# KORU Medical Systems (KRMD) 10-Q SEC filing - Q3 FY2026

- Filed: Aug 5, 2026, 4:08 PM EDT
- Fiscal quarter: Q3 FY2026
- Calendar quarter: Q3 2026
- Accession: 0001161697-26-000189
- OpenCapital page: https://www.opencapital.sh/filings/0001161697-26-000189
- Markdown URL: https://www.opencapital.sh/filings/0001161697-26-000189.md
- Official SEC filing index: https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/0001161697-26-000189-index.htm

## Filing documents

- [10-Q (form_10-q.htm)](https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/form_10-q.htm)
- [CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER (ex_31-1.htm)](https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/ex_31-1.htm)
- [CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER (ex_31-2.htm)](https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/ex_31-2.htm)
- [CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER (ex_32-1.htm)](https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/ex_32-1.htm)
- [CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER (ex_32-2.htm)](https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/ex_32-2.htm)

---

## 10-Q

SEC source: [form_10-q.htm](https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/form_10-q.htm)

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

(Mark One)

**[X]** QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

**For the Quarterly Period Ended June 30, 2026**

or

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________.

Commission File Number: **0-12305**

**KORU MEDICAL SYSTEMS, INC.**

(Exact name of registrant as specified in its charter)

| Delaware | 13-3044880 |
| --- | --- |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 100 Corporate Drive, Mahwah, New Jersey | 07430 |
| (Address of principal executive offices) | (Zip Code) |

**(845) 469-2042**

(Registrant’s telephone number, including area
code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

**Common stock, $0.01 par value** **KRMD** **The Nasdaq Stock Market**

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. **[X]** Yes [_] No

Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). **[X]** Yes [_]
No

Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.

Large accelerated filer [\_] Accelerated filer [\_]

Non-accelerated filer **[X]** Smaller reporting company **[X]**

Emerging growth company [\_]

If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. [_]

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). [_] Yes **[X]** No

As of August 5, 2026, 46,171,902 shares of common stock, $0.01 par value
per share, were outstanding, which excludes 4,018,526 shares of treasury stock.

---

**KORU MEDICAL SYSTEMS, INC.**

**FORM 10-Q**

**FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2026**

**TABLE OF CONTENTS**

|  |  | PAGE |
| --- | --- | --- |
| PART I. FINANCIAL INFORMATION |  |  |
| ITEM 1. | [Condensed Financial Statements (Unaudited)](#Part_I_Item_1) | 3 |
|  | [Balance Sheets as of June 30, 2026 (Unaudited) and December 31, 2025](#bs) | 3 |
|  | [Statements of Operations (Unaudited) for the three and six months ended June 30, 2026 and 2025](#so) | 4 |
|  | [Statements of Cash Flows (Unaudited) for the six months ended June 30, 2026 and 2025](#scf) | 5 |
|  | [Statements of Stockholders’ Equity (Unaudited) for the three and six months ended June 30, 2026 and 2025](#se) | 6-7 |
|  | [Notes to Financial Statements](#notes) | 8 |
| ITEM 2. | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#Part_I_Item_2) | 15 |
| ITEM 3. | [Quantitative and Qualitative Disclosures About Market Risk](#Part_I_Item_3) | 20 |
| ITEM 4. | [Controls and Procedures](#Part_I_Item_4) | 20 |
| PART II. OTHER INFORMATION |  |  |
| ITEM 1A. | [Risk Factors](#Part_II_Item_1A) | 20 |
| ITEM 2. | [Unregistered Sales of Equity Securities](#Part_II_Item_2) | 20 |
| ITEM 6. | [Exhibits](#Part_II_Item_6) | 21 |
|  | [Signatures](#signatures) | 22 |

- 2 -

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**

**PART I — FINANCIAL INFORMATION**

## Item 1. Condensed Financial Statements (Unaudited) Item 1. Financial Statements (Unaudited)

**KORU MEDICAL SYSTEMS, INC.**

### BALANCE SHEETS

| Line item | June 30, 2026 | December 31, 2025 |
| --- | --- | --- |
|  | (UNAUDITED) |  |
| ASSETS |  |  |
| CURRENT ASSETS |  |  |
| Cash and cash equivalents | $8,287,704 | $8,872,212 |
| Accounts receivable, net | 5,027,723 | 5,972,252 |
| Inventory, net | 4,511,126 | 3,678,131 |
| Other receivables | 1,064,909 | 557,653 |
| Prepaid expenses and other current assets | 622,655 | 908,542 |
| TOTAL CURRENT ASSETS | 19,514,117 | 19,988,790 |
| Property and equipment, net | 3,929,718 | 4,471,386 |
| Intangible assets, net of accumulated amortization of $562,655 and $527,949 as of June 30, 2026 and December 31, 2025, respectively | 1,663,318 | 684,841 |
| Operating lease right-of-use assets | 2,755,890 | 2,956,192 |
| Other assets | 98,970 | 98,970 |
| TOTAL ASSETS | $27,962,013 | $28,200,179 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |
| CURRENT LIABILITIES |  |  |
| Accounts payable | $2,912,589 | $2,267,473 |
| Accrued expenses | 2,869,568 | 4,828,830 |
| Other liabilities | 11,068 | 27,722 |
| Accrued payroll and related taxes | 807,832 | 531,972 |
| Financing lease liability | 148,592 | 124,913 |
| Operating lease liability | 430,173 | 413,448 |
| TOTAL CURRENT LIABILITIES | 7,179,822 | 8,194,358 |
| Financing lease liability, net of current portion | 71,409 | 78,675 |
| Operating lease liability, net of current portion | 2,659,265 | 2,879,224 |
| TOTAL LIABILITIES | 9,910,496 | 11,152,257 |
| STOCKHOLDERS’ EQUITY |  |  |
| Common stock, $0.01 par value, 75,000,000 shares authorized, 50,172,404 and 49,790,934 shares issued 46,148,690 and 46,370,432 shares outstanding as of June 30, 2026, and December 31, 2025, respectively | 501,724 | 497,909 |
| Additional paid-in capital | 56,527,047 | 52,449,339 |
| Treasury stock, 4,018,526 and 3,438,526 shares as of June 30, 2026 and December 31, 2025, respectively, at cost | (6,405,793) | (3,882,494) |
| Accumulated deficit | (32,571,461) | (32,016,832) |
| TOTAL STOCKHOLDERS’ EQUITY | 18,051,517 | 17,047,922 |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $27,962,013 | $28,200,179 |

