What changed in this filing

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Item 1. Financial Statements

2025-02-11 compared with 2024-11-12 · 341 added, 265 removed, 61 unchanged (91% of the section changed)

Balance Sheets

and cash equivalents

receivable (net of allowances for credit losses of $ 45,000 )

expenses and other current assets

Financial Statements.

Electromed, Inc.

Condensed Balance Sheets

December 31, 2024

June 30, 2024

Current Assets

and equipment, net

intangible assets, net

and Shareholders’ Equity

accrued liabilities

Cash and cash equivalents

Accounts receivable (net of allowances for credit losses of $ 45,000 )

Contract assets

Income taxes receivable

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Finite-life intangible assets, net

Deferred income taxes

Liabilities and Shareholders’ Equity

Current Liabilities

long-term liabilities

Shareholders’

stock, $ 0.01 par value per share, 13,000,000 shares authorized;

8,457,071 and 8,637,883 shares issued and outstanding, as

of September 30, 2024 and June 30, 2024, respectively

paid-in capital

Accounts payable

Accrued compensation

Income tax payable

Warranty reserve

Other accrued liabilities

Total current liabilities

Other long-term liabilities

Total liabilities

Shareholders’ Equity

liabilities and shareholders’ equity

Notes to Condensed Financial Statements (Unaudited).

Statements of Operations (Unaudited)

Months Ended September 30,

Common stock, $ 0.01 par value per share, 13,000,000 shares authorized;

8,556,844 and 8,637,883 shares issued and outstanding, as of December 31, 2024 and June 30, 2024, respectively

Additional paid-in capital

Retained earnings

Total shareholders' equity

Total liabilities and shareholders' equity

See Notes to Condensed Financial Statements (Unaudited).

Electromed, Inc.

Condensed Statements of Operations

Three Months Ended

Six Months Ended

Cost of revenues

Operating expenses

general and administrative

and development

operating expenses

Interest income,

income before income taxes

Selling, general and administrative

Research and development

Total operating expenses

Operating income

Interest income, net

Net income before income taxes

Income tax expense

Income per share:

Weighted-average

common shares outstanding:

Notes to Condensed Financial Statements (Unaudited).

Statements of Cash Flows (Unaudited)

Months Ended September 30,

Cash Flows From

Operating Activities

to reconcile net income to net cash provided by (used for) operating activities:

of finite-life intangible assets

compensation expense

in operating assets and liabilities:

expenses and other assets

tax payable, net

payable and accrued liabilities

( 1,743,000 )

( 1,174,000 )

cash provided by (used for) operating activities

Cash Flows From

Investing Activities

for property and equipment

for finite-life intangible assets

cash used for investing activities

Cash Flows From

Financing Activities

of common stock upon exercise of options

paid on net share settlement of stock awards

of common stock

Weighted-average common shares outstanding:

See Notes to Condensed Financial Statements (Unaudited).

Electromed, Inc.

Condensed Statements of Cash

Flows (Unaudited)

Six Months Ended December 31,

Cash Flows From Operating Activities

Adjustments to reconcile net income to net cash provided by operating activities:

Amortization of finite-life intangible assets

Share-based compensation expense

Changes in operating assets and liabilities:

Accounts receivable

Contract assets

Prepaid expenses and other assets

Income taxes receivable, net

Accounts payable and accrued liabilities

( 1,171,000 )

cash (used for) provided by financing activities

Accrued compensation

Net cash provided by operating activities

Cash Flows From Investing Activities

Expenditures for property and equipment

Expenditures for finite-life intangible assets

Net cash used for investing activities

Cash Flows From Financing Activities

Issuance of common stock upon exercise of options

Taxes paid on net share settlement of stock awards

Repurchase of common stock

( 4,536,000 )

decrease in cash

Net cash (used for) provided by financing activities

( 5,010,000 )

Net increase in cash

Cash and cash equivalents

Beginning of period

End of period

Supplemental Disclosures

of Cash Flow Information

paid for income taxes

Supplemental Disclosures

of Noncash Investing and Financing Activities

and equipment acquisitions in accounts payable

Demonstration

equipment returned to inventory

owed on net share settlement of stock awards in accrued liabilities

of common stock upon the vesting of performance-based stock units

Notes to Condensed Financial Statements (Unaudited).

