What changed in this filing

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Item 1A. Risk Factors

2022-03-04 compared with 2021-03-05 · 75 added, 69 removed, 499 unchanged (22% of the section changed)

8 unchanged sentences

● Our dependence on a limited number of products, and disruptions in our ability to sell these products.

● Securities class action litigation or derivative litigation.

● Sufficiency of our internal and external sources of liquidity.

● Dependence upon the integrity of our supply chain, including multiple single-source suppliers.

● Our reliance on third-party suppliers for certain of our raw materials and components.

● Securities class action litigation or derivative litigation.

● Sufficiency of our internal and external sources of liquidity.

● The strict adherence to regulatory requirements governing medical devices during the manufacturing process and that of suppliers.

2 unchanged sentences

● Our inability to collect on our accounts receivables held by customers.

● Failure to maintain relationships with Group Purchasing Organizations.

● Failure to maintain relationships with integrated delivery healthcare systems and Group Purchasing Organizations.

● Cost-containment efforts of our customers and purchasing groups.

5 unchanged sentences

● Failure to attract and retain the talent required for our business.

● Inability to scale our operations.

● Inability to scale our operations or adequately manage generational upgrades to our own products.

● Our engagement in related party transactions.

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● The ability of Roger Susi, who serves as our Chairman of the Board of Directors, President and Chief Executive Officer, to exert significant influence over matters subject to stockholder approval.

● Payment of dividends.

● Payment of dividends, or a reduction or cessation of expected dividends.

● The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

5 unchanged sentences

Risks Relating to Our Business and Financial Condition

Our business, financial condition and operations may be materially adversely affected by the COVID-19 pandemic or other public health crises.

The COVID-19 pandemic, and the resulting restrictions intended to slow the spread of COVID-19, including stay-at-home orders, business shut downs and other restrictions, has and will likely continue to adversely affect our business in a number of ways.

Our business, financial condition and operations has been and may be in the future, materially adversely affected by the COVID-19 pandemic or other public health crises.

The COVID-19 pandemic, and the resulting restrictions intended to slow the spread of COVID-19, including stay-at-home orders, business shutdowns and other restrictions, has and may continue to adversely affect our business in a number of ways.

To respond to the demands of managing COVID-19 and the resulting economic uncertainties, healthcare organizations may be forced to adjust spending priorities by increased spending related to COVID-19, which may have a significant effect on the demand and available budget for our products and related services.

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We could experience other negative impacts of COVID-19 relating to lack of availability of our key personnel or temporary closures of our office or the facilities of our suppliers or third-party service providers.

The future progression of the COVID-19 pandemic and its resulting impacts on our customers, sales activity, supply chain and distribution networks are highly uncertain at this time.

The future progression of the COVID-19 pandemic and its resulting impacts on our customers, sales activity, supply chain and distribution networks are uncertain at this time.

However, the foregoing and other disruptions as a result of COVID-19 could have a material adverse effect on our business, operating results and financial condition, especially to the extent these impacts persist or exacerbate over an extended period of time.

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● technological developments such as new imaging modalities which render MRI procedures obsolete or reduce the instances where MRI imaging is utilized;

● loss of key relationships with suppliers, group purchasing organizations, or end-user customers;

● loss of key relationships with suppliers, integrated delivery healthcare systems, group purchasing organizations, or end-user customers;

● manufacturing or supply interruptions;

6 unchanged sentences

Our business could be adversely impacted by the effects of COVID-19 or other epidemics.

The COVID-19 pandemic has negatively impacted our revenues and may continue to do so in the future.

With respect to our sales, some customers that are implementing heightened security policies have inhibited the ability of our domestic sales force and international distributors to access hospitals for purposes of selling our products.

This has caused delays of orders for our products and negatively affected our revenues.

These heightened security policies and delays of orders may continue into the future.

The COVID-19 pandemic has negatively impacted our revenues, particularly in 2020, and may do so again in the future.

