Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
You should read the following
discussion and analysis together with our audited consolidated financial statements and the accompanying notes contained elsewhere in
this report. This discussion contains forward-looking statements, within the meaning of Section 27A of Securities Act, Section 21E of
the Exchange Act, and the Private Securities Litigation Reform Act of 1995, including statements regarding our expected financial
condition, business and financing plans. These statements involve risks and uncertainties. Our actual results could differ materially
from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed
below and elsewhere in this Annual Report on Form 10-K, particularly under the heading “Risk Factors.”
Overview
The Company is a biopharmaceutical
company focused on developing and commercializing therapeutic products for life-threatening diseases and conditions.
Our primary focus is commercializing
our lead product, DefenCath® (taurolidine and heparin), in the U.S. The name DefenCath is the U.S. proprietary name approved by the
U.S. Food and Drug Administration (“FDA”). CorMedix launched the product commercially in April 2024 in the inpatient setting
and July 2024 in the outpatient hemodialysis setting.
DefenCath
is an FDA approved antimicrobial CLS (a formulation of taurolidine 13.5 mg/mL, and heparin 1000 USP Units/mL) indicated to reduce the
incidence of CRBSI in adult patients with kidney failure receiving chronic hemodialysis through a CVC. It is indicated for use in a limited
and specific population of patients. CRBSIs, a clinically confirmed subset of the epidemiological surveillance term, central line associated
bloodstream infection (“CLABSI”), can lead to treatment delays and increased costs to the healthcare system when they occur
due to extended and often repeat hospitalizations, need for IV antibiotic treatment, long-term anticoagulation therapy, removal/replacement
of the CVC, related treatment costs, as well as increased mortality. We believe DefenCath can address a significant unmet medical need.
Following the submission of
a duplicate NTAP application to CMS, CMS issued the IPPS 2024 proposed rule that includes a NTAP per hospital stay for DefenCath. This
NTAP represents reimbursement to inpatient facilities of 75% of the wholesaler acquisition cost (“WAC”) price per 3 mL vial,
and an average utilization of 19.5 vials per hospital stay. The final IPPS rule amended as of October 1, 2024 to reflect the current WAC
of $249.99 per 3ml vial resulting in a potential maximum NTAP of $3,656.10.
On November 15, 2023, we announced
that the FDA approved the NDA for DefenCath to reduce the incidence of CRBSI in adult patients with kidney failure receiving chronic hemodialysis
through a CVC. DefenCath is the first and only FDA-approved antimicrobial CLS in the U.S. and was shown to reduce the risk of CRBSI by
up to 71% in a Phase 3 clinical study. As a result of the November 2023 FDA approval, CorMedix launched the product commercially in April
2024 in the inpatient setting and July 2024 in the outpatient hemodialysis setting.
DefenCath is listed in the
Orange Book as having NCE exclusivity (5 years) expiring on November 15, 2028, and the GAIN exclusivity extension of the NCE exclusivity
(an additional 5 years) expiring on November 15, 2033. The GAIN exclusivity extension of 5 years is the result of the January 2015 designation
of DefenCath as a QIDP.
On January 25, 2024, CMS determined
that DefenCath should be classified as a renal dialysis service that is subject to the Medicare ESRD PPS. The ESRD PPS provides bundled
payment for renal dialysis services, but also affords a transitional drug add-on payment adjustment, or TDAPA, which provides temporary,
additional payments for certain new drugs and biologicals. We submitted an application for TDAPA on January 26, 2024, and received confirmation
that our application was approved on April 18, 2024 for a July 1, 2024 implementation. We also submitted a HCPCS application for a J-code
to CMS on December 8, 2023, for DefenCath, which is relevant to billing and the TDAPA application. The HCPCS J-code for DefenCath was
published by CMS on April 2, 2024. TDAPA reimbursement is calculated based on 100 percent ASP (or 100 percent of wholesale acquisition
price or manufacturers’ list price, respectively, if such data is unavailable). TDAPA and post-TDAPA add-on payment adjustments
for DefenCath apply for five years (with such add-on payments applying to all ESRD PPS payments for years three through five). CMS confirmed
a July 1, 2024 implementation date for HCPCS and TDAPA.
