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What changed in IRADIMED CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of IRADIMED CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+254 added−246 removedSource: 10-K (2024-03-01) vs 10-K (2023-03-02)

Top changes in IRADIMED CORP's 2023 10-K

254 paragraphs added · 246 removed · 217 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

78 edited+15 added−7 removed154 unchanged
Biggest changeWe seek to grow our business by, among other things: Driving market awareness of our MRI compatible IV infusion pump and the safety risks associated with using conventional IV pumps with long IV lines. We believe that the largest potential market for our MRI compatible IV infusion pumps is the segment of the market that is currently using workaround solutions.
Biggest changeWe believe our current products increase the safety of performing MRI diagnostics for patients by minimizing potential complications with IV infusions, vital signs monitoring, and detection of metals possessing ferromagnetism. 5 Table of Contents We seek to grow our business by, among other things: Driving market awareness of our MRI compatible IV infusion pump and the safety risks associated with using conventional IV pumps with long IV lines.
All of these approaches have drawbacks, introduce safety risks and may result in patient harm. Use of multiple lengths of extension tubing can cause infusion inaccuracies, unnecessary waste of costly medications and false alarms or, more seriously, delayed alarms for equipment issues such as occlusion, especially when low flow rates are being used.
All these approaches have drawbacks, introduce safety risks and may result in patient harm. Use of multiple lengths of extension tubing can cause infusion inaccuracies, unnecessary waste of costly medications and false alarms or, more seriously, delayed alarms for equipment issues such as occlusion, especially when low flow rates are being used.
MRI Compatible Patient Vital Signs Monitoring System Our 3880 Monitor 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.
MRI Compatible Patient Vital Signs Monitoring System Our 3880 Monitor has been designed with non-magnetic components and other special features to monitor a patient’s vital signs safely and accurately during various MRI procedures.
Product quality plays a critical role in our success. While we believe that we have made significant improvements to our product quality and overall quality systems, further quality concerns, whether real or perceived, could adversely affect our results. Conversely, improving quality can be a competitive advantage and improve our results.
Product quality plays a critical role in our success. While we believe that we have made significant improvements to our product quality and overall quality systems, quality concerns, whether real or perceived, could adversely affect our results. Conversely, improving quality can be a competitive advantage and improve our results.
Some of the raw materials and parts that are critical to the production and operation of our products are sourced from single suppliers. Some components we or our suppliers utilize are from Chinese manufacturers.
Some of the raw materials and parts that are critical to the production and operation of our products are sourced from single suppliers. Some components we or our suppliers utilize are from Chinese or Taiwanese manufacturers.
In the U.S., we sell our products through our 25 direct field sales representatives, 3 regional sales directors and 5 clinical application specialists. We have distribution agreements for our products with independent distributors selling our products internationally. We have developed an experienced team of international distributors that have a strong MRI/radiology product portfolio and focus.
In the U.S., we sell our products through our 25 direct field sales representatives, 3 regional sales directors and 7 clinical application specialists. We have distribution agreements for our products with independent distributors selling our products internationally. We have developed an experienced team of international distributors that have a strong MRI/radiology product portfolio and focus.
These risks and inefficiencies include: ● Infection risk from running lengthy IV tubing sets with multiple extensions through the wall or under the door; ● Risk of inaccurate dose delivery from using a conventional IV infusion pump with multiple extension lines; ● Potential medication occlusion and lengthy alarm notification delays due to multiple extension lines, posing great risks to patients on critical medications; ● Excess medication costs due to the disposal of multiple extension IV tubing sets filled with unused medication at the end of the procedure; and 5 Table of Contents ● Lost productivity and MRI scanning time due to the lengthy set up time required for multiple extension lines.
These risks and inefficiencies include: ● Infection risk from running lengthy IV tubing sets with multiple extensions through the wall or under the door; ● Risk of inaccurate dose delivery from using a conventional IV infusion pump with multiple extension lines; ● Potential medication occlusion and lengthy alarm notification delays due to multiple extension lines, posing great risks to patients on critical medications; ● Excess medication costs due to the disposal of multiple extension IV tubing sets filled with unused medication at the end of the procedure; and ● Lost productivity and MRI scanning time due to the lengthy set up time required for multiple extension lines.
Many of these potential competitors have established reputations, customer relationships and marketing, distribution, and service networks. In addition, they have substantially longer histories in the medical products industry, larger product lines and greater financial, technical, manufacturing, management, and research and development budgets. Many of these potential competitors may have long-term product supply relationships with our potential customers.
Many of these potential competitors have established reputations, customer relationships and marketing, distribution, and service networks. In addition, they have substantially longer histories in the medical products industry, larger product lines and greater financial, technical, manufacturing, management, and research and development resources. Many of these potential competitors may have long-term product supply relationships with our potential customers.
The MDR initially became effective in May 2021, however the MDR transition was recently extended to 2028 for Class IIb non implanted devices. Regardless our CE Certificates remain valid through May 2024, allowing us to continue shipping our products into the EU.
The MDR initially became effective in May 2021, however the MDR transition was recently extended to 2028 for Class IIb non implanted devices. Regardless our CE Certificates remain valid through December 2028, allowing us to continue shipping our products into the EU.
When an incident occurs, this wireless touchscreen uniquely allows users to quickly and easily log all ferrous items as they enter the MRI Zone IV improving the reporting accuracy hospitals require for accreditation. 11 Table of Contents Intellectual Property We protect our proprietary technology through a combination of patents, trade secrets and confidentiality agreements.
When an incident occurs, this wireless touchscreen uniquely allows users to quickly and easily log all ferrous items as they enter the MRI Zone IV improving the reporting accuracy hospitals require for accreditation. Intellectual Property We protect our proprietary technology through a combination of patents, trade secrets and confidentiality agreements.
Additionally, based on historical sales data and customer purchasing behaviors, we believe, through the use of our direct U.S. sales team, there is potential for sales of our MRI compatible IV infusion pump system within critical care departments of U.S. hospitals (refer to the section below titled Expansion of Intra-Hospital Use of MRI Compatible Devices ).
Additionally, based on historical sales data and customer purchasing behaviors, we believe, that with our direct U.S. sales team, there is potential for sales of our MRI compatible IV infusion pump system within critical care departments of U.S. hospitals (refer to the section below titled Expansion of Intra-Hospital Use of MRI Compatible Devices ).
Additionally, based on historical sales data and customer purchasing behaviors, we believe, through the use of our direct U.S. sales team, there is potential for sales of our MRI vital signs monitoring system within critical care departments of U.S. hospitals (refer to the section below titled Expansion of Intra-Hospital Use of MRI Compatible Devices ).
Additionally, based on historical sales data and customer purchasing behaviors, we believe, that with our direct U.S. sales team, there is potential for sales of our MRI vital signs monitoring system within critical care departments of U.S. hospitals (refer to the section below titled Expansion of Intra-Hospital Use of MRI Compatible Devices ).
We believe the dominant competitor with a market-leading position in MRI compatible vital signs monitoring 14 Table of Contents is Invivo Research, Inc., which was founded by Roger Susi, our founder, President, Chief Executive Officer, and Chairman of the Board of Directors. Invivo is now owned by Koninklijke Philips NV (NYSE: PHG).
We believe the dominant competitor with a market-leading position in MRI compatible vital signs monitoring is Invivo Research, Inc., which was founded by Roger Susi, our founder, President, Chief Executive Officer, and Chairman of the Board of Directors. Invivo is now owned by Koninklijke Philips NV (NYSE: PHG).
Any of these events could disrupt our business and have a material adverse effect on our revenues, profitability, and financial condition. 16 Table of Contents Product Recalls We have made substantial investments in quality systems and we will continue to make improvements to our products and systems to further reduce potential issues related to patient safety and avoid recalls in the future.
Any of these events could disrupt our business and have a material adverse effect on our revenues, profitability, and financial condition. Product Recalls We have made substantial investments in quality systems and we will continue to make improvements to our products and systems to further reduce potential issues related to patient safety and avoid recalls in the future.
ITEM 1. BUSINESS Overview IRADIMED CORPORATION (“IRADIMED”, the “Company,” “we,” “us,” “our”) develops, manufactures, markets and distributes Magnetic Resonance Imaging (“MRI”) compatible medical devices and related accessories, disposables and services relating to them. We were incorporated in Oklahoma in July 1992 and reincorporated in Delaware in April 2014.
ITEM 1. BUSINESS Overview IRADIMED CORPORATION (“IRadimed”, the “Company,” “we,” “us,” “our” or similar terms) develops, manufactures, markets and distributes Magnetic Resonance Imaging (“MRI”) compatible medical devices and related accessories, disposables and services relating to them. We were incorporated in Oklahoma in July 1992 and reincorporated in Delaware in April 2014.
If we are unable to remain compliant with RoHS 2, there may be an interruption of sales to the EU, which could significantly lower our revenues from foreign sales while we take remedial measures. Anti-Bribery Laws Our global activities are subject to the U.S. Foreign Corrupt Practices Act, the U.K.
If we are unable to remain compliant with RoHS 2, there may be an interruption of sales to the EU, which could significantly lower our revenues from foreign sales while we take remedial measures. 18 Table of Contents Anti-Bribery Laws Our global activities are subject to the U.S. Foreign Corrupt Practices Act, the U.K.
All our products and facilities and those of our suppliers are subject to drug and medical device laws and regulations promulgated by the FDA and national and supranational regulatory authorities outside the U.S., including, for example, Health Canada’s Health Products and 15 Table of Contents Foods Branch, the U.K.’s Medicines and Healthcare Products Regulatory Agency, and Australia’s Therapeutic Goods Agency.
All our products and facilities and those of our suppliers are subject to drug and medical device laws and regulations promulgated by the FDA and national and supranational regulatory authorities outside the U.S., including, for example, Health Canada’s Health Products and Foods Branch, the U.K.’s Medicines and Healthcare Products Regulatory Agency, and Australia’s Therapeutic Goods Agency.
Moreover, an MRI scanner’s gradient magnetic field and RF fields can send electrical currents through cables and other conductive materials that are near the MRI system and cause the cables to heat, which may result in burns if they come into contact with the patient or facility staff.
Moreover, an MRI scanner’s gradient magnetic field and radiofrequency (“RF”) fields can send electrical currents through cables and other conductive materials that are near the MRI system and cause the cables to heat, which may result in burns if they come into contact with the patient or facility staff.
We believe, however, based on feedback and historical successes selling our devices, that there is continued potential for expanded deployment of our MRI compatible IV infusion pumps and MRI compatible monitors within the Intensive Care Unit (“ICU”), Emergency Room (“ER”), and other critical care departments within U.S. hospitals where there is a high probability that MRI procedures will need to be performed on these patients.
We believe, however, based on feedback and historical successes selling our devices, that there is continued potential for expanded deployment of our MRI compatible IV infusion pumps and MRI compatible monitors within the Intensive Care Unit (ICU), Emergency Room (ER), and other critical care departments within U.S. hospitals where there is a high probability that MRI procedures will need to be performed on these patients.
We have 16 issued U.S. patents and 4 issued foreign patents with remaining lives that range from 1 to 18 years. We also have a number of U.S. patent applications pending.
We have 16 issued U.S. patents and 4 issued foreign patents with remaining lives that range from 1 to 17 years. We also have a number of U.S. patent applications pending.
In addition, certain modifications made to marketed devices also may require 510(k) clearance or approval of a PMA supplement. The FDA’s 510(k) clearance process varies in length and can extend beyond twelve months. The process of obtaining PMA approval is much more costly, lengthy, and uncertain than the 510(k) process.
In addition, certain modifications 16 Table of Contents made to marketed devices also may require 510(k) clearance or approval of a PMA supplement. The FDA’s 510(k) clearance process varies in length and can extend beyond twelve months. The process of obtaining PMA approval is much more costly, lengthy, and uncertain than the 510(k) process.
Additionally, expanded use of our MRI compatible medical devices could serve as a type of transport package and allow 4 Table of Contents for consistent and uninterrupted administration of IV fluids and monitoring of vital signs, allowing for easier and safer intra-hospital transport of patients to and from the MRI scanner.
Additionally, expanded use of our MRI compatible medical devices could serve as a type of transport package and allow for consistent and uninterrupted administration of IV fluids and monitoring of vital signs, allowing for easier and safer intra-hospital transport of patients to and from the MRI scanner.
Our remote display/control unit utilizes a proven MRI compatible 2.4 GHz frequency hopping spread spectrum radio technology for artifact-free operation that does not disturb the MRI imaging process. Clinicians may also use the remote display/control unit to adjust a second pump channel when used in combination with our Side Car unit discussed above.
Our remote display/control unit utilizes a proven MRI compatible 2.4 GHz frequency hopping spread spectrum 10 Table of Contents radio technology for artifact-free operation that does not disturb the MRI imaging process. Clinicians may also use the remote display/control unit to adjust a second pump channel when used in combination with our Side Car unit discussed above.
As a result, we believe that our MRidium 3860+ MRI compatible IV infusion pump is the only true MRI compatible IV infusion pump available today. The medical device and IV infusion market is highly regulated and is typically one of the areas that the FDA scrutinizes closely for new market introductions.
As a result, we believe 14 Table of Contents that our MRidium 3860+ MRI compatible IV infusion pump is the only true MRI compatible IV infusion pump available today. The medical device and IV infusion market is highly regulated and is typically one of the areas that the FDA scrutinizes closely for new market introductions.
We believe that a positive user experience is critical to driving increased rates of utilization of our products. 7 Table of Contents Our Products Typical MRI Scanner Room The following diagram is representation of an aerial view of a typical MRI scanner room with a typical three Tesla magnet.
We believe that a positive user experience is critical to driving increased rates of utilization of our products. Our Products Typical MRI Scanner Room The following diagram is representation of an aerial view of a typical MRI scanner room with a typical three Tesla magnet.
The loss of the quality system certification may prevent product 17 Table of Contents shipments to the EU and to other foreign markets, such as Canada, which could significantly lower our revenues from foreign sales while we take remedial measures.
The loss of the quality system certification may prevent product shipments to the EU and to other foreign markets, such as Canada, which could significantly lower our revenues from foreign sales while we take remedial measures.
