10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2015

OR

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

For the transition period from            to

Commission File No.:  001-36534

IRADIMED CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	73-1408526
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number

1025 Willa Springs Drive Winter Springs, Florida	32708
(Address of principal executive offices)	(Zip Code)

(407) 677-8022

(Registrant’s telephone number, including area code)

N/A

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

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

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  o	Smaller reporting company  x

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

The registrant had 11,019,400 shares of common stock, par value $0.0001 per share, outstanding as of July 31, 2015.

IRADIMED CORPORATION

Table of Contents

					Page
Part I	Financial Information
	Item 1	Condensed Financial Statements
		(a)		Condensed Balance Sheets as of June 30, 2015 (Unaudited) and December 31, 2014	2
		(b)		Condensed Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2015 and 2014 (Unaudited)	3
		(c)		Condensed Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014 (Unaudited)	4
		(d)		Notes to Unaudited Condensed Financial Statements	5
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
	Item 3	Quantitative and Qualitative Disclosures About Market Risk			18
	Item 4	Controls and Procedures			19
Part II	Other Information
	Item 1		Legal Proceedings		20
	Item 1A		Risk Factors		20
	Item 2		Unregistered Sale of Equity Securities and Use of Proceeds		35
	Item 3		Default Upon Senior Securities		35
	Item 4		Mine Safety Disclosures		35
	Item 5		Other Information		35
	Item 6.		Exhibits		35
Signatures					36

1

PART I. FINANCIAL INFORMATION

Item 1.  Condensed Financial Statements

IRADIMED CORPORATION

CONDENSED BALANCE SHEETS

	June 30, 2015			December 31, 2014
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	12,427,528		$	9,454,150
Investments	7,907,327			7,913,793
Accounts receivable, net of allowance for doubtful accounts of $86,785 as of June 30, 2015 and $28,119 as of December 31, 2014	4,260,683			1,960,214
Inventory, net	2,318,201			2,125,838
Prepaid expenses and other current assets	145,043			276,540
Prepaid income taxes	129,918			320,941
Deferred income taxes	204,949			116,339
Total current assets	27,393,649			22,167,815
Property and equipment, net	828,333			794,835
Intangible assets, net	182,960			250,836
Deferred income taxes	321,400			76,557
Other assets	35,501			19,676
Total assets	$	28,761,843		$	23,309,719
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,044,936		$	629,167
Accrued payroll and benefits	1,044,949			1,244,898
Other accrued taxes	13,005			65,790
Warranty reserve	59,180			27,925
Deferred revenue	1,302,420			308,341
Accrued income taxes	66,827			—
Total current liabilities	3,531,317			2,276,121
Deferred revenue	142,381			142,902
Total liabilities	3,673,698			2,419,023
Stockholders’ equity:
Common stock; $0.0001 par value; 90,000,000 shares authorized; 10,975,650 shares issued and outstanding as of June 30, 2015 and 10,814,650 shares issued and outstanding as of December 31, 2014	1,098			1,082
Additional paid-in capital	16,729,207			15,785,838
Retained earnings	8,383,315			5,125,249
Accumulated other comprehensive loss	(25,475		)	(21,473		)
Total stockholders’ equity	25,088,145			20,890,696
Total liabilities and stockholders’ equity	$	28,761,843		$	23,309,719

See accompanying notes to unaudited condensed financial statements.

2

IRADIMED CORPORATION

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2015			2014		2015			2014
Revenue	$	7,609,143		$	4,700,369	$	14,600,848		$	8,257,606
Cost of revenue	1,422,027			869,745		2,750,207			1,526,111
Gross profit	6,187,116			3,830,624		11,850,641			6,731,495
Operating expenses:
General and administrative	1,985,269			1,130,484		3,953,287			2,223,179
Sales and marketing	1,104,682			864,519		2,193,378			1,624,308
Research and development	403,447			225,500		745,748			449,804
Total operating expenses	3,493,398			2,220,503		6,892,413			4,297,291
Income from operations	2,693,718			1,610,121		4,958,228			2,434,204
Other income, net	46,135			11,631		92,951			15,083
Income before provision for income taxes	2,739,853			1,621,752		5,051,179			2,449,287
Provision for income taxes	969,282			602,931		1,793,113			907,099
Net income	$	1,770,571		$	1,018,821	$	3,258,066		$	1,542,188
Other comprehensive (loss) income:
Change in fair value of available-for-sale securities, net of tax (benefit) expense of $(8,249) and $821 for the three months ended June 30, 2015 and 2014, respectively, and $(2,464) and $1,993 for the six months ended June 30, 2015 and 2014, respectively	(13,398		)	1,526		(4,002		)	3,701
Comprehensive income	$	1,757,173		$	1,020,347	$	3,254,064		$	1,545,889
Net income per share:
Basic	$	0.16		$	0.15	$	0.30		$	0.22
Diluted	$	0.15		$	0.11	$	0.27		$	0.17
Weighted average shares outstanding:
Basic	10,974,448			7,000,000		10,940,525			7,000,000
Diluted	12,107,707			8,878,170		12,068,122			8,868,610

See accompanying notes to unaudited condensed financial statements.

3

IRADIMED CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2015			2014
Operating activities:
Net income	$	3,258,066		$	1,542,188
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense	58,666			450
Provision for excess and obsolete inventory	42,156			29,669
Depreciation and amortization	106,264			54,462
Stock-based compensation	582,085			332,282
Impairment of intangible assets	55,433			—
Changes in operating assets and liabilities:
Accounts receivable	(2,359,135		)	(294,488		)
Inventory	(124,866		)	(321,249		)
Prepaid expenses and other current assets	133,004			59,377
Other assets	(17,332		)	(13,634		)
Deferred income taxes	(330,989		)	(122,063		)
Accounts payable	306,116			239,794
Accrued payroll and benefits	(199,949		)	195,638
Other accrued taxes	(52,785		)	(47,061		)
Warranty reserve	31,255			5,000
Deferred revenue	993,558			387,675
Accrued income taxes, net of prepaid income taxes	257,850			199,588
Net cash provided by operating activities	2,739,397			2,247,628
Investing activities:
Purchases of investments	—			(2,540		)
Purchases of property and equipment	(121,415		)	(218,425		)
Capitalized intangible assets	(5,904		)	(17,676		)
Net cash used in investing activities	(127,319		)	(238,641		)
Financing activities:
Proceeds from stock option exercises	199,060			—
Income tax benefits credited to equity	162,240			—
Payment of initial public offering costs	—			(203,225		)
Repayment of officer note payable	—			(6,333		)
Net cash provided by (used in) financing activities	361,300			(209,558		)
Net increase in cash and cash equivalents	2,973,378			1,799,429
Cash and cash equivalents, beginning of period	9,454,150			2,461,559
Cash and cash equivalents, end of period	$	12,427,528		$	4,260,988
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	1,802,000		$	829,574

See accompanying notes to unaudited condensed financial statements.

4

IRADIMED CORPORATION

Notes to Unaudited Condensed Financial Statements

1 — Basis of Presentation

The accompanying interim condensed financial statements of IRADIMED CORPORATION (“IRADIMED”, the “Company”, “we”, “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The interim financial information is unaudited, but reflects all normal adjustments that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

These accompanying interim condensed financial statements should be read with the financial statements and related footnotes to financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. The accounting policies followed in the preparation of these interim condensed financial statements are consistent in all material respects with those described in Note 1 of our 10-K.

Certain prior year amounts have been reclassified to conform to current year presentation.

FDA Warning Letter

On September 2, 2014 we announced we received a Warning Letter from the U.S. Food and Drug Administration (“FDA”) relating to an inspection of our facility that took place in April 2014. At the conclusion of the April inspection, FDA issued a Form 483 that identified eight observations. The majority of the observations related to procedures and documentation associated with the design, development and validation testing of software used in certain of our products. Other observations were related to the design validation of pump labeling, design analysis of tube stretching, procedures for post-market design review, and procedures and processing related to handling certain reported complaints. We submitted responses to the Form 483 in May 2014 and June 2014 in which we described our proposed corrective and preventative actions to address each of the FDA’s concerns.

FDA’s Warning Letter stated that the FDA accepted as adequate several of our responses to Form 483 observations, identified two responses whose accuracy will be determined in the next scheduled inspection of our facility and identified issues for which our response was determined to be inadequate. The issues identified as inadequate concern our procedures for validating device design, primarily related to software quality assurance.

Also, the Warning Letter raised a new issue. The Warning Letter stated that modifications made to software on our previously cleared infusion pumps, the MRidium 3860 and MRidium 3850, were “significant” and required submission of new premarket notifications under Section 510(k) (a “510(k) submission”) of the Food, Drug and Cosmetic Act (the “FDC Act”). These modifications were made over time. We believe they were insignificant and did not require premarket notification submissions. However, the FDA indicated that the modifications of the software for the MRidium 3860 and the software for the MRidium 3850 were “significant” modifications because they could significantly affect the safety or effectiveness of these devices. As a result, the Warning Letter states that the products being sold by us are “adulterated” and “misbranded” under the FDC Act. The Warning Letter also indicates that the MRidium 3860+ infusion pump requires separate FDA clearance from the MRidium 3860 and MRidium 3850.

The Warning Letter requested that we immediately cease activities that result in the misbranding or adulteration of the MRidium 3860 MRI infusion pump, MRidium 3850 MRI infusion pump, and the MRidium 3860+ MRI infusion pump, including the commercial distribution of the devices. We immediately complied with the Warning Letter and ceased sale and distribution of the identified products in the United States.

On September 4, 2014, we submitted to the FDA our initial response to the Warning Letter and on September 17, 2014 we sent an additional response that included supplemental information related to the Form 483 inspection observations for which the FDA considered our initial responses inadequate.

On November 25, 2014, we announced that we filed the 510(k) submission related to our MRidium 3860+ MRI IV infusion pumps and on December 12, 2014 we were notified that our 510(k) submission had been formally accepted for review by the FDA. On December 22, 2014, under FDA enforcement discretion, we announced that we resumed domestic distribution of our MRI compatible MRidium 3860+ MRI IV infusion pump systems, without the Dose Error Reduction System (“DERS”) option. On January 28, 2015, under FDA enforcement discretion, we announced that we resumed domestic distribution of our DERS option.

5

We continue to work with the FDA to fully resolve the Warning Letter and complete the review of the 510(k) submission. See the Legal matters portion of Note 12.

Certain Significant Risks and Uncertainties

We market our products to end users in the United States and to distributors internationally. Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses. As of December 31, 2014, two international customers accounted for approximately 35% of gross accounts receivable.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue Contracts with Customers (Topic 606). This update provides guidance on the recognition of revenue based upon the entity’s contracts with customers to transfer goods or services at an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB deferred the effective date to annual reporting periods beginning after December 15, 2017, including interim reporting periods within those periods, which will require us to adopt this update in the first quarter of 2018. Early adoption is permitted to the original effective date of December 15, 2016, including interim reporting periods within those periods. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulating effect recognized as of the date of initial application. We are in the process of determining the method of adoption and assessing the potential impacts of adopting this guidance on our financial position, results of operations and cash flows.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330). Under this ASU, inventory will be measured at the lower of cost or net realizable value and options that currently exist for market value have been eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. No other changes were made to the current guidance on inventory measurement. The ASU is effective for interim and annual reporting periods beginning after December 15, 2016. Early adoption is permitted and should be applied prospectively. We are in the process of evaluating the provisions on this statement, including which period to adopt, and have not determined what impact the adoption of this amendment will have on our financial position, results of operations and cash flows.

2 — Basic and Diluted Net Income per Share

Basic net income per share is based upon the weighted average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. As discussed further in Note 13, the effect of our 1.75:1 stock split and recapitalization is reflected in the number of outstanding shares and per share information in the table below. The underwriters’ warrants, preferred stock and stock options granted by us represent the only dilutive effect reflected in diluted weighted-average shares outstanding.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
Net income	$	1,770,571	$	1,018,821	$	3,258,066	$	1,542,188
Weighted-average shares outstanding — Basic	10,974,448		7,000,000		10,940,525		7,000,000
Effect of dilutive securities:
Underwriters’ warrants	111,878		—		102,541		—
Preferred stock	—		1,400,000		—		1,400,000
Stock options	1,021,381		478,170		1,025,056		468,610
Weighted-average shares outstanding — Diluted	12,107,707		8,878,170		12,068,122		8,868,610
Basic net income per share	$	0.16	$	0.15	$	0.30	$	0.22
Diluted net income per share	$	0.15	$	0.11	$	0.27	$	0.17

6

Stock options to purchase shares of our common stock excluded from the calculation of diluted net income per share because the effect would have been anti-dilutive are as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
	(unaudited)		(unaudited)
Anti-dilutive stock options	24,000	581,259	183,072	570,759

3 — Inventory

Inventory consists of:

	June 30, 2015		December 31, 2014
	(unaudited)
Raw materials	$	1,757,482	$	1,541,688
Work in process	130,477		126,188
Finished goods	430,242		457,962
Total	$	2,318,201	$	2,125,838

The Company reviews its inventory on a periodic basis for excess, obsolete or impaired inventory and records a reserve for items identified. As of June 30, 2015 and December 31, 2014, the Company maintained an allowance for excess and obsolete inventory of $104,225 and $62,069, respectively.

4 — Property and Equipment

Property and equipment consist of:

	June 30, 2015			December 31, 2014
	(unaudited)
Computer software and hardware	$	342,469		$	303,076
Furniture and fixtures	220,998			198,253
Leasehold improvements	188,240			182,105
Machinery and equipment	937,394			849,852
Tooling in-process	7,915			42,315
	1,697,016			1,575,601
Accumulated depreciation	(868,683		)	(780,766		)
Total	$	828,333		$	794,835

Depreciation and amortization expense of property and equipment was $46,127 and $23,831 for the three months ended June 30, 2015 and 2014, respectively, and $87,917 and $35,045 for the six months ended June 30, 2015 and 2014, respectively.

5 — Intangible Assets

The following table summarizes the components of intangible asset balances:

	June 30, 2015			December 31, 2014
	(unaudited)
Patents — in use	$	168,383		$	238,548
Patents — in process	37,263			31,358
Internally developed software	148,967			148,967
	354,613			418,873
Accumulated amortization	(171,653		)	(168,037		)
Total	$	182,960		$	250,836

7

Amortization expense of intangible assets was $8,830 and $9,861 for the three months ended June 30, 2015 and 2014, respectively, and $18,347 and $19,417 for the six months ended June 30, 2015 and 2014. During the six months ended June 30, 2015, we recorded an impairment charge of $55,433 on patents related to certain of our IV sets. This charge is included as general and administrative expense in our Condensed Statements of Operations and Comprehensive Income.

Expected annual amortization expense for the next five years related to intangible assets is as follows:

Six months ending December 31, 2015	$	17,659
2016	18,016
2017	10,538
2018	10,538
2019	10,538
2020	10,538

6 — Stock-Based Compensation

Stock-based compensation was recognized as follows in the Condensed Statements of Operations and Comprehensive Income:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
Cost of revenue	$	19,079	$	970	$	34,800	$	1,929
General and administrative	132,955		57,567		249,884		114,502
Sales and marketing	141,303		101,452		268,649		196,988
Research and development	13,717		9,484		28,752		18,863
Total	$	307,054	$	169,473	$	582,085	$	332,282

As of June 30, 2015 we had $2,893,894 of total unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average period of 2.9 years.

The following table presents a summary of our stock option activity as of and for the six months ended June 30, 2015:

	Options
Outstanding beginning of period	1,945,192
Options granted	24,000
Options exercised	(160,999	)
Options canceled	—
Outstanding end of period	1,808,193

7 — Investments

Our investments consisted of corporate bonds that we have classified as available-for-sale and are summarized in the following tables:

	June 30, 2015
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds:
U.S. corporations	$	6,433,286	$	1,151	$	36,886	$	6,397,551
International corporations	1,515,200		495		5,919		1,509,776
Total	$	7,948,486	$	1,646	$	42,805	$	7,907,327

8

	December 31, 2014
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds:
U.S. corporations	$	6,433,286	$	—	$	27,067	$	6,406,219
International corporations	1,515,200		—		7,626		1,507,574
Total	$	7,948,486	$	—	$	34,693	$	7,913,793

Unrealized losses from the above investments for all periods presented are attributable to changes in interest rates. We do not believe any of these unrealized losses represent other-than-temporary impairments based on our evaluation of available evidence as of June 30, 2015.

