0001554859-23-000036 | 10-Q | XBRL Viewer

Notes Held for Investment (Tables)

3 Months Ended

Mar. 31, 2023


	March 31			December 31
	2023			2022
Senior secured promissory notes	$	1,000	$	1,000
Secured convertible promissory notes		4,072		3,679
Total notes held for investment	$	5,072	$	4,679

Condensed Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings	Total
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
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock acquired			(99)		(99)
Treasury stock acquired (Shares)		(2,030)
Employee stock grants			628		628
Employee stock grants (in shares)	8,406
Taxes paid related to net share settlement of equity awards			(106)		(106)
Taxes paid related to net share settlement of equity awards (in shares)	(1,418)
Stock option exercises			62		62
Stock option exercises (in shares)	23,800
Net income				3,360	3,360
Balance at Mar. 31, 2022	$ 7		21,130	28,255	49,392
Balance (in shares) at Mar. 31, 2022	6,855,168
Balance (in shares) at Mar. 31, 2022		67,952
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
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock acquired					$ (4,991)
Treasury stock acquired (Shares)					(148,500)
Balance at Mar. 31, 2023	$ 7		17,005	44,189	$ 61,201
Balance (in shares) at Mar. 31, 2023	6,920,643
Balance (in shares) at Mar. 31, 2023		214,422			(214,422)
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)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Employee stock grants			695		$ 695
Employee stock grants (in shares)	18,048
Taxes paid related to net share settlement of equity awards			(146)		(146)
Taxes paid related to net share settlement of equity awards (in shares)	(3,949)
Stock-based compensation			7		7
Net income				4,969	4,969
Balance at Mar. 31, 2023	$ 7		$ 17,005	$ 44,189	$ 61,201
Balance (in shares) at Mar. 31, 2023	6,920,643
Balance (in shares) at Mar. 31, 2023		214,422			(214,422)

Fair Value Measurements - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Short-Term Debt [Line Items]
Debt securities measured at fair value	$ 4,072	$ 3,679
Monarch Debt Security
Short-Term Debt [Line Items]
Percentage of probability of equity financing	20.00%
Percentage of probability of change of control	20.00%
Percentage of probability of payment at maturity or an insolvency event	60.00%
Mellitus Convertible Notes
Short-Term Debt [Line Items]
Percentage of probability of equity financing	70.00%
Percentage of probability of change of control	8.00%
Percentage of probability of payment at maturity or an insolvency event	22.00%

Income Taxes

3 Months Ended

Mar. 31, 2023

Income Taxes

Income Taxes

16.Income Taxes

The Company’s income tax provision for the three months ended March 31, 2023 was $1,664 and for the three months ended March 31, 2022 was $583. The income tax provision reflects its estimate of the effective tax rates expected to be applicable for the full year, adjusted for any discrete events that are recorded in the period in which they occurred. The estimates are re-evaluated each quarter based on the estimated tax expense for the full year.

For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the statements of operations.

The effective tax rate for the three months ended March 31, 2023 was 24.68%, compared to 14.79%, in the same period of the prior year. The increase in effective tax rate for the three months ended March 31, 2023 was primarily due to lower tax benefits associated with employee stock-based compensation.

The effective tax rate for the three months ended March 31, 2023 differed from the U.S. federal statutory rate of 21% primarily due to state income taxes (net of federal benefit) and federal and state research and development (“R&D”) credit benefit. The effective tax rate for the three months ended March 31, 2022 differed from the U.S. federal statury rate of 21% primarily due to

state income taxes (net of federal benefit) partially offset by tax benefits associated with employee share-based compensation plans and federal and state R&D credit benefit.

As of March 31, 2023, and December 31, 2022, the Company had $447 and $401, respectively of unrecognized tax benefits, excluding interest and penalties. The Company’s practice is to recognize interest and penalty expenses related to uncertain tax positions in income tax expense, which was $42 and $30 for the three months ended March 31, 2023, and the year ended December 31, 2022, respectively.

On August 16, 2022, the Creating Helpful Incentives to Produce Semiconductors for America Act of 2022 (“CHIPS and Science Act”), and Inflation Reduction Act (“IRA”) 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 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 March 31, 2023.

- 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

3 Months Ended

Mar. 31, 2023

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 stockholders divided by the weighted average number of common shares outstanding during the measurement period. Diluted EPS represents net income attributable to common stockholders 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.

Basic and diluted EPS is calculated as follows:


	Three months ended March 31,
	2023					2022
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic	6,701,199	$	4,969	$	0.74	6,777,950	$	3,360	$	0.50
Common stock warrants	64,825		—			71,839		—
Common stock options	1,130,019		—			1,266,667		—
Diluted	7,896,043	$	4,969	$	0.63	8,116,456	$	3,360	$	0.41

As of March 31, 2023, 5,000 options related to stock awards were granted and unvested. These options were considered anti-dilutive for the computation of diluted net income per share. Hence, these options were excluded from the computation of diluted net income per share. As of March 31, 2022, there were no weighted average shares outstanding of common stock equivalents excluded from the computation of diluted net income per share.

Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2023

Accrued Expenses

Schedule of accrued expenses


	March 31,		December 31,
	2023		2022
Compensation	$	2,682	$	2,467
Accrued Taxes		3,781		1,923
Miscellaneous Accruals		743		358
Total Accrued Expenses	$	7,206	$	4,748

Net Income Per Share, Basic and Diluted - Additional Information (Details) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from the computation of diluted net income per share		0
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from the computation of diluted net income per share	5,000

Variably-Priced Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
Variably-Priced Revenue (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Variably-Priced Revenue
Revenue from variable-fee licenses	$ 8,561	$ 5,842
Revenue from sales of hardware and equipment accessories	$ 340	$ 285

Net Income Per Share, Basic and Diluted (Tables)

3 Months Ended

Mar. 31, 2023

Net Income Per Share, Basic and Diluted

Schedule of basic and diluted EPS


	Three months ended March 31,
	2023					2022
	Shares	Net Income		EPS		Shares	Net Income		EPS
Basic	6,701,199	$	4,969	$	0.74	6,777,950	$	3,360	$	0.50
Common stock warrants	64,825		—			71,839		—
Common stock options	1,130,019		—			1,266,667		—
Diluted	7,896,043	$	4,969	$	0.63	8,116,456	$	3,360	$	0.41

Property and Equipment, net (Tables)

3 Months Ended

Mar. 31, 2023

Property and Equipment, net

Schedule of capital assets


	March 31,		December 31,
	2023		2022
Capital assets	$	1,301	$	1,206
Less: accumulated depreciation		(598)		(539)
Capital assets, net	$	703	$	667

Fair Value Measurements - Changes in the notes held for the investments with significant unobservable inputs (Details) - Level 3 - Convertible Notes $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Beginning balance	$ 3,679
Purchased	500
Change in fair value of the notes held for investment	(107)
Ending balance	$ 4,072

Other Non-current assets (Tables)

3 Months Ended

Mar. 31, 2023

Other Non-current assets

Schedule of other non-current assets


	March 31,		December 31,
	2023		2022
Prepaid licenses	$	2,487	$	2,490
Other		331		352
Total other non-current assets	$	2,818	$	2,842

Long-Term Investments - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	12 Months Ended
	Oct. 31, 2020	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2020
Equity Securities without Readily Determinable Fair Value [Line Items]
Impairment		$ 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

Assets for Lease, net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Assets for Lease, net
Lease revenue	$ 9,304	$ 7,889
Depreciation expense	70	108
Reduction to accumulated depreciation for returned and retired items	197	90
Loss on disposal of assets for lease	$ (78)	$ (74)

Lessee Arrangements

3 Months Ended

Mar. 31, 2023

Lessee Arrangements

Lessee Arrangements

13.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 March 31, 2023, the remaining lease term is two years and six months with no options to renew. The Company recognized facilities lease expenses of $22 and $22 for the three months ended March 31, 2023 and 2022, 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 March 31, 2023:


	Total
2023 Remaining period		67
2024		93
2025		71
Total undiscounted future minimum lease payments		231
Less: present value discount		(7)
Total lease liabilities		224
Lease expense in excess cash payment		(12)
Total ROU asset	$	212

As of March 31, 2023, the Company’s ROU asset was $212, which was recorded on the Company’s balance sheet as other noncurrent assets, and the Company’s current and noncurrent lease liabilities were $86 and $138, 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 4 to the Unaudited Condensed Financial Statements.

Stock Incentive Plan - Stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Number of Stock Options Outstanding
Balance, Beginning	1,287,847
Options granted	0	0
Balance, Ending	1,287,847		1,287,847
Exercisable, Ending	1,282,847
Weighted Average Exercise Price
Balance, Beginning	$ 3.44
Balance, Ending	3.44		$ 3.44
Exercisable, Ending	$ 3.34
Weighted Average Remaining Contractual Term, Options Outstanding (in years)	2 years 9 months 10 days		3 years 10 days
Weighted Average Remaining Contractual Term, Options Exercisable (in years)	2 years 9 months 3 days
Aggregate Intrinsic Value, Options Outstanding	$ 30,100		$ 38,053
Aggregate Intrinsic Value, Options Exercisable	$ 30,100

Condensed Statements of Income - USD ($) $ in Thousands	3 Months Ended
Condensed Statements of Income - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Condensed Statements of Income
Revenues	$ 18,206	$ 14,016
Operating expenses:
Cost of revenues	1,269	970
Engineering and product development	1,630	1,126
Sales and marketing	5,192	4,676
General and administrative	3,859	3,302
Total operating expenses	11,950	10,074
Income from operations	6,256	3,942
Interest income	484	1
Change in fair values of notes held for investment	(107)
Other income, net	377	1
Pre-tax net income	6,633	3,943
Income tax provision	1,664	583
Net income	$ 4,969	$ 3,360
Net income per share, basic	$ 0.74	$ 0.50
Weighted average number of shares used in computing basic income per share	6,701,199	6,777,950
Net income per share, diluted	$ 0.63	$ 0.41
Weighted average number of shares used in computing diluted income per share	7,896,043	8,116,456

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

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 March 31, 2023
U.S. Treasury bills	$	37,663	$	—	$	—	$	37,663
(Included in short-term investments)
Investment in debt securities		—		—		4,072		4,072
(Included in notes held for investment)
Total Assets	$	37,663	$	—	$	4,072	$	41,735


	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 securities		—		—		3,679		3,679
(Included in notes held for investment)
Total Assets	$	20,073	$	—	$	3,679	$	23,752

Schedule of key inputs for the valuation model


		March 31,
		2023
Risk-free rate		3.67% - 4.67%
Cash flow discount rate		26.4% - 28.7%
Expert term in years		0.25 - 3.68
Expected volatility		105.0%- 205.0%

