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Item 5. Market for Registrant’s Common Equity

2021-03-05 compared with 2020-03-06 · 45 added, 702 removed, 44 unchanged (94% of the section changed)

MARKET FOR REGISTRANT’S COMMON STOCK, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR REGISTRANT’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Common Stock

common stock has been publicly traded on the Nasdaq Capital Market under the stock symbol “IRMD”

since July 16,

Our common stock has been publicly traded on the Nasdaq Capital Market under the stock symbol “IRMD” since July 16, 2014.

Prior to that date, there was no public market for our common stock.

The following table summarizes, for the periods indicated,

the high and low sale price per share of our common stock as reported by the Nasdaq:

Year ended December 31, 2019

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

Year ended December 31, 2018

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

stock market in general has experienced significant stock price fluctuations in the past few years.

In some cases, these fluctuations

have been unrelated to the operating performance of the affected companies.

Therefore, many companies have experienced dramatic

volatility in the market prices of their common stock.

We believe that a number of factors, both within and outside our

control, could cause the price of our common stock to fluctuate, perhaps substantially.

Factors such as the following could have

a significant adverse impact on the market price of our common stock:

There were no dividends declared during the fiscal years ended December 31, 2020, and 2019 and we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

The stock market in general has experienced significant stock price fluctuations in the past few years.

In some cases, these fluctuations have been unrelated to the operating performance of the affected companies.

Therefore, many companies have experienced dramatic volatility in the market prices of their common stock.

We believe that a number of factors, both within and outside our control, could cause the price of our common stock to fluctuate, perhaps substantially.

Factors such as the following could have a significant adverse impact on the market price of our common stock:

● Our financial position and results of operations;

● Our ability to obtain additional financing and, if available, the terms and conditions of the financing;

Concern as to, or other evidence of, the reliability and efficiency of our proposed products or our competitors’

● Concern as to, or other evidence of, the reliability and efficiency of our proposed products or our competitors’ products;

● Announcements of innovations or new products by us or our competitors;

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● Changes in interest rates;

Competitive developments, including announcements by competitors of new products or significant contracts, acquisitions, strategic

partnerships, joint ventures or capital commitments;

● Competitive developments, including announcements by competitors of new products or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;

● Sales of large blocks of our stock;

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● General economic and other national and international conditions.

of February 28, 2020, we had 4 stockholders of record.

This number is significantly less than and does not include

“street name”

or beneficial holders, whose shares are held by banks, brokers, financial institutions and other nominees.

do not expect to declare or pay any cash dividends on our common stock in the foreseeable future, and we currently intend to retain

future earnings, if any, to finance the expansion of our business.

The decision whether to pay cash dividends on our common stock

will be made by our board of directors, at its discretion, and will depend on our financial condition, operating results,

capital requirements and other factors that the board of directors considers significant.

We have never declared or paid cash dividends

on our capital stock.

As of February 28, 2021, we had 3 stockholders of record.

This number is significantly less than and does not include “street name” or beneficial holders, whose shares are held by banks, brokers, financial institutions and other nominees.

At this time, we do not expect to declare or pay any cash dividends on our common stock in the foreseeable future, and we currently intend to retain future earnings, if any, to finance the expansion of our business.

The decision whether to pay cash dividends on our common stock will be made by our board of directors, at its discretion, and will depend on our financial condition, operating results, capital requirements and other factors that the board of directors considers significant.

We have never declared or paid cash dividends on our capital stock.

Unregistered Sales of Securities;

Use of Proceeds from Registered

Use of Proceeds from Registered Securities

Purchases of Equity Securities by the Issuer

In April 2017, the Board of Directors

authorized a stock repurchase program of up to $8 million of the Company’s common stock pursuant to a stock repurchase program.

This program was publicly announced on April 28, 2017 and expired on April 28, 2018.

During the program period, we expended

$1.8 million for such repurchases.

The following table provides information

regarding repurchases of common stock for the year ended December 31, 2019.

The following table provides information regarding repurchases of common stock for the year ended December 31, 2020.

Dollar Value of

Average Price

Paid per Share

Dollar Value of

January 1, 2019—January 31, 2019

February 1, 2019—February 28, 2019

March 1, 2019—March 31, 2019

April 1, 2019—April 30, 2019

May 1, 2019—May 31, 2019

June 1, 2019—June 30, 2019

July 1, 2019—July 31, 2019

August 1, 2019—August 31, 2019

September 1, 2019—September 30, 2019

October 1, 2019—October 31, 2019

November 1, 2019—November 30, 2019

December 1, 2019—December 31, 2019

January 1, 2020—January 31, 2020

February 1, 2020—February 29, 2020

March 1, 2020—March 31, 2020

April 1, 2020—April 30, 2020

May 1, 2020—May 31, 2020

June 1, 2020—June 30, 2020

July 1, 2020—July 31, 2020

August 1, 2020—August 31, 2020

September 1, 2020—September 30,2020

October 1, 2020—October 31, 2020

November 1, 2020—November 30, 2020

December 1, 2020—December 31, 2020

The number of shares purchased reflects shares withheld for taxes on vesting of restricted stock.

