KORU Medical Systems, Inc. (KRMD)

CIK: 0000704440. SIC: 3841 Surgical & Medical Instruments & Apparatus. Latest 10-K as of: 2026-03-12.

SIC breadcrumb: Manufacturing > SIC Major Group 38 > SIC 3841 Surgical & Medical Instruments & Apparatus

SEC company page: https://www.sec.gov/edgar/browse/?CIK=704440. Latest filing source: 0001161697-26-000052.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000704440.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000704440.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001161697-26-000108.

Extracted from Part I Item 2 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-05-06. Report date: 2026-03-31.

PART I — ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF 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 inflation, tariffs, war and other geopolitical
conflicts, customer ordering patterns, availability and costs of raw materials and labor and our ability to recover such costs, future
operating results, growth of new patient starts and the Ig market, our compliance with Food and Drug Administration and foreign authority
regulations and the outcome of regulatory audits, introduction and adoption of competitive products, 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 our research and development effort, expanding the market of FREEDOMTM
System, demand in the SCIg market, availability of sufficient capital if or when needed, dependence on key personnel, and the impact of
recent accounting pronouncements, as well as those risks and uncertainties described in our Annual Report on Form 10-K for the year ended
December 31, 2025. 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, which include, without limitation, statements regarding 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.  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, the “Company,”
“KORU Medical,” “we,” “us” or “our” refers to KORU Medical Systems, Inc.

OVERVIEW

The Company develops, manufactures and markets proprietary
portable and innovative medical devices primarily for the 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 US and Canada), (ii) international core, and (iii) pharma services and clinical trials.  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 FREEDOMTM System, with the primary delivery for immunoglobulin to treat Primary Immunodeficiency Diseases (“PIDD”)
and Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”). Pharma services and clinical trials 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 drug development process as well as non-recurring engineering services revenues
(“NRE”) received from biopharmaceutical companies to ready or customize the FREEDOMTM System for clinical and commercial
use.

The Company ended the first quarter of 2026 with $11.8
million in net revenues, a 22.1% increase compared to $9.6 million in the same period last year. Revenues were driven by growth in our
core domestic and international business of 11.7% and 35.2%, respectively, along with an increase of 166.0% in our pharma services and
clinical trials business.

Gross profit for the first quarter of 2026 was $7.2
million, a 19.6% increase compared to $6.0 million in the same period last year, primarily driven by volume growth. Gross margin was 61.5%
for the three months ended March 31, 2026, a decrease from 62.8% in the prior year period. We define gross margin as gross profit stated
as a percentage of net revenues.

Operating expenses for the first quarter of 2026 were
$8.1 million, compared to $7.3 million for the same period last year, driven by an increase of $0.6 million in selling, general, and administrative
expenses, and an increase of $0.2 million in research and development expenses.

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Table of Contents

The Company imports certain materials and products
that are subject to U.S. government tariffs and import duties. On February 20, 2026, a US federal court ordered the U.S. government to
begin refunding certain tariffs. The Company believes that some of the tariffs it has paid may be eligible for refund; however, the amount
and timing of any potential refunds are uncertain. Accordingly, the Company has not recorded, nor plans to record, any benefit related
to possible tariff refunds at this time.

RESULTS OF OPERATIONS

Three months ended March 31, 2026, compared to
March 31, 2025

Net Revenues

The following table summarizes our net revenues for
the three months ended March 31, 2026, and 2025:

Three Months Ended March 31,

Change from Prior Year

% of Net Revenues

2026

2025

$

%

2026

2025

Net Revenues

Domestic Core

$

7,739,872

$

6,927,964

$

811,908

11.7%

65.8%

71.9%

International Core

3,284,041

2,428,662

855,379

35.2%

27.9%

25.2%

Total Core

11,023,913

9,356,626

1,667,287

17.8%

93.7%

97.1%

Pharma Services and Clinical Trials

740,711

278,449

462,262

166.0%

6.3%

2.9%

Total

$

11,764,624

$

9,635,075

$

2,129,549

22.1%

100%

100%

Total net revenues increased $2.1 million, or 22.1%,
to $11.8 million for the three months ended March 31, 2026, as compared to $9.6 million in the prior year period. Domestic core revenues
were $7.7 million, an increase of 11.7% over the prior year period, primarily due to higher consumable volumes, driven by new patient
starts and market share gains within new and existing accounts, supported by a strong underlying SCIg market. International core revenues
were $3.3 million, an increase of 35.2% over the prior year period, primarily due to higher pump and consumable volumes, driven by distributor
purchases supporting pre-filled syringe (PFS) conversions for a key EU market. Pharma services and clinical trials net revenues were $0.7
million, an increase of 166.0% over the prior year period, primarily due to higher clinical trial product revenues for advancing existing
collaborations.

