and Estimates (Tables)

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies and Estimates

Schedule of estimated useful lives of property and equipment

At December 31, 2021 and 2020, 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

Property and Equipment, net (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Property and Equipment, net
Capital assets	$ 882	$ 786
Less: accumulated depreciation	(488)	(525)
Capital assets, net	$ 394	$ 261

Assets for Lease, net (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Assets for Lease, net
Assets for lease	$ 3,241	$ 3,407
Less: accumulated depreciation	(1,598)	(1,466)
Assets for lease, net	$ 1,643	$ 1,941

Assets for Lease, net

12 Months Ended

Dec. 31, 2021

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 9 to the financial statements). Assets for lease consist of the following:


	December 31,		December 31,
	2021		2020
Assets for lease	$	3,241	$	3,407
Less: accumulated depreciation		(1,598)		(1,466)
Assets for lease, net	$	1,643	$	1,941

Depreciation expense amounted to $442 and $439 for the years ended December 31, 2021 and 2020, respectively. Reduction to accumulated depreciation for returned items was $310 and $268 for the years ended December 31, 2021 and December 31, 2020, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $362 and $271 for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, total assets for lease, net, in use at customer locations were $631 and $736, respectively.

Leases - Lessor Arrangements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Leases
Lease, Practical Expedient, Lessor Single Lease Component [true false]	true
Lease revenue	$ 30,561	$ 25,743

Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit).	Total
Balance at Dec. 31, 2019	$ 7		$ 19,400	$ (6,334)	$ 13,073
Balance (in shares) at Dec. 31, 2019	6,556,221	(25,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Employee stock grant (in shares)	641
Investment in SYNAPS Dx (Note 6)			2,230		2,230
Investment in SYNAPS Dx (Note 6) (shares)	40,922
Stock option exercises			230		$ 230
Stock option exercises (in shares)	127,638				130,162
Stock-based compensation			253		$ 253
Net income				14,007	14,007
Balance at Dec. 31, 2020	$ 7		22,113	7,673	29,793
Balance (in shares) at Dec. 31, 2020	6,725,422	(25,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of put option in SYNAPS Dx (Note 6)			(2,230)		$ (2,230)
Exercise of put option in SYNAPS Dx (Note 6) (in Shares)		(40,922)			40,922
Employee stock grant			512		$ 512
Employee stock grant (in shares)	5,516
Stock option exercises			58		$ 58
Stock option exercises (in shares)	93,442				95,175
Stock-based compensation			192		$ 192
Net income				17,222	17,222
Balance at Dec. 31, 2021	$ 7		$ 20,645	$ 24,895	$ 45,547
Balance (in shares) at Dec. 31, 2021	6,824,380	(65,922)

Summary of Significant Accounting Policies and Estimates (Details)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Federal statutory rate	21.00%	21.00%
Assets for Lease
Property, Plant and Equipment [Line Items]
PPE useful life	36 months
Machinery & Equipment
Property, Plant and Equipment [Line Items]
PPE useful life	5 years	5 years
Computer Equipment & Software
Property, Plant and Equipment [Line Items]
PPE useful life	3 years	3 years
Furniture & Fixtures
Property, Plant and Equipment [Line Items]
PPE useful life	5 years	5 years

Stock Option Plan - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Oct. 31, 2015	Dec. 31, 2021	Dec. 31, 2020	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total number of unvested shares		0
Total estimated grant date fair value of options non-vested		$ 192	$ 253
Number of stock option granted		0	0
Number of stock option forfeited		0	0
Fully vested stock granted		5,516	641
Grant date fair value of stock		$ 557	$ 50
Stock-based compensation expense		$ 749	$ 253
2014 Stock Incentive Plan \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares issued pursuant to awards granted under plan		3,044,865		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		1,215,753
Total number of unvested shares		3,044,865

Long-Term Investments (Tables)

12 Months Ended

Dec. 31, 2021

Long-Term Investments.

Schedule of long term investments


	December 31,		December 31,
	2021		2020
Investments in SYNAPS Dx	$	512	$	2,742
Investments in Mellitus Health Inc.		309		309
Total	$	821	$	3,051

Summary of Significant Accounting Policies and Estimates (Policies)

12 Months Ended

Dec. 31, 2021

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

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, recognition and measurement of current and deferred income taxes, valuation and recognition of investments and valuation of inventory. 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.

Inventory

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.

Assets for Lease

Assets for lease are recorded at cost. At December 31, 2021 and 2020, 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, 2021 and 2020, 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, 2021 and 2020, 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, 2021 and 2020, 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, 2021 or 2020.

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, money market 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, 2021 and 2020. The Company invested in the debt and equity securities of two privately held companies, which was recorded on cost basis. See Note 6 to the financial statements for more information.

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, 2021 and 2020.

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”) carryforwards, and they are measured using enacted tax rates expected to be in effect when differences are expected to reverse. The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) 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.

Statement of Cash Flows

Statement of Cash Flows

Short term and investments that are readily convertible into cash are treated as cash equivalent in the statement of cash flows.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 adopted the new standard prospectively on January 1, 2021 and determined that the adoption of this new accounting guidance did not have a material impact on its financial statements.

In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, investment in equity method and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. This ASU is effective for fiscal years beginning after December 15, 2020. The Company adopted the new standard prospectively on January 1, 2021 and determined that the adoption of this new accounting guidance did not have a material impact on its financial statement.

