Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) effective as of November 6, 2023, is made by and between KORU Medical Systems, Inc., a Delaware corporation, having its principal place of business at 100 Corporate Drive, Mahwah, NJ 07430 (the “Company”), and Kenneth Miller, an individual having a domicile at [address] (“Employee”).

 

WHEREAS, the Company desires to employ Employee, and Employee desires to be employed by the Company, upon terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound hereby, the parties hereto agree as follows:

 

1.         Employment.

 

(a)        Position. The Company hereby employs Employee as Chief Commercial Officer of the Company. Employee shall report directly to the President/Chief Executive Officer of the Company (the “CEO”) and shall have the duties, authority and responsibilities customarily held by a person holding the position Chief Commercial Officer in companies engaged in business similar to the Company’s business and of similar size to the Company. Employee shall render such other services as may be reasonably assigned to them from time to time by the CEO. Employee shall be a full-time, exempt employee. Employee’s employment under this Agreement is expected to commence on November 6, 2023 (the “Start Date”).

 

(b)        Duties. Employee hereby agrees to be employed as Chief Commercial Officer. Employee agrees that he shall: (i) faithfully and to the best of his ability perform all of the duties that may be required of him pursuant to the terms of this Agreement; (ii) devote substantially all of his business time and attention to the performance of Employee’s duties hereunder ; and (iii) not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the performance of such services either directly or indirectly without the prior written consent of the CEO.

 

(c)        Place of Performance. The principal place of Employee’s employment shall be at Employer’s corporate headquarters. In addition, Employee will be required to travel as reasonably required for Company business. The Company shall reimburse the Employee for all reasonable, necessary, and documented travel and expenses incurred by Employee in performing his duties hereunder, in accordance with Company policies and procedures.

 

2.         At-Will Employment. The Company and Employee agree that Employee’s employment with the Company is “at-will,” meaning that Employee may terminate his employment at any time for any reason or no reason, and that Company may terminate Employee’s employment at any time for any reason or no reason, subject to the terms, conditions, and obligations set forth in Section 4 of this Agreement.

 

3.         Compensation and Related Matters.

 

(a) Base Salary. The Company shall pay to Employee an annual base salary of $360,000 (the “Base Salary”), less such deductions as are required by law or that Employee may elect in accordance with Company policy and procedure, payable in equal periodic installments in accordance with the Company’s customary payroll practices, but no less frequently than monthly. The Base Salary shall be prorated for any partial year of employment on the basis of a 365-day year.

 

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The Base Salary shall be reviewed at least annually by the Company’s Board of Directors (the “Board”) and may change at the Board’s sole and absolute discretion in consultation with the CEO.

 

(b)        Annual Bonus. For each complete calendar year, Employee shall be eligible to earn an annual bonus (the “Annual Bonus”) of up to 50% of the Base Salary (the “Annual Bonus Target”) in accordance with the Company’s Annual Incentive Compensation Plan, as the same may be amended from time to time. Employee must be fully and actively employed as of the payment date and must not have provided notice of termination for any reason prior to the payment date to be entitled to the Annual Bonus. For the calendar year ended December 31, 2023, any Annual Bonus will be prorated for time of service from Employee’s commencement of employment.

 

(c)        Equity Compensation.

 

(i) Employee shall be granted two non-qualified options (the “Sign-on Options”), each to purchase up to 200,000 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), subject to the terms and conditions of the Company’s standard form of award agreement, to be entered into between Employee and the Company. The shares underlying one of the Sign-on Options will be subject to a four (4) year vesting schedule, vesting in 25% increments on each twelve (12) month anniversary of the date of award. The shares underlying the other of the Sign-on Options will be subject to a three (3) year cliff vesting schedule, vesting based on mutually agreed net sales growth performance targets set forth in the award agreement. The Sign-on Options shall be awarded, and the exercise prices of the Sign-On Options shall be the arithmetic mean of the high and low prices of a share of Common Stock (and if the mean results in a fractional cent, rounded up to the nearest cent), as reported on the Nasdaq Capital Market (the “Price”), on November 14, 2023.

 

(ii) Upon a Change of Control Termination, the Shares underlying the Sign-on Options shall automatically vest in full.  “Change of Control Termination” as used herein means Employee’s employment being terminated by the Company (or its successor) without Cause or by the Employee for Good Reason (as defined below) within three (3) months before or six (6) months after any of the following occur: (A) the acquisition by any person or group, other than the Company, of 50% or more of the voting stock of the Company; (B) the consummation of a merger, consolidation or reorganization, the result of which is that the shareholders of the Company immediately prior to the merger, consolidation or reorganization do not own and control immediately after the merger, consolidation or reorganization at least 50% of the value of the outstanding equity and combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors of the Board; or (C) a sale, exclusive license or other disposition (in one transaction or a series of related transactions) of all or substantially all of the Company’s assets.

 

(d)        Business Expenses. Employee shall receive reimbursement from the Company for all reasonable and documented out-of-pocket expenses incurred by Employee in performing services hereunder; provided that, in each case, that such expenses are accounted for in accordance with the standard policies and procedures established by the Company for reimbursement of expenses.

 

(e) Paid Vacation; Sick Time; Personal Days; and Holidays. Employee shall be entitled to four (4) weeks of paid vacation time off per calendar year (pro-rated according to the Company’s standard policies and procedures related to accrual of paid vacation time off), to be taken at such times and for such periods as shall not interfere with the duties required to be rendered by Employee hereunder. Employee shall also accrue a total of seven (7) paid sick days and two (2) paid personal days per calendar year in accordance with current Company policy, which may be revised from time. In addition to the foregoing, Employee shall be entitled to paid holidays in accordance with the Company’s policies and procedures.

 

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Employee shall not be paid for accrued but unused vacation paid time off, paid sick time, or paid personal days upon termination of Employee’s employment for any reason, unless otherwise required by law.

 

(f)        Other Benefits. Employee shall be entitled to participate in such life insurance, medical, dental disability, pension and retirement plans and other programs as may be approved from time to time by the Company for the benefit of its employees, except any such plan or program with respect to which Employee voluntarily executes a legally effective waiver. Nothing herein shall affect the Company’s right to amend, modify or terminate any retirement or other benefit plan at any time for any reason.

 

4.         Termination of Employment.

 

(a)        Termination by Company. The Company may terminate Employee’s employment with the Company at any time effective immediately: (i) without Cause (as defined below); or (ii) with Cause (as defined below). For purposes of this Agreement, “Cause” shall mean Employee’s: (A) gross negligence or willful misconduct with respect to the Company, including, without limitation, engagement in dishonesty with respect to the Company’s business, or conduct that is injurious to the Company, its business or its reputation; (B) embezzlement, theft or fraud; (C) conviction of or plea of guilty or no contest to any felony, or any lesser crime of dishonesty; (D) personal conduct in furtherance of a hostile work environment or personal engagement in discrimination in violation of any state or federal anti-harassment or discrimination statute; (E) breach of any material obligation under this Agreement or any other written agreement between Employee and the Company; (F) Employee’s failure to perform Employee’s duties (other than any such failure resulting from incapacity due to physical or mental illness); or (G) violation of the Company’s written policies, including but not limited to its Code of Ethics and/or Code of Conduct.

 

(b)        Termination by Employee. Employee may terminate his employment with the Company by giving Company not less than sixty (60) days’ prior written notice, provided that the Company may waive all or any part of the sixty (60) day notice period for no consideration by giving written notice to the Employee and, for all purposes of this Agreement, the Employee’s effective date of termination shall be the date determined by the Company in such notice.

 

(c)        For Good Reason By Employee. Employee may terminate his employment under this Agreement for Good Reason. “Good Reason” shall mean, in each case to the extent not consented by Employee: (i) a breach by the Company of any material provision of this Agreement or any other written agreement between Employee and the Company; (ii) material reduction of the Employee’s authority, duties, or responsibilities; (iii) a reduction of the Employee’s then-current Base Salary or Annual Bonus Target; (iv) the Company’s failure to obtain an agreement from any successor to the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place, except where such assumption occurs by operation of law; or (v) the Company’s Common Stock no longer being publicly traded.

 

(d)        Death. Employee’s employment hereunder shall terminate effective immediately upon his death.

 

(e) Disability. The Company may terminate Employee’s employment hereunder if: (i) as a result of Employee’s incapacity due to physical or mental illness, Employee shall have been absent from his duties hereunder for a period of 120 consecutive days or a total of 180 days during any 365-day period and is unable to perform the essential duties of the job with or without a reasonable accommodation; and (ii) if within ten (10) days after written notice of termination is given by the Company to Employee (which may occur at or after the end of such period), Employee shall not have returned to the performance of his duties hereunder on a full-time basis.

 

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During any period that Employee fails to perform his duties hereunder as a result of incapacity due to physical or mental illness (the “Disability Period”), Employee shall continue to receive his Base Salary as set forth in Section 3(a) of this Agreement until his employment is terminated pursuant to this Section 4(e), provided that payments so made to Employee during the Disability Period shall be reduced by the sum of the amounts, if any, payable to Employee under disability benefit plans of the Company.

 

5.         Compensation upon Termination of Employment.

 

(a)        Accrued and Unpaid Compensation. If Employee’s employment is terminated for any reason, the Company shall pay Employee his full Base Salary through the effective date of the termination of Employee’s employment (“Termination Date”), plus all accrued and unpaid benefits (including all health and welfare benefits in which Employee was a participant in accordance with their terms), and the Company shall have no further obligations whatsoever to Employee under this Agreement except as expressly provided otherwise in this Agreement.