Schedule of changes in the notes held for the investments


	Convertible Notes
Balance as of December 31, 2022	$	3,679
Purchased		500
Change in fair value of the notes held for investment		(107)
Balance as of March 31, 2023	$	4,072

Condensed Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
Condensed Statements of Cash Flows - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 4,969	$ 3,360
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
Depreciation	129	155
Deferred tax (income) expense	(80)	179
Loss on disposal of assets for lease	78	74
Allowance for credit losses	48	21
Change in fair values of notes held for investment	107
Gain on short-term investments	(305)
Stock-based compensation	702	628
Changes in Operating Assets and Liabilities:
Trade accounts receivable	(5,507)	(1,818)
Inventory	(43)	(45)
Prepaid expenses and other current assets	(1,301)	(1,988)
Other non-current assets	25	19
Accounts payable	(537)	(68)
Accrued expenses	2,458	946
Other current and non-current liabilities	118	39
Net Cash Provided by Operating Activities	861	1,502
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment	(95)	(122)
Proceeds from maturities of short-term investments	20,211
Purchase of short-term investments	(37,496)
Purchase of notes held for investment	(500)
Purchase of assets for lease	(544)	(134)
Net Cash Used in Investing Activities	(18,424)	(256)
CASH FLOWS FROM FINANCING ACTIVITIES:
Taxes paid related to net settlement of equity awards	(146)	(106)
Treasury stock acquired		(99)
Proceeds from exercise of stock options		62
Net Cash Used in Financing Activities	(146)	(143)
(DECREASE) INCREASE IN CASH	(17,709)	1,103
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	23,014	37,323
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 5,305	$ 38,426

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Income Taxes
Income tax provision	$ 1,664	$ 583
Effective income tax rate	24.68%	14.79%
Federal statutory rate	21.00%
Unrecognized tax benefits	$ 447		$ 401
Interest and penalty expenses related to uncertain tax positions	$ 42	$ 30

- Definition

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

+ References + Details

Inventory

3 Months Ended

Mar. 31, 2023

Inventory

Inventory

4. Inventory

Inventory, which is made up of finished goods, is recorded at the lower of cost or net realizable value. Cost is determined on the first-in, first-out method. The Company periodically analyzes its inventory levels to identify inventory that has a cost basis in excess of its estimated realizable value and writes down such inventory as appropriate. Inventory balance was $512 and $469 as of March 31, 2023 and December 31, 2022, respectively.

Stock Incentive Plan - Treasury Stock Acquired (Details) - USD ($) $ in Thousands	3 Months Ended	15 Months Ended
	Mar. 31, 2022	Mar. 31, 2023	Mar. 14, 2022
Stock Incentive Plan
Shares authorized under Share Repurchase Program			$ 20,000
Treasury stock acquired (in shares)		148,500
Cost of treasury stock acquired	$ 99	$ 4,991

Commitments and Contingencies (Details) $ in Thousands		1 Months Ended		3 Months Ended	4 Months Ended	12 Months Ended
Commitments and Contingencies (Details) $ in Thousands	Jan. 01, 2022	Jan. 31, 2023 USD ($)	Dec. 31, 2022 USD ($) item	Mar. 31, 2023 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Commitments and Contingencies
Retention credit				$ 1,240	$ 1,240
Credit claimed				0		$ 0
Aggregate principal amount				$ 500
Employer matching contribution	50.00%
Maximum
Commitments and Contingencies
Maximum contribution of percentage of employee's eligible earnings	6.00%
Senior secured convertible promissory note \| Monarch
Commitments and Contingencies
Maximum amount of available funding			$ 5,000			5,000
Aggregate principal amount		$ 500	3,500		$ 4,000
Transaction fee			100
Remaining amount available to be drawn			$ 1,000			$ 1,000
Option to extend the maturity date \| item			2
Period to extend the maturity date			1 year
Interest rate			10.00%

Property and Equipment, net (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Property and Equipment, net
Capital assets	$ 1,301	$ 1,206
Less: accumulated depreciation	(598)	(539)
Capital assets, net	$ 703	$ 667

Stock Incentive Plan - Stock option - additional information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted	0	0
2014 Stock Incentive Plan \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of unvested stock options	$ 87
Weighted average period of unvested stock awards	3 years 4 months 24 days

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2023	May 05, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
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, par value $0.001 per share
Trading Symbol	SMLR
Security Exchange Name	NASDAQ
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
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,851,498
Entity Central Index Key	0001554859
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

Other Non-current assets - Schedule of other non-current assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Other Non-current assets
Prepaid licenses	$ 2,487	$ 2,490
Other	331	352
Total other non-current assets	$ 2,818	$ 2,842

Other Non-current assets

3 Months Ended

Mar. 31, 2023

Other Non-current assets

Other Non-current assets

10. Other Non-current assets

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


	March 31,		December 31,
	2023		2022
Prepaid licenses	$	2,487	$	2,490
Other		331		352
Total other non-current assets	$	2,818	$	2,842

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. 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.

Revenue from these product licenses will be recognized in accordance with ASC 606, Revenue from Contracts with Customers. The Company did not generate significant revenue from these product licenses during the three months ended March 31, 2023 and 2022.

Other includes right-of-use asset (“ROU”) of $212, miscellaneous receivables of $100, and long-term deposits of $19 as of March 31, 2023. As of December 31, 2022, ROU was $233, miscellaneous receivable was $100, and long-term deposit was $19.

