CorMedix Inc. 10-K

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. Changes in Internal Control Over Financial Reporting Other than the appointment of our current Chief Financial Officer as interim Chief Executive Officer in addition to his role as our Chief Financial Officer on October 4, 2021, there were no changes in our internal control over financial reporting during our fourth quarter ended December 31, 2021, 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. 55 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, 2021, 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, 2021. Item 9B. Other Information Not applicable. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 56 PART III Item 10. Directors, Executive Officers, and Corporate Governance 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 . Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in the ownership of our common stock and other equity securities. Such persons are required to furnish us copies of all Section 16(a) filings. To our knowledge, based solely on a review of the copies of such reports furnished to us and representations that no other reports were required, during the fiscal year ended December 31, 2021, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with, except as to the following: (i) Dr, David was not timely in filing a Form 4 for changes in beneficial ownership that occurred on November 1, 2021, the changes in beneficial ownership were reported on November 10, 2021; and (ii) Mr. Kaplan was not timely in filing a Form 4 for changes in beneficial ownership that occurred on November 16, 2021, the changes in beneficial ownership were reported on November 19, 2021. Directors The following table sets forth the name, age and position of each of our directors as of March 25, 2022: Name Age Director Since Position(s) with CorMedix Paulo F. Costa 71 September 2020 Director Janet Dillione 62 August 2015 Director Gregory Duncan 56 November 2020 Director Alan W. Dunton 67 March 2019 Director Myron Kaplan 76 April 2016 Director and Chairman of the Board Steven Lefkowitz 65 June 2017 Director Joseph Todisco 46 March 2022 Director 57 Paulo F. Costa has been a director of CorMedix since September 2020. Mr. Costa previously served as President and Chief Executive Officer of Novartis U.S. Corporation, from October 2005 to August 2008. Prior to his work at Novartis U.S. Corporation, Mr. Costa was President and Chief Executive Officer of Novartis Pharmaceuticals, U.S. from July 1999 to September 2005. Prior to joining Novartis, Mr. Costa spent 30 years at Johnson & Johnson, including as President of Janssen Pharmaceutica, Inc. From August 2009 to August 2012, Mr. Costa served as Chairman of the Board of Amylin Pharmaceuticals Inc, a commercial stage biopharma company, until its sale to Bristol-Myers Squibb and AstraZeneca in a $7 billion transaction in 2012. Mr. Costa currently serves as Chairman of the Board of MacroGenics, Inc., a public late stage biopharma company focused on oncology. Mr. Costa received his undergraduate degree from São Paulo School of Business Administration and earned a master’s degree in business administration from Harvard Business School. Among other experience, qualifications, attributes and skills, Mr. Costa’s significant depth of experience in the pharmaceutical industry, including service as a director and executive of pharmaceutical companies, led to the conclusion of our Board that he should serve as a director of our Company in light of our business and structure. Janet Dillione has been a director of CorMedix since August 2015. Since November 2020, Ms. Dillione currently serves as the Chief Executive Officer of Connect America, a nationally recognized leader in comprehensive telehealth and remote patient monitoring solutions. Prior to joining Connect America, she served as Chief Executive Officer of Bernoulli Enterprise, Inc. since May 2014, a real-time connected healthcare information technology company. Previously, she was at Nuance Communications, Inc., a leading provider of voice and language solutions for businesses and consumers around the world, having joined Nuance in April 2010 as Executive Vice President and General Manager of the Healthcare Division and serving as an executive officer from March 2010 until May 2014. From June 2000 to March 2010, Ms. Dillione held several senior level management positions at Siemens Medical Solutions, a global leader in medical imaging, laboratory diagnostics, and healthcare information technology, including President and CEO of the global healthcare IT division. Ms. Dillione currently serves as a director of Vizient, Inc., a private health care performance improvement company. Ms. Dillione received her B.A. from Brown University in 1981 and completed the Executive Program at The Wharton School of Business of the University of Pennsylvania in 1998. She has over 25 years of experience leading global teams in the development and delivery of healthcare technology and services. Among other qualifications, attributes and skills, Ms. Dillione’s financial expertise and significant executive management experience with medical device and healthcare companies led to the conclusion of our Board that she should serve as a director of our Company in light of our business and structure. Gregory Duncan has been a director of CorMedix since November 2020. Mr. Duncan currently serves as the Chairman and CEO of Virios Therapeutics, a clinical-stage biopharmaceutical company developing and commercializing innovative antiviral therapies to treat diseases associated with a viral triggered abnormal immune response, such as fibromyalgia (FM), and has served since April 2020. From 2014 and prior to joining his current company earlier this year, Mr. Duncan served as President and CEO of Celtaxsys, a privately held biotechnology company focused on cystic fibrosis and other rare, inflammatory diseases. Mr. Duncan has spent the majority of his career in senior leadership roles in commercial stage pharmaceutical companies. From 2007 to 2013, he served as a senior executive at UCB, including as President of its North America business, as well as an executive committee member. Prior to his roles with UCB, Mr. Duncan spent approximately 17 years at Pfizer where he gained significant experience across sales and marketing functions including serving as SVP of US Marketing and later as President of Pfizer’s Latin America business from 2005 to 2007. Mr. Duncan received his undergraduate degree from the State University of New York, Albany, and earned an MBA degree from Emory University. Among other experience, qualifications, attributes and skills, Mr. Duncan’s significant depth of experience in the pharmaceutical industry led to the conclusion of our Board that he should serve as a director of our Company in light of our business and structure. 58 Alan W. Dunton, M.D. has been a director of CorMedix since March 2019. He is the founder and principal consultant of Danerius, LLC, a biotechnology and pharmaceutical consulting business which he started in 2006. From 1994, he served in senior positions in Research and Development in the Pharmaceutical Division of Johnson and Johnson including President and Managing Director of the Janssen, the major research, development and regulatory arm of the pharmaceuticals division at Johnson & Johnson. From January 2007 through March 2009, Dr. Dunton served as President and Chief Executive Officer of Panacos Pharmaceuticals, Inc. From November 2015 through March 2018, Dr. Dunton was the Head/Senior Vice President of Research, Development and Regulatory Affairs of Purdue Pharma L.P., a private pharmaceutical company. Dr. Dunton received his Bachelor of Science degree in biochemistry, magna cum laude, from State University of New York at Buffalo, and received his M.D. from New York University School of Medicine. In addition to CorMedix, Dr. Dunton currently serves on the boards of three public companies, as a Director at Palatin Technologies, Inc. and Oragenics, Inc. he chairs the Compensation Committees of both companies. He also serves as a member of the Audit Committees of these companies. Additionally, Dr. Dunton is a member of the board of Recce Pharma Ltd., an Australian public biotechnology company focused on developing novel anti-infectives for serious and life threatening diseases. Among other qualifications, Dr. Dunton’s significant depth of experience in the pharmaceutical industry, including service as a director of public pharmaceutical companies, led to the conclusion of our Board that he should serve as a director of our Company in light of our business and structure. Myron Kaplan became a director of CorMedix in April 2016. He is a founding partner of Kleinberg, Kaplan, Wolff & Cohen, P.C., a New York City general practice law firm, where he has practiced corporate and securities law for more than forty years. In 2012, Mr. Kaplan became a trustee of the Lehman Brothers Plan Holding Trust. Previously, he served as a member of the board of directors of SAirGroup Finance (USA) Inc., a subsidiary of SAirGroup that had publicly issued debt securities, Trans World Airlines, Inc. and Kitty Hawk, Inc. Among his business and civic involvements, Mr. Kaplan currently serves on the boards of directors of a number of private companies and has been active for many years on the boards of trustees and various board committees of The Children’s Museum of Manhattan and JBI International (formerly The Jewish Braille Institute of America). Mr. Kaplan graduated from Columbia College and holds a Juris Doctor from Harvard Law School. Among other experience, qualifications, attributes and skills, Mr. Kaplan’s experience in a broad range of corporate and securities matters and service as a director of public companies led to the conclusion of our Board that he should serve as a director of our Company in light of our business and structure. Steven Lefkowitz was a director of CorMedix from August 2011 to June 2016. He was reappointed to the Board in June 2017. He also served as our acting Chief Financial Officer from August 2013 to July 2014. Mr. Lefkowitz has been the President and Founder of Wade Capital Corporation, a financial advisory services company, since June 1990. Mr. Lefkowitz has been a director of both public and private companies. Mr. Lefkowitz received his A.B. from Dartmouth College in 1977 and his M.B.A. from Columbia University in 1985. Among other experience, qualifications, attributes and skills, Mr. Lefkowitz’s education, experience and financial expertise led to the conclusion of our Board that he should serve as a director of our Company in light of our business and structure. Joseph Todisco became a director of CorMedix in March 2022. Prior to joining CorMedix, he was a senior executive at Amneal Pharmaceuticals, where for the past 11 years he has held various roles, most recently as Executive Vice President, Chief Commercial Officer where he was responsible for Amneal Specialty, a growing branded products business. During his tenure at Amneal, Mr. Todisco held roles overseeing corporate development and international operations, leading commercial teams in several international markets including the UK, Australia and Germany, as well as leading Amneal’s merger integration with Impax Laboratories in 2018. He was previously Co-Founder and managing executive of Gemini Laboratories, a specialty pharmaceutical company focused on the sales and marketing for niche branded products in the US Market. Gemini Laboratories was established as an affiliate of Amneal Pharmaceuticals and was subsequently acquired by Amneal in 2018. Prior to joining Amneal, Mr. Todisco was Vice President, Business Development & Licensing at Ranbaxy, Inc. where he was responsible for developing and executing Ranbaxy’s North American commercial business strategy. Prior to Ranbaxy, he held various roles at Par Pharmaceutical, and in his earlier career held positions at Oppenheimer & Company and Marsh & McLennan Companies. Mr. Todisco obtained his MBA in finance from Fordham Graduate School of Business and his BA in Economics from Georgetown University. Among other qualifications, attributes and skills, Mr. Todisco’s business expertise and significant executive management experience in the pharmaceutical industry led to the conclusion of our Board that he should serve as a director of our Company in light of our business and structure. Board Independence Our Board has undertaken a review of the independence of our directors and has determined that (i) all current directors are independent within the meaning of Section 5605(b) of the Nasdaq Marketplace Rules, (ii) all members of our Audit Committee meet the additional test for independence for audit committee members imposed by SEC regulation and Section 5605(c) of the Nasdaq Marketplace Rules, (iii) all of the members of our Compensation Committee are independent within the meaning of Section 5605(d) of the Nasdaq Marketplace Rules, and (iv) all of the members of our Nominating and Governance Committee are independent within the meaning of Section 5605(e) of the Nasdaq Marketplace Rules. Board Committees Our Board has established an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. Our Audit Committee currently consists of Mr. Lefkowitz (Chair), Dr. Dunton and Mr. Duncan. Our Compensation Committee currently consists of Ms. Dillione (Chair), Dr. Dunton and Mr. Duncan. Our Nominating and Governance Committee currently consists of Mr. Costa (Chair), Mr. Kaplan and Ms. Dillione. The membership of these Committees may be changed after our next annual meeting. 59 Each of the above-referenced committees operates pursuant to a formal written charter. The charters for each committee, which have been adopted by our Board, contain a detailed description of the respective committee’s duties and responsibilities and are available on our website at www.cormedix.com under the “Investor Relations—Corporate Governance” tab. Audit Committee The Audit Committee monitors our corporate financial statements and reporting and our external audits, including, among other things, our internal controls and audit functions, the results and scope of the annual audit and other services provided by our independent registered public accounting firm and our compliance with legal matters that have a significant impact on our financial statements. The Audit Committee also consults with our management and our independent registered public accounting firm prior to the presentation of financial statements to stockholders and, as appropriate, initiates inquiries into aspects of our financial affairs. The Audit Committee is responsible for establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. In addition, the Audit Committee is directly responsible for the appointment, retention, compensation and oversight of the work of our independent registered public accounting firm, including approving services and fee arrangements. All related party transactions will be approved by the Audit Committee before we enter into them. Both our independent registered public accounting firm and internal financial personnel regularly meet with, and have unrestricted access to, the Audit Committee. The Board has determined that each of Mr. Lefkowitz, Dr. Dunton and Mr. Duncan qualifies as an “audit committee financial expert” as that term is defined in the rules and regulations of the SEC. The designation of each of Mr. Lefkowitz, Dr. Dunton and Mr. Duncan as an “audit committee financial expert” does not impose on them any duties, obligations or liability that are greater than those that are generally imposed on them as a member of the Audit Committee and the Board, and their designation as an “audit committee financial expert” pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of the Audit Committee or the Board. Compensation Committee The Compensation Committee reviews and approves our compensation policies and all forms of compensation to be provided to our executive officers, including, among other things, annual salaries, bonuses, and other incentive compensation arrangements. In addition, the Compensation Committee administers our equity compensation plans, including granting stock options to our executive officers. The Compensation Committee also reviews and approves employment agreements with executive officers and other compensation policies and matters. Since 2016, we have periodically engaged Frederic W. Cook & Co., an independent compensation consultant, for input on the compensation of our Named Executive Officers and directors. The Compensation Committee assessed the independence of Frederic W. Cook & Co., considering the factors required by the Nasdaq Global Market Listing Rules and concluded that no conflict of interest exists that would prevent Frederic W. Cook & Co. from independently representing our Company. In the future, we, or the Compensation Committee, may engage or seek the advice of Frederic W. Cook & Co., or another compensation consultant. At our 2021 annual meeting of stockholders, our stockholders indicated their preference that we solicit a non-binding advisory vote on the compensation of the named executive officers, commonly referred to as a “Say-On-Pay” vote, every year. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Annual Report on Form 10-K. The Compensation Committee evaluates our executive compensation program in light of our benchmarking of peer companies with the advice of Frederic W. Cook as well as our shareholders’ views’ including the “Say-On-Pay” votes when making future decisions regarding executive compensation. The next “Say-On-Pay” vote will occur at the 2022 annual meeting of stockholders. Each member of the Compensation Committee is a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act. Nominating and Governance Committee The Nominating and Governance Committee identifies, evaluates and recommends nominees to the Board and committees of the Board, conducts searches for appropriate directors and evaluates the performance of the Board and of individual directors. The Nominating and Governance Committee also is responsible for reviewing developments in corporate governance practices, evaluating the adequacy of our corporate governance practices and reporting and making recommendations to the Board concerning corporate governance matters. 60 Executive Officers The following table sets forth the name, age and position of each of our executive officers as of December 31, 2021: Name Age Position(s) with CorMedix Matthew David 44 Interim Chief Executive Officer, Chief Financial Officer Phoebe Mounts 71 Executive Vice President and General Counsel and Head of Regulatory, Compliance and Legal Elizabeth Masson-Hurlburt 42 Executive Vice President and Head of Clinical Operations Thomas Nusbickel 64 Executive Vice President and Chief Commercial Officer Matthew David became our Executive Vice President and Chief Financial Officer in May 2020 and is currently serving as interim Chief Executive Officer since the retirement of Mr. Baluch on October 4, 2021. Prior to joining us, he most recently served as Head of Strategy at Ovid Therapeutics Inc, a late-stage clinical biopharmaceutical company focused on developing treatments for rare neurological disorders, where he was responsible for financing strategy and investor relations, and joined in October 2018. Prior to Ovid, Dr. David was a Strategic Advisor to Frequency Therapeutics, advising on financing, investor relations and strategic initiatives from 2017 to early 2019. Prior to Frequency, Dr. David spent the majority of his career as an investment banker specialized in the life sciences sectors, including at Piper Jaffray, Thomas Weisel Partners, Ferghana Partners and most recently at Bank of America Merrill Lynch. As part of his experience as an investment banker, Dr. David has advised on a broad range of capital raising and strategic transactions. Earlier in his career, Dr. David was part of the equity research team at Lehman Brothers, focusing on Large Pharma. Dr. David began his career as a surgical resident at Beth Israel Hospital, after receiving an M.D. from NYU School of Medicine. Dr. David earned his Bachelor of Arts degree in Chemistry, magna cum laude , from Dartmouth College. Phoebe Mounts became our Executive Vice President and General Counsel and Head of Regulatory, Compliance and Legal in May 2019. Prior to her employment with us, Dr. Mounts was a partner at Morgan, Lewis & Bockius LLP, where she provided legal counsel to life sciences companies for over 20 years. As part of her work at Morgan Lewis, Dr. Mounts had been providing us legal services as outside counsel since 2013, with responsibility for developing our FDA regulatory strategies for DefenCath. Prior to graduating from Georgetown University Law Center, Dr. Mounts was on the faculty of the Johns Hopkins University School of Public Health for 16 years, specializing in molecular biology and infectious disease. She received her Ph.D. in molecular biology from the University of Edinburgh in Scotland. Elizabeth Masson-Hurlburt became our Executive Vice President and Head of Clinical Operations in March 2018. Prior to her employment, Ms. Masson-Hurlburt had been providing us clinical operations expertise as a consultant since late November 2017. Before she began her consulting career, she held several progressive management roles in clinical operations, most recently at Gemphire Therapeutics, as a Senior Director, Clinical Operations from April 2015 to October 2016, then as Vice President, Clinical Operations from October 2016 to March 2018. Ms. Masson-Hurlburt received her B.A. in Leadership and Organizational Management from Bay Path College. Thomas Nusbickel became our Executive Vice President and Chief Commercial Officer in May 2021. Prior to his employment, Mr. Nusbickel held several leadership roles in the commercial strategy and renal disease space, most recently at Coherus Biosciences, as Vice President of Market Access and Government Affairs, Opko Inc., as Chief Commercial Officer, and served for more than two decades at Amgen. Mr. Nusbickel has an undergraduate degree from Eckerd College and an M.B.A. from Pepperdine University. On October 1, 2021, the Company and Khoso Baluch came to a mutual agreement pursuant to which Mr. Baluch retired from his position as our Chief Executive Officer, effective October 4, 2021. Mr. Baluch also resigned from our Board of Directors. Dr. David is serving as interim Chief Executive Officer and Chief Financial Officer. The Board of Directors appointed Joseph Todisco as the Chief Executive Officer on March 16, 2022, commencing no later than May 16, 2022, and appointed Mr. Todisco to serve as a member of the Board on March 18, 2022. Dr. David will continue to serve as interim Chief Executive Officer and Chief Financial Officer until Mr. Todisco commences employment, after which Dr. David will continue to serve as our Chief Financial Officer. On October 4, 2021, we and John L. Armstrong, Jr. came to a mutual agreement pursuant to which Mr. Armstrong retired from his position as our Executive Vice President, Technical Operations, effective October 4, 2021. 61 Item 11. Executive Compensation DIRECTOR COMPENSATION Director Compensation in Fiscal 2021 The following table shows the compensation earned by each non-employee director of our Company for the year ended December 31, 2021. Name Fees Earned ($) Option Awards (1) (2) ($) Total ($) Paulo F. Costa 84,000 125,460 209,460 Janet Dillione 78,000 188,190 266,190 Gregory Duncan 72,000 125,460 197,460 Alan W. Dunton 72,000 188,190 260,190 Myron Kaplan 120,000 188,190 308,190 Steven Lefkowitz 93,000 188,190 281,190 (1) The amounts included in this column are the dollar amounts representing the full grant date fair value of each stock option award calculated in accordance with FASB ASC Topic 718 and do not represent the actual value that may be recognized by the directors upon option exercise. For information on the valuation assumptions used in calculating these amounts, see Note 7 to our audited financial statements included in this Annual Report on Form 10-K. (2) As of December 31, 2021, the number of shares underlying options held by each non-employee director was as follows: 43,750 shares for Mr. Costa; 105,000 shares for Ms. Dillione; 42,500 for Mr. Duncan; 72,500 shares for Dr. Dunton; 86,000 shares for Mr. Kaplan; and 83,000 shares for Mr. Lefkowitz. Director Compensation Plan We maintain a Deferred Compensation Plan for Directors, pursuant to which our non-employee directors may defer all of their cash director fees and restricted stock units. Any cash fees due to a participating director will be converted into a number of shares of our common stock by dividing the dollar amount of fees payable by the closing price of our common stock on the date such fees would be payable, and the director’s unfunded account is credited with the shares. The shares that accumulate in a director’s account will be paid to the director on the tenth business day in January following the year in which the director’s service terminates for whatever reason, other than death, in which case the account will be paid within 30 days of the date of death to the designated beneficiary, as applicable. In the event of a change in control of our Company, the director would receive cash in an amount equal to the number of shares in the account multiplied by the fair market value of our common stock on the change in control date, and the payment would be accelerated to five business days after the effective date of the change in control. In January 2021, the Board, following the recommendation of the Compensation Committee and based on advice of Frederic W. Cook & Co., determined that no adjustment was needed with regard to Board and committee cash compensation. Following a review of board compensation practices of the Company’s peer group, the Board made the following changes to equity compensation effective as of January 2021, (i) increased the annual grant of stock options to each non-employee director from 15,000 to 20,000 shares, (ii) increased the initial grant of stock options to new non-employee directors from 20,000 to 25,000 shares; and (iii) provided a one-time 10,000 share grant of stock options as of January 11, 2021 for non-employee directors who joined the Board prior to 2020. The 2020 and 2021 compensation programs are set forth below in the table. All stock options are subject to continued service on the Board through the vesting date. The exercise price per share of each stock option granted to our non-employee directors is equal to the fair market value of our common stock as determined based upon the closing sales price for our stock on the date of grant. On January 11, 2021, our Board amended outstanding stock options to purchase shares of our common stock held by the non-employee directors to extend the post-termination exercise period of such options such that each vested stock option held by a director as of the date of separation from service will remain exercisable for the 12-month period following the date of separation from service, but in no event later than the end of the term of the option. 