Statements of Shareholders’ Equity (Unaudited)

Supplemental Disclosures of Cash Flow Information

Cash paid for income taxes

Supplemental Disclosures of Noncash Investing and Financing Activities

Property and equipment and intangible asset acquisitions in accounts payable

Taxes owed on net share settlement of stock awards in accrued liabilities

Demonstration equipment transferred between inventory and property and equipment

Issuance of common stock upon the vesting of performance-based stock units

See Notes to Condensed Financial Statements (Unaudited).

Electromed, Inc.

Condensed Statements of Shareholders’

Equity (Unaudited)

Additional Paid-

1 unchanged sentence

Balance at June 30, 2023

Exercise of common

stock options, vesting of performance stock units and issuance of restricted stock, net of cancellations and tax

Share-based compensation

September 30, 2023

Exercise of common stock options, vesting of performance stock units and issuance of restricted stock, net of cancellations and tax withholdings

Share-based compensation expense

Balance at September 30, 2023

Exercise of common stock options, vesting of performance stock units and issuance of restricted stock, net of cancellations and tax withholdings

Share-based compensation expense

Balance at December 31, 2023

Additional Paid-

Shareholders’

Balance at June 30, 2024

Exercise of common

stock options, vesting of performance stock units and issuance of restricted stock, net of cancellations and tax withholdings

Share-based compensation

Repurchase of common

Exercise of common stock options, vesting of performance stock units and issuance of restricted stock, net of cancellations and tax withholdings

Share-based compensation expense

Repurchase of common stock

( 4,555,000 )

( 4,558,000 )

September 30, 2024

Notes to Condensed Financial Statements (Unaudited).

to Condensed Financial Statements

Balance at September 30, 2024

Exercise of common stock options, vesting of performance stock units and issuance of restricted stock, net of cancellations and tax withholdings

Share-based compensation expense

Repurchase of common stock

Balance at December 31, 2024

Electromed, Inc.

Notes to Condensed

Financial Statements

Interim Financial Reporting

Nature of business:

Electromed, Inc.

(the “Company”) develops, manufactures and markets innovative airway clearance products

that apply High Frequency Chest Wall Oscillation (“HFCWO”) therapy in pulmonary care for patients of all ages.

Company markets its products in the U.S.

(the “Company”) develops, manufactures and markets innovative airway clearance products that apply High Frequency Chest

Wall Oscillation (“HFCWO”) therapy in pulmonary care for patients of all ages.

The Company markets its products in

to the homecare and hospital markets.

The Company also sells internationally through

distributors.

its inception, the Company has operated in a single industry segment:

The Company also sells internationally through distributors.

Since its inception, the Company has operated

in a single industry segment:

developing, manufacturing, and marketing medical equipment.

Basis of presentation:

The accompanying

unaudited Condensed Financial Statements of the Company have been prepared in accordance with U.S.

generally accepted accounting

principles (“U.S.

The accompanying unaudited Condensed

Financial Statements of the Company have been prepared in accordance with U.S.

generally accepted accounting principles (“U.S.

GAAP”) for interim financial statements and pursuant to the rules and regulations of the U.S.

and Exchange Commission.

In the opinion of management, the accompanying unaudited Condensed Financial Statements reflect all adjustments

consisting of normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results

of operations as required by Regulation S-X.

Interim results of operations are not necessarily indicative of the results that may

be achieved for the full year.

The financial statements and related notes do not include all information and footnotes required

GAAP for annual reports.

This interim report should be read in conjunction with the financial statements included in the

Company’s Annual Report on

Form 10-K for the fiscal year ended June 30, 2024 (“fiscal 2024”).

summary of the Company’s significant accounting policies and estimates follows:

significant accounting policies are detailed in Note 1.

Nature of Business and Summary of Significant Accounting Policies of

the Annual Report on Form 10-K for the year ended June 30, 2024.

There have been no significant changes to these policies that

have had a material impact on the Unaudited Condensed Financial Statements and the accompanying disclosure notes for the three

months ended September 30, 2024.

Issued Accounting Standards

2023-07 - Segment Reporting (Topic 280):

Securities and Exchange Commission.

In the opinion of management, the accompanying unaudited Condensed Financial Statements reflect all adjustments consisting of

normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations

as required by Regulation S-X.