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We announced on June 6, 2024
that the CMS has determined that DefenCath qualified for pass-through status under the hospital Out-Patient Prospective Payment System
(“OPPS”). Pass-through status provides for separate payment under Medicare Part B for the utilization of DefenCath in the
outpatient ambulatory setting for a period of at least two years, and up to a maximum of three years. While vascular access for hemodialysis
can be initiated in an inpatient setting, ambulatory surgical centers or vascular access centers offer a less-invasive, outpatient-based
alternative for patients. We estimate that up to 100,000 HD-CVC placements occur each year, and pass-through status offers providers
a separate reimbursement mechanism in this setting of care administration of DefenCath.
Subsequent to the launch
of DefenCath in April 2024, we announced U.S.-based multi-year commercial supply agreements consisting of a large and several mid-sized
dialysis organizations. Each provider has customized an implementation plan to provide access to patients based on a variety of clinical
and other factors. We believe the currently contracted customer base represents roughly 60% of the outpatient dialysis centers in the
U.S.
Financial Operations Overview
Revenue
Our ability to continue to generate revenue and become profitable depends
on our ability to continue to successfully commercialize DefenCath and achieve gross profits from DefenCath sales that are greater than
our ongoing operating costs. If we fail to continue to successfully commercialize DefenCath, or any other product lines we advance in
a timely manner or obtain regulatory approval for them, our ability to generate future revenue, and our results of operations and financial
position, could be adversely affected. Prior to the commercial launch of DefenCath, we have funded our operations primarily through equity
financings.
Cost of Revenues
Cost of revenues include
direct and indirect costs related to the manufacturing and distribution of DefenCath, including product cost, packaging services, freight,
amortization of the license intangible asset and an allocation of overhead costs that are primarily fixed such as salaries, benefits
and insurance.
Research and Development Expense
Research and development,
or R&D, expense consists of: (i) internal costs associated with our development activities; (ii) payments we make to third-party
contract research organizations, contract manufacturers, investigative sites, and consultants; (iii) technology and intellectual property
license costs; (iv) manufacturing development costs; (v) personnel related expenses, including salaries, stock–based compensation
expense, benefits, travel and related costs for the personnel involved in drug development; (vi) activities relating to regulatory filings
and pre-clinical studies and clinical trials; and (vii) manufacturing-related costs, including previously expensed pre-NDA approval inventory
amounting to approximately $6,400,000, through November 15, 2023. All R&D is expensed as incurred.
The process of conducting
pre-clinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming. The probability of success
for each product line and clinical trial may be affected by a variety of factors, including, among others, the quality of the product
line’s early clinical data, investment in the program, competition, manufacturing capabilities and commercial viability. As a result
of the uncertainties associated with clinical trial enrollments and the risks inherent in the development process, we are unable to determine
the duration and completion costs of future clinical stages of our product lines or when, or to what extent, we will generate revenues
from the commercialization and sale of any of our future product lines.
Development timelines, probability
of success and development costs vary widely. We are currently focused on the commercialization of DefenCath in the U.S.
Selling and Marketing Expense
Selling and marketing, or
S&M, expense includes the cost of salaries and related costs for personnel in sales and marketing, brand building, advocacy, market
research and consulting costs. Selling and marketing expenses are expensed as incurred.
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General and Administrative Expense
General and administrative,
or G&A, expenses consist principally of salaries and related costs for personnel in executive, finance and administrative functions
including payroll taxes and health insurance, stock-based compensation and travel expenses. Other general and administrative expenses
include facility-related costs, insurance and professional fees for legal, patent review, consulting, and accounting services. General
and administrative expenses are expensed as incurred.
Foreign Currency Exchange Transaction Gain
(Loss)
Foreign currency exchange
transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than our functional currency and is
reported in the consolidated statement of operations as a separate line item within other income (expense). The intercompany loans outstanding
between our New Jersey-based company and our subsidiaries will not be repaid and the nature of the funding advanced was of a long-term
investment nature. As such, unrealized foreign exchange movements related to long-term intercompany loans are recorded in other comprehensive
income (loss).
