Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 28, 2020 | Jun. 30, 2019 | |
Document and Entity Information | |||
Entity Registrant Name | IRADIMED CORP | ||
Entity Central Index Key | 0001325618 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 106,525,318 | ||
Entity Common Stock, Shares Outstanding | 11,919,669 | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 43,481,781 | $ 28,027,688 |
Accounts receivable, net | 7,293,303 | 4,209,992 |
Investments | 2,768,287 | 6,349,915 |
Inventory, net | 3,641,561 | 4,059,443 |
Prepaid expenses and other current assets | 407,802 | 526,787 |
Prepaid income taxes | 1,370,947 | 1,367,892 |
Total current assets | 58,963,681 | 44,541,717 |
Property and equipment, net | 2,053,806 | 1,869,561 |
Intangible assets, net | 860,087 | 832,519 |
Operating lease right-of-use asset, net | 2,955,873 | |
Deferred income taxes, net | 1,663,415 | 1,088,702 |
Other assets | 232,002 | 109,759 |
Total assets | 66,728,864 | 48,442,258 |
Current liabilities: | ||
Accounts payable | 993,742 | 772,470 |
Accrued payroll and benefits | 2,166,209 | 1,802,321 |
Other accrued taxes | 596,576 | 133,000 |
Warranty reserve | 81,761 | 74,524 |
Deferred revenue | 1,671,420 | 1,798,784 |
Current portion of operating lease liability | 240,843 | |
Other current liability | 108,421 | 108,421 |
Total current liabilities | 5,858,972 | 4,689,520 |
Deferred revenue | 2,630,467 | 1,807,005 |
Operating lease liability, less current portion | 2,715,030 | |
Total liabilities | 11,204,469 | 6,496,525 |
Stockholders' equity: | ||
Common stock; $0.0001 par value; 31,500,000 shares authorized; 11,765,875 shares issued and outstanding as of December 31, 2019 and 10,989,111 shares issued and outstanding as of December 31, 2018 | 1,177 | 1,099 |
Additional paid-in capital | 19,192,394 | 15,317,335 |
Retained earnings | 36,300,450 | 26,669,491 |
Accumulated other comprehensive income (loss) | 30,374 | (42,192) |
Total stockholders' equity | 55,524,395 | 41,945,733 |
Total liabilities and stockholders' equity | $ 66,728,864 | $ 48,442,258 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 31,500,000 | 31,500,000 |
Common stock, shares issued | 11,765,875 | 10,989,111 |
Common stock, shares outstanding | 11,765,875 | 10,989,111 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
STATEMENTS OF OPERATIONS | |||
Revenue | $ 38,517,141 | $ 30,438,983 | $ 23,081,592 |
Cost of revenue | 8,816,161 | 7,211,633 | 5,569,896 |
Gross profit | 29,700,980 | 23,227,350 | 17,511,696 |
Operating expenses: | |||
General and administrative | 10,451,266 | 8,710,882 | 9,001,164 |
Sales and marketing | 9,169,590 | 6,995,586 | 5,502,959 |
Research and development | 1,432,719 | 1,517,112 | 1,722,564 |
Total operating expenses | 21,053,575 | 17,223,580 | 16,226,687 |
Income from operations | 8,647,405 | 6,003,770 | 1,285,009 |
Other income, net | 395,912 | 193,537 | 111,377 |
Income before provision for income taxes | 9,043,317 | 6,197,307 | 1,396,386 |
Provision for income tax (benefit) expense | (587,642) | (106,143) | 896,622 |
Net income | $ 9,630,959 | $ 6,303,450 | $ 499,764 |
Net income per share: | |||
Basic (in dollars per share) | $ 0.85 | $ 0.59 | $ 0.05 |
Diluted (in dollars per share) | $ 0.78 | $ 0.52 | $ 0.04 |
Weighted average shares outstanding: | |||
Basic (in shares) | 11,282,214 | 10,758,752 | 10,638,858 |
Diluted (in shares) | 12,276,444 | 12,110,117 | 11,720,316 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 9,630,959 | $ 6,303,450 | $ 499,764 |
Other comprehensive income (loss): | |||
Change in fair value of available-for-sale securities, net of tax expense (benefit) of $24,713, $(1,168) and $(10,039) respectively | 80,659 | (3,554) | (16,655) |
Realized loss on available-for-sale securities reclassified to net income, net of tax expense (benefit) of $2,671, $(7,269) and $(2,162) respectively | (8,093) | 20,767 | 4,595 |
Other comprehensive income (loss) | 72,566 | 17,213 | (12,060) |
Comprehensive income | $ 9,703,525 | $ 6,320,663 | $ 487,704 |
STATEMENTS OF COMPREHENSIVE I_2
STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
STATEMENTS OF COMPREHENSIVE INCOME | |||
Change in fair value of available-for-sale securities, net of tax expense (benefit) | $ 24,713 | $ (1,168) | $ (10,039) |
Realized (gain) loss on available-for-sale securities reclassified to net income, net of tax expense (benefit) | $ 2,671 | $ (7,269) | $ (2,162) |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total |
Balances at Dec. 31, 2016 | $ 1,072 | $ 12,055,188 | $ 19,869,714 | $ (36,849) | $ 31,889,125 |
Balance (in shares) at Dec. 31, 2016 | 10,722,675 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 499,764 | 499,764 | |||
Other comprehensive loss | (12,060) | (12,060) | |||
Stock-based compensation | 2,454,363 | 2,454,363 | |||
Net share settlement of restricted stock units | $ 5 | (158,145) | (158,140) | ||
Net share settlement of restricted stock units (in shares) | 50,759 | ||||
Exercise of stock options and warrants | $ 3 | 76,363 | 76,366 | ||
Exercise of stock options and warrants (in shares) | 33,054 | ||||
Purchases and retirement of treasury stock | $ (20) | (1,818,521) | (1,818,541) | ||
Purchases and retirement of treasury stock (in shares) | (209,922) | ||||
Cumulative effect from adoption of accounting standard update | 13,933 | (13,933) | |||
Balances at Dec. 31, 2017 | $ 1,060 | 12,623,181 | 20,355,545 | (48,909) | 32,930,877 |
Balance (in shares) at Dec. 31, 2017 | 10,596,566 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 6,303,450 | 6,303,450 | |||
Other comprehensive loss | 17,213 | 17,213 | |||
Stock-based compensation | 1,764,319 | 1,764,319 | |||
Net share settlement of restricted stock units | $ 8 | (309,569) | (309,561) | ||
Net share settlement of restricted stock units (in shares) | 77,352 | ||||
Exercise of stock options and warrants | $ 31 | 1,239,404 | 1,239,435 | ||
Exercise of stock options and warrants (in shares) | 315,193 | ||||
Cumulative effect from adoption of accounting standard update | 10,496 | (10,496) | |||
Balances at Dec. 31, 2018 | $ 1,099 | 15,317,335 | 26,669,491 | (42,192) | 41,945,733 |
Balance (in shares) at Dec. 31, 2018 | 10,989,111 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 9,630,959 | 9,630,959 | |||
Other comprehensive loss | 72,566 | 72,566 | |||
Stock-based compensation | 1,854,965 | 1,854,965 | |||
Net share settlement of restricted stock units | $ 7 | (473,150) | (473,143) | ||
Net share settlement of restricted stock units (in shares) | 74,880 | ||||
Exercise of stock options and warrants | $ 71 | 2,493,244 | 2,493,315 | ||
Exercise of stock options and warrants (in shares) | 701,884 | ||||
Balances at Dec. 31, 2019 | $ 1,177 | $ 19,192,394 | $ 36,300,450 | $ 30,374 | $ 55,524,395 |
Balance (in shares) at Dec. 31, 2019 | 11,765,875 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities: | |||
Net income | $ 9,630,959 | $ 6,303,450 | $ 499,764 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Change in allowance for doubtful accounts | 31,338 | 15,833 | (7,083) |
Change in provision for excess and obsolete inventory | 48,114 | 111,790 | 69,199 |
Depreciation and amortization | 1,242,325 | 1,105,003 | 1,308,738 |
Write-off of non-trade accounts receivable | 205,444 | ||
Stock-based compensation | 1,854,965 | 1,764,319 | 2,454,363 |
Deferred income taxes, net | (596,755) | (144,430) | (150,657) |
(Gain) loss on maturities of investments | (10,764) | 28,036 | 6,757 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (3,114,649) | (446,896) | (201,591) |
Inventory | 123,680 | (121,591) | (334,113) |
Prepaid expenses and other current assets | (487,650) | (407,461) | (1,161,964) |
Other assets | (171,002) | 65,135 | (13,860) |
Accounts payable | 149,319 | 34,161 | (523,449) |
Accrued payroll and benefits | 363,888 | 289,985 | 477,070 |
Other accrued taxes | 463,576 | 23,498 | (9,592) |
Warranty reserve | 7,237 | 13,986 | 19,633 |
Deferred revenue | 700,348 | (5,885) | 944,632 |
Other current liability | (150) | (12,063) | |
Prepaid income taxes, net of accrued income taxes | (3,055) | (1,252,768) | (155,310) |
Other | 859 | ||
Net cash provided by operating activities | 10,232,733 | 7,376,015 | 3,415,918 |
Investing activities: | |||
Purchases of investments | (1,124,512) | (2,693,739) | |
Proceeds from maturity of investments | 3,687,000 | 2,905,000 | 2,495,004 |
Purchases of property and equipment | (368,281) | (228,315) | (775,574) |
Capitalized intangible assets | (117,531) | (36,350) | (49,189) |
Net cash provided by (used in) investing activities | 3,201,188 | 1,515,823 | (1,023,498) |
Financing activities: | |||
Proceeds from stock option and warrant exercises | 2,493,315 | 1,239,435 | 76,366 |
Taxes paid for the net share settlement of restricted stock units | (473,143) | (309,561) | (158,140) |
Purchases of treasury stock | (1,818,541) | ||
Net cash provided by (used in) financing activities | 2,020,172 | 929,874 | (1,900,315) |
Net increase in cash and cash equivalents | 15,454,093 | 9,821,712 | 492,105 |
Cash and cash equivalents, beginning of year | 28,027,688 | 18,205,976 | 17,713,871 |
Cash and cash equivalents, end of year | 43,481,781 | 28,027,688 | 18,205,976 |
Supplemental disclosure of cash flow information: | |||
Cash paid for income taxes | 12,000 | 1,375,714 | 1,205,028 |
Right-of-use asset recognized in exchange for new lease obligation | 3,182,724 | ||
Operating and short-term lease payments recorded within cash flow from operating activities | $ 428,176 | $ 418,772 | $ 409,378 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Significant Accounting Policies | |
Organization and Significant Accounting Policies | 1 — Organization and Significant Accounting Policies Organization IRADIMED CORPORATION (“IRADIMED”, the “Company”, “we”, “our”) was incorporated in Oklahoma in July 1992 and reincorporated in Delaware in April 2014. We develop, manufacture, market and distribute a Magnetic Resonance Imaging (“MRI”) compatible intravenous (“IV”) infusion pump system and MRI compatible patient vital signs monitoring systems and related accessories and services. We are a leader in the development of innovative MRI compatible medical devices . We are the only known provider of a non-magnetic IV infusion pump system that is specifically designed to be safe for use during MRI procedures. We were the first to develop an infusion delivery system that largely eliminates many of the dangers and problems present during MRI procedures. Standard infusion pumps contain magnetic and electronic components which can create radio frequency interference and are dangerous to operate in the presence of the powerful magnet that drives an MRI system. Our patented MRidium® MRI compatible IV infusion pump system has been designed with a non-magnetic ultrasonic motor, uniquely designed non-ferrous parts and other special features in order to safely and predictably deliver anesthesia and other IV fluids during various MRI procedures. Our pump solution provides a seamless approach that enables accurate, safe and dependable fluid delivery before, during and after an MRI scan, which is important to critically-ill patients who cannot be removed from their vital medications, and children and infants who must generally be sedated in order to remain immobile during an MRI scan. Each IV infusion pump system consists of an MRidium® MRI compatible IV infusion pump, non-magnetic mobile stand, proprietary disposable IV tubing sets and many of these systems contain additional optional upgrade accessories. Our 3880 MRI compatible patient vital signs monitoring system (“IRADIMED 3880 ”) has been designed with non-magnetic components and other special features in order to safely and accurately monitor a patient’s vital signs during various MRI procedures. The IRADIMED 3880 operates dependably in magnetic fields up to 30,000 gauss, which means it can operate virtually anywhere in the MRI scanner room, including in very close proximity to the MRI scanner bore. The IRADIMED 3880 has a compact, lightweight design allowing it to travel with the patient from their critical care unit, to the MRI and back, resulting in increased patient safety through uninterrupted vital signs monitoring and decreasing the amount of time critically ill patients are away from critical care units. Other MRI compatible patient vital signs monitors are large and heavy, creating workflow issues for users. 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; invasive blood pressure; patient temperature, and; optional advanced multi-gas anesthetic agent unit featuring continuous Minimum Alveolar Concentration measurements. The IRADIMED 3880 MRI compatible patient vital signs monitoring system has an easy-to-use design and allows for the effective communication of patient vital signs information to clinicians. Our headquarters is located in Winter Springs, Florida. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the financial statements and the reported amount of revenue and expenses during the reporting period. Such estimates include allowances for potentially uncollectible accounts receivable, valuation of inventory, intangible assets, stock‑based compensation, deferred income taxes, reserves for warranty obligations, and the provision for income taxes. Actual results could differ from those estimates. Close-Out of FDA Warning Letter As announced on October 8, 2019, we received a close-out letter from the FDA with respect to the FDA warning letter previously received in August 2014. We received this warning letter following a routine inspection of our prior facility between April 7 and April 16, 2014. The close-out letter confirmed that all issues cited in the August 2014 warning letter have been resolved. Revenue Recognition We generate revenue from the sale of MRI compatible medical devices and accessories, extended warranty agreements, services related to maintaining our products and the sale of disposable products used with our devices. The principal customers for our MRI compatible products include hospitals and acute care facilities, both in the U.S. and internationally. 