We have never encountered a significant supply interruption from any sole supplier; however, the operations of our third-party suppliers could be disrupted by conditions unrelated to our business operations or that are beyond our control, including but not limited to the on-going global supply chain issues, international trade restrictions, excessive demand creating shortages of available supply, and conditions related to health pandemics.
We have never encountered a significant supply interruption from any sole supplier; however, the operations of our third-party suppliers could be disrupted by conditions unrelated to our business operations or that are beyond our control, including but not limited to the global supply chain issues, international trade restrictions, excessive demand creating 13 Table of Contents shortages of available supply, and conditions related to health pandemics.
Our patent pending TruSense technology predicts an approaching ferrous hazard by uniquely sensing a threat’s speed, trajectory, and Zone IV door status. with IRadimed’s expertise in Dynamic Signal Processing. This technology reduces false alarms, all while simultaneously circumventing background magnetic field noise.
Our patent pending Tru Sense TM technology predicts an approaching ferrous hazard by uniquely sensing a threat’s speed, trajectory, and Zone IV door status. with IRadimed’s expertise in Dynamic Signal Processing. This technology reduces false alarms, all while simultaneously circumventing background magnetic field noise.
We cannot be sure that future medical devices or modifications of current medical devices, will qualify for the 510(k) pathway or whether 510(k) clearance or PMA approval will be obtained for any future product that we propose to market. Our FMD1 is an example of this as a non-regulated medical device and providing no diagnostic or therapeutic claims.
We cannot be sure that future medical devices or modifications of current medical devices, will qualify for the 510(k) pathway or whether 510(k) clearance or PMA approval will be obtained for any future product that we propose to market. Our FMD1 is an example of this as a non-regulated product without diagnostic or therapeutic claims.
We offer a variety of IV 9 Table of Contents tubing sets for varying infusion scenarios and these include our standard “spike” infusion set, syringe adapter infusion set and extension infusion set. Each of our IV tubing sets is latex-free and DEHP-free. ● MRidium 1056 Standard Infusion Set.
We offer a variety of IV tubing sets for varying infusion scenarios and these include our standard “spike” infusion 9 Table of Contents set, syringe adapter infusion set and extension infusion set. Each of our IV tubing sets is latex-free and Di-2-ethylhexyl phthalate (DEHP)-free. ● MRidium 1056 Standard Infusion Set.
Our 3865 MRidium Wireless Remote also functions as a battery charger for our MRidium battery pack. 10 Table of Contents Dose Error Reduction System (“DERS”) Our DERS software for use with our MRidium 3860+ MRI compatible IV infusion pump system incorporates the latest dosing safety features for patients.
Our 3865 MRidium Wireless Remote also functions as a battery charger for our MRidium battery pack. Dose Error Reduction System (DERS) Our DERS software for use with our MRidium 3860+ MRI compatible IV infusion pump system incorporates the latest dosing safety features for patients.
We conduct annual training to prevent harassment and discrimination and monitor employee conduct year-round, including by providing employees with access to an anonymous whistleblower hotline to report any violations. The basis for recruitment, hiring, development, training, compensation, and advancement at the Company is qualifications, performance, skills and experience.
We conduct annual training to reduce risks of harassment and discrimination and monitor employee conduct year-round, including by providing employees with access to an anonymous whistleblower hotline to report any allegations. The basis for recruitment, hiring, development, training, compensation, and advancement at the Company is qualifications, performance, skills and experience.
We have a direct sales organization in the U.S. and a team of experienced international distributors that we believe can effectively go to market with additional MRI compatible patient care products. While we have not completed an acquisition, we evaluate such opportunities from time to time that might improve our product mix and profitability.
We have a direct sales organization in the U.S. and a team of experienced international distributors that we believe can effectively go to market with additional MRI compatible patient care products. While we have not completed an acquisition, we evaluate such opportunities from time to time that might improve our value to customers via a larger product offering.
For example, the non-magnetic, ultrasonic motor which drives our MRI compatible IV infusion pump is sole sourced from a major multinational Japanese manufacturing company with whom we have an excellent long-term relationship. This company has exclusively provided us with these motors since 2005.
For example, the non-magnetic, ultrasonic motor which drives our MRI compatible IV infusion pump is sole sourced from a major multinational Japanese manufacturing company with whom we have an excellent long-term relationship. This company has exclusively provided us with these motors since 2005. Our exclusive supply agreement with this company expired February 25, 2024.
Other large and well-known companies such as General Electric Healthcare (NYSE: GEHC) and Schiller AG, also have competing products as do other smaller privately held companies.
Other large and well-known companies such as GE Healthcare Technologies (NYSE: GEHC) and Schiller AG, also have competing products as do other smaller privately held companies.
Under our GPO agreements, we are required to pay the GPOs a fee of three percent of the sales of our products to members of the GPO. Manufacturing and Suppliers We assemble our products in our facility in Winter Springs, Florida, from components and sub-assemblies purchased from outside suppliers.
Under our GPO agreements, we are required to pay the GPOs a fee of three percent of the sales of our products to members of the GPO. Sales to participating IDNs do not have an associated fee. Manufacturing and Suppliers We assemble our products in our facility in Winter Springs, Florida, from components and sub-assemblies purchased from outside suppliers.
The features of the IRADIMED 3880 include: wireless ECG with dynamic gradient filtering; wireless SpO2 using Masimo® algorithms; non-magnetic respiratory CO2; invasive and non-invasive blood pressure; patient temperature, and optional advanced multi-gas anesthetic agent unit featuring continuous Minimum Alveolar Concentration measurements.
The features of the IRADIMED 3880 include: wireless Electrocardiogram (“ECG”) with dynamic gradient filtering; wireless blood oxygen saturation monitoring (“SpO2”) using Masimo® algorithms; non-magnetic respiratory CO2; invasive and non-invasive blood pressure; patient temperature; and optional advanced multi-gas anesthetic agent unit featuring continuous Minimum Alveolar Concentration measurements.
Based on an estimate the number of critical care departments in the U.S. and an estimate of the anticipated adoption rate in these critical care departments, we believe there is potential for the sale of an additional 5,250 of our MRI vital signs monitoring systems.
Based on an estimate the number of critical care departments in the U.S. and an estimate of the anticipated 4 Table of Contents adoption rate in these critical care departments, we believe there is potential for additional sales of our MRI vital signs monitoring systems.
Our research and development efforts are driven by the leadership of our founder, Roger Susi, assisted by engineers and technical professionals with significant experience in product design. Our research and development expenses were $2.3 million or 4.3 percent of revenue in 2022 and $1.9 million or 4.6 percent of revenue in 2021.
Our research and development efforts are driven by the leadership of our founder, Roger Susi, along with engineers and technical professionals with significant experience in systems engineering and product design. Our research and development expenses were $2.9 million or 4.4 percent of revenue in 2023 and $2.3 million or 4.3 percent of revenue in 2022.
The percentage of total revenue generated by geographic region was as follows: ​ ​ ​ ​ ​ ​ ​ ​ Percent of Revenue ​ ​ ​ Years Ended December 31, ​ ​ 2022 2021 United States 82.4 % 80.0 % International 17.6 % 20.0 % ​ The percentage of total revenue generated by product type was as follows: ​ ​ ​ ​ ​ ​ ​ ​ Percent of Revenue ​ ​ ​ Years Ended December 31, ​ ​ 2022 2021 Devices 68.5 % 64.7 % Disposable, service and other 27.4 % 30.6 % Amortization of extended warranty agreements 4.1 % 4.7 % ​ Selling cycles for our devices have varied widely and have historically ranged between three and six months in duration.
The percentage of total revenue generated by geographic region was as follows: ​ ​ ​ ​ ​ ​ ​ Percent of Revenue ​ ​ Years Ended December 31, ​ ​ 2023 2022 United States 80.1 % 82.4 % International 19.9 % 17.6 % ​ 12 Table of Contents The percentage of total revenue generated by product type was as follows: ​ ​ ​ ​ ​ ​ ​ ​ Percent of Revenue ​ ​ Years Ended December 31, ​ ​ 2023 ​ 2022 Devices 70.1 % 68.5 % Disposable, service and other 26.8 % 27.4 % Amortization of extended warranty agreements 3.1 % 4.1 % ​ Selling cycles for our devices have varied widely and have historically ranged between three and six months in duration.
Our third quarter sales have typically been lower, compared to other fiscal quarters, principally because the fiscal quarter coincides with the summer vacation season, in the U.S., Europe and Japan. Segment Information and Geographic Data Our business operates as one reportable segment.
Historically, our third quarter bookings have typically been lower, compared to other fiscal quarters, principally because the fiscal quarter coincides with the summer vacation season in the northern hemisphere. Segment Information and Geographic Data Our business operates as one reportable segment.
We devote a significant amount of time and training to ensure that this educational experience is a success. This training is performed most commonly by our sales staff and is augmented by our clinical application specialists. We intend to hire more clinical application specialists to strengthen our initial training experience and increase ongoing customer support.
We devote a significant amount of time and training to ensure 7 Table of Contents that this educational experience is a success. This training is usually performed by our sales staff with the frequent assistance of our clinical application specialists. We intend to hire more clinical application specialists to strengthen our initial training experience and increase ongoing customer support.
Such makeshift extension sets can also affect the effectiveness of fluid delivery. A clinician’s adjustment of dosage and other settings may take longer to reach the patient due to the over-extended tubing. Further, there are risks in using a standard IV infusion pump that is mistakenly believed to be at a safe distance from the MR scanner.
A clinician’s adjustment of dosage and other settings may take longer to reach the patient due to the over-extended tubing. 3 Table of Contents Further, there are risks in using a standard IV infusion pump that is mistakenly believed to be at a safe distance from the MR scanner.
This technology predicts an approaching ferrous hazard by uniquely sensing a threat’s speed, trajectory, and Zone IV door status reducing false alarms, all while simultaneously circumventing background magnetic field noise. 2 Table of Contents Industry We currently compete in the MRI compatible medical device market.
This is the first ferromagnetic detection device with Tru Sense TM threat qualification technology. This technology predicts an approaching ferrous hazard by uniquely sensing a threat’s speed, trajectory, and Zone IV door status reducing false alarms, all while simultaneously circumventing background magnetic field noise. Industry We currently compete in the MRI compatible medical device market.
Susi began the formal and detailed development of what subsequently has become our MRidium MRI compatible IV infusion pump system. This first-generation MRI compatible IV infusion pump system and its associated proprietary IV tubing sets obtained FDA 510(k) clearance in March 2005 after which we began our sales and marketing efforts.
This first-generation MRI compatible IV infusion pump system and its associated proprietary IV tubing sets obtained FDA 510(k) clearance in March 2005 after which we began our sales and marketing efforts.
We intend to leverage this experience and collaboration to innovate and commercialize other technologically advanced MRI compatible patient care products. The recent introduction of our Ferromagnetic Detection system (“FMD”) is an example of this expansion. When reasonably available, acquiring synergistic MRI patient care companies, products, or technology licenses to accelerate our product development and leverage our existing sales organization.
The recent introduction of our Ferromagnetic Detection system (“FMD”) is an example of this expansion. 6 Table of Contents When reasonably available, acquiring synergistic MRI patient care companies, products, or technology licenses to accelerate our product development and leverage our existing sales organization.
Human Capital As of December 31, 2022, we had 123 full-time employees, including 44 in manufacturing and service, 49 in sales, marketing and customer support services, 9 in regulatory affairs and quality assurance, 11 in finance and administration and 10 in research and development. No employees are represented by a labor union.
Human Capital As of December 31, 2023, we had 148 full-time employees, including 57 in manufacturing and service, 48 in sales, marketing and customer support services, 15 in regulatory affairs and quality assurance, 13 in finance and administration and 15 in research and development. No employees are represented by a labor union.
Accordingly, we do not actively market our MRI vital signs monitor in countries that we believe do not have a minimum level of patient safety standards to warrant a device like ours.
As with our MRI compatible IV infusion pump, we also consider our MRI compatible multi-parameter vital signs monitor primarily as a patient safety device. Accordingly, we do not actively market our MRI vital signs monitor in countries that we believe do not have a minimum level of patient safety standards to warrant a device like ours.
In October 2017, we received FDA 510(k) clearance for our 3880 Monitor and immediately began our direct selling efforts in the United States. In 2022, we introduced our ferromagnetic detection device, IRadimed FMD1 3600 with Remote Alarm Logging Unit, (“RALU”). This is the first ferromagnetic detection device with TruSense threat qualification technology.
In December 2016, we made our first shipments of the 3880 Monitor to international customers. In October 2017, we received FDA 510(k) clearance for our 3880 Monitor and immediately began our direct selling efforts in the United States. 2 Table of Contents In 2022, we introduced our ferromagnetic detection device, IRadimed FMD1 3600 with Remote Alarm Logging Unit, (“RALU”).
Invivo Research was acquired by Invivo Corporation in 1992, which began trading on the Nasdaq Stock Exchange in 1994. Mr. Susi served as a Director of Invivo Corporation from 1998 until 2000 and oversaw technical areas from 2000 to 2004. Invivo Corporation was acquired by Intermagnetics General Corporation in 2004, which was later acquired by Koninklijke Philips NV (NYSE: PHG).
Invivo Research Inc. was acquired by Invivo Corporation (“Invivo”) in 1992, which began trading on the Nasdaq Capital Market (“Nasdaq”) in 1994. Mr. Susi served as a Director of Invivo Corporation from 1998 until 2000 and oversaw technical areas from 2000 to 2004.
The MRI compatible patient vital signs monitoring system also includes: (1) an extended range remote tablet that allows for remote monitoring from outside the MRI scanner room; (2) a base station control center that facilitates printing, wireless communications between the remote tablet and the monitor, and acts as a battery charger for the remote tablet, and; (3) wireless ECG, SpO2 and invasive blood pressure pods that facilitate the respective monitoring modalities.
