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)). 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 Chief Executive Officer, effective May 10, 2022, there were no changes in our internal control over financial reporting during our year ended December 31, 2022, 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. 54 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, 2022, 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, 2022. Item 9B. Other Information Not applicable. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 55 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 . Directors The following table sets forth the name, age and position of each of our directors as of March 15, 2023: Name Age Director Since Position(s) with CorMedix Joseph Todisco 47 March 2022 Director and Chief Executive Officer Paulo F. Costa 72 September 2020 Director Janet Dillione 62 August 2015 Director Gregory Duncan 58 November 2020 Director Alan W. Dunton 68 March 2019 Director Myron Kaplan 77 April 2016 Director and Chairman of the Board Steven Lefkowitz 67 June 2017 Director Joseph Todisco became a director of CorMedix in March 2022. Prior to joining CorMedix as our Chief Executive Officer, 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. 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 1992 to 1998. 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 served as Director from June 2009 to October 2013 and Chairman until May 2022 of MacroGenics, Inc., a public oncology focused biopharma company. 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. 56 Janet Dillione has been a director of CorMedix since August 2015. Since November 2020, Ms. Dillione has served 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 and starting in May 2014, she served as Chief Executive Officer of Bernoulli Enterprise, Inc., 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 and IT 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, 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. 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 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 and became Chairman of the Board in August 2017. 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. 57 Board Independence Our Board has undertaken a review of the independence of our directors and has determined that (i) all current directors, except Mr. Todisco, our Chief Executive Officer, 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, except Mr. Todisco, our Chief Executive Officer, 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, Ms. Dillione and Mr. Todisco. The membership of these Committees may be changed after our next annual meeting. 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. We solicited a “Say-On-Pay vote at our 2022 annual meeting of stockholders, and the next “Say-On-Pay” vote will occur at the 2023 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. 58 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. Executive Officers The following table sets forth the name, age and position of each of our executive officers as of March 15, 2023: Name Age Position(s) with CorMedix Joseph Todisco 47 Chief Executive Officer Matthew David 45 Chief Financial Officer Phoebe Mounts 72 Executive Vice President and General Counsel and Head of Regulatory, Compliance and Legal Elizabeth Hurlburt 44 Executive Vice President and Head of Clinical Operations Erin Mistry 41 Executive Vice President and Chief Commercial Officer See the biography for Joseph Todisco under “Directors.” Matthew David became our Chief Financial Officer in May 2020. From October 4, 2021 through May 10, 2022, Dr. David also served as our interim Chief Executive Officer in addition to his role as Chief Financial Officer. 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 and Technical Operations in October 2021. 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 Hurlburt became our Executive Vice President and Head of Clinical Operations in March 2018. Her current role is Executive Vice President and Head of Clinical and Medical Affairs, effective May 2022. Prior to her employment, Ms. 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. Hurlburt received her B.A. in Leadership and Organizational Management from Bay Path College and a M.S. in Management and Leadership from Western Governors University. Erin Mistry became our Senior Vice President of Payer Strategy, Government Affairs and Trade in March 2020. Her current role is Executive Vice President and Chief Commercial Officer, effective January 2023. Prior to joining CorMedix, Erin held roles as VP market access at Intarcia therapeutics as well as Senior Managing Director of the global Value and Access practice at Syneos Health. During her career, Erin has worked with emerging, mid-size, and large biopharma companies with a focus on pricing, access and reimbursement. She currently serves on the boards of Incubate Coalition and the AntiMicrobial Working Group, both in Washington, DC. Erin holds a B.S. in Industrial Engineering (healthcare) and an M.S. in Biomechanical Engineering from North Carolina State University. On May 10, 2022, Thomas Nusbickel, our former Chief Commercial Officer, and CorMedix mutually agreed to part ways, effective June 1, 2022. 59 Item 11. Executive Compensation DIRECTOR COMPENSATION Director Compensation in Fiscal 2022 The following table shows the compensation earned by each non-employee director of our Company for the year ended December 31, 2022: Name Fees Earned or Paid in Cash ($) Option Awards (1) (2) ($) Total ($) Paulo F. Costa 94,000 59,960 153,960 Janet Dillione 78,000 59,960 137,960 Gregory Duncan 72,000 59,960 131,960 Alan W. Dunton 82,000 59,960 141,960 Myron Kaplan 130,000 59,960 189,960 Steven Lefkowitz 93,000 59,960 152,960 (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 9 to our audited financial statements included in this Annual Report on Form 10-K. (2) As of December 31, 2022, the number of shares underlying options held by each non-employee director was as follows: 63,750 shares for Mr. Costa; 125,000 shares for Ms. Dillione; 62,500 for Mr. Duncan; 92,500 shares for Dr. Dunton; 106,000 shares for Mr. Kaplan; and 103,000 shares for Mr. Lefkowitz. Director Compensation Plan 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 for 2022. The 2022 compensation program is set forth below in the table. Each year we make an annual grant of stock options to each non-employee director with respect to 20,000 shares and we make an initial grant of stock options to new non-employee directors with respect to 25,000 shares, prorated as appropriate. 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. Cash Stock Options Annual Fee $ 55,000 First Election to Board 25,000 (1) Annual Grant, Prorated in First Year Following Election to the Board 20,000 (2) Additional Annual Fee - Board Chair $ 45,000 Additional Annual Fee - Audit Chair $ 23,000 Additional Annual Fee - Compensation Chair $ 18,000 Additional Annual Fee - Nomination and Governance Chair $ 14,000 Additional Annual Fee - Audit Committee Non-Chair Members $ 10,000 Additional Annual Fee - Compensation Committee Non-Chair Members $ 7,000 Additional Annual Fee - Nomination and Governance Committee Non-Chair Members $ 5,000 Additional Annual Fee - Strategic Committee Members $ 15,000 Additional One-Time Fee - Search Committee for CEO $ 10,000 (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 one-time fee for the Search Committee for CEO was paid in Q2 2022. 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. 60 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 2022, our Named Executive Officers were Joseph Todisco, Matthew David, Phoebe Mounts, Elizabeth Hurlburt and Thomas Nusbickel. Mr. Todisco’s service as our Chief Executive Officer was effective May 10, 2022. Mr. Nusbickel separated from service as our Chief Commercial Officer effective June 1, 2022. 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, 2022 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 March 2019, May 2020, March 2021 and March 2022, respectively, we entered into an employment agreement with each of Phoebe Mounts, our Executive Vice President and General Counsel and Head of Regulatory, Compliance and Legal, Matthew David, our Executive Vice President and Chief Financial Officer, Elizabeth Hurlburt, our Executive Vice President and Head of Clinical Operations, and Joseph Todisco, our Chief Executive Officer. These agreements provide for a salary for each Named Executive Officer and are described under the caption “Employment Agreements.” Dr. David, our Chief Financial Officer, served as interim Chief Executive Officer until Mr. Todisco was appointed Chief Executive Officer, effective May 10, 2022. Dr. David’s 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. His compensation as the interim Chief Executive Officer is described under the caption “Employment Agreements.” Following Dr. David’s tenure as the interim Chief Executive Officer, and as he continues to serve as Chief Financial Officer, his annual base salary was $375,000. On March 16, 2022, we entered into an employment agreement with Mr. Todisco to serve as our Chief Executive Officer, effective May 10, 2022. The base salary information for our Named Executive Officers for 2022 is described under the caption “Employment Agreements.” Annual Bonuses We maintain the CorMedix Inc. Executive Bonus Plan (the “Bonus Plan”), which is 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. 