In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements. This ASU is the final update of the 2019 proposed ASU, Codification Improvements, of which various topics in the Codification are amended, clarified, simplified, or otherwise modified to improve the Codification. The amendments in Section B of this ASU improve the Codification by ensuring that all guidance that requires or provides an option for an entity to provide information in the notes to financial statements is codified in the disclosure section of the Codification. The amendments in Section C of this ASU are varied in nature and may affect the application of the guidance in cases which the original guidance may have been unclear. The amendments in Sections B and C of this ASU are effective for the Company’s annual periods beginning after December 15, 2020, and the amendments should be applied retrospectively, and should be applied at the beginning of the period that includes the adoption date. The Company adopted the new standard retrospectively on January 1, 2021 and determined that the adoption of this new accounting guidance did not have a material impact on its financial statements.

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 ASU No. 2019-04, 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 No. 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 March 2020, FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses standard issued in 2016 (ASU No. 2016-13). The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The issues 1-5 are conforming amendments, which are effective upon issuance of this final update. The amendments related to issue 6 and 7 effect ASU No. 2020-13, Financial instruments – credit losses (Topic 326): measurement of credit losses on financial statements. Effective dates of issue 6 and 7 are the same as the effective date of ASU No.2020-13, The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company's financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (IBORs) and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The ASU can be adopted no later than December 1, 2022, with early adoption permitted. The Company has not yet adopted this ASU and is evaluating the effect of adopting this new accounting guidance.

In August 2020, the FASB issued ASU No. 2020-06, Debt--Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity's Own Equity (Subtopic 815-40). The amendments in this update affect entities that issue convertible instruments and/or contracts in an entity's own equity. For contracts in an entity's own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the current guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment. The Board simplified the settlement assessment by removing the requirements (1) to consider whether the contract would be settled in registered shares, (2) to consider whether collateral is required to be posted, and (3) to assess shareholder rights. Those amendments also affect the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this update affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock by eliminating the beneficial conversion feature model and cash conversion model. As compared with current GAAP, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument. The interest rate of more convertible debt instruments will be closer to the coupon interest rate. This ASU is effective for the Company’s fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company expects the adoption of this ASU will not have material impact on its financial statements.

In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848). This ASU clarifies the scope of Topic 848 so that derivatives affected by the discounting transition due to reference rate reform initiatives are explicitly eligible for certain optional expedients and exceptions in Topic 848. In addition, to efficiently address another emerging issue related reference rate reform and respond to stakeholder feedback on the proposed feedback on the proposed update on this project, the Board decided to clarify that a receive-variable-rate, pay-variable-rate cross-

currency interest rate swap may be considered an eligible hedging instrument in a net investment hedge if both legs of the swap do not have the same repricing intervals and dates as of the result of reference rate reform. The amendments in this update are elective and apply to all entities that have derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The amendments also optionally apply to all entities that designate receive-variable-rate, pay-variable-rate cross-currency interest rate swaps as hedging instruments in net investment hedges that are modified as a result of reference rate reform. An entity may elect to apply the amendments in this update on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The amendments in this update do not apply to contract modifications made after December 31, 2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship (including periods after December 31, 2022). The Company has not yet adopted this ASU and is evaluating the effect of adopting this new accounting guidance.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This update provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. This update is effective for the Company’s fiscal years beginning after December 15, 2021. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company's financial statements.

In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. This update address stakeholders’ concerns by amending the lease classification requirements for lessors to align them with practice under Topic 840. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: i) The lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in paragraphs 842-10-25-2 through 25-3, ii) the lessor would have otherwise recognized a day-one loss. This update is effective for the Company’s fiscal years beginning after December 15, 2021. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Company's financial statements.

Concentration of Credit Risk (Details) $ in Thousands	12 Months Ended
Concentration of Credit Risk (Details) $ in Thousands	Dec. 31, 2021 USD ($) customer item	Dec. 31, 2020 USD ($) customer item
Concentration of Credit Risk
Allowance for doubtful accounts \| $	$ 61	$ 61
Customer concentration risk \| Revenue
Concentration of Credit Risk
Number of customers	2	2
Customer concentration risk \| Revenue \| Customer one
Concentration of Credit Risk
Concentration risk percentage	40.80%	47.20%
Customer concentration risk \| Revenue \| Customer two
Concentration of Credit Risk
Concentration risk percentage	28.60%	22.80%
Customer concentration risk \| Accounts receivable
Concentration of Credit Risk
Number of customers	3	4
Customer concentration risk \| Accounts receivable \| Customer one
Concentration of Credit Risk
Concentration risk percentage	21.90%	31.20%
Customer concentration risk \| Accounts receivable \| Customer two
Concentration of Credit Risk
Concentration risk percentage	20.10%	19.40%
Customer concentration risk \| Accounts receivable \| Customer three
Concentration of Credit Risk
Concentration risk percentage	16.60%	15.70%
Customer concentration risk \| Accounts receivable \| Customer four
Concentration of Credit Risk
Concentration risk percentage		10.40%
Vendor concentration risk \| Accounts payable
Concentration of Credit Risk
Number of vendors \| item	1	2
Vendor concentration risk \| Accounts payable \| Vendor one
Concentration of Credit Risk
Concentration risk percentage	14.00%	15.90%
Vendor concentration risk \| Accounts payable \| Vendor two
Concentration of Credit Risk
Concentration risk percentage		24.30%

