10-Q 1 irmd-20220930x10q.htm FORM 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File No.:  001-36534

IRADIMED CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware

    

73-1408526

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number

1025 Willa Springs Drive
Winter Springs, Florida

32708

(Address of principal executive offices)

(Zip Code)

(407) 677-8022

(Registrant’s telephone number, including area code)

N/A

(Former Name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Common stock, par value $0.0001

IRMD

NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” as defined in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer

Non-accelerated filer   

Smaller reporting company   

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No 

The registrant had 12,566,336 shares of common stock, par value $0.0001 per share, outstanding as of October 31, 2022.

IRADIMED CORPORATION

Table of Contents

Page

Cautionary Note Regarding Forward-Looking Statements

3

Part I

Financial Information

5

Item 1

Condensed Financial Statements

5

(a)     Condensed Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021

5

(b)    Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2022, and 2021 (Unaudited)

6

(c)    Condensed Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022, and 2021 (Unaudited)

7

(d)     Condensed Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022, and 2021 (Unaudited)

8

(e)     Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2022, and 2021 (Unaudited)

9

(f)      Notes to Unaudited Condensed Financial Statements

10

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4

Controls and Procedures

25

Part II

Other Information

26

Item 1

Legal Proceedings

26

Item 1A

Risk Factors

26

Item 2

Unregistered Sale of Equity Securities and Use of Proceeds

26

Item 3

Default Upon Senior Securities

26

Item 4

Mine Safety Disclosures

26

Item 5

Other Information

26

Item 6

Exhibits

27

Signatures

28

2

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements relate to future events or our future financial performance or condition and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements include, but are not limited to, statements about:

our ability to receive 510(k) clearance for our products and product candidates, complete inspections conducted by the U.S. Food & Drug Administration (“FDA”) or other regulatory bodies resulting in favorable outcomes, additional actions by or requests from the FDA, including a request to cease domestic distribution of products, or other regulatory bodies and unanticipated costs or delays associated with the resolution of these matters;
the timing and likelihood of regulatory approvals or clearances from the FDA or other regulatory bodies and regulatory actions on our product candidates and product marketing activities;
unexpected costs, expenses and diversion of management attention resulting from actions or requests posed to us by the FDA or other regulatory bodies;
our primary reliance on a limited number of products;
our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;
market and economic uncertainty caused by any or all public health concerns such as pandemics;
our expectations regarding the sales and marketing of our products, product candidates and services;
our expectations regarding the integrity of our supply chain for our products;
the potential for adverse application of environmental, climate change, health and safety and other laws and regulations of any jurisdiction on our operations;
our expectations for market acceptance of our new products;
the potential for our marketed products to be withdrawn due to recalls, patient adverse events or deaths;
our ability to establish and maintain intellectual property on our products and our ability to successfully defend these in cases of infringement;
the implementation of our business strategies;
the potential for exposure to product liability claims;
our financial performance expectations and interpretations thereof by securities analysts and investors;
our ability to compete in the development and marketing of our products and product candidates with other companies in our industry;
difficulties or delays in the development, production, manufacturing and marketing of new or existing products and services, including difficulties or delays associated with obtaining requisite regulatory approvals or clearances associated with those activities;

3

changes in laws and regulations or in the interpretation or application of laws or regulations, as well as possible failures to comply with applicable laws or regulations as a result of possible misinterpretations or misapplications;
cost-containment efforts of our customers, purchasing groups, third-party payers and governmental organizations;
costs associated with protecting our trade secrets and enforcing our patent, copyright and trademark rights, and successful challenges to the validity of our patents, copyrights or trademarks;
actions of regulatory bodies and other government authorities, including the FDA and foreign counterparts, that could delay, limit or suspend product development, manufacturing or sales or result in recalls, seizures, consent decrees, injunctions and monetary sanctions;
costs or claims resulting from potential errors or defects in our manufacturing that may injure persons or damage property or operations, including costs from remediation efforts or recalls;
the results, consequences, effects or timing of any commercial disputes, patent infringement claims or other legal proceedings or any government investigations;
interruption in our ability to manufacture our products or an inability to obtain key components or raw materials or increased costs in such key components or raw materials;
uncertainties in our industry due to the effects of government-driven or mandated healthcare reform;
competitive pressures in the markets in which we operate;
the loss of, or default by, one or more key customers or suppliers; and
unfavorable changes to the terms of key customer or supplier relationships.

