IRMD 10-K & 10-Q changes, risk factors and insider trading

Our current revenue and profitability are significantly dependent on the sale of the MRidium 3860+ MRI compatible IV infusion pump system,systems, the 3880 MRI compatible patient vital signs monitoring system (both Class II medical devices) and the ongoing sale of related disposables and services.

In the near term, we do not anticipate finding alternative sources for our primary suppliers. Therefore, if our primary suppliers become unable or unwilling to manufacture or deliver materials, or manufacture or deliver such materials later than anticipated, we could experience protracted delays or interruptions in the supply of materials which would ultimately delay our manufacture of products for commercial sale,sale. whichAny such delay could materially and adversely affect our development programs, commercial activities, operating results, and financial condition.

A cyber securitycybersecurity incident or failure to protect our information technology infrastructure could be disruptive to our business, compromise confidential data, cause reputation harm, adversely affect our business and operating results, subject us to litigation and federal and state governmental inquiries.

We are subject to diverse laws and regulations relating to data privacy and security, such as federal and state data protection regulations, including the California Consumer Privacy Act, as amended,amended by the California Privacy Rights Act, the Virginia Consumer Data Protection Act, the Colorado Privacy Act, the Connecticut Data Privacy Act, and other state privacy laws that have been enacted or may be enacted in the future, and European data privacy laws, including the General Data Protection Regulation. Complying with these numerous and complex regulations is expensive and difficult, and failure to comply with these regulations could result in regulatory scrutiny, civil liability and related fines, or damage to our reputation. In addition, any security breach or attempt thereof could result in liability for stolen assets or information, additional costs associated with repairing any system damage, incentives offered to clientscustomers or other business partners to maintain business relationships after a breach, and implementation of measures to prevent future breaches, including organizational changes, deployment of additional personnel and protection technologies, increased employee training, and engagement of third-party experts and consultants. The costs incurred to remediate any security incident could be substantial.

The manufacture of our products must comply with strict regulatory requirements governing Class II medical devices in the U.S. and other regulatory requirements in foreign locations. Problems may arise during manufacturing, quality control, storage, or distribution of our products for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, manufacturing quality concerns, or problems with raw materials, electromechanical, software and other components, supplier issues, and natural disasters. If problems arise during production, the affected products may have to be discarded. Manufacturing problems or delays could also lead to increased costs, lost sales, damage to customer relations, failure to supply penalties, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches of products. If problems are not discovered before the product is released to the market, voluntary recalls, corrective actions, or product liability related costs may also be incurred. Should we encounter difficulties in the manufacture of our products or be subject to a product recall, our business could suffer materially.

We manufacture and store our products at a single facility in Winter Springs,Orlando, Florida, which is also the location of our principal executive offices. If by reason of fire, hurricane, or other natural disaster, or for any other reason, the facility is destroyed or seriously damaged or our access to it is limited, our ability to provide products to our customers would be seriously interrupted or impaired completely and our operating results and financial condition would be materially and negatively affected. Our insurance may not cover our losses in any particular case. In addition, regardless of the level of insurance coverage, damage to our facility may harm our business, financial condition, and operating results.

Our manufacturing facility in WinterOrlando, Springs, Florida,Florida is our only manufacturing facility, and if it is damaged or rendered inoperable or inaccessible due to political, social or economic upheaval or due to natural or other disasters, it would be difficult or impossible for us to manufacture our product for asome period of time, which may lead to a loss of customers and significant impairment of our financial condition and operating results.

Many existing and potential customers for our products are members of GPOs. GPOs negotiate pricing arrangements and contracts, which are sometimes exclusive, with medical supply manufacturers and distributors, and these negotiated prices are made available to a GPO’s affiliated hospitals and other members. We pay the GPOs an administrative fee in the form of a percentage of the volume of products sold to their affiliated hospitals and other members. If we are not an approved provider selected by a GPO, affiliated hospitals and other members may be less likely to purchase our products. Should a GPO negotiate a sole source or bundling contract covering a future or current competitor’s products, we may be precluded from making sales of our competing products to members of that GPO for the duration of the contractual arrangement. For example, even if we have an existing contract with a GPO for sales of our MRidium 3860+ MRI compatible IV infusion pump,pumps, we may encounter difficulties in selling, or be unable to sell, our 3880 MRI compatible patient vital signs monitoring system to that GPO’s affiliated hospitals and other members, which may result in a longer sales cycle or an inability to sell. Our failure to renew contracts with GPOs may cause us to lose market share and could have a material adverse effect on our sales, financial condition, and results of operations. In the future, if another competitive supplier emerges, and we fail to keep our relationships and develop new relationships with GPOs, our competitive position would likely suffer.