Interest Income
Interest income consists
of interest earned on our cash and cash equivalents and short-term investments.
Interest Expense
Interest expense consists
of interest incurred on financing of expenditures.
Results of Operations
Comparison of the Years Ended December 31, 2024 and 2023
The following is a tabular
presentation of our consolidated operating results for the years ended December 31, 2024 and 2023 (in thousands):
2024 2023 % of Change Increase (Decrease)
Cost of revenue (3,190 ) - -
Operating Expenses:
Foreign exchange transaction loss (31 ) (29 ) 6 %
Interest expense (37 ) (34 ) 6 %
Other income 520 - -
Tax benefit 1,395 - -
Other comprehensive (loss) income (3 ) 11 (130 )%
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Revenue. Revenue for
the year ended December 31, 2024 was $43.5 million as compared to $0 for the same period in 2023. Revenue consists of sales of DefenCath,
which was approved by the FDA in November 2023 and launched in the U.S in April 2024 (inpatient setting) and July 2024 (outpatient setting)
and reflects the shipment of DefenCath to direct customers and specialty distributors, net of estimates for applicable variable consideration,
which consists primarily of distribution service fees, prompt pay and other discounts, product returns, chargebacks, rebates and volume
incentive rebates.
Cost of Revenue. Cost
of revenue for the year ended December 31, 2024 was $3.2 million as compared to $0 for the same period in 2023. Cost of revenues include
direct and indirect costs related to the manufacturing and distribution of DefenCath, including product cost, packaging services, freight,
amortization of the license intangible asset and an allocation of overhead costs that are primarily fixed such as salaries, benefits
and insurance. Direct costs of product sales during the year ended December 31, 2024 were minimal as DefenCath sold to date represented
validation lot units previously expensed as R&D. This only marginally benefited the total gross margin in 2024 and the majority of
validation batch product has been sold as of December 31, 2024. Indirect costs of approximately $3.0 million for the year ended December
31, 2024, represent the proportion of supply chain and quality personnel, benefits and insurance expenses representing excess capacity
in the production of sellable product. As unit sales increase, a greater proportion of these costs will be capitalized as a component
of inventory and expensed at the point-of-sale.
Research and Development
Expense. R&D expense for the year ended December 31, 2024 was $3.9 million, a decrease of $9.2 million, or 70%, from $13.2 million
for the same period in 2023. The decrease was driven by the approval of DefenCath. As a result of the transition to commercial operations,
costs related to medical affairs and certain other personnel that supported R&D efforts prior to the FDA approval of DefenCath of
approximately $6.9 million began supporting non research and development operations and have been recognized in cost of revenue or general
and administrative expense during the year ended December 31, 2024 Also, in 2023, prior to FDA approval, there were $1.5 million of costs
recognized in R&D related to the manufacturing of DefenCath validation batches. These types of costs are now capitalized in inventory
as DefenCath is a commercialized product.
Selling and Marketing Expense.
S&M expense was $28.7 million for the year ended December 31, 2024, an increase of $10.6 million, or 59%, from $18.1 million for
the same period in 2023. The increase was due primarily to increased marketing efforts and new personnel hired in late 2023 or throughout
2024, inclusive of our sales force and support for the commercial launch of DefenCath during 2024. Subsequent to December 31, 2024, we
severed our internal sales force, future costs associated with the Syneos sales force are expected to be similar to those recognized internally
in 2024.
General and Administrative
Expense. G&A expense for the year ended December 31, 2024 was $30.0 million, an increase of $12.3 million, or 69%, from $17.7
million for the same period in 2023. The increase was driven by the approval of DefenCath. As a result of the transition to commercial
operations, certain medical affairs, other personnel and consulting expenses of approximately $6.0 million previously classified in R&D
are included in G&A expense during the year ended December 31, 2024. Additional G&A personnel were also hired throughout 2024
in anticipation of and to support commercial operations, representing an increases of $2.8 million as well as increases in legal and
compliance of $1.7 million and consulting fees of $0.9 million.
