CorMedix Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 001-34673 CORMEDIX INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 20-5894890 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 300 Connell Drive , Suite 4200 , Berkeley Heights , NJ 07922 (Address of Principal Executive Offices) (Zip Code) (908) 517-9500 (Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, $0.001 par value CRMD Nasdaq Global Market Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging Growth Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The number of shares outstanding of the issuer’s common stock, as of May 10, 2023 was 45,377,764 . CORMEDIX INC. TM AND SUBSIDIARIES INDEX Page PART I FINANCIAL INFORMATION 1 Item 1. Unaudited Condensed Consolidated Financial Statements 1 Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 1 Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2023 and 2022 2 Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022 3 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 4 Notes to Unaudited Condensed Consolidated Financial Statements 5 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosure About Market Risk 28 Item 4. Controls and Procedures 28 PART II OTHER INFORMATION 29 Item 1. Legal Proceedings 29 Item 1A. Risk Factors 29 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 29 Item 3. Defaults Upon Senior Securities 29 Item 4. Mine Safety Disclosure 29 Item 5. Other Information 29 Item 6. Exhibits 30 SIGNATURES 31 i PART I FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements. CorMedix Inc. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 25,268,225 $ 43,148,323 Restricted cash 126,174 124,102 Short-term investments 30,332,493 15,644,062 Prepaid research and development expenses 2,910 11,016 Other prepaid expenses and current assets 1,051,427 623,672 Total current assets 56,781,229 59,551,175 Property and equipment, net 1,607,582 1,609,679 Restricted cash, long-term 102,345 102,320 Operating lease right-of-use assets 742,503 775,085 TOTAL ASSETS $ 59,233,659 $ 62,038,259 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 1,446,592 $ 2,202,149 Accrued expenses 3,089,302 3,973,941 Current portion of operating lease liabilities 138,623 134,801 Total current liabilities 4,674,517 6,310,891 Operating lease liabilities, net of current portion 631,388 667,632 TOTAL LIABILITIES 5,305,905 6,978,523 COMMITMENTS AND CONTINGENCIES (Note 4) STOCKHOLDERS’ EQUITY Preferred stock - $ 0.001 par value: 2,000,000 shares authorized; 181,622 shares issued and outstanding at March 31, 2023 and December 31, 2022 182 182 Common stock - $ 0.001 par value: 160,000,000 shares authorized; 44,499,788 and 42,815,196 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively 44,500 42,815 Accumulated other comprehensive gain 101,232 82,743 Additional paid-in capital 339,709,852 330,294,782 Accumulated deficit ( 285,928,012 ) ( 275,360,786 ) TOTAL STOCKHOLDERS’ EQUITY 53,927,754 55,059,736 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 59,233,659 $ 62,038,259 See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 1 CORMEDIX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) For the Three Months Ended March 31, 2023 2022 Revenue Net sales $ - $ 7,636 Cost of sales - ( 1,527 ) Gross profit - 6,109 Operating Expenses Research and development ( 3,407,502 ) ( 2,287,587 ) Selling, general and administrative ( 7,609,677 ) ( 4,750,883 ) Total operating expenses ( 11,017,179 ) ( 7,038,470 ) Loss From Operations ( 11,017,179 ) ( 7,032,361 ) Other Income (Expense) Interest income 446,384 13,751 Foreign exchange transaction gain (loss) 12,345 ( 10,206 ) Interest expense ( 8,776 ) ( 5,378 ) Total other income (expense) 449,953 ( 1,833 ) Net Loss ( 10,567,226 ) ( 7,034,194 ) Other Comprehensive Income (Loss) Unrealized gain (loss) from investment 16,393 ( 34,171 ) Foreign currency translation gain (loss) 2,096 ( 3,038 ) Total other comprehensive income (loss) 18,489 ( 37,209 ) Other Comprehensive Loss $ ( 10,548,737 ) $ ( 7,071,403 ) Net Loss Per Common Share – Basic and Diluted $ ( 0.24 ) $ ( 0.18 ) Weighted Average Common Shares Outstanding – Basic and Diluted 44,090,998 38,247,059 See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 2 CORMEDIX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) For the three months ended March 31, 2023 Common Stock Preferred Stock– Series C-3, Series E and Series G Accumulated Other Comprehensive Additional Paid-in Accumulated Total Stockholders’ Shares Amount Shares Amount Income (Loss) Capital Deficit Equity Balance at December 31, 2022 42,815,196 $ 42,815 181,622 $ 182 $ 82,743 $ 330,294,782 $ ( 275,360,786 ) $ 55,059,736 Stock issued in connection with ATM sale of common stock, net 1,684,592 1,685 - - - 7,198,721 - 7,200,406 Stock-based compensation - - - - - 2,216,349 - 2,216,349 Other comprehensive gain - - - - 18,489 - - 18,489 Net loss - - - - - - ( 10,567,226 ) ( 10,567,226 ) Balance at March 31, 2023 44,499,788 $ 44,500 181,622 $ 182 $ 101,232 $ 339,709,852 $ ( 285,928,012 ) $ 53,927,754 For the three months ended March 31, 2022 Common Stock Preferred Stock– Series C-3, Series E and Series G Accumulated Other Comprehensive Additional Paid-in Accumulated Total Stockholders’ Shares Amount Shares Amount Income (Loss) Capital Deficit Equity 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 641,542 642 - - - 3,003,574 - 3,004,216 Stock-based compensation - - - - - 1,138,299 - 1,138,299 Other comprehensive loss - - - - ( 37,209 ) - - ( 37,209 ) Net loss - - - - - - ( 7,034,194 ) ( 7,034,194 ) Balance at March 31, 2022 38,727,979 $ 38,728 181,622 $ 182 $ 49,921 $ 312,473,623 $ ( 252,693,275 ) $ 59,869,179 See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 3 CORMEDIX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Three Months Ended March 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 10,567,226 ) $ ( 7,034,194 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 2,216,349 1,138,299 Change in right-of-use assets 32,582 30,358 Depreciation 16,863 20,252 Changes in operating assets and liabilities: Decrease in trade receivables - 41,874 Decrease in inventory - 394 (Increase) decrease in prepaid expenses and other current assets ( 419,578 ) 141,105 Decrease in accounts payable ( 755,582 ) ( 469,362 ) Decrease in accrued expenses ( 884,872 ) ( 583,633 ) Decrease in operating lease liabilities ( 32,422 ) ( 29,435 ) Net cash used in operating activities ( 10,393,886 ) ( 6,744,342 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of short-term investments ( 25,422,039 ) ( 8,483,337 ) Maturity of short-term investments 10,750,000 4,300,000 Purchase of equipment ( 14,766 ) ( 4,324 ) Net cash used in investing activities ( 14,686,805 ) ( 4,187,661 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of common stock from at-the-market program, net 7,200,406 3,004,216 Net cash provided by financing activities 7,200,406 3,004,216 Foreign exchange effect on cash 2,284 ( 3,179 ) NET DECREASE IN CASH AND CASH EQUIVALENTS ( 17,878,001 ) ( 7,930,966 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH – BEGINNING OF PERIOD 43,374,745 53,551,277 CASH, CASH EQUIVALENTS AND RESTRICTED CASH – END OF PERIOD $ 25,496,744 $ 45,620,311 Cash paid for interest $ 8,776 $ 5,378 Supplemental Disclosure of Non-Cash Investing Activities: Unrealized (loss) gain from investments $ ( 16,393 ) $ 34,171 See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 4 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1 — Organization, Business and Basis of Presentation: Organization and Business CorMedix Inc. (“CorMedix” or the “Company”) is a biopharmaceutical company focused on developing and commercializing therapeutic products for the prevention and treatment of life-threatening diseases and conditions. The Company was incorporated in the State of Delaware on July 28, 2006 and its principal executive office is located in Berkeley Heights, New Jersey. In 2013, the Company formed a wholly-owned subsidiary, CorMedix Europe GmbH and in May 2020, the Company formed a wholly-owned Spanish subsidiary, CorMedix Spain, S.L.U. The Company’s primary focus is the development of its lead product candidate, DefenCath™, for potential commercialization in the United States, or U.S., and other key markets. The Company has in-licensed the worldwide rights to develop and commercialize DefenCath and Neutrolin ® . The name DefenCath is the U.S. proprietary name conditionally approved by the U.S. Food and Drug Administration, or FDA, while the name Neutrolin was used in the European Union, or EU, and other territories where the Company received CE-Mark approval for the commercial distribution of Neutrolin as a catheter lock solution, or CLS, regulated as a medical device. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions for Quarterly Reports on Form 10-Q and Article 8 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include all information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary to fairly state the interim results. Interim operating results are not necessarily indicative of results that may be expected for the full year ending December 31, 2023 or for any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 30, 2023. The accompanying consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements included in such Annual Report on Form 10-K. Note 2 — Summary of Significant Accounting Policies and Liquidity and Uncertainties: Liquidity and Uncertainties The condensed consolidated financial statements have been prepared in conformity with 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 and potential commercial launch plans for DefenCath in the U.S. and its other operating requirements, the Company’s existing cash and cash equivalents and short-term investments at March 31, 2023 are expected to fund its operations at least through the first half of 2024, after taking into consideration the costs for resubmission of the NDA and initial preparations for the commercial launch for DefenCath. 5 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED 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 March 31, 2023, the Company has $ 24.2 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 5). 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. Use of Estimates The preparation of condensed consolidated 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 condensed 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 condensed consolidated statement of cash flows: March 31, 2023 December 31, 2022 Cash and cash equivalents $ 25,268,225 $ 43,148,323 Restricted cash 228,519 226,422 Total cash, cash equivalents and restricted cash $ 25,496,744 $ 43,374,745 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 classified as available-for-sale and equity securities 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 in the condensed consolidated statement of operations. Realized gains and losses, amortization of premiums and discounts and interest and dividends earned are included in other 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 March 31, 2023 or December 31, 2022. 6 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued 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 March 31, 2023 and December 31, 2022, all of the Company’s investments had contractual maturities of less than one year. As of March 31, 2023, no allowance for credit loss was recorded. The following table summarizes the amortized cost, unrealized gains and losses and the fair value at March 31, 2023 and December 31, 2022: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value March 31, 2023: Money Market Funds included in Cash Equivalents $ 8,026,616 $ - $ 523 $ 8,027,139 U.S. Government Agency Securities 25,742,953 - 15,454 25,758,407 Corporate Securities 2,690,038 ( 314 ) 893 2,690,617 Commercial Paper 1,884,234 ( 765 ) - 1,883,469 Subtotal 30,317,225 ( 1,079 ) 16,347 30,332,493 Total March 31, 2023 $ 38,343,841 $ ( 1,079 ) $ 16,870 $ 38,359,632 December 31, 2022: Money Market Funds included in 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 Fair Value Measurements The Company’s financial instruments recorded in the condensed consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities, accounts payable and accrued expenses. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature of their maturity dates. The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. 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. Financial assets recorded at fair value on the Company’s condensed consolidated balance sheets are categorized as follows: ● 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. 7 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued The following table provides the carrying value and fair value of the Company’s financial assets measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022: Carrying Value Level 1 Level 2 Level 3 March 31, 2023: Money Market Funds and Cash Equivalents $ 8,027,139 $ 8,027,139 $ - $ - U.S. Government Agency Securities 25,758,407 25,758,407 - Corporate Securities 2,690,617 - 2,690,617 - Commercial Paper 1,883,469 - 1,883,469 - Subtotal 30,332,493 25,758,407 4,574,086 $ - Total March 31, 2023 $ 38,359,632 $ 33,785,546 $ 4,574,086 $ - December 31, 2022: 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 $ - Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use, or ROU, assets, current portion of operating lease liabilities, and operating lease liabilities, net of current portion, on the condensed consolidated balance sheet. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has elected, as an accounting policy, not to apply the recognition requirements in ASC 842 to short-term leases. Short-term leases are leases that have a term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes the lease payments for short-term leases on a straight-line basis over the lease term. The Company has also elected, as a practical expedient, by underlying class of asset, not to separate lease components from non-lease components and, instead, account for them as a single component. 8 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued Loss Per Common Share Basic loss per common share excludes any potential dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net 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 Company. However, since their effect is anti-dilutive, the Company has excluded potentially dilutive shares. The following potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. Three Months Ended March 31, 2023 2022 (Number of Shares of Common Stock Issuable) Series C non-voting preferred stock 4,000 4,000 Series E non-voting preferred stock 391,953 391,953 Series G non-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 6,126,080 4,067,305 Shares underlying restricted stock units 207,469 - Total potentially dilutive shares 11,782,480 9,572,691 Stock-Based Compensation Stock-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, stock-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, facilities expenses and costs related to the manufacturing of the product that could potentially be available to support the commercial launch prior to marketing approval. The Company accrues for costs incurred as the services are being provided by monitoring the status of the activities and the invoices received from its external service providers. 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. 9 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued Note 3 — Accrued Expenses: Accrued Expenses Accrued expenses consist of the following: March 31, 2023 December 31, 2022 Professional and consulting fees $ 832,443 $ 514,354 Accrued payroll and payroll taxes 1,465,601 2,180,581 Manufacturing development related 735,873 1,214,550 Other 55,385 64,456 Total $ 3,089,302 $ 3,973,941 Note 4 — Commitments and Contingencies: Contingency Matters In re CorMedix Inc. Securities Litigation, Case No. 2:21-cv-14020 (D.N.J.) 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-cv 14020-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. 10 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued In re CorMedix Inc. Derivative Litigation, Case No. 2:21-cv-18493-JXN-LDW (D.N.J.) 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. 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. 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. On or about April 18, 2023, the Court entered an order consolidating the above-mentioned shareholder derivative complaints for all purposes, including pretrial proceedings, trial and appeal. The consolidated derivative action is entitled, In re CorMedix Inc. Derivative Litigation , C.A. No. 2:21-cv-18493-JXN-LDW. The provisions of the Order to Stay entered in the Voter Action on January 21, 2022, apply to the consolidated derivative action. The consolidated derivative action was then administratively terminated and removed from the Court’s docket until the motion to dismiss the class action is resolved. The individual defendants intend to vigorously contest the claims set forth in the consolidated derivative action when the case moves forward. Demand Letter 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. 11 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued Patent Infringement 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 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 District Court of Mannheim issued its decisions on May 8, 2015, staying both proceedings as it 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 German PTO declared that the Utility Model was invalid. The Company filed an appeal against the ruling on September 7, 2016. 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 that the Prosl European Patent would be invalidated. 