The decision-making process of customers is often complex and time-consuming. Based on our experience, we believe the period between initial discussions with customers regarding our products and a customer’s purchase of our products have varied widely and have historically ranged between three and six months in duration. Sales cycles can also be delayed because of capital budgeting procedures.procedures in hospitals. Moreover, even if one or two units are sold to a hospital, we believe that it will take additional time and experience with our products before other medical professionals routinely use them for other procedures and in other departments of the hospital. Such time would delay potential sales of additional units and disposable products or additional optional accessories to that medical facility or hospital. These delays could have an adverse effect on our business, financial condition, and results of operations.

We rely on distributors for all our sales outside the U.S. and hence do not have direct control over foreign sales activities. These distributors also assist us with regulatory approvals and the education of physicians and government agencies.agencies outside of the U.S. Our revenues outside the U.S. in fiscal year 20242025 represented approximately 1716 percent of our net revenues. If our existing international distributors fail to sell our products or sell at lower levels than we anticipate, we could experience a decline in revenues or fail to meet our forecasts. We cannot be certain that we will be able to attract new international distributors nor retain existing ones that market our products effectively or provide timely and cost-effective customer support and service. None of our existing distributors are obligated to continue selling our products.

We believe that Mr. Susi will continue to play a leading and significant role in the development of new products.products and be an extremely valuable source of institutional knowledge about our markets, industry, customers and competitors due to his 40 year tenure in our field. Our current and future operations could be adversely impacted if we were to lose his services. Accordingly, our success will be dependent on appropriately managing the risks related to maintaining his continued services, including having a succession plan.

We are working to expand our size and scale via more penetration of existing markets and the launch of new complementary products and updates to existing products. This growth, if it occurs as planned, will place significant demands on our management and manufacturing capacity, as well as our financial, administrative, and other resources. We cannot guarantee that any of the personnel, systems, procedures, controls and new facilities we put in place will be adequate to support the manufacture and distribution of our products. Our operating results will depend substantially on the ability of our officers and key employees to manage changing business conditions and to implement and improve our financial and administrative systems and manage other resources. If we are unable to respond to and manage changing business conditions, or the scale of our products, services, and operations, then the quality of our services, our ability to retain key personnel and our business could be harmed. In February 2023, we purchased 26 acres of land in Orlando, Florida and continue construction on an expanded facility to increase capacity. Any failure to successfully complete construction and operate such a facility expansion might limit our ability to grow as we expect. We do not plan to retain the current Winter Springs, Florida leased facility once the larger facility is fully operational.

Significant changes and volatility in most aspects of the current business environment, including financial markets, customer behavior, speed of technological, regulatory, and competitive changes, and the recent health pandemic,changes make it increasingly difficult for us to predict our revenues and earnings into the future. Our quarterly sales and profits depend substantially on the volume and timing of orders fulfilled during the quarter, and such orders are difficult to forecast. Product demand is dependent upon the capital spending budgets of our customers and prospects as well as government funding policies and matters of public policy as well as product and economic cycles that can affect the spending decisions of these entities. As a result, any revenue, earnings or financial guidance or outlook which we have given or might give may turn out to be inaccurate. Though we endeavor to give reasonable estimates of future revenues, earnings, and financial information at the time we give such guidance, based on then-current conditions, there is a significant risk that such guidance or outlook will turn out to be incorrect. Historically, companies that have overstated their operating guidance have suffered significant declines in their stock price when such lesser results are announced to the public.

We base the aforementioned estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as discussed in greater detail in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” and in our financial statements. Our actual operating results may differ and fall below our assumptions and the financial forecasts of securities analysts and investors, resulting in a significant decline in our stock price.

