What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-13 compared with 2025-02-11 · 363 added, 235 removed, 167 unchanged (78% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

December 31, 2024

March 31, 2025

June 30, 2024

1 unchanged sentence

Cash and cash equivalents

$ 15,237,000 $ 16,080,000

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

23,442,000 23,333,000

Contract assets

Income taxes receivable

1,124,000 719,000

2,968,000 3,712,000

Income tax receivable

Prepaid expenses and other current assets

492,000 329,000

Total current assets

44,195,000 44,173,000

Property and equipment, net

4,813,000 5,165,000

Finite-life intangible assets, net

588,000 657,000

703,000 87,000

Deferred income taxes

2,152,000 2,152,000

$ 52,451,000 $ 52,234,000

Liabilities and Shareholders' Equity

1 unchanged sentence

Accounts payable

$ 1,879,000 $ 1,010,000

Accrued compensation

3,971,000 3,893,000

Income tax payable

Warranty reserve

1,594,000 1,567,000

Other accrued liabilities

1,067,000 930,000

Total current liabilities

8,511,000 7,677,000

Other long-term liabilities

Total liabilities

8,511,000 7,689,000

Shareholders' Equity

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

8,509,619 and 8,637,883 shares issued and outstanding, as of March 31, 2025, and June 30, 2024, respectively

85,000 87,000

Additional paid-in capital

21,300,000 20,790,000

Retained earnings

22,555,000 23,668,000

Total shareholders' equity

43,940,000 44,545,000

Total liabilities and shareholders' equity

$ 52,451,000 $ 52,234,000

See Notes to Condensed Financial Statements (Unaudited).

Electromed, Inc.

Condensed Statements of Operations

Condensed Statements of Operations (Unaudited)

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of revenues

11 unchanged sentences

Electromed, Inc.

Condensed Statements of Cash

Flows (Unaudited)

Six Months Ended December 31,

Condensed Statements of Cash Flows (Unaudited)

Nine Months Ended March 31,

Cash Flows From Operating Activities

2 unchanged sentences

Share-based compensation expense

Deferred income taxes

Changes in operating assets and liabilities:

2 unchanged sentences

Prepaid expenses and other assets

Income taxes receivable, net

Income tax receivable, net

Accounts payable and accrued liabilities

( 1,171,000 )

Accrued compensation

8 unchanged sentences

Repurchase of common stock

( 4,536,000 )

Net cash (used for) provided by financing activities

( 5,010,000 )

Net increase in cash

Net (decrease) increase in cash

Cash and cash equivalents

5 unchanged sentences

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

Option exercise proceeds in other assets

Obligation for unsettled share repurchases in accrued liabilities

See Notes to Condensed Financial Statements (Unaudited).

Electromed, Inc.

Condensed Statements of Shareholders’

Equity (Unaudited)

Additional Paid-

Condensed Statements of Shareholders ’ Equity (Unaudited)

Shareholders’

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 withholdings

Exercise of common stock options 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

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

Share-based compensation expense

Balance at December 31, 2023

Additional Paid-

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

Share-based compensation expense

Balance at March 31, 2024

Shareholders’

3 unchanged sentences

Repurchase of common stock

( 4,555,000 )

( 4,558,000 )

Balance at September 30, 2024

3 unchanged sentences

Balance at December 31, 2024

Exercise of common stock options, net of cancellations and tax withholdings

Share-based compensation expense

Repurchase of common stock

Balance at March 31, 2025

Electromed, Inc.

Notes to Condensed

Financial Statements

Notes to Condensed Financial Statements

Interim Financial Reporting

1 unchanged sentence

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.

The Company markets its products in

(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 the U.S.

to the homecare and hospital markets.

The Company also sells internationally through distributors.

Since its inception, the Company has operated

in a single industry segment:

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.

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

generally accepted accounting principles (“U.S.

1 unchanged sentence

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.

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.

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” ).

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

Software costs:

We capitalize certain implementation costs incurred during the development stage of implementing new software.

Capitalized costs are included within Other Assets on the Condensed Balance Sheets when the software meets the definition of a cloud computing arrangement that is a service contract.

We expense costs as incurred during the post-implementation/operation stage.

Capitalized implementation costs are amortized on a straight-line basis over the contractual term of the cloud computing arrangement, which includes renewal options that are reasonably certain to be exercised.