Interim results of operations are not necessarily indicative of the results that may be achieved

for the full year.

The financial statements and related notes do not include all information and footnotes required by U.S.

for annual reports.

This interim report should be read in conjunction with the financial statements included in the Company’s

Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (“fiscal 2024”).

A summary of the Company’s significant accounting

policies and estimates:

Our significant accounting policies are detailed

Nature of Business and Summary of Significant Accounting Policies of the Annual Report on Form 10-K for the

year ended June 30, 2024.

There have been no significant changes to these policies that have had a material impact on the Unaudited

Condensed Financial Statements and the accompanying disclosure notes for the three and six months ended December 31, 2024.

Recently Issued Accounting Standards

ASU 2023-07 - Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

standard introduces increased disclosure requirements primarily related to significant segment expenses, along with disclosure

of key criteria and metrics utilized by the Chief Operating Decision Maker (“CODM”).

It is effective for annual periods

beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption

The Company is currently evaluating the impact of adoption and additional disclosure requirements.

2023-09 - Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

standard introduces increased transparency about income tax information through the requirement of increased disclosures around

specific categories in the rate reconciliation and requiring additional information on reconciling items.

It is effective for

annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact

of adoption and additional disclosure requirements.

is measured based on consideration specified in the contract with a customer, adjusted for any applicable estimates of variable

consideration and other factors affecting the transaction price.

When a contract with a customer has been established, revenue

is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer,

typically upon shipment or delivery.

Disaggregation

In the following table, net revenues are disaggregated by market:

The standard introduces increased disclosure requirements

primarily related to significant segment expenses, along with disclosure of key criteria and metrics utilized by the Chief Operating

Decision Maker (“CODM”).

It is effective for annual periods beginning after December 15, 2023, and interim periods

within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company currently expects to adopt this

standard for its fiscal year ending June 30, 2025, and is evaluating the impact of adoption and additional disclosure requirements.

ASU 2023-09 - Income Taxes (Topic 740):

to Income Tax Disclosures

The standard introduces increased transparency

about income tax information through the requirement of increased disclosures around specific categories in the rate reconciliation

and requires additional information on reconciling items.

It is effective for annual periods beginning after December 15, 2024,

with early adoption permitted.

The Company currently expects to adopt this standard for its fiscal year ending June 30, 2026, and

is evaluating the impact of adoption and additional disclosure requirements.

ASU 2024-03 - Reporting Comprehensive

Income—Expense Disaggregation Disclosures

The standard introduces increased disclosure requirements

for certain costs and expenses.

It is effective for annual reporting periods beginning after December 15, 2026, with early adoption

The Company currently expects to adopt this standard for its fiscal year ending June 30, 2027, and is evaluating the

impact of adoption and additional disclosure requirements.

Revenue is measured based on consideration specified

in the contract with a customer, adjusted for any applicable estimates of variable consideration and other factors affecting the

transaction price.

When a contract with a customer has been established, revenue is recognized when a performance obligation is

satisfied by transferring control of a distinct good or service to a customer, typically upon shipment or delivery.

Disaggregation of revenues.

In the following table, net revenues are disaggregated

Schedule of disaggregated revenue

Months Ended September 30,

Three Months Ended December 31,

Six Months Ended December 31,

Homecare distributor

the following table, net homecare revenue is disaggregated by payer type:

Months Ended September 30,

In the following table, net homecare revenue is disaggregated by

Three Months Ended December 31,

Six Months Ended December 31,

Medicare Supplemental

The following tables provide information about accounts receivable and contract assets from contracts with customers:

Contract balances.

The following tables

provide information about accounts receivable and contract assets from contracts with customers:

Schedule of contract asset

included in “Accounts receivable, net of allowance for credit losses”

December 31, 2024

June 30, 2024

Receivables, included in “Accounts receivable, net of allowances for credit losses”

Contract Assets

Accounts receivable, net of allowances for credit losses, as of June 30, 2023 were $24,130,000.

assets, beginning

Reclassification

of contract assets to accounts receivable

Total Accounts receivable, net of allowances

for credit losses, as of June 30, 2023, were $24,130,000.

