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What changed in KORU Medical Systems, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of KORU Medical Systems, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+159 added−153 removedSource: 10-K (2025-03-12) vs 10-K (2024-03-13)

Top changes in KORU Medical Systems, Inc.'s 2024 10-K

159 paragraphs added · 153 removed · 129 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

37 edited+8 added−8 removed57 unchanged
Biggest changeThese include: • Increasing diagnoses of Primary Immunodeficiency Diseases (“PIDD”), which often require immunoglobulin (“Ig”) treatment • New on-label indications for SCIg drugs such as Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”), Secondary Immunodeficiency Diseases (“SIDD”), and others in clinical development. • Increase in the number of available SCIg medications such as the introduction of Cutaquig® and Xembify® in the United States and Europe, and planned launches of Cuvitru® and HyQvia® in Japan • Biopharmaceutical investment in SCIg products, such as prefilled syringe formats that make infusion easier for patients, which may make more patients eligible for SCIg therapy • Increasing supply of donated plasma, which increases the global supply of Ig medications • Favorable patient preference, side effect profile, and health economics for at-home SCIg compared with intravenous Ig therapy We intend to maintain and extend our leadership position in the SCIg market through clinical and product innovation and commercial excellence.
Biggest changeTo reinforce our leadership in SCIg, we have identified key market trends driving its continued growth, including: • Increasing diagnoses of Primary Immunodeficiency Diseases (PIDD) , which frequently require immunoglobulin (Ig) treatment. • Expansion of on-label SCIg indications , including Chronic Inflammatory Demyelinating Polyneuropathy (CIDP), Secondary Immunodeficiency Diseases (SIDD), and additional conditions currently in clinical development. • Growth in SCIg treatment options , such as the introduction of Cutaquig® and Xembify® in the United States and Europe, along with the planned launches of Cuvitru® and HyQvia® in Japan. • Ongoing biopharmaceutical investment in SCIg therapies , including prefilled syringe formats designed to enhance ease of use and expand patient eligibility for SCIg treatment. • Increasing availability of donated plasma , which supports the growing global supply of Ig medications. • Patient preference and cost-effectiveness of at-home SCIg therapy , which offers a favorable side effect profile and health economic advantages compared to intravenous Ig (IVIg) treatment.
The FREEDOM System operates at a lower pressure than an electrical, volumetric pump and maintains a balance between what a patient’s subcutaneous tissues can tolerate what the system delivers.
The FREEDOM System operates at a lower pressure than an electrical, volumetric pump and maintains a balance between what a patient’s subcutaneous tissues can tolerate and what the system delivers.
Tharby was appointed as President and CEO in April 2021. Ms. Tharby has over 25 years of executive leadership experience building and leading strong performing global organizations that develop and commercialize products and service innovations, while delivering solutions to patients in the home setting. Prior to joining KORU, Ms.
Ms. Tharby was appointed as President and CEO in April 2021. Ms. Tharby has over 25 years of executive leadership experience building and leading strong performing global organizations that develop and commercialize products and service innovations, while delivering solutions to patients in the home setting. Prior to joining KORU, Ms.
In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; • the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • federal criminal laws that prohibit executing a scheme to defraud any federal healthcare benefit program or making false statements relating to healthcare matters; • the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; - 5 - Table of Contents • the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services (“CMS”) information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain health care professionals beginning in 2022, and teaching hospitals and ownership and investment interests held by the physicians described above and their immediate family members, and payments or other “transfers of value” to such physician owners; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical and device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to track and report information related to payments and other “transfers of value” to physicians and other healthcare providers or pricing, marketing expenditures and information; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; • the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • federal criminal laws that prohibit executing a scheme to defraud any federal healthcare benefit program or making false statements relating to healthcare matters; • the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; • the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services (“CMS”) information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain healthcare professionals beginning in 2022, and teaching hospitals and ownership and investment interests held by the physicians described above and their immediate family members, and payments or other “transfers of value” to such physician owners; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical and device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to track and report information related to payments and other “transfers of value” to physicians and other healthcare providers or pricing, marketing expenditures and information; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Most countries outside of the U.S. require that product approvals be recertified on a regular basis, generally every five years. The recertification process requires that we evaluate any device changes and any new regulations or standards relevant to the device and, where needed, conduct appropriate testing to document continued compliance.
Most countries outside of the U.S. require that product approvals be recertified on a regular basis, generally every three to five years. The recertification process requires that we evaluate any device changes and any new regulations or standards relevant to the device and, where needed, conduct appropriate testing to document continued compliance.
Our products are sold principally through a small number of distributors so our specialty pharmacy customers receive the benefit of remote inventory management and one-stop shopping. We sell the majority of our products through three distributors in the U.S. and two distributors outside the U.S.
Our products are sold principally through a small number of distributors so our specialty pharmacy customers receive the benefit of remote inventory management and one-stop shopping. We sell the majority of our products through three distributors in the U.S. and three distributors outside the U.S.
Post launch, we intend to commercialize our products for use with these drugs, working with our pharmaceutical partners, our distributors and our specialty pharmacy partners who distribute and train patients on the use of these products both in the home and in ambulatory infusion centers.
Post launch, we intend to commercialize our products for use with these drugs, working with our pharmaceutical partners, our distributors and our specialty pharmacy partners who distribute and train patients on the use of these products both in the home and in infusion centers.
The pipeline is driven by the need to deliver high therapeutic doses, difficulty in formulating large molecules into small volumes, nursing shortage, pharmaceutical companies shifting development programs toward at-home subcutaneous therapy, and patient preference. Biopharmaceutical manufacturers seek device partners during the drug development process.
The pipeline is driven by the need to deliver high therapeutic doses, difficulty in formulating large molecules into small volumes, nursing shortage, pharmaceutical companies shifting development programs toward at-home and infusion clinic subcutaneous therapy, and patient preference. Biopharmaceutical manufacturers seek device partners during the drug development process.
Some countries do not have medical device regulations, but in most foreign countries, medical devices are regulated. Frequently, regulatory approval may first be obtained in a foreign country prior to application in the U.S. due to differing regulatory requirements; however, other countries require approval in the country of origin first.
Some countries do not have medical device regulations, but in many foreign countries, medical devices are regulated. Frequently, regulatory approval may first be obtained in a foreign country prior to application in the U.S. due to differing regulatory requirements; however, other countries require approval in the country of origin first.
These laws include: • the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs.
These laws include: - 6 - Table of Contents • the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs.
We believe our track record of regulatory clearance and successful patient use, combined with our channel access, position KORU to both maximize our growth in the core SCIg market and expand into new therapeutic areas. OUR PRODUCTS KORU’s infusion devices work together as a system to deliver life-saving therapies to patients with chronic illnesses, such as PIDD and CIDP.
We believe our track record of achieving regulatory clearances and successful patient use, combined with our channel access, position KORU to both maximize our growth in the core SCIg market and expand into new therapeutic areas. OUR PRODUCTS KORU’s infusion devices work together as a system to deliver life-saving therapies to patients with chronic illnesses, such as PIDD and CIDP.
In our goal to expand into novel therapies outside of SCIg, we estimate that at least 100 large-volume drugs are in clinical development utilizing subcutaneous infusion, with approximately 30% greater than 10ml.
In our goal to expand into novel therapies outside of SCIg, we estimate that at least 100 large-volume drugs, greater than 2ml, are in clinical development utilizing subcutaneous infusion, with approximately 20% greater than 10ml.
We cannot predict with any certainty how future reforms to Federal regulations may impact our business. See “ITEM 1A. RISK FACTORS.” Under the PMA application process, the applicant must demonstrate that the device is safe and effective for its intended use.
We cannot predict with any certainty how future reforms to Federal regulations may impact our business. See “ITEM 1A. RISK FACTORS.” - 5 - Table of Contents Under the PMA application process, the applicant must demonstrate that the device is safe and effective for its intended use.
Where recertification applications are required, they must be approved in order to continue selling our products in those countries. - 4 - Table of Contents Post-Approval Regulation Even after a device is cleared or approved by FDA for marketing, numerous regulatory requirements continue to apply.
Where recertification applications are required, they must be approved in order to continue selling our products in those countries. Post-Approval Regulation Even after a device is cleared or approved by FDA for marketing, numerous regulatory requirements continue to apply.
He earned his Bachelor of Arts in Business Management from State University of New York at Albany and his Master of Business Administration from The University of Chicago, Booth School of Business.
He earned his Bachelor of Arts in Business Management from State University of New York at Albany and his Master of Business Administration from The University of Chicago, Booth School of Business. - 9 - Table of Contents
Miller has over 30 years of extensive expertise and experience in leading high-performing teams in commercialization and marketing strategy, international expansion, and driving sustainable growth and profitability. As Chief Commercial Officer, Mr. Miller has oversight of the global commercial function, including U.S. and International sales and marketing organizations.
Miller joined KORU Medical in November 2023 as Chief Commercial Officer. Mr. Miller has over 30 years of extensive expertise and experience in leading high-performing teams in commercialization and marketing strategy, international expansion, and driving sustainable growth and profitability. As Chief Commercial Officer, Mr. Miller has oversight of the global commercial function, including U.S. and International sales and marketing organizations.
The SCIg products administered with delivered by the FREEDOM System are indicated for a variety of conditions, including Primary Immunodeficiency (PIDD ) and Chronic Inflammatory Demelinating Polyneuropathy (CIDP) in the United States and PIDD, CIDP and Secondary Immunodeficiency Disease (“SIDD”) outside of the United States. Empaveli® is indicated for Paroxysmal Nocturnal Hemoglobinuria (“PNH”).
The SCIg products administered by the FREEDOM System are indicated for a variety of conditions, including Primary Immunodeficiency Disease (PIDD ) and Chronic Inflammatory Demyelinating Polyneuropathy (CIDP) in the United States and PIDD, CIDP and Secondary Immunodeficiency Disorder (“SIDD”) outside of the United States. Empaveli® is indicated for Paroxysmal Nocturnal Hemoglobinuria (“PNH”).