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 most domestic sales, we enter into agreements with healthcare supply contracting companies, commonly referred to as Group Purchasing Organizations ("GPOs"), which enable us to sell and distribute our products to their member hospitals. Our agreements with GPOs typically include negotiated pricing for all group members established at time of GPO contract execution. We do not sell to GPOs. Hospitals, group practices and other acute care facilities that are members of a GPO, purchase products directly from us under the terms of our GPO agreements. We recognize revenue when all of the following criteria are met: we have a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or the amount we expect to receive, is determinable and we have transferred control of the promised products or services to the customer. We consider transfer of control evidenced upon the passage of title and risks and rewards of ownership to the customer, which is typically at a point in time, except for our extended warranty agreements. We allocate the transaction price using the relative standalone selling price method. Customer sale prices for our MRI compatible IV infusion pump systems and related disposables and services are contractually fixed over the GPO contract term. We recognize a receivable at the point in time we have an unconditional right to payment. Payment terms are typically within 45 days after transferring control to U.S. customers. Most international distributors are required to pay a portion of the transaction price in advance and the remaining amount within 30 days of receiving the related products. Accordingly, we have elected to use the practical expedient that allows us to ignore the possible existence of a significant financing component within the contract. We have elected to account for shipping and handling charges billed to customers as revenue and shipping and handling related expenses as cost of revenue. In certain U.S. states we are required to collect sales taxes from our customers. We have elected to exclude the amounts collected for these taxes from revenue and record them as a liability until remitted to the taxing authority. Contract Liabilities We record contract liabilities, or deferred revenue, when we have an obligation to provide a product or service to the customer and payment is received in advance of our performance. When we sell a product or service with a future performance obligation, we defer revenue allocated to the unfulfilled performance obligation and recognize this revenue when, or as, the performance obligation is satisfied. Our deferred revenue consists of advance payments received from customers prior to the transfer of products or services, shipments that are in-transit at the end of a period and sales of extended warranty agreements. Advance payments received from customers and shipments in-transit are recognized in revenue at the time control of the related products has been transferred to the customer or services have been delivered. Amounts related to extended warranty agreements are deferred and recognized in revenue ratably over the agreement period, which is typically one to four years after control of the related products is transferred to the customer, as we believe this recognition pattern best depicts the transfer of services being provided. Deferred revenue is classified as current or long-term deferred revenue in our Balance Sheets, depending on the expected timing of satisfying the related performance obligations. Capitalized Contract Costs We capitalize commissions paid to our sales managers related to contracts with customers when the associated revenue is expected to be earned over a period of time. Deferred commissions are primarily related to the sale of extended warranty agreements. Capitalized commissions are included in Prepaid Expenses and Other Current Assets in our Balance Sheets when the associated expense is expected to be recognized in one year or less, or in Other Assets when the associated expense is expected to be recognized in greater than one year. The associated expense is included in Sales and Marketing expenses in our Statements of Operations. Variable Consideration Most of our sales are subject to 30 to 60-day customer-specified acceptance provisions primarily for purposes of ensuring products were not damaged during the shipping process. Historically, we have experienced immaterial product returns and, when experienced, we typically exchange the affected products with new products. Accordingly, variable consideration from contracts with customers is immaterial to our financial statements. Cash Equivalents All highly liquid instruments purchased with an original maturity of three months or less are classified as cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable is recorded at the transaction price of the related products and services. We regularly assess the sufficiency of the allowance for estimated uncollectible accounts receivable. Estimates are based on historical collection experience and other customer‑specific information, such as bankruptcy filings or known liquidity problems of our customers. When it is determined that an account receivable is uncollectible, it is written off and relieved from the allowance. Any future determination that the allowance for estimated uncollectible accounts receivable is not properly stated could result in changes in operating expense and results of operations. As of December 31, 2019 and 2018, our allowance for doubtful accounts was $69,093 and $42,443, respectively. Investments Our investments consist of corporate debt securities and are considered available‑for‑sale. The specific identification method is used to determine the cost basis of investments sold. Our investments are recorded in our Balance Sheets at fair value. We classify our investments as current based on the nature of the investments and their availability for use in current operations. Unrealized gains and losses on our investments are included in accumulated other comprehensive income (loss), net of tax. Realized gains or losses and impairment losses that are determined to be other‑than‑temporary are recorded in other income, net in our Statements of Operations. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. A three‑level valuation hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels of inputs are: · Level 1 — quoted prices (unadjusted) in active markets for an identical asset or liability. · Level 2 — quoted prices for a similar asset or liability in an active market or model‑derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability. · Level 3 — unobservable and significant to the fair value measurement of the asset or liability. Financial instruments include cash and cash equivalents, investments, accounts receivable, accounts payable and accrued expenses. Cash and cash equivalents and investments are reported at their respective fair values on the balance sheet dates. The recorded carrying amount of accounts receivable, accounts payable and accrued expenses approximates their fair values due to their short‑term nature. Inventory Inventory is stated at the lower of standard cost, which approximates actual cost on a first‑in, first‑out basis, or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We may be exposed to a number of factors that could result in portions of our inventory becoming either obsolete or in excess of anticipated usage. These factors include, but are not limited to, technological changes, competitive pressures in products and prices, and the introduction of new product lines. We regularly evaluate our ability to realize the value of inventory based on a combination of factors, including historical usage rates, forecasted sales, product life cycles, and market acceptance of new products. When inventory that is obsolete or in excess of anticipated usage is identified, it is written down to net realizable value or an inventory valuation allowance is established. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight‑line method over estimated useful lives of the respective assets, which are generally three to five years for computer software and hardware and five to seven years for furniture, fixtures, machinery and equipment. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the improvements. Repair and maintenance costs that do not extend the useful life of our property and equipment are expensed as incurred. Intangible Assets Intangible assets include application and legal costs incurred to obtain patents. We capitalize these costs when we determine that probable future economic benefits exist. In making this determination, we consider the projected future operating results associated with the patents, industry and economic trends, and the entry of new products in the market. Costs incurred prior to this determination are expensed in the period they are incurred. We amortize capitalized patent costs using the straight‑line method over their useful lives, which is typically 17 years. Periodic costs incurred to maintain existing patents are expensed as incurred. Research & Development and Capitalized Software Development Costs Research and development costs are expensed as incurred. Some of our products include embedded software which is essential to the products’ functionality. Costs incurred in the research and development of new software components and enhancements to existing software components are expensed as incurred until technological feasibility has been established. We capitalize software development costs when the project reaches technological feasibility and cease capitalization when the project is ready for release. Capitalized software development costs are included in intangible assets and are amortized on a straight-line basis over the estimated useful life of the product and included in cost of revenue. Amortization begins when the product is available for general release to the customer. Long‑lived Assets Long‑lived assets, including right-of-use assets, are tested for impairment whenever changes in circumstances indicate the carrying value of these assets may be impaired. Impairment indicators include, but are not limited to, technological obsolescence, unfavorable court rulings, significant negative industry and economic trends, and significant underperformance relative to historical and projected future operating results. Impairment is considered to have occurred when the estimated undiscounted future cash flows related to the asset groups are less than its carrying value. Estimates of future cash flows involve consideration of many factors including the marketability of new products, product acceptance and lifecycle, competition, appropriate discount rates and operating margins. An impairment is recognized as the amount by which the carrying value is greater than the fair value of the asset or asset group. Warranty We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage in product quality programs and processes, including actively monitoring and evaluating the quality of our suppliers, the estimated warranty obligation is affected by ongoing product failure rates, material usage costs and direct labor incurred in correcting a product failure. Actual product failure rates, material usage costs and the amount of labor required to repair products that differ from estimates result in revisions to the estimated liability. We warrant for a limited period of time that our products will be free from defects in materials and workmanship. We estimate warranty allowances based on historical warranty experience. The estimates we use in projecting future product warranty costs may prove to be incorrect. Any future determination that our provision for product warranty is understated could result in increases to our cost of revenue and a reduction in our operating profits and results of operations. Historically, warranty expenses have not been material to our financial statements. Advertising and Marketing For the years ended December 31, 2019, 2018 and 2017, these costs were $155,983, $123,451 and $118,975, respectively. Advertising and marketing costs are expensed as incurred and included in sales and marketing expense. Stock‑Based Compensation We recognize stock‑based compensation expense associated with employee equity awards on a straight‑line basis over the requisite service period for the entire award, which is generally four years for employees and two years for the board of directors. Historically, we have granted two types of employee equity awards, stock options and restricted stock units. The maximum contractual life of our stock options is ten years from the grant date. We utilize the Black‑Scholes option pricing model to estimate the grant date fair value of those awards. The Black‑Scholes option pricing model requires the input of certain assumptions including stock price, dividend yield, expected volatility, risk‑free interest rate, and expected option life. Changes in these assumptions can materially affect the estimated fair value of our employee stock options. The grant date stock price was based on our closing stock price on the date of grant; dividend yield was based on our expectation of dividend payments over the expected life of the option; expected volatility was based on a study of our volatility and comparable, publicly traded companies with similar products and product life cycles; risk-free interest rate was the rate available on zero coupon U.S. government obligations with a term approximating the expected option life; the expected option life was calculated using the simplified method. The grant date fair value of our restricted stock units is based on the closing price of our common stock on the date of grant. We elect to recognize forfeitures as they occur. We issue new shares of common stock upon exercise of stock options or vesting of restricted stock units. Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is recorded to offset net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We recognize the tax benefit of uncertain tax positions in the financial statements based on the technical merits of the position. When the tax position is deemed more likely than not of being sustained, we recognize the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement. On December 22, 2017, the Tax Cuts and Jobs Act ("2017 Act") was enacted. As a result of the 2017 Act, we were required to revalue our deferred tax assets and deferred tax liabilities to account for the future impact of lower corporate tax rates on these deferred amounts. The reduction in the federal corporate tax rate increased our income tax expense for the year ended December 31, 2017. See Note 11 for further information on the financial impact of the 2017 Act. Foreign Currency Gains and losses from transactions denominated in currencies other than our functional currency are included in other income, net. Foreign currency gains and losses result primarily from fluctuations in the exchange rate between the U.S. Dollar and the Japanese Yen. Comprehensive Income Comprehensive income includes net income and other comprehensive income items that are excluded from net income under U.S. GAAP. Comprehensive income includes unrealized gains and losses on our investments classified as available for sale. Basic and Diluted Net Income per Share Basic net income per share is based on the weighted-average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The Underwriters’ warrants, stock options and restricted stock units granted by us represent the only dilutive effect reflected in diluted weighted‑average shares outstanding. See the Warrants portion of Note 9. The following table presents the computation of basic and diluted net income per share: For the Years Ended December, 31 2019 2018 2017 Net income $ 9,630,959 $ 6,303,450 $ 499,764 Weighted-average shares outstanding — Basic 11,282,214 10,758,752 10,638,858 Effect of dilutive securities: Underwriters’ warrants 55,361 92,486 — Stock options 843,957 1,137,270 1,067,072 Restricted stock units 94,912 121,609 14,386 Weighted-average shares outstanding — Diluted 12,276,444 12,110,117 11,720,316 Basic net income per share $ 0.85 $ 0.59 $ 0.05 Diluted net income per share $ 0.78 $ 0.52 $ 0.04 Stock options and warrants to purchase shares of our common stock and restricted stock units excluded from the calculation of diluted net income per share because the effect would have been anti-dilutive are as follows: As of December, 31 2019 2018 2017 Anti-dilutive stock options, warrants and restricted stock units 25,439 21,488 478,882 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 throughout the year. We have not incurred any losses related to these balances. Our products require clearance from the Food and Drug Administration and international regulatory agencies prior to commercialized sales. Our future products may not receive required approvals. If we were denied such approvals, or if such approvals were revoked or delayed or if we were unable to timely renew certain approvals for existing products, it would have a materially adverse impact on our business, results of operations and financial condition. Certain key components of our products essential to their functionality are sole‑sourced. Any disruption in the availability of these components would have a materially adverse impact on our business, results of operations and financial condition. Recent Accounting Pronouncements Accounting Pronouncements Implemented in 2019 In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by all leases not considered short-term leases. For short-term leases, lessees may elect an accounting policy by class of underlying assets under which right-of-use assets and lease liabilities are not recognized and lease payments are generally recognized as expense over the lease term on a straight-line basis. We adopted this update on January 1, 2019 and, as part of that process, made the following elections: · We elected to use the hindsight practical expedient. · We elected the package of practical expedients in transition for leases that commenced prior to January 1, 2019 whereby contracts were not reassessed or reclassified from their previous assessment as of December 31, 2018. · In March 2018, the FASB approved an optional transition method that allows companies to use the effective date as the date of initial application on transition. We elected this transition method, and as a result, did not adjust comparative period financial information or make the newly required lease disclosures for periods before the effective date. · We elected to make the accounting policy election for short-term leases resulting in lease payments being recorded as an expense on a straight-line basis over the lease term. · We elected to not separate lease and nonlease components, for all leases. · We did not elect the land easement practical expedient. The impact of Topic 842 on our Balance Sheet beginning January 1, 2019 was through the recognition of an operating lease right-of-use asset and an operating lease liability. Amounts recognized at January 1, 2109 for operating leases were as follows: January 1, 2019 Operating lease right-of-use asset $ 3,182,724 Current portion of operating lease liability $ 226,852 Operating lease liability, less current portion $ 2,955,872 There was no impact to our Statements of Operations, Statements of Cash Flows or beginning retained earnings related to the adoption of Topic 842. Recently Issued Accounting Pronouncements to be Implemented In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . ASU 2019-12 will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. We do not expect ASU 2019-12 to have a material impact on financial condition, results of operations or cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. In November 2018, April 2019 and May 2019, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses , ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses and ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief , which provided additional implementation guidance on ASU 2016-03. The previously mentioned ASUs are effective for fiscal years beginning after December 15, 2022, with early adoption permitted. We do not expect the adoption of these ASUs to have a material impact on our financial condition, results of operations or cash flows. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2019 | |
Revenue | |
Revenue | 2 - Revenue 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: For the Years Ended December 31, 2019 2018 2017 United States $ 30,930,267 $ 24,508,026 $ 19,500,680 International 7,586,874 5,930,957 3,580,912 Total revenue $ 38,517,141 $ 30,438,983 $ 23,081,592 Revenue information by type is as follows: For the Years Ended December 31, 2019 2018 2017 Devices: MRI compatible IV infusion pump system $ 18,052,406 $ 14,536,998 $ 13,621,769 MRI compatible patient vital signs monitoring systems 9,709,233 6,655,618 1,848,616 Total Devices revenue 27,761,639 21,192,616 15,470,385 Disposables, services and other 8,914,822 7,728,624 6,613,999 Amortization of extended warranty agreements 1,840,680 1,517,743 997,208 Total revenue $ 38,517,141 $ 30,438,983 $ 23,081,592 Contract Liabilities Our contract liabilities consist of: As of December 31, 2019 2018 Advance payments from customers $ 12,765 $ 180,425 Shipments in-transit 4,250 9,582 Extended warranty agreements 4,284,872 3,415,782 Total $ 4,301,887 $ 3,605,789 Changes in the contract liabilities during the period are as follows: Deferred Revenue Contract liabilities, December 31, 2017 $ 3,621,256 Increases due to cash received from customers 2,222,217 Decreases due to recognition of revenue (2,237,684) Contract liabilities, December 31, 2018 $ 3,605,789 Increases due to cash received from customers 3,337,181 Decreases due to recognition of revenue (2,641,083) Contract liabilities, December 31, 2019 $ 4,301,887 Capitalized Contract Costs Our total capitalized contract costs as of December 31, 2019 and December 31, 2018 were $352,250 and $181,248, respectively. Expense for the years ended December 31, 2019, 2018 and 2017 related to the amortization of capitalized contract costs were immaterial to our financial statements. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2019 | |
Inventory | |
Inventory | 3 — Inventory Inventory consists of: As of December 31, 2019 2018 Raw materials $ 2,939,451 $ 3,408,158 Work in process 229,479 305,562 Finished goods 697,483 557,566 Inventory before allowance for excess and obsolete 3,866,413 4,271,286 Allowance for excess and obsolete (224,852) (211,843) Total $ 3,641,561 $ 4,059,443 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Property and Equipment | 4 — Property and Equipment Property and equipment consist of: As of December 31, 2019 2018 Computer software and hardware $ 627,624 $ 555,292 Furniture and fixtures 1,112,550 901,415 Leasehold improvements 225,841 202,026 Machinery and equipment 1,778,524 2,184,015 Tooling in-process 163,105 58,263 3,907,644 3,901,011 Accumulated depreciation (1,853,838) (2,031,450) Total $ 2,053,806 $ 1,869,561 Depreciation and amortization expense of property and equipment was $501,218, $470,395 and $362,872 for the years ended December 31, 2019, 2018 and 2017, respectively. Property and equipment, net by geographic region is as follows: As of December 31, 2019 2018 United States $ 1,689,740 $ 1,439,545 International 364,066 430,016 Total property and equipment, net $ 2,053,806 $ 1,869,561 Long-lived assets held outside of the United States consist principally of tooling, which is a component of property and equipment, net. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets | |
Intangible Assets | 5 — Intangible Assets The following table summarizes the components of intangible asset balances: As of December 31, 2019 2018 Patents — in use $ 304,270 $ 304,270 Patents — in process 120,581 73,164 Internally developed software — in use 867,569 867,569 Internally developed software — in process 80,721 13,723 Trademarks 26,133 23,017 1,399,274 1,281,743 Accumulated amortization (539,187) (449,224) Total $ 860,087 $ 832,519 Amortization expense of intangible assets was $89,963, $89,333 and $82,399 for the years ended December 31, 2019, 2018 and 2017, respectively. Expected annual amortization expense for the next five years related to intangible assets is as follows (excludes in-process intangible assets): 2020 $ 89,963 2021 $ 89,963 2022 $ 89,392 2023 $ 88,740 2024 $ 88,439 |
Investments
Investments | 12 Months Ended |
Dec. 31, 2019 | |
Investments | |
Investments | 6 — Investments Our investments consisted of corporate bonds that we have classified as available-for-sale and are summarized in the following tables: As of December 31, 2019 Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value Corporate bonds: U.S. corporations $ 2,258,686 $ 29,123 $ — $ 2,287,809 International corporations 471,139 9,339 — 480,478 Total $ 2,729,825 $ 38,462 $ — $ 2,768,287 As of December 31, 2018 Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value Corporate bonds: U.S. corporations $ 5,487,645 $ — $ 58,309 $ 5,429,336 International corporations 918,417 2,162 — 920,579 Total $ 6,406,062 $ 2,162 $ 58,309 $ 6,349,915 As of December 31, 2019, the scheduled maturities of our investments are as follows: Cost Fair Value Less than 1 year $ 471,139 $ 480,478 1 to 3 years 2,258,686 2,287,809 Total $ 2,729,825 $ 2,768,287 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | 7 — Fair Value Measurements The fair value of our assets and liabilities subject to recurring fair value measurements are as follows: Fair Value at December 31, 2019 Quoted Prices Significant in Active Other Significant Market for Observable Unobservable Fair Identical Assets Inputs Inputs Value (Level 1) (Level 2) (Level 3) Corporate bonds: U.S. corporations $ 2,287,809 $ — $ 2,287,809 $ — International corporations 480,478 — 480,478 — Total $ 2,768,287 $ — $ 2,768,287 $ — Fair Value at December 31, 2018 Quoted Prices Significant in Active Other Significant Market for Observable Unobservable Fair Identical Assets Inputs Inputs Value (Level 1) (Level 2) (Level 3) Corporate bonds: U.S. corporations $ 5,429,336 $ — $ 5,429,336 $ — International corporations 920,579 — 920,579 — Total $ 6,349,915 $ — $ 6,349,915 $ — Our corporate bonds are valued by the third-party custodian at closing prices from national exchanges or pricing vendors on the valuation date. There were no transfers into or out of any Levels during the years ended December 31, 2019 or 2018. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss) | 8 — Accumulated Other Comprehensive Income (Loss) The only component of accumulated other comprehensive income (loss) relates to unrealized gains and (losses) on our investments and activity is as follows: Unrealized Gains (Losses) on Available-For-Sale Securities Balance at December 31, 2016 $ (36,849) Losses, net (16,655) Reclassification realized in net earnings 4,595 Balance at December 31, 2017 $ (48,909) Losses, net (3,554) Reclassification realized in net earnings 20,767 Cumulative effect from adoption of accounting standard update (10,496) Balance at December 31, 2018 $ (42,192) Gains, net 80,659 Reclassification realized in net earnings (8,093) Balance at December 31, 2019 $ 30,374 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | 9 — Stock‑Based Compensation In April 2014, our Board of Directors adopted and our shareholders approved the 2014 Equity Incentive Plan (“2014 Plan”). Upon adoption and approval of the 2014 Plan, the previous equity incentive plan was terminated and the remaining shares available for future awards were canceled. The 2014 Plan reserved 1,000,000 shares of our common stock for awards of incentive stock options, non-qualified stock option, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based and cash awards. As of December 31, 2019, there were 198,966 shares available for future awards under the 2014 Plan. Stock‑based compensation was recognized as follows in the Statements of Operations: For the Years Ended December 31, 2019 2018 2017 Cost of revenue $ 256,924 $ 279,221 $ 214,325 General and administrative 1,167,161 1,000,002 1,670,015 Sales and marketing 348,603 329,644 441,931 Research and development 82,277 155,452 128,092 Total stock-based compensation expense $ 1,854,965 $ 1,764,319 $ 2,454,363 Stock Options The following table presents a summary of our stock option activity as of and for the year ended December 31, 2019: Weighted-Average Weighted-Average Remaining Aggregate Exercise Price Contractual Intrinsic Options Per Share Life (Yrs.) Value Outstanding beginning of period 1,129,463 $ 2.29 4.2 $ 25,052,908 Options granted 50,000 21.13 Options exercised (539,853) 1.60 Options