 

(b)        Severance. If Employee’s employment is terminated either by the Company without Cause (as defined above) (and not for death or Disability), or by Employee pursuant to Section 4(c) above, then, subject to his execution and non-revocation of a reasonable and customary general release of claims in favor of the Company and its affiliates, Employee shall be entitled to receive the following:

 

(i) if the Termination Date is less than twelve (12) months after Employee’s commencement of employment with the Company, an amount equal to three (3) months of his Base Salary in effect as of the Termination Date, paid in accordance with the Company’s normal payroll cycle over the three (3) month period following the Termination Date; or if the Termination Date is twelve (12) months or more after Employee’s commencement of employment with the Company, an amount equal to six (6) months of his Base Salary in effect as of the Termination Date, paid in accordance with the Company’s normal payroll cycle over the six (6) month period following the Termination Date; provided that such payments shall automatically cease upon Employee’s employment or engagement as a consultant, contractor, or service provider by any person or entity other than the Company within the applicable payment period; and provided that such amounts shall be paid in accordance with the Company’s customary payroll practices, and less such deductions as are required by law or that Employee may elect in accordance with Company policy and procedure; and

 

(ii) for the same three (3) or six (6) month period after the Termination Date, as applicable under Section 5(b)(i) above, and subject to applicable law, the Company will also pay its share of premiums for Employee’s health insurance as currently enrolled on the Termination Date; provided that such payments shall automatically cease upon Employee’s employment or engagement as a consultant, contractor, or service provider by any person or entity other than the Company within the applicable payment period.

 

6.         Representations and Warranties of Employee. Employee represents and warrants to the Company that he is free to accept employment hereunder and that he has no prior or other obligations or commitments of any kind that would in any way hinder or interfere with his acceptance of, or the full performance of, such employment.

 

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7.         Confidentiality.

 

(a)        During Employee’s employment and at all times thereafter, Employee shall keep Confidential Information (as defined below) strictly confidential. Employee shall not at any time, directly or indirectly, disclose or divulge any Confidential Information, except (i) if required by law, regulation or legal or regulatory process, but only in accordance with Section 7(b) below, or (ii) to his affiliates and their respective directors, officers, employees, managing members, general partners, agents and consultants (including attorneys, financial advisors and accountants) (“Representatives”), as applicable, to the extent necessary to permit such Representatives to assist Employee in any Permitted Use (as defined below); provided that Employee shall require each such Representative to be bound by the terms of this Section 7 to the same extent as if they were parties hereto and Employee shall be responsible for any breach of this Section 7 by any of its Representatives.

 

(b)        If Employee or any of his Representatives is required, in the written opinion of Employee’s counsel, to disclose any Confidential Information, by law, regulation or legal or regulatory process, Employee shall: (i) take all reasonable steps to preserve the privileged nature and confidentiality of the Confidential Information, including requesting that the Confidential Information not be disclosed to non-parties or the public; (ii) give the Company prompt prior written notice of such request or requirement so that the Company may seek, at its sole cost and expense, an appropriate protective order or other remedy; and (iii) cooperate with the Company, at the Company’s sole cost and expense, to obtain such protective order. In the event that such protective order or other remedy is not obtained, Employee (or such other persons to whom such request is directed) will furnish only that portion of the Confidential Information which, on the advice of such person’s counsel, is legally required to be disclosed and, upon the Company’s request, use its reasonable best efforts to obtain assurances that confidential treatment will be accorded to such information.

 

(c)        For the purposes hereof, “Confidential Information” shall mean all trade secrets, information, data, documents, agreements, files and other materials, whether disclosed orally or disclosed or stored in written, electronic or other form or media, which is obtained from or disclosed by the Company or its Representatives before or after the date hereof regarding the Company or its clients, including, without limitation, all analyses, compilations, reports, forecasts, studies, samples and other documents which contain or otherwise reflect or are generated from such information, data, documents, agreements, files or other materials. The term “Confidential Information” as used herein does not include information that at the time of disclosure or thereafter is generally available to and known by the public (other than as a result of its disclosure directly or indirectly by Employee or any of his Representatives in violation of this Agreement).

 

(d)        Employee shall make no use whatsoever, directly or indirectly, of any Confidential Information, except for: (i) the purposes of performing Employee’s duties and obligations to the Company; (ii) evaluating Employee’s ownership interest in the Company; and (iii) use for the benefit of the Company as part of the solicitation of existing or prospective customers of the Company (the “Permitted Uses”).

 

(e)        Upon the termination of. Employee’s employment or upon the Company’s request at any time and for any reason, Employee shall immediately deliver to the Company all materials (including all soft and hard copies) in Employee’s possession which contain or relate to Confidential Information, as well as all information necessary to access such confidential information.

 

(f) Notwithstanding the foregoing confidentiality obligations, pursuant to 18 USC § 1833(b), Employee will not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret if such disclosure is made: (i) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

 

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Additionally, if Employee files a lawsuit claiming retaliation by Company based on the reporting of a suspected violation of law, Employee may disclose a trade secret to Employee’s attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and Employee does not disclose the trade secret except pursuant to court order.

 

8.         Assignment of Developments.

 

(a)        All inventions, modifications, discoveries, designs, developments, improvements, processes, works of authorship, documentation, formulae, data, techniques, know-how, secrets or intellectual property rights or any interest therein made by Employee, either alone or in conjunction with others, at any place or at any time during the Term, whether or not reduced to writing or practice during such period , which result , in whole or in part, from (i) any services performed directly or indirectly for the Company by Employee or (ii) Employee’s use of the Company’s time, equipment, supplies, facilities or information (collectively, the “Company Developments”) shall be and hereby is the exclusive property of the Company without any further compensation to Employee. In addition, without limiting the generality of the foregoing, all Company Developments which are copyrightable work by Employee are intended to be “work made for hire” as defined in Section 81 of the Copyright Act of 1976, as amended, and shall be and hereby are the property of the Company.

 

(b)        Employee shall promptly disclose any Company Developments to the Company. If any Company Development is not the property of the Company by operation of law, this Agreement or otherwise, Employee will, and hereby does, without further consideration, assign to the Company all right, title and interest in such Company Development and will reasonably assist the Company and its nominees in every way, at the Company’s expense, to secure, maintain and defend the Company’s rights in such Company Development. Employee shall sign all instruments necessary for the filing and prosecution of any applications for, or extension or renewals of, letters patent (or other intellectual property registrations or filings) of the United States or any foreign country which the Company desires to file. Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee’s agent and attorney-in-fact (which designation and appointment shall be deemed coupled with an interest and shall survive Employee’s death or incapacity), to act for and in Employee’s behalf to execute and file any such applications, extensions or renewals and to do all other lawfully permitted acts to further the prosecution and issuance of such letters patent or other intellectual property registrations or filings, or such other similar documents, with the same legal force and effect as if executed by Employee.

 

9.         Non-Competition; Non-Solicitation; Non-Disparagement.

 

(a) During Employee’s employment and for the Restricted Period (as defined below), Employee shall not engage in any Prohibited Activity anywhere in the world. For the purposes of this Agreement, (i) “Restricted Period” shall mean the later of (A) the period during which Employee is entitled to receive any payment pursuant to Section 5(b) of this Agreement, or (B) twelve (12) months following termination of this Agreement; and (ii) “Prohibited Activity” shall mean the design, development, marketing, sale, re-sale, manufacture or distribution of home infusion products, or other similar activities, or the engagement in any other business in which the Company is actively engaged immediately prior to the commencement of the Restricted Period, in each case on Employee’s behalf or on behalf of another (including as a shareholder, member, employee, employer, owner, operator, manager, advisor, consultant, agent, partner, joint venturer or investor of another person or entity).

 

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Prohibited Activity also includes activity that may require or inevitably require disclosure of trade secrets, proprietary information or other Confidential Information of the Company except as otherwise permitted hereunder.

 

(b)        During the Restricted Period, Employee shall not, directly or indirectly: (i) solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment of any employee of the Company; (ii) solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact or meet with any (x) existing or prospective customer of the Company for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company, or (y) competitor of the Company for any purpose related to the business or services of the competitor or the Company; or (iii) induce, influence or encourage any existing or prospective customer, supplier or other business partner of the Company for purposes of diverting their business or services from the Company.

 

(c)        Employee shall not, during his employment or thereafter, make, publish or communicate to any person or in any public forum any comments or statements (whether written or oral) that denigrate or disparage the reputation or stature of the Company, its affiliates or any of their respective officers, directors, managers or employees (acting in their capacity as officers, directors, managers or employees of the Company or its affiliates). Notwithstanding the foregoing, nothing in this Section 9(c) is intended to, nor shall it, interfere with Employee’s protected rights under applicable labor laws to engage in protected concerted activity, or to file a charge or complaint with, or participate in an investigation or proceeding pursuant to, the statutes administered by the Equal Employment Opportunity Commission or equivalent state agency, or any federal, state or local government agency.

 

(d)        Employee acknowledges that the restrictions contained in this Section 9 are reasonable and necessary to protect the legitimate interests of the Company and constitute a material inducement to the Company to enter into this Agreement and offer employment to Employee under this Agreement. In the event that any covenant contained in this Section 9 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable law. The covenants contained in this Section 9 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

 

10. Clawback. Notwithstanding anything to the contrary contained in this Agreement: (i) if the Company’s financial results for any time period, and the Company’s financial statements covering all or part of such period, are subsequently restated and such restatement shows Clawback Compensation was incorrectly paid or vested, Employee shall be required to forfeit the Clawback Compensation that was incorrectly paid or vested as a result of such previously reported incorrect financial results, as applicable, in such period; (ii) to the extent Employee’s fraud or other Misconduct resulted in the receipt or vesting of Clawback Compensation, the Employee shall forfeit such improperly paid or vested Clawback Compensation; or (iii) if Employee, without the consent of the Company, while employed by the Company or after termination of such employment, breaches any of Section 9 of this Agreement and fails to cure (if curable) such breach after written notice thereof and a reasonable opportunity to cure, then Employee shall forfeit the Clawback Compensation.