There were no shares repurchased

pursuant to the open market repurchase authorization.

There were no shares repurchased pursuant to the open market repurchase authorization.

The average price paid per share does not include the withheld shares discussed in (1).

Transfer Agent

The transfer agent and registrar for our

common stock is EQ by Equiniti, which acquired our former transfer agent, Corporate Stock Transfer, Inc., in November 2019.

The transfer agent and registrar for our common stock is EQ by Equiniti.

Equity Compensation Plan Information

Our equity compensation plan information

is provided as set forth in Part III, Item 11 herein.

Our equity compensation plan information is provided as set forth in Part III, Item 11 herein.

Additional Information

of our annual reports, quarterly reports, current reports, and any amendments to those reports, are available free of charge on

the Internet at www.sec.gov.

All statements made in any of our filings, including all forward-looking statements, are made as of

the date of the document , in which the statement is included, and we do not assume or undertake any obligation to update

any of those statements or documents unless we are required to do so by law.

Copies of our annual reports, quarterly reports, current reports, and any amendments to those reports, are available free of charge on the Internet at www.sec.gov.

All statements made in any of our filings, including all forward-

looking statements, are made as of the date of the document, in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.

Stock Performance Graph

The following information of Part II

Item 5 is being furnished and shall not be deemed to be “soliciting material”

or to be “filed”

of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section,

nor will it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities

Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such information by reference thereto.

The following graph shows a comparison,

from December 31, 2014 through December 31, 2019, of cumulative total return for our common stock, the Russell 2000 Index

and the Nasdaq Medical Equipment Index.

The following information of Part II Item 5 is being furnished and shall not be deemed to be “soliciting material” or to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such information by reference thereto.

The following graph shows a comparison, from December 31, 2015 through December 31, 2020, of cumulative total return for our common stock, the Russell 2000 Index and the Nasdaq Medical Equipment Index.

Such returns are based on historical results and are not intended to suggest future performance.

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SELECTED FINANCIAL DATA

The following tables set forth certain selected

financial data for each of the years in the five-year period ended December 31, 2019, and is derived from the audited Financial

Statements of IRADIMED CORPORATION.

The statements of operations data for each of the years in the three-year period ended December 31,

2019 are included elsewhere in this report.

The statements of operations data for the years ended December 31, 2016 and 2015

and balance sheet data as of December 31, 2017, 2016 and 2015 are derived from our audited financial statements not included

in this report.

The selected financial data set forth below is qualified in its entirety by, and should be read in conjunction

with, the Financial Statements and Notes thereto and “Management’s Discussion and Analysis and Results of Operations”

included elsewhere in this report.

The following tables set forth certain selected financial data for each of the years in the five-year period ended December 31, 2020, and is derived from the audited Financial Statements of IRADIMED CORPORATION.

statements of operations data for each of the years in the three-year period ended December 31, 2020 are included elsewhere in this report.

The statements of operations data for the years ended December 31, 2017 and 2016 and balance sheet data as of December 31, 2018, 2017 and 2016 are derived from our audited financial statements not included in this report.

The selected financial data set forth below is qualified in its entirety by, and should be read in conjunction with, the Financial Statements and Notes thereto and “Management’s Discussion and Analysis and Results of Operations” included elsewhere in this report.

Years ended December 31,

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Total operating expenses

Income from operations

(Loss) income from operations

Other income, net

Income before provision for income taxes

(Loss) income before provision for income taxes

Provision for income tax (benefit) expense

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Working capital

Total stockholders’

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

should read this discussion and analysis together with our audited financial statements, the notes to such statements and the other

financial information included in this Form 10-K.

This discussion contains forward-looking statements that involve risks and

uncertainties.

As a result of many factors, such as those set forth under the section entitled “Risk Factors”

and elsewhere

in this Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS”

for a discussion of the uncertainties, risks

and assumptions associated with these statements.

We develop, manufacture, market and distribute

Magnetic Resonance Imaging (“MRI”) compatible medical devices and accessories and services relating to them.

are a leader in the development of innovative magnetic resonance imaging (“MRI”) compatible medical devices.

We are the only known provider of a non-magnetic intravenous (“IV”) infusion pump system that is specifically designed

to be safe for use during MRI procedures.

We were the first to develop an infusion delivery system that largely eliminates many

of the dangers and problems present during MRI procedures.

Standard infusion pumps contain magnetic and electronic components which

can create radio frequency interference and are dangerous to operate in the presence of the powerful magnet that drives an MRI

Our patented MRidium®

MRI compatible IV infusion pump system has been designed with a non-magnetic ultrasonic motor,

uniquely designed non-ferrous parts and other special features to safely and predictably deliver anesthesia and other IV fluids

during various MRI procedures.

