UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

☒  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20212023

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to __________

Commission file number 0-12305

REPRO MEDKORU MEDICAL SYSTEMS, INC.INC.

(Exact name of registrant as specified in its charter)

(845)-469-2042

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $.01 PAR VALUENone

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐  No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐  No ☒

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, 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.

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐  No ☒

Based on the closing sales price of June 30, 2021,2023, the aggregate market value of the voting and nonvoting common equity held by non-affiliates of the registrant was $120,485,383111,191,841.

As of February 28, 2022,March 13, 2024, 44,671,16045,710,500 shares of common stock, $0.01 par value per share, were outstanding, which excludes 3,420,502 shares of Treasury Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement for the 20222024 Annual Meeting of Shareholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2021.2023.

INDEX TO FORM 10-K

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Table of Contents

PART I

Throughout this report, the “Company,” “KORU Medical,” “KORU,” “we,” “us” or “our” refer to Repro MedKORU Medical Systems, Inc. d/b/a KORU Medical Systems.

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K contains “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.  Forward-looking statements can be identified by words such as: “mission,” “believe,” “plan,” “goal,” “intend,” “seek,” “expect,” “will,” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make under “Our Strategy” in Business under Item 1 of this Form 10-K and “Overview”“Liquidity and Capital Resources” in Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 7 of this Form 10-K, and statements regarding success of our move to the newly leased facility including continuityEU certification appeal, completion of product supply,a next-generation pump and consumable system, compliance with EU MDR, transition to our secondary manufacturing source, and 20222024 expenses, needs for additional capital, capital investments, plans for expansion of our share position and inventory levels.products, and increase in patient SCIg prescriptions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions.  Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control.  Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, readers should not rely on any of these forward-looking statements.

Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, those discussed in this Annual Report on Form 10-K, and in particular, the risks discussed under the caption “Risk Factors” in Item 1A, and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”).

Any forward-looking statement made by us in this Annual Report on Form 10-K is based only on information currently available to us and speaks only as of the date on which it is made.  We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

ITEM 1. BUSINESS

OUR BUSINESS

KORU Medical designs,develops, manufactures and markets proprietary portablecommercializes innovative and innovative medical devices,patient-centric large volume subcutaneous infusion solutions primarily for the ambulatory infusionsubcutaneous drug delivery market as governed by the United States Food and Drug Administration (the “FDA”) quality and regulatory system and international standards for quality system management. Our development and marketing focus is primarily concentrated on our mechanical infusion products, the FREEDOM Infusion Systems (which we refer to as the “FREEDOM System” when used with one or more accessories), which include the FREEDOM60® Syringe Driver, the FreedomEdge® Syringe Driver, HIgH-Flo Subcutaneous Safety Needle Sets™ and Precision Flow Rate Tubing™.

Our revenues deriveare derived from three business sources: (i) domestic core (which consists of US and Canada), (ii) international core, and (iii) novel therapies.  Our core domestic and international revenues consist of sales of our productssyringe drivers, tubing and needles (“Product Revenue”) for the delivery of subcutaneous immunoglobulin (“SCIg”) to treat Primary Immunodeficiency Diseases (“PIDD”), Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”), and other disease statesdrugs that are FDA cleared for use with the KORU Medical syringe driver.FREEDOM System, with the primary delivery for immunoglobulin to treat Primary Immunodeficiency Diseases (“PIDD”) and Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”). Novel therapies revenues consist of product revenues related to the sales of our infusion system (syringe drivers, tubing and needles)Product Revenue for feasibility/clinical trials (pre-clinical studies, Phase I, Phase II, Phase III) of biopharmaceutical companies in the drug development process as well as non-recurring engineering services (“NRE”) revenues (including product innovation, testing and registration services) received from biopharmaceutical companies to ready or customize the FREEDOM System for clinical and commercial use.use across multiple drug categories.

OUR MISSION

Our mission is to improve the quality of life of patients around the world by delivering innovative, effective, and easy-to-use drug delivery systems that can be used at home or alternate site settings, for patient self-administration of drug therapy.

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OUR STRATEGY

We planOur goal is to become theexpand our position as a leading provider of solutions forlarge volume subcutaneous large-volume infusions defined as greater than 10mlinfusion systems (>10ml) self-administered in the home by the patient and/or delivered in an ambulatory infusion center by a healthcare professional. . We intend to accomplish this objective by increasing our leadership position and penetration ofin our domestic and international core SCIgsubcutaneous immunoglobulin (“SCIg”) market and extending this position into newnovel subcutaneous drug therapies. Both the Ig and novel therapy drugs, will use our Freedom Infusion system and new innovations that are in development for the Freedom Infusion system platform.

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WeIn the goal of increasing our leadership position in SCIg, we have identified multiple factors that we believe are driving growth of the SCIg market. These include:

We intend to maintain and extend our leadership position in the SCIg market through clinical and product innovation and commercial excellence. By improving our products, establishing thought leadership in subcutaneous therapy, partnering with SCIg drug manufacturers, expanding geographically, and executing commercially, we intend to increase our overall global share position and the number of patients prescribed SCIg.SCIg over intravenous Ig.

Furthermore, we planIn our goal to expand into newnovel therapies outside of SCIg. WeSCIg, we estimate that at least 100 large-volume drugs are in clinical development utilizing subcutaneous infusion.infusion, with approximately 30% greater than 10ml. The pipeline is driven by the need to deliver high therapeutic doses, difficulty in formulating large molecules into small volumes, patient preference for and superior economics of subcutaneous infusion over intravenous infusion, the COVID-19 pandemic causingnursing shortage, pharmaceutical companies to shiftshifting development programs toward at-home SCsubcutaneous therapy, and other factors.patient preference. Biopharmaceutical manufacturers seek device partners during the drug development process. We intend to partner with them during clinical development—generating non-recurring services revenues to prepare and customize our products for use during the clinical usetrial process and to obtain regulatory clearance for use with their drug. Post launch, we intend to commercialize our products for use with these drugs, working with our pharmaceutical partners, our distributors and product revenues by selling devices for evaluationsour specialty pharmacy partners who distribute and clinical use—train patients on the use of these products both in the home and subsequently, commercialization.in ambulatory infusion centers.

OurWe believe our track record of regulatory clearance and successful patient use, combined with our channel access, position KORU to both maximize our growth in the core SCIGSCIg market and expand into new therapeutic areas.

OUR PRODUCTS

FREEDOM SYSTEM

KORU’s infusion devices work together as a system to deliver life-saving therapies to patients with chronic illnesses, such as PIDD and CIDP.  The FREEDOM System comprises the FREEDOM60 Syringe Driver (standard 60/50ml syringe compatible) and FreedomEdge Syringe Driver (standard 30ml and 20ml syringe and prefilled syringe compatible), HIgH-Flo Subcutaneous Safety Needle Sets and Precision Flow Rate Tubing.  The systems are portable, easy to operate, maintenance free and do not require batteries or electricity. The FREEDOM System operates at a lower pressure than an electrical, volumetric pump and maintains a balance between what a patient’s subcutaneous tissues can absorb andtolerate what the system delivers, or what we refer to as DynEq®.delivers.

TheOur FREEDOM System is cleared by thefor several on-label subcutaneous indications including specific FDA for a wide rangeclearance for: delivery of flow rates and certainspecific medications forthrough subcutaneous and intravenous indications,routes, including specific clearance for leading immune globulins Cutaquig ®, Cuvitru®, Hizentra®, Xembify, Empaveli® (branded Aspaveli® outside the United States), Gammagard Liquid®, and Xembify® and a varietyselected intravenously administered antibiotics. Outside of antibiotics. The FREEDOM System is the only infusion system specifically clearedU.S. our indications for use with a prefilled syringe, the Hizentra® 20ml prefilled syringe.also include treatments for hydration and iron chelation.

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Ambulatory infusion systems such as the FREEDOM System are most prevalent in the home care and alternate infusion site markets. The SCIg products administered with delivered by the FREEDOM System are indicated for a variety of conditions, including Primary Immunodeficiency (PIDD ) and Chronic Inflammatory Demelinating Polyneuropathy (CIDP) in the United States and PIDD, CIDP and Secondary Immunodeficiency Disease (“SIDD”) outside of the United States. Empaveli® is indicated for Paroxysmal Nocturnal Hemoglobinuria (“PNH”). The use of the FREEDOM System for treatment of PIDD through SCIg administrationdrug delivery continues to increase, and it remains the market leading delivery system in the U.S. for these infusions.  There istreatments. In recent years Hizentra® and HyQvia® has received an expanded indication for Hizentra®treatment of CIDP in the United States. Multiple SCIg drugs have received indications for patients with CIDP which is an acquired immune-mediated inflammatory disorderSID outside of the peripheral nervous system.United States. It is expected that patient access to SCIg will expand as new SCIg drugs may enter the market.  We believe the FREEDOM System is an ideal system for SCIg administration because:

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are developed, existing drugs are approved and/or marketed in new countries, and existing drugs receive new indications.

HIgH-Flo Subcutaneous Safety Needle Sets are a criticalan important element of the FREEDOM System,System. The needle sets are available in 26- and 24-gauge sizes and feature unique design elements specific to subcutaneous self-administration.  One such feature includes a back-cut needle designed for more comfort and less tissue damage with flexible wings to minimize patient discomfort.

Precision Flow Rate Tubing is designed for repeatable flow rates without allowing unrestricted flow.  The tubing regulates the flow rate and infusion time for various applications when used with the FREEDOM System.  Each tubing set provides a different level of flow restriction and consistently delivers medication with low residual volume to minimize drug waste.

SALES AND DISTRIBUTION

The FREEDOM System is sold through both direct sales and medical device distributors to pharmaceutical companies, specialty pharmacy customers and home infusion providers.  Our products are sold principally through a small number of distributors so our specialty pharmacy customers receive the benefit of remote inventory management and one-stop shopping.  We sell the majority of our products through twothree distributors in the U.S. and two distributors outside the U.S.  As of December 31, 2021,2023, these fourfive distributors comprised approximately 62%74% of our net revenues with one of our U.S. distributors contributing approximately 41%.

Specialty pharmacies, home infusion providers, and distributors are our primary call points,sales contacts, although we provide education and training materials to clinicians, patients, and patient advocates both in the field and online.

MANUFACTURING AND RAW MATERIALS

We currently manufacture, assemble and package all of our pump products, assemble and complete final packaging of our consumables (which consist of needle and tubing sets), and perform product assembly, calibration, pre- and post-assembly quality control inspection and testing and final packaging for all of our products at our Chester, NY facility and expect to continue such activities for certain of our products at our newly leased facility in Mahwah, NJ commencing on or about June 2022.  In the fourth quarter of 2020, we entered into an agreement withfacility.  Command Medical Products, Inc. (“Command”), to manufacturea contract manufacturing organization with operations in Nicaragua, currently provides subassemblies, and supply the Company’s subassemblies, needle setsmanufactures, assembles and tubing products for supply continuity and cost savings. We expect the transition to Command to be completed in July 2022.packages approximately 80% of our consumables..

Our ability to meet customer demand depends, in part, on our ability to obtain timely and adequate delivery of components for our products. All of the components that go into the manufacturing of our products and accessories are sourced from third-party suppliers on a single source basis. We believe alternative sources of supply for all equivalent materials are available from other sources or can be produced by the Company, and the Company does not believe it is substantially dependent on any suppliers. The Company uses single-source suppliers in part due to governmental approval and validation requirements. A change in supplier, or the use of multiple suppliers of the same materials, often would necessitate additional approvals and validations, which the Company seeks to avoid unless and until the need arises. The Company does not have any contracts with suppliers that impose material binding obligations on the Company or provide the Company with any material rights or benefits, other than the Company’s agreement with Command. Command currently stores our finished goods in their warehouse located in Miami Florida once the products are released and shipped from Nicaragua.

RESEARCH AND DEVELOPMENT

We recognize the importance of innovation to our long-term success and are committed to research and new product development activities.  Our product development team along with outside engineering resources are continuously engaged in continuously improving existing product performance and researchinginnovating on new product opportunities to enhance our product portfolio.  We spent $2.5$5.7 million and $1.3$5.0 million on research and development for the years ended December 31, 20212023 and 2020,2022, respectively.  We intend to make additional investments in research and development over the next twelve months.months to support completing research and development for a “next-generation” infusion pump and consumable system.

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REGULATORY

Our medical devices and technologies, as well as our business activities, are subject to a complex set of regulations and rigorous enforcement, principally by the FDA, and numerous other federal, state, and non-U.S. governmental authorities.  To varying degrees, each of these agencies requires us to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of our products.

The FDA regulates, among other things, the research, development, testing, manufacturing, approval, labeling, storage, recordkeeping, advertising, promotion, and marketing, distribution, post approval monitoring and reporting, and import and export of medical devices in the U.S. to assure the safety and effectiveness of medical products for their intended use.  Thus, both before and after a product is commercially released, we have ongoing responsibilities under the FDA. For instance, all medical devices marketed in the U.S. must be manufactured in accordance with the FDA’s quality system regulations (“QSRs”).  Accordingly, our facility and procedures and those of our applicable suppliers are also subject to periodic inspections by the FDA to determine compliance with applicable laws and regulations.  The Federal Trade Commission also regulates the advertising of our products.  Further, we are subject to laws directed at preventing fraud and abuse, which subject our sales and marketing, training and other practices to government scrutiny.

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Our business is also affected by patient privacy laws and government payor cost containment initiatives, as well as environmental health and safety laws and regulations.

U.S. Device Classification and Clearance

Except where an exemption applies, each new or significantly modified medical device we seek to commercially distribute in the U.S. will require either a premarket notification to the FDA requesting permission for commercial distribution under Section 510(k) of the Federal Food, Drug and Cosmetic Act (“FFDCA”), also known as a 510(k) clearance, or approval of a pre-market approval (“PMA”ra”) application.application, or as part of a drug-device combination product through a Biologics License Application (“BLA”) or New Drug Application (“NDA”).  For example, the use of our FREEDOM System with therapies not covered by the existing FDA clearance will require additional 510(k) clearance , BLA, NDA or PMA approval.

Under the 510(k) process, applicants must demonstrate to the FDA that a device is as safe and effective as, or substantially equivalent to, a legally marketed device, known as the “predicate” device.  Applicants must submit performance data to establish substantial equivalence.  In some instances, data from human clinical trials must also be submitted in support of a 510(k), and thesethis data must be collected in a manner that conforms to the applicable Investigational Device Exemption (“IDE”) regulations.  The FDA must issue a substantial equivalence determination before commercial distribution can occur.  Changes to cleared devices that will not significantly affect the safety or effectiveness of the device can generally be made without additional 510(k) submissions.  Changes that will significantly affect the safety or effectiveness of the device will require a new 510(k) prior to marketing of the modified device.  Notably, the FDA has announced its intention to pursue comprehensive reforms to its current 510(k) clearance pathway and to its post-market safety monitoring process.  We cannot predict with any certainty how thesefuture reforms to Federal regulations may impact our business.  See “ITEM 1A. RISK FACTORS.”

Under the PMA application process, the applicant must demonstrate that the device is safe and effective for its intended use.  This approval process applies to most Class III devices, and generally requires clinical data to support the safety and effectiveness of the device, obtained in conformance with IDE regulations.  The FDA will approve a PMA application if it finds that there is a reasonable assurance that the device is safe and effective for its intended purpose, and that the proposed manufacturing is in compliance with the QSRs.  For novel technologies, the FDA will seek input from an advisory panel of medical experts regarding the safety and effectiveness of, and their benefit-risk analysis for the device.  The PMA process is generally more detailed, lengthier and more expensive than the 510(k) process, though both processes can be expensive and lengthy, and requires payment of significant user fees, unless an exemption is available.

