| Summary of Significant Accounting Policies and Liquidity and Uncertainties | Note 2 — Summary of Significant Accounting Policies
and Liquidity and Uncertainties: Liquidity and Uncertainties The condensed consolidated financial statements
have been prepared in conformity with GAAP which contemplate continuation of the Company as a going concern. To date, the Company’s
commercial operations have not generated sufficient revenues to enable profitability. Based on the Company’s current development
plans and potential commercial launch plans for DefenCath in the U.S. and its other operating requirements, the Company’s existing
cash and cash equivalents and short-term investments at March 31, 2023 are expected to fund its operations at least through the first
half of 2024, after taking into consideration the costs for resubmission of the NDA and initial preparations for the commercial launch
for DefenCath. The Company’s continued operations will
depend on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic
relationships, potential strategic transactions or out-licensing of its products in order to commercially launch DefenCath upon NDA approval
and until profitability is achieved, if ever. Management can provide no assurances that such financing or strategic relationships will
be available on acceptable terms, or at all. As of March 31, 2023, the Company has $24.2 million available under its At-the-Market Issuance
Sales Agreement (the “ATM program”) and has $150.0 million available under its current shelf registration for the issuance
of equity, debt or equity-linked securities (see Note 5). The Company’s operations are subject to
a number of other factors that can affect its operating results and financial condition. Such factors include, but are not limited to:
the results of clinical testing and trial activities of the Company’s product candidates; the ability to obtain regulatory approval
to market the Company’s products; ability to manufacture successfully; competition from products manufactured and sold or being
developed by other companies; the price of, and demand for, Company products; the Company’s ability to negotiate favorable licensing
or other manufacturing and marketing agreements for its products; and the Company’s ability to raise capital to support its operations. Use of Estimates The preparation of condensed
consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported
amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Basis of Consolidation The condensed consolidated financial statements
include the accounts of the Company, CorMedix Europe GmbH and CorMedix Spain, S.L.U., its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation. Financial Instruments Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and short-term investments. The
Company maintains its cash and cash equivalents in bank deposit and other interest-bearing accounts, the balances of which exceed federally
insured limits. The following table is the
reconciliation of the accounting standard that modifies certain aspects of the recognition, measurement, presentation and disclosure
of financial instruments as shown on the Company’s condensed consolidated statement of cash flows:
March 31, 2023 December 31, 2022
Cash and cash equivalents $ 25,268,225 $ 43,148,323
Restricted cash 228,519 226,422
Total cash, cash equivalents and restricted cash $ 25,496,744 $ 43,374,745 The appropriate classification of marketable securities
is determined at the time of purchase and reevaluated as of each balance sheet date. Investments in marketable debt classified as available-for-sale
and equity securities are reported at fair value. Fair value is determined using quoted market prices in active markets for identical
assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities. Changes in fair value that are considered temporary
are reported in the condensed consolidated statement of operations. Realized gains and losses, amortization of premiums and discounts
and interest and dividends earned are included in other income (expense). For declines in the fair value of equity securities that are
considered other-than-temporary, impairment losses are charged to other income (expense), net. The Company considers available evidence
in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost. There
were no deemed permanent impairments at March 31, 2023 or December 31, 2022. The Company’s marketable securities are
highly liquid and consist of U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities
of more than 90 days. As of March 31, 2023 and December 31, 2022, all of the Company’s investments had contractual maturities of
less than one year. As of March 31, 2023, no allowance for credit loss was recorded. The following table summarizes the amortized
cost, unrealized gains and losses and the fair value at March 31, 2023 and December 31, 2022:
Amortized Gross Gross Fair Value
March 31, 2023:
Money Market Funds included in Cash Equivalents $ 8,026,616 $ - $ 523 $ 8,027,139
U.S. Government Agency Securities 25,742,953 - 15,454 25,758,407
Corporate Securities 2,690,038 (314 ) 893 2,690,617
Commercial Paper 1,884,234 (765 ) - 1,883,469
Subtotal 30,317,225 (1,079 ) 16,347 30,332,493
Total March 31, 2023 $ 38,343,841 $ (1,079 ) $ 16,870 $ 38,359,632
December 31, 2022:
Money Market Funds included in Cash Equivalents $ 7,311,327 $ - $ 572 $ 7,311,899
U.S. Government Agency Securities 12,072,127 (3,184 ) 2,056 12,070,999
Corporate Securities 2,684,235 (183 ) 909 2,684,961
Commercial Paper 888,875 (773 ) - 888,102
Subtotal 15,645,237 (4,140 ) 2,965 15,644,062
Total December 31, 2022 $ 22,956,564 $ (4,140 ) $ 3,537 $ 22,955,961 Fair Value Measurements The Company’s financial instruments recorded
in the condensed consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities, accounts
payable and accrued expenses. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts
receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature of their
maturity dates. The Company categorizes its financial instruments
into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value
hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable
inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based
on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at
fair value on the Company’s condensed consolidated balance sheets are categorized as follows:
● Level 1 inputs—Observable inputs that reflect quoted
prices (unadjusted) for identical assets or liabilities in active markets.
