| --- | --- | --- | --- | |-------|-----------------------------------------------------------|-------|-------| | | | | | | | | | | | | | | | | | Q2 2022 Earnings Call August 3, 2022 KORU Medical Systems | | | | | | | | 1 Forward-Looking Statements 2 This presentation contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 regarding our expectations for future performance, including but not limited to our future reve ...

Financial Performance - Total net sales for the three months ended June 30, 2022, were $6.5 million, an 18.4% increase from $5.5 million in the same period last year, driven by growth in all three business sources [94]. - Domestic core sales increased by 8.7% to $5.0 million, while international core sales rose by 10.7% to $951,485, and novel therapies sales surged by 746.6% to $598,352 [96]. - For the six months ended June 30, 2022, total net sales were $12.8 million, a 16.7% increase from $11.0 million in the prior year, with domestic core sales up by 10.9% [103]. - Novel therapies sales for the six months ended June 30, 2022, reached $954,204, a 765.0% increase compared to $110,311 in the same period last year [103]. Profitability and Loss - Gross profit for the three months ended June 30, 2022, was $3.3 million, representing 51.1% of net sales, down from 58.1% in the prior year due to accelerated amortization of manufacturing variances [97]. - The net loss for the three months ended June 30, 2022, was $2.9 million, a 159.8% increase from a net loss of $1.1 million in the same period last year [102]. - Gross profit for the six months ended June 30, 2022, was $6,968,478, an increase of $526,440 or 8.2% compared to the same period in 2021, with gross profit as a percentage of net sales decreasing to 54.5% from 58.8% [104]. - The net loss for the six months ended June 30, 2022, was $5,458,855, compared to a net loss of $2,400,687 in the same period last year, representing an increase of 127.4% [108]. Operating Expenses - Operating expenses for the same period increased by 52.8% to $6.8 million, primarily due to higher selling, general and administrative expenses and research and development costs [99]. - Selling, general and administrative expenses rose to $11,021,235, an increase of $1,942,461 or 21.4%, primarily due to $2 million in compensation and benefits for new hires [105]. - Research and development expenses increased by 237% to $1.3 million for the three months ended June 30, 2022, primarily due to higher consulting fees for product development [100]. - Research and development expenses surged to $2,452,086, a significant increase of $1,728,367 or 238.8%, driven by higher consulting fees and compensation [106]. Cash Flow and Liquidity - Cash on hand as of June 30, 2022, was $18.3 million, with expectations that cash flows from operations will be sufficient to meet requirements for at least the next 12 months [109][114]. - Net cash used in operating activities was $4,625,314 for the six months ended June 30, 2022, primarily due to the net loss and working capital changes [116]. - The company anticipates that equipment financing and inventory reduction will help reduce cash outflows by the end of fiscal year 2022 [110]. Inventory and Supply Chain - Inventory position was $6.8 million as of June 30, 2022, reflecting excess work in process inventory due to supply chain issues, with plans to reduce this by the end of 2022 [112]. - Supply chain issues and labor shortages resulted in estimated backorders of $0.3 million, which are expected to be cleared in the third quarter of 2022 [96]. Capital Expenditures - The company expects capital expenditures for manufacturing and leasehold improvements to be between $1.5 million and $2.0 million in 2022 [111]. - Net cash used in investing activities was $1,928,829 for the six months ended June 30, 2022, primarily for capital expenditures related to manufacturing and office equipment [118]. - The company is transitioning to a dual source of manufacturing to improve costs, with the implementation expected to be completed by the end of the first quarter of 2023 [92].