8 — Fair Value Measurements

The fair value of our assets and liabilities subject to recurring fair value measurements are as follows:

	Fair Value at June 30, 2015
	Fair Value		Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Corporate bonds:
U.S. corporations	$	6,397,551	$	—	$	6,397,551	$	—
International corporations	1,509,776		—		1,509,776		—
Total	$	7,907,327	$	—	$	7,907,327	$	—

	Fair Value at December 31, 2014
	Fair Value		Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Corporate bonds:
U.S. corporations	$	6,406,219	$	—	$	6,406,219	$	—
International corporations	1,507,574		—		1,507,574		—
Total	$	7,913,793	$	—	$	7,913,793	$	—

Our corporate bonds are valued by a 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 six months ended June 30, 2015 or the year ended December 31, 2014.

9 — Accumulated Other Comprehensive (Loss) Income

The only component of accumulated other comprehensive (loss) income, net of tax, for the three months ended June 30, 2015 and 2014 is as follows:

	Unrealized (Losses) Gains on Available-For-Sale Securities
Balances at March 31, 2015	$	(12,077	)
Losses, net	(13,398		)
Balances at June 30, 2015	$	(25,475	)
Balances at March 31, 2014	$	3,100
Gains, net	1,525
Balances at June 30, 2014	$	4,625

9

The only component of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2015 and 2014 is as follows:

	Unrealized (Losses) Gains on Available-For-Sale Securities
Balances at December 31, 2014	$	(21,473	)
Losses, net	(4,002		)
Balances at June 30, 2015	$	(25,475	)
Balances at December 31, 2013	$	924
Gains, net	3,701
Balances at June 30, 2014	$	4,625

10 — Income Taxes

We recorded provisions for income taxes of $969,282 and $1,793,113 for the three and six months ended June 30, 2015, respectively. Our effective tax rate was 35.4% and 35.5% for the three and six months ended June 30, 2015, respectively. Our effective tax rates for the three and six months ended June 30, 2015 differed from the U.S. Federal statutory rate primarily due to higher U.S. state tax expense, partially offset by the domestic production activities deduction.  The higher U.S. state tax expense increased our effective rate by approximately 4.1% and the domestic production activities deduction decreased our effective rate by approximately 2.7%.

We recorded provisions for income taxes of $602,931 and $907,099 for the three and six months ended June 30, 2014, respectively. Our effective tax rate was 37.2% and 37.0% for the three and six months ended June 30, 2014, respectively. Our effective tax rates for the three and six months ended June 30, 2014 differed from the U.S. Federal statutory rate primarily due to higher U.S. state tax expense, partially offset by the domestic production activities deduction. The higher U.S. state tax expense increased our effective rate by approximately 4.8% and the domestic production activities deduction decreased our effective rate by approximately 2.7%.

As of June 30, 2015 and December 31, 2014, we have 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 state jurisdictions. Our returns are not currently under examination by the Internal Revenue Service or other taxing authorities. The Company is subject to income tax examinations for our United States Federal and State income taxes for 2009 and subsequent years.

11 — Segment, Customer and Geographic Information

We operate in one reportable segment which is the development, manufacture and sale of MRI compatible IV infusion pump systems and products for use by hospitals and acute care facilities during MRI procedures.

In the U.S., we sell our products through our direct sales force and outside of the U.S. we sell our products through distributors who resell our products to end users.

Revenue information by geographic region is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
United States	$	7,199,343	$	4,217,709	$	13,497,549	$	6,666,818
International	409,800		482,660		1,103,299		1,590,788
	$	7,609,143	$	4,700,369	$	14,600,848	$	8,257,606

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Revenue information by type is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
Devices	$	6,367,010	$	4,029,238	$	12,254,263	$	7,049,627
Disposable IV Sets and Services	1,242,133		671,131		2,346,585		1,207,979
	$	7,609,143	$	4,700,369	$	14,600,848	$	8,257,606

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

	June 30, 2015		December 31, 2014
	(unaudited)
United States	$	752,146	$	728,556
International	76,187		66,279
	$	828,333	$	794,835

Long-lived assets held outside of the United States consist principally of tooling, which is a component of property and equipment, net.

12 — Commitments and Contingencies

Leases.  In January 2014, we entered into a non-cancelable operating lease, commencing July 1, 2014, for a new manufacturing and headquarters facility in Winter Springs, Florida owned by Susi, LLC, an entity controlled by our president, CEO and controlling stockholder, Roger Susi. Pursuant to the terms of our lease for this property, the monthly base rent is $32,583, 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. The term of the lease expires on May 31, 2019. Unless advance written notice of termination is timely provided, the lease will automatically renew for two successive terms of five years each beginning in 2019 and again in 2024, and thereafter, will be renewed for successive terms of one year each.

A summary of our non-cancelable operating lease commitments of June 30, 2015 is as follows:

Six months ending December 31, 2015	$	195,498
2016	390,996
2017	390,996
2018	390,996
2019	162,915
Total non-cancelable operating lease commitments	$	1,531,401

Rent expense under our operating leases was $100,361 and $31,571 for the three months ended June 30, 2015 and 2014, respectively, and $200,536 and $62,342 for the six months ended June 30, 2015 and 2014, respectively.

Leasehold improvements are amortized over the shorter of the initial lease term or the estimated useful life.

Purchase commitments.  We had various purchase orders for goods or services totaling approximately $2,334,727 at June 30, 2015 and $1,993,801 at December 31, 2014. No amounts related to these purchase orders have been recognized in our balance sheet.

Legal matters.  On September 10, 2014, a Civil Action was filed in the U.S. District Court for the Southern District of Florida (“Lam Civil Action”). The Lam Civil Action was a putative class action lawsuit brought against the Company and certain individuals who are officers and / or directors of the Company. The plaintiff was an alleged shareholder of the Company, and in the operative complaint sought relief on behalf of a class of persons who purchased the Company’s common stock during the period from July 15, 2014 through September 17, 2014. The complaint alleged that the defendants failed to disclose material information concerning the Company’s compliance with FDA regulations in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that the putative class members suffered damages as a result. The complaint additionally alleged “control person” liability against the individual defendants under Section 20(a) of the Securities Exchange Act of 1934. The Company disputed the plaintiff’s allegations and theories of liability. On May 26, 2015, the court granted the defendants’ motions to dismiss the complaint in its entirety. On June 22, 2015, the plaintiff filed a notice of appeal in the U.S. Court of Appeals for the Eleventh Circuit. We accrued an insignificant amount related to this matter during the three months ended June 30, 2015.

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In addition to the foregoing, we may from time to time become party to various legal proceedings or claims that arise in the ordinary course of business.

13 — Capital Stock

Reincorporation

Effective April 14, 2014, we reincorporated as a Delaware corporation. As part of this reincorporation, we converted all previously outstanding shares of our Class A Common Stock and Class B Common Stock into a single class of common stock on a 1.75:1 conversion ratio and all previously outstanding shares of our Series A Preferred Stock were split on a 1.75:1 conversion ratio into new Series A Preferred Stock. This recapitalization was accounted for as a stock split as the intent was to provide for wider distribution of our common stock. In accordance with our Certificate of Incorporation, upon the sale of shares pursuant to an initial public offering, which was completed in July 2014, all of our Series A Preferred Stock was automatically converted into common stock on a 1:1 conversion ratio.

The table below summarizes the effect of the stock split and conversion on our capital stock that was previously outstanding prior to our initial public offering:

Series A Preferred Stock outstanding — Pre recapitalization	800,000
Stock split ratio	1.75:1
Series A Preferred Stock outstanding — Post recapitalization	1,400,000
Common stock outstanding — Pre recapitalization
Class A Common Stock	400,000
Class B Common Stock	3,600,000
Total	4,000,000
Stock split ratio	1.75:1
Common stock outstanding — Post recapitalization	7,000,000

As of the effective date of the reincorporation, we are now authorized to issue 90,000,000 shares of Common Stock with a par value of $0.0001 per share and 10,000,000 shares of Preferred Stock with a par value of $0.0001.

The effect of this stock split has been retroactively applied to per-share computations, share and option amounts for all periods presented within these condensed financial statements and accompanying notes.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition (“MD&A”) supplements the MD&A in the Company’s Annual Report filed on Form 10-K. The MD&A should be read in conjunction with the Risk Factors section of this Quarterly Report, our condensed financial statements and accompanying footnotes, the discussion of certain risks and uncertainties contained in Part II, Item 1A of this Quarterly Report, the Form 10-K and the cautionary information regarding forward-looking statements at the end of this section.

Some of the statements contained in this MD&A and elsewhere in this Quarterly Report are forward-looking statements that involve substantial risks and uncertainties. All statements other than historical facts contained in this report, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “may,” “will,” “continue,” “should,” “plan,” “predict,” “potential” and other similar expressions. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in these forward-looking statements, which are subject to a number of risks, uncertainties and assumptions including, but not limited to the risks discussed in the Risk Factor section of this Quarterly Report.

Our Business

We are the only known provider of non-magnetic intravenous (“IV”) infusion pump systems that are designed to be safe for use during magnetic resonance imaging (“MRI”) procedures. Other electromechanical medical devices and pumps contain magnetic and electronic parts that are potentially dangerous to operate in the presence of the powerful magnet that drives an MRI. Our MRidium 3860+ MRI compatible IV infusion pump system has been designed with non-ferrous parts, ceramic ultrasonic motors, non-magnetic mobile stands 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 to providing IV fluids 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. MRidium is a trademark of IRADIMED CORPORATION.

Each IV infusion pump system consists of an MRidium MRI compatible IV infusion pump, mobile stand, and proprietary disposable IV tubing sets and many of these systems contain additional optional upgrade accessories. We primarily generate revenue from the one-time sale of pumps and accessories, in addition to revenue generated from ongoing service contracts and the sale of proprietary disposable tubing sets used during each patient infusion. The principal customers for our MRI compatible products include hospitals, acute care facilities and outpatient imaging centers.

We sell our MRI compatible products through our direct sales force in the U.S. and independent distributors internationally. We have distribution agreements for our products with 35 independent distributors selling our products internationally. Selling cycles for medical devices vary widely but are typically three to six months in duration. We also enter into agreements with healthcare supply contracting companies in the U.S., which enable us to sell and distribute our MRidium MRI compatible IV infusion pump systems to their member hospitals. Under these agreements, we are required to pay these group purchasing organizations (“GPOs”) a percentage fee based on sales of our products to their member hospitals. We currently have contracts with four major GPOs that effectively give us the ability to sell to more than 95% of all U.S. acute care facilities.

FDA Warning Letter

The FDA conducted a routine inspection of our prior facility between April 7 and April 16, 2014. This was the first FDA inspection of our facility since the voluntary product recall in August 2012 of certain infusion sets and the voluntary recall in July 2013 of our DERS software. The FDA issued a Form 483 on April 16, 2014 that identified eight observations. The majority of the observations related to procedural and documentation issues associated with the design, development, validation testing and documentation of software used in certain of our products. Other observations were related to the design validation of pump labeling, design analysis of tube stretching, procedures for post-market design review, and control and procedures related to handling certain reported complaints. We submitted a response to the Form 483 in May 2014 and June 2014 in which we described our proposed corrective and preventative actions to address each of the FDA’s observations.

On September 2, 2014, we received a warning letter from the FDA relating to this inspection (the “Warning Letter”). The Warning Letter stated that the FDA accepted as adequate several of our responses to Form 483 observations, identified two responses whose accuracy will be determined in the next scheduled inspection of our facility and identified issues for which our response was determined to be inadequate. The issues identified as inadequate concern our procedures for validating device design primarily related to software quality assurance.

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Also, the Warning Letter raised a new issue. The Warning Letter stated that modifications made to software on our previously cleared infusion pumps, the MRidium 3860 and MRidium 3850, were “significant” and required submission of new premarket notifications under Section 510(k) (a “510(k) submission”) of the FDC Act. These modifications were made over time. We believe they were insignificant and did not require premarket notification submissions. However, the FDA indicated that the modifications of the software for the MRidium 3860 and the software for the MRidium 3850 were “significant” modifications because they could significantly affect the safety or effectiveness of these devices. As a result, the Warning Letter states that the products being sold by us are “adulterated” and “misbranded” under the FDC Act. The Warning Letter also indicates that the MRidium 3860+ infusion pump requires separate FDA clearance from the MRidium 3860 and MRidium 3850.

The Warning Letter requested that we immediately cease activities that result in the misbranding or adulteration of the MRidium 3860 MRI infusion pump, MRidium 3850 MRI infusion pump, and the MRidium 3860+ MRI infusion pump, including the commercial distribution of the devices. We immediately complied with the Warning Letter and ceased sale and distribution of the identified products in the United States.

On September 4, 2014, we submitted to the FDA our initial response to the Warning Letter and on September 17, 2014 we sent an additional response that included supplemental information related to the Form 483 inspection observations for which the FDA considered our initial responses inadequate.

On November 25, 2014, we announced that we filed the 510(k) submission related to our MRidium 3860+ MRI IV infusion pumps and on December 12, 2014 we were notified that our 510(k) submission had been formally accepted for review by the FDA. On December 22, 2014, under FDA enforcement discretion, we announced that we resumed domestic distribution of our MRI compatible MRidium 3860+ MRI IV infusion pump systems, without the DERS option. On January 28, 2015, under FDA enforcement discretion, we announced that we resumed domestic distribution of our DERS option.

We continue to work with the FDA to fully resolve the Warning Letter and complete the review of the 510(k) submission.

Financial Highlights and Outlook

Our total revenue increased $2.9 million, or 61.9%, to $7.6 million for the second quarter ended June 30, 2015, compared to $4.7 million for the second quarter of last year. Net income was $1.8 million, or $0.15 per diluted share, in the second quarter ended June 30, 2015, compared with net income of $1.0 million, or $0.11 per diluted share, in the second quarter last year. These increases were significantly driven by sales of our MRI compatible IV pump systems.  During the second quarter of 2015, we sold 220 pump systems, compared to 146 pump systems sold during the same period in 2014, a 50.7% increase.

For the remainder of 2015, we expect continued revenue growth as we focus on working down our backlog and our expanding U.S. direct sales force continues to drive market awareness of the advantages of patient safety and operating efficiencies provided by our MRI compatible IV infusion pump systems. We intend to continue focusing our efforts on converting users of our former competitor’s pumps to our systems, in addition to targeting an increased number of hospitals and acute care facilities that have yet to adopt our technology. We expect operating expenses to increase in 2015 due to increased headcount, the costs associated with our new corporate headquarters, costs incurred in addressing the Warning Letter, higher legal expense, higher depreciation expense from additional capital expenditures and the costs of being a public company.

Application of Critical Accounting Policies

We prepare our financial statements in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and use assumptions that affect the reported amounts of assets, liabilities and related disclosures at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

We believe that the following critical accounting policies require the use of significant estimates, assumptions, and judgments. The use of different estimates, assumptions, and judgments could have a material effect on the reported amounts of assets, liabilities and related disclosures as of the date of the financial statements and revenue and expenses during the reporting period.

·Revenue recognition

·Accounts receivable and allowance for doubtful accounts

·Inventory carried at the lower of cost or market

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·Stock-based compensation

·Income taxes

These critical accounting policies are described in more detail in our Annual Report filed on Form 10-K, under Management’s Discussion and Analysis and Results of Operations. There have been no changes to these policies during the six months ended June 30, 2015.

Results of Operations

The following table sets forth selected statements of operations data as a percentage of total revenue for the periods indicated. Our historical operating results are not necessarily indicative of the results for any future period.