With respect to our sales, in the past, some customers implemented heightened security policies that inhibited the ability of our domestic sales force and international distributors to access hospitals for purposes of selling our products.

This caused delays of orders for our products and negatively affected our revenues.

These heightened security policies and delays of orders may be reinstated or continue.

Our materials suppliers could also be disrupted by conditions related to COVID-19, or other epidemics, possibly resulting in disruption to our supply chain.

If our suppliers are unable or fail to fulfill their obligations to us for any reason, we may not be able to manufacture our products and satisfy customer demand or our obligations under sales agreements in a timely manner, and our business could be harmed as a result.

At this point in time, there is uncertainty relating to the potential effect of COVID-19 on our business.

Infections may become more widespread or may recur at a later time, there may be variations in the global response to future outbreaks, and inefficiencies of testing and vaccination programs, and, should any one of these limit our ability to timely sell and distribute our products or cause supply disruptions, it would have a negative impact on our business, financial condition and operating results.

At this point in time, there remains uncertainty relating to the ongoing or possible renewed effects of COVID-19 on our business.

Infections from new or existing variants may become widespread or may recur at a later time, there may be variations in the global response to future outbreaks, and inefficiencies of testing and vaccination programs, and should any one of these limit our ability to timely sell and distribute our products or cause supply disruptions, it would have a negative impact on our business, financial condition and operating results.

In addition, a significant health epidemic could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products which could have a material adverse effect on our business, operating results and financial condition.

We have been subject to securities class action litigation and derivative litigation and we may be subject to similar or other litigation in the future.

In the past, following adverse action by the FDA or volatility in our stock price, securities class action litigation has been brought against us.

There can be no assurance that we will not face other securities litigation in the future.

With respect to any litigation, our insurance may not reimburse us or may not be sufficient to reimburse us for the expenses or losses we may suffer in contesting and concluding such lawsuits.

A decision adverse to our interests on these actions or resulting from these matters could result in the payment of substantial damages and could have a material adverse effect on our business, financial condition and our common stock.

Regardless of the outcome, these claims may result in injury to our reputation, significant costs, diversion of management’s attention and resources, and loss of revenue.

There is no assurance that our internal and external sources of liquidity will at all times be sufficient for our cash requirements.

We must have sufficient sources of liquidity to fund our working capital requirements, our capital improvement plans, and execute on our strategic initiatives.

A decline in operating results could limit our generation of capital resources and cause financial stresses if we are unable to increase revenues or adjust our costs appropriately to changes in revenue.

Further, future new product launches or investments in other growth initiatives may demand increased working capital before any long-term return is realized from increased revenue.

Our ability to achieve our business and cash flow plans is based on a number of assumptions which involve significant judgments and estimates of future performance, borrowing capacity and credit availability, which cannot at all times be assured.

Accordingly, there is no assurance that cash flows from operations and other internal and external sources of liquidity will at all times be sufficient for our cash requirements.

If necessary, we may need to consider actions and steps to improve our cash position and mitigate any potential liquidity shortfall, such as modifying our business plan, pursuing additional financing to the extent available, reducing capital expenditures, pursuing and evaluating other alternatives and opportunities to obtain additional sources of liquidity and other potential actions to reduce costs.

There can be no assurance that any of these actions would be successful, sufficient or available on favorable terms.

Any inability to generate or obtain sufficient levels of liquidity to meet our cash requirements at the level and times needed could have a material adverse impact on our business and financial position.

Our continued success depends on the integrity of our supply chain, including multiple single-source suppliers, the disruption of which could negatively impact our business.

24 unchanged sentences

We may experience these or other shortages in the future resulting in delayed shipments, supply constraints, contract disputes and/or stock-outs of our products.

We have been subject to securities class action litigation and derivative litigation, and we may be subject to similar or other litigation in the future.

In the past, following adverse action by the FDA or volatility in our stock price, securities class action litigation has been brought against us.