PATENTS AND INTELLECTUAL PROPERTY We have patents and other intellectual property that we believe protect the FREEDOM System, and we continue to file patent applications in connection with our research and development activities. As of December 31, 2023, we own 15 U.S. Patents and 60 foreign patents.
PATENTS AND INTELLECTUAL PROPERTY We have patents and other intellectual property that we believe protect the FREEDOM System, and we continue to file patent applications in connection with our research and development activities. As of December 31, 2024, we own 14 U.S. Patents and 34 foreign patents.
Our FREEDOM System is cleared for several on-label subcutaneous indications including specific FDA clearance for: delivery of specific medications through subcutaneous and intravenous routes, including specific clearance for leading immune globulins Cutaquig ®, Cuvitru®, Hizentra®, Xembify, Empaveli® (branded Aspaveli® outside the United States), Gammagard Liquid®, and selected intravenously administered antibiotics.
Our FREEDOM System is FDA 510(k) cleared and certified outside the United States for delivery of several on-label subcutaneous indications including Cutaquig ®, Cuvitru®, Hizentra®, Xembify, Empaveli® (branded Aspaveli® outside the United States), and Gammagard Liquid®. Additionally, our FREEDOM System has specific FDA clearance for selected intravenously administered antibiotics.
Environmental Health and Safety Laws We are required to comply with federal, state, and local environmental laws; however, there is no significant effect of compliance on capital expenditures, earnings, or competitive position. We do not use significant amounts of hazardous materials in the assembly of our products.
Environmental Health and Safety Laws We are required to comply with federal, state, and local environmental laws; however, there is no significant effect of compliance on capital expenditures, earnings, or competitive position.
For drugs requiring infusion volumes over 3 ml, the segment most similar to the SCIg drugs currently delivered by the FREEDOM System, the most relevant approaches include mechanical pumps, on-body wearable devices, and simple electronic pumps.
For drugs requiring infusion volumes over 3 ml, the segment most similar to the SCIg drugs currently delivered by the FREEDOM System, the most relevant approaches include mechanical pumps, on-body wearable devices, and simple electronic pumps. Challenges to their successful commercialization include high costs per infusion, increased environmental impact, complexity for users, and complex mechanisms with multiple failure modes.
They are more costly and require electricity or batteries, extensive training and maintenance and must be programmed by a qualified pharmacist or clinician. Elastomeric pumps are one-time-use balloon type devices used for infusion of drugs in intravenous and surgical wound site applications. Pharmacies are required to fill them with drugs and deliver them to the patient.
Elastomeric pumps are one-time-use balloon type devices used for infusion of drugs in intravenous and surgical wound site applications. Pharmacies are required to fill them with drugs and deliver them to the patient.
EXECUTIVE OFFICERS The following table sets forth certain information with respect to our executive officers as of March 13, 2024: Name Age Position / Held Since Linda Tharby 55 Chief Executive Officer and President (since April 2021) Tom Adams 51 Chief Financial Officer, Secretary and Treasurer (since August 2023) Brian Case 51 Chief Technology Officer (since April 2022) Ken Miller 55 Chief Commercial Officer (since November 2023) Executive officers hold office at the discretion of the Board of Directors. - 7 - Table of Contents Ms.
The fundamental patents protecting our drug delivery systems extend until 2039 and beyond. - 8 - Table of Contents EXECUTIVE OFFICERS The following table sets forth certain information with respect to our executive officers as of March 12, 2025: Name Age Position / Held Since Linda Tharby 56 Chief Executive Officer and President (since April 2021) Tom Adams 52 Chief Financial Officer, Secretary and Treasurer (since August 2023) Christopher Pazdan 42 Chief Operating Officer (since July 2024) Ken Miller 56 Chief Commercial Officer (since November 2023) Executive officers hold office at the discretion of the Board of Directors.
We intend to make additional investments in research and development over the next twelve months to support completing research and development for a “next-generation” infusion pump and consumable system. - 3 - Table of Contents REGULATORY Our medical devices and technologies, as well as our business activities, are subject to a complex set of regulations and rigorous enforcement, principally by the FDA, and numerous other federal, state, and non-U.S. governmental authorities.
REGULATORY Our medical devices and technologies, as well as our business activities, are subject to a complex set of regulations and rigorous enforcement, principally by the FDA, and numerous other federal, state, and non-U.S. governmental authorities.
OUR MISSION Our mission is to improve the quality of life of patients around the world by delivering innovative, effective, and easy-to-use drug delivery systems that can be used at home or alternate site settings, for patient self-administration of drug therapy. - 1 - Table of Contents OUR STRATEGY Our goal is to expand our position as a leading provider of large volume subcutaneous infusion systems (>10ml) self-administered in the home by the patient and/or delivered in an ambulatory infusion center by a healthcare professional. .
The Company originally incorporated in March 1980. OUR MISSION Our mission is to improve the quality of life of patients around the world by delivering innovative, effective, and easy-to-use drug delivery systems that can be used at home or alternate site settings, for patient self-administration of drug therapy.
(“Command”), a contract manufacturing organization with operations in Nicaragua, currently provides subassemblies, and manufactures, assembles and packages approximately 80% of our consumables.. Our ability to meet customer demand depends, in part, on our ability to obtain timely and adequate delivery of components for our products.
The remaining 85% of our consumable supply is sourced from Command Medical Products, Inc. (“Command”), a contract manufacturing organization with operations in Nicaragua. Our ability to meet customer demand depends, in part, on our ability to obtain timely and adequate delivery of components for our products.
We frequently benchmark our compensation practices and benefits programs against those of comparable industries and in the geographic areas where our facilities are located. We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization.
We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization.
To help drive consistent execution of our business strategy, including our customer focused philosophy, and support their development, we provide training opportunities to our employees that align with their responsibilities over their career with us. We maintain a dedicated Internet-based learning platform with a broad portfolio of written, audio-visual and interactive enterprise-wide and discipline-specific policy and training materials.
None of our employees are represented by a collective bargaining agreement. To help drive consistent execution of our business strategy, including our customer focused philosophy, and support their development, we provide training opportunities to our employees that align with their responsibilities over their career with us.
This platform includes a library of self-directed courses and virtual, instructor-led programs for employees at all levels of our organization. Managers and supervisors are provided training to help their employees progress in their professional development. We believe our employees are key to achieving our business objectives. Our key human capital measures include employee safety, turnover, absenteeism and production.
We maintain a dedicated internet-based learning platform with a broad portfolio of written, audio-visual and interactive enterprise-wide and discipline-specific policy and training materials. This platform includes a library of self-directed courses and virtual, instructor-led programs for employees at all levels of our organization. Managers and supervisors are provided training to help their employees progress in their professional development.
As of December 31, 2023, these five distributors comprised approximately 74% of our net revenues with one of our U.S. distributors contributing approximately 41%. Specialty pharmacies, home infusion providers, and distributors are our primary sales contacts, although we provide education and training materials to clinicians, patients, and patient advocates both in the field and online.
Specialty pharmacies, home infusion providers, and distributors are our primary sales contacts, although we provide education and training materials to clinicians, patients, and patient advocates both in the field and online. - 4 - Table of Contents MANUFACTURING AND RAW MATERIALS We currently manufacture 100% of our pump product volume and approximately 15% of our consumables volume at our Mahwah, NJ facility.
COMPETITION AND THE MARKET Competition for the FREEDOM System includes electronic (volumetric) pumps, elastomeric (infuser) pumps, and fully mechanical pumps as well as other types of pumps. Safety, ease of use, familiarity, cost effectiveness, accuracy, and sustainability are the principal driving influencers of pump selection. Electronic pumps deliver drugs at a programmed flow rate.
Safety, ease of use, familiarity, cost effectiveness, accuracy, and sustainability are the principal driving influencers of pump selection. Electronic pumps deliver drugs at a programmed flow rate. They are more costly and require electricity or batteries, extensive training and maintenance and must be programmed by a qualified pharmacist or clinician.
We spent $5.7 million and $5.0 million on research and development for the years ended December 31, 2023 and 2022, respectively.
We spent $5.3 million and $5.7 million on research and development for the years ended December 31, 2024 and 2023, respectively. We intend to make additional investments in research and development for a “next-generation” infusion pump and consumable system as well as for future innovation.
Outside of the U.S. our indications for use also include treatments for hydration and iron chelation. - 2 - Table of Contents Ambulatory infusion systems such as the FREEDOM System are most prevalent in the home care and alternate infusion site markets.
Infusion systems such as the FREEDOM System are most prevalent in the home care and alternate infusion clinic markets.
We intend to accomplish this objective by increasing our leadership position and penetration in our domestic and international core subcutaneous immunoglobulin (“SCIg”) market and extending this position into novel subcutaneous drug therapies. Both the Ig and novel therapy drugs, will use our Freedom Infusion system and new innovations that are in development for the Freedom Infusion system platform.
We aim to achieve this by expanding our leadership and market penetration in the domestic and international subcutaneous immunoglobulin (SCIg) market while extending our expertise into emerging subcutaneous drug therapies. Both SCIg and novel drug therapies will leverage our Freedom Infusion System and upcoming innovations within the platform, supporting healthcare providers in delivering optimized, efficient, and patient-friendly infusion solutions.
As of December 31, 2023, approximately 51% of the Company’s workforce was female and approximately 37% of the Company’s employees in managerial roles were female. Approximately 39% were minorities (non-White) in the Company workforce as of December 31, 2023. None of our employees are represented by a collective bargaining agreement.
HUMAN CAPITAL RESOURCES As of December 31, 2024, we had 80 full time employees, including 3 international employees. As of December 31, 2024, approximately 49% of the Company’s workforce was female and approximately 31% of the Company’s employees in managerial roles were female. Approximately 43% were minorities (non-White) in the Company workforce as of December 31, 2024.