The MRI compatible patient vital signs monitoring system also includes: (1) an extended range remote tablet that allows for remote monitoring from outside the MRI scanner room; (2) a base station control center that facilitates printing, wireless communications between the remote tablet and the monitor, and acts as a battery charger for the remote tablet; and (3) wireless ECG, SpO2 and invasive blood pressure pods that facilitate the respective monitoring modalities. 11 Table of Contents IRadimed FMD1 with Remote Alarm Logging Unit (“RALU”) Our 3600 ferromagnetic detection device, IRadimed FMD1 with RALU is the first ferromagnetic detection device with Tru Sense TM threat qualification technology.
We enter into agreements with integrated delivery health systems and healthcare supply contracting companies, which are commonly referred to as Group Purchasing Organizations (“GPOs”) in the U.S., which enable us to sell and distribute our products to 12 Table of Contents their member hospitals.
We enter into agreements with Integrated Delivery Networks (“IDNs”) and healthcare supply contracting companies, which are commonly referred to as Group Purchasing Organizations (“GPOs”) in the U.S., which enable us to sell and distribute our products to their member hospitals. GPOs negotiate volume purchase prices for hospitals, group practices, and other clinics that are members of a GPO.
As business progress dictates, we intend to add to our specialized, MRI product-focused direct sales team, including our supporting clinical application specialists. We believe that we can significantly increase sales of our MRI compatible medical devices by continuing to call on critical care departments, which may help influence hospitals’ purchasing decisions.
We believe that we can significantly increase sales of our MRI compatible medical devices by continuing to call on critical care departments, which may help influence hospitals’ purchasing decisions.
By increasing the safety parameters of equipment operating within the harsh magnetic environment of the MRI scanner room, we hope to enable hospitals and other healthcare providers to offer the MRI diagnostic procedures patients require. We believe our current products increase the safety of performing MRI diagnostics for patients by minimizing potential complications with IV infusions and vital signs monitoring.
By increasing the safety parameters of equipment operating within the harsh magnetic environment of the MRI scanner room, we hope to enable hospitals and other healthcare providers to offer the MRI diagnostic procedures patients require.
In addition, we conduct quality management reviews designed to inform management of key issues that may affect the quality of our products. From time to time, we may determine that products manufactured or marketed by us do not meet our specifications, published standards or regulatory requirements.
From time to time, we may determine that products manufactured or marketed by us do not meet our specifications, published standards or regulatory requirements.
Despite our training and compliance program, our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents in violation of any of these laws. 18 Table of Contents
Despite our training and compliance program, our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents in violation of any of these laws. Available Information Our principal executive office is located at 1025 Willa Springs Drive, Winter Springs, Florida 32708.
For more information about risks related to these matters, see the section captioned “ Defects or failures associated with our products and/or our quality control systems could lead to the filing of adverse event reports, recalls or safety alerts and negative publicity and could subject us to regulatory actions” in the “Risk Factors” section.
For more information about risks related to these matters, see the section captioned “ Defects or failures associated with our products and/or our quality control systems could lead to the filing of adverse event reports, recalls or safety alerts and negative publicity and could subject us to regulatory actions” in the “Risk Factors” section. 17 Table of Contents Healthcare Fraud and Abuse Laws As a manufacturer and distributor of medical devices to hospitals and other healthcare providers, we and our customers are subject to laws which apply to Medicare, Medicaid, and other federal and state healthcare programs in the U.S.
The market for medical products is subject to rapid change due to an increasingly competitive, cost-conscious environment and to government programs intended to reduce the cost of medical care. Many manufacturers and distributors of medical equipment are large, well-established companies whose resources, reputations, and ability to leverage existing customer relationships might give them a competitive advantage over us.
Many manufacturers and distributors of medical equipment are large, well-established companies whose resources, reputations, and ability to leverage existing customer relationships might give them a competitive advantage over us.
Research and Development Our research and development efforts focus on developing innovative products by utilizing our established core competencies in MRI compatible technologies and feedback from strategic relationships with hospitals, acute medical facilities and medical equipment manufacturers for new product ideas.
Financial information about geographic areas is presented in Notes 2 and 4 in the Notes to Financial Statements of this Annual Report on Form 10-K. 15 Table of Contents Research and Development Our research and development efforts focus on developing innovative products by utilizing our established core competencies in MRI compatible technologies and feedback from strategic relationships with hospitals, acute medical facilities and medical equipment manufacturers for new product ideas.
During the development of our products, our founder, Roger Susi, obtained a number of patents regarding our MRI compatible IV infusion pump and related systems. Mr. Susi has irrevocably assigned these patents to us. We consider our patents important but do not believe our future success is materially dependent upon patents.
During the development of our products, our founder, President, Chief Executive Officer, and Chairman of the Board of Directors, Roger Susi, obtained a number of patents regarding our MRI compatible IV infusion pump and related systems. Mr. Susi has irrevocably assigned these patents to us.
We sell our products primarily to hospitals and acute care facilities, both in the United States and internationally. We currently employ a direct sales strategy in the United States and as of December 31, 2022, our direct sales force consisted of 25 field sales representatives, supported by 3 regional sales directors, and supplemented by 5 clinical application specialists.
We currently employ a direct sales strategy in the United States and as of December 31, 2023, our direct sales force consisted of 25 field sales representatives, supported by 3 regional sales directors, and supplemented by 7 1 Table of Contents clinical application specialists. Internationally, we market our products into approximately 80 countries through the use of independent distributors.
Other problems include devices malfunctioning if they are not properly designed for use in the harsh MR environment and low-quality MR images due to artifacts caused by RF interference emitted from ancillary equipment. 3 Table of Contents To deal with the harsh environment of MR, some manufacturers have offered a “shielded box” solution (also known as a Faraday cage) for use with their standard IV pumps, but the approach has not been widely accepted by customers.
To deal with the harsh environment of MR, some manufacturers have offered a “shielded box” solution (also known as a Faraday cage) for use with their standard IV pumps, but the approach has not been widely accepted by customers.
When a quality issue is identified, we investigate the issue and seek to take appropriate corrective action, such as withdrawal of the product from the market, correction of the product at the customer location, notice to the customer of revised labeling or a combination of these or other corrective actions. 13 Table of Contents In January 2007, we received ISO 13485 certification and met the requirements under the European Medical Device Directive to use the CE Mark, thereby allowing us to continue to market our products in the European Community.
When a quality issue is identified, we investigate the issue and seek to take appropriate corrective action, such as withdrawal of the product from the market, correction of the product at the customer location, notice to the customer of revised labeling or a combination of these or other corrective actions.
We generate revenue from the sale of MRI compatible medical devices and related accessories, extended warranty agreements, services related to maintaining our products and the sale of disposable products used with our devices.
We generate revenue from the sale of MRI compatible medical devices and related accessories, extended warranty agreements, services related to maintaining our products and the sale of disposable products used with our devices. In fiscal year 2023, our revenue was $65.6 million and our income from operations was $20.0 million representing an operating profit margin of 30.5 percent.
Our 3880 Monitor is compact and lightweight, overcoming many of the workflow issues created by other larger and heavier MRI compatible monitors currently in the market. In December 2016, we made our first shipments of the 3880 Monitor to international customers.
Using current and new technologies, and our trade secrets, we believe our 3880 Monitor improves on the design of other MRI compatible vital signs monitors. Our 3880 Monitor is compact and lightweight, overcoming many of the workflow issues created by other larger and heavier MRI compatible monitors currently in the market.
Mr. Susi began exploring the market for an MRI compatible IV infusion pump while at Invivo. Invivo subsequently disclaimed any interest in the infusion pump and acknowledged that Mr. Susi was free to pursue the infusion pump development for his own account. Accordingly, Mr.
Invivo Corporation was acquired by Intermagnetics General Corporation in 2004, which was later acquired by Koninklijke Philips NV (NYSE: PHG). Mr. Susi began exploring the market for an MRI compatible IV infusion pump while at Invivo. Invivo subsequently disclaimed any interest in the infusion pump and acknowledged that Mr.
We believe that this strategy is likely expanding the number of acute care facilities using our MRI compatible products and increasing the average number of MRI compatible IV infusion pumps and monitors per MRI scanner. 6 Table of Contents Internationally, our focus is to continue working with our distributors in key target markets, such as Europe and Asia, to expand the business and augment our market penetration rates.
We believe that this strategy is likely expanding the number of acute care facilities using our MRI compatible products and increasing the average number of MRI compatible IV infusion pumps and monitors per MRI scanner.
Our MRidium 3860+ is the only MRI compatible IV infusion pump system on the market today. In 2014, we began developing our own MRI compatible patient vital signs monitoring system (“3880 Monitor”). Through the use of current and new technologies, and our trade secrets, we believe our 3880 Monitor improves on the design of other MRI compatible vital signs monitors.
An SpO2 monitor can signal when an insufficient level of oxygen is being supplied to the body. Our MRidium 3860+ is the only MRI compatible IV infusion pump system on the market today. In 2014, we began developing our own MRI compatible patient vital signs monitoring system (“3880 Monitor”).
MRI Compatible Patient Vital Signs Monitor The market for MRI compatible multi-parameter vital signs monitors is well-developed and more subject to replacement cycles than new adoptions. As with our MRI compatible IV infusion pump, we also consider our MRI compatible multi-parameter vital signs monitor primarily as a patient safety device.
Based on an estimate of the number of critical care departments in the U.S., we believe there is the potential for the continued sales of our MRI compatible IV infusion pump systems. MRI Compatible Patient Vital Signs Monitor The market for MRI compatible multi-parameter vital signs monitors is well-developed and more subject to replacement cycles than new adoptions.
In 2009, we introduced our second-generation MRI compatible IV infusion pump system, the MRidium 3860+ which improved upon the previous 3850 version in a number of areas, including the addition of blood oxygen saturation monitoring (“SpO2”), and remote wireless monitoring capability. An SpO2 monitor can signal when an insufficient level of oxygen is being supplied to the body.
The exclusive arrangement ended in 2010, allowing us to implement a direct marketing strategy with our own sales force in the U.S. In 2009, we introduced our second-generation MRI compatible IV infusion pump system, the MRidium 3860+ which improved upon the previous 3850 version in several areas, including the addition of SpO2 monitoring, and remote wireless monitoring capability.
Internationally, we market our products into approximately 80 countries through the use of independent distributors. As of December 31, 2022, we have sold approximately 6,582 MRI compatible IV infusion pump systems and approximately 1,596 of our 3880 MRI compatible patient vital signs monitoring systems.
As of December 31, 2023, we have sold approximately 7,196 MRI compatible IV infusion pump systems and approximately 2,166 of our 3880 MRI compatible patient vital signs monitoring systems.
Quality management and oversight play an essential role in understanding and meeting customer requirements, effectively resolving quality issues and improving our products and services. We have a network of quality systems throughout our facilities that relate to the design, development, assembly, packaging, sterilization, handling, distribution and labeling of our products.
We have a network of quality systems throughout our facilities that relate to the design, development, assembly, packaging, sterilization, handling, distribution and labeling of our products. To assess and facilitate compliance with applicable requirements, we periodically review our quality systems to determine their effectiveness and identify areas for improvement.
To assess and facilitate compliance with applicable requirements, we periodically review our quality systems to determine their effectiveness and identify areas for improvement. We also conduct compliance training programs for our sales and marketing personnel and perform assessments of our suppliers of raw materials, components and finished goods.
We also conduct compliance training programs for our sales and marketing personnel and perform assessments of our suppliers of raw materials, components and finished goods. In addition, we conduct quality management reviews designed to inform management of key issues that may affect the quality of our products.
Additionally, with our 3880 Monitor, we focus on educating customers on the total workflow benefits our devices offer and how our devices increase the efficiency of MRI scanners via patient throughput. In recent years, we have decreased the size of our commercial teams while increasing their collective efficiencies.
Additionally, with our 3880 Monitor, we focus on educating customers on the total workflow benefits our devices offer and how our devices increase the efficiency of MRI scanners via patient throughput. As business progress dictates, we intend to add to our specialized, MRI product-focused direct sales team, including our supporting clinical application specialists.
In October 2022, we underwent a recertification audit to maintain our ISO 13485:2016 and Medical Device Single Audit Program certifications and received our certificates. These certificates will need renewal again in January 2025. Competition The medical products industry is generally characterized by intense competition and extensive research and development.
In January 2007, we received ISO 13485 certification and met the requirements under the European Medical Device Directive to use the CE Mark, thereby allowing us to continue to market our products in the European Community. In October 2022, we underwent a recertification audit to maintain our ISO 13485:2016 and Medical Device Single Audit Program certifications and received our certificates.
In fiscal year 2022, 1 Table of Contents our revenue was $53.3 million and our income from operations was $15.6 million representing an operating profit margin of 29.3 percent. Refer to the information contained under the caption “Financial Highlights and Outlook” regarding our outlook for 2023. Our internet website is www.iradimed.com.
Refer to the information contained under the caption “Financial Highlights and Outlook” regarding our outlook for 2024. Our internet website is www.iradimed.com.
Our exclusive supply agreement with this company was renewed in March 2019 and extends through February 25, 2024. This supply agreement is renewable with written mutual consent of the Company and supplier. We place significant emphasis on providing quality products and services to our customers.
This supply agreement was renewed March 2024, and extends through March 1, 2029. We place significant emphasis on providing quality products and services to our customers. Quality management and oversight play an essential role in understanding and meeting customer requirements, effectively resolving quality issues and improving our products and services.
The combination of sales based on the number of targeted MRI scanners and critical care departments of U.S. hospitals results in a current global target market of approximately 32,600 of our MRI patient vital signs monitoring systems. Expansion of Intra-Hospital Use of MRI Compatible Devices Historically, we marketed our MRI compatible devices primarily to the MRI departments of U.S. hospitals.
Expansion of Intra-Hospital Use of MRI Compatible Devices Historically, we marketed our MRI compatible devices primarily to the MRI departments of U.S. hospitals.
Removed
The exclusive arrangement ended in 2010, allowing us to implement a direct marketing strategy with our own sales force in the U.S.
