Item 9A. Controls and Procedures
Item
9A. Controls
and Procedures.
Evaluation
of Disclosure Controls and Procedures
Our
principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures,
as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act, as of the end of the period subject to this Annual Report
on Form 10-K. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure
controls and procedures were effective.
Management’s
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting refers to the process
designed by, or under the supervision of, our President and Chief Executive Officer and our Chief Financial Officer, and effected
by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles,
and includes those policies and procedures that:
(1)
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions
of our assets;
(2)
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization
of our management and directors; and
(3)
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our
assets that could have a material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting cannot provide absolute assurance of preventing and detecting
misstatements on a timely basis. It is possible to design into the process safeguards to reduce, though not eliminate, the risk
that misstatements are not prevented or detected on a timely basis. Management is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company.
Our
management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework
set forth in the report entitled Internal Control-Integrated Framework published by the Committee of Sponsoring Organizations
of the Treadway Commission in 2013. Based on this assessment, management has concluded that, as of June 30, 2023, our internal
control over financial reporting was effective.
This
Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding
internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent
registered public accounting firm pursuant to the rules of the SEC that exempt smaller reporting companies from the auditor attestation
requirement.
Changes
in Internal Control Over Financial Reporting
There
were no changes in our internal control over financial reporting that occurred during the fourth quarter of fiscal 2023 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item
9B. Other Information.
None.
22
Item
9C. Disclosure
Regarding Foreign Jurisdictions that Prevent Inspections.
Not
applicable.
PART
III
Certain
information required by Part III is incorporated by reference from our definitive Proxy Statement for the Fiscal 2024 Annual Meeting
of Shareholders (the “Proxy Statement”). Except for those portions specifically incorporated in this Annual Report
on Form 10-K by reference to the Proxy Statement, no other portions of the Proxy Statement are deemed to be filed as part of this
Annual Report on Form 10-K.
Item
10. Directors,
Executive Officers and Corporate Governance.
Information
about our Executive Officers
The
following sets forth certain information about our current executive officers:
James
L. Cunniff , age 58, joined Electromed in July 2023 as the Company’s President and Chief Executive Officer. Prior to
joining Electromed, Mr. Cunniff most recently served as President and Chief Executive Officer of Provista Inc., from 2017 to May
2022. Previously, he served as President and Chief Executive Officer at Denver Solutions, LLC (d/b/a Leiters Health) from 2015
to 2017 and as Senior Vice President, Americas, at Acelity L.P. Inc., from 2012 to 2014. Mr. Cunniff holds a bachelor's degree
in Advertising and Business from the University of Illinois Urbana-Champaign and has completed the Advanced Management Program
at Harvard Business School.
Bradley
M. Nagel , age 41, joined Electromed in November 2022 as the Company’s Chief Financial Officer, Treasurer and Secretary.
Prior to joining Electromed, Mr. Nagel most recently served as Divisional Chief Financial Officer of Global Lung Health and Visualization
at Medtronic plc from June 2018 to November, 2022. Previously, he served at Medtronic as Sr. Manager, Accounting and Sales Operations
from 2016 to June 2018 and Accounting Manager from 2015 to 2016. Before joining Medtronic, Mr. Nagel held various roles of increasing
responsibility in sales, operations and accounting at Target Corporation and TCF Financial Corporation. Mr. Nagel holds a bachelor's
degree in Business & Finance from Calvin University.
Code
of Ethics
Our
Board annually reviews and approves revisions to our Code of Ethics and Business Conduct (the “Code of Ethics”) that
applies to all employees, directors, and officers, including the Chief Executive Officer and the Chief Financial Officer (Principal
Financial Officer and Principal Accounting Officer). The Code of Ethics was updated in May 2020 and is available in the “Investor
Relations” section of our website at www.smartvest.com. We intend to disclose on our website any amendment to or waiver
from any provision of the Code of Ethics that applies to our Chief Executive Officer or our Chief Financial Officer (Principal
Financial Officer and Principal Accounting Officer), and that relates to any element of the Code of Ethics identified in Item
406(b) of Regulation S-K, as promulgated by the SEC. Such disclosure will be provided promptly following the date of the amendment
or waiver.
The
additional information required by this item is incorporated herein by reference to the sections labeled “Election of Directors,”
“Corporate Governance,” “and “Security Ownership Certain Beneficial Owners and Management” and,
if any, under “Delinquent Section 16(a) Reports” in the Proxy Statement.
