What changed in this filing

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Item 9A. Controls and Procedures

2021-03-05 compared with 2020-03-06 · 388 added, 847 removed, 391 unchanged (76% of the section changed)

1 unchanged sentence

Disclosure Controls and Procedures

We maintain a set of disclosure controls

and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) designed to ensure that information required to be disclosed

by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time

periods specified in the SEC’s rules and forms.

In accordance with Rule 13a-15(b) of the Exchange Act, as

of the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out under the supervision and

with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness

of our disclosure controls and procedures.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded

that our disclosure controls and procedures, as of the end of the period covered by this Annual Report on Form 10-K, were

effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under

the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and

forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer,

as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial

Our management is responsible for establishing

and maintaining a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under

the Exchange Act) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with U.S.

generally accepted accounting principles (“U.S.

GAAP”).

internal control systems, no matter how well designed, have inherent limitations.

We conducted an assessment of the effectiveness

of our system of internal control over financial reporting as of December 31, 2019, the last day of our fiscal year.

assessment was based on criteria established in the framework Internal Control-Integrated Framework (2013), issued by the Committee

of Sponsoring Organizations of the Treadway Commission and included an evaluation of elements such as the design and operating

effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of the end

of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external reporting purposes in accordance with U.S.

We reviewed the results of management’s assessment

with the Audit Committee of our Board of Directors.

The effectiveness of our internal control

over financial reporting as of December 31, 2019, has been audited by RSM US LLP, an independent registered public accounting

firm, as stated in their report included herein.

Changes in Internal Control Over Financial

There were no changes in our internal control

over financial reporting during the quarter ended December 31, 2019 that materially affected, or are reasonably likely to

materially affect, our internal control over financial reporting.

We maintain a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this Annual Report on Form 10-K, were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

generally accepted accounting principles (“U.S.

All internal control systems, no matter how well designed, have inherent limitations.

We conducted an assessment of the effectiveness of our system of internal control over financial reporting as of December 31, 2020, the last day of our fiscal year.

This assessment was based on criteria established in the framework Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission and included an evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S.

We reviewed the results of management’s assessment with the Audit Committee of our Board of Directors.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended December 31, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

Our disclosure controls and procedures and

internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified

Management does not expect, however, that our disclosure controls and procedures or our internal control over financial

reporting will prevent or detect all error and fraud.

Any control system, no matter how well designed and operated, is based upon

certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met.

Further, no evaluation

of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and

instances of fraud, if any, within the Company have been detected.

Report of Independent Registered Public

Accounting Firm

To the Shareholders and the Board of Directors of IRADIMED CORPORATION

Opinion on the Internal Control Over Financial Reporting

have audited IRADIMED CORPORATION's (the Company) internal control over financial reporting as of December 31, 2019,

based on criteria established in Internal Control —

Integrated Framework issued by the Committee of Sponsoring Organizations

of the Treadway Commission in 2013.

In our opinion, the Company maintained, in all material respects, effective internal control

over financial reporting as of December 31, 2019, based on criteria established in Internal Control —

Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the

Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements of the Company and our report dated

March 6, 2020 expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for maintaining

effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial

reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to

express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting

firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal

control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal

control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and

operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures

as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial

A company's internal control over financial reporting is a process

designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements

for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial

reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,

accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance

that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted

accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations

of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection

of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial

reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject

to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies

or procedures may deteriorate.

/s/ RSM US LLP

Orlando, Florida

March 6, 2020

Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above.

Management does not expect, however, that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud.

Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met.

Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

OTHER INFORMATION

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DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this Item 10

will be included in the Proxy Statement to be filed within 120 days after the fiscal year covered by this annual report on Form 10-K

and is incorporated herein by reference.

The information required by this Item 10 will be included in the Proxy Statement to be filed within 120 days after the fiscal year covered by this annual report on Form 10-K and is incorporated herein by reference.

EXECUTIVE COMPENSATION

The information required by this Item 11

will be included in the Proxy Statement, and such information is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12,

including Equity Compensation Plan Information, will be included in the Proxy Statement, and such information is incorporated herein

by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,

AND DIRECTOR INDEPENDENCE

The information required by this Item 13

will be included in the Proxy Statement, and such information is incorporated herein by reference.

The information required by this Item 11 will be included in the Proxy Statement, and such information is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12, including Equity Compensation Plan Information, will be included in the Proxy Statement, and such information is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item 13 will be included in the Proxy Statement, and such information is incorporated herein by reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item 14

will be included in the Proxy Statement, and such information is incorporated herein by reference.

The information required by this Item 14 will be included in the Proxy Statement, and such information is incorporated herein by reference.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1 unchanged sentence

Financial Statements:

See “Index to Financial Statements”

in Part II, Item 8 of this annual report on Form 10-K.

See “Index to Financial Statements” in Part II, Item 8 of this annual report on Form 10-K.

Financial Statement Schedule:

Not applicable.

The exhibits listed in the accompanying “Exhibit Index”

are filed or incorporated by reference as part of this Form 10-K.

The exhibits listed in the accompanying “Exhibit Index” are filed or incorporated by reference as part of this Form 10-K.

FORM 10-K SUMMARY

3 unchanged sentences

Amended and Restated Certificate of Incorporation

Bylaws of Iradimed Corporation, as amended and restated as of September 13, 2018

Third Amended and Restated Bylaws of the Registrant

Specimen common stock certificate

Description of Registrant’s Securities

Form of Stock Option Agreement for Iradimed Corp.

2005 Incentive Stock Plan

Iradimed Corporation 2014 Equity Incentive Plan

Iradimed Corporation Amended and Restated 2014 Equity Incentive Plan

Form of Stock Option Agreement for Iradimed Corporation 2014 Equity Incentive Plan

2 unchanged sentences

Form of Restricted Stock Unit Agreement (Performance-Vesting) for Iradimed Corporation 2014 Equity Incentive Plan

Lease Agreement regarding 1025 Willa Springs

Lease Agreement regarding 1025 Willa Springs Dr.

between Susi, LLC and the Registrant, dated January 17, 2014

1 unchanged sentence

Scott, dated December 16, 2013

Employment Agreement between the Registrant and Brent Johnson, dated December 7, 2011

10.10&dagger;

Supply Agreement between the Registrant and Fukoku Co., Ltd.

entered into on January 26, 2014

10.11&dagger;

Amendment Agreement to Supply Agreement between the Registant and Fukoku Co., Ltd.

entered into on March 26, 2019

Employment Agreement between the Registrant and John McCreery, dated March 28, 2017

Employment Agreement between the Registrant and Leslie McDonnell, dated July 24, 2019

Employment Agreement between the Registrant and Roger Susi, dated July 24, 2019

Employment Agreement Modification between the Registrant and John McCreery, dated September 14, 2018

Employment Agreement between the Registrant

and Louis Waldman , dated September 18, 2018

First Amended and Restated Separation Agreement between the Registrant and John McCreery, dated August 23, 2019

Employment Agreement between the Registrant

and Francis Casey , dated September 21, 2018

Employment Agreement, dated as of January 3, 2020 by and between Iradimed Corporaiton and MaryBeth Smith

Confidential Separation Agreement and General Release, dated May 28, 2020, by and between Iradimed Corporation and Leslie McDonnell

Separation Agreement, dated as of July 15, 2020, by and between Iradimed Corporation and Louis Waldman

Consent of RSM US LLP, Independent Registered Public Accounting Firm

9 unchanged sentences

XBRL Taxonomy Extension Presentation Linkbase Document

+ Indicates a management contract or compensatory plan

or arrangement.