We are also required to comply with the regulations of every other country where we commercialize products before we can launch or maintain new products on the market.  Many countries that previously did not have medical device regulations, or had minimal regulations, are now introducing them.

International sales of medical devices manufactured in the U.S. that are not approved by the FDA for use in the U.S., or that are banned or deviate from lawful performance standards, are subject to FDA export requirements.  Additionally, exported devices are subject to the regulatory requirements of each country to which the device is exported.  Some countries do not have medical device regulations, but in most foreign countries, medical devices are regulated.  Frequently, regulatory approval may first be obtained in a foreign country prior to application in the U.S. due to differing regulatory requirements; however, other countries require approval in the country of origin first.  Most countries outside of the U.S. require that product approvals be recertified on a regular basis, generally every five years.  The recertification process requires that we evaluate any device changes and any new regulations or standards relevant to the device and, where needed, conduct appropriate testing to document continued compliance.  Where recertification applications are required, they must be approved in order to continue selling our products in those countries.

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Post-Approval Regulation

Even after a device is cleared or approved by FDA for marketing, numerous regulatory requirements continue to apply.  The FDA and other worldwide regulatory agencies and competent authorities actively monitor compliance to local laws and regulations through review and inspection of design and manufacturing practices, record-keeping, reporting of adverse events, labeling and promotional practices.  The FDA can ban certain medical devices, detain or seize adulterated or misbranded medical devices, order repair, replacement or refund of these devices and require notification of health professionals and others with regard to medical devices that present unreasonable risks of substantial harm to the public health.  The FDA may also enjoin and restrain a company for certain violations of the FFDCA and the Safe Medical Devices Act pertaining to medical devices or initiate action for criminal prosecution of such violations.  In addition, FDA and other governmental agencies such as the Department of Justice can take action against a company that promotes “off-label” uses.  Regulatory agencies and authorities in the countries where we do business can halt production in or distribution within their respective country or otherwise take action in accordance with local laws and regulations.  Any adverse regulatory action, depending on its magnitude, may restrict a company from effectively marketing and selling its products, may limit a company’s ability to obtain future premarket clearances or approvals, and could result in a substantial modification to a company’s business practices and operations.

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Manufacturing Regulation

We must also comply with FDA and foreign agency regulations governing medical device manufacturing practices.  The FDA and foreign agencies require manufacturers to register their establishments, and they monitor compliance with device manufacturing requirements through inspections of manufacturing facilities.  If an investigator observes conditions that might be violative, the manufacturer must correct those conditions or explain them satisfactorily or face potential regulatory action that might include physical removal of the product from the marketplace.  We are an FDA-registered medical device manufacturer and must demonstrate that we comply with the FDA’s QSR and Current Good Manufacturing Practices (“cGMPs”).

We believe that our products and procedures are in compliance with all applicable FDA and international regulations.  There is no assurance, however, that other products we are developing or products that we may develop in the future will be cleared by the FDA and classified as Class II products, or that additional regulations restricting the sale of our present or proposed products will not be promulgated by the FDA or other foreign agencies.  In addition, changes in FDA, or other federal or state health, environmental or safety regulations or their applications could adversely affect our business.

Other Healthcare Laws

We are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business.  These laws include:

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Violations of any of the laws described above include civil and criminal penalties, damages, fines, the curtailment or restructuring of an entity’s operations, the debarment, suspension or exclusion from federal and state healthcare programs and/or imprisonment.

Coverage and Reimbursement

Our profitability and operations are subject to changes in legislative, regulatory and reimbursement policies and decisions as well as changes in private payer reimbursement coverage and payment decisions and policies.  Our products are purchased by specialty pharmacies and ambulatory service providers or hospitals that typically bill various third-party payors, such as governmental programs (e.g., Medicare, Medicaid, and comparable non-U.S. programs), private insurance plans and managed care plans, for the healthcare services and products provided to their patients.  The ability of our customers to obtain appropriate coverage and reimbursement for our products and the drugs they administer is critical because it affects which products customers purchase and the price they are willing to pay.  Third-party payors are increasingly reducing coverage and reimbursement for certain healthcare services and products and challenging prices charged for healthcare services and products.

Environmental Health and Safety Laws

We are required to comply with federal, state, and local environmental laws; however, there is no significant effect of compliance on capital expenditures, earnings, or competitive position.  We do not use significant amounts of hazardous materials in the assembly of our products.

COMPETITION AND THE MARKET

Competition for the FREEDOM System includes electronic (volumetric) pumps, elastomeric (“infuser”)(infuser) pumps, and fully mechanical pumps as well as other types of pumps.  Safety, ease of use, familiarity, cost effectiveness, accuracy, pressure, etc.and sustainability are the principal driving influencers of pump selection.  Electronic pumps deliver drugs at a programmed flow rate.  They are more costly and require electricity or batteries, extensive training and maintenance and must be programmed by a qualified pharmacist or clinician. Elastomeric pumps are one-time-use balloon type devices used for infusion of drugs in intravenous (“IV”) and surgical wound site applications.  Pharmacies are required to fill them with drugs and deliver them to the patient.  They are easy to use from the patient point of view but can be more costly and time consuming to fill, are temperature sensitive and have larger residual volumes than other delivery systems.

Competition for infusion devices for new drugs includes a variety of technologies and companies. No single technological approach—autoinjectors, electronic (volumetric pumps), mechanical pumps, needle-free injectors, on-body wearable pumps,devices, pen injectors, and pre-filled syringes—will meet the needs of all or even a majority of drugs. For drugs requiring infusion volumes over 3 ml, the segment most similar to the SCIg drugs currently delivered by the FREEDOM System, the most relevant approaches include mechanical pumps, on-body wearable pumps,devices, and simple electronic pumps. Challenges to their successful commercialization include high costs per infusion, increased environmental impact, complexity for users, and complex mechanisms with multiple failure modes.

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HUMAN CAPITAL RESOURCES

As of December 31, 2021,2023, we had 7782 full time employees, and no part timeincluding 3 international employees.  As of December 31, 2021,2023, approximately 57%51% of the Company’s workforce was female and approximately 20%37% of the Company’s employees in managerial roles were female.  Approximately 41%39% were minorities (non-White) in the Company workforce as of December 31, 2021.2023.  None of our employees are represented by a collective bargaining agreement.

To help drive consistent execution of our business strategy, including our customer focused philosophy, and support their development, we provide training opportunities to our employees that align with their responsibilities over their career with us.  We maintain a dedicated Internet-based learning platform with a broad portfolio of written, audio-visual and interactive enterprise-wide and discipline-specific policy and training materials.  This platform includes a library of self-directed courses and virtual, instructor-led programs for employees at all levels of our organization.  Managers and supervisors are provided training to help their employees progress in their professional development.

We believe our employees are key to achieving our business objectives.  We have COVID-19 prevention protocols in place to minimize the spread of COVID-19 in our workplace.  These protocols, which remain in place, meet or exceed the Centers for Disease Control guidelines and where applicable, state mandates.

Our key human capital measures include employee safety, turnover, absenteeism and production.  We frequently benchmark our compensation practices and benefits programs against those of comparable industries and in the geographic areas where our facilities are located.  We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled and unskilled labor throughout our organization.  Our notable health, welfare and retirement benefits include:

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We strive to maintain an inclusive environment free from discrimination of any kind, including sexual or other discriminatory harassment.  Our employees have multiple avenues available through which inappropriate behavior can be reported, including a confidential hotline.  All reports of inappropriate behavior are promptly investigated with appropriate action taken to stop such behavior.

PATENTS AND INTELLECTUAL PROPERTY

We filedhave patents and received U.S.other intellectual property that we believe protect the FREEDOM System, and foreign protection for many ofwe continue to file patent applications in connection with our products relating to infusion systemsresearch and related components. We had one patent granted in the U.S. and eleven foreign patents granted outside the U.S. in 2021.development activities. As of December 31, 2021,2023, we own 15 U.S. Patents and 60 foreign patents. In addition, we have six12 pending U.S. patent applications pending in the U.S. and 13 applications pending in foreign jurisdictions.  Expiration dates for the entire patent portfolio range (US & Foreign) from 2022 to 2038. In some cases where it was no longer deemed economically beneficial, we have allowed certain patent and/or trademark protections to lapse.  In addition, the patent application process for both the U.S.applications. The fundamental patents protecting our drug delivery systems extend until 2039 and foreign countries is highly uncertain and involves complex legal and factual issues that differ from country to country. Consequently, there can be no assurance that patent applications relating to products or technology will result in patents being granted or that, if issued, the patents will afford protection against competitors with similar technology.  There can be no assurance that we will have the financial resources necessary to enforce any patent rights we may hold.beyond.

EXECUTIVE OFFICERS

The following table sets forth certain information with respect to our executive officers as of March 2, 2022:13, 2024:

Executive officers hold office at the discretion of the Board of Directors.

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Ms. Tharby was appointed as President and CEO in April 2021. Ms. Tharby has over 25 years of executive leadership experience building and leading strong performing global organizations that develop and commercialize products and service innovations, while delivering solutions to patients in the home setting. Prior to joining KORU, Ms. Tharby spent the last 24 years working in various roles of increased responsibility at Becton Dickinson (“BD”). Ms. Tharby was a member of the Executive Leadership team of BD that transformed the company from an $8 billion medical supplies company to an $18 billion global medical technology company. Ms. Tharby’s most recentlast role at BD was as Chief Customer Experience Officer from July 2018 through December 2020. In her prior role,Prior to that she served as BD’s Chief Human Resources Officer, from October 2016 through July 2018,2018. From 1998 to 2016, she led the company through its $24 billion acquisition and integration of C.R. Bard in 2017. She also held numerous senior global business leadership roles at BD, including Executive Vice President and President of Life Sciences, Group President of Pre-Analytical Systems and Biosciences, Worldwide President of Diabetes Care, and Vice President/General Manager of Pharmaceutical Systems. Ms. Tharby has an Honors Bachelor of Business Administration from Wilfrid Laurier University in Waterloo, Ontario Canada.

Ms. FisherMr. Adams joined KORU Medical in November 2021 as Vice President of Financial Planning and Analysis, was appointed Interim-Chief Financial Officer in July 2022 and Chief Financial Officer in August 2023. Mr. Adams has more than 26 years ofan extensive background in financial experience at a variety of industries.planning, corporate finance, commercial and supply chain finance, and mergers and acquisitions (M&A). Prior to joining KORU in 2015, Ms. Fisher was Assistant Controller, Senior Manager for Armored Autogroup, Inc., a worldwide consumer products company.  Before joining Armored Autogroup, Inc., sheMedical, Mr. Adams spent seven10 years at Gilman Ciocia, Inc.,Integra Life Sciences in various leadership positions in Finance and Accounting Controllership with his most recent position as Senior Director of Finance. In this role, Mr. Adams was the head of finance for Integra’s Tissue Technology Business where shehe served a leading role in supporting a variety$500 million business unit to high growth and profitability. Previous roles included Group Controller/Head of financial roles, including Chief Accounting OfficerFP&A Global Supply and Treasurer,prior to Integra Life Sciences, Mr. Adams served as Director of Finance at Pfizer Inc serving in many domestic and earlier, as Controller. Before Gilman Ciocia, Inc., she held multiple financial management roles at The New York Times Company and Thomson Financial.  Ms. Fisher is a Certified Public Accountant and a graduateinternational roles. Mr. Adams earned his Bachelor of ArizonaScience in Business Administration-Accounting & Finance from the Ohio State University with a B.S. in accounting.University.

Mr. Marques was appointedCase joined KORU Medical in April 2022 as Chief Operating OfficerTechnology Officer. Mr. Case has over 20 years of research and development experience working with a combination of large and small medical device companies. For the 16 years prior to joining KORU Medical, Mr. Case was an R&D leader with Fresenius Kabi, a global leader specializing in December 2018.  Prior to that, Mr. Marques served as ourlifesaving medicines and technologies for infusion, transfusion, and clinical nutrition. As the Vice President of OperationsR&D for the Transfusion and Engineering from February 2016Cell Technologies business, Mr. Case provided global business and joined KORU as Directortechnical leadership to drive the long-term product vitality of Manufacturingthe business and Manufacturing Engineering in July 2015.promote entry into new business areas.  During his time at Fresenius, Mr. Case’s many accomplishments included bringing new products and technologies to market, leading to new business divisions, multiple international product approvals and value creation for the company. Mr. Case also led the Project Management office for the company, responsible for the identification and implementation of best practices and functional excellence.  Prior to joining KORU,Fresenius, Mr. Marques served as Lean Manufacturing ChampionCase was the R&D Manager, Advanced Research at Nobel Biocare Procera LLC,Cook Medical where he led a manufacturercross-functional team that developed and assessed new technologies to create a product portfolio to service the peripheral disease market. Mr. Case’s work has been prolific with over 100 patents filed during his career. Mr. Case received his Master of dental implants and CAD/CAM-based individualized prosthetics, until joining KORU.  Mr. Marques has over 24 years of experience within the dental, medical device, and automotive industries, and holds two U.S. patents for cardiovascular medical devices.  Mr. Marques obtained a B.S. in Mechanical Engineering Technology and an M.S.Science in Engineering Management from the New JerseyRose-Hulman Institute of Technology.Technology, and his Bachelor of Science in Engineering Mechanics, from University of Illinois.

-Mr. Miller joined KORU Medical in November 2023 as Chief Commercial Officer. Mr. Miller has over 30 years of extensive expertise and experience in leading high-performing teams in commercialization and marketing strategy, international expansion, and driving sustainable growth and profitability.  As Chief Commercial Officer, Mr. Miller has oversight of the global commercial function, including U.S. and International sales and marketing organizations. He was President & CEO of NASCO HealthCare from October 2018 through January 2023. At NASCO, he transformed sales & marketing, and led the consolidation of NASCO’s manufacturing footprint which delivered year-over-year double digit revenue and EBITDA growth.  Prior to NASCO, Ken spent 7 -years at BD with his last role as the Worldwide President Diabetes Care where he led the transition from a product focus to a full-service diabetes management solution provider. Ken also held leadership roles in marketing, sales, and business development with Novo Nordisk, Adams Respiratory Therapeutics, and Roche Laboratories.  He earned his Bachelor of Arts in Business Management from State University of New York at Albany and his Master of Business Administration from The University of Chicago, Booth School of Business.

ITEM 1A. RISK FACTORS

RISK FACTORS

An investment in our common stock involves significant risks.  Before making an investment in our common stock, you should carefully consider all of the information contained in this Annual Report on Form 10-K and our other filings with the SEC including the material risks and uncertainties that we have identified below.  The risks and uncertainties identified below are not the only risks and uncertainties we face.  If any of the material risks or uncertainties that we face were to occur, the trading price of our common stock could decline and you could lose part or all of your investment.  Please note that additional risks not currently known to us or that we currently deem immaterial also may adversely affect our business, operations, results of operations, financial condition and prospects.

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Risks Related to Our Business

If we are unable to successfully introduce new products or fail to keep pace with advances in technology, our business, financial condition and results of operations could be adversely affected.

We need to successfully introduce new products to achieve our strategic business objectives.  A significant element of our strategy is to increase revenue growth by investing in innovation and new product development, which will require substantial resources.  Our successful product development will depend on many factors, including our ability to attract strong talent to lead our research and development efforts, properly anticipate and satisfy customer needs, adapt to new technologies, obtain regulatory concurrence on a timely basis, demonstrate satisfactory clinical results, manufacture products in an economical and timely manner, obtain appropriate intellectual property protection for our products, gain and maintain market acceptance of our products, and differentiate our products from those of our competitors.  In addition, patents attained by others can preclude or delay our commercialization of a product. There can be no assurance that any products now in development or that we may seek to develop in the future will achieve technological

feasibility, obtain regulatory concurrence or gain market acceptance.  If we cannot successfully introduce new products or adapt to changing technologies, our products may become obsolete, and our revenue and profitability could suffer.

Our business depends on an adequate supply of drugs to be administered by our products.

Demand for our products depends on the availability of drugs to be administered by them.through our delivery system..  Currently, most of our products require immunoglobulin therapies that rely on blood plasma collection for drugs such as Hizentra® and Cuvitru®.  Any disruption in the supply of these drugs for any reason, including contamination, could significantly adversely affect our business.  The change of any drug indication by the FDA or comparable foreign governmental agencies could also result in decreased demand for our products.  In addition, pharmaceutical companies and other competitors have or are developing alternative therapies for disease states that are deliverable with devices we do not offer or without a medical device.  The COVID-19 pandemic has negatively impacted the collection of plasma, the source of the active ingredient of SCIg medications, which may limit the supply of these drugs.  If there is not an adequate supply of drugs requiring administration by medical devices such as those provided by us or alternative therapies are developed, our sales may suffer and/or our products may become obsolete.

Our compliance with EU MDR regulations by May 2024December 2028 will require significant investment and, if we are not in compliance by that time, we will not be able to sell our products in the EU.

In the European Union (“EU”), we are required to comply with the new Medical Device Regulation (“MDR” or “EU MDR”) effective May 2021, which supersedes the prior Medical Device Directives. Medical devices which have a valid CE certificate to the current Medical Device Directives (issued before May 2021), as do all of our current products, can continue to be sold until May 2024December 2028 or until the CE certificate expires, whichever comes first, providing there are no significant changes as defined in Article 120 of EU MDR. The MDR was published in May 2017 with a 3-year transition period. That transition period was extended to May 2021 due to the COVID-19 pandemic. In early 2023, the transition period was further extended to December 2028 for class IIa products. The CE mark required to sell medical devices in the EU is affixed following conformity assessment and either approval from an appointed independent notified body or through self-certification by the manufacturer. The selected pathway to CE marking is based on product risk classification. CE marking indicates conformity to the applicable essential requirements of the relevant Medical Device Directives and in the future to the general safety and performance requirements for the new MDR. The MDR will change multiple aspects of the existing regulatory framework for CE marking, such as increased clinical evidence requirements and other new requirements, including Unique Device Identification (“UDI”) as well as many other post-market obligations. MDR also significantly modifies and increases the compliance requirements for the industry and will require significant investment by us in the near future to implement.

Our products are also subject to approval and regulation by foreign regulatory and safety agencies. For example, the EU has adopted the EU Medical Device Regulation (the “EU MDR”) and the In Vitro Diagnostic Regulation (the “EU IVDR”), each of which impose stricter requirements for the marketing and sale of medical devices, including in the area of clinical evaluation requirements, quality systems and post-market surveillance. Implementation of the compliance requirements of these regulations requires us to incur significant expenditures and utilize resources. Failure to continue to meet these requirements could adversely impact our business in the EU and other regions that tie their product registrations to the EU requirements.

If we are unable to comply with the MDR by May 2024,December 2028, we will not be able to sell our products in the EU, which will materially impact our net revenues.

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Interruption of our manufacturing operations, including due to transitioning toor our new facility,contract manufacturing operations could adversely affect our future revenuesbusiness.

Command currently provides subassemblies for all of our consumables (needle and operating income.tubing sets), and manufactures, assembles and packages approximately substantially all of our consumables. In the event of any interruption in Command’s operations or supply of goods, the Company may have to seek alternative sources of subassemblies, which may be not be readily available on commercially reasonable terms or at all, and increase its capacity for manufacturing finished goods in Mahwah, NJ, which could be time-consuming and costly.

The FDA and other U. S. and non-U.S. government agencies regulate our manufacturing operations, which includes product assembly, calibration, pre- and post-assembly quality control inspection and testing, and final packagingcontract manufacturing operations for all of our products. Variations in theour or Command’s manufacturing process may result in production failures which could lead to launch delays, product shortage, unanticipated costs, lost revenues and damage to our reputation.  A failure to identify and address manufacturing problems prior to the release of products to our customers may also result in a quality or safety issue that could result in a recall or other inability to sell our products.

Our products are currently manufactured in Nicaragua and Mahwah, NJ, and stored at our corporate headquarters and manufacturing facility. Products are also stored in storage facilities in the local NY area.Mahwah, NJ.  Loss or damage to our manufacturing or contract manufacturing and storage sitessite due to weather, vandalism, terrorism, a natural disaster, issues in our manufacturing process, equipment failure or other factors, could adversely affect our ability to manufacture sufficient quantities of products or otherwise deliver products to meet customer demand or contractual requirements which may result in a loss of revenue and other adverse business consequences, including damage to our relationship with customers. Additionally, because Command manufactures and supplies the Company’s subassemblies and finished goods for needle sets and tubing products in Nicaragua, there could be a delay in providing the products timely due to their climate and international boundaries. Command currently stores our finished goods in their warehouse located in Miami Florida once the products are released from Nicaragua.

We take precautions to safeguard our facility, and storage site, including acquiring insurance, adopting health and safety protocols and utilizing off-site storage of computer data.  Our insurance may not cover our losses in any particular case.  In addition, regardless of the level of insurance coverage, damage to our facilitiesfacility may harm our business, financial condition and operating results.

Our business has beenPublic health crises, such as the COVID-19 pandemic, have had, and could continue to be adversely affected byin the COVID-19 pandemic.future have, a negative effect on our business.

The COVID-19 pandemic has and will continue affecting economies and businesses around the world.  We are closely monitoring the impact of COVID-19 on all aspects of our business, including how it may impact our employees and business operations.  While we did not incur significant manufacturing disruptions during 2021 fromPandemics or disease outbreaks, such as the COVID-19 pandemic, customer purchasing patternshave created and clinical trial activity have been less predictable. The COVID-19 pandemic has also impacted the rate of diagnosis of many conditions duemay continue to fewer infections causing patients to seek diagnosis, reduced access to healthcare professionals,create significant volatility, uncertainty and other factors including conditions treated by SCIg using the FREEDOM infusion system.  We also believe COVID-19 has precipitated limited availability and rising costs of raw materials and labor, which may impact our financial results if current trends continue. We may experience disruptions that could severely impact our results of operations and financial condition.  We are unable to predict the impact that COVID-19 will have on our future operating results and financial condition due to numerous uncertainties.  These uncertainties include the geographic spread of the pandemic, the severity of the virus, the impact of the virus directly on our employees or those of our suppliers, the duration of the outbreak, governmental actions, travel restrictions and social distancing, business closures or business disruptions (including those impacting our supply chain), delays in clinical trials, the effectiveness of actions takeneconomic disruption in the United States and other countries to contain and treat the disease, the availability of plasma and drugs that are administered bymarkets we sell our products into and operate in, primarily the number of new prescriptions for PIDDU.S., Europe, and CIDP, purchasing patterns of customers inAsia-Pacific and may negatively impact business and healthcare activity globally. In response to the COVID-19 pandemic, changesgovernments around the world have imposed measures designed to reduce the transmission of COVID-19 and individuals continue to respond to the fear of contracting COVID-19. In particular, elective procedures and exams were delayed or cancelled, there were significant reductions in physician office visits, and hospitals postponed or canceled capital purchases as well as limited or eliminated services. While elective procedures and exams and capital purchases have increased from initially depressed levels, the reduction in elective procedures, exams and capital purchases has had, and we believe may continue to have, a negative impact on the sales of our operations, or whetherproducts. Additionally, governments and other third-party payors around the United States and additional countries are required toworld facing tightening budgets could move to complete lock-down status, among others.  Our sales representatives are unable to hold in-person meetings with customers and health care providers to discuss our products, which may further impact our sales. As local jurisdictions continue to put restrictions in place, our ability to continue to manufacture our products may also be limited. Such events may result in a periodreduce the reimbursement rates or the scope of business and manufacturing disruption, and in reduced operations, any ofcoverage offered, which could materiallyfurther adversely affect sales of our products.

The extent to which fear of exposure to or actual effects of COVID-19, new variants, disease outbreak, epidemic or a similar widespread health concern impacts our business financial condition and results of operations.  The health of our workforce and our ability to meet staffing needs at our facility cannot be predicted and is vital to our operations.  We will continue to monitor the COVID-19 situation closely and intend to follow health and safety guidelines as they evolve.  Further, the spread of COVID-19,depend on future developments, which has caused a broad impact globally, may materially affect us economically.  While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, it has resulted in significant disruption of global financial markets, which could reduce our ability to access capital, negatively affecting our liquidity.  In addition, the recession resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.  The ultimate long-term impact of COVID-19 isare highly uncertain and cannot be predicted with confidence.confidence, such as the speed and extent of geographic spread of the disease, the duration of the outbreak, travel restrictions, the efficacy of vaccination and treatment; impact on the U.S. and international healthcare systems, the U.S. economy and worldwide economy; the timing, scope and effectiveness of U.S. and international governmental response; and the impact on the health, well-being and productivity of our employees.

We may be unable to compete successfully in our highly competitive industry.

We operate in a single market – ambulatory infusion – and are dependent upon our success in that market. We face competition in our market from a wide range of international and domestic companies, including those that deliver electronic volumetric pumps, elastomeric infuser pumps, and other mechanical devices.devices, novel drug delivery devices and methodologies, and devices and formulation technologies that allow drugs to be delivered in volumes smaller than the FREEDOM System is designed to deliver.  These include large medical device companies with multiple product lines, some of which may have greater financial and marketing resources than we do.  We also face competition from companies that are even more specialized than ours with respect to particular markets or product lines.  Some of those companies have greater financial and sales and marketing resources than we do or offer products at a lower price point than ours.  In addition, former employees may develop products that are competitive with ours or capitalize on customer relationships developed while employed with us, subject to their continuing obligations under confidentiality agreements and

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other restrictive covenants that may survive their employment.  We face competition on the basis of product features, clinical or economic outcomes, product quality, availability, price, services, technological innovation and other factors.  In addition, we face changing customer preferences and requirements, changes in the ways health care services are delivered, including the transition of high-acuity care to lower-acuity, and non-acute care settings.

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Competition may increase further as additional companies begin to enter our market or modify their existing products to compete directly with ours.  If we are forced to reduce our prices due to increased competition, our business could suffer.

The medical technology industry has also experienced a significant amount of consolidation, resulting in larger companies with greater access to markets.  HealthPharmaceutical manufacturers, health care systems, other health care companies and even retail pharmacies are also consolidating, resulting in greater purchasing power for these companies.  As a result, competition among medical device suppliers to provide goods and services has increased.  Group purchasing organizations and integrated health delivery networks have also served to concentrate purchasing decisions for some customers, which has led to downward pricing pressure for medical device suppliers.  Further consolidation in the industry could intensify competition among medical device suppliers and exert additional pressure on the prices of our products.

Consolidation in the medical industry could have a negative impact with payor and provider relationships and distributor relationships, as we could lose market share as consolidation occurs.

Technological developments by others may disrupt our business and negatively impact our revenues.

The medical device industry is subject to rapid technological change and discovery and frequent product introductions.  The development of new or improved products, processes or technologies by other companies that provide better features, pricing or clinical outcomes or economic value may render our products or proposed products obsolete or less competitive.  If our competitors respond more quickly to new or emerging technologies and changes in customer requirements or we do not introduce new versions or upgrades to our product portfolio in response to those requirements, our products may not be marketable.  If competitors develop more effective or affordable products or achieve earlier patent protection or product commercialization for new products than we do, our operations will likely be adversely affected.

We are subject to costly and complex laws and governmental regulations and any adverse regulatory action may materially adversely affect our financial condition and business operations.

Our medical devices and technologies, as well as our business activities, are subject to a complex set of regulations and rigorous enforcement, principally by the FDA, and numerous other federal, state, and non-U.S. governmental authorities.authorities and equivalent regulatory bodies of other countries.  To varying degrees, each of these agencies requires us to comply with laws and regulations governing the design, development, and manufacturing; testing, labeling, content and language of instructions for use and storage; clinical trials; product safety; establishment registration and device listing; marketing, promotion, and distribution of our products; premarket clearance and approval; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; post-market approval studies; and product import and export.

In the U.S., our device products are subject to clearance or approval by FDA under the FFDCA.  Before we can market a new medical device, or a new use of, new claim for, or significant modification to, an existing product, we must first receive either 510(k) clearance or approval of a PMA application from the FDA, unless an exemption applies.  Under the 510(k) process, the manufacturer must submit to the FDA a premarket notification, demonstrating that the device is “substantially equivalent,” as defined in the statute, to a legally marketed predicate device.  To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.  If the manufacturer is unable to demonstrate substantial equivalence to FDA’s satisfaction, or if there is no available predicate device, then the manufacturer may be required to seek approval through the PMA application process, which is generally more costly and time consuming than the 510(k) process.  Through the PMA application process, the applicant must submit data and information demonstrating reasonable assurance of the safety and effectiveness of the device for its intended use.  Accordingly, a PMA application typically includes, but is not limited to, extensive technical information regarding device design and development, pre-clinical and clinical trial data, manufacturing information, labeling and financial disclosure information for the clinical investigators in device studies. In the future our device products may be approved as part of a drug submission under a combination product regulatory pathway. Under the combination product approval process, our device would typically be submitted as part of a drug application, typically a BLA or NDA in the United States. The proof required for approval as a combination product is similar to that required for a 510(k), but may differ in material ways. In addition, the regulatory approval is held by the pharmaceutical manufacturer, not KORU.

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We cannot guarantee that we will be able to obtain or maintain FDA 510(k) clearance or premarket approval for our new products or enhancements or modifications to existing products (including the use of our FREEDOM System with therapies not covered by the existing FDA clearance), and the failure to maintain approvals or clearances, or obtain approval or clearance could have a material adverse effect on our business, results of operations, financial condition and cash flows. Even if we are able to obtain approval or clearance, it may:

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Both before and after a product is commercially released, we have ongoing responsibilities under the FDA and other applicable non-U.S. government agency laws and regulations.  The FDA and other worldwide regulatory agencies actively monitor compliance with local laws and regulations through review and inspection of design and manufacturing practices, recordkeeping, reporting of adverse events, labeling and promotional practices.  The results of these inspections can include inspectional observations on the FDA’s Form 483, warning letters, or other forms of enforcement.  If the FDA or any state or foreign regulatory authorities were to conclude that we are not in compliance with any applicable laws or regulations, or that any of our medical products are ineffective or pose an unreasonable health risk, they could deem our products adulterated or misbranded, and take enforcement action against us.  FDA and state and foreign regulatory authorities have broad enforcement powers.  Possible enforcement actions include, but are not limited to:  temporarily or permanently suspending the sale and/or distribution of such medical products; detaining or seizing all adulterated or misbranded medical products; ordering recall, repair, replacement, or refund of such products; refusing to grant pending pre-market approval or 510(k) clearance applications; and/or requiring us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health.  In addition, the FDA prohibits device manufacturers from promoting their products for uses and indications other than those set forth in the approved product labeling, and failure to comply with this prohibition could subject us to significant civil or criminal exposure, administrative obligations and costs, and/or other potential penalties from, and/or agreements with, the federal government.  The FDA and other non-U.S. government agencies may also assess civil or criminal penalties against us, our officers or employees and impose operating restrictions on a company-wide basis.  The FDA may also recommend prosecution to the U.S. Department of Justice.  Any adverse regulatory action, depending on its magnitude, may restrict us from effectively marketing and selling our products and limit our ability to obtain future pre-market clearances or approvals, and could result in a substantial modification to our business practices and operations.

Regulations regarding the development, manufacture and sale of medical devices are evolving and subject to future change and have tended to become more stringent over time.  Regulatory changes could result in restrictions on our ability to continue or expand our operations, higher than anticipated costs, or lower than anticipated sales. We cannot predict what impact, if any, those changes might have on our business; however, failure to comply with applicable regulatory requirements could have a material adverse effect on our business, financial condition, and results of operations.  Later discovery of previously unknown problems with a product or manufacturer could result in fines, delays or suspensions of regulatory clearances or approvals, seizures or recalls of products, physician advisories or other field actions, operating restrictions and/or criminal prosecution.  We may also initiate field actions as a result of a failure to strictly comply with our internal quality policies.  The failure to receive product approval clearance on a timely basis, suspensions of regulatory clearances, seizures or recalls of products, physician advisories or other field actions, or the withdrawal of product approval by the FDA or by comparable agencies in foreign countries could have a material adverse effect on our business, financial condition or results of operations.

Governmental regulations outside the U.S. have also, and may continue to, become increasingly stringent and common.  In the EU, for example, a new MDR was published in 2017 which, when it enters into full force in May 2021, will include significant additional premarket and post-market requirements.  Penalties for regulatory non-compliance could be severe, including fines and revocation or suspension of a company’s EU device approval, ability to distribute products and criminal sanctions.  Future foreign governmental laws and regulations may have a material adverse effect on us.

In addition, exported devices are subject to the regulatory requirements of each country to which the device is exported.  Some countries do not have medical device regulations, but in most foreign countries, medical devices are regulated.  Frequently, regulatory approval may first be obtained in a foreign country prior to application in the U.S. due to differing regulatory requirements; however, other countries, such as China for example, require approval in the country of origin or legal manufacturer first.  Most countries outside of the U.S. require that product approvals be renewed or recertified on a regular basis, generally every four to five years.  The renewal or recertification process requires that we evaluate any device changes and any new regulations or standards relevant to the device and conduct appropriate testing to document continued compliance.  Where renewal or recertification applications are required, they may need to be renewed and/or approved in order to continue selling our products in those countries.  There can be no assurance that we will receive the required approvals for new products or modifications to existing products on a timely basis or that any approval will not be subsequently withdrawn or conditioned upon extensive post market study requirements.

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Our global regulatory environment is becoming increasingly stringent and unpredictable, which could increase the time, cost and complexity of obtaining regulatory approvals for our products, as well as the clinical and regulatory costs of supporting those approvals.  Several countries that did not have regulatory requirements for medical devices have established such requirements in recent years and other countries have expanded on existing regulations.  Certain regulators are exhibiting less flexibility and are requiring local preclinical and clinical data in addition to global data.  While harmonization of global regulations has been pursued, requirements continue to differ significantly among countries.  In the United Kingdom, for example, the Medicines and Healthcare products Regulatory Agency (MHRA) is responsible for regulating the UK medical device market.  With recent changes in the United Kingdom’s membership with the European Union, the MHRA has and will continue to impose new regulatory obligations becoming effective in 2021 through 2023, for medical device manufacturers.  We expect this global regulatory environment will continue to evolve, which could impact our ability to obtain future approvals for our products or could increase the cost and time to obtain such approvals in the future.

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OurIf our EU device approval is suspended, it could have a material adverse effect on our business and financial results may be materially adversely affected if our facility is not ready for manufacturing when the lease on our current facility expires in December 2022.results.

The lease on our current corporate headquarters and manufacturing facility expires in December 2022. We have entered into a leaseCompany’s products are currently certified by its notified body, BSI, for a new facility for our operations, and we expect to complete our move into that facility in June 2022. If we are unable to establish continuous manufacturing operations in our new facility before our existing lease expires, our revenues will suffer. We may not be able to establish such operations before our existing lease expires due to a number of factors, including delays in construction caused by raw materials, labor shortages and unforeseen complications; delays in receiving necessary regulatory approvals from U.S. and international authorities; unexpected manufacturing quality issues; inability to hire or retain necessary personnel; and other unforeseen circumstances. We have begun building our product inventory and expect to continue to do so through the second quarter of 2022, in order to ensure we can continue to service our customerssale in the event we are unableEU.  In March 2024, the Company received an assessment report from BSI stating that, following BSI’s review of technical documentation submitted by the Company in connection with a prior audit nonconformance, a recommendation for continued certification cannot be made.  The Company has filed an appeal to maintain continuous manufacturing operations. Additionally, we have established Command as an alternate source of manufacturing as needed for continuity.

Proposed changes tothis determination.  If the FDA 510(k) clearance pathway and post-market safety monitoring process could adversely affect our ability to offer our new and existing products.

As discussed above, the FDA’s and other regulatory authorities’ policies may change and additional government regulationsCompany’s appeal is denied, then its EU certification may be enacted thatsuspended with respect to some or all of the Company’s products.  Any such suspension would affect the Company’s EU revenues, which effect could prevent, limit or delay regulatory approval of our product candidates.  In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our future products under development.

In fact, the FDA has announced its intention to pursue comprehensive reforms to its current 510(k) clearance pathway, which is used for clearance of low- to moderate-risk devices that are substantially equivalent to a device alreadybe material depending on the market, and to its post-market safety monitoring process.  In May 2019,extent of the FDA solicited public feedback on its plans to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates, including whether the FDA should publish a list of devices that have been cleared on the basis of demonstrated substantial equivalence to predicate devices that are more than 10 years old.  The FDA sought input on whether it should consider certain actions, such as whether to sunset certain older devices that were used as predicates under the 510(k)-clearance pathway.  These proposals have not yet been finalized or adopted, and the FDA may work with Congress to implement such proposals through legislation.  Accordingly, it is unclear the extent to which any proposals, if adopted, could impose additional regulatory requirements on us that could delay our ability to obtain new 510(k) clearances, increase the costs of compliance, or restrict our ability to maintain our current clearances, or otherwise create competition that may negatively affect our business.

In September 2019, the FDA finalized a guidance to describe an optional “safety and performance based” premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence under the 510(k) clearance pathway, by demonstrating that such device meets objective safety and performance criteria established by the FDA, obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process.  The FDA intends to maintain a list of device types appropriate for the “safety and performance-based pathway” and develop product-specific guidance documents that identify the performance criteria for each such device type, as well as the testing methods recommended in the guidance, where feasible.  The FDA may establish performance criteria for classes of devices for which we or our competitors seek or currently have received clearance.  It is unclear the extent to which such performance standards, if established, could impact our ability to obtain new 510(k) clearances or otherwise create competition that may negatively affect our business.

These reforms could delay or prevent us from obtaining or maintaining 510(k) clearances or other premarket authorizations for our existing or new devices.  Compliance with the new rules could require us to undertake significant additional costs prior to and following commercialization of our products, which may reduce the profitability of those products.

In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products.  Any new statutes, regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of any future products or make it more difficult to obtain clearance or approval for, manufacture, market or distribute our products.  We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require: additional testing prior to obtaining clearance or approval; changes to manufacturing methods; recall, replacement or discontinuance of our products; or additional record keeping.

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suspension. 

Health care policy changes and industry cost-containment measures could result in downward pricing pressure for our products and limit our sales.

Most of our customers, and those to whom our customers supply medical devices, rely on third-party payers, including government programs and private health insurance plans, to reimburse some or all the cost of the medical devices we manufacture.  The continuing efforts of governmental authorities, insurance companies and other payers of health care costs to contain or reduce these costs and, more generally, to reform the health care system, could limit the prices we are able to charge for our products or the amounts of reimbursement available for our products or the drugs that they administer, which would put pressure on us to reduce our prices for our products and/or limit our sales.  The adoption of some or all of these proposals could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Issues with product quality could have an adverse effect upon our business, subject us to regulatory actions, cause a loss of customer confidence in us or our products, among other negative consequences.

Quality management plays an essential role in determining and meeting customer requirements, preventing defects, improving our products and services, and assuring the safety and efficacy of our products.  Our future success depends on our ability to maintain and continuously improve our quality management program.  While we have a quality system that covers the lifecycle of our products, quality and safety issues may occur with respect to any of our products.  A quality or safety issue may result in adverse inspection reports, voluntary or official action indicated, warning letters, import bans, product recalls (either voluntary or required by the FDA or

similar governmental authorities in other countries) or seizures, monetary sanctions, injunctions to halt manufacture and distribution of products, civil or criminal sanctions, costly litigation, refusal of a government to grant approvals and licenses, restrictions on operations or withdrawal of existing approvals and licenses.  An inability to address a quality or safety issue in an effective and timely manner may also cause negative publicity, a loss of customer confidence in us or our current or future products, which may result in the loss of sales and difficulty in successfully launching new products.

Defects or quality issues associated with our products could adversely affect the results of our operations.

The design, manufacture and marketing of medical devices involve certain inherent risks.  Manufacturing or design defects, component failures, unapproved or improper use of our products, or inadequate disclosure of risks or other information relating to the use of our products can lead to injury or other serious adverse events.  We are subject to the FDA’s medical device reporting regulations and similar foreign regulations, which require us to report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, it could cause or contribute to a death or serious injury.  The timing of our obligation to report is triggered by the date we become aware of the adverse event as well as the nature of the event.  If we fail to comply with our reporting obligations, the FDA could take action, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device clearances or approvals, seizure of our products, or delay in clearance or approval of future products.

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These adverse events could also lead to safety alerts relating to our products or recalls (either voluntary or as required by the FDA or similar governmental authorities in other countries), and could result, in certain cases, in the removal of a product from the market.  A recall could result in significant costs and lost sales and customers, enforcement actions and/or investigations by state and federal governments or other enforcement bodies, as well as negative publicity and damage to our reputation that could reduce future demand for our products.  Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.

Personal injuries relating to the use of our products can also result in significant product liability claims being brought against us.  A product liability claim, regardless of its merit or outcome, could not only result in significant legal defense costs, but also have a material adverse effect on our business and reputation and ability to attract and retain customers for our products.  In some circumstances, adverse events could also cause delays in regulatory approval of new products or the imposition of post-market approval requirements.

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We are subject to lawsuits.

We have been and may be party to lawsuits, settlement discussions, mediations, arbitrations and other disputes, including patent and product liability claims, whether brought by companies, individuals or governmental authorities.  These matters may result in a loss of patent protection, reduced revenue, incurrence of significant liabilities and diversion of our management’s time, attention and resources. Our insurance coverage may not provide adequate protection against actual losses.  In addition, we are subject to the risk that one or more of our insurers may become insolvent and become unable to pay claims that may be made in the future.  Even if we maintain adequate insurance, claims could have a material adverse effect on our financial condition, liquidity and results of operations and on our ability to obtain suitable, adequate or cost-effective insurance in the future.  Litigation and other disputes, including any adverse outcomes, may have an adverse impact on our business, operations or financial condition.  Even claims without merit could subject us to adverse publicity and require us to incur significant legal fees.

If we are unable to protect our patents or other proprietary rights, or if we infringe the patents or other proprietary rights of others, our competitiveness and business prospects may be materially damaged.

Patent and other proprietary rights are essential to our business.  We own patents, trade secrets, trademarks and/or other intellectual property rights related to many of our products.  Our success depends to a significant degree on our ability to obtain and enforce patents, both in the U.S. and in other countries.  We can lose the protection afforded by these intellectual property assets through patent expirations, legal challenges or governmental action.  Additionally, our intellectual property rights may be challenged or infringed upon by third parties, particularly in countries where property rights are not highly developed or protected, or we may be unable to enter into license agreements with third-party owners of intellectual property on reasonable terms.  Unauthorized use of our intellectual property rights or inability to preserve existing intellectual property rights could adversely impact our competitive position and results of operations.

The patent position of a medical device company is often uncertain and involves complex legal and factual questions.  Significant litigation concerning patents and products is pervasive in our industry.  Patent claims include challenges to the coverage and validity of our patents on products or processes as well as allegations that our products infringe patents held by competitors or other third parties.  A loss in any of these types of cases could result in a loss of patent protection or the ability to market products, which could lead to a significant loss of sales, or otherwise materially affect future results of operations.  We also rely on trademarks, trade secrets and know-how to develop, maintain and strengthen our competitive positions.  Third parties may know, discover or independently develop equivalent proprietary information or techniques, or they may gain access to our trade secrets or disclose our trade secrets to the public.

Although our employees, consultants, parties to collaboration agreements and other business partners are generally subject to confidentiality or similar agreements to protect our confidential and proprietary information, these agreements may be breached, and we may not have adequate remedies in the event of a breach of confidence.  To the extent that our employees, consultants, parties to collaboration agreements and other business partners use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

Furthermore, our intellectual property, other proprietary technology and other sensitive company data is potentially vulnerable to loss, damage or misappropriation from system malfunction, computer viruses, unauthorized access to our data or misappropriation or misuse thereof by those with permitted access and other events.  While we have invested to protect our intellectual property, confidential information and other data, and continue to work diligently in this area, there can be no assurance that our precautionary measures will prevent breakdowns, breaches, cyber incidents or other events. Such events could have a material adverse effect on our reputation, business, financial condition or results of operations.

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Misappropriation or other loss of our intellectual property from any of the foregoing would have an adverse effect on our competitive position and may cause us to incur substantial litigation costs.

We need to attract and retain key employees to be competitive.

Our ability to compete effectively depends upon our ability to attract and retain executives and other key employees, including people in technical, marketing, sales, research and development, quality assurance and regulatory compliance positions.  We depend on key management personnel and attracting and retaining other qualified personnel, and our business could be harmed if we lose key management personnel or cannot attract and retain other qualified personnel.  We do not maintain any “key man” insurance policies on the lives of any of our employees.

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In addition, if we expect to grow our operations, it will be necessary for us to attract and retain additional qualified personnel.  In particular, we will need to find experienced key employees to lead our research and development and operations functions.  The failure to attract, integrate, motivate, and retain additional skilled and qualified personnel could have a material adverse effect on our business.  We compete for such personnel against numerous companies, including larger, more established companies with significantly greater financial resources than we possess.  Our ability to recruit such talent will depend on a number of factors, including compensation and benefits, work location and work environment.  There can be no assurance that we will be successful in attracting or retaining such personnel and the failure to do so could have a material adverse effect on our business, financial condition and results of operations.

We sell a majority of our products through only a few distributors on whom we depend, and our financial results depend on their purchasing patterns.

Most of our customers prefer to purchase our products through distributors, rather than directly from us, because of “one-stop shopping” convenience and their ability to ship directly to patients.  We sell most of our products through a small number of distributors, twothree in the U.S. and two outside the U.S.  As of December 31, 2021,2023, these fourfive distributors comprised approximately 62%74% of our net revenues with one U.S. distributor contributing 41%.  Purchasing patterns by these distributors cannot always be predicted and fluctuate from quarter to quarter and year to year based on, among other things, their expectations of customer demand.  Any decline in business with the distributors outside the U.S. could have an adverse impact on our business.  If we were unable to sell through the distributors outside the U.S., we would have to find other distributors or broaden our customer base and expand direct relationships with customers.  Other distributors may not be available or may not agree to arrangements that are commercially reasonable.  In the U.S. we could transition to direct customer purchase; however, customers may not want to purchase directly from us and may decide to purchase competitors’ products through their distributors.  Moreover, a transition from distributors to direct customer purchase would be time consuming and costly.

We and the biopharmaceutical companies with whom we do novel therapies business (“our customersbiopharma customers”) are subject to extensive regulation by governments around the world, and if these regulations are not complied with, existing and future operations may be curtailed, and we could be subject to liability.

Our devices and our biopharma customers’ drug-device combination products, and/or compatible products that may utilize our device are subject to extensive regulation by governmental authorities in the United States, Europe and other countries, including the FDA.  Not only do these regulations present challenges during the regulatory approval process, but after our devices or our biopharma customers’ drug-device combination products, and/or compatible products that may utilize our device are approved for new indications and placed in the market, numerous regulatory requirements will apply.  These include, but are not limited to QSR, labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or “off label” uses, medical device reporting regulations and post-market surveillance regulations, and laws and regulations that govern the development, testing, manufacturing, advertising, marketing and distribution of medical devices, including our devices and our biopharma customers’ drug-device combination products, and/or compatible products that may utilize our device.  The FDA has broad post-market and regulatory enforcement powers.

In the European Union (“EU”), we are required to comply with the new Medical Device Regulation (“MDR” or “EU MDR”) effective May 2021, which will supersedes the prior Medical Device Directives.  MedicalClass IIa medical devices which have a valid CE certificate to the current Medical Device Directives (issued before May 2021) can continue to be sold until May 2024December 2028 or until the CE certificate expires, whichever comes first, providing there are no significant changes as defined in Article 120 of EU MDR.  The MDR was published in May 2017 with a 3-year transition period.  That transition period was extended to May 2021 due to the COVID-19 pandemic.  In 2023, the transition period was extended further to December 2028 for Class IIa products. The CE mark required to sell medical devices in the EU is affixed following conformity assessment and either approval from an appointed independent notified body or through self-certification by the manufacturer.  The selected pathway to CE marking is based on product risk classification.  CE marking indicates conformity to the applicable essential requirements of the relevant Medical Device Directives and in the future to the general safety and performance requirements for the new MDR.  The MDR will change multiple aspects of the existing regulatory framework for CE marking, such as increased clinical evidence requirements and other new requirements, including Unique Device Identification (“UDI”) as well as many other post-market obligations.  MDR also significantly modifies and increases the compliance requirements for the industry and will require significant investment in the near future to implement.

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If our devices are commercialized as part of a drug-delivery combination product we, as the manufacturer of the device component of that combination product, we are subject to unannounced and preapproval inspections by the FDA of our manufacturing facility to determine our compliance with QSR and cGMP.

Failure to comply with applicable regulatory requirements can result in an enforcement action by the FDA or other regulatory authority, which may include any or all of the following sanctions: fines, injunctions, consent decrees and civil penalties, recall or seizure of our products or our biopharma customers’ drug-device combination products, operating restrictions, partial suspensions or total shutdown of production, refusing our biopharma customers’ requests for regulatory approvals of their drug-device combination products or new intended uses, as applicable, refusing our requests for regulatory approval of our devices, withdrawing our biopharma customers’ or our regulatory approvals that may be granted and criminal prosecution.

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The therapeutic efficacy of certain of our biopharma customers’ drug-device combination products, and/or compatible products that may utilize our device are either unproven in humans or has only been proven in limited circumstances, and we may not be able to successfully develop and sell our products in combination with our biopharma customers’ drug-or-drug-device combination products.

While some of our biopharma customers use our products with established, approved drugs, in certain instances, the benefits of those drugs as injectable therapies are either unproven or have only been proven in limited circumstances.  Our ability to generate revenue from our products will depend heavily on the successful development, commercialization and sales of our biopharma customers’ drug products or drug-device combination products, which is subject to many potential risks.  For example, data developed in clinical trials or following the commercialization of our biopharma customers’ drugs or drug-device combination products may show that such therapies do not prove to be effective treatments for the targets they are being designed to act against (or as effective as other treatments available). In clinical trials or following commercialization, it may be shown that those drugs interact with human biological systems in unforeseen, ineffective or harmful ways.  If those drugs are associated with undesirable side effects or have characteristics that are unexpected, the pharmaceutical companies that make those drugs may need to abandon clinical development or discontinue commercial sales or limit clinical development or sales to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.  As a result of these and other risks described herein that are inherent in the development and sale of therapeutic agents, pharmaceutical companies may never successfully develop or successfully commercialize their drugs, or the commercialization of their drugs may be abandoned or severely limited, which may limit our profitability with respect to biopharma customers with drugs or drug-device combination products including those drugs and our device, and we may not be successful in achieving commercial scale production and sales of our injectable drug delivery systems in combination with certain drugs.

Certain of the injectable therapies being targeted for use with our products are not approved but are in various phases of clinical development. These injectable therapies may be independently terminated by their makers prior to submission of a regulatory filing or even after regulatory approval and pharmaceutical developers may cease their efforts with us, resulting in the cessation of any revenue associated with that contract or program.

We work with pharmaceutical and biotechnology companies who are targeting the use of our products with a variety of injectable therapies.  When we collaborate with pharmaceutical developers, they may engage us in a variety of ways, including in vitro feasibility testing, product customization and validation (“development”), non-interventional user testing of our devices, animal or human clinical research using our devices, regulatory submissions, manufacturing development, and commercialization. Certain of those injectable therapies are not FDA approved and are in various phases of clinical development.  The clinical development of these pipeline therapies can be terminated by their developers at any stage.  Our biopharma customers may choose to continue their drug program without use of our devices. Use in one stage of work does not guarantee use in a future development stage or in commercialization. Furthermore, these pharmaceutical companies could obtain regulatory approval for their injectable therapies and decide for business reasons not to require or encourage utilization of our device.  Prior investments we have made in manufacturing capacity or research and development will then not result in the generation of revenue that would have previously been anticipated.

Our commercial success depends upon the attainment of significant market acceptance of drug product candidates to be included in our biopharma customers’ drug-device combination and/or compatible products that may utilize our device, if approved, among physicians, patients, healthcare payers or the medical community.

Even if pharmaceuticalbiopharmaceutical companies obtain regulatory approval for their drug product candidates, their product candidates may not gain sufficient levels of market acceptance among physicians, healthcare payers, patients or the medical community to make them commercially feasible. Market acceptance of our biopharma customers’ product candidates, if they receive approval, depends on a number of factors, including the:

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If pharmaceutical companies’ candidates are approved but fail to achieve market acceptance among physicians, patients or healthcare payers, we may not be able to generate anticipated revenue.  This may limit our ability to generate anticipated revenue from our prior investments.  Moreover, even if we achieve commercial scale production and sales of our injectable drug delivery systems in combination with certain injectable therapies, the makers of such therapies may face indirect competition from companies who develop and market other brand name, biosimilar or generic injectable therapies as well as alternative treatments and delivery methods that compete with our biopharma customers’ drug-device combination products, and/or compatible products that may utilize our device, which may have a material adverse effect on our results of operations, our financial condition and/or cash flows.

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Most brand name injectable therapies will face future competition from generic or biosimilar therapies, which could significantly reduce their commercial viability.

Brand name injectable therapies will usually become exposed to competition from generic or biosimilar rivals at some time after their regulatory approval and commercial launch.  The average selling price and market share of brand name injectable therapies can be significantly diminished following the introduction of generic or biosimilar competition.  These factors may result in our biopharma customers using our products with their brand name injectable therapies seeking to withdraw such injectable therapy from the market or change market tactics in a way that makes the use of our products cost prohibitive.  This may result in reduction of revenues due to lower demand, termination of supply contracts, and other factors.

AllMost of our components and raw materials, including all of our consumables subassemblies, are sourced from single suppliers. If we are unable to obtain sufficient components or raw materials on a timely basis or for a cost-effective price, or if we experience other supply difficulties, our business and results of operations may be adversely affected.

Our ability to meet customer demand depends, in part, on our ability to obtain timely and adequate delivery of raw materials and components for our products.  AllA majority of the materials and components that go into the manufacturing of our products, including all of our consumables subassemblies. are single-sourced from third-party suppliers.

The price and supply of materials and components for our products may be impacted or disrupted for reasons beyond our control. A significant price increase from a single-source supplier could have a material impact on our financial results. While we work with suppliers to ensure continuity of supply, no assurance can be given that these efforts will be successful.  Although we do carry strategic inventory and maintain insurance to help mitigate the potential risk related to any supply disruption, there can be no assurance that such measures will be sufficient or effective.  The termination, reduction or interruption in supply of raw materials and components and an inability to quickly develop acceptable alternative sources for such supply, could adversely impact our ability to manufacture and sell our products in a timely or cost-effective manner.

We do not have long-term agreements in place with any of our suppliers, with the exception of a long-termfive- year agreement with our needle set subassembly supplierCommand which we entered in 2020. Due to regulatory requirements relating to the qualification of suppliers, we are not likely to be able to establish additional or replacement sources on a timely basis or without excessive cost.  We are in the process of establishing alternative sources of supply for our raw materials and components, but there can be no assurance we will be able to do so.

Additionally, Command manufactures and supplies the Company’s subassemblies, needle sets and tubing products in Nicaragua. There could be a delay in providing the products timely due to their climate and international boundaries.

Additionally, volatility in our cost of energy, raw materials, components, subassemblies, transportation/freight, and manufacturing and distribution could adversely affect our results of operations.  Climate change (including laws or regulations passed in response to it) could increase our costs, in particular our costs of supply, energy and transportation/freight.  Material or sustained increases in the price of oil and natural gas could have an adverse impact on the cost of many of the plastic materials we use to make and package our products, as well as our transportation/freight costs.  These outcomes may in turn result in customers transitioning to available competitive products, loss of market share, negative publicity, reputational damage, loss of customer confidence or other negative consequences (including a decline in stock price).

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Our failure to comply with laws and regulations relating to reimbursement of health care products may subject us to penalties and adversely impact our reputation, business, results of operations, financial condition and cash flows.

Our devices are purchased principally by specialty pharmacies and ambulatory service providers or hospitals that typically bill various third-party payers, such as governmental programs (e.g., Medicare, Medicaid and comparable non-U.S. programs), private insurance plans and managed care plans, for the healthcare services provided to their patients.  The ability of those customers to obtain appropriate reimbursement from third-party payers for our products and the drugs they administer is critical because it affects which products customers purchase and the prices they are willing to pay.  As a result, our devices are subject to regulation regarding quality and cost by U.S. governmental agencies, including the Centers for Medicare & Medicaid Services (“CMS”), as well as comparable state and non-U.S. agencies responsible for reimbursement and regulation of health care goods and services, including laws and regulations related to kickbacks, false claims, self-referrals and health care fraud.  Many states have similar laws that apply to reimbursement by state Medicaid and other funded programs, and in some cases to all payers.  In certain circumstances, insurance companies can attempt to bring a private cause of action against a manufacturer for causing a false claim to be filed under the Federal Racketeer Influenced and Corrupt Organizations Act. In addition, as a manufacturer of FDA-approved devices reimbursable by federal healthcare programs, we are subject to the Physician Payments Sunshine Act, which requires us to annually report certain payments and other transfers of value we make to U.S.-licensed physicians or U.S. teaching hospitals.  Any failure to comply with these laws

and regulations could subject us or our officers and employees to criminal and civil financial penalties.  Similar reporting requirements applicable to medical device manufacturers have also been implemented by some states. Failure to comply with these state requirements could result in civil monetary penalties being assessed against us.

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These laws and regulations, among other things, constrain our business, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales programs, we may have with hospitals, physicians or other potential purchasers of our products. Due to the breadth of these laws, the narrowness of statutory exceptions and regulatory safe harbors available, and the range of interpretations to which they are subject, it is possible that some of our current or future practices might be challenged under one or more of these laws.

To enforce compliance with the healthcare regulatory laws, certain enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business. Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.  Even an unsuccessful challenge or investigation into our practices could cause adverse publicity and be costly to respond to.  If our operations are found to be in violation of any of the healthcare laws or regulations described above or any other healthcare regulations that apply to us, we may be subject to penalties, including administrative, civil and criminal penalties, damages, fines, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputational harm, disgorgement and the curtailment or restructuring of our operations.  In addition, we are subject to the U.S. Foreign Corrupt Practices Act and similar anti-corruption laws outside the U.S. Actual or alleged violation of these laws by our employees, consultants, sales agents or distributors could subject us to investigations by the U.S. or foreign governments, significant criminal or civil sanctions and other liabilities, and damage our reputation.

We may need additional funding in the future, and if we are unable to raise capital when needed, we may be forced to delay, reduce or eliminate our product development, commercial efforts, or sales efforts.

Producing and marketing our developed products is costly.  Although we believe we currently have adequate capital to fulfill our near-term funding needs, we may need to raise additional capital in the future in order to execute our business plan and help us fund the development and commercialization of new products.  We raised approximately $26.6 million from the equity offering in 2020.

We may finance future cash needs through public or private equity offerings and may also use debt financings or strategic collaboration and licensing arrangements.  We may seek to access the public or private equity markets whenever conditions are favorable, even if we do not have an immediate need for additional capital.  To the extent that we raise additional funds by issuing equity securities, our shareholders may experience additional dilution; any debt financing, if available, may involve restrictive covenants and could result in high interest expense.  If we raise additional funds through collaboration and licensing arrangements, it may require us to relinquish certain enumerated rights to our product candidates, processes, technologies, or development projects, or to enter into licenses on terms that are not favorable to us.  We cannot be certain that additional funding will be available on acceptable terms, or at all.  If adequate funds are not available from the foregoing sources, we may consider additional strategic financing options, or we may be required to delay, reduce the scope of, or eliminate our research or development and/or some of our commercialization efforts.

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We are required to comply with certain financial and operating covenants under our credit facility. Failure to comply with these covenants would prevent us from drawing on our facility and, once drawn, could cause amounts borrowed to become immediately due and payable.

If we want to draw on our credit facility, we must comply with specified financial and operating covenants under our credit facility and make payments, limiting our ability to operate our business as we otherwise might. Our failure to comply with any of these covenants or to meet any debt payment obligations could result in an event of default which, if not cured or waived, would result in any amounts outstanding, including any accrued interest and/or unpaid fees, becoming immediately due and payable. We might not have sufficient working capital or liquidity to satisfy any repayment obligations in the event of an acceleration of those obligations. In addition, if we are not in compliance with the financial and operating covenants under the credit facility at the time we wish to borrow funds, we will be unable to borrow funds. The financial and operating covenants under the credit facility may limit our ability to borrow funds or capital, including for general corporate purposes and strategic acquisitions.

We may experience difficulties resulting from our relatively new and evolving management structure and executive team.

We have made a number of changes to our management structure throughout the organization since July 2018in recent years and have filled a number of these positions while we are actively recruiting to fill others.  Although, we believe the persons who currently and will serve in these positions are and will be qualified to do so, they may take time to integrate into the organization and with each other, if at all.  Many of these persons have or will have had little to no experience with our company prior to joining us, which may result in delays in our ability to implement our business plans.  If we are unable to integrate, motivate and retain the services of our new executives and other managers, or if integration takes longer than we expect, it may have an adverse effect on our business and financial condition.

Changes in tax or labor laws or exposure to additional income tax liabilities could increase our costs and reduce our margins.

Changes to the tax and labor laws in the U.S. or other countries in which we operate could have an adverse effect on our operating results.  Certain changes in tax rates, deductibility of interest, deductibility of executive compensation expense, expensing of capital expenditures, the ability to use certain tax credits, taxation on earnings from international business operations, and the system of taxation (from worldwide to territorial) could adversely affect our financial condition and results of operations.  Taxing authorities may audit us from time to time and disagree with certain positions we have taken in respect of our tax liabilities.  We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision.  However, we may not accurately predict the outcome of these audits, and as a result the actual outcome of these audits may have an adverse impact on our financial results.

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Prior to the U.S. presidential election, President Biden proposed an increase in the U.S. corporate income tax rate from 21% to 28%, the creation of a 10% penalty on certain imports and a 15% minimum tax on worldwide book income.

Our manufacturing operations depend on low-cost labor.  Recent increases in U.S. minimum wage requirements, as well as those imposed by the state of New York and New Jersey will increase our costs for employees to support those operations, reduce our margins and negatively impact our profit.

A downturn in global economic conditions could adversely affect our operations.

Deterioration in the global economic environment, particularly in countries with government-sponsored healthcare systems, may cause decreased demand for our products and increased competition, which could result in lower sales volume and downward pressure on the prices for our products, longer sales cycles, and slower adoption of new technologies.  A weakening of economic conditions in the U.S. and/or abroad may also adversely affect our suppliers, which could result in interruptions in supply.

We are subject to foreign currency exchange risk.

A portion of our revenues is currently, and we expect in the future to be, derived from international operations.  Our revenues from sales outside the U.S. may be adversely affected by fluctuations in foreign currency exchange rates.  We cannot predict with any certainty changes in foreign currency exchange rates or our ability to mitigate these risks.  We may experience additional volatility as a result of inflationary pressures and other macroeconomic factors.  If we cannot adequately mitigate foreign currency exchange rates, our revenues and profit may suffer.

Our distribution network and other operations outside the U.S. subject us to certain risks.

Approximately 17% of our net revenues in the year ended December 31, 2021,2023, came from our operations outside the U.S., and we intend to continue to pursue growth opportunities in foreign markets.  Our foreign operations subject us to certain risks, including, among others, the effects of fluctuations in foreign currency exchange, uncertainties with respect to local economic and political

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conditions, competition from local companies, trade protectionism and restrictions on the transfer of goods across borders, U.S. diplomatic and trade relations with the governments of the foreign countries in which we operate, foreign regulatory requirements or changes in such requirements, local product preferences and product requirements, longer payment terms for accounts receivable than we experience in the U.S., difficulty in establishing, staffing and managing foreign operations, changes to international trade agreements and treaties, changes in tax laws, weakening or loss of the protection of intellectual property rights in some countries, and import or export licensing requirements.

Brexit may impact our business in the United Kingdom.

One of our two most significant international distributors is located in the United Kingdom (“UK”), and the other is in Finland, a member of the European Union (“EU”).  The June 2016 referendum result in the UK to exit the EU (commonly known as “Brexit”), and the subsequent commencement of the official withdrawal process by the UK government in March 2017, has created uncertainties affecting business operations in the UK and the EU.  On January 31, 2020, the UK withdrew from the EU. Under the withdrawal agreement agreed between the UK and the EU, the UK was subject to a transition period until December 31, 2020 (the “Transition Period”) during which EU rules continued to apply.  During the Transition Period, negotiations between the UK and the EU continued in relation to the future customs and trading relationship between the UK and the EU following the expiration of the Transition Period. Due to the current COVID-19 global pandemic, negotiations between the UK and the EU scheduled have either been postponed or occurred in a reduced forum via video conference.  However, on December 24, 2020, the negotiators from the EU and UK reached an agreement on a new partnership.  This agreement sets out the rules that apply between the EU and the UK as of January 1, 2021.   New regulations require medical device registration with the Medicines and Healthcare Products Regulatory Agency (“MHRA") before being placed on the Great Britain market (England, Wales, and Scotland). Additionally, all medical devices will require a UK Conformity Assessed mark (“UKCA”) by July 1, 2023. CE marks issued by Notified Bodies will remain valid until this time. Therefore, we must be compliant with applicable legislation in order to identify our devices with the UKCA mark and continue to market and sell our devices in Great Britain beyond July 1, 2023.

We are dependent on information technology systems and subject to privacy and security laws, and our systems and infrastructure face certain risks, including from cyber security breaches and data leakage.

Despite the implementation of security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization.  While we do not believe that we have experienced any such system failure, accident, or security breach to date, if such an event were to occur and cause interruptions in our systems, it could result in a material disruption of our operations.  To the extent that any disruption or security breach results in a loss of or damage to our data or applications or other data

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or applications relating to our technology, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities, damage to our reputation, and the further development of our product candidates could be delayed.  Additionally, such disruptions and security breaches, when there is a risk of patient harm, may require devices changes to fix vulnerabilities and strengthen cybersecurity.  Such changes could, in some cases, require reporting to and approval by the FDA prior to implementation, which could cause a delay in the continued marketing of the underlying product that will result in a loss of revenues to us. Furthermore, failure to adhere to good cybersecurity practices with regards to medical devices could result in enforcement action by the FDA including warning letters or other forms of enforcement.

We cannot guarantee that any of our strategic acquisitions, investments or alliances will be successful.

We may seek to supplement our internal growth through strategic acquisitions, investments and alliances.  Such transactions are inherently risky, and the integration of any newly acquired business requires significant effort and management attention.  The success of any acquisition, investment or alliance may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity or to successfully integrate any business we may acquire into our existing business.  There can be no assurance that any past or future transaction will be successful.

Our operating results and financial condition may fluctuate.

Our operating results and financial condition may fluctuate from quarter to quarter and year to year for a number of reasons.  Events such as a delay in product development, increases in litigation expenses, changes to our expectations or strategy or even a relatively small revenue shortfall may cause financial results for a period to be below our expectations or projections.  As a result, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of future performance.  Our operating results and financial condition are also subject to fluctuation from all of the risks described throughout this section.  These fluctuations may adversely affect our results of operations and financial conditions and our stock price.

Future material impairments in the value of our long-lived assets could negatively affect our operating results.

We review our long-lived assets, including identifiable intangible assets and property, plant and equipment, for impairment.  Long-lived assets are reviewed when there is an indication or triggering event that impairment may have occurred.  Changes in market conditions or other changes in the future outlook of value may lead to impairment charges in the future.  In addition, we may from time to time sell assets that we determine are not critical to our strategy.  Future events or decisions may lead to asset impairments and/or related charges. Certain non-cash impairments may result from a change in our strategic goals, business direction or other factors relating to the overall business environment.  Material impairment charges could negatively affect our results of operations.

Actions of activist stockholders could have an adverse effect on our business.

From time to time, we may be subject to proposals by stockholders urging us to take certain corporate actions.  If activist stockholder activities ensue, our business could be adversely affected because responding to proxy contests and reacting to other actions by activist stockholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees. For example, we may be required to retain the services of various professionals to advise us on activist stockholder matters, including legal, financial and communications advisors, the costs of which may negatively impact our future financial results.  In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, employees, and joint venture partners, and cause our stock price to experience periods of volatility or stagnation.

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Natural disasters, war and other events could adversely affect our suppliers and customers.

Natural disasters (including pandemics), war, terrorism, labor disruptions and international conflicts, and actions taken by the U.S. and other governments or by our customers or suppliers in response to such events, could cause significant economic disruption and political and social instability in the U.S. and areas outside of the U.S. in which we operate.  Most of our products are assembled and packaged in Nicaragua, where there is currently civil unrest whose outcome cannot be predicted.  This and similar events could increase the costs for or cause interruptions in the supply of materials, result in decreased demand for our products or adversely affect our manufacturing and distribution capabilities.

Our insurance coverage may be inadequate to cover all the liabilities we may incur.

We face the risk of exposure to liability claims if any product that we develop causes injury.  Although we carry insurance at levels customary for companies in our industry, such coverage may become unavailable or be inadequate to cover all liabilities we may incur.  There can be no assurance that we will be able to continue to maintain such insurance, or obtain comparable insurance at a reasonable cost, if at all.  If we are unable to obtain sufficient insurance coverage at an acceptable cost or otherwise, or if the amount of any claim against us exceeds the coverage under our policies, we may face significant expenses.

Rising inflation increases economic uncertainty and may require us to raise prices in order to maintain our operating margins.

For much of the past two years, inflation rates have risen or held steady at rates not seen in a generation or more. Higher level of inflation not only reduces the real value of the profits we generate from our business (and in turn our returns to investors), but it also increases the costs of goods and services, including those from our single-source suppliers, that we need to run our business. Should such trends continue, it would not only have a destabilizing macroeconomic effect on the broader U.S. and global economy, but it may also require us to increase the price of our products in order to maintain sufficient operations margins. Any increase in the prices we charge our customers could reduce the demand for our products, perhaps significantly. We will continue to monitor inflation trends and will make adjustments to our business as necessary.

Brexit may impact our business in the United Kingdom.

One of our two most significant international distributors is located in the United Kingdom (“UK”), and the other is in Finland, a member of the European Union (“EU”).  The June 2016 referendum result in the UK to exit the EU (commonly known as “Brexit”), and the subsequent commencement of the official withdrawal process by the UK government in March 2017, has created uncertainties affecting business operations in the UK and the EU.  On January 31, 2020, the UK withdrew from the EU. Under the withdrawal agreement agreed between the UK and the EU, the UK was subject to a transition period until December 31, 2020 (the “Transition Period”) during which EU rules continued to apply.  During the Transition Period, negotiations between the UK and the EU continued in relation to the future customs and trading relationship between the UK and the EU following the expiration of the Transition Period. Due to the current COVID-19 global pandemic, negotiations between the UK and the EU scheduled have either been postponed or occurred in a reduced forum via video conference.  However, on December 24, 2020, the negotiators from the EU and UK reached an agreement on a new partnership.  This agreement sets out the rules that apply between the EU and the UK as of January 1, 2021.  New regulations require medical device registration with the Medicines and Healthcare Products Regulatory Agency (“MHRA") before being placed on the Great Britain market (England, Wales, and Scotland). Additionally, all medical devices will require a UK Conformity Assessment mark (“UKCA”) by December 31, 2024. CE marks issued by Notified Bodies will remain valid until this time. Therefore, we must be compliant with applicable legislation in order to identify our devices with the UKCA mark and continue to market and sell our devices in Great Britain beyond December 31, 2024.

We could be adversely affected, directly or indirectly, by the effects of an increased focus on environmental, social and governance issues.

Recently, shareholders generally have increased their focus on environmental, social and governance ("ESG") issues, specifically regarding how companies are addressing climate change, diversity, and human rights, among other ESG-related issues. Our failure to comply with shareholder expectations and standards regarding ESG issues, which are still evolving and can vary considerably, or the perception that we have not responded appropriately to ESG-related issues, could result in reputational harm, and could have an adverse effect on our business, results of operations and financial condition.

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Climate change could present immediate and long-term risks to our industry and our customers. The potential for increased severe weather events could have a material adverse effect on our operations and infrastructure or the operations and infrastructure of our suppliers. In addition, the effects of climate change could include long-term changes in temperature levels and water availability, increased energy costs, and increased supply costs impacted by those increasing energy costs. The cost of mitigating or responding to ESG issues could be significant; however, these costs are too uncertain to predict. In addition, the approaches taken by the U.S. or foreign governments to regulate ESG issues, which may include legislative or regulatory changes, could adversely impact our business, results of operations, financial condition, and prospects, and are too uncertain to predict.

Risks Related to Ownership of Our Common Stock

There may be circumstances in which the interests of our significant stockholders could be in conflict with your interests as a stockholder.

TwoThree stockholders, together with their respective affiliates, beneficially own approximately 24%17%, 11%, and 13%7% of our outstanding common stock, respectively.  An affiliate of Horton Freedom, L.P.Capital Management LLP. currently serves on our Board of Directors.  Circumstances may arise in which these stockholders may have an interest in exerting influence to pursue or prevent acquisitions, divestitures or other transactions, including the issuance of additional shares or debt, that, in their judgment, could enhance their investment in us or another company in which they invest.  Such transactions might adversely affect us or other holders of our common stock. Furthermore, our significant concentration of share ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in companies with significant stockholders.

We do not currently intend to pay dividends on our common stock.

We have never paid dividends on our common stock, and we do not intend to pay any dividends to holders of our common stock for the foreseeable future.  We currently intend to invest our future earnings, if any, to fund our growth.  Therefore, you are not likely to receive any dividends on your common stock for the foreseeable future.

Future sales and issuances of shares of our common stock or rights to purchase our common stock, including pursuant to our equity compensation plans, could result in additional dilution of the percentage ownership of our stockholders.

We may need additional capital in the future to continue our planned operations.  To the extent we raise additional capital by issuing equity and/or convertible securities, our stockholders may experience substantial dilution.  We may sell our common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner, we determine from time to time. If we sell our common stock, convertible securities or other equity securities, investors may be materially diluted.  These sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.

We provide and intend to continue to provide additional equity-based compensation to our employees, directors and consultants.  We have twoconsultants under our three equity compensation plans, under which a total of 7,000,000 shares of our common stock have been reserved for issuance to our employees, including officers, consultants and directors, which number may be increased with the approval of our stockholders.plans. We may issue equity-based compensation outside of our equity compensation plans as inducement for new employees.  If our Board elects to issue additional stock options or other equity-based compensation, our stockholders may experience additional dilution, which could cause our stock price to decline.  Because stock options granted under our equity compensation plans will generally only be exercised when the exercise price for such option is below the then market value of the common stock, the exercise of such options or the issuance of shares will cause dilution to the book value per share of our common stock and to existing and new investors.

There has been volatility in the price of shares of our common stock.

Since our common stock was listed on the Nasdaq Capital Market on October 17, 2019, it has traded between $2.30$1.82 per share to $12.84 per share.  Our stock price is subject to wide fluctuations in response to a variety of factors, including:

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In addition, the stock market has experienced significant price and volume fluctuations that have particularly affected the trading prices of equity securities of many biotechnology companies.  These fluctuations have often been unrelated or disproportionate to the operating performance of these companies.  Any negative change in the public’s perception of the prospects of medical device companies could further depress our stock price regardless of our results.  Sales of substantial amounts of our common stock, particularly by our two most significant stockholders, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock and our stock price may decline substantially in a short time and our stockholders could suffer losses or be unable to liquidate their holdings.

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If we do not maintain compliance with the listing standards of the Nasdaq Capital Market, Nasdaq may delist our common stock from trading on its exchange.

The Nasdaq Capital Market on which our common stock trades has continued listing standards that we must maintain on an ongoing basis in order to continue the listing of our common stock.  If we fail to meet these continued listing requirements, our common stock may be subject to delisting.  If our common stock is delisted and we are not able to list our common stock on another national securities exchange, we expect our securities would be quoted on an over-the-counter market.  If this were to occur, our stockholders could face significant material adverse consequences, including limited availability of market quotations for our common stock and reduced liquidity for the trading of our common stock.  In addition, we could experience a decreased ability to issue additional securities and obtain additional financing in the future, if or when needed.

We are a smaller reporting company and non-accelerated filer, and we cannot be certain if the reduced disclosure requirements applicable to us will make our common stock less attractive to investors.

We are currently a “smaller reporting company” and a “non-accelerated filer”, as those terms are defined in the Securities Act.  Accordingly, we take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “smaller reporting companies” and “non-accelerated filers,” including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting.  Decreased disclosures in our SEC filings due to our status as a “smaller reporting company” and “non-accelerated filer” may make it harder for investors to analyze our results of operations and financial prospects.

We cannot predict if investors will find our common stock less attractive if we rely on these exemptions.  If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our share price may be more volatile.

Our significant shareholders, officers and directors can sell their stock, which may have a negative effect on our stock price and ability to raise additional capital, and may make it difficult for investors to sell their stock at any price.

10% and 7% of our outstanding common stock held by two stockholders, respectively, are freely tradeable in the market pursuant to a resale registration statement.  These stockholders purchased those shares at prices significantly lower than the price at which our common stock is currently trading.  In the event either of these significant stockholders choose to sell a substantial portion of their holdings, the price of our common stock may decline suddenly and sharply.  This may make it difficult or impossible for other investors to sell their stock at any price.

Our officers and directors beneficially own approximately 34% of our outstanding common stock as of December 31, 2021.  Each individual officer and director may be able to sell up to 1% of our outstanding common stock every ninety (90) days in the open market pursuant to Rule 144, which may have a negative effect on our stock price. In addition, if our officers and directors are selling their stock into the open market, it may make it difficult or impossible for investors to sell their stock at any price.

The price of our common stock may be adversely affected by the future issuance and sale of shares of our common stock or other equity securities.

We cannot predict the size of future issuances or sales of our common stock or other equity securities future acquisitions or capital raising activities, or the effect, if any, that such issuances or sales may have on the market price of our common stock. The issuance and sale of substantial amounts of common stock or other equity securities or announcement that such issuances and sales may occur, could adversely affect the market price of our common stock. Any decline in the price of our common stock may encourage short sales, which could place further downward pressure on the price of our common stock and may impair our ability to raise additional capital through the sale of equity securities.

You may find it difficult to sell our common stock.

Only recently has there been any active trading market in our common stock.  We cannot assure you that such an active trading market for our common stock will be sustained.  Regardless of whether an active and liquid public market exists, negative fluctuations in our actual or anticipated operating results will likely cause the market price of our common stock to fall, making it more difficult for you to sell our common stock at a favorable price, or at all.

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If we fail to continue to meet the listing standards of the Nasdaq Stock Market LLC (“Nasdaq”), our common stock may be delisted, which could have a material adverse effect on the liquidity of our common stock.

Our common stock is currently listed on the Nasdaq Capital Market.  Nasdaq has requirements that a company must meet in order to remain listed on Nasdaq.  There can be no assurance that we will continue to meet all of these requirements, or any other requirement in the future.  If we fail to meet the requirements, including maintaining minimum price, levels of stockholders’ equity or market values of our common stock, our common stock could be delisted.  If our common stock were to be delisted, the liquidity of our common stock would be adversely affected and the market price of our common stock could decrease.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 1C. CYBERSECURITY

Management has responsibility for developing and coordinating the Company’s cybersecurity policy and strategy, and for managing the prevention, detection, mitigation and remediation of cybersecurity incidents. We utilize various risk assessment tools and technologies to identify potential cyber and information security threats and risks, including engaging a third-party information technology services provider to perform risk evaluation and testing. In addition, the Company is in the process of implementing a program for all team members to participate in ongoing training and awareness programs that include periodic assessments to drive adoption and awareness of cybersecurity processes and controls.

We promote a company-wide culture of cybersecurity risk management intended to protect the confidentiality, integrity, and availability of our critical systems and the information contained therein. No risks from cybersecurity threats or previous cybersecurity incidents have materially affected, or are reasonably likely to materially affect, our business strategy, financial condition or results of operations. However, there can be no assurance that the controls and procedures in place to monitor and mitigate the risks of cyber threats will be successful or sufficient to avoid material losses or consequences in the future. Additionally, while we have insurance coverage in place that is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all insured losses or all types of claims that may arise.

Our Board of Directors, as a whole and through its committees, oversees risk management, including cybersecurity risks. The Board has delegated risk management responsibilities, including but not limited to cybersecurity risk, to the Nominating and Governance Committee. Specifically, the Nominating and Governance Committee periodically reviews our cybersecurity policies, data security programs and plans that management has established to monitor compliance and assess preparedness.

ITEM 2. PROPERTIES

We currently rent a building located at 24 Carpenter Road, Chester, New York. This facility is used as our headquarters and for our general operations. We expect to move in June 2022 from this building into 43,975 square feet of a building located at 100 Corporate Drive, Mahwah, New Jersey. The Company’s existingJersey with the lease expires December 31, 2022, and the new lease commenceshaving commenced on March 1, 2022 and expiresexpiring August 31, 2032. This facility is used as our headquarters and for our in-house manufacturing operations.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is traded on the Nasdaq Capital Market under the symbol “KRMD.”  We have not paid any cash dividends on our common stock and do not plan to pay any such dividends in the foreseeable future.  We currently intend to use all available funds for our business operations.

We are authorized to issue 77,000,000 shares of capital stock, of which 75,000,000 are designated common stock, $0.01 par value per share, and 2,000,000 are designated preferred stock.  As of February 28, 2022, 44,671,160March 13, 2024, 45,669,362 shares of our common stock were issued and outstanding held by approximately 552471 stockholders of record.  There were no shares of preferred stock issued and outstanding.

Unregistered Sales of Equity Securities

The Company issued an aggregate of 49,998 shares of common stock to its non-employee directors during the three months ended December 31, 2021 under its 2021 Omnibus Equity Incentive Plan.

The Company issued options to purchase 350,000 shares of common stock at a weighted average exercise price of $3.13 to three new employees during the three months ended December 31, 2021 under its 2015 Stock Option Plan.

All of the securities issued by the Company as described in this Item were issued in reliance on the exemption from registration under Section 4(2) under the Securities Act of 1933, as amended.

Issuer Purchases of Equity Securities

On November 16, 2020, the Company announced that its Board of Directors had authorized a stock repurchase program under which the Company may purchase up to $10.0 million of its outstanding common stock through December 31, 2021.  As of December 31, 2020, the Company had purchased 683,271 shares for an aggregate $3,499,358 pursuant to this program. No purchases have been made since that time.

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ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

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ITEM 7. 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 together with our consolidated financial statements and related notes included under ITEM 8 of this Annual Report on Form 10-K.  This discussion contains forward-looking statements about our business and operations.  Our actual results may differ materially from those we currently anticipate as a result of many factors, including those described under Part I – FORWARD LOOKING STATEMENTS and elsewhere in this Annual Report.

OVERVIEW

The Company designs,develops, manufactures and markets proprietary portable andcommercializes innovative medical devicespatient-centric large volume subcutaneous solutions primarily for the ambulatory infusionsubcutaneous drug delivery market as governed by the United States Food and Drug Administration (the “FDA”) quality and regulatory system and international standards for quality system management.

KORU Medical continues to monitor its operations and government recommendations as they relate to the COVID-19 pandemic. We cannot predict the effects the pandemic may have on our business, in particular with respect to demand for our products, our strategy, and our prospects, the effects on our customers, or the impact on our financial results.  For example, our future net revenue growth may continue to be impacted due to fewer new prescriptions for individuals with Primary Immune Deficiency Disease (“PIDD”) and Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”) as a result of patients not seeking care during the pandemic. We believe that the pandemic has precipitated limited availability and rising costs of raw materials and labor. We have accounted for these costs of which we are aware, but we may see a future impact on our financial results if current trends continue.

On March 15, 2021, the Company entered into an employment agreement with its President and Chief Executive Officer, Linda Tharby. Ms. Tharby has over 25 years of executive leadership experience building and leading strong performing global organizations, developing and commercializing products and service innovations, and delivering solutions to patients in the home setting.

The Company began its implementation of secondary sourcing of our needle and tubing sets to Command at the beginning of 2021 and is expected to complete the implementation by the second half of 2022. The Company has entered into a lease commencing March 1, 2022 for a new manufacturing facility and corporate headquarters, into which the Company expects to move in June 2022.

Our revenues derive from three business sources: (i) domestic core (which consists of US and Canada), (ii) international core, and (iii) novel therapies.  Our domestic core domestic and international core revenues consist of sales of our products for the delivery of subcutaneous drugs that are FDA cleared for use with the KORU Medical infusion system,FREEDOM Infusion System, with the primary delivery today for immunoglobulin to treat PIDDPrimary Immunodeficiency Diseases (“PIDD”) and CIDP.Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”). Novel therapies revenues consist of product revenues offrom our infusion system (syringe drivers, tubing and needles) for feasibility/clinical trials (pre-clinical studies, Phase I, Phase II, Phase III) of biopharmaceutical companies in the drug development process as well as non-recurring engineering services revenues (“NRE”) received from biopharmaceutical companies to ready or customize the FREEDOM System for clinical and commercial use.

The Company achieved four quarterscompleted its transition of sequential quarterly growth in 2021, endingsubstantially all finished goods manufacturing of its needle and tubing sets to Command Medical Products, a third-party contract manufacturing organization which also provides subassemblies for all of the year with net revenues of $23.5 million, or 2.8% below 2020, with the shortfall driven by novel therapies where we had a large clinical trial order in 2020. Our domestic core net revenues for 2021 were 0.8% higher than last year mostly due to priceCompany’s products, in the second halfquarter of 2023.

The Company entered into a lease commencing March 1, 2022 for a new corporate headquarters and manufacturing facility located in Mahwah, NJ. During the quarter ended June 30, 2022, the Company completed the first phase of the move, the headquarters and office staff to the new location, and completed the move of its manufacturing facility at the end of the first quarter 2023.

The Company ended the 2023 fiscal year and our international corewith $28.5 million in net revenues, were up 14.5%a 2.2% increase compared towith $27.9 million in the same period last year driven by volume growth in key customers.our core domestic and international business of 5.9% and 10.4% respectively, offset by a 41.6% decline in our novel therapies business.

Our gross margin, which is our grossGross profit, for the year ended December 31, 2023, was $16.7 million, an increase of 8.7% or $1.3 million from the same period last year, and stated as a percentage of net revenues for 2021 was 58.6%, a declinean increase from prior year of 61.8%. The majority of the decline was driven by delays55.1% in the transition to our secondary manufacturing source. We expect this transition to be completed in the second half of 2022.prior year.

Operating expenses in 2021 increased by 28.9%, or $4.6for the year ended December 31, 2023, were $27 million, compared toup from $26.1 million for the same period last year, mostlythe increase was driven primarily by costs associated with building out our executive team, regulatory efforts in support of 510(k) approvals and research and development spend in support of our innovation efforts.

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and depreciation, partially offset by selling, general and administrative expenses.

RESULTS OF OPERATIONS

Year Ended December 31, 20212023 compared to Year Ended December 31, 20202022

Net Revenues

The following table summarizes our net revenues for the years ended December 31, 20212023 and 2020:2022:

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Total net revenues decreased $0.7increased $0.6 million, or 2.8%2.2%, for the year ended December 31, 2021,2023, as compared with the same period last year.

Domestic core growth of 5.9% was primarily driven by volume growth in pumps and consumables attributed to overall SCIG market growth and new account share gains. International core growth of 10.4% was driven by increased volume across several EU markets and the entry into multiple new geographic markets. Novel therapies net revenues declined by 41.6% driven primarily by lower NRE revenue of $0.9 million and fewer clinical trial supply shipments of $0.2 million than in the prior year period, driven by lower novel therapies revenue due to a large clinical trial in 2020. Domestic core revenue grew 0.8% mostly due to price in the second half of the year and international core grew 14.5%, driven by growth in key customers.year.

Gross Profit

Our gross profit for the years ended December 31, 2021,2023, and 20202022 is as follows:

Gross profit decreased $1.2increased $1.3 million or 7.8% for8.7% in the year ended December 31, 2021, as2023, compared to the same period in 2020.

2022 driven by the increase in net revenues of $0.6 million coupled with a favorable cost of goods sold impact of $0.7 million. Gross profit stated as a percentage of net revenues which is referredincreased to as gross margin, declined58.6% in the year ended 2023 compared to 58.6%55.1% for the year ended December 31, 2021, compared to 61.8% for the same period last year. The majority of the decline was2022 primarily driven by unfavorableincreased manufacturing productivity and product mix and a delay inversus the transition to our secondary manufacturing source. This was partially offset by price favorability due to a price increase in the second half of 2021.prior year.

Selling, general and administrative, Litigation, and Research and developmentOperating Expenses

Our selling, general and administrative, litigation and research and development and depreciation and amortization costs for the years ended December 31, 2021,2023, and 20202022 are as follows:

Selling, general and administrative expenses increased $5.8decreased $0.2 million, or 48.5%1.2%, forduring the year ended December 31, 20212023 compared towith the same period last year, primarily due to higher salary,a $0.4 million decrease in compensation and benefits and recruiting fees of $2.4 million related to new hires to support expansion of our quality and regulatory, commercial and business development teams. Further contributing to the increase was $1.6 million inexecutive management restructuring costs associated with the departure and replacement of the former chief executive officer and the recruitment of two new Board members, which includes non-cash equity expense of $0.4 million. Market research, testing and consulting fees to support commercialization and regulatory filings of $1.1 million and higher director fees and director and officer liability insurance of $0.8 million also contributed.

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Litigation fees decreased $2.4 million compared to the same period last year due to the settlement agreement reached with EMED Technologies Corporation (“EMED”)that took place in the prior year.year, and a decrease in stock compensation costs of $0.2 million, partially offset by $0.4 million increase in compensation costs related to business development and medical affairs new hires.

Research and development expenses increased $1.2$0.8 million, foror 15.9% during the year ended December 31, 2021,2023 compared with the same period last year, primarily due to $0.5 million in compensation and benefits, $0.1 million in stock compensation and $0.1 million in expenses, to support acceleration and insourcing of our innovation efforts.

Depreciation and amortization expense increased by 48.2% to $0.9 million in the year ended December 31, 2023 compared with $0.6 million in the year ended December 31, 2022 resulting from prior year investments in our Mahwah, NJ facility which includes our corporate office, in-house manufacturing, and research and development labs and the associated annualized depreciation impact.

Net Loss

Our net loss increased $5.1 million in the year ended December 31, 2023 compared with the same period last year mostly driven by the establishment of an allowance for the nonrealization of deferred tax assets of $6.0 million offset by a higher gross profit of $1.3 million, an increase in other income of $0.4 million due to fees related to personnel to support product development.

Depreciationhigher interest and amortization

For the year ended December 31, 2021, depreciation and amortization expense increased $44,535, or 10.6%, compared with the same period last year.  We continued to invest in capital assets, mostly related to manufacturing and computer equipment.

Net Loss

Our net loss for the year ended December 31, 2021,dividend income from our treasury bill investments, which was $4.6 million, as compared to net loss of $1.2 million for the year ended December 31, 2020, driven by higher selling, general and administrative expenses and research and development costs, partially offset by lower litigation costs, all as described above. Further offsetting the loss was a tax benefithigher operating expenses of $0.3 million resulting from book to tax differences related to stock option expense and the tax benefit for the net operating losses$0.8 million.

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Table of approximately $1.5 million.Contents

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of liquidity is our cash on hand of $25.3$11.5 million as of December 31, 2021, and $3.5 million of funds available under our revolving credit facility.2023.  Our principal source of operating cash inflows is from sales of our products and NRE services to customers. Our principal cash outflows relate to the purchase and production of inventory, funding of research and related costs,development, and selling, general and administrative expenses and research and development costs.

expenses. To develop new products, support future growth, achieve operating efficiencies, and maintain product quality, we must continueare continuing to invest in manufacturing technologies, facilities and equipment, and research and development. We estimatedevelopment, innovation, and equipment. Operating expenses to be betweenfor the 2023 fiscal year were $27.0 million and $28.0 million in 2022. We expect our 2022 capital investments for manufacturing and leasehold improvements for our new facility to be in aggregate between $1.5 million and $2.0 million, net of financing arrangements.million.

Our inventory position was $6.1$3.5 million at December 31, 2021. We expect these levels to rise as we build to ensure timely order fulfillment as we complete the transition2023, which reflected a decrease of the manufacturing of our needle sets and tubing products to our secondary source and for supply continuity as we move our manufacturing facility to our new location in$2.9 million from December 31, 2022. As the relocation and transition to our secondary source are completed, this inventory is expected to convert to a source of cash in the future.

On March 27, 2020,In October 2023, the Company received a payroll tax credit under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) of $0.7 million. This credit was signed into law. The CARES Act containspreviously recorded as a provision known asreceivable..

We expect that our cash on hand and cash flows from operations will be sufficient to meet our requirements at least through the Employee Retention Credit (“ERC”),next twelve months. Continued execution on our longer-term strategic plan may require the Company to draw on our new credit facility, take on additional debt or raise capital through issuance of equity, or a refundable payroll tax credit for qualified wages paid to retained full-time employees between March 13, 2020,combination of both. Our future capital requirements may vary from those currently planned and December 31, 2020. The Consolidations Appropriations Act (CAA), signed into lawwill depend on December 27, 2020, significantly modifiedmany factors, including our rate of sales growth, the timing and expandedextent of spending on various strategic initiatives including research and development, our international expansion, the provisionstiming of new product introductions, market acceptance of our solutions, and overall economic conditions including inflation and the ERC to include wages paid in 2021. For 2021,potential impact of global supply imbalances on the ERC provides employers a refundable federal tax credit equal to 70% of the first $10,000 of qualified wages and benefits paid to retained employees between January 1, 2021, and December 31, 2021. Credits may be claimed immediately by reducing payroll taxes sent to the Internal Revenue Service.global financial markets. To the extent that thecurrent and anticipated future sources of liquidity are or are expected to be insufficient to fund our future business activities and requirements, we may be required to draw on our existing credit exceeds employment withholdings, the employer may request a refund of prior taxes paid. The Company has determined that it has qualified for this credit and anticipates utilizing benefits under this act to aid its liquidity position and as a result has recorded a receivable of $0.7 million as of December 31, 2021.