Our other 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 and nine months ended March 31, 2025 .

Recently Issued Accounting Standards

1 unchanged sentence

Improvements to Reportable Segment Disclosures

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.

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.

Adoption of the standard is not expected to have a material impact on the financial statements.

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.

Improvements 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, and interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

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

Three Months Ended December 31,

Six Months Ended December 31,

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

Three Months Ended March 31,

Nine Months Ended March 31,

$ 14,102,000 $ 12,287,000 $ 41,906,000 $ 36,108,000

724,000 783,000 2,137,000 1,909,000

Homecare distributor

In the following table, net homecare revenue is disaggregated by

Three Months Ended December 31,

Six Months Ended December 31,

696,000 524,000 2,090,000 1,377,000

162,000 277,000 474,000 490,000

$ 15,684,000 $ 13,871,000 $ 46,607,000 $ 39,884,000

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

Three Months Ended March 31,

Nine Months Ended March 31,

$ 7,151,000 $ 5,974,000 $ 21,329,000 $ 17,684,000

5,126,000 4,825,000 15,371,000 13,666,000

Medicare Supplemental

1,314,000 1,177,000 3,813,000 3,447,000

238,000 115,000 676,000 722,000

273,000 196,000 717,000 589,000

$ 14,102,000 $ 12,287,000 $ 41,906,000 $ 36,108,000

Contract balances.

The following tables

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

Schedule of contract asset

December 31, 2024

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

March 31, 2025

June 30, 2024

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

$ 23,442,000 $ 23,333,000

Contract Assets

Total Accounts receivable, net of allowances

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

Six Months Ended

December 31, 2024

$ 1,124,000 $ 719,000

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

Nine Months Ended

Fiscal Year Ended

March 31, 2025

June 30, 2024

2 unchanged sentences

Contract assets, beginning

Reclassification of contract assets to accounts receivable

$ 719,000 $ 487,000

Reclassification of contract assets to accounts receivable

( 2,166,000 ) ( 2,325,000 )

Contract assets recognized

2,355,000 2,840,000

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

216,000 ( 283,000 )

Contract assets, ending

$ 1,124,000 $ 719,000

Selected Balance Sheet Information

Inventory consists of the following:

Schedule of components of inventories

December 31, 2024

March 31, 2025

June 30, 2024

Parts inventory

$ 1,805,000 $ 2,556,000

Work in process

249,000 454,000

Finished goods

782,000 834,000

Estimated inventory to be returned

399,000 265,000

Reserve for obsolescence

Other accrued

liabilities consist of the following:

Schedule of components of other accrued liabilities

December 31, 2024

( 267,000 ) ( 397,000 )

$ 2,968,000 $ 3,712,000

Other assets consist of the following:

March 31, 2025

June 30, 2024

Capitalized software costs

$ 662,000 $ -

41,000 87,000

$ 703,000 $ 87,000

Other accrued liabilities consist of the following:

March 31, 2025

June 30, 2024

Accrued insurance recoupments

Accrued tax withholding upon equity award vesting

$ 620,000 $ 467,000

Other accrued expenses

447,000 463,000

$ 1,067,000 $ 930,000

Warranty Reserve

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

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.

The 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:

Nine Months Ended

Fiscal Year Ended

March 31, 2025

June 30, 2024

Warranty reserve, beginning

$ 1,567,000 $ 1,378,000

Accrual for products sold

297,000 559,000

Expenditures and costs incurred for warranty claims

( 270,000 ) ( 370,000 )

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.

$ 1,594,000 $ 1,567,000

Income tax expenses were $ 391,000 and $ 1,776,000 , and the effective tax rate was 17.1 % and 25.0 % for the three and nine months ended March 31, 2025 , respectively.

Estimated income tax expense for the three and nine months ended March 31, 2025 , includes a discrete current tax benefit of $ 338,000 and $ 478,000 , respectively, primarily related to the exercise of stock options.

Income tax expenses were estimated at $ 468,000 and $ 1,217,000 , and the effective tax rate was 23.9 % and 26.8 % for the three and nine months ended March 31, 2024 , respectively.