We are subject to the continuousregular examination of our income tax returns by the U.S. Internal Revenue Service (the “IRS”) and other tax authorities. It is possible that tax authorities may disagree with certain positions we have taken, and any adverse outcome of such a review or audit could have a negative effect on our financial position and operating results. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes, but the determination of our provision for income taxes and other tax liabilities requires significant judgment by management, and there are transactions where the ultimate tax determination is uncertain. Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made. There can be no assurance that the outcomes from continuousregular examinations will not have an adverse effect on our business, financial condition, and results of operations.

The constant growth and development of technology, including the increased use of Artificial Intelligence,AI, presents risks and challenges to our operations that could give rise to legal or regulatory action, damage our reputation or otherwise materially harm of our business.

Emerging technology is a consistent subject of new laws or regulations and evolving interpretations and applications of laws and regulations. If we fail to comply with these laws, we may be subject to penalties, fines or criminal or civil liability. The development and use of Artificial Intelligence (“AI”) presents new risks and challenges that can impact our operations if we incorporate AI into our operations, or if used by our third-party vendors. While we aim to continue to develop and use AI responsibly and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise. AI technologies are complex and rapidly evolving and the technologies that we develop or use may ultimately be flawed. If our AI technologies fail to operate as anticipated or not perform as specified, including any biases or errors in the outputs of AI, patient care may be affected, legal claims may be asserted against us and our reputation may be harmed. Moreover, AI technology is subject to rapidly evolving domestic and international laws and regulations, which could impose significant costs and obligations on the Company. For example, in 2023 the Biden Administration issued a new, executive order on safe, secure and trustworthy AI, including transparency requirements for AI and other predictive algorithms that are part of certified health information technology. Some states have adopted or are considering additional measures regarding the use of AI within the health care industry. Emerging regulations may pertain to data privacy, data protection, and the ethical use of AI, as well as clarifying intellectual property considerations. Our use of AI could give rise to legal or regulatory action, increased scrutiny or liability, damage our reputation or otherwise materially harm our business. Additionally, if we fail to keep pace with various AI technological developments, our competitive position and business results may be negatively impacted.

We are subject to substantial government regulation and trade policies that isare subject to change and could force us to make modifications to how we develop, manufacture, market, and price our products.

In addition, with the current political climate, funding adjustments that change or impact Medicare or Medicaid as well as general uncertainties regarding these programs may impact a hospitalshospital’s ability to honor payment obligations.

We and our suppliers and customers are required to obtain regulatory approvals and maintain compliance with regulations applicable to medical devices, including infusion pumps,pumps and patient monitors, and these approvals could result in delays or increased costs in developing new products, subject us to sanctions and could adversely affect our business.

In December 2014, the FDA issued guidance entitled “Infusion Pumps Total Product Life Cycle.” This guidance established substantial additional pre-market requirements for new and modified infusion pumps. Through this guidance, the FDA indicated more data demonstrating product safety will be required for future 510(k) submissions for infusion pumps, including the potential for more clinical and human factors data. The process for obtaining regulatory approvals to market infusion pumps and related accessories have become more costly and time consuming. The impact of this guidance is likely to result in a more time consuming and costly process to obtain regulatory clearance to market infusion pumps. In addition, new requirements could result in longer delays for the clearance of new products, modification of existing infusion pump products or remediation of existing products in the market. Future delays in the receipt of, or failure to obtain, approvals could result in delayed or no realization of product revenues.

In the event that a competitor infringes upon our patent or other intellectual property rights, enforcing those rights may be costly, difficult, and time-consuming. Even if successful, litigation to enforce our intellectual property rights or to defend our patents against challenge could be expensive and time-consuming and could divert our management’s attention. We may not have sufficient resources to enforce our intellectual property rights or to defend our patent or other intellectual property rights against a challenge. If we are unsuccessful in enforcing and protecting our intellectual property rights and protecting our products, itour business could be materially harm our business.affected.