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

- 3 -

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**

**KORU MEDICAL SYSTEMS, INC.**

### STATEMENTS OF OPERATIONS

_(UNAUDITED)_

| Line item | Three Months Ended / June 30, 2026 | Three Months Ended / June 30, 2025 | Six Months Ended / June 30, 2026 | Six Months Ended / June 30, 2025 |
| --- | --- | --- | --- | --- |
| NET REVENUES | $12,045,420 | $10,194,800 | $23,810,044 | $19,829,875 |
| Cost of goods sold | 4,199,212 | 3,719,031 | 8,732,447 | 7,307,771 |
| Gross Profit | 7,846,208 | 6,475,769 | 15,077,597 | 12,522,104 |
| OPERATING EXPENSES |  |  |  |  |
| Selling, general and administrative | 5,939,986 | 5,384,148 | 12,522,165 | 11,343,522 |
| Research and development | 1,069,200 | 1,194,789 | 2,385,804 | 2,309,398 |
| Depreciation and amortization | 210,031 | 209,487 | 407,561 | 426,844 |
| Total Operating Expenses | 7,219,217 | 6,788,424 | 15,315,530 | 14,079,764 |
| Net Operating Income /(Loss) | 626,991 | (312,655) | (237,933) | (1,557,660) |
| Non-Operating Income/(Expense) |  |  |  |  |
| Gain/(Loss) on currency exchange | (22,343) | 44,193 | (45,493) | 49,782 |
| Loss on disposal of fixed assets, net | (406,269) | — | (406,269) | — |
| Interest income, net | 59,870 | 78,951 | 140,866 | 152,130 |
| TOTAL OTHER (EXPENSE)/INCOME | (368,742) | 123,144 | (310,896) | 201,912 |
| INCOME / (LOSS) BEFORE INCOME TAXES | 258,249 | (189,511) | (548,829) | (1,355,748) |
| Income Tax Expense | (5,800) | (17,356) | (5,800) | (17,356) |
| NET INCOME/(LOSS) | $252,449 | $(206,867) | $(554,629) | $(1,373,104) |
| NET INCOME / (LOSS) PER SHARE |  |  |  |  |
| Basic | $0.01 | $(0.00) | $(0.01) | $(0.03) |
| Diluted | $0.01 | $(0.00) | $(0.01) | $(0.03) |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |  |  |  |  |
| Basic | 46,083,893 | 46,193,709 | 46,223,623 | 46,088,353 |
| Diluted | 49,509,437 | 46,193,709 | 46,223,623 | 46,088,353 |

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

- 4 -

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**

**KORU MEDICAL SYSTEMS, INC.**

### STATEMENTS OF CASH FLOWS

_(UNAUDITED)_

| Line item | Six Months Ended / June 30, 2026 | Six Months Ended / June 30, 2025 |
| --- | --- | --- |
| CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
| Net Loss | $(554,629) | $(1,373,104) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| Stock-based compensation expense and warrant expense | 1,139,284 | 1,113,334 |
| Depreciation and amortization | 407,561 | 426,844 |
| Loss on disposal of fixed assets | 406,269 | — |
| Non-cash leasing charges | (2,931) | — |
| Changes in operating assets and liabilities: |  |  |
| Decrease/(Increase) in accounts receivable | 944,529 | 805,133 |
| Decrease/(Increase) in other receivables | (507,257) | 47,979 |
| Decrease/(Increase) in inventory | (832,996) | (1,144,175) |
| Decrease/(Increase) in prepaid expenses and other assets | 285,887 | 317,897 |
| Increase/(Decrease) in accounts payable | 645,116 | (555,430) |
| Increase/(Decrease) in accrued payroll and related taxes | 275,860 | (122,459) |
| Increase/(Decrease) in other liabilities | (16,654) | 74,833 |
| Increase/(Decrease) in accrued expenses | (1,959,263) | (288,659) |
| NET CASH FLOWS FROM OPERATING ACTIVITIES | 230,776 | (697,807) |
| CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
| Purchases of property and equipment | (154,070) | (472,252) |
| Purchases of intangible assets | (461,035) | (3,400) |
| Capitalized software development costs | (52,147) | — |
| NET CASH FLOWS FROM INVESTING ACTIVITIES | (667,252) | (475,652) |
| CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
| Payments on insurance finance indebtedness | — | (271,152) |
| Payments for taxes related to net share settlement of equity awards | (81,059) | (27,536) |
| Payments on finance lease liability, net of asset | (66,973) | (54,084) |
| NET CASH FLOWS FROM FINANCING ACTIVITIES | (148,032) | (352,772) |
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (584,508) | (1,526,231) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 8,872,212 | 9,580,947 |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $8,287,704 | $8,054,716 |
| Supplemental Information |  |  |
| Cash paid during the years for: |  |  |
| Interest | $4,732 | $7,563 |
| Income Taxes | $5,800 | $17,356 |
| Non-cash Financing Activity |  |  |
| During the six months ended June 30, 2026, the Company acquired an intangible asset for $961,035, of which $500,000 was settled through the issuance of 125,628 shares of common stock | - |  |

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

- 5 -

---

**

**KORU MEDICAL SYSTEMS, INC.**

**STATEMENTS OF STOCKHOLDERS’ EQUITY**

**(UNAUDITED)**

**Three and Six Months Ended June 30, 2026**

| Line item | Common Stock / Shares | Common Stock / Amount | Additional / Paid-in / Capital | Accumulated / Deficit | Treasury / Stock | Total / Stockholders’ / Equity |
| --- | --- | --- | --- | --- | --- | --- |
| BALANCE, DECEMBER 31, 2025 | 49,790,934 | $497,909 | $52,449,339 | $(32,016,832) | $(3,882,494) | $17,047,922 |
| Issuance of stock-based compensation | 142,568 | 1,426 | 96,074 | — | — | 97,500 |
| Compensation expense related to stock options | — | — | 254,053 | — | — | 254,053 |
| Compensation related to restricted stock | — | — | 329,957 | — | — | 329,957 |
| Forfeiture of unvested restricted stock | — | — | 1,666,299 | — | (1,666,299) | — |
| Net loss | — | — | — | (807,078) | — | (807,078) |
| BALANCE, MARCH 31, 2026 | 49,933,502 | $499,335 | $54,795,722 | $(32,823,910) | $(5,548,793) | $16,922,354 |
| Issuance of stock-based compensation | 113,274 | 1,133 | 96,367 | — | — | 97,500 |
| Compensation expense related to stock options | — | — | 308,252 | — | — | 308,252 |
| Compensation related to restricted stock, net of payment for taxes | — | — | (29,038) | — | — | (29,038) |
| Forfeiture of unvested restricted stock | — | — | 857,000 | — | (857,000) | — |
| Restricted shares issued as acquisition consideration | 125,628 | 1,256 | 498,744 | — | — | 500,000 |
| Net Income | — | — | — | 252,449 | — | 252,449 |
| BALANCE, JUNE 30, 2026 | 50,172,404 | $501,724 | $56,527,047 | $(32,571,461) | $(6,405,793) | $18,051,517 |

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**

**Three and Six Months Ended June 30, 2025**

| Line item | Common Stock / Shares | Common Stock / Amount | Additional / Paid-in / Capital | Accumulated / Deficit | Treasury / Stock | Total / Stockholders’ / Equity |
| --- | --- | --- | --- | --- | --- | --- |
| BALANCE, DECEMBER 31, 2024 | 49,377,617 | $493,776 | $49,581,303 | $(29,378,906) | $(3,882,494) | $16,813,679 |
| Issuance of stock-based compensation | 183,881 | 1,839 | 95,661 | — | — | 97,500 |
| Compensation expense related to stock options | — | — | 359,197 | — | — | 359,197 |
| Compensation related to restricted stock | — | — | 227,860 | — | — | 227,860 |
| Issuance of warrants | — | — | 13,032 | — | — | 13,032 |
| Net loss | — | — | — | (1,166,237) | — | (1,166,237) |
| BALANCE, MARCH 31, 2025 | 49,561,498 | $495,615 | $50,277,053 | $(30,545,143) | $(3,882,494) | $16,345,031 |
| Issuance of stock-based compensation | 93,961 | 940 | 96,560 | — | — | 97,500 |
| Compensation expense related to stock options | — | — | 147,944 | — | — | 147,944 |
| Compensation related to restricted stock, net of payment for taxes | — | — | 142,766 | — | — | 142,766 |
| Net loss | — | — | — | (206,867) | — | (206,867) |
| BALANCE, JUNE 30, 2025 | 49,655,459 | $496,555 | $50,664,323 | $(30,752,010) | $(3,882,494) | $16,526,374 |