Forward-looking statements are not guarantees of future performance and are subject to substantial risks and uncertainties that could cause the actual results to differ materially from those that we predicted in the forward-looking statements. Investors should carefully review the information contained under the caption “Risk Factors” contained in Item 1A for a description of risks and uncertainties that could cause actual results to differ from those that we predicted. All forward-looking statements are based on information available to us on the date hereof, and we assume no obligation to update forward-looking statements, except as required by Federal Securities laws.

Unless expressly indicated or the context requires otherwise, references in this Quarterly Report to “IRADIMED,” the “Company,” “we,” “our,” and “us” refer to IRADIMED CORPORATION.

4

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

IRADIMED CORPORATION

CONDENSED BALANCE SHEETS

September 30, 

December 31, 

2022

2021

    

(unaudited)

    

ASSETS

Current assets:

Cash and cash equivalents

$

55,592,152

$

61,999,550

Investments

501,855

Accounts receivable, net of allowance for doubtful accounts of $113,850 as of September 30, 2022, and $60,361 as of December 31, 2021

10,651,264

5,136,599

Inventory, net

 

5,243,256

 

4,299,799

Prepaid expenses and other current assets

 

386,634

 

1,000,716

Prepaid income taxes

 

 

3,306,438

Total current assets

 

71,873,306

 

76,244,957

Property and equipment, net

 

2,292,516

 

2,069,376

Intangible assets, net

 

1,881,137

 

1,118,584

Operating lease right-of-use asset, net

2,276,089

2,482,084

Deferred income taxes, net

 

985,097

 

765,096

Other assets

 

236,188

 

201,325

Total assets

$

79,544,333

$

82,881,422

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

964,360

$

782,903

Accrued payroll and benefits

 

2,349,772

 

2,814,560

Other accrued taxes

 

181,877

 

140,315

Warranty reserve

 

95,287

 

108,880

Deferred revenue

 

1,586,256

 

2,553,096

Current portion of operating lease liability

289,147

276,568

Other current liabilities

136,927

146,435

Total current liabilities

 

5,603,626

 

6,822,757

Deferred revenue

 

2,182,494

 

1,679,343

Operating lease liability, less current portion

1,986,942

2,205,516

Total liabilities

 

9,773,062

 

10,707,616

Stockholders’ equity:

Common stock; $0.0001 par value; 31,500,000 shares authorized; 12,565,290 shares issued and outstanding as of September 30, 2022, and 12,544,024 shares issued and outstanding as of December 31, 2021

 

1,256

 

1,254

Additional paid-in capital

 

26,179,351

 

25,160,618

Retained earnings

 

43,590,664

 

46,994,922

Accumulated other comprehensive income

 

 

17,012

Total stockholders’ equity

 

69,771,271

 

72,173,806

Total liabilities and stockholders’ equity

$

79,544,333

$

82,881,422

See accompanying notes to unaudited condensed financial statements.

5

IRADIMED CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

    2021

Revenue

$

13,407,272

$

10,907,302

$

38,439,551

$

29,941,721

Cost of revenue

 

2,864,534

 

2,501,745

8,377,526

7,141,547

Gross profit

 

10,542,738

 

8,405,557

30,062,025

22,800,174

Operating expenses:

General and administrative

 

2,881,590

 

2,252,274

8,000,335

7,247,262

Sales and marketing

 

3,037,209

 

2,585,702

9,014,553

7,434,603

Research and development

 

491,643

 

480,696

1,673,337

1,410,192

Total operating expenses

 

6,410,442

 

5,318,672

18,688,225

16,092,057

Income from operations

 

4,132,296

 

3,086,885

11,373,800

6,708,117

Other income , net

 

105,183

 

7,143

103,371

14,675

Income before provision for income taxes

 

4,237,479

 

3,094,028

11,477,171

6,722,792

Provision for income tax expense

 

810,375

 

517,767

2,322,301

1,289,988

Net income

$

3,427,104

$

2,576,261

$

9,154,870

$

5,432,804

Net income per share:

Basic

$

0.27

$

0.21

$

0.73

$

0.44

Diluted

$

0.27

$

0.20

$

0.72

$

0.43

Weighted average shares outstanding:

Basic

 

12,564,636

 

12,331,062

12,559,465

12,318,476

Diluted

 

12,631,129

 

12,603,566

12,637,325

12,570,925

See accompanying notes to unaudited condensed financial statements.