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 order to avoid a dismissal, on January 12, 2023, the Company withdrew the infringement action with prejudice. Due to the withdrawal, there will be no decision on the merits, however, on March 9, 2023, the District Court of Mannheim issued 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. A decision was rendered by the court on December 11, 2018, dismissing the complaint in its entirety. The Company therefore appealed in January 2019. At the end of an oral hearing held on June 18, 2021, 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. The Company reimbursed costs in the amount of approximately $ 41,000 plus interest to TauroPharm. 12 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued In connection with the aforementioned patent and utility model infringement and unfair competition proceedings against TauroPharm, the Company was required by the District Courts of Mannheim and Cologne to provide security deposits to cover legal fees in the event TauroPharm is entitled to reimbursement of these costs. As of March 31, 2023, the aggregate deposit was approximately $ 126,000 , 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 $ 50,000 ), are in the process of being refunded to the Company. To summarize, one of the infringement proceedings initiated on September 9, 2014 before the District Court of Mannheim, has been terminated after the Company’s withdrawal of the action; the parallel validity proceedings before the German Federal Patent Court are also terminated. The other infringement proceeding initiated on September 9, 2014 before the District Court of Mannheim is in its final stages; the parallel validity proceeding before the European Patent Office is also terminated. After the Company withdrew the infringement action and TauroPharm consented to the withdrawal, there is no decision on the merits, but the court issued a decision that the Company has to bear the costs of the proceedings. A complaint filed on January 16, 2015 against TauroPharm in the District Court of Cologne, has been withdrawn by the Company and the proceedings were closed. In connection with the aforementioned proceedings, the Company was required to provide security deposits to the District Courts of Mannheim and Cologne in the aggregate amount of approximately $ 126,000 , of which approximately $ 50,000 are in the process of being refunded to the Company. 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 March 31, 2023 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 March 31, 2023 and 2022. 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 quarters ended March 31, 2023 and 2022. 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. 13 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued Note 5 — 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. In November 2020, the Company allocated to its at-the-market program (“ATM program”), an aggregate of $ 50,000,000 out of the $100,000,000 total under the 2020 Shelf Registration, which has been fully sold. On August 12, 2021, the Company entered into an At-The-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 , which was the remaining balance under the 2020 Shelf Registration, 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 March 31, 2023, the Company has $ 24,217,000 available under its ATM program relating to its 2020 Shelf Registration. 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 quarters ended March 31, 2023 and 2022, the Company sold an aggregate of 1,684,592 and 641,542 shares of its common stock under the ATM program, respectively, and realized net proceeds of $ 7,200,000 and $ 3,004,000 , respectively. Restricted Stock Units As of March 31, 2023, the Company has 207,469 outstanding restricted stock units (the “RSUs”) for which the Company recorded $ 86,000 compensation expense for the quarter ended March 31, 2023. Unrecognized compensation expense for these RSUs amounted to $ 389,000 and the expected weighted average period for the expense to be recognized is 1.37 years at March 31, 2023. 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 and designated by the Company’s board of directors, all with par value of $ 0.001 per share, the following are outstanding: As of March 31, 2023 and December 31, 2022 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 14 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued Stock Options During the three months ended March 31, 2023 and 2022, the Company granted ten-year qualified and non-qualified stock options covering an aggregate of 1,747,000 and 767,850 shares of the Company’s common stock under the Amended and Restated 2019 Omnibus Stock Incentive Plan, respectively. The weighted average exercise price of these options is $ 4.36 and $ 4.03 per share, respectively. During the three months ended March 31, 2023 and 2022, total compensation expense for stock options issued to employees, directors, officers and consultants was $ 2,130,000 and $ 1,138,000 , respectively. As of March 31, 2023, there was approximately $ 8,606,000 in total unrecognized compensation expense related to stock options granted, which expense will be recognized over an expected remaining weighted average period of 1.6 years. The fair value of each stock option award estimated on the grant date is determined using the Black-Scholes option pricing model. The following assumptions were used for the Black-Scholes option pricing model for the stock options granted during the three months ended March 31, 2023: Expected term 5 years Volatility weighted average 105.45 % Dividend yield weighted average 0.0 % Risk-free interest rate weighted average 3.65 % Weighted average grant date fair value of options granted during the period $ 3.42 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, if any, 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. 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. Note 6 — 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 in September 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. Operating lease expense in the Company’s condensed consolidated statements of operations and comprehensive loss for each of the three months ended March 31, 2023 and 2022 was approximately $ 52,000 , which includes costs associated with leases for which ROU assets have been recognized as well as short-term leases. At March 31, 2023, the Company has a total operating lease liability of $ 770,000 , of which $ 139,000 was classified as operating lease liabilities, short-term and $ 631,000 was classified as operating lease liabilities, net of current portion, on the condensed consolidated balance sheet. At December 31, 2022, the Company’s total operating lease liability was $ 803,000 of which $ 135,000 was classified as operating lease liabilities, short-term and $ 668,000 was classified as operating lease liabilities, net of current portion, on the condensed consolidated balance sheet. Operating ROU assets as of March 31, 2023 and December 31, 2022 are $ 743,000 and $ 775,000 , respectively. 15 CORMEDIX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued For each of the three months ended March 31, 2023 and 2022, cash paid for amounts included in the measurement of lease liabilities in operating cash flows from operating leases was $ 50,000 . The weighted average remaining lease term as of March 31, 2023 and 2022 were 4.6 and 5.6 years, respectively, and the weighted average discount rate for operating leases was 9 % at March 31, 2023 and 2022. As of March 31, 2023, maturities of lease liabilities were as follows: 2023 (excluding the three months ended March 31, 2023) $ 151,000 2024 205,000 2025 208,000 2026 211,000 2027 169,000 Total future minimum lease payments 944,000 Less imputed interest ( 174,000 ) Total $ 770,000 Note 7 — Subsequent Events: In April 2023 through May 5, 2023, the Company sold an aggregate of 849,476 shares of its common stock under the ATM program and realized net proceeds of approximately $3.7 million. As of the filing of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, the Company has $ 20.4 million available balance under its ATM program, and it has $ 150.0 million available under the 2021 Shelf Registration for the issuance of equity, debt or equity-linked securities. 16 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our 2022 Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on March 30, 2023. Forward Looking Statements This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, referred to herein as the Exchange Act. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. All statements are based on the beliefs and assumptions of our management based on information currently available to management, including, but not limited to, statements regarding our plans to submit a resubmission of our NDA application for DefenCath, the classification and timing of the NDA resubmission, the results of an FDA prior approval inspection as part of its NDA review process, the timing and qualification of our contract manufacturing organization alternative manufacturing site, qualification of an alternate source of heparin API, and our future financial position, financing plans, future revenues, projected costs and sufficiency of our cash and short term investments to fund our operations should be considered forward-looking. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included in our most recent Annual Report on Form 10-K, as well as any amendments thereto, as filed with the SEC and which are incorporated herein by reference. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Set forth below is a summary of the principal risks we face: Risks Related to our Financial Position and Need for Additional Capital ● We have a history of operating losses, expect to incur additional operating losses in the future, and may never be profitable. ● Our cost of operations could increase significantly more than what we expect depending on the costs to complete our development program for DefenCath. ● We will likely need to finance our future cash needs through public or private equity offerings, debt financings or corporate collaboration and licensing arrangements. Any additional funds that we obtain may not be on terms favorable to us or our stockholders and may require us to relinquish valuable rights. Risks Related to the Development and Commercialization of Our Product Candidates ● DefenCath, our lead product candidate, has received Fast Track designation and Qualified Infectious Disease Product designation from the FDA, but we cannot provide assurances that these designations will not be rescinded. ● If the FDA requires a second clinical trial for DefenCath or imposes additional manufacturing requirements to approve the New Drug Application, the development of DefenCath will take longer and cost more to complete, and we will likely need significant additional funds to undertake a second trial, if required. ● Final approval by regulatory authorities of our product candidates for commercial use may be delayed, limited or prevented, any of which would adversely affect our ability to generate operating revenues. ● Successful development and commercialization of our other products is uncertain. ● If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business. ● The successful commercialization of DefenCath will depend on obtaining coverage and reimbursement from third-party payors. ● Physician and patients may not accept and use our products. 17 ● Changes in funding for the FDA and other government agencies or future government shutdowns or disruptions could cause delays in the submission and regulatory review of marketing applications, which could negatively impact our business or prospects. ● The resurgence of COVID-19 pandemic, or other pandemic, epidemic or outbreak of an infectious disease may materially and adversely impact our business, including our preclinical studies and clinical trials. ● Clinical trials required for our product candidates may be expensive and time-consuming, and their outcome is uncertain. ● If we fail to comply with international regulatory requirements, we could be subject to regulatory delays, fines or other penalties. ● Even if approved, our products will be subject to extensive post-approval regulation. Risks Related to Our Business and Industry ● Competition and technological change may make our product candidates and technologies less attractive or obsolete. ● Healthcare policy changes, including reimbursement policies for drugs and medical devices, may have an adverse effect on our business, financial condition and results of operations. ● If we lose key management or scientific personnel, cannot recruit qualified employees, directors, officers, or other personnel or experience increases in compensation costs, our business may materially suffer. ● If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed. ● We may not successfully manage our growth. ● We face the risk of product liability claims and the amount of insurance coverage we hold now or in the future may not be adequate to cover all liabilities we might incur. ● We may be exposed to liability claims associated with the use of hazardous materials and chemicals. ● Negative U.S. and global economic conditions may pose challenges to our business strategy, which relies on funding from the financial markets or collaborators. Risks Related to Our Intellectual Property ● If we materially breach or default under any of our license agreements, the licensor party to such agreement will have the right to terminate the license agreement, which termination may materially harm our business. ● If we and our licensors do not obtain protection for and successfully defend our respective intellectual property rights, competitors may be able to take advantage of our research and development efforts to develop competing products. ● Ongoing and future intellectual property disputes could require us to spend time and money to address such disputes and could limit our intellectual property rights. ● The decisions by the European and German patent offices may affect patent rights in other jurisdictions. ● If we infringe the rights of third parties we could be prevented from selling products and forced to pay damages and defend against litigation. 18 Risks Related to Dependence on Third Parties ● We may seek a sales partner in the U.S. if DefenCath receives FDA approval or we may undertake marketing and sales of DefenCath in the U.S. on our own. If we are unable to enter into or maintain agreements with third parties to market and sell DefenCath or any other product after approval or are unable to find a sales partner or establish our own marketing and sales capabilities, we may not be able to generate significant or any product revenues. ● If we or our collaborators are unable to manufacture our products in sufficient quantities or are unable to obtain regulatory approvals for a manufacturing facility, we may be unable to meet demand for our products and we may lose potential revenues. ● Corporate and academic collaborators may take actions that delay, prevent, or undermine the success of our products. ● Data provided by collaborators and others upon which we rely that has not been independently verified could turn out to be false, misleading or incomplete. ● We rely on third parties to conduct our clinical trials and pre-clinical studies. If those parties do not successfully carry out their contractual duties or meet expected deadlines, our product candidates may not advance in a timely manner or at all. ● We will depend on third party suppliers and contract manufacturers for the manufacturing of our product candidates and have no direct control over the cost of manufacturing our product candidates. Increases in the cost of manufacturing our product candidates would increase our costs of conducting clinical trials and could adversely affect our future profitability. Risks Related to Our Common Stock ● We will likely need additional financing to fund our activities in the future, which may dilute our stockholders. ● Our executive officers and directors may sell shares of their stock, and these sales could adversely affect our stock price. ● Our common stock price has fluctuated considerably and is likely to remain volatile, in part due to the limited market for our common stock and you could lose all or a part of your investment. ● A significant number of additional shares of our common stock may be issued at a later date, and their sale could depress the market price of our common stock. ● Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult. ● If we fail to comply with the continued listing standards of the Nasdaq Global Market, it may result in a delisting of our common stock from the exchange. ● Laws, rules and regulations relating to public companies may be costly and impact our ability to attract and retain directors and executive officers. ● Our internal control over financial reporting and our disclosure controls and procedures may not prevent all possible errors that could occur. ● Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer. ● We do not intend to pay dividends on our common stock so any returns on our common stock will be limited to the value of our common stock. 