Interest Income. Interest
income for the year ended December 31, 2024 was $2.6 million, a decrease of $0.1 million, or 4%, from $2.7 million for the same period
in 2023, due to lower short-term investments during this period as compared to the same period last year.
Foreign Exchange Transaction
Income (Loss). Foreign exchange transaction income (losses) for the years ended December 31, 2024 and 2023 were due to the re-measuring
of transactions denominated in a currency other than our functional currency. Balances and changes were immaterial for all periods presented.
Other Income. Other
income relates to a settlement with a previously utilized vendor, occurring during the year ended December 31, 2024.
Interest Expense.
Interest expense pertains to certain liabilities we chose to finance. Balances and changes were immaterial for all periods presented.
Tax Benefit. Tax benefit
for the year ended December 31, 2024 was $1.4 million, due to the sale of our unused NJ State net operating losses for fiscal year 2023,
which were sold in fiscal year 2024, through the NJEDA Program. There was no tax benefit from the sale of unused net operating losses
for fiscal year 2023.
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Other Comprehensive (Loss)
Income. Unrealized foreign exchange movements related to long-term intercompany loans, the translation of the foreign affiliate financial
statements to U.S. dollars and unrealized movements related to short-term investment are recorded in other comprehensive (loss) income.
Other comprehensive income (loss) is considered immaterial for all periods presented.
Quarterly Results of Operations (Unaudited):
The following table is the
summary of the Company’s unaudited quarterly condensed consolidated results of operations for the year ended December 31, 2024
(amounts in thousands, except for per share amounts):
Fourth Quarter Third Quarter Second Quarter First Quarter
* Diluted earnings per share are not presented in this table
Liquidity and Capital Resources
Sources of Liquidity
As a result of our R&D,
S&M and G&A expenditures and the lack of substantial product sales revenue, our ongoing operations have not been profitable on
an annual basis since our inception. We achieved profitability in the fourth quarter of 2024, driven by product sales of DefenCath. During
the year ended December 31, 2024, we received net proceeds of $18.9 million from the issuance of 3,049,878 shares of common stock under
our at-the-market-issuance sales agreement, or ATM program, as compared to $12.9 million net proceeds in 2023 from the issuance of 2,977,637
shares of common stock. Also, in 2023, we received net proceeds of $42.9 million from the issuance of 9,000,093 shares of common stock
and pre-funded warrants to purchase 2,500,625 shares of common stock in connection with a public offering. We may continue to be reliant
on external sources of cash until we are able to generate sufficient operating cash flow to fund operations.
In March 2024, we received
$1.4 million, net of expenses, from the sale of our unused New Jersey net operating losses (“NOL”), that were eligible for
sale under the State of New Jersey’s Economic Development Authority’s New Jersey Technology Business Tax Certificate Transfer
program (“NJEDA Program”). The NJEDA Program allowed us to sell our available fiscal 2023 NJ state NOL tax benefits in the
amount of approximately $1.5 million.
Net Cash Used in Operating Activities
Net cash used in operating
activities for the year ended December 31, 2024 was $50.6 million as compared to $38.4 million in 2023, an increase in net cash use of
$12.2 million. The increase in cash use is primarily driven by an increase in trade receivables of $51.8 million and inventories of $3.4
million offset by a net increase in the change of accrued expenses and accounts payable of $15.4 million, primarily attributable to the
gross-to-net-deductions accruals and decreased net loss of $28.4 million.
Net Cash Provided by (Used in) Investing
Activities
Net cash provided by investing
activities for the year ended December 31, 2024, was $21.2 million as compared to $17.1 million of net cash used in investing activities
for the same period in 2023. The net cash provided during the year ended December 31, 2024, was mainly driven by maturing short-term
investments used to help fund operations, and lower purchases of short-term investments in 2024.
Net Cash Provided by Financing Activities
Net cash provided by financing
activities for the year ended December 31, 2024, was $26.3 million as compared to $55.9 million for the same period in 2023, a decrease
of $29.6 million. The decrease was mainly attributable to the net proceeds of $42.9 million from a public offering completed during the
year ended December 31, 2023, offset by increases in proceeds from the exercise of stock options of $7.4 million, and increased ATM net
proceeds of $6.0 million during the year ended December 31, 2024.