Estimated income tax expense for the three and nine months ended March 31, 2024 , includes a discrete current tax benefit of $ 99,000 and $ 95,000 , respectively, primarily 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 and state income tax in multiple jurisdictions.

With limited exceptions, years prior to the Company’s fiscal year ended June 30, 2022 , 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

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

of capital stock consisting of 13,000,000 shares of common stock, par value $ 0.01 per share, and 2,000,000 shares

of undesignated stock.

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 $ 5,000,000 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

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 March 31, 2025 , or June 30, 2024 .

Interest on borrowings under the line of credit, if any, accrues at the prime rate ( 7.50 % on March 31, 2025 ) 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 March 31, 2025 , 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.

Authorized shares:

The Company’s Articles of Incorporation, as amended, have established 15,000,000 authorized shares of capital stock consisting of 13,000,000 shares of common stock, par value $ 0.01 per share, and 2,000,000 shares of undesignated stock.

On September 11, 2024, the Company announced the approval of a stock repurchase authorization.

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

A total of 280,017 shares were repurchased and retired under this authorization for a total cost of $ 5,000,000 , or $ 17.86 per share.

This repurchase authorization has been exhausted in its entirety.

On March 6, 2025, the Company announced the approval of a new stock repurchase authorization.

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

This repurchase authorization has no expiration date.

Through March 31, 2025 , a total of 60,036 shares were repurchased and retired for a total cost of $ 1,449,000 , or $ 24.14 per share.

Of the total shares repurchased as of March 31, 2025 under the new authorization, 5,128 shares were unsettled and recorded as repurchases as of their trade date with a corresponding liability of $ 118,000 included within other accrued liabilities on the Condensed Balance Sheet.

Repurchased shares are automatically retired and constitute authorized but unissued shares.

Share-Based Compensation

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.

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 2024.

Share-based compensation expenses were $ 2,409,000 and $ 1,250,000 for the nine months ended March 31, 2025 , and 2024 , 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

Stock option transactions during the nine months ended March 31, 2025 , are summarized as follows:

Weighted-Average

Exercise Price per

Exercise Price

Number of Shares

Outstanding at June 30, 2024

635,073 $ 8.49

62,432 $ 17.43

( 83,253 ) $ 5.83

Cancelled or Forfeited

Outstanding at December 31, 2024

The following assumptions were

used to estimate the fair value of stock options granted:

Six Months Ended

( 6,698 ) $ 10.74

Outstanding at March 31, 2025

607,554 $ 9.75

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

Nine Months Ended

Fiscal Year Ended

March 31, 2025

June 30, 2024

1 unchanged sentence

3.69 - 4.14 % 3.85 - 4.64 %

3.85 – 4.64 %

Expected term (years)

Expected volatility

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.

53 % 51 - 52 %

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

On March 31, 2025 , the weighted average remaining contractual term for all outstanding stock options was 6.4 years and the aggregate intrinsic value of the options was $ 8,572,000 .

Outstanding on March 31, 2025 , were 607,554 stock options issued to employees, of which 364,423 were vested and exercisable and had an aggregate intrinsic value of $ 5,776,000 .

As of March 31, 2025 , $ 699,000 of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of approximately 2.2 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.

During the nine months ended March 31, 2025 , 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 6 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 March 31, 2025 .

As of March 31, 2025 , $ 514,000 of total unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.3 years.

During the nine months ended March 31, 2025 , the Company issued restricted stock units to employees totaling 68,095 shares of common stock, with a weighted average vesting term of 3 years and a weighted average fair value of $ 17.87 per share.

There were 65,395 shares of unvested restricted stock units with a weighted average fair value of $ 17.89 per share outstanding as of March 31, 2025 .

As of March 31, 2025 , $ 778,000 of total unrecognized compensation expense related to restricted stock units is expected to be recognized over a weighted-average period of approximately 2.5 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.

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 achieved.

The 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 both vesting, unrecognized stock-based compensation expense totaling $ 648,000 , which was set to be recognized in future periods, was recognized in the nine months ended March 31, 2025 .

Stock-based compensation expense recognized for PSUs was $ 863,000 and $ 217,000 for the nine months ended March 31, 2025 , and 2024 , respectively.

After the vesting and settlement described above, there were no PSUs outstanding as of March 31, 2025 .

Commitments and Contingencies

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

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 disposition.