Financial Data and Key Metrics Changes - KORU Medical Systems reported net revenues of $6.2 million for Q1 2022, a 15% increase year-over-year, marking the second consecutive quarter of double-digit growth [9][19] - Gross profit increased by $400,000 or 12.1%, while gross margin decreased by 150 basis points to 58% due to higher manufacturing costs and the dilutive impact of increased NRE revenues [21][24] - Net loss for Q1 2022 was $2.5 million or negative $0.06 per diluted share, compared to a net loss of $1.3 million or negative $0.03 per diluted share in Q1 2021 [24] Business Line Data and Key Metrics Changes - Domestic core business revenues increased by 13.2% year-over-year, driven by higher pump and consumable sales [19] - Novel Therapies revenues increased to over $350,000 for Q1 2022, primarily due to pre-commercialization revenues from pharmaceutical pipeline deal expansions [9][19] - International core revenues decreased by 8.6% year-over-year due to changes in ordering patterns from smaller distributors [9][20] Market Data and Key Metrics Changes - The overall SCIg drug market growth increased from 1% in Q4 2021 to 7% in Q1 2022, indicating a market recovery as patients return to regular therapy [9] - The prefilled syringe market penetration increased to 5% from 3.4% in the previous quarter, driven by label expansions [14] Company Strategy and Development Direction - The company aims to increase core SCIg penetration and expand into Novel Therapies, with a strategic plan rolled out in December 2021 [10][11] - KORU Medical is expanding its international presence, recently signing a distribution agreement with iExpert in Germany, a significant SCIg market [11][16] - The company is focused on innovation and product development, with plans for a next-generation pump and improvements to the FreedomEdge platform [18][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the U.S. market and the potential for double-digit growth, driven by the rebound in patient diagnoses and therapy cadence [27][41] - The company tightened its revenue guidance for 2022 to $26.5 million to $27 million, reflecting confidence in market growth and pipeline expansion [27][28] - Management highlighted the importance of label expansions and international agreements as key drivers for future growth [29][41] Other Important Information - The company is on track to move to a new building location in Mahwah, New Jersey, on June 1, 2022, and has strengthened its executive team with the hiring of a new Chief Technology Officer [11][18] - KORU Medical ended the quarter with $22.6 million in cash, indicating strong capitalization to support strategic initiatives [25] Q&A Session Summary Question: Impact of prefilled syringes on overall subcu penetration - Management noted a 0.5 point improvement in overall subcu penetration and a 40% growth in pump orders, attributing part of this growth to the FreedomEdge pump cleared for prefilled syringes [33] Question: Updates on new pump developments and product pipeline - Management confirmed ongoing innovation efforts, including improvements to the FreedomEdge platform and plans for a next-generation pump [35] Question: Feedback from specialty pharmacies regarding prefilled syringes - Management reported positive feedback regarding the ease of use of prefilled syringes and ongoing efforts to train pharmacies and patients [36] Question: Future developments of the Novel Therapies pipeline and international progress - Management highlighted the importance of the U.S. market recovery, Novel Therapies pipeline expansion, and the new distribution agreement in Germany as key factors for achieving growth targets [40] Question: Contribution from the recent 510(k) approval for EMPAVELI - Management indicated that the approval is expected to significantly enhance the promotion of the FreedomEdge pump and contribute to revenue growth [42]

Financial Performance - Net sales for the three months ended March 31, 2022, were $6,244,330, an increase of 15% compared to $5,430,951 for the same period in 2021[13]. - Gross profit for the quarter was $3,622,305, representing a gross margin of approximately 58%[13]. - The net loss for the quarter was $2,537,514, compared to a net loss of $1,276,138 in the same quarter of 2021, reflecting a 98% increase in losses year-over-year[13]. - Basic and diluted net loss per share for Q1 2022 was $(0.06), compared to $(0.03) for Q1 2021, indicating a worsening loss per share[35]. - Net loss for the three months ended March 31, 2022, was $2.5 million, a 98.8% increase from a net loss of $1.3 million in the same period last year, representing 40.6% of net sales[92]. Expenses - Operating expenses increased to $6,748,820, up 24% from $5,445,143 in the prior year, primarily due to higher selling, general, and administrative expenses[13]. - Research and development expenses surged to $1,148,355, a significant increase from $336,841 in the prior year, indicating a focus on innovation[13]. - Selling, general and administrative expenses increased by 10.0% to $5.49 million, while research and development costs surged by 240.9% to $1.15 million[89]. - The company recognized stock-based compensation expense of $524,670 for the three months ended March 31, 2022, down from $1,086,681 in the same period of 2021, representing a decrease of approximately 51.7%[61]. Assets and Liabilities - Cash and cash equivalents at the end of the period were $22,577,247, down from $25,334,889 at the end of 2021, indicating a decrease of 11%[16]. - Total assets increased to $43,427,637 as of March 31, 2022, compared to $41,293,031 at the end of 2021, marking a growth of 5%[11]. - Total liabilities rose to $8,626,540, up from $4,791,976 at the end of 2021, reflecting an increase of 80%[11]. - Total property and equipment increased to $4,156,663 as of March 31, 2022, compared to $3,418,479 as of December 31, 2021, reflecting a growth of approximately 21.6%[53]. Sales Breakdown - Domestic sales accounted for 84.9% of total net sales in Q1 2022, increasing from 81.9% in Q1 2021, with domestic sales reaching $5,301,388[43]. - International sales decreased to $942,942 in Q1 2022 from $984,162 in Q1 2021, representing a decline of approximately 4.2%[43]. - Domestic core revenues increased by 13.2% to $4.99 million, while international core revenues decreased by 8.6% to $0.89 million[87]. Cash Flow and Financing - Net cash used in operating activities was $1.8 million for the three months ended March 31, 2022, primarily due to the net loss and deferred tax asset[99]. - Cash flows from financing activities resulted in a net outflow of $0.3 million for the three months ended March 31, 2022, primarily for financed insurance[102]. - The company anticipates potential future capital requirements may necessitate additional debt or equity financing post-December 31, 2023[97]. Future Outlook and Strategic Initiatives - The company is focused on expanding its market presence and enhancing its product offerings in the ambulatory infusion market[81]. - The company has entered into a lease for a new manufacturing facility and corporate headquarters, expected to be operational by June 2022[84]. - The company is implementing secondary sourcing for needle and tubing sets, expected to be completed by the second half of 2022[84]. - The company anticipates that the COVID-19 pandemic may continue to impact demand for its products and financial results due to fewer new prescriptions[82]. Stock Options and Compensation - As of March 31, 2022, there were 3,638,750 stock options outstanding under the 2015 Plan, with a weighted average exercise price of $3.49[61]. - The fair value of stock options granted during the three months ended March 31, 2022, was $2.45 per share, compared to $3.06 per share in the same period of 2021[59]. - The company has $5,861,444 of total unrecognized compensation cost related to non-vested share-based compensation arrangements, expected to be recognized over a weighted-average period of 46 months[64]. - The total fair value of shares vested as of March 31, 2022, was $2,815,943, compared to $1,230,434 as of March 31, 2021, showing an increase of approximately 128.5%[64]. Legal and Regulatory Matters - The company has not been involved in any material legal proceedings that could impact its financial condition[54]. - The company is assessing the impact of recently adopted accounting standards, including those related to income taxes and leases, which have not materially affected its financial statements[45][44].