Inventory (Details) - USD ($) $ in Thousands	1 Months Ended		12 Months Ended
Inventory (Details) - USD ($) $ in Thousands	Nov. 30, 2021	Sep. 30, 2020	Dec. 31, 2021	Dec. 31, 2020
Inventory
Inventory balance			$ 550	$ 340
Product inventory purchased		$ 1,202
Renewal term (in years)		4 years
Inventory wrote-off amount			$ 1,202
Minimum
Inventory
Royalty on net sales (in percent)		0.00%
Maximum
Inventory
Royalty on net sales (in percent)		10.00%
Private Company #1
Inventory
Other product inventory	$ 0
Inventory wrote-off percentage	100.00%
Inventory wrote-off amount	$ 1,200

Related Party Transactions

12 Months Ended

Dec. 31, 2021

Related Party Transactions

Related Party Transactions

12. Related Party Transactions

In December 2020, the Company transferred and sold its shares of preferred stock and common stock warrants of Mellitus to one of the Company’s significant stockholders, for a cash purchase price of $1,942. See Note 6 to the financial statements for more information.

Income Taxes - Summary of activity related to the Company's gross unrecognized tax benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Unrecognized tax benefits:
Unrecognized tax benefits - January 1	$ 341	$ 295
Gross increases related to prior tax positions	41	1
Gross increases related to current tax positions	94	45
Unrecognized tax benefits - December 31	$ 476	$ 341

Summary of Significant Accounting Policies and Estimates

12 Months Ended

Dec. 31, 2021

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

Revenue Recognition

Accounts Receivable and Allowance for Doubtful Accounts

Inventory

Assets for Lease

Property and Equipment

At December 31, 2021 and 2020, 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, 2021 and 2020, 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

Research and Development

Stock-Based Compensation

Employee Benefit Plan

Income Taxes

Statement of Cash Flows

Short term and investments that are readily convertible into cash are treated as cash equivalent in the statement of cash flows.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Recently Adopted

Accounting Pronouncements Not Yet Adopted

Assets for Lease, net (Tables)

12 Months Ended

Dec. 31, 2021

Assets for Lease, net

Schedule of assets for lease


	December 31,		December 31,
	2021		2020
Assets for lease	$	3,241	$	3,407
Less: accumulated depreciation		(1,598)		(1,466)
Assets for lease, net	$	1,643	$	1,941

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, 2021	Dec. 31, 2020
Number of Stock Options Outstanding
Balance, Beginning		1,451,420	1,581,582
Options exercised		(95,175)	(130,162)
Forfeited/Cancelled		0	0
Balance, Ending	1,581,582	1,356,245	1,451,420
Exercisable, Ending		1,356,245	1,420,368
Weighted Average Exercise Price
Balance, Beginning		$ 3.25	$ 3.23
Options exercised		2.55	2.95
Balance, Ending	$ 3.23	3.30	3.25
Exercisable, Ending		$ 3.30	$ 3.15
Weighted Average Remaining Contractual Term, Options Outstanding (in years)	5 years 10 months 9 days	3 years 11 months 19 days	4 years 10 months 28 days
Weighted Average Remaining Contractual Term, Options Exercisable (in years)		3 years 11 months 19 days	4 years 10 months 13 days
Aggregate Intrinsic Value, Options Outstanding	$ 70,827	$ 119,830	$ 131,714
Aggregate Intrinsic Value, Options Exercisable		$ 119,830	$ 129,039

Stock Option Plan (Tables)

12 Months Ended

Dec. 31, 2021

Stock Option Plan

Schedule of stock option activity


	Options Outstanding
				Weighted
				Average
	Number of	Weighted		Remaining	Aggregate
	Stock Options	Average		Contractual	Intrinsic Value
	Outstanding	Exercise Price		Term (In Years)	(In Thousands)
Balance, December 31, 2019	1,581,582	$	3.23	5.86	$	70,827
Options exercised	(130,162)		2.95
Balance, December 31, 2020	1,451,420	$	3.25	4.91	$	131,714
Options exercised	(95,175)		2.55	—		—
Balance, December 31, 2021	1,356,245	$	3.30	3.97	$	119,830
Exercisable as of December 31, 2020	1,420,368	$	3.15	4.87	$	129,039
Exercisable as of December 31, 2021	1,356,245	$	3.30	3.97	$	119,830

Schedule of stock-based compensation expense


	Year ended December 31,
	2021		2020
Cost of Revenues	$	—	$	—
Engineering and Product Development		32		—
Sales and Marketing		125		—
General and Administrative		592		253
Total	$	749	$	253

Commitments and Contingencies (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Commitments and Contingencies.
Retention credit	$ 1,240

Accrued Expenses

12 Months Ended

Dec. 31, 2021

Accrued Expenses

Accrued Expenses

7. Accrued Expenses

Accrued expenses consist of the following:


	December 31,		December 31,
	2021		2020
Compensation	$	1,754	$	1,524
Accrued Taxes		1,159		861
Miscellaneous Accruals		523		413
Total Accrued Expenses	$	3,436	$	2,798

Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies.

Commitments and Contingencies

10. Commitments and Contingencies

In September 2020, the Company entered into an agreement with a private company to exclusively market and distribute a new product line, which was terminated by mutual consent in November 2021. See Note 4 to the financial statements for more information.

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.

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 the retention credit claimed, along with penalties. As of December 31, 2021, the Company has claimed $1.24 million in this retention credit.