Segment Reporting

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

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 structure.

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

1 unchanged sentence

Earnings Per Common Share ( “ EPS ” )

The computations

of the basic and diluted EPS amounts were as follows:

Three Months Ended December 31,

Six Months Ended December 31,

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

Three Months Ended March 31,

Nine Months Ended March 31,

$ 1,891,000 $ 1,493,000 $ 5,333,000 $ 3,322,000

Weighted-average common shares outstanding:

8,495,005 8,565,725 8,493,715 8,549,352

Effect of dilutive common stock equivalents

472,833 327,096 486,503 273,586

8,967,838 8,892,821 8,980,218 8,822,938

Earnings per common share:

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.

$ 0.22 $ 0.17 $ 0.63 $ 0.39

$ 0.21 $ 0.17 $ 0.59 $ 0.38

Common stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were 3,196 and 289,362 for the three months ended March 31, 2025 , and 2024 , respectively, and were 47,971 and 400,639 for the nine months ended March 31, 2025 , and 2024 , respectively.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Financial Statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and our audited financial statements and related notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (“fiscal 2024”).

Electromed, Inc.

(“we,” “our,” “us,” “Electromed” or the “Company”) develops and provides innovative airway clearance products applying High Frequency Chest Wall Oscillation (“HFCWO”) technologies in pulmonary care for patients.

We manufacture, market and sell products that provide HFCWO, including the SmartVest® Airway Clearance System (“SmartVest System”) that includes our newest generation SmartVest Clearway® Airway Clearance System (“Clearway”), previous generation SmartVest SQL®, and related garments and accessories to patients with compromised pulmonary function.

The SmartVest Clearway, which received 510(k) clearance from the U.S.

Food and Drug Administration in November 2022, provides patients with proven quality of life outcomes while offering a state-of-the-art patient experience with a simple touch screen user interface, small generator footprint and comfortable, lightweight vests.

Our products are sold in both the homecare market and the hospital market for inpatient use, which we refer to as “hospital sales.” Since 2000, we have marketed the SmartVest System and its predecessor products to patients suffering from bronchiectasis, cystic fibrosis, and other chronic pulmonary conditions which require external chest manipulation to enhance mucus transport.

Additionally, we offer our products to a patient population that includes neuromuscular disorders such as cerebral palsy, muscular dystrophies, amyotrophic lateral sclerosis (“ALS”), patients with post-surgical complications or who are ventilator dependent and patients who have other conditions involving excess secretion and impaired mucus transport.

The SmartVest System is often eligible for reimbursement from major private insurance providers, health maintenance organizations (“HMOs”), state Medicaid systems, and the federal Medicare system, which we believe is an important consideration for patients considering an HFCWO course of therapy.

For domestic sales, the SmartVest System may be reimbursed under the Medicare-assigned billing code (E0483) for HFCWO devices if the patient has cystic fibrosis, bronchiectasis (including chronic bronchitis or COPD that has resulted in a diagnosis of bronchiectasis), or any one of certain enumerated neuromuscular diseases and myopathies and can demonstrate that another less expensive physical or mechanical treatment did not adequately mobilize retained secretions.

Private payers consider a variety of sources, including Medicare, as guidelines in setting their coverage policies and payment amounts.

Critical Accounting Estimates

For a description of our critical accounting estimates and assumptions used in the preparation of our financial statements, including the unaudited Condensed Financial Statements in this Quarterly Report on Form 10-Q, see Note 1 and Note 2 to our unaudited Condensed Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Part II, Item 7, and Note 1 to our audited financial statements included in Part II, Item 8, of our Annual Report on Form 10-K for fiscal 2024.

There were no material changes in our critical accounting estimates and assumptions since the filing of our Annual Report on Form 10-K for fiscal 2024 .

Results of Operations

Net revenues for the three and nine months ended March 31, 2025, and 2024 are summarized in the table below.

Three Months Ended

Nine Months Ended

Increase (Decrease)

Homecare distributor

Homecare revenue.

Homecare revenue increased by $1,815,000 or 14.8%, for the three months ended March 31, 2025, compared to the same period in the prior year.

For the nine months ended March 31, 2025, homecare revenue was $41,906,000, representing an increase of $5,798,000, or 16.1%, compared to the same period in the prior year.