Our pump solution provides a seamless approach that enables accurate, safe and dependable fluid

delivery before, during and after an MRI scan, which is important to critically-ill patients who cannot be removed from their vital

medications, and children and infants who must generally be sedated to remain immobile during an MRI scan.

IV infusion pump system consists of an MRidium®

MRI compatible IV infusion pump, non-magnetic mobile stand, proprietary

disposable IV tubing sets and many of these systems contain additional optional upgrade accessories.

3880 MRI compatible patient vital signs monitoring system has been designed with non-magnetic components and other special

features to safely and accurately monitor a patient’s vital signs during various MRI procedures.

The IRADIMED 3880 system

operates dependably in magnetic fields up to 30,000 gauss, which means it can operate virtually anywhere in the MRI scanner room.

The IRADIMED 3880 has a compact, lightweight design allowing it to travel with the patient from their critical care unit, to the

MRI and back, resulting in increased patient safety through uninterrupted vital signs monitoring and decreasing the amount of time

critically ill patients are away from critical care units.

The features of the IRADIMED 3880 include:

wireless ECG with dynamic

gradient filtering;

wireless SpO2 using Masimo®

non-magnetic respiratory CO2;

invasive and non-invasive blood pressure;

patient temperature, and;

optional advanced multi-gas anesthetic agent unit featuring continuous Minimum Alveolar Concentration

measurements.

The IRADIMED 3880 MRI compatible patient vital signs monitoring system has an easy-to-use design and allows for the

effective communication of patient vital signs information to clinicians.

generate revenue from the sale of MRI compatible medical devices and accessories, extended warranty agreements, services related

to maintaining our products and the sale of disposable products used with our devices.

The principal customers for our MRI

compatible products include hospitals and acute care facilities, both in the United States and internationally.

As of December 31,

2019, our direct U.S.

sales force consisted of 29 field sales representatives, 4 regional sales directors and supplemented by 6

clinical support representatives.

Internationally, we have distribution agreements with independent distributors selling our products.

Historical selling cycles for our devices

have varied widely and are typically three to six months in duration.

We also enter into agreements with healthcare supply contracting

companies in the U.S., which enable us to sell and distribute our MRidium MRI compatible IV infusion pump system to their member

Under these agreements, we are required to pay these group purchasing organizations (“GPOs”) a fee of three

percent of the sales of our products to their member hospitals.

Our current GPO contracts effectively give us the ability to sell

to more than 95 percent of all U.S.

hospitals and acute care facilities.

December 22, 2017 , the Tax Cuts and Jobs Act (“2017 Act”) was enacted.

The 2017 Act represents major tax

reform that, among other provisions, reduced the U.S.

corporate tax rate.

Certain income tax effects of the 2017 Act, including

$0.5 million of tax expense recorded principally due to the remeasurement of our net deferred tax assets as of December 31,

2017, are reflected in our Financial Statements in accordance with Staff Accounting Bulletin No.

118 (“SAB 118”),

which provides SEC staff guidance regarding the application of Accounting Standards Codification (“ASC”) Topic 740, Income

Taxes , in the reporting period in which the 2017 Act became law.

See Note 11 to the Financial Statements for further information

on the financial impact of the 2017 Act.

Financial Highlights and Outlook

Our revenue was $38.5 million in 2019, $30.4

million in 2018 and $23.1 million in 2017.

Our diluted earnings per share was $0.78 in 2019, $0.52 in 2018 and $0.04 in 2017.

cash provided by operations was $10.2 million in 2019, $7.4 million in 2018 and $3.4 million in 2017.

Our estimated installed base of medical

devices is as follows:

Years Ended December 31,

IV Infusion Pump Systems

Patient Vital Signs Monitoring Systems

In 2020, we expect our revenues to increase

due to higher sales of our medical devices and related accessories, disposables and services through the continued execution of

our critical care strategy and headcount growth of our sales team.

We intend to continue targeting an increased

number of hospitals and acute care facilities that have yet to adopt our technology and furthering our penetration into the Intensive

Care Unit, Emergency Room and other critical care locations within hospitals where there is a high probability that interventional

radiology procedures will need to be performed on patients.

We expect operating expenses to increase in 2020 due to growth in headcount

and higher sales commission costs due to anticipated higher sales.

Application of Critical Accounting Policies

We prepare our financial statements in conformity

The preparation of these financial statements requires us to make estimates and use assumptions that affect the

reported amounts of assets, liabilities and related disclosures at the date of the financial statements and the reported amounts

of revenue and expenses during the reporting period.

Actual results could differ from those estimates.

Our significant accounting policies are

more fully described in Note 1 to the Financial Statements.

However, we believe that the following critical accounting policies

require the use of significant estimates, assumptions and judgments.

The use of different estimates, assumptions and judgments

could have a material effect on the reported amounts of assets, liabilities and related disclosures as of the date of the financial

statements and revenue and expenses during the reporting period.

Revenue Recognition

generate revenue from the sale of MRI compatible medical devices and accessories, extended warranty agreements, services related

to maintaining our products and the sale of disposable products used with our devices.