Inline XBRL for the cover page of this Annual Report on Form 10-K, included as part of this Exhibit 101 inline XBRL Document set

+ Indicates a management contract or compensatory plan or arrangement.

† Confidential treatment has been granted for portions of this exhibit.

These portions have been omitted from the exhibit filed

with the Securities and Exchange Commission and submitted separately to the Securities and Exchange Commission.

* The certification attached as Exhibit 32.1 that accompanies this Form 10-K is not deemed filed with the SEC and is

not to be incorporated by reference into any filing of Iradimed Corporation under the Securities Act or the Exchange Act, whether

made before or after the date of this Form 10-K, irrespective of any general incorporation language contained in such filing.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winter Springs, State of Florida,

on March 6, 2020.

These portions have been omitted from the exhibit filed with the Securities and Exchange Commission and submitted separately to the Securities and Exchange Commission.

* The certification attached as Exhibit 32.1 that accompanies this Form 10-K is not deemed filed with the SEC and is not to be incorporated by reference into any filing of Iradimed Corporation under the Securities Act or the Exchange Act, whether made before or after the date of this Form 10-K, irrespective of any general incorporation language contained in such filing.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winter Springs, State of Florida, on March 5, 2021.

IRADIMED CORPORATION

March 5, 2021

/s/ Leslie McDonnell

Leslie McDonnell

/s/ Roger Susi

Chief Executive Officer and President

(Principal Executive Officer)

Each person whose signature appears below

constitutes and appoints Leslie McDonnell and Chris Scott as his true and lawful attorneys-in-fact and agents, with full power

of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments

to this Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith,

with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents full power and authority to do and

perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes

as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents, or his substitute

or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities

Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company in the capacities and

on the dates indicated.

/s/ Leslie McDonnell

Chief Executive Officer and President (Principal Executive Officer)

Each person whose signature appears below constitutes and appoints Leslie McDonnell and Chris Scott as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company in the capacities and on the dates indicated.

/s/ Roger Susi

Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)

March 5, 2021

Leslie McDonnell

/s/ Chris Scott

1 unchanged sentence

March 5, 2021

/s/ Roger Susi

Chairman of the Board

March 6, 2020

/s/ Monty Allen

12 unchanged sentences

Statements of Comprehensive Income

Statements of Stockholders’

Statements of Stockholders’ Equity

Statements of Cash Flows

Notes to Financial Statements

Report of Independent Registered Public

Accounting Firm

To the Stockholders and the Board of Directors of IRADIMED CORPORATION

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of IRADIMED CORPORATION

Opinion on the Financial Statements

We have audited the accompanying balance sheets of IRADIMED

CORPORATION (the Company) as of December 31, 2019 and 2018, the related statements of operations, comprehensive income, stockholders'

equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes to the financial

statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows

for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted

in the United States of America.

We have also audited, in accordance with the standards of the

Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial

reporting as of December 31, 2019, based on criteria established in Internal Control —

Integrated Framework issued

by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 6, 2020 expressed

an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

Adoption of New Accounting Standard

As discussed in Note 1 to the consolidated financial statements,

the Company has changed its method for accounting for leases effective January 1, 2019 due to the adoption of ASC 842, Leases .

We have audited the accompanying balance sheets of IRADIMED CORPORATION (the Company) as of December 31, 2020 and 2019, the related statements of operations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes to the financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

We conducted our audits in accordance with the standards of

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial

Our audits also included evaluating the accounting principles used and significant estimates made by management, as

well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis

for our opinion.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

We have served as the Company's auditor since 2013.

/s/ RSM US LLP

We have served as the Company's auditor

Orlando, Florida

14 unchanged sentences

Deferred income taxes, net

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

5 unchanged sentences

Current portion of operating lease liability

Other current liability

Other current liabilities

Total current liabilities

2 unchanged sentences

Total liabilities

Stockholders’

Stockholders’ equity:

Common stock;

4 unchanged sentences

Retained earnings

Accumulated other comprehensive income (loss)

Total stockholders’

Total liabilities and stockholders’

Accumulated other comprehensive income

Total stockholders’ equity

Total liabilities and stockholders’ equity

See accompanying notes to financial statements.

8 unchanged sentences

Total operating expenses

Income from operations

(Loss) income from operations

Other income, net

Income before provision for income taxes

Provision for income tax (benefit) expense

(Loss) income before provision for income taxes

Provision for income tax benefit

( 1,985,879 )

Net income per share:

7 unchanged sentences

Realized loss on available-for-sale securities reclassified to net income, net of tax expense (benefit) of $ 4,286 , $ 2,671 and $( 7,269 ) respectively

Other comprehensive income (loss)

Other comprehensive income

Comprehensive income

1 unchanged sentence

iRadimed Corporation

STATEMENTS OF STOCKHOLDERS’

STATEMENTS OF STOCKHOLDERS’ EQUITY

Comprehensive

Stockholders’

(Loss) Income

Balances, December 31, 2017

Other comprehensive loss

Other comprehensive income

Stock-based compensation

1 unchanged sentence

Exercise of stock options and warrants

Purchases and retirement of treasury stock

Cumulative effect from adoption of accounting standard update

4 unchanged sentences

Exercise of stock options and warrants

Cumulative effect from adoption of accounting standard update

Balances, December 31, 2019

2 unchanged sentences

Net share settlement of restricted stock units

Exercise of stock options and warrants

( 1,207,632 )

( 1,207,618 )

Exercise of stock options

Balances, December 31, 2020

8 unchanged sentences

Depreciation and amortization

Write-off of non-trade accounts receivable

Disposal of property and equipment

Stock-based compensation

3 unchanged sentences

Accounts receivable

( 3,114,649 )

Prepaid expenses and other current assets

( 1,098,908 )

Accounts payable

3 unchanged sentences

Deferred revenue

Other current liability

Prepaid income taxes, net of accrued income taxes

Other current liabilities

Prepaid income taxes

( 1,106,264 )

( 1,252,768 )

Net cash provided by operating activities

1 unchanged sentence

Purchases of investments

( 1,124,512 )

Proceeds from maturity of investments

1 unchanged sentence

Capitalized intangible assets

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Financing activities:

1 unchanged sentence

Taxes paid for the net share settlement of restricted stock units

Purchases of treasury stock

Net cash provided by (used in) financing activities

( 1,207,618 )

Net cash provided by financing activities

Net increase in cash and cash equivalents

9 unchanged sentences

1 — Organization and Significant Accounting Policies

IRADIMED CORPORATION (“IRADIMED”,

the “Company”, “we”, “our”) was incorporated in Oklahoma in July 1992 and reincorporated

in Delaware in April 2014.

We develop, manufacture, market and distribute a Magnetic Resonance Imaging (“MRI”)

compatible intravenous (“IV”) infusion pump system and MRI compatible patient vital signs monitoring systems and related

accessories and services.

We are a leader in the development of innovative

MRI compatible medical devices.

We are the only known provider of a non-magnetic 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 in order 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 in order 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 (“IRADIMED 3880”) has been designed with non-magnetic components

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

The IRADIMED 3880 operates dependably in magnetic fields up to 30,000 gauss, which means it can operate virtually anywhere in the

MRI scanner room, including in very close proximity to the MRI scanner bore.

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

IRADIMED CORPORATION (“IRADIMED”, the “Company”, “we”, “our”) was incorporated in Oklahoma in July 1992 and reincorporated in Delaware in April 2014.

We develop, manufacture, market and distribute a Magnetic Resonance Imaging (“MRI”) compatible intravenous (“IV”) infusion pump system and MRI compatible patient vital signs monitoring systems and related accessories and services.

We are a leader in the development of innovative MRI compatible medical devices .

We are the only known provider of a non-magnetic 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 system.

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 in order 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 in order to remain immobile during an MRI scan.