 

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Further, if Employee otherwise has engaged in or engages in any activity referred to in the preceding clauses (i) – (iii), he shall forfeit any compensation, gain or other value realized on the vesting or exercise of the Clawback Compensation required to be returned to the Company, or the sale of shares of Common Stock acquired in respect thereof, and must promptly repay such amounts to the Company. “Clawback Compensation” means the Annual Bonus, Sign-On Options and any shares of Common Stock issued under any of the foregoing. “Misconduct” means willful misconduct, or an act or omission done, or omitted to be done, by Employee negligently or in bad faith or without reasonable belief that Executive’s action or omission was in the best interests of the Company but shall exclude any act or omission done, or omitted to be done, at the direction of the Board or on the advice of counsel for the Company. For the avoidance of doubt, approval by the Board of a public filing shall not constitute approval of an act or omission unless the Board has been informed of such act or omission. This clawback provision shall terminate upon a Change in Control. In addition, and without limiting the foregoing, any incentive-based or other compensation paid to the Employee under this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation, or stock exchange listing requirement will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation, or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement, including but not limited to the KORU Medical Systems Clawback Policy adopted by the Board on May 17, 2023).

 

11.       Amendment; Waiver. This Agreement may be amended, and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only by an instrument in writing signed by the parties hereto. Waiver of any term or condition of this Agreement will not be construed as a waiver of any subsequent breach or waiver of the same term or condition, or a waiver of any other term or condition of this Agreement.

 

12.       Applicable Law; Severability. This Agreement shall be governed by and construed under the laws of the State of Delaware, exclusive of the body of law known as conflicts of law. Should a court or other body of competent jurisdiction determine that any term or provision of this Agreement is excessive in scope or duration or is illegal, invalid or unenforceable, then the parties agree that such term or provision shall not be voided or made unenforceable , but rather shall be modified so as to be valid, legal and enforceable to the maximum extent possible, under the purposes stated in the preceding sentence and with applicable law, and all other terms and provisions of this Agreement shall remain valid and fully enforceable.

 

13.       Submission to Jurisdiction; Waiver of Jury Trial.

 

(a)        IF A DISPUTE ARISES BETWEEN THE PARTIES CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT, THE PARTIES CONSENT TO THE SOLE AND EXCLUSIVE JURISDICTION OF THE STATE COURTS SITUATED IN WILMINGTON, DELAWARE AND THE FEDERAL UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE.

 

(b)        EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

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14.       Equitable Relief. In the event of a breach or threatened breach by Employee of Sections 7 through 9, Employee hereby consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief.

 

15.       Further Assurances. The Company and Employee shall each take all actions as may be reasonably necessary or appropriate in furtherance of their respective obligations and covenants set forth in this Agreement, including, without limitation, executing and delivering such additional agreements, certificates, instruments and other documents as may be deemed necessary or appropriate.

 

16.       Assignability; Third-Party Beneficiary. This Agreement will be binding upon, enforceable by and inure solely to the benefit of, the parties and their respective permitted successors and assigns. Except as otherwise expressly provided in this Agreement, this Agreement shall not be assigned by any party hereto without the prior written consent of the non- assigning parties. Except as otherwise expressly provided in this Agreement, nothing in this Agreement is intended to or will confer upon any person, other than the parties to this Agreement and their respective heirs, successors and assigns, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Notwithstanding anything to the contrary herein, nothing in this Agreement shall preclude the Company from consolidating or merging into or with, transferring all or substantially all of its equity or assets to, or otherwise assigning this Agreement by operation of law to another person or entity without the consent of Employee; provided that, in each case, such other person or entity shall assume this Agreement and all obligations of the Company hereunder. Upon such consolidation, merger, transfer of equity or assets, or assignment by operation of law, and such assumption, the term the “Company” as used herein, shall mean such other person or entity and this Agreement shall continue in full force and effect.

 

17.       Notices. All notices and other communications under this Agreement must be in writing and will be deemed given if delivered personally, faxed, sent by internationally recognized overnight courier, mailed by registered or certified mail (return receipt requested), postage prepaid, or sent by electronic mail (without a failed transmission response) to the parties at the following addresses (or at such other address for a party as such party specifies by like notice):

 

If to the Company:	If to the Employee:
KORU Medical Systems, Inc.	Kenneth Miller
100 Corporate Drive	[address]
Mahwah, NJ 07430	[email]
Attention: Linda Tharby	[cell]
Telephone: 845-610-5561
Email: ltharby@korumedical.com

 

All such notices, consents, requests, demands, waivers and other communications so delivered, mailed or sent shall be deemed to have been received (i) if by personal delivery, on the day delivered, (ii) if by certified or registered mail, on the earlier of the date of receipt or the third business day after the mailing thereof , (iii) if by next-day or overnight mail or delivery service such as Federal Express or UPS, on the day delivered or (iv) if by fax or electronic mail, on the day on which such fax or electronic mail was sent, provided that a copy is also sent by certified or registered mail or by next-day or overnight mail or delivery service such as Federal Express or UPS.

 

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18.       Section 409A. Notwithstanding any provision to the contrary in this Agreement, no payment shall be made and no election shall be permitted that would violate the requirements of or cause taxation under Section 409A of the Internal Revenue Code and the Treasury regulations promulgated thereunder. Further, all provisions in this Agreement shall be interpreted in a manner consistent with Section 409A and guidance related thereto.

 

19.       Section 280G.

 

(a)        If (i) the aggregate of all amounts and benefits due to Employee under this Agreement or under any Company plan, program, agreement or arrangement, would, if received by Employee in full and valued under Section 280G of the Code, constitute “parachute payments” as such term is defined in and under Section 280G of the Code (collectively, “280G Benefits”), and if (ii) such aggregate would, if reduced by all federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, be less than the amount Employee would receive, after all taxes, if Employee received aggregate 280G Benefits equal (as valued under Section 280G of the Code) to only three times Employee’s “base amount”, as defined in and under Section 280G of the Code, less $1.00, then (iii) such cash 280G Benefits (in reverse order of maturity, to the extent that the reduction of such cash 280G Benefits can achieve the intended result) shall be reduced or eliminated to the extent necessary so that the 280G Benefits received by Employee will not constitute parachute payments. The determinations with respect to this Section 19(a) shall be made by an independent auditor (the “Auditor”) paid by the Company. The Auditor shall be the Company’s regular independent auditor unless Employee reasonably objects to the use of that firm, in which event the Auditor will be a nationally recognized firm chosen by the parties hereto.

 

(b)        It is possible that, after the determinations and selections made pursuant to Section 19(a), Employee will receive 280G Benefits that are, in the aggregate, either more or less than the amount provided under Section 19(a) (hereafter referred to as an “Excess Payment” or “Underpayment”, respectively). If it is established, pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally and conclusively resolved, that an Excess Payment has been made, Employee shall promptly repay the Excess Payment to the Company, together with interest on the Excess Payment at the applicable federal rate (as defined in and under Section 1274(d) of the Code) from the date of Employee’s receipt of such Excess Payment until the date of such repayment. In the event that it is determined (x) by a court or (y) by the Auditor upon request by any of the parties hereto, that an Underpayment has occurred, the Company shall promptly pay an amount equal to the Underpayment to Employee, together with interest on such amount at the applicable federal rate from the date such amount would have been paid to Employee had the provisions of Section 19(a) not been applied until the date of payment.

 

20.       Termination of Agreement; Survival. This Agreement shall terminate upon termination of Employee’s employment as provided herein; provided, however, that the provisions of Sections 7, 8, 9, 10, 12, 13, 14, 19 and this Section 20 shall survive termination of this Agreement.

 

21.       Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

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22.       Electronic Execution and Delivery. The parties may execute and deliver this Agreement by facsimile, electronic mail of a .PDF or other electronic means under which the signature of or on behalf of such party can be seen, and such execution and delivery will be considered valid, binding and effective for all purposes.

 

23.       Entire Agreement: This Agreement, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among or between any of the parties with respect to the subject matter hereof and thereof, excluding any separate confidentiality and/or assignment of inventions agreement Employee may have previously signed.

 

 

[signature page follows]

 

 

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IN WITNESS WHEREOF, the parties and/or their authorized representatives have executed this Employment Agreement as of the date first set forth above.

 

COMPANY:

 

KORU MEDICAL SYSTEMS, INC.

 

 

By:   /s/ Linda Tharby  

Name: Linda Tharby

Title: President and Chief Executive Officer

 

 

 

 

EMPLOYEE:

 

 

  s/ Kenneth Miller  

Kenneth Miller

 

 

[Signature page to Employment Agreement]

 

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Exhibit 10.2

 

KORU MEDICAL SYSTEMS, INC.

 

NONQUALIFIED STOCK OPTION AWARD

 

This NONQUALIFIED STOCK OPTION AWARD (this “Agreement”), dated as of November 15, 2023 (the “Date of Grant”), is delivered by KORU Medical Systems, Inc., a New York corporation (the “Company”), to Kenneth Miller (the “Grantee”).

 

The Compensation Committee of the Board of Directors of the Company (the “Committee”) has decided to make a grant of a nonqualified stock option to purchase shares of the Company’s common stock, par value $0.01 per share (“Company Stock”) as an inducement to Grantee’s initial employment with the Company to encourage the Grantee to contribute materially to the growth of the Company, thereby benefiting the Company’s stockholders, and aligning the economic interests of the Grantee with those of the stockholders.

 

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows:

 

1.         Grant of Option. Subject to the terms and conditions set forth in this Agreement, the Company hereby grants to the Grantee a nonqualified stock option (the “Option”) to purchase up to 200,000 shares of Common Stock (“Shares”) at an exercise price of $____1 per Share (the “Strike Price”).

 

2.         Exercisability of Option. The Option shall become exercisable on the following dates (each, a “Vesting Date”): 50,000 Shares on the one (1) year anniversary of the Date of Grant (the “Vesting Commencement Date”) and 50,000 Shares on each anniversary of the Date of Grant thereafter until fully vested, provided the Employee is employed by the Company on the respective Vesting Date.

 

3.         Option Term.

 

(a)       The Option shall have a term of ten (10) years from the Date of Grant and shall terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Agreement.

 

(b)       If the Grantee’s employment with the Company (“Service”) terminates without cause (as determined by the Committee in its sole discretion) and for any reason other than death or disability, the then vested portion of the Option shall continue to be exercisable until the earlier of the 90th day after the date of the Grantee’s termination of Service or the date the Option expires by its terms. The portion of the Option not vested as of the date of such termination of Service shall expire as of such date and shall not be exercisable thereafter.

