0001554859-23-000007 | 10-K | XBRL Viewer

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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2022	Mar. 16, 2023	Jun. 30, 2022
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	001-36305
Entity Registrant Name	SEMLER SCIENTIFIC, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-1367393
Entity Address, Address Line One	2340-2348 Walsh Avenue, Suite 2344
Entity Address, City or Town	Santa Clara
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95051
City Area Code	877
Local Phone Number	774-4211
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	SMLR
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 155,160,658
Entity Common Stock, Shares Outstanding		6,844,512
Auditor Name	BDO USA, LLP
Auditor Firm ID	243
Auditor Location	New York, NY
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Entity Central Index Key	0001554859
Amendment Flag	false

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current Assets:
Cash and cash equivalents	$ 23,014	$ 37,323
Short-term investments	20,073
Trade accounts receivable, net of allowance for doubtful accounts of $109 and $61, respectively	3,884	3,619
Inventory, net	469	550
Prepaid expenses and other current assets	1,468	4,044
Total current assets	48,908	45,536
Assets for lease, net	2,478	1,643
Property and equipment, net	667	394
Long-term investments	821	821
Long-term notes receivable	4,679
Other non-current assets	2,842	332
Long-term deferred tax assets	2,298	1,946
Total assets	62,693	50,672
Current liabilities:
Accounts payable	835	443
Accrued expenses	4,748	3,436
Deferred revenue	1,160	921
Other short-term liabilities	114	80
Total current liabilities	6,857	4,880
Long-term liabilities:
Other long-term liabilities	160	245
Total long-term liabilities	160	245
Commitments and contingencies (Note 13)
Stockholders' equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 6,906,544, and 6,824,380 shares issued, and 6,692,122, and 6,758,458 shares outstanding (treasury shares of 214,422 and 65,922), respectively	7	7
Additional paid-in capital	16,449	20,645
Retained earnings	39,220	24,895
Total stockholders' equity	55,676	45,547
Total liabilities and stockholders' equity	$ 62,693	$ 50,672

Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Condensed Balance Sheets
Allowance for doubtful accounts on trade accounts receivable (in dollars)	$ 109	$ 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	6,906,544	6,824,380
Common stock, shares outstanding	6,692,122	6,758,458
Treasury stock, shares	214,422	65,922

Condensed Statements of Income - USD ($) $ in Thousands	12 Months Ended
Condensed Statements of Income - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Condensed Statements of Income
Revenues	$ 56,686	$ 53,027
Operating expenses:
Cost of revenues	4,252	6,122
Engineering and product development	4,809	3,780
Sales and marketing	17,685	14,445
General and administrative	12,737	9,235
Total operating expenses	39,483	33,582
Income from operations	17,203	19,445
Interest income	494	10
Other expenses	5
Other income	489	10
Pre-tax net income	17,692	19,455
Income tax provision	3,367	2,233
Net income	$ 14,325	$ 17,222
Net income per share, basic	$ 2.13	$ 2.56
Weighted average number of shares used in computing basic income per share	6,726,687	6,731,693
Net income per share, diluted	$ 1.79	$ 2.12
Weighted average number of shares used in computing diluted income per share	7,999,750	8,138,608

Statements of Stockholders Equity - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings	Total
Balance at Dec. 31, 2020	$ 7		$ 22,113	$ 7,673	$ 29,793
Balance (in shares) at Dec. 31, 2020	6,725,422
Balance (in shares) at Dec. 31, 2020		(25,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of put option in SYNAPS Dx			(2,230)		(2,230)
Exercise of put option in SYNAPS Dx (in Shares)		(40,922)
Employee stock grants			512		512
Employee stock grants (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
Balance (in shares) at Dec. 31, 2021		(65,922)			(65,922)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock acquired			(4,991)		$ (4,991)
Treasury stock acquired (Shares)		(148,500)			(148,500)
Exercise of put option in SYNAPS Dx (in Shares)					(40,922)
Employee stock grants			723		$ 723
Employee stock grants (in shares)	11,131
Taxes paid related to settlement of equity awards			(114)		(114)
Taxes paid related to settlement of equity awards (in shares)	(1,710)
Stock option exercises			168		$ 168
Stock option exercises (in shares)	72,743				73,398
Stock-based compensation			18		$ 18
Net income				14,325	14,325
Balance at Dec. 31, 2022	$ 7		$ 16,449	$ 39,220	$ 55,676
Balance (in shares) at Dec. 31, 2022	6,906,544
Balance (in shares) at Dec. 31, 2022		(214,422)			(214,422)

Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
Statements of Cash Flows - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 14,325	$ 17,222
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Depreciation	589	628
Deferred tax (income) expense	(351)	408
Loss on disposal of assets for lease	463	362
Gain on short-term investments	(77)
Loss on disposal of inventory		1,202
Allowance for doubtful accounts	103	63
Stock-based compensation	741	749
Changes in Operating Assets and Liabilities:
Trade accounts receivable	(367)	(874)
Inventory	81	(1,412)
Prepaid expenses and other current assets	2,576	(2,657)
Other non-current assets	(2,510)	86
Accounts payable	392	(234)
Accrued expenses	1,310	638
Other current and non-current liabilities	188	(125)
Net Cash Provided by Operating Activities	17,463	16,056
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment	(476)	(318)
Purchase of short-term investments	(19,996)
Purchase of notes held for investment	(4,679)
Purchase of assets for lease	(1,684)	(507)
Net Cash Used in Investing Activities	(26,835)	(825)
CASH FLOWS FROM FINANCING ACTIVITIES:
Taxes paid related to net settlement of equity awards	(114)	(45)
Treasury stock acquired	(4,991)
Proceeds from exercise of stock options	168	58
Net Cash (Used in) Provided by Financing Activities	(4,937)	13
(DECREASE) INCREASE IN CASH	(14,309)	15,244
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	37,323	22,079
CASH AND CASH EQUIVALENTS, END OF PERIOD	23,014	37,323
Supplemental Disclosure of Cash Flow Information:
Cash paid for taxes	$ 2,400	2,647
Exercised put option of 211,928 common stock in SYNAPS Dx for 40,922 common stock of the company		$ 2,230

Statements of Cash Flows (Parenthetical)	12 Months Ended
Statements of Cash Flows (Parenthetical)	Dec. 31, 2022 shares
Condensed 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

The Company

12 Months Ended

Dec. 31, 2022

The Company

The Company

1. The Company

We are a company providing technology solutions to improve the clinical effectiveness and efficiency of healthcare providers. The Company’s mission is to develop, manufacture and market innovative products and services that assist our customers in evaluating and treating chronic diseases. The Company’s patented and U.S. Food and Drug Administration, or FDA, cleared product, QuantaFlo, measures arterial blood flow in the extremities to aid in the diagnosis of peripheral arterial disease, or PAD, and serves as an aid to measure hemodynamics related to heart dysfunction.