Each 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.

Our 3880 MRI compatible patient vital signs monitoring system (“IRADIMED 3880”) has been designed with non-magnetic components and other special features in order to safely and accurately monitor a patient’s vital signs during various MRI procedures.

The IRADIMED 3880 operates dependably in magnetic fields up to 30,000 gauss, which means it can operate virtually anywhere in the MRI scanner room, including in very close proximity to the MRI scanner bore.

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.

Other MRI compatible patient vital signs monitors are large and heavy, creating workflow issues for users.

of the IRADIMED 3880 include:

The features of the IRADIMED 3880 include:

wireless ECG with dynamic gradient filtering;

wireless SpO2 using Masimo®

respiratory CO2;

wireless SpO2 using Masimo® algorithms;

non-magnetic respiratory CO2;

invasive and non-invasive blood pressure;

1 unchanged sentence

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.

Our headquarters is located in Winter Springs,

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.

Our headquarters is located in Winter Springs, Florida.

Use of Estimates

The preparation of financial statements

in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities in the financial statements and the reported amount of revenue and expenses during the reporting period.

Such estimates include allowances for potentially uncollectible accounts receivable, valuation of inventory, intangible assets,

stock-based compensation, deferred income taxes, reserves for warranty obligations, and the provision for income taxes.

results could differ from those estimates.

Close-Out of FDA Warning Letter

As announced on October 8, 2019, we

received a close-out letter from the FDA with respect to the FDA warning letter previously received in August 2014.

this warning letter following a routine inspection of our prior facility between April 7 and April 16, 2014.

The close-out

letter confirmed that all issues cited in the August 2014 warning letter have been resolved.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the financial statements and the reported amount of revenue and expenses during the reporting period.

Such estimates include allowances for potentially uncollectible accounts receivable, valuation of inventory, intangible assets, stock-based compensation, deferred income taxes, reserves for warranty obligations, and the provision for income taxes.

Actual results could differ from those estimates.

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.

We 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 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.

Under these agreements, we are required to pay the GPOs a fee of three percent of the sales of our products to members of the GPO.

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;

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.

We 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.

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.

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.

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.

Accordingly, 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.

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.

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.

Amounts 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.

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.

Deferred 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.

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.

Cash Equivalents

All highly liquid instruments purchased

with an original maturity of three months or less are classified as cash equivalents.

All highly liquid instruments purchased with an original maturity of three months or less are classified as cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

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.

As of December 31, 2019 and

2018, our allowance for doubtful accounts was $69,093 and $42,443, respectively.

Our investments consist of corporate debt

securities and are considered available-for-sale.

The specific identification method is used to determine the cost basis of investments

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 receivable.

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.

As of December 31, 2020 and 2019, our allowance for doubtful accounts was $ 46,484 and $ 69,093 , respectively.

Our investments consist of corporate debt securities and are considered available-for-sale.

The specific identification method is used to determine the cost basis of investments sold.

Our investments are recorded in our Balance Sheets at fair value.

We classify our investments as current based on the nature

of the investments and their availability for use in current operations.

Unrealized gains and losses on our investments are included

in accumulated other comprehensive income (loss), net of tax.

Realized gains or losses and impairment losses that are determined

to be other-than-temporary are recorded in other income, net in our Statements of Operations.

We classify our investments as current based on the nature of the investments and their availability for use in current operations.

Unrealized gains and losses on our investments are included in accumulated other comprehensive income (loss), net of tax.

Realized gains or losses and impairment losses that are determined to be other-than-temporary are recorded in other income, net in our Statements of Operations.

Fair Value Measurements

Fair value is the price that would be received

to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between

market participants on the measurement date.

A three-level valuation hierarchy requires an entity to maximize the use of observable

inputs and minimize the use of unobservable inputs when measuring fair value.

The valuation hierarchy is based upon the

transparency of inputs to the valuation of an asset or liability on the measurement date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.

A three-level valuation hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.

The three levels of inputs are:

Level 1 —

quoted prices (unadjusted) in active markets for an identical asset or liability.

Level 2 —

quoted prices for a similar asset or liability in an active market or model-derived valuations in which all

significant inputs are observable for substantially the full term of the asset or liability.

Level 3 —

unobservable and significant to the fair value measurement of the asset or liability.

Financial instruments include cash and cash

equivalents, investments, accounts receivable, accounts payable and accrued expenses.

Cash and cash equivalents and investments

are reported at their respective fair values on the balance sheet dates.

The recorded carrying amount of accounts receivable, accounts

payable and accrued expenses approximates their fair values due to their short-term nature.

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.

● Level 1 — quoted prices (unadjusted) in active markets for an identical asset or liability.

● Level 2 — quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.

● Level 3 — unobservable and significant to the fair value measurement of the asset or liability.

Financial instruments include cash and cash equivalents, investments, accounts receivable, accounts payable and accrued expenses.

Cash and cash equivalents and investments are reported at their respective fair values on the balance sheet dates.

The recorded carrying amount of accounts receivable, accounts payable and accrued expenses approximates their fair values due to their short-term nature.

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 products.

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.

Property and Equipment

Property and equipment are stated at cost

less accumulated depreciation.

Depreciation expense is computed using the straight-line method over estimated useful lives of the

respective assets, which are generally three to five years for computer software and hardware and five to seven years for furniture,

fixtures, machinery and equipment.

Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful

life of the improvements.

Repair and maintenance costs that do not

extend the useful life of our property and equipment are expensed as incurred.

Property and equipment are stated at cost less accumulated depreciation.

Depreciation expense is computed using the straight-line method over estimated useful lives of the respective assets, which are generally three to five years for computer software and hardware and five to seven years for furniture, fixtures, machinery and equipment .

Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the improvements.

Repair and maintenance costs that do not extend the useful life of our property and equipment are expensed as incurred.

Intangible Assets

Intangible assets include application and

legal costs incurred to obtain patents.

Intangible assets include application and legal costs incurred to obtain patents.

We capitalize these costs when we determine that probable future economic benefits exist.

In making this determination, we consider the projected future operating results associated with the patents, industry and economic

trends, and the entry of new products in the market.

Costs incurred prior to this determination are expensed in the period they

are incurred.

We amortize capitalized patent costs using the straight-line method over their useful lives, which is typically 17

In making this determination, we consider the projected future operating results associated with the patents, industry and economic trends, and the entry of new products in the market.

Costs incurred prior to this determination are expensed in the period they are incurred.

We amortize capitalized patent costs using the straight-line method over their useful lives, which is typically 20 years .

Periodic costs incurred to maintain existing patents are expensed as incurred.

Research & Development and Capitalized Software

Development Costs

Research and development costs are expensed

Some of our products include embedded software which is essential to the products’

functionality.

Costs incurred

in the research and development of new software components and enhancements to existing software components are expensed as incurred

until technological feasibility has been established.

We capitalize software development costs when the project reaches technological

feasibility and cease capitalization when the project is ready for release.

Capitalized software development costs are included

in intangible assets and are amortized on a straight-line basis over the estimated useful life of the product and included in cost

Research & Development and Capitalized Software Development Costs

Research and development costs are expensed as incurred.

Some of our products include embedded software which is essential to the products’ functionality.

Costs incurred in the research and development of new software components and enhancements to existing software components are expensed as incurred until technological feasibility has been established.

We capitalize software development costs when the project reaches technological feasibility and cease capitalization when the project is ready for release.

Capitalized software development costs are included in intangible assets and are amortized on a straight-line basis over the estimated useful life of the product and included in cost of revenue.

Amortization begins when the product is available for general release to the customer.

Long-lived Assets

Long-lived assets, including right-of-use

assets, are tested for impairment whenever changes in circumstances indicate the carrying value of these assets may be impaired.