The increases were primarily due to incremental referrals and approvals driven by an increase in direct sales representatives and efficiencies within our reimbursement department, as well as higher net revenues per approval.

Hospital revenue.

Hospital revenue was $724,000, a decrease of $59,000, or 7.5%, for the three months ended March 31, 2025, compared to the same period in the prior year.

For the nine months ended March 31, 2025, hospital revenue was $2,137,000, an increase of $228,000, or 11.9%, compared to the same period in the prior year.

The decrease in the three-month period was primarily due to the timing of hospital purchases, while the growth in the nine-month period primarily reflects the increased demand for capital and consumables in hospitals.

Homecare distributor revenue.

Homecare distributor revenue increased by $172,000, or 32.8%, for the three months ended March 31, 2025, compared to the same period in the prior year.

For the nine months ended March 31, 2025, homecare distributor revenue was $2,090,000, an increase of $713,000, or 51.8%, compared to the same period in the prior year.

The increases in homecare distributor sales were primarily a result of increased demand from our distribution partners.

Other revenue.

Other revenue was $162,000, a decrease of $115,000, or 41.5% for the three months ended March 31, 2025, compared to the same period in the prior year.

For the nine months ended March 31, 2025, other revenue was $474,000, a decrease of $16,000, or 3.3%, compared to the same period in the prior year.

The decreases in other revenue were primarily due to the lower demand for purchases by customers that do not fall within the other markets described above.

Gross profit increased to $12,229,000, or 78.0% of net revenues, for the three months ended March 31, 2025, from $10,382,000, or 74.8% of net revenues, in the same period in the prior year.

Gross profit increased to $36,347,000, or 78.0% of net revenues, for the nine months ended March 31, 2025, from $30,425,000, or 76.3% of net revenues, in the same period in the prior year.

The increase in gross profit dollars was primarily a result of increased overall revenue and the increase in gross profit percentage was a result of higher net revenue per device.

Operating expenses

Selling, general and administrative expenses.

Selling, general and administrative (“SG&A”) expenses were $9,812,000 and $29,033,000 for the three and nine months ended March 31, 2025, respectively, representing increases of $1,438,000 and $3,334,000, or 17.2% and 13.0%, respectively, compared to the same periods in the prior year.

Payroll and compensation-related expenses were $6,592,000 and $19,924,000 for the three and nine months ended March 31, 2025, respectively, representing increases of $871,000 and $2,813,000, or 15.2% and 16.4%, respectively, compared to the same periods in the prior year.

The increases in the current-year periods were primarily due to the accelerated recognition of share-based compensation associated with the vesting of performance-based equity awards, and salaries and incentive compensation related to the higher average number of sales, sales support, marketing, and reimbursement personnel to process higher patient referrals.

We have also continued to provide regular merit-based increases for our employees and are regularly benchmarking our compensation ranges, including share-based compensation, for new and existing employees to ensure we can hire and retain the talent needed to drive growth in our business.

Field sales employees totaled 62 as of March 31, 2025, 55 of which were direct sales representatives, compared to 59 field sales employees and 51 direct sales representatives as of March 31, 2024.

Travel, meals and entertainment expenses were $922,000 and $2,880,000 for the three and nine months ended March 31, 2025, respectively, representing increases of $162,000 and $427,000, or 21.3% and 17.4%, respectively, compared to the same periods in the prior year.

The increase in the current year was primarily due to a higher average number of direct sales representatives and higher travel costs.

Total discretionary marketing expenses were $325,000 and $943,000 for the three and nine months ended March 31, 2025, respectively, representing an increase of $21,000 and a decrease of $152,000, or an increase of 6.9% and a decrease of 13.9%, respectively, compared to the same periods in the prior year.

The increase in the three-month period was due to increased investment in our direct-to-consumer advertising, while the decrease in the nine -month period was primarily due to a one-time investment in market research in the prior year that did not recur in t he nine months ended March 31, 2025.

Professional fees were $1,285,000 and $3,604,000 for the three and nine months ended March 31, 2025, respectively, representing increases of $307,000 and $382,000, or 31.4% and 11.9%, respectively, compared to the same periods in the prior year.

Professional fees are primarily for services related to legal costs, shareowner services and reporting requirements, information technology technical support and consulting fees.