62 Effective January 1, 2020 Effective January 1, 2021 Cash Stock Options Cash Stock Options Annual Fee $ 55,000 $ 55,000 First Election to Board 20,000 (1) 25,000 (1) Annual Grant, Prorated in First Year Following Election to the Board 15,000 (2) 20,000 (2) Additional Annual Fee - Board Chair $ 45,000 $ 45,000 Additional Annual Fee - Audit Chair $ 23,000 $ 23,000 Additional Annual Fee - Compensation Chair $ 18,000 $ 18,000 Additional Annual Fee - Nomination and Governance Chair $ 14,000 $ 14,000 Additional Annual Fee - Audit Committee Non-Chair Members $ 10,000 $ 10,000 Additional Annual Fee - Compensation Committee Non-Chair Members $ 7,000 $ 7,000 Additional Annual Fee – Nomination and Governance Committee Non-Chair Members $ 5,000 $ 5,000 Additional Annual Fee – Strategic Committee Members $ - $ 15,000 Additional Annual Fee – Strategic Finance Committee Two Co-Chairs $ 20,000 (3) - (1) Vest one third each on the date of grant and the first and second anniversary date of grant. (2) Vest monthly over one year after the grant date. (3) The Additional Annual Fee for the Strategic Finance Committee Co-Chairs ended on June 30, 2020. EXECUTIVE COMPENSATION Components of Compensation The key components of our executive compensation package are cash compensation (salary and annual bonuses), long-term equity incentive awards and change in control and other severance agreements. These components are administered with the goal of providing total compensation that recognizes meaningful differences in individual performance, is competitive, varies the opportunity based on individual and corporate performance, and is valued by our Named Executive Officers. During 2021, our Named Executive Officers were Khoso Baluch, Matthew David, John Armstrong, Phoebe Mounts, Elizabeth Masson-Hurlburt and Thomas Nusbickel. Mr. Baluch retired as our Chief Executive Officer effective October 4, 2021, and Mr. Armstrong retired as our Executive Vice President for Technical Operations effective October 4, 2021. Dr. David, who has served as our Executive Vice President and Chief Financial Officer since May 11, 2020, has from October 4, 2021, also served as our interim Chief Executive Officer in addition to his role as Chief Financial Officer. Base Salary It is the Compensation Committee’s objective to set a competitive rate of annual base salary for each Named Executive Officer. The Compensation Committee believes competitive base salaries are necessary to attract and retain top quality executives, since it is common practice for public companies to provide their named executive officers with a guaranteed annual component of compensation that is not subject to performance risk. The Compensation Committee, on its own or with outside consultants, may establish salary ranges for the Named Executive Officers, with minimum to maximum opportunities that cover the normal range of market variability. The actual base salary for each Named Executive Officer is then derived from those salary ranges based on his or her responsibility, tenure and past performance and market comparability. Annual base salaries for the Named Executive Officers are reviewed and approved by the Compensation Committee in the first quarter following the end of the previous performance year. Changes in base salary are based on the scope of an individual’s current job responsibilities, individual performance in the previous performance year, target pay position relative to the peer group, and our salary budget guidelines. The Compensation Committee reviews established goals and objectives, and determines an individual’s achievement of those goals and objectives and considers the recommendations provided by the Chief Executive Officer to assist it in determining appropriate salaries for the Named Executive Officers other than the Chief Executive Officer. For the years ended December 31, 2020 and 2021, with the advice of outside consultants, including Frederic W. Cook & Co., the Compensation Committee increased the salaries of certain of our Named Executive Officers to account for adjustments in the market. See under the caption “Employment Agreements.” In May 2020, March 2019, March 2021 and May 2021, respectively, we entered into an employment agreement with each of Matthew David, our Executive Vice President and Chief Financial Officer, Phoebe Mounts, our Executive Vice President and General Counsel and Head of Regulatory, Compliance and Legal, Elizabeth Masson-Hurlburt, our Executive Vice President and Head of Clinical Operations, and Thomas Nusbickel, our Chief Commercial Officer. These agreements provide for a salary for each Named Executive Officer and are described under the caption “Employment Agreements.” Effective October 4, 2021, Matthew David, our Chief Financial Officer, began serving as interim Chief Executive Officer, until a new Chief Executive Officer is appointed. Dr. David’s new base salary as an interim Chief Executive Officer is described under the caption “Employment Agreements.” Dr. David’s new base salary was increased to account for the additional responsibilities associated with serving as interim Chief Executive Officer. Dr. David’s new base salary was increased from $330,000 to $425,000 to account for the additional responsibilities associated with serving as the interim Chief Executive Officer. Should Dr. David continue to serve as the interim Chief Executive for six months after October 4, 2021, the Board, or its Compensation Committee, will review such base salary to determine whether an increase is appropriate at that time. After Dr. David ceases to serve as interim Chief Executive Officer, and as he continues to serve as Chief Financial Officer, we will provide him with an annual base salary of $375,000, representing a $45,000 increase from his current salary level under the employment agreement. 63 The base salary information for our Named Executive Officers for 2020 and 2021 is set forth in the Summary Compensation Table below. Annual Bonuses As part of their compensation package, our Named Executive Officers generally have the opportunity to earn annual non-equity incentive bonuses. Annual non-equity bonuses are designed to reward superior executive performance while reinforcing our short-term strategic operating goals. The Board approves, based on the Compensation Committee’s recommendation, an annual corporate target award for the Named Executive Officers based on a percentage of base salary and any applicable terms in any individual employment agreements. Annual bonus targets as a percentage of base salary increase with executive rank so that for the more senior executives, a greater proportion of their total cash compensation is contingent upon annual performance. For 2021, Messrs. Baluch and Armstrong, Dr. Mounts, Ms. Masson-Hurlburt and Mr. Nusbickel were each eligible for an annual target bonus of 80%, 35%, 30%, 30% and 30% of base salary, respectively, of his or her base salary then in effect. Dr. David was eligible for an annual target bonus of 30% of base salary prior to serving as interim Chief Executive Officer and the target was increased to 60% of base salary while serving in that role. Dr. David’s new annual target bonus as interim Chief Executive Officer is described under the caption “Employment Agreements.” On December 20, 2021, the Board adopted the CorMedix Inc. Executive Bonus Plan (the “Bonus Plan”), which will be used to grant annual and other performance bonuses to executives, including our Named Executive Officers. The Bonus Plan provides for bonuses based on achievement of performance objectives, as determined by the Compensation Committee for each performance period. Participants may receive bonuses based on a target bonus amount, which may be a percentage of the participant’s base salary or such other amount as the Compensation Committee determines, and achievement of the applicable performance objectives. Bonuses are subject to continued employment through the end of the applicable performance period and compliance with restrictive covenant agreements. The Compensation Committee will set the performance periods, target bonuses and performance objectives and will select the eligible executives for each performance period. The performance metrics may include (but shall not be limited to) any of the following: (i) net earnings or net income (before or after taxes); (ii) earnings per share; (iii) net sales growth; (iv) net operating profit; (v) return measures (including, but not limited to, return on assets, capital, equity, or sales); (vi) cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital); (vii) cash flow per share; (viii) earnings before or after taxes, interest, depreciation, and/or amortization; (ix) gross or operating margins; (x) productivity ratios; (xi) share price (including, but not limited to, growth measures and total stockholder return); (xii) expense targets or ratios; (xiii) charge-off levels; (xiv) improvement in or attainment of revenue levels; (xv) margins; (xvi) operating efficiency; (xvii) operating expenses; (xviii) economic value added; (xix) improvement in or attainment of expense levels; (xx) improvement in or attainment of working capital levels; (xxi) debt reduction; (xxii) capital targets; (xxiii) regulatory, clinical, or manufacturing milestones; (xxiv) consummation of acquisitions, dispositions, projects or other events or transactions; (xxv) developing strategic plans, (xxvi) objectives related to product development, testing, product design, regulatory approval, product manufacturing and other business needs, and (xxvii) personal objectives for the participant. Bonuses are to be paid in a cash lump sum within 2 ½ months following the end of the applicable performance period (but no later than March 15 of the calendar year following the calendar year in which the performance period ends). Effective as of the inception of the Bonus Plan, the Compensation Committee approved a special performance bonus opportunity under the Bonus Plan for Dr. Matthew David, interim Chief Executive Officer, Executive Vice President and Chief Financial Officer, Dr. Phoebe Mounts, Executive Vice President and General Counsel, and Ms. Liz Masson-Hurlburt, Executive Vice President and Head of Clinical Operations, to provide an incentive for the Company’s leadership team to accomplish specific performance objectives during a performance period beginning October 1, 2021 and ending March 31, 2022. The executives have an opportunity to earn a performance bonus of up to 30% of salary for Dr. Mounts and Ms. Masson-Hurlburt and up to 60% of salary for Dr. David based on attainment of key performance objectives, continued employment and compliance with restrictive covenants. With new leadership under Dr. David as interim Chief Executive Officer, the Compensation Committee determined that it was appropriate to provide specific targeted performance objectives tied to incentive payments to drive performance that is intended to support our long-term performance. At the beginning of the performance year, the Board approves annual corporate goals and objectives, based on the recommendations of the Compensation Committee. The Board or Compensation Committee approves bonus awards, if any, for each Named Executive Officer based on the achievement of these pre-established corporate goals and such other factors as our Board or Compensation Committee deems appropriate, based on recommendations of the Compensation Committee. For any given performance year, proposed annual bonuses may range from 0% to 100% of target, or higher under certain circumstances. Corporate performance has a significant impact on the annual bonus amounts because the Compensation Committee and Board believe it is an appropriate measure of how the Named Executive Officer contributed to business results. The Compensation Committee determined that it was appropriate to pay discretionary bonuses to Dr. David, Dr. Mounts, Ms. Masson-Hurlburt and Mr. Nusbickel based on individual performance and the challenges the Company had faced during 2021. Each of Dr. David, Dr. Mounts, Ms. Masson-Hurlburt and Mr. Nusbickel received discretionary bonuses of $75,900, $61,875, $37,800 and $75,000, respectively. In 2021, we paid our Named Executive Officers annual bonuses equal to their target annual bonuses for 2020, and we paid Dr. Mounts and Ms. Masson-Hurlburt each a special bonus equal to two months of base salary on account of their work on the submission of the New Drug Application for DefenCath. The Board, based on the recommendation of the Compensation Committee, approved bonuses at these levels as a result of corporate and individual performance and the submission of the New Drug Application for DefenCath. Long-Term Incentive Equity Awards We believe that long-term performance is achieved through an ownership culture that encourages high performance by our Named Executive Officers through the use of stock-based awards. Our long-term incentive plans were established to provide our employees, including our Named Executive Officers, with incentives to help align employees’ interests with the interests of our stockholders. The Compensation Committee believes that the use of stock-based awards offers the best approach to achieving our long-term compensation goals. We have historically elected to use stock options as the primary long-term equity incentive vehicle; however, the Compensation Committee may in the future utilize other forms of equity grants as part of our long-term incentive program. We have selected the Black-Scholes method of valuation for share-based compensation. Due to the early stage of our business and our desire to preserve cash, we may provide a greater portion of total compensation to our Named Executive Officers through stock options and other equity grants than through cash-based compensation. The Compensation Committee generally oversees the administration of our equity plans. 64 Stock Options Our 2019 Omnibus Stock Incentive Plan (the 2019 Plan), which was approved by the shareholders on November 26, 2019, authorizes us to grant options to purchase shares of our common stock and other equity awards to our employees, directors and consultants. The Compensation Committee or the Board, based on Compensation Committee recommendations, makes stock option awards to Named Executive Officers based upon a review of competitive compensation data, its assessment of individual performance, a review of each Named Executive Officer’s existing long-term incentives, and retention considerations. Periodic stock option grants are made, or recommended to the Board, at the discretion of the Compensation Committee to eligible employees and, in appropriate circumstances, the Compensation Committee considers the recommendations of our Chief Executive Officer Stock options granted to employees have an exercise price equal to the fair market value of our common stock on the day of grant, typically vest based on continued employment and, for performance-based grants, upon the achievement of certain performance-based milestones, and generally expire 10 years after the date of grant. The fair value of the options granted to the Named Executive Officers in the Summary Compensation Table is determined in accordance with the Black-Scholes method of valuation for share-based compensation. Incentive stock options also include certain other terms necessary to ensure compliance with the Code. In 2021, the Board, based on the recommendation of the Compensation Committee, granted a mix of time-based and performance-based stock options to our Named Executive Officers. The time-based stock options vest annually in four increments while the executive remains employed by the Company. The performance-based stock options generally vest based upon achievement of performance milestones and continued employment. In January 2021, the Board granted 70,000 time-based stock options to Dr. Mounts, Mr. Armstrong, and Ms. Masson-Hurlburt, respectively, 40,000 time-based stock options to Dr. David, and 160,000 time-based stock options to Mr. Baluch, and granted the same number of performance-based stock options to each, respectively. In November 2021, the Board, based on the recommendation of the Compensation Committee, granted additional stock options to Drs. David and Mounts, in order to recognize their increased responsibilities, including assuming the additional obligations associated with the interim Chief Executive Director role in the case of Dr. David, and overseeing the Company’s technical operations group, in the case of Dr. Mounts. Dr. David was granted a stock option with respect to 125,000 shares of our common stock and Dr. Mounts was granted a stock option with respect to 100,000 shares of our common stock, both with an exercise price of $5.56 per share, which was the closing price of our common stock on the Nasdaq Global Market on the date of grant. The options will vest over four years in four equal annual installments beginning on the date of grant, subject to Drs. David and Mounts’ continued employment, consistent with the terms of our standard form of option agreement. In February 2021, the Compensation Committee amended outstanding time-based stock options held by our Named Executive Officers to extend the post-termination exercise periods with respect to such stock options that are vested as of the date of termination of employment: (i) from 90 days to 12 months following the date of termination in the event of an involuntary termination without Cause, a termination for Good Reason, death or disability and (ii) by implementing a new three-year post-termination exercise period following the date of termination of employment in the event of a termination by reason of retirement (i.e., termination after reaching age 62 with five years of continuous service or age 55 with ten years of continuous service), but not beyond the date of expiration of the term of the option in either case. The amendment did not apply to outstanding incentive stock option so as to not affect their tax status. We expect to continue to use stock options as a long-term incentive vehicle because: ● Stock options align the interests of our Named Executive Officers with those of our stockholders, supporting a pay-for performance culture, foster employee stock ownership, and focus the management team on increasing value for our stockholders. ● Stock options are performance-based. All of the value received by the recipient of a stock option is based on the growth of the stock price. In addition, stock options can be issued with vesting based on the achievement of performance goals. ● Stock options help to provide balance to the overall executive compensation program as base salary and annual bonuses focus on short-term compensation, while the vesting of stock options increases stockholder value over the longer term. ● The vesting period of stock options encourages executive retention and the preservation of stockholder value. In determining the number of stock options to be granted to our Named Executive Officers, we take into account the individual’s position, scope of responsibility, ability to affect profits and stockholder value and the individual’s historic and recent performance and the value of stock options in relation to other elements of the individual Named Executive Officer’s total compensation. 65 Executive Benefits and Perquisites Our Named Executive Officers are parties to employment agreements as described below. In addition, consistent with our compensation philosophy, we intend to continue to maintain our current benefits for our Named Executive Officers, including medical, dental and life insurance and the ability to contribute to a 401(k) plan; however, the Compensation Committee in its discretion may revise, amend, or add to the officer’s executive benefits if it deems it advisable. We believe these benefits are currently comparable to benefit levels for comparable companies. Employment Agreements Employment Agreements with Current Named Executive Officers On September 26, 2019, we entered into an employment agreement with Mr. Baluch, our former Chief Executive Officer. In connection with Mr. Baluch’s separation from service on October 4, 2021, we and Mr. Baluch entered into a separation agreement and release dated as of October 1, 2021 (the “Baluch Separation Agreement”). Mr. Baluch’s retirement was treated as a termination without Cause (as defined below) under the employment agreement, based on the circumstances of his retirement. Under the Baluch Separation Agreement, Mr. Baluch received the severance payments and benefits described in his employment agreement as follows: (i) lump sum payment of 60 days compensation, payment of any accrued compensation and any unpaid bonus for the prior year, as well as rights to indemnification and directors’ and officers’ liability insurance and any rights or privilege otherwise required by law; (ii) payment of base salary for a period of 12 months following October 4, 2021; (iii) payment on a prorated basis, if any, for the 2021 year, based on the actual achievement of the specified bonus objectives; (iv) if Mr. Baluch elected to continue health insurance coverage under COBRA, monthly payment of a portion of his COBRA premium for a period of 12 months following October 4, 2021 or until he became eligible for group health insurance coverage under another employer’s plan, whichever occurs first; and (v) all equity awards and stock options that are scheduled to vest on or before the next succeeding anniversary of the date of termination shall be accelerated and deemed to have vested as of the termination date, provided that any performance-based equity awards and stock options whose vesting requirements have not been successfully met as of the date of termination will not accelerate. Mr. Baluch met the eligibility requirements for retirement as of the date of his separation, so certain of Mr. Baluch’s vested stock options will be exercisable for up to three years after the date of his separation under the terms of the applicable grant agreements. The Baluch Separation Agreement provides this retirement treatment for all of Mr. Baluch’s outstanding vested options. We reimbursed Mr. Baluch for reasonable legal fees up to $20,000 incurred in connection with the review of the Baluch Separation Agreement. Mr. Baluch is bound by confidentiality, non-solicitation and non-competition covenants under his employment agreement, and an extended covenant not to solicit employees under the Baluch Separation Agreement, among other terms. On April 17, 2020, we entered into an employment agreement with Mr. Armstrong, our former Executive Vice President for Technical Operations. In connection with Mr. Armstrong’s separation from service on October 4, 2021, we and Mr. Armstrong entered into a separation agreement and release dated as of October 4, 2021 (the “Armstrong Separation Agreement”). Mr. Armstrong’s retirement was treated as a termination without Cause under the employment agreement, based on the circumstances of his requirement. Under the Armstrong Separation Agreement, Mr. Armstrong received the severance payments and benefits described in his employment agreement are as follows: (i) lump sum payment of 60 days compensation, payment of any accrued compensation and any unpaid bonus for the prior year, as well as rights to indemnification and directors’ and officers’ liability insurance and any rights or privilege otherwise required by law; (ii) payment of base salary for a period of nine months following October 4, 2021; (iii) payment on a prorated basis, if any, for the 2021 year, based on the actual achievement of the specified bonus objectives; (iv) if Mr. Armstrong elected to continue health insurance coverage under COBRA, then monthly payment of a portion of his COBRA premium for a period of nine months following October 4, 2021 or until he became eligible for group health insurance coverage under another employer’s plan, whichever occurs first; and (v) all equity awards and stock options that are scheduled to vest on or before the next succeeding anniversary of the date of termination shall be accelerated and deemed to have vested as of the termination date, provided that any performance-based equity awards and stock options whose vesting requirements have not been successfully met as of the date of termination will not accelerate. Mr. Armstrong met the eligibility requirements for retirement as of the date of his separation, so certain of Mr. Armstrong’s vested stock options will be exercisable for up to three years after the date of his separation under the terms of the applicable grant agreements. The Armstrong Separation Agreement provides this retirement treatment for all outstanding vested options. We reimbursed Mr. Armstrong for reasonable legal fees up to $10,000 incurred in connection with the review of the Armstrong Separation Agreement. Mr. Armstrong is bound by confidentiality, non-solicitation and non-competition covenants under his employment agreement, and an extended covenant not to solicit employees under the Armstrong Separation Agreement, among other terms. On March 10, 2021, we entered into a new employment agreement with Ms. Masson-Hurlburt to serve as our Executive Vice President and Head of Clinical Operations. On March 19, 2019, we entered into an employment agreement with Dr. Mounts to serve as our Executive Vice President and General Counsel and Head of Regulatory, Compliance and Legal, effective May 1, 2019. On April 29, 2021, we entered into an employment agreement with Mr. Nusbickel to serve as our Executive Vice President and Chief Commercial Officer, effective May 13, 2021. After the initial three-year term of each employment agreement, the term of the employment agreement will automatically renew for additional successive one-year periods, unless either party notifies the other in writing at least 90 days before the expiration of the then-current term that the term will not be renewed. 