19 Overview CorMedix Inc. and our wholly owned subsidiaries, CorMedix Europe GmbH and CorMedix Spain, S.L.U., (collectively referred to herein as “we,” “us,” “our” and the “Company”), is a biopharmaceutical company focused on developing and commercializing therapeutic products for the prevention and treatment of infectious and inflammatory diseases. Our primary focus is the development of our lead product candidate, DefenCath™, for potential commercialization in the United States, or U.S., and other key markets as a catheter lock solution, or CLS. We have in-licensed the worldwide rights to develop and commercialize DefenCath and Neutrolin ® . The name DefenCath is the U.S. proprietary name conditionally approved by the U.S. Food and Drug Administration, or FDA, while the name Neutrolin was used in the European Union, or EU, and other territories where we received CE-Mark approval for the commercial distribution of Neutrolin as a CLS regulated as a medical device. DefenCath/Neutrolin 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. Infection and thrombosis represent key complications among hemodialysis, total parenteral nutrition and oncology patients with central venous catheters. These complications can lead to treatment delays and increased costs to the healthcare system when they occur due to hospitalizations, need for intravenous, or IV antibiotic treatment, long-term anticoagulation therapy, removal/replacement of the central venous catheter, related treatment costs and increased mortality. We believe DefenCath addresses a significant unmet medical need and a potential large market opportunity. In January 2015, the FDA designated DefenCath as a Qualified Infectious Disease Product, or QIDP, for prevention of catheter-related blood stream infections in patients with end stage renal disease receiving hemodialysis through a central venous catheter. Catheter-related blood stream infections and clotting can be life-threatening. The QIDP designation provides five years of market exclusivity in addition to the five years granted for a new chemical entity upon approval of a New Drug Application, or NDA. In addition, in January 2015, the FDA granted Fast Track designation to DefenCath Catheter Lock Solution, a designation intended to facilitate development and expedite review of drugs that treat serious and life-threatening conditions so that the approved drug can reach the market expeditiously. The Fast Track designation of DefenCath provides us with the opportunity to meet with the FDA on a more frequent basis during the development process, and also ensures eligibility to request priority review of the marketing application. In December 2015, we launched our Phase 3 Prospective, Multicenter, Double-blind, Randomized, Active Control Study to Demonstrate Safety & Effectiveness of DefenCath/Neutrolin in Preventing Catheter-related Bloodstream Infection in Subjects on Hemodialysis for End Stage Renal Disease, or LOCK-IT-100, in patients with hemodialysis catheters in the U.S. The clinical trial was designed to demonstrate the safety and effectiveness of DefenCath compared to the standard of care CLS, Heparin, in preventing CRBSIs. The primary endpoint for the trial assessed the incidence of CRBSI and time to CRBSI for each study subject. Secondary endpoints were catheter patency, which was defined as required use of tPA, or removal of catheter due to dysfunction, and removal of catheter for any reason. As previously agreed with the FDA, an interim efficacy analysis was performed when the first 28 potential CRBSI cases were identified in our LOCK-IT-100 study that occurred through early December 2017. Based on these first 28 cases, there was a highly statistically significant 72% reduction in CRBSI by DefenCath relative to the active control of heparin (p=0.0034). Because the pre-specified level of statistical significance was reached for the primary endpoint and efficacy had been demonstrated with no safety concerns, the LOCK-IT-100 study was terminated early. The study continued enrolling and treating subjects until study termination, and the final analysis was based on a total of 795 subjects with a total of 41 cases. There was a 71% reduction in CRBSI by DefenCath relative to heparin, which was highly statistically significant (p=0.0006), with a good safety profile. 20 The FDA granted our request for a rolling submission and review of the NDA, which is designed to expedite the approval process for products being developed to address an unmet medical need. Although the FDA usually requires two pivotal clinical trials to provide substantial evidence of safety and effectiveness for approval of an NDA, the FDA will in some cases accept one adequate and well-controlled trial, where it is a large multicenter trial with a broad range of subjects and study sites that has demonstrated a clinically meaningful and statistically very persuasive effect on a disease with potentially serious outcome. In March 2020, we began the modular submission process for the NDA for DefenCath for the prevention of CRBSI in hemodialysis patients, and in August 2020, the FDA accepted for filing the DefenCath NDA. The FDA also granted our request for priority review, which provides for a six-month review period instead of the standard ten-month review period. As we announced in March 2021, the FDA informed us in its Complete Response Letter, or CRL, that it could not approve the NDA for DefenCath in its present form. The FDA noted concerns at the third-party manufacturing facility after a review of records requested by the FDA and provided by the contract manufacturing organization, or CMO. Additionally, the FDA required a manual extraction study to demonstrate that the labeled volume can be consistently withdrawn from the vials despite an existing in-process control to demonstrate fill volume within specifications. In April 2021, we and the CMO met with the FDA to discuss proposed resolutions for the deficiencies identified in the CRL to us and the Post-Application Action Letter, or PAAL, received by the CMO from the FDA for the NDA for DefenCath. There was an agreed upon protocol for the manual extraction study identified in the CRL, which has been successfully completed. Addressing the FDA’s concerns regarding the qualification of the filling operation necessitated adjustments in the process and generation of additional data on operating parameters for manufacture of DefenCath. We and the CMO determined that additional process qualification was needed with subsequent validation to address these issues. The FDA did not request additional clinical data and did not identify any deficiencies related to the data submitted on the efficacy or safety of DefenCath from LOCK-IT-100. In draft labeling discussed with the FDA, the FDA added that the initial approval will be for the limited population of patients with kidney failure receiving chronic hemodialysis through a central venous catheter. This is consistent with our request for approval pursuant to the Limited Population Pathway for Antibacterial and Antifungal Drugs, or LPAD. LPAD, passed as part of the 21st Century Cures Act, is a new program intended to expedite the development and approval of certain antibacterial and antifungal drugs to treat serious or life-threatening infections in limited populations of patients with unmet needs. LPAD provides for a streamlined clinical development program involving smaller, shorter, or fewer clinical trials and is intended to encourage the development of safe and effective products that address unmet medical needs of patients with serious bacterial and fungal infections. We believe that LPAD will provide additional flexibility for the FDA to approve DefenCath to reduce CRBSIs in the limited population of patients with kidney failure receiving hemodialysis through a central venous catheter. On February 28, 2022, we resubmitted the NDA for DefenCath to address the CRL issued by the FDA. In parallel, our third-party manufacturer submitted responses to the deficiencies identified at the manufacturing facility in the PAAL issued by the FDA concurrently with the CRL. On March 28, 2022, we announced that the resubmission of the NDA for DefenCath had been accepted for filing by the FDA. The FDA considered the resubmission as a complete, Class 2 response with a six-month review cycle. The CMO notified us that an onsite inspection by the FDA was conducted that resulted in FORM FDA 483 observations that are being addressed. The CMO submitted responses to the inspectional observations along with a corrective action plan and requested a meeting with the FDA to discuss. We were also notified by our supplier of heparin, an active pharmaceutical ingredient, or API, for DefenCath, that an inspection by the FDA for an unrelated API resulted in a Warning Letter due to deviations from good manufacturing practices for the unrelated API. On August 8, 2022, we announced receipt of a second CRL from the FDA regarding our DefenCath NDA. The FDA stated that the DefenCath NDA cannot be approved until deficiencies conveyed to the CMO and the heparin API supplier are resolved to the satisfaction of the FDA. There were no other requirements identified by the FDA for us prior to resubmission of the NDA. The FDA has acknowledged the progress reports submitted by the CMO on implementation of the ongoing corrective actions. Validation of manufacturing with heparin from an alternative supplier is underway to prepare for resubmission of the NDA in the event that the Warning Letter at our current API supplier remains unresolved. Corrective actions have been implemented to address the inspectional observations at the CMO and are under review by the FDA. 21 We met with the FDA in April 2023, and were informed that the NDA can be resubmitted at our discretion and the FDA may conduct a pre-approval inspection of the CMO as part of the NDA review process. Based on guidance from the FDA, we will resubmit the NDA utilizing both the existing source of heparin API supplier as well as heparin from an alternative supplier. The NDA resubmission is targeted for mid-May following receipt of the meeting minutes from the