- 7 -

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**

**KORU MEDICAL SYSTEMS, INC.**

**NOTES TO THE UNAUDITED FINANCIAL STATEMENTS**

### **NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

NATURE OF OPERATIONS

KORU MEDICAL SYSTEMS, INC. (the “Company,”
“KORU Medical,” “KORU,” “we,” “us” or “our”) develops, manufactures and commercializes
innovative and patient-centric large volume subcutaneous infusion solutions primarily for the subcutaneous drug delivery market as governed
by the United States Food and Drug Administration (the “FDA”) quality and regulatory system and international standards for
quality system management. The Company operates as one segment.

BASIS OF PRESENTATION

The accompanying financial statements should be read
in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2025 (“Annual Report”).
 In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the Company has
omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited financial statements of the Company.
 The accompanying interim financial statements are unaudited and reflect all adjustments which are in the opinion of management necessary
for a fair statement of the Company’s financial position, results of operations, and cash flows for the periods presented. All
such adjustments are of a normal, recurring nature. The Company’s results of operations and cash flows for the interim periods
are not necessarily indicative of the results of operations and cash flows that it may achieve in future periods.

CASH AND CASH EQUIVALENTS

For purposes of the statements of cash flows, the
Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. As of June
30, 2026 the Company held cash and cash-equivalents of $8.3 million.

INTANGIBLE ASSETS

Costs incurred in obtaining patents have been capitalized
and are being amortized over the legal life of the patents.

During the three months ended June 30, 2026, the Company
acquired certain intangible assets for $961,035. This purchase was accounted for as a technology asset acquisition, as it did not meet
the definition of a business combination under ASC 805.

SOFTWARE DEVELOPMENT COSTS

The Company capitalizes certain costs related to the development of internal-use
software in accordance with ASC 350-40, Internal-Use Software. Capitalization begins when management has authorized the project, and it
is probable that the software will be completed and used as intended. Capitalized costs primarily include internal labor directly associated
with application development activities, such as coding, configuration, and testing.

STOCK-BASED COMPENSATION

The Company maintains an omnibus equity incentive
plan under which it grants options and other equity incentive awards to certain executives, employees and consultants, as well as shares
of common stock to non-employee directors.

The fair value of each stock option grant is estimated
on the date of the grant using the Black-Scholes option-pricing model. All options are charged against income at their fair value.
 The entire compensation expense of the award is recognized over the vesting period.

Shares of stock granted for director fees are recorded
at the fair value of the shares at the grant date.

Restricted stock awards are equity classified and
measured at the fair market value of the underlying stock at the grant date. The fair value of restricted stock awards vesting at certain
market capitalization thresholds were estimated on the date of grant using the Brownian Motion Monte Carlo lattice model. The fair value
of restricted stock awards with time-based vesting were estimated on the date of grant at the current stock price. The fair value of restricted
stock awards vesting at certain annual sales growth thresholds were estimated as of the date of Board acknowledgement of the achievement,
at the current stock price. We recognize restricted stock expense using the straight-line attribution method over the requisite service
period and account for forfeitures as they occur.

- 8 -

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**

Restricted stock units (“RSUs”) and performance
stock units (“PSUs”) are equity classified and measured at the fair market value of the underlying stock at the grant date.

NET INCOME PER SHARE

The following table sets forth the computation of
basic and diluted income per share:

Schedule of Basic and Diluted Income per Share Computation Table

| Line item | Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 |
| --- | --- | --- | --- | --- |
| Numerator: |  |  |  |  |
| Net income(loss) for basic and diluted earnings per share | $252,449 | $(206,867) | $(554,629) | $(1,373,104) |
| Denominator for basic income per share weighted average shares | 46,083,893 | 46,193,709 | 46,223,623 | 46,088,353 |
| Effect of dilutive securities: |  |  |  |  |
| Options, restricted stock units, and warrants | 3,425,544 | — | — | — |
| Denominator for diluted income per share weighted average shares | 49,509,437 | 46,193,709 | 46,223,623 | 46,088,353 |
| Basic income per share | $0.01 | $(0.00) | $(0.01) | $(0.03) |
| Diluted income per share | $0.01 | $(0.00) | $(0.01) | $(0.03) |

Approximately 2,273,140 stock options and 1,152,404 restricted
stock units for the three months ended June 30, 2026 were included in the diluted EPS calculation because they were dilutive.
Additional stock options and restricted stock units were excluded from the diluted EPS calculation for the three-month period ended June
30, 2026 because they were anti-dilutive, primarily consisting of unvested and out-of-the-money options of 1,677,997 and unvested performance-based
awards of 525,875. Because the Company reported a net loss for the six months ended June 30, 2026, all potential common shares were anti-dilutive
and therefore excluded from the calculation of diluted net loss per share for the period.

USE OF ESTIMATES IN THE FINANCIAL STATEMENTS

The preparation of financial statements in conformity
with United States generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Important estimates include but are not limited to asset lives, deferred tax valuation allowances, inventory valuation, expected credit
losses, and customer rebate and incentive accruals. The results of operations for the six months ended June 30, 2026 are not necessarily
indicative of the results that may be expected for the entire 2026 fiscal year.

REVENUE RECOGNITION

Our revenues are derived from three business sources:
(i) domestic core (which consists of US and Canada), (ii) international core, and (iii) pharma services and clinical trials. Our
domestic and international core revenues consist of sales of our syringe drivers, tubing and needles (“Product Revenue”) for
the delivery of subcutaneous drugs that are FDA cleared for use with the KORU Medical infusion system, with the primary delivery for immunoglobulin
to treat Primary Immunodeficiency Diseases (“PIDD”) and Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”).
Pharma services and clinical trials consist of Product Revenue for feasibility/clinical trials (pre-clinical studies, Phase I, Phase II,
Phase III) of biopharmaceutical companies in the drug development process as well as non-recurring engineering services (“NRE”)
revenues (including testing and registration services) received from biopharmaceutical companies to ready or customize the FREEDOMTM System for clinical and commercial use across multiple drug categories.

For Product Revenue, we recognize revenues when shipment
occurs, at which point the customer obtains control and ownership of the goods. Shipping costs generally are billed to customers
and are included in Product Revenue.

The Company generally does not accept return of goods
shipped unless it is a Company error. The only credits provided to customers are for defective merchandise. The Company warrants
the syringe driver from defects in materials and workmanship under normal use and the warranty does not include a performance obligation.
 The costs under the warranty are expensed as incurred.