In addition, we have 12 pending U.S. patent applications and 13 foreign patent applications. The fundamental patents protecting our drug delivery systems extend until 2039 and beyond.
In addition, we have 10 pending U.S. patent applications and 10 foreign patent applications.
By improving our products, establishing thought leadership in subcutaneous therapy, partnering with drug manufacturers, expanding geographically, and executing commercially, we intend to increase our overall global share position and the number of patients prescribed SCIg over intravenous Ig.
By improving treatment protocols, expanding geographic reach, and executing commercially, we aim to enhance our global market position and increase the number of patients benefiting from SCIg therapy over IVIg.
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In the goal of increasing our leadership position in SCIg, we have identified multiple factors that we believe are driving growth of the SCIg market.
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OUR STRATEGY Our goal is to strengthen our position as a leading provider of large-volume subcutaneous infusion systems (≥10ml) for self-administration in the home and for administration by healthcare professionals in infusion centers.
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MANUFACTURING AND RAW MATERIALS We currently manufacture, assemble and package all of our pump products, assemble and complete final packaging of our consumables (which consist of needle and tubing sets), and perform calibration, pre- and post-assembly quality control inspection and testing at our Mahwah, NJ facility. Command Medical Products, Inc.
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As we continue to advance subcutaneous infusion therapy, we are focused on delivering solutions that not only improve patient outcomes but also enhance the overall infusion experience for both patients and caregivers. Our commitment to innovation extends beyond product development—we work closely with healthcare providers and specialty pharmacies to drive therapy optimization through advanced infusion solutions and evidence-based insights.
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Challenges to their successful commercialization include high costs per infusion, increased environmental impact, complexity for users, and complex mechanisms with multiple failure modes. - 6 - Table of Contents HUMAN CAPITAL RESOURCES As of December 31, 2023, we had 82 full time employees, including 3 international employees.
Added
By reducing the complexity of infusions, improving workflow efficiencies, and supporting economic sustainability for providers, we help ensure that SCIg therapy remains a viable and preferred option for a growing number of patients. - 3 - Table of Contents Through ongoing clinical and product innovation, strategic partnerships, and commercial excellence, we will continue to expand our presence in the SCIg market.
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Case joined KORU Medical in April 2022 as Chief Technology Officer. Mr. Case has over 20 years of research and development experience working with a combination of large and small medical device companies. For the 16 years prior to joining KORU Medical, Mr.
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As of December 31, 2024, these six distributors comprised approximately 75% of our net revenues with one of our U.S. distributors contributing approximately 35%.
Removed
Case was an R&D leader with Fresenius Kabi, a global leader specializing in lifesaving medicines and technologies for infusion, transfusion, and clinical nutrition. As the Vice President of R&D for the Transfusion and Cell Technologies business, Mr. Case provided global business and technical leadership to drive the long-term product vitality of the business and promote entry into new business areas.
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We do not use significant amounts of hazardous materials in the assembly of our products. - 7 - Table of Contents COMPETITION AND THE MARKET Competition for the FREEDOM System includes electronic (volumetric) pumps, elastomeric (infuser) pumps, and fully mechanical pumps as well as other types of pumps.
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During his time at Fresenius, Mr. Case’s many accomplishments included bringing new products and technologies to market, leading to new business divisions, multiple international product approvals and value creation for the company. Mr. Case also led the Project Management office for the company, responsible for the identification and implementation of best practices and functional excellence. Prior to Fresenius, Mr.
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We believe our employees are key to achieving our business objectives. Our key human capital measures include employee safety, turnover, absenteeism and production. We frequently benchmark our compensation practices and benefits programs against those of comparable industries and in the geographic areas where our facilities are located.
Removed
Case was the R&D Manager, Advanced Research at Cook Medical where he led a cross-functional team that developed and assessed new technologies to create a product portfolio to service the peripheral disease market. Mr. Case’s work has been prolific with over 100 patents filed during his career. Mr.
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Pazdan joined KORU Medical in 2021 as Vice President of Quality Assurance and Regulatory Affairs before being promoted to Senior Vice President of Operations in 2022, and subsequently to Chief Operating Officer in July 2024. As Chief Operating Officer, Mr. Pazdan oversees Research & Development, Manufacturing, Sourcing, Supply Chain, Quality, Regulatory and Project Management. Prior to joining KORU, Mr.
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Case received his Master of Science in Engineering Management from Rose-Hulman Institute of Technology, and his Bachelor of Science in Engineering Mechanics, from University of Illinois. Mr. Miller joined KORU Medical in November 2023 as Chief Commercial Officer. Mr.
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Pazdan spent 17 years in various functions within the Medical Device industry, most recently serving as Vice President of Quality Assurance at Hillrom. In this role, Mr. Pazdan was head of quality for multiple business segments comprising $2 billion in annual revenue. Mr. Pazdan earned his Bachelor of Science in Engineering from the University of Illinois Urbana-Champaign. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

60 edited+14 added−7 removed200 unchanged
Biggest changeIf we fail to comply with our reporting obligations, the FDA could take action, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device clearances or approvals, seizure of our products, or delay in clearance or approval of future products. - 13 - Table of Contents These adverse events could also lead to safety alerts relating to our products or recalls (either voluntary or as required by the FDA or similar governmental authorities in other countries), and could result, in certain cases, in the removal of a product from the market.
Biggest changeIf we fail to comply with our reporting obligations, the FDA could take action, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device clearances or approvals, seizure of our products, or delay in clearance or approval of future products.
The MDR will change multiple aspects of the existing regulatory framework for CE marking, such as increased clinical evidence requirements and other new requirements, including Unique Device Identification (“UDI”) as well as many other post-market obligations.
The MDR will change multiple aspects of the existing regulatory framework for CE marking, such as increased clinical evidence requirements and other new requirements, including Unique Device Identification (“UDI”) as well as many other post-market obligations.
If we are unable to integrate, motivate and retain the services of our new executives and other managers, or if integration takes longer than we expect, it may have an adverse effect on our business and financial condition. Changes in tax or labor laws or exposure to additional income tax liabilities could increase our costs and reduce our margins.
If we are unable to integrate, motivate and retain the services of our relatively new executives and other managers, or if integration takes longer than we expect, it may have an adverse effect on our business and financial condition. Changes in tax or labor laws or exposure to additional income tax liabilities could increase our costs and reduce our margins.
Market acceptance of our biopharma customers’ product candidates, if they receive approval, depends on a number of factors, including the: - 16 - Table of Contents • efficacy and safety of the product candidates; • clinical indications for which the product candidates are approved; • acceptance by physicians, patients and the medical community of the product candidates as a safe and effective treatment; • potential and perceived advantages of the product candidates over alternative treatments; • safety of the product candidates seen in a broader patient group; • prevalence and severity of any side effects; • product labeling or product insert requirements of the FDA or other regulatory authorities; • timing of market introduction of the product candidates as well as competitive products; • cost of treatment in relation to alternative treatments; • availability of coverage and adequate reimbursement and pricing by third party payers and government authorities; • relative convenience and ease of administration; and • effectiveness of the pharmaceutical companies’ sales and marketing efforts.
Market acceptance of our biopharma customers’ product candidates, if they receive approval, depends on a number of factors, including the: - 17 - Table of Contents • efficacy and safety of the product candidates; • clinical indications for which the product candidates are approved; • acceptance by physicians, patients and the medical community of the product candidates as a safe and effective treatment; • potential and perceived advantages of the product candidates over alternative treatments; • safety of the product candidates seen in a broader patient group; • prevalence and severity of any side effects; • product labeling or product insert requirements of the FDA or other regulatory authorities; • timing of market introduction of the product candidates as well as competitive products; • cost of treatment in relation to alternative treatments; • availability of coverage and adequate reimbursement and pricing by third party payers and government authorities; • relative convenience and ease of administration; and • effectiveness of the pharmaceutical companies’ sales and marketing efforts.
In addition, the regulatory approval is held by the pharmaceutical manufacturer, not KORU. - 11 - Table of Contents We cannot guarantee that we will be able to obtain or maintain FDA 510(k) clearance or premarket approval for our new products or enhancements or modifications to existing products (including the use of our FREEDOM System with therapies not covered by the existing FDA clearance), and the failure to maintain approvals or clearances, or obtain approval or clearance could have a material adverse effect on our business, results of operations, financial condition and cash flows.
In addition, the regulatory approval is held by the pharmaceutical manufacturer, not KORU. - 12 - Table of Contents We cannot guarantee that we will be able to obtain or maintain FDA 510(k) clearance or premarket approval for our new products or enhancements or modifications to existing products (including the use of our FREEDOM System with therapies not covered by the existing FDA clearance), and the failure to maintain approvals or clearances, or obtain approval or clearance could have a material adverse effect on our business, results of operations, financial condition and cash flows.
There can be no assurance that we will receive the required approvals for new products or modifications to existing products on a timely basis or that any approval will not be subsequently withdrawn or conditioned upon extensive post market study requirements. - 12 - Table of Contents Our global regulatory environment is becoming increasingly stringent and unpredictable, which could increase the time, cost and complexity of obtaining regulatory approvals for our products, as well as the clinical and regulatory costs of supporting those approvals.
There can be no assurance that we will receive the required approvals for new products or modifications to existing products on a timely basis or that any approval will not be subsequently withdrawn or conditioned upon extensive post market study requirements. - 13 - Table of Contents Our global regulatory environment is becoming increasingly stringent and unpredictable, which could increase the time, cost and complexity of obtaining regulatory approvals for our products, as well as the clinical and regulatory costs of supporting those approvals.
MDR also significantly modifies and increases the compliance requirements for the industry and will require significant investment in the near future to implement. - 15 - Table of Contents If our devices are commercialized as part of a drug-delivery combination product we, as the manufacturer of the device component of that combination product, we are subject to unannounced and preapproval inspections by the FDA of our manufacturing facility to determine our compliance with QSR and cGMP.
