| Summary of Significant Accounting Policies | Note 2 — Summary of Significant Accounting
Policies: Basis of Presentation The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America, or GAAP, for interim financial information and with the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly,
the unaudited condensed consolidated financial statements do not include all information and footnotes required by GAAP for complete annual
financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all
adjustments, consisting of normal recurring adjustments, considered necessary to fairly state the interim results. Interim operating results
are not necessarily indicative of results that may be expected for the full year ending December 31, 2022 or for any subsequent period.
These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes
thereto of the Company which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission,
or SEC, on March 29, 2022. The accompanying consolidated balance sheet as of December 31, 2021 has been derived from the audited financial
statements included in such Form 10-K. Liquidity and Uncertainties The condensed consolidated financial statements
have been prepared in conformity with GAAP which contemplate continuation of the Company as a going concern. To date, the Company’s
commercial operations have not generated sufficient revenues to enable profitability. Based on the Company’s current development
plans for DefenCath in the U.S. and its other operating requirements, the Company’s existing cash and cash equivalents and short-term
investments at September 30, 2022 are expected to fund its operations at least through 2023. The Company’s continued operations will depend
on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships,
potential strategic transactions or out-licensing of its products in order to commercially launch DefenCath upon NDA approval and until
profitability is achieved, if ever. Management can provide no assurances that such financing or strategic relationships will be available
on acceptable terms, or at all. As of September 30, 2022, the Company has $37.9 million available under its At-the-Market Issuance Sales
Agreement (the “ATM program”) and has $150.0 million available under its current shelf registration for the issuance of equity,
debt or equity-linked securities (see Note 3). The Company’s operations are subject to a
number of other factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the
results of clinical testing and trial activities of the Company’s product candidates; the ability to obtain regulatory approval
to market the Company’s products; ability to manufacture successfully; competition from products manufactured and sold or being
developed by other companies; the price of, and demand for, Company products; the Company’s ability to negotiate favorable licensing
or other manufacturing and marketing agreements for its products; and the Company’s ability to raise capital to support its operations. The COVID-19 pandemic and government measures taken
in response to the pandemic have had a significant impact, both direct and indirect, on businesses and commerce. In response to the COVID-19
pandemic, “shelter in place” orders and other public health guidance measures were implemented across much of the United States,
Europe and Asia, including in the locations of the Company’s offices, clinical trial sites, key vendors and partners. A resurgence
of the COVID-19 pandemic may impact the Company’s program timelines which could materially and adversely affect its business, financial
conditions and results of operations. Use of Estimates The preparation of condensed consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue
and expenses during the reporting period. Actual results could differ from those estimates. Included in these estimates are assumptions
on accrued expenses and assumptions used in determining stock compensation such as expected volatility and risk-free interest rate. Reclassifications Certain reclassifications
were made to the prior year’s amounts to conform to the 2022 presentation. Non-cash lease expense, as presented on the Company’s
condensed consolidated statement of cash flows for the nine months ended September 30, 2021, is now presented as change in right-of-use
assets and change in operating lease liabilities. Basis of Consolidation The condensed consolidated financial statements
include the accounts of the Company, CorMedix Europe GmbH and CorMedix Spain, S.L.U., its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. Financial Instruments Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and short-term investments. The
Company maintains its cash and cash equivalents in bank deposit and other interest-bearing accounts, the balances of which, at times,
may exceed federally insured limits. The following table is the
reconciliation of the accounting standard that modifies certain aspects of the recognition, measurement, presentation and disclosure of
financial instruments as shown on the Company’s condensed consolidated statement of cash flows:
September 30, December 31,
Cash and cash equivalents $ 43,254,116 $ 53,317,405
Restricted cash 215,963 233,872
Total cash, cash equivalents and restricted cash $ 43,470,079 $ 53,551,277 The appropriate classification of marketable securities
is determined at the time of purchase and reevaluated as of each balance sheet date. Investments in marketable debt classified as available-for-sale
are reported at fair value. Fair value is determined using quoted market prices in active markets for identical assets or liabilities
or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data
for substantially the full term of the assets or liabilities. For the Company’s available for sale debt securities, realized gains
and losses, amortization of premiums and discounts and interest and dividends earned are included in other income (expense). The Company
considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value
is less than cost. There were no deemed permanent impairments at September 30, 2022 or December 31, 2021. The Company’s marketable securities are highly
liquid and consist of U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities
of more than 90 days. As of September 30, 2022 and December 31, 2021, all of the Company’s investments had contractual maturities
of less than one year. As of September 30, 2022, no allowance for credit loss was recorded. The following table summarizes the amortized
cost, unrealized gains and losses and the fair value at September 30, 2022 and December 31, 2021:
Amortized Gross Gross Fair Value
September 30, 2022:
Cash Equivalents $ 7,008,643 $ (154 ) $ - $ 7,008,489
U.S. Government Agency Securities 11,472,712 (12,538 ) - 11,460,174
Corporate Securities 2,599,855 (9,794 ) - 2,590,061
Commercial Paper 1,698,838 (2,849 ) - 1,695,989
Subtotal 15,771,405 (25,181 ) - 15,746,224
Total September 30, 2022 $ 22,780,048 $ (25,335 ) $ - $ 22,754,713
December 31, 2021:
Cash Equivalents $ 10,462,877 $ (23 ) $ - $ 10,462,854
U.S. Government Agency Securities 2,806,597 (1,261 ) - 2,805,336
Corporate Securities 7,548,493 (4,467 ) 1 7,544,027
Commercial Paper 1,799,548 - 92 1,799,640
Subtotal 12,154,638 (5,728 ) 93 12,149,003
Total December 31, 2021 $ 22,617,515 $ (5,751 ) $ 93 $ 22,611,857 Fair Value Measurements The Company’s financial instruments recorded
in the condensed consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities, accounts payable
and accrued expenses. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable,
accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature of their maturity dates. The Company categorizes its financial instruments
into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value
hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable
inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based
on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at fair
value on the Company’s condensed consolidated balance sheets are categorized as follows:
● Level 1 inputs—Observable inputs that reflect quoted
prices (unadjusted) for identical assets or liabilities in active markets.
