# CorMedix Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [CorMedix Inc.](/companies/crmd.md) (CIK 1410098)
- Form: 10-Q
- Filed: 2025-05-06
- Accepted by EDGAR: May 6, 2025, 08:32 ET
- Period: 2025-03-31
- Accession: 0001213900-25-039908
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1410098/000121390025039908/ea0239390-10q_cormedix.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1410098/000121390025039908/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $1.6m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $37.5m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $3.2m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $20.1m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $10.0k | us-gaap:InterestExpenseNonoperating |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $20.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.30 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.32 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 68,975,418 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $19.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $10.2k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-03-31 | $66.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $144.9m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $149.6m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $34.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $34.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $114.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 29,480 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and our audited 2024 Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or the SEC, on March 25, 2025.*

### Forward Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are subject to risks and uncertainties. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions or variations intended to identify forward-looking statements. All statements, other than statements of historical facts, regarding management’s expectations, beliefs, goals, plans or CorMedix’s prospects should be considered forward-looking statements. Readers are cautioned that actual results may differ materially from projections or estimates due to a variety of important factors, and readers are directed to the Risk Factors identified in CorMedix’s filings with the SEC, including its most recent Annual Report on Form 10-K, copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from CorMedix. CorMedix may not actually achieve the goals or plans described in its forward-looking statements, and such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Investors should not place undue reliance on these statements. CorMedix assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

### Overview

CorMedix Inc. (collectively, with our wholly owned subsidiaries, referred to herein as “we,” “us,” “our” or the “Company”) is a biopharmaceutical company focused on developing and commercializing therapeutic products for life-threatening diseases and conditions.

Our primary focus is commercializing our lead product, DefenCath® (taurolidine and heparin), in the U.S. The name DefenCath is the U.S. proprietary name approved by the U.S. Food and Drug Administration (“FDA”). CorMedix launched the product commercially in April 2024 in the inpatient setting and July 2024 in the outpatient hemodialysis setting.

DefenCath is an FDA approved antimicrobial catheter lock solution (“CLS”) (a formulation of taurolidine 13.5 mg/mL, and heparin 1000 USP Units/mL) indicated to reduce the incidence of catheter-related bloodstream infections (“CRBSI”) in adult patients with kidney failure receiving chronic hemodialysis through a central venous catheter (“CVC”). It is indicated for use in a limited and specific population of patients. CRBSIs can lead to treatment delays and increased costs to the healthcare system when they occur due to extended and often repeat hospitalizations, need for IV antibiotic treatment, long-term anticoagulation therapy, removal/replacement of the CVC, related treatment costs, as well as increased mortality. We believe DefenCath can address a significant unmet medical need.

Following the submission of a duplicate New Technology Add-On Payment (“NTAP”) application to Centers for Medicare and Medicaid Services (“CMS”), CMS issued the Inpatient Prospective Payment System (“IPPS”) 2024 proposed rule that includes a NTAP per hospital stay for DefenCath. This NTAP represents reimbursement to inpatient facilities of 75% of the wholesaler acquisition cost (“WAC”) price per 3 mL vial, and an average utilization of 19.5 vials per hospital stay. The final IPPS rule was amended as of October 1, 2024 to reflect the current WAC of $249.99 per 3ml vial resulting in a potential maximum NTAP of $3,656.10, which CMS has extended through November 15, 2026.

On November 15, 2023, we announced that the FDA approved the new drug application (“NDA”) for DefenCath to reduce the incidence of CRBSI in adult patients with kidney failure receiving chronic hemodialysis through a CVC, DefenCath is indicated for use in a limited and specific population of patients. DefenCath is the first and only FDA-approved antimicrobial CLS in the U.S. and was shown to reduce the risk of CRBSI by up to 71% in a Phase 3 clinical study. As a result of the November 2023 FDA approval, CorMedix launched the product commercially in April 2024 in the inpatient setting and July 2024 in the outpatient hemodialysis setting.