In February 2025,2026, our Board of Directors declared aan increased regular quarterly cash dividend of $0.17$0.20 per share.share of common stock. Even though our Board of Directors has approved the payment of a regular quarterly cash dividend on the Company’s common stock,stock since 2024, there can be no assurance as to whether or when we may pay dividends on our common stock in the future. Future dividends, if any, will be declared and paid at the discretion of the Board of Directors and will depend on a number of factors. In the future, the Board of Directors may elect to allocate capital based on our continued ability to generate cash from operations, our capital needs to support normal operations, and making investments aimed at supporting growth, rather than paying cash dividends. These capital allocation decisions could have a material adverse effect on our stock price. If the Board of Directors chose to reduce or omit a dividend and retain future earnings for the operation and expansion of our business, realization of a gain on your investment will depend solely on the appreciation of the price of our common stock, which may never occur.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations will increasecause ourus to incur legal and financial compliance costs, makemakes some activities more difficult, time consumingtime-consuming or costly and increaseresults in demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants to monitor and advise us regarding compliance, which willwould increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could resultresults in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We may need to invest in additional resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business may be adversely affected.

If securities or industry analysts faildo tonot initiatepublish research coverageor ofreports about our stock,business, or if they publish unfavorable research or downgrade our stock, or discontinue coverage, our trading volume might be reduced, and our stock price and trading volume could decline.

The trading market for our common stock depends, in part, on the research and reports that securities or industry analysts publish about us, our business.business, If securities orour industry analystsand our competitors. We do not commencecontrol these analysts or continuethe coveragecontent, opinions, or timing of ourtheir Company,reports. theIf trading market for our stock may not be robust and the price of our stock could likely be negatively impacted. In the event securitiesone or industrymore analysts initiatewho currently cover us cease coverage, andfail laterto publish regular reports, or downgrade our stock or discontinue such coverage,stock, our stock price and trading volume could decline.

You should read this discussion and analysis together with our audited financial statements, the notes to such statements and the other financial information included in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under the section entitled “Risk Factors” and elsewhere in this Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. See “CAUTIONARY STATEMENTSNOTE REGARDING FORWARD-LOOKING STATEMENTS” for a discussion of the uncertainties, risks and assumptions associated with these statements. Due to rounding, certain amounts in the tables herein may not sum precisely.

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 issystems 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 systemsystems hashave been designed with a non-magnetic ultrasonic motor, uniquely designed non-ferrous parts and other special features to safely and predictably deliver anesthesia and other IV fluids during various MRI procedures. Our pump solutionsolutions providesprovide a seamless approach that enables accurate, safe and dependable fluid delivery before, during and after an MRI scan, which is important to critically ill patients who cannot be removed from their vital medications, and children and infants who must generally be sedated to remain immobile during an MRI scan.

Each IV infusion pump system generally 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.

We generate revenue from the sale of MRI compatible medical devices and accessories, extended warrantymaintenance 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 United States and internationally. As of December 31, 2024,2025, our direct U.S. sales force consisted of 2729 field sales representatives, 4 regional sales directors and supplemented by 10 clinical application specialists. Internationally, we have distribution agreements with independent distributors selling our products.

We generate revenue from the sale of MRI compatible medical devices and accessories, extended warrantymaintenance 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.

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 warrantymaintenance agreements. We allocate the transaction price using the relative standalone selling price method.

For the year ended December 31, 2024,2025, revenue from sales in the U.S. increased $8.1$10.0 million, or 15.416.4 percent, to $60.6$70.6 million from $52.5$60.6 million for the same period in 2023.2024. Revenue from sales internationally decreasedincreased $0.4$0.6 million, or 3.14.8 percent, to $12.6$13.2 million from $13.0$12.6 million for the same period in 2023.2024. Domestic sales accounted for 8384 percent of total revenue for the year ended December 31, 2024,2025, compared to 8083 percent for the same period in 2023.2024.

For the year ended December 31, 2024,2025, revenue from salesthe amortization of our disposables,extended servicemaintenance and otheragreements increased $1.5$0.2 million, or 8.56.7 percent, to $19.1$2.4 million from $17.6$2.2 million for the same period in 2023.2024. Revenue from the amortizationsales of our extended warranty agreementsdisposables increased $0.2$2.5 million, or 11.717.0 percent, to $2.2$17.5 million from $2.0$15.0 million for the same period in 2023.2024. Revenue from services and other decreased $0.2 million, or 4.1 percent, to $3.9 million from $4.1 million for the same period in 2024. The increase in ancillary product sales and revenue from amortization aligns with the increased gross sales of our devices.