There can be no assurance that we will not face other securities litigation in the future.

With respect to any litigation, our insurance may not reimburse us or may not be sufficient to reimburse us for the expenses or losses we may suffer in contesting and concluding such lawsuits.

Regardless of the outcome, these claims may result in injury to our reputation, significant costs, diversion of management’s attention and resources, and loss of revenue.

There is no assurance that our internal and external sources of liquidity will at all times be sufficient for our cash requirements.

We must have sufficient sources of liquidity to fund our working capital requirements, our capital improvement plans, to return cash to shareholders via stock repurchases and/or dividends, and execute on our strategic initiatives.

Further, future new product launches or investments in other growth initiatives may demand increased working capital before any long-term return is realized from increased revenue.

Accordingly, there is no assurance that cash flows from operations and other internal and external sources of liquidity will at all times be sufficient for our cash requirements.

There can be no assurance that any of these actions would be successful, sufficient or available on favorable terms.

The manufacture of our products requires strict adherence to regulatory requirements governing medical devices and if we or our suppliers encounter problems our business could suffer.

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Consequently, we may need to increase our efforts, and related expenses for research and development, marketing, and selling to maintain or improve our position.

We may not realize

the per unit revenue we have planned for and expect.

We may not realize the per unit revenue we have planned for and expect.

Continued sales to our existing customers are expected to be significant to our revenue in the future, and if our existing customers do not continue to purchase from us, our revenue may decline.

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If a major customer experiences financial difficulties, the effect on us could be material and have an adverse effect on our business, financial condition, and results of operations.

Additionally, COVID-19 may cause delays in payments from customers, which may adversely impact our future results of operations and liquidity.

If we fail to maintain relationships with Group Purchasing Organizations, sales of our products could decline.

Additionally, COVID-19 has and may continue to cause delays in payments from customers, which may adversely impact our future results of operations and liquidity.

If we fail to maintain relationships with integrated delivery healthcare systems and Group Purchasing Organizations, sales of our products could decline.

Our ability to sell our products to U.S.

hospitals, acute care facilities and outpatient imaging centers depends in part on our relationships with Group Purchasing Organizations (“GPOs”).

hospitals, acute care facilities and outpatient imaging centers depends in part on our relationships with integrated delivery healthcare systems and Group Purchasing Organizations (“GPOs”).

Many existing and potential customers for our products are members of GPOs.

8 unchanged sentences

Our MRI compatible medical devices are considered capital equipment by many potential customers, and hence changes in the budgets of healthcare organizations and the timing of spending under these budgets and conflicting spending priorities, such as spending related to COVID-19, may have a significant effect on the demand for our products and related services.

Any decrease in expenditures by these healthcare facilities could decrease demand for our products

and related services and reduce our revenue.

Any decrease in expenditures by these healthcare facilities could decrease demand for our products and related services and reduce our revenue.

Additionally, changes to reimbursement policies by third-party payors could also decrease demand for our products and related services and reduce our revenue.

14 unchanged sentences

Our revenues outside the U.S.

have recently represented approximately one-fifth of our net revenues.

have recently represented approximately 20 percent of our net revenues.

If our existing international distributors fail to sell our products or sell at lower levels than we anticipate, we could experience a decline in revenues or fail to meet our forecasts.

14 unchanged sentences

Competition for highly skilled personnel is often intense in the medical device industry, including in the MRI compatible medical device segment.

If our current employees with experience in the MRI compatible device industry leave our company, we may have difficulty finding replacements with an equivalent amount of experience and skill,

which could harm our operations.

If our current employees with experience in the MRI compatible device industry leave our company, we may have difficulty finding replacements with an equivalent amount of experience and skill, which could harm our operations.

Our future success will also depend in part on our ability to identify, hire and retain additional personnel, including executives, skilled engineers to develop new products and sales and production staff.