The principal customers for our MRI compatible

products include hospitals and acute care facilities, both in the U.S.

and internationally.

we sell our products

through our direct sales force and outside of the U.S.

we sell our products through third-party distributors who resell our products

to end users.

For most domestic sales, we enter into agreements

with healthcare supply contracting companies, commonly referred to as Group Purchasing Organizations (“GPOs”), which

enable us to sell and distribute our products to their member hospitals.

Our agreements with GPOs typically include negotiated

pricing for all group members established at time of GPO contract execution.

We do not sell to GPOs.

Hospitals, group

practices and other acute care facilities that are members of a GPO, purchase products directly from us under the terms of our

GPO agreements.

recognize revenue when all of the following criteria are met:

we have a contract with a customer that creates enforceable rights

and obligations;

promised products or services are identified;

the transaction price, or the amount we expect to receive, is determinable

and we have transferred control of the promised products or services to the customer.

We consider transfer of control evidenced

upon the passage of title and risks and rewards of ownership to the customer, which is typically at a point in time, except for

our extended warranty agreements.

We allocate the transaction price using the relative standalone selling price method.

Customer sale prices for our MRI compatible IV infusion pump systems and related disposables and services are contractually fixed

over the GPO contract term.

We recognize a receivable at the point in time we have an unconditional right to payment.

Payment terms

are typically within 45 days after transferring control to U.S.

Most international distributors are required to pay

a portion of the transaction price in advance and the remaining amount within 30 days of receiving the related products.

we have elected to use the practical expedient that allows us to ignore the possible existence of a significant financing component

within the contract.

We have elected to account for shipping

and handling charges billed to customers as revenue and shipping and handling related expenses as cost of revenue.

In certain U.S.

states we are required to

collect sales taxes from our customers.

We have elected to exclude the amounts collected for these taxes from revenue and record

them as a liability until remitted to the taxing authority.

Contract Liabilities

We record contract liabilities, or deferred

revenue, when we have an obligation to provide a product or service to the customer and payment is received in advance of our performance.

When we sell a product or service with a future performance obligation, we defer revenue allocated to the unfulfilled performance

obligation and recognize this revenue when, or as, the performance obligation is satisfied.

Our deferred revenue consists of advance

payments received from customers prior to the transfer of products or services, shipments that are in-transit at the end of a

period and sales of extended warranty agreements.

Advance payments received from customers and shipments in-transit are recognized

in revenue at the time control of the related products has been transferred to the customer or services have been delivered.

related to extended warranty agreements are deferred and recognized in revenue ratably over the agreement period, which is typically

one to four years after control of the related products is transferred to the customer, as we believe this recognition pattern

best depicts the transfer of services being provided.

Deferred revenue is classified as current

or long-term deferred revenue in our Balance Sheets, depending on the expected timing of satisfying the related performance obligations.

Capitalized Contract Costs

We capitalize commissions paid to our sales

managers related to contracts with customers when the associated revenue is expected to be earned over a period of time.

commissions are primarily related to the sale of extended warranty agreements.

Capitalized commissions are included in Prepaid

Expenses and Other Current Assets in our Balance Sheets when the associated expense is expected to be recognized in one year or

less, or in Other Assets when the associated expense is expected to be recognized in greater than one year.

The associated expense

is included in Sales and Marketing expenses in our Statements of Operations.

Variable Consideration

Most of our sales are subject to 30 to 60-day

customer-specified acceptance provisions primarily for purposes of ensuring products were not damaged during the shipping process.

Historically, we have experienced immaterial product returns and, when experienced, we typically exchange the affected products

with new products.

Accordingly, variable consideration from contracts with customers is immaterial to our financial statements.

Accounts Receivable and Allowance for Doubtful

Accounts receivable is recorded at the transaction

price of the related products and services.

We regularly assess the sufficiency of the allowance for estimated uncollectible accounts

Estimates are based on historical collection experience and other customer-specific information, such as bankruptcy

filings or known liquidity problems of our customers.

When it is determined that an account receivable is uncollectible, it is

written off and relieved from the allowance.

Any future determination that the allowance for estimated uncollectible accounts receivable

is not properly stated could result in changes in operating expense and results of operations.

Inventory is stated at the lower of standard

cost, which approximates actual cost on a first-in, first-out basis, or net realizable value.

Net realizable value is the estimated

selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.

We may be exposed to a number of factors that could result in portions of our inventory becoming either obsolete or in excess of

anticipated usage.

These factors include, but are not limited to, technological changes, competitive pressures in products and

prices, and the introduction of new product lines.

We regularly evaluate our ability to realize the value of inventory based on

a combination of factors, including historical usage rates, forecasted sales, product life cycles, and market acceptance of new

When inventory that is obsolete or in excess of anticipated usage is identified, it is written down to net realizable

value or an inventory valuation allowance is established.

The estimates we use in projecting future

product demand may prove to be incorrect.