● Level 2 inputs— Significant other observable inputs
(e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active,
inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs).
● Level 3 inputs—Unobservable inputs for the asset or
liability, which are supported by little or no market activity and are valued based on management’s estimates of assumptions that
market participants would use in pricing the asset or liability. The following table provides the carrying value
and fair value of the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2022 and December
31, 2021:
Carrying Value Level 1 Level 2 Level 3
September 30, 2022:
Cash Equivalents $ 7,008,489 $ 7,008,489 $ - $ -
U.S. Government Agency Securities 11,460,174 11,460,174 -
Corporate Securities 2,590,061 - 2,590,061 -
Commercial Paper 1,695,989 - 1,695,989 -
Subtotal 15,746,224 11,460,174 4,286,050 $ -
Total September 30, 2022 $ 22,754,713 $ 18,468,663 $ 4,286,050 $ -
December 31, 2021:
Cash Equivalents $ 10,462,854 $ 10,462,854 $ - $ -
U.S. Government Agency Securities 2,805,336 2,805,336 -
Corporate Securities 7,544,027 - 7,544,027 -
Commercial Paper 1,799,640 - 1,799,640 -
Subtotal 12,149,003 2,805,336 9,343,667 -
Total December 31, 2021 $ 22,611,857 $ 13,268,190 $ 9,343,667 $ - Foreign Currency Translation and
Transactions The condensed consolidated financial statements
are presented in U.S. Dollars, or USD, the reporting currency of the Company. For the financial statements of the Company’s foreign
subsidiaries, whose functional currency is the EURO, foreign currency asset and liability amounts, are translated into USD at end-of-period
exchange rates. Foreign currency income and expenses are translated at average exchange rates in effect during the period in which the
income and expenses were recognized. Translation gains and losses are included in other comprehensive income (loss). The Company had a
foreign currency translation loss of $10,000 and $4,000 for the three months ended September 30, 2022 and 2021, respectively, and $22,000
and $6,000 for the nine months ended September 30, 2022 and 2021, respectively. The Company has intercompany loans between the
parent company based in New Jersey and its German subsidiary. The intercompany loans outstanding are not expected to be repaid in the
foreseeable future and unrealized foreign exchange movements related to long-term intercompany loans are recognized in other comprehensive
income (loss). Foreign currency exchange transaction gain (loss)
is the result of re-measuring transactions denominated in a currency other than the functional currency of the Company recording the transaction. Restricted Cash As of September 30, 2022 and December 31, 2021,
the Company has restricted cash in connection with the patent and utility model infringement proceedings against TauroPharm (see Note
4). The Company was required by the District Courts of Mannheim to provide security deposit to cover legal fees in the event TauroPharm
is entitled to reimbursement of these costs. The Company furthermore had to provide a deposit for the first and second instances, respectively,
in connection with the unfair competition proceedings in Cologne. As of September 30, 2022 and December 31, 2021, restricted cash in connection
with the patent and utility model infringement proceedings were $114,000 and $132,000, respectively. As of September 30, 2022 and December 31, 2021,
the Company had $102,000 in long-term restricted cash for a lease security deposit. Loss Per Common Share Basic loss per common share excludes any potential
dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net
loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised
or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. However, since
their effect is anti-dilutive, the Company has excluded potentially dilutive shares. The following potentially dilutive shares have been
excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive.
Nine Months Ended
2022 2021
(Number of Shares of Common Stock Issuable)
Series C non-voting preferred stock 4,000 4,000
Series E non-voting preferred stock 391,953 391,953
Series G non-voting preferred stock 5,004,069 5,004,069
Shares issuable for payment of deferred board compensation 48,909 48,909
Shares underlying outstanding warrants - 56,455
Shares underlying outstanding stock options 4,562,322 3,754,944
Restricted stock units 207,469 -
Total potentially dilutive shares 10,218,722 9,260,330 |