FDA. As the resubmission will contain new manufacturing information, we expect it to be a Class 2 resubmission with a six-month review. As part of the NDA review process, the FDA notified us that although the tradename DefenCath was conditionally approved, the FDA now has identified potential confusion with another pending product name that is also under review. The ultimate acceptability of our proposed tradename is dependent upon which application is approved first. As a precaution, we have submitted an alternative proprietary name to the FDA which will undergo review. We previously announced agreements with additional CMOs, including Alcami Corporation and Siegfried Hameln, with proven capabilities for manufacturing commercial sterile parenteral drug products. They may function as alternate manufacturing sites for DefenCath for the U.S. market. As part of the technology transfer and validation of the manufacturing process, we would also expect to qualify an alternate source of heparin API sourced from a major U.S. supplier. We announced on April 26, 2023 that following the submission of a duplicate New Technology Add-On Payment (“NTAP”) application in Q4-2023 to the Centers for Medicare & Medicaid Services (“CMS”), CMS has subsequently issued the Inpatient Prospective Payment System (‘IPPS”) 2024 proposed rule that includes a NTAP of up to $17,111 per hospital stay for DefenCath. This NTAP represents reimbursement to inpatient facilities of 75% of the anticipated wholesaler acquisition cost price of $1,170 per 3 mL vial, and an average utilization of 19.5 vials per hospital stay. The final IPPS rule will be published in late summer and we expect this payment amount to be issued in that final rule. This NTAP is conditioned upon the DefenCath NDA obtaining final FDA approval prior to July 1, 2024. We announced on May 1, 2023 that the United States Patent and Trademark Office (“USPTO”) allowed our patent claims directed to a locking solution composition for treating and reducing infection and flow reduction in central venous catheters. Our newly allowed U.S. Patent Application (No. 17/721,699) reflects the unique and proprietary formulation of our product, DefenCath, for which we expect to resubmit our NDA by mid-May. The newly allowed application provides patent coverage that supplements our existing licensed U.S. Patent No. 7,696,182, and has the potential to provide an additional layer of patent protection for DefenCath through 2042. We intend to pursue additional indications for DefenCath use as a CLS in populations with unmet medical needs that may also represent potentially significant market opportunities. While we are continuing to assess these areas, potential future indications may include use as a CLS to reduce CRBSIs in total parenteral nutrition patients using a central venous catheter and in oncology patients using a central venous catheter. In addition to DefenCath, we are sponsoring a pre-clinical research collaboration for the use of taurolidine as a possible treatment for rare orphan pediatric tumors. In February 2018, the FDA granted orphan drug designation to taurolidine for the treatment of neuroblastoma in children. We may seek one or more strategic partners or other sources of capital to help us develop and commercialize taurolidine for the treatment of neuroblastoma in children. We are also evaluating opportunities for the possible expansion of taurolidine as a platform compound for use in certain medical devices. Patent applications have been filed in several indications, including wound closure, surgical meshes, and wound management. We would seek to establish development/commercial partnerships to advance these programs. We were granted a deferral by the FDA under the Pediatric Research Equity Act, or PREA, that requires sponsors to conduct pediatric studies for NDAs for a new active ingredient, such as taurolidine in DefenCath, unless a waiver or deferral is obtained from the FDA. A deferral acknowledges that a pediatric assessment is required but permits the applicant to submit the pediatric assessment after the submission of an NDA. We have made a commitment to conduct the pediatric study after approval of the NDA for use in adult hemodialysis patients. Pediatric studies for an approved product conducted under PREA may qualify for pediatric exclusivity, which, if granted, would provide an additional six months of marketing exclusivity. DefenCath would then have the potential to receive a total marketing exclusivity period of 10.5 years, including exclusivity pursuant to NCE and QIDP. The FDA regards taurolidine as a new chemical entity and therefore an unapproved new drug. Consequently, there is no appropriate predicate medical device currently marketed in the U.S. on which a 510(k) approval process could be based. As a result, we will be required to submit a premarket approval application, or PMA, for marketing authorization for any medical device indications that we may pursue. In the event that an NDA for DefenCath is approved by the FDA, the regulatory pathway for these medical device product candidates may be revisited with the FDA. Although there may be no appropriate predicate, de novo Class II designation can be proposed, based on a risk assessment and a reasonable assurance of safety and effectiveness. In the EU, Neutrolin was regulated as a Class 3 medical device. In July 2013, we received CE Mark approval for Neutrolin. In December 2013, we commercially launched Neutrolin in Germany for the prevention of CRBSI, and maintenance of catheter patency in hemodialysis patients using a tunneled, cuffed central venous catheter for vascular access. 22 In September 2014, the TUV-SUD and The Medicines Evaluation Board of the Netherlands, or MEB, granted a label expansion for Neutrolin to include use in oncology patients receiving chemotherapy, intravenous, or IV, hydration and IV medications via CVC for the EU. In December 2014, we received approval from the Hessian District President in Germany to expand the label for these same expanded indications. The expansion also adds patients receiving medication and IV fluids via CVC in intensive or critical care units (cardiac care unit, surgical care unit, neonatal critical care unit, and urgent care centers). An indication for use in total parenteral nutrition was also approved. We are in the process of winding down our operations in the EU and have discontinued the sales of Neutrolin in both the EU and the Middle East. Since our inception, our operations have been primarily limited to conducting clinical trials and establishing manufacturing for our product candidates, licensing product candidates, business and financial planning, research and development, seeking regulatory approval for our products, initial commercialization activities for DefenCath in the U.S. and Neutrolin in the EU and other foreign markets, and maintaining and improving our patent portfolio. We have funded our operations primarily through debt and equity financings. We have generated significant losses to date, and we expect to use substantial amounts of cash for our operations as we prepare our pre-launch commercial activities for DefenCath for the U.S. market, pursue business development activities, and incur additional legal costs to defend our intellectual property. As of March 31, 2023, we had an accumulated deficit of approximately $285.9 million. We are unable to predict the extent of any future losses or when we will become profitable, if ever. Financial Operations Overview Revenue We have not generated substantial revenue since our inception. Through March 31, 2023, we have funded our operations primarily through debt and equity financings. Research and Development Expense Research and development, or R&D, expense consists of: (i) internal costs associated with our development activities; (ii) payments we make to third party contract research organizations, or CRO, contract manufacturers, investigative sites, and consultants; (iii) technology and intellectual property license costs; (iv) manufacturing development costs; (v) personnel related expenses, including salaries, stock–based compensation expense, benefits, travel and related costs for the personnel involved in drug development; (vi) activities relating to regulatory filings and the advancement of our product candidates through preclinical studies and clinical trials; (vii) facilities and other allocated expenses, which include direct and allocated expenses for rent, facility maintenance, as well as laboratory and other supplies; and (viii) costs related to the manufacturing of the product that could potentially be available to support the commercial launch prior to marketing approval. All R&D is expensed as incurred. Conducting a significant amount of development is central to our business model. Product candidates in later-stage clinical development generally have higher development costs than those in earlier stages of development, primarily due to the significantly increased size and duration of the clinical trials. The process of conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming. The probability of success for each product candidate and clinical trial may be affected by a variety of factors, including, among others, the quality of the product candidate’s early clinical data, investment in the program, competition, manufacturing capabilities and commercial viability. As a result of the uncertainties associated with clinical trial enrollments and the risks inherent in the development process, we are unable to determine the duration and completion costs of current or future clinical stages of our product candidates or when, or to what extent, we will generate revenues from the commercialization and sale of any of our product candidates. 