MDR also significantly modifies and increases the compliance requirements for the industry and will require significant investment in the near future to implement. - 16 - Table of Contents If our devices are commercialized as part of a drug-delivery combination product we, as the manufacturer of the device component of that combination product, we are subject to unannounced and preapproval inspections by the FDA of our manufacturing facility to determine our compliance with QSR and cGMP.
If adequate funds are not available from the foregoing sources, we may consider additional strategic financing options, or we may be required to delay, reduce the scope of, or eliminate our research or development and/or some of our commercialization efforts. - 18 - Table of Contents We are required to comply with certain financial and operating covenants under our credit facility.
If adequate funds are not available from the foregoing sources, we may consider additional strategic financing options, or we may be required to delay, reduce the scope of, or eliminate our research or development and/or some of our commercialization efforts. - 19 - Table of Contents We are required to comply with certain financial and operating covenants under our credit facility.
We face competition on the basis of product features, clinical or economic outcomes, product quality, availability, price, services, technological innovation and other factors. In addition, we face changing customer preferences and requirements, changes in the ways health care services are delivered, including the transition of high-acuity care to lower-acuity, and non-acute care settings.
We face competition on the basis of product features, clinical or economic outcomes, product quality, availability, price, services, technological innovation and other factors. In addition, we face changing customer preferences and requirements, changes in the ways healthcare services are delivered, including the transition of high-acuity care to lower-acuity, and non-acute care settings.
If we are unable to comply with the MDR by December 2028, we will not be able to sell our products in the EU, which will materially impact our net revenues. - 9 - Table of Contents Interruption of our manufacturing or our contract manufacturing operations could adversely affect our business.
If we are unable to comply with the MDR by December 2028, we will not be able to sell our products in the EU, which will materially impact our net revenues. - 10 - Table of Contents Interruption of our manufacturing or our contract manufacturing operations could adversely affect our business.
In addition, former employees may develop products that are competitive with ours or capitalize on customer relationships developed while employed with us, subject to their continuing obligations under confidentiality agreements and - 10 - Table of Contents other restrictive covenants that may survive their employment.
In addition, former employees may develop products that are competitive with ours or capitalize on customer relationships developed while employed with us, subject to their continuing obligations under confidentiality agreements and - 11 - Table of Contents other restrictive covenants that may survive their employment.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results. Personal injuries relating to the use of our products can also result in significant product liability claims being brought against us.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results. - 14 - Table of Contents Personal injuries relating to the use of our products can also result in significant product liability claims being brought against us.
The continuing efforts of governmental authorities, insurance companies and other payers of health care costs to contain or reduce these costs and, more generally, to reform the health care system, could limit the prices we are able to charge for our products or the amounts of reimbursement available for our products or the drugs that they administer, which would put pressure on us to reduce our prices for our products and/or limit our sales.
The continuing efforts of governmental authorities, insurance companies and other payers of healthcare costs to contain or reduce these costs and, more generally, to reform the healthcare system, could limit the prices we are able to charge for our products or the amounts of reimbursement available for our products or the drugs that they administer, which would put pressure on us to reduce our prices for our products and/or limit our sales.
As a result, our devices are subject to regulation regarding quality and cost by U.S. governmental agencies, including the Centers for Medicare & Medicaid Services (“CMS”), as well as comparable state and non-U.S. agencies responsible for reimbursement and regulation of health care goods and services, including laws and regulations related to kickbacks, false claims, self-referrals and health care fraud.
As a result, our devices are subject to regulation regarding quality and cost by U.S. governmental agencies, including the Centers for Medicare & Medicaid Services (“CMS”), as well as comparable state and non-U.S. agencies responsible for reimbursement and regulation of healthcare goods and services, including laws and regulations related to kickbacks, false claims, self-referrals and healthcare fraud.
Any decline in the price of our common stock may encourage short sales, which could place further downward pressure on the price of our common stock and may impair our ability to raise additional capital through the sale of equity securities. You may find it difficult to sell our common stock.
Any decline in the price of our common stock may encourage short sales, which could place further downward pressure on the price of our common stock and may impair our ability to raise additional capital through the sale of equity securities. - 24 - Table of Contents You may find it difficult to sell our common stock.
Pharmaceutical manufacturers, health care systems, other health care companies and even retail pharmacies are also consolidating, resulting in greater purchasing power for these companies. As a result, competition among medical device suppliers to provide goods and services has increased.
Pharmaceutical manufacturers, healthcare systems, other healthcare companies and even retail pharmacies are also consolidating, resulting in greater purchasing power for these companies. As a result, competition among medical device suppliers to provide goods and services has increased.
These outcomes may in turn result in customers transitioning to available competitive products, loss of market share, negative publicity, reputational damage, loss of customer confidence or other negative consequences (including a decline in stock price). - 17 - Table of Contents Our failure to comply with laws and regulations relating to reimbursement of health care products may subject us to penalties and adversely impact our reputation, business, results of operations, financial condition and cash flows.
These outcomes may in turn result in customers transitioning to available competitive products, loss of market share, negative publicity, reputational damage, loss of customer confidence or other negative consequences (including a decline in stock price). - 18 - Table of Contents Our failure to comply with laws and regulations relating to reimbursement of healthcare products may subject us to penalties and adversely impact our reputation, business, results of operations, financial condition and cash flows.
The June 2016 referendum result in the UK to exit the EU (commonly known as “Brexit”), and the subsequent commencement of the official withdrawal process by the UK government in March 2017, has created uncertainties affecting business operations in the UK and the EU. On January 31, 2020, the UK withdrew from the EU.
The June 2016 referendum resulted in the UK’s decision to exit the EU (commonly known as “Brexit”), and the subsequent commencement of the official withdrawal process by the UK government in March 2017, has created uncertainties affecting business operations in the UK and the EU. On January 31, 2020, the UK withdrew from the EU.
Command currently provides subassemblies for all of our consumables (needle and tubing sets), and manufactures, assembles and packages approximately substantially all of our consumables.
Command currently provides subassemblies for all of our consumables (needle and tubing sets), and manufactures, assembles and packages approximately 85% of our consumables.
In the United Kingdom, for example, the Medicines and Healthcare products Regulatory Agency (MHRA) is responsible for regulating the UK medical device market. With recent changes in the United Kingdom’s membership with the European Union, the MHRA has and will continue to impose new regulatory obligations becoming effective in 2021 through 2023, for medical device manufacturers.
In the United Kingdom, for example, the Medicines and Healthcare products Regulatory Agency (MHRA) is responsible for regulating the UK medical device market. With recent changes in the United Kingdom’s membership with the European Union, the MHRA has and will continue to impose new regulatory obligations for medical device manufacturers.
Therefore, we must be compliant with applicable legislation in order to identify our devices with the UKCA mark and continue to market and sell our devices in Great Britain beyond December 31, 2024. We could be adversely affected, directly or indirectly, by the effects of an increased focus on environmental, social and governance issues.
Therefore, we must be compliant with applicable legislation in order to identify our devices with the UKCA mark and continue to market and sell our devices in Great Britain beyond June 30, 2030. We could be adversely affected, directly or indirectly, by the effects of an increased focus on environmental, social and governance issues.
We need to attract and retain key employees to be competitive. Our ability to compete effectively depends upon our ability to attract and retain executives and other key employees, including people in technical, marketing, sales, research and development, quality assurance and regulatory compliance positions.
Our ability to compete effectively depends upon our ability to attract and retain executives and other key employees, including people in technical, marketing, sales, research and development, quality assurance and regulatory compliance positions.
Approximately 17% of our net revenues in the year ended December 31, 2023, came from our operations outside the U.S., and we intend to continue to pursue growth opportunities in foreign markets.
Approximately 20% of our net revenues in the year ended December 31, 2024, came from our operations outside the U.S., and we intend to continue to pursue growth opportunities in foreign markets.
Deterioration in the global economic environment, particularly in countries with government-sponsored healthcare systems, may cause decreased demand for our products and increased competition, which could result in lower sales volume and downward pressure on the prices for our products, longer sales cycles, and slower adoption of new technologies.
A downturn in global economic conditions could adversely affect our operations. Deterioration in the global economic environment, particularly in countries with government-sponsored healthcare systems, may cause decreased demand for our products and increased competition, which could result in lower sales volume and downward pressure on the prices for our products, longer sales cycles, and slower adoption of new technologies.
Our foreign operations subject us to certain risks, including, among others, the effects of fluctuations in foreign currency exchange, uncertainties with respect to local economic and political - 19 - Table of Contents conditions, competition from local companies, trade protectionism and restrictions on the transfer of goods across borders, U.S. diplomatic and trade relations with the governments of the foreign countries in which we operate, foreign regulatory requirements or changes in such requirements, local product preferences and product requirements, longer payment terms for accounts receivable than we experience in the U.S., difficulty in establishing, staffing and managing foreign operations, changes to international trade agreements and treaties, changes in tax laws, weakening or loss of the protection of intellectual property rights in some countries, and import or export licensing requirements.
Our foreign operations subject us to certain risks, including, among others, the effects of fluctuations in foreign currency exchange, uncertainties with respect to local economic and political conditions, competition from local companies, trade protectionism and restrictions on the transfer of goods across borders, including tariffs or other barriers to market participation, pricing pressure that we may experience internationally, U.S. diplomatic and trade relations with the governments of the foreign countries in which we operate, foreign regulatory requirements or changes in such requirements, local product preferences and product requirements, longer payment terms for accounts receivable than we experience in the U.S., difficulty in establishing, staffing and managing foreign operations, changes to international trade agreements and treaties, changes in tax laws, weakening or loss of the protection of intellectual property rights in some countries, and import or export licensing requirements.
Risks Related to Ownership of Our Common Stock There may be circumstances in which the interests of our significant stockholders could be in conflict with your interests as a stockholder. Three stockholders, together with their respective affiliates, beneficially own approximately 17%, 11%, and 7% of our outstanding common stock, respectively.