Added
We sell our products primarily to hospitals and acute care facilities, both in the United States and internationally.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Relating to Our Business and Financial Condition ● Pandemic or other public health crises. ● Our dependence on a limited number of products, and disruptions in our ability to sell these products. ● 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. ● Our markets are very competitive, and we sell certain of our products in a mature market. ● We manufacture and store our products at a single facility in Florida. ● Our inability to collect on our accounts receivables held by customers. ● Failure to maintain relationships with integrated delivery healthcare systems and Group Purchasing Organizations. ● Cost-containment efforts of our customers and purchasing groups. ● A failure in our efforts to access and educate clinicians, anesthesiologists, radiologists, and hospital administrators regarding the advantages of our products. ● The lengthy sales cycle for medical devices could delay our sales. ● Our reliance on distributors to sell our products outside of the U.S. ● Successful development and commercialization of enhanced products or new products to remain competitive. ● Our dependency on our founder, Chairman, President and Chief Executive Officer, Roger Susi. 19 Table of Contents ● Failure to attract and retain the talent required for our business. ● Inability to scale our operations or adequately manage generational upgrades to our own products. ● Our engagement in related party transactions. ● Difficulties associated with integrating acquisitions of technologies, products, and businesses. ● Difficulties associated with accurately forecasting our business performance. ● Inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP. ● Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns. ● We are subject to various privacy and consumer protection laws.
Biggest changeRisks Relating to Our Business and Financial Condition ● The strict adherence to regulatory requirements governing medical devices during the manufacturing process and that of suppliers. ● Successful development and commercialization of enhanced products or new products to remain competitive. ● Our dependence on a limited number of products, and disruptions in our ability to sell these products. ● 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. 20 Table of Contents ● Our markets are very competitive, and we sell certain of our products in a mature market. ● We manufacture and store our products at a single facility in Florida. ● Our inability to collect on our accounts receivables from our customers. ● Failure to maintain relationships with Integrated Delivery Networks and Group Purchasing Organizations. ● Cost-containment efforts of our customers and purchasing groups. ● A failure in our efforts to access and educate clinicians, anesthesiologists, radiologists, and hospital administrators regarding the advantages of our products. ● The lengthy sales cycle for medical devices could delay our sales. ● Our reliance on distributors to sell our products outside the U.S. ● Our dependency on our founder, Chairman, President and Chief Executive Officer, Roger Susi. ● Failure to attract and retain the talent required for our business. ● Sufficiency of our internal and external sources of liquidity. ● Inability to scale our operations or adequately manage generational upgrades to our own products. ● Difficulties associated with integrating acquisitions of technologies, products, and businesses. ● Difficulties associated with accurately forecasting our business performance. ● Inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP. ● Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns. ● Our engagement in related party transactions. ● We are subject to various privacy and consumer protection laws.
Our stock could be subject to wide fluctuations in price in response to various factors, including the following: ● a lack of liquidity in the public trading of our common stock; ● the commercial success or failure of our key products; ● delayed or reduced orders from our customers; ● manufacturing or supply interruptions; ● changes or developments in laws or regulations applicable to our products and product candidates; ● introduction of competitive products or technologies; ● poorly executed acquisitions or acquisitions whose projected potential is not realized; ● actual or anticipated variations in quarterly operating results; ● failure to meet or exceed our own estimates and projections or the estimates and projections of securities analysts or investors; ● new or revised earnings estimates or guidance by us or securities analysts or investors; ● varying economic and market conditions in the U.S.; ● negative developments impacting the medical device industry in general and changes in the market valuations of companies deemed similar to us; ● negative developments concerning our sources of manufacturing supply; ● disputes or other developments relating to patents, trademarks or other proprietary rights; ● litigation or investigations involving us, our industry, or both; ● issuances of debt, equity or convertible securities at terms deemed unfavorable by the market; ● major catastrophic events; ● sales of large blocks of our stock; ● changes in our Board of Directors, management or key personnel; or ● the other factors described in this “Risk Factors” section.
Our stock could be subject to wide fluctuations in price in response to various factors, including the following: ● a lack of liquidity in the public trading of our common stock; ● the commercial success or failure of our key products; ● delayed or reduced orders from our customers; ● manufacturing or supply interruptions; ● changes or developments in laws or regulations applicable to our products and product candidates; ● introduction of competitive products or technologies; ● poorly executed acquisitions or acquisitions whose projected potential is not realized; ● actual or anticipated variations in quarterly operating results; 38 Table of Contents ● failure to meet or exceed our own estimates and projections or the estimates and projections of securities analysts or investors; ● new or revised earnings estimates or guidance by us or securities analysts or investors; ● varying economic and market conditions in the U.S.; ● negative developments impacting the medical device industry in general and changes in the market valuations of companies deemed similar to us; ● negative developments concerning our sources of manufacturing supply; ● disputes or other developments relating to patents, trademarks or other proprietary rights; ● litigation or investigations involving us, our industry, or both; ● issuances of debt, equity or convertible securities at terms deemed unfavorable by the market; ● major catastrophic events; ● sales of large blocks of our stock; ● changes in our Board of Directors, management or key personnel; or ● the other factors described in this “Risk Factors” section.
Our products could be rendered obsolete or economically impractical by numerous factors, many of which are beyond our control, including but not limited to: ● entrance of new competitors into our markets; ● technological advancements of MRI scanners; ● 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, integrated delivery healthcare systems, group purchasing organizations, or end-user customers; ● manufacturing or supply interruptions; ● product liability claims; ● our reputation and product market acceptance; ● loss of existing regulatory approvals or the imposition of new requirements to maintain such approvals; and ● product recalls or safety alerts.
Our products could be rendered obsolete or economically impractical by numerous factors, many of which are beyond our control, including but not limited to: ● entrance of new competitors into our markets; ● technological advancements of MRI scanners; ● 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, integrated delivery healthcare systems, group purchasing organizations, distributors, or direct end-user customers; ● manufacturing or supply interruptions; ● product liability claims; ● our reputation and product market acceptance; ● loss of existing regulatory approvals or the imposition of new requirements to maintain such approvals; and ● product recalls or safety alerts.
During the evaluation and testing process, if we identify one or more material weaknesses in our internal controls over financial reporting, we will be unable to assert that our internal controls are effective. We are required to disclose changes made in our internal controls and procedures on a quarterly basis.
During the evaluation and testing process, if we identify one or more material weaknesses in our internal controls over financial reporting, we will be unable to assert that our internal controls are effective. We are required to disclose significant changes made in our internal controls and procedures on a quarterly basis.
Foreign Corrupt Practices Act and similar worldwide anti-bribery laws. ● We and our suppliers and customers are required to obtain regulatory approvals to comply with regulations applicable to medical devices and infusion pumps. ● We and our suppliers and customers are required to maintain compliance with regulations applicable to medical devices and infusion pumps. ● Our operations are subject to environmental laws and regulations.
Foreign Corrupt Practices Act and similar worldwide anti-bribery laws. ● We and our suppliers and customers are required to obtain regulatory approvals and maintain compliance with regulations applicable to medical devices and infusion pumps. ● Our operations are subject to environmental laws and regulations.
The only significant ongoing related party transaction is the lease agreement between our company and Susi, LLC, an affiliate of Roger Susi, with respect to our sole production and headquarters facility in Winter Springs, Florida.
The only significant ongoing related party transaction is the lease agreement between our company and Susi, LLC, an affiliate of Roger Susi, with respect to our current sole production and headquarters facility in Winter Springs, Florida.
Foreign governmental authorities that regulate the manufacture and sale of medical devices have become increasingly stringent and, to the extent we sell our products in foreign countries, we may be subject to rigorous regulation in the future.
Foreign governmental authorities that regulate the manufacture and sale of medical devices have become increasingly stringent and, to the extent we sell our products in foreign countries, we may be subject to more rigorous regulation in the future.
Related party transactions present difficult conflicts of interest, could result in disadvantages to our company, and may impair investor confidence, which could materially and adversely affect us.
Related party transactions that present difficult conflicts of interest, could result in disadvantages to our company, and may impair investor confidence, which could materially and adversely affect us.
Such assumptions and estimates include those related to revenue recognition, accruals for product returns, allowances for doubtful accounts, valuation of inventory, impairment of intangibles and long-lived assets, accounting for leases, accounting for income taxes and stock-based compensation and allowances for uncertainties. These factors are also influenced by regular changes to GAAP, some of which are material to most companies.
Such assumptions and estimates include those related to revenue recognition, accruals for product returns, allowances for doubtful accounts, valuation of inventory, impairment of intangibles and long-lived assets, accounting for leases, accounting for income taxes and stock-based compensation and allowances for uncertainties. These factors are also influenced by regular changes to GAAP, some of which are material to many companies.
In addition, manufacturing flaws, component failures, design defects, off-label uses, or inadequate disclosure of product related information could result in an unsafe condition or the injury or death of a patient. All these events could harm our sales, margins and profitability in the affected periods and may have a material adverse effect on our business.
In addition, manufacturing flaws, component failures, design defects, off-label uses by practitioners, or inadequate disclosure of product related information could result in an unsafe condition or the injury or death of a patient. All these events could harm our sales, margins and profitability in the affected periods and may have a material adverse effect on our business.
Susi, our founder, who serves as our Chairman of the Board of Directors, President and Chief Executive Officer, and his affiliates, beneficially own approximately 43 percent of our outstanding common stock. Mr. Susi may be able to significantly influence matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions, or other extraordinary transactions.
Susi, our founder, who serves as our Chairman of the Board of Directors, President and Chief Executive Officer, and his affiliates, beneficially own approximately 36 percent of our outstanding common stock. Mr. Susi may be able to significantly influence matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions, or other extraordinary transactions.
Any potential intellectual property litigation also could force us to do one or more of the following: ● stop selling, making, or using products that use the disputed intellectual property; ● obtain a license from the intellectual property owner to continue selling, making, licensing, or using products, which license may require substantial royalty payments and may not be available on reasonable terms, or at all; ● pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; ● pay the attorney fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; or 34 Table of Contents ● redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and/or infeasible.
Any potential intellectual property litigation also could force us to do one or more of the following: ● stop selling, making, or using products that use the disputed intellectual property; ● obtain a license from the intellectual property owner to continue selling, making, licensing, or using products, which license may require substantial royalty payments and may not be available on reasonable terms, or at all; ● pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; ● pay the attorney fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; or ● redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and/or infeasible.
Risks Related to Our Industry ● Changes in government regulations could force us to make modifications to how we develop, manufacture, market, and price our products. ● Failure to obtain, or experience significant delays in obtaining, FDA clearances or other necessary approvals to commercially distribute new products. ● Risks associated with doing business outside of the U.S. ● 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. ● Defects or failures associated with our products and/or our quality control systems. ● Our products or product types, or MR imaging could be subject to negative publicity. ● Impact of U.S. healthcare policy and changes thereto. ● Healthcare fraud and abuse regulations potentially result in significant liability, require us to change our business practices and restrict our operations in the future. ● Impact of violations of the U.S.
Risks Related to Our Industry ● Changes in government regulations or U.S. healthcare policy could force us to make modifications to how we develop, manufacture, market, and price our products. ● Failure to obtain, or experience significant delays in obtaining, FDA clearances or other necessary approvals to commercially distribute new products. ● Risks associated with doing business outside of the U.S. ● 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. 21 Table of Contents ● Defects or failures associated with our products and/or our quality control systems. ● Our products or product types, or MR imaging could be subject to negative publicity. ● Healthcare fraud and abuse regulations could potentially result in significant liability, require us to change our business practices and/or restrict our operations in the future. ● Impact of violations of the U.S.
We have also evaluated our exposure to future inflationary risk and concluded that it is not significant based on our current business model, market conditions, and hedging strategies. We have mitigated the impact of inflation on our cost of goods sold by continued operational efficiency.
We have also evaluated our exposure to future inflationary risk and concluded that it is not significant based on our current business model and market conditions. We have mitigated the impact of inflation on our cost of goods sold by continued operational efficiency.
Any major factor adversely affecting the sale of our products or services would cause our revenues to decline and have a material adverse impact on our business, financial condition, and our common stock. We have significant international sales as well as international supply chain links and we face risks related to health epidemics that could adversely affect our revenue.
Any major factor adversely affecting the sale of our products or services would cause our revenues to decline and have a material adverse impact on our business, financial condition, and our common stock. 23 Table of Contents We have significant international sales as well as international supply chain links and we face risks related to health epidemics that could adversely affect our revenue.
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.
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 2014, following adverse action by the FDA or volatility in our stock price, securities class action litigation has been brought against us.
In addition, our products are subject to pre-clearance requirements by the FDA and similar international agencies that govern a wide variety of product activities from design and development to labeling, manufacturing, promotion, sales, and distribution. Compliance with these regulations may be time consuming, burdensome, and expensive for us.
In addition, our products are subject to pre-clearance requirements by the FDA and similar international agencies that govern a wide variety of product activities from design and development to labeling, manufacturing, promotion, sales, and distribution. Compliance with these regulations is time consuming, burdensome, and expensive for us.
Risks Related to Ownership of Our Common Stock ● Significant fluctuations and volatility of our common stock. ● Use of capital to repurchase shares of our common stock. ● Our need or choice to raise additional capital in the future. ● 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, 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. ● Failure to develop and maintain adequate internal controls or to implement new or improved controls. ● Impact of being a public company on our competitive environment and our risk of potential litigation. ● Impact from our involvement in securities class action litigation. ● Impact of securities or industry analysts’ failing to initiate research coverage of our stock, downgrading our stock, or discontinuing coverage. ● Our charter documents and Delaware law have provisions that may discourage an acquisition of us by others and may prevent attempts by our stockholders to replace or remove our current management.
Risks Related to Ownership of Our Common Stock ● Significant fluctuations and volatility of our common stock. ● Use of capital to repurchase shares of our common stock and need or choice to raise additional capital in the future. ● 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 due to his significant minority ownership. ● 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. ● Failure to develop and maintain adequate internal controls or to implement new or improved controls. ● Impact of being a public company on our competitive environment and our risk of potential litigation. ● Impact from our involvement in securities class action litigation, if any. ● Impact of securities or industry analysts’ failing to initiate research coverage of our stock, downgrading our stock, or discontinuing coverage. 22 Table of Contents ● Our charter documents and Delaware law have provisions that may discourage an acquisition of us by others and may prevent attempts by our stockholders to replace or remove our current management.
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.
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 25 Table of Contents actions to reduce costs.
Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions; ● foreign currency fluctuations that can impact our financial statements when foreign denominations are translated into U.S. dollars; ● different local product preferences and product requirements, which might increase with increasing nationalism; 29 Table of Contents ● trade protection and restriction measures under international trade treaties and via tariffs, and import or export licensing requirements; ● difficulty in establishing, staffing and managing non-U.S. operations; ● failure to maintain relationships with distributors, especially those who have assisted with foreign regulatory or government clearances; ● changes in labor, environmental, health and safety laws; ● healthcare crises or epidemics; ● potentially negative consequences from changes in or interpretations of tax laws, including U.S. state and foreign tax jurisdiction responses to recent changes in U.S. 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 Russia’s invasion of Ukraine and Brexit; ● economic instability, inflation, deflation, recession or interest rate fluctuations; ● uncertainties regarding judicial systems and procedures; and ● minimal or diminished protection of intellectual property.
Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions; ● foreign currency fluctuations that can impact our financial statements when foreign denominations are translated into U.S. dollars; 31 Table of Contents ● different local product preferences and product requirements, which might increase with increasing nationalism; ● trade protection and restriction measures under international trade treaties and via tariffs, and import or export licensing requirements; ● difficulty in establishing, staffing and managing non-U.S. operations; ● failure to maintain relationships with distributors, especially those who have assisted with foreign regulatory or government clearances; ● uncertainties regarding judicial systems and procedures, changes in labor, environmental, health and safety laws; ● healthcare crises or epidemics; ● potentially negative consequences from changes in or interpretations of tax laws, including U.S. state and foreign tax jurisdiction responses to recent changes in U.S. federal tax laws; ● political instability and actual or anticipated military or political conflicts, including instability related to war and terrorist attacks, such as Russia’s invasion of Ukraine, and to political matters, such as the U.K.’s Brexit; ● economic instability, inflation, deflation, recession or interest rate fluctuations; ● potential disruption in supply chains; and ● minimal or diminished protection of intellectual property.
In the case of a willful infringement, the definition of which is subjective, such damages may be increased up to three times. An adverse decision 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.
In the case of a willful infringement, the definition of which is subjective, such damages may be increased up to three times. An adverse decision could have a material adverse effect 37 Table of Contents on our business, financial position and results of operations and could cause the market value of our common stock to decline.
Historically, companies that have overstated their operating guidance have suffered significant declines in their stock price when such results are announced to the public. There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP.
Historically, companies that have overstated their operating guidance have suffered significant declines in their stock price when such results are announced to the public. 29 Table of Contents There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP.
The FDA may also issue further warning letters or untitled letters, refuse future requests for 510(k) submission or premarket approval, revoke existing 510(k) clearances or premarket approvals 21 Table of Contents previously granted, impose operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices and assess civil or criminal penalties against our officers, employees, or us.
The FDA may also issue warning letters or untitled letters, refuse future requests for 510(k) submission or premarket approval, revoke existing 510(k) clearances or premarket approvals previously granted, impose operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices and assess civil or criminal penalties against our officers, employees, or us.
We are responsible for obtaining the applicable regulatory approval for the commercial distribution of our products. As part of our strategy, we plan to seek approvals for new MRI compatible products.
We are responsible for obtaining the applicable regulatory approval for the commercial distribution of our products. As part of our strategy, we plan to seek approvals for new or improved MRI compatible products.
We may need to invest in additional resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.
We may need to invest in additional 40 Table of Contents resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.
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. We may not be successful in attracting, integrating, or retaining qualified 26 Table of Contents personnel to meet our current growth plans or future needs.
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. We may not be successful in attracting, integrating, or retaining qualified personnel to meet our current growth plans or future needs.
ITEM 1A. RISK FACTORS We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control.
ITEM 1A. RISK FACTORS We operate in a rapidly changing environment that involves many risks that could materially affect our business, financial condition or future results, and some of which are beyond our control.
As inflationary measures have affected the greater market in 2022, we have considered the effects of inflation on our business operations and financial results. We have assessed that inflation has not had a material impact on our revenues, expenses, assets, liabilities, or cash flows for the current reporting period.
As inflationary measures have affected the greater market in the last two years, we have considered the effects of inflation on our business operations and financial results. We have assessed that inflation has not had a material impact on our revenues, expenses, assets, liabilities, or cash flows for the current reporting period.
Also, to the extent we hire personnel from competitors, we may be subject to allegations that we have improperly solicited, or that they have divulged proprietary or other confidential information, or that their former employers own their inventions or work product. We may be unable to scale our operations successfully.
Also, to the extent we hire personnel from competitors, we may be subject to allegations that we have improperly solicited, or that they have divulged proprietary or other confidential information, or that their former employers own their inventions or work product. 28 Table of Contents We may be unable to scale our operations successfully.
Consequently, we may 24 Table of Contents 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.
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.
Sales to customers outside of the U.S. have historically comprised of approximately 17 percent of our net revenues and we expect that non-U.S. sales will contribute to future growth. A majority of our international sales originate from Europe and Japan, and we also make sales in Canada, Hong Kong, Australia, Mexico and certain parts of the Middle East.
Sales to customers outside of the U.S. have recently been approximately 20 percent of our net revenues and we expect that non-U.S. sales will contribute to future growth. A majority of our international sales originate from Europe and Japan, and we also make sales in Canada, Hong Kong, Australia, Mexico and certain parts of the Middle East.
Our executed agreement with this vendor provides that the price at which we purchase products from the vendor is determined by agreement from time to time or should material costs change.
Our executed agreement with this vendor, which renewed in March 2024, provides that the price at which we purchase products from the vendor is determined by agreement from time to time or should material costs change.
We may be unable to protect our rights in trade secrets and unpatented proprietary technology in these countries. If our trade secrets become known, we may lose our competitive advantages.
We may be unable to protect our rights in 35 Table of Contents trade secrets and unpatented proprietary technology in these countries. If our trade secrets become known, we may lose our competitive advantages.
Management maintains an allowance for potential credit losses. From time to time, we have had, and may in the future have, accounts receivables from one or more customers that accounted for 10 percent or more of our gross accounts receivable. As a result, we may be exposed to a certain level of concentration of credit risk.
From time to time, we have had, and may in the future have, accounts receivables from one or more affiliated customers that accounted for 10 percent or more of our gross accounts receivable. As a result, we may be exposed to a certain level of concentration of credit risk.
We rely on unpatented trade secrets, know-how and technology. This intellectual property is difficult to protect, especially in the medical device industry, where much of the information about a product must be submitted to regulatory authorities during the regulatory approval process.
Our unpatented trade secrets, know-how, confidential and proprietary information, and technology may be inadequately protected. We rely on unpatented trade secrets, know-how and technology. This intellectual property is difficult to protect, especially in the medical device industry, where much of the information about a product must be submitted to regulatory authorities during the clearance process.
Risks Relating to our Intellectual Property ● Protection of our intellectual property. 20 Table of Contents ● Our unpatented trade secrets, know-how, confidential and proprietary information, and technology may be inadequately protected. ● Uncertainties associated with timely patent reviews and approvals. ● We may become involved in patent litigation or other intellectual property proceedings relating to our future product approvals. ● Disclosure of confidential or proprietary information.
Risks Relating to our Intellectual Property ● Protection of our intellectual property. ● Uncertainties associated with timely patent reviews and approvals. ● We may become involved in patent litigation or other intellectual property proceedings relating to our current and future products. ● Disclosure of confidential or proprietary information, unpatented trade secrets, know-how, confidential and proprietary technology.
Our inability to collect on our accounts receivables held by customers may have an adverse effect on our business operations and financial condition. We market our products to end users in the United States and to distributors internationally. Sales to end users in the United States are generally made on open credit terms.
Our inability to collect on our accounts receivables from customers may have an adverse effect on our business operations and financial condition. We market our products to end users in the United States and to 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.
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 recent health pandemic, make it increasingly difficult for us to predict our revenues and earnings into the future.
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, customer behavior, speed of technological, regulatory, and competitive changes, and the recent health pandemic, make it increasingly difficult for us to predict our revenues and earnings into the future.
If the Board of Directors chose to omit a dividend and retained 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.
These capital allocation decisions could have a material adverse effect on our stock price. If the Board of Directors chose to omit a dividend and retained 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.
Future quality concerns, whether real or perceived, could adversely affect our operating results. Our products or product types, or MR imaging could be subject to negative publicity, which could have a material adverse effect on our financial position and results of operations and could cause the market value of our common stock to decline.
Our products or product types, or MR imaging could be subject to negative publicity, which could have a material adverse effect on our financial position and results of operations and could cause the market value of our common stock to decline.
Failure to develop and maintain adequate internal controls or to implement new or improved controls 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.
As a result of being a public company, we are obligated to establish and maintain adequate internal controls. Failure to develop and maintain adequate internal controls or to implement new or improved controls 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.
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. 27 Table of Contents The environment in which we operate makes it 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.
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.
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.
These requirements include, among other things, regulations regarding manufacturing practices, product labeling, off- 32 Table of Contents 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.
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. For example, the FDA conducted routine inspections of our facility in Winter Springs, Florida in June 2019.
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.
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 39 Table of Contents aimed at supporting growth, rather than paying cash dividends.
Among the reasons we may be unable to obtain these raw materials and components include, but are not limited to: ● a supplier’s inability or unwillingness to continue supplying raw materials and/or components; ● regulatory requirements or action by regulatory agencies or others, including changes in international trade treaties and/or tariffs; ● adverse financial or other strategic developments at or affecting the supplier, including bankruptcy; ● unexpected demand for or shortage of raw materials or components; ● failure of the supplier to comply with quality standards which results in quality and product failures, product contamination and/or recall; ● discovery of previously unknown or undetected imperfections in raw materials or components; ● labor disputes or shortages, including from natural disasters and the effects of health emergencies or pandemics; and 23 Table of Contents ● political instability and actual or anticipated military or political conflicts.
Certain of those raw materials and components are proprietary products of those unaffiliated third-party suppliers and are specifically cited in our applications with regulatory agencies so that they must be obtained from that specific sole source or sources and could not be obtained from another supplier unless and until an appropriate application amendment is approved by the regulatory agency. 24 Table of Contents Among the reasons we may be unable to obtain these raw materials and components include, but are not limited to: ● a supplier’s inability or unwillingness to continue supplying raw materials and/or components; ● regulatory requirements or action by regulatory agencies or others, including changes in international trade treaties and/or tariffs; ● adverse financial or other strategic developments at or affecting the supplier, including bankruptcy; ● unexpected demand for or shortage of raw materials or components; ● failure of the supplier to comply with quality standards which results in quality and product failures, product contamination and/or recall; ● discovery of previously unknown or undetected imperfections in raw materials or components; ● labor disputes or shortages, including from natural disasters and the effects of health emergencies or pandemics; and ● political instability and actual or anticipated military or political conflicts.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights. 33 Table of Contents Our unpatented trade secrets, know-how, confidential and proprietary information, and technology may be inadequately protected.
An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights.
Because we rely on distributors to sell our products outside of the U.S., our revenues could decline if our existing distributors do not continue to purchase products from us or if our relationship with any of these distributors is terminated.
These delays could have an adverse effect on our business, financial condition, and results of operations. 27 Table of Contents Because we rely on distributors to sell our products outside of the U.S., our revenues could decline if our existing distributors do not continue to purchase products from us or if our relationship with any of these distributors is terminated.
Any one of the factors above, or the cumulative effect of some of the factors referred to above, may result in significant fluctuations in our quarterly or annual operating results, fluctuations in our share price and investors’ perception of our business.
Any one of the factors above, or the cumulative effect of some of the factors referred to above, may result in significant fluctuations in our quarterly or annual operating results, fluctuations in our share price and investors’ perception of our business. If we fail to meet or exceed such expectations, our business and stock price could be materially adversely affected.
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. 22 Table of Contents 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.
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.
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.
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.
If lawsuits prevail against us, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results. 38 Table of Contents We may and have become involved in securities class action litigation that could divert management’s attention from our business and adversely affect our business and could subject us to significant liabilities.
If lawsuits prevail against us, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.
We pay the GPOs an administrative fee in the form of a percentage of the volume of products sold to their affiliated hospitals and other members. If we are not an approved provider selected by a GPO, affiliated hospitals and other members may be less likely to purchase our products.
If we are not an approved provider selected by a GPO, affiliated hospitals and other members may be less likely to purchase our products.
If we are unable to respond to and manage changing business conditions, or the scale of our products, services, and operations, then the quality of our services, our ability to retain key personnel and our business could be harmed. In February 2023, we purchased 26 acres of land in which we plan to build an expanded facility to increase capacity.
If we are unable to respond to and manage changing business conditions, or the scale of our products, services, and operations, then the quality of our services, our ability to retain key personnel and our business could be harmed.
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. We and our customers are subject to various U.S. federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claims laws.
We and our customers are subject to various U.S. federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claims laws.
In addition, new requirements could result in longer delays for the clearance of new products, modification of existing infusion pump products or remediation of existing products in the market. Future delays in the receipt of, or failure to obtain, approvals could result in delayed or no realization of product revenues.
In addition, new requirements could result in longer delays for the clearance of new products, modification of existing infusion pump products or remediation of existing products in the market.
This concentration of ownership may have the effect of promoting, delaying or deterring a change of control of our company. 37 Table of Contents 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.
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.
Many of the component parts of our products are obtained through supply agreements with third parties. Some of these parts require our partners to engage in complex manufacturing processes and involve long lead times or delivery periods.
Some of these parts require our partners to engage in complex manufacturing processes and involve long lead times or delivery periods.
Accordingly, our success will be dependent on appropriately managing the risks related to maintaining his continued services. If we fail to attract and retain the talent required for our business, our business could be materially harmed. Competition for highly skilled personnel is often intense in the medical device industry, including in the MRI compatible medical device segment.
Accordingly, our success will be dependent on appropriately managing the risks related to maintaining his continued services, including having a succession plan. If we fail to attract and retain the talent required for our business, our business could be materially harmed.
If securities or industry analysts do not commence or continue coverage of our company, the trading market for our stock may not be robust and the price of our stock could likely be negatively impacted. In the event securities or industry analysts initiate coverage, and later downgrade our stock or discontinue such coverage, our stock price could decline.
