What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-04 compared with 2021-03-05 · 101 added, 80 removed, 699 unchanged (21% of the section changed)

55 unchanged sentences

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

Employment Agreement between the Registrant and Christopher K.

Scott, dated December 16, 2013

Amended and Restated Employment Agreement between the Registrant and Christopher K.

Scott, dated July 8, 2021

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

entered into on January 26, 2014

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

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

entered into on March 26, 2019

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

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

26 unchanged sentences

/s/ Chris Scott

Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)

Chief Financial and Operating Officer and Secretary (Principal Financial and Accounting Officer)

March 4, 2022

9 unchanged sentences

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Balance Sheets

5 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of IRADIMED CORPORATION

To the Stockholders and the Board of Directors of IRADIMED CORPORATION

Opinion on the Financial Statements

19 unchanged sentences

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 since 2013.

Orlando, Florida

47 unchanged sentences

Total operating expenses

(Loss) income from operations

Income (loss) from operations

Other income, net

(Loss) income before provision for income taxes

Provision for income tax benefit

Income (loss) before provision for income taxes

Provision for income tax expense (benefit)

( 1,985,879 )

5 unchanged sentences

For the Years Ended December 31,

Other comprehensive income (loss):

Change in fair value of available-for-sale securities, net of tax expense (benefit) of $ 5,097 , $ 24,713 and $( 1,168 ) respectively

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

Other comprehensive (loss) income:

Change in fair value of available-for-sale securities, net of tax (benefit) expense of $( 11,486 ), $ 5,097 and $ 24,713 respectively

Realized gain on available-for-sale securities reclassified to net income, net of tax expense of $ 4,545 , $ 4,286 and $ 2,671 respectively

Other comprehensive (loss) income

Comprehensive income

10 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

Other comprehensive income

Other comprehensive loss

Stock-based compensation

Net share settlement of restricted stock units

( 1,207,632 )

( 1,207,618 )

Exercise of stock options

12 unchanged sentences

Deferred income taxes, net

(Gain) loss on maturity of investments

Gain on maturity of investments

Changes in operating assets and liabilities:

3 unchanged sentences

( 1,038,047 )

( 1,098,908 )

Accounts payable

6 unchanged sentences

( 1,106,264 )

( 1,252,768 )

Net cash provided by operating activities

Investing activities:

Purchases of investments

( 1,124,512 )

Proceeds from maturity of investments

19 unchanged sentences

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.

2 unchanged sentences

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.

Our patented MRidium® MRI compatible IV infusion pump system has been designed with a non-magnetic ultrasonic motor, uniquely designed non-ferrous parts and other special features to safely and predictably deliver anesthesia and other IV fluids during various MRI procedures.

Our pump solution provides a seamless approach that enables accurate, safe and dependable fluid delivery before, during and after an MRI scan, which is important to critically ill patients who cannot be removed from their vital medications, and children and infants who must generally be sedated to remain immobile during an MRI scan.

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.

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

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

The IRADIMED 3880 has a compact, lightweight design allowing it to travel with the patient from their critical care unit, to the MRI and back, resulting in increased patient safety through uninterrupted vital signs monitoring and decreasing the amount of time critically ill patients are away from critical care units.

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

The features of the IRADIMED 3880 include:

3 unchanged sentences

invasive and non-invasive blood pressure;

invasive blood pressure;

patient temperature, and;

13 unchanged sentences

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.

For many domestic sales, we enter into agreements with integrated delivery health systems and healthcare supply contracting companies, commonly referred to as Group Purchasing Organizations (“GPOs”).

GPO agreements 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 the 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.

7 unchanged sentences

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 medical devices and related disposables and services are contractually fixed over the contract term.

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

19 unchanged sentences

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.

Our sales are typically 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.

69 unchanged sentences

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.

Historically, we have granted three types of employee equity awards, stock options, restricted stock units and performance-based restricted stock units.

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

Expense related to our performance-based restricted stock units is recognized straight-line over the requisite performance period, which is three years.

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

9 unchanged sentences

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.