23 Development timelines, probability of success and development costs vary widely. We are currently focused on securing the marketing approval for DefenCath in the U.S. as well as on continuing sales in foreign markets where Neutrolin is approved. In December 2015, we signed an agreement with a clinical research organization, or CRO, to help us conduct our LOCK-IT-100 Phase 3 clinical trial in hemodialysis patients with central venous catheters to demonstrate the efficacy and safety of DefenCath in preventing catheter-related bloodstream infections and blood clotting in subjects receiving hemodialysis therapy as treatment for end stage renal disease. Our LOCK-IT-100 study was completed and all costs related to the agreement with the CRO has been paid . We are pursuing additional opportunities to generate value from taurolidine, an active component of DefenCath. Based on initial feasibility work, we have completed an initial round of pre-clinical studies for taurolidine-infused surgical meshes, suture materials, and hydrogels, which may require a PMA regulatory pathway for approval. We are also involved in a pre-clinical research collaboration for the use of taurolidine as a possible treatment for rare orphan pediatric tumors. In February 2018, the FDA granted orphan drug designation to taurolidine for the treatment of neuroblastoma in children. We may seek one or more strategic partners or other sources of capital to help us develop and commercialize taurolidine for the treatment of neuroblastoma in children. Selling, General and Administrative Expense Selling, general and administrative, or SG&A, expense includes costs related to commercial personnel, medical education professionals, marketing and advertising, salaries and other related costs, including stock-based compensation expense, for persons serving in our executive, sales, finance and accounting functions. Other SG&A expense includes facility-related costs not included in R&D expense, promotional expenses, costs associated with industry and trade shows, and professional fees for legal services and accounting services. Foreign Currency Exchange Transaction Gain (Loss) Foreign currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than our functional currency and is reported in the condensed consolidated statement of operations as a separate line item within other income (expense). The intercompany loans outstanding between our company based in New Jersey and our subsidiary based in Germany are not expected to be repaid in the foreseeable future and the nature of the funding advanced is of a long-term investment nature. As such, unrealized foreign exchange movements related to long-term intercompany loans are recorded in other comprehensive income (loss). Interest Income Interest income consists of interest earned on our cash and cash equivalents and short-term investments. Interest Expense Interest expense consists of interest incurred on our convertible debt, amortization of debt discount and on financing of expenditures. 24 Results of Operations Three months ended March 31, 2023 compared to three months ended March 31, 2022 The following is a tabular presentation of our condensed consolidated operating results (in thousands): For the Three Months Ended March 31, % of Change Increase 2023 2022 (Decrease) Revenue $ - $ 8 (100 )% Cost of sales - (2 ) (100 )% Gross profit - 6 (100 )% Operating Expenses: Research and development (3,407 ) (2,288 ) 49 % Selling, general and administrative (7,610 ) (4,751 ) 60 % Total operating expenses (11,017 ) (7,039 ) 57 % Loss from operations (11,017 ) (7,033 ) 57 % Interest income 446 14 3,146 % Foreign exchange transaction income (loss) 12 (10 ) (221 )% Interest expense (9 ) (5 ) 63 % Net loss (10,568 ) (7,034 ) 50 % Other comprehensive income (loss) 19 (37 ) (150 )% Comprehensive loss $ (10,549 ) $ (7,071 ) 49 % Revenue. Revenue for the three months ended March 31, 2023 was $0 as compared to $8,000 in the same period last year, a decrease of $8,000. The decrease was the result of winding down of our operations in the EU and the discontinuance of Neutrolin sales in both the EU and the Middle East. Cost of Sales. Cost of sales was $0 for the three months ended March 31, 2023 compared to $2,000 in the same period last year, a decrease of $2,000. The decrease was the result of winding down of our operations in the EU and the discontinuance of Neutrolin sales in both the EU and the Middle East. Research and Development Expense . R&D expense was $3,407,000 for the three months ended March 31, 2023, an increase of $1,119,000, or 49%, from $2,288,000 for the same period in 2022. The increase was driven by an increase in personnel expenses of $588,000 and non-cash charges for stock-based compensation of $189,000, due to additional hires in 2023 as compared to 2022. There were also additional costs related to medical affairs activities of $300,000, and an increase in costs related to the manufacturing of DefenCath prior to its potential marketing approval of $192,000. These increases were offset by a decrease in consulting fees of $151,000. Selling, General and Administrative Expense . SG&A expense was $7,610,000 for the three months ended March 31, 2023, an increase of $2,859,000, or 60%, from $4,751,000 for the same period in 2022. The increase was primarily attributable to an increase in costs related to market research studies and pre-launch activities in preparation for the potential marketing approval of DefenCath of $1,906,000, an increase in personnel expenses of $511,000 as a result of additional SG&A hires in 2023 as compared to 2022 and an increase in non-cash charges for stock-based compensation of $892,000. These increases were partially offset, among others of lesser significance, by decreases in legal fees and office expenses of $371,000 and $136,000, respectively. Interest Income . Interest income was $446,000 for the three months ended March 31, 2023 compared to $14,000 for the same period last year, an increase of $432,000. The increase was attributable to higher interest rates and higher average balance in short-term investments during this period as compared to the same period last year. 25 Foreign Exchange Transaction Gain (Loss) . Foreign exchange transaction gain (loss) were due to the re-measuring of transactions denominated in a currency other than our functional currency. For the quarter ended March 31, 2023, there was a gain of $12,000 and a loss of $10,000 for the same period in 2022. Interest Expense . Interest expense was $9,000 for the three months ended March 31, 2023 as compared to $5,000 for the same period in 2022, an increase of $4,000, primarily due to higher interest rates on expenses that were financed this year as compared to the same period last year. Other Comprehensive Income (Loss) . Unrealized foreign exchange movements related to long-term intercompany loans, the translation of the foreign affiliate financial statements to U.S. dollars and unrealized movements related to short-term investment are recorded in other comprehensive income (loss) which resulted in income of $19,000 for the three months ended March 31, 2023 and a loss of $37,000 for the three months ended March 31, 2022. Liquidity and Capital Resources Sources of Liquidity As a result of our cost of sales, R&D and SG&A expenditures and the lack of substantial product sales revenue, our ongoing operations have not been profitable since our inception. During the three months ended March 31, 2023, we received net proceeds of $7,200,000 from the issuance of 1,684,592 shares of common stock under our at-the-market-issuance sales agreement, or ATM program, as compared to $3,004,000 net proceeds for the same period in 2022 from the issuance of 641,542 shares of common stock. We will continue to be reliant on external sources of cash for the foreseeable future until we are able to generate revenue. Net Cash Used in Operating Activities Net cash used in operating activities for the three months ended March 31, 2023 was $10,394,000 as compared to $6,744,000 for the same period in 2022, an increase of $3,650,000, The increase is primarily driven by an increase in net loss of $3,533,000, attributable to a net increase in operating expenses of $3,979,000. Net Cash Used in Investing Activities