Item
11. Executive
Compensation.
The
information required by this item is incorporated herein by reference to the sections labeled “Executive Compensation,”
“Director Compensation,” and “Corporate Governance – Personnel and Compensation Committee” in the
Proxy Statement.
23
Item
12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The
information required by this item relating to the security ownership of certain holders is incorporated herein by reference to
the sections labeled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation
Plan Information” in the Proxy Statement.
Item
13. Certain
Relationships and Related Transactions, and Director Independence.
The
information required by this item is incorporated herein by reference to the sections labeled “Corporate Governance–Independence”
and “Related Person Transaction Approval Policy” in the Proxy Statement.
Item
14. Principal
Accountant Fees and Services.
Our
independent registered public accounting firm is RSM US LLP, Rochester, MN , Auditor firm ID: 49 .
The
information required by this item is incorporated herein by reference to the section labeled “Ratification of the Appointment
of the Company’s Independent Registered Public Accounting Firm – Audit Fees” in the Proxy Statement.
PART
IV
Item
15. Exhibits
and Financial Statement Schedules.
(a) Documents
filed as part of this report.
(1) Financial
Statements. The following financial statements are included in Part II, Item 8 of this
Annual Report on Form 10-K:
● Report
of Independent Registered Public Accounting Firm
● Balance
Sheets as of June 30, 2023 and 2022
● Statements
of Operations for the years ended June 30, 2023 and 2022
● Statements
of Shareholders’ Equity for the years ended June 30, 2023 and 2022
● Statements
of Cash Flows for the years ended June 30, 2023 and 2022
● Notes
to Financial Statements
(2) Financial
Statement Schedules. No financial statement schedule is required to be included in this
Annual Report on Form 10-K.
Exhibit Number
Description
Method of Filing
3.1
Composite Articles of Incorporation, as amended through November 8, 2010 (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K for the fiscal year ended June 30, 2015)
Incorporated by Reference
3.2
Amended and Restated Bylaws, effective September 29, 2020 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed September 29, 2020)
Incorporated by Reference
4.1
Description of Securities (incorporated by reference to Exhibit 4.1 to Annual Report on Form 10-K for the fiscal year ended June 30, 2019)
Incorporated by Reference
24
Exhibit Number
Description
Method of Filing
10.1
Electromed,
Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed November 15,
2011)*
Incorporated
by Reference
10.2
Form
of Stock Option Award Agreement under the Electromed, Inc. 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.4
to Quarterly Report on Form 10-Q for the quarter ended December 31, 2011)*
Incorporated
by Reference
10.3
Electromed,
Inc. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed November 25,
2014)*
Incorporated
by Reference
10.4
Form
of Incentive Stock Option Agreement under the Electromed, Inc. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.2
to Current Report on Form 8-K filed November 25, 2014)*
Incorporated
by Reference
10.5
Form
of Nonqualified Stock Option Agreement under the Electromed, Inc. 2014 Equity Incentive Plan (incorporated by reference to
Exhibit 10.3 to Current Report on Form 8-K filed November 25, 2014)*
Incorporated
by Reference
10.6
Form
of Restricted Stock Agreement under the Electromed, Inc. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.4
to Current Report on Form 8-K filed November 25, 2014)*
Incorporated
by Reference
10.7
Electromed,
Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 99.1 to Registration Statement on Form S-8 filed December
4, 2017)*
Incorporated
by Reference
10.8
Form
of Restricted Award Agreement under the 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.11 to Annual
Report on Form 10-K for the fiscal year ended June 30, 2018)*
Incorporated
by Reference
10.9
Form
of Non-Qualified Option Agreement under the 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to
Quarterly Report on Form 10-Q for the quarter ended March 31, 2019)*
Incorporated
by Reference
10.10
Form
of Restricted Stock Agreement (Non-Employee Directors) under the 2017 Omnibus Incentive Plan (incorporated by reference to
Exhibit 10.13 to Annual Report on Form 10-K for the fiscal year ended June 30, 2018)*
Incorporated
by Reference
10.11
Form of Performance Stock Unit Agreement (Inducement Grant)*
Filed
Electronically
10.12
Form of Non-Qualified Stock Option Agreement (Inducement Grant)*
Filed
Electronically
10.13
Non-Competition,
Non-Solicitation and Confidentiality Agreement with Kathleen S. Skarvan dated effective December 1, 2012 (incorporated