	Percent of Revenue Three Months Ended June 30,				Percent of Revenue Six Months Ended June 30,
	2015		2014		2015		2014
Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue	18.7		18.5		18.8		18.5
Gross profit	81.3		81.5		81.2		81.5
Operating expenses:
General and administrative	26.1		24.1		27.1		26.9
Sales and marketing	14.5		18.4		15.0		19.7
Research and development	5.3		4.8		5.1		5.4
Total operating expenses	45.9		47.2		47.2		52.0
Income from operations	35.4		34.3		34.0		29.5
Other income, net	0.6		0.2		0.6		0.2
Income before provision for income taxes	36.0		34.5		34.6		29.7
Provision for income taxes	12.7		12.8		12.3		11.0
Net income	23.3	%	21.7	%	22.3	%	18.7	%

Three Months Ended June 30, 2015 and 2014

Revenue

Revenue increased approximately $2.9 million, or 61.9%, to $7.6 million for the three months ended June 30, 2015, compared to $4.7 million for the same period in 2014.

Revenue from sales in the U.S. increased approximately $3.0 million, or 70.7%, to $7.2 million for the three months ended June 30, 2015, from $4.2 million for the same period in 2014. Revenue from sales internationally decreased approximately $0.1 million, or 15.1%, to $0.4 million for the three months ended June 30, 2015, from $0.5 million for the same period in 2014.

Revenue from sales of devices increased approximately $2.4 million, or 58.0%, to $6.4 million for the three months ended June 30, 2015, from $4.0 million for the same period in 2014. During the three months ended June 30, 2015, we sold 220 MRI compatible IV infusion pumps compared to 146 pumps for the same period in 2014. The average selling price of our MRI compatible IV infusion pump systems during the three months ended June 30, 2015 was approximately $29,000, compared to approximately $28,000 for the same period in 2014. The increase in our average selling price is the result of higher domestic sales as a percent of total revenue during the three months ended June 30, 2015 compared to the same period in 2014.

Revenue from sales of our disposable IV sets and services increased approximately $0.5 million, or 85.1%, to $1.2 million for the three months ended June 30, 2015, from $0.7 million for the same period in 2014.

Cost of Revenue

Cost of revenue increased approximately $0.5 million, or 63.5%, to $1.4 million for the three months ended June 30, 2015, from $0.9 million for the same period in 2014. Gross profit increased approximately $2.4 million, or 61.5%, to $6.2 million for the three months ended June 30, 2015 from $3.8 million for the same period in 2014. The increase in cost of revenue and gross profit is due to higher sales during the three months ended June 30, 2015, compared to the second quarter 2014. Gross profit margin was significantly consistent at 81.3% for the three months ended June 30, 2015 compared to 81.5% for the same period in 2014.

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General and Administrative

General and administrative expense increased approximately $0.9 million, or 75.6%, to $2.0 million for the three months ended June 30, 2015, from $1.1 million for the same period last year. This increase is primarily due to higher payroll and employee benefits, legal and professional fees, medical device excise tax expense, administration fees paid to our GPO’s and stock compensation expense for the first quarter 2015 when compared to the same period last year.

Sales and Marketing

Sales and marketing expense increased approximately $0.2 million, or 27.8%, to $1.1 million for the three months ended June 30, 2015, from $0.9 million for the same period in 2014. This is primarily the result of higher salary expense resulting from the increased size of our sales organization, sales commissions resulting from higher sales and stock compensation expense as of June 30, 2015 compared to the same period last year.

Research and Development

Research and development expense increased approximately $0.2 million, 78.9%, to $0.4 million for the three months ended June 30, 2015, from $0.2 million for the same period in 2014. This is primarily the result of higher outside consulting and engineering expenses.

Other Income, Net

Other income, net consists of interest income, foreign currency gains and losses, and other miscellaneous income. We reported other income of approximately $46,000 for the three months ended June 30, 2015, compared to approximately $12,000 for the same period in 2014. This increase is primarily the result of interest income related to our investment portfolio which had higher average balances in the 2015 period than in the 2014 period.

Income Taxes

We recorded income tax expense of approximately $1.0 million and $0.6 million for the three months ended June 30, 2015 and 2014, respectively. The higher income tax expense for the second quarter of 2015 is due to higher income before provision for income taxes, partially offset by a decrease in our effective tax rate when compared to the same period in 2014. Our effective tax rate for the second quarter of 2015 was 35.4% compared to 37.2% for the same period in 2014. The decrease in our effective tax rate is the result of a lower U.S. state tax rate, higher deductions associated with the exercise of stock options and a higher domestic production activities deduction.

Six Months Ended June 30, 2015 and 2014

Revenue

Revenue increased approximately $6.3 million, or 76.8%, to $14.6 million for the six months ended June 30, 2015, compared to $8.3 million for the same period in 2014.

Revenue from sales in the U.S. increased approximately $6.8 million, or 102.5%, to $13.5 million for the six months ended June 30, 2015, from $6.7 million for the same period in 2014. Revenue from sales internationally decreased approximately $0.5 million, or 30.6%, to $1.1 million for the six months ended June 30, 2015, from $1.6 million for the same period in 2014.

Revenue from sales of devices increased approximately $5.3 million, or 73.8%, to $12.3 million for the six months ended June 30, 2015, from $7.0 million for the same period in 2014. During the six months ended June 30, 2015, we sold 437 MRI compatible IV infusion pumps compared to 292 pumps for the same period in 2014. The average selling price of our MRI compatible IV infusion pump systems during the six months ended June 30, 2015 was approximately $28,000, compared to $24,000 for the same period in 2014. The increase in our average selling price is the result of higher domestic sales as a percent of total revenue during the six months ended June 30, 2015 compared to the same period in 2014.

Revenue from sales of our disposable IV sets and services increased approximately $1.1 million, or 94.3%, to $2.3 million for the six months ended June 30, 2015, from $1.2 million for the same period in 2014.

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Cost of Revenue

Cost of revenue increased approximately $1.3 million, or 80.2%, to $2.8 million for the six months ended June 30, 2015, from $1.5 million for the same period in 2014. Gross profit increased approximately $5.1 million, or 76.0%, to $11.9 million for the six months ended June 30, 2015 from $6.7 million for the same period in 2014. The increase in cost of revenue and gross profit is due to higher sales during the six months ended June 30, 2015, compared to the same period in 2014. Gross profit margin was significantly consistent at 81.2% for the six months ended June 30, 2015 compared to 81.5% for the same period in 2014.

General and Administrative

General and administrative expense increased approximately $1.8 million, or 77.8%, to $4.0 million for the six months ended June 30, 2015, from $2.2 million for the same period last year. This increase is primarily due to higher payroll and employee benefits, legal and professional fees, administration fees paid to our GPO’s, stock compensation expense, insurance expense, consulting expense, franchise tax expense, bad debt expense and the impairment of patents related to one model of our IV sets for the first quarter 2015 when compared to the same period last year.

Sales and Marketing

Sales and marketing expense increased approximately $0.6 million, or 35.0%, to $2.2 million for the six months ended June 30, 2015, from $1.6 million for the same period in 2014. This is primarily the result of higher sales commissions resulting from higher sales, salary and travel costs resulting from the increased size of our sales organization and stock compensation expense as of June 30, 2015 compared to the same period last year.

Research and Development

Research and development expense increased approximately $0.3 million, 65.8%, to $0.7 million for the six months ended June 30, 2015, from $0.4 million for the same period in 2014. This is primarily the result of higher outside consulting and engineering expenses.

Other Income, Net

Other income, net consists of interest income, foreign currency gains and losses, and other miscellaneous income. We reported other income of approximately $93,000 for the six months ended June 30, 2015, compared to approximately $15,000 for the same period in 2014. This increase is primarily the result of interest income related to our investment portfolio which had higher average balances in the 2015 period than in the 2014 period.

Income Taxes

We recorded income tax expense of approximately $1.8 million and $0.9 million for the six months ended June 30, 2015 and 2014, respectively. The higher income tax expense for the six months ended June 30, 2015 is due to higher income before provision for income taxes, partially offset by a decrease in our effective tax rate when compared to the same period in 2014. Our effective tax rate for the six months ended June 30, 2015 was 35.5% compared to 37.0% for the same period in 2014. The decrease in our effective tax rate is the result of a lower U.S. state tax rate, higher deductions associated with the exercise of stock options and a higher domestic production activities deduction.

Liquidity and Capital Resources

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

As of June 30, 2015, we had cash and cash equivalents and liquid investments of approximately $20.3 million, stockholders’ equity of $25.1 million, and working capital of $23.9 million. As of December 31, 2014, we had cash and cash equivalents and liquid investments of approximately $17.4 million, stockholders’ equity of $20.9 million, and working capital of $19.9 million.

We believe that our current cash and cash equivalents and any cash generated from operations will be sufficient to meet our ongoing operating requirements for at least the next 12 months. We do not anticipate requiring additional capital; however, if required or desirable, we may seek to obtain a credit facility, raise debt or issue additional equity in the private or public markets.

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For the six months ended June 30, 2015, cash provided by operations increased approximately $0.5 million to $2.7 million, compared to cash provided by operations of $2.2 million for the same period in 2014. This increase was primarily the result of higher net income and net cash inflows related to deferred revenue, inventory and the add back of non-cash items such as stock compensation, impairment of intangible assets, depreciation and amortization, partially offset by net cash outflows related to accounts receivable and accrued payroll and benefits and deferred taxes. The sum of our net income and certain non-cash expense items, such as stock compensation, impairment of intangible assets, depreciation and amortization was approximately $4.0 million for the six months ended June 30, 2015 compared to $1.9 million for the same period last year.

Cash used in investing activities was approximately $127,000 for the six months ended June 30, 2015 compared to approximately $239,000 for the same period last year. We used approximately $121,000 of cash to purchase property and equipment during the six months ended June 30, 2015 compared to approximately $218,000 for the same period last year.

Cash provided by financing activities was approximately $361,000 for the six months ended June 30, 2015 and related to the exercise of stock options by employees and the tax benefits on those exercises. For the six months ended June 30, 2014, cash used in financing activities was approximately $210,000. We used $203,000 of cash to pay costs associated with the initial public offering of our common stock that was completed in July 2014. We also used $6,000 during the six months ended June 30, 2014 to repay in full the officer note payable.

We market our products to end users in the United States and to distributors internationally. Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses. As of December 31, 2014, two international customers accounted for approximately 35% of gross accounts receivable.

In July 2014, we completed the move of our manufacturing operations and headquarters facility into a new building that is approximately 24,000 square feet located in Winter Springs, Florida. The new facility has been leased from Susi, LLC, an entity controlled by our President and CEO, Roger Susi. Pursuant to the terms of our lease, the monthly base rent is $32,583, adjusted annually for changes in the consumer price index.

Off-Balance Sheet Arrangements

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 obtained liability insurance providing coverage that limits our exposure for these indemnified matters. Based on our historical experience and the estimated probability of future loss, we have determined that the estimated fair value of these indemnities is not material to our financial position or results of operations and have not recorded a liability for these agreements as of June 30, 2015. We had no other off-balance sheet arrangements during the six months ended June 30, 2015 or for the year ended December 31, 2014 that had, or are reasonably likely to have, a material effect on our financial condition, results of operations, or liquidity.

Recent Accounting Pronouncements

See Note 1 to the unaudited condensed financial statements contained herein for a full description of recent accounting pronouncements including the respective expected dates of adoption and effects on results of our operations and financial condition.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Exchange Risk

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, principally the Japanese yen (“Yen”). The volatility of the Yen depends on many factors that we cannot forecast with reliable accuracy. We have experienced and will continue to experience fluctuations in our net income as a result of transaction gains (losses) related to revaluing Yen denominated cash and accounts payable balances that are denominated in Yen. In the event our Yen denominated cash, accounts payable or expenses increase, our operating results may be affected by fluctuations in the Yen exchange rate. If the U.S. Dollar uniformly increased or decreased in strength by 10% relative to the Yen, our net income would have correspondingly increased or decreased by an immaterial amount for the three and six months ended June 30, 2015 and 2014.

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Interest Rate Risk

When able, we invest excess cash in bank money-market funds, corporate debt securities or discrete short-term investments. The fair value of our cash equivalents and short-term investments is sensitive to changes in the general level of interest rates in the U.S., and the fair value of these investments will decline if market interest rates increase. As of June 30, 2015, we had approximately $7.9 million in corporate bonds, with approximately $6.7 million that mature between 1 and 3 years and $1.2 million that mature between 3 and 5 years. These corporate bonds have fixed interest rates and semi-annual interest payment dates. If market interest rates were to change by 100 basis points from levels at June 30, 2015, we expect the corresponding change in fair value of our investments would be approximately $116,000. This is based on sensitivity analyses performed on our financial position as of June 30, 2015. Actual results may differ as our analysis of the effects of changes in interest rates does not account for, among other things, sales of securities prior to maturity and repurchase of replacement securities, the change in mix or quality of the investments in the portfolio, and changes in the relationship between short-term and long-term interest rates.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On September 10, 2014, a Civil Action was filed in the U.S. District Court for the Southern District of Florida (“Lam Civil Action”). The Lam Civil Action was a putative class action lawsuit brought against the Company and certain individuals who are officers and / or directors of the Company. The plaintiff was an alleged shareholder of the Company, and in the operative complaint sought relief on behalf of a class of persons who purchased the Company’s common stock during the period from July 15, 2014 through September 17, 2014. The complaint alleged that the defendants failed to disclose material information concerning the Company’s compliance with FDA regulations in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that the putative class members suffered damages as a result. The complaint additionally alleged “control person” liability against the individual defendants under Section 20(a) of the Securities Exchange Act of 1934. The Company disputed the plaintiff’s allegations and theories of liability. On May 26, 2015, the court granted the defendants’ motions to dismiss the complaint in its entirety. On June 22, 2015, the plaintiff filed a notice of appeal in the U.S. Court of Appeals for the Eleventh Circuit. We accrued an insignificant amount related to this matter during the three months ended June 30, 2015.

Item 1A. Risk Factors

Risks Relating to Our Business and Financial Condition

Our financial performance is currently dependent on a single product, and disruptions in our ability to sell this product may have a material adverse effect on our business.

Our current revenue and profitability is dependent on the sale of the MRidium 3860+ and 3850/R MRI compatible IV infusion pump system and the ongoing sale of disposable tubing sets related to them. Sales of the MRidium 3860+ and 3850/R MRI compatible IV infusion pump systems have historically comprised a substantial majority of our net revenue. Our near-term revenue and profitability will, accordingly, be dependent upon our ability to successfully market and sell this Class II medical device.

On September 2, 2014 we announced we received a Warning Letter from the FDA. The FDA stated in the Warning Letter that modifications made to software on our previously cleared infusion pumps, the MRidium 3860 and MRidium 3850, were “significant” and required submission of new premarket notifications under Section 510(k) (a “510(k) submission”) of the Food, Drug and Cosmetic Act (the “FDCA”). Such updates occurred periodically over time. As stated in the warning letter, the FDA indicated that the modifications of the software related to the MRidium 3860 from version 2.0 to current version 3.5.1 and the modifications of the software related to the MRidium 3850 from version 1.0 to version 585.11.1 as “significant” modifications because they could significantly affect the safety or effectiveness of the devices. As a result, the Warning Letter alleges that the products being sold by us are “adulterated” and “misbranded” under the FDCA. The Warning Letter also indicates that the MRidium 3860+ infusion pump requires separate FDA clearance from the MRidium 3860 and MRidium 3850.

The Warning Letter requested that we immediately cease activities that result in the misbranding or adulteration of the MRidium 3860 MRI infusion pump, MRidium 3850 MRI infusion pump, and the MRidium 3860+ MRI infusion pump, such as the commercial distribution of the devices. We immediately complied with the Warning Letter and ceased sale and distribution of the identified products in the United States. On September 4, 2014, we submitted to the FDA our initial response to the Warning Letter and on September 17, 2014 we sent an additional response that included supplemental information. On November 25, 2014, we announced that we filed the 510(k) submission related to our MRidium 3860+ MRI IV infusion pumps and on December 12, 2014 we were notified that our 510(k) submission had been formally accepted for review by the FDA. On December 22, 2014, under FDA enforcement discretion, we announced that we resumed domestic distribution of our MRI compatible MRidium 3860+ MRI IV infusion pump systems, without the Dose Error Reduction System (“DERS”) option. On January 28, 2015, under FDA enforcement discretion, we announced that we resumed domestic distribution of our DERS option.

