IRADIMED CORP

Notes to Unaudited Condensed Financial Statements

1 — Basis of Presentation

The accompanying interim condensed financial statements of IRADIMED CORPORATION (“IRADIMED”, the “Company,” “we,” “our” and “us”) have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The interim financial information is unaudited, but reflects all normal adjustments that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, and other interim periods, or future years or periods.

The accompanying interim condensed financial statements should be read in conjunction with the financial statements and related footnotes to financial statements included in our 2023 Annual Report. The accounting policies followed in the preparation of these interim condensed financial statements, except as described in Note 1 herein, are consistent in all material respects with those described in Note 1 of the 2023 Annual Report.

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

Certain Significant Risks and Uncertainties

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

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

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

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

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued accounting standard updates (“ASU”) 2016-13,Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. In November 2018, April 2019 and May 2019, the FASB issued ASU 2018-19,* Codification Improvements to Topic 326, Financial Instruments - Credit Losses*, ASU 2019-04,* Codification Improvements to Topic 326, Financial Instruments - Credit Losses* and ASU 2019-05,Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provided additional implementation guidance on ASU 2016-03. We adopted ASU 2016-03 starting on January 1, 2023 and it did not result in a material impact on our financial condition, results of operations or cash flows.

2 — Revenue Recognition

Disaggregation of Revenue

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

Revenue information by geographic region is as follows:

Revenue information by type is as follows:

Contract Liabilities

Our contract liabilities consist of:

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

Capitalized Contract Costs

Our capitalized contract costs totaled $165,386 and $162,134 as of March 31, 2024 and December 31, 2023, respectively, and are classified as other assets on the unaudited condensed balance sheets.

3 — Basic and Diluted Net Income per Share

Basic net income per share is based upon the weighted-average number of shares of Company common stock, par value $0.0001 (“common stock”), outstanding during the period. Diluted net income per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Stock options, restricted stock units and performance-based restricted stock units granted by us represent the only dilutive effect reflected in diluted weighted-average shares of common stock outstanding.

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

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

4 — Inventory, net

Inventory consists of:

5 — Property and Equipment, net

Property and equipment consist of:

Depreciation expense of property and equipment was $168,657 and $157,314 for the three months ended March 31, 2024 and 2023, respectively.

Land Acquisition

On February 2, 2023, the Company entered into a reinstatement and amendment (“Reinstatement”) to the previously announced sale and purchase agreement with O Property, Ltd., a Florida limited partnership, dated as of November 1, 2022, pursuant to which the parties agreed to consummate a sale of real property located in Orange County, Florida. Pursuant to the terms of the Reinstatement, the parties consummated the sale of approximately 26.5 acres of land to the Company for a purchase price of$6,200,000. The property was acquired as a site for future office, assembly, warehouse, and shipping space to accommodate our increased operations and anticipated growth.

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

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

6 — Intangible Assets, net

The following table summarizes the components of intangible asset balances:

Amortization expense of intangible assets was $57,432 and $25,236 for the three months ended March 31, 2024 and 2023, respectively.

Expected annual amortization expense for the remaining portion of 2024 and the next five years related to intangible assets is as follows (excludes in process intangible assets):

7 — Fair Value Measurements

The fair values of cash equivalents, accounts receivables net, and accounts payable approximate their carrying amounts due to their short duration.

As of March 31, 2024, we did not have any asset or liabilities subject to recurring fair value measurements.

8 — Stock-Based Compensation

Stock-based compensation was recognized as follows in the unaudited Condensed Statements of Operations:

As of March 31, 2024, we had (i) $3,705,922 of unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 2.39 years and (ii) $1,161,564 of unrecognized compensation cost related to unvested performance-based restricted stock units, which is expected to be recognized over a weighted-average period of 2.23 years.

The following table presents a summary of our equity award activity for the three months ended March 31, 2024 (shares):

9 — Income Taxes

For the three months ended March 31, 2024, we recorded a provision for income tax expense of $1,106,968. Our effective tax rate was 21.1 percent and differed from the U.S. Federal statutory rate primarily due to U.S. state income tax expense, partially offset by benefits from research and development tax credits.