6

IRADIMED CORPORATION

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

Net income

$

3,427,104

$

2,576,261

$

9,154,870

$

5,432,804

Other comprehensive (loss) income:

Change in fair value of available-for-sale securities, net of tax expense (benefit) of $0 and $(944) for the three months ended September 30, 2022 and 2021, respectively, and $9,098 and $(8,275) for the nine months ended September 30, 2022 and 2021, respectively

(2,948)

(10,953)

(6,027)

Realized gain on available-for-sale securities reclassified to net income, net of tax expense of $0 and $0 for the three months ended September 30, 2022 and 2021, respectively, and $1,966 and $3,176 for the nine months ended September 30, 2022 and 2021, respectively

(6,059)

(9,829)

Other comprehensive loss

 

 

(2,948)

 

(17,012)

 

(15,856)

Comprehensive income

$

3,427,104

$

2,573,313

$

9,137,858

$

5,416,948

See accompanying notes to unaudited condensed financial statements.

7

IRADIMED CORPORATION

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

Accumulated

Additional

Other

Common Stock

Paid-in

Retained

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income

    

Equity

Balances, December 31, 2021

 

12,544,024

$

1,254

$

25,160,618

$

46,994,922

$

17,012

$

72,173,806

Net income

 

 

 

2,486,713

 

 

2,486,713

Dividends paid

(12,559,127)

(12,559,127)

Other comprehensive loss

 

 

 

 

(10,885)

 

(10,885)

Stock-based compensation expense

 

 

453,360

 

 

 

453,360

Net share settlement of restricted stock units

3,879

 

1

 

(67,381)

 

 

 

(67,380)

Exercise of stock options

12,566

 

1

 

71,947

 

 

 

71,948

Balances, March 31, 2022

12,560,469

$

1,256

$

25,618,544

$

36,922,508

$

6,127

$

62,548,435

Net income

 

 

 

3,241,052

 

 

3,241,052

Other comprehensive loss

 

 

 

 

(6,127)

 

(6,127)

Stock-based compensation expense

 

 

121,003

 

 

 

121,003

Net share settlement of restricted stock units

556

 

 

(5,726)

 

 

 

(5,726)

Balances, June 30, 2022

 

12,561,025

$

1,256

$

25,733,821

$

40,163,560

$

$

65,898,637

Net income

3,427,104

3,427,104

Stock-based compensation expense

393,187

393,187

Net share settlement of restricted stock units

1,265

(22,417)

(22,417)

Exercise of stock options

3,000

74,760

74,760

Balances, September 30, 2022

12,565,290

$

1,256

$

26,179,351

$

43,590,664

$

$

69,771,271

Accumulated

 

Additional

Other

 

Common Stock

Paid-in

Retained

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income

    

Equity

Balances, December 31, 2020

 

12,308,432

$

1,231

$

23,676,843

$

37,669,451

$

37,087

$

61,384,612

Net income

 

 

 

1,386,849

 

 

1,386,849

Other comprehensive loss

 

 

 

 

(4,869)

 

(4,869)

Stock-based compensation expense

 

 

347,741

 

 

 

347,741

Net share settlement of restricted stock units

3,502

 

 

(38,707)

 

 

 

(38,707)

Exercise of stock options

250

 

 

2,460

 

 

 

2,460

Balances, March 31, 2021

12,312,184

$

1,231

$

23,988,337

$

39,056,300

$

32,218

$

63,078,086

Net income

 

 

 

1,469,694

 

 

1,469,694

Other comprehensive loss

 

 

 

 

(8,039)

 

(8,039)

Stock-based compensation expense

 

 

358,012

 

 

 

358,012

Net share settlement of restricted stock units

2,727

 

1

 

(15,875)

 

 

 

(15,874)

Exercise of stock options

2,125

 

 

20,235

 

 

 

20,235

Balances, June 30, 2021

 

12,317,036

 

$

1,232

 

$

24,350,709

 

$

40,525,994

 

$

24,179

 

$

64,902,114

Net income

2,576,261

2,576,261

Other comprehensive loss

(2,948)

(2,948)

Stock-based compensation expense

361,836

361,836

Net share settlement of restricted stock units

618

(8,766)

(8,766)

Exercise of stock options

23,000

2

62,918

62,920

Balances, September 30, 2021

12,340,654

$

1,234

$

24,766,697

$

43,102,255

$

21,231

$

67,891,417

See accompanying notes to unaudited condensed financial statements.