Any future determination that our inventory is overvalued could result in increases to

our cost of sales and decreases to our operating margins and results of operations.

We provide for the estimated cost of product

warranties at the time revenue is recognized.

While we engage in product quality programs and processes, including actively monitoring

and evaluating the quality of our suppliers, the estimated warranty obligation is affected by ongoing product failure rates, material

usage costs and direct labor incurred in correcting a product failure.

Actual product failure rates, material usage costs and the

amount of labor required to repair products that differ from estimates result in revisions to the estimated liability.

for a limited period of time that our products will be free from defects in materials and workmanship.

We estimate warranty allowances

based on historical warranty experience.

The estimates we use in projecting future product warranty costs may prove to be incorrect.

Any future determination that our provision for product warranty is understated could result in increases to our cost of revenue

and a reduction in our operating profits and results of operations.

Historically, warranty expenses have not been material to our

financial statements.

Stock-based Compensation

We apply the fair value recognition provisions

of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation —

Stock Compensation

(“ASC 718”).

Determining the amount of stock-based compensation to be recorded for stock options that we grant requires

us to develop estimates of the fair value as of the grant date.

Calculating the fair value of stock option awards requires that

we make highly subjective assumptions.

We use the Black-Scholes option pricing model to value our stock option awards.

valuation methodology requires that we make assumptions as to the volatility of our common stock, the expected term of our stock

options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend

As we completed our IPO in July 2014, we utilize the historical stock price volatility from a representative group

of public companies, which includes the Company, to estimate expected stock price volatility.

We selected companies from the medical

device industry with market capitalizations that are similar to ours.

We intend to continue to utilize the historical volatility

of the same or similar public companies to estimate expected volatility until a sufficient amount of historical information regarding

the price of our publicly traded stock becomes available.

We use the simplified method as prescribed by ASC 718 to calculate the

expected term of stock options granted to employees as we do not have sufficient historical exercise data to provide a reasonable

basis upon which to estimate the expected term of our stock option awards.

The risk-free interest rate used for each grant is based

Treasury yield curve in effect at the time of the grant for instruments with a similar expected life.

dividend yield of zero as we have no current intention to pay cash dividends.

We elect to recognize forfeitures as they occur.

As stock-based compensation is an important

part of our employee compensation reward strategy, we expect the future impact of stock-based compensation expense on our financial

results to grow due to additional stock grants and increased headcount.

We account for income taxes under the asset

and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences

of events that have been included in the financial statements.

Under this method, deferred tax assets and liabilities are determined

based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect

for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities

is recognized in income in the period that includes the enactment date.

We record net deferred tax assets to the

extent we believe these assets will more likely than not be realized.

In making such determination, we consider all available positive

and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax

planning strategies and recent financial operations.

A valuation allowance is recorded to offset net deferred tax assets if, based

upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

We recognize the tax benefit of uncertain

tax positions in the financial statements based on the technical merits of the position.

When the tax position is deemed more likely

than not of being sustained, we recognize the largest amount of tax benefit that is greater than 50 percent likely of being

ultimately realized upon settlement.

December 22, 2017, the Tax Cuts and Jobs Act (“2017 Act”) was enacted.

As a result of the 2017 Act, we were

required to revalue our deferred tax assets and deferred tax liabilities to account for the future impact of lower corporate tax

rates on these deferred amounts.

The reduction in the federal corporate tax rate increased our income tax expense for the year

ended December 31, 2017.

See Note 11 for further information on the financial impact of the 2017 Act.

Results of Operations

The following table sets forth for the periods

indicated selected statements of operations data as a percentage of total revenue.

Our historical operating results are not necessarily

indicative of the results for any future period.

Percent of Revenue

Years Ended December 31,

Cost of revenue

Operating expenses:

General and administrative

Sales and marketing

Research and development

Total operating expenses

Income from operations

Other income, net

Income before provision for income taxes

Provision for income tax (benefit) expense

Comparison of the Years Ended December 31, 2019 and

Revenue by Geographic Region

Years Ended December 31,

(In millions, except percent change)

United States

International

Total revenue

Revenue by Type

Years Ended December 31,

(In millions, except percent change)

MRI compatible IV infusion pump system

MRI compatible patient vital signs monitoring system

Total Devices revenue

Disposables, services and other

Amortization of extended warranty agreements

Total revenue

increased $8.1 million, or 26.5 percent, to $38.5 million from $30.4 million for the same period in 2018.

This increase is primarily due to an increase in the number of our MRI compatible medical devices that we recognized in revenue,

higher revenue from our disposables, services and other, and a higher average selling price for our infusion pump system.

During the year ended December 31,

2019, we recognized revenue on 519 MRI compatible IV infusion pumps compared to 451 pumps in 2018.

The average selling price for

our MRI compatible IV infusion pump systems recognized in revenue during the year ended December 31, 2019 was approximately

$34,800, compared to $32,200 for the same period in 2018.

The increase in average selling price is the result of higher domestic

unit sales and a favorable product sales mix during 2019 when compared to 2018.