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2021

Accrued Expenses

Schedule of accrued expenses


	December 31,		December 31,
	2021		2020
Compensation	$	1,754	$	1,524
Accrued Taxes		1,159		861
Miscellaneous Accruals		523		413
Total Accrued Expenses	$	3,436	$	2,798

Property and Equipment, net

12 Months Ended

Dec. 31, 2021

Property and Equipment, net

Property and Equipment, net

5. Property and Equipment, net

Capital assets consist of the following:


	December 31,		December 31,
	2021		2020
Capital assets	$	882	$	786
Less: accumulated depreciation		(488)		(525)
Capital assets, net	$	394	$	261

Depreciation expense amounted to $180 and $138 for the years ended December 31, 2021 and 2020, respectively.

Long-Term Investments

12 Months Ended

Dec. 31, 2021

Long-Term Investments.

Long-Term Investments

6. Long Term Investments

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


	December 31,		December 31,
	2021		2020
Investments in SYNAPS Dx	$	512	$	2,742
Investments in Mellitus Health Inc.		309		309
Total	$	821	$	3,051

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 December 31, 2021 and 2020 was approximately $512.

In October 2020, the Company purchased 211,928 shares of common stock of SYNAPS Dx, from certain sellers in exchange for 40,922 shares of the Company’s common stock. The total fair value of the purchase consideration as of December 31, 2020 was approximately $2,230. The Company had the right to, in various circumstances, sell any or all of these shares of common stock back to the sellers in exchange for the shares of the Company’s common stock originally issued to the sellers. These rights were tied to (a) SYNAPS Dx completing a bona fide equity financing, (b) the share price in such financing, (c) the timing of delivery of certain documents to the Company or (d) at the Company’s sole option, at any time between March 31, 2021 and October 8, 2021. On April 1, 2021, the Company exercised its option to “put” these shares of common stock back to the sellers in exchange for the shares of the Company’s common stock originally issued to the sellers.

In October 2020, the Company acquired from a seller a convertible promissory note previously issued by Mellitus Health Inc., (“Mellitus”) to such seller for a purchase price of $59, which represented the $50 principal amount of the note and all accrued and unpaid interest thereon.

Subsequently, in October 2020, the Company purchased $250 of shares of preferred stock of Mellitus, and in connection with such transaction, the convertible promissory note, together with all accrued interest thereon, also converted pursuant to its terms into shares of preferred stock of Mellitus as repayment in full of such convertible promissory note. The value of consideration exchanged for the shares of preferred stock of Mellitus held by the Company as of December 31, 2021 and 2020 was approximately $309.

Also in October 2020, the Company acquired another convertible promissory note directly from Mellitus in the principal amount of $1,500, $100 of which was retained for expense reimbursement, and warrants to purchase common stock of Mellitus. In November 2020, this convertible promissory note, together with all accrued interest thereon, converted pursuant to its terms into shares of preferred stock of Mellitus. In December 2020, the Company transferred and sold such shares of preferred stock and the common stock warrants of Mellitus to a significant stockholder of the Company for a cash purchase price of $1,942. As of December 31, 2020, the Company no longer held the shares acquired in connection with the conversion of such convertible promissory note. The Company recorded $442 in Other income associated with the sale during the year ended December 31, 2020.

In April 2021, the Company entered into an agreement with Mellitus to exclusively market and distribute its product line in the United States, including Puerto Rico, except for selected accounts. The Company is currently developing a marketing plan. Under this distribution agreement, the Company agreed to purchase $2,000 of product licenses and prepaid $2,000 for the license purchases. This prepayment is included in ‘Prepaid expenses and other current assets’ in the balance sheet. Unless terminated early in accordance with its terms, the exclusive distribution agreement will remain in full force and effect until April 1, 2026, and thereafter there is an option for this agreement to be automatically renewed for additional one-year terms. Revenue from these product licenses will be recognized in accordance with ASC 606, Revenue from Contracts with Customers. The Company did not generate any revenue from these product licenses during the year ended December 31, 2021.

The investments in SYNAPS Dx and Mellitus securities that were retained by the Company as of December 31, 2021 were recorded in accordance with ASC 321, Investments – equity securities, 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 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. In accordance with ASC 321, the Company assessed qualitatively for impairment and determined that there was no impairment for these investments in 2021.

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current Assets:
Cash and cash equivalents	$ 37,323	$ 22,079
Trade accounts receivable, net of allowance for doubtful accounts of $61 and $61, respectively	3,619	2,808
Inventory	550	340
Prepaid expenses and other current assets	4,044	1,376
Total current assets	45,536	26,603
Assets for lease, net	1,643	1,941
Property and equipment, net	394	261
Other non-current assets	332	418
Long-term investments	821	3,051
Long-term deferred tax assets	1,946	2,365
Total assets	50,672	34,639
Current liabilities:
Accounts payable	443	677
Accrued expenses	3,436	2,798
Deferred revenue	921	963
Other short-term liabilities	80	76
Total current liabilities	4,880	4,514
Long-term liabilities:
Other long-term liabilities	245	332
Total long-term liabilities	245	332
Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 6,824,380, and 6,725,422 shares issued, and 6,758,458 and 6,700,422 shares outstanding (treasury shares of 65,922 and 25,000, respectively)	7	7
Additional paid-in capital	20,645	22,113
Retained earnings	24,895	7,673
Total stockholders' equity	45,547	29,793
Total liabilities and stockholders' equity	$ 50,672	$ 34,639

Related Party Transactions (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2020
Related Party Transactions
Cash purchase price	$ 1,942	$ 1,942

Stock Option Plan - Stock-based compensation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 749	$ 253
Engineering and Product Development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	32
Sales and Marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	125
General and Administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 592	$ 253

Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Tax Credit Carryforward [Line Items]
Tax credit carryforward	$ 0
Unrecognized Tax Benefits	476	$ 341	$ 295
Interest and penalty expenses related to uncertain tax positions	0	$ 0
Federal
Tax Credit Carryforward [Line Items]
NOL carryforwards	$ 106
Company's tax years beginning for examination	3 years
State
Tax Credit Carryforward [Line Items]
NOL carryforwards	$ 5,746
Company's tax years beginning for examination	4 years

Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Balance Sheets
Allowance for doubtful accounts on trade accounts receivable (in dollars)	$ 61	$ 61
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	6,824,380	6,725,422
Common stock, shares outstanding	6,758,458	6,700,422
Treasury stock, shares	65,922	25,000

Statements of Income - USD ($) $ in Thousands	12 Months Ended
Statements of Income - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Statements of Income
Revenues	$ 53,027	$ 38,603
Operating expenses:
Cost of revenues	6,122	3,356
Engineering and product development	3,780	2,938
Sales and marketing	14,445	9,942
General and administrative	9,235	6,406
Total operating expenses	33,582	22,642
Income from operations	19,445	15,961
Interest income	10	19
Other income		506
Other income	10	525
Pre-tax net income	19,455	16,486
Income tax provision	2,233	2,479
Net income	$ 17,222	$ 14,007
Net income per share, basic	$ 2.56	$ 2.13
Weighted average number of shares used in computing basic income per share	6,731,693	6,584,441
Net income per share, diluted	$ 2.12	$ 1.74
Weighted average number of shares used in computing diluted income per share	8,138,608	8,066,561

Stockholders' Equity

12 Months Ended

Dec. 31, 2021

Stockholders' Equity

Stockholders' Equity

11. 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, 2021 and 2020, a total of 1,433,120 and 1,528,295 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,
	2021	2020
Common stock warrants	76,875	76,875
Stock options	1,356,245	1,451,420
Total	1,433,120	1,528,295

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 13
-Subparagraph (b)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Long-Term Investments - Investment in Mellitus Health Inc., (Details) - USD ($) $ in Thousands	1 Months Ended			12 Months Ended
	Apr. 30, 2021	Dec. 31, 2020	Oct. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Equity Securities without Readily Determinable Fair Value [Line Items]
Shares purchased				211,928
Cash purchase price		$ 1,942			$ 1,942
Other income					442
Impairment				$ 0
Mellitus
Equity Securities without Readily Determinable Fair Value [Line Items]
Purchase of product licenses	$ 2,000
Renewal term of purchase agreement (in years)	1 year
Mellitus \| Prepaid expenses and other current assets
Equity Securities without Readily Determinable Fair Value [Line Items]
Prepaid license purchases	$ 2,000
Investments in Mellitus Health Inc.
Equity Securities without Readily Determinable Fair Value [Line Items]
Shares purchased			250
First Promissory note from Mellitus
Equity Securities without Readily Determinable Fair Value [Line Items]
Purchase price			$ 59
Principal amount			50
Conversion value				$ 309	$ 309
Second Promissory note from Mellitus
Equity Securities without Readily Determinable Fair Value [Line Items]
Principal amount			1,500
Expense reimbursement			$ 100

Stock Option Plan

12 Months Ended

Dec. 31, 2021

Stock Option Plan

Stock Option Plan

13. 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 3,044,865 shares for the year ending December 31, 2021.

In light of stockholder approval of the 2014 Plan, the Company no longer grants equity awards under the 2007 Plan. As of December 31, 2021, there were no shares available for future stock-based compensation grants under the 2007 Plan and 1,215,753 shares of an aggregate total of 3,044,865 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, 2021 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 2021 and 2020 is as follows:


	Options Outstanding
				Weighted
				Average
	Number of	Weighted		Remaining	Aggregate
	Stock Options	Average		Contractual	Intrinsic Value
	Outstanding	Exercise Price		Term (In Years)	(In Thousands)
Balance, December 31, 2019	1,581,582	$	3.23	5.86	$	70,827
Options exercised	(130,162)		2.95
Balance, December 31, 2020	1,451,420	$	3.25	4.91	$	131,714
Options exercised	(95,175)		2.55	—		—
Balance, December 31, 2021	1,356,245	$	3.30	3.97	$	119,830
Exercisable as of December 31, 2020	1,420,368	$	3.15	4.87	$	129,039
Exercisable as of December 31, 2021	1,356,245	$	3.30	3.97	$	119,830

There were no unvested stock option awards as of December 31, 2021. The total estimated grant date fair value of options vested during the years ended December 31, 2021 and 2020 was $192 and $253, respectively. There were no options granted or forfeited during the years ended December 31, 2021 or 2020.

Stock grants

The Company granted 5,516 and 641 shares of fully vested stock to a consultant, employees and board of directors in the year ended December 31, 2021 and 2020, respectively. Grant date fair value of the stock was $557 and $50 for the year ended December 31, 2021 and 2020, respectively.