 

(c)       If the Grantee’s Service is terminated by the Company for cause (as determined by the Committee in its sole discretion), the Option shall expire on the date of such termination of Service, and no portion shall be exercisable thereafter.

__________________________

1 To be determined based on the arithmetic mean of the high and low prices of a share of Common Stock (and if the mean results in a fractional cent, rounded up to the nearest cent), in each case as reported by the Nasdaq Capital Market on the last trading day before the Date of Grant.

 

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(d)       In the event of the Grantee’s termination of Service is due to death or disability during Grantee’s Service, the vested portion of the Option shall continue to be exercisable until the earlier of (i) the date the Option expires by its terms and (ii) the first anniversary of the date of such termination.

 

(e)       In the event of the Grantee’s death occurs after Service termination but during the 90 day period following such termination , the vested portion of the Option shall continue to be exercisable until the earlier of (i) the date the Option expires by its terms and (ii) the first anniversary of the Grantee’s death.

 

4.        Exercise Procedures.

 

(a)       Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or all of the exercisable Option by giving the Company written notice to exercise in the manner provided in this Agreement, specifying the number of Shares as to which the Option is to be exercised and tendering payment for such Shares. The Grantee shall pay an amount equal to the Strike Price multiplied by the number of Shares as to which the Option is to be exercised (the “Exercise Price”) (i) by certified or official bank check (or the equivalent thereof acceptable to the Company); (ii) by delivery of shares of Common Stock acquired at least six months prior to the option exercise date and having a Fair Market Value (as determined as of the exercise date) equal to all or part of the Exercise Price and a certified or official bank check (or the equivalent thereof acceptable to the Company) for any remaining portion of the Exercise Price; or (iii) with approval of the Committee, which shall not be unreasonably withheld, by “net exercise”, as a result of which the Grantee will receive (X) the number of Shares as to which the Option is to be exercised less (Y) such number of shares of Common Stock as is equal to (I) the aggregate Exercise Price for the portion of the Option being exercised divided by (II) the fair market value on the date of exercise. “Fair Market Value” of a share of Common Stock means (i) if the Common Stock principally trades on a national securities exchange other than the Nasdaq Capital Market, the closing sale price of a share of Common Stock, and (ii) if the Common Stock principally trades on the Nasdaq Capital Market or an over-the counter marketplace, the arithmetic mean of the high and low prices of a share of Common Stock (and if the mean results in a fractional cent, rounded up to the nearest cent), in each case as reported on the last trading day before the option exercise date, provided that such quotations shall have been made within the ten (10) business days preceding the applicable option exercise date. In the event shares of Common Stock are not so traded at the time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate provided such manner is consistent with Treasury Regulation Section 1.409A-1(b)(5)(iv).

 

(b)       The Company’s obligation to deliver Shares upon exercise of the Option shall be subject to all applicable laws, rules and regulations and also to such approvals by governmental agencies as may be deemed appropriate by the Committee, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations. The Company may require that the Grantee (or other person having the right to exercise the Option) represent that the Grantee (or such other person) is purchasing Shares for his/her own account and not with a view to or for sale in connection with any distribution of the Shares, or such other representation as the Committee deems appropriate.

 

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(c)       All obligations of the Company under this Agreement shall be subject to the rights of the Company as provided in this Agreement to withhold amounts required to be withheld for any taxes, if applicable. Subject to Committee approval, the Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Option by having Shares withheld from delivery having a value equal to the amount of the tax withheld. The election must be in a form and manner prescribed by the Committee and shall be subject to the prior approval of the Committee.

 

5.        Restrictions on Exercise. Except as the Committee may otherwise authorize in its sole discretion, in writing, only the Grantee may exercise the Option during the Grantee’s lifetime and, after the Grantee’s death, the Option shall be exercisable (subject to the limitations specified in this Agreement) solely by the legal representatives of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Agreement.

 

6.        Adjustments in Authorized Shares and Awards; Corporate Transaction, Liquidation or Dissolution.

 

(a)       Adjustment in Authorized Shares and Awards. In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, shares of Common Stock, or other property), recapitalization, forward or reverse stock split, subdivision, consolidation or reduction of capital, reorganization, merger, consolidation, scheme of arrangement, split-up, spin-off or combination involving the Company or repurchase or exchange of shares or other securities of the Company or other rights to purchase shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that any adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or property) subject to the Option, (ii) the Strike Price with respect to the Option or, if deemed appropriate, make provision for a cash payment to the Grantee, and (iii) the number and kind of Shares underlying the Option. Notwithstanding the foregoing, no such adjustment shall be authorized to the extent that such adjustment would cause the Option to violate Section 424(a) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”) or otherwise subject (in the determination of the Committee) any Grantee to taxation under Section 409A of the Code; and provided further that the number of Shares subject to the Option shall always be a whole number.

 

(b) Merger, Consolidation or Similar Corporate Transaction. In the event of a merger or consolidation of the Company with or into another corporation or a sale of substantially all of the stock of the Company (a “Corporate Transaction”), unless the Option is assumed by the surviving company in the Corporate Transaction (the “Surviving Company”) or replaced with an equivalent award granted by the Surviving Company in substitution for the Option, the Committee shall cancel any portion of the Option that is not vested and nonforfeitable as of the consummation of such Corporate Transaction (unless the vesting of the Option is accelerated by the Committee in its sole discretion or pursuant to a written agreement between the Company and the Grantee) and with respect to any vested and nonforfeitable portion of the Option, the Committee may either (i) allow the Grantee to exercise the Option within a reasonable period prior to the consummation of the Corporate Transaction and cancel any portion of the Option that remains unexercised upon consummation of the Corporate Transaction, or (ii) cancel the Option in exchange for a payment (in cash, or in securities or other property) in an amount equal to the amount that the Grantee would have received (net of the Exercise Price with respect to the Option) if such vested Option was settled or distributed or such vested Option was exercised immediately prior to the consummation of the Corporate Transaction.

 

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Notwithstanding the foregoing, if an Option is not assumed by the Surviving Company or replaced with an equivalent award issued by the Surviving Company and the Exercise Price with respect to the Option exceeds the Fair Market Value of the shares of Common Stock immediately prior to the consummation of the Corporation Transaction, the Option shall be cancelled without any payment to the Grantee.

 

(c)       Liquidation or Dissolution of the Company. In the event of the proposed dissolution or liquidation of the Company, the Option will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee. Additionally, the Committee may, in the exercise of its sole discretion, cause the Option to be vested and non-forfeitable and cause any conditions on the Option to lapse, as to all or any part of the Option, including Shares as to which the Option would not otherwise be exercisable or non-forfeitable and allow the Grantee to exercise the Option within a reasonable period prior to the consummation of such proposed action. Any portion of the Option that remains unexercised upon consummation of such proposed action shall be cancelled.

 

(d)       Deferred Compensation. Notwithstanding the forgoing provisions of this Section 6, if the Option constitutes deferred compensation within the meaning of Code Section 409A, no payment or settlement of the Option shall be made pursuant to Section 4.2(b) or (c), unless the Corporate Transaction or the dissolution or liquidation of the Company, as applicable, constitutes a change in ownership of the Company or a substantial portion of its assets within the meaning of Treasury Regulation Section 1.409A-3(i)(5) or (vii), or change in effective control of the Company within the meaning of Treasury Regulation Section 1.409A(3)(i)(5)(vi).

 

7.        Required Withholding. The Committee in its sole discretion may provide for when taxes are to be withheld in connection with the Option (the “Tax Date”). The Grantee may elect to make payment for the withholding of federal, state and local taxes, including Social Security and Medicare (“FICA”) taxes by one or a combination of the following methods:

 

(i)        payment of an amount in cash equal to the amount to be withheld;

 

(ii)       delivering part or all of the amount to be withheld in the form of Common Stock valued at its Fair Market Value on the Tax Date;

 

(iii)      requesting the Company to withhold from those Shares that would otherwise be received pursuant to the Option, a number of Shares having a Fair Market Value on the Tax Date equal to the amount to be withheld; or

 

(iv)      withholding from any compensation otherwise due to the Grantee.

 

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The Committee in its sole discretion may provide that the maximum amount of such tax withholding shall not exceed the minimum amount of taxes, including FICA taxes, required to be withheld under federal, state and local law. An election by Grantee under this subsection is irrevocable. Any fractional share amount and any additional withholding not paid by the withholding or surrender of Shares must be paid in cash. If no timely election is made, the Grantee must deliver cash to satisfy all tax withholding requirements.

 

8.        Interpretation. The Committee shall have the discretionary authority to interpret and construe the Option pursuant to the terms of this Agreement, and the Committee’s decisions shall be conclusive as to any questions arising hereunder.

 

9.        Restrictions on Sale or Transfer of Shares. The Grantee agrees that he shall not sell, transfer, pledge, donate, assign, mortgage, hypothecate or otherwise encumber the Shares underlying the Option unless the Shares are registered under the Securities Act of 1933, as amended (the “Securities Act”), or the Company is given an opinion of counsel reasonably acceptable to the Company that such registration is not required under the Securities Act.

 

10.      No Employment or Other Rights. The grant of the Option shall not confer upon the Grantee any right to be retained by or in the service of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee’s Service at any time. The right of the Company to terminate at will the Grantee’s Service at any time for any reason is specifically reserved.

 

11.      No Stockholder Rights. Neither the Grantee, nor any person entitled to exercise the Option, shall have any of the rights and privileges of a stockholder with respect to the Shares subject to the Option, until certificates or book entries for Shares have been issued upon the exercise of the Option.

 

12.      Assignment and Transfers. Except as the Committee may otherwise authorize in its sole discretion, in writing, the Option and the rights and interests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in the event of the death of the Grantee, by will or by the laws of descent and distribution. Nothing herein shall be construed as requiring the Committee to honor a domestic relations order except to the extent required under applicable law. In the event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the Option by notice to the Grantee, and the Option and all rights hereunder shall thereupon become null and void. The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Agreement may be assigned by the Company without the Grantee’s consent.