Accrued Expenses

3 Months Ended

Mar. 31, 2023

Accrued Expenses

Accrued Expenses

11.Accrued Expenses

Accrued expenses consist of the following:


	March 31,		December 31,
	2023		2022
Compensation	$	2,682	$	2,467
Accrued Taxes		3,781		1,923
Miscellaneous Accruals		743		358
Total Accrued Expenses	$	7,206	$	4,748

Condensed Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current Assets:
Cash and cash equivalents	$ 5,305	$ 23,014
Short-term investments	37,663	20,073
Trade accounts receivable, net of reserves of $154 and $109, respectively	9,343	3,884
Inventory, net	512	469
Prepaid expenses and other current assets	2,769	1,468
Total current assets	55,592	48,908
Assets for lease, net	2,873	2,478
Property and equipment, net	703	667
Long-term investments	821	821
Notes held for investment (includes measured at fair value of $4,072 and $3,679, respectively)	5,072	4,679
Other non-current assets	2,818	2,842
Long-term deferred tax assets	2,378	2,298
Total assets	70,257	62,693
Current liabilities:
Accounts payable	298	835
Accrued expenses	7,206	4,748
Deferred revenue	1,286	1,160
Other short-term liabilities	128	114
Total current liabilities	8,918	6,857
Long-term liabilities:
Other long-term liabilities	138	160
Total long-term liabilities	138	160
Commitments and contingencies (Note 14)
Stockholders' equity:
Common stock, $0.001 par value; 50,000,000 shares authorized; 6,920,643, and 6,906,544 shares issued, and 6,706,221 and 6,692,122 shares outstanding (treasury shares of 214,422 and 214,422), respectively	7	7
Additional paid-in capital	17,005	16,449
Retained earnings	44,189	39,220
Total stockholders' equity	61,201	55,676
Total liabilities and stockholders' equity	$ 70,257	$ 62,693

Property and Equipment, net

3 Months Ended

Mar. 31, 2023

Property and Equipment, net

Property and Equipment, net

6. Property and Equipment, net

Capital assets consist of the following:


	March 31,		December 31,
	2023		2022
Capital assets	$	1,301	$	1,206
Less: accumulated depreciation		(598)		(539)
Capital assets, net	$	703	$	667

Depreciation expense amounted to $59 and $46 for the three months ended March 31, 2023 and 2022, respectively.

Notes Held for Investment

3 Months Ended

Mar. 31, 2023

Notes Held for Investment

Notes Held for Investment

9.Notes Held for Investment

Notes receivable consist of the following for the periods presented:


	March 31			December 31
	2023			2022
Senior secured promissory notes	$	1,000	$	1,000
Secured convertible promissory notes		4,072		3,679
Total notes held for investment	$	5,072	$	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 Medical Technology, LLC (“Monarch”), providing Monarch with up to $5,000 in available funding, of which $4,000, in principle was drawn as of March 31, 2023 (the “Debt Security”). The remaining $1,000 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, 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 March 31, 2023, the Company estimated the fair value of the Debt Securities of Monarch to be $3,858 and Mellitus $214. 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 were 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 quarters ended March 31, 2023 and 2022, the Company recognized $82 and $0, respectively, 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 quarter ended March 31, 2023, the Company recorded change in fair value of $107.

Fair Value Measurements - Valuation model (Details)	Mar. 31, 2023 Y
Risk-free interest rate \| Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.0367
Risk-free interest rate \| Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.0467
Cash flow discount rate \| Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.264
Cash flow discount rate \| Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.287
Expected term (in years) \| Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	0.25
Expected term (in years) \| Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	3.68
Expected volatility \| Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	1.050
Expected volatility \| Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input	2.050

Concentration of Credit Risk (Details) $ in Thousands	3 Months Ended		12 Months Ended
Concentration of Credit Risk (Details) $ in Thousands	Mar. 31, 2023 USD ($) customer item	Mar. 31, 2022 customer	Dec. 31, 2022 customer item
Concentration of Credit Risk
Deposits	$ 5,305
U.S. treasury bills	37,663
First Republic Bank and Edward Jones
Concentration of Credit Risk
Deposits	$ 5,198
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	40.90%	39.20%
Customer concentration risk \| Revenue \| Customer two
Concentration of Credit Risk
Concentration risk percentage	33.50%	31.70%
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	60.00%		26.80%
Customer concentration risk \| Accounts receivable \| Customer two
Concentration of Credit Risk
Concentration risk percentage	15.40%		25.90%
Customer concentration risk \| Accounts receivable \| Customer three
Concentration of Credit Risk
Concentration risk percentage	13.60%		16.80%
Vendor concentration risk \| Accounts payable
Concentration of Credit Risk
Number of vendors \| item	2		2
Vendor concentration risk \| Accounts payable \| Vendor one
Concentration of Credit Risk
Concentration risk percentage	20.60%		25.80%
Vendor concentration risk \| Accounts payable \| Vendor two
Concentration of Credit Risk
Concentration risk percentage	13.90%		10.80%

Assets for Lease, net (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Assets for Lease, net
Assets for lease	$ 3,970	$ 3,702
Less: accumulated depreciation	(1,097)	(1,224)
Assets for lease, net	$ 2,873	$ 2,478