66 On May 11, 2020, we entered into an employment agreement with Dr. David to serve as our Chief Financial Officer. After the initial three-year term of the employment agreement, the term of the employment agreement will automatically renew for additional successive one-year periods, unless either party notifies the other in writing at least 90 days before the expiration of the then-current term that the term will not be renewed. On October 26, 2021, we entered into a letter agreement with Dr. David which modified certain terms of his employment agreement and provided other compensation as a result of Dr. David serving as our interim Chief Executive Officer effective as of October 4, 2021. Pursuant to the letter agreement, during the period in which Dr. David serves as interim Chief Executive Officer, his base salary was increased to $425,000 from $330,000, which is the amount set forth in his employment agreement. Should Dr. David continue to serve as the interim Chief Executive Officer for six months after October 4, 2021, the Board or Compensation Committee will review such base salary to determine whether an increase is appropriate at that time. After Dr. David ceases to serve as interim Chief Executive Officer, and as he continues to serve as Chief Financial Officer, we will provide him with an annual base salary of $375,000, representing a $45,000 increase from his current salary level under the employment agreement. The Board or Compensation Committee will review such base salary to determine whether an increase is appropriate in 2022 as part of the 2022 compensation review cycle and benchmarking review. Under the letter agreement, Dr. David’s target annual bonus with respect to the period during which he serves as interim Chief Executive Officer is increased to 60% from 30% of his base salary. After Dr. David ceases to serve as interim Chief Executive Officer, and as he continues to serve as Chief Financial Officer, his target annual bonus will increase to 40% of his base salary. Under the letter agreement, in the event Dr. David’s employment is terminated by us other than as a result of his death or disability or notice of nonrenewal of the employment agreement, and other than for Cause, or if he resigns for Good Reason, in either case during the period he serves as interim Chief Executive Officer, he will be eligible for severance equal to his base salary for a period of 12 months following his termination date, which is increased from nine months as is otherwise provided for in his employment agreement. Dr. David has agreed to waive any rights he may have under his employment agreement to a Good Reason termination as a result of his ceasing to serve as our interim Chief Executive Officer at a future date. In connection with Dr. David serving as interim Chief Executive Officer, the Board granted Dr. David a stock option with respect to 125,000 shares of our common stock with an exercise price of $5.56 per share, which was the closing price of our common stock on the Nasdaq Global Market on the date of grant. The option will vest over four years in four equal annual installments beginning on the date of grant, subject to Dr. David’s continued employment, consistent with the terms of our standard form of option agreement. Pursuant to their respective employment agreements, Mr. Baluch received an annual salary of $425,000, Mr. Armstrong received an annual salary of $325,000, Ms. Masson-Hurlburt receives an annual salary of $315,000 (effective March 2021), Dr. Mounts receives an annual salary of $350,000 (amended to $375,000 in January 2021), Mr. Nusbickel receives and annual salary of $375,000 and Dr. David receives an annual salary of $330,000 (amended to $425,000 while he serves as interim Chief Executive Officer). Such salaries cannot be decreased unless all officers and/or members of our executive management team experience an equal or greater percentage reduction in base salary and/or total compensation, provided that any reduction in an executive’s salary may be no greater than 25%. Messrs. Baluch and Armstrong were eligible for an annual bonus, of up to 80% of his base salary for Mr. Baluch (the target amount is 80%, but the bonus could exceed that amount) and up to 35% of his base salary for Mr. Armstrong, as determined by our Board or the Compensation Committee. Each other executive will be eligible for an annual bonus of up to 30% for Ms. Masson-Hurlburt, up to 30% for Dr. Mounts, up to 30% for Mr. Nusbickel and up to 30% for Dr. David (and up to 60% while he serves as interim Chief Executive Officer), of his or her base salary then in effect, as determined by our Board or the Compensation Committee. In determining such bonus payment, our Board or the Compensation Committee will take into consideration the achievement of specified Company objectives, predetermined by our Board or the Compensation Committee and Chief Executive Officer, and such other factors as our Board or the Compensation Committee deems appropriate. Each executive generally must be employed through December 31 of a given year to be eligible to earn that year’s annual bonus. The following provisions of the employment agreements with Dr. David, Dr. Mounts, Ms. Masson-Hurlburt and Messrs. Nusbickel, Baluch and Armstrong are identical except where noted. If we terminate the executive’s employment for Cause, the executive will be entitled to receive only the accrued compensation due to him or her as of the date of such termination, rights to indemnification and directors’ and officers’ liability insurance, and as otherwise required by law, and certain equity awards will be forfeited. 67 If we terminate the executive’s employment other than for Cause, and other than for death, disability or notice of nonrenewal, or if the executive resigns for Good Reason (as defined below), the executive will receive the following benefits: (i) payment of any accrued compensation and any unpaid bonus relating to the completed prior year, as well as rights to indemnification and directors’ and officers’ liability insurance and any rights or privilege otherwise required by law; (ii) we will continue to pay the executive’s base salary for a period of twelve months in the case of Mr. Baluch, and in the case of Dr. David while he is serving as interim Chief Executive Officer, following termination of employment and nine months for the other executives, and for Dr. David while he is not serving as interim Chief Executive Officer, following termination of employment; (iii) payment on a prorated basis for any target bonus for the year of termination based on the actual achievement of the specified bonus objectives; (iv) if the executive timely elects continued health insurance coverage under COBRA, then we will pay the premium to continue such coverage for him or her and his or her eligible dependents in an amount equal to the portion paid for by us during the executive’s employment until the conclusion of the time when he or she is receiving continuation of base salary payments or until he or she becomes eligible for group health insurance coverage under another employer’s plan, whichever occurs first, provided however that we have the right to terminate such payment of COBRA premiums on behalf of the executive and instead pay him or her a lump sum amount equal to the COBRA premium times the number of months remaining in the specified period if we determine in our discretion that continued payment of the COBRA premiums is or may be discriminatory under Section 105(h) of the Code; and (v) unvested equity awards that are scheduled to vest on or before the next succeeding anniversary of the date of termination shall be accelerated and deemed to have vested as of the termination date; provided that any performance based equity awards or stock options whose vesting requirements have not been successfully met as of the date of termination of employment or resignation with Good Reason will not accelerate. In addition, the event of a termination by the Company without Cause or the executive’s resignation of employment for Good Reason, in either case within 24 months following a Corporate Transaction (as defined in the employment agreement), all equity awards and stock options shall become fully vested and exercisable, and vested stock options will remain exercisable for a specified period of time following termination or resignation or, if earlier, the expiration date of the stock option. The separation benefits set forth above are conditioned upon the executive executing a release of claims against us, our parents, subsidiaries, and affiliates, and each such entities’ officers, directors, employees, agents, successors, and assigns in a form acceptable to us, within a time specified therein, which release is not revoked within any time period allowed for revocation under applicable law. For purposes of the agreement, “Cause” is defined as: (i) the willful failure, disregard, or refusal by the executive to perform his or her material duties or obligations under the employment agreement (other than as a result of executive’s mental incapacity or illness; (ii) any willful, intentional, or grossly negligent act by the executive having the effect of materially injuring (whether financially or otherwise) our business or reputation or any of our affiliates; (iii) executive’s conviction of any felony involving moral turpitude (including entry of a guilty or nolo contendere plea); (iv) the executive’s qualification as a “bad actor,” as defined by 17 CFR 230.506(a); (v) the good faith determination by the Board, after a reasonable and good-faith investigation by us that the executive engaged in some form of harassment or discrimination prohibited by law (including, without limitation, harassment on the basis of age, sex or race) unless the executive’s actions were specifically directed by the Board; (vi) any material misappropriation or embezzlement by the executive of our or our affiliates’ property (whether or not a misdemeanor or felony); or (vii) material breach by the executive of the employment agreement that is materially injurious to us and that is not cured, to the extent subject to cure, by executive to our reasonable satisfaction. For purposes of the agreement, “Good Reason” is defined as any of the following without the executive’s consent: (i) any material breach of the employment agreement by us; (ii) any material diminution by us of the executive’s duties, responsibilities, or authority; (iii) a material reduction in the executive’s annual base salary unless all officers and/or members of our executive management team experience an equal or greater percentage reduction in annual base salary and/or total compensation, provided that any reduction may be no greater than 25%; (iv) a material reduction in the executive’s target bonus level unless all officers and/or members of our executive management team experience an equal or greater percentage reduction related to target bonus levels, provided that any reduction may be no greater than 25%. If the executive terminates his or her employment by written notice of termination or if the executive or we terminate his or her employment by providing a notice of nonrenewal at least 90 days before the employment agreement is set to expire, the executive will not be entitled to receive any payments or benefits other than any accrued compensation, any unpaid prior year’s bonus, rights to indemnification and directors’ and officers’ liability insurance and as otherwise required by law. If the executive’s employment is terminated as a result of his or her death or disability, we will pay the executive or the executive’s estate, as applicable, any accrued compensation and any unpaid prior year’s bonus. Our employment agreements with Dr. David, Dr. Mounts, Ms. Masson-Hurlburt and Messrs. Nusbickel, Baluch and Armstrong each contain a non-compete provision that provides that during the employment and for a specified period immediately following the executive’s separation from employment for any reason, the executive is prohibited from engaging in any business involving the development or commercialization of a preventive anti-infective product that would be a direct competitor of Defencath/Neutrolin or a product containing taurolidine or any other product being actively developed or produced by us within the United States and the European Union (or in the case of Dr. David, Ms. Masson-Hurlburt and Mr. Nusbickel, worldwide) on the date of termination of his or her employment. 68 Tax and Accounting Considerations U.S. federal income tax generally limits the tax deductibility of compensation we pay to our Named Executive Officers and certain other officers to $1.0 million each in the year the compensation becomes taxable to the executive officers. Although deductibility of compensation is preferred, tax deductibility is not a primary objective of our compensation programs. Rather, we seek to maintain flexibility in how we compensate our executive officers so as to meet a broader set of corporate and strategic goals and the needs of stockholders, and as such, we may be limited in our ability to deduct amounts of compensation from time to time. Accounting rules require us to expense the cost of our stock option grants. Because of option expensing and the impact of dilution on our stockholders, we pay close attention to, among other factors, the type of equity awards we grant and the number and value of the shares underlying such awards. Pension Benefits We do not maintain any qualified or nonqualified defined benefit pension plans. As a result, none of our Named Executive Officers participate in or have benefits under qualified or nonqualified defined benefit pension plans sponsored by us. Our Compensation Committee may elect to adopt qualified or nonqualified pension benefit plans in the future if it determines that doing so is in our best interests. Nonqualified Deferred Compensation None of our Named Executive Officers participate in nonqualified defined contribution plans or other nonqualified deferred compensation plans maintained by us. Our Compensation Committee may elect to provide our officers and other employees with nonqualified deferred compensation benefits in the future if it determines that doing so is in our best interests. Summary Compensation Table The following table sets forth information with respect to compensation earned by our Named Executive Officers in the years ended December 31, 2021 and 2020: Name and Principal Position Year Salary ($) Option Awards (1) ($) Non-equity Incentive Plan Compensation ($) (4) All Other Compensation ($) Total ($) Matthew David (2) 2021 351,923 951,895 165,150 43,584 (5) 1,512,552 Interim Chief Executive Officer and Chief Financial Officer 2020 209,423 768,386 99,000 20,866 (5) 1,097,675 Phoebe Mounts 2021 375,000 1,164,810 101,250 11,412 (5) 1,652,472 Executive Vice President and General Counsel and Head of Regulatory, Compliance and Legal 2020 350,000 408,070 163,333 9,745 (5) 931,148 Elizabeth Masson-Hurlburt 2021 310,800 742,910 70,875 44,818 (5) 1,169,403 Executive Vice President and Head of Clinical Operations 2020 291,792 332,420 136,500 35,561 (5) 796,273 Thomas Nusbickel (3) 2021 233,654 (3) 1,540,265 75,000 27,663 (5) 1,876,582 Executive Vice President and Chief Commercial Officer Khoso Baluch (6) 2021 366,700 1,698,080 (6) -- 531,393 (7) 2,596,173 Former Chief Executive Officer 2020 425,000 428,583 340,000 40,088 (10) 1,233,671 John Armstrong (8) 2021 272,500 742,910 (8) -- 323,938 (9) 1,339,348 Former Executive Vice President for Technical Operations 2020 322,635 332,420 112,875 19,388 (11) 787,318 (1) The amounts included in this column are the dollar amounts representing the full grant date fair value of each award calculated in accordance with FASB ASC Topic 718 and do not represent the actual value that may be recognized by the Named Executive Officers upon option exercise. 69 (2) Dr. David became our Executive Vice President and Chief Financial Officer on May 11, 2020 and is also serves as the interim Chief Executive Officer effective October 4, 2021. (3) Mr. Nusbickel became our Executive Vice President and Chief Commercial Officer on May 13, 2021. His salary does not include the sign-in bonus in cash amounting to $50,000, to be paid on the first anniversary of his employment, subject to his continued employment with us. (4) The non-equity incentive plan compensation are bonuses reflected in 2021 were for the performance for the year 2021 which were accrued in 2021 but will be paid in 2022. (5) Consists of health benefits and 401(k) employer match. (6) On October 1, 2021, the Company and Khoso Baluch came to a mutual agreement pursuant to which Mr. Baluch retired from his position as the Company’s Chief Executive Officer, effective October 4, 2021. Option awards include 240,000 options that were forfeited when he retired, with a grant date fair value of $1,196,240. (7) Consists of health benefits, 401(k) employer match and severance pay of $495,833 of which $177,492 was paid in 2021 and the remaining balance of $318,341 will be paid in 2022. (8) On October 4, 2021, the Company and John Armstrong came to a mutual agreement pursuant to which Mr. Armstrong retired from his position as the Company’s Executive Vice President, Technical Operations, effective October 4, 2021. Option awards include 105,000 options that were forfeited when he retired, with a grant date fair value of $523,355. (9) Consists of health benefits and severance pay of $297,917 of which $134,514 was paid in 2021 and the remaining balance of $163,403 will be paid in 2022. (10) Consists of health benefits, 401(k) employer match, and reimbursed commuter expenses (11) Consists of health benefits. 70 Outstanding Equity Awards at Fiscal Year-End 2021 The following table contains certain information concerning unexercised options for the Named Executive Officers as of December 31, 2021. Name Number of Shares Underlying Unexercised Options (#) – Exercisable Number of Shares Underlying Unexercised Options (#) – Unexercisable (1) Equity Incentive Plan Awards: Number of Shares Underlying Unexercised Unearned Options # (2) Option Exercise Price ($) Option Expiration Date Matthew David 42,917 62,250 19,833 5.63 05/11/2030 42,917 62,250 19,833 4.08 05/11/2030 10,000 30,000 40,000 8.32 01/10/2031 31,250 93,750 -- 5.56 10/31/2031 Phoebe Mounts 39,000 21,000 10,000 7.92 05/01/2029 12,382 12,382 -- 5.63 02/25/2030 25,000 25,000 -- 4.08 05/11/2030 25,000 25,000 -- 5.63 05/11/2030 17,500 52,500 70,000 8.32 01/10/2031 25,000 75,000 -- 5.56 10/31/2031 Elizabeth Masson-Hurlburt 44,700 9,300 -- 1.45 3/19/2028 18,780 2,100 -- 8.30 01/10/2029 12,382 12,382 -- 5.63 02/25/2030 18,750 18,750 -- 4.08 05/11/2030 18,750 18,750 -- 5.63 05/11/2030 17,500 52,500 70,000 8.32 01/10/2031 Thomas Nusbickel -- 167,500 100,000 7.56 05/12/2031 Khoso Baluch 310,000 -- -- 12.60 10/04/2024 69,600 -- -- 8.30 10/04/2024 90,000 -- -- 6.82 10/04/2024 75,472 -- -- 5.63 10/04/2024 80,000 -- -- 8.32 10/04/2024 John Armstrong 2,000 -- -- 7.60 10/04/2024 3,000 -- -- 16.25 10/04/2024 40,000 -- -- 12.55 10/04/2024 6,600 -- -- 10.90 10/04/2024 7,830 -- -- 8.30 10/04/2024 46,698 -- -- 5.63 10/04/2024 28,125 -- -- 4.08 10/04/2024 35,000 -- -- 8.32 10/04/2024 (1) Options vest based on continued employment over three or four years. (2) Options vest based on achievement of specific milestones and continued employment and become exercisable if and when a milestone is achieved. Option Repricings We did not engage in any repricings or other modifications to any of our Named Executive Officers’ outstanding options during the year ended December 31, 2021. 71 Potential Payments on a Qualifying Termination If the severance payments called for in our employment agreements for Dr. David, Dr. Mounts, Ms. Masson-Hurlburt and Mr. Nusbickel had been triggered on December 31, 2021, we would have been obligated to make the following payments: Name Cash Severance Payment ($ per month) and (# of months paid) Severance Benefits ($ per month) and (# of months paid) (1) Number of Options (# that would vest) and ($ market value) (2) Matthew David $ 35,417 (3) 12 mos. $ 2,915 12 mos. 62,250 $ 29,258 Phoebe Mounts $ 31,250 (4) 9 mos. $ 0 9 mos. 25,000 $ 11,750 Elizabeth Masson-Hurlburt $ 26,250 (5) 9 mos. $ 2,915 9 mos. 28,050 $ 37,643 Thomas Nusbickel $ 31,250 (6) 9 mos. $ 2,882 9 mos. 0 $ 0 (1) Consists of COBRA payments. (2) The market value equals the difference between the fair market value of the shares that could be acquired based on the closing sale price per share of our common stock on the Nasdaq Global Market on December 31, 2021, which was $4.55, and the exercise prices of the applicable stock options. (3) Represents severance based on monthly base salary, payable for 12 months. Any bonus for the year of termination based on performance would also be paid. (4) Represents severance based on monthly base salary, payable for 9 months. Any bonus for the year of termination based on performance would also be paid. (5) Represents severance based on monthly base salary, payable for 9 months. Any bonus for the year of termination based on performance would also be paid. (6) Represents severance based on monthly base salary, payable for 9 months. Any bonus for the year of termination based on performance would also be paid. (7) Represents severance based on monthly base salary, payable for 9 months. Any bonus for the year of termination based on performance would also be paid. The severance payments called for in the employment agreements with Messrs. Baluch and Armstrong were both triggered on October 4, 2021, and the Company was obligated to make the following payments pursuant to their respective separation agreements: Name Cash Severance Payment ($ per month) and (# of months paid) Severance Benefits ($ per month) and (# of months paid) (1) Number of Options (# that vested) and ($ market value) (2 ) Khoso Baluch (3) $ 35,417 (5) 12 mos. $ 2,016 12 mos. 0 $ 0 John L. Armstrong, Jr. (4) $ 27,083 (5) 9 mos. $ 2,081 9 mos. 28,125 $ 13,219 (1) Consists of COBRA payments. (2) The market value equals the difference between the fair market value of the shares that could be acquired based on the closing sale price per share of our common stock on the Nasdaq Global Market on December 31, 2021, which was $4.55, and the exercise prices of the applicable stock options. (3) We entered into a Separation Agreement with Mr. Baluch on October 4, 2021, and pursuant to that agreement, we paid Mr. Baluch an additional lump sum payment of $70,833 which represented base salary for 60 days as pay in lieu of notice. (4) We entered into a Separation Agreement with Mr. Armstrong on October 4, 2021, and pursuant to that agreement, we paid Mr. Armstrong an additional lump sum payment of $54,167 which represented base salary for 60 days as pay in lieu of notice. (5) Represents severance pay based on monthly base salary. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table shows the number of shares of our common stock beneficially owned as of March 25, 2022 by: ● each person known by us to own beneficially more than 5% of the outstanding shares of our common stock; ● each director; ● each of our Named Executive Officers; and ● all of our current directors and executive officers as a group. This table is based upon the information supplied by our Named Executive Officers, directors and principal stockholders and from Schedules 13D and 13G filed with the SEC. Except as indicated in footnotes to this table, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown, and their address is c/o CorMedix Inc., 300 Connell Drive, Suite 4200, Berkeley Heights, New Jersey 07922. As March 25, 2022 we had 38,727,979 shares of common stock outstanding. Beneficial ownership in each case also includes shares issuable upon exercise of outstanding options that can be exercised within 60 days after March 25, 2022 for purposes of computing the percentage of common stock owned by the person named. Options owned by a person are not included for purposes of computing the percentage owned by any other person. 72 Name and Address of Beneficial Owner Common Stock Beneficially Owned (1) Shares % 5% or Greater Stockholders Elliott Associates, L.P. (2) 1,303,411 4.99 % BlackRock, Inc. (3) 2,500,721 6.6 % Nomura Global Financial Products, Inc. (4) 2,003,612 5.3 % Directors: Paulo F. Costa (5) 42,083 * Janet Dillione (6) 163,473 * Gregory Duncan (7) 40,833 * Alan W. Dunton (8) 83,750 * Myron Kaplan (9) 261,034 * Steven Lefkowitz (10) 180,650 * Joseph Todisco 0 * Named Executive Officers: Matthew David (11) 206,734 * Phoebe Mounts (12) 245,273 * Elizabeth Masson-Hurlburt (13) 209,703 * Thomas Nusbickel (14) 72,500 * Khoso Baluch (15) 685,977 1.7 John Armstrong (16) 266,131 * All Executive Officers and directors as a group (11 persons) (17) 1,506,033 3.8 % * Less than 1% (1) Based upon 38,727,979 shares of our common stock outstanding on March 25, 2022 and, with respect to each individual holder, rights to acquire our common stock exercisable within 60 days of March 25, 2022. (2) Based solely on information contained in Amendment No. 1 to the Statement on Schedule 13D filed with the SEC on February 11, 2021 by Elliott Associates, L.P. (“Elliott Associates”), Elliott International, L.P. (“Elliott International”) and Elliott International Capital Advisors Inc. (“Elliott International Capital Advisors”, and together with Elliott Associates and Elliott International, the “Elliott Reporting Entities”), the investment manager of Elliott International, and other information known to us. The Elliott Reporting Entities may be deemed to collectively beneficially own 7,136,979 shares of our common stock, including (i) 1,184,889 shares of common stock outstanding, (ii) 391,953 shares of common stock issuable upon conversion of the Series E preferred stock, and (iii) 5,560,137 shares of common stock issuable upon conversion of the Series G preferred stock. The number of shares of our common stock into which the Series E and Series G preferred stock are convertible into, as applicable, are limited pursuant to the terms of the convertible securities to that number of shares of our common stock which would result in the Elliott Reporting Entities having aggregate beneficial ownership of not more than 4.99% (calculated in accordance with Rule 13d-4 under the Exchange Act) of the total issued and outstanding shares of our common stock (the “Ownership Limitation”). The Elliott Reporting Entities disclaim beneficial ownership of any and all shares of our common stock issuable upon any conversion of the convertible securities if such conversion would cause the Elliott Reporting Entities aggregate beneficial ownership of our common stock to exceed or remain above the Ownership Limitation. Therefore, the Elliott Reporting Entities disclaim beneficial ownership of any shares of our common stock, issuable upon any conversion of the Series E preferred stock and the Series G preferred stock, which conversion would be prohibited by the Ownership Limitation. The Ownership Limitation does not prevent the Elliott Reporting Entities or their affiliates from voting the shares of Series E and Series G preferred stock held by Elliott Associates and Elliott International. Accordingly, the shares of Series E preferred stock and Series G preferred stock, as of the record date, will be entitled to an aggregate of 2,682,477 votes. The business address of Elliott Investment Management L.P., the investment manager of the Elliott Reporting Entities, is 40 West 57 th Street, 30 th Floor, New York, New York 10019. 