ELECTROMED, INC. – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited Condensed Financial
Statements and related notes thereto included in Part I, Item 1 of this
Quarterly Report on Form 10-Q, and our audited financial statements and related
notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K for
the fiscal year ended June 30, 2021 ("fiscal 2021").

Overview

Electromed, Inc. ("we," "our," "us," "Electromed" or the "Company") develops and
provides innovative airway clearance products applying High Frequency Chest Wall
Oscillation ("HFCWO") technologies in pulmonary care for patients of all ages.

We manufacture, market and sell products that provide HFCWO, including the
SmartVest® Airway Clearance System ("SmartVest System") that includes our newest
generation SmartVest SQL® and previous generation SV2100, and related products,
to patients with compromised pulmonary function. The SmartVest SQL is smaller,
quieter and lighter than our previous product, with enhanced programmability and
ease of use. Our products are sold in both the home health care market and the
institutional market for use by patients in hospitals, which we refer to as
"institutional sales." The SmartVest SQL has been sold in the domestic home care
market since 2014. In 2015, we launched the SmartVest SQL into institutional and
certain international markets. In June 2017, we announced the launch of the
SmartVest SQL with SmartVest Connect™ wireless technology, which allows data
connection between physicians and patients to track therapy performance and
collaborate in treatment decisions. SmartVest Connect is currently available to
pediatric and cystic fibrosis patients and was made available to certain
targeted adult pulmonary clinics starting in November 2017. Since 2000, we have
marketed the SmartVest System and its predecessor products to patients suffering
from cystic fibrosis, bronchiectasis and repeated episodes of pneumonia.
Additionally, we offer our products to a patient population that includes
neuromuscular disorders such as cerebral palsy, muscular dystrophies,
amyotrophic lateral sclerosis ("ALS"), the combination of emphysema and chronic
bronchitis commonly known as chronic obstructive pulmonary disease ("COPD"), and
patients with post-surgical complications or who are ventilator dependent or
have other conditions involving excess secretion and impaired mucus transport.

The SmartVest System is often eligible for reimbursement from major private
insurance providers, health maintenance organizations ("HMOs"), state Medicaid
systems and the federal Medicare system, which we believe is an important
consideration for patients considering an HFCWO course of therapy. For domestic
sales, the SmartVest System may be reimbursed under the Medicare-assigned
billing code (E0483) for HFCWO devices if the patient has cystic fibrosis,
bronchiectasis (including chronic bronchitis or COPD that has resulted in a
diagnosis of bronchiectasis) or any one of certain enumerated neuromuscular
diseases, and can demonstrate that another less expensive physical or mechanical
treatment did not adequately mobilize retained secretions. Private payers
consider a variety of sources, including Medicare, as guidelines in setting
their coverage policies and payment amounts.

Critical Accounting Estimates

For a description of our critical accounting policies, estimates and assumptions
used in the preparation of our financial statements, including the unaudited
Condensed Financial Statements in this Quarterly Report on Form 10-Q, see Note 1
to our unaudited Condensed Financial Statements included in Part I, Item 1 of
this Quarterly Report on Form 10-Q and Part II, Item 7, and Note 1 to our
audited financial statements included in Part II, Item 8, of our Annual Report
on Form 10-K for fiscal 2021.

Some of our accounting policies require us to exercise significant judgment in
selecting the appropriate assumptions for calculating financial statements. Such
judgments are subject to an inherent degree of uncertainty. Among other factors,
these judgments are based upon our historical experience, known trends in our
industry, terms of existing contracts and other information from outside
sources, as appropriate. We believe the critical accounting policies that
require the most significant assumptions and judgments in the preparation of our
financial statements, including the unaudited Condensed Financial Statements
contained in this Quarterly Report on Form 10-Q, include: revenue recognition
and the estimation of variable consideration, inventory valuation, share-based
compensation and warranty reserve.