61 As part of their compensation package, our Named Executive Officers generally have the opportunity to earn annual non-equity incentive bonuses under the Bonus Plan. 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 2022, Dr. Mounts, Ms. Hurlburt and Mr. Nusbickel were each eligible for an annual target bonus of 30% each of their respective 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. Following Dr. David’s tenure as the interim Chief Executive Officer, and as he continues to serve as Chief Financial Officer, his current annual target bonus is 40%. Mr. Todisco joined the Company on May 10, 2022 and his bonus is described in more detail under the caption “Employment Agreements.” 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. For 2022, the Compensation Committee determined that it was appropriate to pay bonuses to Mr. Todisco, Dr. Mounts, Dr. David and Ms. Hurlburt based on achievement of corporate goals and individual performance in 2022. Each of Mr. Todisco, Dr. Mounts, Dr. David and Ms. Hurlburt received performance bonuses of $305,760, $88,200, $147,235 and $84,848, respectively. In the case of Dr. David, his bonus reflected his bonus targets as both the interim Chief Executive Officer and Chief Financial Officer, on a prorated basis. These bonuses were paid in early 2023. Mr. Nusbickel received a bonus in accordance with the terms of his separation agreement as described under “Employment Agreements” below. In 2021, the Compensation Committee approved a special performance bonus opportunity under the Bonus Plan for Dr. Matthew David, then interim Chief Executive Officer, Executive Vice President and Chief Financial Officer, Dr. Phoebe Mounts, Executive Vice President and General Counsel and Head of Technical Operations, and Ms. Elizabeth 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 had an opportunity to earn a performance bonus of up to 30% of salary for Dr. Mounts and Ms. 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 while Dr. David served 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. In May 2022, Dr. David, Dr. Mounts and Ms. Hurlburt received performance bonuses of $242,250, $106,875 and $89,775, respectively. 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. Stock Options On October 13, 2022, our shareholders approved the Amended and Restated 2019 Omnibus Stock Incentive Plan, which, subject to certain adjustments, authorizes us to issue up to 4,800,000 additional shares of our common stock as long-term equity incentives to our 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 to employees, consultants, and directors of our Company or a related entity. 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 February 2023, the Board, based on the recommendation of the Compensation Committee, granted time-based stock options to our Named Executive Officers based on 2022 metrics as determined by the Board. The time-based stock options vest annually in four increments while the executive remains employed by the Company. The Board granted 125,000 time-based stock options each to Dr. David, Dr. Mounts and Ms. Hurlburt, all with an exercise price of $4.43 per share, and 400,000 time-based stock options to Mr. Todisco with an exercise price of $4.43 per share. 62 In January 2021, the Board, based on the recommendation of the Compensation Committee, granted a mix of time-based and performance-based stock options to Drs. Mounts and David, Messrs. Armstrong and Baluch, and Ms. Hurlburt, which vested annually in four increments while the executive remained employed by the Company. These performance-based stock options were forfeited in December 2022 because the performance was not achieved and, in the case of Messrs. Armstrong and Baluch, they no longer remained employed by us. 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, 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. 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 March 16, 2022, we entered into an employment agreement with Mr. Todisco, our Chief Executive Officer. After the initial term, 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. The terms of Mr. Todisco’s employment agreement are further described below. 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, dated as of May 11, 2020, and provided other compensation as a result of Dr. David serving as our interim Chief Executive Officer, effective as of October 4, 2021 through May 10, 2022. Pursuant to the letter agreement, during the period in which Dr. David served 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. After Dr. David ceased to serve as interim Chief Executive Officer and while he serves as Chief Financial Officer, he receives an annual base salary of $375,000, effective May 10, 2022. Under the letter agreement, Dr. David’s target annual bonus with respect to the period during which he served as interim Chief Executive Officer was increased to 60% from 30% of his base salary. After Dr. David ceased to service as interim Chief Executive Officer, his target annual bonus is 40% of his base salary. 63 On March 10, 2021, we entered into an employment agreement with Ms. Hurlburt to serve as our Executive Vice President and Head of Clinical Operations. 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 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 19, 2019. 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 April 29, 2021, we entered into an employment agreement with Mr. Nusbickel, our Chief Commercial Officer. In connection with Mr. Nusbickel’s separation from service effective June 1, 2022, we and Mr. Nusbickel entered into a separation agreement and release dated as of May 10, 2022 (the “Nusbickel Separation Agreement”). Mr. Nusbickel was eligible to receive severance benefits on account of termination without Cause under the employment agreement. Under the Nusbickel Separation Agreement, Mr. Nusbickel received the severance payments and benefits described in his employment agreement as follows: (i) lump sum payment of 44 days compensation in lieu of notice; (ii) payment of base salary for a period of nine months following June 1, 2022; (iii) payment of an annual bonus on a prorated basis, for the 2022 year, based on achievement of specified bonus objectives; (iv) the monthly payment of a portion of his COBRA premium for a period of nine months following June 1, 2022 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 will not accelerate, as such vesting requirements have not been successfully met as of the date of termination. Mr. Nusbickel is bound by confidentiality, non-solicitation and non-competition covenants under his employment agreement, among other terms. Pursuant to their respective employment agreements, Mr. Todisco receives an annual salary of $600,000 (effective May 2022), Dr. Mounts receives an annual salary of $375,000, Dr. David receives an annual salary of $375,000 (effective May 2022), and Ms. Hurlburt receives an annual salary of $365,000 (effective May 2022). Dr. David’s salary was increased to $425,000 from October 2021 to May 2022 while he served 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%. Each executive is eligible for an annual bonus of up to 30% for Ms. Hurlburt, up to 30% for Dr. Mounts, up to 40% for Dr. David (which was increased up to 60% while he served as interim Chief Executive Officer) and up to 65% for Mr. Todisco (solely with respect to the 2022 fiscal year, Mr. Todisco will receive an annual bonus not less than $195,000), 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 Mr. Todisco, Drs. David and Mounts and Ms. Hurlburt are identical except where noted. If we terminate the executive’s employment for Cause (as defined in the employment agreement), 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. 64 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 in the employment agreement), 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. Todisco following termination of employment and nine months for the other executives; (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, and in the case of Mr. Todisco, accelerated vesting of the restricted stock units granted to him on May 10, 2022; 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, in 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, and, in the case of Mr. Todisco, a payment in the amount of 150% of the sum of Mr. Todisco’s then-current base salary and his target bonus in effect will be paid in equal monthly installments over 18 months following termination. 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. 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 Mr. Todisco, Drs. David and Mounts and Ms. Hurlburt 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, Mr. Todisco and Ms. Hurlburt worldwide) on the date of termination of his or her employment. 