DefenCath is listed in the Orange Book as having new chemical entity (“NCE”) exclusivity (5 years) expiring on November 15, 2028, and the Generating Antibiotic Incentives Now (“GAIN”) exclusivity extension of the NCE exclusivity (an additional 5 years) expiring on November 15, 2033. The GAIN exclusivity extension of 5 years is the result of the January 2015 designation of DefenCath as a Qualified Infectious Disease Product (“QIDP”).

On January 25, 2024, CMS determined that DefenCath should be classified as a renal dialysis service that is subject to the Medicare end-stage renal disease prospective payment system (“ESRD PPS”). The ESRD PPS provides bundled payment for renal dialysis services, but also affords a transitional drug add-on payment adjustment, or TDAPA, which provides temporary, additional payments for certain new drugs and biologicals. We submitted an application for TDAPA on January 26, 2024, and received confirmation that our application was approved on April 18, 2024 for a July 1, 2024 implementation. We also submitted a Healthcare Common Procedure Coding System (“HCPCS”) application for a J-code to CMS on December 8, 2023, for DefenCath, which is relevant to billing and the TDAPA application. The HCPCS J-code for DefenCath was published by CMS on April 2, 2024. TDAPA reimbursement is calculated based on 100 percent ASP (or 100 percent of wholesale acquisition price or manufacturers’ list price, respectively, if such data is unavailable). TDAPA and post-TDAPA add-on payment adjustments for DefenCath apply for five years (with such add-on payments applying to all ESRD PPS payments for years three through five). CMS confirmed a July 1, 2024 implementation date for HCPCS and TDAPA.

We announced on June 6, 2024 that the CMS has determined that DefenCath qualified for pass-through status under the hospital Out-Patient Prospective Payment System (“OPPS”). Pass-through status provides for separate payment under Medicare Part B for the utilization of DefenCath in the outpatient ambulatory setting for a period of at least two years, and up to a maximum of three years. While vascular access for hemodialysis can be initiated in an inpatient setting, ambulatory surgical centers or vascular access centers offer a less-invasive, outpatient-based alternative for patients. We estimate that up to 100,000 hemodialysis-central venous catheter (“HD-CVC”) placements occur each year, and pass-through status offers providers a separate reimbursement mechanism in this setting of care administration of DefenCath.

Subsequent to the launch of DefenCath in April 2024, we announced U.S.-based multi-year commercial supply agreements consisting of a large and several mid-sized dialysis organizations. Each provider has customized an implementation plan to provide access to patients based on a variety of clinical and other factors. We believe the currently contracted customer base represents roughly 60% of the outpatient dialysis centers in the U.S., in terms of the total addressable patient market.

### Financial Operations Overview

### Revenue from Product Sales

We generate product revenue from commercial sales of DefenCath to a limited number of direct customers as well as distributors. Revenue from product sales is recognized when our direct customers obtain control of the product and is recorded at the transaction price, net of estimates for variable consideration consisting of chargebacks, discounts, returns and rebates. Actual amounts of consideration ultimately received may differ from our estimates. If actual results vary materially from our estimates, we will adjust these estimates, which will affect revenue from product sales and earnings in the period such estimates are adjusted.

We continue to assess our estimates of variable consideration as we accumulate additional historical data and will adjust these estimates accordingly.

### Cost of Revenues

Cost of revenues include direct and indirect costs related to the manufacturing and distribution of DefenCath, including product cost, packaging services, freight, amortization of the license intangible asset and an allocation of overhead costs that are primarily fixed such as salaries, benefits and insurance.

### Research and Development Expense

Research and development, or R&D, expense consists of: (i) internal costs associated with our development activities; (ii) payments we make to third-party contract research organizations, contract manufacturers, investigative sites, and consultants; (iii) technology and intellectual property license costs; (iv) manufacturing development costs; (v) personnel related expenses, including salaries, stock–based compensation expense, benefits, travel and related costs for the personnel involved in drug development; and (vi) activities relating to regulatory filings and pre-clinical studies and clinical trials. All R&D is expensed as incurred.