Risks Related to Ownership of Our Common Stock There may be circumstances in which the interests of our significant stockholders could be in conflict with your interests as a stockholder. Three stockholders, together with their respective affiliates, beneficially own approximately 13%, 10%, and 9% of our outstanding common stock, respectively.
Certain non-cash impairments may result from a change in our strategic goals, business direction or other factors relating to the overall business environment. Material impairment charges could negatively affect our results of operations. Actions of activist stockholders could have an adverse effect on our business.
Future events or decisions may lead to asset impairments and/or related charges. Certain non-cash impairments may result from a change in our strategic goals, business direction or other factors relating to the overall business environment. Material impairment charges could negatively affect our results of operations. Actions of activist stockholders could have an adverse effect on our business.
Regardless of whether an active and liquid public market exists, negative fluctuations in our actual or anticipated operating results will likely cause the market price of our common stock to fall, making it more difficult for you to sell our common stock at a favorable price, or at all.
Regardless of whether an active and liquid public market exists, negative fluctuations in our actual or anticipated operating results will likely cause the market price of our common stock to fall, making it more difficult for you to sell our common stock at a favorable price, or at all. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Because stock options granted under our equity compensation plans will generally only be exercised when the exercise price for such option is below the then market value of the common stock, the exercise of such options or the issuance of shares will cause dilution to the book value per share of our common stock and to existing and new investors.
Because stock options granted under our equity compensation plans will generally only be exercised when the exercise price for such option is below the then market value of the common stock, the exercise of such options or the issuance of shares will cause dilution to the book value per share of our common stock and to existing and new investors. - 23 - Table of Contents There has been volatility in the price of shares of our common stock.
As a result, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of future performance. Our operating results and financial condition are also subject to fluctuation from all of the risks described throughout this section. These fluctuations may adversely affect our results of operations and financial conditions and our stock price.
As a result, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of future performance. Our operating results and financial condition are also subject to fluctuation from all of the risks described throughout this section.
The cost of mitigating or responding to ESG issues could be significant; however, these costs are too uncertain to predict. In addition, the approaches taken by the U.S. or foreign governments to regulate ESG issues, which may include legislative or regulatory changes, could adversely impact our business, results of operations, financial condition, and prospects, and are too uncertain to predict.
In addition, the approaches taken by the U.S. or foreign governments to regulate ESG issues, which may include legislative or regulatory changes, could adversely impact our business, results of operations, financial condition, and prospects, and are too uncertain to predict.
In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, employees, and joint venture partners, and cause our stock price to experience periods of volatility or stagnation. - 20 - Table of Contents Natural disasters, war and other events could adversely affect our suppliers and customers.
In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, employees, and joint venture partners, and cause our stock price to experience periods of volatility or stagnation.
Our failure to comply with shareholder expectations and standards regarding ESG issues, which are still evolving and can vary considerably, or the perception that we have not responded appropriately to ESG-related issues, could result in reputational harm, and could have an adverse effect on our business, results of operations and financial condition. - 21 - Table of Contents Climate change could present immediate and long-term risks to our industry and our customers.
Our failure to comply with shareholder expectations and standards regarding ESG issues, which are still evolving and can vary considerably, or the perception that we have not responded appropriately to ESG-related issues, could result in reputational harm, and could have an adverse effect on our business, results of operations and financial condition.
There has been volatility in the price of shares of our common stock. Since our common stock was listed on the Nasdaq Capital Market on October 17, 2019, it has traded between $1.82 per share to $12.84 per share.
Since our common stock was listed on the Nasdaq Capital Market on October 17, 2019, it has traded between $1.82 per share to $12.84 per share.
We sell most of our products through a small number of distributors, three in the U.S. and two outside the U.S. As of December 31, 2023, these five distributors comprised approximately 74% of our net revenues with one U.S. distributor contributing 41%.
We sell most of our products through a small number of distributors, three in the U.S. and three outside the U.S. As of December 31, 2024, these six distributors comprised approximately 75% of our net revenues with one U.S. distributor contributing 35%.
We may be unable to compete successfully in our highly competitive industry. We operate in a single market – ambulatory infusion – and are dependent upon our success in that market.
If we are unable to compete successfully in our highly competitive industry, our business and financial condition may be adversely affected. We operate in a single market – infusion – and are dependent upon our success in that market.
The financial and operating covenants under the credit facility may limit our ability to borrow funds or capital, including for general corporate purposes and strategic acquisitions. We may experience difficulties resulting from our relatively new and evolving management structure and executive team.
The financial and operating covenants under the credit facility may limit our ability to borrow funds or capital, including for general corporate purposes and strategic acquisitions. We may experience difficulties resulting from our relatively new and evolving management structure and executive team. We have made a number of changes to our management structure throughout the organization in recent years.
Our stock price is subject to wide fluctuations in response to a variety of factors, including: • quarterly variations in operating results; • announcement of new products or customers by our competitors; • changes in financial estimates by securities analysts; • trading volume on the Nasdaq Capital Market; • announcements related to litigation; • general economic conditions; or • other events or factors that are beyond our control. - 22 - Table of Contents In addition, the stock market has experienced significant price and volume fluctuations that have particularly affected the trading prices of equity securities of many biotechnology companies.
Our stock price is subject to wide fluctuations in response to a variety of factors, including: • quarterly variations in operating results; • announcement of new products or customers by our competitors; • changes in financial estimates by securities analysts; • trading volume on the Nasdaq Capital Market; • announcements related to litigation; • general economic conditions; or • other events or factors that are beyond our control.
A failure to identify and address manufacturing problems prior to the release of products to our customers may also result in a quality or safety issue that could result in a recall or other inability to sell our products. Our products are currently manufactured in Nicaragua and Mahwah, NJ, and stored at our corporate headquarters in Mahwah, NJ.
A failure to identify and address manufacturing problems prior to the release of products to our customers may also result in a quality or safety issue that could result in a recall or other inability to sell our products.
We need to successfully introduce new products to achieve our strategic business objectives. A significant element of our strategy is to increase revenue growth by investing in innovation and new product development, which will require substantial resources.
A significant element of our strategy is to increase revenue growth by investing in innovation and new product development, which will require substantial resources.
While we have invested to protect our intellectual property, confidential information and other data, and continue to work diligently in this area, there can be no assurance that our precautionary measures will prevent breakdowns, breaches, cyber incidents or other events.
While we have invested to protect our intellectual property, confidential information and other data, and continue to work diligently in this area, there can be no assurance that our precautionary measures will prevent breakdowns, breaches, cyber incidents or other events. Such events could have a material adverse effect on our reputation, business, financial condition or results of operations.
If our Board elects to issue additional stock options or other equity-based compensation, our stockholders may experience additional dilution, which could cause our stock price to decline.
We may issue equity-based compensation outside of our equity compensation plans as inducement for new employees. If our Board elects to issue additional stock options or other equity-based compensation, our stockholders may experience additional dilution, which could cause our stock price to decline.
During the Transition Period, negotiations between the UK and the EU continued in relation to the future customs and trading relationship between the UK and the EU following the expiration of the Transition Period.
During the Transition Period, negotiations between the UK and the EU continued in relation to the future customs and trading relationship between the UK and the EU following the expiration of the Transition Period. Due to the current COVID-19 global pandemic, negotiations between the UK and the EU were delayed.
MDR also significantly modifies and increases the compliance requirements for the industry and will require significant investment by us in the near future to implement. Our products are also subject to approval and regulation by foreign regulatory and safety agencies.
MDR also significantly modifies and increases the compliance requirements for the industry and will require significant investment by us in the near future to implement.
Although, we believe the persons who currently and will serve in these positions are and will be qualified to do so, they may take time to integrate into the organization and with each other, if at all.
Although, we believe the persons who currently serve in these positions are qualified to do so, they may have difficulties integrating into the organization and with each other.
Health care policy changes and industry cost-containment measures could result in downward pricing pressure for our products and limit our sales. Most of our customers, and those to whom our customers supply medical devices, rely on third-party payers, including government programs and private health insurance plans, to reimburse some or all the cost of the medical devices we manufacture.
Most of our customers, and those to whom our customers supply medical devices, rely on third-party payers, including government programs and private health insurance plans, to reimburse some or all the cost of the medical devices we manufacture.
These fluctuations have often been unrelated or disproportionate to the operating performance of these companies. Any negative change in the public’s perception of the prospects of medical device companies could further depress our stock price regardless of our results.
Any negative change in the public’s perception of the prospects of medical device companies could further depress our stock price regardless of our results.
Recent increases in U.S. minimum wage requirements, as well as those imposed by the state of New York and New Jersey will increase our costs for employees to support those operations, reduce our margins and negatively impact our profit. A downturn in global economic conditions could adversely affect our operations.
Recent increases in U.S. minimum wage requirements, as well as those imposed by the state of New York and New Jersey will increase our costs for employees to support those operations, reduce our margins and negatively impact our profit. President Trump has indicated his willingness to increase the use of tariffs by the U.S. to accomplish certain U.S. policy goals.
Changes in market conditions or other changes in the future outlook of value may lead to impairment charges in the future. In addition, we may from time to time sell assets that we determine are not critical to our strategy. Future events or decisions may lead to asset impairments and/or related charges.
Long-lived assets are reviewed when there is an indication or triggering event that impairment may have occurred. Changes in market conditions or other changes in the future outlook of value may lead to impairment charges in the future. In addition, we may from time to time sell assets that we determine are not critical to our strategy.
Such events could have a material adverse effect on our reputation, business, financial condition or results of operations. - 14 - Table of Contents Misappropriation or other loss of our intellectual property from any of the foregoing would have an adverse effect on our competitive position and may cause us to incur substantial litigation costs.
Misappropriation or other loss of our intellectual property from any of the foregoing would have an adverse effect on our competitive position and may cause us to incur substantial litigation costs. - 15 - Table of Contents We need to attract and retain key employees to be competitive.
To the extent we raise additional capital by issuing equity and/or convertible securities, our stockholders may experience substantial dilution. We may sell our common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner, we determine from time to time.