Gross Profit

Our gross profit for the three months ended March
31, 2026 and 2025 is as follows:

Three Months Ended March 31,

Change from Prior Year

2026

2025

$

%

Gross Profit

$

7,231,389

$

6,046,335

$

1,185,054

19.6%

Gross Margin

61.5%

62.8%

Gross profit increased $1.2 million, or 19.6%, to $7.2 million in the three
months ended March 31, 2026, as compared to $6.0 million in the prior year period, primarily driven by volume growth. Gross margin decreased
to 61.5% in the three months ended March 31, 2026, as compared to 62.8% in the prior year period. The decrease in gross margin was primarily
driven by higher production costs based on timing of production runs in the prior quarter that were amortized in the three months ended
March 31, 2026, and tariff-related charges that did not occur in the prior year period, partially offset by a favorable geographic sales
mix.

Operating Expenses

Our selling, general and administrative, research
and development and depreciation and amortization expenses for the three months ended March 31, 2026 and 2025 are as follows:

Three Months Ended March 31,

Change from Prior Year

2026

2025

$

%

Selling, general and administrative

$

6,582,178

$

5,959,374

$

622,804

10.5%

Research and development

1,316,603

1,114,609

201,994

18.1%

Depreciation and amortization

197,531

217,357

(19,826

)

(9.1%

)

Total Operating Expenses 

$

8,096,312

$

7,291,340

$

804,972

11.0%

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Table of Contents

Selling, general and administrative expenses increased
$0.6 million, or 10.5%, to $6.6 million during the three months ended March 31, 2026, as compared to $6.0 million in the prior year period.
The increase in selling, general and administrative expenses was primarily driven by increases in legal fees and compensation expenses
related to salary and stock compensation, partially offset by lower temporary labor expenses.

Research and development expenses increased $0.2 million,
or 18.1%, to $1.3 million during the three months ended March 31, 2026, as compared to $1.1 million in the prior year period, primarily
due to higher compensation expenses for salary and stock compensation related to headcount additions, partially offset by lower temporary
labor expenses.

Depreciation and amortization expense remained flat
at $0.2 million during the three months ended March 31, 2026, as compared to $0.2 million in the prior year period.

Net Loss

Three Months Ended March 31,

Change from Prior Year

2026

2025

$

%

Net Loss

$

(807,078

)

$

(1,166,237

)

$

359,159

30.8%

Our net loss decreased $0.4 million in the three months
ended March 31, 2026, as compared to the prior year period, primarily driven by an increase in gross profit of $1.2 million, driven by
increased revenues, partially offset by operating expense increases of $0.8 million.

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of liquidity is our cash on hand
of $8.8 million as of March 31, 2026.  Our principal source of operating cash inflows is from sales of our products and NRE. Our
principal cash outflows relate to the purchase and production of inventory, funding of research and development, and selling, general
and administrative expenses. To develop new products, support future growth, achieve operating efficiencies, and maintain product quality,
we are continuing to invest in research and development and manufacturing equipment.

Our inventory position was $4.5 million at March 31,
2026, which reflects an increase of $0.8 million from December 31, 2025, due to expected future demand from our customers.

We expect that our cash on hand, cash flows from operations,
and as needed, cash available under our credit facility, will be sufficient to meet our requirements at least through the next twelve
months. Continued execution on our longer-term strategic plan may require the Company to draw on our credit facility, take on additional
debt, raise capital through issuance of equity, or utilize a combination of the above. Our future capital requirements may vary from those
currently planned and will depend on many factors, including 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 solutio

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-03-12. Report date: 2025-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and
results of operations should be read together with our consolidated financial statements and related notes included under ITEM 7 of this
Annual Report on Form 10-K.  This discussion contains forward-looking statements about our business and operations.  Our actual
results may differ materially from those we currently anticipate as a result of many factors, including those described under Part I –
FORWARD LOOKING STATEMENTS and elsewhere in this Annual Report.