8

IRADIMED CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended

September 30, 

    

2022

    

2021

Operating activities:

Net income

$

9,154,870

$

5,432,804

Adjustments to reconcile net income to net cash provided by operating activities:

Change in allowance for doubtful accounts

56,118

(567)

Change in provision for excess and obsolete inventory

 

29,227

 

51,731

Depreciation and amortization

 

1,363,578

 

1,020,223

(Gain) loss on disposal of property and equipment

 

(3,000)

 

1,066

Stock-based compensation

 

967,551

 

1,067,589

Deferred income taxes, net

(227,133)

414,095

Loss on maturities of investments

(8,025)

(13,005)

Changes in operating assets and liabilities:

Accounts receivable

 

(5,570,783)

 

321,852

Inventory

 

(903,792)

 

(344,721)

Prepaid expenses and other current assets

 

(306,031)

 

(663,408)

Other assets

 

6,660

 

23,447

Accounts payable

 

37,338

 

(17,076)

Accrued payroll and benefits

 

(464,788)

 

699,204

Other accrued taxes

 

3,395

 

(12,727)

Warranty reserve

 

(13,593)

 

20,953

Deferred revenue

 

(452,822)

 

313,381

Other current liabilities

(9,508)

Prepaid income taxes

3,344,605

(422,728)

Net cash provided by operating activities

 

7,003,867

 

7,892,113

Investing activities:

Proceeds from maturities of investments

500,000

950,000

Purchases of property and equipment

 

(564,883)

 

(391,303)

Capitalized intangible assets

 

(838,438)

 

(170,234)

Net cash (used in) provided by investing activities

 

(903,321)

 

388,463

Financing activities:

Dividends paid

(12,559,127)

Proceeds from exercises of stock options

146,707

85,615

Taxes paid related to the net share settlement of equity awards

(95,523)

(63,347)

Net cash (used in) provided by financing activities

 

(12,507,943)

 

22,268

Net (decrease) increase in cash and cash equivalents

 

(6,407,398)

 

8,302,844

Cash and cash equivalents, beginning of period

 

61,999,550

 

50,068,728

Cash and cash equivalents, end of period

$

55,592,152

$

58,371,572

Supplemental disclosure of cash flow information:

Cash paid for income taxes

$

757,137

$

1,283,722

ROU asset recognized in exchange for new lease obligation

$

$

27,713

Operating and short-term lease payments recorded within cash flow provided by operating activities

$

364,825

$

364,545

See accompanying notes to unaudited condensed financial statements.

9

IRADIMED CORPORATION

Notes to Unaudited Condensed Financial Statements

1 — Basis of Presentation

The accompanying interim condensed financial statements of IRADIMED CORPORATION (“IRADIMED”, the “Company”, “we”, “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The interim financial information is unaudited, but reflects all normal adjustments that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, and other interim periods, or future years or periods.

The accompanying interim condensed financial statements should be read in conjunction with the financial statements and related footnotes to financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. The accounting policies followed in the preparation of these interim condensed financial statements, except as described in Note 1, are consistent in all material respects with those described in Note 1 of our Form 10-K.

We operate in one reportable segment which is the development, manufacture and sale of Magnetic Resonance Imaging (“MRI”) compatible medical devices, related accessories, disposables and service for use primarily by hospitals and acute care facilities during MRI procedures.

Certain Significant Risks and Uncertainties

We market our products to end users in the United States and to third-party distributors internationally. Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses.

We have deposited our cash and cash equivalents with various financial institutions. Our cash and cash equivalents balances exceed federally insured limits regularly throughout the year. We have not incurred any losses related to these balances.

Our medical devices require clearance from the FDA and international regulatory agencies prior to commercialized sales. Our future products may not receive required approvals. If we were denied such approvals, or if such approvals were revoked or delayed or if we were unable to timely renew certain approvals for existing products, it would have a materially adverse impact on our business, results of operations and financial condition.

Certain key components of our products essential to their functionality are sole-sourced. Any disruption in the availability of these components would have a materially adverse impact on our business, results of operations and financial condition.