The trading market for our common stock depends, in part, on the research reports that securities or industry analysts publish about our business. If securities or industry analysts do not commence or continue coverage of our company, the trading market for our stock may not be robust and the price of our stock could likely be negatively impacted.
If we fail to meet or exceed such expectations, our business and stock price could be materially adversely affected. 36 Table of Contents 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.
Any use of capital to repurchase shares of our common stock, or the election to continue to pay a regular cash dividend, could have a material adverse effect on our stock price and our business.
Our charter documents and Delaware law have provisions that may discourage an acquisition of us by others and may prevent attempts by our stockholders to replace or remove our current management.
In the event securities or industry analysts initiate coverage, and later downgrade our stock or discontinue such coverage, our stock price could decline. Our charter documents and Delaware law have provisions that may discourage an acquisition of us by others and may prevent attempts by our stockholders to replace or remove our current management.
Many existing and potential customers for our products are members of GPOs. GPOs negotiate pricing arrangements and contracts, which are sometimes exclusive, with medical supply manufacturers and distributors, and these negotiated prices are made available to a GPO’s affiliated hospitals and other members.
GPOs negotiate pricing arrangements and contracts, which are sometimes exclusive, with medical supply manufacturers and distributors, and these negotiated prices are made available to a GPO’s affiliated hospitals and other members. We pay the GPOs an administrative fee in the form of a percentage of the volume of products sold to their affiliated hospitals and other members.
Defects or failures associated with our products and/or our quality control systems could lead to the filing of adverse event reports, recalls or safety alerts and negative publicity and could subject us to regulatory actions.
In addition, we may not be able to obtain insurance in the future on terms acceptable to us or at all. 32 Table of Contents Defects or failures associated with our products and/or our quality control systems could lead to the filing of adverse event reports, recalls or safety alerts and negative publicity and could subject us to regulatory actions.
He may also have interests that differ from yours and may vote in a way with which you disagree, and which may be adverse to your interests.
He may also have interests that differ from yours and may vote in a way with which you disagree, and which may be adverse to your interests. This concentration of ownership may have the effect of promoting, delaying or deterring a change of control of our company.
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 integrated delivery healthcare systems and Group Purchasing Organizations (“GPOs”).
Our ability to sell our products to U.S. hospitals, acute care facilities and outpatient imaging centers depends in part on our relationships with Integrated Delivery Networks and Group Purchasing Organizations (“GPOs”). Many existing and potential customers for our products are members of GPOs.
Stock repurchases now are burdened with a Federal excise tax which diminishes their attraction to deliver returns to shareholders. In February 2023, our Board of Directors declared and paid a special cash dividend of $1.05 per common share, which reduced our cash balance by approximately $13.2 million.
Stock repurchases now are burdened with a Federal excise tax which diminishes their attraction to deliver returns to shareholders. In December 2023, our Board of Directors declared a special cash dividend of $0.48 per share and the initiation of a regular quarterly dividend of $0.15 per share.
If we fail to successfully commercialize our products due to the lack of intellectual property protection, we may be unable to generate sufficient revenues to meet or grow our business according to our expected goals and this may have a materially adverse effect on our profitability, financial condition, and operations.
If we fail to successfully commercialize our products due to the lack of intellectual property protection, we may be unable to generate sufficient revenues to meet or grow our business according to our expected goals and this may have a materially adverse effect on our profitability, financial condition, and operations. 36 Table of Contents We may become involved in patent litigation or other intellectual property proceedings relating to our current and future product clearances, which could result in liability for damages or delay or stop our development and commercialization efforts.
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 MR procedures and hence also for our products and related services and reduce our revenue.
To avoid future product recalls we have made and continue to invest in our quality systems, processes, and procedures. We will continue to make improvements to our products and systems to further reduce issues related to patient safety. However, there can be no assurance our efforts or systems will be sufficient.
We will continue to make improvements to our products and systems to further reduce issues related to patient safety. However, there can be no assurance our efforts or systems will be sufficient. Future quality concerns, whether real or perceived, could adversely affect our operating results.
These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers. As a result of being a public company, we are obligated to establish and maintain adequate internal controls.
These factors could also make it more difficult for us to attract and retain qualified executive officers and qualified members of our Board of Directors, particularly to serve on the Board of Directors’ audit committee (the “Audit Committee”) and compensation committee (the “Compensation Committee”).
Such time would delay potential sales of additional units and disposable products or additional optional accessories to that medical facility or hospital. These delays could have an adverse effect on our business, financial condition, and results of operations.
Such time would delay potential sales of additional units and disposable products or additional optional accessories to that medical facility or hospital.
A breach of our network security 28 Table of Contents and systems could have negative consequences for our business and future prospects, including possible fines, penalties and damages, reduced customer demand for our products, and harm to our reputation and brand.
A breach of our network security and systems could have negative consequences for our business and future prospects, including possible fines, penalties and damages, reduced customer demand for our products, and harm to our reputation and brand. 30 Table of Contents Risks Related to Our Industry We are subject to substantial government regulation that is subject to change and could force us to make modifications to how we develop, manufacture, market, and price our products.
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, the recent health pandemic has and may continue to cause delays in payments from customers, which may adversely impact our future results of operations and liquidity.
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, changes to reimbursement policies by third-party payors could also decrease demand for our products and related services and reduce our revenue. 25 Table of Contents Any failure in our efforts to access and educate clinicians, anesthesiologists, radiologists, and hospital administrators regarding the advantages of our products could significantly limit our product sales.
Any failure in our efforts to access and educate clinicians, anesthesiologists, radiologists, and hospital administrators regarding the advantages of our products could significantly limit our product sales.
Risk Factors Summary The following is a summary of the risk factors that could materially affect our business, financial condition, or future results, all of which are more fully described below.
In evaluating the Company and its business, you should carefully consider the information included under Part I, Item 1A “Risk Factors” in this Annual Report. Risk Factors Summary The following is a summary of the risk factors that could materially affect our business, financial condition, or future results, all of which are more fully described below.
In some circumstances, adverse events arising from or associated with the design, manufacture or marketing of our products could result in the suspension or delay of regulatory reviews of our applications for new product approvals or clearances. 30 Table of Contents We may also voluntarily undertake a recall of our products or temporarily shut down production lines based on internal safety, quality monitoring and testing data.
In some circumstances, adverse events arising from or associated with the design, manufacture or marketing of our products could result in the suspension or delay of regulatory reviews of our applications for new product approvals or clearances.
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.
Future delays in the receipt of, or failure to obtain, approvals could result in delayed or no realization of product revenues. 34 Table of Contents 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.
Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require us to make significant payments. Such payment could have a material impact on how investors view our company and result in a decline in our stock price.
Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require us to make significant payments.
The stock markets have from time-to-time experienced significant price and volume fluctuations that have affected the market prices of small capitalization medical device companies.
We may and have become involved in securities class action litigation that could divert management’s attention from our business and adversely affect our business and could subject us to significant liabilities. The stock markets have from time-to-time experienced significant price and volume fluctuations that have affected the market prices of small capitalization medical device companies.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePursuant to the terms of the Reinstatement, the parties consummated the sale of approximately 26.518 acres of land to the Company for a purchase price of $6,200,000. The property was acquired as a site for future office, assembly and warehouse/shipping space to accommodate our increased operations and anticipated growth.
Biggest changeThe property was acquired as a site for future office, assembly and warehouse/shipping space to accommodate our increased operations and anticipated growth. In February 2023, we entered into two, two-year, non-cancelable operating leases for approximately 5,400 square feet of additional office space in Winter Springs, Florida. Pursuant to the lease terms the total monthly base rent is $10,055.
Unless advance written notice of termination is timely provided, the lease will automatically renew for one additional successive term of five 39 Table of Contents years beginning in 2024, and thereafter will be renewed for successive terms of one year each.
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.
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.
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 43 Table of Contents additional five years, resulting in a new lease expiration date of May 31, 2024.
On February 2, 2023, the Company entered into a reinstatement and amendment to the previously announced sale and purchase agreement with O Property, Ltd., a Florida limited partnership dated as of November 1, 2022, pursuant to which the parties agreed to consummate a sale of real property located in Orange County, Florida.
Pursuant to a reinstatement and amendment, dated February 2, 2023, to the previously announced sale and purchase agreement with O Property, Ltd., a Florida limited partnership, and the Company, dated November 1, 2022, the parties consummated the sale of approximately 26.518 acres of land located in Orange County, Florida to the Company for a purchase price of $6,200,000.
Added
For the twelve months ended December 31, 2023 and 2022, the Company paid $110,605 and $0 respectively. Under the terms of the lease, we are responsible for insurance and maintenance expenses. Pursuant to the contract terms, the leases will expire February 2025 and do not contain any residual value guarantee or material restrictive covenants.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we are involved in legal proceedings arising in the ordinary course of business. We believe that adequate reserves for these liabilities have been made and that there is no litigation pending that could have a material adverse effect on our liquidity, access to capital markets or ability to conduct our daily operations.
Biggest changeWhile many of these matters involve inherent uncertainty as of the date hereof, we do not currently believe that any such legal proceedings will have a material adverse effect on our business, financial position, results of operations or liquidity. We also believe that adequate reserves for these liabilities have been made. ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 40 Table of Contents PART II
MINE SAFETY DISCLOSURES Not applicable. ​ 44 Table of Contents PART II
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ITEM 3. LEGAL PROCEEDINGS From time to time, we are involved in legal proceedings arising in the ordinary course of business, including proceedings for which we may not have insurance coverage.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer The following table provides information regarding repurchases of common stock for the year ended December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number Maximum ​ ​ ​ ​ ​ ​ ​ of Shares ​ Dollar Value of ​ ​ ​ ​ ​ ​ ​ Purchased as ​ Shares that ​ ​ Total ​ ​ ​ ​ Part of ​ May Yet ​ ​ Number of ​ ​ ​ ​ Publicly ​ Be Purchased ​ ​ Shares ​ Average Price ​ Announced ​ Under the ​ ​ Purchased ​ Paid per Share ​ Plans or ​ Plans or ​ ​ (1) ​ (2) ​ Programs ​ Programs January 1, 2022—January 31, 2022 1,095 ​ $ — — ​ $ — February 1, 2022—February 28, 2022 48 ​ $ — — ​ $ — March 1, 2022—March 31, 2022 458 ​ $ — — ​ $ — April 1, 2022—April 30, 2022 47 ​ $ — — ​ $ — May 1, 2022—May 31, 2022 75 ​ $ — — ​ $ — June 1, 2022—June 30, 2022 41 ​ $ — — ​ $ — July 1, 2022—July 31, 2022 567 ​ $ — — ​ $ — August 1, 2022—August 31, 2022 16 ​ $ — — ​ $ — September 1, 2022—September 30,2022 52 ​ $ — — ​ $ — October 1, 2022—October 31, 2022 333 ​ $ — — ​ $ — November 1, 2022—November 30, 2022 — ​ $ — — ​ $ — December 1, 2022—December 31, 2022 6,612 ​ $ — — ​ $ — Total 9,344 ​ $ — — ​ $ — (1) The number of shares purchased reflects shares withheld for taxes on vesting of restricted stock.
Biggest changePurchases of Equity Securities by the Issuer The following table provides information regarding repurchases of common stock for the year ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number Maximum ​ ​ ​ ​ ​ ​ ​ of Shares ​ Dollar Value of ​ ​ ​ ​ ​ ​ ​ Purchased as ​ Shares that ​ ​ Total ​ ​ ​ ​ Part of ​ May Yet ​ ​ Number of ​ ​ ​ ​ Publicly ​ Be Purchased ​ ​ Shares ​ Average Price ​ Announced ​ Under the ​ ​ Purchased ​ Paid per Share ​ Plans or ​ Plans or ​ (1) (2) Programs Programs January 1, 2023—January 31, 2023 898 $ — — $ — February 1, 2023—February 28, 2023 48 $ — — $ — March 1, 2023—March 31, 2023 469 $ — — $ — April 1, 2023—April 30, 2023 23 $ — — $ — May 1, 2023—May 31, 2023 524 $ — — $ — June 1, 2023—June 30, 2023 1,502 $ — — $ — July 1, 2023—July 31, 2023 588 $ — — $ — August 1, 2023—August 31, 2023 17 $ — — $ — September 1, 2023—September 30, 2023 66 $ — — $ — October 1, 2023—October 31, 2023 338 $ — — $ — November 1, 2023—November 30, 2023 — $ — — $ — December 1, 2023—December 31, 2023 10,004 $ — — $ — Total 14,477 $ — — $ — (1) The number of shares purchased reflects shares withheld for taxes on vesting of restricted stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Common Stock Our common stock has been publicly traded on the Nasdaq Capital Market under the stock symbol “IRMD” since July 16, 2014. Prior to that date, there was no public market for our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Common Stock Our common stock has been publicly traded on Nasdaq under the stock symbol “IRMD” since July 16, 2014. Prior to that date, there was no public market for our common stock.
Factors such as the following (and others) could have a significant adverse impact on the market price of our common stock: ● Our financial position and results of operations; ● Our ability, if needed, to obtain additional financing and, if available, the terms and conditions of the financing; ● Concern as to, or other evidence of, the reliability and efficiency of our proposed products or our competitors’ products; ● Announcements of innovations or new products by us or our competitors; ● Federal, state, and international governmental regulatory actions and the impact of such requirements on our business; ● The development of litigation against us; ● Period-to-period fluctuations in our operating results; ● Changes in estimates of our performance by any securities analysts; ● The issuance of new equity securities pursuant to a future offering or acquisition; ● Poorly executed acquisitions or acquisitions whose projected potential is not realized; ● Changes in interest rates; ● Competitive developments, including announcements by competitors of new products or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; ● Sales of large blocks of our stock; ● Investor perceptions of our company; and ● General economic and other national and international conditions.
