| Summary of Significant Accounting Policies | Note 3 — Summary of Significant Accounting Policies: Use of Estimates The preparation of financial
statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ
from those estimates. Basis of Consolidation The consolidated financial statements
include the accounts of the Company, CorMedix Europe GmbH and CorMedix Spain, S.L.U. its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. Financial Instruments Financial instruments that potentially subject
the Company to concentrations of credit risk consist principally of cash and cash equivalents and short-term investments. The Company
maintains its cash and cash equivalents in bank deposit and other interest-bearing accounts, the balances of which exceed federally insured
limits. The following table is the reconciliation
of the accounting standard that modifies certain aspects of the recognition, measurement, presentation and disclosure of financial instruments
as shown on the Company’s consolidated statement of cash flows:
December 31,
2022 2021
Cash and cash equivalents $ 43,148,323 $ 53,317,405
Restricted cash, short-term and long-term 226,422 233,872
Total cash, cash equivalents and restricted cash $ 43,374,745 $ 53,551,277 The appropriate classification of marketable securities
is determined at the time of purchase and reevaluated as of each balance sheet date. Investments in marketable debt and equity securities
classified as available-for-sale are reported at fair value. Fair value is determined using quoted market prices in active markets for
identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the assets or liabilities. Changes in fair value that are considered temporary
are reported net of tax in other comprehensive income (loss). Realized gains and losses, amortization of premiums and discounts and interest
and dividends earned are included in income (expense). For declines in the fair value of equity securities that are considered other-than-temporary,
impairment losses are charged to other (income) expense, net. The Company considers available evidence in evaluating potential impairments
of its investments, including the duration and extent to which fair value is less than cost. There were no deemed permanent impairments
at December 31, 2022 or 2021. The Company’s marketable securities are highly
liquid and consist of U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities
of more than 90 days. As of December 31, 2022 and 2021, all of the Company’s investments had contractual maturities which were less
than one year. The following table summarizes the amortized cost, unrealized gains and losses and the fair value at December 31, 2022
and 2021:
December 31, 2022: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value
Money Market Funds and Cash Equivalents $ 7,311,327 $ - $ 572 $ 7,311,899
U.S. Government Agency Securities 12,072,127 (3,184 ) 2,056 12,070,999
Corporate Securities 2,684,235 (183 ) 909 2,684,961
Commercial Paper 888,875 (773 ) - 888,102
Subtotal 15,645,237 (4,140 ) 2,965 15,644,062
Total December 31, 2022 $ 22,956,564 $ (4,140 ) $ 3,537 $ 22,955,961
December 31, 2021:
Money Market Funds and Cash Equivalents $ 10,462,877 $ (23 ) $ - $ 10,462,854
U.S. Government Agency Securities 2,806,597 (1,261 ) - 2,805,336
Corporate Securities 7,548,493 (4,467 ) 1 7,544,027
Commercial Paper 1,799,548 - 92 1,799,640
Subtotal 12,154,638 (5,728 ) 93 12,149,003
Total December 31, 2021 $ 22,617,515 $ (5,751 ) $ 93 $ 22,611,857 Fair Value Measurements The Company’s financial instruments
recorded in the consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities and
accounts payable. The carrying value of certain financial instruments, primarily cash and cash equivalents,
accounts receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature
of their maturity dates. The Company categorizes its financial instruments
into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value, which is set out
below. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest
priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the
category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.
● Level 1 inputs—Observable inputs that reflect quoted
prices (unadjusted) for identical assets or liabilities in active markets.
● Level 2 inputs— Significant other observable inputs
(e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active,
inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs).
● Level 3 inputs—Unobservable inputs for the asset or
liability, which are supported by little or no market activity and are valued based on management’s estimates of assumptions that
market participants would use in pricing the asset or liability. The following table provides the carrying value
and fair value of the Company’s financial assets measured at fair value as of December 31, 2022 and 2021:
December 31, 2022: Carrying Value Level 1 Level 2 Level 3
Money Market Funds and Cash Equivalents $ 7,311,899 $ 7,311,899 $ - $ -
U.S. Government Agency Securities 12,070,999 12,070,999 - -
Corporate Securities 2,684,961 - 2,684,961 -
Commercial Paper 888,102 - 888,102 -
Subtotal 15,644,062 12,070,999 3,573,063 -
Total December 31, 2022 $ 22,955,961 $ 19,382,898 $ 3,573,063 $ -
December 31, 2021:
Money Market Funds and Cash Equivalents $ 10,462,854 10,462,854 - -
U.S. Government Agency Securities 2,805,336 2,805,336 - -
Corporate Securities 7,544,027 - 7,544,027 -
Commercial Paper 1,799,640 - 1,799,640 -
Subtotal 12,149,003 2,805,336 9,343,667 -
Total December 31, 2021 $ 22,611,857 $ 13,268,190 $ 9,343,667 $ - Foreign Currency Translation and Transactions The consolidated financial statements are presented
in U.S. Dollars (USD), the reporting currency of the Company. For the financial statements of the Company’s foreign subsidiaries,
whose functional currency is the EURO, foreign currency asset and liability amounts, if any, are translated into USD at end-of-period
exchange rates. Foreign currency income and expenses are translated at average exchange rates in effect during the year. Translation gains
and losses are included in other comprehensive income (loss). The Company had a foreign currency translation loss of $9,442 and $10,221
for the year ended December 31, 2022 and 2021, respectively. Foreign currency exchange transaction gain (loss)
is the result of re-measuring transactions denominated in a currency other than the functional currency of the entity recording the transaction. Restricted Cash As of December 31, 2022, and 2021 the Company has
restricted cash in connection with the patent and utility model infringement proceedings against TauroPharm (see Note 8). The Company
was required by the District Courts of Mannheim to provide security deposit to cover legal fees in the event TauroPharm is entitled to
reimbursement of these costs. The Company furthermore had to provide a deposit for the first and second instances, respectively, in connection
with the unfair competition proceedings in Cologne. During the year ended December 31, 2021, approximately $48,000 was released by the
court for the reimbursement of legal fees and other costs which was removed from restricted cash. As of December 31, 2022 and 2021, restricted
cash in connection with the patent and utility model infringement proceedings were $124,000 and $132,000, respectively. As of December 31, 2022, the Company had $102,000
in long-term restricted cash for a lease security deposit. Prepaid Research and Development and Other Prepaid Expenses Prepaid expenses consist of payments
made in advance to vendors relating to service contracts for clinical trial development, manufacturing, pre-clinical development and insurance
policies. These advanced payments are amortized to expense either as services are performed or over the relevant service period using
the straight-line method. Inventories Inventories are valued at the lower of cost or
net realizable value on a first in, first out basis. Inventories consist of raw materials (including labeling and packaging), work-in-process,
and finished goods, if any, for the DefenCath product. Inventories consist of the following:
December 31,
2022 2021
Finished goods $ - $ 3,008 Property and Equipment Property and equipment consist
primarily of furnishings, fixtures, leasehold improvements, office equipment and computer equipment all of which are recorded at cost.
Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements
are amortized using the straight-line method over the remaining lease term or the life of the asset, whichever is shorter. Property
and equipment, as of December 31, 2022 and 2021 were $1,609,679 and $1,474,937, respectively, net of accumulated depreciation of $449,787
and $365,169, respectively. Depreciation and amortization of property and equipment is included in selling, general and administrative
expenses.
Description Estimated Useful Life
Office equipment and furniture 5 years
Leasehold improvements 7 years or remaining term of the lease
Computer equipment 5 years
Computer software 3 years Leases The
Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”)
assets, current portion of operating lease liabilities, and operating lease liabilities, net of current
portion, on the consolidated balance sheet (see Note 11). Operating lease ROU assets
and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at
commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based
on the information available at commencement date in determining the present value of future payments. The Company’s lease terms
may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense
for minimum lease payments is recognized on a straight-line basis over the lease term. The
Company has elected, as an accounting policy, not to apply the recognition requirements in ASC 842 to short-term leases. Short-term leases
are leases that have a term of 12 months or less and do not include an option to purchase the underlying asset that the
Company is reasonably certain to exercise. The Company recognizes the lease payments for short-term leases on a straight-line basis
over the lease term. The
Company has also elected, as a practical expedient, by underlying class of asset, not to separate lease components from non-lease components
and, instead, account for them as a single component. Revenue Recognition The Company uses Accounting Standards Codification
(“ASC”) 606, “ Revenue from Contracts with Customers,” The Company recognizes net sales upon shipment
of product to the dialysis centers and upon meeting the five-step model prescribed by ASC 606 outlined above. Loss Per Common Share Basic loss per common share excludes
dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss
per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised
or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company’s outstanding shares of Series E preferred
stock entitle the holders to receive dividends on a basis equivalent to the dividends paid to holders of common stock. As a result, the
Series E preferred stock meet the definition of participating securities requiring the application of the two-class method. Under the
two-class method, earnings available to common shareholders, including both distributed and undistributed earnings, are allocated to each
class of common stock and participating securities according to dividends declared and participating rights in undistributed earnings,
which may cause diluted earnings per share to be more dilutive than the calculation using the treasury stock method. No loss has been
allocated to these participating securities since they do not have contractual obligations that require participation in the Company’s
losses. Since the Company has only incurred losses, basic
and diluted loss per share are the same as potentially dilutive shares have been excluded from the calculation of diluted net loss per
share as their effect would be anti-dilutive. The shares outstanding at the end of the respective periods presented below were excluded
from the calculation of diluted net loss per share due to their anti-dilutive effect:
Number of Shares of Common Stock Issuable At
December 31,
2022 2021
Series C non-voting preferred stock 4,000 4,000
Series E voting preferred stock 391,953 391,953
Series G voting preferred stock 5,004,069 5,004,069
Shares issuable for payment of deferred board compensation 48,909 48,909
Shares underlying outstanding warrants - 56,455
Shares underlying outstanding stock options 4,454,369 3,358,131
Restricted stock units 207,469 -
Total potentially dilutive shares 10,110,769 8,863,517 Stock-Based Compensation Share-based compensation cost is measured at grant
date, based on the estimated fair value of the award using the Black-Scholes option pricing model for options with service or performance-based
conditions. Stock-based compensation is recognized as expense over the requisite service period on a straight-line basis or when the achievement
of the performance condition is probable. For options with market-based vesting, share-based compensation cost is measured at grant date
using the Monte Carlo option pricing model and the expense is recognized over the derived service period. Research and Development Research and development costs
are charged to expense as incurred. Research and development include fees associated with operational consultants, contract clinical research
organizations, contract manufacturing organizations, clinical site fees, contract laboratory research organizations, contract central
testing laboratories, licensing activities, and allocated executive, human resources and facilities expenses. The Company accrues for
costs incurred as the services are being provided by monitoring the status of the trial and the invoices received from its external service
providers. As actual costs become known, the Company adjusts its accruals in the period when actual costs become known. Costs related
to the acquisition of technology rights and patents for which development work is still in process are charged to operations as incurred
and considered a component of research and development expense. Income Taxes Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred
tax assets will not be realized. Legal Costs The Company records legal
costs associated with loss contingencies when they are probable and reasonably estimable. |