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Funding Requirements and Liquidity
Our total cash, cash equivalents
and short-term investments as of December 31, 2024, was $51.7 million, excluding restricted cash of $0.1 million, compared with $76.0
million for the year ended December 31, 2023, excluding restricted cash of $0.2 million. As of December 31, 2024, $30.2 million of the
Company’s common stock remains available for potential sale under the ATM program. Additionally, we have $100.0 million of remaining
capacity available under our 2024 Shelf Registration Statement for the issuance of Company securities.
We expect to continue to
fund operations from cash collections from accounts receivable, plus cash, cash equivalents and short-term investments and through capital
raising sources, which may be dilutive to existing stockholders. In May 2024, we implemented an ATM program, which may be utilized to
support our ongoing funding requirements. We may seek to sell additional equity or debt securities through one or more discrete transactions,
or enter into a strategic alliance arrangement, but can provide no assurances that any such financing or strategic alliance arrangement
will be available on acceptable terms, or at all. Moreover, the incurrence of indebtedness would result in increased fixed obligations
and could contain covenants that would restrict our operations. Raising additional funds through strategic alliance arrangements with
third parties may require significant time to complete and could force us to relinquish valuable rights to our technologies, future revenue
streams, research programs or product candidates, or to grant licenses on terms that may not be favorable to us or our stockholders.
Our actual cash requirements
may vary materially from those now planned due to a number of factors, including any material change in commercial operations pertaining
to DefenCath or the focus and direction of our research and development programs, any acquisition or pursuit of development of new product
candidates, competitive and technical advances, the costs of commercializing any of our product candidates, and costs of filing, prosecuting,
defending and enforcing any patent claims and any other intellectual property rights. Because our business has not generated consistent
and sustained positive operating cash flow, we may need to raise additional capital in order to continue to fund our research and development
activities, as well as to fund operations generally and we can provide no assurances that financing or strategic relationships will be
available on acceptable terms, or at all, if additional funds are needed. If we are unable to raise additional funds when needed, we
may be forced to slow or discontinue our commercial operations pertaining to DefenCath. We may also be required to delay, scale back
or eliminate some or all of our anticipated research and development programs. Each of these alternatives would likely have a material
adverse effect on our business.
We currently estimate that
as of December 31, 2024, we have sufficient cash, cash equivalents and short-term investments to fund operations for at least twelve months
from the issuance of these financial statements.
Contractual Obligations
We entered into a seven-year
operating lease agreement in March 2020 for an office space at 300 Connell Drive, Berkeley Heights, New Jersey 07922. The lease agreement,
with a monthly average cost of approximately $17,000, commenced on September 16, 2020.
In December 2024, we entered
into a three-year agreement with Syneos Health Commercial Services, LLC (“Syneos”) where Syneos will provide a dedicated
inpatient field sales force of sales that will exclusively promote DefenCath to hospitals and health systems. We are obligated to an
up-front implementation and a fixed monthly fee. Upon the twelve-month anniversary of the deployment date, expected to be in the
second quarter of 2025, the agreement is cancelable provided 60 days written notice. As of December 31, 2024, the minimum amount
committed under this agreement totals $9.6 million.
In 2008, the Company entered
into a License and Assignment Agreement (the ND License Agreement) with ND Partners, LLP (NDP). Pursuant to the ND License Agreement,
NDP granted the Company exclusive, worldwide licenses for certain antimicrobial catheter lock solutions, processes for treating and inhibiting
infections, a biocidal lock system and a taurolidine delivery apparatus, and the corresponding United States and foreign patents and
applications (the NDP Technology). During the year ended December 31, 2024, net sales milestones in the amount of $2 million were achieved
and are accrued in our consolidated balance sheet. The Company anticipates payment will be due in 2025 in accordance with the agreement
terms at the end of the twelve-month period post attainment.
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Critical Accounting Estimates
We prepare our consolidated
financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates
that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates,
as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences
between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates
on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations
for the future based on available information. We evaluate these estimates on an ongoing basis. We consider an accounting estimate to
be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting
estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates
that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of
Directors. In addition, there are other items within our financial statements that require estimation, but are not deemed critical as
defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.