Six Months Ended

December 31, 2024

Fiscal Year Ended

June 30, 2024

Increase (decrease)

Contract assets, beginning

Reclassification of contract assets to accounts receivable

( 1,441,000 )

Contract assets

(decrease) because of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables

during the period

Contract assets,

( 2,325,000 )

Contract assets recognized

Increase (decrease) as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period

Contract assets, ending

Selected Balance Sheet Information

consists of the following:

Inventory consists of the following:

Schedule of components of inventories

December 31, 2024

June 30, 2024

Parts inventory

Work in process

Finished goods

Estimated inventory

to be returned

Estimated inventory to be returned

Reserve for obsolescence

accrued liabilities consist of the following:

Other accrued

liabilities consist of the following:

Schedule of components of other accrued liabilities

insurance recoupments

Accrued tax withholding

upon performance stock unit vesting

accrued expenses

Warranty Reserve

Company provides a lifetime warranty on its products to the prescribed patient for sales within the U.S.

and a one to five-year

warranty for all homecare distributor, hospital and other sales.

The Company estimates the costs that may be incurred under its

warranty and records a liability in the amount of such costs at the time the product is shipped.

Factors that affect the Company’s

warranty reserve include the number of units shipped, historical and anticipated rates of warranty claims, the product’s

useful life and cost per claim.

The Company periodically assesses the adequacy of its recorded warranty reserve and adjusts the

amounts as necessary.

in the Company’s warranty reserve were as follows:

reserve, beginning

for products sold

and costs incurred for warranty claims

December 31, 2024

June 30, 2024

Accrued insurance recoupments

Accrued tax withholding upon equity award vesting

Other accrued expenses

Warranty Reserve

tax expense was estimated at $ 659,000 , and the effective tax rate was 30.9 % for the three months ended September 30, 2024, which

includes a discrete current tax benefit of $ 4,000 primarily related to the vesting of restricted stock awards.

tax expense was estimated at $ 64,000 , and the effective tax rate was 29.3 % for the three months ended September 30, 2023.

Company is subject to U.S.

federal and state income tax in multiple jurisdictions.

With limited exceptions, years prior to the

Company’s fiscal year ended June 30, 2021, are no longer open to U.S.

The Company provides a lifetime warranty on

its products to the prescribed patient for sales within the U.S.

and a one to five-year warranty for all homecare distributor,

hospital and other sales.

The Company estimates the costs that may be incurred under its warranty and records a liability in the

amount of such costs at the time the product is shipped.

Factors that affect the Company’s warranty reserve include the number

of units shipped, historical and anticipated rates of warranty claims, the product’s useful life and cost per claim.

Company periodically assesses the adequacy of its recorded warranty reserve and adjusts the amounts as necessary.

Changes in the Company’s warranty

reserve were as follows:

Six Months Ended

December 31, 2024

Fiscal Year Ended

June 30, 2024

Warranty reserve, beginning

Accrual for products sold

Expenditures and costs incurred for warranty claims

Warranty reserve, ending

Income tax expenses were estimated at $ 726,000

and $ 1,385,000 , and the effective tax rate was 26.9 % and 28.7 % for the three and six months ended December 31, 2024, respectively.

Estimated income tax expense for the three and six months ended December 31, 2024, includes a discrete current tax benefit of $ 135,000

and $ 139,000 , respectively, primarily related to the exercise of stock options and the vesting of restricted stock awards.

Income tax expense was estimated at $ 685,000

and $ 749,000 , and the effective tax rate was 28.8 % and 28.9 % for the three and six months ended December 31, 2023, respectively.

Estimated income tax expense for the three and six months ended December 31, 2023, includes a discrete current tax benefit of $ 1,000

and $ 1,000 , respectively, related to the exercise of stock options.

The Company is subject to U.S.

federal and state

income tax in multiple jurisdictions.

With limited exceptions, years prior to the Company’s fiscal year ended June 30, 2021,

are no longer open to U.S.

federal, state or local examinations by taxing authorities.

The Company is not under any current income tax examinations by any federal, state or local taxing authority.

If any issues addressed

in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could

be required to adjust its provision for income taxes in the period such resolution occurs.

The Company is not under any current income

tax examinations by any federal, state or local taxing authority.

If any issues addressed in the Company’s tax audits are

resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision

for income taxes in the period such resolution occurs.