The disruption in the shipment of our products had a significant adverse effect on our business and our financial condition. We are working with the FDA to resolve the Warning Letter and complete the review of the 510(k) submission.  Although we have resumed commercial distribution of our product, there can be no guarantee that our efforts will be successful in obtaining clearance of our 510(k) submission. The FDA could require us to, again, cease shipment of our products, or notify health professionals and others that the devices present unreasonable risk or substantial harm to public health, order a recall, repair, replacement, or refund of the devices, detain or seize adulterated or misbranded medical devices, or ban the medical devices. The FDA may also issue further warning letters or untitled letters, refuse our request for 510(k) submission or premarket approval, revoke existing 510(k) clearances or premarket approvals previously granted, impose operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices and assess civil or criminal penalties against our officers, employees, or us.

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The MRidium 3860+ or 3850/R MRI compatible IV infusion pumps could be rendered obsolete or economically impractical by numerous factors, many of which are beyond our control, including:

·entrance of new competitors into our markets;

·technological developments such as new imaging modalities which render MRI procedures obsolete or reduce the instances where MRI imaging is utilized;

·loss of key relationships with suppliers, group purchasing organizations, or end-user customers;

·manufacturing or supply interruptions;

·product liability claims;

·our reputation and product market acceptance; and

·product recalls or safety alerts.

Any major factor adversely affecting the sale of our MRidium 3860+ MRI compatible IV infusion pump would cause our revenues to decline and have a material adverse impact on our business, financial condition and our common stock.

We are currently subject to securities class action litigation and derivative litigation and we may be subject to similar or other litigation in the future.

We and certain of our officers and/or directors are defendants in a lawsuit filed in the United States District Court for the Southern District of Florida, brought on behalf of our stockholders that alleges that the defendants failed to disclose material information concerning our compliance with FDA regulations in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that the putative class members suffered damages as a result. The lawsuit additionally alleges “control person” liability against the individual defendants under Section 20(a) of the Securities Exchange Act of 1934. The plaintiffs seek to represent a class comprised of purchasers of our common stock during the period from July 15, 2014 through September 2, 2014 and seeks damages, costs and expenses and such other relief as determined by the Court.

While we believe we have meritorious defenses and intend to defend this lawsuit vigorously, we cannot predict the outcome of this lawsuit. Legal fees and costs incurred in connection with such activities may be significant and we could, in the future, be subject to judgments or enter into settlements of claims for significant monetary damages. With respect to any litigation, our insurance may not reimburse us or may not be sufficient to reimburse us for the expenses or losses we may suffer in contesting and concluding such lawsuits. A decision adverse to our interests on these actions or resulting from these matters could result in the payment of substantial damages and could have a material adverse effect on our business, financial condition and our common stock. Regardless of the outcome, these claims may result in injury to our reputation, significant costs, diversion of management’s attention and resources, and loss of revenue.

Our continued success depends on the integrity of our supply chain, including multiple single-source suppliers, the disruption of which could negatively impact our business.

Many of the component parts of our MRidium MRI compatible IV infusion pumps are obtained through supply agreements with third parties. Some of these parts require our partners to engage in complex manufacturing processes. In light of our dependence on third-party suppliers, several of which are single-source suppliers, we are subject to inherent uncertainties and risks related to their ability to produce parts on a timely basis, to comply with product safety and other regulatory requirements and to provide quality parts to us at a reasonable price.

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For example, we are dependent upon a single vendor for the ultrasonic motor at the core of our MRidium MRI compatible IV infusion pump. If this vendor fails to meet our volume requirements, which we anticipate will increase over time, or if the vendor becomes unable or unwilling to continue supplying motors to us, this would impact our ability to supply our pumps to customers until a replacement source is secured. Our executed agreement with this vendor provides that the price at which we purchase products from the vendor is determined by mutual agreement from time to time or should material costs change. Although we have had a long history of stable pricing with this supplier, this provision may make it difficult for us to continue to receive motors from this vendor on favorable terms or at all if we do not agree on pricing in the future. In such event, it could materially and adversely affect our commercial activities, operating results and financial condition.

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

Additionally, any failure by us to forecast demand for, or to maintain an adequate supply of, raw materials or finished products could result in an interruption in the supply of certain products and a decline in our sales.

The manufacture of our products requires strict adherence to regulatory requirements governing medical devices and if we or our suppliers encounter problems our business could suffer.

The manufacture of our pumps and 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 of our pump, the batch 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 Florida.

We manufacture and store our products at a single facility in Winter Springs, Florida. 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 and our operating results and financial condition would be negatively affected.

Our inability to collect on our accounts receivables held by significant customers may have an adverse effect on our business operations and financial condition.

We market our products to end users in the United States and to distributors internationally. Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses. From time to time, we have had accounts receivables from one or two customers that accounted for 10.0% or more of our gross accounts receivable.  As a result, we are exposed to a certain level of concentration of credit risk.  If a major customer experiences financial difficulties, the effect on us could be material and have an adverse effect on our business, financial condition and results of operations.

If we fail to maintain relationships with GPOs, sales of our products could decline.

Our ability to sell our products to U.S. acute care facilities and outpatient imaging centers depends in part on our relationships with group purchasing organizations (“GPOs”). 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 competitor’s products, we may be precluded from making sales to members of that GPO for the duration of the contractual arrangement. 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.

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Cost-containment efforts of our customers and purchasing groups could adversely affect our sales and profitability.

Our MRI compatible IV infusion pumps are considered capital equipment by many potential customers, and hence changes in the budgets of healthcare organizations and the timing of spending under these budgets and conflicting spending priorities can have a significant effect on the demand for our products and related services. Any decrease in expenditures by these healthcare facilities could decrease demand for our products and related services and reduce our revenue.

Any failure in our efforts to educate clinicians, anesthesiologists, radiologists, and hospital administrators regarding the advantages of our products could significantly limit our product sales.

Our future success will require us to educate a sufficient number of clinicians, anesthesiologists, radiologists, hospital administrators and other purchasing decision-makers about our products and the costs and benefits of MRI compatible IV infusion pump systems. If we fail to demonstrate the safety, reliability and economic benefits of our products to hospitals and acute medical facilities, our products may not be adopted and our sales will suffer.

The lengthy sales cycle for the MRidium 3860+ MRI compatible IV infusion pump could delay our sales.

The decision-making process of customers is often complex and time-consuming. Based on our experience, we believe the period between initial discussions concerning the MRidium 3860+ MRI compatible IV infusion pump and a purchase of a unit is three to six months. The process can be delayed as a result of capital budgeting procedures. Moreover, even if one or two units are sold to a hospital, we believe that it will take additional time and experience with the MRidium 3860+ MRI compatible IV infusion pump before other medical professionals routinely use the MRidium 3860+ MRI compatible IV infusion pump for other procedures and in other departments of the hospital. Such time would delay potential sales of additional units and disposable tubing 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.

Because we rely on distributors to sell our products outside of the U.S., our revenues could decline if our existing distributors do not continue to purchase products from us or if our relationship with any of these distributors is terminated.

We rely on distributors for all of 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. Our revenues outside the U.S. have historically represented approximately one-quarter to one-third of our net revenues. Our expectation of revenue from outside the U.S. over the next twelve months is significantly lower than our historical averages as we focus on fulfilling orders from our significant U.S. backlog. 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.

If we do not successfully develop and commercialize enhanced products or new products that remain competitive, we could lose revenue opportunities and customers, and our ability to achieve growth would be impaired.

The medical device industry is characterized by rapid product development and technological advances, which places our products at risk of obsolescence. Our long-term success depends upon the development and successful commercialization of new products, new or improved technologies and additional applications for non-magnetic infusion technology. The research and development process is time-consuming and costly and may not result in products or applications that we can successfully commercialize. If we do not successfully adapt our technology, products and applications, we could lose revenue opportunities and customers. In addition, we may not be able to improve our products or develop new products or technologies quickly enough to maintain a competitive position in our markets and continue to grow our business.

We are highly dependent on our founder, CEO, President, Director and controlling shareholder, Roger Susi.

Roger Susi developed our MRidium MRI compatible IV infusion pump system, and we believe that he will play a significant role in our continued success and in the development of new products including an MRI compatible device for patient resuscitation. 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 executing a succession plan for Mr. Susi on a timely basis.

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If we fail to attract and retain the talent required for our business, our business could be materially harmed.

Competition for highly skilled personnel is often intense in the medical device industry, and more specifically in the MRI compatible medical device industry. A number of our executives and employees are former employees of Invivo Corporation, where Mr. Susi developed the first MRI compatible patient monitoring system. If our current employees with experience in the MRI compatible device industry leave our company, we may have difficulty finding replacements with an equivalent amount of experience and skill, which could harm our operations. Our future success will also depend in part on our ability to identify, hire and retain additional personnel, including skilled engineers to develop new products, and executives to oversee our marketing, sales, customer support and production staff. We may not be successful in attracting, integrating or retaining qualified personnel to meet our current growth plans or future needs. Our productivity may be adversely affected if we do not integrate and train our new employees quickly and effectively.

Also, to the extent we hire personnel from competitors, we may be subject to allegations that we have improperly solicited, or that they have divulged proprietary or other confidential information, or that their former employers own their inventions or work product.

We may be unable to scale our operations successfully.

Our plan is to grow rapidly. Our 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 systems, procedures and controls 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, administrative and 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.

We engage in related party transactions, which result in a conflict of interest involving our management.

We have engaged in the past, and continue to engage, in related party transactions, particularly between our company and Roger Susi and his affiliates. One significant ongoing related party transaction is the lease agreement between our company and Susi, LLC, an affiliate of Roger Susi, with respect to our sole production and headquarters facility in Winter Springs, Florida. Related party transactions present difficult conflicts of interest, could result in disadvantages to our company and may impair investor confidence, which could materially and adversely affect us. Related party transactions could also cause us to become materially dependent on related parties in the ongoing conduct of our business, and related parties may be motivated by personal interests to pursue courses of action that are not necessarily in the best interests of our company and our stockholders.

Any acquisitions of technologies, products and businesses, may be difficult to integrate, could adversely affect our relationships with key customers, and/or could result in significant charges to earnings.

We plan to periodically review potential acquisitions of technologies, products and businesses that are complementary to our products and that could accelerate our growth. However, our company has never completed an acquisition and there can be no assurance that we will be successful in finding any acquisitions in the future. The process of identifying, executing and realizing attractive returns on acquisitions involves a high degree of uncertainty. Acquisitions typically entail many risks and could result in difficulties in integrating operations, personnel, technologies and products. If we are not able to successfully integrate our acquisitions, we may not obtain the advantages and synergies that the acquisitions were intended to create, which may have a material adverse effect on our business, results of operations, financial condition and cash flows, our ability to develop and introduce new products and the market price of our stock.

The environment in which we operate makes it increasingly difficult to forecast our business performance.

Significant changes and volatility in global financial markets, in consumer and business environments, and our general competitive landscape may 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 or earnings guidance or outlook which we have given or might give may turn out to be inaccurate. Though we will endeavor to give reasonable estimates of future revenues and earnings 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 results are announced to the public.

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There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with United States GAAP. Furthermore, portions of GAAP require the use of fair value models which are variable in application and methodology from appraiser to appraiser. Any changes in estimates, judgments and assumptions used could have a material adverse effect on our business, financial position and operating results.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such assumptions and estimates include those related to revenue recognition, accruals for product returns, valuation of inventory, impairment of intangibles and long-lived assets, accounting for income taxes and stock-based compensation and reserves for potential litigation. We base our 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.” 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.

Risks Related to Our Industry

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

The medical device industry is regulated extensively by governmental authorities, principally the FDA in the U.S. and corresponding state and foreign regulatory agencies. The majority of our manufacturing processes are required to comply with quality systems regulations, including current good manufacturing practice requirements that cover the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging and shipping of our products. Failure to comply with applicable medical device regulatory requirements could result in, among other things, warning letters, fines, injunctions, civil penalties, repairs, replacements, refunds, recalls or seizures of products, total or partial suspensions of production, refusal of the FDA or other regulatory agencies to grant pre-market clearances or approvals for our products, withdrawals or suspensions of future current clearances or approvals and criminal prosecution.

In addition, our products are subject to pre-approval requirements by the FDA and similar international agencies that govern a wide variety of product activities from design and development to labeling, manufacturing, promotion, sales and distribution. Compliance with these regulations may be time consuming, burdensome and expensive for us. The failure to obtain, or the loss or suspension of any such pre-approval, would negatively affect our ability to sell our products, and harm our anticipated revenues.

Foreign governmental authorities that regulate the manufacture and sale of medical devices have become increasingly stringent and, to the extent we sell our products in foreign countries, we may be subject to rigorous regulation in the future. Regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated revenue.

If we fail to obtain, or experience significant delays in obtaining, FDA clearances or other necessary approvals to commercially distribute new products, our ability to grow will suffer.

Our current products are Class II medical devices and hence require regulatory pre-market approval by the FDA and other federal and state authorities prior to their sale in the U.S. Similar approvals are required by foreign governmental authorities for sale of our products outside of the U.S. We are responsible for obtaining the applicable regulatory approval for the commercial distribution of our products. As part of our growth strategy, we plan to seek approvals for new MRI compatible products. The process of obtaining approvals, particularly from the FDA, can be costly and time consuming, and there can be no assurance that we will obtain the required approvals on a timely basis, or at all. Failure to receive approvals for new products will hurt our ability to grow.

We are subject to risks associated with doing business outside of the U.S.

Sales to customers outside of the U.S. have historically comprised of approximately one-quarter to one-third of our net revenues and we expect that non-U.S. sales will contribute to future growth. However, our expectation of revenue from outside the U.S. over the next twelve months is significantly lower than our historical averages as we focus on fulfilling orders from our significant U.S. backlog. A majority of our international sales originate from Europe and Japan, and we also make sales in Canada, Hong Kong, Australia, Mexico and certain parts of the Middle East. The risks associated with operations outside the United States include:

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·foreign regulatory and governmental requirements that could change and restrict our ability to manufacture and sell our products;

·possible failure to comply with anti-bribery laws such as the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions;

·foreign currency fluctuations that can impact our financial statements when foreign figures are translated into U.S. dollars;

·different local product preferences and product requirements;

·trade protection and restriction measures and import or export licensing requirements;

·difficulty in establishing, staffing and managing non-U.S. operations;

·failure to maintain relationships with distributors, especially those who have assisted with foreign regulatory or government clearances;

·changes in labor, environmental, health and safety laws;

·potentially negative consequences from changes in or interpretations of tax laws;

·political instability and actual or anticipated military or political conflicts;

·economic instability, inflation, deflation, recession or interest rate fluctuations;

·uncertainties regarding judicial systems and procedures; and

·minimal or diminished protection of intellectual property.

These risks, individually or in the aggregate, could have an adverse effect on our results of operations and financial condition.

We may incur product liability losses, or become subject to other lawsuits related to our products, business, and insurance coverage could be inadequate or unavailable to cover these losses.

Our business is subject to potential product liability risks that are inherent in the design, development, manufacture and marketing of our medical devices and consumable products. We carry third party product liability insurance coverage to protect against such risks, but there can be no assurance that our policy is adequate. In the ordinary course of business, we may become the subject of product liability claims and lawsuits alleging that our products have resulted or could result in an unsafe condition or injury to patients. Any product liability claim brought against us, with or without merit, could be costly to defend and could result in settlement payments and adjustments not covered by or in excess of our product liability insurance. We currently have third-party product liability insurance with maximum coverage of $3,000,000; however, such coverage requires a substantial deductible that we must pay before becoming eligible to receive any insurance proceeds. The deductible amount is currently equal to $25,000 per occurrence and $125,000 in the aggregate. We will have to pay for defending product liability or other claims that are not covered by our insurance. These payments could have a material adverse effect on our profitability and financial condition. Product liability claims and lawsuits, safety alerts, recalls or corrective actions, regardless of their ultimate outcome, could have a material adverse effect on our business, financial condition, reputation and on our ability to attract and retain customers. In addition, we may not be able to obtain insurance in the future on terms acceptable to us or at all.