● Litigation contingencies are assessed and judgments are made
to determine if an unfavorable outcome is considered probable or reasonably possible, and when considered reasonably possible but not
probable, the contingency is disclosed along with an estimate of the possible loss or range of loss. If a liability is possible or probable,
but no reasonable estimation of loss can be made, we will disclose the nature of the contingency and state that such an estimate cannot
be made. Such estimates and judgements are based on information obtained through the discovery process, court filings and follow on filings
by the plaintiffs as well as the stage of litigation. There have been no changes in management’s estimates in 2024.
● We account for product
revenue from the sale of our product, DefenCath, in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”)
which entails our estimates and judgments primarily in determining the transaction price and more specifically as it relates to variable
consideration associated with the contracts. Our customers are located in the United States and consist primarily of outpatient service
providers and to a lesser extent specialty wholesale distributors. Variable consideration pertaining to an allowance for product returns
of short-dated or expired product requires estimation as our customers may have differing utilization, storage and distribution methods
and we do not yet have significant historical trends. The Company’s product accrual takes into consideration estimates of product
held by its customers, the distribution channel, the shelf life of the product held by customers, as well as when the product is eligible
for return based on our returns good policy. At December 31, 2024, the Company had $0.7 million in accrued returns allowance. We have
established the estimate for returns based on specific customer circumstances, industry best practices and management experiences. Once
return windows open and we experience actual returns we will further refine our estimate methods.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
N/A.
Item 8. Financial Statements and Supplementary Data
The information required
by this Item 8 is included in Part IV, Item 15, and is incorporated by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
Item 9A. Controls and Procedures
As of the end of the period
covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) (the “Exchange Act”). Based on the
foregoing evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures
are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is
accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosures.
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Changes in Internal Control Over Financial
Reporting
There were no changes in
our internal control over financial reporting during our year ended December 31, 2024, or in other factors that could significantly affect
these controls, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Controls Over Financial
Reporting
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal
control over financial reporting. As defined by the Securities and Exchange Commission, internal control over financial reporting is
a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board
of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles.
Our internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our
assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In connection with the preparation
of our annual consolidated financial statements, management, including, our Principal Executive and Financial Officer, has undertaken
an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on the criterial
established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). Management’s assessment included an evaluation of the design of our internal control over financial
reporting and testing of the operational effectiveness of those controls.
Based on this evaluation,
management has concluded that our internal control over financial reporting was effective as of December 31, 2024.
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Item 9B. Other Information
Rule 10b5-1 Plans
During the three months ended December 31, 2024,
no director or officer of the Company (as defined in Rule 16a-1(f) under the Exchange Act) informed us of the adoption or termination of
a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item
408 of SEC Regulation S-K.
2025 Annual Meeting of Shareholders
We currently plan to hold our 2025 Annual Meeting
of Shareholders (the “2025 Annual Meeting”) on June 24, 2025. The time and location of the 2025 Annual Meeting, and the matters
to be considered, will be as set forth in our definitive proxy statement for the 2025 Annual Meeting to be filed with the SEC.
Because the scheduled date of
the 2025 Annual Meeting is more than 30 days from the anniversary of the Company’s 2024 Annual Meeting of Stockholders, prior disclosed
deadlines regarding the submission of stockholder proposals pursuant to Rule 14a-8 (“Rule 14a-8”) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), for the 2025 Annual Meeting are no longer applicable. The Company is hereby
providing notice of certain revised deadlines for the submission of stockholder proposals in connection with the 2025 Annual Meeting.
In order for a stockholder proposal, submitted pursuant to Rule 14a-8, to be considered timely for inclusion in the Company’s proxy
statement and form of proxy for the 2025 Annual Meeting, such proposal must be received by the Company by April 8, 2025, which the Company
determined to be a reasonable time before the Company plans to begin printing and mailing its proxy materials. Therefore, in order for
a stockholder to submit a proposal for inclusion in the Company’s proxy materials for the 2025 Annual Meeting, the stockholder must
comply with the requirements set forth in Rule 14a-8, including with respect to the subject matter of the proposal, and must deliver the
proposal and all required documentation to the Company no later than April 8, 2025. The public announcement of an adjournment or postponement
of the date of the 2025 Annual Meeting will not commence a new time period (or extend any time period) for submitting a proposal pursuant
to Rule 14a-8.