 

13.      Applicable Law. The validity, construction, interpretation and effect of this instrument shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof.

 

14. Notice. Any notice to the Company provided for in this instrument shall be addressed to the Company in care of the Chief Executive Officer at the headquarters of the Company, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing.

 

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Any notice shall be delivered by hand, or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

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IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.

 

KORU Medical Systems, Inc.

 

 

 

By: ____________________

Name:  Linda Tharby

Title:    Chief Executive Officer

 

 

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of this Agreement. I hereby further agree that all of the decisions and determinations of the Committee shall be final and binding.

 

 

 

Grantee: ____________________

Name:   Kenneth Miller

 

 

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Exhibit 10.3

 

Certain information identified by [***] has been excluded from this exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

 

KORU MEDICAL SYSTEMS, INC.

 

NONQUALIFIED STOCK OPTION AWARD

 

This NONQUALIFIED STOCK OPTION AWARD (this “Agreement”), dated as of November 15, 2023 (the “Date of Grant”), is delivered by KORU Medical Systems, Inc., a New York corporation (the “Company”), to Kenneth Miller (the “Grantee”).

 

The Compensation Committee of the Board of Directors of the Company (the “Committee”) has decided to make a grant of a nonqualified stock option to purchase shares of the Company’s common stock, par value $0.01 per share (“Company Stock”) as an inducement to Grantee’s initial employment with the Company to encourage the Grantee to contribute materially to the growth of the Company, thereby benefiting the Company’s stockholders, and aligning the economic interests of the Grantee with those of the stockholders.

 

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows:

 

1.         Grant of Option. Subject to the terms and conditions set forth in this Agreement, the Company hereby grants to the Grantee a nonqualified stock option (the “Option”) to purchase up to 200,000 shares of Common Stock (“Shares”) at an exercise price of $____1 per Share (the “Strike Price”).

 

2.         Exercisability of Option.

 

(a)       Vesting. If the Company’s Net Sales Growth (defined below) for any of the fiscal years ended December 31, 2024, 2025 or 2026 (each, a “Target Year”) is at least the applicable Net Sales Target set forth on Schedule I hereto, then, on the Vesting Date, a corresponding portion of the Award shall vest as set forth on Schedule I hereto. Additionally, if Net Sales Growth is less than any of the Net Sales Targets set forth in Schedule I in any Target Year (a “Miss Year”), vesting of the Award in the following Target Years (each such subsequent Target Year, a “Catch-up Year”) shall be further subject to the following catch-up vesting provisions: if the Net Sales Growth in the Miss Year(s) when averaged with the Net Sales in each Catch-up Year(s) equals or exceeds a Net Sales Target in any single Miss Year that has not previously been obtained, then on the Vesting Date, an additional portion of the Award shall vest as if the applicable Net Sales Target had been met in the Miss Year(s). Notwithstanding the foregoing, the Award shall automatically vest in full upon the Company maintaining, for a period of at least two consecutive fiscal quarters after January 1, 2024 and prior to the Vesting Date, a run rate over the previous four consecutive fiscal quarters of at least $50,000,000, as reported in the Company’s filings pursuant to the Securities Exchange Act of 1934, as amended.

 

(b) Definitions. “Net Sales Growth” means the percentage growth of the Company’s net sales as first reported in an earnings press release, Form 8-K or Form 10-K, as applicable, approved by the Board for the applicable fiscal year as compared to the immediately preceding fiscal year, excluding net sales attributable to any acquisition, business combination, or other transaction with a third party (e.g., distribution rights), as compared to the immediately preceding fiscal year occurring in that Target Year, and shall be FX Neutral.

______________________________

1 To be determined based on the arithmetic mean of the high and low prices of a share of Common Stock (and if the mean results in a fractional cent, rounded up to the nearest cent), in each case as reported by the Nasdaq Capital Market on the last trading day before the Date of Grant.

 

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For Target Years following an acquisition, business combination or other transaction with a third party, net sales attributable to such transaction will be added to the base calculation of net sales and included in the calculation of Net Sales Growth. “Vesting Date” means the effective date of vesting of the Award, which date shall be the date on which Board approves the 2026 fiscal year financial statements to be included in the earnings press release, Form 8-K or Form 10-K reporting such results and shall be prior to the date such results are publicly released. “FX Neutral” means the neutralization of the impact of foreign currency exchanges on the calculation of Net Sales Growth of the Company for each Target Year for which an Award is calculated.

 

3.         Option Term.

 

(a)       The Option shall have a term of ten (10) years from the Date of Grant and shall terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Agreement.

 

(b)       If the Grantee’s employment with the Company (“Service”) terminates without cause (as determined by the Committee in its sole discretion) and for any reason other than death or disability, the then vested portion of the Option shall continue to be exercisable until the earlier of the 90th day after the date of the Grantee’s termination of Service or the date the Option expires by its terms. The portion of the Option not vested as of the date of such termination of Service shall expire as of such date and shall not be exercisable thereafter.

 

(c)       If the Grantee’s Service is terminated by the Company for cause (as determined by the Committee in its sole discretion), the Option shall expire on the date of such termination of Service, and no portion shall be exercisable thereafter.

 

(d)       In the event of the Grantee’s termination of Service is due to death or disability during Grantee’s Service, the vested portion of the Option shall continue to be exercisable until the earlier of (i) the date the Option expires by its terms and (ii) the first anniversary of the date of such termination.

 

(e)       In the event of the Grantee’s death occurs after Service termination but during the 90 day period following such termination , the vested portion of the Option shall continue to be exercisable until the earlier of (i) the date the Option expires by its terms and (ii) the first anniversary of the Grantee’s death.

 

4.         Exercise Procedures.

 

(a) Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or all of the exercisable Option by giving the Company written notice to exercise in the manner provided in this Agreement, specifying the number of Shares as to which the Option is to be exercised and tendering payment for such Shares.

 

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The Grantee shall pay an amount equal to the Strike Price multiplied by the number of Shares as to which the Option is to be exercised (the “Exercise Price”) (i) by certified or official bank check (or the equivalent thereof acceptable to the Company); (ii) by delivery of shares of Common Stock acquired at least six months prior to the option exercise date and having a Fair Market Value (as determined as of the exercise date) equal to all or part of the Exercise Price and a certified or official bank check (or the equivalent thereof acceptable to the Company) for any remaining portion of the Exercise Price; or (iii) with approval of the Committee, which shall not be unreasonably withheld, by “net exercise”, as a result of which the Grantee will receive (X) the number of Shares as to which the Option is to be exercised less (Y) such number of shares of Common Stock as is equal to (I) the aggregate Exercise Price for the portion of the Option being exercised divided by (II) the fair market value on the date of exercise. “Fair Market Value” of a share of Common Stock means (i) if the Common Stock principally trades on a national securities exchange other than the Nasdaq Capital Market, the closing sale price of a share of Common Stock, and (ii) if the Common Stock principally trades on the Nasdaq Capital Market or an over-the counter marketplace, the arithmetic mean of the high and low prices of a share of Common Stock (and if the mean results in a fractional cent, rounded up to the nearest cent), in each case as reported on the last trading day before the option exercise date, provided that such quotations shall have been made within the ten (10) business days preceding the applicable option exercise date. In the event shares of Common Stock are not so traded at the time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate provided such manner is consistent with Treasury Regulation Section 1.409A-1(b)(5)(iv).

 

(b)       The Company’s obligation to deliver Shares upon exercise of the Option shall be subject to all applicable laws, rules and regulations and also to such approvals by governmental agencies as may be deemed appropriate by the Committee, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations. The Company may require that the Grantee (or other person having the right to exercise the Option) represent that the Grantee (or such other person) is purchasing Shares for his/her own account and not with a view to or for sale in connection with any distribution of the Shares, or such other representation as the Committee deems appropriate.

 

(c)       All obligations of the Company under this Agreement shall be subject to the rights of the Company as provided in this Agreement to withhold amounts required to be withheld for any taxes, if applicable. Subject to Committee approval, the Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Option by having Shares withheld from delivery having a value equal to the amount of the tax withheld. The election must be in a form and manner prescribed by the Committee and shall be subject to the prior approval of the Committee.

 

5.         Restrictions on Exercise. Except as the Committee may otherwise authorize in its sole discretion, in writing, only the Grantee may exercise the Option during the Grantee’s lifetime and, after the Grantee’s death, the Option shall be exercisable (subject to the limitations specified in this Agreement) solely by the legal representatives of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Agreement.

 

6.         Adjustments in Authorized Shares and Awards; Corporate Transaction, Liquidation or Dissolution.

 

(a) Adjustment in Authorized Shares and Awards.

 

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In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, shares of Common Stock, or other property), recapitalization, forward or reverse stock split, subdivision, consolidation or reduction of capital, reorganization, merger, consolidation, scheme of arrangement, split-up, spin-off or combination involving the Company or repurchase or exchange of shares or other securities of the Company or other rights to purchase shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that any adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or property) subject to the Option, (ii) the Strike Price with respect to the Option or, if deemed appropriate, make provision for a cash payment to the Grantee, and (iii) the number and kind of Shares underlying the Option. Notwithstanding the foregoing, no such adjustment shall be authorized to the extent that such adjustment would cause the Option to violate Section 424(a) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”) or otherwise subject (in the determination of the Committee) any Grantee to taxation under Section 409A of the Code; and provided further that the number of Shares subject to the Option shall always be a whole number.