The increase for the three and nine months ended March 31, 2025 , was primarily related to increased expense recognition associated with the board of directors’ equity compensation.

Research and development expenses .

Research and development (“R&D”) expenses were $277,000 and $694,000 for the three and nine months ended March 31, 2025, respectively, representing increases of $110,000 and $214,000, or 65.9% and 44.6%, respectively, compared to the same periods in the prior year.

The increases were primarily due to increased average headcount and external spend related to product enhancements and sustaining engineering.

Operating income

Operating income increased by $299,000 or 16.2% to $2,140,000 for the three months ended March 31, 2025, compared to the same period in the prior year.

Operating income increased by $2,374,000 or 55.9% to $6,620,000 for the nine months ended March 31, 2025, compared to the same period in the prior year.

The increase is primarily due to an increase in revenue and gross profit in both the three- and nine- month periods, as well as a lower growth rate in selling, general and administrative expenses in the nine- month period.

Interest income, net

Net interest income for the three and nine months ended March 31, 2025, was $142,000 and $489,000, respectively, compared to $120,000 and $293,000, respectively, for the same periods in the prior year.

The increases are primarily due to increased cash balances.

Income tax expense

Income tax expenses were estimated at $391,000 and $1,776,000, and the effective tax rate was 17.1% and 25.0%, for the three and nine months ended March 31, 2025, respectively.

Estimated income tax expense for the three and nine months ended March 31, 2025, includes a discrete tax benefit of $338,000 and $478,000, respectively, primarily related to the exercise of stock options.

Income tax expense was estimated at $468,000 and $1,217,000, and the effective tax rate was 23.9% and 26.8%, for the three and nine months ended March 31, 2024, respectively.

Estimated income tax expense for the three and nine months ended March 31, 2024, includes a discrete current tax benefit of $99,000 and $95,000, respectively, primarily related to the exercise of stock options.

Net income for the three and nine months ended March 31, 2025, was $1,891,000 and $5,333,000, respectively, compared to $1,493,000 and $3,322,000 for the same periods in the prior year.

The increase in net income was primarily due to increased revenue and gross profit.

Liquidity and Capital Resources

Cash Flows and Sources of Liquidity

Cash Flows from Operating Activities

For the nine months ended March 31, 2025, net cash provided by operating activities was $7,534,000.

Cash flows provided by operating activities consisted of net income of $5,333,000, non-cash expenses of $3,184,000, an increase in accounts payable and accrued expenses of $877,000, a decrease in inventories of $564,000, and an increase in accrued compensation of $78,000.

These cash flows from operating activities were offset by an increase in income tax receivable, net of $1,209,000, an increase in prepaid expenses and other assets of $779,000, an increase in contract assets of $405,000, and an increase in accounts receivable of 109,000.

Cash Flows from Investing Activities

For the nine months ended March 31, 2025, cash used for investing activities was $149,000.

Cash used for investing activities consisted of $117,000 in expenditures for property and equipment and $32,000 in expenditures for intangible asset costs.

Cash Flows from Financing Activities

For the nine months ended March 31, 2025, cash used for financing activities was $8,228,000.

Cash used for financing activities consisted of $6,331,000 used for our share repurchase program and $2,278,000 for taxes paid on net share settlement of stock awards, partially offset by $381,000 from the issuance of common stock upon exercise of options.

Adequacy of Capital Resources

Our primary working capital requirements relate to adding employees to our sales force and support functions, continuing infrastructure investments, and supporting general corporate needs, including financing equipment purchases and other capital expenditures incurred in the ordinary course of business.

Based on our current operational performance, we believe our working capital of approximately $35,684,000 and available borrowings under our existing credit facility will provide sufficient liquidity to meet our anticipated working capital and other liquidity needs for the next twelve months from the date of this report.

We maintain a credit facility that was last amended in December 2023, which provides us with a revolving line of credit.

Interest on borrowings on the line of credit accrues at the prime rate (7.50% as of March 31, 2025) less 1.0% and is payable monthly.

There was no outstanding principal balance on the line of credit as of March 31, 2025, or June 30, 2024.

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, and the line of credit expires on December 18, 2025, if not renewed.

As of March 31, 2025, the maximum $2,500,000 was available under the line of credit.