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers, and Corporate Governance
The information required
by this Item will be included in our Proxy Statement, which will be filed within 120 days after the close of the 2024 fiscal year, or
an amendment to this Annual Report, and is hereby incorporated by reference.
Code of Ethics
We
have adopted a written Code of Conduct and Ethics that applies to our directors, executive officers and all employees. We intend to disclose
any amendments to, or waivers from, our code of ethics and business conduct that are required to be publicly disclosed pursuant to rules
of the SEC by filing such amendment or waiver with the SEC. This code of ethics and business conduct can be found in the “Investors
- Corporate Governance” section of our website, www.cormedix.com.
Insider Trading Policy
We
have adopted insider trading and 10b5-1 trading plan policies and procedures applicable to our directors, officers, employees,
and other covered persons, and have implemented processes for the company, that we believe are reasonably designed to promote compliance
with insider trading laws, rules and regulations, and the Nasdaq Stock Market LLC listing standards. Our insider trading policy and our
10b5-1 trading plan policy are filed as Exhibit 19.1 to this Annual Report on Form 10-K.
Item 11. Executive Compensation
The information required
by this Item will be included in our Proxy Statement, which will be filed within 120 days after the close of the 2024 fiscal year, or
an amendment to this Annual Report, and is hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholders Matters
The information required
by this Item will be included in our Proxy Statement, which will be filed within 120 days after the close of the 2024 fiscal year, or
an amendment to this Annual Report, and is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions and Director
Independence
The information required
by this Item will be included in our Proxy Statement, which will be filed within 120 days after the close of the 2024 fiscal year, or
an amendment to this Annual Report, and is hereby incorporated by reference.
Item 14. Principal Accountant Fees and Services
The information required
by this Item will be included in our Proxy Statement, which will be filed within 120 days after the close of the 2024 fiscal year, or
an amendment to this Annual Report, and is hereby incorporated by reference.
41
PART IV
Item 15. Exhibits, Financial Statement Schedules
1. Financial Statements. The following
consolidated financial statements of CorMedix Inc. are filed as part of this Annual Report on Form 10-K:
Report of Independent Registered Public Accounting Firm (PCAOB ID # 688) F-2
Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3
Consolidated Statements of Cash Flows Years Ended December 31, 2024 and 2023 F-6
Notes to Consolidated Financial Statements F-7
2. Financial Statement Schedules. The Financial
Statement Schedules have been omitted because of the absence of conditions under which they are required or because the required information,
where material, is shown in the financial statements or notes thereto.
3. Exhibit Index. The following is a list of exhibits filed
as part of this Annual Report on Form 10-K:
42
43
19.1 Insider Trading Policies and Procedures X
23.1 Consent of Independent Registered Public Accounting Firm X
101.INS Inline XBRL Instance Document X
101.SCH Inline XBRL Taxonomy Extension Schema Document. X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X
*** These certifications are furnished.
+ Indicates management contract or compensation plan.
Item 16. Form 10-K Summary
Not applicable.
44
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
CORMEDIX INC.