The Company has recorded an expense of $749 and $253 as it relates to stock-based compensation for the years ended December 31, 2021 and 2020, respectively, which was allocated as follows based on the role and responsibility of the recipient in the Company:


	Year ended December 31,
	2021		2020
Cost of Revenues	$	—	$	—
Engineering and Product Development		32		—
Sales and Marketing		125		—
General and Administrative		592		253
Total	$	749	$	253

Net Income Per Share, Basic and Diluted (Tables)

12 Months Ended

Dec. 31, 2021

Net Income Per Share, Basic and Diluted

Schedule of basic and diluted EPS


	For the year ended December 31,
	2021					2020
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic EPS	6,731,693	$	17,222	$	2.56	6,584,441	$	14,007	$	2.13
Common stock warrants	73,767		—		—	70,281		—		—
Common stock options	1,333,148		—		—	1,411,839		—		—
Diluted EPS	8,138,608	$	17,222	$	2.12	8,066,561	$	14,007	$	1.74

Property and Equipment, net - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Property and Equipment, net
Depreciation expense	$ 180	$ 138

Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Accrued Expenses
Compensation	$ 1,754	$ 1,524
Accrued Taxes	1,159	861
Miscellaneous Accruals	523	413
Total Accrued Expenses	$ 3,436	$ 2,798

Leases - Variable-fee Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Leases
Revenue from variable-fee licenses	$ 21,510	$ 11,610
Revenues from sales of hardware and equipment accessories	$ 956	$ 1,250

Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

14. Income Taxes

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


	2021		2020
Current tax provision:
Federal	$	1,397	$	—
State		428		343
Total current tax provision		1,825		343
Deferred tax provision:
Federal		456		2,052
State		(48)		84
Total deferred tax provision		408		2,136
Total income tax provision	$	2,233	$	2,479

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, 2021 and 2020 are as follows:


	2021		2020
Federal statutory rate	21.00	%	21.00	%
State income tax rate, net of federal benefit	1.55	%	2.19	%
Deferred tax adjustments	0.22	%	0.73	%
Stock-based compensation	(10.62)	%	(8.44)	%
Permanent items	(1.16)	%	(0.44)	%
Other	0.46	%	0.00	%
Effective income tax rate	11.45	%	15.04	%

The decrease in the effective tax rate was primarily related to a windfall deduction from stock option exercise and the California law changes on the net operating loss utilization.

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


	2021		2020
Net operating loss carryforwards	$	446	$	492
Deferred revenue		220		233
Stock based compensation		556		605
Accrual and reserves		529		209
Research and development credits, net of tax reserve		228		818
Other		14		18
Lease liability		77		98
Total gross deferred tax assets		2,070		2,473
Less valuation allowance		—		—
Net deferred tax assets		2,070		2,473
Deferred tax liabilities:
Depreciation and amortization		(49)		(12)
Right of use assets		(75)		(96)
Total deferred tax liabilities		(124)		(108)
Net deferred tax assets	$	1,946	$	2,365

Federal and California tax laws impose significant restrictions on the utilization of net operating loss (“NOL”) carryforwards in the event of a change in ownership of the Company, as defined by Section 382 of the Code (“Section 382”). The Company has completed a formal 382 study for the period from January 1, 2012 through June 30, 2019 and believes a change in ownership has occurred. The Company has NOL carryforwards for federal and California income tax purposes of approximately $106 and $5,746, respectively, as of December 31, 2021. The federal NOL carryforwards, if not utilized, will expire beginning in 2033. The state NOL carryforwards, if not utilized, will expire beginning in 2036. Under the U.S. Tax Cuts & Job Act, NOLs generated after December 31, 2017 will be carried forward indefinitely with the yearly NOL utilization limited to 80% of taxable income. However, the CARES Act temporarily removes the taxable income limitation to allow NOL carryforwards to fully offset 100% of taxable income. The Company has research and development tax credit carryforwards for federal income tax purposes $0 balance for the year ended December 31, 2021.

As of December 31, 2021 and 2020, the Company had $476 and $341, respectively, of unrecognized tax benefits, excluding interest and penalties. The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:


		Gross Unrecognized Tax Benefits 2021		Gross Unrecognized Tax Benefits 2020
Unrecognized tax benefits – January 1	$	341	$	295
Gross increases related to prior tax positions		41		1
Gross increases related to current tax positions		94		45
Unrecognized tax benefits – December 31	$	476	$	341

The Company’s policy 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, 2021 and 2020. The Company files income tax returns in the U.S. federal and various state tax jurisdictions.

The Company’s tax years beginning in 2017 remain open for examination by the state tax authorities for four years. The Company’s tax years beginning in 2018 remain open for examination by the federal tax authorities for three years. Tax years beginning in 2016 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, 2021.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Income Taxes - Summary of components of the (benefit) provision for income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Current tax provision:
Federal	$ 1,397	$ 0
State	428	343
Total current tax provision	1,825	343
Deferred tax provision:
Federal	456	2,052
State	(48)	84
Total deferred tax provision	408	2,136
Total income tax provision	$ 2,233	$ 2,479

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Net Income Per Share, Basic and Diluted

12 Months Ended

Dec. 31, 2021

Net Income Per Share, Basic and Diluted

Net Income Per Share, Basic and Diluted

15. 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, 2021, there were no warrants or options outstanding that were antidilutive.

Basic and diluted net EPS is calculated as follows:


	For the year ended December 31,
	2021					2020
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic EPS	6,731,693	$	17,222	$	2.56	6,584,441	$	14,007	$	2.13
Common stock warrants	73,767		—		—	70,281		—		—
Common stock options	1,333,148		—		—	1,411,839		—		—
Diluted EPS	8,138,608	$	17,222	$	2.12	8,066,561	$	14,007	$	1.74

Leases - Future minimum rental payments (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Leases
2022	$ 87
2023	90
2024	93
2025	71
Total undiscounted future minimum lease payments	341
Less: present value discount	(16)
Total lease liabilities	325
Lease expense in excess cash payment	(11)
Total ROU asset	$ 314

Concentration of Credit Risk

12 Months Ended

Dec. 31, 2021

Concentration of Credit Risk

Concentration of Credit Risk

8. 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, 2021, two customers accounted for 40.8% and 28.6% of the Company’s revenue. For the year ended December 31, 2020, two customers accounted for 47.2%, and 22.8% of the Company’s revenue. As of December 31, 2021, three customers accounted for 21.9%, 20.1% and 16.6% of the Company’s accounts receivable, respectively. As of December 31, 2020, four customers accounted for 31.2%, 19.4%, 15.7% and 10.4% of the Company’s accounts receivable, respectively.