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Acquisitions typically entail many risks and could result in difficulties in integrating operations, personnel, technologies, and products.

of operations, financial condition and cash flows, our ability to develop and introduce new products and the market price of our stock.

The environment in which we operate makes it increasingly difficult to accurately forecast our business performance.

If we are not able to successfully integrate our acquisitions, we may not obtain the advantages and synergies that the acquisitions were intended to create, which may have a material adverse effect on our business, results of operations, financial condition and cash flows, our ability to develop and introduce new products and the market price of our stock.

The environment in which we operate makes it difficult to accurately forecast our business performance.

Significant changes and volatility in most aspects of the current business environment, including financial markets, consumer behavior, speed of technological, regulatory, and competitive changes, and the continued impact of COVID-19, make it increasingly difficult for us to predict our revenues and earnings into the future.

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Our privacy policy is posted on our website, and any failure by us or our vendor or other business partners to comply with it or with federal, state, or international privacy, data protection or security laws or regulations could result in regulatory or litigation-related actions against us, legal liability, fines, damages, and other costs.

Substantial expenses and operational changes may be required in connection with maintaining compliance with such laws, and in particular

certain emerging privacy laws are still subject to a high degree of uncertainty as to their interpretation and application.

Substantial expenses and operational changes may be required in connection with maintaining compliance with such laws, and in particular certain emerging privacy laws are still subject to a high degree of uncertainty as to their interpretation and application.

For example, in May 2018, the General Data Protection Regulation (the “GDPR”) began to fully apply to the processing of personal information collected from individuals located in the European Union.

22 unchanged sentences

Sales to customers outside of the U.S.

have historically comprised of approximately one-fifth of our net revenues and we expect that non-U.S.

have historically comprised of approximately 20 percent of our net revenues and we expect that non-U.S.

sales will contribute to future growth.

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federal tax laws;

● political instability and actual or anticipated military or political conflicts, including instability related to war and terrorist attacks and to political matters such as Brexit;

● political instability and actual or anticipated military or political conflicts, including instability related to war and terrorist attacks and to political matters such as Russia’s invasion of Ukraine and Brexit;

● economic instability, inflation, deflation, recession or interest rate fluctuations;

3 unchanged sentences

We may incur product liability losses or become subject to other lawsuits related to our products, business, and insurance coverage could be inadequate or unavailable to cover these losses.

Our business is subject to potential product liability risks that are inherent in the design, development, manufacture and marketing of our medical devices and consumable products.

Our business is subject to potential product liability risks that are inherent in the design, development, manufacture and marketing of our medical devices and disposable products.

We carry third-party product liability insurance coverage to protect against such risks, but there can be no assurance that our policy is adequate.

6 unchanged sentences

These payments could have a material adverse effect on our profitability and financial condition.

Product liability claims and lawsuits, safety alerts, recalls or corrective actions, regardless of their ultimate

outcome, could have a material adverse effect on our business, financial condition, reputation and on our ability to attract and retain customers.

Product liability claims and lawsuits, safety alerts, recalls or corrective actions, regardless of their ultimate outcome, could have a material adverse effect on our business, financial condition, reputation and on our ability to attract and retain customers.

In addition, we may not be able to obtain insurance in the future on terms acceptable to us or at all.

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healthcare policy and changes thereto, including the Patient Protection and Affordable Care Act, may have a material adverse effect on our financial condition and results of operations.

In 2010 the Patient Protection and Affordable Care Act (ACA) was enacted.

While the provisions of the ACA are intended to expand access to health insurance coverage and improve the quality of healthcare over time, other provisions of the legislation, including Medicare provisions aimed at decreasing costs, comparative effectiveness research, an independent payment advisory board and pilot programs to evaluate alternative payment methodologies, are having a meaningful effect on the way healthcare is developed and delivered and could have a significant effect on our business.

There had been ongoing litigation and congressional efforts to modify or repeal all or certain provisions of the ACA.

We face uncertainties that might result from modification or repeal of any of the provisions of the ACA, or reimposision of any original provisions since removed or relaxed, including as a result of current and future executive orders and legislative actions.

We cannot predict what other healthcare programs and regulations will ultimately be implemented at the federal or state level or the effect of any future legislation or regulation in the United States may have on our business.

Changes in the healthcare industry in the U.S.

and abroad could adversely affect the demand for our products and the way in which we conduct our business.

For example, the Patient Protection and Affordable Care Act (“ACA”), enacted in 2010, required most individuals to have health insurance, established new regulations on health plans, created insurance-pooling mechanisms and reduced Medicare spending on services provided by hospitals and other providers.

The long-term viability of the ACA, and its impact on our business and results of operations, remains uncertain.

There have also been recent U.S.

Congressional actions to repeal and replace the ACA, and future actions are expected.

For example, the Tax Cuts and Jobs Act of 2017 (“TCJA”), among other things, eliminated the individual mandate requiring most Americans (other than those who qualify for a hardship exemption) to carry a minimum level of health coverage effective January 1, 2019.

In December 2018, a federal district court judge in Texas found the ACA’s individual mandate to be unconstitutional;

and therefore, the entire law to be invalid.

In December 2019, the Fifth Circuit affirmed the ruling regarding the individual mandate but remanded the case to the district court for additional analysis of the question of severability and whether portions of the law remain valid.

In June 2021, the U.S.

Supreme Court held that the states and individuals that brought the lawsuit do not have standing to challenge the law, effectively ending the case without ruling on the constitutionality of the individual mandate.

Although we cannot predict the ultimate content or timing of any healthcare reform legislation or other court challenges to the ACA, potential changes resulting from any amendment, repeal, replacement, or invalidation of these programs, including any reduction in the future availability of healthcare insurance benefits, may decrease the number of people who are insured, which could adversely affect our business and future results of operations.

Our medical devices and business activities are subject to rigorous regulation by the FDA and other federal, state and international governmental authorities.

These authorities and members of Congress have been increasing their scrutiny over the medical device industry.

In recent years, Congress, the Department of Justice, the Office of Inspector General of the Department of Health and Human Services and the Department of Defense have issued subpoenas and other requests for information to medical device manufacturers, primarily related to financial arrangements with healthcare providers, regulatory compliance and marketing and product promotional practices.

Furthermore, certain state governments have enacted legislation to limit and/or increase transparency of interactions with healthcare providers, pursuant to which we are required by law to disclose payments and other transfers of value to healthcare providers licensed by certain states.

We anticipate that the government will continue to scrutinize our industry closely, and any new regulations or statutory provisions could result in delays or increased costs during the periods of product development, clinical trials and regulatory review and approval, as well as increased costs to assure compliance.

We are subject to healthcare fraud and abuse regulations that could result in significant liability, require us to change our business practices and restrict our operations in the future.

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Violations of these laws, or allegations of such violations, could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

We and our suppliers and customers are required to obtain regulatory approvals to comply with regulations applicable to medical devices and infusion pumps, and these approvals could result in delays or increased costs in developing new products.

We and our suppliers and customers are required to obtain regulatory approvals to comply with regulations applicable to medical devices, including infusion pumps, and these approvals could result in delays or increased costs in developing new products.

In December 2014, the FDA issued guidance entitled “Infusion Pumps Total Product Life Cycle.” This guidance established substantial additional pre-market requirements for new and modified infusion pumps.

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Future delays in the receipt of, or failure to obtain, approvals could result in delayed or no realization of product revenues.

We and our suppliers and customers are required to maintain compliance with regulations applicable to medical devices and infusion pumps, and it could be costly to comply with these regulations and to develop compliant products and processes.

We and our suppliers and customers are required to maintain compliance with regulations applicable to medical devices, including infusion pumps, and it could be costly to comply with these regulations and to develop compliant products and processes.

Failure to comply with these regulations could subject us to sanctions and could adversely affect our business.