Defects or failures associated with our products and/or our quality control systems could lead to the filing of adverse event reports, recalls or safety alerts and negative publicity and could subject us to regulatory actions.

Safety problems associated with our products could lead to a product recall or the issuance of a safety alert relating to such products and result in significant costs and negative publicity. An adverse event involving one of our products could require us to file an adverse event report with the FDA. Such disclosure could result in reduced market acceptance and demand for all of our products, and could harm our reputation and our ability to market our products in the future. In some circumstances, adverse events arising from or associated with the design, manufacture or marketing of our products could result in the suspension or delay of regulatory reviews of our applications for new product approvals or clearances.

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We may also voluntarily undertake a recall of our products or temporarily shut down production lines based on internal safety, quality monitoring and testing data. For example, in August 2012, we initiated a voluntary recall of a particular lot of MRidium Series 1000 MR Infusion Sets, Type 1058 MR IV, an extension set used with our MRidium MRI compatible IV infusion pumps, due to an out-of-specification dimension of one section of the IV set. We retrieved and destroyed all unused infusion sets subject to the recall. In July 2013, the FDA notified us that it had concluded its audit and confirmed that the recall was considered terminated. In July 2013, we issued a voluntary recall of our MRI compatible IV infusion pump systems equipped with MRidium 1145 DERS Drug Library due to their potential risk in providing an incorrect recommended value for the infusion rate during the pump’s initial infusion setup. To avoid future product recalls we have made and continue to invest in our quality systems, processes and procedures. We will continue to make improvements to our products and systems to further reduce issues related to patient safety. However, there can be no assurance our systems will be sufficient. Future quality concerns, whether real or perceived, could adversely affect our operating results.

Our products or product types could be subject to negative publicity, which could have a material adverse effect on our financial position and results of operations and could cause the market value of our common stock to decline.

The market’s perception of our products could be harmed if any of our products or similar products offered by others in our industry become the subject of negative publicity due to a product safety issue, withdrawal, recall, or are proven or are claimed to be harmful to patients. The FDA Warning Letter may harm the market perception of our company and products. The harm to market perception may have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

Recent U.S. healthcare policy changes, including the Affordable Care Act and PPACA, may have a material adverse effect on our financial condition and results of operations.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”), enacted in 2010, implemented changes that are expected to significantly impact the medical device industry. Beginning on January 1, 2013, the Affordable Care Act imposed a 2.3% excise tax on sales of products defined as “medical devices” by the regulations of the FDA. We believe that all of our medical products are “medical devices” within the meaning of the FDA regulations. If this tax rate is increased in future years, it would negatively impact our operating results.

Other significant measures contained in the PPACA include research on the comparative clinical effectiveness of different technologies and procedures, initiatives to revise Medicare payment methodologies, such as bundling of payments across the continuum of care by providers and physicians, and initiatives to promote quality indicators in payment methodologies. The PPACA also includes significant new fraud and abuse measures, including required disclosures of financial payments to and arrangements with physician customers, lower thresholds for violations and increasing potential penalties for such violations. In addition, the PPACA established an Independent Payment Advisory Board (“IPAB”), to reduce the per capita rate of growth in Medicare spending. The IPAB has broad discretion to propose policies to reduce health care expenditures, which may have a negative impact on payment rates for services, including treatments and procedures which incorporate use of our products. The IPAB proposals may impact payments for treatments and procedures that use our technology beginning in 2016 and for hospital services beginning in 2020, and may indirectly reduce demand for our products.

The taxes imposed by the new federal legislation and the expansion in government’s effect on the U.S. healthcare industry may result in decreased profits to us, lower reimbursements by payers for our products or reduced medical procedure volumes, all of which may adversely affect our business, financial condition and results of operations.

We are subject to healthcare fraud and abuse regulations that could result in significant liability, require us to change our business practices and restrict our operations in the future.

We and our customers are subject to various U.S. federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claims laws. Violations of these laws are punishable by criminal or civil sanctions, including substantial fines, imprisonment and exclusion from participation in healthcare programs such as Medicare and Medicaid, and Veterans’ Administration health programs and health programs outside the U.S. These laws and regulations are broad in scope and are subject to evolving interpretations, which could require us to alter one or more of our sales or marketing practices. In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our sales, profitability and financial condition. Furthermore, since many of our customers rely on reimbursement from Medicare, Medicaid and other governmental programs to cover a substantial portion of their expenditures, if we or our customers are excluded from such

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programs as a result of a violation of these laws, it could have an adverse effect on our results of operations and financial condition. We have developed and implemented business practices and processes to train our personnel to perform their duties in compliance with healthcare fraud and abuse laws and conduct informal oversight to detect and prevent these types of fraud and abuse. However, we lack formal written policies and procedures at this time. If we are unable to formally document and implement the controls and procedures required in a timely manner or we are otherwise found to be in violation of such laws, we might suffer adverse regulatory consequences or face criminal sanctions, which could harm our operations, financial reporting or financial results.

We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

The U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. We intend to adopt policies for compliance with these anti-bribery laws, which often carry substantial penalties. We cannot assure you that our internal control policies and procedures always will protect us from reckless or other inappropriate acts committed by our affiliates, employees or agents. Violations of these laws, or allegations of such violations, could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

We and our suppliers and customers are required to obtain regulatory approvals to comply with FDA regulations applicable to medical devices and infusion pumps, and these approvals could result in delays or increased costs in developing new products.

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.

We and our suppliers and customers are required to maintain compliance with FDA regulations applicable to medical devices and infusion pumps, and it could be costly to comply with these regulations and to develop compliant products and processes. Failure to comply with these regulations could subject us to sanctions and could adversely affect our business.

Even if we are able to obtain approval for introducing new products to the market, we and our suppliers may not be able to remain in compliance with applicable FDA and other material regulatory requirements once clearance or approval has been obtained for a product. These requirements include, among other things, regulations regarding manufacturing practices, product labeling, off-label marketing, advertising and post-marketing reporting, adverse event reports and field alerts. Compliance with these FDA requirements is subject to continual review and is monitored through periodic inspections by the FDA. For example, the FDA conducted routine inspections of our facility in Winter Park, Florida in June 2010 and more recently between April 7 and April 16, 2014. The FDA issued a Form 483 on April 16, 2014 that identified eight observations. As described above, the FDA subsequently issued a Warning Letter that has resulted in us ceasing to distribute our primary product in the United States. See the risk factor entitled, “Our financial performance is currently dependent on a single product, and disruptions in our ability to sell this product may have a material adverse effect on our business.”

In addition, manufacturing flaws, component failures, design defects, off-label uses or inadequate disclosure of product related information could result in an unsafe condition or the injury or death of a patient. All of these events could harm our sales, margins and profitability in the affected periods and may have a material adverse effect on our business. Any adverse regulatory action or action taken by us to maintain appropriate regulatory compliance, with respect to these laws and regulations could disrupt our business and have a material adverse effect on our sales, profitability and financial condition. Furthermore, an adverse regulatory action with respect to any of our products or operating procedure or to our or our suppliers’ manufacturing facility could materially harm our reputation in the marketplace.

Our operations are subject to environmental laws and regulations, with which compliance is costly and which exposes us to penalties for non-compliance.

Our business, products, and product candidates are subject to federal, state, and local laws and regulations relating to the protection of the environment, worker health and safety and the use, management, storage, and disposal of hazardous substances, waste, and other regulated materials. These environmental laws and regulations could require us to pay for environmental remediation and response costs at third-party locations where we dispose of or recycle hazardous substances. The costs of complying with these various environmental requirements, as they now exist or as may be altered in the future, could adversely affect our financial condition and results of operations.

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Risks Relating to our Intellectual Property

Our success depends on our ability to protect our intellectual property.

We intend to rely on a combination of patents, trademarks, trade secrets, know-how, license agreements and contractual provisions to establish and protect our proprietary rights to our technologies and products. We cannot guarantee that the steps we have taken or will take to protect our intellectual property rights will be adequate or that they will deter infringement, misappropriation or violation of our intellectual property. We may fail to secure patents that are important to our business, and we cannot guarantee that any pending U.S. trademark or patent application, if ultimately issued, will provide us some relative competitive advantage. Litigation may be necessary to enforce our intellectual property rights and to determine the validity and scope of our proprietary rights. Any litigation could result in substantial expenses and may not adequately protect our intellectual property rights. In addition, the laws of some of the countries in which our products may in the future be sold may not protect our products and intellectual property to the same extent as U.S. laws, or at all. We may be unable to protect our rights in trade secrets and unpatented proprietary technology in these countries. If our trade secrets become known, we may lose our competitive advantages.

Even if we are able to secure necessary patents in the U.S., we may not be able to secure necessary patents and trademarks in foreign countries in which we sell our products or plan to sell our products. In March 2013, the U.S. transitioned to a “first inventor to file” system for patents in which, assuming the other requirements for patentability are met, the first inventor to file a patent application is entitled to a patent. We may be subject to a third-party pre-issuance submission of prior art to the U.S. Patent and Trademark Office, or become involved in opposition, derivation, reexamination, inter parties review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights.

Our unpatented trade secrets, know-how, confidential and proprietary information, and technology may be inadequately protected.

We rely on unpatented trade secrets, know-how and technology. This intellectual property is difficult to protect, especially in the medical device industry, where much of the information about a product must be submitted to regulatory authorities during the regulatory approval process. We seek to protect trade secrets, confidential information and proprietary information, in part, by entering into confidentiality and invention assignment agreements with employees, consultants, and others. These parties may breach or terminate these agreements, and we may not have adequate remedies for such breaches. Furthermore, these agreements may not provide meaningful protection for our trade secrets or other confidential or proprietary information or result in the effective assignment to us of intellectual property, and may not provide an adequate remedy in the event of unauthorized use or disclosure of confidential information or other breaches of the agreements. Despite our efforts to protect our trade secrets and our other confidential and proprietary information, we or our collaboration partners, board members, employees, consultants, contractors, or scientific and other advisors may unintentionally or willfully disclose our proprietary information to competitors.

There is a risk that our trade secrets and other confidential and proprietary information could have been, or could, in the future, be shared by any of our former employees with, and be used to the benefit of, any company that competes with us.

If we fail to maintain trade secret protection or fail to protect the confidentiality of our other confidential and proprietary information, our competitive position may be adversely affected. Competitors may also independently discover our trade secrets. Enforcement of claims that a third party has illegally obtained and is using trade secrets is expensive, time consuming and uncertain. If our competitors independently develop equivalent knowledge, methods and know-how, we would not be able to assert our trade secret protections against them, which could have a material adverse effect on our business.

There can be no assurance of timely patent review and approval to minimize competition and generate sufficient revenues.

There can be no assurance that the Patent and Trademark Office will have sufficient resources to review our patent applications in a timely manner. Consequently, even if our patent applications are ultimately successful, our patent applications may be delayed, which would prevent intellectual property protection for our products. If we fail to successfully commercialize our products due to the lack of intellectual property protection, we may be unable to generate sufficient revenues to meet or grow our business according to our expected goals and this may have a materially adverse effect on our profitability, financial condition, and operations.

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We may become involved in patent litigation or other intellectual property proceedings relating to our future product approvals, which could result in liability for damages or delay or stop our development and commercialization efforts.

The medical device industry has been characterized by significant litigation and other proceedings regarding patents, patent applications, and other intellectual property rights. The situations in which we may become parties to such litigation or proceedings may include any third parties (which may have substantially greater resources than we have) initiating litigation claiming that our products infringe their patent or other intellectual property rights; in such case, we will need to defend against such proceedings.

The large number of patents, the rapid rate of new patent applications and issuances, the complexities of the technologies involved and the uncertainty of litigation significantly increase the risks related to any patent litigation. Any potential intellectual property litigation also could force us to do one or more of the following:

·stop selling, making, or using products that use the disputed intellectual property;

·obtain a license from the intellectual property owner to continue selling, making, licensing, or using products, which license may require substantial royalty payments and may not be available on reasonable terms, or at all;

·pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing;

·pay the attorney fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; or

·redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and/or infeasible.

If any of the foregoing events occur, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products, all of which could have a material adverse effect on our business, results of operations and financial condition. As the number of participants in our industry grows, the possibility of intellectual property infringement claims against us increases.

Furthermore, the costs of resolving any patent litigation or other intellectual property proceeding, even if resolved in our favor, could be substantial. Uncertainties resulting from the initiation and continuation of patent litigation or other intellectual property proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other intellectual property proceedings may also consume significant management time.

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, it could materially harm our business.

There may also be situations where we use our business judgment and decide to market and sell products, notwithstanding the fact that allegations of patent infringement(s) have not been finally resolved by the courts (i.e., an “at-risk launch”). The risk involved in doing so can be substantial because the remedies available to the owner of a patent for infringement may include, among other things, damages measured by the profits lost by the patent owner and not necessarily by the profits earned by the infringer. In the case of a willful infringement, the definition of which is subjective, such damages may be increased up to three times. An adverse decision could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

In addition, we may indemnify our customers and distributors with respect to infringement by our products of the proprietary rights of third parties. Third parties may assert infringement claims against our customers or distributors. These claims may require us to initiate or defend protracted and costly litigation on behalf of our customers or distributors, regardless of the merits of these claims. If any of these claims succeed, we may be forced to pay damages on behalf of our customers or distributors or may be required to obtain licenses for the products they use. If we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using our products.

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We may be subject to claims that we, our board members, employees or consultants have used or disclosed alleged trade secrets or other proprietary information belonging to third parties and any such individuals who are currently affiliated with one of our competitors may disclose our proprietary technology or information.

As is commonplace in the medical device industry, some of our board members, employees and consultants are or have been associated with other medical device companies that compete with us. For example, Mr. Susi and a number of our other employees are former employees of Invivo Corporation. While associated with such other medical device companies, these individuals may have been exposed to research and technology similar to the areas of research and technology in which we are engaged. We may become subject to future claims that we, our employees, board members, or consultants have inadvertently or otherwise used or disclosed alleged trade secrets or other proprietary information of those companies. Litigation may be necessary to defend against such claims.

We have entered into confidentiality agreements with our executives and key consultants. However, we do not have, and are not planning to enter into, any confidentiality agreements with our non-executive directors because they have a fiduciary duty of confidentiality as directors. There is the possibility that any of our former board members, employees, or consultants who are currently employed at, or associated with, one of our competitors may unintentionally or willfully disclose our proprietary technology or information.

Risks Related to Ownership of Our Common Stock

Our common stock price may be subject to significant fluctuations and volatility, and you may be unable to sell your shares at a fair price, or at all.

Our stock could be subject to wide fluctuations in price in response to various factors, including the following:

·a lack of liquidity in the public trading of our common stock;

·the commercial success or failure of our key products;

·delayed or reduced orders from our customers;

·manufacturing or supply interruptions;

·changes or developments in laws or regulations applicable to our products and product candidates;

·introduction of competitive products or technologies;

·poorly executed acquisitions or acquisitions whose projected potential is not realized;

·actual or anticipated variations in quarterly operating results;

·failure to meet or exceed our own estimates and projections or the estimates and projections of securities analysts or investors;

·varying economic and market conditions in the U.S.;

·negative developments impacting the medical device industry in general and changes in the market valuations of companies deemed similar to us;

·negative developments concerning our sources of manufacturing supply;

·disputes or other developments relating to patents, trademarks or other proprietary rights;

·litigation or investigations involving us, our industry, or both;

·issuances of debt, equity or convertible securities at terms deemed unfavorable by the market;

·major catastrophic events;

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·the expiration of contractual lock-up agreements;

·sales of large blocks of our stock;

·exercise of the underwriters’ warrant that may lead to sales that put downward pressure on our stock price;

·changes in our Board of Directors, management or key personnel; or

·the other factors described in this “Risk Factors” section.

Any one of the factors above, or the cumulative effect of some of the factors referred to above, may result in significant fluctuations in our quarterly or annual operating results, fluctuations in our share price and investors’ perception of our business. If we fail to meet or exceed such expectations, our business and stock price could be materially adversely affected.

Future sales of our common stock may cause our stock price to decline.