March 25, 2025 By: /s/ Joseph Todisco
Joseph Todisco
Chief Executive Officer
(Principal Executive Officer)
March 25, 2025 By: /s/ Matthew David
Matthew David
Chief Financial Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated:
Signature Title Date
/s/ Joseph Todisco Chief Executive Officer and Director March 25, 2025
Joseph Todisco (Principal Executive Officer)
Matthew David (Principal Financial and Accounting Officer)
/s/ Myron Kaplan Director and Chairman of the Board March 25, 2025
Myron Kaplan
/s/ Janet Dillione Director March 25, 2025
Janet Dillione
/s/ Gregory Duncan Director March 25, 2025
Gregory Duncan
/s/ Alan Dunton Director March 25, 2025
Alan Dunton
/s/ Steven Lefkowitz Director March 25, 2025
Steven Lefkowitz
/s/ Robert Stewart Director March 25, 2025
Robert Stewart
45
CORMEDIX INC. AND SUBSIDIARIES
FINANCIAL STATEMENTS
Financial Statements Index
Report of Independent Registered Public Accounting Firm (PCAOB ID # 688) F-2
Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3
Consolidated Statements of Cash Flows Years Ended December 31, 2024 and 2023 F-6
Notes to Consolidated Financial Statements F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and Board of Directors of
CorMedix Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of CorMedix Inc. (the “Company”) and Subsidiaries as of December 31, 2024 and 2023, the related consolidated
statements of operations and comprehensive income (loss), stockholders’ equity and cash flows for each of the two years in the period
ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, based
on our audits, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024,
in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is
a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the
audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion
on the critical audit matter or on the accounts or disclosures to which it relates.
Variable Consideration: Product Returns
Description of the
Matter
As discussed in Note
3 of the consolidated financial statements, the Company includes estimates of variable consideration in its transaction price at the
time control of the product transfers to the customer. The variable consideration includes an estimate for future product returns. The
Company permits returns for product that is within six months prior to or past the labeled expiration date. The Company’s product
return accrual takes into consideration estimates of product held by its customers, the distribution channel, the shelf life of the product
held by customers, as well as when the product is eligible for return based on the contractual terms. At December 31, 2024, the
Company had $0.7 million in accrued returns allowance.
Auditing the allowance
for sales returns was complex due to the significant estimation required in determining product held by customers and in the distribution
channel, as well as product that may not be sold to, or consumed by, the end user prior to the dates eligible for return under the contractual
terms. The allowance for sales returns is sensitive to the level of product and turnover at the customer and in the distribution channel,
which could exceed future end user demand and be subject to return.
How We Addressed the
Matter in Our Audit
We obtained an understanding
and evaluated the design of the Company's controls over the estimation for sales returns. In order to test the estimated sales return
reserve, we performed audit procedures that included, among others, reviewing sell-through information of the Company’s major customers.
We analyzed the estimated remaining inventory with selected customers and their distribution channel as compared to product sold to that
customer and forecasted sales to, or usage by, the end users giving consideration to the remaining shelf life of the product. Further,
for direct sales to outpatient dialysis centers, we reviewed the Company’s sales made to certain customers individual dialysis
center locations by month during both the reporting period and through the financial statement issuance date to evidence follow on orders
and utilization by those individual dialysis centers. We also performed direct management inquiries with Company sales and supply chain
department personnel, and reviewed key customer contract terms and their alignment with such reserve assumptions.
/s/ Marcum llp
Marcum llp
We have served as the Company’s auditor
since 2014.
Morristown, New Jersey
March 25, 2025
F-2
CorMedix
Inc. And Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, 2024 and 2023
December 31,
ASSETS
Current assets
License intangible asset, net 1,844,156 -
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Operating lease liabilities, net of current portion 349,091 517,013
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS’ EQUITY
The accompanying notes are integral part of these
consolidated financial statements.
F-3
CorMedix
Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)
Years Ended December 31, 2024 and 2023
December 31,
Revenue:
Operating Expenses:
Other Income (Expense):
Foreign exchange transaction loss (30,788 ) (28,994 )
Other Comprehensive Income (Loss):
Unrealized (loss) gain from investments (4,830 ) 9,683
Foreign currency translation gain 1,368 1,682
Total other comprehensive gain (loss) (3,462 ) 11,365
Net Loss Per Common Share – Basic and Diluted $ (0.30 ) $ (0.91 )
The accompanying notes are integral part of these
consolidated financial statements.
F-4
CORMEDIX INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY
Years Ended December 31, 2024 and 2023
Shares Amount Shares Amount Gain (Loss) Capital Deficit Equity
Cancelation of shares held in escrow (21,832 ) (22 ) - - - 22 - -
Other comprehensive loss - - - - (3,462 ) - - (3,462 )
The accompanying notes are integral part of these
consolidated financial statements.
F-5