73 (3) Based solely on information contained in Amendment No. 1 to the Statement on Schedule 13G filed with the SEC on February 3, 2022 by BlackRock, Inc. (“BlackRock”). BlackRock has the sole voting power with respect to 2,450,933 shares of our common stock and the sole dispositive power with respect to 2,500,721 shares of our common stock. The business address of BlackRock is 55 East 52 nd Street, New York, New York 10055. (4) Based solely on information contained on Schedule 13G filed with the SEC on February 14, 2022 by Nomura Global Financial Products, Inc. (“NGFP”). NGFP is a wholly owned subsidiary of Nomura Holdings, Inc., which accordingly may be deemed to beneficially own the shares beneficially owned by NGFP. NGFP has the shared voting power with respect to 2,003,612 shares of our common stock and the shared dispositive power with respect to 2,003,612 shares of our common stock. The business address of NGFP is Worldwide Plaza, 309 West 49 th Street, New York, NY 10019. The business address of Nomura Holdings, Inc. is 13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-8645, Japan. (5) Consists of 42,083 shares of our common stock issuable upon exercise of stock options. (6) Consists of (i) 53,473 shares of our common stock, and (ii) 110,000 shares of our common stock issuable upon exercise of stock options. Ms. Dillione also holds 48,909 shares of common stock deferred under Director’s Compensation Plan, which is excluded for purposes of calculating the number of shares of our common stock beneficially owned as of March 25, 2022. (7) Consists of 40,833 shares of our common stock issuable upon exercise of stock options. (8) Consists of (i) 6,250 shares of our common stock, and (ii) 77,500 shares of our common stock issuable upon exercise of stock options. (9) Consists of (i) 140,034 shares of our common stock held directly, (ii) 30,000 shares of our common stock held by Mr. Kaplan’s wife, 20,000 of which are held by her individually and 10,000 of which are held as a custodian for two of Mr. Kaplan’s grandchildren, and (iii) 91,000 shares of our common stock issuable upon exercise of stock options. (10) Consists of (i) 60,498 shares of our common stock held directly, (ii) 2,000 shares of our common stock held by Mr. Lefkowitz’s wife, (iv) 30,152 shares of our common stock held by Wade Capital Corporation Money Purchase Plan, an entity for which Mr. Lefkowitz has voting and investment control, and (v) 88,000 shares of our common stock issuable upon exercise of stock options. (11) Consists of (i) 3,150 shares of our common stock, and (ii) 203,584 shares of our common stock issuable upon exercise of stock options. (12) Consists of (i) 7,200 shares of our common stock, and (ii) 238,073 shares of our common stock issuable upon exercise of stock options. (13) Consists of 209,703 shares of our common stock issuable upon exercise of stock options. (14) Consists of 72,500 shares of our common stock issuable upon exercise of stock options. (15) Consists of (i) 60,905 shares of our common stock, and (ii) 625,072 shares of our common stock issuable upon exercise of stock options. On October 1, 2021, we came to a mutual agreement with Mr. Baluch pursuant to which, Mr. Baluch retired from his position as our Chief Executive Officer, effective October 4, 2021. Mr. Baluch also resigned from our Board of Directors. (16) Consists of (i) 96,878 shares of our common stock, and (ii) 169,253 shares of our common stock issuable upon exercise of stock options. On October 4, 2021, we came to a mutual agreement with Mr. Armstrong pursuant to which Mr. Armstrong retired from his position as our Executive Vice President, Technical Operations, effective October 4, 2021. (17) Consists of the following held by our directors and executive officers (A) 302,757 shares of our common stock, and (B) 1,173,276 shares of our common stock issuable upon exercise of stock options. Stock Performance Graph The following performance graph shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act except as shall be expressly set forth by specific reference in such filing. The performance graph compares the performance of our common stock to the Russel 2000 Index and the NASDAQ Biotechnology Index. The graph covers the most recent five-year period ended December 31, 2021. The graph assumes that the value of the investment in our common stock and each index was $100.00 at December 31, 2016, and that all dividends are reinvested. 74 Cumulative Total Return 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021 CorMedix Inc. $ 100.00 $ 32.81 $ 84.31 $ 95.16 $ 97.12 $ 59.48 Russell 2000 $ 100.00 $ 114.65 $ 102.02 $ 128.06 $ 153.62 $ 176.39 NASDAQ Biotechnology $ 100.00 $ 121.63 $ 110.85 $ 138.69 $ 175.33 $ 175.37 Item 13. Certain Relationships and Related Transactions and Director Independence Related Party Transactions In February 2021, Manchester Securities Corp., Elliott Associates LP and Elliott International LP (collectively, “Elliott”), an existing institutional investor who collectively beneficially own the largest portion of the Company’s common stock, converted an aggregate of 10,001 Series G preferred shares into an aggregate of 556,069 shares of our common stock. Procedures for Review and Approval of Transactions with Related Persons Pursuant to the Audit Committee Charter, the Audit Committee is responsible for reviewing and approving all related party transactions as defined under Item 404 of Regulation S-K, after reviewing each such transaction for potential conflicts of interests and other improprieties. Our policies and procedures for review and approval of transactions with related persons are in writing in our Code of Conduct and Ethics available on our website at www.cormedix.com under the “Investor Relations—Corporate Governance” tab. The information on Board independence is found in Item 10 of this Report under the heading “Board Independence.” Item 14. Principal Accounting Fees and Services Fees Paid to the Independent Registered Public Accounting Firm The following table sets forth fees billed to us by Friedman LLP, our independent registered public accounting firm for the years ended December 31, 2021 and 2020, for services relating to: auditing our annual financial statements; reviewing our financial statements included in our quarterly reports on Form 10-Q; reviewing registration statements during 2021 and 2020; financing activities in 2021 and 2020; and services rendered in connection with tax compliance, tax advice and tax planning, and all other fees for services rendered. 75 2021 2020 Audit Fees $ 155,000 $ 153,000 Audit Related Fees 16,000 37,000 Tax Fees - - All Other Fees - - Total $ 171,000 $ 190,000 Audit Committee Pre-Approval Policies and Procedures Pursuant to its charter, the Audit Committee is responsible for reviewing and approving in advance any audit and any permissible non-audit engagement or relationship between us and our independent registered public accounting firm. The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant pre-approvals, provided such approvals are presented to the Audit Committee at a subsequent meeting. If the Audit Committee elects to establish pre-approval policies and procedures regarding non-audit services, the Audit Committee must be informed of each non-audit service provided by our independent registered public accounting firm. Audit Committee pre-approval of audit and non-audit services will not be required if the engagement for the services is entered into pursuant to pre-approval policies and procedures, provided the policies and procedures are detailed as to the particular service, the Audit Committee is informed of each service provided and such policies and procedures do not include delegation of the Audit Committee’s responsibilities under the Exchange Act to our management. Audit Committee pre-approval of non-audit services (other than review and attestation services) also will not be required if such services fall within available exceptions established by the SEC. All services performed by our independent registered public accounting firm during 2021 were pre-approved by the Audit Committee. PART IV Item 15. Exhibits, Financial Statement Schedules (a) List of documents filed as part of this report: 1. Financial Statements: The financial statements of the Company and the related reports of the Company’s independent registered public accounting firms thereon have been filed under Item 8 hereof. 2. Financial Statement Schedules: None. 3. Exhibit Index The following is a list of exhibits filed as part of this Form 10-K: Exhibit Number Description of Document Registrant’s Form Dated Exhibit Number Filed Herewith 1.1 At Market Issuance Sales Agreement, dated March 9, 2018, between CorMedix Inc. and B. Riley FBR, Inc. S-3 3/09/2018 1.1 1.2 Amended and Restated At Market Issuance Sales Agreement, dated November 27, 2020, by and among CorMedix Inc., B. Riley Securities, Inc. and Needham & Company LLC 8-K 11/27/2020 1.1 1.3 At Market Issuance Sales Agreement, dated August 12, 2021, by and among CorMedix Inc., Truist Securities, Inc. and JMP Securities LLC. 8-K 08/12/2021 1.1 3.1 Form of Amended and Restated Certificate of Incorporation. S-1/A 3/01/2010 3.3 3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation, dated February 24, 2010. S-1/A 3/19/2010 3.5 76 Exhibit Number Description of Document Registrant’s Form Dated Exhibit Number Filed Herewith 3.3 Second Amended and Restated Bylaws as amended October 8, 2020 8-K 10/14/2020 3.1 3.4 Certificate of Amendment to Amended and Restated Certificate of Incorporation, dated December 3, 2012. 10-K 3/27/2013 3.3 3.5 Certificate of Amendment to Amended and Restated Certificate of Incorporation, dated August 9, 2017. 8-K 8/10/2017 3.1 3.6 Certificate of Amendment to Amended and Restated Certificate of Incorporation, dated March 25, 2019 8-K 3/25/2019 3.1 3.7 Amended and Restated Certificate of Designation of Series C-3 Non-Voting Convertible Preferred Stock of CorMedix Inc., filed with the Delaware Secretary of State on September 15, 2014. 8-K 9/16/2014 3.16 3.8 Second Amended and Restated Certificate of Designation of Series E Convertible Preferred Stock of CorMedix Inc., filed with the Delaware Secretary of State on September 5, 2019. 8-K 9/11/2019 3.2 3.9 Certificate of Designation of Series G Convertible Preferred Stock of CorMedix Inc., filed with the Delaware Secretary of State on September 5, 2019 8-K 9/11/2019 3.1 4.1 Specimen of Common Stock Certificate. S-1/A 3/19/2010 4.1 4.2 Form of Warrant issued on January 8, 2014. 8-K 1/09/2014 4.23 4.3 Form of Series B Warrant to Purchase Common Stock of CorMedix Inc. issued on May 3, 2017. 8-K 5/03/2017 4.2 4.4 Form of Underwriter’s Warrant to Purchase Common Stock of CorMedix Inc., issued May 3, 2017. 8-K 5/03/2017 4.3 4.5 Description of Capital Stock of CorMedix Inc. 10-K 3/16/2020 4.5 10.1* License and Assignment Agreement, dated as of January 30, 2008, between the Company and ND Partners LLC. S-1/A 12/312009 10.5 10.2 Escrow Agreement, dated as of January 30, 2008, among the Company, ND Partners LLC and the Secretary of the Company, as Escrow Agent. S-1 11/25/2009 10.6 10.3+ Form of Indemnification Agreement between the Company and each of its directors and executive officers. S-1/A 3/01/2010 10.17 10.4+ 2013 Stock Incentive Plan 10-K 3/27/2013 10.27 10.5+ Executive Employment Agreement, dated as of September 26, 2019, between CorMedix Inc. and Khoso Baluch 8-K 10/01/2019 10.1 10.6+ Separation Agreement and Release, dated October 4, 2021, between CorMedix Inc. and Khoso Baluch. 10-Q 11/09/2021 10.1 10.7**+ Executive Employment Agreement, dated and effective May 11, 2020, between CorMedix Inc. and Matthew David. 10-K 10.10 10.8+ Letter Agreement, dated and effective October 26, 2021, between CorMedix Inc. and Matthew David, M.D. 8-K 10/29/2021 10.1 77 Exhibit Number Description of Document Registrant’s Form Dated Exhibit Number Filed Herewith 10.9**+ Executive Employment Agreement, dated and effective April 17, 2020, between CorMedix Inc. and John Armstrong. 8-K 4/23/2020 10.14 10.10+ Separation Agreement, dated October 4, 2021, between CorMedix Inc. and John K. Armstrong, Jr. 10-Q 11/09/2021 10.2 10.11 Form of Securities Purchase Agreement, dated November 17, 2017, between CorMedix Inc. and the investors signatory thereto. 8-K 11/13/2017 10.1 10.12 Backstop Agreement, dated November 9, 2017, between CorMedix Inc. and the investor named therein. 8-K 11/13/2017 10.2 10.13 Form of Registration Rights Agreement, dated November 9, 2017, by and between CorMedix Inc. and the investor named therein. 8-K 11/13/2017 10.3 10.14 Amendment No. 1, dated as of December 11, 2017, to Registration Rights Agreement, dated November 9, 2017, by and between CorMedix Inc. and the investor named therein. 8-K 12/11/2017 10.1 10.15**+ Executive Employment Agreement, dated and effective March 10, 2021, between CorMedix Inc. and Elizabeth Masson-Hurlburt 8-K 3/12/2021 10.1 10.16 Securities Purchase Agreement, dated December 31, 2018, between CorMedix Inc. and the investor named therein. 8-K 1/03/2019 10.1 10.17* Employment Agreement, dated as of March 19, 2019, between CorMedix Inc. and Phoebe Mounts 10-Q 5/13/19 10.1 10.18 Securities Exchange Agreement, dated August 14, 2019, by and among CorMedix Inc. and the Existing Security holders listed on the Schedule of Holders thereto. 8-K 8/15/2019 10.1 10.19 Amended and Restated Registration Rights Agreement, dated as of September 6, 2019, by and among CorMedix Inc. and Manchester Securities Corp., and Elliot International, L.P. and Elliot Associates, L.P. 8-K 9/11/2019 10.1 10.20 2019 Omnibus Stock Incentive Plan 8-K 11/27/2019 10.1 10.21**+ Executive Employment Agreement, dated April 29, 2021, between CorMedix Inc. and Thomas Nusbickel. 10-Q 08/21/2021 10.1 10.22+ 2021 Executive Bonus Plan 8-K 12/23/2021 10.1 10.23+ Executive Employment Agreement, dated March 16, 2022, between CorMedix Inc. and Joseph Todisco. 8-K 03/21/2022 10.2 21.1 List of Subsidiaries. 10-K 3/27/2013 21.1 23.1 Consent of Independent Registered Public Accounting Firm. X 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 101 The following materials from CorMedix Inc. Form 10-K for the year ended December 31, 2021, formatted in Extensible Business Reporting Language (XBRL): (i) Balance Sheets at December 31, 2021 and 2020, (ii) Statements of Operations for the years ended December 31, 2021 and 2020, (iii) Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020, (iv) Statements of Cash Flows for the years ended December 31, 2021 and 2020 and (v) Notes to the Financial Statements.** X 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Confidential treatment has been granted for portions of this document. The omitted portions of this document have been filed separately with the SEC. ** Portions of the exhibit have been omitted in reliance on Item 601(b)(10)(iv) of Regulation S-K. + Indicates management contract or compensation plan. Item 16. Form 10-K Summary Not applicable. 78 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 29, 2022 By: /s/ Matthew David Matthew David Interim Chief Executive Officer and Chief Financial Officer (Principal Executive Officer) March 29, 2022 By: /s/ Matthew David Matthew David Interim Chief Executive Officer and 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/ Matthew David Interim Chief Executive Officer and Chief Financial Officer March 29, 2022 Matthew David (Principal Executive Officer) /s/ Matthew David Interim Chief Executive Officer and Chief Financial Officer March 29, 2022 Matthew David (Principal Financial and Accounting Officer) /s/ Myron Kaplan Director and Chairman of the Board March 29, 2022 Myron Kaplan /s/ Paulo Costa Director March 29, 2022 Paulo Costa /s/ Janet Dillione Director March 29, 2022 Janet Dillione /s/ Gregory Duncan Director March 29, 2022 Gregory Duncan /s/ Alan Dunton Director March 29, 2022 Alan Dunton /s/ Steven Lefkowitz Director March 29, 2022 Steven Lefkowitz /s/ Joseph Todisco Director March 29, 2022 Joseph Todisco 79 CORMEDIX INC. AND SUBSIDIARIES FINANCIAL STATEMENTS Financial Statements Index Report of Independent Registered Public Accounting Firm (PCAOB ID # 711 ) F-2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F-4 Consolidated Statements of Operations and Comprehensive Income (Loss) Years Ended December 31, 2021 and 2020 F-5 Consolidated Statements of Changes in Stockholders’ Equity Years Ended December 31, 2021 and 2020 F-6 Consolidated Statements of Cash Flows Years Ended December 31, 2021 and 2020 F-7 Notes to Consolidated Financial Statements F-8 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of CorMedix Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of CorMedix, Inc. and Subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 audit to obtain reasonable assurance about whether the consolidated 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 consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated 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 consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F- 2 Critical Audit Matter Description Stock Based Compensation During the year ended December 31, 2021, the Company recorded stock-based compensation expense of approximately $5.0 million. As discussed in Note 7 to the consolidated financial statements, the Company issues various types of equity awards, including stock options and restricted stock units. Auditing the Company’s accounting for stock-based compensation required complex auditor judgment due to the number and variety of equity awards outstanding, the inclusion of market and performance vesting criteria in certain awards, and the subjectivity of assumptions used to value stock-based awards. In particular, judgment was required to evaluate the nature of the performance conditions, as well as to assess the satisfaction of the performance targets. How We Addressed the Matter in Our Audit To test stock based-compensation expense, we performed audit procedures that included, among others, obtaining an understanding of the Company’s controls over stock-based compensation, assessing the completeness of the awards granted and evaluating the methodologies used to estimate the fair value of these awards. We also tested the accuracy of the data used in measuring the awards by agreeing the underlying inputs, such as grant date, grant price, performance targets and vesting terms, among others, back to source documents, such as compensation meeting minutes or award letters and testing the clerical accuracy of the calculation of the expense recorded. We determined whether milestone targets were satisfied in accordance with the contractual conditions and recalculated grant date fair value. We also evaluated the adequacy of the Company’s stock-based compensation disclosures included in Note 7 in relation to these matters. /s/ Friedman LLP We have served as the Company’s auditor since 2014. Marlton, NJ March 29, 2022 F- 3 CorMedix Inc. And Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, 2021 and 2020 December 31, 2021 2020 ASSETS Current assets Cash and cash equivalents $ 53,317,405 $ 41,905,469 Restricted cash 131,567 191,314 Short-term investments 12,149,003 4,444,072 Trade receivables, net 45,368 3,357 Inventories 3,008 143,564 Prepaid research and development expenses 51,993 62,210 Security deposit - 20,000 Other prepaid expenses and current assets 770,485 1,412,183 Total current assets 66,468,829 48,182,169 Property and equipment, net 1,474,937 111,499 Restricted cash, long term 102,305 - Operating lease right-of-use assets 899,505 1,014,635 TOTAL ASSETS $ 68,945,576 $ 49,308,303 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 2,209,552 $ 1,128,104 Accrued expenses 3,014,156 2,924,351 Operating lease liabilities, short-term 121,368 109,128 Total current liabilities 5,345,076 4,161,583 Operating lease liabilities, net of current portion 802,433 923,708 TOTAL LIABILITIES 6,147,509 5,085,291 COMMITMENTS AND CONTINGENCIES (Note 6) STOCKHOLDERS’ EQUITY Preferred stock - $ 0.001 par value: 2,000,000 shares authorized; 181,622 and 241,623 shares issued and outstanding at December 31, 2021 and 2020, respectively 182 242 Common stock - $ 0.001 par value: 160,000,000 shares authorized at December 31, 2021 and 2020; 38,086,437 and 33,558,096 shares issued and outstanding at December 31, 2021 and 2020, respectively 38,086 33,558 Accumulated other comprehensive gain 87,130 102,006 Additional paid-in capital 308,331,750 261,536,061 Accumulated deficit ( 245,659,081 ) ( 217,448,855 ) TOTAL STOCKHOLDERS’ EQUITY 62,798,067 44,223,012 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 68,945,576 $ 49,308,303 The accompanying notes are integral part of these consolidated financial statements. F- 4 CorMedix Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Years Ended December 31, 2021 and 2020 December 31, 2021 2020 Revenue: Net sales $ 190,936 $ 239,231 Cost of sales ( 148,938 ) ( 204,846 ) Gross profit 41,998 34,385 Operating Expenses: Research and development ( 13,132,982 ) ( 13,377,193 ) Selling, general and administrative ( 16,346,601 ) ( 13,877,944 ) Total operating expenses ( 29,479,583 ) ( 27,255,137 ) Loss From Operations ( 29,437,585 ) ( 27,220,752 ) Other Income (Expense): Interest income 14,403 116,065 Foreign exchange transaction loss ( 21,287 ) ( 59,165 ) Interest expense ( 15,943 ) ( 33,226 ) Total other (expense) income ( 22,827 ) 23,674 Net Loss Before Income Taxes ( 29,460,412 ) ( 27,197,078 ) Tax benefit 1,250,186 5,169,395 Net Loss ( 28,210,226 ) ( 22,027,683 ) Other Comprehensive Income (Loss): Unrealized loss from investments ( 4,655 ) ( 1,271 ) Foreign currency translation (loss) gain ( 10,221 ) 6,020 Total other comprehensive (loss) income ( 14,876 ) 4,749 Comprehensive Loss $ ( 28,225,102 ) $ ( 22,022,934 ) Net Loss Per Common Share – Basic and Diluted $ ( 0.75 ) $ ( 0.77 ) Weighted Average Common Shares Outstanding – Basic and Diluted 37,666,081 28,561,963 The accompanying notes are integral part of these consolidated financial statements. F- 5 CORMEDIX INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIENCY) Years Ended December 31, 2014 and 2013 Common Stock Preferred Stock – Series C-2, C-3, Series D, Series E, Series F and Series G Accumulated Other Comprehensive Gain Additional Paid-in Accumulated Total Stockholder’ Shares Amount Shares Amount (Loss) Capital Deficit Equity Balance at December 31, 2019 25,665,350 $ 25,665 241,623 $ 242 $ 97,257 $ 218,944,268 $ ( 195,421,172 ) $ 23,646,260 Stock issued in connection with public offering, net 5,111,110 5,111 - - - 21,250,059 - 21,255,170 Stock issued in connection with ATM sale of common stock, net 2,687,646 2,688 - - - 18,430,257 - 18,432,945 Stock issue in connection with warrants exercised 91,500 92 - - - 411,659 - 411,751 Issuance of vested restricted stock 2,490 2 - - - ( 2 ) - - Stock-based compensation - - - - - 2,499,820 - 2,499,820 Other comprehensive income - - - - 4,749 - - 4,749 Net loss - - - - - - ( 22,027,683 ) ( 22,027,683 ) Balance at December 31, 2020 33,558,096 $ 33,558 241,623 $ 242 $ 102,006 $ 261,536,061 $ ( 217,448,855 ) $ 44,223,012 Stock issued in connection with ATM sale of common stock, net 3,737,862 3,738 - - - 41,451,892 - 41,455,630 Stock issued in connection with warrants exercised, cash 31,407 31 - - - 164,855 - 164,886 Stock issued in connection with warrants exercised, cashless 70,269 70 - - - ( 70 ) - - Stock issued in connection with options exercised 32,734 33 - - - 137,002 - 137,035 Conversion of Series G preferred shares to common stock 556,069 556 ( 10,001 ) ( 10 ) - ( 546 ) - - Conversion of Series C-3 preferred shares to common stock 100,000 100 ( 50,000 ) ( 50 ) - ( 50 ) - - Stock-based compensation - - - - - 5,042,606 - 5,042,606 Other comprehensive loss - - - - ( 14,876 ) - - ( 14,876 ) Net loss - - - - - - ( 28,210,226 ) ( 28,210,226 ) Balance at December 31, 2021 38,086,437 $ 38,086 181,622 $ 182 $ 87,130 $ 308,331,750 $ ( 245,659,081 ) $ 62,798,067 The accompanying notes are integral part of these consolidated financial statements. F- 6 CORMEDIX INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2021 and 2020 December 31, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 28,210,226 ) $ ( 22,027,683 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 5,042,606 2,499,820 Change in right-of-use assets 115,130 34,368 Inventory reserve - 44,006 Depreciation 61,890 127,964 Changes in operating assets and liabilities: Change in operating lease liabilities ( 109,035 ) ( 18,845 ) Increase in trade receivables ( 44,080 ) ( 3,089 ) Decrease in inventory 145,456 149,597 Decrease (Increase) in prepaid expenses and other current assets 666,628 ( 991,754 ) Increase in accounts payable 1,082,129 103,333 Decrease in accrued expenses 94,279 ( 1,883,149 ) Decrease in deferred revenue - ( 2,206 ) Net cash used in operating activities ( 21,155,223 ) ( 21,967,638 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of short-term investments ( 15,289,586 ) ( 8,549,758 ) Maturity of short-term investments 7,580,000 16,088,572 Purchase of equipment ( 1,425,329 ) ( 112,638 ) Net cash (used in) provided by investing activities ( 9,134,915 ) 7,426,176 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of common stock from at-the-market program, net 41,455,630 18,432,945 Proceeds from the public offering, net - 21,255,170 Proceeds from exercise of warrants 164,886 411,751 Proceeds from exercise of stock options 137,035 - Net cash provided by financing activities 41,757,551 40,099,866 Foreign exchange effects on cash ( 12,919 ) 13,192 NET INCREASE IN CASH AND CASH EQUIVALENTS 11,454,494 25,571,596 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH – BEGINNING OF YEAR 42,096,783 16,525,187 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH – END OF YEAR $ 53,551,277 $ 42,096,783 Cash paid for interest $ 15,943 $ 33,226 Supplemental