We may sell our common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner, we determine from time to time. If we sell our common stock, convertible securities or other equity securities, investors may be materially diluted.
Please note that additional risks not currently known to us or that we currently deem immaterial also may adversely affect our business, operations, results of operations, financial condition and prospects. - 8 - Table of Contents Risks Related to Our Business If we are unable to successfully introduce new products or fail to keep pace with advances in technology, our business, financial condition and results of operations could be adversely affected.
Risks Related to Our Business If we are unable to successfully introduce new products or fail to keep pace with advances in technology, our business, financial condition and results of operations could be adversely affected. We need to successfully introduce new products to achieve our strategic business objectives.
Future sales and issuances of shares of our common stock or rights to purchase our common stock, including pursuant to our equity compensation plans, could result in additional dilution of the percentage ownership of our stockholders. We may need additional capital in the future to continue our planned operations.
If we do not pay dividends, a return on our stockholders’ investment will only occur if our stock price appreciates. Future sales and issuances of shares of our common stock or rights to purchase our common stock, including pursuant to our equity compensation plans, could result in additional dilution of the percentage ownership of our stockholders.
A weakening of economic conditions in the U.S. and/or abroad may also adversely affect our suppliers, which could result in interruptions in supply. We are subject to foreign currency exchange risk. A portion of our revenues is currently, and we expect in the future to be, derived from international operations.
A weakening of economic conditions in the U.S. and/or abroad may also adversely affect our suppliers, which could result in interruptions in supply.
Future material impairments in the value of our long-lived assets could negatively affect our operating results. We review our long-lived assets, including identifiable intangible assets and property, plant and equipment, for impairment. Long-lived assets are reviewed when there is an indication or triggering event that impairment may have occurred.
These fluctuations may adversely affect our results of operations and financial conditions and our stock price. - 21 - Table of Contents Future material impairments in the value of our long-lived assets could negatively affect our operating results. We review our long-lived assets, including identifiable intangible assets and property, plant and equipment, for impairment.
The potential for increased severe weather events could have a material adverse effect on our operations and infrastructure or the operations and infrastructure of our suppliers. In addition, the effects of climate change could include long-term changes in temperature levels and water availability, increased energy costs, and increased supply costs impacted by those increasing energy costs.
Climate change could present immediate and long-term risks to our industry and our customers. The potential for increased severe weather events could have a material adverse effect on our operations and infrastructure or the operations and infrastructure of our suppliers.
We expect this global regulatory environment will continue to evolve, which could impact our ability to obtain future approvals for our products or could increase the cost and time to obtain such approvals in the future. If our EU device approval is suspended, it could have a material adverse effect on our business and financial results.
We expect this global regulatory environment will continue to evolve, which could impact our ability to obtain future approvals for our products or could increase the cost and time to obtain such approvals in the future. Healthcare policy changes and industry cost-containment measures could result in downward pricing pressure for our products and limit our sales.
We provide and intend to continue to provide additional equity-based compensation to our employees, directors and consultants under our three equity compensation plans. We may issue equity-based compensation outside of our equity compensation plans as inducement for new employees.
These sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders. We provide and intend to continue to provide additional equity-based compensation to our employees, directors and consultants under our three equity compensation plans.
Additionally, all medical devices will require a UK Conformity Assessment mark (“UKCA”) by December 31, 2024. CE marks issued by Notified Bodies will remain valid until this time.
New regulations require medical device registration with the Medicines and Healthcare Products Regulatory Agency (“MHRA") before being placed on the Great Britain market (England, Wales, and Scotland). Additionally, all medical devices will require a UK Conformity Assessment mark (“UKCA”) by June 30, 2030. CE marks issued by Notified Bodies will remain valid until this time.
This agreement sets out the rules that apply between the EU and the UK as of January 1, 2021. New regulations require medical device registration with the Medicines and Healthcare Products Regulatory Agency (“MHRA") before being placed on the Great Britain market (England, Wales, and Scotland).
However, on December 24, 2020, the negotiators from the EU and UK reached an agreement on a new partnership. This agreement sets out the - 22 - Table of Contents rules that apply between the EU and the UK as of January 1, 2021.
Removed
For example, the EU has adopted the EU Medical Device Regulation (the “EU MDR”) and the In Vitro Diagnostic Regulation (the “EU IVDR”), each of which impose stricter requirements for the marketing and sale of medical devices, including in the area of clinical evaluation requirements, quality systems and post-market surveillance.
Added
Please note that additional risks not currently known to us or that we currently deem immaterial also may adversely affect our business, operations, results of operations, financial condition and prospects.
Removed
Implementation of the compliance requirements of these regulations requires us to incur significant expenditures and utilize resources. Failure to continue to meet these requirements could adversely impact our business in the EU and other regions that tie their product registrations to the EU requirements.
Added
Our products are currently manufactured in Nicaragua and Mahwah, NJ, and stored in warehouse space at our corporate headquarters in Mahwah, NJ.
Removed
The Company’s products are currently certified by its notified body, BSI, for sale in the EU. In March 2024, the Company received an assessment report from BSI stating that, following BSI’s review of technical documentation submitted by the Company in connection with a prior audit nonconformance, a recommendation for continued certification cannot be made.
Added
These adverse events could also lead to safety alerts relating to our products or recalls (either voluntary or as required by the FDA or similar governmental authorities in other countries), and could result, in certain cases, in the removal of a product from the market.
Removed
The Company has filed an appeal to this determination. If the Company’s appeal is denied, then its EU certification may be suspended with respect to some or all of the Company’s products. Any such suspension would affect the Company’s EU revenues, which effect could be material depending on the extent of the suspension.
Added
On February 1, 2025, President Trump signed three executive orders announcing his intent to impose 25% tariffs on imports from Canada and Mexico and a 10% additional tariff on imports from China.
Removed
We have made a number of changes to our management structure throughout the organization in recent years and have filled a number of these positions while we are actively recruiting to fill others.
Added
While the implementation of tariffs on imports from Mexico and Canada were paused, the Chinese tariffs took effect as scheduled and China responded by implementing 15% tariffs on certain U.S. imports.
Removed
Due to the current COVID-19 global pandemic, negotiations between the UK and the EU scheduled have either been postponed or occurred in a reduced forum via video conference. However, on December 24, 2020, the negotiators from the EU and UK reached an agreement on a new partnership.
Added
The implementation of new tariffs on imports from Canada, Mexico, China or other countries for an extended period and without specific exemptions for our products, and any reciprocal tariffs or other reactions by other countries thereto, could have a material adverse impact on our financial condition, results of operations and cash flows.
Removed
If we sell our common stock, convertible securities or other equity securities, investors may be materially diluted. These sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.
Added
Further, sanctions, tariffs, or other measures that restrict international trade, as well as instability resulting from global conflicts, could negatively affect our business operations and results. - 20 - Table of Contents We are subject to foreign currency exchange risk. A portion of our revenues is currently, and we expect in the future to be, derived from international operations.
Added
There may be greater uncertainty and market volatility following U.S. and global elections, resulting from potential shifts in trade policies, tariffs or other trade protection measures, and the reaction of other countries thereto, or changes to international trade agreements, which could have a material adverse effect on our operations, including our ability to source and manufacture products in a timely and cost effective manner, financial condition, results of operations and/or liquidity.
Added
Geopolitical developments related to various global conflicts are sources of uncertainty and may cause disruptions to global or regional markets, supply chains or operations in the regions. Sanctions and export restrictions may continue to proliferate, leading to greater uncertainty in emerging and growth markets.
Added
Any significant changes in the political, economic, financial, competitive, legal and regulatory or reimbursement conditions where we conduct, or plan to expand, our international operations may have a material impact on our business, financial condition or results of operations.
Added
Natural disasters, war and other events could adversely affect our suppliers and customers.
Added
In addition, the effects of climate change could include long-term changes in temperature levels and water availability, increased energy costs, and increased supply costs impacted by those increasing energy costs. The cost of mitigating or responding to ESG issues could be significant; however, these costs are too uncertain to predict.
Added
We may need additional capital in the future to continue our planned operations. To the extent we raise additional capital by issuing equity and/or convertible securities, our stockholders may experience substantial dilution.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES We currently rent 43,975 square feet of a building located at 100 Corporate Drive, Mahwah, New Jersey with the lease having commenced on March 1, 2022 and expiring August 31, 2032. This facility is used as our headquarters and for our in-house manufacturing operations. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable.
Biggest changeITEM 2. PROPERTIES We currently rent 43,975 square feet of a building located at 100 Corporate Drive, Mahwah, New Jersey with the lease having commenced on March 1, 2022 and expiring August 31, 2032. This facility is used as our headquarters and for our in-house manufacturing operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of March 13, 2024, 45,669,362 shares of our common stock were issued and outstanding held by approximately 471 stockholders of record. There were no shares of preferred stock issued and outstanding.
Biggest changeAs of March 12, 2025, 45,957,115 shares of our common stock were issued and outstanding held by approximately 431 stockholders of record. There were no shares of preferred stock issued and outstanding. Dividend Policy We have never declared or paid cash dividends on our capital stock.
We currently intend to use all available funds for our business operations. We are authorized to issue 77,000,000 shares of capital stock, of which 75,000,000 are designated common stock, $0.01 par value per share, and 2,000,000 are designated preferred stock.
We currently intend to use all available funds for our business operations. - 25 - Table of Contents We are authorized to issue 77,000,000 shares of capital stock, of which 75,000,000 are designated common stock, $0.01 par value per share, and 2,000,000 are designated preferred stock.
Added
We currently intend to retain all future earnings for the operation and expansion of our business and, therefore, do not anticipate declaring or paying cash dividends in the foreseeable future.
Added
The payment of dividends will be at the discretion of our Board of Directors and will depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payments of dividends present in any of our future debt agreements and other factors our Board of Directors may deem relevant.