As of December 31, 2021 and 2020 the allowance for doubtful accounts was $61.

As of December 31, 2021, one vendor accounted for 14.0% of the Company’s accounts payable. As of December 31, 2020, two vendors accounted for 15.9% and 24.3% of the Company’s accounts payable, respectively.

Long-Term Investments - Investment in SYNAPS Dx (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Oct. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Sep. 30, 2020
Equity Securities without Readily Determinable Fair Value [Line Items]
Shares purchased		211,928
Promissory note from SYNAPS Dx
Equity Securities without Readily Determinable Fair Value [Line Items]
Principal amount				$ 500
Expense reimbursement				$ 100
Conversion value		$ 512	$ 512
Investments in SYNAPS Dx
Equity Securities without Readily Determinable Fair Value [Line Items]
Shares purchased	211,928
Common stock issued on Exchange	40,922
Fair value of purchase consideration			$ 2,230

Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2021

Stockholders' Equity

Schedule of common stock reserved for issuance


	Year ended December 31,
	2021	2020
Common stock warrants	76,875	76,875
Stock options	1,356,245	1,451,420
Total	1,433,120	1,528,295

Net Income Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Net Income Per Share, Basic and Diluted
Basic shares (in shares)	6,731,693	6,584,441
Common stock warrants (in shares)	73,767	70,281
Common stock options (in shares)	1,333,148	1,411,839
Diluted shares (in shares)	8,138,608	8,066,561
Net Income - Basic EPS	$ 17,222	$ 14,007
Net Income - Common stock warrants	0	0
Net Income - Common stock options	0	0
Net Income - Diluted EPS	$ 17,222	$ 14,007
Basic EPS (in dollars per share)	$ 2.56	$ 2.13
Common stock warrants (in dollars per share)	0
Common stock options (in dollars per share)	0
Diluted EPS (in dollars per share)	$ 2.12	$ 1.74

Assets for Lease, net - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Assets for Lease, net
Depreciation expense	$ 442	$ 439
Reduction to accumulated depreciation for returned items	310	268
Loss on disposal of assets for lease	(362)	(271)
Total assets for lease, net, in use at customer locations	$ 631	$ 736

Inventory

12 Months Ended

Dec. 31, 2021

Inventory

Other Product Inventory

4. Inventory

As of December 31, 2021 and 2020, the inventory balance was $550 and $340, respectively.

In September 2020, the Company entered into an agreement with Private company #1 to exclusively market and distribute a new product line. Product inventory under this agreement was as follows for the periods presented:

Under this agreement, the Company has purchased product inventory of $1,202 since the agreement was signed. The Company also agreed to make royalty payments ranging from 0% to 10% of net sales depending on the average net sales price of the distributed products. Unless early terminated in accordance with its terms, this exclusive distribution agreement will remain in full force and effect until December 31, 2024, and thereafter there is an option for this agreement to be automatically renewed for additional 4-year terms.

Since entry into the distribution agreement in September 2020, the Company was not able to generate significant revenue from this product and in November 2021, the distribution agreement was terminated by mutual consent. As per the termination agreement, the Company is allowed to sell the existing inventory within a year from January 1, 2022. Because, this product is new to the market, and requires a longer sales cycle, it is difficult to establish a foothold in the market within one year. Termination of the agreement further complicated the Company’s marketing efforts to develop long-term customer relationships. Hence, management concluded the net realizable value of the product inventory is zero and wrote-off 100% of $1.2 million of inventory of this product.

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Taxes

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


	2021		2020
Current tax provision:
Federal	$	1,397	$	—
State		428		343
Total current tax provision		1,825		343
Deferred tax provision:
Federal		456		2,052
State		(48)		84
Total deferred tax provision		408		2,136
Total income tax provision	$	2,233	$	2,479

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


	2021		2020
Federal statutory rate	21.00	%	21.00	%
State income tax rate, net of federal benefit	1.55	%	2.19	%
Deferred tax adjustments	0.22	%	0.73	%
Stock-based compensation	(10.62)	%	(8.44)	%
Permanent items	(1.16)	%	(0.44)	%
Other	0.46	%	0.00	%
Effective income tax rate	11.45	%	15.04	%

Schedule of deferred tax assets


	2021		2020
Net operating loss carryforwards	$	446	$	492
Deferred revenue		220		233
Stock based compensation		556		605
Accrual and reserves		529		209
Research and development credits, net of tax reserve		228		818
Other		14		18
Lease liability		77		98
Total gross deferred tax assets		2,070		2,473
Less valuation allowance		—		—
Net deferred tax assets		2,070		2,473
Deferred tax liabilities:
Depreciation and amortization		(49)		(12)
Right of use assets		(75)		(96)
Total deferred tax liabilities		(124)		(108)
Net deferred tax assets	$	1,946	$	2,365