Stock Incentive Plan - Additional Information (Details) $ in Thousands	1 Months Ended	3 Months Ended
	Oct. 31, 2015 shares	Mar. 31, 2023 USD ($) shares	Mar. 31, 2022 USD ($) employee shares	Jan. 01, 2023 shares	Sep. 30, 2014 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense \| $		$ 702	$ 628
Aggregate of shares granted fully vested stock awards		18,048	8,406
Fair value of stock awards on grant date \| $		$ 695	$ 628
Net shares issued after deducting taxes paid on granted shares		14,099	6,988
Number of non-employees \| employee			1
2014 Stock Incentive Plan \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares increase in share reserve				267,685
Maximum number of shares issued pursuant to awards granted under plan		3,582,888			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		1,725,256
Total unrecognized compensation cost related to non-vested awards \| $		$ 87
Weighted average period of unvested stock awards		3 years 4 months 24 days
Total number of unvested shares		3,582,888
2007 Key Person Stock Option Plan \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for future stock-based compensation grants		0

Basis of Presentation

3 Months Ended

Mar. 31, 2023

Basis of Presentation

Basis of Presentation

1.Basis of Presentation

Semler Scientific, Inc., a Delaware corporation (“Semler” or “the Company”), prepared the unaudited interim financial statements included in this report in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 23, 2023 (the “Annual Report”). In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any future period, including the full year.

Credit Losses on Financial Instruments

In accordance with Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Toic 326”), the Company periodically reviews the financial assets for credit losses. Financial instruments include cash, cash equivalents, marketable and non-marketable securities, and accounts receivable.

In determing the amount of the allowance for credit losses, the Company considers historical collectability based on past due status and make judgments about the creditworthiness of customers based on ongoing credit evaluations. The Company also considers customer-specific information, current market conditions, and reasonable and supportable forecasts of future economic conditions. Any credit loss is recorded as a charge to other income, net, not to exceed the amount of the unrealized loss. Unrealized losses other than the credit loss are recognized in accumulated other comprehensive income (“AOCI”). If the Company has an intent to sell, or if it is more likely than not that the Company will be required to sell a debt security in an unrealized loss position before recovery of its amortized cost basis, the Company will write down the security to its fair value and record the corresponding charge as a component of other income, net.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In June 2016, the Financial Accounting Standards Board (“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 adopted this ASU prospectively effective January 1, 2023 and determined that the adoption of this new accounting standard did not have a material impact on its financial statements.

In March 2020, FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses standard issued in 2016 (ASU No. 2016-13). The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The issues 1-5 are conforming amendments, which are effective upon issuance of this final update. The 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 adopted this ASU prospectively effective January 1, 2023 and determined that the adoption of this new accounting standard did not 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 adopted this ASU prospectively effective January 1, 2023 and determined that the adoption of this new accounting standard did not 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 write-offs 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 adopted this ASU prospectively effective January 1, 2023 and determined that the adoption of this new accounting standard did not have a material impact on its financial statements.

Long-Term Investments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
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

Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Measurements

Fair Value Measurements

8.Fair Value Measurements

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


	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total
As of March 31, 2023
U.S. Treasury bills	$	37,663	$	—	$	—	$	37,663
(Included in short-term investments)
Investment in debt securities		—		—		4,072		4,072
(Included in notes held for investment)
Total Assets	$	37,663	$	—	$	4,072	$	41,735


	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 securities		—		—		3,679		3,679
(Included in notes held for investment)
Total Assets	$	20,073	$	—	$	3,679	$	23,752

Treasury bills were purchased on February 10, 2023, March 3, 2023 and March 24, 2023, at a cost of $9,999, $20,498 and $6,999, respectively, and fair values accrete to maturity dates at an interest rate of 4.61% , 4.84% and 4.51%, resepectively. As of March 31, 2023, the interest income recorded on these bills was $167.

The Company's privately held debt securities are recorded at fair value on a recurring basis. The estimation of fair value for these investments requires the use of significant unobservable inputs, and as a result, the Company deems these assets as Level 3 within the fair value measurement framework. For investments without a readily determinable fair value, the Company applies valuation methods based on information available, including the market approach and bond plus call pricing approach. Observable transactions, such as the issuance of new equity by an investee and changes in market yield, are indicators of investee enterprise value and are used to estimate the fair value of the Company’s investments.

The Company valued the Monarch Debt Security using a bond plus call option model reflecting the cash flow from the Monarch Debt Security and assuming a 20% probability of an equity financing, a 20% probability of a change of control, and a 60% probability of payment at maturity or an insolvency event. The Company valued the Mellitus debt security using a bond plus call option model reflecting the cash flow from the Mellitus debt securities and assuming a 70% probability of an equity financing, 8% probability of a change of control, and a 22% probability of payment at maturity or an insolvency event. The fair value of the Company’s privately held debt securities were estimated at $4,072 and $3,679 as of March 31, 2023 and December 31, 2022, respectively.

The key inputs for the valuation model are:


		March 31,
		2023
Risk-free rate		3.67% - 4.67%
Cash flow discount rate		26.4% - 28.7%
Expert term in years		0.25 - 3.68
Expected volatility		105.0%- 205.0%

The following table reprents changes in the notes held for the investments with significant unobservable inputs (Level 3):


	Convertible Notes
Balance as of December 31, 2022	$	3,679
Purchased		500
Change in fair value of the notes held for investment		(107)
Balance as of March 31, 2023	$	4,072

- 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

Lessee Arrangements - Future minimum rental payments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Lessee Arrangements
2023 Remaining period	$ 67
2024	93
2025	71
Total undiscounted future minimum lease payments	231
Less: present value discount	(7)
Total lease liabilities	224
Lease expense in excess cash payment	(12)
Total ROU asset	$ 212	$ 233

Long-Term Investments (Tables)