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 $1.0 million each in the year the compensation becomes taxable to the executive officers. Although deductibility of compensation is considered, tax deductibility is not a primary objective of our compensation programs. Rather, we seek to maintain flexibility in how we compensate our executive officers so as to meet a broader set of corporate and strategic goals and the needs of stockholders, and as such, we may be limited in our ability to deduct amounts of compensation from time to time. Accounting rules require us to expense the cost of our stock option grants. Because of option expensing and the impact of dilution on our stockholders, we pay close attention to, among other factors, the type of equity awards we grant and the number and value of the shares underlying such awards. Pension Benefits We do not maintain any qualified or nonqualified defined benefit pension plans. As a result, none of our Named Executive Officers participate in or have benefits under qualified or nonqualified defined benefit pension plans sponsored by us. Our Compensation Committee may elect to adopt qualified or nonqualified pension benefit plans in the future if it determines that doing so is in our best interests. Nonqualified Deferred Compensation None of our Named Executive Officers participate in nonqualified defined contribution plans or other nonqualified deferred compensation plans maintained by us. Our Compensation Committee may elect to provide our officers and other employees with nonqualified deferred compensation benefits in the future if it determines that doing so is in our best interests. 65 Summary Compensation Table The following table sets forth information with respect to compensation earned by our Named Executive Officers in the years ended December 31, 2022 and 2021: Name and Principal Position Year Salary ($) Bonus ($) Stock Awards (1) ($) Option Awards (1) ($) Non-equity Incentive Plan Compensa-tion ($) All Other Compen-sation ($) Total ($) Joseph Todisco (2) 2022 378,461 701,245 1,273,500 305,760 (3) 32,223 (4) 2,691,189 Chief Executive Officer Matthew David (5) 2022 393,462 -- 305,900 389,485 (6) 47,697 (4) 1,136,544 Chief Financial Officer 2021 351,923 75,900 (7) -- 951,895 -- 43,584 (4) 1,423,302 Phoebe Mounts 2022 375,000 -- 428,260 195,075 (8) 12,146 (4) 1,010,481 Executive Vice President and General Counsel and Head of Regulatory, Compliance and Legal 2021 375,000 61,875 (7) -- 1,164,810 -- 11,412 (4) 1,613,097 Elizabeth Hurlburt 2022 346,346 -- 305,900 175,623 (9) 16,942 (4) 844,811 Executive Vice President and Head of Clinical Operations 2021 310,800 37,800 (7) -- 742,910 -- 44,818 (4) 1,136,328 Thomas Nusbickel (10) 2022 191,827 -- 305,900 (9) 31,384 (11) 416,766 (12) 945,877 Former Executive Vice President and Chief Commercial Officer 2021 233,654 75,000 (7) -- 1,540,265 -- 27,663 (4) 1,876,582 (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. (2) Mr. Todisco became our Chief Executive Officer on May 10, 2022. (3) Represents annual bonus for the 2022 year that was accrued in fiscal year 2022 paid in 2023. (4) Represents premiums paid by us for health benefits and 401(k) plan employer match. (5) Dr. David served as the interim Chief Executive Officer effective October 4, 2021 through May 10, 2022. (6) Represents (i) an incentive cash award of $242,250, which was earned as a result of our performance during the period October 2021 through March 2022 and paid in 2022, under a special performance bonus opportunity, and (ii) $147,235 annual bonus for the 2022 year that was accrued in fiscal year 2022 and paid in 2023. Solely with respect to (i) herein, $89,250 of the payment was accrued on an estimated basis during the year ended December 31, 2021 and the balance of $153,000 was booked during the year ended December 31, 2022. (7) Represents discretionary annual bonuses accrued in fiscal year 2021 paid in 2022. (8) Represents i) an incentive cash award of $106,875, which was earned as a result of our performance during the period October 2021 through March 2022 and paid in 2022, under a special performance bonus opportunity, and (ii) $88,200 annual bonus for the 2022 year that was accrued in fiscal year 2022 and paid in 2023. Solely with respect to (i) herein, $39,375 of the payment was accrued on an estimated basis during the year ended December 31, 2021 and the balance of $67,500 was booked during the year ended December 31, 2022. (9) Represents (i) an incentive cash award of $89,775, which was earned as a result of our performance during the period October 2021 through March 2022 and paid in 2022, under a special performance bonus opportunity, and (ii) $85,848 annual bonus for the 2022 year that was accrued in fiscal year 2022 and paid in 2023. Solely with respect to (i) herein, $33,075 of the payment was accrued on an estimated basis during the year ended December 31, 2021 and the balance of $56,700 was booked during the year ended December 31, 2022. (10) On May 10, 2022, we and Thomas Nusbickel came to a mutual agreement pursuant to which Mr. Nusbickel separated from service as our Chief Commercial Officer, effective June 1, 2022. Stock options granted in 2022 include 50,000 options that were forfeited when his employment was terminated, with a grant date fair value of $152,950. (11) Represents an annual bonus for the 2022 year paid in 2023. (12) Represents premiums paid by us for health benefits, 401(k) plan employer match, sign-on bonus in cash amounted to $50,000 and severance pay for Mr. Nusbickel of $320,673 of which $251,215 was paid in 2022 and the remaining balance of $69,458 is payable in 2023. 66 Outstanding Equity Awards at Fiscal Year-End 2022 The following table contains certain information concerning unexercised options for the Named Executive Officers as of December 31, 2022. Option Awards Stock Awards Name Number of Shares Underlying Unexercised Options (#) Exercisable Number of Shares Underlying Unexercised Options (#) Unexercisable (1) Equity Incentive Plan Awards: Number of Shares Underlying Unexercised Unearned Options # (2) Option Exercise Price ($) Option Expiration Date Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: FMV or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (3) Joseph Todisco -- 500,000 -- 3.38 05/09/2032 207,469 (4) 875,519 Matthew David 63,667 41,500 19,833 5.63 05/11/2030 -- -- 63,667 41,500 19,833 4.08 05/11/2030 -- -- 20,000 20,000 -- 8.32 01/10/2031 -- -- 62,500 62,500 -- 5.56 10/31/2031 -- -- 25,000 75,000 -- 4.03 02/17/2032 -- -- Phoebe Mounts 49,500 10,500 10,000 7.92 05/01/2029 -- -- 18,573 6,191 -- 5.63 02/25/2030 -- -- 37,500 12,500 -- 4.08 05/11/2030 -- -- 37,500 12,500 -- 5.63 05/11/2030 -- -- 35,000 35,000 -- 8.32 01/10/2031 -- -- 50,000 50,000 -- 5.56 10/31/2031 -- -- 35,000 105,000 -- 4.03 02/17/2032 -- -- Elizabeth Hurlburt 54,000 -- -- 1.45 3/19/2028 -- -- 20,880 -- -- 8.30 01/10/2029 -- -- 18,573 6,191 -- 5.63 02/25/2030 -- -- 28,125 9,375 -- 4.08 05/11/2030 -- -- 28,125 9,375 -- 5.63 05/11/2030 -- -- 35,000 35,000 -- 8.32 01/10/2031 -- -- 25,000 75,000 -- 4.03 02/17/2032 -- -- (1) Vesting based on continued employment over four years. (2) Options vest based on achievement of specific milestones and continued employment and become exercisable if and when a milestone is achieved. (3) 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, 2022, which was $4.22. (4) Each restricted stock unit represents the right to receive one share of our common stock. The restricted stock units vest 50% on the first anniversary of the grant date, 30% on the second anniversary of the grant date, and the remaining 20% on the third anniversary of the grant date, subject to continued service through the applicable vesting date. 67 Option Repricings We did not engage in any repricings or other modifications to any of our Named Executive Officers’ outstanding options during the year ended December 31, 2022. Potential Payments on a Qualifying Termination If the severance payments called for in our employment agreements for Mr. Todisco, Dr. David, Dr. Mounts and Ms. Hurlburt had been triggered on December 31, 2022, we would have been obligated to make the following payments: Name Cash Severance Payment ($ 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) Number of Restricted Stock Units (# that would vest) and ($ market value) (3) Joseph Todisco $ 50,000 (4) 12 mos. $ 3,402 12 mos. 500,000 $ 420,000 207,469 $ 875,519 Matthew David $ 31,250 (5) 9 mos. $ 3,383 9 mos. 116,500 $ 20,060 0 $ 0 Phoebe Mounts $ 31,250 (5) 9 mos. $ 0 9 mos. 117,500 $ 21,700 0 $ 0 Elizabeth Hurlburt $ 30,417 (5) 9 mos. $ 0 9 mos. 84,375 $ 15,563 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, 2022, which was $4.22, and the exercise prices of the applicable stock options. (3) The fair market value of the shares that could be acquired was based on the closing sale price per share of our common stock on the Nasdaq Global Market on December 31, 2022, which was $4.22. (4) Represents severance based on monthly base salary, payable for 12 months. Any bonus for the year of termination based on performance would also be paid. (5) Represents severance based on monthly base salary, payable for 9 months. Any bonus for the year of termination based on performance would also be paid. The severance payment called for in the employment agreement with Thomas Nusbickel was triggered on June 1, 2022. We were obligated to make the following payment pursuant to the Separation Agreement with Mr. Nusbickel, dated May 10,2022: Name Cash Severance Payment ($ 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) Thomas Nusbickel (3) $ 31,250 (4) 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, 2022, which was $4.22, and the exercise prices of the applicable stock options. (3) Pursuant to Mr. Nusbickel’s Separation Agreement, we paid Mr. Nusbickel an additional lump sum payment of $39,423 which represented base salary for 44 days as pay in lieu of notice, and a prorated bonus for the year of termination of $31,384. (4) Represents severance pay based on monthly base salary. 