Payment obligations under the line of credit are secured by a security interest in substantially all our tangible and intangible assets.

The documents governing our line of credit contain certain financial and non-financial covenants that include a minimum tangible net worth of not less than $10,125,000 and restrictions on our ability to incur certain additional indebtedness or pay dividends.

Any failure to comply with these covenants in the future may result in an event of default, which if not cured or waived, could result in the lender accelerating the maturity of our indebtedness, preventing access to additional funds under the line of credit, requiring prepayment of outstanding indebtedness, or refusing to renew the line of credit.

If the maturity of the indebtedness is accelerated or the line of credit is not renewed, sufficient cash resources to satisfy the debt obligations may not be available and we may not be able to continue operations as planned.

If we are unable to repay such indebtedness, the lender could foreclose on these assets.

For the nine months ended March 31, 2025, and 2024, we spent approximately $117,000 and $265,000, respectively, on property and equipment.

We currently expect to finance planned equipment purchases with cash flows from operations or borrowings under our credit facility.

We may need to incur additional debt if we have an unforeseen need for additional capital equipment or if our operating performance does not generate adequate cash flows.

While the impact of macroeconomic factors such as inflation are difficult to predict, we believe our cash, cash equivalents and cash flows from operations will be sufficient to meet our working capital, capital expenditure, operational cash requirements for fiscal 2025 and the foreseeable future.

We will continue to evaluate our projected expenditures relative to our available cash and evaluate financing alternatives to satisfy our working capital and other cash requirements.

Information Regarding Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact should be considered forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward- looking statements include, but are not limited to, statements regarding:

our business strategy, including our intended level of investment in R&D and marketing activities;

our expectations with respect to earnings, gross margins and sales growth, industry relationships, marketing strategies and international sales;

estimated sizes of markets into which our products are or may be sold;

our business strengths and competitive advantages;

our ability to grow additional sales distribution channels;

our intent to retain any earnings for use in operations rather than paying dividends;

our expectation that our products will continue to qualify for reimbursement and payment under government and private insurance programs;

our intellectual property plans and practices;

the expected impact of applicable regulations on our business;

our beliefs about our manufacturing processes;

our expectations and beliefs with respect to our employees and our relationships with them;

our belief that our current facilities are adequate to support our growth plans;

our expectations with respect to ongoing compliance with the terms of our credit facility;

our expectations regarding the ongoing availability of credit and our ability to renew our line of credit;

enhancements to our products and services;

expected excise tax exemption for the SmartVest System;

and our anticipated revenues, expenses, capital requirements and liquidity.

Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “project,” “goal,” “target,” “should,” “will,” “would,” and similar expressions, including the negative of these terms, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Although we believe these forward-looking statements are reasonable, they involve risks and uncertainties that may cause actual results to differ materially from those projected by such statements.

Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or our industry’s actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements.

Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, the following:

ability to obtain reimbursement from Medicare, Medicaid, or private insurance payers for our products;

component or raw material shortages, changes to lead times or significant price increases;

adverse changes to state and federal health care regulations;

our ability to maintain regulatory compliance and to gain future regulatory approvals and clearances;

entry of new competitors including new drug or pharmaceutical discoveries;

adverse economic and business conditions or intense competition;

the risks associated with our planned salesforce expansion;

wage and component price inflation;

technical problems with our research and products;

the risks associated with cyberattacks, data breaches, computer viruses and other similar security threats;

changes affecting the medical device industry;

our ability to develop new sales channels for our products such as the homecare distributor channel;

adverse international health care regulation impacting current international business;

our ability to renew our line of credit or obtain additional credit as necessary;

our ability to protect and expand our intellectual property portfolio.

This list of factors is not exhaustive, however, and these or other factors, many of which are outside of our control, could have a material adverse effect on us and our results of operations.

Therefore, you should consider these risk factors with caution and form your own critical and independent conclusions about the likely effect of these risk factors on our future performance.

Forward-looking statements speak only as of the date on which the statements are made, and we undertake no obligation, and expressly disclaim any such obligation, to update any forward-looking statement for any reason other than as required by law, even if new information becomes available or other events occur in the future.

You should carefully review the disclosures, and the risk factors described in this and other documents we file from time to time with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for fiscal 2024.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth herein.

Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, we are not required to provide disclosure pursuant to this Item.

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