3 Months Ended

Mar. 31, 2023

Long-Term Investments

Schedule of carrying value of non-marketable equity investments


	March 31,		December 31,
	2023		2022
Investments in SYNAPS Dx	$	512	$	512
Investments in Mellitus Health Inc.		309		309
Total initial cost	$	821	$	821

Other Non-current assets - Additional Information Details (Details) - USD ($) $ in Thousands	1 Months Ended
	Apr. 30, 2021	Mar. 31, 2023	Dec. 31, 2022
Equity Securities without Readily Determinable Fair Value [Line Items]
Term of agreement	5 years
ROU asset		$ 212	$ 233
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]		Other Assets, Noncurrent	Other Assets, Noncurrent
Miscellaneous receivables		$ 100	$ 100
Long-term deposits		$ 19	$ 19
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

Property and Equipment, net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Property and Equipment, net
Depreciation expense	$ 59	$ 46

Condensed Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Condensed Balance Sheets
Reserves on trade accounts receivable (in dollars)	$ 154	$ 109
Notes, Fair value	$ 4,072	$ 3,679
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	6,920,643	6,906,544
Common stock, shares outstanding	6,706,221	6,692,122
Treasury stock, shares	214,422	214,422

Lessee Arrangements - Lessor Arrangements (Details)	Mar. 31, 2023
Lessee Arrangements
Lease, Practical Expedient, Lessor Single Lease Component [true false]	true

Basis of Presentation (Policies)	3 Months Ended
Basis of Presentation (Policies)	Mar. 31, 2023
Basis of Presentation
Basis of Presentation	Semler Scientific, Inc., a Delaware corporation (“Semler” or “the Company”), prepared the unaudited interim financial statements included in this report in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 23, 2023 (the “Annual Report”). In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for any future period, including the full year.
Credit Losses on Financial Instruments	Credit Losses on Financial Instruments In accordance with Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Toic 326”), the Company periodically reviews the financial assets for credit losses. Financial instruments include cash, cash equivalents, marketable and non-marketable securities, and accounts receivable. In determing the amount of the allowance for credit losses, the Company considers historical collectability based on past due status and make judgments about the creditworthiness of customers based on ongoing credit evaluations. The Company also considers customer-specific information, current market conditions, and reasonable and supportable forecasts of future economic conditions. Any credit loss is recorded as a charge to other income, net, not to exceed the amount of the unrealized loss. Unrealized losses other than the credit loss are recognized in accumulated other comprehensive income (“AOCI”). If the Company has an intent to sell, or if it is more likely than not that the Company will be required to sell a debt security in an unrealized loss position before recovery of its amortized cost basis, the Company will write down the security to its fair value and record the corresponding charge as a component of other income, net.
Recent Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements Accounting Pronouncements Recently Adopted In June 2016, the Financial Accounting Standards Board (“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 adopted this ASU prospectively effective January 1, 2023 and determined that the adoption of this new accounting standard did not have a material impact on its financial statements. In March 2020, FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses standard issued in 2016 (ASU No. 2016-13). The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The issues 1-5 are conforming amendments, which are effective upon issuance of this final update. The 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 adopted this ASU prospectively effective January 1, 2023 and determined that the adoption of this new accounting standard did not 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 adopted this ASU prospectively effective January 1, 2023 and determined that the adoption of this new accounting standard did not 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 write-offs 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 adopted this ASU prospectively effective January 1, 2023 and determined that the adoption of this new accounting standard did not have a material impact on its financial statements.

- Definition

Disclosure of accounting policy for credit loss on financial instrument measured at amortized cost basis, net investment in lease, off-balance sheet credit exposure, and available-for-sale debt security. Includes, but is not limited to, methodology used to estimate allowance for credit loss, how writeoff of uncollectible amount is recognized, and determination of past due status and nonaccrual status.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 326
-SubTopic 30
-Section 35
-Paragraph 7A
-URI https://asc.fasb.org/extlink&oid=125515542&loc=SL120269220-210453

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Accrued Expenses
Compensation	$ 2,682	$ 2,467
Accrued Taxes	3,781	1,923
Miscellaneous Accruals	743	358
Total Accrued Expenses	$ 7,206	$ 4,748

Assets for Lease, net

3 Months Ended

Mar. 31, 2023

Assets for Lease, net

Assets for Lease, net

5. Assets for Lease, net

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. Operating leases are short-term in nature (monthly, quarterly or one year), and all of which have renewal options. The assets that may be associated with these leasing arrangements are identified below as assets for lease. Upon shipment under operating leases, assets for lease are depreciated. During the three months ended March 31, 2023 and 2022, the Company recognized approximately $9,304 and $7,889, respectively, in lease revenues related to these arrangements, which is included in Revenues on the Condensed Statements of Income.

Assets for lease consist of the following:


	March 31,		December 31,
	2023		2022
Assets for lease	$	3,970	$	3,702
Less: accumulated depreciation		(1,097)		(1,224)
Assets for lease, net	$	2,873	$	2,478

Depreciation expense amounted to $70 and $108 for the three months ended March 31, 2023 and 2022, respectively. Reduction to accumulated depreciation for returned and retired items was $197 and $90 for the three months ended March 31, 2023 and 2022, respectively. The Company recognized a loss on disposal of assets for lease in the amount of $78 and $74 for the three months ended March 31, 2023 and 2022, respectively.