We recognized revenue on 278 MRI compatible

patient vital signs monitoring systems during the year ended December 31, 2019, compared to 186 systems for the same period

The average selling price for our MRI compatible patient vital signs monitoring systems recognized in revenue was approximately

$34,700 during the year ended December 31, 2019, compared to $35,100 for the same period in 2018.

The decrease in average

selling price is due to higher international unit sales in 2019 when compared to 2018.

Revenue from sales in the U.S.

$6.4 million, or 26.2 percent, to $30.9 million from $24.5 million for the same period in 2018.

Revenue from sales

internationally increased $1.7 million, or 27.9 percent, to $7.6 million from $5.9 million for the same period in 2018.

sales accounted for 80.3 percent of total revenue for the year ended December 31, 2019, compared to 80.5 percent for the same

period in 2018.

from sales of devices increased $6.6 million, or 31.0 percent, to $27.8 million from $21.2 million for the same period in 2018.

Revenue from sales of our disposables, services and other increased $1.2 million, or 15.3 percent, to $8.9 million from

$7.7 million for the same period in 2018.

Revenue from the amortization of our extended maintenance contracts increased $0.3 million,

or 21.3 percent, to $1.8 million from $1.5 million for the same period in 2018.

Cost of Revenue and Gross Profit

Years Ended December 31,

(In millions, except gross profit percentage)

Cost of revenue

Gross profit percentage

Cost of revenue increased approximately

$1.6 million, or 22.2 percent, to $8.8 million for the year ended December 31, 2019, from $7.2 million for

the same period in 2018.

Gross profit increased approximately $6.5 million, or 27.9 percent, to $29.7 million for the

year ended December 31, 2019 from $23.2 million for the same period in 2018.

The increase in cost of revenue and gross

profit is due to higher sales during the year ended December 31, 2019, compared to the same period in 2018.

Gross profit margin

was 77.1 percent and 76.3 percent for the years ended December 31, 2019 and 2018, respectively.

The increase in gross profit

margin is the result of favorable overhead variance adjustments, partially offset by unfavorable pricing adjustments in 2019 compared

Operating Expenses

Years Ended December 31,

(In millions, except percentage of revenue)

General and administrative

Percentage of revenue

Sales and marketing

Percentage of revenue

Research and development

Percentage of revenue

General and Administrative

General and administrative expense increased

approximately $1.8 million, or 20.0 percent, to $10.5 million for the year ended December 31, 2019, from $8.7 million

for the same period last year.

This increase is primarily due to higher expenses for payroll and benefits, legal and professional

costs, employee relocation and recruiting costs, regulatory approval and certification costs, GPO administrative fees due to higher

sales and stock compensation expense.

Sales and Marketing

Sales and marketing expense increased approximately

$2.2 million, or 31.1 percent, to $9.2 million for the year ended December 31, 2019, from $7.0 million for

the same period in 2018.

This is primarily the result of higher salary and commissions expenses resulting from the increased size

of our sales team and higher sales during 2019 when compared to 2018.

Research and Development

Research and development expense decreased

approximately $(0.1) million, or (5.6) percent, to $1.4 million for the year ended December 31, 2019, from $1.5 million for

the same period in 2018.

This is primarily due to lower expenses for payroll and stock compensation expense.

Other Income, Net

Other income, net consists of interest income,

foreign currency transactional gains and losses, and other miscellaneous income.

We reported other income of approximately $0.4

million and $0.2 for the years ended December 31, 2019 and 2018, respectively.

This increase is primarily the result of higher

interest income and gains on maturities of investments during the year ended December 31, 2019 compared to the same period

We recorded a provision for income tax benefit

of approximately $(0.6) million and $(0.1) million for the years ended December 31, 2019 and 2018, respectively.

Our effective

tax rate for the year ended December 31, 2019 was (6.5) percent compared to (1.7) percent for the same period in 2018.

decrease in our provision for income taxes and effective tax rate is primarily the result of discrete items related to tax benefits

associated with the exercise and sale of employee options and vesting of restricted stock units.

Comparison of the Years Ended December 31, 2018 and

Revenue by Geographic Region

Years Ended December 31,

(In millions, except percent change)

United States

International

Total revenue

Revenue by Type

Years Ended December 31,

(In millions, except percent change)

MRI compatible IV infusion pump system

MRI compatible patient vital signs monitoring systems

Total Devices revenue

Disposables, services and other

Amortization of extended warranty agreements

Total revenue

increased $7.3 million, or 31.9 percent, to $30.4 million from $23.1 million for the same period in 2017.

This increase is primarily due to an increase in the number of our MRI compatible medical devices that we recognized in revenue

and higher revenue from our disposables, services and other.

The increase was partially offset by a lower average selling price

for our infusion pump system resulting from higher international sales as a percent of total sales in 2018 compared to 2017.

During the year ended December 31,

2018, we recognized revenue on 451 MRI compatible IV infusion pumps compared to 392 pumps in 2017.