                                       12

Impacts of COVID-19 on Our Business and Operations

In March 2020, the World Health Organization designated COVID-19 as a global
pandemic, and the U.S. Department of Health and Human Services designated
COVID-19 as a public health emergency. The impact of the COVID-19 pandemic on
our business remains uncertain, and its effects on our operational and financial
performance will depend in part on future developments, which cannot be
reasonably estimated at this time. Such future developments include, but are not
limited to, the duration, scope and severity of the COVID-19 pandemic in
geographic areas in which we operate or in which our patients live, actions
taken to contain or mitigate its impact, the impact on governmental healthcare
programs and budgets, the development and distribution of treatments or
vaccines, and the resumption of widespread economic activity. Due to the
inherent uncertainty of the unprecedented and evolving situation, we are unable
to predict with confidence the likely impact of the COVID-19 pandemic on our
future operations.

During the third quarter of our fiscal year ending June 30, 2022 ("fiscal
2022"), we continued to experience a reduction in the number of clinics allowing
face-to-face access by our sales team as the number of infections relating to
the Omicron variant of COVID-19 increased throughout most regions of the United
States, and hospitals implemented additional safety protocols. Our sales team
continued to utilize a hybrid sales process of virtual and face-to-face
clinician interaction with strict adherence to specific clinic and healthcare
system safety protocols, which we believe allowed them to drive stronger
referral growth compared to the prior year period. During March 2022, we
observed an improvement in clinic access and patient flow compared to earlier in
the quarter, which we believe is likely a result of Omicron-related case
reductions throughout most of the United States, resulting in a record high
number of monthly referrals for our company.

We believe that the impact of the COVID-19 pandemic on our home care and
institutional business will likely continue during the remainder of fiscal 2022.
Our home care revenue for the three months ended March 31, 2022 has increased as
compared to the three months ended March 31,2021; however, if COVID-19 infection
rates increase and federal, state and local restrictions on commerce,
stay-at-home orders or other restrictions on businesses are reinstated, we
believe that such measures could have a material adverse effect on our business.

We observed increased changes to our supply chain timelines and increased raw
material and shipping costs during the third quarter of fiscal 2022, but we have
not experienced any disruptions that materially impacted product availability
for our customers. We anticipate that raw material costs will increase in future
quarters primarily relating to electronic components but may extend to other
components as well. In certain instances, we have purchased key electronic
materials in advance to ensure adequate future supply and mitigate the risk of
supply chain disruption. It is possible that the COVID-19 pandemic could have a
greater adverse impact on our supply chain in the future, including impacts
associated with preventative and precautionary measures taken by other
businesses and applicable governments. A reduction or interruption in any of our
manufacturing processes could have a material adverse effect on our business.
Any significant increases to our raw material or shipping costs could reduce our
gross margins.

We have also taken measures to ensure the safety of our employees and to comply
with applicable governmental orders. We consider our business to be essential
under applicable governmental orders, primarily due to our role in manufacturing
and supplying needed medical devices to patients with respiratory-related issues
and have therefore continued to operate during the government restrictions put
in place in response to the pandemic.

In response to the COVID-19 pandemic and the U.S. federal government's
declaration of a public health emergency, the Centers for Medicare & Medicaid
Services ("CMS") implemented a number of temporary rule changes and waivers to
allow prescribers to best treat patients during the period of the public health
emergency. These waivers became effective on March 1, 2020. Clinical indications
and documentation typically required will not be enforced for
respiratory-related products including the SmartVest System (solely with respect
to Medicare patients). The minimum documentation now requires a valid order and
documentation of a respiratory-related diagnosis. Face-to-face and in-person
requirements for respiratory devices are being waived while the waiver is in
place. The CMS waiver was recently extended in conjunction with the extension of
the federal public health emergency for an additional 90-day period beginning
April 16, 2022.