OVERVIEW

The Company develops, manufactures and commercializes innovative patient-centric
large volume subcutaneous solutions primarily for the subcutaneous drug delivery market as governed by the United States Food and Drug
Administration (the “FDA”) quality and regulatory system and international standards for quality system management.

Our revenues derive from three business sources: (i) domestic core (which
consists of US and Canada), (ii) international core, and (iii) pharma services and clinical trials.  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”). Pharma services and clinical trials 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 drug development process as well as non-recurring engineering services revenues (“NRE”) received from biopharmaceutical
companies to ready or customize the FREEDOM Infusion System for clinical and commercial use.

The Company ended the 2025 fiscal year with $41.1 million in net revenues,
a 22.2% increase compared with $33.6 million in the same period last year driven by growth in our domestic core and international core
businesses of 11.0% and 80.0% respectively, partially offset by a 5.6% decrease in our pharma services and clinical trials business net
revenues.

Gross profit for the year ended December 31, 2025, was $25.6 million, an
increase of 20.0% or $4.3 million from the same period last year. Gross margin was 62.3% for the year ended December 31, 2025, a decrease
from 63.4% from the prior year. We define gross margin as gross profit stated as a percentage of net revenues.

Operating expenses for the year ended December 31, 2025, were $28.6 million,
up from $27.8 million from the same period last year.

RESULTS OF OPERATIONS

Year Ended December 31, 2025 compared to Year Ended December 31, 2024

Net Revenues

The following table summarizes our net revenues for the years ended December
31, 2025 and 2024:

Years Ended December 31,

Change from Prior Year

% of Net Revenues

2025

2024

$

%

2025

2024

Net Revenues

Domestic Core

$

27,992,436

$

25,214,613

$

2,777,823

11.0%

68.1%

74.9%

International Core

10,881,183

6,043,979

4,837,204

80.0%

26.5%

18.0%

Total Core

38,873,619

31,258,592

7,615,027

24.4%

94.5%

92.9%

Pharma Services and Clinical Trials

2,253,747

2,387,871

(134,124

) 

(5.6)%

5.5%

7.1%

Total

$

41,127,366

$

33,646,463

$

7,480,903

22.2%

100%

100%

Total net revenues increased $7.5 million, or 22.2%, to $41.1 million,
for the year ended December 31, 2025, as compared with the same period last year. Domestic core growth of 11.0% was primarily driven by
volume in consumables and pumps attributed to subcutaneous immunoglobulin (SCIg) market growth and new account share gains. International
core growth of 80.0% was primarily driven by SCIg market growth, increased penetration in several established EU markets, and entry into
multiple new geographic markets. Pharma services and clinical trials net revenues decreased $0.1 million, or 5.6%, driven by lower NRE
collaborations revenues resulting from the timing of project milestones partially offset by higher clinical trial orders when compared
to the prior year.

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Gross Profit

Our gross profit for the years ended December 31, 2025, and 2024 is as
follows:

Years Ended December 31,

Change from Prior Year

2025

2024

$

%

Gross Profit

$

25,604,079

$

21,331,858

$

4,272,221

20.0%

Gross Margin

62.3%

63.4%

Gross profit increased $4.3 million, or 20.0%, to $25.6 million, in the
year ended December 31, 2025, compared to the same period in 2024 driven by the increase in net revenues of $7.5 million partially offset
by an increase in manufacturing costs. Gross margin decreased to 62.3% in the year ended 2025 compared to 63.4% for the year ended 2024,
primarily driven by higher materials costs, tariff-related charges, and geographic sales mix from outside the United States, partially
offset by higher average selling prices in the US market.