In April 2021, the Company entered into an agreement, as amended in December 2022, with Mellitus Health, Inc, or Mellitus, a private company to exclusively market and distribute Insulin Insights, an FDA-cleared software product that recommends optimal insulin dosing for diabetic out-patients in the United States, including Puerto Rico, except for selected accounts. In December 2022 certain clauses of this agreement were amended, including an additional prepayment of $500 for licenses, making a total prepayment of $2,500 for licenses.

Summary of Significant Accounting Policies and Estimates

12 Months Ended

Dec. 31, 2022

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, 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.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash, cash equivalents, accounts receivable and trade payables. The Company maintains its cash with major financial institutions. The Company’s cash consists of bank deposits held with banks that, at times, exceed federally insured limits. The cash and cash equivalents also include short term treasury bills with original maturities of three months or less. The Company manages its accounts receivable credit risk through ongoing credit evaluation of its customers' financial conditions. The Company generally does not require collateral from its customers. For information regarding the Company’s significant customers and vendors, see Note 11 to financial statements.

Revenue Recognition

The Company generates revenues primarily from the rental or license of its vascular testing product. The Company recognizes revenues from the licensing of its product primarily 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, either on a fixed or variable (e.g. fee per test) basis, as earned. The Company also recognizes revenue for hardware and supplies sales as of the date of shipment.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of highly liquid investments purchased with an initial maturity date of three months or less. Funds held as investments in money market funds are included within cash and cash equivalents.

Short-Term Investments

Short-term investments are those that can be readily converted into cash and also any investment instruments that will mature within one year or which are expected to be liquidated within one year. As of December 31, 2022, short-term investments represented a T-Bill that matured on March 2, 2023 and subsequently reinvested in similar instruments.

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.

As of December 31, 2021, the allowance for doubtful accounts was $61. Net change due to credit losses during the year was $48. Allowance balance as of December 31, 2022 was $109.

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, 2022 and 2021, 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, 2022 and 2021, 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, 2022 and 2021, 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, 2022 and 2021, 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, 2022, or 2021.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.

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, 2022 and 2021. The Company classifies short-term investments within Level 1 in the fair value hierarchy, because quoted prices for identical assets in active markets are used to determine fair value. The Company estimates the fair value of the investment in debt security using Level 3 inputs. See Note 8 for description of methodologies and significant assumptions used in those valuations. The Company also invested in non-convertible promissory note, prepayment for inventory and equity securities of two privately held companies, which were recorded on cost basis. See Note 6,8 and 9 to the financial statements for more information.

Investment Valuation

The Company’s investments in equity in privately held companies without readily determinable fair values, which are generally recorded at cost, plus or minus subsequent observable price changes in orderly transactions for identical or similar investments, less impairments. As part of its 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 its qualitative assessment indicates the investments are impaired, the fair value of these equity securities would be estimated, which would involve a significant degree of judgment and subjectivity.

No impairment charges were recorded during the year ended December 31, 2022 and 2021.

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. Revenue recognized for the year ended December 31, 2022 from amounts included in deferred revenue as of December 31, 2021 was $921. Revenue recognized for the year ended December 31, 2021 from amounts included in deferred revenue as of December 31, 2020 was $963.

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”). Effective January 1, 2022, the Company started to match 50% of employee’s 401(k) deferral up to a maximum of 6% of the employee’s eligible earnings.

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.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In May 2021, the financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 adopted this ASU prospectively effective January 1, 2022 and determined that the adoption of this new accounting standard did not have a material impact on its financial statements.

In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments. This update addresses 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 adopted this ASU prospectively to the leases that commence or modified on or after January 1, 2022 and determined that the adoption of this new accounting standard 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 expect adoption of this standard will have a material impact on its financial statements on the adoption date. However, subsequently the impact will largely depend on the composition and credit quality of the Company's portfolio of financial assets and the economic conditions at the time of adoption.

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 Company determined that issues 1-5 have no impact on its financials. The amendments related to issue 6 and 7 effect ASU No. 2016-13, 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. 2016-13. The Company will adopt the new standard in the first quarter of fiscal year 2023. The Company does not expect adoption of this standard will have a material impact on its financial statements.

In October 2021, the FASB issued ASU No.2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. For public business entities, this guidance will be effective for fiscal years beginning after December 15, 2022 and for interim periods within those fiscal years. This ASU should be applied prospectively to all business combinations in the year of adoption. The Company will adopt the new standard in the first quarter of fiscal year 2023. The Company does not expect the adoption of this standard will have a material impact on its financial statements.

In March 2022, the FASB issued ASU No.2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the troubled debt restructuring accounting model in Accounting Standards Codification (“ASC”) 310-40 for creditors that have adopted the guidance on measurement of credit losses in ASU 2016-13. Additionally, the ASU requires the public business entities to disclose current period gross writeoffs by year of origination for financing receivables and net investments in leases as part of their vintage disclosures under ASC 326. For entities that have adopted the amendments in ASU 2026-13, the amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For entities that have not yet adopted the amendments in ASU 2016-13, the effective dates are the same as effective dates in ASU 2016-13. The Company will adopt this ASU along with ASU 2016-13 in the first quarter of 2023. The Company does not expect the adoption of this standard will have a material impact on its financial statements.

Assets for Lease, net

12 Months Ended

Dec. 31, 2022

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


	As of December 31,
	2022		2021
Assets for lease	$	3,702	$	3,241
Less: accumulated depreciation		(1,224)		(1,598)
Assets for lease, net	$	2,478	$	1,643

Depreciation expense amounted to $386 and $442 for the years ended December 31, 2022 and 2021, respectively. Reduction to accumulated depreciation for returned items was $352 and $310 for the years ended December 31, 2022 and December 31, 2021, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $463 and $362 for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, total assets for lease, net, in use at customer locations were $518 and $631, respectively.

Inventory

12 Months Ended

Dec. 31, 2022

Inventory

Inventory

4. Inventory

As of December 31, 2022 and 2021, the inventory balance was $469 and $550, respectively. Inventory includes finished goods of light blocking bags and heel warmers.

Property and Equipment, net

12 Months Ended

Dec. 31, 2022

Property and Equipment, net

Property and Equipment, net

5. Property and Equipment, net

Capital assets consist of the following:


	As of December 31,
	2022		2021
Capital assets	$	1,206	$	882
Less: accumulated depreciation		(539)		(488)
Capital assets, net	$	667	$	394

Depreciation expense amounted to $203 and $180 for the years ended December 31, 2022 and 2021, respectively.