Added
Securities Authorized for Issuance Under Equity Compensation Plans Information relating to our equity compensation plans as of December 31, 2024, under which our equity securities were authorized for issuance, is included in Item 12 of Part III of this Annual Report and such information is incorporated herein by reference. ITEM 6. RESERVED

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNet Loss Years Ended December 31, Change from Prior Year 2023 2022 $ % Net Loss $ (13,741,062 ) $ (8,661,142 ) $ 5,079,920 58.7% Stated as a Percentage of Net Revenues (48.2% ) (31.0% ) Our net loss increased $5.1 million in the year ended December 31, 2023 compared with the same period last year mostly driven by the establishment of an allowance for the nonrealization of deferred tax assets of $6.0 million offset by a higher gross profit of $1.3 million, an increase in other income of $0.4 million due to higher interest and dividend income from our treasury bill investments, which was partially offset by higher operating expenses of $0.8 million. - 26 - Table of Contents LIQUIDITY AND CAPITAL RESOURCES Our principal source of liquidity is our cash on hand of $11.5 million as of December 31, 2023.
Biggest changeNet Loss Years Ended December 31, Change from Prior Year 2024 2023 $ % Net Loss $ (6,066,633 ) $ (13,741,062 ) $ 7,674,429 55.9% - 27 - Table of Contents Our net loss decreased $7.7 million in the year ended December 31, 2024 compared with the same period last year, mostly driven by lower net operating losses of $3.8 million as a result of our gross profit improvement of 27.7%, and an operating expense increase of 3%.
Partially offsetting these increases were cash flows generated from a decrease in inventory of $2.9 million, a decrease in accounts receivable of $0.5 million, and changes in working capital of $0.4 million.
Partially offsetting these increases were cash flows generated from a decrease in inventory of $2.9 million, a decrease in accounts receivable of $0.5 million, and other changes in working capital of $0.4 million.
Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions. - 28 - Table of Contents Revenue Recognition Our revenues are derived from three business sources: (i) domestic core (which consists of US and Canada), (ii) international core, and (iii) novel therapies.
Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions. - 29 - Table of Contents Revenue Recognition Our revenues are derived from three business sources: (i) domestic core (which consists of US and Canada), (ii) international core, and (iii) novel therapies.
To the extent that current and anticipated future sources of liquidity are or are expected to be insufficient to fund our future business activities and requirements, we may be required to draw on our existing credit facility, seek additional equity or debt financing sooner.
To the extent that current and anticipated future sources of liquidity are or are expected to be insufficient to fund our future business activities and requirements, we may be required to draw on our new credit facility or seek additional equity or debt financing sooner.
Continued execution on our longer-term strategic plan may require the Company to draw on our new credit facility, take on additional debt or raise capital through issuance of equity, or a combination of both.
Continued execution on our longer-term strategic plan may require the Company to draw on our credit facility, take on additional debt, raise capital through issuance of equity, or a combination.
Refer to “NOTE 5 — LEASES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K for further details regarding our operating and finance leases.
Refer to “NOTE 6 — LEASES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K for further details regarding our operating and finance leases.
ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED Refer to “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.
ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED Refer to “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K. - 30 - Table of Contents ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.
Debt and Borrowing Capacity Refer to “NOTE 10 — DEBT OBLIGATIONS” and “NOTE 11 — SUBSEQUENT EVENT” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K for further details regarding debt and borrowing capacity. Lease Commitments We have finance and operating leases for our corporate office and certain office and computer equipment.
Debt and Borrowing Capacity Refer to “NOTE 5 — DEBT OBLIGATIONS” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K for further details regarding debt and borrowing capacity. Lease Commitments We have finance and operating leases for our corporate office and certain office and computer equipment.
Domestic core growth of 5.9% was primarily driven by volume growth in pumps and consumables attributed to overall SCIG market growth and new account share gains. International core growth of 10.4% was driven by increased volume across several EU markets and the entry into multiple new geographic markets.
Domestic core growth of 12.3% was primarily driven by volume growth in pumps and consumables attributed to overall SCIg market growth and new account share gains. International core growth of 31.5% was driven by overall SCIg market growth, increased penetration in several established EU markets, and the entry into multiple new geographic markets.
This net cash usage was primarily due to the net loss of $13.7, plus cash flows used to reduce accrued expenses of $1.2 million primarily from the payment of 2023 employee bonuses, and a decrease in accounts payable of $1.4 million.
Net cash used in operating activities of $4.9 million for the year ended December 31, 2023 was primarily due to the net loss of $13.7 million, plus cash flows used to reduce accrued expenses of $1.2 million primarily from the payment of 2023 employee bonuses, and a decrease in accounts payable of $1.4 million.
Financing Activities Net cash used in financing activities for the year ended December 31, 2023 of $0.2 million, was from a net between borrowings and payments on our note payable for insurance premium financing of $0.1 million, and $0.1 million for payments on our finance leases.
Net cash used in financings activities of $0.2 million for the year ended December 31, 2023, due to payments on our note payable for insurance premium financings, partially offset by the borrowings for the insurance premium financing, and $0.1 million for payments on our finance leases.
Our two operating leases have remaining lease terms of 8.6 years and 5 years, respectively. Our three finance leases have remaining lease terms of 3.4 years, 3 years, and 4.75 years, respectively.
Our three operating leases have remaining lease terms of 7.7 years, 4.1 years, and 3.4 years, respectively. Our three finance leases have remaining lease terms of 2.4 years, 2.0 years, and 3.8 years, respectively.
Gross profit, for the year ended December 31, 2023, was $16.7 million, an increase of 8.7% or $1.3 million from the same period last year, and stated as a percentage of net revenues was 58.6%, an increase from 55.1% in the prior year.
Gross profit, for the year ended December 31, 2024, was $21.3 million, an increase of 27.7% or $4.6 million from the same period last year. Gross margin was 63.4% for the year ended December 31, 2024, an increase from 58.6% from the prior year. We define gross margin as gross profit stated as a percentage of net revenues.
The Company ended the 2023 fiscal year with $28.5 million in net revenues, a 2.2% increase compared with $27.9 million in the same period last year driven by volume growth in our core domestic and international business of 5.9% and 10.4% respectively, offset by a 41.6% decline in our novel therapies business.
The Company ended the 2024 fiscal year with $33.6 million in net revenues, an 18.0% increase compared with $28.5 million in the same period last year driven by growth in our core domestic and international business of 12.3% and 31.5% respectively, and further driven by a 61.9% increase in our novel therapies business.
Gross Profit Our gross profit for the years ended December 31, 2023, and 2022 is as follows: Years Ended December 31, Change from Prior Year 2023 2022 $ % Gross Profit $ 16,708,282 $ 15,368,986 $ 1,339,296 8.7% Stated as a Percentage of Net Revenues 58.6% 55.1% Gross profit increased $1.3 million or 8.7% in the year ended December 31, 2023, compared to the same period in 2022 driven by the increase in net revenues of $0.6 million coupled with a favorable cost of goods sold impact of $0.7 million.
Gross Profit Our gross profit for the years ended December 31, 2024, and 2023 is as follows: Years Ended December 31, Change from Prior Year 2024 2023 $ % Gross Profit $ 21,331,858 $ 16,708,282 $ 4,623,576 27.7% Gross Margin 63.4% 58.6% Gross profit increased $4.6 million, or 27.7%, to $21.3 million, in the year ended December 31, 2024, compared to the same period in 2023 driven by the increase in net revenues of $5.1 million coupled with significant gross margin improvement.
Further contributing to this change were non-cash items including a deferred tax asset increase of $2.0 million partially offset by the establishment of an allowance for non-realization of deferred tax assets of $6.0 million, stock-based compensation expense of $2.8 million, depreciation and amortization expense of $0.9 million and a loss on disposal of fixed assets of $0.1 million.
Further contributing to this change were non-cash items of $3.8 million including stock-based compensation expense of $2.6 million, depreciation and amortization expense of $0.9 million, and $0.3 million for non-cash leasing charges and losses on disposals of fixed assets.
Cash Flows The following table summarizes our cash flows: Year Ended December 31, 2023 Year Ended December 31, 2022 Net cash (used in) operating activities $ (4,892,553 ) $ (5,404,549 ) Net cash (used in) investing activities $ (814,597 ) $ (2,801,568 ) Net cash (used in)/ provided by financing activities $ (218,867 ) $ 279,485 Operating Activities Net cash used in operating activities was $4.9 million for the year ended December 31, 2023.
Cash Flows The following table summarizes our cash flows: Year Ended December 31, 2024 Year Ended December 31, 2023 Net cash used in operating activities $ (319,718 ) $ (4,892,553 ) Net cash used in investing activities $ (1,333,042 ) $ (814,597 ) Net cash used in financing activities $ (248,533 ) $ (218,867 ) Operating Activities Net cash used in operating activities was $0.3 million for the year ended December 31, 2024.
To develop new products, support future growth, achieve operating efficiencies, and maintain product quality, we are continuing to invest in research and development, innovation, and equipment. Operating expenses for the 2023 fiscal year were $27.0 million. Our inventory position was $3.5 million at December 31, 2023, which reflected a decrease of $2.9 million from December 31, 2022.
Our principal cash outflows relate to the purchase and production of inventory, funding of research and development, and selling, general and administrative expenses. To develop new products, support future growth, achieve operating efficiencies, and maintain product quality, we are continuing to invest in research and development, innovation, and equipment. Operating expenses for the 2024 fiscal year were $27.8 million.
Novel therapies net revenues declined by 41.6% driven primarily by lower NRE revenue of $0.9 million and fewer clinical trial supply shipments of $0.2 million than in the prior year.
Novel therapies net revenues increased $0.9 million, or 61.9%, driven primarily by an increase in NRE collaborations and an increase in clinical trial supply shipments when compared to the prior year.