Operating Expenses

Our selling, general and administrative, research and development and depreciation
and amortization expenses for the years ended December 31, 2025, and 2024 are as follows:

Years Ended December 31,

Change from Prior Year

2025

2024

$

%

Selling, general and administrative

$

23,378,807

$

21,631,674

$

1,747,133

8.1% 

Research and development

4,387,214

5,257,942

(870,728

)

(16.6)% 

Depreciation and amortization

810,500

888,473

(77,973)

(8.8)% 

Total Operating Expense

$

28,576,521

$

27,778,089

$

798,432

2.9% 

Selling, general and administrative expenses increased $1.7 million, or
8.1%, to $23.4 million, during the year ended December 31, 2025 compared with the same period last year, primarily due to an increase
in compensation and benefits-related bonus accrual, sales commission related to year over year company performance, and legal fees, partially
offset by lower consulting expenses.

Research and development expenses decreased $0.9 million, or 16.6%, to
$4.4 million, during the year ended December 31, 2025 compared with the same period last year, primarily due to lower compensation and
benefit expense and CTO severance expenses from the prior year, partially offset by higher temporary labor expenses for product development.

Depreciation and amortization expense decreased $0.1 million, or 8.8%,
to $0.8 million, during the year ended December 31, 2025, as compared with the same period last year, primarily driven by asset retirement
and decreased capital spending.

Net Loss

Years Ended December 31,

Change from Prior Year

2025

2024

$

%

Net Loss

$

(2,637,926

)

$

(6,066,633

)

$

3,428,707

56.5%

Our net loss decreased $3.4 million or 56.5% in the year ended December
31, 2025 compared with the same period last year, driven by higher gross profit of $4.3 million, partially offset by an increase in operating
expense of $0.8 million.

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of liquidity is our cash on hand of $8.9 million as
of December 31, 2025.  Our principal source of operating cash inflows is from sales of our products in our core business, clinical
trial products, and NRE services to our customers. Our principal cash outflows relate to the purchase and production of inventory, selling,
general and administrative expenses, and funding of research and development, to develop new products, support future growth, achieve
operating efficiencies, and maintain product quality, we are continuing to invest in research and development, innovation, and equipment.
Operating expenses for the 2025 fiscal year were $28.6 million.

Our inventory position was $3.7 million at December 31, 2025, which reflects
an increase of $0.9 million from December 31, 2024.

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We expect that our cash on hand and cash flows from operations will be
sufficient to meet our requirements at least through the next twelve months. Continued execution on our longer-term strategic plan may
require the Company to draw on our credit facility, take on additional debt, raise capital through issuance of equity, or utilize a combination
of the above. Our future capital requirements may vary from those currently planned and will depend on many factors, including 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 overall economic conditions including inflation,
tariffs, and the potential impact of global supply imbalances on the global financial markets. To the extent that current and anticipated
future sources of liquidity are or are expected to be insufficient to fund our future business activities and requirements, we may be
required to draw on our credit facility or seek additional equity or debt financing sooner. There can be no assurance the Company will
be able to obtain the financing or raise the capital required to fund its operations or growth opportunities.

Cash Flows

The following table summarizes our cash flows:

Year Ended

December 31, 2025

Year Ended

December 31, 2024

Net cash used in operating activities

$

462,405

$

(319,718

)

Net cash used in investing activities

$

(949,790

)

$

(1,333,042

)

Net cash used in financing activities

$

(221,350

)

$

(248,533

)

Operating Activities

Net cash produced from operating activities was $0.5 million for the year
ended December 31, 2025. This net cash produced was primarily due to the net loss of $2.6 million, an increase in inventory of $0.9 million,
an increase in accounts receivable of $0.5 million, and an increase in prepaids and other assets of $0.2 million, offset by an increase
in accrued expenses for 2025 bonuses and payroll of $0.6 million, and an increase in accounts payable of $0.6 million.

Further contributing to this change were non-cash items of $3.4 million
including stock-based compensation expense of $2.7 million, depreciation and amortization expense of $0.8 million, and partially offset
by a $0.1 million decrease in non-cash leasing liabilities.

Net cash used in operating activities was $0.3 million for the year ended
December 31, 2024. This net cash usage was primarily due to the net loss of $6.1 million, offset by a $2.6 million increase in accrued
expenses for 2024 bonuses and payroll, $0.7 million in lower inventories, and $0.7 million in increased accounts payable, partially offset
by a higher accounts receivable balance of $1.7 million, and $0.2 million of changes in other liabilities, prepaids, and other assets.