68 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Beneficial Ownership The following table shows the number of shares of our common stock beneficially owned as of March 15, 2023 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. At March 15, 2023 we had 44,499,788 shares of common stock outstanding. Beneficial ownership in each case also includes shares issuable upon vesting of restricted stock units within 60 days from March 15, 2023 and exercise of outstanding options that can be exercised within 60 days after March 15, 2023 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. Name and Address of Beneficial Owner Common Stock Beneficially Owned (1) Shares % 5% or Greater Stockholders Nomura Global Financial Products, Inc. (2) 2,952,334 7.2 % Directors: Paulo F. Costa (3) 70,417 * Janet Dillione (4) 185,140 * Gregory Duncan (5) 69,167 * Alan W. Dunton (6) 105,417 * Myron Kaplan (7) 287,701 * Steven Lefkowitz (8) 202,317 * Named Executive Officers: Joseph Todisco (9) 363,434 * Matthew David (10) 345,734 * Phoebe Mounts (11) 395,714 * Elizabeth Hurlburt (12) 308,394 * Thomas Nusbickel (13) 137,500 * All executive officers and directors as a group (11 persons) (14) 2,467,001 5.3 % * Less than 1% (1) Based upon 44,499,788 shares of our common stock outstanding on March 15, 2023 and, with respect to each individual holder, rights to acquire our common stock exercisable within 60 days of March 15, 2023. 69 (2) Based solely on information contained in Amendment No. 1 to the Statement on Schedule 13G filed with the SEC on February 14, 2023 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 2,952,334 shares of our common stock and the shared dispositive power with respect to 2,952,334 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. (3) Consists of 70,417 shares of our common stock issuable upon exercise of stock options. (4) Consists of (i) 53,473 shares of our common stock, and (ii) 131,667 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 15, 2023. (5) Consists of 69,167 shares of our common stock issuable upon exercise of stock options. (6) Consists of (i) 6,250 shares of our common stock, and (ii) 99,167 shares of our common stock issuable upon exercise of stock options. (7) Consists of (i) 145,034 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) 112,667 shares of our common stock issuable upon exercise of stock options. (8) 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) 109,667 shares of our common stock issuable upon exercise of stock options. (9) Consists of (i) 34,700 shares of our common stock, (ii) 103,734 shares of our common stock issuable upon vesting of restricted stock units, and (iii) 225,000 shares of our common stock issuable upon exercise of stock options. (10) Consists of (i) 3,150 shares of our common stock, (ii) 342,584 shares of our common stock issuable upon exercise of stock options. (11) Consists of (i) 7,200 shares of our common stock, and (ii) 388,514 shares of our common stock issuable upon exercise of stock options. (12) Consists of 308,394 shares of our common stock issuable upon exercise of stock options. (13) Consists of 137,500 shares of our common stock issuable upon exercise of stock options. On May 10, 2022, we came to a mutual agreement to part ways with Mr. Nusbickel, our former Chief Commercial Officer, effective June 1, 2022. (14) Consists of the following held by our directors and executive officers (A) 376,357 shares of our common stock, (B) 103,734 shares of our common stock issuable upon vesting of restricted stock units, and (C) 1,986,910 shares of our common stock issuable upon exercise of stock options. 70 Equity Compensation Plan Information The following table provides information as of December 31, 2022 about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans (including individual arrangements): Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)(c) Equity compensation plans approved by security holders (1) 4,661,838 (2) $ 6.21 (3) 4,995,109 (1) Our 2013 Stock Incentive Plan was approved by our stockholders on July 30, 2013. Our 2019 Omnibus Stock Incentive Plan was approved by our stockholders on November 26, 2019. Our Amended and Restated 2019 Omnibus Stock Incentive Plan was approved by our stockholders on October 13, 2022. (2) Consist of 4,454,369 underlying stock options and 207,469 underlying restricted stock units. (3) Applicable to shares underlying outstanding stock options only. 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 NASDAQ Composite and the NASDAQ Biotechnology Index. The graph covers the most recent five-year period ended December 31, 2022. The graph assumes that the value of the investment in our common stock and each index was $100.00 at December 31, 2017, and that all dividends are reinvested. Cumulative Total Return 12/2017 12/2018 12/2019 12/2020 12/2021 12/2022 CorMedix Inc. $ 100.00 $ 256.97 $ 290.04 $ 296.02 $ 181.27 $ 168.13 NASDAQ Composite $ 100.00 $ 97.16 $ 132.81 $ 192.47 $ 235.15 $ 158.65 NASDAQ Biotechnology $ 100.00 $ 91.14 $ 114.02 $ 144.15 $ 144.18 $ 129.59 71 Item 13. Certain Relationships and Related Transactions and Director Independence Related Party Transactions No related party transactions occurred during the Fiscal year ended December 31, 2022. 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 Annual Report on Form 10-K 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 and Marcum LLP, our independent registered public accounting firms for the years ended December 31, 2022 and 2021, 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 2022 and 2021; financing activities in 2022 and 2021; and services rendered in connection with tax compliance, tax advice and tax planning, and all other fees for services rendered. 2022 2021 Audit Fees (Friedman LLP) $ 42,400 $ 155,000 Audit Fees (Marcum LLP) 127,000 - Audit Related Fees (Friedman LLP) - 16,000 Tax Fees - - All Other Fees - - Total $ 169,400 $ 171,000 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 2022 were pre-approved by the Audit Committee. 72 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 Annual Report on Form 10-K: Exhibit Number Description of Document Registrant’s Form Dated Exhibit Number Filed Herewith 1.1 At-the-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-the-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-the-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 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 X 73 Exhibit Number Description of Document Registrant’s Form Dated Exhibit Number Filed Herewith 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 and effective May 11, 2020, between CorMedix Inc. and Matthew David 10-K 3/30/2021 10.10 10.6+ Letter Agreement, dated and effective October 26, 2021, between CorMedix Inc. and Matthew David, M.D. 8-K 10/29/2021 10.1 10.7 Form of Securities Purchase Agreement, dated November 17, 2017, between CorMedix Inc. and the investors signatory thereto 8-K 11/13/2017 10.1 10.8 Backstop Agreement, dated November 9, 2017, between CorMedix Inc. and the investor named therein 8-K 11/13/2017 10.2 10.9 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 10.10 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 10.11**+ Executive Employment Agreement, dated and effective March 10, 2021, between CorMedix Inc. and Elizabeth Hurlburt 8-K 3/12/2021 10.1 10.12 Securities Purchase Agreement, dated December 31, 2018, between CorMedix Inc. and the investor named therein 8-K 1/03/2019 10.1 10.13**+ Employment Agreement, dated as of March 19, 2019, between CorMedix Inc. and Phoebe Mounts 10-Q 5/13/19 10.1 10.14 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 10.15 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 10.16+ 2019 Omnibus Stock Incentive Plan 8-K 11/27/2019 10.1 10.17+ Amended and Restated 2019 Omnibus Stock Incentive Plan S-8 10/26/2022 99.1 10.18**+ Executive Employment Agreement, dated April 29, 2021, between CorMedix Inc. and Thomas Nusbickel 10-Q 08/21/2021 10.1 10.19+ 2021 Executive Bonus Plan 8-K 12/23/2021 10.1 10.20+ Executive Employment Agreement, dated March 16, 2022, between CorMedix Inc. and Joseph Todisco. 8-K 03/21/2022 10.1 21.1 List of Subsidiaries 10-K 3/27/2013 21.1 23.1 Consent of Independent Registered Public Accounting Firm X 23.2 Consent of Independent Registered Public Accounting Firm X 74 Exhibit Number Description of Document Registrant’s Form Dated Exhibit Number Filed Herewith 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 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 32.2 Certification of 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, 2022, formatted in Extensible Business Reporting Language (XBRL): (i) Balance Sheets at December 31, 2022 and 2021, (ii) Statements of Operations for the years ended December 31, 2022 and 2021, (iii) Statements of Changes in Stockholders’ Equity for the years ended December 31, 2022 and 2021, (iv) Statements of Cash Flows for the years ended December 31, 2022 and 2021 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). ** 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. 