The process of conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming. The probability of success for each product line and clinical trial may be affected by a variety of factors, including, among others, the quality of the product line’s early clinical data, investment in the program, competition, manufacturing capabilities and commercial viability. As a result of the uncertainties associated with clinical trial enrollments and the risks inherent in the development process, we are unable to determine the duration and completion costs of future clinical stages of our product lines or when, or to what extent, we will generate revenues from the commercialization and sale of any of our future product lines.

Development timelines, probability of success and development costs vary widely. We are currently focused on the commercialization of DefenCath in the U.S.

### Selling and Marketing Expense

Selling and marketing, or S&M, expense includes the cost of salaries and related costs for personnel in sales and marketing including our contract sales force, brand building, advocacy, market research and consulting costs. Selling and marketing expenses are expensed as incurred.

### General and Administrative Expense

General and administrative, or G&A, expenses consist principally of salaries and related costs for personnel in executive, finance and administrative functions including payroll taxes and health insurance, stock-based compensation and travel expenses. Other general and administrative expenses include facility-related costs, insurance and professional fees for legal, patent review, consulting, and accounting services. General and administrative expenses are expensed as incurred.

### Foreign Currency Exchange Transaction Gain (Loss)

Foreign currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than our functional currency and is reported in the consolidated statement of operations as a separate line item within other income (expense). The intercompany loans outstanding between our New Jersey-based company and our subsidiaries will not be repaid and the nature of the funding advanced was of a long-term investment nature. As such, unrealized foreign exchange movements related to long-term intercompany loans are recorded in other comprehensive income (loss).

### Interest Income

Interest income consists of interest earned on our cash and cash equivalents and short-term investments.

### Interest Expense

Interest expense consists of interest incurred on financing of expenditures.

### Results of Operations

### Comparison of the Three Months Ended March 31, 2025 and 2024

The following is a tabular presentation of our consolidated operating results for the three months ended March 31, 2025 and 2024 *(in thousands):*

|  | For the Three Months Ended March 31, 2025 | 2024 | % of Change Increase (Decrease) |
| --- | ---: | ---: | ---: |
| Revenue | $39,082 | $- | - |
| Cost of revenues | (1,597) | (819) | 95% |
| Gross profit (loss) | 37,485 | (819) | 4,680% |
| Operating Expenses: |  |  |  |
| Research and development | (3,193) | (838) | 281% |
| Selling and marketing | (4,474) | (6,337) | (29)% |
| General and administrative | (9,693) | (8,711) | 11% |
| Total operating expenses | (17,360) | (15,886) | 9% |
| Income (loss) from operations | 20,125 | (16,705) | 220% |
| Interest income | 567 | 857 | (34)% |
| Foreign exchange transaction (loss) gain | (38) | (4) | (852)% |
| Interest expense | (10) | (10) | 2% |
| Net income (loss) before income taxes | 20,644 | (15,862) | 230% |
| Tax benefit | - | 1,395 | 100% |
| Net income (loss) | 20,644 | (14,467) | 243% |
| Other comprehensive (loss) | (6) | (10) | 43% |
| Comprehensive income (loss) | $20,638 | $(14,477) | 243% |

*Revenue.* Revenue for the three months ended March 31, 2025 was $39.1 million as compared to $0 for the same period in 2024. Revenue consists of sales of DefenCath, which was approved by the FDA in November 2023 and launched in the U.S in April 2024 (inpatient setting) and July 2024 (outpatient setting) and reflects the shipment of DefenCath to direct customers and specialty distributors, net of estimates for applicable variable consideration, which consists primarily of distribution service fees, prompt pay and other discounts, product returns, chargebacks, rebates and volume incentive rebates.