Further contributing to this change were non-cash items of $3.8 million
including stock-based compensation expense of $2.6 million, depreciation and amortization expense of $0.9 million, and $0.3 million for
non-cash leasing charges and losses on disposals of fixed assets.

Investing Activities

Net cash used in investing activities of $0.9 million for the year ended
December 31, 2025, was driven by capital expenditures for manufacturing equipment related to our production line for our next generation
consumables and infusion pumps.

Net cash used in investing activities of $1.3 million for the year ended
December 31, 2024, was driven by capital expenditures for manufacturing equipment related to our production line for our next generation
consumables.

Financing Activities

Net cash used in financing activities of $0.2 million for the year ended
December 31, 2025 was primarily due to payments on our note payable for insurance premium financing, partially offset by new borrowings
for a subsequent insurance premium financing agreement. The insurance premium financing note was also paid off early, without penalty,
during the period.

Net cash used in financing activities of $0.2 million for the year ended
December 31, 2024 was primarily due to payments on our note payable for insurance premium financing, partially offset by new borrowings
for a subsequent insurance premium financing agreement. In addition, we had payments for taxes related to net share settlement of equity
awards of $0.1 million.

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Debt and Borrowing Capacity

Refer to “NOTE 5 — DEBT OBLIGATIONS” in the accompanying
“Notes to Financial Statements” appearing in this Annual Report on Form 10-K for further details regarding debt and borrowing
capacity.

Lease Commitments

We have finance and operating leases for our corporate office and certain
office and computer equipment.  Our three operating leases have remaining lease terms of 6.7 years, 3.1 years, and 2.4 years, respectively.
Our three finance leases have remaining lease terms of 1.4 years, 1.0 years, and 2.8 years, respectively.

Refer to “NOTE 6 — LEASES” in the accompanying “Notes
to Financial Statements” appearing in this Annual Report on Form 10-K for further details regarding our operating and finance leases.

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles of the United States (“GAAP”) requires estimates and assumptions that affect the reported amounts of
assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the financial statements and accompanying
notes.  The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of
the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective
judgments, often as a result of the need to make estimates of matters that are inherently uncertain.  Based on this definition, we
have identified some of our more critical accounting estimates below.  We also have other key accounting policies, which involve
the use of estimates, judgments, and assumptions that are significant to understanding our results.  For additional information,
see “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the accompanying “Notes
to Financial Statements” appearing in this Annual Report on Form 10-K.  Although we believe that our estimates, assumptions,
and judgments are reasonable, they are based upon information presently available.  Actual results may differ significantly from
these estimates under different assumptions, judgments, or conditions.

Revenue Recognition

Our revenues are derived from three business sources: (i) domestic core
(which consists of US and Canada), (ii) international core, and (iii) pharma services and clinical trials.  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”).
Pharma services and clinical trials 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 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 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 recognizes revenue
on the basis of our efforts or inputs (for example, resources consumed, labor hours expended, costs incurred, or time elapsed) to the
satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation (i.e.
completion milestone). The input method that we use is based on costs incurred.

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Contracts are often modified to account for changes in 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 are not yet billable based on the terms of the contracts. Contract liabilities (i.e., deferred revenue) consist of fees invoiced
or paid by the Company’s customers for which the associated performance obligations have not been satisfied and revenue has not
been recognized based on the Company’s revenue recognition criteria described above. As of December 31, 2025, the Company has recognized
a contract asset of $319,955 which is included in other accounts receivable in the accompanying balance sheet.

Inventory

Inventories of raw materials are stated at the lower of standard cost,
which approximates average cost, or market value including allocable overhead.  Work-in-process and finished goods are stated at
the lower of standard cost or market value and include direct labor and allocable overhead.

We maintain reserves for excess and obsolete inventory resulting from the
potential inability to sell certain products at prices in excess of current carrying costs. We make estimates regarding the future recoverability
of the costs of these products and record provisions based on historical experience, expiration of sterilization dates and expected future
trends. If actual product life cycles, product demand or acceptance of new product introductions are less favorable than projected by
management, additional inventory write downs may be required, which could unfavorably affect future operating results.

ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED

Refer to “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K.

ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

Refer to “NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K.