Repro Med Systems, Inc. (NASDAQ:KRMD) Q4 2021 Earnings Conference Call March 2, 2022 4:30 PM ET Company Participants Greg Chodaczek - IR Linda Tharby - President and CEO Karen Fisher - CFO Conference Call Participants Alex Nowak - Craig Hallum Capital Operator Greetings. Welcome to KORU Medical Systems Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation . [Operator instructions] Please note, ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to __________ Commission file number 0-12305 REPRO MED SYSTEMS, INC. (Exact name of registrant as specified in its charter) NEW YORK 13-3044880 (State or other jur ...

Repro Med Systems, Inc. (NASDAQ:KRMD) Q3 2021 Earnings Conference Call November 10, 2021 4:30 PM ET Company Participants Greg Chodaczek - IR Linda Tharby - President and CEO Karen Fisher - CFO Conference Call Participants Trenton McCarthy - Craig-Hallum Capital Group Operator Good day. And welcome to KORU Medical Systems Third Quarter 2021 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator instructions]. Please note, this event is being recorded. I would now like ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2021 or [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________. Commission File Number: 0-12305 REPRO MED SYSTEMS, INC. (Exact name of registrant as specified in its charter) New York 13-30448 ...

Financial Data and Key Metrics Changes - Total net sales for Q2 2021 were $5.5 million, a decrease of 28% from $7.7 million in Q2 2020, primarily due to two one-time events totaling $2.3 million [20][21] - Sequential quarter net sales growth was 2%, driven by a 4% increase in domestic core and growth in novel therapy revenues [21] - Gross margin for Q2 2021 was 50.1%, a decrease of 5.6 percentage points, primarily due to lower volumes resulting in unfavorable absorption [22] - Net loss for Q2 2021 was $1.1 million, or negative $0.03 per diluted share, unchanged from the same period in 2020 [23] Business Line Data and Key Metrics Changes - The core domestic business in the subcutaneous Ig market saw high single-digit growth in Q2 2021, with total grams sold and end-user sales both increasing [10] - The novel therapy franchise experienced a small but encouraging increase in quarter-over-quarter revenues due to increased early-stage feasibility agreements with pharmaceutical companies [10] Market Data and Key Metrics Changes - The total addressable market for subcutaneous Ig in the U.S. is approximately $250 million, with less than 15% of patients currently utilizing subcutaneous therapy [12] - International sales increased by 1% from the prior year quarter [21] Company Strategy and Development Direction - The company’s strategy focuses on three areas: increasing penetration in core subcutaneous Ig therapy, expanding the pipeline of new drug candidates, and improving operational excellence and regulatory quality [12][14][15] - The company aims to convert over 85% of patients on IVIg to subcutaneous Ig, emphasizing the economic and patient outcome benefits of at-home therapy [13] - A targeted commercial plan is in place to increase market presence and share in the subcutaneous Ig market, with plans for a new distribution partnership in Germany expected by Q4 [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market recovery, modeling a similar impact in the second half of the year as seen in Q2, with expectations of about 6% year-to-date growth [30] - The company is optimistic about the future, highlighting a solid financial position and a strategic plan designed to increase top-line growth while expanding the pharmaceutical pipeline [18][26] Other Important Information - The company has identified a target pipeline of over 70 high-volume drugs, with the majority in phases 1 to 3 clinical trials [14] - The company is focused on innovation, operational excellence, and building quality and regulatory competencies to gain a competitive advantage [15][17] Q&A Session Summary Question: Impact of COVID on outlook for the remainder of the year - Management expects overall market performance to remain consistent with Q2, modeling about 6% growth year-to-date despite COVID uncertainties [30] Question: Progress on European initiatives - The company has made good progress in Germany, nearing a distribution agreement, with expected contributions by year-end [31] Question: Future gross margin expectations - Management anticipates gross margins to return to the 59% range by year-end, with further improvements expected in 2022 due to outsourcing agreements [32] Question: Details on signed agreements and market opportunities - Five signed agreements are expected to utilize KORU's pump in clinical trials, with a significant market opportunity anticipated from three seeking FDA approval by year-end [35][36] Question: KORU's influence on subcu-Ig market penetration - The company plans to work closely with specialty pharmacies to convert patients from IVIg to subcu-Ig, leveraging clinical data and cost benefits [38][39] Question: Features and improvements for the Freedom System - Management identified several minor improvements for the Freedom System focused on patient comfort and convenience, with plans for future innovations [40][41]