In September 2021, President Joe Biden signed an executive order directing
executive departments and agencies to include a clause in all covered federal
contracts to comply with guidance issued by the Safer Federal Workforce Task
Force, which requires, among other things, covered federal contractor employees,
including employees working remotely related to federal contracts, to be fully
vaccinated, unless the employee is entitled to an accommodation. As a federal
contractor to the U.S. Department of Veterans Affairs Federal Supply Schedule
("Veterans Administration"), we are subject to this regulation. In fiscal 2021,
$557,000, or 1.6% of our total revenues, were attributable to the Veterans
Administration, and we intend to leverage that business as a future growth
opportunity; approximately 19 million U.S. veterans were served by the Veterans
Administration healthcare system in calendar year 2020. During the three-month
period ended December 31, 2021, we conducted a review process to ensure that we
fully comply with the Safer Federal Workforce Task Force regulations. Through a
concerted effort to increase vaccination rates among our workforce, we were able
to achieve compliance with such regulations with minimal disruption.


                                       13




On December 7, 2021, President Biden's executive order was enjoined nationwide,
and the federal government is appealing that decision. Due to the injunction,
the federal government announced on December 9, 2021 that it is taking no action
to enforce the clause implementing the requirements of the executive order at
this time. Although it is unclear whether the executive order will be upheld, we
are well positioned to achieve compliance with the Safer Federal Workforce Task
Force regulations if the executive order becomes enforceable in the future.

Results of Operations

Net Revenues

Net revenues for the three and nine months ended March 31, 2022 and 2021 are
summarized in the table below.

                     Three Months Ended                                                 Nine Months Ended
                          March 31,                                                         March 31,
                    2022            2021             Increase (Decrease)              2022             2021                  Increase

Home care $ 9,033,000 $ 8,163,000 $ 870,000 10.7 % $ 27,721,000 $ 24,529,000 $ 3,192,000

           13.0 %
Institutional        392,000         443,000          (51,000 )        (11.5 %)      1,174,000        1,029,000         145,000           14.1 %
Home care
distributor          520,000         105,000          415,000          395.2 %       1,063,000          432,000         631,000          146.1 %
International        196,000          76,000          120,000          157.9 %         432,000          297,000         135,000           45.5 %
Total           $ 10,141,000     $ 8,787,000     $  1,354,000           15.4 %    $ 30,390,000     $ 26,287,000     $ 4,103,000           15.6 %



Home care revenue. Home care revenue for the three months ended March 31, 2022
was $9,033,000, representing an increase of $870,000, or 10.7%, compared to the
same period in fiscal 2021. For the nine months ended March 31, 2022, home care
revenue was $27,721,000, representing an increase of $3,192,000, or 13.0%,
compared to the same period in fiscal 2021. The revenue increase compared to the
prior year periods was primarily due to increases in referrals and approvals.
The increase in referrals was primarily due to increased sales representative
productivity driven by increased clinic access and patient flow, our sales team
adapting to a hybrid virtual and face-to-face selling methodology, and benefits
of the CMS waiver on the non-commercial Medicare portion of our home care
revenue. Additionally, we also benefitted from a Medicare allowable rate
increase that took effect on January 1, 2022. Annual Medicare rate increases for
our device are linked closely to changes in the Urban Consumer Price Index.

The CMS waiver benefited the non-commercial Medicare portion of our home care
revenue by increasing the number of referrals and the approval percentage for
previously non-covered diagnoses. We believe that our ongoing sales team
execution, along with the expected return to pre-COVID-19 levels of patient
face-to-face engagement with physicians and clinic access for our sales team,
has the potential to mitigate the impact of a CMS waiver expiration, which is
currently set to expire in July 2022.

Institutional revenue. Institutional revenue for the three months ended March
31, 2022 was $392,000, representing a decrease of $51,000, or 11.5%, compared to
the same period in fiscal 2021. For the nine months ended March 31, 2022,
institutional revenue was $1,174,000, an increase of $145,000, or 14.1%,
compared to the same period in fiscal 2021. For the three months ended March 31,
2022, the revenue decline was driven by lower capital purchases. Consumable
volume growth during the period increased by 16.5% compared to the prior year
period, reflecting increased consumable wrap usage in hospitals. The revenue
increase for the nine months ended March 31, 2022 was due to increased capital
purchases and stronger consumable volumes compared to the corresponding prior
year periods, as hospitals resumed utilization of HFCWO protocols after reducing
utilization early in the COVID-19 pandemic.