The average selling price for

our MRI compatible IV infusion pump systems recognized in revenue during the year ended December 31, 2018 was approximately

$32,200, compared to $34,700 for the same period in 2017.

The decrease in average selling price is the result of higher international

unit sales and an unfavorable product sales mix during 2018 when compared to 2017.

We recognized revenue on 186 MRI compatible

patient vital signs monitoring systems during the year ended December 31, 2018, compared to 70 systems for the same period

The average selling price for our MRI compatible patient vital signs monitoring systems recognized in revenue was approximately

$35,100 during the year ended December 31, 2018, compared to $25,200 for the same period in 2017.

The increase in average

selling price is due to higher domestic unit sales in 2018 when compared to 2017.

Revenue from sales in the U.S.

$5.0 million, or 25.7 percent, to $24.5 million from $19.5 million for the same period in 2017.

Revenue from sales

internationally increased $2.3 million, or 65.6 percent, to $5.9 million from $3.6 million for the same period in 2017.

sales accounted for 80.5 percent of total revenue for the year ended December 31, 2018, compared to 84.5 percent for the same

period in 2017.

from sales of devices increased $5.7 million, or 37.0 percent, to $21.2 million from $15.5 million for the same period in 2017.

Revenue from sales of our disposables, services and other increased $1.1 million, or 16.9 percent, to $7.7 million from

$6.6 million for the same period in 2017.

Revenue from the amortization of our extended maintenance contracts increased $0.5 million,

or 52.2 percent, to $1.5 million from $1.0 million for the same period in 2017.

Cost of Revenue and Gross Profit

Years Ended December 31,

(In millions, except gross profit percentage)

Cost of revenue

Gross profit percentage

Cost of revenue increased approximately

$1.6 million, or 29.5 percent, to $7.2 million for the year ended December 31, 2018, from $5.6 million for

the same period in 2017.

Gross profit increased approximately $5.7 million, or 32.6 percent, to $23.2 million for the

year ended December 31, 2018 from $17.5 million for the same period in 2017.

The increase in cost of revenue and gross

profit is due to higher sales during the year ended December 31, 2018, compared to the same period in 2017.

Gross profit margin

was 76.3 percent and 75.9 percent for the years ended December 31, 2018 and 2017, respectively.

The increase in gross profit

margin is the result of favorable overhead variance adjustments and higher domestic revenue as a percent of total revenue in 2018

compared to 2017.

Operating Expenses

Years Ended December 31,

(In millions, except percentage of revenue)

General and administrative

Percentage of revenue

Sales and marketing

Percentage of revenue

Research and development

Percentage of revenue

General and Administrative

and administrative expense decreased approximately $(0.3) million, or (3.2) percent, to $8.7 million for the year ended

December 31, 2018, from $9.0 million for the same period last year.

This decrease is primarily due to lower stock compensation

expense primarily related to a one-time charge for the modification of the underwriters’

warrants recognized in 2017,

the write-off of non-trade accounts receivable during 2017 and lower consulting expenses during 2018, partially offset by higher

expenses for payroll and benefits, computer software and supplies, legal and professional expenses.

Sales and Marketing

Sales and marketing expense increased approximately

$1.5 million, or 27.1 percent, to $7.0 million for the year ended December 31, 2018, from $5.5 million for

the same period in 2017.

This is primarily the result of higher salary and commissions expenses resulting from the increased size

of our sales team and higher sales during 2018 when compared to 2017, partially offset by lower stock compensation expense.

Research and Development

Research and development expense decreased

approximately $(0.2) million, or (11.9) percent, to $1.5 million for the year ended December 31, 2018, from $1.7 million for

the same period in 2017.

This is primarily due to lower expenses for consulting and outside engineering services, partially offset

by higher payroll and stock compensation expense.

Other Income, Net

Other income, net consists of interest income,

foreign currency transactional gains and losses, and other miscellaneous income.

We reported other income of approximately $0.2

million and $0.1 million for the years ended December 31, 2018 and 2017, respectively.

This increase is primarily the result

of higher interest income, partially offset by higher losses on maturities of investments during the year ended December 31,

2018 compared to the same period in 2017.

We recorded a provision for income tax benefit

of approximately $(0.1) million for the year ended December 31, 2018.

For the year ended December 31, 2017, we recorded

a provision for income tax expense of approximately $0.9 million.

Our effective tax rate for the year ended December 31, 2018

was (1.7) percent compared to 64.2 percent for the same period in 2017.

The decrease in our provision for income taxes and effective

tax rate is primarily the result of discrete items related to tax benefits associated with the exercise and sale of employee options

and underwriters’

warrants during 2018 and $0.5 million of tax expense recorded during the year ended December 31, 2017

due to a one-time remeasurement of net deferred tax assets resulting from the 2017 Act, enacted on December 22, 2017.

Note 11 to the Financial Statements for further information on the financial statement impact of the 2017 Act.