75 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized. CORMEDIX INC. March 30, 2023 By: /s/ Joseph Todisco Joseph Todisco Chief Executive Officer (Principal Executive Officer) March 30, 2023 By: /s/ Matthew David Matthew David Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature Title Date /s/ Joseph Todisco Chief Executive Officer and Director March 30, 2023 Joseph Todisco (Principal Executive Officer) /s/ Matthew David Chief Financial Officer March 30, 2023 Matthew David (Principal Financial and Accounting Officer) /s/ Myron Kaplan Director and Chairman of the Board March 30, 2023 Myron Kaplan /s/ Paulo Costa Director March 30, 2023 Paulo Costa /s/ Janet Dillione Director March 30, 2023 Janet Dillione /s/ Gregory Duncan Director March 30, 2023 Gregory Duncan /s/ Alan Dunton Director March 30, 2022 Alan Dunton /s/ Steven Lefkowitz Director March 30, 2023 Steven Lefkowitz 76 CORMEDIX INC. AND SUBSIDIARIES FINANCIAL STATEMENTS Financial Statements Index Reports of Independent Registered Public Accounting Firms Marcum LLP , (PCAOB ID 688), Friedman LLP, (PCAOB ID 711 ) F-2 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-4 Consolidated Statements of Operations and Comprehensive Income (Loss) Years Ended December 31, 2022 and 2021 F-5 Consolidated Statements of Changes in Stockholders’ Equity Years Ended December 31, 2022 and 2021 F-6 Consolidated Statements of Cash Flows Years Ended December 31, 2022 and 2021 F-7 Notes to Consolidated Financial Statements F-8 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of CorMedix Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of CorMedix Inc. and Subsidiaries (the “Company”) as of December 31, 2022, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. 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 audit 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 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 audit 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 audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the 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 financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor since 2014 (such date takes into account the acquisition of certain assets of Friedman LLP by Marcum LLP effective September 1, 2022). Marlton, New Jersey March 30, 2023 F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of CorMedix Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of CorMedix Inc. and Subsidiaries (the “Company”) as of December 31, 2021, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year 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 the results of its operations and its cash flows for the year 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 audit. 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 audit 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 audit 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 audit 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 audit 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 audit provides a reasonable basis for our opinion. /s/ Friedman LLP Friedman LLP We served as the Company’s auditor from 2014 through 2022. Marlton, NJ March 29, 2022 F- 3 CorMedix Inc. And Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, 2022 and 2021 December 31, 2022 2021 ASSETS Current assets Cash and cash equivalents $ 43,148,323 $ 53,317,405 Restricted cash 124,102 131,567 Short-term investments 15,644,062 12,149,003 Trade receivables, net - 45,368 Inventories - 3,008 Prepaid research and development expenses 11,016 51,993 Other prepaid expenses and current assets 623,672 770,485 Total current assets 59,551,175 66,468,829 Property and equipment, net 1,609,679 1,474,937 Restricted cash, long term 102,320 102,305 Operating lease right-of-use assets 775,085 899,505 TOTAL ASSETS $ 62,038,259 $ 68,945,576 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 2,202,149 $ 2,209,552 Accrued expenses 3,973,941 3,014,156 Operating lease liabilities, short-term 134,801 121,368 Total current liabilities 6,310,891 5,345,076 Operating lease liabilities, net of current portion 667,632 802,433 TOTAL LIABILITIES 6,978,523 6,147,509 COMMITMENTS AND CONTINGENCIES (Note 8) STOCKHOLDERS’ EQUITY Preferred stock - $ 0.001 par value: 2,000,000 shares authorized; 181,622 shares issued and outstanding at December 31, 2022 and 2021 182 182 Common stock - $ 0.001 par value: 160,000,000 shares authorized at December 31, 2022 and 2021; 42,815,196 and 38,086,437 shares issued and outstanding at December 31, 2022 and 2021, respectively 42,815 38,086 Accumulated other comprehensive gain 82,743 87,130 Additional paid-in capital 330,294,782 308,331,750 Accumulated deficit ( 275,360,786 ) ( 245,659,081 ) TOTAL STOCKHOLDERS’ EQUITY 55,059,736 62,798,067 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 62,038,259 $ 68,945,576 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, 2022 and 2021 December 31, 2022 2021 Revenue: Net sales $ 65,408 $ 190,936 Cost of sales ( 3,734 ) ( 148,938 ) Gross profit 61,674 41,998 Operating Expenses: Research and development ( 10,679,549 ) ( 13,132,982 ) Selling, general and administrative ( 20,006,093 ) ( 16,346,601 ) Total operating expenses ( 30,685,642 ) ( 29,479,583 ) Loss From Operations ( 30,623,968 ) ( 29,437,585 ) Other Income (Expense): Interest income 326,016 14,403 Foreign exchange transaction income (loss) 37,145 ( 21,287 ) Interest expense ( 26,515 ) ( 15,943 ) Total other (expense) income 336,646 ( 22,827 ) Net Loss Before Income Taxes ( 30,287,322 ) ( 29,460,412 ) Tax benefit 585,617 1,250,186 Net Loss ( 29,701,705 ) ( 28,210,226 ) Other Comprehensive Income (Loss): Unrealized gain (loss) from investments 5,055 ( 4,655 ) Foreign currency translation loss ( 9,442 ) ( 10,221 ) Total other comprehensive loss ( 4,387 ) ( 14,876 ) Comprehensive Loss $ ( 29,706,092 ) $ ( 28,225,102 ) Net Loss Per Common Share – Basic and Diluted $ ( 0.74 ) $ ( 0.75 ) Weighted Average Common Shares Outstanding – Basic and Diluted 40,274,273 37,666,081 The accompanying notes are integral part of these consolidated financial statements. F- 5 CORMEDIX INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY Years Ended December 31, 2022 and 2021 Common Stock Preferred Stock – Series C-2, C-3, Series D, Series E, Series F and Series G Accumulated Other Comprehensive Additional Paid-in Accumulated Total Stockholders’ Shares Amount Shares Amount Gain (Loss) Capital Deficit Equity 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 Stock issued in connection with ATM sale of common stock, net 4,704,259 4,705 - - - 17,764,911 - 17,769,616 Stock issued in connection with warrants exercised, cash 24,500 24 - - - 128,601 - 128,625 Stock-based compensation - - - - - 4,069,520 - 4,069,520 Other comprehensive loss - - - - ( 4,387 ) - - ( 4,387 ) Net loss - - - - - - ( 29,701,705 ) ( 29,701,705 ) Balance at December 31, 2022 42,815,196 $ 42,815 181,622 $ 182 $ 82,743 $ 330,294,782 $ ( 275,360,786 ) $ 55,059,736 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, 2022 and 2021 December 31, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 29,701,705 ) $ ( 28,210,226 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 4,069,520 5,042,606 Change in right-of-use assets 124,420 115,130 Depreciation 84,618 61,890 Changes in operating assets and liabilities: Decrease (Increase) in trade receivables 42,143 ( 44,080 ) Decrease in inventory 3,008 145,456 Decrease in prepaid expenses and other current assets 187,235 666,628 (Decrease) Increase in accounts payable ( 6,566 ) 1,082,129 Increase in accrued expenses 961,963 94,279 Decrease in operating lease liabilities ( 121,368 ) ( 109,035 ) Net cash used in operating activities ( 24,356,732 ) ( 21,155,223 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of short-term investments ( 31,140,004 ) ( 15,289,586 ) Maturity of short-term investments 27,650,000 7,580,000 Purchase of equipment ( 219,360 ) ( 1,425,329 ) Net cash used in investing activities ( 3,709,364 ) ( 9,134,915 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of common stock from at-the-market program, net 17,769,616 41,455,630 Proceeds from exercise of warrants 128,625 164,886 Proceeds from exercise of stock options - 137,035 Net cash provided by financing activities 17,898,241 41,757,551 Foreign exchange effects on cash ( 8,677 ) ( 12,919 ) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 10,176,532 ) 11,454,494 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH – BEGINNING OF YEAR 53,551,277 42,096,783 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH – END OF YEAR $ 43,374,745 $ 53,551,277 Cash paid for interest $ 26,516 $ 15,943 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 gain (loss) from investments $ 5,055 $ ( 4,655 ) Deposit on equipment reclassified from prepaid expenses and current assets to property and equipment, net $ - $ 501,821 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. As announced in May 2022, the Company began the process of winding down its operations in the EU and expects to discontinue Neutrolin sales in both the EU and the Middle East by the end of 2022. 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 and 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 was 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. Note 2 — Liquidity and Uncertainties: The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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. 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, 2022 are expected to fund its operations for at least twelve months from the issuance of this Annual Report on Form 10-K, after taking into consideration the costs for resubmission of the NDA and initial preparations for the commercial launch for DefenCath. F- 8 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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, 2022, 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 9). 