Long Term Investments

12 Months Ended

Dec. 31, 2022

Long-Term Investments.

Long-Term Investments

6. Long-Term Investments

Carrying value of non-marketable securities is measured as the total initial cost plus the cumulative net gain (loss). Carrying value of non-marketable equity investments consist of the following for the periods presented:


	As of December 31,
	2022		2021
Investments in SYNAPS Dx	$	512	$	512
Investments in Mellitus Health Inc.		309		309
Total initial cost	$	821	$	821

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, 2022 and 2021 was approximately $512.

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, 2022 and 2021 was approximately $309.

The investments in SYNAPS Dx and Mellitus securities that were retained by the Company as of December 31, 2022 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.

The Company qualitatively assessed both investments for impairment in accordance with ASC 321. As of December 31, 2022, the Company determined that there was no impairment for the investment in SYNAPS Dx and the investment in Mellitus.

Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Measurements

Fair Value Measurements

7. Fair Value Measurements

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


	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total
As of December 31,2022
U.S. Treasury bill	$	20,073	$	—	$	—	$	20,073
(Included in short-term investments)
Investment in debt Security		—		—		3,679		3,679
(Included in notes held for investment)
Total Assets	$	20,073	$	—	$	3,679	$	23,752

There were no debt securities that were measured at fair value as of December 31,2021.

Treasury bill was purchased on November 30, 2022 at a cost of $19,996 and fair value accretes to maturity date at an interest rate of 4.245%. As of December 31, 2022, the interest income recorded on this bill was $77. The fair value of the investments in the debt securities were determined by the Company to be equivalent to the initial purchase price, as the transactions were negotiated with an unrelated third parties. There were no material changes in the fair value of the

debt securities identified between the acquisition date of securities, and the year end of December 31, 2022, the reporting date.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Notes held for investment

12 Months Ended

Dec. 31, 2022

Notes held for investment

Notes held for investment

8. Notes held for investment

Notes receivable consist of the following for the periods presented:


	As of December 31,
	2022		2021
Senior secured promissory notes	$	1,000	$	—
Secured convertible promissory notes		3,679		—
Total notes held for investment	$	4,679	$	—

In June 2022, the Company loaned Mellitus an aggregate of $1,000 through the purchase of two senior secured promissory notes that bear interest at a rate of 5% per annum, and mature in three years unless accelerated due to an event of default as provided in the notes. Repayment of notes is secured by a first priority interest in all of Mellitus’ assets.

In May 2022, to facilitate the subordination of such notes in connection with the purchase of the senior secured notes, the Company acquired $179 aggregate principal amount of outstanding convertible notes of Mellitus, which, as amended, mature July 5, 2025, if not automatically converted into preferred stock prior thereto. This note bears an interest rate of 10% per annum.

In December 2022, the Company entered in a senior convertible promissory note arrangement with Monarch,

providing Monarch with up to $5,000 in available funding, of which $3,500, in principle was drawn on the issuance date (the “Debt Security”). The remaining $1.5 million is available to be drawn at any time unless there is an Event of Default that is continuing. The Debt Security accrues interest at 10% per annum, payable monthly commencing January 5, 2023, and the principal balance is due December 6, 2024. The note along with up to $100 of transaction expenses is due and payable on the occurrence of an event of default or change of control unless accelerated due to the conversion into preferred stock prior thereto at the option of the Company. The Company has the option to extend the maturity date for two consecutive one-year terms. The Debt Security can be converted into Monarch’s shares at the Company’s option upon (a) an equity financing at Monarch, (b) upon a change of control at Monarch, or (c) at the Company’s option at any time prior to the maturity date. If converted upon a change of control, the Company has the right to receive a cash payment equal to the balance of the Debt Security or the amount payable upon conversion into Monarch’s shares. The Debt Security is redeemable at any time at Monarch’s option or automatically upon an Event of Default.

The Company made an irrevocable election to account for the Debt Securities using the fair value option under ASC 825 – Financial Instruments (“ASC 825”) and will measure the fair value of the Debt Securities in accordance with ASC 820. The Company made the fair value option election to present the Debt Securities in its entirety at fair value, which it believes to be preferable to recognizing the host instrument at fair value under ASC 320 and potentially separately recognizing certain embedded features as bifurcated derivatives under ASC 815. As of December 31, 2022, the Company estimated the fair value of the Debt Securities of Monarch to be $3,500 and Mellitus $179, which are equivalent of the outstanding principal balances at December 31, 2022.

The Company recognizes interest income as it accrues on the Debt Securities, which is included in interest income in the statements of income. For the year ended December 31, 2022, the Company recognized $62 of interest income from Monarch and Mellitus notes, which is included in prepaid and other current assets. The Company recognizes changes in fair value of the Debt Securities in the statements of income separately from the interest income. For the year ended December 31, 2022, there was no change in fair value recorded.

Other Non-current assets

12 Months Ended

Dec. 31, 2022

Other Non-current assets

Other Non-current assets

9.Other non-current assets

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


	As f December 31,
	2022		2021
Prepaid licenses	$	2,490	$	—
Other		352		332
Total other non-current assets	$	2,842	$	332

In April 2021, the Company entered into a five-year agreement, as amended in December 2022, 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, including hiring dedicated sales and marketing personnel, conducting webinars and attending trade shows and etc. Under this distribution agreement and its amendments, the Company agreed to purchase $2,500 of product licenses and prepaid $2,500 for the license purchases. This prepayment, which was reclassed to a long-term asset in 2022 due to the change in the estimation of the recoverability period is expected to be more than one year. The long-term portion of the prepaid licenses are included in the Other non-current assets. Unless early terminated in accordance with its terms, the exclusive distribution agreement will remain in full force and effect until April 1, 2026, and for renewal periods of one year each upon its anniversary date, unless terminated by at least 60 days written notice prior to such an anniversary date. Either party may terminate the agreement by written notice to the other party upon or after the breach of any material provision of this agreement by the other party, if the other party has not cured such breach within 60 days after written notice thereof from the non-breaching party.

Accrued Expenses

12 Months Ended

Dec. 31, 2022

Accrued Expenses

Accrued Expenses

10. Accrued Expenses

Accrued expenses consist of the following:


	As of December 31,
	2022		2021
Compensation	$	2,467	$	1,754
Accrued Taxes		1,923		1,159
Miscellaneous Accruals		358		523
Total Accrued Expenses	$	4,748	$	3,436

Concentration of Credit Risk

12 Months Ended

Dec. 31, 2022

Concentration of Credit Risk

Concentration of Credit Risk

11. 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 cash and cash equivalents also include short term treasury bills with original maturities of three months or less. As of December 31,2022, the Company held deposits of $12,960, which exceeded federal deposit corporation limits. The Company also invested in U.S. treasury bills in the amount of $30,127. 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, 2022, two customers accounted for 40.4% and 29.0% of the Company’s revenue. For the year ended December 31, 2021, two customers accounted for 40.8%, and 28.6% of the Company’s revenue. As of December 31, 2022, three customers accounted for 26.8%, 25.9% and 16.8% of the Company’s accounts receivable. As of December 31, 2021, three customers accounted for 21.9%, 20.1% and 16.6% of the Company’s accounts receivable.