Financing Arrangements

Company has a credit facility that provides for a $ 2,500,000 revolving line of credit through December 18, 2025, if not renewed

before such date.

There was no outstanding principal balance on the line of credit as of September 30, 2024 or June 30, 2024.

Interest on borrowings under the line of credit, if any, accrues at the prime rate ( 8.0 % on September 30, 2024) less 1.00 % and

is payable monthly.

The amount eligible for borrowing on the line of credit is limited to the lesser of $ 2,500,000 or 57.0 % of

eligible accounts receivable.

On September 30, 2024, the maximum $ 2,500,000 was eligible for borrowing.

Payment obligations under

the line of credit, if any, are secured by a security interest in substantially all the tangible and intangible assets of the

documents governing the line of credit contain certain financial and nonfinancial covenants that include a minimum tangible net

worth covenant of not less than $ 10,125,000 and restrictions on the Company’s ability to incur certain additional indebtedness

or pay dividends.

The Company has a credit facility that provides

for a $ 2,500,000 revolving line of credit through December 18, 2025, if not renewed before such date.

There was no outstanding

principal balance on the line of credit as of December 31, 2024, or June 30, 2024.

Interest on borrowings under the line of credit,

if any, accrues at the prime rate ( 7.50 % on December 31, 2024) less 1.00 % and is payable monthly.

The amount eligible for borrowing

on the line of credit is limited to the lesser of $ 2,500,000 or 57.00 % of eligible accounts receivable.

On December 31, 2024, the

maximum $ 2,500,000 was eligible for borrowing.

Payment obligations under the line of credit, if any, are secured by a security

interest in substantially all the tangible and intangible assets of the Company.

The documents governing

the line of credit contain certain financial and non-financial covenants that include a minimum tangible net worth covenant of

not less than $ 10,125,000 and restrictions on the Company’s ability to incur certain additional indebtedness or pay dividends.

The Company’s Articles of Incorporation, as amended, have established 15,000,000 authorized shares

2 unchanged sentences

September 11, 2024, the Company’s Board of Directors (the “Board”) approved a stock repurchase authorization.

Under the authorization, the Company can repurchase up to $ 5.0 million of shares of common stock.

The repurchase authorization

has no expiration date.

As of September 30, 2024, a total of 262,756 shares have been repurchased and retired under this

authorization for a total cost of $ 4,536,000 , or $ 17.26 per share.

Repurchased shares have been retired and constitute authorized

but unissued shares.

Under the authorization, the Company can repurchase up to $ 5,000,000 of shares of common stock.

The repurchase authorization has

no expiration date.

As of December 31, 2024, a total of 262,756 shares have been repurchased and retired under this authorization

for a total cost of $ 4,536,000 , or $ 17.26 per share.

Repurchased shares have been retired and constitute authorized but unissued

Share-Based Compensation

Company’s share-based compensation plans are described in Note 8 to the financial statements included in the Company’s

Annual Report on Form 10-K for fiscal 2024.

Share-based compensation expense was $ 697,000 and $ 371,000 for the three months ended

September 30, 2024, and 2023, respectively.

This expense is included in selling, general and administrative expense, cost of goods

sold, and research and development in the Condensed Statements of Operations.

option transactions during the three months ended September 30, 2024, are summarized as follows:

The Company’s share-based compensation

plans are described in Note 8 to the financial statements included in the Company’s Annual Report on Form 10-K for fiscal

Share-based compensation expenses were $ 1,652,000 and $ 791,000 for the six months ended December 31, 2024, and 2023, respectively.

This expense is included in selling, general and administrative, research and development, and cost of sales expense in the Condensed

Statements of Operations.

Stock Options

Stock option transactions during

the six months ended December 31, 2024, are summarized as follows:

Number of Shares

1 unchanged sentence

Exercise Price per

Outstanding on June 30, 2024

Outstanding at June 30, 2024

Cancelled or Forfeited

Outstanding on September 30, 2024

following assumptions were used to estimate the fair value of stock options granted:

Three Months Ended September 30, 2024

Fiscal Year Ended June 30, 2024

Outstanding at December 31, 2024

The following assumptions were

used to estimate the fair value of stock options granted:

Six Months Ended

Fiscal Year Ended

June 30, 2024

Risk-free interest rate

3.69 - 4.14 %

3.85 – 4.64 %

Expected term (years)

Expected volatility

intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price.