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. Note 3 — Summary of Significant Accounting Policies: Use of Estimates The preparation of financial statements in conformity with GAAP 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. 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. 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 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, 2022 2021 Cash and cash equivalents $ 43,148,323 $ 53,317,405 Restricted cash, short-term and long-term 226,422 233,872 Total cash, cash equivalents and restricted cash $ 43,374,745 $ 53,551,277 F- 9 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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, 2022 or 2021. 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, 2022 and 2021, 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, 2022 and 2021: December 31, 2022: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds and Cash Equivalents $ 7,311,327 $ - $ 572 $ 7,311,899 U.S. Government Agency Securities 12,072,127 ( 3,184 ) 2,056 12,070,999 Corporate Securities 2,684,235 ( 183 ) 909 2,684,961 Commercial Paper 888,875 ( 773 ) - 888,102 Subtotal 15,645,237 ( 4,140 ) 2,965 15,644,062 Total December 31, 2022 $ 22,956,564 $ ( 4,140 ) $ 3,537 $ 22,955,961 December 31, 2021: 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 Fair Value Measurements The Company’s financial instruments recorded in the consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities and accounts payable. 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 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. F- 10 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) The following table provides the carrying value and fair value of the Company’s financial assets measured at fair value as of December 31, 2022 and 2021: December 31, 2022: Carrying Value Level 1 Level 2 Level 3 Money Market Funds and Cash Equivalents $ 7,311,899 $ 7,311,899 $ - $ - U.S. Government Agency Securities 12,070,999 12,070,999 - - Corporate Securities 2,684,961 - 2,684,961 - Commercial Paper 888,102 - 888,102 - Subtotal 15,644,062 12,070,999 3,573,063 - Total December 31, 2022 $ 22,955,961 $ 19,382,898 $ 3,573,063 $ - December 31, 2021: 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 $ - 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 $ 9,442 and $ 10,221 for the year ended December 31, 2022 and 2021, respectively. 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. Restricted Cash As of December 31, 2022, and 2021 the Company has restricted cash in connection with the patent and utility model infringement proceedings against TauroPharm (see Note 8). 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, 2022 and 2021, restricted cash in connection with the patent and utility model infringement proceedings were $ 124,000 and $ 132,000 , respectively. As of December 31, 2022, the Company had $ 102,000 in long-term restricted cash for a lease security deposit. F- 11 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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, 2022 2021 Finished goods $ - $ 3,008 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, 2022 and 2021 were $ 1,609,679 and $ 1,474,937 , respectively, net of accumulated depreciation of $ 449,787 and $ 365,169 , 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 or remaining term of the lease 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, and operating lease liabilities, net of current portion, on the consolidated balance sheet (see Note 11). 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. F- 12 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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. 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. 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. 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, 2022 2021 Series C non-voting preferred stock 4,000 4,000 Series E voting preferred stock 391,953 391,953 Series G voting preferred stock 5,004,069 5,004,069 Shares issuable for payment of deferred board compensation 48,909 48,909 Shares underlying outstanding warrants - 56,455 Shares underlying outstanding stock options 4,454,369 3,358,131 Restricted stock units 207,469 - Total potentially dilutive shares 10,110,769 8,863,517 F- 13 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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. 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. Legal Costs The Company records legal costs associated with loss contingencies when they are probable and reasonably estimable. Note 4 — Geographic Information: Geographic Information The following table summarizes the geographic information: December 31, 2022 2021 Reported revenues $ 65,408 $ 190,936 Revenues attributable to European and Mideast operations, which are based in Germany 65,408 190,936 Total assets 62,038,259 68,945,576 Total assets located in the United States, with the remainder in the European Union $ 61,740,478 $ 68,558,413 Note 5 — Accrued Expenses: Accrued Expenses Accrued expenses consist of the following: December 31, 2022 2021 Professional and consulting fees $ 514,354 $ 311,408 Accrued payroll and payroll taxes 2,180,581 2,508,398 Manufacturing development related 1,214,550 99,614 Other 64,456 94,736 Total $ 3,973,941 $ 3,014,156 Note 6 — 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. F- 14 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Note 7 — Income Taxes: The Company’s U.S. and foreign loss before income taxes are set forth below: December 31, 2022 2021 United States $ ( 29,973,763 ) $ ( 29,031,585 ) Foreign ( 313,559 ) ( 428,827 ) Total $ ( 30,287,322 ) $ ( 29,460,412 ) There were no current or deferred income tax provisions for the years ended December 31, 2022 and 2021 because the Company has incurred operating losses since inception. The Company’s deferred tax assets consist of the following: December 31, 2022 2021 Net operating loss carryforwards – Federal $ 47,683,000 $ 44,085,000 Net operating loss carryforwards – State 1,592,000 3,717,000 Net operating loss carryforwards – Foreign 10,000 5,000 Capitalized licensing fees 304,000 449,000 Stock-based compensation 5,270,000 4,430,000 Accrued compensation 172,000 320,000 Section 174 capitalization 2,702,000 - Other 28,000 ( 17,000 ) Totals 57,761,000 52,989,000 Less valuation allowance ( 57,761,000 ) ( 52,989,000 ) Deferred tax assets $ - $ - The Company had the following potentially utilizable net operating loss tax carryforwards: December 31, 2022 2021 Federal $ 227,068,000 $ 209,930,000 State $ 22,389,000 $ 52,280,000 Foreign $ 38,000 $ 20,000 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 2040. 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. 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. 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. F- 15 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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. As announced in May 2022, the Company began the process of winding down its operations in the EU and expects to derive no income after the end of 2022. The Company’s effective tax rate varied from the statutory rate as follows: December 31, 2022 2021 Statutory federal tax rate 21.0 % 21.0 % State income tax rate (net of federal) ( 4.3 )% 3.5 % Change in foreign NOL ( 0.2 )% ( 8.3 )% NJ NOL adjustment 1.9 % 4.2 % Other permanent differences ( 0.8 )% ( 0.9 )% Effect of valuation allowance ( 15.7 )% ( 15.3 )% Effective tax rate 1.9 % 4.2 % 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, 2022 and 2021, 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, 2022 $ 52,989,000 $ 4,805,000 $ ( 32,000 ) $ 57,762,000 December 31, 2021 $ 48,480,000 $ 4,541,000 $ ( 32,000 ) $ 52,989,000 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, 2022 and 2021. 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 remain 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, 2022 and 2021, the Company received net proceeds of $ 586,000 and $ 1,250,000 , 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 $ 626,000 of its total $ 626,000 in available NOL tax benefits for the state fiscal year 2021 and $ 1,337,000 of its total $ 1,337,000 for the state fiscal year 2020. F- 16 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Note 8 — 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. On October 10, 2022, the lead plaintiff filed a second amended consolidated complaint that superseded the original complaints in In re CorMedix Securities Litigation. In the second amended complaint, the lead plaintiff seeks to represent two classes of shareholders: (i) shareholders who purchased or otherwise acquired CorMedix securities between October 16, 2019 and August 8, 2022, inclusive; and (ii) shareholders who purchased CorMedix securities pursuant or traceable to the Company’s November 27, 2020 offering pursuant to CorMedix’s Form S-3 Registration Statement, its Prospectus Supplement, dated November 27, 2020, and its Prospectus Supplement, dated August 12, 2021. The second amended complaint names as defendants the Company and twelve (12) current and former directors and officers of CorMedix, namely Khoso Baluch, Robert Cook, Matthew David, Phoebe Mounts, John L. Armstrong, and Joseph Todisco (the “Officer Defendants” and collectively with CorMedix, the “CorMedix Defendants”) as well as Janet Dillione, Myron Kaplan, Alan W. Dunton, Steven Lefkowitz, Paulo F. Costa, Greg Duncan (the “Director Defendants”). The second amended complaint alleges that the CorMedix Defendants violated Section 10(b) of the Exchange Act (and Rule 10b-5), the Officer Defendants violated Section 20(a), the Director Defendants, CorMedix, Baluch, and David violated Section 11 of the Securities Act, and that the Director Defendants, Baluch, and David violated Section 15. In general, the purported bases for these claims are allegedly false and misleading statements and omissions related to the NDA submissions to the FDA for DefenCath, subsequent complete response letters, as well as communications from the FDA related and directed to the Company’s contract manufacturing organization and heparin supplier. The Company intends to vigorously contest such claims. The Company and the other Defendants filed their motion to dismiss the second amended complaint on November 23, 2022; the lead plaintiff filed his opposition to the Defendants’ motions to dismiss on January 7, 2023; and Defendants filed their reply brief on February 6, 2023. 