Cost of revenue increased approximately $1.5$2.6 million, or 9.715.4 percent, to $16.9$19.5 million for the year ended December 31, 2024,2025, from $15.4$16.9 million for the same period in 2023.2024. Gross profit increased approximately $6.1$8.0 million, or 12.114.2 percent, to $56.3$64.3 million for the year ended December 31, 20242025 from $50.2$56.3 million for the same period in 2023.2024. The increase in cost of revenue and gross profit is primarily due to higher revenue and associated material costs during the year ended December 31, 2024,2025, compared to the same period in 2023.2024.

Gross profit margin wasremained 76.9consistent percentat and 76.577 percent for the years ended December 31, 20242025 and 2023,2024. respectively. The increase in gross profit marginThis is the result of favorable overhead variance adjustments and higher average selling prices in 20242025 compared to 2023,2024, a reduction in certain raw material costs, and increasedimproved inventory management; oversightand ofoffset inventory.by The increase in year over year sales also positively impacts the Company’s ability to favorably absorbincreased overhead costs related to, employment costs, shipping logistics, and increase gross profit margin.depreciation.

General and administrative expense increased approximately $0.8$1.9 million, or 5.412 percent, to $15.9$17.8 million for the year ended December 31, 2024,2025, from $15.1$15.9 million for the same period in 2023.2024. This increase is primarily due to higher expenses forrelated legal and professional costs,to regulatory approval and consulting costs, and payroll and employee benefits costs.costs, and non-capital expenses related to the New Facility. These increases are a direct result of the support needs for the continued growth of the Company and need for additional support resources.Company.

Sales and marketing expenses increased approximately $3.5$1.8 million, or 28.612 percent, to $15.6$17.4 million for the year ended December 31, 2024,2025, from $12.1$15.6 million for the same period in 2023.2024. This increase is primarily the result of increased expenses for sales commissions, sales-related travel costs, and higher expenses for payroll and benefits. Higher commissions are related to the sales cycle, and in line with revenue growth. The increases are a direct result of the continued growth of the Company.

Other income, net consists of interest income, foreign currency transactional gains and losses, and other miscellaneous income. We reported other income of approximately $2.3$2.2 million and $1.7$2.3 million for the years ended December 31, 20242025 and 2023,2024, respectively. This increasedecrease is primarily the result of higherlower available interest incomerates during the year ended December 31, 20242025 compared to the same period in 2023.2024.

Our principal sources of liquidity have historically been our cash and cash equivalents balances, and our investments, cash flow from operations and access to the financial markets.operations. Our principal uses of cash are operating expenses, working capital requirements, capital expenditures and dividend payments.

For the year ended December 31, 2024,2025, cash provided by operations increaseddecreased $12.1$0.7 million to $25.6$24.9 million, from $13.5$25.6 million in 2023.2024. During 2024,2025, cash provided by operations was positively impacted by higher net income, lowerincome inventory,tax lower accounts receivable,effects, and increaseddeferred stockrevenue compensation.collections, Cash provided by operations waswhile negatively impacted by higher accounts payablereceivable, inventory and otherexpense accruals, higher deferred revenue, and higher deferred income taxes.accruals.

For the year ended December 31, 2024,2025, cash used in investing activities increaseddecreased $0.8$0.4 million to $8.8$8.4 million, from $8.0$8.8 million used in 2023.2024. During 2025 and 2024, cash relatedoutflows towere investingprimarily activitiesthe was impacted by purchasescost of property and equipment, specifically ongoing construction costs for our new corporate office and manufacturing facility in OrangeOrlando, County,Florida, Florida.which is now completed and occupied.

For the year ended December 31, 2024,2025, cash used in financing activities increased $0.6$3.3 million to $14.3$17.6 million, from $13.7$14.3 million used in 2023.2024. During 2025 and 2024, cash used in financing activities was related to higher cash payments for dividends and higher taxes paid for the net share settlement of restricted stock units.