cancelled (750) 26.33 Options expired — — Outstanding end of period 638,860 $ 4.31 4.3 $ 12,192,995 Exercisable 586,985 $ 2.84 3.9 $ 12,067,647 As of December 31, 2019, we had $538,991 of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted average period of 3.6 years. The total grant date fair value of stock options that vested during the year ended December 31, 2019 was $101,387. The total intrinsic value of options exercised during the year ended December 31, 2019, 2018 and 2017 was $11,870,492, $6,071,319 and $268,053, respectively. The weighted-average grant-date fair value of options granted during the year ended December 31, 2019 was $11.84. No options were granted during the year ended December 31, 2018. The weighted-average grant-date fair value of options granted during the years ended December 31, 2017 was $11.10. For the years ended December 31, 2019, 2018 and 2017, we estimated the fair value of options granted using a Black-Scholes option pricing model with the following weighted average assumptions: For the Years Ended December 31, 2019 2018 2017 Volatility 59.1 % — % 92.0 % Expected term (years) 6.3 — 6.3 Risk-free interest rate 1.5 % — % 1.4 % Dividend yield % — % % Restricted Stock Units The following table presents a summary of our restricted stock unit activity as of and for the year ended December 31, 2019: Restricted Weighted-Average Stock Grant Date Units Fair Value Unvested at December 31, 2018 226,501 $ 15.89 Granted 178,657 $ 21.88 Vested (93,989) $ 16.41 Cancelled (14,121) $ 15.11 Unvested at December 31, 2019 297,048 $ 19.36 As of December 31, 2019, we had $5,261,330 of unrecognized compensation cost related to the unvested restricted stock units, which is expected to be recognized over a weighted-average period of 3.1 years. Warrants Associated with our IPO completed on July 21, 2014, we issued Underwriters Warrants (the “Warrants”) to purchase up to a total of 201,600 shares of our common stock. The grant date aggregate fair value of the Warrants was $611,000. The Warrants were exercisable, in whole or in part, commencing July 21, 2015 through July 21, 2017. The Warrants were exercisable at $8.125 per share, or 130 percent of the public offering price per share of our common stock in the IPO. On the grant date, we classified the Warrants as equity and incremental direct costs associated with our IPO. Accordingly, the issuance of the Warrants had no impact on our financial statements. On July 17, 2017, our Board of Directors approved a modification to the Warrants. This modification extended the expiration date of the Warrants from July 17, 2017 to July 17, 2019 and revised the strike price from $8.125 to $10.05. The fair value of the amended Warrants was $2.42 per share as measured using the Black-Scholes options pricing model. Related to this modification, we recognized a $380,452 charge to earnings during the year ended December 31, 2017. This charge is included in general and administrative expense in our Statements of Operations. During the year ended December 31, 2019, 162,031 warrants were exercised. As of December 31, 2019, no Warrants remained outstanding. |
Other Income, Net
Other Income, Net | 12 Months Ended |
Dec. 31, 2019 | |
Other Income, Net | |
Other Income, Net | 10 — Other Income, Net Other income, net consists of: For the Years Ended December 31, 2019 2018 2017 Interest income $ 388,801 $ 238,106 $ 122,575 Realized gain (losses) on maturities of investments 10,764 (29,308) (6,761) Foreign currency exchange losses (3,653) (15,261) (4,437) Total other income, net $ 395,912 $ 193,537 $ 111,377 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | 11 — Income Taxes The components of the provision for income taxes are as follows: For the Years Ended December 31, 2019 2018 2017 Current taxes: U.S. federal $ (47,831) $ 740 $ 862,725 State 58,379 37,547 186,993 Total current tax expense 10,548 38,287 1,049,718 Deferred taxes: U.S. federal (544,384) (128,905) (92,788) State (53,806) (15,525) (60,308) Total deferred tax benefit (598,190) (144,430) (153,096) Provision for income tax (benefit) expense $ (587,642) $ (106,143) $ 896,622 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred taxes are as follows: As of December 31, 2019 2018 Deferred income tax assets (liabilities): Stock compensation $ $ 927,282 Deferred revenue 446,562 499,307 Reserves and allowances 257,549 197,355 Research and development credits carryforward 146,320 43,391 Net operating loss carryforward 688,084 26,767 Depreciation and amortization (619,528) (611,269) Other, net (45,929) 5,869 Total deferred income taxes, net $ 1,663,415 $ 1,088,702 As of December 31, 2019, we recorded a U.S. federal net operating loss carryforward of $613,610, which has an indefinite carryforward period, and is primarily related to tax windfalls associated with the exercise and vesting of equity awards. Additionally, as of December 31, 2019, we recorded a state net operating loss carryforward of $74,474, which expires in various years between 2031 and 2039. A reconciliation of the statutory U.S. federal tax rate to our effective rate is as follows: For the Years Ended December 31, 2019 2018 2017 Statutory U.S. federal tax rate 21.0 % 21.0 % 34.0 % Tax Cuts and Jobs Act — — 33.9 Tax (windfalls) deficiencies on exercise and vesting of equity awards (17.1) (21.8) 5.4 Stock compensation expense (9.8) (0.2) 5.3 State taxes, net of federal benefit 0.1 (0.1) 5.1 Permanent items 1.2 0.5 4.4 Provision to return adjustments (1.1) (0.3) (9.5) Domestic production activities deduction — — (7.2) Research and development credits (0.8) (0.8) (7.2) Effective rate (6.5) % (1.7) % 64.2 % As of December 31, 2019 and December 31, 2018, we had not identified or accrued for any uncertain tax positions. We are currently unaware of any uncertain tax positions that could result in significant payments, accruals or other material deviations in this estimate over the next 12 months. We file tax returns in the United States Federal jurisdiction and many U.S. state jurisdictions. Our returns are not currently under examination by the Internal Revenue Service (“IRS”). The Company remains subject to income tax examinations for our United States Federal and certain U.S. state income taxes for 2016 and subsequent years and various other U.S. state income taxes for 2015 and subsequent years. Tax Cuts and Jobs Act On December 22, 2017, the Tax Cuts and Jobs Act (“2017 Act”) was enacted. The 2017 Act includes a number of changes to existing U.S. tax laws that impact us, most notably a reduction of the U.S. corporate income tax from 34.0 percent to 21.0 percent effective January 1, 2018. The 2017 Act also provides for the acceleration of depreciation for certain assets placed into service after September 27, 2017 as well as prospective changes that began in 2018, including repeal of the domestic production activities deduction, acceleration of tax revenue recognition, capitalization of research and development expenditures and additional limitations on the deductibility of executive compensation. As a result of the 2017 Act, our deferred tax assets and deferred tax liabilities were revalued to reflect the reduction in the U.S. corporate income tax rate from 34.0 percent to 21.0 percent, resulting in a $473,899 increase in income tax expense for the year ended December 31, 2017. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Leases | 12 — Leases Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate, unless the rate implicit in the lease is readily determinable. Lease assets also include any upfront lease payments made and exclude lease incentives. Lease terms include options to extend or terminate leases when it is reasonably certain that those options will be exercised. Variable lease payments are expensed as incurred and include annual rent adjustments based on the consumer price index. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term. Lease agreements with lease and nonlease components are combined as a single lease component. The depreciable life of lease assets and leasehold improvements is limited by the expected lease term. We have only one material lease contract outstanding. In January 2014, we entered into a non-cancelable operating lease, commencing July 1, 2014, for our manufacturing and headquarters facility in Winter Springs, Florida owned by Susi, LLC, an entity controlled by our Chairman of the Board and Chief Technology Officer, Roger Susi. Pursuant to the terms of our lease for this property, the monthly base rent is $34,133, adjusted annually for changes in the consumer price index. Under the terms of the lease, we are responsible for property taxes, insurance and maintenance expenses. Prior to May 31, 2019, the expiration date of the initial lease term, and pursuant to the terms of the lease contract, we renewed the lease for an additional five years, resulting in a new lease expiration date of May 31, 2024. Unless advance written notice of termination is timely provided, the lease will automatically renew for one additional successive term of five years beginning in 2024, and thereafter will be renewed for successive terms of one year each. For purposes of Topic 842, we concluded that we will exercise the remaining five-year option, resulting in a remaining lease term of 9.4 years as of December 31, 2019. This lease agreement does not contain any residual value guarantee or material restrictive covenants. Operating lease cost recognized in the Condensed Statements of Operations is as follows: Year Ended December 31,2019 Cost of revenue $ 186,139 General and administrative 184,177 Sales and marketing 10,417 Research and development 28,861 Total $ 409,594 Lease costs for short-term leases were immaterial for the year ended December 31, 2019. Maturity of Operating lease liability as of December 31, 2019 is as follows: 2020 $ 409,596 2021 409,596 2022 409,596 2023 409,596 2024 409,596 Thereafter 1,809,050 Total lease payments 3,857,030 Imputed interest (901,157) Present value of lease liability $ 2,955,873 We used a discount rate of 6.0% to determine the present value of the operating lease liability on January 1, 2019. Undiscounted future minimum lease payments under noncancelable operating leases as of December 31, 2018 as determined prior to the adoption of ASC 842 are as follows: 2019 $ 170,664 2020 — 2021 — 2022 — 2023 — Thereafter — Total minimum lease payments $ 170,664 |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefit Plan | |
Employee Benefit Plan | 13 — Employee Benefit Plan We sponsor a 401(k) tax-deferred savings plan under which eligible employees may elect to have a portion of their salary deferred and contributed to the plan. Employer matching contributions are determined by management and are discretionary. Employer matching contributions were $374,979, $293,669 and $232,129, respectively, for the years ended December 31, 2019, 2018 and 2017. Employer contributions vest immediately. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14 — Commitments and Contingencies Purchase commitments. We had various purchase orders for goods or services totaling approximately $3,208,174 at December 31, 2019. No amounts related to these purchase orders have been recognized in our balance sheet. Indemnifications. Under our amended and restated bylaws, we have agreed to indemnify our officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity. We have a director and officer liability insurance policy that limits our exposure under these indemnifications and enables us to recover a portion of any future loss arising out of them. In addition, in the normal course of business, we enter into contracts that contain indemnification clauses whereby the Company indemnifies our customers against damages associated with product failures. We have determined that these agreements fall within the scope of ASC 460, Guarantees . We have obtained liability insurance providing coverage that limits our exposure for these indemnified matters. We have not incurred costs to defend lawsuits or settle claims related to these indemnities. We believe the estimated fair value of these indemnities is minimal and have not recorded a liability for these agreements as of December 31, 2019. Legal matters. We may from time to time become a party to various legal proceedings or claims that arise in the ordinary course of business. |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2019 | |
Capital Stock | |