RESULTS OF OPERATIONS Year Ended December 31, 2023 compared to Year Ended December 31, 2022 Net Revenues The following table summarizes our net revenues for the years ended December 31, 2023 and 2022: Years Ended December 31, Change from Prior Year % of Net Revenues 2023 2022 $ % 2023 2022 Net Revenues Domestic Core $ 22,446,519 $ 21,205,204 $ 1,241,315 5.9% 78.7% 76.0% International Core 4,596,097 4,164,714 431,383 10.4% 16.1% 14.9% Novel Therapies 1,475,050 2,526,119 (1,051,069 ) (41.6% ) 5.2% 9.1% Total $ 28,517,666 $ 27,896,037 $ 621,629 2.2% - 25 - Table of Contents Total net revenues increased $0.6 million, or 2.2%, for the year ended December 31, 2023, as compared with the same period last year.
RESULTS OF OPERATIONS Year Ended December 31, 2024 compared to Year Ended December 31, 2023 Net Revenues The following table summarizes our net revenues for the years ended December 31, 2024 and 2023: - 26 - Table of Contents Years Ended December 31, Change from Prior Year % of Net Revenues 2024 2023 $ % 2024 2023 Net Revenues Domestic Core $ 25,214,613 $ 22,446,519 $ 2,768,094 12.3% 74.9% 78.7% International Core 6,043,979 4,596,097 1,447,882 31.5% 18.0% 16.1% Total Core 31,258,592 27,042,616 4,215,976 15.6% 92.9% 94.8% Novel Therapies 2,387,871 1,475,050 912,821 61.9% 7.1% 5.2% Total $ 33,646,463 $ 28,517,666 $ 5,128,797 18.0% 100% 100% Total net revenues increased $5.1 million, or 18.0%, to $33.6 million, for the year ended December 31, 2024, as compared with the same period last year.
Gross profit as a percentage of net revenues increased to 58.6% in the year ended 2023 compared to 55.1% for the year ended 2022 primarily driven by increased manufacturing productivity and product mix versus the prior year.
Gross margin increased to 63.4% in the year ended 2024 compared to 58.6% for the year ended 2023, primarily driven by increased manufacturing productivity, improved margin on product revenue mix, and increases in average selling prices versus the prior year.
If actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write downs may be required, which could unfavorably affect future operating results. - 29 - Table of Contents ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED Refer to “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K.
If actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write downs may be required, which could unfavorably affect future operating results.
In October 2023, the Company received a payroll tax credit under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) of $0.7 million. This credit was previously recorded as a receivable.. We expect that our cash on hand and cash flows from operations will be sufficient to meet our requirements at least through the next twelve months.
Our inventory position was $2.8 million at December 31, 2024, which reflects a decrease of $0.7 million from December 31, 2023. We expect that our cash on hand and cash flows from operations will be sufficient to meet our requirements at least through the next twelve months.
Operating Expenses Our selling, general and administrative, research and development and depreciation and amortization costs for the years ended December 31, 2023, and 2022 are as follows: Years Ended December 31, Change from Prior Year 2023 2022 $ % Selling, general and administrative $ 20,365,617 $ 20,606,507 $ (240,890 ) (1.2%) Research and development 5,742,254 4,956,215 786,039 15.9% Depreciation and amortization 870,390 587,137 283,253 48.2% Total Operating Expense $ 26,978,261 $ 26,149,859 $ 828,402 3.2% Selling, general and administrative expenses decreased $0.2 million, or 1.2%, during the year ended December 31, 2023 compared with the same period last year, primarily due to a $0.4 million decrease in compensation and benefits related to executive management restructuring costs that took place in the prior year, and a decrease in stock compensation costs of $0.2 million, partially offset by $0.4 million increase in compensation costs related to business development and medical affairs new hires.
Operating Expenses Our selling, general and administrative, research and development and depreciation and amortization expenses for the years ended December 31, 2024, and 2023 are as follows: Years Ended December 31, Change from Prior Year 2024 2023 $ % Selling, general and administrative $ 21,631,674 $ 20,365,617 $ 1,266,057 6.2% Research and development 5,257,942 5,742,254 (484,312 ) (8.4)% Depreciation and amortization 888,473 870,390 18,083 2.1% Total Operating Expense $ 27,778,089 $ 26,978,261 $ 799,828 3.0% Selling, general and administrative expenses increased $1.3 million, or 6.2%, to $21.6 million, during the year ended December 31, 2024 compared with the same period last year, primarily due to a $1.7 million increase in compensation and benefits-related bonus accrual and sales commission related to year over year company performance, partially offset by lower recruiting expenses and liability insurance costs.
Net cash used in investing activities of $2.8 million for the year ended December 31, 2022, was for capital expenditures for manufacturing space, research and development laboratories and office equipment for our corporate office and manufacturing facilities move.
Net cash used in investing activities of $0.8 million for the year ended December 31, 2023, was for capital expenditures for research and development and manufacturing equipment Financing Activities Net cash used in financing activities of $0.2 million for the year ended December 31, 2024 was primarily due to payments on our note payable for insurance premium financing, partially offset by new borrowings for a subsequent insurance premium financing agreement.
Offsetting these were primarily non-cash charges for stock-based compensation of $3.1 million, and depreciation and amortization of $0.6 million. - 27 - Table of Contents Investing Activities Net cash used in investing activities of $0.8 million for the year ended December 31, 2023, was for capital expenditures for research and development and manufacturing equipment.
Further contributing to this change were the establishment of an allowance for non-realization of deferred tax assets of $4.0 million, stock-based compensation of $2.8 million, depreciation and amortization of $0.9 million, and a loss on disposal of fixed assets of $0.1 million. - 28 - Table of Contents Investing Activities Net cash used in investing activities of $1.3 million for the year ended December 31, 2024, was driven by capital expenditures for manufacturing equipment related to our production line for our next generation consumables.
Operating expenses for the year ended December 31, 2023, were $27 million, up from $26.1 million for the same period last year, the increase was driven primarily by research and development and depreciation, partially offset by selling, general and administrative expenses.
Operating expenses for the year ended December 31, 2024, were $27.8 million, up from $27.0 million for the same period last year.
Net cash used in operating activities of $5.4 million for the year ended December 31, 2022 was primarily due to the net loss of $8.7 million, working capital changes which included an increase in accounts payable and other liabilities of $1.3 million, an increase in accrued payroll of $0.4 million increase in inventory of $0.3 million, an increase in accrued expenses of $0.2 million.
This net cash usage was primarily due to the net loss of $6.1 million, offset by a $2.6 million increase in accrued expenses for 2024 bonuses and payroll, $0.7 million in lower inventories, and $0.7 million in increased accounts payable, partially offset by a higher accounts receivable balance of $1.7 million, and $0.2 million of changes in other liabilities, prepaids, and other assets.
Research and development expenses increased $0.8 million, or 15.9% during the year ended December 31, 2023 compared with the same period last year, primarily due to $0.5 million in compensation and benefits, $0.1 million in stock compensation and $0.1 million in expenses, to support acceleration and insourcing of our innovation efforts.
Research and development expenses decreased $0.5 million, or 8.4%, to $5.3 million, during the year ended December 31, 2024 compared with the same period last year, primarily due to lower overall project spend driven by timing, partially offset by CTO severance costs and an increase in compensation and benefits-related bonus accrual related to year over year company performance.
Removed
The Company completed its transition of substantially all finished goods manufacturing of its needle and tubing sets to Command Medical Products, a third-party contract manufacturing organization which also provides subassemblies for all of the Company’s products, in the second quarter of 2023.
Added
Depreciation and amortization expense remained flat at $0.9 million during the year ended December 31, 2024, as compared to $0.9 million during the same period in 2023, primarily driven by capital spending related to projects.
Removed
The Company entered into a lease commencing March 1, 2022 for a new corporate headquarters and manufacturing facility located in Mahwah, NJ.
Added
In the prior year we established an allowance for the non-realization of deferred tax assets which reversed a tax benefit of $4.0 million, partially offsetting in the current year was lower interest income of $0.1 million driven by a lower cash balance coupled with lower yields.
Removed
During the quarter ended June 30, 2022, the Company completed the first phase of the move, the headquarters and office staff to the new location, and completed the move of its manufacturing facility at the end of the first quarter 2023.
Added
LIQUIDITY AND CAPITAL RESOURCES Our principal source of liquidity is our cash on hand of $9.6 million as of December 31, 2024. Our principal source of operating cash inflows is from sales of our products in our core business, NRE services, and clinical trial products to our customers.
Removed
Depreciation and amortization expense increased by 48.2% to $0.9 million in the year ended December 31, 2023 compared with $0.6 million in the year ended December 31, 2022 resulting from prior year investments in our Mahwah, NJ facility which includes our corporate office, in-house manufacturing, and research and development labs and the associated annualized depreciation impact.
Added
In addition, we had payments for taxes related to net share settlement of equity awards of $0.1 million.
Removed
Our principal source of operating cash inflows is from sales of our products and NRE services to customers. Our principal cash outflows relate to the purchase and production of inventory, funding of research and development, and selling, general and administrative expenses.
Added
ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED Refer to “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K.
Removed
Further contributing were deferred tax assets of $2.0 million increased for book to tax differences related to stock option expense.
Removed
The $0.3 million provided by financing activities for the year ended December 31, 2022, was from $0.4 million in option exercises offset by $0.08 million in net borrowings on our indebtedness for a note payable for insurance premium financing and $0.05 million in equipment financing.
Removed
Subsequent Event In March 2024, the Company received an assessment report from its notified body in the EU, BSI, stating that, following BSI’s review of technical documentation submitted by the Company in connection with a prior audit nonconformance, a recommendation for continued certification cannot be made. The Company has filed an appeal to this determination.
Removed
If the Company’s appeal is denied, then its EU certification may be suspended with respect to some or all of the Company’s products as determined by a BSI review panel. Management believes that the Company’s appeal will be successful in limiting the scope of the suspension to have minimal impact on the Company’s revenues, if any.

Other KRMD 10-K year-over-year comparisons