 

(b)       Merger, Consolidation or Similar Corporate Transaction. In the event of a merger or consolidation of the Company with or into another corporation or a sale of substantially all of the stock of the Company (a “Corporate Transaction”), unless the Option is assumed by the surviving company in the Corporate Transaction (the “Surviving Company”) or replaced with an equivalent award granted by the Surviving Company in substitution for the Option, the Committee shall cancel any portion of the Option that is not vested and nonforfeitable as of the consummation of such Corporate Transaction (unless the vesting of the Option is accelerated by the Committee in its sole discretion or pursuant to a written agreement between the Company and the Grantee) and with respect to any vested and nonforfeitable portion of the Option, the Committee may either (i) allow the Grantee to exercise the Option within a reasonable period prior to the consummation of the Corporate Transaction and cancel any portion of the Option that remains unexercised upon consummation of the Corporate Transaction, or (ii) cancel the Option in exchange for a payment (in cash, or in securities or other property) in an amount equal to the amount that the Grantee would have received (net of the Exercise Price with respect to the Option) if such vested Option was settled or distributed or such vested Option was exercised immediately prior to the consummation of the Corporate Transaction. Notwithstanding the foregoing, if an Option is not assumed by the Surviving Company or replaced with an equivalent award issued by the Surviving Company and the Exercise Price with respect to the Option exceeds the Fair Market Value of the shares of Common Stock immediately prior to the consummation of the Corporation Transaction, the Option shall be cancelled without any payment to the Grantee.

 

(c) Liquidation or Dissolution of the Company. In the event of the proposed dissolution or liquidation of the Company, the Option will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee. Additionally, the Committee may, in the exercise of its sole discretion, cause the Option to be vested and non-forfeitable and cause any conditions on the Option to lapse, as to all or any part of the Option, including Shares as to which the Option would not otherwise be exercisable or non-forfeitable and allow the Grantee to exercise the Option within a reasonable period prior to the consummation of such proposed action. Any portion of the Option that remains unexercised upon consummation of such proposed action shall be cancelled.

 

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(d)       Deferred Compensation. Notwithstanding the forgoing provisions of this Section 6, if the Option constitutes deferred compensation within the meaning of Code Section 409A, no payment or settlement of the Option shall be made pursuant to Section 4.2(b) or (c), unless the Corporate Transaction or the dissolution or liquidation of the Company, as applicable, constitutes a change in ownership of the Company or a substantial portion of its assets within the meaning of Treasury Regulation Section 1.409A-3(i)(5) or (vii), or change in effective control of the Company within the meaning of Treasury Regulation Section 1.409A(3)(i)(5)(vi)..

 

7.         Required Withholding. The Committee in its sole discretion may provide for when taxes are to be withheld in connection with the Option (the “Tax Date”). The Grantee may elect to make payment for the withholding of federal, state and local taxes, including Social Security and Medicare (“FICA”) taxes by one or a combination of the following methods:

 

(i)         payment of an amount in cash equal to the amount to be withheld;

 

(ii)        delivering part or all of the amount to be withheld in the form of Common Stock valued at its Fair Market Value on the Tax Date;

 

(iii)       requesting the Company to withhold from those Shares that would otherwise be received pursuant to the Option, a number of Shares having a Fair Market Value on the Tax Date equal to the amount to be withheld; or

 

(iv)       withholding from any compensation otherwise due to the Grantee.

 

The Committee in its sole discretion may provide that the maximum amount of such tax withholding shall not exceed the minimum amount of taxes, including FICA taxes, required to be withheld under federal, state and local law. An election by Grantee under this subsection is irrevocable. Any fractional share amount and any additional withholding not paid by the withholding or surrender of Shares must be paid in cash. If no timely election is made, the Grantee must deliver cash to satisfy all tax withholding requirements.

 

8.         Interpretation. The Committee shall have the discretionary authority to interpret and construe the Option pursuant to the terms of this Agreement, and the Committee’s decisions shall be conclusive as to any questions arising hereunder.

 

9.         Restrictions on Sale or Transfer of Shares. The Grantee agrees that he shall not sell, transfer, pledge, donate, assign, mortgage, hypothecate or otherwise encumber the Shares underlying the Option unless the Shares are registered under the Securities Act of 1933, as amended (the “Securities Act”), or the Company is given an opinion of counsel reasonably acceptable to the Company that such registration is not required under the Securities Act.

 

10. No Employment or Other Rights. The grant of the Option shall not confer upon the Grantee any right to be retained by or in the service of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee’s Service at any time.

 

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The right of the Company to terminate at will the Grantee’s Service at any time for any reason is specifically reserved.

 

11.       No Stockholder Rights. Neither the Grantee, nor any person entitled to exercise the Option, shall have any of the rights and privileges of a stockholder with respect to the Shares subject to the Option, until certificates or book entries for Shares have been issued upon the exercise of the Option.

 

12.       Assignment and Transfers. Except as the Committee may otherwise authorize in its sole discretion, in writing, the Option and the rights and interests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in the event of the death of the Grantee, by will or by the laws of descent and distribution. Nothing herein shall be construed as requiring the Committee to honor a domestic relations order except to the extent required under applicable law. In the event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the Option by notice to the Grantee, and the Option and all rights hereunder shall thereupon become null and void. The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Agreement may be assigned by the Company without the Grantee’s consent.

 

13.       Applicable Law. The validity, construction, interpretation and effect of this instrument shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof.

 

14.       Notice. Any notice to the Company provided for in this instrument shall be addressed to the Company in care of the Chief Executive Officer at the headquarters of the Company, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing. Any notice shall be delivered by hand, or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.

 

KORU Medical Systems, Inc.

 

 

 

By: ____________________

Name:  Linda Tharby

Title:    Chief Executive Officer

 

 

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of this Agreement. I hereby further agree that all of the decisions and determinations of the Committee shall be final and binding.

 

 

 

Grantee: ____________________

Name:    Kenneth Miller

 

 

 

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Certain information identified by [***] has been excluded from this exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

 

Schedule I

 

The following table sets forth the number of Shares of that are eligible to vest on the Vesting Date based on the Net Sales Target (%) for each fiscal year.

 

	Net Sales Target
Year Ended	[***]%	[***]%	[***]%	[***]%	[***]%	[***]%	25%
2024	22,000	33,500	49,100	53,600	58,000	62,500	66,666
2025	22,000	33,500	49,100	53,600	58,000	62,500	66,666
2026	22,000	33,500	49,100	53,600	58,000	62,500	66,668

 

 

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EXHIBIT 99.1

 

 

KORU MEDICAL SYSTEMS, INC. ANNOUNCES 2023 THIRD QUARTER FINANCIAL RESULTS AND UPDATES FULL YEAR 2023 OUTLOOK

 

MAHWAH, NJ – November 8, 2023 – KORU Medical Systems, Inc. (NASDAQ: KRMD) ("KORU Medical" or the "Company"), a leading medical technology company focused on the development, manufacturing, and commercialization of innovative and easy-to-use specialty infusion solutions that improve quality of life for patients, today reported financial results for the third quarter ended September 30, 2023 and updates full year 2023 outlook.

 

Highlights:

 

●	Third quarter net revenue of $7.0 million, a 10% decline versus prior year
●	Novel Therapies net revenue decline of $0.6 million was impacted primarily by a large clinical trial order in the prior year and timing of collaborations
●	Domestic Core net revenue of $5.8 million, a 2% decline, reflected a prior year backorder clearance of $0.3 million
●	Improved gross margin to 62.0%, an increase of 630 BPS versus prior year, driven by increased manufacturing efficiencies
●	Continued strategic, operational expense discipline, ending the quarter with $10.8 million in cash and cash equivalents
●	Revised full year 2023 net revenue guidance to $28.0 to $28.5 million, reaffirmed gross margin guidance between 58%-60% for full-year and a planned Q4 exit between 60%-62%, and increased year-end cash balance guidance to greater than $10.5 million
●	Announced a new Novel Therapies innovation collaboration and brought the total closed collaborations to 15
●	Received a 510(k) clearance for FREEDOM60® Infusion System as the first and only FDA-cleared device for use with Hizentra® 50 mL prefilled syringes
●	Named Ken Miller, a 30-year healthcare and pharmaceutical executive, as Chief Commercial Officer

 

"Our third quarter revenues were impacted by our Novel Therapies business due to the timing of collaborations and by our Domestic Core business, which saw lower than anticipated growth in the underlying market. We progressed several initiatives in the quarter aimed at growing our top-line, including expanding our Novel Therapies collaborations, outperforming the U.S. subcutaneous immunoglobulin market, advancing our geographic expansion efforts, and gaining a new 510(k) clearance for a prefilled syringe indication," said Linda Tharby, KORU Medical's President and CEO. "We simultaneously advanced our efforts towards profitability and delivered on our gross margin goals despite revenue headwinds by exercising strategic operational expense discipline in light of our current environment. We are confident we have the right plan in place to capitalize on upcoming catalysts, grow our position in our subcutaneous immunoglobulin business, and expand into the larger addressable Novel Therapies market."

 

2023 Third Quarter Financial Results

 

		Three Months Ended September 30,						Change from Prior Year
		2023			2022			$			%
Net Revenues
Domestic Core		$	5,773,863		$	5,900,042		$	(126,179)		(2.1%)
International Core			1,066,567			1,096,746			(30,179)		(2.8%)
Novel Therapies			162,768			763,610			(600,842)		(78.7%)
Total		$	7,003,198		$	7,760,398		$	(757,200)		(9.8%)

 

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Total net revenues decreased $0.8 million, or 9.8%, for the three months ended September 30, 2023, as compared with the same period last year. Novel Therapies net revenues declined by 78.7%, primarily driven by a large clinical trial order of $0.5 million in the prior period and the timing of collaboration revenue. Domestic Core net revenues declined by 2.1% driven by lower consumable volumes as compared to the prior year period, which included a clearing of a $0.3 million consumable backorder. Partially offsetting this decline, was an increase in pump units sold. International Core net revenues declined by 2.8%, driven largely by a tender order in the prior year period, partially offset by growth in several countries.

 

Gross profit was mostly flat compared to the prior year, with revenue declines offset by a decrease in manufacturing costs. Gross margin increased to 62.0% compared to 55.7% in the third quarter of 2022. The increase was primarily driven by production efficiencies from the outsourced manufacturing initiative and Chester site exit when compared to the prior year.

 

Operating expenses for the three months ended September 30, 2023, were $6.1 million, up from $5.9 million for the same period last year, driven primarily by an increase of $0.4 million in research and development expense mostly offset by a reduction of $0.2 million in selling, general and administrative expenses.