In July 2014, we sold approximately 2.3 million shares of common stock in our initial public offering, and such shares are registered and freely tradable.  If these stockholders sell, or indicate an intention to sell, our common stock in the public market, the trading price of our common stock could decline. In addition, our directors, officers and stockholders who beneficially own approximately 8.4 million shares of common stock, which were subject to lock-up agreements that expired in January 2015. As a result, up to approximately 1.0 million shares became eligible for sale in the public market and approximately 7.4 million shares held by affiliates became eligible for sale subject to volume limitations under Rule 144 under the Securities Act.  Moreover, we filed a registration statement under Form S-8 to register all of the shares issuable upon exercise of options outstanding or reserved for future issuance under our equity compensation plans. If these additional shares are sold, or if it is perceived that they will be sold, the trading price of our common stock could decline.

We may need or choose to raise additional capital in the future, which could result in dilution to our stockholders and adversely affect stock price.

While we believe the proceeds from our recent initial public offering and our current positive cash flow will provide us with adequate capital to fund operations for at least the next 12 months, we may need or choose to raise additional funds prior to that time. We may seek to sell additional equity or debt securities or to obtain an additional credit facility, which we may not be able to do on favorable terms, or at all. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders. If additional funds are raised through the issuance of debt securities or preferred stock, these securities could have rights that are senior to holders of common stock and any debt securities could contain covenants that would restrict our operations. The sale of such securities could hurt demand for our common stock and lead our share price to decline.

Roger Susi, who serves as a director and an executive officer, owns a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

Roger Susi, our founder, who serves as one of our directors and Chief Executive Officer, and his affiliates beneficially owns a majority of our outstanding common stock.  Mr. Susi will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. He may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

Mr. Susi’s majority ownership also qualifies our company as a “controlled company” and allows us to opt out of compliance with numerous corporate governance listing requirements.

In addition, we qualify for the “controlled company” exemption under the corporate governance rules of the NASDAQ Stock Market until such a time as Mr. Susi does not control a majority of our outstanding common stock. As a “controlled company,” we would be permitted to opt out of compliance with the requirements that a majority of our board of directors consist of independent directors, that our Board of Directors’ compensation committee be comprised solely of independent directors, and that director nominees be selected or recommended to the Board of Directors for selection by independent directors. Notwithstanding the availability of these exemptions, we have elected not to rely upon any of the exemptions afforded to a “controlled company” under NASDAQ rules. A majority of our Board of Directors is comprised of independent directors, our compensation committee is comprised solely of independent directors, and our director nominees are recommended for selection to our Board of Directors by a majority of our independent directors in a vote in which only independent directors may participate. Our compliance is voluntary, however, and there can be no assurance that we will continue to comply with these standards in the future.

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We do not intend to pay dividends for the foreseeable future.

The continued expansion of our business will require funding. Accordingly, we do not anticipate that we will pay any cash dividends on shares of our common stock for the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant. Investors seeking cash dividends should not purchase our common stock. Accordingly, if you purchase shares, realization of a gain on your investment will depend solely on the appreciation of the price of our common stock, which may never occur.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the NASDAQ Stock Market and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase 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 will 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 result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are investing 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.

We believe that being a public company and compliant with these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

As a result of becoming a public company, we are obligated to establish and maintain adequate internal controls. Failure to develop and maintain adequate internal controls or to implement new or improved controls could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort. Our internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. We are in the very early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404 of the Sarbanes-Oxley Act of 2002. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal controls over financial reporting, we will be unable to assert that our internal controls are effective.

We will be required to disclose changes made in our internal controls and procedures on a quarterly basis. However, our independent registered public accounting firm will not be required to report on the effectiveness of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until the date we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating. Our remediation efforts may not enable us to avoid a material weakness in the future.

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We believe that our business practices have become more visible as a public company, and this could impact our competitive environment and our risk of potential litigation.

As a result of disclosure of information in filings required of a public company, our business and financial condition have become more visible potentially exposing us to new competition and threatened or actual litigation, including by competitors and other third parties. New competition could result in reduced sales of our products and adversely impact our profitability. If lawsuits prevail against us, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

We may and have become involved in securities class action litigation that could divert management’s attention from our business and adversely affect our business and could subject us to significant liabilities.

The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices of small cap medical device companies. These broad market fluctuations as well a broad range of other factors, including the realization of any of the risks described in this “Risk Factors” section, may cause the market price of our common stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. We have become, and may in the future, become involved in this type of litigation. Litigation is expensive and could divert management’s attention and resources from our primary business, which could adversely affect our operating results. Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require us to make significant payments. Such payment could have a material impact on how investors view our company and result in a decline in our stock price.

We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and intend to take advantage of certain exemptions from various reporting requirements. We cannot predict if investors will respond negatively to our reliance on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.

As an “emerging growth company” we have also chosen to take advantage of certain provisions of the JOBS Act that allow us to provide you with less information in our public filings than would otherwise be required. As a result it may be more difficult for you to evaluate an investment in our company.

If securities or industry analysts fail to initiate research coverage of our stock, downgrade our stock, or discontinue coverage, our trading volume might never develop and our stock price could decline.

The trading market for our common stock depends, in part, on the research reports that securities or industry analysts publish about our business.  If securities or industry analysts do not commence or continue coverage of our company, trading market for our stock may not be robust and the price of our stock could likely be negatively impacted. In the event securities or industry analysts initiate coverage, and later downgrade our stock or discontinue such coverage, our stock price could decline.

Our charter documents and Delaware law have provisions that may discourage an acquisition of us by others and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our charter documents, as well as provisions of the Delaware General Corporation Law (“DGCL”), could depress the trading price of our common stock by making it more difficult for a third party to acquire us at a price favorable to our shareholders. These provisions include:

·authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval to defend against a takeover attempt; and

·establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon at stockholder meetings.

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In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors. We are subject to Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our Board of Directors. This provision could have the effect of delaying or preventing a change of control, whether or not it is desired by or beneficial to our stockholders, which could also affect the price that some investors are willing to pay for our common stock.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

Not Applicable.

Item 3. Default Upon Senior Securities

Not Applicable.

Item 4.  Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information

Not Applicable.

Item 6. Exhibits

(a)Exhibits

Exhibit Number	Description of Document
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule, 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule, 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 I.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

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IRADIMED CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	IRADIMED CORPORATION
Dated: August 11, 2015	/s/ Roger Susi
	By:	Roger Susi
	Its:	Chief Executive Officer and President (Principal Executive Officer and Authorized Officer)
	/s/ Chris Scott
	By:	Chris Scott
	Its:	Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Roger Susi, certify that:

1.I have reviewed this quarterly report on Form 10-Q of IRADIMED CORPORATION;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2015

/s/ Roger Susi

By: Roger Susi

Chief Executive Officer and President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Chris Scott, certify that:

1.I have reviewed this quarterly report on Form 10-Q of IRADIMED CORPORATION;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2015

/s/ Chris Scott

By: Chris Scott

Chief Financial Officer and Secretary

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of IRADIMED CORPORATION (the “Company”) on Form 10-Q for the quarter ending June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Roger Susi

By: Roger Susi

Chief Executive Officer and President

(Principal Executive Officer)

August 11, 2015

/s/ Chris Scott

By: Chris Scott

Chief Financial Officer and Secretary

(Principal Financial and Accounting Officer)

August 11, 2015

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Fair Value Measurements (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Fair Value Measurements
Fair value assets, amount transferred between measurement levels	$ 0	$ 0
Recurring | Fair Value
Fair Value Measurements
Total	7,907,327	7,913,793
Recurring | Fair Value | U.S. corporations
Fair Value Measurements
Total	6,397,551	6,406,219
Recurring | Fair Value | International corporations
Fair Value Measurements
Total	1,509,776	1,507,574
Recurring | Significant Other Observable Inputs (Level 2)
Fair Value Measurements
Total	7,907,327	7,913,793
Recurring | Significant Other Observable Inputs (Level 2) | U.S. corporations
Fair Value Measurements
Total	6,397,551	6,406,219
Recurring | Significant Other Observable Inputs (Level 2) | International corporations
Fair Value Measurements
Total	$ 1,509,776	$ 1,507,574

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Inventory (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Inventory
Raw materials	$ 1,757,482	$ 1,541,688
Work in process	130,477	126,188
Finished goods	430,242	457,962
Total	2,318,201	2,125,838
Allowance for excess and obsolete inventory	$ 104,225	$ 62,069

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Investments (Tables)

6 Months Ended

Jun. 30, 2015

Investments

Summary of available for sale securities

	June 30, 2015
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds:
U.S. corporations	$	6,433,286	$	1,151	$	36,886	$	6,397,551
International corporations	1,515,200		495		5,919		1,509,776
Total	$	7,948,486	$	1,646	$	42,805	$	7,907,327

	December 31, 2014
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds:
U.S. corporations	$	6,433,286	$	—	$	27,067	$	6,406,219
International corporations	1,515,200		—		7,626		1,507,574
Total	$	7,948,486	$	—	$	34,693	$	7,913,793

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Segment, Customer and Geographic Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($) item	Dec. 31, 2014 USD ($)
Segment, Customer and Geographic Information
Number of reportable segment | item			1	1
Segment, Customer and Geographic Information
Revenue	$ 7,609,143	$ 4,700,369	$ 14,600,848	$ 8,257,606
Property and equipment, net	828,333		828,333		$ 794,835
Devices
Segment, Customer and Geographic Information
Revenue	6,367,010	4,029,238	12,254,263	7,049,627
Disposable IV sets and services
Segment, Customer and Geographic Information
Revenue	1,242,133	671,131	2,346,585	1,207,979
United States
Segment, Customer and Geographic Information
Revenue	7,199,343	4,217,709	13,497,549	6,666,818
Property and equipment, net	752,146		752,146		728,556
International
Segment, Customer and Geographic Information
Revenue	409,800	$ 482,660	1,103,299	$ 1,590,788
Property and equipment, net	$ 76,187		$ 76,187		$ 66,279

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Stock-Based Compensation (Details 2) - Options	6 Months Ended
	Jun. 30, 2015 shares
Options
Outstanding beginning of period (in shares)	1,945,192
Options granted (in shares)	24,000
Options exercised (in shares)	(160,999)
Outstanding end of period (in shares)	1,808,193

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Inventory

6 Months Ended

Jun. 30, 2015

Inventory

Inventory

3 — Inventory

Inventory consists of:

	June 30, 2015		December 31, 2014
	(unaudited)
Raw materials	$	1,757,482	$	1,541,688
Work in process	130,477		126,188
Finished goods	430,242		457,962
Total	$	2,318,201	$	2,125,838

The Company reviews its inventory on a periodic basis for excess, obsolete or impaired inventory and records a reserve for items identified. As of June 30, 2015 and December 31, 2014, the Company maintained an allowance for excess and obsolete inventory of $104,225 and $62,069, respectively.

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Commitments and Contingencies (Details)	1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 30, 2014 USD ($) item	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Purchase commitments
Purchase commitments		$ 2,334,727		$ 2,334,727		$ 1,993,801
Susi, LLC | Winter Springs, Florida Facility
Leases
Monthly base rent	$ 32,583
Number of successive renewal terms of lease | item	2
Renewal term of lease beginning in 2019	5 years
Renewal term of lease beginning in 2024	5 years
Renewal term lease thereafter	1 year
Non-cancelable operating lease commitments
Six months ending December 31, 2015		195,498		195,498
2016		390,996		390,996
2017		390,996		390,996
2018		390,996		390,996
2019		162,915		162,915
Total non-cancelable operating lease commitments		1,531,401		1,531,401
Rent expense		$ 100,361	$ 31,571	$ 200,536	$ 62,342

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies

Minimum lease payments

A summary of our non-cancelable operating lease commitments of June 30, 2015 is as follows:

Six months ending December 31, 2015	$	195,498
2016	390,996
2017	390,996
2018	390,996
2019	162,915
Total non-cancelable operating lease commitments	$	1,531,401

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Segment, Customer and Geographic Information (Tables)

6 Months Ended

Jun. 30, 2015

Segment, Customer and Geographic Information

Schedule of revenue information by geographic region

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
United States	$	7,199,343	$	4,217,709	$	13,497,549	$	6,666,818
International	409,800		482,660		1,103,299		1,590,788
	$	7,609,143	$	4,700,369	$	14,600,848	$	8,257,606

Schedule of revenue information by external customers by product

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
Devices	$	6,367,010	$	4,029,238	$	12,254,263	$	7,049,627
Disposable IV Sets and Services	1,242,133		671,131		2,346,585		1,207,979
	$	7,609,143	$	4,700,369	$	14,600,848	$	8,257,606

Schedule of property and equipment, net information by geographic region

	June 30, 2015		December 31, 2014
	(unaudited)
United States	$	752,146	$	728,556
International	76,187		66,279
	$	828,333	$	794,835

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Capital Stock (Details)			6 Months Ended	12 Months Ended
	Jul. 31, 2014	Apr. 14, 2014 $ / shares shares	Jun. 30, 2015 $ / shares shares	Dec. 31, 2013 shares	Dec. 31, 2014 $ / shares shares
Capital Stock
Conversion ratio			1.75
Common stock shares outstanding - Post recapitalization			10,975,650		10,814,650
Common stock, shares authorized			90,000,000		90,000,000
Common stock, par value (in dollars per share) | $ / shares			$ 0.0001		$ 0.0001
Common Stock
Capital Stock
Conversion ratio		1.75		1.75
Common stock shares outstanding - Pre recapitalization				4,000,000
Common stock shares outstanding - Post recapitalization				7,000,000
Common stock, shares authorized		90,000,000	90,000,000
Common stock, par value (in dollars per share) | $ / shares		$ 0.0001	$ 0.0001
Common Stock | IPO
Capital Stock
Conversion ratio	1
Class A Common Stock
Capital Stock
Common stock shares outstanding - Pre recapitalization				400,000
Class B Common Stock
Capital Stock
Common stock shares outstanding - Pre recapitalization				3,600,000
Preferred Stock
Capital Stock
Preferred stock, shares authorized		10,000,000	10,000,000
Preferred stock, par value (in dollars per share) | $ / shares		$ 0.0001	$ 0.0001
Series A Preferred Stock
Capital Stock
Conversion ratio		1.75		1.75
Preferred stock outstanding - Pre recapitalization				800,000
Preferred stock outstanding - Post recapitalization				1,400,000

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Capital Stock (Tables)

6 Months Ended

Jun. 30, 2015

Capital Stock

Summarizes the effect of the stock split and conversion of capital stock previously outstanding

Series A Preferred Stock outstanding — Pre recapitalization	800,000
Stock split ratio	1.75:1
Series A Preferred Stock outstanding — Post recapitalization	1,400,000
Common stock outstanding — Pre recapitalization
Class A Common Stock	400,000
Class B Common Stock	3,600,000
Total	4,000,000
Stock split ratio	1.75:1
Common stock outstanding — Post recapitalization	7,000,000

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Basis of Presentation (Details)	12 Months Ended
	Dec. 31, 2014 customer	Sep. 02, 2014 item
FDA Warning Letter
Number of observations		8
Number of identified responses whose accuracy will be determined		2
Gross accounts receivable | Credit concentration risk | International customer
Certain Significant Risks and Uncertainties
Number of customers | customer	2
Concentration risk (as a percent)	35.00%

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Basic and Diluted Net Income per Share

6 Months Ended

Jun. 30, 2015

Basic and Diluted Net Income per Share

Basic and Diluted Net Income per Share

2 — Basic and Diluted Net Income per Share

Basic net income per share is based upon the weighted average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. As discussed further in Note 13, the effect of our 1.75:1 stock split and recapitalization is reflected in the number of outstanding shares and per share information in the table below. The underwriters’ warrants, preferred stock and stock options granted by us represent the only dilutive effect reflected in diluted weighted-average shares outstanding.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
Net income	$	1,770,571	$	1,018,821	$	3,258,066	$	1,542,188
Weighted-average shares outstanding — Basic	10,974,448		7,000,000		10,940,525		7,000,000
Effect of dilutive securities:
Underwriters’ warrants	111,878		—		102,541		—
Preferred stock	—		1,400,000		—		1,400,000
Stock options	1,021,381		478,170		1,025,056		468,610
Weighted-average shares outstanding — Diluted	12,107,707		8,878,170		12,068,122		8,868,610
Basic net income per share	$	0.16	$	0.15	$	0.30	$	0.22
Diluted net income per share	$	0.15	$	0.11	$	0.27	$	0.17