Impairment indicators include, but are not limited to, technological obsolescence, unfavorable court rulings, significant negative

industry and economic trends, and significant underperformance relative to historical and projected future operating results.

is considered to have occurred when the estimated undiscounted future cash flows related to the asset groups are less than its

carrying value.

Estimates of future cash flows involve consideration of many factors including the marketability of new products,

product acceptance and lifecycle, competition, appropriate discount rates and operating margins.

An impairment is recognized as

the amount by which the carrying value is greater than the fair value of the asset or asset group.

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.

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.

We warrant for a limited period of time that our products will be free from defects in

materials and workmanship.

Long-lived assets, including right-of-use assets, are tested for impairment whenever changes in circumstances indicate the carrying value of these assets may be impaired.

Impairment indicators include, but are not limited to, technological obsolescence, unfavorable court rulings, significant negative industry and economic trends, and significant underperformance relative to historical and projected future operating results.

Impairment is considered to have occurred when the estimated undiscounted future cash flows related to the asset groups are less than its carrying value.

Estimates of future cash flows involve consideration of many factors including the marketability of new products, product acceptance and lifecycle, competition, appropriate discount rates and operating margins.

An impairment is recognized as the amount by which the carrying value is greater than the fair value of the asset or asset group.

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.

We warrant 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

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.

Advertising and Marketing

For the years ended December 31, 2019,

2018 and 2017, these costs were $155,983, $123,451 and $118,975, respectively.

Advertising and marketing costs are expensed as

incurred and included in sales and marketing expense.

For the years ended December 31, 2020, 2019 and 2018, these costs were $ 6,959 , $ 155,983 and $ 123,451 , respectively.

Advertising and marketing costs are expensed as incurred and included in sales and marketing expense.

Stock-Based Compensation

We recognize stock-based compensation expense

associated with employee equity awards on a straight-line basis over the requisite service period for the entire award, which is

generally four years for employees and two years for the board of directors.

Historically, we have granted two types

of employee equity awards, stock options and restricted stock units.

The maximum contractual life of our stock

options is ten years from the grant date.

We utilize the Black-Scholes option pricing model to estimate the grant date fair value

of those awards.

The Black-Scholes option pricing model requires the input of certain assumptions including stock price, dividend

yield, expected volatility, risk-free interest rate, and expected option life.

Changes in these assumptions can materially affect

the estimated fair value of our employee stock options.

The grant date stock price was based on

our closing stock price on the date of grant;

dividend yield was based on our expectation of dividend payments over the expected

life of the option;

expected volatility was based on a study of our volatility and comparable, publicly traded companies with similar

products and product life cycles;

We recognize stock-based compensation expense associated with employee equity awards on a straight-line basis over the requisite service period for the entire award, which is generally four years for employees and two years for the board of directors.

Historically, we have granted two types of employee equity awards, stock options and restricted stock units.

The maximum contractual life of our stock options is ten years from the grant date.

We utilize the Black-Scholes option pricing model to estimate the grant date fair value of those awards.

The Black-Scholes option pricing model requires the input of certain assumptions including stock price, dividend yield, expected volatility, risk-free interest rate, and expected option life.

Changes in these assumptions can materially affect the estimated fair value of our employee stock options.

The grant date stock price was based on our closing stock price on the date of grant;

dividend yield was based on our expectation of dividend payments over the expected life of the option;

expected volatility was based on a study of our volatility and comparable, publicly traded companies with similar products and product life cycles;

risk-free interest rate was the rate available on zero coupon U.S.

government obligations with

a term approximating the expected option life;

government obligations with a term approximating the expected option life;

the expected option life was calculated using the simplified method.

The grant date fair value of our restricted

stock units is based on the closing price of our common stock on the date of grant.

We elect to recognize forfeitures as they

We issue new shares of common stock upon

exercise of stock options or vesting of restricted stock units.

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.

The grant date fair value of our restricted stock units is based on the closing price of our common stock on the date of grant.

We elect to recognize forfeitures as they occur.

We issue new shares of common stock upon exercise of stock options or vesting of restricted stock units.

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.

Foreign Currency

Gains and losses from transactions denominated

in currencies other than our functional currency are included in other income, net.

Foreign currency gains and losses result primarily

from fluctuations in the exchange rate between the U.S.

Gains and losses from transactions denominated in currencies other than our functional currency are included in other income, net.

Foreign currency gains and losses result primarily from fluctuations in the exchange rate between the U.S.

Dollar and the Japanese Yen.

Comprehensive Income

Comprehensive income includes net income

and other comprehensive income items that are excluded from net income under U.S.

Comprehensive income includes unrealized

gains and losses on our investments classified as available for sale.

Comprehensive income includes net income and other comprehensive income items that are excluded from net income under U.S.

Comprehensive income includes unrealized gains and losses on our investments classified as available for sale.

Basic and Diluted Net Income per Share

Basic net income per share is based on the

weighted-average number of common shares outstanding during the period.

Diluted net income per share reflects the potential dilution

that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

The Underwriters’

warrants, stock options and restricted stock units granted by us represent the only dilutive effect reflected in diluted weighted-average

shares outstanding.

Basic net income per share is based on the weighted-average number of common shares outstanding during the period.

Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

The Underwriters’ warrants, stock options and restricted stock units granted by us represent the only dilutive effect reflected in diluted weighted-average shares outstanding.

See the Warrants portion of Note 9.

The following table presents the computation

of basic and diluted net income per share:

The following table presents the computation of basic and diluted net income per share:

For the Years Ended December, 31

Weighted-average shares outstanding —

Weighted-average shares outstanding — Basic

Effect of dilutive securities:

Underwriters’

Underwriters’ warrants

Stock options

Restricted stock units

Weighted-average shares outstanding —

Weighted-average shares outstanding — Diluted

Basic net income per share

Diluted net income per share

Stock options and warrants to purchase shares

of our common stock and restricted stock units excluded from the calculation of diluted net income per share because the effect

would have been anti-dilutive are as follows:

Stock options and warrants to purchase shares of our common stock and restricted stock units excluded from the calculation of diluted net income per share because the effect would have been anti-dilutive are as follows:

As of December, 31

Anti-dilutive stock options, warrants and restricted stock units

Anti-dilutive stock options and restricted stock units

Certain Significant Risks and Uncertainties

We market our products to end users in the

United States and to third-party distributors internationally.

Sales to end users in the United States are generally made on open

credit terms.

We market our products to end users in the United States and to third-party distributors internationally.

Sales to end users in the United States are generally made on open credit terms.

Management maintains an allowance for potential credit losses.

We have deposited our cash and cash equivalents

with various financial institutions.

We have deposited our cash and cash equivalents with various financial institutions.

Our cash and cash equivalents balances exceed federally insured limits throughout the year.

We have not incurred any losses related to these balances.

Our products require clearance from the

Food and Drug Administration and international regulatory agencies prior to commercialized sales.

Our future products may not receive

required approvals.

If we were denied such approvals, or if such approvals were revoked or delayed or if we were unable to timely

renew certain approvals for existing products, it would have a materially adverse impact on our business, results of operations

and financial condition.

Certain key components of our products essential

to their functionality are sole-sourced.

Any disruption in the availability of these components would have a materially adverse

impact on our business, results of operations and financial condition.

Our products require clearance from the Food and Drug Administration and international regulatory agencies prior to commercialized sales.

Our future products may not receive required approvals.

If we were denied such approvals, or if such approvals were revoked or delayed or if we were unable to timely renew certain approvals for existing products, it would have a materially adverse impact on our business, results of operations and financial condition.

Certain key components of our products essential to their functionality are sole-sourced.

Any disruption in the availability of these components would have a materially adverse impact on our business, results of operations and financial condition.