Disclosure of Non-Cash Financing and Investing Activities: Conversion of Series G preferred stock to common stock $ 10 $ - Conversion of Series C-3 preferred stock to common stock $ 50 $ - Unrealized loss from investments $ 4,655 $ 1,271 Deposit on equipment reclassified from prepaid expenses and current assets to property and equipment, net $ 501,821 $ - Right-of-use assets obtained in exchange for lease liability $ - $ 1,014,635 Issuance of common stock for vested restricted stock units $ - $ 2 The accompanying notes are integral part of these consolidated financial statements. F- 7 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 — Organization, Business and Basis of Presentation: Organization and Business: CorMedix Inc. (“CorMedix” or the “Company”) was incorporated in the State of Delaware on July 28, 2006. The Company is a biopharmaceutical company focused on developing and commercializing therapeutic products for the prevention and treatment of infectious and inflammatory diseases. In 2013, the Company formed a wholly-owned subsidiary, CorMedix Europe GmbH and in May 2020, the Company formed a wholly-owned Spanish subsidiary, CorMedix Spain, S.L.U. The Company’s primary focus is to develop its lead product candidate, DefenCath™, for potential commercialization in the United States (“U.S.”) and other key markets. The Company has in-licensed the worldwide rights to develop and commercialize DefenCath/Neutrolin®, which is a novel anti-infective solution (a formulation of taurolidine 13.5 mg/mL, and heparin 1000 USP Units/mL) intended for the reduction and prevention of catheter-related infections and thrombosis in patients requiring central venous catheters in clinical settings such as hemodialysis, total parenteral nutrition, and oncology. The name DefenCath is the U.S. proprietary name conditionally approved by the U.S. Food and Drug Administration (“FDA”), while the name Neutrolin is currently used in the European Union (“EU”) and other territories where the Company has received CE-Mark approval for the commercial distribution of Neutrolin as a catheter lock solution (“CLS”) regulated as a medical device. In January 2015, the FDA designated DefenCath as a Qualified Infectious Disease Product (“QIDP”) for prevention of catheter-related blood stream infections in patients with end stage renal disease receiving hemodialysis through a central venous catheter. Catheter-related blood stream infections and clotting can be life-threatening. The QIDP designation provides five years of market exclusivity in addition to the five years granted for a New Chemical Entity upon approval of a New Drug Application (“NDA”). In addition, in January 2015, the FDA granted Fast Track designation to DefenCath Catheter Lock Solution, a designation intended to facilitate development and expedite review of drugs that treat serious and life-threatening conditions so that the approved drug can reach the market expeditiously. The Fast Track designation of DefenCath provides us with the opportunity to meet with the FDA on a more frequent basis during the development process, and also ensures eligibility to request priority review of the marketing application. In December 2015, the Company launched its Phase 3 Prospective, Multicenter, Double-blind, Randomized, Active Control Study to Demonstrate Safety & Effectiveness of DefenCath/Neutrolin in Preventing Catheter-related Bloodstream Infection in Subjects on Hemodialysis for End Stage Renal Disease (“LOCK-IT-100”), in patients with hemodialysis catheters in the U.S. The clinical trial was designed to demonstrate the safety and effectiveness of DefenCath compared to the standard of care CLS, Heparin, in preventing CRBSIs. The primary endpoint for the trial assessed the incidence of CRBSI and time to CRBSI for each study subject. Secondary endpoints were catheter patency, which was defined as required use of tissue plasminogen activating factor, or tPA, or removal of catheter due to dysfunction, and removal of catheter for any reason. As previously agreed with the FDA, an interim efficacy analysis was performed when the first 28 potential CRBSI cases were identified in our LOCK-IT-100 study that occurred through early December 2017. Based on these first 28 cases, there was a highly statistically significant 72% reduction in CRBSI by DefenCath relative to the active control of heparin (p=0.0034). Because the pre-specified level of statistical significance was reached for the primary endpoint and efficacy had been demonstrated with no safety concerns, the LOCK-IT-100 study was terminated early. The study continued enrolling and treating subjects until study termination, and the final analysis was based on a total of 795 subjects. In a total of 41 cases, there was a 71% reduction in CRBSI by DefenCath relative to heparin, which was highly statistically significant (p=0.0006), with a good safety profile. The FDA granted the Company’s request for a rolling submission and review of the NDA which is designed to expedite the approval process for products being developed to address an unmet medical need. Although the FDA usually requires two pivotal clinical trials to provide substantial evidence of safety and effectiveness for approval of an NDA, the FDA will in some cases accept one adequate and well-controlled trial, where it is a large multicenter trial with a broad range of subjects and investigation sites with procedures to include trial quality that has demonstrated a clinically meaningful and statistically very persuasive effect on prevention of a disease with potentially serious outcome. F- 8 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) In March 2020, the Company began the modular submission process for the NDA for DefenCath for the prevention of CRBSI in hemodialysis patients, and in August 2020, the FDA accepted for filing the DefenCath NDA. The FDA also granted the Company’s request for priority review, which provides for a six-month review period instead of the standard ten-month review period. As announced in March 2021, the FDA informed in its Complete Response Letter (“CRL”), to the Company that it cannot approve the NDA for DefenCath in its present form. The FDA noted concerns at the third-party manufacturing facility after a review of records requested by the FDA and provided by the contract manufacturing organization (“CMO”). Additionally, the FDA is requiring a manual extraction study to demonstrate that the labeled volume can be consistently withdrawn from the vials despite an existing in-process control to demonstrate fill volume within specifications. In April 2021, the Company and the CMO met with the FDA to discuss proposed resolutions for the deficiencies identified in the CRL to the Company and the Post-Application Action Letter (“PAAL”), received by the CMO from the FDA for the NDA for DefenCath. There was an agreed upon protocol for the manual extraction study identified in the CRL, which now has been successfully completed. Addressing the FDA’s concerns regarding the qualification of the filling operation necessitated adjustments in the process and generation of additional data on operating parameters for manufacture of DefenCath. The Company and the CMO determined that additional process qualification is needed with subsequent validation to address these issues. The FDA did not request additional clinical data and did not identify any deficiencies related to the data submitted on the efficacy or safety of DefenCath from LOCK-IT-100. In draft labeling discussed with the FDA, the FDA added that the initial approval will be for the limited population of patients with kidney failure receiving chronic hemodialysis through a central venous catheter. This is consistent with the Company’s request for approval pursuant to the Limited Population Pathway for Antibacterial and Antifungal Drugs (“LPAD”). LPAD, passed as part of the 21st Century Cures Act, is a new program intended to expedite the development and approval of certain antibacterial and antifungal drugs to treat serious or life-threatening infections in limited populations of patients with unmet needs. LPAD provides for a streamlined clinical development program involving smaller, shorter, or fewer clinical trials and is intended to encourage the development of safe and effective products that address unmet medical needs of patients with serious bacterial and fungal infections. The Company believes that LPAD will provide additional flexibility for the FDA to approve DefenCath to prevent CRBSIs in the limited population of patients with kidney failure receiving hemodialysis through a central venous catheter. On February 28, 2022, the Company announced that it resubmitted the NDA for DefenCath to address the CRL issued by the FDA. In parallel, the Company’s third-party manufacturer submitted responses to the deficiencies identified at the manufacturing facility in the PAAL issued by the FDA concurrently with the CRL. The FDA will evaluate the submission to accept for filing and determine the review timeline. The FDA has stated that it expected all corrections to facility deficiencies to be complete at the time of resubmission so that all corrective actions may be verified during an onsite evaluation of the manufacturing facility in the next review cycle, if the FDA determines it will do an onsite evaluation. If an onsite inspection is required, the Company may encounter delays in obtaining FDA approval because the FDA is currently facing a backlog due to the COVID-19 pandemic. The FDA issued a guidance document on its plan to use voluntary remote interactive evaluations at facilities, including for a pre-approval inspection to assess a marketing application. The FDA will request the manufacturing facility to participate in a voluntary remote interactive evaluation, if the FDA believes it is appropriate. A manufacturing facility cannot request the remote interaction. The FDA expects the use of remote interactive evaluations should help the FDA operate within normal timeframes in spite of the COVID-19 pandemic. The Company intends to pursue additional indications for DefenCath use as a CLS in populations with an unmet medical need that also represent potentially significant market opportunities. While the Company is continuing to assess these areas, potential future indications may include use as a CLS to reduce CRBSIs in total parenteral nutrition patients using a central venous catheter and in oncology patients using a central venous catheter. In addition to DefenCath, the Company is sponsoring a pre-clinical research collaboration for the use of taurolidine as a possible treatment for rare orphan pediatric tumors. In February 2018, the FDA granted orphan drug designation to taurolidine for the treatment of neuroblastoma in children. The Company may seek one or more strategic partners or other sources of capital to help develop and commercialize taurolidine for the treatment of neuroblastoma in children. The Company is also evaluating opportunities for the possible expansion of taurolidine as a platform compound for use in certain medical devices. Patent applications have been filed in several indications, including wound closure, surgical meshes, and wound management. Based on initial feasibility work, the Company is advancing pre-clinical studies for taurolidine-infused surgical meshes, suture materials and hydrogels. The Company will seek to establish development/commercial partnerships as these programs advance. F- 9 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) The Company was granted a deferral by the FDA under the Pediatric Research Equity Act (“PREA”), that requires sponsors to conduct pediatric studies for NDAs for a new active ingredient, such as taurolidine in DefenCath, unless a waiver or deferral is obtained from the FDA. A deferral acknowledges that a pediatric assessment is required but permits the applicant to submit the pediatric assessment after the submission of an NDA. The Company has made a commitment to conduct the pediatric study after approval of the NDA for use in adult hemodialysis patients. Pediatric studies for an approved product conducted under PREA may qualify for pediatric exclusivity, which if granted would provide an additional six months of marketing exclusivity. DefenCath would then have the potential to receive a total marketing exclusivity period of 10.5 years, including exclusivity pursuant to NCE and QIDP. The FDA regards taurolidine as a new chemical entity and therefore, it is currently an unapproved new drug. The Company might in the future pursue product candidates that would involve devices impregnated with taurolidine, and the Company believes that at the current time such products would be combination products subject to device premarket submission requirements (while subject also, under review by the FDA, to the standards for drug approvability). Consequently, given that there is no appropriate predicate medical device currently marketed in the U.S. on which a 510(k) approval process could be based and that taurolidine is not yet approved in any application, the Company anticipates that it would be required to submit a premarket approval application (“PMA”) for marketing authorization for any medical device indications that we may pursue for devices containing taurolidine. In the event that an NDA for DefenCath is approved by the FDA, the regulatory pathway for these medical device product candidates may be revisited with the FDA. Although there may be no appropriate predicate, de novo Class II designation can be proposed, based on a risk assessment and a reasonable assurance of safety and effectiveness. In the European Union (“EU”), Neutrolin is regulated as a Class 3 medical device. In July 2013, the Company received CE Mark approval for Neutrolin. In December 2013, the Company commercially launched Neutrolin in Germany for the prevention of CRBSI, and maintenance of catheter patency in hemodialysis patients using a tunneled, cuffed central venous catheter for vascular access. To date, Neutrolin is registered and may be sold in certain European Union countries for such treatment. In September 2014, the TUV-SUD and The Medicines Evaluation Board of the Netherlands (“MEB”), granted a label expansion for Neutrolin to include use in oncology patients receiving chemotherapy, intravenous (“IV”) hydration and IV medications via CVC for the EU. In December 2014, the Company received approval from the Hessian District President in Germany to expand the label for these same expanded indications. The expansion also adds patients receiving medication and IV fluids via CVC in intensive or critical care units (cardiac care unit, surgical care unit, neonatal critical care unit, and urgent care centers). An indication for use in total parenteral nutrition was also approved. In September 2019, the Company’s registration with the Saudi Arabia Food and Drug Administration, or the SFDA, expired. As a result, the Company cannot sell Neutrolin in Saudi Arabia. The Company intends to complete the documentation required to renew its registration with the SFDA, however, the Company cannot predict how long the renewal process will take. There is no assurance that the registration will be renewed by the SFDA. F- 10 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Note 2 — Liquidity and Uncertainties: The consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. To date, the Company’s commercial operations have not generated sufficient revenues to enable profitability. As of December 31, 2021, the Company had an accumulated deficit of $ 245.7 million, and incurred net losses of $ 28.2 million and $ 22.0 million for the years ended December 31, 2021 and 2020, respectively. Based on the Company’s current development plans for DefenCath/Neutrolin in both the U.S. and foreign markets and its other operating requirements, the Company’s existing cash and cash equivalents and short-term investments at December 31, 2021 are expected to fund its operations at least through the first half of 2023, after taking into consideration the costs for resubmission of the NDA and initial preparations for the commercial launch for DefenCath. The Company’s continued operations will depend on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships, potential strategic transactions or out-licensing of its products in order to commercially launch DefenCath upon NDA approval and until profitability is achieved, if ever. Management can provide no assurances that such financing or strategic relationships will be available on acceptable terms, or at all. As of December 31, 2021, the Company has $ 50.0 million available under its At-the-Market Issuance Sales Agreement (the “ATM program”) and has $ 150.0 million available under its current shelf registration for the issuance of equity, debt or equity-linked securities (see Note 7). The Company’s operations are subject to a number of other factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Company’s product candidates; the ability to obtain regulatory approval to market the Company’s products; ability to manufacture successfully; competition from products manufactured and sold or being developed by other companies; the price of, and demand for, Company products; the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products; and the Company’s ability to raise capital to support its operations. The novel coronavirus has been declared a pandemic and has spread to multiple global regions. The outbreak and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. In response to the COVID-19 outbreak, “shelter in place” orders and other public health guidance measures have been implemented across much of the United States, Europe and Asia, including in the locations of the Company’s offices, clinical trial sites, key vendors and partners. The Company’s program timelines may be negatively affected by COVID-19, which could materially and adversely affect its business, financial conditions and results of operations. Note 3 — Summary of Significant Accounting Policies: Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain reclassifications were made to the prior year’s amounts to conform to the 2021 presentation. Non-cash lease expense, as presented on the Company’s consolidated statement of cash flows for the year ended December 31, 2020, is now presented as change in right-of-use assets and change in operating lease liabilities. Basis of Consolidation The consolidated financial statements include the accounts of the Company, CorMedix Europe GmbH and CorMedix Spain, S.L.U. its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. F- 11 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Financial Instruments Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and short-term investments. The Company maintains its cash and cash equivalents in bank deposit and other interest-bearing accounts, the balances of which, at times, may exceed federally insured limits. The following table is the reconciliation of the accounting standard that modifies certain aspects of the recognition, measurement, presentation and disclosure of financial instruments as shown on the Company’s consolidated statement of cash flows: December 31, 2021 2020 Cash and cash equivalents $ 53,317,405 $ 41,905,469 Restricted cash, short-term and long-term 233,872 191,314 Total cash, cash equivalents and restricted cash $ 53,551,277 $ 42,096,783 The appropriate classification of marketable securities is determined at the time of purchase and reevaluated as of each balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair value is determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Changes in fair value that are considered temporary are reported net of tax in other comprehensive income (loss). Realized gains and losses, amortization of premiums and discounts and interest and dividends earned are included in income (expense). For declines in the fair value of equity securities that are considered other-than-temporary, impairment losses are charged to other (income) expense, net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost. There were no deemed permanent impairments at December 31, 2021 or 2020. The Company’s marketable securities are highly liquid and consist of U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities of more than 90 days. As of December 31, 2021 and 2020, all of the Company’s investments had contractual maturities which were less than one year. The following table summarizes the amortized cost, unrealized gains and losses and the fair value at December 31, 2021 and 2020: December 31, 2021: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds and Cash Equivalents $ 10,462,877 $ ( 23 ) $ - $ 10,462,854 U.S. Government Agency Securities 2,806,597 ( 1,261 ) - 2,805,336 Corporate Securities 7,548,493 ( 4,467 ) 1 7,544,027 Commercial Paper 1,799,548 - 92 1,799,640 Subtotal 12,154,638 ( 5,728 ) 93 12,149,003 Total December 31, 2021 $ 22,617,515 $ ( 5,751 ) $ 93 $ 22,611,857 December 31, 2020: Money Market Funds and Cash Equivalents $ 3,182,762 $ ( 81 ) $ 8 $ 3,182,689 Corporate Securities 3,565,501 ( 1,005 ) 3 3,564,499 Commercial Paper 879,501 - 72 879,573 Subtotal 4,445,002 ( 1,005 ) 75 4,444,072 Total December 31, 2020 $ 7,627,764 $ ( 1,086 ) $ 83 $ 7,626,761 F- 12 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Fair Value Measurements The Company’s financial instruments recorded in the consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities, accounts payable and accrued expenses. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature of their maturity dates. The Company’s senior secured convertible note (prior to its extinguishment in August 2019) falls into the Level 3 category within the fair value level hierarchy. The fair value was determined using market data for valuation. The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value, which is set out below. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. ● Level 1 inputs—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs— Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs). ● Level 3 inputs—Unobservable inputs for the asset or liability, which are supported by little or no market activity and are valued based on management’s estimates of assumptions that market participants would use in pricing the asset or liability. The following table provides the carrying value and fair value of the Company’s financial assets measured at fair value as of December 31, 2021 and 2020: December 31, 2021: Carrying Value Level 1 Level 2 Level 3 Money Market Funds and Cash Equivalents $ 10,462,854 $ 10,462,854 $ - $ - U.S. Government Agency Securities 2,805,336 2,805,336 - - Corporate Securities 7,544,027 - 7,544,027 - Commercial Paper 1,799,640 - 1,799,640 - Subtotal 12,149,003 2,805,336 9,343,667 - Total December 31, 2021 $ 22,611,857 $ 13,268,190 $ 9,343,667 $ - December 31, 2020: Money Market Funds and Cash Equivalents $ 3,182,689 3,182,689 - - Corporate Securities 3,564,499 - 3,564,499 - Commercial Paper 879,573 - 879,573 - Subtotal 4,444,072 - 4,444,072 - Total December 31, 2020 $ 7,626,761 $ 3,182,689 $ 4,444,072 $ - F- 13 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Foreign Currency Translation and Transactions The consolidated financial statements are presented in U.S. Dollars (USD), the reporting currency of the Company. For the financial statements of the Company’s foreign subsidiaries, whose functional currency is the EURO, foreign currency asset and liability amounts, if any, are translated into USD at end-of-period exchange rates. Foreign currency income and expenses are translated at average exchange rates in effect during the year. Translation gains and losses are included in other comprehensive income (loss). The Company had a foreign currency translation loss of $ 10,221 in 2021 and a gain of $ 6,020 in 2020. Foreign currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than the functional currency of the entity recording the transaction. Geographic Information The following table summarizes the geographic information: December 31, 2021 2020 Reported revenues $ 190,936 $ 239,231 Revenues attributable to European and Mideast operations, which are based in Germany 190,936 237,025 Total assets 68,945,576 49,308,303 Total assets located in the United States, with the remainder in the European Union $ 68,558,413 $ 48,928,244 Restricted Cash As of December 31, 2021, and 2020 the Company has restricted cash in connection with the patent and utility model infringement proceedings against TauroPharm (see Note 7). The Company was required by the District Courts of Mannheim to provide security deposit to cover legal fees in the event TauroPharm is entitled to reimbursement of these costs. The Company furthermore had to provide a deposit for the first and second instances, respectively, in connection with the unfair competition proceedings in Cologne. During the year ended December 31, 2021, approximately $ 48,000 was released by the court for the reimbursement of legal fees and other costs which was removed from restricted cash. As of December 31, 2021 and 2020, restricted cash in connection with the patent and utility model infringement proceedings were $ 132,000 and $ 191,000 , respectively. As of December 31, 2021, the Company had $ 102,000 in long-term restricted cash for a lease security deposit. Prepaid Research and Development and Other Prepaid Expenses Prepaid expenses consist of payments made in advance to vendors relating to service contracts for clinical trial development, manufacturing, pre-clinical development and insurance policies. These advanced payments are amortized to expense either as services are performed or over the relevant service period using the straight-line method. Inventories Inventories are valued at the lower of cost or net realizable value on a first in, first out basis. Inventories consist of raw materials (including labeling and packaging), work-in-process, and finished goods, if any, for the DefenCath product. Inventories consist of the following: December 31, 2021 2020 Finished goods $ 3,008 $ 143,564 F- 14 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Property and Equipment Property and equipment consist primarily of furnishings, fixtures, leasehold improvements, office equipment and computer equipment all of which are recorded at cost. Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the remaining lease term or the life of the asset, whichever is shorter. Property and equipment, as of December 31, 2021 and 2020 were $ 1,474,937 and $ 111,499 , respectively, net of accumulated depreciation of $ 365,169 and $ 303,279 , respectively. Depreciation and amortization of property and equipment is included in selling, general and administrative expenses. Description Estimated Useful Life Office equipment and furniture 5 years Leasehold improvements 7 years Computer equipment 5 years Computer software 3 years Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of operating lease liabilities (included in accrued expenses), and operating lease liabilities, net of current portion, on the consolidated balance sheet (see Note 10). Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has elected, as an accounting policy, not to apply the recognition requirements in ASC 842 to short-term leases. Short-term leases are leases that have a term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes the lease payments for short-term leases on a straight-line basis over the lease term. The Company has also elected, as a practical expedient, by underlying class of asset, not to separate lease components from non-lease components and, instead, account for them as a single component. Accrued Expenses Accrued expenses consist of the following: December 31, 2021 2020 Professional and consulting fees $ 311,408 $ 146,129 Accrued payroll and payroll taxes 2,508,398 2,490,441 Manufacturing development related 99,614 143,780 Other 94,736 144,001 Total $ 3,014,156 $ 2,924,351 Revenue Recognition The Company uses Accounting Standards Codification (“ASC”) 606, “ Revenue from Contracts with Customers,” issued by the Financial Accounting Standards Board (“FASB”), that prescribes a five-step model for recognizing revenue which includes (i) identifying contracts with customers; (ii) identifying performance obligations; (iii) determining the transaction price; (iv) allocating the transaction price; and (v) recognizing revenue. F- 15 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) The Company recognizes net sales upon shipment of product to the dialysis centers and upon meeting the five-step model prescribed by ASC 606 outlined above. Deferred Revenue In August 2014, the Company entered into an exclusive distribution agreement (the “Wonik Agreement”) with Wonik Corporation, a South Korean company, to market, sell and distribute Neutrolin for hemodialysis and oncolytic patients upon receipt of regulatory approval in South Korea. Upon execution, Wonik paid the Company a non-refundable $ 50,000 payment and will pay an additional $ 50,000 upon receipt of the product registration necessary to sell Neutrolin in South Korea (the “Territory”). The term of the Wonik Agreement commenced on August 8, 2014 and will continue for three years after the first commercial sale of Neutrolin in the Territory. The non-refundable up-front payment has been recorded as deferred revenue and will be recognized as revenue on a straight-line basis over the contractual term of the Agreement. Deferred revenue related to this agreement was fully amortized at December 31, 2020. Loss Per Common Share Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company's outstanding shares of Series E preferred stock entitle the holders to receive dividends on a basis equivalent to the dividends paid to holders of common stock. As a result, the Series E preferred stock meet the definition of participating securities requiring the application of the two-class method. Under the two-class method, earnings available to common shareholders, including both distributed and undistributed earnings, are allocated to each class of common stock and participating securities according to dividends declared and participating rights in undistributed earnings, which may cause diluted earnings per share to be more dilutive than the calculation using the treasury stock method. No loss has been allocated to these participating securities since they do not have contractual obligations that require participation in the Company’s losses. Since the Company has only incurred losses, basic and diluted loss per share are the same as potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. The shares outstanding at the end of the respective periods presented below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect: Number of Shares of Common Stock Issuable At December 31, 2021 2020 Series C non-voting preferred stock 4,000 104,000 Series E voting preferred stock 391,953 391,953 Series G voting preferred stock 5,004,069 5,560,137 Shares issuable for payment of deferred board compensation 48,909 48,909 Shares underlying outstanding warrants 56,455 183,148 Shares underlying outstanding stock options 3,358,131 2,447,687 Total potentially dilutive shares 8,863,517 8,735,834 Stock-Based Compensation Share-based compensation cost is measured at grant date, based on the estimated fair value of the award using the Black-Scholes option pricing model for options with service or performance-based conditions. Stock-based compensation is recognized as expense over the requisite service period on a straight-line basis or when the achievement of the performance condition is probable. For options with market-based vesting, share-based compensation cost is measured at grant date using the Monte Carlo option pricing model and the expense is recognized over the derived service period. F- 16 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Research and Development Research and development costs are charged to expense as incurred. Research and development include fees associated with operational consultants, contract clinical research organizations, contract manufacturing organizations, clinical site fees, contract laboratory research organizations, contract central testing laboratories, licensing activities, and allocated executive, human resources and facilities expenses. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial and the invoices received from its external service providers. As actual costs become known, the Company adjusts its accruals in the period when actual costs become known. Costs related to the acquisition of technology rights and patents for which development work is still in process are charged to operations as incurred and considered a component of research and development expense. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. Recently Adopted Authoritative Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This adoption on January 1, 2020 did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued new guidance which modifies the disclosure requirements on fair value measurements. The guidance was effective for the Company beginning in the first quarter of fiscal year 2020. This adoption on January 1, 2020 did not have a material impact on the Company’s consolidated financial statements. In November 2018, the FASB issued new guidance to clarify the interaction between the authoritative guidance for collaborative arrangements and revenue from contracts with customers. The new guidance clarifies that, when the collaborative arrangement participant is a customer in the context of a unit-of-account, revenue from contracts with customers guidance should be applied, adds unit-of-account guidance to collaborative arrangements guidance, and, in a transaction with a collaborative arrangement participant who is not a customer, precludes presenting the transaction together with revenue recognized under contracts with customers. The guidance was effective for the Company beginning in the first quarter of fiscal year 2020. This adoption on January 1, 2020 did not have a material impact on the Company’s consolidated financial statements. In November 2019, the FASB issued new guidance which requires that an entity measure and classify share-based payment awards granted to a customer by applying the guidance in FASB ASC 718. The guidance was effective for the Company beginning in the first quarter of fiscal year 2020. This adoption on January 1, 2020 did not have a material impact on the Company’s consolidated financial statements. In December 2019, the FASB issued ASU 2019-12 which removes certain exceptions to the general principles of the accounting for income taxes and also improves consistent application of and simplification of other areas when accounting for income taxes. The guidance was effective for the Company beginning in the first quarter of fiscal year 2021. Early adoption was permitted. This adoption on January 1, 2021 did not have a material impact on the Company’s consolidated financial statements. F- 17 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Note 4 — Related Party Transactions: In February 2021, Manchester Securities Corp., Elliott Associates LP and Elliott International LP (collectively, “Elliott”), an existing institutional investor who collectively beneficially own the largest portion of the Company’s common stock, converted an aggregate of 10,001 Series G preferred shares into an aggregate of 556,069 shares of the Company’s common stock. Note 5 — Income Taxes: The Company’s U.S. and foreign loss before income taxes are set forth below: December 31, 2021 2020 United States $ ( 29,031,585 ) $ ( 20,605,821 ) Foreign ( 428,827 ) ( 591,257 ) Total $ ( 29,460,412 ) $ ( 27,197,078 ) There were no current or deferred income tax provision for the years ended December 31, 2021 and 2020 because the Company has incurred operating losses since inception. The Company’s deferred tax assets consist of the following: December 31, 2021 2020 Net operating loss carryforwards – Federal $ 44,085,000 $ 38,986,000 Net operating loss carryforwards – State 3,717,000 2,958,000 Net operating loss carryforwards – Foreign 5,000 2,455,000 Capitalized licensing fees 449,000 600,000 Stock-based compensation 4,430,000 3,358,000 Accrued compensation 320,000 102,000 Other ( 17,000 ) 21,000 Totals 52,989,000 48,480,000 Less valuation allowance ( 52,989,000 ) ( 48,480,000 ) Deferred tax assets $ - $ - The Company had the following potentially utilizable net operating loss tax carryforwards: December 31, 2021 2020 Federal $ 209,930,000 $ 185,650,000 State $ 52,280,000 $ 41,600,000 Foreign $ 20,000 $ 8,185,000 The net operating losses generated will start to expire in 2026 for Federal purposes whereas the operating losses for state purposes will begin expiring in 2038. The Tax Cuts and Jobs Act of 2017 (the “Act”) limits the net operating loss deduction to 80 % of taxable income for losses arising in tax years beginning after December 31, 2017. However, the net operating losses now have an indefinite carryforward as opposed to the former 20-year carryforward. The foreign net operating loss tax carryforwards do not expire. Our federal and state operating loss carryforwards include windfall tax deductions from stock option exercises. During 2021, the Company’s German subsidiary was audited by the German taxing authorities for the years 2013-2015. It was determined that the amount of German income was not sufficient, so the taxing authorities made adjustments accordingly. Further, amended returns were filed for the subsequent years to provide the German subsidiary sufficient income. As a result of these changes, the German NOL was fully utilized and no longer has a carryforward attribute. Since such adjustments are statutory adjustments in Germany for tax purposes, there is no material effect on the Company’s financial statements. The foreign net operating loss carryforward relates to the Company’s Spanish subsidiary. The utilization of the Company’s net operating losses may be subject to a substantial limitation due to the “change of ownership provisions” under Section 382 of the Internal Revenue Code and similar state provisions. Such limitation may result in the expiration of the net operating loss carryforwards before their utilization. The Company’s foreign earnings are derived from its German subsidiary. The Company does not expect any foreign earnings to be repatriated in the U.S. in the near future. F- 18 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) The Company’s effective tax rate varied from the statutory rate as follows: December 31, 2021 2020 Statutory federal tax rate 21.0 % 21.0 % State income tax rate (net of federal) 3.5 % 4.3 % Effect of foreign operations 0.0 % 0.7 % Change in foreign NOL ( 8.3 )% 0.5 % NJ NOL adjustment 4.2 % 2.9 % Other permanent differences ( 0.9 )% ( 0.6 )% Effect of valuation allowance ( 15.3 )% ( 9.8 )% Effective tax rate 4.2 % 19.0 % In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the appropriate character during the periods in which those temporary differences become deductible and the loss carryforwards are available to reduce taxable income. In making its assessment, the Company considered all sources of taxable income including carryback potential, future reversals of existing deferred tax liabilities, prudent and feasible tax planning strategies, and lastly, objectively verifiable projections of future taxable income exclusive of reversing temporary differences and carryforwards. At December 31, 2021 and 2020, the Company maintained a full valuation allowance against its net deferred tax assets. The Company will continue to assess all available evidence during future periods to evaluate the realization of its deferred tax assets. The following table presents the changes in the deferred tax asset valuation allowance for the periods indicated: Year Ended Balance at Beginning of Year Increase (Decrease) Charged (Credited) to Income Taxes (Benefit) Increase (Decrease) Charged (Credited) to OCI Balance at End of Year December 31, 2021 $ 48,480,000 $ 4,541,000 $ ( 32,000 ) $ 52,989,000 December 31, 2020 $ 45,815,000 $ 2,696,000 $ ( 31,000 ) $ 48,480,000 Accounting for uncertainty in income taxes requires uncertain tax positions to be classified as non-current income tax liabilities unless they are expected to be paid within one year. The Company has concluded that there are no uncertain tax positions requiring recognition in its consolidated financial statements as of December 31, 2021 and 2020. The Company recognizes interest and penalties related to uncertain tax positions if any as a component of income tax expense. The Company files U.S. federal and state returns. The Company’s foreign subsidiary also files a local tax return in their local jurisdiction. From a U.S. federal, state and local perspective the years that remains open to examination are consistent with each jurisdiction’s statute of limitations. From a foreign perspective, tax years 2016 to 2020 remain open to examination. During the years ended December 31, 2021 and 2020, the Company received net proceeds of $ 1,250,186 and $ 5,169,395 , respectively, from the sale of most of its remaining unused New Jersey net operating losses (“NOL”) 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 the Company to sell $ 1,337,000 of its total $ 1,337,000 in available NOL tax benefits for the state fiscal year 2020 and $ 5,529,000 of its total $ 6,018,000 for the state fiscal year 2019. F- 19 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Note 6 — Commitments and Contingencies: Contingency Matters On October 13, 2021, the United States District Court for the District of New Jersey consolidated into In re CorMedix Inc. Securities Litigation , Case No. 2:21-cv014020-JXN-CLW, two putative class action lawsuits filed on or about July 22, 2021 and September 13, 2021, respectively, and appointed lead counsel and lead plaintiff, a purported stockholder of the Company. The lead plaintiff filed a consolidated amended class action complaint on December 14, 2021, alleging violations of Sections 10(b) and 20(a) of the Exchange Act, along with Rule 10b-5 promulgated thereunder, and Sections 11 and 15 of the Securities Act of 1933. The complaint names as defendants the Company, Khoso Baluch, Matthew David, Phoebe Mounts, John L. Armstrong, Robert Cook, Janet Dillione, Alan W. Dunton, Myron Kaplan, Steven Lefkowitz, Paulo F. Costa, and Greg Duncan, as well as two underwriters of the Company’s secondary stock offering, B. Riley Securities, Inc. and Needham & Company, LLC. The purported bases for these claims are alleged misstatements and omissions in connection with the NDA submitted to the FDA for DefenCath, and the subsequent notification by the FDA that the NDA could not be approved in its present form. The lead plaintiff purports to assert the Exchange Act claims on behalf of persons that purchased or otherwise acquired shares of the Company’s securities between October 16, 2019, and September 6, 2021, and purports to assert the Securities Act claims on behalf of persons that purchased shares of the Company’s securities pursuant or traceable to a secondary offering of stock that commenced on November 27, 2020. The Company intends to vigorously contest such claims and filed a motion to dismiss the current complaint in full, with prejudice, on February 21, 2022. As of this filing, the current schedule set by the Court requires the Company and the other defendants to refile their motion to dismiss on March 28, 2022, requires the lead plaintiff to file an opposition to the Company’s motion to dismiss on or before April 27, 2022 and requires that the Company file a reply on or before May 27, 2022. On or about October 13, 2021, a purported shareholder, derivatively and on behalf of the Company, filed a shareholder derivative complaint in the United States District Court for the District of New Jersey, in a case entitled Voter v. Baluch, et al. , Case No. 2:21-cv-18493-JXN-LDW. The complaint names as defendants Khoso Baluch, Janet Dillione, Alan W. Dunton, Myron Kaplan, Steven Lefkowitz, Paulo F. Costa, Greg Duncan, Matthew David, and Phoebe Mounts along with the Company as Nominal Defendant. The complaint alleges breaches of fiduciary duties, abuse of control, and waste of corporate assets against the defendants and a claim for contribution for purported violations of Sections 10(b) and 21D of the Exchange Act against certain defendants. The Company intends to vigorously contest such claims. On January 21, 2022, pursuant to a stipulation between the parties, the Court entered an order staying the case while the motion to dismiss the class action lawsuit described in the foregoing paragraph is pending. The stay may be terminated before the motion to dismiss is resolved according to certain circumstances described in the stipulation available on the Court’s public docket. On September 9, 2014, the Company filed in the District Court of Mannheim, Germany, a patent infringement action against TauroPharm GmbH and Tauro-Implant GmbH as well as their respective CEOs (the “Defendants”) claiming infringement of the Company’s European Patent EP 1 814 562 B1, which was granted by the European Patent Office (the “EPO”) on January 8, 2014 (the “Prosl European Patent”). The Prosl European Patent covers the formulation of taurolidine and citrate with low dose heparin in a catheter lock solution for maintaining patency and preventing infection in hemodialysis catheters. In this action, the Company claims that the Defendants infringe on the Prosl European Patent by manufacturing and distributing catheter locking solutions to the extent they are covered by the claims of the Prosl European Patent. The Company believes that its patent is sound and is seeking injunctive relief and raising claims for information, rendering of accounts, calling back, destruction and damages. Separately, TauroPharm has filed an opposition with the EPO against the Prosl European Patent alleging that it lacks novelty and inventive step. The Company cannot predict the ultimate outcome of either of these related matters. At present, the EPO has revoked the Prosl European Patent as invalid, and the Company has filed an appeal, which is currently pending. In the same complaint against the same Defendants, the Company also alleged an infringement (requesting the same remedies) of ND Partners’ utility model DE 20 2005 022 124 U1 (the “Utility Model”), which the Company believes is fundamentally identical to the Prosl European Patent in its main aspects and claims. The Court separated the two proceedings and the Prosl European Patent and the Utility Model claims were tried separately. TauroPharm has filed a cancellation action against the Utility Model before the German Patent and Trademark Office (the “German PTO”) based on the similar arguments as those in the opposition against the Prosl European Patent. F- 20 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) The Court issued its decisions on May 8, 2015, staying both proceedings. In its decisions, the Court found that the commercialization by TauroPharm in Germany of its TauroLock catheter lock solutions Hep100 and Hep500 infringes both the Prosl European Patent and the Utility Model and further that there is no prior use right that would allow TauroPharm to continue to make, use or sell its product in Germany. However, the Court declined to issue an injunction in favor of the Company that would preclude the continued commercialization by TauroPharm based upon its finding that there is a sufficient likelihood that the EPO, in the case of the Prosl European Patent, or the German PTO, in the case of the Utility Model, may find that such patent or utility model is invalid. Specifically, the Court noted the possible publication of certain instructions for product use that may be deemed to constitute prior art. As such, the District Court determined that it will defer any consideration of the request by the Company for injunctive and other relief until such time as the EPO or the German PTO made a final decision on the underlying validity of the Prosl European Patent and the Utility Model. The opposition proceeding against the Prosl European Patent before the EPO is ongoing. The EPO held a hearing in the opposition proceeding on November 25, 2015. However, the EPO did not issue a decision at the end of the hearing but adjourned the matter due to the fact that the panel was of the view that Claus Herdeis, one of the managing directors of TauroPharm, had to be heard as a witness in a further hearing in order to close some gaps in the documentation presented by TauroPharm as regards the publication of the prior art. The German PTO held a hearing in the validity proceedings relating to the Utility Model on June 29, 2016, at which the panel affirmed its preliminary finding that the Utility Model was invalid based upon prior publication of a reference to the benefits that may be associated with adding heparin to a taurolidine based solution. The Company filed an appeal against the ruling on September 7, 2016. An oral hearing was held on September 17, 2019 in which the German Federal Patent Court affirmed the first instance decision that the Utility Model was invalid. The decision has only a declaratory effect, as the Utility Model had expired in November 2015. On April 28, 2020, the Company filed a withdrawal of the complaint on the German utility model, thereby waiving its claims on these proceedings. The proceedings were closed and during the year ended December 31, 2020, final reimbursement of approximately $ 30,000 for the costs in connection with the utility model infringement were paid to TauroPharm . On November 22, 2017, the EPO in Munich, Germany held a further oral hearing in this matter. At the hearing, the panel held that the Prosl European Patent would be invalidated because it did not meet the requirements of novelty based on a technical aspect of the European intellectual property law. The Company disagrees with this decision and has appealed the decision. The Company continues to believe that the Prosl European Patent is indeed novel and that its validity should be maintained. There can be no assurance that the Company will prevail in this matter. On January 16, 2015, the Company filed a complaint against TauroPharm GmbH and its managing directors in the District Court of Cologne, Germany. In the complaint, the Company alleged violation of the German Unfair Competition Act by TauroPharm and that TauroPharm is improperly and unfairly using its proprietary information relating to the composition and manufacture of Neutrolin, in the manufacture and sale of TauroPharm’s products TauroLock TM , TauroLock-HEP100 and TauroLock-HEP500. The Company sought a cease and desist order against TauroPharm from continuing to manufacture and sell any product containing taurolidine (the active pharmaceutical ingredient (“API”) of Neutrolin) and citric acid in addition to possible other components, damages for any sales in the past and the removal of all such products from the market. Hearings in this matter were held in the District Court of Cologne, Germany on November 19, 2015, on November 15, 2016 and on November 20, 2018. A decision was rendered by the court on December 11, 2018, dismissing the complaint in its entirety. The Company therefore appealed in January 2019. An oral hearing was held on September 6, 2019. In view of new arguments brought forward in this hearing, the Court issued an evidentiary order on September 27, 2019 ordering an expert opinion. The expert opinion was not in the Company’s favor. In a supplementary expert opinion submitted after the Company had brought forward arguments against the first expert opinion, the expert confirmed his view. In an oral hearing held on June 18, 2021, the Court only heard from the expert, and the Court, as well as both parties, asked further questions to the expert around his expert opinion. At the end of the hearing and internal deliberation among the panel of judges, the Court indicated that it would dismiss the complaint of the Company, if the Company did not withdraw the appeal. As there were no advantages to further pursuing the matter in view of the Court’s statements, the Company withdrew the appeal and the proceedings are therefore now closed. TauroPharm requested an increase of the value in dispute determined by the Court in order to receive a higher reimbursement of costs (as this is based on the value in dispute under German law) but the request was rejected in view of arguments brought forward against it by legal counsel of the Company. The Company will have to reimburse costs in the amount of approximately $ 41,000 plus interest to TauroPharm. F- 21 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) In connection with the aforementioned patent and utility model infringement and unfair competition proceedings against TauroPharm, the Company was required by the District Courts of Mannheim and Cologne to provide security deposits to cover legal fees in the event TauroPharm is entitled to reimbursement of these costs. As of December 31, 2021, the aggregate deposit was approximately $ 132,000 , which the Company recorded as restricted cash on the condensed consolidated balance sheets, after deducting approximately $ 48,000 released