Home care distributor revenue. Home care distributor revenue for the three
months ended March 31, 2022 was $520,000, representing an increase of $415,000,
or 395.2%, compared to the same period in fiscal 2021. For the nine months ended
March 31, 2022, home care distributor revenue was $1,063,000, an increase of
$631,000, or 146.1%, compared to the same period in fiscal 2021. The revenue
increase in the current year periods was due to increased demand from one of our
primary home care distribution partners. We began selling to a limited number of
home medical equipment distributors during our fiscal year ended June 30, 2020,
who in turn sell our SmartVest System in the U.S. home care market.


                                       14




International revenue. International revenue for the three months ended March
31, 2022 was $196,000, representing an increase of $120,000, or 157.9%, compared
to the same period in fiscal 2021. For the nine months ended March 31, 2022,
international revenue was $432,000, an increase of $135,000, or 45.5%, compared
to the same period in fiscal 2021. International sales are affected by the
timing of international distributor purchases that can cause significant
fluctuations in reported revenue on a quarterly basis.

Gross profit

Gross profit increased to $7,743,000, or 76.4% of net revenues, for the three
months ended March 31, 2022, from $6,701,000, or 76.3% of net revenues, in the
same period in fiscal 2021. Gross profit increased to $23,324,000, or 76.7% of
net revenues, for the nine months ended March 31, 2022, from $20,374,000, or
77.5% of net revenues, in the same period in fiscal 2021. For the nine months
ended March 31, 2022, the decrease in gross profit as a percentage of net
revenues compared to the prior year period was primarily due to higher raw
material and shipping costs, partially offset by a Medicare allowable rate
increase that took effect in January 2022, increased operational efficiencies
and operating leverage on higher revenue.

Operating expenses

Selling, general and administrative expenses. Selling, general and
administrative ("SG&A") expenses were $6,544,000 and $19,806,000 for the three
and nine months ended March 31, 2022, respectively, representing increases of
$493,000 and $3,316,000, or 8.1% and 20.1%, respectively, compared to the same
periods in the prior year.

Payroll and compensation-related expenses were $3,990,000 and $12,013,000 for
the three and nine months ended March 31, 2022, respectively, representing
increases of $152,000 and $1,444,000, or 4.0% and 13.7%, respectively, compared
to the same periods in the prior year. The increase in the current year periods
was primarily due to a higher average number of sales, sales support and
marketing personnel, increased reimbursement personnel to process higher patient
referrals, increased temporary resources to assist with systems infrastructure
investments and increased incentive payments on higher home care revenue. We
have also continued to provide regular merit-based increases for our employees
and are regularly benchmarking our compensation ranges for new and existing
employees to ensure we can hire and retain the talent needed to drive growth in
our business. Field sales employees totaled 51, of which 42 were direct sales,
as of March 31, 2022, compared to 48 as of March 31, 2021, of which 39 were
direct sales.

Travel, meals and entertainment expenses were $580,000 and $1,810,000 for the
three and nine months ended March 31, 2022, respectively, representing increases
of $140,000 and $540,000, or 31.8% and 42.5%, respectively, compared to the same
periods in the prior year. The increase in the three months ended March 31, 2022
was primarily due to our sales team resuming closer-to-normal levels of travel
compared to the COVID-19 driven travel restrictions in the prior year periods
and an increase in regional sales meetings that were cancelled in the prior year
due to COVID-19. For the nine months ended March 31, 2022, we also held an
in-person national sales meeting in August 2021 whereas the national sales
meeting was held virtually the prior fiscal year due to COVID-19.

Total discretionary marketing expenses were $241,000 and $605,000 for the three
and nine months ended March 31, 2022, respectively, representing decreases of
$107,000 and $248,000, or 30.7% and 29.1%, respectively, compared to the same
periods in the prior year. The decrease in the current year periods was
primarily due to a shift to more cost-effective direct-to-consumer marketing
investments.