Cash used in investing activities for the three months ended March 31, 2023 was $14,687,000 as compared to $4,188,000 provided by in the same period in 2022. The net cash used in investing activities during the three months ended March 31, 2023 was mainly driven by increased amounts invested in short-term investments as compared to the same period in 2022. Net Cash Provided by Financing Activities Net cash provided by financing activities for the three months ended March 31, 2023 was $7,200,000 as compared to $3,004,000 for the same period in 2022, an increase of $4,196,000, attributable to higher net proceeds generated from the sale of our common stock in our at-the-market program, or ATM program, during the three months ended March 31, 2023 as compared to the same period in 2022. Funding Requirements and Liquidity Our total cash on hand and short-term investments as of March 31, 2023 was $55,601,000, excluding restricted cash of $229,000, compared with $58,792,000 at December 31, 2022, excluding $226,000 restricted cash. During the three months ended March 31, 2023, we received net proceeds of $7,200,000 from the issuance of 1,684,592 shares of common stock under our ATM program. As of March 31, 2023, we have approximately $24,217,000 available under our ATM program and $150,000,000 under the 2021 Shelf Registration statement for the issuance of equity, debt or equity-linked securities. 26 Because our business has not generated positive operating cash flow, we will likely need to raise additional capital in order to continue to fund our research and development activities, as well as to fund operations generally. Our continued operations are focused primarily in activities leading to the pre-launch and commercialization for DefenCath and will depend on our ability to raise sufficient funds through various potential sources, such as equity, debt financings, and/or strategic relationships and potential strategic transactions. We can provide no assurances that financing or strategic relationships will be available on acceptable terms, or at all. We expect to continue to fund operations from cash on hand and through capital raising sources as previously described, which may be dilutive to existing stockholders, through revenues from the licensing of our products, or through strategic alliances. We expect to continue to utilize our ATM program, if conditions allow, to support our ongoing funding requirements. Additionally, we may seek to sell additional equity or debt securities through one or more discrete transactions, or enter into a strategic alliance arrangement, but can provide no assurances that any such financing or strategic alliance arrangement will be available on acceptable terms, or at all. Moreover, the incurrence of indebtedness would result in increased fixed obligations and could contain covenants that would restrict our operations. Raising additional funds through strategic alliance arrangements with third parties may require significant time to complete and could force us to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or to grant licenses on terms that may not be favorable to us or our stockholders. Our actual cash requirements may vary materially from those now planned due to a number of factors, any change in the focus and direction of our research and development programs, any acquisition or pursuit of development of new product candidates, competitive and technical advances, the costs of commercializing any of our product candidates, and costs of filing, prosecuting, defending and enforcing any patent claims and any other intellectual property rights. We expect to grow product sales for DefenCath in the U.S., should we receive FDA approval. In the absence of significant revenue, we are likely to continue generating operating cash flow deficits. We will continue to use cash as we increase other activities leading to the commercialization of DefenCath upon approval, pursue business development activities, and incur additional legal costs to defend our intellectual property. We currently estimate that as of March 31, 2023, we have sufficient cash to fund operations at least through the first half of 2024, after taking into consideration the costs for resubmission of the NDA and initial preparations for the commercial launch for DefenCath. Additional financing will likely be needed to build out our commercial infrastructure should we receive FDA approval and to continue our operations should we decide to market and sell DefenCath in the U.S. on our own. If we are unable to raise additional funds when needed, we may be forced to slow or discontinue our preparations for the commercial launch of DefenCath. We may also be required to delay, scale back or eliminate some or all of our research and development programs. Each of these alternatives would likely have a material adverse effect on our business. Contractual Obligations We entered into a seven-year operating lease agreement in March 2020 for an office space at 300 Connell Drive, Berkeley Heights, New Jersey 07922. The lease agreement, with a monthly average cost of approximately $17,000, commenced on September 16, 2020. Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates. For the three-month period ended March 31, 2023, there were no significant changes to our critical accounting policies and estimates as identified in our Annual Report on Form 10-K for the year ended December 31, 2022. 27 Item 3. Quantitative and Qualitative Disclosure about Market Risk. Interest Rate Risk We are exposed to market risks in the ordinary course of our business. Market risk is the risk of change in fair value of a financial instrument due to changes in interest rates, equity prices, financing, exchange rates or other factors. These market risks are principally limited to interest rate fluctuations. We had cash, cash equivalents and short-term investments of $55,601,000 and $58,792,000 at March 31, 2023 and December 31, 2022, respectively, consisting primarily of funds in cash, money market accounts, U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities of more than 90 days. The primary objective of our investment activities is to preserve principal and liquidity while maximizing income without significantly increasing risk. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of our investment portfolio, we do not believe an immediate 10.0% increase in interest rates would have a material effect on the fair market value of our portfolio, and accordingly we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates. Our results of operations and cash flows are subject to fluctuations due to changes in interest rates. We do not believe that we are materially exposed to changes in interest rates. We do not currently use interest rate derivative instruments to manage exposure to interest rate changes. We estimate that a 1% unfavorable change in interest rates would not have a material effect on interest expense for the three months ended March 31, 2023. Inflation Risk Inflation generally affects us by increasing our cost of labor and pricing of contracts and agreements. We do not believe that inflation had a material effect on our business, financial condition, or results of operations during the three months ended March 31, 2023. Item 4. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are designed only to provide reasonable assurance that information to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) as of March 31, 2023. Based on the foregoing evaluation, our Chief Executive Officer and our Chief Financial Officer 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 our Chief Financial Officer, to allow timely decisions regarding required disclosures. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during our first quarter ended March 31, 2023, 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. 28 PART II OTHER INFORMATION Item 1. Legal Proceedings. For information regarding our legal proceedings, see Note 4, Commitments and Contingencies, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q, which is incorporated into this item by reference. Item 1A. Risk Factors. There were no material changes from the risk factors previously disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None. Item 3. Default Upon Senior Securities. None. Item 4. Mine Safety Disclosures. Not applicable. Item 5. Other Information. None. 29 Item 6. Exhibits. The exhibit index set forth below is incorporated by reference in response to this Item 6. Exhibit Number Description 10.1*+ Form of Indemnification Agreement between the Company and each of its directors and executive officers. 31.1* Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 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). * Filed herewith. + Indicates management contract or compensation plan. 30 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CORMEDIX INC. Date: May 15, 2023 By: /s/ Joseph Todisco Name: Joseph Todisco Title: Chief Executive Officer (Principal Executive Officer) 31