Rebates are provided to distributors for the difference
in selling price to distributors and pricing specified to select customers. In addition, rebates are provided to customers for meeting
growth targets. Provisions for both distributor pricing and customer growth rebates are variable consideration and are recorded
as a reduction of revenue in the same period the related sales are recorded or when it is probable the growth target will be achieved.

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**

We recognize NRE revenue under an input method, which
recognizes revenue on the basis of our efforts or inputs (for example, resources consumed, labor hours expended, costs incurred, or time
elapsed) to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance
obligation (i.e. completion milestone). The input method that we use is based on costs incurred.

Contracts are often modified to account for changes
in contract specifications and requirements. Contract modifications exist when the modification either creates new, or changes existing,
enforceable rights and obligations. Generally, when contract modifications create new performance obligations, the modification is considered
to be a separate contract and revenue is recognized prospectively. When contract modifications change existing performance obligations,
the impact on the existing transaction price and measure of progress for the performance obligation to which it relates is generally recognized
as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. Contract assets primarily
represent revenue earnings over time that are not yet billable based on the terms of the contracts. Contract liabilities (i.e., deferred
revenue) consist of fees invoiced or paid by the Company’s customers for which the associated performance obligations have not been
satisfied and revenue has not been recognized based on the Company’s revenue recognition criteria described above. The Company has
recognized a contract asset, which is included in other receivables in the accompanying balance sheet, of $335,206 and $319,955 as of
June 30, 2026 and December 31, 2025, respectively.

The following table summarizes net revenues from our
distributors and direct customers by geography for the three and six months ended June 30, 2026, and 2025.

Schedule of Net Revenues by Customer Type and Geography Table

| Line item | Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 |
| --- | --- | --- | --- | --- |
| Revenues |  |  |  |  |
| Domestic | $8,396,591 | $8,012,272 | $16,835,334 | $15,217,904 |
| International | 3,648,829 | 2,182,528 | 6,974,710 | 4,611,971 |
| Total | $12,045,420 | $10,194,800 | $23,810,044 | $19,829,875 |

ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED

The Company considers the applicability and impact
of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures
are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment
loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition
are less than the carrying amount. The impairment loss, if recognized, would be based on the excess of the carrying value of the
impaired asset over its respective fair value. The Company did not record any impairment losses for the quarter ended June 30, 2026,
nor June 30, 2025.

### **NOTE 2 — PROPERTY AND EQUIPMENT**

Property and equipment consist of the following at:

Schedule of Property and Equipment Table

| Line item | June 30, 2026 | December 31, 2025 |
| --- | --- | --- |
| Furniture and office equipment | $1,527,809 | $1,407,636 |
| Leasehold improvements | 2,161,557 | 1,959,045 |
| Manufacturing equipment and tooling | 4,663,208 | 5,171,898 |
| Total property and equipment | 8,352,574 | 8,538,579 |
| Less: accumulated depreciation and amortization | (4,422,856) | (4,067,193) |
| Property and equipment, net | $3,929,718 | $4,471,386 |

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**

### **NOTE 3 — STOCK-BASED COMPENSATION**

The Company maintains three equity incentive plans:
the 2015 Stock Option Plan, as amended (the “2015 Plan”), the 2021 Omnibus Equity Incentive Plan (the “2021 Plan”),
and the 2024 Omnibus Equity Incentive Plan (the “2024 Plan”). All equity awards issued to employees, consultants, and non-employee
directors on or after May 9, 2024, are issued from the 2024 Plan. The Company has also issued restricted stock and stock options as employment
inducement awards outside of these plans to certain executive officers.

The 2015 Plan provides for the grant of incentive
stock options and nonqualified stock options. As of June 30, 2026, there were 1,903,000 shares reserved for outstanding awards under the
2015 Plan.

The 2021 Plan provides for the grant of incentive
stock options, nonqualified stock options, stock awards, restricted stock awards, restricted stock units, performance share units, stock
appreciation rights, and/or other equity-based awards to employees, consultants and directors. As of June 30, 2026, there were 100,000 shares reserved for outstanding awards under the 2021 Plan.

The 2024 Plan provides for the grant of incentive
stock options, nonqualified stock options, stock awards, restricted stock awards, restricted stock units, performance share units, stock
appreciation rights and/or other equity-based awards to employees, consultants and directors. Awards previously made under the 2015 Plan
and the 2021 Plan that are forfeited or cancelled after May 9, 2024 will be available for issuance under the 2024 Plan. As of June 30,
2026, there were 2,134,545 shares reserved for outstanding awards and 3,028,956 shares available for issuance under the 2024 Plan.

Each non-employee director of the Company (other than
the Chairman of the Board) is eligible to receive $110,000 annually, to be paid quarterly in arrears of $12,500 in cash and $15,000 in
common stock. The Chairman of the Board is eligible to receive $140,000 annually, to be paid quarterly in arrears of $12,500 in cash and
$22,500 in common stock. All payments were and are pro-rated for partial service.

Restricted stock units (“RSUs”) and performance
share units (“PSUs”) are equity classified and measured at the fair value of the underlying stock at the grant date.

Shares of stock granted for non-employee director
fees are recorded at the fair value of the shares at the grant date.

On March 12, 2026 the Company announced the retirement
of our CEO, Linda Tharby, with both parties entering into a separation and transition agreement, and general release. Ms. Tharby continued
to serve as CEO through June 30, 2026, at which time she transitioned to a non-executive advisory employee, and will continue to serve
as a member of the Board of Directors through December 31, 2026. As part of the separation and transition agreement, 580,000 unvested
restricted stock awards from Ms. Tharby’s new hire inducement plan were forfeited during the six months ended June 30, 2026. All
forfeited restricted stock awards were transferred to Treasury, and forfeited RSUs, PSUs, and stock options were remitted back to the
2024 Plan.

**Time-Vesting Stock Options**

The following table summarizes the status of the time-vested
stock options outstanding at June 30, 2026:

Schedule of status of time based stock options

| Line item | Shares | Weighted Average Exercise Price |
| --- | --- | --- |
| Outstanding at January 1 | 3,614,245 | $3.48 |
| Granted | 156,857 | $3.95 |
| Exercised | — | — |
| Forfeited | (81,272) | $2.73 |
| Outstanding at June 30 | 3,689,830 | $3.50 |
| Options exercisable at June 30 | 2,097,335 | $3.28 |

Total stock-based compensation expense for time-vested
stock options included in operating expense in the accompanying statement of operations was $308,252 and $562,305 for the three and six
months ended June 30, 2026, respectively. As of June 30, 2026, the intrinsic value of all time-based stock options was $3,014,639.

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**

The following table presents information pertaining
to time-vested stock options outstanding at June 30, 2026:

Schedule of information pertaining to options outstanding

| Range of Exercise Price | Number Outstanding | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price |
| --- | --- | --- | --- | --- | --- |
| $2.08 - $4.06 | 3,216,318 | 6.5 years | $3.28 | 2,097,335 | $3.28 |
| $4.35 - $5.70 | 473,512 | 9.6 years | $5.01 | — | — |
| Total | 3,689,830 | 6.9 years | $3.50 | 2,097,335 | $3.28 |

As of June 30, 2026, there was $3,368,702 of total
unrecognized compensation cost related to unvested share-based stock compensation awards granted under the Plans. That cost is expected
to be recognized over a weighted-average period of 25 months.