Capital Stock | 15 — Capital Stock The rights and privileges of our Series A Preferred Stock and Common Stock are as follows: Series A Preferred Stock We are authorized to issue 3,500,000 shares of preferred stock, of which 800,000 of these shares shall be designated as Series A Preferred Stock (“Preferred Stock”) with a par value of $0.0001 per share. As of December 31, 2019, there was no preferred stock issued or outstanding. Voting and Dividends. The holder of each share of Preferred Stock has the right to one vote for each share of Common Stock into which such Preferred Stock could then be converted. The holders of the Preferred Stock are entitled to receive dividends from legally available assets prior to any declaration or payment of dividends to Common Stock holders. Dividends on each share of Preferred Stock are initially at $0.06429 per year payable when and as declared by the Board and are non-cumulative. After payment of such dividends, any additional dividends or distributions are distributed among all holders of Common Stock and Preferred Stock in proportion to the number of shares of Common Stock that would be held by each holder if all shares of Preferred Stock were converted to Common Stock at the then effective conversion rate. To date, no dividends have been declared. Liquidation. In the event of any liquidation, dissolution or winding up of our Company, either voluntary or involuntary, the holders of the Preferred Stock are entitled to receive, prior and in preference to any distribution of the proceeds resulting from such liquidation event to holders of the Common Stock, an amount equal to $1.07143 plus declared but unpaid dividends. If, upon occurrence of such liquidation event, the proceeds are insufficient to permit the payment of the aforementioned amount in full, then the entire proceeds shall be distributed ratably among all holders of the Preferred Stock in proportion to the full amount each holder would otherwise receive. Conversion. Each share of Preferred Stock is convertible at any time, at the option of the holder, into such number of fully paid non-assessable shares of Common Stock as is determined by dividing the original issue price of each share of Preferred Stock by the applicable conversion price. The initial conversion price per share is $1.07143. Adjustments to the initial conversion price may result from a recapitalization event or changes in the number of common shares outstanding. Each share of Preferred Stock automatically converts into shares of fully paid non-assessable shares of Common Stock, at the then applicable conversion rate, upon the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Preferred Stock, voting as a single class on an as-converted basis. Redemption. Upon a majority vote of the then outstanding shares of Preferred Stock, we may, at our discretion, redeem or purchase shares of Preferred Stock. We also have a first right of refusal to repurchase shares of the Preferred Stock arising from a holder's proposal to sell such Preferred Stock. Common Stock We are authorized to issue 31,500,000 shares of Common Stock with a par value of $0.0001 per share. Voting and Dividends. Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Company for their vote except for matters related to potential amendments to our Certificate of Incorporation or matters that solely relate to the terms of one or more outstanding series of our Preferred Stock. Holders of our Common Stock are entitled to receive, when, as and if declared by the Board, dividends pro rata based on the number of shares of Common Stock held. These dividend rights are junior to those of the Preferred Stock holders’ rights to dividends. Liquidation. Liquidation preference of the Common Stock holders is junior to that of the Preferred Stock holders. Redemption. The Common Stock is not redeemable. Share Repurchase On April 27, 2017 (the “Authorization Date”), our Board of Directors approved a share repurchase program, authorizing the repurchase of up to $8.0 million of our common stock through April 28, 2018. During the program period, we used $1,818,541 to acquire 209,922 shares of our common stock. We retired to treasury all of the repurchased shares. |
Organization and Significant _2
Organization and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the financial statements and the reported amount of revenue and expenses during the reporting period. Such estimates include allowances for potentially uncollectible accounts receivable, valuation of inventory, intangible assets, stock‑based compensation, deferred income taxes, reserves for warranty obligations, and the provision for income taxes. Actual results could differ from those estimates. |
Close-Out of FDA Warning Letter | Close-Out of FDA Warning Letter As announced on October 8, 2019, we received a close-out letter from the FDA with respect to the FDA warning letter previously received in August 2014. We received this warning letter following a routine inspection of our prior facility between April 7 and April 16, 2014. The close-out letter confirmed that all issues cited in the August 2014 warning letter have been resolved. |
Revenue Recognition | Revenue Recognition We generate revenue from the sale of MRI compatible medical devices and accessories, extended warranty agreements, services related to maintaining our products and the sale of disposable products used with our devices. The principal customers for our MRI compatible products include hospitals and acute care facilities, both in the U.S. and internationally. 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 most domestic sales, we enter into agreements with healthcare supply contracting companies, commonly referred to as Group Purchasing Organizations ("GPOs"), which enable us to sell and distribute our products to their member hospitals. Our agreements with GPOs typically include negotiated pricing for all group members established at time of GPO contract execution. We do not sell to GPOs. Hospitals, group practices and other acute care facilities that are members of a GPO, purchase products directly from us under the terms of our GPO agreements. We recognize revenue when all of the following criteria are met: we have a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or the amount we expect to receive, is determinable and we have transferred control of the promised products or services to the customer. We consider transfer of control evidenced upon the passage of title and risks and rewards of ownership to the customer, which is typically at a point in time, except for our extended warranty agreements. We allocate the transaction price using the relative standalone selling price method. Customer sale prices for our MRI compatible IV infusion pump systems and related disposables and services are contractually fixed over the GPO contract term. We recognize a receivable at the point in time we have an unconditional right to payment. Payment terms are typically within 45 days after transferring control to U.S. customers. Most international distributors are required to pay a portion of the transaction price in advance and the remaining amount within 30 days of receiving the related products. Accordingly, we have elected to use the practical expedient that allows us to ignore the possible existence of a significant financing component within the contract. We have elected to account for shipping and handling charges billed to customers as revenue and shipping and handling related expenses as cost of revenue. In certain U.S. states we are required to collect sales taxes from our customers. We have elected to exclude the amounts collected for these taxes from revenue and record them as a liability until remitted to the taxing authority. Contract Liabilities We record contract liabilities, or deferred revenue, when we have an obligation to provide a product or service to the customer and payment is received in advance of our performance. When we sell a product or service with a future performance obligation, we defer revenue allocated to the unfulfilled performance obligation and recognize this revenue when, or as, the performance obligation is satisfied. Our deferred revenue consists of advance payments received from customers prior to the transfer of products or services, shipments that are in-transit at the end of a period and sales of extended warranty agreements. Advance payments received from customers and shipments in-transit are recognized in revenue at the time control of the related products has been transferred to the customer or services have been delivered. Amounts related to extended warranty agreements are deferred and recognized in revenue ratably over the agreement period, which is typically one to four years after control of the related products is transferred to the customer, as we believe this recognition pattern best depicts the transfer of services being provided. Deferred revenue is classified as current or long-term deferred revenue in our Balance Sheets, depending on the expected timing of satisfying the related performance obligations. Capitalized Contract Costs We capitalize commissions paid to our sales managers related to contracts with customers when the associated revenue is expected to be earned over a period of time. Deferred commissions are primarily related to the sale of extended warranty agreements. Capitalized commissions are included in Prepaid Expenses and Other Current Assets in our Balance Sheets when the associated expense is expected to be recognized in one year or less, or in Other Assets when the associated expense is expected to be recognized in greater than one year. The associated expense is included in Sales and Marketing expenses in our Statements of Operations. Variable Consideration Most of our sales are subject to 30 to 60-day customer-specified acceptance provisions primarily for purposes of ensuring products were not damaged during the shipping process. Historically, we have experienced immaterial product returns and, when experienced, we typically exchange the affected products with new products. Accordingly, variable consideration from contracts with customers is immaterial to our financial statements. |
Cash Equivalents | Cash Equivalents All highly liquid instruments purchased with an original maturity of three months or less are classified as cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable is recorded at the transaction price of the related products and services. We regularly assess the sufficiency of the allowance for estimated uncollectible accounts receivable. Estimates are based on historical collection experience and other customer‑specific information, such as bankruptcy filings or known liquidity problems of our customers. When it is determined that an account receivable is uncollectible, it is written off and relieved from the allowance. Any future determination that the allowance for estimated uncollectible accounts receivable is not properly stated could result in changes in operating expense and results of operations. As of December 31, 2019 and 2018, our allowance for doubtful accounts was $69,093 and $42,443, respectively. |
Investments | Investments Our investments consist of corporate debt securities and are considered available‑for‑sale. The specific identification method is used to determine the cost basis of investments sold. Our investments are recorded in our Balance Sheets at fair value. We classify our investments as current based on the nature of the investments and their availability for use in current operations. Unrealized gains and losses on our investments are included in accumulated other comprehensive income (loss), net of tax. Realized gains or losses and impairment losses that are determined to be other‑than‑temporary are recorded in other income, net in our Statements of Operations. |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. A three‑level valuation hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels of inputs are: · Level 1 — quoted prices (unadjusted) in active markets for an identical asset or liability. · Level 2 — quoted prices for a similar asset or liability in an active market or model‑derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability. · Level 3 — unobservable and significant to the fair value measurement of the asset or liability. Financial instruments include cash and cash equivalents, investments, accounts receivable, accounts payable and accrued expenses. Cash and cash equivalents and investments are reported at their respective fair values on the balance sheet dates. The recorded carrying amount of accounts receivable, accounts payable and accrued expenses approximates their fair values due to their short‑term nature. |
Inventory | Inventory Inventory is stated at the lower of standard cost, which approximates actual cost on a first‑in, first‑out basis, or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We may be exposed to a number of factors that could result in portions of our inventory becoming either obsolete or in excess of anticipated usage. These factors include, but are not limited to, technological changes, competitive pressures in products and prices, and the introduction of new product lines. We regularly evaluate our ability to realize the value of inventory based on a combination of factors, including historical usage rates, forecasted sales, product life cycles, and market acceptance of new products. When inventory that is obsolete or in excess of anticipated usage is identified, it is written down to net realizable value or an inventory valuation allowance is established. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight‑line method over estimated useful lives of the respective assets, which are generally three to five years for computer software and hardware and five to seven years for furniture, fixtures, machinery and equipment. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the improvements. Repair and maintenance costs that do not extend the useful life of our property and equipment are expensed as incurred. |
Intangible Assets | Intangible Assets Intangible assets include application and legal costs incurred to obtain patents. We capitalize these costs when we determine that probable future economic benefits exist. In making this determination, we consider the projected future operating results associated with the patents, industry and economic trends, and the entry of new products in the market. Costs incurred prior to this determination are expensed in the period they are incurred. We amortize capitalized patent costs using the straight‑line method over their useful lives, which is typically 17 years. Periodic costs incurred to maintain existing patents are expensed as incurred. |
Research & Development and Capitalized Software Development Costs | Research & Development and Capitalized Software Development Costs Research and development costs are expensed as incurred. Some of our products include embedded software which is essential to the products’ functionality. Costs incurred in the research and development of new software components and enhancements to existing software components are expensed as incurred until technological feasibility has been established. We capitalize software development costs when the project reaches technological feasibility and cease capitalization when the project is ready for release. Capitalized software development costs are included in intangible assets and are amortized on a straight-line basis over the estimated useful life of the product and included in cost of revenue. Amortization begins when the product is available for general release to the customer. |