Factors such as the following (and others) could have a significant adverse impact on the market price of our common stock: ● Our financial position and results of operations; ● Our ability, if needed, to obtain additional financing and, if available, the terms and conditions of the financing; ● Concern as to, or other evidence of, the reliability and efficiency of our proposed products or our competitors’ products; ● Announcements of innovations or new products by us or our competitors; ● Federal, state, and international governmental regulatory actions and the impact of such requirements on our business; ● The development of litigation against us; ● Period-to-period fluctuations in our operating results; ● Changes in estimates of our performance by any securities analysts; ● The issuance of new equity securities pursuant to a future offering or acquisition; ● Poorly executed acquisitions or acquisitions whose projected potential is not realized; ● Changes in interest rates; ● Competitive developments, including announcements by competitors of new products or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; ● Sales of large blocks of our stock; ● Investor perceptions of our company; and ● General economic and other national and international conditions. 45 Table of Contents Stockholders As of February 29, 2024, we had 3 stockholders of record.
There were no shares repurchased pursuant to the open market repurchase authorization. (2) The average price paid per share does not include the withheld shares discussed in (1). Transfer Agent The transfer agent and registrar for our common stock is Broadridge Financial Solutions, Inc.
There were no shares repurchased pursuant to the open market repurchase authorization. (2) The average price paid per share does not include the withheld shares discussed in (1). 46 Table of Contents Transfer Agent The transfer agent and registrar for our common stock is Broadridge Financial Solutions, Inc.
The following graph shows a comparison, from December 31, 2017 through December 31, 2022, of cumulative total return for our common stock, the Russell 2000 Index and the Nasdaq Medical Equipment Index. Such returns are based on historical results and are not intended to suggest future performance.
The following graph shows a comparison, from December 31, 2018 through December 31, 2023, of cumulative total return for our common stock, the Russell 2000 Index and the Nasdaq Medical Equipment Index. Such returns are based on historical results and are not intended to suggest future performance.
Data for the Russell 2000 Index and the Nasdaq Medical Equipment Index assumes reinvestment of dividends. ​ ​ 43 Table of Contents ITEM 6. [RESERVED] ​ ​
Data for the Russell 2000 Index and the Nasdaq Medical Equipment Index assumes reinvestment of dividends. ​ ITEM 6. [RESERVED] ​ 47 Table of Contents
Stock Performance Graph The following information of Part II Item 5 is being furnished and shall not be deemed to be “soliciting material” or to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such information by reference thereto.
Equity Compensation Plan Information The information required by this item regarding our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report Stock Performance Graph The following information of Part II Item 5 is being furnished and shall not be deemed to be “soliciting material” or to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such information by reference thereto.
This number is significantly less than and does not include “street name” or beneficial holders, whose shares are held by banks, brokers, financial institutions and other nominees. 41 Table of Contents Dividends On February 2, 2023, the Board of Directors declared a special cash dividend of $1.05 per share on the Company’s common stock, paid on February 21, 2023 to shareholders of record at the close of business on February 13, 2023.
This number is significantly less than and does not include “street name” or beneficial holders, whose shares are held by banks, brokers, financial institutions and other nominees. Dividends On February 2, 2023, the Board of Directors declared a special cash dividend of $1.05 per share on the Company’s common stock.
The decision on whether to pay cash dividends on our common stock in the future will be made by our board of directors, at its discretion, and will depend on our financial condition, operating results, capital requirements and other factors that the board of directors considers significant. Unregistered Sales of Securities; Use of Proceeds from Registered Securities None.
The special cash dividend and the quarterly dividend are payable on January 12, 2024, to shareholders of record at the close of business on December 18, 2023. ​ The decision on whether to pay cash dividends on our common stock in the future will be made by our Board of Directors, at its discretion, and will depend on our financial condition, operating results, capital requirements and other factors that the board of directors considers significant. ​ Unregistered Sales of Securities; Use of Proceeds from Registered Securities None.
Removed
Stockholders As of February 28, 2023, we had 3 stockholders of record.
Added
On February 21, 2023, we paid $13,222,907, to shareholders of record at the close of business on February 13, 2023. On December 12, 2023, the Board of Directors declared a special cash dividend of $0.48 per share and the initiation of a regular quarterly dividend on the Company's outstanding common stock. The regular quarterly dividend is $0.15 per share.
Removed
Equity Compensation Plan Information Our equity compensation plan information is provided as set forth in Part III, Item 11 herein. 42 Table of Contents Additional Information Copies of our annual reports, quarterly reports, current reports, and any amendments to those reports, are available free of charge on the Internet at www.sec.gov.
Removed
All statements made in any of our filings, including all forward-looking statements, are made as of the date of the document, in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur historical operating results are not necessarily indicative of the results for any future period. ​ ​ ​ ​ ​ ​ ​ ​ Percent of Revenue ​ ​ Years Ended December 31, ​ ​ 2022 2021 ​ Revenue 100.0 % 100.0 % Cost of revenue 22.6 23.4 Gross profit 77.4 76.6 Operating expenses: ​ ​ General and administrative 20.1 23.4 Sales and marketing 23.8 25.2 Research and development 4.3 4.6 Total operating expenses 48.2 53.2 Income from operations 29.3 23.5 Other income, net 1.0 0.0 Income before provision for income taxes 30.3 23.5 Provision for income tax expense 6.3 1.2 Net income 24.0 % 22.3 % ​ Comparison of the Years Ended December 31, 2022 and 2021 Revenue by Geographic Region ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ (In millions, except percent change) 2022 2021 Change United States ​ $ 43.9 ​ $ 33.5 ​ 31.0 % International ​ 9.4 ​ 8.3 13.3 ​ Total revenue ​ $ 53.3 ​ $ 41.8 27.5 % ​ 46 Table of Contents Revenue by Type ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ (In millions, except percent change) 2022 2021 Change Devices: ​ ​ ​ ​ ​ ​ ​ ​ ​ MRI compatible IV infusion pump system ​ $ 14.5 ​ $ 13.3 9.0 % MRI compatible patient vital signs monitoring system ​ 21.7 ​ 13.8 57.2 ​ Ferro Magnetic Detection Systems ​ ​ 0.3 ​ ​ — ​ N/A ​ Total Devices revenue ​ 36.5 ​ 27.1 34.7 ​ Disposables, service and other ​ 14.6 ​ 12.8 14.1 ​ Amortization of extended warranty agreements ​ 2.2 ​ 1.9 15.8 ​ Total revenue ​ $ 53.3 ​ $ 41.8 27.5 % ​ Revenue increased $11.5 million, or 27.5 percent, to $53.3 million from $41.8 million for the same period in 2021.
Biggest changeOur historical operating results are not necessarily indicative of the results for any future period. ​ ​ ​ ​ ​ ​ ​ ​ Percent of Revenue ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 2022 Revenue ​ 100.0 % 100.0 % Cost of revenue ​ 23.5 22.6 ​ Gross profit ​ 76.5 77.4 ​ Operating expenses: ​ ​ ​ ​ General and administrative ​ 23.1 20.1 ​ Sales and marketing ​ 18.5 23.8 ​ Research and development ​ 4.4 4.3 ​ Total operating expenses ​ 46.0 48.2 ​ Income from operations ​ 30.5 29.3 ​ Other income, net ​ 2.6 1.0 ​ Income before provision for income taxes ​ 33.1 30.3 ​ Provision for income tax expense ​ 6.9 6.3 ​ Net income ​ 26.2 % 24.0 % ​ Comparison of the Years Ended December 31, 2023 and 2022 Revenue by Geographic Region ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 2022 ​ ​ ​ United States ​ $ 52,525,449 ​ $ 43,898,735 International ​ 13,036,847 ​ 9,404,410 Total revenue ​ $ 65,562,296 ​ $ 53,303,145 ​ 50 Table of Contents Revenue by Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 2022 ​ ​ ​ Devices: ​ ​ ​ MRI Compatible IV Infusion Pump Systems ​ $ 19,611,128 ​ $ 14,526,017 MRI Compatible Patient Vital Signs Monitoring Systems ​ 25,414,537 ​ 21,721,720 Ferro Magnetic Detection Systems ​ 944,793 ​ 257,112 Total Devices revenue ​ 45,970,458 ​ 36,504,849 Disposables, services and other ​ 17,578,366 ​ 14,622,327 Amortization of extended warranty agreements ​ 2,013,472 ​ 2,175,969 Total revenue ​ $ 65,562,296 ​ $ 53,303,145 ​ Revenue increased $12.3 million, or 23.0 percent, to $65.6 million from $53.3 million for the same period in 2022.
We believe our sources of liquidity, including cash flow from operations, existing cash, investments, and available financing sources will be sufficient to meet our projected cash requirements for at least the next 12 months from the date the financial statements are issued.
We believe our sources of liquidity, including cash flow from operations, existing cash, and available financing sources will be sufficient to meet our projected cash requirements for at least the next 12 months from the date the financial statements are issued.
We allocate the transaction price using the relative standalone selling price method. 45 Table of Contents 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.
We allocate the transaction price using the relative standalone selling price method. 49 Table of Contents 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.
From time to time, we may explore additional financing sources to meet our working capital requirements, make continued investment in research and development, expand our business and acquire products or businesses that complement our current business. These actions would likely affect our future capital requirements and the adequacy of our available funds.
From time to time, we may explore additional financing sources to meet our working capital requirements, make continued investment in research and development, expand our business and acquire products or businesses that complement our current business. These actions would likely affect our future capital 53 Table of Contents requirements and the adequacy of our available funds.
The principal customers for our MRI compatible products include hospitals and acute care facilities, both in the United States and internationally. As of December 31, 2022, our direct U.S. sales force consisted of 25 field sales representatives, 3 regional sales directors and supplemented by 5 clinical application specialists. Internationally, we have distribution agreements with independent distributors selling our products.
The principal customers for our MRI compatible products include hospitals and acute care facilities, both in the United States and internationally. As of December 31, 2023, our direct U.S. sales force consisted of 25 field sales representatives, 3 regional sales directors and supplemented by 7 clinical application specialists. Internationally, we have distribution agreements with independent distributors selling our products.
This increase is primarily due to higher expenses for legal and professional costs, regulatory approval and certification costs, and payroll and employee benefits costs. These increases are a direct result of the continuous growth of the company and need for additional resources.
This increase is primarily due to higher expenses for legal and professional costs, regulatory approval and consulting costs, and payroll and employee benefits costs. These increases are a direct result of the continuous growth of the Company and need for additional support resources.
Our future liquidity and capital requirements will depend on numerous factors, including the: ● Amount and timing of revenue and expenses; ● Extent to which our existing and new products gain market acceptance; 49 Table of Contents ● Extent to which we make acquisitions; ● Cost and timing of product development efforts and the success of these development efforts; ● Cost and timing of selling and marketing activities; and ● Availability of borrowings or other means of financing. ​
Our future liquidity and capital requirements will depend on numerous factors, including the: ● Amount and timing of revenue and expenses; ● Dividend policy; ● Extent to which our existing and new products gain market acceptance; ● Extent to which we make acquisitions; ● Cost and timing of product development efforts and the success of these development efforts; ● Cost and timing of selling and marketing activities; and ● Availability of borrowings or other means of financing.
Income Taxes We recorded a provision for income tax expense of approximately $3.4 million for the year ended December 31, 2022, compared to a tax expense of approximately $0.5 million for the year ended December 31, 2021.
Income Taxes We recorded a provision for income tax expense of approximately $4.5 million for the year ended December 31, 2023, compared to a tax expense of approximately $3.4 million for the year ended December 31, 2022.
Actual results could differ from those estimates. Our significant accounting policies are more fully described in Note 1 to the Financial Statements. However, we believe that the following critical accounting policies require the use of significant estimates, assumptions and judgments.
Our significant accounting policies are more fully described in Note 1 to the Financial Statements. However, we believe that the following critical accounting policies require the use of significant estimates, assumptions and judgments.
Domestic sales accounted for 82.4 percent of total revenue for the year ended December 31, 2022, compared to 80.0 percent for the same period in 2021. Revenue from sales of devices increased $9.4 million, or 34.7 percent, to $36.5 million from $27.1 million for the same period in 2021.
Domestic sales accounted for 80.1 percent of total revenue for the year ended December 31, 2023, compared to 82.4 percent for the same period in 2022. Revenue from sales of devices increased $9.5 million, or 25.9 percent, to $46.0 million from $36.5 million for the same period in 2022.
In the U.S. 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 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”).
In the U.S. 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 many domestic sales, we enter into agreements with IDN systems and healthcare supply contracting companies, commonly referred to as GPOs.
Our effective tax rate for the year ended December 31, 2022 was 20.7 percent compared to 5.2 percent for the same period in 2021.
Our effective tax rate for the year ended December 31, 2023 was 20.8 percent compared to 20.7 percent for the same period in 2022.
During 2022, cash provided by financing activities was related to a cash payment for a dividend, proceeds from the exercise of stock options, offset by taxes paid for the net share settlement of restricted stock units. Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses.
During 2023, cash used in financing activities was related to a cash payment for a dividend and taxes paid for the net share settlement of restricted stock units. Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses.
Investing Activities For the year ended December 31, 2022, cash related to investing activities decreased $2.0 million to a use of $1.4 million, from $0.6 million provided in 2021. During 2022, cash related to investing activities was impacted by maturities of investments, purchases of property and equipment, and capitalized intangible assets.
During 2022, cash related to investing activities was impacted by maturities of investments, purchases of property and equipment, and capitalized intangible assets. Financing Activities For the year ended December 31, 2023, cash related to financing activities decreased $1.0 million to a use of $13.7 million, from $12.7 million used in 2022.
Revenue from the amortization of our extended warranty agreements increased $0.3 million, or 15.8%, to $2.2 million from $1.9 million for the same period in 2021. The increase in ancillary product sales aligns with the increased sales of our devices.
Revenue from the amortization of our extended warranty agreements decreased $0.2 million, or 7.5%, to $2.0 million from $2.2 million for the same period in 2022. The increase in ancillary product sales aligns with the increased sales of our devices.
Our diluted earnings per share was $1.02 in 2022, and $0.74 in 2021. Our cash provided by operations was $10.0 million in 2022, and $11.3 million in 2021.
Our diluted earnings per share was $1.35 in 2023, and $1.02 in 2022. Our cash provided by operations was $13.5 million in 2023, and $10.0 million in 2022.