**Restricted Stock Awards, RSUs, and PSUs**

The following table summarizes the activities for
our unvested restricted stock awards, RSUs, and PSUs for the six months ended June 30, 2026.

Schedule of Unvested Restricted Stock Awards, Restricted Stock Units, and Performance Stock Units Activity Table

| Line item | Shares | Weighted Average Grant-Date Fair Value |
| --- | --- | --- |
| Unvested at January 1 | 1,722,147 | $2.99 |
| Granted | 687,204 | $4.81 |
| Vested | (242,348) | $2.32 |
| Forfeited/canceled | (560,565) | $3.31 |
| Unvested at June 30 | 1,606,438 | $3.61 |

During the six months ended June 30, 2026, 580,000 shares of restricted stock originally issued to our former CEO as part of her new hire inducement award were forfeited and returned to
treasury.

Total stock-based compensation expense for restricted
stock awards, RSUs, and PSUs, included in operating expense in the accompanying statement of operations was $52,021 and $381,978 for the
three and six months ended June 30, 2026, respectively.

As of June 30, 2026, there was $4,919,605 of unrecognized
compensation cost related to unvested employee restricted stock awards, RSUs, and PSUs. This amount is expected to be recognized over
a weighted-average period of 25 months.

### **NOTE 4 — DEBT OBLIGATIONS**

On March 8, 2024, the Company entered into a loan
and security agreement with a large domestic banking institution, as lender, providing for a $5,000,000 revolving credit facility and
a $5,000,000 term loan facility. Borrowings are secured by a first-priority lien on substantially all of the assets of the Company, subject
to customary exceptions. On March 30, 2026 the loan and security agreement was amended to extend the maturity of the $5,000,000 revolver
from December 31, 2026 to March 30, 2028, and extends the interest-only period of the $5,000,000 term loan from September 30, 2026 to
June 30, 2027 with a possible further extension to December 31, 2027 upon the achievement of certain EBITDA milestones as set forth therein.
The term loan maturity has been extended from December 1, 2028 to December 1, 2029. The amendment lowers the interest rate floor to 5.50%
from 6.50% for the revolver and the term loan. The amendment removes the adjusted quick ratio covenant for both the term loan and the
revolver. The adjusted quick ratio covenant for the revolver has been replaced with a remaining months liquidity covenant of at least
twelve months, to be tested monthly beginning the first month the revolver is drawn on; provided, however, the Company will be in compliance
if trailing three (3) month average Adjusted EBITDA (as defined in the revolver) is positive.

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**

### **NOTE 5 — LEASES**

We have finance and operating leases for our corporate
office, vehicles, and certain office and computer equipment.

The components of lease expense were as follows:

Schedule of Lease Expense Components Table

| Line item | Three Months Ended / June 30, 2026 | Three Months Ended / June 30, 2025 | Six Months Ended / June 30, 2026 | Six Months Ended / June 30, 2025 |
| --- | --- | --- | --- | --- |
| Operating lease cost | $133,495 | $132,502 | $266,990 | $257,587 |
| Short-term lease cost | — | 2,700 | — | 6,086 |
| Total lease cost | $133,495 | $135,202 | $266,990 | $263,673 |
| Finance lease cost: |  |  |  |  |
| Amortization of right-of-use assets | $36,547 | $28,896 | $66,022 | $57,793 |
| Interest on lease liabilities | 2,578 | 4,085 | 4,713 | 8,575 |
| Total finance lease cost | $39,125 | $32,981 | $70,735 | $66,368 |

Supplemental cash flow information related to leases
was as follows:

Schedule of Supplemental Cash Flow Information Related to Leases Table

| Line item | Six Months Ended / June 30, 2026 | Six Months Ended / June 30, 2025 |
| --- | --- | --- |
| Cash paid for amounts included in the measurement of lease liabilities: |  |  |
| Operating cash flows from operating leases | $268,433 | $261,117 |
| Financing cash flows from finance leases | 70,702 | 65,718 |
| ROU assets obtained in exchange for new finance lease liabilities | 82,383 | — |

| Line item | June 30, 2026 | December 31, 2025 |
| --- | --- | --- |
| Weighted Average Remaining Lease Term |  |  |
| Operating leases | 6.08 Years | 6.57 Years |
| Finance leases | 1.75 Years | 1.67 Years |
| Weighted Average Discount Rate |  |  |
| Operating leases | 4.11% | 4.13% |
| Finance leases | 4.47% | 4.74% |

Maturities of lease liabilities are as follows:

Schedule of Maturities of Lease Liabilities Table

| Year Ended December 31, | Operating Leases | Finance Leases |
| --- | --- | --- |
| Remainder of 2026 | $270,896 | $80,669 |
| 2027 | 554,475 | 104,096 |
| 2028 | 557,286 | 36,079 |
| 2029 | 553,759 | 7,475 |
| 2030 | 568,217 | — |
| Thereafter | 986,164 | — |
| Total undiscounted lease payments | 3,490,797 | 228,319 |
| Less: imputed interest | (401,359) | (8,318) |
| Total lease liabilities | $3,089,438 | $220,001 |

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### **NOTE 6 — INCOME TAXES**

For interim income tax reporting, the Company estimates
its annual effective tax rate and applies it to fiscal year-to-date pretax loss, excluding unusual or infrequently occurring discrete
items. Tax jurisdictions with losses for which tax benefits cannot be realized are excluded. The Company’s reported income tax
expense as of June 30, 2026 and 2025 is lower than the statutory tax rate at 21%
primarily due to the valuation allowance established against the net deferred tax assets.

We evaluate our deferred tax assets to determine if
they are more likely than not to be realized by assessing both positive and negative evidence in accordance with ASC Topic 740, Income
Taxes. After considering our cumulative pretax loss (the three-year period ended with the current year), as well as analyzing all
available evidence, we maintained the full valuation allowance against our net deferred tax assets. As we continue to assess the
realizability of our deferred tax assets, reported pretax income and new evidence may result in a partial or full reduction of the valuation
allowance in future periods.

The Company files income tax returns in the U.S. federal
jurisdiction and in various state jurisdictions. Income tax returns for years prior to fiscal 2022 are no longer subject to examination
by tax authorities.

### **NOTE 7 — COMMITMENTS AND CONTINGENCIES**

**LEGAL PROCEEDINGS**

The Company has been and may again become involved
in legal proceedings, claims and litigation arising in the ordinary course of business. The Company is not presently a party to
any litigation or other legal proceedings that is believed to be material to its financial condition.

### **NOTE 8 — SUBSEQUENT EVENTS**

On August 5, 2026, the Company’s Board of Directors
approved an increase in its non-employee director compensation, effective October 1, 2026.

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**

**PART I — ITEM 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

This Quarterly Report on Form 10-Q contains, and our
officers and representatives may from time to time make, certain “forward-looking” statements (as such term is defined in
the Private Securities Litigation Reform Act of 1995) and information relating to us that are based on the beliefs of the management,
as well as assumptions made and information currently available. Forward-looking statements are neither historical facts nor assurances
of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business,
future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking
statements relate to the future, they are subject to uncertainties, risks and changes in circumstances that are difficult to predict and
many of which are outside of our control.