30, 2024, the weighted average remaining contractual term for all outstanding stock options was 6.45 years and the aggregate intrinsic

value of the options was $ 8,331,000 .

Outstanding on September 30, 2024, were 678,856 stock options issued to employees, of which

414,855 were vested and exercisable and had an aggregate intrinsic value of $ 5,862,000 .

As of September 30, 2024, $ 1,057,000 of

total unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of

approximately 2.65 years.

the three months ended September 30, 2024, the Company issued restricted stock awards to employees totaling 21,400 shares of common

stock, with a weighted-average vesting term of three years and a weighted average fair value of $ 17.25 per share.

There were 42,667

shares of unvested restricted stock with a weighted average grant date fair value of $ 13.91 per share outstanding as of September

As of September 30, 2024, $ 453,000 of total unrecognized compensation expense related to restricted stock awards is

expected to be recognized over a weighted-average period of approximately 2.66 years.

the three months ended September 30, 2024, the Company issued restricted stock units to employees totaling 63,700 , with a weighted-average

vesting term of three years and a weighted average fair value of $ 17.25 per unit.

There were 61,300 units of unvested restricted

stock with a weighted average grant date fair value of $ 17.25 per share outstanding as of September 30, 2024.

As of September

30, 2024, $ 1,008,000 of total unrecognized compensation expense related to restricted stock units is expected to be recognized

over a weighted-average period of approximately 2.92 years.

Performance-Based

Restricted Stock Units

Company granted 175,000 performance-based restricted stock units (“PSUs”) to our CEO in connection with his appointment

as CEO on July 1, 2023.

The PSUs are to be earned based on the extent to which performance goals tied to Total Shareholder Return

(“TSR”) are achieved.

The performance-based restricted stock units will be eligible to vest and settle into shares

of common stock on a 1-for-1 basis with respect to one-half of the shares upon achieving a total shareholder return of 50% and

the remaining shares upon a total shareholder return of 100%, in each case within four years of the date of grant.

The grant date

fair value of the awards was determined using a Monte Carlo valuation model with an expected term of four years.

As of September

30, 2024, the first TSR target was achieved, resulting in the vesting of 87,500 shares of common stock to our CEO.

stock-based compensation expense of $395,000 associated with the first TSR target, which was set to be recognized in future periods,

was recognized in the three months ended September 30, 2024.

based compensation expense recognized for PSUs was $ 468,000 and $ 73,000 for the three months ended September 30, 2024, and 2023,

respectively.

The weighted average grant date fair value per unit was $ 6.58 and as of September 30, 2024, 87,500 PSUs remained

On September 30, 2024, approximately $ 395,000 of unrecognized compensation expense related to outstanding PSUs remained,

which is scheduled to be recognized over a period of 2.75 years or upon attainment of total shareholder return of 100%.

The intrinsic value of an option is the amount

by which the fair value of the underlying stock exceeds its exercise price.

On December 31, 2024, the weighted average remaining

contractual term for all outstanding stock options was 6.3 years and the aggregate intrinsic value of the options was $ 13,260,000 .

Outstanding on December 31, 2024, were 652,804 stock options issued to employees, of which 398,001 were vested and exercisable

and had an aggregate intrinsic value of $ 8,861,000 .

As of December 31, 2024, $ 886,000 of total unrecognized compensation expense

related to stock options is expected to be recognized over a weighted-average period of approximately 2.4 years.

Restricted Stock

During the six months ended December 31, 2024,

the Company issued restricted stock awards to employees totaling 21,400 shares of common stock, with a weighted average vesting

term of 3 years and a weighted average fair value of $ 17.25 per share, and to directors totaling 21,000 shares of common stock,

with a vesting term of six months and a weighted average fair value of $ 30.78 per share.

There were 62,817 shares of unvested restricted

stock with a weighted average fair value of $ 19.59 per share outstanding as of December 31, 2024.

As of December 31, 2024, $ 909,000

of total unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average

period of approximately 1.2 years.

During the six months ended December 31, 2024,

the Company issued restricted stock units to employees totaling 65,810 shares of common stock, with a weighted average vesting

term of 3 years and a weighted average fair value of $ 17.41 per share.