In December 2021 and 2020, the Company granted Performance-Based Restricted Stock Units (“PSUs”) to certain employees under the Company’s Long-Term Incentive Pan (“LTIP”), which was adopted under the Company’s Amended and Restated 2014 Equity Incentive Plan.

Payouts of the PSUs will be based on the Company's total shareholder return compared to a pre-defined peer group.

For purposes of the LTIP, total shareholder return is calculated as the share price at the end of the performance period, which is three years, including the reinvestment of any dividends during the performance period, as compared to the share price at the beginning of the performance period.

The payout range for participants will be between 0 percent and 200 percent, depending on the Company's performance against the peer group.

The grant date fair value of our PSUs is based on a Monte Carlo simulation, the closing price of our common stock, and other pertinent factors on the grant date.

Compensation expense for the PSUs is recognized on a straight-line basis over the requisite performance period, which is three years from the grant date.

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

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.

16 unchanged sentences

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.

The Underwriters’ warrants, stock options restricted stock units and performance-based 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.

6 unchanged sentences

Restricted stock units

Performance-based restricted stock units

Weighted-average shares outstanding — Diluted

9 unchanged sentences

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.

Our cash and cash equivalents balances exceed federally insured limits periodically 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 medical devices require clearance from the Food and Drug Administration and international regulatory agencies prior to commercialized sales.

Our future products may not receive required approvals.

3 unchanged sentences

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.

The COVID-19 pandemic, and related governmental and societal responses thereto, continue to cause disruption in global supply and distribution channels and significantly change the way companies manage their business.

From the beginning of this global health crisis, our priority has been the safety and well-being of our employees and continuing to supply our customers with access to our therapeutic and diagnostic device solutions.

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.

The ongoing impact of the pandemic depends on several 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 disruptions in our supply chain and manufacturing operations, delays in payments on outstanding accounts receivable, uncertain demand for our products, and effects of any actions we may take to address financial and operational challenges our customers may face.

Our future results may potentially be heavily determined by global vaccination rates, duration of the pandemic, its geographic spread, further business disruptions and the overall impact on the global economy.

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

● disruptions in our supply chain that may limit our ability to procure materials necessary to manufacture our products or procuring materials at elevated costs resulting in diminished financial results;

● 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;

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

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

3 unchanged sentences

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.

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

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements to be Implemented

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

Accounting Pronouncements Implemented in 2021

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

2019-12, Income Taxes (Topic 740):

1 unchanged sentence

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.

We adopted ASU 2009-12 as of January 1, 2021 and it did not have an impact on our financial condition, results of operations or cash flows.

Recently Issued Accounting Pronouncements to be Implemented

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

37 unchanged sentences

Our capitalized contract costs totaled $ 357,810 and 384,367 as of December 31, 2021 and 2020, respectively.

3 — Inventory

3 — Inventory, net

Inventory consists of:

5 unchanged sentences

Allowance for excess and obsolete

4 — Property and Equipment

4 — Property and Equipment, net

Property and equipment consist of:

15 unchanged sentences

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

5 — Intangible Assets, net

The following table summarizes the components of intangible asset balances:

11 unchanged sentences

As of December 31, 2020

Corporate bonds:

International corporations

As of December 31, 2021, the scheduled maturities of our investments are as follows:

8 unchanged sentences

Identical Assets

Corporate bonds:

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.

6 unchanged sentences

Reclassification realized in net earnings

Cumulative effect from adoption of accounting standard update

Balance at December 31, 2019

27 unchanged sentences

Outstanding end of period

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, 2021, 2020 and 2019 was $ 7,104,183 , $ 7,764,920 and $ 11,870,492 , respectively.

1 unchanged sentence

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

We estimated the fair value of options granted during the year ended December 31, 2019 using a Black-Scholes option pricing model with the following weighted average assumptions:

Expected term (years)

7 unchanged sentences

As of December 31, 2021, we had $ 3,621,967 of unrecognized compensation cost related to the unvested restricted stock units, which is expected to be recognized over a weighted-average period of 2.7 years.