COVID-19 Considerations

The COVID-19 global pandemic caused disruption in global supply and distribution channels and dramatically changed the way companies do business.

From the beginning of this global health crisis, our first priority has been the safety and well-being of our employees.

We continue to monitor the developments associated with the COVID-19 pandemic and its effects on our employees, customers, supply chain and distribution channels.

The ongoing impact of the pandemic depends on a number of factors including the severity and duration of the pandemic and the extent and severity of the impact on our customers, which is uncertain and unpredictable.

Our future results of operations and cash flows may suffer adverse effects from delays in payments on outstanding accounts receivable, potential manufacturing, distribution and supply chain disruptions and uncertain demand, and effects of any actions we may take to address financial and operational challenges our customers may face.

Other risks and uncertainties that we face include, but are not limited to:

● postponement or cancellation of MRI medical procedures and their uncertain return which adversely impacts our business;

● potential temporary or prolonged closure of our office and production facility;

● the health of our employees and ability to meet staffing needs;

● potential new or continued governmental actions that may limit employees’ ability to work;

● civil unrest relating to government, corporate and societal responses to the pandemic;

● volatility in economic conditions and the financial markets, and

● other unanticipated effects that remain unknown.

We are actively managing our response to the COVID-19 pandemic and working with our customers, distributors, vendors, and suppliers and assessing the potential effects to our financial position, results of operations and cash flows.

As of the date of the issuance of these financial statements, the extent to which COVID-19 may materially impact our financial condition, liquidity, or results of operations in future periods remains uncertain.

For further information regarding the potential impact of the COVID-19 pandemic on our company, see “Risk Factors” in Item 1A of this report.

Recent Accounting Pronouncements

Accounting Pronouncements Implemented

In February 2016, the Financial Accounting

Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842).

requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by all leases

not considered short-term leases.

For short-term leases, lessees may elect an accounting policy by class of underlying assets under

which right-of-use assets and lease liabilities are not recognized and lease payments are generally recognized as expense over

the lease term on a straight-line basis.

We adopted this update on January 1,

2019 and, as part of that process, made the following elections:

We elected to use the hindsight practical expedient.

We elected the package of practical expedients in transition for leases that commenced prior to January 1, 2019 whereby

contracts were not reassessed or reclassified from their previous assessment as of December 31, 2018.

In March 2018, the FASB approved an optional transition method that allows companies to use the effective date as the

date of initial application on transition.

We elected this transition method, and as a result, did not adjust comparative period

financial information or make the newly required lease disclosures for periods before the effective date.

We elected to make the accounting policy election for short-term leases resulting in lease payments being recorded as an expense

on a straight-line basis over the lease term.

We elected to not separate lease and nonlease components, for all leases.

We did not elect the land easement practical expedient.

The impact of Topic 842 on our Balance Sheet

beginning January 1, 2019 was through the recognition of an operating lease right-of-use asset and an operating lease liability.

Amounts recognized at January 1, 2109 for operating leases were as follows:

Operating lease right-of-use asset

Current portion of operating lease liability

Operating lease liability, less current portion

There was no impact to our Statements of

Operations, Statements of Cash Flows or beginning retained earnings related to the adoption of Topic 842.

Recently Issued Accounting Pronouncements

to be Implemented

In December 2019, the FASB issued ASU

Recently Issued Accounting Pronouncements to be Implemented

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

ASU 2019-12 will be effective

for fiscal years, and interim periods within those years, beginning after December 15, 2020.

We do not expect ASU 2019-12

to have a material impact on financial condition, results of operations or cash flows.

In June 2016, the FASB issued ASU 2016-13, Financial

Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which requires the Company

to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income.

In November 2018, April 2019 and May 2019, the FASB issued ASU 2018-19, Codification Improvements to Topic

326, Financial Instruments - Credit Losses , ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments

- Credit Losses and ASU 2019-05, Financial Instruments - Credit Losses (Topic 326):

Targeted Transition Relief ,

which provided additional implementation guidance on ASU 2016-03.

The previously mentioned ASUs are effective for fiscal years

beginning after December 15, 2022, with early adoption permitted.

We do not expect the adoption of these ASUs to have a material

impact on our financial condition, results of operations or cash flows.

ASU 2019-12 will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2020.

We do not expect ASU 2019-12 to have a material impact on financial condition, results of operations or cash flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income.

In November 2018, April 2019 and May 2019, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses , ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses and ASU 2019-05, Financial Instruments - Credit Losses (Topic 326):

Targeted Transition Relief , which provided additional implementation guidance on ASU 2016-03.

The previously mentioned ASUs are effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

We do not expect the adoption of these ASUs to have a material impact on our financial condition, results of operations or cash flows.

Disaggregation of Revenue

We disaggregate revenue from contracts with

customers by geographic region and revenue type as we believe it best depicts the nature, amount, timing and uncertainty of our

revenue and cash flow.

Revenue information by geographic region

is as follows:

We disaggregate revenue from contracts with customers by geographic region and revenue type as we believe it best depicts the nature, amount, timing and uncertainty of our revenue and cash flow.

Revenue information by geographic region is as follows:

For the Years Ended December 31,

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Total Devices revenue

Disposables, services and other

Disposables, service and other

Amortization of extended warranty agreements

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Extended warranty agreements

Changes in the contract liabilities during

the period are as follows:

Changes in the contract liabilities during the period are as follows:

Contract liabilities, December 31, 2018

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Decreases due to recognition of revenue

( 2,641,083 )

Contract liabilities, December 31, 2019

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Decreases due to recognition of revenue

( 2,197,952 )

Contract liabilities, December 31, 2020

Capitalized Contract Costs

Our total capitalized contract costs as

of December 31, 2019 and December 31, 2018 were $352,250 and $181,248, respectively.

Expense for the years ended December 31,

2019, 2018 and 2017 related to the amortization of capitalized contract costs were immaterial to our financial statements.

Our capitalized contract costs totaled $ 384,367 and 352,250 as of December 31, 2020 and 2019, respectively.

3 — Inventory

Inventory consists of:

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Accumulated depreciation

Depreciation and amortization expense of

property and equipment was $501,218, $470,395 and $362,872 for the years ended December 31, 2019, 2018 and 2017, respectively.

Property and equipment, net by geographic

region is as follows:

( 2,336,408 )

( 1,853,838 )

Depreciation and amortization expense of property and equipment was $ 510,652 , $ 501,218 and $ 470,395 for the years ended December 31, 2020, 2019 and 2018, respectively.

Property and equipment, net by geographic region is as follows:

As of December 31,

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Total property and equipment, net

Long-lived assets held outside of the United

States consist principally of tooling, which is a component of property and equipment, net.

Long-lived assets held outside of the United States consist principally of tooling, which is a component of machinery and equipment, net.

5 — Intangible Assets

The following table summarizes the components

of intangible asset balances:

The following table summarizes the components of intangible asset balances:

As of December 31,

Patents —

Internally developed software —

Patents — in use

Patents — in process

Internally developed software — in use

Internally developed software — in process

Accumulated amortization

Amortization expense of intangible assets

was $89,963, $89,333 and $82,399 for the years ended December 31, 2019, 2018 and 2017, respectively.

Expected annual amortization expense for

the next five years related to intangible assets is as follows (excludes in-process intangible assets):

Our investments consisted of corporate bonds

that we have classified as available-for-sale and are summarized in the following tables:

Amortization expense of intangible assets was $ 92,945 , $ 89,963 and $ 89,333 for the years ended December 31, 2020, 2019 and 2018, respectively.