As of December 31, 2022 and 2021 the allowance for doubtful accounts was $109 and $61, respectively.

As of December 31, 2022, two vendors accounted for 25.8% and $10.8% of the Company’s accounts payable. As of December 31, 2021, one vendor accounted for 14.0% of the Company’s accounts payable.

Leases

12 Months Ended

Dec. 31, 2022

Leases

Leases

12. 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, 2022, the remaining lease term is three years and nine months with no options to renew. The Company recognized facilities lease expenses of $88 and $112 for the years ended December 31, 2022 and 2021, 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, 2022:


	Total
2023		90
2024		93
2025		71
Total undiscounted future minimum lease payments		254
Less: present value discount		(9)
Total lease liabilities		245
Lease expense in excess cash payment		(12)
Total ROU asset	$	233

As of December 31, 2022, the Company’s ROU asset was $233, which is recorded on the Company’s balance sheet as other non-current assets, and the Company’s current and noncurrent lease liabilities were $85 and $160, 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, 2022 and 2021, the Company recognized approximately $34,039 and $30,561, 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 (e.g., fee per test) and sales of hardware equipment and accessories in accordance with Topic 606. Total revenues from variable-fee licenses were approximately $21,277 and $21,510 for the years ended December 31, 2022 and 2021, respectively. Total revenues from sales of hardware and equipment accessories were approximately $1,358 and $956 for the years ended December 31, 2022 and 2021, respectively. 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.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies.

Commitments and Contingencies

13. Commitments and Contingencies

Senior Secured Convertible Note

In December 2022, the Company committed a loan of $5,000 to Monarch through the purchase of a senior secured convertible promissory note that bears interest at a rate of 10% per annum and matures on the second anniversary from the issue date, which can be extended for up to two additional consecutive one-year terms in the Company’s sole discretion. The note along with up to $100 of transaction expenses is due and payable on the occurrence of an event of default or change of control unless accelerated due to the conversion into preferred stock prior thereto at the option of the Company. Monarch borrowed $3,500 out of the committed amount of $5,000 as of December 31, 2022 and has agreed to reimburse the Company for up to $100 of transaction expense. Repayment of the note is secured by a first priority interest in all of Monarchs’ assets. In January 2023, Monarch borrowed an additional $500 leaving a balance of $1,000 available to be borrowed in the future. See Note 8 to financial statements.

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 claimed $1.24 million in this retention credit. No credit was claimed for the year ended December 31, 2022.

Legal Matter

From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business. The Company is not currently a party to any litigation the outcome of which, if determined adversely to it, would individually or in the aggregate be reasonably expected to have a material adverse effect on its business, operating results, cash flows or financial condition.

Stockholders' Equity

12 Months Ended

Dec. 31, 2022

Stockholders' Equity

Stockholders' Equity

14. 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.

Treasury Stock Acquired

On March 14, 2022, the Company’s Board of Directors authorized a share repurchase program under which it may repurchase up to $20.0 million of its outstanding common stock. Under this program the Company may purchase shares on a discretionary basis from time to time through open market purchases, privately negotiated transactions or other means, including through Rule 10b5-1 trading plans or through the use of other techniques such as accelerated share repurchases. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions and other opportunities that it may have for the use or investment of its cash balances. The repurchase program has no expiration date, does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice. The Company purchased 148,500 shares at a cost of approximately $4,991 during the year ended December 31, 2022.

For the years ended December 31, 2022 and 2021, a total of 1,548,545 and 1,433,120 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,
	2022	2021
Common stock warrants	76,875	76,875
Stock options	1,471,670	1,356,245
Total	1,548,545	1,433,120

- 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://fasb.org/us-gaap/role/ref/legacyRef
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+ Details

Stock Option Plan

12 Months Ended

Dec. 31, 2022

Stock Option Plan

Stock Option Plan

15. 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 3,315,203 shares for the year ending December 31, 2022.

In light of stockholder approval of the 2014 Plan, the Company no longer grants equity awards under the 2007 Plan. As of December 31, 2022, there were no shares available for future stock-based compensation grants under the 2007 Plan and 1,471,670 shares of an aggregate total of 3,315,203 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, 2022 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 2022 and 2021 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, 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
Options exercised	(73,398)		2.58	—		—
Options granted	5,000		30.48	4.00		—
Balance, December 31, 2022	1,287,847	$	3.44	3.03	$	38,053
Exercisable as of December 31, 2021	1,356,245	$	3.30	3.97	$	119,830
Exercisable as of December 31, 2022	1,282,847	$	3.34	3.00	$	38,053

On May 17, 2022 the Company awarded 5,000 options to an employee as compensation pursuant to the 2014 Plan with an exercise price of $30.48 and Black-Scholes options pricing model value of $22.27. In applying the Black-Scholes options pricing model, the following assumptions were used: 1) expected price volatility of 78.6%; risk-free interest rate of 2.884%; weighted average expected life of 7 years; zero forfeiture rate and no dividend yield; 1/4th of these options is vested one year after the grant date and 1/48th for each month thereafter contingent upon the participant’s continued service beginning on the initial vesting date and ending when the Vested Ratio equals 1/1. The total estimated grant date fair value of options vested during the years ended December 31, 2022 and 2021 was $0 and $192, respectively. As of December 31, 2022, unrecognized stock-based compensation expense of $94 is expected to be recorded over a weighted average period of 3.4 years. Actual forfeitures are recognized as they occur.

There were no options granted or forfeited during the year ended December 31, 2021.

Stock grants

The Company granted 9,421 and 5,516 shares of fully vested stock to a consultant, employees and board of directors in the year ended December 31, 2022 and 2021, respectively. Grant date fair value of the stock was $723 and $557 for the year ended December 31, 2022 and 2021, respectively.