 

Net loss for the third quarter of 2023 was $1.4 million, or $(0.03) per diluted share, compared to a net loss of $1.2 million, or ($0.03) per diluted share for the same period of 2022. Net loss included a tax benefit of $0.3 million for the third quarter of 2023.

 

Assumptions and Outlook for Full Year 2023

 

For the full year 2023, the Company's guidance has been revised to reflect the slower anticipated growth in the underlying U.S. subcutaneous immunoglobulin market and the timing of Novel Therapies collaboration wins and expected milestone completion. KORU Medical is updating its 2023 growth outlook on the underlying U.S. subcutaneous immunoglobulin drug market Q4 growth of 3-4% from a prior full year expectation of 5%.

 

KORU Medical Outlook:

 

●	Reducing full year 2023 net revenue guidance to $28.0 - $28.5 million, from prior guidance of $31.0 - $32.5 million
●	Reaffirming 2023 gross margin guidance between 58%-60% and a planned 2023 exit between 60%-62%
●	Increasing cash balance guidance at year-end 2023 to greater than $10.5 million

 

Conference Call and Webcast Details

 

The Company will host a live conference call and webcast to discuss these results and provide a corporate update on Wednesday, November 8, 2023, at 4:30 PM ET.

 

To participate in the call, please dial (844) 826-3035 (domestic) or (412) 317-5195 (international) and provide conference ID:10182999. The live webcast will be available on the IR Calendar on the News/Events page of the Investors section of KORU Medical's website.

 

Non-GAAP Measures

 

This press release includes the non-GAAP financial measures "Adjusted EBITDA" and "Adjusted Diluted Earnings Per Share" that are not in accordance with, nor an alternate to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on KORU Medical's reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company's financial results. Non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. Reconciliations of the Company's non-GAAP measures are included at the end of this press release.

 

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About KORU Medical Systems

 

KORU Medical Systems develops, manufactures, and commercializes innovative and easy-to-use subcutaneous drug delivery systems that improve quality of life for patients around the world. The FREEDOM Syringe Infusion System currently includes the FREEDOM60® and FreedomEdge® Syringe Infusion Drivers, Precision Flow Rate Tubing™ and HIgH-Flo Subcutaneous Safety Needle Sets™. These devices are used for infusions administered in the home and alternate care settings. For more information, please visit www.korumedical.com.

 

Forward-looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. All statements that are not historical fact are forward-looking statements, including, but not limited to, expected financial outlook and operating performance for fiscal 2023. Forward-looking statements discuss the Company's current expectations and projections relating to its financial position, results of operations, plans, objectives, future performance and business. Forward-looking statements can be identified by words such as "outlook", "expect", "plan", "believe" and "will". Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, uncertainties associated with the shift to increased healthcare delivery in the home, new patient diagnoses, customer ordering patterns, global health crises, innovation and competition, labor and supply price increases, inflationary impacts, labor supply, and those risks and uncertainties included under the captions "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which are on file with the SEC and available on our website at www.korumedical.com/investors and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of November 8, 2023. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.

 

Investor Contact:

Greg Chodaczek

347-620-7010

investor@korumedical.com

 

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KORU MEDICAL SYSTEMS, INC.

BALANCE SHEETS

(UNAUDITED)

		September 30,			December 31,
		2023			2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	10,772,178		$	17,408,257
Accounts receivable less allowance for doubtful accounts of $24,777 as of September 30, 2023 and $21,459 as of December 31, 2022			4,050,756			3,558,884
Inventory			4,676,913			6,404,867
Other receivables			813,499			972,396
Prepaid expenses			1,373,348			1,457,232
TOTAL CURRENT ASSETS			21,686,694			29,801,636
Property and equipment, net			3,820,087			3,886,975
Intangible assets, net of accumulated amortization of $373,943 and $325,872 as of September 30, 2023 and December 31, 2022, respectively			758,423			787,182
Operating lease right-of-use assets			3,544,959			3,786,545
Deferred income tax assets, net			5,445,123			3,967,480
Other assets			98,969			102,625
TOTAL ASSETS		$	35,354,255		$	42,332,443
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable		$	945,619		$	2,391,799
Accrued expenses			1,458,529			2,889,941
Note payable			466,026			433,295
Other liabilities			500,620			257,337
Accrued payroll and related taxes			392,527			542,399
Financing lease liability – current			102,470			98,335
Operating lease liability – current			356,349			345,834
TOTAL CURRENT LIABILITIES			4,222,140			6,958,940
Financing lease liability, net of current portion			316,906			394,283
Operating lease liability, net of current portion			3,384,666			3,653,257
TOTAL LIABILITIES			7,923,712			11,006,480
Commitments and Contingencies (Note 7)
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, 75,000,000 shares authorized, 49,059,583 and 48,861,891 shares issued 45,639,081 and 45,441,389 shares outstanding as of September 30, 2023, and December 31, 2022, respectively			490,596			488,619
Additional paid-in capital			46,629,753			44,252,117
Treasury stock, 3,420,502 shares as of September 30, 2023 and December 31, 2022, at cost			(3,843,562	)		(3,843,562	)
Accumulated deficit			(15,846,244	)		(9,571,211	)
TOTAL STOCKHOLDERS' EQUITY			27,430,543			31,325,963
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	35,354,255		$	42,332,443

 

The accompanying notes are an integral part of these financial statements.

 

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KORU MEDICAL SYSTEMS, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2023			2022			2023			2022
NET REVENUES		$	7,003,198		$	7,760,398		$	21,331,734		$	20,551,356
Cost of goods sold			2,661,021			3,438,036			8,954,398			9,260,516
Gross Profit			4,342,177			4,322,362			12,377,336			11,290,840
OPERATING EXPENSES
Selling, general and administrative			4,623,928			4,825,349			15,352,972			15,846,584
Research and development			1,293,256			862,148			4,454,739			3,314,233
Depreciation and amortization			216,014			164,344			642,050			399,479
Total Operating Expenses			6,133,198			5,851,841			20,449,761			19,560,296
Net Operating Loss			(1,791,021	)		(1,529,479	)		(8,072,425	)		(8,269,456	)
Non-Operating Income/(Expense)
Loss on currency exchange			(9,390	)		(10,057	)		(12,542	)		(38,897	)
Loss on disposal of fixed assets, net			(3,527	)		—			(59,806	)		—
Interest income, net			135,429			42,476			392,098			44,579
TOTAL OTHER INCOME/(EXPENSE)			122,512			32,419			319,750			5,682
LOSS BEFORE INCOME TAXES			(1,668,509	)		(1,497,060	)		(7,752,675	)		(8,263,774	)
Income Tax Benefit			300,247			271,500			1,477,642			1,579,359
NET LOSS		$	(1,368,262	)	$	(1,225,560	)	$	(6,275,033	)	$	(6,684,415	)
NET LOSS PER SHARE
Basic		$	(0.03	)	$	(0.03	)	$	(0.14	)	$	(0.15	)
Diluted		$	(0.03	)	$	(0.03	)	$	(0.14	)	$	(0.15	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic			45,639,081			45,038,181			45,578,314			44,877,366
Diluted			45,639,081			45,038,181			45,578,314			44,877,366

 

The accompanying notes are an integral part of these financial statements.

 

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KORU MEDICAL SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

		For the Nine Months Ended
		September 30,
		2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss		$	(6,275,033	)	$	(6,684,415	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense			2,379,613			2,361,085
Depreciation and amortization			642,050			399,479
Deferred income taxes			(1,477,643	)		(1,579,569	)
Loss on disposal of fixed assets			59,806			—
ROU landlord credit			(16,489	)		218,044
Changes in operating assets and liabilities:
Increase in Accounts receivable			(332,975)			(1,445,079	)
Decrease / (Increase) in Inventory			1,727,954			(777,818	)
Increase in Prepaid expenses and other assets			87,540			(160,794	)
Increase in Other liabilities			243,282			267,491
(Decrease) / Increase in Accounts payable			(1,446,180	)		138,077
(Decrease) / Increase in Accrued payroll and related taxes			(149,872	)		663,444
Decrease in Accrued expenses			(1,431,412	)		(140,958	)
NET CASH USED IN OPERATING ACTIVITIES			(5,989,358	)		(6,741,013	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment			(586,897	)		(2,541,693	)
Purchases of intangible assets			(19,312	)		(36,003	)
NET CASH USED IN INVESTING ACTIVITIES			(606,209	)		(2,577,696	)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from indebtedness			565,172			644,733
Payments on indebtedness			(532,441	)		(508,583	)
Proceeds from issuance of equity			—			314,000
Payments on finance lease liability			(73,243	)		(25,062	)
NET CASH USED IN PROVIDED BY FINANCING ACTIVITIES			(40,512	)		425,088
NET DECREASE IN CASH AND CASH EQUIVALENTS			(6,636,079	)		(8,893,621	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			17,408,257			25,334,889
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	10,772,178		$	16,441,268
Supplemental Information
Cash paid during the periods for:
Interest		$	34,773		$	15,700
Income taxes		$	3,160		$	—
Schedule of Non-Cash Operating, Investing and Financing Activities:
Issuance of common stock as compensation		$	348,849		$	355,505

 

The accompanying notes are an integral part of these financial statements.

 

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KORU MEDICAL SYSTEMS, INC.

SUPPLEMENTAL INFORMATION

(UNAUDITED)

 

The following table summarizes our net sales for the three and nine months ended September 30, 2023 and 2022:

 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Net Sales
Domestic	$	5,773,863		$	5,900,042		$	16,881,170		$	15,890,369
International		1,066,567			1,096,746			3,281,061			2,943,173
Novel Therapies		162,768			763,610			1,169,503			1,717,814
Total	$	7,003,198		$	7,760,398		$	21,331,734		$	20,551,356

 

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KORU MEDICAL SYSTEMS, INC.