We believe our sources of liquidity, including cash flow from operations, existing cash, and available financing sourcessources, if needed, will be sufficient to meet our projected cash requirements for at least the next 12 months from the date the financial statements are issued and into the foreseeable future. Any equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants that increase our costs. We monitor our capital requirements to ensure our needs are in line with these available capital resources.sources. From time to time, if necessary and beneficial, we may explore additional financing sources to meet our working capital requirements, make continued investment in research and development, expand our business and acquire products or businesses that complement our current business. These actions would likely affect our future capital requirements and the adequacy of our available funds. Our future liquidity and capital requirements will depend on numerous factors, including the:

We generate revenue from the sale of MRI compatible medical devices and accessories, extended maintenance 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. As of MarchJune 31,30, 2026, our direct U.S. sales force consisted of 29 field sales representatives, 4 regional sales directors and supplemented by 1011 clinical application specialists. Internationally, we have distribution agreements with independent distributors selling our products.

For the quarter ended MarchJune 31,30, 2026, our revenue increased by $2.5$0.1 million, or 13%0.5%, to $22.0$20.5 million,million from $20.4 million compared to $19.5 million for the quartersame endedperiod March 31,of 2025. Income before the provision for income taxes was $7.8$6.9 million for the quarter ended MarchJune 31,30, 2026, compared to $5.9$7.3 million for the quarter ended MarchJune 31,30, 2025. Net income was $5.8$5.2 million, or $0.45$0.41 per diluted share, in the quarter ended MarchJune 31,30, 2026, compared to $4.7$5.8 million, or $0.37$0.45 per diluted share in the quarter ended MarchJune 31,30, 2025.

We believe that the estimates, assumptions and judgments involved in the accounting policies described in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Annual Report have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. As of MarchJune 31,30, 2026, there were no material changes to the information provided regarding recent accounting pronouncements in Note 1 to the Financial Statements in the 2025 Annual Report.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

For the three months ended MarchJune 31,30, 2026, total revenue increased by $2.5$0.1 million, or 13%,0.5%, to $22.0$20.5 million from $19.5$20.4 million for the same period in 2025. This increase is primarily attributed to continued demand for our IV infusion pump systems, amortization of extended maintenance revenue, and modifications to our sales incentive plan for patient vital signs monitoring systems.systems, disposables, and amortization of extended maintenance revenue.

Revenue from sales in the U.S. increaseddecreased by $2.1$1.5 million, or 13%,8%, to $18.0$16.7 million for the three months ended MarchJune 31,30, 2026, from $16.0$18.2 million for the same period in 2025. Revenue from sales internationally increased by $1.5 million, or 69%, to $3.7 million from $2.2 million for the threesame monthsperiod endedin March 31, 2026 and 2025 at $4.0 million.2025. Domestic sales accounted for 82% of revenue for the three months ended MarchJune 31,30, 2026 and 89% of revenue for the same period in 2025.

Revenue from sales of devices increaseddecreased by $2.4$0.8 million, or 19%,5%, to $15.4$13.8 million for the three months ended MarchJune 31,30, 2026, from $13.0$14.6 million for the same period in 2025. Revenue from the amortization of extended maintenance agreements increased by $99$0.2 thousand,million, or 18%,28%, to $659$0.8 thousandmillion for the three months ended MarchJune 31,30, 2026,2026 from $560$0.6 thousandmillion for the three months ended MarchJune 31,30, 2025. Revenue from sales of disposables remainedincreased constantby at$0.6 $4.9million, or 14%, to $4.8 million for the three months ended MarchJune 31,30, 2026 andfrom $4.2 million for the three months ended June 30, 2025. Revenue from services and other remainedincreased constantby at$0.1 million, or 7%, to $1.1 million from $1.0 million for the threesame monthsperiod ended March 31, 2026 andin 2025.

For the three months ended MarchJune 31,30, 2026, our cost of revenue increased by $0.5$0.8 million, or 11%,18%, to $5.2$5.3 million from $4.7$4.5 million for the same period in 2025. For the three months ended MarchJune 31,30, 2026, our gross profit increaseddecreased by $2.0$0.8 million, or 13%,5%, to $16.8$15.2 million from $14.8$16.0 million for the same period in 2025. For the three months ended MarchJune 31,30, 2026, gross profit margin increaseddecreased to 77%74% compared to 76%78% for the same period in 2025. The decrease in gross margin is attributed to initial production inefficiencies on new product manufacturing.