The Company has recorded an expense of $741 and $749 as it relates to stock-based compensation for the years ended December 31, 2022 and 2021, respectively, which was allocated as follows based on the role and responsibility of the recipient in the Company:


		December 31		December 31
	2022		2021
Engineering and Product Development	$	45	$	32
Sales and Marketing		173		125
General and Administrative		523		592
Total	$	741	$	749

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes

Income Taxes

16. Income Taxes

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


	2022		2021
Current tax provision:
Federal	$	3,201	$	1,397
State		517		428
Total current tax provision		3,718		1,825
Deferred tax provision:
Federal		(373)		456
State		22		(48)
Total deferred tax provision		(351)		408
Total income tax provision	$	3,367	$	2,233

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, 2022 and 2021 are as follows:


	2022		2021
Federal statutory rate	21.00	%	21.00	%
State income tax rate, net of federal benefit	2.57	%	1.55	%
Stock-based compensation	(4.03)	%	(10.62)	%
Permanent items	(0.93)	%	(1.16)	%
Other	0.35	%	0.68	%
Effective income tax rate	18.96	%	11.45	%

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


	2022		2021
Net operating loss carryforwards	$	303	$	446
Deferred revenue		278		220
Stock based compensation		529		556
Accrual and reserves		297		529
Research and development credits		254		228
Other		2		14
Depreciation and amortization		633		—
Lease liability		59		77
Total gross deferred tax assets		2,355		2,070
Less valuation allowance		—		—
Net deferred tax assets		2,355		2,070
Deferred tax liabilities:
Depreciation and amortization		—		(49)
Right of use assets		(56)		(75)
Total deferred tax liabilities		(56)		(124)
Net deferred tax assets	$	2,299	$	1,946

Federal and California tax laws imposes 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 no NOL carryforwards for Federal income tax purposes

and approximately $4,234 for California income tax purposes as of December 31, 2022. The state NOL carryforwards, if not utilized, will expire beginning in 2036.

As of December 31, 2022 and 2021, the Company had $401 and $476, 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 2022		Gross Unrecognized Tax Benefits 2021
Unrecognized tax benefits – January 1	$	476	$	341
Gross increases related to prior tax positions		—		41
Gross decreases related to prior tax positions		(120)		—
Gross increases related to current tax positions		45		94
Unrecognized tax benefits – December 31	$	401	$	476

The Company’s policy is to recognize interest and penalty expenses related to uncertain tax positions in income tax expense, which was $30 and none for the years ended December 31, 2022 and 2021, respectively. The Company files income tax returns in the U.S. federal and various state tax jurisdictions.

The Company’s tax years beginning in 2018 remain open for examination by the state tax authorities for four years. The Company’s tax years beginning in 2019 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, 2022.

On August 16, 2022, the CHIPS and Science Act of 2022 or Creating Helpful Incentives to Produce Semiconductors for America Act, and Inflation Reduction Act (IRA Act) was signed into law in the United States. Among other things, CHIPS and Science Act provides incentives and tax credits for the global chip manufacturers who choose to set-up or expand existing operations in the United States. The IRA Act imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. This act is primarily applicable to large corporations with an annual revenue of $1 billion or over. Implementation of this act has no impact on the Company’s financial statements as of December 31, 2022.

- 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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Net Income Per Share, Basic and Diluted

12 Months Ended

Dec. 31, 2022

Net Income Per Share, Basic and Diluted

Net Income Per Share, Basic and Diluted

17. 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. 5,000 options related to stock awards were granted and unvested. As of December 31, 2022, these options were considered anti-dilutive for the computation of diluted net income per share.

Basic and diluted net EPS is calculated as follows:


	For the year ended December 31,
	2022					2021
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic EPS	6,726,687	$	14,325	$	2.13	6,731,693	$	17,222	$	2.56
Common stock warrants	68,588		—		—	73,767		—		—
Common stock options	1,204,475		—		—	1,333,148		—		—
Diluted EPS	7,999,750	$	14,325	$	1.79	8,138,608	$	17,222	$	2.12

Summary of Significant Accounting Policies and Estimates (Policies)

12 Months Ended

Dec. 31, 2022

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

Concentration of Credit Risk

Concentration of Credit Risk

Cash and Cash Equivalents

Short-Term Investments

Short-Term Investments

Revenue Recognition

Accounts Receivable and Allowance for Doubtful Accounts

As of December 31, 2021, the allowance for doubtful accounts was $61. Net change due to credit losses during the year was $48. Allowance balance as of December 31, 2022 was $109.

Inventory

Inventory

Assets for Lease

Property and Equipment

At December 31, 2022 and 2021, 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, 2022 and 2021, 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

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Fair Value of Financial Instruments

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

Investment Valuation

Investment Valuation

No impairment charges were recorded during the year ended December 31, 2022 and 2021.

Deferred Revenue

Research and Development

Stock-Based Compensation

Employee Benefit Plan

Income Taxes

Recent Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Accounting Pronouncements Recently Adopted

Accounting Pronouncements Not Yet Adopted

Summary of Significant Accounting Policies and Estimates (Tables)

12 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies and Estimates

Schedule of estimated useful lives of property and equipment

At December 31, 2022 and 2021, 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

Assets for Lease, net (Tables)

12 Months Ended

Dec. 31, 2022

Assets for Lease, net

Summary of assets for lease, net


	As of December 31,
	2022		2021
Assets for lease	$	3,702	$	3,241
Less: accumulated depreciation		(1,224)		(1,598)
Assets for lease, net	$	2,478	$	1,643

Property and Equipment, net (Tables)

12 Months Ended

Dec. 31, 2022

Property and Equipment, net

Schedule of capital assets


	As of December 31,
	2022		2021
Capital assets	$	1,206	$	882
Less: accumulated depreciation		(539)		(488)
Capital assets, net	$	667	$	394

Long-Term Investments (Tables)

12 Months Ended

Dec. 31, 2022

Long-Term Investments.

Schedule of carrying value of non-marketable equity investments


	As of December 31,
	2022		2021
Investments in SYNAPS Dx	$	512	$	512
Investments in Mellitus Health Inc.		309		309
Total initial cost	$	821	$	821

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Measurements

Schedule of financial assets measured at fair value on a recurring basis


	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total
As of December 31,2022
U.S. Treasury bill	$	20,073	$	—	$	—	$	20,073
(Included in short-term investments)
Investment in debt Security		—		—		3,679		3,679
(Included in notes held for investment)
Total Assets	$	20,073	$	—	$	3,679	$	23,752

Notes held for investment (Tables)

12 Months Ended

Dec. 31, 2022

Notes held for investment

Schedule of notes receivable


	As of December 31,
	2022		2021
Senior secured promissory notes	$	1,000	$	—
Secured convertible promissory notes		3,679		—
Total notes held for investment	$	4,679	$	—

Other Non-current assets (Tables)

12 Months Ended

Dec. 31, 2022

Other Non-current assets

Schedule of other non-current assets


	As f December 31,
	2022		2021
Prepaid licenses	$	2,490	$	—
Other		352		332
Total other non-current assets	$	2,842	$	332