SUPPLEMENTAL INFORMATION

(UNAUDITED)

 

A reconciliation of our non-GAAP measures is below:

 

		Three Months Ended						Nine Months Ended
Reconciliation of GAAP Net (Loss)		September 30,						September 30,
to Non-GAAP Adjusted EBITDA:		2023			2022			2023			2022
GAAP Net Loss		$	(1,368,262	)	$	(1,225,559	)	$	(6,275,033	)	$	(6,684,415	)
Tax (Benefit)/Expense			(300,247	)		(271,500	)		(1,477,642	)		(1,579,359	)
Depreciation and Amortization			216,014			164,344			642,050			399,479
Interest (Income)/Expense, Net			(135,429	)		(42,476	)		(392,098	)		(44,579	)
Reorganization Charges			—			200,000			—			765,433
Manufacturing Initiative Expenses			—			20,537			55,361			108,886
Stock-based Compensation Expense			697,658			779,510			2,379,613			2,429,999
Non-GAAP Adjusted EBITDA		$	(890,266	)	$	(375,144	)	$	(5,067,749	)	$	(4,604,556	)

 

 

		Three Months Ended						Nine Months Ended
Reconciliation of Reported Diluted EPS		September 30,						September 30,
to Non-GAAP Adjusted Diluted EPS:		2023			2022			2023			2022
Reported Diluted Earnings Per Share		$	(0.03	)	$	(0.03	)	$	(0.14	)	$	(0.15	)
Reorganization Charges			—			—			—			0.02
Non-GAAP Adjusted Diluted Earnings Per Share		$	(0.03	)	$	(0.03	)	$	(0.14	)	$	(0.13	)

 

*Numbers presented are rounded to the nearest whole cent

 

Reorganization Charges. We have excluded the effect of reorganization charges in calculating our non-GAAP measures. In 2022 we incurred severance expenses related to the reorganization of the leadership team, which we would not have otherwise incurred in periods presented as part of continuing operations.

 

Manufacturing Initiative Expenses. We have excluded the effect of expenses related to creating manufacturing efficiencies, in calculating our non-GAAP measures. We incurred expenses in connection with these initiatives which we would not have otherwise incurred in periods presented as part of our continuing operations.

 

Stock-based Compensation Expense. We have excluded the effect of stock-based compensation expense in calculating our non-GAAP measures. We record non-cash compensation expenses related to grants of options and restricted shares for executives, employees and consultants, and grants of shares to our board of directors. Depending upon the size, timing and the terms of the grants, the non-cash compensation expense may vary significantly but will recur in future periods.

 

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EXHIBIT 99.2

 

 

KORU MEDICAL SYSTEMS, INC. RECEIVES FDA 510(k) CLEARANCE FOR FREEDOM60® INFUSION SYSTEM WITH HIZENTRA® 50 ML PREFILLED SYRINGES

 

MAHWAH, NJ – NOVEMBER 7, 2023 – KORU Medical Systems, Inc. (NASDAQ: KRMD) (“KORU Medical” or the “Company”), a leading medical technology company focused on the development, manufacturing, and commercialization of innovative and easy-to-use specialty subcutaneous infusion solutions that improve quality of life for patients, today announced that it received U.S. Food and Drug Administration (FDA) clearance for use of the FREEDOM60® Infusion System with Hizentra® 50 mL prefilled syringes (PFS).

 

“Being the first and only FDA-cleared infusion system for use with prefilled syringes demonstrates KORU Medical’s continued commitment to enhance the patient experience for all patients self-administering subcutaneous immunoglobulin (SCIg) therapy in the home,” said Linda Tharby, KORU Medical’s President and CEO. “Prefilled syringes are proven to provide a significant improvement in ease of use for all patients, and in administering higher doses of immunoglobulin, including for PIDD and CIDP patients. We are now able to deliver PFS benefits to Hizentra® patients through our FREEDOM™ Infusion System portfolio - the FREEDOM60® Infusion System with 50 mL PFS and the FreedomEdge® with 20 mL PFS. We believe the unlocking of these PFS benefits through use with the FREEDOM™ Infusion System could lead to even greater opportunity to expand SCIg use in the home.”

 

The FREEDOM™ Infusion System is the first and only infusion system cleared for use with prefilled syringes and, given the majority of patients are prescribed doses of 50 mL or greater, this clearance for FREEDOM60® significantly expands the benefits of PFS use, especially for those diagnosed with conditions requiring significantly higher doses of immunoglobulin. When using prefilled syringes with the FREEDOM™ Infusion System, KORU Medical has demonstrated that patients can experience up to an 80% reduction in drug preparation tasks when compared to using vials.

 

The FDA approved the Hizentra® 50 mL prefilled syringe in April 2023, and CSL Behring has announced an early 2024 availability. Hizentra® is the most prescribed subcutaneous immunoglobulin and the first to be available in prefilled syringes.

 

About KORU Medical Systems

 

KORU Medical Systems develops, manufactures, and commercializes innovative and easy-to-use subcutaneous drug delivery systems that improve quality of life for patients around the world. The FREEDOM™ Infusion System currently includes the FREEDOM60® and FreedomEdge® Syringe Infusion Drivers, Precision Flow Rate Tubing™ and HIgH-Flo Subcutaneous Safety Needle Sets™. The FREEDOM™ Infusion System is used for infusions administered in the home and alternate care settings. For more information, please visit www.korumedical.com.

 

Forward Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. All statements that are not historical fact are forward-looking statements and can be identified by words such as “believe,” “could” and “opportunity”. Actual results may differ materially from these statements due to potential risks and uncertainties such as, among others, timing of Hizentra® 50 mL prefilled syringe availability, patient acceptance of PFS with the FREEDOM™ Infusion System, and those risks and uncertainties included under the captions “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which are on file with the SEC and available on our website at www.korumedical.com/investors and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of November 7, 2023. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.

 

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Hizentra® is a registered trademark of CSL Behring AG.

 

Hizentra® is manufactured by CSL Behring AG and distributed by CSL Behring LLC.

 

Investor Contact:

Greg Chodaczek

347-620-7010

investor@korumedical.com

 

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EXHIBIT 99.3

 

 

KORU MEDICAL SYSTEMS, INC. APPOINTS KEN MILLER AS CHIEF COMMERCIAL OFFICER

 

MAHWAH, NJ – November 8, 2023 – KORU Medical Systems, Inc. (NASDAQ: KRMD) (“KORU Medical” or the “Company”), a leading medical technology company focused on the development, manufacturing, and commercialization of innovative and easy-to-use specialty subcutaneous infusion solutions that improve quality of life for patients, today announced the appointment of Ken Miller as Chief Commercial Officer, effective November 6, 2023.

 

Ken brings over 30 years of extensive expertise and experience in leading high-performing teams in commercialization and marketing strategy, international expansion, and driving sustainable growth and profitability. As Chief Commercial Officer, Ken will have oversight of the global commercial function including U.S. and International sales and marketing organizations. He joins KORU Medical with impressive medical device and pharmaceutical industry experience, most recently from NASCO Healthcare where he spent five years as President & CEO. At NASCO, he transformed sales & marketing, and led the consolidation of NASCO’s manufacturing footprint which delivered year-over-year double digit revenue and EBITDA growth.  Prior to NASCO, Ken spent 7 years at Becton Dickinson (NYSE: BDX) with his last role as the Worldwide President Diabetes Care where he led the transition from a product focus to a full-service diabetes management solution provider. Ken also held leadership roles in marketing, sales, and business development with Novo Nordisk, Adams Respiratory Therapeutics, and Roche Laboratories. He earned his Bachelor of Arts in Business Management from State University of New York at Albany and his Master of Business Administration from The University of Chicago, Booth School of Business.

 

“I am confident that Ken’s experience in healthcare paired with his track record of success will be instrumental in propelling Koru Medical in this next phase of our growth. His arrival comes at an exciting time in our company’s journey and his commercialization expertise, drive and passion for customers and innovation will be instrumental in achieving this next stage of our success,” said Linda Tharby, KORU Medical’s President and CEO. “I am grateful to have Ken’s leadership on the KORU Medical team as we continue to grow the business in new markets and geographies and execute on our strategic growth plan.”

 

Mr. Miller added, “I am thrilled to have been appointed as the Chief Commercial Officer of KORU Medical, and eager to ramp up and accomplish our strategic goals and deliver value to the company and its shareholders. I selected KORU Medical because of the life changing solutions it provides patients in need, its innovation efforts to continually improve its products, its current leadership position in subcutaneous infusion and the enormous potential of the markets served.”

 

In connection with the commencement of his employment, Mr. Miller will be awarded two separate options, each to purchase 200,000 shares of the Company’s common stock at an exercise price equal to the arithmetic mean of the high and low prices of a share of common stock per share of the Company’s common stock on the day before the grant date, November 15, 2023. One of the option awards is subject to a four-year vesting schedule with 25% of the shares vesting on the first anniversary of the grant date and the remaining shares vesting in equal annual installments on the subsequent three anniversaries. The other of the option awards is subject to vesting based on specified net sales growth targets for each of the 2024 through 2026 fiscal years, which will vest in full upon the Company maintaining a specified run rate for at least two consecutive quarters after January 1, 2024. These awards are subject to the terms and conditions of the respective option agreements, which are described in more detail in the Company’s Form 8-K filed with the Securities and Exchange Commission today. The Compensation Committee of the Company’s Board of Directors approved the awards as an inducement material to Mr. Miller’s employment in accordance with Nasdaq Listing Rule 5635(c)(4).

 

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About KORU Medical Systems

 

KORU Medical Systems develops, manufactures, and commercializes innovative and easy-to-use subcutaneous drug delivery systems that improve quality of life for patients around the world. The FREEDOM Syringe Infusion System currently includes the FREEDOM60® and FreedomEdge® Syringe Infusion Drivers, Precision Flow Rate Tubing™ and HIgH-Flo Subcutaneous Safety Needle Sets™. These devices are used for infusions administered in the home and alternate care settings. For more information, please visit www.korumedical.com.

 

Investor Contact:

Greg Chodaczek

347-620-7010

investor@korumedical.com

 

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