Schedule of activity related to unrecognized tax benefits


		Gross Unrecognized Tax Benefits 2021		Gross Unrecognized Tax Benefits 2020
Unrecognized tax benefits – January 1	$	341	$	295
Gross increases related to prior tax positions		41		1
Gross increases related to current tax positions		94		45
Unrecognized tax benefits – December 31	$	476	$	341

Leases - Lessee Arrangements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Jul. 31, 2020
Leases
Lease agreement term			61 months
Remaining lease term	3 years 9 months
Options to renew	false
Lease expenses	$ 112	$ 97
ROU asset	$ 314
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other Assets, Noncurrent
Current lease liabilities	$ 80
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other Liabilities, Current
Noncurrent lease liabilities	$ 245
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other Liabilities, Noncurrent

Stockholders' Equity - Summary of exercise of common stock outstanding stock options (Details) - shares	Dec. 31, 2021	Dec. 31, 2020
Stockholders' Equity
Total	1,433,120	1,528,295
Common stock warrants
Stockholders' Equity
Total	76,875	76,875
Employee stock option
Stockholders' Equity
Total	1,356,245	1,451,420

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, 2021	Dec. 31, 2020
Income Taxes
Federal statutory rate	21.00%	21.00%
State income tax rate, net of federal benefit	1.55%	2.19%
Deferred tax adjustments	0.22%	0.73%
Stock-based compensation	(10.62%)	(8.44%)
Permanent Items	(1.16%)	(0.44%)
Other	0.46%	0.00%
Effective income tax rate	11.45%	15.04%

Net Income Per Share, Basic and Diluted - Additional Information (Details)	12 Months Ended
	Dec. 31, 2021 shares
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares outstanding excluded from the computation of diluted net income per share	0
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares outstanding excluded from the computation of diluted net income per share	0

Income Taxes - Summary of Deferred tax assets (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Deferred tax assets:
Net operating loss carryforwards	$ 446	$ 492
Deferred revenue	220	233
Stock based compensation	556	605
Accrual and reserves	529	209
Research and development credits, net of tax reserve	228	818
Other	14	18
Lease liability	77	98
Total gross deferred tax assets	2,070	2,473
Less valuation allowance		0
Net deferred tax assets	2,070	2,473
Deferred tax liabilities:
Depreciation and amortization	(49)	(12)
Right of use assets	(75)	(96)
Total deferred tax liabilities	(124)	(108)
Net deferred tax assets	$ 1,946	$ 2,365

The Company

12 Months Ended

Dec. 31, 2021

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 provides 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 Santa Clara, California.

On January 30, 2020, the World Health Organization (“WHO”) declared the recent novel coronavirus (COVID-19) outbreak a global health emergency, which prompted national, state and local governments to begin putting actions in place to slow the spread of COVID-19. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic. The outbreak of COVID-19 resulted in travel restrictions, quarantines, “stay-at-home” and “shelter-in-place” orders and extended shutdown of certain businesses around the world and restricted the Company’s ability to perform in person demonstrations to potential customers and attend in-person trade shows or conduct other in-person sales activities. While restrictions began to ease in the second quarter and activities began to resume, recent outbreaks could lead to restrictions being reimplemented. In the first half of 2020, the Company’s revenues, primarily from variable-fee licenses, were negatively impacted by the COVID-19 pandemic. In the third and fourth quarters of 2020, the Company’s revenues, primarily from variable-fee licenses, rebounded to and even exceeded pre-COVID-19 levels. However, the Company believes that it possibly experienced some negative effects from the COVID-19 pandemic, with travel restrictions still in place through early 2021, and with the outbreak of the Delta and Omicron variants during the second half of 2021, which may have impacted the sequential growth of the Company’s revenues, in particular, revenue from variable-fee licenses. The extent and duration of the pandemic is unknown, and the future effects on the Company’s business are uncertain and difficult to predict. The Company is continuing to monitor the events and circumstances surrounding the COVID-19 pandemic, which may require adjustments to the Company’s estimates and assumptions in the future.

Leases

12 Months Ended

Dec. 31, 2021

Leases

Leases

9. 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 December 31, 2021, the remaining lease term is three years and nine months with no options to renew. The Company recognized facilities lease expenses of $112 and $97 for the years ended December 31, 2021 and 2020, 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 December 31, 2021:


	Total
2022	$	87
2023		90
2024		93
2025		71
Thereafter		—
Total undiscounted future minimum lease payments		341
Less: present value discount		(16)
Total lease liabilities		325
Lease expense in excess cash payment		(11)
Total ROU asset	$	314

As of December 31, 2021, the Company’s ROU asset was $314, which is recorded on the Company’s balance sheet as other non-current assets, and the Company’s current and noncurrent lease liabilities were $80 and $245, respectively, which were recorded on the Company’s balance sheet as other short-term liabilities and other long-term liabilities, 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 to the financial statements. During the year ended December 31, 2021 and 2020, the Company recognized approximately $30,561 and $25,743, respectively, in lease revenue related to these arrangements, which is included in revenue on the Statements of Income.

Variable-fee Revenue

The Company recognizes revenues from variable-fee licenses (i.e., fee per test) and sales of hardware equipment and accessories in accordance with Topic 606. Total revenues from variable-fee licenses were approximately $21,510 and $11,610 for the years ended December 31, 2021 and 2020, respectively. Total revenues from sales of hardware and equipment accessories were approximately $956 and $1,250 for the years ended December 31, 2021 and 2020, respectively. Essentially all of the variable-fee licenses are with large healthcare organizations. The remainder of the revenue is earned from leasing the Company’s testing product for a fixed fee, which is not subject to Topic 606.