1 unchanged sentence

These requirements include, among other things, regulations regarding manufacturing practices, product labeling, off-label marketing, advertising and post-marketing reporting, adverse event reports and field alerts.

Compliance with these FDA requirements is subject to continual review and is monitored

through periodic inspections by the FDA.

Compliance with these FDA requirements is subject to continual review and is monitored through periodic inspections by the FDA.

For example, the FDA conducted routine inspections of our facility in Winter Springs, Florida in July 2016.

78 unchanged sentences

For example, Mr.

Susi and a number of our other employees are former employees of Invivo Corporation and/or other medical device firms.

Susi and a number of our other employees are former employees of other medical device firms.

While associated with such other companies, these individuals may have been exposed to research and technology similar to the areas of research, technology, sales methodology, pricing models and other such matters in which we are engaged.

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If we fail to meet or exceed such expectations, our business and stock price could be materially adversely affected.

Any use of capital to repurchase shares of our common stock could have a material adverse effect on our stock price and our business.

Any use of capital to repurchase shares of our common stock, or the election to pay a cash dividend, could have a material adverse effect on our stock price and our business.

Our Board of Directors has historically authorized stock repurchase programs and, pursuant to these authorizations, we have used a significant amount of cash to repurchase shares of common stock of our company.

1 unchanged sentence

While our stock repurchase program has expired, should our Board of Directors authorize another stock repurchase program, there can be no assurance that we will be able to repurchase shares on favorable terms or, if we do repurchase shares, that such repurchases will increase shareholder value.

Additionally, if we use a significant portion of our capital to repurchase shares, our financial flexibility will be reduced, and we may not be able to execute on other strategic initiatives or tolerate periods of operating losses.

If we repurchase shares on unfavorable terms or if our use of capital to repurchase shares inhibits our ability to pursue other strategic initiatives or tolerate periods of operating losses, it could have a material adverse effect on our stock price and our business.

In February 2022, our Board of Directors declared a special cash dividend of $1.00 per common share, which reduced our cash balance by approximately $12.6 million.

In the future, the Board of Directors may elect to allocate capital based on our continued ability to generate cash from operations, our capital needs to support normal operations, and making investments that are aimed at supporting growth, rather than paying cash dividends.

These capital allocation decisions could have a material adverse effect on our stock price.

If the Board of Directors elects to retain all future earnings for the operation and expansion of our business, realization of a gain on your investment will depend solely on the appreciation of the price of our common stock, which may never occur.

Additionally, if we use a significant portion of our capital to repurchase shares or pay cash dividends, our financial flexibility will be reduced, and we may not be able to execute on other strategic initiatives or tolerate periods of operating losses.

If we repurchase shares on unfavorable terms or if our use of capital to repurchase shares or pay cash dividends inhibits our ability to pursue other strategic initiatives or tolerate periods of operating losses, it could have a material adverse effect on our stock price and our business.

We may need or choose to raise additional capital in the future, which could result in dilution to our stockholders and adversely affect stock price.

While we believe that our cash and investment balances and prospective cash flow from our operations will provide us with adequate capital to fund operations for at least the next 12 months from the date of the issuance of the financial statements included herein, we may need or choose to raise additional funds prior to that time.

We may seek to sell additional equity or debt securities or to obtain a credit facility, which we may not be able to do on favorable terms, or at all.

We may seek to sell additional equity or debt securities or

to obtain a credit facility, which we may not be able to do on favorable terms, or at all.

The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders.

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This concentration of ownership may have the effect of delaying or deterring a change of control of our company.

At this time, we do not intend to pay dividends.

At this time, we do not anticipate that we will pay any cash dividends on shares of our common stock.

Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.

Investors seeking cash dividends should not purchase our common stock.

Accordingly, if you purchase shares, realization of a gain on your investment will depend solely on the appreciation of the price of our common stock, which may never occur.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

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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 1A. Risk Factors