Stock options to purchase shares of our common stock excluded from the calculation of diluted net income per share because the effect would have been anti-dilutive are as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
	(unaudited)		(unaudited)
Anti-dilutive stock options	24,000	581,259	183,072	570,759

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Basic and Diluted Net Income per Share (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2014 USD ($) $ / shares shares	Jun. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2014 USD ($) $ / shares shares
Basic and Diluted Net Income per Share
Stock split ratio			1.75
Net income | $	$ 1,770,571	$ 1,018,821	$ 3,258,066	$ 1,542,188
Weighted-average shares outstanding - Basic (in shares)	10,974,448	7,000,000	10,940,525	7,000,000
Effect of dilutive securities:
Underwriters' warrants	111,878		102,541
Preferred stock		1,400,000		1,400,000
Stock options	1,021,381	478,170	1,025,056	468,610
Weighted-average shares outstanding - Diluted (in shares)	12,107,707	8,878,170	12,068,122	8,868,610
Basic net income per share (in dollars per share) | $ / shares	$ 0.16	$ 0.15	$ 0.30	$ 0.22
Diluted net income per share (in dollars per share) | $ / shares	$ 0.15	$ 0.11	$ 0.27	$ 0.17
Anti-dilutive warrants and stock options (in shares)	24,000	581,259	183,072	570,759

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Accumulated Other Comprehensive (Loss) lncome (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Unrealized (Losses) Gains on Available-For-Sale Securities
Balance at the beginning	$ (12,077)	$ 3,100	$ (21,473)	$ 924
Gains (Losses), net	(13,398)	1,526	(4,002)	3,701
Balance at the end	$ (25,475)	$ 4,625	$ (25,475)	$ 4,625

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CONDENSED BALANCE SHEETS - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 12,427,528	$ 9,454,150
Investments	7,907,327	7,913,793
Accounts receivable, net of allowance for doubtful accounts of $86,785 as of June 30, 2015 and $28,119 as of December 31, 2014	4,260,683	1,960,214
Inventory, net	2,318,201	2,125,838
Prepaid expenses and other current assets	145,043	276,540
Prepaid income taxes	129,918	320,941
Deferred income taxes	204,949	116,339
Total current assets	27,393,649	22,167,815
Property and equipment, net	828,333	794,835
Intangible assets, net	182,960	250,836
Deferred income taxes	321,400	76,557
Other assets	35,501	19,676
Total assets	28,761,843	23,309,719
Current liabilities:
Accounts payable	1,044,936	629,167
Accrued payroll and benefits	1,044,949	1,244,898
Other accrued taxes	13,005	65,790
Warranty reserve	59,180	27,925
Deferred revenue	1,302,420	308,341
Accrued income taxes	66,827
Total current liabilities	3,531,317	2,276,121
Deferred revenue	142,381	142,902
Total liabilities	3,673,698	2,419,023
Stockholders' equity:
Common stock; $0.0001 par value; 90,000,000 shares authorized; 10,975,650 shares issued and outstanding as of June 30, 2015 and 10,814,650 shares issued and outstanding as of December 31, 2014	1,098	1,082
Additional paid-in capital	16,729,207	15,785,838
Retained earnings	8,383,315	5,125,249
Accumulated other comprehensive loss	(25,475)	(21,473)
Total stockholders' equity	25,088,145	20,890,696
Total liabilities and stockholders' equity	$ 28,761,843	$ 23,309,719

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CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities:
Net income	$ 3,258,066	$ 1,542,188
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense	58,666	450
Provision for excess and obsolete inventory	42,156	29,669
Depreciation and amortization	106,264	54,462
Stock-based compensation	582,085	332,282
Impairment of intangible assets	55,433
Changes in operating assets and liabilities:
Accounts receivable	(2,359,135)	(294,488)
Inventory	(124,866)	(321,249)
Prepaid expenses and other current assets	133,004	59,377
Other assets	(17,332)	(13,634)
Deferred income taxes	(330,989)	(122,063)
Accounts payable	306,116	239,794
Accrued payroll and benefits	(199,949)	195,638
Other accrued taxes	(52,785)	(47,061)
Warranty reserve	31,255	5,000
Deferred revenue	993,558	387,675
Accrued income taxes, net of prepaid income taxes	257,850	199,588
Net cash provided by operating activities	2,739,397	2,247,628
Investing activities:
Purchases of investments		(2,540)
Purchases of property and equipment	(121,415)	(218,425)
Capitalized intangible assets	(5,904)	(17,676)
Net cash used in investing activities	(127,319)	(238,641)
Financing activities:
Proceeds from stock option exercises	199,060
Income tax benefits credited to equity	162,240
Payment of initial public offering costs		(203,225)
Repayment of officer note payable		(6,333)
Net cash provided by (used in) financing activities	361,300	(209,558)
Net increase in cash and cash equivalents	2,973,378	1,799,429
Cash and cash equivalents, beginning of period	9,454,150	2,461,559
Cash and cash equivalents, end of period	12,427,528	4,260,988
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$ 1,802,000	$ 829,574

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Intangible Assets (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Intangible assets
Intangible Assets, gross	$ 354,613		$ 354,613		$ 418,873
Accumulated amortization	(171,653)		(171,653)		(168,037)
Total	182,960		182,960		250,836
Amortization expense of intangible assets	8,830	$ 9,861	18,347	$ 19,417
Impairment of intangible assets			55,433
Expected annual amortization expense
Six months ending December 31, 2015	17,659		17,659
2016	18,016		18,016
2017	10,538		10,538
2018	10,538		10,538
2019	10,538		10,538
2020	10,538		10,538
Patents - in use
Intangible assets
Intangible Assets, gross	168,383		168,383		238,548
Patents - in use | General and administrative
Intangible assets
Impairment of intangible assets			55,433
Patents - in process
Intangible assets
Intangible Assets, gross	37,263		37,263		31,358
Internally developed software
Intangible assets
Intangible Assets, gross	$ 148,967		$ 148,967		$ 148,967

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2015

Property and Equipment

Schedule of property and equipment

	June 30, 2015			December 31, 2014
	(unaudited)
Computer software and hardware	$	342,469		$	303,076
Furniture and fixtures	220,998			198,253
Leasehold improvements	188,240			182,105
Machinery and equipment	937,394			849,852
Tooling in-process	7,915			42,315
	1,697,016			1,575,601
Accumulated depreciation	(868,683		)	(780,766		)
Total	$	828,333		$	794,835

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Stock-Based Compensation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Stock Based Compensation
Stock based compensation	$ 307,054	$ 169,473	$ 582,085	$ 332,282
Total unrecognized stock based compensation expense	2,893,894		$ 2,893,894
Weighted average period expected to be recognized			2 years 10 months 24 days
Cost of revenue.
Stock Based Compensation
Stock based compensation	19,079	970	$ 34,800	1,929
General and administrative
Stock Based Compensation
Stock based compensation	132,955	57,567	249,884	114,502
Sales and marketing
Stock Based Compensation
Stock based compensation	141,303	101,452	268,649	196,988
Research and development
Stock Based Compensation
Stock based compensation	$ 13,717	$ 9,484	$ 28,752	$ 18,863

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2015

Stock-Based Compensation

Schedule of stock-based compensation

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
Cost of revenue	$	19,079	$	970	$	34,800	$	1,929
General and administrative	132,955		57,567		249,884		114,502
Sales and marketing	141,303		101,452		268,649		196,988
Research and development	13,717		9,484		28,752		18,863
Total	$	307,054	$	169,473	$	582,085	$	332,282

Summary of stock option activity

The following table presents a summary of our stock option activity as of and for the six months ended June 30, 2015:

	Options
Outstanding beginning of period	1,945,192
Options granted	24,000
Options exercised	(160,999	)
Options canceled	—
Outstanding end of period	1,808,193

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Basis of Presentation

6 Months Ended

Jun. 30, 2015

Basis of Presentation

Basis of Presentation

1 — Basis of Presentation

The accompanying interim condensed financial statements of IRADIMED CORPORATION (“IRADIMED”, the “Company”, “we”, “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The interim financial information is unaudited, but reflects all normal adjustments that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

These accompanying interim condensed financial statements should be read with the financial statements and related footnotes to financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. The accounting policies followed in the preparation of these interim condensed financial statements are consistent in all material respects with those described in Note 1 of our 10-K.

Certain prior year amounts have been reclassified to conform to current year presentation.

FDA Warning Letter

On September 2, 2014 we announced we received a Warning Letter from the U.S. Food and Drug Administration (“FDA”) relating to an inspection of our facility that took place in April 2014. At the conclusion of the April inspection, FDA issued a Form 483 that identified eight observations. The majority of the observations related to procedures and documentation associated with the design, development and validation testing of software used in certain of our products. Other observations were related to the design validation of pump labeling, design analysis of tube stretching, procedures for post-market design review, and procedures and processing related to handling certain reported complaints. We submitted responses to the Form 483 in May 2014 and June 2014 in which we described our proposed corrective and preventative actions to address each of the FDA’s concerns.

FDA’s Warning Letter stated that the FDA accepted as adequate several of our responses to Form 483 observations, identified two responses whose accuracy will be determined in the next scheduled inspection of our facility and identified issues for which our response was determined to be inadequate. The issues identified as inadequate concern our procedures for validating device design, primarily related to software quality assurance.

Also, the Warning Letter raised a new issue. The Warning Letter stated that modifications made to software on our previously cleared infusion pumps, the MRidium 3860 and MRidium 3850, were “significant” and required submission of new premarket notifications under Section 510(k) (a “510(k) submission”) of the Food, Drug and Cosmetic Act (the “FDC Act”). These modifications were made over time. We believe they were insignificant and did not require premarket notification submissions. However, the FDA indicated that the modifications of the software for the MRidium 3860 and the software for the MRidium 3850 were “significant” modifications because they could significantly affect the safety or effectiveness of these devices. As a result, the Warning Letter states that the products being sold by us are “adulterated” and “misbranded” under the FDC Act. The Warning Letter also indicates that the MRidium 3860+ infusion pump requires separate FDA clearance from the MRidium 3860 and MRidium 3850.

The Warning Letter requested that we immediately cease activities that result in the misbranding or adulteration of the MRidium 3860 MRI infusion pump, MRidium 3850 MRI infusion pump, and the MRidium 3860+ MRI infusion pump, including the commercial distribution of the devices. We immediately complied with the Warning Letter and ceased sale and distribution of the identified products in the United States.

On September 4, 2014, we submitted to the FDA our initial response to the Warning Letter and on September 17, 2014 we sent an additional response that included supplemental information related to the Form 483 inspection observations for which the FDA considered our initial responses inadequate.

On November 25, 2014, we announced that we filed the 510(k) submission related to our MRidium 3860+ MRI IV infusion pumps and on December 12, 2014 we were notified that our 510(k) submission had been formally accepted for review by the FDA. On December 22, 2014, under FDA enforcement discretion, we announced that we resumed domestic distribution of our MRI compatible MRidium 3860+ MRI IV infusion pump systems, without the Dose Error Reduction System (“DERS”) option. On January 28, 2015, under FDA enforcement discretion, we announced that we resumed domestic distribution of our DERS option.

We continue to work with the FDA to fully resolve the Warning Letter and complete the review of the 510(k) submission. See the Legal matters portion of Note 12.

Certain Significant Risks and Uncertainties

We market our products to end users in the United States and to distributors internationally. Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses. As of December 31, 2014, two international customers accounted for approximately 35% of gross accounts receivable.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue Contracts with Customers (Topic 606). This update provides guidance on the recognition of revenue based upon the entity’s contracts with customers to transfer goods or services at an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB deferred the effective date to annual reporting periods beginning after December 15, 2017, including interim reporting periods within those periods, which will require us to adopt this update in the first quarter of 2018. Early adoption is permitted to the original effective date of December 15, 2016, including interim reporting periods within those periods. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulating effect recognized as of the date of initial application. We are in the process of determining the method of adoption and assessing the potential impacts of adopting this guidance on our financial position, results of operations and cash flows.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330). Under this ASU, inventory will be measured at the lower of cost or net realizable value and options that currently exist for market value have been eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. No other changes were made to the current guidance on inventory measurement. The ASU is effective for interim and annual reporting periods beginning after December 15, 2016. Early adoption is permitted and should be applied prospectively. We are in the process of evaluating the provisions on this statement, including which period to adopt, and have not determined what impact the adoption of this amendment will have on our financial position, results of operations and cash flows.

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CONDENSED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts	$ 86,785	$ 28,119
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	10,975,650	10,814,650
Common stock, shares outstanding	10,975,650	10,814,650

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Segment, Customer and Geographic Information

6 Months Ended

Jun. 30, 2015

Segment, Customer and Geographic Information

Segment, Customer and Geographic Information

11 — Segment, Customer and Geographic Information

We operate in one reportable segment which is the development, manufacture and sale of MRI compatible IV infusion pump systems and products for use by hospitals and acute care facilities during MRI procedures.

In the U.S., we sell our products through our direct sales force and outside of the U.S. we sell our products through distributors who resell our products to end users.

Revenue information by geographic region is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
United States	$	7,199,343	$	4,217,709	$	13,497,549	$	6,666,818
International	409,800		482,660		1,103,299		1,590,788
	$	7,609,143	$	4,700,369	$	14,600,848	$	8,257,606

Revenue information by type is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
Devices	$	6,367,010	$	4,029,238	$	12,254,263	$	7,049,627
Disposable IV Sets and Services	1,242,133		671,131		2,346,585		1,207,979
	$	7,609,143	$	4,700,369	$	14,600,848	$	8,257,606

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

	June 30, 2015		December 31, 2014
	(unaudited)
United States	$	752,146	$	728,556
International	76,187		66,279
	$	828,333	$	794,835

Long-lived assets held outside of the United States consist principally of tooling, which is a component of property and equipment, net.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
Document and Entity Information
Entity Registrant Name	IRADIMED CORP
Entity Central Index Key	0001325618
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		11,019,400
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies

Commitments and Contingencies

12 — Commitments and Contingencies

Leases.  In January 2014, we entered into a non-cancelable operating lease, commencing July 1, 2014, for a new manufacturing and headquarters facility in Winter Springs, Florida owned by Susi, LLC, an entity controlled by our president, CEO and controlling stockholder, Roger Susi. Pursuant to the terms of our lease for this property, the monthly base rent is $32,583, 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. The term of the lease expires on May 31, 2019. Unless advance written notice of termination is timely provided, the lease will automatically renew for two successive terms of five years each beginning in 2019 and again in 2024, and thereafter, will be renewed for successive terms of one year each.

A summary of our non-cancelable operating lease commitments of June 30, 2015 is as follows:

Six months ending December 31, 2015	$	195,498
2016	390,996
2017	390,996
2018	390,996
2019	162,915
Total non-cancelable operating lease commitments	$	1,531,401

Rent expense under our operating leases was $100,361 and $31,571 for the three months ended June 30, 2015 and 2014, respectively, and $200,536 and $62,342 for the six months ended June 30, 2015 and 2014, respectively.

Leasehold improvements are amortized over the shorter of the initial lease term or the estimated useful life.

Purchase commitments.  We had various purchase orders for goods or services totaling approximately $2,334,727 at June 30, 2015 and $1,993,801 at December 31, 2014. No amounts related to these purchase orders have been recognized in our balance sheet.

Legal matters.  On September 10, 2014, a Civil Action was filed in the U.S. District Court for the Southern District of Florida (“Lam Civil Action”). The Lam Civil Action was a putative class action lawsuit brought against the Company and certain individuals who are officers and / or directors of the Company. The plaintiff was an alleged shareholder of the Company, and in the operative complaint sought relief on behalf of a class of persons who purchased the Company’s common stock during the period from July 15, 2014 through September 17, 2014. The complaint alleged that the defendants failed to disclose material information concerning the Company’s compliance with FDA regulations in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that the putative class members suffered damages as a result. The complaint additionally alleged “control person” liability against the individual defendants under Section 20(a) of the Securities Exchange Act of 1934. The Company disputed the plaintiff’s allegations and theories of liability. On May 26, 2015, the court granted the defendants’ motions to dismiss the complaint in its entirety. On June 22, 2015, the plaintiff filed a notice of appeal in the U.S. Court of Appeals for the Eleventh Circuit. We accrued an insignificant amount related to this matter during the three months ended June 30, 2015.