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2022

Accrued Expenses

Schedule of accrued expenses


	As of December 31,
	2022		2021
Compensation	$	2,467	$	1,754
Accrued Taxes		1,923		1,159
Miscellaneous Accruals		358		523
Total Accrued Expenses	$	4,748	$	3,436

Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases

Schedule of future minimum rental payments required under operating leases


	Total
2023		90
2024		93
2025		71
Total undiscounted future minimum lease payments		254
Less: present value discount		(9)
Total lease liabilities		245
Lease expense in excess cash payment		(12)
Total ROU asset	$	233

Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2022

Stockholders' Equity

Schedule of common stock reserved for issuance


	Year ended December 31,
	2022	2021
Common stock warrants	76,875	76,875
Stock options	1,471,670	1,356,245
Total	1,548,545	1,433,120

Stock Option Plan (Tables)

12 Months Ended

Dec. 31, 2022

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, 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
Options exercised	(73,398)		2.58	—		—
Options granted	5,000		30.48	4.00		—
Balance, December 31, 2022	1,287,847	$	3.44	3.03	$	38,053
Exercisable as of December 31, 2021	1,356,245	$	3.30	3.97	$	119,830
Exercisable as of December 31, 2022	1,282,847	$	3.34	3.00	$	38,053

Schedule of stock-based compensation expense


		December 31		December 31
	2022		2021
Engineering and Product Development	$	45	$	32
Sales and Marketing		173		125
General and Administrative		523		592
Total	$	741	$	749

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Taxes

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


	2022		2021
Current tax provision:
Federal	$	3,201	$	1,397
State		517		428
Total current tax provision		3,718		1,825
Deferred tax provision:
Federal		(373)		456
State		22		(48)
Total deferred tax provision		(351)		408
Total income tax provision	$	3,367	$	2,233

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


	2022		2021
Federal statutory rate	21.00	%	21.00	%
State income tax rate, net of federal benefit	2.57	%	1.55	%
Stock-based compensation	(4.03)	%	(10.62)	%
Permanent items	(0.93)	%	(1.16)	%
Other	0.35	%	0.68	%
Effective income tax rate	18.96	%	11.45	%

Schedule of deferred tax assets


	2022		2021
Net operating loss carryforwards	$	303	$	446
Deferred revenue		278		220
Stock based compensation		529		556
Accrual and reserves		297		529
Research and development credits		254		228
Other		2		14
Depreciation and amortization		633		—
Lease liability		59		77
Total gross deferred tax assets		2,355		2,070
Less valuation allowance		—		—
Net deferred tax assets		2,355		2,070
Deferred tax liabilities:
Depreciation and amortization		—		(49)
Right of use assets		(56)		(75)
Total deferred tax liabilities		(56)		(124)
Net deferred tax assets	$	2,299	$	1,946

Schedule of activity related to unrecognized tax benefits


		Gross Unrecognized Tax Benefits 2022		Gross Unrecognized Tax Benefits 2021
Unrecognized tax benefits – January 1	$	476	$	341
Gross increases related to prior tax positions		—		41
Gross decreases related to prior tax positions		(120)		—
Gross increases related to current tax positions		45		94
Unrecognized tax benefits – December 31	$	401	$	476

Net Income Per Share, Basic and Diluted (Tables)

12 Months Ended

Dec. 31, 2022

Net Income Per Share, Basic and Diluted

Schedule of basic and diluted EPS


	For the year ended December 31,
	2022					2021
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic EPS	6,726,687	$	14,325	$	2.13	6,731,693	$	17,222	$	2.56
Common stock warrants	68,588		—		—	73,767		—		—
Common stock options	1,204,475		—		—	1,333,148		—		—
Diluted EPS	7,999,750	$	14,325	$	1.79	8,138,608	$	17,222	$	2.12

The Company (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Prepaid licenses	$ 2,490
Agreement with Mellitus Health, Inc
Prepaid Licenses, Additional Amount Noncurrent	500
Prepaid licenses	$ 2,500

Summary of Significant Accounting Policies and Estimates (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Allowance for doubtful accounts	$ 109	$ 61
Net change due to credit losses	48
Impairment charges	0	0
Deferred revenue recognized	$ 921	$ 963
Employer matching contribution	50.00%
Maximum contribution of percentage of employee's eligible earnings	6.00%
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

Assets for Lease, net (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Assets for Lease, net
Assets for lease	$ 3,702	$ 3,241
Less: accumulated depreciation	(1,224)	(1,598)
Assets for lease, net	$ 2,478	$ 1,643

Assets for Lease, net - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Assets for Lease, net
Depreciation expense	$ 386	$ 442
Reduction to accumulated depreciation for returned and retired items	352	310
Loss on disposal of assets for lease	(463)	(362)
Total assets for lease, net, in use at customer locations	$ 518	$ 631

Inventory (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Inventory
Inventory balance	$ 469	$ 550

Property and Equipment, net (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property and Equipment, net
Capital assets	$ 1,206	$ 882
Less: accumulated depreciation	(539)	(488)
Capital assets, net	$ 667	$ 394

Property and Equipment, net - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Property and Equipment, net
Depreciation expense	$ 203	$ 180

Long-Term Investments (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Equity Securities without Readily Determinable Fair Value [Line Items]
Total initial cost	$ 821	$ 821
Investments in SYNAPS Dx
Equity Securities without Readily Determinable Fair Value [Line Items]
Total initial cost	512	512
Investments in Mellitus Health Inc.
Equity Securities without Readily Determinable Fair Value [Line Items]
Total initial cost	$ 309	$ 309

Long-Term Investments - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Oct. 31, 2020	Dec. 31, 2022	Dec. 31, 2021	Sep. 30, 2020
Equity Securities without Readily Determinable Fair Value [Line Items]
Shares purchased		211,928
Impairment		$ 0	$ 0
Investments in Mellitus Health Inc.
Equity Securities without Readily Determinable Fair Value [Line Items]
Amount of shares purchased	$ 250
Promissory note from SYNAPS Dx
Equity Securities without Readily Determinable Fair Value [Line Items]
Principal amount				$ 500
Expense reimbursement				$ 100
Conversion value		512	512
Convertible promissory note previously issued by Mellitus
Equity Securities without Readily Determinable Fair Value [Line Items]
Purchase price	59
Principal amount	$ 50
Conversion value		$ 309	$ 309

Fair Value Measurements (Details) - USD ($) $ in Thousands		12 Months Ended
Fair Value Measurements (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities measured at fair value			$ 0
Purchase cost		$ 19,996
Interest income		77
U.S. Treasury bill
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Purchase cost	$ 19,996
Interest rate	4.245%
Interest income		77
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury bill		20,073
Investment in debt Security		3,679
Total Assets		23,752
Recurring \| Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury bill		20,073
Total Assets		20,073
Recurring \| Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment in debt Security		3,679
Total Assets		$ 3,679