● Level 2 inputs—Significant other observable inputs (e.g., quoted
prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other
than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs).
● Level 3 inputs—Unobservable inputs for the asset or
liability, which are supported by little or no market activity and are valued based on management’s estimates of assumptions that
market participants would use in pricing the asset or liability. The following table provides the carrying value
and fair value of the Company’s financial assets measured at fair value on a recurring basis as of March 31, 2023 and December
31, 2022:
Carrying Value Level 1 Level 2 Level 3
March 31, 2023:
Money Market Funds and Cash Equivalents $ 8,027,139 $ 8,027,139 $ - $ -
U.S. Government Agency Securities 25,758,407 25,758,407 -
Corporate Securities 2,690,617 - 2,690,617 -
Commercial Paper 1,883,469 - 1,883,469 -
Subtotal 30,332,493 25,758,407 4,574,086 $ -
Total March 31, 2023 $ 38,359,632 $ 33,785,546 $ 4,574,086 $ -
December 31, 2022:
Money Market Funds and Cash Equivalents $ 7,311,899 $ 7,311,899 $ - $ -
U.S. Government Agency Securities 12,070,999 12,070,999 -
Corporate Securities 2,684,961 - 2,684,961 -
Commercial Paper 888,102 - 888,102 -
Subtotal 15,644,062 12,070,999 3,573,063 -
Total December 31, 2022 $ 22,955,961 $ 19,382,898 $ 3,573,063 $ - Leases The Company determines if an arrangement is a
lease at inception. Operating leases are included in operating lease right-of-use, or ROU, assets, current portion of operating lease
liabilities, and operating lease liabilities, net of current portion, on the condensed consolidated balance sheet. Operating lease ROU assets and operating lease
liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.
As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information
available at commencement date in determining the present value of future payments. The Company’s lease terms may include options
to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum
lease payments is recognized on a straight-line basis over the lease term. The Company has elected, as an accounting policy,
not to apply the recognition requirements in ASC 842 to short-term leases. Short-term leases are leases that have a term of 12 months
or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise.
The Company recognizes the lease payments for short-term leases on a straight-line basis over the lease term. The Company has also elected,
as a practical expedient, by underlying class of asset, not to separate lease components from non-lease components and, instead, account
for them as a single component. Loss Per Common Share Basic loss per common share excludes any potential
dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net
loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised
or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. However, since
their effect is anti-dilutive, the Company has excluded potentially dilutive shares. The following potentially dilutive shares have been
excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive.
Three Months Ended
2023 2022
(Number of Shares of Common Stock Issuable)
Series C non-voting preferred stock 4,000 4,000
Series E non-voting preferred stock 391,953 391,953
Series G non-voting preferred stock 5,004,069 5,004,069
Shares issuable for payment of deferred board compensation 48,909 48,909
Shares underlying outstanding warrants - 56,455
Shares underlying outstanding stock options 6,126,080 4,067,305
Shares underlying restricted stock units 207,469 -
Total potentially dilutive shares 11,782,480 9,572,691 Stock-Based Compensation Stock-based compensation cost is measured at grant
date, based on the estimated fair value of the award using the Black-Scholes option pricing model for options with service or performance-based
conditions. Stock-based compensation is recognized as expense over the requisite service period on a straight-line basis or when the achievement
of the performance condition is probable. For options with market-based vesting, stock-based compensation cost is measured at grant date
using the Monte Carlo option pricing model and the expense is recognized over the derived service period. Research and Development Research and development costs are charged to
expense as incurred. Research and development include fees associated with operational consultants, contract clinical research organizations,
contract manufacturing organizations, clinical site fees, contract laboratory research organizations, contract central testing laboratories,
licensing activities, and allocated executive, human resources, facilities expenses and costs related to the manufacturing of the product
that could potentially be available to support the commercial launch prior to marketing approval. The Company accrues for costs incurred
as the services are being provided by monitoring the status of the activities and the invoices received from its external service providers.
Costs related to the acquisition of technology rights and patents for which development work is still in process are charged to operations
as incurred and considered a component of research and development expense. |