Liquidity and Capital Resources

Our principal sources of liquidity have

historically been our cash and cash equivalents balances, our investments, cash flow from operations and access to the financial

Our principal uses of cash are operating expenses, working capital requirements and capital expenditures.

As of December 31, 2019, we had cash

and cash equivalents and investments of $46.3 million, stockholders’

equity of $55.5 million, and working capital of $53.1

million compared to cash and cash equivalents and investments of $34.4 million, stockholders’

equity of $41.9 million, and

working capital of $39.9 million as of December 31, 2018.

For the Years Ended December 31,

(In millions)

Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

Comparison of the Years Ended December 31,

2019, 2018 and 2017

Operating Activities

For the year ended December 31, 2019,

cash provided by operations increased $2.8 million to $10.2 million, from $7.4 million in 2018.

During 2019, cash provided by operations

was positively impacted by higher net income, deferred revenue, other accrued taxes and accounts payable, partially offset by negative

impacts from accounts receivable and other assets.

For the year ended December 31, 2018,

cash provided by operations increased $4.0 million to $7.4 million, from $3.4 million in 2017.

During 2018, cash provided by operations

was positively impacted by higher net income, prepaid expenses and other current assets, and accounts payable, partially offset

by negative impacts from prepaid income taxes and deferred revenue.

Investing Activities

For the year ended December 31, 2019,

cash provided by investing activities increased $1.7 million to $3.2 million, from $1.5 million in 2018.

During 2019, cash provided

by investing activities was positively impacted by maturities of investments, partially offset by negative impacts from purchases

of property and equipment, and capitalized intangible assets.

For the year ended December 31, 2018,

cash provided by investing activities increased $2.5 million to $1.5 million, from cash used in investing activities of $(1.0)

million in 2017.

During 2018, cash provided by investing activities was positively impacted by maturities of investments, partially

offset by negative impacts from purchases of securities, purchases of property and equipment, and capitalized intangible assets.

Financing Activities

For the year ended December 31, 2019,

cash provided by financing activities increased $1.1 million to $2.0, from $0.9 million in 2018.

During 2019, cash provided by

financing activities was positively impacted by proceeds from the exercise of stock options and warrants, partially offset by taxes

paid for the net share settlement of restricted stock units.

For the year ended December 31, 2018,

cash provided by financing activities increased $2.8 million to $0.9, from cash used in financing activities of $(1.9) million

During 2018, cash provided by financing activities was positively impacted by proceeds from the exercise of stock options

and warrants, partially offset by taxes paid for the net share settlement of restricted stock units.

Sales to end users in the United States

are generally made on open credit terms.

Management maintains an allowance for potential credit losses.

Our manufacturing operations and headquarters

facility is approximately 23,100 square feet located in Winter Springs, Florida.

This facility has been leased from Susi, LLC,

an entity controlled by our Chief Technology Officer and Chairman, Roger Susi.

Pursuant to the terms of our lease, the monthly

base rent is $34,133, adjusted annually for changes in the consumer price index.

We believe our sources of liquidity, including

cash flow from operations, existing cash, investments, and available financing sources will be sufficient to meet our projected

cash requirements for at least the next 12 months from the date the financial statements are issued.

Any equity financing may be

dilutive to stockholders, and debt financing, if available, may involve restrictive covenants that increase our costs.

our capital requirements to ensure our needs are in line with available capital resources.

From time to time, we may explore additional

financing sources to meet our working capital requirements, make continued investment in research and development, expand our business

and acquire products or businesses that complement our current business.

These actions would likely affect our future capital requirements

and the adequacy of our available funds.

Our future liquidity and capital requirements will depend on numerous factors, including

Amount and timing of revenue and expenses;

Extent to which our existing and new products gain market acceptance;

Extent to which we make acquisitions;

Cost and timing of product development efforts and the success of these development efforts;

Cost and timing of selling and marketing activities;

Availability of borrowings or other means of financing.

Contractual Obligations

In the normal course of business, we enter

into obligations and commitments that require future contractual payments.

The commitments result primarily from purchase orders

with vendors that supply components used in our medical devices and related disposables and commitments for our building and office

equipment leases.

The following table summarizes our contractual obligations and commercial commitments as of December 31,

Payments due by Period

Unconditional purchase obligations

Operating lease obligations

Purchase obligations are defined as agreements

to purchase goods or services that are enforceable and legally binding.

Included in the purchase obligations category above are

obligations related to purchase orders for inventory purchases under our standard terms and conditions and under negotiated agreements

with vendors.

We expect to receive consideration (products or services) for these purchase obligations.

The purchase obligation

amounts do not represent all anticipated purchases in the future, but represent only those items for which we are contractually

The table above does not include obligations under employment agreements for services rendered in the ordinary course

Off-Balance Sheet Arrangements

During the periods presented, we did not

have and we do not currently have any off-balance sheet arrangements, as defined under SEC rules.

Total stockholders’ equity

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-K

Item 5. Market for Registrant’s Common Equity