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 “Derivative Litigation”). 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 individual defendants intend 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. The case was administratively terminated on March 16, 2022 while the stay is pending. On or about January 13, 2023, another 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 DeSalvo v. Costa, et al. , Case No. 2:23-cv-00150-JXN-CLW. Defendants Paulo F. Costa, Janet D. Dillione, Greg Duncan, Alan Dunton, Myron Kaplan, Steven Lefkowitz, Joseph Todisco, Khoso Baluch, Robert Cook, Matthew David, Phoebe Mounts, and John L. Armstrong along with the Company as Nominal Defendant. The complaint alleges breaches of fiduciary duty and unjust enrichment against the individual defendants. The individual defendants intend to vigorously contest such claims. The case is in the early stages. F- 17 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) On or about January 25, 2023, another 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 Scullion v. Baluch, et al. , Case No. 2:23-cv-00406-ES-ESK. Defendants Khoso Baluch, Janet Dillione, Alan W. Dunton, Myron Kaplan, Steven Lefkowitz, Paulo F. Costa, Gregory Duncan, Matthew David, and Phoebe Mounts, along with the Company as Nominal Defendant. The complaint alleges breaches of fiduciary duties. The individual defendants intend to vigorously contest such claims. The case is also in the early stages. On or about June 23, 2022, the Company’s Board received a letter demanding it investigate and pursue causes of action, purportedly on behalf of Company, against certain current and former directors, officers, and/or other employees of the Company (the “Letter”), which the Board believes are duplicative of the claims already asserted in the Derivative Litigation. As set forth in the Board’s response to the Letter, the Board will consider the Letter at an appropriate time, as circumstances warrant, as it continues to monitor the progress of the Derivative Litigation. On September 9, 2014, the Company filed in the District Court of Mannheim, Germany, (the “Court”) 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 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. 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. 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 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. F- 18 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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. In a hearing on October 27, 2022 before the EPO Board of Appeals, the Board expressed the view that the patent claims of the Prosl European Patent on file were not inventive over prior art presented by TauroPharm. The Company thus withdrew its appeal against the first instance decision. This means that the invalidation of the patent has become final and that, as a consequence, the infringement proceedings, which are formally still ongoing, will also be closed because there is no underlying patent anymore. In view of the invalidation of the Prosl European Patent, on November 9, 2022, the Defendants requested the infringement proceedings (docket number 7 O 118/14) to be resumed and to dismiss our infringement action. In order to avoid a dismissal, on January 12, 2023, the Company withdrew the infringement action with prejudice. The Defendants consented to the withdrawal on February 2, 2023 and requested that the Company, as plaintiff, bears the costs of the proceedings. Given that pursuant to statutory law, a plaintiff that withdraws an action, has to bear the costs of the proceedings, The Company put the decision on who has to bear the costs in the District Court of Mannheim’s discretion. Due to the withdrawal, there will be no decision on the merits, however, the District Court of Mannheim will issue a decision that the Company has to bear the cost of the proceedings. Given that the court fees have already been paid by the Company, the cost of the proceedings are the costs that will have to be reimbursed to the Defendants, i.e mainly statutory attorney’s fees and expenses. 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 reimbursed costs in the amount of approximately $ 41,000 plus interest to TauroPharm. 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, 2022, the aggregate deposit was approximately $ 124,000 , which the Company recorded as restricted cash on the consolidated balance sheets. On February 8, 2023, the Regional Court of Cologne informed the Company that the security deposit in two proceedings (81 HL 448/15 and 81 HL 903/19), in the amount of 36,000 EUR and 10,000 EUR, (approximately in aggregate of $ 49,000 ), will be refunded to CorMedix and that it instructed their accounting department to wire transfer the two security deposits. The remaining aggregate deposit of about $ 75,000 remains in security deposit. F- 19 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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, 2022 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, 2022 and 2021. 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, 2022 and 2021. 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. Note 9 — Stockholders’ Equity: Common Stock: In November 2020, the Company filed a shelf registration statement, (the “2020 Shelf Registration”), under which the Company could issue and sell up to an aggregate of $100,000,000 of shares of its common stock, $0.001 par value per share. On November 27, 2020, the Company entered into an Amended and Restated At Market Issuance Sales Agreement (the “Amended Sales Agreement”) with FBR Securities, Inc. (formerly known as B. Riley FBR Inc.) and Needham & Company, LLC as sales agents. The Amended Sales Agreement relates to the sale of shares of up to $50,000,000 of its common stock under its at-the-market program (the “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 2020 Shelf Registration to which the offering relates. 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, 2021, the ATM program under the Amended Sales Agreement had been fully sold. On August 12, 2021, the Company entered into a new 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 $ 50,000,000 of its common stock through the sales agents under its ATM program, 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 2020 Shelf Registration 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, 2022, the Company has $ 31,600,000 available under its ATM program relating to its 2020 Shelf Registration filed in November 2020. F- 20 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Also, on August 12, 2021, the Company filed a new shelf registration statement (the “2021 Shelf Registration”) for the issuance of up to $ 150,000,000 of shares of its common stock which is currently available for the issuance of equity, debt or equity-linked securities. During the year ended December 31, 2022 and 2021, the Company sold an aggregate of 4,704,259 and 3,737,862 shares of its common stock under the ATM program, respectively, and realized net proceeds of $ 17,770,000 and $ 41,456,000 , respectively. During the year ended December 31, 2022 and 2021, the Company issued an aggregate of 24,500 and 31,407 shares of its common stock, respectively, upon cash exercise of warrants, resulting in net proceeds to the Company of $ 129,000 and $ 165,000 , respectively. 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, the Company issued an aggregate of 70,269 shares of its common stock upon cashless exercise of 95,286 warrants. 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 . Restricted Stock Units On May 10, 2022, the Company granted 207,469 restricted stock units (“RSUs”) to its chief executive officer under its Amended and Restated 2019 Omnibus Stock Incentive Plan with a weighted average grant date fair value of $ 3.38 per share. The fair market value of the RSUs was estimated to be the closing price of the Company’s common stock on the date of grant. These RSUs vest as to 50 % on the first anniversary of the grant date, as to 30 % on the second anniversary of the grant date, and as to 20 % on the third anniversary of the grant date, subject to continued service as an employee or consultant through the applicable vesting date. During the year ended December 31, 2022, compensation expense recorded for the RSUs was $ 226,000 . Unrecognized compensation expense for these RSUs amounted to $ 475,000 . The expected weighted average period for the expense to be recognized is 1.4 years. F- 21 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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, 2022 and 2021 Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Series C-3 2,000 $ 10.00 $ 20,000 Series E 89,623 $ 49.20 $ 4,409,452 Series G 89,999 $ 187.36 $ 16,862,213 Total 181,622 $ 21,291,665 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, 2022: 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- 22 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. F- 23 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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. 