Expected annual amortization expense for the next five years related to intangible assets is as follows (excludes in-process intangible assets):

6 — Investments

Our investments consist of bonds that we have classified as available-for-sale and are summarized in the following tables:

As of December 31, 2020

Corporate bonds:

International corporations

As of December 31, 2019

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International corporations

As of December 31, 2019, the scheduled

maturities of our investments are as follows:

As of December 31, 2020, the scheduled maturities of our investments are as follows:

Less than 1 year

7 — Fair Value Measurements

The fair value of our assets and liabilities

subject to recurring fair value measurements are as follows:

The fair value of our assets and liabilities subject to recurring fair value measurements are as follows:

Fair Value at December 31, 2020

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Identical Assets

Corporate bonds:

International corporations

Fair Value at December 31, 2019

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International corporations

Our corporate bonds are valued by the third-party

custodian at closing prices from national exchanges or pricing vendors on the valuation date.

There were no transfers into or out of any

Levels during the years ended December 31, 2019 or 2018.

Accumulated Other Comprehensive Income (Loss)

The only component of accumulated other

comprehensive income (loss) relates to unrealized gains and (losses) on our investments and activity is as follows:

Our corporate bonds are valued by the third-party custodian at closing prices from national exchanges or pricing vendors on the valuation date.

There were no transfers into or out of any Levels during the years ended December 31, 2020 or 2019.

8 — Accumulated Other Comprehensive Income

The only component of accumulated other comprehensive income relates to unrealized gains and (losses) on our investments and activity is as follows:

Unrealized Gains

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Reclassification realized in net earnings

Cumulative effect from adoption of accounting standard update

Balance at December 31, 2018

Reclassification realized in net earnings

Cumulative effect from adoption of accounting standard update

Balance at December 31, 2019

2 unchanged sentences

9 — Stock-Based Compensation

In April 2014, our Board of Directors

adopted and our shareholders approved the 2014 Equity Incentive Plan (“2014 Plan”).

Upon adoption and approval of the

2014 Plan, the previous equity incentive plan was terminated and the remaining shares available for future awards were canceled.

The 2014 Plan reserved 1,000,000 shares of our common stock for awards of incentive stock options, non-qualified stock option,

stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based and cash awards.

In April 2014, our Board of Directors adopted and our shareholders approved the 2014 Equity Incentive Plan (“2014 Plan”).

Upon adoption and approval of the 2014 Plan, the previous equity incentive plan was terminated and the remaining shares available for future awards were canceled.

The 2014 Plan initially reserved 1,000,000 shares of our common stock for awards of incentive stock options, non-qualified stock option, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based and cash awards.

On June 12, 2020, the shareholders approved an amendment to the 2014 Plan, which reserved an additional 1,000,000 shares of our common stock for the various equity awards mentioned above.

As of December 31, 2020, there were 1,146,586 shares available for future awards under the 2014 Plan.

Stock-based compensation was recognized

as follows in the Statements of Operations:

Stock-based compensation was recognized as follows in the Statements of Operations:

For the Years Ended December 31,

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Stock Options

The following table presents a summary of

our stock option activity as of and for the year ended December 31, 2019:

The following table presents a summary of our stock option activity as of and for the year ended December 31, 2020:

Weighted-Average

Exercise Price

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Outstanding end of period

As of December 31, 2019, we had $538,991

of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted average

period of 3.6 years.

The total grant date fair value of stock options that vested during the year ended December 31,

2019 was $101,387.

The total intrinsic value of options exercised during the year ended December 31, 2019, 2018 and 2017 was

$11,870,492, $6,071,319 and $268,053, respectively.

The weighted-average grant-date fair value

of options granted during the year ended December 31, 2019 was $11.84.

No options were granted during the year ended December 31,

The weighted-average grant-date fair value of options granted during the years ended December 31, 2017 was $11.10.

the years ended December 31, 2019, 2018 and 2017, we estimated the fair value of options granted using a Black-Scholes option

pricing model with the following weighted average assumptions:

The total grant date fair value of stock options that vested during the year ended December 31, 2020 was $ 609,875 .

The total intrinsic value of options exercised during the year ended December 31, 2020, 2019 and 2018 was $ 7,764,920 , $ 11,870,492 and $ 6,071,319 , respectively.

No options were granted during the years ended December 31, 2020 and December 31, 2018.

The weighted-average grant-date fair value of options granted during the year ended December 31, 2019 was $ 11.84 .

For the years ended December 31, 2020, 2019 and 2018, we estimated the fair value of options granted using a Black-Scholes option pricing model with the following weighted average assumptions:

For the Years Ended December, 31

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Restricted Stock Units

The following table presents a summary of

our restricted stock unit activity as of and for the year ended December 31, 2019:

The following table presents a summary of our restricted stock unit activity as of and for the year ended December 31, 2020:

Weighted-Average

1 unchanged sentence

Unvested at December 31, 2020

As of December 31, 2019, we had $5,261,330

of unrecognized compensation cost related to the unvested restricted stock units, which is expected to be recognized over a weighted-average

period of 3.1 years.

Associated with our IPO completed on July 21,

2014, we issued Underwriters Warrants (the “Warrants”) to purchase up to a total of 201,600 shares of our common stock.

As of December 31, 2020, we had $ 3,491,004 of unrecognized compensation cost related to the unvested restricted stock units, which is expected to be recognized over a weighted-average period of 2.8 years.

Associated with our IPO completed on July 21, 2014, we issued Underwriters Warrants (the “Warrants”) to purchase up to a total of 201,600 shares of our common stock.

The grant date aggregate fair value of the Warrants was $ 611,000 .

The Warrants were exercisable, in whole or in part, commencing

July 21, 2015 through July 21, 2017.

The Warrants were exercisable at $8.125 per share, or 130 percent of the public

offering price per share of our common stock in the IPO.

On the grant date, we classified the Warrants as equity and incremental

direct costs associated with our IPO.

The Warrants were exercisable, in whole or in part, commencing July 21, 2015 through July 21, 2017.

The Warrants were exercisable at $ 8.125 per share, or 130 percent of the public offering price per share of our common stock in the IPO.

On the grant date, we classified the Warrants as equity and incremental direct costs associated with our IPO.

Accordingly, the issuance of the Warrants had no impact on our financial statements.

July 17, 2017, our Board of Directors approved a modification to the Warrants.

This modification extended the expiration date

of the Warrants from July 17, 2017 to July 17, 2019 and revised the strike price from $8.125 to $10.05.

The fair value

of the amended Warrants was $2.42 per share as measured using the Black-Scholes options pricing model.

Related to this modification,

we recognized a $380,452 charge to earnings during the year ended December 31, 2017.

This charge is included in general

and administrative expense in our Statements of Operations.

During the year ended December 31, 2019, 162,031 warrants were

As of December 31, 2019, no Warrants remained outstanding.

On July 17, 2017, our Board of Directors approved a modification to the Warrants.

This modification extended the expiration date of the Warrants from July 17, 2017 to July 17, 2019 and revised the strike price from $ 8.125 to $ 10.05 .

During the year ended December 31, 2019, the remaining 162,031 warrants were exercised.

10 — Other Income, Net

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Total other income, net

The components of the provision for income

taxes are as follows:

11 — Income Taxes

The components of the provision for income taxes are as follows:

For the Years Ended December 31,

Current taxes:

Total current tax expense

( 2,404,511 )

Total current tax (benefit) expense

( 2,375,017 )

Deferred taxes:

Total deferred tax benefit

Provision for income tax (benefit) expense

Deferred income taxes reflect the net tax

effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the

amounts used for income tax purposes.

Total deferred tax expense (benefit)

Provision for income tax benefit

( 1,985,879 )

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of our deferred taxes are as follows:

7 unchanged sentences

Depreciation and amortization

Accrued expenses

Total deferred income taxes, net

As of December 31, 2019, we recorded

federal net operating loss carryforward of $613,610, which has an indefinite carryforward period, and is primarily related

to tax windfalls associated with the exercise and vesting of equity awards.