*Cost of Revenue.* Cost of revenue for the three months ended March 31, 2025 was $1.6 million as compared to $0.8 for the same period in 2024. Cost of revenues include direct and indirect costs related to the manufacturing and distribution of DefenCath, including product cost, packaging services, freight, amortization of the license intangible asset and an allocation of overhead costs that are primarily fixed such as salaries, benefits and insurance. No product costs were recognized in the period ended March 31, 2024, the costs recognized pertained to indirect costs related to the proportion of supply chain and quality personnel, benefits and insurance expenses, representing excess capacity in the production of sellable product. As unit sales increase, a greater proportion of these costs will be capitalized as a component of inventory and expensed at the point-of-sale.

*Research and Development Expense*. R&D expense for the three months ended March 31, 2025 was $3.2 million, an increase of $2.4 million, or 281%, from $0.8 million for the same period in 2024. The increase was due primarily to the increase in personnel and clinical trial services in support of the ongoing clinical studies initiated in the fourth quarter of 2024.

*Selling and Marketing Expense.* S&M expense was $4.5 million for the three months ended March 31, 2025, a decrease of $1.8 million, or 29%, from $6.3 million for the same period in 2024. This decrease is considered temporary as we severed our internal sales force in early January 2025, while the related severance costs were recognized in the fourth quarter of 2024. Costs associated with our newly established outsourced sales force have been ramping throughout the period ended March 31, 2025. We expect these costs to be normalized for the second quarter of 2025 and to be more closely in-line with the comparison period.

*General and Administrative Expense*. G&A expense for the three months ended March 31, 2025 was $9.7 million, an increase of $1.0 million, or 11%, from $8.7 million for the same period in 2024. The increase was driven by non-cash charges for stock-based compensation of $1.3 million offset by a decrease in medical affairs of $0.3 million.

*Interest Income*. Interest income was $0.6 million for the three months ended March 31, 2025 compared to $0.8 million for the same period last year, a decrease of $0.2 million, or 25%. The decrease was attributable to lower average interest rates during this period as compared to the same period last year.

*Foreign Exchange Transaction Income (Loss)*. Foreign exchange transaction income (loss) for the three months ended March 31, 2025 and 2024 were due to the re-measuring of transactions denominated in a currency other than our functional currency. Balances and changes were immaterial for all periods presented.

*Interest Expense*. Interest expense pertains to certain liabilities we chose to finance. Balances and changes were immaterial for all periods presented.

*Tax Benefit.* Tax benefit for the three months ended March 31, 2024 of $1.4 million, was due to the sale of our unused NJ State net operating losses for fiscal year 2023, which were sold in fiscal year 2024, through the NJEDA Program. No net operating losses were sold during the three months ended March 31, 2025, or planned to be sold pertaining to unused net operating losses for fiscal year 2024.

*Other Comprehensive (Loss) Income*. Unrealized foreign exchange movements related to long-term intercompany loans, the translation of the foreign affiliate financial statements to U.S. dollars and unrealized movements related to short-term investment are recorded in other comprehensive (loss) income. Other comprehensive income (loss) is considered immaterial for all periods presented.

### Liquidity and Capital Resources

### Sources of Liquidity

We achieved profitability in the fourth quarter of 2024 and the first quarter of 2025, driven by product sales of DefenCath. During the three months ended March 31, 2025, we received net proceeds of $6.8 million from the issuance of 620,444 shares of common stock under our at-the-market-issuance sales agreement, or ATM program. We may continue to utilize external sources of cash to further fund operations.

In March 2024, we received $1.4 million, net of expenses, from the sale of our unused New Jersey net operating losses (“NOL”), that were eligible for sale under the State of New Jersey’s Economic Development Authority’s New Jersey Technology Business Tax Certificate Transfer program (“NJEDA Program”). The NJEDA Program allowed us to sell our available fiscal 2023 NJ state NOL tax benefits in the amount of approximately $1.5 million.