[General Information](index=1&type=section&id=General%20Information) [FORM 10-Q Filing Details](index=1&type=section&id=FORM%2010-Q%20Filing%20Details) Outlines the company's Form 10-Q filing, classification as a non-accelerated and smaller reporting company, and common stock outstanding - Filing Type: Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934[2](index=2&type=chunk) - Registrant Name: REPRO MED SYSTEMS, INC. (KORU Medical Systems)[3](index=3&type=chunk) Company Classification | Classification | Status | | :--------------- | :----- | | Large accelerated filer | [_] | | Accelerated filer | [_] | | Non-accelerated filer | [X] | | Smaller reporting company | [X] | | Emerging growth company | [_] | - Common stock outstanding as of August 11, 2021: **44,511,162 shares**[5](index=5&type=chunk) [PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited financial statements, showing decreased cash, increased net losses, and negative operating cash flow for the period ended June 30, 2021 [Balance Sheets](index=3&type=section&id=Balance%20Sheets%20as%20of%20June%2030%2C%202021%20(Unaudited)%20and%20December%2031%2C%202020) Summarizes unaudited balance sheets, highlighting changes in assets, liabilities, and equity between June 30, 2021, and December 31, 2020 Key Balance Sheet Figures (Unaudited) | Metric | June 30, 2021 ($) | December 31, 2020 ($) | Change ($) | Change (%) | | :-------------------------- | :-------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $26,538,478 | $27,315,286 | $(776,808) | (2.84%) | | Total Current Assets | $37,140,181 | $37,525,792 | $(385,611) | (1.03%) | | Total Assets | $40,598,900 | $39,918,934 | $679,966 | 1.70% | | Total Current Liabilities | $3,311,125 | $3,666,402 | $(355,277) | (9.69%) | | Total Liabilities | $3,335,158 | $3,761,955 | $(426,797) | (11.34%) | | Total Stockholders' Equity | $37,263,742 | $36,156,979 | $1,106,763 | 3.06% | [Statements of Operations](index=4&type=section&id=Statements%20of%20Operations%20(Unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202021%20and%202020) Summarizes unaudited statements of operations, highlighting net sales, gross profit, and net loss for the three and six months ended June 30, 2021 and 2020 Statements of Operations (Three Months Ended June 30) | Metric | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :-------------------------- | :----------- | :----------- | :--------- | :--------- | | Net Sales | $5,528,174 | $7,708,904 | $(2,180,730) | (28.29%) | | Gross Profit ($) | $3,210,184 | $4,909,880 | $(1,699,696) | (34.62%) | | Total Operating Expenses | $4,591,238 | $5,941,881 | $(1,350,643) | (22.73%) | | Net Operating Loss | $(1,381,054) | $(1,032,001) | $(349,053) | 33.82% | | Loss Before Income Taxes | $(1,369,865) | $(1,045,119) | $(324,746) | 31.07% | | Net Loss | $(1,124,549) | $(1,076,038) | $(48,511) | 4.51% | | Basic Net Loss Per Share | $(0.03) | $(0.03) | $0.00 | 0.00% | Statements of Operations (Six Months Ended June 30) | Metric | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :---------- | :---------- | | Net Sales | $10,959,125 | $14,038,913 | $(3,079,788) | (21.94%) | | Gross Profit ($) | $6,442,038 | $8,698,090 | $(2,256,052) | (25.94%) | | Total Operating Expenses | $10,036,381 | $9,147,268 | $889,113 | 9.72% | | Net Operating Loss | $(3,594,343) | $(449,178) | $(3,145,165) | 700.21% | | Loss Before Income Taxes | $(3,588,364) | $(453,763) | $(3,134,601) | 690.72% | | Net Loss | $(2,400,687) | $(626,610) | $(1,774,077) | 283.13% | | Basic Net Loss Per Share | $(0.05) | $(0.02) | $(0.03) | 150.00% | [Statements of Cash Flows](index=5&type=section&id=Statements%20of%20Cash%20Flows%20(Unaudited)%20for%20the%20six%20months%20ended%20June%2030%2C%202021%20and%202020) Summarizes unaudited statements of cash flows, detailing operating, investing, and financing activities for the six months ended June 30, 2021 and 2020 Statements of Cash Flows (Six Months Ended June 30) | Activity | 2021 ($) | 2020 ($) | Change ($) | | :------------------------------------------ | :------------- | :------------- | :---------- | | Net cash (used in)/provided by operating activities | $(2,776,150) | $2,707,549 | $(5,483,699) | | Net