Net Income Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Net Income Per Share, Basic and Diluted
Basic shares (in shares)	6,701,199	6,777,950
Common stock warrants (in shares)	64,825	71,839
Common stock options (in shares)	1,130,019	1,266,667
Diluted shares (in shares)	7,896,043	8,116,456
Net Income - Basic EPS	$ 4,969	$ 3,360
Net Income - Common stock warrants	0	0
Net Income - Common stock options	0	0
Net Income - Diluted EPS	$ 4,969	$ 3,360
Basic EPS (in dollars per share)	$ 0.74	$ 0.50
Diluted EPS (in dollars per share)	$ 0.63	$ 0.41

Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies

Commitments and Contingencies

14.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 on the issuance date and $500 in the first quarter of 2023 out of the committed amount of $5,000 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. See Note 8 to the Unaudited Condensed 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 has not made any significant payment under such indemnification provisions. Accordingly, the Company has not recorded any liabilities relating to these agreements. In certain cases, the Company has recourse against third parties with respect to the aforesaid indemnities, and the Company believes it maintains adequate levels of insurance coverage to protect the Company with respect to potential claims arising from such agreements.

401(K) Plan

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

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 March 31, 2023, the

Company has claimed $1.24 million in this retention credit. No credit was claimed for the three months ended March 31, 2023 and for the year ended December 31, 2022.

Litigation

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

Stock Incentive Plan - Stock-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 702	$ 628
Engineering and Product Development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	45	45
Sales and Marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	170	172
General and Administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 487	$ 411

Long-Term Investments

3 Months Ended

Mar. 31, 2023

Long-Term Investments

Long-Term Investments

7.Long-Term Investments

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


	March 31,		December 31,
	2023		2022
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 March 31, 2023 and December 31, 2022 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 March 31, 2023 and December 31, 2022 was approximately $309.

The investments in SYNAPS Dx and Mellitus securities that were retained by the Company as of March 31, 2023 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 March 31, 2023 and December 31, 2022, the Company determined that there was no impairment for the investment in SYNAPS Dx and the investment in Mellitus.

Stock Incentive Plan (Tables)

3 Months Ended

Mar. 31, 2023

Stock Incentive 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, 2022	1,287,847	$	3.44	3.03	$	38,053
Options exercised	—		—	—		—
Options granted	—		—	—		—
Balance, March 31, 2023	1,287,847	$	3.44	2.78	$	30,100
Exercisable as of March 31, 2023	1,282,847	$	3.34	2.76	$	30,100

Schedule of stock-based compensation expense


	Three months ended March 31,
	2023		2022
Engineering and Product Development	$	45	$	45
Sales and Marketing		170		172
General and Administrative		487		411
Total	$	702	$	628

Variably-Priced Revenue

3 Months Ended

Mar. 31, 2023

Variably-Priced Revenue

Variably-Priced Revenue

2.Variably-Priced Revenue

The Company recognizes variable-fee licenses (i.e., fee per test) and sales of hardware equipment and accessories in accordance with ASC 606, Revenue from Contracts with Customers. Total fees from variable-fee licenses represent approximately $8,561 and $5,842 for the three months ended March 31, 2023 and 2022, respectively. Total sales of hardware and equipment accessories represent approximately $340 and $285 of revenues for the three months ended March 31, 2023 and 2022, 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.

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

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

+ Details

Lessee Arrangements (Tables)

3 Months Ended

Mar. 31, 2023

Lessee Arrangements

Schedule of future minimum rental payments required under operating leases


	Total
2023 Remaining period		67
2024		93
2025		71
Total undiscounted future minimum lease payments		231
Less: present value discount		(7)
Total lease liabilities		224
Lease expense in excess cash payment		(12)
Total ROU asset	$	212

Stock Incentive Plan

3 Months Ended

Mar. 31, 2023

Stock Incentive Plan

Stock Incentive Plan

15.Stock Incentive Plan

The Company’s stock-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of its stockholders. Stock options have been granted to employees under the stockholder-approved 2007 Key Person Stock Option Plan (“2007 Plan”) and stock options and restricted stock have been granted to employees under the stockholder-approved 2014 Stock Incentive Plan (“2014 Plan”). 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. On January 1, 2023, the Share Reserve increased by 267,685. The Share Reserve is currently 3,582,888 shares as of March 31, 2023.

In light of stockholder approval of the 2014 Plan, the Company no longer grants equity awards under the 2007 Plan. As of March 31, 2023, there were no shares available for future stock-based compensation grants under the 2007 Plan and 1,725,256 shares of an aggregate total of 3,582,888 shares were available for future stock-based compensation grants under the 2014 Plan.

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 did not purchase any shares during the three months ended March 31, 2023. The Company purchased 148,500 shares at a cost of approximately $4,991 as of March 31, 2023.

Stock Awards

The Company granted fully vested stock awards of 18,048 shares of common stock to the non-employee members of the board of directors and employees as compensation during the three months ended March 31, 2023. Net shares issued after deducting taxes paid on these grants were 14,099. Fair value of these stock awards on grant date was $695. The Company granted fully vested stock awards of 8,406 shares of common stock to the non-employee members of the board of directors, employees and one non-employee as compensation during the three months ended March 31, 2022. Net shares issued after deducting taxes paid on these grants were 6,988. Fair value of these stock awards on grant date was $628.