Our actual results may vary materially from the forward-looking
statements made in this report due to important factors such as uncertainties associated with inflation, tariffs, war and other geopolitical
conflicts, customer ordering patterns, availability and costs of raw materials and labor and our ability to recover such costs, future
operating results, growth of new patient starts and the Ig market, our compliance with Food and Drug Administration and foreign authority
regulations and the outcome of regulatory audits, introduction and adoption of competitive products, acceptance of and demand for new
and existing products, ability to penetrate new markets, success in enforcing and obtaining patents, reimbursement related risks, government
regulation of the home health care industry, success of our research and development effort, expanding the market of FREEDOMTM System, demand in the SCIg market, availability of sufficient capital if or when needed, dependence on key personnel, and the impact of
recent accounting pronouncements, as well as those risks and uncertainties described in our Annual Report on Form 10-K for the year ended
December 31, 2025. When used in this report, the words “estimate,” “project,” “believe,” “may,”
“will,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify
forward-looking statements, which include, without limitation, statements regarding need for additional financing. Such statements
reflect current views with respect to future events based on currently available information and are subject to risks and uncertainties
that could cause actual results to differ materially from those contemplated in such forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake
any obligation to release publicly any revision to these forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.

Throughout this report, the “Company,”
“KORU Medical,” “we,” “us” or “our” refers to KORU Medical Systems, Inc.

**OVERVIEW**

The Company develops, manufactures and markets proprietary
portable and innovative medical devices primarily for the subcutaneous drug delivery market as governed by the United States Food and
Drug Administration (the “FDA”) quality and regulatory system and international regulations and standards for quality system
management.

Our revenues derive from three business sources: (i)
domestic core (which consists of US and Canada), (ii) international core, and (iii) pharma services and clinical trials. Our domestic
core and international core revenues consist of sales of our products for the delivery of subcutaneous drugs that are FDA cleared for
use with the FREEDOMTM System, with the primary delivery for immunoglobulin to treat Primary Immunodeficiency Diseases (“PIDD”)
and Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”). Pharma services and clinical trials revenues consist of product
revenues from our infusion system (syringe drivers, tubing and needles) for feasibility/clinical trials (pre-clinical studies, Phase I,
Phase II, Phase III) of biopharmaceutical companies in the drug development process as well as non-recurring engineering services revenues
(“NRE”) received from biopharmaceutical companies to ready or customize the FREEDOMTM System for clinical and commercial
use.

The Company ended the second quarter of 2026 with
$12.0 million in net revenues, an 18.2% increase compared to $10.2 million in the same period last year. Revenues were driven by growth
in our core domestic and international business of 12.4% and 59.1%, respectively, along with a decrease of 35% in our pharma services
and clinical trials business.

Gross profit for the second quarter of 2026 was $7.8
million, a 21.2% increase compared to $6.5 million in the same period last year. Gross margin was 65.1% for the three months ended June
30, 2026, an increase from 63.5% in the prior year period. We define gross margin as gross profit stated as a percentage of net revenues.

Operating expenses for the second quarter of 2026
were $7.2 million, an increase of 6.3%, compared to $6.8 million for the same period last year, driven by an increase of $0.6 million
in selling, general, and administrative expenses, and a decrease of $0.1 million in research and development expenses.

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**

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

**RESULTS OF OPERATIONS**

**Three months ended June 30, 2026, compared to June
30, 2025**

Net Revenues

The following table summarizes our net revenues for
the three months ended June 30, 2026, and 2025:

| Line item | Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Change from Prior Year / $ | Change from Prior Year / % | % of Net Revenues / 2026 | % of Net Revenues / 2025 |
| --- | --- | --- | --- | --- | --- | --- |
| Net Revenues |  |  |  |  |  |  |
| Domestic Core | $7,979,558 | $7,097,285 | $882,273 | 12.4% | 66.2% | 69.6% |
| International Core | 3,469,558 | 2,180,111 | 1,289,447 | 59.1% | 28.8% | 21.4% |
| Total Core | 11,449,116 | 9,277,396 | 2,171,720 | 23.4% | 95.0% | 91.0% |
| Pharma Services and Clinical Trials | 596,304 | 917,404 | (321,100) | (35.0%) | 5.0% | 9.0% |
| Total | $12,045,420 | $10,194,800 | $1,850,620 | 18.2% | 100.0% | 100.0% |

Total net revenues increased $1.9 million, or 18.2%,
to $12.0 million for the three months ended June 30, 2026, as compared to $10.2 million in the prior year period. Domestic core revenues
were $8.0 million, an increase of 12.4% over the prior year period, primarily due to higher pump and consumable volumes, driven by new
patient starts and market share gains within new and existing accounts, supported by a strong underlying SCIg market. International core
revenues were $3.5 million, an increase of 59.1% over the prior year period, due to higher pump and consumable volumes, driven by distributor
purchases supporting pre-filled syringe (PFS) conversions, and new patient starts in established EU markets. Pharma services and clinical
trials net revenues were $0.6 million, a decrease of 35% over the prior year period, primarily due to lower clinical trial product revenues
related to customer order timing.

Gross Profit

Our gross profit for the three months ended June 30,
2026 and 2025 is as follows:

| Line item | Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Change from Prior Year / $ | Change from Prior Year / % |
| --- | --- | --- | --- | --- |
| Gross Profit | $7,846,208 | $6,475,769 | $1,370,439 | 21.2% |
| Gross Margin | 65.1% | 63.5% |  |  |

Gross profit increased $1.4 million, or 21.2%, to
$7.8 million in the three months ended June 30, 2026, as compared to $6.5 million in the prior year period, primarily driven by volume
growth. Gross margin increased to 65.1% in the three months ended June 30, 2026, as compared to 63.5% in the prior year period. The increase
in gross margin was primarily driven by lower manufacturing costs and higher average selling prices.

Operating Expenses

Our selling, general and administrative, research
and development and depreciation and amortization expenses for the three months ended June 30, 2026 and 2025 are as follows:

| Line item | Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Change from Prior Year / $ | Change from Prior Year / % |
| --- | --- | --- | --- | --- |
| Selling, general and administrative | $5,939,986 | $5,384,148 | $555,838 | 10.3% |
| Research and development | 1,069,200 | 1,194,789 | (125,589) | (10.5%) |
| Depreciation and amortization | 210,031 | 209,487 | 544 | 0.3% |
| Total Operating Expenses | $7,219,217 | $6,788,424 | $430,793 | 6.3% |

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Selling, general and administrative expenses increased $0.6 million, or
10.3%, to $5.9 million during the three months ended June 30, 2026, as compared to $5.4 million in the prior year period. The increase
in selling, general and administrative expenses was primarily driven by increases in compensation and benefits from new hires, and legal
fees, partially offset by lower stock compensation, recruiting, and consulting expenses.

Research and development expenses decreased $0.1 million,
or 10.5% to $1.1 million during the three months ended June 30, 2026, as compared to $1.2 million in the prior year period, primarily
due to lower project spend and timing partially offset by higher compensation expenses for salary and stock compensation related to headcount
additions

Depreciation and amortization expense remained flat
at $0.2 million during the three months ended June 30, 2026, as compared to $0.2 million in the prior year period.