In addition to the foregoing, we may from time to time become party to various legal proceedings or claims that arise in the ordinary course of business.

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CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Revenue	$ 7,609,143	$ 4,700,369	$ 14,600,848	$ 8,257,606
Cost of revenue	1,422,027	869,745	2,750,207	1,526,111
Gross profit	6,187,116	3,830,624	11,850,641	6,731,495
Operating expenses:
General and administrative	1,985,269	1,130,484	3,953,287	2,223,179
Sales and marketing	1,104,682	864,519	2,193,378	1,624,308
Research and development	403,447	225,500	745,748	449,804
Total operating expenses	3,493,398	2,220,503	6,892,413	4,297,291
Income from operations	2,693,718	1,610,121	4,958,228	2,434,204
Other income, net	46,135	11,631	92,951	15,083
Income before provision for income taxes	2,739,853	1,621,752	5,051,179	2,449,287
Provision for income taxes	969,282	602,931	1,793,113	907,099
Net income	1,770,571	1,018,821	3,258,066	1,542,188
Other comprehensive (loss) income:
Change in fair value of available-for-sale securities, net of tax (benefit) expense of $(8,249) and $821 for the three months ended June 30, 2015 and 2014, respectively, and $(2,464) and $1,993 for six months ended June 30, 2015 and 2014, respectively	(13,398)	1,526	(4,002)	3,701
Comprehensive income	$ 1,757,173	$ 1,020,347	$ 3,254,064	$ 1,545,889
Net income per share:
Basic (in dollars per share)	$ 0.16	$ 0.15	$ 0.30	$ 0.22
Diluted (in dollars per share)	$ 0.15	$ 0.11	$ 0.27	$ 0.17
Weighted average shares outstanding:
Basic (in shares)	10,974,448	7,000,000	10,940,525	7,000,000
Diluted (in shares)	12,107,707	8,878,170	12,068,122	8,868,610

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

Stock-Based Compensation

Stock Based Compensation

6 — Stock-Based Compensation

Stock-based compensation was recognized as follows in the Condensed Statements of Operations and Comprehensive Income:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
Cost of revenue	$	19,079	$	970	$	34,800	$	1,929
General and administrative	132,955		57,567		249,884		114,502
Sales and marketing	141,303		101,452		268,649		196,988
Research and development	13,717		9,484		28,752		18,863
Total	$	307,054	$	169,473	$	582,085	$	332,282

As of June 30, 2015 we had $2,893,894 of total unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average period of 2.9 years.

The following table presents a summary of our stock option activity as of and for the six months ended June 30, 2015:

	Options
Outstanding beginning of period	1,945,192
Options granted	24,000
Options exercised	(160,999	)
Options canceled	—
Outstanding end of period	1,808,193

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Intangible Assets

6 Months Ended

Jun. 30, 2015

Intangible Assets

Intangible Assets

5 — Intangible Assets

The following table summarizes the components of intangible asset balances:

	June 30, 2015			December 31, 2014
	(unaudited)
Patents — in use	$	168,383		$	238,548
Patents — in process	37,263			31,358
Internally developed software	148,967			148,967
	354,613			418,873
Accumulated amortization	(171,653		)	(168,037		)
Total	$	182,960		$	250,836

Amortization expense of intangible assets was $8,830 and $9,861 for the three months ended June 30, 2015 and 2014, respectively, and $18,347 and $19,417 for the six months ended June 30, 2015 and 2014. During the six months ended June 30, 2015, we recorded an impairment charge of $55,433 on patents related to certain of our IV sets. This charge is included as general and administrative expense in our Condensed Statements of Operations and Comprehensive Income.

Expected annual amortization expense for the next five years related to intangible assets is as follows:

Six months ending December 31, 2015	$	17,659
2016	18,016
2017	10,538
2018	10,538
2019	10,538
2020	10,538

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2015

Intangible Assets

Summary of the components of intangible asset balances

	June 30, 2015			December 31, 2014
	(unaudited)
Patents — in use	$	168,383		$	238,548
Patents — in process	37,263			31,358
Internally developed software	148,967			148,967
	354,613			418,873
Accumulated amortization	(171,653		)	(168,037		)
Total	$	182,960		$	250,836

Schedule of expected annual amortization expense related to intangible assets

Six months ending December 31, 2015	$	17,659
2016	18,016
2017	10,538
2018	10,538
2019	10,538
2020	10,538

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Capital Stock

6 Months Ended

Jun. 30, 2015

Capital Stock

Capital Stock

13 — Capital Stock

Reincorporation

Effective April 14, 2014, we reincorporated as a Delaware corporation. As part of this reincorporation, we converted all previously outstanding shares of our Class A Common Stock and Class B Common Stock into a single class of common stock on a 1.75:1 conversion ratio and all previously outstanding shares of our Series A Preferred Stock were split on a 1.75:1 conversion ratio into new Series A Preferred Stock. This recapitalization was accounted for as a stock split as the intent was to provide for wider distribution of our common stock. In accordance with our Certificate of Incorporation, upon the sale of shares pursuant to an initial public offering, which was completed in July 2014, all of our Series A Preferred Stock was automatically converted into common stock on a 1:1 conversion ratio.

The table below summarizes the effect of the stock split and conversion on our capital stock that was previously outstanding prior to our initial public offering:

Series A Preferred Stock outstanding — Pre recapitalization	800,000
Stock split ratio	1.75:1
Series A Preferred Stock outstanding — Post recapitalization	1,400,000
Common stock outstanding — Pre recapitalization
Class A Common Stock	400,000
Class B Common Stock	3,600,000
Total	4,000,000
Stock split ratio	1.75:1
Common stock outstanding — Post recapitalization	7,000,000

As of the effective date of the reincorporation, we are now authorized to issue 90,000,000 shares of Common Stock with a par value of $0.0001 per share and 10,000,000 shares of Preferred Stock with a par value of $0.0001.

The effect of this stock split has been retroactively applied to per-share computations, share and option amounts for all periods presented within these condensed financial statements and accompanying notes.

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Accumulated Other Comprehensive (Loss) lncome

6 Months Ended

Jun. 30, 2015

Accumulated Other Comprehensive (Loss) Income.

Accumulated Other Comprehensive (Loss) Income

9 — Accumulated Other Comprehensive (Loss) Income

The only component of accumulated other comprehensive (loss) income, net of tax, for the three months ended June 30, 2015 and 2014 is as follows:

	Unrealized (Losses) Gains on Available-For-Sale Securities
Balances at March 31, 2015	$	(12,077	)
Losses, net	(13,398		)
Balances at June 30, 2015	$	(25,475	)
Balances at March 31, 2014	$	3,100
Gains, net	1,525
Balances at June 30, 2014	$	4,625

The only component of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2015 and 2014 is as follows:

	Unrealized (Losses) Gains on Available-For-Sale Securities
Balances at December 31, 2014	$	(21,473	)
Losses, net	(4,002		)
Balances at June 30, 2015	$	(25,475	)
Balances at December 31, 2013	$	924
Gains, net	3,701
Balances at June 30, 2014	$	4,625

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Investments

6 Months Ended

Jun. 30, 2015

Investments

Investments

7 — Investments

Our investments consisted of corporate bonds that we have classified as available-for-sale and are summarized in the following tables:

	June 30, 2015
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds:
U.S. corporations	$	6,433,286	$	1,151	$	36,886	$	6,397,551
International corporations	1,515,200		495		5,919		1,509,776
Total	$	7,948,486	$	1,646	$	42,805	$	7,907,327

	December 31, 2014
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate bonds:
U.S. corporations	$	6,433,286	$	—	$	27,067	$	6,406,219
International corporations	1,515,200		—		7,626		1,507,574
Total	$	7,948,486	$	—	$	34,693	$	7,913,793

Unrealized losses from the above investments for all periods presented are attributable to changes in interest rates. We do not believe any of these unrealized losses represent other-than-temporary impairments based on our evaluation of available evidence as of June 30, 2015.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2015

Fair Value Measurements

Fair Value Measurements

8 — Fair Value Measurements

The fair value of our assets and liabilities subject to recurring fair value measurements are as follows:

	Fair Value at June 30, 2015
	Fair Value		Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Corporate bonds:
U.S. corporations	$	6,397,551	$	—	$	6,397,551	$	—
International corporations	1,509,776		—		1,509,776		—
Total	$	7,907,327	$	—	$	7,907,327	$	—

	Fair Value at December 31, 2014
	Fair Value		Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Corporate bonds:
U.S. corporations	$	6,406,219	$	—	$	6,406,219	$	—
International corporations	1,507,574		—		1,507,574		—
Total	$	7,913,793	$	—	$	7,913,793	$	—

Our corporate bonds are valued by a 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 six months ended June 30, 2015 or the year ended December 31, 2014.

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Income Taxes

6 Months Ended

Jun. 30, 2015

Income Taxes

Income Taxes

10 — Income Taxes

We recorded provisions for income taxes of $969,282 and $1,793,113 for the three and six months ended June 30, 2015, respectively. Our effective tax rate was 35.4% and 35.5% for the three and six months ended June 30, 2015, respectively. Our effective tax rates for the three and six months ended June 30, 2015 differed from the U.S. Federal statutory rate primarily due to higher U.S. state tax expense, partially offset by the domestic production activities deduction.  The higher U.S. state tax expense increased our effective rate by approximately 4.1% and the domestic production activities deduction decreased our effective rate by approximately 2.7%.

We recorded provisions for income taxes of $602,931 and $907,099 for the three and six months ended June 30, 2014, respectively. Our effective tax rate was 37.2% and 37.0% for the three and six months ended June 30, 2014, respectively. Our effective tax rates for the three and six months ended June 30, 2014 differed from the U.S. Federal statutory rate primarily due to higher U.S. state tax expense, partially offset by the domestic production activities deduction. The higher U.S. state tax expense increased our effective rate by approximately 4.8% and the domestic production activities deduction decreased our effective rate by approximately 2.7%.

As of June 30, 2015 and December 31, 2014, we have 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 state jurisdictions. Our returns are not currently under examination by the Internal Revenue Service or other taxing authorities. The Company is subject to income tax examinations for our United States Federal and State income taxes for 2009 and subsequent years.

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Property and Equipment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Property and equipment
Property and equipment, gross	$ 1,697,016		$ 1,697,016		$ 1,575,601
Accumulated depreciation	(868,683)		(868,683)		(780,766)
Total	828,333		828,333		794,835
Depreciation and amortization expense of property and equipment	46,127	$ 23,831	87,917	$ 35,045
Computer software and hardware
Property and equipment
Property and equipment, gross	342,469		342,469		303,076
Furniture and fixtures
Property and equipment
Property and equipment, gross	220,998		220,998		198,253
Leasehold improvements
Property and equipment
Property and equipment, gross	188,240		188,240		182,105
Machinery and equipment
Property and equipment
Property and equipment, gross	937,394		937,394		849,852
Tooling in-process
Property and equipment
Property and equipment, gross	$ 7,915		$ 7,915		$ 42,315

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Inventory (Tables)

6 Months Ended

Jun. 30, 2015

Inventory

Schedule of inventory

	June 30, 2015		December 31, 2014
	(unaudited)
Raw materials	$	1,757,482	$	1,541,688
Work in process	130,477		126,188
Finished goods	430,242		457,962
Total	$	2,318,201	$	2,125,838

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Measurements

Schedule of the fair value of assets and liabilities subject to recurring fair value measurements

	Fair Value at June 30, 2015
	Fair Value		Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Corporate bonds:
U.S. corporations	$	6,397,551	$	—	$	6,397,551	$	—
International corporations	1,509,776		—		1,509,776		—
Total	$	7,907,327	$	—	$	7,907,327	$	—

	Fair Value at December 31, 2014
	Fair Value		Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Corporate bonds:
U.S. corporations	$	6,406,219	$	—	$	6,406,219	$	—
International corporations	1,507,574		—		1,507,574		—
Total	$	7,913,793	$	—	$	7,913,793	$	—

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Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Taxes
Provisions for income taxes	$ 969,282	$ 602,931	$ 1,793,113	$ 907,099
Effective tax rate (as a percent)	35.40%	37.20%	35.50%	37.00%
Increase in the effective tax rate due to higher U.S. state tax expense (as a percent)	4.10%	4.80%	4.10%	4.80%
Decrease in effective tax rate due to domestic production activities deduction (as a percent)	2.70%	2.70%	2.70%	2.70%

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CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Change in fair value of available for sale securities, tax (benefit) expense	$ (8,249)	$ 821	$ (2,464)	$ 1,993

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Property and Equipment

6 Months Ended

Jun. 30, 2015

Property and Equipment

Property and Equipment

4 — Property and Equipment

Property and equipment consist of:

	June 30, 2015			December 31, 2014
	(unaudited)
Computer software and hardware	$	342,469		$	303,076
Furniture and fixtures	220,998			198,253
Leasehold improvements	188,240			182,105
Machinery and equipment	937,394			849,852
Tooling in-process	7,915			42,315
	1,697,016			1,575,601
Accumulated depreciation	(868,683		)	(780,766		)
Total	$	828,333		$	794,835

Depreciation and amortization expense of property and equipment was $46,127 and $23,831 for the three months ended June 30, 2015 and 2014, respectively, and $87,917 and $35,045 for the six months ended June 30, 2015 and 2014, respectively.

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Accumulated Other Comprehensive (Loss) lncome (Tables)

6 Months Ended

Jun. 30, 2015

Accumulated Other Comprehensive (Loss) Income.

Schedule of component of accumulated other comprehensive (loss) income, net of tax

	Unrealized (Losses) Gains on Available-For-Sale Securities
Balances at March 31, 2015	$	(12,077	)
Losses, net	(13,398		)
Balances at June 30, 2015	$	(25,475	)
Balances at March 31, 2014	$	3,100
Gains, net	1,525
Balances at June 30, 2014	$	4,625

	Unrealized (Losses) Gains on Available-For-Sale Securities
Balances at December 31, 2014	$	(21,473	)
Losses, net	(4,002		)
Balances at June 30, 2015	$	(25,475	)
Balances at December 31, 2013	$	924
Gains, net	3,701
Balances at June 30, 2014	$	4,625

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Investments (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Cost	$ 7,948,486	$ 7,948,486
Gross Unrealized Gains	1,646
Gross Unrealized Losses	42,805	34,693
Fair Value	7,907,327	7,913,793
U.S. corporations
Cost	6,433,286	6,433,286
Gross Unrealized Gains	1,151
Gross Unrealized Losses	36,886	27,067
Fair Value	6,397,551	6,406,219
International corporations
Cost	1,515,200	1,515,200
Gross Unrealized Gains	495
Gross Unrealized Losses	5,919	7,626
Fair Value	$ 1,509,776	$ 1,507,574

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Basic and Diluted Net Income per Share (Tables)

6 Months Ended

Jun. 30, 2015

Basic and Diluted Net Income per Share

Schedule of computation of basic and diluted net income per share

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
Net income	$	1,770,571	$	1,018,821	$	3,258,066	$	1,542,188
Weighted-average shares outstanding — Basic	10,974,448		7,000,000		10,940,525		7,000,000
Effect of dilutive securities:
Underwriters’ warrants	111,878		—		102,541		—
Preferred stock	—		1,400,000		—		1,400,000
Stock options	1,021,381		478,170		1,025,056		468,610
Weighted-average shares outstanding — Diluted	12,107,707		8,878,170		12,068,122		8,868,610
Basic net income per share	$	0.16	$	0.15	$	0.30	$	0.22
Diluted net income per share	$	0.15	$	0.11	$	0.27	$	0.17

Schedule of stock options to purchase shares of common stock excluded from the calculation of diluted net income per share

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
	(unaudited)		(unaudited)
Anti-dilutive stock options	24,000	581,259	183,072	570,759