Professional fees were $719,000 and $2,454,000 for the three and nine months
ended March 31, 2022, respectively, representing increases of $19,000 and
$768,000, or 2.7% and 45.6%, respectively, compared to the same periods in the
prior year. Professional fees include services related to legal costs,
shareowner services and reporting requirements, information technology technical
support and consulting fees. For the nine months ended March 31, 2022, the
increase in professional fees was primarily due to a shareholder activism
matter, increased investment in our system infrastructure and increased clinical
study costs. Our shareholder activism matter concluded with a cooperation
agreement in September 2021, and we did not incur any shareholder activism costs
during the three months ended March 31, 2022. We continue to make key
investments in systems infrastructure including implementing a new enterprise
resource planning ("ERP") system, enhancing our customer relationship management
system and further optimizing of the revenue cycle management system that was
implemented in June 2021. We expect these system infrastructure investments will
result in more efficient and scalable operational processes and provide enhanced
analytics to drive business performance. We also expect to continue investing in
our on-going clinical studies in order to continue building the body of evidence
around positive outcomes from bronchiectasis patients using HFCWO/SmartVest

therapy.


                                       15




Recruiting fees were $207,000 and $569,000 for the three and nine months ended
March 31, 2022, respectively, representing increases of $124,000 and $358,000,
or 149.4% and 169.7%, respectively, compared to the same periods in the prior
year. The increase in recruiting fees is primarily due to increased recruiting
for senior leadership and direct sales representative positions.

Insurance expenses were $337,000 and $972,000 for the three and nine months
ended March 31, 2022, respectively, representing increases of $50,000 and
$145,000, or 17.4% and 17.5%, respectively, compared to the same periods in the
prior year. The increase in insurance expenses primarily relate to higher health
insurance, director and officer insurance costs and cyber insurance costs.

Research and development expenses. Research and development ("R&D") expenses
were $336,000 and $1,041,000 for the three and nine months ended March 31, 2022,
respectively, representing decreases of $71,000 and $355,000, or 17.4% and
25.4%, respectively, compared to the same periods in the prior year. The
decrease in the current-year periods was primarily due to reduced professional
services costs associated with our next generation platform development. R&D
expenses were 3.3% and 3.4% of revenue for the three and nine months ended

March
31, 2022, respectively.

Interest income, net

Net interest income for the three and nine months ended March 31, 2022 was
$6,000 and $21,000, respectively, compared to $10,000 and $29,000, respectively,
in the comparable prior year periods. The decrease in the current year periods
was primarily due to lower rates earned on our cash deposits and lower cash
deposits in the bank compared to prior fiscal periods.

Income tax expense

Income tax expense was estimated at $224,000 and $576,000 and the effective tax
rate was 25.8% and 23.1% for the three and nine months ended March 31, 2022,
respectively. Estimated income tax expense for the three and nine months ended
March 31, 2022 each include a discrete tax benefit of $22,000 and $43,000,
respectively, related to the exercise of stock options and other items.

Income tax expense was estimated at $29,000 and $555,000 and the effective tax
rate was 11.5% and 22.0% for the three and nine months ended March 31, 2021,
respectively. Estimated income tax expense for the three months ended March 31,
2021 included a discrete tax benefit of $37,000 as a result of lower federal and
state taxes than what was originally estimated in our fiscal year ended June 30,
2020 tax provision. Estimated income tax expense for the nine months ended March
31, 2021 included that $37,000 discrete tax benefit as well as a $32,000
discrete tax benefit related to the exercise of stock options. The net impact of
these discrete events decreased the estimated effective tax rates by 2.7% during
the nine months ended March 31, 2021.