There were 63,110 shares of unvested restricted stock units

with a weighted average fair value of $ 17.42 per share outstanding as of December 31, 2024.

As of December 31, 2024, $ 882,000 of

total unrecognized compensation expense related to restricted stock units is expected to be recognized over a weighted-average

period of approximately 2.7 years.

Performance-Based Restricted Stock Units

The Company granted 175,000

performance-based restricted stock units (“PSUs”) to our CEO in connection with his appointment as CEO on July 1, 2023.

The PSUs were earned based on the extent to which performance goals tied to Total Shareholder Return (“TSR”) were

performance-based restricted stock units were eligible to vest and settle into shares of common stock on a 1-for-1 basis with

respect to one-half of the shares upon achieving a total shareholder return of 50% and the remaining shares upon a total shareholder

return of 100%, in each case within four years of the date of grant.

The grant date fair value of the awards was determined using a

Monte Carlo valuation model with an expected term of four years.

As of September 30, 2024, TSR exceeded the 50 %

target, resulting in a partial vesting and the issuance of an initial 87,500

shares of common stock to our CEO.

As of December 31, 2024, TSR exceeded the 100 %

target, resulting in the vesting of the remaining 87,500

shares of common stock.

As a result of the most recent vesting, unrecognized

stock-based compensation expense of $ 359,000 , which was set to be recognized over the next 2.5 years, was recognized during the

three months ended December 31, 2024.

As a result of both vesting, unrecognized stock-based compensation expense totaling $ 718,000 ,

which was set to be recognized in future periods, was recognized in the six months ended December 31, 2024.

Stock based compensation expense recognized for

PSUs was $ 863,000 and $ 145,000 for the six months ended December 31, 2024, and 2023, respectively.

After the vesting and settlement

described above, there were no PSUs outstanding as of December 31, 2024.

Commitments and Contingencies

Company is occasionally involved in claims and disputes arising in the ordinary course of business.

The Company ensures certain

business risks where possible to mitigate the financial impact of individual claims and establishes reserves for an estimate of

any probable cost of settlement or other disposition.

The Company is occasionally involved in claims

and disputes arising in the ordinary course of business.

The Company insures certain business risks where possible to mitigate

the financial impact of individual claims and establishes reserves for an estimate of any probable cost of settlement or other

Segment Reporting

President and Chief Executive Officer is our chief operating decision maker (“CODM”).

The CODM reviews financial information,

including long-lived assets, presented on a consolidated basis, accompanied by information about revenue by market, for purposes

of allocating resources and evaluating financial performance.

We have a single active product and engage in the single business

activity of selling and supporting that single product.

There are no segment managers who are held accountable for operations,

operating results or plans for levels or components below the consolidated level.

Accordingly, we have determined that we have

a single reportable and operating segment structure.

We and our CODM evaluate performance based on revenue from our single product

in the markets in which the Company operates.

Our President and Chief Executive Officer is

our chief operating decision maker (“CODM”).

The CODM reviews financial information, including long-lived assets, presented

on a consolidated basis, accompanied by information about revenue by market, for purposes of allocating resources and evaluating

financial performance.

We have a single active product and engage in the single business activity of selling and supporting that

single product.

There are no segment managers who are held accountable for operations, operating results or plans for levels or

components below the consolidated level.

Accordingly, we have determined that we have a single reportable and operating segment

We and our CODM evaluate performance based on revenue from our single product in the markets in which the Company operates.

Revenue by market is described above in Note 2.

Earnings Per Common Share (“EPS”)

computations of the basic and diluted EPS amounts were as follows:

Three Months Ended September 30,

The computations

of the basic and diluted EPS amounts were as follows:

Three Months Ended December 31,

Six Months Ended December 31,

Weighted-average common shares outstanding:

1 unchanged sentence

Earnings per common share:

stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were 44,026

and 403,944 for the three months ended September 30, 2024, and 2023, respectively.

Common stock equivalents excluded from the calculation

of diluted earnings per share because their impact was anti-dilutive were 8,865 and 405,974 for the three months

ended December 31, 2024, and 2023, respectively, and were 43,498 and 404,973 for the six months ended December

31, 2024, and 2023, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements