UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~September 30, 2017~~March 31, 2024

Oror

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

For the transition period from ________ to ________.

Commission File Number:0-12305

~~REPRO MED~~KORU MEDICAL SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	13-3044880
~~New York~~	~~13-3044880~~
(State or ~~Other Jurisdiction~~other jurisdiction of ~~Incorporation~~incorporation or ~~Organization)~~ organization)	(I.R.S. Employer Identification No.)

~~24 Carpenter Road, Chester,~~ 100 Corporate Drive, Mahwah, New ~~York~~ Jersey	~~10918~~ 07430
(Address of ~~Principal Executive Offices)~~ principal executive offices)	(Zip Code)

~~(845)~~ (845) 469-2042

(Registrant’s telephone number, including area code)

~~February 28~~Securities registered pursuant to Section 12(b) of the Act:

~~(Former name, former address and former fiscal year, if changed since last report)~~

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	KRMD	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~[X]~~ [X]Yes ~~[ ]~~ [_] No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). [X]Yes ~~[X]~~ [_] No ~~[ ]~~

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


	Large accelerated filer ~~[ ]~~ [_]	Accelerated filer ~~[ ]~~ [_]
	Non-accelerated filer[ ] X]	Smaller reporting company ~~[X]~~ [X]
	~~(Do not check if a smaller reporting company)~~	Emerging growth company [ ] _]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~[_]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~[ ]~~[_] Yes ~~[X]~~ [X]No

As of ~~November 3, 2017, 37,930,620~~May 1, 2024, 45,764,225 shares of common stock, ~~$0.01~~$0.01 par value per share, were outstanding, which excludes ~~2,737,231~~3,420,502 shares of treasury stock.

~~REPRO MED~~
KORU MEDICAL SYSTEMS, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
TABLE OF CONTENTS

PAGE
~~PAGE~~
PART I. FINANCIAL INFORMATION
~~PART I~~– ~~FINANCIAL INFORMATION~~
ITEM 1.
Financial Statements (Unaudited)
3
~~ITEM 1.~~
~~Financial Statements~~
Balance Sheets as of ~~September 30, 2017~~March 31, 2024 (Unaudited) and ~~February 28, 2017~~
December 31, 2023
3
Statements of Operations (Unaudited) for the three ~~and seven~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~
2023
4
Statements of Cash Flows (Unaudited) for the ~~seven~~three months ended ~~September 30, 2017~~March 31,2024 and ~~2016~~
2023
5
Statements of Stockholders' Equity (Unaudited) for the three months ended March 31, 2024 and 2023
6
Notes to Financial Statements
~~6-11~~
7
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
~~12-18~~
17
ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
18
20
ITEM 4.
Controls and Procedures
18
20
PART II–II. OTHER INFORMATION
ITEM 2.
1A.
~~Unregistered Sales of Equity Securities and Use of Proceeds~~
Risk Factors
~~18-19~~
20
ITEM 6.
Exhibits
19
21
Signatures 22

- 2 -

Table of Contents
PART I –— FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

~~REPRO MED~~KORU MEDICAL SYSTEMS, INC.
BALANCE SHEETS

(UNAUDITED)

September 30,

February 28,

March 31, December 31,

2017

2017

2024 2023

(Unaudited)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$
3,661,707

$
3,313,265

$ 10,820,317 $ 11,482,240
Certificates of deposit

262,314

262,314

Accounts receivable less allowance for doubtful accounts of $77,067 at September 30, 2017 and $18,046 at February 28, 2017

1,481,410

1,502,030

Accounts receivable less allowance for doubtful accounts of $24,777 as of March 31, 2024 and $24,777 as of December 31, 2023 4,392,511 4,045,211
Inventory

1,586,568

1,353,703

3,147,312 3,481,301
Tax Receivable

—

172,457

Other receivables 288,714 28,889
Prepaid expenses

225,088

175,955

830,408 1,218,288
TOTAL CURRENT ASSETS

7,217,087

6,779,724

19,479,262 20,255,929
Property and equipment, net

902,075

932,092

3,755,530 3,837,657
Patents, net of accumulated amortization of $195,354 and $180,137 at September 30, 2017 and February 28, 2017, respectively

440,565

426,943

Intangible assets, net of accumulated amortization of $406,801 and $390,341 as of March 31, 2024 and December 31, 2023, respectively 737,901 754,361
Operating lease right-of-use assets 3,428,885 3,514,055
Deferred income tax assets, net of allowance for non-realization of deferred tax assets of $6,391,452 and $6,002,777 for March 31, 2024 and December 31, 2023, respectively — —
Other assets

31,583

31,490

98,970 98,970
TOTAL ASSETS

$
8,591,310

$
8,170,249

$ 27,500,548 $ 28,460,972

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Deferred capital gain - current

$
22,481

$
22,481

Accounts payable

362,878

772,428

$ 1,774,185 $ 975,193
Accrued expenses

502,249

417,357

1,459,405 1,711,427
Note payable 159,031 314,344
Other liabilities 457,653 512,520
Accrued payroll and related taxes

123,716

177,018

519,441 462,941
Accrued tax liability

142,883

—

Financing lease liability – current 111,103 109,540
Operating lease liability – current 372,109 368,313
TOTAL CURRENT LIABILITIES

1,154,207

1,389,284

4,852,927 4,454,278
Deferred capital gain – long term

9,382

22,496

Deferred tax liability

91,039

82,422

Financing lease liability, net of current portion 288,253 316,623
Operating lease liability, net of current portion 3,241,837 3,336,300
TOTAL LIABILITIES

1,254,628

1,494,202

8,383,017 8,107,201

STOCKHOLDERS’ EQUITY

Common stock, $0.01 par value; 75,000,000 shares authorized, 40,667,851 and 40,558,429 shares issued, 37,930,620 and 37,821,198 shares outstanding at September 30, 2017 and February 28, 2017, respectively

406,679

405,584

Common stock, $0.01 par value, 75,000,000 shares authorized, 49,143,589 and 49,089,864 shares issued 45,723,087 and 45,669,362 shares outstanding as of March 31, 2024, and December 31, 2023, respectively
491,436 490,899
Additional paid-in capital

4,162,679

4,129,726

47,717,888 47,018,707
Retained earnings

3,111,528

2,484,941

7,680,886

7,020,251

Less: Treasury stock, 2,737,231 shares at September 30, 2017 and February 28, 2017

(344,204
)

(344,204
)
Treasury stock, 3,420,502 shares as of March 31, 2024 and December 31, 2023, at cost (3,843,562 ) (3,843,562 )
Accumulated deficit (25,248,231 ) (23,312,273 )
TOTAL STOCKHOLDERS’ EQUITY

7,336,682

6,676,047

19,117,531 20,353,771
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
8,591,310

$
8,170,249

$ 27,500,548 $ 28,460,972

The accompanying notes are an integral part of these financial ~~statements~~statements.

- 3 -

~~REPRO MED~~Table of Contents
KORU MEDICAL SYSTEMS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)

Three Months Ended
March 31,
2024 2023

NET REVENUES $ 8,197,798 $ 7,392,605
Cost of goods sold 3,094,500 3,245,570
Gross Profit 5,103,298 4,147,035

OPERATING EXPENSES
Selling, general and administrative 5,357,620 5,425,877
Research and development 1,475,674 1,564,869
Depreciation and amortization 231,370 213,117
Total Operating Expenses 7,064,664 7,203,863

Net Operating Loss (1,961,366 ) (3,056,828 )

Non-Operating Income/(Expense)
Loss on currency exchange (11,479 ) (680 )
Loss on disposal of fixed assets, net (300 ) (56,279 )
Interest income, net 37,187 125,502
TOTAL OTHER INCOME 25,408 68,543

LOSS BEFORE INCOME TAXES (1,935,958 ) (2,988,285 )

Income Tax Benefit — 577,400

NET LOSS $ (1,935,958 ) $ (2,410,885 )

NET LOSS PER SHARE

Basic $ (0.04 ) $ (0.05 )
Diluted $ (0.04 ) $ (0.05 )

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

Basic 45,712,224 45,487,593
Diluted 45,712,224 45,487,593

For the
Three Months Ended

For the
Seven Months Ended

September 30,

September 30,

2017

2016

2017

2016

NET SALES

$
3,849,338

$
3,221,502

$
9,188,414

$
7,293,695

Cost of goods sold

1,470,680

1,188,558

3,539,662

2,643,925

Gross Profit

2,378,658

2,032,944

5,648,752

4,649,770

OPERATING EXPENSES

Selling, general and administrative

1,893,911

2,114,407

4,536,954

4,887,608

Research and development

14,852

75,198

47,564

147,136

Depreciation and amortization

77,517

70,935

179,874

167,513

Total Operating Expenses

1,986,280

2,260,540

4,764,392

5,202,257

Net Operating Profit/(Loss)

392,378

(227,596
)

884,360

(552,487
)

Non-Operating Income/(Expense)

Gain/(Loss) on currency exchange

10,419

(4,096
)

65,079

8,237

Interest and other income

361

262

1,104

1,336

TOTAL OTHER INCOME/(EXPENSE)

10,780

(3,834
)

66,183

9,573

PROFIT/(LOSS) BEFORE TAXES

403,158

(231,430
)

950,543

(542,914
)

Income Tax (Expense)Benefit

(137,404
)

78,217

(323,956
)

183,819

NET INCOME/(LOSS)

$
265,754

$
(153,213
)
$
626,587

$
(359,095
)

NET INCOME/(LOSS) PER SHARE

Basic

$
0.01

$
—

$
0.02

$
(0.01
)
Diluted

$
0.01

$
—

$
0.02

$
(0.01
)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

Basic

37,898,357

37,779,427

37,856,074

37,885,432

Diluted

38,056,604

37,779,427

38,014,321

37,885,432

The accompanying notes are an integral part of these financial ~~statements~~statements.

- 4 -

~~REPRO MED~~Table of Contents
KORU MEDICAL SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)

For the
Three Months Ended
March 31,
2024 2023

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (1,935,958 ) $ (2,410,885 )
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense and warrant expense 699,718 881,222
Depreciation and amortization 231,370 213,117
Deferred income taxes — (577,400 )
Loss on disposal of fixed assets 300 56,279
ROU landlord credit (5,497 ) (5,497 )
Changes in operating assets and liabilities:
Increase in Accounts receivable (607,125 ) (647,994 )
Decrease / (Increase) in Inventory 333,989 (233,551 )
Decrease in Prepaid expenses and other assets 387,880 288,786
(Decrease) / Increase in Other liabilities (54,867 ) 4,207
Increase / (Decrease) in Accounts payable 798,992 (888,679 )
Increase / (Decrease) in Accrued payroll and related taxes 56,500 (41,984 )
Decrease in Accrued expenses (252,022 ) (1,298,204 )
NET CASH USED IN OPERATING ACTIVITIES (346,720 ) (4,660,583 )

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (133,083 ) (272,605 )
Purchases of intangible assets (0 ) (11,232 )
NET CASH USED IN INVESTING ACTIVITIES (133,083 ) (283,837 )

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on indebtedness (155,313 ) (214,892 )
Payments on finance lease liability (26,807 ) (24,080 )
NET CASH USED IN FINANCING ACTIVITIES (182,120 ) (238,972 )

NET DECREASE IN CASH AND CASH EQUIVALENTS (661,923 ) (5,183,392 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 11,482,240 17,408,257
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,820,317 $ 12,224,865

Supplemental Information
Cash paid during the periods for:
Interest $ 12,296 $ 12,326
Income taxes $ — $ —

Schedule of Non-Cash Operating, Investing and Financing Activities:
Issuance of common stock as compensation $ 123,804 $ 175,776

For the Seven Months Ended

September 30,

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income (Loss)

$
626,587

$
(359,095
)
Adjustments to reconcile net income (loss) to net cash provided by/(used in) operating activities:

Amortization of deferred compensation cost

—

14,000

Stock based compensation expense

53,407

126,006

Depreciation and amortization

179,874

167,513

Deferred capital gain - building lease

(13,113
)

(13,113
)
Deferred taxes

8,617

(30,288
)
Provision for returns and doubtful accounts

58,941

(14,102
)
Changes in operating assets and liabilities:

Increase in accounts receivable

(38,321
)

(293,821
)
Increase in inventory

(232,865
)

(71,011
)
Decrease/(Increase) in prepaid expense and other assets

123,231

(78,602
)
(Decrease)/Increase in accounts payable

(409,550
)

357,384

Decrease in accrued payroll and related taxes

(53,302
)

(31,204
)
Increase in accrued expense

84,892

168,732

Increase/(Decrease) in accrued tax liability

142,883

(155,075
)
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES

531,281

(212,676
)

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for property and equipment

(134,640
)

(123,689
)
Payments for patents

(28,839
)

(106,355
)
NET CASH USED IN INVESTING ACTIVITIES

(163,479
)

(230,044
)

CASH FLOWS FROM FINANCING ACTIVITIES

Payment for cancelled shares

(19,360
)

—

Purchase of treasury stock

—

(120,577
)
NET CASH USED IN FINANCING ACTIVITIES

(19,360
)

(120,577
)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

348,442

(563,297
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

3,313,265

4,201,949

CASH AND CASH EQUIVALENTS, END OF PERIOD

$
3,661,707

$
3,638,652

Supplemental Information

Cash paid during the periods for:

Interest

$
—

$
—

Taxes

$
—

$
—

NON-CASH FINANCING AND INVESTING ACTIVITIES

Issuance of common stock as compensation

$
78,750

$
43,468

The accompanying notes are an integral part of these financial ~~statements~~statements.

- 5 -

~~REPRO MED~~Table of Contents
KORU MEDICAL SYSTEMS, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
Three Months Ended March 31, 2024

Additional Total
Common Stock Paid-in Retained Treasury Stockholders’
Shares Amount Capital Deficit Stock Equity

BALANCE, DECEMBER 31, 2023 49,089,864 $ 490,899 $ 47,018,707 $ (23,312,273 ) $ (3,843,562 ) $ 20,353,771
Issuance of stock-based compensation 53,725 537 123,267 — — 123,804
Compensation expense related to stock options — — 393,113 — — 393,113
Compensation related to Restricted Stock — — 130,676 — — 130,676
Issuance of warrants — — 52,125 — — 52,125
Net loss — — — (1,935,958 ) — (1,935,958 )
BALANCE, MARCH 31, 2024 49,143,589 $ 491,436 $ 47,717,888 $ (25,248,231 ) $ (3,843,562 ) $ 19,117,531
Three Months Ended March 31, 2023

Additional Total
Common Stock Paid-in Retained Treasury Stockholders’
Shares Amount Capital Deficit Stock Equity

BALANCE, DECEMBER 31, 2022 48,861,891 $ 488,619 $ 44,252,117 $ (9,571,211 ) $ (3,843,562 ) $ 31,325,963
Issuance of stock-based compensation 48,875 489 175,287 — — 175,776
Compensation expense related to stock options — — 535,059 — — 535,059
Compensation related to Restricted Stock 50,000 500 169,887 170,387
Net loss — — — (2,410,885 ) — (2,410,885 )
BALANCE, MARCH 31, 2023 48,960,766 $ 489,608 $ 45,132,350 $ (11,982,096 ) $ (3,843,562 ) $ 29,796,300
- 6 -
Table of Contents
KORU MEDICAL SYSTEMS, INC.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

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

NATURE OF OPERATIONS

~~REPRO MED~~KORU MEDICAL SYSTEMS, INC. (the ~~“Company”, “RMS”,~~“Company,” “KORU Medical,” “we,” “us” or ~~“we”~~“our”) designs, manufactures and markets proprietary portable and innovative medical devices primarily for the ~~ambulatory infusion~~subcutaneous drug delivery market ~~and emergency medical applications~~ as governed by the United States Food and Drug Administration (the “FDA”) quality and regulatory system and international regulations and standards for quality ~~management systems.~~system management. The Company operates as one segment.

~~FISCAL YEAR END~~

~~On March 22, 2017, the Board of Directors approved a change in the Company’s fiscal year end from February 28 to December 31.~~

BASIS OF PRESENTATION

The accompanying unaudited financial statements as of September 30, 2017, have been prepared in accordance with generally accepted accounting principles and with instructions to SEC regulation S-X for interim financial statements.

In the opinion of the Company’s management, the financial statements contain all adjustments consisting of normal recurring accruals necessary to present fairly the Company’s financial position as of September 30, 2017, and the results of operations and cash flow for the three and seven month periods ended September 30, 2017, and 2016.

~~The results of operations for the three and seven months ended September 30, 2017, and 2016 are not necessarily indicative of the results to be expected for the full year. These interim~~ financial statements should be read in conjunction with the ~~financial statements and notes thereto of the Company and management’s discussion and analysis of financial condition and results of operations included in the~~ Company’s ~~Annual Report~~annual report on Form 10-K for the year ended ~~February 28, 2017, as filed~~December 31, 2023 (“Annual Report”). In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited financial statements of the Company. The accompanying interim financial statements are unaudited and reflect all adjustments which are in the opinion of management necessary for a fair statement of the Company’s financial position, results of operations, and cash flows for the periods presented. All such adjustments are of a normal, recurring nature. The Company’s results of operations and cash flows for the interim periods are not necessarily indicative of the results of operations and cash flows that it may achieve in future periods.
CASH AND CASH EQUIVALENTS
For purposes of the statements 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 has historically held cash balances in excess of $250,000 at its primary commercial bank, which exceeds FDIC insurance limits. 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 no more than $250,000 maintained at any one bank. As of March 31, 2024 the Company has an investment balance of $10.2 million in a US Treasury bill that matures every 90 days.
PATENTS
Costs incurred in obtaining patents have been capitalized and are being amortized over the legal life of the patents.
STOCK-BASED COMPENSATION
The Company maintains a stock option plan and an omnibus equity incentive plan under which it grants stock options to certain executives, key employees and consultants. The fair value of each option grant is estimated on ~~Form 10-K.~~the date of the grant using the Black-Scholes option-pricing model. All options are charged against income at their fair value. The entire compensation expense of the award is recognized over the vesting period.

The Company also maintains a non-employee director compensation plan. Shares of stock granted for director fees are recorded at the fair value of the shares at the grant date.
The Company issues restricted stock awards. Restricted stock awards are equity classified and measured at the fair market value of the underlying stock at the grant date. The fair value of restricted stock awards vesting at certain market capitalization thresholds were estimated on the date of grant using the Brownian Motion Monte Carlo lattice model. The fair value of restricted stock awards with time-based vesting were estimated on the date of grant at the current stock price. The fair value of restricted stock awards vesting at certain annual sales growth thresholds were estimated as of the date of Board acknowledgement of the achievement, at the current stock price. We recognize restricted stock expense using the straight-line attribution method over the requisite service period and account for forfeitures as they occur.
- 7 -
Table of Contents
NET LOSS PER COMMON SHARE
Basic net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and common equivalent shares outstanding during the period. The Company’s potentially dilutive common shares are those that result from diluted common stock options and unvested restricted stock awards. The calculation of diluted net loss per share excluded stock options of zero and 14,626, respectively, in weighted-average shares for each of the three months ended March 31, 2024 and 2023, as their effect was anti-dilutive as a result of the net loss incurred for those periods.
The calculation of diluted net loss per share excluded stock options, performance-based restricted stock and performance-based restricted stock units (PSUs) of 904,496 and 914,626 respectively, in weighted-average shares for each of the three months ended March 31, 2024 and 2023, as their effect was anti-dilutive as a result of the net loss incurred for those periods.
The following securities were not included in the computation of diluted shares outstanding for the three months ended March 31, 2024, and 2023 because the effect would be anti-dilutive:

Three Months Ended
March 31,
2024 2023
Common stock options $ — $ 14,626
PSUs 54,496 —
Restricted stock 850,000 900,000
Total $ 904,496 $ 914,626
Therefore, diluted weighted average number of shares outstanding and diluted net loss per share were the same as basic weighted average number of shares outstanding and net loss per share for the three months ended March 31, 2024 and 2023.

Three Months Ended
March 31,
2024 2023

Net loss $ (1,935,958 ) $ (2,410,885 )

Weighted Average Outstanding Shares:
Basic weighted average shares outstanding 45,712,224 45,487,593
Dilutive effect of outstanding stock options and unvested restricted stock — —
Diluted weighted average shares outstanding 45,712,224 45,487,593

Net loss per share
Basic $ (0.04 ) $ (0.05 )
Diluted $ (0.04 ) $ (0.05 )
USE OF ESTIMATES IN THE FINANCIAL STATEMENTS

The preparation of financial statements in conformity with ~~U.S.~~United States generally accepted accounting principles (“~~U.S.~~ GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Important estimates include but are not limited to asset lives, deferred tax valuation allowances, inventory valuation, and customer rebate and incentive accruals. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the entire 2024 fiscal year.

- 8 -
~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~Table of Contents

REVENUE RECOGNITION
Our 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 (“Product Revenue”) for 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 (“PIDD”) 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 biopharmaceutical companies to ready or customize the FREEDOM System for clinical and commercial use across multiple drug categories.
For 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 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 ~~May 2017,~~addition, rebates are provided to customers for meeting growth targets. Provisions for both distributor pricing and customer growth rebates are variable consideration and are recorded as a reduction of revenue in the ~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09—Compensation-Stock Compensation (Topic 718),~~same period the related sales are recorded or when it is probable the growth target will be achieved.
We recognize NRE revenue under an input method, which ~~provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying~~recognizes revenue on the ~~guidance in Topic 718, Compensation—Stock Compensation, to a change~~basis of our efforts or inputs (for example, resources consumed, labor hours expended, costs incurred, or time elapsed) to the ~~terms or conditions~~satisfaction of a ~~share-based payment award.~~performance obligation relative to the total expected inputs to the satisfaction of that performance obligation (i.e. completion milestone). The ~~amendments~~input method that we use is based on costs incurred.
Contracts are often modified to account for changes in ~~this update affect any entity~~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 performance obligation to which it relates is generally recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. Contract assets primarily represent revenue earnings over time that ~~changes~~are not yet billable based on the terms of the contracts. Contract liabilities (i.e., deferred revenue) consist of fees invoiced or conditions of a share-based payment award. The amendments in this update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periodspaid by the Company’s customers for which ~~financial statements~~the associated performance obligations have not ~~yet~~ been satisfied and revenue has not been recognized based on the Company’s revenue recognition criteria described above. As of March 31, 2024, the Company has recognized a contract asset of zero.
The following table summarizes net revenues by geography for the three months ended March 31, 2024, and 2023:
Three Months Ended March 31,
2024 2023
Revenues
Domestic $ 6,384,083 $ 6,283,965
International 1,813,715 1,108,640
Total $ 8,197,798 $ 7,392,605
- 9 -
Table of Contents
ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED
The Company considers the applicability and impact of all recently issued ~~and (2) all other entities for reporting periods for which financial statements have~~accounting pronouncements. Recent accounting pronouncements not ~~yet been made available for issuance. The amendments~~specifically identified in ~~this update should be applied prospectively~~our disclosures are either not applicable to ~~an award modified on~~the Company or ~~after the adoption date. Based upon our initial evaluation, we do~~are not ~~expect the adoption of the standard~~expected to have a material effect on our financial ~~statements, disclosure requirements and methods~~condition or results of ~~adoption.~~operations.

~~- 6 -~~

In June 2016, the FASB issued ASU No. ~~2016-13—~~2016-13, Financial Instruments – Credit Losses (Topic 326);: Measurement of Credit Losses on Financial Instruments, which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. This ASU affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The ~~amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The~~ Company ~~is assessing~~adopted the pronouncement on January 1, 2023, and there was no impact ~~of the adoption of the ASU~~ on its financial ~~statements, disclosure requirements~~statements.
FAIR VALUE MEASUREMENTS
Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Valuation techniques used to measure fair value should maximize the use of observable inputs and ~~methods~~minimize the use of ~~adoption.~~unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.
• Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.
• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and includes instruments for which the determination of fair value requires significant judgment or estimation.
~~In May 2014, the FASB issued ASU No. 2014-09—Revenue from Contracts with Customers.~~ The ~~ASU clarifies the principles for recognizing revenue~~carrying amounts of cash and ~~develops a common revenue standard for~~cash equivalents, including investments in short-term U.S. ~~GAAP~~Treasury bills, accounts receivable, prepaid expenses, accounts payable and International Financial Reporting Standards (“IFRS”) that removes inconsistencies and weaknesses in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparabilityaccrued expenses are considered to be representative of ~~revenue recognition practices across entities, industries, jurisdictions and capital markets, provides more useful information to users~~their fair values because of the ~~financial statements through improved disclosure requirements~~short-term nature of those instruments. There were no transfers between levels in the fair value hierarchy during the three months ended March 31, 2024 and ~~simplifies~~2023.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the preparation of financial statements by reducing the number of requirements to which an entity must refer. The amendments in this update are effective for the annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Full or modified retrospective adoption is required and early application is not permitted. On July 9, 2015, the FASB issued ASU No. 2015-14 Revenue from Contracts with Customers (Topic 606); Deferralcarrying amount of the ~~Effective Date, which (a) delays~~assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the ~~effective date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), by one year to annual periods beginning after December 15, 2017 and (b) allows early adoption~~use of the ~~ASU by all entities as of~~asset and its eventual disposition are less than the original effective date for public entities. We currently anticipate adopting the new standard using the modified retrospective method beginning January 1, 2018. In March 2016, the FASB issued ASU No. 2016-08 Revenue from Contracts with Customers (Topic 606); Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and the effective date is the same as the requirements in ASU 2014-09. In April 2016, the FASB issued ASU No. 2016-10 Revenue from Contracts with Customers (Topic 606); Identifying Performance Obligations and Licensing, which is intended to clarify identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas and the effective date is the same as the requirements in ASU 2014-09. In May 2016, FASB issued ASU No. 2016-12—Revenue from Contracts with Customers (Topic 606); Narrow-Scope Improvements and Practical Expedients, which is intended to not change the core principle of the guidance in Topic 606, but rather affect only the narrow aspects of Topic 606 by reducing the potential for diversity in practice at initial application and by reducing the cost and complexity of applying Topic 606 both at transition and on an ongoing basis.carrying amount. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by update 2014-09). In December 2016, the FASB issued ASU No. 2016-20 Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which represents changes to make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. This update is the final, combined version of Proposed Accounting Standards Updates 2016-240 and 2016-320 (both entitled Technical Corrections and Improvements), which have been deleted. We do not expect the adoption of the standard and related amendments to have a material effect on our financial condition or results of operations.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The main difference between the current requirement under GAAP and this ASU is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. This ASU requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset willimpairment loss, if recognized, would be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. This is effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. This ASU must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require applicationexcess of the ~~new guidance at the beginning~~carrying value of the ~~earliest comparative period presented. We are currently assessing the potential impact of this ASU on our financial statements, disclosure requirements and methods of adoption.~~impaired asset over its respective fair value. The Company did not record any impairment losses through March 31, 2024.

- 710 -

~~The Company considers~~Table of Contents
NOTE 2 — PROPERTY AND EQUIPMENT
Property and equipment consists of the ~~applicability~~following at:
March 31, 2024 December 31, 2023

Furniture and office equipment $ 1,423,093 $ 1,412,164
Leasehold improvements 1,953,653 1,953,653
Manufacturing equipment and tooling 3,311,833 3,193,113
Total property and equipment 6,688,579 6,558,930
Less: accumulated depreciation and amortization (2,933,049 ) (2,721,273 )
Property and equipment, net $ 3,755,530 $ 3,837,657
Depreciation and ~~impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to~~amortization expense was $214,910 and $197,233 for the ~~Company or are not expected to have a material effect on our financial condition or results of operations.~~three months ended March 31, 2024 and 2023, respectively.

NOTE 3 — STOCK-BASED COMPENSATION

The Company maintains a ~~long-term~~stock option plan and omnibus equity incentive ~~stock benefit~~ plan under which it grants stock options ~~and restricted stock~~ to certain ~~directors~~executives, key employees and ~~key employees.~~consultants. It also has granted stock options outside of the plans as inducement awards. The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. All options are charged against income at their fair value. The entire compensation expense of the award is recognized over the vesting period.
The Company issues performance share units (PSUs) under its omnibus equity incentive plan. Performance share units are equity classified and measured at the fair market value of the underlying stock at the grant date.
Shares of stock granted for director fees under the non-employee director compensation plan and under its omnibus equity incentive plan are recorded at the fair value of the shares at the grant date.
The Company issues restricted stock awards under its omnibus equity incentive plan and outside the plan as incentive awards. Restricted stock awards are equity classified and measured at the fair market value of the underlying stock at the grant date. The fair value of restricted stock awards vesting at certain market capitalization thresholds were estimated on the date of grant using the Brownian Motion Monte Carlo lattice model. The fair value of other restricted stock awards were estimated on the date of grant at the current stock price. We recognize restricted stock expense using the straight-line attribution method over the ~~vesting period.~~requisite service period and account for forfeitures as they occur.

~~RECLASSIFICATION~~The Company has three equity incentive plans: the 2015 Stock Option Plan, as amended (the “2015 Plan”), the 2021 Omnibus Equity Incentive Plan (the “2021 Plan”), and the Non-Employee Director Compensation Plan. The Company has also issued restricted stock and stock options as employment inducement awards to its Chief Executive Officer and Chief Commercial Officer, respectively.

~~Certain reclassifications have been made~~The 2015 plan provides for the grant of incentive stock options and nonqualified stock options. As of March 31, 2024, there were 2,120,000 shares reserved for outstanding awards and 604,250 shares available for issuance under the 2015 Plan. Additional options may be issued under the 2015 Plan as outstanding options are forfeited.
The 2021 Plan provides for the grant of incentive stock options, nonqualified stock options, stock awards, restricted stock awards, restricted stock units and/or stock appreciation rights to ~~conform prior period data~~employees, consultants and directors. As of March 31, 2024, there were 656,744 shares reserved for outstanding awards and 152,811 shares available for issuance under the 2021 Plan. Additional awards may be issued under the 2021 Plan as outstanding awards are forfeited.
Each non-employee director of the Company (other than the Chairman of the Board) is eligible to receive $110,000 annually, to be paid quarterly $12,500 in cash and $15,000 in common stock. The Chairman of the Board is eligible to receive $140,000 annually, to be paid quarterly $12,500 in cash and $22,500 in common stock. Non-employee director compensation is paid pursuant to the ~~current presentation. These reclassifications had no effect on reported net income.~~Non-Employee Director Compensation Plan. All payments were and are pro-rated for partial service.

- 11 -
~~NOTE 2 RELATED PARTY TRANSACTIONS~~Table of Contents

Time Based Stock Options
~~On December 20, 2013, we executed an agreement effective March 1, 2014,~~
The following table summarizes the activities for our stock options with a Company director, Dr. Mark Baker, to provide clinical research and support services related to new and enhanced applications for the FREEDOM60® Syringe Infusion System. Authorized by the Board of Directors, the agreement provided for payment of 420,000 shares of common stock valued at $0.20 per share over a three-year period. Amortization amounted to zero and $7,000time based vesting for the three months ended ~~September 30, 2017~~March 31, 2024, and ~~2016, respectively, and zero and $14,000 for the seven months ended September 30, 2017 and 2016, respectively.~~2023.

March 31,
2024 2023

Dividend yield 0.00% 0.00%
Expected Volatility 46.18 - 46.21% 61.3%
Weighted-average volatility — —
Expected dividends — —
Expected term (in years) 10 10
Risk-free rate 4.2% - 4.3% 3.53%
On October 21, 2015, Cyril Narishkin was appointed to the Board of Directors and Interim Chief Operating Officer of the Company. Also effective October 21, 2015, we entered into a consulting agreement with Mr. Narishkin, to support our expanded management team and accelerate our growth opportunities under his role of Interim Chief Operating Officer. The agreement provided for payment of $16,000 per month for eight days per month, of which half was to be paid in cash and half was to be paid in shares of common stock. Effective January 1, 2016, the agreement provided for the same payment of $16,000 per month, of which seventy-five percent was to be paid in cash and twenty-five percent was to be paid in shares of common stock.

On June 24, 2016, Cyril Narishkin executed a termination and general release agreement, which terminated his previous consulting agreement, and resigned as an officer and director for personal reasons. Mr. Narishkin was compensated for services as a consultant through January 31, 2017 at a monthly rate of $16,000 per month for up to eight days of service a month upon request of the Company. Mr. Narishkin’s compensation was zero and $48,000 for the three months ended September 30, 2017 and 2016, respectively and zero and $166,000 for the seven months ended September 30, 2017 and 2016, respectively. In accordance with the agreement, the Company repurchased 96,542 shares of common stock of the Company owned by Mr. Narishkin at an aggregate purchase price of $43,393 in July 2016.

~~LEASED AIRCRAFT~~

The Company leases an aircraft from a company controlled by Andrew Sealfon, the Company’s President and Chief Executive Officer. The lease payments were $3,876 and $5,375 for the three months ended September 30, 2017 and 2016, respectively and $9,544 and $12,542 for the seven months ended September 30, 2017 and 2016, respectively. The original lease agreement has expired and the Company is currently on a month-to-month basis for rental payments.

~~BUILDING LEASE~~

Mr. Mark Pastreich, a director, is a principal in the entity that owns the building leased by Company. The Company is in year nineteen of a twenty-year lease. There have been no changes to lease terms since his directorship and none are expected through the life of the current lease. With a monthly lease amount of $11,042, the lease payments were $33,126 for each of the three months ended September 30, 2017 and 2016 and $77,294 for each of the seven months ended September 30, 2017 and 2016. The Company also paid property taxes for the three months ended September 30, 2017 and 2016 in the amount of $12,862 and $12,334, respectively, and $29,098 and $28,159 for the seven months ended September 30, 2017 and 2016, respectively.

~~We are currently negotiating a lease extension at our current facility as we continue to assess what our strategy for future expansion and growth requirements will be.~~

~~- 8 -~~

~~NOTE 3 PROPERTY AND EQUIPMENT~~

~~Property and equipment consists of the following at:~~

September 30, 2017

February 28, 2017

Land

$
54,030

$
54,030

Building

171,094

171,094

Furniture, office equipment, and leasehold improvements

1,054,971

1,022,942

Manufacturing equipment and tooling

1,074,157

1,003,166

2,354,252

2,251,232

Less: accumulated depreciation

(1,452,177
)

(1,319,140
)
Property and equipment, net

$
902,075

$
932,092

~~NOTE 4 LEGAL PROCEEDINGS~~

Lawyers representing EMED Technologies Corp. (“EMED”) sent RMS a letter dated, May 1, 2013, which alleged that the RMS High-Flo Butterfly design infringed a patent controlled by EMED. RMS disputed this claim and believes that our design did not infringe and that the EMED patent itself was not valid. Under advice of counsel, on September 20, 2013, the Company commenced in the United States District Court for the Eastern District of California a Declaratory Judgment action against competitor, EMED to establish the invalidity of one of EMED’s patents and non-infringement of the Company’s needle sets. EMED answered the complaint and asserted patent infringement and unfair business practice counterclaims. The Company responded by asserting its own unfair business practice claims against EMED. Both parties have requested injunctive relief and monetary damages. Discovery is ongoing.

On June 16, 2015, the Court issued what it termed a “narrow” Preliminary Injunction against the Company from making certain statements regarding some of EMED’s products. On June 23, 2016, EMED filed a Motion seeking to have the Company held in contempt, claiming that certain language in the Company’s device labeling does not comply with the injunction. In response to a Show Cause Order, the Company advised the Court that the language in the Company’s labeling that EMED challenged is language that the FDA directed the Company to use in its labeling. The Court discharged the Show Cause Order, effectively rejecting EMED’s contempt argument.

On March 24, 2016, EMED filed a Motion seeking a second Preliminary Injunction prohibiting RMS from selling three of its products in California. The Company opposed that Motion on April 19, 2016. The Order denying this second Preliminary Injunction was issued June 6, 2017.

On August 22, 2017, the Company filed a Motion seeking a Preliminary Injunction prohibiting EMED from making false statements and claims regarding the products of both companies. EMED filed a Response and Objections to Company’s motion on September 21, 2017, and Company filed a subsequent Reply on September 28, 2017. The Court issued a Minute Order on September 22, 2017 vacating a hearing set for October 5, 2017, and stating that if the Court determines oral hearings to be required, the parties will be notified. Presently, the parties are awaiting further action by the Court.

On June 25, 2015, EMED filed a claim of patent infringement for the second of its patents, also directed to the Company’s needle sets, in the United States District Court for the Eastern District of Texas. This second patent is related to the one concerning the Company’s declaratory judgment action. Given the close relationship between the two patents, the Company requested that the Texas suit be transferred to California. Also, based on a validity review of the patent in the U.S. Patent and Trademark Office (“USPTO”), discussed below, the Company requested the Texas suit be stayed. On May 12, 2016, the Court entered an order staying the case until after the Patent Trial and Appeal Board (“PTAB”) at the USPTO issued a final written decision regarding the validity of the patent. On January 12, 2017, the PTAB issued its final written decision invalidating the claims asserted by EMED in the Texas litigation. On January 26, 2017, the Company and EMED requested that the Texas case remain stayed pending EMED’s appeal of the PTAB’s final ruling to the Court of Appeals for the Federal Circuit (“CAFC”).

~~- 9 -~~

On September 11, 2015, the Company requested an ex parte reexamination of the patent in the first filed case, and on September 17, 2015 the Company requested an inter partes review (“IPR”) of the patent in the second filed case. On November 20, 2015, the USPTO instituted the ex parte reexamination request having found a substantial new question of patentability concerning EMED’s patent in the first filed case. All EMED claims have been rejected by the USPTO Examiner in a Final Office Action dated July 19, 2017. EMED filed a response to this Final Office Action on September 15, 2017 that is awaiting consideration by the Examiner. Thus, the ex parte reexamination is ongoing. A decision to institute the IPR for EMED’s patent in the second filed case was ordered by the USPTO on February 19, 2016 having determined a reasonable likelihood all claims of the patent may be found to be unpatentable. Oral argument for the IPR was held on November 22, 2016 and a final ruling issued on January 12, 2017. In its final ruling, the PTAB held the claim asserted by EMED against the Company in the second filed case was invalid. EMED appealed the PTAB’s final ruling, and EMED’s opening brief in the CAFC was filed on June 26, 2017. The Company’s response brief was filed on August 3, 2017. EMED filed a reply brief on August 17, 2017. Presently, the parties are awaiting further action by the CAFC.

Although the Company believes it has meritorious claims and defenses in these actions and proceedings, their outcomes cannot be predicted with any certainty. We believe that it is likely both patents will be determined invalid, however, if any of these actions against the Company are successful, they could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

~~NOTE 5 STOCKHOLDERS’ EQUITY~~

On September 30, 2015, RMS’s Board of Directors authorized the Company to make open market purchases of up to 2,000,000 shares of the Company’s outstanding Common Stock. The purchases are made through a broker designated by the Company, with price, timing and volume restrictions based on average daily trading volume, consistent with the rules of the Securities and Exchange Commission for such repurchases. As of September 30, 2017, the Company had repurchased 396,606 shares at an average price of $0.45. The management of the Company has decided to discontinue repurchasing its outstanding common stock under the program for an undetermined period of time to utilize cash for capital investments needed to expand the business.

~~NOTE 6 STOCK-BASED COMPENSATION~~

On September 30, 2015, the Board of Directors approved the 2015 Stock Option Plan (“the Plan”) authorizing the Company to grant stock option awards to certain officers, employees and consultants under the Plan, subject to shareholder approval at the Annual Meeting of Shareholders held on September 6, 2016. The total number of shares of common stock of the Company, par value $0.01 per share (“Common Stock”), with respect to which awards may be granted pursuant to the Plan was not to exceed 2,000,000 shares.

On June 29, 2016, the Board of Directors approved the amendment to the Plan increasing the total number of shares of Common Stock to be subject to awards granted under the Plan to 4,000,000 shares. On September 6, 2016, at the Annual Shareholder Meeting, the Company’s shareholders approved the Plan as amended.

~~As of September 30, 2017, there were outstanding 1,163,000 options awarded to certain executives, key employees and advisory board members under the Plan.~~

On October 21, 2015, the Board of Directors of the Company approved non-employee director compensation of $25,000 each annually, to be paid quarterly half in cash and half in common stock, beginning September 1, 2015.

The per share weighted average fair value of stock options granted during the seven months ended September 30, 2017 and September 30, 2016 was $0.26 and zero, respectively. The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the seven months ended September 30, 2017 and September 30, 2016. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options. The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued:

September 30,

2017

2016

Dividend yield

0.00%

—

Expected Volatility

70.1-72.2%

—

Weighted-average volatility

—

—

Expected dividends

—

—

Expected term (in years)

5 Years

—

Risk-free rate

2.30-2.36%

—

~~- 10 -~~

The following table summarizes the status of the ~~Plan:~~stock options:

Three Months Ended March 31,

Seven Months Ended September 30,

2024 2023

2017

2016

Shares Weighted
Average
Exercise
Price Shares Weighted
Average
Exercise
Price

Shares

Weighted
Average
Exercise
Price

Shares

Weighted
Average
Exercise
Price

Outstanding at March 1

1,345,000

$
0.39

1,060,000

$
0.37

Outstanding at January 1 3,256,250 $ 3.66 3,035,000 $ 3.93
Granted

68,000

$
0.44

—

$
—

65,000 $ 2.21 40,000 $ 3.91
Exercised

—

$
—

—

$
—

— $ — — $ —
Forfeited

250,000

$
0.36

155,000

$
0.36

381,250 $ 7.0 — $ —
Outstanding at September 30

1,163,000

$
0.40

905,000

$
0.37

Options exercisable at September 30,

573,000

$
0.38

—

$
—

Outstanding at March 31 2,940,000 $ 3.19 3,075,000 $ 3.92
Options exercisable at March 31 1,393,750 $ 3.59 1,010,000 $ 4.63
Weighted average fair value of options granted during the period

—

$
—

—

$
—

— $ 1.39 — $ 2.83
Stock-based compensation expense

—

$
(25,343
)

—

$
86,876

— $ 393,113 — $ 535,059

Total stock-based compensation expense ~~net of estimated forfeitures for stock option awards totaled $(25,343)~~was $393,113 and ~~$86,876~~$535,059 for the ~~seven~~three months ended ~~September 30, 2017~~March 31, 2024, and ~~September 30, 2016,~~2023, respectively.

~~The weighted-average grant-date fair value of options granted during~~ No cash was received from option exercises for the ~~seven~~three months ended ~~September 30, 2017~~March 31, 2024, and ~~September 30, 2016, was $17,961 and zero,~~2023, respectively. ~~The total intrinsic value of options exercised during the seven months ended September 30, 2017 and September 30, 2016, was zero for both periods.~~

The following table presents information pertaining to options outstanding at ~~September 30, 2017:~~March 31, 2024:

Range of Exercise Price

Number
Outstanding

Weighted
Average
Remaining
Contractual
Life

Weighted
Average
Exercise
Price

Number
Exercisable

Weighted
Average
Exercise
Price

Number
Outstanding Weighted
Average
Remaining
Contractual
Life Weighted
Average
Exercise
Price Number
Exercisable Weighted
Average
Exercise
Price

$0.36 - $0.46

1,163,000

5 years

$
0.40

573,000

$
0.38

$2.18 - $4.37 2,940,000 6.9 years $ 3.19 1,393,750 $ 3.59

As of ~~September 30, 2017,~~March 31, 2024, there was ~~$115,384~~$2,719,478 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the ~~Plan.~~Plans. That cost is expected to be recognized over a weighted-average period of 1746 months. The total fair value of shares vested as of March 31, 2024, and March 31, 2023, was $3,884,426 and $3,511,874, respectively.
- 12 -
Table of Contents
Performance Based Stock Options
The following table summarizes the activities for our unvested performance based stock option awards for the three months ended March 31, 2024, and 2023.
Three Months Ended March 31,
2024 2023
Shares Weighted
Average
Grant-Date
Fair Value Shares Weighted
Average
Grant-Date
Fair Value

Unvested at January 1 200,000 $ 1.48 — $ —
Granted — $ — — $ —
Vested — $ — — $ —
Forfeited/canceled — $ — — $ —
Unvested at March 31 200,000 $ 1.48 — $ —
Total stock-based compensation expense was $8,121 and zero for the three months ended March 31, 2024, and 2023, respectively.
As of March 31, 2024, there was $168,223 of unrecognized compensation cost related to unvested employee performance based options. This amount is expected to be recognized over a weighted-average period of 36 months.
Restricted Stock Awards and PSUs
The following table summarizes the activities for our restricted stock awards and PSUs for the three months ended March 31, 2024, and 2023.
Three Months Ended March 31,
2024 2023
Shares Weighted
Average
Grant-Date Fair Value Shares Weighted
Average
Grant-Date Fair Value

Unvested at January 1 904,496 $ 1.80 950,000 $ 3.04
Granted — $ — — $ —
Vested — $ — 50,000 $ 3.31
Forfeited/canceled — $ — — $ —
Unvested at March 31 904,496 $ 1.80 900,000 $ 2.93
Total stock-based compensation expense was $122,551 and $170,387 for the three months ended March 31, 2024, and 2023, respectively.
As of March 31, 2024, and 2023, there was $755,513 and $1,447,790 of unrecognized compensation cost related to unvested employee restricted stock awards and PSUs. This amount is expected to be recognized over a weighted-average period of 21 months.
- 13 -
Table of Contents
Common Stock Warrants
The following table summarizes the activities for our common stock warrants issued in connection with our loan financing agreement with HSBC for the three months ended March 31, 2024, and 2023.
Three Months Ended March 31,
2024 2023
Shares Weighted
Average
Grant-Date Fair Value Shares Weighted
Average
Grant-Date Fair Value

Unvested at January 1 — $ — — $ —
Granted 76,104 $ 1.37 — $ —
Vested 38,052 $ 1.37 — $ —
Forfeited/canceled — $ — — $ —
Unvested at March 31 38,052 $ 1.37 — $ —
As of March 31, 2024, and 2023, there was $52,125 and zero of unrecognized cost related to unvested warrants.
NOTE 4 — DEBT OBLIGATIONS
On July 28, 2023, the Company entered into a commercial insurance premium finance and security agreement with AON Premium Finance, LLC in the aggregate principal amount of $0.57 million bearing an annual percentage rate of 9.5%, to finance its insurance premiums. Monthly payments are due on the first of each month beginning August 1, 2023 through June 1, 2024. The balance of the AON note was $314,344 as of December 31, 2023 and $159,031 as of March 31, 2024.
On March 8, 2024, the Company entered into a loan and security agreement with HSBC Ventures USA Inc., as lender, providing for a $5,000,000 revolving credit facility and a $5,000,000 term loan facility. Borrowings are secured by a first-priority lien on substantially all of the assets of the Company, subject to customary exceptions. The revolving credit facility matures on December 31, 2025 and the term loan matures on December 1, 2028. Our former revolving credit facility with Key Bank expired during the ~~seven months~~quarter ended September 30, ~~2017~~2023. As of March 31, 2024, there were no outstanding borrowings under the term loan nor the revolving credit facility.
NOTE 5 — LEASES
We have finance and ~~September 30, 2016, was $17,873~~operating leases for our corporate office and ~~zero,~~certain office and computer equipment. Our two operating leases have remaining lease terms of 8.4 years and 4.8 years, respectively. Our three finance leases have remaining lease terms of 3.2 years, 2.75 years, and 4.5 years, respectively, as of March 31, 2024.

The components of lease expense were as follows:

Three Months Ended
March 31,
2024 2023

Operating lease cost $ 111,548 $ 112,522
Short-term lease cost 3,460 52,894
Total lease cost $ 115,008 $ 165,416

Finance lease cost:
Amortization of right-of-use assets $ 28,896 $ 27,223
Interest on lease liabilities 6,053 6,720
Total finance lease cost $ 34,949 $ 33,943
- 1114 -

Table of Contents
Supplemental cash flow information related to leases was as follows:

Three Months Ended
March 31,
2024 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 120,365 $ 113,813
Financing cash flows from finance leases 32,859 30,800
Supplemental balance sheet information related to leases was as follows:

March 31,
2024 December 31,
2023

Operating Leases
Operating lease right-of-use assets $ 3,428,885 $ 3,514,055

Operating lease current liabilities 372,109 368,313
Operating lease long term liabilities 3,241,837 3,336,300
Total operating lease liabilities $ 3,613,946 $ 3,704,613

Finance Leases
Property and equipment, at cost $ 577,929 $ 577,929
Accumulated depreciation (190,358 ) (161,461 )
Property and equipment, net $ 387,571 $ 416,468

Finance lease current liabilities 111,103 109,540
Finance lease long term liabilities 288,253 316,623
Total finance lease liabilities $ 399,356 $ 426,163
March 31,
2024 December 31,
2023

Weighted Average Remaining Lease Term
Operating leases 6.6 Years 6.9 Years
Finance leases 3.6 Years 3.7 Years

Weighted Average Discount Rate
Operating leases 5.73% 5.76%
Finance leases 6.17% 6.19%
Maturities of lease liabilities are as follows:
Year Ending December 31, Operating Leases Finance Leases
Remainder of 2024 $ 384,041 98,578
2025 512,055 131,437
2026 512,055 131,437
2027 512,055 74,194
2028 511,009 6,179
Thereafter 1,833,604 —
Total undiscounted lease payments 4,264,819 441,825
Less: imputed interest (650,873 ) (42,469 )
Total lease liabilities $ 3,613,946 $ 399,356
- 15 -
Table of Contents
NOTE 6 — INCOME TAXES
For interim income tax reporting, the Company estimates its annual effective tax rate and applies it to fiscal year-to-date pretax loss, excluding unusual or infrequently occurring discrete items. Tax jurisdictions with losses for which tax benefits cannot be realized are excluded. The Company reported an income tax expense of zero and income tax benefit of $0.6 million for the periods ended March 31, 2024 and 2023, respectively.
We evaluate our deferred tax assets to determine if they are more likely than not to be realized by assessing both positive and negative evidence in accordance with ASC Topic 740, Income Taxes. After considering our cumulative pretax loss (the three-year period ending with the current year), as well as analyzing all available evidence, we have recorded a valuation allowance of $6.0 million against our net deferred tax assets during the year ended December 31, 2023. As of March 31, 2024, the valuation allowance is $6.4 million As we continue to assess the realizability of our deferred tax assets, reported pretax income and new evidence may result in a partial or full reduction of the valuation allowance in future periods.
Recurring items cause our effective tax rate to differ from the U.S. federal statutory rate of 21%, including U.S. federal R&D credits, U.S. state tax rates, and stock-based compensation.
Beginning in 2022, certain research and development costs are required to be capitalized and amortized over a five-year period under the Tax Cuts and Jobs Act enacted in December 2017. This change will impact the expected U.S. federal and state income tax expense and cash taxes to be paid for our fiscal 2024.
The Company files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. Income tax returns for years prior to fiscal 2020 are no longer subject to examination by tax authorities.
NOTE 7 — COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS
The Company has been and may again become involved in legal proceedings, claims and litigation arising in the ordinary course of business. KORU Medical Systems Inc. is not presently a party to any litigation or other legal proceeding that is believed to be material to its financial condition.
NOTE 8 — SUBSEQUENT EVENTS
On April 8, 2024, the Company’s appeal to BSI in connection with a prior audit matter was upheld resulting in no disruption of sales of the Company to the market and patients. Our products remain certified, marketed and sold in the EU. The Company intends to address the identified nonconformance through the routine BSI assessment process.
- 16 -
Table of Contents
PART I –— ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF ~~OPERATIONS.~~OPERATIONS

This Quarterly Report on Form 10-Q contains, and our officers and representatives may from time to time make, certain “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information relating to us that are based on the beliefs of the management, as well as assumptions made and information currently available. 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 uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control.

Our actual results may vary materially from the forward-looking statements made in this report due to important factors such as uncertainties associated with global health crises, inflation, war and other geopolitical conflicts, customer ordering patterns, availability and costs of raw materials and labor and our ability to recover such costs, our ability to convert inventory to a source of cash, future operating results, ~~unpredictability related~~growth of new patient starts and the SCIg market, our ability to partner with biopharmaceutical companies in our novel therapies business, Food and Drug Administration and foreign authority regulations and the outcome of regulatory audits, introduction of competitive products, ~~limited liquidity,~~acceptance of and demand for new and existing products, ability to penetrate new markets, success in enforcing and obtaining patents, reimbursement related risks, government regulation of the home health care industry, success of ~~the~~our research and development effort, expanding the market of ~~FREEDOM60~~^®FREEDOM system demand in the SCIg market, availability of sufficient capital ~~to continue operations,~~if or when needed, dependence on key personnel, and the ~~outcome~~impact of ~~litigation~~recent accounting pronouncements, as well as those risks and ~~regulatory investigation.~~uncertainties described in Part II.— Item IA. “Risk Factors” in this report and from time to time in our past and future reports filed with the Securities and Exchange Commission, including in our Annual Report on Form 10-K for the year ended December 31, 2023 in addition to others. When used in this report, the words “estimate,” “project,” “believe,” “may,” “will,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking ~~statements.~~statements, which include, without limitation, statements regarding reduction of inventory, and need for additional financing. Such statements reflect current views with respect to future events based on currently available information and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. These statements involve risks and uncertainties with respect to the ability to raise capital if or when needed to develop and market new products, acceptance of and demand for new and existing products, ability to penetrate new markets, our success in enforcing and obtaining patents, obtaining required Government approvals, attracting and maintaining key personnel and succeeding in litigation claims that could cause the actual results to differ materially. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. The Company does not undertake any obligation to release publicly any revision to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Throughout this report, ~~“RMS,”~~ the “Company,” “KORU Medical,” “we,” “us” ~~and~~or “our” ~~refer~~refers to ~~Repro Med~~KORU Medical Systems, Inc.

OVERVIEW

~~On March 22, 2017,~~The Company develops, manufactures and markets proprietary portable and innovative medical devices primarily for the ~~Board~~subcutaneous drug delivery market as governed by the United States Food and Drug Administration (the “FDA”) quality and regulatory system and international regulations and standards for quality system management.
Our revenues derive from three business sources: (i) domestic core (which consists of ~~Directors approved a change~~US and Canada), (ii) international core, and (iii) novel therapies. Our domestic core and international core revenues consist of sales of our products for the delivery of subcutaneous drugs that are FDA cleared for use with the FREEDOM Infusion 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 from 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 ~~Company’s fiscal year end~~drug development process as well as non-recurring engineering services revenues (“NRE”) received from ~~February 28~~biopharmaceutical companies to ~~December 31.~~ready or customize the FREEDOM System for clinical and commercial use.

~~During~~The Company ended the first quarter of 2024 with $8.2 million in net revenues, a 10.9% increase compared with $7.4 million in the same period last year. Revenues were driven by volume growth in our core domestic and international business of 4.1% and 63.1% respectively, slightly offset by a 21.3% decline in our novel therapies business.
Gross profit for the three months ended ~~September 30, 2017, our total net sales were up 19.5% compared with~~March 31, 2024, was $5.1 million, an increase of $1 million, or 23.1%, from $4.1 million for the same period last year, ~~with the majority of the increase coming~~driven primarily by additional revenue from ~~higher~~ volume in our core businesses and manufacturing efficiencies from our ~~domestic customers. Our~~outsourced manufacturing compared to the same period last year. Gross margin was 62.3%, an increase from 56.1% in the prior year period. We define gross margin as gross profit stated as a percentage ~~61.8%, was not as high as~~of net revenues.
Operating expenses for the three months ended March 31, 2024, were $7.1 million, compared to $7.2 million for the same period last year, ~~63.1%, mostly due to higher production costs related to scrap during quality inspections as we continue to work to implement~~driven primarily by a ~~nondestructive testing protocol, which we expect to have implemented before the end~~decrease of ~~the calendar year. Our selling, general~~$0.1 million in research and administrative costs were 10.4% lower for the three months ended September 30, 2017 compared with the same period last year mostly due to a significant reduction in legal fees for the quarter related to our litigation and regulatory efforts.development expenses.

Our net sales for the seven months ended September 30, 2017 increased 26.0%, versus the same period last year. Part of the increase was the result of backorders of $0.4 million at February 28, 2017 which were filled during the three month period ended June 30, 2017. Excluding these backorders, net sales grew 18.0% driven by growth both domestically and internationally, which included a larger pump order from a national customer in the period and a large return of product related to a market withdrawal last year. Our selling, general and administrative costs were 7.2% lower for the seven months ended September 30, 2017 compared with the same period last year. We saw a significant reduction in legal fees related to our litigation and regulatory efforts. However, we cannot predict whether this trend will continue, nor can we predict the outcome of the litigation or regulatory process. We also had reductions in sales and marketing spend driven by reduced consulting fees that were incurred last year related to our website redesign, public relations, sales training and lead generation efforts and the timing of spend for current year marketing initiatives. Offsetting these savings were increased salary and related benefit costs in our regulatory department due to headcount to support our regulatory compliance requirements and the addition of our Chief Operating Officer.

We continue to expand internationally, generating our first sales in Asia and Africa in the 2017 quarter. The FDA issued a new 510(k) clearance for our Integrated Catch-Up Freedom Syringe Driver System, the first ever fully integrated 510(k) cleared system by the FDA, confirming the science behind the performance of using the dedicated RMS system. It is also the only mechanical infusion system cleared for both subcutaneous drugs (SCIg) and intravenous (antibiotics), clearing the path for customers to invest in one system to meet all their needs. The FDA renewed our Certificate to Foreign Government which is used to communicate to foreign governments that the FDA certified that RMS meets good manufacturing practices and quality system regulations. We received registrations in new countries, launched our new flow controller in Europe and started several clinical trials with drug companies. Furthermore, we have launched a new marketing campaign, redesigned our packaging and entered the social media world to help extend our brand awareness. We plan to continue to focus on global sales growth, cost control and new product development. We have requested an extension on the lease for our facility as we continue to assess what our strategy for future expansion and growth requirements will be.

- 1217 -

Table of Contents
RESULTS OF OPERATIONS

Three months ended ~~September 30, 2017~~March 31, 2024, compared to ~~September 30, 2016~~March 31, 2023

Net ~~Sales~~Revenues

The following table summarizes our net ~~sales~~revenues for the three months ended ~~September 30, 2017~~March 31, 2024, and ~~2016:~~2023:

Three Months Ended September 30,

Change from Prior Year

% of Sales

2017

2016

$

%

2017

2016

Sales

Domestic

$
3,209,345

$
2,597,905

$
611,440

23.5%

83.4%

80.6%

International

639,993

623,597

16,396

2.6%

16.6%

19.4%

Total

$
3,849,338

$
3,221,502

$
627,836

19.5%

Three Months Ended March 31, Change from Prior Year % of Net Revenues
2024 2023 $ % 2024 2023
Net Revenues
Domestic Core $ 5,953,865 $ 5,719,135 $ 234,730 4.1% 72.7% 77.4%
International Core 1,790,483 1,097,490 692,993 63.1% 21.8% 14.8%
Total Core 7,744,348 6,816,625 927,723 13.6% 94.5% 92.2%
Novel Therapies 453,450 575,980 (122,530 ) (21.3% ) 5.5% 7.8%
Total $ 8,197,798 $ 7,392,605 $ 805,193 10.9% 100% 100%

Total net ~~sales~~revenues increased ~~$0.6~~$0.8 million, or ~~19.5%~~10.9%, to $8.2 million for the three months ended ~~September 30, 2017~~March 31, 2024, as compared with the same period ~~last year. This growth was~~in 2023. Domestic Core revenues increased by 4.1% from higher consumable volumes driven ~~mostly~~by new patients starts and share gains. International Core revenues increased by 63.1%, from higher consumable and pump volumes driven largely by increased ~~volume from domestic sales. We continue~~Ig supply, increased penetration within approved indications, and geographic expansion. International orders were expedited for certain distribution partners of $0.26 million in March 2024 to ~~concentrate~~ensure adequate inventory to fulfill patient needs in the ~~majority~~event of ~~our efforts~~a supply disruption related to the BSI regulatory review process. Novel therapies net revenues declined by 21.3% primarily driven by a milestone completion for a collaboration agreement in ~~our infusion product lines, specifically towards new applications in both domestic and international markets. During~~ the ~~quarter we generated our first sales in Asia and Africa, and we continue to pursue registrations in new countries. We also continue to expand our sales efforts into the antibiotic market.~~prior year period.

Gross Profit

Our gross profit for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 is as follows:

Three Months Ended September 30,

Change from Prior Year

Three Months Ended March 31, Change from Prior Year

2017

2016

$

%

2024 2023 $ %
Gross Profit

$
2,378,658

$
2,032,944

$
345,714

17.0%

$ 5,103,298 $ 4,147,035 $ 956,263 23.1%
Stated as a Percentage of Net Sales

61.8%

63.1%

Gross Margin 62.3% 56.1%

Gross profit increased ~~$0.3~~$1.0 million ~~or 17.0%~~to $5.1 million in the three months ended ~~September 30, 2017,~~March 31, 2024, compared to $4.1 million in the same period in ~~2016. This~~2023. Gross margin increased to 62.3% compared to 56.1% in the first quarter of 2023. The increase in ~~the quarter~~gross margin was ~~mostly~~primarily driven by production efficiencies from outsourced manufacturing and consolidation of US manufacturing sites when compared to the increase in net sales of $0.6 million. Partially offsetting this increase were higher production costs related to scrap during quality inspections as we work to implement a nondestructive testing protocol, which we expect to have implemented before the end of the calendar year. Additionally, we still incurred slightly higher payroll costs as we built up inventory.prior year period.

~~Selling, general and administrative and Research and development~~Operating Expenses

Our selling, general and administrative, ~~expenses and~~ research and development ~~costs~~and depreciation and amortization expenses for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 are as follows:

Three Months Ended September 30,

Change from Prior Year

Three Months Ended March 31, Change from Prior Year

2017

2016

$

%

2024 2023 $ %
Selling, general and administrative

$
1,893,911

$
2,114,407

$
(220,496
)
(10.4
)
$ 5,357,620 $ 5,425,877 $ (68,257 ) (1.3% )
Research and development

14,852

75,198

(60,346
)
(80.2
)
1,475,674 1,564,869 (89,195 ) (5.7% )
Depreciation and amortization 231,370 213,117 18,253 8.6%

$
1,908,763

$
2,189,605

$
(280,842
)
(12.8
)
$ 7,064,664 $ 7,203,863 $ (139,199 ) (1.9% )
Stated as a Percentage of Net Sales

49.6%

68.0%

Selling, general and administrative expenses decreased ~~$0.2~~$0.1 million, or ~~10.4%~~1.3%, during the three months ended ~~September 30, 2017~~March 31, 2024 compared towith the same period last year. ~~The decrease was the result of a significant reduction in legal fees of $0.3 million related to our litigation~~
Research and ~~regulatory efforts. We cannot predict whether this trend will continue, nor can we predict the outcome of the litigation. We also had reduced~~development expenses ~~in sales and marketing of~~decreased $0.1 million, ~~mostly due to lower salary and related costs due to attrition in Europe, lower overall marketing spend~~or 5.7% during the three months ended March 31, 2024 compared with the same period last year, primarily due to timing ~~all partially offset by recruiting fees~~of project spend in ~~Europe. Further offsetting the savings were increased costs of $0.1 million in our regulatory department due to headcount to~~ support ~~our regulatory compliance requirements and the addition~~ of our ~~Chief Operating Officer, as well as an increase in bad debt expense of $65,000 related to an international customer. Research~~innovation efforts for both core and ~~development expense decreased 80.2% due to attrition. We are committed to our research and development activities and are actively searching to replace the open positions.~~novel therapies businesses.

- 1318 -

~~Depreciation and amortization~~Table of Contents

Depreciation and amortization expense increased by ~~9.3% up~~8.6% to ~~$77,517~~$231,370 in the three months ended ~~September 30, 2017~~March 31, 2024 compared with ~~$70,935~~$213,117 in the three months ended ~~September 30, 2016 as a result of continued investment in computer~~March 31, 2023. The increase was driven by research and development tooling and equipment ~~testing equipment, patent applications and maintenance of existing patents.~~commissioned during 2023.

Net ~~Income/(Loss)~~Loss

Three Months Ended September 30,

Change from Prior Year

2017

2016

$

Net Income/(Loss)

$
265,754

$
(153,213
)
$
418,967

Stated as a Percentage of Net Sales

6.9%

(4.8%
)

Three Months Ended March 31, Change from Prior Year
2024 2023 $ %
Net Loss $ (1,935,958 ) $ (2,410,885 ) $ 474,927 19.7%

Our net ~~income for~~loss decreased $0.5 million in the three months ended September 30, 2017 was $0.3 million compared to a net loss of $0.2 million for the three months ended September 30, 2016. This $0.4 million change was mostly a result of the increase in net sales and the reduced selling, general and administrative expenses as described above. Additionally, the Company recognized a $10,419 foreign exchange gain for the period.

~~Seven months ended September 30, 2017 compared to September 30, 2016~~

~~Net Sales~~

~~The following table summarizes our net sales for the seven months ended September 30, 2017 and 2016:~~

Seven Months Ended September 30,

Change from Prior Year

% of Sales

2017

2016

$

%

2017

2016

Sales

Domestic

$
7,463,949

$
5,885,669

$
1,578,280

26.8%

81.2%

80.7%

International

1,724,465

1,408,026

316,439

22.5%

18.8%

19.3%

Total

$
9,188,414

$
7,293,695

$
1,894,719

26.0%

~~Total net sales increased $1.9 million or 26.0% for the seven months ended September 30, 2017~~March 31, 2024 compared with the same period last year, ~~and was~~mostly driven by both domestic and international sales. Part of the increase was the result of backorders of $0.4 million at February 28, 2017 which were filled during the three month period ended June 30, 2017. Excluding these backorders, net sales grew 18.0%. The launch of a new drug generated increased needle sales as customers built inventory, a larger pump order was received from a national customer in the period and last year included a large return of product related to a market withdrawal. We continue to concentrate the majority of our efforts in our infusion product lines, specifically towards new applications in both domestic and international markets. We generated our first sales in Asia and Africa during the period, and we continue to pursue registrations in new countries. We also continue to expand our sales efforts into the antibiotic market.

~~Gross Profit~~

~~Our gross profit for the seven months ended September 30, 2017 and 2016 is as follows:~~

Seven Months Ended September 30,

Change from Prior Year

2017

2016

$

%

Gross Profit

$
5,648,752

$
4,649,770

$
998,982

21.5%

Stated as a Percentage of Net Sales

61.5%

63.8%

Gross profit increased $1.0 million or 21.5% in the seven months ended September 30, 2017, compared to the same period in 2016. This increase was driven by the increase in net sales of $1.9 million. Partially offsetting this increase were higher production costs related to scrap during quality inspections as we work to implement a nondestructive testing protocol, higher sterilization costs due to more frequent cycles required to meet demand and backlog and increased shipping costs due to a backlog. We also had higher production salary and related benefits costs from overtime and the addition of a second shift to meet increased demand.

~~- 14 -~~

~~Selling, general and administrative and Research and development~~

~~Our selling, general and administrative expenses and research and development costs for the seven months ended September 30, 2017 and 2016 are as follows:~~

Seven Months Ended September 30,

Change from Prior Year

2017

2016

$

%

Selling, general and administrative

$
4,536,954

$
4,887,608

$
(350,654
)
(7.2%
)
Research and development

47,564

147,136

(99,572
)
(67.7%
)

$
4,584,518

$
5,034,744

$
(450,226
)
(8.9%
)
Stated as a Percentage of Net Sales

49.9%

69.0%

Selling, general and administrative expenses decreased $0.4 million, or 7.2%, during the seven months ended September 30, 2017 compared to the same period last year. The decrease was the result of a significant reduction in legal fees of $0.6 million related to our litigation and regulatory efforts. We cannot predict whether this trend will continue, nor can we predict the outcome of the litigation. We also had reductions in sales and marketing spend of $0.2 million driven by lower consulting fees related to our website redesign last year, timing of spend this year on marketing initiatives and tradeshows and lower salary and related costs due to attrition in Europe. Partially offsetting these savings were increased costs in our regulatory department due to headcount to support our regulatory compliance requirements and the addition of our Chief Operating Officer, totaling $0.4 million, as well as an increase in ~~bad debt expense~~gross profit of ~~$65,000, related to an international customer. Research~~$1.0 million and ~~development expense decreased by~~a decrease in operating expenses of $0.1 million ~~or 67.7%, primarily due to attrition for the period. We are committed to our research and development activities and are actively searching to replace the open positions.~~partially offset by a decrease in tax benefit of $0.6 million.

~~Depreciation and amortization~~

Depreciation and amortization expense increased by 7.4% up to $179,874 in the seven months ended September 30, 2017 compared with $167,513 in the seven months ended September 30, 2016 as a result of continued investment in computer equipment, testing equipment, patent applications and maintenance of existing patents.

~~Net Income/(Loss)~~

Seven Months Ended September 30,

Change from Prior Year

2017

2016

$

Net Income/(Loss)

$
626,587

$
(359,095
)
$
985,682

Stated as a Percentage of Net Sales

6.8%

(4.9%
)

Our net income for the seven months ended September 30, 2017 was $0.6 million compared to a net loss of $0.4 million for the seven months ended September 30, 2016.. This $1.0 million change was mostly a result of the increase in net sales and the reduced selling, general and administrative expenses as described above. Additionally, the Company recognized $65,079 in foreign exchange gain for the period.

LIQUIDITY AND CAPITAL ~~RESOURCES~~RESOURCES.

Our principal source of liquidity is our cash on hand of ~~$3.7~~$10.8 million as of ~~September 30, 2017, and cash flows from operations.~~March 31, 2024. Our principal source of operating cash inflows is from sales of our products ~~to customers.~~and NRE. 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, capital expenditures~~expenses. To develop new products, support future growth, achieve operating efficiencies, and ~~patent costs.~~maintain product quality, we are continuing to invest in research and development, and equipment.

Our inventory position was $3.1 million at March 31, 2024, which reflects a decrease of $0.3 million from December 31, 2023.
We ~~believe~~expect that ~~as of September 30, 2017,~~our cash on hand and cash ~~expected to be generated~~flows from ~~future operating activities~~operations will be sufficient to ~~fund~~meet our ~~operations,~~requirements at least through the 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, raise capital through issuance of equity, or a combination of both. Our future capital requirements may vary from those currently planned and will depend on many factors, including ~~further~~our rate of sales growth, the timing and extent of spending on various strategic initiatives including research and development, our international expansion, the timing of new product introductions, market acceptance of our solutions, and ~~capital expenditures for~~overall economic conditions including inflation and the ~~next 12 months. We believe~~potential impact of global supply imbalances on the ~~FREEDOM System continues to find a solid following in~~global financial markets. To the ~~SCIg market,~~extent that current and ~~this market is~~anticipated future sources of liquidity are or are expected to ~~continue~~be insufficient to ~~increase both domestically~~fund our future business activities and ~~internationally. In addition,~~requirements, we ~~expect many of the SCIg providers, and others, will see benefit in using the FREEDOM System for~~may be required to draw on our new credit facility or seek additional ~~uses such as antibiotics, chemotherapeutics, and pain medications.~~

~~We continue to~~equity or debt financing sooner. There can be ~~in litigation with a competitor, EMED Technologies Corp. (“EMED”) and have incurred a significant amount of legal fees in connection with that process. Although~~no assurance the Company ~~believes it has meritorious claims and defenses in~~will be able to obtain the ~~actions and proceedings, their outcomes cannot be predicted with any certainty. If any of these actions against~~financing or raise the ~~Company are successful, they could have a material adverse effect on the Company’s business, results of~~capital required to fund its operations ~~financial condition and cash flows.~~or planned expansion.

~~- 15 -~~

On September 30, 2015, RMS’s Board of Directors authorized the Company to make open market purchases of up to 2,000,000 shares of the Company’s outstanding Common Stock. The purchases are made through a broker designated by the Company, with price, timing and volume restrictions based on average daily trading volume, consistent with the rules of the Securities and Exchange Commission for such repurchases. As of September 30, 2017, the Company had repurchased 396,606 shares at an average price of $0.45. The management of the Company has decided to discontinue repurchasing its outstanding Common Stock for an undetermined period of time to utilize cash for capital investments needed to expand the business.

Cash Flows

The following table summarizes our cash flows:

Three Months Ended
March 31, 2024 Three Months Ended
March 31, 2023

Seven Months Ended
September 30, 2017

Seven Months Ended
September 30, 2016

Net cash provided by/(used in) operating activities

$
531,281

$
(212,676
)
Net cash used in operating activities $ (346,720 ) $ (4,660,583 )
Net cash used in investing activities

$
(163,479
)
$
(230,044
)
$ (133,083 ) $ (283,837 )
Net cash used in financing activities

$
(19,360
)
$
(120,577
)
$ (182,120 ) $ (238,972 )

Operating Activities

Net cash provided by operating activities of $0.5 million for the seven months ended September 30, 2017 was primarily attributable to net income of $0.6 million, non-cash charges of $0.2 million for depreciation and amortization of long lived tangible and intangible assets, a decrease in tax receivable of $0.1 million, and an increase in tax liability of $0.1 million. Offsetting these were an increase in inventory of $0.2 million as we built up finished goods inventory after our backorder position at February 28, 2017 and the reduction of accounts payable of $0.4 million which was the result of the payment of legal fees accrued at February 28, 2017.

Net cash used in operating activities ~~of $0.2~~was $0.3 million for the ~~seven~~three months ended ~~September 30, 2016~~March 31, 2024 vs $4.7 million in the prior year. This net cash usage of $0.3 million was primarily ~~attributable~~due to the ~~operating~~net loss of ~~$0.4~~$1.9 million, an increase in accounts receivable of $0.3 million, ~~an increase in prepaid expense~~a reduction of ~~$0.1 million mostly due to an income tax receivable of $0.1 million due to the loss in the period and the decrease in tax liability of $0.2 million. Partially offsetting these were non-cash charges~~accrued expenses of $0.2 million ~~for depreciation and amortization~~driven by payment of ~~long lived tangible and intangible assets, stock based compensation expense of $0.1 million and~~2023 bonuses, offset by an increase in accounts payable of ~~$0.4~~$0.8 million, ~~mostly~~a decrease in inventory of $0.3 million, and non-cash items including stock-based compensation expense of $0.7 million, and depreciation and amortization expense of $0.2 million.
- 19 -
Table of Contents
Net cash used in operating activities of $4.7 million for the three months ended March 31, 2023 was primarily due to ~~raw material purchases~~the net loss of $2.4 million, working capital changes which included an increase in accounts receivable of $0.6 million, an increase in inventory of $0.2 million, a decrease in accrued expenses of $1.3 million, a decrease in accounts payable of $0.9 million, and ~~legal fees.~~a decrease in prepaid expense of $0.3 million. Further contributing was an increase in deferred tax assets of $0.6 million. Offsetting these were primarily non-cash charges for stock-based compensation of $0.9 million, depreciation and amortization of $0.2 million, and a loss on disposal of fixed assets of $0.1 million.