by the court to the Company during the year ended December 31, 2021. Commitments In-Licensing In 2008, the Company entered into a License and Assignment Agreement (the “NDP License Agreement”) with ND Partners, LLP (“NDP”). Pursuant to the NDP 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”). The Company acquired such licenses and patents through its assignment and assumption of NDP’s rights under certain separate license agreements by and between NDP and Dr. Hans-Dietrich Polaschegg, Dr. Klaus Sodemann and Dr. Johannes Reinmueller. As consideration in part for the rights to the NDP Technology, the Company paid NDP an initial licensing fee of $ 325,000 and granted NDP a 5 % equity interest in the Company, consisting of 7,996 shares of the Company’s common stock. The Company is required to make payments to NDP upon the achievement of certain regulatory and sales-based milestones. Certain of the milestone payments are to be made in the form of shares of common stock currently held in escrow for NDP, and other milestone payments are to be paid in cash. The maximum aggregate number of shares issuable upon achievement of milestones is 29,109 shares. In 2014, a certain milestone was achieved resulting in the release of 7,277 shares held in escrow. The number of shares held in escrow as of December 31, 2021 is 21,832 shares of common stock. The maximum aggregate amount of cash payments due upon achievement of milestones is $ 3,000,000 with the balance being $ 2,500,000 as of December 31, 2021 and 2020. Events that trigger milestone payments include but are not limited to the reaching of various stages of regulatory approval and upon achieving certain worldwide net sales amounts. There were no milestones achieved during the years ended December 31, 2021 and 2020. The NDP License Agreement may be terminated by the Company on a country-by-country basis upon 60 days prior written notice. If the NDP License Agreement is terminated by either party, the Company’s rights to the NDP Technology will revert back to NDP. Employment Agreements On September 27, 2016, the Company entered into an employment agreement with Khoso Baluch, its former Chief Executive Officer, which upon its expiration in September 2019, was replaced with a new agreement, dated September 26, 2019. On October 4, 2021, Mr. Baluch retired from the Company and his employment agreement was terminated. In connection with his separation from service, the Company and Mr. Baluch entered into a separation agreement and release dated as of October 1, 2021 (the “Baluch Separation Agreement”). Mr. Baluch’s retirement was treated as a termination without Cause (as defined below) under the employment agreement. Under the Baluch Separation Agreement, Mr. Baluch received the severance payments and benefits described below with respect to a termination by the Company without Cause. Mr. Baluch met the eligibility requirements for retirement as of the date of his separation, so certain of Mr. Baluch’s vested stock options will be exercisable for up to three years after the date of his separation under the terms of the applicable grant agreements. The Baluch Separation Agreement provides this retirement treatment for all of Mr. Baluch’s outstanding vested options. The Company reimbursed Mr. Baluch for legal fees incurred in connection with the review of the Baluch Separation Agreement. Mr. Baluch is bound by confidentiality, non-solicitation and non-competition covenants under his employment agreement, and an extended covenant not to solicit employees under the Baluch Separation Agreement, among other terms. Total severance amount was $ 495,833 of which $ 177,492 was paid and $ 318,341 was accrued as of December 31, 2021. F- 22 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) On March 1, 2017, the Company entered into an employment agreement with John Armstrong, its former Executive Vice President for Technical Operations, which upon its expiration in March 2020, was replaced with a new agreement dated April 17, 2020. On October 4, 2021, Mr. Armstrong retired from the Company and his employment agreement was terminated. In connection with his separation from service, the Company and Mr. Armstrong entered into a separation agreement and release dated as of October 4, 2021 (the “Armstrong Separation Agreement”). Mr. Armstrong’s retirement was treated as a termination without Cause under the employment agreement. Under the Armstrong Separation Agreement, Mr. Armstrong received the severance payments and benefits described below with respect to a termination by the Company without Cause. Mr. Armstrong met the eligibility requirements for retirement as of the date of his separation, so certain of Mr. Armstrong’s vested stock options will be exercisable for up to three years after the date of his separation under the terms of the applicable grant agreements. The Armstrong Separation Agreement provides this retirement treatment for all outstanding vested options. The Company reimbursed Mr. Armstrong for legal fees incurred in connection with the review of the Armstrong Separation Agreement. Mr. Armstrong is bound by confidentiality, non-solicitation and non-competition covenants under his employment agreement, and an extended covenant not to solicit employees under the Armstrong Separation Agreement, among other terms. Total severance amount was $ 297,917 of which $ 134,514 was paid and $ 163,403 was accrued as of December 31, 2021. On March 19, 2018, the Company entered into an employment agreement with Elizabeth Masson-Hurlburt to serve as its Executive Vice President and Head of Clinical Operations, which upon its expiration in March 2021, was replaced with a new agreement dated March 10, 2021. On March 19, 2019, the Company entered into an employment agreement with Phoebe Mounts to serve as its Executive Vice President and General Counsel and Head of Regulatory, Compliance and Legal, effective May 1, 2019. On April 29, 2021, the Company entered into an employment agreement with Thomas Nusbickel to serve as its Executive Vice President and Chief Commercial Officer, effective May 13, 2021. After the initial three-year term of each employment agreement, the term of the employment agreement will automatically renew for additional successive one-year periods, unless either party notifies the other in writing at least 90 days before the expiration of the then-current term that the term will not be renewed. On May 11, 2020, the Company entered into an employment agreement with Matthew David to serve as its Chief Financial Officer. After the initial three-year term of the employment agreement, the term of the employment agreement will automatically renew for additional successive one-year periods, unless either party notifies the other in writing at least 90 days before the expiration of the then-current term that the term will not be renewed. On October 26, 2021, the Company entered into a letter agreement with Dr. David which modified certain terms of his employment agreement and provided other compensation as a result of Dr. David serving as the Company’s interim Chief Executive Officer effective as of October 4, 2021. Pursuant to the letter agreement, during the period in which Dr. David serves as interim Chief Executive Officer, his base salary will increase to $ 425,000 from $ 330,000 , which is the amount set forth in his employment agreement and will be reviewed and increased, if appropriate, by the Company’s Compensation Committee six months following October 4, 2021 if Dr. David continues to serve as interim Chief Executive Officer on such date. After Dr. David ceases to serve as interim Chief Executive Officer, and as he continues to serve as Chief Financial Officer, the Company will provide him with an annual base salary of $ 375,000 , representing a $ 45,000 increase from his current salary level under the employment agreement. The Board, or the Company’s Compensation Committee, will review such base salary to determine whether an increase is appropriate in 2022 as part of the 2022 compensation review cycle and benchmarking review. Under the letter agreement, Dr. David’s target annual bonus with respect to the period during which he serves as interim Chief Executive Officer is increased to 60 % from 30 % of his base salary, which is otherwise set forth in his employment agreement. After Dr. David ceases to serve as interim Chief Executive Officer, and as he continues to serve as Chief Financial Officer, his target annual bonus will increase to 40 % of his base salary. Under the letter agreement, in the event Dr. David’s employment is terminated by the Company other than as a result of his death or disability or notice of nonrenewal of the employment agreement, and other than for Cause, or if he resigns for Good Reason, in either case during the period he serves as interim Chief Executive Officer, he will be eligible for severance equal to his base salary for a period of 12 months following his termination date, which is increased from nine months as is otherwise provided for in his employment agreement. Dr. David has agreed to waive any rights he may have under his employment agreement to a Good Reason termination as a result of his ceasing to serve as our interim Chief Executive Officer at a future date. In connection with Dr. David serving as interim Chief Executive Officer, the Board granted Dr. David a stock option with respect to 125,000 shares of the Company’s common stock with an exercise price of $ 5.56 per share, which was the closing price of the Company’s common stock on the Nasdaq Global Market on the date of grant. The option vests over four years in four equal annual installments beginning on the date of grant, subject to Dr. David’s continued employment, consistent with the terms of the Company’s standard form of option agreement. F- 23 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Pursuant to their respective employment agreements, Mr. Baluch received an annual salary of $425,000, Mr. Armstrong received an annual salary of $325,000, Ms. Masson-Hurlburt receives an annual salary of $315,000 (effective March 2021), Dr. Mounts receives an annual salary of $350,000 (amended to $375,000 in January 2021), Mr. Nusbickel receives and annual salary of $375,000 and Dr. David receives an annual salary of $330,000 (amended to $425,000 while he serves as interim Chief Executive Officer). Such salaries cannot be decreased unless all officers and/or members of the Company’s executive management team experience an equal or greater percentage reduction in base salary and/or total compensation, provided that any reduction in an executive’s salary may be no greater than 25%. Each executive will be eligible for an annual bonus, which may equal up to 80% for Mr. Baluch (the target amount is 80%, but the bonus may exceed that amount), up to 35% for Mr. Armstrong, up to 30% for Ms. Masson-Hurlburt, up to 30% for Dr. Mounts, up to 30% for Mr. Nusbickel and up to 30% for Dr. David (and up to 60% while he serves as interim Chief Executive Officer), of his or her base salary then in effect, as determined by the Company’s Board or the Compensation Committee. In determining such bonus payment, the Company’s Board or the Compensation Committee will take into consideration the achievement of specified Company objectives, predetermined by the Company’s Board or the Compensation Committee and Chief Executive Officer, and such other factors as the Company’s Board or the Compensation Committee deems appropriate. Each executive must be employed through December 31 of a given year to be eligible to earn that year’s annual bonus. The following provisions of the employment agreements with Dr. David, Dr. Mounts, Ms. Masson-Hurlburt and Mr. Nusbickel are identical except where noted. If the Company terminates the executive’s employment for Cause, the executive will be entitled to receive only the accrued compensation due to him or her as of the date of such termination, rights to indemnification and directors’ and officers’ liability insurance, and as otherwise required by law, and certain equity awards will be forfeited. If the Company terminates the executive’s employment other than for Cause, and other than for death, disability or notice of nonrenewal, or if the executive resigns for Good Reason (as defined below), the executive will receive the following benefits: (i) payment of any accrued compensation and any unpaid bonus relating to the completed prior year, as well as rights to indemnification and directors’ and officers’ liability insurance and any rights or privilege otherwise required by law; (ii) the Company will continue to pay his or her base salary for a period of twelve months in the case of Mr. Baluch and Dr. David while he is serving as interim Chief Executive Officer, and nine months for the other executives following the effective date of the termination of employment; (iii) payment on a prorated basis for any target bonus for the year of termination based on the actual achievement of the specified bonus objectives; (iv) if the executive timely elects continued health insurance coverage under COBRA, then the Company will pay the premium to continue such coverage for him or her and his or her eligible dependents in an amount equal to the portion paid for by the Company during the executive’s employment until the conclusion of the time when he or she is receiving continuation of base salary payments or until he or she becomes eligible for group health insurance coverage under another employer’s plan, whichever occurs first, provided however that the Company has the right to terminate such payment of COBRA premiums on behalf of the executive and instead pay him or her a lump sum amount equal to the COBRA premium times the number of months remaining in the specified period if the Company determines in its discretion that continued payment of the COBRA premiums is or may be discriminatory under Section 105(h) of the Code; and (v) unvested equity awards that are scheduled to vest on or before the next succeeding anniversary of the date of termination shall be accelerated and deemed to have vested as of the termination date; provided that any performance based equity awards or stock options whose vesting requirements have not been successfully met as of the date of termination of employment or resignation with Good Reason will not accelerate. In addition, the event of a termination by the Company without Cause or the executive’s resignation of employment for Good Reason, in either case within 24 months following a Corporate Transaction (as defined in the employment agreement), all equity awards and stock options shall become fully vested and exercisable, and vested stock options will remain exercisable for a specified period of time following termination or resignation or, if earlier, the expiration date of the stock option. The separation benefits set forth above are conditioned upon the executive executing a release of claims against us, our parents, subsidiaries, and affiliates, and each such entities’ officers, directors, employees, agents, successors, and assigns in a form acceptable to us, within a time specified therein, which release is not revoked within any time period allowed for revocation under applicable law. F- 24 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) For purposes of the agreement, “Cause” is defined as: (i) the willful failure, disregard, or refusal by the executive to perform his or her material duties or obligations under the employment agreement (other than as a result of executive’s mental incapacity or illness; (ii) any willful, intentional, or grossly negligent act by the executive having the effect of materially injuring (whether financially or otherwise) our business or reputation or any of our affiliates; (iii) executive’s conviction of any felony involving moral turpitude (including entry of a guilty or nolo contendere plea); (iv) the executive’s qualification as a “bad actor,” as defined by 17 CFR 230.506(a); (v) the good faith determination by the Board, after a reasonable and good-faith investigation by the Company that the executive engaged in some form of harassment or discrimination prohibited by law (including, without limitation, harassment on the basis of age, sex or race) unless the executive’s actions were specifically directed by the Board; (vi) any material misappropriation or embezzlement by the executive of the Company or its affiliates’ property (whether or not a misdemeanor or felony); or (vii) material breach by the executive of the employment agreement that is materially injurious to the Company and that is not cured, to the extent subject to cure, by executive to our reasonable satisfaction. For purposes of the agreement, “Good Reason” is defined as any of the following without the executive’s consent: (i) any material breach of the employment agreement by the Company; (ii) any material diminution by the Company of the executive’s duties, responsibilities, or authority; (iii) a material reduction in the executive’s annual base salary unless all officers and/or members of the Company’s executive management team experience an equal or greater percentage reduction in annual base salary and/or total compensation, provided that any reduction may be no greater than 25%; (iv) a material reduction in the executive’s target bonus level unless all officers and/or members of our executive management team experience an equal or greater percentage reduction related to target bonus levels, provided that any reduction may be no greater than 25%. If the executive terminates his or her employment by written notice of termination or if the executive or the Company terminates his or her employment by providing a notice of nonrenewal at least 90 days before the employment agreement is set to expire, the executive will not be entitled to receive any payments or benefits other than any accrued compensation, any unpaid prior year’s bonus, rights to indemnification and directors’ and officers’ liability insurance and as otherwise required by law. If the executive’s employment is terminated as a result of his or her death or disability, the Company will pay him or her or his or her estate, as applicable, any accrued compensation and any unpaid prior year’s bonus. The Company’s employment agreements with Dr. David, Dr. Mounts, Ms. Masson-Hurlburt and Mr. Nusbickel each contain a non-compete provision that provides that during the employment and for a specified period immediately following the executive’s separation from employment for any reason, the executive is prohibited from engaging in any business involving the development or commercialization of a preventive anti-infective product that would be a direct competitor of Defencath/Neutrolin or a product containing taurolidine or any other product being actively developed or produced by the Company within the United States and the European Union (or in the case of Dr. David, Ms. Masson-Hurlburt and Mr. Nusbickel, worldwide) on the date of termination of his or her employment. Other The Company 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 of approximately $ 17,000 commenced on September 16, 2020. The Company’s sublease on its previous premises at 400 Connell Drive, Berkeley Heights, New Jersey 07922 terminated on November 30, 2020 (see Note 10). Note 7 — Stockholders’ Equity: Common Stock: On July 30, 2020, the Company completed an underwritten public offering of its common stock, par value $ 0.001 per share, which yielded net proceeds of approximately $ 21.3 million. The public offering was made pursuant to an underwriting agreement with SunTrust Robinson Humphrey, Inc. and JMP Securities LLC (collectively, the “Underwriters”), relating to the issuance and sale of an aggregate of 5,111,110 shares of common stock, including 666,666 shares of common stock pursuant to the full exercise of the Underwriters’ option to purchase additional shares, at a public offering price of $ 4.50 per share. The offering was made pursuant to the Company’s effective registration statement on Form S-3 Registration Statement No. 333-223562 previously filed with and declared effective by the SEC and a prospectus supplement and accompanying prospectus filed with the SEC. F- 25 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) The Company had a prior sales agreement with FBR Securities, Inc., (formerly known as B. Riley FBR, Inc.) (“B. Riley”) for its ATM program, which expired on April 16, 2018, under which the Company could issue and sell up to an aggregate of $60.0 million of shares of its common stock. On March 9, 2018, the Company entered into a new agreement with B. Riley for the sale of up to $14.7 million of the Company’s common stock under the ATM program, pursuant to a registration statement filed on March 9, 2018 for an aggregate of $70 million of the Company’s securities, which became effective on April 16, 2018. This new ATM agreement replaced a prior sales agreement with B. Riley that expired on April 16, 2018. The ATM program amount was increased by $25.0 million in November 2018. Under the ATM program, the Company may issue and sell common stock from time to time through B. Riley acting as agent, subject to limitations imposed by the Company and subject to B. Riley’s acceptance, such as the number or dollar amount of shares registered under the registration statement to which the offering relates. B. Riley is entitled to a commission of up to 3% of the gross proceeds from the sale of common stock sold under the ATM program. During the year ended December 31, 2020, the Company sold 1,854,970 shares of common stock under the new and expired ATM programs, and realized net proceeds of approximately $11.4 million. At December 31, 2020, this ATM program and the current shelf registration for the issuance of equity, debt or equity-linked securities has been exhausted. In November 2020, the Company filed a new registration statement, under which the Company could issue and sell up to an aggregate of $100.0 million of shares of its common stock. On November 27, 2020, the Company entered into an Amended and Restated At Market Issuance Sales Agreement (“Amended Sales Agreement”) with B. Riley FBR Inc. and Needham & Company, LLC as sales agents. The Amended Sales Agreement relates to the sale of shares of up to $25.0 million of the Company’s common stock under its ATM program, of which the Company may issue and sell common stock from time to time through the sales agents, subject to limitations imposed by the Company and subject to the sales agents’ acceptance, such as the number or dollar amount of shares registered under the registration statement to which the offering relates. The sales agents are entitled to a commission of up to 3% of the gross proceeds from the sale of common stock sold under the ATM program. During the year ended December 31, 2020, the Company sold 832,676 shares of common stock under the Amended Sales Agreement and realized net proceeds of approximately $ 7.0 million. At December 31, 2020, the Company had approximately $17.8 million available under the Amended Sales Agreement and $75.0 million available under its shelf registration statement for the issuance of equity, debt or equity-linked securities unrelated to the Amended Sales Agreement. On February 5, 2021, the Company allocated to its ATM program an additional $25.0 million of the remaining $75.0 million available under its shelf registration statement. Giving effect to the additional $25.0 million, plus the $17.8 million available at December 31, 2020, the Company had a total of $42.8 million available under the ATM program at February 5, 2021. During the year ended December 31, 2021, the Company sold an aggregate of 3,737,862 shares of its common stock under the ATM program and realized net proceeds of approximately $41.5 million. On August 12, 2021, the Company entered into an At Market Issuance Sales Agreement with Truist Securities, Inc. and JMP Securities LLC, as sales agents, pursuant to which the Company may sell, from time to time, an aggregate of up to $50.0 million of its common stock through the sales agents under its ATM program, subject to limitations imposed by the Company and subject to the sales agent’s acceptance, such as the number or dollar amount of shares registered under the registration statement to which the offering relates. The sales agents are entitled to a commission of up to 3% of the gross proceeds from the sale of common stock sold under the ATM program. As of December 31, 2021, the Company has $ 50.0 million available under its ATM program relating to its shelf registration statement filed in November 2020 and it has $ 150.0 million available under its new shelf registration statement filed on August 12, 2021 for the issuance of equity, debt or equity-linked securities. During the year ended December 31, 2021, the Company issued an aggregate of 656,069 shares of its common stock upon conversion of 50,000 Series C-3 preferred shares by an unrelated party and 10,001 Series G preferred shares by a related party. During the year ended December 31, 2021 and 2020, the Company issued an aggregate of 31,407 and 91,500 shares of its common stock, respectively, upon cash exercise of warrants, resulting in net proceeds to the Company of $ 165,000 and $ 412,000 , respectively. During the year ended December 31, 2021, the Company issued an aggregate of 70,269 shares of its common stock upon cashless exercise of 95,286 warrants. F- 26 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) During the year ended December 31, 2021, there were no restricted stock units issued by the Company and for the year ended December 31, 2020, the Company issued an aggregate of 2,490 shares of its common stock upon the vesting of restricted stock units issued to the Company’s board of directors. During the year ended December 31, 2021, the Company issued an aggregate of 32,734 shares of its common stock upon exercise of stock options, resulting in net proceeds to the Company of $ 137,000 . No stock options were exercised during the year ended December 31, 2020. Restricted Stock Units During the years ended December 31, 2021 and 2020 the Company did not grant any restricted stock units (“RSUs”) to its officers and directors. During the year ended December 31, 2020, the compensation expense recorded for the 2,490 RSUs that vested was $ 11,000 . At December 31, 2021 and 2020, there were no RSUs outstanding. Preferred Stock The Company is authorized to issue up to 2,000,000 shares of preferred stock in one or more series without stockholder approval. The Company’s board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Of the 