Long-lived Assets | Long‑lived Assets Long‑lived assets, including right-of-use assets, are tested for impairment whenever changes in circumstances indicate the carrying value of these assets may be impaired. Impairment indicators include, but are not limited to, technological obsolescence, unfavorable court rulings, significant negative industry and economic trends, and significant underperformance relative to historical and projected future operating results. Impairment is considered to have occurred when the estimated undiscounted future cash flows related to the asset groups are less than its carrying value. Estimates of future cash flows involve consideration of many factors including the marketability of new products, product acceptance and lifecycle, competition, appropriate discount rates and operating margins. An impairment is recognized as the amount by which the carrying value is greater than the fair value of the asset or asset group. |
Warranty | Warranty We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage in product quality programs and processes, including actively monitoring and evaluating the quality of our suppliers, the estimated warranty obligation is affected by ongoing product failure rates, material usage costs and direct labor incurred in correcting a product failure. Actual product failure rates, material usage costs and the amount of labor required to repair products that differ from estimates result in revisions to the estimated liability. We warrant for a limited period of time that our products will be free from defects in materials and workmanship. We estimate warranty allowances based on historical warranty experience. The estimates we use in projecting future product warranty costs may prove to be incorrect. Any future determination that our provision for product warranty is understated could result in increases to our cost of revenue and a reduction in our operating profits and results of operations. Historically, warranty expenses have not been material to our financial statements. |
Advertising and Marketing | Advertising and Marketing For the years ended December 31, 2019, 2018 and 2017, these costs were $155,983, $123,451 and $118,975, respectively. Advertising and marketing costs are expensed as incurred and included in sales and marketing expense. |
Stock-Based Compensation | Stock‑Based Compensation We recognize stock‑based compensation expense associated with employee equity awards on a straight‑line basis over the requisite service period for the entire award, which is generally four years for employees and two years for the board of directors. Historically, we have granted two types of employee equity awards, stock options and restricted stock units. The maximum contractual life of our stock options is ten years from the grant date. We utilize the Black‑Scholes option pricing model to estimate the grant date fair value of those awards. The Black‑Scholes option pricing model requires the input of certain assumptions including stock price, dividend yield, expected volatility, risk‑free interest rate, and expected option life. Changes in these assumptions can materially affect the estimated fair value of our employee stock options. The grant date stock price was based on our closing stock price on the date of grant; dividend yield was based on our expectation of dividend payments over the expected life of the option; expected volatility was based on a study of our volatility and comparable, publicly traded companies with similar products and product life cycles; risk-free interest rate was the rate available on zero coupon U.S. government obligations with a term approximating the expected option life; the expected option life was calculated using the simplified method. The grant date fair value of our restricted stock units is based on the closing price of our common stock on the date of grant. We elect to recognize forfeitures as they occur. We issue new shares of common stock upon exercise of stock options or vesting of restricted stock units. |
Income Taxes | Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is recorded to offset net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We recognize the tax benefit of uncertain tax positions in the financial statements based on the technical merits of the position. When the tax position is deemed more likely than not of being sustained, we recognize the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement. On December 22, 2017, the Tax Cuts and Jobs Act ("2017 Act") was enacted. As a result of the 2017 Act, we were required to revalue our deferred tax assets and deferred tax liabilities to account for the future impact of lower corporate tax rates on these deferred amounts. The reduction in the federal corporate tax rate increased our income tax expense for the year ended December 31, 2017. See Note 11 for further information on the financial impact of the 2017 Act. |
Foreign Currency | Foreign Currency Gains and losses from transactions denominated in currencies other than our functional currency are included in other income, net. Foreign currency gains and losses result primarily from fluctuations in the exchange rate between the U.S. Dollar and the Japanese Yen. |
Comprehensive Income | Comprehensive Income Comprehensive income includes net income and other comprehensive income items that are excluded from net income under U.S. GAAP. Comprehensive income includes unrealized gains and losses on our investments classified as available for sale. |
Basic and Diluted Net Income per Share | Basic and Diluted Net Income per Share Basic net income per share is based on the weighted-average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The Underwriters’ warrants, stock options and restricted stock units granted by us represent the only dilutive effect reflected in diluted weighted‑average shares outstanding. See the Warrants portion of Note 9. The following table presents the computation of basic and diluted net income per share: For the Years Ended December, 31 2019 2018 2017 Net income $ 9,630,959 $ 6,303,450 $ 499,764 Weighted-average shares outstanding — Basic 11,282,214 10,758,752 10,638,858 Effect of dilutive securities: Underwriters’ warrants 55,361 92,486 — Stock options 843,957 1,137,270 1,067,072 Restricted stock units 94,912 121,609 14,386 Weighted-average shares outstanding — Diluted 12,276,444 12,110,117 11,720,316 Basic net income per share $ 0.85 $ 0.59 $ 0.05 Diluted net income per share $ 0.78 $ 0.52 $ 0.04 Stock options and warrants to purchase shares of our common stock and restricted stock units excluded from the calculation of diluted net income per share because the effect would have been anti-dilutive are as follows: As of December, 31 2019 2018 2017 Anti-dilutive stock options, warrants and restricted stock units 25,439 21,488 478,882 |
Certain Significant Risks and Uncertainties | 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 throughout the year. We have not incurred any losses related to these balances. Our products require clearance from the Food and Drug Administration and international regulatory agencies prior to commercialized sales. Our future products may not receive required approvals. If we were denied such approvals, or if such approvals were revoked or delayed or if we were unable to timely renew certain approvals for existing products, it would have a materially adverse impact on our business, results of operations and financial condition. Certain key components of our products essential to their functionality are sole‑sourced. Any disruption in the availability of these components would have a materially adverse impact on our business, results of operations and financial condition. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Implemented in 2019 In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by all leases not considered short-term leases. For short-term leases, lessees may elect an accounting policy by class of underlying assets under which right-of-use assets and lease liabilities are not recognized and lease payments are generally recognized as expense over the lease term on a straight-line basis. We adopted this update on January 1, 2019 and, as part of that process, made the following elections: · We elected to use the hindsight practical expedient. · We elected the package of practical expedients in transition for leases that commenced prior to January 1, 2019 whereby contracts were not reassessed or reclassified from their previous assessment as of December 31, 2018. · In March 2018, the FASB approved an optional transition method that allows companies to use the effective date as the date of initial application on transition. We elected this transition method, and as a result, did not adjust comparative period financial information or make the newly required lease disclosures for periods before the effective date. · We elected to make the accounting policy election for short-term leases resulting in lease payments being recorded as an expense on a straight-line basis over the lease term. · We elected to not separate lease and nonlease components, for all leases. · We did not elect the land easement practical expedient. The impact of Topic 842 on our Balance Sheet beginning January 1, 2019 was through the recognition of an operating lease right-of-use asset and an operating lease liability. Amounts recognized at January 1, 2109 for operating leases were as follows: January 1, 2019 Operating lease right-of-use asset $ 3,182,724 Current portion of operating lease liability $ 226,852 Operating lease liability, less current portion $ 2,955,872 There was no impact to our Statements of Operations, Statements of Cash Flows or beginning retained earnings related to the adoption of Topic 842. Recently Issued Accounting Pronouncements to be Implemented In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . ASU 2019-12 will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. We do not expect ASU 2019-12 to have a material impact on financial condition, results of operations or cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. In November 2018, April 2019 and May 2019, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses , ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses and ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief , which provided additional implementation guidance on ASU 2016-03. The previously mentioned ASUs are effective for fiscal years beginning after December 15, 2022, with early adoption permitted. We do not expect the adoption of these ASUs to have a material impact on our financial condition, results of operations or cash flows. |
Organization and Significant _3
Organization and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Significant Accounting Policies | |
Schedule of computation of basic and diluted net income per share | For the Years Ended December, 31 2019 2018 2017 Net income $ 9,630,959 $ 6,303,450 $ 499,764 Weighted-average shares outstanding — Basic 11,282,214 10,758,752 10,638,858 Effect of dilutive securities: Underwriters’ warrants 55,361 92,486 — Stock options 843,957 1,137,270 1,067,072 Restricted stock units 94,912 121,609 14,386 Weighted-average shares outstanding — Diluted 12,276,444 12,110,117 11,720,316 Basic net income per share $ 0.85 $ 0.59 $ 0.05 Diluted net income per share $ 0.78 $ 0.52 $ 0.04 |
Schedule of stock options and warrants to purchase shares of common stock and restricted stock units excluded from the calculation of diluted net income per share | As of December, 31 2019 2018 2017 Anti-dilutive stock options, warrants and restricted stock units 25,439 21,488 478,882 |
Schedule of new accounting pronouncements and changes in accounting principles | January 1, 2019 Operating lease right-of-use asset $ 3,182,724 Current portion of operating lease liability $ 226,852 Operating lease liability, less current portion $ 2,955,872 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue | |
Schedule of disaggregation of revenue by geographic region and type | Revenue information by geographic region is as follows: For the Years Ended December 31, 2019 2018 2017 United States $ 30,930,267 $ 24,508,026 $ 19,500,680 International 7,586,874 5,930,957 3,580,912 Total revenue $ 38,517,141 $ 30,438,983 $ 23,081,592 Revenue information by type is as follows: For the Years Ended December 31, 2019 2018 2017 Devices: MRI compatible IV infusion pump system $ 18,052,406 $ 14,536,998 $ 13,621,769 MRI compatible patient vital signs monitoring systems 9,709,233 6,655,618 1,848,616 Total Devices revenue 27,761,639 21,192,616 15,470,385 Disposables, services and other 8,914,822 7,728,624 6,613,999 Amortization of extended warranty agreements 1,840,680 1,517,743 997,208 Total revenue $ 38,517,141 $ 30,438,983 $ 23,081,592 |
Schedule of deferred revenue and changes in the contract liabilities | Our contract liabilities consist of: As of December 31, 2019 2018 Advance payments from customers $ 12,765 $ 180,425 Shipments in-transit 4,250 9,582 Extended warranty agreements 4,284,872 3,415,782 Total $ 4,301,887 $ 3,605,789 Changes in the contract liabilities during the period are as follows: Deferred Revenue Contract liabilities, December 31, 2017 $ 3,621,256 Increases due to cash received from customers 2,222,217 Decreases due to recognition of revenue (2,237,684) Contract liabilities, December 31, 2018 $ 3,605,789 Increases due to cash received from customers 3,337,181 Decreases due to recognition of revenue (2,641,083) Contract liabilities, December 31, 2019 $ 4,301,887 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory | |
Schedule of inventory | As of December 31, 2019 2018 Raw materials $ 2,939,451 $ 3,408,158 Work in process 229,479 305,562 Finished goods 697,483 557,566 Inventory before allowance for excess and obsolete 3,866,413 4,271,286 Allowance for excess and obsolete (224,852) (211,843) Total $ 3,641,561 $ 4,059,443 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Schedule of property and equipment | As of December 31, 2019 2018 Computer software and hardware $ 627,624 $ 555,292 Furniture and fixtures 1,112,550 901,415 Leasehold improvements 225,841 202,026 Machinery and equipment 1,778,524 2,184,015 Tooling in-process 163,105 58,263 3,907,644 3,901,011 Accumulated depreciation (1,853,838) (2,031,450) Total $ 2,053,806 $ 1,869,561 |
Schedule of property and equipment, net, information by geographic region | As of December 31, 2019 2018 United States $ 1,689,740 $ 1,439,545 International 364,066 430,016 Total property and equipment, net $ 2,053,806 $ 1,869,561 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets | |
Summary of the components of intangible asset balances | As of December 31, 2019 2018 Patents — in use $ 304,270 $ 304,270 Patents — in process 120,581 73,164 Internally developed software — in use 867,569 867,569 Internally developed software — in process 80,721 13,723 Trademarks 26,133 23,017 1,399,274 1,281,743 Accumulated amortization (539,187) (449,224) Total $ 860,087 $ 832,519 |
Schedule of expected annual amortization expense related to intangible assets (excludes in process intangible assets) | 2020 $ 89,963 2021 $ 89,963 2022 $ 89,392 2023 $ 88,740 2024 $ 88,439 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments | |
Summary of available-for-sale securities | As of December 31, 2019 Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value Corporate bonds: U.S. corporations $ 2,258,686 $ 29,123 $ — $ 2,287,809 International corporations 471,139 9,339 — 480,478 Total $ 2,729,825 $ 38,462 $ — $ 2,768,287 As of December 31, 2018 Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value Corporate bonds: U.S. corporations $ 5,487,645 $ — $ 58,309 $ 5,429,336 International corporations 918,417 2,162 — 920,579 Total $ 6,406,062 $ 2,162 $ 58,309 $ 6,349,915 |
Scheduled maturities of investments | Cost Fair Value Less than 1 year $ 471,139 $ 480,478 1 to 3 years 2,258,686 2,287,809 Total $ 2,729,825 $ 2,768,287 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements | |
Schedule of the fair value of assets and liabilities subject to recurring fair value measurements | Fair Value at December 31, 2019 Quoted Prices Significant in Active Other Significant Market for Observable Unobservable Fair Identical Assets Inputs Inputs Value (Level 1) (Level 2) (Level 3) Corporate bonds: U.S. corporations $ 2,287,809 $ — $ 2,287,809 $ — International corporations 480,478 — 480,478 — Total $ 2,768,287 $ — $ 2,768,287 $ — Fair Value at December 31, 2018 Quoted Prices Significant in Active Other Significant Market for Observable Unobservable Fair Identical Assets Inputs Inputs Value (Level 1) (Level 2) (Level 3) Corporate bonds: U.S. corporations $ 5,429,336 $ — $ 5,429,336 $ — International corporations 920,579 — 920,579 — Total $ 6,349,915 $ — $ 6,349,915 $ — |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) | |
Schedule of components of accumulated other comprehensive loss, net of tax | Unrealized Gains (Losses) on Available-For-Sale Securities Balance at December 31, 2016 $ (36,849) Losses, net (16,655) Reclassification realized in net earnings 4,595 Balance at December 31, 2017 $ (48,909) Losses, net (3,554) Reclassification realized in net earnings 20,767 Cumulative effect from adoption of accounting standard update (10,496) Balance at December 31, 2018 $ (42,192) Gains, net 80,659 Reclassification realized in net earnings (8,093) Balance at December 31, 2019 $ 30,374 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock-Based Compensation | |
Schedule of stock-based compensation | For the Years Ended December 31, 2019 2018 2017 Cost of revenue $ 256,924 $ 279,221 $ 214,325 General and administrative 1,167,161 1,000,002 1,670,015 Sales and marketing 348,603 329,644 441,931 Research and development 82,277 155,452 128,092 Total stock-based compensation expense $ 1,854,965 $ 1,764,319 $ 2,454,363 |
Summary of stock option activity | Weighted-Average Weighted-Average Remaining Aggregate Exercise Price Contractual Intrinsic Options Per Share Life (Yrs.) Value Outstanding beginning of period 1,129,463 $ 2.29 4.2 $ 25,052,908 Options granted 50,000 21.13 Options exercised (539,853) 1.60 Options cancelled (750) 26.33 Options expired — — Outstanding end of period 638,860 $ 4.31 4.3 $ 12,192,995 Exercisable 586,985 $ 2.84 3.9 $ 12,067,647 |
Schedule of weighted average assumptions were used to estimate the fair value of stock option grants using Black-Scholes model | For the Years Ended December 31, 2019 2018 2017 Volatility 59.1 % — % 92.0 % Expected term (years) 6.3 — 6.3 Risk-free interest rate 1.5 % — % 1.4 % Dividend yield % — % % |
Summary of restricted stock unit activity | Restricted Weighted-Average Stock Grant Date Units Fair Value Unvested at December 31, 2018 226,501 $ 15.89 Granted 178,657 $ 21.88 Vested (93,989) $ 16.41 Cancelled (14,121) $ 15.11 Unvested at December 31, 2019 297,048 $ 19.36 |
Other Income, Net (Tables)
Other Income, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Income, Net | |
Schedule of components of other income, net | For the Years Ended December 31, 2019 2018 2017 Interest income $ 388,801 $ 238,106 $ 122,575 Realized gain (losses) on maturities of investments 10,764 (29,308) (6,761) Foreign currency exchange losses (3,653) (15,261) (4,437) Total other income, net $ 395,912 $ 193,537 $ 111,377 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of components of the provision for income taxes | For the Years Ended December 31, 2019 2018 2017 Current taxes: U.S. federal $ (47,831) $ 740 $ 862,725 State 58,379 37,547 186,993 Total current tax expense 10,548 38,287 1,049,718 Deferred taxes: U.S. federal (544,384) (128,905) (92,788) State (53,806) (15,525) (60,308) Total deferred tax benefit (598,190) (144,430) (153,096) Provision for income tax (benefit) expense $ (587,642) $ (106,143) $ 896,622 |
Schedule of significant components of deferred taxes | As of December 31, 2019 2018 Deferred income tax assets (liabilities): Stock compensation $ $ 927,282 Deferred revenue 446,562 499,307 Reserves and allowances 257,549 197,355 Research and development credits carryforward 146,320 43,391 Net operating loss carryforward 688,084 26,767 Depreciation and amortization (619,528) (611,269) Other, net (45,929) 5,869 Total deferred income taxes, net $ 1,663,415 $ 1,088,702 |
Schedule of reconciliation of statutory U.S. federal tax rate to effective rate | For the Years Ended December 31, 2019 2018 2017 Statutory U.S. federal tax rate 21.0 % 21.0 % 34.0 % Tax Cuts and Jobs Act — — 33.9 Tax (windfalls) deficiencies on exercise and vesting of equity awards (17.1) (21.8) 5.4 Stock compensation expense (9.8) (0.2) 5.3 State taxes, net of federal benefit 0.1 (0.1) 5.1 Permanent items 1.2 0.5 4.4 Provision to return adjustments (1.1) (0.3) (9.5) Domestic production activities deduction — — (7.2) Research and development credits (0.8) (0.8) (7.2) Effective rate (6.5) % (1.7) % 64.2 % |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Schedule of lease cost | Year Ended December 31,2019 Cost of revenue $ 186,139 General and administrative 184,177 Sales and marketing 10,417 Research and development 28,861 Total $ 409,594 |
Schedule of maturity of lease liabilities | Maturity of Operating lease liability as of December 31, 2019 is as follows: 2020 $ 409,596 2021 409,596 2022 409,596 2023 409,596 2024 409,596 Thereafter 1,809,050 Total lease payments 3,857,030 Imputed interest (901,157) Present value of lease liability $ 2,955,873 |
Schedule of future minimum operating lease payments | Undiscounted future minimum lease payments under noncancelable operating leases as of December 31, 2018 as determined prior to the adoption of ASC 842 are as follows: 2019 $ 170,664 2020 — 2021 — 2022 — 2023 — Thereafter — Total minimum lease payments $ 170,664 |
Organization and Significant _4
Organization and Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounts Receivable and Allowance for Doubtful Accounts | |||
Accounts receivable, allowance for doubtful accounts | $ 69,093 | $ 42,443 | |
Advertising and Marketing | |||
Advertising and marketing costs | $ 155,983 | $ 123,451 | $ 118,975 |
Employees | |||
Stock Based Compensation | |||
Requisite service period for recognizing stock based compensation expenses associated with employee stock options | 4 years | ||
Board of directors | |||
Stock Based Compensation | |||
Requisite service period for recognizing stock based compensation expenses associated with employee stock options | 2 years | ||
Patent | |||
Intangible Assets | |||
Estimated useful lives of intangible assets | 17 years | ||
United States | |||
Revenue | |||
Payment term to U.S. customers | 45 days | ||
International | |||
Revenue | |||
Payment term of remaining amount to international distributors | 30 days | ||
Minimum | |||
Revenue | |||
Extended warranty agreement period | 1 year | ||
Term of customer-specified acceptance provisions | 30 days | ||
Minimum | Computer software and hardware | |||
Property and Equipment | |||
Estimated useful lives of assets | 3 years | ||
Minimum | Furniture and fixtures | |||
Property and Equipment | |||
Estimated useful lives of assets | 5 years | ||
Minimum | Machinery and equipment | |||
Property and Equipment | |||
Estimated useful lives of assets | 5 years | ||
Maximum | |||
Revenue | |||
Extended warranty agreement period | 4 years | ||
Term of customer-specified acceptance provisions | 60 days | ||
Stock Based Compensation | |||
Contractual life of stock options | 10 years | ||
Maximum | Computer software and hardware | |||
Property and Equipment | |||
Estimated useful lives of assets | 5 years | ||
Maximum | Furniture and fixtures | |||
Property and Equipment | |||
Estimated useful lives of assets | 7 years | ||
Maximum | Machinery and equipment | |||
Property and Equipment | |||
Estimated useful lives of assets | 7 years |
Organization and Significant _5
Organization and Significant Accounting Policies - Basic and Diluted Net Income per Share (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Basic and Diluted Net Income Per Share | |||
Net income | $ 9,630,959 | $ 6,303,450 | $ 499,764 |
Weighted-average shares outstanding - Basic (in shares) | 11,282,214 | 10,758,752 | 10,638,858 |
Effect of dilutive securities: | |||
Underwriters' warrants | 55,361 | 92,486 | |
Stock options | 843,957 | 1,137,270 | 1,067,072 |
Restricted stock units | 94,912 | 121,609 | 14,386 |
Weighted-average shares outstanding - Diluted (in shares) | 12,276,444 | 12,110,117 | 11,720,316 |
Basic net income per share (in dollars per share) | $ 0.85 | $ 0.59 | $ 0.05 |
Diluted net income per share (in dollars per share) | $ 0.78 | $ 0.52 | $ 0.04 |
Anti-dilutive stock | |||
Anti-dilutive stock options, warrants and restricted stock units | 25,439 | 21,488 | 478,882 |
Organization and Significant _6
Organization and Significant Accounting Policies - Leases (Details) - USD ($) | Jan. 01, 2019 | Dec. 31, 2019 |
Leases | ||
Lease, practical expedient, use of hindsight | true | |
Lease, practical expedients, package | true | |
Operating lease right-of-use asset | $ 2,955,873 | |
Current portion of operating lease liability | 240,843 | |
Operating lease liability, less current portion | $ 2,715,030 | |
ASU 2016-02 | ||
Leases | ||
Operating lease right-of-use asset | $ 3,182,724 | |
Current portion of operating lease liability | 226,852 | |
Operating lease liability, less current portion | $ 2,955,872 |
Revenue - Information by Geogra
Revenue - Information by Geographic Region (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Contract Liabilities | |||
Total revenue | $ 38,517,141 | $ 30,438,983 | $ 23,081,592 |
United States | |||
Contract Liabilities | |||
Total revenue | 30,930,267 | 24,508,026 | 19,500,680 |
International | |||
Contract Liabilities | |||
Total revenue | $ 7,586,874 | $ 5,930,957 | $ 3,580,912 |
Revenue - Information by Type (
Revenue - Information by Type (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue | |||
Total Devices Revenue | $ 27,761,639 | $ 21,192,616 | $ 15,470,385 |
Disposables, services and other | 8,914,822 | 7,728,624 | 6,613,999 |
Amortization of extended warranty agreements | 1,840,680 | 1,517,743 | 997,208 |
Total revenue | 38,517,141 | 30,438,983 | 23,081,592 |
MRI Compatible IV Infusion Pump Systems | |||
Disaggregation of Revenue | |||
Total Devices Revenue | 18,052,406 | 14,536,998 | 13,621,769 |
MRI Compatible Patient Vital Signs Monitoring Systems | |||
Disaggregation of Revenue | |||
Total Devices Revenue | $ 9,709,233 | $ 6,655,618 | $ 1,848,616 |
Revenue - Contract Liabilities
Revenue - Contract Liabilities (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Deferred revenue | ||||
Advance payments from customers | $ 12,765 | $ 180,425 | ||
Shipments in-transit | 4,250 | 9,582 | ||
Extended warranty agreements | 4,284,872 | 3,415,782 | ||
Total | $ 4,301,887 | $ 3,605,789 | $ 4,301,887 | $ 3,605,789 |
Changes in contract liabilities | ||||
Contract liabilities at beginning of the year | 3,605,789 | 3,621,256 | ||
Increases due to cash received from customers | 3,337,181 | 2,222,217 | ||
Decreases due to recognition of revenue | (2,641,083) | (2,237,684) | ||
Contract liabilities at end of the year | $ 4,301,887 | $ 3,605,789 |
Revenue - Capitalized Contract
Revenue - Capitalized Contract Costs (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Revenue | ||
Capitalized contract costs | $ 352,250 | $ 181,248 |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory | ||
Raw materials | $ 2,939,451 | $ 3,408,158 |
Work in process | 229,479 | 305,562 |
Finished goods | 697,483 | 557,566 |
Inventory before allowance for excess and obsolete | 3,866,413 | 4,271,286 |
Allowance for excess and obsolete | (224,852) | (211,843) |
Total | $ 3,641,561 | $ 4,059,443 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment | |||
Property and equipment, gross | $ 3,907,644 | $ 3,901,011 | |
Accumulated depreciation | (1,853,838) | (2,031,450) | |
Total | 2,053,806 | 1,869,561 | |
Depreciation expense of property and equipment | 501,218 | 470,395 | $ 362,872 |
Computer software and hardware | |||
Property and equipment | |||
Property and equipment, gross | 627,624 | 555,292 | |
Furniture and fixtures | |||
Property and equipment | |||
Property and equipment, gross | 1,112,550 | 901,415 | |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, gross | 225,841 | 202,026 | |
Machinery and equipment | |||
Property and equipment | |||
Property and equipment, gross | 1,778,524 | 2,184,015 | |
Tooling in-process | |||
Property and equipment | |||
Property and equipment, gross | $ 163,105 | $ 58,263 |
Property and Equipment - Geogra
Property and Equipment - Geographic information (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property and equipment | ||
Property and equipment, net | $ 2,053,806 | $ 1,869,561 |
United States | ||
Property and equipment | ||
Property and equipment, net | 1,689,740 | 1,439,545 |
International | ||
Property and equipment | ||
Property and equipment, net | $ 364,066 | $ 430,016 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible assets | |||