Performance-Based Restricted Stock Units

The following table presents a summary of our Performance-Based Restricted Stock Unit (“PSU”) activity as of and for the year ended December 31, 2021:

Performance-Based

Weighted-Average

Unvested at December 31, 2020

Unvested at December 31, 2021

During the year ended December 31, 2021, the Company awarded 8,956 PSUs.

The awards will vest three years from the award date based on the achievement of certain performance criteria approved by the Compensation Committee.

During the year ended December 31, 2020, the Company awarded 11,891 PSUs.

The 9,345 remaining outstanding awards will vest three years from the award date based on the achievement of certain performance criteria approved by the Compensation Committee.

Based on the level of achievement of the performance criteria at the end of the three years for each of the PSUs awarded, the number of shares earned can range from 0 percent to 200 percent of the remaining shares outstanding;

therefore, the maximum number of shares that can be issued under these awards is twice the original remaining outstanding awards of 18,301 PSUs, or 36,602 shares.

For the year ended December 31, 2021, the grant date fair value of the PSUs was $ 57.69 per unit, which was calculated using a Monte-Carlo simulation model with an expected term of three years and a risk-free interest rate of 1.0 %.

The Monte-Carlo simulation incorporated the volatility and dividend yield for the Company and each member of the peer group individually.

Peer group volatilities ranged from 38.4 % to 94.0 % and dividend yields ranged from 0.0 % to 1.1 %.

The volatility and dividend yield used for the Company was 50.7 % and 0.0 %, respectively.

For the year ended December 31, 2020, the grant date fair value of the PSUs was $ 29.53 per unit, which was calculated using a Monte-Carlo simulation model with an expected term of three years and a risk-free interest rate of 0.2 %.

The Monte-Carlo simulation incorporated the volatility and dividend yield for the Company and each member of the peer group individually.

Peer group volatilities ranged from 39.9 % to 89.4 % and dividend yields ranged from 0.0 % to 1.23 %.

The volatility and dividend yield used for the Company was 51.0 % and 0.0 %, respectively.

As of December 31, 2021, we had $ 682,658 of unrecognized compensation cost related to the unvested PSUs, which is expected to be recognized over a weighted-average period of 2.7 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.

11 unchanged sentences

Interest income

Realized gain (losses) on maturities of investments

Realized gains on maturities of investments

Foreign currency exchange losses

5 unchanged sentences

( 2,404,511 )

Total current tax (benefit) expense

Total current tax expense (benefit)

( 2,375,017 )

1 unchanged sentence

Total deferred tax expense (benefit)

Provision for income tax benefit

Provision for income tax expense (benefit)

( 1,985,879 )

11 unchanged sentences

Total deferred income taxes, net

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

As of December 31, 2021 and 2020, we recorded a state net operating loss carryforward of $ 215,133 and $ 263,974 , respectively.

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

5 unchanged sentences

CARES Act NOL carryback

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

Stock compensation expense

Incentive stock options

Stock compensation expense and tax windfalls upon exercises and vesting

State taxes, net of federal benefit

3 unchanged sentences

Foreign taxes

Foreign derived intangible income

Research and development credits

11 unchanged sentences

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.

For the year ended December 31, 2021, the Company paid Susi, LLC $ 461,874 related to this lease.

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

1 unchanged sentence

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.

At the time we adopted ASU 2016-02, Leases (Topic 842), 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, 2021.

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

5 unchanged sentences

Research and development

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

Lease costs for short-term leases were immaterial for the years ended December 31, 2021, 2020 and 2019.

Maturity of Operating lease liability as of December 31, 2021, is as follows:

16 unchanged sentences

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 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.

We believe the estimated fair value of these indemnities is immaterial and have not recorded a liability for these agreements as of December 31, 2021.

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.

As of December 31, 2021, we accrued approximately $ 146 thousand related to various matters.

15 — Capital Stock

5 unchanged sentences

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.

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

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.

12 unchanged sentences

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.

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 holders of Preferred Stock.

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

The Common Stock is not redeemable.

16 — Subsequent Event

On February 7, 2022, the Board of Directors declared a special cash dividend of $ 1.00 per share on the Company’s common stock.

On February 24, 2022, we paid $ 12,559,127 to shareholders of record at the close of business on February 17, 2022.

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