Notes held for investment (Details) $ in Thousands	1 Months Ended			12 Months Ended
Notes held for investment (Details) $ in Thousands	Dec. 31, 2022 USD ($) item	Jun. 30, 2022 USD ($) item	May 31, 2022 USD ($)	Dec. 31, 2022 USD ($)	Jan. 31, 2023 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total notes held for investment	$ 4,679			$ 4,679
Aggregate principal amount				4,679
Interest income from promissory notes				62
Changes in fair value				0
Senior secured promissory notes
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total notes held for investment	1,000			1,000
Interest rate (as a percent)		5.00%
Number of notes receivable \| item		2
Term (in years)		3 years
Aggregate principal amount		$ 1,000
Secured convertible promissory note
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total notes held for investment	3,679			3,679
Secured convertible promissory note \| Mellitus
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest rate (as a percent)			10.00%
Aggregate principal amount			$ 179
Fair value of the Debt Securities	179			179
Secured convertible promissory note \| Monarch
Accounts, Notes, Loans and Financing Receivable [Line Items]
Aggregate principal amount	3,500			3,500
Maximum amount of available funding	5,000			5,000
Transaction fee	100			100
Remaining amount available to be drawn	$ 1,500			$ 1,500	$ 1,000
Option to extend the maturity date \| item	2
Period to extend the maturity date	1 year			1 year
Fair value of the Debt Securities	$ 3,500			$ 3,500
Interest rate	10.00%			10.00%

Other Non-current assets - Schedule of other non-current assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Other Non-current assets
Prepaid licenses	$ 2,490
Other	352	$ 332
Total other non-current assets	$ 2,842	$ 332

Other Non-current assets - Additional Information Details (Details) - USD ($) $ in Thousands	1 Months Ended
	Apr. 30, 2021	Dec. 31, 2022	Dec. 31, 2021
Equity Securities without Readily Determinable Fair Value [Line Items]
Term of agreement	5 years
ROU asset		$ 233	$ 314
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]		Other Assets, Noncurrent	Other Assets, Noncurrent
Miscellaneous receivables		$ 100
Long-term deposits		$ 19
Miscellaneous deposits			$ 18
Mellitus
Equity Securities without Readily Determinable Fair Value [Line Items]
Purchase of product licenses	$ 2,500
Renewal term of purchase agreement (in years)	1 year
Termination upon notice (in days)	60 days
Mellitus \| Prepaid expenses and other current assets
Equity Securities without Readily Determinable Fair Value [Line Items]
Prepaid license purchases	$ 2,500

Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accrued Expenses
Compensation	$ 2,467	$ 1,754
Accrued Taxes	1,923	1,159
Miscellaneous Accruals	358	523
Total Accrued Expenses	$ 4,748	$ 3,436

Concentration of Credit Risk (Details) $ in Thousands	12 Months Ended
Concentration of Credit Risk (Details) $ in Thousands	Dec. 31, 2022 USD ($) customer item	Dec. 31, 2021 USD ($) customer item
Concentration of Credit Risk
Deposits exceeded federal deposit corporation limits	$ 12,960
U.S. treasury bills	30,127
Allowance for doubtful accounts	$ 109	$ 61
Customer concentration risk \| Revenue
Concentration of Credit Risk
Number of customers \| customer	2	2
Customer concentration risk \| Revenue \| Customer one
Concentration of Credit Risk
Concentration risk percentage	40.40%	40.80%
Customer concentration risk \| Revenue \| Customer two
Concentration of Credit Risk
Concentration risk percentage	29.00%	28.60%
Customer concentration risk \| Accounts receivable
Concentration of Credit Risk
Number of customers \| customer	3	3
Customer concentration risk \| Accounts receivable \| Customer one
Concentration of Credit Risk
Concentration risk percentage	26.80%	21.90%
Customer concentration risk \| Accounts receivable \| Customer two
Concentration of Credit Risk
Concentration risk percentage	25.90%	20.10%
Customer concentration risk \| Accounts receivable \| Customer three
Concentration of Credit Risk
Concentration risk percentage	16.80%	16.60%
Vendor concentration risk \| Accounts payable
Concentration of Credit Risk
Number of vendors \| item	2	1
Vendor concentration risk \| Accounts payable \| Vendor one
Concentration of Credit Risk
Concentration risk percentage	25.80%	14.00%
Vendor concentration risk \| Accounts payable \| Vendor two
Concentration of Credit Risk
Concentration risk percentage	10.80%

Leases - Future minimum rental payments (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Leases
2023	$ 90
2024	93
2025	71
Total undiscounted future minimum lease payments	254
Less: present value discount	(9)
Total lease liabilities	245
Lease expense in excess cash payment	(12)
Total ROU asset	$ 233	$ 314

Leases - Lessee Arrangements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Jul. 31, 2020
Leases
Lease agreement term			61 months
Remaining lease term	3 years 9 months
Options to renew	false
Lease expenses	$ 88	$ 112
ROU asset	$ 233	$ 314
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other Assets, Noncurrent	Other Assets, Noncurrent
Current lease liabilities	$ 85
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other Liabilities, Current
Noncurrent lease liabilities	$ 160
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other Liabilities, Noncurrent

Leases - Lessor Arrangements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Leases
Lease, Practical Expedient, Lessor Single Lease Component [true false]	true
Lease revenue	$ 34,039	$ 30,561
Operating Lease, Lease Income, Statement of Income or Comprehensive Income [Extensible Enumeration]	Revenue from Contract with Customer, Excluding Assessed Tax	Revenue from Contract with Customer, Excluding Assessed Tax

Leases - Variable-fee Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Leases
Revenue from variable-fee licenses	$ 21,277	$ 21,510
Revenues from sales of hardware and equipment accessories	$ 1,358	$ 956

Commitments and Contingencies (Details) $ in Thousands	1 Months Ended	12 Months Ended
Commitments and Contingencies (Details) $ in Thousands	Dec. 31, 2022 USD ($) item	Dec. 31, 2022 USD ($)	Jan. 31, 2023 USD ($)	Dec. 31, 2021 USD ($)
Commitments and Contingencies
Retention credit	$ 0	$ 0		$ 1,240
Aggregate principal amount		4,679
Senior secured convertible promissory note \| Monarch
Commitments and Contingencies
Maximum amount of available funding	5,000	5,000
Aggregate principal amount	3,500	3,500
Additional borrowing funded			$ 500
Transaction fee	100	100
Remaining amount available to be drawn	$ 1,500	$ 1,500	$ 1,000
Option to extend the maturity date \| item	2
Period to extend the maturity date	1 year	1 year
Interest rate	10.00%	10.00%