Net Income

| Line item | Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | Change from Prior Year / $ | Change from Prior Year / % |
| --- | --- | --- | --- | --- |
| Net Income | $252,449 | $(206,867) | $459,316 | (222.0%) |

Our net income increased $0.5 million in the three
months ended June 30, 2026, as compared to the prior year period, primarily driven by an increase in gross profit of $1.4 million from
increased revenues, partially offset by operating expense increases of $0.4 million, and other income and losses change of $0.5 million
due to an asset disposal.

**Six months ended June 30, 2026, compared to June
30, 2025**

Net Revenues

The following table summarizes our net revenues for
the six months ended June 30, 2026, and 2025:

| Line item | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | Change from Prior Year / $ | Change from Prior Year / % | % of Net Revenues / 2026 | % of Net Revenues / 2025 |
| --- | --- | --- | --- | --- | --- | --- |
| Net Revenues |  |  |  |  |  |  |
| Domestic Core | $15,719,429 | $14,025,250 | $1,694,179 | 12.1% | 66.0% | 70.7% |
| International Core | 6,753,599 | 4,608,773 | 2,144,826 | 46.5% | 28.4% | 23.2% |
| Total Core | 22,473,028 | 18,634,023 | 3,839,005 | 20.6% | 94.4% | 94.0% |
| Pharma Services and Clinical Trials | 1,337,016 | 1,195,852 | 141,164 | 11.8% | 5.6% | 6.0% |
| Total | $23,810,044 | $19,829,875 | $3,980,169 | 20.1% | 100.0% | 100.0% |

Total net revenues increased $4.0 million, or 20.1% to $23.8 million, for
the six months ended June 30, 2026, as compared with the same prior year period. Domestic core revenues increased by 12.1% to $15.7 million,
primarily due to volume growth in pumps and consumables, driven by new patient starts and market share gains. International core revenues
increased by 46.5% to $6.8 million, primarily due to higher pump volumes, driven by prefill patient conversions, new patient starts in
existing markets and entry into new geographic markets. Pharma services and clinical trials net revenues increased by $0.1 million, or
11.8% to $1.3 million in the six months ended June 30, 2026, as compared to the prior year period, driven by clinical trial orders and
NRE revenue.

Gross Profit

Our gross profit for the six months ended June 30,
2026 and 2025 is as follows:

| Line item | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | Change from Prior Year / $ | Change from Prior Year / % |
| --- | --- | --- | --- | --- |
| Gross Profit | $15,077,597 | $12,522,104 | $2,555,493 | 20.4% |
| Gross Margin | 63.3% | 63.1% |  |  |

Gross profit increased by $2.6 million or 20.4% in
the six months ended June 30, 2026, as compared with the same prior year period. The increase in the first half of 2026 was driven by
an increase in net revenues of $4.0 million as described above. Gross margin increased to 63.3% in the six months ended June 30, 2026,
as compared with 63.1% in the prior year period. The increase in gross margin was primarily driven by lower manufacturing costs, increases
in average selling prices, partially offset by tariff related price increases.

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Operating Expenses

Our selling, general and administrative, research
and development and depreciation and amortization expenses for the six months ended June 30, 2026 and 2025 are as follows:

| Line item | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | Change from Prior Year / $ | Change from Prior Year / % |
| --- | --- | --- | --- | --- |
| Selling, general and administrative | $12,522,165 | $11,343,522 | $1,178,643 | 10.4% |
| Research and development | 2,385,804 | 2,309,398 | 76,406 | 3.3% |
| Depreciation and amortization | 407,561 | 426,844 | (19,283) | (4.5%) |
| Total Operating Expenses | $15,315,530 | $14,079,764 | $1,235,766 | 8.8% |

Selling, general and administrative expenses increased
$1.2 million, or 10.4%, during the six months ended June 30, 2026, as compared with the prior year period, primarily due to increases
in legal fees and compensation and benefits partially offset by lower consulting expenses.

Research and development expenses increased by $0.08
million, or 3.3% during the six months ended June 30, 2026, as compared with the same prior year period, primarily due to higher compensation
and benefit expenses partially offset by lower project expenses.

Depreciation and amortization expense remained flat
at $0.4 million in the six months ended June 30, 2026, as compared with $0.4 million in the same prior year period.

Net Loss

| Line item | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | Change from Prior Year / $ | Change from Prior Year / % |
| --- | --- | --- | --- | --- |
| Net Loss | $(554,629) | $(1,373,104) | $818,475 | (59.6%) |
| Stated as a Percentage of Net Revenues | (2.3%) | (6.9%) |  |  |

Our net loss decreased $0.8 million in the six months
ended June 30, 2026, as compared with the same prior year period, mostly driven by an increase in gross profit of $2.6 million or 20.4%,
partially offset by an increase in operating expenses of $1.2 million or 8.8%, and changes in other income and losses of $0.5 million.

**LIQUIDITY AND CAPITAL RESOURCES**

Our principal source of liquidity is our cash on hand
of $8.3 million as of June 30, 2026. Our principal source of operating cash inflows is from sales of our products and NRE. Our principal
cash outflows relate to the purchase and production of inventory, funding of research and development, and selling, general and administrative
expenses. To develop new products, support future growth, achieve operating efficiencies, and maintain product quality, we are continuing
to invest in research and development and manufacturing equipment.

Our inventory position was $4.5 million at June 30,
2026, which reflects an increase of $0.8 million from December 31, 2025, due to expected future demand from our customers.

We expect that our cash on hand, cash flows from operations, and as needed,
cash available under our credit facility, will be sufficient to meet our requirements at least through the next twelve months. Continued
execution on our longer-term strategic plan may require the Company to take on additional debt, raise capital through issuance of equity,
or utilize a combination of the above. Our future capital requirements may vary from those currently planned and will depend on many factors,
including our rate of sales growth, the timing and extent of spending on various strategic initiatives including research and development,
our international expansion, the timing of new product introductions, market acceptance of our solutions, and overall economic conditions
including inflation and the potential impact of global supply imbalances on the global financial markets. To the extent that current and
anticipated future sources of liquidity are or are expected to be insufficient to fund our future business activities and requirements,
we may be required to obtain additional equity or debt financing sooner. There can be no assurance that the Company will be able to obtain
the financing or raise the capital required to fund operations or planned expansion.

- 18 -

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**

Credit Facility

On March 8, 2024, the Company entered into a loan
and security agreement with a large domestic banking institution, as lender, providing for a credit facility consisting of a $5,000,000
revolving credit facility and a $5,000,000 term loan facility. On March 30, 2026, the Company entered into an amendment to the agreement
extending the revolver maturity to March 30, 2028 and the term loan maturity to December 1, 2029, extending the interest-only period on
the term loan through at least June 30, 2027, and lowering the interest rate floor on both facilities from 6.50% to 5.50%. The Company
has not drawn on the credit facility, and there is no obligation to do so at any time. Borrowings are secured by a first-priority lien
on substantially all of the assets of the Company, subject to customary exceptions. The credit facility contains customary affirmative
and negative covenants and events of default. For a complete description of the terms of the credit facility, see Note 4 to the condensed
financial statements included herein.