In 2020,facility, seek additional equity or debt financing sooner. There can be no assurance the Company purchased 683,271 shares ofwill be able to obtain the financing or raise the capital required to fund its common stock outstanding for $3.5 million under its stock repurchase program, which expired on December 31, 2021. No repurchases under the program were made in 2021.

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operations or planned expansion.

Cash Flows

The following table summarizes our cash flows:

Operating Activities

OperatingNet cash outflows were $4.3used in operating activities was $4.9 million for the year ended December 31, 2021 and2023. This net cash usage was mostly attributableprimarily due to the net loss adjusted for non-cash charges of $3.2$13.7, plus cash flows used to reduce accrued expenses of $1.2 million an increaseprimarily from the payment of 2023 employee bonuses, and a decrease in accounts receivablepayable of $1.0 million due to higher sales in the fourth quarter of this year compared with last year, an increase in other receivables of $0.7 million for the ERC refund, an increase in prepaids of $0.8 million related to raw materials in transit, all partially offset by$1.4 million. Partially offsetting these increases were cash flows generated from a decrease in inventory of $0.7$2.9 million, a decrease in accounts receivable of $0.5 million, and changes in working capital of $0.4 million.

Further contributing to this change were non-cash items including a deferred tax asset increase of $2.0 million partially offset by the establishment of an increase in accounts payableallowance for non-realization of $0.6deferred tax assets of $6.0 million, stock-based compensation expense of $2.8 million, depreciation and amortization expense of $0.9 million and a loss on disposal of fixed assets of $0.1 million.

Net cash used in operating activities of $0.7$5.4 million for the year ended December 31, 2020,2022 was mostly attributableprimarily due to non-cash charges for stock-based compensationthe net loss of $8.7 million, working capital changes which included an increase in accounts payable and litigation settlement expenseother liabilities of $2.9$1.3 million, andan increase in accrued payroll of $0.4 million increase in inventory of $0.3 million, an increase in accrued expenses and accrued payroll of $1.4 million, driven by the litigation settlement with EMED and customer rebates.$0.2 million. Further adding to the increase was an increase in depreciation and amortization of $0.4 million and a decrease in accounts receivable of $0.7 million due to timing of collections.  Offsetting thesecontributing were primarily working capital changes which include an increase in inventory of $4.4 million as we built inventory to keep pace with sales growth and to ensure timely order fulfillment during the transition to our secondary manufacturing source, an increase in prepaid expenses and otherdeferred tax assets of $0.4$2.0 million relating to increased insurance premiums, and a decrease in accrued tax liability of $0.2 million resulting fromfor book to tax differences related to stock option expense.  Offsetting these were primarily non-cash charges for stock-based compensation of $3.1 million, and depreciation and amortization of $0.6 million.

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Table of Contents

Investing Activities

Our netNet cash used in investing activities of $0.4$0.8 million for the year ended December 31, 2021,2023, was primarily for capital expenditures for manufacturing equipment and computers for new hires and replacement of retired computers.

Our net cash used in investing activities of $1.0 million for the year ended December 31, 2020, was primarily for capital expenditures for research and development and strategic initiatives.manufacturing equipment.

Net cash used in investing activities of $2.8 million for the year ended December 31, 2022, was for capital expenditures for manufacturing space, research and development laboratories and office equipment for our corporate office and manufacturing facilities move.

Financing Activities

Net cash used in financing activities for the year ended December 31, 2023 of $0.2 million, was from a net between borrowings and payments on our note payable for insurance premium financing of $0.1 million, and $0.1 million for payments on our finance leases.

The $2.7$0.3 million provided by financing activities for the year ended December 31, 2021 is attributed to cash received2022, was from $0.4 million in option exercises offset by $0.08 million in net borrowings on our indebtedness for options exercised of $1.3a note payable for insurance premium financing and $0.05 million the issuance of common stock as settlement for litigation of $0.9 million, and $0.5 million on borrowings from indebtedness.in equipment financing.

The $23.2 million provided by financing activities for the year ended December 31, 2020 is from the $26.6 million capital raise, net of expenses, and $0.1 million from options exercised, offset against the repurchase of the Company’s common stock outstanding of $3.5 million.  

We expect that our cash on hand, cash flows from operations, and our fully available credit facility will be sufficient to meet our requirements at least through the next 12 months and thereafter for the foreseeable future.

See “NOTE 10 — DEBT OBLIGATIONS” for further detail regarding the promissory note and loan agreement, and “NOTE 11 — EQUITY” regarding the equity offering in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K.  Also, see “NOTE 4 — STOCK-BASED COMPENSATION” for further detail regarding the EMED settlement.

Debt and Borrowing Capacity

Refer to “NOTE 10 — DEBT OBLIGATIONS” and “NOTE 11 — SUBSEQUENT EVENT” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K for further details regarding debt.

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COMMITMENTS AND CONTRACTUAL OBLIGATIONSdebt and borrowing capacity.

Lease Commitments

We currently rent a building located at 24 Carpenter Road, Chester, New York.  This facility is used as our headquartershave finance and operating leases for our general operations. We expect to move in June 2022 from this building into 43,975 square feetcorporate office and certain office and computer equipment.  Our two operating leases have remaining lease terms of a building located at 100 Corporate Drive, Mahwah, New Jersey. The Company’s existing8.6 years and 5 years, respectively. Our three finance leases have remaining lease expires December 31, 2022,terms of 3.4 years, 3 years, and the new lease commences March 1, 2022, and expires August 31, 2032.4.75 years, respectively.

Refer to “NOTE 5 –— LEASES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K for further details regarding our operating and finance leases.

Subsequent Event

In March 2024, the Company received an assessment report from its notified body in the EU, BSI, stating that, following BSI’s review of technical documentation submitted by the Company in connection with a prior audit nonconformance, a recommendation for continued certification cannot be made.  The Company has filed an appeal to this determination.  If the Company’s appeal is denied, then its EU certification may be suspended with respect to some or all of the Company’s products as determined by a BSI review panel.  Management believes that the Company’s appeal will be successful in limiting the scope of the suspension to have minimal impact on the Company’s revenues, if any.

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles of the United States (“GAAP”) requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the financial statements and accompanying notes.  The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.  Based on this definition, we have identified some of our more critical accounting estimates below.  We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results.  For additional information, see “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K.  Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available.  Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.

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Table of Contents

Revenue Recognition

The Financial Accounting Standards BoardOur revenues are derived from three business sources: (i) domestic core (which consists of US and Canada), (ii) international core, and (iii) novel therapies.  Our core domestic and international revenues consist of sales of our syringe drivers, tubing and needles (“FASB”Product Revenue”) issued Accounting Standards Updatefor the delivery of subcutaneous drugs that are FDA cleared for use with the KORU Medical infusion system, with the primary delivery for immunoglobulin to treat Primary Immunodeficiency Diseases (“ASU”PIDD”) No. 2014-09, and Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”). Novel therapies consist of Product Revenue for feasibility/clinical trials (pre-clinical studies, Phase I, Phase II, Phase III) of biopharmaceutical companies in the drug development process as well as non-recurring engineering services (“NRE”) revenues (including testing and registration services) received from Contracts with Customers, which provides a single comprehensive modelbiopharmaceutical companies to ready or customize the FREEDOM System for entities toclinical and commercial use in accounting for revenue arising from contracts with customers.  We adopted this ASU effective January 1, 2018, on a full retrospective basis.  Adoption of this standard did not result in significant changes to our accounting policies, business processes, systems or controls, or have a material impact on our financial position, results of operations and cash flows or related disclosures.  As such, prior period financial statements were not recast.across multiple drug categories.

The Company’s revenues result from the sale of assembled products.  WeFor Product Revenue, we recognize revenues when shipment occurs, and at which point the customer obtains control and ownership of the goods.  Shipping costs generally are billed to customers and are included in sales.Product Revenue.

The Company generally does not accept return of goods shipped unless it is a Company error.  The only credits provided to customers are for defective merchandise.  The Company warrants the syringe driver from defects in materials and workmanship under normal use and the warranty does not include a performance obligation.  The costs under the warranty are expensed as incurred.

Rebates are provided to distributors for the difference in selling price to distributor and pricing specified to select customers.  In addition, rebates are provided to customers for meeting growth targets.  Provisions for both distributor pricing and annual customer growth rebates are variable consideration and are recorded as a reduction of revenue in the same period the related sales are recorded or when it is probable the annual growth target will be achieved.  Rebates

We recognize NRE revenue under an input method, which recognizes revenue on the basis of our efforts or inputs (for example, resources consumed, labor hours expended, costs incurred, or time elapsed) to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation (i.e. completion milestone). The input method that we use is based on costs incurred.

Contracts are providedoften modified to distributorsaccount for changes in contract specifications and requirements. Contract modifications exist when the modification either creates new, or changes existing, enforceable rights and obligations. Generally, when contract modifications create new performance obligations, the modification is considered to be a separate contract and revenue is recognized prospectively. When contract modifications change existing performance obligations, the impact on the existing transaction price and measure of progress for the differenceperformance obligation to which it relates is generally recognized as an adjustment to revenue (either as an increase in selling price to distributoror a reduction of revenue) on a cumulative catch-up basis. Contract assets primarily represent revenue earnings over time that are not yet billable based on the terms of the contracts. Contract liabilities (i.e., deferred revenue) consist of fees invoiced or paid by the Company’s customers for which the associated performance obligations have not been satisfied and pricing specified to select customers.

Therevenue has not been recognized based on the Company’s revenue recognition criteria described above. As of December 31, 2023, the Company established an allowance for charging off uncollectible tradehas recognized a contract asset of zero which is included in other accounts receivable that have both ofin the following characteristics: (a) They have a contractual maturity of one year or less, (b) They arose from the sale of goods or services.accompanying balance sheet.

Inventory

Inventories of raw materials are stated at the lower of standard cost, which approximates average cost, or market value including allocable overhead.  Work-in-process and finished goods are stated at the lower of standard cost or market value and include direct labor and allocable overhead.

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We maintain reserves for excess and obsolete inventory resulting from the potential inability to sell certain products at prices in excess of current carrying costs. We make estimates regarding the future recoverability of the costs of these products and record provisions based on historical experience, expiration of sterilization dates and expected future trends. If actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write downs may be required, which could unfavorably affect future operating results.

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Table of Contents

ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED

Refer to “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K.

ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

Refer to “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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REPRO MEDKORU MEDICAL SYSTEMS, INC.

INDEX TO FINANCIAL STATEMENTS

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Index to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Repro Med

KORU Medical Systems, Inc.

Chester,Mahwah, New YorkJersey

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Repro MedKORU Medical Systems, Inc. (the Company) as of December 31, 20212023 and 2020,2022, the related statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20212023 and 2020,2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)(PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Grant of Stock OptionsDeferred Tax Valuation Allowance

Description of the Matter:

As discussed in Note 41 to the financial statements, the Company granted 2,000,000 options to purchase shares of its common stock with 10-year terms andrecorded a grant-date fair value of $5,699,986 to employees, directors and consultants$6 million deferred tax valuation allowance during the year ended December 31, 2021.2023. Management is required to analyze the fair value of each option granted and amortize it over its vesting period.evaluate deferred tax assets to determine if they are more likely than not to be realized.

We identified the grant of the stock optionsvaluation allowance as a critical audit matter. Management’s estimatesestimate regarding the fair value of options resultvaluation allowance results in the application of a high degree of auditor judgment.

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Index to Financial Statements

How We Addressed the Matter in Our Audit:

We applied auditor judgment to determine the nature and extent of procedures to be performed over the valuation allowance. We obtained an understanding of the Company’s processes and controls in place for determining the fair valuequalitative factors used in the calculation of each granted option.the allowance. We evaluated the option price model management selected to determinevaluation allowance by testing the fair value,completeness and analyzed the underlying data used to estimate the fair valueaccuracy of the awards. We also recalculateddata utilized in the fair valuedetermination of each option granted during the year.qualitative factors and the reasonableness of management’s judgments and significant assumptions used in the development of the qualitative factors.

/s/ McGrail Merkel Quinn & Associates, P.C.

We have served as the Company's auditor since 2014.

Scranton, Pennsylvania

March 2, 202213, 2024

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Index to Financial Statements

REPRO MEDKORU MEDICAL SYSTEMS, INC.

BALANCE SHEETS

See accompanying Notes to Financial Statements.

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Index to Financial Statements

REPRO MEDKORU MEDICAL SYSTEMS, INC.

STATEMENTS OF OPERATIONS

See accompanying Notes to Financial Statements.

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Index to Financial Statements

REPRO MEDKORU MEDICAL SYSTEMS, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

See accompanying Notes to Financial Statements.

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Index to Financial Statements

REPRO MEDKORU MEDICAL SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

See accompanying Notes to Financial Statements.

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Index to Financial Statements

REPRO MEDKORU MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

REPRO MEDKORU MEDICAL SYSTEMS, INC. (the “Company,” “KORU Medical,” “KORU,” “we,” “us” or “our”) designs,develops, manufactures and markets proprietary portablecommercializes innovative and innovative medical devicespatient-centric large volume subcutaneous infusion solutions primarily for the ambulatory infusionsubcutaneous drug delivery market as governed by the United States Food and Drug Administration (the “FDA”) quality and regulatory system and international standards for quality system management.  The Company operates as one segment.

BASIS OF PRESENTATION

We prepare our financial statements and accompanying notes in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  Certain prior year amounts have been reclassified to conform to the current year presentation in our Financial Statements.

CASH AND CASH EQUIVALENTS

For purposes of the statementstatements of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents.  The Company holdshas historically held cash balances in excess of $250,000 at its depository,primary commercial bank, which exceeds the FDIC insurance limits andlimits. To reduce the risk of uninsured deposits, the Company entered an insured cash sweep program with KeyBank during the second quarter of 2023 to automatically invest its uninsured bank cash balances over $250,000 into FDIC insured banks so there is therefore, uninsured.no more than $250,000 maintained at any one bank. Further, as of December 31, 2023 the Company had invested $10.2 million in a US Treasury bill that matures every 90 days.

INVENTORYINVENTORY

Inventories of raw materials are stated at the lower of standard cost, which approximates average cost, or market value including allocable overhead.  Work-in-process and finished goods are stated at the lower of standard cost or market value and include direct labor and allocable overhead.

We maintain reserves for excess and obsolete inventory resulting from the potential inability to sell certain products at prices in excess of current carrying costs.  We make estimates regarding the future recoverability of the costs of these products and record provisions based on historical experience, expiration of sterilization dates and expected future trends.  If actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by management, additional inventory write downs may be required, which could unfavorably affect future operating results.

INTANGIBLE ASSETS

Certain of our identifiable intangible assets, including patents and trademarks, are amortized using the straight-line method over their estimated useful lives which range from 6 to 20 years.  All of our intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Our management is responsible for determining if impairment exists and considers various factors when making these determinations.  Amortization expense related to intangible assets for the years ended December 31, 20212023 and 20202022 was $63,83064,469 and $62,17762,143, respectively.

The estimated amortization expense for the succeeding years for the intangible assets is approximately:

Schedule of amortization expense