Stockholders' Equity - Additional Information (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) Vote $ / shares shares	Mar. 14, 2022 USD ($)	Dec. 31, 2021 $ / 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 increase in share reserve	1,548,545		1,433,120
Shares authorized under Share Repurchase Program \| $		$ 20,000
Treasury stock acquired (in shares)	148,500
Cost of treasury stock acquired \| $	$ 4,991

Stockholders' Equity - Summary of exercise of common stock outstanding stock options (Details) - shares	Dec. 31, 2022	Dec. 31, 2021
Stockholders' Equity
Total	1,548,545	1,433,120
Common stock warrants
Stockholders' Equity
Total	76,875	76,875
Stock options
Stockholders' Equity
Total	1,471,670	1,356,245

Stock Option Plan - Additional Information (Details) - USD ($) $ in Thousands		1 Months Ended	12 Months Ended
	May 17, 2022	Oct. 31, 2015	Dec. 31, 2022	Dec. 31, 2021	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total estimated grant date fair value of options non-vested			$ 0	$ 192
Number of stock option granted			5,000	0
Number of stock option forfeited				0
Fully vested stock granted			9,421	5,516
Grant date fair value of stock			$ 723	$ 557
Stock-based compensation expense			$ 741	$ 749
2014 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock option granted	5,000
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			3,315,203		450,000
Number of share reserve approved		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			1,471,670
Total unrecognized compensation cost related to non-vested awards			$ 94
Weighted average period of unvested stock awards			3 years 4 months 24 days
Total number of unvested shares			3,315,203

Stock Option Plan - Summary of the Company's stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Number of Stock Options Outstanding
Balance, Beginning	1,356,245	1,451,420
Options exercised	(73,398)	(95,175)
Options granted	5,000	0
Balance, Ending	1,287,847	1,356,245	1,451,420
Exercisable, Ending	1,282,847	1,356,245
Weighted Average Exercise Price
Balance, Beginning	$ 3.30	$ 3.25
Exercise price	30.48
Options exercised	2.58	2.55
Options granted	30.48
Balance, Ending	3.44	3.30	$ 3.25
Exercisable, Ending	$ 3.34	$ 3.30
Weighted Average Remaining Contractual Term, Options Outstanding (in years)	3 years 10 days	3 years 11 months 19 days	4 years 10 months 28 days
Weighted Average Remaining Contractual Term, Options granted (in years)	4 years
Weighted Average Remaining Contractual Term, Options Exercisable (in years)	3 years	3 years 11 months 19 days
Aggregate Intrinsic Value, Options Outstanding	$ 38,053	$ 119,830	$ 131,714
Aggregate Intrinsic Value, Options Exercisable	$ 38,053	$ 119,830

Stock Option Plan -Stock option Assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	May 17, 2022	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted		5,000	0
Exercise price		$ 30.48
2014 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted	5,000
Exercise price	$ 30.48
Share based compensation, options pricing model value	$ 22.27
Share based compensation, expected price volatility	78.60%
Share based compensation, risk-free interest rate	2.884%
Share based compensation, weighted average expected life (in years)	7 years
Forfeiture rate	0.00%
Share based compensation, expected dividend yield	0.00%
2014 Stock Incentive Plan \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of unvested stock options		$ 94
Weighted average period of unvested stock awards		3 years 4 months 24 days

Stock Option Plan - Stock-based compensation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 741	$ 749
Engineering and Product Development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	45	32
Sales and Marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	173	125
General and Administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 523	$ 592

Income Taxes - Summary of components of the (benefit) provision for income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Current tax provision:
Federal	$ 3,201	$ 1,397
State	517	428
Total current tax provision	3,718	1,825
Deferred tax provision:
Federal	(373)	456
State	22	(48)
Total deferred tax provision	(351)	408
Total income tax provision	$ 3,367	$ 2,233

- Definition

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

+ References + Details

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, 2022	Dec. 31, 2021
Income Taxes
Federal statutory rate	21.00%	21.00%
State income tax rate, net of federal benefit	2.57%	1.55%
Stock-based compensation	(4.03%)	(10.62%)
Permanent Items	(0.93%)	(1.16%)
Other	0.35%	0.68%
Effective income tax rate	18.96%	11.45%

Income Taxes - Summary of Deferred tax assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets:
Net operating loss carryforwards	$ 303	$ 446
Deferred revenue	278	220
Stock based compensation	529	556
Accrual and reserves	297	529
Research and development credits, net of tax reserve	254	228
Other	2	14
Depreciation and amortization	633	0
Lease liability	59	77
Total gross deferred tax assets	2,355	2,070
Less valuation allowance		0
Net deferred tax assets	2,355	2,070
Deferred tax liabilities:
Depreciation and amortization		(49)
Right of use assets	(56)	(75)
Total deferred tax liabilities	(56)	(124)
Net deferred tax assets	$ 2,299	$ 1,946

Income Taxes - Summary of activity related to the Company's gross unrecognized tax benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Unrecognized tax benefits:
Unrecognized tax benefits - January 1	$ 476	$ 341
Gross increases related to prior tax positions	0	41
Gross decreases related to prior tax positions	(120)	0
Gross increases related to current tax positions	45	94
Unrecognized tax benefits - December 31	$ 401	$ 476

Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Tax Credit Carryforward [Line Items]
Net operating loss carryforwards for California	$ 4,234
Unrecognized Tax Benefits	401	$ 476	$ 341
Interest and penalty expenses related to uncertain tax positions	30	$ 0
Federal
Tax Credit Carryforward [Line Items]
NOL carryforwards	$ 0
Company's tax years beginning for examination	3 years
State
Tax Credit Carryforward [Line Items]
Company's tax years beginning for examination	4 years

Net Income Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Net Income Per Share, Basic and Diluted
Basic shares (in shares)	6,726,687	6,731,693
Common stock warrants (in shares)	68,588	73,767
Common stock options (in shares)	1,204,475	1,333,148
Diluted shares (in shares)	7,999,750	8,138,608
Net Income - Basic EPS	$ 14,325	$ 17,222
Net Income - Common stock warrants	0	0
Net Income - Common stock options	0	0
Net Income - Diluted EPS	$ 14,325	$ 17,222
Basic EPS (in dollars per share)	$ 2.13	$ 2.56
Common stock warrants (in dollars per share)	0
Common stock options (in dollars per share)	0
Diluted EPS (in dollars per share)	$ 1.79	$ 2.12

Net Income Per Share, Basic and Diluted - Additional Information (Details)	12 Months Ended
	Dec. 31, 2022 shares
Net Income Per Share, Basic and Diluted
Securities excluded from the computation of diluted net income per share	5,000