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. F- 24 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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. 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. F- 25 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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 October 13, 2022, the Company’s shareholders approved the CorMedix Inc. Amended and Restated 2019 Omnibus Stock Incentive Plan (the “A&R 2019 Plan”), pursuant to which the Company may issue an additional 4,800,000 shares of its common stock, plus any shares that remain available for grant under its existing plan as of the effective date, 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 A&R 2019 Plan is a new equity compensation plan for the Company’s employees, consultants, and directors which replaced the 2019 Omnibus Stock Incentive Plan. The 2013 Stock Incentive Plan and the 2019 Omnibus 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 A&R 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, 2022 and 2021, the Company granted ten-year qualified and non-qualified stock options to its officers, directors, employees and consultants covering an aggregate of 1,627,850 and 1,664,700 shares of the Company’s common stock under the 2019 Plan, respectively. The weighted average exercise price of these options is $ 3.83 and $ 7.98 per share, respectively. During the years ended December 31, 2022 and 2021, total compensation expense for stock options issued to employees, directors, officers and consultants was $ 3,843,000 and $ 5,043,000 , respectively. As of December 31, 2022, there was $ 4,985,000 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 1.5 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 grant 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, 2022 2021 Risk-free interest rate 1.76 % - 4.31 % 0.5 % - 1.26 % Expected volatility 89.68 % - 107.2 % 102.93 % - 107.1 % Expected term (years) 2.75 – 5 years 1.97 - 5 years Expected dividend yield 0.0 % 0.0 % Weighted-average grant date fair value of options granted during the period $ 2.90 $ 5.56 F- 26 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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, 2022: Shares Underlying Stock Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2021 3,358,131 $ 7.53 6.8 $ 337,075 Granted 1,627,850 $ 3.83 $ 793,792 Exercised - - $ - Expired/Canceled ( 60,053 ) $ 8.00 $ 4,968 Forfeited ( 471,559 ) $ 7.16 $ 12,849 Outstanding at December 31, 2022 4,454,369 $ 6.21 6.6 $ 1,113,050 Vested at December 31, 2022 2,638,516 $ 7.26 5.0 $ 366,528 Expected to vest in the future 1,815,853 $ 4.69 8.9 $ 746,522 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, 2022 and 2021, the Company issued an aggregate of 24,500 and 31,407 shares of its common stock, respectively, upon cash exercise of warrants, resulting in net proceeds to the Company of $ 129,000 and $ 165,000 , 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. 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, 2021 56,455 $ 5.25 0.61 Exercised ( 24,500 ) $ 5.25 - Expired ( 31,955 ) $ 5.25 - Outstanding at December 31, 2022 - - - F- 27 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) 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 years ended December 31, 2022 and 2021 no compensation was deferred under this plan. Note 10 — Concentrations: At December 31, 2022, there were no net accounts receivable from a customer that exceeded 10 % of the Company’s accounts receivable and at December 31, 2021, one customer had exceeded 10% of the Company’s accounts receivable ( 100 %). During the year ended December 31, 2022, the Company had revenue from two customers that exceeded 10 % of its total sales ( 55 % and 29 %) and the Company had revenue from three customers that exceeded 10 % of its total sales ( 60 %, 14 % and 10 %) for the year ended December 31, 2021. Note 11 — 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 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, 2022 and 2021 was approximately $ 208,000 and $ 209,000 , respectively, which includes costs associated with leases for which ROU assets have been recognized as well as short-term leases. At December 31, 2022 and 2021, the Company has a total operating lease liability of $ 803,000 and $ 924,000 , respectively. At December 31, 2022, approximately $ 135,000 and $ 668,000 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, 2022 and 2021 are $ 775,000 and $ 900,000 , respectively. For the year ended December 31, 2022 and 2021, cash paid for amounts included in the measurement of lease liabilities in operating cash flows from operating leases was $ 199,000 and $ 195,000 , respectively. As of December 31, 2022 and 2021, the weighted average remaining lease term were 4.8 years and 5.8 years, respectively and the weighted average discount rate of 9% and 9% at December 31, 2022 and 2021, respectively. As of December 31, 2022, maturities of lease liabilities were as follows: 2023 $ 202,000 2024 205,000 2025 208,000 2026 and thereafter 380,000 Total future minimum lease payments 995,000 Less imputed interest ( 192,000 ) Total $ 803,000 F- 28 CORMEDIX INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, (Continued) Note 12 — Subsequent Events: On January 15, 2023, the Company entered into an employment agreement with Erin Mistry, pursuant to which she was promoted to the role of Executive Vice President and Chief Commercial Officer. The Board further appointed Ms. Mistry an officer, for purposes of Section 16 of the Securities Exchange Act of 1934. Through March 30, 2023, the Company sold an aggregate of 1,684,592 shares of its common stock under the ATM program (see Note 9) and realized net proceeds of approximately $7,200,000. As of the filing of this Annual Report on Form 10-K, the Company has $24,200,000 available balance under its ATM program and it has $150,000,000 available under its current shelf registration for the issuance of equity, debt or equity-linked securities. On March 2, 2023, the Company provided regulatory and manufacturing updates related to the FDA compliance remediation activities at its primary CMO and heparin API supplier, as well as updated timelines for potential resubmission of its NDA under various scenarios. More specifically: 1) The Company has been informed by its primary CMO (“CMO 1”) that all corrective actions stemming from the FDA’s June 2022 inspection have been completed and the CMO has provided to FDA documentation showing effectiveness of the corrective actions. The primary CMO awaits feedback from the FDA with respect to the compliance status of the facility, and 2) The Company has been informed by its existing supplier of heparin API (“API 1”) that all corrective actions related to its June 2022 FDA Warning Letter for a non-heparin API have been completed and implementation is underway, however it is unclear to the Company based on recent FDA actions if full resolution of the outstanding warning letter would still be required prior to approving the DefenCath NDA with reference to API 1. The supplier has informed the Company that it has made updates to the US Heparin Drug Master File (“DMF”) clarifying which activities take place at the site which is identified in the warning letter (early-stage processing) and which activities take place at a different FDA registered facility (final processing and release). The supplier has also informed the Company that subsequent to those updates, a supplement to an approved application referring to this DMF was recently approved by FDA. Based on this recent approval and the update to the DMF, it is possible that full resolution of the outstanding warning letter is no longer a barrier to FDA approval of the DefenCath NDA. The Company intends to seek confirmation from FDA on this issue set as follows: Given the progress made by CMO 1 on remediation of the inspectional observations and the potential precedent created by FDA’s approval of a supplement referencing the same heparin DMF utilized for DefenCath, the Company has submitted a Type A meeting request seeking additional guidance from the FDA prior to resubmission of the NDA application. The FDA granted the meeting request, and the meeting has been scheduled for mid-April. On March 23, 2023, Plaintiffs filed a letter, attaching a joint stipulation, requesting that the Voter v. Baluch , et al ., Case No. 2:21-cv-18493-JXN-LDW be re-opened and consolidated with DeSalvo v. Costa, et al., Case No. 2:23-cv-00150-JXN-CLW and Scullion v. Baluch, et al., Case No. 2:23-cv-00406-ES-ESK to consolidate all three derivative actions and continue the temporary stay for all three derivative actions. F-29