Cash Flows

The following table summarizes our cash flows:

| Line item | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 |
| --- | --- | --- |
| Net cash from/(used in) operating activities | $230,776 | $(697,807) |
| Net cash used in investing activities | $(667,252) | $(475,652) |
| Net cash used in financing activities | $(148,032) | $(352,772) |

Operating Activities

Net cash from operating activities was $0.2 million for the six months
ended June 30, 2026, as compared to $(0.7) million in the prior year period. This net cash inflow of $0.2 million was due to a net loss
of $0.6 million, working capital uses which netted $1.2 million and included a decrease of accrued expense by $2.0 million reflecting
the pay-out of prior-year accrued bonuses, an increase in inventory of $0.8 million, and an increase in other receivables of $0.4 million
partially offset by decreases in trade accounts receivable of $0.9 million, increases in accounts payable of $0.6 million, decreases of
prepaid expense of $0.3 million, and other increases in payroll accruals and taxes of $0.3 million. Additional offsets to the net loss
were non-cash items of $2.0 million including stock based compensation of $1.1 million, depreciation of $0.4 million, and losses on asset
disposals of $0.4 million.

Net cash used in operating activities was $0.7 million
for the six months ended June 30, 2025, as compared to $0.3 million in the prior year period. This net cash usage of $0.7 million was
primarily due to the net loss of $1.3 million, a decrease in accounts receivable and contract assets of $0.9 million and an increase in
prepaid expenses of $0.4 million, offset by increases in inventory of $1.1 million and decreases in accounts payable of $0.6 million.
Additional offsets to the net loss were non-cash items including stock-based compensation expense of $1.1 million, and depreciation and
amortization expense of $0.4 million.

Investing Activities

Net cash used in investing activities of $0.7 million
for the six months ended June 30, 2026, was related to an acquisition of technology assets, capitalized software development costs, and
capital expenditure for manufacturing equipment for our next generation pump production line.

Net cash used in investing activities of $0.5 million
for the six months ending June 30, 2025, was due to capital expenditures related to purchases of manufacturing equipment for next generation
consumable and pump production lines.

Financing Activities

Net cash used in financing activities of $0.1 million
for the six months ended June 30, 2026 was for payment for taxes related to net share settlement of equity awards, and for payments on
our finance leases.

Net cash used in financing activities of $0.4 million
for the six months ended June 30, 2025 was primarily due to payments on our note payable for insurance premium financing.

- 19 -

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**

**ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED**

Refer to “NOTE 1 — NATURE OF OPERATIONS
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the accompanying financial statements, which is incorporated herein by reference.

## ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK**

Not applicable.

## ITEM 4. CONTROLS AND PROCEDURES

The Company’s management, including the Company’s
Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls
and procedures as such is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Based upon their evaluations, the Principal Executive Officer and Principal Financial Officer concluded that, as of
the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of
ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the
Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms and (2) is accumulated and communicated to the Company’s management, including its
Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s
internal control over financial reporting during the three months ended June 30, 2026, that have materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial reporting.

**PART II – OTHER INFORMATION**

## ITEM 1A. RISK FACTORS

Our operations and financial results are subject to
various risks and uncertainties, including those described in “PART 1, ITEM 1A. RISK FACTORS” in our Annual Report on Form
10-K for the year ended December 31, 2025, which could adversely affect our business, financial condition, results of operations, cash
flows, and the trading price of our common stock.

## ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

On May 18, 2026, the Company purchased certain contracts
and intellectual property assets from a third-party in exchange for a combination of cash and 125,628 shares of the Company’s common
stock, par value $0.01 per share, which shares represented $500,000 of the aggregate purchase price for the assets. The shares were issued
to the collateral agent on behalf of the seller’s noteholders, and are subject to an 18-month restriction on transfer. The Company
relied on Rule 506 of Regulation D under the Securities Act of 1933, as amended, in connection with the issuance.

- 20 -

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**

**PART II – ITEM 6. EXHIBITS.**

| Exhibit No. | Description |
| --- | --- |
| 31.1 | Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act 2002 |
| 31.2 | Certification of Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act 2002 |
| 32.1 | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 2002 |
| 32.2 | Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act 2002 |
| 101.INS | Inline XBRL Instance Document - the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

- 21 -

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**

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KORU MEDICAL SYSTEMS, INC.

August 5, 2026 /s/ Adam Kalbermatten

Adam Kalbermatten, Chief Executive Officer    (Principal Executive Officer)

August 5, 2026 /s/ Thomas Adams

Thomas Adams, Chief Financial Officer and Treasurer    (Principal Financial Officer)

- 22 -

---

---

## CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

SEC source: [ex_31-1.htm](https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/ex_31-1.htm)

**EXHIBIT 31.1**

RULE 13A-14(A) / 15D-14(A) CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

I, Adam Kalbermatten, Principal Executive Officer, certify that:

| 1) | I have reviewed this Quarterly Report on Form 10-Q of KORU Medical Systems, Inc. (the “Report”); |
| --- | --- |
| 2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|  | (a) |
|  | (b) |
|  | (c) |
|  | (d) |
| 5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing this equivalent function): |
|  | (a) |
|  | (b) |

Date: August 5, 2026

/s/ Adam Kalbermatten

Adam Kalbermatten, Chief Executive Officer

(Principal Executive Officer)

---

---

## CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

SEC source: [ex_31-2.htm](https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/ex_31-2.htm)

**EXHIBIT 31.2**

RULE 13A-14(A) / 15D-14(A) CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

I, Thomas Adams, Principal Financial Officer, certify that:

| 1) | I have reviewed this Quarterly Report on Form 10-Q of KORU Medical Systems, Inc. (the “Report”); |
| --- | --- |
| 2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|  | (a) |
|  | (b) |
|  | (c) |
|  | (d) |
| 5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing this equivalent function): |
|  | (a) |
|  | (b) |

Date: August 5, 2026

/s/ Thomas Adams

Thomas Adams, Chief Financial Officer and Treasurer

(Principal Financial Officer)

---

---

## CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

SEC source: [ex_32-1.htm](https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/ex_32-1.htm)

**EXHIBIT 32.1**

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADDED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002

In connection with the Quarterly Report of KORU Medical Systems, Inc. (the
“Company”) on Form 10-Q (the “Report”) for the quarter ended June 30, 2026 as filed with the Securities and Exchange
Commission, I, Adam Kalbermatten, Principal Executive Officer, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 5, 2026

/s/ Adam Kalbermatten

Adam Kalbermatten, Chief Executive Officer

(Principal Executive Officer)

---

---

## CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

SEC source: [ex_32-2.htm](https://www.sec.gov/Archives/edgar/data/704440/000116169726000189/ex_32-2.htm)

**EXHIBIT 32.2**

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADDED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002

In connection with the Quarterly Report of KORU Medical Systems, Inc. (the
“Company”) on Form 10-Q (the “Report”) for the quarter ended June 30, 2026 as filed with the Securities and Exchange
Commission, I, Thomas Adams, Principal Financial Officer, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 5, 2026

/s/ Thomas Adams

Thomas Adams, Chief Financial Officer and Treasurer

(Principal Financial Officer)

---