cash used in investing activities | $(167,136) | $(513,273) | $346,137 | | Net cash provided by financing activities | $2,166,478 | $30,064,144 | $(27,897,666) | | Net (decrease)/increase in cash and cash equivalents | $(776,808) | $32,258,420 | $(33,035,228) | | Cash and cash equivalents, end of period | $26,538,478 | $38,129,349 | $(11,590,871) | [Statements of Stockholders' Equity](index=6&type=section&id=Statements%20of%20Stockholders'%20Equity%20(Unaudited)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202021%20and%202020) Details unaudited statements of stockholders' equity, highlighting changes from net loss, stock-based compensation, and capital raises for the periods ended June 30, 2021 and 2020 Total Stockholders' Equity | Date | Amount ($) | | :--------------- | :------------- | | June 30, 2021 | $37,263,742 | | December 31, 2020 | $36,156,979 | | June 30, 2020 | $39,247,254 | | December 31, 2019 | $11,236,080 | - Key changes in stockholders' equity for the six months ended June 30, 2021, included issuances for stock-based compensation, litigation settlement, and options exercised, offset by a net loss[21](index=21&type=chunk) - Key changes for the six months ended June 30, 2020, included a significant capital raise of **$26,471,980**, stock-based compensation, litigation settlement share issuance, and options exercised[22](index=22&type=chunk) [Notes to Financial Statements](index=6&type=section&id=Notes%20to%20Financial%20Statements) Details notes to the unaudited financial statements, covering accounting policies, property, commitments, stock-based compensation, debt, leases, equity, and subsequent events [NOTE 1 — Nature of Operations and Summary of Significant Accounting Policies](index=6&type=section&id=NOTE%201%20%E2%80%94%20NATURE%20OF%20OPERATIONS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines KORU Medical Systems' operations, revenue recognition policies, and adoption status of new accounting standards, operating as a single segment - KORU Medical Systems designs, manufactures, and markets proprietary portable and innovative medical devices primarily for the ambulatory infusion market, operating as one segment[23](index=23&type=chunk) - Revenue is recognized when shipment occurs and the customer obtains control and ownership of the goods[38](index=38&type=chunk) Net Sales by Geography (Three Months Ended June 30) | Category | 2021 Sales ($) | 2020 Sales ($) | Change ($) | Change (%) | | :---------- | :----------- | :----------- | :--------- | :--------- | | Domestic | $4,645,770 | $6,745,810 | $(2,100,040) | (31.1%) | | International | $882,404 | $963,094 | $(80,690) | (8.4%) | | **Total** | **$5,528,174** | **$7,708,904** | **$(2,180,730)** | **(28.3%)** | Net Sales by Geography (Six Months Ended June 30) | Category | 2021 Sales ($) | 2020 Sales ($) | Change ($) | Change (%) | | :---------- | :------------ | :------------ | :---------- | :---------- | | Domestic | $9,092,559 | $12,086,676 | $(2,994,117) | (24.8%) | | International | $1,866,566 | $1,952,237 | $(85,671) | (4.4%) | | **Total** | **$10,959,125** | **$14,038,913** | **$(3,079,788)** | **(21.9%)** | - Adopted ASU No. 2019-12 (Income Taxes) on January 1, 2021, with **no impact** on financial statement disclosures[44](index=44&type=chunk) - Assessing the impact of ASU No. 2016-13 (Credit Losses) and ASU No. 2020-04 (Reference Rate Reform), which are not yet adopted[45](index=45&type=chunk)[46](index=46&type=chunk) [NOTE 2 — Property and Equipment](index=9&type=section&id=NOTE%202%20%E2%80%94%20PROPERTY%20AND%20EQUIPMENT) Summarizes changes in property and equipment, net, and depreciation expense for the periods ended June 30, 2021, compared to prior periods Property and Equipment, Net | Date | Amount ($) | | :--------------- | :------------- | | June 30, 2021 | $1,110,550 | | December 31, 2020 | $1,167,623 | Depreciation Expense | Period | 2021 Amount ($) | 2020 Amount ($) | | :-------------------------- | :------------ | :------------ | | Three Months Ended June 30 | $100,564 | $79,245 | | Six Months Ended June 30 | $200,967 | $152,013 | [NOTE 3 — Commitments and Contingencies](index=9&type=section&id=NOTE%203%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) Details the company's legal proceedings, including the dismissal of a class action lawsuit, and its manufacturing supply agreement - Lead plaintiff voluntarily dismissed a putative class action lawsuit against the Company and its Chief Financial Officer and former Chief Executive Officer on July 12, 2021[53](index=53&type=chunk)[55](index=55&type=chunk) - Entered into a five-year Manufacturing and Supply Agreement with Command Medical Products, Inc. on November 11, 2020, for