Net income

Net income for the three and nine months ended March 31, 2022 was $645,000 and
$1,922,000, respectively, compared to $224,000 and $1,962,000 for the same
periods in the prior year. The increase in net income for the three months ended
March 31, 2022 was driven by home care and distributor revenue growth, partially
offset by increased strategic investments in SG&A and higher product costs. The
decrease in net income for the nine months ended March 31, 2022 was due to
increased strategic investments in SG&A, shareholder activism costs and higher
product costs, partially offset by stronger home care and distributor revenue
growth.


                                       16

Liquidity and Capital Resources

Cash Flows and Sources of Liquidity

Cash Flows from Operating Activities

For the nine months ended March 31, 2022, net cash provided by operating
activities was $53,000. Cash flows provided by operating activities consisted of
net income of $1,922,000, non-cash expenses of $1,191,000, a decrease in
inventory of $9,000, a decrease in contract assets of $98,000 and an increase in
accounts payable and accrued liabilities of $550,000. These cash flows from
operating activities were offset by an increase in accounts receivable of
$2,582,000, an increase in prepaid expenses and other assets of $519,000, an
increase in income tax receivable of $443,000 and a decrease in accrued
compensation of $173,000. The increase in accounts receivable was primarily due
to continued growth in the Medicare portion of our home care business, which has
a 13-month payment cycle. Three distinct items have negatively impacted our
operating cash flow for the nine months ended March 31, 2022, including tax
payments on higher-than-expected fiscal 2021 net income, a one-time payout of
accrued vacation balances as part of an enhancement to our paid time off policy,
and increased prepayments to secure adequate supply of key raw material
components. Our cash receipt collection remains strong, with the three months
ended March 31, 2022 period having the highest cash receipt collections in our
company's history, building upon the prior record that was set in the previous
quarter.

Cash Flows from Investing Activities

For the nine months ended March 31, 2022, cash used in investing activities was
$1,066,000. Cash used in investing activities consisted of $980,000 in
expenditures for property and equipment and $86,000 in expenditures for patent
costs. The investment in property and equipment primarily relates to our system
infrastructure investments in an ERP system, customer relationship management
system and revenue cycle management system, as well as tooling equipment for our
next generation product.

Cash Flows from Financing Activities

For the nine months ended March 31, 2022, cash used in financing activities was
$1,032,000, which consisted of $962,000 used to repurchase shares of common
stock, and $70,000 of taxes paid on net share settlements of stock option
exercises.

Adequacy of Capital Resources

Our primary working capital requirements relate to adding employees to our sales
force and support functions, continuing R&D efforts, IT infrastructure projects,
and supporting general corporate needs, including financing equipment purchases
and other capital expenditures incurred in the ordinary course of business.
Based on our current operational performance, we believe our working capital of
$28,022,000 and available borrowings under our existing credit facility will
provide adequate liquidity during fiscal 2022.

Effective December 17, 2021, we renewed our credit facility, which provides us
with a revolving line of credit. Interest on borrowings on the line of credit
accrues at the prime rate (3.5% at March 31, 2022) less 1.0% and is payable
monthly. There was no outstanding principal balance on the line of credit as of
March 31, 2022 or June 30, 2021. The amount eligible for borrowing on the line
of credit is limited to the lesser of $2,500,000 or 57.00% of eligible accounts
receivable, and the line of credit expires on December 18, 2023, if not renewed
before such date. At March 31, 2022, the maximum $2,500,000 was available under
the line of credit. Payment obligations under the line of credit are secured by
a security interest in substantially all of our tangible and intangible assets.

The documents governing our line of credit contain certain financial and
nonfinancial covenants that include a minimum tangible net worth of not less
than $10,125,000 and restrictions on our ability to incur certain additional
indebtedness or pay dividends.

Any failure to comply with these covenants in the future may result in an event
of default, which if not cured or waived, could result in the lender
accelerating the maturity of our indebtedness, preventing access to additional
funds under the line of credit, requiring prepayment of outstanding
indebtedness, or refusing to renew the line of credit. If the maturity of the
indebtedness is accelerated or the line of credit is not renewed, sufficient
cash resources to satisfy the debt obligations may not be available and we may
not be able to continue operations as planned. If we are unable to repay such
indebtedness, the lender could foreclose on these assets.