by reference to Exhibit 10.2 to the Current Report on Form 8-K filed December 3, 2012)*
Incorporated
by Reference
10.14
Amended
and Restated Employment Agreement with Kathleen S. Skarvan dated as of December 2, 2019 (incorporated by reference to Exhibit 10.1
to Current Report on Form 8-K filed December 6, 2019)*
Incorporated
by Reference
10.15
Employment
Agreement with Bradley M. Nagel, dated October 19, 2022 (incorporated by reference to Exhibit 10.1 to Current Report on Form
8-K filed October 24, 2022)*
Incorporated
by Reference
25
Exhibit Number
Description
Method of Filing
10.16
Letter Agreement with Kathleen S. Skarvan, dated February 14, 2023 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed February 14, 2023)*
Incorporated by Reference
10.17
Employment Agreement with James Cunniff, dated May 22, 2023 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed June 5, 2023)*
Incorporated by Reference
10.18
Letter Agreement with James Cunniff, dated May 22, 2023 (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed June 5, 2023)*
Incorporated by Reference
10.19
Letter Agreement with Christopher G. Holland, dated June 9, 2023 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed June 15, 2023)*
Incorporated by Reference
10.20
Business Loan Agreement with Choice Financial Group, dated December 18, 2019 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed December 17, 2019)
Incorporated by Reference
10.21
Rider to Business Loan Agreement (Asset Based) with Choice Financial Group, dated December 18, 2019 (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed December 17, 2019)
Incorporated by Reference
10.22
Rider to Business Loan Agreement (Asset Based) with Choice Financial Group, dated December 16, 2020 (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed December 17, 2020)
Incorporated by Reference
10.23
Rider to Business Loan Agreement (Asset Based) with Choice Financial Group, Dated December 17, 2021 (incorporated by reference to Exhibit 10. 1 to Current Report on 8-K filed December 17, 2021)
Incorporated by Reference
10.24
Cooperation Agreement, dated July 25, 2022, by and among Electromed, Inc. and Summers Value Partners LLC and certain of its affiliates signatory thereto (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed July 25, 2022)
Incorporated by Reference
10.25
Description of Fiscal Year 2023 Officer Bonus Plan (incorporated by reference to Exhibit 10.24 to Annual Report on Form 10-K for the fiscal year ended June 30, 2022)*
Incorporated by Reference
10.26
Description of Fiscal Year 2024 Officer Bonus Plan
Filed Electronically
23.1
Consent of Independent Registered Public Accounting Firm
Filed Electronically
24.1
Powers of Attorney
Filed Electronically
31.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed Electronically
31.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed Electronically
32.1
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Furnished Electronically
32.2
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Furnished Electronically
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
Filed Electronically
26
Exhibit Number
Description
Method of Filing
101.DEF
XBRL Taxonomy Extension Definition Linkbase
Filed Electronically
101.INS
XBRL Instance Document
Filed Electronically
101.LAB
XBRL Taxonomy Extension Label Linkbase
Filed Electronically
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
Filed Electronically
101.SCH
XBRL Taxonomy Extension Schema
Filed Electronically
104
Cover Page Interactive Data File (embedded within the inline XBRL Document)
Filed electronically
* Management compensatory contract or arrangement.
Item 16. Form 10-K Summary.
None.
27
SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ELECTROMED, INC.
Date: August 22, 2023
By
/s/ James L. Cunniff
James L. Cunniff
President and Chief Executive Officer
Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ James L. Cunniff
President and Chief Executive Officer and Director
August 22, 2023
James L. Cunniff
(principal executive officer)
/s/ Bradley M. Nagel
Chief Financial Officer
August 22, 2023
Bradley M. Nagel
(principal financial and accounting officer)
*
Director
August 22, 2023
Stan K. Erickson
*
Director
August 22, 2023
Gregory J. Fluet
*
Director
August 22, 2023
Joseph L. Galatowitsch
*
Director
August 22, 2023
Lee A. Jones
*
Director
August 22, 2023
Kathleen S. Skarvan
*
Director
August 22, 2023
Andrew J. Summers
*
Director
August 22, 2023
Kathleen A. Tune
*
Director
August 22, 2023
Andrew M. Walsh
* The undersigned, by signing his name hereto, does hereby sign this document on behalf of each of the above-named directors
of the registrant pursuant to powers of attorney duly executed by such persons.
By
/s/ James L. Cunniff
James L. Cunniff
Attorney-in-Fact
28