Investing Activities

~~Our net~~Net cash used in investing activities of ~~$0.2~~$0.1 million for the ~~seven~~three months ~~ended September 30, 2017~~ending March 31, 2024, was for capital expenditures for research and ~~September 30, 2016~~development and manufacturing equipment.
Net cash used in investing activities of $0.3 million for the three months ending March 31, 2023, was ~~primarily attributable to our continued investment in~~for capital ~~assets mostly related to production~~expenditures for research and ~~for new patent applications~~development and ~~maintenance of existing patents.~~office equipment.

Financing Activities

~~Our net~~Net cash used in financing activities ~~was $19,360 and $120,577~~ for the ~~seven~~three months ended ~~September 30, 2017 and September 30, 2016, respectively, and were a result of~~March 31, 2024 was $0.2 million, due to payments on our note payable for insurance premium financing.
Net cash used in financing activities for the ~~repurchase of shares of the Company’s common stock.~~three months ended March 31, 2023, was $0.2 million, due to payments on our note payable for insurance premium financing.

~~FDA~~ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

RMS had an inspection by the FDA in June 2015, which included, among other items, a review of customer complaints, quality controls, quality assurance and documentation. The FDA inspection was then expanded as a consequence of an extensive “trade complaint” filed on behalf of a competitor which resultedRefer to “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the issuance of an FDA FORM 483. Eight months later, on February 29, 2016 we received a Warning Letter. Since that time the Company has successfully addressed all quality and regulatory issues cited in the Warning Letter and the FDA FORM 483. On October 2, 2017, the FDA conducted another inspection as a last step in closing the Warning Letter. We anticipate the Warning Letter to be closed in the near future.

~~On April 19, 2017, the FDA renewed our Certificate to Foreign Government~~accompanying financial statements, which is ~~used to communicate to foreign governments that the FDA confirmed and certified that RMS meets U.S. FDA good manufacturing practices and quality system regulations.~~incorporated herein by reference.

~~- 16 -~~

~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09—Compensation-Stock Compensation (Topic 718), which provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this update affect any entity that changes the terms or conditions of a share-based payment award. The amendments in this update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. Based upon our initial evaluation, we do not expect the adoption of the standard to have a material effect on our financial statements, disclosure requirements and methods of adoption.

In June 2016, FASB issued ASU No. 2016-13—Financial Instruments – Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments, which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. This ASU affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is assessing the impact of the adoption of the ASU on its financial statements, disclosure requirements and methods of adoption.

In May 2014, the FASB issued ASU No. 2014-09—Revenue from Contracts with Customers. The ASU clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”) that removes inconsistencies and weaknesses in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets, provides more useful information to users of the financial statements through improved disclosure requirements and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The amendments in this update are effective for the annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Full or modified retrospective adoption is required and early application is not permitted. On July 9, 2015, the FASB issued ASU No. 2015-14 Revenue from Contracts with Customers (Topic 606); Deferral of the Effective Date, which (a) delays the effective date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), by one year to annual periods beginning after December 15, 2017 and (b) allows early adoption of the ASU by all entities as of the original effective date for public entities. We currently anticipate adopting the new standard using the modified retrospective method beginning January 1, 2018. In March 2016, the FASB issued ASU No. 2016-08 Revenue from Contracts with Customers (Topic 606); Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations and the effective date is the same as the requirements in ASU 2014-09. In April 2016, the FASB issued ASU No. 2016-10 Revenue from Contracts with Customers (Topic 606); Identifying Performance Obligations and Licensing, which is intended to clarify identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas and the effective date is the same as the requirements in ASU 2014-09. In May 2016, FASB issued ASU No. 2016-12—Revenue from Contracts with Customers (Topic 606); Narrow-Scope Improvements and Practical Expedients, which is intended to not change the core principle of the guidance in Topic 606, but rather affect only the narrow aspects of Topic 606 by reducing the potential for diversity in practice at initial application and by reducing the cost and complexity of applying Topic 606 both at transition and on an ongoing basis. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by update 2014-09). In December 2016, the FASB issued ASU No. 2016-20 Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which represents changes to make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. This update is the final, combined version of Proposed Accounting Standards Updates 2016-240 and 2016-320 (both entitled Technical Corrections and Improvements), which have been deleted. We do not expect the adoption of the standard and related amendments to have a material effect on our financial condition or results of operations.

~~- 17 -~~

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The main difference between the current requirement under GAAP and this ASU is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. This ASU requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. This is effective for annual and interim periods beginning after December 15, 2018 and early adoption is permitted. This ASU must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are currently assessing the potential impact of this ASU on our financial statements, disclosure requirements and methods of adoption.

The Company considers the applicability and impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations.

~~PART I –~~ ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISK.~~RISK

Not ~~Applicable.~~applicable.

~~PART I –~~ ITEM 4. CONTROLS AND ~~PROCEDURES.~~PROCEDURES

The Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, ~~have~~has evaluated the effectiveness of the Company’s disclosure controls and procedures as such is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluations, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting during the ~~quarter~~three months ended ~~September 30, 2017,~~March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

~~PART II –~~ ITEM ~~2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.~~1A. RISK FACTORS

~~On October 21, 2015,~~Our operations and financial results are subject to various risks and uncertainties, including those described in “PART 1, ITEM 1A. RISK FACTORS” in our Annual Report on Form 10-K for the ~~Board~~year ended December 31, 2023, which could adversely affect our business, financial condition, results of ~~Directors of~~operations, cash flows, and the Company approved non-employee director compensation of $25,000 each annually, to be paid quarterly half in cash and half in common stock, beginning September 1, 2015. The number of shares to be issued each quarter is calculated based upon the closingtrading price of ~~the~~our common stock on the last day of each fiscal quarter as reported by the OTCQX. The Company issued 53,196 and 97,314 shares of common stock to its non-employee directors during the three and seven month period ended September 30, 2017, respectively.stock.

The Company issued 42,553 and 56,108 shares of common stock to Dr. Fred Ma, its Chief Medical Officer, under the terms of his employment agreement, during the three and seven month period ended September 30, 2017, respectively.

On September 30, 2015, RMS’s Board of Directors authorized the Company to make open market purchases of up to 2,000,000 shares of the Company’s outstanding Common Stock. The purchases are made through a broker designated by the Company, with price, timing and volume restrictions based on average daily trading volume, consistent with the rules of the Securities and Exchange Commission for such repurchases. As of September 30, 2017, the Company had repurchased 396,606 shares at an average price of $0.45. There were no repurchases of common stock by the Company during the quarter ended September 30, 2017. The management of the Company has decided to discontinue repurchasing its outstanding Common Stock for an undetermined period of time to utilize cash for capital investments needed to expand the business. There is no expiration date to the repurchase plan.

- 1820 -

~~On September 30, 2015, the Board~~Table of Directors approved the 2015 Stock Option Plan authorizing the Company to grant awards to certain employees under the plan at fair market value, which was approved by shareholders at the Annual Meeting held on September 6, 2016. The total number of shares of Common Stock, with respect to which awards may be granted pursuant to the Plan, shall not exceed 4,000,000 shares. As of September 30, 2017, there were outstanding 1.2 million options awarded to certain executives, key employees and advisory board members under the Plan.Contents

~~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.~~

PART II – ITEM 6. EXHIBITS.

Exhibit No. Description
~~31.1~~
31.1 Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act 2002
31.2
Certification of Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act 2002
32.1
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 2002
32.2
Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 2002
101*
101.INS
Inline XBRL Instance Document - the XBRL Instance Document does not appear in the Interactive Data ~~Files of Financial Statements~~File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and ~~Notes.~~
contained in Exhibit 101)

* In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

- 1921 -

~~SIGNATURES~~Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KORU MEDICAL SYSTEMS, INC.
~~REPRO MED SYSTEMS, INC.~~
May 1, 2024
/s/ Linda Tharby
~~November 3, 2017~~
~~/s/ Andrew I. Sealfon~~
~~Andrew I. Sealfon,~~Linda Tharby, President ~~Chairman of the Board, Director,~~and Chief Executive Officer

(Principal Executive Officer)
~~November 3, 2017~~
May 1, 2024
/s/ ~~Karen Fisher~~
Thomas Adams
~~Karen Fisher,~~Thomas Adams, Chief Financial Officer and Treasurer

(Principal Financial Officer)

- 2022 -

		PAGE
		~~PAGE~~
			PART I. FINANCIAL INFORMATION
~~PART I~~– ~~FINANCIAL INFORMATION~~
ITEM 1.	Financial Statements (Unaudited)	3
~~ITEM 1.~~	~~Financial Statements~~

	Balance Sheets as of ~~September 30, 2017~~March 31, 2024 (Unaudited) and ~~February 28, 2017~~ December 31, 2023	3

	Statements of Operations (Unaudited) for the three ~~and seven~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~ 2023	4

	Statements of Cash Flows (Unaudited) for the ~~seven~~three months ended ~~September 30, 2017~~March 31,2024 and ~~2016~~ 2023	5

	Statements of Stockholders' Equity (Unaudited) for the three months ended March 31, 2024 and 2023	6

	Notes to Financial Statements	~~6-11~~ 7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~12-18~~ 17

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	18 20

ITEM 4.	Controls and Procedures	18 20

PART II–II. OTHER INFORMATION

ITEM 2. 1A.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~ Risk Factors	~~18-19~~ 20

ITEM 6.	Exhibits	19 21

	Signatures	22


	September 30,			February 28,			March 31,			December 31,
	2017			2017			2024			2023
	(Unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	3,661,707		$	3,313,265		$	10,820,317		$	11,482,240
Certificates of deposit		262,314			262,314
Accounts receivable less allowance for doubtful accounts of $77,067 at September 30, 2017 and $18,046 at February 28, 2017		1,481,410			1,502,030
Accounts receivable less allowance for doubtful accounts of $24,777 as of March 31, 2024 and $24,777 as of December 31, 2023								4,392,511			4,045,211
Inventory		1,586,568			1,353,703			3,147,312			3,481,301
Tax Receivable		—			172,457
Other receivables								288,714			28,889
Prepaid expenses		225,088			175,955			830,408			1,218,288
TOTAL CURRENT ASSETS		7,217,087			6,779,724			19,479,262			20,255,929
Property and equipment, net		902,075			932,092			3,755,530			3,837,657
Patents, net of accumulated amortization of $195,354 and $180,137 at September 30, 2017 and February 28, 2017, respectively		440,565			426,943
Intangible assets, net of accumulated amortization of $406,801 and $390,341 as of March 31, 2024 and December 31, 2023, respectively								737,901			754,361
Operating lease right-of-use assets								3,428,885			3,514,055
Deferred income tax assets, net of allowance for non-realization of deferred tax assets of $6,391,452 and $6,002,777 for March 31, 2024 and December 31, 2023, respectively								—			—
Other assets		31,583			31,490			98,970			98,970
TOTAL ASSETS	$	8,591,310		$	8,170,249		$	27,500,548		$	28,460,972

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Deferred capital gain - current	$	22,481		$	22,481
Accounts payable		362,878			772,428		$	1,774,185		$	975,193
Accrued expenses		502,249			417,357			1,459,405			1,711,427
Note payable								159,031			314,344
Other liabilities								457,653			512,520
Accrued payroll and related taxes		123,716			177,018			519,441			462,941
Accrued tax liability		142,883			—
Financing lease liability – current								111,103			109,540
Operating lease liability – current								372,109			368,313
TOTAL CURRENT LIABILITIES		1,154,207			1,389,284			4,852,927			4,454,278
Deferred capital gain – long term		9,382			22,496
Deferred tax liability		91,039			82,422
Financing lease liability, net of current portion								288,253			316,623
Operating lease liability, net of current portion								3,241,837			3,336,300
TOTAL LIABILITIES		1,254,628			1,494,202			8,383,017			8,107,201

STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value; 75,000,000 shares authorized, 40,667,851 and 40,558,429 shares issued, 37,930,620 and 37,821,198 shares outstanding at September 30, 2017 and February 28, 2017, respectively		406,679			405,584
Common stock, $0.01 par value, 75,000,000 shares authorized, 49,143,589 and 49,089,864 shares issued 45,723,087 and 45,669,362 shares outstanding as of March 31, 2024, and December 31, 2023, respectively								491,436			490,899
Additional paid-in capital		4,162,679			4,129,726			47,717,888			47,018,707
Retained earnings		3,111,528			2,484,941
		7,680,886			7,020,251
Less: Treasury stock, 2,737,231 shares at September 30, 2017 and February 28, 2017		(344,204	)		(344,204	)
Treasury stock, 3,420,502 shares as of March 31, 2024 and December 31, 2023, at cost								(3,843,562	)		(3,843,562	)
Accumulated deficit								(25,248,231	)		(23,312,273	)
TOTAL STOCKHOLDERS’ EQUITY		7,336,682			6,676,047			19,117,531			20,353,771
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	8,591,310		$	8,170,249		$	27,500,548		$	28,460,972


	Three Months Ended
	March 31,
		2024			2023

NET REVENUES	$	8,197,798		$	7,392,605
Cost of goods sold		3,094,500			3,245,570
Gross Profit		5,103,298			4,147,035

OPERATING EXPENSES
Selling, general and administrative		5,357,620			5,425,877
Research and development		1,475,674			1,564,869
Depreciation and amortization		231,370			213,117
Total Operating Expenses		7,064,664			7,203,863

Net Operating Loss		(1,961,366	)		(3,056,828	)

Non-Operating Income/(Expense)
Loss on currency exchange		(11,479	)		(680	)
Loss on disposal of fixed assets, net		(300	)		(56,279	)
Interest income, net		37,187			125,502
TOTAL OTHER INCOME		25,408			68,543

LOSS BEFORE INCOME TAXES		(1,935,958	)		(2,988,285	)

Income Tax Benefit		—			577,400

NET LOSS	$	(1,935,958	)	$	(2,410,885	)

NET LOSS PER SHARE

Basic	$	(0.04	)	$	(0.05	)
Diluted	$	(0.04	)	$	(0.05	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

Basic		45,712,224			45,487,593
Diluted		45,712,224			45,487,593


	For the Three Months Ended						For the Seven Months Ended
	September 30,						September 30,
	2017			2016			2017			2016

NET SALES	$	3,849,338		$	3,221,502		$	9,188,414		$	7,293,695
Cost of goods sold		1,470,680			1,188,558			3,539,662			2,643,925
Gross Profit		2,378,658			2,032,944			5,648,752			4,649,770

OPERATING EXPENSES
Selling, general and administrative		1,893,911			2,114,407			4,536,954			4,887,608
Research and development		14,852			75,198			47,564			147,136
Depreciation and amortization		77,517			70,935			179,874			167,513
Total Operating Expenses		1,986,280			2,260,540			4,764,392			5,202,257

Net Operating Profit/(Loss)		392,378			(227,596	)		884,360			(552,487	)

Non-Operating Income/(Expense)
Gain/(Loss) on currency exchange		10,419			(4,096	)		65,079			8,237
Interest and other income		361			262			1,104			1,336
TOTAL OTHER INCOME/(EXPENSE)		10,780			(3,834	)		66,183			9,573

PROFIT/(LOSS) BEFORE TAXES		403,158			(231,430	)		950,543			(542,914	)

Income Tax (Expense)Benefit		(137,404	)		78,217			(323,956	)		183,819

NET INCOME/(LOSS)	$	265,754		$	(153,213	)	$	626,587		$	(359,095	)

NET INCOME/(LOSS) PER SHARE

Basic	$	0.01		$	—		$	0.02		$	(0.01	)
Diluted	$	0.01		$	—		$	0.02		$	(0.01	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

Basic		37,898,357			37,779,427			37,856,074			37,885,432
Diluted		38,056,604			37,779,427			38,014,321			37,885,432


	For the Seven Months Ended
	September 30,
	2017			2016

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	626,587		$	(359,095	)
Adjustments to reconcile net income (loss) to net cash provided by/(used in) operating activities:
Amortization of deferred compensation cost		—			14,000
Stock based compensation expense		53,407			126,006
Depreciation and amortization		179,874			167,513
Deferred capital gain - building lease		(13,113	)		(13,113	)
Deferred taxes		8,617			(30,288	)
Provision for returns and doubtful accounts		58,941			(14,102	)
Changes in operating assets and liabilities:
Increase in accounts receivable		(38,321	)		(293,821	)
Increase in inventory		(232,865	)		(71,011	)
Decrease/(Increase) in prepaid expense and other assets		123,231			(78,602	)
(Decrease)/Increase in accounts payable		(409,550	)		357,384
Decrease in accrued payroll and related taxes		(53,302	)		(31,204	)
Increase in accrued expense		84,892			168,732
Increase/(Decrease) in accrued tax liability		142,883			(155,075	)
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES		531,281			(212,676	)

CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property and equipment		(134,640	)		(123,689	)
Payments for patents		(28,839	)		(106,355	)
NET CASH USED IN INVESTING ACTIVITIES		(163,479	)		(230,044	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payment for cancelled shares		(19,360	)		—
Purchase of treasury stock		—			(120,577	)
NET CASH USED IN FINANCING ACTIVITIES		(19,360	)		(120,577	)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		348,442			(563,297	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		3,313,265			4,201,949
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	3,661,707		$	3,638,652

Supplemental Information
Cash paid during the periods for:
Interest	$	—		$	—
Taxes	$	—		$	—

NON-CASH FINANCING AND INVESTING ACTIVITIES
Issuance of common stock as compensation	$	78,750		$	43,468


				Additional								Total
	Common Stock			Paid-in		Retained			Treasury			Stockholders’
	Shares	Amount		Capital		Deficit			Stock			Equity

BALANCE, DECEMBER 31, 2023	49,089,864	$	490,899	$	47,018,707	$	(23,312,273	)	$	(3,843,562	)	$	20,353,771
Issuance of stock-based compensation	53,725		537		123,267		—			—			123,804
Compensation expense related to stock options	—		—		393,113		—			—			393,113
Compensation related to Restricted Stock	—		—		130,676		—			—			130,676
Issuance of warrants	—		—		52,125		—			—			52,125
Net loss	—		—		—		(1,935,958	)		—			(1,935,958	)
BALANCE, MARCH 31, 2024	49,143,589	$	491,436	$	47,717,888	$	(25,248,231	)	$	(3,843,562	)	$	19,117,531

	Three Months Ended March 31,
	2024		2023
Revenues
Domestic	$	6,384,083	$	6,283,965
International		1,813,715		1,108,640
Total	$	8,197,798	$	7,392,605

•	Level 1 – Quoted prices in active markets for identical assets or liabilities.

•	Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.

•	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and includes instruments for which the determination of fair value requires significant judgment or estimation.

	March 31, 2024			December 31, 2023

Furniture and office equipment	$	1,423,093		$	1,412,164
Leasehold improvements		1,953,653			1,953,653
Manufacturing equipment and tooling		3,311,833			3,193,113
Total property and equipment		6,688,579			6,558,930
Less: accumulated depreciation and amortization		(2,933,049	)		(2,721,273	)
Property and equipment, net	$	3,755,530		$	3,837,657


	September 30, 2017			February 28, 2017

Land	$	54,030		$	54,030
Building		171,094			171,094
Furniture, office equipment, and leasehold improvements		1,054,971			1,022,942
Manufacturing equipment and tooling		1,074,157			1,003,166
		2,354,252			2,251,232
Less: accumulated depreciation		(1,452,177	)		(1,319,140	)
Property and equipment, net	$	902,075		$	932,092

									Three Months Ended March 31,
	Seven Months Ended September 30,								2024			2023
	2017				2016				Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
	Shares	Weighted Average Exercise Price			Shares		Weighted Average Exercise Price

Outstanding at March 1	1,345,000	$	0.39			1,060,000	$	0.37
Outstanding at January 1									3,256,250	$	3.66	3,035,000	$	3.93
Granted	68,000	$	0.44			—	$	—	65,000	$	2.21	40,000	$	3.91
Exercised	—	$	—			—	$	—	—	$	—	—	$	—
Forfeited	250,000	$	0.36			155,000	$	0.36	381,250	$	7.0	—	$	—
Outstanding at September 30	1,163,000	$	0.40			905,000	$	0.37
Options exercisable at September 30,	573,000	$	0.38			—	$	—
Outstanding at March 31									2,940,000	$	3.19	3,075,000	$	3.92
Options exercisable at March 31									1,393,750	$	3.59	1,010,000	$	4.63
Weighted average fair value of options granted during the period	—	$	—			—	$	—	—	$	1.39	—	$	2.83
Stock-based compensation expense	—	$	(25,343	)		—	$	86,876	—	$	393,113	—	$	535,059


Range of Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price		Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price

$0.36 - $0.46	1,163,000	5 years	$	0.40	573,000	$	0.38
$2.18 - $4.37								2,940,000	6.9 years	$	3.19	1,393,750	$	3.59


	March 31, 2024			December 31, 2023

Operating Leases
Operating lease right-of-use assets	$	3,428,885		$	3,514,055

Operating lease current liabilities		372,109			368,313
Operating lease long term liabilities		3,241,837			3,336,300
Total operating lease liabilities	$	3,613,946		$	3,704,613

Finance Leases
Property and equipment, at cost	$	577,929		$	577,929
Accumulated depreciation		(190,358	)		(161,461	)
Property and equipment, net	$	387,571		$	416,468

Finance lease current liabilities		111,103			109,540
Finance lease long term liabilities		288,253			316,623
Total finance lease liabilities	$	399,356		$	426,163

	March 31, 2024	December 31, 2023

Weighted Average Remaining Lease Term
Operating leases	6.6 Years	6.9 Years
Finance leases	3.6 Years	3.7 Years

Weighted Average Discount Rate
Operating leases	5.73%	5.76%
Finance leases	6.17%	6.19%

Year Ending December 31,	Operating Leases			Finance Leases
Remainder of 2024	$	384,041			98,578
2025		512,055			131,437
2026		512,055			131,437
2027		512,055			74,194
2028		511,009			6,179
Thereafter		1,833,604			—
Total undiscounted lease payments		4,264,819			441,825
Less: imputed interest		(650,873	)		(42,469	)
Total lease liabilities	$	3,613,946		$	399,356


	Three Months Ended September 30,				Change from Prior Year			% of Sales
	2017		2016		$		%	2017	2016
Sales
Domestic	$	3,209,345	$	2,597,905	$	611,440	23.5%	83.4%	80.6%
International		639,993		623,597		16,396	2.6%	16.6%	19.4%
Total	$	3,849,338	$	3,221,502	$	627,836	19.5%

	Three Months Ended March 31,				Change from Prior Year					% of Net Revenues
	2024		2023		$			%		2024	2023
Net Revenues
Domestic Core	$	5,953,865	$	5,719,135	$	234,730		4.1%		72.7%	77.4%
International Core		1,790,483		1,097,490		692,993		63.1%		21.8%	14.8%
Total Core		7,744,348		6,816,625		927,723		13.6%		94.5%	92.2%
Novel Therapies		453,450		575,980		(122,530	)	(21.3%	)	5.5%	7.8%
Total	$	8,197,798	$	7,392,605	$	805,193		10.9%		100%	100%

							Three Months Ended March 31, 2024			Three Months Ended March 31, 2023
	Seven Months Ended September 30, 2017			Seven Months Ended September 30, 2016
Net cash provided by/(used in) operating activities	$	531,281		$	(212,676	)
Net cash used in operating activities							$	(346,720	)	$	(4,660,583	)
Net cash used in investing activities	$	(163,479	)	$	(230,044	)	$	(133,083	)	$	(283,837	)
Net cash used in financing activities	$	(19,360	)	$	(120,577	)	$	(182,120	)	$	(238,972	)

Exhibit No.	Description
~~31.1~~
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act 2002

31.2	Certification of Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act 2002

32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 2002

32.2	Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 2002

101* 101.INS	Inline XBRL Instance Document - the XBRL Instance Document does not appear in the Interactive Data ~~Files of Financial Statements~~File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and ~~Notes.~~ contained in Exhibit 101)

	KORU MEDICAL SYSTEMS, INC.
	~~REPRO MED SYSTEMS, INC.~~
May 1, 2024	/s/ Linda Tharby
~~November 3, 2017~~	~~/s/ Andrew I. Sealfon~~
	~~Andrew I. Sealfon,~~Linda Tharby, President ~~Chairman of the Board, Director,~~and Chief Executive Officer (Principal Executive Officer)

~~November 3, 2017~~ May 1, 2024	/s/ ~~Karen Fisher~~ Thomas Adams
	~~Karen Fisher,~~Thomas Adams, Chief Financial Officer and Treasurer (Principal Financial Officer)