### Net Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities for the three months ended March 31, 2025 was $19.7 million as compared to net cash used in operating activities of $17.3 million for the same period in 2024. Net cash provided by operating activities was attributable to the net income of $20.6 million for the three months ended March 31, 2025 compared to a net loss of $14.5 million in the comparison period in 2024. There were also increases in trade receivables and prepaid expenses and other current assets of $2.9 million and $1.0 million, respectively, during the three months ended March 31, 2025. These increases are partially offset by net increases in accounts payable and accrued expenses in an aggregate amount of $4.4 million.

### Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities for the three months ended March 31, 2025 was $0.2 million as compared to $8.9 million of net cash provided by investing activities for the same period in 2024. The net cash used during the three months ended March 31, 2025, was mainly driven by lower maturity of the amount invested in short-term investments, as compared to the same period in 2024.

### Net Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2025 was $6.1 million due to the net proceeds generated from the sale of our common stock in our ATM program, partially offset by payments of employee withholding taxes for vested restricted stock units of $1.0 million. Net cash used in financing activities for the three months ended March 31, 2024 was $0.1 million attributable to the payment of employee withholding taxes for vested restricted stock units.

### Funding Requirements and Liquidity

Our total cash, cash equivalents and short-term investments as of March 31, 2025, was $77.5 million, excluding restricted cash of $0.1 million, compared with $51.7 million as of December 31, 2024, excluding restricted cash of $0.1 million. As of March 31, 2025, $23.2 million of the Company’s common stock remains available for potential sale under the ATM program. Additionally, we have $100.0 million of remaining capacity available under our 2024 Shelf Registration Statement for the issuance of Company securities.

We expect to continue to fund operations from cash collections of accounts receivable, our cash on hand, cash equivalents and short-term investments, and through capital raising sources, which may be dilutive to existing stockholders. In May 2024, we implemented an ATM program, which may be utilized to support our ongoing funding requirements. We may seek to sell additional equity or debt securities through one or more discrete transactions, but can provide no assurances that any such financing will be available on acceptable terms, or at all. Moreover, the incurrence of indebtedness would result in increased fixed obligations and could contain covenants that would restrict our operations.

Our actual cash requirements may vary materially from those now planned due to a number of factors, including any material change in commercial operations pertaining to DefenCath or the focus and direction of our research and development programs, any acquisition or pursuit of development of new product candidates, competitive and technical advances, the costs of commercializing any of our product candidates, and costs of filing, prosecuting, defending and enforcing any patent claims and any other intellectual property rights. Because our business has not generated consistent and sustained positive operating cash flow, we may need to raise additional capital in order to continue to fund our research and development activities, as well as to fund operations generally and we can provide no assurances that financing or strategic relationships will be available on acceptable terms, or at all, if additional funds are needed. If we are unable to raise additional funds when needed, we may be forced to slow or discontinue our commercial operations pertaining to DefenCath. We may also be required to delay, scale back or eliminate some or all of our anticipated research and development programs. Each of these alternatives would likely have a material adverse effect on our business.

We currently estimate that as of March 31, 2025, we have sufficient cash, cash equivalents and short-term investments to fund operations for at least twelve months from the issuance of these financial statements.

### Contractual Obligations

We entered into a seven-year operating lease agreement in March 2020 for an office space at 300 Connell Drive, Berkeley Heights, New Jersey 07922. The lease agreement, with a monthly average cost of approximately $17,000, commenced on September 16, 2020.

In December 2024, we entered into a three-year agreement with Syneos Health Commercial Services, LLC (“Syneos”) under which Syneos will provide a dedicated inpatient field sales force that will exclusively promote DefenCath to hospitals and health systems. We have paid an up-front implementation fee and are obligated to pay a fixed monthly fee. Upon the twelve-month anniversary of the deployment date, expected to be in the second quarter of 2026, the agreement is cancelable upon 60 day’s written notice. As of March 31, 2025, the minimum amount committed under this agreement totals $9.1 million.