Additionally, as of December 31, 2019, we recorded

a state net operating loss carryforward of $74,474, which expires in various years between 2031 and 2039.

As of December 31, 2020, we recorded a state net operating loss carryforward of $ 263,974 .

Many states follow a 20-year carryforward period for net operating losses, however, certain states have a shorter expiration period.

A reconciliation of the statutory U.S.

tax rate to our effective rate is as follows:

federal tax rate to our effective rate is as follows:

For the Years Ended December 31,

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federal tax rate

Tax Cuts and Jobs Act

CARES Act NOL carryback

Tax (windfalls) deficiencies on exercise and vesting of equity awards

3 unchanged sentences

Provision to return adjustments

Domestic production activities deduction

Compensation limitations

Foreign taxes

Research and development credits

Effective rate

As of December 31, 2019 and December 31,

2018, we had not identified or accrued for any uncertain tax positions.

We are currently unaware of any uncertain tax positions

that could result in significant payments, accruals or other material deviations in this estimate over the next 12 months.

We file tax returns in the United States

Federal jurisdiction and many U.S.

As of December 31, 2020 and December 31, 2019, we had not identified or accrued for any uncertain tax positions.

We are currently unaware of any uncertain tax positions that could result in significant payments, accruals or other material deviations in this estimate over the next 12 months.

We file tax returns in the United States Federal jurisdiction and many U.S.

state jurisdictions.

Our returns are not currently under examination by the Internal Revenue

Service (“IRS”).

Our returns are not currently under examination by the Internal Revenue Service.

The Company remains subject to income tax examinations for our United States Federal and certain U.S.

1 unchanged sentence

state income taxes for 2016 and subsequent years.

Tax Cuts and Jobs Act

On December 22, 2017, the Tax Cuts

and Jobs Act (“2017 Act”) was enacted.

The 2017 Act includes a number of changes to existing U.S.

tax laws that impact

us, most notably a reduction of the U.S.

corporate income tax from 34.0 percent to 21.0 percent effective January 1, 2018.

The 2017 Act also provides for the acceleration of depreciation for certain assets placed into service after September 27,

2017 as well as prospective changes that began in 2018, including repeal of the domestic production activities deduction, acceleration

of tax revenue recognition, capitalization of research and development expenditures and additional limitations on the deductibility

of executive compensation.

As a result of the 2017 Act, our deferred tax assets and deferred tax liabilities were revalued to reflect

the reduction in the U.S.

corporate income tax rate from 34.0 percent to 21.0 percent, resulting in a $473,899 increase in income

tax expense for the year ended December 31, 2017.

Lease assets and lease liabilities are recognized

at the commencement of an arrangement where it is determined at inception that a lease exists.

Lease assets represent the right

to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from

These assets and liabilities are initially recognized based on the present value of lease payments over the lease term

calculated using our incremental borrowing rate, unless the rate implicit in the lease is readily determinable.

Lease assets also

include any upfront lease payments made and exclude lease incentives.

Lease terms include options to extend or terminate leases

when it is reasonably certain that those options will be exercised.

Variable lease payments are expensed as

incurred and include annual rent adjustments based on the consumer price index.

Leases with an initial term of 12 months or less

are not recorded on the balance sheet, and the expense for these short-term leases and for operating leases is recognized on a

straight-line basis over the lease term.

Lease agreements with lease and nonlease

components are combined as a single lease component.

The depreciable life of lease assets and leasehold improvements is limited

by the expected lease term.

have only one material lease contract outstanding.

In January 2014, we entered into a non-cancelable operating lease,

commencing July 1, 2014, for our manufacturing and headquarters facility in Winter Springs, Florida owned by Susi, LLC, an

entity controlled by our Chairman of the Board and Chief Technology Officer, Roger Susi.

Pursuant to the terms of our lease for

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

Under the terms of

the lease, we are responsible for property taxes, insurance and maintenance expenses.

Prior to May 31, 2019, the expiration

date of the initial lease term, and pursuant to the terms of the lease contract, we renewed the lease for an additional five years,

resulting in a new lease expiration date of May 31, 2024.

Unless advance written notice of termination is timely provided,

the lease will automatically renew for one additional successive term of five years beginning in 2024, and thereafter will be renewed

for successive terms of one year each.

For purposes of Topic 842, we concluded that we will exercise the remaining five-year option,

resulting in a remaining lease term of 9.4 years as of December 31, 2019.

This lease agreement does not contain any residual

value guarantee or material restrictive covenants.

Operating lease cost recognized in the Condensed

Statements of Operations is as follows:

December 31, 2019

We have one material lease contract outstanding.

In January 2014, we entered into a non-cancelable operating lease, commencing July 1, 2014, for our manufacturing and headquarters facility in Winter Springs, Florida owned by Susi, LLC, an entity controlled by our President, Chief Executive Officer, and Chairman of the Board, Roger Susi.

Pursuant to the terms of our lease for this property, the monthly base rent is $ 34,133 , adjusted annually for changes in the consumer price index.

Under the terms of the lease, we are responsible for property taxes, insurance and maintenance expenses.

Prior to May 31, 2019, the expiration date of the initial lease term, and pursuant to the terms of the lease contract, we renewed the lease for an additional five years , resulting in a new lease expiration date of May 31, 2024.

Unless advance written notice of termination is timely provided, the lease will automatically renew for one additional successive term of five years beginning in 2024, and thereafter, will be renewed for successive terms of one year each.

We concluded that we will exercise the remaining five-year option, resulting in a remaining lease term of 8.4 years as of December 31, 2020.

This lease agreement does not contain any residual value guarantee or material restrictive covenants.

Operating lease cost recognized in the Statements of Operations is as follows:

For the Years Ended

Cost of revenue

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Research and development

Lease costs for short-term leases were immaterial

for the year ended December 31, 2019.

Maturity of Operating lease liability as

of December 31, 2019 is as follows:

Lease costs for short-term leases were immaterial for the year ended December 31, 2020 and 2019.

Maturity of Operating lease liability as of December 31, 2020 is as follows:

Total lease payments

1 unchanged sentence

Present value of lease liability

We used a discount rate of 6.0% to determine

the present value of the operating lease liability on January 1, 2019.

Undiscounted future minimum lease payments

under noncancelable operating leases as of December 31, 2018 as determined prior to the adoption of ASC 842 are as follows:

Total minimum lease payments

We used a discount rate of 6.0 % to determine the present value of the operating lease liability on January 1, 2019.

13 — Employee Benefit Plan

We sponsor a 401(k) tax-deferred savings

plan under which eligible employees may elect to have a portion of their salary deferred and contributed to the plan.

matching contributions are determined by management and are discretionary.

Employer matching contributions were $374,979, $293,669

and $232,129, respectively, for the years ended December 31, 2019, 2018 and 2017.

We sponsor a 401(k) tax-deferred savings plan under which eligible employees may elect to have a portion of their salary deferred and contributed to the plan.

Employer matching contributions are determined by management and are discretionary.

Employer matching contributions were $ 441,479 , $ 374,979 and $ 293,669 , respectively, for the years ended December 31, 2020, 2019 and 2018.

Employer contributions vest immediately.

14 — Commitments and Contingencies

We had various purchase orders for goods or services totaling approximately $3,208,174 at December 31,

Purchase commitments.

We had various purchase orders for goods or services totaling approximately $ 3,089,103 and $ 3,208,174 as of December 31, 2020 and 2019, respectively.

No amounts related to these purchase orders have been recognized in our balance sheet.

Indemnifications.

Under our amended and restated bylaws, we have agreed to indemnify our officers and directors for certain events or occurrences

arising as a result of the officer or director serving in such capacity.