For the three months ended March 31, 2023, we recorded a provision for income tax expense of $943,589. Our effective tax rate was 21.7 percent, and differed from the U.S. Federal statutory rate primarily due to U.S. state income tax expense, partially offset by benefits from research and development tax credits.

As of March 31, 2024 and December 31, 2023, we had not identified or accrued for any uncertain tax positions. We are currently unaware of any uncertain tax positions that could result in significant payments, accruals, or other material deviations in this estimate over the next 12 months. We believe that our tax positions comply in all material

respects with applicable tax law. However, tax law is subject to interpretation, and interpretations by taxing authorities could be different from ours, which could result in the imposition of additional taxes and penalties.

We file tax returns in the United States Federal jurisdiction and many U.S. state jurisdictions. Our returns are not currently under examination by the Internal Revenue Service. The Company remains subject to income tax examinations for our United States Federal and certain U.S. state income taxes for 2019 and subsequent years.

10 — Leases

We have entered into operating lease contracts for our manufacturing plant, office space, and various office equipment with three material lease contracts outstanding.

In January 2014, we entered into a non-cancelable operating lease, commencing July 1, 2014, for our manufacturing and headquarters facility in Winter Springs, Florida owned by Susi, LLC, an entity controlled by our President, Chief Executive Officer, and Chairman of the Board, Roger Susi. Pursuant to the terms of our lease for this property, the monthly base rent is $34,133, adjusted annually for changes in the consumer price index. The Company paid Susi, LLC $129,482 and $127,817 for the three months ended March 31, 2024 and 2023, respectively. Under the terms of the lease, we are responsible for insurance and maintenance expenses. Prior to May 31, 2019, the expiration date of the initial lease term, and pursuant to the terms of the lease contract, we renewed the lease for an additional five years, resulting in a new lease expiration date of May 31, 2024. Unless advance written notice of termination is timely provided, the lease will automatically renew forone additional successive term offive years beginning in 2024, and thereafter, will be renewed for successive terms ofone year each. At the time we adopted ASU 2016-02,Leases (Topic 842), we concluded that we would exercise the remaining five-year option, resulting in a remaining lease term of 5.9 years as of March 31, 2024. This lease agreement does not contain anyresidual value guarantee or material restrictive covenants.

In February 2023, we entered intotwo, two-year, non-cancelable operating leases with non-related parties for additional office space in Winter Springs, Florida. Pursuant to the lease terms the total monthly base rent is $10,055. For the three months ended March 31, 2024 and 2023, the Company paid $30,165 and $22,810 respectively. Under the terms of the leases, we are responsible for insurance and maintenance expenses. Pursuant to the contract terms, the leases will expire in February 2025 and do not contain any residual value guarantee or material restrictive covenants.

We will reassess the lease accounting terms and assumptions once the details regarding completion of a new manufacturing facility and planned departure of the current primary facility is finalized.

Operating lease cost recognized in the unaudited Condensed Statements of Operations is as follows:

Lease costs for short-term leases were immaterial for the three months ended March 31, 2024, and 2023.

Maturity of our operating lease liability as of March 31, 2024, is as follows:

11 — Commitments and Contingencies

Purchase commitments. We had various purchase orders for goods or services totaling $6,509,275 and $8,217,571 as of March 31, 2024 and December 31, 2023, respectively. Amounts recognized in our balance sheet related to these purchase orders were immaterial.

Legal matters. We may, from time to time, become a party to various legal proceedings or claims that arise in the ordinary course of business. As of March 31, 2024 and December 31, 2023, we had accrued approximately $250,000, respectively, related to various matters.

12 — Subsequent Events

On May 2, 2024, the Company’s Board of Directors declared aregular quarterly cash dividend of$0.15 per share on the Company's outstanding common stock. The payment will be made to stockholders on May 30, 2024, to stockholders of record at the close of business on May 20, 2024.