                                       17




For the nine months ended March 31, 2022 and 2021, we spent $980,000 and
$105,000, respectively, on property and equipment. We currently expect to
finance planned equipment purchases with available working capital, cash flows
from operations or borrowings under our credit facility. We may need to incur
additional debt if we have an unforeseen need for additional capital equipment
or if our operating performance does not generate adequate cash flows.

Cautionary Note Regarding Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q that are not
statements of historical fact should be considered forward-looking statements
within the meaning of the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Forward- looking statements
include, but are not limited to, statements regarding: the expected impact of
the COVID-19 pandemic on our business; our business strategy, including our
intended level of investment in R&D and marketing activities; our expectations
with respect to earnings, gross margins and sales growth, industry
relationships, marketing strategies and international sales; estimated sizes of
markets into which our products are or may be sold; our business strengths and
competitive advantages; our ability to grow additional sales distribution
channels; our intent to retain any earnings for use in operations rather than
paying dividends; our expectation that our products will continue to qualify for
reimbursement and payment under government and private insurance programs; our
intellectual property plans and practices; the expected impact of applicable
regulations on our business; our beliefs about our manufacturing processes; our
expectations and beliefs with respect to our employees and our relationships
with them; our belief that our current facilities are adequate to support our
growth plans; our expectations with respect to ongoing compliance with the terms
of our credit facility; our expectations regarding the ongoing availability of
credit and our ability to renew our line of credit; enhancements to our products
and services; expected excise tax exemption for the SmartVest System; and our
anticipated revenues, expenses, capital requirements and liquidity. Words such
as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend,"
"may," "ongoing," "plan," "potential," "project," "should," "will," "would," and
similar expressions, including the negative of these terms, are intended to
identify forward-looking statements but are not the exclusive means of
identifying such statements. Although we believe these forward-looking
statements are reasonable, they involve risks and uncertainties that may cause
actual results to differ materially from those projected by such statements.
Such statements involve known and unknown risks, uncertainties and other factors
that may cause our actual results or our industry's actual results, levels of
activity, performance or achievements to be materially different from the
information expressed or implied by the forward-looking statements.

Factors that could cause actual results to differ from those discussed in the
forward-looking statements include, but are not limited to, the following:

? the duration, extent and severity of the COVID-19 pandemic, including its

effects on our business, operations and employees as well as its impact on our

customers and distribution channels and on economies and markets more

generally;

? the competitive nature of our market;

? changes to Medicare, Medicaid, or private insurance reimbursement policies;

? supply chain disruptions that limit our ability to produce and deliver our

products to patients;

? changes to state and federal health care laws;

? changes affecting the medical device industry;

? our ability to develop new sales channels for our products such as the home

care distributor channel;

? our need to maintain regulatory compliance and to gain future regulatory

approvals and clearances;

? new drug or pharmaceutical discoveries;

? general economic and business conditions;

? our ability to renew our line of credit or obtain additional credit as

necessary;

? our ability to protect and expand our intellectual property portfolio;

? the risks associated with expansion into international markets;

? the risks associated with cyberattacks, data breaches, computer viruses and

other similar security threats; and

? the risks associated with our planned sales force expansion.

                                       18




This list of factors is not exhaustive, however, and these or other factors,
many of which are outside of our control, could have a material adverse effect
on us and our results of operations. Therefore, you should consider these risk
factors with caution and form your own critical and independent conclusions
about the likely effect of these risk factors on our future performance.
Forward-looking statements speak only as of the date on which the statements are
made, and we undertake no obligation, and expressly disclaim any such
obligation, to update any forward-looking statement for any reason other than as
required by law, even if new information becomes available or other events occur
in the future. You should carefully review the disclosures and the risk factors
described in this and other documents we file from time to time with the
Securities and Exchange Commission (the "SEC"), including our Annual Report on
Form 10-K for fiscal 2021. All forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements set forth herein.