subassemblies, needle sets, and tubing products[56](index=56&type=chunk)[57](index=57&type=chunk) [NOTE 4 — Stock-Based Compensation](index=10&type=section&id=NOTE%204%20%E2%80%94%20STOCK-BASED%20COMPENSATION) Summarizes significant stock option and restricted stock grants, increased compensation expense, and unrecognized costs for share-based arrangements - Granted **150,000 non-qualified options** to Interim CEO James M. Beck and **1,000,000 non-qualified options** to incoming President and CEO Linda Tharby in Q1 2021[60](index=60&type=chunk)[61](index=61&type=chunk) - Issued three restricted stock awards for an aggregate **1,000,000 shares** of common stock to Linda Tharby for **$3,310,000**[62](index=62&type=chunk) Stock-Based Compensation Expense (Time-Based Stock Options) | Period | 2021 Amount ($) | 2020 Amount ($) | | :-------------------------- | :------------ | :------------ | | Six Months Ended June 30 | $1,528,522 | $290,991 | - All **1,000,000 performance-based stock options** outstanding at January 1, 2021, were forfeited by June 30, 2021, resulting in a compensation expense reversal of **$(408,747)**[73](index=73&type=chunk) - Unrecognized compensation cost related to non-vested share-based compensation arrangements was **$5.4 million** (expected over 46 months) and **$2,458,451** for unvested restricted shares (expected over 21 months) as of June 30, 2021[71](index=71&type=chunk)[75](index=75&type=chunk) [NOTE 5 — Debt Obligations](index=12&type=section&id=NOTE%205%20%E2%80%94%20DEBT%20OBLIGATIONS) Outlines the renewal of a **$3.5 million** revolving line of credit and a **$2.5 million** equipment financing agreement, with no outstanding amounts as of June 30, 2021 - Renewed a **$3.5 million** revolving line of credit with KeyBank on June 24, 2021, with an interest rate of Prime Rate minus 1.50%, due June 1, 2022[76](index=76&type=chunk) - **No amount** was outstanding against the line of credit as of June 30, 2021[79](index=79&type=chunk) - Entered into a Progress Payment Loan and Security Agreement with Key Equipment Finance for up to **$2.5 million** in equipment financing, with **no outstanding amount** as of June 30, 2021[80](index=80&type=chunk) [NOTE 6 — Leases](index=13&type=section&id=NOTE%206%20%E2%80%94%20LEASES) Summarizes increased total lease costs, decreased right-of-use assets and liabilities, and weighted-average lease terms and discount rates Total Lease Cost (Six Months Ended June 30) | Year | Operating Lease Cost ($) | Short-term Lease Cost ($) | Total Lease Cost ($) | | :--- | :------------------- | :-------------------- | :--------------- | | 2021 | $75,290 | $68,437 | $143,727 | | 2020 | $75,843 | $13,688 | $89,531 | Operating Lease Right-of-Use Assets | Date | Amount ($) | | :--------------- | :------------- | | June 30, 2021 | $166,483 | | December 31, 2020 | $236,846 | Weighted Average Lease Terms and Discount Rates | Metric | June 30, 2021 | December 31, 2020 | | :-------------------------- | :------------ | :---------------- | | Operating leases (term) (Years) | 0.9 Years | 1.4 Years | | Finance leases (term) (Years) | 0.4 Years | 0.7 Years | | Operating leases (discount rate) (%) | 4.75% | 4.75% | | Finance leases (discount rate) (%) | 4.75% | 4.75% | [NOTE 7 — Equity](index=14&type=section&id=NOTE%207%20%E2%80%94%20EQUITY) Outlines a **$26.6 million** public offering in June 2020 and a **$10.0 million** stock repurchase program with no further purchases in 2021 - In June 2020, the company issued **3,593,750 shares** of common stock, generating **$26.6 million** in net proceeds from a public offering[85](index=85&type=chunk) - A **$10.0 million** stock repurchase program was authorized through December 31, 2021. As of December 31, 2020, **$3,499,358** was used to purchase **683,271 shares**, with **no further purchases** made in 2021[86](index=86&type=chunk)[128](index=128&type=chunk) [NOTE 8 — Subsequent Events](index=14&type=section&id=NOTE%208%20%E2%80%94%20SUBSEQUENT%20EVENTS) Details the voluntary dismissal of a putative class action lawsuit against the company and its officers on July 12, 2021 - A putative class action lawsuit against the Company and its Chief Financial Officer and former Chief Executive Officer was voluntarily dismissed without prejudice on July 12, 2021[87](index=87&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses KORU Medical Systems' financial condition, noting declines in net sales and gross profit, increased net losses, and negative operating cash flow [Overview](index=15&type=section&id=OVERVIEW) Outlines KORU Medical Systems' business, revenue sources, COVID-19 impact, and key sales and inventory trends for the period - KORU Medical Systems designs, manufactures, and