2,000,000 shares of preferred stock authorized, the Company’s board of directors has designated (all with par value of $ 0.001 per share) the following: As of December 31, 2021 As of December 31, 2020 Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Series C-3 2,000 $ 10.00 $ 20,000 52,000 $ 10.00 $ 520,000 Series E 89,623 $ 49.20 $ 4,409,452 89,623 $ 49.20 $ 4,409,452 Series G 89,999 $ 187.36 $ 16,862,213 100,000 $ 187.36 $ 18,736,452 Total 181,622 $ 21,291,665 241,623 $ 23,665,904 During the year ended December 31, 2021, 50,000 Series C-3 preferred shares were converted into 100,000 shares of the Company’s common stock by an unrelated party and 10,001 Series G preferred shares were converted into 556,069 shares of the Company’s common stock by a related party. The following rights, privileges, terms and condition apply to the outstanding preferred stock at December 31, 2021: Series C-3 Non-Voting Preferred Stock Rank. The Series C-3 non-voting preferred stock will rank senior to our common stock; senior to any class or series of capital stock created after the issuance of the Series C-3 non-voting preferred stock; and junior to the Series E voting convertible preferred stock in each case, as to dividends or distributions of assets upon our liquidation, dissolution or winding up whether voluntarily or involuntarily. Conversion. Each share of Series C-3 preferred stock is convertible into 2 shares of our common stock (subject to adjustment in the event of stock dividends and distributions, stock splits, stock combinations, or reclassifications affecting our common stock) at a per share price of $ 5.00 at any time at the option of the holder, except that a holder will be prohibited from converting shares of Series C-3 preferred stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than 9.99 % of the total number of shares of our common stock then issued and outstanding. Liquidation Preference. In the event of our liquidation, dissolution or winding up, holders of Series C-3 preferred stock will receive a payment equal to $ 10.00 per share of Series C-3 preferred stock before any proceeds are distributed to the holders of our common stock. After the payment of this preferential amount, and subject to the rights of holders of any class or series of our capital stock hereafter created specifically ranking by its terms senior to the Series C-3 preferred stock and holders of Series C-3 preferred stock will participate ratably in the distribution of any remaining assets with the common stock and any other class or series of our capital stock hereafter created that participates with the common stock in such distributions. F- 27 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Voting Rights. Shares of Series C-3 preferred stock will generally have no voting rights, except as required by law and except that the consent of holders of two thirds of the outstanding Series C-3 preferred Stock will be required to amend the terms of the Series C-3 preferred stock or the certificate of designation for the Series C-3 preferred stock. Dividends . Holders of Series C-3 preferred stock are entitled to receive, and we are required to pay, dividends on shares of the Series C-3 preferred stock equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of the common stock when, as and if such dividends (other than dividends in the form of common stock) are paid on shares of the common stock. Redemption . We are not obligated to redeem or repurchase any shares of Series C-3 preferred stock. Shares of Series C-3 preferred stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions. Listing . There is no established public trading market for the Series C-3 preferred stock, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Series C-3 preferred stock on any national securities exchange or trading system. Fundamental Transactions . If, at any time that shares of Series C-3 preferred stock are outstanding, we effect a merger or other change of control transaction, as described in the certificate of designation and referred to as a fundamental transaction, then a holder will have the right to receive, upon any subsequent conversion of a share of Series C-3 preferred stock (in lieu of conversion shares) for each issuable conversion share, the same kind and amount of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such fundamental transaction if such holder had been, immediately prior to such fundamental transaction, the holder of a share of common stock. Series E Voting Convertible Preferred Stock Rank. The Series E voting preferred stock will rank senior to our common stock; senior to any class or series of capital stock created after the issuance of the Series E voting convertible preferred stock; senior to the Series C-3 non-voting convertible preferred stock; and on parity with the Series G voting convertible preferred stock in each case, as to dividends or distributions of assets upon our liquidation, dissolution or winding up whether voluntarily or involuntarily. Conversion. Each share of Series E preferred stock is convertible into 4.3733 shares of our common stock (subject to adjustment as provided in the certificates of designation for the Series E preferred stock) at a per share price of $ 3.75 at any time at the option of the holder, except that a holder will be prohibited from converting shares of Series E preferred stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than 4.99 % of the total number of shares of our common stock then issued and outstanding. Liquidation Preference. In the event of our liquidation, dissolution or winding up, holders of Series E preferred stock will receive a payment equal to $ 49.20 per share of Series E preferred stock on parity with the payment of the liquidation preference due the Series G preferred stock, but before any proceeds are distributed to the holders of common stock, and the Series C-3 non-voting convertible preferred stock. After the payment of this preferential amount, holders of Series E preferred stock will participate ratably in the distribution of any remaining assets with the common stock and any other class or series of our capital stock that participates with the common stock in such distributions. Voting Rights. Shares of Series E preferred stock are entitled to vote on an as-converted basis, based upon an assumed conversion price of $ 7.93 . Dividends. Holders of Series E preferred stock are entitled to receive, and we are required to pay, dividends on shares of the Series E preferred stock equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of the common stock when, as and if such dividends (other than dividends in the form of common stock) are paid on shares of the common stock. Redemption. We are not obligated to redeem or repurchase any shares of Series E preferred stock. Shares of Series E preferred stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions. Listing. There is no established public trading market for the Series E preferred stock, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Series E preferred stock on any national securities exchange or trading system. F- 28 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Fundamental Transactions. If, at any time that shares of Series E preferred stock are outstanding, we effect a merger or other change of control transaction, as described in the certificate of designation and referred to as a fundamental transaction, then a holder will have the right to receive, upon any subsequent conversion of a share of Series E preferred stock (in lieu of conversion shares) for each issuable conversion share, the same kind and amount of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such fundamental transaction if such holder had been, immediately prior to such fundamental transaction, the holder of a share of common stock. Debt Restriction. As long as any of the Series E preferred stock is outstanding, we cannot create, incur, guarantee, assume or suffer to exist any indebtedness, other than (i) trade payables incurred in the ordinary course of business consistent with past practice, and (ii) up to $10 million aggregate principal amount of indebtedness with a maturity less than twelve months outstanding at any time, which amount may include up to $5 million of letters of credit outstanding at any time. Other Covenants. In addition to the debt restrictions above, as long as any of the Series E preferred stock is outstanding, we cannot, among others things: create, incur, assume or suffer to exist any encumbrances on any of our assets or property; redeem, repurchase or pay any cash dividend or distribution on any of our capital stock (other than as permitted, which includes the dividends on the Series E preferred stock and Series G preferred stock); redeem, repurchase or prepay any indebtedness (other than as permitted); or engage in any material line of business substantially different from our current lines of business. Purchase Rights. In the event we issue any options, convertible securities or rights to purchase stock or other securities pro rata to the holders of common stock, then a holder of Series E preferred stock will be entitled to acquire, upon the same terms a pro rata amount of such stock or securities as if the Series E preferred stock had been converted to common stock. Series G Voting Convertible Preferred Stock Rank . The Series G voting convertible preferred stock will rank senior to our common stock; senior to any class or series of capital stock created after the issuance of the Series G voting convertible preferred stock; junior to the Series C-3 non-voting convertible preferred stock, pending the consent of the holders of such series to the subordination thereof; and on parity with the Series E voting convertible preferred stock in each case, as to dividends or distributions of assets upon our liquidation, dissolution or winding up whether voluntarily or involuntarily. Conversion . Each share of Series G preferred stock is convertible into approximately 55.5978 shares of our common stock (subject to adjustment as provided in the certificate of designation for the Series G preferred stock) at a per share price of $ 3.37 at any time at the option of the holder, except that a holder will be prohibited from converting shares of Series G preferred stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than 4.99 % of the total number of shares of our common stock then issued and outstanding. Liquidation Preference . In the event of our liquidation, dissolution or winding up, holders of Series E preferred stock will receive a payment equal to $ 187.36452 per share of Series G preferred stock on parity with the payment of the liquidation preference due the Series E preferred stock, but before any proceeds are distributed to the holders of Series C-3 preferred stock (pending the consent of the holders of such series to the subordination thereof) and any proceeds are distributed to the holders of common stock. After the payment of this preferential amount, holders of Series G preferred stock will participate ratably in the distribution of any remaining assets with the common stock and any other class or series of our capital stock that participates with the common stock in such distributions. Voting Rights . Shares of Series G preferred stock are entitled to vote on an as-converted basis, based upon an assumed conversion price of $ 7.93 . Dividends . Holders of Series G Preferred stock are entitled to receive, and we are required to pay, dividends on shares of the Series G preferred stock equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of the common stock when, as and if such dividends (other than dividends in the form of common stock) are paid on shares of the common stock. Redemption . We are not obligated to redeem or repurchase any shares of Series G preferred stock. Shares of Series G preferred stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions. F- 29 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Listing . There is no established public trading market for the Series G preferred stock, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Series G preferred stock on any national securities exchange or trading system. Fundamental Transactions . If, at any time that shares of Series G preferred stock are outstanding, we effect a merger or other change of control transaction, as described in the certificate of designation and referred to as a fundamental transaction, then a holder will have the right to receive, upon any subsequent conversion of a share of Series G preferred stock (in lieu of conversion shares) for each issuable conversion share, the same kind and amount of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such fundamental transaction if such holder had been, immediately prior to such fundamental transaction, the holder of a share of common stock. Debt Restriction . As long as any of the Series G preferred stock is outstanding, we cannot create, incur, guarantee, assume or suffer to exist any indebtedness, other than (i) trade payables incurred in the ordinary course of business consistent with past practice, and (ii) up to $10 million aggregate principal amount of indebtedness with a maturity less than twelve months outstanding at any time, which amount may include up to $5 million of letters of credit outstanding at any time. Other Covenants . In addition to the debt restrictions above, as long as any of the Series G preferred stock is outstanding, we cannot, among others things: create, incur, assume or suffer to exist any encumbrances on any of our assets or property; redeem, repurchase or pay any cash dividend or distribution on any of our capital stock (other than as permitted, which includes the dividends on the Series E preferred stock and the Series G preferred stock); redeem, repurchase or prepay any indebtedness (other than as permitted); or engage in any material line of business substantially different from our current lines of business. Purchase Rights . In the event we issue any options, convertible securities or rights to purchase stock or other securities pro rata to the holders of common stock, then a holder of Series G preferred stock will be entitled to acquire, upon the same terms a pro rata amount of such stock or securities as if the Series G preferred stock had been converted to common stock. Stock Options: On November 26, 2019, the Company’s shareholders approved the CorMedix Inc. 2019 Omnibus Stock Incentive Plan (the “2019 Plan”). Pursuant to the 2019 Plan and subject to certain adjustments as described below, the Company may issue up to 3,000,000 shares of its common stock, plus any shares that remain available for grant under its 2013 Stock Incentive Plan (the “2013 Plan”) as of the effective date (up to a maximum carry-forward of 522,606 shares plus any outstanding options under the 2013 Plan that were canceled, forfeited and expired after the approval of the 2019 Plan), as long-term equity incentives to the Company’s employees, consultants, and directors. The long-term incentives may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, or other rights or benefits (collectively, stock rights) to employees, consultants, and directors of the Company or a related entity (collectively, participants). The Company believes that the effective use of long- term equity incentives is essential to attract, motivate, and retain employees, consultants and directors, to further align participants’ interests with those of the Company’s stockholders, and to provide participants incentive compensation opportunities that are competitive with those offered by other companies in the same industry and locations as the Company. The 2019 Plan is a new equity compensation plan for the Company’s employees, consultants, and directors which replaced the 2013 Plan. The 2013 Plan and the Amended and Restated 2006 Stock Incentive Plan are referred to collectively as the “Prior Plans”. No further awards will be granted under the Prior Plans after the approval of the 2019 Plan. Awards outstanding under the Prior Plans will remain outstanding in accordance with their terms and the Prior Plans. During the years ended December 31, 2021 and 2020, the Company granted ten-year qualified and non-qualified stock options to its officers, directors, employees and consultants covering an aggregate of 1,664,700 and 1,111,984 shares of the Company’s common stock under the 2019 Plan, respectively. The weighted average exercise price of these options is $ 7.98 and $ 5.11 per share, respectively. F- 30 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) During the years ended December 31, 2021 and 2020, total compensation expense for stock options issued to employees, directors, officers and consultants was $ 5,043,000 and $ 2,489,000 , respectively. As of December 31, 2021, there was $ 5,516,000 total unrecognized compensation expense related to unvested stock options granted which expense is expected to be recognized over an expected remaining weighted average period of 1.6 years. All share-based awards are recognized on a straight-line method, assuming all awards granted will vest. Forfeitures of share-based awards are recognized in the period in which they occur. The fair value at grants dates of the grants issued subject to service and performance-based vesting conditions were determined using the Black-Scholes option pricing model with the following assumptions: Year Ended December 31, 2021 2020 Risk-free interest rate 0.5 % - 1.26 % 0.27 % - 1.67 % Expected volatility 102.93 % - 107.1 % 102.7 % - 107.9 % Expected term (years) 1.97 – 5 years 5 - 10 years Expected dividend yield 0.0 % 0.0 % Weighted-average grant date fair value of options granted during the period $ 5.56 $ 3.59 The Company estimated the expected term of the stock options granted based on anticipated exercises in future periods. The expected term of the stock options granted to consultants is based upon the full term of the respective option agreements. The expected stock price volatility for the Company’s stock options is calculated based on the historical volatility since the initial public offering of the Company’s common stock in March 2010. The expected dividend yield of 0.0 % reflects the Company’s current and expected future policy for dividends on the Company’s common stock. To determine the risk-free interest rate, the Company utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of the Company’s awards which is 5 years for employees and 10 years for non-employees. The following table summarizes the Company’s stock options activity and related information for the year ended December 31, 2021: Shares Underlying Stock Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2020 2,447,687 $ 7.22 7.1 $ 552,030 Granted 1,664,700 $ 7.98 $ - Exercised ( 32,734 ) $ 4.19 $ 11,904 Expired/Canceled ( 248,001 ) $ 7.53 $ 52,475 Forfeited ( 473,521 ) $ 7.72 $ 4,406 Outstanding at December 31, 2021 3,358,131 $ 7.53 6.8 $ 483,244 Vested at December 31, 2021 1,931,950 $ 8.04 5.2 $ 332,831 Expected to vest in the future 1,426,181 $ 6.85 8.9 $ 150,413 The aggregate intrinsic value is calculated as the difference between the exercise prices of the underlying options and the quoted closing price of the common stock of the Company at the end of the reporting period for those options that have an exercise price below the quoted closing price. Warrants: During the years ended December 31, 2021 and 2020, the Company issued an aggregate of 31,407 and 91,500 shares of its common stock, respectively, upon cash exercise of warrants, resulting in net proceeds to the Company of $ 165,000 and $ 412,000 , respectively. F- 31 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) During the year ended December 31, 2021, the Company issued an aggregate of 70,269 shares of its common stock upon cashless exercise of 95,286 warrants. The following table is the summary of warrant activities: Shares Underlying Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at December 31, 2020 183,148 $ 4.96 1.61 Exercised ( 126,693 ) $ 4.83 - Outstanding at December 31, 2021 56,455 $ 5.25 0.61 Stock-based Deferred Compensation Plan for Non-Employee Directors In 2014, the Company established an unfunded stock-based deferred compensation plan, providing non-employee directors the opportunity to defer up to one hundred percent of fees and compensation, including restricted stock units. The amount of fees and compensation deferred by a non-employee director is converted into stock units, the number of which is determined based on the closing price of the Company’s common stock on the date such compensation would have otherwise been payable. At all times, the plan participants are one hundred percent vested in their respective deferred compensation accounts. On the tenth business day of January in the year following a director’s termination of service, the director will receive a number of common shares equal to the number of stock units accumulated in the director’s deferred compensation account. The Company accounts for this plan as stock-based compensation under ASC 718. During the year ended December 31, 2021, no compensation was deferred under this plan and during the year ended December 31, 2020, the amount of compensation that was deferred under this plan was $ 62,250 . Note 8 — Concentrations: At December 31, 2021 and 2020, one customer exceeded 10 % of the Company’s accounts receivable ( 100 % and 95 %). During the year ended December 31, 2021, the Company had revenue from three customers that exceeded 10 % of its total sales ( 60 %, 14 % and 10 %) and the Company had revenue from two customers that exceeded 10 % of its total sales ( 58 %, 12 %) for the year ended December 31, 2020. Note 9 — Leases: The Company 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. The Company’s sublease on its previous premises at 400 Connell Drive, Berkeley Heights, New Jersey 07922 terminated on November 30, 2020. The Company entered into an operating lease for office space in Germany that began in July 2017. The rental agreement has a three-month term which automatically renews and includes a monthly cost of 400 Euros. The Company elected to apply the short-term practical expedient to the office lease. The Company also has an operating lease for office equipment. Operating lease expense in the Company’s consolidated statements of operations and comprehensive loss for the year ended December 31, 2021 and 2020 was approximately $ 209,000 and $ 66,000 , respectively, which includes costs associated with leases for which ROU assets have been recognized as well as short-term leases. At December 31, 2021 and 2020, the Company has a total operating lease liability of $ 924,000 and $ 1,033,000 , respectively. At December 31, 2021, approximately $ 122,000 and $ 802,000 were classified as operating lease liabilities, short-term and operating lease liabilities, net of current portion, respectively, on the consolidated balance sheet. Operating ROU assets as of December 31, 2021 and 2020 are $ 900,000 and $ 1,015,000 , respectively. F- 32 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) For the year ended December 31, 2021 and 2020, cash paid for amounts included in the measurement of lease liabilities in operating cash flows from operating leases was $ 195,000 and $ 48,000 , respectively. As of December 31, 2021 and 2020, the weighted average remaining lease term were 5.8 years and 6.8 years, respectively and the weighted average discount rate of 9% and 9% at December 31, 2021 and 2020, respectively. As of December 31, 2021, maturities of lease liabilities were as follows: 2022 $ 200,000 2023 202,000 2024 205,000 2025 208,000 2026 and thereafter 380,000 Total future minimum lease payments 1,195,000 Less imputed interest ( 271,000 ) Total $ 924,000 Note 10 — Subsequent Events: During the first quarter of 2022, the Company sold an aggregate of 641,542 shares of its common stock under the ATM program (see Note 7) and realized net proceeds of approximately $3.0 million. As of the filing of this Annual Report on Form 10-K, the Company has $46.9 million available balance under its ATM program and it has $150.0 million available under its current shelf registration for the issuance of equity, debt or equity-linked securities. On March 16, 2022, the Company’s Board of Directors (the “Board”) appointed Joseph Todisco as the Company’s Chief Executive Officer, commencing on such date as mutually agreed by Mr. Todisco and the Board, but in no event later than May 16, 2022. Mr. Todisco was appointed to serve as a member of the Board on March 18, 2022. Mr. Todisco will receive an annual salary of $ 600,000 , which may be adjusted from time to time. He will be eligible for an annual bonus, based on a target of 65 % of his base salary, as determined by the Board or the Compensation Committee of the Board (“Compensation Committee”). In determining such bonus, the Board or Compensation Committee will take into consideration the achievement of specified company objectives and personal objectives. Mr. Todisco generally must be employed through December 31 of a given year to earn that year’s annual bonus. Solely with respect to the 2022 fiscal year, Mr. Todisco will be paid an annual bonus in an amount that is not less than $ 195,000 (equal to 50 % of the 2022 target bonus amount). Effective as of the date Mr. Todisco’s employment with the Company commences (the “Start Date”), the Company will grant Mr. Todisco stock option to purchase 500,000 shares of the Company’s common stock, with an exercise price equal to the closing price of the Company’s stock on the date of grant. The option will vest over four years in four equal annual installments on the first four anniversaries of the Start Date, provided that Mr. Todisco remains an employee or consultant through the applicable vesting date. Mr. Todisco will also be granted 207,469 restricted stock units (“Initial RSUs”), which will vest as to 50 % on the first anniversary of the Start Date, as to 30 % on the second anniversary of the Start Date, and as to 20 % on the third anniversary of the Start Date, provided that Mr. Todisco remains an employee or consultant through the applicable vesting date. Dr. Matthew David will continue to serve as interim Chief Executive Officer and Chief Financial Officer until Mr. Todisco commences employment, after which Dr. David will continue to serve as the Company’s Chief Financial Officer. On March 28, 2022, the Company announced that the resubmission of the NDA for DefenCath has been accepted for filing by the FDA. The FDA considers the resubmission as a complete, Class 2 response with a six-month review cycle. F-33