For the three months ended MarchJune 31,30, 2026, sales and marketing expense decreasedincreased by $0.1$0.2 million, or 3%,6%, to $4.1$4.2 million from $4.2$4.0 million for the same period in 2025. This increase is primarily due to reducedincreased sales commissions,commissions related to timingincreased monitor books and transitionnewly of sales focus to ourreleased MRidium® 3870 IV infusion pump system.system bookings.

For the three months ended MarchJune 31,30, 2026, research and development expense increaseddecreased by $0.4$0.2 million, or 67%,22%, to $1.0$0.7 million from $0.6$0.9 million for the same period in 2025. This increase is primarily due to ana increasedecrease in payroll and benefit expenses. Payroll expenses relatedcapitalized toas theinternal MRidium®software 3870 IV infusion pump system, were capitalizeddevelopment for the samecurrent period in 2025.period.

Other income, net consists of interest income,income (the largest component), foreign currency gains and losses, and other miscellaneous income. For the three months ended MarchJune 31,30, 2026, other income, net increaseddecreased $19$42 thousand, or 4%,8%, to $532$497 thousand from $513$539 thousand for the same period in 2025.

For the three and six months ended MarchJune 31,30, 2026, we recorded a provision for income tax expense of $1,951$1,670 thousand.thousand and $3,621 thousand, respectively. For the three and six months ended MarchJune 31,30, 2026, our effective tax rate was 25.1%24.2% ,and 24.7% respectively, and differed from the U.S. federal statutory rate primarily due to U.S. state income tax expense, and non-deductible compensation expenses, partially offset by benefits from research and development tax credits.

For the three and six months ended MarchJune 31,30, 2025, we recorded a provision for income tax expense of $1,258$1,553 thousand .and $2,811 thousand, respectively. For the three and six months ended MarchJune 31,30, 2025, our effective tax rate was 21.2%consistent ,at 21.2%, and differed from the U.S. federal statutory rate primarily due to U.S. state income tax expense, partially offset by benefits from research and development tax credits.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes several significant provisions, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions, such as accelerated deductions for qualified property and domestic research expenditures. The Company has evaluated the impact of the OBBBA on its financial statements and does not expect the legislation to result in a material change to its annual effective tax rate. During the first quarter of 2026, the Company implemented the OBBBA‑related changes to the foreign‑derived deduction regime, including the transition from the FDII deduction to the FDDEI deduction, which became effective for tax years beginning after December 31, 2025.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $56.4$59.1 million, stockholders’ equity of $98.5$101.7 million, and working capital of $74.3$77.6 million. As of December 31, 2025, we had cash and cash equivalents of $51.2 million, stockholders’ equity of $94.6 million, and working capital of $71.0 million.

Cash provided by operating activities increased by $4.0$2.2 million, to $8.3$14.2 million for the threesix months ended MarchJune 31,30, 2026, compared to $4.3$12.0 million for the same period in 2025. During the threesix months ended MarchJune 31,30, 2026, cash provided by operations was positively impacted by higher net income, and lower cash outflows related to accounts payable,payable and pre-paid expenses, and inventory purchases, and offset by an increase in accounts receivable related to timing.

Cash used in investing activities decreased by $3.4$5.8 million, to $0.5$0.9 million for the threesix months ended MarchJune 31,30, 2026, compared to $3.9$6.7 million for the same period in 2025. The decrease from our 2025 spend in investing activities is attributed to construction costs of the completed new executive offices and expanded manufacturing facility to accommodate our continued growth.

Cash used in financing activities increased by $0.3$0.9 million, to $2.6$5.4 million for the threesix months ended MarchJune 31,30, 2026, compared to approximately $2.3$4.5 million for the same period in 2025. The increase is primarily due to the per share increase of a regularour quarterly cash dividend payment. Special and quarterly cash dividend payments are subject to the sole discretion of the Board and applicable law.

As of MarchJune 31,30, 2026 and December 31, 2025, we did not have any off-balance sheet arrangements, as such term is defined under Item 303 of Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

As of MarchJune 31,30, 2026, there were no material changes to the information provided regarding recent accounting pronouncements in Note 1 to the Financial Statements in the 2025 Annual Report.