markets proprietary portable and innovative medical devices for the ambulatory infusion market[92](index=92&type=chunk) - Revenue sources include domestic core, international core, and novel therapies (clinical trials and non-recurring engineering services)[94](index=94&type=chunk) - COVID-19 pandemic has impacted demand, raw material availability, and costs, potentially affecting future financial results[93](index=93&type=chunk) - Total net sales decreased **28%** for the three months ended June 30, 2021, compared to the prior year, which included approximately **$1.1 million** in stocking orders and **$1.2 million** in novel therapies sales[95](index=95&type=chunk) - Sequential quarter net sales grew **2%**, driven by **4% domestic core growth**, indicating market recovery in new patient starts for SCIg therapy[95](index=95&type=chunk) - Inventory increased **$0.7M** from December 31, 2020, due to the transition of manufacturing to a secondary source[96](index=96&type=chunk) [Results of Operations](index=15&type=section&id=RESULTS%20OF%20OPERATIONS) Examines the company's financial performance, detailing net sales, gross profit, and operating expenses for the three and six months ended June 30, 2021 and 2020 [Three Months Ended June 30, 2021 vs. 2020](index=15&type=section&id=Three%20months%20ended%20June%2030%2C%202021%2C%20compared%20to%20June%2030%2C%202020) Compares financial results for the three months ended June 30, 2021, and 2020, noting declines in net sales and gross profit, and changes in operating expenses and net loss Net Sales (Three Months Ended June 30) | Category | 2021 Sales ($) | 2020 Sales ($) | Change ($) | Change (%) | | :-------------------------- | :----------- | :----------- | :--------- | :--------- | | Domestic Core | $4,597,797 | $5,557,577 | $(959,780) | (17.3%) | | Novel Therapies (Domestic) | $47,973 | $1,188,233 | $(1,140,260) | (96.0%) | | International Core | $859,694 | $853,043 | $6,651 | 0.8% | | Novel Therapies (International) | $22,710 | $110,051 | $(87,341) | (79.4%) | | **Total Net Sales** | **$5,528,174** | **$7,708,904** | **$(2,180,730)** | **(28.3%)** | Gross Profit (Three Months Ended June 30) | Metric | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :----- | :--- | :--- | :--------- | :--------- | | Gross Profit ($) | $3,210,184 | $4,909,880 | $(1,699,696) | (34.6%) | | Gross Margin | 58.1% | 63.7% | - | - | Operating Expenses (Three Months Ended June 30) | Expense Type | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :-------------------------- | :----------- | :----------- | :--------- | :--------- | | Selling, general and administrative | $4,085,945 | $3,201,831 | $884,114 | 27.6% | | Litigation | $0 | $2,346,914 | $(2,346,914) | (100.0%) | | Research and development | $386,878 | $298,196 | $88,682 | 29.7% | - Net loss increased by **$48,511 (4.5%)** to **$(1,124,549)** in 2021 from **$(1,076,038)** in 2020[103](index=103&type=chunk)[104](index=104&type=chunk) [Six Months Ended June 30, 2021 vs. 2020](index=17&type=section&id=Six%20months%20ended%20June%2030%2C%202021%20compared%20to%20June%2030%2C%202020) Compares financial results for the six months ended June 30, 2021, and 2020, noting declines in net sales and gross profit, and changes in operating expenses and net loss Net Sales (Six Months Ended June 30) | Category | 2021 Sales ($) | 2020 Sales ($) | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :---------- | :---------- | | Domestic Core | $9,010,214 | $10,430,343 | $(1,420,129) | (13.6%) | | Novel Therapies (Domestic) | $82,345 | $1,656,333 | $(1,573,988) | (95.0%) | | International Core | $1,838,600 | $1,837,910 | $690 | 0.0% | | Novel Therapies (International) | $27,966 | $114,327 | $(86,361) | (75.5%) | | **Total Net Sales** | **$10,959,125** | **$14,038,913** | **$(3,079,788)** | **(21.9%)** | Gross Profit (Six Months Ended June 30) | Metric | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :----- | :--- | :--- | :--------- | :--------- | | Gross Profit ($) | $6,442,038 | $8,698,090 | $(2,256,052) | (25.9%) | | Gross Margin | 58.8% | 62.0% | - | - | Operating Expenses (Six Months Ended June 30) | Expense Type | 2021 ($) | 2020 ($) | Change ($) | Change (%) | | :-------------------------- | :----------- | :----------- | :---------- | :---------- | | Selling, general and administrative | $9,078,774 | $5,964,811 | $3,113,963 | 52.2% | | Litigation | $0 | $2,446,072 | $(2,446,072) | (100.0%) | | Research and development | $723,719 | $554,221 | $169,498 | 30.6% | - Net loss significantly widened by **$1,774,077 (283.1%)** to **$(2,400,687)** in 2021 from **$(626,610)** in 2020[110](index=110&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Evaluates the