In 2008, the Company entered into a License and Assignment Agreement (the ND License Agreement) with ND Partners, LLP (NDP). Pursuant to the ND License Agreement, NDP granted the Company exclusive, worldwide licenses for certain antimicrobial catheter lock solutions, processes for treating and inhibiting infections, a biocidal lock system and a taurolidine delivery apparatus, and the corresponding United States and foreign patents and applications (the NDP Technology). During the year ended December 31, 2024, net sales milestones in the amount of $2.0 million were achieved and are accrued in our consolidated balance sheet. In April 2025, the Company paid the final milestone payments in the aggregate amount of $2.0 million.

### Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis. We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors. In addition, there are other items within our financial statements that require estimation, but are not deemed critical as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.

- Litigation contingencies are assessed and judgments are made to determine if an unfavorable outcome is considered probable or reasonably possible, and when considered reasonably possible but not probable, the contingency is disclosed along with an estimate of the possible loss or range of loss. If a liability is possible or probable, but no reasonable estimation of loss can be made, we will disclose the nature of the contingency and state that such an estimate cannot be made. Such estimates and judgements are based on information obtained through the discovery process, court filings and follow on filings by the plaintiffs as well as the stage of litigation. There have been no changes in management’s estimates through the filing of this Form 10-Q.
- We account for product revenue from the sale of our product, DefenCath, in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) which entails our estimates and judgments primarily in determining the transaction price and more specifically as it relates to variable consideration associated with the contracts. Our customers are located in the United States and consist primarily of outpatient service providers and to a lesser extent specialty wholesale distributors. Variable consideration pertaining to an allowance for product returns of short-dated or expired product requires estimation as our customers may have differing utilization, storage and distribution methods and we do not yet have significant historical trends. The Company’s product accrual takes into consideration estimates of product held by its customers, the distribution channel, the shelf life of the product held by customers, as well as when the product is eligible for return based on our returns good policy. At March 31, 2025, the Company had $1.4 million in accrued returns allowance. We have established the estimate for returns based on specific customer circumstances, industry best practices and management experiences. Once return windows open and we experience actual returns we will further refine our estimate methods.
- As of March 31, 2025, we continue to maintain a full valuation allowance against our deferred tax assets. While we generated taxable income in the current quarter and may be profitable for the full year, we believe that a full valuation allowance remains appropriate due to the uncertainty pertaining to the full year level of forecasted profitability as compared to our recent historical losses. We will continue to evaluate all available evidence, both positive and negative, in future periods. A sustained trend of profitability could result in a reduction of the valuation allowance, which would favorably impact our effective tax rate.

## Market risk

As filed, 128 characters.

The Company is not required to provide the information called for in this item due to its status as a Smaller Reporting Company.

## Controls and procedures

As filed, 1,548 characters.

Disclosure controls and procedures are designed only to provide reasonable assurance that information to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) as of March 31, 2025. Based on the foregoing evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosures.

### Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### PART II

### OTHER INFORMATION

## Risk factors

As filed, 1,365 characters.

There were no material changes from the risk factors previously disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, except for the following:

*Our business may be adversely affected by tariffs, trade sanctions or similar government actions.*

As of the date of this Quarterly Report on Form 10-Q, discussions remain ongoing in respect of certain trade restrictions and tariffs on imports from various foreign countries, as well as retaliatory tariffs enacted in response to such actions. In light of these events, there continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties, and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. Any of these factors could depress economic activity and restrict our access to potential partners, suppliers or other third parties we seek to do business with and, in turn, have a material adverse effect on the business and financial condition of such third parties, which in turn would negatively impact us.

Filed May 6, 2025.
Source: SEC EDGAR, the filing index for accession 0001213900-25-039908. Last ingested by Listed: Nov 2, 2026, 07:41 ET. No prices; not investment advice.