Revenue from sales in the U.S. increased $10.4 million, or 31.0 percent, to $43.9 million from $33.5 million for the same period in 2021. Revenue from sales internationally increased $1.1 million, or 13.3 percent, to $9.4 million from $8.3 million for the same period in 2021.
Revenue from sales in the U.S. increased $8.6 million, or 19.7 percent, to $52.5 million from $43.9 million for the same period in 2022. Revenue from sales internationally increased $3.6 million, or 38.6 percent, to $13.0 million from $9.4 million for the same period in 2022.
Sales and Marketing Sales and marketing expense increased approximately $2.1 million, or 19.8 percent, to $12.7 million for the year ended December 31, 2022, from $10.6 million for the same period in 2021. This increase is primarily the result of higher expenses for sales commissions, sales activities and software costs, partially offset by lower expenses for payroll and benefits.
Sales and Marketing Sales and marketing expenses decreased approximately $0.6 million, or 4.3 percent, to $12.1 million for the year ended December 31, 2023, from $12.7 million for the same period in 2022. This decrease is primarily the result of lower expenses for sales commissions, partially offset by higher expenses for payroll and benefits.
The increase in gross profit margin is the result of favorable overhead variance adjustments and higher average selling prices in 2022 compared to 2021, offset by increased raw material costs due to inflation.
Gross profit margin was 76.5 percent and 77.4 percent for the years ended December 31, 2023 and 2022, respectively. The increase in gross profit margin is the result of favorable overhead variance adjustments and higher average selling prices in 2023 compared to 2022, offset by increased raw material costs due to inflation.
Selling cycles for our devices have varied widely and have historically ranged between three and six months in duration with more recent trends lengthening beyond this historical range due to lingering pandemic issues. We also enter into agreements with integrated delivery health systems and healthcare supply contracting companies in the U.S.
Selling cycles for our devices have varied widely and have historically ranged between three and six months in duration with more recent trends lengthening beyond this historical range due to lingering pandemic issues.
We reported other income of approximately $550 thousand and $19 thousand for the years ended December 31, 2022 and 2021, respectively. This increase is primarily the result of higher interest income during the year ended December 31, 2022 compared to the same period in 2021.
This increase is primarily the result of higher interest income during the year ended December 31, 2023 compared to the same period in 2022.
Critical Accounting Policies and Estimates We prepare our financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires us to make estimates and use assumptions that affect the reported amounts of assets, liabilities and related disclosures at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
The preparation of these financial statements requires us to make estimates and use assumptions that affect the reported amounts of assets, liabilities and related disclosures at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
This increase was the result of higher overall unit sales especially related to our patient vital signs monitoring systems. Revenue from sales of our disposables, service and other increased $1.8 million, or 14.1 percent, to $14.6 million from $12.8 million for the same period in 2021.
This increase was the result of higher overall unit sales, particularly our IV infusion pump systems. Revenue from sales of our disposables, service and other increased $3.0 million, or 20.2 percent, to $17.6 million from $14.6 million for the same period in 2022.
During 2022, cash provided by operations was positively impacted by higher net income, prepaid expenses, accounts payable, and prepaid income taxes. Cash provided by operations was negatively impacted by net accounts receivable and accrued payroll and benefits.
During 2023, cash provided by operations was positively impacted by higher net income, accounts receivable, stock compensation, and deferred revenue. Cash provided by operations was negatively impacted by inventory, accounts payable, and deferred income taxes.
Liquidity and Capital Resources Our principal sources of liquidity have historically been our cash and cash equivalents balances, our investments, cash flow from operations and access to the financial markets.
The increase in our effective tax rate is primarily the result of higher book income before the provision for income taxes. 52 Table of Contents Liquidity and Capital Resources Our principal sources of liquidity have historically been our cash and cash equivalents balances, our investments, cash flow from operations and access to the financial markets.
Cost of Revenue and Gross Profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ (In millions, except gross profit percentage) 2022 2021 Revenue ​ $ 53.3 ​ $ 41.8 ​ Cost of revenue ​ 12.0 ​ 9.8 ​ Gross profit ​ $ 41.3 ​ $ 32.0 ​ Gross profit percentage ​ 77.5 % 76.6 % ​ Cost of revenue increased approximately $2.2 million, or 22.4 percent, to $12.0 million for the year ended December 31, 2022, from $9.8 million for the same period in 2021.
Cost of Revenue and Gross Profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ Years Ended December 31, ​ ​ ​ 2023 2022 Revenue ​ ​ $ 65,562,296 ​ $ 53,303,145 ​ Cost of revenue ​ ​ 15,404,027 ​ 12,020,742 ​ Gross profit ​ ​ $ 50,158,269 ​ $ 41,282,403 ​ Gross profit percentage ​ ​ 76.5 % 77.4 % ​ Cost of revenue increased approximately $3.4 million, or 28.1 percent, to $15.4 million for the year ended December 31, 2023, from $12.0 million for the same period in 2022.
The increase in cost of revenue and gross profit is primarily due to higher revenue during the year ended December 31, 2022, compared to the same period in 2021. ​ Gross profit margin was 77.5 percent and 76.6 percent for the years ended December 31, 2022 and 2021, respectively.
Gross profit increased approximately $8.9 million, or 21.5 percent, to $50.2 million for the year ended December 31, 2023 from $41.3 million for the same period in 2022. The increase in cost of revenue and gross profit is primarily due to higher revenue during the year ended December 31, 2023, compared to the same period in 2022.
Our principal uses of cash are operating expenses, working capital requirements and capital expenditures. 48 Table of Contents As of December 31, 2022, we had cash and investments of $57.9 million, stockholders’ equity of $73.7 million, and working capital of $68.9 million, compared to cash and cash equivalents and investments of $62.5 million, stockholders’ equity of $72.2 million, and working capital of $69.4 million as of December 31, 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, (In millions) 2022 2021 Net cash provided by operating activities ​ $ 10.1 ​ $ 11.3 Net cash (used in) provided by investing activities ​ $ (1.4) ​ $ 0.6 Net cash (used in) provided by financing activities ​ $ (12.7) ​ $ 0.0 ​ Comparison of the Years Ended December 31, 2022 and 2021 Operating Activities For the year ended December 31, 2022, cash provided by operations decreased $1.2 million to $10.1 million, from $11.3 million in 2021.
As of December 31, 2023, we had cash and investments of $49.8 million, stockholders’ equity of $71.4 million, and working capital of $59.7 million, compared to cash and cash equivalents and investments of $58.0 million, stockholders’ equity of $73.7 million, and working capital of $68.9 million as of December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 2022 Net cash provided by operating activities ​ $ 13,465,012 ​ $ 10,042,711 Net cash used in investing activities ​ (8,007,167) ​ (1,374,997) Net cash used in financing activities ​ (13,656,511) ​ (12,706,400) ​ Comparison of the Years Ended December 31, 2023 and 2022 Operating Activities For the year ended December 31, 2023, cash provided by operations increased $3.5 million to $13.5 million, from $10.0 million in 2022.
During 2021, cash provided by investing activities was impacted by maturities of investments, partially offset by impacts from purchases of property and equipment, and capitalized intangible assets. Financing Activities For the year ended December 31, 2022, cash related to financing activities decreased $(12.7) million to a use of $(12.7) million, from $24 thousand provided in 2021.
Investing Activities For the year ended December 31, 2023, cash related to investing activities decreased $6.6 million to a use of $8.0 million, from $1.4 million used in 2022. During 2023, cash related to investing activities was impacted by purchases of property and equipment, specifically the purchase of land.
Under these agreements, we are required to pay these group purchasing organizations (“GPOs”) a fee of three percent of the sales of our products to their member hospitals. 44 Table of Contents Financial Highlights and Outlook Our revenue was $53.3 million in 2022 and $41.8 million in 2021.
Under our GPO agreements, we are required to pay the GPOs a fee of three percent of the sales of our products to members of the GPO. Sales to participating IDNs do not have an associated fee. Financial Highlights and Outlook Our revenue was $65.6 million in 2023 and $53.3 million in 2022.
The increase in year over year sales also positively impacts the ability to favorably absorb overhead costs increasing gross profit margin. ​ 47 Table of Contents Operating Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ (In millions, except percentage of revenue) 2022 2021 General and administrative ​ $ 10.7 ​ $ 9.8 ​ Percentage of revenue ​ 20.1 % 23.4 % Sales and marketing ​ $ 12.7 ​ $ 10.6 ​ Percentage of revenue ​ 23.8 % 25.2 % Research and development ​ $ 2.3 ​ $ 1.9 ​ Percentage of revenue ​ 4.3 % 4.6 % ​ General and Administrative General and administrative expense increased approximately $0.9 million, or 9.2 percent, to $10.7 million for the year ended December 31, 2022, from $9.8 million for the same period last year.
Operating Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2023 2022 General and administrative ​ ​ $ 15,122,065 ​ $ 10,697,067 ​ Percentage of revenue ​ ​ 23.1 % 20.1 % Sales and marketing ​ ​ $ 12,142,090 ​ $ 12,679,610 ​ Percentage of revenue ​ ​ 18.5 % 23.8 % Research and development ​ ​ $ 2,858,656 ​ $ 2,278,081 ​ Percentage of revenue ​ ​ 4.4 % 4.3 % ​ General and Administrative General and administrative expense increased approximately $4.4 million, or 41.4 percent, to $15.1 million for the year ended December 31, 2023, from $10.7 million for the same period last year.
Our estimated installed base of medical devices is as follows: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 IV Infusion Pump Systems 6,582 6,062 Patient Vital Signs Monitoring Systems 1,596 1,138 ​ COVID 19 Considerations The worldwide COVID-19 pandemic has negatively impacted, and may continue to negatively impact, the macroeconomic environment in the United States and globally.
Our estimated installed base of medical devices is as follows: ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 IV Infusion Pump Systems 7,196 6,582 Patient Vital Signs Monitoring Systems 2,166 1,596 ​ Critical Accounting Policies and Estimates We prepare our financial statements in conformity with U.S. GAAP.
These increases are a direct result of the continuous growth of the Company. Commissions and sales activity expenses increases in line with revenue growth. Research and Development Research and development expense increased approximately $0.4 million, or 21.1 percent, to $2.3 million for the year ended December 31, 2022, from $1.9 million for the same period in 2021.
Research and Development Research and development expense increased approximately $0.6 million, or 25.5 percent, to $2.9 million for the year ended December 31, 2023, from $2.3 million for the same period in 2022. This is primarily due to higher payroll and benefits costs, offset by lower prototype design and consulting expenses.
Removed
Our agreements with healthcare supply contracting companies enable us to sell and distribute our products and services to their member hospitals.
Added
We also enter into agreements with IDNs and healthcare supply contracting companies, which are commonly referred to as GPOs in the U.S., which enable us to sell and distribute our products to their member hospitals. GPOs negotiate volume 48 Table of Contents purchase prices for hospitals, group practices, and other clinics that are members of a GPO.
Removed
The magnitude of the impact will depend on numerous evolving factors that we may not be able to accurately predict, including the impact of federal, state, local and foreign governmental actions, consumer, supplier and hospital behavior in response to the pandemic and such governmental actions, and the economic and operating conditions.
Added
The decline in revenue from the amortization of deferred revenue year-over-year is primarily due to a higher initial volume of deferred revenue during the pandemic, as more companies were purchasing extended warranties at that time.
Removed
Gross profit increased approximately $9.3 million, or 29.1 percent, to $41.3 million for the year ended December 31, 2022 from $32.0 million for the same period in 2021.
Added
The increase 51 Table of Contents in year over year sales also positively impacts the Company’s ability to favorably absorb overhead costs and increase gross profit margin.
Removed
This is primarily due to higher expenses for prototype and consulting costs, offset by lower allocated payroll and benefits costs. Other Income, Net Other income, net consists of interest income, foreign currency transactional gains and losses, and other miscellaneous income.
Added
Lower commissions are related to the sales cycle, and not necessarily in line with revenue growth. The increases are a direct result of the continuing growth of the Company.
Removed
The increase in our effective tax rate is primarily the result of higher book income before the provision for income taxes and tax benefits associated with the exercise and sale of employee options and vesting of restricted stock units that materially reduced the effective tax rate in 2021 but did not recur to the same extent in 2022.
Added
Other Income, Net Other income, net consists of interest income, foreign currency transactional gains and losses, and other miscellaneous income. We reported other income of approximately $1.7 million and $0.6 million for the years ended December 31, 2023 and 2022, respectively.
Added
Our principal uses of cash are operating expenses, working capital requirements and capital expenditures.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+1 added−0 removed4 unchanged
Biggest changeDollar uniformly increased or decreased in strength by 10 percent relative to the Yen, our net income would have correspondingly increased or decreased by an immaterial amount for the year ended December 31, 2022. Interest Rate Risk When able, we invest excess cash in bank money-market funds, corporate debt securities or discrete short-term investments.
Biggest changeDollar uniformly increased or decreased in strength by 10 percent relative to the Yen, our net income would have correspondingly increased or decreased by an immaterial amount for the year ended December 31, 2023. Interest Rate Risk When able, we invest excess cash in money-market funds, and in the past, corporate debt securities or discrete short-term investments.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We develop our products in the U.S. and sell those products into more than 77 countries throughout the world. We also purchase certain components for our products from foreign vendors. Most of our sale and purchase transactions are denominated in the U.S. Dollar.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We develop our products in the U.S. and sell those products into approximately 80 countries throughout the world. We also purchase certain components for our products from foreign vendors. Most of our sale and purchase transactions are denominated in the U.S. Dollar.
Our interest income is sensitive to changes in the general level of interest rates in the U.S. If market interest rates were to change by 100 basis points from levels at December 31, 2022, we expect a corresponding change of approximately $526,000 in interest income earned on our excess cash held in interest bearing accounts. ​
Our interest income is sensitive to changes in the general level of interest rates in the U.S. If market interest rates were to change by 100 basis points from levels at December 31, 2023, we expect a corresponding change of approximately $431,000 in interest income earned on our excess cash held in interest bearing accounts. ITEM 8.
Added
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Financial Statements and Supplementary Data required by this Item 8 are incorporated by reference to information beginning on Page F-1 of this Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 54 Table of Contents

Other IRMD 10-K year-over-year comparisons