COVID-19 Considerations

The worldwide COVID-19 pandemic has negatively impacted, and may continue to negatively impact, the macroeconomic environment in the United States and globally. From the beginning of this global health crisis, our priority has been the safety and well-being of our employees and continuing to supply our customers with access to our therapeutic and diagnostic device solutions. Due to the evolving and uncertain nature of COVID-19, it is reasonably possible that it could materially impact our estimates, particularly those that require consideration of forecasted financial information, in the near to medium term. These estimates relate to certain accounts including, but not limited to, intangible assets, and other long-lived assets. The magnitude of the impact will depend on numerous evolving factors that we may not be able to accurately predict, including the duration and extent of the pandemic, 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 that we may face in the aftermath of COVID-19.

10

Environmental, Social, and Governance (“ESG”) Related Matters

ESG related matters have received increased focus recently from investors, employees, ratings agencies, governmental agencies, and other stakeholders. Government agencies and listing exchanges have mandated or proposed, and others may in the future further mandate certain ESG requirements and disclosures. For example, the SEC has recently proposed additional disclosures regarding, among other items, the impact businesses have on the environment. The SEC proposed rule would require companies to make certain climate-related disclosures, including information about climate-related risks, greenhouse gas emissions and certain climate-related financial statement metrics. We may face increased scrutiny related to any third-party sustainability ratings we receive and our ESG activities, our related disclosures and/or our failure to achieve progress in these areas on a timely basis, or at all, could adversely affect our reputation, business, and results of operations. To the extent the SEC proposal becomes effective, we will be required to establish additional internal controls, engage additional consultants, and incur additional costs related to measuring and evaluating our environmental impact and preparing such disclosures. If we fail to implement sufficient internal controls or accurately capture and disclose relevant data concerning our ESG activities, our reputation, business, financial condition, and results of operations may be materially adversely affected.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements to be Implemented

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. In November 2018, April 2019 and May 2019, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses and ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provided additional implementation guidance on ASU 2016-03. The previously mentioned ASUs are effective for fiscal years beginning after December 15, 2022, with early adoption permitted. We do not expect the adoption of these ASUs to have a material impact on our financial condition, results of operations or cash flows.

2 — Revenue Recognition

Disaggregation of Revenue

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

Revenue information by geographic region is as follows:

Three Months Ended

Nine Months Ended

September 30, 

September 30,

    

2022

    

2021

    

2022

    

2021

(unaudited)

(unaudited)

United States

 

$

10,810,370

 

$

8,676,488

 

$

31,606,401

 

$

23,992,474

International

 

2,596,902

 

2,230,814

 

6,833,150

 

5,949,247

Total revenue

 

$

13,407,272

 

$

10,907,302

 

$

38,439,551

 

$

29,941,721

11

Revenue information by type is as follows:

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

(unaudited)

(unaudited)

Devices:

MRI Compatible IV Infusion Pump Systems

 

$

3,866,535

 

$

3,369,068

 

$

11,001,490

 

$

9,329,182

MRI Compatible Patient Vital Signs Monitoring Systems

 

5,519,045

 

3,779,442

 

15,635,415

 

9,760,991

Ferro Magnetic Detection Systems

62,982

62,982

Total Devices revenue

 

9,448,562

 

7,148,510

 

26,699,887

 

19,090,173

Disposables, services and other

 

3,410,015

 

3,285,656

 

10,158,922

 

9,412,091

Amortization of extended warranty agreements

 

548,695

 

473,136

 

1,580,742

 

1,439,457

Total revenue

 

$

13,407,272

 

$

10,907,302

 

$

38,439,551

 

$

29,941,721

Contract Liabilities

Our contract liabilities consist of:

September 30, 

December 31, 

    

2022

    

2021

(unaudited)

Advance payments from customers

 

$

184,653

 

$

551,267

Shipments in-transit

 

10,867

 

70,295

Extended warranty agreements

 

3,573,230

 

3,610,877

Total

 

$

3,768,750

 

$

4,232,439

Changes in the contract liabilities during the periods presented are as follows:

    

Deferred 

Revenue

Contract liabilities, December 31, 2021

 

$

4,232,439

Increases due to cash received from customers

 

2,927,868

Decreases due to recognition of revenue

 

(3,391,557)

Contract liabilities, September 30, 2022

 

$

3,768,750

    

Deferred 

    

Revenue

Contract liabilities, December 31, 2020

$

4,254,672

Increases due to cash received from customers

 

3,617,619

Decreases due to recognition of revenue

 

(3,519,193)

Contract liabilities, September 30, 2021

$

4,353,098

Capitalized Contract Costs

Our capitalized contract costs totaled $351,150 and $357,810 as of September 30, 2022 and December 31, 2021, respectively, and are classified as other assets on the balance sheet.