company's liquidity, cash on hand, and cash flow activities from operations, investing, and financing for the period - Principal source of liquidity is cash on hand, which was **$26.5 million** as of June 30, 2021[111](index=111&type=chunk) Cash Flows Summary (Six Months Ended June 30) | Activity | 2021 ($) | 2020 ($) | | :------------------------------------------ | :------------- | :------------- | | Net cash (used in)/provided by operating activities | $(2,776,150) | $2,707,549 | | Net cash used in investing activities | $(167,136) | $(513,273) | | Net cash provided by financing activities | $2,166,478 | $30,064,144 | - Net cash used in operating activities for H1 2021 was primarily due to the net loss, increased inventory (**$0.7M**), and decreased accrued expenses (**$0.8M**), partially offset by non-cash stock-based compensation (**$1.3M**) and deferred tax assets (**$1.2M**)[113](index=113&type=chunk) - Net cash provided by financing activities for H1 2021 was mainly from options exercised and non-cash common stock issuance for litigation settlement, a significant decrease from H1 2020 which included a **$26.5 million** capital raise and a **$3.5 million** line of credit draw[117](index=117&type=chunk) [Accounting Pronouncements Recently Adopted and Not Yet Adopted](index=19&type=section&id=ACCOUNTING%20PRONOUNCEMENTS%20RECENTLY%20ADOPTED) Refers to Note 1 for details on recently adopted and not yet adopted accounting pronouncements and their financial statement impact - Details on recently adopted and not yet adopted accounting pronouncements are incorporated by reference from Note 1 to the financial statements[118](index=118&type=chunk)[119](index=119&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=19&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that this item is not applicable for this quarterly report - This item is not applicable[120](index=120&type=chunk) [ITEM 4. Controls and Procedures](index=19&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[121](index=121&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three months ended June 30, 2021[122](index=122&type=chunk) [PART II. OTHER INFORMATION](index=21&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. Legal Proceedings](index=21&type=section&id=ITEM%201.%20Legal%20Proceedings) KORU Medical is not a party to any material litigation, with a previously disclosed class action lawsuit voluntarily dismissed - KORU Medical is not presently a party to any litigation or other legal proceeding believed to be material to its financial condition[123](index=123&type=chunk) - A previously disclosed putative class action lawsuit against the Company and its Chief Financial Officer and former Chief Executive Officer was voluntarily dismissed without prejudice on July 12, 2021[124](index=124&type=chunk) [ITEM 1A. Risk Factors](index=21&type=section&id=ITEM%201A.%20Risk%20Factors) States no material changes to the company's risk factors since its Annual Report on Form 10-K for the year ended December 31, 2020 - **No material changes** to risk factors since the Annual Report on Form 10-K for the year ended December 31, 2020[125](index=125&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=21&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Outlines the issuance of common stock to non-employee directors and the status of the **$10.0 million** stock repurchase program - Issued **14,615 shares** of common stock to non-employee directors during the three months ended June 30, 2021, as compensation, relying on Section 4(2) of the Securities Act of 1933 for exemption from registration[126](index=126&type=chunk)[127](index=127&type=chunk) - **No purchases** have been made under the **$10.0 million** stock repurchase program since December 31, 2020, as the company evaluates cash needs[128](index=128&type=chunk) [ITEM 6. Exhibits](index=22&type=section&id=ITEM%206.%20Exhibits) Presents the exhibits filed with the Form 10-Q, including compensation summaries, equity plans, indemnification agreements, and certifications - Exhibits include Summary of Non-Employee Director Compensation, 2021 Omnibus Equity Incentive Plan, Form of Indemnification Agreement, Certifications (302 and 906 of Sarbanes-Oxley Act 2002), and Inline XBRL documents[131](index=131&type=chunk) [Signatures](index=23&type=section&id=Signatures) [Report Signatures](index=23&type=section&id=Report%20Signatures) Details the report's signing on August 11, 2021, by the President and CEO and CFO and Treasurer, certifying compliance - The report was signed on August 11, 2021, by Linda Tharby (President and Chief Executive Officer) and Karen Fisher (Chief Financial Officer and Treasurer)[130](index=130&type=chunk)