Intangible Assets, gross | $ 1,399,274 | $ 1,281,743 | |
Accumulated amortization | (539,187) | (449,224) | |
Total | 860,087 | 832,519 | |
Amortization expense of intangible assets | 89,963 | 89,333 | $ 82,399 |
Expected annual amortization expense | |||
2020 | 89,963 | ||
2021 | 89,963 | ||
2022 | 89,392 | ||
2023 | 88,740 | ||
2024 | 88,439 | ||
Patents - in use | |||
Intangible assets | |||
Intangible Assets, gross | 304,270 | 304,270 | |
Patents - in process | |||
Intangible assets | |||
Intangible Assets, gross | 120,581 | 73,164 | |
Internally developed software - in use | |||
Intangible assets | |||
Intangible Assets, gross | 867,569 | 867,569 | |
Internally developed software - in process | |||
Intangible assets | |||
Intangible Assets, gross | 80,721 | 13,723 | |
Trademarks | |||
Intangible assets | |||
Intangible Assets, gross | $ 26,133 | $ 23,017 |
Investments (Details)
Investments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Investments | ||
Cost | $ 2,729,825 | $ 6,406,062 |
Gross Unrealized Gains | 38,462 | 2,162 |
Gross Unrealized Losses | 58,309 | |
Fair Value | 2,768,287 | 6,349,915 |
U.S. corporations | ||
Investments | ||
Cost | 2,258,686 | 5,487,645 |
Gross Unrealized Gains | 29,123 | |
Gross Unrealized Losses | 58,309 | |
Fair Value | 2,287,809 | 5,429,336 |
International corporations | ||
Investments | ||
Cost | 471,139 | 918,417 |
Gross Unrealized Gains | 9,339 | 2,162 |
Fair Value | $ 480,478 | $ 920,579 |
Investments - Schedule of matur
Investments - Schedule of maturities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Cost | ||
Less than 1 year | $ 471,139 | |
1 to 3 years | 2,258,686 | |
Total | 2,729,825 | $ 6,406,062 |
Fair Value | ||
Less than 1 year | 480,478 | |
1 to 3 years | 2,287,809 | |
Total | $ 2,768,287 | $ 6,349,915 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value Measurements | ||
Fair value assets, amount transferred between measurement levels | $ 0 | |
Fair value liabilities, amount transferred between measurement levels | 0 | |
Recurring | ||
Fair Value Measurements | ||
Total | 2,768,287 | $ 6,349,915 |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Total | 2,768,287 | 6,349,915 |
Recurring | U.S. corporations | ||
Fair Value Measurements | ||
Total | 2,287,809 | 5,429,336 |
Recurring | U.S. corporations | Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Total | 2,287,809 | 5,429,336 |
Recurring | International corporations | ||
Fair Value Measurements | ||
Total | 480,478 | 920,579 |
Recurring | International corporations | Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Total | $ 480,478 | $ 920,579 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Component of accumulated other comprehensive loss | |||
Balance at the beginning | $ (42,192) | $ (48,909) | $ (36,849) |
Gains (Losses), net | 80,659 | (3,554) | (16,655) |
Reclassification realized in net earnings | (8,093) | 20,767 | 4,595 |
Cumulative effect from adoption of accounting standard update | (10,496) | ||
Balance at the end | $ 30,374 | $ (42,192) | $ (48,909) |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - Equity Incentive Plan 2014 - shares | Dec. 31, 2019 | Apr. 30, 2014 |
Stock-Based Compensation | ||
Common shares authorized for issuance | 1,000,000 | |
Shares available for future awards | 198,966 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-based compensation expense (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-Based Compensation | |||
Total stock-based compensation expense | $ 1,854,965 | $ 1,764,319 | $ 2,454,363 |
Cost of revenue | |||
Stock-Based Compensation | |||
Total stock-based compensation expense | 256,924 | 279,221 | 214,325 |
General and administrative | |||
Stock-Based Compensation | |||
Total stock-based compensation expense | 1,167,161 | 1,000,002 | 1,670,015 |
Sales and marketing | |||
Stock-Based Compensation | |||
Total stock-based compensation expense | 348,603 | 329,644 | 441,931 |
Research and development | |||
Stock-Based Compensation | |||
Total stock-based compensation expense | $ 82,277 | $ 155,452 | $ 128,092 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock Options and Restricted Stock Units Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Options | |||
Stock Options | |||
Outstanding beginning of period (in shares) | 1,129,463 | ||
Options granted (in shares) | 50,000 | 0 | |
Options exercised (in shares) | (539,853) | ||
Options cancelled (in shares) | (750) | ||
Outstanding end of period (in shares) | 638,860 | 1,129,463 | |
Exercisable (in shares) | 586,985 | ||
Weighted-Average Exercise Price Per Share | |||
Outstanding beginning of period (in dollars per share) | $ 2.29 | ||
Options granted (in dollars per share) | 21.13 | ||
Options exercised (in dollars per share) | 1.60 | ||
Options cancelled (in dollars per share) | 26.33 | ||
Outstanding end of period (in dollars per share) | 4.31 | $ 2.29 | |
Exercisable (in dollars per share) | $ 2.84 | ||
Weighted-Average Remaining Contractual Life (Yrs.) | |||
Weighted-Average Remaining Contractual Life, Outstanding (in years) | 4 years 3 months 18 days | 4 years 2 months 12 days | |
Weighted-Average Remaining Contractual Life, Exercisable (in years) | 3 years 10 months 24 days | ||
Aggregate Intrinsic Value | |||
Outstanding beginning of period (in dollars) | $ 25,052,908 | ||
Outstanding end of period (in dollars) | 12,192,995 | $ 25,052,908 | |
Exercisable (in dollars) | 12,067,647 | ||
Total unrecognized compensation expense | $ 538,991 | ||
Weighted-average period expected to be recognized | 3 years 7 months 6 days | ||
Total grant date fair value of stock options vested during the period | $ 101,387 | ||
Total intrinsic value of options exercised | $ 11,870,492 | $ 6,071,319 | $ 268,053 |
Weighted-average grant-date fair value of options granted (in dollars per share) | $ 11.84 | $ 11.10 | |
Summary of weighted average assumptions used to estimate the fair value of stock option grants | |||
Volatility (as a percent) | 59.10% | 92.00% | |
Expected term (years) | 6 years 3 months 18 days | 0 years | 6 years 3 months 18 days |
Risk- free interest rate (as a percent) | 1.50% | 1.40% | |
Dividend yield (as a percent) | 0.00% | 0.00% | |
Restricted Stock Units | |||
Aggregate Intrinsic Value | |||
Weighted-average period expected to be recognized | 3 years 1 month 6 days |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - Restricted Stock Units | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Restricted Stock Units | |
Unvested at beginning of year (in shares) | shares | 226,501 |
Granted (in shares) | shares | 178,657 |
Vested (in shares) | shares | (93,989) |
Cancelled (in shares) | shares | (14,121) |
Unvested at end of year (in shares) | shares | 297,048 |
Weighted-Average Grant Date Fair Value | |
Unvested at the beginning of year (in dollars per share) | $ / shares | $ 15.89 |
Granted (in dollars per share) | $ / shares | 21.88 |
Vested (in dollars per share) | $ / shares | 16.41 |
Cancelled (in dollars per share) | $ / shares | 15.11 |
Unvested at the end of year (in dollars per share) | $ / shares | $ 19.36 |
Unrecognized compensation cost | $ | $ 5,261,330 |
Weighted-average period expected to be recognized | 3 years 1 month 6 days |
Stock-Based Compensation - Warr
Stock-Based Compensation - Warrants (Details) - IPO - Warrants - USD ($) | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2019 | Jul. 17, 2017 | Jul. 16, 2017 | Jul. 21, 2014 | |
Stock-Based Compensation | |||||
Warrants up to the number of shares, underwriters can purchase | 0 | 201,600 | |||
Fair value of warrants | $ 611,000 | ||||
Exercise price of IPO warrants (in dollars per share) | $ 2.42 | $ 8.125 | |||
Exercise price expressed as a percent of original issue price | 130.00% | ||||
Strike price (in dollars per share) | $ 10.05 | $ 8.125 | |||
Fair value modification of IPO warrants recognized | $ 380,452 | ||||
Warrants exercised | 162,031 |
Other Income, Net (Details)
Other Income, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Other income, net | |||
Interest income | $ 388,801 | $ 238,106 | $ 122,575 |
Realized gain (losses) on maturities of investments | 10,764 | (29,308) | (6,761) |
Foreign currency exchange losses | (3,653) | (15,261) | (4,437) |
Total other income, net | $ 395,912 | $ 193,537 | $ 111,377 |
Income Taxes - Components of th
Income Taxes - Components of the provision for income taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current taxes: | |||
U.S. federal | $ (47,831) | $ 740 | $ 862,725 |
State | 58,379 | 37,547 | 186,993 |
Total current tax expense | 10,548 | 38,287 | 1,049,718 |
Deferred taxes: | |||
U.S. federal | (544,384) | (128,905) | (92,788) |
State | (53,806) | (15,525) | (60,308) |
Total deferred tax benefit | (598,190) | (144,430) | (153,096) |
Provision for income tax (benefit) expense | $ (587,642) | $ (106,143) | $ 896,622 |
Income Taxes - Significant comp
Income Taxes - Significant components of deferred taxes (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred income tax assets (liabilities): | ||
Stock compensation | $ 790,357 | $ 927,282 |
Deferred revenue | 446,562 | 499,307 |
Reserves and allowances | 257,549 | 197,355 |
Research and development credits carryforward | 146,320 | 43,391 |
Net operating loss carryforward | 688,084 | 26,767 |
Depreciation and amortization | (619,528) | (611,269) |
Other, net | (45,929) | 5,869 |
Total deferred income taxes, net | $ 1,663,415 | $ 1,088,702 |
Income Taxes - Operating loss (
Income Taxes - Operating loss (Details) | Dec. 31, 2019USD ($) |
Income Taxes | |
U.S. federal net operating loss carryforward with indefinite carryforward period | $ 613,610 |
State net operating loss carryforward with definite carryforward period | $ 74,474 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of the statutory U.S. federal tax rate to effective rate (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of the statutory U.S. federal tax rate to effective rate | |||
Statutory U.S. federal tax rate | 21.00% | 21.00% | 34.00% |
Tax Cuts and Jobs Act | 33.90% | ||
Tax (windfalls) deficiencies on exercise and vesting of equity awards | (17.10%) | (21.80%) | 5.40% |
Stock compensation expense | (9.80%) | (0.20%) | 5.30% |
State taxes, net of federal benefit | 0.10% | (0.10%) | 5.10% |
Permanent items | 1.20% | 0.50% | 4.40% |
Provision to return adjustments | (1.10%) | (0.30%) | (9.50%) |
Domestic production activities deduction | (7.20%) | ||
Research and development credits | (0.80%) | (0.80%) | (7.20%) |
Effective rate (as a percent) | (6.50%) | (1.70%) | 64.20% |
Income Taxes - Tax Reforms (Det
Income Taxes - Tax Reforms (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | |||
Federal statutory rate (as a percent) | 21.00% | 21.00% | 34.00% |
Effective tax rate | 33.90% | ||
Increase in income tax expense | $ 473,899 |
Leases (Details)
Leases (Details) | 1 Months Ended | 12 Months Ended |
Jan. 31, 2014USD ($)item | Dec. 31, 2019 | |
Leases | ||
Lessee, operating lease, existence of option to extend | true | |
Lessee, operating lease, existence of option to terminate | true | |
Lessee, operating lease, existence of residual value guarantee | false | |
Susi, LLC | Winter Springs, Florida Facility | ||
Leases | ||
Monthly base rent | $ | $ 34,133 | |
Number of successive renewal terms of lease | item | 1 | |
Renewal term of lease beginning in 2019 | 5 years | |
Renewal term of lease beginning in 2024 | 5 years | |
Renewal term lease thereafter | 1 year | |
Remaining lease term (in years) | 9 years 4 months 24 days |
Leases - Operating Lease Cost (
Leases - Operating Lease Cost (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases | |
Operating lease cost | $ 409,594 |
Cost of revenue | |
Leases | |
Operating lease cost | 186,139 |
General and administrative | |
Leases | |
Operating lease cost | 184,177 |
Sales and marketing | |
Leases | |
Operating lease cost | 10,417 |
Research and development | |
Leases | |
Operating lease cost | $ 28,861 |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) - USD ($) | Dec. 31, 2019 | Jan. 01, 2019 |
Operating leases | ||
2020 | $ 409,596 | |
2021 | 409,596 | |
2022 | 409,596 | |
2023 | 409,596 | |
2024 | 409,596 | |
Thereafter | 1,809,050 | |
Total lease payments | 3,857,030 | |
Imputed interest | (901,157) | |
Present value of lease liability | $ 2,955,873 | |
Discount rate | 6.00% |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) | Dec. 31, 2019USD ($) |
Operating leases, future minimum payments due, fiscal year maturity | |
2019 | $ 170,664 |
Total minimum lease payments | $ 170,664 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee Benefit Plan | |||
Employer matching contributions | $ 374,979 | $ 293,669 | $ 232,129 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Dec. 31, 2019USD ($) |
Purchase commitments | |
Purchase commitments | $ 3,208,174 |
Capital Stock (Details)
Capital Stock (Details) | 12 Months Ended | |||
Dec. 31, 2019USD ($)item$ / sharesshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2018$ / sharesshares | Apr. 27, 2017USD ($) | |
Capital Stock | ||||
Common stock, shares authorized | 31,500,000 | 31,500,000 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||
Purchases of treasury stock | $ | $ 1,818,541 | |||
Preferred Stock | ||||
Capital Stock | ||||
Preferred stock, shares authorized | 3,500,000 | |||
Number of voting right on each preferred stock | item | 1 | |||
Dividend on each share of Preferred Stock (in dollars per share) | $ / shares | $ 0.06429 | |||
Amount per preferred stock to be paid in the event of liquidation, dissolution, or winding up (in dollars per share) | $ | $ 1.07143 | |||
Conversion price (in dollars per share) | $ / shares | $ 1.07143 | |||
Series A Preferred Stock | ||||
Capital Stock | ||||
Preferred stock, shares authorized | 800,000 | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | |||
Preferred stock, shares issued | 0 | |||
Preferred stock, shares outstanding | 0 | |||
Maximum | ||||
Capital Stock | ||||
Repurchase of the stock | $ | $ 8,000,000 | |||
Common Stock | ||||
Capital Stock | ||||
Common stock, shares authorized | 31,500,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | |||
Number of voting right on each common stock | item | 1 | |||
Purchases of treasury stock | $ | $ 1,818,541 | |||
Purchase and retirement of treasury stock | 209,922 |