12

3 — Basic and Diluted Net Income per Share

Basic net income per share is based upon the weighted-average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Stock options, restricted stock units and performance-based restricted stock units granted by us represent the only dilutive effect reflected in diluted weighted-average shares outstanding.

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

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2022

    

2021

    

2022

    

2021

(unaudited)

(unaudited)

Net income

$

3,427,104

$

2,576,261

$

9,154,870

$

5,432,804

Weighted-average shares outstanding — Basic

 

12,564,636

 

12,331,062

 

12,559,465

 

12,318,476

Effect of dilutive securities:

Stock options

18,196

187,737

21,198

191,439

Restricted stock units

48,297

84,767

56,662

61,010

Weighted-average shares outstanding — Diluted

 

12,631,129

 

12,603,566

 

12,637,325

 

12,570,925

Basic net income per share

$

0.27

$

0.21

$

0.73

$

0.44

Diluted net income per share

$

0.27

$

0.20

$

0.72

$

0.43

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

Three Months Ended

Nine Months Ended

September 30, 

September 30,

    

2022

    

2021

    

2022

    

2021

(unaudited)

(unaudited)

Anti-dilutive stock options and restricted stock units

 

26,402

164

 

31,254

2,644

4 — Inventory, net

Inventory consists of:

September 30, 

December 31, 

    

2022

    

2021

(unaudited)

Raw materials

$

4,715,981

$

3,777,846

Work in process

 

337,217

 

191,722

Finished goods

 

402,835

 

513,782

Inventory before allowance for excess and obsolete

5,456,033

4,483,350

Allowance for excess and obsolete

(212,777)

(183,551)

Total

$

5,243,256

$

4,299,799

13

5 — Property and Equipment, net

Property and equipment consist of:

September 30, 

December 31, 

    

2022

    

2021

(unaudited)

Computer software and hardware

$

1,062,468

$

837,826

Furniture and fixtures

 

1,503,426

 

1,252,434

Leasehold improvements

 

257,786

 

237,086

Machinery and equipment

 

2,110,769

 

2,066,003

Tooling in-process

 

639,053

 

537,043

 

5,573,502

 

4,930,392

Accumulated depreciation

 

(3,280,986)

 

(2,861,016)

Total

$

2,292,516

$

2,069,376

Depreciation expense of property and equipment was $142,389 and $131,541 for the three months ended September 30, 2022 and 2021, respectively, and $419,970 and $396,278 for the nine months ended September 30, 2022 and 2021, respectively.

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

September 30, 

December 31, 

    

2022

    

2021

(unaudited)

United States

 

$

2,142,195

 

$

1,855,012

International

 

150,321

 

214,364

Total property and equipment, net

 

$

2,292,516

 

$

2,069,376

Long-lived assets held outside of the United States consist principally of tooling and machinery and equipment, which are components of property and equipment, net.

6 — Intangible Assets, net

The following table summarizes the components of intangible asset balances:

September 30, 

December 31, 

    

2022

    

2021

(unaudited)

Patents — in use

$

392,037

$

372,502

Patents — in process

 

96,575

 

111,593

Internally developed software — in use

 

872,218

 

872,218

Internally developed software — in process

1,302,362

468,441

Trademarks

27,697

27,697

 

2,690,889

 

1,852,451

Accumulated amortization

 

(809,752)

 

(733,867)

Total

$

1,881,137

$

1,118,584

Amortization expense of intangible assets was $25,236 and $25,256 for the three months ended September 30, 2022 and 2021, respectively, and $75,886 and $76,478 for the nine months ended September 30, 2022 and 2021, respectively.

14

Expected annual amortization expense for the remaining portion of 2022 and the next five years related to intangible assets is as follows (excludes in process intangible assets):

Three months ending December 31, 2022

    

$

25,236

2023

    

$

100,946

2024

$