Stock Options

Aggregate intrinsic value represents the difference between the closing market value as of March 31, 2023 of the underlying common stock and the exercise price of outstanding, in-the-money options. A summary of the Company’s stock option activity and related information for the three months ended March 31, 2023 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, 2022	1,287,847	$	3.44	3.03	$	38,053
Options exercised	—		—	—		—
Options granted	—		—	—		—
Balance, March 31, 2023	1,287,847	$	3.44	2.78	$	30,100
Exercisable as of March 31, 2023	1,282,847	$	3.34	2.76	$	30,100

As of March 31, 2023, the fair value of unvested stock options was approximately $87. This unrecognized stock-based compensation expense is expected to be recorded over a weighted average period of 3.4 years.

No options were granted during the three months ended March 31, 2023 and 2022.

The Company has recorded an expense of $702 and $628 as it relates to stock-based compensation for the three months ended March 31, 2023 and 2022, respectively:


	Three months ended March 31,
	2023		2022
Engineering and Product Development	$	45	$	45
Sales and Marketing		170		172
General and Administrative		487		411
Total	$	702	$	628

Accounts Receivable and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2023

Accounts Receivable and Allowance for Credit Losses

Accounts Receivable and Allowance for Credit Losses

3. Accounts Receivable and Allowance for Credit Losses

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

Lessee Arrangements - Lessee Arrangements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Jul. 31, 2020
Lessee Arrangements
Lease agreement term				61 months
Remaining lease term	2 years 6 months
Options to renew	false
Lease expenses	$ 22	$ 22
ROU asset	$ 212		$ 233
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other Assets, Noncurrent		Other Assets, Noncurrent
Current lease liabilities	$ 86
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other Liabilities, Current
Noncurrent lease liabilities	$ 138
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other Liabilities, Noncurrent

Notes Held for Investment (Details) $ in Thousands	1 Months Ended				3 Months Ended		4 Months Ended
Notes Held for Investment (Details) $ in Thousands	Jan. 31, 2023 USD ($)	Dec. 31, 2022 USD ($) item	Jun. 30, 2022 USD ($) item	May 31, 2022 USD ($)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)	Mar. 31, 2023 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total notes held for investment		$ 4,679			$ 5,072		$ 5,072
Aggregate principal amount					500
Fair value of the Debt Securities		3,679			4,072		4,072
Interest income from promissory notes					82	$ 0
Changes in fair value					107
Senior secured promissory notes
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total notes held for investment		1,000			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			4,072		4,072
Secured convertible promissory note \| Mellitus
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest rate (as a percent)				10.00%
Fair value of the Debt Securities		179			214		214
Aggregate principal amount				$ 179
Secured convertible promissory note \| Monarch
Accounts, Notes, Loans and Financing Receivable [Line Items]
Aggregate principal amount	$ 500	3,500					4,000
Maximum amount of available funding		5,000
Transaction fee		100
Remaining amount available to be drawn		$ 1,000
Option to extend the maturity date \| item		2
Period to extend the maturity date		1 year
Fair value of the Debt Securities		$ 3,500			$ 3,858		$ 3,858
Interest rate		10.00%

Concentration of Credit Risk

3 Months Ended

Mar. 31, 2023

Concentration of Credit Risk

Concentration of Credit Risk

12.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 March 31,2023, the Company held deposits of $5,305, approximately $5,198 of which held by First Republic Bank (“FRB”). The Company’s deposits at FRB are largely uninsured. On May 1, 2023, JP Morgan Chase Bank (“JPM”) agreed to acquire all the assets and liabilities of FRB. Consequently, all depositors of FRB will become the depositors of JPM. Deposits at JPM are largely uninsured. The Company also invested in U.S. treasury bills in the amount of $37,663. 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 exposure to potential credit loss. For the three months ended March 31, 2023, two customers (including affiliates) accounted for 40.9% and 33.5% of the Company’s revenues,. For the three months ended March 31, 2022, two customers (including affiliates) accounted for 39.2% and 31.7% of the Company’s revenues. As of March 31, 2023, three customers accounted for 60.0%, 15.4%, and 13.6% of the Company’s accounts receivable. As of December 31, 2022, three customers accounted for 26.8%, 25.9%, and 16.8% of the Company’s accounts receivable. The Company’s largest customer in terms of both revenues and accounts receivable in the three months ended March 31, 2023 is a U.S. diversified healthcare company and its affiliated plans.

As of March 31, 2023, two vendors accounted for 20.6% and 13.9% of the Company’s accounts payable. As of December 31, 2022, two vendors accounted for 25.8% and 10.8% of the Company’s accounts payable.

Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Inventory
Inventory balance	$ 512	$ 469

Assets for Lease, net (Tables)

3 Months Ended

Mar. 31, 2023

Assets for Lease, net

Summary of assets for lease, net


	March 31,		December 31,
	2023		2022
Assets for lease	$	3,970	$	3,702
Less: accumulated depreciation		(1,097)		(1,224)
Assets for lease, net	$	2,873	$	2,478

Fair Value Measurements (Details) - USD ($) $ in Thousands				3 Months Ended
Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 24, 2023	Mar. 03, 2023	Feb. 10, 2023	Mar. 31, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury bill				$ 37,663	$ 20,073
Investment in debt securities				4,072	3,679
Total Assets				41,735	23,752
Debt securities measured at fair value				4,072	3,679
Purchase cost				37,496
Interest income				305
U.S. Treasury bill
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Purchase cost	$ 6,999	$ 20,498	$ 9,999
Interest rate	4.51%	4.84%	4.61%
Interest income				167
Recurring \| Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Treasury bill				37,663	20,073
Total Assets				37,663	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 securities				4,072	3,679
Total Assets				$ 4,072	$ 3,679