We have a director and officer liability insurance policy

that limits our exposure under these indemnifications and enables us to recover a portion of any future loss arising out of them.

In addition, in the normal course of business,

we enter into contracts that contain indemnification clauses whereby the Company indemnifies our customers against damages associated

with product failures.

We have determined that these agreements fall within the scope of ASC 460, Guarantees .

We have obtained

liability insurance providing coverage that limits our exposure for these indemnified matters.

We have not incurred costs to defend

lawsuits or settle claims related to these indemnities.

We believe the estimated fair value of these indemnities is minimal and

have not recorded a liability for these agreements as of December 31, 2019.

We may from time to time become a party to various legal proceedings or claims that arise in the ordinary course

Under our amended and restated bylaws, we have agreed to indemnify our officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity.

We have a director and officer liability insurance policy that limits our exposure under these indemnifications and enables us to recover a portion of any future loss arising out of them.

In addition, in the normal course of business, we enter into contracts that contain indemnification clauses whereby the Company indemnifies our customers against damages associated with product failures.

We have determined

that these agreements fall within the scope of ASC 460, Guarantees .

We have obtained liability insurance providing coverage that limits our exposure for these indemnified matters.

We have not incurred costs to defend lawsuits or settle claims related to these indemnities.

We believe the estimated fair value of these indemnities is minimal and have not recorded a liability for these agreements as of December 31, 2020.

Legal matters.

We may from time to time become a party to various legal proceedings or claims that arise in the ordinary course of business.

15 — Capital Stock

The rights and privileges of our Series A

Preferred Stock and Common Stock are as follows:

The rights and privileges of our Series A Preferred Stock and Common Stock are as follows:

Series A Preferred Stock

We are authorized to issue 3,500,000 shares

of preferred stock, of which 800,000 of these shares shall be designated as Series A Preferred Stock (“Preferred Stock”)

with a par value of $0.0001 per share.

We are authorized to issue 3,500,000 shares of preferred stock, of which 800,000 of these shares shall be designated as Series A Preferred Stock (“Preferred Stock”) with a par value of $ 0.0001 per share.

As of December 31, 2020, there was no preferred stock issued or outstanding .

and Dividends.

The holder of each share of Preferred Stock has the right to one vote for each share of Common Stock

into which such Preferred Stock could then be converted.

The holders of the Preferred Stock are entitled to receive dividends from

legally available assets prior to any declaration or payment of dividends to Common Stock holders.

Dividends on each share of Preferred

Stock are initially at $0.06429 per year payable when and as declared by the Board and are non-cumulative.

After payment of such

dividends, any additional dividends or distributions are distributed among all holders of Common Stock and Preferred Stock in proportion

to the number of shares of Common Stock that would be held by each holder if all shares of Preferred Stock were converted to Common

Stock at the then effective conversion rate.

Voting and Dividends.

The holder of each share of Preferred Stock has the right to one vote for each share of Common Stock into which such Preferred Stock could then be converted.

The holders of the Preferred Stock are entitled to receive dividends from legally available assets prior to any declaration or payment of dividends to Common Stock holders.

Dividends on each share of Preferred Stock are initially at $ 0.06429 per year payable when and as declared by the Board and are non-cumulative.

After payment of such dividends, any additional dividends or distributions are distributed among all holders of Common Stock and Preferred Stock in proportion to the number of shares of Common Stock that would be held by each holder if all shares of Preferred Stock were converted to Common Stock at the then effective conversion rate.

To date, no dividends have been declared.

In the event of any liquidation, dissolution or winding up of our Company, either voluntary or involuntary, the holders of the

Preferred Stock are entitled to receive, prior and in preference to any distribution of the proceeds resulting from such liquidation

event to holders of the Common Stock, an amount equal to $1.07143 plus declared but unpaid dividends.

If, upon occurrence of such

liquidation event, the proceeds are insufficient to permit the payment of the aforementioned amount in full, then the entire proceeds

shall be distributed ratably among all holders of the Preferred Stock in proportion to the full amount each holder would otherwise

Each share of Preferred Stock is convertible at any time, at the option of the holder, into such number of fully paid

non-assessable shares of Common Stock as is determined by dividing the original issue price of each share of Preferred Stock by

the applicable conversion price.

In the event of any liquidation, dissolution or winding up of our Company, either voluntary or involuntary, the holders of the Preferred Stock are entitled to receive, prior and in preference to any distribution of the proceeds resulting from such liquidation event to holders of the Common Stock, an amount equal to $ 1.07143 plus declared but unpaid dividends.

If, upon occurrence of such liquidation event, the proceeds are insufficient to permit the payment of the aforementioned amount in full, then the entire proceeds shall be distributed ratably among all holders of the Preferred Stock in proportion to the full amount each holder would otherwise receive.

Each share of Preferred Stock is convertible at any time, at the option of the holder, into such number of fully paid non-assessable shares of Common Stock as is determined by dividing the original issue price of each share of Preferred Stock by the applicable conversion price.

The initial conversion price per share is $ 1.07143 .

Adjustments to the initial conversion price

may result from a recapitalization event or changes in the number of common shares outstanding.

Each share of Preferred Stock automatically

converts into shares of fully paid non-assessable shares of Common Stock, at the then applicable conversion rate, upon the date

specified by written consent or agreement of the holders of a majority of the then outstanding shares of Preferred Stock, voting

as a single class on an as-converted basis.

Upon a majority vote of the then outstanding shares of Preferred Stock, we may, at our discretion, redeem or purchase shares of

Preferred Stock.

We also have a first right of refusal to repurchase shares of the Preferred Stock arising from a holder’s

proposal to sell such Preferred Stock.

We are authorized to issue 31,500,000 shares

of Common Stock with a par value of $0.0001 per share.

and Dividends.

Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly

submitted to the stockholders of the Company for their vote except for matters related to potential amendments to our Certificate

of Incorporation or matters that solely relate to the terms of one or more outstanding series of our Preferred Stock.

our Common Stock are entitled to receive, when, as and if declared by the Board, dividends pro rata based on the number of shares

of Common Stock held.

These dividend rights are junior to those of the Preferred Stock holders’

rights to dividends.

Adjustments to the initial conversion price may result from a recapitalization event or changes in the number of common shares outstanding.

Each share of Preferred Stock automatically converts into shares of fully paid non-assessable shares of Common Stock, at the then applicable conversion rate, upon the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Preferred Stock, voting as a single class on an as-converted basis.

Upon a majority vote of the then outstanding shares of Preferred Stock, we may, at our discretion, redeem or purchase shares of Preferred Stock.

We also have a first right of refusal to repurchase shares of the Preferred Stock arising from a holder's proposal to sell such Preferred Stock.

We are authorized to issue 31,500,000 shares of Common Stock with a par value of $ 0.0001 per share.

Voting and Dividends.

Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Company for their vote except for matters related to potential amendments to our Certificate of Incorporation or matters that solely relate to the terms of one or more outstanding series of our Preferred Stock.

Holders of our Common Stock are entitled to receive, when, as and if declared by the

Board, dividends pro rata based on the number of shares of Common Stock held.

These dividend rights are junior to those of the Preferred Stock holders’ rights to dividends.

Liquidation preference of the Common Stock holders is junior to that of the Preferred Stock holders.

The Common Stock is not redeemable.

Share Repurchase

April 27, 2017 (the “Authorization Date”), our Board of Directors approved a share repurchase program, authorizing

the repurchase of up to $8.0 million of our common stock through April 28, 2018 .

During the program period, we used

$1,818,541 to acquire 209,922 shares of our common stock.

We retired to treasury all of the repurchased shares.

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 9A. Controls and Procedures